From Politika….

Just when you thought there is nothing that can surprise you anymore in this country, comes this. LNT’s “Degpunktā” reports that Valmiera state prison had four special guards dogs shot as part of the “economy regime”. Apparently, the guards couldn’t bring themselves to do that so they called in an outsider and gave him a gun. I wonder if that’s the kind of measures that Mr Slakteris, the minister of finance, meant when he famously told the Bloomberg TV that “we will be …taupÄ«gi [economical].”

And from the Telegraph….

Ryanair’s chief executive caused howls of protest today when he suggested that the airline may charge passengers £1 to use its toilets.

From Calculated Risk…..

The S&P 500 closed at 735 or so. The low in 1997 was 737.01.

Note: the S&P 500 was at 744 when Greenspan spoke of “irrational exuberance”!

From Megan McArdle…..

One of the enduring mysteries of the last month has been how fourth quarter GDP could have been falling faster in Europe than in the United States. Now we have an answer: our first GDP estimates were way too optimistic. The revised estimates now put the annualized rate of decline in the fourth quarter at 6.2%, rather than the 3.8% initially predicted. That’s roughly in line with the decline in Europe and the UK, though Japan still has a commanding lead in the race to the bottom.

From Felix Salmon…

It’s pretty much impossible to get one’s head around the sheer enormity of the numbers in Barack Obama’s first budget. But it’s important to try, and one anonymous commenter has a very good point: the entire federal budget, as submitted by President Clinton in 1996 through 1999, was smaller than the budget deficit that Obama is proposing for next year.

From Spiegel…..

And how about subprime companies? European corporations are deeply in hock, with $801 billion in corporate debt maturing this year-nearly one-third more than in the U.S. Some, such as Munich-based chipmaker Qimonda and Swedish automaker Saab, say they are insolvent.

From Edward Hugh…….

According to the 2009 budget Barack Obama is sending to congress today, the United States will have a $1.75 trillion deficit this year. The figure represents 12.3 percent of estimated gross domestic product, double the previous post-war record of 6 percent in 1983, and the highest level since the deficit totaled 21.5 percent of GDP in 1945, at the end of World War II. It seems the numbers are about to start getting let out of the bag, and it will be interesting to see how the markets react.

From Bloomberg….

China investors should be “defensively positioned” as a decline in the nation’s tax receipts signals a steeper slowdown in spending than retail sales figures show, according to Goldman Sachs Group Inc.

“Tax data show much sharper deceleration in income and consumption in the past few months than suggested by official retail sales or income growth figures,” Goldman Sachs analysts Joshua Lu, Caroline Li and Fiona Lau wrote in a note today.

Value-added tax has “de-linked sharply” from retail sales figures, the analysts wrote. VAT rose 1 percent in the fourth quarter from a year earlier, while retail sales gained 21 percent, according to the note.

When the sales tax figures diverge sharply from the total sales figures, one set of figures has to be wrong.

From Bloomberg….

Japan’s exports plunged 45.7 percent in January from a year earlier, resulting in a record trade deficit, as recessions in the U.S. and Europe smothered demand for the country’s cars and electronics.

The shortfall widened to 952.6 billion yen ($9.9 billion), the biggest since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The drop in shipments abroad eclipsed a record 35 percent decline set the previous month.

A nation that used to finance the US is now having to sell assets to finance itself.

From the Telegraph….

The cost of bankruptcy protection on German debt has reached an all-time high on spill-over from the financial crisis in Eastern Europe and mounting concerns about the stability of Germany’s banking system.

People are becoming more wary about lending to the German government. Used to be that the thought of Germany defaulting was unthinkable.

It use to be said that the Debtor was the slave to the Lender. But nowadays it is reversed. As Gregor says….

Collectively, the debtors are in control. Not the creditors. This is why the the Creditors, not the Debtors, will be making most of the concessions in the years ahead. Whether the US public debt is inflated away, rescheduled, or repudiated–or some combination of all three–it doesn’t matter much. The process is already underway.

He is speaking of the domestic US market, but it is just as true world wide.

From the Wall Street Journal….

It used to be that credit-card companies lured customers with cash rewards. Now American Express Co. is paying to get rid of them. The card issuer is offering selected customers a $300 AmEx prepaid gift card if they pay off their balances and close their accounts.

The unusual move underscores how quickly conditions have deteriorated in the credit-card market. The current economic morass was provoked by spiking mortgage defaults. But as the economic crisis widens and unemployment climbs, there is growing concern that credit-card defaults will soar into the stratosphere as well.

From Naked Capitalism…..

The latest canard is the pretense at negotiations with AIG. If you recall, AIG, which is regulated by a host of countries at the insurance subsidiary level, came begging to Uncle Sam because it had a credit default swaps unit at the holding company level that had written unhedged policies that looked pretty certain to crater the parent company. Even though the subsidiary companies are well regarded (in many cases very well regarded) they cannot readily upstream cash to the parent. The only way to realize value is by selling them, and this isn’t a great environment for doing that.

What has been appalling about AIG is that Uncle Sam initially imposed a suitably puntitive deal but then for reasons that remain a mystery, relented . Since the federal government is NOT a regulator of AIG, there was no reason to expect the authorities to step in, save Ben Bernanke and Hank Paulson’s attentiveness to the needs of the financial sector generally. AIG has globe-spanning operations, and there is no good reason why the US public should be stuck with the consequences of their lousy risk management decisions. But not only did AIG get considerably more in loans in version 2.0 of its deal with the US government, but the terms on its initial loans were improved considerably.

I have to tell you, in all my years of private sector dealings, when a company comes back for more money, particularly when it has missed targets (as AIG did, it claimed the initial loan would be sufficient), the new money, be it debt or equity, comes on vastly more costly terms. And it is simply unheard of to revise an initial deal to be more company friendly. I do not know why the travesty of the kow-towing to AIG’s faux needs has not resulted in more ridicule.

And it only gets worse. AIG is on the verge of getting even more fawning treatment from a “sympathetic” government. Do little guy deadbeats get such kid glove treatment?

I have no use for the Big Three auto makers plea that they need government money. Unlike Yves Smith, I want to see them go bankrupt.

But I can’t help feel that auto unions and every other blue collar worker in this country have every right to be mad enough to chew nails. We will make an industrial company beg to get 20 billion and at the same time we shovel hundreds of billions of dollars at one white collar company that helped to get us into this mess.

From the Telegraph….

The British Bankers’ Association said that customers withdrew £2.3bn in January, the biggest drop since records began.

The BBA said personal deposits fell by £2.3bn as spending drained cash and savers sought alternative ways of getting a return on their cash. The previous high for falling deposits was £1.5bn in 1997.

Predictable, but it is still not what you want to see.