Machiavelli999

On a day expected to be full of bruises for Bernanke, the statement from Sen. Jim Bunning - the only senator who voted against the Fed chairman's original confirmation four years ago - is still a standout, calling Bernanke's Fed a "creature from Jekyll Island" and going on: "Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard."

I find these words so disengenous coming from Bunning. He talks about the Fed not following the Taylor rule in his speech, well the Taylor rule now says rates should be -4%. Yes, that's MINUS 4%.

He talks about the Fed not doing its job on consumer protection, but I am going to guess that he is going to vote against the establishment of a consumer financial protection agency.

In short, he throws out some populist jingo to get the lapdogs (like most the readers here) to yell "Hooorah!" but in fact he was just as much a part of the problem as everyone else.

The White House has seen signs that the U.S. unemployment rate to be announced on Friday "might tick upward," spokesman Robert Gibbs says ahead of tomorrow's NFP data. Some economists have boldly predicted an uptick in payrolls.

MarketGuy,

Well, let me make a little prediction then. Next year you'll start seeing U6 come down but U3 will remain high.

Nov. ISM Non-Manufacturing Index: 48.7 vs. 51.5 expected and 50.6 prior (<50 denotes contraction). Decline was led by a drop in the Business index, which fell to 49.6 from 55.2 in October. Prices index rose to 57.8 from 53. Employment rose to 41.6 from 41.

By the way, just a general comment on these ISM reports. One of the reasons being given for the recovery in summer and fall was inventory restocking.

Well both the ISM Manufacturing and Non-Manufacturing surveys have shown inventories have been declining for over year. So, what inventory restocking do people see here?

The White House has seen signs that the U.S. unemployment rate to be announced on Friday "might tick upward," spokesman Robert Gibbs says ahead of tomorrow's NFP data. Some economists have boldly predicted an uptick in payrolls.

I am a bull. But I am an objective bull (unlike most of the bears here).

So, having said that. The ISM numbers for the month of November were not encouraging. I expect a disappointment tomorrow.

However, Meredith Whitney commented that the unemployment RATE really doesn't matter as much as the payroll numbers. This is because as the labor market begins to recover, a lot of the people who got discouraged and stopped looking for work and were no longer being counted in the U3 measure of unemployment will start looking for work again and start being counted again. This will keep the unemployment rate high.

So, we can have an interesting phenomenon where payrolls are increasing by the unemployment rate is going up.

Nov. ISM Non-Manufacturing Index: 48.7 vs. 51.5 expected and 50.6 prior (<50 denotes contraction). Decline was led by a drop in the Business index, which fell to 49.6 from 55.2 in October. Prices index rose to 57.8 from 53. Employment rose to 41.6 from 41.

OK, this is the first number in a few weeks that is really scaring the bull in me. This is not good. This really could be a turning point in the market.

Initial Jobless Claims: -5K to 457K vs. 485K expected. Continuing claims +28K to 5,465,000.

I am going to guess yes. As usual, the number to look at is the Initial Jobless Claims and there the data keeps getting better and better.

I won't be celebrating until we get back down below 400K, but this is definitely encouraging news.

Keynesians Are Wrong

"The funny thing is that Keynesians have always been wrong. And yet, here we are ... "


Umm..no they are not. And as one of many examples, lets just take a look at the narrative from stimulus critics recently.

First it was, "the stimulus won't work, in fact it will hurt, because it will crowdout investment"

Now the argument is "Yes, the stimulus has caused the recovery, but it doesn't count because it was caused by the stimulus"

A year from now it will be "Oh, the recover was going to happen anyway"

Nov. ISM Manufacturing Index: 53.6 vs. 55 expected and 55.7 in October. Prices index 55 vs. 65 prior. Employment 50.8 vs. 53.1. Inventories 41.3 vs. 46.9. New orders 59.9 vs. 63.3. While below consensus, it marks the fourth straight month of expansion in U.S. manufacturing.

Sigh....

Did anyone here take calculus? The first derivative is still positive but it decreased. That's what the PMI is. The first derivative.

Nov. ISM Manufacturing Index: 53.6 vs. 55 expected and 55.7 in October. Prices index 55 vs. 65 prior. Employment 50.8 vs. 53.1. Inventories 41.3 vs. 46.9. New orders 59.9 vs. 63.3. While below consensus, it marks the fourth straight month of expansion in U.S. manufacturing.

Papaswamp,

You don't even understand the data you are looking at. Any number above 50 is expansion. The only problem is the expansion slowed in November.

Taleb goes berserk on the upcoming Bernanke reappointment: "I cannot believe that we... can accept living in such a society. I am not blaming Bernanke (he doesn't even know he doesn't understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible."

"All of the above, but in a rational way."

Well, I'll explain to you how hard that is. If you actually proposed cutting Medicare, like Obama has, all those townhall, "small-government" types, that were protesting against Obama, would quickly start protesting against you.

I mean the Medicare "Advantage" program is just one big corporate give away. Obama wants to get rid of it. Instead of embracing this, Republicans are making the cuts to Medicare as one of the centerpieces of their opposition. The first amendment the GOP proposed last night was to ensure that there would be NO cuts to Medicare.

Taleb goes berserk on the upcoming Bernanke reappointment: "I cannot believe that we... can accept living in such a society. I am not blaming Bernanke (he doesn't even know he doesn't understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible."

"We need to
> cut the size of government to 1/2 or more of what it is now."

When people say things like this, I want to know what exactly do they want to cut. 86% of the government is military, social security, medicare and medicaid. What from that do you want to cut?

Taleb goes berserk on the upcoming Bernanke reappointment: "I cannot believe that we... can accept living in such a society. I am not blaming Bernanke (he doesn't even know he doesn't understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible."

Niner,

Just out of curiosity, what exactly are you not happy with these first 10 months. I mean if you look at what he campaigned on (healthcare, climate change, Afghanistan) there really should be no surprises here.

Unless, you didn't listen to what he was campaigning on and just voted for him because he didn't have an (R) after his name.

I am just curious because its rare that I actually meet one of these Obama disenchanted voters. Usually, the Obama haters I meet always hated Obama, which always makes me wonder why is he compromising. The people who don't like him, will never like him, no matter how much compromising he does.

But, now I have actually run into the elusive "independent" voter. So, I am very curious to ask what has he done to lose you these past 10 months.

Krugman: 'The Deficit Doesn't Matter'

"Many have been forced to default (for lack of financing) at debt/GDP rates close to 50%."

This is true. Much smaller countries with much less developed economies and much more violent and unstable political systems. These are the type of countries that default at 50% of GDP.

Krugman: 'The Deficit Doesn't Matter'

Thank you for all those thumb downs, but here is another thought that popped into my head. A lot of the people who are arguing that debt is a huge problem are also huge believers in market fundamentalism. Meaning the market is always right.

I don't believe this, but if you do then listen to what the market is saying. Yields are tiny. CDS rates are tiny. Inflation expectations are tiny.

The facts just don't want to go along with your moral story, I am sorry.

Krugman: 'The Deficit Doesn't Matter'

I have written this argument many times (as has Krugman) and it is continuously ignored. Let's take a couple countries that have serious economic problems: Italy and Japan.

Both have stagnant to no growth. One has a maniac for a prime minister who is more interested in banging chicks young enough to be his granddaughter. The other country is stuck in a 20 year stagflation. Horrible, horrible political and economical situations.

On top of all of that, both have huge debt loads well in excess of 100% of GDP. (And btw, they don't count their future liabilities due to their much more generous welfare states either!)

So, according to your theories these countries should be defaulting on their debt any day now or facing hyperinflation. In fact, neither is true and in fact both easily can raise more debt if needed and at pretty low rates (Japan can raise debt at 1.2% rates).

Now, the United States has an economy bigger than both of these countries combined. And debt as % of GDP significantly lower at the moment. Why on earth would you think it would have a debt problem, if neither Italy nor Japan do??