Economics Update

Retail sales are imploding Down 2.8% from September, and down 4.1% year over year,

Here is a historical data, courtesy of Calculated Risk, just so you know how bad these numbers look.

Of course, the financial press always has to find a silver lining, so they make note of the fact that consumer confidence rose from to 57.9 from 57.6, the article attributes this to falling gas prices, but I ascribe it to three words, "Buh Bye Bush." With the election, they realize that Bush will soon be gone, and so the number goes, though the number still reflects major suckage.

In the overseas economy, yesterday, it was Germany, well today, it's been confirmed that it's actually the whole Euro Zone that is in recession.

Also, we have automotive news from that side of the pond, with the three major credit insurers in Europe pulling insurance coverage to suppliers of Ford and GM. Basically this means that if either of the auto makers default, the suppliers are on their own.

They have basically decided that the risk of a default is too much for them to cover.

And in domestic bad news cast as good news, we make note of the fact that banks and bank like institutions borrowed less from the Fed this week. Only an average daily borrowing rate of 95.4 billion, down from $110 billion.

Down to an average of 95.4 average daily borrowing list week. Let's run the numbers 95.4 billion/business days * 250 days a year = 28.85 trillion...$23,850,000,000,000.00...By comparison, the US GDP in 2006 was 13.6 trillion.

We also have Freddie Mac tapping a $100 billion bailout fund that was not counted in the above.

As Calculated Risk notes, "Remember Fannie and Freddie have much lower default rates than the loans packaged by Wall Street. If conditions worsened dramatically for Freddie and Fannie, imagine how bad it is for Wall Street MBS and loans held by lenders like Wachovia (Wells Fargo) and WaMu (JPMorgan Chase)."

As to energy, oil is down on demand concerns, and and retail gasoline is down almost $2/gallon from peak.

There is a part of me that wonders if the swing in oil/gas was some sort of electioneering, but it clearly did not work.
In currency, the dollar rose, because when people are frightened, they still flee to the dollar for safety...for a while at least.