Even the sales of office supplies -- viewed by some as an indicator of where the economy is headed -- are off, according to Pasadena-based Avery Dennison Corp.
You might find the chart I made today on Los Angeles cargo traffic interesting. Those office supplies come from somewhere (most likely not here). It is our largest port and perhaps it too is a proxy of what's to come.
Although the resolution of that chart is pretty course, it sure looks to me like the EPR ratio leads each recession.
Nevertheless, whether it leads or is coincident, a '10 for 10' record since 1950 is pretty impressive. What does that say about the little 'downturn' at the end of the graph in 2007?
The population ratio is a BLS (US bureau of labor statistics) metric that is the working stiffs divided by the total population. Addicts of this ratio note that the % of US citizens working has either declined or was static during the last 7 years. In short there are less % of Americans working than 7 years ago.
The question is are things so good that lots of folks retired and are living the good life or so bad that finding and working a low wage job is so hard that folks just drop out of the labor force all together. Being part of the statistic, I favor the latter explanation.
CR, yesterday ISI makes a very interesting point on mortgage resets and foreclosures. According to Ed Hyman & Co., most of the folks losing their homes to foreclosure lose them before the teaser rate resets. I had no idea. Anyway, the implications are severe. Obviously foreclosures are really gonna spike once the resets hit full swing. Also, any sort of FHA plan to restructure mortgage payments is likely to be a dud -- if homeowners can't pay the teaser rate, they're going to have just as much trouble if not more paying a revised fixed rate. Of course, that assumes they even qualify for an FHA loan, i.e. have a decent payment history to begin with.
"most of the folks losing their homes to foreclosure lose them before the teaser rate resets"
This may be due to the dominance of flippers in the first wave of foreclosures. IMO, foreclosures will come in three waves, and we are past the first and into the second now:
Wave 1: Dominated by Flippers and subprime borrowers that depend on cash-outs. Primarily stated 100% CLTV purchase.
Wave 2: Dominated by resets in all products (including recast negam's). Primarily re-fi's with high (real) DTI's.
Wave 3: Dominated by unemployed or lost bonus/commission income. Primarily prime conforming as defaults there overshoot historical peaks.
The way economists predict near-recessions amuses me. If humans were rational creatures we'd never have recessions, we'd never have bubbles, the economy would grow on a nicely smooth curve. Economists are forever using models that assume humans are rational creatures who never panic
In the real world, every time unemployment has risen at least 0.5% from its low, which is what UCLA is predicting, unemployment has continued to rise at least 2.0% from its low as a recession takes hold. This is because near-recessions provoke a fear-contagion reaction that pushes the economy into a real recession. Once a bunch of people have lost their jobs, once businesses realize the economy is really slowing down, then people and businesses stop spending more than they have to in fear of the future and a bunch more people are suddenly tossed out of their jobs. Etc.
There have been a few super-slowmo slowdowns that didn't scare people into a recession b/c unemployment didn't rise as much as 0.5%, but UCLA is predicting too much of a slowdown to avoid a recession.
Let's be frank: the economic herd is on the brink of a panicky stampede into recession and the Fed must choose between (1) feeding inflation to delay the business cycle or (2) allowing the business cycle to proceed into recession. I think this Fed will choose #2. I also think Bernanke will be a one-termer Fed Chair for doing so.
At this point, the debate over whether the Fed should cut 0.25% or 0.50% is sorta silly, because according to my calculations the Fed would have to cut about 2.00% to return to a normal yield curve. That we are debating over which tiny cut will happen next week shows that we all implicitly accept that the Fed is making choice #2 above and that a recession will unfold.
I would be surprised if any big moves happen in markets until next Tuesday. Then you have a couple of big banks report, the Fed decision, several economic data points all coming out.
The top link above from Bloomberg has a couple of feel-good paragraphs for us CR readers.
RE: the BOE refusing to pump more liquidity into the market:
"The central bank won't amend its system for financing commercial banks by changing collateral rules or making longer- dated loans for fear of encouraging risky behavior in future, King said today in written testimony to the U.K. Treasury Committee.
The provision of such liquidity support undermines the efficient pricing of risk by providing ex-post insurance for risky behavior,'' he said.That encourages excessive risk- taking, and sows the seeds of a future financial crisis.''
Well, now that's a guy who knows what moral hazard is and is doing more than giving it lip service.
Mr. Bernanke, which kind of man will you be? Lip service, or a big sloppy kiss to Wall Street?
GMAFB... Okay, now we're at the "HOVERING" stage. What. Ever.
"This is blood. It's red."
"It is not."
"It's obvious that it's red. Now say it's red."
"It's not red."
(grabs arm, twists) "What color is it?"
"Ooooh, owww, it's not red!"
(twists harder) "WHAT COLOR IS IT?"
"Owwwww... it's... DARK PINK!"
mai_neh, I suspect the alleged "fear" factor is a mislabelling. You will notice that the process you describe is virtually identical to the traffic slowdown process on a crowded freeway when one person touches brakes, those behind him touch brakes, and soon the traffic flow has nearly stopped, even though the original car has resumed his original speed. But the reaction had little to do with fear. Caution, maybe. It is probably more accurate to say that snowballing effect is a characteristic of fluid dynamics.
The Fed's legal mandate is to maintain price stability while fostering low unemployment. The Fed has a second mandate to foster smooth functioning of financial markets. It has no mandate either to support the wealth of investors or (the point that needs to be made here) to punish investors and deflate bubbles. Saying the Fed is less pricipled than the BoE because the Fed has failed to do what one would like - when the Fed has no mandate to do what one would like - is to misstate the problem. Associating one's own views with "principle" is a common stance, but not helpful.
The U.S. trade deficit has become like the U.S. Govt. budget deficit. The press reports even the slightest improvement in the RATE of deficit growth as a positive.
You see headlines like yesterday:
TRADE DEFICIT IMPROVES!
when it goes from $59.3 billion to $59.0 billion per month.
Of course, there's no way a trade deficit can improve as long as it is negative.
The vast majority of people believe what they read. Even Larry Kudlow continuously claims that the U.S. Govt. budget deficit is "shrinking" when it is rocketing above $9 trillion. He means, the rate of deficit growth is slowing.
The top link above is also bad news for US homeowners with ARMs based on LIBOR which are about to reset. Isn't peak reset coming up real soon? LIBOR is at a nine year high and King has just said "you're on your own, pal" to everone with a LIBOR based mortgage.
Employer survey shows hiring to remain stable MILWAUKEE -- -- Employers are predicting another stable quarter of hiring, with 27% of companies expecting to add positions in the last three months of the year, according to a survey of 14,000 U.S. companies being released today.
Nine percent of companies said they expected to reduce employment, according to the survey by Milwaukee-based global staffing firm Manpower Inc.
The numbers are on par with hiring intentions from the same quarter last year, when 28% of employers predicted they would increase hiring and 8% expected a decrease.
The numbers also show employers are holding off on making any big moves amid the ups and downs on Wall Street and a sagging housing market, said Jonas Prising, president of Manpower North America. Given the uncertainty about the economy, stable hiring is good news, he said.
In the latest report, the majority of employers -- 58% -- expected no change in hiring between October and December, while 6% of companies were unsure of their plans.
k harris 8:33, The Fed's mandate is to "maintain price stability?" So, when RE prices triple in a few years, that's "stability?" Seems to me that the Fed should have done something in 2002-3. Are you saying that the Fed shouldn't allow house prices to fall, but should be stabilized at these current unrealistic prices?
Is it perhaps that many have forgotten or never knew that, in normal times, housing and all of the associated spending and secondary effects accounts for up to 20% of the GDP?
And that in the last few years, the housing mania increased that percentage?
And with a collapse of the housing market there must also be a corresponding drop in GDP, employment, etc?
That housing was not just Toll Brothers, but also the mortgage, finance, home improvements, furnishings, appliances, suppliers, taxing authorities, retail, lumber, etc., etc., etc.?
NEW YORK -- Conventional wisdom has it that people will do everything to keep their homes. Not any more.
The proliferation of no-money-down home loans over the past few years, coupled with the current housing downturn, is giving rise to a new mentality: People will risk losing their homes while doing everything to keep their credit cards.
"This is the biggest surprise we're seeing," said Elizabeth Schomburg, senior vice president of the Family Credit Counseling Service in Chicago. "People are actually coming to us with situations where they are current on their credit cards but are in foreclosure."
I guess we're still in that mindset that "the economy will never experience a recession again" just as economists thought in the late 30s that the era of economic growth would never return.
If the Fed wants stable prices, it should put the kibosh on inflation, which means stopping increases in the money supply that exceed increases in the GDP.
But look at what the Fed is doing at its discount window. It is accepting CDOs as collateral, and supplying the banks with new money in exchange for them, thereby increasing the money supply, hence fostering inflation.
Sorry, kh, you are right about the Fed's mandate, but it abandoned that mandate a while ago, and trying to recapture it now will be about as difficult as getting virginity back.
Look at the dollar, now 79.26 and falling. Fourth day below the key support level of 80.
"It has no mandate either to support the wealth of investors or (the point that needs to be made here) to punish investors and deflate bubbles. "
k harris
A former Governer, McChesney I believe, said that it's the Fed's job to take away the punch bowl just when the party gets started. Certainly other CB's (Australia, various EU ...) are much better at prevented and popping bubbles.
This Fed under Greenspan became famous at fostering bubbles. And looky where we are.
And some analysts don't see an immediate danger to investors holding bonds backed by credit-card receivables. Cynthia Ullrich, a senior director in Fitch Ratings' asset-backed securities group, said the outstanding deals have "sufficient" cushions to accommodate an expected increase in card delinquencies in the coming months.
The question is are things so good that lots of folks retired and are living the good life or so bad that finding and working a low wage job is so hard that folks just drop out of the labor force all together. Being part of the statistic, I favor the latter explanation.
There is a third choice not mentioned there. Consider it a blend of the second ( low wage job ) that involves fading out and flipping stuff to make a living. Some people flip homes (which is a hot topic on these boards). Some people flip other merchandise or tangible things. It could be things they obtained at estate sales, yard sales, clearance piles at the local walmart or almost anywhere. For lack of a better term, call it the 'hidden internet economy'. People who are tired of the rat race and saw a different way of making a living that didn't involve working for the man.
This is not a new economic trend, but it is something that the internet (and sites like ebay) have accelerated. We are becoming a nation of flippers and consumers, with only some of us producing tangible goods (services being less of a tangible product in this context).
How an economic downturn affects the flipper-economy will be a very interesting case study.
Bottom line, hard to command premium prices when the commodity folks are selling the same stuff.
Sept. 11 (Bloomberg) -- When Charles Ruppert has a yen for a white-chocolate latte, he doesn't head to a Starbucks Corp. shop. He goes to a McCafe located in a McDonald's Corp. restaurant and pays 26 percent less.
"The Fed's legal mandate is to maintain price stability while fostering low unemployment."
Bernanke has also spoken very recently on trade imbalances - a situation in which the US position would be improved by a cheaper dollar. Stir that into the mix and see where the logic goes....
Bernanke has also spoken very recently on trade imbalances - a situation in which the US position would be improved by a cheaper dollar. Stir that into the mix and see where the logic goes...
To properly see where the logic goes, you have to add that the imbalance is with what he calls "developing countries".
His speech yesterday is at :http://www.federalreserve.gov/newsevents/speech/bernanke20070911a.htm
and the table of current account balances is about halfway down.
The US has a large deficit( yeah DUH!) Euroland a modest deficit. The surpluses .. China and Japan. So, I ask : weaker dollar against who(m)? They want a weaker $ against those two and there is no free market determination of those two exchange rates - Fed monetary policy cannot affect those rates. Political pressure may, hence Paulson's 18 visits to China perhaps..
We are becoming a nation of flippers and consumers, with only some of us producing tangible goods (services being less of a tangible product in this context).
RayOnTheFarm
So, would Adam Smith be calling us a nation of online shopkeepers?
"Look at the dollar, now 79.26 and falling. Fourth day below the key support level of 80."
That's a bit of a concern. And sort of an interesting symmetry with oil above 80. $5 a gallon for heating oil could mean that people freeze to death this winter... Not the sort of thing that makes for good election year headlines.
Mortgage Brokers say 57% of clients couldn't refi in AUG.
The Great Loan Blog
Keep up the great work CR. One of my favorite reads.
This is so going to end poorly (assuming it does end).
CR,
Even the sales of office supplies -- viewed by some as an indicator of where the economy is headed -- are off, according to Pasadena-based Avery Dennison Corp.
You might find the chart I made today on Los Angeles cargo traffic interesting. Those office supplies come from somewhere (most likely not here). It is our largest port and perhaps it too is a proxy of what's to come.
Trade Deficit, Part 3
We're virtually awash in a sea of disturbing data these days.
Yet another indicator from our friends over at Big Picture Blog
Employment Population Ratio & Recessions
Although the resolution of that chart is pretty course, it sure looks to me like the EPR ratio leads each recession.
Nevertheless, whether it leads or is coincident, a '10 for 10' record since 1950 is pretty impressive. What does that say about the little 'downturn' at the end of the graph in 2007?
The population ratio is a BLS (US bureau of labor statistics) metric that is the working stiffs divided by the total population. Addicts of this ratio note that the % of US citizens working has either declined or was static during the last 7 years. In short there are less % of Americans working than 7 years ago.
The question is are things so good that lots of folks retired and are living the good life or so bad that finding and working a low wage job is so hard that folks just drop out of the labor force all together. Being part of the statistic, I favor the latter explanation.
Looks like Asia is mixed.
Europe mixed
World Markets - CNNMoney.com
With US markets to open slightly lower
Pre-Market: Stock Trading Before the Markets Open from CNNMoney.com
All in all a bit boring.
Things haven't been the same since Thornberg left the UCLA group.
Seems like 1031's "Qualified" Intermediaries are getting hit too:
Bloomberg.com
CR, yesterday ISI makes a very interesting point on mortgage resets and foreclosures. According to Ed Hyman & Co., most of the folks losing their homes to foreclosure lose them before the teaser rate resets. I had no idea. Anyway, the implications are severe. Obviously foreclosures are really gonna spike once the resets hit full swing. Also, any sort of FHA plan to restructure mortgage payments is likely to be a dud -- if homeowners can't pay the teaser rate, they're going to have just as much trouble if not more paying a revised fixed rate. Of course, that assumes they even qualify for an FHA loan, i.e. have a decent payment history to begin with.
Take Care!
"most of the folks losing their homes to foreclosure lose them before the teaser rate resets"
This may be due to the dominance of flippers in the first wave of foreclosures. IMO, foreclosures will come in three waves, and we are past the first and into the second now:
Wave 1: Dominated by Flippers and subprime borrowers that depend on cash-outs. Primarily stated 100% CLTV purchase.
Wave 2: Dominated by resets in all products (including recast negam's). Primarily re-fi's with high (real) DTI's.
Wave 3: Dominated by unemployed or lost bonus/commission income. Primarily prime conforming as defaults there overshoot historical peaks.
The way economists predict near-recessions amuses me. If humans were rational creatures we'd never have recessions, we'd never have bubbles, the economy would grow on a nicely smooth curve. Economists are forever using models that assume humans are rational creatures who never panic
In the real world, every time unemployment has risen at least 0.5% from its low, which is what UCLA is predicting, unemployment has continued to rise at least 2.0% from its low as a recession takes hold. This is because near-recessions provoke a fear-contagion reaction that pushes the economy into a real recession. Once a bunch of people have lost their jobs, once businesses realize the economy is really slowing down, then people and businesses stop spending more than they have to in fear of the future and a bunch more people are suddenly tossed out of their jobs. Etc.
There have been a few super-slowmo slowdowns that didn't scare people into a recession b/c unemployment didn't rise as much as 0.5%, but UCLA is predicting too much of a slowdown to avoid a recession.
Let's be frank: the economic herd is on the brink of a panicky stampede into recession and the Fed must choose between (1) feeding inflation to delay the business cycle or (2) allowing the business cycle to proceed into recession. I think this Fed will choose #2. I also think Bernanke will be a one-termer Fed Chair for doing so.
At this point, the debate over whether the Fed should cut 0.25% or 0.50% is sorta silly, because according to my calculations the Fed would have to cut about 2.00% to return to a normal yield curve. That we are debating over which tiny cut will happen next week shows that we all implicitly accept that the Fed is making choice #2 above and that a recession will unfold.
Vader-
I would be surprised if any big moves happen in markets until next Tuesday. Then you have a couple of big banks report, the Fed decision, several economic data points all coming out.
important:
Three-Month Pound Libor Rate Stays at Nine-Year High (Update1) - Bloomberg.com
BOE's King Refuses to Relax Money Lending Standards (Update6) - Bloomberg.com
Hi all,
One question to you all here.
Is the average US citizen aware of the risk of such a high external trade deficit?
Are politicians tackling the issue? I can not find any significant press information on the issue.
Here in Europe, I can tell you that Spain and the UK are definitely not caring about their massive external imbalances...
The risk looks ultimately extremely high that this ends all VERY BADLY.
The top link above from Bloomberg has a couple of feel-good paragraphs for us CR readers.
RE: the BOE refusing to pump more liquidity into the market:
"The central bank won't amend its system for financing commercial banks by changing collateral rules or making longer- dated loans for fear of encouraging risky behavior in future, King said today in written testimony to the U.K. Treasury Committee.
The provision of such liquidity support undermines the efficient pricing of risk by providing ex-post insurance for risky behavior,'' he said.That encourages excessive risk- taking, and sows the seeds of a future financial crisis.''
Well, now that's a guy who knows what moral hazard is and is doing more than giving it lip service.
Mr. Bernanke, which kind of man will you be? Lip service, or a big sloppy kiss to Wall Street?
-- Judge Smales
"You'll get nothing and like it"
I expect Bernanke will be a lip service kinda guy. The BoE seems a lot tougher and more principled than the FED.
I think we are in the recession already (or maybe 2-3 weeks from it)
GMAFB... Okay, now we're at the "HOVERING" stage. What. Ever.
"This is blood. It's red."
"It is not."
"It's obvious that it's red. Now say it's red."
"It's not red."
(grabs arm, twists) "What color is it?"
"Ooooh, owww, it's not red!"
(twists harder) "WHAT COLOR IS IT?"
"Owwwww... it's... DARK PINK!"
mai_neh, I suspect the alleged "fear" factor is a mislabelling. You will notice that the process you describe is virtually identical to the traffic slowdown process on a crowded freeway when one person touches brakes, those behind him touch brakes, and soon the traffic flow has nearly stopped, even though the original car has resumed his original speed. But the reaction had little to do with fear. Caution, maybe. It is probably more accurate to say that snowballing effect is a characteristic of fluid dynamics.
But then, a rose is a rose, even when it's not red, but dark pink.
The Fed's legal mandate is to maintain price stability while fostering low unemployment. The Fed has a second mandate to foster smooth functioning of financial markets. It has no mandate either to support the wealth of investors or (the point that needs to be made here) to punish investors and deflate bubbles. Saying the Fed is less pricipled than the BoE because the Fed has failed to do what one would like - when the Fed has no mandate to do what one would like - is to misstate the problem. Associating one's own views with "principle" is a common stance, but not helpful.
Francois,
The U.S. trade deficit has become like the U.S. Govt. budget deficit. The press reports even the slightest improvement in the RATE of deficit growth as a positive.
You see headlines like yesterday:
TRADE DEFICIT IMPROVES!
when it goes from $59.3 billion to $59.0 billion per month.
Of course, there's no way a trade deficit can improve as long as it is negative.
The vast majority of people believe what they read. Even Larry Kudlow continuously claims that the U.S. Govt. budget deficit is "shrinking" when it is rocketing above $9 trillion. He means, the rate of deficit growth is slowing.
RE: the BOE refusing to pump more liquidity into the market:
That's not a very good sign, practically guarantees another round of quality asset liquidation.
Another reason why cutting rates won't help things.
Francois
For historical reasons, any real opposition to the US ruling classes has been crushed years ago.
Outside of the blogs, there is very little opposition to what the govt says.
rich, I think your confusing "deficit" and "debt".
The top link above is also bad news for US homeowners with ARMs based on LIBOR which are about to reset. Isn't peak reset coming up real soon? LIBOR is at a nine year high and King has just said "you're on your own, pal" to everone with a LIBOR based mortgage.
Employer survey shows hiring to remain stable
MILWAUKEE -- -- Employers are predicting another stable quarter of hiring, with 27% of companies expecting to add positions in the last three months of the year, according to a survey of 14,000 U.S. companies being released today.
Nine percent of companies said they expected to reduce employment, according to the survey by Milwaukee-based global staffing firm Manpower Inc.
The numbers are on par with hiring intentions from the same quarter last year, when 28% of employers predicted they would increase hiring and 8% expected a decrease.
The numbers also show employers are holding off on making any big moves amid the ups and downs on Wall Street and a sagging housing market, said Jonas Prising, president of Manpower North America. Given the uncertainty about the economy, stable hiring is good news, he said.
In the latest report, the majority of employers -- 58% -- expected no change in hiring between October and December, while 6% of companies were unsure of their plans.
k harris 8:33, The Fed's mandate is to "maintain price stability?" So, when RE prices triple in a few years, that's "stability?" Seems to me that the Fed should have done something in 2002-3. Are you saying that the Fed shouldn't allow house prices to fall, but should be stabilized at these current unrealistic prices?
Why are people surprised?
Is it perhaps that many have forgotten or never knew that, in normal times, housing and all of the associated spending and secondary effects accounts for up to 20% of the GDP?
And that in the last few years, the housing mania increased that percentage?
And with a collapse of the housing market there must also be a corresponding drop in GDP, employment, etc?
That housing was not just Toll Brothers, but also the mortgage, finance, home improvements, furnishings, appliances, suppliers, taxing authorities, retail, lumber, etc., etc., etc.?
Still much more room to fall.
Who could have imagined?
NEW YORK -- Conventional wisdom has it that people will do everything to keep their homes. Not any more.
The proliferation of no-money-down home loans over the past few years, coupled with the current housing downturn, is giving rise to a new mentality: People will risk losing their homes while doing everything to keep their credit cards.
"This is the biggest surprise we're seeing," said Elizabeth Schomburg, senior vice president of the Family Credit Counseling Service in Chicago. "People are actually coming to us with situations where they are current on their credit cards but are in foreclosure."
Seattle Post-Intelligencer: File not found
Can't take care of tomorrow if you can't take care of today.
Hi,
I would agree with the writer, as mortgage consultant we see the slow down comming from middle of 2007.
I think this Fed will choose #2. I also think Bernanke will be a one-termer Fed Chair for doing so.
...as will the next president IMHO.
a rose is a rose.
a troll is a ...
Hi UCLA. How ur flat house prices?
I guess we're still in that mindset that "the economy will never experience a recession again" just as economists thought in the late 30s that the era of economic growth would never return.
If the Fed wants stable prices, it should put the kibosh on inflation, which means stopping increases in the money supply that exceed increases in the GDP.
But look at what the Fed is doing at its discount window. It is accepting CDOs as collateral, and supplying the banks with new money in exchange for them, thereby increasing the money supply, hence fostering inflation.
Sorry, kh, you are right about the Fed's mandate, but it abandoned that mandate a while ago, and trying to recapture it now will be about as difficult as getting virginity back.
Look at the dollar, now 79.26 and falling. Fourth day below the key support level of 80.
"Hi all,
One question to you all here.
Is the average US citizen aware of the risk of such a high external trade deficit?"
Francois:
You'll have to go to Yahoo message boards for this one. We're all above average here.
"It has no mandate either to support the wealth of investors or (the point that needs to be made here) to punish investors and deflate bubbles. "
k harris
A former Governer, McChesney I believe, said that it's the Fed's job to take away the punch bowl just when the party gets started. Certainly other CB's (Australia, various EU ...) are much better at prevented and popping bubbles.
This Fed under Greenspan became famous at fostering bubbles. And looky where we are.
Kevin
from that article.
And some analysts don't see an immediate danger to investors holding bonds backed by credit-card receivables. Cynthia Ullrich, a senior director in Fitch Ratings' asset-backed securities group, said the outstanding deals have "sufficient" cushions to accommodate an expected increase in card delinquencies in the coming months.
Sounds familiar.
The question is are things so good that lots of folks retired and are living the good life or so bad that finding and working a low wage job is so hard that folks just drop out of the labor force all together. Being part of the statistic, I favor the latter explanation.
There is a third choice not mentioned there. Consider it a blend of the second ( low wage job ) that involves fading out and flipping stuff to make a living. Some people flip homes (which is a hot topic on these boards). Some people flip other merchandise or tangible things. It could be things they obtained at estate sales, yard sales, clearance piles at the local walmart or almost anywhere. For lack of a better term, call it the 'hidden internet economy'. People who are tired of the rat race and saw a different way of making a living that didn't involve working for the man.
This is not a new economic trend, but it is something that the internet (and sites like ebay) have accelerated. We are becoming a nation of flippers and consumers, with only some of us producing tangible goods (services being less of a tangible product in this context).
How an economic downturn affects the flipper-economy will be a very interesting case study.
"Outside of the blogs, there is very little opposition to what the govt says."
No, you're just confusing the concept of "mainstream media coverage" with the concept of "existence."
McDonald's Challenges Starbucks With Cheaper Lattes
Want fried with that Latte.
Bottom line, hard to command premium prices when the commodity folks are selling the same stuff.
Sept. 11 (Bloomberg) -- When Charles Ruppert has a yen for a white-chocolate latte, he doesn't head to a Starbucks Corp. shop. He goes to a McCafe located in a McDonald's Corp. restaurant and pays 26 percent less.
Gonna be less starbucks built
"The Fed's legal mandate is to maintain price stability while fostering low unemployment."
Bernanke has also spoken very recently on trade imbalances - a situation in which the US position would be improved by a cheaper dollar. Stir that into the mix and see where the logic goes....
re wally
Bernanke has also spoken very recently on trade imbalances - a situation in which the US position would be improved by a cheaper dollar. Stir that into the mix and see where the logic goes...
To properly see where the logic goes, you have to add that the imbalance is with what he calls "developing countries".
His speech yesterday is at :http://www.federalreserve.gov/newsevents/speech/bernanke20070911a.htm
and the table of current account balances is about halfway down.
The US has a large deficit( yeah DUH!) Euroland a modest deficit. The surpluses .. China and Japan. So, I ask : weaker dollar against who(m)? They want a weaker $ against those two and there is no free market determination of those two exchange rates - Fed monetary policy cannot affect those rates. Political pressure may, hence Paulson's 18 visits to China perhaps..
-K
We are becoming a nation of flippers and consumers, with only some of us producing tangible goods (services being less of a tangible product in this context).
RayOnTheFarm
So, would Adam Smith be calling us a nation of online shopkeepers?
IMF official warns of slowing U.S. economy amid subprime crisis
Search - Global Edition - The New York Times
"Look at the dollar, now 79.26 and falling. Fourth day below the key support level of 80."
That's a bit of a concern. And sort of an interesting symmetry with oil above 80. $5 a gallon for heating oil could mean that people freeze to death this winter... Not the sort of thing that makes for good election year headlines.