recession

Blame it on animal spirits

Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits — a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

— John Maynard Keynes, The General Theory
of Employment, Interest and Money (1936)

Animal Spirits

— Jacket art by Edward Koren from
Akerlof & Shiller, Animal Spirits (2009)

We will all go together when we go

An impressionist’s view of the global equity markets in 2008 — eight index lines tumbling down, a cascade of loss.


See the waves of synchronized selling, the major U.S., European and Asian indices moving together in a shaky dance.  Falling, recovering and finally capitulating, ending the year crashed on the floor, disoriented and spastic.  There is no de-linking of global financial markets.  There is universal suffering.

Which, as Tom Lehrer noted, has a bright side.

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Emergency Financial Assistance for Law Firms

Proposed Program

A portion of the $700 billion authorized under the Emergency Economic Stabilization Act of 2008 (the “Act”) will be used to fund the Client Receivables Acquisition Program (“CRAP”).

Law firms eligible to participate in CRAP may sell client receivables to the U.S. government, thereby receiving payment for fees billed to clients who are unable, unwilling or unaware of their obligation to pay for legal advice.

Law Firm Eligibility

To be eligible to participate in CRAP, a law firm must have —

  • its head office in the U.S.,
  • “significant operations” in the U.S., or
  • “substantial ambitions” in the U.S.

An eligible law firm must also belong to one of the following categories:

Law firms that are deemed to be “financial institutions” within the meaning of the Act.  A law firm may be treated as a financial institution if the average age of its inventory and client receivables is equivalent to 12 or more working capital weeks or if Treasury determines that the firm has otherwise become, in effect, a provider of long‑term financing to its clients.

Law firms whose participation in CRAP is “necessary to promote financial market stability” for purposes of the Act.  If more than 50% of a law firm’s annual revenues (on an accrual basis) are from clients who are “financial institutions” within the meaning of the Act, then Treasury may determine that purchases of the firm’s client receivables are necessary to promote financial market stability.

Law firms whose impact on local economic conditions is deemed to be unusually significant.  Under program guidelines to be issued by Treasury, eligibility for participation in CRAP may be extended to a law firm whose overhead expenses on a per-lawyer basis exceed 120% of the average for its peer group, or if the firm is otherwise determined to have an unusually significant impact on the local labor, real estate or catering markets.

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At the pump: $1.66 a gallon

From a July high of $4.11, today the average price of regular gasoline at U.S. filling stations is $1.66 a gallon.  Goodbye, energy conservation.  Adios, alternatives and hybrids.  See you after the recession.

The chart shows nominal (i.e., unadjusted for inflation) weekly average U.S. retail gasoline prices since 1993 — now at their lowest level since February 2004.

Weekly U.S. Retail Gasoline PricesSource:  Energy Information Administration