{"id":196588,"date":"2008-04-10T16:56:00","date_gmt":"2008-04-10T21:56:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/04\/10\/economics-update-481\/"},"modified":"2008-04-10T16:56:00","modified_gmt":"2008-04-10T21:56:00","slug":"economics-update-481","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/04\/10\/economics-update-481\/","title":{"rendered":"Economics Update"},"content":{"rendered":"

Jobless claims are back below 400,000<\/a>, down to 357,000. This is a noisy number, and it appears that the Easter holiday may have effected this somehow.<\/p>\n

In high finance, we are starting to see some of the sh%$pile being liquidated at steep discounts, with Goldman Sachs selling \u00bd billion of Chrysler debt at about 63\u00a2 on the dollar<\/a>, which comes to about a $185 million dollar haircut, and it has been revealed that Lehman liquidated about $1 billion in funds<\/a>.<\/p>\n

You can view this as an orderly unwinding of these highly uncertain financial instruments, or the first steps towards a rush to the exits. I’m not sure which, though the fact that the LIBOR-OIS and the TED spreads are up again<\/a>.*<\/sup> might indicate that it is a rush to the exits.<\/p>\n

Basically, the spread, or difference in interest rates, between what banks demand when they lend to each other is a measure of how skittish people are about debt. The higher the number, the worse fear.<\/p>\n

After dropping briefly following the Bear bailout, the spread is heading back up, implying that there are a lot of people who don’t want to buy someone else’s debt.<\/p>\n

In international trade, the Dollar hit a record low vs the Euro<\/a>, $1.5912:\u20ac1.0000, and the Yuan strengthened to below 7 to the dollar<\/a> for the first time ever.<\/p>\n

On the brighter side, the trade deficit rose in February<\/a>, which might indicate that the economy is strengthening somewhat, though it isn’t in the UK apparently, because the Bank of England cuts key British interest rate 25 basis points<\/a>, to 5 percent.<\/p>\n

The continental Europeans appear to be more worried about inflation though, as the European Central Bank left rates unchanged<\/a>, which will put some more downward pressure on the dollar.<\/p>\n

Seriously though, I really can’t make a whole bunch of sense in today’s data, there is too much noise in opposite directions, which is why a fair man is not too hard on economists, who deal with this all the time.<\/p>\n

Luckily, I’m not a fair man, so to all you economists, Go away, or I shall taunt you a second time.<\/p>\n

*<\/sup>As Paul Krugman puts it<\/a>, “One is the spread between Libor and Treasuries, the other the spread between Libor and the futures price of the Fed funds rate; I tend to prefer TED spread, because fears of bank defaults should affect Fed funds as well as Libor; but I know that Fed officials prefer OIS. Anyway, both pointing in the same direction.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Jobless claims are back below 400,000, down to 357,000. This is a noisy number, and it appears that the Easter holiday may have effected this somehow. In high finance, we are starting to see some of the sh%$pile being liquidated at steep discounts, with Goldman Sachs selling \u00bd billion of Chrysler debt at about 63\u00a2 …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1080,973,1004],"tags":[],"class_list":["post-196588","post","type-post","status-publish","format-standard","hentry","category-currency","category-economy","category-finance"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196588"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=196588"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196588\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=196588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=196588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=196588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}