1) Kind of like my thesis that the States give a better picture of the economy than the Federal Government, I agree with the idea that small banks better represent that health of the US economy. Most small an medium-sized businesses rely on small banks. Growth in employment relies on small and medium-sized businesses, because they typically have more room to expand.
2) I’ve been arguing for a weak economy before the double dip concept was derided. Not that I make the Philly Fed survey a big part of my analysis, but the weak report is consistent with my view that the US economy is weak.
3) All developed markets where there is still confidence are finding long government yields hitting new lows. No surprise, with so many investors and nations scared, that many would focus on sovereign governments for repayment.
4) So there are failures to deliver in the MBS market. Part of it is due to the Fed sucking up a large part of the market. Part due to the low cost of short term funds. My question to anyone reading, are there any significant costs?
5) A crisis like this is divisive. In the US, it separates the strong versus the weak states. In the EU, it separates the strong versus the weak countries. That is the nature of financial crises — they divide the healthy from the sick,with some slight tweaking from government action. As it is now, there is a divergence where countries with some flexibility fight to maintain their independence.
6) Jake makes the argument that one would pay a lot for certainty of return of principal in this environment. SO, don’t sniff at low short term rates.
7) Ordinarily I agree w/Jesse. For example, I agree that there could be a lot more extracted from the rich in taxes. But I don’t think it would succeed. There are too many holes in the tax code, and the wealthy would hire bright people to make the tax obligation go away. I speak as one that has seen this in action. Rich people are much smarter than poor people when it comes to money. It would take radical tax reform to change matters.
8 ) The ultimate stories on GM and AIG, as well as FNMA and FHCC, is that the government loses money on the deals, but spins them positively, in saying, “look, they are operational again.” Truth, better that they all failed, but the government aims at fixing things, even when it can’t.
9) This piece gets it right on Social Security in minor, blows it in major. Yes, the bonds built up over the last 20 years will be paid out of current tax revenues, but will the US Government be able to bear the total burden as Medicare expenses go through the roof?
11) Are we turning into Japan? I have argued yes for some time because we are following the same government actions that Japan did.
12) How bad is the economy? Bad enough that average people are liquidating 401(k)s.
13) China might finally be getting smart on population policy. But getting women to have more kids once you have convinced them of the short-term value of not doing it — you will have a better career, and the long-term benefit of not doing it — we have too many people for the planet already; it’s pretty tough. They take the easy road of not having kids, and it doesn’t matter how many economic incentives get kicked up — once women decide they don’t want to have children, there is no amount of economic policy that will change their minds.
But, there are other ways to do it: show reruns of happy families with many kids. Waltons, Brady Bunch, Eight is Enough, etc. We had eight kids, (we adopted five) and there is a lot of value in the many relationships that exist in a large family.
Okay, enough for now. Time for sleep. Just don’t go shorting bonds thinking I told you to do it.