-2.9%

That was the revised number for 1st. quarter GDP, down from -1%.  I mean, we're talkin' Greece here c. 2010.  It wasn't the weather gang, there's something seriously out of joint out there and it appears that the only thing holding this together is the slosh, slosh, slosh of free money Over Here and Over There which is clearly not going to end soon as Janet and the Administration have a lip-lock on each other.  Given the state of things can you imagine if this latest middle east crisis really blows up and people start to worry from where will come the next barrel of oil?

And yet, the equity markets keep chugging right ahead.  If there was any further proof that was need that what is the only driver of this economy is cheap and plentiful money, this number and the reaction to it must provide the final clue.  Who was the economist that said, "All things continue forever until they stop?"  There's too many of those buggers out there--which is part of the problem as well--to get them straight.  Despite Janet, it is going to end sometime and then what?  I've lived a reasonably long time and I don't remember ever seeing anything like this.

Then again, there was a bright spot on the horizon this week.  I've been talking forever about bank funding, you know, "Banks die on the liability side," and for the first time there seems to be a dialog beginning about what is now being called the "Repo problem," that is method by which banks fund themselves by pledging assets against loans made in the normal course of business.  The issue is of course duration risk, or term funding risk to put it another way, that is to say what is the average maturity of the portfolio of these loans.  What I didn't know is that only a handful of banks reveal that number--Citibank being one--which makes it more than a bit difficult to judge the funding risk present.  Moreover, repos is just one part of the problem as it is clearly better to have a balance sheet funded by even 10 day repos than by overnight loans should things start to go toes up.  The important thing is people are beginning to pay attention to what counts rather than to the Loonie Tunes chorus led by Crazy Lizzy Warren.  The bad news is that given the state--and perhaps direction of this economy--we may have to start worrying about this again although the excess reserve number continues to increase providing a rather substantial cushion as opposed to earlier times.  Over all, I am encouraged.

USA vs. Germany tomorrow for all the marbles.  And then of course there is the curious case of the Looie "the nibbler" Suarez played out before half a billion people yesterday.  Brilliant footballer, sick little dude.  He just might have brought the hopes of 3,000,000 countrymen crashing down as surely, he will not be allowed to continue..Then again, around the world, we allow people to continue doing the same things economically that produce nothing better than a red card.  Play on.