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Tag >> economy
Feb 09

Time for a short squeeze on sovereign debt

Posted by Ron F in Riskemerging marketseconomydemanddefaultdebtbailouts

Ron F

I see that the bond investors are demanding that the Greek government adopt austerity measures to stem the debt crisis that is building there and threatening to spill over into the rest of the European Union.

This of course is classic International Monetary Fund medicine for emerging markets, and bond vigilantism at its cheekiest, only it's likely to prolong an economic downturn and deepen the deficits since pension cuts and the like will serve to further depress consumer demand and with it, tax revenue.

Feb 08

A mixed picture on jobs

Posted by Ron F in recoveryrecessionjobsjoblessnessemploymenteconomy, earnings, career/management

Ron F

I searched in vain through news reports over the weekend for an explanation of how unemployment could decline in January, from 10 percent to 9.7 percent, when job losses grew, albeit by only 20,000.

Surely, I thought, the explanation lay in a decline in the labor force because unemployed workers had given up looking, which is the usual explanation for a decline in unemployment that's accompanied by more job losses.

Feb 06

Guess what. Investors like bailouts

Posted by Ron F in RiskrecoveryrecessioneconomyCashbailouts

Ron F

The market bounced back today big time, but not because of the unexpected decline in unemployment, from 10 percent to 9.7 percent, even though it was produced in part by surprisingly strong hiring in the manufacturing sector.

Caterpillar and GE hiring is good news, no? Evidently not for investors worried that the potential for wage growth producing higher inflation will lead to higher interest rates and lower risk-adjusted returns.

Feb 02

Private investment a stopgap for state and local budgets

Posted by Ron F in TaxrecoveryrecessionObama AdministrationGoldman SachseconomyCashCapital

Ron F

A growing number of state and local governments are leasing highways, airports and other public property to private investor so they can devote dwindling tax revenues to maintenance and improvements of other infrastructure. Much of the investment in these so-called public-private partnerships is coming from  pension funds and private equity. But observers doubt the trend is sustainable.

This piece describes a burst of such activity recently seen in the U.K. and Canada. But Hawaii, Illinois and Pennsylvania also have plans to lease their housing authorities, toll roads and railroad terminals.

Jan 29

AT&T;'s results are an object lesson for the economy

Posted by Ron F in recoveryjoblessnessemploymenteconomy, earnings, cost cuttingCashcapital expenditurescapex

Ron F

AT&T's fourth-quarter earnings results show why policymakers have to spend less time focusing on short-term moves in the capital markets and more on economic fundamentals.

The company said it will increase capital spending by almost $2 billion, or 10 percent, to improve its much-maligned network by adding more cell towers and connecting them to faster fiber optic lines.

Jan 28

CFOs: no major hiring plans

Posted by Stephen Taub in SpendingraisesObama AdministrationjobseconomyCFOCareers/Managementbonuses

Stephen Taub

Bad news for President Obama. The morning after our leader joined the rest of Americans and finally acknowledged that jobs are the most important issue facing the country, chief financial officers signaled they don't expect the employment picture to improve anytime soon.

Sure, 62 percent of the 371 corporate CFOs who participated in the latest quarterly survey conducted by Financial Executives International (FEI) and Baruch College's Zicklin School of Business said they do not plan any layoffs for this year. Big deal. Most companies have already gotten around to this cost-cutting measure. In fact, 77 percent of those surveyed said they already cut rank and file during the economic downturn.

Jan 27

As goes the economy, so goes the deficit

Posted by Ron F in TaxrecoveryrecessionObama AdministrationeconomyCashbailouts

Ron F

I've ranted before about why government spending is necessary to help get us out of recession, but in light of the latest hysteria over the federal deficit, I see no choice but to do so again, even though I claimed only earlier today to want to avoid politics to the extent I can.

Sorry, but that's impossible, not today, when the press and blogosphere are all atwitter over President Obama's gimmicky spending "freeze." So to restate a simple fact, the deficit is being driven by the economy, not the other way around, as the latest report of the Congressional Budget Office makes clear.

Jan 25

Oops. About that November increase in durable orders

Posted by Ron F in recoveryrecessioneconomydataconsumer spendingcash concernscapital expenditures

Ron F

This obviously is conspiracy theorizing at its worst, but it's hard not to scratch your head over the revision to the November report on durable goods orders that the Census Bureau quietly made on January 15.

Remember, the initial report of a 0.2 percent increase got major billing as a positive indication for the economy, even though the consensus expectation was for an 0.5 percent increase. As CNBC intoned, this was a sign of "a firmly entrenched economic recovery."

Jan 22

As goes GE...

Posted by Ron F in General ElectricGEeconomy, earnings, cash concernscapital expenditurescapex

Ron F

The results that General Electric reported on Friday for the fourth quarter of last year show that expectations continue to be everything on Wall Street. And so long as they're not as bad as expected, stocks will continue to rise.

Who knows, at this rate, maybe we'll never need a real recovery.

Jan 21

Recession's over? Not to those who make the call

Posted by Ron F in recoveryrecessionjoblessnessemploymenteconomycareers

Ron F

Blaming "administrative" reasons for a weekly jobless claims figure that exceeded forecasts by almost 10 percent seems pretty lame to me.

After all, surely the forecasts could have anticipated some of these "administrative" issues, no? And this is the fourth straight week that the number has risen.

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