A quick bit of data

[solarbird]

Good morning. I'm playing catch-up, so this update is very heavily reliant on secondary sources (particularly Mish Shedlock), rather than primary, but I only link to items which link through to original articles, so the data is there if you go digging. Sorry about that; it's a little easier to get these things online that way.

There's been a good bit of a rally in the stock markets lately, as many people have noted, and various commentaries have made a good deal of noise about a market bottom, and the beginning of a recovery, and so on. Most of it is not based on any data beyond excitement over the stock market, though there have been a few positive earnings surprises, and that's good. Also, the TED spread and LIBOR rates are well down into non-panic territory, tho' still quite high compared to good economic times.

Still, despite lower rates, bank lending continues to fall, particularly at bailout-recipient banks. And job losses haven't been letting up. (California's up to 11.2%, a record, and that's not even the U-6; that's the conservative U-3!) Job losses will, of course, have a cascading effect on purchasing, which has generally been 65% to 70% of US GDP over the last couple of decades; indeed, March retail sales fell sharply and unexpectedly. Also, commercial property is on the decline with large bankruptcy and failure counts in retail, Japanese deflation is picking up steam; Americans are entering credit default at record rates; home foreclosure rates are soaring again as various temporary moratoriums on foreclosures are being lifted, and so on.

And things like this very bad idea - invaliding one out of 10 dollars, declaring them "non-currency" to force more and immediate spending before you lose 10% of your money - makes me think that the power that be are not at all of the opinion that the situation has stabilised for very long. It's not so much that the idea exists, it's that it came out of Harvard and was printed in the New York Times, an organ of the political and economic establishment. (Extra analysis here, courtesy Mish; story relayed to me by cow.)

Questions are being raised about the validity of the bank "stress tests" the Treasury is conducting, with former Federal bank regulator William Black calling them a "complete sham." Mish has a roundup of reactions to these tests, here; Nobel laureate economist Joseph Stiglitz thinks the bank plans will fail as they aren't really targeted at rebuilding a coherent financial system, but are instead centred around bailouts. The IMF is raising its estimate of bank losses to around US$4 trillion. Small-business optimism - a major driver of recovery employment - is sinking to new lows as venture capital investments plunge.

Staying in the real economy, trading values of housing CDOs have plumbed new lows, after a brief and smallish apparent recovery driven mostly by the money funnel. Credit spreads on commercial property are at record highs for all tranches other than AAA. AAA is level at extremely high spreads, but not at or hugely close to the records set earlier on.

This blog post over at Economic Edge collates a whole bunch of charts from the St. Louis Fed. You'll enjoy the plumetting tax receipts, the zomgwtf corporate pretax profits, and, as I've been saying a lot lately, keep watching the M1, particularly for shit like this. Mmmm, big spikes up. I can't recommend looking over that chart set strongly enough; note that the timelines on many of these are decades long, and compare recent huge swings against the previous five decades. (Watch some of the vertical scales, though; they aren't very consistent and that can be misleading!)

Jeffrey Sachs as a long post up on why the "Geithner-Summers Plan is Even Worse Than We Thought", mostly discussing the money-funnel functionality.

This is a contingency plan only so far, but the Canadian Auto Workers are preparing their membership for a Chrysler bankruptcy. Do they know something? Maybe.

So there's a bit of a cold splash of reality for your Monday morning. Good luck.

eta: Japanese steel output fell 13.2% for FY2008 (ending March), the biggest drop since 1948, on falling demand, particularly in the automobile sector.

Comments

[maellenkleth]

umm, thank you, I think. I was quite down enough already this evening...... :(

the forced inflation scheme brings me to mind of the Social Credit movement (BC political history is steeped in this: attend!) and specifically its Albertan outcome: the prosperity certificate, as described here: http://en.wikipedia.org/wiki/Prosperity_certificates.

would not be at all surprised to see something like that emerge again.

[doragoon.livejournal.com]

if you like that graph of the M1 http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt
it seems to be updated regularly.

[kodi]

The "invalidate 1 dollar in 10 plan" is so stupid on its face, I have to wonder if it is presented only to make inflation targeting seem more attractive by comparison. Or, for that matter, to provide a really easy target for ridicule to get people linking to the article. Because, in all fairness, it's quite fun to ridicule that idea, especially when it comes stamped with "Harvard."