Wednesday, March 3, 2010
And that development could send the country’s economic growth down to 2 percent within 10 years, he told Bloomberg.
That would represent a veritable plunge from the current level of about 10 percent and likely throw the entire region, including Japan and South Korea, into recession, says Rogoff, former chief economist at the International Monetary Fund.
Latin American commodity exporters also would suffer, as China is a huge customer for them.
“You’re not going to go a decade without having a bump in the business cycle,” Rogoff said. (more)
His outlook for the U.S. housing market is positive, noting that it has been six months since the plunge last May.
“It looks like the big drop is over,” O'Sullivan told Bloomberg TV.
He said there remain risks and headwinds but with low mortgages rates, declining inflation and the lower home prices, he predicts the market “seems to be turning.”
Consumer confidence has also risen while affordability remains high, O'Sullivan said. “I think on balance, the pluses outweigh the minuses,” he said. (more)
It is astounding how many economists, government officials, and Wall Street strategists construe the current economic conditions as evidence of a bona fide recovery. It is a testament to the power of the rose colored glasses handed out by our nation's leading universities that such a feeling could be widely held despite the clear and present danger that compounds daily. The myopia leads us to enact policies that actually exacerbate our problems. The "remedies" are postponing, perhaps indefinitely, a true recovery.
The oracles who have described the nature of this imminent recovery do so based on their conviction that consumer spending is slowly returning to levels that existed prior to the recession. New data released today seems to support this view, with consumer spending up 0.5% in January. (more)
If the U.S., the United Kingdom, Germany and others shoulder more and more risk--whether from supporting companies or cash-strapped nations like Greece--"then the credit spreads and yields of these sovereigns should look more and more like the markets that they guarantee," says Gross.
"The Kings, in other words, in the process of increasingly shedding their clothes, begin to look more and more like their subjects. Kings and serfs begin to share the same castle." (more)
What's not being counted: potential debt bombs that don't get factored into most budget analysis.
The first is the debt held by the public. That's money owed to those who have bought U.S. Treasurys, most notably big bond mutual funds and foreign governments. Debt held by the public today is roughly $8 trillion and rising.
The second number is the money the federal government owes to government trust funds, such as those for Medicare and Social Security. The government has used revenue collected for those programs to cover other outlays. Currently, the debt to the trust funds is approaching $5 trillion. (more)
The background history of this case goes something like this: In the 1960s, Newfoundland and Labrador, Canada's most eastern province was also Canada's poorest. Fortunately, Newfoundland had a river in Labrador with great hydroelectric potential it wanted to develop and sell the power to the New England States. Unfortunately, the only way to get the power to market was to build a power line through Quebec.
So the Newfoundland Government set up a company called NALCOR to develop the project and negotiate a 'deal' with Hydro Quebec--and NALCOR was financed by the Rothschilds--Alarm bells now should ring! (more)
Estimates also predict that letter carriers will deliver 150 billion pieces of mail in 2020, a drop of about 26 billion pieces from last year. Postmaster General John E. Potter plans to press lawmakers and the Postal Regulatory Commission in the coming weeks to eliminate Saturday mail deliveries and allow the mail agency to raise prices beyond the rate of inflation, if necessary.
"We intend to be around for decades and centuries to come," Potter told a meeting of regulators, congressional staffers and major mail customers Tuesday. "These are the first steps that are necessary to make sure that that occurs." (more)
“There are good reasons to see moly prices rise. First, there is the long-term demand curve:
“That’s roughly a 75% increase in a decade. And that assumes historical demand is the best guide. But there are good reasons why moly demand might rise more. This demand is mainly from energy uses and infrastructure investment. Nuclear reactors need moly. Deep-water wells need moly. Tar sands and heavy oils use moly in their pipelines.
“So these are strong new sources of demand that did not impact demand as much in the past. And then you look at where the moly will come from. The financial crisis halted or delayed the development of new mines. China is a potential source for new supply, but its mines are on the higher-cost side of the scale. They will need higher moly prices to encourage investment and bring the new supply online.
Unlike in the U.S., growth in the great white north was relatively broad. And now with several quarters of expansion under their belt, there’s extra pressure on the Bank of Canada to start (gasp!) raising rates. Can you imagine? Banks willing to pay interest on savings again? What a world."The persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity.”
The BoC said its lending rates would remain the same. “The target overnight rate [0.25%] can be expected to remain at its current level until the end of the second quarter of 2010,” the statement reads.