confusing, conflicting economic news

[pippin]

According to one news report:
"net capital inflows into the country fell precipitously, from about US$50 billion (42 billion euros) in August to $4.2 billion in September, the lowest since the near-collapse and bailout of the Long Term Capital Management hedge fund rattled markets in 1998.

The new data are raising fears that the US may have difficulty funding its current-account deficit, which ran at about $46 billion a month in the first half of the year and is expected to reach $550 billion by year-end. The fiscal deficit reached $374 billion in the fiscal year ended in October, by far the largest in US history, although off-budget expenditures could carry that as high as $450 billion. . . . Although foreigners have been financing the current-account deficit for more than a decade, the necessity for exorbitant inflows is finally catching up with the United States. The deteriorating trend in net US portfolio inflows suggests a growing reluctance by foreign private investors to shoulder this burden."

http://www.atimes.com/atimes/Global_Economy/EK22Dj01.html

Today msnbc trumpets the fact tha:

"U.S. economy seen growing faster . . .roared ahead at an astounding 8.2 percent annual rate in the third quarter, the fastest pace in nearly two decades and a much stronger performance than previously thought. It raises hope that a long spell of lackluster business activity is finally over."
http://www.msnbc.com/news/997861.asp?0cv=CB10

We're told this holiday season will bring on the shoppers in droves in one report but another report says sales are down. (how do people who've been bn strike and/ or out of work shop any way??)

What the heck is going on? Who is the public to believe what's spin and what's econonomic reality? :crazy:

[cthrumatrix]

1. it's called trying to buy your way out of "trouble"...if we don't ...

we're dead as an economic entity...and people know this

* our dollar is in shambles becuase of the trade deficit and growing ferderal deficit.

* are debt is not attractive anymore...which means you will need to entice others to buy by raising rates...

* raising rates chokes real estate and makes funding the debt even more expensive

The only way out is massive consumption and tax revenues to pay down the debt. We need a contnious economic boom or else we are in trouble....big trouble. Like the collapse of the dollar.

My views are it is planned already...and the collapse will be blamed on a terror attack to mask the real issues.

[KayLaw]

2. It's tough to follow

After the world was lied to about something as serious as war and the deaths of all those people, I've decided to dig for facts and make personal decisions based on those and my life experiences.

I think all the debt is a problem and worry that cheap money encourages people to make reckless decisions so I have a lot of doubts about the future.

Right now, I just spend as little as possible and save as much as I can. I don't see how I can go wrong with such a plan.

[papau]

3. One qtr of good numbers is not a recovery - it is a campaign plan

But the economy is not dead - and huge deficits - however caused - do give an initial bump to the economy - before all hell breaks lose.

So we should expect about 125000 new jobs created per month - meaning the unemployment rate can not go down from the current 6.0% - but it will because of Bush's new "seasonal adjustments" just before the election - but only down to 5.7 to 5.8%.

And sales this season will be above last year - not much - rather flat.

And GDP growth will be 4.0% 4th qtr - and then drift down toward 3% by the election.

And the thing to remember is that a 5 to 7% Gore victory because of peace and prosperity was made close because of other items in the campaign.

And 2004 is Karma time.

[TreasonousBastard]

4. Well...

I haven't seen the full report, but note that capital spending was up a bit, which is good news, but state and local gummint spending were also up, which is not necessarily good news. Means higher local taxes or more federal subsidies, and more debt.

It's pretty much up to consumer spending this holidy season, which might or might not be up. Haven't seen any numbers on personal income, which would be part of the key. Note that that last quarter spending was largely fueled by tax-bribe checks, and that flood of cash isn't around any more. Mortgage refinance and credit card funny money has pretty much dried up, too. We're pretty much maxed out on personal credit.

The current account is a huge problem. The only way out of that is to balance imports and exports and a net cash outflow while that's going on. That means massive additions to the debt for a while if we don't get more foreign money coming in.

As usal, Washington trumpets the good news and downplays the bad, and time will tell.

[John_Shadows_1]

5. We're trying to lower the trade deficit...

... but the drying up of foreign capital can't be offset in the near-term - it could drive interest rates up (to attract money to fund the debt), and could turn into a real disaster.

This is the weak point of our economy - We import more than we export , and we try to make up the difference with foreign investment in our financial markets - what happens if this dries up? And btw, Greenspan addressed this last week.

[cthrumatrix]

6. Robert Rubin was on with Maria Bartiroma last night on CNBC

and basically shared the very negative view of our financial picture.

He said he had been "debate coaching" Clark and others and feels we need new leadership...I was surprised he was so "upfront"

[John_Shadows_1]

7. although, it should be said ....

... Rubin isn't exactly clean himself - you should read "The Roaring Nineties" by Joseph Stiglitz. It gives a really good account of how Clinton's progressive priorities were derailed by Rubin and the guys at treasury. Rubin is also chair of Citigroup, one of the most vile and corrupt corporations on the face of the planet.

On the other hand, Clinton did balance the budget on Rubin's advice.

[kcwayne]

8. There is a direct relationship between the two realities

Capital inflows decrease because

1) Our trade deficit is expanding, no one is buying our stuff
2) Our interest rates are low, we are not an attactive investment
3) Stock market is corrupt and wallowing. Who wants to put their
money into US companies right now?
4) Our companies are not re-investing here, and capital investment
has fallen off. (Check the capital inflows to China or India...,
that is where business investment is occurring now)

GDP grew the last quarter because

1) Massive expenditures on military goods by the government
2) Labor costs as a component of finished goods is falling
dramatically, because the labor is outsourced and we are
buying cheap components for finished goods that are built
offshore. Increases trade deficit, but makes productivity
numbers soar.

Cheering for GDP growth under the current economic environment is like cheering for the executioner because he oiled the rails of the Guillotine. This GDP growth is not healthy, because it is a measure of the dislocation of our economy to other nations.

The real GDP that should be considered should only reflect American companies that produce product here, and should have the imported goods removed from the value of the GDP. For example, the output of Levi is included in the GDP numbers, but Levi doesn't produce jeans here anymore, they have become a sales and marketing organization that use offshore production exclusively.

[John_Shadows_1]

9. one other factor for growth...

... was all the refinancing that went on due to low interest rates.

Oh, and much of the expansion took place as growth in investment in oil and coal companies.

[Skittles]

10. IT'S CALLED BULLSHIT

we are being fed BULLSHIT in the hopes we will all head to the malls and shop our asses off.

[leftchick]

11. or HORSESHIT!

any way you look at it it is republiCON SHIT to make you spend when you shouldn't, go into debt, lose one of those great jobs you just got in October, file backruptcy, foreclose on your house. We are well on the way to no medicaid or medicare, welfare and social security! NO Social Programs left!........on and on it goes till we are back to the Gilded Age of the Have and Have nots. Extra clue, WE are to be the Have Nots! Fuckers, all of them....

[tom_paine]

12. It's called Lying Like the Old Soviet Union

The Busheviks, and now the agencies they have purged and now control, are as trustworthy as a Soviet Toilet Paper Production Report

"Pay no attention of the sorties of 6-hour lines! Lies made up by our enemies! Just an occasional aberration that will be strightened out soon, Comrades!"

Bah!