Thursday, July 28, 2011

Panini Press

7/28 It's becoming more and more fun to blog here than on my real blogs. I really don't want to seriously think too long on the Boner mess. I have two charts today. One shows the reality of the depression which screams for an even easier money policy. Please don't forget that the way out of the famous Great Depression was money being pumped into the economy. Even willy nilly money now termed as "helicopter money" helps get the economy churning. May I have the first chart please? Suzy, will you get the lights?

As you can see, hey, pay attention little Johnny B., stop that sniffling...Suzy stop messing with his name tag, as I was saying, as you can see by the chart, the Bank Deregulation Depression is now doing a double dip. Housing prices seem to be a fair judge of the depression originally caused by a bubble in real estate and those Mad Hatter real estate financing instruments. And look, it is double dipping and gets worse with every month. THIS is reality. The employment graph shows the same double dip pattern.

Meanwhile this next chart is the result of the "boner headed" wrangling over the debt ceiling. Remember, money pumped in is needed. And you can't just get the money needed to end the Depression from the people actually in the Depression, the ones without the jobs and money. You either have to take it from the people who have the money, let's call them "the rich," or you have to borrow the money. So the debt ceiling thing is kind of bothersome since the rich people solution is off the table. And the worst thing that could happen when you need to borrow money is a higher cost of borrowing caused by lenders having no confidence in their ultimate payback. Yesterday, the stock market finally stopped listening to the parade of analysts on CNBC (and other media sources) who claimed we would obviously meet the deadline. Why? The ratings services, who don't want to be behind the curve yet again, let it be known that a downgrade in our credit worthiness score was imminent. This has major conseqences on the debt we already owe and the world who have invested in us. Overnight foreign indices are showing trouble ahead for tomorrow's trading in the US as well. I write at 4am 7/28. (New medication is messing with my sleep pattern.) Suzy, the lights again...

This shows yesterday's loss of faith in the two year US treasury bond. It is probably going to cost us a lot more to borrow and we are borrowed to the hilt now. Is a Greece-like desertion of lenders imminent? In some way, I guess this might occur. Oddly enough, I listened to a Planet Money show (NPR?) the other day that had one of the authors of This Time is Different linkie , I'm not sure which one. They were talking about the tipping point that causes investers to flee in mass movements from a country. Our debt numbers compared to GDP were past the fleeing stage but perhaps...wait for it...this time is different.

Wouldn't it be fun if the ratings services were responsible in a major way for the first and second dip of the GREAT Bank Deregulation Depression? NO, not really.

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