Authoritarian governments come with very high body counts.
Recap: Spain borrowed €100 billion and will give it to the banks which will use it to buy Spanish government bonds, transferring the debts of the banks to the citizens, who have no jobs. More likely than not the €100 billion will come from the ESM, which will set up the seniority contest that recently played out in Greece and will drive up Spain's borrowing costs. It will also drive up the cost to France and Germany. Despite Spanish PM Rajoy's assurances, the money comes with conditions, the IMF will be sitting at the table”monitoring” the Spanish austerity program. And it's not a bailout, it's 'assistance.' Whatever it's called, it was fooled the markets for 2 hours but was a complete failure after 6. Krugman: “It’s becoming increasingly clear that it will take utter catastrophe to get any real policy action that goes beyond bank bailouts. But don’t despair: utter catastrophe may be just around the corner.” Italy is next.
Here & Now: , John Hussman says a new recession is already here, has been all along, because we never addressed the problems that produced the first one. Our problems stem from a series of poor decisions made by people who should have known better, which have made recurring crisis inevitable. They ought to stop digging the damned hole.
What's A Heaven For? Economic theory does not have to be right or useful, being interesting is sufficient.
Normal? Who's Normal? Before we all went crazy sometime in the 90s, existing home sales were about 3.5 million a year. Today they are about 4.6 million a year – 30% above the 90s norm, although the population has only increased by 10%. Why should sales increase? The US savings rate is far below the long-term average, which means that customers are spending every penny they can get their hands on. So why would anyone think spending is going to pick up?
Silver Lining: The descent into recession has lowered the price of gasoline in the US by 40 cents so far. One interpretation is that the price of oil rises until it tips the world's economies into recession, demand drops, prices drop and eventually the cycle repeats.
Shame: Of the 35 richest countries in the world, the United States ranks 34th in childhood poverty – mainly because it ranks first in income disparity.
Enough, Already: Raymond Dolin of West Virginia, hitchhiking through the US writing a memoir entitled The Kindness of America, was waiting for a ride by the side of Highway 2 in Montana when a man drove up, shot him and drove away.
Cat/Bag: The Labor Department is “postponing” the requirement that reporters filing stories on just-released unemployment and economic data do so from a room under government control, using government-provided computers and government-provided internet access. So the government can protect them, it says.
Talking Turkey, Or Not: Turkey has more journalists in prison – nearly 100 - than any other country.
Cross My Heart: In Kabul on Saturday, General Allen pledged to halt attacks on residential areas "altogether." On Sunday the General added the caveat that "NATO would continue to conduct operations against insurgents who use civilian dwellings for shelter...” But a senior US defense official said “We’re bombing civilian residences and killing civilians in Afghanistan and Pakistan, because that’s what our leaders insist we have to do...”
Warmup Question: Who cheats more, bankers or politicians? Bankers, next question.
Upstairs, Downstairs: Statistics show that America is no longer the land of opportunity and that the 'American dream' is a myth. America's social mobility is one of the lowest of any of the advanced industrial economies. Americans who are born poor are overwhelmingly likely to stay poor, just as those born rich will be rich. Chose your parents carefully.
The Parting Shot:
A new day.