Today in the economy

[killersheep]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

Perhaps we should just take a step back instead of analyzing the nation's currency effect. Since I get this from a Forex site it will certainly be focused on currency exchange and speculation based off of that. If anyone can tell me where to get a more general focus economic calender, I would greatly appreciate it.

Looking at these numbers I am very suprised to see the US core retail sales in positive territory. I fully expected with the amounts of layoffs and foreclosures that people would be padlocking their wallets. I understand that they aren't huge numbers, but there aren't any spending spree months coming up either.

[Kirkland Laing]

Retail sales are given a big statistical adjustment in February as it's quietest month of the year. No telling if they're goosing the numbers.

But the big retail spending problem is this.

It's 70% of us GDP, 70% of the economy.

The US consumer has for decades been the engine of economic growth, buying the world's products and growing the global economy.

But since 1980 median wages have been static but living costs have risen, forcing the US consumer to go into debt to finance their lifestyles.

Over the past decade that debt has been secured on their houses, something that was rising in value and looked to be an ATM machine.

But now those houses are falling to half their value so the US consumer is now heavily indebted with no increase in earnings and can't borrow any more as their assets have halved in value.

So how is the economy going to pick up? It will do at some point but it'll probably be a dead cat bounce when it does, it's hard to see what's going to drive substantial future growth right now.

[CGM]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

Perhaps we should just take a step back instead of analyzing the nation's currency effect. Since I get this from a Forex site it will certainly be focused on currency exchange and speculation based off of that. If anyone can tell me where to get a more general focus economic calender, I would greatly appreciate it.

Looking at these numbers I am very suprised to see the US core retail sales in positive territory. I fully expected with the amounts of layoffs and foreclosures that people would be padlocking their wallets. I understand that they aren't huge numbers, but there aren't any spending spree months coming up either.

Fair enough. I'll just make one final observation about currency. Very often the value of a nation's currency relative to another's is held up as a barometer to the health of that nation's economy, but it ain't quite so simple. For example, you could argue that a fall in the exchange rate of your country in and of itself in some ways will have a positive effect on the economy, in that it makes foreign goods more expensive, thus encuouraging domestic consumption, while at the same time making your own products more attractive to foreign purchasers. Oh wait, increased exports will then drive the exchange rate back up.

It's all a bit complicated, ain't it. Equilibrium is a very interesting topic.

[killersheep]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

Perhaps we should just take a step back instead of analyzing the nation's currency effect. Since I get this from a Forex site it will certainly be focused on currency exchange and speculation based off of that. If anyone can tell me where to get a more general focus economic calender, I would greatly appreciate it.

Looking at these numbers I am very suprised to see the US core retail sales in positive territory. I fully expected with the amounts of layoffs and foreclosures that people would be padlocking their wallets. I understand that they aren't huge numbers, but there aren't any spending spree months coming up either.

Fair enough. I'll just make one final observation about currency. Very often the value of a nation's currency relative to another's is held up as a barometer to the health of that nation's economy, but it ain't quite so simple. For example, you could argue that a fall in the exchange rate of your country in and of itself in some ways will have a positive effect on the economy, in that it makes foreign goods more expensive, thus encuouraging domestic consumption, while at the same time making your own products more attractive to foreign purchasers. Oh wait, increased exports will then drive the exchange rate back up.

It's all a bit complicated, ain't it. Equilibrium is a very interesting topic.

It is an interesting and very complicated topic, there is definately a reason I don't dabble in Forex. I picture it as an abacus that is infinately long and all the scales move independently and constantly, but sometimes together Each scale is based on a different variety of vastly complex economic systems.

[Kirkland Laing]

American International Group Inc. will pay $450 million in bonuses to employees in its financial products unit. That division was at the heart of AIG's collapse last fall, which compelled the U.S. government to provide $173.3 billion in aid to keep it running.
Chief Executive Edward Liddy told Treasury Secretary Timothy Geithner in a letter dated Saturday that the next payments to employees of the financial products unit -- whose woes caused massive losses at the giant insurer -- are due on Sunday, and added "quite frankly, AIG's hands are tied."


AIG to Pay $450 Million in Bonuses - WSJ.com

[killersheep]

American International Group Inc. will pay $450 million in bonuses to employees in its financial products unit. That division was at the heart of AIG's collapse last fall, which compelled the U.S. government to provide $173.3 billion in aid to keep it running.
Chief Executive Edward Liddy told Treasury Secretary Timothy Geithner in a letter dated Saturday that the next payments to employees of the financial products unit -- whose woes caused massive losses at the giant insurer -- are due on Sunday, and added "quite frankly, AIG's hands are tied."


AIG to Pay $450 Million in Bonuses - WSJ.com

I hate Liddy

[Kirkland Laing]

The stock market has jumped a little in the last week or so. That's because this was informally announced a week ago :

The Financial Accounting Standards Board, pressured by lawmakers to change the fair-value rule blamed for worsening the financial crisis, proposed permitting companies to use “significant judgment” in valuing assets......

Fair-value, also known as mark-to-market accounting, requires companies to set values on most securities every quarter based on market prices. Wells Fargo & Co. and other companies argue the rule doesn’t make sense when trading has dried up because it forces banks to write down assets to fire- sale prices.

FASB Moves Toward Giving Banks More Flexibility on Fair-Value - Bloomberg.com

The rule was brought in after various banking/accounting scandals involving banks making up ficticious values for their dodgy assets. It now appears that part of the plan to get us out of the current mess is to again let banks ignore the shit-like quality of assets they own on their balance sheets and make up ficticious values for them. Hey presto, the banks become solvent again! Then it looks like they plan to try and reinflate the bubble that just burst. This is all going to end in tears.

[Hunter]

The Financial Accounting Standards Board, pressured by lawmakers to change the fair-value rule blamed for worsening the financial crisis, proposed permitting companies to use “significant judgment” in valuing assets......

Haha - I cant believe this.......Talk about putting a band aid on the problem...