Sudden Debt

U.S. Inflation Becoming a Real Issue for Foreign Investors

On Oct 15 11:26 AM Robert Martorana wrote:

"... China, for example, will threaten to sell Treasuries whenever
we displease them..."

Precisely. For the reverse example, remember what President Eisenhower did to convince the British and French to resolve the Suez Crisis in 1956 ( heavy selling of pound sterling in NY).

Regards,
H.

Dollar Hegemony Is Ending

On Oct 06 10:46 AM locksmith wrote:

> You are right about debt but wrong about bigger picture. Most European
> countries have far more public debt than US....

Sure, as % of GDP some do, but certainly NOT the big ones like Germany and France.

And, in fact, absolute size does matter. There is not a single country in the world whose government owes nearly $12 trillion AND issues the global reserve currency.

Please consider the meaning of "reserve currency". Who wants to hold on to rapidly depreciating money as a "reserve"?

Is There Really a Global 'Cabal' Aiming to Dump the Dollar?

Are you forgetting who is the biggest oil importer in the world? It is the US by very far (~11 mio bbl/day vs. #2 Japan with 4.6 mio bbl/day) and it pays in... dollars.

Why would oil producers want to continue selling a depleting resource by pricing it at a steadily devaluing currency?

Even if Fisk's sources are merely sending a warning to the US about its fiscal and monetary policies, it is still a warning that should be taken very seriously.

And Fisk is decidedly NOT naive about sources in the region, being the world's premier Middle East correspondent for over 30 years.

Dollar Hegemony Is Ending

Reuters did NOT delete the article - they just changed its title.


On Oct 06 10:16 AM Living4Dividends wrote:

> Thanks for the article. I believe that the original article in The
> Independent and the now-deleted Reuters article were based on rumors
> and not actual sources. The fact that Reuters deleted the article
> gives credence to this argument.
>
> Japan, Saudi Arabia, UAE, and Russia have denied the allegations.

BLS Jobs Numbers Contradict BLS Jobs Numbers

Oh, and as for the state-by-state part of your analysis, BLS has this to say in a footnote to their data:
"Caution on aggregating state data. State estimation procedures are designed to produce accurate data for each individual state. BLS independently develops a national employment series; state estimates are not forced to sum to national totals. Because each state series is subject to larger sampling and nonsampling
errors than the national series, summing them cumulates individual state level errors and can cause significant distortions at an aggregate level. Due to these statistical limitations, BLS does not compile a "sum-of-states" employment series, and cautions users that such a series is subject to a relatively large and vola-
tile error structure."

The cumulation of 50 sampling errors alone kills the entire premise of this article, I'm afraid.

BLS Jobs Numbers Contradict BLS Jobs Numbers

"Traditionally, once those weekly lay-off reports begin to significantly exceed one million when totaled up on a monthly basis, the U.S. economy begins to experience net job-losses. Thus, when the weekly lay-offs soared to as high as 3 million per month, I pointed out that as a matter of simple arithmetic, the net job-losses had to increase to somewhere close to 2 million per month."

I must respectfully disagree on two grounds:

1. The number of monthly unemployment claims that produces net monthly losses in non-farm payrolls (NFPs) is closer to 1.6 million, not 1 million. That has been the case since 1975 and can be easily observed when you plot [monthly unemployment claims] and [monthly changes in NFPs] on the same chart. Look where the claims stand when NFPs dip below zero and voila..

2. Net gains/losses in non-farm payrolls are quite obviously not a simple subtraction of gross unemployment claims from a constant 1 million (or 1.6 million, as it may be). You are forgetting that people are also getting hired all the time...

The mathematical correlation function between unemployment claims and NFPs is neither simple nor continuous.

Now, this is not to say that BLS is a bunch of angels - the Birth/Death model alone is full of holes, most of them admitted by the BLS itself, albeit in tiny-sized footnotes.

The Specter of Default

Ok, SA corrected the title now... Thanks.

The Specter of Default

I don't know why SA changed the title of my post, entering the word "Government" where it never appeared on the original post. It is unfortunate because it changes the meaning of my post.

No, I do NOT recommend default on govt. debt, but a reduction in private debt, e.g. housing and consumer debt. And BTW that's what Solon did.

The GDP on Debt Steroids

Thanks vm for the FRB SF link. Very interesting reading.

Regards,
H.


On May 21 03:42 PM Fighting Yoda wrote:

> Debt is forever, as assets go down - collateral shrinks, deflation
> (even disinflation) makes debt servicing more difficult. Yes the
> market will eventually figure it out, meanwhile the markets continue
> to remain irrational (despite today's mild fall).
>
> Read this: from SFO Fed:
> U.S. Household Deleveraging and Future Consumption Growth
> www.frbsf.org/publicat...
>