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.

Peter Schiff is that market wizard people were laughing at just a year ago because of his extreme views. Well, things have turned out much as he has indicated they would. So, now he has a captive audience. And what is he saying? Government is a burden that we need less of. The way forward is not government stimulus but less government, less consumption and higher savings.

Well Peter, I have news for you: that game plan of yours is a recipe for deflation, depression, civil unrest and financial Armageddon. You see, Schiff is an ideologue from the small government, free markets crowd. While I agree with his broader themes about less consumption and more savings, I do not see eye-to-eye with his ideology. What America needs now is a practical solution to a real problem, not ideology from the small government crowd.

On Wednesday morning the U.S. Department of Labor released the latest report on claims for unemployment insurance. The week to December 20th saw 586,000 new claims for unemployment insurance on a seasonally-adjusted basis, which is a 26-year high. The actual number was even higher at 715,496. While these are extremely high numbers, we have to wait until the holiday season is over before drawing any definitive conclusion because this time of year is notorious for distortions from the effects of seasonality.

My very first post on this blog was in March and it was titled “The Economy Is Definitely In Recession.” Back then, this seemed like a stretch for a lot of people, but today the National Bureau of Economic Research (NBER), which makes the official recession call for the U.S., determined that the recession began in December 2007.

Last night, in an e-mail Yves Smith of naked capitalism pointed out an Op-Ed piece by Meredith Whitney which ran in the Financial Times yesterday. It was a fairly somber and downbeat assessment from an analyst who has proved right on the money throughout this credit crisis.

I will provide a highlight here so you get the gist of Whitney’s commentary. But so as not to steal Whitney’s thunder, I will link out to the entire article so you can read it on the FT website.

Stephen Roach must feel a certain sense of Schadenfreude because he has been warning since the end of the Technology Bubble that U.S. monetary policy was reckless and would end in a very bad way. The bubble reached heights few anticipated, making Roach seem like a Cassandra for a number of years. However, now that the bubble has burst and his economic predictions have proven right, we would be well advised to listen to him regarding where the global economy is now headed.

Because I was out of commission pretty much all day on Friday, I haven’t been able to crunch the U.S. retail sales numbers until now. But, let me do a recap today and breakdown what these numbers might mean for the U.S. economy. The headline analysis has been that these were the worst [...]

Yesterday, I laid out some of my general thinking on the business cycle and the economy. Obviously, understanding the business cycle is important to economic forecasting and is, therefore, central to personal financial planning, general investing and business planning.
Over the next few weeks, I will chart out a panoply of data sets for the [...]

Yesterday, I said that investors would begin to focus on the real economy now that the financial crisis has eased somewhat due to massive government intervention. Today, retail sales figures for September 2008 were released by the United States and they were much worse than expected. As a result, shares have dropped, with [...]

Now that policy makers worldwide have finally stepped in to stop the bleeding, we have had a relief rally of monumental proportions. Most global indices were deep into oversold territory, meaning that there was lots of pent-up demand for a turn to the upside. A big rally to the upside was baked into [...]