Investigations begin into whether Woolwich attack was a "lone wolf" incident or part of a possible planned wave: http://t.co/oY0ASxh4eW
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Archive for February, 2009
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Cartoon for Saturday
This just never gets old. -
The Fed is shifting focus
It’s been three months since the Fed announced its Term Asset-Backed Securities Loan Facility (TALF), and over two weeks since the Treasury announced its Financial Stability Plan, under which the size of the TALF was increased to $1 trillion. The size of the Fed balance sheet peaked at $2.3 trilliion on the week ending December 17, 2008, and has since then decreased by $354 billion (on 2/25/09).
The Fed is shifting focus. It awaits the start of its TALF program, where the Fed will lend against a wider range of collateral to a much broader base of firms (any U.S. company with eligible collateral can participate in TALF). Furthermore, the only programs that have increased in size are those to purchase directly alternative assets (MBS or CDOs, for example).
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Chilling economic charts: inflation
Gross domestic product across the Organisation for Economic Co-Operation and Development (OECD) countries fell 1.5% in the fourth quarter of 2008, following an 0.2% contraction in the third quarter of 2008. There are 30 membercountries of the OECD, and according to the two consecutive quarters of negative economic growth definition, the OECD is in recession.
In continuing the series of really scary charts, which I have re-named chilling economic charts, I present what the world economic crash – of course, initiated here in the US of A – has done to global inflation rates. End result: the world recession is slashing inflation across the globe.
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Please don’t let this be a microcosm of the labor market
The labor market is brutal, but it cannot be this brutal! From the Financial Times: Throngs of unemployed New Yorkers braved sub-freezing temperatures on Tuesday in hopes of finding new work amid rising job cuts. Wrapping around block of the Sheraton New York Hotel for hours, more than 5,000 people – many in business attire [...]
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Germany’s outlook is not good
This is a terrible outlook for battered Germany. From Deutsche Welle:
In an interview with the Bild newspaper on Monday, Feb. 23, Deutsche Bank’s Chief Economist Norbert Walter said Germany had to be prepared for a dramatic decline in economic output as the global downturn batters exports, decimates companies’ profits and raises the specter of large-scale job losses.
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McKinsey survey shows some silver linings
The McKinsey Quarterly released the results of its Economic Conditions survey, conducted January 27, 2009 – February 2, 2009. The survey is broad-based, where 1,820 executives were surveyed from around the world and across a large set of industries. The first notable finding of the survey is the following silver lining: 40% of executives believe that the economy will initiate recovery by the end of 2009.
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Fed balance sheet growing again; TALF to start soon
The Fed balance sheet is growing again; bank credit is up $76.9 billion for the week ending on Feb. 18 to $1.91 trillion, while reserve balances grew another $85.6 billion to $688.9 billion. The balance sheet is set to expand (much) further; the Fed is expected to announce the start date of its new Term Asset-Backed Securities Loan Facility (TALF) soon. The program is massive – up to $1 trillion – and could help consumer ABS markets, but questions still remain.
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When will the economic storm calm?
Paul Krugman writes a nice piece (hat tip, Mark Thoma) about how the U.S. economy will eventually emerge from its recessionary depths. However, it occurs to me that another question should be: when will the economy emerge from the depths? And unless one is prescient, nobody really can. But key surveys on construction, sentiment, and manufacturing indicate that it may be a while. An excerpt from Paul Krugman’s op-ed piece in the NY Times: -
Japan is taking a beating
Countries that depend on export growth to fuel overall economic growth are taking a beating, especially Japan. In the current global recession scenario, international labor markets, incomes, production, and profits are contemporaneously declining. Not good for any country that depends on foreign demand. But worse yet, the yen remains elevated, reducing foreign demand even further.
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Just what we need: rising gas prices in the middle of a deep recession
Gas prices are on the rise again; and with the unemployment rate accelerating, already-strapped consumers will pull back even more. Not good. Eventually, though, the rising unemployment rate and slackening demand for gasoline will pass through to lower gas prices.
