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Mish's Global Economic Trend Analysis |
Posted: 08 Jul 2011 02:01 PM PDT In response to Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline Revisited I received a nice email from Michael Pettis. Thanks Mish.Generic Germany This is one of the things that happen when you take snips. I left out a section where Pettis was not referring to Germany per se, but rather surplus countries in general. Here is the clarifying section. Let me again, following my practice from last month's newsletter, simplify matters by calling all surplus countries "Germany" and all deficit countries "Spain". Germany and Spain jointly have put into place policies that ensure that Germany runs a large current account surplus and Spain a large current account deficit for many years. As I argued three weeks ago, I think that it is far more likely that German policies rather than Spanish policies created the huge distortions, but for our purposes we can ignore the direction of causality.The article from three weeks ago which Pettis refers is How to become virtuous and save more Lack of Enforcement Mechanism a Major Problem Pettis is working on an idea to fix trade imbalances, one not involving a return to the gold standard. I may have some details later on. Lack of an enforcement mechanism regarding trade is an enormous problem. Debts pile up forever, with no way to pay them back. History suggests there is no better enforcement mechanism than gold, so it will be interesting to see what Pettis comes up with. Europe Will Blow Sky High, Gold Will Soar I believe Pettis is correct regarding the Euro. Spain, Italy, Portugal, Greece, and Ireland are all in serious trouble. Worse yet, bankers demand more austerity so they can pay back debts to French, German, UK, and US banks. Europe will blow sky high. Major defaults will come when the population gets fed up enough with austerity and demands change. When things do blow, I look for gold to soar. The issue, as always, is timing the event. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Posted: 08 Jul 2011 12:19 PM PDT It's a good thing "Greece is Saved" so we can all turn our attention to something far more important, like saving Italy. Italian Government Bond Yield 9-Year High Bloomberg reports Italian Yields Reach Nine-Year High as Debt Crisis Spreads; Bunds Surge Italian bonds slid for the fifth straight day, driving yields to a nine-year high, as contagion from Greece's fiscal crisis intensified in the region's biggest government-debt market.Finance Minister Scandal RTE reports Italian finance minister in rent scandal Italian finance minister Giulio Tremonti has found himself in hot water after it was disclosed that his former adviser - facing a possible jail term for corruption - had been paying his rent.Tremonti's Future in Doubt The Financial Times reports Italy's finance minister under fire Giulio Tremonti's future as Italy's finance minister appeared in doubt on Friday after Silvio Berlusconi, prime minister, launched a public attack on his handling of the centre-right government's proposed austerity package.Italy 10-Year Government Bonds Germany 10-Year Government Bonds Widening Spread Spread is easy enough to calculate: 5.27 - 2.83 = 2.44. Italy has nearly as much debt as Germany, in an economy nowhere near as big. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Payroll Stunner Full "Pathetic" Jobs Report - Many Charts Posted: 08 Jul 2011 10:08 AM PDT Thoughts on the Jobs Report Thoughts on the Jobs Report Last month I commented things are awful at first glance and simply bad beneath the surface. This month things took a huge turn for the worse. Three months ago I commented "It is very questionable if this pace of jobs keeps up." Clearly it didn't, for the second straight disastrous month. Certainly this cannot all be blamed on the Tsunami in Japan. The entire global economy is slowing rapidly as I have commented numerous times. Economists projected a drop in the unemployment rate, I called for a rise to 9.2%. Few were prepared for today's grim numbers.
Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data. Digging deeper into the Household Survey, we see some more interesting data. In the last year, the civilian population rose by 1,799,000. Yet the labor force dropped by 263,000. Those not in the labor force rose by 2,063,000. Last month the labor force rose by 272,000. This month the labor force fell by 272,000. How's that for symmetry? The 6-month labor force total for 2011 is +4,000. Many of those millions who dropped out of the workforce would start looking if they thought jobs were available. Indeed, in a 2-year old recovery, the labor force should be rising sharply as those who stopped looking for jobs, once again started looking. Instead, the labor force is not expanding at all. Were it not for people dropping out of the labor force for the past two years, the unemployment rate would be well over 11%. June 2011 Jobs Report Please consider the Bureau of Labor Statistics (BLS) June 2011 Employment Report. Nonfarm payroll employment was essentially unchanged in June (+18,000), and the unemployment rate was little changed at 9.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major private-sector industries changed little over the month. Government employment continued to trend down. Unemployment Rate - Seasonally Adjusted Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted Notice that employment is lower than it was 10 years ago. Nonfarm Employment - Payroll Survey - Monthly Look - Seasonally Adjusted click on chart for sharper image Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs. Ignoring the effects of the census, in the last 9 months of a recovery 2 years old, the economy is averaging 130,000 jobs a month. That is very poor as recoveries go. Statistically, 127,000 jobs a month is enough to keep the unemployment rate flat. Nonfarm Employment - Payroll Survey Details - Seasonally Adjusted Average Weekly Hours Index of Aggregate Weekly Hours Average Hourly Earnings vs. CPI "Success" of QE2
Not only are wages rising slower than the CPI, there is also a concern as to how those wage gains are distributed. BLS Birth-Death Model Black Box The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey. The BLS has moved to quarterly rather than annual adjustments to smooth out the numbers. For more details please see Introduction of Quarterly Birth/Death Model Updates in the Establishment Survey In recent years Birth/Death methodology has been so screwed up and there have been so many revisions that it has been painful to watch. The Birth-Death numbers are not seasonally adjusted while the reported headline number is. In the black box the BLS combines the two coming out with a total. The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance. Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way. Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions. Birth Death Model Adjustments For 2011 BLS Back in Outer-Space Do NOT subtract 131,000 from the headline number. That is statistically invalid. However, in my estimation the BLS is back in outer-space. It is clear the economy is slowing and the BLS model has not picked it up. The model is horrendously wrong at economic turns. Household Data click on chart for sharper image In the last year, the civilian population rose by 1,799,000. Yet the labor force dropped by 263,000. Those not in the labor force rose by 2,063,000. Last month the labor force rose by 272,000. Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%. Table A-8 Part Time Status click on chart for sharper image There has been virtually no improvement in part-time employment in a full year. 8.5+ million workers want a full time job and cannot find one. Table A-15 Table A-15 is where one can find a better approximation of what the unemployment rate really is. click on chart for sharper image Distorted Statistics Given the total distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is hard to discuss the numbers. The official unemployment rate is 9.2%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. While the "official" unemployment rate is an unacceptable 9.2%, U-6 is much higher at 16.2%. Things are much worse than the reported numbers would have you believe, and for the second consecutive month the beneath the surface numbers were bad-to-awful. Note that U3 rose from 9.1% to 9.2% while U6 rose from 15.8% to 16.2%. Thus, the official measure rose .1, while the alternative measure rose .4. This is an "artifact" of 272,000 people dropping out of the labor force this past month. Also note that the unemployment rate is barely better than it was a year ago. It would actually be worse than a year ago were it not for people dropping out of the labor force. This was a pathetic jobs report. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Posted: 08 Jul 2011 08:03 AM PDT I will have a full report later the morning but in the meantime, here are a few grim details of Friday's jobs report.
Take The Way Under Two days ago, in "Hamster Wheel Economy" I said ... Going Nowhere FastIt looks like the "way under" was correct. Indeed, the way, way, way under was correct. Proving once again what an optimist I am, I thought we would beat last month's total. We could not even beat last month's revised lower total. My usual report will follow shortly. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
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Japanese School Makes Kids Clean Urinals Barehanded Posted: 08 Jul 2011 07:54 PM PDT A school which is making schoolgirls clean their male classmates' toilets barefoot and barehanded is arousing widespread disgust amongst Japanese, both for the humiliating nature of the practice and its complete diregard for hygiene, amidst accusations that a bizarre toilet-cleaning cult run by an elderly millionaire is actually trying to infiltrate the nation's schools. |
Actors Who Are Better Looking Than The Real Life Characters They Played Posted: 08 Jul 2011 07:27 PM PDT Who knew that Warren Beatty, Brad Pitt and Angelina Jolie are much more attractive than the people they portray in movies? Check out these photo comparisons from big time movies. Angelina Jolie as Christine Collins in 'Changeling' Russel Crowe as John Nash in 'A Beautiful Mind' Brad Pitt as Jesse James in 'The Assassination of Jesse James' Julia Roberts as Erin Brockovich in 'Erin Brockovich' Daniel Day Lewis as Gerry Conlon in 'In the Name of the Father' Liam Neeson as Oskar Schindler in 'Schindler's List' Julie Andrews as Marie Von Trapp in 'The Sound Of Music' Leonardo DiCaprio as Frank Abagnale in 'Catch Me If You Can' Josh Brolin as George W Bush in 'W' The Rock as Sean Porter in 'Gridiron Gang' Elizabeth Taylor as Cleopatra in 'Cleopatra' Johnny Depp as George Jung in 'Blow' Antonio Banderas as Pancho Villa in 'And Starring Pancho Villa as Himself' Charlize Theron as Aileen Wuornos in 'Monster' Ray Liotta as Henry Hill in 'Goodfellas' Warren Beatty and Faye Dunaway as Bonnie and Clyde in 'Bonnie And Clyde' Mark Harmon as Ted Bundy in 'The Deliberate Stranger' Denzel Washington as Frank Lucas in 'American Gangster' Salma Hayek as Frida Kahlo in 'Frida' Joaquin Phoenix as Johnny Cash in 'Walk The Line' Johnny Depp as John Dillenger in 'Public Enemies' |
Posted: 07 Jul 2011 09:44 PM PDT |
Posted: 07 Jul 2011 08:45 PM PDT |
Shocking Pictures of an African Catching Python for a Living Posted: 07 Jul 2011 08:37 PM PDT What at first might seem like a remarkably bad idea is actually a well-planned assault. In southern Africa, traditional python hunters display their technique for capturing and killing the enormous reptiles. African rock pythons (python sabae) are among some of the largest snakes in the world, reaching over 6 m in length. While their relatives the Burmese pythons are known for their docility, African pythons are much more vicious, as this hunter finds out first-hand. The technique is simple, and yet terrifying. The hunter ties a piece of hide onto his forearm and armed only with a small torch to light up the dark he dives headfirst into the python lair. He encounters a large snake guarding a clutch of eggs. At this point, a sensible person would get out as quickly as possible but this hunter has other plans. He waves his shielded forearm about to distract the snake from biting his face. The python lunges, grabs his hand and begins to swallow. With his free hand, the hunter then chokes the snake and his partner pulls him back out of the hole, which seems like his favorite part, and I don't blame him. |
Funny Demotivational Posters - Part 25 Posted: 07 Jul 2011 07:42 PM PDT This is new kind of funny pictures and it is also another way to change serous image into funny picture with help of some words, Motivational posters have not properly benefit but its use only for fun and make others fool. On the internet making the motivational poster is so easy you can only upload a image with text and a online software change your image into a motivational poster. Here are a lot of of pictures of motivational posters they are too funny and enjoyable and maybe this thing make a smile on your face. Motivational posters have only one kind and that is demotivational poster this kind of poster has been repeatedly parodied, and parodical demotivational posters have become an Internet meme. Have a look on this beautiful collection. Related Posts: Funny Demotivational Posters - Part 1 Funny Demotivational Posters - Part 2 Funny Demotivational Posters - Part 3 Funny Demotivational Posters - Part 4 Funny Demotivational Posters - Part 5 Funny Demotivational Posters - Part 6 Funny Demotivational Posters - Part 7 Funny Demotivational Posters - Part 8 Funny Demotivational Posters - Part 9 Funny Demotivational Posters - Part 10 Funny Demotivational Posters - Part 11 Funny Demotivational Posters - Part 12 Funny Demotivational Posters - Part 13 Funny Demotivational Posters - Part 14 Funny Demotivational Posters - Part 15 Funny Demotivational Posters - Part 16 Funny Demotivational Posters - Part 17 Funny Demotivational Posters - Part 18 Funny Demotivational Posters - Part 19 Funny Demotivational Posters - Part 20 Funny Demotivational Posters - Part 21 Funny Demotivational Posters - Part 22 Funny Demotivational Posters - Part 23 Funny Demotivational Posters - Part 24 |
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