Basically flat, so basically, sucky numbers, 386K.
Category: Economy
Wrong Again, Matthew Saroff Edition.
The Greek Democrats have formed a governing coalition including the 3rd place PASOK party:
A conservative-led government took power in Greece on Wednesday promising to negotiate softer terms on its harsh international bailout, help the people regain their dignity and steer the country through its biggest crisis for four decades.
The swearing-in of Antonis Samaras as prime minister after elections last Sunday ended weeks of uncertainty that rattled financial markets and threatened to push near-bankrupt Greece out of the euro zone.
Samaras, a Harvard-educated economist from a prominent Greek family, will head an alliance of his New Democracy party and Socialist PASOK rivals – the same discredited establishment parties which have dominated politics since 1974.
I said that it would not happen, and it did. Oh, well.
BTW, the outgoing PASOK leader, George Papandreu, went to Harvard too (and Amherst, and the London School of Economics).
You know, I think that the value of a Harvard education might be overrated.
It’s Jobless Thursday!
And the numbers are not good, with initial claims rising 6K to 386000, the 4-week moving average rising to 382,000, though both continuing and extended claims were down.
It’s a crappy report, and it’s been the trending this way for a while.
Not good.
It’s Jobless Thursday
And initial jobless claim have fallen for the first time in over a month, by 12K to a still crappy 377K, but the 4-week moving average rose, as did continuing claims, though extended claims fell. (It should be noted that extended claims are being impacted by people running out their strings, so the drop is not necessarily good news).
I would note that we also have a slightly wonkish bit data point, where the yield curve has inverted, indicating that the markets think that the markets are expecting a deflationary environment:
One could argue that this is a positive development for the US consumer because it could mean price stability. However this move in TIPS certainly raises the risk of near-term deflation, driven by weak demand growth. And deflation is notoriously difficult to get under control. This feels (though only in the near term) a bit like Japan, a nation quite familiar with zero to negative inflation expectations.
Normally, the longer a bond, the higher the rate, because there is a cost to having your money locked up for long periods, but under certain conditions, like investors desperate for a safe haven, the rates drop as the term lengthens (up to a point).
In a not entirely not unrelated note, the Chinese central bank has unexpectedly cut its benchmark rate in response to their economy slows.
Not a good economic news day.
Great Googly Moogly
The latest monthly jobs report is out, and is sucks wet farts from dead pigeons. Only 68,000 new jobs were created, the March and April numbers were revised down to 78K, the unemployment rate (U-3) went up by a a tenth of a point to 8.2% (U-6 rose by .3% to 14.8%), and long term unemployment rose.
Note that while the private sectors payroll was a “Meh” +87K, but government payrolls fell by 19,000.
So, while we American governmental entities aren’t going austerity crazy like the Brits, we are kind of slow walking austerity. (Something that Obama’s campaign seems to be bragging about)
The Institute for Supply Management’s latest manufacturing index is headed in the wrong direction as well.
But at least we’re not Yurp which sucks a lot worseworse, with Euro zone unemployment climing to 11%. (Thanks Angela)
It’s Jobless Thursday!
And initial claims are up, 1st quarter GDP is revised down, and the ADP job numbers are anemic.
BTW, the Indian economy appears to be slowing down too.
This seems to happen every summer.
For the past three years, there has been an apparent pickup in the Fall and Winter that sputters out toward the end of Spring.
I;m beginning to think that the seasonal adjustments need to be tweaked.
It’s Jobless Thursday!
And basically it’s the same-old same-old with initial claims hanging around at the 370K doldrums.
Additionally, we have mixed news in other metrics, with capital equipment orders and the purchasing managers index falling, while consumer confidence and durable goods orders rose.
They Own Us
Too hot for TED
When someone gives a TED talk suggesting that lower taxes on the very wealthy actually makes out economy worse off, because the middle class is the real engine of job growth.
The response of TED was to refuse to release the video of the talk:
TED, the nonprofit organization that organizes and promotes wonky web videos on varying issues known as “TED talks,” has reportedly decided not to publish a video on income inequality in which venture capitalist Nick Hanauer declares, “Rich businesspeople like me don’t create jobs.” TED organizers deemed the talk too “politically controversial,” and in an email obtained by the National Journal, TED curator Chris Anderson told Hanauer that “we couldn’t release it, because it would be unquestionably regarded as out and out political. We’re in the middle of an election year in the US. Your argument comes down firmly on the side of one party.
It’s the super-rich’s world, they just allow us to rent a space in their attic.
BTW, the “Curator” of TED posted his his response online. The phrase, “Whiner” comes to mind. (Be sure to read the comments, they realy cut him a new one)
Basically, this was cut because the thesis makes the moneybags who back TED feel bad. The “Masters of the Universe” really think that they are different and special.
Thus they cannot abide being described as an effect rather than a cause.
It’s Jobless Thursday!
All the numbers were basically in a holding pattern.
So, not awful, but still in a kind of a sucky place.
Greeks to Hold New Elections
Roll Stewart!
They couldn’t form a coalition, so there will be a caretaker government followed by a new election. It appears that the left leaning SYRIZA party rejected the proposal for a “government of technocrats”.
What a surprise, the group they are saying here is to allow the EU (the Germans, really) to take over the country and democracy be damned.
Jon Stewart nails it when he notes that nearly 70 years after the end of WWII, the Germans rule Europe.
It’s Jobless Thursday!
This week, everything improved, but only marginally.
Meh.
Quote of the Day
H/t Brad Delong.
Buh Bye Sarko (and Greece)
In what has been forecast in the polls for weeks (months?) Francois Holland defeated president “Bling Bling”:
Socialist Francois Hollande defeated conservative incumbent Nicolas Sarkozy today to become France’s next president, heralding a change in how Europe tackles its debt crisis and how France flexes its military and diplomatic muscle around the world.
Exuberant, diverse crowds filled the Place de la Bastille, the iconic plaza of the French Revolution, to fete Hollande’s victory, waving French, European and labor union flags and climbing its central column. Leftists are overjoyed to have one of their own in power for the first time since Socialist Francois Mitterrand was president from 1981 to 1995.
“Austerity can no longer be inevitable!” Hollande declared in his victory speech Sunday night after a surprising campaign that saw him transform from an unremarkable, mild figure to an increasingly statesmanlike one.
It helps to be standing next Nicolas Sarkozy. Standing next to him, I would look “increasingly statesmanlike.”
I think that the money quote is toward the end:
People of all ages and different ethnicities celebrated Hollande’s victory at the Bastille. Ghylaine Lambrecht, 60, who celebrated the 1981 victory of Mitterrand at the Bastille, was among them.
“I’m so happy. We had to put up with Sarko for 10 years,” she said referring to Sarkozy’s time as interior and finance minister and five years as president. “In the last few years the rich have been getting richer. Now long live France, an open democratic France.”
I think that Sarkozy showed everyone who he really was when he decided pander to bigots when it looked like he was losing.
It’s also a referendum on Angela Merkel, who, in a real breach of the political norms, openly endorsed Sarko in the election.
That being said (I really use that phrase too much, don’t I), if the French rejected the idea of Merkel as ally, the Greeks pretty much firebombed the Reichstag:
Alexis Tsipras became the surprise package of the Greek election by telling Angela Merkel to get lost.
“The people of Europe can no longer be reconciled with the bailouts of barbarism,” Tsipras, 37, said on state-run NET TV late yesterday after his Syriza party unexpectedly came second in the country’s election. “European leaders, and especially Ms. Merkel, should realize that her policies have undergone a crushing defeat.”
Tsipras’s calls to tax the rich, delay debt repayments and cut defense spending struck a chord with voters angry at austerity measures imposed by the European Union and the International Monetary Fund in return for bailouts. As far as euro membership is concerned, Tsipras told voters that a Greek exit would put the currency itself in jeopardy and they shouldn’t feel “blackmailed” into more austerity.
The result put Syriza ahead of the Socialist Pasok party, potentially derailing efforts to implement the terms of the country’s financial lifeline. Syriza, which means Coalition of the Radical Left, won 16 percent of the vote, projections showed. That exceeded the 13 percent won by Pasok, one of the two pillars of the political establishment since 1974. New Democracy, led by Antonis Samaras, topped the poll with 20 percent.
The result, the best since the party was founded in 2004, puts Tsipras in a position to try and form a government should New Democracy fail to put a coalition together in the first round of talks.
BTW, New Democracy has already given up on forming a government, because together they can’t get anyone but the Socialists (Pasok) to agree to continuing austerity. (Merkel and the EE demanded that both leading parties agree to the terms in order to get the loans, with the predictable result that both together got about ⅓ of the vote.)
It’s pretty complex, because, in order to make a coalition without New Democracy and Pasok, almost all the other parties have to join the coalition, and somehow I don’t think that the Leftist Tsipras, the Communists, and the Neo-Nazi in everything but name Golden Dawn will find common ground.
It’s Jobless Thursday
And it’s good news, with initial claims falling by 27K to 365,000, beating estimates, and continuing and extended claims fell as well, though the less volatile 4-week moving average rose.
The real news on the economy though is the fact that Euro zone unemployment hit a record high:
Rising unemployment and plunging business confidence in the euro area revealed the increasingly fragile state of the region’s economy on Wednesday, as voters in France and Greece prepare to deliver their verdict on austerity in Sunday elections.
Official figures showed that unemployment across the 17-member single currency zone increased by 169,000 in March, for the 11th consecutive month, to hit 17.37m. The unemployment rate was 10.9%, the highest level in its history.
Even in Germany, which has so far largely escaped unscathed from the downturn sweep of the labour market, unemployment began to tick up in March, though it remained at just 5.6% of the workforce.
There was also evidence that businesses are being hit by what many analysts expect to be a eurozone-wide recession. The manufacturing PMI for the zone in April – a measure of confidence among businesses – registered a sharp decline, from 47.7 to 45.9, the lowest since June 2009, and well below the 50 mark which signals growth.
BTW, in the US, consumer confidence to a 2 month low.
To quote Bette Davis, “Fasten your seat belts, it’s going to be a bumpy night.”
GPD Growth Slows
If people are planning on a robust recovery, they will be disappointed:
The economic recovery slowed more than expected early this year, raising fears of a spring slowdown for the third year in a row and giving Republicans a fresh opportunity to criticize President Obama’s policies.
The United States gross domestic product grew at an annual rate of 2.2 percent in the first quarter, down from 3 percent at the end of last year, according to a preliminary report released Friday. It was the first deceleration in a year, but it was not nearly as severe as other setbacks in the last couple of years.
Yeah, it sucks, but not so badly, until Angela Merkel manages to accomplish her goal of blowing up Europe though a misguided push for austerity.
It’s Jobless Thursday
And the news remains bad, initial claims fell by only 1000 to a too-damn-high 388,000, with the 4 week moving average and continuing claims rising, though extended claims fell a bit.
Furthermore, we saw durable goods orders cratering. They fell 4% in March.
As I mused earlier, I think that a lot of the good numbers in the 1st quarter were economic activity moving up because of a historically mild winter.
Yeah, Austerity Works
The UK is officially back in recession:
When David Cameron became PM, and announced his austerity plans — buying completely into both the confidence fairy and the invisible bond vigilantes — many were the hosannas, from both sides of the Atlantic. Pundits here urged Obama to “do a Cameron”; Cameron and Osborne were the toast of Very Serious People everywhere.
Now Britain is officially in double-dip recession, and has achieved the remarkable feat of doing worse this time around than it did in the 1930s.
Britain is also unique in having chosen the Big Wrong freely, facing neither pressure from bond markets nor conditions imposed by Berlin and Frankfurt.
Yep, the UK is now doing officially doing worse than it did in the great depression.
Why is anyone still listening to the austerity monkeys?
Austerity Isn’t Working for Qnyone
The 2nd most obnoxious people in Europe in their support of the magical austerity fairy are the Dutch, and now their coalition government has collapsed over their own austerity plans:
More uncertainty loomed for the euro zone on Saturday after the prime minister of the Netherlands, Mark Rutte, said he expected new elections to take place following the collapse of talks on new austerity measures.
The announcement is unwelcome news for Europe’s single currency zone, particularly because the Netherlands is one of just four countries using the euro currency that have maintained a coveted AAA credit rating.
………
The Dutch government has taken a tough line on bailouts for Greece and given strong support to Germany’s efforts to force through a new pact on fiscal responsibility in the euro zone.
But the country’s domestic politics have been plunged into crisis because targets for the budget deficit, laid down by the European Union, were missed.
On Saturday it became clear that a package of measures that had been under negotiation for several weeks, intended to save about 14 billion euros, or $18 billion, would not be supported by the Freedom Party, led by Geert Wilders, a populist right-wing and anti-Islam campaigner. The proposal included spending curbs and tax increases.
If 90% of politics is economics, then the right wing populist parties springing forth throughout Europe have a bright future, because, as much as it pains me, they are right on the economics of the situation.
Of course, the far left parties are largely correct on this too, but the mainstream parties are completely clueless.
Hell of a choice.
Payback’s A Bitch
Everyone is freaking out because Argentina is renationalizing its formerly state owned oil company, YPF:
Argentina says it will seize a controlling interest in oil company YPF that is owned by Spanish firm Repsol.
President Cristina Fernandez said a bill would be presented to the Senate allowing the government to expropriate 51% of YPF shares.
The move, announced on national television, was welcomed by her cabinet and Argentina’s regional governors.
Spanish Foreign Minister Jose Manuel Garcia Margallo said the action had “broken the climate of friendship”.
Speaking after a government crisis meeting, Mr Margello told journalists his government would take “clear and forceful measures”, although he did not specify what these would be.
In a statement Repsol said it “considers the announced measure to be manifestly unlawful and gravely discriminatory”.
The sale of the former state owned energy company was in the middle of the Argentine financial crisis, when creditor nations held a figurative gun to the Argentine government’s head, so it was sold at fire sale prices.
As to concerns about Argentina no longer being “friendly” to foreign investment, it’s not a big deal.
Argentina has been growing more rapidly than all of its neighbors, including the vaunted Brazil.
Additionally, foreign investment won’t go away, though it might demand an additional 50 basis points return.
Also, reduced foreign investment also less risk of the speculative inrushes that cause crashes which result in the loss of economic sovereignty and a shredding of middle class.
The recent lesson of Argentina, and of Iceland, as well as that of Malaysia during the Asian financial crisis, is that the so called Washington consensus, that currency speculation and completely unimpeded capital flows, that this will produce unparalleled economic growth, is completely wrong.
This is not an expropriation, this is justice. The assets were stolen by the looters in the first place.
It’s Jobless Thursday!
Another disappointing week, last week was revised up, and initial claims this week were worse than forecast, 386K, down 2K from last week, only last week was revised up by 8K, with the 4-week moving average and continuing claim rising, though extended/emergency claims fell.
What I think we are seeing, and I think the fact that home sales fell in March reinforces this, is that the generally good economic news in the 1st quarter was (at least partially) an artifact of the unseasonably warm winter, which moved a lot of economic activity a few months earlier.
Basically, we saw time shifting, and thought that it was a recovery.