The Mess That Greenspan Made - Part 414

Rick Perry Does Not ♥ Economic Eggheads

There’s a lot not to like about Texas Governor and GOP candidate Rick Perry, but, clearly, two of his redeeming qualities are his disdain for the Bernanke Fed and, based on the fact that his campaign team is, so far, devoid of economists, a seeming dislike for the entire dismal set. Prior to last night’s GOP debate, this story in Forbes discussed the latter.

The governor relies on the Lone Star State’s economic performance under his leadership over the last decade to make his case. But where is his economic plan for the nation? Or, at least, where is the economic team that will help him craft it?

So far, apparently, neither exists.

As he stands up his campaign, there is evidence Perry is reaching out to private-sector leaders for economic advice. He brought a handful of Washington hands who lead small business trade associations down to Austin last month for a lunch meeting that one participant described as a “pure policy session” on job growth.

And it may be that Perry would like to hold off on hiring economic eggheads for as long as he can. The governor has cultivated an anti-elitist image, distancing himself from his predecessor in the Texas governor’s mansion, George W. Bush, by noting the 43rd president went to Yale, while Perry was a Texas A&M man. On Fox News, he recently blasted Obama for surrounding himself with academics who claim prestigious degrees and no real-world experience. “They are intellectually very, very smart but he does not have wise men and women around him,” Perry said.

As for last night’s debate, according to this Housing Wire story, the nation’s chief economist – Fed Chairman Ben Bernanke – isn’t too popular with this crowd, both Newt Gingrich and Mitt Romney saying they would not reappoint Bernanke to another term as the Fed chief if they were elected president, Gingrich saying he’d “fire him tomorrow”.

Based on Newt’s position in polls, Bernanke can rest easy until the end of his term.

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Of Job Growth and Recessions

Add this graphic from this NY Times article to the growing collection of charts portending doom for the U.S. economy (or at least another recession), this one based on the idea that job growth in the U.S. has slowed to a pace that, without exception over the last 50 years, has been associated with recessions (i.e., either heading into, in, or exiting a slowdown).

Of course, word earlier today that weekly jobless claims “unexpectedly” rose, up 2,000 to 414,000 for the week ended Sept. 3rd as employers stepped up their pace of firing, only adds to the negative feedback loop that the U.S. economy entered a few months ago.

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Thursday Morning Links

MUST READS
OECD warns that global economy is slowing – BBC
The three Fed stooges (and Mr Gross) – FT Alphaville
ECB holds rates as recession fears mount – Reuters
BoE keeps rates unchanged, holds off on more stimulus – Telegraph
Asian Central Banks Keep Interest Rates on Hold – NY Times
Fitch warns of downgrades for China, Japan – Reuters
A Layman’s Guide to the President’s Jobs Speech – Bloomberg
Chance of G7 Intervention As Soon As This Weekend – Business Insider
Through the looking glass with US Treasuries and gold – FT Alphaville
Rick Perry’s economic team: Free of economists so far – CNN/Money
Bitcoin: Cryptocurrency – Technology Review

MARKETS/INVESTING
Oil near $89 after mixed supply report – AP
Gold rises after ECB leaves rates unchanged – Reuters
More than 2.8m tonnes of hidden copper stocks -FT Alphaville
Mining stocks – On the runway, ready for take-off – FGMR
Paulson’s Fund Said to Lose 34% This Year – Bloomberg
Is China accumulating gold reserves? – Commodity Online
Crude on the Wide – Why? – Bruce Krasting
Is Gold Making a Double Top? – CNBC

ECONOMY/WORLD/HOUSING/BANKING
Rising Fears of Recession – NY Times
A Primer on Jobs and the Jobless – Mises
Middle-Class Americans Often Fall Down Economic Ladder – HuffPost
Channeling FDR: The Moral Case Against Unemployment – Freakonomics
Swiss Franc Decision Should Be a Lesson for Euro Critics – Spiegel
Romania Central Bank to Discuss Reserve Structure – Bloomberg
Germany backs sovereign debt rescue policies – Telegraph
Greek backsliding sparks euro exit talk – Reuters
Calculating the Ooomph From Big Government Refi Effort – WSJ
Mortgage Applications Drop as Refinancing Retreats – WSJ
Suing Banks Is Next Best to Letting Them Fail – Bloomberg
Bernanke gets hammered in Republican debate – Housing Wire
Bernanke unlikely to show his hand on Fed easing – Reuters

 

One Reason Why Canada Is So Expensive

After going through the pictures from our recent trip to Canada, I felt compelled to post this image from atop Little Beehive above Chateau Lake Louise in Banff National Park. I guess attractions like this are one reason why it’s so expensive to travel there.


Click to enlarge

We’d never been on this particular hike before and, despite all the people, it was quite fun. The sheer number of hikers on the trail does a good job of keeping the bears away and, rather than going the extra half mile and 400 feet in elevation to Little Beehive,  nearly all of them stop at the incredibly crowded Lake Agnes Tea House that has virtually no view.

Prepare to Pay More When You Visit Canada

Apparently I’m not the only one to have noticed the sometimes shockingly higher prices for consumer goods when you cross the border from the U.S. into Canada as finance minister Jim Flaherty has also seen the disparity as detailed in this story at Reuters.

Canada’s finance minister says he is irritated that retail prices are higher in Canada than in the United States despite the country’s strong currency, and wants a parliamentary committee to investigate the matter.

In a letter sent on Tuesday to the Canadian Senate Committee on National Finance, Finance Minister Jim Flaherty suggested he would repeat a 2007 drive in which he publicly pressured retailers to lower their prices in light of a sharp Canadian currency appreciation that he said should have eliminated the price gap.

“Canadians are rightly irritated when they see large price discrepancies on the exact same products being sold on different sides of the border,” Flaherty wrote in the letter, obtained by Reuters on Wednesday.

Flaherty’s bid to stop the flow of shoppers to malls just south of the border is aimed at boosting consumer spending after the Canadian economy contracted in the second quarter.

Consumer spending has been relatively healthy in Canada, even during the recession, but economists predict it will be more subdued in the rest of this year as confidence slips.

What was interesting about our recent trip is that the first stop we made after we crossed into Alberta was at the Calgary Costco where many of the same items sold at our local store were also available there. With only a few exceptions, prices were sharply higher.

You expect that high-tax items like gasoline and alcohol would be much dearer north of the border, but it seemed like just about everything was 10, 20 percent higher or more. Of course, it took me a little while to figure out that ribeyes were $22 per kilogram, not per pound, so it wasn’t quite as bad as it first seemed.

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