Initial claims were much better than last week, down 42K to 346,000, not surprising, as last week’s numbers were horrible.
Category: Economy
Sucks
It’s jobless Thursday, and initial claims rose by 28,000 to 385,000, as did the 4-week moving average, though continuing claims fell slightly.
The monthly non-farm payroll numbers come out tomorrow, and I do not expect them to be pretty.
Manufacturing Slows
The Institute for Supply Management’s manufacturing survey shows factory activity growth slowing:
Factory activity grew at the slowest rate in three months in March, suggesting the economy lost some momentum at the end of the first quarter as the effects of tighter fiscal policy started kicking in.
Data so far this year had shown little sign that higher taxes, and the $85 billion in across-the-board government spending cuts that took effect March 1 known as the “sequester,” had weighed on economic activity.
“It suggests the economy was probably starting to slow at the end of the quarter, possibly reflecting the impact of the fiscal headwinds coming from sequestration and higher taxes,” said Millan Mulraine, a senior economist at TD Securities in New York.
So not surprising.
Weak demand, nut-jobs who want to crash the economy in the house to reinforce their 2014 electoral prospects.
I would not be inclined to ramp up anything either.
It’s Jobless Thursday!!
Not good. initial claims rose by 16K, with the 4 week moving average rising by 2250, though continuing claims fell.
Of more concern, consumer confidence fell, probably influenced by the sequester.
There is No Medicine for Stupidity
Click for full size
Much better than the Euro Zone
Because their currency floated
Paul Krugman has noted that Poland has done remarkably well by retaining its own currency and allowing it to float, (see chart pr0n).
Of course, the response of the Polish leaders is to try to join the Euro:
Donald Tusk, Poland’s prime minister, took a big political gamble on Tuesday when he opened the door to a referendum on joining the euro, in the face of strong public opposition to the common currency.
The move is part of a campaign to prepared Poland to begin the final stages of accession to the single currency by 2015. Mr Tusk had previously opposed a public vote, arguing that Poles had already bound themselves to the euro when they voted in 2003 to join the EU.
The crisis in the eurozone has hit support for the euro – the latest opinion survey shows 62 per cent of Poles are opposed to joining, with scepticism increasing markedly since the financial and debt crises hit Europe five years ago.
But now Mr Tusk has publicly raised the possibility of allowing a referendum – demanded by rightwing opposition parties opposed to euro membership – in return for an agreement with the opposition to push through the necessary constitutional changes.
Seriously, they want a piece of this?
You see, what happened was that instead of creating inflation, the wild capital flows caused the Zloty to appreciate, and when those flows reversed, the currency depreciated.
In the Euro zone, what happens is inflation, and then the need for depression to contract the economy. Wanting to be a part of this is stupid and insane.
Seriously, we need higher quality elites running the world.
A Thought on Inequality in Our Society
Yes, this is very wrong.
It’s Jobless thursday!!!
336,000 initial claims, up 2K, with the 4-week moving average falling to 339,750, though continuing claim rose.
Not bad.
That Sound You Hear is Millions of Eurozoners Moving Their Money to Swiss Bank Accounts
Well, we have already seen how the economic crisis is treated around the world.
The tax payers take it on the chin, and the bond holders, who under laws have no claim to payment from bankrupt banks, get all (or nearly all of) their money.
Well, the EU powers that be have taken it a step further, by stealing money from the account holders to pay the bond holders:
European finance ministers have agreed an £8.7bn bailout for Cyprus which includes all Cypriot bank customers handing over up to 10% of their savings.
Cyprus becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the eurozone for financial help amid the region’s debt crisis, but also faces a possible run on its banks as depositors try to avoid losing up to 10% of their savings.
The savers, half of whom are thought to be Russian, will raise almost €6bn. It is the first time a bailout has included such a measure.
“I wish I was not the minister to do this,” the Cypriot finance minister, Michael Sarris, said after 10 hours of late-night talks in which eurozone finance ministers agreed the package. “Much more money could have been lost in a bankruptcy of the banking system or indeed of the country.”
Without a rescue, Cyprus would default and threaten to unravel investor confidence in the eurozone, a renewed confidence fostered by the European Central Bank’s promise last year to do whatever it takes to support the euro.
They do not understand what this means.
Something north of 50% of the deposits in Cypriot banks will be gone in the next few months, going to banks in Germany, Switzerland, or into mattresses.
This comment is delusional:
Such levies break the taboo of hitting bank depositors with losses, but [ Dutch finance minister Jeroen] Dijsselbloem said it would not have otherwise been possible to salvage its financial sector, which is around eight times the size of the economy.
They have just destroyed the financial sector in Cyprus, and perhaps through much of the Euro Zone.
Since the 1930s, in the developed world, at least, deposit insurance that makes the the depositors, at least the smaller ones, whole has been the core of our banking system.
This will likely precipitate a return to the days before the FDIC and its brethren around the world, when people stored kept their wealth in safes, or in commodities like gold, and the (temporarily)better off of members of the EU have just made it insane for anyone to ever put more than a few days walking around money in the banks of any Euro Zone nation. (Except perhaps for Germany and the Netherlands, for now.)
H/t Atrios.
It’s Jobless Thursday!
Initial claims, and the 4-week moving average are down, but continuing claims are up a tick.
Not bad.
Normally, He’d be Wanker of the Day………
But today, after Pamela Sampson, Niall Ferguson suggesting that Paul Krugman is the victim of an abusive childhood:
In my view Paul Krugman has done fundamental damage to the quality of public discourse on economics. He can be forgiven for being wrong, as he frequently is–though he never admits it. He can be forgiven for relentlessly and monotonously politicizing every issue. What is unforgivable is the total absence of civility that characterizes his writing. His inability to debate a question without insulting his opponent suggests some kind of deep insecurity perhaps the result of a childhood trauma. It is a pity that a once talented scholar should demean himself in this way.
Krugman’s response is to the point:
What a pathetic response. Notice that he is doing precisely what I never do, and making it about the person as opposed to his ideas. All I have ever done to him is point out that he seems to not know what he is talking about, and that he has been repeatedly wrong. I would never stoop to speculating about his childhood! If he can’t handle professional criticism — which is all that I have ever offered — he should go find another profession.
Krugman is right.
There is a qualitative difference between the two arguments. Krugman is blunt. He has no problems telling people that he disagrees with that they are full of sh%$.
He’s blunt, but he does not pull the kind of crap that Ferguson tried to pull.
H/t Atrios.
The ADP Report is Out
The private payroll rose by 198,000 in February, largely because of increases in construction employment.
Good news, but not great.
The Germans Used the Euro to Exported Inflation
Paul Krugman looks at the German economy at the start of the Euro, and compares it to the Spanish economy now, and observes that the Germans painlessly devalued relative to Europe as the Euro created inflation in the periphery:
1. Thanks to the giant housing bubble, Spanish costs got much further out of line than Germany’s ever did, so the required adjustment is much bigger.
2. Germany got to do its adjustment in the face of a relatively strong European economy; Spain is being asked to adjust in the face of a depressed Europe sliding back into recession.
3. In part because of this difference in overall macro conditions, but also because Germany doesn’t have a housing boom and is actually engaging in a bit of austerity on its own, the burden of adjustment this time around is falling much more on deflation by the overvalued country.
………
You can see just how much harsher Spain’s adjustment is, and how much less help it’s getting from rising wages in the rest of the eurozone. Basically, Germany is refusing to do for Spain what Spain did for Germany in the past.
And the result of all that is incredibly high unemployment.
German banks fueled speculative bubbles in the periphery, which raised costs relative Germany, and so made Germany’s labor markets relatively cheap.
I’m beginning to think that ending the Euro is the only way to save the EU.
To Be Fair, You Cannot Say this in The New York Times
Krugman talks about Monti and his catastrophic embrace of austerity when he was installed by the European Union.
What I want to point out is this rather interesting paragraph buried toward the end of his OP/ED
For Mr. Monti was, in effect, the proconsul installed by Germany to enforce fiscal austerity on an already ailing economy; willingness to pursue austerity without limit is what defines respectability in European policy circles. This would be fine if austerity policies actually worked — but they don’t. And far from seeming either mature or realistic, the advocates of austerity are sounding increasingly petulant and delusional.
(emphasis mine)
It’s an odd turn of phrase, “The proconsul installed by Germany,” and I’m wondering if he is making an oblique reference to Vidkun Quisling.
Of course, were he to make a direct reference to the infamous Norwegian collaborator in the pages of The Times, at least in the terms of current policy and politics, he would not be in the pages of The Times for much longer.
Why the Mathematics of Finance are Crap
I will give you this (admittedly old) example from Global Economic Intersection, which explains in very simple terms, how much of finance is much closer to a confidence scheme that we would like to imagine:
“If Timmy brings 100 marbles to school and lends them to his classmates at 5% interest for the day, and the classmates diligently work to trade and earn and win enough marbles to pay their debts, how many marbles will Timmy collect at the end of the day?”
The banker will promise a 5% return, and my guess is that a lot of you thought the same thing.
Only it’s not true.
Most of the pupils are of the linear thinking neoclassical persuasion steeped from the cradle in “banker arithmetic”, so they sharpen their pencils and calculate that Timmy will receive 105 marbles in total principal + interest. “Profit drives the marble economy”, Teacher correctly explains, “which is why the classmates were all so busily engaged working for marbles.” And the pupils agreed it would be great fun participating in a marble economy where you could exercise your talents to get out more than you put in.
But little Warren had failed to cram his head into the neoclassical pencil sharpening box where you learn banker arithmetic and he exclaims, “But there ARE only 100 marbles, so unless Teacher adds marbles into the room, Timmy can only get back as many marbles as he put in. So the correct answer is Timmy will get back 100 marbles and some of his classmates will default on their debts and suffer a life of stupid unemployed poverty because Teacher says “We must live within our means.” and she refuses to add the needed marbles even though she owns the marble factory that produces unlimited marbles at virtually no cost.”
Yes, his is a metaphor for the Euro Zone, and the Austrian school ratf$#@s who make up the Bundesbank.
Read the rest.
It’s Jobless Thursday!!!!
Not good news. Initial unemployment claims rose by 20K to 362K, as did the 4-week moving average and continuing claims, though extended claims fell, probably because of exhaustion of benefits.
Of more concern is that the Fed’s Open Market Committee minutes came out, and it looks like they are losing their nerve on quantitative easing:
The Federal Reserve signaled it may consider slowing the pace of asset purchases as officials extended a debate over whether record monetary easing risks unleashing inflation or fueling asset-price bubbles.
Several participants at the Federal Open Market Committee’s Jan. 29-30 meeting “emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved,” according to the minutes of the gathering released yesterday.
This is not the right time for the Fed to take its head off the accelerator pedal.
Moving in the Wrong Direction
So, the recession lowered the salaries of the 99%, and raised them for the 1%:
Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.
The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent.
Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel considered second only to the Nobel, concluded that “the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.”
We need to raise the minimum wage, raise taxes on the rich, and reign in the financial industry, and we need to do that right now.
Or maybe guillotines. I could go for then too,
It’s Jobless Thursday?
The numbers were better than forecast, with initial claims falling by 27K to 340,000, though the less volatile 4-week moving average rose slightly to 352,500, with continuing claims falling to 3.11 million.
Not too shabby.
Attention Greece: You Now Have the Chance to Screw the Germans, Do IT!
I was listening to NPR this morning, and discovered that the privatization/fire sale of Greek owned state assets that the IMF and the EU (really, the Germans) is not going as as quickly as expected, and one of the reasons is that some of the privatization deals actually effect the Germans and the rest as well, and they are objecting:
European governments, as well as Washington, are reportedly concerned over Russia’s possible expansion into Europe. Gazprom, Russia’s state-owned gas monopoly, has made a high bid for the Greek gas utility company. Media reports suggest the privatization agency has delayed choosing a buyer — under international pressure.
There are also other strategic concerns, such as conflict with China over Greek ports.
George Stathakis, an economist and lawmaker for the opposition leftist party Syriza, says China wants to expand its current control of a part of the Port of Piraeus and also buy the south-north railway link, raising fears China will flood the European markets with its inexpensive products.
“German and Dutch interests are opposing the idea of using Greece as the primary source of Chinese trade with Europe,” Stathakis says.
(emphasis mine)
It’s not like the cheap Chinese crap will put Greek manufacturers out of business. The Germans and the Dutch already did that.
Someone Greek will unload the ships, and someone Greek will fuel the ships, and someone Greek will operate the locomotives.
If some Germans lose their jobs over this, why should Greeks care?
Sauce for the gander. The EU austerity caucus, with the Germans at the lead, had demanded, and got the dismantlement of the Greek public health insurance system.
Share the misery.
It’s Jobless Thursday!
366,000 initial claims, down 5000 from last week, and the 4 week moving average fell to a 5 year low, though continuing claims rose. Extended claims were down.
Good, but I’d like to see things a bit better.
Meh
The labor force grew by 157000 jobs in January:
American employers added 157,000 jobs in January compared with a revised 196,000 jobs the previous month, the Labor Department reported on Friday. The unemployment rate was little changed at 7.9 percent, about where it has been stuck since September.
On the bright side, revised government data showed that the economy added 335,000 more jobs than originally estimated during all of 2012, including an additional 150,000 in the last quarter of the year. That was on top of the previously reported fourth-quarter job growth of 603,000 and 2012 growth of 2.2 million.
The higher revisions, in particular, encouraged traders on Wall Street, sending the Dow Jones industrial average over the 14,000-point mark for the first time since 2007.
Still, job growth has been modest compared with previous recoveries, and economists saw little in January’s report to suggest that hiring would pick up soon.
Look at the graph.
The current rate has jobs remaining below trend for over a decade, the best realistic case we see is still a lost decade.
Like I said, “Meh”.
These employment numbers Kung Fu is weak.