Bill Gross, the founder of PIMCO and manager of the world’s largest bond fund, has just released his most recent Economic Outlook. In it, he takes a tack regarding the fix to the present turmoil in the markets with which I disagree. However, I would like to draw your attention to his analysis as his voice carries weight in the market place.

Seasonal adjustments for jobless claims are wearing off, but the uptick in claims remains. U.S. Jobless claims for the week ended January 24th came in at 588,000, up slightly from the previous week. Meanwhile, continuing claims reached a new high of nearly 4.8 million. The data only confirms how weak the U.S. jobs picture is and sets us up for a very big unemployment number on Friday.

Bloomberg has a good interview from the World Economic Forum at Davos with Nouriel Roubini and Robert Shiller on the credit crisis and banking industry. The video is below.

Enjoy.

Smarting from Tim Geithner’s comments about China manipulating, its currency, the Chinese have retaliated with a condemnation of U.S. economic policy in the harshest of terms. At the World Economic Forum, Chinese Premier Wen went on the attack, accusing the United States of undisciplined profligacy.

As I indicated just yesterday, irrespective of Geithner’s motives in branding China a currency manipulator, his language was unwise. Further comments of these sorts can only increase tensions between China and the U.S.

Here are some worthwhile contributions from the econblgger world I think you should definitely read.

In November, the U.S. federal agencies which oversee the banking system proposed new guidelines for real estate appraisals. One would imagine that these guidelines would be in keeping with the new more stringent regulatory frame of mind the financial services sector. This is not the case.

In fact, the new proposal appears to entirely eliminate mandated written appraisals in connection with cramdowns and refis.

A few months ago, the Germans were very resistant to the notion that Germany would also suffer greatly in this global downturn. Yet, as the months have past, it has become increasingly apparent that exports from Germany and retail spending in particular are hurting. As a result, the German government has joined the bailout and stimulus crowd.

Germany is proof positive that this is not a moral debate in which only the irresponsible and overleveraged suffer, individually or as nations. After all, the Germans received almost none of the upside during the housing bubble. I suggest those who want to label the downturn a case of just desserts for bad behavior read a few history books on how financial crises drag down the good with the bad.

Animal Spirits Depend on Trust – Robert Shiller, Wall Street Journal
Geithner enlists lobbyist as top aide – Jeanne Cummings – Politico.com (Hat tip Marshall)
Argentina’s B- Rating Affirmed by Standard & Poor’s Ratings – Bloomberg.com
Fuld sells $14m home to wife for $100 – Business – NZ Herald News
Broader point about Geithner, Obama, China, and “manipulation” – [...]

In case you missed it, Freddie Mac and Fannie Mae have cost taxpayers tens of billions to date. The bill is still rising, however, as the two companies are looking for $50 billion more to avoid technical insolvency.

Then there is Citigroup who has had their hands out for $45 billion. They have also written down over $80 billion in bad assets. Yet, they are still splurging on corporate jets.

The video below reports on these events, on John Thain’s million-dollar office makeover and more. Needless to say, we have a clear case of banks behaving badly.

I have yet to read what the media has reported on the new Case-Shiller Housing Index numbers for November 2008. However, I have crunched the numbers and they do not look very good.

For the Composite-20 list of cities, the index is down 18.2% in the past year, putting it down 25.1% from its peak. The Composite-10 list shows a fall of 19.1% and 26.6% for the same time frames. This puts prices back to levels last seen in February 2004.