American Markets- Leading News

Eveillard – This Fed Manipulation is Incredibly Dangerous

Funds Cut Positions in Gold by 4% & Silver by 20%

http://www.resourceinvestor.com/2012/04/30/funds-cut-positions-in-gold-by-4-silver-by-20?utm_source=DailyENL&utm_medium=eNL&utm_campaign=RI_eNL&_LID=36950843

Bolivia Seizing Assets of Spanish Power Generator Red Electrica

Bolivia is seizing the local assets of Spain’s Red Electrica Corp., operator of the country’s electricity grid.

President Evo Morales signed the nationalization decree today, Communications Minister Amanda Davila said in a telephone interview. The company’s investment in its Bolivian unit was inadequate and the energy industry should be in public hands, Davila said.

http://www.bloomberg.com/news/2012-05-01/bolivia-seizing-assets-of-spanish-power-generator-red-electrica.html

Einhorn Says Fed Rate Stance ‘No Longer Useful,’ Risks Inflation

Hedge-fund manager David Einhorn said Federal Reserve policy intended to stimulate the economy and create jobs is “no longer useful” because it risks inflation.

Investors including Pacific Investment Management Co.’s Bill Gross have said Fed policy makers may be adding the risk of future economic disruption. The central bank has kept interest rates near zero since late 2008.

Einhorn, whose hedge fund can bet on the rise or fall in equity prices, has been adjusting investments he oversees for Greenlight Capital Re Ltd. (GLRE), the Cayman Islands-based reinsurer where he is chairman. He boosted bullish bets in stocks last month as corporate profits improved and beat earnings expectations, he said on a conference call with investors today.

“This enthusiasm is tempered by our continued concern about the structural sovereign-debt problems in Europe and Japan, a slowing Chinese economy, and high oil prices and general inflation connected to the Fed’s continued insistence on maintaining an emergency zero percent interest-rate policy, which we believe is no longer useful or effective,” Einhorn said on the call.

Fed policymakers, led by Chairman Ben S. Bernanke, reiterated their view April 25 that conditions may warrant “exceptionally low levels” for rates through at least late 2014. The central bank has kept its target federal funds rate between zero and 0.25 percent since December 2008….

http://www.bloomberg.com/news/2012-05-01/einhorn-says-fed-rate-stance-no-longer-useful-risks-inflation.html

Batista Considers Partner to Tap $1.5 Trillion Assets

http://www.bloomberg.com/news/2012-04-30/batista-seeks-partner-to-tap-1-5-trillion-resources.html

JPM Refuses to Derisk Derivative Book -Defies FED-Screws Average American

Sieze JPM and break it up and bring back Glass-Steagall.

http://www.bloomberg.com/news/2012-04-30/jpmorgan-s-zubrow-says-fed-risk-rule-may-hurt-markets.html

 States Finally Start to Scale Back Gold Plated Worker Pension

Anglos always get the government Jobs in the USA, thus up until now the reluctance to cut them or their pensions. Something in the Anglosaxons, as a small, small minority they like to bully the rest of us. How the worm turns. Amerika- lots of Rich Anglos and their cousins working for the government and lots of poor Americans supporting them with 2-3 jobs. Take a hike Anglomasons, you’re the biggest pigs in America!

BATON ROUGE, La. (AP) — Neil Carpenter took a pay cut when he accepted a job as a Louisiana state accountant more than 12 years ago, but he figured he would make up for the loss with a retirement check that would guarantee long-term financial security for him and his family.

Now the 41-year-old finds his life plan teetering as Republican Gov. Bobby Jindal seeks to restructure the pension system for rank-and-file workers, potentially requiring higher employee contributions and delaying the retirement plans of employees like Carpenter.

“Do you really want to breach a contract with the employees who have committed a long part of their lives to the state of Louisiana?” Carpenter asked state lawmakers recently.

For years, state governments lured workers with the promise of lucrative pensions that provide nearly the pay that employees earned on the job. But after years of budget crunches, nearly every state has revamped public retirement benefits in an effort to shrink the long-term obligations that are billions of dollars short of what is needed to cover benefits….

Link

FED Attack Dogs Du Jour on Gold

File photo of Richard Fisher, president of the Federal Reserve Bank of Dallas, at the 2009 Albert H. Gordon Lecture on February 23, 2009. REUTERS/Brian Snyder

Tue May 1, 2012 11:54am EDT

(Reuters) – The philosophical divide within the U.S. Federal Reserve was on display on Tuesday as two top officials differed over the need to ease policy further.

Atlanta Fed President Dennis Lockhart, a voter this year on the U.S. central bank’s policy-setting panel, said he was “a bit reticent at this point to pull the trigger on any new action,” including more asset purchases, known as quantitative easing.

But Chicago Fed President Charles Evans, a policy dove who has long endorsed more bond buys, said the Fed has a “tremendous” amount of room to ease policy more in part because the United States is not likely to see a “burst” of inflation.

In late 2008 the Fed slashed interest rates to near zero and has bought $2.3 trillion in long-term securities in an unprecedented drive to spur growth and revive the economy after the worst recession in decades.

“I think we need to see how the economy evolves,” Lockhart said on CNBC television, adding he hasn’t changed his economic outlook in any fundamental way, given the recent mixed data.

“There’s only so much we can do to stimulate loan demand and change the risk appetite of the financial system and banks,” he added. “So I’m not sure at this moment that more … really active stimulus in the form of quantitative easing for example would have that big of an effect.”

The U.S. recovery, especially in jobs, has been slow and economic growth has been erratic, leading the central bank to repeat last week that it expects to keep rates “exceptionally low” at least through late 2014.

“One beneficial effect of any further asset purchases would be to convey the idea that we’re committed to keeping policy very low for the amount of time necessary to get the economy going,” Evans said on CNBC.

“Additional purchases would reaffirm that commitment over and above the effect on long term rates of the purchases themselves,” he said.

http://www.reuters.com/article/2012/05/01/us-usa-fed-idUSBRE84004G20120501

Bibi Netanyahu’s Terrorist Father Dies

There was no systemic  torture of Jews during the Spanish Inquisition, they were told to convert or leave simply as they were trying to buy the government and corruption was everywhere  among these people, exactly like it is on Wall Street and London. His father was one of ‘the’ inventors of the Shoah myth. Since he is a dual Citizen thug, and is control of USA foreign policy in the Middle East I thought I would report it here. I wonder how this liar like hells, home of the father of the liars.

http://www.nytimes.com/2012/05/01/world/middleeast/benzion-netanyahu-dies-at-102.html?_r=1&hpw

FBI Generates another Fake Terror Event with disgruntled workers

C4 is so tightly controlled, only a government sponsored agent could get it. Some how I doubt these dupes, who may be working for the government for all we know could design an effective remote trigger.

Five people were arrested in a federal sting operation in which FBI agents provided inoperable explosives to suspects allegedly intending to bomb an Ohio bridge, the Justice Department said.

Douglas Wright, 26, Brandon Baxter, 20, and Anthony Hayne, 35, described as self-proclaimed anarchists in a Justice Department statement, were arrested yesterday on charges of conspiracy and attempted use of explosive materials. Charges are pending against Connor Stevens, 20, and Joshua Stafford, 23, who were also arrested, the department said. The men are scheduled to appear today in federal court in Cleveland.

“The safety of the citizens of the Northern District is and continues to be our primary focus,” Stephen D. Anthony, special agent in charge of Federal Bureau of Investigation’s Cleveland division, said in the statement. “The individuals charged in this plot were intent on using violence to express their ideological views.”

Wright, Baxter and Hayne initially considered using smoke grenades in a plot to topple financial institution signs atop high-rise building in downtown Cleveland, prosecutors said in the statement, citing a criminal complaint filed today.

The plan evolved into one requiring the use of C-4 explosives to be placed under a bridge that crosses from Brecksville, Ohio, to Sagamore Hills, Ohio, over the Cuyahoga Valley National Park, according to the complaint. The explosives were to be remotely detonated, prosecutors said.

The fake explosives were controlled by an undercover FBI agent and the public was never in danger, prosecutors said.

The U.S. government has increased its use of alternative strategies, including stings and informants, since Sept. 11, 2001. Undercover informants played a key role in alleged plots to bomb New York synagogues, detonate a bomb near Chicago’s Wrigley Field, attack a federal courthouse in Illinois and blow up a Dallas skyscraper.

http://www.bloomberg.com/news/2012-05-01/five-men-arrested-in-fbi-sting-over-plot-to-bomb-bridge-in-ohio.html

Occupy Starts New York May Day Protests With Chants

Occupy Wall Street demonstrators took to the streets in May Day protests after a drenching rain in New York, gathering in Bryant Park and outside banks with slogans decrying inequities of wealth.

Organizers say the events will mark a spring resurgence. Calls for a general strike with no work, no school, no banking and no shopping have sprung up on websites in Toronto, Barcelona, London, Kuala Lumpur and Sydney, among hundreds of cities in North America, Europe and Asia….

http://www.bloomberg.com/news/2012-05-01/occupy-wall-street-starts-may-day-protests-amid-soaking-rain.html

Chavez Puts His Trust in Christ as He Heads for Cancer Treatment

Christ did one mass healing but in general for a person to get healed they had to repent of their sins. Chavez is still a thief, can’t keep the lights on and massive amounts of cocaine are flying out of the country he runs. Radiation therapy other than IMRT is in general worthless for cancer and I doubt Cuba has one of those as the USA/Varian owns all the patents. I hope has repented and pray for his recovery.

http://www.bloomberg.com/news/2012-04-30/chavez-seeks-permission-to-fly-to-cuba-for-more-cancer-treatment.html

Obama Fails to Stem Middle-Class Slide He Blamed on Bush

Barack Obama campaigned four years ago assailing President George W. Bush for wage losses suffered by the middle class. More than three years into Obama’s own presidency, those declines have only deepened.

The rebound from the worst recession since the 1930s has generated relatively few of the moderately skilled jobs that once supported the middle class, tightening the financial squeeze on many Americans, even those who are employed.

“It started long before Obama, but he hasn’t done anything,” said John Forsyth, 58, a railroad-car inspector and political independent from Lebanon, Ohio. “He kept pushing this change, change, change, and he hasn’t done anything.”

Underlying the erosion of the middle class, defined by some economists as the middle 60 percent of income earners, are trends that stretch back decades, including competition from lower-wage workers overseas and technological advances that allow factories and offices to produce more with less labor.

As a candidate in 2008, Obama blamed the reversals largely on the policies of Bush and other Republicans. He cited census figures showing that median income for working-age households — those headed by someone younger than 65 — had dropped more than $2,000 after inflation during the first seven years of Bush’s time in office.

Yet real median household income in March was down $4,300 since Obama took office in January 2009 and down $2,900 since the June 2009 start of the economic recovery, according to an analysis of census data by Sentier Research, an economic- consulting firm in Annapolis, Maryland.

1% Get 93%

A president who attacked Bush’s policies for favoring the rich has overseen a recovery in which the wealthiest 1 percent captured 93 percent of per-capita real income gains in 2010, according to an analysis of tax data by Emmanuel Saez, an economics professor at the University of California at Berkeley.

On average, families in the top 1 percent saw their inflation-adjusted incomes rise by $105,637 that year from 2009, according to Saez.

While there is no settled definition of middle class, the middle 60 percent of households nationwide in 2010 earned between $20,000 and $100,000, according to the U.S. Census.

In and around Dayton, Ohio, a region that has endured a wrenching shift from dependence on the auto industry to new sources of growth such as distribution warehouses and information technology, disappointment with Obama is often balanced by wariness of his Republican challenger, Mitt Romney.

“I don’t know if there’s anybody I’m going to vote for,” Forsyth said of the candidates.

Limited Opportunity

While the U.S. unemployment rate fell from a peak of 10 percent in October 2009 to 8.2 percent in March, the jobs data that dominate public discussion obscure a shift that has limited opportunity for workers such as Forsyth.

Ninety-five percent of the net job losses during the recession were in middle-skill occupations, such as office workers, bank tellers and machine operators, according to research by economists Nir Jaimovich of Duke University in Durham, North Carolina, and Henry Siu of the University of British Columbia in Vancouver.

The job growth since has been clustered in either high- skill fields inaccessible to workers without advanced education or low-paying industries, they found.

In March, 3.2 million fewer Americans held sales and office jobs than five years earlier, and 1.2 million fewer were employed in transportation and production fields, all areas that typically pay middle-income wages, according to the Bureau of Labor Statistics.

Dayton’s Dreams

By contrast, the number of better-paid managerial and professional employees grew by almost 2 million over that period and employment in lower-paying service jobs expanded by 1.5 million.

In Dayton — the birthplace of aviation and such inventions as the mechanical cash register, the self-starting car engine, the stepladder and cellophane tape — these trends have diminished incomes and curtailed dreams.

Mandy Copeland, a 34-year-old occupational therapy assistant, and her husband, a heating and ventilation technician, have given up hope of trading their three-bedroom ranch house for a home with a basement that they could turn into a recreation room for their three children.

Eighteen-year-old Alex Ray recently decided he would wait on attending a four-year college and instead spend his first year at a local community college. His father, Tom Ray, a 47- year-old information-technology project manager who only recently regained a wage cut his employer imposed during the recession, praised his son for a “very mature” choice that he estimated would save $20,000.

Falling Birthrate

Fewer children are being brought into the world; the birthrate in Montgomery County, where Dayton is located, has fallen every year since 2007, in keeping with a national trend. Even the rituals of death have changed.

To save money, families are increasingly choosing cremation over burial, said Anne Dunbar, co-owner of a funeral home in the Dayton suburb of Springfield. Others are forgoing memorial services for simple graveside ceremonies. Rather than flowers or donations to a charity, 15 to 20 families a year now ask that newspaper obituaries include a plea for contributions toward funeral expenses, she said.

‘The Real Majority’

The challenges facing residents in this Ohio city about 60 miles north of Cincinnati have been emblematic of the issues that have moved centrist swing voters ever since the 1970 publication of “The Real Majority,” a top-selling political analysis. Authors Richard Scammon and Ben Wattenberg created a mythical 47-year-old Dayton housewife to argue that her most pressing concerns had the potential to turn presidential elections.

Today, the most pressing concern for Lisa Meeks, 47, is making herself “more marketable” to potential employers. Meeks, who left her pre-school teaching position because her hours were reduced, now rides the bus to Sinclair Community College in the morning and then boards another bus to get to her new job, working the evening shift as a call-center manager.

“I’m still seeing people struggling,” said Meeks. “You hear people saying, ‘I’ve put in four job applications and I haven’t heard anything back. What am I doing wrong?’”

Though the scale is greater, the workplace shifts that Dayton and the rest of the country are seeing parallel the Bush- era job trends that Obama criticized four years ago, when he said that during President Bill Clinton’s administration “the average American family saw its income go up $7,500 instead of go down $2,000, like it has under George Bush.”

Stopping Downturn

Arriving in the White House during a financial crisis, Obama concentrated on stopping a downturn that many economists feared could turn into a depression. He pressed for an $831 billion stimulus package and an auto-industry bailout. He cut taxes for middle-class workers and backed a health-care overhaul that he said would help middle-income families by keeping medical costs down and easing access to insurance coverage.

To promote a skilled workforce, the Obama administration has stressed support for education, including aid to local schools to reduce teacher layoffs. It has emphasized infrastructure improvements to promote competitiveness and backed clean-energy technologies that could provide future jobs.

Romney says deficit spending to finance the stimulus, uncertainty generated by the health law, and tighter regulation of the financial industry have deterred businesses from hiring. He backs reductions in government spending and tax cuts, including for wealthy “job creators” to spur investment.

Nothing Obama has accomplished in office so far has stopped what Siu calls “the hollowing out of the middle.”

No Overnight Fix

Just 19 percent of registered voters believe the president’s policies favor the middle class, compared with 25 percent who say they benefit the rich, according to a CBS-New York Times poll conducted Feb. 8-13. Still, asked to choose which candidate would do a better job protecting the middle class, 49 percent say Obama and 39 percent Romney, according to an April 5-8 ABC News-Washington Post poll.

“The economic crisis, deep recession and wage stagnation weren’t created overnight and they won’t be solved overnight,” Amy Brundage, a White House spokeswoman, said in an e-mail. “While we are making progress and the economy is growing and creating jobs, too many middle class families are still struggling to recover from the worst financial crisis of our lifetimes caused by the reckless economic policies of the past.”

Fundamental Forces

Siu and other economists attribute the phenomenon to such fundamental forces as the movement of production offshore to lower-cost countries and technological gains that have made U.S. companies more efficient. Even with 5.2 million fewer Americans employed since January 2008, the U.S. is turning out more goods and services than before the recession, one reason corporate profits hit record levels and wealthy investors prospered.

Robots are replacing factory workers. Airport kiosks are taking the place of ticket agents. Intuit Inc. (INTU)’s TurboTax software performs the work of accountants.

“This is early days. We see the next 10 years as being more disruptive than the last 10,” said Erik Brynjolfsson, director of the MIT Center for Digital Business and co-author of the book “Race Against the Machine.” He cites developments in artificial-intelligence technologies such as those in Google Inc. (GOOG)’s experimental self-driving car, International Business Machine Corp. (IBM)’s Jeopardy-playing Watson computer, and Apple Inc. (AAPL)’s Siri voice-recognition software.

Plant Closing

That disruption is being felt in the Dayton area. Thousands of auto workers and employees at related parts manufacturers and machine-tool makers lost their jobs after General Motors Co. (GM) closed its plant in nearby Moraine two days before Christmas in 2008. Less than six months later, NCR Corp. (NCR), once called National Cash Register Co. and founded in Dayton in 1884, said it would move its headquarters to Duluth, Georgia, taking more than a thousand jobs with it.

Unemployment in the Dayton metropolitan region reached 12.4 percent in January 2010, though the jobless rate had come down to 8.7 percent in February.

Some of the lost manufacturing and office jobs have been replaced by growth in warehouse centers that take advantage of the area’s location near the intersection of two interstate highways, said Richard Stock, director of the Business Research Group at the University of Dayton.

Caterpillar Logistics, a unit of Peoria, Illinois-based Caterpillar Inc. (CAT), and Carter Logistics LLC opened distribution centers in the area. Employees at those and other warehouses are paid “above a living wage, but they’re definitely for the most part lower-middle-income jobs,” Stock said.

High Skills Needed

The other major sources of growth have been in information technology, exemplified by Teradata Corp. (TDC), headquartered in Dayton, and Reed Elsevier Plc (REL)’s Lexis Nexis unit, which has a facility in the area, Stock said

Aeronautics and advanced materials manufacturing have also expanded around Wright-Patterson Air Force Base, home of the Air Force Materiel Command and Air Force Research Laboratory, Stock said. GE Aviation, a unit of Fairfield, Connecticut-based General Electric Co. (GE), broke ground last year on a $51 million research center in Dayton.

“Those jobs are at the very high-skilled end, jobs that require quite a bit of education,” Stock said. “There are not too many jobs in the middle.”

As a result, pay has declined. Real average weekly earnings in the metropolitan area dropped to $800 last year from $817 in 2007, according to U.S. Labor Department data analyzed by Stock.

Sitting on a metal bleacher watching her 7-year-old son at an early evening baseball practice, Mandy Copeland reflected on the expectations she and her husband had six years ago when she finished the coursework that qualified her for her occupational therapy job.

“We had pretty high hopes,” she said. “Now we’re just happy we have jobs.”

http://www.bloomberg.com/news/2012-05-01/obama-fails-to-stem-middle-class-slide-he-blamed-on-bush.html

U.S. Stocks Advance as Manufacturing Data Top Estimates

U.S. stocks advanced, sending the Standard & Poor’s 500 Index toward the highest level in almost a month, after a better-than-estimated manufacturing report bolstered optimism in the world’s largest economy.

All 10 industries in the S&P 500 advanced today as financial, energy and technology shares had the biggest gains. Intel Corp. (INTC) and JPMorgan Chase & Co. (JPM) increased more than 1.7 percent. Sears Holdings Corp. (SHLD) rallied 13 percent as it forecast a profit after a gain from selling some stores in the U.S. and Canada. Archer Daniels Midland Co., the world’s largest grain processor, gained 6.6 percent as profit topped estimates.

The S&P 500 rose 0.9 percent to 1,410.84 at 11 a.m. New York time, to the highest on a closing basis since April 3. The index fell more than 0.7 percent in April, halting a four-month rally. The Dow Jones Industrial Average added 90.93 points, or 0.7 percent, to 13,304.56. Trading in S&P 500 companies was 0.2 percent above the 30-day average at this time of day.

“Things are improving,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “It’s nice to see that manufacturing was better than expected. The earnings season has been a positive. That’s what investors have to look at. We don’t recommend that people get out of the market.”

Equities rose as manufacturing unexpectedly expanded in April at the fastest pace in 10 months, driven by gains in orders and production that signal the U.S. remains a source of strength for the global economy. Investors also watched corporate earnings as about 74 percent of S&P 500 companies that reported results since April 10 have beaten earnings projections, according to data compiled by Bloomberg.

Intel, JPMorgan

The Morgan Stanley Cyclical Index of companies most-tied to economic growth gained 1.8 percent as 28 of its 30 stocks advanced. The Dow Jones Transportation Average climbed 1.3 percent. The KBW Bank Index jumped 1.7 percent as all of its 24 stocks rose. Intel added 1.7 percent to $28.89. JPMorgan increased 2.3 percent to $43.97.

Sears Holdings rallied 13 percent to $60.57 after forecasting first-quarter earnings per share of $1.46 to $1.84. Two analysts surveyed by Bloomberg expected a loss of $1.25 a share. The company had a gain of about $235 million after taxes and minority interests from selling the stores.

The retailer said yesterday it plans to spin off its Hometown and Outlet stores, which may give Chairman Edward Lampert an opportunity to hold a larger stake in the new publicly traded company.

Independent Chairman

Chesapeake Energy Corp. (CHK) jumped 7.2 percent to $19.77. The company will name an independent chairman to replace Aubrey McClendon and halt an incentive program that allowed the chief executive officer to amass personal stakes in thousands of company-operated wells.

ADM (ADM) gained 6.6 percent to $32.86. Fiscal third-quarter earnings topped analysts’ estimates for the first time in four quarters after international grain sales and oilseed processing in North America improved.

Anadarko Petroleum Corp. (APC) added 3 percent to $75.39. The second-largest U.S. independent oil and natural-gas producer by market value said first-quarter profit rose on higher crude prices and a $1.8 billion gain from an Algerian tax settlement.

Avon Products Inc. (AVP) lost 7.8 percent to $19.92. The door-to- door cosmetics seller that’s the target of a $10 billion takeover bid from Coty Inc. reported first-quarter profit that trailed analysts’ estimates, hurt by higher labor and materials costs.

Emerson Slumps

Emerson Electric Co. (EMR) dropped 6.1 percent to $49.32. The maker of industrial equipment and InSinkErator-brand garbage disposals cut its 2012 earnings forecast and reported second- quarter revenue and earnings that missed the average analyst estimate.

Pfizer Inc. (PFE) lost 0.4 percent to $22.80. The world’s largest drugmaker said first-quarter revenue fell to $15.4 billion from $16.5 billion a year earlier, hurt by a 25 percent drop in sales from its pharmaceutical business because of the loss of U.S. patent protection for Lipitor.

Stock market trend charts and investor sentiment are signaling the S&P 500 may surpass its 2012 high before the rally gives way to a 10 percent decline, according to UBS AG.

The benchmark gauge for U.S. equities is likely to exceed this year’s peak of 1,419.04 and climb to 1,460, after it held last month above its March 6 low, said Michael Riesner and Marc Mueller, Zurich-based analysts with UBS. The S&P 500 halted a five-day slump on April 10 at 1,358.59. Two weeks later, it rebounded from another drop at 1,358.79.

First Since 2008

For the first time since the start of 2008, bonds were the only investments to provide positive returns amid renewed concern the global economy is slowing and as widening deficits in Europe threaten contagion.

Fixed-income assets — from Australian government debt to U.S. Treasuries to global junk bonds — gained 0.7 percent last month including reinvested interest, according to Bank of America Merrill Lynch index data. The MSCI All-Country World Index of stocks lost 1.1 percent including dividends while the Standard & Poor’s GSCI Total Return Index of metals, fuels and agricultural products fell 0.5 percent. The U.S. Dollar Index (DXY) dropped 0.3 percent.

“Concerns of an economic slowdown and renewed risks over Europe are the biggest drivers,” Anthony Valeri, a market strategist in San Diego at LPL Financial, which oversees $330 billion, said April 26 in a telephone interview. “There’s renewed concerns about Europe, and Spain in particular.”

http://www.bloomberg.com/news/2012-05-01/u-s-stock-futures-are-little-changed-before-factory-data.html

Krugman Says Fed ‘Reckless’ to Allow High Jobless Rate

Nobel Prize-winning economist Paul Krugman suggested Federal Reserve policy makers led by Ben S. Bernanke are “reckless” for refusing to pursue higher inflation, which he said could lower U.S. unemployment.

“The reckless thing is to allow mass unemployment to continue,” Krugman, a Princeton University professor, said on Bloomberg Television’s “Street Smart” yesterday. “We have had a massive failure of our political system that has come to accept that 8 percent unemployment is the new normal and there is nothing that can be done,” Krugman said. “We’re in a low- key version of the Great Depression.”

Krugman, whom Bernanke hired at Princeton in 2000 when he was chairman of the economics department, has said the Fed should tolerate inflation of 3 percent to 4 percent to boost the economy and put Americans back to work. He was responding yesterday to Bernanke’s comments last week that pursuing such a policy would be “reckless.”

Representative Ron Paul of Texas, appearing on the same show, rejected Krugman’s argument for higher inflation. Paul, who has written a book titled “End the Fed,” blamed governments for “debasing” their currencies.

“Inflation is theft,” said Paul, a Republican presidential candidate who said he will stay in the race until his party’s convention in August. “You’re stealing value from people who save money. It really destroys an important feature of the economy — and that is saving.”

Earth to Bernanke’

The Bernanke-Krugman debate started with Krugman’s April 24 article in the New York Times Magazine, titled “Earth to Bernanke.” In it, Krugman argued that allowing a more rapid increase in consumer prices would align with Bernanke’s comment in 2000 that the Bank of Japan should pursue faster inflation to escape deflation.

“What we really want from the Fed now is that kind of resolve to do whatever it takes, which is what Ben Bernanke thought Japan should have been doing in the year 2000,” Krugman said yesterday. “This notion that wages are fixed and any inflation comes at the expense of workers is wrong. Wages tend to rise in an economy that’s doing well.”

Bernanke responded to Krugman’s criticism in a press conference last week following a meeting of the Federal Open Market Committee, which repeated that interest rates are likely to stay “exceptionally low” at least through late 2014.

“So there’s this view circulating that the views I expressed about 15 years ago on the Bank of Japan are somehow inconsistent with our current policies,” Bernanke said in response to a reporter’s question. “That is absolutely incorrect. My views and our policies today are completely consistent with the views that I held at that time.”

Recommendation Rejected

Bernanke rejected Krugman’s policy recommendations.

“The question is, does it make sense to actively seek a higher inflation rate in order to achieve” a slightly faster reduction in the unemployment rate, Bernanke said last week. “The view of the committee is that that would be very reckless.”

Krugman said yesterday that the Fed should keep its benchmark interest rate low until “well past” late 2014. “We could be better off at 4” percent inflation, he said.

The jobless rate has exceeded 8 percent since February 2009 and is projected to hold at 8.2 percent in April, according to the median estimate of economists surveyed by Bloomberg News ahead of a May 4 report from the Labor Department.

Krugman also said the U.S. can withstand more fiscal stimulus.

“There’s no reason to panic over our debt now,” Krugman said. “If you cut spending now, what it does is depress the economy. It’s a self-defeating policy.”

http://www.bloomberg.com/news/2012-04-30/krugman-says-fed-should-allow-inflation-to-rise-above-2-goal.html

Manufacturing in U.S. Unexpectedly Expands at a Faster Pace

Unfortunately manufacturing is a small  part of the USE, only 10 pc. Obviously planes, trains, and cars (mining equipment) remain in big demand globally.

Manufacturing unexpectedly expanded in April at the fastest pace in 10 months, driven by gains in orders and production that signal the U.S. remains a source of strength for the global economy.

The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg News survey, from 53.4 in March, the Tempe, Arizona- based group’s report showed today. Readings greater than 50 signal growth. The median forecast in the Bloomberg survey called for a drop to 53. Measures of production and orders were the highest in a year.

Stronger demand for automobiles is bolstering American manufacturing at a time when factories in other parts of the world are paring production as growth cools. At the same time, the industry faces headwinds from smaller gains in business investment, less contribution from inventories and recession in parts of Europe.

“Manufacturing is still in pretty good shape,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who projected an increase in the factory index. “U.S. manufacturing will outperform its counterparts in Europe. At this point, we’re in a steady-state expansion” in the economy, he said.

Stocks climbed after the figures, with the Standard & Poor’s 500 Index increasing 0.8 percent to 1,409.7 at 10:37 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 1.95 percent from 1.91 percent late yesterday.

Estimates of the ISM index ranged from 52 to 54. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

Production, Orders

The ISM’s production index climbed to 61 in April, the highest since March 2011, from 58.3. The new orders measure increased to 58.2, the strongest since April 2011, from 54.5. Fifteen of the 18 industries reported growth in orders and production in April and none indicated a decline. The gauge of export orders rose to 59 from 54.

The employment gauge climbed to a 10-month high of 57.3 from 56.1 in the prior month. Economists project a 20,000 increase in factory employment in April, according to the Bloomberg survey median before the Labor Department’s May 4 release of its jobs data. Total payrolls increased by about 160,000 during the month, up from 120,000 in March, the median estimate shows.

The measure of orders waiting to be filled decreased to 49.5 from 52.5. The inventory index dropped to 48.5 to 50, while a gauge of customer stockpiles increased to 45.5 from a three- month low of 44.5. A figure lower than 50 means manufacturers are reducing stockpiles.

U.K. Manufacturing

Elsewhere, a U.K. manufacturing index fell more than forecast in April as export orders declined the most since May 2009. The gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, dropped to 50.5, the lowest this year, from a revised 51.9 in March, Markit said on its website today. The median forecast in a Bloomberg survey called for a decline to 51.5 from an initial March estimate of 52.1.

China’s manufacturing expanded for a fifth month in April, reducing pressure on policy makers to open the taps on credit in the world’s second-largest economy. The Purchasing Managers’ Index rose to 53.3 from 53.1 in March, China’s statistics bureau and logistics federation said in a statement today. That’s the highest reading in a year.

Recent regional reports indicate U.S. manufacturing, which accounts for about 12 percent of the total economy, is expanding less vigorously than last year. New York-area factories grew at the slowest pace in five months in April, and manufacturing in the Philadelphia region expanded at a slower pace last month, according to figures from the Federal Reserve.

Business Investment

Business spending on equipment and software in the first quarter rose at a 1.7 percent pace, the weakest in almost three years, a Commerce Department report showed last week. Other data last week showed orders for non-defense capital goods excluding aircraft — a proxy for business investment in items such as computers and communications gear — decreased 0.8 percent in March.

Overseas demand for U.S. made-goods also risks fading as global growth slows. Spain’s economy contracted in the first quarter, putting the euro region’s fourth-largest economy into its second recession since 2009. The U.K. economy shrank 0.2 percent in the first quarter after contracting 0.3 percent in the prior three months as Britain slid into its first double dip recession since the 1970s.

Global Economy

“The global economy is uneven,” John Faraci, chairman and chief executive officer of International Paper Co. (IP), said during an April 27 earnings call. “We got a recession going on in Western Europe. The growth has slowed in China and India. And North Americas is a recovering but far from fully recovered economic environment.”

At the same time, stronger auto production bolstered the U.S. economy from January through March, which may keep support manufacturing. Motor vehicle output added 1.12 percentage points to growth, the most since the third quarter of 2009. Cars last quarter sold at the fastest pace in four years, according to industry data.

Manufacturers mentioned gains in automotive and high- technology industries, the Fed said in its Beige Book business survey, published April 11. The firms “expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices,” the Fed said in the report.

3M Co., the maker of fuel system tune-up kits and Post-it Notes, posted first-quarter profit that beat analysts’ estimates because of rising U.S. auto and industrial demand. The St. Paul, Minnesota-based company’s industrial and transportation unit posted sales of $2.66 billion, an 8.6 percent increase.

http://www.bloomberg.com/news/2012-05-01/ism-index-of-u-s-manufacturing-increased-to-54-8-in-april.html

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