This week’s continued bear rally uptick, following reports of first quarter bank profits, was abetted by the Treasury Department’s decision to withhold the results of the stress tests they’ve been conducting on the nation’s 19 largest banks. As Reuters and Bloomberg note, officials say they don’t want to “complicate” the market’s response to a rare bit of seemingly good news. There’s even talk that Treasury will only release aggregate numbers when they go public later this month. Sounds like the banks didn’t do so well on their exams. And remember–the scenarios under which they were tested were jiggered in a relatively rosy direction compared to the real performance of the economy.
The world’s most famous currency speculator, George Soros–who has played no small role in crafting the Democrats into the favored party of Wall Street–is invoking the specter of a Japan-style stagnation. As for the banks, says Soros, “What we have created now is a situation where the banks who will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy. Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive. This is the zombie bank situation.”
First Jon Stewart, now Nouriel Roubini: This week Dr. Doom called hyperventilating CNBC pimp Jim Cramer “a buffoon. He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong…. [H]e should just shut up because he has no shame.” Elsewhere, Roubini reiterated that he expects the macroeconomic situation to remain lousy for a long time to come.
Here’s a worthwhile video of Elizabeth Warren–the long-time credit industry critic and head of the TARP Congressional Oversight Panel–introducing her panel’s latest report, along with links to the April COP update.
While we’re keeping news of bank stress tests away from the markets, we will also want to keep news of a new Rasmussen Poll from Minnesota’s ascendant GOP media nutjob, Michele Bachmann, whose tireless self-promotion has made her a fixture on cable news of late. According to the survey, barely more than half of U.S. adults (53 percent) now say that capitalism is preferable to socialism. Bachmann should pray hardest for the under-30 set, which prefers capitalism by the narrowest of margins–37-33, with 30 percent undecided. And get this: “Two out of three Americans believe that big government and big business often work together in ways that hurt consumers and investors.” Crazy talk!
More: Krugman blog: The bounce and the revision thing; Martin Wolf: What the G2 must discuss now that the G20 is over; New York Review of Books: John Gray on novelist Margaret Atwood’s book about debt culture; Bloomberg: Dollar advances on optimism that the worst of the U.S. economic crisis is over; Bloomberg: Overseas borrowers sell dollar bonds at record yearly pace.