November 12, 2010

Lickety-Split Links (111210, Morning)

Filed under: Lucid Links — Tom @ 8:43 am

Uncle Sam’s Monthly Treasury Statement for October, typically a very slow month for collections, shows that the government took in $146 billion during the month, up 8% from $135.2 billion in October 2009.

That’s nice, but to get to the Congressional Budget Office’s projected $2.648 trillion in receipts (go to Page 3 at link) by the time the fiscal year ends on September 30, 2011, collections will have to increase by 22.5% over fiscal 2009′s $2.162 trillion.

In other words, they’re already running way behind (by about $18 billion — no, make that almost $20 billion) where they need to be to keep the coming year’s deficit from being higher than the projected $1.066 trillion.

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You have to wonder if this is what rank and file UAW workers expected when their leadership ran to the loving arms of the Obama administration for $50 billion to bail out bankrupt General Motors last year:

General Motors Co is in the final stage of talks to sell equity to long-time Chinese partner SAIC Motor Corp in conjunction with its landmark initial public offering, two people familiar with the matter said.

The two government-funded automakers are currently finalizing how much of a stake SAIC would buy in the top U.S. automaker after discussions involving technology sharing and SAIC’s ambitions to move beyond the China market, the sources said.

You also have to wonder, given that both governments are involved, if there isn’t an implied Chinese threat to stop buying U.S. bonds lurking in the background of these discussions — or even a specifically stated up-front threat.

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At Pajamas Media, Zombie has the definitive pair of posts on gerrymandering:

The second post also has a number of runners-up.

They are must reads. They are not necessarily enjoyable. In fact, they are infuriating.

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From the “You Can’t Make This Stuff Up” Dept.:

Obama panel probes stimulus waste — at Ritz Carlton

Members of a key panel created by the American Recovery and Reinvestment Act, better known as the stimulus bill, have scheduled a meeting on November 22 to consider ways to prevent “fraud, waste, and abuse of Recovery Act funds.” The meeting will be held at the super-luxe Ritz Carlton Hotel in Phoenix, Arizona.

The group is the Recovery Independent Advisory Panel, a sub-committee of the larger Recovery Accountability and Transparency board (sometimes known as the RAT board). The stimulus bill set up the Recovery Independent Advisory Panel, or RIAP, to make recommendations to identify and prevent waste of the bill’s $814 billion in stimulus spending.

Okay, the choice of venue is obviously offensive.

But isn’t it far more offensive that they’re finally coming up with “recommendations to identify and prevent waste” 21 months after the stimulus bill became law? It’s a little late for the “prevent” part.

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13 Comments

  1. That last link is rich (no pun intended). Hey, why don’t they have the meeting in Harry Reid’s Nevada Ritz Carlton rooms instead?

    Comment by zf — November 12, 2010 @ 9:27 am

  2. Just a quickie question: what do you think of people defending the Feds QE2 on the basis that it will balance deflation against long-term inflation?

    Seems a bit paradoxical to me.

    Comment by zf — November 12, 2010 @ 11:41 am

  3. #2, it’s nonsense and here’s why:

    http://www.cnbc.com/id/40135092

    According to the article the prices at Walmart have actually gone up by .6% over the past 2 months or at an annual rate of 3.6% whereas the CPI is indicating an annual rate of .3%, this is a 10 fold difference between what real people are experiencing and what the government says is happening. Going back to an earlier comment on another thread, the GDP figures the government publishes are supposed to be minus inflation. If you are reporting an annual 3.5% GDP but inflation is really 3.6%, not .3% then we never came out of the recession and there is in fact NO DEFLATION occurring except in the housing sector. A price drop in one sector of the economy is NOT DEFLATION, a general price drop in most if not all sectors of the economy would be considered deflation. What we have here is the other way around and the Dems and their bureaucrat allies are afraid the public will realize they once again have been lied to. How can you trust a government that lies? You can’t.

    Comment by dscott — November 12, 2010 @ 4:42 pm

  4. #2 and #3, there may be inflation occurring that hasn’t made its way into govt. reports, but I’m not down with the idea that an 86-item market basket at Wal-Mart provides any kind of meaningful evidence of that. I can name several things at Wal-Mart that may or may not be in that basket that I know have gone down or haven’t budged.

    As to whether inflating the currency offsets other deflation that’s occurring, they’re different things. Bernanke runs the danger of inflating everything across the board, while the deflation to the extent it might be occurring is only on certain items in certain sectors.

    A lot of food commodity prices are going up, there is no doubt about that.

    Comment by TBlumer — November 12, 2010 @ 5:17 pm

  5. #4, IF the CPI figures do not include food and that figure is used to adjust the GDP for inflation then clearly the adjustment is faulty and under reports inflation. The reason I submit is that when a consumer has a fixed amount of income, little credit as now is because of the financial debacle, then a zero sum game has been established. In a zero sum game what one spends more on one thing (necessities) must subtract from the disposal income left for another thing. This is exactly how the economy tanked the first time around by my contention. The price of energy (gasoline and diesel) skyrocketed, then layoffs commenced, no job – no ability to pay the mortgage, dampened housing sales, no new home sales, more job layoffs in the construction industry, etc.

    BTW- Energy like Food is NOT in the CPI for adjusting the GDP to my knowledge. Please correct me if I’m wrong about that.

    The food price hikes are the next support beam in the economy to be knocked out. Given the stupidity of Congress’s wild deficit spending and the Fed’s irresponsible enabling of it by buying Treasuries, inflation via dollar devaluation has started Carter style inflation. With the weakness of our economy this is going to really hurt a lot of the most vulnerable people in our society, namely the poor and senior citizens. What the Dem controlled Congress has done is extremely cruel or thoughtless at best.

    Comment by dscott — November 12, 2010 @ 6:57 pm

  6. #3 and #4, Thanks for your responses.

    Comment by zf — November 12, 2010 @ 8:55 pm

  7. #5 dscott, based on this look at Wiki, I don’t think you’re correct about food and energy not being considered in the GDP deflator:

    http://en.wikipedia.org/wiki/GDP_deflator

    If food and energy go up a bunch, lower income folks who aren’t eligible for food stamps will be hard-hit, as will outfits selling items that aren’t considered “necessities” to lower-income folks, as you aptly pointed out.

    Comment by TBlumer — November 12, 2010 @ 9:09 pm

  8. Hmmm, let’s test that theory. GDP According to the BEA:

    Quarter Current 2005 chained dollars
    2008q1 14,328.4 13,339.2
    2008q2 14,471.8 13,359.0
    2008q3 14,484.9 13,223.5
    2008q4 14,191.2 12,993.7
    2009q1 14,049.7 12,832.6
    2009q2 14,034.5 12,810.0
    2009q3 14,114.7 12,860.8
    2009q4 14,277.3 13,019.0
    2010q1 14,446.4 13,138.8
    2010q2 14,578.7 13,194.9
    2010q3 14,730.2 13,260.7

    So according to the BEA using 2005 chained dollars, we went into an economic decline in 2008q3 and didn’t start growing again in 2009q3, i.e. 5 consecutive quarters. But using Current Dollars we experienced an economic decline 2008q4 to 2009q2, 3 consecutive quarters.

    So whose figures are you going to believe?

    Comment by dscott — November 13, 2010 @ 8:39 am

  9. No, that’s 4 consecutive quarters downward Q308, Q408, Q109, Q209 — i.e., the recession as normal people define it.

    The current dollar declines only mean that we experienced overall deflation during the three quarters you ID’d, heavily influenced by the drop in energy prices (e.g., $4/gal gas to $2/gal), and to an extent food. They have no significance in an of themselves in evaluating economic growth until they are deflated.

    Comment by TBlumer — November 13, 2010 @ 9:11 am

  10. Uhmm, my post didn’t show for your response BUT.

    The BEA site: http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=555&p_created=1284581867&p_sid=d_2kvXek&p_accessibility=0&p_redirect=&p_lva=&p_sp=cF9zcmNoPSZwX3NvcnRfYnk9JnBfZ3JpZHNvcnQ9JnBfcm93X2NudD00MjQsNDI0JnBfcHJvZHM9JnBfY2F0cz0mcF9wdj0mcF9jdj0mcF9zZWFyY2hfdHlwZT1hbnN3ZXJzLnNlYXJjaF9ubCZwX3BhZ2U9MQ**&p_li=&p_topview=1

    Table 9.0U – Comparison of the PCE Price Index with the CPI reconciles the changes in the personal consumption expenditures (PCE) chain-type price index, prepared by the Bureau of Economic Analysis (BEA), with changes in the consumer price index for all urban consumers (CPI), prepared by the Bureau of Labor Statistics (BLS).

    The differences between the two indexes can be grouped into four categories: formula effect, weight effect, scope effect, and “other effects.”
    The formula effect accounts for the different formulas used to calculate the two indexes. The PCE price index is based on the Fisher-Ideal formula, while the CPI is based on a modified Laspeyres formula.
    The weight effect accounts for the relative importance of the underlying commodities reflected in the construction of the two indexes.
    The scope effect accounts for conceptual differences between the two indexes. PCE measures spending by and on behalf of the personal sector, which includes both households and nonprofit institutions serving households; the CPI measures out-of-pocket spending by households. The “net” scope effect adjusts for CPI items out-of-scope of the PCE price index less items in the PCE price index that are out-of-scope of the CPI.
    “Other effects” include seasonal adjustment differences, price differences, and residual differences.

    http://www.bea.gov/national/nipaweb/nipa_underlying/TableView.asp?SelectedTable=62&FirstYear=2009&LastYear=2010&Freq=Qtr&ViewSeries=N

    The PCE by the BEA for 2010q3 was 1% on an annual basis, the CPI was 1.5% for the same period IF I read this chart properly. So this is even WORSE than I suspected.

    Comment by dscott — November 13, 2010 @ 9:33 am

  11. #8, aren’t chained dollars supposed to cancel out that drop in price as you suggested? This is why I included the 2009q3 for 5 months according to the 2005 chained dollars because 2009q4 is the first uptick in chained dollars.

    Comment by dscott — November 13, 2010 @ 9:37 am

  12. Correction to my comment on the number of quarters, you are correct about 4 quarters not 5, I confused the numbers in 2009q3 chained dollars, details, details, details.

    Comment by dscott — November 13, 2010 @ 10:05 am

  13. #4, Having gone to Wal-Mart today I have to disagree. Just about *everything* was up, food and otherwise.

    Comment by zf — November 16, 2010 @ 7:00 pm

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