If we learn from our mistakes, why aren't we getting smarter?
Arrogant Investment Group: AIG's new leader thinks that the government should shut up and let him run the place his way. He promises pay back the $182 billion, but won't be rushed. He forgets – we own 79.9% of AIG and AIG signed on to pay back the bailout funds within two years. Then he says that if we want our money back already, we shouldn't have come to AIG's rescue in the first place. At least he's right about that.
The Shipping News: The bad news is that US rail car traffic is down 19% y/y. The good news is that it can't fall much further and thus a turn-around is just ahead. Or is that just a roundhouse?
Unexpected: Initial jobless claims edged up 2.5% last week, while the number drawing unemployment payments remained steady at 6.24 million. Despite a fleeting glimmer of improvement last week, economists still expect unemployment to be over 10% next year. Why anyone would expect otherwise is a mystery.
Budget Buster: New York's tax income in the latest quarter is down 24% y/y, $3.6 billion below last year's collection. Not quite California numbers, not yet, but is that a trend forming? US federal tax receipts are down about 15 percent. Great Britain's down over 33% while German corporate tax receipts have dropped nearly 60%.
Hello? Anybody there? Industrial civilization is about to hit the wall at full speed. Even though we still cling to the hope that some magical 'progress' will let us continue our comfortable lifestyles, it is too late to stop the inevitable. The 'sustainability' dream is not sustainable, it is a form of denial. Our governments can't even agree not to grind the last fish into catfood, much less reverse our dumping of CO2 into the atmosphere, or prepare for oil's slow demise. How can there be hope?
Consider the Source: House prices rose 3% in June according to Radar Logic. This is probably the result of the spread of defaults and foreclosures to more expensive neighborhoods. It's not that prices are going up, but that the bargains have larger price tags and larger discounts. 13% of all mortgaged houses are in some stage of default or foreclosure – and a growing number are prime mortgages.
Hit the Road? How far will California's economy have to fall before hordes of Joads pull up roots and start looking for nirvana – or at least a job -elsewhere? Are the neighboring states ready, or even willing, for an influx of migrant 49ers?
Grist: The world's temperature has cooled a tad since the 1998 peak. Never mind the scientific explanation, climate change deniers will jump to proclaim that
the recession global warming is over.
Looking for Hope: For US households to lower their debt to income ratios to the long term trend level of 115% would require a 4.5% decrease in spending for the next two years. If the customer reverts to the 1990-2000 ratio of 91% debt/income consumer spending (the heartbeat of America) would drop 15% for the next two years. If a recovery is to be consumer driven, perhaps it will be by Chinese consumers.
A Quote: “Some of the most strident opposition to health-care reform stems from the literally fatal misconception that markets are the answer to our medical needs.”
Serfing: “Is there a government anywhere that less represents its citizens than the US government? “ My, I love a good rant: “The US is ruled by powerful interest groups who control politicians with campaign contributions. Our real rulers are an oligarchy of financial and military/security interests and AIPAC, which influences US foreign policy for the benefit of Israel.” And it gets better from there...
Porn O'Graph: Deflationary expectations.