More P3 Evidence - Things Will Get Worse

Just a few notes to get the holiday weekend off to a good start. As I like to say - enjoy them while you can.

Bloomberg - ‘Buy China’ Pesticide Withers Those Green Shoots: William Pesek "One possible explanation is protectionism, as China works to encourage exports while curbing imports. The country objects to the “Buy American” provisions in U.S. stimulus efforts, yet it is using similar tactics. Another reason may be that China’s revival is more spin than reality."

Bloomberg - Muni Downgrades Add Risk, Prize to Bond Game: Jane Bryant Quinn "Downgrades are just starting to pour into the muni market. States, having run through their rainy-day funds, are slashing subsidies to towns and cities, which are already struggling with reduced sales- and property-tax collections. Some 48 states face fiscal stress, the Center on Budget and Policy Priorities reports, a situation that’s likely to continue for the next two years."

Mish - Jobs Contract 18th Straight Month; Unemployment Rate Hits 9.5% "Looking ahead, I expect the service sector to continue to weaken. Mall vacancy rates are rising and a huge contraction in commercial real estate is finally started. There is no driver for jobs and states in forced cutback mode are making matters far worse." You should ALWAYS read Mish's (un)employment reviews.

OK, so China's fudging, unemployment WILL get worse (it's worse than you are being told) and the muni market is under severe stress. If this is all new news to you, where the hell have you been for the past year? The muni thing scares the hell out of me. The green shoot cheerleaders rarely add it all up for you, what I like to call the multifecta - unemployment, reduced dividends, reduced credit, increased savings rates, market values 40% off of highs, real estate values crumbling and now the possibility of muni defaults is not a good combination for any economy. Folks, that was just the obvious short list of factors facing the CONSUMER ONLY. It is only a matter of time. 2009 is our 1930.