Nuke The Whales?

We should give this whale a pass.

Comments

[Neo]

I wonder why AP seemed to miss this piece of history ...

It was delightfully appropriate that, as large parts of Argentina were swept by severe blizzards last week, on a scale never experienced before, the city of Nashville, Tennessee, should have enjoyed the coolest July 21 in its history, breaking a record established in 1877. Appropriate, because Nashville is the home of Al Gore, the man who for 20 years has been predicting that we should all by now be in the grip of runaway global warming. His predictions have proved so wildly wrong – along with those of the Met Office's £33 million computer model which forecast that we should now be enjoying a "barbecue summer" and that 2009 would be one of "the five warmest years ever" – that the propaganda machine has had to work overtime to maintain what is threatening to become the most expensive fiction in history.

[yo]

cmon tom,

whale stories are ok, but if you really want some traffic and comments, get back to the birth cert story and don't forget about mentioning the difference between citizen and natural born citizen.

[Jane]

WOw,

WHy are the moonbats so afraid of t transparency? Hmmmmmmmmmmmmm

[Al "manbearpig" Gore]

well, Seattle and Portland are experiencing an unprecedented heat wave, so I guess this balances out all of the rest of the cool weather. That's it! The world is tilting! Everybody Run! The World is Tilting!

[RichatUF]

Jane-

I'll hold out for his transcripts from Columbia and HLS. He's a genius right...SuperGenius if I were to believe his supporters.

And in other news (and I hate to hijack the thread so early): But its green shoots breaking out all over. Here is the official release.

quick hits: Q1 revised down .9% to -6.4%. Autos added +.2% (probably the intradealer transfers with all the closings); trade added +1.38% (exports fell, but imports [ie oil] fell at a faster rate); inventories were -.83% and cut 141 billion, with the first quarter being revised down to -2.36%. The yahoo write up has the inventories cargo cult: "A key area where businesses ended up cutting more deeply in the spring was inventories. They slashed spending at a record pace of $141.1 billion. There was a silver lining to that, though: With inventories at rock-bottom, businesses may need to ramp up production to satisfy customer demand. That would give a boost to the economy in the current quarter."

Gotta run, but I'm surprised that it came in at -1.0%. Government spending was the real kicker in the report. More to follow eventually.

[cathyf]

Long ago when I was briefly in Roger Schlafly's section of Real Analysis, he had a great t-shirt that advocated: "NUKE THE GAY BABY WHALES FOR JESUS!" Yep, that just about covers it.

[RichatUF]

And all of 2008 was revised down .7 to an annualized rate of .4% with most of the revision looking like it was tucked into Q108 and Q308.

[Parking Lot]

((Nuke the whales)

geez when I read the headline I thought for sure the topic was Michael Moore ... did ya see that pic of him on Drudge yesterday?

(ok, sorry for the insult to the whales of the ocean, it really is unfair to compare those beautiful creatures to a slob like lyin' Mike, they are far more intelligent)

[Parking Lot]

((whale stories are ok, but if you really want some traffic and comments, get back to the birth cert story ))

whale stories do so attract a lot of traffic! as long as said stories are about pieces of shite like Mikey Moore ... remember him? the troofer the entire Dem party used to exalt like an oracle from on high?

[Parking Lot]

RichatUF

((And all of 2008 was revised down .7 to an annualized rate of .4% with most of the revision looking like it was tucked into Q108 and Q308.))

Rich, do you have any thoughts on when and if interest rates will go up?

[RichatUF]

Parking Lot-

If I were really good at interest rate forcasts I'd probably be working in the Caymans.

My guess is that it really comes down to when China's loan bubble starts to unwind and their banks start to implode. ie. Since foreign demand for US debt is still necessary for China to go on an international buying spree of basic materials, they'll buy as long as their banks can internally fund production with a forced lending program. Once the forced lending program begins to unwind (a key in seeing the unwind might be a spike in the exchange rates of the Sing$, Malaysian ringgit, and Thai bhat-as upper class Chinese begin offshoring their gains), China would then start burning off their basic materials stock piles obliviating the need to purchase dollars. The euros might need to start buying dollars however to lower their exchange rate because they are getting wacked on their trade accounts.

I could see a scenario in which the short and long maturities go down in yield and the intermediate maturities goes up (in which the 10 year would have the highest interest rate of all maturities).

[RichatUF]

still necessary for China to go on->

..still necessary and China to going on...

[Parking Lot]

Rich

what do you think of this analysis?

http://www.oftwominds.com/blogjuly09/rates-capital-trap07-09.html

[Rick Ballard]

"Government spending was the real kicker in the report."

Rich,

Here's the component table to go with the truly fantastic -1% number. I understand that you are reiterating this:

Real federal government consumption expenditures and gross investment increased 10.9 percent in the second quarter, in contrast to a decrease of 4.3 percent in the first. National defense increased 13.3 percent, in contrast to a decrease of 5.1 percent. Nondefense increased 6.0 percent, in contrast to a decrease of 2.5 percent. Real state and local government consumption expenditures and gross investment increased 2.4 percent, in contrast to a decrease of 1.5 percent.

from the press release but I can't figure out how the release relates to that table at all - aside from the truly fantastic -1% right at the top.

Very nice call last night on the "adjustments" to past data. I wonder if the BEA rented a 4 barreled Mannian enHansenizer for the work?

[RichatUF]

Parking Lot-

Quite a bit to read. I've got to let his analysis roll around head for a while. If I'm understanding his point he is saying that residential real estate (and thus consumer spending) is going to be the next "liquidity trap"-money that can't be accessed because the he market has evaporated and property can't be sold. I'm still not sure just based on the quick read I gave it though. I also noticed he included the Sprott report we've had in these threads a few times.

Rick-

I wonder if the BEA rented a 4 barreled Mannian enHansenizer for the work?

I could imagine the flurry of calls between Romer and GISS. And now that you do mention it the numbers do look a bit odd. Wonder if they might be using some CAC accounting in the government spending number?

[Parking Lot]

Rich

the main point that I got out of it was that interest rates are going to be going up soon because 'Surplus money looking for a home is drying up even as the demand for surplus capital skyrockets.' His argument (as I understood it) is that the competition to attract capital will force up the interest rates. Do you think that is a plausible argument?

I copied this from the page:

The vicious Cirle of Shinking capital

1. global recession shrinks profits and savings, credit crunch lowers borrowing ...
asset deflation destroys equity and risk premiums reduce leverage

2. global liquidity glut dries up; SWFs and central banks no longer have surplus to lend, millions who lost their jobs draw down from savings.

3. as tax revenues decline, demographic-driven costs (medical, pensions, water, etc.) skyrocket, pushing govts to huge deficits (ie borrow trillions)

4. the vicious circle of shrinking capital pits private vs. public for capital to borrow, driving interest rates ever higher

[clarice]

My D.C. sharpened pikes business looks better every day.

[Rick Ballard]

Rich,

This guy does a point by point on the press release which leads me to believe that I may still be sane.

PL,

Where does Uncle Ben's monetization of the debt fit into the scenario? There is no "fixed sum" of money available to purchase debt. Uncle Ben prints up a huge stack of Benjie's on Monday morning and gives it to primary dealers in exchange for their nasty, dirty old bonds and they turn around and buy stacks and stacks of Turbo Timmy's fresh, clean and sweet new bonds.

Liquidity just isn't a problem as long as Uncle Ben prints nice new money every week.

[Parking Lot]

Rick

((Where does Uncle Ben's monetization of the debt fit into the scenario? There is no "fixed sum" of money available to purchase debt. ))

I copied this off the site, does it answer your question?

((Why can't the Fed just print the $2 trillion the government wants to borrow? Wouldn't that solve the problem? In theory, perhaps, but in practice, when the Fed did exactly that, announcing it was printing $300 billion to buy Treasuries, the bond market reacted violently by pushing rates up dramatically.

Printing trillons of dollars is seen as inflationary by the bond market, and if inflation is being ramped up to 4%, why buy a bond that pays 2%? To keep buying bonds which are guaranteed to lose money is simply unwise. The net result is the Fed cannot just print $3 trillion (don't forget all the bonds which have to be rolled over) and buy Treasuries--the bond market would instantly demand much higher rates to compensate for the additional risks of inflation.

))

[matt]

Industrial production is at a virtual standstill. Right now, the only things that seem to be going in the economy are short sales/foreclosures and AG. With this year's weather across the Cornbelt, I am a bit concerned about crop yields as well. The Central Valley in California already has its own issues.

Natural resources are way down because of the industrial depression, so where is the growth in the economy going to come from?

These are deep down fundamentals, and I just don't see how they can be predicting a bottom yet.

[Rick Ballard]

PL,

The description would be absolutely accurate were it not for the deflationary abyss on the left side of the tightrope upon which Uncle Ben is walking. There are hints (Treasury's new "definitions" regarding buyers) that foreign money isn't exactly hot after new issues. The tails on the auctions last week reflect a certain disenchantment.

Don't worry! Be happy! Just look at that absolutely fantastical -1% print for Q2! For God's sake - don't read Matt's comment with those nasty concerns which have the appearance of reality.

I know - buy some stocks! They're all going to double in six months and you'll be rich! GS will be very happy to sell you as much as you want.

[Parking Lot]

Rick

((The description would be absolutely accurate were it not for the deflationary abyss on the left side of the tightrope upon which Uncle Ben is walking. There are hints (Treasury's new "definitions" regarding buyers) that foreign money isn't exactly hot after new issues. The tails on the auctions last week reflect a certain disenchantment.))

True, buyers aren't exactly beating a path to the door to buy the new issues, but if they were offered a better rate of return they might? Isn't that an incentive to raise the interest

((I know - buy some stocks! They're all going to double in six months and you'll be rich! GS will be very happy to sell you as much as you want))

Isn't that the exact same song they were singing last year about this same time? preluding the funeral dirge of September and October

(actually I wish I had bought some GS in Jan 2009 and sold it in June)

[RichatUF]

PL-

I looked at it too fast, seeing as how he had a graph right in the middle of the page. I re-read the link after I've had my evening cup of coffee.

In re: your clipped comment-dollarized global trade would soak up a significant amount of the printed dollars even with trade collapsing. Asia still has to buy oil and the Middle East still has to buy food. And what doesn't get soaked up can go into a bank account while prices fall and awaiting deals. Bernanke wouldn't buy all the Treasuries anyway (though Summers might) as oil exporters and asian consumer goods exporters need to roll over some dollar holdings for future use. The interesting case in all this is the relationship between Japan and the Eurozone and will they take a coordinated effort to weaken their currencies against the dollar (to help their exporters but also to ease debt repayment burdens because of the number of Eastern Europe countries that have yen demoninated consumer debts).

[matt]

Rick;

The treasury auctions are not realizing anything near expectations, which means that the buyers are not buying. Say hello to the China Syndrome.

The minute the Fed starts buying Treasuries, the game is up and we will see a meltdown of the dollar. This is a direct correlation that can only be highly inflationary. Once that happens, its going to be a pinball effect.

Just pray it doesn't happen. What I am seeing with my own eyes in the industrial economy, in AG, and in housing has me scared enough already.

[matt]

Rich;

The Chinese are pumping billions of our former dollars into their economy right now. The Japanese economy is melting down because exports have dried up. Europe is too heavily invested in the dollar and if no one is buying machine tools and the high end stuff, then that will kick in as well over there much worse. Their automotive industry, which like the States, is the last real pillar of manufacturing, is only now tanking the way ours did 6-9 months ago. Porsche lost what? $7 Billion? VW? BMW? Daimler? Audi barely made a profit.

French workers are threatening to blow up their factories. It reminds me of the scene in Blazing Saddles when Cleavon Little puts the gun to his head. Nobody move or I'll kill the economy!

Lots of green frickin shoots.....

[Bill in AZ]

I can barely walk around for all the green shoots sprouting up today:

WSJ headline right now:
"U.S. Economy Pulls Out of Tailspin "

Yahoo headline right now:
"Profit reports push up Dow to best July in 20 years"

Dunno how it could possibly get any greener'n this.

[Bill in AZ]

...and I missed this WSJ headline for all the green shoots:
"Stocks Wrap Up a Hot July"

"The Dow industrials rose 17 points as markets saw a mixed finish to one of the best months for stocks in years."

woohoo - best month in years!

[matt]

read the financial statements, Bill. There is so much BS it's unconscionable. Bloomberg actually did an article on it today.

McDonald's reported that they lost money in the last quarter because of the strength of the dollar, except the only problem is that the dollar is at Y95/$ in Japan, $1.4/euro, 6.72 RMB/$. These are historic lows for the dollar. And yet Mickey D's has the chutzpah to say otherwise and none of the analysts questions them.

I am hoping the Dow is a leading indicator, but when you look at the global economy, where the hell are the green shoots?

[Rick Ballard]

Matt,

Perhaps McDonald's hired a few moonlighting BEA analysts to prepare their explanation?

[Peter]

There are lots of green shoots. The drive belt on my mower is borked and I can't fix it until Tuesday.

[Ignatz]

--These are historic lows for the dollar.--

While they don't indicate dollar strength they are not actually historic lows.
But we do have the crew in place to set some new records, pronto.
I hope next year I still have some change.