Saturday, October 31, 2009

Saturday roundup (10-31-09)

Stiglitz Says U.S. Recession ‘Nowhere Near’ End After GDP Jump (Bloomberg)

12 Hair-Raising Money Tales (Bankrate.com)

Friday, October 30, 2009

Friday roundup (10-30-09)

Quotes of the day:

"Until we get to better employment numbers, it's hard to get real income growth and real spending ... and we're just not there yet." -- Kurt Karl, chief US economist at Swiss Re. (The Associated Press)

"Well, we're certainly losing half a million jobs a week now and that's very, very disturbing, and that's why the consumer confidence numbers are low and that's why the government's doing all it can to stimulate aggregate demand. However, we think we run the risk of bankrupting the entire country by continuing to add to this debt." -- David Tice, chief portfolio strategist, bear markets, for Federated Investors



9 banks in major holding company fail: FBOP's banks in California, Illinois, Texas and Arizona bring the number of '09 failures to 115. (CNN) (Chicago Tribune) (The Los Angeles Times)

The banks seized by regulators today, in the order listed at the FDIC website (FDIC) are:

Bank USA, National Association of Phoenix AZ: its ratio of troubled assets was 85.3% (BankTracker)

Community Bank of Lemont IL: its ratio of troubled assets was 879.1% (BankTracker)

San Diego National Bank of San Diego CA: its ratio of troubled assets was 84.6% (BankTracker)

California National Bank of Los Angeles CA: its ratio of troubled assets was 233.1% (BankTracker)

Pacific National Bank of San Francisco CA: its ratio of troubled assets was 62.8% (BankTracker)

Park National Bank of Chicago IL: its ratio of troubled assets was 73.1% (BankTracker)

Citizens National Bank of Teague TX: its ratio of troubled assets was 23.8% (BankTracker)

Madisonville State Bank of Madisonville TX: its ratio of troubled assets was 66.5%
(BankTracker)

North Houston Bank of Houston TX: its ratio of troubled assets was 63.5% (BankTracker)

NY gov says deficit up to $10B over next 2 years (The Associated Press) (Healthcare Association of New York State)

Citigroup Shares Tumble After Analyst Sees Major Writedown (CNBC)

Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash (Bloomberg) -- "'All of the components of real estate value are going in the wrong direction simultaneously,' said Ross"

Dark Vision – The Coming Collapse of the Muni Bond Market (Nathan's Economic Edge blog)

Pension Funds for Public Employees Lost $600 Billion Last Year (Bloomberg)

Stimulus Jobs Check: Are They for Real?: CBS News Visits California and Illinois to See Stimulus Dollars in Action (CBS News)

The White House has issued a report on the $787 billion federal stimulus package, claiming that more than 600,000 jobs have been saved or created as a result. Chip Reid reports. (CBS News)



Simple analysis of cost per job saved from stimulus:




Breakfast with Dave: David Rosenberg, chief economist and strategist at Gluskin Sheff, on yesterday's GDP report and other news. (Scribd)

Rosenberg talks with CNBC:












Thursday, October 29, 2009

Thursday roundup (10-29-09)

Quotes of the day:

"When you have more people losing jobs than getting them, you don’t have the pre-conditions for a sustainable recovery. The economy needs to move it up a notch or we are looking at a double dip." -- Edward Harrison (Credit Writedowns blog)

"The dollar is weaker not so much because people are buying yen because they think Japan is suddenly going to be the next hot thing again. Instead, there is a sense that in some very defined and critical way, the dollar and the U.S. have lost their way. The U.S. has borrowed so much from foreigners. They've got a rising budget deficit and few ways to bring it under control that investors see as viable. Those are things that affect the value of a currency." -- Stephen King, chief economist at HSBC in London. (The Washington Post)

GDP Increases 3.5%, But Not Time To Celebrate Yet (Expected Returns blog)

U.S. Home Vacancies Rise to 18.8 Million on Defaults (Bloomberg)

Stimulus jobs overstated by thousands (The Associated Press)

Shell Q3 profit falls 62 pct, to cut 5,000 jobs (The Associated Press)

[Mass. Governor] Patrick to cut 2,000 jobs to protect local aid (The Boston Globe)

It's The Worst-Ever Credit Crunch On Main Street (Business Insider)

Joe Saluzzi on Bloomberg TV The Close 10 29 09:



Central banks chill asset rally: The liquidity tide is turning. Authorities across large parts of the world have either begun to tighten the spigot or are taking steps to wean their economies off emergency stimulus. (The Telegraph)

Prichard [a city in Alabama] files for bankruptcy; city faces lawsuit over nearly empty pension fund (Al.com blog) (Al.com blog)

Harvard University professors Niall Ferguson and Kenneth Rogoff join Bloomberg's Ken Prewitt and Tom Keene on a special live broadcast for the one-year anniversary of Bloomberg Surveillance. Ferguson and Rogoff also field questions from the audience, which includes John Ryding of RDQ Economics LLC and Kathleen Stephansen of Aladdin Capital Management LLC. (Bloomberg Surveillance) (Listen/Download)

2009 Has the Worst Honey Crop on Record: If you like honey, you should buy it now ... and buy a lot. (The Daily Green)

Is it a recovery yet? (Weekly report, 10-29-09)

As noted here, one market strategist has said that we can be "more certain that there is an economic recovery" if the initial jobless claims, reported on Thursdays, drop below 500,000.

IT'S NOT A RECOVERY YET!

"The Labor Department said Thursday its tally of newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally-adjusted 530,000. Analysts expected a steeper drop to 521,000, according to a survey by Thomson Reuters." (The Associated Press)

Wednesday, October 28, 2009

Wednesday roundup (10-28-09)

Quotes of the Day:

"Much of the strength in the economy is due to temporary factors such as fiscal stimulus initiatives like the home-buyers credit." -- Dana Saporta, an economist at Stone & McCarthy Research in Skillman, New Jersey. (Bloomberg)

"What I don’t think anyone appreciates is the downside potential of the economy." -- David Lykken, managing director of Mortgage Banking Solutions, an Austin, Texas-based consulting firm. (Bloomberg)

"The U.S. market has the most downside risk in the coming year. Although the U.S. may experience a quarter or more of growth, the driver is not real demand but rather stimulus from the Federal Reserve and government spending that is unsustainable." -- Marty Beskow, a poll participant and portfolio manager for Blue Water Capital Advisors in Duluth, Minnesota. (Bloomberg) -- the article is entitled "Investors Sense Rout in Stocks After Biggest Rally Since 1930s"

"...the shocks that hit the U.S. economy last fall were, by almost any measure, larger than those that precipitated the Great Depression." -- Christina D. Romer, Chair, Council of Economic Advisers (The US Senate, Oct. 22 testimony)

"We are very concerned about deflation being a drag on [Japan's] economic growth." -- Randall Jones, an economist heading research on Japan and South Korea at the Organization for Economic Cooperation and Development. (The Wall Street Journal)

"GMAC’s insolvent, it has been, and I don’t know that we can inject enough money into it to fix it. The company, frankly, needs to be restructured and liquidated." -- Christopher Whalen, managing director of Institutional Risk Analytics of Torrance, California. (Bloomberg)

"We have a much more concentrated financial industry as a result of the financial crisis than we did a year ago. We have several firms that are clearly too big to fail. So the question is, do we have the regulatory structure to deal with it?" -- Dean Baker, the co-director of the Center for Economic and Policy Research in Washington. (NPR)














Unemployed tap their 401(k)s: Almost half of all workers who left their job last year took a cash distribution from their plan, according to a new study. (CNN)

Costco to accept food stamps nationwide (The Associated Press) (The Associated Press)

Weak Consumer May Hurt Holidays:



New home sales fall a surprising 3.6 percent: September new home sales post surprise drop as benefit of first-time buyer tax credit wanes (The Associated Press)

Fears of a New Chill in Home Sales (The New York Times)

Foreclosures Spread to Middle Class: Forget the subprime-mortgage borrowers. This latest wave in the foreclosure crisis is hitting homeowners hurt by unemployment. (Newsweek)

Housing slump hits California timber industry like a buzz saw: Weak demand for lumber is forcing some mills to close and leaving many loggers and truckers unemployed. (The Los Angeles Times)

US Airways Cutting 1,000 Jobs, Reducing Flying: The Airline is Focusing Flights on its Three Hubs (The Associated Press) (The Arizona Republic)

American cuts 700 more positions (Fort Worth Star-Telegram) (The Dallas Morning News)

AP Staffers Freak Out As Layoffs Loom (Business Insider)

Clunkers: Taxpayers paid $24,000 per car: Auto sales analysts at Edmunds.com say the pricey program resulted in relatively few additional car sales. (CNN)

Economic growth expected, but can it be sustained ... without government help? (The Associated Press)

Dead Government Walking (Sprott Asset Management's "Markets at a Glance" ) -- "the United States Government is on a trajectory to default on their obligations."

Death Cometh for the Greenback by Nobel Prize-winning economist Joseph E. Stiglitz (National Interest online)

Let GMAC Fail (The Atlantic)

Plan would end taxpayer bailouts for financial firms deemed 'too big to fail': Under the Obama administration's proposal, the cost of future government rescues of large bank holding companies and other complex financial firms would be paid by their surviving rivals. (The Los Angeles Times)

9 Signs of America in Decline (US News & World Report blogs)

Converting the Preachers: George Soros launches a $50 million effort to purge economics of its free-market zeal. (Newsweek)

Retrospective: The downfall of Washington Mutual: Inside the frenzied effort to prevent the largest bank failure in U.S. history (Puget Sound Business Journal)

Tuesday, October 27, 2009

Tuesday roundup (10-27-09)

Quotes of the day:

"Delaware ... became the headquarters of the card business in the early 1980s when banks discovered that they could charge unlimited interest rates to any consumer nationwide as long as the company was based in Delaware. Now, banks like Bank of America, JP Morgan Chase, and HSBC run their credit card operations in the state." (Forbes blogs)

"We need to see a real improvement in employment conditions. Layoffs need to stop rising and hiring needs to pick up. The soonest that we think that consumers' confidence will see a sustained rise would be late spring of next year." Mark Vitner, an economist at Wells Fargo (CNN)

What recovery? Americans still gloomy on economy (The Associated Press) (Bloomberg)

Deflation fears as Eurozone and US credit contracts: Bank lending to firms and households in the eurozone has fallen for the first time, raising fears of an economic relapse and a slide into deflation next year. (The Telegraph) (The Wall Street Journal)

Regulators Prepare for the Next 'Big One' (The Wall Street Journal)

A Bold Call To Bail Out Detroit (Time magazine blogs)

Midnight Candles: Investment Outlook by Bill Gross for November 2009 (Pimco)

The accelerating decline of newspapers (The Washington Post) -- "U.S. newspaper circulation has hit its lowest level in seven decades"

Monday, October 26, 2009

Monday roundup (10-26-09)

Quotes of the day:

"There are signs that parts of the financial industry have resumed risk taking practices reminiscent of those which led to the crisis. ... Most of the negative effects of the economic downturn on balance sheets are still to come." -- European Central Bank Governing Council member Christian Noyer (The New York Times)

"With no sign of meaningful improvement in newspaper advertising trends, and accelerating declines in circulation, we remain concerned about the outlook for newspaper companies." -- Alexia Quadrani, a JPMorgan Chase & Co. analyst (Bloomberg)

"In a recent report, former Washington Post executive Leonard Downie Jr. and journalism professor Michael Schudson expressed concern that dwindling circulation and financial losses were threatening newspapers' ability to act as watchdogs of governments and corporations." -- Journalist Martin Zimmerman (The Los Angeles Times) (see report at the Columbia Journalism Review)

"As I’ve noted here earlier, the blog newsfrom1930 performs a very valuable 'reality check' for today by each day publishing a summary of the Wall Street Journal from the same day in 1930. The overwhelming flavour of reports from that time is that the Depression was over and recovery was imminent. Plus la change…" -- Economist Steve Keen (Debt Deflation)

U.S. bank chargeoff rate exceeds Depression: Moody's (Reuters) (FT Alphaville) (Zero Hedge)

Clock ticking on debt ceiling: This week Uncle Sam plans to sell $123 billion worth of Treasurys. That will bring the country's debt level very close to the $12.1 trillion debt ceiling. (CNN)

The secret to our success (The Mess that Greenspan Made blog) (Breakfast with Dave)

Dollar Up YTD Against Only Nine Currencies Worldwide (Infectious Greed blog)

New York Delays $959 Million Payment to Pension Fund (Bloomberg)

Caterpillar cuts 2,500 laid-off workers, brings 550 others back to adjust for rising demand (The Associated Press)

Recession Drives Surge in Youth Runaways (The New York Times)

Part two WaMu: Hometown bank turned predatory: Through high-risk and overpriced loans, WaMu became one of the nation's biggest predatory lenders. The strategy eventually failed, bringing down the bank and costing thousands of borrowers their homes. (Seattle Times)

No relief in sight for Main Street banks: With loan losses still mounting, some regional banks aren't looking to return to profitability until 2011. (CNN)

Personal bailouts: droves walking away from mortgages (Eye on Miami blog)

Detroit house auction flops for urban wasteland (Reuters)

Citibank shows why credit card holders need protection: Months before a law takes effect that cracks down on abuses by credit card issuers, the bank increases interest rates to almost 30% on customers who pay their bills on time. (The Los Angeles Times)

No, You're Reading That Right: 79.9 percent rate targets credit-challenged (NBC San Diego)

Newspaper circulation falling fast, down 10.6 pct (The Associated Press) (The New York Times)

Sunday, October 25, 2009

Quotes of the day:

"It's not even a jobless recovery; it's a recovery with more job losses," said UCLA economist Lee Ohanian. "The idea of having essentially no net job creation after a remarkably severe recession is a real pathology for the U.S. economy." (The San Francisco Chronicle)

"Poorly performing commercial loans are becoming a nettlesome issue for banks, which are already suffering from the meltdown in residential real estate. Capmark is seen as a good gauge of the larger market, as it is among the top servicers of U.S. commercial real estate loans and is the largest servicer of loans in the rest of the world, according to the Mortgage Bankers Association." -- The Street.com (The Street.com)

"Oh, what a tangled web these mortgage lenders weave." -- Gretchen Morgenson in an article entitled "If Lenders Say ‘The Dog Ate Your Mortgage’" (The New York Times)

Capmark Financial files for bankruptcy protection: "one of the nation's largest commercial real estate lenders" (The Associated Press) (Reuters)

Japan Airlines to Slash 13,000 Jobs by March 2015, Kyodo Says (Bloomberg)

'Great depression' gaffe lifted from [British] Prime Minister's website: For a few hours over the weekend it was the top story on Gordon Brown's official website. (The Telegraph)

UK households 'lost 13pc of wealth in one year': The huge impact of the economic turmoil on households in Britain has been revealed by new figures that show that household wealth in Britain fell by £844bn between 2007 and 2008, driven by sharp falls in house prices and the collapse of the stock market. (The Telegraph)

BofA faces twofold challenge on credit-card losses: Recession, new regulations present daunting task for returning to profitability (Charlotte Business Journal)

Laying on bets at America's biggest pension fund (Reuters)

Food will never be so cheap again: Biofuel refineries in the US have set fresh records for grain use every month since May. Almost a third of the US corn harvest will be diverted into ethanol for motors this year, or 12pc of the global crop. (The Telegraph)

Earnings reports to give picture of job market: In earnings linked to labor market, demand may signal if companies are ready to hire (The Associated Press)

Retrospective: Reckless strategies doomed WaMu: Execs say WaMu fell victim to the economy -- but WaMu caused its demise by embracing risky loans and dismantling -- Part I (The Seattle Times)

The Depression’s lessons: frugality and generosity (The Richmond Times Dispatch)

Saturday, October 24, 2009

Saturday roundup (10-24-09)

Quote of the day:

"Even under their worst projections, no economists had expected the [UK] economy to contract by this extent during the quarter. So now we can say it — the UK economy is in its longest recession on record." -- The Times of London (The Times of London)

Global economy has no substitute for falling dollar (The Sunday Times of London)

US Treasury sets record $123 bln bond auction week (Reuters)

Friday, October 23, 2009

Friday roundup (10-23-09)

Quotes of the day:

"We certainly know there are hundreds and hundreds of zombie banks out there. The only alternative for them is to be seized and it’s only a matter of manpower and money before they get to it." -- Gerard Cassidy, an RBC Capital Markets analyst in Portland, Maine

"There are losses that will have to float through the [banking] system not just for one quarter or two, but for years." -- Paul Miller, a financial industry analyst at FBR Capital Markets in Arlington, Virginia (Bloomberg)

“It’s a big deal for a lot of these [65 or older] people not to find a job. That so many of them are still trying to find work shows how bad the economic situation is. A lot of people normally give up at that age.” -- said David Certner, legislative policy director for AARP (The New York Times)

Bank closings hit 101 for year; most since 1992: Bank closings hit 101 for year as regulators shut down 2 more banks; most since 1992 (The Associated Press) (CNN)

The banks closed were:

Partners Bank, of Naples, FL, which had a toxic asset ratio of 394.3% in June (Bank Tracker)

American United Bank, of Lawrenceville, Ga., which had a toxic asset ratio of 155.3% in June (Bank Tracker)

Hillcrest Bank Florida, of Naples, FL, which had a toxic asset ratio of 292.5% in June (Bank Tracker)

Flagship National Bank, of Bradenton, FL, which had a toxic asset ratio of 258.4% in June (Bank Tracker)

Bank of Elmwood, based in Racine, WI, which had a toxic asset ratio of 182.5% in June (Bank Tracker)

Riverview Community Bank of Otsego, MN, which had a toxic asset ratio of 252.1% in June (Bank Tracker)

First Dupage Bank in Westmont, IL, which had a toxic asset ratio of 226.2% in June (Bank Tracker)

Last week's closure, San Joaquin Bank of Bakersfield, CA, by the way, had a toxic asset ratio of 126.2% in June. (Bank Tracker)

Recession [in Britain]: it’s not over (Financial Times blogs)

This [UK] recession just became a depression (The Telegraph blogs)

Booksellers Ask Justice Dept to Probe Price Wars (Reuters)

The 2010 Real Estate Trifecta (Safe Haven)

$13 an Hour? 500 Sign Up, 1 Wins a Job (The New York Times)

Foreclosure Fraud - Guide to Looking up Public Records for Fraud (Scribd)

Wall Street's Naked Swindle: A scheme to flood the market with counterfeit stocks helped kill Bear Stearns and Lehman Brothers — and the feds have yet to bust the culprits (Rolling Stone)

Jack Benny: Your Money or Your Life skit

Thursday, October 22, 2009

Thursday roundup (10-22-09)

Quotes of the day:

"The Aaa rating of the U.S. is not guaranteed. So if they don't get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy." -- Steven Hess, Moody's lead analyst for the United States (Reuters)

"Right now America’s banking system resembles a pyramid. At the top, two or three firms are doing well. But beneath them are a handful of giant conglomerates that are struggling towards profits, a tier of middling banks with overexposure to risky assets, and a vast base of small banks in deep, deep trouble." -- The Economist (The Economist)

"The situation of our economy is explosive. We face a derailment of public finances without precedent." -- Greece's Prime Minister George Papandreou (Deutsche Welle)

How much is too much government debt? (Reuters)

7,000 unemployed Americans lose their lifeline every day (CNN)

NCR cutting up to 2,200 jobs to reduce costs (The Associated Press)

The growing case for a jobless recovery by David Altig, senior vice president and research director at the Atlanta Fed (Macroblog)

Commercial Real Estate Bust Looms: Owners of shopping malls, hotels, office space and apartment buildings — and the bankers who financed them — face a major crunch (NBC Los Angeles) (CBS Moneywatch)

Downtown Boynton [FL] condo towers awaiting owners: Two months after receiving its certificate of occupancy, no deals have closed at The Promenade (Palm Beach Post)

The FHA Is Doomed: Huge Bailout Coming (Business Insider)




Fitch cuts Greece rating on soaring deficits, debt (Reuters)

Starving Ethiopia appeals for help (ABC News - Australia)

Walmart season (Motley Fools blog)

Retrospective: Behind the Scences of the Auto Bailout (NPR)

Is it a recovery yet? (Weekly report, 10-22-09)

One measure of recovery would be getting the weekly initial jobs claims below 500,000 (blog). For the sixth week since noting this, we have to say:

IT IS NOT A RECOVERY YET.

"The Labor Department said Thursday that new jobless claims rose to a seasonally adjusted 531,000 last week, from an upwardly revised 520,000 the previous week. Wall Street economists had expected only a slight increase, according to Thomson Reuters." (The Associated Press)

"'Until demand turns around, businesses have to continue to cut costs,' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. 'We remain pessimistic on consumer spending.'" (Bloomberg)

Wednesday, October 21, 2009

Wednesday (10-21-09)

Quotes of the day:

"Japan is about to go bankrupt. It is on the cusp of a fiscal crisis that will change perceptions of Asia dramatically. The IMF says gross public debt will reach 218pc of GDP this year. This is compounding very fast." -- Ambrose Evans-Pritchard, journalist (The Telegraph blogs)

"What I think is remarkable is just how little U.S. officials have said about the weakness in the dollar, and as long as it's orderly, they seem comfortable with it." -- Adam Boyton, Deutsche Bank currency strategist (CNBC)

Bailout's hidden costs: SigTARP Neil Barofsky, overseer of the $700 billion TARP program, says the cost to taxpayers will be a lot greater than the government is letting on. (CNN)

Public distrust is biggest cost of TARP, Barofsky says (Marketwatch)



The lessons of the banks' failure are yet to be learnt: Telegraph View: Mervyn King, the Governor of the Bank of England, fears that by rescuing the banks, they may become even more reckless. (The Telegraph)



New York Faces December Cash Squeeze, Governor Says (Bloomberg)

23 states report higher unemployment in September (The Associated Press)

Homes: About to get much cheaper (CNN)

Apartment Rents Decline in U.S. West as Unemployment Increases (Bloomberg)

Students Rely on Federal Loans to Pay Rising Tuition: Private College Financing Dried Up as Credit Crunch Hit Lenders; Costs Up 6.5% for Public Schools, 4.4% at Private Ones (The Wall Street Journal)

Wal-Mart to cut prices weekly through holidays (The Associated Press)

The Math Manifests Itself in the Charts…
(Nathan's Economic Edge blog) (Seeking Alpha blog)

Gerald Celente on "greet shoots":

Tuesday, October 20, 2009

Tuesday roundup (10-20-09)

The Warning (PBS Frontline)



Quotes of the day:

"You can have a stimulus every quarter from now until we go bankrupt. But would that be good policy?" -- economist Kevin Hassett, former adviser to Republican presidential candidate John McCain (Time)

"The euro at $1.50 is a disaster for the European economy and industry." -- Henri Guaino, right-hand man of President Nicolas Sarkozy. (The Daily Telegraph)

“The demand for goods is still very soft; the United States economy is just barely recovering. In a weak economy where consumer spending is weak, businesses have been slashing left and right. This surprisingly deflationary result reflects that.” -- Allen Sinai, president of Decision Economics. (The New York Times)

"There is no evidence of inflation or of developing inflation pressures anywhere in this report." -- Robert Brusca, chief economist at FAO Economics, in a note to clients. (Marketwatch)

"Business travel is way off and that's where the airlines get half their revenue." -- Raymond Neidl, airline consultant, commenting on 19% drop in air-industry revenues (CNN)

Revised formula puts 1 in 6 Americans in poverty (The Associated Press)

Producer Prices in U.S. Declined 0.6% in September (Bloomberg)

Deflation fears persist amid beginning of economic recovery (USAToday) (UPI) (Forbes)

Housing Market Recovery Looks Slow in the Making (CNBC) (Bloomberg)

Top banks cut small business lending by $8 billion: As small business loans continue to dry up, the President readies a new set of initiatives aimed at reversing the trend. (CNN)

U.K. Had Record September Deficit as Slump Hit Taxes (Bloomberg)

Experts warn of 'deluge' of insolvencies to come in the UK: Insolvency experts have warned that there will be a "deluge" of business failures next year. (The Telegraph)

Rising Debt a Threat to Japanese Economy (The New York Times)

Sun Micro to cut 3,000 jobs as Oracle deal delayed (Reuters)

Recession prompts Hawaii to close schools on Fridays (AFP)

The Sum Total of All That Is Wrong (Financial Armaggedon)

Global Recovery "Tenuous," Years of Slower Growth Ahead, says Zanny Minton Beddoes, economics editor at The Economist and former IMF Economist



Niall Ferguson: U.S. Empire in Decline, on Collision Course with China




The Dollar Is Dying a Slow Death, Says Niall 'Ascent of Money' Ferguson



Wake Up Washington! China Is Already Dumping the Dollar, Niall Ferguson Says

Monday, October 19, 2009

Monday roundup (10-19-09)

Quotes of the day:

"What happened then [in the runup to the savings & loan crisis) was an epidemic of what we call in criminology 'control fraud' and that means 'What happens when the fraud is led by the person who controls a seemingly legitimate corporation or government agency?,' in this case they were savings & loans. And they -- these frauds were growing at an annual rate of over 50 percent. Their weapon of choice is accounting fraud.

"So the -- it's real easy. It's a three-part optimization. First thing you do is grow like crazy: Ponzi-like scheme. Second thing you do is deliberately make really bad loans, because they have a higher interest and higher expenses associated with them, so you report more profits. And the third thing you do is have extraordinary leverage -- leverage is simply lots of debt compared to your equity. And the point of this is: If you do those three things, you are mathematically guaranteed to report, not just profits, but record profits. At that kind of growth rate, with people concentrating on whatever the optimal area is for the fraud, you produce financial bubbles.

"In the case of the savings & loans crisis, we re-regulated the industry in the face of opposition from the Reagan administration, the House of Representatives, and the Senate, and we looked for the Achilles Heel for this kind of scheme, which is growth. And so we restricted growth. And this kind of fraud also creates a distinctive pattern of operations and we used that to triage and to go after these institutions while they were still reporting they were the most profitable savings & loans in America. People thought we were crazy, contemporaneously, who were conservative economists, but it turned out we were right about every single one of these institutions.

"What does it mean for today? The same thing. We have another epidemic of accounting fraud. In this case it's not commercial real estate, which it was in the savings & loans crisis, it started out with -- in the United States context -- with home mortgages. ... The ONLY reason you inflate an appraisal is for fraud. There's no other purpose in the world. And we have survey information that's quite good on appraisers. In 2003, 70 percent reported that they had been the subject of an attempt to intimidate to inflate appraisal values in that year alone. When we did the same survey in 2007, that percentage was up to 90 percent. So we have horrific, endemic fraud, and it's coming out of the lenders, not the poor people who can't pay the mortgages. And THAT is what brought this crisis." -- William Black, former regulator and author of The Best Way to Rob a Bank Is to Own One (Democracy Now video)

"So we have to watch out. Debt is that's very toxic and can hit you very quickly." -- Nassim Taleb, author of the Black Swan theory (Fora TV video)

[Britain's] National debt 'is rising £700,000 each minute and is almost treble the Government figure' (The Daily Mail) (The Times of London)

Foreclosures Force Ex-Homeowners to Turn to Shelters (The New York Times)

U.S. Commercial Property Values Fall 3% in August (Bloomberg)

FDIC Failed to Limit Commercial Real-Estate Loans, Reports Show (Bloomberg)

Manufacturing recovery likely slow to come (The Washington Times)

The Stock Market Has Never Been This (Intermediate-Term) Overbought by John P. Hussman, Ph.D. (Hussman Funds)

Gannett quarterly profit, ad revenue sink (Reuters)

New York Times to cut 100 jobs: Newspaper will slash 8% of its newsroom staff by the end of 2009, asking staff to volunteer for buyouts before layoffs become necessary. (CNN)

Hollywood film output likely to fall by a third (The Guardian)

Armageddon in Alabama Proves Parable for Local U.S. Governments (Bloomberg)

The Warning: In the devastating aftermath of the economic meltdown, FRONTLINE sifts through the ashes for clues about why it happened and examines critical moments when it might have gone much differently. (The program will be broadcast tomorrow.) (PBS Frontline)

Sunday, October 18, 2009

Sunday roundup (10-18-09)

Quotes of the day:

“The Obama administration may say they want a strong dollar. But everyone knows they haven’t got the means to support it. The Federal Reserve can’t raise rates, and the White House can’t cut the budget deficit anytime soon.” -- Neil Mellor, a currency strategist at BNY Mellon Global Markets in London (The New York Times)

"This deficit is driven by us. I mean, you talk about systemic risk. The systemic risk today is the Congress of the United States. We're creating these massive debts which we're passing on to our children. We're going to undermine fundamentally the quality of life for our children by doing this." -- Sen. Judd Gregg (R) of NH (The Associated Press)

Will US factories show signs of life?: Investors look to big manufacturer earnings for signs of economic recovery (The Associated Press)

3rd-quarter venture funding weakest in 6 years (Marketwatch)

Young Job Seekers Hit Hard by Economy: Unemployment Rate for Recent College Graduates Quadrupled from Two Years Ago (CBS News)

Foreclosure crisis far from over for South Florida (The Miami Herald)

Southern California's vast desolation indoors: Almost 51 million square feet of office space is vacant in Southland, and that number is expected to continue growing well into next year. (The Los Angeles Times)

One industry that's booming: debt collection (The Miami Herald)

Saturday, October 17, 2009

Saturday roundup (10-17-09)

Quotes of the day: "Obviously, foreign investors are not ATMs without limit either. No wonder many experts worry that the debt bubble will be a greater crisis some day in the future." -- Xinhua, the official press agency of the government of the People's Republic of China, key buyer of US debt (Xinhua) "... personal finances have undergone the longest and deepest decline in the 60-year history of the surveys, and few consumers expect their finances to improve any time soon." -- Reuters/University of Michigan Surveys of Consumers (Reuters)

$1.4 Trillion Deficit Complicates Stimulus Plans (The New York Times) (The Washington Post)

Wall St. Is Winning: Elizabeth Warren "Speechless" About Record Bonuses:



Warren: Housing Market Getting Worse:



"Astonishing" That Big Banks Are Taking Taxpayer Money, Writing the Rules, Warren Says:



Imports dive at ports of Los Angeles and Long Beach: They report their worst combined import statistics in nine years for September, which is often the busiest month at the nation's biggest port complex. (The Los Angeles Times)

Florida's jobless rate hits 11 percent as public toll worsens: Workers remain out of work longer and longer as Florida's unemployment rate hits 11 percent for the first time in 34 years. (The Miami Herald)

California job losses keep climbing: The Bay Area, whose tech industry is gearing up, is projected to lead the state's comeback. Southern California -- hobbled by the collapse in housing and construction -- will lag, economists say. (The Los Angeles Times)

The Unemployed Wait: More than a million jobless Americans are in danger of losing benefits by the end of the year unless Congress passes an extension of unemployment insurance. (Editorial in The New York Times)

More Trouble for Housing: Mounting Foreclosures: Job losses and declining prices, though moderating, are still contributing to mortgage defaults and delinquencies. (Kiplinger Forecasts)

Food giants [in UK] cut back on product size but prices remain the same (The Times of London)

Friday, October 16, 2009

Friday roundup (10-16-09)

Quotes of the day: "Risks on the growth front are still the dominant risks." -- US Treasury Secretary Timothy Geithner (Marketwatch) "I think that if the Chinese stop buying our debt, it is virtually the end of the financial world as we know it." -- Julian Robertson, hedge fund manager (The Financial Times)

ECB's Trichet: strong dollar comments important (Reuters)

Dollar May Drop 20% More, Harvard’s Ferguson Says (Bloomberg)

What Happens If the Dollar Crashes: Trade wars could break out. Overexposed banks might collapse. And that's just for starters (Business Week)

Federal deficit hits all-time high $1.42 trillion (The Associated Press)

State Revenue Falls Most Since 1963 on Incomes, Sales (Bloomberg)

Mountain of modifications: Industry tries to keep up with avalanche of troubled mortgages (Marketwatch)

Foreclosure filings in 2009 (interactive map) (CNN)

Calif. bank becomes 99th in US to be shut in 2009 (The Associated Press)

BofA posts $1 billion loss on consumer credit woes (Reuters)

Bank of America May Overhaul Cards After $4.7 Billion of Losses (Bloomberg)

Overdue credit card payments on rise (Bloomberg)

Max Keiser, independent analyst, and Frédéric Bonnevay, economist at the Institut Montaigne in Paris debate the "recovery" and how banks stand today (Keiser, as usual, is a bit over the top for general audiences):





U.S. Michigan Sentiment Index Decreased to 69.4 (Bloomberg)

Recession Will Be 'Full-Blown Depression': Strategist (CNBC) -- there is an associated video (click the link to view it)

Elizabeth Warren, talking to The Washington Post (Oct. 8), said: "The way I see it, is that the financial system itself is quite fragile and the underlying economy -- the REAL economy -- jobs, housing, household wealth is still in a very perilous state." (The Washington Post)



Wal-Mart attacks new markets with big price cuts (Reuters)

Spartan Stores CEO: Deflation hurting supermarket chain's bottom line (Michigan Business Review - MLive.com)

General Electric profit slumps 44%: Beats street profit outlook, but with significantly less sales (Marketwatch)

GE, Bank of America earnings weigh on futures: Stock futures fall after disappointing reports from Bank of America, GE (The Associated Press)

Joe Saluzzi, speaking Wednesday's Dow 10,000: "It's good price action" but...



JAL slumps, investors say bankruptcy an option (Reuters)

Thursday, October 15, 2009

Thursday roundup (10-15-09)

No Inflation [=deflation] Means No Cost Of Living Increase For Social Security Recipients (NPR) (BBC) (The Atlantic)

Inflation or deflation? It's definitely deflation, says Mike "Mish" Shedlock of Sitka Pacific Capital:





Jay Taylor, president and CEO of Taylor Hard Money Advisors, Inc., also holds the deflation view:












Foreclosures: 'Worst three months of all time': Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter - a sign the plague is still spreading. (CNN) (Bloomberg) (The Associated Press)

Credit-Card Losses Underscore Challenges Facing Lenders (The Wall Street Journal)

Citi results weighed down by failed loans: Citigroup results hurt by failed loans, warns credit environment remains challenging (The Associated Press)

German 'Wise Men' fear credit crunch in 2010: Germany's leading institutes have warned that the pace of economic recovery is "unsustainable" and that the country's banks may face a fresh crisis over the next year as bad debts surface in earnest. (The Telegraph)

Ex-FSA chief Sir Howard Davies sees 'dramatic’ risks for Britain: The British people are living in a fool's paradise and have yet to understand the gravity of the economic crisis, according a former head of the Financial Services Authority. (The Telegraph)

Governor warns of growing problems in Ill. budget (The Associated Press)

Colo. 1st state to cut minimum wage as living costs fall (USA Today) (The New York Times blogs)

Frugality is forever: Women, especially mothers, vow to cut costs -- but will they keep their promise? (Marketwatch)

For many U.S. wealthy, housing crisis still a squeeze (Reuters)

Is it a recovery yet? (Weekly report, 10-15-09)

Weekly jobless claims under 500,000 would be a more solid indication that a recovery is going on than we have had up to now, according to one analyst quoted back on Aug. 20 (Reuters) (blog).

IT IS NOT A RECOVERY YET!

"The number of newly laid-off workers filing claims for unemployment insurance has fallen to the lowest level since early January, a sign the labor market is slowly improving. ... The Labor Department said Thursday that first-time claims for jobless benefits dropped to a seasonally-adjusted 514,000 from an upwardly revised 524,000 the previous week." (The Associated Press) That adds 3,000 claims to the figure reported last week. (blog)

"'While the pace of firings has begun to moderate, it has become increasingly evident that businesses are not in any rush to add to payrolls,' said Ryan Sweet, an economist at Moody’s Economy.com in West Chester, Pennsylvania. 'The labor market holds the key for consumer spending.'" (Bloomberg)

Wednesday, October 14, 2009

Wednesday roundup (10-14-09)

World's hungry reach more than 1 billion in '09: U.N. (Reuters) (The Independent) (The Associated Press)

Ponzi Finance (an outstanding article) (Safe Haven)

More Americans Falling Further Behind On Debts (The Associated Press)

JPMorgan Credit-Card Results Suggest More Pain Ahead (The Wall Street Journal)

US dollar falls to 14-month euro low (The Associated Press)

Dollar loses reserve status to yen & euro (The New York Post)

Sept. retail sales fall 1.5 percent post Clunkers (The Associated Press)

Mortgage professionals expect home foreclosures to keep rising: Executives and economists at the Mortgage Bankers Assn. convention say job losses have replaced adjustable subprime loans as the main cause of defaults. (The Los Angeles Times)

[UK] Treasury slams EU report on debt spiral: The Treasury has lashed out at the European Commission in highly charged language after it suggested that Britain risks a debt compound spiral that could push public borrowing to levels never seen in a modern democracy. (The Telegraph)

N.Y.’s Deficit May Grow to $4.1 Billion, Report Says (Bloomberg) (The New York Times)

Bank regulators: Real estate loans biggest concern: Losses mounting on commercial real estate loans pose biggest concern, federal regulators say (The Associated Press) (The Wall Street Journal blogs)

FDIC bank fund in the red until 2012: Even as regulators try to replenish deposit insurance fund, it will be over two years before it boasts a positive balance, warns agency chief. (CNN)

Still on the Job, but at Half the Pay (The New York Times)

Sorry, no jobs. This is California (Reuters)

[North Carolina's Department of Health and Human Services] Expects Thousands Of Job Losses, Cut Services (NBC17)

The Dow [which exceeded 10,000 today] doesn't represent the economy: Commentary: Big business may be booming, but talk to Main Street (Marketwatch)

Wall Street Smarts by Calvin Trillin (The New York Times)

Geithner Aides Reaped Millions Working for Banks, Hedge Funds (Bloomberg)

“Does Banking Contribute to the Good of Society?” (Naked Capitalism blog)

Greater Depression Coming: Interest Only Mortgage Loans on Horizon (The Coming Economic Depression blog)

The Biggest Bust Will Follow the Biggest Bubble (The Daily Reckoning)

Why You've Never Heard of the Great Depression of 1920:

Presented by Thomas E. Woods, Jr., at "The Great Depression: What We Can Learn From It Today," the Mises Circle in Colorado; sponsored by Limited Government Forum of Colorado Springs and hosted by the Ludwig von Mises Institute. Recorded Saturday, 4 April 2009. (Youtube)



Some of the quotes from Warren Harding in this lengthy video are as follows:

"Gross expansion of currency and credit have depreciated the dollar just as expansion and inflation have discredited the coins of the world. We inflated in haste, we must deflate in deliberation. We debased the dollar in reckless finance, we must restore in honesty. Deflation on the one hand and restoration of the 100-cent dollar on the other ought to have begun on the day after the armistice, but plans were lacking or courage failed. ...

"We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens, but because it will be an example to stimulate thrift and economy in private life. ...

"Let us call to all the people for thrift and economy, for denial and sacrifice, if need be, for a nation-wide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the Republic. There hasn't been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations." (The American Presidency Project)

"We can reduce the abnormal expenditures, and we will. We can strike at war taxation, and we must. We must face the grim necessity, with full knowledge that the task is to be solved, and we must proceed with a full realization that no statute enacted by man can repeal the inexorable laws of nature. Our most dangerous tendency is to expect too much of government, and at the same time do for it too little. We contemplate the immediate task of putting our public household in order. We need a rigid and yet sane economy, combined with fiscal justice, and it must be attended by individual prudence and thrift, which are so essential to this trying hour and reassuring for the future. ...

"The economic mechanism is intricate and its parts interdependent, and has suffered the shocks and jars incident to abnormal demands, credit inflations, and price upheavals. The normal balances have been impaired, the channels of distribution have been clogged, the relations of labor and management have been strained. We must seek the readjustment with care and courage. Our people must give and take. Prices must reflect the receding fever of war activities. Perhaps we never shall know the old levels of wages again, because war invariably readjusts compensations, and the necessaries of life will show their inseparable relationship, but we must strive for normalcy to reach stability. All the penalties will not be light, nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization. I would like government to do all it can to mitigate; then, in understanding, in mutuality of interest, in concern for the common good, our tasks will be solved. No altered system will work a miracle. Any wild experiment will only add to the confusion. Our best assurance lies in efficient administration of our proven system." (The Avalon Project)

Tuesday, October 13, 2009

Tuesday roundup (10-13-09)

Loan losses could eclipse positive bank earnings: For US banks, loan losses likely to overshadow trading profits as banks report earnings (The Associated Press)

Moody's: CMBS [commercial mortgage-backed securities] Delinquency Rate Jumps By Record Amt In Sept (The Wall Street Journal)

Commercial Real-Estate Loans Pose Risk to Banks, Regulators Say (Bloomberg)

Capmark highlights woes of commercial real estate (Reuters) -- the company could file for bankruptcy next week

Home rescue plan delaying, not solving crisis (Reuters)

More Banks to Fail, But Bailout Probably Not Needed: Bair (CNBC)

Chris Whalen managing director of Institutional Risk Analytics told CNBC on Oct. 2 that there's a "big mess ahead of us" in finance:





Unemployment is the top worry: Commentary: Consumer sentiment likely to be hobbled by jobs (Marketwatch)

Holiday survey: Buyers to spend less, shop later (National Jeweler)

World financial crisis 'not over' [Nouriel Roubini interviewed on video] (BBC)

Ongoing deflation [in the UK] (The Spectator blog)

Sterling Takes a Beating: Heaviest Selling in Years Rivals Dollar's Drubbing Amid Similar Challenges (The Wall Street Journal)

Stiglitz Says Banks Should Be Banned From CDS Trading (Bloomberg)

Homeless Population in Shelters Hits Record High: This year is the "worst on record" (NBCNewYork)

Indigent Burials Are on the Rise (The New York Times) (The New York Daily News)

Charles Biderman, founder and CEO of TrimTabs Investment Research, appears on Bloomberg TV on October 12, 2009 to discuss tax data, unemployment numbers, and his outlook on the market with Bloomberg's Carol Massar and Matt Miller: