MacroScope

from UK News:

Ghost of past failure haunts G20

Stopping off in New York during a marathon, 18,000-mile diplomatic offensive before next week’s G20 summit in London next week, British Prime Minister Gordon Brown recalled a conference held in eerily similar circumstances in London 76 years ago.

Sixty-six nations gathered for the June 1933 London Monetary and Economic Conference which was aimed at lifting the world’s economy out of the Depression.

But amid American opposition to European plans to return to a system of fixed exchange rates, the conference collapsed and the world put up trade barriers, jobless ranks swelled and the rise of Fascism took the world into war.

“There was no further progress other than a resort to protectionism for the rest of that decade,” Brown told a business audience during a five-day pre-summit tour that has taken him to the European Parliament in Strasbourg, New York, Brazil and Chile.

Brown must be hoping desperately that history will not repeat itself when he hosts a meeting of leading industrial and developing economies in London on April 2 to try to chart a way out of the worst global financial crisis since the 1930s.

from Mark Felsenthal:

Sherlock Holmes and the Case of the Collapsing Economy

"I think, Watson," Sherlock Holmes tells Watson in "The Five Orange Pips,"  "that of all our cases we have had none more fantastic than this."

The famous fictitious sleuth referred not to a world-wide financial crisis, but a multi-continental saga of murderous revenge, and it also centered on the British hamlet of Horsham, where the Group of 20 rich and emerging nations are meeting to solve their own baffling case, the Global Economic Collapse of 2008-?. 

Readers who not like the endings of stories given away should read no futher. Readers hoping for a hopeful analogy to a story about brains and pluck overcoming adversity should also click away from this post immediately.

Welcome to “The Great Recession”

Ladies and gentlemen, we have a name. We are living through “The Great Recession”. Dominique Strauss-Kahn, managing director of the International Monetary Fund, used the term to describe our current angst on a trip to Africa this week. He may not have been the first to use it — we have found other citations, including JPMorgan — but the guessing here is that it may  stick with him because of his role.

It’s a pretty neat moniker, actually. It resonates, of course, with “Great Depression” but without the soup lines and Hoovervilles. At the same time, it differentiates between the severe contraction now under way and run-of-the-mill economic misery. It also has the snappiness that media folks like — hence this post.

The Bretton Woods duo of IMF and World Bank have been underlining how bad things are. Strauss-Kahn, for example, tells Reuters that delays in bank restructuring could mean economic recovery is not on the cards even in 2010 (which sounds a long way off, but is only next year). Then comes Robert Zoellick, president of the World Bank, who opines to Britain’s Daily Mail that global growth will probably fall about 1 to 2 percent this year.

from Mark Felsenthal:

Greenspan slammed

Former Fed Chairman Alan Greenspan isn't getting the respect he used to.

Greenspan's op-ed in the Wall Street Journal drew withering criticism from High Frequency Economics' Ian Shepherdson, who was unimpressed with the Maestro's denial of any Fed contribution to the country' worst financial crisis since the Great Depression.

Greenspan: "Given the decoupling of monetary policy from long-term mortgage rates, accelerating the path of monetary tightening that the Fed pursued in 2004-2005 could not have 'prevented' the housing bubble."

Shepherdson: "We were appalled and outraged by Alan Greenspan's self-serving it-wasn't-my-fault op-ed... If Mr. Greenspan can say with a straight face that this was not a consequence of the Fed's excessively easy stance then either he is delusional or a very talented poker player."

Need a job? Try Wyoming

It’s no surprise that the U.S. Bureau of Labor Statistics report on state unemployment is grim reading. Unemployment is up in 49 of 50 states (go Louisiana!). 

It may also be telling us something troubling about the prospects for recovering from this recession quickly. The states with low unemployment aren’t exactly the most exciting places to live, and even if you were prepared to move there’s the not-so-small matter of trying to sell your home in the middle of a housing crisis.

The states with the lowest unemployment include Wyoming, North and South Dakota, and Nebraska — far from the coasts where populations — and unemployment — are higher. Which brings us to the Oswald Hypothesis (don’t worry — we didn’t know what it was either until JP Morgan economist Michael Feroli mentioned it). Higher homeownership rates may increase the natural unemployment rate, essentially because that makes it harder for people to pick up and move.

MacroScope video: Lakshman Achuthan

Lakshman Achuthan, managing director at the Economic Cycle Research Institute, speaks to Pedro Nicolaci da Costa about his views of the recession, the current economic environment, and possible steps that could lead to a turnaround.

Finns told to smash piggy banks

In Finland, public service messages have turned to pleading with people to consume more to stave off the recession.

The “Ala ruoki lamaa“, or “Don’t feed the recession”, campaign says being too cautious in consumption is one factor feeding the recession, and it seeks to make people understand the importance of private consumption to the economy.

Posters of a piggy bank equipped with fangs and horns greet travellers on tram stops in Helsinki, and television viewers see spots showing consumers feeding the recession by curbing consumption.

The Beige Book Chronicles

The U.S. Federal Reserve’s Beige Book survey of economic conditions is always chock full of goodies for the econ wonks among us. Today’s installment is a recession-era opus, chronicling in amazing detail just how sharply the economy is falling. Allow us to present a top 10 list of interesting observations:

10. Across the country, demand for professional services was down. “However, Dallas noted a modest increase, albeit less-than-expected, in demand for legal services due to increased bankruptcy proceedings.”

9. In New York City, revenues per hotel room were reported down a record 30 percent in January from a year earlier. Some 13 Broadway shows closed in January.

from Tales from the Trail:

Bold budget boosts bailout

USA-OBAMA/How do you buy $750 billion of toxic bank assets with only $250 billion of taxpayer money?

If you know to play U.S. budget rules like a violin.

President Barack Obama told Congress in passing this week he might need more money than lawmakers have already approved to stabilize banks and pull the economy out of the ditch. 

How much? His budget virtuoso Peter Orszag said on Thursday he could support buying up to $750 billion in bad assets but only needed to set aside $250 billion to do it.

from Tales from the Trail:

When is a housing crisis like venereal disease?

If you're among those upset that your taxpayer dollars may be spent in volume to rescue people who -- for whatever reason -- can't make their mortgage payments, Federal Financial Analytics analyst Karen Shaw Petrou recommends thinking about it this way:

"Preventing foreclosures has a lot in common with treating syphilis. In both cases, you help some who are undeserving, but – in an economic collapse or a public-health emergency – one acts nonetheless. "

Just as in an serious epidemic, you'd take care of the problem and leave moral judgements to others, the right course of action is to take action to halt the housing crisis and leave the debate about moral hazard to economists, she wrote in a note to clients on Friday.