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To: mishedlo who wrote (70045)9/21/2006 1:29:13 AM
From: CalculatedRisk  Read Replies (2) | Respond to of 110194
 
This Just In: The Iraq Study Group Has Nothing to Report
washingtonpost.com

NOTE: This story is funny. It sounds like they will recommend the Murtha plan after the election in November.

By Dana Milbank
Wednesday, September 20, 2006; A02

If President Bush and the Iraqi government are hoping for some solutions from the congressionally commissioned Iraq Study Group, they might want to start thinking about a Plan B.

Former secretary of state James Baker and former congressman Lee Hamilton (D-Ind.), the study group's co-chairmen, called a briefing yesterday to give a "progress report" on their activities. A dozen television cameras and scores of reporters filled the hall -- only to discover that Baker and Hamilton had revived Jerry Seinfeld's "show about nothing" format.

"We're not going to speculate with you today about recommendations," Baker announced at the session, hosted by the U.S. Institute of Peace.

Can the war in Iraq be won?

"We're not going to make any assessments today about what we think the status of the situation is in Iraq," said Hamilton.

Could they at least explain their definitions of success and failure in Iraq?

"We're not going to get into that today," Baker replied.

After more such probing, Hamilton became categorical. "We've made no judgment of any kind at this point about any aspect of policy with regard to Iraq."

A few minutes later, one of the organizers called out: "We have time for one or two more questions."

"But no time for any answers," one of the reporters muttered.

"This is pitiful," contributed one of the cameramen, as reporters' smiles escalated into audible chuckles.

Baker was bothered by the questioning. "Malicious," he whispered to Hamilton, unaware that it could be heard on the audio feed.

As a general rule, it's a bad idea to call a news conference if you have nothing to say. It's worse if you announce that answers are urgently needed but then decline to provide any.

"The next three months are critical," Hamilton warned at the start. "Before the end of this year, this [Iraqi] government needs to show progress in securing Baghdad, pursuing national reconciliation and delivering basic services."

But no matter how urgent the situation in Iraq, the solutions will have to wait at least until Nov. 8 -- and possibly much later -- because of a more urgent consideration: domestic politics. We're "going to report after the midterm election," Baker announced.

Bill Jones of Executive Intelligence Review asked the obvious question. "The situation in Iraq seems to be degenerating from day to day" and may not be a "salvageable situation" by November, he said. "Shouldn't the urgency be propelled by developments in Iraq rather than the calendar here?"

Baker didn't think so. "We think it's more important, frankly, to make sure whatever we bring forward is taken, to the extent that we can take it, out of domestic politics," he said.

Baker, a troubleshooter for President Bush, said "We have said from Day One that we were going to report after the midterm election." In fact, Baker said on Day One -- the commission's launch on March 15, 2006 -- that "we have not set a time frame" and that "we may come forward with some interim reports."

The only thing the two would say yesterday is that they had met with lots of people, including several Iraqis on a 3 1/2 -day visit to Iraq recently.

"How much were you able to leave the Green Zone while you were in Baghdad?" a woman in the audience asked.

Baker admitted that only one of the 10 members, former senator Charles Robb (D-Va.), left the capital's heavily fortified enclave to see the violence-torn land. "It was recommended to us that it would probably be something that we ought not to do but they were willing for us to do it if we insisted," reasoned Baker. "We didn't insist because we didn't want somebody to write a story that we were cowboyin' down there in Iraq."

And besides, cowboy Hamilton added, "we had a very brief period in Iraq."

Hamilton, who also served as vice chairman of the Sept. 11 commission, spent considerable time praising Baker and the other members with some of the same phrases -- "sense of purpose," "able people" -- members of that commission used on each other.

But the reporters were determined to extract a nugget of useful information from the pair, who stood in twin gray suits.

"I understand you don't want to get into the recommendations," said the Wall Street Journal's Yochi Dreazen, but "do you think Iraq is still winnable in any substantive sense, or is the issue for your panel now minimizing the scale of U.S. loss and the suffering the U.S. may have going forward?"

"Secretary Baker and I simply are not able at this point even to give you a good idea of where the study group exists with regard to recommendations," Hamilton reiterated.

"Can you at least explain certain definitions?" pleaded Spencer Ackerman of the New Republic. For example, he asked, "what does a responsible exit mean?"

"That's the very question that Mr. Hamilton just said we're not going to get into," Baker repeated.

It didn't qualify as a recommendation, but the two did have some advice for the Iraqi government. "The people of Iraq have the right to expect immediate action," Hamilton said.

Providing, of course, they don't expect it from the Iraq Study Group.



To: mishedlo who wrote (70045)9/21/2006 12:13:06 PM
From: CalculatedRisk  Respond to of 110194
 
Philly Fed: Manufacturing Indicators Suggest No Growth
phil.frb.org

The Federal Reserve Bank of Philadelphia today released September’s Business Outlook Survey. Activity in the region's manufacturing sector slowed this month, according to firms polled for the survey. Indicators for general activity, new orders, and shipments fell from their readings last month and suggest no growth. The firms were also significantly less optimistic about future activity. In a special question, participants were asked about actual capital expenditures this year and plans for expenditures in 2007.

Philadelphia Federal Reserve Senior Economic Analyst Mike Trebing summarized the survey:

"Indicators from our Business Outlook Survey reflect little or no growth in the region’s manufacturing sector this month. The indexes for general business activity, shipments, and new orders fell from their readings in August. The index for current employment, however, showed some overall improvement. A significant percentage of the firms continue to report rising prices for inputs, but our index for current prices paid suggests that price increases were less widespread this month. The index for prices received for our respondents’ own products was somewhat higher than last month, however. The executives who responded to the survey this month were significantly less optimistic about future growth in manufacturing."

This survey, which was started in 1968, gathers information on the manufacturing industry in the Third Federal Reserve District covering eastern Pennsylvania, southern New Jersey, and Delaware. Participation in the survey is limited to manufacturing firms with plants in the area with more than 100 employees. The survey asks about the current pace of business in the participants' plants and their future expectations of business.



To: mishedlo who wrote (70045)9/22/2006 4:24:22 AM
From: YanivBA  Read Replies (2) | Respond to of 110194
 
I think you are barking at the wrong tree here Mish. The Yen is not going to sink much farther. I expect that a global liquidity contraction should support the Yen as the carry trade unwinds. As you wrote in "Nightmare Carry Trade Scenario":

Nightmare Scenario

I view the nightmare scenario something like the following.
1. End of quantitative easing (QE) in Japan
2. End of ZIRP in Japan (Rising interest rates)
3. Rising interest rates in Europe
4. Falling interest rates in the US
5. Tightening credit in the US
6. A rising YEN vs. the US$


Now after May we know that a liquidity contraction is good for the dollar because when market participants exit positions they request dollars in return. We also now that a severe liquidity contraction should be bullish for the Yen as market participants have funded leveraged positions by borrowing Yen. So what is it going to be? Yen bullish or Dollar bullish?

I really don’t have a strong opinion here. If I am pressed I would say it would chop violently to burn both leveraged sides but be generally range bound. What I do know is who does not have a bullish argument. The Euro and emerging markets currencies. I say a liquidity contraction is going to be Euro bearish and emerging markets bearish. That should be enough to burn the carry trade and still be consistent with a US bond bull.

Let us technically consider who should be weaker going forward, the feeble Yen or the almighty Euro?



A falling wedge. A bullish MACD histogram divergence. An extreme reading on the RSI. Are we going parabolic here? If we are where is the sentiment?

I say Mish, quit picking on the Yen. Go back to "Nightmare Carry Trade Scenario".
Rewrite:

1. Falling commodities
2. Falling emerging markets
3. Rising interest rates in Japan
4. Falling long interest rates in the US.
5. Falling Mortgage Backed Securities ( 55% of Pimco is MBS )
6. Unwinding yield inversion.
7. A falling Euro.

YanivBA.