02-08-2002 18:32									#151
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quote: The Japanese government is, for some reason, convinced that construction projects are the way to end their rather lengthy recession. That it hasn't worked yet does nothing to stop them from trying, like most government projects.

There are good reasons to suspect the Japanese is trying to support the stock market using funds from its govt pensions funds. Of the 1,9 trillion Yen it received last year it invested 1,3tr in Japanese shares while it had a negative return of 17% on those investments. (worse than the topix drop of 16% and worse than the positive returns it receives on foreign investments)

Squandering pension money like that, it's getting ever more disgusting...

	02-08-2002 20:06									#152
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Well, it was clear that the government was squandering money from somewhere to make the stock market 11,500 by the time the banks had to mark their holdings to market. Whether that squandering comes from pensions or some other place doesn't seem to matter much.

I'm just amazed that Japan can keep its debt levels so high without too much problem. The U.S. populace freaked when the number went above 50% of GDP, for instance.

	02-08-2002 20:10									#153
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Not a big problem if it's covered by domestic savings at extremely low interest rates.

	02-08-2002 20:13									#154
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The Japanese just have not found enough useless sh!t to buy. Never been a problem for Americans, of course.

	02-08-2002 20:18									#155
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Well why should consumer spending on credit help the economy when government spending on credit does not ?

	02-08-2002 20:26									#156
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quote: Originally posted by DanS The Japanese just have not found enough useless sh!t to buy.

They're too busy shipping it out.

	02-08-2002 20:42									#157
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"Well why should consumer spending on credit help the economy when government spending on credit does not ?"

Because people buy the useless sh!t they want to buy, not the useless sh!t that the gov't wants to buy for them. This is a better situation all around.

"They're too busy shipping it out."

So then they end up shovelling money at the dollar and supporting the US public debt.

What's the world coming to?

	02-08-2002 21:03									#158
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" Because people buy the useless sh!t they want to buy, not the useless sh!t that the gov't wants to buy for them. This is a better situation all around. "

Yeah, but for a simple demand side view, there's no difference.

	02-08-2002 21:23									#159
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quote: Originally posted by DanS Well, it was clear that the government was squandering money from somewhere to make the stock market 11,500 by the time the banks had to mark their holdings to market. Whether that squandering comes from pensions or some other place doesn't seem to matter much.

Macro economically speaking, no. Morally speaking is quite another matter though.

quote: I'm just amazed that Japan can keep its debt levels so high without too much problem. The U.S. populace freaked when the number went above 50% of GDP, for instance.

Belgium and Italy have been carrying a debt of above 100% for years without a currency crisis (which is the main risk) as they didn’t had much foreign debt and as they didn’t try inflate themselves out of their debt. (as Greenspan seems bent on doing and Japan needs to do but is too impotent for)

quote: "They're too busy shipping it out." So then they end up shovelling money at the dollar and supporting the US public debt. What's the world coming to?

They were shipping it out, of the late they’ve been shipping it back it. What's the world coming to if even the Japanese don't trust US assets anymore?

	02-08-2002 23:43									#160
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"What's the world coming to if even the Japanese don't trust US assets anymore?"

Well, Americans aren't gonna pay for Japan's useless sh!t in pesos, are they?

	02-08-2002 23:46									#161
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The markets have been jojoing up and down again lately, is this because they have become less liquid? (I feel that "uncertainty" as an explanation is just too easy)

	02-08-2002 23:51									#162
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Looks like normal bear market behaviour to me. Sell offs, and steep rallies cause there are so many bulls around who fear nothing more than missing "the bottom".

	03-08-2002 00:01									#163
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quote: Originally posted by Roland Looks like normal bear market behaviour to me. Sell offs, and steep rallies cause there are so many bulls around who fear nothing more than missing "the bottom".

Sweet lord Cheezus. I agree with Roland. Guess it's time to start buying then.

	03-08-2002 00:35									#164
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quote: Originally posted by Roland Looks like normal bear market behaviour to me. Sell offs, and steep rallies cause there are so many bulls around who fear nothing more than missing "the bottom".

I know the cycle, but why wasn't it there for quite a long time? (a year or so?)

	03-08-2002 00:37									#165
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I don't think this bear market is even as severe (at least so far) as the '72-'73 bear market.

Which reminds me. Friday night and it's time to hit the beer market.

	03-08-2002 00:42									#166
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Roland: It's not because of the bulls. Rather, it's because the bears are getting scared that a bottom has been reached. Everybody's covering their shorts.

	03-08-2002 01:03									#167
	Lose 30 kilos (of popups)

Still doesn't explain why the markets are so volatile, covering is the reaction on a movement isn't it? So where did it start and why doesn't it end like it did months ago. Is it because stabilising actors left the market?

	03-08-2002 10:56									#168
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You are alluding to the $55 billion or whatever in fund redemptions in July?

I rather take a different approach. The structure still supports a downward price slide. But the bears have to butter their bread by taking some money off the table. Who else in the market is enthusiastic and who is able to support these 10% swings to the upside? The new information we have seen has not supported positive swings for a while.

	20-08-2002 21:48									#169
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The (adjusted) returns on the last business cycle are starting to roll in. Kasriel has a good, short look at comparable productivity during expansion periods...

http://www.northerntrust.com/librar.../us/020819.html

I think he's looking at this cup half empty. 2% productivity growth per annum for a 10 year stretch is good, IMO, especially compared to our experience 1973-1990 and the decade-long employment and population boom.

Looking back, 1960-73 was an amazing period. To me, it isn't even real in a sense. I was born in '73 and am a child of the oil shocks. 2% productivity growth rate felt very good and the change seemed very fast. I can only imagine what a nearly 3.5% growth rate would be like.

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Last edited by DanS on 20-08-2002 at 21:54

	20-08-2002 22:22									#170
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Anecdotal evidence suggests that productivity growth due to information technology has a ways to run.

My brother-in-law is a machinest at Meritor, which builds custom heavy axels and we have been having a running discussion--mainly him telling me how things are run at the plant (yeh, you've got to believe you're interested at family gatherings to make it through ). About 3 or 4 years ago, they moved to a just-in-time model, which he just hates. He says the assembly line is always being held up because they don't have one or another small and cheap part.

Also, he uses a terminal to track what he does, which automates the stocking process from the back office. He complains that often it doesn't work like it should, and that he has to call the back office anyway to make sure he's stocked. He does admit that it's nice when it does work. If he uses 4 bolts of a specific type, then 4 bolts are re-ordered automatically.

Of course, I try to explain to him that from management's POV, him using this system, even if faulty and inconsistent, is amazingly good--a huge step forward in management control. But it's a tough sell, considering that he doesn't see it. He just sees an idled line because of a nut that costs $1 is not in stock.

This reminds me a lot of the 80s and 90s, when the advent of complicated spreadsheets allowed financial engineering on a mass scale.

The other day, my secretary told me about how her first job was in a corporate accounting department, where they did spreadsheet calculations using a typewriter and 9 copies using carbon paper. In the 80s, they moved to Lotus, etc., which was kludgy. Then the 90s brought the blue screen of death. Now, I run spreadsheets doing at least a million calculations without a second thought.

	20-08-2002 22:40									#171
	Inflate your Upload Space

who was Kasriel's old boss? Oh yeah, Robert Deitrich. Funny old guy.

Productivity has always been difficult to analyse for service industries. Now that the economy is much more service oriented than manufacturing, I think it is impossible to compare this period economically to past periods. While not being overawed by the 'productivity' of teenagers sitting around dotcom shops playing video games on a brand new state of the art servers, I am certain that the late 90's produced significant productivity gains, simply through office and supply chain technology that wasn't available or user friendly in the past.

(simul-post)

	20-08-2002 22:57									#172
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Re supply chain management, I was surprised that these manufacturing shops weren't further along in the process than they are--they seem to have just started overhauling their MOs in the last 5 years. Before that, it was probably just a bunch of management-speak.

Re office technology, I do wonder where any additional gains will come from. Everything that I use works OK, including the internet connection.

	21-08-2002 12:58									#173
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The 2 % are quite pathetic if you bear in mind that

a) about 0.5 percentage points comes from from funny hedonic measurements, especially in computers

b) the US economy is completely out of whack and those numbers reflect unsustainable overconsumption and overinvestment.

The japanese scenario looks ever likelier. I put it at ~35 % now.

Ad service industries - that is just a relative measurement problem. Even when manufacturing made up 40-50 % of GDP in many countries, services were still 30-50 %. The larger problem is that GDP is a crap concept.

	21-08-2002 14:19									#174
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Just so that everyone is sure about it, here's Saras Jr.

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	21-08-2002 18:23									#175
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quote: Originally posted by DanS I think he's looking at this cup half empty. 2% productivity growth per annum for a 10 year stretch is good, IMO, especially compared to our experience 1973-1990 and the decade-long employment and population boom.

What employment boom?
The US's employment rate has been static or falling since 1990 after rising very strongly during the 1970's and 1980's.
If the employment growth had continued then GDP growth in the period 1990-2000 would have been higher than in the period 1970-1990, however it was exactly the same (3.2% in each case)

So the increase in productivity growth has been completely offset by a reduction in employment growth.

Even the underlying trend in growth hasn't improved - if you take the rise in productivity* and rise in the workforce over a cycle to be equivalent to the underlying growth rate then it was 3.1% in 1973-79, 2.9% in 1979-90 (the average for 1973-90 is 3.0%) and 3.0% in 1990-2000

*I am using GDP per man-year as I have no data for hours going back to 1973

BTW what does everyone think of the large budget deficits that the US is now racking up (over 3% of GDP in the first half of 2002)?

	21-08-2002 20:30									#176
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Hey, where's my cigar??!!

Aren't little kids cute? Once you hit 25, you're over the hill though.

"What employment boom?"

The one that provided jobs to all of those immigrants.

"*I am using GDP per man-year as I have no data for hours going back to 1973"

I saw those numbers a couple of days ago. In the States, still holding steady at roughly 1,800-1,900 hours per annum, IIRC. In Europe, slides to (very) roughly 1,400 hours, depending on country.

"BTW what does everyone think of the large budget deficits that the US is now racking up (over 3% of GDP in the first half of 2002)?"

How do you figure these numbers? By my calculation, it's well under 2%.

http://www.fms.treas.gov/mts/mts0602.txt

Jan -- 43.7B
Feb -- (76.1B)
Mar -- (64.3B)
Apr -- 67.2B
May -- (80.6B)
Jun -- 29.1B

Total deficit = $81B / $5,000 x 100% = 1.62%

This squares with the numbers provided by FT, which probably prompted your post...

http://search.ft.com/search/article...id=020820005916

But by and large, I think these numbers suck. There is no fiscal discipline in this town nowadays.

	21-08-2002 20:34									#177
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"In Europe, slides to (very) roughly 1,400 hours, depending on country."

More like 1600.

US Deficit is estimated at 165 billion $, ie 1.6 % of GDP.

Will go to 5-7 %.

	21-08-2002 21:06									#178
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There was a good graphic of this in FT or the WSJ (?) a couple of days ago, but now I can't find it. I don't remember the precise numbers or the basis.

Re the 5-7%, I haven't seen a good reason to believe that number.

	21-08-2002 23:21									#179
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I am actually a proponent of having a fiscal deficit at this stage of the economy. Our cap ex budget is much, much larger than 3% of GDP and it just makes good sense to match your assets and liabilities. When the econ is weak, the borrowing costs are lowest, and the purchasing leverage is the highest. Basic math. Borrow more.

Plus it gives me some more bonds to trade.

I also think that the real US economy is quite healthy right now, in much better shape than it was three years ago. You actually have borrowing and staffing based on SOME cash flow numbers! It is a wonderfully healthy phenomenon.

	22-08-2002 02:27									#180
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quote: Originally posted by DanS "What employment boom?" The one that provided jobs to all of those immigrants.

If it was a boom comparable to those in the 1970's and 1980's then you would have seen a rise in the US's employment rate (employed/working age population) similar to those times - what happened was stagnation.
If employing all those immigrants was so important then why has the US's activity rate been falling for over a decade?

quote: Originally posted by DanS "*I am using GDP per man-year as I have no data for hours going back to 1973" I saw those numbers a couple of days ago. In the States, still holding steady at roughly 1,800-1,900 hours per annum, IIRC. In Europe, slides to (very) roughly 1,400 hours, depending on country.

You couldn't PM me either a link or the data could you?
I'd love to get hold of an average annual hours series going back to 1973!
Pretty please

quote: Originally posted by DanS "BTW what does everyone think of the large budget deficits that the US is now racking up (over 3% of GDP in the first half of 2002)?" How do you figure these numbers? By my calculation, it's well under 2%.

Actually I got that data from the BEA national accounts release (Table 3.1, line 24 'net lending'), this was a $300bn deficit in the first quarter and a $340bn one in the second (actually I estimated one figure to achieve this, it was line 3 'Corporate profits tax accruals', I estimated this at $200bn - slightly above the average for the last four quarters - when the preliminary estimate of GDP is out next thursday we'll see how far out I am)
**edit**
looking at the new data it was $212bn so I was out by $6bn in the following estimate - or 0.1% of GDP
**edit**
The average figure of a $320bn deficit (at annual rate) is 3.1% of the $10,340bn (again, at an annual rate) GDP for the period.

The figures you are referring to seem to be only for the federal government, not all federal+state+government corporations etc.

My reason for choosing this measure of budget balance is (as usual) that is is the most internationally comparable figure. It reached a peak of $165bn surplus in Q1 2000 (1.7% of GDP), since then it has deteriorated by around 5% of GDP (or $10bn a week at today's prices