Rev. James Meeks -- Barak Obama's new pastor -- seems to have been one of the prime movers behind the much-condemned Chicago 2006 Halloween "Haunted House" that showed scenes in Hell occupied by homosexuals, abortionists, and Buddhists.
Rich Lowry provides a standard 101 lecture on inflation without asking some of the more interesting 101 questions. For example: why isn't ongoing inflation front page news? (Maybe because ordinary people don't really notice it that much?) Why don't ordinary people notice inflation all that much? (Maybe because, unlike the US in the 1970's, there are more lower-cost substitutes to choose from? For just about everything?) What do lower-cost substitutes have to do with inflation? (Maybe they allow ordinary people to maintain their standard of living by switching from higher-cost items to lower-cost substitutes?)
Look for lots of new stories like this one about just how bad is Ohio's economy. Then check out union membership by state, and ask yourself, are there any questions raised by these facts?
We live across the street from last Saturday night's Obama fundraiser, and saw all the limos and SUVs dropping off extremely well-dressed contributors. Anyway, one of Obama's supporters was quoted in this story as follows, but I think there's an incorrect use of an important word in what follows:
I'm nauseaus! I want it to be over. I want him to have the nomination, and I want him to be the president of the United States," said Obama supporter Deborah Koppelman.
(I suppose some would say she really is nauseaus rather than nauseated, but anyway...)
Upon exactly what was the United States of American built upon? (Scroll to the bottom of this article to find the answer. Hint: The first letter is "t" and the there's an "x" in there somewhere!)
David Malpass, in an email, describes current activities in credit markets. Even though the economy's vital signs are actually still largely okay, the following must be considered:
"...the turmoil in credit markets has worsened materially as the dollar hits new lows. The spread between the bonds of government sponsored agencies and Treasuries widened sharply on March 6, as did the spread between Italian bonds and German bonds, showing zero risk tolerance. Showing the depth of the risk aversion, the spread even widened between bonds issued by different parts of the federal government (Treasuries versus Ginnie Mae bonds issued by the Federal Housing Administration.) Ten-year swap spreads and the TED spread between Treasuries and euro-dollars widened, showing a lack of confidence by banks in the credit of other banks.
In addition to dollar weakness, a circular mark-to-market process is a key factor driving the credit market deterioration. As we understand one example, a major bank sold a small group of bonds at a low price late in February. This caused a mark-to-market decline in similar bonds elsewhere. A margin lender raised its margin requirement, creating a margin call for a hedge fund owning similar bonds. Unable to meet the margin call, the hedge fund sold bonds quickly, adding to the volatility in that segment of the bond market. This began to impact the volatility in agency bonds, causing increased margin requirements on them. As volatility on agency bonds increased, margin calls went out, forcing sales, driving prices down and forcing lower marks, a process still underway after today's market close.
From a macro-economic standpoint, this is resulting in a further sharp deleveraging of the global financial system. Leveraged bond holders sell, reducing their debt but causing losses for their investors or owners. The bonds, now with higher yields, find their way into the hands of less leveraged holders. The amount of debt in the system declines relative to the equity capital.
While traumatic, we don't think this deleveraging process has a big impact on GDP. The losses are to balance sheets, usually large ones. The system is evolving toward less leverage with wider spreads and a better matching of maturities. This should allow future growth in output despite the losses on past wealth. We're encouraged by the speed with which the muni bond crisis of recent weeks calmed. Some municipalities will pay more interest going forward in comparison with the unusually low interest payments of recent years.
We're not sure when the credit crisis will subside, though at some point credit spreads will be wider than credit risk justifies. We think a Washington preference for a stronger dollar would solve the problem, but is unlikely at this point. Global reservoirs of liquidity are full, but are not stepping in to buy the marked-down dollar-denominated credit instruments. Instead, capital has been fleeing away from the dollar into commodities and Asia.
The latest credit market turmoil is probably not enough to stop U.S. GDP growth in the first quarter. If the turmoil persists, though, it will weaken second quarter growth substantially, reducing employment, investment and consumption."
