Author's posts

Aug 05 2011

DocuDharma Digest

Regular Features-

Featured Essays for August 4, 2011-

DocuDharma

Aug 05 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 US stocks plunge in worst day since crisis

AFP

48 mins ago

The Dow Jones Industrial Average plunged 4.3 percent Thursday, its worst one-day drop since the financial crisis, as global markets melted down over fears of a new economic downturn.

The Dow closed down 512.76 points to 11,383.68. The broader S&P 500 lost 4.8 percent to 1,200.07, while the tech-heavy Nasdaq Composite plunged 5.1 percent to 2,556.39.

More turmoil over sovereign debt problems in Europe and feeble US economic data are stoking “fear that the economy is heading for a double-dip recession,” said Peter Cardillo of Rockwell Global Capital.

Aug 04 2011

Sick of being right

Caasandra Herr Doktor Professor–

It’s kind of annoying when people claim that I said the stimulus would work; how much noisier could I have been in warning both that it was grossly inadequate, and that by claiming that a far-too-small stimulus was just right, Obama would discredit the whole idea?

Of course, the WSJ also said that the stimulus wouldn’t work. The difference was in how it was supposed to fail.

The WSJ view was that federal borrowing would crowd out private spending by driving interest rates sky-high, that the bond vigilantes would destroy the economy. Note that when the linked editorial was published, the 10-year rate was at 3.7%, with the Journal in effect predicting that it would go much higher.

My view was that government borrowing in a liquidity trap does not drive up rates, and indeed that rates would stay low as long as the economy stayed depressed.

How it turned out.

That’s a pretty clear test; among other things, you would have lost a lot of money if you believed the WSJ view.

Inflation is another issue; the WSJ kept telling readers that a big inflationary surge was coming. Commodity prices have muddied this issue to some extent, but even so actual developments on the inflation front have been a lot closer to what Keynesians were predicting than to the right-wing line.

Of course, I would much rather have actually had adequate policy than be vindicated by the form of our economic failure.

Aug 04 2011

Predicting the Weather

Meteorology is a science.

  • If the rock is wet, it’s raining.
  • If the rock is swinging, the wind is blowing.
  • If the rock casts a shadow, the sun is shining.
  • If the rock does not cast a shadow and is not wet, the sky is cloudy.
  • If the rock is not visible, it is foggy.
  • If the rock is white, it is snowing.
  • If the rock is coated with ice, there is a frost.
  • If the ice is thick, it’s a heavy frost.
  • If the rock is bouncing, there is an earthquake.
  • If the rock is under water, there is a flood.
  • If the rock is warm, it is sunny.
  • If the rock is missing, there was a tornado.

Economics?  No so much.

Jobless Claims Remain Elevated

By LUCA DI LEO And JEFF BATER, The Wall Street Journal

AUGUST 4, 2011, 8:34 A.M. ET

New claims for unemployment insurance fell by just 1,000 to a seasonally adjusted 400,000 in the week ended July 30, the Labor Department said Thursday. That followed a 21,000 decline the previous week, which was revised from an originally reported 24,000 drop.

Economists surveyed by Dow Jones Newswires had forecast claims would rise by 7,000 in the latest week.

…

Fears are growing that a new recession may follow the severe downturn of 2008 and 2009. Three former top officials at the Federal Reserve put the odds between 20% and 40% in a recent interview with the Wall Street Journal. A Labor Department report out Friday is expected to show the unemployment rate remained at 9.2% last month, more than two years after the recession ended.

Thursday’s report showed the number of continuing unemployment benefit claims — those drawn by workers for more than a week — rose by 10,000 to 3,730,000 in the week ended July 23.

…

U.S. consumers cut spending in June at the fastest pace in nearly two years, raising concerns that the economy is stalling largely because of underlying weakness following the financial crisis and not just temporary factors seen in recent months, such as higher prices for food and gas.

Aug 04 2011

DocuDharma Digest

Regular Features-

Featured Essays for August 3, 2011-

DocuDharma

Aug 03 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

Lawrence H. Summers is the Charles W. Eliot University Professor at Harvard and former U.S. treasury secretary. He speaks and consults widely on economic and financial issues. The opinions expressed here are his own.

1 A debt deal that solves the wrong problem: Summers

Lawrence H. Summers, Reuters

1 hr 19 mins ago

CAMBRIDGE, Massachusetts (Reuters) – At last, Washington has reached a deal that raises the debt limit and averts a default that would have been a national embarrassment and an economic and geopolitical catastrophe.

The forces shaping the deal and the deal itself are multifaceted, and so is the right reaction to it. Mine has a number of elements.

Relief. There will be no first default in U.S. history; no economy-damaging short-run austerity; no attack on the nation’s core social protection programs or on universal health care; and no repeat of the last month’s shabby spectacle for at least 15 months. All of this was in doubt even a week ago as congressional intransigence threatened to make the problem of acceptably raising the debt limit insoluble.

Aug 03 2011

The Kind Of Deal Democrats Hate

For Democrats, the congressional budget deal is a Satan Sandwich.

Aug 03 2011

DocuDharma Digest

Regular Features-

Featured Essays for August 2, 2011-

DocuDharma

Aug 03 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 24 killed in Syria as Ramadan begins: activist

AFP

14 hrs ago

At least 24 civilians were killed by security forces across Syria, including 10 after evening prayers on the first day of the Muslim holy month of Ramadan, a human rights activist said on Tuesday.

The reports of new deaths came as the UN Security Council was to hold a second day of emergency talks on the deadly crackdown in Syria.

“Ten martyrs fell and several people were wounded by gunfire from security forces during protests in several Syrian towns after the ‘taraweeh’ evening prayers” on Monday’s first day of Ramadan, Syrian Observatory for Human Rights chief Rami Abdel Rahman said, adding that the day’s death toll was 24.

Aug 02 2011

Paint It Black

So I’m watching CNBC and their stock spokesmodel is saying “Well, it’s a sea of red out there but we’re trying to focus on the green.”

CEO- “What people are missing is that corporate fundamentals are much better than economic fundamentals.”

Indeed.

I don’t know that I have much more to add so here’s a video-

Dow down 265.87, below 12,000.  S&P negative for the year, below 200 day moving average.  Both longest losing streak since October 2008.

You remember, the big crash.

“The bond market is not worried about our ability to pay our debts, they’re worried about our ability to grow.”

Load more