Central Perk

luni, 4 octombrie 2010

Small Business Relief and Backyard Chats on the Economy

Economy and Jobs Agenda
Monday, October 4, 2010

The Week In Economy and Jobs

Last weeek, President Obama signed the Small Business Jobs Act into law. In addition to the eight small business tax cuts the President has already signed into law, this bill includes eight more which will accelerate more than $55 billion in tax relief over the next year to businesses across the country. Capital gains taxes will be completely eliminated for key investments in small businesses driving capital to as many as one million small firms across America. Later in the week, the President hit the road to talk to middle class families in New Mexico, Iowa and Virginia about their economic concerns.

In case you missed it, be sure to check out the first edition of the White House White Board video series. Council of Economic Advisers Chair Austan Goolsbee explains the fight over extending tax cuts for the middle class.

Highlights

Creating a Fair Playing Field for American Businesses Overseas
October 4, 2010
Victoria Espinel, U.S. Intellectual Property Enforcement Coordinator, explains efforts to enforce American intellectual property rights as the President seeks to dramatically expand American exports.

Community Colleges: The Backbone of Our Public Workforce System
October 3, 2010
Jane Oates, Assistant Secretary for the Employment and Training Administration at the Department of Labor, explains why those focused on getting Americans to work are excited about the White House Summit on Community Colleges.

Weekly Address: Solar Power & a Clean Energy Economy
October 2, 2010
The President points to a revolutionary new solar plant that will employ 1,000 people and power 140,000 homes. The plant is possible because of the President’s investments in the clean energy economy, which Congressional Republicans want to eliminate.

If We’re Serious about Jobs, Don’t Stop Job Creation
October 1, 2010
NEC Director Lawrence Summers explains how a partisan minority in Congress has put up to 100,000 jobs in jeopardy, and what can be done about it.

White House White Board: CEA Chair Austan Goolsbee Explains the Tax Cut Fight
September 29, 2010
Introducing White House Whiteboard, in which one of our key players on the White House team will cut through the political back-and-forth you hear every day and break down an issue affecting American families into simple, understandable terms.

A Living-Room Discussion with Middle Class Families
September 28, 2010
A look at Vice President Biden's visit to the home of Bob and Lorie Cochran in Manchester, New Hampshire for a discussion on the economy and other issues that are important to middle class families.

The President on Our Veterans & Choosing Priorities in Albuquerque
September 28, 2010
Meeting with Andy and Etta Cavalier at their home in Albuquerque, New Mexico, President Obama spoke openly on the economy with area families the Cavaliers’ front yard.

President of the Small Business Where GOP Announced "Pledge" Applauds Small Business Jobs Bill
September 28, 2010
The owner of Tart Lumber, where Republicans announced their “Pledge to America,” comes out in support of the Small Business Jobs Act the President just signed -- and that Republicans almost universally voted against.

Keep Putting Them on the Job!
September 27, 2010
A look at the immensely successful Temporary Assistance for Needy Families (TANF) Subsidized Jobs program -- and what will happen if it is allowed to end prematurely.

President Obama Signs Small Business Jobs Act - Learn What's In It
September 27, 2010
You may have heard about the Small Business Jobs Act -- here's what's in it.

Weekly Address: Crossroads on the Economy
September 25, 2010
The President lays out the choice between his plan to keep our economy moving forward, and the agenda put out by Republicans in Congress taking us backward to the special interest economy that created this mess.

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Daily Snapshot: Behind the Scenes Photos from September

Your Daily Snapshot for
Monday, October 4, 2010

Behind the Scenes Photos: September 2010

Take a behind-the-scenes look at the month of September. See President Obama meet with his national security staff in the Situation Room, toss a ball for Bo in the Rose Garden and work on a speech in the Oval, plus many more. See more photos.

President Barack Obama and Bo, the Obama family dog, walk along the Colonnade of the White House, Sept. 10, 2010. (Official White House Photo by Pete Souza)

Today's Schedule

All times are Eastern Daylight Time

10:00 AM: The President receives the Presidential Daily Briefing

11:30 AM: The President meets with senior advisors

12:30 PM: Women’s Entrepreneurship Event Opening Session with Valerie Jarrett

1:00 PM: Briefing by Press Secretary Robert Gibbs

1:30 PM: President's Economic Recovery Advisory Board: Workforce Training, Job Market, and Skills for America’s Future

1:45 PM: The Vice President delivers remarks at a rally for Governor Ted Strickland

2:00 PM: The President meets with the President's Economic Recovery Advisory Board (PERAB)

3:30 PM: Women’s Entrepreneurship Event Closing Session with SBA Administrator Mills

5:30 PM: The Vice President attends an event for Governor Ted Strickland

Indicates Events that will be livestreamed on WhiteHouse.gov/live.

Seth's Blog : Demonstrating strength

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Demonstrating strength

Apologize

Defer to others

Avoid shortcuts

Tell the truth

Offer kindness

Seek alliances

Volunteer to take the short straw

Choose the long-term, sacrificing the short

Demonstrate respect to all, not just the obviously strong

Share credit and be public in your gratitude

Risking the appearance of weakness takes strength. And the market knows it.

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duminică, 3 octombrie 2010

Mish's Global Economic Trend Analysis

Long-Wave, Fixed Investment, Inventory, and Demographic Cycles all Downwardly Converging
Sunday Funnies 2010-10-03 World's First Bureaucrat; Cobb County Georgia Spends $78,000 on Mules Jack and Jill, has Second Thoughts, Finds No Buyers
California Legislature and Schwarzenegger Agree to Kick the Can; Corporations Vote with their Feet
Government Share of Personal Income Tops 30%

Long-Wave, Fixed Investment, Inventory, and Demographic Cycles all Downwardly Converging

Posted: 03 Oct 2010 11:06 PM PDT

Inquiring minds are reviewing a chart of Total Loans and Leases and also a chart of Quarterly Real Final Sales of Domestic Product for clues about the strength of the alleged recovery.

After a review of the charts, my friend "BC" shares some of his thoughts regarding the converging Long-Wave, Fixed Investment, Inventory, and Demographic Cycles. The possibilities are not pretty.

Real Final Sales of Domestic Product

Year	Annualized QoQ	Annualized YoY
Q2 '08	+1.10%	+1.80%
Q3 '08	-3.90%	+0.15%
Q4 '08	-4.60%	-1.93%
Q1 '09	-3.90%	-2.86%
Q2 '09	+0.22%	-3.07%
Q3 '09	+0.41%	-2.00%
Q4 '09	+2.07%	-0.33%
Q1 '10	+1.06%	+0.94%
Q1 '10	+0.90%	+1.11%
Avg.	-0.74%	-0.69%
Avg Since Q1 '09	+0.13%	-1.04%

Total Loans and Leases at Commercial Banks

My friend "BC" writes ....

US GDP Poised to Contract

The trend rate of bank lending and money supply ex incremental annualized government spending implies that the private sector probably decelerated to around 0% or slightly negative early in Q3 and is poised to contract again hereafter.

Consider what real final sales/demand would have been had the government not borrowed and spent 30% of private GDP over two years.

The average trend rate of real final sales since the secular '00 peak is 1.6% vs. the average long-term trend rate of 3.4%.

This means that the US economy has experienced a 14-15% decline (24-25% per capita) in real final sales/demand below what would have otherwise occurred had the long-term trend rate continued from the secular peak. Were the trend to persist through the rest of the decade, as the secular LW (Long-Wave) debt-deflationary precedent implies, the loss of US real final sales/demand from the long-term trend rate will be 30% (~40% per capita), which is likely to be the level at which the US labor market underutilization rate eventually reaches.

Downwardly Converging Cycles

Moreover, we are likely completing a weak Kitchin Cycle (inventory rebuilding) as a part of the simultaneously downwardly converging Kondratiev Cycle (Long-Wave), the Juglar Cycle (fixed investment), and the Kuznets Cycle (demographic swings).

If so, the post-'00 trend rate will likely decelerate well below the 1.6% rate to around the 1% rate or lower, implying the risk that real final sales/demand will be 35-40% (as much as 45-50% per capita) below the long-term pre-'00 trend rate by the late '10s or early '20s.

Note that bank loans grew 9%/yr. (5-6% in GDP deflator terms) from after WW II to the absolute peak in '08 and 7% from '74 and '82 (4-5% deflated), whereas real final sales grew 3.2% from after WW II to the peak in '08 and 2.9% from '74 and '82.

A deceleration of real final sales/demand of 35-40% or so below the long-term trend implies a similar scale of decline in bank loans of 35-40% (-4%/yr.) from the secular '08 peak to converge by '20 with the longer-term trend growth of final sales from the onset of the secular reflationary phase in the early '80s.

As mentioned earlier, the loss of growth of final sales/demand per capita from the secular peak will be closer to 50%, which is approximately the scale of decline per capita likely to have occurred from the '85 secondary peak for US oil production by '20.

The loss of bank loans and final sales/demand, with total government /GDP of 36-37% (and 56-57% of private GDP), implies a combined loss of GDP and resulting government receipts totaling no less than 8% of GDP or $1.1T/yr. avg. in federal deficits for the decade just to keep nominal GDP from contracting.

Loan Growth and PE Contraction

Growth of bank loans, final sales, and thus GDP and corporate earnings will have decelerated from the 6-7% secular bull and long-term trend to 4% by 2020. The implication for stock prices given the tendency for the P/E to contract and earnings to track GDP is for the SPX to fall to the 300s-400s at some point.

Unfortunately, by the late '10s to early '20s, the doubling or more of the US debt held by the public will have a net interest burden reaching and then surpassing 25% of government receipts (absent large tax increases and/or cuts in spending).

The larger the deficits in the meantime, the sooner the US government will reach the fiscal day of reckoning.

Please note that the above analysis is not a prediction that the S&P 500 will fall to 300. Many things can happen along the way.

However, it is important to keep an open mind on these things.

The S&P 500 certainly could fall that low. Moreover, were it to do so, it would be consistent with the convergence of the various cycles as described above, and it would also be consistent with Japan's Two Lost Decades.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Sunday Funnies 2010-10-03 World's First Bureaucrat; Cobb County Georgia Spends $78,000 on Mules Jack and Jill, has Second Thoughts, Finds No Buyers

Posted: 03 Oct 2010 08:12 PM PDT

In a belated edition of "Sunday Funnies" please consider Mules Jack and Jill  run up $78,000 bill

Cobb County taxpayers became the proud owners of two mules in August 2009. County officials bought the animals to put them to work on a proposed historic farm, a living museum where schoolchildren would learn how farmers tilled the land a century ago.

But Cobb put the cart before the horse. Or rather, the mules before the farm.

Several key steps in the development of historic Hyde Farm had not been completed by the time the county bought the mules. More than a year later, some are still not resolved.

In the meantime, Cobb taxpayers have footed the bill for $78,000 on the mules in the past year — including purchase price, a caretaker, food and other expenses. With the cost rising, the county has been trying to sell the mules since June but has not found a buyer.

The problems don't surprise the Alabama farmer who sold the animals to Cobb officials.

"Most of that bunch, you know, they didn't know a mule from a donkey," said Terry LeDuke of Vincent, Ala.

While $78,000 is a tiny fraction of the county budget, that amount could have covered the price of building a medium-size playground or a pavilion restroom structure at a county park. And the episode demonstrates how poor planning can lead a government to get in over its head.

Once purchased, the mules quickly started racking up other expenses that now stand at $63,490, the largest of which was $25,488 to pay a caretaker to feed, groom and exercise the animals. The caretaker, Cindy Cason, is the wife of a county transportation department employee, Randy Cason.

County workers also spent 701 man hours — an estimated cost of $15,000 in taxpayer money — to work on four different mule-related projects.

For three months, county staffers have been trying to find a new home for Jack and Jill. They are advertising them on eBay, Craigslist and several specialty mule websites but are not getting good offers for them, Canon said.

LeDuke, the Alabama man who sold Cobb the animals, said it's a bad time to sell mules. "Ain't no market for them. Right now, it's winter coming on and somebody's got to feed them all winter."

LeDuke told the county he'd be willing to buy the mules back for $3,000 — less than half of what he sold them for.

When LeDuke learned how much Cobb had spent on his former animals in the past year, he said, "Good God almighty ... That's a bunch of [expletive]."

Archeologists Unearth Bureaucrat

It's very difficult to top that story but in honor of government bureaucrats as well as government mules and jackasses, here is this week's cartoon feature.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

California Legislature and Schwarzenegger Agree to Kick the Can; Corporations Vote with their Feet

Posted: 03 Oct 2010 06:11 PM PDT

The budget impasse in California is over. The governor and the legislature agreed to a "compromise" that does essentially nothing and solves no long-term problems.

Please consider California Budget Deal Ends Impasse With Vote Expected in Days

California Governor Arnold Schwarzenegger and top lawmakers came up with a compromise to close a $19.1 billion deficit and give the state a budget, ending a record three-month impasse with a vote expected next week on the spending plan.

The accord doesn't raise taxes, as sought by Democrats, nor does it dismantle the state's welfare system, proposed by Republicans, the leaders said yesterday. Passage of the plan would clear the way for Treasurer Bill Lockyer to borrow about $10 billion on Wall Street by issuing short-term notes needed to pay bills until tax revenue comes in later in the year.

Legislative aides briefed on the details said last week's framework cuts spending by around $8 billion, less than the $12 billion the governor had proposed, and holds education spending about the same as last year's level, around $49 billion. The framework also would suspend for two years a tax break that let companies deduct part of net operating losses in a previous year from current-year taxes, said the two people briefed on it.

Nothing was solved by this "compromise". The state's massive welfare system is still intact, the massive pension problem was shoved aside, and the bloated state prison system was not even discussed.

Instead, the state will borrow $10 billion of the $19 billion it needs, hoping the revenue comes in later. It won't. California will be back at this next year with a different legislature and governor in place.

Perhaps democrats can win the Governor's office and enough seats in the legislature to raise everyone's taxes enough to support more free give aways to unions, illegal aliens, and other groups with their hands in taxpayer pockets.

Corporations Vote With Their Feet

Wealthy taxpayers and corporations are not bothering to wait for the vote. They have had enough. Nevada News and Views reports Companies Fleeing California For Utah Over Confiscatory Tax Rate

Computer software giant Adobe, computer game monster EA Games, and Internet auction king ebay are abandoning California to set up shop in Utah. Why? California's horrid business climate and high taxes.

Adobe Systems, maker of a suite of graphics programs such as Adobe PDF, Illustrator, Photoshop, and InDesign, have announced that they are building a $100 million facility in either Salt Lake City or in nearby Utah County, Utah. The facility will bring thousands of jobs to Utah over the next few decades.

In May the Internet auction company ebay also announced a major new facility to be built in Salt Lake City. The $287 million data center will also bring hundreds of new jobs to the Bee Hive State.

Not to be forgotten, games maker Electronic Arts opened its new facility in July in Salt Lake City where around 100 employees are already at work.

These companies fleeing California's horrid business climate are not alone. There has been a steady flow of businesses out of California for the better part of a decade. As California's political morass worsens, as its budget woes increase, and as her politicians are proven incapable of making the hard budgetary decisions to take power from unions and chop unnecessarily lavish social programs, the state's jobs are bleeding out. California is an a freefall the end of which is still unseen.

It should be noted that Utah is a right-to-work state.

The article mentions by name, about 70 companies that have left California. Many of the names are highly recognizable.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Government Share of Personal Income Tops 30%

Posted: 03 Oct 2010 09:29 AM PDT

On Friday, the Wall Street Journal reported US Stocks Rise, Boosted By Upbeat Income, Spending Data

The U.S. Commerce Department said consumer spending rose 0.4% in August after rising the same amount in July. Incomes, meantime, increased by 0.5% in August after a 0.2% rise in July. The numbers were slightly better than expected. Economists surveyed by Dow Jones Newswires had forecast spending and income would both climb by 0.3% in August.

Not only is the data from August, but raw numbers without an explanation as to what really happened paints a very misleading picture.

Jed Graham at the Capital Hill Blog explains how Government Propped Up Personal Incomes In August

News accounts are highlighting the fact that the 0.5% increase in personal income in August was the biggest of the year. But the data weren't evidence of a healthy and sustainable private-sector expansion.

Government transfer payments accounted for 60% of the increase, and the government share of personal income crept further into record territory at just over 30%. That's up from just above 25% before the recession.

Transfer payments include Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps - now called Supplemental Nutrition Assistance Program (SNAP) , medical insurance (Medicaid and Medicare), and housing assistance.

Transfer payments are social schemes to redistribute the wealth. However, given the US is running an enormous deficit, one can argue these schemes are funded by the government printing money and giving it away.

Regardless of how you look at it, government share of personal income at 30% is outrageous. Moreover, more than half of that 30% is transfer payments, an equally outrageous happening.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Seth's Blog : Your ecosystem

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Your ecosystem

The tropical acacia tree has hollow thorns, nectar and protein-producing leaves. All perfect for the stinging ants that live inside the thorns and eat the nectar and the leaves.

And what's in it for the tree? The ants keep birds and other pests away, as well as killing off small shoots that might grow into competitive trees (ht: Jerry Coyne).

The ecosystem combines two elements that can't live without one another. Each produces something the other needs.

Too often, businesses (and freelancers) focus on making it on their own. In fact, the secret of being indispensable is making it together.

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luni, 4 octombrie 2010

Small Business Relief and Backyard Chats on the Economy

Daily Snapshot: Behind the Scenes Photos from September

Seth's Blog : Demonstrating strength

Demonstrating strength

More Recent Articles

duminică, 3 octombrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Your ecosystem

Your ecosystem

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luni, 4 octombrie 2010

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