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Monthly Archives: December 2011

Short Economic Stories: Asia

China: There’s more evidence of residential property prices dropping. The People’s Bank of China is going to have to step-in in Q1 if this continues. After the European financial system crisis, China’s property bubble is the number two strategic investment issue to track. How is China’s stock market?  Down over 60% since the peak in 2008, and down nearly 30% from this year’s peak.  India: The news […] Read the rest of this entry »

Short Economic Stories: Europe

The big news:  The ECB indicated banks bellied-up to the feed-trough that is its new unlimited three year line of credit. More than 500 European banks sopped-up nearly 500B euro of loans.  Roughly 300B of this will be used to refinance existing debt. This move by the ECB is a desperate one. The first quarter of 2012 will see a tidal wave of sovereign & bank debt […] Read the rest of this entry »

Short Economic Stories: US

As of now, Congress has failed to approve an extension on the payroll tax cut and jobless benefit extension. Brinkmanship and polarized politics aside, most expected Congress to cook-up something before they head home for the holiday break.  The impact of not extending the fiscal candy is likely to be a 2%(ish) drag on an economy that is already only likely to see flat […] Read the rest of this entry »

Greedometer : December 16 2011

The greedometer registered 4600 rpm.   2011 continues to resemble a compressed version of 2007-2008.  The mini greedometer is topping-out for this cycle. There’s a new leg down about to begin.

The final European debt summit: V 9.0

Without question, last week’s biggest economic story was whether Europe would succeed in laying out a credible plan to (once and for all) solve their insolvency problem. In keeping with the bazooka-less incremental changes brought to bear over the past 2 years, last week produced more of the same. All 17 eurozone member countries plus 9 of the 10 European Union (non euro using […] Read the rest of this entry »

Short Economic Stories: Asia

China: Last week, China announced the November inflation rate dropped to 4.2%. Fingers reamin crossed everywhere for China to avoid the same fate as everyone else that had a property bubble. December 11th marks the 10th anniversary of China’s admission to the World Trade Organization (WTO). You can imagine a lot of deals had to be done in order to permit this. One such deal was the protection […] Read the rest of this entry »

Short Economic Stories: US

The latest consumer confidence and small business confidence readings continue a steady increase since summer. The latest readings have risen almost all the way to the average level seen in recessions.  Outstanding!  Last week had an update on consumer credit. As has been the case for most of 2011, the headline reads ” Consumer credit expanded $7.7B in October”. OK, read a little further. All of that […] Read the rest of this entry »

Short Economic Stories: Europe

We’re only a couple days from learning whether the Eurozone implodes or manages to stumble along for a few more months because of yet another hail Mary pass. There are several uniquely painful aspects to the eurozone financial crisis. The sheer breadth of it is top of the list. Trillions of euros are needed to plug the holes in the dam for the next few […] Read the rest of this entry »

Net exposure to Europe doesn’t tell us much

We’re told the large (systemically important) US banks have manageable exposure to Europe once all the long and short positions are netted with Credit Default Swaps. Supposedly the net exposure to PIIGS sovereign debt is $16B for Citi, and $2.5B for Goldman Sachs. That’s NET exposure. What’s the gross exposure?   If Goldman has $50B (I have no idea, this is just an example) in PIIGS […] Read the rest of this entry »

2011: 2007 reprise

This year resembled 2007 in several respects. Immediately prior to both years: Wall St. forecast record earnings. The Fed and the majority of economists forecast 3% GDP growth. Yet both years saw wild volatility in stocks that finished where they started. Nearing the end of both years: Wall St was / is calling for record earnings the next year (it must be nice to always think things […] Read the rest of this entry »