British Airways faces reality - a 'repression'.

The airline operating level results continue to signal that this economy isn't getting any better despite Wall Streets enthusiasm. It looks as if things are getting worse but thankfully not as quickly as they were. BA's latest pronouncement said " market conditions continue to be very challenging with trading at all levels well below last year". The airline is cutting capacity for the peak summer months, defering aircraft deliveries, and reducing the capex spend . Not much there to show that green shoots are sprouting. Banks are repairing their severely impaired balance sheets rather than lend to the economy, unemployment is rising,corporate bankruptcies are growing, and finance directors are slashing travel budgets.

Elsewhere in the bellweather airline sector Swiss is cutting winter capacity by 9%, Austrian is laying off 1,000 staff while Czech is reducing its fleet by 10%.

Although we've stopped plumetting economies continue to drift downwards. If not a depression then it's certainly a more than standard recession - perhaps we should start calling it a repression. At the end of this global demand is likely to be severely repressed by perhaps as much as 7-10%. At some stage governments in the UK and the US are going to have to toy with inflation financing to get out of this mess - that's why in the long term I think the Euro will continue to appreciate. There is talk of 20% cuts in government spending in the UK but I'm not sure the electorate is ready for reductions of this projected scale. Anyway, the opposition would need to have a huge swing to unseat the incumbents huge arithmetic lead - Labour isn't dead yet. Currency and bond markets may well have got Sterling wrong.

Other unconnected pieces of recent data that surprised me:

• Phoenix house prices have fallen by 53.7% from their peak. By contrast Charlotte is down 11% and Dallas 8%.
• State level personal income tax collection is down 26% from prior year levels in the January - April timeframe.
• June autosales are set to rise above 10m units annualised in June - still down from last years 13.7m level.
• For the first 4 months of the year Central California bankruptcy levels are up 75% from 2008 levels.