November 2008

The significance of (-1.5%) deflation

Tim Iacono of "The Mess that Greenspan Made" has published the latest version of his very revealing graph series of the Case Schiller-CPI, which replaces "owners equivalent rent" with actual house prices:

I consider this graph the best proxy available for measuring the competing forces of inflation and deflation. As Tim points out, the graph is now "screaming" deflation. Tim, however, doesn't think measuring deflation is particularly productive. Here I respectfully disagree, for reasons I discuss below.

New low in Kondratieff interest rate cycle reached

Just a note for those of you who follow the 60 year long Kondratieff cycle.

Today (Nov. 20) both the 10 and 30 year bond took out their previous 2002 secular lows. The secular interest rate decline from 1981 is still intact, but at 27 years, is near to its turning point -- most likely whenever this deflationary recession ends.

From that point until ~2040 a secular rise in interest rates can be expected.

Freddie Mac, Fannie Mae to Suspend Foreclosures Until January 9th

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Merry Christmas!

This is a silver lining in a dark cloud, Freddie Mac and Fannie Mae are suspending all foreclosures until January 9th.

Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, are suspending foreclosures beginning next week through Jan. 9.

Unemployment Climbs Near 1982 Levels

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Unemployment is increasing so fast, so dramatic, well, all I can say is Merry Christmas. Even in normal times Corporations like to give pink slips as stocking stuffers, just in time for the Holidays. This year they have a jump on that fine act and being fired is now the gift that keeps on giving, way before the actual holiday pink slip season.
BLS Unemployment rate graph, updated

U.S. Economy: Jobless Claims Approach Highest Level Since 1982 :

The number of Americans filing for unemployment benefits approached a 26-year high, and a gauge of the economy's future performance dropped, sending yields on benchmark Treasuries to record lows.

UPDATE7: Auto deal dead for now, certain politicians and market not happy

CNBC is just reporting that some sort of agreement has been reached in the Senate. Announcement to be made this afternoon.

The network is reporting that the funding will come from the $25 billion that was originally allocated for retooling. Now that money, if the deal goes through, will go to allow the automakers to meet their financial obligations. As everyone knows, the automakers have been struggling, their CEOs testifying before Congress this past week, are saying the situation hasn't been this dire in decades.

Jerome York, adviser to former GM board member, Kirk Kekorian, told Bloomberg today that the company actually has weeks left, not months. This contrasts to what CEO, Rick Wagoner has said to Congress and the Press.

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