The Bowtie Economist's Daily Dose of 70-Word Wisdom


Credit Default Swamps

01/10/2011

Based on my calculations, credit default swaps are trading as if Greece has a 70% chance of defaulting, 50% for Ireland, 40% for Portugal and 30% for Spain. Both Greece and Ireland are paying over 80% of their export revenues…

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3 Major Points in Yesterday’s Employment Report

01/08/2011

1) Workweek didn’t move; it’s stuck at 34.3 hours for the 3rd straight month. History says hours lead bodies so as a leading indicator there isn’t much evidence of improving labor demand 2) State & local governments are downsizing with…

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Deceptive Decline

01/07/2011

Today’s decline in the unemployment rate is deceptive. It shows is that people have stopped looking for jobs. The Civilian Labor Force Participation Rate declined to 64.3% last month and is way off its all time high of 67.3% of…

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Hello? The Irish election in March

01/06/2011

The Irish election in March ― I don’t think this is on the radar screen. The point worth making is that if the opposition party wins, and presses for a debt restructuring, the story isn’t going to end there. The…

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Household Cash Flow

01/05/2011

Every penny at the pumps drains $1.5 billion out of household cash flow. Gas prices at the pumps are $3.15/gallon, but back in September it was closer to $2.70/gallon. This is nothing more than a $60 billion annualized drag on…

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The Biggest Myth

01/04/2011

The biggest myth being promulgated today is that the economy must be doing better because state & local government revenues are on the rise. Dude! That’s not the economy! It’s called tax increases. In fact, 23 states have boosted taxes…

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Happy New Year!

12/31/2010

I want to take the opportunity and wish you all the best for 2011. To health, happiness and prosperity — especially in risk adjusted terms.

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Down Jones Industrials

12/28/2010

10 From a historical standpoint, the yield on the S&P 500 (2%) is very low. This smacks of a market top and underscores the point that the market is too optimistic; investors are willing to forgo yield because they assume…

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Gross Deficit Product

12/22/2010

Our annual deficit is 10% of GDP. A deficit of 3% is sustainable (trust me) and 2% of the deficit will melt away as the economy revives; leaving a deficit of 5%. Had the Bush tax cuts been repealed that…

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Budget Brawl Makes no Cents

12/20/2010

There will probably a nasty spending fight in ’11 complicated by the need to raise the federal debt limit to avoid a default; a vote many new Republican have indicated they would not make. Republicans say the debt limit vote…

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