U.S. Stocks, Dollar Advance on Trade Data
By Stephen Kirkland and Rita Nazareth - 
U.S. stocks rose for the first time in seven days and the Dollar Index climbed as the trade deficit narrowed amid record exports and the cheapest valuations in almost a year lured equity investors. The euro fell as traders reduced bets on the pace of interest-rate increases. Traders work on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
June 7 (Bloomberg) -- Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG, talks about the European debt crisis, the euro and U.S. dollar, and the global economy. Ruskin speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
June 9 (Bloomberg) -- Antoine van Agtmael, chairman of Ashmore EMM LLC, talks about the global economy and financial markets. Van Agtmael, who coined the term "emerging markets," also discusses the selection of a new International Monetary managing director. He speaks from Washington with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The S&P 500 advanced 0.7 percent to 1,288.16 at 11:11 a.m. in New York after six straight days of losses, its longest slump since February 2009. The Stoxx Europe 600 Index gained 1 percent. The Dollar Index rose 0.4 percent after falling as much as 0.3 percent. The euro depreciated against 13 of its 16 major counterparts. Crude oil rose 1.1 percent after OPEC failed to reach an agreement on production targets.
U.S. equities rebounded after the S&P 500 slumped 6.2 percent from an almost three-year high at the end of April through yesterday following disappointing data on jobs, manufacturing and consumer confidence. The slump left the index trading at 12.1 times forecast earnings for the next year, the cheapest since last summer, according to Bloomberg data.
“We’re due for a rally after miserable stock performance,” said John Carey, a Boston-based money manager at Pioneer Investments, which oversees about $250 billion. “People have been focusing on the negatives and have not been emphasizing the earnings momentum. Some stocks present good values again. It’s a good environment for investors to be positioning themselves.”
S&P 500 Rebound
The S&P 500 rebounded following a 4.9 percent slide over the previous six days. Earnings are forecast to grow 20 percent this year for S&P 500 companies on 9.8 percent revenue growth, according to data compiled by Bloomberg.Producers of energy and raw materials helped lead gains among 10 groups in the S&P 500 today, rising 1 percent or more. Monsanto Co. climbed 2.7 percent and CF Industries Holdings Inc. rallied 4 percent to pace gains among agricultural stocks after the U.S. Department of Agriculture said the nation’s corn harvest may be 2.3 percent smaller than forecast in May because of excessive Midwest rains.
The U.S. trade gap shrank 6.7 percent to $43.7 billion, the lowest since December, Commerce Department figures showed. The gap was projected to widen to $48.8 billion from an initially reported $48.2 billion in March, according to the median forecast of 75 economists surveyed by Bloomberg. Exports increased 1.3 percent to $175.6 billion, boosted by sales of fuel oil, petroleum products and computers.
Jobless Claims
Stocks climbed even after U.S. initial jobless claims unexpectedly rose last week, increasing by 1,000 to 427,000 in the week ended June 4, according to figures from the Labor Department. Economists forecast a drop to 419,000, according to a Bloomberg survey.The yield on the 30-year Treasury bond fell one basis point to 4.18 percent before the government sells $13 billion of the securities, the last of three auctions this week totaling $66 billion. The yield on the five-year Treasury note rose five basis points to 1.55 percent.
The Stoxx 600 also gained for the first time in seven days, led by basic-resource and chemical companies. Home Retail Group Plc plunged 14 percent after cutting its forecast for revenue at the Argos chain.
The euro weakened even as European Central Bank President Jean-Claude Trichet said “strong vigilance” is needed to contain inflation. The ECB left its main refinancing rate at 1.25 percent, matching expectations from all 52 economists surveyed by Bloomberg.
Inflation Forecast
The euro erased an earlier advance versus the dollar, Euribor futures rose and German government bonds fell after Trichet said the ECB hadn’t raised its 2012 inflation forecast from 1.7 percent, fueling speculation the bank won’t raise rates as quickly as previously expected.Crude oil climbed 1.1 percent to $101.87 a barrel in New York. Corn futures for July delivery rose 11.5 cents, or 1.5 percent, to $7.7550 a bushel on the Chicago Board of Trade. Earlier, the price reached $7.93, the highest for a most-active contract since June 2008. Cotton, cocoa and coffee also rallied.
The extra yield investors demand to hold Greek 10-year bonds instead of benchmark German bunds increased 51 basis points, while the similar-maturity Portuguese-German spread widened to 725 basis points, the most since at least 1997, when Bloomberg began collecting the data.
Plan for Greece
European governments and the International Monetary Fund would lend as much as an extra 45 billion euros ($66 billion) to Greece under the latest plan to avoid the euro area’s first sovereign default, two people with direct knowledge of the talks said. European estimates put Greece’s 2012-14 financing gap at as much as 170 billion euros, the people said. It would be filled by the loans, plus around 57 billion euros in unspent aid from last year’s bailout, roughly 30 billion euros in asset-sale proceeds and about 30 billion euros in rollovers by creditors.
The MSCI Emerging Markets Index dropped 0.4 percent. The Shanghai Composite sank 1.7 percent amid speculation the central bank will keep tightening monetary policy. South Korea’s Kospi Index retreated 0.6 percent before tomorrow’s central bank rate decision.
The New Zealand dollar climbed 1.7 percent versus the yen after the central bank said commodity prices remain “very strong” and that borrowing costs will need to increase in the next two years.
Black Power Wanes Amid Rising Hispanic Economic Clout in U.S.
Black Power Wanes Amid Rising Hispanic Economic Clout in U.S.
By Tim Jones - 
U.S. Representative Danny Davis sits in his west side congressional office, long ago the headquarters of Sears Roebuck & Co., and watches black Chicago slip away. U.S. Representative Danny Davis. Photographer: Jay Premack/Bloomberg
Residents shop along 26th Street in the predominantly Mexican Little Village neighborhood in Chicago. Photographer: Scott Olson/Getty Images
Looters steal from a drugstore near the intersection of West Madison Avenue and Oakley Boulevard during the West Side Riots, Chicago early April 1968. Photographer Robert Abbott Sengstacke/Getty Images
Chicago mayoral candidates (from left) Rahm Emanuel Gery Chico, Carol Moseley Braun, and Miguel del Valle prepare to start a debate at WGN-TV Jan, 27, 2011 in Chicago. Photographer: Chris Sweda-Pool/Getty Images
Harold Washington greets Chicagoans while campaigning for the office of mayor of Chicago in 1983. Source: Chicago History Museum/Getty Images
The third-largest U.S. city lost 17 percent of its black population -- 181,000 people -- in the past decade, according to the Census Bureau. In their place, Hispanics gained 25,000, or 3.3 percent. To explain the seismic shift those numbers represent in economic and political power, Davis drew on the words of Chicago blues legend Buddy Guy.
“While you’re steppin’ out, somebody else is steppin’ in,” said Davis, 69, an eight-term congressman and pillar of Chicago’s black political establishment.
In the city that drew waves of blacks during the Great Migration of the early 20th century, their descendants barely remain the largest racial or ethnic group, at 32.4 percent. Blacks earn less and are more likely to live in poverty than Hispanics, who make up almost 30 percent of Chicago, a city of 2.7 million that lost 6.9 percent of its population since 2000.
The reversal of fortunes for the two groups is echoed nationwide, where blacks have fallen to 12.6 percent of the total U.S. population of 308.7 million, and Hispanics have risen to 16.3 percent. Hispanics are also outpacing blacks economically: Their median household income rose 21.6 percent in the decade to $40,946, compared with $34,445 for blacks.
Supermajority Lost
Black lawmakers in Illinois and other states have managed to hold onto most legislative and congressional districts by giving up their supermajority numbers. The proportion of blacks in Davis’s district will drop to just more than 50 percent from 65 percent, according to a map approved by the Illinois General Assembly on May 31.The mapmakers didn’t eliminate the growing tension between blacks and Hispanics, who are pushing for boundaries they say would better reflect their population gains.
“There’s no place to divide us up anymore,” said U.S. Representative Luis Gutierrez, whose Hispanic-dominant, horseshoe-shaped district wraps around Davis’s in the center of Chicago.
The Mexican American Legal Defense and Educational Fund criticized state legislative boundaries for failing to “create a sufficient number of districts for Latino electoral opportunities.” Nina Perales, the group’s vice president for litigation, stopped short of saying it would challenge the map in court as it has successfully in the past.
Reversing Great Migration
The population shift in Chicago is part of a nationwide phenomenon of blacks moving out of cities and into suburbs or reversing the Great Migration and returning to Southern U.S. states, William Frey, a demographer and senior fellow at the Brookings Institution, wrote in a May 4 report.“There’s a national trend of black suburbanization, a new generation of African-Americans who both have more opportunity and don’t see their future living in cities, like their parents and grandparents,” Frey said in a telephone interview from Washington.
The dispersal of the black population may dilute traditional voting clusters, Frey said.
“As blacks become more a part of the mainstream of American voters, not only geographically but economically, those kinds of older blocs will be melted down,” he said.
For the first time, Hispanics now outnumber blacks and represent the largest minority group in major American cities, 26 percent to 22 percent, according to census data.
No ‘Bloodbath’
Demographers and political analysts expected the past two rounds of redistricting to produce a “bloodbath” between blacks and Hispanics, said Arturo Vargas, executive director of the Los Angeles-based National Association of Latino Elected and Appointed Officials. That didn’t happen in part because the Hispanic population still has a higher percentage both of non- citizens and young people who aren’t old enough to vote, Vargas said.“Our potential electorate is much smaller right now,” he said. “We don’t yet have the potential electorate to draw these lines.”
Gutierrez’s district, which connects Chicago’s Puerto Rican community on the northwest side and Mexican-American neighborhoods on the southwest side, offers a glimpse of the future. The district was 65 percent Latino when he was first elected in 1992, with 40 percent of those people registered voters. Today, it’s 75 percent Hispanic, with 60 percent registered, Gutierrez said.
Fatter Wallets
Hispanics also are strengthening their financial position at a faster pace than blacks. In Chicago, the median household income of Hispanics in 2009 was $41,802, up 14 percent over 2000, compared with $30,769 for blacks, up 6 percent over the same period, according to the Census Bureau’s American Community Survey. The poverty rate for Hispanics in 2009 was 21.6 percent, compared with 31.7 percent for blacks.Almost three decades after Chicagoans elected Harold Washington as their first black mayor, the city’s political landscape has been transformed. In the February mayoral election, voters elected Rahm Emanuel, former White House chief of staff to President Barack Obama, with 55 percent of the vote. The next two finishers were Hispanics, Gery Chico, with 24 percent, and Miguel Del Valle, with 9 percent. Former U.S. Senator Carol Moseley Braun, the only major black candidate, received 9 percent of the vote.
‘Stopped Organizing’
To Davis, a former Chicago alderman who campaigned for mayor before dropping out and endorsing Braun, the election results reflected the rising power of the city’s Hispanic population. Their unity and “sense of nationalism” reminded him of Chicago’s black community a generation ago before it got complacent, Davis said.“African-Americans stopped organizing,” he said in a telephone interview from his office in Chicago, a city whose community-organizing culture birthed Obama’s political career.
The importance of organizing waned, Davis said, first when Washington was elected in 1983 and again after Obama won the White House in 2008. Davis said he heard black constituents say: “I ain’t going to no meeting. I’m going to watch the Bulls,” the city’s NBA basketball team.
Davis’s 7th congressional district runs east-to-west from some of the priciest real estate along the downtown lakefront to the public housing ghettos described in journalist Alex Kotlowitz’s book “There Are No Children Here.” The Chicago Housing Authority has demolished most of those high-rises, contributing to the exodus of blacks from the city in what Davis called “population annihilation.”
Business Graveyard
People aren’t the only ones who have departed from Davis’s neighborhood, which was devastated by the riots following the assassination of Martin Luther King Jr. in 1968. His district also was once home to Sears, Western Electric, International Harvester and Allied Radio -- “all of them gone,” Davis said.In Illinois, blacks now make up 14.3 percent of the population, compared with 15.8 percent for Hispanics and 63.7 percent for non-Hispanic whites. Blacks saw their first decline in total numbers in Illinois in the state’s history, according to an analysis of the new data by Frey.
Davis sees a similar decline in the political influence of blacks in his hometown. He delivers his assessment in song, quoting The Righteous Brothers classic “You’ve Lost That Lovin’ Feeling.”
“Gone, gone, gone,” he sang in his baritone voice.
A Message of Defeat
Al Qaeda's New Video: A Message of Defeat
By Scott StewartA new video from al Qaeda’s media arm, As-Sahab, became available on the Internet on June 2. The video was 100 minutes long, distributed in two parts and titled “Responsible Only for Yourself.” As the name suggests, this video was the al Qaeda core’s latest attempt to encourage grassroots jihadists to undertake lone-wolf operations in the West, a recurrent theme in jihadist messages since late 2009.
The video, which was well-produced and contained a number of graphics and special effects, features historical footage of a number of militant Islamist personalities, including Osama bin Laden, Ayman al-Zawahiri, Abdullah Azzam and Abu Yahya al-Libi.
In addition to al-Libi, who is considered a prominent al Qaeda ideological authority, the video also features an extensive discourse from another Libyan theologian, Sheikh Jamal Ibrahim Shtaiwi al-Misrati. Al-Misrati (who is from Misurata, as one can surmise from his name) was also featured in a March 25 As-Sahab message encouraging jihadists in Libya to assume control of the country and place it under Shariah once the Gadhafi regime is overthrown. The still photo used over the March message featuring al-Misrati was taken from the video used in the June 2 message, indicating that the recently released video of al-Misrati was shot prior to March 25. The video also contains a short excerpt of a previously released Arabic language Al-Malahim media video by Anwar al-Awlaki and an English-language statement by Adam Gadahn that is broken up into small segments and appears periodically throughout the video.
Despite the fact that many of the video segments used to produce this product are quite dated, there is a reference to bin Laden as a shaheed, or martyr, so this video was obviously produced after his death.
Unlike the As-Sahab message on the same topic featuring Adam Gadahn released in March 2010 and the English-language efforts of
al Qaeda in the Arabian Peninsula’s “Inspire” magazine, this video is primarily in Arabic, indicating that it is intended to influence an Arabic-speaking audience. To date, much of the media coverage pertaining to the release of this video has focused on one short English-language segment in which Adam Gadahn encourages Muslims in the United States to go to gun shows and obtain automatic weapons to use in shooting attacks. This focus is understandable given the contentiousness of the gun-control issue in the United States, but a careful examination of the video reveals far more than just fodder for the U.S. gun-control debate.
Contents of the Video
The first 36 minutes of the video essentially comprise a history lesson of militants who heard the call to jihad and then acted on it. Among the examples are individuals such as ElSayyid Nosair, the assassin of Jewish Defense League founder Meir Kahane; Abdel Basit (also known as Ramzi Yousef), the operational planner of the 1993 World Trade Center attack and the thwarted Bojinka plot; Mohammed Bouyeri, the assassin of Dutch filmmaker Theo Van Gogh; and Fort Hood shooter Nidal Malik Hasan. Others include the leader of the team of assassins who killed Egyptian President Anwar Sadat and the militants behind the Mumbai attacks.Then, after listing those examples, the video emphasizes the point that if one is to live in the “real Islamic way,” one must also follow the examples of the men profiled. Furthermore, since the “enemies of Islam” have expanded their “attacks against Islam” in many different places, the video asserts that it is not only in the land of the Muslims that the enemies of Islam must be attacked, but also in their homelands (i.e., the West). In fact, the video asserts that it is easy to strike the enemies of Islam in their home countries and doing so creates the biggest impact. And this is the context in which Gadahn made his widely publicized comment about Muslims buying guns and conducting armed assaults.
Now, it is important to briefly address this comment by Gadahn: While it is indeed quite easy for U.S. citizens to legally purchase a wide variety of firearms, it is illegal for them to purchase fully automatic weapons without first obtaining the proper firearms license. This fixation with obtaining fully automatic rifles instead of purchasing readily available and legal semi-automatic weapons has led to the downfall of a number of jihadist plots inside the United States, including one just last month in New York. Therefore, aspiring jihadists who would seek to follow Gadahn’s recommendations to the letter would almost certainly find themselves quickly brought to the attention of the authorities.
When we look at the rest of Gadahn’s comments in this video, it is clear the group is trying to convey a number of other interesting points. First, Gadahn notes that jihadists wanting to undertake lone-wolf activities must take all possible measures to keep their plotting secret, and the first thing they should do is avail themselves of all the electronic manuals available on the Internet pertaining to security.
A few minutes later in the video, Gadahn remarks on a point made in a segment from a U.S. news program that the Hollywood perception of the capabilities of the National Security Agency (NSA) is nowhere near what those capabilities are in real life and that, while the NSA and other Western intelligence agencies collect massive amounts of data, it is hard for them to link the pieces together to gain intelligence on a pending attack plan. This is true, and the difficulty of putting together disparate intelligence to complete the big picture is something STRATFOR has long discussed. Gadahn notes that the downfall of most grassroots operations is loose lips and not the excellence of Western intelligence and urges aspiring grassroots jihadists to trust no one and to reveal their plans to no one, not even friends and family members. This claim is also true. Most thwarted grassroots plots have been uncovered due to poor operational security and sloppy tradecraft.
The video also contains lengthy theological discussions justifying the jihadist position that jihad is a compulsory, individual obligation for every able-bodied Muslim. As the video turns to the necessity of attacking the enemies of Islam in their homelands, Gadahn notes that Americans are people who crave comfort and security and that terrorist attacks scare them and take away their will to fight Muslims. According to Gadahn, terrorist attacks also cause the people to object to leaders who want to attack Islam, and the people will not vote for those leaders.
Throughout the video, the American Israel Public Affairs Committee is depicted several times, and it is asserted that the United States and the West are controlled by Jewish interests. Gadahn says that influential figures in the Zionist-controlled Western governments, industries and media should be attacked, and that such attacks will weaken the will of the masses to fight against Islam. He also says that attacks against such targets are not hard and that, from recent examples of people who have assaulted the pope and Italian Prime Minister Silvio Berlusconi, it is evident that if jihadists trust their efforts to Allah and choose the right place, time and method, they can succeed in their attacks.
But armed assaults are not the only type of attacks being advocated in the video. The message also contains several minutes of material dedicated to encouraging cyber-jihadists to conduct electronic attacks against the United States. This concept was supported by several excerpts from a segment of the U.S. television program 60 Minutes pertaining to the cyber threat and featuring U.S. experts discussing their fears that terrorists would attack such targets as the electrical grid. Again, this is an old threat, and acquiring the skills to become a world-class hacker takes time, talent and practice. This means that, in practical terms, the threat posed by such attacks is no greater than it was prior to the release of this video.
Tactical Implications
First, it needs to be recognized that this video does not present any sort of new threat. As far as Gadahn’s pleas for American Muslims to buy firearms and conduct armed assaults, we wrote an analysis in May 2010 discussing many failed jihadist bomb plots and forecasting that the jihadists would shift to armed assaults instead. Furthermore, jihadist websites have long been urging their followers to become cyber-jihadists and to create viruses that would cripple the economies of the United States and the West, which are so dependent on computerized systems.Even the calls to target industrial and media leaders are not new. Jihadist publications such as the now-defunct online magazine of al Qaeda in Saudi Arabia, Maaskar al-Battaar, encouraged attacks against such targets as far back as 2004.
This means that this latest As-Sahab message merely echoes threats that have already existed for some time now, such as threats emanating from grassroots jihadists. The grassroots threat is real and must be guarded against, but it is not nearly as acute as the threat posed by other, more skillful terrorist actors. Grassroots operatives do not often possess good terrorist tradecraft, and their attacks tend to be poorly planned and executed and susceptible to discovery and disruption.
However, killing people is not difficult, and even amateurs can be deadly. As we examine these repeated pleas by al Qaeda for grassroots jihadists to conduct attacks in the West, and then consider the ease with which such attacks can be conducted — evidenced by Hasan’s actions at Fort Hood — it raises an interesting question: Why haven’t we seen more of these attacks?
Certainly we’ve seen some thwarted attempts like the previously mentioned plot in New York in May 2011 and a successful attack in March on U.S. Air Force personnel in Frankfurt, Germany, but overall, the jihadist message urging Muslims to take up arms and conduct attacks simply does not appear to be gaining much traction among Muslims in the West — and the United States in particular. We have simply not seen the groundswell of grassroots attacks that was initially anticipated. The pleas of Gadahn and his companions appear to be falling upon deaf ears and do not seem to resonate with Muslims in the West in the same way that the cries of the pro-democracy movements in the Middle East have in recent months.
In theory, these grassroots efforts are supposed to supplement the efforts of al Qaeda to attack the West. But in practice, al Qaeda and its franchise groups have been rendered transnationally impotent in large part by the counterterrorism efforts of the United States and its allies since 9/11. Jihadist groups been able to conduct attacks in the regions where they are based, but grassroots operatives have been forced to shoulder the bulk of the effort to attack the West. In fact, the only successful attacks conducted inside the United States since 9/11 have been conducted by grassroots operatives, and in any case, grassroots plots and attacks have been quite infrequent. Despite the ease of conducting such attacks, they have been nowhere near as common as jihadist leaders hoped — and American security officials feared.
One reason for this paucity of attacks may be the jihadist message being sent. In earlier days, the message of Islamist militants like Abdullah Azzam was “Come, join the caravan.” This message suggested that militants who answered the call would be trained, equipped and put into the field of battle under competent commanders. It was a message of strength and confidence — and a message that stands in stark contrast to As-Sahab’s current message of “Don’t come and join us, it is too dangerous — conduct attacks on your own instead.” The very call to leaderless resistance is an admission of defeat and an indication that the jihadists might not be receiving the divine blessing they claim.
The trade deficit in goods and services shrank
Data Watch
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The trade deficit in goods and services shrank by $3.1 billion to $43.7 billion in April
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 6/9/2011
The trade deficit in goods and services shrank by $3.1 billion to $43.7 billion in April. The consensus expected a trade deficit of $48.8 billion.
Exports increased $2.2 billion in April, led by petroleum. Imports declined $1.0 billion, led by autos/parts and oil. The decline in oil imports was due to lower volume; oil prices climbed in April.
In the last year, exports are up 18.8% while imports are up 15.9%.
The monthly trade deficit is $2.2 billion larger than last year. Adjusted for inflation, the trade deficit in goods is $0.1 billion smaller than last year. This is the trade measure that is most important for calculating real GDP.
Implications: Record exports and lower imports sharply reduced the trade deficit in April. This was largely due to two factors: (1) a drop in imports of autos and auto parts, primarily due to recent disasters in Japan, and (2) a change in petroleum flows, with the US increasing its exports and reducing its imports in the face of higher prices. Today’s trade data are the flip side of some recent weaker data on domestic auto production and auto sales and will partially offset the negative impact on GDP. As a result, we are raising our forecast for real GDP growth in the second quarter from a 1.5% annual rate to 2%, with much faster growth in the second half of the year. In addition, revisions to trade data suggest that real GDP growth in the first quarter will be revised up to a 2.2% annualized growth rate from 1.8%. Despite the reduction in the trade deficit in April, total trade volumes continued to rise. Exports plus imports are now only 0.7% below the record peak of mid-2008. Exports are already at a record high and up substantially from a year ago. In other news this morning, initial claims for unemployment insurance increased 1,000 last week to 427,000. Continuing claims for regular state benefits declined 71,000 to 3.68 million. These figures suggest a rebound in payroll job creation in June after the lull in May.
________________________________________
The trade deficit in goods and services shrank by $3.1 billion to $43.7 billion in April
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 6/9/2011
The trade deficit in goods and services shrank by $3.1 billion to $43.7 billion in April. The consensus expected a trade deficit of $48.8 billion.
Exports increased $2.2 billion in April, led by petroleum. Imports declined $1.0 billion, led by autos/parts and oil. The decline in oil imports was due to lower volume; oil prices climbed in April.
In the last year, exports are up 18.8% while imports are up 15.9%.
The monthly trade deficit is $2.2 billion larger than last year. Adjusted for inflation, the trade deficit in goods is $0.1 billion smaller than last year. This is the trade measure that is most important for calculating real GDP.
Implications: Record exports and lower imports sharply reduced the trade deficit in April. This was largely due to two factors: (1) a drop in imports of autos and auto parts, primarily due to recent disasters in Japan, and (2) a change in petroleum flows, with the US increasing its exports and reducing its imports in the face of higher prices. Today’s trade data are the flip side of some recent weaker data on domestic auto production and auto sales and will partially offset the negative impact on GDP. As a result, we are raising our forecast for real GDP growth in the second quarter from a 1.5% annual rate to 2%, with much faster growth in the second half of the year. In addition, revisions to trade data suggest that real GDP growth in the first quarter will be revised up to a 2.2% annualized growth rate from 1.8%. Despite the reduction in the trade deficit in April, total trade volumes continued to rise. Exports plus imports are now only 0.7% below the record peak of mid-2008. Exports are already at a record high and up substantially from a year ago. In other news this morning, initial claims for unemployment insurance increased 1,000 last week to 427,000. Continuing claims for regular state benefits declined 71,000 to 3.68 million. These figures suggest a rebound in payroll job creation in June after the lull in May.
Wednesday, June 8, 2011
Tuesday, June 7, 2011
Did the Recession Ever Really Go Away?
Did the Recession Ever Really Go Away?
All the stimulus programs (trillions of dollars!), the money creation, the buyouts of bad debt, the bailouts, the nationalizations, the ghastly spending, the new regulations: nothing has worked to bring back the shining city on a hill.
The IMF and Moral Hazard
The IMF and Moral Hazard
[Deep Freeze, chapter 3 (2011)]
The late 1990s saw a strengthening of the International Monetary Fund's core mandate as a global financial parent on the lookout for perceived instabilities to correct in the name of economic development. Several alterations in the scope of its operations following the crises of the previous 20 years had given the Fund a far wider range of policy options, as well as far greater resources, with which to support faltering economies.The crises of the late 1980s and '90s — the Mexican peso crisis, the Russian debt default, the Asian crisis, the Brazilian currency crisis, and the Argentine crisis, among others — all were used to strengthen the Fund's core operating mandate, which is to stabilize exchange rates in order to facilitate global trade. The IMF's failures to immediately stabilize previous crises were reckoned to have been due to a lack of procedural guidelines allowing it to speedily aid the ailing economies. Each time a shortcoming appeared following the IMF's rush to maintain global financial stability, it was assumed that the existing scope of operations was inadequate, not that there was something fundamentally wrong with the very existence of these operations.
In some ways, Iceland's financial crisis could be recorded in the history books as much like the crises in Mexico, Russia, Brazil, Argentina, or any number of Asian nations. However, it differs in two major ways. First, the extent of its boom and subsequent collapse is much greater than anything experienced in the aforementioned developing countries. More important, and more puzzling, is the fact that Iceland is the first developed country to suffer a financial calamity of this scope since the Great Depression.
Up with Vietnamese Catfish
Up with Vietnamese Catfish
After communism vanished in Vietnam in the 1990s, entrepreneurs started exporting its catfish. The stuff was so good that it threatened US producers. So in 2003, Congress legislated against the imported fish. It can't be called catfish; it must be called swai and basa. Also, a pricey tariff applies.
Then the US catfish industry started spreading Stalinesque propaganda about the evils of Vietnamese fish. It is nasty, dirty, and disease ridden. As an appeal to goofy American sentimentalism, they claimed that the industry was violating fishes' rights by putting them in too-small tanks. They even claimed that Vietnamese fish puts the United States at risk of "bioterrorism."
The Fundamental Difference between Fairs and Markets
The Fundamental Difference between Fairs and Markets
[Excerpted from chapter 4 in part 1 of the The Turgot Collection (2011). Originally written in 1757.]
Smoke, Mirrors, and Inflation Expectations
Smoke, Mirrors, and Inflation Expectations
Bernanke and other experts believe that it is possible to bring inflationary expectations to a state of equilibrium by means of transparent central-bank policies. In such a state of equilibrium, they argue, expectations are perfectly anchored or are not sensitive to changes in various economic data.
According to this way of thinking, once inflationary expectations are well anchored various price shocks such as sharp increases in oil or food prices are likely to be of a transitory nature. This means that over time price shocks are unlikely to have much effect on the rate of inflation.
Note that what matters in this way of thinking is the underlying price inflation. Therefore, the Fed chairman and many economists believe that to be able to track underlying inflation they must pay attention to core inflation — percentage changes in the consumer price index less food and energy.
According to Bernanke and other experts, it is difficult to bring inflationary expectations to a state of equilibrium as long as individuals are not clear about the precise inflation goal that Fed policy makers are aiming at.
Absolutely nothing is said here about the possible role that changes in the money supply might have on general increases in prices. Without a preceding increase in the money supply there cannot be a general increase in prices (which popular thinking labels as inflation).
Can There Be Inflation without an Increase in the Money Supply?
Now what is a price of a good? It is the amount of dollars paid per unit of a good. Obviously then, for a given amount of real goods, if the stock of money remains unchanged, the amount of dollars spent per unit of a good will also stay unchanged (all other things being equal). In order to have a general increase in prices we must have an increase in the stock of money. Could inflation expectations then cause a general rise in prices without the preceding rise in the money supply?Let us say that on account of a sudden sharp increase in the price of oil, people have formed higher inflation expectations. If the money stock remains unchanged, then no general increase in prices can take place, all other things being equal.[2] All that we will have here is a situation where the prices of oil and energy-related goods go up and the prices of other goods and services go down.
In fact, various so-called price shocks tend to come mostly because of preceding increases in the amount of dollars generated by the Fed and the banking system.
When new money is generated, it does not enter all markets instantly. It moves sequentially from one market to another market — there is a time lag between changes in money supply and changes in the prices of goods and services. For some goods the time lag tends to be short, while for others it can be very long.
This doesn't mean that a rise in the price of a particular good cannot be caused by a sharp fall in its supply. But a general increase in the prices of all goods cannot take place without preceding increases in money supply.
Most economists are dismissive of the money supply as far as general rises in prices of goods and services are concerned. The main reason for this is that the money supply is not always well correlated with changes in various price indexes.
On account of the variable time lag from changes in money to changes in various price indexes it is not always possible to articulate graphically the importance of money in driving general rise in prices.
What matters here, however, is not a statistical correlation as such but whether it is logically possible to have a general rise in prices without a preceding rise in money supply.
The yearly rate of increase in our monetary measure AMS[3] from 2.4 percent in June last year to 10.6 percent in May this year raises the likelihood of a sharp increase in the growth momentum of the CPI in the months ahead (see chart).
In fact an increase in inflation expectations always comes ultimately in response to rises in money supply. (An increase in the money supply pushes prices in general higher and this in turn lifts inflation expectations.)
Conclusion
Notwithstanding inflation expectations, a general increase in prices cannot emerge without a preceding increase in the money supply. A visible increase in the growth momentum of the money supply during June last year and May this year has already set the foundation for a further strengthening in the growth momentum of the CPI.
Down with the Dictator of Yemen
Down with the Dictator of Yemen
If you truly want to unite a population, here is a key: drive the dictator out of the country. The fleeing of a despot always leads to unparalleled and authentic celebration, because the people perceive a newfound freedom. In the street celebrations, dancing, enthusiasm, and optimism, we gain a glimpse of what freedom is all about. It is about removing the boot from the neck.
Samira Abdalla Salim, Another “Random” Jihadist
Samira Abdalla Salim, Another “Random” Jihadist: Koran Proselytizer Stabs Two @ MN Library
By Debbie SchlusselCheck out the story of Samira Abdalla Salim, who just stabbed two people outside a Bloomington, Minnesota library. Did I mention that she passes out Korans . . . when she’s not stabbing infidel Americans in the name of allah? I’m sure we’ll get the usual “not tied to a terrorist group” BS, when she’s tied to Islam. The mainstream media is already saying this is a “random” attack. Random? Uh, not when you consider she’s a devout Muslim chick who passes out Korans and that the people she stabbed probably don’t fit that description.
Koran-Inspired Stabbings in Minnesota
Two people were stabbed in a seemingly random attack at a Twin Cities library.
After the incident Wednesday night at the Oxboro Library in Bloomington, 35-year-old Samira Abdalla Salim was arrested.
Salim was no stranger to the Oxboro Library. She had a reputation for handing out the Koran and talking religion outside the building. Read the rest of this entry »
“Evil Zionist Jews Own US”
DISGUSTING: Helen Thomas (tHAMAS) Tells “Diversity Workshop”: “Evil Zionist Jews Own US”
By Debbie SchlusselAs you may recall, after Helen Thomas said that the Jews “should go back to Poland, Germany,” etc., she issued an “apology.” You know–one of those “apologies” which the utterer doesn’t mean but says to save his/her job. We knew she didn’t mean it, since she’s been attacking the Jews and Israel on behalf of her HAMAS and Hezbollah nazi buddies for decades (even before those organizations existed, she openly attacked Jews and Israel). Well, now, there’s more confirmation that she didn’t mean it. Earlier this week, I told you that on Thursday (yesterday), Ms. tHAMAS was keynoting a “diversity workshop” hosted by Arab Detroit. Get a load of what she said there. It’s far worse than her original statements.
Not Separated @ Birth
In addition to standing by her original comments this summer about Jews in Israel and how they should leave and “go back to Poland, Germany,” etc., Thomas went several steps further–all of it to eager praise and applause by our “moderate” Arab neighbors here in Detroit. As reported by the Detroit Free Press‘ resident Muslim propagandist, Niraj Warikoo:In a speech that drew a standing ovation, Thomas talked about “the whole question of money involved in politics.”I’m not surprised by these comments. It’s typical Helen Thomas, and it was tolerated by oodles of Presidents, GOP and Democrats, and the White House press corps for decades. And I’m not surprised by the standing ovation she got for it. Sadly, it’s shock–shock!–for the organized liberal Jewish community that keeps pretending that the Arab and Muslim communities in Detroit don’t constantly say and applaud such anti-Semitic, anti-Jewish conspiracy theories and statements.
“We are owned by propagandists against the Arabs. There’s no question about that. Congress, the White House, and Hollywood, Wall Street, are owned by the Zionists. No question in my opinion. They put their money where there mouth is…We’re being pushed into a wrong direction in every way.”
These Muslims and Arabs (a good number of those in attendance were Islamo-sympathizing Christian Arabs who hate Jews just as much) are NOT “moderates” just because they live in the West. They gave a standing ovation to this modern day Protocols of the Elders of Zion spoken by a 90-year-old ugly hag. Oh, and the speech was given in the tax-funded Arab-American National Museum that hosts her sculpture (which isn’t as ugly as her, but close enough). The Museum got several million dollars from you, the American taxpayer, thanks to an earmark from conservative Republican Congressman Hezbollah Joe Knollenberg.
It’s interesting that Oralandar Brand-Williams, the Detroit Newsistan “reporter” didn’t have the guts to report that Thomas made these statements, which should tell you something: per usual, the Detroit Newsistan lies and whitewashes Muslims and their sympathizers like Thomas.
If they were even an iota true, I’d have a pretty good stake, since in the world according to tHAMAS, the Jews own everything. So, where’s my share? But Jews . . . er, Zionists don’t “own” these institutions. Sadly, Arab Muslim money speaks louder. Who paid for Bush the father, Bush the son, and Clinton the only and their Presidential libraries? Not the Jews . . . er, “Zionists.” And the last time I checked, the guy who owns e-Bay, Four Season, Saks Fifth Avenue, MicroSoft, FOX News, the Wall Street Journal, Harper-Collins Publishing, the New York Post, etc. was named Prince Al-Waleed Bin Talal. Funny, it doesn’t sound like a Jewish–or even “Zionist”–name to me.
Oh, and Thomas played the old, dumb Arab semantics game of, “I can’t be an anti-Semite because I’m a Semite.” We all know anti-Semitism is the term for hatred of Jews, not Arabs. That’s always how it’s been used, and what it means. The word was coined that way. And it’s how the Nazis used it. However, since they play this game constantly, I usually call them what they really are: anti-Jewish and neo-Nazis.
But, hey, I’ll bet Whoopi Goldberg still defends her. Now, if Helen Thomas said 9/11 was perpetrated by Muslims (which is actually true), well, that’s a different story . . . . Because you can’t say that in America. So, who really owns America? I think we know the answer. And each person’s last name has an Al-something in it.
“Israel Is Evil, I Support Palestine; US Govt Brainwashed”
New Detroit Pistons Owner to Schlussel: “Israel Is Evil, I Support Palestine; US Govt Brainwashed”
By Debbie SchlusselI’ve already told you about new Detroit Pistons Owner “Palestinian” Tewfiq Tom Gores and his pro-HAMAS, pro-Palestinian, anti-Israel, mobster family. I also told you how he and his friends sicced a Jewish Detroit area lawyer to call and threaten me, demanding I remove the post. Now I’ve heard from his partner in his multi-billion dollar Platinum Equity, the company that bought the Pistons with him. Annie Joubran is Tom Gores’ partner in Platinum AND she’s married to his first cousin, Robert Joubran, also his partner in Platinum. Over the last few days a number of Tom Gores’ relatives and friends–who are Israeli Arabs of Lebanese descent, but identify as “Palestinians”–posted anti-Israel, anti-Semitic comments on this site.
Detroit Pistons, Now Brought to You By Israel Haters
Then, over the weekend, I received an unsolicited anti-Israel, pro-Palestinian e-mail, below, from Annie Joubran, who as a partner in Platinum (with her husband, Robert), is also a co-owner of the Pistons. Hey, maybe they should change the name of the team to the Detroit Palestinians, then they can claim that the rest of us are illegally occupying “their” territory and must leave to accommodate their jihad.Ms. Joubran, by the way, is Armenian (her maiden name is Annie Sarkissian). She and her husband give a lot of money to charities promoting Armenian art, but there’s a disconnect, as much of Armenian art recalls the Armenian Holocaust, and she is apparently clueless about who perpetrated that genocide. A person who was formerly listed on LinkedIn mentions her “job experience” as Annie and Robert Joubran’s “Personal Assistant/Estate Manager/Stylist/Shopper.” Must be nice. If only she spent some of that money on the “oppressed” Palestinians along with the gazillions the whole world is already sending them. Read our e-mail “discussion,” below.
From: Annie Joubran ajoubran@platinumequity.com
Date: Sun, Jun 5, 2011 at 12:58 PM
Subject: Shameful
To: writedebbie@gmail.com
You can have all the press in the world- but the truth does wiggle its way to the top. I pray you continue your calling- because with every article you write and every interview you give the subject of what’s truly going on in Palestine becomes more and more transparent.
Everyone in the world who knows anything about politics knows the truth about what the israelis have done to the Arabs in Palestine. Read the rest of this entry »
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