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Monthly Archives: October 2011

Weekly Short Economic Stories

ECRI ‘s WLI indicator dropped to -10.1  two  weeks ago, and -10.0 last week. The WLI fell this low in February 2008 — 3 months into the Great Recession.  The odds are building that January 2012 will be the first month the US falls back into recession (but it could be December 2011).  Granted, a year ago I forecast 4Q 2011 would see a […] Read the rest of this entry »

3Q 2011 GDP. First read.

Preamble: The BEA (part of the US Federal govt) releases three estimates in the immediate months following a given quarter. It does such a poor job with these estimates that frequently several years after the fact it will radically adjust several quarters GDP growth estimates –when no one cares / when it won’t spook anyone. Talk about a mixed bag. The BEA’s initial estimate […] Read the rest of this entry »

The latest Save Europe Plan

14 conferences over 21 months has produced a stream of denials, bail-out plans, and plans to have grander plans. The latest plan: 50% losses on Greek Bonds. The EFSF bailout fund will be levered-up 4X. Banks will have to meet 9% tier 1 capital by next summer.   50% Greek Debt Haircut Per previous comments I’ve made, this won’t be enough. Greece needs at […] Read the rest of this entry »

Short Economic Stories: US

It is remarkable how October 2011 resembles October & November 2008. Consumer sentiment, retail sales, GDP, ECRI WLI, Federal Reserve data — all look like they did immediately prior to December 2008 — the first month of the previous recession. US Consumers: Retail sales figures were adjusted upwards for the 3rd quarter but a closer look at the data leaves me scratching my head […] Read the rest of this entry »

Short Economic Stories: Europe

Tuesday saw a story from The Guardian Newspaper that Germany & France had agreed to enlarge the EFSF bailout fund to 2T euro ($2.7T). Wow! I wonder if that will actually happen. We’ll know next week. More importantly, I wonder how this will make it through 17 EU parliaments. A list of countries opposed to more IMF help for Europe is growing. Canada, the […] Read the rest of this entry »

Dexia Bank Dominoes

Dexia Bank is majority owned by the governments of France, Belgium, and Luxembourg. It was rescued shortly after Lehman Brothers imploded in 2008. Dexia is front page news again because it can’t get funding (no one wants to lend it money). There are similarities between Dexia in 2011 and Bear Stearns in 2008. Both banks are/were heavily reliant on wholesale funding (this means they […] Read the rest of this entry »

BIGPIGS in Europe

Could it be that after almost 2 years of slo-mo financial system meltdown in Europe the end approaches?  Admittedly I am surprised it has gone this long. Germany and France intend to come up with yet another grand plan to save Europe’s financial system in 2 weeks time, then present the plan at the Nov 3 – 4 G20 conference.  As of now, the […] Read the rest of this entry »

Weekly US Short Economic Stories

It is inspiring to see how much stock markets respond to press conferences and plans to have plans to fix Europe’s financial system. There remain no details and no agreements on how this will be done, mind you.  Global stock markets rose from the depths of Tuesday morning last week to post yet another European faith-based rally.  The S&P500 dropped to 1075 — down […] Read the rest of this entry »

Greedometer update

            Last week the greedometer dropped to 3800 rpm.  The nearest analogue – in terms of how the greedometer is behaving — is September 2008. Here’s the historical chart showing the greedometer readings over the past 12 years, and matched to the S&P500…. The red circles are where we are now, and the same reading from the previous 2 […] Read the rest of this entry »

Weekly Short Economic Stories

US : Operation twist is doing its thing. US mortgage rates fell to their lowest ever. The average rate for a 30-yr fixed mrtg fell to 4%. When that drops to a more-Japanese-like 3.25% in a few months, I won’t be surprised. A 2.5% 15-yr fixed rate seems likely. Another result of operation twist is bank stocks are being hammered. Annaly Capital Mgmt (symbol […] Read the rest of this entry »