Wednesday roundup (08-31-11)

Downturn in global trade adds to gloom: Global trade buckled suddenly in the second quarter as Europe flirted with recession and Asia came off the boil, while Canada's bellwether economy contracted outright, adding to the darkening picture across the world. (The Telegraph)

When debt levels turn cancerous (The Telegraph blogs) The real effects of debt by Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli (The Bank for International Settlements)

IMF Estimates Show Serious Damage To European Banks - FT (The Wall Street Journal)

Greek debt out of control: watchdog (Agence France-Presse)

UK debt levels damaging growth, warns BIS: Britain's debt burden has surged past the point at which it harms growth in every area of the nation's borrowing, the Bank for International Settlements (BIS) warned. (The Telegraph) UK debt levels rise fastest of all G7 nations (My Finances.co.uk)

[Bank of England's] Posen urges bankers to prevent second recession (The Independent) The Fed must print money to head off a global crash by Adam Posen (Reuters blogs)

Italian 'chaos' casts doubt on austerity measures: Concern is growing in Italy that government flip-flopping over a new package of tough austerity measures promised earlier this month to stave off a debt crisis is undermining Italy's credibility and could make it an easy target for speculators. (Agence France-Presse) 'Italy Is Burning and No One Is Putting It Out': Italian Prime Minister Silvio Berlusconi and his ruling coalition have made a raft of changes to their proposed austerity package, causing many to doubt Rome's intentions. German commentators say that the country's future looks bleak. (Der Spiegel)

Prospects darken for Irish economy (Reuters)

Could the US economy go the way of Japan? (The BBC)

U.S. Private-Sector Job Growth Slows In August, 91,000 Positions Added: ADP (Reuters)

MBA: Mortgage Purchase Activity "near 15-year lows" (Calculated Risk blog)

Debt ceiling debate legacy: 'Scary erosion in confidence' (Politico)

Is Another Bank Bailout Brewing? (Marketwatch blogs) Obama Goes All Out For Dirty Banker Deal (Rolling Stone blogs)

Irene could be among 10 costliest U.S. disasters (CBSNews) (The New York Times)

Hurricane Irene is the 10th billion-dollar disaster this year -- "This 10th U.S. billion-dollar disaster officially breaks the annual record dating back to 1980" (The Los Angeles Times blogs)

Finnish papermaker UPM to cut 1,200 jobs (Reuters)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Tuesday roundup (08-30-11)

Quote of the Day:

"I think it's going to stay very disappointing for a long period of time and I mean at least through 2012." -- Ward McCarthy, chief financial economist at Jeffries, speaking about the economy, on which he is described as being a cautious optimist. (Yahoo!'s The Daily Ticker)

Double-dip fears across the West as confidence crumbles: The Western world is at mounting risk of a double-dip recession after key measures of confidence collapsed in both the United States and Europe, with Germany suffering the steepest one-month fall since records began in the 1970s. (The Telegraph)

Gross Says U.S., Europe Face Recession (Bloomberg)

Global Recession Likely, Depression Possible: Economist (CNBC)

Consumer confidence plunges to lowest level since Great Recession (CNNMoney) U.S. Consumer Confidence Falls to Two-Year Low (Bloomberg) Consumers gloomy but their spending says otherwise -- "'They tend to register their anxiety about the future in these surveys ... without actually curtailing their spending,' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ." (The Associated Press)

Pockets of Debt Illiquidity Show Rising Bank Fears (Reuters)

The tragedy of the too big to fail banking sector – over $1 trillion in deposits are over the $250,000 FDIC limit. $6.5 trillion in insured deposits backed by $3.9 billion. (My Budget 360) Gerald Celente - I’m Now 100% In Gold, Roubini is Wrong (King World News)

Worst Crop Conditions Since Great Depression Bankrupting American Businesses (The Business Insider) Cotton prices may spike as drought worsens (Bloomberg) Hedge Funds Boost Bullish Agriculture Bets as Corn, Soy Yields May Slump (Bloomberg)

European Economic Confidence Falls Most Since December 2008 on Debt Crisis (Bloomberg) A fall in confidence that could end in double dip by Prof. David Blanchflower, a former member of the Bank of England's Monetary Policy Committee (The New Statesman)

Choice for EU: Bail Out Greece or Bail Your Banks -- "default is now all but certain and will come soon" (The Wall Street Journal) Get Them to the Greek (Writedowns) – IASB (Global Macro Monitor blog)

Britain In Debt 'Danger Zone', Experts Warn (Sky News)

Bank of Italy warns on growth as bond sale falters (Reuters) Berlusconi Accepts Allies’ Demands to Overhaul $66 Billion Austerity Plan (Bloomberg) Italy revamps austerity plan (The Associated Press) Italian Town Mints Own Money to Fight Austerity (Reuters)

Fitch delivers fresh alert to Ireland on credit rating (The Irish Independent)

10 Lessons From People Who Lived Through The Depression (The Business Insider)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Monday roundup (08-29-11)

On account of a power failure brought on by Irene, complicating existing computer problems, the Sunday 08-28-11 roundup had to be omitted.

Quote of the Day:

"Texas factory activity was largely unchanged in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained positive but fell from 10.8 to 1.1, suggesting growth stalled this month." -- The Federal Reserve Bank of Dallas (The Federal Reserve Bank of Dallas)

US In Recession Right Here, Right Now (Mish's Global Economic Trend Analysis blog)

FEMA almost out of disaster funds (CNNMoney) How will FEMA pay for Hurricane Irene? (The Washington Post blogs)

Crews rush to restore power to millions, but some people could be without power for a weeks (The Associated Press)

In Vermont, worst deluge since 1927: The Weather Channel's Jim Cantore and NBC's Ron Allen have the latest from Vermont, where residents battled epic flooding Monday after the remnants of Hurricane Irene set off the state's worst flooding in more than 80 years. (NBC Nightly News)

Visit msnbc.com for breaking news, world news, and news about the economy

Irene Adds to a Bad Year for Insurance Industry -- "may reach $7 billion by the time the storm dissipates" (The New York Times) Why insurance might not cover billions in hurricane Irene damage: Damage estimates run in the billions for hurricane Irene, but with flooding the main culprit, a majority of damage will be items not covered by insurance claims, experts say. (The Christian Science Monitor)

Small business hiring slows in August, wages dip (Reuters)

Vital Signs: Disposable Income Dips (The Wall Street Journal blogs)

Contracts to buy homes fell 1.3 percent in July -- "further evidence that the depressed housing market remains a drag on the economy" (The Associated Press)

U.S. Postal Service woes put worker injury fund at risk (Reuters)

[Republican Presidential candidate] Rick Perry says Social Security is a "Ponzi scheme" and a "monstrous lie" (CBSNews) Rick Perry sticks to claim that Social Security is a scam (The Los Angeles Times) Cartoon of the Day [Dec. 28, 2008] (Carpe Diem blog)

A Do-Nothing Congress Would Balance the Budget (Almost): Only Congressional Action Can Avert Massive Amounts of Automatic Deficit Reduction (Center for American Progress)

Profits Falling, Banks Confront a Leaner Future (The New York Times)

Central Bankers Worry Economy Still in Peril (The Wall Street Journal)

John Mauldin: The End of the World Part 1 (Cliff Küle's Notes blog)

ECB chief urges eurozone to quickly ratify debt crisis plan: Amid economic uncertainty in the eurozone, European Central Bank President Jean-Claude Trichet has urged governments to quickly implement a debt crisis plan worked out by European leaders in July. (Deutsche Welle) Euro chiefs call for quick debt crisis plan implementation (Agence France-Presse)

European Central Bank spends €6.65 billion ($9.6B) on bond purchases to halt debt crisis (The Associated Press)

Capital Flight Proves Confidence in European Interbank System has Collapsed (Mish's Global Economic Trend Analysis blog)

Lagarde Snubbed in Push to Raise Bank Capital (Bloomberg) Lagarde leads from the front on Europe (Reuters blogs) EU rules out fresh capitalisation for Europe's banks: A fresh round of capitalisation for European banks was firmly ruled out by EU officials and bankers when they appeared before an emergency meeting of the European Parliament's economic committee. (The Telegraph) No, Mme Lagarde – forced recapitalisation would be exactly the wrong policy -- "Banks do not need increased capital requirements. Instead, they need proper resolution mechanisms, whereby they can be allowed to go bust, safely, with losses for lenders instead of taxpayers and the wider macroeconomy." (The Telegraph blogs) A TARP for Europe?: Lagarde points at the naked banks no one wants to see. (The Wall Street Journal)

New Worries in Europe Over Pace of Growth (The New York Times) EU Rehn:Indicators Point To Further Slowing Of Euro-Zone Growth (The Wall Street Journal)

Finland's demands for collateral could leave Greek bailout in ruins: Row over collateral for emergency loans to Athens reveals cracks in the eurozone (The Guardian) Finland Could Upend Fragile Consensus on Greece (The New York Times)

Euro bail-out in doubt as 'hysteria' sweeps Germany: German Chancellor Angela Merkel no longer has enough coalition votes in the Bundestag to secure backing for Europe's revamped rescue machinery, threatening a consitutional crisis in Germany and a fresh eruption of the euro debt saga. (The Telegraph) German Debate on Bailout Fund Is Test for Merkel (The Wall Street Journal)

Saab Auto could be forced into bankruptcy: union (Marketwatch)

Plunge in vital services sector adds to fears of UK double dip (The Independent)

Nordea Bank to cut 2,000 jobs (Agence France-Presse)

Market Chaos 'Potentially Dangerous for Humanity': Financial markets are inefficient and growing to the point of overwhelming the economy, according to Paul Woolley, an expert on market dysfunctionality. In an interview with SPIEGEL he explains why it's up to investors to stop dangerous trends and hold financial institutions accountable. (Der Spiegel)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Saturday roundup (08-27-11)

Quote of the Day:

[In the opinion of Nobel laureate in economy Joseph Stiglitz:] "... the austerity measure that the republicans have been advocating would only [serve] to 'turn the economic downturn to the great depression' and to replay what happened in 1930s, which witnessed a Wall Street crash and deep recession. ... 'We are now in the beginning of that recession, worse than even I had anticipated because of the pressure for austerity, which was far worse that I had expected,' he said. 'Why the American would go down to this road is a total mystery to me.'" -- Xinhua (Xinhua)

IMF's Lagarde Says Global Economy in 'Dangerous New Phase' (The Wall Street Journal)

'Act now' to save global recovery, IMF chief urges (Reuters)

High Debt Levels Poised to Stunt Growth (The Wall Street Journal blogs)

Lagarde Urges Recapitalization of Europe’s Banks (Bloomberg) Christine Lagarde: EU banks must raise more cash: Christine Lagarde, the head of the International Monetary Fund (IMF), has called for European banks to be forced to raise more cash as the world economy enters a "dangerous new phase" which could end in recession. (The Telegraph)

Schaeuble says world economy may see 7 lean years (Reuters)

Greece Matters Again and It Could Be In Trouble (CNBC) Finland's demands for collateral could leave Greek bailout in ruins: Row over collateral for emergency loans to Athens reveals cracks in the eurozone (The Observer) Situation in Greece ‘Remains Serious,’ Germany’s Schaeuble Says (Bloomberg)

Cyprus parliament approves austerity package (Reuters)

Cost of Hurricane Irene Seen Running Into Billions (The Associated Press)

Hurricane Irene And Municipal Bankruptcy (The Business Insider)

Are food prices approaching a violent tipping point?: A provocative new study suggests the timing of the Arab uprisings is linked to global food price spikes, and that prices will soon permanently be above the level which sparks conflicts (The Guardian blogs) The Food Crises and Political Instability in North Africa and the Middle East (Cornell University Library)

Unofficial Problem Bank list increases to 988 Institutions (Calculated Risk blog)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Friday roundup (08-26-11)

[US] Economy grew 1 pct. this spring, slower than first estimated; likely to fuel recession fears (The Associated Press) Economy: 'Slowdown is here to stay' (CNNMoney)

Final August Consumer Sentiment at 55.7, Down Sharply from July (Calculated Risk blog) "... consumers lost confidence in lawmakers' ability to stave off the threat of another recession, a survey released on Friday showed." (Reuters)

Foreclosures make up 31% of home sales (Marketwatch)

The Slow Disappearance of the American Working Man: A smaller share of men have jobs today than at any time since World War II (Bloomberg Businessweek)

"The First Recorded Word For ‘Freedom’ In Any Human Language Is The Sumerian Amargi, A Word For Debt-Freedom ... If Aristotle Were Around Today, He’d Probably Conclude That Most Americans Were, For All Intents And Purposes, Slaves" (Washington's Blog)

Big Asset Sale Near at Bank of America ["in a deal that could raise nearly $10 billion"] (The New York Times)

Bank of America: some comment on the Buffett deal (Bronte Capital blog) Buffett and Bank of America: Playing Poker with Patsies... (Musing on Markets blog) What Buffett Is Getting From His Bank of America Deal (The New York Times blogs) BofA's Costly Buffett Buffer (The Wall Street Journal) Warren Buffett's Bank Of America Investment Shows Faith In Government Support, Experts Say (The Huffington Post blog)

ABN Amro to Cut 2,350 Jobs Ahead of Privatization (The Wall Street Journal) Bank job cuts top 60,000 after ABN Amro axes thousands: ABN Amro has become the latest bank to announce thousands of staff cuts as the total number of jobs lost in the banking sector in recent months rose above 60,000. (The Telegraph)

High Debt Seen Hurting US, Japan, Europe - Paper (The Dow Jones Newswires) Public Debt of 80%-100% of GDP Hurts Growth, BIS Economists Say (Bloomberg)

Greek bailout in doubt because of European countries’ demands for collateral (The Washington Post)

Spain changes constitution to cap budget deficit (The Guardian)

Roubini's Call on the Economy [Thursday afternoon, before Bernanke's Friday speech]: Nouriel Roubini, Roubini Global Economics, explains why Fed chief Ben Bernanke will announce QE3 tomorrow [= Friday]. He also says it doesn't matter what Obama proposes, because it will never get through the Republican Congress (CNBC)



Bernanke: The Debt Ceiling Debate Nearly Broke the Recovery (The Atlantic) Bernanke to Congress: Don’t replay the debt-ceiling debacle (The Washington Post blogs)

Key Passages From Bernanke’s Jackson Hole Remarks (The Wall Street Journal blogs)

Hurricane Irene to deliver blow to economy: Experts expect Irene to be a multibillion-dollar disaster (The Associated Press) US on High Alert as Irene Closes In; NY Airports to Shut (CNBC) Hurricane Irene risk forces first-ever NYC shutdown (USAToday) Airlines cancel nearly 5,000 flights because of Hurricane Irene: The carriers warn that several major airports in New York and Washington, D.C., could shut down entirely to guard against the storm. (The Los Angeles Times) New York Faces Evacuation Orders as Transit Shutdown Looms (Bloomberg) Hurricane Irene: All Broadway shows cancel weekend performances (The Los Angeles Times blogs)

Utilities bracing for widespread power outages: Response teams assemble early as Irene threatens unusually large number of customers (The Associated Press) Irene May Cut Electricity for Days, U.S. Says (Bloomberg) Cash could be king if Irene's a disaster (The Connecticut Post)

Hot Summer Erodes Corn, Soy Harvest (Bloomberg)

Are food prices approaching a violent tipping point? (Cliff Küle's Notes blog)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Thursday roundup 08-25-11

Quote of the Day:

"We’re in very serious danger. The world is in a depression in the Big Three of America, Europe and Japan, a mini-depression that we have not seen since the 1930s." -- Nobel Prize-winning economist Robert Mundell, at the Lindau conference. (The Telegraph blogs)

Bailout for Greece Falters Over Demand for Collateral: Finland's Request for Collateral Is Still a Sticking Point; Merkel Cancels Trip to Focus on New Treaty Plan (The Wall Street Journal)

Greek Banks' Liquidity Is Suffering As Nervous Clients Withdraw Savings (The Wall Street Journal)

Greece forced to tap emergency fund: Greece has been forced to activate an obscure emergency fund for its banks because they are running short of collateral that is acceptable to the European Central Bank (ECB). (The Telegraph)

Greek cbank activates funding scheme [offering emergency liquidity assistance] for banks - paper (Reuters)

Greece yet to outline debt swap plan (The Irish Times)

Merkel attacked over eurozone crisis stance by ex-mentor Kohl -- "The enormous changes in the world can be no excuse for having no view or idea where you belong and where you are going," he said. (The Irish Independent)

Is a downgrade of Germany’s credit rating next? (Bloomberg)

Chance of Recession [in the US] Is as High as 80%: Study (CNBC)

Let’s Be Honest: We’re in a Depression, Not a Recession, And There’s No End In Sight (The New Republic)

Hoenig Says U.S. Should Focus on Fixing Finances, Fed Has Done All It Can (Bloomberg)

Home Prices in U.S. Decline 5.9% in Second Quarter, FHFA Says (Bloomberg)

Commercial real estate outlook turns grim (Housing Wire)

Warren Buffett to invest $5 billion in Bank of America (Reuters) Buffett Bails Out Bank of America by Barry Ritholtz (The Big Picture blog) "At least we can put aside all the lies that Bank of America did not need capital. It needed capital: $5 billion of it." (ZeroHedge blog) Think The Buffet Investment In BAC Is Investing Savvy? (The Golden Truth blog)

Philippine Airlines to cut 2,600 jobs amid losses (The Associated Press)

Northrop Grumman to cut 500 aerospace jobs: Northrop is offering buyouts but plans layoffs if fewer than 500 people volunteer to leave before Oct. 28. The aerospace industry has been downsizing in anticipation of a smaller Pentagon budget. (The Los Angeles Times)

Deepwater trouble on the horizon: oil discovered floating near source of Gulf of Mexico spill (The Press-Register of Mobile AL) Coast Guard, BP return to scene of Gulf of Mexico spill after reports of oil blobs (The Washington Post)

Irene Threatens East Coast With $13.9B in Damage (Bloomberg)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Is it a recovery yet? (Weekly report, 08-25-11)

A recovery would be indicated by weekly initial jobless claims holding below 500,000. (See this post.)

IT'S A RECOVERY! (And it has been a recovery for every week since the Nov. 25, 2009 report, with the exception of the Aug. 19, 2010 report.)

"Jobless claims climbed by 5,000 to 417,000 in the week ended Aug. 20, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 405,000, according to the median forecast." (Bloomberg)

"Weekly claims have increased for two consecutive weeks and the 4-week average is still elevated." (Calculated Risk blog)

"'The lack of willingness of [initial jobless claims] to break below 400,000 remains a real concern for those looking for a labour market recovery,' writes David Semmens, economist at Standard Chartered Bank, in a note. 'It is important to remember demand drives hiring, not the other way around; and while demand remains weak, employers will hold off from making those all important hires.'" (The Street)

SEE LAST WEEK'S POST HERE.

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Wednesday roundup (08-24-11)

Europe Banks Lean More on Emergency Funding (The Wall Street Journal)

‘The euro is breaking down:’ Greenspan (The Financial Post)

Market crash 'could hit within weeks', warn bankers: A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets. (The Telegraph)

The Destructive Power of the Financial Markets: Speculators are betting against the euro, banks are taking incalculable risks and the markets are in turmoil. Three years after the Lehman Brothers bankruptcy, the financial industry has become a threat to the global economy again. Governments missed the chance to regulate the industry, and another crash is just a matter of time. (Der Spiegel)

German president says ECB bond buying illegal (The Financial Times) Germany fires cannon shot across Europe's bows: German President Christian Wulff has accused the European Central Bank of violating its treaty mandate with the mass purchase of southern European bonds. (The Telegraph) German Adviser: We Must Help Greece [adding that he wants the ECB to stop buying Spain's and Italy's bonds] (The Wall Street Journal)

Merkel Rejects Euro Region Breakup, Presses Allies to Cut Sovereign Debt (Bloomberg)

France announces austerity plan as growth slows (Agence France-Presse)

What Italy tells us about Europe's debt crisis (Time blogs)

[US] Budget deficit to hit $1.3 trillion this year, congressional analysts report (The Washington Post)

Budget agency projects slow growth, high joblessness (USAToday)

Nomura: U.S. Economy Lost Jobs in August (The Wall Street Journal blogs)

With Jobs Elusive, Young Workers Quit Looking (The Wall Street Journal blogs)

MBA: Mortgage Purchase Activity at Lowest Level Since 1996 (Calculated Risk blog)

Higher-End Housing Hits a Wall (CNBC)

Big Banks: Under-Capitalized, Overexposed, Opaque (The Big Picture blog)

Savings (not the war) caused recovery after the war (Cliff Küle's Notes blog)

Officials Warn of Threat From Hurricane Irene (The New York Times blogs) "1821, 1938 storms show potential for severe loss" (Reuters)

The Greatest Trade of All Time (Sprott Asset Management)

It Should Be Obvious To Everyone By Now: ["BAC is technically insolvent. ... BAC is the poster-child for what is going on beneath surface in our system right now. The system is even more embedded with fraud, corruption and grand-scale taxpayer theft right now than it was in 2008."] (The Golden Truth blog)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Tuesday roundup (08-23-11)

National debt has increased $4 trillion under Obama -- "It's the most rapid increase in the debt under any U.S. president." (CBSNews)

New-Home Sales in U.S. Declined in July to the Lowest Level in Five Months (Bloomberg) New-home sales fall, 2011 could be worst year yet: Sales fell 0.7 pct. in July; 2011 shaping up to be worst on records dating back 50 years (The Associated Press)

Hurricane Irene could hit U.S. as a monster (CBSNews)

Could Blankfein Face Prison?: The Goldman Sachs CEO didn’t get a big-time criminal-defense lawyer because he’s worried about an SEC wrist slap — there’s a real possibility of doing time, says former Goldman managing director Nomi Prins. (The Daily Beast)

Deutsche Bank knew mortgage co it bought lied [and should be held financially responsible]: Justice Dept (Reuters)

UBS to Cut 3,500 Jobs, Half in Investment Banking (The New York Times blogs) European Bank Job ‘Bloodbath’ Surpasses 40,000 [in past month alone] (Bloomberg)

777 New York City Schools Workers Will Lose Jobs (The New York Times)

Jeremy Grantham Is Worried About The Massive Rise In American Inequality (The Business Insider) "So worried is Grantham that he thinks debt forgiveness and changes to the tax system may be needed if America is ever to prosper again." (FT Alphaville blog) Danger: Children at Play: Stop Press Addendum (GMO) Consumers Need A Debt Jubilee? [Stephen Roach also calls for debt forgiveness.] (Cliff Küle's Notes blog)

CDS [Credit Default Swaps] Market to Euro Banks - This is Worse Than 2008 (Pragmatic Capitalism)

Finland threatens to withdraw Greek bailout support: Jyrki Katainen, the Finnish prime minister, has threatened to withdraw support for the Greek bailout in a move that could crush the fragile signs of recovery on global markets. (The Telegraph) "... we are no nearer a solution to Greece and its collateral effects than we were when this all began a few years ago." (The New York Times blogs)

Japan Noda: to cooperate with BOJ to beat deflation (Reuters)

Moody's cuts Japan rating one notch to AA3 (Reuters)

Dominique Strauss-Kahn is free to go home: A New York state judge grants prosecutors' request to dismiss all charges against the former IMF chief and denies accuser Nafissatou Diallo's request for a special prosecutor. (The Los Angeles Times)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Monday roundup (08-22-11)

When Banks Aren't Safe & Governments are Bankrupt... (BBC Newsnight)



European Central Bank continues bond-buying (The Washington Post)

Bundesbank questions legality of EU bail-outs: Germany's Bundesbank has issued a blistering critique of EU bail-out policies, warning that the eurozone is drifting towards a debt union without "democratic legitimacy" or treaty backing. (The Telegraph)

Is Germany's Commerzbank in Need of Another Bailout? -- "Last week an unidentified bank needed to tap the ECB for $500 million in emergency funds at a penalty rate, something that only happens when liquidity dries up and banks are distrustful of lending to each other, even overnight. ... All banks are suspect because the ECB won't say [who did the borrowing]." (Mish's Global Economic Trend Analysis blog)

Is Europe facing a credit crunch like 2008? (CNNMoney) "'I’m not sleeping at night,' said Charles Wyplosz, director of the Geneva-based International Center for Money and Banking Studies. 'We have moved into a new phase of crisis.'" (Bloomberg)

Is the Recession of 2011 Coming? (Cliff Küle's Notes blog)

Fed's Bullard says FOMC to act if economy sags: report (Reuters)

Mortgage delinquencies rise for second quarter in a row: A Mortgage Banker Assn. survey shows that the decline since the fall in the percentage of homeowners who have missed at least one payment appears to have ended. (The Los Angeles Times) "Million-dollar-and-up homes are the fastest-growing segment of the U.S. foreclosure market" (The Street)

Boomer Retirement Could Slow US Recovery: Fed Study (Reuters)

City of Lansing [MI] budget deficit 12 to 15 million dollars [in fiscal 2013] (MLive.com)

Bank Of America May Need To Raise $40-$50 Billion Of New Capital -- Analyst (The Business Insider)

Morgan Stanley at Brink Got $107B From Fed (Bloomberg)

Goldman Sachs CEO hires criminal defense lawyer: Lloyd Blankfein retains Reid Weingarten amid the governments inquiry into the financial crisis. The move hints there could be new push to investigate the firm and its executives on criminal grounds. (The Los Angeles Times) "'Nobody lawyers up like this unless they are in deep shit' - my anonymous Wall Street source" (The Golden Truth blog) [Or, more politely:] "'Why do you bring in someone like that?' said the source, who was not authorized to speak publicly, about Weingarten. 'It says one thing: that they're taking it seriously.'" (Reuters)

Forget TARP: Wall St [= Morgan Stanley, Citigroup, Bank of America, Royal Bank of Scotland, State Street, UBS, Goldman Sachs, JP Morgan Chase, Deutsche Bank] Borrowed $1.2 Trillion from Fed (The Big Picture blog)

Prosecutors Seek Dismissal of Strauss-Kahn Charges (The Wall Street Journal) Factbox: Strauss-Kahn's legal troubles aren't over (Reuters) Prosecutor Asks Court to Drop Charges Against Strauss-Kahn (The New York Times blogs) Recommendation for dismissal (New York States Unified Court System)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Sunday roundup (08-21-11)

Austerity is ushering in a global recession: When the world's economic powers are slipping toward a global recession, tighter austerity is not the answer. by Robert Reich (The Christian Science Monitor blogs)

Global economy is dangerously close to recession (The Economic Times of India)

El-Erian Joins With Feldstein-Fels on Prospect of New Core Euro (Bloomberg)

Merkel Underscores Opposition to Euro Bonds (The New York Times) Merkel insists eurobonds are 'exactly the wrong answer’: Angela Merkel has insisted Germany will not sanction the issuing of eurobonds – in a move that could trigger another unsettled day on global markets. (The Telegraph)

Why won't our cowardly [UK] leaders stand up to these arrogant bullies [Merkel and Sarkozy]? -- "Now that Merkel and Sarkozy have arrogantly signalled that Britain’s position is in the ‘second tier’ of EU member states, behind a Franco-German core, will our pusillanimous politicians come to our rescue?" (The Daily Mail)

Greeks act to avert bank failure = "a run on the country’s fragile banking system" (The Financial Times)

Italy's Debt May Swell as Austerity Chokes Growth: Euro Credit (Bloomberg)

Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans -- [as part of] "Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression" (Bloomberg) Fed’s $1.2 Trillion Liquidity Lifelines Dwarfed TARP: Glossary (Bloomberg)

By Choosing The Big Banks Over The Little Guy, The Government Is Dooming BOTH (Washington's Blog)

Why The Current Bear Market Is Far From Over (The Business Insider)

Australia's BlueScope to stop exports, axe 1,000 jobs (Reuters)

Photos: Oil At BP's Deepwater Horizon Gulf Spill Site (Washington's Blog)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Saturday roundup (08-20-11)

Quote of the Day:

"I maintain the next move by the Fed is to massively open up the dollar swap lines with European central banks. ... I think there is a decent chance this important next step takes place outside of Jackson Hole. It could happen this Sunday night. If I’m wrong, and we get nothing, the European funding markets are going to collapse next week." -- Bruce Krasting, retired hedge fund manager. (ZeroHedge blog) Biography @ (The Business Insider)

We've been warned: the system is ready to blow: Only a new way of managing the global economy can prevent more mayhem in the markets and on the streets (The Observer)

Fears mount of cuts in EU bank lending -- [which would] "drag down the already struggling world economy" (The Financial Times)

Fears for free cash withdrawals [in the UK] after bank ban on rivals' ATMs: The future of free cash withdrawals is under threat after a nationalised bank barred one million of its customers using cash machines belonging to rivals (The Telegraph)

Japan Quake Is Causing Costly Shift to Fossil Fuels (The New York Times)

Recovery could be one of longest, most difficult in U.S. history, economists say (The Washington Post)

After a two-year rebound, recession risks rise (The Los Angeles Times)

Bernanke under pressure to calm markets: Federal Reserve chairman faces growing demands to take decisive action to combat global economic crisis (The Observer)

This time, the economic crisis is no one’s fault but the government’s (The Washington Post)

S&P Says Municipal Bonds Backed by U.S. Road Funds May Face Ratings Cuts (Bloomberg)

Stocks Have Been Falling (in terms of Gold) Since 2000 (Cliff Küle's Notes blog)

Unofficial Problem Bank list declines to 984 Institution (Calculated Risk blog)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Friday roundup (08-19-11)

European leaders split over solution to euro debt crisis (The Irish Times)

Can the EU be saved?: Europe’s grand experiment seems to be failing (Maclean's)

Banks, entwined in government debt, contribute to Europe’s dimming outlook (The Washington Post) Europe Update: More Bank Funding Concerns (Calculated Risk blog)

Damning Poll on Leadership: Germans Don't Trust Merkel to Handle Euro Crisis (Der Spiegel) Most Germans doubt Merkel can stop financial crisis: poll (Agence France-Presse)

Greece Sees Deeper-Than-Expected Recession In 2012 (The Wall Street Journal) Europe's Debt Crisis Won't End Until Greece Defaults (CNBC)

U.S. is vulnerable to European banks' problems, analysts say: Federal officials fear the European debt crisis could hurt big banks there and trigger major problems here, perhaps dragging the U.S. into another recession. (The Los Angeles Times)

JP Morgan Joins the GDP Downgrade Party (The Wall Street Journal blogs)

PIMCO: Treasuries reflect likelihood of recession -- "It is increasingly apparent to us that policy options are limited and that economic growth is slowing down" (Reuters)

Fed's Pianalto: years to lower unemployment (Reuters)

Air Force to cut 6,000 positions, Ga. base waits for news (The Atlanta Business Chronicle)

Bank of America CEO Moynihan Says Expect 3,500 Job Reductions This Quarter (Bloomberg) Reports: Bank of America to cut 10,000 jobs (The Atlanta Journal-Constitution)

DOE approves up to 1,100 additional layoffs at Hanford (The Yakima Herald)

The United States of Unemployment (The Wall Street Journal)

U.S. closes 3 more banks, 68 so far in 2011 (Reuters)

Lydian Private Bank of Palm Beach FL had a troubled assets ratio of 145.8%. (BankTracker)

First Southern National Bank of Statesboro GA had a troubled assets ratio of 298.1%. (BankTracker)

First Choice Bank of Geneva IL had a troubled assets ratio of 222.1%. (BankTracker)

ZULAUF: Own Gold, Own Treasuries, Get Out Of Debt, And Get Out Of Equities (The Business Insider)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Thursday roundup 08-19-11

Is This A Second Great Depression – Or Could It Become Something Worse? by Simon Johnson, former chief economist of the International Monetary Fund (The Baseline Scenario blog)

Roubini: "Gold, Like US Treas Yields, Is Pricing Risk That We Go Into Another Deflationary Depression & Global Financial Meltdown, Not Inflation" (Washington's Blog)

Bond markets signal 'Japanese' slump for US and Europe: The global credit markets are braced for deflation and perhaps depression. (The Telegraph)

Euro and EU 'on edge of precipice,' says Delors (Agence France-Presse) Pour Jacques Delors, l'Europe est "au bord du gouffre": L'euro et l'Europe sont au bord du gouffre, estime l'ancien président de la Commission européenne, Jacques Delors. Il estime que le sommet franco-allemand de mardi n'a pas apporté les réponses nécessaires à la crise de la dette, en refusant de lancer des euro-obligations. (France Soir) Delors: “L’Europa e l’euro sono sull’orlo del baratro, ci vuole più cooperazione”: L'ex presidente della Commissione, uno dei padri nobili dell'Unione, distilla giudizi drastici in un'intervista a Les Temps. "Il vertice Merkel-Sarkozy? Non servirà a niente" (Il Fatto Quotidiano)

Some European banks face short-term funding stress (Reuters)

European crises, U.S. debt, slow global economy revive fears over banks’ footing (The Washington Post)

Fed Eyes European Banks: Regulators Scrutinize Ability of Institutions' U.S. Units to Fund Themselves (The Wall Street Journal)

Morgan Stanley cuts global growth forecasts: Bank warns that U.S. and euro zone are ‘dangerously close to a recession’ (Reuters)

In euro-zone crisis, German leader Angela Merkel’s options are limited (The Washington Post)

Austrians, Dutch follow Finns, seek Greek collateral (Reuters) Requests for Collateral Pose a Hurdle for Greek Bailout (The New York Times)

Cue Panic As Fed Resumes Liquidity Swap Lines, Lends $200 Million To Swiss National Bank, Most Since October 2010 (ZeroHedge blog)

Italy's Troubles Are Deep (Seeking Alpha blog)

Australia Premier Warns on Debt (The Wall Street Journal)

Philly Fed index warns that risk of double-dip recession is growing: The US economy has sent its loudest signal yet that the risk of a double-dip recession is growing, data which helped drive falls in global markets. (The Telegraph) Philly Fed factory activity index worst in 2-1/2 yrs (Reuters) Philly Fed Survey: "Regional manufacturing activity has dipped significantly" (Calculated Risk blog) Philly Fed: A Total Disaster (Pragmatic Capitalism)

Home sales dropped 3.5 pct. in July, hit 2011 low: Third decline in 4 months puts sales pace behind last year's totals, a 13-year low (The Associated Press)

Consumers Most Negative on U.S. Economy Since Recession (Bloomberg)

Fed may have bullets left, but are they blanks? (Reuters)

BofA cutting 3,500 jobs, more may follow: report (Reuters)

Regulators shutter small bank in Pennsylvania; makes 65 US bank failures this year (The Associated Press) Public Savings Bank of Huntingdon Valley PA had a troubled assets ratio of 309.3%. (BankTracker)

Negative rates: the price of safety for investors (Reuters)

The Real Reason the SEC Has Been Shredding Documents For Decades (Washington's Blog)

BP's Gulf Oil Well May Be Leaking AGAIN: "The Oil May Be Coming From Cracks And Fissures In The Seafloor Caused By The Work BP Did During Its Failed Attempts To Cap The Runaway Macondo Well – And That Type Of Leakage Can’t Be Stopped, Ever" (Washington's Blog)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Is it a recovery yet? (Weekly report, 08-18-11)

A recovery would be indicated by weekly initial jobless claims holding below 500,000. (See this post.)

IT'S A RECOVERY! (And it has been a recovery for every week since the Nov. 25, 2009 report, with the exception of the Aug. 19, 2010 report.)

"There were 408,000 initial unemployment claims filed in the week ended Aug. 13, the Labor Department said Thursday, up 9,000 from an upwardly revised 399,000 the prior week." (CNNMoney)

"'This was a slightly larger increase than expected, a reminder that the labor market has yet to break into sustained improvement,' said Sara Kline at Moody's Analytics." (Agence France-Presse)

"'People continue to get laid off,' David Semmens, a U.S. economist at Standard Chartered Bank in New York, said before the report. 'The uncertainty in the economic outlook is continuing to give hiring managers sleepless nights and is keeping businesses from expanding. We have an incredibly long way to go' to get a healthy labor market, Semmens said." (Bloomberg)

SEE LAST WEEK'S POST HERE.

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.