US Economy

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The powerless Fed

Markets sold off last night on the concern that Fed is not going to man the big QE3 pump. With good reason it seems, though there is still hope. We know that the dominant clique at the FOMC is concerned about inflation. However, in his speech overnight, Ben Bernanke made it clear, rightly, that the

1

The Chairman’s speech

Find below the full text of Chairman Bernanke’s overnight speech: Chairman Ben S. Bernanke At the Economic Club of Minnesota Luncheon, Minneapolis, Minnesota September 8, 2011 The U.S. Economic Outlook Good afternoon. I am delighted to be in the Twin Cities and would like to thank the Economic Club of Minnesota for inviting me to

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Gooooooo GOP!

I would like to able to report this morning that US economic leadership has reached a rapprochement. That both Treasury and the Federal Reserve have agreed a new round of stimulus measures that aim specifically to create US jobs and reverse the decline of its middle class through a sensible balance of medium term spending,

10

Pulling a rabbit out of a hat

Last night several more Fed boffins were on the hustings giving dovish speeches. The first is Dennis Lockhart. Here is the executive summary: While acknowledging that downside risks to the recovery have increased, Lockhart expects a modest cyclical recovery to proceed. In his view, a number of necessary structural adjustments are holding back economic growth in

13

US GDP signalling big job losses

Last night,  Zero Hedge ran an interesting post looking at the long term relationship between US GDP and employment growth. I have reproduced one chart and added a few of my own. The results are sobering. First, the history of US GDP: That gives some idea of just how sub-par this US recovery has been in

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Pivotal week for markets

As the US economy flirts with recession, the week ahead is huge as August data pours in. This could be make or break for markets. Following is a great summary from Calculated Risk with much more available at the site. —– Monday, Aug 29th —– 8:30 AM: Personal Income and Outlays for July. The following graph shows

11

US recession a certainty

From the excellent analysts at Forecast comes this note from yesterday: US recession a certainty on asset based probability model * Probability model currently arguing that a recession is a near certainty within next year * Backs up signals from the more coincident consumer confidence gauge * Argues for more ‘distribution’ as risk is unloaded

3

Is the US already in recession?

Following my earlier discussion on the different impacts different kinds of shocks, from the eminently sensible team at Forecast comes this analysis of the implications of the recently recorded collapse in US consumer confidence. Enjoy. M/T: Confidence shocks – why the US may already be in recession * Michigan confidence plunge is a red alert

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Full FOMC Statement

Below find the full FOMC Statement. And below that, find a useful guide to the changed language from Zero Hedge. Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected.  Indicators suggest a deterioration in overall labor

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D’oh, S&P (updated)

Oh my, from the WSJ (h/t Precious Bodily Fluids): A mathematical error discovered late Friday by Treasury Department officials has thrown into limbo — at least temporarily — plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said. The

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S&P downgrades the US

From the newswires: S&P downgrades US debt to AA+ The US had its AAA credit rating downgraded for the first time by Standard & Poor’s to AA+ based on its judgment that the debt ceiling deal agreed by lawmakers would not be enough to curtail record deficits. “The downgrade reflects our opinion that the fiscal

5

ex-Fed trinity muse on QE3

  Below find the video that triggered last night’s equities bounce back. I’m not sure why it stimulated any such thing. There’s not much that’s bullish in it in my view. The phrase that comes to mind for me is ‘old men talk while young men die’:

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Whither now the US?

I’ve been warning for a couple of months that the US economy is in trouble. It’s hasn’t really been that hard to see, so long as you recognise its underlying condition. The US economy is in a depression. It’s not quite the kind we saw in the 1930s but it’s a depression nonetheless, just slower

23

The US debt deal

Find below details of the US debt deal, direct from the White House: Fact sheet: Bipartisan Debt Deal: A Win for the Economy and Budget Discipline Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default

5

Deadlines, debt and downgrades

Find below an excellent note from Westpac covering the fallout from various scenarios emanating from the US debt-ceiling debacle. The note is both useful and entertaining, with Russell Jones of the rates strategies team nicely capturing the absurdity of the situation.

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Abusing money for power

For me, the most remarkable part of writing The Great Crash of 2008 with Ross Garnaut was diving into the murky depths of Wall St’s extraordinary manipulation of money. In the book, we called this “Clever Money”. It was the story of how, over many years, Wall St took the plain vanilla process of securitisation,

18

The debt ceiling farce continues

Just as I suspected, the nonsensical debate over the US debt ceiling looks like going down to the wire. From the New York Times today: WASHINGTON — Negotiations over a broad deficit reduction plan collapsed in acrimony on Friday after Speaker John A. Boehner suddenly broke off talks with President Obama, raising the risk of

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Hurtling towards a debt ceiling disaster

Another day passes without any progress in negotiations on raising the US debt ceiling… And the stakes are rising. From Thursday’s Wall Street Journal: Credit rating agencies moved closer to an unprecedented downgrade of the U.S. government’s debt amid deteriorating talks in Washington, with President Barack Obama abruptly walking out of a key meeting Wednesday with

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Bernanke’s full testimony

Chairman Ben S. Bernanke Semiannual Monetary Policy Report to the Congress Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C. July 13, 2011 Chairman Bachus, Ranking Member Frank, and other members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to the Congress (PDF). I will

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The trouble with mainstream media

One of the reasons I first started blogging was a feeling that the mainstream media is doing a terrible job educating people about some of the biggest issues that we face today. I suspect that most of my colleagues at MacroBusiness feel the same way. Having spent several years as a financial journalist earlier in

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Disastrous jobs report humbles a blogger

Once upon a time, a man who goes by the name of Rotten Apple wrote a post titled “The Bull Case for the US Economy“. Well, many moons have passed since then, but, to paraphrase Emperor Hirohito’s famous remark, in the meantime the economic situation has developed not necessarily to this humble blogger’s advantage. From

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The bull case for the US economy

There are no shortage of reasons to worry about the state of the world economy today. An unsustainable bubble in China, the possibility of sovereign debt defaults in Europe, the chance that debt ceiling politics will derail the US economic recovery… And I could go on. Like many of the writers on MacroBusiness, I am