Stilltitled

The trick is not to remove the toxic assets from the banks’ balance sheets but instead put them into a “side pocket,” as hedge funds are doing with their illiquid assets.

—Soros on an alternative to the bad bank option

Stimulus that works; serious foreclosure mitigation, including principal reduction; lower credit spreads – shrink those enormous interest-rate spreads (over Treasuries).

—Blinder’s wishlist on stimulus

Banks and brokerages worldwide have cut more than 250,000 jobs since the middle of 2007 as credit losses and write-offs caused the worst financial crisis since the Great Depression.

—Bloomberg News

• GDP
  • -3.8% : unadjusted
    • Consumer spending dropped at a 3.5% annual rate, following a 3.8% drop in Q3
  • -5.1% adjusted for the impact of inventories for pre-ordered goods
  • Question: what does 4Q09 GDP look like?
    • Fewer stores and fewer orders
  • If they plan for flat demand, then…
    • Inventories will build according to the -5.1% scenario, and
    • GDP will be negatively impacted on a comparable, YoY, basis
    • Short answer: we get a credit now from inventories that we have to pay for later
  • Nonetheless — GDP was forecast to decline 5.5% in 4Q08
• Unemployment — 7.2%, up from 4.9% a year earlier
  • 524k workers cut in December, with total job cuts for 2008 at 2.6mm
• Business Investment
  • Declined 19% at an annual rate in Q4, the most since 1975
  • Investment in equipment and software dropped at a 28% pace, the most in 50 years
• Chicago PMI — 33.3
  • New orders: dwon from 31.5 to 30.7
  • Production: down from 32.4 to 29.7
  • Raw Materials: increased from 32.7 to 39.8
  • Order Backlogs: increased from 26.3 to 26.5

It looks like the economy carried a lot of negative momentum into the first quarter

—Former Federal Reserve Governor Laurence Meyer

You have to realize the size of the problem confronting us today is significantly larger than in the ‘30s. The situation will continue to deteriorate.

—George Soros

I’m appealing to your sense of fairness. I did a lot of things that were mostly right.

—Rod Blagojevich