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alstry (36.24)

Anyone with a pulse?

Recs

9

February 13, 2008 – Comments (3)

Credit Markets are hitting new lower lows.  Many classes affected including investment grade stuff.  Once you factor swaps, we are talking about multiple times larger market compared to the equity markets.

If Credit Instruments are declining in value, and they are leveraged, you would think that potential margin calls could have a cross over effect on equity markets.  Further, it is these instruments that make up the reserves or our financial system.....if we are hitting lows, could these reserves falling to dangerously low levels.

Basic logic, if the largest asset class in the world, debt instruments and the derivitives are crashing, what can we say about what is likely to happen to equity markets?

 

Just a seperate thought: 

How can retail sales be up and California sales tax be DOWN 9.7%?

3 Comments – Post Your Own

#1) On February 13, 2008 at 11:12 AM, devoish (97.09) wrote:

Monthly retail sales vs. quarterly taxes?

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#2) On February 13, 2008 at 11:34 AM, alstry (36.24) wrote:

January CA state sales and usage taxes down 9.7%.

Here is some more evidence of slowing:

The Sun News from South Carolina. “With the housing market lagging, Georgetown County expects a $600,000 to $700,000 shortfall in projected revenue and is working to balance its budget, Finance Director Scott Proctor said. That slowdown also has Horry County making budget trims.”

“In the Grand Strand area, sales fell 45 percent for single-family homes and 55 percent for condos in 2007 compared to 2006, according to statistics from the MLS released in January.”

“The drops follow the 2005 housing boom, when condo sales jumped 48 percent and single-family home sales rose 27 percent.”

“‘Building permits are down, documentary stamps are down, recording fees are down,’ Proctor said. ‘It’s not just for 2008. It will affect our fiscal process as we look toward our next budget. We’d love for it to turn around.’”

Paulson told is the worst is just beginning.  I agree with him.  the defaults are already high and its just beginning?  The problem is that there is trillions in debt that simply can't be serviced....nobody seems to want to face up to that fact.

Further, the boom and historically high revenues streams were a byproduct of the credit bubble.  Now that credit is slowing...revenues are slowing.  Credit contractions are vicious and little is being discussed about it in the MSM.

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#3) On February 14, 2008 at 12:24 PM, bellard (99.28) wrote:

Hi Al;

Dont worry - I am not stalking you. Solid red thumb picks! I do agree with most of your overall economic outlook. I think most people do not realize how bad this recession is. I still think the US will come in and BAILOUT home prices, and the economy, but they are still in denial.....You are the new "specbear"! 

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