In America, the 1990 census showed a marked decrease in childbearing. 25% of the women between 30 and 34 were childless, while the comparable figure in 1976 was 16%. By 1985, the birthrate expected per average woman over her lifetime had fallen to 1.8, slightly below Europe’s level and below the “replacement rate”, the level […]
Read more...We said at the beginning of April, when the idea of a “surgical” bankruptcy of GM and Chrylser was first mooted, that we assumed this was an effort at high stakes poker, because there was simply no way to make reality conform with the Administration’s fantasy. Readers may recall that the high concept was a […]
Read more...Readers may know we have oft pointed to the work of Carmen Reinhart and Kenneth Rogoff on financial crises. They have built a large database of past crises, and have compared the US to past crises countries. Their conclusion was that the US looked like a typical crisis country “only more so”, and in two […]
Read more...KBW, a firm specializing in bank stocks, expects Wells Fargo to show $120 billion in “stress test losses”, meaning losses under the assumption of a supposed worst case of recession through the first quarter of 2010 and unemployment reaching 12%. Note that the 12% figure (according to Bloomberg) was included in the analyst’s report;. This […]
Read more...We’ve mentioned earlier that it was inevitable that China would reduce its purchases of Treasuries, independent of its desire to diversify away from them. With trade falling (although China still has a high surplus) and hot money inflows reversing direction, China has less reason to buy foreign assets. From the New York Times: Reversing its […]
Read more...Willem Buiter takes no prisoners, In his latest post, “The green shoots are weeds growing through the rubble in the ruins of the global economy”, he dispatches the idea that recovery is around the corner (citing Carmen Reinhart and Kenneth’s latest paper on the resolution of financial crises) and points out that the fiscal state […]
Read more...Barry Eichengreen, an expert on the Great Depression, and Kevin O’Rourke, take issue with the notion that the current downturn is less severe than the Great Depression. While the slump in the US is not as bad, that mis-states the global picture. Note that many economists expect the US to suffer less than the big […]
Read more...Note that the 53% cumulative default rate for junk bonds over the next five years foreseen by Deutsche Bank analyst Jim Reid is nearly twice the level forecast by Moodys of 29%, It is also well in excess of the rate during the S&L crisis, which produced a nasty but comparatively short recession. From Bloomberg: […]
Read more...Submitted by Rolfe Winkler, publisher of OptionARMageddon. [Reader note: I thought it useful to add commentary around the FDIC data. Those that would prefer to skip straight to it, see the chart and read paragraphs 4-9]. Conventional wisdom says that financial companies are having trouble borrowing because credit markets are broken. This is dangerously wrong. […]
Read more...In a world of floating rates, driving the value of one’s currency down takes a bit of doing, but as China (since 1994) and Japan (circa 2003) have demonstrated, central banks can lower currency prices. And trashing one’s currency is part of the standard program recommended for countries facing deflation. The preferred method these days […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns I have just finished looking at the latest employment situation report and there is absolutely no good news there. This report is miles apart from the jobless claims data I reviewed yesterday and does not suggest we are anywhere close to a bottom. The headline number […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns Tomorrow, we all await the unemployment number with anticipation. In all likelihood, it is going to be a nasty number edging us ever closer to the 9.0% I once saw as a sort of upper range number for 2009. Meanwhile, jobless claims for the week ended […]
Read more...The George Santayana saying, “Those who cannot learn from history are doomed to repeat it,” is so oft repeated as to verge on cliche. Yet the US variant of this syndrome is to be aware of history, then rationalize how it does not apply to us. Japanese policy makers from the early days of the […]
Read more...Is Obama’s leaked view that a “quick and surgical bankruptcy” was a “likely option” for GM and Chrysler form of bizarre brinksmanship? If not, Obama has just painted himself in a corner based on what looks to be some very bad advice. As we will explain below, the notion of a “quick and surgical” bankruptcy […]
Read more...Oh, so there was even more to the GM Wagoner resignation than met the eye. So how come no bank turnaround plans? Oh, if they were no good, the government might have to get tough with them. Can’t have that, now can we? From CNBC (hat tip reader Dwight): The announcement by the White House […]
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