The Crisis of Credit Visualized

Very well done animation on the credit crisis:

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

via Planet Money

Has Obama sold out to Wall Street? Matt Taibbi thinks so

Reading this article will make you furious. In a recent article for Rolling Stone , titled "Obama's Big Sellout," Matt Taibbi eviscerates the Obama White House, saying that President Obama has . . . more

Back-asswards: Biggifying Too Big to Fail

What do we do in response to a financial crisis due in no small part to the systemic risk posed by institutions that by their very size prove essential to a functioning financial system? Gorge them on taxpayer funds so they get even bigger, while smaller banks without the benefit of implicit government guarantee are allowed to fail (as all insolvent businesses should):




From TARP Oversight Report via TBP.

Gather Weekly: pot politics, social media, spending galore

This week's Gather articles (12/5-12/11):


Web

• Google launches real-time search feature (video)

Economy

• Obama on jobs creation, new stimulus: US must "spend our way out of this recession"
• Millions may lose benefits as Congress debates unemployment extension
• Obama may support using TARP funds to pay for jobs bill
• Cash for Caulkers could rebate up to $12,000 per home

Politics

• Coakley, Brown win primaries for MA Senate seat
• Senate Dems agree to drop public option from health care bill
• Senate vote on abortion amendment to health care bill expected today
• New Jersey is next gay marriage battleground
• House passes huge $447 billion omnibus spending bill

Social Media

• Hate Facebook? Sick of social media? Check out Seppukoo
• Social media wish list: 5 Twitter feature requests for 2010
• Facebook for business: 5 tips to increase fan engagement

Money

• 9 top international retirement destinations from Mint.com
• Twitter stock investing app StockTwits closes $3 million series B round of funding
• Is a falling dollar good or bad for you?

Marijuana legalization (yes this deserves its own category this week)

• Cannabis in the capital? Omnibus bill allows for medical marijuana legalization in D.C.
• Denver's Ganja Gourmet to provide culinary cannabis

Science

• Hot air in climate change debate: 2000s warmest decade ever

Gather Weekly: unemployment, piracy stocks, health care

This week's Gather articles (12/1-12/5):

Health care reform

• Senate Dems seek to limit tax deduction on compensation for health insurance executives
• Politics, Lumbergh style: Senate will vote on health care bill amendments this weekend
• Glimmer of bipartisanship: several Dems join GOP in health care bill amendment
• But what about the death panels? AARP backs Dems' health care bill

Web

• Mashable's Pete Cashmore on 10 Web trends to watch in 2010
• Explosive growth of social networks: infographic

Sports

• The Importance of the World Cup 2010 Draw: Preview and Breakdown

Economy

• Is the tide turning for unemployment? Initial jobless claims fell to one-year low last week
• The new green economy: marijuana market booming in Humboldt County, CA
• The 10.2% solution: Obama hosts jobs summit today at White House to address unemployment

Politics & legislation

• Duct tape legislation: House bill will fix deadline glitch in unemployment benefits extension bill
  
• Gay marriage bill defeated in New York state Senate
• Capitol Hill's taxing agenda: Congress ponders tax legislation to end 2009
• Democratic leaders advocate additional unemployment benefits extension
• House to extend unemployment benefits, estate tax break before Xmas; jobs bill delayed until 2010

International

• Somali pirate "stock exchange" lets investors fund, profit from piracy

Books

• Christmas gift ideas: NYT Book Review's 10 Best Books of 2009

Cash for Clunkers a clunker?

	Cool infographic over at The Detroit News about the Cash for Clunkers program by state . Michigan is a clear outlier with a high ratio of buying American instead of foreign cars. Other states are spread . . . more

President Obama to hold jobs summit in December

	This Thursday President Obama announced plans to hold a jobs summit in December , in direct response to an unemployment rate at 10.2% ( this non-government estimate puts real unemployment around 22% . . . more

Dow closes at 10,226.94, a 52-week high

	On Monday the Dow Jones Industrial Average stock index hit not only its highest number for 2009 but also over the last year, with a gain of 203.52 points (2.03%) to . . . more

Unemployment rate hits 10.2% nationwide

Today the Labor Department reported that the national unemployment rate increased to 10.2%. This marks the highest unemployment rate since 1983 - a 26-year high. This chart from chartoftheday.com . . . more

Interactive map: foreclosure, unemployment rates and median household income by county

NPR has an interactive map up detailing the foreclosure rates, unemployment rates, and median household income by county nationwide. You can zoom in by state and find your county and compare it to . . . more

Trouble in the Golden State: End of the California Dream?

A good article in The Guardian's Observer section about the possibility of California becoming America's first failed state - and reasons to hope that this won't happen.

Unemployment extension bill stalls in Senate

Despite increasing pressure from state labor groups, constituents, strong Democratic support, and signs from Republican leaders that they would not obstruct its passage, the unemployment extension bill . . . more

Unemployment Extension may stall in Senate

Earlier this week, the House passed a bill to extend unemployment benefits to 29 states in which the average unemployment rate over the last 3 months has been 8.5% or higher. Now it is time for the . . . more

Hasn't This Guy Ever Heard of the Deflationary Death Spiral?

Not sure how, but I get these occasional newsletters from CaseyResearch.com, and this recent one was rather contrarian to say the least. Casey not only says that deflation is a good thing, but he absolutely rips into my beloved Economist (not to mention all those Nobel laureates out there). That got my ire up but I wanted to see what he had to say:

Q: Doug, according to a recent article called "The Greater of Two Evils," The Economist recently stated that inflation is preferable to deflation. What is your take on that?

Doug Casey: It was certainly one of the most ridiculous articles that I have read in recent years. It is disappointing that The Economist is employing the same quality analysts that have populated magazines like Slime and Newspeak for so long -- utterly conventional, thoughtless, and statist in outlook. Everything in this article is not only wrong but the opposite, exactly the opposite of what the truth is.

You know, it is funny. It starts off with a section title saying "Inflation Is Bad, But Deflation Is Worse." No, inflation is very bad, and deflation is actually quite a good thing. I will explain that in a moment. But the first thing that drew my attention in the ridiculous article was a laudatory comment about Paul Krugman, who, they point out, is a Nobel laureate in economics.

My first comment is that the granting of a Nobel Prize in economics is as meaningless and arbitrary as the granting of the Nobel Peace Prize, which is really just a prize in political correctness and whatever appeals to the mob at the moment. These things are all very arbitrary. They have had excellent economists, and they have had anti-economists nominated for the Nobel Prize in Economics. It’s as meaningless an award as the Peace Prize -- which has been given to criminal personalities like Kissinger and Arafat, and buffoons like Al Gore.

[...]

Deflation is actually a good thing, because in a deflation prices drop and money becomes more valuable, so deflation encourages people to save money. Deflation rewards the prudent saver and punishes the profligate borrower. The way a society, like an individual, becomes wealthy is by producing more than it consumes. In other words, by saving, not borrowing. And during a deflation, when money becomes more valuable, everybody wants money. They want to save. Whereas during an inflation, you want to get rid of the money. You want to consume. You want to spend. But you don’t become wealthy by spending and consuming; you become wealthy by producing and saving.

Inflation encourages people to borrow, because they expect to pay the debt off with cheaper dollars. It encourages people to mortgage their future.

Fiery! I enjoy reading contrarian stuff, although Casey comes across as unnecessarily nasty (looks like that's his schtick, now that I check the site a bit). I don't like having to sift good ideas out of irrelevant invective. I think he does hit on a couple good points - 6-12 mos. of low deflation is probably not a bad thing with regard to increasing personal savings rates, encouraging consumer deleveraging, etc. And it certainly makes the current climate of laughable bank savings and CD interest rates more tolerable. But that's not a sustainable situation. Casey doesn't address the inherent problems of the deflationary death spiral (I love that phrase - sounds like some sort of evil econ prof's terror weapon). He also hints at being one of these guys who wants to return to the gold standard and probably has a custom-made vault in his basement to hold his hoard of bullion. The majority of stuff I've read (admittedly a tiny amount) holds that low to moderate inflation is a good thing.

Then again, I slept through Econ 1, so what do I know?

(Also, Mr Casey, the journalists at The Economist make you look like an arrogant windbag.)

Is This Rally for Reals?

Probably not. But what do I know?

For more authoritative opinions, check out this roundtable over at NYT between Simon Johnson, Nicholas Bloom, and Barry Ritholz about the market's rally since its March 9th low. Johnson's all doom and gloom; Bloom's a bit more measured in his take on the situation; Ritholz offers investment strategy more than analysis of the virtues of this recent rally.

(Although Ritholz seems to offer somewhat contradictory advice. If buy and hold is a "losing strategy" in a bear market, then why does he say "For many investors, dollar cost averaging into broad index funds works well" and then actually suggest that they increase their investments during major downturns like the present? "If you want to be a bit aggressive, you can increase your contributions once the markets fall 30 percent or (like now) 50 percent." I think the key here is the difference between active traders and passive buy-and-hold investors - active strategy will change depending on the market situation; for most average investors, passive dollar cost averaging is the way to go regardless of market conditions. And indeed in the case of the latter, increasing that investment during major downturns is a way to pick up extra shares on the cheap.)

One from "The More Things Change..." File:

A cartoon from the Chicago Tribune, 1934. The refrain sounds so familiar, doesn't it? (Click to enlarge.)



Via the increasingly indispensable Big Picture.

Snapshot of the Economy: A Thumbnail

I find it fascinating to see how the economy affects everyday things that one might not otherwise give a second thought to. I thought this was a neat snippet:

Beerzie Boy writes from Sacramento:

We have a soda machine at work that, like most soda machines, can be persnickety about taking bills when they are wrinkled. You have to smooth the bill and unfold the corners perfectly to get the bill to go into the machine. Last year about this time, I could not get the machine to take a dollar bill, no matter how flat and perfect it was, so I would always have to use change to get a soda. It was a real pain, because I often didn't have change and would have to pester my co-workers to get some. One day when I saw the vending machine guy filling the machine, I asked him why this was happening. He told me that when the machine gets full of bills, it refuses to take any more. Pretty simple.

Recently, the opposite started to happen: I would try to use change, and it would refuse to take it and dump it in the coin return. At first it only refused quarters, then it started to refuse dimes, then nickels. Now it will only take bills. When I saw the vending machine guy he said -- you have probably guessed it -- that the coin bins were filling faster than the bill bin. He also said this was becoming more common on the machines on his route. So I guess that people are digging deeper into their purses, piggy banks, and car ashtrays for the money to get their daily soda fix, and saving their bills for more important things.

Via Planet Money.

A Stupefying Amount of Cabbage

Check out this interactive chart over at CNNMoney.com. It shows the total amount of money involved in the economic rescue itemized by program:



$2.6 trillion - and that's only a quarter of the total allocated!

Can a brother hold a couple big dimes?

Via Ritholz.

A Silver Lining?

One of the possible upsides of this crisis is that we might once again have a reasonable national savings rate. As recently as three years ago we were, as a country, spending more than 100% of our income. The ensuing credit bubble, fed in no small part by ballooning home prices, was a big factor in EconoShitstorm '08. Check out the graph below for perspective on historical personal savings rates:



Sometimes an existential crisis is required for us to make fundamental changes as a society.

Via Planet Money.

What's the Deal with the Economy?

Intriguing, cool interactive graphic over at Russel.com. Definitely visit to dig down and learn about all these indicators, what they are, and what they mean. Maybe you can explain it to me, because I don't know what the hell I'm looking at here.

Leading indicators trending toward (although a ways off from) typical, at least. So we've got that going for us.

Hm, upon examining closer it looks like the data is as of 2/28...which makes sense. In a few days we should be able to get the numbers from March. You can subscribe to an email update if you follow this link.

Via Ritholz @ The Big Picture - a must-read (good mix of broad analysis of the financial crisis, interviews, guest authors, in-depth market/investing stuff, and a fair amount of humorous bits as well) during these tumultuous times.

Hat tip to RAW for turning me on to that blog. (Who still has to answer the email I sent him about...two weeks ago? WTF, man?)