Business Insider (Thanks Brent)
BEIJING — China said on Monday it expected to lay off 1.8 million workers in the coal and steel industries, or about 15% of the workforce, as part of efforts to reduce industrial overcapacity, but no time frame was given.
It is the first time China has given figures that underline the magnitude of its task in dealing with slowing growth and bloated state enterprises.
Yin Weimin, the minister for human resources and social security, told a news conference that 1.3 million workers in the coal sector could lose jobs, plus 500,000 from the steel sector. China's coal and steel sectors employ about 12 million workers, according to data published by the National Bureau of Statistics.

They are going to start cutting public sector jobs and wages before the private sector has had time to adjust.

From the Calgary Herald

An unexpected battle is brewing between one of the province’s most powerful unions and an NDP government that’s always been labour-friendly but is now facing severe financial straits.
The Alberta Teachers’ Association will sit down with provincial negotiators next week to set parameters under new bargaining rules that will give the province more oversight in central contract issues, including salaries.
But at the same time, two sides that were often seen as allies amid decades of provincial Tory rule will now face off under a dark economic cloud that has seen oil prices plummet for months, tens of thousands of private-sector layoffs, and dwindling government revenue. 
Pundits say with the ATA’s contract set to expire this summer, the upcoming round of contract talks is shaping up to be quite uncomfortable as the New Democrats face some of their strongest political supporters at the bargaining table. 
“The days of being best friends may be gone,” said Duane Bratt, chair and professor in Mount Royal University’s Department of Policy Studies.
“There are teachers that are members of the party, that are some of the NDP’s closest supporters,” said Bratt, adding that several NDP MLAs are former educators.
“What does the government do when faced with this fiscal reality? Will they think of the broader economic situation or will they think about their supporters and members of their caucus?”
With the ATA’s current four-year agreement set to expire Aug. 31, 2016, a new round of collective bargaining is expected to start in the next few weeks.
In their existing contract, teachers received a zero per cent increase for the first three years and a two per cent increase in the fourth year, beginning Sept. 1, 2015, with a one per cent lump sum payment in the final year, paid out in November 2015.
But as they enter a new round of talks, Chaldeans Mensa, associate political science professor at MacEwan University in Edmonton, says teachers need to be aware of the economic reality.
“If teachers make unrealistic demands it may backfire. The public is in no mood to support that.”
“It’s difficult, because the NDP is facing two forces, the economic reality and their traditional allies. But the government knows they will have to hold the line.”
Education Minister David Eggen agrees the New Democrats and labour unions have supported each other in the past. But at the same time, he hopes both sides understand the fiscal challenges ahead.
The NDP announced earlier this week that the steep and prolonged collapse of world oil prices has doubled Alberta’s deficit projection for next year to more than $10 billion.
Union contract talks will have to reflect that reality, Eggen stressed.
“This won’t be easy. I wake up in the middle of the night thinking about how we can do this.
“But we’ve been in a difficult economic circumstance since we were elected. We can see the clouds gathering.
“And we all live in this economic climate, everyone understands what that looks like.”
But ATA president Mark Ramsanker is adamant that in spite of a lack of resources, teachers are still faced with the critical, daily task of educating an increasing number of children and the system is bursting. 
“Everybody keeps talking about the economic reality. But we have to balance that with the demographic reality of today’s classroom.”
Ramsanker estimates 55,000 new students have arrived in Alberta over the last five years, about 11,000 per year. 
“The fact of the matter is classrooms are still very complex, and their sizes are still unmanageable.
“That’s the reality that has to be addressed.”
Under the new Bill 8, the Public Education Collective Bargaining Act, contract talks will be a three-step process starting with setting parameters around what will be negotiated at the central bargaining table versus what will be negotiated at the local level between teachers and school boards.
Once parameters are set, central bargaining begins first, followed by local bargaining by 61 school boards across the province.
Eggen said the initial central bargaining process will be good opportunity for “the funder” to make clear to the union the lack of available revenue.
Ramsanker replied the union will in turn use that opportunity to make clear the urgent needs in the classroom.

They are going to start cutting public sector jobs and wages before the private sector has had time to adjust.

From the Calgary Herald
The NDP government will introduce essential services legislation this spring as the prospect of significant public sector strike action becomes a new reality in Alberta. 
The Notley government is responding to a Supreme Court decision in 2015 that recognized the right of public sector employees to strike but allowed governments to designate some workers as providing essential services who are unable to take job action.
It will be a fundamental change for Alberta, which has long had many of its government workers covered by a blanket ban on striking.
“What this does, it shifts the landscape dramatically,” Guy Smith, president of the Alberta Union of Provincial Employees, said in a recent interview.
“It’s now providing to a majority of our members a right they never had before. So that obviously changes the dynamic at the bargaining table because without that legal right, the tools in the tool box were pretty limited when it came to contract negotiations, and employers knew that.”
Smith said the change will make contract negotiations more fair but won’t automatically mean more labour action.
Bargaining for AUPE’s new contract in 2017 promises to be tough as the NDP government grapples with a massive deficit caused by low oil prices.
Among the workers that have been forbidden to strike in the province are all unionized Government of Alberta employees, post-secondary faculty and staff, and police, fire and emergency medical personnel.
As well, nurses, general support staff, and professional and technical employees at approved hospitals are not allowed to strike.

Quartz tells us why we love lip sync battles.

Genscape
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Zerohedge
North Dakota's largest producer, Whiting Petroleum, announced that it would suspend all fracking, and that Continental Resources has effectively done the same after reporting that it no longer has any fracking crews working in the Bakken shale.
As Reuters reports, Whiting said it would "suspend all fracking and spend 80 percent less this year, the biggest cutback to date by a major U.S. shale company reacting to the plunge in crude prices."

There is just one problem.  Whiting Chief Executive Officer Jim Volker said that "we believe this conservative strategy should help us to maintain our liquidity position and leave us well positioned to capitalize on a rebound in oil prices."
In other words, the moment oil prices rebound even modestly, and according to many the new breakeven shale prices are as low at $40-$50/barrel, the Whitings and Continentals will immediately resume production, forcing Saudi Arabia to go back to square one, boosting supply even higher, and repeat the entire charade from scratch.
And so on.

Zerohedge
Note the parallels to the Canadian market. Resource driven economy, same debt to income ratios.
Jonathan Tepper (the expert on  the 60 minutes piece who called the Irish, Spanish, and USA property bubbles) described the Canadian market in 2013 as one of "biggest housing bubbles in the world". 
See also here and here
Don't act like I never told ya.

Calgary Herald
Some Canadian banks could be forced to preserve capital by raising equity or even cutting dividends if oil prices continue to slump, Moody’s warns in a new report.
In a “severe stress” scenario modelled by the ratings agency, and included in the report to be widely circulated Monday, losses in consumer lending portfolios would exceed historic peaks and capital markets activity at the country’s biggest banks would be significantly crimped.
“Under the moderate stress scenario we modeled, the profitability of Canadian banks will decline but their capital would not be impaired,” David Beattie, a senior vice-president at Moody’s, wrote in the report.
“In our severe stress scenario, however,” he warned, “some of the banks’ CET1 (capital) ratios could fall under 9.5 per cent, in which case we believe they might be required to take capital conservation measures, cut dividends, or raise additional equity.”
In an interview, Beattie characterized the likelihood of the severe stress case as “very remote” and said dividend cuts would be avoided by the big banks “except under extreme duress.”
Still, with oil prices slumping to levels not seen in more than a decade, the ratings agency expects banks will have to absorb the pain of oil producers, drillers, and service companies, as well as consumers in oil-producing provinces.
In the severe stress test scenario outlined by Moody’s, losses in the big banks’ consumer portfolios would rise above the historical peak, and there would be a 20 per cent decline in capital markets’ net income, driving losses to 1.5 times quarterly net income.
In this scenario, unless the banks reduce the payout ratio — the percentage of earnings paid out to shareholders as dividends — or issued shares, “it would take multiple quarters to absorb stress losses through retained earnings,” Beattie wrote.
Among Canada’s biggest banks, Canadian Imperial Bank of Commerce and Bank of Nova Scotia emerge as the “negative outliers” in the Moody’s stress testing.
CIBC’s rank reflects the fact that the bank’s operations are primarily in Canada. The country’s fifth-largest bank also has “considerable oil and gas concentration in its corporate loan book, and a material portion of its earnings comes from capital markets activities,” Beattie wrote.
Scotiabank would face higher stress losses from its corporate loan book and the segment mix of its corporate loans.
In the severe stress scenario, both CIBC and Scotiabank would lose about 100 basis points from CET1, a key measure used to gauge a bank’s capital cushion.
However, Beattie said that doesn’t mean those banks would be the first to have to tap the market for funds through an equity issue, or to reduce dividends.
“Each of the banks is coming from a different starting point in terms of capital,” he said, adding that all Canada’s big banks hold capital well above the regulatory minimum. What’s more, any of the banks could invoke capital conservation measures quickly and pre-emptively if the probability of a severe stress situation were to begin to rise, he said.
Toronto-Dominion Bank is a “positive outlier” in the Moody’s analysis, losing just 53 basis points of CET1 in the severe stress scenario. Beattie said Canada’s second-largest bank by market capitalization has a relatively small oil and gas corporate loan book, despite that book growing considerably over the past year.
TD also has a comparatively low concentration of retail operations in oil-producing provinces, and low reliance on earnings from capital markets, he wrote.
The impact on capital markets activity is difficult to predict, Beattie said, adding that underwriting earnings will be hurt by reduced equity issues in the energy sector, but that could be at least partly offset by mergers and acquisitions activity that tends to take place during a downturn.

This is how the unemployed get work, and how we find a way to live.
Suffering is only worthwhile if it is shared. 
Those who succeed despite all odds do so because of community.
Community employment programs showing significant promise over traditional government programs.
Is that the core idea behind providing homes to the homeless?
Just watched "There Will Be Blood" the D D Lewis character -the oil magnate- ultimately had no sense of community. Everyone was a competitor and and obstacle.
People are happier in more equal countries where there is more community.

The Fed raised rate last year because their Phillips curve model told them wage inflation was on the way. Alan Kreuger pointed out that notwithstanding low LFPRs, the labour market is tight and wage inflation is on the way.

The Fed rate increase and its lead up caused monetary policy conditions to tighten substantially.

Here is a post from Tim Duy

Bottom Line: The Fed has yet to fully embrace the change in financial conditionals and the implications for the path of policy. To be sure Yellen gave enough this week to take March off the table. That said, policymakers will hesitate to dramatically change their general policy outlook focused on higher rates. Consequently, I anticipate Fedspeak with seemingly unrealistic hawkish undertones. Essentially, they will leave the fear of policy error simmering on the back-burner.

and another from Sumner himself on targeting the forecast through TIPS.
My views on current business conditions are pretty similar to those of Tyler, AFAIK.  I think we both see a modest risk of recession this year, but less than 50-50.  So suppose there is a recession this year—can I say, “I told you so”?  I certainly didn’t think the rate increase in December would lead to recession (although some other MMs were more pessimistic.)  But that misses the point.  Sorry to be so long winded, but wake up here, this is the key point.
The Fed needs to always keep the “shadow NGDP futures price” close to target.  If at any time they let it slip, as they did in September 2008, and if MMs point out that it is slipping, and if the Fed does not take aggressive actions that it clearly could take to prevent if from slipping, then yes, it’s the Fed’s fault.
That italicized (bold) statement does not involve any Monday morning quarterbacking.  I’m not going to blame them for anything that they cannot prevent in real time.  But recall that currently they are not even at the zero bound.  Let’s explain this with a simpler example.  We do have TIPS spreads, so we don’t need shadow prices for inflation expectations.  MMs claim that even with the liquidity bias in TIPS spreads, the current ultra-low 5-year spread suggests money is too tight for the Fed’s 2% inflation target.  That doesn’t mean we’ll have a recession, but if the Fed wants to hit their 2% inflation target they need to ease policy.  If they don’t, and if they fall short of their inflation target, then MMs will have been right.


Whatever structural problems the economy has that need to be solved through institutional/fiscal reforms I am becoming increasing convinced a nominal GDP target rule would be overall welfare enhancing.
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