If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.
China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.
China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC's Chris Hogg.
That's a little disturbing, but there's a really funny punchline to this story.
Does everyone remember Geithner's comedy act in June? In case you don't:
Speaking at Peking University, Mr Geithner said: "Chinese assets are very safe."
Disclaimer: Not certain this is appropriate to EP. This is in the way of an introduction to some aspects of modeling and might be a bit arcane. It was inspired by a comment by RebelCapitalist and deals with econometric modeling. Enjoy.
Let's say we're interested in estimating the likelihood of some event x happening. x might be a loan default, upcoming regulations, getting hit by lightning, whatever. If we happen to know something about x, we can assign some probability P(x), play the numbers, and improve our chances of a good outcome. That's a big "if", and unless P = 1 we can still lose; still, that's the best we can do.
When Colonial Bank failed on Friday, the 77th bank to fail this year, very few people noted that it was the largest bank failure of 2009. Even fewer people noted that the cost of cleaning it up required more capital resources than the FDIC had.
The total losses of Friday's five bank failures, according to the FDIC, would be $3.67 Billion. The problem is that the FDIC had less than $650 million in its Deposit Insurance Fund at the time.
The stock market may be acting like the recovery has started, but in the world of real corporate earnings, corporate defaults are happening at a larger and faster rate.
A record total of 82 US nonfinancial companies defaulted during the second quarter, led by 16 in the media and entertainment sector, 15 in autos, and 15 in natural resources. These 82 defaults accounted for a collective $254 billion in outstanding debt, dramatically overshadowing the 30 defaults totaling $52.9 billion in debt during the first quarter. By contrast, for all of 2008, 69 issuers defaulted on about $102 billion in debt.
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China Investment Corp. (CIC) plans to invest soon in U.S. taxpayer subsidized investment funds of toxic mortgage-backed securities, which it sees as a safer bet than buying into the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF).
Single-family housing starts in July were at a rate of 490,000; this is 1.7 percent (±7.1%)* above the revised June figure of 482,000. The July rate for units in buildings with five units or more was 80,000.
Ok, firstly 1.7% isn't that much but the biggest thing here is the margin of error, 7.1%! And that asterisk?
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
"Put the jam on the bottom shelf so the little man can reach it," Sen. Ralph Yarborough used to say in the 1950s and 60s, when Texas still elected populist democrats to the Senate.
Well, it's time for Obama and the Congress to put some jam, in the form of stimulus and jobs (like a new WPA) in the reach of the little people, because if they aren't careful, the little people are about to get dragged back over the precipice into a chasm of wage deflation.
Last month's Industrial production and capacity utilization data was spun to some glorious V for victory recovery, at which point I noted a contraction is a contraction, which is what last months data was.
I've been looking over industrial production and capacity utilization for July 2009, trying to analyze a trend. July's industrial production index rose to 96.0.
Here is last months graph, not including this months number, zeroing in on this depression recession.
Think a health care public option is just some communist plot to send all old people to death camps? Well, I have a barometer for you on just how important this option is to reduce costs on health care....The Stock Market.
While the broad market was slammed, shares of large health insurers rallied as the Obama administration apparently backed off its plan to give Americans the option of signing up for a government-run health-insurance option. See full story on prospects for a public option.
"Health care can outperform in a declining stock market, but what's going on today is that investors have a growing belief that a public plan will not be part of the final solution," said John Sullivan, director of research at Leerink Swann, a health-care investment bank.
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