Explaining Southern California's economy

Where's the inflation? It's Ron Paul versus Ben Bernanke PART II

Ron Paul Continues Iowa Campaign Tour

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LE MARS, IA - DECEMBER 30: Republican presidential hopeful U.S. Rep Ron Paul (R-TX) speaks during a town hall meeting at the Le Mars Convention Center on December 30, 2011 in Le Mars, Iowa.

Last week, I wrote about how there's no significant inflation in the U.S. economy and that critics of the Federal Reserve's policies, chiefly Ron Paul, should admit that they were wrong and find something else to complain about. Such as Fed Chairman Ben Bernanke's inability to address the central bank's other mandate, maximum employment. With an unemployment rate at 8.3 percent, we're far from it.

The response from the commenters was swift, copious — and merciless! I got 120 comments, by far the most ever for a DeBord Report post, and all the one's that I didn't write myself disagreed with everything I had to say. Well, one didn't entirely disagree. This person just said I was as off-the-mark as Kenneth Rogoff and Paul Krugman and shouldn't be blamed.

I'll hasten to say at this point that I'm really fine with with this. I actually like being vigorously attacked, and I think that a good blogger brings the comment stream into the process. And so I'm doing that now (the comments are unedited, by the way).

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The Future of Wealth in LA: How LA stacks up

The above chart is from the a new report, "The Future of Philanthropy in L.A.: A Wealth of Opportunity," which I blogged about yesterday. The red line is LA County's projected transfer of wealth from 2010-2060, plotted against other counties (and cities, such as Detroit, Philadelphia, Chicago, Brooklyn). The growth rate is anticipated to be 8.7 percent yearly. That's a pretty torrid rate and, as you can see, will enable LA to outpace other major metro areas by a wide margin.

Growth always sounds great, but it can create challenges. For example, when countries grow too fast, they can have problems with inflation: too much money becomes available too fast to buy too few goods or services. Governments can get headaches trying to manage this.

In terms of the looming transfer or wealth in the LA region, the challenge is for non-profit organizations to get ready for it to happen. If your philanthropic metabolism is based on the present levels of wealth transfer, it's going to need to evolve to deal with wealth transfers that will be, as the report points out, 1,303 percent higher than Philadelphia, at an extreme.

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Stuckflation continues: 80,000 new jobs in October does not a recovery make

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Unemployment in America grinds on as job seekers confront a weak recovery.

The BLS released October employment numbers this morning, and the numbers were disappointing. We were looking for around 100,000 new jobs, but we got only 80,000. The pattern for the past few months has been for a low number to be revised up. August, for example, came in at zero (yes, zero) but was later revised up, as was September.

So that's the silver lining. Taking revised data into account, we added about 100,000 more jobs than the BLS originally thought at the end of the summer and into the early fall. 

Altogether, this was enough to shave 0.1 percent off the unemployment level: we went from 9.1 to 9.0 (Hooray, U.S. economy!). Obviously, this is a dismal pace of improvement, unlikely to do much at all to bring the economy back to "full" employment of around 4 percent anytime soon. 

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Let the battle begin: Stagflation or 'Stuckflation'?

This CNBC video features the musings of Barry James, who manages the James Golden Rainbow Fund, which "seeks to provide total return through a combination of growth and income and preservation of capital in declining markets." More to the point, Barry was asked to consider whether we're currently experiencing a replay of the 1970s, a decade that will be forever known for "Saturday Night Fever," the Bicentennial, punk rock...and stagflation, a scary economic phenomenon that combines low growth and high inflation.

We certainly have the low growth part right now, even though the third quarter 2011 data showed that U.S. GDP was 2.5 percent, much better than expected. The high inflation side, on the other hand, hasn't really materialized. Our current rate is 3.9 percent, just slightly above the historic average of 3.38 percent. And this is with the Federal Reserve pouring money into the economy.

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Reportings: Gold collapses; Zynga's IPO; Issa picks Mitt

More market madness as inflation retreats, the dollar rallies, and gold collapses. "'Liquidation selling in gold and silver seems to be outweighing its safe-haven buying," said James Moore, research analyst at Fastmarkets.com, 'but we would expect that to return before too long.'" (The Street)

 

Zynga's dismal second-quarter earnings raise questions about going public: "Zynga's IPO is more likely to be affected by the roiling stock market, analysts said. The company in June declared its intent to publicly sell shares to the public, but has yet to pull the trigger on a date to begin trading." (LAT)

 

Rep. Darrell Issa throws his weight behind Mitt Romney. Also insists the the current Chief Executive lives in an economic fantasy land: "'President Obama never worked in the real economy — we can’t afford to have another president who has spent his career outside the real economy,' Mr. Issa said in a statement."

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