Friday, April 10, 2009

SAR #9100

Government: a protection racket that makes laws.

Wrong Map: Wall Street, CNBC, the Fed and the Administration all act as if economic recovery were just a bailout or two away. If recovery means returning to the credit-driven consumptive binge of the last 20 years, recovery is not going to happen. Just ask the family that just lost their job, their house and their dreams how long it'll be before they get sucked into that trap again. My dad lived for 50 years after the depression and never, ever forgot. Nor forgave.

Pop Quiz: What will global warming look like? Australia.

Faster, Not Better: Over 40% of those getting a mortgage modification fall 60 days behind in their payments after only 5 months. Another victory for the Paulson-Bernanke-Geithner team.

Slowdown: Some US states' tax collections are so far below normal that the states cannot send out tax refunds to their citizens promptly because "we don't have the money."

Pay Me Now, Pay Me Later: Saudi Arabia has threatened to keep its petroleum at home if the world doesn't promise to pay it for the oil it won't have when the oil runs out. It also wants to be paid for the oil it won't sell because burning it causes global warming.

Contrary Souls: Corporate fundamentals are historically awful, with little hope of improvement, so naturally the stock market rallies on the hope of unearned riches.

Basics: Capitalism is about failure. Good businesses rise from the ruins of badly run ones. If the government, the society, becomes a deus ex machina dispensing taxpayer cash to prop up failed institutions, this is not preserving capitalism. It sort of a reverse socialism, the worst kind of socialism, protecting the oligopoly at the expense of everyone else.

The Annual Return: Federal fisheries managers have again this year canceled California's commercial chinook fishing season in a probably doomed attempt to save the fishery.

True Tales from Accounting: Wells Fargo is projecting a record $3 billion in first quarter profits. Hey, they're doing okay on the $25 billion the taxpayers lent them.

Now and Then: Weekly jobless claim numbers are a tad below expectations, while the Fed's meeting minutes indicate they expect unemployment to rise steeply throughout 2009 and into 2010 before leveling off. Continuing unemployment claims rose to yet another all-time record, at 5.84 million.

If/Then: Economist James Hamilton of UCSD shows that every postwar US recession but one was preceded "by a dramatic increase in the price of crude petroleum." If the price of oil got the recession started, then relieving the banks of their toxic debts may not be the solution...

Shadowland: U-6, the unemployment number that actually counts all of the unemployed, is well on its way to the 20% mark. That's why the government doesn't talk about it.

Stiff Upper & All: Great Britain's National Institute of Economic and Social Research says the UK's economy has contracted 4.2% in the last year and that the economy will not recover for two more years. Cheers

Porn O'Graph: Belts, tightening.


Anonymous said...

RE: Porn O'Graph:

Notice that the graph clearly shows that the activities to slow the the 2001-2002 recession kicked off the following massive bubble. Clearly, adding government spending and loose money just keeps an unsustainable situation going. The collapse when it comes, and it most surly will, will be magnified in direct proportion to the amount of "foolery" used to mask the problems.


The Anecdotal Economist said...

RE: True Tales From Accounting...

Of the four remaining major national banks (Chase, Citi, BofA and Wells), Wells Fargo and Citi have a far lower amount of loss reserves as a percentage of loans than do JPM and Citi.

Notwithstanding, in conjunction with newly restored "mark-to-make-believe" accounting from their friends at FASB (who were bribed by the Fed and threatened by the SEC), the banks likely will report stellar Q1 earnings, by design, meaning the feds (that seamless Bush-Obama transition) implicitly will allow them to now under-reserve for bad loans, thus dramtically improving net income and capital ratios.

Combined with "stress tests" to be graded, not "pass/fail" but "present," the entire exercise appears to have been created to dupe private investors into buying new issues of common stock offered by the banks, such as Goldman Sachs' upcoming issue, to "prove" capital markets are functioning again.

Add the PPIP government-sanctioned looting of what little taxpayer money yet can be borrowed from China and we will be able to call off Depression 2.0.

(Pay no attention to those unemployment numbers, or tent city numbers, or mass shootings numbers because, HEY!, the banks are OK!)

Which will, of course, prop things up for 6-12 months and lift the stock market sufficiently for Wall Street insiders to "distribute" their remaining equity holdings to the rube small investors who mistakenly believe the government has solved all our problems.

Which, of course, sets us up the "big one" sometime in 2010. The big what? I don't know, but it's coming.

Check local listings, but stay tuned...

Anonymous said...

I hoping it's 2010, I've been going long on rice, beans, and ammo. It's a sad day, I live close to the ground but that might not be enough to help a few others. I just won't to know if the this will be on tv?
The race to the bottom continues.