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Thread: The US Recovery

  1. #91
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    Quote Originally Posted by astralis View Post
    i've addressed your points regarding use of one-month data points, the Fed's response, and gold. and until you provide data from sources that economists actually use, then i think further discussion is moot.
    So unless he plays with the same cooked books you wont talk to him? Funny, today they announced that the economy created more jobs than last month, but that unemployment also ticked up... Seems the claim of labor participation dropping because of retiring boomers and not discouraged gen exers might be false.

    small start ups- lowest level in modern history
    small businesses now the smallest part of the economy since the 70's (they create the most jobs)
    Biggest buyer of houses are investment groups not prospective homeowners
    declining labor participation rate
    climbing unemployment with real unemployment over 10%...

    Boom times for sure!

  2. #92
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    z,

    the point is to use one set of commonly-accepted data. as it is, there's a lot of cherry picking going around-- ie let's accept the labor participation rate as legit while decrying the unemployment rate as cooked. or, more flagrantly, actually stating that there's a conspiracy to drive gold prices down.

    if you or snapper or whomever use that set of data, then i can debate. when snapper used the labor participation rate, i pointed out the issues with using it. you may disagree on whether those issues are correct or not, but at least we're using the same set of numbers.

    otherwise it'll be one random competing claim against another, with numbers being pulled out of nether regions.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  3. #93
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    Quote Originally Posted by astralis View Post
    z,

    the point is to use one set of commonly-accepted data. as it is, there's a lot of cherry picking going around-- ie let's accept the labor participation rate as legit while decrying the unemployment rate as cooked. or, more flagrantly, actually stating that there's a conspiracy to drive gold prices down.

    if you or snapper or whomever use that set of data, then i can debate. when snapper used the labor participation rate, i pointed out the issues with using it. you may disagree on whether those issues are correct or not, but at least we're using the same set of numbers.

    otherwise it'll be one random competing claim against another, with numbers being pulled out of nether regions.
    except we've posted numbers and you reject them. We reject the cooked books coming from the government and the fed in favor of numbers from the real world.

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    except we've posted numbers and you reject them. We reject the cooked books coming from the government and the fed in favor of numbers from the real world.
    by "real world", you mean some random online blogs. even right wing think tanks such as heritage will take pains to use government data figures for their calculations, otherwise no one takes them seriously.

    and if they're "cooked", then why the use of SOME government figures and not others?
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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    Layman question/hypothetical:

    Obama calls me up tomorrow and tells me he's read my blog and WAB posts and gosh now he realizes what an awful President he is, asks me if I would please serve out the remainder of his term, and by the way, he's already gotten all branches of government to agree, kaythxbye.

    I take the weekend to settle into the White House and tell my minions to bring to me Odalys Garcia, and on Monday I stop QE3. (Can I stop QE3?)

    What happens?

    -dale

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    dale,

    you wouldn't be able to. fed chairmen can't be removed on policy grounds, precisely to prevent political interference. you'd have to wait until bernanke left, then nominate a new chairman. but most of the sitting governors AGREE with the QE plan, so even if bernanke left and you replaced him, QE would probably still go on.

    but to address your deeper question. let's say you be dictator for a day.

    Monday you stop QE3, markets instantly fall, all across the world. there's been a recent market slowdown just because investors were already worried about bernanke -possibly slowing down- QE3 in the future.

    there'd be a big disruption in the housing market, which would probably seize up the recent housing revival. banks would probably stop loaning altogether and sit on their profit. while the amount of money involved isn't big compared to the overall size of the US economy, what instantly stopping QE would indicate to investors is that this dale-obama administration believes in Austrian economics (no monetary support, no fsical stimulus) and that further attempts at austerity can be expected in the future. that's the short-term effect.

    EDIT: also, it'd indicate that the dale-obama administration would either 1. want to change the Fed's mission from balancing inflation/unemployment to just inflation alone, or 2. eliminate the Fed altogether. either would be highly disruptive because it'd be a watershed in how the Fed interacts with the US/world economy.

    assuming you DON'T do monetary stimulus or QE in the years following, the medium-term effect is deflation, and a long, long time until recovery. most likely led by years of grinding wage deflation a la japan. the current slow recovery would most likely turn into a moderate recession and then stagnation.

    most likely this wouldn't be politically tenable, but assuming it is across administrations, economics 101 dictates that the US would ultimately slowly recover based on wages falling across the US. this was pretty much what happened in europe until the ECB did their weaker version of QE, and is in fact still occurring in peripheral nations like portugal.
    Last edited by astralis; 08 Jun 13, at 06:10.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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    Quote Originally Posted by astralis View Post
    i've addressed your points regarding use of one-month data points, the Fed's response, and gold. and until you provide data from sources that economists actually use, then i think further discussion is moot.
    Or do you mean data that suits you? What economist doesn't take some account of the value of a currency or whether the market is rising/falling? I seem to a met someone way ahead of economists...

  8. #98
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    Quote Originally Posted by zraver View Post
    So unless he plays with the same cooked books you wont talk to him? Funny, today they announced that the economy created more jobs than last month, but that unemployment also ticked up... Seems the claim of labor participation dropping because of retiring boomers and not discouraged gen exers might be false.

    !
    I don't mean to be insulting, but "It's the denominator, stupid!"

    Number of members of the labor force without jobs
    --------------------------------------------------------- = unemployment rate (%)
    Total number of members of the labor force

    If the number of jobs rises by 100,000 and the labor force by 200,000, the unemployment rate will rise, regardless of whether the armchair economists thought employment would "only" rise by 75'000.

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    So return to a pertinent subject if I may be so bold... I recall some time ago in a previous thread that people were advising me that the 'bond bubble' was all in my head as it were, though the graphs I recall posting said different. Well that's fine of course; I am not an economist by trade nor a professional investor and so naturally you can discount my views if you see things differently. Will you though discount the views of a board member of the Bank of England so lightly when he says "A 'disorderly' bursting of biggest bond bubble in history is biggest risk to financial stability". He continues “We have intentionally blown the biggest government bond bubble in history,” he said at hearing on the reappointment of officials to the Financial Policy Committee, created to monitor broad risks to the financial system. One version of his comments you can see here A 'disorderly' bursting of biggest bond bubble in history is biggest risk to financial stability, say BoE's Andy Haldane - Telegraph others elsewhere if you can't get access. So is he wrong too?

    Yes yes I know this doesn't actually refer to the US but if the situation is so dramatically in the US pray explain how? Just like in the UK wages are squeezed and inflation - even reported inflation - beats wage increases which means people are getting poorer no? Both Government (in the UK) and Central Bank in the US are desperately trying to create another housing bubble not that it really benefits buyers when the support is withdrawn but to help the construction industry who lobby for such investment.

    So was I and is this BoE chap wrong about a bond bubble? If so why? If not what is likely to any bubbles currently being created?

    Why the equities markets so volatile scared of tapering? Emerging markets are being destroyed and all flooding to commodities it seems to me. Why? Cos your pennies aren't worth the paper you write the signs on to real investors, you are robbing savers.

    I know this rightly belongs in another topic but don't feel it my duty to start another "chicken - roosting" thread when essentially the two started in the one thread so perhaps I was paranoid about the gold smack down 7 sigma event it went. Well since then we have seen a welter of revelations about Government surveillance. Now another from Bloomberg...

    "Thousands of technology, finance and manufacturing companies are working closely with U.S. national security agencies, providing sensitive information and in return receiving benefits that include access to classified intelligence, four people familiar with the process said."

    http://www.bloomberg.com/news/2013-0...-of-firms.html

    Other direct quotes contradict each other such as:

    Gus Hunt, the chief technology officer at the CIA: "We fundamentally try to collect everything and hang onto it forever."

    Barack Obama: "Nobody is listening to your telephone calls."

    Look I have dabbled in 'black arts' myself for my country and would do so again if/when required by my superiors but NOT against our own population without reasonable cause provided to an independent Judge. It's the rule of law for our own people surely?
    Last edited by snapper; 14 Jun 13, at 09:12.

  10. #100
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    Quote Originally Posted by snapper View Post

    Yes yes I know this doesn't actually refer to the US but if the situation is so dramatically in the US pray explain how? Just like in the UK wages are squeezed and inflation - even reported inflation - beats wage increases which means people are getting poorer no? Both Government (in the UK) and Central Bank in the US are desperately trying to create another housing bubble not that it really benefits buyers when the support is withdrawn but to help the construction industry who lobby for such investment.

    So was I and is this BoE chap wrong about a bond bubble? If so why? If not what is likely to any bubbles currently being created?

    Why the equities markets so volatile scared of tapering? Emerging markets are being destroyed and all flooding to commodities it seems to me. Why? Cos your pennies aren't worth the paper you write the signs on to real investors, you are robbing savers.
    I won't comment on the bond markets for reasons I stated several times before. But, after decades of living beyond our means -- that's what a current-account deficit + budget deficit means -- it would be irrational to expect real wages and real incomes to resume the same upward trajectory.

    We're finally deflating, in fits and starts, which might take 5-7 years, or 10+ without a major war to shock the economy.

    Don't expect the usual pattern of post-recession recovery; that's just denial.

  11. #101
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    Quote Originally Posted by DOR View Post
    I won't comment on the bond markets for reasons I stated several times before. But, after decades of living beyond our means -- that's what a current-account deficit + budget deficit means -- it would be irrational to expect real wages and real incomes to resume the same upward trajectory.

    We're finally deflating, in fits and starts, which might take 5-7 years, or 10+ without a major war to shock the economy.

    Don't expect the usual pattern of post-recession recovery; that's just denial.
    I appreciate that you don't trade, though I wonder what interest you get from a bank, but that is not really the point. As bond yields rise the cost of debts - national and personal - rises. The Fed having made large purchases in the bond markets to suppress the yield and create the bubble is now sitting on losses. What do they do now? The liquidity which you said recently was needed is drying up. Is it no longer necessary and if not what has suddenly changed to make it less necessary?

    Regarding 'deflating' I find this a rather strange comment when you persistently argued that inflation was low. In fact the latest PPI figures show the reverse of what you claim; 0.5% increase instead of anticipated 0.1%, food up 0.6 percent in May and energy up 1.3% in May. The $ is devaluing which causes inflation and not the reverse. So what next for Bernanke and co?

  12. #102
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    Investing isn't a choice between financial markets or bank accounts.

    What's changed? The Fed sees light at the end of the tunnel.

    Deflating isn't just about wholesale or consumer prices.

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    As rates go to 4-6 (say 10-year slowly gets to 3.5+ and 30 year goes to 5.5+) ergo our semi-normal range.

    What happens is repricing not just of investment markets.

    Ergo people tend to forget that equipment financing and other aspects of operational leverage reprice far more than some financial instrument can.

    Think Airplane leases that yield 6% now have to go to 9%, operational leverage for the finance firm goes down as their financing costs squeeze the margin between what they pay and get and the Airline having to pay more.

    Imagine I finance a candy depositing machine (yes I thought about it) now lets say at 10% you need a certain hurdle on prices AND how fast you turn your inventory AND get cash out of the receivable cycle. So you have 3, 4, 5 components interrelated that each reprice based on return rates necessary not just for your own capital returns but because you have to pay others theirs.

    The Fed is choosing deflation because with it rates stay stable 4-6% is stable and even though there would be asset losses they would be tolerable and bearable by the system while overall pressure on employment and capital won't be as much marginally as if they continued easing. They are essentially tapering for the sake of carrying gov't debt because otherwise if the market perceives further QE the rates explode and the whole ship(economy) sinks.
    Originally from Sochi, Russia.

  14. #104
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    cyppok,

    because otherwise if the market perceives further QE the rates explode
    what evidence is there for this?
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  15. #105
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    Quote Originally Posted by astralis View Post
    cyppok,



    what evidence is there for this?
    The reason the Fed talked about tapering or slowly exiting QE is because yields moved.
    Mish's Global Economic Trend Analysis: Mortgage Refis Plunge Following 76 Basis Point Rise in 30-Year Rate; Treasury Yield Reaches 14-Month High; What About Convexity Hedging?
    Look at the rate curve he has of 10y, 30y, etc... All of them are about 1% beneath normalcy.
    The bad auction with highest rates in a year
    Bonds Burned By Ugly, Tailing 30 Year Auction | Zero Hedge
    3 auctions with very ugly demand.
    Foreigners exiting partly either to front-run the yield change or just lower demand, either way higher supply of treasuries on the market.
    Treasury Sales By Foreigners Hit Record High In April | Zero Hedge
    will know by now that in April, foreign investors, official and private, sold $54.5 billion. Why is this number of note? Because it is the biggest monthly sale of Treasurys by foreigners in the history of the data series.
    My guess we got 1% point in treasuries we need to go up by at which point we resume very slow variations around that set of numbers.
    Originally from Sochi, Russia.

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