SAR #10048

Normal is a town in Oklahoma.

Contagion:  Greece is small potatoes; the UK may be the first major economy to come under attack for its excessive and unsupportable sovereign debt, some wonder if the sovereign swine flu will spread to the US – after all, it already shows many of the symptoms: budget deficits, possible ratings downgrades, and lots of short-term debts coming due. Merrily Lynch does not think so, but it recommends a large helping of fiscal austerity, just in case.  Germany has rejected the idea of bailing out Greece, insisting there is "no way around" Greece having to adopt painful austerity measures (or maybe not).  [Similar 'painful austerity measures' are pretty much what the deficit hawks have in mind for the US.]

Tough Love:  Not nearly as many mortgage modifications have been undertaken as was promised and even fewer have succeeded.   Over 70% of those that qualified – and most did not – will eventually fail anyway, so say to recent reports.  There are about 7.7 million houses in some stage of default/delinquency (they've reached another all-time high), and another 5 million to go through foreclosure over the next few years.  No wonder Treasury officials are worried about the next wave of foreclosures.

Role Playing:  The United States has become the world's policeman.  China is well on the way to becoming the world's banker.  Guess which pays better . The question, for both, is how long can you keep it up.

Smoke & Mirrors:  Foreign holdings of short-term U.S. treasury bills fell by $53 billion in December, and $500 million for all of 2009.  If the neighbors are not going to finance our foolishness and we can’t,  who will? 

Weather Report:  How bad the economy has been depends on where you fit in the class system.  The bottom 20% have undergone a depression. Those in the middle have experienced a deep recession, while those at the top of the heap have pretty much seen full employment and wish the rabble would just shut up.

Late News:  The Bush Obama administration is considering indefinite detention without trial or charges for enemies of the state.

Crystal Ball:  When the Fed stops buying up all the mortgages (a) mortgage interest rates will climb less than .75%  (b) mortgage interest rates will climb over 6%, or  (c) mortgage rates will be immaterial, as house sales will essentially stop.

Common Decency:  American politics happily and unthinkingly embraces exceptionalism, both at home and abroad (how else to explain invading Iraq & Afghanistan - or any other country we want whenever the mood strikes - or insisting that 5% of the world's population gets to consume 25 or 30% of its resources? ).  Our political life consists of a party which refuses to govern and another that is philosophically opposed to the idea of governing.  There are no rules, no concept of fairness or decorum or concern for the people or for democracy.  It is a matter of what you can get away with in a country suffering from electile dysfunction.

Duh?  Some complain that if American and European biofuel production goals are reached it will lead to higher food prices, at least 100 million more hungry people in the third world, and more crowding into slums as small farmers are forced off their lands.  Something should be done about those food prices.

Political Economics:  Shell says that if the UK would give it greater tax incentives it could make more oil and gas appear in the North Sea.  No geologists need apply.