The drop in the unemployment rate to 9.7% is an artifact of seasonal adjustment: Employment on the Household Survey actually fell from 137.953 million to 136.809 million. Seasonally adjusted, it rose from 137.792 million to 138.333 million. That is, the actual number of people who said they had jobs fell, but by less than would occur [...]
“The battle is not to the swift, nor the race to the strong,” wrote the late journalist Damon Runyon (of “Guys and Dolls” fame), “but that’s the way to bet.” It’s not just Mediterranean Europe: every government in the world is straining. The weakest will win the race to the bottom.
Own Treasuries vs. gilts.
Own Bunds [...]
Considering that durable goods orders fell by 30% from their 2008 peak, a 0.3% rise as reported this morning doesn’t quite make it as a first robin of spring.
470,000 new unemployment claims, for that matter, doesn’t quite make it as an employment recovery.
My article “Clinton as Cargo Cult” appears this morning on the main FIrst Things website.
Excerpt:
Obama hasn’t been retooled, of course, but he decked himself out in new trim: a spending freeze (that affects only 17 percent of the budget, $50 billion worth of accelerated depreciation for capital investment (extending his own 2009 extension of part [...]
Today’s lead Bloomberg News report that the French banks were willing to accept a haircut on their AIG swaps suggests that the New York Fed lied about the controversial (read: scandalous) decision to pay off Goldman Sachs et. al. at par for their derivatives contracts with the failing insurer:
France’s regulator was “open to further negotiations” [...]
What makes the administration’s proposed ban on bank proprietary trading most embarrassing is the failure to address the source of the 2008-2009 crisis: the fact that the ratings agencies concocted phony AAA ratings for securities backed by volatile subprime mortgage assets with malice aforethought. There’s a better way to do it. I spent a good [...]
I have boundless regard for Paul Volcker, but the proposed restrictions on bank proprietary trading are, well, fixing the barn’s roof after the horse has bolted. The Obama administration really, really doesn’t get the joke. The banks went bankrupt by loading up on supposedly ultra-safe, AAA-rated assets, spawned out of the derivatives hatcheries with the [...]
There is a German expression — Das Groschen faellt pfennigweise — which says, roughly, that the quarter you put in a pay phone drops by pennies. You get the joke by small increments. The economic reports trickling out over the last month confirm, little by little, that there is no recovering from the Great Recession. [...]
The Financial Times quotes Gillian Tett of Geonomica on the peculiar fact that corporate risk is now priced higher than sovereign risk:
“For the first time, the market has started to price in a bigger probability of default among industrialised countries than among investment grade companies.
More specifically, it now costs more to insure the combined risk [...]
On Dec. 22, with the 10-year yield at 3.73%, I gave my top 10 reasons why the curve would flatten — all related to economic weakness. That forecast seemed to go pear-shaped quickly, as the 10-year yield jumped to 3.83% on Dec. 29. But the 10-year yield was trading at 3.66% this morning.
On Jan. 14, [...]