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sâmbătă, 13 august 2011

Weekly Address: Putting the American People First

Your Daily Snapshot for
Saturday, August 13, 2011

Weekly Address: Putting the American People First

While members of Congress are at home in their districts, President Obama asks Americans that agree that it’s time to put country before party and pass stalled bills to help grow our economy to let them know.

Watch the video

Weekly Wrap Up

Here are some of the top stories from the White House blog.

Common Sense Solutions: On Monday, August 8th, President Obama addressed our nation’s credit downgrade and said that our nation's problems are "eminently solvable." He laid out steps Congress can take right now to jumpstart the economy. "Specifically, we should extend the payroll tax cut as soon as possible, so that workers have more money in their paychecks next year and businesses have more customers next year," said the President. Watch the remarks.

Crisis in Africa: Right now, thousands of families are starving as a result of a famine caused by the worst drought in the Horn of Africa in 60 years. This week, Dr. Jill Biden led a delegation including former Senator Bill Frist and USAID Director Rajiv Shah to the Dadaab Refugee Camp in Kenya where they witnessed the suffering first hand. If you are as touched by their plight as Dr. Biden and her team, there are many ways you can help,

New Fuel Rules: On Tuesday, President Obama announced historic new fuel efficiency standards for work trucks, buses and other heavy-duty vehicles. These new standards will save American businesses approximately $50 billion over the life of the program, while reducing oil consumption by a projected 530 million barrels and greenhouse gas (GHG) pollution by approximately 270 million metric tons. Transportation Secretary Ray LaHood calls the new standards a “significant win.” On Thursday, the President travelled to Holland, MI where he visited an advanced battery plant making the batteries that will be needed to power these vehicles of the future and talked about his goal to see more products that are made in America sold around the world.

Celebrating Ramadan: The ninth month of the Islamic calendar marks Ramadan, a holy month of prayer and fasting for Muslims around the world. On Thursday night, the President marked this occasion at an Iftar dinner with Muslim-American members of Congress and diplomatic corps, as well as Muslim-American families. According to the CIA World Fact Book, there are approximately 1.8 million Muslims in the United States. Watch President Obama's speech.

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Seth's Blog : Wasting time is not a waste

Wasting time is not a waste

In fact, wasting time is a key part of our lives.

Wasting time poorly is a sin, because not only are you forgoing the productivity, generosity and art that comes from work, but you're also giving up the downtime, experimentation and joy that comes from wasting time.

If you're going to waste time (and I hope you will) the least you can do is do it well.

• Email to a friend •

vineri, 12 august 2011

Mish's Global Economic Trend Analysis

White House Press Secretary Claims "Unemployment Benefits Could Create Up To 1 Million Jobs"
Eurozone in Recession, Industrial Production "Unexpectedly" Drops .7%; France in Recession, Germany on the Way; Is the US in Recession?
Nonsense Regarding Reverse Repos, Excess Reserves, and Liquidity

White House Press Secretary Claims "Unemployment Benefits Could Create Up To 1 Million Jobs"

Posted: 12 Aug 2011 06:32 PM PDT

Real Clear Politics notes Unemployment Benefits Could Create Up To 1 Million Jobs

"I understand why extending unemployment insurance provides relief to people who need it, but how does that create jobs," Wall Street Journal's Laura Meckler asked Jay Carney at Wednesday's WH briefing.

Carney responded: "Oh, uh, it is by, uh, I would expect a reporter from the Wall Street Journal would know this as part of the entrance exam."

"There are few other ways that can directly put money into the economy than applying unemployment insurance," Carney said.

Carney answers the question: "It is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren't running a paycheck are going to spend the money that they get. They're not going to save it, they're going to spend it. And with unemployment insurance, that way, the money goes directly back into the economy, dollar for dollar virtually."

"Every place that, that money is spent has added business and that creates growth and income for businesses that leads them to decisions about jobs, more hiring. So, there are few other ways that can directly put money into the economy than applying unemployment insurance, Carney said.

So there you have it. The unemployed create jobs. If only we had millions more unemployed we could create millions more jobs simply by given the unemployed more money.

I suppose we could triple unemployment benefits and create three times as many jobs on the theory that the unemployed would still spend every penny of three times as much money.

We could be even more creative and extend unemployment benefits to infinity thereby creating an infinite number of jobs. However, creation of an infinite number of jobs would sound unrealistic as a news headline, even for a liberal media, if only barely. So let's just do this for three more years at three times the benefits.

I have the headline ready: "Obama to create 9 million jobs by giving the unemployed three times as much money if they agree to spend it."

Addendum:

A couple of people argued spending will create jobs but asked "how many?" Certainly 1 million seems ridiculous.

More to the heart of the matter, to paraphrase a response from "Fedwatcher", such activities will create jobs but not efficiently or permanently.

Therein is the crux of the matter. Certainly if the government gave $20,000 to everyone who was unemployed we would see a burst of activity, followed by another crash. Throwing money around does not create lasting jobs, only another heroin high.

Worse yet, in response to stimulus, businesses may invest more in productive capacity only to find out as the stimulus wore off, they really didn't need it. Heaven help any business that borrows money on such false signals.

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

Eurozone in Recession, Industrial Production "Unexpectedly" Drops .7%; France in Recession, Germany on the Way; Is the US in Recession?

Posted: 12 Aug 2011 12:05 PM PDT

Recession loom everywhere you look. Let's look at France: French growth sputters to a halt in 2nd quarter

The French government was put under further pressure to cut deeper into spending after figures Friday showed growth in Europe's second biggest economy ground to a halt in the spring, in another sign that the global economy is facing rising recessionary threats.

With the worse-than-expected French growth figures suggesting a possible budget shortfall this year, government ministers may have to find additional savings ahead of a key meeting with President Nicolas Sarkozy on Aug. 24.

The flat growth reported in the second quarter of the year was attributable to a slump in consumer spending and exports, and came as policymakers scramble to soothe investor concerns that the country could be the next major economy to lose its coveted triple-A credit rating.

Eurozone Industrial Production "Unexpectedly" Drops .7%

RTT News reports Eurozone Industrial Output Declines Unexpectedly In June

Eurozone industrial production declined unexpectedly in June on widespread decreases in sub-sectors, indicating a sharp slowdown in economic activity in the currency bloc at the end of the second quarter.

Industrial output fell 0.7 percent month-on-month, offsetting the 0.2 percent increase seen in May, data released by Eurostat showed Friday. Economists had expected production to remain flat in June.

Among the sub-sectors, durable consumer goods output and capital goods production logged the biggest falls of 2.5 percent and 1.5 percent, respectively. At the same time, non-durable consumer goods output dropped 0.5 percent. Decreases in intermediate goods and energy output came in at 0.6 percent and 0.4 percent, respectively.

Germany Industrial Production Unexpectedly Drops 1.1%

Forex Crunch reports More Evidence of Core Slowdown in Germany's Industrial Production

German industrial production dropped by 1.1% in June. Early expectations stood on a rise of 0.1%. The rise of 1.2% that was reported for May was revised to only 0.9%. Altogether, the locomotive of the euro-zone cannot drive the train in high speed anymore.

US Consumer Sentiment Unexpectedly Declines to Three Decade Low

Bloomberg reports U.S. Consumer Confidence Drops to Three-Decade Low Amid Economic Headwinds

Confidence among U.S. consumers plunged in August to the lowest level since May 1980, adding to concern that weak employment gains and volatility in the stock market will prompt households to retrench.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. The gauge was projected to decline to 62, according to the median forecast in a Bloomberg News survey.

Estimates of 69 economists for the confidence measure ranged from 59 to 66.5, according to the Bloomberg survey. The index averaged 89 in the five years leading up to the recession that began in December 2007.

Barry Ritholtz at the Big Picture asks Are We Already in Recession?

Bloomberg reported today that "Consumer Sentiment Plunged to Three-Decade Low."

That sent me scurrying to find some charts, and I ended up liking the two from UBS strategist Andy Lees, at bottom.

The first one is an overlay the University of Michigan consumer confidence index vs the Conference Board's data. The second chart shows the long term history of the Conference Board data. At an implied level of 43.37 we would be in recession now; not only that but a deep recession.

As the charts show, the ABC index has diverged from the Conference Board data for some time now.

The correlation between consumer confidence and recession might not hold this time — although that would be the first split for 40 plus years.

There is also an implication from this data series that we are already in recession. Given yesterday's data showing both imports and exports falling, we may have an implied Q2 GDP revised lower by 0.8% to 0.5% annualized growth — putting Q2 into the negative category.

Hence, it is not unfeasible that we could be the verge of recession.

Forget "verge of recession" the US is in one. Whether or not it gets reported as such depends on further data. If new data continues to be weak, the NBER is very likely to backdate a recession to June or July.

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

Nonsense Regarding Reverse Repos, Excess Reserves, and Liquidity

Posted: 12 Aug 2011 09:53 AM PDT

Today the Fed announced a series of meaningless small reverse-repo (monetary drain actions) to test the exit-policy soaking-up ability of the Fed down the road.

I suggest the Fed's Statement Regarding Reverse Repurchase Agreements is meaningless given the amounts involved, the timing, and the reasons the Fed stated.

As noted in the October 19, 2009, Statement Regarding Reverse Repurchase Agreements, the Federal Reserve Bank of New York has been working internally and with market participants on operational aspects of triparty reverse repurchase agreements to ensure that this tool will be ready if the Federal Open Market Committee decides it should be used. Beginning Monday, August 15, the New York Fed intends to conduct another series of small-scale reverse repurchase (repo) transactions using all eligible collateral types. The first operation will be conducted using only the expanded reverse repo counterparties announced on July 27, 2011. Subsequent operations in this series will be open to all eligible reverse repo counterparties.

Going forward, the Federal Reserve plans to conduct a series of small-scale reverse repurchase transactions about every two months, which will bring the frequency of these operational exercises in line with that of the Term Deposit Facility exercises.

Like the earlier operational readiness exercises, this work is a matter of prudent advance planning by the Federal Reserve. The operations have been designed to have no material impact on the availability of reserves or on market rates. Specifically, the aggregate amount of outstanding reverse repo transactions will be very small relative to the level of excess reserves, and the transactions will be conducted at current market rates. These operations do not represent a change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future.

ZeroHedge sarcastically comments

With liquidity already being very scarce courtesy of the FDIC assessment, of Europe wreaking havoc with money markets, of repos pulling out of the market at a record pace, of O/N General Collateral trading with the same volatility as the S&P, this will surely have no impact at all on anything, just like all other centrally planned, and carefully thought through actions.

After reading the announcement, it should be crystal clear the Fed did nothing and said nothing of importance.

Ironically, I agree with this short clip of Tyler's statement "surely have no impact at all on anything", except that is clearly not what Tyler meant.

I suggest it is time to stop hyping-up every play and every statement by Fed officials as if it means anything.

Moreover, excess reserves are so high the Fed could mop up $1 trillion of them right now without having an impact on anything except for interest paid on reserves to banks. Tyler missed this completely, and the key to understanding the issue is realization that excess-reserve theory of inflation and lending is fallacious.

I have covered the reasons numerous occasions. Here is the pertinent snip from Yes Virginia, U.S. Back in Deflation; Inflation Scare Ends; Hyperinflationists Wrong Twice Over

Excess Reserve Money-Multiplier Theory is Fatally Flawed

Some have written these "excess reserves" are waiting in the wings to cause massive inflation.

It did not happen nor will it. Simply put, the excess-reserve money-multiplier theory is potty.

Banks do not lend just because they have reserves. Indeed reserves do not enter the equation at all. Rather, banks lend as long as they are not capital impaired and as long as they have good credit risks willing to borrow.

In this case, banks are capital impaired, and there are too few credit-worthy clients who want to borrow. The result is banks do not lend and money sits as excess reserves.

What Would Draining $1 Trillion Excess Reserves Do?

The effect of draining $1 trillion in excess reserves would be .25% (max) of $1 trillion in interest to banks paid on excess reserves, thus $2.5 billion a year total (max) to banks, free money that banks have no business collecting.

I say max because the rate floats from zero to .25% max although in theory the Fed can pay anything it wants for excess reserves.

There are no liquidity issues in regards to draining $1 trillion in reserves, if done slowly over time.

Excess Reserves

Given the state of excess reserves, there is no liquidity issue in any real sense at all, and the Fed should indeed implement an exit strategy while it is easy to do so, instead of later when it may not be so easy.

The Fed does not do so because

The Fed fails to understand monetary easing policy is now economically useless
The Fed wants to slowly recapitalize banks over time with taxpayer money from the treasury via paying interest to banks on excess reserves

I suspect both.

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

Damn Cool Pics

Holy Month of Ramadan 2011 in Pictures
Beautiful iPhone Photography
How Parents Use Facebook to Spy on their Kids [Infographic]
US Debt Crisis - 2012 is only for America
Resort Like Prisons Of Netherlands

Holy Month of Ramadan 2011 in Pictures

Posted: 12 Aug 2011 02:31 PM PDT

Ramazan is the ninth month of the Islamic calendar, which lasts 29 or 30 days. It is the Islamic month of fasting, in which participating Muslims refrain from eating, drinking and sexual intimacy with their partners during daylight hours and is intended to teach Muslims about patience, spirituality, humility and submissiveness to God. Muslims fast for the sake of God (Arabic: الله‎, trans: Allah) and to offer more prayer than usual.

Beautiful iPhone Photography

Posted: 12 Aug 2011 01:51 PM PDT

With so many fantastic apps on the market, with their one touch photo effects and filters, iPhones and their built in digital cameras have taken the photography world by storm. Producing some truly inspiring results, which we have gathered a collection of for you today. Take a look at the fun and creative life captured on an iPhone followed up by some links to a few apps to take your own pics with.

Source: noupe

How Parents Use Facebook to Spy on their Kids [Infographic]

Posted: 12 Aug 2011 01:45 PM PDT

There is a lot you can tell about a person by reading their Facebook profile. From incriminating photos to friendship insights, Facebook tells all. That's one of the reasons so may parents are joining Facebook, according to a recent study. As it turns out, more than half of parents use the popular social network to spy on their kids' Internet activity--and 11 percent of parents joined Facebook for the sole purpose of snooping on their kids! But with the growing number of underage Facebook users, are parents snooping, or safeguarding? Find out the stats on parents and Facebook in the below infographic.

Click to enlarge.

Source: onlineschools

US Debt Crisis - 2012 is only for America

Posted: 11 Aug 2011 09:15 PM PDT

A must watch video for all specially for those who are considering going to US in future!!

Resort Like Prisons Of Netherlands

Posted: 11 Aug 2011 07:28 PM PDT

Neat lawns, flowerbeds, playgrounds and buildings designed by famous architects, this is how a Dutch prison looks like. It is more like a country club or recreation center, but not a prison. It has everything you need for healthy living. Today, in the Dutch prison Penitentiary Maashegge contains 167 people, but in 2 years it will be closed.

In 2009 the Dutch justice ministry announced that it will close eight prisons and cut 1,200 jobs in the prison system, due to the decrease in crime in the country. In order to somehow save their beautiful prisons, the Dutch government is inviting foreign criminals into them. For example, last year 500 Belgian inmates were invited. The Netherlands would get 30 million euros in the deal, and it will allow the closing of the prisons in Rotterdam and Veenhuizen to be postponed until 2012.

This is a medium-security prison which contains 167 prisoners and 140 employees. Taking pictures of the prisoners is prohibited.

The prison looks like a park inside. The Dutch can be definitely proud not only of their cheese, tulips and wind-mills but also of the penitentiary system that had gone through perfection since the 16th century. In 1595 they built the first prison where criminals were engaged in working and where the principle of humanity prevailed.

One can get the idea of the place only looking at the barbed wire fences.

The territory is divided into parts which are connected with one another with the help of such gates.

Posters for personnel.

Doors are supplied with special electronic locks.

They can meet relatives once a month for 2 hours and can make a paid 10-minute call per week. There is a library here that can be attended once a week as well.

Prisoners can work 4 hours a day and earn 25 Euros a week.

Each room is supplied with a radio, TV socket, watching TV costs 6 Euros a week.

Those who misbehaved are sent to the isolation ward. It is empty and has no windows.

The prisoners are also given a piece of chalk to draw on the door. This can be the only thing to do.

View from the window.

A catholic board school was located here before and was later turned into a prison.

The ground is used for walking.

If somebody can't afford paying 6 Euros a week for watching TV in the ward, he can watch it in the hall.

The prison has standard rooms. Corridors end with a kitchen where anyone can cook for himself if he doesn't like the menu. Prisoners are given jam, rolls, coffee, tea and juices for breakfast. A dinner consists of three hot dishes, salads and fruits. In some prisons it's allowed to order dishes from restaurants. Jews often order Kosher food. Prisoners have a right not to attend the dining room. In this case they will be delivered food but before it's necessary to check whether the delivered menu corresponds to the dishes on the list.

This is the building where young people who haven't reached the age of 23 spend time before the court. Preliminary conclusion can't last longer than 3 months.

A prison must remind of home. Otherwise a person will only become more angry.

A hotel.

Good doctors, attentive nurses and best equipment are available. Only two cases of tuberculosis were recently revealed. Since 2008 the practice of giving food additives reducing stress conditions has been introduced. In one of prisons they started dispensing reagent called orange aroma associated with health and freshness and decreasing aggressiveness.