Succinct summation of the week’s events:

Positives:

1)UoM and ABC confidence bounce a touch off multi month lows
2)Chinese economic data mixed at best but reduces odds of more tightening and raises hopes for soft landing

Negatives:

1)US retail sales, trade deficit, and jobless claims weaker than expected and Q2 GDP may be revised to 1-1.5%
2)CSCO repeats ‘unusual uncertainty’ theme of Bernanke
3)Mortgage apps not responding to historically low mortgage rates
4)Chinese economic data mixed at best
5)Southern European sovereign debt worries arise again as yield spreads and CDS widen out, and last but certainly not least
6)Fed policy, panic and inability to allow the business cycle to work without interference.

Category: Uncategorized

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

20 Responses to “Succinct summation of the week’s events”

  1. obsvr-1 says:

    “A Sustainable Level of Bank Profits Appears to be About 1% of GDP.” Higher Bank Profits Lead to a Ponzi Economy and a Depression

    http://www.philstockworld.com/2010/08/13/a-sustainable-level-of-bank-profits-appears-to-be-about-1-of-gdp-higher-bank-profits-lead-to-a-ponzi-economy-and-a-depression/

  2. globaleyes says:

    It’s a Fast World we live in and sometimes things blurrrrr. I like Succinct summation of week’s events (SSOWE) and hope it becomes a permanent feature.

    In praise of new brevity!

  3. flipspiceland says:

    RE: consumers not responding to lower mortgage rates:

    It would be too much to hope that consumers are getting financially savvy and have become conscious of the fact that while mortgage rates have reached all time lows, the price of housing increases more than the money saved on lower interest, nullifying any savings at all.

  4. franklin411 says:

    It’s impossible not to interfere in the business cycle. Take the example of a vat of water. If you intervene by plunging your hand into the water, you affect the outcome by introducing bacteria, dirt, and whatever the heck else you had on your hands at the time.

    If you do not plunge your hand into the water…you affect the outcome by not introducing bacteria, dirt, and whatever the heck else you had on your hands at the time.

    Or, let’s take a religious example:

    Sin of Commission: When your action results in sin.
    Sin of Omission: When your failure to act results in sin.

  5. Petey Wheatstraw says:

    At least the positives more than outweigh the negatives.

    Sheesh.

  6. VennData says:

    Mark Hurd might have a different summary order for the negs; how pissed must the delightfully charming and classy Jodie Fischer be that her fifteen minutes are muted, when she’s upstaged by a sassy flight attendant from Brooklyn.

    And the ten year at 2.67% is positive for everyone except the people who own it.

  7. call me ahab says:

    wasn’t it Invictus who was questioning the intelligence of Hoenig, President of the FRB of Kansas City? Well from what he says here- Hoenig appears to be the wisest of the Fed Presidents-

    “Low interest rates cannot solve every problem faced by the United States, he argued . . .In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long,” Hoenig, said. “I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short cut.”

    Unfotunately- the Fed has set the expectation that rates will be low for years and years out- cementing the expectation of no growth, because if ZERO can’t get you there- what can?

  8. I would move “mortgage apps not responding to unusually low interest rates” to the positive column.

    And what Hoenig said, “Low interest rates cannot solve every problem faced by the United States”

    Once we dispense with that fantasy, and once we realize that no matter what or how many policy tricks you try, too many houses is too many houses, well then, we might just bottom out such that real economic activity can then proceed.

  9. franklin411 says:

    @Ahab
    You should read the full text of Hoenig’s speech. He’s essentially arguing for a 1% Fed rate…simply to give people the impression that we’re doing better than we are. He seems to think that if you say “prosperity is just around the corner” often enough, it will become true.

    Furthermore, he says that our present rate of recovery is far too rapid. Economic growth is rocketing like a champagne cork, according to Hoenig. Really?

    He admits that unemployment is painful, but says that 9.5% unemployment is actually quite good. Really?

    I don’t question Hoenig’s intelligence.

    I question whether he can get his head any further up his @ss.

    http://www.huffingtonpost.com/2010/08/13/federal-reserve-pursuing_n_681540.html

  10. willid3 says:

    Low interest rates cannot solve every problem faced by the United States, he argued . . .In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long,” Hoenig, said. “I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short cut.”

    while easy money certainly lead to the mess we are in, along with malfeasance at the regulators.
    i am not sure what what can be done (that will be allowed) in place there of low interest rates? but even thats not really true just because the Fed set a rate, doesn’t mean anybody but the banks are getting it.

    and i am not sure what he is seeing (or why) that makes him think the economy is doing great, cause there doesn’t seem to be much to support that view. it certainly isn’t the employment state (or lack there of). Nor is the growth in incomes (or lack there of).
    but i guess if we thought the economy was just great in the last 9 or so years, i guess we might think so

  11. Okay F411: Hoenig’s got his head up his ass. What’s your monetary prescription for what ails us?

    (But please leave out the self-serving horseshit about needing more education. Education for what? The point behind an education is getting a job. Educating a person is not like building a ballpark in a cornfield, where if you educate, the jobs will come.)

  12. call me ahab says:

    I would move “mortgage apps not responding to unusually low interest rates” to the positive column.

    no doubt there TC- no doubt

    willid-

    I guess the gist of it is- according to Hoenig- is that we have weak to moderate growth now- how long do we keep the pedal down on low rates?

    by the Fed’s very actions- in my opinion- they create the atmosphere that creates the permanent low expectations- low rates as far as the eye can see BECAUSE we’re not going anywhere anytime soon.

  13. mathman says:

    TC: i’d like to join in by saying that the projections Obama made during his campaign that SOLD me on the way out of the mess was his plan to promote sustainable energy sources, provide tons of “green jobs” (from the manufacture to transportation and installation of various large and small solar, wind, geothermal, tidal, etc. alternatives to fossil fuels). You know – he was going to LEAD us out of this by getting us all on board (much like Kennedy launched the space program, if you were around then), coming up with a plan, getting Congress behind it (because the constituency would be all for it), and gettin’ er done!

    Well, he disappointed us by instead bailing out the goddamn insolvent banks and MADE US PAY FOR IT, didn’t prosecute ANYONE for the 8 yr. fiasco “government” we had to put up with (not to mention all the financial shenanigans), extended the wars (this is NOT what we elected him to do), and now calls us progressive types “drug addicted losers” more or less.

    That aside (and trying to stay on task), there’s still so much work to do beginning with the environment, rebuilding our electrical grid (which is on the verge of collapse), getting mass transit up to the task it will have to provide in the coming years (if you believe oil is on its way out), getting local growing and farms up and running (even in the cities), taking care of those that need it (physical, medical, mental, emotional, & dysfunctional problems abound), on top of all the usual needs of far-flung societies like ours, that we need many more people employed than our decaying country has now.

    Whether the government LEADS by investing in all this or private industry steps up (like China and Germany who are KILLING us on this green tech wave, due to our lack of spine, thought, whatever), it’s gotta get done if we want to survive and we better start YESTERDAY.

  14. franklin411 says:

    @TC
    We need at least $10 trillion in direct government investment in infrastructure ($5 trillion alone would go to fixing our crumbling infrastructure, according to the American Society of Civil Engineers), education, and energy. I agree with Mathman that we’re getting or clocks cleaned in green energy by the Chinese.

    Imagine…a world were China leads the world in industrial production, college graduates, and domestic energy production… That’s what’s going to happen if we don’t get our act together and make a big push to break the back of the structural flaw in the economy that Ronald Reagan built:

    A nation that manufactures nothing is, by definition–if not sooner, then later–a slave nation.

  15. Winston Munn says:

    If I may add another layer as a succinct summation of the succint summation (SSOTSS)

    Positives:
    China isn’t fu#cked, yet.

    Negatives:
    But we are.

  16. TK says:

    Barry, this is not the first time I’ve seen comments from you criticizing the Fed for not allowing the business cycle to work, but I don’t think I’ve seen a post explaining your view in more detail. Have you gone Austerian?

  17. VennData says:

    According to CNN, 68% of Americans are against building a mosque at 9/11 ground zero. Lord, forgive these people, their hearts have been polluted by the GOP media machine.

    These 68% of Americans are un-American. You people deserve morons like George Bush as your leader.

  18. rktbrkr says:

    Hoenig “gets it”

    Hoenig dissented from this week’s decision to bolster the recovery by keeping the Fed’s holdings of securities at $2.05 trillion and has objected to every statement this year. The Fed’s longest serving policy maker today also dismissed concerns that deflation poses a risk to the recovery, said monetary policy isn’t a cure-all for the economy and cautioned that “market participants should not direct policy.”

    “Of course the market wants zero rates to continue indefinitely,” he said. “They are earning a guaranteed return on free money from the Fed by lending it back to the government through securities purchases.”

  19. call me ahab says:

    Venndata-

    have you ever considered how a question is framed? For instance- the question- “do you like the idea of a Mosque at Ground Zero?

    answer = no, because as the CNN poll states- “Many Americans say putting a mosque so close to the area now called “Ground Zero” is disrespectful to the victims.”

    new question- do Muslim groups have the right to build a Mosque at Ground Zero?

    answer = yes, they do have the right- (but I sure wish they would build it elsewhere to be respectful of the victims)

    but as always- you jump to conclusions- ( and those 68% of Americans are just morons)-

    but you’re not too bright yourself are you Venndata?

  20. I think we should allow Al Quaida to build a memorial to the suicide bombers at ground zero (btw, I fucking hate that term) that gave their lives in defense of Allah. Snark.

    @f411: That was a fiscal prescription. Or maybe, since we ain’t got $10 trillion, it was a monetary prescription (i.e., just print it). I’m not philosophically opposed to spending money. But we can’t throw good money after bad. I cringe when I see green energy projects touted as our economic salvation. Increased energy efficiencies, which usually can come close to paying for themselves, perhaps might save us, but paying more for energy because it is “green” is a luxury that an economy falling to the mat may not be able to afford.