Solarbird (solarbird) wrote,
Solarbird
solarbird

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okay, this is weird

Good evening.

Let's cut straight to the "yesterday's tinfoil is today's front page" news. The Federal Reserve Bank, which is a private bank (albeit chartered by the US government and so on) wants to float its own debt. Karl at Market Ticker wants to know who, exactly, is going to be backing this debt, and if it's the US government, how this isn't the Fed saying it just wants to allocate taxpayer dollars, without even what little oversight there is these days at Treasury.

I don't know whether this is related to t-bills being issued with negative interest, but I would suspect so. (The overnight fell to .12% two nights in a row, another few huge misses from the supposed target of 1.00.) This implies that the Federal Reserve sees deflationary rates and is trying to respond with again yet more "liquidity" to raise those rates by increasing supply - but it's still not triggering any lending.

The CDR Counterparty Risk Index (an index on Credit Default Swap rates) has re-established its post-May upward trend after the near-explosion back in September and October. None of the other indices look better; in fact, they look worse.

I'm not the only one watching the M1 anymore; so's Mish. But he also notes that very little base money is making its way all the way into the M1. I think he does a disservice by ignoring the asymptotic spike on the Fed base money year-to-year graph, because I don't think it compares well to the 1929 spike, which was much smaller, even if the leadup line is very, very similar.

As far as equities go, as this graph shows, the Dow did about a clean a bounce as is possible off the moving average, executing a lovely technical move. Futures are up overnight, though, as are the Nikkei and Hang Seng, and as you can see in the above linked chart, we're still in oversold territory. All these things say Wave 4 continues up.

Former Labour Secretary Robert Reich says we can start calling it a depression now and beat the rush. But with the above, I don't know where we're looking at going from here. One of the things that made the GD worse was that there were fears triggered by the existence of a competing economic system of significance. We don't have that this time put people are nonetheless considering how to deal with the depression that's starting to become assumed. Bonds are already implying a higher corporate default rate than the 30s.

Brad Setzer notes that a lot of oil-producers are now in a severe fiscal crunch following the recent oil collapse, in an article called "good bye, petrodollars." This is not moving away from dollar-denominated oil; it's instead more liquidity that will disappear from world markets as oil-exporting states stop having money to throw around.

That same US dollar is looking like it's going to take another run down towards the November 25 low; Japanese export figures fell off a cliff (and China's didn't do much better). China has now "asked" domestic airlines not to buy any more foreign planes for a while:
The Civil Aviation Administration of China (CAAC) said it "encourages" airlines to cancel or defer taking delivery of new planes next year, and asked them to make best use of their existing fleets of more than 2,000 planes.
That'll certainly hurt us in Boeingland. Foo.

Correction, 6th paragraph: Labour, not Treasury secretary. Sorry, posting late. Error pointed out by silussa.
Tags: economics
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