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Did Obama Blow Jobs Speech?
Friday Follies - Did Obama Blow Jobs Speech?
Courtesy of Phil of Phil's Stock World
Obama did not satisfy the markets last night.
Although his $447Bn American Jobs Act is a step in the right direction, $307Bn (68%) of the money is coming in the form of tax cuts and Unemployment Insurance extensions, leaving just $140Bn to go towards the creation of actual jobs. Even if every single dollar of that money went directly towards paying a $40,000 salary - the entire amount would employ just 3.5M people, not even 1/4 of the amount of people who are out of work.
Is that the best America can do? Come up with a jobs program that MIGHT lower unemployment from 9% to 7% over the next year? Of course we won't create 3.5M jobs for $140Bn because a lot of that money gets spent on parts and materials. It's certainly not that the projects are unnecessary, it's just that the scope of the program is too limited to have a substantial impact.
In fact, exactly one year ago, I wrote "Jobless Thursday - America's Infrastructure Crisis" where I laid out the TRILLIONS of Dollars worth of repair work that MUST be done in this country sooner or later. Why don't we do them SOONER, while 20M potential workers are sitting on the sidelines? We MUST spend at least $2Tn on infrastructure in the next 10 years so why not spend $400Bn this year and next rather than waiting until the last minute to do anything? The money is all borrowed over time either way but NOW is when people need to get back to work and, of course, if we get necessary projects done now instead of 10 years from now, then we, the People, get to enjoy 10 years of beneficial use out of them. This is not complicated stuff folks, just common sense...
Nonetheless, $447Bn is 3% of our GDP and figure about 2/3 gets spent in the first year so the program SHOULD keep us out of Recession in 2012 - yay, for that at least. If Recession is off the table, then the markets are under-priced - now we have to consider whether or not the bill can get past the Republicans in Congress. By the way, if you have not read "Reflections of a GOP Operative" yet, please do - it's an excellent insight into the current political climate.
We had flipped bearish yesterday, anticipating the potential for disappointment with both Bernanke and Obama's speeches after a nice 5% run-up in anticipation of the same in the first two trading days of the week. In Member Chat we grabbed the SDS Sept $23/24 bull call spread at .30 with bullish offsets so not too bearish but a nice 3.1:1 pay-off (not including the offset) if the S&P pulls back and SDS ends up over $24 next Friday. We finished the day at $23.70 on the sell-off but, as I just said above, it looks like we won't need the hedge as this jobs bill, IF PASSED, has an excellent chance of keeping us from contracting.
Since our hedges (there were 3 new ones in Member Chat yesterday) are fully offset with bullish bets, we can afford to hold them over the weekend - especially as New York and DC are on terror alert this morning (and Southern California lost power last night), which is hopefully nothing with 9/11 coming on Sunday but, just in case, we are better safe than sorry.
It wasn't all bearish betting yesterday, though, we found long trade ideas we liked (hedged, of course!) on HPQ, WFR, DF and XLF with shorts on USO (as oil touched $90 again), Oil (/CL) Futures (huge winner this morning with oil at $87.50!) and AGQ so mixed betting - down with commodities, bottom-fishing in stocks, was the theme but we do stand ready to tip more bearish if our levels fail to hold (see yesterday's post).
There will be more Fed Speak today as SF Fed Dove, John Williams speaks at 11:15. Williams helped send the markets lower yesterday as he cut his growth forecast for the second half of the year to 2% (not too bad) and called for immediate and strong action by both Congress and the Fed, without which he sees no change in the 9.1% unemployment rate saying: "The real threat is an economy that is at risk of stalling and the prospect of many years of very high unemployment, with potentially long-run negative consequences." We'll see how he feels about Obama's proposal later this morning. Williams' great concern is the same as everyone's - that "Europe’s debt crisis has the potential to slam U.S. financial markets and deal a further blow to already fragile confidence. A downturn in Europe could knock the props out from under the U.S. recovery.”
Speaking of Europe, they are down about 1% this morning but it's the Euro itself that's the real story, dropping all the way to $1.377 as the EU heads into lunch. That's the lowest the Euro has been since February, when the Dollar was way up at 78.50. That's another 2.5% up from here and, as we all know, a 2.5% rise in the Dollar can very easily give us a 2.5% or GREATER drop in the markets. If we're going to have any silver lining from the rising dollar (aside from falling commodities) let's look for the Russell to begin to outperform as a strong Dollar is good for small companies who do most of their business in the US (and not at all good for the few exporters we have left).
There's a G7 Meeting this weekend as central bankers and finance ministers from the Group of Seven nations convene in Marseille, France, for their first face-to-face talks since they promised "coordinated action" Aug. 8 to calm financial markets, Europe's failure to stamp out investor worries over sovereign debts are set to be the focus. Any global recession "will have Europe's fingerprints on it," said Constance Hunter of Aladdin Capital Management LLP in Stamford, Connecticut. "Europe is the real risk." It's not the only risk as policy makers race to head off a recurrence of the contraction, the worst since the Great Depression, that followed the collapse of Lehman Brothers Holdings Inc. three years ago this month. The Organization for Economic Cooperation and Development yesterday said the G-7 will barely expand in the final quarter as the euro region shrinks.
The cost of insuring Greece’s debt against default shot to a new high on Thursday, as investors increasingly see the country in a risk class of its own, even compared with other troubled euro-zone economies. Greece’s five-year credit default swaps rose to 3008 basis points, up 288 basis points from Wednesday, according to data provider Markit. The Greek government said Thursday the economy contracted in the second quarter even more than was originally thought, by 7.3% instead of 6.9%. Officials conceded the government will fail to cut its budget shortfall as planned this year.
The rest of Europe is losing patience with Greece. Germany has hinted Greece will not get its next bailout check unless it gets its act together, and Finland reiterated its insistence on collateral for more Greek aid, a controversial condition that has Europe divided and threatens to delay new agreements. “The euro zone has spent a year trying to bail out an over-indebted country by loaning it more money,” LeBas said. “That’s not going to work in the long run. Some form of Greek default is a largely foregone conclusion.”
Japan has revised their annualized GDP to NEGATIVE 2.1%, down from the -1.3% initial reading as Capital Spending was revised to -0.9% from +0.2%. China, meanwhile, is looking at 6.2% August Inflation, led by rising food prices which, unfortunately, make up 40% of the average Chinese family's budget.
It looks like the G7 have plenty to discuss this weekend.
Have a good one,
- Phil
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So the government owns enough computers they can sell to pay down the deficit or maybe they can use the proceeds to fund a balanced budget? I fail to see your point, elaborate please.
They don't own the computers - the technology came from the military industrial complex - the west coast private computer business would not exist without military spending in the 50 s & 60s.
I declare this discussion over. That is not an answer or a rebuttal or a well thought out logicically based argument. Its a history lesson, which I do not need because I know the history of the internet, computers, and technology quite well. I do not dispute that the government was integral to the development of computers. If I was to make an argument along these lines, what I would argue, is that if any wealth was generated by the government they have borrowed against it to the degree that any wealth that existsed no longer exists because that wealth which is now debt is so leveraged that the debt can never be repaid. But that is not even the argument I am making or would make.
Common sense is all you need to understand economics on its most fundamental level. This most simple of human behaviors and thought processes is lost upon those who would claim to be the most educated economists. They done thunk themselves into circular logic and can not escape. And that is a part of why this system as it currently exists is an epic fail, becuase we the people tolerated such behavior and thinking in the first place.
Exactly. The Government could have tendered the computer projects from private wealth and innovation and paid for it with a balanced budget. The wealth generated by selling the technology to the private sector would be the return on investment for the nation and private sector to reinvest again and again and so on. If the nation needs to arm itself then this can be paid for out of the wealth of the country.
Is that a private sector that can create credit or cannot ?
How can I pay for something with a balanced budget ? - if I give money or technology to a private actor I must tax the commons under a balanced budget - is that fair ?
If I introduce new money into the system every year I don't have to tax anybody and I don't have to give it to a private actor if I spend it on Goverment projects - but thats a different debt free money discussion I guess.
Well Tyler you are giving the other side a chance to make their opinions know, its great for the trolls, and gives good laughs, I probably should thank you.
Theres a deindustrialisation agenda at the very top of goverment - don't you know ?
Mike Griffen Invoking Mark Twain.....................
www.youtube.com/watch?v=S503nFnu-EY
Sad to see a great nation humbled by bankers with a Malthusian outlook as decapitalisation improves their short term profits.
why not, he would blow a goat if wall street ask.
i thought Steve was sick....
Lloyd.
Obama. Relegated to the dustbin of history. Already. http://thecivillibertarian.blogspot.com/2011/09/relegated-to-dust-bin-of...
I laid out the TRILLIONS of Dollars worth of repair work that MUST be done in this country sooner or later. Why don't we do them SOONER, while 20M potential workers are sitting on the sidelines? We MUST spend at least $2Tn on infrastructure in the next 10 years so why not spend $400Bn this year and next rather than waiting until the last minute to do anything?
This passes for quality info on ZH? From where does this type of statist thinking originate?
If we want to invest, please, please, do not spend it on outmoded and dead ideas. Fix the roofs and windows on our schools? Build bridges and roads to no-where? Make sure we keep paying UE bennies for 150 weeks? A centralized and mandated health insurance program?
Invest in buggy whip factories, it is just about the same thing. How about developing ways to do these things without bankrupting the electorate? Do we really need to spend $10K per student to teach them to read or do algebra? Should it really cost $500 to visit the doctor?
Do it now voluntarily while we can or the market will force our hand.
sschu
Word, Keynesianism by any other name still smells like shit.
" Why don't we do them SOONER, while 20M potential workers are sitting on the sidelines? We MUST spend at least $2Tn on infrastructure in the next 10 years so why not spend $400Bn this year and next rather than waiting until the last minute to do anything?"
You are such a jackass Phil. WHY? Did you see what the Longshoreman did in Washington State yesterday?
Why Jackass? Because the fucking Union Leaders have their fist up the POTUS' ass. Any "infrastructure" project will get funneled through the Union prism. ANYTHING funneled through the Union prism will spell BIG DIG.
Jackass. Remember the BIG DIG?
I haven't looked yet, but I just know they're all in jail, right?
Tyler: The Fairness Doctrine was repealed a while back, no need for this article.
A+++++++++++++
Freaking hysterical.
Hey, you know, this is really a great idea: any time a politician says jobs, just put the word blow in front. It makes them all sound like geniuses.
"I am sending this Congress a plan that you should pass right away. It's called the American Blow Jobs Act. There should be nothing controversial about this piece of legislation."
The act reads in part, "All services to be provided by Nancy Pelosi".... there, it's controversial.
Ewww. And I thought the Obama imagery was bad enough.
he probably couldn't even do that right , he would start sucking your nose or something.
He is a joke. The public is starting to realize it.
How can jobs be created when we have little or no competitive advantage? A good nice sounding speech is worthless in this environment. For most jobs (ex union,govt,geegs,etc.) the prevailing worldwide labor rate is about $5/day w/o any benefits of legal protection thanks entirely to the www which has created a vast unemployed worldwide labor pool. As the EU is learning fast, economies can't be burdened with safety nets or retirment benefits. The USA will be taking is course ASAP upon the US$ will cease to be the world's reserve currency. It will happen much faster and more violently than anyone expects. BTW, the prevailing world labor rate is declining. Of course the fortunate who have union and govt jobs will extend and pretend, they have the most to lose. As US/EU consumption declines so goes the undeveloped world and the labor rate. Its over. Housing will never recover.
Two words: Balanced trade - it's the natural law.
We don't need ANY program from the Goobermint, let alone an even larger one. More government is the problem not the solution. Printing money to buy debt that will never be paid back in order to create temporary jobs administered by a fraud ridden agency is not the path to sustainable growth.
We're from the goverment and we are here to help.
ilene,
Sorry we are not discussing the article much. But you knew, right, this is what would happen? I'm just not grown up enough to restrain myself.
There was an article? I never made it past the "head" line.
lol, I had no idea.
And clearly this is the thread to ask ilene:
so, which way DO you lean?
<collapses into giggles>
Time for him to be the blowee, everyone else has been blowing him
So you are saying better fel-late, than never?
This might get his approval rating up.
We are watching a dinosaur die. Obama and the DC establishment are out of tools, short of seizure of private corporations, Chavez style. The Keynsian economics have failed. Their government regulation has failed. Their credit market manipulation has failed. They forgot that the role for goverment is to bring predictability and secuity, not to try to make ad hoc jobs. The private sector is just standing on the sidelines watching the dinosaur flail. The dinosaur is too stupid to know it's over. The private sector will have no confidence as long as we hear about unsubstantiated and special interest nonsense about "green" and "healthcare" and whatever else the dreamers are pondering. The private sector acts and invests when it is left alone. Government doesn't understand that the private sector needs to be left alone. The government IS the problem. Why is that so hard for these asswipes to figure out?
"Why is that so hard for these asswipes to figure out?"
If they don't trade favors with selected "senior" membears of the congress, they don't get favorable treatment for their own bills. If a congressman doesn't get the things "powerful" constituants want back home, he doesn get financial support for the next election. Hence the tendency for longivity, in many cases of members who are shameless in the support for things which do not really serve the public good.
By and large, in the real world, the more aggressive part of the public who maintains a"me! now!" approach is dominant. People wanted those big houses they could not pay for. Lawmakeings, like the repeal of Glass-Steagal of course, were popular because times were good and the general public (like me) were on their daily commute unaware of what into economic theory at the time. The can was successfully "kicked down the road".
As I read the articles today I am struck by the sheer volume of commentators who think that this is "step in the right direction," and that investors are nervous about whether Congress will embrace this plan. Am I the only person in this country who sees that this whole proposal is nothing but more of the same. The same special interest groups: teachers, green, infrastructure, that received the lion's shares of the last two rounds of stimulus. Why do they now need more? If the last $2T in stimulus created zero jobs and subtracted 2% of GDP, how is this $500B round, going to magically created millions of jobs and add 3% to GDP? Then there is overwhelming shock, SHOCK, I tell you, that the market is not up 500 or 5000 or 5 millions points on this glorious dawn of a new day in America. WTF happened to my country? (That's the what the fuck WTF and not the win the future WTF.)
As for infrastructure, I just need to ask, how many billions are poured into infrastructure every year in every state in this country? And just where exactly does that money go, since every year in every state more and more money is needed to pour into more infrastructure?
Obama wouldn't know infrastructure if they wrapped it in broadband fiber and loaded it on a train to the Port of San Diego.
Mr Vulture,
I agree with you. We are electing politicians for their "starpower"; not becuse they bring a reasoned and mature approach to the very serious business of operating a government.
However, IMO, it is perpetual "war", not "infrastructure' that is the principal factor. Historically, wars are inflationary. The government is spending on non productive military activity. At present, work is proceeding on first of the new Gerald R. Ford class of aircraft carriers, started in 2007 to be finished in 2015. Cost 15 billion.
The cost of "up-armored" humvees is quoted in Wikipedia at around $140,000 and they don't last very long. Special versions, equipped with special electronic equipment for incoming detection and pre-detonation are ticketed at ~ $1,000,000.
http://nationaldefensemegadirectory.com/
The cost of war must be balanced against cost of not being prepared but real infrastructure produces a return. Today we enjoy a distribution of foodstuffs that no country on earth can match. And that food distribution is a very big part of quality of life. And we haven't really spent large on infrastructure in a long time. Rail, in example, is still the cheapest way to hall tonnage across the continent and it has received no special benefits in a long time
Another is medical. Keeping productive people productive is valuable but doctors in private practice aren't doing nearly as well as bankers.
It's like watching a train wreck happen in slow motion.
Sounds like the 1930's all over again, huh?
When you apply the same solution to the same problem, why would you expect a different outcome?
who didn't he blow?
Didn't blow you or me. I know I ain't satisfied.
cause we don't work for Goldman Suks
Immelt sending more jobs overseas...is that what he said? Or did he mention to legalize the 14 million illegals who now hold jobs that Americans could have?
I missed the speech. I was watching...Balloon Boy Reruns.
lulz
Did someone say blow jobs?
I gotta say, your post next to your avatar pic is just too much for words.
Obama is apparently giving blow jobs. Do you want one? He does have blow job lips.
Me, I want my money back from all that social security they keep taking from my check when I know, dammit, know, I ain't never gonna see it in real terms and certainly not in inflation adjusted terms.
Well, at least he's finally giving something back.
But do you want a blow job from him? I mean, you can close your eyes and stuff and pretend whatever you like, but I'd worry he'd like steal something...it's not like he is a high class prostitute or anything.