Monday, January 31, 2011

FT executive MBA ranking

Traditional MBA providers have to adapt in the face of online learning and growing numbers of schools in developing nations
The world's top 100 MBA programmes of 2011

Transformation of US manufacturing sector

"... The story of American factories essentially boils down to this: They've managed to make more goods with fewer workers.
The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have placed near the top of world rankings in productivity gains over the past three decades.
That higher productivity has meant a leaner manufacturing force that's capitalized on efficiency...
What's changed is that U.S. manufacturers have abandoned products with thin profit margins, like consumer electronics, toys and shoes. They've ceded that sector to China, Indonesia and other emerging nations with low labor costs.
Instead, American factories have seized upon complex and expensive goods requiring specialized labor: industrial lathes, computer chips, fighter jets, health care products..."
Read more 
Comment: That's right and it's fine, yet how come the trade deficit doesn't go away? Apparantly, the US does not produce enough of these top-notch to compensate for the mass of imports of stupid goods.

Friday, January 28, 2011

Another bubble that is about to burst: College tuition

"Tuition has been increasing at such an alarming rate that some say we’re witnessing yet another bubble in America — this time not in the stock market or in housing, but in college tuition."
Read more
See also: Why American kids do so poorly by Jeff Tucker
See also: the sick generation  (as I am inclined to say)
Comment: Public eduction is slowpoison.

Thursday, January 27, 2011

Japan debt downgraded

Japan's Credit Rating Cut to AA- by S&P on Debt Load

Japan’s credit rating was cut for the first time in nine years by Standard & Poor’s as persistent deflation and political gridlock undermine efforts to reduce a 943 trillion yen ($11 trillion) debt burden.
The world’s most indebted nation is now ranked at AA-, the fourth-highest level, putting the country on a par with China, which likely passed Japan last year to become the second-largest economy. The government lacks a “coherent strategy” to address the nation’s debt, the rating company said in a statement. The outlook for the rating is stable, S&P said.
The yen and bond futures fell on concern the downgrade will push up the cost of borrowing for Japan, where public debt is about twice the size of gross domestic product. Vice Finance Minister Fumihiko Igarashi this week said the government must fix its finances to avoid a debt crisis that could trigger a “global depression.”
Full text
Comment: Goning short on Japanese debt has become a must.

Monday, January 24, 2011

McDonald signals inflation on the way

LOS ANGELES (Reuters) – McDonald's Corp (MCD.N) said it would selectively increase menu prices this year to help offset an expected rise in its own grocery bill for the 10 commodities that account for around 75 percent of its food preparation costs.
Food prices are climbing around the globe and the world's biggest restaurant chain said its costs are expected to rise this year 2 percent to 2.5 percent in the United States and 3.5 percent to 4.5 percent in Europe.
Read more
Comment: More to come. Eat out while you still can.

The new, new supercycle

Super-Cycle Leaves No Economy Behind Before Davos Summit

For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously, driving bond yields and commodity prices higher...
Lyons and his colleagues predict a “super-cycle” of historically high growth that will last at least a generation and will be led by booming trade, investment and urbanization, according to a report published in November. He reckons such a cycle has occurred only twice since the end of the 18th century: the four decades before World War I and the three following World War II. He’s betting the new phase will contribute to a reversal in the three-decade decline for U.S. bond yields after 10-year Treasury notes lost an average 40 basis points a year since the early 1980s...

“World-trend economic growth is being lifted,” said London-based O’Neill, who helps manage $840 billion. “The notion that BRICs benefit at the expense of others is increasingly out of date.”
Investors should buy copper, coal and oil to take advantage of the growth of cities in emerging markets, according to Standard Chartered, which says the Chinese yuan, Indian rupee and Korean won will appreciate on strengthening domestic growth.
Developed nations also will benefit as their emerging- market counterparts invest more abroad, hire more of their workers and rely on their expertise in areas such as financial services, said Lyons, who will be at Davos. He predicts both the U.S. and European Union will enjoy an average trend growth of 2.5 percent through 2030, compared with the 1.9 percent and 1.7 percent he forecasts for this year.
“It’s a win-win situation,” said Lyons, who concedes growth won’t always be strong and continuous during the entire period....
Read more
Comment: Markets climb a wall of worry and drown in a wave of optimism.

Sunday, January 23, 2011

Who buys US debt?


China shuns treasuries

Data Shows Less Buying of U.S. Debt by China
FOR eight years after the United States resumed running large budget deficits in 2002, China was the largest lender, buying a fifth of the new Treasury securities sold during that span — an expenditure of more than $900 billion. During 2006, China financed more than half the American deficit. When the financial crisis struck hardest, China spent more than $100 billion on Treasuries over the two-month period of September and October 2008.
But over the last year, China has been a net seller of Treasury securities, according to figures released this week by the American government. If that is true, it would be extraordinary, considering the size of the bilateral trade deficit, and there has been speculation that China has been purchasing Treasuries through accounts in other countries.
The Treasury Department estimated that China reduced its holdings of Treasuries by nearly $11 billion in November alone. For the 12 months through November, as the accompanying charts indicate, China reduced its holdings of Treasuries by more than $36 billion.
Full text
Comment: We've entered endgame stage.

California dreamin'

22 Facts Reflecting The Demise Of California
Got to Rense.com
Comment: The trend points downhill with no turn-around in sight. 

European debt panorama

Source: FAZ

Saturday, January 22, 2011

Euro gets stronger

The euro rose against all its major counterparts as speculation increased that European policy makers will craft a long-term approach to handle the region’s sovereign-debt crisis...
The euro rose 1.7 percent to $1.3621, from $1.3388 Jan. 14. It touched $1.3626 yesterday, the highest since Nov. 23. The 17- nation currency climbed 1.4 percent to 112.48 yen, from 110.94 last week. The dollar fell 0.4 percent to 82.57 yen, from 82.87.--
Comment: It looks as if markets finally get it. Yet with so many incompetents in high positions anything is always possible. Absurdities now are the "new normal" in all segments of the financial markets.

Friday, January 21, 2011

Euro moves on

EURO 1.3544+0.0072+0.53%

Comment: It seems that the euro shows no respect neither for Roubini nor for Krugman nor for many more of a host of self-proclaimed currency experts.

Thursday, January 20, 2011

Getting it all wrong again

Capital Controls Roil Latin America Bond Markets by Evoking `80s

Latin American nations from Brazil to Peru are returning to currency and foreign investment controls that marked the 1980s era of hyperinflation.
Since the start of the year, policy makers across the region have increased dollar purchases to record levels, raised reserve requirements and curbed banks’ ability to bet against the dollar in a bid to stem a 29 percent rally in Latin American currencies since March 2009. Controls may stiffen, and other nations could join the “market-unfriendly” drive, said Alberto Ramos, an economist at Goldman Sachs Group Inc.
Full text
Comment: Like some people who never seem to learn, there are also countries and whole regions that seem unable to learn. One of the candidates for this category is Latin America with Brazil at the top. That the authorities blame their own misbehavior on the markets is just one part of the story; the other part is that they really believe in what they say. Being mean is one thing, being stupid is another thing. Then there is the kind that is both mean and stupid. Most of the harm they produce falls on themselves. In the case of Latin America it is the people who will suffer and rightly so, the cynic say, because it is the people who elect, admire and follow the bad men and women at the top. Sheeples indeed. Exploited by ruthless wolfes disguised as shepards.

Don't blame me

EURO 1.3501

Don't blame me for your wrong investments.

Back on the Road to Serfdom

"... Antony Mueller looks at the more immediate causes of the recent financial crisis. His essay is a valuable corrective to the standard account of the economic downturn that has fueled so much of the recent resurgence of statism. Professor Mueller’s interpretation of the crisis, which is informed by the Austrian School of economics, also accounts for why the proposed remedies are likely to prolong the economic malaise in those countries adopting them..."
Read more

How economics became a thoroughly corrupted profession

"... The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found..."
Read more
Comment: More than ever before, sciencentist have turned themselves into willing serfs of the state.

Wednesday, January 19, 2011

Please wait and stay put

Amity Shales says that "(t)he reason Hu Jintao decided to visit the U.S. this month is that the Chinese leader wants to know when the U.S. economy and its currency will be stable and strong again. It’s good the Chinese are known for patience because Hu may have to wait a while.
At least that’s the view according to John Taylor, a Stanford University economist who has influenced Federal Reserve policies in the past.
Full text
Comment: Taylor is too optimistic by my account, and even Chinese can lose patience.

Only in America

Caroline Baum wonders:
"The pieces just don’t add up.
Credit card debt outstanding has fallen 27 straight months for a total decline of $177.2 billion.
The unemployment rate has been stuck above 9 percent for 20 months.
Average hourly earnings rose 1.9 percent in 2010.
Personal income rose less than 4 percent in the 12 months ended November.
About 23 percent of homes with mortgages are worth less than the amount of the loan.
Faced with these not insignificant hurdles, what did the U.S. consumer do? Why, he spent like there was no tomorrow..."
Full text
Comment: The American dream has become an obsession.

Friday, January 14, 2011

What a difference three years make

#1 In November 2007, the official U.S. unemployment rate was just 4.7 percent.  Today, the official U.S. unemployment rate is 9.4 percent.
#2 In November 2007, 18.8% of unemployed Americans had been out of work for 27 weeks or longer.  Today that percentage is up to 41.9%.
#3 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer.  Today, there are over 6 million Americans that have been unemployed for half a year or longer.
#4 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it back in 2007.
#5 More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the "recession" began in December 2007.
#6 According to one analysis, the United States has lost a total of approximately 10.5 million jobs since 2007.
#7 As 2007 began, only 26 million Americans were on food stamps.  Today, an all-time record of 43.2 million Americans are enrolled in the food stamp program.
#8 In 2007, the U.S. government held a total of $725 billion in mortgage debt.  As of the middle of 2010, the U.S. government held a total of $5.148 trillion in mortgage debt.
#9 In the year prior to the "official" beginning of the most recent recession in 2007, the IRS filed just 684,000 tax liens against U.S. taxpayers.  During 2010, the IRS filed over a million tax liens against U.S. taxpayers.
#10 From the year 2000 through the year 2007, there were 27 bank failures in the United States.  From 2008 through 2010, there were 314 bank failures in the United States.
#11 According to the U.S. Department of Housing and Urban Development, the number of U.S. families with children living in homeless shelters increased from 131,000 to 170,000 between 2007 and 2009.
#12 In 2007, one poll found that 43 percent of Americans were living "paycheck to paycheck".  Sadly, according to a survey released very close to the end of 2010, approximately 55 percent of all Americans are now living paycheck to paycheck.
#13 In 2007, the "official" federal budget deficit was just 161 billion dollars.  In 2010, the "official" federal budget deficit was approximately 1.3 trillion dollars.
#14 As 2007 began, the U.S. national debt was just under 8.7 trillion dollars.  Today, the U.S. national debt has just surpassed 14 trillion dollars and it continues to soar into the stratosphere.
Full text
Comment: What is beginning to show up in the statistics now has been a long time in the making. It will take a long time to unwind the culture of hype of the past decades.

Thursday, January 13, 2011

Chinese rating agency downgrades US

"Dagong has downgraded the local and foreign currency long term sovereign credit
rating of the United States of America (hereinafter referred to as “United States” ) from
“AA” to “A+“, which reflects its deteriorating debt repayment capability and drastic decline
of the government’s intention of debt repayment..."
Full text
Comment: These Chinese sound like Austrians.

Wednesday, January 12, 2011

Back on the Road to Serfdom

Read more

Mad dog barking

Geithner warns Beijing on currency policies

Geithner says undervalued Chinese currency is increasing inflation risks in China

WASHINGTON (AP) -- China's currency is substantially undervalued and Beijing is moving too slowly to fulfill its promise to let it rise, Treasury Secretary Timothy Geithner said Wednesday.
Geithner said it's in China's own interests to accelerate the pace of currency reform. He said the undervalued yuan is increasing the risk of inflation that will harm Chinese growth.
Geithner addressed a range of economic policy issues at the center of U.S.-Chinese relations in a speech advancing Chinese President Hu Jintao visit to Washington next week.
In addition to the currency issue, he mentioned widespread theft of U.S. intellectual property in China, Beijing's protection policies that hurt U.S. exporters, and accusations that the government provides subsidies to Chinese businesses that violate World Trade Organization rules.
Full text
Comment: Better stop before its too late. Biting the hand that feeds you can be harzardous to your well-being.

More euro bailout schemes

EU Crisis Plan May Feature Portugal Aid, Buybacks, Debt Rules

European governments are considering aid for Portugal, debt buybacks, lower interest rates on rescue loans and guarantees against excessive debt as part of a package to quell the financial crisis, according to two people with direct knowledge of the talks.
The plan, which may include a loan to Portugal of about 60 billion euros ($78 billion) and purchases of outstanding Greek debt, would mark an attempt to contain a crisis that has frustrated unprecedented efforts by policy makers to calm markets and raised questions about the health of the 17-nation euro economy.
Euro-area finance ministers will discuss elements of the package next week, though the debate is so sensitive in Germany that decisions may wait until a scheduled summit of political leaders on Feb. 4, said the people, who declined to be named because the deliberations are private.
Full text
Comment: Euro authorities are determined to save the euro. That has been my thesis from the beginning of the euro crisis almost a year ago. In the meantime euro authorities have invested so much prestige and funds that it doesn't need willingness. Saving the euro has become a necessity.

Portuguese bond sale

Portugal eases fears with successful bond sale

Markets showed relief that the country managed to borrow euro1.25 billion ($1.62 billion) in a bond auction and that it ended up paying a far lower rate for its longer-term debt than previously. The government debt agency said it sold euro650 million in bonds with a 2014 maturity and euro599 million in 2020 bonds and that demand for both was high.
Full text
Comment: With debt it is as much the willingness to pay as it is the ability to pay. One could even say that the willingness to pay precedes de ability to pay. Portugal certainly shows its willingness to pay.

Government debt in per cent of gdp

Source: FAZ

Greece and Ireland above critical interest rate level

Source: FAZ

Monday, January 10, 2011

Comeback for the greenback?

The world’s most accurate foreign- exchange forecasters say the dollar will be the best currency to own this year as the Federal Reserve’s bond purchases bolster the U.S. economy instead of debasing America’s legal tender.
Read more
Comment: Could be, but as of now it is too early to tell.

Saturday, January 8, 2011

Bailout for Portugal

BERLIN (Reuters) – Germany and France want Portugal to accept an international bailout as soon as possible in order to prevent its debt crisis spreading to other countries, German magazine Der Spiegel reported on Saturday.
Without citing its sources, the magazine said government experts from both European heavyweights were concerned Lisbon will soon not be able to finance its debt at reasonable rates, after its borrowing costs rose at the end of last year.
Berlin and Paris also want euro zone countries to publicly commit to do whatever it takes to protect the bloc's single currency, including topping up a 750 billion euro ($968 billion) rescue fund if necessary.
Portugal is viewed by many economists as the peripheral euro zone country that is most likely to follow Ireland and Greece to seek an international bailout as it grapples to cut its debts and borrowing costs. It holds its first bond auction of the year next week.
(Writing by Brian Rohan; Editing by Alison Birrane)
Comment: Better don't bite the mouth that feeds you.

Friday, January 7, 2011

Change of tides

January 7, 2011

Wanted: Austro-Monetary Economist for Ron Paul

Ron Paul has been named chairman of the Domestic Monetary Policy subcommittee, and will have one committee staffer. Ron and his chief of staff Jeff Deist are looking for a smart, young economist, “thoroughly Austrian, and preferably with an advanced degree.  The candidate needs strong knowledge of the Fed and monetary policy generally, and must be an effective writer.  He or she will be responsible for organizing hearings; summarizing data and Fed actions for Dr. Paul; writing statements; dealing with Financial Services committee staff; and various other tasks.”
Ron and Jeff want an economist with a “strong personality to match their strong analytical skills.” The Fed and its shills are significant opponents, after all. The “salary will be respectable, a solid 5 figures, though depending on experience.”
Write me if you are that person, or can recommend someone. The preference, btw, is for someone with no Beltway experience. And probably you should be single. But what an opportunity to work hard, do good, and have fun. I will add, from personal experience, that Ron Paul is a great boss, too.
This can be a life-changing experience for the right young person. Imagine an 18th century classified: “Wanted, Economist-Assistant to Thomas Jefferson.” This is the equivalent, although Jefferson was not as principled in office as Ron Paul.
Comment: This is another step on the long way to a better world. We're still in the phase of deconstruction (doing away with the Fed) and there is a long way to go and many obstacles to overcome before things really will become better.

Thursday, January 6, 2011

More poverty or just new statistics

WASHINGTON – The number of poor people in the U.S. is millions higher than previously known, with 1 in 6 Americans — many of them 65 and older — struggling in poverty due to rising medical care and other costs, according to preliminary census figures released Wednesday.
Comment: Useless numbers for bad politics.

German boom

German factory orders rose five times more than economists forecast in November, driven by demand from outside the euro region....
“Exports are decisive but domestic demand is picking up as well. Germany continues to be the driving force in the euro region.”
Comment:  Anyone remember Paul Krugman when he denounced Germany as the bad guy for not doing enough "stimulus"? This guy gets it wrong each time he opens his mouth - not different from his former colleague Ben Bernanke: the tragic of bad economics.

College education bubble

#1 Americans now owe more than $875 billion on student loans, which is more than the total amount that Americans owe on their credit cards.
#2 Since 1982, the cost of medical care in the United States has gone up over 200%, which is horrific, but that is nothing compared to the cost of college tuition which has gone up by more than 400%.
#3 The typical U.S. college student spends less than 30 hours a week on academics.
#4 The unemployment rate for college graduates under the age of 25 is over 9 percent.
#5 There are about two million recent college graduates that are currently unemployed.
#6 Approximately two-thirds of all college students graduate with student loans.
#7 In the United States today, 317,000 waiters and waitresses have college degrees.
#8 The Project on Student Debt estimates that 206,000 Americans graduated from college with more than $40,000 in student loan debt during 2008.
#9 In the United States today, 24.5 percent of all retail salespersons have a college degree.
#10 Total student loan debt in the United States is now increasing at a rate of approximately $2,853.88 per second.
#11 There are 365,000 cashiers in the United States today that have college degrees.
#12 Starting salaries for college graduates across the United States are down in 2010.
Comment: Modern, state-run college education, particularly in the social "sciences" and "humanities", is not only expensive and mostly useless, it is also dangerous.

#13 In 1992, there were 5.1 million "underemployed" college graduates in the United States. In 2008, there were 17 million "underemployed" college graduates in the United States.

#14 In the United States today, over 18,000 parking lot attendants have college degrees.

#15 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor's degree within four years.

#16 According to a recent survey by Twentysomething Inc., a staggering 85 percent of college seniors planned to move back home after graduation last May.