Notes From Underground: Unemployment was softer then expected; and CFIUS must not have read the G-20 communique

Friday’s unemployment number was close to consensus but the average hours worked and average hourly wages were a little on the soft side. Yes, the unemployment rate fell to 9.5 percent, but that was due to the amount of people that left the work force as the ability to find work is causing workers to leave the job search in frustration. The rate itself is not important at this point because a higher jobless rate with a more robust economy would signal that people were returning to the labor force–a good thing.

It is now July and the Obama Administration, with the aid of the Bernanke FED, is going to hit the panic button. (READ: NEW QUANTITATIVE EASE.) The model builders at the FED are becoming very concerned about the lack of growth with interest rates at 0 percent and an aggressive fiscal stimulus package. Now that EUROPE and others are heading for FISCAL AUSTERITY, the U.S. is forced to do the heavy lifting. The equity markets were weak last week and yet the DOLLAR sold off considerably–the times they are a changing. Europe is still in dire straits but investors and traders are beginning to worry about the U.S. The failure to stimulate growth is wreaking havoc with FEDERAL and STATE  BUDGETS, and leading to the layoff of government employees at a time of almost no private sector job growth. This is a witch’s brew and is unnerving investors that have run to the U.S. for a safe haven. The 2010 elections are looming and the question is: How long does OBAMA sit tight? The bigger question is: Do OBAMA and BERNANKE have the patience of JOB????

The weekend brought news of a potential takeover of a U.S. steel producer by the Chinese steel maker, Anshan Iron and Steel Group. It appears that several Congressmen are asking Secretary Geithner to block any steel deal based on strategic reasons. Geithner is asking CFIUS to review the takeover leading the Chinese to be upset. Every time the Chinese wish to buy U.S. assets the issue of strategic implications is invoked. The ink is not yet dry on the flowery language of the G-20 communique and it is already thrust into the dust bin of history. Forget global cooperation and the free flow of goods and capital. It is a myth. To experience global capitalism we may have to move to RUSSIA. Oh the IRONY.

In the southern hemisphere, the Australian bank meets tonight and the consensus is for no change in the interest rate but we look for no change and a benign statement from the Aussies.

Tags: , , , , , , , , , , ,

2 Responses to “Notes From Underground: Unemployment was softer then expected; and CFIUS must not have read the G-20 communique”

  1. Joe Says:

    > The failure to stimulate growth is wreaking havoc with FEDERAL and STATE BUDGETS, and leading to the layoff of government employees at a time of almost no private sector job growth.<

    Oh, man. The courts are getting symathethic with Gov. Arnold in the Golden State. He is cutting some state sectors to minimum wage when he can get around union contracts. The balance will be due once A budget gets passed. It's still a standoff. In Calif. and Illinois I have yet to see anyone budge. The pain still appears to be below the surface, but how deep? Quite the game of political chicken.

    So, we're looking at FED help to bail out the states this time around? If the political landscape does not change this November, I'm betting that's next.

    With the Chinese yuan revalued, the Mainland is sure to get into a shopping mode. Throw in a steel company with that next load of corn.

  2. spdbrnr34 Says:

    Joe…you hit it at the end re Yuan reval…give their consumers buying power, corporations more buying power, expose the US for the monetizing, bankrupt mess that they are, and see China rise while the US falls…

Leave a Reply


%d bloggers like this: