Real GDP growth for 2Q 2013 was revised to an annualized 2.5% from the initial estimate of 1.7%. The GDP Price Index was revised to 0.8%.
Initial claims for unemployment last week fell 6,000 to 331,000. The 4-week moving average rose 2,500 to 330,500. Continuing claims fell 14,000 to 2.989 million.
Corporate profits in 2Q 2013 were $1.830 trillion, up from $1.785 trillion in 1Q.
The Bloomberg Consumer Comfort Index continued to fall sharply, down almost -3 points to -31.7, a 4-month low.
The Fed’s balance sheet fell $-1.2 billion last week, with total assets of $3.644 trillion. Reserve Bank credit increased $12.0 billion.
The Fed reports that M2 Money Supply fell by $-18.3 billion last week.
The shaky coalition of Western nations promising to strike Syria for its alleged use of chemical weapons is getting even shakier. In the UK, Prime Minister David Cameron is reconsidering:
David Cameron backed down and agreed to delay a military attack on Syria following a growing revolt over the UK’s rushed response to the crisis on Wednesday night.
The Prime Minister has now said he will wait for a report by United Nations weapons inspectors before seeking the approval of MPs for “direct British involvement” in the Syrian intervention.
Oh look … Cameron plans on getting the approval of Parliament before committing British troops to war.
That’s because opposition British politicians apparently play hardball while ours … well they talk and complain a lot:
Senior sources had previously suggested that Britain would take part in strikes as soon as this weekend which meant an emergency recall of Parliament was necessary on Thursday.
However, following Labour threatening not to support the action and senior military figures expressing concerns over the wisdom of the mission, the Prime Minister on Wednesday night agreed to put British involvement on hold.
The climbdown is likely to be seen as an embarrassment for Mr Cameron as he was determined to play a leading role in British military strikes, which had been expected this weekend.
France too is showing signs of waffling:
French President Francois Hollande said on Thursday that Syria needed a political solution, but that could only happen if the international community could halt killings like last week’s chemical attack and better support the opposition.
Hollande sounded a more cautious note than earlier in the week, when he said France stood ready to punish those behind the apparent poison gas attack that killed hundreds of civilians in Damascus.
He indicated that France was looking to Gulf Arab countries to step up their military support to the opposition to President Bashar al-Assad, after Paris said this week it would do so.
Not exactly the saber rattling that was going on a few days ago. It appears a “political solution” may be code words for “yeah, we’re climbing down too.”
Don’t expect a climbdown here. At least not anytime soon. Not only has President Obama said he doesn’t need Congress’s approval, he’s also decided he doesn’t need to inform the American people of his decision via a televised Oval Office announcement. However he would like the cover of a coalition (my, the shadenfreude here is delicious, isn’t it?).
If one had to guess, however, any strike this week would be sans the British and the French. And that may be enough to delay an American strike (don’t forget, President Obama claims he hasn’t made a decision yet).
Meanwhile in the Med, tensions spiral up as Russia decides to flex a little naval muscle in the area:
Russia will “over the next few days” be sending an anti-submarine ship and a missile cruiser to the Mediterranean as the West prepares for possible strikes against Syria, the Interfax news agency said on Thursday.
“The well-known situation shaping up in the eastern Mediterranean called for certain corrections to the make-up of the naval forces,” a source in the Russian General Staff told Interfax.
Interesting. And, if the strikes don’t happen now, who will claim to have helped call the coalition’s bluff?
As with most things concerning foreign affairs that this administration involves itself, this is turning into a debacle of major proportion.
This week, I present you with a $17,000 car that in a number of ways, drives exactly like a Ferrari 458 Speciale. It is, without a doubt, the car that Star Trek’s Mr. Spock would buy.
The following US economic statistics were announced today:
The MBA reports mortgages dropped -2.5% last week, with purchases climbing 2.0%, but re-fis falling 5.0%.
The Pending Home Sales Index declined 1.3% to 109.5 in July, as higher prices and mortgage rates began hitting the housing industry.
One of the first things any military commander must do is define the mission clearly and succinctly. It must have a goal and that goal must be achievable with the assets the commander is willing or able to commit to the mission.
What it shouldn’t be is some nebulous one-over-the-world hand wave of a mission driven by politics and open to interpretation. Unfortunately, it appears that’s precisely the type mission the Obama administration is ginning up for Syria according to the NY Times:
President Obama is considering military action against Syria that is intended to “deter and degrade” President Bashar al-Assad’s government’s ability to launch chemical weapons, but is not aimed at ousting Mr. Assad from power or forcing him to the negotiating table, administration officials said Tuesday.
“Deter and degrade” are open to interpretation and Syria could and likely would initiate another chemical attack after the US attacks just to point out that they’re neither deterred or degraded.
Here’s the problem:
The strikes would instead be aimed at military units that have carried out chemical attacks, the headquarters overseeing the effort and the rockets and artillery that have launched the attacks, according to the options being reviewed within the administration.
An American official said that the initial target lists included fewer than 50 sites, including air bases where Syria’s Russian-made attack helicopters are deployed. The list includes command and control centers as well as a variety of conventional military targets.
A) We’ve told them where we’ll strike. Since it is a limited strike and it is going to be against specific units, Syria has the option of dispersing them, an option I’m sure they’ll take. They’ll also likely disperse them in to highly populated urban areas where they can.
B) We’ve told them what we’re going to strike. Since they have thousands of artillery pieces capable of firing chemical shells, it is unlikely a limited strike is going to even seriously dent that capability. Moving artillery into the cities would likely deter the US more than the US would deter Syria. Helicopters can be moved as well. They don’t need long runways. Other aircraft will be dispersed And finally, command and control are easily moved and dispersed.
C) We’ve told them how we’re going to strike. It is clear that if an attack does happen it is not something that is supported by the majority of the American people for various reasons. Couple that with a seemingly risk averse commander and you can pretty well define how this will happen – missiles. Specifically Tomahawk missiles. Given our history of their use, you can pretty much guess at what and where they’ll be aimed.
D) We’ve pretty well told them it won’t be much of a strike.
Perhaps two to three missiles would be aimed at each site, a far more limited unleashing of American military power than past air campaigns over Kosovo or Libya.
Well even the administration knows this is a recipe for failure so they immediately engage is a classic attempt to lower expectations:
Some of the targets would be “dual use” systems, like artillery that is capable of firing chemical weapons as well as conventional rounds. Taking out those artillery batteries would degrade to some extent the government’s conventional force — but would hardly cripple Mr. Assad’s sizable military infrastructure and forces unless the air campaign went on for days or even weeks.
The goal of the operation is “not about regime change,” a State Department spokeswoman, Marie Harf, said Tuesday. Seeking to reassure the public that the United States would not be drawn into a civil war in the Middle East, and perhaps to lower expectations of what the attack might accomplish, Obama administration officials acknowledged that their action would not accomplish Mr. Obama’s repeated demand that Mr. Assad step down.
And what would we accomplish? Well likely the opposite of what we hoped would happen – deterrence and degradation. Assad would be invited to prove the US wasn’t successful in either by doing what? Using chemical weapons once again. His reasoning would be that since he’s being accused of doing so, and supposedly punished for doing so, there’s no reason not to do it again.
The following US economic statistics were announced today:
ICSC-Goldman Store Sales still look weak, with a 0.2% increase for the week, and 1.9% annual increase. Redbook, on the hand, reports a stronger 3.8% year-on-year same-store sales increase.
The S&P/Case-Shiller home price index rose 0.9% in June, a 12.1% increase from last year.
The Conference Board’s consumer confidence index rose 1.2 points to 81.5 in August.
The Richmond Fed Manufacturing Index rose sharply from -11 to 14 in August as business activity picked up in the mid-Atlantic district.
Confidence among institutional investors remains high, though it declined a bit from 107.6 to 105.1 in August.
Government abuse: not surprising, not unexpected, but certainly something that needs to be stopped – now!
This has been in the news recently and now it is getting some Congressional attention. It has to do with possible illegal activities involving the NSA and DEA. As you know, the NSA’s job is to focus outside the US, not inside, and primarily on enemies of the United States, not it’s citizens:
Eight Democratic senators and congressmen have asked Attorney General Eric Holder to answer questions about a Reuters report that the National Security Agency supplies the Drug Enforcement Administration with intelligence information used to make non-terrorism cases against American citizens.
The August report revealed that a secretive DEA unit passes the NSA information to agents in the field, including those from the Internal Revenue Service, the FBI and Homeland Security, with instructions to never disclose the original source, even in court. In most cases, the NSA tips involve drugs, money laundering and organized crime, not terrorism.
Five Democrats in the Senate and three senior Democrats on the House Judiciary Committee submitted questions to Holder about the NSA-DEA relationship, joining two prominent Republicans who have expressed concerns. The matter will be discussed during classified briefings scheduled for September, Republican and Democratic aides said.
“These allegations raise serious concerns that gaps in the policy and law are allowing overreach by the federal government’s intelligence gathering apparatus,” wrote the senators – Tammy Baldwin of Wisconsin, Ron Wyden of Oregon, Tom Udall of New Mexico, Richard Blumenthal of Connecticut and Sherrod Brown of Ohio.
Why, other than the fact that the NSA has no charter or permission to pass its information about American citizens on to other agencies, is this important?
The Reuters reports cited internal documents that show how DEA’s Special Operations Division funnels information from overseas NSA intercepts, domestic wiretaps, informants and a large DEA database of telephone records to authorities nationwide to help them launch criminal investigations of Americans.
The documents show that agents have been trained to conceal how such investigations truly begin – to “recreate” the investigative trail to effectively cover up the original source of the information, raising questions about whether exculpatory information might be withheld from defendants at trial.
The internal documents describe the process of recreating the evidence trail to omit any reference to the Special Operations Division as “parallel construction.” For example, agents said in interviews, they act as if a drug investigation began with a traffic stop for speeding or a broken taillight, instead of a tip passed from the NSA. An IRS document describes a similar process for tax agency investigators.
Emphasis mine. So not only is passing such information to these agencies unauthorized, the government then instructs its agents on how to lie about the source of their information (a lie of omission). And, of course, it is also legitimate to ask whether or not exculpatory evidence could also have been available but not passed to these agencies.
Is this really the type government we want? One that spies on us, intercepts our electronic messages and phone calls and uses them secretly by passing what should be private to various other government agencies and then lies about it? Peggy Noonan addresses those questions quite directly today:
If the citizens of the United States don’t put up a halting hand, the government can’t be expected to. It is in the nature of security professionals to always want more, and since their mission is worthy they’re less likely to have constitutional qualms, to dwell on such abstractions as abuse of the Fourth Amendment and the impact of that abuse on the First.
If you assume all the information that can and will be gleaned will be confined to NSA and national security purposes, you are not sufficiently imaginative or informed. If you believe the information will never be used wrongly or recklessly, you are touchingly innocent.
If you assume you can trust the administration on this issue you are not following the bouncing ball, from Director of National Intelligence James Clapper, who told Congress under oath the NSA didn’t gather “any type of data at all on millions or hundreds of millions of Americans” (he later had to apologize) to President Obama, who told Jay Leno: “We don’t have a domestic program.” What we do have, the president said, is “some mechanism that can track a phone number or an email address that is connected to a terrorist attack.”
Oh, we have more than that.
Almost every politician in America lives in fear of one big thing: a terrorist attack they can later be accused of not having done everything to stop. And so they’ll do anything. They are looking to preserve their political viability and historical standing. We, as citizens, must keep other things in mind, such as the rights we are born with as Americans, one of which is privacy.
Lord Acton nailed it when he said “Power corrupts …”. We’re currently in the midst of watching exactly that happen to an even greater degree than in the past. If you give government power, it will do everything it can to expand that power – whether legitimately or illegitimately. It is the nature of the beast. And we have to put up a hand to stop it.
If you’re wondering why the Tea Party is characterized in such nasty ways by the establishment of both parties, it is because it does indeed attempt to put up a hand to stop these sorts of abuses and remove power from the abusers. They threaten the very base of power the political establishment has worked so hard to build over the years.
Here are today’s statistics on the state of the economy:
Durable goods orders fell -7.3% in July, with ex-transportation orders down -0.6%. On a year-over-year basis, orders are down -0.3%, but ex-transportation orders are up 5.9%.
The Dallas Fed Manufacturing Survey shows overall business activity in Texas rose 0.6 points to 5.0, but the production index fell 4.1 points to 7.3.
That’s certainly one of the factors keeping GDP growth low.
Four years into the economic recovery, U.S. workers’ pay still isn’t even keeping up with inflation. The average hourly pay for a nongovernment, non-supervisory worker, adjusted for price increases, declined to $8.77 last month from $8.85 at the end of the recession in June 2009, Labor Department data show.
Stagnant wages erode the spending power of consumers. That means it is harder for them to make purchases ranging from refrigerators to restaurant meals that account for most of the nation’s economic growth.
Not only that, but unemployment remains historically high years after the “recovery”. The question, however, is why wages are remaining stagnant. The WSJ cites three factors:
Economic growth remains sluggish, advancing at a seasonally adjusted annual pace of less than 2% for three straight quarters—below the prerecession average of 3.5%. That effectively has put a lid on inflation, which has been near or below the 2% level the Federal Reserve considers healthy for the economy. With demand for labor low, prices not rising fast and 11.5 million unemployed searching for work, employers aren’t under pressure to raise wages to retain or attract workers.
Emphasis mine. The Fed is happy with the inflation rate. And the administration, despite numerous claims to be focused like a laser beam on “j-0-b-s” has done little if anything to address unemployment or economic growth. Finally, given the uncertainty that regulation and new laws (such as ObamaCare) bring to the table, employers are even less likely to hire until the regulatory and legal dust settles and they have a much better idea of how both effect their business and industry. It’s not about “pressure”. It’s about a lack of incentive.
Businesses are changing how they manage payrolls. Economists at the Federal Reserve Bank of San Francisco in a recent paper said that, in the past, companies cut wages when the economy struggled and raised them amid expansions. But in the past three recessions since 1986—and especially the 2007-2009 downturn—companies minimized wage cuts and instead let workers go to keep remaining workers happy. As a result, to compensate for the wage cuts that never were made, businesses now may be capping wage growth. “As the economy recovers, pent-up wage cuts will probably continue to slow wage growth long after the unemployment rate has returned to more normal levels,” the researchers said.
Another point to make, again considering the unemployment rate, is that those working are glad to still have a job. And with the economy still struggling it is unlikely that many feel the time right to push for higher wages. In fact, it is a “buyers market” right now when it comes to labor. And it will remain one until we get into much higher growth percentages and the demand for labor begins to outstrip the supply. We’re not even close to that at this point.
Globalization continues to pressure wages. Thanks to new technologies, Americans are increasingly competing with workers world-wide. “We are on a long-term adjustment, as China, in particular, but all developing countries, get their wages closer to ours,” said Richard Freeman, an economist at Harvard University. According to Boston Consulting Group, there will be only a roughly 10% cost difference between the U.S. and China in making products such as machinery, furniture and plastics by 2015.
Technology is also replacing workers in many industries. Automation is especially tough on low skilled workers. But again, given laws like ObamaCare, the incentive at work is to have fewer employees, not more. Businesses will automate where it makes sense and helps make a profit. It is also a means of closing that wage gap mentioned above, so it isn’t a trend that is likely to end anytime soon.
All of those factors and what I’ve mentioned in addition to them combine to make unemployment and wage growth both remain static. There simply aren’t any incentives at the moment to hire more people. Certainly not in GDP growth. Certainly not with the plethora of new regulations and laws.
In fact, as is mentioned in the article, at the moment there are only two paths to higher wages:
The only path to wage gains is through a stronger economy or an increase in demand for specialized skills.
The economy is moribund and has been for quite some time with GDP growth under 2% for the last three quarters.
That narrows the path to wage gains to a single one – developing specialized skills. It isn’t a path open to everyone, unfortunately, for a number of reasons.
So how could government help change all of that? Quite simply by getting out of the way – something it seems completely unable to comprehend or do.
And because of that, it continues to contribute negatively to the economic situation we endure.
This week, Michael, and Dale discuss Syria, the NSA, and tiptoe ever so carefully around the subject of race in America.
The direct link to the podcast can be found here.
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