Bank lending update

It's been a few months since I last highlighted total bank lending but not much has changed since late October. Just to make sure you don't think I forgot here's an update.

Total bank loans and leases as per the Fed continues its steady decline economic recovery notwithstanding.  As you can see there was a large recent spike but this was due to an accounting change in bank's loans and not a sudden increase in lending.  This lack of new lending may be one reason broad money supply is so sluggish of late.

Like last update the banks are buying US Treasuries instead of lending. If you wondering who is buying those hated T bonds look to your corner mega-huge bank.   Considering their funding costs and capital requirements are pretty much zero you could say banks would rather just play golf and clip Treasury coupons.

Money Money + Money -- Money supply update

The broadest money supply figures available (M2 + institutional money market funds) turned positive a few months ago but is only growing slowly.  Furthermore this money measure has not exceeded its pre crisis peaks.

Looking back in the mid 2000's you can see broad money supply was also very sluggish. With QE 2 ending in June we'll see if this data series can keep expanding.

Inflation expectations in the bond market

Here's an update on inflation expectations as expressed by the bond market.   While much is being said right now about inflation expectations becoming unglued the 10 year [Treasury - TIP] difference is not showing anything exceptional yet.   As you can see from the chart inflation expectations (as expressed by nominal yields - 'real' TIPS yields) are getting back to their 'normal' range of around 2.5 percent.

10 year TIP yields are near the low end of the range but some of that is due to nominal yields slowly dropping over time, pushing the TIPS yields down so the difference remains relatively constant.  With QE2 slated to end and oil prices (as well as other base commodities) rising it will be interesting to see if the implied breakeven inflation rate rises above long term resistance of ~2.6 percent.

Japan Nuclear Update: Fear and Loathing about Fukushima

It hasn't taken very long for the charlatans and plain fear mongers to try to capitalize on the situation in Japan. I recently saw a banner ad on my web site for a company shilling a supplement to prevent radiation injury to Americans. I am not going to link to the company and give them free publicity.

To be very clear:
YOU ARE IN NO DANGER IF YOU LIVE IN ALASKA, HAWAII OR THE CONTINENTAL US.
The EPA agrees with me without using all caps.
A professor from Berkeley agrees with me.

Those who have a memory longer than a year may recall two nuclear weapons detonated OVER Japan a few decades ago. The amount of nuclear radiation emitted from those events were several orders of magnitude higher than the current situation yet we didn't have anyone dying in America did we?

This chart from http://xkcd.com/radiation/ has been floating about showing the relative levels of radiation and I think one should really take a look at it to put some of the news reports in context.  One problem is our instruments are so sensitive that its very possible in America to detect the slightly elevated levels of radiation that have made it to our shores.  Then again, getting on an airplane would provide a much higher dose but that doesn't seem to be mentioned at the same time the TV breathlessly tells you the clouds of nuclear radiation are coming this way.

Plutonium:
There's been reports plutonium has been found on the grounds of the Fukushima power plants and we should all hit the panic button  Plutonium is a natural by product of the normal fission cycle which occurs in a power plant. What they didn't mention in the first reports is the scale of the plutonium concentration and that matters a lot. For some sanity I suggest you listen to this interview:
http://georneys.blogspot.com/2011/03/14th-interview-with-my-dad-nuclear.html

Tepco came out with some clarification of the Plutonium and it's not something to worry about
http://www.tepco.co.jp/en/press/corp-com/release/11032812-e.html


Finding people in Japan:
The red cross has another site for finding people in Japan here:
http://www.familylinks.icrc.org/web/doc/siterfl0.nsf/htmlall/familylinks-japon-eng
I mentioned another site run by Google a couple days ago.

Predictions for cleanup taking 30 years:
I ran across a Bloomberg article predicting it will take 30 years and billions to clean this mess up. I link to it so we can see how accurate they are. I find it odd to make such predictions when the smoke hasn't even settled.

There's an interesting presentation by Arevea floating around which appears to give a good timeline of what has happened. Of course this is a theory regarding the damage of the cooling torus but it does look like a possible reason for the elevated radiation readings in the water.
https://docs.google.com/present/view?id=dg4hcz37_289dr9g62f6

I'm not trying to sugar coat the issue in Japan which is still volatile and dangerous but please respond to any positive or negative news reports with a healthy dose of skepticism.

More on China's empty cities

One problem with satellite photos is you don't know what has happened since taken. One may legitimately posit an apartment complex that looks empty in the image may now be filled to capacity and teeming with life.  A recent expose by a journalist on the ground demolishes those theories.

http://www.sbs.com.au/dateline/story/about/id/601007/n/China-s-Ghost-Cities
Watch the video and see the numerous empty towers of apartments. It's a pre-made ghost town.

Here's one insta-city I found a few weeks ago: Chenggong aka Kunming

What is most impressive about the apartment complex shown is how they built the entire place without adding any roads yet.  Hopefully they'll get around to it. Zoom out and look around (both north and east) and you can see the scale of this new city.  Like the video above almost all of this new Chenggong appears unused.

Take a look at the photos from this area. (Panoramio link) and see all the buildings going up and completely empty roads.  There's just too many completely empty homes and roads devoid of life.

ht:  Also Sprach Analyst

An amazing rescue story from Japan

The tragic stories coming from Japan keep piling up and the death toll climbs every day as the Japanese try to dig themselves out of the rubble.   The humanitarian challenge of caring for a couple hundred thousand homeless is straining even the organized Japanese.

Amongst the despair and rubble there are amazing stories of bravery and determination emerging.

Here is one of them.
Hideaki Akaiwa escaped the earthquake and tsunami, but after being unable to find his wife, scrounged up some SCUBA gear and went back into the waters to find his wife! He succeeded and later pulled the same technique to find his mother.  A somewhat embellished but great read of the story goes something like this (from Badassoftheweek 03/18/11)

Regardless of how he came across this equipment (borrowing, stealing, buying, beating up a Yakuza SCUBA diving demolitions expert, etc.) Hideaki threw on his underwater survival gear, rushed into the goddamned tsunami, and dove beneath the rushing waves, determined to rescue his wife or die trying. I'm not exactly sure whether or not the dude even knew how to operate SCUBA equipment, but according to one version of his story he met his wife while he was surfing (which is awesome, by the way), so it doesn't seem like that much of a stretch to say that he already had a little experience SCUBA diving under a more controlled situation. Of course, even if this dude didn't know how to work the gear I'm certain that wouldn't have stopped him either – Hideaki wasn't going to let a pair of soul-crushing natural disasters deter him from doing awesome shit and saving his family. He dove down into the water, completely submerged in the freezing cold, pitch black rushing current on all sides, and started swimming through the underwater ruins of his former hometown.
Surrounded by incredible hazards on all sides, ranging from obscene currents capable of dislodging houses from their moorings, sharp twisted metal that could easily have punctured his oxygen line (at best) or impaled him (at worst), and with giant fucking cars careening through the water like toys, he pressed on. Past broken glass, past destroyed houses, past downed power lines arcing with electrical current, through undertow that could have dragged him out to sea never to be heard from again, he searched.
Hideaki maintained his composure and navigated his way through the submerged city, finally tracking down his old house. He quickly swam through to find his totally-freaked-out wife, alone and stranded on the upper level of their house, barely keeping her head above water. He grabbed her tight, and presumably sharing his rebreather with her, dragged her out of the wreckage to safety. She survived.

Read the whole article.

Tool for finding people in Japan via Google

Google has a service for people looking those lost or missing in Japan. The url is:
http://japan.person-finder.appspot.com/?lang=en
They currently have over 250 thousand records. One word of caution however, some cruel people are posting entries stating some people have died and these entries are entirely false so while I don't want to encourage false hope be cautious of such entries.
From metro.uk

One family were crushed when a message posted on the Google people finder by Lucas. A said that Brian Hickebottom had died in the disaster. However, it emerged that the information was wrong, and he had found refuge in the school where he and his wife work, much to his relatives' relief . . . Responding to a post about US marine Justan Browning, which said he had died when a building collapsed, someone going by the name Canadian Friend wrote: 'I have seen several false reports that people are deceased. It is disgusting. Do not give up hope. Call your government to verify the above report.'