Santa Edition

Well, somewhere in the world Santa is spreading his joy and in other parts, well, not so much. But we can still hope.

My daughter finally seems down for the eight count so I thought I might sneek in a post before the jolly old soul arrives. And talk about jolly old souls; it seems Asian stocks are up a good bit this evening on news that consumer spending only slowed .6% in November in the U.S. versus the anticipated .7%. Woohoo, let's party!!

http://www.bloomberg.com/apps/news?pid=20601087&sid=ab.yi64ezPkY&refer=home

Before you pop that cork, however, it looks like December may not fare quite as well. The weekend before Christmas - you know the retail big mama - fell 24% over last year in what Bloomberg says may be the worst holiday retail season in four decades. Sorry, you cannot put the cork back in the bottle and return it, but if you use one of those pressurized corks you may be able to make it last to new year's eve.

http://www.bloomberg.com/apps/news?pid=20601087&sid=agdeTeaKJuGU&refer=home

Oh, and did I mention, that first time jobless claims rose to 586,000?

http://www.bloomberg.com/apps/news?pid=20601087&sid=audHmQcYVBxY&refer=home

When markets rise simply because the bad news is not quite as terrible - on some fronts - as anticipated, then it is a bit hard to get a sustained rally I would think.

More Dong for Your Bong

I admit that this is not a big deal but I had to go there for the heading. How often do you have a link to a devalued dong. I hear that happens when you get older, but I am not going there.

http://www.bloomberg.com/apps/news?pid=20601087&sid=avuMNO_SNRjo&refer=home

All I Can Say is Staggering

How can one state have a two-year budget shortfall of $42 billion? I realize that California was one of the hardest hit by the real estate bubble bursting, but there are an enormous number of wealthy people living in California that may need to be tapped to fill that void. Big void indeed, but big state indeed. Their problem is that they all get to vote on whether they want to pay taxes. And I thought we elected officials to tell us what to do?

http://www.bloomberg.com/apps/news?pid=20601109&sid=a5GbgGwA7BKM&refer=home

So How Have The Really Smart People Done?

Not so well, apparently. According to this calculation, Harvard through the Harvard Management Corporation has lost up to 50% in this down-turn. I sure am glad I am not nearly that smart. I would be in pretty bad shape if I had done what they did. Really, though, this is a good lesson. A lot of what is now considered a toxic investment was extremely complex but, for a while, very profitable. So much so that it seems no one really understood the risk. Well folks, when you cannot understand the risk, by definition it is to risky for you. But try telling that to someone from Harvard.

http://www.huffingtonpost.com/ed-epstein/how-much-has-harvard-real_b_152711.html

I know it is a bit light tonight, but tis' the season! So let me end with something not as light.

China

No catchy heading, no big lead in, just the bottom line. Some are predicting growth to go to zero or even negative in 2009, which for a country needing 5% to break-even this is a drastic recession. Moreover, even when it recovers, some are predicting it will never return to the growth rates of late (I agree) and will be in a difficult economic situation for years if not decades to come.

http://www.nakedcapitalism.com/2008/12/guest-post-how-can-no-one-see-imminent_23.html

Think about the knock on effects here. First you have the social and political problems, which I have discussed. It is kinda like a big panda bear with a hangover; not much is needed to piss it off. Second, think about the short to medium term impacts on various commodities. China was an increasingly major consumer of metals, oil and a variety of other commodities. If its growth rate goes to negative in the short term and single digits in the medium term, this is a major pressure valve letting the steam off of commodity prices. If accurate, commodity prices could well languish for some time. This helps the U.S. by making things more affordable, but it hinders other countries dependent on these commodity exports, which will lead to more instability in those countries. Remember the balance thingy I mentioned yesterday? Well this is an area where that is needed.

All-in-all, China sneezing is not a good thing.

http://www.nakedcapitalism.com/2008/12/guest-post-how-can-no-one-see-imminent_23.html

Disclosures: None