Oh, there are fewer jobs available... it's just that workers are leaving the state so the unemployment goes elsewhere.
Meanwhile, Ford Motor Company is exporting more jobs.
If enough employers close up shop and enough people leave the state, Michigan will become a full employment state and a shining example for the rest of the country... at least statistically.
What did Disraeli say?
As you can see, money is created in our economy in two ways that are different but related. The Federal Reserve begins the process by creating "raw money" when it buys a Treasury security on the open market. The banking system can then expand this amount of money by lending it.
On the other hand, if the Federal Reserve sees the nation is threatened with inflation, it may sell some of the securities in its portfolio. Buyers pay the Fed for these securities out of their bank accounts. At this point, places like Trustworthy Bank and Reliable Savings and Loan have less money to lend. In this way, the Federal Reserve removes money from the economy since the money paid to the Fed does not go back into any sort of bank account.
A second way in which the Federal Reserve can influence the economy is by raising or lowering the discount rate, the interest rate charged financial institutions when they borrow reserves from the Fed. Although seldom used, discount rate changes can be powerful signals of the direction of monetary policy.
The Federal Reserve can also have a powerful impact on the flow of money and credit by either raising or lowering reserve requirements, the percentage of their deposits that financial institutions must keep on reserve. If the Fed lowers reserve requirements, this can lead to more money being injected into the economy since it frees up funds that were previously set aside. On the other hand, if the Fed raises reserve requirements, it reduces the amount of money that institutions are free to loan out or invest. However, the Fed is cautious about changing reserve requirements and has done so only occasionally because of the dramatic impact it can have on both financial institutions and the economy.
Two points when you look at the chart below for the past 20 years:
| Period in Effect | Percent Per Annum |
|---|
04/21/86 to 07/10/86 | 6.50 | 0 |
|---|---|---|
| 07/11/86 to 08/20/86 | 6 | 0 |
| 08/21/86 to 09/07/87 | 5.50 | 0 |
| 09/08/87 to 08/08/88 | 6 | 0 |
| 08/09/88 to 02/23/89 | 6.50 | 0 |
| 02/24/89 to 12/18/90 | 7 | 0 |
| 12/19/90 to 01/31/91 | 6.50 | 0 |
| 02/01/91 to 04/29/91 | 6 | 0 |
| 04/30/91 to 09/12/91 | 5.50 | 0 |
| 09/13/91 to 11/05/91 | 5 | 0 |
| 11/06/91 to 12/22/91 | 4.50 | 0 |
| 12/23/91 to 07/01/92 | 3.50 | 0 |
| 07/02/92 to 05/16/94 | 3 | 0 |
| 05/17/94 to 08/17/94 | 3.50 | 0 |
| 08/18/94 to 11/15/94 | 4 | 0 |
| 11/16/94 to 02/01/95 | 4.75 | 0 |
| 02/02/95 to 01/30/96 | 5.25 | 0 |
| 01/31/96 to 10/14/98 | 5 | 0 |
| 10/15/98 to 11/18/98 | 4.75 | 0 |
| 11/19/98 to 08/24/99 | 4.50 | 0 |
| 08/25/99 to 11/17/99 | 4.75 | 0 |
| 11/18/99 to 02/02/00 | 5 | 0 |
| 02/03/00 to 03/20/00 | 5.25 | 0 |
| 03/21/00 to 05/17/00 | 5.50 | 0 |
| 05/18/00 to 01/03/01 | 6 | 0 |
| 01/04/01 to 01/30/01 | 5.50 | 0 |
| 01/31/01 to 03/19/01 | 5 | 0 |
| 03/20/01 to 04/17/01 | 4.50 | 0 |
| 04/18/01 to 05/16/01 | 4 | 0 |
| 05/17/01 to 06/27/01 | 3.50 | 0 |
| 06/28/01 to 08/21/01 | 3.25 | 0 |
| 08/22/01 to 09/16/01 | 3 | 0 |
| 09/17/01 to 10/02/01 | 2.50 | 0 |
| 10/03/01 to 11/06/01 | 2 | 0 |
| 11/07/01 to 12/12/01 | 1.50 | 0 |
| 12/13/01 to 11/06/02 | 1.25 | 0 |
| 11/07/02 to 01/08/03 | .75 | 0 |
| 01/09/03 to 06/25/03 | 2.25 | 0 |
| 06/26/03 to 06/29/04 | 2.0 | 0 |
| 06/30/04 to 08/09/04 | 2.25 | 0 |
| 08/10/04 to 09/20/04 | 2.50 | 0 |
| 09/21/04 to 11/09/04 | 2.75 | 0 |
| 11/10/04 to 12/13/04 | 3.00 | 0 |
| 12/14/04 to 02/01/05 | 3.25 | 0 |
| 02/02/05 to 03/21/05 | 3.50 | 0 |
| 03/22/05 to 05/02/05 | 3.75 | 0 |
05/03/05 to 06/29/05 | 4.00 | 0 |
| 06/30/05 to 08/08/05 | 4.25 | 0 |
08/09/05 to 09/19/05 | 4.50 | 0 |
| 09/20/05 to 10/31/05 | 4.75 | 0 |
| 11/01/05 to 12/12/05 | 5.00 | 0 |
| 12/13/05 to 02/01/06 | 5.25 | 0 |
| 02/02/06 to 03/27/06 | 5.50 | 0 |
| 03/28/06 to 05/09/06 | 5.75 | 0 |
| 05/10/06 to present | 6.00 | 0 |
Economists say that the Current Account deficit doesn't matter... and may be a good thing. But there is agreement that inflation is a bad thing. No connection, huh?
So, let's see, current account deficit is good and inflation is bad, but current account deficit seems to be contributing to the weakness of the dollar which makes imported items... such as oil?... more expensive which contributes to inflation which is bad.In a report released Thursday, William Powers, managing director of PIMCO's portfolio management and investment strategy groups, said the bond management firm has increased its currency exposure to 5 percent from 3 percent.
The fund was constrained to limit its currency exposure to 3 percent in the past because of volatility in the currency market.
"Today with the likelihood that the dollar is about to embark on its next downward leg, PIMCO's Investment Committee has increased the tolerance for currency exposures," said Powers.
PIMCO will also maintain a diversified portfolio to include the yen, euro, and emerging market currencies.
Overall, Powers has a bearish outlook on the dollar, saying the magnitude of the U.S. currency's downtrend is "as great as 20-25 percent, and perhaps greater than that."
With the Federal Reserve expected to pause its monetary tightening soon, Power said the markets would refocus on the large U.S. current account deficit, currently at 7 percent of gross domestic product. The current account is a measure of international trade, in physical goods and international transactions.
The roughly $805 billion U.S. current account gap has contributed to dollar weakness in three of the last five years.
He also cited the diminished appetite for the greenback and other U.S. assets by various central banks including oil producers whose revenues are dollar-denominated.
Okay, others are thinking it. I'm saying it. Michigan is in a recession. Housing markets elsewhere are tanking. Just talked with my wife's brother-in-law in Virginia. The spigot just got turned off there.
Ben Bernanke et al at the Federal Reserve has just cost the U.S. taxpayers billions of dollars and he feels good about it.
That's what happens when the government tries to run the economy.
| DJIA | 11048.72 | -199.15 | (-1.77%) |
| NASDAQ | 2169.62 | -49.79 | (-2.24%) |
| NYSE | 8145.53 | -159.72 | (-1.92%) |
| S&P 500 | 1265.29 | -22.93 | (-1.78%) |
Having said several times that the Fed's wisdom in raising interet rates should be challenged, it seems that others are coming on board:
From CNNMoney.com
While investors were hoping for a weak number that might lead the Fed to stop raising interest rates, one analyst said the jobs number was so small that it causes concern the economy may be headed for downturn.
'I think this was a horrible number," said Briggs, "It means the economy is falling down."
Briggs said the low number overshadowed any positive effect a halt in interest rate hikes might have.
"Yippee, the Fed might pause," he said with more than a tinge of sarcasm. "I'm a growth guy."
Other analysts shared Briggs' view.
"It was like, 'Wow,'" said Hugh Johnson, chairman of the asset management company Johnson Illington Advisors. "What we're seeing today is the 'R' jitters."
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.December 11, 2007 Somehow the Fed misses the obvious."Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/
December 13, 2007 [from The Christian Science Monitor]
[Image from: CNNMoney.com]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?
Current Activity
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| | "There is danger from all men. The only maxim of a free government ought to be to trust no man living with power to endanger the public liberty." - John Adams"An enlightened citizenry is indispensable for the proper functioning of a republic. Self-government is not possible unless the citizens are educated sufficiently to enable them to exercise oversight." - Thomas Jefferson
As of Sept. 15, the current solar minimum ranks third all-time in the amount of spotless days with 717 since 2004. There have been 206 spotless days in 2009, which is 14th all-time. But there are still more than 100 days left in the year, and Perry expects that number to climb. Perry, who studies sunspots and solar activity in his spare time, received an undergraduate degree in physics at Kansas State University and a Ph.D in physics and astronomy at The University of Kansas. He also has spent time as a meteorologist.
From Icecap
