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A September to Remember (cont.)…the Netherlands

August 30, 2012

The Dutch go to the polls on September 12.

Recent opinion polls suggest the ruling right-of-center VVD (you know…the People’s Party for Freedom and Democracy) will be unable to form a right-of-center majority government. So….down the road of extended negotiations and horse trading we will probably go.

The Netherlands has a population of 16,700,000 (give or take a few pairs of clogs) yet they manage to field 12 political parties.  Clearly they take their politics seriously.

What if the left-wing, euro-skeptic SP (Socialist Party) wins enough votes to be the second-biggest party?  And then teams up with the PVV (Party for Freedom).  We’re not saying that would ever happen because they are political poles apart but they are intellectually aligned when it comes to their views on EU integration.  And it’s a strange world in which we live.

The Dutch as a whole are increasingly vocal in their anti-bailout rhetoric and it’s not without a realistic possibility that the SP will make a very good showing.  If this happens, it would make it more difficult for any new Dutch coalition to secure sufficient parliamentary support for continued / additional financial support for their profligate neighbors to the south.

In any case, expect more uncertainty as we get closer to the date…just as we did with Greece.

Unlike Greece, however, the Netherlands does count.  While their GDP may be only 3 times larger than that of the Greeks, they are an important cog in the wheel of the northern alliance because they are seen as being prudent and practical…even if some of them like to inhale from time to time.

And, along with Germany, Finland and Luxembourg, they still hold the coveted AAA rating, although Moodys have hinted that it might be in jeopardy.  Presumably the Dutch would not be happy losing that rating, especially as they would see it being mostly Greece’s fault.

Losing Dutch support would be a big chink in Angela’s armor…that’s Angela Merkel, of course.  Not Angela Landsbury…the actor…although I’m sure that Angela, the former, would like to swap places with Angela, the latter from time to time.

Vocal Dutch may inspire vocal Germans.

Angela needs docile not vocal.  Especially as “vocal” is not that many vowels and consonants away from “volatile”.  Angela definitely does not need volatile!

So…the coming Dutch elections could be far more important than most pundits predict.

Continuing our sweep through a European September, we’ll saunter on over to Portugal next.

 

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More BOGUS numbers?

August 6, 2012

On Friday, the market positively rejoiced over the latest numbers from our friends at BOGUS, but are they all they’re cracked up to be?

The pundits were hoping for 100,000 or so but the number came in at 163,000…causing the HFT (those pesky high frequency trading) computers to shift into overdrive and force the Dow up past the elusive 13,000 and propel the S&P towards the equally elusive 1,400.

How much of this was general enthusiasm….the so-called “risk on” trade…and how much was the shorts ducking for cover, we don’t know…or care.  All we know is that the market is and will continue to be in a manic mood as we meander through the second half of the secular bull market we now find ourselves in.

So the July employment report showed nonfarm payrolls weighing in with 163,000 additions, up from the previous month’s 64,000.  This was a big surprise, especially given the recent run of bad news, like the Institute for Supply Management’s index of business activity dipping  below 50 (the dividing line between expansion and contraction), for the second month in a row in July.  That had not happened since mid-2009 when everyone thought the world was coming to an end (now, of course, we know that the world officially ends on 12/21/12).

But here’s what we can figure out.  The index of business activity drops to lows not seen for 3 years yet the folks at BOGUS (remember…that stands for the Bureau of Goosed-Up Statistics) saw it differently.   By the way, BOGUS used to be called the Bureau of Ginnied-Up Statistics….but all the Ginnys of the world became upset that their lovely name was being associated with such frivolity.  And the folks at Bombay and Gilberts were not impressed either.  Hopefully the geese will be less sensitive.

In any event, the BLS / BOGUS surveyed that factory jobs increased by 25,000 last month. Firstly…what is a survey?  Come on now.  How definitive can those numbers be?

But wait…there’s more.  The Goosed-Up statisticians added 377,000 jobs for seasonal adjustment. That just happened to be the largest such adjustment in July for the past 10 years. Wow! Who knew?

But wait…there’s even more.  Let’s not forget the invariably reliable (excuse the facetious tone) birth/death model that miraculously added another 52,000 and voila…you have way more than 163,000…in fact, way, way more…like almost 430,000.

That’s a nice big number so how come the U3 unemployment number edged UP to 8.3% and the U6 number representing under-employed as well, breached 15% again?

We’re more confused than normal.  But who cares…the market liked it and so Gentle Ben’s asset bubble remains intact…for now.

Why should we worry that 1 in 7 Americans remains unemployed or under-employed.  And that’s only counting the ones who ostensibly count.  What about all those others who have simply given up, disappeared off the rolls (but hopefully not off the rails)? In fact, according to John Williams, over at Shadow Stats, the real number should be above 22%.

Take a look at this Fox News interview.

http://video.foxbusiness.com/v/1748956928001/the-real-unemployment-numbers/

But OK…let’s cut the BOGUS folks some slack and accept that their 163,000 number is spot on.  Great…but we all know that we need to create 150,000 new jobs every month just to keep up with population growth (organic and through immigration).  So we beat it by 13,000 in July but missed it by 86,000 (150,000-64,000) in the preceding month so we’re still behind by 73,000….and that’s just counting two months.  Hardly anything to crow about.

But the market doesn’t care and the mainstream media likes to portray rosiness whenever it can…so a combination of market exuberance, short covering and effusive news coverage pushed the market up, where it remains as we go to press today.  So all is good with the world….until it isn’t!

We’ll talk more about Mr. Market in a day or so…it will be a nice break from our debt dilemma discussion.

Finally…here’s CBS reporting the BOGUS news.  Everything is good with America…unless of course, you happen to be 1 of those 7 un- or under-employed Americans who have the time to watch such drivel.

http://www.cbsnews.com/8301-505123_162-57486029/job-creation-picks-up-steam-in-july/

 

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