Stocks enter the final hour with decent gains, since Monday the DOW has added more than 250 points or about 2.5% while the NASDAQ has advanced more than 50 points or some 3%. The ECRI Weekly Leading Index continues to slip as the smoothed annualized growth rate dropped to a recessionary –10.5% despite no change in the index itself. Mass layoff announcements increased to 1,647 events involving 145,538 claimants during June.
The European bank stress test results are out. 7 of the 91 banks involved failed, a relatively small number despite the Europeans being even more reckless in their approach to bank management than we are. That said like our stress tests it is an exercise in window dressing as there are more than enough exemptions and exclusions to pass even the most impaired of institutions, such as some of the Spanish Cajas and the Bank of Ireland which needs a cool 2.5 Billion in extra capital.
The fact that stress test are even required illustrates the need for regulation and its effective enforcement as virtually any large corporation left to its own devices will pursue a path of shameless greed even if it results in its own demise.
Like Japan following its bust and now two lost decades that have seen the transfer of bad debts from the private sector to the public sector and 20-years of almost continuous deflation. The west follows the same path socializing losses in America and Europe for the benefit of the corporate sector at the expense of the taxpayer and more than a few pension funds who reel from the losses compliments of the toxic assets syndicated by the banks bailed out with taxpayer funds.
But what amazes me is that given the absolutely shameless behavior of the financial sector and the almost complete lack of appropriate regulatory and policy response that the resultant moral hazard hasn’t spawned wholesale consumer retaliation. While strategic default is a growing phenomenon along with living “rent” free for 14+ months in the house after the cessation of mortgage payments. To date the consumer response has been surprisingly mild. Another example of the need to pursue a sustainable path in this world, at all levels especially by governments and big businesses.
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. 
