Category: China

Economics Update

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Unemployment Chart Pr0n Courtesy Calculated Risk


Adjusted vs. Nonadjusted Claims Courtesy of J. Bradford DeLong


10 Year SA vs NSA, H/t The Reconstruction

It’s what Atrios calls “New Jobless Day,” and initial claims rose by 11K to a seasonally adjusted 531,000, but the 4-week moving average, which I consider to be a better metric, was basically flat, falling by 750 to 532,250, and continuing claims fell 98K to 5.92 million.

BTW, look at the graphs of the seasonally adjusted vs the non-seasonally adjusted numbers on the right.

I’m not sure how well the adjustments work in the current crisis, but it does smooth out the numbers somewhat, but you can clearly see some artifacts, January 2009, of the adjustments.

It’s even clearer in the bottom graph which goes back 10 years: Seasonal adjustment generally works, except when it doesn’t.

There is a potential cloud on the horizon from China, where authorities are starting to talk about reducing their economic stimulus package because of inflation concerns.

There is a possibility that a reduction in stimulus may have an oversize effect, particularly since official Chinese economic numbers are pretty Mickey Mouse.

If this is the case, it might put a further crimp in world trade.

In any case, the Conference Board’s Index of Leading Economic Indicators rose for the 6th straight month in September.

Calculated Risk: Apartment Rents “Plunge” in the West: also means that house prices have to fall to get back in line with rent to own ratios

In any case, the unemployment numbers drove oil prices down slightly, to $81.19/bbl, and the dollar strengthened slightly vs the Euro and yen.

Economics Update

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Unemployment by State, h/t Calculated Risk


Architectural Billings Index, h/t Calculated Risk

Permanent Layoffs, h/t macroblog, which led Calculated risk to note that that it’s not a jobless recovery, it’s a “job-loss” recovery

The Federal Reserve’s Beige Book, a collection of “anecdotal” data (it’s really more than “anecdotal”, but you know economists) about the economy, was released today, and it shows that the economy is stabilizing, with that data showing either flat, or slight upticks, in economic activity.

We also got the state by state unemployment report for September, and it is ugly. (see bottom pic)

In real estate, mortgage applications fell sharply on higher rates, and the Architectural Billings Index rose, but remained below 50, indicating further contraction in nonresidential construction

The news in the Far East was pretty good though, with the decline in Japanese exports slowing to a 10-month best, and China’s GDP growing by 8.9% year over year, though Chinese statistics are always somewhat suspect.

In energy, oil rose to a 1-year high, $81.37/bbl, and the dollar weakened to a 14 month low, hitting $1.5014:€1.0000, so the buck and a half barrier is broken again.

It’s Shagadelic, Baby!

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The “Gogo” boots REALLY bring the ensemble together,

Though the Mini-Skirts, and the

White gloves and the Chinese model 79 sub-machine gun finish it all nicely.

Seriously, the Militiawomen uniforms at the People’s Republic 60th anniversary celebrations look like something out of Austin Powers’ wet dreams.

See also my earlier post Crouching Tiger, Hidden Segway, for more Chinese photo weirdness.

I understand the red, because after all, it is the color of Communism, but the miniskirts and Go-Go boots add a very silly aspect to all of this.

People’s Republic of China 60th Anniversary Parade Pix

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The first question is, “What is with those white sidewall tires?”


These cruise missiles launchers look similar in size and configuration to the Ground Launched Tomahawks


Drones

Something in the Flanker class

Air refueling demo


Shore based anti-ship missiles


These look like S300s (SA-10 Grumble)


Chinese version of the EFV/AAAV, the ZBD2000. It has that whole, “separated at birth” thing going with the EFV

There are dozens of photographs at Xinhuanet.com, but these are the ones that caught my eyes.

I don’t see any major revelations in Chinese weapons, but I’m not an analyst.

Could someone explain to me though, how that neon blue camoflage works?

Another Claude Raines Moment: Banker Salaries

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I’m shocked, shocked to find that gambling is going on here!

US Bank CEO Pay Dwarfs Rest of the World: Study

I am stunned that suggestion that the geniuses at Wall Street might somehow be overpaid:

Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That’s less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world’s fourth-largest bank, JPMorgan Chase

…

“The U.S. executive pay levels have always dwarfed pay for companies elsewhere in the world,” said Sarah Anderson, a fellow with the Institute for Policy Studies, which is critical of Wall Street, and co-author of the recent study “America’s Bailout Barons.”

“They have claimed it is impossible to recruit people without paying such compensation. Yet, if you look at the pay levels in Europe and in a lot of Asian countries, somehow they manage to find people who can run major global firms while making a fraction of what they make in the U.S.,” she said.

Great googly moogly: Why don’t we just outsource bank presidents to China.

GM Sells Saab to Koenigsegg

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So it looks like the quirky cars are going to be around for a while (see here and here).

There is still the matter of financing, but this is pretty close to a done deal.

Koenigsegg is a serious (the body is completely carbon fiber, it weighs less than 1300 kg, and it does 0 to 100 km/h in under 3 seconds) supercar manufacturer (see pic), which implies that they will be doing more than just milking the brand name, and will actually look to keeping the Saab product line fairly cutting edge, perhaps migrating some of their existing tech down to Saab, which is good news.

In other Swedish car news, it looks like Ford is making some progress in selling Volvo automobile, with reports that a consortium named Konsortium Jakob AB, Volvo Trucks, and the Chinese auto companies Geely, Dongfeng, Beijing Auto, and Chongqing Changan, are all rumored to be bidding on the deal.

Economics Update (Yesterdays)

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Temporary Help Numbers, H/T The Big Picture

I was going to post, but thunder storms came through, and even with a surge protector, I shut down.

It was a big day for central bank news, with reports that the Federal Reserve sending signals that it will stop purchasing Treasuries, which means that while rate hikes are not on the horizon, that quantitative easing (printing money) will be ended over the next few months.

Meanwhile, the granddaddy of zero interest rate central banks, the Bank of Japan, has decided to keep its rate at 0.1% (basically 0%), as the Bank Governor, Masaaki Shirakawa, says that he does not see a strong recovery once stimulus measures fade, “I can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course.”

The Bank of Korea is of the same mind, with it keeping its benchmark rate at 2%, an all time low for the institution.

In employment, the decline in temporary workers seems to be moderating a bit (see graph).

In real estate, it looks like commercial real estate (CRE)is on a path to crash more catastrophically than residential real estate, Fitch Ratings predicting that delinquencies could exceed 5% by year’s end.

Basically, CRE is in a worse place than residential, because they typically take out 5 year mortgages that they have to refinance at the end of the term. If real estate prices go down, they cannot refinance, while in residential real estate, once you have a mortgage, you have one until the loan is paid off.

In China, exports have declined for the 9th straight month, and new loans fell, indicating that they are not out of the woods yet.

Meanwhile, in currency, there has been a flight to safety, driving up the US dollar, and to an even larger degree, the Japanese Yen.

In energy, oil fell, though it is still above $70/bbl, and gasoline prices have spiked, up 15¢ in the past two weeks.

Economics Update

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Interesting day. Not a whole bunch of news, but what I saw looks like it might mean more than it seems.

First, we have 10-year treasuries spiking, because bond investors believe that the economy will not be recovering this year.

We may also have S&P warning of a lending bubble in China, with the possibility of a “sharp deterioration in banks’ assets,” over the next few months as a result.

I think that if the bond market is right, and that is a big if, then the expansion of lending in China does have a real possibility of a significant hang-over in the next few months.

It does seem that pessimism is ruling energy and currency too, with retail gasoline having its biggest 2 week drop since the end of last year, and crude oil closing at a 2 month low.

Additionally, demand for a safe haven has driven the dollar higher.

Malaysia and China Move to End Dollar Trade

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The two nations are considering conducting their trade in yuan and ringgit, as opposed to using the US dollar as a medium.

Basically, with both the Treasury and the Federal Reserve shoveling cash out the door into that black hole which is the shadow banking system, people are beginning to wonder if there might be a better vehicle to conduct trade with than the dollar, which they expect to depreciate.

The Collapse of Chinese Rural Healthcare

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I remember reading about the “Barefoot Doctors“, paramedics sent out by Mao Zedong to address the lack of healthcare in the the rural regions, and now, with the Chinese Communist Party’s aggressive focus on economic development in urban areas, their rural healthcare system has been systematically dismantled:

Tan Zhengrui serves some 700 people in China’s rural Miyun county, making doctor’s rounds on his motorcycle with a stethoscope, thermometer and blood-pressure gauge — the sum total of his medical equipment.

Just 80 kilometers (50 miles) from central Beijing, Tan’s clinic in Peng He Yan village consists of a bed, a bench and a couple of desks. He doesn’t even have a scale to weigh patients.

The focus of the article is on the worries that if Swine Flu “goes viral”* in the rural areas, there will be nothing to arrest its spread.

Note that Tan Zhengrui, who started his career as one of Mao’s “Barefoot Doctors,” is due to retire, and there is no replacement in sight, and he suggests a return to the old ways, “We need a policy like Mao’s, to order people out to the countryside.”

Certainly, requiring a year of internship in the rural areas as a part of a doctor’s education would not be a bad thing.

*Sorry for the pun.†
†OK, I’m not really sorry for the pun, I’m an invertebrate punster, so slug me.‡
†Not sorry for that one either.

Chinese Move Aircraft Carrier, Possibly for Refit

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The partially completed Soviet aircraft carrier Varyag was sold by the Ukraine to China a few years back, and it was thought that it would be converted to a casino.

Well Galrahn came across photos of the ship being moved across the Dalian shipyard in what appears to be a prelude toward bringing the hull up to operational standards.

My guess is that it will never see operational service, but that it will be used for training and development of an indigenous carrier capability.

Economics Update

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Well, we are seeing more signs that China is slowly walking back from its massive investment in the US Dollar, with the world’s most populous nation decreasing its holdings in US securities in January and February of this year.

Of note is the rather Panglossian panic in the tone of this article, which appears to make some fairly epic leaps in order to suggest that this is all really good news for the United States and the US dollar.

If there is really a Chinese pullout of US assets for any extended period, the dollar will fall significantly, and inflation will increase, as the cost of imports, including will increase markedly.

This may not be a rush to the exits, but if it’s a major player in the currency markets tiptoeing towards the door, it’s a much bigger deal than the authors let on.

In any case, it appears that Goldman Sachs will sell about $5 billion in new shares, it’s current market cap is around $60 billion, in order to evade the executive pay limits.

I would argue that this is managers not acting in the best interests of the shareholders, particularly since Warren Buffet’s deal with Goldman is more costly, as they are theoretically required to, but the idea that shareholders actually own a financial firm, and that management works for the shareholders, is apparently for suckers.

In energy, oil fell on projections from the IEA that demand would continue to fall, though this has had little effect on retail gasoline, which is up 10¢ over the past few weeks.

In currency, the dollar is down, in light trading.

China Calls for Currency Basked as Reserve Instrument

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This would replace the US dollar as a reserve currency.

It would obviously weaken the US dollar in the long run, which is not necessarily a bad thing, the “strong dollar” policy of Robert Rubin (and Larry Summers, and Timothy Geithner, and Ben Bernanke) benefits Wall Street at the expense of main street, and is long term unsustainable.

It is unclear to me as to whether this is a real move for change, or simply an attempt by China to assert itself on the world economic stage, though.

China’s Chengdu J-10 Modified

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It appears that there have been some upgrades and/or fixes to China’s Chengdu J-10 canard-delta fighter.

If you look at the top (newer) image it appears that an Infra-Red Search and Track (IRST) unit has been added just forward of the cockpit, and that the inlet has been modified from the original aircraft (bottom).

Douglas Barrie thinks that there may have been vibration or air flow instability issues with the original inlet, but it looks to me more like an attempt to reduce RCS in the forward aspect.

Or maybe it’s a buff with photoshop.