"Crisis-Hit Banks Flooded Fed with Junk" (CNBC via Financial Times) I first wrote about the issue of collateral quality on Wednesday. The story continues, in today's Financial Times: "Banks flooded the Federal Reserve with billions of dollars in 'junk bonds' and other low-grade collateral in exchange for much-needed liquidity during the crisis, as the financial sector struggled under a crippling credit crunch, new data show". Watch for the details of just how bad that collateral really was to emerge over the next few days, as journalists and others continue to pore over the Fed's spreadsheets.
It will take some time to tease out the broader trends from the data; in the meantime, look for thought provoking anecdotes will drive the discussion. For example, the following: "Within a day of easing the collateral requirements, Credit Suisse had borrowed $1 billion from the PDCF, using it for the first of only two times, against a collateral portfolio that was made up of 91 percent equity. "
Bad Employment Numbers: 39,000 New Jobs—Economists Predicted Number 3.5 Times Higher \(CNBC via Reuters\) Bad Numbers: "Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, the Labor Department said. However, overall employment for September and October was revised to show 38,000 more jobs than previously estimated." The expectations were far higher: "Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 percent." More raw data: "Employment in the goods-producing sector fell 15,000, weighed down by manufacturing payrolls which fell 13,000 and construction shedding 5,000 jobs. Employment in the private service-providing sector rose 65,000 in November, though retail hiring fell a surprising 28,100 despite expectations of a busy holiday season. The workweek was steady at 34.3 hours in November and average hourly earnings edged up 1 cent."