Tuesday, April 7, 2009

Looking for Good News in All the Wrong Places

Here are some news flashes from today.  On the inflation/deflation front comes:

Quarter of companies globally set to freeze pay: survey

  • Monday April 6, 2009, 11:41 pm EDT

  • HONG KONG (Reuters) - A quarter of the world's companies, and 40 percent in the United States, plan to freeze salaries this year, but employees in South America and India can look forward to robust rises, a global survey shows on Tuesday

Next.  Great Banana II-type news, listing some communities that are printing scrip as in the 1930s that is a form of local currency to encourage shopping locally:

Communities print their own currency to keep cash flowing . . .

By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.

"We print the real thing," she says.

Next.  As previously discussed briefly at EBR, the appropriateness and legality of the FDIC's role in the PPIP plan has now made the New York Times in 'No-Risk' Insurance at FDIC:

So how much does the F.D.I.C. think it might lose?

“We project no losses,” Sheila Bair, the chairwoman, told me in an interview. Zero? Really? “Our accountants have signed off on no net losses,” she said. (Well, that’s one way to stay under the borrowing cap.)

By this logic, though, the F.D.I.C. appears to have determined it can lend an unlimited amount of money to anyone so long as it believes, at least at the moment, that it won’t lose any money.

Finally (courtesy of RGE Monitor, subscription only):  

Business CEOs (Business Roundtable) released today horrible findings, with 2/3 of respondents of the country's biggest companies expecting decreased sales, capital spending and employment for Q2 and Q3 2009.  With 50 being neutral and the range of the scale being -50 to +150, the CEO Economic Outlook Index fell in Q3 2008 from 79 (expanding!) to -5 in the just-reported Q1 2009.  Out of a maximum drop of 129 units, the fall in just six months was 84 units.

This is ugly.  The MSM is also reporting on such facts as a record number of corporate defaults, record projected corporate defaults, etc., etc.

The current economic banana is the longest since the Great D.  The Establishment keeps ignoring possibly the law or at least ethics in its frenzy to bail out Big Finance.  There is no a priori reason why the stock market and business cycle will not follow the courses of the 1929-33 and 1973-4 bear markets, which were that until the corruption is disclosed, such as with the Pecora Commission in 1933 and the resignation of Nixon in summer 1974, things will not just continue to get worse.

If Barack Obama needs Sheila Bair at the FDIC to help him do an end run around Congress in order to bail out banks that she is certifying are well capitalized, and his party completely controls Congress, what is going on here?

Copyright (C) Long Lake LLC 2009 

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