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.”
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.
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.”
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.”
$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.”
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.
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.”
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.”
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.
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.”
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.
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.
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.
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.
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
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.”
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.”
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”
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.
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.
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.
Fed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheet
This is a difficult one to wrap my head around. But the idea that they are trying to create a different class of debt is very troubling. The resulting confusion can’t be good for investors who were fooled by GSE AAA ratings based on “implicit” guarantees.
__________________________________
Move Presents Challenges: ‘Very Close Cousins to Existing Treasury Bills’
By JON HILSENRATH and DAMIAN PALETTA – Wall Street Journal
The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.
Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools.
Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter.
It isn’t known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle: The Federal Reserve Act doesn’t explicitly permit the Fed to issue notes beyond currency.
Majority of Modified Loans Fail After 6 Months, Regulator Says
Bloomburg – 2008-12-08
“Most U.S. mortgages modified by lenders to help keep struggling borrowers in their homes fell back into delinquency within six months, the chief regulator of national banks said. “
Almost 53 percent of borrowers whose loans were modified in the first quarter of this year re-defaulted by being more than 30 days overdue, John Dugan, head of the Treasury Department’s Office of the Comptroller of the Currency, said today at a housing conference in Washington.
NFP: Joblosses Even Worse Than Reported
By Barry Ritholtz – December 8th, 2008, 6:34AM
Over the past few years, we have railed at the prettyfied numbers that come out of BLS regarding NFP job creation and the unemployment rate. From the Birth Death Adjustment to the understated unemployment rate, the official data (and corresponding headlines) painted a very misleading picture of what was going on. No conspiracy, mind you — just a creeping bias that has slowly distorted the data.
Hence, the past few years of aberrational, credit-driven economic growth was hidden from the public view. Many (tho not all) of Wall Street Economists were too hapless or cowardly to point this out. And some even cheerleaded the absurdity of the “Goldilocks” BLS data. Some simply declared the US a Nation of Whiners.
With the economy now in a full blown recession, and the Housing and Credit crisis getting worse, it hardly semed necessary to pile on BLS. Until Friday’s report. As bad as it was, looking beneath the headline data hows that it was worse — much worse — than reported. Consider the following:
Hanks Bad Gamble – CRITICS: Rescue Plan Bungles Make Profits Less Likely
2008-12-02 – NYpost.com
“All we’ve created is dead banks, not true value in their stock,” said Paul Miller, a banking analyst with FBR Capital Markets.
Of course the government just buying common equity stakes wouldn’t be so great either, unless they were going to get serious about taking an active stake in management, and forcing increased consumer lending.
But then, what exactly would we be left with? Not a private free market, that’s for sure. Almost makes one pine for New Deal-era direct consumer lending programs and work programs.
There seem to be no good solutions — no matter what Hank does, there are very serious (if not fatal) flaws with the plan. And by continously shifting plans, even more confusion is added, which is toxic to the market. Hank and Ben seem to want to do a little bit of everything, without really committing anything, which seems to be a horrible recipe for success.
Or maybe its just that every intervention is a bad intervention. Is this all really better than just letting the system fall apart so something new can take its place? As far as the list of things we were trying to prevent, the stock market has already collapsed (though it could go further), mortgage lendering is still too constrained for most people (given prices), and consumer lending is still being choked off. What exactly are we gaining from all this intervention and “official” uncertainty?
Private Mortgage Insurance Applications Continue Slide
2008-12-01 —thetruthaboutmortgage.com
“Private mortgage insurance volume sunk further in October as defaults continued to rise, the Mortgage Companies of America (MICA) said today.”
Peter Schiff, he was right the whole time 2006 – present
I sure wish some of the foolish talking heads on our televisions could be held accountable for misinformation. But hey, it is the news, since when have we pushed for accuracy. Peter Shiff has tried and tried to speak to the masses about the upcoming crisis and the true net effects it could have on the entire economy. But instead of listening, it was easier to laugh and ridicule. Watch the video for yourself.
Gift Cards for the Holidays? Think Again…
from a friend of mine, via email
———————————-
i wanted to give everyone a heads up that if you tend to give gift cards around the holidays, you need to be careful that the cards will not be honored after the holidays.
Stores that are planning to close after Christmas are still selling the cards through the holidays even though the cards will be worthless January 1. There is no law preventing them from doing this. On the contrary, it is referred to as ‘Bankruptcy Planning).
Below is a partial list of stores that you need to be cautious about.
Circuit City (filed Chapter 11)
Ann Taylor 117 stores nationwide closing
Lane Bryant, Fashion Bug ,and Catherine’s to close 150 stores
nationwide
Eddie Bauer to close stores 27 stores and more after January
Cache will close all stores
Talbots closing down specialty stores
J. Jill closing all stores (owned by Talbots) Pacific Sunwear (also owned by Talbots)
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January.
Home Depot closing 15 stores 1 in NJ ( New Brunswick )
Macys to close 9 stores after January
Linens and Things closing all stores
Movie Galley Closing all stores
Pep Boys Closing 33 stores
Sprint/Nextel closing 133 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores./>Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Lowes to close down some stores
Dillard’s to close some stores
Why a Gold Standard?
Once a Gold Standard Warrior, has Alan Greenspan lost his youthful wisdom?
Donald Grove
Washington Correspondent
Casey Research, LLC.
The Casey Report
The $800 billion bailout, and billions more being pumped less obviously into the global economy, will cure nothing. Americans are clamoring for a savior. No one is willing to believe that the party is over. In the past, someone always came to our rescue.
Like a parent dispelling a childhood nightmare, FDR soothed the masses with the assurance that they had nothing to fear but fear itself. To this day, he is revered for turning a depression into the Great Depression. In the aftermath of the dot-com bubble, Fed Chairman Alan Greenspan came to the rescue with a brand-new bubble in real estate.
Even if there was someone out there who could pull off one more illusionary rescue, it would only delay the inevitable and worsen the pain. Pain now or more pain later. The compassionate solution is to let Adam Smith’s invisible hand guide us, as should have been happening all along. Almost no public figures have the backbone to speak honestly about what’s wrong. There is no free lunch. Still, voters believe the promise that “I will give you what you want and make someone else pay for it.” Neither Congress nor either presidential candidate can take us back to the fairytale world of mortgaged opulence we blissfully enjoyed in the recent past.
Economist, Roubini: 20 Reasons why things are hopeless…
I have not made a formal tally of Roubini’s various lists of why the economy is going (and will continue to go) to hell in a handbasket, but recent sightings suggest his typical list is eight to twelve reasons.
However, in his latest missive, on the subject of why the consumer is toast, Roubini outdoes himself and comes up with twenty reasons. Oh, sorry, AT LEAST twenty reasons. I also don’t think I’ve ever read Roubini say his tally of woes was less than comprehensive.
In case you are new to this line of discussion, “falling consumption” in the absence of big time government countermeasures, equals “memorably bad downturn.”
Is there some secret significance to this development? Numerologists and technical analysts are encouraged to weigh in. Personally, I think his list does boil down to a dozen or so reasons, but be sure to read down to his last point, where he draws his bottom line, a peak to trough fall in GDP of 10%. He needed 20 reasons to steel readers for his conclusion.
And I am really not making fun of Roubini. It is merely that because his messages are so consistently grim and have so far proven correct, one needs to find comic relief where one can.
The End of the Wall Street Boom
The G-20’s Secret Debt Solution
by 11-13-08
If you think this weekend’s G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks … think again.
Behind the scenes, a far more fundamental fix is being discussed — the possible revaluation of gold and the birth of an entirely new monetary system.
I’ve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what I’m about to tell you now is not on the G-20 table this weekend.
Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. You’ll see why in a minute.
First, the G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition …
“If we can’t print money fast enough to fend off another deflationary Great Depression, then let’s change the value of the money.”
I call it … “The G-20’s Secret Debt Solution”
The Real Unemployment Numbers
2008-11-08 — seekingalpha.com
Unemployment continues to skyrocket to a number far higher than 6.5% … although this is the official number the American people are told. That number simply does not jive with every anecdotal piece of evidence, sentiment gauge, and the like. Because it’s a government manufactured myth, as we’ve pointed out many times in the past – keep feeding the sheep false figures and hope they don’t figure it out. I’ve long since stopped dissecting a few of the major government reports because they all have been (ahem) “modified” since the early ’90s to show favorable statistics. But since we get new readers, most of whom don’t recognize the “Man” behind the curtain statistics, I pull out some old blog entries to showcase reality.
Let me preface this whole charade by saying “today’s” number will be revised in the future, so the market infatuation with numbers that constantly get revised within 30-60 days is in and of itself, sort of silly – but it is what it is. To that end…
- Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.
So when market participants reacted to “better than expected” August and September numbers and stock valuations changed those days – did it really make sense since it was based on a data set that meant essentially nothing? 30 days ago we told you 159,000 jobs were lost – oops, now it’s 284,000. Etc. (We had to keep the real numbers a secret until the election, eh?) So aside from all the other problems with the data – that is one reason alone to basically ignore this data and just listen to the companies themselves – the companies chopping 5000 jobs here, 7000 jobs there, 8000 jobs out there. (Click link to read further)
…..
The amount of people working part-time for economic reasons surged by 645,000 in October to 6.70 million, following an increase of 337,000 in September. The current level is 2.3 million higher than a year ago and is the highest since July 1993, when the tally was also 6.70 million. No higher figure has been seen since the 1982 recession, when a record 6.86 million people were working part-time for economic reasons.
Peter Schiff: ‘There is a major, major crisis coming’
Peter Schiff, president of Euro Pacific Capital Inc. and disciple of Austrian School economics, says “a major, major crisis is coming,” thanks to the government’s attempts to ‘fix’ the economy with giant bailouts.
Well, he’s been right so far
NO MORE MORTGAGE PAYMENTS SOON – Get Ready to Default!
The New Bailout- NO MORE MORTGAGE PAYMENTS!
The plan is to FULLY SUBSIDIZE millions of borrower’s mortgage payments for three years. The program is predicated upon the housing market improving within the next 5-years. This is a really bad assumption to make but also could shed some light on the Fed’s inflation expectations. This plan may help borrowers de-leverage temporarily but will not help the broader housing market. It just kicks the default can down the road several years.
“In five years’ time, participants would, in all likelihood, be able to sell their homes or refinance their mortgages at amounts that would allow them to repay the loan.”
This program does nothing about the leading cause of loan default across higher paper grades, which is negative equity. Those severely underwater borrowers that would chose to participate in something like this are the very ones that you want to foreclosure upon in order to clear the market in the first place. The primary reason one would enter a program like this is if you planned on walking anyway. After three years when their mortgage payments kick in again or five when the big balloon is due, do you really think the these underwater home owners will feel better about their situation or more passionate about saving the home in which they have lived for free for years knowing they are another $100k in debt? I think not.
Second Mortgage Notes For less than 1 cent on the Dollar!!?
2008-11-03 — ml-implode.com
“A good friend who specializes in distressed real estate assets such as notes and REO just bought 27 second mortgages with a face value of $2,153,400 million for $2400 – that’s TWO THOUSAND FOUR HUNDRED DOLLARS.”
New foreclosure plan on tap
FDIC offers plan to systematically modify loans for homeowners most at risk of foreclosure. Agency chief hopes program will spur other banks to take similar measures.
NEW YORK (CNNMoney.com) — One of the country’s top banking regulators said Thursday that the government is working on a plan to do more to help troubled homeowners.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that her agency and the Treasury Department are working closely to find ways to prevent avoidable foreclosures. The plan would use the Treasury Secretary’s new authority under the Emergency Economic Stabilization Act to provide guarantees to mortgage lenders.
“Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “Specifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards.”
IndyMac and the FDIC began working together to modify loans after they went under overnight. Their process, as discussed on August 20, 2008, looked like this. I assume a similar model will be used for current process. Full Article about IndyMac loan modifications.
Bank Bailout… not helping main street at all
2008-10-17 — denninger.net
John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios – not be lent out. In other words, they intend to hoard it.
This means, bluntly, that not one nickel of benefit will be seen by Main Street, despite claims by Paulson, Bush and others that this bailout is necessary for “Main Street, not Wall Street.”
S&P Warns on $351.7 Billion of Alt-A RMBS
By: PAUL JACKSON – housingwire.com
October 15, 2008
Standard & Poor’s Ratings Services said Wednesday that it had placed ratings on 5,536 classes from 456 U.S. RBMS transactions backed by Alt-A mortgage collateral issued in 2006 and 2007 on review for likely downgrades.
Perhaps most telling is that the mortgages involved aren’t short-term resets: S&P said that most of the Alt-A transactions now under review are collateralized by fixed and long-reset hybrids (meaning rates are fixed for five or more years from origination dates). In aggregate, the affected classes represent an original par amount of approximately $351.7 billion; that total is $280.1 billion in current balance.
Driving the likely downgrades is yet another update to loss severity projections by the rating agency, which said it now expects average loss severity on affected mortgage deals to be at 40 percent rather than the previous threshold of 25 percent.
“Continued foreclosures, distressed sales, an increase in carrying costs for properties in inventory, costs associated with foreclosures, and further declines in home sales will depress prices further and push loss severities higher than we had previously assumed,” S&P analysts said in a press statement.
DOW jumps 900+ points in one day
Dow jumps 936 points and S&P up 104, in the biggest point gains ever. The Dow, S&P and Nasdaq all gain over 11%.
NEW YORK (CNNMoney.com) — Stocks rallied Monday afternoon, with the Dow rallying 976 points during the session, as investors bet that the worst of the credit crisis is over, following a series of global initiatives announced over the last few days.
The Dow Jones industrial average (INDU) ended 936 points higher, after having risen as much as 976 points during the session. The advance was the largest ever during a session on a point basis. The point gain was equal to 11.1%, the best one-day percentage gain since Sept. 1932 and the fifth-best ever.
“The Economist” polls American economists on the Presidential election
The Economist’s poll of economists
Examining the candidates
Oct 2nd 2008 | WASHINGTON, DC
From The Economist print edition
In our special report on the election we analyse the two candidates’ economic plans. Here, we ask professional economists to give us their views.
Full Report Here - 20+ Page Analysis
Bailout Bill Passes!
2008-10-03 — ml-implode.com
No updated media stories yet; but just confirmed this live on TV. Our worst fears confirmed — what could have been just an ugly downturn will now probably be a lengthy depression and in many ways, the final nail in the coffin for a sovereign United States. Let’s hope something good comes of this money.
Update: Here’s a news article.
Update 2: The market barely paused on the way down after the bill passage; as I write this the Dow has reversed course over 200 points to the downside.
Update 3: Minyanville has reprinted comments from Mr. Practical from back in March which we think are worth re-reading in light of the latest bailout attempt:
…. when government grows too big and through its hubris believes its bureaucracy knows more than the market, the seeds of eventual deflation are sewn… I’m talking about direct intervention in the supply of credit to “ensure price stability.” That lie is due to the political refusal to allow the market to tighten.
The problem becomes worse when big government aligns itself with big business (the extinction of entrepreneurs) to affect the natural self-correction processes of the market.
Years of debt accumulation aren’t cured by a 5% correction in stocks, as Wall Street would have you believe. A major debt correction — one that the market has been trying to accomplish for years but which has been rejected time and time again by Fed policy — is necessary to correct the huge imbalances that exist. To deny the necessity of this eventuality is, of course, human.
Total US debt is now 3.6 times GDP and continues to grow. But new debt is less and less effective in driving economic growth: More income is going to service that debt and less to creating production, the stuff that generates income.
In 1929, US debt was 2.9 times – the second highest it’s ever been. Despite Mr. Bernanke’s false recollections of Fed actions back then, they created an immense amount of liquidity (credit) trying to cure the stock market crash. The market did rally temporarily as a result, then slowly crashed to deeper lows, since that new credit just went to short-term speculation in stocks. The new money did no real good, because there was already too much capacity, so the credit never went to creating production.
Stocks crushed!! DOW Loses 777 points.
CNNMoney.com Monday, Sept. 29, 2008
Approximately $1.2 trillion in market value is gone after the House rejects the $700 billion bank bailout plan.
The Bailout – Paulson’s 0% Balance Transfer!
2008-09-24 — ml-implode.com
”But does this really solve our economic problems or make them worse? Ben and Hank are just offering us a low-rate balance transfer and higher credit limit on a new card. And boy are they getting a low introductory rate as yields on new Treasuries have fallen near 0%. Happy days are here again! We can keep borrowing, which means we can keep spending!”
AARP: Older Borrowers Behind on Mortgages Too
2008-09-19 — thetruthaboutmortgage.com
”So the AARP released a “first-of-its-kind” study that reveals older homeowners are not exempt from the ongoing mortgage crisis, significant considering the home is a nest egg for most.”
Will the Government Own Your Home?
2008-09-19 — cnbc.com
”Even the insiders I’m talking to, who know far more than I do, and who will be at the table, are answering my questions with: “Honestly, I’m just not sure.”
And the Beginning of the end of Investment Banking
The meltdown
Lehman files for bankruptcy. Merrill is bought by Bank of America. The Fed and major banks expand lending. Anxiety lingers. Will WaMu get bought by JP Morgan? What are the implications of this shrinking market and what will it to do our lending capacity?
Here we go…This was bound to happen when the Feds said “no” to further bailouts.
FHA Bailout could cost U.S. Taxpayers over $100 million
2008-08-26 — forbes.com
When the nation’s politicians take the stage in Denver and St. Paul, Minn., you’ll hear a lot of talk about saving the decrepit housing market, and lately that means one thing: The Federal Housing Administration.
Watch your wallet.
“Nobody is talking about it, but in three years the FHA bailout is going to cost taxpayers at least $100 billion dollars,” said Guy Cecala, a mortgage industry insider and publisher of Inside Mortgage Finance. “Everybody on Capital Hill recognizes that there will be significant costs, but they’re trying to keep the housing spigot open even if it will bring in some bad water down the road.”
Economist says: “Expect two more waves of foreclosures…”
Mortgagenewsdaily.com
“While the U.S is currently in the midst of the largest bout of home foreclosures in at least 30 years, at least one economist says two more ‘waves’ are likely on the way.
Patrick Newport, a housing economist at Global Insight, said the next round of foreclosures could come over the next several months as a result of continued job losses in the U.S.
In addition to the nearly 660,000 U.S. jobs lost since December, Global Insight is currently forecasting another 600,000 jobs lost over the rest of 2008 and into the first quarter of 2009.”
Large U.S. Banks May Fail Amid Recession, Rogoff Says
From Bloomberg.com Aug 18, 2008
The worst is yet to come in the U.S.,” Rogoff, a Harvard University professor of economics, said in an interview in Singapore today. “The financial sector needs to shrink; I don’t think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.
Top Alt-A Mortgage Lenders in First Quarter 2008
From TruthAboutLending.com Aug 19, 2008
Now that Alt-A lending is grabbing some headlines, I thought it’d be timely to take a look at the top Alt-A mortgage lenders over the last reported quarter, as compiled by National Mortgage News.
As you can see, GMAC’s Residential Capital, which includes companies like Homecomings Financial, led the way with a paltry $2 billion in loan fundings during the first quarter of 2008.
While they were the leader, their production was off more than fifty percent from the same period a year earlier.
Countrywide Financial managed a close second with $1.8 billion, though it was nowhere near the $9.2 billion they funded in the first quarter of 2007.
HSBC came in a distant third with just $602 million funded, followed by Branch Banking & Trust with $581 million and Flagstar Bank with $460 million.
Am Trust Bank, which funded just $247 million during the quarter, had been the top Alt-A lender during the fourth quarter of 2007 with $8.2 billion in production.
Indymac, who had been one of the leading Alt-A lenders over the last several years, didn’t even make the list as they shifted nearly all production to GSE/FHA/VA.
For comparison sake, EMC Mortgage produced a whopping $58 billion in Alt-A loans during the final quarter of 2006, before things took a turn for the worse.
The Truth About Inflation
By, Aaron Krowne, the founder and fearless owner of ML-Implode, now tracking the US mortgage meltdown since New Year’s Day 2007 by publishing its trade-marked Implode-o-Meter of busted lenders.
“What does it mean when they say Inflation???”
NOBODY LIKES INFLATION, writes Aaron Krowne of ML-Implode, but inflation is a “fact of life” – a natural disaster, like a hurricane or earthquake.
Right?
Wrong. That is the impression policy makers and politicians have worked very hard for almost a century to create. But it is a bold-faced lie, meant to deflect your attention (and anger) away from the real culprit – them.
The fact of the matter is that prices in general can only go up if more money is created. When more money is created, that means each Dollar buys fewer goods and services. Your common sense is exactly right on this matter!
Merrill’s CDO’s: ‘They Knew What They Were Doing’
This story is amazing. In 2007, during the time in which subprime lenders were collapsing and defaults soaring, Merrill was packaging up and selling $30 billion in rotten CDO’s and selling them as fast as they could.
Everyone already knows about the Merrill 5.47 cents on the dollar CDO deal that just went down. In case you missed it her e is the link.
Now, of course, many are coming out saying ‘but but but that was for the worst of the worst CDO’s’ and ‘but but but, 2005 vintages were not as strong as recent vintages’.
That is not the truth. The truth is that Merrill’s marks are very similar to National Australia Banks write-down earlier this week and other banks with similar holdings will likely have to write down their holdings similarly. Meredith Whitney said the same today in her interview on CNBC. It was great….
Lawmakers Now Pressing for Banks to Hide Losses Longer
This is infuriating. When will the deception and fraud stop!
It is actions like these by the Solon’s that has turned a ‘crisis of confidence’ into something that has brought the global financial markets to their knees.
The FASB is being pressured by the lawmakers to delay its time line on the revamped FAS 140 and FIN 46R. This of course will help out the financial institutions by creating less transparency and delaying the inevitable probably due to a new tax payer bailout being drawn up that will channel more dollars to parties other than those who need it, the US citizens.
Bush Signs Sweeping Housing Bill into Law
“President Bush signed a massive housing and mortgage relief bill into law early Wednesday morning, the White House said, making official changes ranging from a $300 billion expansion of the underwriting authority of the Federal Housing Administration to a new regulator for twin mortgage finance giants Fannie Mae and Freddie Mac”
Banks Cant Give Away Foreclosures
Video of the Day: Foreclosure Auction on the Courthouse steps in Martinez, CA. It’s amazing how much some of these houses sold for a few years ago, not that I feel any of the homes in this news piece are worth the stated sales prices.
Inflation Fears, Credit Crunch, and Our Gov’t… the inter-connectedness of it all
A little dated ( May, 2008 ) but still very relevant. We are destroying our country and our financial well-being. Everything is inter-connected. We are going BROKE and are headed for the 1970’s style “stagflation” when the FEDs have no more bullets to shoot out the problems! Our dollar is tumbling fast each day. An interesting piece from Glen Beck:
CA has a 4.25 year inventory?!?
Wow. Especially when CA controal approximately 40% of the real estate/ money available for lending. If this money continues to be tied up, or even worse not paid back, how could this NOT affect the entire market?
CA Foreclosures “Leveling Off”? What does this really mean?
It is that time of the month again folks! The June monthly CA foreclosure report is ready, data courtesy of Foreclosure Radar. It was another ‘record’ month, which when speaking of foreclosures, is not a good thing. However, in a couple of areas we show some ‘leveling-off’.
‘Leveling-off’ is considered to be positive by many but that sometimes is not the case. For example, if retail sales ‘level-off’ going into December, it is not a good thing because sales should accelerate in the Holiday’s. This is analogous to what happened in the foreclosure arena in June. Although numbers seem to be leveling off, the situation is continuing to worsen according to the way I see the data.
Harvard’s “The State of the Nation’s Housing 2008″ Report
July 7, 2008
Outstanding downloadable report with very interesting data. Harvard’s “The State of the Nation’s Housing 2008″ Report.
The study presents a dispiriting picture of how severe and structurally ingrained housing affordability challenges have become. By 2006, 17.7 million households—about 15.8 percent of all households—were spending more than half their income on housing, an increase of 3.8 million just since 2001. Even 34 percent of households with incomes equivalent to 1-2 times the federal minimum wage, and 15 percent with incomes equivalent to 2-3 times this wage, spend more than half their incomes on housing. With the economy spinning out a growing proportion of full and part-time jobs with wages in these ranges, prospects for a meaningful reduction in affordability problems remain dim.
This year’s State of the Nation’s Housing report finds that demand for new homes has dropped well below projected long run demand. House price deflation, tight credit, and consumer concerns over the direction of the economy have kept buyers at bay and some households from forming. The somber conclusion is that if the economy slips into recession or job losses keep racking up, household growth and homeownership demand could fall even more.
The Looting of America
July 7, 2008 – http://market-ticker.denninger.net/
“If Congress again opens up banking to Wall Street speculation, as it opened up S&Ls and banks to real estate speculation, regulators will quickly lose control over the complex series of events that a pervasive marketplace will immediately set in motion. Insider abuse, self-dealing, and back scratching relationships between institutions will run rampant.
FHA is merely a Backwards Answer
June 21, 2008 – www.financialarmageddon.com
Well, this certainly is embarrassing. The Federal Housing Administration – the very agency the Bush Administration and Congress trumpet as the solution to the mortgage crisis – has announced that it suffered a $4.6 billion loss last year. This is one of the worst financial performances ever for the government’s multibillion-dollar mortgage insurer.
We’d hope this news might cause Congress to reconsider its plans to turn over some $300 billion of troubled loans to an agency already in financial distress. No such luck. A bill passed by the House and now being debated on the Senate floor would expand the FHA portfolio to about 1.5 million mostly high-risk subprime mortgages. So at the very time private lenders and investors are fleeing subprime markets, Congress wants taxpayers to dive in.
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