It’s Official: Financial Crisis Status Downgraded to Turmoil

It’s nice to see that we now seem to be back to mere financial turmoil rather than a full blown crisis, judging by the OECD’s indicators of financial market stress.

The OECD’s indicators for bank credit default swap rates and the three-month Treasury eurodollar spread rate have both declined from the crisis peak from mid-September to mid-October and are closer to the “turmoil” rates experienced from August 2007 to mid-September. However, they remain several times higher than the “routine” rates that prevailed prior to August 2007.

The one worrying sign is that the three-month EURIBOR-EONIA swap index spread indicator stands at 162, up from 118  during the peak of the crisis, from 62 during the turmoil period and only 6 under routine conditions.

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In a preview of its Economic Outlook, the OECD says economic activity is expected to fall by 0.9 percent in the U.S. next year, by 0.5 percent in the Euro area and by 0.1 percent in Japan as OECD countries enter a protracted slowdown. Presenting OECD’s gross domestic product [GDP], inflation and unemployment forecasts for these three major economies ahead of the G20 summit, Jorgen Elmeskov, Director of Policy Studies in the OECD’s Economics Department, said a high degree of uncertainty surrounds the outlook. Much depends on the depth and duration of the financial crisis, the main driver of the current recession.

"The ongoing adjustment in housing markets still has a long way to go."

GDP for the OECD countries as a whole is expected to fall 0.3 percent year-on-year in 2009 before recovering slightly to grow by 1.5 percent in 2010. The average unemployment rate in the OECD area, estimated at 5.9 percent this year, is forecast to climb to 6.9 percent next year and reach 7.2 percent in 2010. Inflation should continue to ease as economic slack puts downward pressure on prices and if, as assumed, commodity prices maintain their recent lower levels.  “Against this backdrop, additional macroeconomic stimulus is needed,” said Elmeskov.

Comments

[Smarty_Pants:]

OECD: "International organisation helping governments tackle the economic, social and governance challenges of a globalised economy" - OECD.org

“Against this backdrop, additional macroeconomic stimulus is needed,” said Elmeskov.

Typical of a gub'mint biased economic think tank. The 'solution' to over-extended credit problems is to borrow more. Like there's any other answer they might consider.

I hope my interpretation of this article being an exercise in satire is correct.

Smarty_Pants then added the following gem to the OECD's analysis:

I have noticed that the fuzz on cattypillers is longer this year. Prepare for a harsh winter.

2008 Nov 13 02:46 PM

[moonbat1775:]

Smarty,
One of my previous hobbies was following the global warming debate. I became convinced we are going to have global cooling for the next 30 or so years. I haven't followed it lately since the bloody banking system is more important. But here is the link to my favorite site on that subject:

wattsupwiththat.com/

2008 Nov 13 02:55 PM

[Smarty_Pants:]

What little research I have done on so called global warming have led me to believe that sunspots play a more important role than gub'mint sponsored computer models allow for.

I'm old enough to remember the original hysteria predicting the coming of the next ice age due to global cooling back in the 70s. It's mostly just a bunch of blather from those looking for gub'mint subsidies or power over productive people.

What I don't understand is why everyone says melting ice caps will cause ocean levels to rise when nobody mentions that the vast majority of the existing ice caps are already floating in the ocean and displacing the water now. Even if they melt entirely the level of the ocean won't be significantly different.

Fill a glass half way with water, note the level, add a couple ice cubes and mark the new water level. Higher than the initial level, right? Wait for cubes to melt and compare to level with cubes before melting. Not much difference. The weight of the cubes themselves cause the water level to rise before they melt. Melting doesn't change it much by comparison.

A thousand years ago it was warm enough for Vikings to settle in Greenland and farm. It's mostly ice now. Yet life goes on.

Climate crises = blather.

2008 Nov 13 03:54 PM