Central Perk

luni, 25 octombrie 2010

My Turn to Answer Your Questions

Good afternoon,

As a Senior Advisor to the President, I spend a lot of time talking to President Obama about the issues that affect all Americans.

But tomorrow I want to try something a little different. I’m hosting a live chat with Americans from around the country to answer questions about the economy, health care, energy, education or really whatever is on your mind.

Can you join me at 1 p.m. EDT?

I’ve been in the White House with President Obama from Day One, and I know how important it is to the President to understand the concerns of the American people. That’s why he travels around the country meeting with families and small businesses and reads ten of your letters every day. And it’s why we do regular online discussions like Tuesday Talks and Open for Questions.

Over the past few weeks, Austan Goolsbee, Chairman of the Council of Economic Advisers, and Elizabeth Warren, who is leading the effort to get the Consumer Financial Protection Bureau off the ground, have taken some time to answer your questions. Now it’s my turn.

So, I hope you’ll join me tomorrow, and I’ll do my best to answer as many of your questions as I can.

I’m looking forward to talking to you.

Sincerely,

David Axelrod
Senior Advisor to the President

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Daily Snapshot: Helping Small Businesses Get Back on Their Feet

Your Daily Snapshot for
Monday, October 25, 2010

Photo of the Day

President Barack Obama greets Mieraye Redmond, 7, on the sidewalk next door to the home where he met with area families in Seattle, Wash., Oct. 21, 2010. Mieraye gave the President a letter she had written to him at school and attached it to a paper bouquet of flowers that she also made and colored. Sen. Patty Murray is at right. (Official White House Photo by Pete Souza)

Today's Schedule

Today, the President will travel to Rhode Island to tour the facilities of American Cord & Webbing in Woonsocket, Rhode Island, and deliver remarks to workers. Though American Cord & Webbing was hit by the economic downturn and forced to lay off some workers in 2009, they invested in new product development to pursue new customers and over the course of the past year they have brought all of their former laid-off employees back. American Cord and Webbing currently has 47 employees and plans on hiring more. And last month, the company was approved for an SBA loan that will help the company expand its Woonsocket facility, going from 30,000 sq. ft. to 43,000 sq. ft. by next spring.

All times are Eastern Daylight Time

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

10:40 AM: The President meets with senior advisors

11:00 AM: The President meets with Secretary of State Clinton

11:00 AM: The Vice President delivers remarks at the International Association of Chiefs of Police First General Assembly

2:30 PM: The President departs the White House en route Andrews Air Force Base

2:45 PM: The President departs Andrews Air Force Base en route Warwick, Rhode Island

3:55 PM: The President arrives in Warwick, Rhode Island

4:15 PM: The Vice President attends an event for Congressional candidate Ann McLane Kuster

4:40 PM: The President tours American Cord & Webbing Co. Inc

4:55 PM: The President delivers remarks to workers (audio only)

6:30 PM: The President delivers remarks at a DCCC reception

7:30 PM: The President delivers remarks at a DCCC dinner

8:15 PM: The President departs Warwick, Rhode Island en route Andrews Air Force Base

9:25 PM: The President arrives at Andrews Air Force Base

9:40 PM: The President arrives at the White House

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

Seth's Blog : Organizing for joy

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Organizing for joy

Traditional corporations, particularly large-scale service and manufacturing businesses, are organized for efficiency. Or consistency. But not joy.

McDonalds, Hertz, Dell and others crank it out. They show up. They lower costs. They use a stopwatch to measure output.

The problem with this mindset is that as you approach the asymptote of maximum efficiency, there's not a lot of room left for improvement. Making a Chicken McNugget for .00001 cents less isn't going to boost your profit a whole lot.

Worse, the nature of the work is inherently un-remarkable. If you fear special requests, if you staff with cogs, if you have to put it all in a manual, then the chances of amazing someone are really quite low.

These organizations have people who will try to patch problems over after the fact, instead of motivated people eager to delight on the spot.

The alternative, it seems, is to organize for joy. These are the companies that give their people the freedom (and yes, the expectation) that they will create, connect and surprise. These are the organizations that embrace someone who makes a difference, as opposed to searching for a clause in the employee handbook that was violated.

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duminică, 24 octombrie 2010

Mish's Global Economic Trend Analysis

Massive Inflation in China, US Inflation Nonexistent
California Cut 37,000 Government Jobs in September; Much More to Come
German Economy Minister Accuses US of Currency Manipulation

Massive Inflation in China, US Inflation Nonexistent

Posted: 24 Oct 2010 06:51 PM PDT

Those looking for massive inflation cannot find it in the US where credit contraction is still underway. However, one can find massive inflation in China, where increases in money supply and credit run rampant, and property and food prices soar.

Please consider China Hides Rampant Inflation in Money Binge: Patrick Chovanec

High-end property prices in dozens of Chinese cities have doubled during the global financial crisis. Sales of gold bars have done the same this year. Fine pieces of jade are selling at $3,000 an ounce, up 50 percent in the past couple of months, while packets of certain types of dahongpao tea are going for $30,000 a kilogram. Art and wine auctions in China are pulling in record prices, while the Shanghai stock market surged 8.5 percent last week to the highest level in almost six months.

If it seems like there's a lot of money sloshing around the Chinese economy, that's because there is. Over the past two years, M1 expanded by 56 percent, M2 by 53 percent. Currently, even with much-touted "cooling measures," both are still growing at an annual rate of about 20 percent.

...most people in China seem content to believe their country has found a fantastic new formula for prosperity.

In reality, there is rampant inflation in China. It's just showing up in asset prices. The new money that was created entered the economy as loans, mainly to fund investment in fixed assets. When it finally reached consumers, they bought tangibles, like property, instead of spending on consumer goods.

Chinese Inflation Shows Up in Food and Property Prices

The New York Times reports Food and Property Prices Drive China's Concern Over Inflation

China's roaring economy slowed in the third quarter, rising at an annual rate of 9.6 percent after the government took steps to prevent overheating, according to data released Thursday. But inflation last month hit its highest rate in nearly two years.

The government said the consumer price index, the broadest measure of inflation, rose 3.6 percent from the previous September. It was the highest rate in China since 2008, largely because of food prices, which rose 8 percent last month.

Interest rates on savings deposits in China had recently fallen to about 2.25 percent a year before the decision Tuesday. (The government-mandated rate is now 2.5 percent.) But inflation has risen steadily this year, which means bank depositors are essentially facing a negative interest rate return.

And yet, things may be even worse than the consumer price index suggests. A growing number of analysts say inflationary pressure is stronger than the price index indicates, because it is heavily weighted toward food — particularly pork prices. Rising energy, property and transportation costs are not as significant a factor in the index. And even the price increases of many food items — aside from pork — are also not adequately weighed or calculated, analysts say.

Basket of Nonsense

These stories highlight the problems of measuring "inflation" with a basket of consumer prices. The Greenspan and Bernanke Feds both made huge mistakes by ignoring property prices.

It is actually impossible to pick a representative basket of goods and services. Moreover, and more importantly, even if one could pick such a basket, bubbles caused by inflation can form in equities, commodities, land prices, housing, or other assets.

Please remember this is a global economy. Prices, especially commodity prices, are set at the margin, and based on global demands, not just on demands in the US.

Many have misguidedly pointed to rising commodity prices as proof of inflation. All things considered, that "proof" pertains not to the US, but rather to China where credit, monetary, and price inflation are all clearly running rampant.

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

California Cut 37,000 Government Jobs in September; Much More to Come

Posted: 24 Oct 2010 11:25 AM PDT

The LA Times reports Government job cuts ravage California

Weighed down by a struggling economy, government agencies in California shed 37,300 workers last month — more jobs than were lost in the private sector — as cities and counties made their biggest payroll cutbacks since at least 1990.

What's more, analysts see more job cuts ahead as California faces an estimated $10-billion shortfall in the state budget that the next governor must address. Cities and counties, meanwhile, are still struggling with tepid sales and property tax revenue.

Cities across the state have taken stringent measures to balance their budgets, said Eva Spiegel, a spokeswoman with the League of California Cities.

Oakland laid off 80 police officers and delayed pothole repairs. Fullerton laid off 14 police officers and three firefighters, cut library hours and closed restrooms at several parks. Oceanside laid off 28 police officers and three firefighters, closed a swimming pool and a recreation center and eliminated the city Bookmobile.

Overall, the state's unemployment rate remained stuck at 12.4%, one of the highest in the nation. The state lost a net 63,600 jobs in September. Local governments shed 32,400 jobs, according to the monthly report from the state Employment Development Department released Friday.

Taxable sales plummeted 18.5% in California from 2006 to 2009 and are expected to remain relatively flat this year, according to the National University System Institute for Policy Research in La Jolla.

The National League of Cities reported this month that cities across the country were making their sharpest cuts in at least a quarter of a century. Nearly 80% of city finance officers in a survey reported laying off staff, and 87% said their cities were worse off financially this year than last year.

Taxable Sales Down 18%

Those last two paragraphs are the key to understanding one of the things I have been saying, that there is no recovery in sales.

Every month, when retail sales numbers come out, I question them. Here is my article from October 15: Retail Sales Rise More Than Forecast; Once Again I Ask "Really?"

Retail sales may be at their best point in the year, but sales are certainly not within 3% of the all time high [as government data shows]. If they were, tax revenue collection would be exceeding all time highs given increases in sales taxes.

Sales Tax Collections Down 5.9% June 2010 vs. June 2008

In spite of numerous sales tax hikes, tax collections are still 5.9% lower than two years ago. Moreover, June of 2008 was not the pre-recession peak. November of 2007 was the pre-recession peak.

Bear in mind those statistics are as reported in Retail Sales Rise .4% from July - How Far to Pre-recession Levels? Where to from Here? reflective of the second quarter.

See link for several charts.

Unless consumers have gone on a tear in the third quarter (highly unlikely with renewed slowdown in housing as well as the recent Gallup survey above), these retail sales reports are simply not believable.

What's clear is the methodology is flawed. By how much is the question. The way to figure out how much is to factor in all sales tax hikes and compare state sales tax collections. I will take another look at that as time permits.

Expect More Cutbacks, Lots More

Just a few days ago I penned, Severe, Life-changing, and Consciousness-Altering State Budget Cuts Coming.

The LA Times article is but a start for what I envision. Moreover, it does not even begin to address the fact that California Pension Promises Exceed 550% of State Tax Revenue by 2012; A Look at Solutions.

Finally, it should be crystal clear that Los Angeles, Oakland, San Diego, and numerous other cities in California and nationwide are bankrupt, mostly over public union pension promises that cannot be met.

Here are a few posts:

The most galling thing in all of this is public unions across the country are demanding more tax hikes so they can receive benefits those in the private sector can only dream about.

Indeed, most of the police, fire, and teacher layoffs underway would not have to happen, if only the unions would accept cutbacks in pay and benefits. Instead, senior union members always vote to toss the junior members to the dogs, then have the gall to blame voters for not hiking taxes.

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

German Economy Minister Accuses US of Currency Manipulation

Posted: 24 Oct 2010 01:19 AM PDT

At long last a major player is finally pointing a the currency manipulation finger where it needs to be placed, the US.

Please consider Germany Says Fed Is Headed 'Wrong Way' With Monetary Easing

The Federal Reserve's push toward easier monetary policy is the "wrong way" to stimulate growth and may amount to a manipulation of the dollar, German Economy Minister Rainer Bruederle said.

Fed Chairman Ben S. Bernanke yesterday gave Group of 20 finance ministers and central bankers meeting in Gyeongju, South Korea an overview of the U.S. central bank's efforts to jumpstart the world's largest economy. His strategy, which investors expect will soon include greater asset purchases, drew criticism at the talks, said Bruederle.

"It's the wrong way to try to prevent or solve problems by adding more liquidity," Bruederle told reporters yesterday, saying that emerging-market officials were among the critics. Bruederle, a member of the Free Democratic Party, the junior partner in Chancellor Angela Merkel's government, stepped in for hospitalized Finance Minister Wolfgang Schaeuble at the meeting.

"Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate," Bruederle said. The minister has taken a pro-market stance in his first year in office, criticizing state intervention in cases such as providing aid for General Motors Co.'s German Opel unit.

The Big Point

I have been saying for years that the US was every bit the currency manipulator we accuse China of being. My stance is that interest rate policy decisions in and of themselves are manipulative.

Moreover, we have since gone one step further with futile unwarranted rounds of quantitative easing baked into the cake.

Thankfully, the German economic minister is willing to say what anyone with an ounce of common sense has known for a long time: "Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate."

Correction:
Rainer Bruederle is "Bundesminister für Wirtschaft und Technologie", "Federal Minister for Economy and Technology", not Finance Minister. He was filling in for hospitalized Finance Minister Wolfgang Schaeuble at the meeting.

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

Seth's Blog : Change and its constituents (there are two, and both are a problem)

[You're getting this note because you subscribed to Seth Godin's blog.]

Change and its constituents (there are two, and both are a problem)

People who fear they will be hurt by a change speak up immediately, loudly and without regard for the odds or reality.

People who will benefit from a change don't believe it (until it happens), so they sit quietly.

And that's why change in an organization is difficult.

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sâmbătă, 23 octombrie 2010

Mish's Global Economic Trend Analysis

Home Prices Double Dip in "Sudden Dramatic Drop"; 20% More to Come says Gary Shilling

Posted: 23 Oct 2010 07:18 AM PDT

Clear Capital™ has issued a special press release report on home prices that shows a Sudden and Dramatic Drop in U.S. Home Prices

TRUCKEE, Calif. – Oct. 22, 2010 – Clear Capital (www.clearcapital.com), is issuing this special alert on a dramatic change observed in U.S. home prices.

"Clear Capital's latest data shows even more pronounced price declines than our most recent HDI market report released two weeks ago," said Dr. Alex Villacorta, senior statistician, Clear Capital. "At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration."

This special Clear Capital Home Data Index (HDI) alert shows that national home prices have declined 5.9% in just two months and are now at the same level as in mid April 2010, two weeks prior to the expiration of the recent federal homebuyer tax credit. This significant drop in prices, in advance of the typical winter housing market slowdowns, paints an ominous picture that will likely show up in other home data indices in the coming months.

Both Clear Capital and S&P/Case-Shiller indices have displayed consistent market peak, trough, secondary trough, and tax credit run-ups. Despite these consistencies, a critical difference is that HDI's patent pending methodology enables more timely and granular reporting. Therefore, if previous correlations between the Clear Capital and S&P/Case-Shiller indices continue as expected, the next two months will show a similar downward trend in S&P/Case Shiller numbers.

Shilling Calls for Another 20% Drop

Video: Gary Shilling says single-family home prices will drop another 20% over the next few years with number of homeowners underwater to rise from 23% to 40%.

Excess inventories of 2.1 million are the "mortal enemy" of prices says Shilling. "A 20 percent decline would bring us back to the long-term trend, all the way back to 1890. I am a great believer in reversion to the norm".

I agree with Shilling on those points.

It's a great interview, much more to hear, including a forecast on 30-year bond rates of 3%.

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

Nonviable Pension Stupidity in Pittsburgh

Posted: 23 Oct 2010 12:35 AM PDT

Pittsburgh has unfunded pension liabilities totaling $718 million. Those liabilities are a black hole that will continue to grow unless the structural issues are addressed.

Sadly, Pittsburgh agreed to put off addressing the real issues and instead floated a 30-year bond.

Please consider Pittsburgh Deal to Fund City Pensions Put in Park

Pittsburgh's city council nixed a deal this week to lease its parking assets to a consortium led by J.P. Morgan Chase & Co. Instead, the council is proposing that the city's parking authority issue a 30-year bond and pay it off with parking-rate increases. Part of the proceeds would go to the pension plan.

Mayor Luke Ravenstahl said Friday that he was opposed to that proposal. The city pension plan, which had an unfunded liability of $718 million as of August, could fall into state hands without additional funding.

J.P. Morgan Asset Management and LAZ Parking offered the city $452 million to operate garages, lots and 7,000 metered street spaces for 50 years.

, who runs J.P. Morgan's infrastructure-investments group, said the consortium might amend its offer. "Clearly, we were disappointed," he said. "But we believe it's still a viable option."

Nonviable Options

Anyone who proposes a 50-year deal that does not address underlying structural needs is a fool or a charlatan.

Thus, Mark Weisdorf is no friend of Pittsburgh. Instead he is looking out for the best interest of JP Morgan.

However, the same thing can be said about the nonviable solution Pittsburgh came up with. Floating 30-year bonds to fund liabilities without addressing the root cause of the liabilities is just as stupid, if not more stupid.

I have seen no discussion of the real issue: The pension plan of Pittsburgh is not sustainable, nor are public union wages and services.

Pittsburgh is bankrupt, as are many cities in the nation. It is foolish to enter into 30-year or 50-year deals to stave off the inevitable.

Neither the JP Morgan solution nor the action taken by the city council is viable. Pittsburgh kicked the can down a 30-year road, at taxpayer expense, in an asinine attempt to keep the ball in play. The decision cannot and will not work.

The correct decision was to admit bankruptcy of the plan and address the structural issues of untenable union wages and benefits.

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

Seth's Blog : Efficiency is free

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Efficiency is free

Philip Crosby wrote a seminal book (Quality is Free) in which he argued that it's cheaper to build things right the first time than it is to fix them later. Obvious now, but heresy in Detroit 1980. Quality quickly became not just a better way to manufacture, it became a marketing benefit as well. Not only was quality cheaper to make, it was cheaper to sell.

I'm struck that we need a new book, call it Efficiency is Free.

It's cheaper to build carpets that don't create poison gas than it is to do the easy thing and let people suffer later. It's cheaper to build an 8 passenger car that gets 30 miles per gallon than it is to suffer the consequences of the 12 mile per gallon Suburban. It's cheaper to design smaller, lighter and recyclable shipping containers once than it is to buy and hassle with billions of foam peanuts in the long run.

So why doesn't everyone do this? For the same reason the quality revolution took a full generation to take hold--it costs more right now. It takes planning right now. It requires change right now.

Right now will always be difficult. But efficiency is still free.

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luni, 25 octombrie 2010

My Turn to Answer Your Questions

Daily Snapshot: Helping Small Businesses Get Back on Their Feet

Seth's Blog : Organizing for joy

Organizing for joy

More Recent Articles

duminică, 24 octombrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Change and its constituents (there are two, and both are a problem)

Change and its constituents (there are two, and both are a problem)

More Recent Articles

sâmbătă, 23 octombrie 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Efficiency is free

Efficiency is free

More Recent Articles

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luni, 25 octombrie 2010

More Recent Articles

duminică, 24 octombrie 2010

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sâmbătă, 23 octombrie 2010

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