Dale Franks’ QandO posts
Today’s economic statistical releases:
Well, this really isn’t a statistic, as such, but the Dow slipped -300+ at the open, on a pessimistic economic outlook for the US and EU, weak data for the euro zone, and a negative outlook on the US economy from the Federal Reserve. Why the markets are reacting as if any of this is a surprise is beyond me.
Initial claims for unemployment fell -9,000, to a still-unpleasantly-high 423,000. Meanwhile, last weeks claims were revised upward by another 4,000.
The Bloomberg Consumer Comfort Index dropped to –52.1, the worst since the recession "ended" in June, 2009. Note the scare quotes around the word "ended".
The Index of Leading Indicators rose 0.3% last month, though mainly on money supply gains as investors bailed out and went to cash. Which actually isn’t a good sign.
The FHFA home price index in July rose 0.8%. That’s the fourth month in a row the index has risen, so not everything is a complete disaster. We take our good news where we can find it, I guess.
Today’s economic statistical releases:
The market was shocked into stupefaction at an Existing Home Sales release that was stronger than expected. Sales rose by 7.7% to an annual rate of 5.03 million. On a year-over-year basis, sales were up 18.6 %.
The Mortgage Bankers Association reports that purchase applications fell –4.7%, while re-fi apps rose by 2.2%, resulting in a composite index up by 0.6%.
Today’s economic statistical releases:
ICSC-Goldman reports that retail sales fell by –1.2% for the latest week, though the year-on-year rate is on trend at 3.4%. Meanwhile Redbook’s same-store year-on-year sales came in at the low end of the trend at 4.1%.
Housing starts fell -5.0% in August to a lower-than-expected annualized pace of 0.571 million. But, building permits increased by 3.2%, signaling a bit more health in the future. Overall, housing still remains a drag on the larger economy.
Today’s economic statistical releases..well, "release", actually…is the Housing Market Index, which fell one point to 14. It’s been stuck around this level since the Home Buyer Tax Credit expired last June. Even the decline in mortgage rates over the last year hasn’t helped at all. This is also an index where the break-even point is 50, i.e, anything above that is an expansion, while below it is contraction. So, 14 is…bad.
Of course, part of the problem is that, not matter how low mortgage rates are, that doesn’t really help if the bank is demanding to see $200k in cash as security before they give you a $200k loan. Being unable to get a loan, unless you’re so credit-worthy that you don’t need a loan kind of defeats the purpose of mortgage lending. Foreclosures are still high, so banks are still scared to loan money.
Welcome to the world of bad debt overhang.
Note to progressives: Taxing The Rich™ won’t solve this problem. In case you were wondering.
In this podcast, Bruce Michael, and Dale discuss Solyndra affair, and some troubling news from Turkey.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
The Daily Caller is reporting that Solyndra, famed for going belly up and putting the taxpayers on the hook for half a billion dollars, applied for an additional DOE loan for $469 million.
Failed solar panel maker Solyndra’s Securities and Exchange Commission filings show that seven months after the Obama administration’s Department of Energy approved a $535 million federal loan guarantee, Solyndra applied for a second one valued at $469 million.
“On September 11, 2009, we applied for a second loan guarantee from the DOE, in the amount of approximately $469 million, to partially fund Phase II,” Solyndra wrote in a report it filed with the SEC on December 18, 2009. “If we are unable to obtain the DOE guaranteed loan in whole or in part, we intend to fund any financing shortfall with some combination of the proceeds of this offering, cash flows from operations, debt financing and additional equity financing.”
This application went in right after it received the original $535 million from the DOE. So, the question is, what happened to that application? Well, so far, it seems that no one can say.
It’s unclear if the now-bankrupt and scandal-embroiled green energy company actually received a second loan. Department of Energy officials did not immediately respond to The Daily Caller’s request for comment, and the company’s SEC filing left the question open.
So, did Solyndra get that second loan or not? Are we on the hook for more than a billion dollars? It seems like if the answer was "no", the DOE or Obama Administration would be fairly keen on letting us know that.
I’m really curious about this now.
The president’s Green Jobs loan guarantee program, which we’re hearing a lot about, thanks to the Solyndra fiasco, does not appear to be a complete bust. In all fairness, it has to be said that this program has been instrumental in directly creating jobs. Indeed, the Washington Post reports that, after having spent $17.2 billion of the original $38.6 billion appropriated for the green jobs program, the Administration can now claim the creation of 3,545 permanent new jobs as a direct result. That’s 3,545 of our fellow Americans who now have gainful employment, thanks to the Obama Administration’s Green Jobs program. I’m sure they, and their families, are grateful.
Of course, if you do the math, that comes out to a cost of $4,851,904.09 per job. That seems…inefficient. I’m pretty sure that if the government gave me $4.8 million, I could at least double that rate of job creation.
At this rate, once the entire $36.8 billion is spent, we may employ 7,000 people via the Green Jobs program. Or to put it in other terms, 4,000 fewer people than the increase in those who claimed unemployment compensation for the first time this past week.
Today’s economic statistical releases—and there are a number of them, none of them particularly good:
Consumer inflation remains a bit heated with the headline CPI increase at 0.4% for the past month, while the core rate—less food and energy—rose by 0.2%. On a year-over-year basis, inflation rose to 3.8%. worries about Stagflation are not eased by this report.
Business conditions in the New York manufacturing region continue to contract. The Empire State Manufacturing Index fell to -8.82 from last month’s –7.72.
Jobless claims jumped 11,000 in the September 10 week to an unexpectedly high 428,000. The four-week average rose 1,000 to 3.741 million.
Manufacturing slowed significantly in August, as industrial production rose only 0.2%, compared to last month’s 0.9%. Capacity Utilization also fell slightly, to 77.4%.
The nation’s current account deficit narrowed slightly in the second quarter to $118.0 billion.
The Bloomberg Consumer Comfort Index in the September 11 period was -49.3, near this year’s low of -49.4.
The Philadelphia Fed Survey indicates that business conditions in the Mid-Atlantic region continue to contract, with the General Business Conditions Index at –17.5.
There is an implicit, if unspoken consensus among many—if not most—in the economic community of the west that the worst portion of our current economic difficulty is behind us. That the economy, weak and shaky as it may be, has avoided the danger of complete collapse. The opinion holds that we can look forward resignedly, if not confidently, to a period, however long, of subpar economic growth, but growth nonetheless.
I fear that confidence is misplaced. The fiscal and monetary policy mix we seem determined to pursue, is not only unwise, but presents grave economic risks that should not be overlooked. I am not the only one to feel this way. On Monday, Professor Kevin Dowd gave the address shown below at the Adam Smith Institute, the UK’s leading Libertarian think tank. It’s entitled The Decapitalization of the West, and it’s primary theme, as a survey of the economies of the West, and their policy results, can best be encapsulated with the lyrics of a Noel Coward song: " There are bad times just around the corner, There are dark clouds hurtling through the sky".
It takes an hour of your time to watch this. You owe yourself that hour, if for no other reason than to learn how you might prepare for the economic troubles for which 2009 was just a prelude.
"Keynesianism has been tested to destruction," and we’re about to pay the price for that testing.