Green, shoots and leaves

The UK press has got itself into a frenzy over one of Obama's turgid and dreary speeches* saying that the recession was nearing an end (well, he would say that, wouldn't he?), for example The Sun...

EXPERTS last night hailed more “green shoots” of global economic recovery — but warned we are still a long way from beating the recession. Mortgage lending was UP and enquiries with estate agents ROSE (1). In America, banking giant Goldman Sachs reported a 20 per cent rise in quarterly profits...(2) 

(1) From that CML press release:

"The number of house purchase loans ticked up in February, according to new data from the Council of Mortgage Lenders**. There were 24,300 house purchase loans worth £3.1 billion, compared with 23,400 loans worth £3.1 billion in January - a 4% increase. But historically activity remains very weak, running at around one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007."

(2) It is true that Goldman Sachs reported profits of $1.8 billion for the quarter up 20%, but ...

Since the fall of Bear Stearns Cos. a little more than a year ago, Goldman has taken more than $20 billion in taxpayer cash through loans, payments and backstops. Goldman's latest bailout coup was a $12.5 billion paid out of AIG's $180 billion government cash infusion.

Until it was fully extricated, Goldman always characterized its exposure to AIG as "immaterial," and that its $20 billion notional exposure to AIG was hedged. Turns out that it was -- through government bailouts that didn't exist when Goldman entered the contracts. Even former New York Luv Guv Eliot Spitzer told journalist Fareed Zakaria on Sunday that he thinks something smells...

I rest my case.

* In which Obama betrays a frightening lack of understanding of fractional reserve banking (or, just as likely, he's just saying this on behalf of his chums at Goldman Sachs), at 1 min 30:

"... the truth is, that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses ..."

I could explain at length why this is bollocks of course, but just try taking this to its logical extreme - if increased consumer and business indebtedness were A Good Thing, then why not give the banks $1 trillion in 'capital'? Oh, they did that. How about $10 trillion?

** The CML make life easy for lazy journalists accustomed to cutting and pasting by referring to themselves in the third person, I shit ye not!