The economic system is about to teach us a lesson;
we never did much like school anyway.
Spoonful of Honey? Orders for durable goods rose 5.2% in December, the largest gain in five months. Even without an 11% surge in (Boeing) aircraft to offset a 2.3% fall in the auto sector, there was an overall rise in manufacturing. Smile; once in a while things go right.
Net Serve: A week ago, SAR pointed out that the Fed was reporting negative net bank reserves as of December. The reports for Jan 2 and Jan 16th are even more negative. Finally, today, Mish brings it to a wider audience with "Bank Reserves Go Negative."
Another Brick: For those who thought the worst was over and it was time to rush out and buy: Countrywide, the nation's largest mortgage servicer, reports that one out of three subprime loans is delinquent. There are about $1.3 trillion in subprime loans outstanding, one third of which is $400 billion. So far the problems have been the result of only $100 billion in foreclosures. Next!
For My Next Trick: French prosecutors have withdrawn fraud charges from the 'great fraudster', reducing his crime to 'breach of trust.' This undermines SG's allegation of massive fraud as the cause of their meltdown. Kerviel, the accused, claims his superiors knew of his trades and did not complain as long as he made them money. Much of the SG senior staff are 'assisting with inquires'. One of SG's director's sale off $150 million worth of SG shares eight days before the abrupt asset sale is being questioned. Citibank, which knows about such things, has cut the value of SG's stock in half.
All Together Now: Just as the EPA won't let California regulate car emissions because CO2 is a global problem and needs a global solution, Bush's nominee for the Consumer Products Safety Commission feels that since mercury emissions is a global problem, the US should not limit emissions unilaterally. Same with lead paint on children's toys, apparently.
Revival: New home sales fell 26% to a 12-year low in 2007, the worst sales year on record. Median price dropped 10% from 2006. Existing home resales - the bulk of house sales - suffered their biggest annual drop in 25 years. Who'll stop the rain?
And Yet It Moves: The White House Office of Management and Budget reviews all scientific testimony and interviews of government scientists to make sure that it’s “consistent with the President’s budget”. In Indonesia at least 100 people have died from 'bird flu' (H5N1). The White House is reviewing the information to see if it conforms to policy. The Pope once had a similar problem with Galileo.
Whiter Shade of Pale: Escalating climate warming is seen in our chaotic, unstable weather. Global grain production peaked in 1985. Human population now exceeds the globe's ability to sustain it by 20%. Natural gas production in North America peaked in the 1990's. Global oil peaked in 2005. By 2002 over 75% of the world's oceans were over-fished, or fished out. Two thirds of the world's forests have disappeared. Bret Favre may retire.
Headline: US Military says China's weapons exceed self-defense needs. Don't look in the mirror, just shut up and sell them some weapons; that's one of the few things we still manufacture.
Ubiquity: Bangladesh is giving fertilizer plants priority access to natural gas, at the expense of electric power generators - to the extent of curtailing generation if need be. It's not miles per gallon that they're worried about. Elsewhere, Eskom - which supplies 90% the power for South Africa and several of its neighbors - reports that coal shortages are limiting its coal-fired power production to 75% of capacity; China has stopped exporting coal; Pakistan has no power 15 hours a day and Nepal is out of diesel fuel. There are more, but it gets boring.
Spoils: On display in Chaney's office is a piece of the house where Zarqawi died. Tasteful, Mr. Vice President, really, really tasteful.