Geert,Isn’t it a paradox for you also that the main obstacle to turning this so sais recovery into a durable expansion is the stimulus programs of the Obama Administration that were meant to ensure recovery.

Every busineesman can see a huge tax increase coming right at them because of the 1,4 trillion deficit in 2009 and nine trillion more prerdicted for the next ten years.

Consumers (the personal consumption share of GDP rose to a high of 71 % in the 3rd Q of 2009.

The jobless rate is officially 9,8 %.

Consumers can’t carry this expansion for long if the job market doesn’t recover.

When will the animal spirits revive?

The day comes when the next treasury auction goes without bidders on some portion.

China has shifted its maturity to extremely short-term .

They shorten maturity,so that if the birds take flight they can move to dump at the first sign of trouble.

@FV

Taxes are up. They will always be. Taxes are set by the government not by the market. As to food and energy, prices are down. Remeber all these economists a few months ago who said that deflation was only temporarely and based on the collapse of oil prices last year. Guess what: prices are still plunging. It’s just beginning. High prices of the past where not real, they merely reflected the ballooning credit bubble.

it should be looked at in combination with bank credits and M2: you can lead a horse to a well, but you can’t make it drink, or, you can’t push a string

(click on ‘SA’, then on ‘gif chart’ and then change the settings to 1970)

http://www.economagic.com/em-cgi/data.exe/frbH3/day-t04s01

hmm: general motors had it’s own cash for clunker programme, a couple of years ago (zero interest financing), now it’s on life support

http://www.businessinsider.com/chart-of-the-day-motor-vehicle-output-2009-10

According to the Bureau of Economic Analysis (BEA), motor vehicle output spiked a seasonally-adjusted 157.6% quarter on quarter. This is completely unprecedented. Vehicle output is clearly going off a cliff next quarter. The question will be how low can the blue line below go.

Next quarter, we won’t just be returning to business as usual for auto output. Don’t forget that Cash for Clunkers pulled future auto demand, ie. some of Q4 demand, into Q3. Thus Q4 is likely to be very weak since many people who planned to buy a car in Q4 probably took advantage of Clunkers and bought in Q3.

To put this into GDP terms, according to the BEA the spike you see below added 1.66% to the U.S. GDP growth figure reported. Thus without it, GDP growth would have been only 1.89% (3.5% – 1.66%) in Q3.

Now imagine if next quarter the blue line below goes down into negative territory as it did just two quarters ago. Next quarter, not only are we unlikely to get Q3’s boost, but motor vehicle output data could subtract from GDP as well. So watch out for the cliff…

http://krugman.blogs.nytimes.com/

Still, we’ve gotten the big boost, and it’s clearly far short of what we really need.

And yes, we can afford more.

Not necessary.
Look at all the reported “profits” last quarter.

Furthermore “default” is a financial term, not accounting.
What’s at play here is not the amount of debt (leverage), rather the type of covenants as per contract with the debt holder (usually some sort of financial institution).

This little detail is important here in the story about the CEO and his clients.
Depending on the type of covenants, the corporations have different options available. Again, this is important in determining how long a corporation has before insolvency and who ends up with the assets on their books.

Given current economic realities and the tools of corporate finances/management… isn’t it better to talk about non-financial corporations trying to stay solvent, rather than corporate profits in the strict sense?

Isn’t this an important distinction, which gives us an indication of why industrial investment is still down? and in turn why this is very far from it being an economic recovery?
Selling off your built up, overpriced inventory and cutting off as much overhead as you can afford is not exactly an indication of economic recovery.