Thats part of the dynamic going on here. That piggy bank can't drive the economy anymore because available credit facilities and home prices which might allow for that have decreased significantly.
Good analysis Robert very insightful. You may be seeing things that others are ignoring or just missing.
BEIJING — China is expected to issue regulations on Saturday requiring technology companies to disclose proprietary information like data-encryption keys and underlying software code to sell a range of security-related digital technology products to government agencies, American industry officials said on Friday.
But they said it remained unclear how vigorously Chinese officials would enforce the new rules, which already are watered down from a sweeping proposal first raised in 2007. Both the American and European technology industries have contended that the rules are unworkable and that they amount to trade protectionism.
One concern is that the rules will allow the leak of crucial foreign technologies to Chinese competitors who are seeking to build a technology industry on a par with the West.
The European Union’s chief trade official, Karel De Gucht, said in a visit to Beijing this week that the rules had “no real base in reality,” and urged the Beijing government to overhaul them.
The regulations, set to take effect on Friday, largely affect sales of network routers, smart cards, firewall software and other products involved in protecting digital data. They would require software and equipment from both Chinese and foreign companies to meet new technology standards before being certified for sale to government agencies.
To be certified, companies apparently would have to give government-connected testing laboratories encryption algorithms, software source code and design specifications that, for many of the products, are regarded as sensitive trade secrets.
In interviews, American industry officials argued that the rules not only sought details well beyond what was needed to certify the products, but that there were few safeguards to protect the proprietary information from outsiders.
“Even if you’re not talking about the really sensitive stuff, it’s not clear yet how product information will be protected or secured while it is running through the testing process,” John Neuffer, a vice president at the Information Technology Industry Council, a trade group based in Washington, said in a telephone interview.
“China asks for companies to go through testing labs that are essentially state-owned, government-owned,” he said. “That’s the sensitive part.”
The regulations are part of a long-running argument between Western technology companies and the Chinese government over the West’s access to Chinese markets. In the last month, China averted another dispute by rolling back a second plan aimed at giving Chinese companies an advantage in government technology purchases.
But foreign companies still contend that the latest regulations will grant Chinese companies an unfair edge in government sales, a comparatively small but growing part of the market here.
They also worry that the disclosure rules will enable Chinese competitors to copy Western technology. When the 2007 certification proposal was first introduced, some Chinese officials cast it as part of a broader campaign to help the nation’s computer-technology companies gain ground against more advanced Western competitors.
In negotiations, Chinese officials have argued that the United States imposes similar disclosure requirements on many advanced technologies. Mr. Neuffer and others said, however, that except for some military and national security technologies, American certification procedures are far less rigorous and are conducted in testing labs independent from the government.
Other foreign critics have called the regulations an example of trade protectionism, in that they would set standards for selling goods to Chinese governments that Western companies find difficult to meet. Many Chinese technology companies have agreed to abide by the rules.
In Beijing, an American industry expert who has negotiated with the Chinese government on the issue said that most American companies were likely to abandon sales to the Chinese government rather than turn over trade secrets. That expert declined to be named because of the sensitivity of the talks with the Chinese.
American industry officials also have argued that the new rules would gut their technology exports, because few other nations would purchase technology whose essential security secrets had been shared with the Chinese government.
Publicly, the United States government has taken a muted stance on the dispute. Nkenge Harmon, a spokeswoman for the United States trade representative in Washington, noted in a statement that the Chinese first planned to apply the rules to all technology purchases, but later scaled them back to apply only to purchases by local, provincial and national governments.
“We were pleased with that decision,” her statement said. “Since then, the U.S. has continued to ask China to follow global norms in this area, and we are continuing those discussions.”
Wacky and counter-intuitive as it may be, the deficit is part of national savings. When the deficit increases, so does national savings. They used to say 'we owe it to ourselves'. Not any more.
That deficit savings number is adjusted for the BOP transfers out. Net imports are a subtract from GDP. Much of the PCE increase is in the increase in the size of net imports, and a lot of the bad news looks so good. Prada and Oil.
I find some of this interesting but there is no way U-6 was 37.6%, ever. Historical records do not support this. Unemployment stats included 14 year olds in the 1930's, male and female. Did this new deal author adjust for that? What is the reality of todays job market is this. Career jobs are vanishing and if a new job is created it is not a career job(min wage). This will have long term effects on the American economy that most people are just now realizing. I find it ironic that millions of college students are trying to become more marketable for a min wage job. They must try, of course, to better there economic situation, but the reality is not a lack of an educated workforce its a gap in opportunities available. I have a couple degrees, so I'm trying not to make any spelling or grammitical errors here, but I am no more marketable than say my spouse who has little formal education but has some skills. Last summer I applied for several teaching jobs one being for a Florida charter school. I am certified to teach in several arears (Science and all Social Studies) so I thought I might stand a reasonable chance. After applying, I contacted the principal who, in turn replied, "you are one of 540 applicants". This was for 3 teaching positions. Sounds like 1930's to me. Hell, The school only had 200 students. The school staff, (2) people, were unable to handle the flood of phone calls and paperwork (7 page application X 540)so they hired a selection team to accomplish the task at hand. All this competition for 3 $35K jobs. Maybe I should have applied for the impending "selection team".
Companys are now learning to do more with less, even if business picks up they can hire "temp" very low paid workers to fill any additional increase in workload, then just lay them off during slowdowns. This is the new way of managing a workforce and it will stay this way for many years to come(10-20 years or more). This is very creepy to dwell on, but this is the new American economy for this generation. In a couple more years back yard BBQ's conversations everywhere will go like this, "Hey Bob what have you been up to?" Bob excited, said, "Well, Jim I had a good week. First I mowed Jane's yard on Monday, then I sub taught on Tuesday and Thursday, on Friday I traded some can goods for 2 gallons of gas and a fan belt and put in 42 job apps, and finally on saturday I did some census work. A $318 week! I wish every week was like this!"
The bottom line is increased consumer expenditures are not a result of increased disposable income. That's why I did a second graph-o-rama on personal income, which has the savings rate.
I saw CR's government transfers but I didn't graph it out. I didn't think it was that significant in comparison to consumer loans, but that's only in March, so 1/3rd of Q1, although we don't have a monthly breakdown of GDP.
Then, on inventories, the claim is those are a build up. Part of that is true, if you look at the graph, but part of it is also reduction, again from the graph.
What I find weird are some of the headlines. I read "business investment drives GDP" and all sorts of stuff, when one can see, it's nominal! Then it seems no one, except this post, talked about the decline in trade. That should not be happening, even if it was an increase in the trade deficit, for global growth. Both decreased. But the decline in U.S. exports is troublesome!
But CR's conclusion that PCE is not sustainable, yes, that's what i wrote in Personal income too, exactly what you're saying, "oh great, let's return to the past". that is what happened before and people uses their home equity as a ATM because the reality is the middle class have been decimated and cannot afford the "lifestyle" (read college, car, clothes).
As per Calculated Risk:
“PCE increased $130.7 billion; Personal Saving declined $88.5 billion and Gov’t social benefits increased $61.1 billion dollars. So the boost in PCE came from the decline in saving and the increase in benefits. That is not sustainable.”
Also, remember RO's observation on 4/25 the incredible spike in “Consumer leading” recorded for March. It seems that some of that first quarter PCE increase is correlated with increase consumer borrowing in March.
CR may be wrong about "sustainability", if March consumer lending continues into April and May, we may well see a similar second quarter increases in PCE and GDP. Also, why are government benefits not sustainable? There are no 'empirical' signs that there are limits on US goverment borrowing. Money the US borrows from China for example can be passed on as 'social benefits.'
What does not seem to be sustainable is unlimited consumer credit. That’s what got us into this mess in the first place- NO?
While I have zero sympathy for the big banks, and have moved my own banking business away from them, I cannot see that "a barter economy for a period of time" would be the sort of no big calamity thing that Jim Donahue presents. I think it would be horrendous for the people subjected to it because it would be, literally, the end of civilization. No taxes as an advantage? Well, no taxes means no public safety personnel (for starters). The chaos and resultant suffering are mind-boggling, and I don't think even the Greeks deserve that.
Who benefits from a bailout there? Which banks are deep into Greece for loans etc? Those would be the losers.
This is what should have happened in the fall of 2008 on a worldwide basis. The big over extended banks should have been allowed to sink.
Whats the worst that could happen? A barter economy for a period of time? Great no taxes.
It would be nice to see some suits starving to death with no real skills that anyone really wants with their artificially created demand dampened. Almost everyone I know knows how to do something that would be in demand.
The banks were and are desperate to avoid seeing anything like that since they would be exposed.
because comments are threaded. I know it's confusing but this will be fixed in the upgrade (which the 2nd one, I hopefully will do this weekend), but you still have to hit reply when replying.
Yeah, it's disgusting, predictable and so high school. I've seen that attitude almost everywhere I go, esp. the more competitive and elite it gets.
It's a very common human trait to want to feel superior to, or better than, other groups of people, and it bespeaks a basic insecurity. In the old Jim Crow south, the most rabid racists were the poor white trash, who absolutely needed to maintain at least one other group (blacks) in a position inferior to their own pathetic lot. So this Wall Street type feels very threatened when his superior self-image is attacked; he just can't stand the idea that he might no longer be the king of the hill, and he spews out his comtempt and his venom on those he has accustomed himself to think of as his inferiors. It's all pretty predictable when you stop and think about it.
There is an email from some Wall Street type, making the rounds that typifies the attitude towards the real people who work for a living.
But all of this reminds me that nothing changes from high school. You still have the bully's, the jocks, the nerds, the outcasts and so on but now the bullies and jocks run Wall Street. Seriously.
You point to what I think is the biggest farce about employment statistics; a case study in "lies, damn lies and statistics", the fact that employment statistics are treated as a 'zero sum game'. For example, an administrative assistant making $45,000/year with full benefits gets terminated shows up this month as a 'job lost'. That person then gets a part time job making $7,500/year with no benefits and shows up as a 'job gained' in the next months statistics. One job lost , one job gained = zero sum. But, in terms of 'standard of living', obviously the worker has not 'broke-even.'
WOW! That is a mind boggling graph. I missed it when first posted 4/25. That goes a long way to explaining all the positive economic activity described at Bonddad. But, given the employment numbers and the total personal debt, it seems that the 'bubbles' are coming back. Bubble being wealth created by debt. I think that's what economist call monetizing the debt.
RICO, even if used only to go after Goldman, would quickly
cause the rest of Wall Street to fall in line.
This would be a Wall Street meeting after Goldman got hammered by RICO:
Listen, I aint gonna get f****d like Gribbs, understand. Gribbs is 70 years old and the f****n guy's gonna die in prison, I don't need that. So I'm warning everybody, EVERYBODY. It could be my son, it could be anybody. Gribbs got 20 years just for saying hello to some f**k who was sneaking behind his back selling junk, I don't need that, ain't gonna happen to me, you understand.
But you can do that as well, if you wish. All of this focus on just Goldman Sachs has me a little disturbed because it was not "just" Goldman Sachs who set this up. But this is good press at least to have a prayer's chance at getting any real financial reform through.
Last read is they are trying to "exempt" (similar to the House bill) pretty much all derivatives trading.
Some of the proposals, I'm not so sure of, such as breaking up a corporation due to it's total percentage of GDP. I think it would be better to do break ups based on contagion. To firewall out these risks which were like dominoes. i.e. commercial and investment banking, separate, then some derivatives should be banned. I have a real problem with those completely ignoring many of these things are mathematical nonsense as well as have computational complexity which makes them impossible to verify. That should be out, period.
The Securities and Exchange Commission has referred its investigation of Goldman Sachs to the Justice Department for possible criminal prosecution, less than two weeks after filing a civil securities fraud case against the firm, according to a source familiar with the matter
in that contracts, perma temps and so on have absolutely nothing and as you point out, the inaccurate tally of those unemployed or without work.
But frankly, while I find it horrific that the unemployment situation is what it is, I find the hiding of those who cannot even get UI or anything even more so.
They are never mentioned and look at that, they are half the total U.S. workforce.
According to the Bureau of Labor Statistics, 44 percent of the jobless have been out of work for at least six months, the biggest share since the government began keeping track in 1948.
About 3.4 million Americans have been out of work for more than a year, according to a study by the Pew Fiscal Analysis Initiative.
We are probably looking at millions of people losing unemployment benefits in the coming months.
Interviews with state officials found that in New York, 57,000 people have received their last check. In Florida, 130,000 are no longer eligible as are about 30,000 Ohioans.
Those numbers will grow, according to Goldman Sachs Group Inc., which projects that more than 400,000 may soon begin losing benefits every month.
In couple months those 700,000 people hired by the Census are going to lose their jobs as well.
Some Republicans say cutting off aid will spur people to find work.
“We have study after study that shows people are more anxious to get a job after they run out of benefits,” said Representative John Linder of Georgia, the top Republican on the Ways and Means subcommittee with jurisdiction over the unemployment program.
yes, I'm sure that people do get more anxious to get another job when they run out of money. What the study doesn't show is whether they actually get another job.
Thats part of the dynamic going on here. That piggy bank can't drive the economy anymore because available credit facilities and home prices which might allow for that have decreased significantly.
Good analysis Robert very insightful. You may be seeing things that others are ignoring or just missing.
NTTimes:
By MICHAEL WINES
BEIJING — China is expected to issue regulations on Saturday requiring technology companies to disclose proprietary information like data-encryption keys and underlying software code to sell a range of security-related digital technology products to government agencies, American industry officials said on Friday.
But they said it remained unclear how vigorously Chinese officials would enforce the new rules, which already are watered down from a sweeping proposal first raised in 2007. Both the American and European technology industries have contended that the rules are unworkable and that they amount to trade protectionism.
One concern is that the rules will allow the leak of crucial foreign technologies to Chinese competitors who are seeking to build a technology industry on a par with the West.
The European Union’s chief trade official, Karel De Gucht, said in a visit to Beijing this week that the rules had “no real base in reality,” and urged the Beijing government to overhaul them.
The regulations, set to take effect on Friday, largely affect sales of network routers, smart cards, firewall software and other products involved in protecting digital data. They would require software and equipment from both Chinese and foreign companies to meet new technology standards before being certified for sale to government agencies.
To be certified, companies apparently would have to give government-connected testing laboratories encryption algorithms, software source code and design specifications that, for many of the products, are regarded as sensitive trade secrets.
In interviews, American industry officials argued that the rules not only sought details well beyond what was needed to certify the products, but that there were few safeguards to protect the proprietary information from outsiders.
“Even if you’re not talking about the really sensitive stuff, it’s not clear yet how product information will be protected or secured while it is running through the testing process,” John Neuffer, a vice president at the Information Technology Industry Council, a trade group based in Washington, said in a telephone interview.
“China asks for companies to go through testing labs that are essentially state-owned, government-owned,” he said. “That’s the sensitive part.”
The regulations are part of a long-running argument between Western technology companies and the Chinese government over the West’s access to Chinese markets. In the last month, China averted another dispute by rolling back a second plan aimed at giving Chinese companies an advantage in government technology purchases.
But foreign companies still contend that the latest regulations will grant Chinese companies an unfair edge in government sales, a comparatively small but growing part of the market here.
They also worry that the disclosure rules will enable Chinese competitors to copy Western technology. When the 2007 certification proposal was first introduced, some Chinese officials cast it as part of a broader campaign to help the nation’s computer-technology companies gain ground against more advanced Western competitors.
In negotiations, Chinese officials have argued that the United States imposes similar disclosure requirements on many advanced technologies. Mr. Neuffer and others said, however, that except for some military and national security technologies, American certification procedures are far less rigorous and are conducted in testing labs independent from the government.
Other foreign critics have called the regulations an example of trade protectionism, in that they would set standards for selling goods to Chinese governments that Western companies find difficult to meet. Many Chinese technology companies have agreed to abide by the rules.
In Beijing, an American industry expert who has negotiated with the Chinese government on the issue said that most American companies were likely to abandon sales to the Chinese government rather than turn over trade secrets. That expert declined to be named because of the sensitivity of the talks with the Chinese.
American industry officials also have argued that the new rules would gut their technology exports, because few other nations would purchase technology whose essential security secrets had been shared with the Chinese government.
Publicly, the United States government has taken a muted stance on the dispute. Nkenge Harmon, a spokeswoman for the United States trade representative in Washington, noted in a statement that the Chinese first planned to apply the rules to all technology purchases, but later scaled them back to apply only to purchases by local, provincial and national governments.
“We were pleased with that decision,” her statement said. “Since then, the U.S. has continued to ask China to follow global norms in this area, and we are continuing those discussions.”
Wacky and counter-intuitive as it may be, the deficit is part of national savings. When the deficit increases, so does national savings. They used to say 'we owe it to ourselves'. Not any more.
That deficit savings number is adjusted for the BOP transfers out. Net imports are a subtract from GDP. Much of the PCE increase is in the increase in the size of net imports, and a lot of the bad news looks so good. Prada and Oil.
I find some of this interesting but there is no way U-6 was 37.6%, ever. Historical records do not support this. Unemployment stats included 14 year olds in the 1930's, male and female. Did this new deal author adjust for that? What is the reality of todays job market is this. Career jobs are vanishing and if a new job is created it is not a career job(min wage). This will have long term effects on the American economy that most people are just now realizing. I find it ironic that millions of college students are trying to become more marketable for a min wage job. They must try, of course, to better there economic situation, but the reality is not a lack of an educated workforce its a gap in opportunities available. I have a couple degrees, so I'm trying not to make any spelling or grammitical errors here, but I am no more marketable than say my spouse who has little formal education but has some skills. Last summer I applied for several teaching jobs one being for a Florida charter school. I am certified to teach in several arears (Science and all Social Studies) so I thought I might stand a reasonable chance. After applying, I contacted the principal who, in turn replied, "you are one of 540 applicants". This was for 3 teaching positions. Sounds like 1930's to me. Hell, The school only had 200 students. The school staff, (2) people, were unable to handle the flood of phone calls and paperwork (7 page application X 540)so they hired a selection team to accomplish the task at hand. All this competition for 3 $35K jobs. Maybe I should have applied for the impending "selection team".
Companys are now learning to do more with less, even if business picks up they can hire "temp" very low paid workers to fill any additional increase in workload, then just lay them off during slowdowns. This is the new way of managing a workforce and it will stay this way for many years to come(10-20 years or more). This is very creepy to dwell on, but this is the new American economy for this generation. In a couple more years back yard BBQ's conversations everywhere will go like this, "Hey Bob what have you been up to?" Bob excited, said, "Well, Jim I had a good week. First I mowed Jane's yard on Monday, then I sub taught on Tuesday and Thursday, on Friday I traded some can goods for 2 gallons of gas and a fan belt and put in 42 job apps, and finally on saturday I did some census work. A $318 week! I wish every week was like this!"
The bottom line is increased consumer expenditures are not a result of increased disposable income. That's why I did a second graph-o-rama on personal income, which has the savings rate.
I saw CR's government transfers but I didn't graph it out. I didn't think it was that significant in comparison to consumer loans, but that's only in March, so 1/3rd of Q1, although we don't have a monthly breakdown of GDP.
Then, on inventories, the claim is those are a build up. Part of that is true, if you look at the graph, but part of it is also reduction, again from the graph.
What I find weird are some of the headlines. I read "business investment drives GDP" and all sorts of stuff, when one can see, it's nominal! Then it seems no one, except this post, talked about the decline in trade. That should not be happening, even if it was an increase in the trade deficit, for global growth. Both decreased. But the decline in U.S. exports is troublesome!
But CR's conclusion that PCE is not sustainable, yes, that's what i wrote in Personal income too, exactly what you're saying, "oh great, let's return to the past". that is what happened before and people uses their home equity as a ATM because the reality is the middle class have been decimated and cannot afford the "lifestyle" (read college, car, clothes).
As per Calculated Risk:
“PCE increased $130.7 billion; Personal Saving declined $88.5 billion and Gov’t social benefits increased $61.1 billion dollars. So the boost in PCE came from the decline in saving and the increase in benefits. That is not sustainable.”
Also, remember RO's observation on 4/25 the incredible spike in “Consumer leading” recorded for March. It seems that some of that first quarter PCE increase is correlated with increase consumer borrowing in March.
CR may be wrong about "sustainability", if March consumer lending continues into April and May, we may well see a similar second quarter increases in PCE and GDP. Also, why are government benefits not sustainable? There are no 'empirical' signs that there are limits on US goverment borrowing. Money the US borrows from China for example can be passed on as 'social benefits.'
What does not seem to be sustainable is unlimited consumer credit. That’s what got us into this mess in the first place- NO?
While I have zero sympathy for the big banks, and have moved my own banking business away from them, I cannot see that "a barter economy for a period of time" would be the sort of no big calamity thing that Jim Donahue presents. I think it would be horrendous for the people subjected to it because it would be, literally, the end of civilization. No taxes as an advantage? Well, no taxes means no public safety personnel (for starters). The chaos and resultant suffering are mind-boggling, and I don't think even the Greeks deserve that.
Who benefits from a bailout there? Which banks are deep into Greece for loans etc? Those would be the losers.
This is what should have happened in the fall of 2008 on a worldwide basis. The big over extended banks should have been allowed to sink.
Whats the worst that could happen? A barter economy for a period of time? Great no taxes.
It would be nice to see some suits starving to death with no real skills that anyone really wants with their artificially created demand dampened. Almost everyone I know knows how to do something that would be in demand.
The banks were and are desperate to avoid seeing anything like that since they would be exposed.
because comments are threaded. I know it's confusing but this will be fixed in the upgrade (which the 2nd one, I hopefully will do this weekend), but you still have to hit reply when replying.
Yeah, it's disgusting, predictable and so high school. I've seen that attitude almost everywhere I go, esp. the more competitive and elite it gets.
It's a very common human trait to want to feel superior to, or better than, other groups of people, and it bespeaks a basic insecurity. In the old Jim Crow south, the most rabid racists were the poor white trash, who absolutely needed to maintain at least one other group (blacks) in a position inferior to their own pathetic lot. So this Wall Street type feels very threatened when his superior self-image is attacked; he just can't stand the idea that he might no longer be the king of the hill, and he spews out his comtempt and his venom on those he has accustomed himself to think of as his inferiors. It's all pretty predictable when you stop and think about it.
There is an email from some Wall Street type, making the rounds that typifies the attitude towards the real people who work for a living.
But all of this reminds me that nothing changes from high school. You still have the bully's, the jocks, the nerds, the outcasts and so on but now the bullies and jocks run Wall Street. Seriously.
Of all the government statistics, it's the job/unemployment/occupational ones that need a complete overhaul.
You point to what I think is the biggest farce about employment statistics; a case study in "lies, damn lies and statistics", the fact that employment statistics are treated as a 'zero sum game'. For example, an administrative assistant making $45,000/year with full benefits gets terminated shows up this month as a 'job lost'. That person then gets a part time job making $7,500/year with no benefits and shows up as a 'job gained' in the next months statistics. One job lost , one job gained = zero sum. But, in terms of 'standard of living', obviously the worker has not 'broke-even.'
WOW! That is a mind boggling graph. I missed it when first posted 4/25. That goes a long way to explaining all the positive economic activity described at Bonddad. But, given the employment numbers and the total personal debt, it seems that the 'bubbles' are coming back. Bubble being wealth created by debt. I think that's what economist call monetizing the debt.
RICO, even if used only to go after Goldman, would quickly
cause the rest of Wall Street to fall in line.
This would be a Wall Street meeting after Goldman got hammered by RICO:
But you can do that as well, if you wish. All of this focus on just Goldman Sachs has me a little disturbed because it was not "just" Goldman Sachs who set this up. But this is good press at least to have a prayer's chance at getting any real financial reform through.
Last read is they are trying to "exempt" (similar to the House bill) pretty much all derivatives trading.
Some of the proposals, I'm not so sure of, such as breaking up a corporation due to it's total percentage of GDP. I think it would be better to do break ups based on contagion. To firewall out these risks which were like dominoes. i.e. commercial and investment banking, separate, then some derivatives should be banned. I have a real problem with those completely ignoring many of these things are mathematical nonsense as well as have computational complexity which makes them impossible to verify. That should be out, period.
Lets see how this plays out.
SEC Refers Goldman case to the Justice Department
in that contracts, perma temps and so on have absolutely nothing and as you point out, the inaccurate tally of those unemployed or without work.
But frankly, while I find it horrific that the unemployment situation is what it is, I find the hiding of those who cannot even get UI or anything even more so.
They are never mentioned and look at that, they are half the total U.S. workforce.
According to the article:
We are probably looking at millions of people losing unemployment benefits in the coming months.
In couple months those 700,000 people hired by the Census are going to lose their jobs as well.
yes, I'm sure that people do get more anxious to get another job when they run out of money. What the study doesn't show is whether they actually get another job.
All governments did was legalize the mafia so corporations and banks could move in and put the mafia out of business.
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