This morning the net looked like there would be some developments.
Turkey Strikes Back After Syrian Shelling Kills 5 Civilians
By TIM ARANGO and ANNE BARNARD
Turkey’s prime minister said Syrian targets were hit in retaliation for
mortar fire that fell in a Turkish town, raising the prospect of greater
involvement by NATO in Syria.
NATO would be stupid to get into this one.
http://krugman.blogs.nytimes.com/2012/10/03/the-economic-consequences-of-mr-rajoy/
The Economic Consequences of Mr. Rajoy
OK, it’s not really him, it’s the whole European situation. But I’m still obsessing over the third chapter of the new IMF World Economic Outlook,
with its discussion of the case of Britain’s return to the gold
standard — the case that inspired Keynes to write his scathing “The
Economic Consequences of Mr. Churchill”.
Modern estimates (pdf) suggest that Britain returned to the gold standard with a currency overvalued by around 20 percent; it also did so with a large debt from World War I. It proceeded to pursue a policy of harsh fiscal austerity — primary surpluses around 7 percent of GDP — and internal devaluation through deflation. As the IMF shows, it not only suffered prolonged stagnation, it failed even to make a dent in the debt overhang:
So, how do European debtors — and Spain in particular — compare? Too well for comfort.
Estimating overvaluation is trickier than it should be; among other things, the unit labor cost numbers you see are problematic, because they’re “whole economy” rather than private sector. This means that sharp cuts in public sector wages are counted as a rise in competitiveness, when they really aren’t.
So at this point I prefer just plain labor costs in the private sector, which look like this:
This
suggests something like a 15 percent overvaluation overall — same
ballpark as Britain in the 1920s, but maybe a bit smaller.
This is not good. History suggests that unless Spain gets serious help from a broader euro boom, and in particular some inflation in creditor countries, it faces a near-impossible task."
Modern estimates (pdf) suggest that Britain returned to the gold standard with a currency overvalued by around 20 percent; it also did so with a large debt from World War I. It proceeded to pursue a policy of harsh fiscal austerity — primary surpluses around 7 percent of GDP — and internal devaluation through deflation. As the IMF shows, it not only suffered prolonged stagnation, it failed even to make a dent in the debt overhang:
Estimating overvaluation is trickier than it should be; among other things, the unit labor cost numbers you see are problematic, because they’re “whole economy” rather than private sector. This means that sharp cuts in public sector wages are counted as a rise in competitiveness, when they really aren’t.
So at this point I prefer just plain labor costs in the private sector, which look like this:
This is not good. History suggests that unless Spain gets serious help from a broader euro boom, and in particular some inflation in creditor countries, it faces a near-impossible task."
Spain fears harsh rescue terms from AAA Nordic parliaments
03 Oct 2012
| 99 Comments
Debt crisis: Portugal to raise taxes to meet austerity targets
03 Oct 2012
| 10 Comments
Debt crisis: as it happened, October 3
03 Oct 2012
| 417 Comments
IMF: Global recovery 'will take at least six more years’
03 Oct 2012
| 45 Comments
Italian tax collectors 'pocketed millions'
03 Oct 2012
Not much hope here.
Wednesday, October 3, 2012
Links, 10/03/2012
Voter registration slumps amid lack of enthusiasm for Obama and Romney The Guardian
New poll shows popularity of Greece’s Golden Dawn at 22 percent Digital Journal
Not From the Onion: Army Says ‘Social Network’ Use Is a Sign of Radicalism Wired
Obama Outspending Romney on TV Ads New York Times
White House widening covert war in North Africa Detroit Free Press
Fareed Zakaria and the Failure of Thought Leadership Boston Review
DHS ‘fusion centers’ portrayed as pools of ineptitude, civil liberties intrusions Washington Post
EU dog that didn’t bark begins to bite FT
Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened Bloomberg (Other people are starting to notice this…)
UN-led carbon market ‘close to collapse’ FT
Italy service sector shrinks at slower pace in September: PMI Reuters
Microsoft co-founder dings Windows 8 as ‘puzzling, confusing’ Computer World
Misconduct is the main cause of life-sciences retractions Nature
Debates Fail to Decide Elections Amid Myth of Kennedy-Nixon Bloomberg
Russia’s Lavrov says “reset” with U.S. cannot last forever Reuters
Why Doctors Hate Obamacare Huffington Post
The true reason US fears Iranian nukes: they can deter US attacks Glenn Greenwald
Reports of GOP Voter Registration Fraud Increase Truthout
Tea party holds ‘machine gun social’ to fund conservative candidates Raw Story
GOP Consultant: Koch Brothers Bought Ryan’s Nomination With $100 Million Promise National Memo
After Mortgage Settlement, Banks Continued Abusive Practice, California Monitor Says Huffington Post
* * *
New poll shows popularity of Greece’s Golden Dawn at 22 percent Digital Journal
Not From the Onion: Army Says ‘Social Network’ Use Is a Sign of Radicalism Wired
Obama Outspending Romney on TV Ads New York Times
White House widening covert war in North Africa Detroit Free Press
Fareed Zakaria and the Failure of Thought Leadership Boston Review
DHS ‘fusion centers’ portrayed as pools of ineptitude, civil liberties intrusions Washington Post
EU dog that didn’t bark begins to bite FT
Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened Bloomberg (Other people are starting to notice this…)
UN-led carbon market ‘close to collapse’ FT
Italy service sector shrinks at slower pace in September: PMI Reuters
Microsoft co-founder dings Windows 8 as ‘puzzling, confusing’ Computer World
Misconduct is the main cause of life-sciences retractions Nature
Debates Fail to Decide Elections Amid Myth of Kennedy-Nixon Bloomberg
Russia’s Lavrov says “reset” with U.S. cannot last forever Reuters
Why Doctors Hate Obamacare Huffington Post
The true reason US fears Iranian nukes: they can deter US attacks Glenn Greenwald
Reports of GOP Voter Registration Fraud Increase Truthout
Tea party holds ‘machine gun social’ to fund conservative candidates Raw Story
GOP Consultant: Koch Brothers Bought Ryan’s Nomination With $100 Million Promise National Memo
After Mortgage Settlement, Banks Continued Abusive Practice, California Monitor Says Huffington Post
* * *
-
3 Oct 2012: Average rate of income tax will rise by two percentage points to 11.8%, with a one-off 4% surcharge in 2013 -
3 Oct 2012: Former finance minister Peer Steinbrück will be chancellor's rival during next year's general election campaign
-
3 Oct 2012:
Bruce Ackerman and Miguel Maduro: Europe needs a solution to its crisis that will be accepted by its citizens. The South African model may be the answer
158 comments
Wednesday, October 3, 2012
Can you really have a recession if housing, cars, layoffs and stocks won't play?
- by New Deal democrat
In assessing the economy, it's dangerous to rely upon any one data series. None are infallible, and there will always be an exception to any rule. Last week's durable goods orders were just awful, and certainly looked like I would expect to see in a recession, but while most manufacturing-related series are flat to declining, the rest of the economy doesn't seem to want to cooperate. There are a whole bunch of important facets of the economy that simply aren't playing along.
We all know that housing is one of the most important - and most leading - slices of economic activity. There has never been a recession without housing declining at least to a small degree months in advance. Well, here's the entire series for housing permits:
Not only is there no decline, but these have been in a steady rebound for almost two years.
Yesterday it was reported that more cars were sold in September - 15 million on an annualized basis - than at any month in the last 4 years. Here's car sales on a quarterly basis to smooth out noise, for the duration of the series:
The graph doesn't include the July-September quarter for this year, which averaged 14.5 million annualized. The strong rebound from the 2009 lows continues. At no point has a recession started with car slaes increasing like this.
In recession, increasing numbers of people get laid off. Well, here's the graph of initial jobless claims, averaged monthly to decrease noise, since the inception of the series half a century ago:
These have almost always increased by about 10% going in to a recession. They are only about 3% off their recovery lows through last month.
Finally, as I pointed out last week, the stock market almost always peaks before the economy does. Here's a log scale graph of that, split over two time periods(1957-80, left log scale, 1980- present, right log scale) to better show the peaks, for over 50 years:
In 1980 and 1990, the market peaked about a month or so after the economy did. Otherwise, from the 1950's on, the stock market has always peaked first. It just made a new peak about 3 weeks ago.
There's no doubt that the crucial coincident indicators of recession hit something of an air pocket in August and a looking flattish for the year. But we have whole swaths of economic activity that simply aren't cooperating with the recession thesis. So, while manufacturing may be contracting as a whole, and while real wages have declined for going on two years now, it's hard to buy the recession thesis while so many aspects of the economy which ought to have rolled over first, simply haven't rolled over at all. The expansion may just barely have a pulse, but housing and cars - typically the most crucial lifebloods of that pulse - are pumping.
BBC:
T-Mobile USA to merge with rival
Deutsche Telekom confirms it is to merge its T-Mobile USA unit
with US mobile carrier MetroPCS, creating a firm with more than 40
million subscribers.
I will have to ask questions.
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1. TROIKA DOUBTS An unscheduled meeting
between Finance Minister Yannis Stournaras and the heads of the EC, ECB
and IMF troika mission in Athens began at the finance ministry on
Wednesday afternoon. The meeting had not been announced and is believed
to centre on the troika's demands to replace proposed ministry spending
cuts of 2 billion euros with more cuts to salaries, pensions and
benefits, due to doubts about whether the measures proposed by the Greek
side will bring the required result.
2. SDOE LIST Former head of the Financial Crimes
Unit (SDOE) Yiannis Kapeleris on Wednesday denied that he had ever been
presented with a list of politicians or other high-profile individuals
to investigate for undeclared wealth. Kapeleris, who had been summoned
before the Special Parliamentary Committee on Institutions and
Transparency to shed light on reports of lists of individuals under
investigation by the SDOE for illicit enrichment, claimed that he was
once given a list of 10 names to look into by then finance minister
George Papaconstantinou, but none of them were politicians or well-known
business or financial figures.
3. DRAMA UPROAR The small town of Paranesti,
Drama, continued to be in uproar on Wednesday as local residents carried
out a symbolic occupation of the town hall and shut down schools in
protest against the conversion of a local army base into a detention
camp for illegal immigrants. Their actions came after Public Order
Minister Nikos Dendias stated that more immigrants will be transferred
to the town's Pantazopoulou camp. Six town residents who had been
arrested during incidents outside the camp on Monday were released on
Wednesday morning, since the evidence against them did not justify
holding them for a police court.
4. HIGH-PROFILE ARREST A former defence ministry
official accused of involvement in a military procurement kickback
scandal, Yiannis Sbokos, was led before a prosecutor on Wednesday.
Sbokos, who was general secretary responsible for armaments at the
ministry from 1997–2000, was arrested on Tuesday at his home in Kifisia.
He is charged with money laundering and was judged a flight risk by an
examining magistrate, after new evidence allegedly linking him to the
ongoing Tsohatzopoulos case.
5. DEBTS AND QUEUES The National Organisation for
the Provision of Healthcare Services (EOPYY) on Wednesday denied media
reports claiming that it has 'secret debts' that have bumped up the
overall debt load of public-sector organisations. In an announcement,
EOPYY stressed that it submitted a financial report with "full accuracy
and transparency" to the appropriate quarters every month without fail.
The announcement also commented on the long queues formed outside its
secretariats in recent days, explaining that the problem arose because
the contract with a private firm that normally handled these
transactions had ended. Until a new contractor is selected through a
tender, EOPYY will provide the same service with a smaller and untrained
staff.
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I am aware of the limits of medicare at this time.
I am unaware of any crime. Parking and traffic tickets are all I have.
I am going to need an explanation if I am to understand.
Sooner is better. As soon as you can is best.
.
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