▶ “Shalom Aleichem” on violin from an IDF soldier boy…
▶ “Shalom Aleichem” on violin from an IDF soldier boy… – YouTube.
“Shalom Aleichem” ( Peace be to you ) is the song sung by Jewish families before sitting down to the Sabbath meal.
The words are beautiful, but this boy’s musical rendition makes them superfluous.
Shabbat shalom !
JW
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WarSclerotic 
December 20, 2013 at 10:07 PM
“You don’t know the first thing about tomorrow. You’re nothing but a wisp of fog, catching a brief bit of sun before disappearing.”
James 4:14 MSG
December 21, 2013 at 1:52 AM
For those who we’re predicting the fall of America, think again. America will lap the World in the years ahead. The GREAT American Century has just begun. It is Written!
Editor’s Note: Diana Choyleva is head of macroeconomic research at Lombard Street Research, a London-based macroeconomic forecasting firm.
Renewed U.S. competitiveness in an improved economy is likely to spur a business investment-led economic recovery in 2014.
More of what America consumes will be produced at home. The U.S. is best placed to outperform, with GDP growth accelerating to 3%-4%.
But it won’t be the global locomotive of the past. With poor growth prospects elsewhere, global capital will flow into the U.S., pushing up the dollar and lifting U.S. asset prices.
Good news is still at a premium in the global economy. But America’s outlook for 2014 is decidedly positive. The U.S. economy has made tremendous progress correcting its underlying imbalances, well beyond the claims of some commentators that it has merely been ‘printing money’. The U.S. recovery is set to take output growth well above trend to average 3%-4% over the next few years. It will be a production-led recovery, not a consumer-led recovery i.e. America will import less of what it consumes.
Growth should also prove durable, as inflation will not be a concern for some time. The economy continues to have significant spare capacity, while faster GDP growth could also pull up the economy’s potential growth rate. Energy prices and the U.S. dollar will exert downward pressure on inflation, thanks to shale fracking and America’s relative-growth outperformance. Subdued inflation is likely to keep policy rates ultra low for some time. Importantly, even when the Fed decides to raise interest rates in response to a sustained revival in growth, this will not derail the economy because it is no longer plagued by excessive levels of debt.
The dramatic fiscal squeeze, which the OECD estimates at 2.7% of GDP, was the main drag on growth in 2013. This was the biggest annual budget tightening since WWII and comes on the back of four years of continuous fiscal retrenchment. The fact that private demand expanded strongly enough to outweigh tight fiscal policy in 2013 by itself bodes well for 2014, when the fiscal tightening is set to be much less. The budget deal reached in Washington would mean not only even less fiscal tightening in 2014 than assumed before but importantly also reduced concern about U.S. political dysfunction. It removes one of the main risks to our growth forecast for 2014. The other risks are a premature rise in bond yields and weak global growth undermining business confidence.
Reshored to the U.S.
The U.S. dollar is now competitive, crucially against the Chinese yuan and the other Asian currencies. Relatively cheaper labour and energy place the U.S. – the second-largest manufacturer in the world – in a great position in a world of deficient consumer demand. The U.S. is likely to see a much lesser rate of off-shoring production and a rising wave of reshoring. This trend has only just begun.
The fortuitous development of cheaper shale energy in the U.S. is not to be underestimated either. Natural gas from shale is much cheaper in terms of oil equivalent and the incentives to develop it are huge. This major U.S. energy transformation should ensure not only cheaper energy but also a strong flow of capital spending into improving the distribution infrastructure.
America has expertise in many manufacturing industries, which means investment-led growth shouldn’t take long to take hold. U.S. firms will not only have the incentives to invest, but they are flush with cash and are able to invest. The main threat is the tax incentives that encourage firms to keep their cash abroad. But the structural forces described above should provide a substantial impetus to investment irrespective of whether firms bring their cash back or decide to finance their expansion plans with low-cost debt. Most of the other potential uses of the large corporate financial surplus, such as dividends, share buybacks, M&A activity, will also be positive for U.S. domestic demand.
A durable economic revival
But investment-driven recoveries can fizzle out if they substitute capital for labor and firms hog the resulting productivity gains. However, both reshoring and shale energy argue for investment in new production capacity, not substitution of capital for labor. So this investment-led boom should translate into higher employment and wages, spilling over into higher-consumer spending. A production-led recovery is also much less susceptible to weakness in the rest of the world.
Broad-based growth, above the economy’s noninflationary-growth rate, has a much better chance of lasting if it starts when the economy is operating with slack. There is considerable uncertainty about the level of existing slack in the economy and the extent to which the global financial crisis damaged the economy’s underlying supply potential. But our assessment is that plenty of slack remains, which must be used up before demand-pull inflationary pressures build. We also share the Fed’s optimism that stronger growth could pull potential growth higher, meaning it takes even longer to eliminate slack in the economy.
Given continued weakness in the rest of the world, the U.S. dollar should also strengthen, which will further dampen inflationary pressures. Meanwhile, shale fracking will keep energy prices down. But while inflation isn’t an immediate concern for policymakers, the Fed might eventually worry about asset-price bubbles. U.S. real assets look the most attractive investment in 2014, with further potential upside from Chinese capital inflows. This will present the Fed with a difficult dilemma, but not until 2015. In 2014, it will stick with its labor-market centric ‘forward guidance’.
Wage inflation to coexist with subdued CPI inflation
Untangling the labor market story is crucial. The U.S. participation rate has plunged, to reach its lowest level since 1978. Productivity growth has slowed but remains robust. Our estimates, given official population forecasts, suggest the participation rate will not rise dramatically in coming years.
This is a worrying development as it would leave a large part of the U.S. population out of the labor force. Even more worrying, the share of long-term unemployed workers has been extraordinarily high in this cycle. If we count those people as unemployable, the participation rate would plunge to an alarmingly low level and the unemployment rate would fall to a level not far off the economy’s underlying noninflationary rate of unemployment.
If the current situation is one of potential workers not being willing to work at the currently offered wages rather than being unemployable because they’ve been out of the labor force for too long, wage inflation has to rise to induce them back into the labor force. A production-led recovery in the context of weak global-consumer demand and a historically high U.S. profit share suggests wage inflation could coexist with subdued CPI inflation as firms take the hit in profit margins. In fact, this will ensure the growth revival will be sustainable even if the U.S. dollar rises to erode U.S. competitiveness.
Monetary tightening will to take time, but won’t tank growth when it comes
On-balance, the considerations above suggest that while the Fed will wind down its asset-purchase program fully in 2014, it is unlikely to hike the policy rate. The Fed will want to be sure the recovery is entrenched. And when the Fed does raise interest rates it shouldn’t cause growth to collapse because the U.S. economy has eliminated the excesses of the previous boom.
The U.S. housing market was where the crisis began, but the adjustment there is now complete. House prices are rising and the backlog of unsold homes is falling. Substantial downpayments required for a mortgage are an inhibition for buyers, but the demographics relative to current housing supply are positive, affordability is high and easy money has made rentals very profitable. U.S. housing should be a buoyant area over the next couple of years, both in terms of rising investment and the wealth effect on households.
The U.S. household-debt crisis is now also over. Households have lowered their debt to a sustainable level relative to their income even if interest rates return to ‘normal’. They may still need to raise their savings rate but cheaper shale energy should provide a big boost to real incomes over time and the investment recovery should fuel employment and wage growth. U.S. banks have also returned to health, increasing their capital buffers, boosting profits and improving their net-charge-off rates. They are now willing to lend, which together with QE has pushed real broad money growth to rates consistent with above-trend growth.
The last remaining adjustment is to stop public debt from rising further. But the public sector deleveraging has been under way for some time now. Moreover, on current fiscal plans the primary budget deficit will be brought back to a level consistent with stable public debt by end of 2014. Strong growth will help to lower the public debt-to-output ratio over the next few years.
U.S. asset prices and the dollar set to gain
The global recovery from the financial crisis has been uneven. The U.S. is the only major economy that has adjusted fully and looks like the only ‘game in town’. The export-led growth model has always relied on the U.S. as the “consumer of first resort.” But this no longer works because the U.S. real exchange rate is at its lowest since WWII. As a result, the export-led emerging markets’ will not be buoyed by strong U.S. growth, while all emerging markets will be vulnerable to higher-U.S. bond yields.
Lacking domestic sources of strength, the euro area will continue to stagnate, with the risk that deflationary pressures in the periphery spread to the core. Meanwhile, Japan will continue to scoop demand out of the rest of the world, with its Abenomics-led competitive devaluation also stealing growth from the future.
This suggests global capital will flow to the U.S., pushing up the dollar. It is more likely to flow into real assets, with the U.S. housing market doing particularly well. But at the same time the continued global-savings glut and Japan’s drive-through Abenomics to push Japanese investors to seek interest-bearing returns abroad suggest the natural cyclical upswing of Treasury yields could be later and slower than has happened in the past.
While Treasury yields are likely to flat-line for now, they should be more volatile. Ultimately, Chinese financial sector reforms, now underway, could be a decisive factor pushing Treasury yields up. These reforms include proposals to remove controls on private-sector capital outflows from the country. The outflows have been large even with the controls. Take them away and a tidal wave is likely – unless the authorities partly reimpose them. But Chinese investors will be seeking real assets – houses in San Francisco, farm land in Tennessee, stocks and shares – not interest-bearing assets. Chinese financial reforms have the potential to rewrite the story for U.S. and global financial markets.
December 21, 2013 at 5:36 AM
U S A – U S A – U S A ……and Israel too!
December 21, 2013 at 5:47 PM
“It is written” says the ‘prophet’ who doesn’t believe in prophecy. You are constantly giving the lie to yourself.
If the US comes back stronger it is not because of the us goverment. It’s despite of the US goverment.
A different policy would have led to a much earlier recovery and a much better economy.
You cited Diana Choyleva who paints a much bleaker picture of China and a much rosier picture of the US than other economists.
Assuming that she is right, which would be a good thing for the US, she failed to address the biggest problem of the US: public debt.
As soon as the US economy is in a state of robust growth the FED will reduce the printing of money.
This will mean that interest rates will go up. This in turn means that the US goverment will have to pay higher interests for its debt.
Not only that but if nothing changes the US spending for programs like Social Security, Medicare and Medicaid, ObavezCare etc. will rise steadily.
These two effects combined will leave less money to spend on defence and other necessary expenses.
That is the thing that threatens the status of the US as a super power.
After all it was the economic decline of the former USSR which ended the USSR’s and its successor Russia’s status as a super power.
Next, Diana Choyleva gets it wrong when she writes:
“If the current situation is one of potential workers not being willing to work at the currently offered wages rather than being unemployable because they’ve been out of the labor force for too long, wage inflation has to rise to induce them back into the labor force. A production-led recovery in the context of weak global-consumer demand and a historically high U.S. profit share suggests wage inflation could coexist with subdued CPI inflation as firms take the hit in profit margins. In fact, this will ensure the growth revival will be sustainable even if the U.S. dollar rises to erode U.S. competitiveness.
Monetary tightening will to take time, but won’t tank growth when it comes”
In plain English:
Those deadbeats who are not willing to work because the money they get from the state makes working less attractive for them could be induced to work by raising wages.
And because the firms hiring those deadbeats don’t export their products due to the global weak economy they can afford to live with smaller profit margins.
The better way would be to induce working by getting less money from the state thus reducing public spending. She also ignores the fact that many might not participate in the labor market because they simply have given up looking for a job.
She is also wrong on this: “In fact, this will ensure the growth revival will be sustainable even if the U.S. dollar rises to erode U.S. competitiveness.”
In plain English:
Even if the Dollar becomes stronger and therefore US products would become more expensive in other countries that doesn’t matter because the US does not export anyway. This growth is based on domestic production and consumption.
Here’s the error in her thinking. If the Dollar becomes stronger imported products become less expensive.
Because of higher wages in the US these imported products might become cheaper than Us products which in turn might lead again to increased imports and less domestic production. Which for many products is exactly the situation we have now.
Bottom line: While this projected growth might help to some degree it can in no way resolve the biggest of America’s problems: debt and rising social spending.
These problems have to be solved by the political leaders and will not go away by themselves.
The spend and debt fest is not sustainable and has to end one way or another.
The question is not If, but when. It will end either gradually and softly or the hard way.
You are free to believe that everything is fine and dandy.
The data says something different.
Excerpts from: “How the United States’ High Debt Will Weaken the Economy and Hurt Americans”
http://www.heritage.org/research/reports/2013/02/how-the-united-states-high-debt-will-weaken-the-economy-and-hurt-americans#_ftn2
A Credible Strategy
Federal budget deficits and debt are massive today—and future spending and debt projections are far worse if Congress and the President fail to act. Federal spending was about 23 percent of GDP in 2012—far above the historical average of 20.2 percent. It is projected to surge to nearly 36 percent in less than one generation. This spending is the cause of the chronic deficits that are driving the debt higher yet. Public debt is projected to reach 87 percent of GDP by 2023 and rise sharply in later years.
Two programs in particular—Social Security and Medicare—are taking over a quickly expanding share of federal spending. In addition, they suffer from programmatic weaknesses. Social Security and Medicare provide an important safety net for seniors, but in their current form the programs are unsustainable over the medium term and long term. These programs take up 39 percent of the budget today and are projected to grow to 44 percent of federal spending in just 10 years. At $48 trillion in net-present value, their unfunded obligations are triple the size of the entire gross U.S. national debt.
There are numerous reforms to help shore up financing for these programs that garner bipartisan support and that can be implemented quickly. These include raising the Social Security eligibility age to match increases in longevity and correcting the cost-of-living adjustment (COLA) to more accurately measure the impact of inflation on beneficiaries. In Medicare, raising the eligibility age to match Social Security makes common sense. Seniors with high incomes already pay a higher share of their own Medicare costs, and the remaining subsidy should be pared back even further.
Beyond resolving immediate financing challenges, there are bolder reforms to resolve many of the programs’ inherent weaknesses. The goal should be to arrive at a strengthened social safety net for those seniors who need it. Doing so in an affordable manner means turning Social Security and Medicare into true insurance against poverty in retirement.
For Social Security, benefits should be phased out for upper-income retirees. Consolidating Medicare’s three distinct components—Parts A, B, and D—and collecting a combined higher premium would save money and simplify the program. Lawmakers should begin pursuing a credible strategy on reining in massive budget deficits and debt by implementing proposals such as outlined here.[21]
The Time to Act Is Now
By neglecting the regular budget order—the institutional schedule to assess government spending and allocate taxpayer dollars with prudence—Congress and the President are increasingly failing to govern. Congress has only budgeted when forced to do so. Reaching the debt ceiling should be such an occasion, and Congress should not delay the decision again on necessary reforms and spending reductions. The President’s and Congress’s failure to establish a credible strategy for reining in massive deficits and debts in 2011 led Standard & Poor’s to downgrade the U.S. credit rating,[22] Moody’s, another major rating agency, warned Congress early in 2013 that failure to provide a basis for meaningful improvement in the government’s debt ratios over the medium term could “affect the rating negatively.”[23] Ratings agencies provide important signals to investors about the risks associated with investing in government bonds. Further downgrades of the U.S. debt and demand by capital markets will eventually lead to higher interest rates, whose costs would drive up federal spending and debt even more. As U.S. debt is quickly approaching economically damaging debt levels, U.S. lawmakers should delay no more. The time to act is now.
December 21, 2013 at 6:32 PM
Sorry dude, your negativism and bitterness knows no bounds. The US through technological superiority, energy independents and the strongest military in the world will be on top of the mountain as long as your sorry ass is alive and for decades thereafter.
I did not vote for the man, but when Obama took office the US financial house was in great disorder and was fighting two wars. Six or so years later the US markets are at all time highs and business is booming. America is out of Iraq and mostly out of Afghanistan. Obama also did not fall for the trap of starting another war. There is always work to be done and mistakes are always made, but dude the good old US of A is sitting in a good place.
It’s time for the rest of the world to deal with itself. Quit bitching at America and get your own houses in order, honestly you’re just sounding like bitter and acidic bore
December 21, 2013 at 8:14 PM
Hey you loser. I’m not your dude.
Cut the crap. If you are not able to have a civilized mature discussion, just shut up.
If you can’t take the heat stay out of the kitchen.
“dude …sorry ass … bitching ….bore …”
Again you have shown that .you resort to name calling and cheap shots if you are not able to sustain your argument.
You are the one who is boring us to death with always the same stuff which has often been refuted again and again.
Of course everyone who disagrees with you is negative, bitter etc..
How pathetic. My grandma would have destroyed you in any discussion.
Yeah, Obavez spend trillions and achieved little.
I don’t care if you voted for him or not. You sure sound like one of his pathetic worshippers..
This is not your private forum and I don’t give a crap if you like dissenting opinions or not. I will raise my voce as I deem fit.
Being the hypocrite that you are you whined about free speech on this forum while demanding that I and others “quit bitching at America”.. I see how you value free speech.
Being the hypocrite that you are you are constantly bitching at Israel and Bibi.
If you are honest, how about you quit bitching at Israel and Bibi before telling us that we should stop bitching at America?
Either be consistent and follow your own advice or shut up.
Again you have resorted to name calling and cheap shots when you have no arguments.
Pathetic!
December 21, 2013 at 8:56 PM
Idiot!!!!!!
December 21, 2013 at 10:08 PM
Thanks for proving my point.
December 21, 2013 at 10:26 PM
America will leave you and yours in the dust. The next time you want to start a war or are involved in one, fend for yourselves. America is through sending its youngsters to die when you fuck things up once again. Netanyahu choked, he wanted to manipulate America into doing his dirty work. He maneuvered long and hard pulled all the levers pushed all the buttons that once worked, but he failed. He failed because he could not see how things had changed. He failed because he did not have the nerve to act years ago when things could have been done. Now it’s to late!
December 22, 2013 at 1:01 PM
Again, you proved my point.
You are a hypocrite of the first order.
I don’ care where America leaves me or why you bitch at Israel and Bibi.
As long as you bitch at Israel and Bibi I can’t take you serious, when you say: “quit bitching at America”.
Give me break with your same old crap and your double standards.
December 22, 2013 at 2:58 PM
artaxes, JP….
ENOUGH!!!
December 22, 2013 at 6:06 PM
Poor soul, in this thy flesh what dost thou know?
Thou know’st thyself so little that thou knowst not
How thou didst die, nor how thou wast begot.
Thou neither know’st how thou at first camest in,
Nor how thou took’st the poison of man’s sin;
Nor dost thou though thou know’st that thou art so
By what way thou art made immortal know.
December 22, 2013 at 9:08 PM
Wow, I’m impressed. You described yourself perfectly.
December 23, 2013 at 4:36 PM
:0)
December 21, 2013 at 5:56 AM
It would appear the cards have been reshuffled and the reports of Americas death had been greatly exaggerated! As foretold.
My apologies to Mark Twain.
December 21, 2013 at 10:45 AM
Americas best time is not in the past. America is still a young lion. After Obama America has a new and bright future. America will take down Iran (after Iran has attacked Saudi Arabia and caused economic chaos?)
December 23, 2013 at 3:49 AM
My feelings exactly MS. We need to get past Obama and, hopefully, elect a real leader.
December 23, 2013 at 3:22 PM
Yes, Obama will go to history as the weakest president the US ever had. We just have to hope he will not try to grab power in an illegal way when his time is out.
December 23, 2013 at 4:05 AM
Don’t get me wrong guys. I have a lot of respect for everyone on this blog. I just thought you might enjoy this little video…
December 24, 2013 at 2:08 PM
Funny man. ;0) Merry Christmas L.S
December 25, 2013 at 4:19 AM
Merry Christmas to you and yours too JP.