“The history of anti-recession efforts is that they are almost always initiated too late to do any good. The chart above (click to enlarge), based on recession timelines from the National Bureau of Economic Research, shows the enactment of stimulus plans is a fairly accurate indicator that we have hit the bottom of the business cycle, meaning the economy will improve even if the government does nothing.”
~Bruce Bartlett in today’s NY Times
Note that the chart above shows only the legislative lag for fiscal policy, i.e. the time it takes for Congress and the President to design and implement anti-recession fiscal policy. There is also an “impact lag,” which is the time period between passing fiscal stimulus policy (dates are listed above) and when that new fiscal policy change actually starts to have an impact on the economy, which could be another six months or more. By that time, the recession will almost always be over, and the fiscal stimulus will not only be unnecessary, but could actually be destabilizing.
A recent CD post had this quote from Hillary Clinton in 1996:
“The unfettered free market has been the most radically destructive force in American life in the last generation.”
The Dispatches from TJICistan blog responds to Hillary:
What did the market bring us in the generation between 1966 and 1996?
In Cars: Airbags, antilock brakes, front wheel drive, unibody construction with greater rollover protection
In computer hardware: Altairs, Tandys, Atari 800s, Apple IIs, Macintoshes, 386 clones, 486s, pentiums, 1.0 Gigahertz desktop machines.
In computer software: WordPerfect, Microsoft Word, the Macintosh OS, Windows, Oracle, Netscape navigator
In retail shopping: Costco, Target, Barnes and Nobles superstores, Amazon.com, Starbucks
In publishing: An explosion of books like never before seen in the history of mankind. Similarly, an explosion of magazines.
In medicine: Cheap and effective laser eye surgery, Prozac and other SSRIs that have brought relief and happiness to tens of millions, cancer treatments, massive advances in animal medicine
in food: the rise of organic food, cruelty free eggs and meat, Whole Foods, Trader Joes
The list goes on and on and on.
Result: A wave of Venezuelans, mostly from the middle and upper classes, have fled to the United States. Weston, a suburb west of Fort Lauderdale, has become so popular with Venezuelan immigrants, it is known as “Westonzuela.”
The Venezuelan community in the United States has grown more than 94% this decade, from 91,507 in 2000, the year after Mr. Chávez took office, to 177,866 in 2006. Much of that rise has occurred in South Florida, making the Venezuelan community one of the fastest growing Latino subpopulations in the region this decade. In many ways, the Venezuelan influx is reminiscent of the Cuban migration spurred by Fidel Castro’s overthrow of Fulgencio Batista in 1959 and his imposition of a socialist state.
From today’s NY Times Technology section:
India’s IT services market is forecast to grow to US$10.73 billion by 2011, at a five-year compound annual growth rate of 23.2%, as outsourcing emerges as a more favored option for companies in India.
As companies are finding it more difficult to hire and retain staff in their IT departments, they are looking at external service providers as an option, hoping to also cut down costs, and better manage growth in the process. A number of large Indian banks and telecommunications service providers are already outsourcing key IT operations.
IBM, Tata Consultancy Services (TCS) and Wipro together accounted for 26.1% of IT services vendor market share in India last year. IBM was the top vendor, with 11.2% market share. TCS and Wipro occupy the second and third positions with 10.9 and 4.1 percent market shares, respectively.
Isn’t it interesting that:
1. Indian companies are now increasingly outsourcing IT services, TO other Indian (and U.S.-based) companies IN India.
2. U.S.-based IBM is the #1 provider of IT outsourcing services IN India for Indian-based companies.
It’s a flat, flat, flat, flat world.
China Daily–The national urban and township unemployment rate was reduced to 4 percent last year, thanks to the creation of more than 12 million jobs and despite more people entering the workforce, a top labor official said yesterday.
The number of jobs created exceeded the target of 9 million set at the beginning of last year, Zhai Yanli, vice-minister of Labor and Social Security, said at a press conference.
12 million jobs per year breaks down to:
New jobs created every day: 32,876
New jobs created every hour: 1,369
New jobs created every minute: 23
1. New renters have to pay 2 month’s rent in advance = $3,000
2. New renters have to give another 2 month’s rent as a security deposit = $3,000
3. New renters also have to give another 2 month’s rent as a gift to the landlord, which is not refundable= $3,000
4. New renters also have to give another month’s rent as a finder’s fee to the realtor, which is also not refundable = $1,500
Our model suggests that the market is undervalued by 25% today. With the economy picking up steam in 2008, our forecast is that the Dow moves up as well and our year-end 2008 forecast is 15,000, with the S&P 500 at 1625.
Once recession fears prove unfounded, US equities will soar. Those who maintain their appetite for risk will be richly rewarded sooner than they think.
~An optimistic forecast from economists Brian Wesbury and Robert Stein at First Trust Portfolios