It's been a busy week.
Corporations slashed jobs on a daily basis. Though I have not seen a total for the week, it's safe to say that the increase in the unemployed is larger than the population of many cities, including Cheyenne. Worse yet, none of these layoffs factored into initial jobless claims, which are already at a 26-year high.
The House of Representatives passed the stimulus package on a party-line vote. Though some Republicans will point to subsidies for planting new grass on the Mall as an excuse for voting against the bill, many might be preparing a potential conservative backlash in the 2010 primaries. Such is politics.
Euro zone economic sentiment fell to a record low, according to a Reuters' poll. Deflation fears also worsened.
The Fed also expressed concern about the deflation. Specifically, the Federal Open Market Committee observed "some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term."
Interest rates were kept unchanged, while the Fed voted to expand its program to buy debt-related securities. Rather than just buy agency debt and mortgage-backed securities, the central bank is also prepared to purchase longer-term treasuries. The expansion of the central bank's balance sheet was widely expected.
Richmond Fed President Jeffrey Lacker dissented from the majority by expressing his preference to directly purchase U.S. Treasury securities rather than rely on targeted credit programs. Dissent is good because it signals that the Fed is not completely succumbing to group think.
The Obama administration proposed creating a new entity to purchase bad debt from the banks. If that sounds like a recycled plan, it is.
The TARP was designed to buy bad debt from banks. After all, TARP does stand for "Troubled Assets Relief Program". Unfortunately, Citigroup (C) tried to get a jet, financial firms doled out huge bonuses, and us, the taxpayer, saw our credit card rates rise.
Fourth-quarter earnings season has been disappointing, as was expected.
Through Thursday evening, 228 S&P 500 members have reported. Median EPS is running -7.9%, compared to +12.8% a year ago. Companies are generally beating expectations with positive surprises outnumbering negative surprises by a margin of 1.7:1. (A year ago, 2.8 companies topped estimates for every one that missed.)
Fourth-quarter GDP shrank less than expected. The U.S.
