Mish's Global Economic Trend Analysis

House Republicans Wave White Flag Without a Battle; Three Month Extension Approved, Threats Withdrawn; Ryan's Cop-Out
Job Gaining and Job Losing Industries 2007-2012
Cameron's Cursed Speech Postponed Again; Why Bother? Passionate Plea to Exit; Nothing Better Than Something
Annual Gasoline Usage in Millions of Barrels

House Republicans Wave White Flag Without a Battle; Three Month Extension Approved, Threats Withdrawn; Ryan's Cop-Out

Posted: 18 Jan 2013 03:33 PM PST

A friend of mine just emailed a story regarding a Republican budget cave-in with a message "you nailed it". To be honest, I didn't. Let's review my precise call.

Politics of the Debate

Obama will chastise Congress with talk of financial Armageddon if Congress does not raise the debt ceiling.
Congress will pretend to hold the president hostage
The secretary of the Treasury will get into the act with its own version of the default debate
Perhaps a few payments on non-critical budget items will be temporarily skipped
Wall Street will feign panic
Constituents will pressure Congress to approve a new debt ceiling
Congress will raise the ceiling with another useless warning about next time

House Republicans Wave White Flag Without a Battle

Like clockwork, steps 1-3 fell in order. However, Republicans bypassed steps 4-6 and skipped straight to step 7 without a fight.

Bloomberg reports House Republicans Plan Three-Month Debt-Limit Increase.

House Republicans plan to vote Jan. 23 on a three-month extension of U.S. borrowing authority in an effort to force the Democratic-led Senate to adopt a budget plan.

"We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government's spending problem," Speaker John Boehner of Ohio said in a statement today at the end of the party's private policy retreat at a resort near Williamsburg, Virginia.

A leadership aide said Republicans are dropping their insistence that a short-term extension be accompanied by a dollar-for-dollar spending cut.

A leadership aide said Republicans are dropping their insistence that a short-term extension be accompanied by a dollar-for-dollar spending cut.

Senate Republican leader Mitch McConnell of Kentucky said in a statement that the lack of a Senate-passed budget in the last several years was a "shameful record that needs to end this year."

Political divisions in Congress pose limits to the ability of Republicans to achieve their long-term goals of deep cuts in spending, Budget Committee Chairman Paul Ryan of Wisconsin told reporters at the retreat yesterday.

"No one is talking about default, no one wants to default," South Carolina Republican Mick Mulvaney, who voted against the 2011 debt-ceiling deal, said in an interview today with Bloomberg Television. There is a "lot of support growing" among the rank and file for a short-term debt limit, he said.

The comments by Mulvaney and Ryan reflected the new political realities following President Barack Obama's re-election that are spurring House Republicans to reassess their goals.

Ryan's Cop-Out

Look at that pathetic statement by Paul Ryan "Political divisions in Congress pose limits to the ability of Republicans to achieve their long-term goals of deep cuts in spending".

Excuse me Paul, can I ask a simple question? I hope so because it is really simple: Who is the majority party in the House?

Time's up. I think you know the answer.

House Republicans should be able to pass anything they want and block anything they don't.

And it gets worse. "No one is talking about default, no one wants to default," said South Carolina Republican Mick Mulvaney.

Lovely. That goes against the message we heard last week. What changed?

Check out this complete nonsense from House Speaker John Boehner: "We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government's spending problem."

Really? How? More importantly, when did the House EVER "confront government spending problems". What a bunch of horse-hockey.

Why stop there? Take a look a statement by Senate Republican leader Mitch McConnell of Kentucky: Lack of a Senate-passed budget in the last several years was a "shameful record that needs to end this year."

Yes indeed.

Shameful Flag Waving

So, no I didn't "nail it". Republicans did indeed wimp out as I predicted. However, I fully expected a pretend-battle first. This was nothing but a pathetic, premature, shameful waving of the white flag by Republicans up and down the line.

What's next? Foot massages for Obama by Boehner, Ryan, and McConnell?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Job Gaining and Job Losing Industries 2007-2012

Posted: 18 Jan 2013 12:11 PM PST

In response to Interactive Map: Job Gains and Losses in the Recovery by Job Type (Healthcare, Education, Mining, Construction, Finance, Real Estate, etc), I exchanged Emails with Salil Mehta who has a blog on Statistical Ideas.

Salil asked for a better representation of some of the data in my post, specifically, a pair of tables I posted on jobs gains and losses since 2007.

I put together a line chart of what Salil asked, but I like the pie charts he sent much better. Click on either chart to see a sharper image.

Job Gaining Industries 2007-2012

Job Losing Industries 2007-2012

Credit for the data itself goes to Economic Modeling Specialists.

2007 is December of 2007 (just as the recession started)
1012 is December of 2012 (the latest job data)

Job Winners

Healthcare gained jobs every year since 2007, a total of 1,543,846
Private Education Services gained every year since 2007, a total of 443,210
Mining and Quarrying gained every year since 2007, a total of 106,863

Job Losers

Construction lost jobs every year since 2007, a total of -2,360,431
Information lost jobs every year since 2007, a total of -379,502
Government lost jobs every year since 200, a total of -34,997
Real Estate lost jobs every year from 2007-2011, a total of -300,807 since 2007
Manufacturing has gained jobs two consecutive years but the 2007-2012 total is -1,977,255
Retail Trade has gained jobs two consecutive years but the 2007-2012 total is -852,186

Lost and Gone Forever

The three largest net losers (construction, manufacturing, retail trade) have a net combined total of -5,189,872 since 2007. Most of those jobs are lost and gone forever.

Another 300,807 real estate jobs are lost and gone forever, as are 381,122 Finance and Insurance jobs, and 379,502 Information jobs.

See link at top for an interactive look and details that make up the above charts from Salil.

Once again, thanks to Economic Modeling Specialists and Mike Klaczynski at Tableau Software for the original post.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Cameron's Cursed Speech Postponed Again; Why Bother? Passionate Plea to Exit; Nothing Better Than Something

Posted: 18 Jan 2013 10:32 AM PST

All ears in the UK were tuned into an event that did not happen. Cameron prepared another wishy-washy speech, postponed yet again today, this time because of a hostage crisis in Algeria.

Please consider the sad saga of Cameron's cursed speech on Europe.

The great Europe speech was initially meant to be given before Xmas. It was put off, amidst reports that there were still deep arguments about its contents.

Monday January 21st was pencilled in, until somebody pointed out that this was the day of Obama's inaugural address. How about January 22nd? No such luck: this would coincide with the 50th anniversary of the Elysée Treaty between France and Germany. How could Cameron be so tactless? OK then – January 23rd. No again, that's the day that the World Economic Forum kicks off in Davos.

Eventually the Cameron team settled on a day and a location: January 18th in Amsterdam. A Friday is not ideal, in terms of the news cycle – but it would have to do.

The prime minister might now be wishing that the whole ill-starred project could be quietly called off – particularly since some of the speech's contents have already been trailed. More than ever, the prime minister is in a no-win situation. Expectations have been ramped up beyond Tantric levels. Reality can only be an anti-climax.

Unfortunately, it is probably too late for Cameron to abandon the whole speech. It will have to be given. Now, they just have to find a date …

Specter of EU Exit

Bloomberg reports Cameron Speech Excerpts Raise Specter of EU Exit

While Cameron postponed the speech in Amsterdam due to the hostage crisis in Algeria, his office earlier released excerpts for publication before the scheduled address today.

"More of the same" won't be enough to guarantee the EU's future due to Britons' dismay at a lack of consent in their relationship with the 27-nation bloc, Cameron planned to say, according to the text.

"There is a gap between the EU and its citizens which has grown dramatically in recent years and which represents a lack of democratic accountability and consent that is, yes, felt particularly acutely in Britain," he was due to say. "The danger is that Europe will fail and the British people will drift towards the exit."

Both Cameron's Liberal Democrat coalition partners and the opposition Labour Party oppose his push to loosen ties with Europe, saying he risks investor confidence and London's role as a financial center.

"For many foreign investors one of Britain's attractions is as a gateway to a market of 500 million people," Ed Balls, economy spokesman for Labour, wrote in an article on the Guardian newspaper's website. "At a time when securing jobs and growth must be the priority in Europe and when the future shape of the euro zone remains so uncertain, announcing now a referendum that will raise fears that Britain could leave the EU cannot be in our national interest."

Forty-two percent of the electorate say they would vote to leave the EU in a referendum compared with 36 percent who said they would back staying in, according to a YouGov Plc (YOU) poll conducted online on Jan. 10 and 11. A YouGov poll in November found 51 percent favoring an exit.

The speech has yet to be rescheduled.

Biggest Political Wimp of Major Political Leasers

Supposedly Cameron wants a vote on the EU, but not for five years.

Supporting a referendum that far into the future is not supporting a referendum all. It's nothing but pretense.

His own party does not support staying in, UK citizens do not want to stay in, but the opposition does.

By failing to back a vote, and failing to take a strong position on much of anything besides the financial transaction tax, Cameron has proven once again that he is biggest political wimp of all the major world leaders.

Looking for more evidence? If so, please consider We Want to Have Our Cake And Eat It Too; Another Hotel California Setup; One Million Tiny Miseries.

The inherent risk of Cameron's strategy is he is ousted, there never is a vote, and the opposition signs on the dotted line to some absurd agreement.

Instead of making an impassioned plea one way or another, Cameron bowed down to the opposition, in the wimpiest fashion possible, by throwing his own party as well as UK citizens a dried bone five years into the future.

Why bother?

Passionate Plea to Exit

Looking for a speech Cameron could have and should have delivered? Then please consider a Passionate European's case for leaving by Simon May.

For a passionate European there is now a strong case for Britain to leave the EU. By passionate European, I mean someone who sees the EU, for all its absurdities, as the noblest of postwar political projects – one that must and will lead to a federation, probably of a loose, Swiss kind, with a directly or indirectly elected president and a European Parliament with teeth. Someone who would love Britain to support this, but who realises it never will.

No postwar British prime minister has accepted this moral case for federalism. Even Edward Heath, the most pro-European, had no vision for Britain in Europe beyond entry.

It is irresponsible to ask, yet again, a country with virtually no interest in such a development to renew its vows to a marriage whose very purpose it cannot abide. And it is irresponsible to the rest of the EU – especially the core countries of Germany, Benelux [Belgium, the Netherlands and Luxembourg], Italy and even France – which have a profound need to develop into a confederation.

Britain will continue to have access to the EU market if it leaves – just as Switzerland does, a country that also sends about half its exports to the EU. Competitiveness, not market access, is Britain's problem. It has the same access as Germany to the vast Chinese and US markets but is far less successful in both. Switzerland, with a population smaller than the English Midlands, exports almost as much to Germany from outside the EU as Britain does from within it.

There must be a referendum on UK membership, and the only honest choice is in or out. Since Britain will never feel comfortable in a federal project – any more than it would as the 51st US state – it should leave this unnatural marriage, which regularly tears apart its main political parties, and find a role fit for its lonesome, imaginative and tactically adroit self.

Both the US and EU need Britain as an ally, and it will have a bright future as a semi-independent broker in world affairs. The greatest advance in Middle East peace for decades – the 1993 Oslo accords – was brokered by Norway, precisely because of its independence. If Norway can do it, Britain can do it in spades.

Commonsense Plea

Now that was a passionate, well-written, commonsense plea. The most amazing thing about the plea is it comes from an ardent nannyzone advocate.

Cameron could have delivered a similar passionate message, for or against an exit, and let the chips fall where they may.

Nothing Better Than Something

Not only did Cameron fail to deliver a passionate speech, he didn't deliver a speech at all. Judging from leaked excerpts, nothing was just as good, if not better than something.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Annual Gasoline Usage in Millions of Barrels

Posted: 17 Jan 2013 11:40 PM PST

Inquiring minds are once again taking a look at annual gasoline sales in the United States. Reader Tim Wallace provides the following chart for discussion.

click on chart for sharper image

Data is from the US Energy Information Administration (EIA) Weekly Petroleum Report.

Tim writes ...

Hello Mish

Data for the chart is taken from the weekly reports I like to use, and its trend is accurate.

The current downturn happened back in 2007 in gasoline, and it is one of the things I saw that got me out of the market. I cannot see an improved economy from these numbers, and the numbers also cannot be explained by "higher mileage" vehicles - the impact would be some, but not as major as we see here, with usage numbers now back to 2001 levels.

The drops in the past two years can only be explained by less driving, which also would mean less wear and tear on the roads and therefore less spending.

Interestingly, I have seen a lot of repaving of roads that are perfectly serviceable. So why pave them?

And talking about paying for things that you use ... You and I both know that the highways North of the Mason-Dixon line eat up much more tax dollars as the weather in winter tears them apart. Therefore y'all up there should have a much higher fee than those in the South here who use much less of the federal spending pie!

Just sayin'!

Tim

Hi Tim. Thanks for reminding those of us in the great state of Illinois that we should be paying even more for our services! I am sure governor Pat Quinn would be more than happy to oblige overpaid unions by hiking our taxes more.

Kidding aside, Tim was referring to my post ObamaMiles Tax Coming Soon; Transportation "Trust Fund" Broke; Scheme to Boost Taxes 250%; Mindless Possibilities

Readers may also wish to consider European Car Demand Near 20-Year Low; Peugeot Workers Shut Down French Plant; GM Loses Global Car Sales Lead to Toyota Once Again

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mish's Global Economic Trend Analysis

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