http://www.bloomberg.com/apps/news?pid=20601087&sid=alYGX7iqNnjM&refer=home
I posted this morning on unemployment numbers not being as rosy as the press is playing them out to be, well it is not just me saying this. Those that know how to read the numbers better than me know that this was not a good unemployment number.
http://www.nakedcapitalism.com/2009/05/guest-post-april-unemployment-figures.html
Indeed, Mish is the best I know on reading these stats, so I highly recommend this link. All sorts of nice charts and an explanation on the always complex business birth/death adjustment. Let Mish tell you how unemployment is already, by at least one measure, over 15%.
http://globaleconomicanalysis.blogspot.com/2009/05/jobs-contract-16th-straight-month.html
The Less Than Stress Test
I have reported here regularly on the nearly comical stress tests. Feel free to wander back to read old posts. You will find a good three or four discussions on the tests in the past two weeks. This morning I noted how this month's unemployment figures - even though better than most people forecast - were worse than the stress tests' worst case scenario. And as I explained this morning and here previously the "official" unemployment figures are a joke. So, to summarize, we have ridiculously under reported (probably cooked) numbers that are better than expected by most people's expectations yet worse than the more adverse stress test scenario.
Now if this does not have you worried yet, consider this; even with demonstrably ridiculous stress test findings based upon idiotic baselines, the government apparently allowed the failed institutions to negotiate their way out of raising the capital the government - on the government's bogus standards - wanted them to raise.
http://www.calculatedriskblog.com/2009/05/wsj-report-banks-negotiated-concessions.html
Let me summarize one more time slowly so you can let this sink in, as it is an important point. Let's consider the steps:
- The government stress tests, for one of the markers used in the tests, forecast unemployment at 8.3% last month, with 8.8% as the "more adverse," as in worst case, scenario assumption. The actual result, which according to most forecasters was better than expected at 8.9% was worse than the "more adverse" prediction;
- The 8.9% rate is in itself bogus, due in part to Census Bureau temporary hiring, and due in part to other tampering, so the government "more adverse" number is even further from reality;
- Despite the stress test results being based on bogus rosy assumptions on cooked stats, the companies so "tested" are still able to talk the government out of a significant part of the capital requirements that the government decided were needed. And apparently, the government agreed to require less capital.
And here, my friends, is the favorite part of the whole story, the financial stocks by-and-large soared today. Some up over 9%. Time to party up.
Think about what I have just summarized and tell me if I am crazy. I think it is time to party down, not up!
Did I Mention Consumers Spending Less
A regular part of my rant has been on how consumers - 70% or so of GDP - are not, should not and can not keep spending. Debt needs to be reduced (slowly) but it needs to be reduced. We have spent a very very long time building it to where it is and it will take a long time to reduce. Indeed, it should take a long time as deleveraging too fast can have dire impacts. Nonetheless, we must deleverage. And deleverage we are in fact doing. Now you should do the math on how well the economy will do with this taking place.
http://globaleconomicanalysis.blogspot.com/2009/05/consumer-credit-plunges-record-111b.html
Disclosures: None.
No comments:
Post a Comment