House prices rose by 1.2 per cent during April and May, according to Nationwide Building Society. It said that the increase was because of huge demand from buyers and a shortage of properties to choose from. Estate agents have reported that good-quality homes are in such short supply that gazumping — when a buyer makes a higher offer than one already accepted by the seller — is making a comeback in some areas.
The Times of London: Gazumping is back as house prices rise and buyers fight over fewer properties
The General Motors Corp. bankruptcy means months of shedding plants, brands, jobs and dealers just as the recession shows signs of abating. But part of the gamble is that it will prove to be better for the economy than the alternatives.
WSJ: Filing Has Potential to Lift Economy in Long Term
US real GDP is forecast by the International Monetary Fund to fall by 2.8 per cent this year and to stagnate next year. This is a far cry from the early 1930s, when real output collapsed by 30 per cent. So far this is a big recession, comparable in scale with 1973-1975. Nor has globalisation collapsed the way it did in the 1930s.
Credit for averting a second Great Depression should principally go to Fed chairman Ben Bernanke, whose knowledge of the early 1930s banking crisis is second to none, and whose double dose of near-zero short-term rates and quantitative easing – a doubling of the Fed’s balance sheet since September – has averted a pandemic of bank failures. No doubt, too, the $787bn stimulus package is also boosting US GDP this quarter.
Niall Ferguson: How economists can misunderstand the crisis
Oil prices, which were less than $45 a barrel at the end of February, have jumped more than 45% in the past three months. The rally reflects a range of factors: a weakening dollar, fears of inflation and increased appetite for risk among investors. But the driving force appears to be the first glimmers of economic recovery. Confident that an economic rebound will yield stronger demand for oil, investors are rushing to get ahead of another surge in crude prices.
There have been some recent hints of firming demand. U.S. gasoline consumption has risen for two consecutive weeks, according to the Department of Energy's Energy Information Administration. Chinese crude-oil demand rose 3.9% in April over the previous year, according to Reuters. Ali Naimi, Saudi Arabia's oil minister, said last week that an economic recovery was "under way" and predicted oil could hit $75 a barrel by year's end.
WSJ: Investor Hopes for Rising Oil Demand Aren't Borne Out by Reality
where would China move its reserve holdings? The other reserve currencies are generally considered to be the pound, the yen, and of course the euro. Which one would you definitely prefer to the dollar these days?
Simon Johnson: Mr. Geithner Goes to China
“The banks want to go back to business as usual — and then some. And they have a lot of audacity now that everyone has bailed them out,” said Yra Harris, an independent commodities trader who was involved in an effort to regulate derivatives nine years ago. “But we have to begin with the premise that Wall Street doesn’t want transparency, because more transparency means less immediate profits.”
(...)
“Special interests in the financial-services industry are beginning to advocate a return to business as usual and to argue against any need for serious reform,” Ms. Born, now a lawyer in private practice, said at the John F. Kennedy Library in Boston, where she received a Profile in Courage Award.
NYT: Even in Crisis, Banks Dig In for Fight Against Rules
So, let's see:
- job losses at GM mean more profits down the road (finally, someone got us rid of these irksome gold-plated pensions and healtcare plans!);
- oil prices are up again, as many bet that demand is growing again - and people warn of speculators driving things (but hey, we really hate speculators only when prices go down; on the way up, they demonstrate the American spirit and its undomitable optimism, right?);
- the dollar is down again, but that's a good thing, as it signals the end of panic and flight-to-safety (because, as we all know, the only safety is in the dollar; eurozone focus on inflation is just a old-fashioned, nay, retarded, policy sure to lead, yet agian, to stagnation and decline);
- any statistic that is not dismal is greeted as a sign that things are improving (even if it only means falling less fast as before rather than beginning to climb out) - witness the extravagant Times article about the real estate market in London (which is not as far down its fall as the US market...); in fact, it's not that big a recession, nothing like the Great Depression we were so quickly warned about - just an almost ordinary recession, in fact, and pretty much over;
- we're back to normal discourse on taxes (cut, cut, cut) regulation (cut, cut, cut), government (evil, evil, evil) - as demonstrated in the most recent cover of the Economist, and, no surprise there, banks are about to get away with yet more "self-regulation" of the sectors that crashed. Hey, they're profitable once again, so all is well, right?
Or, sure, unemployment will keep on going up for a year or more - but that's already discounted. Don't you know that it's a lagging indicator (ie it gives you no new information on business, it's just a reflection of the recent past, so it's already taken into account by the markets and is no longer relevant)?
Never mind that 12% of mortgages are now delinquent. That basic, vital services are going to be cut across the board in California becausr tax hikes are "unpalatable." That savage investment cuts in the oil industry means that a supply crunch is highly likely in a couple of years at best. That the people that brought us the mess are still in charge, and keener to blame Asia's "savings glut" than 30 years of policies to crush wages and replace them by easy debt.
Enjoy the warm fuzzy feeling emanating from the "green shoots". Its likely to prove rather temporary. But please don't act angry or shocked. If $13 trillion of gifts to banks could not rock the political boat, what will?
Update: in case my point was not obvious enough, see this comment in the thread. And in case you're still in doubt, go read gjonhsit's diary
