Here Comes The Double Dip Pt. 3

[Lore]

Why would that happen when all the data in Europe for the foreseeable future points in the downward direction? If you think our weak 2.2 growth rate is going to change things over there, then you need to do a little more research on global economics.

It need not just be the US, there's also China, India, the whole developing world, etc. Things in China, for example, appear to be turning around after a weak spot, so imagine increased purchases by the Chinese and Indians of Mercedes and BMW's, and you get a turnaround in Germany, which will help other Eurozone nations, etc. In the meantime the US continues merrily along, and before long you get a turnaround in Eurozone measures and they begin, once again, following US industrial production and other figures upward.

Not quite, China relies on the EU as its largest trading partner. They had a monthly uptick from a steady downturn which only shows that the pace of China's slowdown has stabilized at this moment. They are within their 5th straight quarter of a downturn.

"It is way too premature, if not misguided, to conclude that China's growth has distinctly bottomed and is poised for a strong bounce; especially in the context of external headwinds," said Vishnu Varathan, an economist with Mizuho in Singapore.

He pointed out that, although new export orders rose, an overall slip in the new orders component pointed to a slowdown in domestic demand, adding that struggling smaller firms and a precariously poised global economy were also worrying factors.

"With U.S. 'green shoots' faltering and the European recession intensifying, sustained improvement in China's manufacturing sector is anything but a guarantee," Varathan said.

Figures due later on Wednesday are expected to show factory activity in Europe shrank for the ninth consecutive month, with the PMI reading forecast at a dismal 46.0, lower than the 47.7 in March.

http://www.reuters.com/article/2012/05/ ... 2420120502

Doesn't look like the EU is selling more expensive products on average to anyone right now.

As for the USA, we're just muddling along.

*** UPDATE***

To the above article...

The manufacturing PMI for the euro zone slumped to 45.9 in April from March's 47.7. That was weaker than the preliminary reading and the lowest index level since June 2009. Economists had forecast the index would be unchanged from the 46.0 preliminary reading.

http://online.wsj.com/article/SB1000142 ... 21644.html

[Daniel_Plainview]

What you fail to take into account is the possibility Europe could revert to the US's current path on that chart.

All the more reason to continue to monitor the Eurozone diligently. Thanks for the affirmation. It's always nice when we can find common ground.

[OilFinder2]

What you fail to take into account is the possibility Europe could revert to the US's current path on that chart.

All the more reason to continue to monitor the Eurozone diligently. Thanks for the affirmation. It's always nice when we can find common ground.

No, you actually got it backwards.

Notice I said Europe could revert to the US's current trajectory. That is, instead of Europe dragging the US down, the US would drag (or at least help drag) Europe up.

In that case one needs to focus on what the US is doing, not Europe, since my presumption is that the US would lead.

I'm telling you the US could be the weightlifter (along with maybe China, India, etc), and you're replying, "All the more reason to monitor the barbells." Completely backwards.

[dolanbaker]

Considering the fact that the US has given away most of the weights, I don't see how they can lift too much at all (except air).

[kublikhan]

"Fiscal cliff" is a term you'll be hearing much more often between now and the end of the year. That's when a half-trillion dollars worth of tax cuts and spending boosts go by the wayside, possibly dragging the U.S. economy into the abyss of another recession.

That, however, is the worst-case scenario. A more likely outcome, according to those who have studied the issue closely, is that Washington officials come up with a way to extend many of the items in question before automatic tax increases and spending cuts kick in that could choke the life out of the already-stumbling recovery.

For the fiscal cliff, there are four main items at issue: Expiration of the Bush tax cuts; the end of the 2 percent payroll tax holiday; extended unemployment compensation coming to a close; and the automatic spending and budget cuts mandated by the Budget Control Act if Congress fails to reach its Supercommittee's deficit reduction goals. All told, the damage would amount to $500 billion, or some 3.8 percent of gross domestic product , at a time when GDP is struggling to grow by 2 percent.

While it all sounds pretty scary on the surface, in practice it's unlikely that anyone in Washington will be content to sit by and allow another deep recession to hit. "We do not see the doomsday scenario playing out: policymakers are unlikely to drive the US economy off the fiscal cliff," JPMorgan Chase economist Michael Feroli said in an analysis. "Nonetheless, fiscal policy will continue to be a drag on the economy next year."

Policymakers soon will embark on another round of their favorite sport: Can-kicking problems as far down the road as possible (if you'll pardon the overused market cliche).

"Despite the problems, the United States is still one of the bright spots of the world," he said. "It's just a matter of growth slowing, and if in fact growth is slowing you need to reposition differently." James Paulsen, chief market strategist at Wells Capital Management in Minneapolis, said that whatever the Washington negotiations produce, investors should count on getting less stimulative help from the government.

What’s This ‘Fiscal Cliff’ Anyway? Do I Need to Worry?

[dolanbaker]

The chinese government is actively discouraging the purchase of foreign cars by government officials.

http://www.bbc.co.uk/news/business-17284862
China may be about to issue an order that will have bureaucrats up and down the country quaking in their boots, or at least their luxury leather seats.

A public consultation ends on Friday on a proposal to stop officials spending taxpayers' money on foreign-branded cars, forcing them to buy Chinese models instead.

Uhhhh ... in case you didn't notice, that pertained only to government officials.

If a government official is prevented from having a beemer, you can be sure that he'll prevent others having a better can than him!
"I am patriotic, I buy Chinese, YOU must be patriotic as well, YOU will buy Chinese!"

[pstarr]

The inner American: "The fiscal cliff? Oh yeah. Something about mandatory spending cuts? Don't bother me. I have to vote for my favorite Glee. No. I meant Dancing Star. Oh right, Candidate. I sure hope Sarah Palin runs again. She was an angry cougar GRrrrrrrrr "

[Lore]

The inner American: "The fiscal cliff? Oh yeah. Something about mandatory spending cuts? Don't bother me. I have to vote for my favorite Glee. No. I meant Dancing Star. Oh right, Candidate. I sure hope Sarah Palin runs again. She was an angry cougar GRrrrrrrrr "

Maybe a middle aged Alaskan Valley Girl could do better?

[pstarr]

The inner American: "The fiscal cliff? Oh yeah. Something about mandatory spending cuts? Don't bother me. I have to vote for my favorite Glee. No. I meant Dancing Star. Oh right, Candidate. I sure hope Sarah Palin runs again. She was an angry cougar GRrrrrrrrr "

Maybe a middle aged Alaskan Valley Girl could do better?

On Glee or Dancing Stars? I'd put my money on Sara for the "Hunger Games" You betcha

[Lore]

The inner American: "The fiscal cliff? Oh yeah. Something about mandatory spending cuts? Don't bother me. I have to vote for my favorite Glee. No. I meant Dancing Star. Oh right, Candidate. I sure hope Sarah Palin runs again. She was an angry cougar GRrrrrrrrr "

Maybe a middle aged Alaskan Valley Girl could do better?

On Glee or Dancing Stars? I'd put my money on Sara for the "Hunger Games" You betcha

As long as the kill shots from her bow are taken off camera. She's only good for "cut" scenes.

[joewp]

As for the government (federal government, at least), they're a different story. They're the entity which creates the money in the first place, so they are not revenue constrained. Imagine a household which can create its own money, and get people to accept it, and you get the picture.

Wake up, Oily. The Federal government does not create its own money. The Federal Reserve does, at interest.
Forbes: Does the Fed Create Money?

Not only do the Fed’s monetary additions increase the money supply, but the effect can be vastly multiplied through the fractional reserve system.

Also, the process of creating bank reserves always first involves the purchase of an asset by the central bank. The Fed issues electronic credits to banks in exchange for bank assets, including Treasuries. Its purchases drive up the demand for those assets, bringing about rising prices. In fact, Bernanke has clearly stated that the purpose of his “quantitative easing” program is to raise the rate of inflation, which in his mind is too low.

The US government does not create money, the Fed does, and the commercial banks create up to 100 times more.

Obviously, your cornucopia is fantasy based, not fact based.

[Armageddon]

Oily thinks the Fed is Federal also.

[OilFinder2]

Back down to the 360K's!

U.S. jobless claims drop 27,000 to 365,000

The number of people who applied for jobless benefits fell last week for the first time in a month to just slightly above a four-year low, according to the latest government data.

Jobless claims declined by 27,000 to a seasonally adjusted 365,000 in the week ended April 28, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 392,000 from an original reading of 388,000.

Economists surveyed by MarketWatch had projected claims would fall to 378,000.

After sinking to a four-year low of 361,000 in February, claims reversed course over the past month and reached the highest level since last November. Most economists believed a late Easter holiday and spring break, when many school workers can seek temporary benefits, triggered a spike that would soon recede.

[...]

[AgentR11]

Wake up, Oily. The Federal government does not create its own money. The Federal Reserve does, at interest.

I think you misunderstand the Fed... the only reason it can do its job is because of direct congressional authorization. The Fed serves at the pleasure of the government, but is somewhat insulated from short term political pressures, and has a very specific mandate with regard to keeping inflation in check and performing its function of lender of last resort (seems like first resort these days...).

If the Fed were truly private, there would be no reason in the world for them to support extremely low interest rates, they'd withhold their buys until the rate climbed to provide real profitability, but surprise surprise surprise, that's not what they are doing.

This whole meme of "The Fed is a private bank ripping us all off" is just utter nonsense.

If anyone is getting ripped off, its the other REAL private banks who are locked into a very low interest rate realm, with a disconnect between reported inflation and purchasing power degradation.

[ralfy]

According to this writer, most of total money supply isn't created by central banks but by commercial banks:

http://www.webofdebt.com/articles/dollar-deception.php

Another shows that most of total money supply comes in the form of derivatives, much of it unregulated:

http://www.creditcontraction.com/

(See the liquidity pyramid.)

Finally,

"Revealed – the capitalist network that runs the world"

http://www.newscientist.com/article/mg2 ... world.html

Given the transnational nature of top corporations and the idea that the level of financial speculation that they are engaged in may be far removed from interest rates and even fractional reserve policies, it is very likely that corporations and not governments "run the world."

[Armageddon]

People Not In Labor Force Soar By 522,000, Labor Force Participation Rate Lowest Since 1981

it is just getting sad now. In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.

http://www.zerohedge.com/news/people-no ... owest-1981

[TheAntiDoomer]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

[dolanbaker]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

No it hasn't, many of the manufacturing jobs have already been exported and with ever increasing automation, there is an ever decreasing demand for workers (full stop!)

[Daniel_Plainview]

ZH is having a field day with all of the horrible economic news

--- Real U-3 Unemployment Rate: 11.6%

The widely accepted definition of the labor pool, that used by the CBO and all other government forecasting agencies, assumes a 90,000 growth in the labor force every month as it has to keep in line with the growth of the US population! The implication is simple: using a real labor force participation rate long-term average of 65.8%, the real unemployment rate in April was 11.6%, based on the 5.4 million additional workers that should be counted as part of the U-3 which then means that the real number of unemployed is not 12.5 million but 17.9 million, which in turn implies a 11.6% unemployment rate in the US. This also means that the spread between the propaganda, and the real number is now 3.5%: the most it has been since the early 1980s.

--- St. Louis Fed's "Not In Labor Force" Data Is Now Officially Off The Chart

The April "Not in labor force" seasonally adjusted print: 88,419,000. And yet, the maximum reading permitted by St Louis Fed Not in Labor Force (LNS15000000) graph: 88,000,000. The data has now officially dropped off the chart. No further commentary necessary.

--- Huge Miss in April Unemployment

This is really bad news ... we could be heading into a serious recession. And crude oil is pricing as though we're headed into a deflationary recession/depression.

This is scary.

Where's OF2? We need some good news.

[Plantagenet]

Number of people hired in April =115,000

Number of people classified as discouraged no longer counted as being unemployed = 500,000.

-------------------------

When more than four times as many people leave the unemployment rolls by being reclassified as "discouraged" as leave it by getting jobs, its clear that the Obama administration is cooking the books.


The Obama administration is cooking the books on the unemployment number