The big news, the Fed basically giving up and lowering its rates to what is effectively zero, I just posted, but that’s not the only central bank news today.<\/p>\n
The European Central Bank is considering cutting its overnight deposit rate<\/a>, and the Bank of Japan is looking at ‘quantitative’ monetary easing<\/a>, things like buying commercial paper outright.<\/p>\n I think that we may see the printing presses cranking up fairly soon, and as I’ve said before, this might not be a bad thing: inflating our way out of the housing crunch as a way to staunch the bleeding in the credit bubble. (I think I just violated some regulations on mixing metaphors, and the English Instructor Swat Team will come after me, red pencils blazing)<\/p>\n In any case, the Federal reserve cutting rates by \u00be% has pushed the dollar down today<\/a> and pushed treasury yields down to new lows<\/a>.<\/p>\n That second one is part of the goal, the idea that lower yields will move people to more risky investments, but since people have already<\/span> accepted negative yields, I’m not sure that it will make a difference.<\/p>\n In the mean time, those who worry about a deflationary spiral, are not relaxed folks today, with the CPI in the United States dropping by 1.9%<\/a> (non-seasonably adjusted) and 1.7% (seasonably adjusted), the biggest drops since 1932 and 1947 respectively.<\/p>\n Anytime you hear an economic statistic, followed by, “since 1932,” it is not<\/span> a good thing….I’m just saying…<\/p>\n Needless to say, this is hitting with real estate too, with housing construction starts falling 18.9% in November<\/a>, to 625K, the lowest number since records started being kept on this<\/span> in 1959.<\/p>\n Anytime you hear an economic statistic, followed by, “since 195,” or, “since records started being kept,” it is not<\/span> a good thing either….I’m just saying…<\/p>\n In Southern California, one of the areas hardest hit by the housing bubble, prices are down 5% for October-November<\/a>, and 35%<\/span> from November last year.<\/p>\n I’ve seen a few stories about how selling is picking up in California, but this really is people scavenging foreclosures and oft-mentioned the dead cat bounce.<\/p>\n In energy, OPEC meeting opened with calls to cut production by 2 million bbl\/day<\/a>, which, along with the falling dollar and Fed rate cut, pushed oil up<\/a>, but only by a bit less than a dollar.<\/p>\n