Mish's Global Economic Trend Analysis |
- Tremendous News: Wisconsin Senate Passes Collective Bargaining Bill with Democrats in Hiatus in IL; Significant Step Towards Abolishing Slavery Taken
- Five Years of Housing Supply and 5 or 6 Trillion Dollars of Additional Pain
- Ceridian Index Positive 15th Month, but Slowing, Suggesting "Tepid Growth"
- Bloodstained Property Map and Trampled Rights; China's Population: 1.3 Billion; Construction Underway: 43 Billion Square Feet
Posted: 09 Mar 2011 06:16 PM PST Just moments ago came excellent news from the state of Wisconsin. Republicans passed a law greatly restricting collective bargaining of public unions. In a legislative maneuver to outflank Democrats cowardly hiding in Illinois, Republicans stripped the legislation of all budgetary items. As a result, a quorum of senate members need not be present to vote and the bill sailed through. CNN Politics has the full story and a video in Wisconsin Senate passes union limits despite Democratic walkout Wisconsin's Republican-led state Senate passed Gov. Scott Walker's proposed restrictions on collective bargaining for public employees Wednesday, getting around a Democratic walkout by stripping financial provisions from the bill.Major Step Taken to Abolish Union Slavery I commend governor Walker, the Wisconsin senate, and everyone brave enough to tell public unions to "go to hell" Indeed it takes bravery because of coercion, thuggery, vote buying, and extortion by public unions. Regardless of Walker's motivation, abolition of slavery is always and everywhere a tremendous idea. In case you do not understand how votes for collective bargaining is a vote for slavery, please read Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You! Congratulations to Governor Walker, the state of Wisconsin, and to all the partially freed slaves for this major step in the right direction. More work remains. Please send this link to Stephen Colbert and Bill Maher because both are hopelessly ignorant as to what this bill is really about. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Five Years of Housing Supply and 5 or 6 Trillion Dollars of Additional Pain Posted: 09 Mar 2011 04:16 PM PST In a Bloomberg Interview on Housing, Michael Feder, chief executive officer of Radar Logic Inc. says there may be as much as 5 years' worth of housing supply. Feder, speaking with Matt Miller and Carol Massar on Bloomberg Television's "Street Smart," also discusses the Obama administration's efforts to prevent foreclosures and plans to overhaul Fannie Mae and Freddie Mac. If the inline video below does not play, please clock on the above link. Select Feder Quotes: "We are terribly concerned with what is ultimately the pain hast to be taken. The number could approach aggregate mortgages 5 or 6 trillion dollars. The question is how much of that is overhang and how much of it has to be written off." "NAR says based on inventory and absorption rates we have little over 8 months supply. The reality which you add up all the houses for sale, houses vacant not yet on the market, houses underwater, seriously delinquent, in foreclosure, almost in foreclosure, the number is closer to 60 months, 5 years" "Who is going to absorb the foreclosed homes?" I agree with Feder's analysis, and that is why I have stated that even if home prices have bottomed in some areas they are not going to shoot up anytime soon. There is no need to rush into buying a house in my opinion. It's an excellent video. Please play it. Addendum: This is a dated video The timestamp I saw was more recent. However, I still believe the analysis is correct. Mish Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Ceridian Index Positive 15th Month, but Slowing, Suggesting "Tepid Growth" Posted: 09 Mar 2011 10:05 AM PST The Ceridian shipping index measures real-time trends in diesel fuel usage and correlates well "over time" with Industrial Production. Month-to-month analysis is subject to much error. For Example, Ceridian's economist was looking for a weak Christmas season following its "Recovery Time Out" report last October. That report was negated by a December forecast suggestive of a strong recovery. In turn, the strong recovery forecast has been negated by weak January and February numbers. Today's report reflects February numbers. Please consider February PCI Continues to Signal Slow Growth The Ceridian-UCLA Pulse of Commerce Index™ (PCI), a real-time measure of the flow of goods to U.S. factories, retailers and consumers, fell 1.5 percent during the month of February. Coupled with the 0.3 percent loss from January, this latest data eliminates the strong gain (1.8 percent) experienced in December 2010. However, February marks the fifteenth straight month of year over year growth indicating that economic recovery, while fragile, remains underway.Seasonally Adjusted Ceridian Index The above chart suggests an inventory replenishment overshoot culminating with a strong Christmas season. Now we are back to below trend growth for the last couple months. Over the past two months, forecasters have been marking up their expectations for 2011 and 2012. The 51 Wall Street Journal forecasters' predictions for 2011 Q1 GDP growth range between 2% and 5.5%, with 90% of the estimates targeting growth in the first quarter at 2.9% or higher. Weakness in the PCI over the first two months of this year suggests that GDP for the first quarter will come in below consensus, near the lower end of the range of current WSJ forecasts. For the year, the index continues to suggest GDP growth to be in the "normal" historical range of about 3%, which will likely drive continued modest growth in employment but not back to the peak levels attained in late 2007.I am entertaining and have been for some time, the idea that recent hiring may be nearing a crest. Employers, especially retailers were light on employees and ramped up in fourth quarter of 2010. At the beginning of the year they did not lay off as many as normally expected boosting seasonally adjusted hiring. Now it remains to be seen how long that recent hiring lasts. Bear in mind it takes about 125,000 jobs a month just to keep the unemployment rate flat, all things being equal. Yet all things are not equal, the participation rate had been falling like a rock. Without millions dropping out of the labor force, the unemployment rate would be close to 12%, not the reported 8.9%. I expect to see the unemployment rate rise if discouraged workers start seeking jobs and perhaps even if they don't. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 08 Mar 2011 11:52 PM PST The Financial Times published an interesting article a couple days ago on the concept of growing democracy in China. Despite a few anecdotes in the article, the idea of a large or growing democracy in China is unfounded given Chinese central authority trampling of human rights and property rights, on top of having the world's largest central planning scheme. However, what most caught my eyes was the sheer amount of real estate malinvestment, given wages are grossly out of alignment with the costs to purchase the units now under construction. Please consider China: A democracy is built. In many ways, property is the focus of the story of modern China. The double-digit economic growth of the past decade has been driven in part by the real estate explosion in more than 100 cities that has accompanied the process of industrialisation. It is also at the root of an apparent "super-cycle" of rising commodity prices that has lasted several years. Some observers see property as the country's main economic vulnerability because of the potential for the growth of a bubble – "a treadmill to hell", as Jim Chanos, the American investor, has put it.Unsustainable Math Except for a few anecdotes of "victory" the article is brutally mistitled. However, it is well written and researched. It is worth a closer look to see what it took in terms of the trampling of lives needed to create China's boom. Also note that second graph. China is approaching 4,000 million square meters of construction, most of it residential. That is approximately 43 billion square feet of ongoing construction, for a population of 1.3 billion people of which only a very tiny percentage can afford to buy that construction. Is it any wonder China has so many vacant homes, offices, malls, and even cities. In case you missed it, please consider Amazing Satellite Images Of The Ghost Cities Of China on the Business Insider. "There's city after city full of empty streets and vast government buildings, some in the most inhospitable locations. It is the modern equivalent of building pyramids. With 20 new cities being built every year, we hope to be able to expand our list going forward."More Vacant City and Reckless Credit Expansion Stories
China bulls insist this is sustainable. The construction numbers alone vs. the overall population shows otherwise, even if the Chinese could afford to buy those units. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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