This comes from Chapter VIII of Galbraith’s classic volume, “The Great Crash 1929.” Given the recent announcement of fraud at Satyam in India and the monstrous Madoff scandal, it is a quote and concept to remember.

ADP, the payroll data company, has shown that the United States is going to see an even larger loss of jobs in December than we saw in November when the Bureau of Labor Statistics releases its figures this Friday. The number ADP put out is absolutely staggering: 693,000 jobs lost.

Needless to say, this number would confirm that unemployment will rise to at least 9 percent if not into the double digits before the recession is over.

Below is a story from the Guardian where they review the ADP numbers and detail new job cuts at Alcoa.

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If you have been having difficulty accessing the site, my apologies.  The site has been down for part of  the day both yesterday and today.  We are working to fix the problem.  As a result, we have revered back to the old look and feel temporarily.

The investing world started the new year in a really positive mood. Us, stocks for example are up nearly 20% from their 2008 lows just two months ago. However, there is a lot of work to be done as evidenced by the news flow from the real economy. There are a lot of layoffs and corporate bankruptcies hitting the wires in the past few days, some of which you will see reported below in the links.

My general take here is that we should not underestimate the severity of the downturn. We should overestimate it and act accordingly. In so doing, we are more likely to see a stronger recovery.

Update 07 Mar 2009: I am re-posting this in light of increasing evidence that Obama’s stimulus bill was in fact too small. Paul Krugman has a good post today called “One-sided debate,” which reminds us he made that argument but was essentially ignored.

President-elect Barack Obama has won plaudits for his management skills as he prepares for office in less than two weeks. However, his stimulus bill is coming under fire from both the right and the left. On the left, Paul Krugman is critical about the high proportion of so-called stimulus that Obama’s proposal gets from tax cuts. On the right, Republicans like the fact that Obama is not only living up to his tax cut promises for the middle class but is also delaying a return to pre-Bush tax levels for the wealthy. However, there is pause within Republican ranks about the size of this package and the debt load that will go along with it.

The Ukraine-Russia row over natural gas has escalated to a new high. Now, state-owned Gazprom has completely cut off supplies to Europe through the Ukrainian transit route. It still remains unclear what the ultimate aim of the Russians are in bringing the issue to this critical state. Nevertheless, it is generally believed that Russia is making as much a political statement about NATO expansion, the disregard of Russia’s sphere of influence, and the dependency of the European Union on Russia for its energy needs. One should expect a political response from the EU shortly.

The question on everyone’s mind in the emerging markets is who will blow up next. Arnab Das of Dresdner Kleinwort Benson takes a stab at answering that question. He targets the Baltics as the problem children and sees current account surplus nations in Asia as lest vulnerable. He also discusses his views on Russia.

Below is the video with him on CNBC giving forth his view.

The data are in for house prices in the United Kingdom and they are not good. Prices have now fallen 18% from their peak in October 2007 according to the latest Nationwide Building Society survey. They were down a massive 2.5% in December 2008 alone. If you recall, I said November’s survey showed that prices had dropped 13.9% in the year to November, with the losses in December, this number has accelerated to 15.9%- one reason I predicted the United Kingdom will suffer a wave of defaults in the coming year.

Every time I write a links post this year, I fear getting the year wrong and writing 2008. It is hard to believe we have a new year already. It has kicked off with a bang too. Did you see treasuries yesterday? They were bloody awful. And it’s just as bad today. It seems everyone is bullish for a second half recovery and that’s great for stocks, but not so good for government bonds. My personal view is that this will change. However, for now, let’s savour the moment.

There is a lot of news out there and here is what I have scanned.

Enjoy.

FT Alphaville, one of my favorite blog sites, has the latest on Glencore and its credit default swaps. They are exploding to the downside for firms issuing insurance against Glencore’s default. Here’s Alphaville’s chart: