This must be the period of soul searching, with the Economist engaging upon multi-article exegeses on where mainstream macro went wrong [1], [2], [3]. Alternatively, I think this is a happy time for some economists outside the (perceived) mainstream, who can now chortle "I told you so". One recent example is by Mario Rizzo.

The objective facts are far easier to handle in the models than the shifting, subjective expectations of people trying to deal with radically uncertain futures. This is what may get reflected in financial markets. Attempting to understand all of this requires conceding that some knowledge will be imprecise and will lie outside of the box (model). The model is simply a toy that can be thrown out when it no longer suits. This means that it is indeed possible to have valuable knowledge outside of hyper-models (although, of course, all thinking proceeds in

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Despite rising Treasury Note yields, US stock markets yesterday closed at their highest level for 2009. Also, commodities were driven higher by reports indicating that the recession is abating, but the US dollar retreated on concerns of the huge issuance of government bonds.

Elsewhere, Chrysler completed its deal with Fiat, the US Treasury Department announced that ten banks would repay TARP funds, and the Obama administration is dropping its plan to cap salaries at firms receiving bailout funds and has backed away from a large-scale reduction in the number of agencies overseeing financial markets.

Coverage of these events on camera this week included discussions with John Hussman, Chris Whalen, Peter Peterson, Paul Krugman, Mohamed El-Erian, Laszlo Birinyi, Jim Rogers, Jim Grant and Francisco Blanch.

The selection kicks off with the highly regarded John Hussman sharing his wisdom and concludes with an interesting snippet on Africa as an investment destination.

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The 1970s didn’t just curse the world with cheap German wine and the Bay City Rollers. That decade gave us soaring inflation, too.

Gold’s stellar run up to $850 per ounce, rising more than 24 times over, also came in the ’70s. So gold, therefore, must deliver its strongest returns when the cost of living shoots higher. Right?

Wrong. “In the long run, stocks have thrashed gold as great long-term hedges against inflation,” says Jeremy Siegel, professor of finance at Wharton University, Pennsylvania. What’s more, the eight-year bull run in Gold Prices so far this decade has come against the lowest average consumer-price inflation since the early 1960s.

In short, the common opinion of gold as first and foremost a defense from inflation is wildly amiss. Just look at the last 30 years.

Consumer prices in the United States, even on Washington’s data, have pretty much trebled since 1980. But starting at what was

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Tuesday January 27, 2009 Navivest

The Federal Reserve today announced that William C. Dudley has been tapped to serve as President and Chief Executive Officer of the Federal Reserve Bank of New York. He replaces Timothy Geithner, who was yesterday, confirmed by the Senate and sworn in to become the new Treasury Secretary in the Obama administration. The Federal Reserve Board of Governors has already approved his appointment.

The following is from his Federal Reserve Bio:

Mr. Dudley, 56, was executive vice president of the Markets Group at the Federal Reserve Bank of New York. He was also the manager of the System Open Market Account for the Federal Open Market Committee.

He oversaw domestic open market and foreign exchange trading operations and the provisions of account services to foreign central banks. Dudley expanded the Federal Reserve’s contacts with the buy-side investment community and through the Bank’s Treasury Market Practices Group

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Saturday January 24, 2009
Navivest

Yesterday evening, the FDIC announced that the California Department of Financial Institutions had shut down 1st Centennial Bank of Redlands, California and that the FDIC had been named as receiver.

The FDIC has entered into a purchase and assumption agreement with First California Bank of Westlake Village, California, which will assume the insured deposits of 1st Centennial at a 5.29% premium.
First California Bank will also purchase approximately $293 million of the failed bank’s assets. The assets are comprised mainly of cash, cash equivalents and marketable securities. The FDIC is retaining the remaining assets for later disposition.

As a result of that purchase and assumption agreement, the six branches of 1st Centennial will reopen on Monday as branches of First California Bank. Depositors of the failed bank will automatically become depositors of First California and their deposits will continue to be insured by the FDIC.

1st

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Saturday January 17, 2009 Navivest

National Bank of Commerce in Berkeley, IL, became the first bank to fail in 2009, after it was shut down by Office of the Comptroller of the Currency yesterday. The FDIC, which insures bank deposits, was named receiver.

The FDIC has entered into a purchase and assumption agreement with Republic Bank of Chicago, Oak Brook, Illinois, which will assume all of the deposits of National Bank of Commerce.

National Commerce Bank had two branches, total assets of $430.9 million and total deposits of $402.1 million. Republic Bank of Chicago will purchase $366.6 million of National Commerce’s assets and the rest, is being held by the FDIC for later disposition.

The FDIC is estimating that the cost to the Deposit Insurance Fund will be $97.1 million.

The FDIC also announced on Friday, that Bank of Clark County of Vancouver, Washington, was shut down by the Washington Department of

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January 14, 2009 ndash; Yesterday Wisconsin Senator Russ Feingold introduced S. 222 to amend the Internal Revenue Code of 1986 to increase the national limitation on qualified energy conservation bonds and to clarify that certain programs constitute a qualified conservation purpose, and for other purposes; to the Committee on Finance. We expect to see further legislation supporting energy efficiency and alternative energy development. Here is the text from Feingoldrsquo;s comments on the floor:nbsp;nbsp;nbsp;nbsp; Mr. FEINGOLD. Mr. President, over the past few days I have introduced a series of bills that are part of my E4 Initiative, dubbed E4 because of its focus on economy, employment, education, and energy. Today I am introducing two bills that are part of this effort: the Community Revitalization Energy Conservation, CREC, Act of 2009 and the Energy and Technology Advancement, ETA, Act of 2009.nbsp;nbsp;nbsp;nbsp; The newest among my E4 bills is the Community Revitalization Energy Conservation, CREC, ...

The typical Econbrowser reader might not be surprised at the NBER decision -- but some others will. From a May 2008 WSJ article:

"The data are pretty clear that we are not in a recession," Council of Economic Advisers Chairman Edward Lazear told a meeting of editors and reporters from the Wall Street Journal and Dow Jones Newswires.

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"I would be very surprised if the NBER, looking back at this period, would date this as a recession," Mr. Lazear said. There are even indications that revised first-quarter estimates would be slightly stronger than 0.6%. "The optimists seem to have been closer to right on that than the pessimists," he said.

Just to reiterate, that quote is from May 2008.

Here's a picture of GDP and gross domestic income (as suggested by Jim in this post, and noted in the BCDC announcement).

Figure 1: Gross domestic product (blue), and ...

If the new president looked a little, well, burdened on election night, chances are he’s aging a couple of years in the six-hour span between the release of unemployment figures this morning and his first news conference as president-elect this afternoon.

 

6.5% unemployment in October — worst since early Clintontime.  Worse still were the revisions of the August and September numbers.  And as Karl Denninger noticed, the number of unemployed plus the number of people working part-time who’d like to work full-time now tops 11%.  (And who knows what the real figure would turn out to be once John Williams applies Carter-era standards to the numbers.)

As I write, the president-elect is meeting with his “Transition Economic Advisory Board,” his temporary brain trust as it were.  The names on the panel are, well, interesting.  Some of the faces from I.O.U.S.A. are there.  But one has to wonder if

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Cleantech Biofuels is taking the lead in the waste-to-energy industry. With many companies trying to find direction in this field, Cleantech has focused on developing ground-breaking technologies to convert cellulosic material found in municipal solid waste (MSW) into ethanol, which will help generate biofuels and other usable energy products at competitive prices.

Cleantech employs a sophisticated technology known as HFTA technology. HFTA was developed at the renowned University of California, Berkeley and has substantial advantages over any other available means to hydrolyze cellulosic material for ethanol production.

Cleantech has a game plan in place that is not only friendly to the marketplace but will put a smile across the faces of environmentalists across the world. Cleantech anticipates quickly achieving profitability by dramatically reducing pollution released into the environment by the disposal of municipal waste and reducing the costs of transporting waste long distances for disposal.

Leading

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