The Housing Bubble

U.S. Bank Stress Test Results Delayed as Conclusions Debated…
By Craig Torres and Robert Schmidt

May 1 (Bloomberg) — The Federal Reserve is postponing the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.

The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as today, they said.

Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.

“Everybody understands they’ve got a tiger by the tail here,” said Mark Tenhundfeld, a senior vice president at the American Bankers’ Association in Washington. “If they don’t let him go gently, there will be a lot of mauling going on.”

The 19 firms include Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc., GMAC LLC, MetLife Inc. and regional lenders including Fifth Third Bancorp and Regions Financial Corp. The banks in the test hold two-thirds of the assets and more than half of the loans in the U.S. banking system, according to a Fed study released April 24.

Regulators are pushing higher minimum capital levels for the banks to determine whether they can survive a worsening recession.

Officials favor tangible common equity equal of about 4 percent of a bank’s assets and Tier 1 capital worth about 6 percent, according to people familiar with the tests of the largest 19 banks. Financial institutions received preliminary results and are being judged on whether they need more capital to ensure they stay above those levels. Earlier in the process, regulators discussed a TCE target of 3 percent, said two people with knowledge of the deliberations.

‘Dominant’ Element

The Fed, which oversaw the stress tests, wants common equity to be the “dominant” element in a bank’s primary capital, according to a central bank report on the test methodology released a week ago. TCE is a measure of a bank’s financial health that excludes intangible assets such as brand names that can’t readily be used as payments.

Investors and analysts have focused on the TCE ratio as a more accurate benchmark of a bank’s ability to absorb losses. Tier 1 capital is a broader measure of bank health that is commonly used by regulators. Regulators typically look at risk- weighted assets when assessing banks’ financial strength.

Boston radio guy Michael Graham asks: What is swine flu?

Is it one of Mother Nature’s weapons of mass destruction? Is it, to quote The Associated Press, a “virulent” killer that has “swept deeper into Europe” and “surged” to 100 cases in the United States, threatening to overwhelm our hospitals and fill our morgues?

Or is it something you treat with NyQuil?

Now that the number of confirmed swine flu deaths has been revised to eight–not 800 or even 108, but EIGHT– I cannot reconcile the OMIGODWE’REALLYGONNADIE!” coverage with the Natural Truth that this is just…the flu.

Not “swine plague,” “swine cancer” or even “swine erectile dysfunction.” Just the flu. You know - nausea, headaches, vomiting and diarrhea.

That’s not a pandemic. That’s a weekend in Tijuana.

Guten Tag Amerika!

German GDP decline fastest since Great Depression: (UK Telegraph)

Exports of German goods, including cars, have collapsed. Economy minister Karl-Theodor zu Guttenberg said the slump was almost entirely due to the collapse of exports, insisting that a “global revival” will restore growth next year.

Even this may be too optimistic. The International Monetary Fund expects a further 1pc contraction in 2010. Left Party leader Oskar Lafontaine said Berlin seemed to be hoping and praying that other countries would “pull the German economy out of the mud”, sitting on its hands as unemployment reaches 4.6m next year.

“It’s a catastrophe. Company bank deposits have been falling at 1pc a month since December. It is what happened in the US during the Great Depression, and it is why we are seeing such a horrific recession in Europe now,” he said.

Fresh ECB data shows that the M3 “broad” money supply has fallen slightly since the start of the year, though the annual rate growth rate was still 5.1pc in March. Loans to businesses and households have fallen more sharply.

Mr Congdon said the true decline in credit and M3 money had been distorted by “conduits” and off-book instruments used by banks. While the Bank of England has taken steps to adjust for this distortion, the ECB has not.

“They are taking the data at face value. The effect is disastrous. They must act to increase bank deposits for the whole economy,” he said.

The central banks of the US, Canada, Japan, and Britain, among others, have already begun purchasing assets to inject stimulus into the economy.

The ECB has so far resisted the move, despite a growing rift between the German-led hawks in Frankfurt and some national governors. The members from Spain, the Netherlands, Austria, Greece, and Cyprus have all said “credit easing” may be necessary.

The ECB is expected to discuss the possible purchase of debt securities at its next meeting in May, but Bundesbank chief Axel Weber said policymakers must be careful not to blur the lines of fiscal and monetary policy. “There is only a very limited scope for the euro-system to be involved in the purchases of government papers,” he said.

The problem is entirely political. The ECB has the treaty power to buy eurozone debt on the secondary market. Germany fears any such move would be a slippery slope towards an EU debt union in which northern taxpayers might end up shouldering Club Med debts.

Senate rejects bill to modify troubled homeowner loans
Measure would have allowed bankruptcy judges to rewrite terms of mortgages…
By Ronald D. Orol, MarketWatch April 30, 2009

WASHINGTON (MarketWatch) - A controversial provision that would allow bankruptcy judges to modify mortgages for troubled homeowners was rejected by the Senate on Thursday.
The provision, known as “cram-down,” failed on a vote of 51-45. A similar measure was approved by the House earlier this year.
Citigroup Inc. endorsed a version of the measure earlier this year that would have allowed bankruptcy judges to modify loans that existed prior to the measure becoming law. However, since then most other financial institutions have lobbied furiously on Capitol Hill to make sure it was not adopted.
The provision, which was introduced by Sen. Richard Durbin, D-Ill., would have allowed bankruptcy judges to rewrite the terms of a mortgage contract by changing interest rates or extending the loan payment periods.
The rejection is a setback for the Obama administration, which endorsed it. A similar measure was removed from a $700 billion bank bailout bill approved by Congress in October with the expectation by many Senators that lawmakers would return to approve it at a later date.
The American Bankers Association, which had lobbied heavily on Capitol Hill against the measure, was satisfied with the result.
“We have consistently maintained that allowing bankruptcy judges to arbitrarily rewrite the terms of a mortgage contract - including allowing them to reduce the amount owed on a mortgage, change interest rates, or stretch out the terms of the loan - would bring additional risk and uncertainty to an already volatile mortgage market and would make home loans more expensive and less available for consumers,” said Floyd Stoner, ABA executive director.
Durban had sought to attach the measure to a larger housing bill under consideration by the Senate.

Wonder what surprises await today in the world of surrealiy and scams. God bless the USA.

I had a post the other day that never showed. Anyhoo, as an agent of the state I meet lots of people. I am shocked by the number of people approaching retirement that plan on using BK as a launch pad. I.E., pay off the car, declare BK, foreclose the house, get a small apt, collect state pension. I don’t know the risks of this, just making another prediction (that ‘planned’ BKs will rise).

I also finally got to see all the film parts — awesome!

Chrysler going into bankruptcy and GM being nationalized. I think this gives Chrysler the edge by a huge margin.

I think the Pres is loosing creditability fast. Blaming his failed personal intervention on greedy hedgefund investors. How about it was a stupid plan?

Loosing the cram down bill in the same week. HAHA!

I read the book “The Great Depression Ahead” by Harry Dent” - anyone hear read? Makes a lot of sense - just another opinion, but his info has a lot to do with demography and boomer reaching their peak spending years then it does with economics. The book was published last year and he basically predicts the current power bear rally. It says some time in late 2009 or early 2010 that most asset classes will lose 50% - check it out.

Good morning from the middle of the ocean.

Maui is slowly falling into itself. Our peak season had 25% less tourists. Many of the goodtimer haoles have left and there are houses for rent all over the place. Prices have fallen @ 25% since peak. Sales have dropped by 50%. Rents are down at least 20% and falling fast

Roundtrip airfare to/from the mainland is the lowest I have seen since just before Aloha went into the dustbin of history. Got wife to L.A. to see mom later this month for less than $330.

In last few years we have been expanding our roads and just as these projects come on line the overall population starts to decline. Land that was slated to be developed is being returned to the farms they once were before the madness. I expect this to go on for many more years. We lag the mainland by a year or so.

I have lurked here for many years but seldom posted. It seems that I am the only HBBer on this rock. Or am I?

MBIA sues Merrill over CDO losses

NEW YORK (Reuters) - MBIA Inc (MBI.N), the world’s largest bond insurer, sued Merrill Lynch & Co on Thursday seeking damages for losses from complex debt securities it insured for the bank.
The lawsuit, filed in New York State Supreme Court in Manhattan, seeks to void certain credit default swaps and related insurance contracts that MBIA, through a special purpose vehicle, wrote on the securities held by Merrill.

The insurer wrote $5.7 billion in guarantees on these securities, which were packages of mortgages known as collateralized debt obligations (CDOs), it said in a statement.

MBIA faces several hundred million dollars of losses on these contracts because Merrill misrepresented the credit quality of the CDOs, the insurer said.

“MBIA believes that Merrill Lynch’s effort to market the CDS contracts to MBIA was part of a deliberate strategy to offload billions of dollars in deteriorating U.S. subprime residential mortgages,” the company said in a statement.

A spokesman for Merrill declined comment.

Bank of America Corp (BAC.N) bought Merrill Lynch in January, after losses from complex debt securities and mortgages forced the brokerage and investment bank to sell itself.

Security Capital Assurance, another bond insurer, severed $3.1 billion in credit guarantee contracts with Merrill last year, after it claimed the bank gave rights promised to SCA under the contracts to at least one other party. A federal judge ruled in June that SCA had to stand by the guarantees

Someone I know in the PNW is underwater and stopped paying a few months ago. To my surprise they already got a notice that their house is scheduled to be sold at auction this summer even though most of their neighborhood is now abandoned. My question is, how long can they stay without significant risk of finding their stuff on the lawn with no warning? Should they leave by auction day and run the risk that it doesn’t sell at auction and leaves them technically responsible for what happens to “their” house when they’re gone, or should they wait until they see a sheriff’s notice, or ???

I lean toward “stay until they get evicted”, but don’t know if they’ll get any notice of that.

May Day Mates!

Cheerio, and all that! UK wages collapse at fastest rate in 60 years! (UK Telegraph)

Weekly wages fell at the fastest rate in 60 years in February as City bonuses were slashed and workers agreed to reduced hours in the wake of recession, the latest official figures show.

Downtrodden: weekly wages fell in the UK have fallen at the fastest rate in 60 years. National Statistics said average weekly earnings fell 5.8pc compared with the same month last year, to £459.10. The private sector took the full force of the fall in weekly earnings, down sharply by 7.7pc at £463.50, while average weekly earnings in the public sector actually rose by 3.2pc to £442.90. Bonuses in the financial services fell to £549.90 a week in February - which is part of the peak period for bonus payments - from £1,312.80.

“We certainly haven’t seen anything like this in the last 60 years - and probably not in peacetime since the 1930s. In that sense it’s much like everything else in the economy,” said Michael Saunders, chief UK economist at Citigroup.

However, Mr Saunders said that the figures did not look as negative when bonus payments were excluded. “Indeed, after bonus period you may see earnings go slightly into positive territory.”

The Chartered Institute of Personnel and Development has on the other hand argued that with price deflation already a reality, the chances are that pay excluding bonuses will show “a further marked slump in the coming months”.

Despite the gloomy economic backdrop, consumer confidence rose for the third month in a row in April, according to GfK NOP’s latest survey. The GfK NOP Consumer Confidence Index ticked up three points to -27, the highest level since April 2008 and 12 points above the survey’s lowest ever level of -39 in July last year.

Japan falls back into deflation

http://news.bbc.co.uk/2/hi/business/8028223.stm

I’m still trying to get my head around the inflation/deflation debate… Both sides seem to have some valid points.

Wall Street 2 is in the works!

http://blogs.tampabay.com/80s/2009/04/wall-street-sequel-reunites-michael-douglas-oliver-stone.html

Things like this are why there is still lots more pain ahead. The article (and ones like it) use the euphemism “leveraging” instead of saying “excessive debt”.

Sticky Leverage

…

It’s the same on the corporate side as the residential/consumer side, where home equity has plummeted from 57% down to 43% and still falling fast. This excessive debt will put a crimp on future spending (and thus earnings) for years and years and years.

Right now asset prices are unwinding way faster than debt is. It’s a bad combo. The Fed is pumping money into the system as fast as they can - this will stem the tide of asset prices falling somewhat, but at the expense of the debt unwind. So it’ll be that much longer before we get back to equilibrium.

The San Jokin’ Valley, Sacramento Valley, and other California flyover farmbelt burgs contain nine of the top twenty unemployed metro towns with unemployment rates above 15%. El Centro is another farm region outside the valley in California and with the highest unemployment rate of 25%! That’s depression era.

http://finance.yahoo.com/real-estate/article/107003/More-Cities-Seeing-at-Least-15-Percent-Unemployment

Here in N. Ohio, health care, that great engine of job opportunity, has taken another hit; 6 percent of the workforce of 5000 at the county Metropolitan Hospital (servicing the majority of uninsured immigrants and poor) are getting the axe. Local free clinics in the “urban areas” have just received millions in obamabucs, however. Cant have those middle class suburbanites getting any of that stimulus.

So Solly Cholly!
Land of Rising Sun Headed Lower - Bank of Japan revises down growth forecast. (Financial Times May 1 2009)

The Bank of Japan expects growth to contract by a significantly greater margin than it forecast just two months ago as the world’s second largest economy continues to suffer from a collapse in demand.

“Economic conditions in Japan have deteriorated significantly,” the BoJ said in a statement on Thursday as it lowered its forecast for the economy to a 3.1 per cent contraction in the year to next March, rather than a previously expected 2 per cent decline in growth.

Japanese companies also forecast that industrial production would rise further this month and next, as they step up production to make up for large inventory reductions made previously.

The BoJ said the outlook for Japan’s economy was likely to depend on developments in overseas economies and warned that “it was still not certain … whether [recent signs of a levelling out of global economic activity] would lead to a steady recovery of the world ­economy.”

Nevertheless, the central bank kept its benchmark overnight lending rate at 0.1 per cent and failed to announce additional policy measures in spite of its gloomier outlook for the economy.

The central bank expects the pace of decline in exports and production to slow in the first half of the year and the economy to recover gradually in the second half as the effects of economic stimulus measures adopted by various governments kick in. Thereafter, the Japanese economy is expected to return to a growth rate above its potential in 2010, the BoJ said.

It expects prices, excluding fresh foods, to decline by 1.5 per cent, rather than the previously forecast 1.1 per cent, because of the decline in oil prices, the stabilisation of food prices and slumping demand.

The BoJ’s latest assessment of Japan’s economic outlook was much more bullish than that of private economists, who expect growth to shrink more than 4 per cent this fiscal year.

“The BoJ is expecting a V-shaped recovery,” said Masaaki Kanno, economist at JPMorgan in Tokyo.

Limiting the annual contraction to 3.1 per cent will require very strong growth in subsequent quarters because first-quarter GDP is expected to be very weak, he said.

The BoJ’s outlook for a firm recovery later this year comes amid one of the most dismal earnings seasons Japan has seen in recent decades.

This morning on the way into the hospital where I work, everyone–employees, patients, visitors–was being stopped and handed a disposable thermometer to pop into their mouth, get in line and wait for a nurse to read their temp. It was actually quite efficient. Didn’t even make me late for the 7 a.m. conference, dang it.

Sadly, I failed to note what company manufactured the thermometers. A missed stock buying opportunity, at least until Monday.

And RIP to all the innocent piggies slaughtered in Egypt. Such madness.

What are the implications of the failure cramdown legislation to pass?

WaPo
Business Digest

Friday, May 1, 2009
BANKRUPTCY
Mortgage Bill Fails in Senate

Legislation that would have allowed bankruptcy judges to modify mortgages died in the Senate yesterday, handing the Obama administration a significant defeat in its plans to mitigate the foreclosure crisis.

Supporters argued that the measure would have kept 1.7 million borrowers in their homes. It foundered in the face of fierce opposition from the financial industry and Republicans. The legislation, offered as an amendment to a broader housing bill, failed by a vote of 45 to 51.

The measure would have allowed bankruptcy judges to modify troubled mortgages, lowering the interest rate or principal balance through a process known as a cramdown.

She’s Baaack

May 1 (Bloomberg) — The Standard & Poor’s 500 Index may jump 20 percent to 1,050 over the next six to 12 months as investors buy stocks trading at low valuations, said Abby Joseph Cohen, Goldman Sachs Group Inc.’s senior investment strategist.

“You could see the market sustain at these levels,” Cohen, 57, said in a Bloomberg Radio interview. “We’re going to set a new trading range much higher than the trading range in February and March.”

Cohen was replaced as Goldman Sachs’s chief forecaster for the U.S. stock market a year ago. She had been the second-most bullish Wall Street strategist at the start of 2008, a year when the S&P 500 tumbled 38 percent to 903.25 for the steepest annual loss in seven decades. Cohen predicted in December 2007 that the index would end last year at 1,675. David Kostin took her job.

The S&P 500 closed at 872.81 yesterday, or 29 percent higher than the 12-year low reached in March. Kostin projects the index will finish this year at 940, which is also the median estimate among 11 strategists tracked by Bloomberg News. The measure closed between 676.53 and 869.89 in February and March.

For those shorting Treasuries a great read.
For anyone in the market.
And a great followup on yesterday’s discussion.
__

From Seeking Alpha
Long Term Treasury Yields Likely to Rise, Pressuring Dollar Lower

“In all my experience, I have not seen the Federal Reserve succeed in keeping long term interest rates below where the market wants them to be. I don’t expect them to succeed in their present efforts.

And, what about inflationary expectations? I believe that we can provide evidence from other markets that confirm this recent sensitivity to the increasing pressure on the monetary authorities to monetize the government debt. I am not concerned with the absolute levels of expected inflation, just the direction in which the spread has moved.

The spread between the 10-year government bond yield and the rate on 10-year inflation indexed government bonds is often used as an indicator of movements in inflationary expectations. The spread remained relatively constant from January 2009 through March. However, in April the spread has increased by 2 ½ times the January figure. This spread now is at a level we have not seen since early October 2008, right after the fall crisis hit. Market participants seem to be increasingly worried about what the Fed is going to have to do.

Furthermore, every time we see this spread increasing we tend to see a decline in the value of the United States dollar against the Euro and against other major currencies. Relative currency valuations are highly dependent upon changes in what central banks are expected to do because their actions can affect relative rates of inflation. If investors believe that the central bank in your country is going to monetize its government’s debt more rapidly than that of another country, the value of your currency will decline relative to that of the other country.

In this respect, the value of the United States dollar has declined over the past two days and tends to drop every time there is a rise in yields on longer term Treasury bonds. This would indicate that some of the same things affecting the yields on long term bonds are also affecting the value of the currency.”

__

This is from today, May 1st.
It postulates in much clearer language what I said yesterday.
The entire article is worth reading.

Happy May Day, everyone! I assume you all did the same thing I did this morning? Which was to skip out the door and roll around in the beneficial May dew all bare-nekkid before settling down to a nice breakfast of eggs and toast? And now we’re extra beautiful and radiant!
I gotta say, thass some COLD dew. I’m more perked up than if I’d drunk 5 cups of coffee.

Fed mulls longer loans as part of TALF

53 minutes ago
WASHINGTON (AP) — The Federal Reserve is considering allowing longer loan terms in a program aimed at bolstering commercial real-estate lending, according to people with knowledge of the matter.

I guess when you tell people they can buy a car that they won`t have to pay for when they lose their job and fatten up the food stamp program consumer sentiment soars.

Consumer sentiment soars as confidence returns May 1, 2009 11:33 AM ET

All Thomson Reuters news NEW YORK (Reuters) - U.S. consumers felt more confident about the economy last month than at any time since the September failure of Lehman Brothers that pushed global banking to the brink of collapse, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its final index of confidence climbed to 65.1 in April from 57.3 in March. That was the highest since September 2008 and the biggest one-month increase since October 2006.

Heh. The entire new condo building going up around the corner is being auctioned off.

Take a look at the auction notice then the wishing prices at the second link. They probably will be able to auction the <$400K units (it’s just a few blocks from the beach) but I sincerely doubt they’ll get any bids on the higher priced units. This is NOT a luxury building.

http://losangeles.craigslist.org/wst/reb/1143597194.html

http://laplayaauction.com/auction/media/auction-pricing.pdf

B.Dogg,

My post to realestateskeptic got eaten…. grrr….

No access to forum yet either.

Here are the photos of the Texas Rat Snake consuming a rat in our backyard last Friday night. When you open the link, click on slideshow.

http://www.flickr.com/photos/26352634@N05/sets/72157617535193294/

The self-proclaimed brain trust of the GOP had better keep on YELLING to his dwindling flock of “True Believers”… me thinks his $400 million salary is is not going to be supported by the incoming revenue…of course, Murdoch might “snap-it-up” to complement his stable of “truth mongers” @ Fox news!

BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!

Chrysler’s bankruptcy filing is a watershed moment for the U.S. auto industry but also harkens the end of an era for private equity too, says Daniel Gross, columnist at Slate and Newsweek and author of Dumb Money.

Cerberus, which acquired 80.1% of Chrysler and its finance arm for $7.4 billion in May 2007, is just one of several high-profile private equity firms facing big losses on deals done in 2007-08.

Others include:

* Thomas Lee Partners and Bain Capital, which paid $18 billion and assumed $5 billion of Clear Channel Communications debt - and sued bankers to complete the deal - when it took the radio giant private last July. Clear Channel is now in danger of defaulting on its loans, The NY Times reports.

News talk stations:

News talk stations owned by Clear Channel usually have a standard slate of hosts. The morning show is usually local, with other timeslots filled by local and syndicated hosts. Programs that appear on many Clear Channel talk stations include Glenn Beck Program, The Rash Limpbaugh Show, The Dawn insHannity Show, Dr. Lauralie, and Coast to Coast AM, all of which are affiliated with Premiere Radio Networks in some fashion.

Clear Channel Communications
From Wikipedia, the free encyclopedia

Normally I don’t give 2 cents to bottom callers, but these guys actually have some credibility since I started reading their research back during the tech bubble of the late 90’s:

Banerji: The End of the Recession
05/01/09 - 09:47 AM EDT

The end of this recession — the most severe downturn since World War II — is finally in sight. This is the clear message from Economic Cycle Research Institute’s array of leading indices of the U.S. economy.

What are these indicators? One is the ECRI’s U.S. Long Leading Index (USLLI), which has the longest average lead times of any U.S. leading index. Another is the Weekly Leading Index (WLI), which has a shorter lead over the business cycle but is very promptly available.

The growth rate of the USLLI turned up in November 2008 and has now advanced for four straight months. The growth rate of the WLI turned up soon after that, in early December 2008, and as of mid-April 2009 it had been rising for more than four months (see the top two lines in the chart below). A rigorous examination of the data affirms that both USLLI growth and WLI growth have been in cyclical upturns for at least four months.

Therefore, the economy is on the cusp of a growth rate cycle upturn — i.e., a cyclical acceleration in economic growth. In other words, U.S. economic growth, which, according to ECRI’s U.S. Coincident Index growth rate, is still plunging deeper into negative territory (bottom line in chart), will start becoming less negative in short order.

Hey, anyone out in the HBB playground know anything about this service?:

DTV4PC
Watch 1,056 live television channels on your PC

Thanks in advance!

Shoots. I just learned that Evergreen College is ending their Extended education courses because of the budget crunch. I wanted to take a welding class. I’ve ALWAYS wanted to learn how to weld.

Now I wonder if regular tuition will go up and by how much?
Frowny face!

http://yochicago.com/today/renovation/landmark-conversion-at-1400-lake-shore-drive-adds-fitness-center_5391/

“I’d look to The Onion for facts before I’d look to thehousingbubbleblog.”

OK, enough doom and gloom. I’m off to the Mizoguchi (”the filmmakers’ filmmaker”) screening at BAM - Akasen Chitai.

Laters y’all - lay off the sauce for a bit!

NEW YORK (AP) — Oil prices finished the week with a late surge above $53 a barrel as traders looked past tepid economic reports and latched onto signs that U.S. manufacturing was on the mend.

OK GM is shutting down for a couple of months and Chrysler will be off line for how long?? Yet manufacturing is on the mend??

What exactly are we manufacturing?

1. WASHINGTON – U.S. manufacturing activity contracted at a slower-than-expected pace in April, raising hopes that a steep plunge that began last fall may be moderating. The performance was driven by a rise in new orders reflecting higher business and consumer spending.

The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index rose to 40.1 in April from 36.3 in March. A reading below 50 indicates a contraction. Wall Street economists had expected the index to rise to 38 in April, according to survey by Thomson Reuters.

As new orders rose sharply, company inventories shrank for a 36th straight month — suggesting that future production will need to ramp up and eventually help stimulate the economy.

2. In a separate report, though, the Commerce Department said factory orders fell 0.9 percent in March, worse than the 0.6 percent drop that economists had been expecting. Many companies have been battered by the prolonged recession in the United States and by spreading weakness overseas that has sharply reduced their foreign sales.

For March, orders for durable goods dropped 0.8 percent as strength in demand for commercial jetliners and military aircraft offset weakness in other areas. Orders for nondurable goods, products such as petroleum, chemicals and paper, dropped 1 percent after a 0.2 percent fall in February

3. Again, what will the shut down of Chrysler and GM do to manufacturing numbers? My guess is it will put them in the toilet.

OT: Here are some photos of desert sweetpea I took the other day (with my cell phone). Have some better ones on my video and still cameras and will maybe make a youtube of a bunch of nice flowers when I get more photos.

Happy May Day

http://www.flickr.com/photos/37949994@N02/

Quite the rally there at the close - DJI jumped 50 points in 5 minutes right before the bell. End of week covering? Wow.

More Wildflowers!

U.S. regulators seize Silverton commercial bank
On Friday May 1, 2009, 5:05 pm EDT
U.S. banking regulators seized Silverton Bank of Atlanta on Friday, a bank that provided services to other banks, the biggest bank failure so far this year.

The Federal Deposit Insurance Corp said it had created a bridge bank to take over Silverton, saying this would allow its client banks to maintain their relationship with the least amount of disruption.

Silverton had about $4.1 billion in assets and $3.3 billion deposits and becomes the largest failure since Downey Savings and Loans was seized in November, which had about $12.8 billion in assets.

The FDIC said the failure is expected to cost its deposit insurance fund about $1.3 billion.

Silverton did not take deposits directly from the general public nor did it make loans to consumers. It was a commercial bank that provided correspondent banking services to its client banks.

Silverton had about 1,400 client banks in 44 states, and operated six regional offices, according to the FDIC. Its services included credit card operations, clearing accounts, investments, consulting, purchasing loans and selling loan participations.

The bank was closed by its primary regulator, the Office of the Comptroller of the Currency, and the FDIC was appointed receiver.

Did not get this house, my bid was $200,000 someone else bid more, oh well on to the next one.

6915 N 143Rd St West Palm Beach, FL 33418 $229,900 3 Bed, 2 Bath 2,862 Sq Ft MLS ID #R3013043

I wanted to stop lurking long enough to share this link to Foreclosure City” - great radio documentary on housing from-then-to-now in Las Vegas.

188 out of 212 homes on the MLS for our zip code (92127 — Rancho Bernardo West) were built in 1998 or later. Why would anyone buy a brand new home only to live in it for ten years or less?

Does anyone remember that scene in “What about Bob” where Bill Murray’s Bob character says to his psychologist, “I need, I need, I need”? For some strange reason, that scene just spontaneously popped into my head.

And so long as we are on the subject of “needs”, my household could use $500,000 in stimulus funds for a brand new San Diego starter home (bravely assuming there are any new ones available for anywhere near $500,000). Is there any way for an individual household to qualify as “too big to fail”?

Wall Street Journal
* MAY 2, 2009

Citi Said to Need Up to $10 Billion
Bank Disputes ‘Stress Test’ Result; U.S. to Let Lenders Convert Loans to Common Stock

By DAVID ENRICH and DAMIAN PALETTA

WASHINGTON — Citigroup Inc. may need to raise as much as $10 billion in new capital, according to people familiar with the matter, as the government continues negotiations with banks over the results of its so-called stress tests.

The bank, like many others, is negotiating with the Federal Reserve and may need less if regulators accept the bank’s arguments about its financial health, these people said. In a best-case scenario, Citigroup could wind up having a roughly $500 million cushion above what the government is requiring.

As regulators delay the release of bank stress-test results, experts wonder whether the exercise, meant to restore confidence in the banking system, will end up producing the opposite effect. Kelsey Hubbard reports for MarketWatch.

The discussions stem from the tests being run by the Fed and the Treasury to assess the health of the country’s 19 largest banks. Those results will be released Thursday, later than initially planned.

The tests will predict each bank’s potential losses in certain asset categories under dire economic scenarios. The government is expected to direct several banks, including Bank of America Corp., to bolster their capital by raising new funds or converting existing securities into common stock.

The government’s strong preference is for banks in need of fresh capital to raise it either through private investors or selling assets, officials say. That won’t be an option for certain weaker banks, who may have to give the government big stakes in their common equity to boost capital levels. Such a move would help fill banks’ capital needs but would also raise thorny questions about how large a role the U.S. might play in their daily operations.

Can Federal Reserve Board members be brought to trial, or are they beyond the reach of US law?

I am hoping that if this goes to trial, perhaps some juicy details will leak out about why the Bank of America snake ate the Countryside rat last summer.

Wall Street Journal

* MAY 1, 2009

Hearings Sought on Federal Role in Merrill Deal

By MICHAEL R. CRITTENDEN and LIZ RAPPAPORT

Lawmakers likely will call for hearings to inquire about the involvement of the Treasury and the Federal Reserve in Bank of America Corp.’s purchase of Merrill Lynch & Co.

House Financial Services Committee Chairman Barney Frank (D., Mass.) took a new stance Thursday, saying there “probably should be hearings.” He also said Bank of America Chief Executive Kenneth Lewis should get some credit for doing “the right thing” by going through with the Merrill Lynch deal in December because he was acting “in the public interest” to help stabilize the financial system.

The new questions come after shareholders on Wednesday ousted Mr. Lewis as chairman, in part due to frustration stemming from the bank’s acquisition of Merrill Lynch. Merrill’s losses caused the firm to take more bailout money from the Treasury in January. Now the bank faces the challenge of raising even more new capital in the wake of the Fed’s stress test as it steels itself for losses on loans in its portfolio.

Mr. Lewis, in February testimony for an investigation by New York Attorney General Andrew Cuomo, said he felt pressured by former Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to complete the deal after attempting to pull out when he learned of Merrill’s ballooning losses, and to not publicly disclose issues with Merrill’s finances.

Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee, said he probably would seek testimony from Messrs. Bernanke, Paulson and Lewis, among others.

“There is a serious disagreement among the people involved, and we need to get a clearer picture of what transpired,” Mr. Bachus said.

q2uiz

Recently I was nattering about fiddleheads and how much I wanted to try them, and some of you rhapsodized about the deliciousness and made me crazed with thwarted desire, (thanks a LOT, ya meanies,) although that discussion did lead to my first stinging nettle eating—thanks for the delicious recipe, Fasty—and nettles have turned out to be wonderful! And there’s ACRES of ‘em, too!
*happy, gluttonous sigh *

Like said all mushily, Ben’s blog really IS the Über Blog…

Anyway, but BEFORE the nettles I went out and tried the newly emerged coiled fronds of a maidenhair fern, just in case. Icky!
So that was the end of my fern eating, and I resigned myself to being just a sad, broken shell of a forlorn and fiddlehead-less gal, weeping in the woods…

But that’s not the end of it! No! My venerable Japanese neighbor witnessed me trotting eagerly by with a giant bale of nettles, saw I like wild foods, and today she came by with a dish, rice with maidenhair fern fronds, and it was SO delicious. She tried to tell me how to make it but I didn’t understand her.
(I rarely do, I just stand there nodding agreeably, and she doesn’t seem to care.)
What I did grasp was that there’s ferns, fire-place ashes and boiling water involved. Do any of you know about this process? Because I am in a serious fever to know how.

Since all you tiresomely knowledgeable smarty-pantses seem to know everything else in the world, making ümlauts, how to oil wooden knife handles, that Brainiac is a jerk and shrunk Superman’s hometown, etc, etc, I figured someone would know about THIS, too.
Probably ALL of you know about it, and just haven’t told me.
Well, I wanna know! Quick! I got a whole forest to eat, here!

*assumes an urgent, forest-eating, starving face *