Here comes the other economic shoe dropping...

[Warren Dew]

BORROWING TOPS 100% OF GDP... http://news.yahoo.com/us-aaa-rating-sti ... 40123.html

From your link:

"Moody's said Tuesday that the government needed to stabilize the ratio at 73 percent by 2015 'to ensure that the long-run fiscal trajectory remains compatible with a AAA rating.'"

That's simply not going to happen. There is simply no way the federal government is going to run a surplus before 2015, so the debt is not going down. Nor are we going to get 35% growth in 3-4 years, as would be needed - we're closer to zero growth than to 10% annually, which is what would be required.

The only way to get debt down that far would be to increase the nominal GDP by running a 10%+ inflation rate, which would also result in a ratings downgrade, and probably still wouldn't solve the problem since so many federal expenditures are inflation indexed.

Macro question: is there a specific bubble bursting? The housing bubble seems pretty much re-adjusted; looking at the 10+ yr trends, overall housing prices can't go TOO much lower than they are now. And I'm not aware of any other glaringly inflated sectors. So, if there isn't one bursting to drive everything else down with it, are we really talking about going into a double-dip, or are we just dealing with a temporary stall?

Bubbles are not the only way for downturns to happen. That said, on our current trajectory is most likely for a permanent stall.

A point of fact, since CES is so keen to dump everything on Obama's doorstep: On election night, Obama said (after listing the wealth of difficulties the US was facing) "I cannot promise you that all these things will be solved in one year, or in one term."

I suspect most listeners did not interpret him to mean, "I won't solve any of these things", which is what appears to have happened.

[Ian]

Another thought on bubbles...
If there is something "bursting" right now, it's European sovereign debt. All major economies in the world are highly intertwined, but while the US is now stagnant, several of the Euro-zone economies have stumbled on their faces and threaten to draw others along with them, joined as they are with their currency among other things. Put another way, the US economy looks glum, but Europe's looks precarious.

[Rum]

Another thought on bubbles...
If there is something "bursting" right now, it's European sovereign debt. All major economies in the world are highly intertwined, but while the US is now stagnant, several of the Euro-zone economies have stumbled on their faces and threaten to draw others along with them, joined as they are with their currency among other things. Put another way, the US economy looks glum, but Europe's looks precarious.

The key to the Euro issue is interest rates. The 'weak' economies need to borrow more than they actually 'earn' but the weaker they look the higher the interest rates are for them. The gap between their ability to pay and what they *should* pay becomes unreachable and they are forced into some sort of crisis solution. At the moment the central banks are buying bonds like mad to support them, but it looks dodgy to me.

I would not be surprised to see Greece leave in due course as the only viable solution.

Its all a bit wobbly to say the least. The UK is actually in quite a good position for once, given it has its own currency - even if we are 'exposed' by potential debts that won't be paid back.

Bottom line? We have all been living beyond our means and the cost of living at that level is overtaking what we can manage. Get ready to get poorer.

[Coito ergo sum]

Macro question: is there a specific bubble bursting? The housing bubble seems pretty much re-adjusted;

How does it seem that to you? Foreclosures remain at an all time high, and will be higher in 2011 than ever before. http://www.google.com/url?sa=t&source=w ... YRUeBDmChg - It's no longer news because it's just the way it is. It's the new normal.

All indicators point to 2011 being a record setting year in foreclosure activity. The economy, unemployment, and a large shadow inventory of foreclosed homes not even on the market yet are all leading factors to 2011’s anticipated record-breaking foreclosure outcome. 2010 within itself was a record-breaking year in foreclosure activity, where 2.9 million U.S. properties saw a foreclosure filing. One in every 45 U.S. households received a foreclosure filing in 2010.
The 2011 is expected to reach 3 to 3.1 million foreclosure filings for U.S. properties.

Foreclosure inventory stood at an all-time high at the end of March according the March Mortgage Monitor released by Lender Processing Services (LPS). At 2.2 million properties, foreclosure inventories are 8 times historic norms

http://loanrateupdate.com/mortgages/for ... -time-high

Foreclosures at All-Time High—May Rise in 2011

http://www.thefiscaltimes.com/Articles/ ... aspx#page1

If that's "readjusted" then I'm not sure why it's good.

looking at the 10+ yr trends, overall housing prices can't go TOO much lower than they are now.

On what basis? Because they can't get lower than their lowest point in the last 10 years? How do you figure?

And I'm not aware of any other glaringly inflated sectors. So, if there isn't one bursting to drive everything else down with it, are we really talking about going into a double-dip, or are we just dealing with a temporary stall?

Borrowing is now 100% of GDP.

The debt ceiling had nothing to do with credit downgrading. The DEBT is what has to do with the credit of the US taking a downturn. If the US's ability to pay drops, then the cost of borrowing to the US goes up. That causes the entire economy to contract because lenders are less willing to lend in any sector.

US industry is dying, and the government is helping it happen: http://blogs.wsj.com/economics/2011/03/ ... ndustries/

A point of fact, since CES is so keen to dump everything on Obama's doorstep:

Whoever you blame, the reality is the reality. I don't suggest that "everything" should be on Obama's doorstep. But, some of it has to be -isn't Obama the one who said unemployment would not go above 8% under his plan? And, isn't he the one who just said that we have come a long way to improving things? And, wasn't he the one that championed the boondoggle waste of money "cash for clunkers?" And, wasn't he the one who said his policies would fix the housing market? Under his administration a shitload of law and regulations dealing with the economy have been enacted. What's succeeding?

On election night, Obama said (after listing the wealth of difficulties the US was facing) "I cannot promise you that all these things will be solved in one year, or in one term."

It would be nice if some things were solved, or if 2 1/2 years into his term, something was looking better. It ain't.

Remember - most the Democrats are not about economic growth, which is what is required to raise sufficient revenues to pay off even a decent portion of the debt. Recall - we were not promised that the new Administration would "make things better," we were promised a "fundamental change in the way America does business," because American industrial output was "unsustainable." The only way to meet the environmental goals set by the Administration is to retract business and industry, especially heavy industries. That's why he promised to kill coal, and put tremendous burdens on oil. These are two of America's most successful heavy industries that help create wealth. Those are just some examples - but, the bottom line is that to achieve their social and environmental goals, they do it by burdening business and industry - you know "the corporations" that are screwing everyone (and employing people, of course).

[Coito ergo sum]

BORROWING TOPS 100% OF GDP... http://news.yahoo.com/us-aaa-rating-sti ... 40123.html

From your link:

"Moody's said Tuesday that the government needed to stabilize the ratio at 73 percent by 2015 'to ensure that the long-run fiscal trajectory remains compatible with a AAA rating.'"

That's simply not going to happen. There is simply no way the federal government is going to run a surplus before 2015, so the debt is not going down. Nor are we going to get 35% growth in 3-4 years, as would be needed - we're closer to zero growth than to 10% annually, which is what would be required.

The only way to get debt down that far would be to increase the nominal GDP by running a 10%+ inflation rate, which would also result in a ratings downgrade, and probably still wouldn't solve the problem since so many federal expenditures are inflation indexed.

Macro question: is there a specific bubble bursting? The housing bubble seems pretty much re-adjusted; looking at the 10+ yr trends, overall housing prices can't go TOO much lower than they are now. And I'm not aware of any other glaringly inflated sectors. So, if there isn't one bursting to drive everything else down with it, are we really talking about going into a double-dip, or are we just dealing with a temporary stall?

Bubbles are not the only way for downturns to happen. That said, on our current trajectory is most likely for a permanent stall.

A point of fact, since CES is so keen to dump everything on Obama's doorstep: On election night, Obama said (after listing the wealth of difficulties the US was facing) "I cannot promise you that all these things will be solved in one year, or in one term."

I suspect most listeners did not interpret him to mean, "I won't solve any of these things", which is what appears to have happened.

What happened the other day with the debt ceiling thing was complete and utter bullshit. Politicians high-fived each other for what? Agree to raise the debt more than ever before, and to continue spending more money that we don't have to the tune of a trillion dollars -- a million million dollars.

What the hell can't the government just spend less money next year than they spent this year? Each department must make due with 10% less. Get the job done with less. Cut overhead. Cut waste. We know they waste a huge amount money. Get to work cutting back Each department head should go through the entire budget for his department and figure out how to cut 10% minimum. Give that department head a bonus as a percentage for the amount of money he is actually able to cut and still get the job done.

[Ian]

Remember - most the Democrats are not about economic growth, which is what is required to raise sufficient revenues to pay off even a decent portion of the debt. Recall - we were not promised that the new Administration would "make things better," we were promised a "fundamental change in the way America does business," because American industrial output was "unsustainable." The only way to meet the environmental goals set by the Administration is to retract business and industry, especially heavy industries. That's why he promised to kill coal, and put tremendous burdens on oil. These are two of America's most successful heavy industries that help create wealth. Those are just some examples - but, the bottom line is that to achieve their social and environmental goals, they do it by burdening business and industry - you know "the corporations" that are screwing everyone (and employing people, of course).

Would you mind pointing out the various ways that the Obama administration has put the screws to corporations over the last two years? I can't think of too many.

[Warren Dew]

Another thought on bubbles...
If there is something "bursting" right now, it's European sovereign debt. All major economies in the world are highly intertwined, but while the US is now stagnant, several of the Euro-zone economies have stumbled on their faces and threaten to draw others along with them, joined as they are with their currency among other things. Put another way, the US economy looks glum, but Europe's looks precarious.

The key to the Euro issue is interest rates. The 'weak' economies need to borrow more than they actually 'earn' but the weaker they look the higher the interest rates are for them. The gap between their ability to pay and what they *should* pay becomes unreachable and they are forced into some sort of crisis solution. At the moment the central banks are buying bonds like mad to support them, but it looks dodgy to me.

Supposedly part of the deal is imposition of austerity measures in the "weak" economies that should increase their ability to pay their debts. Didn't Greece have to increase its retirement age from 50 to 55 or something like that? It's not clear to me that's enough to bridge the gap, though.

That said, I'd say California is at least as badly off as Greece, and I'd be hard put to find a U.S. state in as good a shape as Germany. Europe as a whole is not worse off than the U.S. today.

Would you mind pointing out the various ways that the Obama administration has put the screws to corporations over the last two years? I can't think of too many.

Obamacare is the big one, though NLRB changes that resulted in Boeing being prohibited from building a new plant - and employing people there, and exporting more planes - is another big example. Then there are a huge raft of regulations that make things very onerous for small businesses, such as the requirement to collect tax idenfication information such as social security numbers from vendors for purchases averaging as small as $3 a day.

[Coito ergo sum]

Remember - most the Democrats are not about economic growth, which is what is required to raise sufficient revenues to pay off even a decent portion of the debt. Recall - we were not promised that the new Administration would "make things better," we were promised a "fundamental change in the way America does business," because American industrial output was "unsustainable." The only way to meet the environmental goals set by the Administration is to retract business and industry, especially heavy industries. That's why he promised to kill coal, and put tremendous burdens on oil. These are two of America's most successful heavy industries that help create wealth. Those are just some examples - but, the bottom line is that to achieve their social and environmental goals, they do it by burdening business and industry - you know "the corporations" that are screwing everyone (and employing people, of course).

Would you mind pointing out the various ways that the Obama administration has put the screws to corporations over the last two years? I can't think of too many.

At Tuesday’s GOP Senate caucus lunch, the lawmakers said that they will renew their efforts, supported by business groups like the U.S. Chamber of Commerce. In a memo Barasso handed out to the lawmakers, he claimed that the administration in July only has put in $9.5 billion in new regulatory costs by proposing 229 new rules and finalizing 379 rules. Among those he cited were EPA, healthcare reform, and financial regulatory reform rules.

http://www.usnews.com/news/washington-w ... pe-in-july

Obama’s EPA Regulations Will Cost Coal Industry $180 Billion & Cause Electricity Rates to Skyrocket

http://www.thegatewaypundit.com/2011/06 ... skyrocket/ Under my plan...electricity rates will necessarily skyrocket..." - B. Obama - video and audio included in the link. He said it himself.

Even as Team Obama talks up the importance of small business growth, entrepreneurs are facing increased burdens imposed by the Obama Administration. The gap between the rosy scenario that Obama wants to portray and the hard realities that small businesses face is growing wider by the day.
Small business owners and start-up entrepreneurs understand just how hollow the Obama Administration’s commitment to small business growth really is. The president delights in announcing new initiatives. The trouble is that these initiatives are not useful, never work as the President promised, and more often disguise the many business killing ideas that the President champions.

For example, President Obama’s big initiative, called the Small Business Lending Fund, to help spark loans to small businesses, was launched with great fanfare over seven months ago. The President called in some small business to act as props to this initiative that he promised would stimulate $30 billion in new lending to small businesses. Obama even made this idea the centerpiece of his “commitment” to small business in the State of the Union Message.

As Americans have come to know, President Obama has particular difficulty translating any of his words into workable policy. So, it should come as little surprise that after eight months, the President’s big idea to spark $30 billion in small business lending ,a href="http://www.marketwatch.com/story/not-mu ... _stmp">has yet to lend a single dollar to a single small business. And so it goes

. http://townhall.com/columnists/luritado ... ess_growth

But reality tells a different story. A day earlier, the House Committee on Ways and Means held a hearing to unveil the effects of the new health care law on businesses. Testifying before the committee were employers and economists, and their message was simple: Obamacare is bad for business.

http://blog.heritage.org/2011/01/31/con ... -business/

Obama administration vs. Boeing - pounding the shit out of one of our most successful employers, and working to make sure they employ FEWER employees: http://seattletimes.nwsource.com/html/o ... ill15.html

Policy advisers for the American Petroleum Institute (API) warned that continued delays for deepwater drilling permits in the Gulf of Mexico would negatively impact deepwater Gulf development as well as Gulf region jobs and the nation's energy security.

http://www.rigzone.com/news/article.asp ... 447&hmpn=1

Obama's Tax Proposal Would Only Hurt American Energy Competitiveness
The president's proposal to eliminate tax breaks would further handicap the bleak unemployment situation

http://www.usnews.com/opinion/articles/ ... titiveness

And, we all know what his administration has done to the space program - thousands of jobs going away.

Where doesn't Obama's policies negatively impact business and industry?

[Warren Dew]

That said, I'd say California is at least as badly off as Greece, and I'd be hard put to find a U.S. state in as good a shape as Germany. Europe as a whole is not worse off than the U.S. today.

And now it appears that Standard & Poor's has recognized this, and has downgraded U.S. federal debt.

http://www.bloomberg.com/news/2011-08-0 ... ccord.html

[Coito ergo sum]

If the federal government's regulatory operation were a business, it would be one of the 50 biggest in the country in terms of revenues, and the third largest in terms of employees, with more people working for it than McDonald's, Ford, Disney and Boeing combined.

http://www.investors.com/NewsAndAnalysi ... ing-Up.htm

[Coito ergo sum]

Moody’s Lowers Economic Growth Outlook

http://blogs.wsj.com/economics/2011/08/ ... h-outlook/

[Coito ergo sum]

Dow Jones Industrial Average plummeting...again....http://www.cnbc.com/id/44188136 US Jobless Claims Up, Gasoline Lifts Consumer Prices http://www.cnbc.com/id/44187274 Morgan Stanley downgrades 2011 forecast - http://www.cnbc.com/id/44186209

U.S. and the euro zone were "dangerously close to a recession", and criticized policymakers in Washington and Europe for not acting more decisively to contain the sovereign debt crisis.

"A negative feedback loop between weak growth and soggy asset markets now appears to be in the making in Europe and the US."

[Coito ergo sum]

Stocks drifted lower in light, choppy trading Friday as investors were reluctant to remain in the market ahead of a weekend, amid worries over a global recession in addition to the ongoing euro zone jitters.

http://www.cnbc.com/id/44202341

[Coito ergo sum]

Number of "green jobs" fails to live up to promises: http://www.nytimes.com/2011/08/19/us/19 ... .html?_r=2

OMG! No way! Shocking news!

[Coito ergo sum]

WASHINGTON (AP) -- Employers stopped adding jobs in August, an alarming setback for an economy that has struggled to grow and might be at risk of another recession.

It was the weakest jobs report since September 2010. The unemployment rate remained at 9.1 percent.

Stock futures plunged on the news. In the 15 minutes after the report was released, Dow futures fell 94 points, from 11,401 to 11,318.

http://finance.yahoo.com/news/Employers ... et=&ccode=