12/24/09 Ouzilly, France – The world of Christendom is hushed in anticipation today. But the noise keeps coming from the financial world. Yesterday, the Dow held steady. The dollar too. Gold, though, rose $7.
This morning, the Asian markets are moving up…following an announcement by China that she would continue her free-spending, free-lending ‘recovery’ era policies.
Back in the USA, we could swear that we read a headline yesterday telling us that new home sales were rising. Today comes this Bloomberg headline:
“Sales of New Homes Unexpectedly Fell in November.”
That didn’t seem to stop consumers. They spent more! At least, that is what the noise said. Where did they get the money? Incomes apparently went up a little. Spending went up a little more.
And then there is another item on Bloomberg News this morning. A new law will take effect in February. Like every new law, it disrupts the old laws by which people organized their lives. This one decrees that credit card companies shall henceforth cease the practice known as “universal default.”
If a fellow defaults on one credit card, the other credit card companies rightly figure he’s likely to do the same to them. So they take precautions, cutting him off from future credit.
But the authorities want people to spend – apparently, even people who can’t pay their bills. So, they are outlawing the practice of “universal default.”
The term “unintended consequences” was invented for these occasions. As usual, the law produces the exact opposite results from those the politicians wanted. The credit card companies are tightening up on all their accounts, realizing that after the new law goes into effect in February, they will be less able to identify the bad accounts quickly and less able to control their losses.
According to Bloomberg, this threatens $9 billion in holiday season sales.
Blah…blah…blah…noise…noise…noise…
It’s best to shut it out…listen for the sound of reindeer bells…and look for a bright star in the East.
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Existing sales were rising, due to the $8k buyers credit, there was no positive impact on new construction. Once again, government manipulation leads to false positives.
Merry Christmas, may the new year bring some sound thinking and logical reason.
There is so much noise now in the markets nobody can hear anything that makes sense anymore but that doesn’t stop people from listening.
By the way, I am not convinced governments judge their gold holdings by the reserves their respective central banks hold but it is more likely they measure and build them up in relation to GDP.
And sundance: you may be wrong with criticizing Harry the way you did in case Bonner’s wrong regarding inflation because that would mean that in hindsight people would not probable not interprete the 2007 events as crash anymore. Not to say depression.
Ooops, one “not” too much. Inflation in words seems to be already there
.
“Probably” not “probable” …
Just picked up a duplex from a subprime pool (they call it a tranch?) of JP Morgan loans, trustee was Deutsche Bank, for over 50% off, thanks JP and Deutsche!
Mr Bill,
The “universal default” is nothing in comparison.
Around the world, behind those superficial richness , can’t we imaging those lurking darkness ?
Actually, the weakening dollar is a fortune to the US due to her huge debt. To other people who are still sane, a free-fall dollar will be a blessing since this will clean up whole the mess. Isn’t it timely to clean up the mess ?