Weekly Initial Unemployment Claims: 457,000
2009-12-03Calculated Risk Blog
“In the week ending Nov. 28, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week’s revised figure of 462,000 [revised from 466,000]. The 4-week moving average was 481,250, a decrease of 14,250 from the previous week’s revised average of 495,500.
…
The advance number for seasonally adjusted insured unemployment during the week ending Nov. 21 was 5,465,000, an increase of 28,000 from the preceding week’s revised level of 5,437,000. The 4-week moving average was 5,541,500, a decrease of 75,750 from the preceding week’s revised average of 5,617,250.”
The Fed Doesn’t Want Banks to Increase Lending
2009-11-27-09 ZeroHedge.com
“Overall, many participants viewed the risks to their inflation outlooks over the next few quarters as being roughly balanced. Some saw the risks as tilted to the downside in the near term, reflecting the quite elevated level of economic slack and the possibility that inflation expectations could begin to decline in response to the low level of actual inflation. But others felt that risks were tilted to the upside over a longer horizon, because of the possibility that inflation expectations could rise as a result of the public’s concerns about extraordinary monetary policy stimulus and large federal budget deficits. Moreover, these participants noted that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation. To keep inflation expectations anchored, all participants agreed that it was important for policy to be responsive to changes in the economic outlook and for the Federal Reserve to continue to clearly communicate its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and pace.”
Dubai Shows Limits of Government Rescues, Roubini’s Das Says
2009-11-30 Bloomberg.com
Nov. 27 (Bloomberg) — The worldwide decline in equities spurred by Dubai’s efforts to reschedule its debt is a sign that government spending alone won’t be enough to protect financial markets, according to Arnab Das of Roubini Global Economics.
Stock volatility will probably jump as countries and companies default on loans, said Das, the head of market research and strategy at RGE, the advisory firm founded by economist Nouriel Roubini.
Shares slumped from Shanghai to Brazil and European shares fell the most in seven months yesterday after Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayment on much of its debt. Governments have spent, lent or guaranteed $11.6 trillion and central banks held interest rates near zero percent to end the first global recession since World War II.
“We’re bound to see a rise in risk aversion,” Das, who is based in London, said in an interview. “The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they can’t make all the excesses simply disappear. We still have to work out those balance sheet stresses. The recovery is proceeding, but significant challenges still lie ahead.”
Dubai Defaults – Deflation In Action – Watched Pot Theory Revisited
1009-11-29 Mish’s Global Economic Blog
Global stock markets endured heavy selling on Thursday as investors were spooked by the spectre of a default by Dubai and after a febrile foreign exchange market saw the yen surge to a 14-year high against the dollar.
The turmoil caused a flight to less risky assets. Gold, which had challenged $1,200 in Asian trading, fell back from its highs and money flowed into havens such as German government bonds.
US markets are closed for the Thanksgiving holiday, but electronic trading of the benchmark S&P 500 equity futures contract showed a potential drop on Wall Street of 2.2 per cent.
As the European trading day progressed it became clear it was Dubai World’s difficulties that had hit a particular nerve, reminding investors of the lingering damage wrought by the financial crisis.
Wells Fargo Chief Economist: “There is no clear, easy way out for housing”
2009-11-28 Mish’s Global Economic Blog
“If there is no clear, easy way out for housing, then there is no clear, easy way out for Wells Fargo. Wells is sitting in a huge pile of Pay Option Arms in bubble states like California, where prices still have a long way to correct.”
Why Your FDIC-Backed Bank Could Fail
2009-11-26 Elliotwave.com
“The following analysis by Bob Prechter is excerpted from the free Club EWI report, Discover the Top 100 Safest U.S. Banks. With 130 bank failures expected by the end of this year, we hope you’ll find this information more valuable than ever”
FDIC’s List of ‘Problem’ Banks Grows 33% in Q309
2009-11-24 Housingwire.com
“Banks and savings institutions insured by the Federal Deposit Insurance Corp. (FDIC) posted aggregate net income of $2.8bn in Q309 despite net quarterly losses reported by more than 26% of all insured institutions, according to the FDIC’s quarterly report on insured institutions.”
Housing Bottom? “Not Even Close,” Barry Ritholtz Says
2009-11-24- Yahoo.com
Barry Ritholtz, CEO of Fusion IQ… notes the existing home sales number was juiced by sales of cheap condos and various government programs. Meanwhile, the Case-Shiller results were below expectations.
Case-Shiller Still Predicts Massive 45% Fall From Today’s Values
2009-11-24 MLImplode.com
The 10 major cities in the Standard & Poor’s/Case-Shiller home price index have risen 5% from their April low, but the index is still predicting a massive 45% fall from today’s values.
The index is still showing a current loss of 30% from the high in June 2006. Based upon a trend generated from the actual prices of 1987 to 1997, and generated forward in a linear projection, the index will fall a total of 62% before it reaches the trend norm.
Geithner Bond Wise Men Bury Warning as Options Rise
2009-11-16 — bloomberg.com
“The options market shows investors are growing increasingly wary that U.S. debt sales may push yields higher even as inflation remains in check.”
The New Flipping: Short Sales
2009-11-16 — heraldtribune.com
“The FBI recently added short sale flipping, dubbed “flopping” by some mortgage fraud experts, to its list of recognized real estate fraud.”
Investors strategize for Fed’s exit from MBS market
2009-11-16 — reuters.com
“Investors who reaped robust gains in U.S. mortgage-backed securities by piggy-backing on the Federal Reserve’s $1.25 trillion buying program are bracing for the end to the central bank’s support — and positioning themselves for a new round of profits as prices cheapen.”
Ambac Faces 99% Chance of Default as Deadline Looms, Swaps Show
2009-11-14 Bloomberg.com
Ambac Financial Group Inc.’s bond- insurance unit faces a 99 percent chance of default, credit derivatives show, as financial institutions brace for the second-largest bond insurer to file a capital update with regulators later today. ”
New CMBS Tax Rules Miss Underwater Factor, BofA Says
2009-09-22 Housingwire.com
The market for commercial mortgage-backed securities (CMBS) experienced a rally last week following the issuance of new guidelines regarding acceptable loan modifications within real estate mortgage investment conduits (REMICs).
The total reach of the new rules may not go so deep, however, as to help some underwater borrowers, according to one research firm.
$30 billion home loan time bomb set for 2010
2009-09-21 sfgate.com
“Next year, many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures – and home-loan data show that the risky loans were heavily used in the Bay Area.”
Is Pent-Up Inflation From Fed Printing Waiting On Deck?
2009-09-21 — blogspot.com
House Prices Won’t Return to Peak Until 2020: Moody’s Analyst
2009-09-21 housingwire.com
” At least another decade will pass before housing prices return to peak 2006 levels, according to an analyst at Moody’s Economy.com.”
Next Bubble to Burst Is Banks’ Big Loan Values
2009-08-13 Bloomberg.com
While Regions may be an extreme example of inflated loan values, it’s not unique. Bank of America Corp. said its loans as of June 30 were worth $64.4 billion less than its balance sheet said. The difference represented 58 percent of the company’s Tier 1 common equity, a measure of capital used by regulators that excludes preferred stock and many intangible assets, such as goodwill accumulated through acquisitions of other companies.Wells Fargo & Co. said the fair value of its loans was $34.3 billion less than their book value as of June 30. The bank’s Tier 1 common equity, by comparison, was $47.1 billion.
Hussman on Post Crash Dynamics
2009-08-13 — blogspot.com
ING’s Alt-A RMBS Portfolio Turns 21% Delinquent
2009-08-12 — housingwire.com
” ING Group posted a EUR 71m ($100.9m) profit in Q209 after three consecutive quarters of losses, despite a decrease in the value and performance of its residential mortgage-backed securities (RMBS) portfolio. “
The Next Fannie Mae
2009-08-11 — wsj.com
Housing prices sink as underwater number rises
2009-08-11 — blownmortgage.com
“Two reports out say if you’re thinking of buying, wait. The prices are going to continue to drop. The reason they offer are the same: Continuing increases in the number of homes worth less than their current mortgages.”
Deflationary Debt Destruction Must Run Its Course
2009-08-11 — minyanville.com
“My vacation back to the US surprised and confounded many of my old friends: they know I moved back to park my wealth in dollars. Incredulously they asked how I could possibly not believe the US government, along with their crony partner the Federal Reserve, will not devalue the dollar to “settle” our debt with foreign lenders. A normal default (since we all know there is no way to possibly pay this debt back, nor is their enough capital in the world to buy our newly needed “financings”) isn’t palatable, they say, so the only direction for the dollar is down. I agree, but only in the long run. “
Entering the Greatest Depression in History
2009-08-10 — lewrockwell.com
Banks Expected to Collect $38 Billion in Overdraft Fees in 2009
2009-08-10 — nakedcapitalism.com
Today’s Financial Times highlights a possible target of regulatory action: bank overdraft fees. And those fees are not distributed the proverbial 80/20 pattern, with 20% of the accounts contributing 80% of the activity, but 90/10. And that 10%, not surprisingly, is in consumers with the lowest credit scores.
And not surprisingly, the biggest banks are the ones with the most aggressive fees.
How To Avoid Foreclosure By Declaring Bankruptcty
2009-08-10 — blownmortgage.com
” Over 3 million people are 60 days behind in their mortgage payments with little hope of finding a quick solution. This has caused many borrowers look for somewhat imaginative measures to save their home, one of these has been declaring bankruptcy to avoid a mortgage foreclosure. Does this work? Is it legal?”
Quelle Surprise! The Fed is Reporting Losses on Its Bear Stearns and AIG SPVs
2009-07-20 NakedCapitalism.com
“Readers may recall that during the heat of bailout battle, the Federal Reserve got into the fancy finance business, relying on the sort of deal structuring sometimes used to try to turn toxic odd pork scraps into barely-digestible sausage, the procedure used for pigs so dead that merely putting lipstick on them just won’t do.
The items in question are Maiden Lane, the vehicle used to backstop JP Morgan’s purchase Bear Stearns, and two sons of Maiden Lane created for dodgy AIG exposures. The bank was permitted to move some particularly fragrant collateral from Bear over to the Fed for a loan of $30 billion. The arrangement got reworked on the fly, and in the end, the Fed loan was reduced to roughly $29 billion as JP Morgan agreed to assume $1.15 billion of risk. The assets were placed in a holding company to be managed by BlackRock.”
Congressman Stearns: Mr Paulson How Do You Have Any Credibility?
It’s about time that people start asking the tough questions.
U.S. Rescue May Reach $23.7 Trillion, Barofsky Says
2009-07-20 Bloomberg.com
THIS IS NOT A MISPRINT.
“U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.
“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.
Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.
“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”
Option-ARMs worse than subprime
2009-07-14 TheMessThatGreenspanMade
“More than one-third of all Option-ARMs (called Pick-A-Pay loans below) are in default and most of these are likely to make it to the foreclosure stage eventually.”
SandP Downgrades 120 Classes of Alt-A RMBS
2009-07-13 Housingwire.com
“After a review of 13 US residential mortgage-backed securities (RMBS) transactions, Standard and Poor’s lowered its ratings on 120 of the securities’ classes last week. The collateral backing the vintage 2005-2007 securities are primarily Alt-A, first-lien residential mortgages.”
Short Sellers BEWARE
2009-07-10 Calculatedrisk.blog
“Often, the troubled home owner assumes the loss will be eaten by the lender. But Bank of America and Chase have quietly added language in their short-sale agreements that require the borrower to sign a promissory note for the shortfall.”
Ron Paul On Fed Audit: We Will Not Be Stopped
2009-07-09 PrisonPlanet.com
“Congressman Ron Paul has vowed that he will not be stopped in his effort to audit the Federal Reserve, as he slammed Senate authorities for blocking the bill earlier this week.
Appearing on Fox News’ Freedom Watch with Judge Napolitano Paul referred to Senate authorities blocking Jim DeMint’s attempt to attach the legislation, which already has 250 co-sponsors in the House, as a provision to a spending bill as a “facade”.
PMI Expects Lower Housing Prices in 2011
2009-07-o7 Housingwire.com
“Home prices will be lower in two years compared to Q109 for much of the country’s metropolitan statistical areas, (MSAs) according to an economic trends report released by PMI Mortgage Insurance Co.”
Another wave of foreclosures is poised to strike
2009-07-04 LATimes.com
“Reporting from Washington — Just as the nation’s housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy.
Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration’s home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments….”
Banks Falling 23% Since May Foreshadow S&P 500 Slump
2009-07-01 Bloomberg.com
“Declines of more than 20 percent in regional banks and homebuilders and the failure of transportation companies to erase their annual loss may be signs the rally in the Standard & Poor’s 500 Index is about to fizzle.”
Delinquencies Double on Least-Risky Loans, U.S. Says
2007-07-01 Bloomburg.com
“Delinquency rates on the least risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure.”
175 California Hotels In Default; Sheraton Keahou Bay Resort in Hawaii Defaults; More Defaults Coming
2009-06-28 Mishs Global Economic Blog
In California, 175 hotels are in default — the first stage in the foreclosure process — according to a report from Atlas Hospitality Group, an Irvine-based brokerage firm. Another 31 have been foreclosed, nearly one third of them in the Inland region.
Of those in default or foreclosure, about 75 percent obtained new loans between 2005 and 2007 for construction financing, re-financing or to buy the hotel, according to the firm. Atlas Hospitality estimates that 2,500 hotels — about 25 percent of the state’s entire hotel population — refinanced or obtained new loans in that time meaning more defaults and foreclosures could be on the horizon.
Agency MBS (Mortgages)? Better Read This!
2009-06-29 Denninger.net
“Mad props once again to Zerohedge who shone the bright light on Freddie’s latest screed. I’m not going to take from their discussion of The Fed buying up paper at what will (almost certainly) lead to ruinous losses – you can find that there. Rather, I am going to look at some of the internals from the document published that they didn’t focus on.”
Wary of dollar, China wants super-sovereign currency
2009-06-26 Forbes.com
China’s central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar’s global domination, which it said had worsened the financial crisis. In its annual financial stability report, the central bank did not mention the dollar by name but said it was a serious defect that one currency should tower over all others. “An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis,” the People’s Bank of China said.
Delinquencies on US Auto-backed Securities Jump 22%
2009-06-27 ResearchRecap.com
Roubini: No confidence in government exit strategy
2009-06-26 Bloomburg:
In this Bloomberg segment Dr. Nouriel Roubini shares his thoughts on why pundits proclaiming the stabilization of the housing market are wrong and why the current policy path is unsustainable and likely to have a messy exit. My favorite part? The idea of our debt ballooning from 40% GDP to 80%. Lovely. Can you say bust?
Alt-A and Pay Option ARMs Fueled out of State Buying
2009-06-10 Dr Housing Bubble.com
If you want further proof how horrific these products are, take a look at how many of the Alt-A and pay Option ARM products originated with a second lien. That is, low down or nothing down fantasy buyers. In California, there are currently floating around 186,917 Alt-A mortgages with a second lien on them. You can rest assured that 90 to 99 percent of these loans will implode in the upcoming months. This is where your piggy back loans and 80-10-10 crap came about. I remember when zero down was a crazy way to suck in unknowing investors to thousand dollar seminars but it actually became a mainstream way to buy a home.
Before you even wonder how safe these loans are 41.6 percent of California Alt-A mortgage holders already have one late in the last 12 months! Keep in mind that most of this junk hasn’t even hit recast points and nearly half are already late with one payment:
Mish’s Global Economic Analysis speech at Google
May 6, 2009
Presented by Mike “Mish” Shedlock.
Mike “Mish” Shedlock is author of one of the most read economics blogs on the Internet: Mish’s Global Economic Trend Analysis http://globaleconomicanalysis.blogspot.com.
Mish gave an @Google talk, sharing his perspective on the state of the global economy (housing, the stock market, commodities, etc.) He also provides his interesting story about how he started blogging, and the impact that it has had on his life personally and professionally.
In January, Time.com ranked his site the #1 based on a rounded set of criteria http://www.time.com/time/business/article/0,8599,1873144-3,00.html. From the article:
“Although Mish is not an economist by training, he adroitly gets into the thick of economic data. Mish uses observations made by those in major media, so-called experts and government officials and serves up analysis based on his impression of their relevance and validity. The author is not afraid to attack conventional wisdom.”
Optimistic Unemployment and Housing Forecasts Looking Downright Silly
2009-06-07 Mish’s Global Economic Blog
Please consider unemployment forecasts. The Fed forecast unemployment at 8.4% in 2009 and the “adverse forecast” was at 10.3% in 2010.
Hello Ben, in case you did not notice, Jobs Contract 17th Straight Month; Unemployment Rate Soars to 9.4% and Bankruptcy Filings Reach 6,000 A Day.
Some Wonder If Bond Market Has Reached Its Tipping Point
2009-06-07 Kiplinger.com
A 27-year bull market in bonds is over and a brutal bear market is under way, says Tom Atteberry, co-manager of FPA New Income. That’s bad news for bond investors, particularly those holding Treasurys and municipal IOUs.
Atteberry, who spoke with us at the annual Morningstar Investment Conference in Chicago, says there is good reason to believe that the run-up in Treasury yields that began late last year will continue. Atteberry says he’s seeing anecdotal evidence that Chinese investors, huge holders of Treasurys, are beginning to sell their government-bond stakes. “They are very, very nervous” about the Federal Reserve purchasing Treasury debt because of the move’s potential for stoking inflation, one of the prime enemies of bond holders.
Mortgage Meltdown, More Pain To Come
2009-05-31 Mish’s Global Economic Blog
Yale University economist Robert Shiller has often dazzled audiences with a chart showing home prices from 1890 to present. Someone even used Mr. Shiller’s chart to make a YouTube video that puts its viewer on a roller-coaster ride over peaks and valleys in home pricing. It’s a bumpy ride.
Now another economist, Thomas Lawler, says Prof. Shiller’s chart is “bogus.” Mr. Lawler says Mr. Shiller cobbled together data that are inconsistent and sometimes unreliable. Mr. Shiller defends his work and accuses Mr. Lawler of making “wild allegations.”
Bolivia in the 80’s vs. The U.S now??
In the 1980s, Bolivia and much of Latin America went through a painful period of hyperinflation that brought the country to the brink of collapse.
Black Swan Fund Makes a Big Bet on Inflation
2009-06-01 Wall Street Journal
“A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation. The firm, Universa Investments L.P., is known for its ties to gloomy investor Nassim Nicholas Taleb, author of the 2007 bestseller “The Black Swan,” which describes the impact of extreme events on the world and financial markets. ”
So Yesterday was a HUGE day as Real Data on Housing Poured in
3 Fascinating articles. Woooooaah Nelly, it seems as things were not as rosy as we thought for the last month.
Mortgage Delinquencies, Foreclosures, Rates Increase
Bloomberg: http://www.bloomberg.com/apps/news?p…mO8&refer=home
“Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March this week as the government’s effort to fix the housing slump lost momentum.”
Mortgage Marekt Seizes Up
Mish’s Global Economic Blog: http://globaleconomicanalysis.blogsp…-locks-up.html
“With respect to yesterday’s episode in the mortgage market — yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.”
THE CURTAINS ARE ON FIRE!!!
Denninger.net: http://market-ticker.denninger.net/a…e-On-Fire.html
“To put this in a bit more simple form, this means that while the banks are claiming to be increasing loss provisions, loans are going bad faster than their provisioning is increasing – which means they’re reporting “profits” that are false, as provisions for bad loans hit earnings. So we can take some more off those “reported earnings”, as much as another $6-10 billion dollars.”
Peter Schiff on Fox News “Gold will break $1000 soon”
Fox News
How Far From the Bottom?
2009-05-27 Ritzhold.com
” Searching for the housing bottom, with Barry Ritholtz, FusionIQ CEO and the Fast Money traders.”
Clayton, Re-Invents Mobile Homes
www.Claytonhomes.com - Take a look what the “new mobile homes” look like. WOW!
They are also moving forward on the concept of a “green manufactured home”, see the link below.
http://www.treehugger.com/files/2009/01/clayton-ihome-design.php – When Warren Buffet bought Clayton Homes in 2003 I was still working in the prefab biz; Punching well above my weight, I sent him an email about the business case for a mobile home manufacturer doing well designed green housing. I don’t know if he got it; I never got an answer.
I feel this might revolutionize homes as we know it.
Five Economic Storms Raging NOW!
2009-05-11
“JP Morgan Chase & Co., Citigroup, Wells Fargo & Co., Goldman Sachs Group, GMAC LLC, SunTrust Banks, Inc., and Fifth Third Bancorp — are at risk of failure and may have to cut back lending dramatically to stay alive.”
Economic casualties pile into tent cities
2009-05-06 USAtoday.com
The homeless include a startling number of first-time homeless, she says. We asked them what industries they were involved in. The majority were talking about construction, the housing industry, real estate. There was a direct correlation to the housing market crash.
Misleading jobless claims data and recessions
2009-05-06 Greenspan mess Blog
“One of the many “green shoots” that has popped up recently for the U.S. economy is the possible peaking of weekly jobless claims, what has been increasingly referred to as a “reliable” indicator for the end of recessions since 1967 when this data was first collected. The chart below, similar to the one published by CR in this item from a couple weeks ago shows the correlation.”
The capital well is running dry and some economies will wither
2009-04-27 Telegraph.co.uk
Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.
Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.
Commercial Real Estate Time Bomb Goes Off But No One Notices
2009-04-23 Mish’s Global Economic blog
The Commercial Real Estate Time Bomb has gone off but it has been lost in the euphoria of economic cheerleading and bottom calls based on dubious (at best) earnings reports from banks. Here are a few headline items from the past week or so to consider.
Malls shedding stores at record pace
CNN Money is reporting Malls shedding stores at record pace
Strip malls, neighborhood centers and regional malls are losing stores at the fastest pace in at least a decade, as a spending slump forces retailers to trim down to stay afloat, according to a real estate industry report.
In just the first quarter of 2009, retail tenants at these centers have vacated 8.7 million square feet of commercial space, according to the latest report from New York-based real estate research firm Reis.
That number exceeds the 8.6 million square feet of retail space that was vacated in all of 2008.
Reis’ report shows that store vacancy rates at malls rose 9.5% in the first quarter, outpacing the 8.9% vacancy rate registered in all of 2008, and marking the largest single-quarter jump in vacancies since Reis began publishing quarterly figures in 1999.
For Housing Crisis, the End Probably Isn’t Near
2009-04-22 NYTimes.com
In 2006 and early 2007, the official housing statistics were still showing that house prices were holding up. But that was largely because so many sellers were refusing to sell. The auctions, made up mostly of foreclosed homes, showed the truth: house values were starting to plummet in many places.
So a few weeks ago, I decided to go to an auction at a hotel ballroom in Washington — and to study the results of several others elsewhere — with an eye to figuring out whether prices may now be close to bottoming out.
That’s clearly a huge economic question. Last week, JPMorgan’s chief financial officer told Eric Dash of The New York Times that JPMorgan, and presumably other banks, would be under pressure “until home prices stabilize and unemployment peaks.”
A Backdoor Nationalization of Banks?
2009-04-21 WallStreetJournal.com
It seems we are off to the races with the gov’t being the primary shareholder of bank interests. Good Lord, what’s next?
Is That Recovery We See?
2009-04-11 Ritzhoild.com
Is That Recovery We See?
By John Mauldin
- Is That Recovery We See?
- Those Wild and Crazy Analysts
- The Shadow Inventory of Homes
- Commercial Real Estate Starts a Long, Slow Slide
- P/E Ratios Go Negative!
- The Effect of Earnings Surprises
- Corporate Earnings and Recovery in Recessions
- The Implosion in Social Security
The market, we keep hearing and reading, is telling us that there is recovery around the corner. And pundits point to data that seems to suggest the worst is behind us. The leading economic indicators, while still down significantly, seem to be in the process of bottoming. There is a large amount of stimulus in the pipeline. Mark-to-market has been modified. Housing seems to be finding a bottom, if you look at the rise in sales from January. And so on.”
Gerald Calente – The World’s #1 Trends Forecaster
www.trendresearch.com - Meet Gerald Calente
If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente. — New York Post
Read this terribly frightening article Greald wrote about the economy to come.
“It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.” …..
“We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to. It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression, people’s minds weren’t wrecked on all these modern drugs – over-the-counter drugs, or crystal meth or whatever it might be. So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.”
Close Look at the Accelerating Rate of Unemployment
2009-04-09 Mish’s Global Economic Blog
The trend in unemployment is unmistakably up and accelerating. Let’s start with a discussion of widely followed data followed by many additional charts that you may not have seen before.
Here is a closeup from Jobs Contract 15th Straight Month; Unemployment Rate Soars to 8.5% courtesy of the BLS.
JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo and More Than 1,800 Other Institutions Believed to Be at Risk of Failure Based on Fourth Quarter 2008 Data
2009-04-09 Businesswire.com
JUPITER, Fla.–(BUSINESS WIRE)–Several of the nation’s largest banks, including JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, plus more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts, according to Martin D. Weiss, Ph.D., president of Weiss Research, Inc., an independent research firm.
The analysis is based on Fourth Quarter 2008 data from TheStreet.Com and the Comptroller of the Currency (OCC). Several large institutions received significant ratings downgrades from the prior quarter, including Citibank, downgraded from C- to D; Wells Fargo, downgraded from C- to D+; and SunTrust Bank, downgraded from C- to D+.
California Foreclosures About To Soar
2009-04-09 ZeroHedge Blog
The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it.
CA foreclosure background – in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.
Moyers Interview: Sharing the Blame for the Economic Crisis?
EXCELLENT!
Must Watch!
Bill Moyers Journal
Sharing the Blame for the Economic Crisis?…
William K. Black, former senior bank regulator
3 parts
wow.
Be Prepared for “Extraordinary Circumstances”
2009-04-02 Mishes Global Trends
The last words you want to see in an appropriations bill from Congress are the words “in case of an emergency” or their twin sister “in the event of extraordinary circumstances“.
When you see those words it is a near certainty that an “emergency” or that “extraordinary circumstances” are right around the corner.
50 Truths about the Economy…. Run for Cover!!
2009-03-26 – blogspot.com
These are just a few simple realities under which we currently exist. To deny the existence of one or more of these truths does not make it go away. And as time goes by, the effects of these truths becomes magnified and the gravity of our situation becomes more clear. The worst is yet to come. Please prepare wisely
50 truths: The simple, underlying fundamentals of a dying system. The Top 10:
- Unemployment is increasing
- Federal tax revenues are decreasing
- Consumer spending is decreasing
- The risk of catastrophic Deflation is increasing
- The risk of catastrophic Hyperinflation is increasing
- The U.S. debt is increasing
- The U.S. deficit is increasing
- The risk that the U.S. government will eventually find itself unable to service its debt is increasing
- Homelessness is increasing
- Poverty is increasing
See all of them at the link below…
Which Trend Do You Think We Are On?
So, we are on the blue continuum. It appears that it almost matches the 30’s Depressionary numbers. I feel we will see another deep, dark drop shortly. The current upswing has very little bering on the condition of the full economy.
Full Size Chart here: http://dshort.com/charts/bears/four-bears-large.gif
House of Cards, Hour Long Special on CNBC
Excellent explanation of what happened between 2001 and today. I caught a glimpse of CNBC’s documentary on the financial crisis called “House of Cards” just now and I highly recommend anyone who’s interested on how we got ourselves into such trouble to watch it.
From what I’ve seen, it at least explains:
- How it was a credit crisis to a stock market crisis to a economic crisis.
- What a CDO is and Alan Greenspan’s take on it.
- What some people have done to warn it and how others knew things were going to be bad.
The show, House of Cards, is going to be on CNBC and premiers tonight (2/12/2009) at 8:00pm ET and 12:00am ET.
Or you can view this entire special online here:
http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards
The Short and Simple Story of the Credit Crisis.
2009-02-19 — crisisofcredit.com
Lenders drop mortgage brokers
I’ve been talking with investors about this very thing for the past year. Unfortunately, I think this one is inevitable. Banks have been pulling their warehouse lines for the past year and increasingly, local banks, are beginning to lend only to their customers. Seems as if it’s back to sitting at the bankers desk or using our new subprime lender, FHA.
2009-02-14 – CNNMONEY.com
NEW YORK (CNNMoney.com) — Some big banks have cut back on doing business with mortgage brokers – and if the trend continues, many mortgage brokers could close down.
That may be bad news for consumers because fewer brokers could lead to a less competitive marketplace and more expensive home loans resulting from consumers not being able to easily comparison-shop rates.
Lots of Reactions on Obama/Housing Plan
Pulled from various sites/blogs:
Obama’s Plan Aimed at Helping Troubled Homeowners
2009-02-18 – WSJ.com
Homeowner Affordability and Stability Plan
Executive Summary
The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.
· Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates.
· Millions of workers have lost their jobs or had their hours cut back, are now struggling to stay current on their mortgage payments – with nearly 6 million households facing possible foreclosure.
· Neighborhoods are struggling, as each foreclosed home reduces nearby property values by as much as 9 percent.
1. Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affortdable
2. A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
3. Supporting Low Mortgage Rages by Strengthening Confidence in Fannie Mae and Freddie Mac.
The Homeowner Affordability and Stability Plan is part of the President’s broad, comprehensive strategy to get the economy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs. The key components of the Homeowner Affordability and Stability Plan are:
Total Bailout Tab, To Date…
2009-02-17 – Ritzhold.com
“Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through Feb. 10, the government has made commitments of nearly $8.8 trillion and spent $2 trillion. Here is an overview, organized by the role the government has assumed in each case.”
Stimulus Bill Signed
2008-17-08 - NYTimes.com
“President Obama has not ruled out a second stimulus package, his press secretary, Robert Gibbs, said on Tuesday, just before Mr. Obama signed his $787 billion recovery package into law with a statement that it would “set our economy on a firmer foundation.”
Foreclosure Epidemic
2009-02-17 – ritzhold.com
Media has it all wrong. Housing is trying to become normal again. It was “in turmoil” when no-one could afford a house without entering into criminally negligent financing arrangements with the mortgage thieves.
Inconvenient Debt: A Detailed Look at the Latest Monetary Base Figures
On his FOX News show, Glenn Beck went back and showed in detail the chart that he had previously showed on his show. Here he is showing the latest Adjusted Monetary Base chart from the St. Louis Federal Reserve Bank. Never in the history of the country has the monetary base increased this much so rapidly. If this continues, inflation will go out of control.
Economist Roubini: The U.K. is NOT Iceland
2009-01-25 – calculatedriskblog.com
“In many ways the UK looks more like the US than Iceland: a housing and mortgage boom that got out of control; excessive borrowing (mortgage debt, credit cards, auto loans, etc.) and low savings by households; a large and rising current account deficit driven by the consumption boom (and private savings fall) and the real estate investment boom; an overvalued exchange rate; an over-bloated financial system that took excessive risks; a light-touch regulation and supervision system that failed to control the financial excesses; and now an ugly financial and economic crisis as the housing and credit boom turns into a bust. This will be the worst financial crisis and recession in the UK in the last few decades.”
Obama Banking Plan?
2009-01-25 – NY Post.com
As the Obama economic team huddles this weekend in an attempt to hammer out the framework of their plan, three options have been bandied about:
* Nationalizing the banks.
* Creating a government-owned “bad bank” to take the toxic assets off of the bank’s balance sheet.
* Continuing the Bush Administration rescue plan of pumping in taxpayer money on an as-needed basis.
Nationalization?
2009-01-26 – Calculatedriskblog.com
Bankruptcy Courts May Be Allowed To Consider MALPRACTICE
2009-01-26- Housingdoom.com
This infuriates me… “There has been a “foreclosure prevention” idea that has been kicked around for awhile now. It is to allow bankruptcy judges to alter mortgage loan terms and even to reduce a borrower’s principal balance. I have not seen a short, concise name for this suggested mortgage “cram down” program so I would like to suggest one of my own”
Flood of foreclosures: It’s worse than you think
2009-01-24 — cnn.com
“Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.”
Mortgage default notices up 121% over year ago
Bank Failures and Commercial Real Estate
2009-01-23 — calculatedriskblog.com
Volcker Group’s recommendations for financial reforms
Paul Volcker is “the last honest guy” in the world, according to one of the foremost critics of the financial industry, Martin Mayer. Volcker was the guy who beat inflation in the early 1980s by raising interest rates as high as 18%. He also warned against the repeal of Glass-Steagall and many other excesses of our financial economy.
Another heavy hitter is Domingo Cavallo, the guy who beat inflation in Argentina by pushing through the currency board regime that took monetary policy out of the hands of the Argentine authorities.
But you’re right that others in this Group of 30 were indeed present at the scene of the crime. The signature right next to Volcker’s on the report is Jacob Frenkel’s, the vice chairman of AIG. Excerpts from the report are below. ————–
“All systemically significant financial institutions, regardless of type, must be subject to an appropriate degree of prudential oversight.” [this would include investment banks and insurers]
“Large, systemically important banking institutions should be restricted in undertaking proprietary activities that present particularly high risks and serious conflicts of interest…” [Prop trading should be outlawed entirely for commercial banks. They've got their hands full just measuring the credit risk of their loan books.]
“To guard against excessive concentration in national banking systems…limits on deposit concentration should be considered at a level appropriate to individual countries.” [Too bad the government's chosen method for resolving failed banks is to kick their assets upstairs to a bigger balance sheet, concentrating deposits even more. E.g. B of A---Countrywide, JPM---WaMu and Wells Fargo---Wachovia.]
etc, etc…. see the reports below.
WaMu’s New $1 million 5-year 1% Balloon Loan (mod) – $878 Per Month!
2009-01-08 — ml-implode.com
“It is obvious that these loan modification plans have been born as a result of panic and the need to protect the bank’s balance sheets rather than doing what is beneficial for the home owner and broader housing market.”
No Recovery for Real Estate as Speculators Dominate Sales
2009-01-08 — bloomberg.com
“We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” said Stiglitz, a Columbia University professor of economics. “We could see a double-dip in the housing recession if that happens.”
………………..
“In past housing recessions, we didn’t see as many mortgages under water, so it didn’t matter if the focus was on speed and not on maximizing value,” Stiglitz said. “Now, the same banks that created the problems by mismanaging their risk are mismanaging the disposal of their assets.”
US fiscal policy: the Keynesian fallacy on steroids
The government’s attempt to spend (read borrow) our way out of this situation may lead to a total collapse of the dollar.
The Fed meeting minutes released today sure paint a picture of a Federal Reserve with very little regard for how to unwind these measures or what the long term consequences could be. I think a collapse in dollar assets is a very real concern after years of being considered nearly lunatic fringe talk.
Willem Buiter wrote a great piece on this.
Analysis of Destroying the Dollar
Peter Schiff vs the Federal Reserve – LIVE!
Among other unpleasant observations, Peter calls the U.S. a banana republic and mocks the Fed with ‘the idea’ of exporting prosperity via printing endless money (debt) to the rest of the world!
This should be a real thrill for those of us that want to see the money masters face that we know the truth about our multi-fractional reserve ponzi scheme banking system.
More Citi-style Bailouts on the way….
2009-01-02 — ml-implode.com
”Treasury issued a report today articulating the “guidelines” for its “Targeted Investment Program,” the program under which taxpayers bailed out guaranteed $306 billion worth of Citigroup’s toxic assets in late November. Why do you care? Because this program will likely be used to offer similar “guarantees” when Bank of America, Chase, Wells Fargo, Goldman and Morgan Stanley show up hat-in-hand on taxpayers’ doorsteps…”
Peter Bernstein’s biggest worry? The dollar
2009-01-03 — ml-implode.com
”As as has been argued here previously, Schumpeter was right: creative destruction is necessary for a capitalist economy to thrive. The business cycle can’t be inflated into oblivion. In attempting that during his years at the Fed, Greenspan allowed financials to grow too large. Now they have to fail, but they can’t be allowed to. In Bernstein’s words: there’s too much debt, but reducing it “quickly” will “bring down the whole system.” Presumably the only solution is to bring it down slowly. That may just happen if we’re lucky. Despite the government’s efforts to reflate the debt bubble, it is deflating as banks deleverage. My personal belief is we won’t be lucky. The stupendous growth of U.S. liabilities, via bailouts and the Fed’s growing balance sheet, will lead to a large fall in the value of the dollar. A view I think Bernstein shares…”
Printing Money – And The Steep Price That Comes With It
2008-12-29 – NY Times
“We got into this mess to a considerable extent by overborrowing,” said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. “Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch, and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”
Quite Possibly The Scariest Housing-Related Chart Ever
This chart is the average decline of home values in CA since peak years. What will 2009 bring? When will this stop? This is terrifying.
60 Minutes reports: A Second Mortgage Disaster On The Horizon?
We’ve been saying this for a long time… and for the record, Ill pull up a previous post from a few months ago with a very troubling graph showing the true impact of these new Alt-A and Pay Option ARMS.
From my April 24 post:
Recently, I have researched the impact and adjustment period of different types of adjustable loans. It seems by the end of 2008, most of the subprime adjustable loans will have adjusted at least on some level. Many in the media are speaking of the lending crisis ending at the end of this year. My data says differently. Beginning in Q1 of 2009 and continuing through Q4 of 2011, we will see an influx of new adjustables, ALT-A and Pay Option ARMS. This is just the beginning of the Tidal Wave as most of these loans are already in a negative equity state. See this Adjustment schedule for yourself. Month 1 is January 2007.
Foreclosure Storm Will Hit U.S. in 2009 as Loan Changes Fail
2008-12-11 – Bloomberg.com
“U.S. foreclosure filings climbed 28 percent in November from a year earlier and a brewing “storm” of new defaults and job losses may force 1 million homeowners from their properties next year, RealtyTrac Inc. said”
A total of 259,085 properties got a default notice, were warned of a pending auction or were foreclosed on last month, the seller of default data said in a report today. That’s the fewest since June. Filings fell 7 percent from October as state laws and lender programs designed to delay the foreclosure process allowed delinquent borrowers to stay in their homes.
“We’re going to see a pretty significant storm next year,” Rick Sharga, executive vice president of marketing for Irvine, California-based RealtyTrac, said in an interview. “There are two or three clouds that suggest a pretty heavy downpour.”
Rising unemployment, expiring foreclosure moratoriums and state efforts that “run out of steam” will push monthly filings toward the record of more than 303,000 set in August, Sharga said. The number of homes that revert to lenders, the last stage of foreclosure and known as “real estate owned” orREO properties, will increase to 1 million from as many as 880,000 this year, he said. …
Goldman Recommends Credit Default Swaps Against NJ, CA, WI, FL, OH, MI, Others
Mishes Global Economic Trends Blog -
The state of New Jersey is insolvent. Bankrupt might be a better word. New Jersey is $60 billion in the hole on pension funding and the Governor is planning on skipping payments in a “pension payment holiday” until 2012 so as to not increase property taxes. To top it off, the ongoing plan assumptions are 8.25%. Sorry NJ, that simply is not going to happen. ….
Inquiring minds are now reading that Goldman Draws Ire for Advising Default Swaps Against New Jersey.
Goldman Sachs Group Inc., one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 states’ debt.
Bets against public debt, once unheard of on bonds considered safe enough for retirees, have soared as the National Conference of State Legislatures projects recession-fueled budget crises will cause $97 billion of shortfalls nationwide over the next 18 to 24 months.
Jumbo Prime: ‘Walk Away’ Loans – More Downgrades Coming
2008-12-10 — ml-implode.com
“This story was originally released a couple of weeks ago but somehow did not make it to the blog. It goes hand in hand with the Moody’s downgrade of many Bank of America Jumbo Prime deals citing a 13% delinquency rate. This represents a total meltdown in the sector happening right now that nobody is reporting.”
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