Today's economic reads as though Dean Koontz decided to write a financial horror novel:
- Unemployment claims hit multi-decadal high
- Citi looking at selling itself
- Deflation Certain--the "malign" kind
- Stocks plumment 5 percent for second straight day
- S&P 500 hits levels last seen when Princess Di was alive
- American auto industry facing extinction
It sound apocalyptic. Financially, it could be. Two stalwarts of the American national economy lived too long on ancient practices: autos and finance.
Consider this from Financial Times of London:
“For some time it has not been a question of whether we will see deflation but if it will be the benign kind, where lower commodity prices boost consumption, or a malign spiral of falling prices pushing up the value of debt,” said Julian Jessop, chief international economist at the consultancy Capital Economics. “Today’s figures all point to the malign variety.”
Some short-term US Treasury bills were quoted below zero per cent. Two-year bond yields at one point fell to 0.96 per cent, the lowest since the two-year note was created in 1976. Yields on the 30-year bond fell to a record low of 3.71 per cent.
Democrats Replaying 1932
Meanwhile, Congressional Democrats and the incoming Obama administration seem willing to let the country go down in flames, as Roosevelt did from election day 1932 until his swearing in April, 1933. During that time, banks were closing at the rate of several a day which was causing irrational panic in businesses, markets, and the public. People were thrown out of work on speculation. Hoover begged Roosevelt to endorse a banking holiday to allow people to compose themselves. The arrogant Democrat ignored the President's pleas.
Roosevelt wanted the problem to fester. He wanted the crash to turn into a nightmarish carnival of economic mayhem: the greater the turmoil, the more easily Americans would accept his socialist plans for them.
After taking office, of course, Roosevelt announced a bank holiday to the cheers of millions. He didn't mention that the holiday was Hoover's idea, nor that he could have endorsed the concept in November, saving millions of jobs and countless lives from the Great Depression that followed.
Today's Democrats are playing cat and mouse with the auto industry. If they would simply let GM file BK, much of the auto industry's problems would resolve themselves. As Romney pointed out, without bankruptcy, the industry will not reform. And the last person we need approving that reformation is Nancy Pelosi.
If the markets continue to dive on Friday, President Bush will have to ask the exchanges to close next week. Thursday is a holiday, anyway. Make it a 5-day market break to quell the panic currently rising throughout the world.
The president should also tell Congress to ***** or get off the pot vis-a-vis the auto bailout. A positive indication against government intervention would allow the GM board to fire the arrogant and incompetent Waggoner and hire a CEO capable of rearchitecting the industry. A bailout will prolong the inevitable, and vacillation will doom the US auto sector completely.
Other "Good" News
The Attorney-General of the United States collapsed during a speech to the Federalist Society tonight, Iran has enough fissionable material for a nuke weapon, and, according to Drudge Report, Time agreed to produce only positive stories about Angelina Jolie. (I can't imagine Time giving anyone unfair, favorable treatment or overlooking their flaws.)