Matching Tracksuits

Just how bad is the current situation? How long will it last? Guido offers some stark analysis:

All previous down markets have lasted three eighths as long as the preceding up phase. This would mean the stock market will be going down till 2016 – 2017. Since stock markets usually rebound before the economy, one can assume the economy will remain weak and contract at least through 2016.

This all leads me to the title of this post. Is this the last Christmas of post WWII over consumption? Or is this a lost Christmas, and last year was the final hurrah? (GuidoWorld » The Last Christmas?)

Just a quote:

In a moment of high panic in late September, the US Treasury unilaterally pushed through a radical change in how bank mergers are taxed–a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that “Treasury had no authority to issue the [tax change] notice.”

Of equally dubious legality are the equity deals Treasury has negotiated with many of the country’s banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, “Any use of these funds for any purpose other than lending–for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.–is a violation of the act.” Yet this is exactly how the funds are being used.

Then there is the nearly $2 trillion the Federal Reserve has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg News believes that this secrecy violates the law and has filed a federal suit demanding full disclosure.

via In Praise of a Rocky Transition.