Why, it’s positively an old geezer’s version of a pop music festival from long ago today. Labeling aside, there are some dandy stories making the rounds and we’ll start with Alan Caruba’s “The National Anxiety Center Lists Top Ten Fears” going into 2010. Most of the fears are ones you have picked up around here already, nevertheless a good list to use if you’re new at the fine art of meta-grouping data into edible lumps of…well…stuff!
Since we’re talking about depressing subjects right off the bat, we might as well call this “Double Meds Thursday” since so many people will have the “Moody’s blues” (or soon will have) when they do a search on what the premier rating group has been up to lately:
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“A new report from Moody’s Investors Service, which gave a negative outlook for Japanese banks, also dampened sentiment.” Underlying story: Japan stock fall.
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“”We’ve really been producing more than we’ve been consuming for quite a while now,” said Chris Lafakis, an economist specializing in energy issues at Moody’s Economy.com.“ Underlying story: Natural gas price drop will cut heating bills.
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“Recent auto supplier ratings upgrades by the likes of Moody’s, S&P and Fitch are noticeably short on firm 2010 predictions. In a (fairly positive) review of US auto supplier prospects published in late November...” Underlying story: Supplier finance: the big freeze thaws.
All of which seems a pretty balanced view until the 900-pound gorillas walk in:
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“Ireland’s banking system faces a “very challenging” environment in 2010 as the economy contracts and a housing slump extends, Moody’s Investors Service said Dec. 15. Underlying story: European, Asian shares decline; US stock-index futures fall.
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“Earlier this month Moody’s said the UK’s prime triple-A credit rating is under threat.” Underlying story: UK debt in spotlight as Greece downgraded. And last but not is th gem…
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“Given this new balancing act, and the fact that both unemployment and unmanageable debt arguably lead to economic misery, analysts at Moody’s have proposed a new misery index. This one instead uses the unemployment rate and the fiscal deficit as a percent of gross domestic product.” Underlying story: Spain tops misery index – the US came in 8th place.
By the way, it’s not like this is a new concept, that is grouping countries by something other than GDP. In fact I was reading the new Global Europe Anticipation Bulletin earlier this week and it sports a nice list of countries and risks associated with the ratio of private to public debt. The US fared better but not my much -10th place if I recall. In fact their web site offers this grim assessment:
“LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009 (1), and that the size of budget deficits preclude any significant new expenditures. “
All of which would fit in nicely (OK, not comfortably though) with one of the two scenarios that Robin Landry has been talking about; namely that we could muddle through till March and then things turn ugly, or we could have an early in the new year decline and one more run through August/September of 2010. With Arch Crawford’s outlook on an astro-econ basis pointing to rough spots in Aug/Sept. 2010 and the (still slim) possibility that the ‘summer of hell” linguistics were a year early, by late summer 2010 we may be all glued to our teevee sets, mouth agape, wondering what the hell the world is coming to. Odds are rising it will be just that.
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Against this background, a number of readers have written in complaining about the Consumer Price Index numbers. Not only are prices continuing to go up for necessities like utilities and food, but now thanks to a higher deduction for medical, most folks I know will actual see their disposable retirement going down while their costs continue to go up. Why as I not surprised?
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When leading economic indicators come out this morning (10 AM) don’t be surprised if they show a little optimism. Reason being that people are still in the “…think we muddle through this…” mode. Well, rotsa ruck. I’m skeptical.
One reason? I mean besides being able to lump meta-data into different piles like we just went through in the search for Moody’s data? We’re only a week or so from the next Case-Schiller/S&P housing report. Seems odd that no one made a big deal about last month’s report. In case you missed it (to me it was like a missing version in the techno-trance dance tune of modern economics) it showed that nationally their 20-market average home was down more than 23.4% to a new post October ’07 low and that worse, in Phoenix and Las Vegas, home prices have dropped on average about 40% – worse even than Detroit where homes are ‘only’ down a shade more than 32% from their peak.
When you tear into the data you notice that Detroit peaked a bit before the rest of the country and places like Charlotte, which peaked much later (in August of 2007 compared with Detroit’s December 2005 peak). Using the same data series, Dallas has only dropped 3.8% from the national peak date but if you calculate from the local peak (July ’07 versus the national peak in July ’06), prices are down about 4.6% from their crest.
I guess that’s the point – or near enough to it: One has to look at the spread of the data over time to get a real picture. While sure, lots of folks in the Dallas area are doing better than say Phoenix – you’d take a 4.6% loss over a 40.6% loss any day, right? – there’s not a single market in the S&P/Case-Schiller 20-market data that looks healthy in terms of holding value. More in their next report, but it’s a good touchstone/reality-check when the happy talk makes the rounds.
The public moody is being deliberately spun away from realities like looming foreclosures which will skyrocket in the new year. Right now there’s a kind of wink-wink, non-nod thing going on where banks (I hear rumbles) are trading loser properties back and forth so they can book accounting losses which will turn into tax-loss carry-forwards. And then we see headlines like “Citigroup to suspend foreclosures for 30-days” which will get us into at least mid-January before they really get rolling again.
Throw in 30-90 days for the data to catch up and we’re where? Back into the March-ish kind of window.
What’s worse – and should become visible by February to the general public – is the story in the Chicago Sun-Times (“Foreclosure interest waning“) that goes to the idea that people are losing their interest (a poor pun, sorry) in acquiring the foreclosed homes. Which means what? Anyone want to take a stab at this?
OK (I have to do all the work around here, don’t I?) : Home prices will have further to fall in 2010.
I have no idea how many ‘home sales’ have arisen then disappeared using this method, but here it goes: Suppose my brother in law is a banker and I want to help him out. Elaine & I would go out and buy a home from him and he would book a ‘pending sale’ at his bank. Then we drag our feet and the loan sits unprocessed for a couple of months – maybe three or even 5 months. Then we just drop the application to sell. The loan never impacts the real economy, but it looks like a pending home sale for months on end. Slick, huh?
The idea being that if enough people saw enough headlines to convince them that the bottom really was in, they’d step up and buy. Turned out that varies by market. While people in Boston seem a little skeptical – “Foreclosures lose luster among average buyers” – and they may have kin in suburban Chicagoland where “Local foreclosure activity spikes in November“, the Frederick (Maryland) NewsPost headlines that a “Survey shows buyers of foreclosed houses are looking to ‘trade up’. Not that Frederick’s results should be surprising because that’s only…lemme see here….
42 miles outside of Washington. Of course people there would be thinking about trading up while the rest of the country craters, know what I mean?
So pardon me if I sit here humming a few bars of Tears for Fear or Moody’s Blues into the coffee cup this morning, but frankly the green shoots/bullish consensus sounds a little suspect. But then so did the swine flu vaccine, the reasons why WTC-7 fell over, and the reasons to go into Afghanistan, and the promise of “change”. I’m a ‘nat-chull- born’ skeptic who is very much afraid of the herd. Should come into focus over the next 90 days whether it’s a herd of bulls – or sheep.
Meantime, a pullback of gold to the $900-$950 area by mid 2010 would be no surprise at all as government tries to delicately keep printing our way through this very delicate mess.
Santa Rally Dead
At least that’s what the futures indicate, early in today’s session. See here? Dollar up, gold down $22 takes the averages with it. Can’t win for losing. The Grinch did it, I’m sure.
Lawless Country
OK, think about this: who’s going to arrest the whole country now that the “U.S. national Debt Tops Debt Limit“? Toss me that ink bottle, and help me load some more paper, congress is sure to come through.
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Speaking of ink, president O has signed the $1.1 trillion spending bill into law.
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And those little darlings in congress have approved a $155 billion spending bill that seems to me may save more public jobs than private….but don’t mind me – I just mailed IRS my Q4 payment this week. Ouch.
Speaking of Lawless…
Something that’s starting to get traction around the ‘net is that in his West Point speech a while back, president O may have effectively declared war on Pakistan without going to congress first. Example: “Did Obama Declare War on Pakistan?“
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Someone (still munching the hook, line, and sinker) might say it’s only drones, but last time I checked when a military begins attacking sovereign soil that’s a ‘war’ don’tcha think?
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“No, but it’s the right thing since we are supporting the government…” would be the next rejoinder. Well, yes, that’s because they seem to have control of their nukes and the next government might not be so cooperative…which leads to a three six-pack discussion best held for the weekend when there’s no garden or field work to be done. Like that’ll ever happen.
End of an Era
“White Americans’ majority to end by mid-century.” I think this means we’ve been out-screwed although the polite press would never put it so directly. The harsh reality is that it’s likely the payoff for the Johnson-era Great Society that made staying home and ‘babying’ a workable option compared to working. Which is not to throw rocks at the Great Society and entitlements – they are not inherently bad and become more desirable the poorer you get - but when are those on welfare going to have to take drug tests like those of us who work for a living? What’s good for the tax goose that’s laying the eggs ought to be more evenly applied. Better: Get rid of drug testing for everyone except that it has now become an industry unto itself with not only testing and so forth but counseling, remediation, detox…oh what a complex stew, huh? I know, “Stop whining Ure…” OK – hand me that clip, would’ja?
Everyone’s a Critic
“Copenhagen summit veering toward farce, wands Ed Miliband“. Gotta hand it to Mr. Ed for his ability to state the obvious.
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Big headlines like “Hillary Clinton tries to save Copenhagen” seem to upstage her boss’s effort, but that’s what being a media darling is about, I suppose.
More scary – although it’s not her first attempt to hijack taxpayer money – is talk of the “US ready to join $100B climate fund.“ Like EPA declaring CO-2 a dangerous chemical isn’t enough of a problem for our flailing economy? Why can’t a shade-tree mechanic build a 75 MPG car and get it licensed for us on public roads? We all know that one - power & control by central government which has seized those powers not otherwise delegated from the States of course! You go Clinton…and keep going….going…..
Healthcare DOA?
Nancy Pelosi is giving off hints like no healthcare bill this year. Which will give members of congress time to strong-arm more dough out of the corpgov-pharma crowd to fatten up their campaign treasuries to keep real change from being elected.
“George you don’t really think members of Congress would do that do you?”
Are you so dumb that hints like “Zebras and their stripes” and “Do bears – you know what - in the woods” needs further clarification? How much Prozac you on, again?
Something Up NK’s Sleeve?
Ask yourself this, if you’re a good teevee detective solver: “Why would “N.Korea to temporarily ban foreigners: reports“? Remember a long-ago predictive linguistics report about NK doing something (possibly nuclear) in mid December? Hmmm…ponder that one while you change out the batteries in your field survey meter…
Skeptical of predictive linguistics? Sure, me too. Except once again go back to my May 27th report from this year where I said…
Korea’s December Nukes
As long as we’re sitting here waiting for a possible attack by North Korea on the South in December… (link to the week ending May 30th report, scroll down)
OK, sure, they haven’t attacked, but the point is that predictive linguistics to get some flavor of events right and we’ll be sitting back watching what they do next. It bodes Il.