Wednesday, June 9, 2010
A May 14, 2010 Barron’s piece entitled We’re Not Greece -- Yet (D. Henniger) referred to a Royal Bank of Canada (RY) study that concluded that “Although the states of California, New York, New Jersey, Massachusetts, and Illinois are comparable in terms of economic output and population to Portugal, Ireland, Italy, Greece, and Spain, RBC finds that states’ debt burden are nowhere near that of the PIIGS.” This, “even after including unfunded liabilities for states’ employees’ pension and other benefits.” As you'll see below, I take issue with the above conclusion, and the first half of this piece will deal with why. Basically, citizens of each US state are responsible not only for the debt burdens of their states and localities, but they're also responsible for their proportionate share of the federal debt. As you'll see, the combination of the two produces debt ratios far in excess of those of the PIIGS. (more)
"We have a little bit more risk with the European situation; the (U.S.) outlook looks good but not so strong as to reduce the unemployment rate very quickly; I don't see inflationary pressures at the moment," Evans told business leaders in Chicago in response to an audience question.
"So I think we will continue to have an accommodative policy stance for quite some time," he said. (more)
Although many gold stocks have seen substantial gains since 2005, the overall price gains of gold stocks has underperformed the price appreciation of the metal as can be seen by viewing the PHLX Gold&Silver Index, comprised of 16 major gold and silver producers. While the price of gold has appreciated almost 200%, the XAU has lagged considerably with a gain of 96%. (more)
“It’s nuts: how can they be concerned about the inflationary impact of this?” says Carl B. Weinberg, chief economist of High Frequency Economics.
“If I were the head of the ECB, I would be printing money to avert the decline in the money supply,” he told the New York Times.
Deflation is commonly defined as a decrease in the general price level of goods and services. Deflation occurs when the annual inflation rate falls below zero percent (a negative inflation rate), resulting in an increase in the real value of money — allowing one to buy more goods with the same amount of money. (more)
One Honda worker on strike posted a question online to his fellow workers: "Our parents have suffered from this cheap labor market and now they are getting old. Do we want to follow in the footstep of our parents?"
A new generation is shaking China's labor landscape, according to Reuters. With the support of the Chinese government, they are demanding higher wages. And if recent weeks are any indication, companies that depend on them to mass-produce electronics, auto parts and other goods sold around the world will answer their call.
The end of cheap Chinese labor may be near. Here are some of the most telling signs: (more)
John Amos, head of the West Virginia-based nonprofit SkyTruth, was looking at satellite images of the oil from the Deepwater Horizon site when he noticed what appeared to be another small slick of oil about 11 miles off the coast of Louisiana and about 40 miles from the major spill. Amos' group uses the images to assess environmental problems; he was among the first independent experts to point out that the spill estimates from BP and the government were far too low, which has now been confirmed. Amos reported a "small but persistent leak or oily discharge" at a second site in the Gulf, one that appeared to be coming from platform 23051 in the Gulf of Mexico. It can be seen on multiple satellite images of the region. Minerals Management Service (MMS) records indicate that the platform belongs to Taylor Energy Company. (more)