Credit Writedowns

The news yesterday was pretty grim as Japanese, Chinese, Eurozone, UK and US manufacturing sectors all showed significant weakening. Combine this with an acknowledgment that we have been in recession for one year already and Meredith Whitney sounding the alarm bell for even worse yet to come and you get a steep sell-off in equities and a huge rally in Treasuries. One should note that Ben Bernanke sounded very dovish yesterday, putting paid to my post on quantitative easing and contributing to the rally in Treasuries.

Below are a few stories on the Internet that I would like to highlight. See the bulk of the news stories over at the news feed, which gets updated continuously. [...] Continue Reading…

My very first post on this blog was in March and it was titled “The Economy Is Definitely In Recession.” Back then, this seemed like a stretch for a lot of people, but today the National Bureau of Economic Research (NBER), which makes the official recession call for the U.S., determined that the recession began in December 2007. Continue reading

Today I learned that we lost one of the most talented bloggers out there, Tanta from the blogsite Calculated Risk. Tanta had been battling cancer. She died aged 47 and will be missed not only by those who knew her but by her many readers and fans. Continue reading

Japan’s policy makers generally procrastinated considerably in terms of implementing any kind of stimulative measures, as well as prematurely reversing the benign impact of policies which had some earlier success. In terms of monetary policy, the BOJ did not actually embrace quantitative monetary easing until 2001, eleven years after their bubble had burst. Continue reading

Last night, in an e-mail Yves Smith of naked capitalism pointed out an Op-Ed piece by Meredith Whitney which ran in the Financial Times yesterday. It was a fairly somber and downbeat assessment from an analyst who has proved right on the money throughout this credit crisis.

I will provide a highlight here so you get the gist of Whitney’s commentary. But so as not to steal Whitney’s thunder, I will link out to the entire article so you can read it on the FT website. Continue reading

The Institute for Supply Management (ISM) released its monthly report on Manufacturing, the ISM Manufacturing Report on Business®. It showed a reading of 36.2 down from 38.9. Where 50 is the demarcation line between growth and recession, 36.2 says the manufacturing industry in the United States is deep into recession territory. Continue reading

I am altering my news round-up a bit here in that we have shifted the bulk of the news stories over to the news feed, which gets updated continuously. So, I will use the round-up to highlight a few top stories. The majority of today’s stories come from the British press. Continue reading

In economic circles, there has been a lot of buzz about Quantitative Easing of late. Basically, the U.S. Federal Reserve has lowered interest rates to near zero percent and the fear is that these cuts will not have enough effect on the willingness to lend in order to reflate the U.S. economy. Therefore, the Fed has decided to take more draconian measures, one of which is Quantitative Easing, flooding the economy with money. Continue reading

The financial services sector has been the hardest hit sector in the credit crisis so far. Banks with large exposures to mortgage-backed securities like Citigroup, UBS and Merrill Lynch have suffered the most. This is largely because the crisis has been in asset prices — chiefly home prices. However, as credit has become severely restricted, the credit crisis has become a global recession and that means the real economy will be impacted. This spells trouble for JPMorgan Chase. Continue reading

Below are links to a few posts on the web that I found particularly good. For more posts and news, see the news feed. Continue reading