SAR #7357

A kitchen is a laboratory where you can eat the experiments.

Party On! In November, consumers increased their spending by the largest amount in 3 1/2 years and dropped the nation's saving rate to a minus 0.5 percent. Now that the refinance ATM is closed, this means that households spent all of their incomes and either dipped into savings (which they mostly don't have) or simply ran up the balance on their credit cards. That's sustainable, right?

Fire Drill: Merrill Lynch , taking a $5 billion rescue (or "accepted investment" - their words) from Temasek Holdings of Singapore, joins Citibank, Morgan Stanley, and USB in needing bailouts from either Orientals or Arabs. Merrill said its total remaining exposure to funny paper is $27.2 billion. Think they're still out passing the hat?

The Free Market: Greenspan & Co. claim the sub-prime mess broadened homeownership. Not true. Home ownership is no higher than in 2003 and will be far lower when we're finally rid of Bush. The mortgage industry lured millions into borrowing more than they could afford, then duped investors into putting vast sums into risky assets wrongly labeled AAA. Ah, the unseen hand of the free market, sweeping chips into the banker's pockets. Bonus, anyone?

How Dry I Am: Some of China's glaciers have shrunk by 18% in the last 5 years, and on average China's glaciers are 7.4% smaller. These glaciers feed the Yangtze, Mekong, Yellow, Ganges and Brahmaputra and supply water to an area home to nearly 1 billion people. Eventually the water will be missed, as will the people.

R.S.V.P. Bond insurance company ratings are being slashed. Mortgage-related losses exceed their capital cushion by billions. Rather than force the insurers to raise collateral to back the guarantees, the banks have agreed to waive all collateral requirements and their rights to terminate deals, until Jan. 18. I'm curious about what happens on the 19th.

Banker's Prayer: God, grant me the capital to accept the losses I cannot change; the reserves to change the terms I can; and the Fed Auction to rescue me from my stupidity. Amen.

Like A Rock: After assets in their money-market funds declined to where customers could get but 82 cents on the dollar, SunTrust pumped $1.4 billion into them, becoming the seventh major company to rescue an investment traditionally billed as safe. Limestone.

Maybe, Maybe Not: US retail sales declined for the third straight week during the worst holiday spending season in five years. This year's holiday spending is growing the slowest pace since 2002. Meanwhile, initial jobless claims increased to 346,000 in the week that ended Dec. 15, while the four-week moving average climbed to the highest unemployment level since Katrina.

Weighing In: New Years means diet season. Most come with the dreaded 8 glasses a day. A word of sanity: This advice derives from a 1945 recommendation that adults should consume one millilitre for every calorie consumed. The part of the recommendation that said "most of this quantity is contained in prepared foods" has been long lost. Too much water is dangerous. Scotch is cut 50% at the factory.