Now raising intellectual capital

from Rolfe Winkler:

Lunchtime Links 12-22

Furlough alert 1--Yahoo imposes week long shut down (Vascellaro, WSJ)

Furlough alert 2 --City of Chicago to shut down Xmas Eve to save cash (CBS2)

TARP deadbeat list grows to 55 (Applebaum, WaPo) Up from 33 banks + AIG last quarter.

Mega-savant Kim Peek dies (Collins, Deseret News) Peek was the inspiration for "Rain Man." What a fascinating brain: "Scientists [recently] learned that Kim could hold a book within eight inches of his face and read the left page with his left eye, the right with his right eye at the same time. He devoured books that way." Much more in the article.

GDP revision suprisingly large (Evans, Real Time Econ) Q3 GDP growth was originally reported at 3.5%. The first revision put it at 2.8%. The second, released today, says it was really 2.2%.

Serious delinquencies rise for prime mortgages (Dixon, Reuters) The delinquency rate is far lower than for subprime and Alt A, but prime mortgages are much larger and there are many more of them. So total dollar volume of prime delinquencies is much larger than for subprime/Alt A.

Losing the 3 handle on GDP


The downwardly revised 3rd quarter GDP certainly didn’t shock economists who were expecting a softer reading than the initial 3.5 percent, but the 2.8 percent certainly isn’t pretty especially considering the psychological blow of losing of the 3 handle. (Speaking of symbolic numbers, the FDIC also reported that its reserve fund is now in the red.) There’s still one more revision ahead though, so maybe it will inch back to 3 percent.

Weaker consumer spending – up 2.9 percent versus the originally estimated 3.4 percent – isn’t exactly encouraging since the recovery needs the nation’s shoppers to quicken the pace a little if the economy has any hope of picking up steam. And remember, the “cash for clunkers” program was a big contributor to the gain. It’s also no surprise that government expenditures helped at least partially offset the decline. Such spending increased 3.1% from the original estimate of 2.3%.

from Rolfe Winkler:

Robert Kennedy on GDP

Something to ponder on the weekend (ht Ecopolis):

Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife. And the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.

RFK, speaking at the University of Kansas, Lawrence KS, 3/18/68

The case for GDP bonds


Around the world, governments are struggling to drum up buyers for the mountain of bonds they need to sell. And that’s especially true for big deficit, low savings countries like Britain and the United States.

The returns they are offering on conventional government bonds are low and there’s the risk of inflation eating away at their value. Perhaps it is time for a different approach.