Good News on the Economy!

Yes, I know that it’s the end of civilization as we know it. But there are some portents out there telling us something different.

First of all there’s Libor. That’s the London Interbank Rate, the interest rate that banks charge each other on interbank loans. Remember, the big problem in the current crisis is that banks are afraid to loan money to each other. Well, here’s the trend in in Libor and longer term interbank rates in recent days from Bloomberg.

10/17/08 10/20/08 10/21/08 1-month 4.18% 3.75% 3.53% 3-month 4.42% 4.06% 3.83% 5-yr Bank 6.36% 6.35% 5.84%

So that’s all right. The Libor rates are dropping like a stone.

Then there’s the news from the housing market in Southern California. Home sales were up in September by a record 65 percent. Daniel Taub from Bloomberg reports.

Southern California home sales rose 65 percent in September, the biggest year-over-year increase in at least two decades, as buyers took advantage of foreclosures to purchase properties at discounted prices, MDA DataQuick said.

Why is this important? Let’s hear from Ludwig von Mises, conservative economist and RMC Chappie. He wrote that a recession is the period of liquidation of the malinvestments of the previous boom.

But when the liquidation ends, then it’s time to start a new economic expansion. So the quicker the liquidation proceeds the sooner we’ll get to the other side.

Things are really looking up. Why, the economy may turn around and start expanding by January 20, 2009 when President Obama takes office. And then he can take the credit for the improved economy. It will happen on his watch, right?