Friday, August 31, 2012
Everyone Is Ignoring A Sign Of US Economic Decline We Haven't Seen In 60 Years
UBS economist Drew Matus was on Bloomberg TV with Tom Keene this morning discussing the U.S. economy – and one rarely-discussed trend in particular that is somewhat alarming.
Matus told Bloomberg TV that the decline of the U.S. capital stock is a bad sign:
I would say that one of the things that people have generally ignored is that the U.S. capital stock is in decline. This is the first time post-war we've ever seen it. We don't know what the repercussions are because we have nothing in history to look back on and say, "Hey, last time it did this, this is what followed on it."
I would submit to you, though, that it's probably nothing good.
The capital stock Matus is referring to is American companies' investments in new equipment and software – one of the four main components in GDP – less the depreciation of existing equipment.
The implication of a drop in the capital stock is that potential growth is much lower than it could be if businesses were investing more in new capital. As a result, economy-wide return on assets can be expected to be much lower, UBS economist Sam Coffin told Business Insider.
Here is a chart showing the growth of the U.S. capital stock from 1947 to 2011 (the most recent data point). Note the lone dip at the end:
BEA
And here is a chart of the annual growth of the capital stock. Note the only time it's ever been negative since 1947:
BEA
As evidenced in the chart, the capital stock is growing at nowhere near average rates we've seen in the past.
Coffin explained to Business Insider the significance of the negative growth shown at right in the chart above and the subsequent yet feeble return to positive territory we've now seen:
It's more of a longer-term story. What it suggests is that productivity growth going forward isn't as likely to be as great because we haven't made as much capital investment as we otherwise would have.
It's sort of a symptom of the slow growth we've seen – except that there have been periods of slow growth in the past when we've seen more capital stock increase. But more importantly, it's just a lack of deepening of the capital stock that suggests lower trend growth ahead unless we work on it.
It's still going along at a pretty slow pace, and probably not enough to make up for the depreciation of the existing capital stock. It's on track for another very soft year in 2012.
The second quarter GDP numbers released yesterday didn't provide much to get excited about going forward, either. Coffin told Business Insider that based on those numbers, we could even see a dip in the capital stock again:
Looking at equipment and software investment – 5.4 percent and 4.7 percent over the last two quarters at an annual rate – that's a good deal slower than last year, and probably doesn't keep up with depreciation.
So, we're looking so far at a probable decline again in the capital stock in 2012, or at least very slow growth, if there is any.
Read more: http://www.businessinsider.com/ubs-capital-stock-us-economic-decline-2012-8#ixzz258IU96jg
Netanyahu tells US 'time has run out' on Iran diplomacy
Prime Minister Binyamin Netanyahu got into a diplomatic shouting match with US Ambassador Dan Shapiro over US President Barack Obama's handling of Iran's nuclear program, saying "time has run out" for diplomacy, Yediot Aharonot cited a source as saying on Friday.
According to the report, which the Jerusalem Post could not independently verify, the showdown took place as Netanyahu met with Shapiro and Republican Congressman Mike Rogers, who visited Israel earlier in the week.
A source that participated in the meeting said that a particularly angry and stressed Netanyahu began a tirade against the US president, attacking him for not doing enough on Iran. "Instead of pressuring Iran in an effective way, Obama and his people are pressuring us not to attack the nuclear facilities," the source quoted Netanyahu as saying.
Angered about continued US rhetoric that diplomacy needs more time to work, Netanyahu said flatly: "Time has run out,"Yediot reported.
The American ambassador is said to have responded politely but firmly, telling Netanyahu that he was distorting Obama's position. Obama promised not to allow Iran to obtain nuclear weapons, he explained, and left all options on the table, including military options.
At that point, diplomatic sources told the paper, "sparks flew" in an escalating shouting match between Netanyahu and Shapiro as the stunned congressman watched.
Netanyahu and Obama may meet face-to-face on the sidelines of September's United Nations General Assembly meeting.
Jerusalem Post
NATO secretly authorizes Syrian attack
On Monday, August 27, 2012, in a meeting in Brussels, NATO military leaders in consultation with “telephonic liaison” with officers of military forces in several former Soviet Republics, major African states, Israel, Saudi Arabia and the Persian Gulf states came to a combined decision to act against Syria.
Two issues were on the agenda:
1. How climate change in Greenland will effect geopolitics, immigration and military affairs for the EU
2. Syria and the potential for Russian and Chinese intervention.
3. Iran was not an official agenda item but it is an unspoken conclusion that, if China and/or Russia stand aside for interference by NATO in Syria’s internal affairs, this will be seen as an authorization for incursions into Iran, a systematic “Balkanization” based on a prescribed formula of “manufactured and simulated internal political and social strife.”
No announcement was made, no plans or timetable published, simply a vote on authorization of force which passed unanimously by member and included non-member states unanimously.
News stories throughout North America and Europe earlier in the day were filled with reports of mass killings by the Syrian Army and the presence of Iranian troops in Syria. True or not, these stories represent a pre-staging for the NATO conference.
The critical reporting issue involves rhetoric. We moved, yesterday, from discussions of “fighting” to “systematic execution of hundreds of civilians.”
No video nor photos were included to verify neither claims nor sources given other than reports from “rebel forces.”
Recent consultation with friends in the Pentagon as to Syria’s air defense system indicated that the US has, in place, a play to destroy the command and control capability of Syria’s system.
The problems are twofold:
1. Russian technicians man the Syrian system
2. The S300P2 system Syria uses is extremely “robust”
An additional political consideration is a simple one, there is no UN authorization. Both Russia and China have vetoed even sanctions against Syria much less authorized an attack.
Thus, there is no existing authority capable of justifying an attack.
In an interview this week at the NAM (Non-Aligned Movement) conference in Tehran, attended by 120 member states, a huge defeat for NATO interests in the area, this interview yielded some substantive and surprising facts.
Press TV: Certain powers have been trying to isolate Iran, actually, by not holding such a conference at such a high ranking level. As you said, this all has failed.
Now tell us about all the sanctions against Iran which have propagated against Iran, that Iran should be isolated, but as you said it’s all been failed. What is really important is that the agenda of the 688-point draft document which talked about, as you call and urge all countries to make the world free from any nuclear weapons.
You were a senior expert in the IAEA as an inspector. Tell us about that and also with the particular focus on Israel which has not yet signed up to the NPT.
Abu Shadi: I oppose strongly any kind of accusation on any state based on intelligence information. All the accusations given to the nuclear program in Iran is based only on intelligence information. There is no single proof that Iran is deviating from its commitment from the Non-Proliferation Treaty.
I am very surprised that the Security Council took four decisions, sanctions against Iran just because of rumors that the intelligence source may think there is something.
I think this policy should be changed. The Security Council and its way of veto, and its limited number only to the big powers should be changed. I think that will also be one of the points to be addressed in this conference. I believe strongly that that situation, which is actually politically influenced by the West, should be changed.
With respect to your second part about the NPT, in fact, almost all the states in the world respects the Non-Proliferation [Treaty] except the five weaponized states, which they should reduce their weapons which didn’t happen up until today, and the three or four states which did not sign the NPT including Israel. Israel is the only state in the Middle East who did not sign the NPT.
None of the Western countries who are accusing not only Iran but before also Iraq, Libya, Syria and even Egypt, did not consider any accusation to what the Israelis are doing. I believe this bias in the international organization should be stopped.
Shadi makes some particularly interesting points and raises some concerns few had noticed. His most damning statement, of course, is that the Security Council, a carryover from a war 70 years ago, certainly a demonstration of oligarchic rule at the United Nations, has been directed at Iran.
In particular, he notes that the council’s unilateral and undemocratic decisions, followed by nations, China and Russia, who defended Syria, were aimed at Iran but backed by no presentation of facts or even qualified intelligence assessments. In fact, since Colin Powell’s humiliating WMD presentation before the UN, no “American fact” has been taken seriously nor is likely to.
CNN quotes a top Powell aid:
A former top aide to Colin Powell says his involvement in the former secretary of state's presentation to the United Nations on Iraq's weapons of mass destruction was "the lowest point" in his life.
"I wish I had not been involved in it," says Col. Lawrence Wilkerson, a longtime Powell adviser who served as his chief of staff from 2002 through 2005. "I look back on it, and I still say it was the lowest point in my life."
Actual risks and ramifications
Top intelligence analysts in private consultation fear a larger Middle East war. “Russia and China won’t stand back, not with the US planning a unilateral move on Africa and its resources. It’s like 1947 again with Truman and the Marshall plan, encirclement, but a war over, not just resources but a world war against what has now seen as the real threat, what Americans call the “middle class.”
Thus, taking Syria without taking Iran is “not in the cards.” Here I return to the words of H. G. Wells, in his War of the Worlds. His grasp in this fiction well over a century old reflects on our times in a curious and wonderfully literate manner:
“No one would have believed in the last years of the nineteenth century that this world was being watched keenly and closely by intelligences greater than man's and yet as mortal as his own; that as men busied themselves about their various concerns they were scrutinised and studied, perhaps almost as narrowly as a man with a microscope might scrutinise the transient creatures that swarm and multiply in a drop of water.
Yet across the gulf of space, minds that are to our minds as ours are to those of the beasts that perish, intellects vast and cool and unsympathetic, regarded this earth with envious eyes, and slowly and surely drew their plans against us.
The immediate pressure of necessity has brightened their intellects, enlarged their powers, and hardened their hearts. And looking across space with instruments, and intelligences such as we have scarcely dreamed of...
And we men, the creatures who inhabit this earth, must be to them at least as alien and lowly as are the monkeys and lemurs to us. The Martians seem to have calculated their descent with amazing subtlety--their mathematical learning is evidently far in excess of ours--and to have carried out their preparations with a well-nigh perfect unanimity.”
Martians, this is how NATO and Israel look on the world, as expressed through the prose of Wells. Their gaze “cool and unsympathetic,” as drone warfare and their plans, calculated acts of false flag terror, kidnappings, assassinations, the abomination of mythical news reporting.
The end of the road, this path of “hubris” could well be world war, least of all fuel price increases that collapse the currencies and economies.
Talking of death is nothing as we are now pre-staged to look on life as nothing, all victims are “militants” if you want them dead or “collateral damage” when you err.
Iran’s position chairing NAM makes them a harder target. The general criticism by many NAM members, the dictatorial rule of the United Nations by the Security Council, has not prevented the Syrian conflict from becoming a threat to world peace.
For Iran, their choice seems, on the surface, to be in aiding Syria, negotiations, using oil leverage with India, China and others and predicting how the west is plotting.
If Iran falls, it will be only another domino.
PressTV
China’s fears grow over eurozone crisis
Premier Wen Jiabao told German Chancellor Angela Merkel that Europe must "strike a balance" between fiscal tightening and measures to promote growth. "Europe's debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly, I am also worried," he said.
His comments mark a shift in Chinese policy. Beijing has until now backed austerity across Euroland, but the severity of China's own downturn has begun to rattle policymakers.
Exports of electronic goods to Italy crashed 43pc in July from a year earlier, and sales to Germany fell 11pc. Caixin reported that processing trade to Europe fell 21pc.
The country's two largest shipping groups COSCO and China Shipping both reported a drastic losses today. The Shanghai composite index of stocks threatened to break below 2000 today, the lowest since the Lehman crisis.
Mr Wen asked for clarification over whether Italy and Spain would adopt "comprehensive rescue measures" needed to unlock the EU bail-out machinery - and open the door to bond purchases by the European Central Bank.
The Telegraph
Quake of 7.9 magnitude strikes off Philippines: USGS
MANILA (Reuters) - An earthquake of 7.9 magnitude struck off the Philippines on Friday and atsunami warning has been issued for the region, the U.S. Geological Survey and the Pacific Tsunami Warning Center said.
The quake was centered off the east coast, 91 miles off the town of Guiuan in Samar province at a depth of about 20 miles, USGS said.
The tsunami warning was issued for the Philippines, Japan, Indonesia, Taiwan, Papua New Guinea and other islands in the Pacific including the U.S. state of Hawaii.
The NOAA Tsunami Center later lifted a warning for Japan, Taiwan and several other Pacific islands.
"Strong earthquake here in Taft, Eastern Samar! And it lasted very long too!" Samar congressman, Ben Evardone, told reporters via text message.
An official at the Philippines' Volcanolgy Institute said he expected damage had been caused in Samar province but he had yet to receive any reports.
"If you are anywhere near the coast I recommend that you head to higher ground," Paul Caruso of the USGS told Sky TV by telephone when asked about a threat of a tsunami hitting the coast of the Philippines.
Yahoo News
Thursday, August 30, 2012
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