Once again, bloomberg.com shows the following videos: Kinetic's Bennett Is `Bullish' on Australian Economy; Williams Sees Australian Retail Stocks Rise on Stimulus; Fed's Evans Supports U.S. Stimulus, Sees `Sobering' Debt; EPFR's Durham Says China's Stocks Are `Very Attractive'. Also, under "Portfolio Matters", someone named Liu is bullish on a variety of Chinese sectors. So, 4/5 videos are bullish, and the Fed's Evans is sending a subliminal message that they are on the case with the correct "stimulus" strategy.
So, there's one continuing negative indicator: bullish Bloomberg videos.
Next, Janet Yellen favors action:
Yellen: Pull out all stops for grim economy
By Ros Krasny Ros Krasny Sun Jan 4, 2:49 pm ET
SAN FRANCISCO (Reuters) – The U.S. economy faces a potentially long period of weak growth and a rising risk of deflation, making it worth "pulling out all the stops" with a big fiscal spending program, Janet Yellen, president of the San Francisco Federal Reserve Bank, said on Sunday.
"The financial and economic firestorm we face today poses a serious risk of an extended period of stagnation -- a very grim outcome," Yellen said on a panel discussion at the American Economics Association's annual meeting in San Francisco.
"If ever, in my professional career, there was a time for active, discretionary fiscal stimulus, it is now."
Yellen said she was skeptical about suggestions for broad-based, permanent tax cuts and backed the "diversified package of policies" suggested recently by the International Monetary Fund.
Specifically, Yellen urged "spending on goods and services with higher rather than lower social value," but said measures should be consistent with "long-term fiscal discipline" to be the most effective.
If the public doesn't believe that spending increases are temporary, then long-term interest rates are likely to rise in response, "undercutting, conceivably even overwhelming, the short-term stimulus," Yellen said.
President-elect Barack Obama has said that signing a major economic stimulus package will be his first priority when he takes office, with a goal of creating or saving 3 million jobs over two years.
Speaking on the same panel as Yellen, renowned economist Martin Feldstein said that $300 billion to $400 billion in fiscal measures in 2009 and 2010 seemed justified.
Feldstein, former head of the National Bureau of Economic Research, also warned that the current recession, with its roots in a financial crisis rather than restrictive Fed interest rate policy, could easily drag on for the rest of 2009.
With the United States already bogged down by a year-long recession, Yellen said there is a rising risk of deflation, or a persistent decline in prices that could cause consumers to delay purchases, dragging down the economy further.
"With an extended period of abnormally high unemployment in the forecast, it is increasingly likely that inflation will fall to undesirably low levels," she said.
Calculated Risk comments on Yellen and Feldstein:
Since the cause of the current recession is different than other post WWII recessions, the dynamics of the eventual recovery might be different too.
With respect to CR, every depression/recession is different. While of course the dynamics here may be different, the current downturn is hardly unique. It followed a period of Fed tightening, which burst the housing and general credit bubble. The credit bubble was worldwide, and the entire industrialized world went into a tailspin. In the early 1930s, orthodox policy of protecting the export industry and balancing the budget were followed, with poor results. The current policy of printing money and resurrecting Keynes is likely to have the same poor results.
With regard to Dr. Yellen: please let inflation fall to zero, if it is not there already. Your dear Fed was formed over 95 years ago. In that time it has engineered the Great Depression and numerous inflations. It turned a blind eye to the obvious housing shenanigans this decade. Three cents in 1913 would buy what a dollar buys today. Some price stability, or even some gentle inflation, would help most of us, given that our wages are not rising and T-bill rates of zero are ridiculous, far worse than what savers could get in the early 1930's at a time when prices were dropping rapidly. What you, Dr. Yellen, are saying is that you and the rest of the Fed are enablers of the inflation lobby that favors borrowers over savers. The problem is that the public actively wants to save and wants to believe that money should hold its value. If the Fed would stop trashing money by generally keeping rates at or below inflation rates, tons of money would come into the US and buoy the markets. Volckerism is needed once again. Dr. Yellen and the Fed are fighting the Great Depression but with a largely busted government.
Mish sees matters more clearly:
"Nearly everyone is hopping on the Keynesian bandwagon as the urge to try something, anything, to halt this economic slide is simply overpowering."
"To further recap, Yellen proposes "novel interventions" of dubious merit, admitting they will not work, and wants a "timely" plan to end them.How about right now, before they do any more damage?"
He knows, however, that he is a minuscule minority, and that the hyperactive train is going to leave the station.
Also, Obama is taking a page from the G W Bush 2001 and 2008 playbooks and now wants to cut taxes. Democrats opposed the 2001 tax cut as unfunded, and retrospectively denied that the shortness of the recession had anything to do with that cut. And one and all must agree that the hasty, bipartisan 2008 tax cut was useless. Obama obviously believes that the third time's the charm:
Jan. 4 (Bloomberg) -- President-elect Barack Obama is pushing for tax cuts amounting to hundreds of billions of dollars in a stimulus package he’s asking Congress to pass within the next several weeks, a transition official and a Democratic aide say.
Meanwhile, here's the real news from Bloomberg.com:
Global Corporate Profits to Drop in ’09; More Bankruptcies Loom
By Katie Hoffmann and Joseph Galante
Jan. 5 (Bloomberg) -- Corporate earnings will continue to slump into the first half of 2009 amid the first simultaneous recessions in the U.S., Japan and Europe since World War II.
Earnings at Standard & Poor’s 500 companies will probably fall in the first half, marking eight straight quarters of declines. In Europe and Asia, the outlook may be even worse as the recession curbs demand for retail goods and exports.
All the happy-talkers and bottom-callers want you to purchase stocks. They want this because this is how they make a living. You will see primarily scary headlines on the Bloomberg videos when their preferred clients have sold all the stocks they want to at higher prices than are then extant. The brokers make no money when at a time of deflation and the worst global economy in 70+ years, you gain a positive yield over inflation when you pay no commission, take no risk, and purchase a Federally-insured CD. In the 1940s and 1950s, the financial community made a mid-single digit share of the national profit stream. On an as-reported basis (which was fraudently reported, to be sure), this share of profits may have hit 40% in 2007. The brokers are desperate for your business and need to engineer a rally to suck you in. The truth is that unless you are a professional money manager, there is fundamentally too much risk in this economy for you to risk money you need in the broad stock market. Let the stock brokers eat cake.