Let’s hope policy-makers have learnt the lessons of the Great Depression
Chapter one: debt-fuelled consumer binge. Chapter two: stock market slump. Chapter three: credit crunch. Chapter four: trade war. Chapter five: well, let's not go there. History does not have to repeat itself, despite its rhymes. Extremism and war concluded the slump of 70 years ago, but they needn't this time.

Quick Overview

• U.S jobless claims were up 35,000 last week to 626,000
  

• U.S. productivity rose 3.2% in the fourth quarter, more than expected.
  

• (Bloomberg) -- Moody’s Investors Service is reviewing the ratings of $302.6 billion in commercial mortgage-backed securities as real-estate values drop and property owners fall behind on payments.

• U.S. Unit labor costs rose 1.8% in the fourth quarter, less than expected.
  

• U.S. factory orders fell 3.9% in December,
  

• England reduced its interest rate from 1.5% to a record low 1.0%
  

• The European Central Bank kept its interest rate unchanged at 2.0%,
  

• The USDA estimates Argentina's soybean crop at 42.5 million tons, down from the January 12th estimate of 49.5 million tons.
  

• Brazil estimates the upcoming coffee crop at 39.4 million bags.

• (Reuters) - The U.S. government has collected more than $271 million in dividends from ownership stakes in American banks.

• Sales in China's auto industry exceeded the U.S. for the first time last month.
  
  

• BHP Billiton said build-up of iron ore stockpiles in China that prompted suppliers to defer shipments last year is ending – causing ore shipments to rise, one broker said.
  
  

Quick Overview

• The Institute of Supply Management's index of services rose from 40.1 to 42.9 in January
  

• Retail sales in the Euro area fell 1.6% YoY
  

• Services in the U.K. rose from 40.2 to 42.5
  

• Australia’s retail sales rose 3.8% in December.
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 7.2 million barrels to 346.1 million barrels
  Supplies of gasoline rose 300,000 barrels
  Supplies of heating oil rose 1.4 million barrels.
  Refinery use rose from 82.5% to 83.5% of capacity last
  Gasoline demand fell 0.5% YoY
  Distillate demand fell 3.7% YoY

• Central Florida is under a hard freeze warning.
  

• Bloomberg reported that India, the biggest maker of sugar after Brazil, produced 9.5 million metric tons in the four months through January, down 20% YoY as farmers harvested less cane
  

Obama's Wars
By BILL MOYERS
The bombing of civilians from the sky is an old and questionable practice, argued over since the moment the military began to fly. It was deliberate strategy in World Wars I and II. American presidents approved it in Korea and extensively in Vietnam, again in the first Gulf War, then in Bosnia and Kosovo, and six years ago during the campaign of "shock and awe" over Iraq.

Quick Overview

• U.S. pending home sales rose 6.3% in December, stronger than expected. (Is the housing sector beginning to show signs of turning the corner ?)
  

• (Bloomberg) -- A record 19 million U.S. houses stood empty at the end of 2008 as banks seized homes faster than they could sell them and prices continued to fall.
  
  

• Australia reduced its interest rate from 4.25% to 3.25%,
  

• Industrial producer prices in the Euro area fell 1.3% MoM.
  

• (Spiegel)... the US Senate is debating a 'Buy American' provision in its economic stimulus package. The European Union fears the US is trying to seal off its market -- and is using its diplomatic arsenal in a bid to stop the move.
  

• Temperatures are expected to fall below freezing tomorrow morning in parts of northern and central Florida.
  

• Merck and Schering Plough, as well as the homebuilder D.R. Horton posted better-than-expected earnings.
  

• India announced approval for duty free imports of raw sugar.

• Ford sales dropped 39% in January, Toyota sales fell 31.7%, Volkswagen sales declined 11.6%, and Mercedes reported a 35.5% drop.

• (Bloomberg) -- China’s central bank may become less aggressive in cutting interest rates as lending surges and the world’s third-biggest economy shows signs of bottoming out, Deutsche Bank AG said.
  
  

• Indonesia cut interest rates to 8.25% from 8.75%

• Global corporate debt issuance recovered to levels more in keeping with boom times in January with buyers found for around 246bn of company bonds.
  

Quick Overview

• U.S. personal incomes fell 0.2% in December while spending fell 1.0%.
  

• U.S. construction fell 1.4% MoM and 5.1% YoY.
  
• The Institute of Supply Management's manufacturing index rose from 32.9 to 35.6
  

• USDA said that there were 94.49 million head of cattle in the U.S. on January 1st, down 1.6% YoY
  

• Manufacturing in the U.K. increased from 34.9 to 35.8 in January.
  

• South Korea’s exports fell by a record 32.8% in January.
  

• Chinese Premier Wen Jiabao said on Sunday he saw signs of recovery in the final days of 2008.
  

• China’s government announced that more than one in seven rural migrant workers have been laid off.
  

In Davos, protectionism is a dirty word
This is what happens when a country loses half a million jobs a month, and when the state becomes spender-of-last-resort. Taxpayers are tribal. They do not want precious stimulus to feed the foreigner.

Hedge fund to offer shares priced in gold
Shares, which are normally quoted in a currency such as sterling or dollars, are to be available in a new denomination: gold.

Quick Overview

• U.S. GDP was down an annual rate of 3.8%
  

• The University of Michigan's index of consumer sentiment rose from 60.1 to 61.2
  

• U.S. employment cost index rose 0.5%.
  

• Japan’s household spending fell 4.6%
  
• Japan’s industrial production fell 9.6%
  
• Japan’s consumer prices rose 0.4%.
  

• Canada’s GDP fell 0.7% MoM and 0.8% YoY.
  

• Unemployment in the Euro area rose from 7.9% to 8.0%.
  
• Euro area inflation was 1.1% per cent in January – the lowest since June 1999
  

• Gold futures rose to their highest level in six months. Holdings in GLD (ETF) have reportedly reached record levels, now above that of Japan, the seventh-largest holder of gold on the planet.
  

HAPPY BIRTHDAY, Thomas Paine

Why dealing with the huge debt overhang is so hard
Let us start with some facts. The ratio of US public and private debt to gross domestic product reached 358 per cent in the third quarter of 2008. This was much the highest in US history (see charts). The previous peak of 300 per cent was reached in 1933, during the Great Depression.

Quick Overview

• U.S. jobless claims rose 3,000 last week to 588,000. The number of Americans drawing jobless benefits for a week or longer rose to 4,776,000.
  

• U.S. durable goods orders fell 2.6% MoM, YoY orders fell 5.7%
  

• U.S. new home sales fell 14.7% MoM, and 37.8% YoY.
  

• (Reuters) - Government officials seeking to revamp the financial bailout have discussed spending another $1 trillion to $2 trillion to help restore banks to health.

• (Reuters) – The cost of the government setting up a "bad bank" to buy up toxic assets from struggling U.S. banks could range as high as $4 trillion, according to some experts, Sen. Charles Schumer said on Thursday.
  

• Japan’s retail sales fell 2.7% YoY

• Japan’s unemployment rose to 4.4% from 3.9%
  

• Canada’s industrial product price index fell1.9%
  

• New Zealand lowered rates from 5.0% to 3.5%
  

• House prices in England and Wales fell by 13.5% YoY

• (Bloomberg) -- Jamie Dimon, chief executive officer of JPMorgan Chase & Co., blamed banks and regulators for letting consumers amass debt like “weapons of mass destruction,” leading to the global economic crisis.

• (Reuters) - Gold is likely to hit new record highs, spurred by serious concern about the U.S. currency and doubt about the state of the world economy, the chairman of Barrick Gold Corp. said on Thursday.
  There was even a possibility, although not a probability, central banks, including China's, might start to switch from dollar holdings to gold..
  

• In its final days Bush imposed a 300% duty on Roquefort cheese.

Brave new connections The argument, simplified, goes like this: by dint of population, geography and culture, America is best placed to lead. Its immigrants make it a hub for the world’s best ideas. Its geography helps it reach out to other regions while insulating it from global problems such as refugees, cross-border conflicts and even some of China's air pollution. Its culture of openness, as well as constructive intellectual and commercial conflict, makes it a hive for innovation. Other countries suffer a disadvantage in these areas. In a world where hierarchical power is less important and relationships paramount, Ms Slaughter writes, America’s ability to orchestrate, not dictate, will bring it success.

Quick Overview

• Obama said he's confident he will get his $900 billion economic stimulus bill approved.
  

• (Reuters) - The Federal Reserve on Wednesday said it is prepared to buy long-term government debt if that would help improve conditions in financial markets and signaled some concern that deflation risks were rising.

• Global survey taken among leaders of major companies around the globe has found deep pessimism. Just 21% believe that revenues will climb in 2009. (Hmmm)
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 6.2 million barrels last week to 338.9 million
  Supplies of gasoline fell 100,000 barrels
  Supplies of heating oil fell 1.9 million barrels.
  Refinery use fell from 83.3% to 82.5% of capacity
  Gasoline demand fell 1.7% YoY
  Distillate demand fell 3.0% YoY.
  

Quick Overview

• U.S. consumer confidence fell from 38.6 to 37.7 in January -- a record low.
  

• YoY the S&P’s/Case-Shiller index of home prices fell 18.2% in November
  

• Germany's business climate index rose from 82.7 to 83.0
  

• IMF scaled down estimates for 09 global growth to 0.5% from the 1.7% previously. The U.K. to contract (-1.3%) in 2009; Italy (-0.6%); Germany (-0.8%); France's (-0.5%) and Canada to grow 0.3%

• AIG said to pay $450 million to retain about 400 derivatives employees, the very division that drove the company into the ground.

• Canada's unveiled a $32 billion plan to stimulate the flagging economy.
  

• (Reuters) - The Federal Deposit Insurance Corp is aiming to take control of a widely mooted "bad bank," to be set up by the US government to mop up toxic assets of struggling banks, Bloomberg News reported on Tuesday.

• Australia’s consumer price index dropped 0.3%
  

Quick Overview

• U.S. existing home sales were at an annual rate of 4.74 million units, up 6.5% MoM, stronger than expected
  

• U.S. leading indicators rose 0.3% in December, stronger than expected.
  

• USDA reports cattle on feed down 7.1% YoY as of January 1st.
  

• Iceland's government collapsed, days after its prime minister called for early elections amid popular anger over a financial crisis that has gutted the economy.
  

• Pfizer agreed to pay $68 billion to acquire Wyeth in the largest pharmaceutical deal in a decade.

• China-Japan November's container trade down 15%

• Argentina's president declared an agricultural emergency Monday in the nation's breadbasket provinces, responding to a key demand by powerful farm organizations amid the worst drought in decades... In some areas, officials say it is the worst drought since the 1930s. Winds across the pampas are whipping up once-fertile soil that has turned to sand.
  Weather forecasts for Argentina are for a continuation of the hot and dry pattern.

• Australia’s sentiment index rose 10 points to minus 20 from November.

• Ex Lehman Brothers chief Dick Fuld has sold his 13m £9.3m Florida mansion to his wife for $100.

• Citibank has new Taxpayer funding so they decide they need a new corporate jet to replace their old one.
  

Bad news: we're back to 1931. Good news: it's not 1933 yet
It is worth glancing at the
front page of New York Times on Monday March 6, 1933 to see what the world looked like three days after Franklin Roosevelt moved into the White House. (http://www.sharelynx.com/chartsfixed/1NYTGold
Embargo4633.gif).

The newspaper splashed with the story that FDR had closed the US banking system – invoking the Trading with Enemies Act – and ordered the confiscation of private gold. From left to right, the headlines read: "Hitler Bloc Wins A Reich Majority, Rules Prussia"; "Japanese Push On In Fierce Fighting, China Closes Wall, Nanking Admits Defeat"; "City Scrip To Replace Currency"; "President Takes Steps Under Sweeping Law of War Time"; "Prison For Gold Hoarders".

Asian Stocks Rise as Shippers Advance on Fees; Contractors Drop
The Baltic Dry Index, a measure of shipping costs for commodities, gained 3.7 percent amid rising demand for iron ore. On Jan. 23, nickel futures jumped 10 percent, copper surged 5.4 percent and gold futures added 6.7 percent.

Bet against a sovereign government if you dare
That’s an opening the size of the Gotthard Tunnel for any government that decides it doesn’t like a bunch of rootless cosmopolite speculators borrowing its bonds for the purpose of short selling. Say.

Biblical debt jubilee may be the only answer
There is no guarantee that the measures will succeed. The vast scale of government borrowing may exhaust the stock of global capital. Markets are already beginning to question the credit-worthiness of sovereign states. The Fed may find it harder than it thinks to disengage from colossal intervention in the bond markets

Israel promises troops legal backing over Gaza war
Last week, the military censor ordered local and foreign media in Israel to blur the faces of army commanders in photos and video footage of the Gaza war for fear they could be identified and arrested while traveling abroad.

When markets turn
GEORGE SOROS, one of the original hedge-fund managers, believes that every boom in the making is tested. Often the potential bubble succumbs and is forgotten. If it survives, the market’s misplaced faith is redoubled. That, Mr Soros says, is when things become dangerous.

Quick Overview

• (Reuters) President Barack Obama said on Friday he expected an $825 billion economic recovery plan to be approved by his target of mid-February.
  

• California's unemployment rate rose to 9.3 percent in December
  

• The USDA said that frozen pork in storage rose 20% YoY
  

• U.K. GDP fell 1.5% QoQ but rose 0.7% YoY
  U.K. retail sales rose 1.8% YoY
  

• Canada’s consumer prices rose 1.2% YoY
  

• Japan Nov All Industry Index fell -2.3% from -0.5%
  

• Australia 4Q Import Price rose 10.8% from 5%; Export Price rose 15.9% from 13.8%.
  

• A new measure to pay owners of old cars €2,500 to junk their wrecks and buy something new has proven popular in Germany.
  

Merrill Lynch CEO Thain Spent $1.22 Million On Office
Area Rug $87,784
Mahogany Pedestal Table $25,713
19th Century Credenza $68,179
Pendant Light Furniture $19,751
4 Pairs of Curtains $28,091
Pair of Guest Chairs $87,784
George IV Chair $18,468
6 Wall Sconces $2,741
Parchment Waste Can $1,405
Roman Shade Fabric $10,967
Roman Shades $7,315
Coffee Table $5,852
Commode on Legs $35,115

Quick Overview

• U.S. jobless claims rose 62,000 to 589,000.
  

• U.S. housing starts fell 15.5% MoM and 33% YoY.
  

• Canada’s retail sales fell 2.4%
  

• The U.S. Department of Energy said:
  Supplies of that crude oil rose 6.1 million barrels to 332.7 million
  Supplies of gasoline rose 6.5 million barrels
  Supplies of heating oil fell 1.4 million barrels.
  Refinery use fell from 85.2% to 83.3%.
  Gasoline demand fell 1.6% YoY
  Distillate demand fell 2.6% YoY.

Quick Overview

• U.K. unemployment rate rose to 6.1% from 6.0%
  

• Canada’s wholesale sales fell 1.6% in November.

• Brazil cut interest rate a full point to 12.75%

• YoY China's gross domestic product grew 6.8% in Q4 -- slowest in seven years.
  
  

• YoY Japan’s exports fell 35% -- sharpest decline since 1980
  

• South Korean GDP shrinks 3.4% QoQ
  

• The forecast for Argentina remains hot and dry next five days
  

• The National Weather Service issued a hard freeze warning for central Florida on Thursday morning.
  

• Indian gold imports for 2008 fell by 47%.
  

• The level of idle containerships has risen to 255 -- 5.5% of the global fleet, a historic high.
  

Options on Eurodollars to Let Traders Bet on Negative Rates

This is sensible contingency planning as you don’t want to be caught out by something that might in other times seem impossible or unexpected,” said Nick Parsons, head of markets strategy in London at NabCapital, a unit of National Australia Bank Ltd., the country’s largest bank. “We’re in an era now where the return of capital is more important than the return on capital.”

Stock markets often decline on inauguration day
I will say, however, that sentiment in recent days has finally taken steps in the right direction. The Hulbert Stock Newsletter Sentiment Index (HSNSI) dropped nearly 17 percentage points on Tuesday, bringing this sentiment benchmark to below where it stood at the Nov. 20 market low

UK cannot take Iceland's soft option
Britain has foreign reserves of under $61bn dollars (£43.7bn), less than Malaysia or Thailand. The foreign liabilities of the UK banks are $4.4 trillion – or twice annual GDP – according to the Bank of England. The mismatch is perilous.

.. know that your people will judge you on what you can build, not what you destroy.

Obama Inaugural Address

Quick Overview

• (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini.

• U.K. consumer prices rose 3.1% YoY
  

• The British Pound fell against the dollar and hit a record low against the yen. Jim Rogers, chairman of Singapore-based Rogers Holdings, said the “U.K. is finished” and investors should sell the currency.
  

• Japan’s consumer confidence fell from 28.4 to 26.2 in December -- the lowest on record
  

• Canada cuts rate to record 1% -- signals more easing.
  

• Germany's BMW is looking into applying for state guarantees to back up its borrowings.
  

• Fiat is acquiring a 35% stake in Chrysler.
  

• Continuing hot and dry weather in Argentina continues to support corn and beans.
  

• Gazprom resumed gas supplies across Ukraine to Europe
  
  

If the state can't save us, we need a licence to print our own money
It bypasses greedy banks. It recharges local economies. It's time to think seriously about an alternative currency

U.S. stimulus not enough, TARP bailout misused: Soros
"If they are successful...the deflationary pressures will be replaced by the specter of inflation and the authorities will have to drain the excess money from the economy almost as quickly as they pumped it in. Of the two operations the second one is going to be, politically, even more difficult than the first," he said.

Robert Fisk: So, I asked the UN secretary general, isn't it time for a war crimes tribunal?
After killing hundreds of women and children, Israel was the good guy again, by declaring a unilateral ceasefire that Hamas was certain to break. But Obama will be smiling on Tuesday. Was not this the reason, after all, why Israel suddenly wanted a truce?

Quick Overview

• RBS fell almost 67% after warning that it could face losses of up to £28bn for 2008 - the largest ever in UK corporate history.
  

• The U.K. has taken the first step towards quantitative (=printing) easing by authorizing the Bank of England to buy up to £50bn of private sector assets as part of a wider drive to get banks lending again.
  

• Germany's top 20 banks still have around 300 billion Euros of toxic securities on their books and have written off only a quarter of that, according to an official survey, SPIEGEL reports.
  

• The total cost of the inauguration of the 44th President of the United States will likely top $150 million.
  

• Hungary cut its interest rate to 9.5% from 10% – the fourth 1/2 point cut in less than two months.

• Standard & Poor cut Spain’s credit rating from AAA+ to AA
  

• Czarnikow estimates a global sugar shortfall of 5.8 million tons this year. Indian production is now estimated at 18 MT compared with 19.2 MT forecast in Dec.

Terribly Bloodied, Still Breathing
A Report From Gaza

Monetary union has left half of Europe trapped in depression
Don't expect tremors before an earthquake – and there is no fault line of greater historic violence than the crunching plates where Latin Europe meets Teutonia.

21,000 Jobs Worldwide Erased in Day as Recession Chokes Demand
About 2.1 million U.S. jobs will be lost in 2009, Lonski predicted, with 80 percent of the layoffs by the 4th of July.

Citigroup’s Pandit Tries to Save the Little That’s Left to Lose
Relief isn’t in sight. North American credit-card losses, as a percentage of total loans, climbed to 8.04 percent in the fourth quarter from a third-quarter rate of 7.13 percent, the bank said. During the early 1990s recession, the losses peaked at 6.44 percent.

Forgive and Forget?
And to protect and defend the Constitution, a president must do more than obey the Constitution himself; he must hold those who violate the Constitution accountable. So Mr. Obama should reconsider his apparent decision to let the previous administration get away with crime. Consequences aside, that’s not a decision he has the right to make.