SAR #9259

Anticipation is not a substitute for reality.

At Ease: President Obama is expected to announce that the US is canceling plans to deploy a missile defense system in Eastern Europe because Iran's long range missiles do not have a very long range and the system doesn't work anyway.

That Shrinking Feeling: US bank loans fell at a 14% annual rate over the last three months – the most rapid fall in loan balances (by %) since the 1930's. This, and similar falls in M1 and M2 money supply data, strongly indicate serious deflation is underway.

Addiction: The Obama administration wants to extend three of Bush's invasive surveillance practices. They also want to extend the government's power to demand sensitive financial records from business without giving a reason. In return, the administration is willing to consider stronger civil rights protections in the new law "provided that they do not undermine the effectiveness of these important (provisions)." Willing to consider...

Short & Sharp: Mortgage application filings fell 8.6% last week, from the previous week and down 18.7% y/y.

Behind the Headline: Industrial output – excluding the overstimulated auto sector – rose 0.4%, 10.7% down from last year. Capacity utilization also increased – but then we've shipped most of our industrial capacity overseas.

Revisions: Old: (1) The check is in the mail. (2) I'll respect you in the morning. (3) I'm from the government, and I'm here to help you." New: (1) The US does not torture. (2) The US has the world's best healthcare system. (3) The US rejects protectionism.

Cookie Jar: One out of every three votes counted in Karzai's victory at the polls appears to have been fraudulent. Imagine that.

Worse and Worser: Credit card write-offs are rapidly rising at the major banks – BofA is at 14.5%, Citi at 12.1%, Discover is at 9.1% and JPMorgan at 8.7%. These charge-offs tend to track unemployment (Hint: the unemployed can't make even minimum payments.) and unemployment will continue to rise.

As Expected: US life expectancy, 77.8 years, Canadian 80.4 years. US infant mortality 6.37 per 1,000, in Canada it's 5.4. The US spends 16% of GDP on healthcare for 85% of the population, Canada's 12% covers everyone. In Canada, healthcare is a basic right. In the US, gun ownership is.

Forgotten, Not Gone: The ozone hole over the Antarctic was discovered in the 1980's and taken care of by the 1987 Montreal Protocol. Right? Well, not really. The hole appears to be stabilizing, but the damage done by CFC's will not disappear until about 2075. An object lesson.

War of Words: USCOM, which “orchestrates a 24/7 multi-media campaign formatted to the cultures and languages of relevant audiences”, is spending $10 million to set up “influence websites” specifically targeting France and Britain in support of our GWOT.

Night, After Day: The economic crisis did not sneak in the back door – the growth of leverage throughout the economy since the 1980s made it inevitable. The bailouts only transferred the debts from the private to the public sectors. It's still debt and it's still there. The more debt we add to the system, the more likely a collapse of the system.

What's Wrong With This Picture: International food aid is at a 20-year low, while there are over a billion hungry people in the world. Fortunately, Wall Street bonuses will not be affected.

Consider the Source: The International Atomic Energy Agency (the folks who were right about Saddam's non-existent nuclear weapons) and US Intelligence ( whose record is a lot more questionable) both state they have found no evidence that Iran presently has an active nuclear weapons program. Israel – which has a dog in this fight – claims it know better.

Porn O'Graph: American's agree on saving Private Ryan Social Security.