Who does not like a good argument? I for one do, especially when it comes to economics. A lot of water has already gone under the bridge relative to the note published a couple of weeks back by VariantPerception on the Spanish banking sector which provided a timely and, in my opinion, accurate analysis of the issues facing the Spanish banking and financial system as a function of the dire macroeconomic situation Spain finds itself with skyrocketing unemployment and lingering (and entrenching) deflation. Now, the reason that I point out how "a lot of water has gone under the bridge" is quite simply that I know the people at Variant and, as you know, I also know Edward Hugh who was very effective in dessimating the conclusions of the report across his (second) empire now growing on Facebook. As Edward noted here on A Fistful of Euros in

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European orders increase more than expected… Was Cash for Clunkers necessary?… Roubini sees a ‘W’ not a ‘V’… Lessons from Mary Poppins…And Now… Today’s Pfennig!

Good day… And welcome to another week, the last one in August! The weather here in St. Louis has shifted toward fall, which is my favorite season. Chuck is flying back home from San Francisco today and will be back in the saddle tomorrow. Both he and the big boss, Frank Trotter, sent me some great Pfennig pfodder over the weekend so lets get right to it.

The dollar continued to drift lower throughout the trading day on Friday, with the commodity currencies of Australia, South Africa, and New Zealand leading the way. Confidence is returning to the markets, and investors are once again moving out of the ’safe havens’ of the Japanese yen and US dollar. The reports coming out of Jackson Hole indicate that central bankers believe

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On Wednesday, US stocks opened the third quarter with a sharp rally but the averages finished well off session highs as caution prevailed ahead of Thursday's jobs report.  The markets opened strongly with the Dow Jones industrial average shooting up 133 points before paring some gains to close up 57 points, or 0.7%, to 8,504.06.  The Nasdaq added 11 points, or 0.6%, to 1,845.72 and the broader S&P 500 index edged up 4 points, or 0.4%, to 923.33.  A better-than-expected report on Chinese manufacturing and General Mills' (NYSE:GIS) solid quarterly earnings also helped sentiments on the Street as investors shrugged off a report from ADP which showed companies in the US cut 473,000 jobs in June.  

US stocks had declined Tuesday after an unexpected decline in consumer confidence sparked a sell off, but the S&P 500 index managed to end the quarter with a 15.2% gain, its best

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I should of course extend an apology to my readers for not posting more in a week when Macro Man has been speaking of a "catalyst" and when both the Fed and the ECB made important announcements (although I am not so sure what the Fed really changed, if anything). However, I too am a slave of the real world and one important customer at the small shop I am working in suddenly wanted a whole lot of stuff done, all in a horrible hurry, so I have been desked all week.

So sitting here on a Thursday evening thinking about whether I could wring out something interesting about this week's events it suddenly dawned on me. I don't have to, the Economist has already done it for me by fielding a survey on ageing populations in their latest print edition.

Here are the articles;

A slow-burning

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by Edward Hugh: Barcelonabr /br /br /According to preliminary estimates from the Spanish National Statistics Office published today, GDP contracted by 1.8% in the first three months of 2009 when compared with the last quarter on 2008. This follows a 1.0% drop in Q4 2008. This is equivalent to a 7.2% annualised rate of contraction, which is, of course, sharp.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SgwM_W4NxhI/AAAAAAAAN5c/P1h2RPTzmDY/s1600-h/spain+gdp+one.png"img id="BLOGGER_PHOTO_ID_5335653941139850770" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 209px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SgwM_W4NxhI/AAAAAAAAN5c/P1h2RPTzmDY/s400/spain+gdp+one.png" border="0" //abr /br /Over the first quarter of 2008 (that is year on year) GDP decreased by 2.9%, the sharpest decline recorded in almost 40 years. In fact you would need to go back to 1945 to find a year in which the Spanish economy contracted as strongly as it is likely to this year.br /br /The contraction was mainly caused by a very large slump in private ...

by Edward Hugh: Barcelonabr /br /span style="font-family:arial;font-size:78%;"/spana href="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s1600-h/ecb+one.png"img id="BLOGGER_PHOTO_ID_5334654802370875058" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 399px; CURSOR: hand; HEIGHT: 264px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SgiAR06lzrI/AAAAAAAAN1E/-NbHseEOV1Q/s400/ecb+one.png" border="0" //abr /br /blockquote“The 60 billion euros they announced is peanuts for an economy the size of the euro zone,” economics professor and former Bank of England policy maker Willem Buiter said at a conference in Dublin yesterday. “I expect they will announce more or that the recession in the euro zone will be longer and deeper than would otherwise be necessary. They have a record of being somewhat behind the curve.” /blockquoteblockquoteEuropean car sales dropped 12 percent in April.... Bayerische Motoren Werke AG’s registrations dropped by almost one-third to 55,633 even as the German market expanded 19 percent, helped by the government’s 2,500 euro ($3,400) sales bonus .........Spain extended its auto-sales slump with a 46 percent plunge in registrations, the largest among the continent’s ...

US GDP falls more than expected…FOMC holds course…Canadian dollar has a great week…Oil helps commodity currencies…And Now… Today’s Pfennig!

Good day… Yesterday was a big day in St. Louis as President Obama came to visit on his 100th day in office. I can’t believe it has been 100 days since the inauguration. Time sure does fly! I’m sure Obama and the rest of his administration would like the calendar to move even faster as this recession will likely last through the end of 2009. While the government has thrown trillions of dollars at the markets in an attempt to turn them around, the key ingredient for recessionary cycles to reverse is time. There is now ‘quick fix’ for the problems we are in, and the policies the administration has begun will take time to have an impact on our shrinking economy. Obama said as much in his nationally televised press conference

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by Edward Hugh: Barcelonabr /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sbfy8wY0gmI/AAAAAAAANAU/3Z93JTLWlN0/s1600-h/almunia.png"img id="BLOGGER_PHOTO_ID_5311981411101868642" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 230px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sbfy8wY0gmI/AAAAAAAANAU/3Z93JTLWlN0/s400/almunia.png" border="0" //abr /br /European Monetary Affairs Commissioner Joaquín Almunia recently, and possibly totally inadvertently, a href="http://www.reuters.com/article/ousiv/idUSTRE5222QP20090303"stumbled on a very interesting argument/a. Here it is:br /blockquote"Who is crazy enough to leave the euro area? Nobody," Almunia said. "The number of candidates to join the euro area increases. The number of candidates to leave the euro area is zero."/blockquotebr /br /strongReductio Ad Absurdum/strongbr /br /Now you don't need a PhD in economics to understand what follows, although a little bit of basic logic would help. What we have here could be construed as a kind of syllogism (and from now on let's christen this one "The Almunia Syllogism"). The Almunia Syllogism has the following form:br /br /a) Anyone leaving (or aiding and abetting the departure of someone from) ...

The IMF Senior Regional Representative For Central Europe and the Baltics, Christoph Rosenberg, recently a href="http://www.rgemonitor.com/euro-monitor/254975/why_the_imf_supports_the_latvian_currency_peg"took me to task on RGE Monitor about my Latvian devaluation proposal/a (as did a href="http://www.rgemonitor.com/economonitor-monitor/254905/devaluation_in_latvia_why_not"RGE's own Mary Stokes/a), and I would like now to take a closer look at some of the points they raise.br /br /In the first place, I would like to say that I obviously regard both Chrisoph and Mary as excellent economists, and I was in no way refering to them when I said that arguing in favour of sticking to the present currency peg constitutes trying to justify “virtually the unjustifiable” according to “the implicit consensus among thinking economists.” I do still hold that the consensus is with me, but that certainly does not mean I regard those who differ from me as "unthinking", and certainly hope I didn't give the impression that I was. And with that little ...

A Santa Rally for the currencies?…  Waiting for the FOMC…  AUD and NZD rally…  China to try and keep growth above 8%… And Now… Today’s Pfennig!

Good day…It was actually a Great day for the currencies yesterday as the dollar index dropped another full point. The Euro moved past $1.35 and then blew through $1.36 to end the day over $1.37. And the Euro wasn’t even the best performer, as the New Zealand dollar rallied over 2.1% vs. the US$ to take the title of best performing currency against the greenback. The South African rand was the only currency turning in a negative performance yesterday with the other commodity driven currencies of Norway and Brazil just barely holding their ground vs. the US$.

The

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