Stocks fell from the open despite little significant news. Durable goods orders increased .3% in December, a volatile series the proxy for business spending, non-defense capital goods ex-aircraft, fell 2.2% though the rate of decline has fallen sharply. Businesses just aren’t investing, as overcapacity remains compliments of the credit bust. The Chicago Fed national activity index increased to -.61 in December just below the recessionary threshold of -.7.
DataQuick reports that Notices of Default hit a record in 2009, while the rate of filings trailed off late in the year I would think that has much more to do with the various moratoria including the HAMP Program than actual fundamental improvement. Still the report suggests that the worst is probably over for the lower priced, aka sub-prime, markets, though they noted that foreclosure activity is increasing rapidly in mid and upper end markets due to the Option ARM and Alt-A resets and unemployment driving prime defaults.
On the subject of employment the 4-week moving average has now increased 3 consecutive weeks reaching 456,250 with the latest release. Economic recovery is about jobs ultimately something Obama recognized in his State of the Union speech last night. Though once again the concept of too much debt was largely avoided with the exception of a passing reference to affordable mortgages and of course reducing the Federal deficit.
Much of this I imagine has to do with the fact that the Fed’s economic models don’t account for the burdens imposed on consumers by the assumption of an excessive debt level. Yet the data on the subject is quite clear as is the current example playing out before us in spades that is the credit bust.
This failure to recognize the systemic problems caused by said debts is the root of much of the criticism surrounding Ben Bernanke’s confirmation hearings. While the official blindness to debt issue I find particularly surprising especially given the data available and the Japanese example, an example that continues to this day and has been going on for 20 odd years.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. Much like my daily radio show on KPIG 107.5 FM in Santa Cruz California and KPYG FM 94.9 Cayucos/San Luis Obispo California. A thousand Blogs were able to spot the current problems and many began discussing it years before it reached crises proportions. While there were exceptions, and these exceptions are becoming more common, the mainstream media failed to get it and largely continue to do so.
