Month: July 2010

Economics Update

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Temp hiring surges

It looks like temporary hiring is very strong, up 19.6% year over year, which, in addition to contributing to my finding employment, should be a leading indicator for direct employment, though private “permanent” employment is still down 0.7% YoY, which runs counter to earlier data. (see chart pr0n)

We are also seeing falling rates of credit card delinquencies, which are down to an 8 year low, which could be seen as either a glass half full, that people are getting a handle on their finances, or glass half empty, with people continuing to deleverage, and flying into the “paradox of thrift.”

Finally, in an update from yesterday, when I discussed office vacancies, today, we see that vacancy rates in shopping centers increased in the 2nd quarter.

Why Aren’t The Dems Hammering This Every Day?

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Georgia Democratic Gubernatorial candidate, and former Governor, Roy Barnes, is now explaining to the voters that wingnut Republicans are more than poor stewards of the public trust, but that they they are actually an embarrassment to the people, and the state, of Georgia.

Some text from his ad:

It’s hard for industry to take us seriously when the Legislature attempts to outlaw stem cell research, passes bills about microchips in the brain, and talks about seceding from the Union.

………

We can’t bring jobs to Georgia with the rest of the country laughing at us.

An appeal to civic pride, reminding folks that these folks are f%$#ing nuts, and that we should be embarrassed that they win elections, is a simple and easily understood: They are laughing at you, not with you because of these clowns.

This is a message that can, and should, be hammered at every day until election day.

Why We are a Sick Nation

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I don’t mean mentally ill, I mean generally unhealthy.

A study has been done, and it shows that countries with more equitable wealth distribution are healthier, even amongst the wealthiest in society:

……

Links between bodily and economic well-being are far from straightforward. In the related area of socioeconomic inequality we’ve already become aware of unexpected influences through the work of Professor Richard Wilkinson of the University of Nottingham.

In his 2009 book The Spirit Level, co-authored with Kate Pickett, he summarised a raft of research all pointing in more or less the same direction. In countries where there is a big earnings gap between rich and poor, life expectancy is lower while mental illness, obesity and drug and alcohol abuse are all more common.

The real surprise is that it’s not only the poor who suffer. The population as a whole do less well if the gap is wider. The nations with the smallest wealth gap and the lowest incidence of health and social problems are the Japanese and the Scandinavians. The countries with, respectively, the greatest and highest are America, Portugal and Britain. The biological explanation for this is uncertain, but possibly mediated by the hormonal effects of perpetual anxiety about status and position, or loss of them. Economics affects health but not always as you might expect.

In our accommodating the insatiable desire of the people at the top for, “Another yacht to water ski behind,” we are shortening, and worsening, the lives of everyone in our society, both among the haves and have nots.

The economists or social scientists might have a more complex explanation for this phenomenon, but as for me, I will keep the lesson simple, “Evil is bad for you.”

A Bit of Windows Coolness

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Freeform Snip


Square Snip

The snipping tool comes with both Vista and Windows 7, and it allows you to take a “screenshot” of a portion of the screen, either as full screen, in a single window, a rectangle, or an irregular shape. (see pix)

It is legitimately a cool bit of stuff, and it comes from the least cool company on the planet, Microsoft®.

OK, Good News For Me

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The US Army is upping its order of ground penetrating radars for deployment in Afghanistan:

To counter the threat, the Army is nearly doubling the number of NIITEK-produced Husky Mounted Detection Systems in theater.

The main component of the Husky is ground-penetrating radar called the VISOR 2500. One of the enduring frustrations with IEDs in Afghanistan is that often components are nonmetallic and nonmagnetic, making them difficult to detect using conventional methods. NIITEK says the radar system allows soldiers to detect threats through the ground that metal detectors wouldn’t pick up.

The most recent contract, awarded June 2, cost the Army $106.5 million for the 76 systems to be installed on Husky tactical support vehicles, as well as for spare parts, maintenance support and training for soldiers.

Yes, I work there, and no, I am not going into any details about what I do there, but obviously this means that there is work to be done.

You Know, This Might Explain Why We Aren’t Seeing a Real Recovery

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US businesses have accumulated $1.84 trillion in cash and cash like assets, and they have essentially stuffed their mattresses with them.

So instead of investing in new plants and equipment, or in product or process improvement, they are holding onto cash, because they are concerned that the banks, the ones that we the taxpayers bailed out to the tune of trillions, will cut off their credit.

Economics Update

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CRE is not a pretty picture
H/t Calculated Risk

Not a good day for real estate.

We have an increase in the rate of mortgage delinquencies, as well as decrease in delinquent mortgages becoming current.

Additionally, in the world of non-residential real estate, office vacancy rates have hit a 17 year high. (See graph pr0n)

Outside of real estate, the Institute for Supply Management’s (ISM) non manufacturing index fell in June, though the number is still above 50, it’s 53.8 down from May’s 55.4, so it is showing slower expansion, not contraction.

On the brighter side, the bankruptcy filing rate in June fell from May’s level.

Well, sort of anyway. You see, June actually had about the same number of filings, but because June had 22 business days, and May, because of where weekends fell and the Memorial Day holiday, only had 20 business days, the rate for filing days was down by 10%.

I call bullsh%$ on that one.

People don’t file on a per business day basis, they do so over a period of time that is largely unaffected by holidays, and June has 1 fewer days that May.

Normally, I Do Not Give Investing Advice…

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“I’m beginning to think these are regular storms,” he added, “and we have a sh%$#y boat.”

But this proposed strategy actually sounds good:

It has been a profitable first half for Contrarian Partners. Our core investment strategy remains unchanged: to mine the research produced by investment banks every six months to establish consensus trading strategies. Then trade against them.

…………

In general, though, the advice was reassuringly poor. The markets continue to reward us for listening to the experts – then doing the opposite.

Needless to say, the proposal is tongue in cheek, but the the truth is in there.

The degree to which the “Masters of the Universe” have missed every warning out there, largely because their excessive salaries and bonuses depend on missing warnings, is stunning.

If we were to take the top 100,000 bankers in the world, and send them to North Korean reeducation camps, and pay the DPRK a million dollars to house each one, both the DPRK and the rest of the world would be far better off.

H/t Barry Ritholtz.

Tin Foil Hat time

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I think that it is fairly clear by the way that Barack Obama has stacked the “deficit reduction commission,” so as to be a “very serious person.”

The two chairs, Erskine Bowles, and Alan Simpson, have both been long time advocates of privatizing and otherwise gutting Social security.

Well, we now have an oddity in statistical reporting, because the Annual Report of the Trustees of Social Security for 2010 has not yet been released.

This is the document that gives an expiration date on the Social Security trust fund, and normally, it’s released on March 31, 3 months ago.

The Angry Bear finds this odd:

I find this odd in the extreme, particularly since Social Security is front and center in the news with the ongoing meetings of the Catfood Commission with their strong suggestions that cuts to Social Security are definitely on the table. You would think that repeated delays in the release of this key Report would at least require SOME explanation and that someone in the media might be asking questions. But no like the proverbial tree falling in the forest no one was close enough to hear the sound. If any. Well the silence is deafening. The lead press item on the Social Security website is the news that Isabella is the number one name for baby girls this year. http://www.ssa.gov/ Which I guess is fascinating news for fans of the Twilight franchise but not quite satisfying for us data driven types.

I think that this is all a part of a desire to give cover to the “Cat food commission,”* so called because that is what seniors will eat if their proposals are adopted cover for their proposal.

I am not sure if the intent is to bury a good report, of if it is to release an alarmist report at the most opportune moment, but my money is on skulduggery.

*In the interest of health, I would suggest that people eat dog food, and not cat food. Cats because they are one of the few true carnivores, do not need the complex carbohydrates and fats that people, and dogs do. As such, dog food is better for you than cat food because it provides carbs and essential fatty acids. A dog can go blind if it is fed on cat food, but a cat lives just fine on dog food. The pnenomenon is known as rabbit starvation.

Better That They Piss on Each Other…

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Because when the ratings agencies are pissing on each other, they are not pissing on the rest of us:

In a report that could equally have been written about its own prospects, S&P credit analyst Emile Courtney laid out a grim picture for rival ratings agency Moody’s saying it costs would likely rise, margins fall and litigation risks multiply.

Moody’s short-term debt has been placed by S&P on its CreditWatch list with a ‘negative watch’ outlook, meaning there is a more than 50pc chance its bonds could be downgraded.

Seriously, we need to obliterate fix the ratings agencies, sooner rather than later.

Yes, the Shrill One Is Shrill

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Paul Krugman compares the justification behind European austerity programs to the infamous French strategy in World War I.

He’s right, of course.

The statements by ECB President Jean-Claude Trichet that austerity in the face of a depression will win through the creation of confidence is much like the infamous Plan XVII envisioned by the French to win the war through the confidence and fighting spirit of the French citizen (élan), as described by Baraba Tuchman in her book The Guns of August:

Entirely offensive in nature, Plan XVII made extensive use of the belief in the mystical élan vital assumed to be instilled within every Frenchman – a fighting spirit capable of turning back any enemy by its sheer power.

Needless to say, Plan XVII was as meaningful an idea as the statement by a British General during the same period of something to the effect of, “A machine gun bullet cannot stop a horse.”

Republicans and Hookers Go Together Like Chocolate and Peanut Butter in a Reese’s

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We have another scandal in the GOP, this one involving embezzlement of Florida State Party funds, and we have now reached the now inevitable hooker stage of the story:

According to a female party official who spoke to investigators, Greer organized a men-only trip to the Bahamas with major donors and “women were involved and paid.” Gov. Charlie Crist, who was on the same trip and hand-picked Greer for the top GOP job in 2007, said today that the charge there were escorts or other paid women involved is “absurdly false.”

You know, if I had been a Republican party operative when I was single, I would have gotten a lot more action.

Hell, the debauchery would have continued after I got married if I had been a ‘Phant operative.

So, Are We Going to Repeat 1937?

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Why this picture does not scare the powers that be defies understanding
H/t Calculated Risk

Well, a quick rundown of this week’s data seems to indicate that if we listen to the austerity fetishists, we are.

In employment, the Thursday unemployment claims data indicates a continued weakening of the employment picture, with initial claims rising 13K to 472K, at least 100K more than what we need to see for meaningful job growth, and both the 4-week moving average and the continuing claims numbers went in the wrong direction too.

Additionally, the official job numbers for June came out, and the non-Farm payroll fell by 125,000, though the drop was because of the US Census winding down its temporary positions.

Private employment rose by an anemic 83,000, and the unemployment rate fell from 9.7% to 9.5%, though the latter was largely from people leaving the rolls because they had given up looking, and the hourly workweek fell.

Additionally, the Institute for Supply Management’s Manufacturing Index fell from 59.7 to 56.2, a 6-month low, though any number over 50 still shows expansion, and the Chicago Purchasing Managers’ index fell slightly as well.

Also, in yet another indication that the economy is running out of steam because the stimulus is running out, small business lending from the SBA has cratered following the expiration of its bonus program to lending banks.

Of course, the inflation hysterics hawks are saying that the bond markets are mad as hell, and that they are not going to take it any more, but if this were true, mortgage rates would not have fallen to their lowest rates in 50 years.

I would note that we are seeing the same thing in real estate, with 31% of all home sales being foreclosure or short sales, up from 1% at the height of the bubble, and these foreclosures are selling for a 27% discount relative to regular sales, which indicates that a recovery, either in price or in volume is still far away.