My oh my, what an interesting week, and I don't mean that in a good way.  From our trade deficit to our automakers on the brink of joining our domestic consumer electronics firms, things aren't looking all that swell.  The latest indicators are showing, at least for November, what has been on everyone's mind, the economy.  Some are saying, though that things will pick up, that the recession began a year ago and we'll come through it by 2009.  We'll see, when the average worker is able to stop worrying not just about making rent or that mortgage payment, but also putting food on the table, then I'll agree.  Globally, like the United States, things for now look dim.  And like I said, the figures show it...which leads us to the Numbers!

It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!

This weeks film is Michael Moore's SiCKO.

“The definition of insanity is doing the same thing over and over again and expecting different results.”
- Albert Einstein

America didn't arrive at our current predicament by chance. We got here by repeatedly applying the same solution to the same problem, over and over again, while ignoring the fact that it never worked. This has been true for decades, through both Republican and Democratic Administrations.

It makes a person wonder if the root cause has more to do with corruption than with ideology.

Example #1)
In December 1982, Reagan signed into the law the Garn-St Germain Depository Institutions Act. It was the culmination of four years of deregulation of the S&L Industry that began under the Carter Administration. Thus began a financial disaster.
What many people aren't aware of is how Wall Street profited from this, and caused it.

This morning Mish has an entry entitled
Huge Demand For Treasuries As Banks Refuse To Lend in which he cites bank reserves and a sluggish M1 multiplier in support of the conclusion that:

Look at the Base Money chart and the Reserve Bank Credit chart. Base money is soaring but all of it is sitting in bank reserves. In other words, banks are not lending. Clearly we have a huge monetary distortion, but banks seem to understand that lending money in this environment would do nothing but increase losses

Of course, Mish's article is simply received wisdom at this point. There can be no recovery until banks start lending, and they are refusing to lend.

There's just one problem with this argument: it isn't true.

Damn, talk about a pretty intense week! The auto sector looks like it just...just might get saved. Still, it looks as if the issue of over capacity is being looked on, which means job cuts. Sadly, that seems to be the theme of this week's manufacturing update. Well actually there is something on health care...think of it as "nyceve lite". They say it gets darkest before the light, well this must be a long tunnel then. ISM is saying that '09 will suck as bad as 2008. Well before I dispense with the unfortunates, it's time for the Numbers!

The Numbers