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  • Originally posted by tantalus View Post
    Is this largely due to the Chinese economy?
    The Chinese economy in 2015 was more than 50% services (50.5%, to be exact, but only if you believe the numbers). Industry is barely one-third. See: http://www.stats.gov.cn/english/Pres...1_1307717.html

    According to US data, exports to China fell 5.1% in Jan-Nov 2015, vis-a-vis the same 2014 period. That was equal to a 5.6% share of the 6.9% decline in US exports to the world. On the (US) import side, purchases from China rose 4.3%, vs. -2.1% overall.

    East Asia was good for the US economy last year. Exports to the region fell 3.8%, as compared to the 8% drop in sales to the rest of the world.
    Trust me?
    I'm an economist!

    Comment


    • Chinese consumer demand is not slowing, at least not according to the statistical evidence. Retail sales grew year-on-year – in real terms – as follows:

      Q1 2014 _ +9.7%
      Q2 2014 _ +10.0%
      Q3 2014 _ +9.9%
      Q4 2014 _ +10.2%
      Q1 2015 _ +12.7%
      Q2 2015 _ +12.7%
      Q3 2015 _ +14.1%
      Q4 2015 _ +13.6%
      Trust me?
      I'm an economist!

      Comment


      • DOR your take?

        REUTERS/Brendan McDermid

        Texan hedge fund manager J. Kyle Bass, the founder of Hayman Capital, has sent his first letter to investors on a global scale in two years.

        The letter, seen by Business Insider, warns that China has a problem much bigger than the subprime crisis in 2008.

        Bass was one of the hedge fund managers who correctly predicted and profited from the mortgage crisis in 2008.

        The problem in China, according to Bass, is the banking system and its coming losses.

        "We have been vigorously studying China over the last year, with the view that the rapid credit expansion in the Chinese banking system will result in significant credit losses that will require the recapitalization of Chinese banks and materially pressure the Chinese currency," Bass wrote in a letter to investors dated February 10.
        More from Business Insider

        "This outcome will have many near-term and long-term effects on countries and markets around the world. In other words, what happens in China will not stay in China."

        In the investor letter, titled "The $34 Trillion Experiment: China's Banking System and the World's Largest Macro Imbalance," Bass says China's banking system has similarities to the US banking system before the most recent financial crisis — excessive leverage, regulatory arbitrage, and irresponsible risk-taking.

        Bass said he had met with Wall Street firms, consultants, and China experts and they all had the view that China would get through the recent turbulence without an economic reset.

        That's not how Bass sees it. He wrote:

        What we have come to realize through these discussions is that many have come to their conclusion without fully appreciating the size of the Chinese banking system and the composition of assets at individual banks. More importantly, banking system losses — which could exceed 400% of the US banking losses incurred during the subprime crisis — are starting to accelerate.

        Bass is among a handful of hedge fund managers betting against China's currency, the yuan. Much of Hayman Capital's fund right now is devoted to the yuan short.
        http://www.businessinsider.com/kyle-...icals#comments

        Comment


        • So, a financial mercenary examines China with the preconceived notion that the banking system is about to collapse and as a result drive down the value of the renminbi.

          1. If the banking system in Shaanxi were to collapse, that has nothing to do with the banking system in Guangxi. Shanghai isn’t Liaoning. There is no single Chinese banking system, just a loosely aligned – no, ‘loosely associated’ – collection of provincial and municipal structures.

          2. If the various banking systems were to simultaneously collapse, the very obvious fact that the debts are domestic makes it impossible for such an occurrence to directly cause a decline in the Rmb. There would be no rush for dollars for the simple reason that the loans are denominated in Rmb; dollars wouldn't help. It is possible, maybe even likely that the currency market would panic under this particular highly unlikely scenario, but that would be the market causing the depreciation, not the banking sector’s problems being the cause.

          3. The largest part of the banks’ non-performing loans are those to state-owned enterprises. When a state-owned bank is owed money by an SOE, the repayment is subject to administrative negotiation. There cannot be an SOE foreclosure without Party approval. I do not envisage the Party, at whatever level, deciding now would be an excellent time to generate a bit of financial panic.

          4. “Wall Street firms, consultants, and China experts” “all had the view that China would get through the recent turbulence without an economic reset.”
          Mr Bass disagrees. Well, I know who I’d put my trust in, and it isn’t some fishy financial mercenary.
          Trust me?
          I'm an economist!

          Comment


          • May 6, 2016
            Americans collecting unemployment checks lowest since end of Clinton presidency


            Initial jobless claims below 300,000 for 61st straight week

            The number of Americans collecting unemployment benefits fell in late April to a nearly 16-year bottom, largely reflecting the low rate of layoffs taking place across the economy.

            Some 2.12 million people collected weekly unemployment benefits, known as continuing claims, in the seven days stretching from April 17 to April 23, the Labor Department said Thursday.


            The last time fewer Americans were collecting unemployment checks was in November 2000, shortly before President Bill Clinton exited the White House.

            The number of unemployment checks the government sends out has tumbled 82% after hitting a record 11.6 million in early 2010, when the U.S. was in the early stages of a recovery following the Great Recession. The figure includes millions of people who received emergency benefits that are no longer available.

            The drop in continuing claims is not entirely the result of an improved labor market, however. Millions of people have since found jobs, but a larger share of Americans are no longer part of the labor force. The so-called labor-force participation rate stood at 63% in March, down from 65% when the recovery began. Retiring baby boomers account for some but not all of that decline.

            Initial jobless claims, meanwhile, climbed by 17,000 to a five-week high of 274,000 in the last week of April. Despite the increase, new claims have been below the key 300,000 mark for 61 straight months, the longest stretch since the waning stages of the Vietnam War.

            Economists polled by MarketWatch had forecast claims would rise to 265,000 in the seven days stretching from April 24 to April 30 (figures are seasonally adjusted.)

            The average of new claims over the past four weeks, a less volatile measure, edged up by a much smaller 2,000 to 258,000, the Labor Department said Thursday. A week earlier the monthly average had fallen to a 43-year low

            Low jobless claims have contributed to marked improvement in the labor market over the past several years. The unemployment rate falls more quickly when hiring is strong and fewer people are being laid off.

            On Friday, the government will issue its latest snapshot of the labor market with the April employment report. Economists predict a 203,000 gain in nonfarm jobs, down slightly from the prior month.

            The economy has created an average of more than 200,000 jobs a month since 2014, knocking the unemployment rate down to 5%.

            ADD: April was the 67th straight month of YoY increases in employment, and the 20th straight month of a rising labor force.

            Add chart:
            Attached Files
            Last edited by DOR; 06 May 16,, 17:15.
            Trust me?
            I'm an economist!

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            • On Friday, the government will issue its latest snapshot of the labor market with the April employment report. Economists predict a 203,000 gain in nonfarm jobs, down slightly from the prior month
              Ended up being 160,000 this morning.

              Comment


              • Originally posted by tbm3fan View Post
                Ended up being 160,000 this morning.
                This is the greatest recovery since 2008.
                "Only Nixon can go to China." -- Old Vulcan proverb.

                Comment


                • Originally posted by tbm3fan View Post
                  Ended up being 160,000 this morning.
                  20+% miss. You only had one job..
                  No such thing as a good tax - Churchill

                  To make mistakes is human. To blame someone else for your mistake, is strategic.

                  Comment


                  • It's hard to forecast the future.

                    It's softer than expected, but the US still nearing full employment. This makes it pretty unlikely for the Fed to tighten again in June, especially since other nations are tumbling.
                    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

                    Comment


                    • Originally posted by gunnut View Post
                      This is the greatest recovery since 2008.
                      Did you read the new claims chart?
                      The last time the line did an imitation of a rock trying to do the backstroke was in the early 1980s, and it bottomed out quick.
                      Trust me?
                      I'm an economist!

                      Comment


                      • This has been the longest continuous expansion in history. I'm definitely getting a bit wary....
                        "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

                        Comment


                        • Originally posted by DOR View Post
                          Did you read the new claims chart?
                          The last time the line did an imitation of a rock trying to do the backstroke was in the early 1980s, and it bottomed out quick.
                          Which part of my statement is incorrect?
                          "Only Nixon can go to China." -- Old Vulcan proverb.

                          Comment


                          • Originally posted by gunnut View Post
                            Which part of my statement is incorrect?
                            The part about "since 2008."
                            Trust me?
                            I'm an economist!

                            Comment


                            • Click image for larger version

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                              • https://www.washingtonpost.com/news/...-in-recession/

                                The interesting thing that happened when Kansas cut taxes and California hiked them

                                By Jim Tankersley and Max Ehrenfreund

                                June 17 at 7:00 AM 

                                In 2012, voters in California approved a measure to raise taxes on millionaires, bringing their top state income tax rate to 13.3 percent, the highest in the nation. Conservative economists predicted calamity, or at least a big slowdown in growth. Also that year, the governor of Kansas signed a series of changes to the state's tax code, including reducing income and sales tax rates. Conservative economists predicted a boom.

                                Neither of those predictions came true. Not right away -- California grew just fine in the year the tax hikes took effect -- and especially not in the medium term, as new economic data showed this week.

                                Now, correlation does not, as they say, equal causation, and two examples are but a small sample. But the divergent experiences of California and Kansas run counter to a popular view, particularly among conservative economists, that tax cuts tend to supercharge growth and tax increases chill it.

                                California's economy grew by 4.1 percent in 2015, according to new numbers from the Bureau of Economic Analysis, tying it with Oregon for the fastest state growth of the year. That was up from 3.1 percent growth for the Golden State in 2014, which was near the top of the national pack.

                                The Kansas economy, on the other hand, grew 0.2 percent in 2015. That's down from 1.2 percent in 2014, and below neighboring states such as Nebraska (2.1 percent) and Missouri (1.2 percent). Kansas ended the year with two consecutive quarters of negative growth -- a shrinking economy. By a common definition of the term, the state entered 2016 in recession.

                                Other effects of the Kansas tax cuts, which were meant to spur entrepreneurship, are well-documented.

                                While state officials anticipated that the reductions would create a shortfall in the state budget, tax revenues have been consistently below even those expectations. Standard & Poor’s and Moody’s Investors Service have signaled that they could reduce Kansas’s credit rating, indicating there is a chance the state cannot pay its bills.

                                The shortfalls have forced Gov. Sam Brownback (R) and lawmakers to make additional adjustments. The state canceled the initial reduction in sales taxes, then increased them again, while delaying additional scheduled reductions in the income tax.

                                On the whole, Brownback’s policies modestly increased taxes for the poor and working class, who pay more in sales taxes than income taxes, while reducing taxes drastically for the rich.

                                The poorest 20 percent of households -- those making less than $23,000 a year -- are paying about $200 more, on average, according to an analysis by the Institute on Taxation and Economic Policy in Washington. For the middle class, the changes have been a wash, with less-affluent households paying somewhat more and more-affluent households giving up a little less.

                                Meanwhile, the wealthiest 1 percent of households, those making at least $493,000 a year, are saving an average of $25,000.

                                Kansas’s gross domestic product is still less than it was at the end of 2011, said Menzie Chinn, an economist at the University of Wisconsin-Madison, who has been following Kansas’s economy. Meanwhile, the economy in the rest of the country continues to expand.

                                “It’s remarkable,” Chinn said.

                                It is perhaps less remarkable -- or surprising -- that California has powered along. The recovery nationwide has favored massive metropolitan areas stocked with high-skilled workers, which is to say places such as Los Angeles, San Jose and San Francisco. The damage from California's deep housing crash has slowly healed in places such as the Central Valley.

                                Still, the noncoastal regions of California lag far behind Silicon Valley and Los Angneles in their job and growth recoveries. The state's median income remains below pre-recession levels after adjustment for inflation, although it still beats the national average.

                                Few, if any, economists would say today that the recovery has been sufficient for all Californians. But almost no one can say that raising taxes on the rich killed that recovery. Or that given a choice of the two states' economic performances over the past few years, you'd rather be Kansas.
                                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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