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The natural divisions of the calendar are a good time to look back on what has happened since the beginning of the year.  Below are some observations about the overall market direction as well as some cautionary points about 3 underlying issues that need to be addressed.

The equity markets are poor performers so far, with the DIA's dropping 3.7%, the SPY's dropping 3.29% and the QQQQ's dropping 9.72%.  There are two primary concerns hurting the market - interest rate hikes and oil prices.  The interest rate hikes should be a smaller concern.  When the Fed started lowering rates a few years ago, companies loaded up on cheap loans and debt.  Currently, most companies are cash rich.  Oil is a different story and could have a major impact.  First, higher energy costs eat into corporate profits.  Secondly, higher oil decreases consumer's disposable income.  Considering the economy is 2/3 consumer spending, this could lead to a huge problem should the oil rally continue.  

the 10-year Treasury's yield increased 4.7%  Yield started increasing in early to mid-February and has only recently come down.  The main event affecting the bond market is the Fed's rate hike policy.  The Fed increased the short-turn rate at both meetings this year, and the market expects these hikes to continue for sometime - at least through this year.  Bolstering this perception is the reappearance of inflation in various economic numbers.  Rates have been way too low for way too long and they are destined to continue their increase.  However, look for Treasury market rallies when the equity markets drop.

The dollar us up 4.69% versus the Yen and 5.12% versus the Euro.  The trading patterns for the currencies are different.  The dollar traded in a range of roughly 102-106 versus the Yen until mid March.  Since then, the dollar has rallied to its current 4 month high.  In comparison, the dollar has rallied, sold-off, then rallied again versus the Euro.  This difference in the charts indicates a fundamental difference between the two trading worlds.  The yen/dollar trade is currently dominated by the different growth rates of the US and Japanese economies.  For the first few months of the year, there was growing optimism Japan was coming out of a recession.  Now, economic indicators coming from Japan have been less bullish when compared to the US numbers.  The dollar/euro trade playing field is more even.  While Europe in general is growing at a slower rate, the newer EU countries are growing faster, making the euro more attractive.  Additionally, traders are moving into more euros now for simple diversification reasons.  The dollar and yen have been around for longer than the euro.  Furthermore, the euro has only recently (within the last three years) come into its own on the international currency scene.  Traders are now more comfortable with the currency and its long-term viability.  I can't help but wonder if there is also a touch of anti-US, pro-Europe slant to the trade as well.  Although I can't empirically prove the previous statement, I wouldn't doubt it existed.

Oil is the big story of the year so far, increasing 36% for the year.  The supply/demand picture is very tight.  This means that most supply is already in production and demand is increasing.  As Asia continues to economically expand, expect more of the same.   Refinery capacity is around 90% as well.  This means the oil companies can't simply ramp up production to increase supply.  Furthering the oil problem is the length of time required to build a refinery and the high cost.  Add all these factors together, and you have a bull market in the making.

There are a few other trends that I find very disturbing.

First, is the relationship to job growth and population growth.  Kash over at Angry Bear has this excellent graph that depicts the difference between job growth and population growth.  (Sorry about having to link; I'm still not that good at adding graphics to diaries.)  The graph shows a disturbing trend - namely that population growth is exceeding job growth at a current level of approximately 12 million people.  Now, the population number includes the total population, so the 12 million number is not as bad as it looks.  But, you get the general idea that the US is not producing enough jobs for its population.  Kash also notes that we are probably near the top of this economic expansion, so job growth may start to drop.  I don't think we are near a top yet, but Kash's point is still solid - job creation is falling behind a number to sustain the US standard of living.

Second, is the increased use of debt to drive GDP growth.   Econ blog Calculated risk has a chart on its front page illustrating this trend.  In short, the US is becoming a very leveraged country.  In 2001, the US national debt and mortgage debt as a percentage of GDP was a little over 8%.  For 2004, that number was a little over 12%.  Should the economy experience an economic shock (for example, a terrorist attack or a spike in rates caused by a currency crisis), a large number of people could be in serious financial trouble.

Finally, is the move away from the dollar.   The US has to import about 1.5 billion dollars a day to finance its trade deficit.  Asian central banks have traditionally been the US's primary financiers.  Japan holds about 770 billion is US debt, China about 160 billion and South Korea right around 100 billion.  All three have publicly stated they will start to diversify their foreign asset holdings.  Considering the importance of their Treasury purchases, the US will have to figure out a way to finance its deficit some other way to maintain its standard of living.

Originally posted to bonddad on Sat Apr 02, 2005 at 12:34 PM PST.

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Comment Preferences

  •  Not very encouraging huh... (none)
    Especially the last line.

    Conquer the Crash, Bob Prechter's Elliott Wave book, cites U.S. total debt held at around 3.5 times GDP, not counting funky derivatives.  

    It's not gonna be fun digesting all that debt.

  •  Many thanks (4.00)
    One of the primary reasons I tune into KOS is to get the real skinny on the economy in your posts. It's simply impossible to receive any sort of unbiased conclusions through the MSM, even PBS (really sad).

    KOS should include your daily analyses on the main page.

  •  adult ed (none)
    i've enjoyed your diaries on current economic events but don't have much grounding in the subject.

    i remember hearing somewhere (maybe some students protesting their classes) that much of economics has an ingrained conservative bias. are there any texts you'd recommend for a basic background in economics?

  •  High yield bond question for bonddad (none)
    Why the yield spread continues to rise these days? Is it because of the perceived heightened credit risks due to the uncertain economy?

    I found the yield on some junk bond funds almost reaches 8-10%, that's 400-500 bps above 5 and 10 year treasury. If you can bet on the direction of high yield, do you think it is the correct time to jump into the high yield bond in order to seek higher interest income.

    I found treasury is just too rich and there's not much room to go up when inflationary pressure seems real. Do you believe high yield bond can reverse the course and outperform treasury, let's say in 6-12 months time frame?

    •  Not sure on the market timing issue (none)
      I haven't found a good HY site to keep track of it, so I really can't say.

      I stepped up on the platform, the man gave me the news, he said you must be joking son, where did you get those shoes-- Donald Fagen

      by bonddad on Sat Apr 02, 2005 at 01:43:04 PM PST

      [ Parent ]

    •  Butting in on high yield bonds (none)
      I track junk bonds by looking at a few high yield bond mutual funds - (PIMCO is one of the best bond fund family. Pick one of their high yield funds and look at a chart.)

      I can't speak to the yield spread vs Treasuries, but right now, high yield bonds PRICES have rolled over to the downside pretty badly. As have REITS, one of last year's big winners.

      The time to get into high yield bonds is at the start of an economic recovery. You can see a price appreciation comparable to stocks with lower volatility. Since we are now a few years into the Bush 'recovery', junk bonds are rolling to the downside, and natural resources are being gobbled up like crazy, I'm thinking we are nearing the peak of this economic/business cycle, if not past it.

      Freedom does not march.

      by ex republican on Sat Apr 02, 2005 at 03:37:27 PM PST

      [ Parent ]

  •  Good Post Thank You (none)
    Good stuff.  Please keep it up.

    Not to belittle most of the wedge issues that seem to dominate the airwaves, but it's my opinion that stuff is what the Russians call wolfmeat  -  just thrown out there to distract you from the REAL news.

  •  The employment vs. population graph (4.00)
    is very telling.  I've heard that we need to create 200,000 jobs monthly to keep up with population growth.

    Add to that that the quality of existing jobs has greatly deteriorated.

    But conservatives will say, it's because people are lazy and don't really want to work.

    When the fox preaches The Passion, farmer watch your geese.

    by reform dem on Sat Apr 02, 2005 at 01:37:43 PM PST

    •  They aren't lazy? (none)
      But the American Heritage Institute, last summer, issued an in-depth report on Poverty in America and concluded (in my translation) "Poor people ain't got no education or discernable job skills and it's their own damn fault!"

      Are you intimating they ... were ... wrong?

      <snark>

      "...[one] must still have Chaos in oneself to be able to give birth to a dancing star." Nietzsche

      by ATinNM on Sat Apr 02, 2005 at 05:05:20 PM PST

      [ Parent ]

  •  Agreed ... (4.00)
    ... on the praise heaped on you, bonddad. I wish your diaries would all hit recommended and stay there because they're so, so useful.

    Most of this stuff makes very little sense to me, and I've been working for several years now to understand it.

    What I do know, however, is that what used to be a $30 trip to the grocery store is now a $60 trip. No joke. And that  I finally decided to go vegetarian because it's costing too damned much otherwise.

    And summer's almost here and my water bill will sneak up, but I need to work on ways to compensate for higher gas prices --- trust me, I already never drive unless absolutely necessary. So while others are planning their latest trip to Costa Rica, I bought rain barrels, which I should have done months ago anyway.

    Etc etc etc ad nauseam infinitum whatever.

    This is a roundabout way, I suppose, to say your diaries help keep me on track. Very few people around me seem at all aware of any kind of potential economic trouble. And it does seem that indicators are somehow muffled --- talk of inflation is minimal, yet my grocery trips are gettng ridiculous, as are the prices for other things. Etc. Eyc.

    So yea --- keep up the good work!

  •  anyone care (none)
    to speculate on Goldman Sachs $105 call on oil?  Did they have clients caught long on futures contracts when oil dropped from 58 to 52 last week?  Were they caught long in their own portfolio?   Or, is this what they really think based on their unique view into the market given that they are the #1 energy derivatives traders.

    In the absence of fear, truth becomes absolute.

    by bohdi777 on Sat Apr 02, 2005 at 02:18:27 PM PST

    •  Never trust Wall Street 'Research' (none)
      It is always suspect.  GS is one of the largest traders of oil contracts. You can bet they have a vested interest in the market.
      •  Agreed (none)
        This is the first piece of news in a while that made me think - ahah, prices must go down...

        Or - they think it will go even higher and don't want to tell everybody of the coming opportunity to make a killing...

        in the long run, we're all dead (Keynes)

        by Jerome a Paris on Sat Apr 02, 2005 at 02:57:35 PM PST

        [ Parent ]

    •  Oil spike (none)
      Basically they are betting that oil will double one more time in nominal terms. This is not out of the question. Consider that Oil is now around where it was during the 1973-1979 period. It then doubled on the supply dislocation of the Iranian revolution and the Iran-Iraq war.

      All they are doing is looking at supply problems, and extrapolate what would happen if there were a similar drop in world production. Since we about as close to the bandwidth oil limit of the current technology as we were in 1976 - in terms of percentage of discoveries which are counted as proven reserves - this is a fairly simple call to make.

  •  JOBS JOBS JOBS (4.00)
    We need to ditch FREE TRADE ASAP, enter balanced and fair bilateral trade agreeements and institute MINIMUM CONTENT LAWS for strategic industries.

    Until that is done our standard of living, quality of jobs and overal economic health will continue to decline.

    We also need a manhatten energy project to get us of the addiction to oil, create high tech jobs, research and environment neutral energy sources

    We also need to create laws that give EVERY stock holder a vote, even if their stock is held in 401k's pension funds or mutual funds. And that vote has to be BINDING on the boards of directors.

    We also need to STOP the transfer of wealth form the middle class to the richest, The top margina lrate needs to be increased significantly for those earning over 1 million a year. And all earnings, whether work or investment sould be attracting the SAME tax treatment.

    It is well past time to STOP measuring economic success by the rise and fall of the DOW JONES, and startmeasuring it in terms of the rise and fall of the wealth of the midle class.

    I am sick and tired of living in an ever increasing feudal society, beholden to the coprorations (whose rights we need to elinimate, they should have none, the constitution only provided rights to citizens) and watching the fat cat CEO gourge themselves on the work on everyone else.

    I am sick and tired of being told to work harder for worse healthcare coverage.
    I am sick and tired of being told to work longer for worse pay rises
    I am sick and tired of being told to retrain constantly, when i have a masters degree, so that they can continue to ship jobs overseas
    I am sick and tired of being told no bonus for you, yet watch the CEO's hand themselves huge stock options
    I am sick and tired of watching colleauges laid off with no severance, while executives get massive golden parachutes.
    I am sick and tired of corporations stealing from pension funds to fund their incompetant business deals and layoffs
    I am sick and tired of having to take "ethics courses" when its the executives being unethical
    and i am sick and tired of being told by the Republicans that all this is GOOD FOR ME.

    Let the Democratic Reformation Begin

    by Pounder on Sat Apr 02, 2005 at 02:49:01 PM PST

    •  Herbert Hoover was not a fan of free trade (none)
      and look what he got for it.

      Getting rid of free trade will reduce American employment and standard of living. I can't think of a faster way to do it.

      I agree with you about energy. We should have started on this issue in the 1970s.

      •  Ditto (none)
        No free trade will just let you stagnate in your misery on your own.

        in the long run, we're all dead (Keynes)

        by Jerome a Paris on Sat Apr 02, 2005 at 02:58:36 PM PST

        [ Parent ]

      •  We need FAIR Trade (none)
        along with free trade to make it work-or we will continue to bleed jobs to places where people make a pittance!
      •  What a steaming pile of horse shit (none)
        Put the Kool aid down !

        American employment and standard of living IS DECLINING RIGHT NOW.

        We need BALANCED TRADE, and minimum contant laws to preserve strategic industries. foreign companies are free to locate in the US, hire US workers to fulfill this minimum content law. this isnt quota or tarriff based.

        If you want to take advantage of the worlds largest consumer and enterprise market, you have to pay to play.

        Free trade means ever lowering employment standards to match those of the poorest nations. Even Mexico is suffering. their manufacturing is disappearing to china and elsewhere in Asia.

        Let the Democratic Reformation Begin

        by Pounder on Sat Apr 02, 2005 at 06:35:58 PM PST

        [ Parent ]

        •  Actually we are adding jobs (none)
          Last year the US economy added 2.4 million new jobs.

          The US unemployment rate is significantly below that of Europe or Canada.

          The Japanese did a lot of what you are advocating in the 1970s and 1980s, their economy has been stagnant since 1990.

          The problem is who selects 'strategic' industries, they usually turn out to be the industries with the most political pull.

          Free trade means ever more competitive industries and a rising standard of living. The problem US businesses are going to have over the next decade is finding workers, because we are headed for a severe shortage.

          The reason it seems like horse manure to you is because you have your head up the horses ass.

          •  Garbage, utter garbage (none)
            the US economy isnt adding enough jobs to keep pace with population growth, go back and read this diary and see the graphs.

            Our unemployment rate is somewhere between the nations of the EU. The EU unemplyment rate as a whole is higher, because several nations have problems, not the entire EU as a whole.

            I am sure it is easy to cherry pick a few nations whose economy doesnt provide as many jobs as the US, especially countries whose economies arent even remotely comparable, such as Canada's. The Us also calculate unemplyment differently to downplay the size of the problem, discounting those that are unemployed but have ceased to find work, when they are included, US unemployment is at higher levels that many countries.

            Japanese economic problems stemmed largely from structural banking failures, not trade failures, also note that Japan has to import all their raw materials.

            where is our rising standard of living you keep talking about? Wages are stagnant, only low paying jobs are being created.

            free trade arguments are horse shit because those are the facts.

            Let the Democratic Reformation Begin

            by Pounder on Sun Apr 03, 2005 at 09:17:10 AM PDT

            [ Parent ]

            •  Facts are Stubborn Things (none)
              As Daniel Patrick Moynihan once said, we can all have our own opinions, but we can't all have our own facts.  What you have provided us all here is your opinion, here are the facts.

              In the US in 2004:

              Population Growth      = .97%
              Non Farm Job Growth    = 1.68%

              For the first 3 months of 2005, annualized rates

              Population Growth     = .85%
              Non Farm Job Growth   = 1.45%

              The graphic shown in this thread reflects the effects of the 2000-1 recession and only counted private sector employment, leaving out the entire public sector which makes up roughly 20% of all employment in the US and is the type of employment that continues to expand even in a downturn.

              As for the EU vs US

              EU unemployment Dec 2004   8.9%
              US unemployment Dec 2004   5.4%

              It is not just a few countries,

              French unemployment  2/2004    10.1%
              German unemployment  3/2005    12%
              Spain unemployment   4q/2004   10.56%
              Italy unemployment   1q/2004    8.5%

              In the four largest economies of Europe, the unemployment rate is substantially higher than in the US, and in the case of Germany, the largest economy, its more than DOUBLE the rate.

              I don't think I implied that Japan's problems were due to trade, I think my point was that they are due to failed government attempts to protect 'strategic' industries. Japan most definitely is a trading nation and one that continues to be in deep trouble for a wide variety of reasons, including as you point out, their wretched banking system.

              As to the standard of living, Real GDP per capita rose 3.4% in 2004, following a gain of 2.0% in 2002.  The average rate of growth in this measure over the past 57 years I have data for is 2.19%.  

              Those are the hard facts.

              Please note before calling something garbage, a few hard facts and not your opinion will make your argument much more compelling.

    •  That's the gag (none)
      we already have ditched free trade. And the US will not be the winner.

      The winners in economic nationalism are nations that do not need to import anything.

      The US imports 70% of its energy.

      You do the math.

      •  The US actually has a relatively (none)
        small import sector.

        True we import a lot of oil, but much less than France or Germany or Japan do.

        Imports take a much smaller share of GDP in the US than just about any other developed country.

        Which by your standard, would make the US a winner.

  •  The root of the problem (none)
    is not deficits per se, but the vicious cycle:

    1. Energy deficit leads to trade deficit.
    2. Trade deficit leads to investment deficit.
    3. Investment deficit creates pressure for tax reductions on wealthy, This leads to budget deficit.
    4. Budget deficit leads to wage and growth deficit. Which means that people are even more determined to keep oil cheap.
    5. Growth deficit means that there is a supply deficit, which means we burn more energy than we should.

    This leads back to 1 again....
  •  Graph (4.00)

    That looks pretty anemic to me.

    What color are your pajamas?

    by Unstable Isotope on Sat Apr 02, 2005 at 03:09:06 PM PST

    •  Labor Slack (none)
      It is similar numbers that went into calculating the "estimated labor slack"

      http://www.bopnews.com/archives/002931.html

      This is the number people should use for making historical comparisons to other times about the relative strength of job supply versus job demand.

      Currenty at 7.3% - which is to say, rotten au gratin.

      •  Perhaps not so rotten after all. (none)
        What is interesting in the graphic is the spread between the 'official' unemployment rate and your estimated slack labor.

        Usually these two numbers move roughly together. I noticed that the last time they were far apart for an extended period of time was in the 1960s, which would correspond with women staying home to raise the baby boom generation.  We are now in the heart of the echo baby booms child bearing years.

        Could it be that what you are measuring is women leaving the work force to raise children?

      •  Just to back my hypothesis up (none)
        with a little data.

        Female labor force participation among 25-34 years olds peaked at 77.3% in April 2000 and in the recent March employment survey fell to 73.5%, nearly a 400 basis point drop.

        •  Unforunately no intelligence either (4.00)
          I dislike patent dishonesty, and youve just delivered a straight up shot of it.

          Why do I say this, take a look at white teenage LFPR:

          LNS11300015,1992,Jan,55.2
          LNS11300015,1992,Feb,54.7
          LNS11300015,1992,Mar,54.3
          LNS11300015,1992,Apr,54.0
          LNS11300015,1992,May,54.1
          LNS11300015,1992,Jun,54.9
          LNS11300015,1992,Jul,54.7
          LNS11300015,1992,Aug,55.2
          LNS11300015,1992,Sep,55.3
          LNS11300015,1992,Oct,54.2
          LNS11300015,1992,Nov,55.2
          LNS11300015,1992,Dec,54.9
          LNS11300015,1993,Jan,54.8
          LNS11300015,1993,Feb,55.0
          LNS11300015,1993,Mar,54.8
          LNS11300015,1993,Apr,54.5
          LNS11300015,1993,May,55.0
          LNS11300015,1993,Jun,54.6
          LNS11300015,1993,Jul,55.0
          LNS11300015,1993,Aug,55.5
          LNS11300015,1993,Sep,55.1
          LNS11300015,1993,Oct,56.0
          LNS11300015,1993,Nov,56.1
          LNS11300015,1993,Dec,55.1
          LNS11300015,1994,Jan,56.5
          LNS11300015,1994,Feb,56.6
          LNS11300015,1994,Mar,56.1
          LNS11300015,1994,Apr,57.8
          LNS11300015,1994,May,56.8
          LNS11300015,1994,Jun,56.4
          LNS11300015,1994,Jul,55.7
          LNS11300015,1994,Aug,57.2
          LNS11300015,1994,Sep,55.0
          LNS11300015,1994,Oct,56.2
          LNS11300015,1994,Nov,55.8
          LNS11300015,1994,Dec,57.4
          LNS11300015,1995,Jan,57.8
          LNS11300015,1995,Feb,56.8
          LNS11300015,1995,Mar,57.7
          LNS11300015,1995,Apr,57.7
          LNS11300015,1995,May,56.8
          LNS11300015,1995,Jun,58.0
          LNS11300015,1995,Jul,57.3
          LNS11300015,1995,Aug,57.5
          LNS11300015,1995,Sep,56.6
          LNS11300015,1995,Oct,56.6
          LNS11300015,1995,Nov,56.2
          LNS11300015,1995,Dec,56.2
          LNS11300015,1996,Jan,56.4
          LNS11300015,1996,Feb,56.3
          LNS11300015,1996,Mar,55.6
          LNS11300015,1996,Apr,55.7
          LNS11300015,1996,May,56.3
          LNS11300015,1996,Jun,55.8
          LNS11300015,1996,Jul,56.1
          LNS11300015,1996,Aug,54.4
          LNS11300015,1996,Sep,56.4
          LNS11300015,1996,Oct,56.2
          LNS11300015,1996,Nov,56.0
          LNS11300015,1996,Dec,55.5
          LNS11300015,1997,Jan,55.0
          LNS11300015,1997,Feb,55.2
          LNS11300015,1997,Mar,55.2
          LNS11300015,1997,Apr,55.7
          LNS11300015,1997,May,55.4
          LNS11300015,1997,Jun,55.0
          LNS11300015,1997,Jul,55.8
          LNS11300015,1997,Aug,54.8
          LNS11300015,1997,Sep,54.9
          LNS11300015,1997,Oct,54.7
          LNS11300015,1997,Nov,55.7
          LNS11300015,1997,Dec,54.7
          LNS11300015,1998,Jan,56.6
          LNS11300015,1998,Feb,56.3
          LNS11300015,1998,Mar,56.7
          LNS11300015,1998,Apr,54.9
          LNS11300015,1998,May,56.1
          LNS11300015,1998,Jun,55.8
          LNS11300015,1998,Jul,55.4
          LNS11300015,1998,Aug,55.9
          LNS11300015,1998,Sep,56.7
          LNS11300015,1998,Oct,56.2
          LNS11300015,1998,Nov,55.4
          LNS11300015,1998,Dec,55.9
          LNS11300015,1999,Jan,55.9
          LNS11300015,1999,Feb,56.3
          LNS11300015,1999,Mar,55.3
          LNS11300015,1999,Apr,55.3
          LNS11300015,1999,May,56.4
          LNS11300015,1999,Jun,54.4
          LNS11300015,1999,Jul,55.2
          LNS11300015,1999,Aug,54.4
          LNS11300015,1999,Sep,55.4
          LNS11300015,1999,Oct,55.8
          LNS11300015,1999,Nov,55.7
          LNS11300015,1999,Dec,55.5
          LNS11300015,2000,Jan,56.3
          LNS11300015,2000,Feb,56.2
          LNS11300015,2000,Mar,56.0
          LNS11300015,2000,Apr,56.6
          LNS11300015,2000,May,55.7
          LNS11300015,2000,Jun,55.6
          LNS11300015,2000,Jul,54.6
          LNS11300015,2000,Aug,55.5
          LNS11300015,2000,Sep,55.0
          LNS11300015,2000,Oct,54.6
          LNS11300015,2000,Nov,54.6
          LNS11300015,2000,Dec,55.1
          LNS11300015,2001,Jan,55.1
          LNS11300015,2001,Feb,54.8
          LNS11300015,2001,Mar,54.7
          LNS11300015,2001,Apr,53.8
          LNS11300015,2001,May,52.0
          LNS11300015,2001,Jun,53.6
          LNS11300015,2001,Jul,53.4
          LNS11300015,2001,Aug,50.8
          LNS11300015,2001,Sep,52.9
          LNS11300015,2001,Oct,52.4
          LNS11300015,2001,Nov,52.5
          LNS11300015,2001,Dec,51.2
          LNS11300015,2002,Jan,50.8
          LNS11300015,2002,Feb,50.8
          LNS11300015,2002,Mar,52.1
          LNS11300015,2002,Apr,50.6
          LNS11300015,2002,May,50.4
          LNS11300015,2002,Jun,50.7
          LNS11300015,2002,Jul,50.9
          LNS11300015,2002,Aug,49.9
          LNS11300015,2002,Sep,50.8
          LNS11300015,2002,Oct,50.1
          LNS11300015,2002,Nov,50.1
          LNS11300015,2002,Dec,49.2
          LNS11300015,2003,Jan,49.1
          LNS11300015,2003,Feb,48.8
          LNS11300015,2003,Mar,47.9
          LNS11300015,2003,Apr,47.9
          LNS11300015,2003,May,47.9
          LNS11300015,2003,Jun,48.4
          LNS11300015,2003,Jul,47.4
          LNS11300015,2003,Aug,47.4
          LNS11300015,2003,Sep,47.2
          LNS11300015,2003,Oct,46.6
          LNS11300015,2003,Nov,47.3
          LNS11300015,2003,Dec,46.1
          LNS11300015,2004,Jan,47.4
          LNS11300015,2004,Feb,47.3
          LNS11300015,2004,Mar,46.5
          LNS11300015,2004,Apr,47.5
          LNS11300015,2004,May,47.7
          LNS11300015,2004,Jun,46.5
          LNS11300015,2004,Jul,47.3
          LNS11300015,2004,Aug,47.2
          LNS11300015,2004,Sep,46.7
          LNS11300015,2004,Oct,46.9
          LNS11300015,2004,Nov,47.0
          LNS11300015,2004,Dec,46.9
          LNS11300015,2005,Jan,46.5
          LNS11300015,2005,Feb,46.8
          LNS11300015,2005,Mar,46.9

          A plunge of almost 1000 basis points from the 1990's level, and down to levels not seen since the 1960's. There was no corresponding increase in the white fertility rate. Clearly you've been given a factoid to spread around, one which is unrelated to any cohesive relationship between fertility rates and employment.

          For further emphasis as to the complete nonsense of your thesis:

          LNS13327709,1994,Jan,11.8
          LNS13327709,1994,Feb,11.4
          LNS13327709,1994,Mar,11.4
          LNS13327709,1994,Apr,11.2
          LNS13327709,1994,May,10.8
          LNS13327709,1994,Jun,10.9
          LNS13327709,1994,Jul,10.7
          LNS13327709,1994,Aug,10.5
          LNS13327709,1994,Sep,10.4
          LNS13327709,1994,Oct,10.3
          LNS13327709,1994,Nov,10.1
          LNS13327709,1994,Dec,10.0
          LNS13327709,1995,Jan,10.2
          LNS13327709,1995,Feb,9.9
          LNS13327709,1995,Mar,9.9
          LNS13327709,1995,Apr,10.0
          LNS13327709,1995,May,10.0
          LNS13327709,1995,Jun,10.1
          LNS13327709,1995,Jul,10.1
          LNS13327709,1995,Aug,10.0
          LNS13327709,1995,Sep,10.1
          LNS13327709,1995,Oct,9.9
          LNS13327709,1995,Nov,10.0
          LNS13327709,1995,Dec,10.0
          LNS13327709,1996,Jan,9.8
          LNS13327709,1996,Feb,10.0
          LNS13327709,1996,Mar,9.8
          LNS13327709,1996,Apr,9.9
          LNS13327709,1996,May,9.7
          LNS13327709,1996,Jun,9.6
          LNS13327709,1996,Jul,9.7
          LNS13327709,1996,Aug,9.3
          LNS13327709,1996,Sep,9.4
          LNS13327709,1996,Oct,9.4
          LNS13327709,1996,Nov,9.3
          LNS13327709,1996,Dec,9.5
          LNS13327709,1997,Jan,9.4
          LNS13327709,1997,Feb,9.4
          LNS13327709,1997,Mar,9.1
          LNS13327709,1997,Apr,9.2
          LNS13327709,1997,May,8.8
          LNS13327709,1997,Jun,8.8
          LNS13327709,1997,Jul,8.6
          LNS13327709,1997,Aug,8.6
          LNS13327709,1997,Sep,8.7
          LNS13327709,1997,Oct,8.4
          LNS13327709,1997,Nov,8.3
          LNS13327709,1997,Dec,8.4
          LNS13327709,1998,Jan,8.4
          LNS13327709,1998,Feb,8.4
          LNS13327709,1998,Mar,8.4
          LNS13327709,1998,Apr,7.9
          LNS13327709,1998,May,7.9
          LNS13327709,1998,Jun,8.0
          LNS13327709,1998,Jul,8.1
          LNS13327709,1998,Aug,7.9
          LNS13327709,1998,Sep,7.9
          LNS13327709,1998,Oct,7.8
          LNS13327709,1998,Nov,7.6
          LNS13327709,1998,Dec,7.6
          LNS13327709,1999,Jan,7.7
          LNS13327709,1999,Feb,7.7
          LNS13327709,1999,Mar,7.6
          LNS13327709,1999,Apr,7.6
          LNS13327709,1999,May,7.4
          LNS13327709,1999,Jun,7.5
          LNS13327709,1999,Jul,7.5
          LNS13327709,1999,Aug,7.3
          LNS13327709,1999,Sep,7.4
          LNS13327709,1999,Oct,7.2
          LNS13327709,1999,Nov,7.1
          LNS13327709,1999,Dec,7.1
          LNS13327709,2000,Jan,7.1
          LNS13327709,2000,Feb,7.2
          LNS13327709,2000,Mar,7.1
          LNS13327709,2000,Apr,6.9
          LNS13327709,2000,May,7.1
          LNS13327709,2000,Jun,7.0
          LNS13327709,2000,Jul,7.0
          LNS13327709,2000,Aug,7.1
          LNS13327709,2000,Sep,7.0
          LNS13327709,2000,Oct,6.8
          LNS13327709,2000,Nov,7.1
          LNS13327709,2000,Dec,6.9
          LNS13327709,2001,Jan,7.3
          LNS13327709,2001,Feb,7.4
          LNS13327709,2001,Mar,7.2
          LNS13327709,2001,Apr,7.4
          LNS13327709,2001,May,7.5
          LNS13327709,2001,Jun,7.9
          LNS13327709,2001,Jul,7.8
          LNS13327709,2001,Aug,8.2
          LNS13327709,2001,Sep,8.8
          LNS13327709,2001,Oct,9.3
          LNS13327709,2001,Nov,9.4
          LNS13327709,2001,Dec,9.6
          LNS13327709,2002,Jan,9.5
          LNS13327709,2002,Feb,9.5
          LNS13327709,2002,Mar,9.4
          LNS13327709,2002,Apr,9.7
          LNS13327709,2002,May,9.5
          LNS13327709,2002,Jun,9.5
          LNS13327709,2002,Jul,9.6
          LNS13327709,2002,Aug,9.6
          LNS13327709,2002,Sep,9.6
          LNS13327709,2002,Oct,9.6
          LNS13327709,2002,Nov,9.8
          LNS13327709,2002,Dec,9.9
          LNS13327709,2003,Jan,9.9
          LNS13327709,2003,Feb,10.1
          LNS13327709,2003,Mar,10.0
          LNS13327709,2003,Apr,10.1
          LNS13327709,2003,May,10.1
          LNS13327709,2003,Jun,10.3
          LNS13327709,2003,Jul,10.3
          LNS13327709,2003,Aug,10.2
          LNS13327709,2003,Sep,10.4
          LNS13327709,2003,Oct,10.2
          LNS13327709,2003,Nov,10.1
          LNS13327709,2003,Dec,9.9
          LNS13327709,2004,Jan,9.9
          LNS13327709,2004,Feb,9.7
          LNS13327709,2004,Mar,9.9
          LNS13327709,2004,Apr,9.6
          LNS13327709,2004,May,9.7
          LNS13327709,2004,Jun,9.6
          LNS13327709,2004,Jul,9.5
          LNS13327709,2004,Aug,9.5
          LNS13327709,2004,Sep,9.4
          LNS13327709,2004,Oct,9.7
          LNS13327709,2004,Nov,9.4
          LNS13327709,2004,Dec,9.3
          LNS13327709,2005,Jan,9.3
          LNS13327709,2005,Feb,9.3
          LNS13327709,2005,Mar,9.1

          If the decrease in LFPR was because of people voluntarily dropping out of the labor force because of some vast demographic bulge, then the underutilization rate would not have shot up from a low of 6.9 to a peak of 10.3 in 2003. People who don't want a job any more would not show up on this at all.

          Finally it was in the 1950's, not the 1960's when there was a large demobilization of women from the labor force.

          So to summarize:

          1. Your interpretation of the present data is bullshit.
          2. Your interpretation of the 1960's data is bullshit.
          3. Your interpretation of the demographic data is bullshit.

          Any other RNC talking points for us?
          •  MY my we certainly are sensitive aren't we (none)
            Maybe I missed it but you failed to label your second set of data which makes it hard to comment on.

            Facts are facts, they are neither democratic or republican.

            Your interpretation of the 1960s data is down right laughable. The last Eisenhower recession ended in 1960, it was a relatively mild recession when compared to the early 1970s or 1980s. Why would it have left so many people out of the labor force when that was not the case following much more severe recessions. During the 1960s there was a huge surge in the number of children that required care. Also there were not the day care options there are today. To suggest that women stayed home to care for this surge in children is hardly republican or dishonest and certainly a much more reasonable explanation than you have provided.

            The drop in teenage participation appears to start back in the mid-1990s and I would hypothesis has other, non-recession related causes. No question that it accelerates during the recession. To me it suggests that teenagers today have a lot more options as to how to spend their time and have parents who are much less money pressed so as to allow them to take advantage of these other alternatives. When jobs got tight and the minimum wage seemed less than appealing, they took up their other alternatives.

            So if I can conclude:

            1. You argument about the 1960s buldge being due to the Eisenhower recession is laughable.

            2. Your data about teenagers shows a change in teenager behavior and has nothing to do with my original hypothesis.

            3. Your other set of data is unlabeled and as such impossible for me to comment on.

            My sincere suggestion to you is to either stop drinking as it clearly clouds your reasoning abilities or don't drink and post.
  •  Thanks (none)
    for adding that

    I stepped up on the platform, the man gave me the news, he said you must be joking son, where did you get those shoes-- Donald Fagen

    by bonddad on Sat Apr 02, 2005 at 03:28:16 PM PST

  •  hey bonddad (none)
    What do you think of I-bonds?  I'm sort of hesitant to buy them since I think it is inevitable that interest rates go up pretty soon and you're locked in for a year.  

    On the other hand, I'm not sure what to do with the 4-6 months of living expenses that you are recommended to keep accessible.  

    It's not Blue versus Red. It's Blue versus Gray.

    by Sedge on Sat Apr 02, 2005 at 04:44:44 PM PST

    •  If you're referring to inflation adjusted (none)
      I'm neutral.

      The best way to invest in bonds is to find a bond mutual fund that has a fairly aggressive investment horizon and large pool of assets.  

      Aggressive investment horizon is a fancy way of saying they invest in all corporate debt save high-yield bonds, in addition to mortgage securities.

      Look for total assets of at least 250 million.  

      I stepped up on the platform, the man gave me the news, he said you must be joking son, where did you get those shoes-- Donald Fagen

      by bonddad on Sat Apr 02, 2005 at 05:15:59 PM PST

      [ Parent ]

    •  I bonds (none)
      I like them.  They aren't the screaming buy that they were 3 years ago, but they're still pretty good.  As an alternative, if you have at least $10,000 to invest, you could buy T-Bills and roll them over every 3 months.  You can even do that online at the Treasury Direct website.

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