Here’s good news, dear reader. The US economy grew at a 3.9% rate in the third quarter. Numbers don’t lie, do they?
Ha! Numbers are the biggest liars on the planet.
Have you noticed how the whole world has been taken over by numbers? We live with them every day. They seem so precise…so confident…so sure of themselves. The US economy did not grow “a little bit”. It did not expand “slightly”. It is not now just “somewhat larger” than it was a year ago. And it’s not even growing at a 3% rate…or a 4% rate. It’s growing at a 3.9% rate.
The older we get, the more suspicious of numbers we’re becoming.
A man today knows his PIN number, his telephone number, often his fax number, his credit card number, his cholesterol number, his street number, his postcode…digits, digits, and more digits! He’s likely to know batting averages of his favourite players…and how much his portfolio increased last year…not to mention the standard numbers of a general education – how many states are there, how many members of Congress, what is the boiling temperature of water, what is the speed of light…how many times can you get a speeding ticket in the state of Georgia before they take away your licence…and so forth.
Some of these numbers are useful. Many are empty frauds.
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Friday, November 2, 2007
Six Reasons Why America Must Get Out of the WTO Now
1. The WTO will have the same status as the UN, IMF, and World Bank.Article VIII of the Agreement (p.5) states the WTO "shall have legal personality and shall be accorded by each of its members such privileges and immunities as are necessary for the exercise of its functions." The existing GATT organization will disappear.
2. Under WTO, Congress agrees to change US laws to meet WTO obligations.Article XVI (P. 10) states: "Each Member shall ensure the conformity of its laws, regulations, and administrative procedures with its obligations as provided in the annexed Agreements."
3. All WTO decisions will be made by the votes of the WTO Members. One country, one vote, no veto. Article IX (p.5) states that decisions "shall be taken by a majority of the votes cast, unless otherwise provided in this agreement or the Multilateral Trade Agreements...each Member of the WTO shall have one vote." In the WTO, Antigua's vote will have equal weight with that of the US. Developing nations will have 83 percent of the WTO votes.
4. The WTO will be the global Supreme Court of Trade Disputes.As per Section 2 of the Dispute Settlement Understanding, the WTO will adjudicate global trade disputes, monitor national responses, and compel enforcement of its decisions. WTO rulings are final. The WTO can impose trade sanctions and fines on the US if we do not abide by its decisions. The WTO can authorize cross-sector retaliation. If the US loses a WTO dispute panel decision, for example, the World Trade Organization can give the plaintiff nation(s) authority to select which US industries, or combination of US industries, must bear the burden of the WTO trade sanctions. Under WTO, innocent bystander industries can be drawn into any trade fight.
5. Trade Agreements can be changed by a vote of the WTO Members. Article X, paragraph 4 (p. 7) states that amendments to the substance of global trade agreements shall take effect for all Members upon acceptance by two-thirds of the WTO Members. Article IX (p. 5) gives the WTO the exclusive authority to interpret the provisions of the Agreement. Any "decision to adopt an interpretation shall be taken by a three-fourths majority of the Members." It will be very difficult for the US to change any adverse WTO interpretation.
6. Congress cannot "fix" the Agreement in the implementing legislation.Article XVI, paragraph 5 (p. 10) states, "No reservations may be made in respect to any provisions of this Agreement." Thus, Congress cannot fix any offending provision in this Agreement.
By any measure, the World Trade Organization severely diminishes U.S. sovereignty. Any Congressional leader that approved this agreement either did not read it, or did not have America’s best interests in mind
Pat Choate is an economist, author of seven books and was the 1996 Vice Presidential running-mate of Ross Perot for the Reform Party. Choate received his PH.D. in economics from the University of Oklahoma.
2. Under WTO, Congress agrees to change US laws to meet WTO obligations.Article XVI (P. 10) states: "Each Member shall ensure the conformity of its laws, regulations, and administrative procedures with its obligations as provided in the annexed Agreements."
3. All WTO decisions will be made by the votes of the WTO Members. One country, one vote, no veto. Article IX (p.5) states that decisions "shall be taken by a majority of the votes cast, unless otherwise provided in this agreement or the Multilateral Trade Agreements...each Member of the WTO shall have one vote." In the WTO, Antigua's vote will have equal weight with that of the US. Developing nations will have 83 percent of the WTO votes.
4. The WTO will be the global Supreme Court of Trade Disputes.As per Section 2 of the Dispute Settlement Understanding, the WTO will adjudicate global trade disputes, monitor national responses, and compel enforcement of its decisions. WTO rulings are final. The WTO can impose trade sanctions and fines on the US if we do not abide by its decisions. The WTO can authorize cross-sector retaliation. If the US loses a WTO dispute panel decision, for example, the World Trade Organization can give the plaintiff nation(s) authority to select which US industries, or combination of US industries, must bear the burden of the WTO trade sanctions. Under WTO, innocent bystander industries can be drawn into any trade fight.
5. Trade Agreements can be changed by a vote of the WTO Members. Article X, paragraph 4 (p. 7) states that amendments to the substance of global trade agreements shall take effect for all Members upon acceptance by two-thirds of the WTO Members. Article IX (p. 5) gives the WTO the exclusive authority to interpret the provisions of the Agreement. Any "decision to adopt an interpretation shall be taken by a three-fourths majority of the Members." It will be very difficult for the US to change any adverse WTO interpretation.
6. Congress cannot "fix" the Agreement in the implementing legislation.Article XVI, paragraph 5 (p. 10) states, "No reservations may be made in respect to any provisions of this Agreement." Thus, Congress cannot fix any offending provision in this Agreement.
By any measure, the World Trade Organization severely diminishes U.S. sovereignty. Any Congressional leader that approved this agreement either did not read it, or did not have America’s best interests in mind
Pat Choate is an economist, author of seven books and was the 1996 Vice Presidential running-mate of Ross Perot for the Reform Party. Choate received his PH.D. in economics from the University of Oklahoma.
Thursday, November 1, 2007
Aussie passes US93c after rate cut
THE Australian dollar cracked US93c on Wednesday, hitting a 23-year high as a widely anticipated US interest rate cut triggered a resurgence of confidence in growth asset markets.
In a sign of renewed risk appetite in foreign-exchange markets, the Australian dollar also hit a 16-year high against the lower-yielding Japanese yen.
The currency is expected to build a support base around its current level as it awaits a widely expected Australian rate rise next week.
At 4.45pm Sydney time, the Australian dollar was quoted at US93.12c, up from US92.17c late on Wednesday, but below an intraday high of US93.42c.
The Australian dollar is at the highest it has been since April 1984.
Against the Japanese yen, the Australian dollar was at Y107.29, up from Y105.71, and hit a high of Y107.85 during the session.
The flight of funds to assets like the Australian dollar and equity markets and expectations of a Reserve Bank of Australia 25-basis-point interest rate rise next week weighed on the Australian bond market.
December three-year futures were down 11.5 ticks at 93.235, while 10-year futures were down 12.5 ticks at 93.69.
The yield on three-year government bonds climbed to a new seven-year high of 6.83 per cent.
Grange Securities chief economist Stephen Roberts said there was now little domestic
information to drive the Australian dollar until the RBA's interest rate decision next week.
"It's going to be more difficult going for the Australian dollar," Mr Roberts said.
"We haven't got any more data this week to help us and then we're into the Reserve Bank's meeting next week, which is already fairly factored in.
"It will probably do a bit of consolidating at this level if it's going to push any higher."
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In a sign of renewed risk appetite in foreign-exchange markets, the Australian dollar also hit a 16-year high against the lower-yielding Japanese yen.
The currency is expected to build a support base around its current level as it awaits a widely expected Australian rate rise next week.
At 4.45pm Sydney time, the Australian dollar was quoted at US93.12c, up from US92.17c late on Wednesday, but below an intraday high of US93.42c.
The Australian dollar is at the highest it has been since April 1984.
Against the Japanese yen, the Australian dollar was at Y107.29, up from Y105.71, and hit a high of Y107.85 during the session.
The flight of funds to assets like the Australian dollar and equity markets and expectations of a Reserve Bank of Australia 25-basis-point interest rate rise next week weighed on the Australian bond market.
December three-year futures were down 11.5 ticks at 93.235, while 10-year futures were down 12.5 ticks at 93.69.
The yield on three-year government bonds climbed to a new seven-year high of 6.83 per cent.
Grange Securities chief economist Stephen Roberts said there was now little domestic
information to drive the Australian dollar until the RBA's interest rate decision next week.
"It's going to be more difficult going for the Australian dollar," Mr Roberts said.
"We haven't got any more data this week to help us and then we're into the Reserve Bank's meeting next week, which is already fairly factored in.
"It will probably do a bit of consolidating at this level if it's going to push any higher."
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Manufacturing in U.S. Probably Grew at Slower Pace
Manufacturing in the U.S. grew at the slowest pace in seven months in October as factories received fewer orders and production cooled, economists said before a report today.
The Institute for Supply Management's manufacturing index fell to 51.5 from 52 the prior month, according to the median of 81 economists surveyed by Bloomberg News. A reading greater than 50 signifies expansion. A separate report may show consumer spending rose at a slower pace in September.
Manufacturing is on the verge of stalling as the deepening housing slump weakens demand for construction equipment, furniture and appliances, economists said. Overseas growth and a weaker dollar are boosting exports at firms including DuPont Co. and Agco Corp., helping avert a broader factory slump.
``The manufacturing sector continued to lose momentum in October,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York. ``Amid heightened uncertainty about the economic outlook, firms are taking care to avoid excessive inventory accumulation.''
The Tempe, Arizona-based group's report is due at 10 a.m. New York time. Forecasts ranged from 50 to 53. Manufacturing accounts for about 12 percent of the economy.
Read Complete Story
The Institute for Supply Management's manufacturing index fell to 51.5 from 52 the prior month, according to the median of 81 economists surveyed by Bloomberg News. A reading greater than 50 signifies expansion. A separate report may show consumer spending rose at a slower pace in September.
Manufacturing is on the verge of stalling as the deepening housing slump weakens demand for construction equipment, furniture and appliances, economists said. Overseas growth and a weaker dollar are boosting exports at firms including DuPont Co. and Agco Corp., helping avert a broader factory slump.
``The manufacturing sector continued to lose momentum in October,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York. ``Amid heightened uncertainty about the economic outlook, firms are taking care to avoid excessive inventory accumulation.''
The Tempe, Arizona-based group's report is due at 10 a.m. New York time. Forecasts ranged from 50 to 53. Manufacturing accounts for about 12 percent of the economy.
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US Gets Cheaper as Falling House Prices Lead to Lower GDP
America is probably getting cheaper. And Americans are probably getting poorer. That’s how the global accounts get settled. Americans owe a fortune to foreigners. As their paper money is marked down so is the fortune they owe. They will owe less. But they will own less too – because the value of their own dollar holdings…and dollar incomes…will go down. Foreigners will take advantage of the situation in two ways. They will buy US assets at low prices. And they will take advantage of low US wages by outsourcing some of their low-wage business to America.
America is a cheap country already; our guess is that it will get cheaper.
Back in the beginning of September, Frederic Mishkin, a Fed governor, estimated that housing prices might fall 20% by the end of 2008, and that it would reduce GDP by as much as 1.5% within three years.
That didn’t seem like much to us…certainly not enough to worry about. But Mishkin felt like a passenger on the Titanic; he wanted to find the lifeboats.
“Monetary authorities have the tools to limit the negative effects on the economy from a house-price decline,” Mr. Mishkin told his colleagues.
Then, in a speech October 19 on ‘monetary policy under uncertainty’, Mr Bernanke argued for acting sooner rather than later when risks become apparent.
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America is a cheap country already; our guess is that it will get cheaper.
Back in the beginning of September, Frederic Mishkin, a Fed governor, estimated that housing prices might fall 20% by the end of 2008, and that it would reduce GDP by as much as 1.5% within three years.
That didn’t seem like much to us…certainly not enough to worry about. But Mishkin felt like a passenger on the Titanic; he wanted to find the lifeboats.
“Monetary authorities have the tools to limit the negative effects on the economy from a house-price decline,” Mr. Mishkin told his colleagues.
Then, in a speech October 19 on ‘monetary policy under uncertainty’, Mr Bernanke argued for acting sooner rather than later when risks become apparent.
Read Complete Story
The Next Worry: Bond Insurers
Wall Street is fretting that the subprime carnage could spread to bond insurance firms. A key concern is CDO exposure
An exotic form of bond insurance could be the next hidden hazard to blow up in the global credit minefield. An obscure company called ACA Capital might spark the explosion.
The carnage on Wall Street has already been brutal. On Oct. 30, Merrill Lynch (MER) ousted CEO Stanley O'Neal after the bank took an $8.4 billion hit, largely from securities backed by risky home loans. The same day, UBS (UBS) cut earnings by $3.6 billion. Citigroup (C), which has suffered its own $1.6 billion wound, may face a fresh billion-dollar disaster.
Now the crisis is spreading from Wall Street—which has taken $35 billion in subprime-related write-downs and lost more than $220 billion in stock value—to a less well known corner of the financial world, that of the bond insurers. These firms sell insurance to banks and other major investors for bonds backed by mortgages and the complicated investments that hold the bonds, known as collateralized debt obligations (CDOs). The policies are designed to protect investors in case the securities default.
Read Complete Story
An exotic form of bond insurance could be the next hidden hazard to blow up in the global credit minefield. An obscure company called ACA Capital might spark the explosion.
The carnage on Wall Street has already been brutal. On Oct. 30, Merrill Lynch (MER) ousted CEO Stanley O'Neal after the bank took an $8.4 billion hit, largely from securities backed by risky home loans. The same day, UBS (UBS) cut earnings by $3.6 billion. Citigroup (C), which has suffered its own $1.6 billion wound, may face a fresh billion-dollar disaster.
Now the crisis is spreading from Wall Street—which has taken $35 billion in subprime-related write-downs and lost more than $220 billion in stock value—to a less well known corner of the financial world, that of the bond insurers. These firms sell insurance to banks and other major investors for bonds backed by mortgages and the complicated investments that hold the bonds, known as collateralized debt obligations (CDOs). The policies are designed to protect investors in case the securities default.
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Give Us This Day Our Daily Debt
It was almost 100 years ago that Henry Ford startled the world by giving his workers a raise without being asked. He explained that if they didn't have money they could not buy Ford automobiles.
From then on, his self-evident bit of common sense was accepted decade after decade. But in recent years it got lost and forgotten. The big boys have stopped giving us little folks enough to buy the big boys' stuff.
Get this from the Wall Street Journal: "The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks. The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000."
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From then on, his self-evident bit of common sense was accepted decade after decade. But in recent years it got lost and forgotten. The big boys have stopped giving us little folks enough to buy the big boys' stuff.
Get this from the Wall Street Journal: "The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks. The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000."
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