Woot! Average Weekly Earnings up in the US last month!

Post #292,504 by Another Scott 9/7/07 11:44:20 AM Reply	Woot! Average Weekly Earnings up in the US last month! Sing the praises of the US Economy! The sub-prime meltdown was just a glitch, it was [link\|http://slate.com/id/2171739/\|contained] just like they thought. Right? Well, maybe not. US employment dropped suddenly and unexpectedly in the last reporting period. [link\|http://www.bloomberg.com/apps/news?pid=20601087&sid=atH3erW3.auo&refer=worldwide\|Bloomberg]: The drop in employment, following a month-long increase in the cost of credit prompted by losses in the mortgage market, is the clearest sign yet that the U.S. expansion is in jeopardy. Payrolls are one of the main indicators, along with sales, wages and production, which help determine the start of economic contractions. Employers cut 4,000 workers, compared with a revised gain of 68,000 in July that was smaller than previously reported, the Labor Department said today in Washington. The unemployment rate held at 4.6 percent as almost 600,000 people left the workforce. ``The recession risk has certainly increased,'' said Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York. ``It definitely cements the case for a rate cut at the next Fed meeting.'' Treasuries rose and stocks fell. The yield on the benchmark two-year note slid below 4 percent, indicating traders foresee a series of Fed rate cuts. The central bank's current target rate is 5.25 percent. The Standard & Poor's 500 Index fell 1.1 percent to 1,461.59 at 10:22 a.m. in New York. [...] Average weekly hours worked by production workers held at 33.8. Average weekly earnings gained to $591.50 last month from $589.81 the prior month. [...] $1.69 a week increase over a month! That's a $20 per week increase over a year! Happy days!!!111! :-/ Some are clamoring for dramatic interest rate cuts. I suspect there will be some reductions, but I hope the Federal Reserve will resist pressure to pump up the money supply excessively before the election. We got in the mess we're in because money was too loose. Cheers, Scott.
Post #292,505 by bepatient 9/7/07 11:56:00 AM Reply	The problem is not with M1 or 2 the problem with the economy right now is the expansion factor...with the derivatives trading pushing the leverage factor >way< too far. Something is going to need to be done to reign this activity back in. Fed dropping interest rates is an enabler for this activity. Too much of today's music is fashionable crap dressed as artistry._{Adrian Belew}
Post #292,506 by Another Scott 9/7/07 12:06:54 PM Reply	Could you elaborate, please. I haven't kept up with the Money Supply numbers recently; AFAIK, the Fed doesn't much either any more (they try to look at the economy as a whole rather than particular money supply numbers). The M1 and M2 [link\|http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt\|seem to have grown in the last 5+ years] (e.g. M2 up 30%), and M2 is up [link\|http://www.federalreserve.gov/releases/h6/Current/\|6%] in the last year. M3 is probably more important in these derivative issues, but IIRC, it's harder to measure. How is dropping interest rates going to "reign in" derivatives trading? Thanks. Cheers, Scott.
Post #292,507 by bepatient 9/7/07 12:20:47 PM Reply	It won't, thats my point The fed dropping rates encourages folks to create more devices to increase return on money...like I said...its an enabler. The implosion of the mortgage industry is a great example of this. They extended themselves out of the safe zone...and in looking for better returns seriously pumped up the amount of high risk borrowing..and one quick turn in home buying erased not only the return...but a chunk of the base principle. These hundreds of millions in losses, in turn, has blown up several multi-billion dollar derivative funds that were cents on the dollar leveraged against these loans. This is a huge magnification of what was essentially a controllable catastrophe. Mortgage comapanies lost the revenue of the interest payments, but in many cases did not lose a huge amount against their base principle in anything but liquidity. They regained the asset borrowed against, the property. They have carrying costs, and often sell at below market to liquidate the assets, but that is their management choice to free cash to go back into their primary business of loaning it out. Too much of today's music is fashionable crap dressed as artistry._{Adrian Belew}
Post #292,526 by Another Scott 9/7/07 8:48:18 PM Reply	Ah, I misread you. Thanks. I'll check the links.
Post #292,508 by bepatient 9/7/07 12:31:33 PM Reply	Better description [link\|http://www.merkfund.com/merk-perspective/insights/2007-02-06.html\|http://www.merkfund....s/2007-02-06.html] Not necessarily agreeing with his conclusion...but the basic description of the issue is very good. Too much of today's music is fashionable crap dressed as artistry._{Adrian Belew}
Post #292,509 by boxley 9/7/07 12:43:21 PM Reply	lets separate credit expansion from printing more money credit expansion allows more goods to be bought with the same amount of money I have $100 pack of cigs is $5 Beep loans me $50 dollars which the vig is 10% Beep bundles my loan with skip doc and alex and convinces nother scott to by the loan for $50.00 down the loans are worth $165 face value plus vig they can only buy 33 packs of cigs If skip me and doc all refuse to pay and turn in 30 packs of cigs, face value borrowed beep and nother scott will be out nothing. However of they borrowed the money to buy the notes, they are out their cigs and vig that is credit expansion Money supply expansion is beep sells cigs for $5 I keep printing $5 dollar bill Beep notices and starts charging $10 for cigs. Finite goods with an expanding money supply is inflationary. Credit expansions are not. Neither are good for the economy thanx, bill Quantum materiae materietur marmota monax si marmota monax materiam possit materiari? Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 51 years. meep reach me at [link\|mailto:bill.oxley@cox.net\|mailto:bill.oxley@cox.net]
Post #292,511 by bepatient 9/7/07 1:06:17 PM Reply	Thats M1 and 2 both are ok and the credit expansion is controlled by the policies of the banking system. What is happening now is that a huge expansion is now outside of the control of the governments...this being credit derivatives. They are bad because there is really no system of control over them. Too much of today's music is fashionable crap dressed as artistry._{Adrian Belew}
Post #292,528 by Another Scott 9/7/07 8:57:42 PM Reply	Yeah, that's good. Until he starts selling his Gold fund...

Welcome to IWETHEY!