I'm not going to talk about the pending auto-company bailout package until we actually see it - however, a partial nationalisation is apparently being floated, via stock dilution in exchange for loans. But until we see the result, this is about everything else.
I'm afraid there's no theme; a lot is happening, but it's not all tied together very well.
Despite the very good day in the US equities markets - Mish thinks we are finally in Wave 4 - most news today and over the weekend was rather bad. So we'll start off with a rarity; an 'up' article from uberbear Mish Shedlock, discussing possible winning companies in the upcoming green-tech/green-energy boom. Also, a former Chinese Central Bank advisor has extreme doubts about any plans to devalue the Yuan, and calls the recent uptick a "blip." Mish agrees.
Breathe deep, because having enjoyed those two pleasant bon mots, it's all downhill from here. Remember; Wave 4 Up ends in Wave 5 Down.
Karl Denninger comments on a repeated CNBC report that - and this is a CNBC quote - "Administration officials are allegedly considering using eminent domain to buy up MBS, with the justification for doing so being invocation of 'national security'." From a legal standpoint, the justification sounds like absolute crazytalk - but we've been so far from law for so long that I can't just toss it aside as crazy anymore. Public Citizen is talking it up. Karl thinks it's a good way to insure all remaining lending stops overnight.
Tribune Company of Chicago - owner of the Los Angeles Times, the Chicago Tribune, and the Chicago Cubs - filed Chapter 11 bankruptcy today. (In that story, the longer one, it was merely expected; confirmation came later today.) Executives noted that, "revenue declines have been dramatically worse, even over the last couple of weeks," forcing the move. Consumers cut back sharply on borrowing in October, defying a predicted increase. Meredith Whitney thinks credit-limit slashing is about to become the norm; anecdotally I know people who have had their credit suddenly cut.
Mortgage renegotiation leads to new lending agreements, but within six months, more than half of them are again in default. At eight months, the rate climbed to 58%. That's better than 100%, but the failure rate is still exceedingly high. And here's yet another story about "omg wealthy neighbourhoods aren't exempt!" Well, no, they're not.
Dow Chemical plans to cut 11% of its workforce and 180 plants. It works out to about 11,000 jobs. Meanwhile, companies are begging Congress to let them out of legally-required compensatory deposits into pension funds which are now dramatically underwater thanks to extensive stock losses.
Japan's third quarter turned out to be worse than originally thought, with the Japanese economy contracting at an annualised rate of 1.8%. Sony is cutting 8,000 jobs, but the article doesn't say where. The Telegraph notes that the "deflation virus is moving... beyond the 1930s extremes." That's not actually true, yet, but they're pro-printing to avoid deflation. Dr. Roubini at RGE Monitor thinks the Ruble is 20-25% overvalued, and S&P has downgraded Russian debt from BBB+ to BBB with negative outlook.
Brad Setser at the Council on Foreign Relations says goodbye to the age of Great Moderation in economic swings. He's not convinced it was ever real, but it was certainly perceived as such. Satyajit Das at RGE Monitor thinks there never was as much liquidity was was perceived during the bubble. That perception of overabundance is gone, and is boosted with actual losses. Finally in analysis, the Centre on Budget and Policy Priorities says 41 states can expect severe budget problems in the next two years. Washington State is on the list, but not until 2010.
Paul Volcker is back, and warning people to get ready: it's getting a lot worse. The Financial Times expects bankruptcies to hit record levels next year, based on a report by German insurer Allianz. Heather Stewart and Ruth Sunderland at The Observer report that GFC Economics suggest that a one-million job-loss months are possible in the new year. It's not so much that there's panic; it's that there's a rolling panic which reinforces itself.
Barack Obama has endorsed the sit-in at the Chicago window factory which closed down on three days notice and is trying not to pay its workers money due. The company is blaming Bank of America, but reports elsewhere say the company is trying to pull a fast one and relocate to Des Moines, Iowa, and rip off its Chicago workers at the same time. This is rapidly becoming a cause.
Three-month treasuries are selling at rates not seen since 1929 - 0.005 percent. That's indicative of severe, severe fear of the next three months. The Baltic Dry Index has leveled off and actually pulled up today, to 671 - still the lowest figure since 1986, but the decline has halted at least for a day. The US dollar has fallen out of its late November/early December trading range. The Fed continues not to try to defend its 1% target rate; over the last few days, the actual rate has dropped to between 0.12% and 0.36%. Old-school TAF/TIO/Discount Window sloshing has picked up a bit, but is of course dwarfed by the TARP and TARP-like programmes. The TED spread insists upon staying uncomfortably above 2.1 (where .25-.5 is normal).
Keep watching the M1. Things are going on.
And in the theme of the times, enjoy this most unusual review of the new Vahxhall Insignia 2.8 V6 automobile, "An adequate way to drive to hell."