Hard to keep in close touch from here, in a little harbor on Ithaca. We went by, but Penelope wasn’t home. However, it looks like yesterday was yet another primo example of misplaced speculative enthusiasm as the Fannie Mae execs who didn’t see the credit problems coming claimed that they were leaving

Furthermore, the commodity bubble (just look at the charts - no pullbacks or wall of worry - that’s a bubble) roars on to its inevitable demise. How about $5/gallon diesel - that’ll really make the transportation stocks go much higher based on current market “logic”.

Helicopter Ben made it very clear that he would move heaven and earth (helicopters, too) to prevent deflation. He is now starting to panic. Ignoring his words, we look at his actions. Swapping Treasuries for credit card receivables, auto loans and student loans is hardly a sign of a receding credit crisis. The fear is tangible despite the efforts to soothe and jam the markets. He will stop at nothing. This is good, in a way, because the Keynesians must be shown to have exhausted all their options in order for them to be completely discredited. Just a quick post from Sivota (geography test).

The government said the economy grew in the first quarter, at an 0.6% annual rate. Given that the rejiggering of the inflation calculation in the first quarter knocked an annualized  2.4% off, a better estimate would be that the economy shrank at 1.8% rate. At least that is what the same data would have yielded last year. It isn’t really meaningful to talk about a “true” number in economics where all yardsticks are made of rubber, but certainly reports such as GM’s indicate a rapid slowdown in the economy. My guess is more like a -5 to -6% annual rate, with the rate of slowing increasing.

From the Chron, “Dollar’s fall forces new standard of frugality,” a summary of what’s in and out:

Source: Chronicle research, BudgetSavvyMag.com

There’s much discussion over the “shape” of the recession. The main ideas are “V”, “U” or “L”.

I’m in the “L” camp. Or more accurately the “L____…” camp. I just don’t see what it is that will pull us out. For sure, mailing out $600 checks isn’t it. That’s a drop in the bucket. And the fundamental change from debt to savings that I see as necessary will take a long time.

On a more local level, there won’t be a month-end summary this month either due to travel.