2012 March 08 | timiacono.com

Only the Shadow Inventory Knows…

It’s funny to look at the chart below from this report($) by Standard & Poors on the housing market’s “shadow inventory” and then think back to the recently released 2006 transcripts from Federal Reserve policy meetings where they were more interested in praising former Fed Chief Alan Greenspan and having a good laugh as the curves began to steepen.

Shadow Inventory

Of course, the more important story is what’s been happening lately and, though there has been some overall improvement, conditions are not much better than they were at the height of the housing and credit market crisis a few years ago, the growth of the “Recently cured expected to redefault” category not being a particularly encouraging sign.

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In this story at the New York Post, economic/financial market skeptic John Crudele suggests that you lower your expectations for tomorrow’s labor report for the following reasons:

As I’ve reported before, the 2.689 million job loss turned into a gain of 243,000 only because Labor’s seasonal adjustment programs expected the job losses to be bigger. The warm winter weather probably kept some people from being put out of work, and this threw off Washington’s calculations.

New York PostWill that same thing happen with tomorrow’s number?

That isn’t likely. Yes, the weather has remained warm. But Labor’s computers are expecting undoctored, not seasonally adjusted growth of more than 800,000 jobs in February.

So there’s less chance that the seasonal adjustments will be pleasantly surprising.

And February isn’t one of those months in which Washington includes a huge guesstimate for jobs added by companies it thinks, but can’t prove, were just started. This so-called Birth/Death Model has been the biggest contributor to job growth — bogus job growth — over the past few years.

Also, John has spotted a link between Tuesday’s stock market dive and Wednesday’s story about the Fed’s latest thinking on the next round of money printing:

Even though one Fed official last week told investors to stop depending on “morphine” from the central bank, the cry for another version of quantitative easing went out less than 24 hours after the Dow Jones industrial average fell 203 points on Tuesday.

Why not give Wall Street what it wants?

Because the Fed’s money-printing operation is leading to higher commodities prices. And as thrilled as I would be to bail Wall Street out again, can’t we at least wait until it really needs our help?

That’s a good question (the second one, that is).

Jim Grant on Fed Money Printing

Jim Grant of Grant’s Interest Rate Observer talks to Maria Bartiromo and Kelly Evans of CNBC about yesterday’s announcement that the Federal Reserve is considering “sterilized” asset purchases, what now appears to be the leading candidate for the Fed’s next round of “quantitative easing”, otherwise known as money printing.

While the quip “Capitalism is an alternative for what we have now – I highly recommend it” has been highly cited, his comments about the 1920-1921 recession were also of interest as that appears to have been the last time that an economic slowdown has been left to run its own course without massive intervention by the government and central bank.

Thursday Morning Links

MUST READS
The Fed Pretty Much Just Announced QE3 – Forbes
Goldman Sachs comments on the Fed’s sterilised QE – FT Alphaville
Fed Debt-Purchase Approach May Hurt Rather Than Help – Bloomberg
Greece on brink of default as bond deal falters – Telegraph
Why a Greek Debt Deal Won’t End the Greek Saga – CNBC
Greek write-downs: The end of risk-free government bonds – Washington Post
BoE keeps quantitative easing target unchanged at 325B sterling – Reuters
ECB Keeps Key Rate at 1% as Inflation Reappears – Bloomberg
Run to gold, Iran-Israel war is coming: Marc Faber – Commodity Online
A Perspective on Money from Howard and Warren Buffett – GoldMoney
Consumer Credit: The Good and the Bad – EconomPicData
Not too warm for a Labor Dept. snow job – NY Post
Eurocrats and Their Vassals – aucontrarian

MARKETS/INVESTING
Oil rises on Greek debt hopes, Iran concerns – AFP
Gold rises as euro draws strength from Greece – Reuters
Happy Birthday, Bull Market! Morning Business Memo – ABC News
Asian markets rally to end 3-day losing streak – MarketWatch
Have Oil Speculators Already Priced In War With Iran? – Businessweek
Switzerland Wants Its Gold Back From The New York Fed – Zero Hedge
Gold Advances as Weakening Dollar May Fuel Investor Demand – Bloomberg
Gold, silver boosted by physical demand, Fed report – Commodity Online
What role could China play in gold’s performance in 2012? – Commodity Online
Gold to climb on physical buying – BullionStreet

ECONOMY/WORLD/HOUSING/BANKING
U.S. Job Creation Declines in February – Gallup
February Employment Report Preview – A Dash of Insight
Beware Analysts Torturing Jobs Data to Fit Model – Bloomberg
Labor Dept. Asks Nuclear Guardians for Help Keeping Jobs Data Secret – CNBC
Homelessness in the U.K. jumps by 14% in a year – Guardian
The European Central Bank, As Seen From A Bar On The Coast Of Spain – NPR
Brazil Speeds Up Interest Rate Cuts to Single Digit to Revive Growth – Bloomberg
Sellers biggest home-prices hike since ’10 – O.C. Register
Parsing Recent Trends in Home Prices Proves Precarious – CNBC
US House Democrats Request Hearing On Fed Mandate – Nasdaq
Banks Shouldn’t Be Both Judge and Jury on Credit Defaults – Bloomberg
Americans Don’t Benefit From Fed Inflated Asset Prices – Real Clear Markets
Punish the bankers? We’re still rewarding them – MarketWatch

 
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