Thursday, May 21, 2009

Not a good day

A smattering of reports and developments roiled the economic waters. The green shoots are really struggling.
  • Another high unemployment report (supposedly) sent stocks lower. (I say "supposedly" because I think these simplistic explanations for market moves are normally just media spin.) It seems nealry impossible now to avoid double-digit unemployment by the end of the year (and probably sooner).
  • Unusually, bonds fell as well (more typically bonds and stocks move in opposite directions). Reports indicate that Standard & Poors will soon be downgrading the debt of the UK and suspicions are growing that the same will happen to US debt. At the same time the credit of several European countries and multiple European banks recently have been downgraded.
  • To no one's surprise the large Florida thrift BankUnited was shut down by the Feds today. This will result in a large hit to the FDIC, second only to that of California's IndyBanc which collapsed last year.
  • Finally, AIG Chairman and CEO Edward Liddy announced he is throwing in the towel. Liddy was brought in after AIG's implosion last year and was literally working for nothing. In interviews he came across as someone who was sincerely trying to make the best of an awful situation and was working out of a genuine sense of social obligation. He took a lot of heat for the incompetence of his predecessors. Called out of retirement as head of Allstate, he's obviously had enough. This has to be viewed as very unfortunate as it is unlikely that there are very many people of his abilities and character available for such assignments as we tried to rebuild our tattered economy.
All-in-all, just not a very good day.

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