The French economy shrank further in the first quarter, bringing the country officially into recession after a fall in the last quarter of 2008. Economy Minister Christine Lagarde said growth data would be "bad".

AFP - The French economy has lost more steam in the first quarter, Economy Minister Christine Lagarde said on Thursday, ahead of the release of growth data which she said would be "bad."
  
France's gross domestic product shrank by 1.1 percent in the last quarter of 2008 and a second consecutive drop would mean the country has officially entered into recession.

OSLO -- When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway's Socialist finance minister and a longtime free market skeptic, did more than crow. Skip to next paragraph Multimedia Graphic Sea of Plenty Related Times Topics: Sovereign Wealth Funds Enlarge This Image Espen Rasmussen for The New York Times

Friends meeting in an Oslo nightspot. Norway's economy grew 3 percent last year as many nations plunged into a recession.

As investors the world over sold in a panic, she bucked the tide, authorizing Norway's $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion -- or about 23 percent of Norway 's economic output.

"The timing was not that bad," Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.

EUOBSERVER / BRUSSELS - A compromise deal between the EU's 'Anglo-Saxon' and 'social market' economies is the best way to secure Europe's future economic strength and social stability, says former EU competition commissioner Mario Monti.

Speaking at the Brussels Economic Forum on Thursday (14 May), an annual meeting point for some of the globe's most influential economic policy makers, Mr Monti added that the current crisis provided an excellent opportunity to secure such a deal.

Former commissioner Mario Monti advocated a compromise economic model at the Brussels Economic Forum on Thursday (14 May)

"To avoid frustration in both groups of countries resulting in resentment against Europe generally and the single market specifically, the EU should, in my view, grab this chance that was not there one year ago," he said.

The Anglo-Saxon economies of the UK and Ireland, together with many new member states, have in the past voiced their frustration with continental countries such as France for failing to comply with single market rules, such as competition and state aid requirements.

Spain's economy suffered its largest contraction in 50 years in the first three months of 2009, preliminary estimates have shown.

GDP fell 1.8% from the previous quarter and was down 2.9% year-on-year, the National Statistics Institute said. It will release final data next week.

Economists said the falls were the steepest seen since 1959.

Spain had enjoyed 14 years of consecutive growth before entering recession in the last quarter of 2008.

The financial evaluation company, Standard and Poor's maintained Romania's country rating at the junk level, following the country's economic environment into a deep recession, the agency informs on Thursday, quoted by Romanian news agency NewsIn. Moreover, the agency confirmed Romania's foreign credit rating of BB+/B and BBB-/A-3 for credits in lei due to the financial risks the country is facing.

The agency maintained Romania's rating at the junk level, as the country's unemployment deepened and threatens to decrease past the 11% threshold in 2011. Standard and Poor's analyst Marko Mrsnik declared that Romania's economy continues to be threatened by serious financial risks due to the steep fall of exports and lack of commercial credits.

Firing angry remarks at China, US lawmakers on Wednesday unveiled a plan to retaliate against countries that allegedly manipulate their currencies to snare an edge in international trade.

"The time has come for Congress to stand up for American workers and not allow China to run roughshod over the American economy. With this legislation we will finally force China to stop cheating and level the playing field for America's manufacturers," said Republican Representative Tim Murphy.

The Currency Reform for Fair Trade Act, backed by Republicans and Democrats as well as business groups and major labor unions, aims to use US anti-dumping and countervailing duties to strike back at prolonged currency manipulation.

US lawmakers have long accused Beijing of keeping the yuan, or renminbi, artificially low -- a step that would boost its exports by making Chinese products less expensive relative to US goods on global markets.

"It's time to treat illegal currency intervention like the outrageous trade subsidy it is," Republican Senator Jim Bunning said as the legislation was introduced in the Senate and House of Representatives.

The US Treasury's effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.

"The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside," said Mark Patterson, chairman of MatlinPatterson Advisers.

The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP's matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.

Take a long look at the chart below. Digest it. Maybe look again if you have to. This happened in the most sophisticated economy in the world.

This is what happened to the price of development land in Japan. Prices roared upwards and then collapsed, ending up below where they started at the beginning at the boom. This is likely to happen here; development land is likely to settle back to 1996 prices. We haven't seen the half of it yet. When we hear some property lads talking about green shoots, this chart should be enough to tell them to snap out of it.

But we can't seem to snap out of it. We are still caught in the trap. We seem to believe that the price of houses and land will miraculously rise again some time soon. This will not happen. It can't and shouldn't. In fact, houses prices are likely to fall another 50 per cent from here before we see anything like the bottom.

International comparisons bear out these forecasts. Until now, many Irish people have clung to the myth of what I call `Dunnes Stores economics'. You know it: it is the school that suggests ``the difference is we're Irish''. Well, the bad news is that being Irish makes no difference at all. It offers no protection. What happened to the Japanese will happen here and, in terms of the recovery, the sooner the better.

"The future is already here -- it's just not very evenly distributed" William Gibson

Another by the same artist.

"It is not necessary to have hope in order to persevere."

Tom Petruno,   LA Times   May 14, 2009

After every bear market on Wall Street, some investors are reluctant to buy because they believe many other investors will be anxious to sell into any rebound, swamping the market and stunting any recovery.

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A new Zillow.com survey of 1,266 homeowners nationwide asks, "If you saw signs of a real estate market turnaround in the next 12 months, how likely would you be to put your home up for sale?"  Twelve percent of homeowners said they'd be "very likely" to try to sell into an improving market, 8% said they'd be "likely" to do so and another 12% said they'd be "somewhat likely."

Zillow refers to that total of 32% as the "shadow inventory" of homes.

"With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory adding to already record-high inventory levels, thus keeping downward pressure on home prices," said Stan Humphries, Zillow's vice president of data and analytics.

Barron's  May 11, '09

In investor lawsuits filed in recent months, BDO Seidman and McGladrey & Pullen stand accused of shoddy audits and signing off on the books of fraud-ridden businesses and investment funds. The cases, together with a string of earlier ones involving the two firms, raise unsettling questions about the level of confidence investors can put in financial audits.

The two audit firms say they stand by their work, and there is, in fact, some murkiness about auditors' responsibilities for detecting fraud. The firms are supposed to "obtain reasonable assurance about whether the financial statements are free from material misstatement, including misstatements caused by fraud," according to the Public Company Accounting Oversight Board, the federal entity that supervises auditors of public companies. The gray area centers on what is reasonable, an issue that often plays out in the courts because accounting firms can be one of the only solvent players left when a company goes down.

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California attorney Steven Thomas, who in 2007 won a $522 million jury award against BDO Seidman stemming from its Bankest audits, says the case reflects the kind of cozy interdependence that helped sink Enron and Arthur Andersen. "Auditors are supposed to have professional skepticism, and that is just inconsistent with the client relationships that they try to preserve to keep the money flowing," Thomas says.

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The firm also is contesting a civil lawsuit from the collapse of Le-Nature's Inc., a Pennsylvania iced-tea producer shuttered in 2006 after allegedly faking $240 million in revenue, according to forensic accounting undertaken by a bankruptcy court. BDO Seidman auditors had certified that Le-Nature's financial statements were free from material error.

"There is a difference between being fooled and putting your head in the sand so you don't see things," says Robert Loigman, a New York lawyer representing Le-Nature's investors who sued (BDO Seidman). A tour of the company's Latrobe, Pa., warehouse would have made clear Le-Nature's wasn't selling $300 million worth of bottled drinks a year as claimed, he says.

To come up with estimates of future losses, the government assumed what they call "a more adverse" scenario. But their more adverse scenario is actually less adverse than the current reality!

Hard to believe? Then just look at their own numbers in the chart the Fed published recently:

Maybe this was already posted at ET but I thought you would appreciate it anyhow.  Some no-bullshit reminders about the real state of the US economy, cutting through the fog of optimism currently permeating our media.

The Congressional Budget Office and Government Accountability Office both have already projected a 50% or greater failure rate for loan guarantees for new nuclear reactors. And there is no denying that the failure rate for renewable energy projects is going to be above zero, possibly above 20%. While it's fine for taxpayers to take some risk for new energy technologies, it's not fine to bet hundreds of billions of our dollars on new energy projects or take risks of 50% or more, especially on such capital intensive projects as new nuclear reactors, which are now projected to cost some $10 billion or more each.

And, for the skeptics out there, let's face facts: the nuclear power industry is the one most in need of this money. Why? Because there is no private capital available to support construction of new nuclear reactors.  It's that simple--private investors simply won't take that risk. If Bank of America or Citigroup have been thinking for the past few years that nuclear reactors are too risky but subprime mortgages aren't, then I have to think a 50% projected failure rate might be too low. Admittedly, these are somewhat hard times for new renewable energy facilities as well, but until last October money was flowing freely to them, and as the recovery begins, private investment will begin flowing to them again. But private money won't flow to nuclear power under any circumstances without the taxpayers taking the risk.

The reality is that the nuclear industry has already asked for $122 Billion in taxpayer-backed loan guarantees (most of which would actually be taxpayer-funded as well, through the Federal Financing Bank). And that would cover only about 20 reactors. Getting to the GOP's dream of 100 new reactors by mid-century (outlined by Sen. Lamar Alexander, R-Tenn, in the GOP Saturday radio address a couple weeks ago), would cost at least five times that amount--and that's before the cost overruns start rolling in. For comparison, a Department of Energy study of 75 existing reactors found an average cost overrun of 207%. If that level holds true for a new generation of reactors, we'd be looking at trillions of taxpayer dollars at risk.

AND WHAT CAN YOU DO?
Yes, I believe in supporting renewable energy and energy efficiency with taxpayer dollars--but limited taxpayer dollars. The potential for unlimited taxpayer loan guarantees for any technology offers the potential for economy-killing failure, for misdirection of money, for rampant corruption.

Have our Congressmembers learned nothing from the debacle of the banking, mortgage and various other crises? Apparently not.