Archive - Dec 27, 2010

• Wen Is Confident China Can Contain Inflation (WSJ)
• Job Offers Rising as Economy Warms Up (WSJ), too bad only temp workers actually get hired
• Euro Pain Turns to 23% Gain for Europeans Through S&P Rally (Bloomberg)
• A neutered teleprompter speaks: Obama Wants Tax Cuts for Wealthiest Americans Ended in 2012 (Bloomberg)
• Krugman waxes philosophic on runaway commodity inflation (NYT)
• China's 2011 money supply back to normal level (Xinhua)
• The Economic Year in Review - Say goodbye to 2010 (Weekly Standard)
• Bankers: Don't fret. Harvard Biz School still loves you (Fortune)

Just the Dallas Fed’s Texas manufacturing index this morning as not even a POMO is stirring today….

No volume, deranged computers, and a rate hike: Europe's mini flash crash refutes the market's "welcoming"
of liquidity withdrawal to Goldman's now traditional embarrassment.

When all else fails, just make stuff up. That appears to be the Plan B for Goldman analyst Helen Zhu, whose take on the faster than expected Chinese rate hike over the weekend is beyond incredulous: "even though our economics team believes that rate hikes are more of a signaling tool rather than the most effective way to curb inflation, we believe this move will be welcomed by the market." So now we know that according to Goldman, rising mortgage rates are good for the economy (that dropping mortgage rates were good is beyond obvious), and the removal of excess liquidity (we have yet to check on where the 1 week Chinese repo rate is) is just as good if not better than the endless pumping thereof. H.M.M.M.M. Fair enough: does Goldman also provide free lobotomies to those clients who followed its FX trading advice in 2010 and are now wanted by the Feds for involuntary manslaughter by way of insanity? Incidentally, we attribute the current drop in ES by 0.5% only to the fact that Brian Sack has been precluded from reaching his Bberg terminal due to snow, and hit the "any key", which on his keyboard just happens to be Buy. And since there is no POMO today, the momo crew may be about to hit a Panic button of their own.

Continuing with the key words to describe 2010's New Normal, promptly after "Jobs" (and the lack thereof) and "Currency" (it is a very fitting metaphor that recently terrorism takes place in the form of weaponized printer cartridges), the 3rd one that should come to mind is "Stuck" - as in the quicksand the economy has found itself, whereby it sinks with every second there is no fiscal and monetary stimulus, and all other primary aspects of the new normal that are going nowhere fast. One of the better illustrations of this newly-found immobility has to do with the Fraudclosure scandal that sizzled in October and November, then fizzled as the banks and the media have done everything in their power to keep it out of sight and out of mind. And Stuck describes far more than just a state of pervasive mortgage insolvency (and bank undercapitalization): it has become a state of mind, whereby the entire nation is seemingly permanently divided on virtually all key issues. We review some of the more salient 'adhesive' trends in the past year.