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Economy - Economics USA

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The Party is the best in a hundred years. Each time the bill becomes too large the Elephant or Donkey says just add it to our tab. It is two o'clock and the waiters are finally making the party's leave the floor. As the t

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• AP

Wholesalers slashed inventories more than expected in April as businesses struggled to get stockpiles in line with falling sales.

The Commerce Department said wholesale inventories fell 1.4% in April, more than the 1.1% decline that economists expected. It marked the 8th straight month that inventories dropped.

Sales at the wholesale level fell 0.4%

 

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• Ritholtz.com/blog/

 
Despite spending less time at the mall, throttling back consumption, and increasing their savings rate, the US consumer still finds themselves with too much debt and too little savings. Even worse (at least for the economy), they lack the income or the equity to fund their previous lifestyles.

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• arclein

Wherever the floor is, and I think that it is been established now, it is a lot less at the consumer level than for most of the economy. Government spending is actually growing sharply in an attempt to offset the loss of consumer demand. However, the bad news about collapsing government revenues has not hit home yet. Recall, it is only the federal government that can print fiat money. The rest have to collect taxes. California is ugly, but there are hundreds of jurisdictions that are going to be in shock before this is over. In the meantime, the degenerating housing market continues to eat away at household finances and sound financial institutions.. This will not end until this problem is finally addressed and it will not simply go away. This is what can give us 1932 all over again.

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• Reuters

The sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA was temporarily blocked by a U.S. Supreme Court justice, with no indication how long the delay would last.

In a one-sentence order, Justice Ruth Bader Ginsburg said the bankruptcy judge's orders allowing the sale "are stayed pending further order" by her or by the Supreme Court.

 

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• Money News

More than 600,000 seniors are delinquent in their mortgage payments or already in foreclosure, USA Today reports. Unlike younger people, many are on fixed incomes and lack the money or job opportunities to catch up on payments when they fall behind. "I've got a lot of seniors who have just been nailed," mortgage specialist Dean Wegner told the newspaper.

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• tipstrategies.com

This link is to a graphical animation representing the net gain/loss of jobs over the last 5+ years for various geographical areas of the U.S.  If anyone is having trouble grasping the extent of the recent economic downturn, this animation will clarify things dramatically.

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• The Daily Show

Euro Pacific Capital's Peter Schiff  and Author, "The Little Book of Bull Moves in Bear Markets" will be interviewed on The Daily Show with John Stewart 6/9/09.  This will be a great interview without all the "normal" pundits cutting off Peter when he talks about the economy.  So plug into the Matrix for this one [ED]

Schiff is best known for his bearish views on the US economy and for his claims to have predicted the economic crisis of 2008.  He has risen to media prominence following the publication of his book Crash Proof: How to Profit From the Coming Economic Collapse, published in 2007.
 
Schiff appears on American financial news programs on networks such as CNBC, CNN, CNN International, Fox News, Bloomberg TV and Fox Business.
Schiff is a supporter of the Austrian School of Economics and the Ludwig von Mises Institute, and was an economic adviser for Ron P

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• Reuters

Stocks fell on Monday after McDonald's Corp posted lighter-than-expected monthly sales and a report that Apple Inc would price new iPhones "aggressively," signaling that consumer spending may remain a concern.

With the market in the midst of a three-month rally, investors are looking for more proof of an improving economy in order to fuel a continued advance while also becoming wary of the ongoing rise in interest rates.

 

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• AP

This and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford.

 

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• VOA

The White House says America's employment picture is worse than the Obama administration had anticipated just a few months ago. The somber admission follows the latest jobless report showing the highest unemployment rate the United States has seen in more than 25 years.

U.S. unemployment jumped a half percent in May,

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• kunstler.com/blog/

 
We're in a strange hiatus for now. "Hope" levitates the legitimacy of the dollar, the stock markets, and the authority of leadership. In the background, implosion continues, debt goes unpaid, banks ignore bad loans to keep them off their books, jobs and incomes vanish...

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• arclein

What makes me most nervous is that the general behavior of the markets are eerily similar to the 29’ crash and the same time functions are in place. It is only nine months since the actual break took place. In roughly the same time period, in 1930, the markets recovered somewhat and trade also. It really was a dead cat bounce that merely punctuated the ongoing economic decline that rolled on for a full two more years until late in 1932.

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• Bloomberg

Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President News Link • THE R3VOLUTION CONTINUES Reported By

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• Reuters

John P. McMurray made it clear to his Countrywide Financial Corp bosses that they were playing a dangerous game with risk. But they didn't listen.  Warnings from McMurray are cited often in a lawsuit filed by the U.S. Securities and Exchange Commission against Countrywide's co-founder Angelo Mozilo and two lieutenants.

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Friday’s statement by China said any investment would be made according to its usual criteria of “safety and reasonable returns”, but made no mention of Beijing’s wish for more power in IMF decision-making, in return for financial support.

Safe, which controls almost $2,000bn of China’s foreign exchange reserves, added it was ready to help the IMF explore more ways to raise finance.

Mr Lipsky said the Chinese and Russian proposals were part of a commitment made during the London G20 summit in April to augment IMF resources by $500bn, and that the IMF “absolutely welcomes” the commitments.

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