Negotiations on new reforms are going long into the night in Greece.

Remember, what’s happening now is not the negotiations with creditors — that’s secondary — but the intragovernmental negotiations: Leaders have to agree on more reforms (cuts, really) in order to get more bailout money.

They’re really pushing it to the wire, but they’re close.

Ekathimerini reports:

The leaders of Greece’s coalition parties came close to achieving an agreement over the terms of a new bailout for the country early on Thursday but objections over pension cuts prevented the deal from being clinched.

Prime Minister Lucas Papademos called representatives of the European Commission, European Central Bank and International Monetary Fund – known as the troika – back to his office at the Maximos Mansion at about 1 a.m. in an attempt to resolve the dispute.

Reports said that the two sides would have to find a way to make 300 million euros of savings in order to avoid 15 percent cuts to supplementary pensions and another 15 percent to basic pensions for former employees at public enterprises.

They want to have a deal before tomorrow’s Eurogroup meeting. If it really is just down to 300 million euros in savings, there should be a way to pull it off.

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In his morning comment, Deutsche Bank’s Jim Reid writes…

I innocently mentioned being a Liverpool fan in yesterday’s Early Morning Reid and ended up being offered Wembley Cup Final tickets I thought I’d missed out on. So without abusing my position I thought I’d mention this morning that I’ve always wanted to go to Augusta for the Masters and that there could be no better home for Olympic 100m or Wimbledon Finals tickets.

Clever.

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From SocGen, a look at surging inflows into credit and real estate funds.

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The above chart is the VIX. Sometimes it’s called the “fear index”. Whatever you want to call it, it’s a quick way of looking at how much investors are willing to pay for downside protection in the market. Right now, complacency is high, and nobody wants to pay much for “insurance.”

Once again, we’re getting close to what’s been a floor for the index (since the crisis) and so it seems inevitable that something is going to come along and jolt everyone awake.

What’s funny is that it’s not hard to see the risks out there: There’s Greece. There’s Portugal. There’s Syria. There’s the fact that in a few weeks, the tax cut extension is about to expire, and Congress is supposedly deadlocked on how to do it (though of course everyone’s betting on a last-second save).

2012 has been a much quieter year than 2011 was from an economy standpoint. As the saying goes: Perhaps too quiet.

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We mentioned this first last night, that data for January showed a shock 7.5% year-over-year fall in Chinese electricity consumption — the first such fall on record excluding the crisis.

Here’s a chart from Nomura’s Zhiwei Zhang  and Wendy Chang comparing electricity production to industrial production. They call it an “alarming fall.”

The report downplays efforts to equate this drop to the Chinese New Year. While drops have been seen, such an outright fall is pretty surprising.

They write:

Official data generally reports electricity production monthly, which is usually well-
matched by consumption, but data for January and February is combined to help smooth the
seasonal effect of the Chinese new year (CNY). With today’s report of lower January
consumption, we expect a concomitant decline in electricity production.

In the last 10 years CNY has often fallen in different months in consecutive years, which
leads to swings (trough to peak in Figure 1) in the year-on-year data (see Note). However, we
have not (ex-2009) seen an actual decline in electricity production since 2002. We therefore
believe that this drop reflects a sharp slowdown in industrial production.  

Speaking of China, here’s a great chart from Reuters’ Scotty Barber on Germany, and its exports to both America and China.

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Team Romney spent yesterday trying to explain why three middle-America caucus states didn’t really matter all that much, and that he was doing just fine.

Obviously the media isn’t convinced.

After Santorum’s big 3-state sweep, CNN goes with the phrase… “game changer.”

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Real quick: Here’s why a recession seems unfathomable right now.

With each bullet point we highlight the key word.

1. Consumer credit is booming.

2. Housing starts are on the rise.

3. Vehicle sales are on the rise.

4. Jobs growth is accelerating.

So you’ve got: cars, jobs, houses, credit.

‘Nuff said.

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Pundits and bloggers are making predictions all the time, and usually they should just be ignored.

Today though, the popular economics blog Calculated Risk published a post called The Housing Bottom Is Here. You should definitely pay attention.

Now first, let’s go over the argument.

To start, the post makes the obvious—yet all too frequently neglected—pointed that when it comes to housing there are two “bottoms.” The one that relates to economic activity and jobs is housing construction/new home sales. The other bottom refers to pricing.

In terms of new construction/total home sales, by all accounts we seem to have turned the corner.

New houses have achieved liftoff lately.

And as for total home sales, they’ve now absolutely flatlined.

Click to enlarge.

As for prices—which is arguably the more difficult case to make—Calculated Risk writes:

The problem with using the house price indexes to look for a bottom is that they are reported with a significant lag. As an example, the recently released Case-Shiller index was for November and the index is an average of September, October and November – so it is a report for several months ago. The CoreLogic index is a little more current – the recent release was for December, and CoreLogic uses a weighted average for prices (December weighted the most) – but that is still quite a lag.

Both of those indexes will bottom seasonally around March, and then start increasing again.

There are several reasons I think that house prices are close to a bottom. First prices are close to normal looking at the price-to-rent ratio and real prices (especially if prices fall another 4% to 5% NSA between the November Case-Shiller report and the March report). Second the large decline in listed inventory means less downward pressure on house prices, and third, I think that several policy initiatives will lessen the pressure from distressed sales (the probable mortgage settlement, the HARP refinance program, and more).

Now you may have disagreements here, but you should absolutely pay attention when Calculated Risk makes a call like this.

The Calculated Risk archives go back to January 2005, so we’re talking at least 7 years of day in/day out coverage of the economy, and the site has always had a special focus on housing.

From 2006-2008, the blog was famously co-authored by “Tanta” (she passed away in December of 2008), who really put the blog on the map with her incredible knowledge of the housing and mortgage markets—knowledge that allowed her to anticipate the bust from miles away.

Throughout this, the main author—the totally un-egotistical Bill McBride (his name is not featured prominently—has plugged away, meticulously chronicling just about every economic indicator there is, from housing starts, the the Architectural Billing Index, the restaurant index, the regional Fed surveys, the ISM, and so on. And by diligently following these measures, he’s gotten to know them REALLY WELL.

Now, speaking from personal experience here, we can say that one of the best advantages you can get in the business of writing about economic conditions is familiarity with the data. So if you’ve covered lots and lots of jobs reports, you’re going to have a much easier time knowing what data is key to suss out, and when you’re seeing a turn.

Since Calculated Risk puts everyone to shame on this front, the blog regularly identifies key twists and turns.

For example, after years of super-bearishness on housing-related activity, it was early last year that McBride started talking about residential construction actually being a net positive contributor to GDP—the first time since 2005.

Also, because Calculated Risk keeps the best data of any blog, it’s always the first with now-classic charts like this one, every time a new jobs report comes out.

The bottom line is: Calculated Risk is exactly what you want in economics reporting. Totally non-ideological, non-book talking, data-driven, incredibly experienced, and just knowledgeable as all get-out.

When a site that got started by famously chronicling the housing bust says that housing is at a bottom, you listen.

Now read CR’s full post here.

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From UBS’ Maury N. Harris:

The surge in payrolls in January provides further evidence that a virtuous cycle of economic activity is beginning to take hold. We have increased our outlook for Q1 2012 real GDP growth to 2.3% from 1.5%.

This is a function of increased consumer spending emanating from pent-up demand and a better labor market and credit conditions. It also reflects expectations that Federal government spending will rebound after plunging in Q4 2011. Risks remain: Europe has n.ot been “solved”. Faster growth and the recent rapid decline in labor force participation have caused us to revised down our estimate for the unemployment rate by year-end: we now expect a 7.9% rate versus our previous estimate of 8.6%.

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Great news for Obama and the economy from a new ABC/WaPo poll:

Fifty percent of Americans in this new ABC News/Washington Post poll approve of Obama’s job performance, the most since spring. Fifty percent say he deserves re-election, better than Bill Clinton at the start of his re-election year and as good as George W. Bush a month before he won a second term. And Obama now leads Romney among registered voters by a slight 51-45 percent, the first time either has cracked 50 percent in a series of matchups since spring.

Two chief factors are at play. One is the economy’s gradual but unmistakable improvement, marked by the newly reported January unemployment rate of 8.3 percent, the lowest since a month after Obama took office. The president’s approval rating on handling the economy, while just 44 percent, is its best in 13 months.

Right now there’s clearly a positive cycle of developments for Obama, between the economic news and the stock market, and they’re combining to produce good vibes for him right now.

But as we pointed out on Friday, since Obama’s approval is so closely tied to the market, there’s a pretty big opportunity for the market to torpedo him before November.

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