Mish's Global Economic Trend Analysis |
- European Credit Stress Returns With Vengeance - Irish, Portuguese Bond Spread at All Time High - Yen Soars - Gold Hits All Time High
- NBER Likely to say "Recession Ended" July 2009; Assessing the Real Time Probability US Back in Recession
- B.J. Lawson Pulls Into Lead in North Carolina Over Democratic Incumbent
- Infrastructure Bank: Obama's Desperate Attempt to Win Midterm Democrat Votes; Stimulus Déjà Vu
Posted: 07 Sep 2010 07:56 PM PDT The risk aversion trade was back in play today with treasuries, the dollar, the Yen, and gold all rallying while the Euro and European government bonds (except German Bunds) were under significant pressure. Please consider Stocks, Irish Bonds Drop, Gold, Yen Rally on Europe Concern Stocks slid, while Greek, Portuguese and Irish bonds tumbled, gold rose to a record and the yen surged to a 15-year high versus the dollar on concern Europe's debt crisis will worsen. U.S. and German bonds rallied.Another name for the risk aversion play is the deflation play. There is plenty of room for the dollar, treasuries, gold, and German government bonds to rally while the rest of the commodity complex drifts lower. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Posted: 07 Sep 2010 12:03 PM PDT One problem with the NBER recession dating analysis is that it is months and sometimes years late in making its assessments. Marcelle Chauvet, professor of economics at the University of California addresses those shortfalls in an interesting article called Real Time Analysis of the U.S. Business Cycle Although careful deliberations are applied to determine turning points, the NBER procedure cannot be used to monitor business cycles on a current basis. Generally, the committee meets months after a turning point (that is, the beginning or end of an economic recession) has occurred and releases a decision only when there is no doubt regarding the dating. This certainty can be achieved only by examining a substantial amount of ex post revised data. Thus, the NBER dating procedure cannot be used in real time. For example, the NBER announced only in July 2003, twenty months after the fact, that the 2001 recession had ended in November 2001.The Beginning and End of the 2007-2009 Recession Inquiring minds are reading the Center for Research on Economic and Financial Cycles article dating The Beginning and End of the 2007-2009 Recession The Figure shows the real time probabilities of recession from the Dynamic Factor Model with Regime Switching (Chauvet 1998). The probabilities indicate that the U.S. recession started in December 2007.Review of the Odds Over Time - To Date Marcelle Chauvet updates the odds we are currently in recession in his blog Real Time Probabilities of Recession U.S. Recession ended in June/July 2009 That is a partial table. Marcelle Chauvet shows the odds starting in October 2007. Notice how the odds the US is currently in recession have risen from 2.5% in May to 24.7% in June. Odds Higher Today Than June We will see the odds for August in a couple months. Those odds will be higher than today because of all the recent grim economic data. Bear in mind Chauvet posts the odds we are already in recession. When the current odds are soaring at an amazing rate (which they are), the odds of a going into recession at a future time, will be much higher. Some don't see it that way. Here is a snip is from Bloomberg as discussed in Nonsense from NBER on Odds of Double-Dip Harvard University Professor Martin Feldstein, who sits on the Business Cycle Dating Committee of the National Bureau of Economic Research says "There's still a significant risk, maybe one chance in three, that there will be a double dip." Fellow panel member and Princeton University Professor Mark Watson said those odds are "way too high" and puts them instead at "one in 10 or maybe one in 20."Double-dip odds of one-in-10 or one-in-20? When the odds are roughly 1-in-4 we are already in recession as of June? If Marcelle Chauvet's model is accurate (and assuming the recession is over, his model is the most realistic model I have seen to date), then the above snip was indeed nonsense, not from the NBER per se, but rather from one or two economists who sit on the panel, most notably Princeton University Professor Mark Watson. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B.J. Lawson Pulls Into Lead in North Carolina Over Democratic Incumbent Posted: 07 Sep 2010 10:47 AM PDT On Sunday, I received an email from B.J. Lawson saying he has pulled into a small lead over incumbent David Price. B.J. Writes ... Dear Friends,Sentiment has indeed shifted. I am starting to expect a blowout in the midterm elections as Voters Strongly Favor Non-Incumbent GOP Newcomers in Midterm Elections. B.J. Lawson Profile Inquiring minds will want to check out where Lawson Stands on the Issues
Those are highlights. Click on the above link for details. David Price, his Democratic congressional opponent in the upcoming election admits to not reading or understanding health care legislation before voting. Lawson says "Passing legislation that is not fully understood, or understandable, is simply legislative malpractice. We must demand better of our elected representatives if we are to restore the trust and legitimacy of our federal government." Charles Goyette Interview Please click on this link to download and play this B.J. Lawson Interview with talk show host Charles Goyette. Money is always welcome, but so is your time and energy! Please click here to Volunteer Time or Services to B.J. Lawson. Please do what you can to support B.J. Lawson. He is of a rare Ron Paul mode, and we cannot afford to let any opportunities to elect such candidates slip through the cracks. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Infrastructure Bank: Obama's Desperate Attempt to Win Midterm Democrat Votes; Stimulus Déjà Vu Posted: 06 Sep 2010 11:40 PM PDT The president's pandering to public unions has backfired and now he wants to create an "infrastructure bank" which would be run by the government but would pool tax dollars with private investment. The New York Times reports Obama Offers a Transit Plan to Create Jobs. President Obama, looking to stimulate a sluggish economy and create jobs, called Monday for Congress to approve major upgrades to the nation's roads, rail lines and runways — part of a six-year plan that would cost tens of billions of dollars and create a government-run bank to finance innovative transportation projects.Mish Comment: What a bunch of crock. If the president was genuinely interested in keeping costs down he would ask Democrats to scrap Davis Bacon and collective bargaining. The White House did not offer a price tag for the full measure or say how many jobs it would create. If Congress simply reauthorized the expired transportation bill and accounted for inflation, the new measure would cost about $350 billion over the next six years. But Mr. Obama wants to "frontload" the new bill with an additional $50 billion in initial investment to generate jobs, and vowed it would be "fully paid for." The White House is proposing to offset the $50 billion by eliminating tax breaks and subsidies for the oil and gas industry.Mish Comment: If the bill was fully paid for the the President ought to have the balls to say how. In simple terms he is either disingenuous or a blatant liar. Is there not even $50 billion in military spending he could cut? Nothing? After months of campaigning on the theme that the president's $787 billion stimulus package was wasteful, Republicans sought Monday to tag the new plan with the stimulus label. The Republican National Committee called it "stimulus déjà vu," and Representative Eric Cantor of Virginia, the House Republican whip, characterized it as "yet another government stimulus effort."Mish Comment: Schwarzenegger and Mayor Bloomberg both have no backbone. Bloomberg panders to unions and until recently Schwarzenegger refused to play hardball. All there are hoping for a large share of the transit plan. There is no shortage of projects in search of money. The problem, analysts say, is that Congress, which would create the bank, is not known for its ability to single out strategic priorities for growth. Instead, it traditionally builds broad support by giving a little something to everybody — Montana, for instance, would get a small amount of Amtrak money in return for its support for improvements along the Northeast corridor.Mish Comment: There is never a shortage of ways Congress can and will waste taxpayer money. This will not change unless and until there is balanced budget amendment. Until taxes have to be raised to fund projects, Congress and any Business Tax relief In addition to the Infrastructure Bank, Obama to Propose Business Tax Relief, Spending to Spur Growth Obama tomorrow will announce an expanded tax incentive to encourage business investment, an administration official said on condition of anonymity. Obama also will urge Congress to extend permanently and expand a research-and-development tax credit for businesses, costing about $100 billion over a decade. He began the rollout of initiatives yesterday in Milwaukee, calling for $50 billion in the first of a six-year program to fix roads, railways and runways and modernize the air-traffic control system.Things are looking very bleak for Obama in the midterm elections, and even Democrats are starting to shy away from many of his policies, including healthcare. For more on Labor Day pandering, please see Labor Day Insanity from Clinton's Secretary of Labor Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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