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Daily Digest - Jan 15

Thursday, January 15, 2009, 8:20 PM

Davos is busy so I am filling in here today...

  • Group Led by Volcker Urges More Oversight of Banks
  • Retail sales dive as holiday spending slumps
  • U.S. 2009 auto sales seen at 27-year low
  • Argentine Peso Worst Latin Currency on Devaluation
  • Economic downturn pounds commercial real estate market
  • Warning that house prices may fall by 80%
  • Group Led by Volcker Urges More Oversight of Banks

Daily Digest - Jan 14

Wednesday, January 14, 2009, 9:37 PM
  • Federal Reserve Vice Chair Donald Kohn
  • Unemployment Rate (Chart).
  • The beginning of the end of Ben Bernanke
  • Accountability for the Troubled Asset Relief Program
  • Tax Oversight Dogs Treasury Nominee (Hat Tip JoeManC)

What's the total debt-to-GDP ratio for the US?

Wednesday, January 14, 2009, 6:38 PM

In response to yesterday's post, titled The crisis explained in one chart: Debt-to-GDP, Lisa G did her homework and then asked a great question:

This debt/GDP % of 403% from 2+ years ago compares to the % in today's post of "340 percent of total GDP. " 

Are these calculated differently or has the percentage actually dropped from 2006?

Any help here? I am getting lost.

Kudos for doing the research and resisting the call to become 'a believer'!  Well done.  There's a perfectly good explanation for all this....


Your chance to be on TV (if you live near Springfield, MA)

Tuesday, January 13, 2009, 10:19 PM

While I have been in discussions with WGBY Springfield (MA) for a while, we have confirmed that I will be giving a seminar on (next) Friday, January 23rd, in the afternoon, from about 1-5 pm.

The event will be taped, with multiple cameras, in a studio (I'm trying to say "high quality", and then broadcast for their upcoming fundraiser on February 10th.

If you:

  • Can come, and...
  • Don't mind being filmed...then...

Erik's changing role at

Tuesday, January 13, 2009, 6:05 PM

When I first discovered the Crash Course last summer, only the first 15 chapters had been completed, but I was still awestruck. I'd never seen anyone do a better job than Chris had done at organizing so many seemingly disparate topics into a single, cohesive message. And frankly, I was a bit envious. My favorite part of my business career was the public speaking I used to do - giving keynote talks at professional conferences and trade shows in the software industry. When I first watched the Crash Course, I thought "Boy, would I love to present this material myself!" Of course I would never try to steal or plagiarize Chris' material, and assured him of this when I first met him. But Chris was quick to say "Wait a minute, this is about promoting the cause, and if you want to help, I'm all for it!". Chris' selflessness and commitment to doing the right thing for society never ceases to amaze me. I was elated to have the opportunity to use Chris' presentation materials myself.


The crisis explained in one chart: Debt-to-GDP

Tuesday, January 13, 2009, 9:41 AM

If I was ever given just one chart, just one piece of data, to make the case that we were on an unsustainable path that had a date with a long period of contraction and economic hardship, it would be this one.


Figure 1: This chart compares total debt (or “credit”) in the U.S. to GDP (or Gross Domestic Product) on a percentage basis. Current total credit-market debt stands at more than 340 percent of total GDP.

As we can see on this chart, the last time debts got even remotely close to current levels was back in the early 1930s, and that bears a bit of explanation. The debt-to-GDP ratio back then didn’t start to climb until after 1929 (blue arrow), because debts remained relatively fixed in size, while it was the GDP that fell away from under the debts. With the exception of the Great Depression anomaly, our country always held less than 200 percent of our GDP in debt (green circle). In 1985 we violated that barrier and have never looked back.


Daily Digest - Jan 13

Monday, January 12, 2009, 8:48 PM
  • Influential Professor Says US has 'Entered a Depression'
  • We're Borrowing Like Mad. Can the U.S. Pay It Back? (Hat Tip JKibbe)
  • Humor, Video on Central Banks
  • Bush to Seek Rest of TARP Money At Obama's Request
  • The Companies That Will Dominate Retail Job Cuts
  • Shane Co., U.S. Jewelry Retailer, Seeks Bankruptcy
  • Cost of war (Graphic)

Daily Digest - Jan 12

Monday, January 12, 2009, 9:30 AM
  • Can science help solve the economic crisis?
  • States with worst jobless rates share root causes 
  • Bad job news at the Jones house 
  • Obama weighs decision about bailout funds
  • Stimulus Projected to Save 3.675mm Jobs... 3mm Too Little? 
  • Christina Romer Video on Stimulus
  • The Fed's Bubble Trouble 
  • The layman's finance crisis glossary 
  • The World's Largest Hedge Fund is a Fraud, November 7, 2005 Submission to the SEC Madoff Investment
  • Business Risks and Costs of New Nuclear Power
  • It's Survival of the Weak and Scrawny 

Daily Digest - Jan 11

Sunday, January 11, 2009, 9:37 AM
  • Yuan-settlement test to start
  • What Are the Chances of a Depression?
  • Asking for TARP Funds Takes Only 27 Minutes
  • Application Guidelines for TARP Capital Purchase Program
  • Warren's Warrants More Valuable Than U.S. Taxpayers'
  • Quantitative and qualitative easing again 
  • GMAC Announces Interim Changes to Its Board
  • Americans Grow To Like Old Cars 
  • Agency Raises Concerns About Car Makers' Pension
  • Obama / Harwood Interview
  • UBS closing U.S. clients' offshore accounts

New Podcast Ready for Subscribers

Sunday, January 11, 2009, 9:12 AM

The next podcast is up and ready for subscribers.  This second podcast went better than the first from a production standpoint, although I already have a raft of ideas for how to improve the third.

In this one, Becca Martenson joins me as the co-host.

As always, keep your questions coming!  They are the best part.


In this podcast entitled The Last Great Bubble, Chris discusses market activity for the past week,  employment and unemployment data, and the possibility of another great bubble in bonds hiding in plain sight before addressing subscriber questions.

If a last great bubble lurks in our near future,  then an enormous advantage exists for those that can either step aside or take temporary advantage of its bursting.