Non-Daily Daily Roundup: Amy Winehouse Economy

The meteor that fell atop Wall Street and the housing market is now starting to show its true reach, and thus New York State is one of the first to suffer.  Both Mayor Bloomberg and Governor Paterson came out yesterday announcing major deficits going forward on the order of billions.  The solution of course, is budget cuts,  even as projected health costs for retired city workers rise.  This same solution should be rolling across a state near you after its New York opening. 

This fits quite nicely with the announced $482 billion federal deficit for fiscal 2009, with that number not factoring further losses from the housing bill.  This all but assures that we need someone magical as the next president, and while both Obama and McCain promise the supernatural on paper, we ought not to expect too much.  Where is the savior when you need him? (Not you Bernanke, be quiet).

Merrill, one of the firms adding to New York's misery, seems to not have righted itself under John Thain, but then we knew that.  In annoucing another writedown of $5.7 billion, and in tune with awful results EVERYWHERE, we have to imagine that former head Stan O'Neal is quite comforted. Fox's Elizabeth McDonald,  reports:

On the July 17 conference call about its second quarter with analysts, analysts who were skeptical as they were expecting a loss of $1.8 bn, Merrill’s chief executive John Thain said: “Right now we believe we are in a very comfortable spot in terms of our capital.” Really? And 10 days later you announce both a massive writedown and another eye-watering, dilutive capital raise?

Without putting too hard a skin on things, that is the type of distortion that O'Neal could not pull off and hold his job.  We don't wonder why.

Meanwhile home prices continued to drop in May by 15.8%, and this trend should eventually cause yawns all around (along with fright faces), since there is no reason to expect demand will pick up when so many other factors (banks raising loan standards, rising cost of living, job insecurity) are in play.  The suffering remains ahead.  You know how when you were a kid and your mom went on a diet, the whole house went on a diet?  No Hostess cupcakes this week, no oreos, no chips.  You just had to wait it out until your dad put his foot down and demanded more junk in the house.  Well today the banks are your mom, and the economy is the kids.  Not sure who dad is in this anology; maybe they divorced or he ran off (see below).

Perhaps the good news, can be found rolling from the silver tongue of presidential candidate McCain, who announced that we could get at offshore oil within months of beginning the effort; some people would say his statement is an absolute fabrication given that most things, including oil drilling, involve a "process," but who are we to judge.

This Winehouse Economy is enough to make you want to grab your daughter and flee to safer climates,  as this one Bostonian is doing.  Now you could argue that this supposed Rockefeller is in some sort of custody dispute, and is actually in the act of kidnapping, but I suspect that he is just getting out before Fannie and Freddie begin to tilt over and wretch. You don't wait for full blown economic disaster when you can spirit your family away to safety and ride it out in the Caribbean.