Looking at charts of the S&P 500 pre-1980, you might guess that, by 2010, it would be at 400...maybe. Looking at pre-1980 charts for the DJIA, you might guess it would reach 4,000 by 2010...maybe. Looking at post-1980 charts, you might expect them to be around 1,800 and 18,000. [more]
US markets haven't been tracking Asian markets very closely for a while now...they've actually headed in opposite directions. However, not long ago this kind of decline in Asian markets would have been followed by a 600 point decline in the Dow. What changed?
"The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for August fell to 65.7 from 66.0 in July. [more]
"Christopher Whalen, managing director at Institutional Risk Analytics, a research firm, has analyzed financial data from the second quarter of this year that almost 7,000 banks submitted to the Federal Deposit Insurance Corporation. The data includes 90 percent of institutions with federally insured deposits but excludes reports from the 19 money-center banks like Citigroup, Bank of America and Wells Fargo. Those reports are filed later to the F.D.I.C." [more]
Not long ago, many analysts were predicting that we'd see 1,000+ bank failures before this mess was cleaned up. So far, we've only seen 105...although there will likely be at least a couple more later today. We have many more banks today than we did at the start of the S&L crisis, but 1,000 bank failures would make this worse... In any case, it looks like the F.D.I.C. is going to run out of money real quick. [more]
What?! They just reported that their debt negotiations had been successful and that they had avoided bankruptcy! [more]
In a previous blog post I wrote the following: [more]
As most of you probably know, a recent report stated that the world-wide CDS market had topped $1 quadrillion. As I understand CDS's, they are basically, what should be illegal, insurance products on junk loans. Correct me if I'm wrong...I'm just trying to figure this out. So, this report is saying we have some amount of junk insured for $1 quadrillion? What is the value of the underlying junk?...100 billion?...$1 trillion? How do the firms holding these CDS's account for them on their books?...Do they have zero value until the underlying junk defaults?...or, are they given some value on the firm's books? Why can't we just declare that credit default swaps are illegal, and that being illegal, all are void and worthless?...just wipe out the market? Is there a legitimate reason to insure against default that would not affect you otherwise?...some reason that doesn't incentivize the CDS holder to push the underlying junk towards default if at all possible? Please explain if possible, because this just reeks of fraud... [more]
I just read the following comment in response to another blog: [more]
I've heard others mention that, recently, the market has been up as the dollar weakens and down as the dollar strengthens...and this held true today...is this just coincidence, or is this rally just based on a weakening dollar? [more]
MIAMI (AP) -- A prominent U.S. mortgage company is being investigated by the Housing and Urban Development Department after allegedly failing to submit a required financial report, raising concerns of fraud. [more]
WASHINGTON (AP) -- The Obama administration wants to shame the mortgage industry into doing a better job of helping borrowers avoid losing their homes to foreclosure.By publishing the names of companies that are lagging behind in the government's plan to ease the housing crisis, officials are counting on public outrage to get the industry on track. The Treasury Department on Tuesday plans to report on the progress of loan servicers -- companies that collect mortgage payments -- that are in line for up to $50 billion in subsidies.
"We want to go faster," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "There are a bunch of servicers that are lacking in performance. They have to lift their game." [more]
Some will argue that the economy is recovering, the recession has ended, this will not evolve into a depression, etc... However, who says that avoiding a depression at all costs is the best course of action? Maybe we need a massive shift in consumer's thinking...one that will naturally cause GDP to shrink by a large percentage...shrink to a level where we can have a new sustainable starting point. Every article on the economy seems to discuss how consumer spending accounts for 70% of GDP, and so we just need to get consumer confidence up, etc... However, this should not be the goal...we need consumers to start saving...and they are. The transition from a negative savings rate to a near 10% savings rate will naturally get us most of the way to a 10% decline in GDP. With a trade deficit that is getting worse, and tax receipts down 20%, we easily get the rest of the way if gov't ever decides to balance the budget. Are we getting to a point where it will never be possible to balance the budget? We're practically giving banks money so they can buy treasuries?!...why bother with the near-zero interest loans? Why don't we just print the money and give it to the banks as gifts?...there really is no difference. We're adding to our debt and getting absolutely nothing in return!...maybe except for some undue confidence that will soon run out. GDP down only 1% in Q2, while government spending increases (from already elevated levels) 11%? We NEED a huge decline in GDP in order to get us to a point from which we will see real growth. [more]