Daily Digest - Jan 2
- China factories cut output at record pace:
- Manufacturing Index Hits Lowest Level Since 1980
- As Recession Deepens, So Does Milk Surplus
- Average Annual Unemployment Rate - Then and Now (Chart)
- Unemployment Rate (Shadow Stats Chart)
- The Year in Markets (Interactive Chart)
- Selling gold jewelry
- Russia cuts off gas deliveries to Ukraine
- Report: Toyota developing solar powered green car
CLSA PMIBEIJING (Reuters) - Chinese factories slashed output and workers at a record pace in December and manufacturing activity overall fell for a fifth month as the global financial crisis hit export demand, a survey by brokerage CLSA showed on Friday.
The figures, which CLSA said showed a sector close to recession, spell further gloom ahead for the Chinese economy and highlight the urgency with which the government is trying to cushion the country from the effects of the global crisis.
"Chinese manufacturing activity was very weak in December. Output contracted at a record pace, employment fell for the fifth month and work in hand declined," Eric Fishwick, head of economic research at CLSA, said in a statement.
"With five back-to-back PMIs signaling contraction, the manufacturing sector, which accounts for 43 percent of the Chinese economy, is close to technical recession," he said.
U.S. factory activity fell to a 28-year low in December, according to an industry report released on Friday that showed a more severe contraction in the sector than expected.
The Institute for Supply Management said its index of national factory activity fell to 32.4 -- the lowest since 1980--from 36.2 in November.
A reading below 50 indicates contraction in the sector.
Economists had expected a reading of 35.5, according to the median of their forecasts in a Reuters poll. Their 69 forecasts ranged from 32.0 to 40.0.
FOWLER, Calif. - The long economic boom, fueled by easy credit that allowed people to spend money they did not have, led to a huge oversupply of cars, houses and shopping malls, as recent months have made clear. Now, add one more item to the list: an oversupply of cows.
Millions of pounds of government-owned milk powder stored in a warehouse in Fowler, Calif.
And it turns out that shutting down the milk supply is not as easy as closing an automobile assembly line.
Target Conservative Portfolio for 2009: 50% Canned Goods / 50% Ammo.
But first a brief detour to one year ago:
I continue to stand by the (very general) ideas that I put forward as themes for 2008. I do not see our current situation as a "downturn" - I see it as a COLLAPSE. A downturn - a normal part of the business cycle - does not usually include a banking-broker/dealer-insurance-derivatives meltdown that requires trillions in support to prevent insolvency of virtually all of major financial institutions.
In the long run, we would be better off without many of those institutions. My buddies on Wall St. used to tell me that they were "creating wealth" - I would correct them and tell that they were "making money" (and participating in massive mal-investment and un-economic activity). The Baily Building and Loan Assoc. (of Bedford Falls) somehow didn't need billions in leveraged speculation, proprietary trading or derivative bets.
There seems to be a lot of talk in AB and elsewhere about this thing called "solutions". Solutions are not my department - predictions are. Any reasonable solution is by definition politically impossible - our political process is about putting out today's fire and leaving the water damage issue to another day.
Since our society cannot go forward carrying every currently existing debt ($50T++) - (this figure does NOT include unfunded liabilities) unwinding unwise credit expansion means insolvency or inflation. There are few true creditors in our society - being a debtor is far more universal. The Federal Government, State Governments, Wall St., Banks, homeowners, consumers, leveraged investors and many other groups would benefit (in a lesser of various evils sense) from the debt reducing power of inflation.
Inflation is on vacation at the moment - but it is the end game. Fiat money requires at least some net positive inflation and a determined Central Bank can Quant-Ease (plus Gov fiscal) some of our problems away - with many side effects to be sure - but someone has to go over the top rope - and it is going to be savers and not debtors.
At some point we will have what may be called A Recovery - but it will really turn out to be A Reflation and collapse again - just like in the late 1930s. Inflating our way out of trouble may also crash into Peak Oil - creating Check Mate and Lights Out.
Obama recently pointed out how so many "different" economists - were in lockstep about the need for massive "stimulus" - funny how a counter-cyclical idea can seem sensible - but the same people advocate pro-cyclical "stimulus" as we chase one free-lunch after another.
My long-term view is dimmer than my short-term view -- so as we enter this New Year, let's all try and fondly recall how affluent our society once felt - as you will not see that again in your lifetime.
MOSCOW: In the face of mounting economic troubles, Russia cut off deliveries of natural gas to Ukraine on Thursday after Ukraine rejected the Kremlin's demands for a sharp increase in gas prices.
A similar reduction in supplies to Ukraine in 2006 caused a drop in pressure throughout Europe's integrated natural gas pipeline system and led to shortages in countries as far away as Italy and France.
But with a recessionary drop in demand, ample supplies and assurances from both countries that gas would flow westward without interruption, there were few signs of the near hysteria in Europe that accompanied the 2006 cutoff.
The authorities in Poland and Italy issued soothing statements on Thursday, noting the existence of high reserves and the distant likelihood of an immediate effect on gas supplies.
Even Ukraine, which says it has enough gas in reserve to last through the winter, took Russia's action in stride, underscoring how the political potency of the Kremlin's energy card has plunged along with the price of oil and gas. Its normally fractious political leadership rallied together in the face of the supply cutoff, united in their demand that the Kremlin pay more for the right to transship gas through Ukraine.
OKYO (AP) - Toyota Motor Corp. is secretly developing a vehicle that will be powered solely by solar energy in an effort to turn around its struggling business with a futuristic ecological car, a top business daily reported Thursday.
The Nikkei newspaper, however, said it will be years before the planned vehicle will be available on the market. Toyota's offices were closed Thursday and officials were not immediately available for comment.