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Post by jeffolie on Sept 9, 2007 12:04:35 GMT -6
The most important data release yesterday was the weekly Federal Reserve commercial paper outstanding number. Asset-backed commercial paper fell a further 3.1% for the week to $966.7 bln. Overall commercial paper outstanding fell by $54.1 bln. Total commercial paper outstanding has fallen 13.4% in one month. During the 2001 downturn, commercial paper peaked in November 2000 and slid through to December 2003. Over that three-year period it declined by only 22%. 15-day commercial paper is yielding 6.3%, 90 basis points higher than a month ago. Treasuries are 200 basis points below these levels. Credit in the system is contracting fast. As a result, signs of weakness in the economy will appear fast. www.minyanville.com/articles/HOG-BCS-SIVS-ABCP-Greenspan/index/a/14021The Chart of the week is a chart of asset backed commercial paper courtesy of Minyanville's Bennet Sedacca. In the chart below, note the drastic drop in asset backed commercial paper. In a mere four weeks, nearly 20% of the entire market has evaporated. Yes, evaporated. This is otherwise known as debt deflation or credit destruction. It is why I continue to be cautious about credit risk and financial markets in general. globaleconomicanalysis.blogspot.com/2007/09/crisis-in-asset-backed-commercial-paper.htmlBy my calculations commercial paper was 1.3B and now is .966 for a decline of about .33B or about 25%.
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Post by unlawflcombatnt on Sept 10, 2007 5:05:23 GMT -6
So in only 1 month, commercial paper declined 2/3 as much as it did in the 3 years from 2000 to 2003. Meanwhile, total employment declined -316,000 in August. Total employment has declined -163,000 since January. Total employment growth since January has averaged -23,000/month. 2nd quarter annualized GDP is less than the originally posted GDP number for the 4th quarter of 2006. We're in a Recession, plain and simple. Everything is contracting, except media propaganda.
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