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(an email exchange)

> the sum of state payrolls just came out for April showing -151k jobs, vs
> the actual prelim rleease earlier this mth of -20k. hints at a potentially
> large downward revision to April payrolls when the May data is released.


Plenty of export driven banana republics out there with high unemployment, low wages, falling currencies, high inflation, and high interest rates. Looking like we’re next…


7 Responses

  1. Warren, Are you suggesting a deteriorating employment picture? as of today unemployment levels are low on an historical basis and wages relatively high. Thanks.

  2. April was weak and 50,000 or so in either direction is inconsequential as millions of jobs are gained/lost each month.

    my twin themes remain weakness and inflation

    weakness due to lack of agg demand as the deficit got too small but now it’s proactively coming back with the fiscal package.

    but this is not enough to sustain boom times, just keep us at ‘muddling through’ levels of sub par growth.

    seems the rampant forecasts of ‘the largest recession since the 1930’s’ were perhaps overstatements

  3. Perhaps it is still to come. We are still in the early stages of the credit cycle and banks, which can no longer offload assets into the secondary markets via securitization, are forced to use their undercapitaized balance sheets and thus pull in credit reigns at a time when budget deficits are too low and the consumer have few if any liquidty alternatives.

  4. the way i see it banks who can’t originate to sell have to origninate to keep at spreads that provide a return on capital sufficient to attract capital.

    that’s all part of the ‘great repricing of risk’ that began almost a year ago

  5. I agree that new incremental business put on by banks may prove to have higher returns, but is there enough capital supporting the legacy portfolios that are still in the early stages of hemmoraging. Looking at the Fannie and Freddie’s balance sheet doesn’t give me alot of confidence regarding their solvency.

  6. fannie/freddie exist for further public purpose.

    What matters at the macro level is how they support agg demand via new lending.

    Seems Congress is doing/will do, at a minimum, ‘whatever it takes’ to ensure they serve credit worthy borrowers.

    Any losses they take or don’t take are per se merely ‘numbers on a piece of paper’ regarding US output and employment

    That is not to say that losses will be of concern to investors

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