I Called That One

Yesterday I noted there would be more bank failures announced on Fridays. Well, Sheila Bair just proved me right again. It is so tough being me and being right so often - though it really helps to make easy predictions.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFJf5K7zppCg&refer=home

http://www.fdic.gov/news/news/press/2009/pr09006.html

My prediction by the way was based upon increasing problems in commercial real estate and small business loans, both of which are quite problematic for local and regional banks. Expect many more this year.

China, Oh China

I write a lot about China as my daughter is from there and her mei mei, little sister, should be coming from there in about two months. I also write about it because it is the number three economy, the largest world population and a major potential place for political and social unrest in years to come. Fitch is now predicting a hard landing in China. If you have followed me (and perhaps believe me) this is no surprise. I mean this fits right into my two-plus-two theory of financial life. Two-plus-two is simply my own approach to macro-economic ideas. Not unique to me, just how I like to think about it. Let's apply two-plus-two to China.

Here we have a lot of twos, but you will get the idea. What does China face:

1. All their trading partners, for the most part, are in a severe recession, so they are not selling much;
2. The Baltic Dry Index, an index of shipping, is at absolutely rock bottom. Much of this is due to a lack of trade but some of it is due to a lack of credit and letters of credit that allow trade to flow on ships. Either way, not good for China.
3. China needs about 8% growth just to tread water. Anything less there is a recession, and right now it is looking like much less.
4. China is not totally export driven, but another major domestic business support is commercial real estate, and that area is really sucking wind right now.

There are more reasons, but these are up there. These are objective factors that simply prove what otherwise is speculation. China, like the rest of the world, is in dire straights.

http://www.nakedcapitalism.com/2009/01/fitch-foresees-hard-landing-for-china.html

Job Losses Continuing

This is hardly a surprise that job losses continue. Unemployment usually peaks long after a recession ends and right now we are not seeing the light at the end of this recession tunnel. Here are some of the latest losses, which I think adds up to about 50,000 jobs. We truly need to help these people instead of spending $138 billion on BofA. Spending that much on a company that helped to cause the problem when we have so many more more pressing problems is making me sick. This is just disgusting what we are doing. Just my opinion.

http://www.fdic.gov/news/news/press/2009/pr09006.html

Disclosures: None.