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Robert Brusca  

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  • Has China Passed Its Peak? [View article]

    I was going to say,

    so when you 'dis' capitalism as not your system just remember in the end it really doesn't matter.
    Feb 4, 2012. 03:08 PM | Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    BY the way When I took a course in comparative economic systems ( A great course by the way) there was one overriding theme. It was and is that capitalism is always at work.

    I know you won;t like this and will try to deny it.

    You can pretend to be Communist. But economics is still at work. In the USSR and other directed economies when they tired to ration things rationing coupons came to have value or to be worthless depending on the value of the thing that the coupon entitled you to get. Black markets developed. Capitalism is always at work even where you try to impose other systems. Only in some really primitive societies are there examples of people not conforming to capitalism

    So whn you
    Feb 4, 2012. 03:06 PM | 1 Like Like |Link to Comment
  • Where Is The Fed: Transparency Land Or Fantasy Land? [View article]
    True enough...

    This business cycle was not a shinning moment for the Fed.
    Feb 4, 2012. 02:53 PM | Likes Like |Link to Comment
  • Jobs Report Is A Sucker-Punch To Pessimists [View article]
    Any jobs are good for the economy. Higher paying jobs are better. But we need all kinds of jobs.

    Roll eyes back at-cha

    Really! Roll eyes?
    Feb 4, 2012. 02:48 PM | 1 Like Like |Link to Comment
  • Jobs Report Is A Sucker-Punch To Pessimists [View article]
    Ah yes....

    As I read these comments I am reminded of the story of the blind men feeling the elephant and describing the part of him they each could fell feel, it's like a wall, like a huge leaf, like a tree trunk, like a snake..etc. .

    That comparison is not meant as an insult.

    Personal experience is just that. It is personal it is local. Economic data are broad, but of course they lack your human observations.

    Those of you reminding me are correct in saying that the economy is still 'bad' and that unemployment is still 'high' and that the applicant to job ratios are huge. How could it be otherwise? No single month can change these things! But this month's results changing minds about the OUTLOOK!

    Do do not deny that we made strides in January when nearly a quarter of one million jobs were created in one-month.

    The BLS is simply too big, has too many non-political (or diversely political) appointees for any conspiracy to play out. Take the BLS numbers at face value, realizing the flaws in any data. Understand that the household survey has been even stronger recently (so do not dwell on the birth-death model). The ADP survey, a private effort to replicate what the BLS does, also has been stronger. Jobless claims have fallen a lot.The Improvement is real. It is actual. it is widespread in short IT IS UNDENIABLE so stop trying to deny it!

    If it isn't real... that is one whale of a conspiracy!

    So please let's keep our discussion to things that are real and not things imagined. No, we did not count unicorns and Leprechauns as employed.

    I am also reminded of conspiracy theorists thinking Bush senior was cooking the data as GDP began to improve just ahead of the November elections when he ran. The Clinton folk were in a rage! After the election it became clear that the economy WAS accelerating and, in fact, the GDP data leading up to the election period were revised up to be even stronger.

    Don't go tilting at windmills. there is no conspiracy.

    The economy has been dead in the water for so long I felt the Fed was not enlightened in its outlook that assumed this weakness would go on and on.

    The economy is improving. It may have a long way to go but that is not to deny progress.

    For those of you who tend to see everything through the eye of politics, yes an improved economy will help the President. But is the critical ingredient in explaining election behavior GDP (GDP-per-capita) or is is unemployment? We have had a growing discrepancy in early recoveries between jobs and output that makes this an important distinction. Historically it did not matter so much. But now, when the economy can grow but with joblessness lingering I wonder.

    Will Ray Fair's model hold up?

    It's a bit hard for me to take Fair's January critique (see link below)... face value.

    But the economy is not just the President's problem; it was not a recession created mostly by Republicans. A lot of chefs stirred that pot even though Democrats blame Republicans and Republicans blame Democrats.. The President will get MOST of the blame/credit but this time the situation is clearly more complicated.

    A manipulated and corrupted political system interacted with bad regulatory environment and greedy/stupid financial institutions as well. The participation of unknowledgeable foreign investors and new not road worthy investment vehicles added the final touches to the debacle to help crate our financial crisis..

    Blame the politicians but don;t stop there. Blame the banks but don;t stop there. Blame regulators and ratings agencies but don't stop there. If you point a finger be sure to stand in front of a mirror. Include the small folk who were both duped and willingly-duped as they bought homes they knew were well over their heads. Or, folk who were so stupid in thinking they could rolling financing of ever large balances forever that their actions called out for economic Darwinism to take hold and put a stop to it.

    Who was dumber? The banker who made the loan (or the investor who bought it from the bank) or the person who took it down?

    Given this view I'm not sure how this year's election will unfold. But the economy and its performance will be in the middle of it. I expect this election cycle to make some new history as it is the most fractious I have ever experienced in my lifetime which spans much of the post-war period

    I can understand Democrat and Republican anger. But lets not jump the tracks with it.

    Feb 4, 2012. 02:46 PM | 2 Likes Like |Link to Comment
  • Why Growth Is Slow And Unemployment Is High [View article]

    I see where you are coming from. Typically when a recession starts we track it with 'peak charts' indexing each variable to be studied to the peak of the cycle ( which we quickly can observe).. Once we have an end to the recession, we switch to a 'trough chart' tracking the recovery period from its recession end since recovery periods are 'special'and have things in common. If we continue to use peak charts we lose a good deal of information since, recessions are of differing severity and that means both depth and length. We would lose our common point of comparison. This one was bad on both scores.

    Recovery or 'trough charts' track recovery speeds; they are not welfare statements for the economy.

    I understand and wholly accept your point. We are in even worse shape when you look at the hole we fell into. Our recession trough is deeper than most and we took along time to dig that hole.

    But once there, it is a fact of life and we wish to explore the recovery itself and how it shakes up. Dragging along the legacy of recession does not help. Yes, we need a stronger recovery to make up for the deep and long recession. No argument here. But even ignoring that you can see how bad the recovery results -- what we are trying to track and to understand is 'recovery'..

    In some sense the level of the unemployment rate tells the story of how bad things still are.but the change in the rate tells of the progress we have made. We could look at the change in that rate from the pre-recession cycle peak but that is not a useful device for understanding things. and none of that is to deny that the unemployment rate while falling is still way too high.

    I hope that helps...

    I have no agenda here beside trying to understand what is going on. I am no Republican nor am I a Democrat. I have been registered in each party at one time or another but I am now disgusted with them both. I do not lean toward partisan-ism except when the facts take me there..

    I have no idea whose agenda this analysis favors.
    Feb 3, 2012. 12:00 PM | 1 Like Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    pardon us for bathing...

    Japan competes substantially by outsourcing to cheap wage countries like China.

    Is that China's plan as it do what Japan has done?

    Indeed on of may added points is to that China is different and will be limited simply because it IS so big. The feedback effects from its development are so much larger than for Taiwan or Korea or Thailand and even Japan is something you do not admit.

    Chains scale is one thing that makes it unique.

    hoarding such a huge pile of foreign exchange reserves that could be used for faster FASTER domestic development is a clear sign of where China has its priorities.

    by the way China's mythology of not having a profit motive is one of the greatest weaknesses in ts economy and one reason why China's banks are one of the biggest jokes - and risks- in global finance.

    PROFIT is not a four-letter word

    Feb 2, 2012. 12:08 PM | 1 Like Like |Link to Comment
  • Do Vehicle Sales Signal A Re-engaged Consumer? [View article]
    Thanks for the comments guys.

    I'm only talking about the economy I do not hawk stocks either here or for a living.

    GM has trouble a plenty and I did not man to imply that VOLT was its only fly in the ointment but that it was a fly in its ointment.

    We still do not know how strongly Japan eventually will recover or if Korean firms will take this opportunity with Japan on the ropes to push though more more product to try to improve its market penetration.

    I'm not a marketing guy or analyst.

    Oh No.

    Buy these stocks at your own risk. I did not say anything about Ford or GM as attractive investments. I did try to give a bit of market flavor on the economic trends which still look very good. Maybe you SHOULD buy some auto stocks based on that really sophisticated chart after all?

    Sometimes simplicity is a great teacher.

    I am in NYC but grew up in Detroit and its environs. I know the history and troubles of the auto companies all too well to think I can give anyone advice other than 'buyer beware'.

    As for your charting stuff, Ryandan, well I'd consult a numerologist or maybe tarot cards. I'm sure that stuff works better than economics.

    But I do think they offer more opportunity than the airlines. Now there is a nearly confirmed losing bet for you. but neither is that a recommendation to short from me. its just an observation.

    Feb 2, 2012. 10:48 AM | Likes Like |Link to Comment
  • Do Vehicle Sales Signal A Re-engaged Consumer? [View article]
    Thank you, Benny for the downside of the upside. I'm so glad to see that after all the good economic data pessimism lives!

    I'm sure there are some other negative comments to be made about these positive trends.. I can hardly wait to read about them.

    But first think about this: Isn't easy money the policy tilt of record and hasn't it here-to-fore been unsuccessful?

    Regardless of your statement, credit has tightened up and, if anything, looser credit would be helpful to the economy.

    Automakers have been waiting for sometime for the aging fleet factor to spur sales. Sales are being stimulated (at last!) but still have a long way to go to get back to real normalcy.

    So what is the distortion here? Why the skepticism?

    'That payment will subtract from other purchases'? Congrats for that tautology. Maybe income is growing (as the the past personal income report showed) and maybe people have extra income and chose to sped some on new wheels? Other purchases in fact may not slow but may speed up. It all depends on if the economy is re-accelerating, something that seems to be beyond the thought process of entrenched pessimists.

    Try to be open minded about incoming data instead of being 'mean' about the assumption of 'mean reversion' and assuming that the real mean to which we will revert is something with a near-zero trend.

    Indeed LOOK AT THE CHART!!@!

    See a trend?


    Feb 2, 2012. 08:52 AM | Likes Like |Link to Comment
  • New Home Sales Show A Very Weak Side - Is It Winter At Work Or The Economy? [View article]
    As I mentioned there are very different regional and local patterns some show recovery and others do not. there are many developments tricked out with utilities and waiting for buyers. Some still have a very long wait.

    The point about property taxes is a really good one. They have really gone up in some places and materially affect the cost of home-owning. These costs are not represented in that affordability index. That is one factor that explains weakness in housing that the index does not capture. I still think bank credit rationing is public enemy number one.

    But let me again emphasize this point on the role of interest rates and home affordability. At a 3.5% mortgage rate and house payments that re 33% of income (an aggressive debt load) a person making $50K can 'afford' a $306K house. At a 5.5% mortgage rate that same person on those same metrics can afford a $242K house. At a 9% mortgage that person can afford a $170K house.

    Moreover, in trying to reconcile median prices and median incomes in the real-world economy recall that house prices often are afforded on not just one median income but on TWO incomes.. As you try to understand house prices historically we also had rising labor force participation rates (for women) and dropping interest rates since 1980 and the two were a potent force to push up house prices. Now labor force participation rates are down, property taxes are up but mortgage rates are very low, compensating for these effects. The example above looks only at the role of dropping mortgage rates and makes a very powerful point.
    Jan 29, 2012. 05:47 PM | Likes Like |Link to Comment
  • New Home Sales Show A Very Weak Side - Is It Winter At Work Or The Economy? [View article]
    maybe so...I don't know where you are getting your home affordability notions but they are not the ones that I know.

    Housing affordability as of November 2011 ranks as the second most affordable cost of housing 'ever'- that is according to a monthly index that goes back to January 1971. That index covers 491 months of data and that is a very impressive statement.

    So you may be right. The second most affordable housing market of all time is still not attractive to buyers.

    But why is that? How does that make sense? Note that I am not dissing you here I am merely reciting a very strange fact. it is a fact worth thinking about as you form an opinion on housing.

    Affordability is a function of three things: median income, median home prices and mortgage rates. I think that you, like many, do not really appreciate how much impact a low mortgage rate makes on house prices- they put 'so much more house 'in reach.

    My own first home purchase carried a mortgage rate of 13%. I could not afford much house at that rate. Go to a web site that does personal finance stuff and home affordability calculations and plug in a fixed income and fixed house price and see how much things change as mortgage rates drop -it is really amazing. As the rate goes down you will be able to boost the price of the house you can afford quite dramatically The ratio of home prices to income is not stable when mortgage rates persistently change in one direction. .

    The problem right now is that there are not many transactions. Homes are very affordable but banks are rationing credit by demanding the very best credit scores to get a loan and to qualify for the super low rate on a mortgage. This is why we have the conundrum of affordability being near a record high and transactions at or near record lows..

    The housing market is regional and byzantine. It will recover in pockets around the country as local supply/demand issues are resolved, the same way that there are pockets that 'may never recover.' Banks will have to see some safety in lending first. That means that the price of loan 'collateral' will have stop falling (home prices). It also means that the economy will have to seem safer (stronger GDP and lower unemployment). Mortgage rates will probably have to rise a bit too (that will lower affordability).

    Housing has complex and interrelated dynamics. Most people latch onto one factor like high foreclosures or the large stock of unsold homes as evidence that the sector cannot recover.

    But it can. It will. It always does. There are some macroeconomic pieces that have to be put in place first. It is always hard to tell which is the chicken and which is the egg, but there is evidence of sub-regions in which housing is doing better. Follow the stocks of the various home builders. The stock price movement will tell you a lot about what sort of recovery we have.
    Jan 28, 2012. 12:16 PM | 2 Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    The problem as I see it, and as La Marque seems to grasp, is that as China shifts from export-led growth to stimulating domestic demand, it will have to make domestic demand effective. That implies people having enough money (income/wealth) to spend. That in turn requires higher wages and probably better working conditions. China's labor exploitation thing will prove to be a passing phase and when it does what is China's competitiveness angle then?
    Jan 28, 2012. 11:27 AM | 3 Likes Like |Link to Comment
  • New Home Sales Show A Very Weak Side - Is It Winter At Work Or The Economy? [View article]
    Winter has boosted a number of OTHER housing reports. Even in THIS report it greatly boosted the Northeast.

    Winter affects the South the least; and it is the largest housing area for new homes sales there fell by 10.1%. While Mid-west sales fell in Dec they had been up strongly in the two previous months and on balance are still strong over three months. So I am not trying to deal only with one region or one month and I am not interested in those out of kilter housing market pockets.

    We are left to ponder the very different behavior (and different lags) for new and existing homes and for starts as well as the surveys of the NAHB. We have both survey and transactions data that are on very different paths and now this plunge in New Home prices.

    Since weather as been unseasonably warm, we can expect it to have boosted activity in traditionally cold regions. Of course it's not a factor in Vegas! Why even bring that up? A double or nothing comment? Vegas will be under pressures for years and anyone seeking to understand anything about the national housing market will not resort to looking at those pockets where overbuilding was so rampant it may take decades to work off the excess. It may even take a wrecking ball.

    As to micmmars, I love your droll comment. Yeah, must be...

    Jan 27, 2012. 12:39 PM | Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    I love the straw-man critique. Keep it up!!I Hit me below the belt. Change the subject. Castigate me for things I have not said! Attack my knowledge and ability to think but do not-DO NOT ever look at what I have written and take issue with that. OHHH NOO.

    I do not mean (nor did I say) that I have no knowledge of Chinese history But that one need not have a PhD (as I believe I said quite clearly) to understand it. I will simply let others read Ben Gee's comments and decide if they have any all.

    I am not trying to make any historical comment or draw and perspectives on China now. Those of you obsessed with history might look at the 'history in the making' in the Middle East and explain the changes we are seeing there in reference to history. I'd say that the Middle East is a clash of a historically little changed region bumping up against the modern economy and new technologies. It's about the power of knowledge no longer suppressible.

    This century is much more about CHANGE than HISTORY. Ignore that you will BE HISTORY. History is interesting. It gives you an important perspective on a people. But China unlike the USSR (now, Russia) despite all its 'history' also has had a recent experience with capitalism. So how will 'Communism' work there? Russia is an interesting example of how a country transitions out of Communism. Is that the sort of history you are interested in?

    Shall we go back and poll the Mandarins? We have seen that the Chinese are very entrepreneurial and I think a 'Western' interpretation actually works quite well for them- despite the obvious limitations I have in my western pea-brain on this matter.

    Again I will emphasize that I'm wary of any Chinese polls and once again refer those who believe in Communism (and in the benevolent view of the high-on-the-hog-living Chinese leadership) to the NYT series on Apple and how its 'outsourced contract' workers in China are treated and how happy and contented they are to stand so long until their legs swell and they waddle when they walk.

    Ah, makes you long for the good old days of foot-binding, doesn't it?

    And of course, the US has a similar spotty history as it developed. Some might day it still does...but I'll not pursue that. That is a critique that goes way too far afield.

    I stand by my statement about no need for a PhD to understand history and actually I think I understand a lot of history quite well and I even read the history written by real historians (not Newt). MOREOVER have not misrepresented any of it here to make a point...unlike some folk.

    Cheers! China: Love it or leave it.... if you can.
    Jan 27, 2012. 11:06 AM | 1 Like Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    I'm an economist not a historian. Still, I don't suppose that one needs a PhD in history to know that when we consider 5,000 years of history we do not find many governments anywhere that ever gave a good fig about their people. Such notions are modern. Even at that modern leaders are usually seen as pursuing their own interests subject to the need for approval of their 'people' in order to get elected.

    Is PM Wen really that different. Is he a true man of the people?

    If you think he is, maybe you have read the NYT expose articles on Apple in China and you can explain why he lets his work force become so badly exploited? Or perhaps you can explain why local corruption is so bad?

    I do not have nor do I need a historian's credential to understand China. What is going on there seems perfectly obvious to me. There is always an official cover story. I doubt that many surveyed in China about their love of the government would want to trust the canvasser enough to register a true opinion. But then PM Wen loves them so much.
    Jan 26, 2012. 08:40 PM | 2 Likes Like |Link to Comment