25IQ

Bernanke: “Globally, both growth and trade are unbalanced. Because a strong expansion in the emerging- market economies will ultimately depend on a recovery in the more advanced economies, this pattern of two-speed growth might very well be resolved in favor of slow growth for everyone if the recovery in the advanced economies falls short…. “On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for many years. As a society, we should find that outcome unacceptable.”  

While Bernanke didn’t identify China in his speech, he took aim at “large, systemically important countries with persistent current-account surpluses.”   http://www.bloomberg.com/news/2010-11-19/bernanke-takes-defense-of-monetary-stimulus-abroad-turns-tables-on-china.html

Federal Reserve Chairman Ben Bernanke put aside traditional central bank niceties and launched a direct attack on the slow pace of China’s steps to strengthen its currency. http://www.businessinsider.com/paul-tudor-jones-bernankes-speech-china-currency-manipulator-2010-11#ixzz15lIlA4x6

Kessler: “Without another $600 billion floating through the economy, Mr. Bernanke must believe that real estate (residential and commercial) would quickly drop, endangering banks.” http://online.wsj.com/article/SB10001424052748704648604575621093223928682.html?mod=googlenews_wsj

It’s fine to collect 20% a year’s worth of carry trade interest, but not if long term rates suddenly move up. A 2% rise at 10 times leverage would result in a 33% capital loss, or more precisely, a wipeout.  A year ago this carry trade looked to be about $500 billion and I suspect it has grown since then.  http://blogs.forbes.com/investor/2010/11/16/bernanke-to-banks-unwind-your-carry-trades-now/

S&P 500 earnings  http://www.ritholtz.com/blog/2010/11/q3-earnings-in-the-books/

So long as China’s credit growth continues at its current pace, aided by the liquidity the Fed is flooding world markets with, and encouraged by artificially low interest rates, the primary risk EMs face today remains that of a bubble http://ftalphaville.ft.com/blog/2010/11/19/411396/bursting-bubbles/

Slouching eagle, surging dragon  - American core CPI fell to 0.6% in October—its lowest level since records began in 1957. The chart at the upper right plots this alongside Chinese CPI, which increased to 4.4% in October, up from 3.6% in September, and now stands at its highest since 2008. That’s partly due to food, which accounts for a third of the Chinese CPI basket. http://www.economist.com/blogs/freeexchange/2010/11/inflation_2

The People’s Bank of China yesterday ordered a 50 basis point increase in the amount of money that lenders must set aside, two days after the cabinet announced measures to tackle inflation. http://www.bloomberg.com/news/2010-11-19/china-will-inevitably-raise-rates-as-wen-battles-prices-economists-say.html

the European Union’s statistics agency increased its estimate of Greece’s 2009 budget deficit to 15.4 percent of G.D.P. from 13.6 percent previously. That meant more pain would be needed to put the budget on track for a deficit smaller than 3 percent of G.D.P. by 2014, as stipulated in the country’s $140 billion rescue package. http://www.nytimes.com/2010/11/19/business/global/19euro.html?ref=business 

The O.E.C.D. said that world growth would slow to 4.2 percent in 2011 from 4.6 percent this year, and then return to 4.6 percent in 2012…. In the United States, growth was projected to rise to 2.2 percent in 2011 and then to 3.1 percent in 2012. For the euro zone, growth was forecast at 1.7 percent in 2011 and 2 percent the year after, while in Japan, gross domestic product was forecast to expand 1.7 percent in 2011 and 1.3 percent in 2012.  http://www.nytimes.com/2010/11/19/business/global/19oecd.html?ref=business

By 2050 Goldman Sachs expects it to have been overtaken by India, Brazil, Indonesia, Mexico and Turkey too. Takashi Inoguchi, a Japanese political scientist, bleakly refers to Japan as a potential “Argentina of the east”  http://www.economist.com/node/17492790?story_id=17492790&fsrc=scn/tw/te/rss/pe

“Pretty charts and fancy theories aside, the bottom line is that nobody has any idea what will happen in a world so globalized that every non-US decision actually matters now. Where before the “ROW” was a simple category, that is no longer the case. And to assume that anyone has any grasp over the infinity of variables that determine the reality of the 95% of world population not residing within the US (which in addition to their own unique financial and economic uniqueness, also has a distinct culture, tradition and history) is beyond naive.  http://www.zerohedge.com/article/socgen-presents-its-vision-future-several-pretty-charts

U.S. Labor Department reported that initial jobless claims increased less than forecast to 439,000 in the week ended Nov. 13. The total number of people collecting unemployment insurance dropped to the lowest level in two years, while those receiving extended payments climbed, the department said in Washington today.  http://www.bloomberg.com/news/2010-11-18/treasuries-fall-as-government-prepares-to-announce-sizes-of-debt-auctions.html

Extending unemployment benefits http://rortybomb.wordpress.com/2010/11/17/car-breaks-down-shows-the-importance-of-extending-unemployment-benefits/

The House of Representatives on Thursday voted down a measure that would have reauthorized extended unemployment insurance for another three months, leaving no clear path forward to prevent the benefits from lapsing as scheduled on Nov 30. Without a reauthorization, the Labor Department estimates that two million long-term unemployed will prematurely stop receiving benefits before the end of the year. http://www.huffingtonpost.com/2010/11/18/unemployment-extension-de_n_785566.html?ir=Business

NYT: Delinquency Rate on Mortgages Dropped in Quarter [but a]rising rate of new foreclosure applications.

According to Reuters data, cities and states canceled $3 billion in planned bond sales, or more than 10 percent of the $24.4 billion of issues in the pipeline. At the same time, prices have been falling rapidly, with investors demanding roughly half a percentage point more in yield than they did earlier this month because they perceive that risk has risen significantly in the past two weeks.  http://dealbook.nytimes.com/2010/11/18/the-fear-factor-in-the-muni-bond-market/

Ten-year note yields were near a three-month high as the index of U.S. leading indicators rose for a fourth consecutive month and mid-Atlantic manufacturing surged  http://www.bloomberg.com/news/2010-11-18/treasuries-fall-as-government-prepares-to-announce-sizes-of-debt-auctions.html

tylercowen tweet: Ireland made a *credible commitment* to low corporate taxes, which is actually a hidden form of *leverage*

Irish bank rescue could cost over 100 bln euros http://www.breakingviews.com/2010/11/17/irish%20banks.aspx?sg=nytimes

Completion Rates by Ad Format over Time  http://adage.com/digitalnext/article?article_id=147008

“For a long time I thought I didn’t want to be CEO of a venture-funded company,” [Twitter’s] Williams said. “It’s kind of a sucky job.” http://venturebeat.com/2010/11/17/twitter-ev-williams-ceo-kind-of-sucky/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Venturebeat+%28VentureBeat%29

Top 10 Lies Entrepreneurs Tell VCs http://blogs.wsj.com/tech-europe/2010/11/17/the-top-10-lies-entrepreneurs-tell-vcs/

[This first item below, which excludes food and energy inflation, reminds me of the old joke about shooting 80 in golf except for puts.  Inflation is low unless you use energy.  Or are poor and food is for that reason a large part of your income.  Starbucks pumped up the price of soy in a beverage today by a dime.]

“…The Consumer Price Index rose 0.2 percent last month after edging up 0.1 percent in September, the Labor Department said. Economists had expected a 0.3 percent gain. Excluding food and energy costs, prices were flat for a third straight month and the increase from a year ago of 0.6 percent was the smallest since records started in 1957….”  http://www.reuters.com/article/idUSTRE6AG2QI20101117 

In October, overall consumer prices were lifted by a 4.6 percent jump in gasoline prices, which built on a September increase of 1.6 percent. Food prices rose by a muted 0.1 percent after gaining 0.3 percent in September. http://www.reuters.com/article/idUSTRE6AG2QI20101117?pageNumber=2

Food import bills for the world’s poorest countries are predicted to rise 11 percent in 2010 and by 20 percent for low-income food-deficit countries.  http://www.fao.org/news/story/en/item/47733/icode/

inflation typically exhibits a six to eight quarter lag to economic output. In light of this relationship, it makes sense that core inflation has stalled-out to its current degree, because it is a lagged reaction to the sharp economic contraction which was occurring in the Q4 2008 to Q2 2009 period http://www.businessinsider.com/will-the-cpi-rebound-2010-11#ixzz15agPjezC

Stiglitz interview: http://www.dailyfinance.com/story/dailyfinance-joseph-stiglitz-interview-transcript/19684345/?icid=sphere_copyright&icid=sphere_copyright

Total housing starts were at 519 thousand (SAAR) in October, down 11.7% from the revised September rate of 588 thousand, and just up 9% from the all time record low in April 2009 of 477 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959).  http://www.calculatedriskblog.com/2010/11/housing-starts-decline-in-october.html

In the second quarter of 2010, U.S. single-family home prices rose an average of 3.6 percent over the year-ago quarter, driven by strong price increases in relatively high-priced markets, such as San Diego, Washington, D.C., and the San Francisco Bay Area. But despite the gain in the national average, prices actually fell in 70 percent of the 384 metro areas, compared to the 2009 second quarter. Many markets experienced double-digit drops, including Detroit; Boise, Idaho; Reno, Nev. and many smaller markets in Florida and Oregon.  http://www.marketwatch.com/story/fiserv-case-shiller-home-price-insights-us-single-family-home-prices-up-36-percent-but-double-dip-decline-expected-in-many-markets-2010-11-15?reflink=MW_news_stmp

muni bond meltdown: http://www.distressed-debt-investing.com/2010/11/what-in-gods-name-is-going-on-in-muni.html

zerohedge Moody’s Downgrades San Francisco To Aa2 From Aa1, As Muni Maul Goes Mainstream http://bit.ly/d7zBPS

Ms. Bartsch of Morgan Stanley said that fund managers were having to get used to the idea that bonds from some European countries have taken on the characteristics of emerging market debt.  http://www.nytimes.com/2010/11/18/business/global/18zone.html?pagewanted=2&_r=1&hp

“… there was growing evidence that {Irish] bank deposits were dwindling, after Irish Life & Permanent said corporate customers had withdrawn €600m – more than 11 per cent of the total – over a matter of weeks in August and September. Bank of Ireland reported a similar trend last week and Allied Irish Banks, which is due to release third-quarter results by Friday, is expected to have been hit by a similar exodus…. Credit analysts at Société Générale on Wednesday forecast that an Irish bail-out would involve the imposition of forced discounts on Allied Irish subordinated bonds along the lines of the 80 per cent haircut being pushed through at Anglo Irish   http://www.ft.com/cms/s/0/28d67dca-f285-11df-a2f3-00144feab49a.html#axzz15a9Sm08u

“… I’m not saying we’re in an undead homicidal zombie market, though we may be. But here’s an example of what the Pet Sematary market is capable of in terms of unintended consequences: QE inflates all asset prices, including commodities. This pressures the Chinese consumer, who we are relying on to pull us all out of this mess, who can suddenly not afford his new LCD TV because his Moo Shu pork is costing 20% more than it used to. Changes in commodity prices have a much greater impact on his consumption than Joe Schmoe in Idaho, with his low cost high fructose corn syrup and processed trans fat diet…” http://ultimibarbarorum.com/2010/11/16/quantitative-queasing/ 

“…Agricultural commodity prices have soared 60 percent in the past five months, according to Capital Economics. A U.S. government farm price index rose 8 percent last month, Nomura Securities said in a note to clients….Kraft Foods said last week that it boosted prices for many of its products to offset more expensive ingredients like sugar and wheat. Some ingredients were 20 percent to 30 percent more expensive from a year earlier, the company said. http://www.businessweek.com/ap/financialnews/D9JH7BDO0.htm

Bloomberg: The best second-half for commodities in a generation is pushing U.S. farm incomes and agricultural land prices toward record highs.  http://www.bloomberg.com/news/2010-11-15/farm-economy-heading-for-record-u-s-profits-pushes-cropland-values-up-10-.html

China is considering a package of price controls and other measures to contain inflation which rose sharply last month and has become the principal risk to the economy. The National Development and Reform Commission, China’s main economic planning body, is putting together a “one-two punch” of policies to limit food inflation, state media reported on Tuesday, in a sign that debate is breaking out over how to tackle rising prices, while two officials in Beijing also confirmed this week that the government was looking again at price controls. Consumer price inflation rose to 4.4 per cent in October, well above the government’s 3 per cent target, after food prices increased at an annualised rate of 10.1 per cent over the month.  http://www.ft.com/cms/s/0/a49d39f4-f17b-11df-8609-00144feab49a.html#axzz15SxNjo00

“…this isn’t just a Chinese problem. 40% of the world’s population, found in China, India, and Brazil, is seeing their food prices skyrocket as a result of price inflation. Note India’s has actually decreased, but remains close to double digit territory. see chart here: http://www.businessinsider.com/the-food-inflation-nightmare-is-about-to-hit-40-of-the-worlds-people-2010-11#ixzz15SyhfQJ3

“… the American economy appears to barely be able to keep joblessness from rising further. US unemployment has held steady at 9.6% since August. For the three months ending in September, GDP grew at annual rate of 2% — still a bit short from the 3% minimum needed to solidly keep the jobless rate from trending up…. But the economy needs to grow at more than double that rate — 5% — in order to shrink the unemployment rate by just one percentage point. … Many economists, including former OMB director Peter Orszag, expect GDP growth to slow for the next 12 to 24 months — Orszag says growth of 0%-2% is actually a best-case scenario.  http://finance.fortune.cnn.com/2010/11/16/what-it-really-takes-to-get-unemployment-down/

muni bonds “dive, dive, dive”: http://www.bespokeinvest.com/thinkbig/2010/11/16/munis-continue-collapse.html

S&P National AMT-Free Municipal Bond Fund (MUB) which has been selling off of late. It is down 5.5% since peaking on August 25th which compares to a drop of 2.46% for the iShares Barclays 7-10 Year Treasury Bond Fund (IEF) which appears to be the closest treasury ETF in terms of maturity. These moves would not be a big deal for equities but bonds are a different story.  http://randomroger.blogspot.com/2010/11/muni-bund-etfs-in-trouble-no-kidding.html

[The way these FOREX firms "play" stupid retail investors investing in currencies was described in   Reminiscences of a Stock Operator, by Edwin Lefevre] See  http://ftalphaville.ft.com/blog/2009/11/02/80866/the-100bn-fx-hustle/    

• Mutual Fund Outflows: Market declines plus capital withdrawals totaled $2.533 trillion — about 31.1% of their 2007 value.• Pension funds lost 17.9% of their 2007 asset value; Insurance companies experienced an 8.6% contraction. (Pension funds are 39.9% of total institutional assets)  http://www.ritholtz.com/blog/2010/11/institutional-investors/

High Frequency trading (HFT) video satire (Xtranormal)  http://www.zerohedge.com/article/next-xtranormal-docket-hft-explained-cartoons

social psychologist Amy Cuddy of Harvard Business School, who recently produced research suggesting that people are likely to see someone as competent if they’ve demonstrated expertise in just one area, even if they later display incompetence elsewhere. So whereas Andreessen and Horowitz are great technologists, the jury is still out on whether they’re investment geniuses. You be the judge on whether they’re overhyped.   http://www.pehub.com/88244/week-in-review/

Ask anyone who knows Silicon Valley venture capitalist and PayPal co-founder Peter Thiel and the first thing they will tell you is that he’s really, really smart. Ask the same people why it is, then, that Thiel’s hedge fund, Clarium Capital Management, is on track to suffer its third year of negative returns… down 17 percent this year, compared to average industry returns of 3 percent. Last year, Thiel’s firm lost a whopping 25 percent at a time when most funds were up by double digits. http://www.nypost.com/p/news/business/thiel_pay_pall_dlVabvgQ55otqWh2oPPmKN#ixzz15IBLr6Dj

My friends have seen the Clarium (Thiel) position reports for 5 years. Their opinion is that Peter has always been a gambler. From the looks of Peter’s return curve and the recent results, gamblers have cold streaks. In reading Peter’s thoughts about the US dollar in this piece, Peter does not seem confident about his strong dollar position.  http://howardlindzon.com/managing-money-is-hard-ask-peter-thiel/

Salmon: “…Markets have definitely been distorted by QE2. …a screenshot from Reuters’s brilliant interactive graphic: http://blogs.reuters.com/felix-salmon/2010/11/15/the-case-against-qe/

US Economics Editor, Greg Ip, discussing his new book, “The Little Book of Economics” http://www.economist.com/blogs/freeexchange/2010/11/economist

Companies’ productivity doesn’t rise and fall in lockstep with economic activity the way it did in the past, in large part because they’re firing more workers in downturns. …Mr. Van Zandweghe sees various changes in the labor market that could help explain the shift. For one, the cost of searching for and hiring workers has fallen thanks to the advent of the Internet. http://blogs.wsj.com/economics/2010/11/15/productivity-changes-may-boost-labor-market-prospects/

[You often get arguments that things are cause by a single variable all the time, which ignores the reality that many variables are involved and you can’t re-run history top prove causation]  http://www.economist.com/blogs/freeexchange/2010/11/commodity_prices

Robert Skidelsky says that when Keynes lectured at Cambridge about monetary theory, he would begin by reading an article from the FT (or occasionally the Economist), and then ask: “What is the theory that lies behind this argument? Is it coherent? Could it be correct? How can we find out?” And that is how he would teach monetary theory at Cambridge.  http://delong.typepad.com/sdj/2010/11/keynes-and-the-ft.html

The music business “is one of the sleaziest businesses there is”, [Keith] Richards argues http://www.economist.com/node/17461585

“The developed world, and the United States in particular, is suffering an economic malaise the likes of which we’ve seen only rarely in the last 100 years,” Mr. Tudor Jones [the undervaluation of the Chinese currency, the renminbi, against the dollar, which he believes has led to the loss of millions of jobs in the United States. That, in turn, he says, has contributed “to the most unsustainable economic imbalance in the world today — China’s persistent bilateral trade surplus with the United States.” http://dealbook.nytimes.com/2010/11/12/tudor-jones-questions-feds-bond-buying/

The deficit panel’s chairmen, Erskine B. Bowles and Alan K. Simpson, called for a phased-in program of modestly higher taxes and cuts to social programs and the military. Some conservatives have criticized that plan for raising taxes at all, and some liberals dislike its emphasis on spending cuts and eliminating middle-class tax breaks.   http://www.nytimes.com/2010/11/14/weekinreview/14leonhardt.html?_r=1

The graphic is here: http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=6mtj15qv

the mortgage-interest deduction costs $131 billion a year, none of which goes to renters or to people who have paid off their mortgage, and all of which goes to people in the top 1/3 of the income distribution. http://blogs.reuters.com/felix-salmon/2010/11/14/re-examining-the-mortgage-interest-deduction/

The IEA estimates that removing all fossil-fuel consumption subsidies would reduce global carbon-dioxide emissions by 1.5 to 2 billion tonnes by 2020. Current emissions from fossil fuel are about 30 billion tonnes; but that potential 1.5 billion reduction is more than a third of the difference between business-as-usual emissions and the level needed to stand something like a 50:50 chance of limiting global warming to two degrees centigrade.  http://www.economist.com/blogs/newsbook/2010/11/fossil-fuel_subsidies

the brain’s ability to selectively filter unattended or unwanted information from reaching awareness — diminishes with age, leaving older adults less capable of filtering out distracting or irrelevant information. Further, this age-related “leaky” attentional filter fundamentally impacts the way visual information is encoded into memory. Older adults with impaired visual attention have better memory for “irrelevant” information.  http://www.futurepundit.com/archives/007642.html

[Researchers] describe a microcircuit in the amygdala that controls, or “gates,” the outflow of fear from that region of the brain. The microcircuit in question… contains two subtypes of neurons that are antagonistic—have opposing functions—and that control the level of fear output from the amygdala by acting like a seesaw. “Imagine that one end of a seesaw is weighted and normally sits on a garden hose, preventing water—in this analogy, the fear impulse—from flowing through it,” says Anderson. “When a signal that triggers a fear response arrives, it presses down on the opposite end of the seesaw, lifting the first end off the hose and allowing fear, like water, to flow.” Once the flow of fear has begun, that impulse can be transmitted to other regions of the brain that control fearful behavior, such as freezing in place. http://media.caltech.edu/press_releases/13393

The authors of a paper that will be released by Science today suggest two possible alternatives to explain this widespread literacy. Either reading is similar enough to something that our brains could already do that it’s processed by existing structures, or literacy has “stolen” areas of the brain that used to be involved in other functions. (A combination of the two is also possible.) http://arstechnica.com/science/news/2010/11/literacy-takes-over-the-brain.ars?utm_source=rss&utm_medium=rss&utm_campaign=rss

Funniest video about the fed ever  http://blogs.reuters.com/felix-salmon/2010/11/12/eat-your-heart-out-matt-taibbi/

Is QE2 A Stealthy $90 Billion Gifting Scheme To The Primary Dealers?   http://www.zerohedge.com/article/qe2-stealthy-90-billion-gifting-scheme-primary-dealers

Currency explained in hip-hop style http://www.economist.com/blogs/freeexchange/2010/11/global_imbalances

Fed Buys $7.229 Billion of Treasuries as Easing Resumes  http://www.bloomberg.com/news/2010-11-12/fed-buys-7-229-billion-of-treasuries-as-easing-resumes.html

As the Fed began its “QE2″ stimulus buying, investors sold off everything from stocks to Treasury bonds and gold. The Dow Jones Industrial Average was off 2.2% for the week. The Treasury note’s yield was pushed up more than 0.20 percentage point for the week.  http://online.wsj.com/home-page

break even rates for TIPS (and hence the expected inflation rates, under certain assumptions):  http://www.econbrowser.com/archives/2010/11/inflation_fears_1.html

“… Goldman …estimates the dollar’s value would have to drop by another 10% to bring the U.S. trade deficit down to its natural, internally balanced level. To put the world on a balanced trade footing, Wilson estimates, China’s yuan needs to appreciate 19% in real, or inflation-adjusted, terms. …  http://finance.fortune.cnn.com/2010/11/11/goldman-predicts-deeper-dollar-drubbing 

“The People’s Bank of China yesterday raised the yuan’s reference rate 0.31 per cent to 6.6242, the strongest since a peg against the US dollar was scrapped in July 2005. China’s larger-than-forecast US$27.1 billion ($34.8 billion) trade surplus last month and the G-20 meeting kicking off in Seoul yesterday combine to point to a stronger Chinese currency http://www.todayonline.com/Business/EDC101112-0000086/Yuan-rises-as-inflation-soars

Brazil’s president, Luiz Inacio Lula da Silva, warned that the world would go “bankrupt” if rich countries cut back on consumption and tried to export their way to prosperity. “There would be no one to buy,” he told reporters. “Everybody would like to sell.” http://www.businessweek.com/ap/financialnews/D9JE4E180.htm

“The S&P is already overpriced and if you push it up another 20 percent it becomes dangerously overpriced,” Grantham said in the interview, which was posted today on the network’s website. “In the not-too-distant future stocks will crack again.”  http://www.businessweek.com/news/2010-11-11/grantham-says-fed-may-push-stocks-dangerously-high.html

“[Grantham] … cash has what people don’t appreciate fully. And that is its ‘optionality.’ In other words, if anything crashes and burns in value—say the U.S. stock market—if you have no resources, it doesn’t help you. If the bond market crashes, and you have no resources, it doesn’t help you. And what cash is is an available resource. It buys you the right to buy the U.S. market if the S&P drops from 1,220 today to 900, which is what we think is fair value.”  http://www.cnbc.com/id/40115265

Bonderman warns over emerging market volatility ‘There will be despair just as there is euphoria now’ says TPG co-founder http://www.ft.com/cms/s/0/e9f209c0-ed80-11df-9085-00144feab49a.html#axzz151JLckR4

Mr. Einhorn is worried that the Fed’s recent move toward more “quantitative easing” will artificially inflate asset prices, paving the way for a new and potentially even more dangerous bubble than the technology and real estate booms of the past decade. (The Fed’s move, which will pump up to $600 billion into the economy by buying Treasury bonds, unleashed a powerful stock market rally last week.) http://dealbook.nytimes.com/2010/11/11/greenlight-finds-a-new-target-of-scorn-the-fed/?

Michael Swanson, an agricultural economist at Wells Fargo. Swanson projects at least 4 percent food inflation next year. Lapp, of Advanced Economics, anticipates at least 3 percent.   http://seattletimes.nwsource.com/html/nationworld/2013400813_food11.html

The extra yield investors demand to hold Spanish 10-year bonds over German bunds jumped 25 basis points this week to 220, nearing June’s euro-era record of 232 basis points. The risk premiums for Ireland and Portugal soared to record highs of 647 and 460 basis points, respectively.  http://www.bloomberg.com/news/2010-11-11/spanish-bond-yields-at-risk-as-debt-contagion-gathers-force-euro-credit.html

“Irish yields are now well above both the levels faced by Greece just before it was bailed out in the spring  http://www.ft.com/cms/s/0/5317a8e4-ede3-11df-8616-00144feab49a.html#axzz151ImjUBs

Ireland’s borrowing costs are being pushed to unsustainable levels. The interest the government needs to pay to borrow from the international markets to fund public spending rose yesterday for a 13th consecutive day, to 9.07%. No government can afford to finance itself at this rate – meaning the country may be forced into a Greek-style bailout from the EU or IMF.  http://www.guardian.co.uk/world/2010/nov/11/question-why-ireland-trouble

The spike does not reflect bad news from Ireland. It has a simple mechanical cause: the decision by LCH.Clearnet, a clearing house, to impose steep cash margins on trading in Irish bonds. Unfair as it is, the nervousness manifest in this move and the price drop it triggered too easily catch momentum in jittery bond markets. http://www.ft.com/cms/s/0/c25b6d6e-edd2-11df-9612-00144feab49a.html#axzz151LGr4LQ 

The U.S. dollar is gaining because it is “a less bad alternative to the eurozone,” said UBS analyst Geoffrey Yu. http://www.businessweek.com/ap/financialnews/D9JE5Q4G0.htm

The rate for a 30-year fixed loan fell to 4.17 percent in the week ended today from 4.24 percent, Freddie Mac said in a statement. That was the lowest level in the company’s records dating to 1971.  http://www.bloomberg.com/news/2010-11-11/mortgage-rate-for-30-year-u-s-loans-falls-to-record-update1-.html  

The World Bank reckons that officially recorded remittances to developing countries will reach $325 billion in 2010, a 6% increase over the previous year.  http://www.economist.com/node/17467174?story_id=17467174&fsrc=scn/tw/te/rss/pe   

the 10 year yield, ten years forward (along with the five year average of each) in a graphic http://econompicdata.blogspot.com/2010/11/is-it-bubble-if-already-priced-into.html

Crawling the web to calculate inflation:  http://online.wsj.com/article/SB10001424052748704804504575606801972873866.html?mod=WSJ_hp_LEFTWhatsNewsCollection

In other words, customers aren’t necessarily paying more (price inflation), but they’re getting less for their money (value deflation). These are essentially the same  http://www.zerohedge.com/article/simon-black-growing-phenomenon-shadow-inflation-value-deflation 

One way of giving people less is to reduce quality:  http://www.economist.com/blogs/democracyinamerica/2010/11/globalisation_and_junk 

China showed inflation hitting a 25-month high of 4.4 per cent, a jump up from 3.6 per cent in the previous month http://blogs.ft.com/beyond-brics/2010/11/11/early-mover-chinese-inflation-jumps-boosting-the-rmb/

The People’s Bank of China stepped up its liquidity siphoning through its regular open market operations this week as part of Beijing’s efforts to ease inflationary pressures. The PBOC drained a net CNY30 billion (US$4.53 billion) from the money market, up sharply from CNY500 million last week. The move comes after its decision Wednesday to raise banks’ reserve requirement ratio by 50 basis points from next week, amid concerns the U.S.’s super-loose monetary policy could lead to hot money inflows and push prices even higher. The central bank has raised the ratio four times this year.  http://online.wsj.com/article/BT-CO-20101110-724683.html

Ryan Chittum of The Columbia Journalism Review noticed the epidemic of supposed gold records and urged those of us in the news media to stop. The actual record was set 30 years ago, when the price of gold, in today’s dollars, hit $2,387, or 71 percent higher than it closed on Tuesday.   http://www.nytimes.com/2010/11/10/business/economy/10leonhardt.html?src=busln

Rubber futures in Tokyo surged to a 30-year high ; Copper in London jumped to a record   http://www.bloomberg.com/news/2010-11-11/rubber-reaches-30-year-high-on-supply-concern-in-thailand-china-inflation.html

Current TIPS yields are well below the long-term average real yield of both nominal bonds and TIPS, but the steepness of the TIPS yield curve means longer-maturity TIPS are yielding higher percentages of both the historic real return on nominal bonds of the same maturity and the historical yield on TIPS. You pick up an additional 99 basis points in yield (or about 20 basis points a year) by moving from five years to 10 years. Another five years gives you about another 11 basis points per year. However, going beyond that only earns you about three basis points a year. And with real yields well below their historic averages for TIPS, you may not want to extend maturities much further than 15 years. http://moneywatch.bnet.com/investing/blog/wise-investing/tips-update-for-november/1802/

“… Once a core policy commandment of the so-called Washington consensus and held dear by the United States Treasury, the International Monetary Fund and global investment banks, the belief that unfettered capital flows are a boon for everyone — including the country on the receiving end — has been dealt a major blow. Short-term investment is now increasingly viewed as something that needs to be controlled. “The world has learned about the perils of free market finance — global financial liberalization just does not work as advertised,” said Dani Rodrik,  http://www.nytimes.com/2010/11/11/business/global/11capital.html?ref=business

“.. Bankers, auditors, regulators, politicians—all of them made the same mistake, in Ireland, which was to believe the numbers they were being shown. Numbers are like that: once they’re printed and ratified, they become perceived as hard facts, in the way that merely verbal statements never are.  http://www.pcworld.com/businesscenter/article/210063/verizon_looks_to_video_broadcasting_on_lte.html

The US Treasury sold $16bn worth of 30-year bonds on Wednesday at a yield of 4.32 per cent — the highest since May — and compared with 3.85 per cent in, say, October. Bid-to-cover ratios were also unimpressive, at 2.31 — the lowest for a year.  mThe long bond, you’ll recall, was one of the US Treasury securities largely left out of the Federal Reserve’s QE2 programme  http://ftalphaville.ft.com/blog/2010/11/10/400576/the-lonely-long-bond-gets-lonelier/

Strong demand for raw materials from emerging markets and a flood of money promised by the U.S. Federal Reserve are pushing commodities prices to new highs. … The International Energy Agency’s chief economist said Tuesday that China’s needs could drive oil to $110 per barrel by 2015—a 27% … [behind paywall at:  http://online.wsj.com/article/SB10001424052748704635704575604443663385672.html ]

Moody’s Investors Service today upgraded China’s debt rating to Aa3 from A1 in a sign of confidence that policy makers can contain risks and sustain the fastest expansion of any major economy. http://www.bloomberg.com/news/2010-11-11/china-s-october-inflation-accelerates-to-4-4-fastest-pace-in-two-years.html

Cisco  forecast sales and profit for this quarter that fell short of analysts’ estimates, sending the shares down as much as 15 percent in late trading. Revenue in the fiscal second quarter will be about $10.1 billion to $10.3 billion, Cisco indicated today on a conference call. Excluding some costs, earnings will be 35 cents a share at most. Analysts projected sales of $11.1 billion and profit of 42 cents   http://www.bloomberg.com/news/2010-11-10/cisco-s-gross-margin-misses-some-estimates-on-component-costs-shares-fall.html

Sargent’s best paper in my opinion is his ‘Some Unpleasant Monetarist Arithmetic’, which used mere algebra to show a scenario where budget deficits imply a trade-off between some inflation now or more inflation later. I think it will be his signature economic insight. Sargent was one of the those macroeconomists who made the bad inference that since some rigor is good, rigor is not just better, but the very essence of science, and the implications of all these highly parochial, unreal models would manifest itself like a Seurat painting seen from a distance. …Smart people can be very clueless when they apply too much precision to imprecise problems.  http://falkenblog.blogspot.com/2010/11/tom-sargent-on-macro-alls-well.html

It is ironic (and more than a touch hypocritical) that Germany chastises its neighbors, like Greece, or its trading partners like the U.S., for their “profligacy”, but relies on these countries “living beyond their means” to produce a trade surplus that allows its own government to run smaller budget deficits. http://www.nakedcapitalism.com/2010/11/auerback-how-do-you-say-%e2%80%9chypocrite%e2%80%9d-in-german.html

envy could have its origin in the fact that the resources obtained from work, for example, are used afterwards in some type of interpersonal conflict, such as when selecting the best partner or dominating the herd. In these cases, it is important to have accumulated more resources that the other, so that victory not only depends on having a lot, but on having more than the other. “For this reason it is important that education and professional training correct these tendencies because of their potentially dreadful consequences for the individuals and the group, as they have done from the Ten Commandments to Shakespeare’s Othello”, he recalled.  http://www.eurekalert.org/pub_releases/2010-11/ciuo-tec110810.php

Rodrik: “Economists teach the virtues of open trade because it benefits us… Exposing the domestic economy to global markets … brings its own rewards. A world economy made up of countries that pursue their own national interests will perhaps not be hyper-globalized, but it will, by and large, be an open one.   Certainly, the global economy needs some traffic rules where there are clear cross-border spillovers. But the balance between national prerogatives and international rules must make a virtue of political reality. If we veer too far toward global governance, we will end up with meaningless rules that beg to be flouted. http://www.project-syndicate.org/commentary/rodrik50/English

Wolf: “Now turn to the argument that the Fed is deliberately weakening the dollar. Any moderately aware person knows that the Fed’s mandate does not include the external value of the dollar. Those governments that have piled up an extra $6,8000bn in foreign reserves since January 2000, much of it in dollars, are consenting adults. Not only did no one ask China, the foremost example, to add the huge sum of $2,400bn to its reserves, but many strongly asked it not to do so …”  http://www.ft.com/cms/s/0/93c4e11e-ec39-11df-9e11-00144feab49a.html#axzz14qyMikFh

A summary of the structural vs. cyclical unemployment debate is here: http://voices.washingtonpost.com/ezra-klein/2010/11/our_unemployment_crisis_is_not.html

More here:

“… Is Structural Unemployment on the Rise?, by Rob Valletta and Katherine Kuang, FRBSF Economic Letter: An increase in U.S. aggregate labor demand reflected in rising job vacancies has not been accompanied by a similar decline in the unemployment rate. Some analysts maintain that unemployed workers lack the skills to fill available jobs, a mismatch that contributes to an elevated level of structural unemployment. However, analysis of data on employment growth and jobless rates across industries, occupations, and states suggests only a limited increase in structural unemployment, indicating that cyclical factors account for most of the rise in the unemployment rate….” http://economistsview.typepad.com/economistsview/2010/11/frbsf-is-structural-unemployment-on-the-rise.html\

Lost decade chart  http://dshort.com/articles/2010/approaching-break-even-in-the-SP500.html

 Small business problems:  http://globaleconomicanalysis.blogspot.com/