Posted on 09/18/2009 8:30:36 AM PDT by blam
Evaluating the Odds of a Double-Dip Recession
Mike Mish Shedlock Sep 18, 2009 10:40 am
OECD may call it over, but is it?
If you have a job and it’s not in jeopardy, pull out the party hat and toot your horn. The OECD calls an end to the global recession.
“The global downturn was effectively declared over yesterday, with the Organisation for Economic Co-operation and Development (OECD) revealing that "clear signs of recovery are now visible" in all seven of the leading Western economies, as well as in each of the key "Bric" nations.
“The OECD's composite leading indicators suggest that activity is now improving in all of the world's most significant 11 economies -- the leading seven, consisting of the US, UK, Germany, Italy, France, Canada, and Japan and the Bric nations of Brazil, Russia, India and China. And in almost every case, at a faster pace than previously.
“Each of the 11 economies saw an improvement in July, the OECD said, with only France improving at a slower rate than in June. The July figures are the most encouraging since the indices began ticking downwards during the first quarter of last year.
[snip]
Friday, September 18. 2009
Posted by Karl Denninger in Bonds at 09:07
Let me guess - record levels of junk bond defaults are positive for the economy going forward?
NEW YORK (Reuters) - About 40 percent of all U.S. junk bonds outstanding in late 2008 will likely default by 2013 as government aid measures end and a wall of corporate debt comes due, Bank of America Merrill Lynch said on Thursday.
By contrast, the cumulative five-year default rate was about 30 percent in the last two default cycles, Bank of America said in a report.
But the real damning part of analysis isn't the front-line - its the last paragraph:
Many so-called distressed debt exchanges are only postponing defaults and will also contribute to the second wave, the bank said. In a distressed debt exchange, companies buy back debt at steep discounts, usually replacing it with longer-maturity debt. About 40 percent of distressed debt exchanges typically default anyway within three years, the bank said.
[snip]
Evaluating the Odds of a Double-Dip Recession
Many discussions here
http://market-ticker.org/
Many so-called distressed debt exchanges are only postponing defaults and will also contribute to the second wave, the bank said. In a distressed debt exchange, companies buy back debt at steep discounts, usually replacing it with longer-maturity debt. About 40 percent of distressed debt exchanges typically default anyway within three years, the bank said.
No, really? You mean that we can’t “extend and pretend” and actually fix anything? It’s all a game to try to claim that something that has blown up really hasn’t blown up?
Yes, that is what the bank said - this is nothing other than a thinly-disguised game - yet another means of gaming the accounting (which should be illegal, but heh, we don’t bother prosecuting stuff like that, right?)
The better question is this: If the economy is healing, if demand is improving, if corporations have seen the bottom and business conditions are in fact improving as final demand is rising, then why are defaults going up?
Debt defaults when the cash flow is inadequate to meet service requirements. But cash flow is a “high frequency” thing - it rises immediately when final demand increases.
So what is this, along with the default rates on credit cards and FHA mortgages telling you?
This “recovery” is just a dead cat bounce. We’ll be lucky if it turns into a double-dip recession. A full blown depression is possible. Compare to the dead cat bounce before the Great Depression...
That’s simple: Odds are very high especially at the rate Obango is spending money he doesn’t have......
Some times it looks as if this going to be a controlled depression,brake the banks,brake job market.....
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