Another economic nosedive


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Stocks nosedive after jobs data
Market closes under 10,000 on report of sagging U.S. job growth, more
euro angst.
By Christine Hauser and Matthew Saltmarsh
New York Times
Posted: Saturday, Jun. 05, 2010
Concerns about the strength of the economic recovery in the United
States and new worries about the debt crisis in Europe sent stocks
sharply lower on Friday, with all the major indexes declining more than
3percent.
The markets were sent skidding after the Labor Department's report on
job growth in May fell short of expectations. While the economy added
431,000 jobs, more than 90 percent of the new jobs were in government -
and most of them were temporary positions to help conduct the 2010
census.
The Dow Jones industrial average closed below 10,000 for the third time
this year, ending at 9,931.22, down 324.06, or 3.2 percent. It was the
Dow's lowest close in almost four months. The euro also continued its
decline, dropping to less than $1.20 on concerns about the fiscal
troubles in Europe.
While the markets have been bedeviled for weeks by worries over debt
problems in Spain, Portugal and Greece, the boundaries of the problem
shifted to Hungary after its government sent worrying signals about its
finances. Investors fled the country's assets, and the euro slipped to
$1.1992 in afternoon trading in London, its lowest level since March
2006.
The currency was down from $1.2162 late Thursday, dented by the comments
from Hungary and from France, where Prime Minister François Fillon told
a news conference, according to a text released by his office, that he
only sees "good news in the parity between the euro and dollar" and that
he was not concerned by its decline.
"The jobless number and the payrolls are having a big impact on the
market, as well as the problems over in the euro zone," said Dan
Faretta, senior market strategist for LaSalle Futures Group. "They are
having issues of it spreading to other countries, and that brings about
a lot of worries for investors."
Few private-sector jobs
Employers added only 41,000 private-sector jobs in May. Those job gains
were limited mostly to the health care, mining and manufacturing
sectors. What had been a return to construction hiring proved
short-lived, as the sector shed jobs again.
While federal employment was up sharply because of the temporary hiring,
state and local governments shed 22,000 jobs in May, and that may be a
preview of things to come.
Private-sector hiring, which exceeded 218,000 jobs in April, fell
dramatically in May, and the recent stock-market slump seems to reflect
a growing view that the U.S. economy, while improving, won't grow fast
enough this year to knock down the jobless rate and move sharply into an
expansion phase.
The nation's unemployment rate fell to 9.7 percent from 9.9 percent. The
Charlotte region's jobless rate dropped to 11.1 percent in April from
12.1 percent the month before.
The national jobless rate is expected to go back up over 10 percent
later this year as the economic recovery convinces more Americans to
resume looking for work - and be counted as unemployed rather than out
of the work force.
Read more:
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Reply to
Gunner Asch
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=========== distro pruned to amc & rcm
Gunner: your concern appears to be fully justified.
IMNSHO the problem is that the situation does not seem to have become abruptly worse, although there may indeed be some sort of trigger point or tipping point, but rather the majority of people are becoming consciously aware of the drastic systemic changes that have occurred in the North American and European economies/societies/cultures, i.e. "Hey -- the Emperor is butt naked!"
The astute and terse observation by the Greek playwright Euripides several thousand years ago, "Those whom the gods would destroy they first make proud {or powerful}" appear to offer as much insight as to what has gone and is going wrong as any modern analysis.
A major consideration is the fact that in many cases *WHAT* the money was spent for is at least as, if not more important, than *HOW MUCH* money was spent, for an individual, a company, a corporation or a nation. Moreover, the failure/omission to spend money, for example on upgrading/maintaining machinery, tools, products, skills, infrastructure, or even basic preventative health care can also be disastrous at all levels from the individual to the nation in the long-term.
We as a society appear to have generally squandered our patrimony and good fortune, and many of our nominally "American" corporations are actively exporting not only the jobs, but also the expertise/methodology that has traditionally given the U.S. its competitive advantage and the ability to offset its higher standard of living/labor costs. The U.S. government does not have "clean hands" in that they continue the tax deductions for "investments" by American corporations in foreign countries and subsidies for job/technology export. This is true for not only the more mature industries such as automotive, but also the vaunted "knowledge based" industries that are supposed to "save" the US economy. For example:
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$385-million-in-Brazilian-plant
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GM Brazil announces new investment of $386M (AP) - 3 hours ago RIO DE JANEIRO - The Brazilian subsidiary of General Motors Co. plans to spend $386 million to develop and produce a new model of Chevrolet. A company statement issued Monday does not give details on the new model to be built at the GM assembly plant in Sao Caetano do Sul. ==>The announcement comes two months after GM announced its Brazil operation would invest $780 million to increase output and produce two other new models.
Reply to
F. George McDuffee
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$385-million-in-Brazilian-plant>
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Cloud computing? What a joke. Just like Apple's claim that people will stop using desktop computers.
Reply to
Michael A. Terrell
Gunner's concern extends no further than his rabid rooting for America to fail under the Obama (or any other Democratic) administration. And he calls himself a patriot.
The rest of this discussion boils down to the simple fact that the world economy is a house of cards and a hall of mirrors all rolled into one.
People listen to the bits and pieces of words that they think they understand coming from economists who think they know something (and are usually apologetic a year or so later when history has proven them wrong). The people then go to their stockbrokers and order them to buy or sell based on this information of no substance. And THAT is what drives the stock market.
The truly scary part is that it's not only the little guys who act on wild speculation, but it's the big players - the fund managers who control billions of dollars. All these people know how to do is guess, No matter which way they go, however, the huge piles of money that they move have an effect on the market. Just look at the result of a misplaced decimal point a couple of months ago. Wild swings in the market due, not to global events, not to financial activities, not due to a disappointing (or optimistic, take your choice) jobs report, but due to a glitch in someone's software that allowed a wild trade to get into the system.
But again, Gunner has no concern here other than his belief that your financial ruin under the present administration is, somehow, a good thing for him.
Reply to
rangerssuck
I'm not commenting on whether it's a good thing or not (as I really don't know...yet) but cloud computing is bigger than you might think. I do know that it's something I deal with on a daily basis as part of my work. There is a world beyond your home computer, beyond your desktop and beyond your machine shop.
Here are a few companies who are working in the cloud (or have their heads in the clouds, if you prefer):
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Reply to
rangerssuck
Amen. If anyone should be worried about stocks sinking, it's gummy. Any worse and he'll have to roll up his portfolio and use it to fend off the younger dumpster divers. Plus, it could get hard for him to thieve wifi if the neighbor can't afford a connection. And without gummer's market newsletter investors will really be f%cked!
Wayne
Reply to
wmbjkREMOVE
I'm still waiting for you to tell us about a single original thought that you have had...bashing Gunner isn't very original, just popular.
Reply to
Buerste
====== This may well be the case, but...
Even assuming "cloud computing" is the biggest grift since beanie babies, it is still the Taiwan Computer Science and Information Technology graduates that are getting the jobs, not U.S. citizens, and they pay taxes in Taiwan, not the U.S. Additionally, the physical plant is not located in the U.S. thus facility/infrastructure construction generated no domestic U.S. activity, and the real estate and other taxes are not paid to a U.S. jurisdiction. The economic multipliers are all in Taiwan.
Of even greater concern is that these types of operations tend to be "incubators" where the ideas for new products/services/businesses are hatched. These "start-ups" will of course now grow in Taiwan, not the U.S.
I have badgered my Congressmen for information on just how much U.S. taxpayer money is being used to establish these competitors, albeit "owned" by nominally American Corporations, either in the form of business expense deductions, investment tax credits, or even direct subsidies such as loan guarantees, but have been unable to get a response. Another concern is how is tax evasion through "transfer pricing" to be controlled, and how will the transnational corporations be forced to repatriate their profits to the U.S. for taxation and/or stockholder dividend distribution.
One of the major reasons for the huge and increasing deficits in U.S. and other governmental budgets and retirement/entitlement plans is that the economic assumptions on which these programs were based have largely been rendered non-operational by the ever-increasing export of high skill/high wage [i.e. high tax paying] jobs, the export of high economic multiplier sectors of the economy, i.e. manufacturing, and mushrooming corporate tax avoidance/evasion by the transnational absentee owners. The GMC and MicroSoft articles were just two specific examples.
Reply to
F. George McDuffee
Warning -- thread drift...
========= If cloud computing is of interest to you see
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Microsoft, of course, is still the largest software company in the world with a large installed base and acknowledges that it can't hold onto its installed software license business model any longer. But with a string of recent setbacks -- Apple surpassing Microsoft in market capitalization; Google replacing Windows on its computers with Chrome -- it needs some good news and TechEd needs to deliver.
Reply to
F. George McDuffee
You mean, original thoughts like repeating the words "libtard" and "cheese check" over and over again? Physician, heal thyself.
Wayne
Reply to
wmbjkREMOVE
=========== I must not be getting all of Gunner's posts.
If the governments at various levels and/or major financial corporations are going to go bankrupt, it is better to have this occur sooner rather than later, as there will be more "stuff" to salvage. Continued digging simply makes the hole deeper. -- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).
Reply to
F. George McDuffee
Im not sure which part of the universe SucksRangers is posting from..but the posts he evidently getting...dont appear to be from me. Or he has over done the coke again..shrug.
Gunner
Reply to
Gunner Asch
I respond thus to "Teabagger" and such. I only respond in kind, so what ever insults I fling are reactive, not proactive...unlike most leftists. Does the term "leftist" bother you? I can't seem to remember, have you ever had a rational, respectful discussion with somebody that disagrees with you?
And, I see you avoided the question.
Reply to
Buerste
======= Not to worry!!! The US has the finest regulators that money can buy, so we can all get rich in the market.....
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-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).
Reply to
F. George McDuffee
Seems like a good spot to post?.
A short [20 min] video clip from the TED series that should be of interest to our OT posters/readers.
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About this talk Michael Shermer says the human tendency to believe strange things -- from alien abductions to dowsing rods -- boils down to two of the brain's most basic, hard-wired survival skills. He explains what they are, and how they get us into trouble.
About Michael Shermer Michael Shermer debunks myths, superstitions and urban legends, and explains why we believe them. Along with publishing Skeptic Magazine, he's author of Why People Believe Weird Things and The? Full bio and more links
Reply to
F. George McDuffee
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Hey George, I think your E-Mail campaign is paying off. LOL The financial reform bill is apparently going to include the Volker Rule and on steroids.
Reply to
John R. Carroll
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Ted.com is one of my favorite sites. wish I had enough time to watch them all
Reply to
RBnDFW
========= Not so fast grasshopper....
The committee to reconcile the House and Senate versions of the financial reform package is meeting, and anything is likely to be produced.
Two items of interest:
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But on Monday, during a discussion on CNBC, Volcker, the head of Obama's Economic Recovery Advisory Board, said the proposed authority is a "workable proposition for anything short of these biggest banks."
The Senate and House financial reform bills feature the resolution authority as a way to end TBTF. The bills are based on Obama's June 2009 blueprint for reforming the financial system.
According to Volcker, it isn't "workable" for the nation's megabanks.
Volcker appeared on the program with William Isaac, the former chairman of the Federal Deposit Insurance Corporation, who added that the legislation is "not going to prevent the top five banks from being saved."
"We will save them," Isaac said. Speaking about a potential future financial crisis, the former bank regulator said that Congress "would jump in with more legislation to bail out those banks. I don't have any doubt about that," he added.
The criticism from two former top bank regulators also echoes recent remarks by Federal Reserve Bank of Dallas President Richard Fisher, who argues that the bill doesn't come close to ending TBTF. Rather, he believes the nation's megabanks either need to significantly shrink, or be broken up.
In an April speech about the financial crisis and the need for fundamental reform, Assistant Treasury Secretary for Financial Institutions Michael S. Barr said "we must end the perception of 'too big to fail.'"
and
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Battling Frank On Wall Street Reform Al Franken is battling Barney Frank to save the life of a credit rating agency amendment that the freshman Minnesota Democrat was able to include in the Senate's Wall Street reform bill. Franken would bar banks from choosing which rating agency can rate which product -- the current system creates conflicts of interest leading to artificially rosy ratings. Under Franken's proposed system, raters would be assigned randomly to a financial institution, leaving them with the freedom to issue a poor rating without fear of losing business -- raters who are more accurate will get more business.
The House bill does not contain a similar measure and Frank, chairman of the House Financial Services Committee, says the amendment is untested and is offering Franken a study of the issue instead. Franken thinks a study isn't needed. Debate on Franken's measure begins at 11:00 a.m. Tuesday, when the conference committee convenes.
It now appears this is more dumb show for the masses of asses...
-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).
Reply to
F. George McDuffee
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"But with the so-called Volcker Rule now likely to become law after appearing to be dead at earlier points in the legislative process, banks are battling hard to fend off further restrictions on their activities."
"Much of the action centers on a provision sponsored by Senator Blanche Lincoln, Democrat of Arkansas, to effectively bar banks from trading derivatives, the complex instruments that have been implicated in the financial system chaos that followed the near collapse of the mortgage market in 2008."
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JC
Reply to
John R. Carroll

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