Updates are delayed due to data problems.

US Fed pins economic hopes on $200bn liquidity boost
Mortgage debt is now greater than home equity for first time since records began.

Updates resume Mar. 8

US economy a '$3 trillion' casualty of war in Iraq
Stiglitz and Bilmes argue the true cost is at least US$3 trillion, under what they call an ultraconservative estimate. They say it could surpass the cost of World War II, which they put at US$5 trillion, adjusted for inflation.

Quick Overview

• The Institute for Supply Management said its index of national factory activity fell to 48.3 in February from 50.7 in January.
  
  

• The U.S. Census Bureau said that construction spending was down 1.7% from December's pace and down 3.3% YoY.
  

• Canada's GDP was down 0.7% in December, but up 2.7% YoY
  

• Japan's wages rose 1% YoY
  

• Manufacturing in Australia rose from 49.2 to 51.4 in February.
  

• Consumer prices in the Euro Area rose 3.2% in February.
  

• Mexico said December silver production declined 6%.
  

'Ninja' loans explode on sub-prime frontline
One family - the husband is a janitor, the wife a cleaner - bought their two bedroom bungalow in Oakland for $420,000 in 2005. Now their mortgage rate has reset and it is on the market for $119,000. It probably won't fetch the list price.
Over in Detroit there are now more than a handful of properties on the market at $100.

Quick Overview

• The U.S. Commerce Department reported January personal spending rose 0.4%, while personal income rose by 0.3%.
  
  

• Chicago Purchasing Managers s index of regional business conditions fell to 44.5 from 51.5.
  
  

• The U.S. core rate of personal consumption expenditures rose 2.2% YoY.
  
  

• GDP in India rose 8.4%.
  
  

• The unemployment rate in the Euro Area unchanged at 7.1%.
  
  

• Consumer prices in the Euro Area rose 3.2% YoY.
  
  

• The International Grains Council forecast 2008-09 global corn plantings down 3% on the year.
  
  

• Chinese January silver imports rose 105%.
  

What Happens When Consumers Stop Consuming?
Central bankers don't normally reduce interest rates in the face of rising consumer prices. But our poor Bernanke-led bank consortium feels it has no choice. The cannons of deflation to the left of them…the artillery of inflation making louder noises to the right - they'll attack on the left!

Why?

Two reasons. First, they believe they can lick inflation any time. That was what Paul Volcker showed them 25 years ago. Inflation can be beaten by clamping down on lending…raising interest rates…and tightening up on the money supply.

But deflation? The present generation of the world's central bankers watched Japan struggle for 18 years. They think they learned something.

Quick Overview

• U.S. GDP rose 0.2% QoQ and 2.2% YoY -- less than expected
  

• Japan's factory production fell 2% in January
  

• Germany's unemployment rate improved from 8.7% to 8.6%.
  

• South Korea’s current account deficit widened to $2.03 billion in January, the biggest deficit in almost 11 years
  

• The International Grain Council estimates 2008/2009 world wheat production at 646 million tonnes, compared with 603.6 last year.
  

• CALPERS, may increase its commodities investments 16-fold to $7.2 billion through 2010.
  

• MF Global exposed a $141.5 million loss from unauthorized trades in wheat by one of its reps.

Quick Overview

• U.S. durable goods orders fell 5.3% in January, weaker than expected. Excluding transport orders fell 1.6%.
  
  

• U.S. new home sales fell 2.8% from December's pace. YoY new home sales fell 34%.
  
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil fell 3.2 million barrels
  Supplies of gasoline rose 2.3 million barrels
  Supplies of heating oil supplies fell 1.3 million barrels.
  Refinery use rose from 83.5% to 84.7%
  Gasoline demand rose 0.4% YoY
  Distillate demand fell 3.5% YoY.

Quick Overview

• Germany’s Feb. business confidence index rose 0.7 to 104.1 -- stronger than expected.
  

• The U.S. Labor Department said that producer prices rose 1.0% in January and up 7.4% YoY. This is the biggest 12-month gain in more than 26 years.

As of today I have not changed the computed 70+% chance of US corn yield being below 150.6 BPA. – Elwynn—

Quick Overview

U.S. existing home sales fell 0.4% in January. This is 10.3 months of inventory. Median home prices fell 4.6% YoY.

Kazakhstan will curb grain exports by imposing custom duties starting March 1, according to reports. The majority of the country's grain exports are wheat.

Gold Falls as U.S. Pledges Support for Some IMF Bullion Sales
``If you're China, you're holding all those U.S. dollars in reserves, it wouldn't be a bad idea to swap some of that for gold,'' Gartman said.
China is the 10th-largest holder of gold amongst central banks, with just 1 percent, or 600 metric tons of gold, in its reserves, according to World Gold Council data.

America’s economy risks mother of all meltdowns Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.

Demand for wheat puts India at risk
B.C. Khatua, the chairman of the Forward Markets Commission, which regulates futures trading for food commodities ranging from wheat and rice to dried beans, said India urgently needed to improve agricultural productivity to stem food price rises, which hit the nation’s poor majority the hardest. “India has a deficit of oilseed, a deficit of many pulses and now a deficit of wheat – all the major staples are now getting hit by the demand-supply gap,” said Mr Khatua.

The Bonfire of Capital
It all sounds more complicated than it really is. Imagine a 200 ft. conveyor belt with two burly workers and a mountain-sized pile of money on one end, and a towering bonfire on the other. Every time a home goes into foreclosure; the two workers stack the money that was lost on the transaction, plus all of the cash that was leveraged on the home via "securitization" and derivatives, onto the conveyor-belt where it is fed into the fire. That is precisely what is happening right now and the amount of capital that is being consumed by the flames far exceeds the Fed's paltry increases to the money supply or Bush's projected $168 billion "surplus package". Capital is being sucked out of the system faster than it can be replaced which is apparent by the sudden cramping in the financial system and a more generalized slowdown in consumer spending..


..Harvard economics professor and former Council of Economic Advisers under President Reagan, Martin Feldstein, made this candid admission:
"There is plenty of blame to go around for the current situation. The Federal Reserve bears much of the responsibility, because of its failure to provide the appropriate supervisory oversight for the major money center banks.

Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish
Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom, from 2003 to 2006, that assignment of ownership wasn't always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Indiana.

Quick Overview

• Turkish troops launched a ground invasion into northern Iraq in pursuit of Kurdish rebels.
  

• Canada's retail sales rose 0.6% MoM and 5.8% YoY
  

• India’s gold imports in January fell 72% to around 24 tonnes from a year ago as soaring prices reduced demand, a senior official at World Gold Council said.
  

• The Far Eastern Freight Conference, whose member’s control 75% of Asia-Europe trade, experienced an eastbound volume increase of 4.8% YoY.
  

Government investigating link between ethanol, beef recalls
Studies from two universities show evidence that feeding cattle a byproduct of ethanol production known as distillers grains can increase their levels of a deadly form of E. coli bacteria.