He’s been fighting this for months, but now he’ll sign it, because he’s afraid of an override.
Category: employment
Economics Update
Well, the obvious lede is the unemployment numbers, with the weekly new unemployment claims, which are a very noisy metric, and continuing claims, which are not, beinb positively ghastly.
Weekly numbers rose to 542,000, whichn is the highest since mid 1992, and well above the estimate of 502,000 and continuing unemployment claims hit 4,012,000, up 109,000, the highest level since 1982.
Therefore, it is no surprise that the index of leading economic indicators fell in October, as die the Philadelphia Federal Reserve’s business activity index, to an 18 year low, and the Architecture Billings Index, an indicator of future construction activity, fell to an all time low.
Meanwhile in the bond market, so many people are fleeing to US treasuries that rates have been driven to historic, and near historic lows, while the costs of insuring private bonds has returned to the stratosphere.
For what it’s worth, we have some good news for a bond insurer, specifically Ambac, which has managed to negotiate a cancellation of $3.5 billion in insurance contracts, which is obviously a serious reduction in liabilities.
In energy, oil briefly fell under $50/bbl, and retail gasoline prices seem to be heading below $2/gallon.
In currency, the dollar is mixed.
Economics Update
Weekly initial unemployment claims are at 516,000, up from 484,000, well above the estimate of 479,000, and the highest number since 2 weeks after the 911 attacks.
With the caveat that weekly unemployment figures have a lot of noise, I would like to segue to a much noisier indicator, the Dow Jones Industrial Average, when fell below 8,000, though it rallied and ended up for the day.
Yean, I know, stock gyrations are really completely noise, but crossing 8K is a big deal for the markets, even if the Dow ended the day up 500+ points.
A better indicator of what is going on in the world is the fact that Germany is now officially in a recession, having experience two consecutive quarters of negative growth.
Calculated Risk’s regular post of credit crisis indicators, a very useful collection of interest rates and interest rate spreads really did not do much today.
That being days, CR does have a nice chart of spreads between 30 Year corporate bonds and treasuries, and it is not pretty: 
Of course if you want to be scared, the fact that foreclosures are up 25% year over year, and that Ranieri’s Franklin Bank has filed chapter 7 (liquidation).
They are the 3rd largest lender to fail this year.
Speaking of failures, there is already General Motors, and Goldman Sachs has suspended its rating of the auto maker, which is a polite way of saying, “Absent a bailout, it’s done.”
In the meantime, oil rose at the end of the day, along with the rising Dow, which indicates that oil traders are complete morons who trade on chicken entrails and other spooky omens.
The dollar was mixed today.
Economics Update
Unemployment rose to 6.5% from 6.1%, a 14 year high, and total non farm employment fell by 240 thousand.
Can we call it a recession already?
If not, how about I draw you a picture:
Meanwhile, the Institute for Supply Management’s manufacturing report fell to 38.9%, the worst number since September 1983.
And, just so now, the real estate recovery ain’t coming soon, not with Property & Portfolio Research Inc. the New York City metro commercial property vacancy rate hitting 17.6%.
FWIW, they had predicted a peak of 13% 3 months ago, but it’s already at 12%.
Meanwhile the National Association of Realtors® says that pending home sales fell 4.6% in Septmeber.
At least we are not in the UK, where house prices fell 15% year over year.
That being said, some of the indicators for the finance market appear to be moderating, with spreads edging down, and money flowing back into mutual funds for the first time in 3½ months.
Additionally, it looks like consumers are using their credit cards a bit more.
The bad economic news news has driven the dollar down, and the weak dollar appears to have beaten recession today on the oil markets, where crude is up a smidgen.
Not surprisingly, Gasoline is down at the pump, the 51st day in a row.
Got to Use the 3d Printer at Work
Well, I got to use the 3d printer for the first time at work.
Nothing major, just some wells for some tubes to sit in to see if we can adapt a device to a different configuration.
It’s king of neat. The machine puts out 2 resins, one is water soluble, and is used to create the initial base on the plate where the other permanent resin, PE I believe, is extruded from the print head in very fine lines.
I’m making something about the size of about a sandwich, and it takes 13 hours to make it.
Unfortunately, the capabilities of a cell phone camera and camcorder do not really capture enough detail to show this as it appears in person.
It’s wicked cool to watch.
Video below:
Economics Update
Jeebus! The Bank of England cut it’s benchmark interest rate 150 basis points (1.5%)…To 3%.
That’s not strong action, that is TEOTWAWKI panic.
The ECB and the Swiss central bank also cut rates, by 50 basis points…The central banks think that we are in end of the world territory.
As further evidence, we have the ECB’s president saying that there may be more rate cuts.
This from an institution that’s only charter is to fight inflation.
Not surprisingly, all these rate cuts had the effect of sending the Dollar and Yen skyrocketing.
Meanwhile, jobless claims dropped a bit, but only through “Jedi Mind Trick” statistics:
The number of U.S. workers filing new claims for jobless benefits fell by 4,000 last week to 481,000, ….
The department revised up its estimate for jobless claims in the prior week to 485,000 from a previously reported 479,000.
So comparing initial estimates, it went up by 2,000, but after the “correction”, it was down by 4000.
In any case, the number sucks, and continuing unemployment claims are the highest that they have been since 1983, when unemployment topped 10%.
It won’t help that retail sales fell to their lowest levels in at least 39 years…..It may be longer, but they only started collecting the statistics in 1969!
Interest rates on interbank lending trending down, but considering all the interest rate cuts, that is pretty unavoidable.
I think that it is more significant that credit card companies were unable to sell bonds at all for the first time since 1993, and when you consider that they charge something north of 20% on carried balances, that is ugly.
BTW, y friends the monoliner bond insurers are back again, with Moody’s cutting Ambac to ‘Baa1’.
It should surprise no one that with massive indications of a deep recession, and the dollar up, oil fell again to $60.77/bbl.
What This Means
This graph, from The Big Picture, means some combination of the following items:
- The economy of the past 18 years has sucked so badly that people have increasingly given up looking up.
- The basic unemployment number has been screwed with by administrations on both sides of the aisle, and significantly understates the unemployment rate.
- That the economy has shifted significantly in the past 2 decades, and high levels of long term unemployment are the norm.
My money is mostly on number 2, though reverse Robin Hood is part of it.
Short term solution is more aid to the long term unemployed. The long term solution is fixing the BLS data, and creating a more just society.
Truth be told, I’m surprised that the divergence did not occur around 1983, when Reagan and His Evil Minions™ screwed with the unemployment numbers with things like counting active duty military as a part of the workforce, to keep the unemployment number below 10.
Check out Daniel Gross in Slate, who argues that the normal unemployment numbers are complete crap.
Economics Update
Calculated Risk: Fannie Mortgage Bond Spreads Decline
Well, we have payroll services firm ADP saying that job cuts in October totaled 157,000, above the 100,000 predicted, with September numbers up too, and Challenger, Gray & Christmas, the grim reapers of the corporate world reporting that more firms are planning to cut jobs.
Meanwhile the ISM’s non-manufacturing index, an index of the service economy, fell to 44.4 the worst number recorded since the index was created in 1997.
It’s not just the US either. U.K. factory output is dropping like a stone.
In the credit crunch, while gross interest are improving, the spreads between these interest rates and treasury notes remain high.
For example, the LIBOR rate has fallen to 2.51% from 4.82% on 10/10, but the spread remains 151 basis points (1.51%) over the Fed’s target rate
Prior to the credit crunch it averaged 22 basis points.
This may be mortgage applications are down, banks are still skittish, and costs are higher.
This is a normal response by banks when you consider that you have things like the bath that Glitnir swap sellers took. They look to being left with 3¢ on the dollar.
The swaps in question are a sort of bond insurance, so it’s no surprise that the two largest, monoliners Ambac and MBIA just posted big losses.
It appears that there are expectations of more rate cuts, as the dollar is down, though paradoxically, so is crude oil….Normally, they tend to move in opposite directions.
Rumor: Rahm Emanuel as White House Chief of Staff
All, in all, I like the idea.
Emanuel is a smart guy, and a very good fixer, but his political instincts are always to choose the Blue Dog Squish Dem, which he can’t do as WH COS.
The Important Question on the Banking Melt Down
How I Spent My Summer Vacation
OK, my 6 week stint of unemployment, actually.
More accurately, this is about the fact that I started an old/new job.
I returned to work at a medical device manufacturer after an 11 months away.
I literally went back to my old cube, and my old phone was there, along with notes from when I was last there and my old voice mail was still active, complete with a message from January of this year, though I still had to wait a bit for my computer login to be created.
It says less about the ebb and flow of employment there than it does about the quality of my cube.
There is a big honking column in the middle of it, which makes it less than desirable.
It will be nice not to be working military (too much dealing with Generals complaining about the colors of power point slides) and nuclear power (the more know, the less I like industry. Cleaning up when you are done generating power is too damn expensive).
Te Funny
H/T The Big Picture.
Economics Update
Let’s start with the fact that this has been a TEOTWAWKI week.
That being said, we are seeing a huge increase in borrowing from the Fed Discount window, as a part of the Fed’s sh^%pile for cash program.
OTOH, jobless claims did fall a bit, to 475,000 though they were at 7 year highs to begin with, and job creation is lagging.
Also, Oil fell to $82/bbl, the lowest in a year and gasoline is heading down too.
Also, the dollar continues to climb, as is the Yen.
In real estate, we are seeing mall vacancies skyrocket.
Not Enough Bullets, Part 3
NY Magazine writes about the heart rending adjustments that have to be made by the until recently overpaid traders at Lehman.
The janitors, receptionists, etc., maybe I have some pity for them.
As for one of the examples, a woman engaged to a Lehman trader who dumped him once he was no longer a millionaire, he’s better off.
Economics Update
Well, we are seeing the 9th straight drop in monthly non-farm employment rolls (click on graphs for pretty pictures).
I find The U6 graph that I swiped from Paul Krugman to be particularly interesting.
Let’s just call it; we are in a recession.
I would also note that the credit flows have nearly shut down worldwide, which is why the Federal Reserve lending window is seeing record use from banks.
BTW, it ain’t just the Fed which is throwing money, particularly US Dollars, out the windows, it’s all of the central banks.
The obvious big news is the House passing the Wall Street bail-out, and I’m as yet unsure how the markets are reacting to this.
Oil is down down, which could either imply confidence in the US economy, or the belief that a recession is inevitable, and the dollar is mixed.
Economics Update
First the Institute for Supply Management’s manufacturing index just fell off a cliff, dropping to 43.5%, when the consensus was for 49.6%.
This is the lowest number since October, 2001, when manufacturers were freaking out over 911, and the biggest drop since 1984.
The fact that factory orders are down 4%, and that the
Baltic Dry Index Tanks, a survey of shipping costs are also in the tank, reinforce the idea that something is amiss, though I woul,d be remiss not to note that the Baltic Dry Index has a lot of noise in the data, and so is not particularly reliable.
Meanwhile, the marginally less noisy weekly jobless claims number have shown an increase too, up 1000, to 497K.
We also have evidence that the credit freeze up continues, with LIBOR spreads rising, and commercial paper basically going away.
In fact, the spread between two year debt swaps and treasuries hit a record, 167.25 basis points.
It doesn’t help that hedge funds are experiencing problems related to the Lehman collapse, with billions of dollars still tied up with mess, while facing a surge of withdrawals from their clients.
Furthermore, there are rumors of a major insurance company on the verge of collapse, and so borrowing costs for the major insurance companies have spiked.
Things aren’t looking great with college’s finances either, with Commonfund restricting withdrawals from its Intermediate Term Fund, which serves schools and other non-profits, because of liquidity concerns.
On the other side of the ocean, the ECB is openly talking about a rate cut, which has pushed the Euro below $1.40:€1.00.
This is all pushing commodities down in price, with Oil, Gold, and Corn falling on the expectation of a stronger dollar and a weaker global economy.
In banking and real estate, 30-year fixed-rate mortgage rates are up marginally, and Citi bought Wachovia for some magic beans (actually around $1/share), and the FDIC got preferred shares.
While not technically a bank failure, that is what it is in reality.
Economics Update
More signs of a recession, durable orders just dropped 4.5%, initial jobless rose by 32,000, to a 7 year high, and existing home sales fell by 2.2% in August.
Meanwhile, the dollar has fallen, largely on concerns about the bailout deal.
Meanwhile, banks are borrowing in excess of $110 billion a day, 39.36 billion from commercial banks, and $88.15 billion from investment banks.
Economics Update
Again, as this seems, this is only the so called little stuff, because there is a lot of big stuff again
I’ve been firmly in the recession camp of the, “Is it recession yet,” dispute, and the the Leading Economic Indicators falling again reinforces that notion, though the fact that the Philadelphia Fed Factory Index rose runs counter to that, but as it is the first rise in 10 months, I put that one in the outlier category.
Meanwhile, the weekly, and this week affected by hurricanes, new filings for unemployment rose to 455K and housing starts fell to a 17 year low, even as mortgage rates continue to fall.
Of course, not too many people can get the loans these days, because all the money is fleeing to treasuries.
Gas prices tick higher – Sep. 17, 2008
Housing Starts Plummet to 17-Year Low in August – Economy * US * News * Story – CNBC.com
In energy, eased off of a bit, as did gasoline for the first time in 9 days, as the panicking over Hurrican Ike moderated.
Finally, I just want to say that Tom Toles is a bloody genius:
Economics Update
Well, I guess that the lead story has to be Lehman Brothers, which appears to be collapsing Bear Stearns style, and looking for government funding of it’s eventual sale, Bear Stearns style, so negotions with potential buyers continue apace.
The Fed and the Treasury Department appear to be seriously twisting arms to make the deal go through, though they claim that there will be “no federal money” involved.
Seriously, all we are doing here is socializing losses. Nationalize the lot of them, throw out upper management, and go after their bonuses, otherwise, we will see more of the same.
Of course the fact that WaMu just had its ratings cut….again…Means that Paulson may have two things on his “to do” list this weekend.
There are already rumors that Washington Mutual is on the auction block.
In the real economy, the one that the rest of us live in, news ain’t great. The weekly job claims fell, but the 4 week moving average and the continuing claims, continue to rise.
Additionally, retail sales fell again in August, showing a continued weakening in the economy, as does the large gain in business inventory.
Real estate is looking worse and worse too, with foreclosures continuing to increase.
This has driven the dollar down, because it points toward the Fed cutting rates.
In energy, oil is continuing on a downward trend, because of hurricane Ike, selling briefly below $100/bbl (!), though the fact that it’s heading toward refineries is driving gasoline up.
I would note that this is actually normal market behavior. Knock out refineries, and the demand for oil decreases, and the price drops, but the demand for gasoline remains the same, so prices increase.
BTW, I’m not sure what is going on in insurance, but it is clear that American International Group is getting absolutely hammered, and when the subject of the short selling is the largest insurer in the world, something is whack.
OK, So I’ve Entered the Realm of the Jobless
So it goes…..
All in all, the end of my contract was a good thing.
Working in nuclear power produced a level of cognitive dissonance, I think that nuclear poser is unsafe and economically unviable, that was wearing me down.
The day after it ended, I went to my chiropractor, and realized that I felt much better than I had in months.
The workplace as a bunch of people was actually pretty good. They were good people, but for the first time in my life, the nature of the work made me miserable.
So, while I am still fat and bald, I am no longer working in nuclear power, which means that all Homer Simpson jokes are now “inoperative”.