March 4

A long way to go. FRBSF.

How to kill a recovery. Paul Krugman, NYT.

The madness of Jean Claude Trichet. Krugman.

Dead nation walking. Richard Russell.

Why the maven is morose. interview of Stephanie Pomboy in Barron's.

Why real estate will hold the economy back. The Daily Capitalist.

Commercial real estate loans and residential housing will continue to be a significant drag on economic performance. Until the mass of over-built homes and commercial properties are liquidated credit will remain tight and unemployment will remain high.


The unfortunate fact remains that credit for most of America is still tight, banks are still trying to repair their balance sheets, and the overlying problem is real estate, the detritus of the Fed’s reckless monetary policy. Credit expansion fueled by the Fed’s easy money policy of the early 2000′s drove private debt to fuel housing over-production, and drove commercial debt to fuel commercial real estate (CRE) over-production. It was the greatest such expansion of money and credit the world has ever seen and it went primarily into real estate. We are now facing the consequences of that expansion and boom: the bust.

includes much more on the FDIC Q4 banking report

Banks face more loan write-downs. WSJ.


Game changers? Tim Duy's Fed Watch.

Saudi Arabia contagion triggers Gulf rout. Ambrose Evans-Pritchard, Telegraph.

latest sell-off was triggered by the arrest of a Shi’ite cleric in the Kingdom’s Eastern Province after he called for democratic reforms and a constitutional monarchy. The province is home to Saudi Arabia’s aggrieved Shi’ite minority and also holds the country’s vast Ghawar oilfield, placing it at the epicentre of global crude supply. "Unrest in this region can have fatal consequences for the world," said JBC Energy. "The plunge on the Saudi stock exchange can be interpreted as a sign of waning trust."

re: Bahrain

protesters have "the right to appeal for help from Iran" if Saudi military units interfere in the struggle. Tanks were seen crossing the 17-mile causeway from Saudi Arabia to Bahrain on Tuesday

Religious tensions in Bahrain on edge. zerohedge.
concludes:

And once religion is involved, which of course means Iran, then all bets are off especially if Saudi sends reinforcements to support the Bahraini status quo.

German-Irish brinkmanship raises EMU stakes. Evans-Pritchard, Telegraph.

The EU's band-aid on a bullet hole. Daniel Gros, Project Syndicate.