Yesterday was both an historic and eventful day. In the United States, we were celebrating the inauguration of a new President. I did my part over the past few days to bolster the economy by going to a number of parties and balls and consuming copious quantities of food and drink. Washington, D.C. was in a true bubble mentality because it was all Obama all the time here. I must confess to doing next to nothing yesterday except follow the activities on television.
However, as Washington was self-absorbed the global economy was reeling. The stock market collapsed, with financials taking a severe beating (I will have more to say about this in a later post). In Europe, the British Pound is in a disorderly unwind as unemployment approaches 2 million. Spain and Ireland are looking like they are in Depression already (Spain is headed for 19% unemployment while Ireland’s whole banking system is falling apart). Germany’s bailing out their banks and employers are cutting jobs across all industries. Not to be outdone, Singapore released truly dismal GDP numbers in what looks like Depression there.
All of this begs the question: what to do? Nationalization, further recapitalization, let them eat cake? I will have more to say about this shortly. In the meantime, here are the links for today.
Very late night inauguration points – James Fallows
SERIOUSLY ALARMED – Ambrose Evans-Pritchard, Telegraph
Roubini Predicts U.S. Losses May Reach $3.6 Trillion – Bloomberg.com
Hypo Real Estate Gets EU12 Billion as Capital Talks Continue – Bloomberg.com
It’s Not Just Consumers Who Are Making Adjustments – Financial Armageddon
The pain in Spain … – Paul Krugman
UniCredit’s Eastern Exposure – FT Alphaville