
Once again, it's been a while since I took the pulse of our economic Comedy of Errors. What's to blame for the long silence? Well, exhaustion maybe? Boredom? I don't think a week has gone by, in recent memory, without some End of Days lede flashing across the webs or CNN's primary-colored tickers. And, personally, I've been spending more time off the grid. Reading more, thinking more, sitting on the porch and doing less. Etc.
But, I'm making a quick return from Walden Pond to bring you a few items of interest. The Health Care Reform/Town Hall Meeting/Tea Baggers nuttery is a different post, so let's stick to market things.
1) Current unemployment rate:
9.7 % (July). Just look at that '08–'09 spike!
2) Maybe, just
maybe, the seeming Ship of Fools on the stock market (who have been reacting to "
less bad" news as if it were the second coming) are starting to realize the depth of the recession and that bright spots of alternating panic and enthusiasm are not simply going to go away as the market magically corrects itself over the course of a year or two (which is the refrain we heard so much this spring and last fall). The stock market has been a rather poor barometer of market health specifically because of this reactionary hula-hooping.
3) Bank Failures! A favorite topic in these round-ups of mine.
This time it's Colonial BancGroup, a quiet powerhouse that most of us probably haven't heard of. Their fingers (fists, really) have been in the warehouse lending market. Even though
BB&T is buying the troubled company, the collapse will create ripple effects that people will feel in the housing market, since the Colonial failure is the sixth largest in U.S. history and 100 times larger than the typical failure this year. Won't that be a shot in the arm to the "recovering" housing industry?
4)
Monetization! What a
great idea. See, when a government can't get the public to buy its bonds (thereby re-directing some of a nation's intentionally limited cash to public debt), the Central Bank has no choice but to buy the debt back itself, which means that said government is buying its own debt with the money it doesn't have. Neat, huh? Over the course of a sustained recession, this practice usually leads to inflation, and if bond auctions fail severely enough, often enough, well, them's the End of Days. Luckily, the Fed has realized it might need to be
more sneaky about this.
5)
We're running out of sugar? So, it's going to be a salty apocalypse?
6) And finally,
"Goldman: Get Ready For Oil Prices To Go Back To $147 [per barrel]". So, if things
do stabilize, we'll be immediately slammed by fuel prices. Won't
that be a laugh?
So, there you have it—a whirlwind overview of the last week's (or so) economic hay ride. Myself, I don't buy that things are stabilizing or recovering (the 500k+ new applicants for unemployment last week might agree with me), but I understand that it's pretty to think so.