Notes From Underground

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.

Tags: Aussie, Bernanke, CIFIUS, Dollar, Europe, Fed, Fiscal Austerity, Geithner, Obama, Quantitative Ease, Russia, unemployment

This entry was posted on July 5, 2010 at 8:36 pm and is filed under Federal Reserve, G-20. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.