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|User Info||2012: The Big Suck (2011 Review, 2012 Outlook); entered at 2011-12-27 13:39:44|
Registered: 2009-02-28 DFW, Tx
Look at this crap. The crowing today is about Consumer confidence reading of 64.5. First of all, this index is based on a par reading of 100. The reading before the market went in the tank in 2007 was 111.90, over twice the reading of the month prior to the currently released number (Oct?). This is a recession reading and I believe the index is the percentage of people that rate the current mess plus the number who think it will get better 6 months from now. Reading this from the conference board, I am not sure how they compile this index, but it seems it was the current plus the expectations divided by 2, but that number doesn't work. The link below spells out some things like 6.7% say jobs are plentiful while 41.8% say they are scarce. The point is that it is depressionary to have an index reading as we had the prior few months and this one is what you would expect in the middle of a bad recession. These are near peak readings on this index.
One thing is for certain and that is the LEI is a bunch of bullcrap. Due to its dependence on some fictitious nonsense like M2 expansion, interest rate spreads and the recovery in a stock market that plunges for a year and rallies for 3 to get back to even, produces a fake number. There is no way this indicator works at all now, as we are looking at 118 on the basis of 100 for 2004, which was a recovery year and I believe works off what used to be good and now is poison.
The big thing is what is happening in California. I don't recall the exact statistics, but their unemployment rate dropped something like .3 or .4% on a gain of 6000 jobs. Now 6000 jobs might be a good growth in Wyoming with 1 million people, but for a state with 35 million people, it is a non-change. I am guessing there are around 16 million workers in California, so if yo do the math, 16,000 is 1/10%. This means you would need 50,000 jobs to move the rate down 3/10% of 1%. Either the employment base in California is collapsing and people are leaving the state, or we have just one more doctored piece of statistical data.
As to Japan. The fact they are spending twice what they take in isn't new. It has been going on for close to 2 decades. This is how you get your debt from a small percentage of GDP to over 200%. The only thing Japan has going for it is their government is around that magic 18% of GDP, so they might be able to fix this, but it would probably be by increasing taxes. If they want inflation, a doubling of taxes would be a good start. If they want collapse, keep listening to banker idiots like Richard Koo.