Drumroll, Please: U.S. stocks are sliding and yields are plummeting as Treasuries surge following the release of much worse than expected manufacturing survey data from the Institute of Supply Management (described as "screeching to a halt") - while the purchasing managers index showed US manufacturing growth at a three month low as new orders fell the most since 1980, the big auto makers all reported big sales drops in January with GM piling up the second highest level of dealer inventories ever, and the Dow is down 1000 points from its highs.
The American Way: Following Atlanta's paralyzing winter storm, a man stole a tow truck and used it to steal cars that had been abandoned on the expressways. Initiative. Gumption.
Le Loi: The European Commission complains that the extent of corruption in Europe is "breathtaking" and costs the EU economy at least 120billion euros annually. Sweden seems to be the least corrupt, with Spain, Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece less exemplary. The report noted that "The political commitment to really root out corruption seems to be missing." Wonder why.
Wickedness Brews Unseen: If the cost of credit is supposed to measure the risk of not getting paid back, then central banks have been mis-pricing credit for several years. This has, in turn, caused the mis-pricing of almost everything else: commodities, stocks, houses, emerging markets, the euro, and so on. Oil too, has been mispriced, but on the low side (see today's entry on the oil business). This will lead to a number of bad outcomes, not the least of which will be daily contests in the streets between the people and the police forces of the status quo. It is not that the central banks have lost control; they never had it. Events, it seems, are in the saddle.
Back To The Future: Germany is preparing a third financial rescue for Greece with a new loan, outlined in a German finance ministry position paper, worth €10bn-€20bn. Because
Predicate Crimes: Shell, after a 71% decline in net profit in the fourth quarter, plans to cut its exploration budget by 25%, sell off $15 billion in assets, and delay further exploration in the Arctic for another year as it grapples with “flat oil prices.” This is as close to a capitulation to the predictions of the peak oil crowd as we've come so far. Shell is acknowledging that it will no longer seek “elephants” - big new fields – because it is not profitable to seek new oil reserves at a paltry $100 a barrel.
The Willy Sutton Approach: Upscale retailers, hoteliers and restauranteurs are raking in the money and those aimed at the bottom of the economic scale are thriving, but those targeting the middle class are struggling and are likely to disappear as their customers migrate to Family Dollar and the Eat All You Can buffet next to the row of cheap motels. Sadly, the top 5 percent of earners are responsible for 38 percent of all domestic consumption. And they don't want fries with that.
They Said: "It’s been many, many years since free markets decided the fate of debt markets and bail-outs have generally had to get bigger and bigger." Deutsche Bank
Leveling The Playing Field: Income inequality statistics are generally 'per household', but most of the 1% have only one working adult while the 90% generally have both spouses working. And even with both adults working the average American household has barely broken even over the last 30 years - which amounts to a 50% decline, and more than that when the extra expenses that two working spouses encounter are counted. So all things being equal, the inequality is even more unequal than advertised.
Porn O'Graph: Less for the money.
The Parting Shot: