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Showing posts from September, 2011

Europeans are taking action on MBS disaster

From Reuters this morning: JPMorgan Chase & Co and Bank of America Corp were hit with new lawsuits by investors seeking to recover losses on $4.5 billion of soured mortgage debt, expanding the litigation targeting the two largest U.S. banks. Sealink Funding Ltd said between 2005 and 2007 it bought nearly $2.4 billion of residential mortgage-backed securities (RMBS) from JPMorgan and $1.6 billion from Bank of America in reliance on offering materials that were misleading about the quality of the underwriting and underlying loans.   According to court papers, Sealink is an Irish entity that oversees RMBS purchased by special purchase vehicles once sponsored by SachsenLB. Another plaintiff,  Landesbank Baden-Wurttemberg , raised similar claims in a separate lawsuit against JPMorgan over $500 million of RMBS that it said it bought. The plaintiffs seek compensatory and punitive damages. Newsflash:  Everyone was thinking of American hedge funds taking the baseball bats to BAC

Futures Market -- says nothing anymore

Used to be that if you looked at the S&P 500 futures market you had a good idea of the market's psychology. No more, yesterday market was "all green" and opened up 1%, by 15:00 it was down 1% but closed up .81%. this kind of volatility is due to very small trading volumes, and market participants looking for direction by pushing the price around.  For investors it is a dangerous time, because the moves can be sudden.  Old trader joke, the market takes the stairs going up, and the elevator going down...  The market is driven by forward earning estimates (determined by 25 year old recently MBA graduates), who are told by the companies they cover: "What to expect".  Bottom line the actual performance and these indicators bear little correlation.  in 2008 analyst were predicting earnings of $75 per share -- the actual number was zero (we also got the S&P500 at a close low of 666 -- how fitting). American Companies have had a free ride with the p

July GDP growth of 0.3% or 3.6% annualized

July would seem to see Canada's economy recovering from its dismal second quarter.  On an annualized basis, there is still hope that the 2.1% target by the BoC can be reached, although the rest of the year will have to generate the same kind of growth that was produced in July. manufacturing grew by 1.4% which is excellent since it reverse the previous three months of poor performance.  Every sector bar retail and construction advanced, and with continued rising national income savings are also going up (despite the poor -- or maybe because of the poor yields).  Oil and Gas continues to be a drag on the overall GDP numbers, but this is entirely due to price decline (as opposed to decline in volume due to the fires earlier this summer). Overall, the number was positive for Canada.  However, externalities remain the #1 problem for the country.  America seems to be, at least not in a recession, at the very least operating at stall speed.  The news out of the UK (Second largest mar

IPPI was just too boring to talk about!

So, Industrial production price input (IPPI) was up a bit in August +0.5% (Huge yawn really), guess what all the increase in prices is due to cost of motor vehicle (big whoop!), whereas raw material costs were flat (and will be falling for September -- you can bet on that). Some of the 2011 census data is starting to emerge, the big stuff:  Canada's population is 34,403,800 up 1% over the past year, aging is a bit of a problem since fertility rate is below 2.1% (population replacement rate). Average age is 39.9 years (up 0.2 years) and 16% of Canada's population is below the age of 15. Bonus:  Last week, a report came out that the Americans were thinking of building a "wall" between Canada and the U.S.  initially I thought it was a joke (a bit like the Onion), turns out no so much (Globe and Mail today).  Apparently, the Americans have decided that it would be a very good way of keeping terrorists and illegal immigrants out -- turns out Canada agrees, plus the Ame

Teranet- National Bank House Price Index +1.3%

Canada's housing market continues to defy gravity.  A cursory look at the rest of the planet of those countries that have seen a strong housing market after the 2007 crisis -- China and Australia, are both now facing rapidly slowing market. Yet, for the 4th month running Canadian house prices are up, this time by 1.3% (July) , in June  it was 1.7%.  Canadian house prices are now 12% above the 2008 peak (Source: national Bank of Canada & Teranet National Bank House Price Index) What is driving these prices, well mortgage rates have restarted their downward trend of the past 30 years.  We forget that in October 1981 Canadian mortgage rate peaked at 22%, falling almost without interruption (87, and 95 stick out as rises 10% to 14% and 6% to 10%).  Today mortgage rates in Canada are around 5% for the 5 year term (Canada doesn't have the U.S. system of 30 year fixed mortgage), and less than 3% for the 1 year mortgage term.  That's driving the ability of Canadians (who

For those who thought I was too pessimistic

 From the Head of Unicredit (BIT:UCG) Security business " the euro is “practically dead” and Europe faces a financial earthquake from a Greek default "... “ The euro is beyond rescue ”... “ The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits .”...." A Greek default will trigger an immediate “magnitude 10” earthquake across Europe. "..." Holders of Greek government bonds will have to write off their entire investment,  the southern European nation will stop paying salaries and pensions and automated teller machines in the country will empty “within minutes .” That's no kook talking, Monday's   Alessio Rastani is now joined by a serious hitter.  Already the futures market in America (that were up 100 bps at 4 this morning) are now up only 55 bps.  Cannot wait for the Spanish finance minister to say that Attila Szalay-Berzeviczy is full of shit, a

The trading rumors are insane

Over the weekend and the last two days, rumors of a fix for the Euro Area's crisis have emerged, this one using the European Investment Bank (EIB) as the vehicle of choice.  In a nutshell, the ECB would capitalize the EIB with Euro 200 billion, then the EIB would borrow another Euro 1.8 trillion (9:1 leverage) that would the proceed to buy (maybe at face value) all the sovereign bonds sold to European banks (maybe insurance companies too) and issuing instead an EIB bond -- that would have the full faith and credit of France and Germany. First off, this was reported in one news organisation (CNBC)  -- and the details are only now being worked out, first being how will this impact the credit worthiness of Germany and France?  BTW, this is exactly what the original U.S. bail out was suppose to be, except that because we were talking about mortgage back securities (of various level) it was thought too complicated to get a "reasonable market price".  Maybe with only four

Cash Crunch in China Picks Up Momentum; Chinese Economy "Teetering On the Edge"

Yesterday’s Mish Shedlock title for his blog!   Basically, the Chinese government has been putting the screws to the economy in order to slow down the, out of control, housing market before something bad becomes terrible.   There is something like 65 million empty apartments in China – constructed but with no electricity provided – basically unoccupied. In China, as in most of Asia, people like new things; this is also true for housing – go figure!   Still it is what it is, so if you buy an apartment as an investment you want to keep it “pristine” and therefore unoccupied form, so that you get full value when you sell it.   Think of an apartment as a car, a soon as it leaves the show room it looses value. So the Chinese government has been aware for some time that excessive investment in real estate has taken place, for two years now the Chinese government has been trying to slow the housing market, and its latest tactic is to starve the market of credit – raising capital

Tell me this is not a massive problem

The Census Bureau started tracking New Home sales in 1963, and the record low was 412,000 in 1982 - until that record was broken in 2009 - and then again in 2010 - and it looks another new record in 2011. (Source: Calculated risk) Imagine in 1963 America's population was 186 million (a little more than half of today's), and the record low in new homes was 412k, and yet 2011 is shaping up to be a 303k -- 25% lower than in 1962 (peak of Cuban Missile crisis). The only bright aspect, it really cannot fall much more! For the sake of comparison -- population wise (this was also when the baby boom started) America with a population of 311 million needs to build 685k house just to be in the same percentage new home as in 1962 (for the sake of comparison from 2002 to 2006 more than 1 million new homes were sold).     BTW in 2009 375k, 2010 323 and now 2011 is looking like 303 -- not a good trend at all, and a further indication that the housing problem is still very much with Ameri

Nial Feguson is my hero

Ferguson is a very well regarded economist (Cambridge) and has a rare ability to cut to the core of the issue.   Below is a presentation he made at the TED talks.   Watch it!   My issue here is how things are changing for the west in general and for the U.S. in particular.   The six killer apps of the West are: Competition Scientific Revolution Property Rights Modern medicine Consumer Society Work Ethics The question is: Are all six of these elements necessary for the continued success?   China economic model is looking relatively good, and the concept of property rights there are rather nebulous.   Of course one of the dilemmas with China is that type of growth that has been achieved.   In a sense, growth has been via investment in production capacity – about 70% of China’s GDP is capacity in infrastructure and production.   Chinese model is not dependent on its   citizen to generate demand for its production, rather it looks at the rest of the world as it

comments

I've received a few comments on my blog, not realizing that I had to approve these.  So they related to somewhat older posts,.  Surprisingly only one "Viagra" comment.. I will be more diligent going forward.

Scandal in the construction industry

A well know secret in Quebec is that the construction industry cartel extract economic rent from the province in its construction projects.  Fact 1:  Roads in Quebec cost about 30% more to build than in Ontario (similar weather).  Fact 2:  For more than 30 years the Quebec department of transport has failed to inspect work sites -- only doing paper inspections. Fact 3:  Everyone in the province hates Public/private partnerships. Now the police force union wants an independent commission to investigate these "crimes".   Think about it, the police doesn't want to do its job, they don't want to investigate arrest and obtain convictions, they want whitewash -- its the only explanation I can phantom, as to their behavior.  It is possible that the police union sees the level of corruption so institutionalized that they see no way of obtaining any conviction.   The reality of PPP is that they do contain costs and keep the contractor "honest" because he'

CAD down 3%

What a night, first I'm not sure what the Street was expecting from the Feds!  In fact, the Feds delivered exactly what most economist had assumed to be the plan:  Twist; whereby the sell short term T-bills and buy long dated one (last tested in the Kennedy Administration) as a means of changing the shape of the yield curve. For Canada, the implication was severe overnights, yields have tightened, the stock market is off nearly 4% (taking Canada back to August 2010), the CAD is down nearly 3% (down to 0.97/1.03) but then oil prices are down 5% for the day. Good old fashion panic is in the air, the French banks are in melt down, European banks are increasingly unable to fund themselves, BAC and WFC have both been downgraded.  Screaming, crying the world is ending... not really!  Over the past year we've had a bear market rally, and now the bears are back! Watch earning forecast for S&P500 companies; in January the figure was $105, then in April it was $95, its now slip

What’s with ‘Merica?

I want to speak specifically about the Wall Street protests that have been going on for a few days.   There’s been a virtual media blackout on the subject as if it were not taking place.   I guess the only place you hear about it is in the foreign press (BBC, TV5 and Al-Jazzira), not the WSJ or NYT not CBS, NBC or Fox. Complete media blackout, and now the latest rumors that some web site are blocking emails about the protest (you know do what you will , and then apologize later if you get caught).   Apparently some protesters were arrested for wearing masks, because in NYC there are laws against wearing masks… I wonder how the American media would react if the demonstration were in Egypt or Syria?   Friends who live in Chicago tell me about curfews for 18 or less youth.   Chicago is the one I know about, but I understand that these curfews have been expanding all over the U.S. in recent years to combat youth bands steeling and beating passersby [I read that a few thousand ci

Inflation up (whoops!)

This morning reading the StatsCan web based news I was directed by error to the July inflation data, when in fact this morning StatsCan published its August data (I have removed the post since). The August news was bad, real bad!  First fuel costs as a component of the CPI is actually down -- fuel prices in August were lower than in July, and yet inflation came in at 3.1% Year on year... Futures market is still pricing a reduction in rates (although with less conviction than it did last week), that's up nearly 0.4% (when the market was expecting at worse a +0.1% increase in inflation).  Question is what can be done? Joke is that inflation is always a monetary phenomenon (of course-- since the goods themselves have not changed!), Canada has been expanding credit (so maybe the BoC will talk to the banks to tighten credit rules -- one would have thought that the new mortgage rules would start to bit, but it seems that's not the case).  The principal tool available to the BoC

Canadian Income/Personal Debt Index is higher in Canada than the U.S – Really

   Are we comparing apple and oranges here?   First off, we are comparing Personal disposable income.   While my American cousins’ harp about the fact that health care in Canada is not free, it is free as a portion of personal disposable income in Canada.   Whereas in America the average American spends nearly 20% of his disposable income on medical costs (I wish I was exaggerating – the math don’t lie!). So the table that is often show that Canada has now passed its over indebted cousins would seem to compare to things that are not comparable.   So taking healthcare allocated revenues out of Americans disposable income reduces that index by 12%.   Which means that Canadian are not yet the worse of the lot… although we are working hard at changing this, as the direction of debt growth is for ever up while Americans are aggressively (willingly or otherwise) deleveraging. The above graph shows the trend, and while Canada is “really” not as bad as the U.S. TODAY, the direc

2014 -- When 26% of Canada's population goes wireless

When I moved to Canada in 2002 I had a cell phone, a land line, a fax line.  Now, I have only one phone, a mobile phone.  I have high speed internet (and skype for long distance phone calls).  The whole thing changed when I finally looked at my bell Canada bill (Internet/phone/satellite TV), my total monthly bill was nearly $300.  That's $3,600 a year -- and I didn't feel I was getting much value for money. Videotron a Montreal based upstart offered me a similar service (cable provider) and my total bill dropped to $105 per month (still got a phone line, TV and internet).  Few months ago I looked at how I was using TV/Internet and phone, bottom line I never used the phone line (only received irritating telemarketers calls), and I just didn't watch as much TV.  My total bill last month was $39.75.  In a decade my "communication" bill went from $3,600 p.a. to $477 p.a. (I've got a cell phone but its outside of that billing -- and it costs less than $50 a month

IMF Cut Canada's growth rate

Big news (not really) the IMF has cut Canada's 2011 growth rate to 2.1% and 1.9% in 2012 (down 0.7% for each year approximately).  Basic problem is not Canada but the fact that about 1/3 of Canada's GDP is dependent on exports, and our primary export markets are having a tough time (America, UK and Europe).  Now oil remains in the $85/bbl range (and has been around that level for some months now), but King Copper is telling a very different story, with copper price hitting 2011 lows.   Copper is a good indicator of economic growth, and everywhere seems to be slowing down.  Canada is not a great exporter of copper (its like 9th largest exporters in the world), but Canada exports many things that when dropped tend to hurt your foot, and these are used in making things (Canada is a second derivative country).   This is hardly a surprising prognostication considering that the Bank of Canada lowered its forecast for GDP growth earlier this year and the figure for them is 2.

Fascinating Dinner last night

Last night, I was invited by a friend to a fascinating presentation about the Canadian political scene.   The speakers, who will remain nameless, are two of Canada best know political commentators and have both been active in Federal and provincial elections (elected, holding office and nominated as ministers).   Both are well know in Canada’s two solitudes for their knowledge of their respective market (Ontario and Quebec).   The tone was collegial (Cannot say the same for several guests present…) before the presentation I had the opportunity to talk to many of those present and I was amazed (mostly high net worth individuals) bottom line they take the American view:   “All politicians are corrupt, crooks, liars and don’t understand anything”.   The strongest reactions I got from two individuals in particular who had never held a “real job” they managed their family’s money. Now there’s nothing wrong with managing your money, they’ve gone to good schools, but it’s also true that

Foreigners Buying Canada Again

The short break where foreigners decided that Canada was not worth the effort was, it appears a one month phenomenon.   They’re back and the figure is $11.3 billion for July, mostly in sovereign short term instruments.   My guess is that foreign investors still see a strong likelihood that Canadian interest will rise (they will not) based on Canada’s overall economics health (forgetting Canada’s Q2/2011 negative GDP numbers).   Over the past 12 months, foreigners have purchase nearly $120 billion in Canadian assets, a similar level to what was seen in 2010 – and about 8% of Canada GDP. (Source: StatsCan) At the same time, Canadians are reducing their foreign bond holdings – not entirely surprising considering that when Canadian invest “abroad” we mean U.S.A. and the 10 year T-Bond are now down to 2% -- taking in consideration the movement in the CAD and the weak yield, there’s not much incentive for Canadians to hold foreign bonds, moreover Canadian are very concerned about

NYC

No writing over the past two days due to travel, NYC if you want to know.  First, this is my first trip to New York City in about two years.  I left Montreal with no U.S. dollars, paid for hotels, lunch, cabs virtually everything with a credit card… the cashless society is here.  The other thing I notice is how “third world” U.S. infrastructure.  Comparing the security systems in place in Canada and the U.S. was day and night.  Whereas the system was fully computerized in Canada, their American counterparts had pen and black light – so basically relying on an aware and attentive controls – where as their Canadian counterparts could concentrate not on the paperwork, but on the passenger demeanour (if you look at the Israeli security system you will see that the focus is not paperwork but rather personal interaction).  Granted that our American cousins are far more interested in the security theatre – when going through the security process in the U.S. there was zero eye contact – proc

Funny but sad comment

The end game is afoot for Greece, the first member of the EU looking at default and maybe/probably exit from the Euro.  The austerity package has been a disaster for Greeks at large.  The promised revenues (and asset sales) have not occurred and the budget deficit is not actually shrinking (as a proportion of GDP) but rising as the country's economy collapse from absolute reduction in government expenses -- that's what happens when the government accounts for 50% of GDP (I know, I know the gov't produces nothing -- but indulge me here).   Germans who've been trough the German unification process (and cost) are not too keen on doing this again, especially since they view the Greeks as layabouts (not making a value judgement here -- just reading the mood).  So the great European experiment has come to a cross road and some hard choices have to be made soon (they could fudge it and delay until 2013 -- but the political landscape may have changed by then -- imagine nation

Rumors about Greece

Well the solids are hitting the fan it seems, rumors are that Greece will give up the ghost this weekend and will declare default.  Honestly, they are way behind their targets (not that they really had any chance of meeting those targets), CDS are 400 bps wider this morning.  That screams default. Collateral damage:  SocGen is trading 8% lower this morning -- it is rumored to be heavily exposed (and under capitalized) to Greek debt... Obviously the big question is why this weekend:  The answer is why not!  It sounds flippant (that's my point) there is absolutely no catalyst this weekend that was not already present last weekend or two months ago.  This is Europe worse kept secret -- Greek austerity is not working, it never worked because the building blocks are just not present.   Funny research report earlier this week by UBS that stated that Greece cannot leave the Euro, because, wait for it, there are no mechanism for leaving the Euro... I mean how stupid do you have to be (a

Unemployment up 0.1%

Not entirely surprising, unemployment rose in August, it rose for two reasons:  First, all those employed by the Federal government to execute the 2011 census have now left!  Beginning in March and ending 31st July, the decennial census is now completed.  Second, the July private sector employment +95k was bound to lead to a slow down in August --- too much too soon too fast!   (source: StatsCan) Putting these numbers in perspective, nearly 1/4 million jobs were created during the pat 12 months, which is not that bad, in fact nearly 300,000 full time jobs were created -- and 77,000 part time jobs were eliminated -- full time work is always better than part time work.  The bulk of employment growth was in Ontario and Alberta. Construction is one area that saw a rather sharp decrease in employment, but then no one is surprised about this as permits for construction peaked a year ago.  Overall, the August job creation performance was not bad, although negative.  The overwhelming fact

How healthy are Canadian banks

By yesterday's standard VERY.  Toronto Dominion Bank  (TSE:TD) raised $5 billion in covered bond yesterday, 40% 2 year 60% 5 year, oversubscribed largest ever bond offering for a Canadian bank, and the yield was not bad 0.875% and 1.62% for the 2 year and 5 year respectively (below projection) [Note: bonds were issued below par so that actual yield is a bit higher, still] How many banks could raise that kind of money at these yields, current Bank of Canada 2 year yield are 0.91% and the 5 year is at 1.46%. So TD (AAA rated by the way) raised money at zero premium to the Bank of Canada in the two year and about 25 bps in the five year. Impressive! Also for all those who think that Canadian banks are in trouble, the same pricing for a US bank would be at least 100 bps higher (if they could get it).

Trade numbers for July

Interesting results this morning, since both Canada and the U.S. revealed their July merchandise trade.   Interseting because both numbers were positive, Both Canada and the U.S. saw a marked improvement of their trade balance. (Source: StatsCan) For Canada its June trade balance of -$1.2 billion was reduced to -$0.7 billion for July, the result of exports rising by 2.2% (while imports only rose by 0.5%).   Looking into the numbers Canada’s trade performance is even better since volume rose by 4.1% - a 1.9% price decline reduced the upside numbers.   As for imports it was the opposite trend with price rises (0.9%), and volume was down 0.4%.   The Japan effect is now gone (trade is back to its pre March level), trade direction reverse towards the U.S. again.   Funny enough energy exports keep on falling (they were not part of the increase here) partly due to the forest fires here (thing of those as the equivalent of Hurricane in the Golf of Mexico) that halted production (also prices

Must read

This commentary about the global economy is fascinating, written by a well respected hedge fund manager, who year in year out generates good returns for his clients (He's a global macro player).  His name is Josh Brown he writes on the Big Picture Blog here . Also this morning HSBC downgraded the US GDP growth for 2011 from 2.8% to 1.3%.

Liberals are morons

The "Defense against Marriage Act" or the "Patriot Act" are exactly the opposite of what they preach to be, that's the conservative way -- give it a name that sounds good, so that people will listen to you, and the do what you want (for those of Canadian persuasion the first is against Gay marriage and the second is to ensure that civil liberty are further eroded)! Liberals are cretins:  This morning on the radio some group called "AgainstPPP" (which means Public Private partnership) made lots of noise because a hospice run as a PPP was using hiring methods that would be illegal in the public sector -- except this institution is not in the public sector (which makes their whole argument moot by the way).  Anyway, this group's statement was that this hospice should be run by the government and that these people were crooks!  Finally, and this is the funny part (hence the stupidity of this group) there are no complaints about patientcare, no its to

Stop the Presses!

Mark Carney announced this morning that the Bank of Canada was keeping interest rates at 1%!  Ok, not really a big surprise since 100% of all economist polled thought that rates were going to stay at 1%, in fact every Canadian thought the rates were going to stay at 1%. So not really a surprise at all.  Among all the data for the first half (so far 1% Q1 and -02% Q2 GDP growth) has not been spectacular.  That the BoC maintained its 2.9% growth for 2011 is "surprising" for that to occur the second half of 2011 will have to be a "gangbusters" (really simple math -- first half generated about 0.45% of a total of 2.9% -- so we aer looking at 5% growth rate in the second half). The odds of very strong growth is limited, new mortgage rules make it difficult now for Canadian to withdraw equity from their home for consumption (although Canadian consumption as a percentage of GDP is around 55%, far away from the U.S. 70%), moreover Canadian (probably due to our proximity

Driving home from the cottage

Weekend was somewhat miserable because of the weather.  Around 11 am I contemplated returning to Montreal early, just to catch a movie.  Well this morning a colleague told me that she left here cottage  (in Mont Laurier) at noon, and got home at 5.  A two  1/2 hour journey took 5 hours! Eventually, I decided to leave at 7 pm, and got home at 8:20, I was on cruse control the entire way, the best way of avoiding speeding tickets.  Turns out that was the right decision -- the road was empty of traffic (it was also dry).  Just goes to show, procrastination sometimes pays off!

Estates General!

It’s a strange use of word, but it represents something real here in Quebec.  First off, the words come from 1789, when the French king decided to bring all French together (Nobility, clergy, business and the rest) to figure out how to pay for the wars.  French king liked his wars!  Anyway, the result was the 1789 French revolution, because neither the nobility or the clergy paid any taxes – they were exempt, so business and the rest decide that enough was enough and the guillotine solved many problems. Back to Quebec, the “revolutionary” thematic is somewhat understood here, although it’s evident that those calling for this “conversation” don’t know or remember what happened to those who called for the process in 1789 (they got their head chopped off).  The problem, as I’ve often expressed it, is that the “revolution” that was called by the early leaders dates back to the 1950s and 1960s – a long time ago, the early leaders (you can still see Rene Lévesque’s’ speech in 1976 when win

Here we go!

First off, after a glorious summer, Labour Day weekend was mostly miserable, so it was three wasted days, which means lots of reading.   Certain themes resonated for Canada: Swiss national bank pegs the Swiss Franc – they’ve had enough of the wild ride.   Not sure how it will work, because commentaries from the ECB seem to indicate that this was all news to them.   This means that many countries that are perceived to be sound (Canada, Switzerland, Sweden, Norway and Australia) may resort to the same process.   We know that the Bank of Canada is very concerned about all they “hot” money flowing into Canada (about 7% of GDP).   How do such economies protect their industry and citizen from global market fears? Europe decided that a good old fashion panic was on the cards for Monday – while America celebrated “something” – but certainly not labour. Spider futures were wild on Monday, but Tuesday morning things cooled down.   BTW as of 6 am Tuesday AM (EST) the yield on 1 year Greek deb

As if we needed a new proof that the North American economy is slowing

In a country that has more than 100 million employed (and I mean America here), that each month 100,000 jobs are created or that none are created is almost immaterial.  Think about it, its a statistical aberration, its a 4th decimal rounding error!  What it is important is the trend indicator, the reality of America is that this non-recession since the summer of 2009 has been one of the weakest in terms of job creation.  The only thing that has been growing are profits (and executive pay).  Overall with the other ISM numbers that have been coming out of the woodwork for the past few weeks, there is no doubt that North American's economy is in a rough spot.  Personally I don't see how QE3 will help, the impact of QE2 has been muted (and expensive). But that's my opinion and its worth... not much.  However, it seems to me that repeating actions that have produced no results is in the hope this time it will be different is a form of madness (see cartoon below). As usual my

Europeans and reality

It would appear that overnight reality has reared its ugly little head in Greece.  Austerity has never worked when the debt load is as heavy as it is now in Greece, it didn't work in Latin America and its not working in Greece -- big surprise.  I guess that someone somewhere (probably in high school today) will get his/her PhD on the fallacy of the European plan for Greece, Portugal and Ireland.    Guess what the world now knows that a budget deficit that was to top out at Euro 23 billion for the YEAR is now a Euro 21 billion, six months into the fiscal year.  The sheer incompetence exhibited by all the players -- and the ultimate desire not to face reality will probably kill the Euro.  One thing for sure its future as the common currency of all of Euro is closer to the end than the beginning.  The question is how will the bubble pop.  Will Germany, Benelux, Finland quit or will, or will some of the PIIGS have to leave the alliance (it seems that Ireland is doing better). In an