It's The Economy Stupid: August 2011

Wednesday, August 31, 2011

It's The Economy Stupid

One reason why QE3 by the Fed would have little impact on Economic growth

From the Bridgewater Daily Observations for Wednesday, August 31, 2011 -

“While Treasury rates have fallen from about 3.5% early in the year to 2.2% now, the impact on housing and therefore households is likely to be modest. The refinancing channel is unlikely to be significant because mortgage rates have fallen a lot less than Treasuries, and for most eligible borrowers, rates are not that much lower than they were last year. Our estimated impact on growth from the decline in rates is less than 0.2%. The flow-through to higher demand for houses and therefore higher prices is also likely to be muted by the decline in equity prices (which reduces available down payments) and the broader deterioration in economic conditions. Early evidence suggests that demand for housing has weakened over the last two months, and on net, we still expect home prices to fall modestly going forward, as demand for houses will likely remain weak while oversupply remains substantial. While mortgage rates and housing more broadly are not the only way that lower Treasury rates flow through to growth, they represent a significant channel that will likely benefit much less than usual from the drop in rates.”

3 Mo T-Bill 0.15%

6 Mo T-Bill 0.46%

2 Yr T-Note 0.196%

3 Yr T-Note 0.306%

5 Yr T-Note 0.909%

7 Yr T-Note 1.498%

10 Yr T-Note 2.164%

20 Yr T-Note 3.091%

30 Yr T-Bond 3.528%

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

Monday, August 29, 2011

Anthony Bourdain & No Reservations Travels to Cajun Country

Anthony Bourdain

No Reservations

The Travel Channel

Episode: Cajun Country

Catch this episode Monday, Aug 29, at 9 PM Eastern/Pacific, 8 PM Central.

Tony travels beyond New Orleans and into Cajun Country to find out what sets bayou culture apart. He dines with locals Wendell Pierce and Lolis Elie, partakes in an authentic crawfish boil and ends his trip with a whole-hog roast. (A boucherie! What’s up with that?! They don’t speak coonass???)

Friday, August 26, 2011

Jefferson and Johns have been suspended indefinitely from the football team, coach Les Miles said Friday.

www.2theadvocate.com

Breaking News

LSU senior quarterback Jordan Jefferson, 21, and sophomore linebacker Joshua Johns, 21, have surrendered to authorities after Baton Rouge police secured arrest warrants for second-degree battery.

Both men are at Parish Prison with their attorney where they are being booked on the felony counts.

Jefferson and Johns have been suspended indefinitely from the football team, coach Les Miles said Friday.

It's The Economy Stupid: GDP

GDP Quarter on Quarter: 1.0%, economists expected 1.1% and the prior period number was 1.3%

GDP Price Index: 2.4%, economists expected 2.3%, prior number was 0.1%

Personal Consumption: 0.4%, economists expected 2.3%, and the prior number was 2.3%

Core PCE Quarter on Quarter: 2.2%, economists expected 2.1%, and the prior number was 2.1%

So, the economy is growing S L O W L Y. What can you say? It’s weak, but ain’t dead yet.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

He said, she said...

Conflicting reports surface on Shady’s bar brawl

Employee: Victim threw first punch

By Mark Clements

Sports Writer

Published: Friday, August 26, 2011

Updated: Friday, August 26, 2011 01:08

Football: Shady's employees tell AP that victim threw first punch in bar fight

Report: Man in Shady's incident accused of threatening, stalking ex-girlfriend

Jordan Jefferson’s apartment searched by police

The Baton Rouge Police Department released an incident report Thursday regarding the Shady's Bar altercation last Friday, confirming senior quarterback Jordan Jefferson and sophomore linebacker Josh Johns' involvement.

According to the report, Andrew Lowery, 21, advised officials that several suspects he believed to be LSU football players pulled a man out of a truck and beat him.

Lowery said he intervened and managed to pull the man away from the crowd.

Lowery said he was then punched and kicked several times by the crowd, and he believed Jefferson and Johns were among the attackers.

"Lowery's face was swollen and had several bruises," the report stated. "Lowery also had blood on his shirt."

However, two Shady's Bar employees told the Associated Press their versions of the fight, which differ from the police report.

Shady's Bar general manager John Peak and door manager Jordan Neldare said they saw Lowery throw the first punch in the brawl.

"That's one thing we do know," Peak told the AP.

Both bar employees also told the AP that Lowery was asked to leave the bar at 1:30 a.m. after he appeared to be harassing a woman. Contrary to the incident report, Neldare said Lowery was already involved in the fight before the truck pulled up, minutes after Lowery left the bar.

An unnamed witness who claimed to have observed the entire altercation told BRPD she "for certain" observed Jefferson kick Lowery in the face, according to the police report.

Neldare said he saw Jefferson at one point "standing by himself and looking upset while the fight was still taking place."

The unnamed witness advised officials that approximately 10 suspects attacked the driver of the car and re-affirmed Johns' involvement as well.

She said approximately five more suspects joined the attack on Lowery. She said she believed they were all football players because she recognized some from the team and others donned official LSU football shirts.

Lowery and the female witness were the only two interviewed in the police report.

The Daily Reveille obtained a copy of a restraining order filed by Lowery's ex-girlfriend, Elizabeth Siadous.

The Advocate reported Siadous claimed Lowery had cornered her at a bar earlier on the night of the altercation, yelled at her and hit her friend.

The restraining order states Lowery must remain at least 100 yards from Siadous, and can not abuse, stalk, follow, threaten or contact her. It was filed Aug. 24 and remains in effect until a court date set for Sept. 21.

BRPD spokesman Sgt. Don Stone also dispelled rumors that surfaced Thursday saying Jefferson was being arrested.

"Jefferson has not been arrested," Stone said. "There's no warrant for an arrest."

This comes a day after police searched Jefferson's off-campus apartment, seizing 49 pairs of shoes.

This hoopla comes with the No. 4 Tigers set to take on No. 3 Oregon at Cowboys Stadium in Arlington, Texas, in just more than a week.

"Through time, I think you'll find that this thing will play out effectively," Miles said. "It's really the same group of men that work hard and want to represent LSU extremely well and that are facing some issues that are not described at the start of every season. I think you'll find that these guys will handle that. It will be a piece of time that will mark them and make them stronger. I would expect that we'll have leadership here that will understand some very specific lessons that were learned."

Thursday, August 25, 2011

FW: Like sands through an hourglass, so are...

Now the circle is getting completed…

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

From: Ronnie L. Stephens [mailto:rstephens@pelicanstatecu.com]
Sent: Thursday, August 25, 2011 2:17 PM
To: John Broussard
Subject: RE: Like sands through an hourglass, so are...

I had heard this from a friend who talked to someone in Police Dept.

They said it was actually Brad Wing, LSU punter, who he hit in the bar earlier.

From: John Broussard [mailto:JBroussard@treasury.state.la.us]
Sent: Thursday, August 25, 2011 2:09 PM
Subject: Like sands through an hourglass, so are...

Thursday Edition

August 25, 2011

Updated continually

2theadvocate.com

Baton Rouge, LA

Zuckerman on Obama in The Wall Street Journal

The Wall Street Journal.

Opinion

August 25, 2011

Obama and the 'Competency Crisis'

Like many Americans who supported him, I long for a triple-A president to run a triple-A country.

By MORTIMER ZUCKERMAN

The rising impatience with the leadership of President Obama was epitomized on Aug. 8 in the middle of one of the now-habitual Wall Street roller coasters. His speech on the economy was 53 minutes late. What showed on TV screens was an empty White House podium, an image suggestive of the absence of leadership. When the president did speak, the best he could come up with was "We've always been and always will be a triple-A country." The market's response was a Bronx cheer, a drop of another 300 points.

Mr. Obama seems unable to get a firm grip on the toughest issue facing his presidency and the country—the economy. He now asserts he is going to "pivot" to jobs. Now we pivot to jobs? When there are already 25 million Americans who are either unemployed or cannot find full-time work? Does this president not appreciate what is going on?

Fewer Americans are working full-time today than when Mr. Obama took office. We have lost over 900,000 full-time jobs in the last four months alone, and long-term unemployment is at a post-World War II high. The public's faith in his ability to deal with the economy has plunged. As Doyle McManus of the L.A. Times put it, "Can this president persuade voters to let him keep his job when so many have lost theirs?" Even Jimmy Carter didn't plumb the depths of national dissatisfaction revealed in the stunning Gallup poll taken Aug. 11-13. The president's approval rating was only 39% with a mere 26% approving of his handling of the economy.

Meanwhile, everyone in the business world is pleading for some kind of adult supervision to build a national platform for sustained growth that includes a long-term fiscal plan that addresses our ballooning debt. They are desperate for strong leadership and feel that all we are getting out of Washington is a lot of noise as Democrats and Republicans blame one another.

Since the president is the one who represents all of America and all Americans, the buck stops with him rather than with the Congress. It is the president's job to offer a coherent program for the twin threats of a static economy and an unsustainable explosion of our debts and deficits. But the only core issue on which he took a clear position in the recent debt-ceiling negotiations was that it would have to include new taxes on the wealthy—and he didn't even hold to that.

He made the politically tested and calculated statement that if you raise taxes on billionaires and millionaires you could solve the problem. This is not so. Even for those who support higher taxes on the wealthy, as I do, we must remember that we have an income tax system in which fully half the "taxpayers" pay no tax at all, and in which the variety of loopholes cries out for a real reform of the tax code. Even if the government instituted a 100% tax on both corporate profits and personal incomes above $250,000 per year, it would yield enough revenue to run the government for only six months. Why? Because under Mr. Obama's presidency, government spending has swelled to 24% of GDP from 18%.

We need real reform of the tax code in which everyone is asked to make some contribution, however small. Hardly anyone on either side of the aisle has a good word to say for the present hodgepodge of selective punishment of the middle class—replete with exceptions, loopholes, and special allowances. Worse, there are no serious proposals being canvassed among the White House, the Congress and the Treasury.

Erskine Bowles, co-chair of the bipartisan Simpson-Bowles commission appointed by the president in 2010 to devise a plan for dealing with the fiscal crisis, put it well: "It is one that is completely predictable and from which there is no escape." The president said he would stand by his commission, but as of today he's remained silent on its many proposals, seemingly unable to speak honestly on the subject.

Everyone recognizes that as populations age, the ratio of worker-to-retiree dependency plummets. Remember that the first baby boomers statistically retired on Jan. 1 of this year. There are now 79 million more of them to be supported in their retirement and with their medical requirements. This has obvious implications for our debts and deficits. How are we to meet this obligation in the face of long-term deficits that stem from approximately $60 trillion of unfunded entitlement liabilities?

It is no surprise that many have begun to doubt the president's leadership qualities. J.P. Morgan calls it the "competency crisis." The president is not seen fighting for his own concrete goals, nor finding the right allies, especially leaders of business big or small. Instead, his latent hostility to the business community has provoked a mutual response of disrespect. This is lamentable given the unique role that small business especially plays in creating jobs.

The president appears to consider himself immune from error and asserts the fault always lies elsewhere—be it in the opposition in Congress or the Japanese tsunami or in the failure of his audience to fully understand the wisdom and benefits of his proposals. But in politics, the failure of communication is invariably the fault of the communicator.

Many voters who supported him are no longer elated by the historic novelty of his candidacy and presidency. They hoped for a president who would be effective. Remember "Yes We Can"? Now many of his sharpest critics are his former supporters. Witness Bill Broyles, a one-time admirer who recently wrote in Newsweek that "Americans aren't inspired by well-meaning weakness." The president who first inspired with great speeches on red and blue America now seems to lack the ability to communicate any sense of resolve for a program, or any realization of the urgency of what might befall us. The teleprompter he almost always uses symbolizes and compounds his emotional distance from his audience.

We lack a coherent and muscular economic strategy, as Mr. Obama and his staff seem almost completely focused on his re-election. He should be spending most of his time on the nitty-gritty of the job instead of on fund raisers, bus tours and visits to diners, which essentially are in service of his political interests. Increasingly his solutions seem to boil down to Vote for Me.

Clearly the president will have to raise his game to win a second term, especially if the Republicans find a real candidate. Will voters be willing to give him another four years? Like many Americans who supported him, I long for a triple-A president to run a triple-A country.

Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report. He will discuss this story Thursday at 5 p.m. ET on WSJ.com.

FW: Fight at Shady's

Rough video of the fight at Shady’s involving LSU football players. Can’t see much.

http://www.thescore1210.com/cc-common/mainheadlines2.html?feed=414444&article=9018499

Wednesday, August 24, 2011

Daily Digest from The Advocate

This is what leads the news these days in Baton Rouge…the bar fight involving LSU football players. All day, every day.

Daily Digest from The Advocate

Daily Digest for August 24, 2011

• Police: No arrests expected Wednesday in bar fight

• Entergy is donating funds to help elderly with bills

• BRAC wins award

• Veterans group set to hold meeting Thursday

• More scorching weather, storms

Daily Digest

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It's The Economy Stupid: Durable Goods Orders

Durable Goods Orders: A 4.0% increase versus economist’s estimates of 2.0%. The prior period was revised to -1.3%. This is a big surprise on the upside, twice the estimate. The number reflects an increase in demand for air craft and autos which were stronger than a decrease in demand for business equipment.

Yesterday President Obama confirmed that the DC earthquake occurred on a rare and obscure fault-line, apparently known as "Bush's Fault". However some of the American people believe that it was caused by the Founding Fathers rolling over in their graves.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

Monday, August 22, 2011

Feinswog Column From 1993 Is Still True Today

From: Daniel, John L
Sent: Monday, August 22, 2011 1:56 PM
Subject: column

From: Lee Feinswog [mailto:sportsmonday@aol.com]
Sent: Monday, August 22, 2011 1:24 PM
To: Daniel, John L
Subject: my column

I wrote the column that follows for The Advocate on August 23, 1993. The headline read, "A primer for athletic behavior."

Honestly, I can't remember what prompted it back then, but after LSU quarterback Jordan Jefferson foolishly made the news hist college football preseason it seemed incumbent upon me to type it up again. Remember, this column was from the pre-internet, pre-everyone-knows-everything-all-the-time era.

Oddly enough, just recently I showed the original copy to BBI's Derek Ponamsky, who especially liked the part, "When you're in a bar, it's not unimaginable that someone will make fun of you for your athletic endeavors or make a move on your date. Do not hit these people. Ignore them. Leave if you must. Do not throw your drink at them or hit them with a beer bottle."

And so it goes.

A primer for athletic behavior

Don't hit people, steal, shoot things, drive drunk …

As you athletes begin your classes at our local universities and continue practicing your respective sports, you should pay attention to what hopefully will be a primer on how to keep your name out of the news for the wrong reasons.

Why, you might ask. Simple. Every year local college athletes are arrested for a variety of reasons.

Just kids doing kid things? Sometimes. But reasons to be arrested nonetheless.

People who know better willingly committing criminal acts? Sure.

Stupidity? Absolutely.

Most everyone here, members of the media included, want you to do well. We want you to get good grades and we want you to play well. We want you to win, because it's good not only for you but for everyone involved, and that includes more than just your schools. It includes this entire community.

And therein lies something many college athletes never consider. As college athletes, you are members of our community. Your university is not an entity within itself; rather it's an integral part of this city. Students come and go, but the people who work on campus and depend on the school for their livelihoods in some form or fashion remain.

So do the fans. Athletes come and go but the same fans buy tickets and support the team year after year after year, long before you got here and will do so long after you're gone.

Which brings up something else that you haven't considered: You are held to a higher standard than the rest of your classmates. Because you're an athlete what you do wrong off the field than what you do right on it. You may not think that's fair, but that's how it is.

If you lose, you may be criticized.

If you break the law, you will be castigated.

This is what happens when you get arrested: Your name appears on police reports. Those reports are fairly detailed and all that you are accused of appears there.

We understand that anyone arrested is innocent until proven guilty. That, however, is where the higher standard comes in. If an everyday student is arrested, it's often not newsworthy.

But when an athlete is booked, his or her alleged crime is newsworthy. In a university town, it's big news. Sadly, but true, people will remember the arrest much more than – if that's the case – the acquittal or the throwing out of the charges.

So what's an athlete to do? Or in this case, not do?

You are at an age when people test the limits. However, you have given up some of that right. They don't put out media guides on the other students. Fans don't pay to watch the other students play games.

-- College kids drink. It's naïve to think otherwise. If you drink, don't drink too much. If you're going to drive, don't drink at all.

-- When you're in a bar, it's not unimaginable that someone will make fun of you for your athletic endeavors or make a move on your date. Do not hit these people. Ignore them. Leave if you must. Do not throw your drink at them or hit them with a beer bottle.

-- If you are a man, don't hit a woman. Under any circumstances. No matter who she is, no matter what she says, no matter what she does.

-- Do not drive too fast. A few years ago a local athlete was ticketed for driving faster than 120 on a state road. His coach blew it off and said the player told him he was just cleaning some bad gas out of his engine. Those kinds of things give us gas.

-- Don't steal things. Shoplifting will get you all sorts of bad publicity. So will stealing things like parking meters and street signs.

-- You may own a gun. Why you would is beyond us, because even if hunting season is right around the corner you should be practicing and/or studying. Leave your gun back home so you don't shoot it out the window. That includes dorm and apartment windows and the windows of your moving car.

All of the above, and plenty of acts not listed, will get your name in the paper and the odds are the story will move on the national wires. We don't like to write those stories. We want to do happy features on you. We want to report about how you've overcome odds to become top-notch athletes. Or about the games you've won with your heroics.

We don't want to write stories about how you've embarrassed your team, your family, your university, yourself or our city.

You hear a lot of talk these days about athletes being role models. You don't want to be a role model? Fine. But don't be a reverse role model.

If you don't want to go to class, that's up to you. If you don't want to study, that's your call. Don't, however, break the law. If you do, you will get plenty of publicity for all the wrong reasons.

---

Sportswriter Lee Feinswog has covered LSU athletics since moving to Baton Rouge in 1984. He is the host of the TV shows Sports Monday and Sports 225, which features a weekly interview with BBI's Derek Ponamsky. Feinswog has written three books, including Tales From The LSU Sidelines and What It Means To Be A Tiger. Contact him through his website, sports225.com.

-30-

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Sunday, August 21, 2011

FW: Breaking News from The Advocate for John

Not a good sign when your players have to hire a criminal defense attorney.

________________________________
From: breakingnews@theadvocate.com [breakingnews@theadvocate.com]
Sent: Sunday, August 21, 2011 4:29 PM
To: John Broussard
Subject: Breaking News from The Advocate for John

<http://www.theadvocate.com/>

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Breaking News

BRPD meeting with LSU players postponed <http://theadvocate.com/newsletters/breakingnewsnewsletter/643686-77/brpd-meeting-with-lsu-players.html>
Advocate staff report Updated: 3:58 p.m.
The meeting between Baton Rouge Police Department investigators and four LSU football players has been postponed until Tuesday morning, said police spokesman Sgt. Donald Stone. Baton Rouge attorney Nathan Fisher, … Continue reading→<http://theadvocate.com/newsletters/breakingnewsnewsletter/643686-77/brpd-meeting-with-lsu-players.html>
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Friday, August 19, 2011

Why Americans Hate Economics

In university classrooms—and especially the Obama White House—fancy theories of macroeconomics defy basic common sense…

By STEPHEN MOORE

The Wall Street Journal.

Opinion, Page A11

Friday, August 19, 2011

Christina Romer, the University of California at Berkeley economics professor and President Obama's first chief economist, once relayed the old joke that "there are two kinds of students: those who hate economics and those who really hate economics." She doesn't believe that, but it's true. I'm surprised how many students tell me economics is their least favorite subject. Why? Because too often economic theories defy common sense. Alas, the policies of this administration haven't boosted the profession's reputation.

Consider what happened last week when Laura Meckler of this newspaper dared to ask White House Press Secretary Jay Carney how increasing unemployment insurance "creates jobs." She received this slap down: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper."

Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."

That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.

I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn't work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.

Economic bimboism is rampant in Washington. The Center for American Progress held a forum earlier this summer arguing that raising the minimum wage would create more jobs. For this to be true, you have to believe that the more it costs a business to hire a worker, the more workers companies will want to hire.

A few months ago Mr. Obama blamed high unemployment on businesses becoming "more efficient with a lot fewer workers," and he mentioned ATMs and airport kiosks. The Luddites are back raging against the machine. If Mr. Obama really wants to get to full employment, why not ban farm equipment?

Or consider the biggest whopper: Mr. Obama's thoroughly discredited $830 billion stimulus bill. We were promised $1.50 or even up to $3 of economic benefit—the mythical "multiplier"—from every dollar the government spent. There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. The multiplier theory only works if you believe there's a fairy passing out free dollars.

How did modern economics fly off the rails? The answer is that the "invisible hand" of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new "macroeconomics," a witchcraft that began to flourish in the 1930s during the rise of Keynes. Macroeconomics simply took basic laws of economics we know to be true for the firm or family—i.e., that demand curves are downward sloping; that when you tax something, you get less of it; that debts have to be repaid—and turned them on their head as national policy.

As Donald Boudreaux, professor of economics at George Mason University and author of the invaluable blog Cafe Hayek, puts it: "Macroeconomics was nothing more than a dismissal of the rules of economics." Over the years, this has led to some horrific blunders, such as the New Deal decision to pay farmers to burn crops and slaughter livestock to keep food prices high: To encourage food production, destroy it.

The grand pursuit of economics is to overcome scarcity and increase the production of goods and services. Keynesians believe that the economic problem is abundance: too much production and goods on the shelf and too few consumers. Consumers lined up for blocks to buy things in empty stores in communist Russia, but that never sparked production. In macroeconomics today, there is a fatal disregard for the heroes of the economy: the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy. "All economic problems are about removing impediments to supply, not demand," Arthur Laffer reminds us.

So here we are, three years of mostly impotent stimulus experiments and the economy still hobbled. Keynesians would be expected to be second-guessing the wisdom of their theories. Instead, Prof. Romer recently complained that the political system will not allow Mr. Obama to "go back and ask for more" stimulus.

And that is why Americans hate economics.

Mr. Moore is a member of the Journal's editorial board.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

RE: It's The Economy Stupid: How big is the Euro trash can?

Oooh! Let’s not forget the printing of money and devaluing the currency. I know the EU & Germany say they won’t, but if this really does end up looking like a South American solution, then that has been part of the game plan time & time again.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

From: John Broussard
Sent: Friday, August 19, 2011 7:28 AM
Subject: It's The Economy Stupid: How big is the Euro trash can?

Okay, so once again Euro Land’s problems are casting a nasty shadow over the world’s financial markets. If independent analysis is correct, losses on some bank’s debt pipelines dwarf their equity capital and large bank bailouts of some sort will likely occur. So, the question is “How big is the Euro trash can?”

Using the simplest estimates for the European banks and applying them to current capital positions, a lot of these banks seem to be under water. They don't have enough capital to meet the expected losses from the debt of peripheral countries that they have taken on.

Overall, we have a classic example of a liquidity problem that has morphed into a solvency problem. But the world is not coming to an end, it is solvable, it’s just that the solution in Europe is likely to look like the past solutions in South America. What’s likely to happen? Well, bond holders will likely have to take a haircut on their PIGS (Portugal, Ireland, Greece, Spain) sovereign debts. The bond holders of the troubled European banks will also likely take a haircut on their bonds. And unfortunately, the equity holders of the troubled European banks will likely be wiped out when takeovers occur.

Why will the equity holders of the troubled European banks likely be wiped out? Because the sovereign nations no longer have the balance sheets to bail them out, so they are going to have to close them and transfer the assets to banks with stronger balance sheets.

Investors should look for bank mergers, major asset sales and widespread company restructuring. Which banks? Well, that’s the REAL problem with the financial markets. No one is absolutely sure which banks, no one is sure how bad the problem is, no one is sure how badly this will affect the world’s economy. So it casts uncertainty on the earnings estimates of the securities of the world’s financial markets. And markets don’t like uncertainty.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

It's The Economy Stupid: How big is the Euro trash can?

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

Wednesday, August 17, 2011

It's The Economy Stupid: PPI

Producer Price Index (Month on Mont) 0.2% Previous Month -0.4%

Producer Price Index (Year on Year) 7.2% Previous Month 7.0%

Producer Price Index Ex Food & Energy (Month on Month) 0.4% Previous Month 0.3%

Producer Price Index Ex Food & Energy (Year on Year) 2.5% Previous Month 2.4%

Okay, so things that companies need to produce things is costing more.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

Monday, August 15, 2011

Was Last Week A Bad Dream?

Okay, it’s like last week was just a bad dream or some sort of roller-coaster ride. All’s quiet on the eastern front (no riots/bank failures/default rumors in Europe).

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

It's The Economy Stupid: Manufacturing

Okay, the Empire Manufacturing number came in WAY below expectations. A survey of economists expected the Empire Manufacturing index to improve from -3.76% to 0.00%. But the number released this morning was a -7.72%, far below the economist’s expectations and headed in the wrong direction.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Friday, August 12, 2011

It's The Economy Stupid: Paul Krugman Is Right

I know, I know, y’all think I’ve lost my mind. That aliens came down and hijacked me, brain washed me and dropped me back down on earth loving the New York Times Op-Ed people. But that’s not the case. I like to read. And I don’t have to just read things that support my position. I believe that in order to truly further your knowledge on any given subject you have to be able to see alternative points of view.

And okay, sure, there isn’t a lot that Paul Krugman writes that I agree with, but there is a piece in the New York Times that caught my eye. In particular, the first paragraph, because after that paragraph he chooses to revert to partisan politics himself. But his essential point is correct. The President, Congress and the Federal Reserve need to concentrate on one thing first. JOBS!!!!

---------------

Friday, August 12, 2011

The New York Times

Paul Krugman:

The Hijacked Crisis

Why are policymakers so worried about reducing the debt instead of reducing unemployment?:

The Hijacked Crisis, by Paul Krugman, Commentary, NY Times:

For more than a year and a half ... we’ve had a public conversation that has been dominated by budget concerns, while almost ignoring unemployment. The supposedly urgent need to reduce deficits has so dominated the discourse that on Monday, in the midst of a market panic, Mr. Obama devoted most of his remarks to the deficit rather than to the clear and present danger of renewed recession. What made this so bizarre was the fact that markets were ... saying — almost shouting — was, “We’re not worried about the deficit! We’re worried about the weak economy!” ...

-----------------

Without job creation this economy is going nowhere. Creating jobs has to be job one, job two and job three. We are not going to solve the country’s long term structural problems this year. But if we don’t revive the economy this year we will make the long term structural problems worse.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

It's The Economy Stupid: Retail Sales

Okay, the consumer ain’t dead yet!

Advance Retail Sales: 0.5%, economists had forecast 0.5%

Retail Sales Less Autos: 0.5%, economist had forecast 0.3%

Retail Sales Ex Auto & Gas: 0.3%, economists had forecast 0.2%

So, the numbers aren’t great, but they didn’t disappoint and they didn’t fall of the face of the earth. So in this environment, it’s a win!

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

Thursday, August 11, 2011

It's The Economy Stupid: It's Gonna Be A Wild Ride

Okay rumors of problems with French banks are causing the markets in Europe to sell off sharply and that is likely to translate into a wild ride today in our markets.

Initial Jobless Claims came in at 395K, below economist’s estimates of 405K, and the number seems to have shifted from the 430K – 420K range to the 400K range, a good development for the economy.

Let’s hope this translates into some positive market numbers and that the rumors of problems in Europe don’t swamp the markets in the U.S.

Clearly the risk of systemic risk in the credit markets worldwide is overshadowing other economic news.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Wednesday, August 10, 2011

LSU in SI.com

Stewart Mandel>COLLEGE FOOTBALL MAILBAG

Why Alabama, not Oklahoma could win title; LSU's surprising ranking

Story Highlights

Read more: http://sportsillustrated.cnn.com/2011/writers/stewart_mandel/08/10/mailbag/index.html#ixzz1UehfjFga

Curtis Barthold, Danville, Calif writes:

Stewart, I'm a devout LSU Tiger fan living amidst the Pac-12 conference fans in Northern California. As much as I love the Tigers, can you explain to me how they can possibly justify their high preseason rankings given they have one of the toughest (if not THE toughest) schedules in football this year?

-- Curtis Barthold, Danville, Calif.

Stewart Mandel replies:

Knowing the way the voters think, it's no secret how the Tigers garnered such a lofty ranking. They went 11-2 last year while playing in the big, bad SEC; they won a January bowl game; and, like Alabama, LSU is a recent national-championship program that recruits well year in and year out. But is it asking too much of the pollsters to dig a little deeper?

This is a team that caught every imaginable break en route to 11 wins last season -- the last-second mulligan against Tennessee, the fake field goal that bounced just right against Florida, the remarkable Les Miles fourth-down reverse against Alabama. I know many feel Miles is immune from typical football karma, but generally speaking, teams that eke out so many close wins one year tend to go the other way the next.

For example, Iowa, which went 11-2 in 2009 with a slew of comebacks and last-second miracles, then, with mostly the same core of players, reverted to 8-5 last year with several last-minute losses.

Throw in a murderous early schedule (non-conference games against Oregon and at West Virginia, and a trip to pesky Mississippi State all in September) and the continual enigma that is quarterback Jordan Jefferson, and you've got all the ingredients for a textbook "flop" team. In fact I'm puzzled why the Tigers are 10 spots ahead of the same Arkansas team that both beat them head-to-head last season and earned a BCS berth. Mark it down here: The Razorbacks will finish at least 10 spots higher than LSU in the final poll.

Read more: http://sportsillustrated.cnn.com/2011/writers/stewart_mandel/08/10/mailbag/index.html#ixzz1UehIWDAP

It's The Economy Stupid: Market Volatility

Dow down again, -382 / -3.4%; 2 Year Treasury now yielding 0.16%. The swings in the stock market are breathtaking. So much money is pouring into Treasury’s just to get out of the way of the stock market. This is not good for any of the market participants.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

Street Address:

301 Main Street

Baton Rouge, LA 70802

Mailing Address:

P.O. Box 44154 Capitol Station

Baton Rouge, LA 70804-4154

Physical Location:

One American Place, 7th Floor

Corner of North Street & 4th Street

Exit 1D I-110 North Street / Capitol Park / Downtown

Tuesday, August 9, 2011

It's The Economy Stupid: The Market Is Up!

Dow finishes up 429 after being down -250.

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph: 225-342-0013

Fx: 225-342-9721

Email: jbroussard@treasusry.state.la.us

The Wall Street Journal: Is Obama Smart?

The Wall Street Journal

WSJ.com

GLOBAL VIEW

AUGUST 9, 2011.

Is Obama Smart?

A case study in stupid is as stupid does.

By BRET STEPHENS

The aircraft was large, modern and considered among the world's safest. But that night it was flying straight into a huge thunderstorm. Turbulence was extreme, and airspeed indicators may not have been functioning properly. Worse, the pilots were incompetent. As the plane threatened to stall they panicked by pointing the nose up, losing speed when they ought to have done the opposite. It was all over in minutes.

Was this the fate of Flight 447, the Air France jet that plunged mysteriously into the Atlantic a couple of years ago? Could be. What I'm talking about here is the Obama presidency.

When it comes to piloting, Barack Obama seems to think he's the political equivalent of Charles Lindbergh, Chuck Yeager and—in a "Fly Me to the Moon" sort of way—Nat King Cole rolled into one. "I think I'm a better speech writer than my speech writers," he reportedly told an aide in 2008. "I know more about policies on any particular issue than my policy directors. And I'll tell you right now that I'm . . . a better political director than my political director."

On another occasion—at the 2004 Democratic convention—Mr. Obama explained to a Chicago Tribune reporter that "I'm LeBron, baby. I can play at this level. I got game."

Of course, it's tempting to be immodest when your admirers are so immodest about you. How many times have we heard it said that Mr. Obama is the smartest president ever? Even when he's criticized, his failures are usually chalked up to his supposed brilliance. Liberals say he's too cerebral for the Beltway rough-and-tumble; conservatives often seem to think his blunders, foreign and domestic, are all part of a cunning scheme to turn the U.S. into a combination of Finland, Cuba and Saudi Arabia.

I don't buy it. I just think the president isn't very bright.

Socrates taught that wisdom begins in the recognition of how little we know. Mr. Obama is perpetually intent on telling us how much he knows. Aristotle wrote that the type of intelligence most needed in politics is prudence, which in turn requires experience. Mr. Obama came to office with no experience. Plutarch warned that flattery "makes itself an obstacle and pestilence to great houses and great affairs." Today's White House, more so than any in memory, is stuffed with flatterers.

Much is made of the president's rhetorical gifts. This is the sort of thing that can be credited only by people who think that a command of English syntax is a mark of great intellectual distinction. Can anyone recall a memorable phrase from one of Mr. Obama's big speeches that didn't amount to cliché? As for the small speeches, such as the one we were kept waiting 50 minutes for yesterday, we get Triple-A bromides about America remaining a "Triple-A country." Which, when it comes to long-term sovereign debt, is precisely what we no longer are under Mr. Obama.

Then there is Mr. Obama as political tactician. He makes predictions that prove false. He makes promises he cannot honor. He raises expectations he cannot meet. He reneges on commitments made in private. He surrenders positions staked in public. He is absent from issues in which he has a duty to be involved. He is overbearing when he ought to be absent. At the height of the financial panic of 1907, Teddy Roosevelt, who had done much to bring the panic about by inveighing against big business, at least had the good sense to stick to his bear hunt and let J.P. Morgan sort things out. Not so this president, who puts a new twist on an old put-down: Every time he opens his mouth, he subtracts from the sum total of financial capital.

Then there's his habit of never trimming his sails, much less tacking to the prevailing wind. When Bill Clinton got hammered on health care, he reverted to centrist course and passed welfare reform. When it looked like the Iraq war was going to be lost, George Bush fired Don Rumsfeld and ordered the surge.

Mr. Obama, by contrast, appears to consider himself immune from error. Perhaps this explains why he has now doubled down on Heckuva Job Geithner. It also explains his insulting and politically inept habit of suggesting—whether the issue is health care, or Arab-Israeli peace, or change we can believe in at some point in God's good time—that the fault always lies in the failure of his audiences to listen attentively. It doesn't. In politics, a failure of communication is always the fault of the communicator.

Much of the media has spent the past decade obsessing about the malapropisms of George W. Bush, the ignorance of Sarah Palin, and perhaps soon the stupidity of Rick Perry. Nothing is so typical of middling minds than to harp on the intellectual deficiencies of the slightly less smart and considerably more successful.

But it takes actual smarts to understand that glibness and self-belief are not sufficient proof of genuine intelligence. Stupid is as stupid does, said the great philosopher Forrest Gump. The presidency of Barack Obama is a case study in stupid does.

Write to bstephens@wsj.com