The N.F.I.B. data was far more prescient than that of the I.S.M. in predicting the current recession, which began in December 2007, Mr. Shepherdson says. The N.F.I.B. survey signaled a downturn in the spring of 2007, while I.S.M. studies didn’t point to a recession until after Lehman Brothers failed in September 2008.
In its survey, the N.F.I.B. asks small businesses how easy it is for them to get loans. The most recent data shows that credit tightness peaked earlier this fall — the worst levels in 23 years, Mr. Shepherdson says. Although credit continues to remain troublingly hard for small business to come by, that phenomenon is a largely untold story.
“Wall Street focuses on big companies because they are in the Standard & Poor’s 500, but small businesses are still in a very grim state,” he says. “Small-company activity according to the N.F.I.B. is still at deep recession levels.”
And while small businesses do not make up the big stock indexes, they do contribute significantly to the overall economy. The tens of millions of people who work at small concerns are, after all, customers of those big, high-profile corporations like McDonald’s, Wal-Mart and Whirlpool.
What we all are enduring — and what small businesses, workers and consumers continue to be pummeled by, even as Wall Street wizards jump back into the bonus pool — is the dismantling of the great credit boom of the early 2000s. This necessary but grueling deleveraging began last year and is now in full swing. But it is nowhere near over.
Bank credit outstanding peaked in October 2008 at $7.3 trillion and is now down to $6.72 trillion. Still, Mr. Shepherdson says he thinks that banking-sector loan and lease assets have to fall by an additional $2 trillion. That could take another two years.
“We are in unknown territory here,” he said. “Since the peak in October ’08, bank credit has dropped by 8 percent. That is enormous and it is accelerating. The peak-to-trough drop in the early ’90s was just 1.3 percent and that was enough to scare the pants off the Fed.”
This credit cave-in is the driving force behind the Federal Reserve’s mortgage purchase program, Mr. Shepherdson says. The last thing the central bank wants to see is a decline in the broad-based money supply, because when that happens it usually means a depression is afoot. Money supply didn’t fall in the early 1990s, but it fell by one-quarter during the 1930s.
The Fed’s asset purchase program is therefore not about driving down mortgage rates, Mr. Shepherdson says, but about trying to prevent a collapse in the money supply. When the Fed buys assets it creates deposits, which, in turn, helps offset the credit pullback. If the Fed wasn’t buying mortgages with both hands, Mr. Shepherdson estimates, the money supply would be falling 1 percent a month.
The message amid this gloom, he says, is that the Fed isn’t likely to raise interest rates anytime soon. In fact, he doesn’t anticipate an increase in rates until the spring of 2011.
“I WOULD be astonished if they raised rates in the heart of the credit contraction storm,” Mr. Shepherdson says. “The credit contraction will last for a couple of years and if the Fed is interested in offsetting it, they will have to buy assets through next year.”
Deflating an asset bubble is never fun, and this particular specimen is one for the record books. The binge may have been a blast, but the purge, alas, sure is painful.
Investor Sentiment: Waiting For The "R" Word
by Guy Lerner
As expected, last week’s holiday infested market action provided little clarity. The sentiment picture remains relatively unchanged. Nonetheless, there was a market moving event, and the "default in Dubai" will likely leave investors with one of two conclusions: 1) coordinated efforts by central bankers to re-liquify the world economy are likely to continue as bad news means good news — the proverbial punch bowl will be with us for awhile; or 2) the house of cards – otherwise known as the recovery – is beginning to look a little wobbly; central bankers, no matter how hard they try, are unable to fight the forces of deleveraging. This contagion just won’t go away so easily.
The "default in Dubai" is interesting as this now becomes a test of central banker resolve to keep the balls in the air. The US equity rally has been looking a little weak over the past two months and this could be the scare that moves a lot of money to the sidelines. Where there is one cockroach, there is bound to be others. But I suspect this will be passed off as nothing more than a hiccup, and will unlikely derail the bullish fervor. The only thing that can do that is lower prices.
What the "default in Dubai" says is that risks are mounting. This is not "wall of worry" nonsense. This is just common sense after a 60% plus move in the S&P500 over 8 months. Common sense often doesn’t work in the markets, but fundamentals, valuations, technicals, and sentiment do not support higher prices. Dollar devaluation and ongoing Federal Reserve complacency are reasons why stocks can go higher, but this will have its limits I suspect. It is not a reason why I would be a buyer of equities. I am just waiting for someone on CNBC to utter the "R" word: resilient. When you hear that word, make sure you run for the exits.
From my data driven perspective, I will state what I said last week and for many weeks before that:
"The major equity indices are in a topping process. This implies a trading range at best. There is risk of a down draft as markets "fueled" by the proverbial "liquidity" are prone to quick sell offs. The outlier trade is a market blow off or a spike in prices, and I do not rule this possibility out because of the ongoing downtrend in the Dollar Index. It is possible but it is not the high odds play. This is not the market environment that will take you from here to there."
The weak dollar was supposed to fix everything
* by Michael Pento
The inflation redux plan from the Federal Reserve and Washington is based on zero interest rates, massive deficits and quantitative easing, which are designed to bring down the value of the U.S. dollar and create inflation. That is the truth, despite promises from Treasury Secretary Geithner that he really means it this time when he says the United States has a strong dollar policy – the irony being, that he says this while concurrently begging the Chinese to allow the dollar to fall vs. the Renminbi. But their hopes placed in a lower dollar are woefully misguided and all that is being accomplished is to put into place the same conditions that brought the global financial system to its knees.
Messrs. Geithner and Ben Bernanke have been successful in bringing down the value of our currency. In fact, many of the negative factors that were in place before the global economic meltdown occurred have returned in full force.
The trade deficit for September surged 18% to $36.5 billion. That gap was the largest since the beginning of 2009 and largely due to imports surging 5.8% to $168.4 billion, which was the biggest increase since 1993. The news must have been greeted with cheers in D.C. After all, the deficit would mean more dollar weakness and signaled the return of the borrowing and spending consumer. But the news also meant that the strategy of balancing trade by destroying the dollar was not based on sound economics. The U.S. dollar fell from 78.5 on the DXY to about 77 during the month of September. In fact, the U.S. dollar has lost more than 16% of its value since March of this year. If a weak dollar discouraged imports and boosted exports, then why did imports surge by the most in 16 years?
Sorry Ben and Tim, the so-called benefits of a falling dollar didn’t materialize as planned. That’s because the inflation you created to bring the dollar down caused the price of goods made in the United States to become more expensive. Therefore, foreign exporters couldn’t really afford to increase the purchase of American made goods even though their currencies strengthened.
The Treasury and the Fed have also been able to bring risk appetites back to 2007 levels. The massive increase in money printing and government guarantees has reduced credit spreads to razor-thin margins. The Libor-OIS spread measures the spread between the London interbank offered rate for dollars over three months and what traders expect the federal funds target rate will be during the term of the contract. The gap fell to 0.10 percentage point this quarter, below the 0.11 percentage point average between December 2001 and July 2007, according to Bloomberg, and substantially below the record high 3.64% in September of 2008.
Likewise, the Ted Spread is back to the “good old days” as well. Last November, the gap between the 3-month Treasury securities and 3-month Libor was 199 basis points. Today, it is just 21 basis points. But the mispricing of risk that helped bring the financial sector down in 2007 and 2008 is not boosting bank lending to private industry. Bank lending is plummeting for the creation of capital goods and new businesses. However, a broad measure of the money supply, Money Zero Maturity, is up 8% year-over-year. That’s because banks are lending to the U. S. government, which is the only insatiable entity for borrowing that still exists.
So the benefits of a crumbling currency have yet to materialize. However, the ravages of pursuing such a flawed policy have started to arrive. The price of oil has soared and gold is setting new highs every day. Credit spreads are indicating that investors are mispricing risk yet again and the ballooning trade deficit indicates that we once again believe we can consume much more than we produce.
Kako ti volim jedinicu opaliti kad god mogu. Samo zato kaj prepisuješ neke članke, koje bi bolje smislio moj tata, a on je pravi dasa. Jedva čekam sutra kada opet ti keljim jedinice, jer sam danas bonus potrošio.
Niall Ferguson: Even Krugman Admits The Deficit Is Unsustainable
Joe Weisenthal|Nov. 30, 2009, 6:41 AM | 1,473 |comment10
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Tags: Recession, Debt, U.S. Government, Deficit, Paul Krugman
niall fergusonNiall Ferguson is travelling from publication to publication, spreading his message of fear and the end of the US empire, unless we do something to get our debt in check.
This time he shows up in Newsweek, in an attempt to explain how fiscal calamity will mean the end of US military might.
You know the drill: Without growth and sound finances, our gigantic global military endeavors will come unglued, resulting in chaos.
Even here he’s taking shots at his rival Paul Krugman. This is in the context of whether there’s enough global demand for our debt to keep on spending like we ahve.
Could that happen? I doubt it. For one thing, the Chinese keep grumbling that they have far too many Treasuries already. For another, a significant dollar depreciation seems more probable, since the United States is in the lucky position of being able to borrow in its own currency, which it reserves the right to print in any quantity the Federal Reserve chooses.
Now, who said the following? "My prediction is that politicians will eventually be tempted to resolve the [fiscal] crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt. And as that temptation becomes obvious, interest rates will soar."
Seems pretty reasonable to me. The surprising thing is that this was none other than Paul Krugman, the high priest of Keynesianism, writing back in March 2003. A year and a half later he was comparing the U.S. deficit with Argentina’s (at a time when it was 4.5 percent of GDP). Has the economic situation really changed so drastically that now the same Krugman believes it was "deficits that saved us," and wants to see an even larger deficit next year? Perhaps. But it might just be that the party in power has changed.
History strongly supports the proposition that major financial crises are followed by major fiscal crises. "On average," write Carmen Reinhart and Kenneth Rogoff in their new book, This Time Is Different, "government debt rises by 86 percent during the three years following a banking crisis." In the wake of these debt explosions, one of two things can happen: either a default, usually when the debt is in a foreign currency, or a bout of high inflation that catches the creditors out. The history of all the great European empires is replete with such episodes. Indeed, serial default and high inflation have tended to be the surest symptoms of imperial decline.
Stepping back, Ferguson argues we won’t be so lucky, so as to follow the Japanese model of a permanently high debt-to-GDP model. As he notes, over their multiple lost decades, the govrnment has been able to tap over-saving households and other institutions. But we’ve got no such luck. Everyone’s basically tapped except China and, well, it’s sad that that’s our only hope.
Speculators Downplay Debt Problems In Dubai
by Brewer Futures Group
The U.S. Dollar is declining overnight as speculators are downplaying the debt problems in Dubai. Over the week-end, the United Arab Emirates central bank said it "stands behind" the country’s lenders. This helped to ease concerns that the state owned Dubai World will default on its debt. Traders now believe that this is a local economic problem rather than one with global ramifications. With these assurances in place, speculators are increasing their demand for higher yielding currencies.
Despite these assurances by the central bank, traders should continue to watch how the Dubai debt situation unfolds. The debt problem has exposed the fragility of the world financial markets. Although there may be a short-term pick-up in global demand for risk, upside momentum in foreign currencies may slow if investors decide to be a little more defensive in their speculative plays. Traders may decide to adopt a "trade not to lose" mentality which could create volatile trading conditions as investors will be quick to take profits following any appreciation.
Over the week-end, Chinese Premier Wen Jiabao rejected calls for a stronger Yuan. European Central Bank members had traveled to China hoping to convince Chinese officials to allow its currency to rise. Their premise was that China is distorting trade and limiting its own monetary policy options by keeping the Yuan tied to the weakening U.S. Dollar. Wen said that keeping the Yuan stable is best for China’s economy. He also implied that a stable Yuan would be beneficial for the global recovery. European officials feel that China’s currency policy is hurting exports because it drives the Euro higher and that this policy is actually detrimental to the Euro Zone’s economic recovery.
Dollar Index futures are trading lower overnight, but holding above last week’s low at 74.27. The late session rally from the overnight low at 74.54 indicates that traders are tentative about pressing this market further.
A rise in consumer prices is helping to boost the December Euro overnight as well as a return of demand for higher yielding assets. The main trend is up with a new main bottom at 1.4799. A trade through this price turns the main trend down. 1.5144 is a new minor top.
The December British Pound is trading sideways overnight. Pressure is coming from the thought that the U.K. economy will continue to weaken over the short-term. A recent GDP report shows that despite additional stimulus, the economy is not as robust as previously forecast. Technically, the main range is 1.5702 to 1.6876. The 50% price at 1.6289 held last week after a sharp sell-off. Additional support is coming from a pair of main bottoms at 1.6258 and 1.6245.
The December Japanese Yen hit a 15-year high last week at 1.1790. The current short-term retracement is normal because of overbought conditions. Continue to look for sideways to higher trading unless this market falls back below the old bottom at 1.1368. Speculators are also a little confused as to whether the Japanese government will intervene. It is well-known that they are concerned about the detrimental effect a rise in the Yen has on exports, but traders aren’t sure if the BoJ will intervene to pressure the Yen. Japanese Finance Minister Fujii said over the week-end that the government won’t act to curb the Yen’s gains, but later denied the comment. No one is sure what the government has in mind. This could produce volatile trading conditions.
The recent Commodity Futures Trading Commission Commitment of Traders Report shows that speculators are looking for the Swiss Franc to rise. This new strategy could be based on the thought that the Swiss economy will outperform the other European nations. The December Swiss Franc has been rising and is not likely to turn back down unless .9782 is violated. Last week’s intervention by the Swiss National Bank help
NY Fed Announces More Reverse Repos Coming, Spooks Stocks
Submitted by Tyler Durden on 11/30/2009
After the first repo test was a complete failure, the FRBNY has decided to try one more time. However, unlike the large test conducted before, this time the Liberty 33 "plan to conduct a series of small-scale, real-value transactions with primary dealers." Anything coming from the New York Fed that has the "real value" stigmata attached to it makes one wonder if April 1 came late this year. We can not wait to report on the near-certain failure that this particular round of repo tests will once again be proven to be, as banks simple can not wait to onboard the toxic filth they so graciously have handed to US taxpayers over the past six months.
NY Fed Announces More Reverse Repos Coming, Spooks Stocks
Submitted by Tyler Durden on 11/30/2009
After the first repo test was a complete failure, the FRBNY has decided to try one more time. However, unlike the large test conducted before, this time the Liberty 33 "plan to conduct a series of small-scale, real-value transactions with primary dealers." Anything coming from the New York Fed that has the "real value" stigmata attached to it makes one wonder if April 1 came late this year. We can not wait to report on the near-certain failure that this particular round of repo tests will once again be proven to be, as banks simple can not wait to onboard the toxic filth they so graciously have handed to US taxpayers over the past six months.
Odlični su ti komentari i vidim da utječu na investitore [lol]
Gospodarstvo | 30.11.2009
Kina pred slomom tržišta nekretnina?
Šangaj
Großansicht des Bildes mit der Bildunterschrift: Rast bez granica – Šangaj
Kinesko gospodarstvo raste usprkos globalnoj recesiji. No istodobno raste i tržište nekretninama i to tolikom brzinom da mnogi strahuju od sličnog sloma kao i u SAD-u.
Godišnji gospodarski rast od 9 do 10 posto i srednja klasa koja broji i do 300 milijuna pripadnika naoko su idealni uvjeti za stvaranje bujajućeg i zdravog tržišta nekreninama. No kineski primjer pokazuje da svaki rast ima svoje granica. U nekim dijelovima Pekinga i do trećine novoizgrađenih stanova ne pronalazi kupca.
Opasna igra
Je li se kineski srednji stalež preračunao?Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Je li se kineski srednji stalež preračunao?Jedini koji još kupuju su špekulanti koji gotovinom kupuju i po desetak stanova koje drže praznima. Jer cijena kvadratnog metra raste još brže od kineskog gospodarstva. U Pekingu je cijena kvadrata u novogradnjama koje niču oko središta grada samo u prvih šest mjeseci ove godine porasla za 30 posto. Cijene su, za svjetske prilike još uvijek relativno niske, između 2000 i 3000 eura za kvadratni metar no potražnja pada pa o stoga privlači i špekulante iz cijelog svijeta. No kineska vlada i dalje pumpa ogromne količine novca u izgradnju novih stanova a stanogradnja je postala jedan od glavnih čimbenika održavanja visoke stope gospodarskog rasta. Stoga Kina, za razliku od ostalih global playera u doba krize i dalje bilježi rekordne vrijednosti rasta dok su ostale gospodarske sile sretne ako se izvuku bez recesije.
Balon pred eksplozijom
Gradnja bez granica – gradilište u ŠangajuBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Gradnja bez granica – gradilište u ŠangajuNo ne samo neovisni ekonomisti nego i središnja kineska banka upozoravaja na mogućnost skorašnje eksplozije umjetno napuhanog tržišta čiji bi krah sa sobom mogao povući i cjelokupno gospodarstvo. Istdobno država povećava cijene energenata i opskrbe vodom što povećava strah od inflacije i nemogućnosti vraćanja kredita. U samo 10 godina obujam hipotekarnih kredita u Kini dosegao je obujam od tri milijarde eura. SAD-u je za akumulaciju ovog obujma trebalo 50 godina. Opasnost isto kao i u SAD-u prijeti od moguće nesposobnosti vraćanja kredita. Jer oni u međuvremenu u prosjeku gutaju 50 posto mjesečnih prihoda kreditnih obveznika. Dobar poznavatelj prilika na kineskom tržištu nekretnina, financijski stručnjak Yi Xianrong procjenjuje da će "kineski balon" puknuti prije ili kasnije. "Nakon toga slijedi kriza bankarskog sustava i tada će nastati ozbiljni problemi", rekao je Xianrong za Spiegel Online. On također smatra da je trenutni rast kineskog gospodarstva od 10 posto opasno previsok. "Meni bi bilo draže kada bi taj rast iznosio posto ali da počiva na sigurnim nogama", kaže Xianrong optužujući kinesko vodstvo za kratkovidnu politiku i forsiranja rasta pod svaku cijenu.
MIROVINSKI SUSTAV
IJF: Za mirovine će 2010. nedostajati 14,8 milijardi kuna
Autor/izvor: SEEbiz
ZAGREB – Prijedlog državnog proračuna za 2010. pokazuje da promjena u mirovinskom sustavu nema, ocjenjuju analitičari Instituta za javne financije i u aktualnom osvrtu upozoravaju na jaz između doprinosa i rashoda, nizak udio rashoda za starosne mirovine, pritisak povlaštenih mirovina, nisku dobrovoljnu mirovinsku štednju i netransparentnost.
Autorica Marijana Bađun tako navodi da se od doprinosa na mirovinsko osiguranje u 2010. planira prikupiti 19,9 milijardi kuna, što je 1,4 posto manje nego u ovoj godini, dok istodobno planirani rashodi za mirovine i mirovinska primanja iznose 34,7 milijardi kuna, što je 1,6 posto više nego ove godine.
"Dakle, planirani jaz između doprinosa i rashoda za 2010. iznosi 14,8 milijardi kuna, a to je 6 posto više nego u planu za ovu godinu. Drugim riječima, doprinosi pokrivaju samo 57 posto izdataka, dok se manjak sustava mora financirati iz drugih izvora", ističe Bađun.
Od ukupno 34,7 milijarde kuna rashoda za mirovine 79 posto, ili 27,1 milijardu kuna, odnosi se na mirovine na temelju osiguranja (starosne, invalidske i obiteljske). Bađun pritom upozorava na nizak udio rashoda za starosne mirovine koje s iznosom 16,7 milijardi kuna čine samo 48 posto ukupnih rashoda za mirovine. Izdaci za invalidske mirovine u 2010. su planirani s 5,9 milijardi, a za obiteljske 4,7 milijardi kuna.
Upozorava i na pritisak povlaštenih mirovina za koje se u 2010. planira 7,2 milijardi kuna (3,8 posto više nego 2009.), što je jedna petina ukupnih rashoda za mirovine. Pritom će se najviše izdvojiti za kategoriju hrvatskih branitelja, 5,1 milijardi kuna, a slijede borci NOR-a s iznosom 530 milijuna kuna.
Ističe i kako kontinuirano raste broj korisnika tzv. braniteljskih mirovina – u listopadu ove godine bilo ih je 66.000 u odnosu na 31.000 u 2003. te naglašava kako je bitno da braniteljske mirovine, a tako i sve ostale, primaju oni koji su ih doista zaslužili. Osvrće se i na visinu povlaštenih mirovina i podsjeća da je Vlada ove godine za 10 posto smanjila samo tzv. saborske mirovine za koje 2010. planira 62 milijuna kuna.
"No one su još znatno veće od prosječnih mirovina ostvarenih prema Zakonu o mirovinskom osiguranju (ZOMO). U listopadu je prosječna neto mirovina za korisnike prema ZOMO-u iznosila 2.172 kuna, saborska 9.311 kuna, redovitih članova HAZU-a 8.308 kuna, braniteljska 5.698 kuna, a mirovina boraca NOR-a 2.689 kuna".