Just about all of the economic indicators out there are suggesting that the free-fall has come to an end, that we’ve stabilized. Probably the worst in terms of shocks to the system is over. The acute stress that we had last fall after the failure of Lehman has been reduced. Interest-rate spreads on commercial paper are way down, interest-rate spreads on corporate debt are down a little bit. The spread on interbank lending is down. All of the indicators are telling the same story. Things are getting worse, but they’re getting worse more slowly. I don’t think we’ve hit bottom, but the bottom is not too much further below us. My big concern is that we don’t hit the bottom and bounce, we hit the bottom and stay there. It’s not obvious where recovery comes from.

The U.S. dollar is going to fall quite a lot, or at least significantly. The demand for dollars has been temporarily inflated by the crisis. Good news is actually bad news for the dollar. If things stabilize, then the safe-haven demand for dollars falls off. I view the Chinese agitation about a new currency as basically an attempt to have somebody rescue them from their own investment decision. China bought too many dollars. Now it’s looking at it and saying, ‘we’re going to lose a lot of money on this investment’.

Paul Krugman, citing improvements in global purchasing managers’ indices, industrial production figures in the U.S. and freight-loading figures at major ports.


There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded. Until the price of homes flattens out we still have a very serious potential mortgage crisis.
Alan Greenspan, 20 May 2009

We expect upward pressure on claims stemming from auto- related layoffs. The labor market will remain weak, with gradual improvement on the horizon.
Maxwell Clarke, chief U.S. economist at IDEAglobal, as initial claims fell by 1k to 631k, and the four week moving average of initial claims fell from 632k to 628.5k, with more than 6.66mm people collecting benefits, a record reading

We continue to be very cautious about the economic outlook
—Kenneth Chenault, CEO, AMEX