This week's edition of Barron's contains an article entitled, "Does Extreme Stress Signal an Economic Snapback?" the thesis of which is carried in the subtitle: "More than a decade's worth of equity gains has evaporated. But history suggests that stocks won't fall much further." The article includes the following graph offered in support of the main thesis:
We are supposed to all think that our 201k's (formerly 401k's) are undervalued now and will at least grow back to the historic norm.
Don't know about you, but I find that graph FAR from reassuring: in fact, it appears to support the opposing thesis.
Is this unbelievable or what? Millions of jobs on the line and Congress puts the auto industry through hell yet Citigroup stock drops and the Government immediately comes to their rescue.
One option being considered is taking some of the risky assets held by Citigroup off its balance sheet, a move that would give the company more breathing room and put it in a better position to raise capital. It was unclear, however, exactly how that option might be structured, the people said. Another option would be for the government to make another cash injection into the company.
What kind of expertise does Governor and failed Presidential candidate Richardson have to be Commerce Secretary?
Here are a series of position statements and while the country is in terrible trouble, Richardson is known to push for more guest worker Visas, which displace US workers, complete open borders towards illegal immigration and endorses NAFTA and the WTO.
Aren't you glad you are in representative Government where the people only get minor choice every couple of years or more?
The American Civic Literacy Program has been quizzing America on basic Eivics, Economics and History. From their press release a shocking 56% of all Government Officials fail this basic quiz.
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One topic no one mentions in the Detroit Bailout controversy is all the offshoring that has been, and still continues, in the auto industry. GM just announced new plants in Brazil, Russia and India, coinciding with plant closings in America.
Despite a $700 Billion Wall Street Bailout, despite the Federal Reserve scooping over a $Trillion of questionable bank assets onto its balance sheets, despite an alphabet soup of new programs designed to aid the banking system, and despite -- or perhaps in part because of -- the almost-daily rule changes in the banking system I have dubbed Global Financial Calvinball; the economy and the financial emergency continues to worsen.
This is imho precisely because, as Jim Kunstler puts it:
Update 4:
This week we got a partial answer to the query posed by the title to this series: one of my two possible outcomes was a deflationary recession (an old fashioned "bust"), featuring (-1.5%) or greater deflation on an annual or shorter basis. This week we learned that in the August-October period CPI already declined (-1.5%). Since November and December have a seasonal bias towards slightly negative (-.1 and -.2 respectively) monthly CPI readings, this deflationary recession will almost certainly last into 2009.
Way back on November 30 of last year, I wrote a blog entitled The Panic of 2008? in which I said:
This is NOT the Great Depression II. Nor is this the stagflationary 1970s. It is going to unfold as some other Beast. Only the broad outlines of this Beast appear discernable now: it will likely feature (1) increasing import prices; (2) wage stagnation (that does not keep up with price inflation); (3) real asset deflation; and (4) possibly a Japan-style "liquidity trap."
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