Saturday, July 31, 2010

Saturday roundup (07-31-10)

Nearly half of U.S. small businesses think economy got worse [over the past year] (The Denver Business Journal)

Steep decline in GDP growth raises alarms: Corporations flourish in the second quarter but won't for much longer if consumer spending remains weak, economists say. (The Los Angeles Times)

25% of Americans Have Bad Credit Scores (The Big Picture blog)

Growth of Problem Banks (Unofficial) -- "With the number of institutions on the unofficial problem bank list now over 800, here is a review of the growth of the unofficial list ... The number of institutions has more than doubled since early August 2009 - even with all the bank failures (failures are removed from the list)." (Calculated Risk blog)

The Aftermath of the Global Housing Bubble Chokes the World Banking System. Only a Coordinated Worldwide Loan Massacre Could Defeat a Japanese-Style Dead-and-Dying-of-Debt Kamikaze. Hell Approaches Us All, But Only For An Extended Period. (Housing Story)

Chicago faces $654M budget shortfall next year (The Associated Press)

A growth recession (The Financial Post)

China setting milestone as economy passes Japan's (The Associated Press)

Friday, July 30, 2010

Friday roundup (07-30-2010)

IMF Says Spain’s Outlook ‘Uncertain,’ Banks Face Elevated Risks (Bloomberg)

Moody’s Says Spain’s Credit Rating Likely to Slip (The New York Times blogs)

IMF Tells France to Step Up Deficit Fight, Sees Risks to Growth (Bloomberg)

Britons' fears raise double-dip recession chance: The prospect of a double-dip recession in Britain is increasing with every month as consumer confidence dwindles to recession levels, a long-running study signalled. (The Telegraph)

European Stress Tests: The Smoking Gun (Seeking Alpha blog)

GDP slows in second quarter to 2.4% rate: New data show deeper recession, slower recovery (Marketwatch) (Bloomberg) (CNN) (The Economist blogs)

With Recovery Slowing, the Jobs Outlook Dims (The New York Times)

Consumer sentiment sags to lowest since November (Reuters)

Foreclosures Continue To Dramatically Increase In 2010 (Benzinga blog)

Housing policy must be set on sustainable basis by former Treasury Secretary Hank Paulson (The Washington Post)

States go deeper into debt (CNN)

Within the Fed, Worries of Deflation (The New York Times)

Deflation Revisited (The Studio Version) (The Automatic Earth blog)

St. Louis Fed Head on Inflation: Tracking inflation in America, with James Bullard, St. Louis Federal Reserve president (CNBC)














Risk of Deflation?: Discussing the risk of deflation, with James Bullard, St. Louis Federal Reserve (CNBC)














IMF Says Some Small US Banks May Need Capital (Reuters)

Regulators on Friday shut banks in Florida, Georgia, Oregon and Washington, lifting to 108 the number of U.S. banks to fail this year as the industry has struggled to cope with mounting loan defaults and recession. (The Associated Press)

Bayside Savings Bank of Port Sainte Joe FL had a troubled assets ratio of 191.7%. (BankTracker)

LibertyBank of Eugene OR had a troubled assets ratio of 150.9%. (BankTracker)

The Cowlitz Bank of Longview WA had a troubled assets ratio of 179.2%. (BankTracker)

Coastal Community Bank of Panama City Beach FL had a troubled assets ratio of 401.4%. (BankTracker)

Northwest Bank & Trust of Acworth GA had a troubled assets ratio of 304.2%. (BankTracker)

Wheat Jumps Near 14-Month High as Russia Drought Dims Harvest (Bloomberg) Wheat Surges, Heading for Biggest Monthly Advance Since 1973, on Drought (Bloomberg)

Thursday, July 29, 2010

Thursday roundup (07-29-10)

Troubles ahead for world economy: Nobel Prize winning economist Professor Joseph Stiglitz speaks with Kerry O'Brien. (The Australian Broadcasting Commission)



Europe's [Euro] 30 trillion headache: European banks have amassed [Euro] 30 trillion in liabilities and face a serious funding threat over the next two years as authorities withdraw emergency support, according to a new report by Standard & Poor's. (The Telegraph)

Moody's Lowers Outlook On Barely Investment-Grade Iceland (The Wall Street Journal)

U.K. Consumer Confidence Falls to Lowest in Almost a Year on Budget Cuts (Bloomberg)

[UK's] Banks ignore pleas and cut loans to the real economy again (The Independent) Banks starve businesses of cash... but there's no shortage of money for bonuses (The Daily Mail)

Sheriffs Roam Ireland Seizing Cars From Debtors After Collapse -- "'We’re getting orders worth millions,' said John Fitzpatrick, a sheriff in Dublin who has confiscated Jaguars, Range Rovers and Mercedes from indebted businessmen. 'Those people are owned body and soul by the banks.'" (Bloomberg)

AP survey: A bleaker outlook for [US] economy into 2011 (The Associated Press)

Homes keep falling into foreclosure as programs fail to help (McClatchy Newspapers)

Fed official warns of Japan-style deflation risk in U.S. (McClatchy Newspapers) Seven Faces of "The Peril" by James Bullard, president and CEO of the Federal Reserve Bank of St. Louis (St. Louis Fed)

"It's like a replay of what we just went through": Nomura Research Institute's Richard Koo says that what the world is experiencing right now, a "balance sheet recession," is different from traditional recessions. However, Japan recently experienced a similar type of recession, and Koo says we can learn a lot from that country's experiences. Interviewed by Daniel Erasmus at King's College, April 2010. (INETeconomics)



"A Modern-Day Depression": Rosenberg Sees "Tough Slogging" for the Economy (Yahoo! Tech Ticker)



CBO Warns of the Risk of a U.S. Fiscal Crisis (The Heritage Foundation)

Niall Ferguson: Empires Fall Abruptly, And The American Empire Is On The Brink (The Business Insider)

Key data [released tomorrow] will shed important light on path of recovery: Will GDP estimate quell or stoke fears of double-dip? (Marketwatch) [The GDP report comes at 8:30 AM EDT Friday.] (Marketwatch)

ATA Truck Tonnage Index declines in June -- "ATA Chief Economist Bob Costello said that the two sequential decreases reflect an economy that is slowing." (Calculated Risk blog)

No end in sight for Sacramento budget stalemate: The two parties [in California's legislature] are staging stunts as the state's unpaid bills pile up heading into the fifth week without a spending plan. -- "'Every passing day of political paralysis leads us closer to a completely avoidable fiscal meltdown,' state Controller John Chiang, a Democrat, warned officials in a written statement this week." (The Los Angeles Times)

Is it a recovery yet? (Weekly report, 07-29-10)

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.)

'First-time claims for unemployment insurance dropped by 11,000 to a seasonally adjusted 457,000, the Labor Department said Thursday." (The Associated Press)

Wednesday, July 28, 2010

Wednesday roundup (07-28-10)

Schwarzenegger declares California fiscal emergency (Reuters) Schwarzenegger orders a new round of unpaid furloughs: More than 150,000 California workers will be forced to take off three days a month — the equivalent of a 14% pay cut — after a financial state of emergency is declared over the lack of a budget. (The Los Angeles Times)

Renesas Electronics to cut 10 pct jobs [out of 50,000] - Nikkei (Reuters)

More Than 1,300 Space Shuttle Workers Get Layoff Notices (Space.com)

Fed survey: Recovery slows in some places (The Associated Press)

Durable Goods Orders Fall as Growth Picture Dims (Reuters)

GSE Foreclosure [Fannie Mae and Freddie Mac] Starts Start Coming Faster in 2010 (Housing Wire)

Morgan Stanley: More Irresponsible Mortgage Lending, Please (The Mess That Greenspan Made)

The short-term risks of growing national debt: The Congressional Budget Office estimates that a growing level of debt would increase the likelihood of a sudden economic crisis. (The Christian Science Monitor blogs) Federal Debt and the Risk of a Fiscal Crisis (The Congressional Budget Office)

Decline and fall of the US by Niall Ferguson (The Age)

$837 Billion in Cash [being held by nonfinancial S&P 500 companies] -- "It shows you just how scared they are." (Crossing Wall Street blog)

It's heartbreaking how the banks are starving businesses of cash, says [Bank of England Governor Mervyn] King (The Daily Mail)

Mainstream Economists: "Mission Accomplished" (Washington's Blog)

Repent -- The End Is Near -- "The world is headed for a Depression much greater than the 1930s." (American Thinker)

Tuesday, July 27, 2010

Tuesday roundup (07-27-10)

Quote of the Day:

"For me, a double-dip is another recession before we've healed from this recession ... The probability of that kind of double-dip is more than 50 percent." -- Robert Shiller, professor of economics at Yale University. (Reuters)

Nowhere to run, nowhere to hide, in Europe -- [interview with Satyajit Das, an internationally renowned derivatives expert] (DNA India)

China banks face 'serious' default risk: report (Agence France-Presse)

Consumer confidence falls to lowest since February -- "It's all about jobs." (The Associated Press)

Drip after drip of deflation data (The Telegraph)

2nd Half Slowdown Update (Calculated Risk blog)

Cities' plea: We need $75 billion or we'll lay off 500,000: City and county officials said Tuesday that they will face massive layoffs unless Congress passes the $75 billion Local Jobs for America Act. But the bill's prospects look dim. (The Christian Science Monitor) (Bloomberg) Local Governments Cutting Jobs and Services: Job losses projected to approach 500,000 (National League of Cities)

Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade (Bloomberg)

'Tremendous' Distress in Commercial Real Estate: CEO -- "Today 'the blood is really in the boardroom behind closed doors where people are negotiating to solve problems,'" Scott Rechler, CEO of RXR Realty, told CNBC. (CNBC)

Krugman: Policymakers' Caution May Be Leading Us To 'Long-Term Jobs Catastrophe' (Crooks and Liars blog)

[The Optimism of Analysts is] Good for Something (Financial Armaggedon blog)

U.S. Long-Term Debt Situation Is One of the World’s Worst (The Heritage Foundation)

The fear economy (CNN)

Monday, July 26, 2010

Monday roundup (07-26-10)

Europe's banks still stressed: Borrowing costs rose Monday in a sign that Friday's stress tests failed to ease financial fears. (Fortune blogs)

Europe's 'Stress Tests' Relied on Mild Assumptions (The Wall Street Journal) (The Telegraph) (CNBC)

Getting Real with "the Realist": Why the European stress tests were not stressful enough, with Nouriel Roubini, Roubini Global Economics chairman. (CNBC)














Chicago Fed: Economic activity declined in June (Calculated Risk blog)

New Home Sales: Worst June on Record (Calculated Risk blog)

Don't hold your breath for a bounce in home prices (The Associated Press)

Double dip in housing already here? (The Boston Globe)

David Rosenberg raises odds of double-dip recession to 67% (The Financial Post) Double-Dip Recession? One Reliable Measure Says It's Inevitable (Daily Finance)

U.S. may face deflation, a problem Japan understands too well: Economists worry that America could be edging closer to the trap that cost the other nation more than a decade of growth. (The Los Angeles Times)

Underestimating Deflation (Seeking Alpha blog)

Deficit-cutting ax may fall on Social Security: Cuts in Social Security benefits might be used as one means to reduce the burgeoning federal budget deficit. But are there better ways to deal with the problem? (The Christian Science Monitor)

United Technologies to cut another 1,500 job cuts (The Associated Press)

Taleb: Government Deficits Could Be the Next 'Black Swan': In a new edition of The Black Swan, author Nassim Nicholas Taleb warns against depending "on financial assets as a repository of value" (Business Week)

Four Shocking Bombshells Bernanke Did NOT Tell Congress About Last Week by Martin Weiss (Money and Markets)

Friends and Neighbors: How do you choose between paying your bills and feeding your kids? NBC's Ann Curry travels to Ohio to take a personal look inside the lives of families who have lost jobs, homes and dreams. [FIVE VIDEOS] (NBCDateline)

Sunday, July 25, 2010

Sunday roundup (07-25-10)

EU Stress Tests May Be 'Missed Opportunity' to Fortify Banks (Bloomberg)

European banks brace for reaction to stress tests: Europe's banks face the only test that matters this week as global investors issue their verdict on eurozone lenders following the stress test results published by EU regulators late on Friday. (The Telegraph)

Despite Flaws, Stress Tests May Satisfy Markets (The New York Times) (The Wall Street Journal blogs)

William Black: "Unlimited Taxpayer Bailout" of FDIC Coming; FDIC Shell Game Hides the Bailout (Mish's Global Economic Trend Analysis blog)

Public pensions put state [of California], cities in crisis (San Francisco Chronicle)

Deflation Defies Expectations — and Solutions (The Wall Street Journal)

Economic Meltdown: The Final Phase (SHTFPlan)

Saturday, July 24, 2010

Saturday roundup (07-24-10)

Europe's media react to bank stress test results (Reuters)

Watch out, the great £50bn property unload is about to begin: [UK] Banks are ready to purge unwanted commercial property from their balance sheets as part of the normal boom and bust cycle - only this time around the world has changed. (The Telegraph)

Deflation 'main threat' to Japan economy (Agence France-Presse) Japan's export reliance adds to deflation (United Press International)

[US] Federal budget deficit to exceed $1.4 trillion in 2010 and 2011 (The Washington Post)

Muni 'Race to Bottom' May Cost $1 Trillion, Former Los Angeles Mayor Says (Bloomberg)

Mass Layoffs Up in June (The Atlantic)

20% of Americans hit by major economic loss (CNN)

When will unemployment checks be mailed? Not soon -- "'States will move as quickly as possible to resume [federal unemployment] payments, but it will not happen overnight,' said Rich Hobbie, executive director of the National Association of State Workforce Agencies. 'Because the program has lapsed for over a month, state workforce agencies need to ensure that claimants qualify for all retroactive payments.'" (CNN)

Schools plan layoffs now that much of stimulus aid is gone -- "'Unless additional recovery money is provided, the education jobs crisis that had been averted to some extent this year may emerge in full force in the coming school year,' said Jack Jennings, president and CEO of the Center on Education Policy." (Phoenix Business Journal)

Offices at the top are going empty: Penthouse floors are vacant in some of the best office buildings in Los Angeles County, a sign of the troubled economic times and the gulf between asking prices and what tenants are willing to pay. (The Los Angeles Times)

Friday, July 23, 2010

Friday roundup (07-23-10)

Seven European banks fail stress tests: Lenders had shortfall of around $4.5 billion under toughest test (Marketwatch)

It's Official: The Stress Tests Were A Joke (The Business Insider)

EU Regulators Call Tests Rigorous But Ignore Sovereign Default (The Wall Street Journal) EU Stress Tests Only Consider Bank Trading Book Bond Losses -- "'The tests need to be across the board -- including the banking book,' said Andrea Williams, who manages about 1.1 billion pounds ($1.69 billion), including BNP Paribas SA and Credit Suisse Group AG shares, at Royal London Asset Management in London. 'It does undermine the whole credibility of the tests.'" (Bloomberg) "'The stress tests do not seem that stressful and it is looking more like a political whitewash rather than a genuine attempt to reassure financial markets that eurozone banks have balance sheets that could really withstand sovereign risk shocks,' said Neil MacKinnon, global macro strategist at VTB Capital. 'They are delaying the day of reckoning,' he said." (The Associated Press) "Only sovereign debt held in trading books was stress tested. ... let's suppose Spain does go down... well then the whole system is probably screwed, and no capital raising (today) will really help. In other words, there are probably only two scenarios: the optimistic path, and the nuclear scenario. Why bother stress testing for the end of the world?" (The Business Insider) "Former Bank of England policy maker David Blanchflower said the criteria suggest a 'relatively loose stress test.' 'It strikes me that the scenarios being tested aren’t particularly tough,' Blanchflower said. 'What if it’s much worse than that? There are too many questions and it doesn’t look that convincing.'" (Bloomberg)

Italy Banks Pass EU Stress Test With Slim Margin (The Wall Street Journal)

Hungary Credit Rating May Be Cut to Junk After IMF Talks Fail (Bloomberg)

Unfunded Entitlements ‘r’ Us (Infectious Greed blog)

OECD Economies Struggle To Restore Fiscal Order: Spending cuts and tax increases are weighed against political worries and fragile recoveries. (Forbes)

[US] National Debt to Top 100 Percent of GDP (CBSNews)

ECRI Leading Indicator: Double Dip Confirmation? (Expected Returns blog) "The index's annualized growth rate fell to minus 10.5 percent from minus 9.8 percent a week ago, its lowest level since May 15, 2009, when it stood at minus 11.1 percent." (Reuters)

The Jobless Effect: Is the Real Unemployment Rate 16.5%, 22%, or. . .? (Daily Finance)

Public sector losing jobs in this recession: report (Reuters) State and Local Government Employment Is Down in 31 States – And Up In 18 – Compared With A Year Ago (Rockefeller Institute of Government)

Can the American mortgage market survive without taxpayer support? (The Economist) The next big task of financial reform: dismantling Fannie and Freddie (The Economist)

Mortgage Securities It Holds Pose Sticky Problem for Fed -- "Holding the securities could cost the Fed a lot of money and hamper its ability to fight inflation, while selling the securities could drain needed money from the still-weak economy." (The New York Times)

Does GM Read History Books, Or Even Newspapers? -- "... GM’s move back into the subprime auto finance market illustrates how quickly people forget the past. 'Subprime lending pays off when the economy is improving but when the business cycle inevitably turns (as every economy does), the loans turn sour, the losses are crushing, and the cycle starts all over again,' [Chad] Brand [founder and president of Peridot Capital] says. 'To me this highlights one of the core problems our domestic economy has developed over the last 10 or 20 years.'" (Market Talk blog)

TARP pay czar criticizes big bank bonuses but won't seek refund of bailout money: Kenneth R. Feinberg calls payments to executives of Goldman Sachs, Bank of America, Wells Fargo and other firms that received bailout funds 'ill-advised,' but says they don't rise to the level of 'contrary to the public interest,' which would require him to demand repayment. (The Los Angeles Times)

U.S. Bank Failures Reach 103 So Far This Year -- "a faster pace of closures than last year when the century mark was not reached until October." (Reuters)

Sterling Bank of Lantana FL had a troubled assets ratio of 185.4%. (BankTracker)

Crescent Bank and Trust Company of Jasper GA had a troubled assets ratio of 414.7%. (BankTracker)

Williamsburg First National Bank of Kingstree SC had a troubled assets ratio of 210.3%. (BankTracker)

Thunder Bank of Sylvan Grove KS had a troubled assets ratio of 40.2%. (BankTracker)

Community Security Bank of New Prague MN had a troubled assets ratio of 388.2%. (BankTracker)

Home Valley Bank of Cave Junction OR had a troubled assets ratio of 102.2%. (BankTracker)

SouthwestUSA Bank of Las Vegas NV had a troubled assets ratio of 519.4%. (BankTracker)

Three of every four oil and gas lobbyists worked for federal government (The Washington Post)

Thursday, July 22, 2010

EUROPEAN BANK STRESS TEST RESULTS (07-23-10)

These are to be released at Noon Eastern Daylight Time (4 pM Greenwich Mean Time) on Friday July 23. (The Wall Street Journal)

Thursday roundup (07-22-10)

Stress tests [results of which are to be released Friday] hold key for European financial markets: Recovery seen at risk if tests are not viewed as credible (Marketwatch) "'The more transparency, the more important that the results will be,' said Peter Braendle, who helps manage $51 billion at Swisscanto Asset Management in Zurich. 'If the methodology is a black box and we just get some results, that will not be very helpful.'" (Bloomberg)

EU banks set to disclose government bond holdings in test -- "although sources said there was some last-minute haggling among German banks over how much to reveal." (Reuters)

Japan – Past the Point of No Return -- "Japanese Debt to GDP by Far THE Highest in the Developing World" (The Big Picture blog)

The One Economic Chart That Really Matters [Total U. S. Debt as a % of GDP] (Seeking Alpha blog)

Fiscal Crises and Imperial Collapses: Historical Perspective on Current Predicaments by Niall Ferguson, Harvard University (Scribd)

President Obama signs six-month extension of emergency unemployment benefits (The Washington Post)

Leading indicators fall in June for 2nd time in past 3 months, suggesting recovery will weaken (The Associated Press)

Existing Home Inventory increases 4.7% Year-over-Year -- "This was another a weak report. ... If months-of-supply increases sharply as I expect, then there will be additional downward pressure on house prices." (Calculated Risk blog) "Given the headwinds of excess inventory and high unemployment, there is absolutely no chance the housing market is coming back anytime soon." (Expected Returns blog)

Bad credit? GM buys AmeriCredit to do sub-prime loans (USAToday)

Lindsey: U.S. entering deflation trap, to ease more -- "Former Federal Reserve board member Lawrence Lindsey said on Thursday it will be 'obvious' by the end of this year that the U.S. economy has entered a 'deflationary trap.'" (Reuters)

DEFLATION!! (Comstock Partners)

Most Americans Think Economy Yet to Hit Bottom (CNBC)

Newark cutting toilet paper to help close $70 million budget deficit (New Jersey Newsroom)

Is it a recovery yet? (Weekly report, 07-22-10)

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.)

"The number of people applying for initial state unemployment insurance benefits rose 37,000 to 464,000 in the week ended July 17, the Labor Department reported Thursday. Economists surveyed by MarketWatch had expected an initial claims level of 450,000." (Marketwatch)

"The sharp increase comes after claims fell steeply two weeks ago to their lowest level since August 2008. But much of that drop was driven by temporary seasonal factors and not an improving job market." (The Associated Press)

"'It’s going to be very slow progress in the labor market,' Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. 'Businesses are being just too conservative in hiring. Sales are subdued so employers don’t want to get overextended.'" (Bloomberg)

Wednesday, July 21, 2010

Wednesday roundup (07-21-10)

Quote of the Day:

"Everyone is starting to realize that this is going to be a much longer, much more difficult path to recovery. It’s really quite fragile and vulnerable in a way that we haven’t seen in our lifetime." -- William Cunningham, head of credit strategies and fixed-income research at Boston-based State Street Corp.’s investment unit, which oversees almost $2 trillion. (Bloomberg) (Re: "in our lifetime": He is a 1983 graduate of Brown University.)

Matthew Simmons:
"We've Now Killed The Gulf Of Mexico"



Federal Reserve ready to step in if economy falters again, Bernanke says -- "It was the first time the Fed chairman has publicly opened the door to further policy steps to bolster the recovery..." (The Washington Post)

The Fed's toughest foe: Deflation (CNN)

US Economic Outlook: The Second-Half Slowdown begins (Goldman Sachs)

Threat of double-dip days ahead: As the world moves towards a sharp slowdown, any additional shock could tip it into full-fledged recession (LiveMint)

Housing Market Stumbles: Construction Slows, Inventories Build Amid Weak Job Growth, Tax-Credit End (The Wall Street Journal)

Existing Homes: Months of Supply and House Prices -- "This is a key reason why I expect house prices to fall further later this year as measured by the Case-Shiller and CoreLogic repeat sales house price indexes." (Calculated Risk blog)

Government watchdogs: Obama failing to help at-risk homeowners (The Washington Post) (Reuters)

Bankruptcy can save your house from foreclosure (CNN)

AIA: Architecture Billings Index shows contraction in June -- "This suggests the slump for commercial real estate design is ongoing. According to the AIA, there is an 'approximate nine to twelve month lag time between architecture billings and construction spending' on non-residential construction. So there will probably be further declines in CRE investment into 2011." (Calculated Risk blog)

Applied Materials cuttting up [to] 500 jobs (Marketwatch)

No Sales Means No Jobs Means No Recovery (Bloomberg-Business Week blogs)

Texas Budget Mess Now as Bad as California's (Texas Observer)

Europe's dangerous contempt for markets (The BBC blogs)

Tests of EU banks are a whitewash, some critics say: Experts have raised concerns about the credibility of the banking 'stress tests' in Europe, wondering if they are tough enough or focused on the right issues. (The Los Angeles Times)

Bank stress tests could end up a no-win situation for EU (The Irish Times)

France, Germany Urge Crackdown on Eurozone Debtors (The Voice of America)

Hungary PM jilts IMF, to discuss budget with EU (Reuters)

Swiss endure safe-haven agony from euro flight: Switzerland is fighting a losing battle to stop massive inflows of funds from investors fleeing sovereign risk in the euro area and the rest of the world, raising the risk of a violent spike in Swiss franc if global debt jitters return. -- "'If we have a US slowdown with a fresh financial crisis, everybody is going to want to buy the Swiss franc, along with bottled water, tins hats, and a shotgun,' said David Bloom, currency chief at HSBC. 'Now that Japan’s debt is around 200pc of GDP the franc has displaced the yen as the ultimate safe haven.'" (The Telegraph)

Gold Coin Sellers Angered by New Tax Law: Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions (ABCNews)

The Volcker Rule: Obama’s economic adviser and his battles over the financial-reform bill. (The New Yorker)

Agora Symposium Slideshow (The Big Picture blog)

The Bicycle's Big Comeback: Why Two-Wheelers Are Key for Reducing Oil Dependence: Bikes lower air pollution, reduces obesity, do not emit climate-disrupting carbon dioxide, and is priced within the reach of the billions of people who cannot afford a car. (Alternet)

Tuesday, July 20, 2010

Tuesday roundup (07-20-10)

New residential construction drops in June: Housing starts fall 5% overall from May, single-family home construction is down 0.7% and apartment construction declines nearly 20%, the government says. It's the latest sign of trouble in the housing market. -- "'The housing industry remains stuck in a rut, with both sales and construction activity moribund,' said Michael D. Larson, an interest rate analyst with Weiss Research. 'Builders simply lack the confidence — or in some cases, the financing — to ramp up construction, especially in the wake of the home buyer tax credit's expiration." (The Los Angeles Times) "'Despite record-low mortgage rates, housing is at risk of a double dip [recession] unless job growth strengthens soon,' wrote Sal Guatieri, a senior economist for BMO Capital Markets." (Marketwatch) (The Atlantic)

Sputtering Obama Foreclosure Program May Threaten Recover (The Huffington Post blog)

Unemployment aid won't be enough to boost recovery (The Associated Press)

The Scariest Unemployment Graph I've Seen Yet (The Atlantic)

Lowest 10-Year Inflation Rate in Forty Years... (Bespoke Investment Group)

The U.S. Is On The Edge Of A Growing Deflationary Sinkhole (Before It's News, via Veterans Today)

4 Reasons To Fear Deflation (U. S. News & World Report blogs)

BofA’s 2nd Quarter: The Bloodshed Continues -- "Investors are running scared after Bank of America declared that it is going to cost an unexpectedly large sum to adhere to the recently passed financial-regulation bill." (The Wall Street Journal blog)

Why Goldman Sachs's Bum Quarter Could be a Sign of Deflation -- "It’s dangerous to read too much into a single quarter’s results, but Goldman’s latest numbers show the same tell-tale signs of stagnation visible at fellow industry bellwether JPMorgan Chase (JPM) and other big banks: Falling revenue, diminished trading activity, anxious clients sitting on their cash. In other words, it’s increasingly clear that faltering demand in the economy at large — the main cause of deflation — is hitting some of the financial industry’s most resilient firms." (BNET)

Profits are so last quarter: Wall St. eyes revenue: Wall Street wants to see sales growth, not just fatter profits, as evidence of a rebound -- "'It all comes down to jobs -- that's the bottom line,' [Howard Silverblatt, an analyst with Standard & Poor's] said. 'Without the jobs, there is no recovery.'" (The Associated Press)

Residents irate as Bell council requests report on salaries: Community groups were demanding the resignation of Bell's city council members, most of whom make $100,000 a year; police chief, who makes $457,000; and city manager, who makes $787,637. (The Los Angeles Times) California Official's $800,000 Salary in City of 38,000 Triggers Protests (Bloomberg) City of Bell Salaries, Eric Spillman Reports: City Manager makes twice as much as President Obama. (KTLA)

 

E.U. Test May Need to Fail Some Banks -- "'It is a bit concerning that authorities around Europe are all sounding quite confident about the ability of their banks to sail through the tests,' said Marie Diron, an economist in London who advises the consulting firm Ernst & Young. 'All banks passing the tests would mean the tests were useless.'" (The New York Times) "'There is every likelihood that these tests will not be stressful at all, which will leave financial markets suspicious that policymakers and regulators are not engaging in a transparent and honest assessment of banks' true balance sheet positions, especially with regard to sovereign risk exposure,' said [Neil Mackinnon, global macro strategist at VTB Capital]." (The Associated Press)

Tough medicine needed as UK's debt pile grows, warns [UK Chancellor of the Exchequer George] Osborne (The Independent)

George Osborne 'has raised risk of double-dip' with emergency budget (The Daily Mail)

Double dip fears as [UK] bank loans dry up: George Osborne and Vince Cable anxious that rationing of lending to small businesses could reverse recovery from recession but banks claim there is no demand for credit (The Guardian)

In Greece, New Austerity Measures Rile Many: The economic crisis in Greece is bringing a new wave of anger among its citizens over austerity measures to control its debt. Paul Solman looks at how Greek citizens are coping with the debt crisis and speaks with Prime Minister George Papandreou. (PBS Newshour)



Russia Extends Drought Emergency to Six More Regions (Bloomberg)

Double dip in the Baltic [Dry Index] -- "Perma-bears have always argued that this [recovery] was built on unstable foundations, and would tip over as government stimulus fades. We will find out over the next three or four months whether they are right." (The Telegraph blogs)

Monday, July 19, 2010

Monday roundup (07-20-10)

Stress tests are debt-crisis hurdle for Europe -- "The hope is that the results are credible enough to lift the cloud of uncertainty surrounding the exposure of European banks to the debt crisis." (The Associated Press)

EU stress tests: for banks or governments? (Reuters blog)

German Institution Said To Fail Stress Test (Credit Writedowns blog)

Moody's Downgrades Ireland (Calculated Risk blog) (The Wall Street Journal blogs)

Hungary now Europe's austerity test case after IMF row -- "The collapse of Hungary's deal with international lenders marks the greatest challenge by a government so far to the Europe-wide orthodoxy of austerity, with markets and other nations watching closely." (Reuters) "IMF backing has increased confidence and helped Hungary finance its debt on financial markets. Without that support, investors will demand higher yields, making it more expensive to sell bonds, said Daniel Bebesy, who helps manage $1.5 billion in Hungarian government debt at Budapest Investment Management. The government plans to sell 50 billion forint ($223 million) of three-month Treasury bills today. 'Hungary needs the safety net that an IMF program provides,' Bebesy said yesterday in a phone interview. 'Without this net, we could get a much bigger slap in the face if global developments turn negative.'" (Bloomberg)

Hungary's IMF revolt augurs ill for Greece: The collapse of Hungary's talks with the International Monetary Fund and the EU is a chilly reminder that sovereign debt crises do not end with a rescue package and a click of the fingers. As austerity drags on for year after year, democracies react. (The Telegraph) "The defiant stance, coming months ahead of important local elections, illustrates the fatigue — and resistance — that a continued push for fiscal rectitude in the wake of the sovereign debt crisis risks engendering across Europe." (The New York Times) "'This news is very negative,' said Gabor Orban, who helps manage $4 billion in emerging-market debt at Aegon Fund Management in Budapest. 'This won’t be the type of selloff where the smart investor is buying. The first reaction will be panic, then the market may calm down.'" (Bloomberg)

Will Greek Austerity Plans Buckle Under Pressure?: As part of his ongoing reporting on Making Sense for financial news, Paul Solman examines -- with some country and western flair -- how Greece's debt woes began and what's being done to contain the problems from spreading throughout Europe and the world. (PBS NewsHour)



When Will Consumers Start Spending Again? Try 2013 (CNBC)

Bank Failures Driving FDIC to Insolvency (Seeking Alpha blog)

Housing Market Index Hits 15-Month Low -- After a brief 'sugar high' from this spring’s expiring homebuyer tax credit, the outlook from home builders is back to a level last seen around the middle of 'The Great Recession', casting more doubt on where the U.S. economy is headed during the second half of the year." (The Mess That Greenspan Made blog) (Calculated Risk blog)

Real Estate Money Is Scarce for Private Equity -- "Private equity real estate fund-raising fell in the second quarter to its lowest level since 2004, suggesting that a recovery has yet to take root in the investment property market." (The New York Times)

Cities Rent Police, Janitors to Save Cash (The Wall Street Journal)

The Real Reason Tim Geithner Is Afraid Of Elizabeth Warren (The Huffington Post blog via The Daily Bail blog)

The US Will Collapse Before Moody's Gets Around To Downgrading Its Debt (The Business Insider)

What If He's Right? -- "I'm not really equipped to evaluate Matt Simmons's warnings about the exact nature of the Macondo blowout and what might happen in the months ahead. But I am confident, having met the guy and corresponded with him and read his books, that he is a straight shooter. I'm sure that he is sincere in proclaiming his extreme discomfort with the position he's taken." (James Howard Kunstler's blog) Interview with Matt Simmons at King World News (King World News)

Sunday, July 18, 2010

Sunday roundup (07-18-10)

German and Spanish banks could face fund-raising call after stress tests (The Guardian)

Stress-testing Europe's banks won't stave off a deflationary vortex: Euroland's authorities are inflicting a triple shock of fiscal, monetary, and currency tightening on a broken economy. They are doing so in a region where industrial output is still 14pc below its peak, where growth barely scraped above zero over the winter "recovery", and where youth unemployment is at 40pc in Spain, 35pc in Slovakia, 29pc in Italy, and 26pc in Ireland. (The Telegraph)

BP canvassing investors on possible break up - report (Reuters) (Agence France-Presse)

Citi: Right Now Analysts Are Slashing Earnings More Often Than Increasing Them (The Business Insider)

Comparisons to the Great Depression keep popping up -- "There is a nagging sense that the roller coaster ride investors have been on since the 2008-09 financial meltdown may not be over — and that a '30s-style boom-bust, boom-bust cycle can't yet be ruled out — as the economy and markets muddle through the difficult post-bubble workout period." (USAToday)

When Being Out of Work Becomes a Chronic Condition (The New York Times)

Office vacancies rise, rents drop in Southland [= Southern California] again: An oversupply of space, businesses' reluctance to add costs and landlords' eagerness to keep good tenants leads to some of the cheapest lease rates in years. In the Inland Empire, vacancy tops 25%. (The Los Angeles Times)

The next foreclosure crisis: Alison Stewart sits down with Elizabeth Warren, attorney, Harvard Law professor and chair of the Congressional Oversight Panel, in a Blueprint America special report about the potential of a national commercial real estate foreclosure crisis. (PBS)

Watch the full episode. See more Need To Know.



Three little pigs: How entitlements will destroy us -- "Our national debt recently topped the $13 trillion mark. That amounts to nearly 90% of this country’s GDP; $72,000 in debt for every household in America. And that’s the good news." (The New York Post)

Saturday, July 17, 2010

Saturday roundup (07-17-10)

Quote of the Day:

"There is an ongoing debate among investors and economists about whether the US economy is in the midst of an economic recovery or at the edge of a double-dip recession. Both sides of the debate seem too optimistic as even those who are cautious about the economy are only assigning a 50% chance to the double dip scenario. In our view, the economy is in a depression and, therefore, the argument should be centered on how long it will take people to realize the extent of the economy’s problems." -- Daniel Aaronson and Lee Markowitz, CFA (Continental Capital Advisors, LLC)

[US] Municipal Bond Defaults Continue at Triple the Typical Rate, Lehmann Says (Bloomberg)

Bank stress tests to shed light on Europe's economic health -- "The results could well show that European banks need tens of billions of dollars in help, a prospect that could further dim growth in an already lagging part of the world economy and force banks and their host governments to present a clear plan for paying the tab." (The Washington Post)

Bank stress tests will fall flat if they fail to cheer Asian investors: Markets will fear the worst if testing European banks fails to reveal any weaknesses. But if problems are found, wider systemic worries could surface. (The Telegraph)

IMF and EU Suspend Talks With Hungary -- "Suspension of talks means Hungary will not have access to remaining funds in its $25.1 billion loan package, created by the International Monetary Fund and European Union and which it now uses as financial safety net, until the review is concluded." (Reuters)

IMF: Hungary Continues To Face Fiscal Challenge (The Wall Street Journal)

Hungary must step up efforts against deficit: EU (Agence France-Presse)

Europe freezes out Goldman Sachs: Shocked by past deals with Italy and Greece, governments are excluding the Wall Street bank from sovereign bond sales (The Observer)

China Has Been Covertly Funding A Housing Bubble Five Times Larger Than That Of The US: 65 Million Vacant Homes Uncovered (ZeroHedge blog)

The Debt Supercycle by John Mauldin (Credit Writedowns blog)

Interview with Matthew Simmons: Founder and Chairman of the Board of the Ocean Energy Institute & Former Chairman Emeritus of Simmons & Company International on the Gulf of Mexico oil leak. (King World News audio file)

Friday, July 16, 2010

Friday roundup (07-16-10)

Quote of the Day:

"Only a fool or the most visually challenged can’t see that growth is moderating significantly. Forecasts for a slowing towards 2% real GDP growth are no longer rare. Canada too is softening and the cracks are starting to deepen in the housing market. This could get exciting, and the stock market, as it was in 2000 and 2007, is seemingly oblivious." -- David Rosenberg, chief economist & strategist, Gluskin Sheff (Scribd)

Confidence Slides, Heightening Risk of a Slowdown -- "'It feels like a wipeout all of a sudden,' said Jonathan Basile, an economist at Credit Suisse in New York who had the lowest forecast in the Bloomberg survey. 'We’ve basically wiped out all the gains we’ve had for some time. It builds the case for moderate growth in consumer spending in the second half.'" (Bloomberg) "The Reuters/University of Michigan consumer sentiment index dropped to an eleven month low in the mid-July reading, down from 76.0 in late-June to just 66.5, the weakest reading on the mood of the consumer since August of last year, just as the Great Recession came to an end (according to the nation’s most learned economists)." (The Mess That Greenspan Made blog) "'Confidence will stay at a low level until we see meaningful declines in unemployment,' David Semmens, an economist at Standard Chartered Bank in New York, said before the report. 'Consumer spending will be weaker in the second half. It'll be a mediocre recovery.'" (Bloomberg)

Robert Reich: The Root Of Economic Anger And Fragility? Declining Wages -- "... Americans are keeping their jobs or finding new ones only by accepting lower wages." (Crooks and Liars blog)

Consumer prices dip for third straight month -- "'Confidence remains unusually weak and that the slowdown in the economic recovery that we always expected has begun,' said Paul Dales, U.S. economist for Capital Economics." (The Associated Press) "The general disinflationary trend continues - CPI is unchanged over the last 8 months - and with all the slack in the system (especially the 9.5% unemployment rate), CPI will probably stay low or even fall further." (Calculated Risk blog)

Why Deflation Is Worse Than Inflation (U. S. News & World Report blogs) 'The stage might well be set for a deflationary process' (FT Alphaville blog)

A flashing red light from the ECRI -- "At this level, the ECRI — which Lex says is noted for its prescience, longevity and impartiality in predicting business cycles — is flashing a great big warning sign that the US economy is going to double dip and head into recession. A -10 per cent market nearly always signals a recession, apparently. Gulp." (FT Alphaville blog) "These numbers are telling us that the manufacturing and inventory led recovery is so stalled that a double dip recession is likely within six months." (Credit Writedowns blog) Mirrored @ (The Business Insider)

U.S. Economy "Rolling Over," China at Risk of "Greek-like" Debt Crisis, Nenner Says -- "'I hope it's going to stay a recession,' Nenner continues. 'Any major problems will really get us into depression. I'm still very negative on the outcome of this big economic crisis.'" (Yahoo! Tech Ticker) "Cycle work is on the fringes of what is already seen by many as a pseudoscience. But Nenner has demonstrated a downright-scary ability to glimpse into the future. And that's why hedge funds and other institutional traders pay top dollar for his insights." (MSN Money)



Dow index falls as big banks make money but not new loans: Two commercial big banks – Citigroup and Bank of America – reported earnings Friday. Yet their stock prices fell, in part because of a slow business climate in which loan portfolios are shrinking. (The Christian Science Monitor)

U.S. Home Seizures Rise 38% to Record as Banks Process Backlog -- "A record 269,962 U.S. homes were seized from delinquent owners in the second quarter as lenders set a pace to claim more than 1 million properties by the end of 2010, according to RealtyTrac Inc. ... 'Foreclosures haven’t peaked yet,' Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts, said in a telephone interview. Unemployment suggests that bank repossessions may climb for another six to nine months, he said." (Bloomberg)

Shadow Banking Debt Still Tops Regular Banks’, Fed Report Says -- "Shadow banking, which converted risky assets such as subprime mortgages into seemingly risk-free, short-term securities, began to break down in August 2007, requiring a near-complete government backstop, the Fed researchers wrote. This included measures to prop up American International Group Inc. and funding for investors to buy asset-backed securities such as bonds backed by car-loan payments. 'Their most powerful observation is that such protection had to be provided ex post, in order to prevent Depression 2.0,' said Paul McCulley, a managing director at bond fund manager Pacific Investment Management Co., in an e-mail. McCulley coined the term shadow banking in 2007 to describe the web of financing sources outside the traditional network of deposit-taking banks." (Bloomberg) Shadow Banking: Federal Reserve Bank of New York Staff Report No. 458 July 2010 (The Federal Reserve Bank of New York)

The Last Bubble: The Problem of Unresolved Debt in the US Financial System (Jesse's Café Américain blog)

The Truth About Financial Reform: It's A Big Fat Failure (The Business Insider)

Who Steered You Wrong About the GS Case? (The Big Picture blog)

Regulators shut banks in Fla, Mich, SC -- "bringing to 96 the number of U.S. banks to succumb this year to the recession and mounting loan defaults." (The Associated Press)

Woodlands Bank of Bluffton SC had a troubled assets ratio of 253.1%. (BankTracker)

First National Bank of the South of Spartanburg SC had a troubled assets ratio of 378.3%. (BankTracker)

Metro Bank of Dade County of Miami FL had a troubled assets ratio of 268.8%. (BankTracker)

Turnberry Bank of Aventura FL had a troubled assets ratio of 271.7&. (BankTracker)

Olde Cypress Community Bank of Clewiston FL had a troubled assets ratio of 324.5%. (BankTracker)

Mainstreet Savings Bank, FSB of Hastings MI had a troubled assets ratio of 244.5%. (BankTracker)

Bank stress tests to shed light on Europe's economic health -- "'The banks' exposure to sovereign debt, the banks' losses, their exposure to property markets . . . there is so much uncertainty at the moment,' said Diego Iscaro, a senior economist with the IHS Global Insight consulting firm." (The Washington Post)

Don't flunk this one: The stress tests of Europe’s banks have been chaotic. But it is too soon to write them off (The Economist)

Bank of Ireland Plans to Cut 750 Jobs Over Two Years (Bloomberg)

[Former business secretary] Peter Mandelson on [former UK Prime Minister Gordon] Brown: 'We were in a pit of debt. And we kept on digging' (The Guardian)

Olive oil shock as consumers feel effects of Greece's financial crisis -- "In an unexpected spin-off from the Eurozone contagion hitting Mediterranean countries, Greek producers uncertain about the future of the debt-laden state are hoarding stocks of olive oil rather than selling them on the open market." (The Independent)

Thursday, July 15, 2010

Thursday roundup (07-15-10)

[UK's ]Banks pledge to investigate collapse of lending to small businesses: George Osborne and Vince Cable demand assurances that credit will start to flow (The Guardian)

Germany Accelerates Deficit-Cutting Plan, Finance Ministry Says (Bloomberg)

Spanish banks' borrowing broke records in June (The Irish Independent)

Getting Stressed About European Stress Tests: Investors want to see details of the bank stress tests — and to learn how banks that fail will raise the extra capital they will need (Bloomberg)

Fed's volte face sends the dollar tumbling: Rarely before have a few coded words in the minutes of the US Federal Reserve caused such an upheaval in the global currency system, or such a sudden flight from the dollar. -- "... the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing. ... The Fed minutes warned of 'significant downside risks' and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump. ... The signs of a deep and sudden slowdown in the US are becoming ever clearer as the 'sugar rush' from the Obama fiscal stimulus wears off and the inventory boost fades." (The Telegraph)

RATE FUTURES REPORT: Heightened Fears Of Double-Dip Recession (The Wall Street Journal)

Could deflation be in our future? (USAToday) Is the U.S. Economy Destined for Deflation? (Money Morning)

[Former Bank of England policy maker David] Blanchflower Says Keep Stimulus to Avoid Deflation 'Nightmare' -- "'The Fed has it right in its minutes, evidence recently looks like the global economy maybe has reached a turning point and it’s hard to see much evidence that the private sector is hiring or investing,' Blanchflower said." (Bloomberg) [In this July 9 clip] Blanchflower Says Economy May Have Decade of Slow Growth: David Blanchflower, professor of economics at Dartmouth College, talks about the global economic outlook. Blanchflower, speaking with Bloomberg's Julie Hyman, also discusses the need for governments to maintain fiscal stimulus measures and the role of private industry in the recovery. (Bloomberg)


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The $4 Trillion Dollar Question -- "Can the US economy really return to 'business as usual' when it has 4 million houses surplus to requirement, when 1 out of 4 mortgages are in negative equity, and when by our calculation, it is burdened with $4 trillion of excess mortgage debt, equivalent to 30% of GDP?" (The Big Picture blog)

Update on the Deflating Commercial Real Estate Bubble (Seeking Alpha blog)

Municipalities on the brink, but muni bonds hang in there (Marketwatch)

Pentagon warns Congress: accounts running dry (Reuters)

American middle class slowly disappearing under mounds of debt – How Wall Street and government sucked working and middle class Americans into perpetual debt serfdom. (My Budget 360)

Lost decade: The new threat to the U.S. economy (CNN)