Our ‘cleanest dirty shirt’
A recent white paper produced by the Wells Fargo Securities Economics Group predicts “that Congress will strike a last-minute deal to raise the debt ceiling, though that does not necessarily preclude a downgrade.” The paper’s authors explore whether that eventuality would result in a massive sell-off of US treasury bonds by foreign investors.
In an example of how poetry can help us understand economics, the paper quotes Johnny Cash’s 1970s classic “Sunday Morning Coming Down”: “I fumbled through my clothes and found my cleanest dirty shirt.”
In other words, like daily newspapers, the dollar is looking more and more like damaged goods, but no one else out there has the financial strength to make an aggressive move. The authors write that the European and Japanese currencies would be the most logical alternatives for foreign investors looking to withdraw their investments from US treasury bonds. But they don’t look all that stable either.
“The Eurozone as a whole has been rocked by its own credit worthiness from the sovereign debt crisis,” the authors write. And, “… the fiscal outlook for Japan is even more frightening than that of the United States. Japan’s gross debt to GDP currently stands at nearly 200 percent, compared to a gross-debt-to-GDP ratio of roughly 90 percent in the United States.”
An example of how government destroys jobs
Employment in North Carolina took a significant hit last month, with the elimination of 10,200 public-sector jobs, according to a report released by the NC Employment Securities Commission. About three quarters of those jobs were in state government, including community colleges and universities. The net loss amounts to 9,500 payroll positions. John Quinterno, a Chapel Hill economist with South by North Strategies, said that public-sector losses erased 42 percent of “private-sector job gains recorded in 2011.”
“June was an abysmal month for North Carolina’s labor market,” Quinterno said. “There was little evidence of any sort of recovery, and in several important respects, labor markets actually deteriorated.”
He concluded that 2011 “is shaping up to be yet another lost year for working North Carolinians.”
Student apartments open
The Province at Greensboro, a 696-bed student apartment complex built by Ohiobased Edwards Companies, opened on July 22. The project, which is located two blocks from UNCG, drew strong opposition from residents of the College Hill neighborhood, but a rezoning was approved by the city council. In a period when development projects have significantly slowed, the student housing investment has been celebrated as an economic generator. The grand opening was attended by at-large Councilman Robbie Perkins and District 1 Councilwoman Dianne Bellamy-Small, along with leaders of the Greensboro Chamber of Commerce.