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Monthly Archives: May 2011

The global economy is slowing again

Evidence continues to build that western (& eastern) economies are slowing. In other words, the many $T spent to prop up economies has largely been wasted. The only positive comment on the expenditure is hopefully systemically important banks have built up enough cash to be able to withstand the losses they face. The US: This week saw the 2nd estimate from our friends at the BEA. 1Q GDP growth […] Read the rest of this entry »

Weekly Short Economic Stories

 Have we solved too big to fail?  No.  In 1994, the 5 largest US banks (in terms of deposits) had 7.9% of the market. In 2010, that figure was 34.3%. The 5 top US banks have assets equivalent to 60% of GDP. US new home starts rose a little — from record setting awful to slightly better than that. A pause in the decline of housing […] Read the rest of this entry »

Weekly Short Economic Stories

This week, the US Treasury hit the debt limit. We’re now officially living on borrowed time. And what have US Tbonds done lately? Rallied! Same thing they did when QE1 shut off. PIMCO’s Bill Gross is correct: US T bonds are likely to take a beating in the long run (though if that’s true, you have to be pessimistic on US economic growth for […] Read the rest of this entry »

Greece: Will they default this weekend?

First, good news: 1Q 2011 saw the Greek economy expand.  Of course, you need to keep this in mind too: GDP estimates for the previous quarter were revised considerably lower. do you believe the latest Greek data ? Now the rest….   S&P lowered Greece’s sovereign debt rating 2 further notches –now 6 notches into junk. S&P indicated that extending the repayment terms of the existing bailout amounts […] Read the rest of this entry »

Weekly Short Economic Stories

This week, the National Federation of Independent Business (NFIB) released data on small business owner optimism. The report shows small business owner optimism rolling over again -and at levels usually only seen in recessions. The last blip (right edge of the graph) was solely due to QE2. Without it, the economy and small business confidence was headed back down in mid 2010.  Below is a plot of the past […] Read the rest of this entry »

US real estate weighs down recovery

Zillow -a real estate research company- says 28.4% of home owners with a mortgage are now under water (owe more on the mortgage than the house is worth). This agrees with the forecast I made last year: that real estate would roll over again in winter 2010-11 seeing prices fall to the previous trough (spring 2009).  But –per what I wrote last year– the winter of 2011-12 has the potential to […] Read the rest of this entry »

April 2011 Employment Report

  The Economist Magazine, April 30th 2011 issue:   ”The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers.  “     Thank you.     For several years, I have maintained that the 2007 -? recession was not (is not) a business cycle recession, but instead a much more insidious balance sheet recession caused […] Read the rest of this entry »

Final act of Greek tragedy approaches

The Greek decade-plus overindulgence in debt has lead to a crisis that threatens the sovereignty of the nation. Worse, because of the intricate nature of banking systems, the Greek financial crisis places Europe in an existential crisis.   In last week’s brief note on Greece, I had considered adding a forecast about what the next steps in the saga would be. Suspecting the view […] Read the rest of this entry »

Weekly Short Economic Stories

Apparently I’m not the only one to notice Ben Bernanke’s comment last week where he indicated the chances of more QE (after QE2) are dropping because the trade off with inflation is “getting less attractive”. The Economist April 30th 2011 issue pointed this out too. 1Q earnings season is mostly complete (435 of 500 done). As expected, earnings have been strong. In fact, the only quarter […] Read the rest of this entry »