Intial jobless claims are up again but continuing claims are down and this is reported as good news. But we are still losing jobs so this means more peoples benifits are running out and nothing is being done about it; so expect a sharp increase in bankruptcies, foreclourses and homelessness that will become more apparent with cold weather. A new trend that is really catching on is for cities to pay the homeless to get out of town. How many buses will Greyhound need to house all the homeless? It’s starting to look like the early thirties when the empty train cars going in both directions would be full of men going to the next town to look for work.
Corporate profits are up but it’s almost entirely from cost cutting. Cost cutting doesn’t make money, cost cutting costs money. When the next quarter numbers come out in early October the picture will be completedly different. The big banks are showing huge profits but not because they are lending more money, it’s still impossible to get a loan. It’s not because defaults from business loans are down, write downs are way up. They’re not making money from foreclosing on more and more families.
They are making money by borrowing trillions from the Federal Reserve (that they printed, backed by thin air) The banks borrow at zero interest and then put it on deposit with the Fed at 6%. (Does your passbook pay 6% or even .6%) The Fed has about a trillion of this money as reserves but they are also buying US Treasury Bonds because nobody else will buy them at the current interest rate. Nobody knows how high interest rates would have to go before anybody would buy them. (this is where the chills run down your spine) Or if anybody would buy them.
The US GDP report comes out tomorrow; don’t expect any good news. Try to think of something funny to say, I can’t.