Daily Digest

Daily Digest - May 14

Thursday, May 14, 2009, 10:14 AM
  • Financials: Is the Tailwind Becoming a Headwind?
  • Truth Tellers Seeing Brown Shoots…
  • Total Private Payrolls (Charts, Historic look back also)
  • Monthly Changes in Private Payrolls (Charts, Historic look back also)
  • Bernanke's Speach at Jekyll Island, Georgia
  • Credit Crisis Visualized (H/T Ivo, Repost)
  • Krugman: Rapid Recovery ‘Extremely Unlikely’
  • Banks CDS, if you blinked…
  • Never one to mince words, Jim Rogers - Bail on the dollar and equities (Video)
  • The Horror Scenario
  • On American Sustainability - Anatomy of Societal Collapse (H/T Suzie)
  • Despite Stimulus Funds, States to Cut More Jobs
  • GM CEO: Bankruptcy Likely; Firm May Leave Detroit
  • It Pays to Lobby (Chart)
  • 1 Minute Battery Station for EV's
  • Bloomberg: Swine Flu May Be Human Error; WHO Investigates Claim (Update1)
  • A few A(H1N1) Links Dr. Henry Niman's Map 4,434 U.S. Cases as of this wrtitng, A(H1N1) Current Timeline, CDC Cases


Financials: Is the Tailwind Becoming a Headwind? 

Good Evening: After taking the weekend to reconsider last week’s celebrations over seeing less awful than expected economic data and the relief in feeling less angst than expected in the wake of the stress test results, investors decided to take profits on Monday. Financial companies led the downdraft in part due to the recent levitation in bank shares, since the banks themselves have decided to respond to the rising demand for their equity with a fresh dose of supply. Negative comments about the banks by Meredith Whitney only reinforced this directional wind shift, as did some proposed tax hikes by the Obama administration. Because it is too soon to tell if today’s reversal will last more than a session or two, perhaps it will be instructive to look at some economic data that lies outside the spin zones found in New York and Washington, D.C.

Friday’s upside surprise in terms of the April jobs figures (-539K vs. expectations for -630K) looked less flattering the more analysts pulled apart the data. Not only were there downward revisions to prior months, but also the weakness in manufacturing, construction and other, higher-paying pursuits was met with strength in either temporary jobs (by the U.S. government for the upcoming census) or fictional jobs (the infamous “birth-death model” somehow estimated new job creation by small businesses of more than 200K). Maybe I should be more open-minded, but I don’t think a new business has been created when former investment bankers hang out the “consultant” shingle while in outplacement, nor would I count all the out of work traders goosing their P.A.s from home. And even if one is moved to take Friday’s unemployment report at face value, losing more than half a million jobs in a month falls a wee bit shy of the 100-150K job additions normally associated with a minimally growing economy.

As the market participants who are actually employed filed back to work this morning, they had little in the way of either economic data or earnings results to guide them. It made the headlines you see below all the harder to miss. A group of stalwart banks, especially those receiving a “good housekeeping” seal of approval from Treasury stress regulators late last week, decided today was the day to cash in the recent rally in their shares by offering a good deal more of them. The new share issuance by Key, USB, Capital One, BB&T, and PNC was marketed as the sort that would enable these fine institutions to repay their TARP loans. To me it looked more like an attempt by this group to avoid having to some day take TARP II funds rather than funding a way to pay back those received in TARP I. Time will tell, but Meredith Whitney’s comments late in the day on CNBC imply my interpretation might not be far off the mark (see below). Saying she wouldn’t touch bank stocks here, Ms. Whitney also pointed out that the business models for financial firms have changed because the government is now involved. “For investors, you invest on what you know to be the rules of the game,” said Whitney. “But with the government involved, no rules apply.” (source: CNBC.com)

If investors needed a further reminder that Uncle Sam is making profits more difficult to come by for corporate America, the Obama administration announced some targeted tax hikes in its proposed budget today (see below). Broker dealers, traders, certain types of insurance, large estates, and “carried interest” all had bull’s-eyes placed on them for prospective tax increases. Rather than comment on the politics of this move, I will stay in the policy realm instead by simply noting that Uncle Sam has some rather large bills to pay. That wealthy individuals, partnerships, and corporations will all be targeted to pony up is exactly the type of change our new President promised while on the campaign trail, and it should come as no surprise to investors. What may start to bother them as they re-price forward earnings at higher effective tax rates is that less of what companies earn will be falling to the bottom line. This announcement is just one of many recently that suggest that even when GDP some day returns to 2007 levels, corporate profits are likely to make a much slower journey back to their highs.


Truth Tellers Seeing Brown Shoots…

Five Economic Storms Raging NOW!

Any economist fixated on so-called “signs of a recovery” needs to have his head examined.

As I’ll prove to you in a moment, the hard-nosed reality is that five major economic cyclones are in progress at this very moment.

The storms are not abating. Nor are they changing direction. Quite the contrary, what you see today is, at best, merely a deceptive calm before the next, even larger tempests.
For investors who follow Wall Street, it could be fatal.

For contrarian investors, however, this insanity opens up some of the greatest opportunities in many years: Precisely when we see plunging barometers all around us, we also have a new surge of hype on Wall Street, driving stock prices higher.

Result: The rally has lowered the cost of contrary investments precisely when their prospects are best. Consider the five storms, and you’ll see exactly what I mean…

Storm #1.
Plunging Jobs

On Friday, the Bureau of Labor Statistics announced that job losses were running at a slightly slower pace than in the first quarter. So Wall Street cheered.

But it’s a joke, and the 539,000 additional Americans out of work aren’t laughing.

Nor are the 23 million people — 15.8 percent of the work force — who are officially unemployed… are struggling with lower paying part-time jobs… or have given up looking for work entirely.

Look. In December 2007, there were 138.1 million jobs in America. Now, there are only 132.4 million.


Total Private Payrolls (Charts, Historic look back also)

Monthly Changes in Provate Payrolls (Charts, Historic look back also)

Bernanke's Speach at Jekyll Island, Georgia

Whether the objectives of the assessment program were achieved will only be known over time. We hope that in two or three years we will be able to reflect on the banking system's return to health with a sharply diminished reliance on government capital. More immediately, we hope and expect that the public and investors will take considerable comfort from the fact that our largest financial institutions have been evaluated in a comprehensive and rigorous fashion; and that they will, as a consequence, be required to have a capital buffer adequate to weather future losses and to supply needed credit to our economy--even if the economic downturn is more severe than is currently anticipated.

Credit Crisis Visualized (H/T Ivo, Repost)

 Krugman: Rapid Recovery ‘Extremely Unlikely’

Princeton University’s Nobel Prize-winning economist, said global economic prospects don’t justify the two-month rally that has restored $8.9 trillion to stock markets around the world.

Speculation government spending packages and interest-rate cuts worldwide will reinvigorate the global economy has helped the MSCI World Index rally 37 percent since falling to its lowest since 1995 on March 9. The U.S. Standard & Poor’s 500 Index surged 34 percent in that time.

“It looks to me now as if the markets are now pricing in a rapid recovery, that they’re pricing in a V-shaped recession, which I consider extremely unlikely,” Krugman, 56, said at a forum in Shanghai today. “The market seems to be looking as if this is going to be an average recession, but it’s not.”

Banks CDS, if you blinked…

Now that we are a few days removed from the release of the stress test results, let’s look at the markets view of the credit quality of the bigger institutions today versus where they were on Feb 10th, the day Geithner introduced the stress test. Interestingly, the CDS of each, except Citi, are near the same level as of yesterdays close as they were on Feb 10th. Of course much happened in between. As of yesterday’s close, the 5 yr CDS for JPM was 123 bps vs 110 bps on Feb 10th and off its high of 237 bps. WFC is at 141 vs 128 on Feb 10th and off its high of 317. BAC is at 190 vs 173 on Feb 10th and off its high of 407. Citi is at 368 vs 282 on Feb 10th and off its high of 675. MS is at 269 vs 273 on Feb 10th and off its high of 470 and GS is at 177 vs 180 on Feb 10th and off its high of 364. The question further out is if the stressed scenarios weren’t stressed enough, will bondholders at some point have to share in the stockholders pain.

Never one to mince words, Jim Rogers - Bail on the dollar and equities (Video)

The Horror Scenario

This morning you may have read Gideon Rachman’s positive view on Hungary. He said the panic is all but over and it looks like Hungry is going to get through this debt crisis.

The horror scenario envisaged a Hungarian banking collapse that would ripple back into the rest of Europe and then around the world. Many EU banks have lent heavily in central Europe. Austrian banks are thought to have lent the equivalent of more than 70 per cent of their country’s gross domestic product to the region. This idea – perhaps combined with a folk memory that the Great Depression had something to do with the collapse of an Austrian bank – helped heighten the panic about Hungary.

But, having just visited Budapest, I can return with good news. The immediate crisis is over. There was a moment when there was a real fear of a bank run. One Hungarian financier is quite precise about the date: Friday, March 13. However, confidence just about held up, the moment passed and so has the threat of imminent collapse.

The unfolding of the Hungarian crisis now looks like a microcosm of the world crisis. Fear of financial collapse is gradually giving way to worries about an unprecedented contraction in the economy – with all the social and political consequences that could imply.

The Hungarian government has predicted that the country’s economy will shrink by 6 per cent this year. It has not performed that badly since 1945. Unemployment is rising and so is inflation, because of the fall in the Hungarian currency.

Hungary has no room for the kind of counter-cyclical Keynesianism that is being tried in the US and the UK. Nobody thinks the markets would tolerate huge fiscal deficits, so instead the government is cutting spending and raising taxes. State pensions were sliced by about 8 per cent last week. Sales tax has just been increased. And this is just the start of an austerity drive.

So, to recap what Rachman is saying, Hungary is looking pretty awful, but it could be worse. But, is that really true? I’ll come at this question via Latvia and the troubles now ongoing there. Yesterday, we learned that Latvia’s economy shrank 18% in the period from Q1 last year to Q1 2009. This is a Great Depression scenario for Latvia. But, the other Baltics, Estonia and Lithuania, are imploding as well. For example, at the end of April, Lithuania reported a 12.6% drop in year-on-year GDP – not as bad as Latvia, but a Depression with a Capital ‘D” nonetheless. I had asked in July if the Baltics were the next Argentina. The answer is obviously, yes.


On American Sustainability - Anatomy of Societal Collapse (H/T Suzie)

On American Sustainability—Anatomy of a Societal Collapse (Summary)

The Real “Inconvenient Truth”

Most Americans believe that we are “exceptional”—both as a society and as a species. We believe that America was ordained through divine providence to be the societal role model for the world. And we believe that through our superior intellect, we can harness and even conquer Nature in our continuous quest to improve the material living standards associated with our ever-increasing population.

The truth is that our pioneering predecessors drifted, quite by accident, upon a veritable treasure trove of natural resources and natural habitats, which they wrested by force from the native inhabitants, and which we have persistently overexploited in order to create and perpetuate our American way of life. The truth is that through our “divine ordination” and “superior intellect”, we have been persistently and systematically eliminating the very resources upon which our way of life and our existence depend.

We now find ourselves in a “predicament”. We are irreparably overextended—living hopelessly beyond our means ecologically and economically—at a time when the supplies of many critical resources upon which we depend will soon be insufficient to enable our American way of life. We are about to discover that we are simply another unsustainable society subject to the inescapable consequence of our unsustainable resource utilization behavior—societal collapse. 

Despite Stimulus Funds, States to Cut More Jobs

Eleven weeks after Congress settled on a stimulus package that provided $135 billion to limit layoffs in state governments, many states are finding that the funds are not enough and are moving to lay off thousands of public employees.

The state of Washington settled on a budget two weeks ago that will mean 1,000 layoffs at public colleges and several times that many in elementary and high schools.

The governor of Massachusetts, who cut 1,000 positions late last year, just announced 250 layoffs, with more likely to come soon.

Arizona has already laid off 800 social service workers this year and is facing the likelihood of deeper cuts over the next two. The state no longer investigates all complaints of child or elder abuse.

"Don't be a child or a vulnerable adult in Arizona," said Tim Schmaltz of the Protecting Arizona's Family Coalition.

The layoffs are one early indication of how the stimulus funding could be coming up short against the economic downturn. As the stimulus plan was being drawn up, there was agreement among the White House, congressional Democrats and many economists that a key goal was to keep states from making big layoffs at a time when 700,000 Americans were losing their jobs every month.

The House passed a stimulus bill with $87 billion in extra Medicaid funding for states, as well as $79 billion in "stabilization" money to plug gaps in states' budgets for education and other areas.

But in the Senate, the stabilization funding was cut by $40 billion to secure the support of the three Republicans who were needed for a filibuster-proof 60 votes -- Sens. Susan Collins and Olympia J. Snowe of Maine and Sen. Arlen Specter of Pennsylvania -- as well as to gain the support of conservative Democrats such as Sen. Ben Nelson of Nebraska. The senators wanted to reduce the package to less than $800 billion, and several wanted to make room for a $70 billion patch of the alternative minimum tax.

Supporters of the final $787 billion bill, which included $25 billion less in state aid than the House plan, said it would help states avoid severe cuts. But tax revenue is coming in even lower than feared.

Ray Scheppach, executive director of the National Governors Association, told a Senate committee last month that states are facing a $200 billion deficit over the next two years. At least a dozen states, including California, Georgia and New Jersey, have ordered furloughs of workers, and increasingly, layoffs loom as the next step.


GM CEO: Bankruptcy Likely; Firm May Leave Detroit

General Motors is open to considering moving its headquarters from Detroit, selling off U.S. plants and even renegotiating parts of its restructuring plan with its major union, the new chief executive said Monday.

It Pays to Lobby (Chart)

An FDL review of lobbying reports for the first quarter of 2009 reveals that banks receiving federal bailout funds spent over $13 million lobbying against consumer interests and for the financial benefit of their executives.

In the first quarter of 2009, banks such as Bank of America, JP Morgan and Wells Fargo that received billions in taxpayer assistance focused their lobbying efforts on defeating attempts to regulate credit card practices, specifically caps on interest rates. They also lobbied extensively to prevent legislation that would have allowed bankruptcy judges to write down mortgage principle ("cramdown"), which FDL examined yesterday. At the same time, they lobbied on behalf of their executives to be paid without limit.
Below is a chart of bailout funds received as a multiple of that $13mm spent on lobbying in the quarter.

1 Minute Battery Station for EV's (Video at bottom of page)

Better Place unveiled its battery swap system today and said the $500,000 gadget can replace a dead battery and get you back on the road in less time than it takes to fill your gas tank.

The prototype revealed in Japan is the first of what the Silicon Valley startup promises will be countless automated battery exchange stations that will one day dot our cities. The technology will make it possible to travel long distances in an EV without the hassle of stopping to recharge your battery, company founder and CEO Shai Agassi said.

“Today marks a major milestone for the automotive industry as well as Better Place,” Agassi said during the demonstration in Yokohama, which was shown live via webcast. “For nearly a century, the automotive industry has been inextricably tied to oil. Today we are demonstrating a new path forward.”

The demonstration came six months after Better Place opened 17 EV charging stations in Tel Aviv, the first step in its plan to have 150,000 places to plug in throughout Israel by 2011. The company, which is working with Renault on an EV, also plans to have 100 battery swap stations in Israel by then. It’s a model the startup hopes to replicate in Denmark, Australia, California, Hawaii and other locations where it has forged alliances with governments and utilities to hasten the adoption of cars with cords.

Taken together, the two developments show just how far Better Place has come in the 19 months since Agassi announced his audacious plan to bring EVs to the masses.

Bloomberg: Swine Flu May Be Human Error; WHO Investigates Claim (Update1) 

May 13 (Bloomberg) -- The World Health Organization is investigating a claim by an Australian researcher that the swine flu virus circling the globe may have been created as a result of human error.

Adrian Gibbs, 75, who collaborated on research that led to the development of Roche Holding AG’s Tamiflu drug, said in an interview that he intends to publish a report suggesting the new strain may have accidentally evolved in eggs scientists use to grow viruses and drugmakers use to make vaccines. Gibbs said he came to his conclusion as part of an effort to trace the virus’s origins by analyzing its genetic blueprint.

“One of the simplest explanations is that it’s a laboratory escape,” Gibbs said in an interview with Bloomberg Television today. “But there are lots of others.”

A few A(H1N1) Links Dr. Henry Niman's Map 4,434 U.S. Cases as of this wrtitng, A(H1N1) Current TimelineCDC Cases 


coyote-smiles's picture
Status: Member (Offline)
Joined: Apr 24 2008
Posts: 11
Re: Daily Digest - May 14

Thanks for the hard work, as always, Davos.  Just one thing... the link "On American Sustainability - Anatomy of Societal Collapse" does not link anywhere, and I would like to read it.



Davos's picture
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - May 14

 Hello Coyote-Smiles:

Hey, thank you for pointing that out, it is fixed now and my appologies for the mess up.

Take care

I'll post this on tomorrow's blog.

 Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update1) 

 By Roger Runningen and Hans Nichols


May 14 (Bloomberg) -- President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

The president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare and said he was confident that the House and Senate would pass health-care overhaul bills by August.

“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

Credit-Card Fees

Obama also prodded Congress to pass restrictions on credit- card issuers, saying consumers need “strong and reliable” protection from unfair practices and hidden fees.

“It’s time for reform that’s built on transparency, accountability, and mutual responsibility, values fundamental to the new foundation we seek to build for our economy,” the president said.

Obama called on Congress to pass a credit-card bill he can sign into law by May 25 that would clamp down on what he says are sudden rate increases, unfair penalties and hidden fees. He wants the measure to protect consumers, strengthen monitoring and impose penalties for credit-card company violations.

The U.S. House of Representatives passed the credit-card bill last month after adding a provision requiring banks to apply consumers’ payments to balances with the highest interest rates first. The bill also imposes limits on card interest rates and fees.

The Senate is debating its version today. It also would require credit-card companies to give 45 days’ notice before increasing an interest rate. It would prohibit retroactive rate increases on existing balances unless a consumer was 60 days late with a payment.

‘Complicit’ in Debt

The president said Americans have been hooked on their credit cards and share some of the blame for the current system.

“We have been complicit in these problems,” he said. “We have to change how we operate. These practices have only grown worse in the midst of this recession.”

The House and Senate will have to iron out any differences and vote again on a final, compromise version before sending it to Obama for his signature.

The American Bankers Association, which represents card issuers, has warned lawmakers and the Obama administration against taking punitive action or setting requirements that are too stringent. Doing so, the lobby group says, would limit consumer credit and worsen a credit crunch.

Obama said that restrictions “shouldn’t diminish consumers’ access to credit.”

Uncollectible credit-card debt rose to 8.82 percent in February, the most in the 20 years that Moody’s Investors Service Inc. has kept records. Lawmakers have said they’re under increasing pressure from constituents to respond to rising interest rates and abrupt changes to consumers’ accounts.

Meetings With Industry

Obama held a White House meeting last month with executives from the credit-card industry, including representatives from Bank of America Corp. and American Express Co. Afterward, he told reporters that credit-card issuers should be prohibited from imposing “unfair” rate increases on consumers and should offer the public credit terms that are easier to understand.

“The days of any time, any increase, anything goes -- rate hike, late fees -- that must end,” Obama said today at Rio Rancho High School. We’re going to require clarity and transparency from now on.”

He also said the steps he has taken to stimulate the economy and start the debate on overhauling the health-care system are beginning to take effect.

“We’ve got a long way to go before we put this recession behind us,” Obama said. “But we do know that the gears of our economy, our economic engine, are slowly beginning to turn.”

Taking questions from the audience, Obama repeated his stance that he wants legislation to overhaul the health-care system finished before the end of the year, saying it is vital to the economy.

Health-care costs are driving up the nation’s debt and burdening entitlement programs such as Medicare, the government- run insurance program for those 65 and older and the disabled.

The programs’ trustees reported May 13 that the Social Security trust fund will run out of assets in 2037, four years sooner than forecast, and Medicare’s hospital fund will run dry by 2017, two years earlier than predicted a year ago

“We can’t keep on just borrowing from China,

Because they said they wouldn't buy our bonds and recently started buying less?

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”


Get tired or Got tired? Will they now begin selling our debt if high interest rates don't entice them?


“It will have a dampening effect on our economy.”


Will have or HAD a dampening effect.? I mean the thing is soaked, getting damp would mean drying off and improving. 

‘Beginning to Turn’


“We’ve got a long way to go before we put this recession behind us,” Obama said. “But we do know that the gears of our economy, our economic engine, are slowly beginning to turn.”

Turn...where or into what, a depression?







Damnthematrix's picture
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Chrysler to shut 800 US dealerships


Car maker Chrysler is closing a quarter of its dealerships in the United States.

In a move which will deal a serious blow to small towns across the United States, the company plans to eliminate nearly 800 dealerships in a matter of weeks.

It says the network is antiquated and sells far fewer cars per dealer than foreign competitors like Honda.

The dealerships are independent, often family-owned businesses which now face the loss of their livelihoods.

The move will have to be approved by the bankruptcy courts.

The move was announced as revised figures were issued showing that the number of Americans out of work rose by more than 600,000 last week.

Dogs_In_A_Pile's picture
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
The Chart of Pompous Prognosticators

Mike -

It's okay though.  Bernanke keeps telling us that the worst is over.  Now where have I heard that before?


1927-1933 Chart of Pompous Prognosticators


1.     "We will not have any more crashes in our time."
- John Maynard Keynes in 1927

2.     "I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

3.     "No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding."
- Calvin Coolidge December 4, 1928

4.     "There may be a recession in stock prices, but not anything in the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

5.     "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929

"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

"There will be no repetition of the break of yesterday... I have no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

"We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

6.     "This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

"Buying of sound, seasoned issues now will not be regretted"
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

"Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929

7.     "The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929

"The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929

"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929

8.     "... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929

"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929

"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

9.     "I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

"I am convinced that through these measures we have reestablished confidence."
- Herbert Hoover, December 1929

"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929

10. "For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930

11. "...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930

12. "There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930 

13. "The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930

"... the outlook continues favorable..."
- HES Mar 29, 1930

14. "... the outlook is favorable..."
- HES Apr 19, 1930

15. "While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930

"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930

"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

16. "... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- HES June 28, 1930

17. "... the present depression has about spent its force..."
- HES, Aug 30, 1930

18. "We are now near the end of the declining phase of the depression."
- HES Nov 15, 1930

19. "Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931

20. "All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933


johnf's picture
Status: Member (Offline)
Joined: Oct 6 2008
Posts: 24
Re: Daily Digest - May 14


pinecarr's picture
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2259
Re: Daily Digest - May 14

That's precious, DIAP!

Damnthematrix's picture
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest - May 14

surely you mean "speechless"!

Oh and thanks for that priceless bit of info DIAP.....  :-)


Davos's picture
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - May 14

Well, this video really adds to that confidence in the market and in the "Fed" and gives them even more credibility.

I'll post it on tomorows blog as well.



maveri's picture
Status: Silver Member (Offline)
Joined: Nov 20 2008
Posts: 159
Re: Daily Digest - May 14


Seems China's domestic market cannot furfill the hole either.

I know of many in Australia who were hoping that China's growth demands would be able to be handled via internal growth alone - perhaps not.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments