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Thread: The sky has finally fallen...
05-06-2010, 11:19 AM #239
05-06-2010, 11:31 AM #240
05-06-2010, 11:39 AM #241
But the next big bang is the UK. Today the European Commission has warned the UK that its high stimulus spending + its growing deficit of about 12 % for 2010 (the largest in the EU, larger than Greece's) + a slower than expected recovery will produce a volatile cocktail. If the UK crashes, the EU is gone.
Now, I wonder how much is the UKs share of the EU's bailout package to Greece? How can one who is in trouble dig itself in deeper trouble to help another in trouble? Where does the money come from? From thin air?
05-06-2010, 11:59 AM #242
Do you think the Chinese will forgive the US and continue to be a large buyer of US treasuries? Of course not; and without the real money machine China (not the US printing press) the US economy is headed one way-down.
Who is confusing gold with paper money? At least in the gold standard there was some restraint on the US's ability to resort to the printing press. Now, all hell is breaking loose. Perhaps the US should index China's holdings of US treasuries to US oil reserves. China has a huge appetite for oil and she will be more than happy to swap loans with oil. With such a benchmark, China need not worry about any attempts to the printing press by the US. It will be a win-win situation for both.
05-06-2010, 01:00 PM #243
05-06-2010, 02:16 PM #244
05-06-2010, 03:35 PM #245
Gold looks good at 1200 now.
05-07-2010, 12:01 AM #246
As I have said earlier, the UK has a high stimulus spending, an expected huge deficit of close to 12%, and a slower than expected recovery. This is bad enough. But now that Greece is in trouble, and being a member of the EU, othet EU countries have to loan Greece bailout money in proportion to their size. Now how is the UK going to raise this additional requirement and then hand it over to Greece? This is on top of the triple threats mentioned above.
Now let us take a look at the US. I will have to look at the big picture because choosing what to highlight on a selectively macro or micro basis distorts the big picture.
Yes, the US has a huge stimulus spending package. It also has deficits that will go beyond and towards 2019. It will have a much better recovery than any EU country.
Re the deficits, look deeper and you will find a declining trend for the next 10 years. In 2009 the deficit was a staggering 13% of GDP. For 2010 this will come down to 10%. Although it is still a deficit it is an improvement of 3%.
For the next 10 years 2010 to 2019 the deficit will average US$974 billion per year vs 2009's deficit of US1.845 trillion and 2010's deficit of US$1.43 trillion deficit.
On top of this the US economic recovery will be much better than the EU's.
With a healthy recovery and a declining deficit over the next 10 years-mind you the deficit as a percent of GDP will shrink even more given the double whammy of declining deficit in absoulute dollar term and an increasing GDP from recovery-the difference between the US and the EU are like day and night.
If you just selectively see only the stimulus spending side without looking at the big picture, you cannot see the forest for the trees.
05-07-2010, 12:38 AM #247
05-07-2010, 08:54 AM #248
The problem with euro is the speak different languages. Tension will be more. whats this 1000 points drop? A mistake or not? What is this guy trying to say?
05-07-2010, 09:02 AM #249
These numbers are by themselves frighteningly huge. But as a percent of GDP it is quite small :
US deficit as percent of GDP:
2008 (3.2%); 2009 (12.9%); 2010 (8.5%); 2011 (6.0%); 2012 (3.4%), 2013 (2.9%); 2014 (2.9%); 2015 (2.7%); 2016 (3.2%); 2017 (3.2%); 2018 (3.1%); 2019 (3.4%).
The GDP growth for the same period obviously helps to bring the deficits as a percent of GDP down. The US has a long history of GDP growth and it is not like Greece.
Without the two big blips in stimulus spending in 2009 and 2010, and to a lesser extent in 2011, the scenario would be a disaster.
05-07-2010, 05:00 PM #250
Good news, unemployment is Up! That's obamanomics for ya.
(or this media writer works for the government)
Why a Rising Unemployment Rate is Good News
By Rick Newman Rick Newman Fri May 7, 11:11 am ET
It sounds dreadful. After drifting down consistently since last fall, the unemployment rate has suddenly shot up again, from 9.7 percent in March to 9.9 percent in April. But don't despair: A rising unemployment rate is actually one of the best signs yet that the economy is bouncing back.
The unemployment rate rose for the right reason. Instead of shedding jobs, employers added 290,000 jobs in April, the strongest showing since 2007. The reason the unemployment rate went up is that a lot more people are suddenly looking for work. The government said that the labor force swelled by 805,000 people in April. That's more than three times the number of new jobs, so the proportion of people looking for a job but unable to find one went up. Still, that big increase in the labor force marks an important shift in sentiment among people on the fringes of the economy.
One of the most worrisome trends throughout the recession and early stages of the recovery has been the declining size of the U.S. labor force itself. By late last year, so many unemployed people had given up looking for a job that the labor force participation rate--the percent of adults who either have a job or are looking for one--had fallen to a 25-year low. Others who might have entered the labor force--recent graduates, stay-at-home spouses--decided not to. The government considers the labor force to include everybody who either has a job or is looking for one. So if you get laid off and spend your days hunting for a new job, you count as part of the labor force, even if you're not earning a paycheck. But if you get discouraged and give up, you don't count.
Until recently, the ranks of "discouraged workers" who had given up looking for jobs had been swelling at alarming rates. Now, a long-term decline in the labor force participation rate finally seems to be reversing, as more people decide that it might be worth looking for a job after all. The participation rate bottomed out last December, when just 64.6 percent of working-age adults belonged to the labor force. It ticked upward for the first three months of 2010, and now it has risen to 65.2 percent. Before the recession, it hovered above 66 percent, so there's still a way to go. But the mere fact that long-unemployed people are looking for work again is encouraging.
One reason economists worry about a "jobless recovery" is that people who have been out of work for a long time find it extremely difficult to rejoin the working world, even as the economy recovers. They tend to lose touch with workplace trends, miss out on new skills, and simply become unmotivated. It might be tempting to write off the long-term unemployed as dropouts, except that not long ago they were productive workers who earned money and contributed to economic growth. Consigning them to the sidelines depresses the economy--and adds more weight to a social safety net that's already frayed.
About 195,000 formerly discouraged workers have now reentered the labor force, presumably because they think the chances of finding a job are getting better. That's a tiny fraction of the 6.7 million Americans who count as the long-term unemployed, but it's still a break in the gloom. Another 610,000 people entered the labor force without being technically unemployed, a sign that first-time workers and other job seekers have decided to get off the couch and start hustling. There are a lot more where they came from, which means the unemployment rate might still rise in future months, before it turns around and starts declining for good. For once, it will be something to cheer.
Last edited by cooler; 05-07-2010 at 05:03 PM.
05-07-2010, 05:41 PM #251
Words of wisdom from Timmy
“It was like spaghetti clumping together.”
– U.S. Treasury Secretary Timothy Geithner, speaking to the U.S. commission on the financial crisis, finds an appetizing analogy for the tangled mess of mortgage
Last edited by cooler; 05-07-2010 at 05:45 PM.
05-07-2010, 05:46 PM #252
It's Space odyseey 2010
I’M AFRAID I CAN’T LET YOU BUY THAT, DAVE
“I think the machines just took over. There's not a lot of human interaction.”
– Charlie Smith, chief investment officer at Fort Pitt Capital Group, suggests Thursday’s seven-minute mid-afternoon meltdown on the Dow was evidence of computerized program selling run amok.
05-07-2010, 05:49 PM #253
Pot Calling The Kettle Insolvent
“Oh my God, I wouldn’t want to be in the position they’re in.”
– Iceland's finance minister Steingrimur Sigfusson tells Bloomberg News that his country, as big a mess as it was, was still better off than Greece because at least it had its own currency, not the euro.
05-07-2010, 05:50 PM #254
05-07-2010, 05:53 PM #255