37 thoughts on “Monday Message Board

  1. On the other hand, Ian, there’s

    US unemployment claims jump unexpectedly

    To get to the main point, there’s at least some evidence that the economic meltdown that seemed possible in late 2008 has been averted, and that we can reasonably hope that the outcome will be “merely” a long and deep recession. But of course stopping the meltdown has already required some radical changes in economic policy, and more will be needed.

  2. Anecdotally at least I think that Ian and JQ are both right. In vulnerable sectors of engineering (eg mining and office construction) people are still losing their jobs. However new investment is starting to happen in housing/domestic construction, and basic infrastructure (power, water, roads, public transport) is stable, which is proping up overall employment in the sector.

    This assumes the proposed Australai fund investment package happens. The latter is still quite important, especially in NSW/Sydney, as some current work is preparation for when it occurs and would stop otherwise. The Sydney economy in particuar would be vulnerable without it IMO.

  3. Ian

    Unlike blogs, you cannot determine economic analysis by anecdotes and cheap jargon.

    How old are you?

    Ta

  4. Chris I’m 48 and have a degree in economics.

    i’m interested in your comment about anecdotes because most of the time these days this blog seems to consist solely of anecdotes followed by histrionics about how we’re all doomed and desperate attempts at blaming the adherents of other political ideologies.

    You want analysis: Unemployment is typically a lagging indicator. Stock prices are typically a leading indicator.

    If stock prices stabilise and start to move up, which appears to be happening, unemployment will likely peak within 3-6 months.

    But that’s just me being immature and spoiling people’s fun.

    Let’s let TonyG tell us how it’s all Krudd’s fault and then Alice can blame it all on the capitalsit oppressors. Then Observa can blame it on Keynesians and Jack Strocchi can tell us how the solution lies in restricting immigration from Africa and the middle east.

  5. Ian

    That’s better.

    Blogs are only ever anecdotes.

    However the recent “stabilisation” and “moving-up” could be a typical dead-cat bounce, following the trends in todays Fin Review – page 23 [Chart].

    The core fundamentals of capitalist profiteering can be held responsible, particularly through a structural need to increase per-capita debt to maintain effective consumption expenditures.

    The problem for anti-capitalists is that they win the argument but not the war, as they have no agreeable alternative – yet.

    But one must come eventually, as the bailouts of trillions have doomed the next generation, if the same capitalist fundamentals persist.

  6. 29# I wouldnt touch it with a ten foot pole unless I was a gambler (stock market right now). Its on a trajectory and the trajectory is travelling too fast. That, to me, means the hot air is still there.
    Ian can tell us all the effect of all those toxic assets has worked its way out and that a 7 trillion bailout will return in a few months as budget surpluses if he likes.

  7. DEAD CAT BOUNCE

    On 3 September 1929 the DOW was at 381.17.

    It collapsed down to 157.51 on 16 December 1930.

    It then rallied for 2 moths to 194.36 by 24 February 1931 – this was a dead cat bounce.

    From then on, it fell and fell and fell to bottom out on 13 July 1932 at 44.88.

    Poor pussy.

  8. Ian#29 says

    “Let’s let TonyG tell us how it’s all Krudd’s fault and then Alice can blame it all on the capitalsit oppressors. Then Observa can blame it on Keynesians and Jack Strocchi can tell us how the solution lies in restricting immigration from Africa and the middle east.”

    Then what would Ian say???

    “There is no GFC, its just a little market adjustment, the stock market is going up now.. see Guys? I told you all along there is nothing wrong and these CEOs deserve every penny they steal….oops I mean get paid for their brilliant innovations. I, as ever, remain a dutiful supporter of unregulated capitalism….CE0s must run for the seat of the universe! Whats 7 trillion here and there?” Love Ian.

  9. Gouldy! Mate! How’s the Chinese New Year effect going?

    Aussie jumps to 12-wk peak

    I’m struggling to understand how a surging AUD will help the Aussie economy, when our miners are currently negotiating contracts at prices 60% below boom levels, with volumes off another 20%. How, pray tell, will a 15% surge in the AUD since early March help?

    For some minerals (e.g. coking coal) we’re looking at a drop in revenue in the order of 80%. That’s a catastrophe.

    Australia shares gain 2.8 pct; 11-week closing high

    Clearly a degree in economics does not help in seeing the bleeding obvious, that this is a bear market rally.

    The best news all week was Obama getting tough with GM and sacking Wagoner. Hopefully when the Geithner ‘plan’ fails, the big O will get tough with Citi and BofA and do what needs doing: Nationalise them.

  10. # jquiggin Says: April 3rd, 2009 at 5:53 am

    To get to the main point, there’s at least some evidence that the economic meltdown that seemed possible in late 2008 has been averted, and that we can reasonably hope that the outcome will be “merely” a long and deep recession. But of course stopping the meltdown has already required some radical changes in economic policy, and more will be needed.

    Pr Q is correct to say that the global economy is latently depressed and only being propped up into long recession by massive financial and fiscal interventions. Praise be the Lord (Keynes).

    Pr Q is also correct to say that a radical re-structuring of the financing of the global politico-economy is required and is underway in the USA and USE (and, by contagion, the PRC). The USA being the villain of the piece owing to the massive prevalence of financial swindlers masquerading as business people.

    (And no, not making Jews the scape goat, although anti-semititic stereotypes are not far from the surface of Old Europe. I’m afraid every metro ethnic group – even the old Scottish banking elite – has been in on the racket. The “debtquity and diversity” scam was an equal opportunity employer. All the sharp traders just following the fast money. Although the foul play was mostly from the Master of the Universe lending-class and Greater Fool borrowing-classes.)

    But Pr Q has been fairly bearish about both the PRC and AUS over the past few years. These two economies look to have more resilience than he gave them credit. Ans they do not appear to be heading for massive institutional re-structuring.

    The PRC will shift resources to the hinterland, let old firms go by the wayside and prop up good long term bets. AUS has pretty much been steady as she goes from Howard-Costello through Rudd-Swan.

    The implication is that the politico-economic ministry of the CCP and the L/NP have been satisfactory, solvency is your standard. Long live the accidental economic genius of the Great Helmsman!

  11. But Pr Q has been fairly bearish about both the PRC and AUS over the past few years. These two economies look to have more resilience than he gave them credit.

    In Australia’s case its just a matter of timing. We’re 6-12 months behind the cycle largely because we’re still getting boom prices for our exports. Australia is Wile E. Coyote, hanging in mid-air, looking down, but still not falling.

    China seems to have achieved the impossible of collapsing exports and industrial production, a severe housing bust, but still growing at 6% plus. Its almost like the official GDP numbers are made up 🙂

    As usual Setser is your man if you want to know what’s happening with China and Asia generally.

  12. # 29 Ian Gould Says: April 3rd, 2009 at 8:42 am

    Chris I’m 48 and have a degree in economics.

    Me too! I guess we just had to have something in common.

    More than cohort and cred it turns out. I share Ian Gould’s mildly bullish conclusions about the PRC, for much the same reason, based on fundamental analysis.

    Although I think I beat him to the punch in calling the PRC gloom overdone. Back on 04FEB09 I predicted that the PRC will not have a “soft landing” and resume something approaching a healthy growth rate as it switches growth from an external to internal focus. Allow me to quote from this forlorn love letter to Howard-Costello economic ministry:

    I also predict that the PRC will engineer a relatively soft-landing for its largely-export driven economy. Unemployment in export related industries will rise but the largely state-run economy will turn to internal development, largely in the peasant hinterlands. This will have the added benefit of politically pacifying unrest in the hinterland

    This expectation seems to be shared by one or two ALP politicians who are positioning themselves to lawfully profit from the PRC’s emerging economic dominance. Expect more of this “cosy capitalism” as the PRC economic juggernaut gains momentum and the ALP political machine tightens its grips around the state apparati.

    Ian Gould says:

    Jack Strocchi can tell us how the solution lies in restricting immigration from Africa and the middle east.

    Gould’s insinuation of bigotry is an easily refutable falsehood. The internets are strewn with my comments supporting a high immigration intake of high IQ NESBs. I have always argued that AUS’s immigrant policy should be “race-neutral” and immigrants “whether black, white or brindle” should be “fit, smart and nice” in character.

    I have never advocated “restricting immigration from African”, Asian or Arabian regions on grounds of race or religion. Ethical practice in these cases is to cite instances or retract.

    Gould’s general falsehood is specially false in the context of this GFC debate. Since the crisis hit Ive been arguing that high immigration is basically the only thing keeping the AUS residential property market from going into a tailspin. All those industrious NESB students provided the rental income stream to support high property prices. The linked to comment*, and many others like them, contains praise, on economic grounds at least, for Howard-Costello’s high immigration policy:

    The difference bw Howard’s immigration flows and the rest of the Anglosphere is that our new immigrants tend to be higher quality high IQ Asian students. They are intent on becoming established citizens, and Howard was intent on establishing them, as evidenced by high skill requirements and citizenship tests.

    This inflow of human capital, together with prudential regulations against over-leveraged securitization and derivatisation of assets, has kept our banks relatively solvent and economy relatively buoyant. And our a*ses out of the GFC sling.

    I can be fairly be accused of ambivalence about the quantitative effect, rather than qualitative nature, of AUS’s high immigration rates. Is that ok?

    High population growth from being an ecological disaster, as shown by the disintegration of our peri-urban fringe into a brown and unpleasant land (drained dams, sprawling fire-hazarded housing estates, wind-blown top soil, clogged rivers, dense clouds of GHG). But Ian Gould, being an “ecological” economist would know all about that.

    *Note: that comment contains a typo about property price falls, for 20% read 10%. Corrected later.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s