Gasbags get their comeuppance every so often:

Via TPM.

This was recorded last week. One wonders if Cramer thinks he’s doing the markets favors by preaching calm. Or did he have friends at Bear? I keep going back to this clip where Cramer blows his top at the Fed for not acting sufficiently quickly to bail out his hedge fund buddies. Why do people turn to him for advice? Because he’s entertaining?

Our future?

Is foreclosure right for you? If you are facing or considering foreclosure, you’re not alone.

Ask yourself:

* Are you stressed out about your mortgage payments?
* Do you have little or no equity in your home?
* Have you had trouble trying to sell your house?
* Is your home sinking under the waves of the real estate crash?
* What if you could live payment free for up to 8 months or more and walk away without owing a penny?

The site’s called youwalkaway.com. You pay them $1000, they help take care of the rest.

My economics knowledge is too shoddy to comment knowledgeably on the news of Bear Stearns’ bailout by the N.Y. Fed and J.P. Morgan. My overinflated slavic sense of spite, however, makes me froth at thoughts like these:

I also wonder what Bear employees were paid in bonuses last year (I assume the checks went out in late December or January) and whether cutting that number by 50% would have saved Bear’s hide.

While I certainly don’t welcome economic catastrophe, I sure would like to see a handful of boastful high-flying financiers violently kicked to the curb every so often. Whatever else it’s doing, the Fed is keeping me from savoring a small bit of social justice.

Taiwan’s Kuomintang party won the parliamentary elections in a landslide today.

Ma, a former mayor of Taipei, has pledged to allow mainland tourists to visit Taiwan, and hopes to reinstate direct transportation, commerce and postal links that were cut off six decades ago.

The New York Times adds:

Mr. Ma, a Harvard-trained lawyer, has said Taiwan needs a strong military and close ties with the United States to counter the military threat from China. But he favors avoiding confrontation with Beijing while allowing closer economic ties.

I can’t help but think that America’s relevance in Asia just took another tumble.

Kenneth Rogoff and Carmen Reinhart have a new paper out. It’s worth a read, and since it’s “lite” enough for a dilettante like me, most anyone can get something out of it.

The bulk of the paper compares the current situation in the United States to various historical financial crises, and concludes that the parallels are there. The gem of the piece, as is often the case with econ papers, comes in the conclusion:

During the 1970s, the U.S. banking system stood as an intermediary between oil-exporter surpluses and emerging market borrowers in Latin America and elsewhere. While much praised at the time, 1970s petro-dollar recycling ultimately led to the 1980s debt crisis, which in turn placed enormous strain on money center banks. It is true that this time, a large volume of petro-dollars are again flowing into the United States, but many emerging markets have been running current account surpluses, lending rather than borrowing. Instead, a large chunk of money has effectively been recycled to a developing economy that exists within the United States’ own borders. Over a trillion dollars was channeled into the sub-prime mortgage market, which is comprised of the poorest and least credit worth borrowers within the United States. The final claimant is different, but in many ways, the mechanism is the same.

That’s such a tidy analogy, it sends shivers down my spine! Though such tidiness is rarely found in the real world, if lumens like Brad Setser and Martin Wolf are impressed, we should all take note.

Andrew links to some bearish predictions under the headline “A Recession Election”, only to end the post with a perplexed link to a Dow Jones’ Marketwatch story reporting 4.9% GDP growth in the third quarter.

The Wall Street Journal’s Economics Blog solves the seeming paradox: GDI, which measures economic activity based on income rather than expenditures, is a better indicator of the health of the economy when it comes to signaling downturns. And though GDI and GDP should add up to the same figure, often they don’t due to statistical blindspots. GDI growth for Q3: 2%.

Nouriel Roubini, in bearish form as usual, is predicting that this week’s stock market rally, after a 10% correction from October through Monday, is the last gasp before we slide into recession.

But the most sensible interpretation of the upward move on Tuesday and Wednesday this week… is that this is the last leg of a sucker’s rally (or dead cat’s bounce) driven by wishful hopes that the Fed easing will prevent a recession.

Dead cat’s bounce: it’s a real term! I love economics.

Larry Summers is scared, and so should we be all:

Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This is still a possible outcome but no longer the preponderant probability. Even if necessary changes in policy are implemented, the odds now favour a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond.

Laymen can only take a giant like Summers at his word when looking at the statistics. You know he’s done his homework.

Undergirding Summers’ newfound pessimism is mega-bear Nouriel Roubini, who’s been sounding the alarm since my final year at SAIS (2005). In a particularly frightening rambling essay, he says the coming recession could bring the S&P500 down as much as 28%.

It’s times like these that I’m glad to be poor and without equity.