A little, with an FYI

[solarbird]

I have rather significant repetitive stress injury history in both arms, and the last few days have been particularly bad. As such, I've been cutting back a lot on computer use, which hampers my ability to write my economics posts - or, really, anything else. It's very, very annoying. But here're a few high notes.

A lot of US states are seeing budget troubles worsen, dramatically and quickly. (That points to an article with table data, you can look up your own US state, if applicable.) California's problems are best known, but are not unique.

We have the first real retailer sales report - Borders canned their CEO after holiday sales were down 14.4%. That's a big number. US Factory shipments in November fell a record 5.3%, so expect more.

Automobile sales data for December was brutal - I'd like to link to tf:rvacha's amalgamation, but I can't, so I'll reproduce it here: Daimler AG sales down 23.5%. Ford sales fell 32.4%. Chrysler sales were down 53%, but I don't have a link. GM sales fell 31%. Porche sales fell 25.5%. Audi America did better than most, down only 9.3%, but they're a small player. Toyota sales fell an astounding 36.7%, Honda down 34.7%, BMW down 35.9%, Nissan America sales fell 30.7%. Low-end wasn't better, with KIA America sales down 39.2%.

The flight from US securities by private investors (noted several times by Brad at the CFR, linked here) has made the mainstream media. The article also notices that treasury sales to central banks and sovereign wealth funds continue reasonably brisk, which is a damn good thing given soaring US debt. But that's old news. More interestingly, China has " has launched the experiment of using the yuan as a reserve currency in relations with 8 countries." That's super-cool. (Interestingly, the US dollar doesn't seem to care - the index is up this week. Also, the Persian Gulf states have reaffirmed their 2010 goal for a common currency. We'll see.)

I've got more but it'll wait until another post. Oh, check Karl's commentary, "Why What They're Doing Can't Work." Basically, it talks about something most people don't understand and nobody understands intuitively: the power function.

More when my hands calm back down.

Comments

[elfs.livejournal.com]

Geez, Karl's not pulling any freakin' punches, is he? Take care of your hands. Mine are getting better. I can type for 20 minutes now without a break and without too many serious typos.

[llachglin.livejournal.com]

Mathematically, Karl is correct. But when applying those mathematics to the real world, he's ignoring a lot of complexities. For one thing, short-term debt can produce longer-term economic growth that results in less overall debt. For another, not producing short-term debt can invite economic contraction and produce more long-term debt. It also depends heavily upon what the debt is used for. He's write to dismiss most of what the Fed is doing because it's unlikely to produce growth, and when you're looking at the debt in individual companies rather than the government and economy as a whole it's essential that many of these debts be brought into the open and defaulted. But for the government and overall economy, the US currently has a manageable debt to GDP ratio of roughly 50%, less than many other developed countries and half of what it was in WWII. We have a lot of fiscal room to operate in, for now. (Unless we blow most of it on tax cuts, which unfortunately seems to be a strong possibility.)

(Deleted a second paragraph because I was confusing month-to-month auto sales vs. year-to-year sales.)

[elfs.livejournal.com]

Tim O'Reilly calls Karl's observation the biggest Ponzi scheme of all (http://radar.oreilly.com/2009/01/the-biggest-ponzi-scheme-of-all.html), and points out that if the assumption is that money is debt on future growth, then you've got an even bigger problem than Karl's when you've got a limited resource such as the Earth.

He also writes something that hadn't occurred to me, but is obvious in retrospect: the marginal cost of making room for growth increases dramatically when you're no longer extending your reach to empty space but are forced to somehow process old stuff to make room for the new stuff you've "grown."

[maellenkleth]

Ah yes, the u;ltimate Ponzi scheme.

In the past fifteen years, we have furnished and outfitted **three** households in the Pacific Northwest, from goods at $0.05 to $0.10 on the dollar, found without much trouble on the shelves of Seattle Goodwill.

**That** should be telling something, that most everything that is needed in the way of durable goods has **already** been made, bought (and nominally paid-for) at least once already.

Shaping up to be a buy-nothing **year**, this year. :(