ABC News: Are We Heading Into a Depression?
17% of West Virginia on Food Stamps
Economist: Waiting for Armageddon
The Rising Price of Bread, Milk, Eggs
Washington Post: Piercing This Bubble for Good
Souring Economy Adds Stress to Latest Auto Buyouts
Fleck: Time to Reign In the Fed
Friday, March 28, 2008
Thursday, March 27, 2008
Our Financial House of Cards
Gallup: Most Americans Say US In Recession; Fear Depression
New Home Sales Fall to 13-Year Low
The Entire State of California is a Declining Market
Factory Orders Drop Unexpectedly
Goldman: Wall Street May Face $460 Billion in Losses
New Englanders Hunker Down into Economic Survival Mode
Gallup: Most Americans Say US In Recession; Fear Depression
New Home Sales Fall to 13-Year Low
The Entire State of California is a Declining Market
Factory Orders Drop Unexpectedly
Goldman: Wall Street May Face $460 Billion in Losses
New Englanders Hunker Down into Economic Survival Mode
Tuesday, March 25, 2008
Thursday, March 20, 2008
Tuesday, March 18, 2008
Robert Reich: 20% Chance of Depression
Mish - Now Presenting: Deflation!
Kunstler: A Real Freak Out
Gary North: The Real Story About the Term Auction Facility
Krugman: How Bad Will It Get?
Gary Tanashian: Game Theory
America Was Conned - Who Will Pay!
Dollar Plunges as US Waits for Rate Cuts
Bernanke May Cut Rates by Most Since Volker
WSJ: The Buck Stops Where!?
3-Month T-Bill Yield Below 1% - 50 Year Low!
Manufacturing Activity Shows Declines
Hong Kong Market Looks for Support at 20,000
Mish - Now Presenting: Deflation!
Kunstler: A Real Freak Out
Gary North: The Real Story About the Term Auction Facility
Krugman: How Bad Will It Get?
Gary Tanashian: Game Theory
America Was Conned - Who Will Pay!
Dollar Plunges as US Waits for Rate Cuts
Bernanke May Cut Rates by Most Since Volker
WSJ: The Buck Stops Where!?
3-Month T-Bill Yield Below 1% - 50 Year Low!
Manufacturing Activity Shows Declines
Hong Kong Market Looks for Support at 20,000
Monday, March 17, 2008
Greenspan: Worst Financial Mess Since WWII
Wall Street Waits for the Next Domino to Fall
Bear Stearns Sold for Just $2 Per Share
Fed Acts to Protect Financial System - Slashes Discount Rate on Sunday Night
Gold Rockets; Dollar Slumps Most in 8 Years
US Losing Confidence Vote as Investors Flee
Vicious Circle Ending in a Systemic Financial Meltdown
Wall Street Waits for the Next Domino to Fall
Bear Stearns Sold for Just $2 Per Share
Fed Acts to Protect Financial System - Slashes Discount Rate on Sunday Night
Gold Rockets; Dollar Slumps Most in 8 Years
US Losing Confidence Vote as Investors Flee
Vicious Circle Ending in a Systemic Financial Meltdown
Friday, March 14, 2008
Wednesday, March 12, 2008
Wilbur Ross Discusses the Banking System
He discusses the $200 billion Fed lending that drove the markets up yesterday and his belief that bank failures are coming.
Tuesday, March 11, 2008
I'm Getting Dizzy!
Reading the headlines these days, I can't help but feel dizzy as we are getting inundated with endless articles that highlight the current financial crisis. Even though I've anticipated this mortgage and general credit crisis for 3 years, everything is unravelling so quickly, that it's getting hard to keep up. Here are some of today's highlights:
From Bloomberg:
There will be more daily articles detailing the financial mess that we are currently in. You will hear more sad stories of families facing foreclosure, job losses, bank failures, credit card defaults...etc The pain is coming and it will be much worse than anyone ever imagined but it will eventually pass. Hopefully, when the banking and economy gets kickstarted, we'll establish rules to make sure that this mess never happens again...until everyone forgets about this mess and it happens again.
From Bloomberg:
Fed to Lend $200 Billion, Take on Mortgage SecuritiesAgain, from Bloomberg:
The Federal Reserve, struggling to contain a crisis of confidence in credit markets, plans to lend up to $200 billion in exchange for mortgage-backed securities.
The Fed coordinated the effort with central banks in Europe and Canada,
which plan to inject up to $45 billion into their banking systems. The Fed said
in a statement it will hold auctions of Treasuries in exchange for debt
including AAA rated mortgage securities sold by Fannie Mae, Freddie Mac and by
banks.
...
Today's steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown. While they fall short of the calls by some analysts for the Fed to make outright purchases of mortgage debt, the central bank left the door open to expanding the effort.
Moody's, S&P Defer Cuts on AAA Subprime, Hiding Loss
Even after downgrading almost 10,000 subprime-mortgage bonds, Standard &From Reuters:
Poor's and Moody's Investors Service haven't cut the ones that matter most: AAA
securities that are the mainstays of bank and insurance company investments.
None of the 80 AAA securities in ABX indexes that track subprime bonds meet the criteria S&P had even before it toughened ratings standards in February, according to data compiled by Bloomberg. A bond sold by Deutsche Bank AG in May 2006 is AAA at both companies even though 43 percent of the underlying mortgages are delinquent.
Sticking to the rules would strip at least $120 billion in bonds of their AAA status, extending the pain of a mortgage crisis that's triggered $188 billion in writedowns for the world's largest financial firms. AAA debt fell as low as 61 cents on the dollar after record home foreclosures and a decline to AA may push the value of the debt to 26
cents, according to Credit Suisse Group.
"The fact that they've kept those ratings where they are is laughable," said Kyle Bass, chief executive officer of Hayman Capital Partners, a Dallas-based hedge fund that made $500 million last year betting lower-rated subprime-mortgage bonds would decline in value. "Downgrades of AAA and AA bonds are imminent, and they're going to be significant."
Bank chiefs asleep at subprime switch, Fed governor saysFrom USAToday:
In scathing criticism of their failure to understand the risks of the subprime market, a senior Federal Reserve policymaker Tuesday lambasted top bankers and called for
more prudence in lending.
"In particular cases, senior management was not fully aware of the firm's latent concentrations to U.S. subprime mortgages," Fed Board Governor Randall Kroszner said in remarks to the American Bankers Association.
"They did not realize that in addition to the subprime mortgages on their books, they had exposure to off-balance sheet vehicles holding mortgages, through claims on counterparties exposed to subprime," he said.
401(k)s tapped to save homes
Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills — and getting slammed with taxes and penalties in the process, according to retirement plan administrators.
Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say.
This is happening even as borrowing from 401(k) accounts remains fairly flat. Fewer still are borrowing from 401(k) plans to buy homes. By contrast, new figures from plan administrators show the number of 401(k) "hardship withdrawals" is up in early 2008 compared with the same period last year.
The main reason? The need to stave off foreclosure or eviction.
There will be more daily articles detailing the financial mess that we are currently in. You will hear more sad stories of families facing foreclosure, job losses, bank failures, credit card defaults...etc The pain is coming and it will be much worse than anyone ever imagined but it will eventually pass. Hopefully, when the banking and economy gets kickstarted, we'll establish rules to make sure that this mess never happens again...until everyone forgets about this mess and it happens again.
Sunday, March 09, 2008
Friday, March 07, 2008
Thursday, March 06, 2008
Time Machine - Richard Nixon Ends U.S. Dollar Peg to Gold
As the U.S. Dollar tanks, it's interesting to go back and see what events accelerated the dollar's massive devaluation over the years. There are many arguments against the "Gold Standard" but listening to Nixon 37 years ago, it is fascinating to see what America's "priorities" were back then. He argued that currency fluctuations didn't matter as long as you "Buy American" products. He implemented a 10% tariff on imported goods to eliminate the disadvantage that American manufacturers faced. We've come a long way and the world is unrecognizable in the context of the 1970's.
Monday, March 03, 2008
The Federal Reserve's Rescue Has Failed
The UK Press are starting to have convulsions about the Fed's inability to control the seized-up credit markets. Ambrose Evans-Pritchard has correctly identified the dangers that lie ahead while the U.S. press has been very slow catching up to reality.
The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.
The debt markets are freezing ever deeper, a full eight months into the crunch. Contagion is spreading into the safest pockets of the US credit universe.
It is hard to imagine a more plain-vanilla outfit than the Port Authority of New York and New Jersey, which manages bridges, bus terminals, and airports.
The authority is a public body, backed by the two states. Yet it had to pay 20pc rates in February after the near closure of the $330bn (£166m) "term-auction" market. It had originally expected to pay 4.3pc, but that was aeons ago in financial time.
"I never thought I would see anything like this in my life," said James Steele, an HSBC economist in New York.
No sane mortal needs to know what term-auction means, except that it too became a tool of the US credit alchemists. Banks briefly used the market as laboratory for conjuring long-term loans at Alan Greenspan's giveaway short-term rates. It has come unstuck. Next in line is the $45trillion derivatives market for credit default swaps (CDS).
Last week, the spreads on high-yield US bonds vaulted to 718 basis points. The iTraxx Crossover index measuring corporate default risk in Europe smashed the 600 barrier. We are now far beyond the August spike.
Sub-prime debt is plumbing new depths. A-rated securities issued in early 2007 fell to a record 12.72pc of face value on Friday. The BBB tier fetched 10.42pc. The "toxic" tranches are worthless.
Why won't it end? Because US house prices are in free fall. The Case-Shiller index for the 20 biggest cities dropped 9.1pc year-on-year in December. The annualised rate of fall was 18pc in the fourth quarter, and gathering speed.
UBS says the cost of the credit debacle will reach $600bn. "Leveraged risk is a cancer in this market."
Try $1trillion, says New York professor Nouriel Roubini. Contagion is moving up the ladder to prime mortgages, commercial property, home equity loans, car loans, credit cards and student loans. We have not even begun Wave Two: the British, Club Med, East European, and Antipodean house busts.
As the once unthinkable unfolds, the leaders of global finance dither. The Europeans are frozen in the headlights: trembling before a false inflation; cowed by an atavistic Bundesbank; waiting passively for the Atlantic storm to hit.
Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?
"We are becoming increasingly concerned that the authorities in the world do not get it," said Bernard Connolly, global strategist at Banque AIG.
"The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said.
For the first time since this Greek tragedy began, I am now really frightened.
The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.
The debt markets are freezing ever deeper, a full eight months into the crunch. Contagion is spreading into the safest pockets of the US credit universe.
It is hard to imagine a more plain-vanilla outfit than the Port Authority of New York and New Jersey, which manages bridges, bus terminals, and airports.
The authority is a public body, backed by the two states. Yet it had to pay 20pc rates in February after the near closure of the $330bn (£166m) "term-auction" market. It had originally expected to pay 4.3pc, but that was aeons ago in financial time.
"I never thought I would see anything like this in my life," said James Steele, an HSBC economist in New York.
No sane mortal needs to know what term-auction means, except that it too became a tool of the US credit alchemists. Banks briefly used the market as laboratory for conjuring long-term loans at Alan Greenspan's giveaway short-term rates. It has come unstuck. Next in line is the $45trillion derivatives market for credit default swaps (CDS).
Last week, the spreads on high-yield US bonds vaulted to 718 basis points. The iTraxx Crossover index measuring corporate default risk in Europe smashed the 600 barrier. We are now far beyond the August spike.
Sub-prime debt is plumbing new depths. A-rated securities issued in early 2007 fell to a record 12.72pc of face value on Friday. The BBB tier fetched 10.42pc. The "toxic" tranches are worthless.
Why won't it end? Because US house prices are in free fall. The Case-Shiller index for the 20 biggest cities dropped 9.1pc year-on-year in December. The annualised rate of fall was 18pc in the fourth quarter, and gathering speed.
UBS says the cost of the credit debacle will reach $600bn. "Leveraged risk is a cancer in this market."
Try $1trillion, says New York professor Nouriel Roubini. Contagion is moving up the ladder to prime mortgages, commercial property, home equity loans, car loans, credit cards and student loans. We have not even begun Wave Two: the British, Club Med, East European, and Antipodean house busts.
As the once unthinkable unfolds, the leaders of global finance dither. The Europeans are frozen in the headlights: trembling before a false inflation; cowed by an atavistic Bundesbank; waiting passively for the Atlantic storm to hit.
Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?
"We are becoming increasingly concerned that the authorities in the world do not get it," said Bernard Connolly, global strategist at Banque AIG.
"The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said.
For the first time since this Greek tragedy began, I am now really frightened.
Sunday, March 02, 2008
Fear Factor - CNN Style
It is absolutely amazing to watch the Mainstream Media outlets suddenly waking up from their 7-year coma. For years, all you would hear is how great the housing market was and how great the economy was. Business Channel reporters would fawn all over Alan Greenspan and fail to question his ridiculous mishandling of interest rates in creating the housing bubble that is bursting today. The people that "got it right" and actually understood what was going on were in the blogosphere/non-mainstream media on the internet. Now those same people that were ridiculed, Nouriel Roubini, John Williams, Robert Shiller...etc are being showcased by the mainstream media as people who actually know what they are talking about.
I get the sense that because the mainstream media have been so wrong for so long, they fear that viewers are turning to the internet for better information. In order to combat this viewer defection, the networks are desperately trying to embrace the internet "heroes" who've been "getting it right" for a very long time. Better late than never, I guess.
I get the sense that because the mainstream media have been so wrong for so long, they fear that viewers are turning to the internet for better information. In order to combat this viewer defection, the networks are desperately trying to embrace the internet "heroes" who've been "getting it right" for a very long time. Better late than never, I guess.
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