MacroScope

Mr. Green Shoots in an orange jumpsuit?

Economist James Hamilton was pretty offended by the rough treatment of Federal Reserve Chairman Ben Bernanke last week at the hands of some U.S. politicians. But when he put up a defense of the Fed chief on his blog, he got an earful from readers who were critical of the U.S. central bank and suspicious over its role in the financial crisis and last year’s bank bailouts.

Some members of the House of Representatives Oversight Committee quizzing Bernanke last week voiced outrage over the Fed’s role in Bank of America’s takeover of Merrill Lynch. They claim the Fed covered up pressure on BofA to swallow massive Merrill losses in order to protect the wider economy.

Hamilton said they were trying to turn Bernanke into a scapegoat.

“These interrogations reveal more about those doing the grilling than they reveal about Bernanke,” Hamilton, an economics professor at the University of California, San Diego, wrote on his blog. “I see this as pure political theater, and I don’t like it.”

But some of his readers reckoned that the Fed chief, a former economics professor with whom Hamilton had corresponded in the past, is getting what he deserves.

“The question is not if the man is a good man. The question is, did he participate in a crime, the crime of knowingly help screw BOA shareholders out of millions?” argued one commentator. “I think he’d look good in orange. He can help the other inmates with their financial planning.”

Shoots and weeds in the economic garden

Nouriel Roubini is a bearish guy at the best of times, but he is currently worried that signs of those “green shoots” of economic recovery are covering up something altogether more stubborn in the garden.

Recent data suggest that the rate of contraction in the world economy may be slowing. But hopes that “green shoots” of recovery may be springing up have been dashed by plenty of yellow weeds.

His point, in a new post on his much-followed blog, is that the consensus view that the global economy has or will soon bottom out has already been proven too optimistic.

Economy: Getting better or just less bad?

In much the same way that analysts have been debating whether equities are in a bear market rally or a new bull market, economists now have to deal with the question of whether the global economy is just bottoming out or is now actually recovering. The two things are obviously linked as BlackRock equities chief Bob Doll indicated when he said this week that equity markets will require the economic backdrop to actually improve rather than simply grow less bad if rises are to be sustained.

The less-dreadful-than-feared syndrome has been around for some time. U.S. markets, for example, found themselves cheering the loss of  539,000 jobs in April simply because its was the smallest since October and looked to be an improvement.

But talk of green shoots, a somewhat overused euphemism for the start of economic revival, has also been on the increase: European Central Bank President Jean-Claude Trichet spoke on Monday about the pick-up in GDP evident in certain areas; China said its efforts to boost growth were working; and a lot of institutional investors are acting as if the worst is over.

Green shoots, Easy Rider edition

OK, so a nearly 10 percent drop in U.S. sales is nothing to crow about, but it sure beats a 19.6 percent fall. Harley-Davidson’s stock is jumping today — and has more than doubled since March — because of stronger-than-expected earnings and a much smaller sales decline in its biggest market.

Sure, some may disagree, but a new Harley isn’t exactly a necessity. If Americans are a little more willing to buy one, that does lend support to the idea that the recession is at least loosening its grip on the world’s biggest economy.

So tell us, how are things looking where you live? A little spring green popping up or are those green shoots about to get trampled?

Gauging recovery with Google

Disappointing U.S. data on Tuesday and other negative corporate news have poured cold water into hopes that the worst is over for the global economy.

Fixed income strategists at Societe Generale looked up ”green shoots economy” on search engine Google and the website delivered 12.5 million hits over the past month. Today, there are about 5 million references. There are a mere 1.82 million references on “bear market rally”.

Could Google searches be taken as a contrarian indicator?  SocGen analysts say recovery hopes are overrated. “More bank news will be coming along this week and the risk now looms to the downside, given the better news already priced in,” the bank says in a note to clients.