SAR #11154

They weren't called 'investment banks' when Bugsy Seigel ran 'em.

Me, Me, Me! The circle continues, unbroken. The market is down because corporate earnings are stalling because consumers are not buying because they are over their heads in debt, and they don't have jobs or adequate wages. The bright spot is the losses in the stock market – Washington pays attention to those folks

Orderly Retreat: US factory orders fell 1.2% in April, m/m after a 3.0% increase the previous month. Inventories of durable goods were up again in April, the sixteenth consecutive month of inventory builds. Translates to “we're not making much and most of what we do make is still sitting on the shelf.”

Day Late/Dollar Short: In Joseph Stiglitz's "Globalism and its Discontents" he asks “Is the IMF a form of colonialism?” Yes. And where have you been for the last 30 years?

Banana Chips: The Republicans are not convinced that not raising the debt ceiling will result in a disaster. Yes, the government would have to make sharp reductions in spending and reduce or eliminate many social services, but they don't see that as a bad thing. Yet. After all, lots of banana republics have survived similar fates.

Either / Or: The European crisis will result either in a fiscally unified sovereign European state, or the shards of a shattered dream mired in poverty. In some ways it will be their Civil War, with much pain, much drama, taking years not months to resolve.

The Chorus Lines: “I didn’t need a global economic collapse to know that the Chicago School of Economics was intellectually bankrupt — but the crisis sure has revealed that much to many many others.” “We’ve learned a lot less these past 74 years than you might have imagined — or rather, we learned some stuff, but have spent the last few decades unlearning it.” “Everybody knows the attempt to explain business cycles in terms of rational expectations and frictionless markets has failed, but no one wants to let on.”

Winners and Losers: Bank regulators have proposed to reduce the risk of another financial crisis by requiring a 20% down payment on all home loans. Consumer advocates say this would keep many families from ever buying a home. Yes, that's the idea.

Tinfoil Hat Time: A “leaked” report claims the Russian Federal Security Service is telling Putin that the reason the IMF's Strauss-Kahn was set up and jailed for sex crimes is that he was about to reveal the all of the gold supposedly held in Fort Knox is missing and unaccounted for. Actually, they cleaned it out to make room for Strauss-Kahn's cell.

Back to your Oars: Jean-Claude Trichet gave a rousing speech about the past and the future of Europe, The speech began: "Each generation needs to affirm its commitment to Europe." And proceeded to explain how the Greeks were not committed enough to German bank profits to austerity measures – to the point where “euro-zone authorities” may have to take over the country and make the hard decisions, steal whatever isn't nailed down and then leave.

Detroit, Anyone? Realtors are ignoring the continuing fall in house prices and urging people to buy a house today because with mortgage rates under 5% it is cheaper to buy than to rent, even (they say) if the price goes down a little bit. What if that little bit is Detroit?

Repeat After Me: “Cutting the deficit means cutting final demand. It means the economy is going to slow. It might not be a bad thing to cut the deficit, but unfortunately, when you cut the deficit, you're going to get a slowdown. The more you cut the deficit, the worse it's going to be." Thus "next year is going to be pretty miserable."

L'affaire Dryness: France has had the driest and hottest spring in decades, “worse than anything on record.” France is (or was) the EU's biggest wheat producer. Meanwhile there is a severe drought in the wheat fields of China, wildfire worries again this year in Russia and flooding in the US heartland.

Report Card: “The Federal government borrowed and spent $5.1 trillion over the past four years to generate a cumulative $700 billion increase in the nation's GDP. That means we've borrowed and spent $7.28 for every $1 of nominal "growth" in GDP. In constant dollars, GDP is flat: we got no growth at all for our $5.1 trillion: zip, zero, nada.”

Porn O'Graph: Putting the un in unemployment.