Where is the US economy headed?

Two pieces of news on the economic front today...
First, Greek Prime Minister Papandreou announced that there will be a referendum on the EU's proposed resolution of the Greek financial crisis. The EU plans call for a 50% write down by banks holding debt, an infusion of a bunch of money and austerity measures by the Greeks.
I can not imagine this referendum, for which no date has been set, as having any chance of passing.

Second, the Japanese took steps today to devalue its currency by 5% against the dollar and the euro. This action will decrease the cost of its exports while making imports to Japan more expensive.
The yen has been appreciating in value recently as investors have shied away from uncertainty about the U.S. and European economies.

That means that Japanese noses are to be pressed 5% harder into the grindstone.

The no confidence vote on Greece's PM is now going on. He may win by a vote or two. He will avoid having to call a snap election. Instead there will be an interim coalition government.
Is anyone following this story?

Good question. Has the Greek PM abandoned his efforts to seek a referendum?

It was a political ploy all along, to bring the hard-liners into line. He has said that it will be 'unnecessary' as long as everyone in the gov't goes along with his plan.

Cycloptichorn

It is difficult to find anything to get excited about regarding the BLS jobless numbers out this morning. We recorded a reported net gain of a mere 80,000 jobs in October. 104,000 were in the private sector while the public sector lost 24,000. Advocates of reducing the size of government might be pleased.
U-3, the most quoted stat, said the unemployment rate dropped from 9.1% to 9.0%. U-6, which I watch, remained at around 16%.
There was an interesting revision in the numbers - as there often is.
BLS now says that net job creation in August was 104,000 vs 57,000 reported earlier and 158,000 vs 103,000 in September.
I don't quite understand the size of the revisions.

More of the same....zero ability to put the unemployed back to work so the American people give up looking for work. There is a lot of silent suffering behind these numbers.

Hindsight Cyclo. You shouldn't try looking savvy with hindsight. Where were you when the referendum was announced?

Thanks, I have been travelling, and events were unfolding more quickly than I was able to follow them. Your judgment is probably true, but the quick and very hostile reactions of the German & Dutch very likely also had something to do with it. The Greeks still have a current running deficit and need continued tranches from their EU benefactors to make payroll for their government employees as well as payments for continuing bond maturities.

I am still very skeptical of the potential that the illusions built into the Eurozone rescue plan will hold. The "voluntary" haircuts for private bondholders, while the various national banks continue to mark the Greek bonds at face value, while evading technical default, will not deceive the bond market and future buyers of Euro area debt. It is very hard to control or even predict events when government debt gets as high as it is in Greece or even Italy and Spain. Moreover nothing has yet been done to address the underlying economic and demographic causes of this continuing problem.

We're not very far behind them.

I shouldn't take claim for that analysis, it's only based on what I've read in a variety of places.



Sure we are. Do you forget that we can simply print more money? We have problems, for sure, but they are nothing like those of Greece, who cannot undertake this traditional remedy.

Cycloptichorn

With its bond purchases, QE2, and continued abnormally low interest rates the Fed has already printed a lot of money and set the stage for accelerating inflation ahead. I agree that both are predictable outcomes for sovereign countries with high and growing debts. The trouble comes in when the adverse effects of all these factors manifest themselves in lowered real economic growth rates. One runs out of maneuvering room very quickly. That indeed is the situation of Europe today.

Do we need a new economic perspective?

I don't think you understand the situation George. The "middle class" can now only eat itself. Those below have nothing further to be milked and those above are too cute to be.

It expanded too much. Malthus ****. It will vote for Big Brother to keep the balls in the air a bit longer.

Do you believe there is only a fixed amount of goods & services available? Or do you believe that economies can grow and produce more under the right circumstances? It appears you believe the former: I don't.

Well George, considering our governmental agencies, our politicians and our economic system we of the 99 percental group are screwed. If you cant see that you deserve the government your getting.

What goods George? What services? Economics has nothing to do with psychology. There's no economic benefits that I know of in beautification treatments. And they are infinitely extensible. In fact there is dysfunction(unforseen negative consequences--impolite to speak of usually) in such treatments.

Take a look round your Yacht Club dining room and tell us how much of the expense goes on nutrient and how much on making the members feel special. As soon as the nutrient costs less than the "appointments" you no longer have a dining room. It has become a treatment centre.

Has Veblen passed you by? He's famous for how he wrote about it and not for any startling discoveries. It's obvious to anybody who opens their eyes.

I once loaned a copy of The Theory of the Leisure Class to the wife of a pal of mine who was in the fashion business after a heated discussion in the pub. She tore it to shreds after reading six pages. That's how to do Ignore stylishly.

I bet you think an orchid is more beautiful that a dandelion. Why? Because more wasteful effort has been applied to the orchid. That's why. There is no aesthetic reason.

WASTE=STATUS. Take a good look at the Conrad Murray trial. Medical incompetence kills thousands. It's a feeding frenzy.

You could whip the few remaining productive workers I suppose.

What about the jobs that such treatments create, and the feel-good factor that makes people spend more?

Pretty Poodle Parlours included eh?

If we all got a poodle and took it for a shampoo and pedicure once a week all our economic difficulties are solved.

Maybe not, but the poodle parlour proprietor's would.