If you are wondering why the U.S. housing market is a mess, watch this video about a $103,000 mortgage that was used to finance a shack –literally, a shack. Of course, the mortgage was packaged with a bunch of others into a mortgage backed security, which was rated AAA.

This scenario sums up the mess that was the U.S. housing market pretty nicely.

With the global economy n recession and inflation headed toward zero, government bonds are looking like the best place to put ones money. As a result, we have seen yields on these assets drop to incredibly low levels in the world’s largest developed economies as their prices have increased.

Treasury securities. They may show all the hallmarks of a bubble. But does that mean that the bubble will end now? Here’s what Stephen Roach says.

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David Rosenberg has been one of the voices of reason warning of excesses during the recent boom and predicting the unraveling to which we are now witness.  I have quoted him liberally here.  There is a very good piece on Rosenberg in the Canada’s National Post (Rosenberg is a Canadian) from Dec 30th.  Below is [...]

There has been a general outcry for economic stimulus on the part of the North American, U.K. and Eurozone federal governments to counteract the fall in private sector consumption. In the U.S. and the U.K. in particular, this message is being heard and largess will be delivered in spades.

But, in the United States, there is a bit of a problem: state and local governments. They will not, and often cannot, spend. In fact some will be cutting. Will local government budget cuts undercut federal fiscal stimulus?

I am still playing a bit of catch up with my e-mail, reading and writing, so I won’t be linking out to any interesting blog stories today. However, I did want to give you a taste of what I thought were the most relevant news stories on the Internet in business over the past few days.

Bankruptcy is a necessary part of a free market. I certainly believe this to be so. Rick Newman, who writes the blog “Flow Chart” over at U.S. News, is putting forward the provocative idea that failure is exactly what we needed more of in 2008 and what we should want in 2009.

The Institute for Supply Management released its monthly manufacturing survey for the Unite States today. The data show a fall from 36.2 to 32.4 where 50 represents the divide between recession and expansion. The 32.4 figure represented the lowest figure in 28 years, while new orders were at their lowest since 1948, suggesting that future demand for manufactured products will be extremely weak.

Happy New Year. As the new year begins, I find myself in a fairly optimistic frame of mind. Perhaps, we can wipe the slate clean and start anew this year. In that vein, let me share with you what I think needs to be done in order to right a global economy that is suffering its worse recession since the 1930s. If we accomplish these ten steps, the global economy may well recover much sooner from recession than any of us expect. Feel free to add your own assessment in the comments section.