Few days ago I’ve posted that the recession possibly started in December with a chance 70%-80%. The final argument was that the combined commercial paper plus bank credit was in decline.
Well, I should learn for the future that one week of data is not enough. In the week of Dec 19 the banking credit jumped by $71 bln to offset the $54 bln decline in CP the same week. Feds are tight but someone is hanging around the discount window with $5 bln. Please keep in mind that banking credit is more expensive than commercial paper so the credit services charges are growing to offset the rising default risks.
That means that the credit expansion had resumed and the picture is as blurry as it was before. I downgrade the recession call for December down to 60%.
December 28, 2007 at 11:02 pm
Judging by the data in the majority of the LEI I would say we have arrived. Is not denial one of the first characteristics in the grieving process? Then comes anger followed by the lawyers.
I believe the lawyers started today in filing the first sub-prime lawsuit against one of the brokers (can’t remember which one.)
How does one determine who is bellying up to the discount window?
I have been reading your blog for the past several months and really enjoy the information and postings. Thanks and keep up the great work!
Is it snowing where you are or is it just me?
Happy New Year to All.
- justenuf2bdangerous
December 29, 2007 at 4:10 pm
Justenuf2bdangerous, thanks!
It’s snowing in the mountains and I have my skis ready
It will snow on my blog for the next few days as well
December 31, 2007 at 7:42 am
I downgrade the recession call for December down to 60%.
What about a consumer-led recession? Are you following the details on option ARMs?
December 31, 2007 at 2:49 pm
You may have downgraded the recession, but your credibility has been upgraded. Thanks for honest reporting.
December 31, 2007 at 3:08 pm
Whether the recession officially started in December is really just sort of an intellectual and forecasting exercise, as anybody that has been paying attention knows the big one has basically arrived.
Happy New Year theroxylandr, eh, TechGuy, Kris, economessed, and the many other excellent posters! I look forward to reading and learning much more in 2008 about the greatest credit bubble bust in human history. These are certainly interesting times.
January 1, 2008 at 2:01 pm
eh, I read all Winter posts. The exports are still booming, that’s the last straw.
Darth Toll, that’s an interesting question what is the recession. Probably, after we think, we should say that it is not an economic event, but psychological.
If the GDP is already negative but market is booming there is no recession, because what people feel is not GDP, but the confidence.