Friday, April 2, 2010

Let the Red Phone go to voicemail, I'm on the other line

President Obama took a very important phone call Thursday night from his new BFF. President Hu Jintao wanted to chat, in fact the call went on for over an hour. We know this wasn’t expected because Air Force One had to park on the tarmac after landing while the two love smitten teenagers kept talking. They were arranging a date for later in the month at the nuclear security summit in Washington (the spring prom as it were).

Back in China, the newly warmed relations were all over the TV news. Their version of the call was that Mr. Hu expressed a desire for healthier ties while stressing Beijing’s positions on Taiwan and Tibet; and the White House said President Obama stressed for China to press Iran on its nuclear ambitions. (Nothing but x’s and o’s on their text messages, no picture sexting so far.)

The White House said emphatically that they did not discuss the Renminbi but they did discuss trade. You can bet the wild swings in the USD were a topic. Obama had tried to shake loose from China’s peg to the dollar by driving the USD down. A weak dollar is in theory as good as tariffs but Wall Street undermining the Euro has driven the USD back up again. None of this sits well with China and they haven’t been shy about saying so.

As a favor to his new friend, Obama will have the Treasury sit on the Congressionally mandated report about China’s blatant currency manipulation. Obama could lay on heavy tariffs under the GATT treaty if China is shown to have engaged in such behavior, which of course they have done every day since China began to trade with the outside world.

China could solve Obama’s US unemployment problem at anytime without doing anything about the currency exchange rate. You see China is not a democracy or a free market in any normal sense of the word. The Peoples Republic of China is a hard core Stalinist regime. They are free market in that they hold their prisoners until they get the best price for their organs (I didn’t say they weren’t capitalists)

If China sees it in their interest they can hold up the transnational corporations that have been siphoning off jobs from the US as much as they see fit. As the only economic super power they can even apply pressure to companies that aren’t dependent on China directly. The Neo-con dream was to build the dragon up and then control it, the dragon doesn’t think so.
China’s officials care about face more than almost anything. Obama was meek and respectful during his visit to China which was great fodder for the rightwing media. But Obama has a stature in the world that China with all its success can’t buy, so Obama can let Hu wear his letter sweater around school and for this China will put out some trade concessions. There will probably be no official agreement announced but what China’s heavy handed government does could solve the unemployment problem, at least until the fall election is over.

Thursday, April 1, 2010

Tea Baggers have always though God was on their side

Some people were wondering what happened to me yesterday because my missive lacked the depressing news that characterize my reports. I’ll make up for it today.

Initial jobless claims were down only slightly despite massive hiring by the Census Bureau. Ross Perot’s old company ADP; they handle a large segment of the payrolls in the US; they estimate that the private sector lost 23,000 jobs last month and their numbers are usually right. Analysts had predicted a net gain of 40,000. Continuing unemployment claims continued to climb despite people running out of eligibility and ceasing to get benefits or to be counted.

The big job placement firm Challenger Grey & Christmas report US companies have 60% more layoffs planned than the previous month. People in companies that arrange out sourcing for other companies say those companies are planning to out-source 25% of the remaining US jobs, it’s just a matter of making it happen.

The stock market was up today on reports that manufacturing output was up in Great Britain, the US and China, that would be mostly in China. US manufacturing is up because of increasing inventory after being pared to the bone because of the credit freeze. The Chicago Purchasing Managers Index was down sharply for March instead of the up trend that had been predicted and it was down last month too. This means they are not planning on any up tick in business as they send ever more jobs to China.

Treasury Secretary Geithner said today that administration officials are "very worried" about recovering the more than 8 million jobs lost in the recession. (it’s really 11 million to make up for population growth) He said the unemployment rate of 9.7 percent is "unacceptably high." The Obama Adm has been predicting that job creation will be 300,000 a month soon. Even with the Census Bureau hiring 700,000 people the jobs numbers aren’t what any reasonable person would call good and those Census jobs will be mostly gone by August.

There is only one thing Obama can do about jobs and that is to raise the current tariff rate of 2% back up to traditional levels. A trade policy that worked well from 1792 until it was ended 200 years later. There were previous attempts to end tariffs such as when the Customs House at Fort Sumter was seized. Conservatives didn’t like paying Federal taxes then either. Many of their other attitudes have remained unchanged as well. The Tea Baggers plan to march on Washington on tax day and militia types are trying to work up the courage to bring their guns. They should read a description of the First Battle of Bull Run that took place across the river from Washington in the summer of 1861. The Confederate tea baggers thought that god was on their side then as well.

Wednesday, March 31, 2010

Knight takes oil well, checkmate in seven months

President Obama has set up the winning gamut for the fall elections by taking the oil away from the “Drill baby, drill” express. Instead of running over the Democrats in the fall, the bearings will seize on the GOP Hummer and it will sit smoking on the dead end road of history.

Before liberals feel all betrayed to big oil, you need to consider that the oil companies have only drilled on a fraction of the leases that they got under Clinton. Most of these places aren’t likely to exploited for decades if ever. With a Democratic majority there is at least the possibility of a rational energy and trade policy. To highlight that point; British Petroleum was one of the biggest producers of solar electric panels remaining in the US. I say was, since they just announced they packing up and moving to China.

Obama continues to rack up an increasingly impressive record with break through negotiations with the Russians to control nukes without giving up that conservative pacifier of ABM’s. He can point to a much increased campaign against Al Qaeda, something that Bush ignored despite all the color coded warnings. Basically he is a “good” Republican. (Well, sigh) At least he is a “compassionate” conservative.

The Republicans have been screaming for a year that the world would end if Obama-care were passed. Now that it is law and what is happening is the swing voters are finding the reality to be completely different. Now their children can’t be dropped from insurance for any reason and that makes a campaign slogan that is hard to talk against. (we want your kids to suffer and die, vote Republican)

The millennium generation that was instrumental in getting Obama elected are getting a break on their student loans with the payments reduced and a twenty year cap on payments. This also gives a break to the Gen Xers who didn’t want their kids living in their basement.

The Republicans by contrast have been all over the news shouting “hell no!” to everything. Hell no to health insurance for the voters kids, hell no to extending their unemployment, hell no to fixing their mortgage. Republicans want more tax cuts for the rich and blaming Obama for the Wall Street bailout isn’t resonating with the public. Obama’s poll numbers are better than most President’s that have been re-elected even with a good portion of the country hating him for the color of his skin. Americans like an underdog if he stands up for what’s right and shows he can be a winner against the odds. That’s hope we can believe in.

Monday, March 29, 2010

The numbers you don’t want to hear; today’s list only

After well over a year in office, President Obama finally did fifteen recess appointments out of 77 that had been waiting for a Senate vote. But wait, this is much worse than it appears. Another 217 nominees haven’t cleared the respective Senate committees, the 77 have all been approved by the Senators that have oversight. This mushrooms out from there as these people would all hire staff and deputies in lesser positions who would also hire people and so on and so on. The Republicans do know how to make a really big mess, oh that’s right, government doesn’t work!

The security services aren’t having positions filled either, in case you were wondering why they couldn’t connect the dots on that underwear bomber. The only reason we have anybody running the CDC and Health Services is because of the H1N1 scare. The recess appointments were heavy in the DOJ, the Commerce Dept. and Trade Representatives. (a trade war is heating up you know)

Four more banks were closed Friday at a cost of 320 million bringing the total to 41 so far this year. The number of banks the Republicans have driven into the ground is often pooh-poohed as not a big deal. In reality, these are often large chains of banks so any comparison to previous Republican banking disasters is hard to make since the size of banks used to be restricted to keep this from happening again and again.

Remember the Libor rate? London InterBank Offered Rate, this measures what banks are charging one another for money and this trickles down into all corporate money exchanges. The last time we heard from this troll under the bridge was when everything froze in September 2008. Normally credit costs are measured by the difference between Treasury bonds and the Libor rate. Treasury Bonds being considered the “safe” money and Libor not quite “safe” this gives you positive number (always).

Last week it flipped with the Libor dropping below Treasuries. If this continues it will indicate that the market no longer considers the debt of the United States of America to be the “safe” money. Nobody has come up with a good reason why this happened. It could be the big banks are just flexing their muscle to show Obama whose the boss. It could be China throwing their weight around. It could that the economy is too weak to create enough demand for US debt and interest rates will skyrocket. One theory is that they are all just stupid. I like that one.