Important News - Oct. 12
By Daniel at 12 October, 2009, 12:04 am
1) Oct. 15th Tax Doom- the next financial pitfall for the economy?
This video sort of makes sense:
2) Our government is really making the dollar a high risk play.
In the last couple days, Toold, there has been some digging by Karl Denninger how the Fed sold 7yr notes the week before last, and already last week bought over 1/2 back. This was verified by the CUSP number on the auction and the buy-back.
Then also this week, a bunch of Fannie debt was sold and bought back 30 minutes later (again, same CUSP number to verify it was the same sale).
(see copies of the transaction below the two short videos he sets the information up with)
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3) If Karl can find this out, so can the foreign lenders we depend on.
Add that the “chart of the day” as somebody called it, shows that we are the biggest lender on mortgages (GSE’s)
4) Some of the loans are 105% LTV and some made to people who will have over 60% debt to income.
Here is what Barney Frank says about the high default rate.
quote
Now we find out that indeed (as I have long suspected) the government’s insane FHA approvals of patently unsustainable loans was an intentional act:
Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that the defaults were, in essence, worth it.
“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”
Got that? It’s a policy to intentionally bankrupt people so as to allow banks who have made bad mortgages a chance to avoid their own bankruptcy.
5) How Unemployment Has Ravaged America
When you hear “10% unemployment” that’s just ongoing government claims.
The majority of the unemployed do not, or can no longer make a claim. Shadowstats.com reports our total unemployed at 23% (chart does not include the latest BLS release):
6) Credit squeeze on entrepreneurs threatens to derail recovery
The decline in bank lending mostly affects smaller businesses. Larger corporations have alternative sources of funding, including retained earnings, corporate bonds, securitized loans and new equity. Those other sources of capital have increased in recent months, but not enough to offset the decline in bank lending.
In the first and second quarters, the U.S. private sector consumed more capital than it raised for the first time in more than 60 years. Negative net investment is “the hallmark of depression and difficult to reverse,” said economist Leigh Skene of Lombard Street Research.
7) Seen on Alea: Not economic, but is says a tremendous amount about what our economic rat race has done to us.
We’re not sure if there’s some behavioral economics lesson here (”nudges” and whatnot), but we really loved this video of people taking the stairs, instead of an escalator, after it was turned into a giant piano.
Americans Still Delusional About House Prices
The expectation for long-term price changes hasn’t changed much since before the bubble (it’s now down to 11% a year appreciation). This outlook is more reasonable now than it was at the peak of the bubble, but it’s still extraordinarily optimistic. This suggests that Americans still regard the last couple of years as a freak anomaly–even though house prices are just now hitting the range of “normal” on key price ratios like price-to-rent and price-to-income (see charts below).
9) Washington starts cooking third stimulus
“It is pretty clear the situation is going to get worse,” said Nobel-prize winning economist Joseph Stiglitz, earlier this week in a televised interview at the annual meeting of the World Bank and the International Monetary Fund.
10) Two Signs That Western Economic Dominance Is Coming To An End
The first bit of evidence, according to the Telegraph, is that auctions for fine wine in Hong Kong are blowing away similar auctions in NYC and London. At one auction a buyer paid $93,000 for an Imperial bottle of 1982 Chateau Petrus.
11) With 2,200 broadband applications, competition for billions in stimulus dollars is intense
WASHINGTON (AP) — The federal government will soon start handing out the first $4 billion from a pot of stimulus funds intended to spread high-speed Internet connections to more rural communities, poor neighborhoods and other pockets of the country clamoring for better access. The challenge is that the government has received $28 billion in requests.
12) Right or wrong, the world is looking east for help, not west to the U.S.
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China’s rapid growth and increased level of consumption is starting to spread growth across the entire region. Asia is fast becoming a retail market worthy of the world’s attention, and not just a 3rd world destination for cheap production.
China’s retail sales of consumer goods totaled 570 billion Yuan (about 83.5 billion U.S. dollars) during the National Day holiday, with average daily sales up 18 percent compared with the same period of last year, the Ministry of Commerce said Friday.
Sales of household appliances soared during the eight-day holiday which started from Oct. 1. Among them, high-definition flat screen TV sets, digital cameras, side-by-side refrigerators and 3G mobile phones are consumers’ favorites. In the case of Kaiyuan Mall in Xi’an, capital of Northwest China’s Shaanxi Province, sales of household appliances gained by 34.7 percent year on year.
Jewelry and cars became hot sellers as well. The sales of jewelry of Caishikou Department Store in Beijing topped 100 million Yuan, up 30 percent year on year. Car sales of major car-selling companies in Southwest China’s Chongqing Municipality increased by 71.7 percent year on year.
13) Loan losses to hinder US banks’ earnings
Earnings at the big US banks this week are expected to be constrained by continuing problems in consumer credit and commercial real estate, in spite of the belief by some in the industry that the worst of the recession is over.
14) Goldman Faces PR Dilemma Over Huge Bonuses
Rival banks are eagerly awaiting this week’s earnings announcement from Goldman Sachs not only for the third-quarter results but for how the firm deals with up to $20 billion in bonuses just a year after it received federal bailout money during the height of the financial crisis.
15) All I want for Christmas: A job
This holiday season, there will be more workers competing for fewer jobs. ‘It’ll be a sad Christmas for my kids,’ said one job seeker.
SAN FRANCISCO (Reuters) — Stanford University is trying to sell $1 billion of its $12.6 billion portfolio of assets including investments in venture capital, its head of investments said Friday.
17) Imports and exports for August - September numbers will be out this week
18) Banks still stuck with the junk
Beset by delays, the government’s program for ridding banks of bad assets is finally poised to take off. But problems still plague the controversial program.
19) The Second Leg Down of This Great Recession Could Be Worse Than 1930s.
The recent run up is creepy similar to the run up after the 1929 crash. This would lead many to believe this market is overdue for a major correction. Dow 4500 or lower isn’t impossible!!!
20) Options Trader Weekly Review: Not Such a Good Week
Last week was FANTASTIC. We had 28 winning trades out of 36 with an average gain of 42% on the winners and an average loss of 12% on the losers - now THAT’S A GOOD WEEK. We were stopped out of most of our bearish trades on Monday but we took a lot of new ones, which I’ll get into later… Of course, since we are rangish and play both ends, the good news is we still had our “losers” and puts that we sold on long positions.
21) Citi reportedly to face fine amid tax crackdown
22) Several letters see stocks having peaked
But first, a (more cheerful) proprietary word: The Hulbert Stock Newsletter Sentiment Index (HSNSI) — which the reflects the average equity exposure among a subset of the short-term market timing newsletters tracked by the Hulbert Financial Digest — stood last night at 35.5%, unchanged for a week.
This reading is considerably below the levels reached in May and July, when the rally was not as far advanced. Mark Hulbert regards it positive from a contrary opinion standpoint.
23) Steep Losses Pose Crisis for Pensions
24) The four biggest U.S. banks face huge loss on MSR valuations
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