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What happened to all of the doom and gloom economic threads?

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While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency's money problems are only growing worse.

The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn't likely, as the House prepares to leave for its August recess.

The agency said a default on the payment, for 2011, wouldn't directly affect service or its ability to pay employees and suppliers. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer.
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http://online.wsj.com/article/SB100...2.html?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond

Health care is going to be so good!

;) ;)

The Amonix solar manufacturing plant in North Las Vegas, subsidized by more than $20 million in federal tax credits and grants, has closed its 214,000-square-foot facility about a year after it opened.
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http://www.lvrj.com/business/amonix...months-heavy-federal-subsidies-162901626.html

Paddy O’Bama Says: Boy, do we know how to pick 'em!
http://pajamasmedia.com/tatler/files/2011/04/obama-wide-grin80.jpg

(CNSNews.com) – An audit conducted by the Energy Department’s Office of Inspector General was "unable to locate" $500,000 worth of equipment purchased with stimulus money by a recipient of funds distributed through the deparment's “Advanced Batteries and Hybrid Components Program,” according to an audit report published by the OIG.
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http://cnsnews.com/news/article/energy-dept-unable-locate-500000-equipment-bought-stimulus-money

I know, a million here, a million there, eventually you get around to talking about real money...

;) ;)

http://pajamasmedia.com/tatler/files/2011/04/obama-wide-grin80.jpg
”’Shovel-ready’ was not as shovel-ready as we expected.” (Laughter)
http://cdn.pjmedia.com/eddriscoll/wp-content/blogs.dir/24/files/2012/07/obama_unexpectedly_thumbnail_6-30-11-3.jpg
 
I had a nice conversation the other day with Lacy Hunt at Hoisington Investments. We agree on many aspects of the global economy and I have a few excerpts of Hoisington's latest forecast below.

First, let me state that if you are looking for someone who has called the US treasury market correct this past decade, look no further than Hunt.

While I have been US treasury bullish (on-and-off ) for years (more on than off), and I can also claim to have never advocated shorting them (in contrast to inflationistas running rampant nearly everywhere), Lacy has correctly been a steadfast unwavering treasury bull throughout.

Will Hoisington catch the turn?

That I cannot answer. However, one look at Japan suggests the actual turn may be a lot further away than people think.

For a viewpoint remarkably different than you will find anywhere else, please consider a few snips from the Hoisington Quarterly Review and Outlook, for the Second Quarter 2012 (not yet publicly posted but may be at any time).

Abysmal Times Confirm the Research

In the eleven quarters of this expansion, the growth of real per capita GDP was the lowest for all of the comparable post-WWII business cycle expansions. Real per capita disposable personal income has risen by a scant 0.1% annual rate, remarkably weak when compared with the 2.9% post-war average.

It is often said that economic conditions would have been much worse if the government had not run massive budget deficits and the Fed had not implemented extraordinary policies.

This whole premise is wrong.

In all likelihood the governmental measures made conditions worse, and the poor results reflect the counterproductive nature of fiscal and monetary policies. None of these numerous actions produced anything more than transitory improvement in economic conditions, followed by a quick retreat to a faltering pattern while leaving the economy saddled with even greater indebtedness. The diminutive gain in this expansion is clearly consistent with the view that government actions have hurt, rather than helped, economic performance.

Economic conditions have been worse in euro-currency zone countries, the UK, and Japan. All three of these major economies have also resorted to massive deficit financing and highly unprecedented monetary policies, and all have substantially higher debt to GDP levels than the United States.

The UK and much of continental Europe is experiencing recession to some degree. Whether Japan is in or out of recession is a pedantic point since the level of nominal GDP is unchanged since 1991. Even such prior stalwarts of the global scene such as China, India, Russia and Brazil are plagued with deteriorating growth. In such circumstances a return to the normal business cycle of one to two rough years, followed by four to five good years, remains highly unlikely in the United States or in these other major economic centers.

Based upon the historical record of effects of excessive and low quality indebtedness, along with the academic research, the 30-year Treasury bond, with a recent yield of less than 3%, still holds value for patient long-term investors. Even when this bond drops to a 2% yield, it may still have value in relation to other assets.

If high indebtedness is indeed the main determinant of future economic growth and further government “stimulus” is counterproductive, then a prolonged state of debt induced coma may so limit returns on other riskier assets that a 30-year Treasury bond with a 2% yield would be a highly desirable asset to hold.
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Those were the ending paragraph of Hoisington's four-page 2nd quarter review. I added paragraph breaks for ease in reading.

Are US Treasuries "Undervalued"?

I will respond to my own question with another question: Undervalued compared to what?

Certainly I would not advocate blindly buying 30-year year US treasuries with the intention of holding on to them for 30 years. Nor would Lacy Hunt.

Likewise, I see no real value in holding 10-year US treasuries for the next 10-years either.

Then again, I have stated the US may go in and out of deflation for as long as a decade. If that does happen, treasuries may easily outperform for that entire period.

One look at the Japanese stock market shows what might happen.

Three Lost Decades
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Read more at http://globaleconomicanalysis.blogspot.com/#A9chVOhiLBWVBuq4.99
 
Another day, another C&P Spewnami from Cap'n Downer.

Meanwhile, in the "Real World™", over two years of Doom and Gloom predictions have fallen flat, only to be replaced by new Doom and Gloom predictions. Are we supposed to be worried about Greece, the Euro in General, or some small solar cmpany today ?

Or are you just going to go full on birther again this morning?
 
vetteman said:
Also known as the UD recovery.:rolleyes:
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Other than Fed inflation, we're still at post #1 and U_D ignores that reality, but I remember his take on the Bush economy heading into '06; worse than the Great Depression it was, rich getting richer, middle-class disappearing, but now, man, now, we're in a golden age...

G-g-g-g-golden years Go-o-old...

wop wop wop
 
The Student-Loan Bubble
By Jay Hallen, NRO
July 19, 2012

A crisis has hit the student-loan market, and it promises to be every bit as dire as the subprime bubble that caused such turmoil in 2008. The Washington Post estimates that outstanding student debt now totals $1 trillion. As many as 30 percent of borrowers have dropped out of their courses of study, leaving them no easy way to repay.

As it did in the housing crisis, the government has played a major role in bringing the student-loan market to such a calamitous impasse. Through programs such as the Federal Family Educational Loan Program (FFELP), taxpayers have guaranteed up to 97 percent of student loans extended by private lenders. Given that safeguard, lenders have had no incentive to restrain their activities or assess the creditworthiness of their borrowers. The government then raised the taxpayers’ exposure to 100 percent by replacing FFELP in 2010 with a system of below-market direct loans administered by the Department of Education (DOE). All students pay an identical low rate — currently 3.4 percent for subsidized loans — while the outlook for the student-loan crisis remains dim.

The growing debt burden is intrinsically linked to the high inflation in college tuition, as subsidized loan rates have drawn an increasing number of students to college, pushing up the total cost of education. The National Center for Education Statistics reports a 9 percent increase in post-secondary enrollment between 1990 and 1999, but a 38 percent increase between 1999 and 2009. Colleges, in turn, keep expanding their facilities and programs and are forced to pay more for the best faculty talent.

Private businesses answering to shareholders have incentive to operate efficiently; colleges, less so, especially when the demand from prospective students is insatiable. The result is that tuition rose 4.6 percent in 2011, a full percentage point higher than the CPI, although down from a 6 percent annual-growth average in the years leading up to the 2008 financial crisis.

Mountains of debt mixed with rapid tuition hikes are a perilous feedback loop that the nation must halt before it becomes an unsustainable burden on the economy. There are three root causes to this crisis in the making:

low, flat loan rates that disregard borrower risk;

a lack of loan-restructuring options; and

a lack of funding alternatives.

Fortunately, each of these three problems has a market-based solution that can be applied to address the student-loan crisis in a responsible manner.
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http://www.nationalreview.com/articles/309940/student-loan-bubble-jay-hallen
 
Why Are Politicians Killing Off "First Jobs"?
From raising the minimum wage, to regulating internships, Washington doesn't allow young people to get experience.
John Stossel, Reason.com (Libertarian)
July 18, 2012

What was your first job?

I stuck pieces of plastic and metal together at an Evanston, Ill., assembly line. We produced photocopiers for a company called American Photocopy.

I hated the work. It was hot and boring. But it was useful. It taught me to get good grades in school so I might have other choices.

Four years later, good grades got me a job as a researcher at a TV station.

To my surprise, that became a career. I never planned to be a TV reporter. I hadn’t even watched TV news. I never took a journalism course.

But by showing up and trying stuff, I found a career.

I write about this because I’m appalled watching politicians kill off “first” jobs. (They say it’s to protect us.)

First, they raise the minimum wage. Forcing employers to pay $7.25 an hour leaves them reluctant to give unskilled kids a chance—why pay more than a worker can produce? So they offer fewer “first” jobs.

On top of that, the Obama Labor Department has issued a fact sheet that says free internships are only legal if the employer derives “no immediate advantage” from the intern.

Are you kidding me? What's the point of that? I want interns who are helpful!

The bureaucrats say they will crack down on companies that don’t pay, but that’s a terrible thing to do.

Unpaid internships are great. They are win-win. They let young people experiment with careers, and figure out what they’d like and what they’re good at. They help employers produce better things and recruit new employees.

I’ve used interns all my career. They have done some of my best research. Some became journalists themselves. Many told me: “Thank you! I learned more working for you than I learned in college, and I didn’t have to pay tuition!

I could have paid them, but then I would have used fewer interns. When I worked at ABC, the network decided to pay them—$10 an hour—but it also cut the number of internships by half. Politicians don’t get it. Neither do most people. Polls show that Americans support raising the minimum wage. Most probably also support limits on unpaid internships, believing that they replace paid work.

But they don’t.
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http://reason.com/archives/2012/07/18/why-are-politicians-killing-off-first-jo

Let us not also forget the movement to prevent kids from working the family farm...

;) ;)
 
The number of Americans filing new claims for unemployment benefits rebounded last week, pushing them back to levels consistent with modest job growth after a seasonal quirk caused a sharp drop the prior period.

Initial claims for state unemployment benefits increased 34,000 to a seasonally adjusted 386,000, the Labor Department said on Thursday. The prior week's figure was revised up to 352,000 from the previously reported 350,000.

Economists polled by Reuters had forecast claims rising to 365,000 last week. The four-week moving average for new claims, a better measure of labor market trends, fell 1,500 to 375,500.
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Read more: http://www.foxbusiness.com/economy/2012/07/19/jobless-claims-rise-more-than-expected/#ixzz214XcCjgC
http://cdn.pjmedia.com/eddriscoll/wp-content/blogs.dir/24/files/2012/07/obama_unexpectedly_thumbnail_6-30-11-3.jpg
 
vetteman said:
The Marxist silver ponytails in Frisco who control the state don't give a fuck. That's why we need to move the Capitol down to where it's closest to the people, like in Orange County. The two biggest cities in California are in SoCal.
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Sacramento is the capital of California, not San Francisco.

Or do you think the state is controlled by the UC Berkeley faculty?
 
phrodeau said:
Sacramento is the capital of California, not San Francisco.

Or do you think the state is controlled by the UC Berkeley faculty?
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What if find funny about CA and Hollywood, is that the magority of movies are now made outside of CA and America. To avoid taxes and reduce expenses (government fee's, labor....)

Yet the insane 'Holy-wood' liberal left keeps on talking about how we need more Government.
 
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