Sunday, October 31, 2010

Sunday roundup (10-31-10)

Secondary deflation and the wisdom of Fed intervention: There's a strong case to be made for battling secondary deflation – the fall in prices that can occur when people try to liquidate too much debt. (The Christian Science Monitor blogs)

Why Commercial Real Estate Isn't Swamped with Foreclosures (DailyFinance)

Britain's economic recovery set to remain sluggish, Deloitte says: Economic adviser Roger Bootle also warns risk of double dip recession remains (The Guardian)

Bank of England Chief Mervyn King Proposes Eliminating Fractional Reserve Banking (Washington's Blog)

Angela Merkel consigns Ireland, Portugal and Spain to their fate: Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face “orderly” bankruptcy. (The Telegraph)

The peak oil debate is over by Dr. James Schlesinger (Energy Bulletin)

Saturday, October 30, 2010

Saturday roundup (10-30-10)

Roubini sees US 'fiscal train wreck' ahead: The US economy is a "fiscal train wreck" waiting to happen, US economist Nouriel Roubini warned on Friday. (The Telegraph)

Dire Warnings for States: 2011 Will be Painful (CNBC)

US Fears Grow Over Catching Japan Economy Slowdown (The New York Times)

Will Fed action next week even matter?: "The true lesson is that it is the markets-- always--that will ultimately rule the day. Any government action is only temporary." (The Financial Post)

Unemployment Offices [in Indiana] To Add Armed Guards: 36 Offices Beefing Up Security Before Benefits Set To End (The Indy Channel)

Residential Investment declines to new low as Percent of GDP (Calculated Risk blog)

How the Banks Put the Economy Underwater (The New York Times)

Unofficial Problem Bank list increases [from 871] to 894 Institutions (Calculated Risk blog)

Zulauf: “Most of the banks are not sound” (The Big Picture blog)

MGM film studio plunges into bankruptcy: Hollywood movie empire reaches deal to unload $4bn debt and relaunch under new management (The Observer)

Construction gives UK economic recovery an unstable foundation: George Osborne says the economy is growing strongly, but how much of that is down to a construction rally that is already petering out? (The Observer)

Most powerful man in Ireland: Olli Rehn denies he forced the €15bn cuts on us, but the EU bureaucrat now wields extraordinary power over Irish finances (The Irish Independent)

Friday, October 29, 2010

Friday roundup (10-29-10)

Fraud Caused the 1930s Depression and the Current Financial Crisis (Washington's Blog)

SEC Urges Banks to Disclose Potential Losses From Flawed Home Foreclosures (Bloomberg)

Warren Buffett’s bank Wells Fargo: ‘A business model based on fraud’ ( Ohio Attorney General Richard Cordray talks about the probe by attorneys general in all 50 states into mortgage foreclosure practices and the disclosure by Wells Fargo & Co. that it found flaws in court documents. Wells Fargo, the biggest U.S. home lender, said it will file supplemental foreclosure affidavits to courts in about 55,000 proceedings after finding some statements "did not strictly adhere to the required procedures." Cordray speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Youtube)

The States Take on Foreclosures (The New York Times)

The Big Lie on Fraudclosure (The Big Picture blog)

David Rosenberg: Q3 GDP Was Just 80 Basis Points Shy Of A Double Dip (The Business Insider)

Consumer sentiment dips to lowest since November (Reuters) "'Main Street doesn’t really believe that the economy is out of a recession until the unemployment rate comes down,' Jonathan Basile, an economist at Credit Suisse in New York, said before the report. 'It’s difficult to see any kind of sharp move higher in confidence.'" (Bloomberg)

Commercial Real Estate: "Normal market conditions years away" (Calculated Risk blog)

Gold Will Outlive Dollar Once Slaughter Comes: John Hathaway -- "The world’s monetary system is in the process of melting down." (Bloomberg)

Inflation? Gary Shilling Says Deflation Is the Real Problem (DailyFinance)

Japanese Production Falls as Deflation Tightens Grip (The Wall Street Journal) Japan Output Slide, Deepening Deflation Point to Economic Slump (Bloomberg)

Thursday, October 28, 2010

Thursday roundup (10-28-10)

Most Americans worry about ability to pay mortgage or rent, poll finds (The Washington Post)

Foreclosures on the Rise in Big Cities: A new report shows that 133 out 206 American metropolitan areas had an increase in foreclosure activity this summer. Ray Suarez explores the spread of the foreclosure epidemic with Patchwork Nation director Dante Chinni and Rick Sharga of Realty Trac. (PBS NewsHour) (Youtube)

Wells Fargo admits to mistakes in foreclosure paperwork (KTNV)

Untangling The Complex Foreclosure Mess: New York Times columnist Gretchen Morgenson explains what the foreclosure mess means for the economy. (National Public Radio)

I was a robo-signer (CNN)

Lower housing prices may be here to stay: Scholar says crises have resulted in value reset (The Las Vegas Review-Journal)

Weekly Initial Unemployment Claims decrease -- "however the 4-week moving average has been moving sideways at an elevated level for almost a year - and that suggests a weak job market." [Chart included.] (Calculated Risk blog)

Straight Talk with Mike Shedlock (aka "Mish") -- "Looking ahead, my model suggests we go in and out of deflation for a number of years, just as Japan did, without the economy ever picking up any steam." (

Real Growth in US Stocks, 1871-2010 (The Big Picture blog)

The scary actual U.S. government debt (The Globe and Mail of Toronto)

[Irish airline] Ryanair axes 1,000 Frankfurt jobs (The Press Association)

[Australian telecom company] Telstra to cut 950 more jobs (The Australian)

[New York Governor] Paterson Plans Layoffs for 898 State Workers Next Month (The Wall Street Journal blogs) (WNED)

FSB Draghi: Global Econ Recovery At Risk Due To Forex Policies (The Wall Street Journal)

EU 'haircut' plans rattle bondholders: Investors face large potential losses on eurozone debt under German plans likely to win backing from EU leaders on Friday – risking a boycott of Greek, Irish, and Portuguese bonds. (The Telegraph)

[UK] House prices are dropping in value by more than a typical annual salary, figures by Nationwide showed today. (The Telegraph)

Irish, Spanish Banks Fail to Reduce Dependence on ECB Funding: Euro Credit (Bloomberg)

Irish borrowing costs at new high on debt fears (The Associated Press)

Japan 'Totally Behind' in Fighting Deflation as Fed Gears Up (Bloomberg)


Future of Drought Series (Early Warning blog)

South Pacific Fisheries on Verge of Collapse [over the Next 25 Years] Regional Bloc Warns (The Voice of America)


Reappearance of Huge Plumes of Oil is Making It Hard to Pretend that the Problem Has Disappeared (Washington's Blog)

Spilling the truth about the Gulf oil spill: A presidential commission investigating the BP oil disaster showed that oil services contractor Halliburton knew weeks before the Deepwater Horizon blast that the cement mixture it planned to use to seal the well wasn't holding. NBC's Tom Costello reports. (NBC Nightly News)

The Spill: A joint investigation by FRONTLINE and ProPublica into the trail of problems -- deadly accidents, disastrous spills, countless safety violations -- which long troubled the oil giant, BP. Could the disaster in the Gulf of Mexico have been prevented? (The Public Broadcasting System)

Is it a recovery yet? (Weekly report, 10-28-10)

According to Linda Duessel, a market strategist at Federated Investors in Pittsburgh, quoted here, a recovery would be indicated by initial jobless claims below 500,000.

IT'S A RECOVERY! (And it has been a recovery for every week since the Nov. 25, 2009 report, with the exception of the Aug. 19, 2010 report.)

"The number of people who filed new claims for unemployment benefits fell 21,000 to 434,000 in the latest week, marking the third straight decline and the lowest level since early July, the U.S. Labor Department reported Thursday." (Marketwatch)

"John Ryding, an economist at RDQ Economics, said in a note to clients that the drop is 'encouraging.' But he added that 'we would need to see a couple more weeks of lower claims readings to be comfortable that employment growth is improving.'" (The Associated Press)

"'Certainly these are encouraging numbers,' said Brian Jones, an economist at Societe Generale SA in New York, who forecast claims would drop to 430,000. At the same time, he said, 'given other labor-market readings you want to be hesitant about saying we’ve turned the corner.'" (Bloomberg)

"In fact, there were three worrisome trends from September that still plague us:

"1. Part-timers reached 9.5 million, a new record high

"2. Broad unemployment rate (U-6) stands at 17.1 percent

"3. Long-term unemployed (unemployed for 27 weeks and over) reached 6.123 million, or 4 percent of the civilian workforce and 41.7 percent of unemployed have been jobless for 27 weeks or more

"These numbers don’t even include the '99-ers,' or folks who have exhausted all benefits. So sure, I’ll take a decent week every now and then, but let’s not be hasty and throw ourselves a 'we’re out of the woods on jobs' party just yet." (CBS Money Watch)

Wednesday, October 27, 2010

Wednesday roundup (10-27-10)

Treasury Sees Escalating Risk to Home Prices -- "The uncertainty over the legal status of foreclosed homes in the nation could further depress home prices and delay the recovery of the housing market, the Obama administration said on Wednesday." (The New York Times)

Wells Fargo to Amend About 55,000 Foreclosures -- "After several weeks of insisting its foreclosure processes were sound, Wells Fargo & Company said on Wednesday that it planned to correct and resubmit up to 55,000 improperly filed documents by mid-November." (The New York Times)

How Much Does It Cost the Government To Prevent a Foreclosure? (The Atlantic)

"The Fraud Perpetrated Upon Investors and Insurers Due to Multiple Pledges of Collateral Could Be Massive" (Washington's Blog)

Chris Whalen Welcomes Our New Tyrannical Overlords, Prepares For The Taxpayer Funded Mortgage Insurer Bailout (ZeroHedge blog)

Why Did Banks Give Home Loans to People Who They KNEW Couldn't Pay? (Washington's Blog)

Too big to jail: When banks make false statements on legal documents, isn’t that fraud? (The Honolulu Weekly)

CMBS and loan defaults: moving on up (FT Alphaville blog)

Pimco likens US to 'Ponzi' scheme: US authorities are operating a "brazen" Ponzi scheme in government debt by buying trillions of dollars of bonds to stimulate the economy, according to Bill Gross, managing director of Pimco, the world's biggest bond house. (The Telegraph)

Insider Selling Volume at Highest Level Ever Tracked (CNBC)

Political upheaval rocks eurozone debt markets: The simmering crisis on the eurozone fringes has erupted again as the full impact of debt deflation hits home, testing political solaridity and raising fresh doubts about the workability of Europe’s austerity policies. (The Telegraph)

Greece Said to Fall Short of Its Goal on Deficit (The New York Times) Greece Caught Lying By Eurostat Again, As Budget Deficit Revised From 3% Initially To Over 15% Of GDP (ZeroHedge blog)

Tuesday, October 26, 2010

Tuesday roundup (10-26-10)

Quotes of the Day:

"Woe to them that devise iniquity, and work evil upon their beds! when the morning is light, they practise it, because it is in the power of their hand. And they covet fields, and take them by violence; and houses, and take them away: so they oppress a man and his house, even a man and his heritage. Therefore thus saith the LORD; Behold, against this family do I devise an evil, from which ye shall not remove your necks; neither shall ye go haughtily: for this time is evil." -- Micah 2:1-3 (The Holy Bible)

"The same people who caused the last crisis are still in charge. They'll get us into another." -- Economist Andy Xie. (Caing)

Federal Reserve 'Terrified' of Deflation: El-Erian (CNBC) (Bloomberg)

Consumer confidence, home prices remain weak -- "Data on Tuesday underscored the fragility of the economic recovery, with consumer confidence rising but still weak and home prices falling again after gaining earlier in the year." (Reuters)

Home prices rise more slowly than expected (The Washington Post) House prices: Latest US index falls, a signal of weakness: Reversing four months of gains, a key US house price index fell modestly in August, and some economists see more declines ahead. But the index is still well off the recession's low point. -- "'Home prices broadly declined in August. Seventeen of the 20 cities ... saw a weakening in year-over-year figures,' said David M. Blitzer, chairman of S&P's index committee, in releasing the numbers. 'It does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers’ tax credits.'" (The Christian Science Monitor) "'Confidence is still very depressed,' said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. 'For many it’s still going to feel like a recession until employment comes back.'" (Bloomberg)

Housing Gloom Deepens: Home Sales Rise, but Economists Don't See Prices Bottoming Till Late '11 or '12 (The Wall Street Journal)

Foreclosures push home prices down in many cities: Home prices projected to keep falling in many metro areas until foreclosure flood clears (The Associated Press)

Warning signs of foreclosure crisis were ignored, says FDIC Chairman Sheila Bair (The Washington Post)

Mortgages to Drop Below $1 Trillion in 2011 to [Lowest Level] Since 1996 (Bloomberg)

How Did the Banks Get Away With Pledging Mortgages to Multiple Buyers? -- [L. Randall Wray (economics professor), Christopher Whalen (banking expert with Institutional Risk Analytics), and William K. Black (professor of economics and law, and the senior regulator during the S & L crisis) offer their analysis]. (Washington's Blog)

ATA: Truck Tonnage Index increases in September: "Economy barely growing" (Calculated Risk blog)

Wind turbine leader Vestas announces 3,000 jobs cut (Agence France Presse)

USGS: Far less oil in Alaska reserve than once thought (The Associated Press)

Monday, October 25, 2010

Monday roundup (10-25-10)

Quote of the Day:

"From the time of the Great Depression up and until 1999, the conversion of loans into MBS [mortgage-backed securities] was illegal. The Banking Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) in the United States and introduced banking reforms, some of which were designed to control speculation of the exact nature of what has taken place in the last several years. It was commonly known as the Glass–Steagall Act. Over the years provisions of the Act were eroded little by little, until the Act was finally killed with the last repeal of the section which prohibited a bank holding company from owning other financial companies. This was accomplished with the Gramm–Leach Act. ... The repeal of the Glass-Steagall Act of 1933 effectively removed the separation that previously existed between Wall Street investment banks and depository banks and has been blamed for creating the damage caused by the collapse of the subprime mortgage market that led to the Financial crisis of 2008–present day. ... In and about the years 1998 and 1999, with the final desecration of the Glass-Steagall Act, the mortgage industry introduced new 'products' into the American marketplace ... Mortgage lenders, acting in coordination with one another, relaxed their standards for lending, which made an entirely new class of lower-income individuals eligible to receive loans. This, in turn, artificially drove up property 'values.' As part and parcel of this scheme, investment 'banks' and other lenders accepted appraisals 'documenting' the new, higher values, and approved hundreds of thousands of applications for financing, most of which would normally have been declined." Class Action [by the Western District of Kentucky, Louisville Division] vs Mortgage Electronic Registration Systems, Gmac, Deutsche Bank, Nation Star, Aurora, Bac, Citigroup, Us Bank, Lps, Et Al, pp. 28, 45. Hosted @ (The Law Offices of Matthew Weidner, P.A., Attorneys at Law, St. Petersburg Florida) (Matt Weidner blog)

Sovereign debt outlook grim: analysts -- [Their paper entitled "Sovereign Debt – Reality Finally Hits" says:] "The prospects of growth in the major global economies are dim and the structural issues that need to be dealt with are so immense that overcoming them appears to be close to impossible." (The Financial Post)

Greece Likely to Default Within Three Years, El-Erian Says (Bloomberg)

Roubini: States Are Doomed -- "The possibility of states failing, is no longer a scary hypothetical. Roubini said that many US states are semi-insolvent. According to a report by the Center on Budget and Policy Priorities, forty-eight states addressed shortfalls in their fiscal year 2010 budgets, totaling $191 billion or 29% of state budgets — the largest gaps on record. Famed banking analyst Meredith Whitney is worried about the same thing ..." (CNBC)

Bank of America admits errors in documents: A Dylan Ratigan Show panel [including Prof. William K. Black] discusses why the bank could resume foreclosures as early as this week, despite finding mistakes in documents they reviewed. (MSNBC)

Visit for breaking news, world news, and news about the economy

Foreclose on the Foreclosure Fraudsters, Part 2: Spurious Arguments Against Holding the Fraudsters Accountable by William K. Black and L. Randall Wray (The Huffington Post blog) (Washington's Blog)

Administration failed to tackle foreclosure crisis: Regulators probing lenders -- "[Federal bank bailouts watchdog] Neil Barofsky said Treasury officials are falsely claiming that the program has helped more than 1.3 million homeowners, even though fewer than half of them have received permanent changes to their mortgages through the government's plan." (The Washington Times)

[Meanwhile back at the ranch, it's only worsening ...] U.S. Mortgage Modifications Slow as Fewer Borrowers Qualify, Treasury Says (Bloomberg)

Bair backs ‘safe harbor’ plan on foreclosures: FDIC, bank regulators examining foreclosure paper-work mess (Marketwatch)

Lawsuit wave could hurt housing market: FDIC chief (Bloomberg)

Fed throws its weight into foreclosure probe -- "'We take violation of proper procedures very seriously,' Bernanke said ..."(The Associated Press)

How The Foreclosure Mess Could Create a Downward Spiral for Housing -- "The longer it takes for banks to exit bad loans and recover cash, the higher the level of bad loans on the books of banks will get. As the non-performing loan portfolio grows, banks will need to set aside an increasing amount of capital to balance. This will, in turn, mean banks will make fewer home loans until the backlog of bad loans can be cleared up." (CNBC)

Existing Home Inventory increases 8.9% Year-over-Year -- " Inventory is very high - and the significant year-over-year increase in inventory is very concerning. The high level of inventory and months-of-supply will put downward pressure on house prices." (Calculated Risk blog)

Treasury Shields Citigroup as Deletions Undercut Disclosure -- "'This is an unprecedented crisis for open government,' said [Tom] Fitton, whose Washington-based organization [Judicial Watch Inc., of which he is president,] says it sued the Bush administration 48 times over disclosure issues. 'When it comes to the bank bailout, the Obama administration has made a decision to err on the side of secrecy.'" (Bloomberg)

To fix the economy, let bad banks die: Bad banks, and their bad business model of willful incompetence, are still alive, and dragging down the recovery. (The Los Angeles Times)

UTC to shed 3,300 jobs by end of 2011 (The Hartford Business Journal)

Beware the risk from Europe -- "Too many countries of the EU now have extraordinary levels of economic stress. ... The institutional response to these problems in the euro zone has been less than transparent. Banks were subject to stress tests in June ... That virtually no major bank failed these tests at a time when they were drowning in toxic assets, is inexplicable." (LiveMint)

King Says Banks Must Prevent Debt `Achilles Heel' by Raising More Equity -- "Much, much more equity; much, much less short-term debt." (Bloomberg)

Banks should be broken up, Bank of England Governor Mervyn King warns: Mervyn King, Governor of the Bank of England, has thrown his weight behind breaking up the banks as part of wider reforms to protect the taxpayer from another financial industry meltdown. (The Telegraph)

Taxpayers should never have to bail out banks, says Bob Diamond of Barclays (The Irish Times)

Double trouble for UK house prices? (FT Alphaville blog)

German boom creates ECB policy nightmare as south lags: Blistering growth in Germany is aggravating the growing gap between the eurozone's North and South and may force the European Central Bank to tighten monetary policy long before the high-debt states are ready, Standard & Poor's has warned. (The Telegraph)

Sunday, October 24, 2010

Sunday roundup (10-24-10)

Unemployment Benefits: The 99ers: Even after an extension of unemployment benefits to 99 weeks, many of those about to go off the program are in a quandary. Scott Pelley talks to some of them in Silicon Valley. (CBSNews 60 Minutes)

[This Recession is] Unlike the Others (Financial Armaggedon blog)

BofA Finds Foreclosure Document Errors (The Wall Street Journal)

BofA Hit with Fraudclosure Class Action Suit (The Big Picture blog)

The Subprime Debacle: Act 2, Part 2 by John Mauldin (Credit Writedowns blog)

G7 Share of World GDP Below 50% by 2012 (Infectious Greed blog)

Britain stares into the abyss again as household confidence plummets: PM will seek to reassure the CBI conference today as economists predict double dip and house-price fall. (The Independent) (The Guardian)

Saturday, October 23, 2010

Saturday roundup (10-23-10)

Quote of the Day:

"... Henry G. Cisneros, secretary of Housing and Urban Development during President Clinton's first term, said serious leaders on both sides of the political aisle increasingly believe that the weight of public debt — plus the hundreds of billions of dollars per year required to make interest payments to creditors — could wreck the economy within the decade. 'This is a catastrophe looming,' said Cisneros ..." -- Los Angeles Times correspondent Kenneth R. Harney. (The Los Angeles Times)

BOA Sorts Foreclosures As Investors Threaten: Mediation might not come soon enough for homeowners facing foreclosure on their Bank of America mortgages. The bank halted all foreclosures earlier this month while it sorted out its paperwork problems. This week, the bank said the review is complete and it will resume foreclosures. But there's new pressure now from investors who want to force banks to buy back problem home-loans. Host Scott Simon talks with Joe Nocera, who writes the Talking Business column for The New York Times. (National Public Radio)

Why Is Due Process a Big Problem for Banks? (The Big Picture blog) (The New York Times)

Foreclosures: A Paperwork Fiasco (The New York Times)

Title insurers seek insulation from foreclosures (The Washington Post)

Foreclose on the Foreclosure Fraudsters Part 1 by William K. Black and L. Randall Wray (Credit Writedowns blog)

Housing in Focus: CNBC's Diana Olick has the details on new red flags being raised on the state of home prices and a bearish outlook on the industry, with Gary Shilling, A. Gary Shilling & Co. (CNBC)

Number of Bank Failures: 2010 about to surpass 2009 (Calculated Risk blog)

Cuts [in the UK] threaten a double-dip recession for construction: Cancelled schools and homes could add to the woes of a sector that already lost 500,000 jobs (The Independent)

Germany Accuses US of Indirectly Manipulating Dollar [by means of "monetary easing, or creating more liquidity"] (Reuters) Germany Says Federal Reserve Heading `Wrong Way' With Monetary Easing Push (Bloomberg)

The haves, the have-nots and the dreamless dead (Reuters)

Rare Earth in BlackBerry to Prius Underscores Alarm Over Supply (Bloomberg)

Friday, October 22, 2010

Friday roundup (10-22-10)

Hoenig Says Excessive Liquidity Can Lead to 'Very Bad Outcomes' -- "Hoenig, the Fed’s longest-serving policy maker, who has dissented from every decision of the Federal Open Market Committee this year[,] ... has said he opposes further asset purchases to boost the economy and has argued that the Fed should begin taking steps to lift interest rates from near zero." (Bloomberg)

Clear Capital: "Sudden and Dramatic Drop in U.S. Home Prices" (Calculated Risk blog)

Robo-signing: Just the start of bigger problems (CNN)

Fannie, Freddie want servicers to assume risk - source (Reuters)

Will Foreclosure Crisis Derail Any Recovery in Housing Market? (CNBC)

FDIC Called On [by William K. Black] To Put Bank Of America Into Receivership (The Huffington Post blog)

America’s Top 25 Foreclosure Banks (The Wall Street Journal blogs)

Regulators close 7 banks in Fla., Ga., Ill., Kan., Ariz.; 139 US bank failures this year (The Associated Press)

First Arizona Savings, A FSB of Scottsdale AZ had a troubled assets ratio of 175.6%. (BankTracker)

Hillcrest Bank Overland Park KS had a troubled assets ratio of 571.6%. (BankTracker)

First Bank of Jacksonville of Jacksonville FL had a troubled assets ratio of 463%. (BankTracker)

Progress Bank of Florida of Tampa FL had a troubled assets ratio of 331.4%. (BankTracker)

The Gordon Bank of Gordon GA had a troubled assets ratio of 615.1%. (BankTracker)

The First National Bank of Barnesville of Barnesville GA had a troubled assets ratio of 193.6%. (BankTracker)

First Suburban National Bank of Maywood IL had a troubled assets ratio of 374.1%. (BankTracker)

Fitch puts most of the US banking sector on negative watch (FT Alphaville blog)

Spending Review: [UK's] Kent County Council to cut 1,500 jobs (The BBC)

Default [by Ireland] on senior debt 'would cost State dear': Forced Anglo haircuts will spook markets, brokerage giant warns (The Irish Independent) Ireland Drives New Bargain on Anglo Irish Debt (The New York Times blogs)

Bill Black, Media Critic: And a good one, at that. (Columbia Journalism Review) (Nieman Watchdog)

Thursday, October 21, 2010

Thursday roundup (10-21-10)

Fannie and Freddie's bottomless bailout: Mortgage giants Fannie Mae and Freddie Mac came out Thursday with their first-ever estimate of what the taxpayer bailout of those two companies will cost--and the worst-case scenario could be double what Congress and the White House had estimated. NBC's Tom Costello reports. (NBC Nightly News)

Fannie, Freddie may need $215 billion more in aid (Reuters)

Fannie and Freddie's Foreclosure Barons: How fishy foreclosures earned millions for lawyers like David J. Stern—and made the housing crisis even worse. (Mother Jones) Stern Foreclosure Factory: $260 Million in 2009 Revenues (The Big Picture blog)

Banks Fight Two-Front War Over Flawed Mortgages With Investors, Homeowners (Bloomberg)

What Clayton Knew: The most shocking discovery yet about how the banks hid their toxic mortgages by Eliot Spitzer. (Slate)

[MAP:] Foreclosure Nation: Leading Democrats, such as Senate Majority Leader Harry M. Reid (D-Nev.) whose state was hit hard by the real estate downturn, have called on lenders to halt foreclosures. But the Obama administration says a nationwide delay could devastate the fragile real estate market in places like Florida. (The Washington Post)

Who’s Who in the Foreclosure Scandal: A Primer on the Players (The ProPublica blog)

Xerox Raises Profit Forecast as It Plans 2,500 More Job Cuts (Bloomberg)

Standard Bank [Africa's largest, by assets] says to cut 2,100 jobs (Reuters)

Nokia to Cut [1,800] Jobs as It Tries to Catch Up to Rivals (The New York Times)

Next Mich. Governor Will Face Large Budget Deficit (The Associated Press)

Harvard's Rogoff Says U.K. May Face 'Bad Decade' If Deficit Left Unchecked (Bloomberg)

As Dollar’s Value Falls, Currency Conflicts Rise (The New York Times)

Is it a recovery yet? (Weekly report, 10-21-10)

According to Linda Duessel, a market strategist at Federated Investors in Pittsburgh, quoted here, a recovery would be indicated by initial jobless claims below 500,000.

IT'S A RECOVERY! (And it has been a recovery for every week since the Nov. 25, 2009 report, with the exception of the Aug. 19, 2010 report.)

"Initial jobless claims declined by 23,000 to 452,000 in the week ended Oct. 15, Labor Department figures showed today in Washington." (Bloomberg)

"'The underlying trend in claims still looks resolutely flat, which means we see little chance of any sustained improvement in the private sector payroll numbers any time soon,' said Ian Shepherdson, chief U.S. economist at High Frequency Economics." (CNN)

"The claims level is 'completely unhealthy at this stage of a recovery, further reinforcing the idea that this recovery is anemic, jobless and insufficient,' wrote Dan Greenhaus, chief economic strategist with Miller Tabak, in a research note." (Marketwatch)

Wednesday, October 20, 2010

Wednesday roundup (10-20-10)

'Axe Wednesday': U.K. makes drastic spending cuts: In a sudden and unprecedented redefinition of the role of government, the British finance minister on Wednesday outlined a drastic plan to reverse the country's massive deficit. NBC's Stephanie Gosk reports. (NBC Nightly News)

Osborne to Slash [Almost 500,000 Public-Sector] Jobs, Tax Banks in U.K. Budget Cuts (Bloomberg)

'No Room for Error' in Cameron's Plan to Eliminate British Budget Deficit (Bloomberg)

Record borrowing casts doubt on Osborne's plan (The Independent)

Economist: Double dip [in the UK] is inevitable -- "The Government's cuts have been branded the 'greatest error seen in our lifetime' by a former Bank of England rate setter [= David Blanchflower] who warned the country now faced another recession and a long painful recovery." (The Press Association)

[(Other) UK] Economists warn of risk of double dip recession (The Manchester Evening News)

Bank of England panel split 3 ways on strategy (The Associated Press)

Ireland Risks 'Prolonged Recession' as Budget Squeeze Hits, Institute Says (Bloomberg)

Fed: Economic growth still 'modest' (CNN) (Reuters)

Will Washington Let the Mortgage Put-Back Fiasco Escalate? (The Atlantic)

Battle Lines Forming in Clash Over Foreclosures -- "Banks 'have essentially sidestepped 400 years of property law in the United States,' said Rebel A. Cole, a professor of finance and real estate at DePaul University. 'There are so many questionable aspects to this thing it’s scary.'" (The New York Times)

This Administration Still Doesn't Have A Clue About The Foreclosure Crisis by Bill Black (The Business Insider)

The Loss of Trust and the Great Unraveling To Come (Of Two Minds blog)

Jobless benefits about to crash (Politico)

BC Law student asks for money back (The Boston Herald)

Corn hikes to jolt grocery shelves (The San Antonio Express-News)

The Coming Meta-Boom and Meta-Bust -- One Top Economist's View: Simon Johnson, a former chief economist for the International Monetary Fund and author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, says the recently passed Dodd-Frank Financial Reform Act does little to prevent the biggest financial risk of our time: banks that are becoming "Too Big to Save," either because potential losses could overwhelm government resources or the public will refuse to sanction another large bailout. Either way, the world economy could crash once again. But preceding any crash, watch for a worldwide "meta-boom." Knowledge@Wharton discussed this and several others issues with Johnson, including how shrinking down big banks could ward off financial meltdowns, Ireland's solvency-threatening debt burden and the implications of Basel III.

Part 1 (Youtube)

Part 2 (Youtube)

Tuesday, October 19, 2010

Tuesday roundup (10-19-10)

[Bank of England Governor] Mervyn King warns of 1930s-style collapse -- "a disastrous collapse" [VIDEO] (The BBC)

Mervyn King hints at fresh round of quantitative easing: Bank of England governor says strong case for pumping money into economy to spur growth and stop inflation falling below 2% -- [thus indicating the Bank has deflation concerns] (The Guardian)

Mary Daly of the SF Fed: We are at Risk of a Long period of Sustained Disinflation -- [disinflation = lower rate of inflation that could turn into deflation] (Economist's View blog)

Atlanta Fed President [Lockhart] Says It's Disinflation That Scares Him Most (The Business Insider)

Job, Inflation Picture ["Wholly"] Unsatisfactory: Fed's Dudley (Reuters)

Fed's Fisher Sees U.S. Economy Expanding Near 'Stall Speed' (Bloomberg)

Fed’s Fisher: Outcome of Coming Meeting Is Not Settled (The Wall Street Journal blogs)

Dallas Fed President Richard Fisher remains skeptical of push to inject more cash into financial system -- "'There are limits to what monetary policy can accomplish if fiscal policy blocks the road,' Fisher said. 'Presently, the efficacy of further accommodation using non-conventional policies is not all that clear.'" (The Dallas Morning News)

Whistleblower Speaks On Fraudclosure -- "... 'we have no idea what is in those packages.' This coming from the person who helped pick, diligence and sort through the various loans ..." (ZeroHedge blog)

Task force probing whether banks broke federal laws during home seizures (The Washington Post)

Questions Rising Over Fannie’s and Freddie’s Oversight of Foreclosures (The New York Times)

NY Fed, 8 Firms Threaten BofA Over Mortgage Securities (CNBC) (The Washington Post) Ghosts Of Countrywide And $47 Billion Worth Of Bonds Haunt Bank Of America: The New York Fed, PIMCO and Blackrock want action from BofA on mortgage securities from the bubble days. (Forbes) "'This repurchase issue is now elevated from the undercard to the main event,' said Jefferson Harralson, Atlanta-based bank analyst with Keefe, Bruyette & Woods Inc. 'It makes you think the losses on these repurchases will be higher because the litigants have significant resources and are some of the most powerful institutions in the country.'" (Reuters)

Bank of America's Countrywide Accused of Racketeering in Homeowners' Suit (Bloomberg)

Citi Could Face A $22 Billion Loss On Put-Back Mortgage Bonds (CNBC) Bove: Put-Back Apocalypse Could Cost Banks More Than $150 Billion (CNBC)

Law Expert: MERS Mess Could Have “a Massive Effect on the Economy” (Firedoglake blog) "'MERS is the central device by which the banks have tried to opt out of the legal system and the real-property record system,' U.S. Representative Alan Grayson of Florida said in an interview. 'They have taken it upon themselves, with the supposed consent of the borrowers, to violate a system of property record-keeping that we’ve had going back centuries.'" (Bloomberg)

US commercial real estate hits recession low (FT Alphaville blog) (Housing Wire)

11 State Pension Funds that May Run Out of Money (The Business Insider) (The Economist)

California Pension Promises May Top Taxes by Fivefold, Milken Study Finds -- "'California simply lacks the fiscal capacity to guarantee public-pension payments, particularly given the wave of state employees set to retire' in future years, said researchers Perry Wong and I-Ling Shen in the Milken report." (Bloomberg)

Moody's: Next California budget deficit likely to be $12 billion -- or more (The Los Angeles Times blogs)

Tough Talk About Big [= $73 Million] Budget Deficit [in San Diego] (NBC San Diego)

[South Korea's] Kookmin Bank to cut 3,000 jobs (United Press International)

Monday, October 18, 2010

Monday roundup (10-18-10)

Quotes of the Day:

"The 'currency wars' themselves are merely a skirmish. The big problem is that the core of the world’s financial system has become unstable, and reckless risk-taking will once again lead to great collateral damage." -- MIT Professor Simon Johnson (Project Syndicate)

"This is the end game of our system. Our system is basically exhausted. Our authorities try to prolong the good times that we have been in for several decades by printing paper money, by going into more debt, etc., etc., to support the system and get it growing. But it won't get back to where we've come from. At some point of time something has to give. We just have a basic situation of too much debt outstanding, private and public sector, relative to the size of our economies and one way or another we have to cut that down. Owners of those nominal values will be the big losers." -- Investor Felix Zulauf. (The Business Insider)

Fed's Lockhart: Quantitative Easing Must Be 'Reasonably Large' (The Wall Street Journal) Fed's Lockhart: QE2 is an "insurance policy" against further disinflation (Calculated Risk blog)

Cost To Insure US Govt Debt 30% Higher Since August - Fitch (The Wall Street Journal)

Wells Fargo Sends Out Panicked Instructions To Prepare For Coming Flood Of Mortgage Repurchase Requests (The Business Insider)

Will "Foreclosure-gate" Cost the Banks Billions? (Time blogs)

U.S. regulators press banks over foreclosures (Reuters)

Foreclosuregate - Originated from Rampant "Control Fraud"?: An excerpt from the Hammer Forum presentation "The Great American Bank Robbery" by William Black, former bank regulator, now a PhD white collar criminologist and economics professor. You can watch the entire presentation at: (Youtube)

'Foreclosure Mill' Employees Got Gifts For Altering Documents, Witness Says (The Huffington Post blog) (The Associated Press)

Florida community feels ripple effects as paperwork issues stall foreclosures (The Washington Post)

Still waiting on justice for the kingpins of the Great Recession (The Seattle Times blogs)

Qualified? Home lenders saying not so fast: Credit grinds to halt as well-heeled borrowers have to slog through process (Reuters)

Deutsche Bank's Ackermann Says Investors Want Basel Implementation by 2013 -- [what regulators plan is the beginning of implementation in 2013 to be completed by 2019] (Bloomberg) (Reuters)

Blanchflower Says U.K. 'Desperately in Danger' of Renewed Slump (Bloomberg) (The Guardian) Spending review: Chancellor accused of 'stupidity' (The Scotsman)

Violent French Protests Show Why A New Debt Crisis Is Inevitable (The Business Insider)

$55M in debt, Crystal Cathedral seeks bankruptcy protection (USAToday) "Robert Schuller cited the title of his 1984 book -- 'Tough Times Never Last, But Tough People DO!' -- as he forecast in the statement that the church will overcome its financial difficulties." (Bloomberg)

Sunday, October 17, 2010

Sunday roundup (10-17-10)

& $45 TRILLION DOLLARS (Youtube)

The Foreclosure Mess -- "This is a major, major crisis. The Lehman bankruptcy could be a spring rain compared to this hurricane. And if this isn’t handled right — and handled right quick, in the next couple of weeks at the outside — this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don’t need to pay their debts?" (The Big Picture blog)

Welcome To The Subprime Debacle, Part 2 by John Mauldin (The Business Insider)

Who Suffers From the Foreclosure Mess? Just About Everyone (The Atlantic)

The Rot Within: Our Culture of Financial Fraud and the Anger of the Honest by Charles Hugh Smith (Of Two Minds blog)

[UK] House prices face a 'double dip with no recovery for five years' (The Daily Mail)

Portugal fears more cuts may be needed: minister (Agence France Presse)

Saturday, October 16, 2010

Saturday roundup (10-16-10)

Quotes of the Day:

"If the economy has a negative shock, or continues to grow as slowly as it has, it’s going to be sliding toward deflation." -- Laurence H. Meyer, a former Fed governor. (The New York Times)

"Deflation destroys the risk-taking that capitalist economies need in order to grow. Creative destruction is replaced with what is just destructive destruction." -- Shumpei Takemori, an economist at Keio University in Tokyo. (The New York Times)

U.S. Posts Second-Largest Annual Budget Deficit on Record (Bloomberg)

Is The Congress About To Pass A Bailout, And Save The Banks From The Mortgage-Putback Crisis? (The Business Insider)

Expecting Bailout II? Why It Might Not Happen This Time (Firedoglake blog)

Banks Fumble Amid Flood Of Foreclosures: Banks hired thousands of inexperienced people to deal with the housing crisis. Mistakes were made. (National Public Radio)

Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?: With risky behavior by big finance again threatening economic stability, how can we get things right this time? by Ellen Brown (Yes! magazine) "We e-mailed and phoned the top six banks involved in the mortgage mess, requesting interviews with their CEOs. So far all have declined the request..." (ABCNews)

Foreclosure Crisis Discovered Through Modest $75K Maine Home (CT Watchdog) (The New York Times)

Are ALL Mortgage Backed Securities a Scam? (Washington's Blog)

Two Fed officials [Rosengren and Evans] favor aggressive easing options (Reuters)

Fed's Rosengren: Important to "insure against the risk of deflation" (Calculated Risk blog) Revisiting Monetary Policy in a Low Inflation Environment: Remarks at the Federal Reserve Bank of Boston’s 55th Economic Conference (The Federal Reserve Bank of Boston) (The Atlantic)

Fed's Evans: May Have To Aim For Higher Inflation (The Wall Street Journal) 'Liquidity Trap' Plagues U.S., More Stimulus Is Required, Fed's Evans Says (Bloomberg) Fed's Evans says US needs 'much more' accommodation (Reuters) "Deflation could cripple the U.S. economy especially because it makes debts more expensive, experts say. It also can stop consumers from spending as they wait for prices to fall further." (Marketwatch)

No chance of state bailout [in Ireland] for broke mortgage holders (The Irish Independent)

Portugal Says Economic Growth Will Slow on Austerity (Bloomberg) Portugal's budget to trigger crisis for government (The Irish Times)

OPEC Members Seek $100 Oil to Counter Dollar Weakness (Bloomberg)

Flashback to 1870 as Cotton Hits Peak (The Wall Street Journal)

Friday, October 15, 2010

Friday roundup (10-16-10)

Quote of the Day:

"When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t." -- Thomas A. Cox, retired lawyer, describing GMAC’s foreclosure process and the work of its limited signing officer, Jeffrey Stephan. (The Big Picture blog)

ECB's Stark: Currency race to devalue would be fatal -- "... in the end [it] will bring about protectionism .. Protectionism in the 1930s is what led to the global economic crisis ..." (Reuters)

Inflation slows, keeping pressure on Fed (Reuters)

CPI: Inflation rate stays uncomfortably low -- "'Inflation is running at rates that are too low' [Federal Reserve Chairman Ben] Bernanke warned. 'The risk of deflation is higher than desirable.'" (CNN) (Calculated Risk blog) The Fed's Great Experiment (Comstock Partners)

Fed's Lockhart says U.S. inflation dangerously low (Reuters)

No inflation, no cost-of-living adjustment for Social Security: Second year in a row of no benefit increase (The Baltimore Sun)

U.S. Michigan Consumer Sentiment Index Unexpectedly Declined in October -- "'The consumer is still facing very challenging times,' Mike Bloom, executive vice president of merchandising and supply chain for CVS Caremark Corp., the largest U.S. provider of prescription drugs, said on a conference call Oct. 8. 'The economy and unemployment rates continue to be a challenge. The consumer is time starved, saving money wherever she can and always looking for value.'" (Bloomberg) "Personal financial expectations were near their all-time low, and the steep decline in buying plans was related to uncertainty about consumers' future income prospects," the survey's director Richard Curtin said in a statement. (Reuters)

Credit Card Delinquencies Fall, but Recovery Elusive -- "Fewer Americans fell behind on their credit card payments in September, but the pace of improvement slowed again, accelerating fears that banks will not recover from their consumer loan losses for years." (Reuters)

A gold-plated burden: Hard-pressed American states face a crushing pensions bill (The Economist) Mayors hear dire warnings about future of state cities -- "Pennsylvania cities will begin to topple like dominoes in five to 10 years unless the state Legislature drastically reforms state law controlling employee pensions and other public finances, Allentown Mayor Ed Pawlowski told a municipal association meeting Thursday." (The Reading [PA] Eagle)

Foreclosure logjam hits housing, broader economy -- "'This creates a headwind for a more substantive recovery in housing and the economy as a whole,' said economist Diane Swonk of Mesirow Financial of the slowing foreclosure pipeline." (Reuters)

Bank Of America On Foreclosuregate: "Heightened Risk Of More Dismal Scenario" (ZeroHedge blog)

For foreclosure processors hired by mortgage lenders, speed equaled money (The Washington Post)

Factbox: Countrywide's subprime lending (Reuters)

The Impact of Error From Securitization to Foreclosure by Barry Ritholtz (The Big Picture blog)

How Wall Street Shafted Main Street: CNN --October 11, 2010--Josh Rosner, who heads the research firm Graham Fisher, presents new proof that banks knew they were selling bad loans. (Youtube)

Krugman: "The Question Is Whether Our Economy Is Governed By Any Kind Of Rule Of Law" (Washington's Blog)

Foreclosure Fraud Propped Up Mortgage-Backed Securities -- And Protected Banks That Issued Them (Crooks and Liars blog)

PressTV 1 News Analysis (with Max Keiser): Insight from Paris: Max Keiser, ('failing US Economy is going off-line') London: Peter Carty ('a fool and his money are soon parted') and Atlanta: Cynthia McKinney.('greed, is taking US down') (Youtube)

Overbuilding and High Debt Could Cause Real Estate to Obstruct Economic Growth for Years (National Real Estate Investor)

Office Vacancy Rate Still At 17 Year Highs (CF Economics blog)

U.S. Shuts Banks in Midwest -- "Lenders in Missouri and Kansas were shut by regulators on Friday, bringing the total bank failures in the nation this year to 132." (Bloomberg)

Security Savings Bank, F.S.B. of Olathe KS had a troubled assets ratio of 196.5%. (BankTracker)

WestBridge Bank and Trust Company of Chesterfield MO had a troubled assets ratio of 294.8%. (BankTracker)

Premier Bank of Jefferson City MO had a troubled assets ratio of 426.9%. (BankTracker)

The PIGS Keep Gobbling Up ECB Cash (The Wall Street Journal blogs)

Portugal publishes budget, warns of paralysis (Reuters)

Thursday, October 14, 2010

Thursday roundup (10-14-10)

September home foreclosures top 100,000 for first time (Reuters)

September Bank Foreclosures Reach New Record: Home Foreclosures by Banks Top 100,000 for First Time; Overall Filings Rise 3 Percent (ABCNews)

Foreclosure "Robo-Signers" Unqualified?: Kelly Cobiella reports on an increase of foreclosures pushed through so-called "robo--signers," employees with little or no experience hired to sign paperwork as fast as possible. (CBSNews)

Faulty Paperwork Prompts Deepening Foreclosure Problem: Foreclosures are mounting and attorneys general have launched an investigation into claims of faulty lender paperwork. Paul Solman reports. (PBSNewshour) (Youtube)

Law firm says it has proof of illegal foreclosure system: Stacks of alleged foreclosure paperwork revealed (WPTV)

Foreclosure expert: 'We're in uncharted waters here':'s Rick Sharga discusses the unprecedented foreclosure crisis and the glut of "distressed properties" on the market (NBCNews)

Mortgage Mess May Cost Big Banks Billions (The New York Times)

Wells officer signed up to 500 foreclosures a day-FT (Reuters)

Same Person Forged Billions of Dollars Worth of Mortgage Documents for Bank of America, Wells Fargo, U.S. Bank and Dozens of Other Lenders and Shells (Washington's Blog)

Document Mess Hits Fannie, Freddie (The Wall Street Journal)

Here's That Devastating Report On Bank Of America That Everyone Is Talking About Today (Business Insider)

The Coming Collapse of the Real Estate Market by Charles Hugh Smith (Of Two Minds blog)

Freddie Mac: 30 year Mortgage Rates fall to 4.19 percent, lowest since 1951 (Calculated Risk blog)

'Mortgage Loan Pools' Latest Thing Looming Over Big Banks (CNBC)

Visit for breaking news, world news, and news about the economy

How Hank Paulson's inaction helped Goldman Sachs (McClatchy Newspapers) "[Max] Keiser: First of all let's be clear about something. In a lot of scandals, you can point to one guy, Hank Paulson. When he was the CEO of Goldman Sacks, before he became the treasury secretary. As CEO of Goldman Sacks, he unwound many of these mortgage contracts from the Goldman banks, they were the only bank that didn't get caught up in this scandal and then as treasury secretary, he made sure that Goldman Sacks got bailed out from their positions through AIG and other foreign interests." (Market Ticker) (The Real News)

Time for Criminal Charges To Be Filed . . . by Barry Ritholtz (The Big Picture blog)

Grayson to FBI: Prosecute The Frauds (The Big Picture blog)

Higher Jobless Claims and Wider Trade Deficit Warn of Slowing Recovery (Seeking Alpha blog) (Calculated Risk blog) "The four-week moving average rose from 456,750 to 459,000, the first increase in seven weeks, and while the most recent data may be a bit clouded by the Columbus Day holiday, there seems to be little doubt that the U.S has far too many layoffs given that the economic recovery is more than a year old. As shown above, it is not unusual for jobless claims to remain elevated after a recession ends, but not at these levels." (The Mess That Greenspan Made blog)

Third-Quarter G.D.P. Forecast Revised Down (The New York Times blogs)

Kansas budget deficit could top $300 million (Kansas Reporter)

Cops [in Cincinnati] On Losing End Of $60M Deficit: Police, Firefighters Face Prospective Layoffs (WLWT)

Newark Council Approves Plan to Sell City Buildings ["including firehouses"] to Close Budget Gap (Bloomberg)

Currency wars – ‘The crisis is upon us’ (FT Alphaville blog)

U.S. is currency war's "tomb maker": China economist (Reuters)

Aon Expects to Cut at Least 1,500 Jobs, Incur $325 Million Cost on Hewitt (Bloomberg)

INL cleanup contractor plans to cut 1,000 jobs (The Associated Press)

Opposing view on the economy: TARP made matters worse (USAToday)

Moody's Cuts Outlook On US Newspaper Industry To Negative (The Wall Street Journal)

UK jobs market faces 'depressing' future as workers worry over redundancies: The UK jobs market faces a “depressing and uncertain” future after a new report revealed job insecurity is at record levels and pay freezes are on the up. (The Telegraph)

'Grave danger of financial collapse' says Clarke (The Independent)