The Housing Bubble

Flagstar May Have to Sell Mortgage-Billing Contracts for a Loss

Aug. 19 (Bloomberg) — Flagstar Bancorp Inc., the Michigan lender whose January takeover sparked scrutiny of buyout firms’ role in the banking industry, may be forced to sell some of its $658 million of mortgage-collection contracts at a loss, people briefed on the matter said.

Fannie Mae, which owns or guarantees the mortgages, wants servicing on late or defaulted loans to be handled by specialists, said the people, who declined to be identified because the talks are private. Troy-based Flagstar would keep servicing Fannie Mae loans that remain current.

Flagstar, the 10th-biggest U.S. mortgage underwriter, is among several banks under pressure from Fannie Mae to pursue delinquent loans more aggressively, the people said. It’s controlled by MatlinPatterson Global Advisers LLC, which injected $350 million into Flagstar and is trying to shore up the lender’s finances after it posted losses in seven of the past eight quarters.

“Large mortgage servicers are just generally overwhelmed,” said Steve Horne, the former director of servicing risk strategy at Fannie Mae who now heads Wingspan Portfolio Advisors LLC, a specialist in distressed-loan collections. They “really lack the tools to cope with the volume of defaults.”

Flagstar doesn’t break out the delinquency rate on the loans it services for Fannie Mae, and the amount of servicing contracts that may be divested isn’t settled because talks are still in progress, one of the people briefed on the matter said. Andrew Siegel, a spokesman for MatlinPatterson, referred questions to Flagstar. The bank’s chief financial officer, Paul Borja, didn’t return calls for comment. Brian Faith, a spokesman for Fannie Mae, said he couldn’t comment.

Climate Bill ‘Out of Control,’ Former Senator Says…

Aug. 18 (Bloomberg) — Cap-and-trade legislation to limit U.S. carbon dioxide emissions has “gotten out of control” and needs to be scaled back in Congress, said former Democratic Senator Timothy Wirth.

“The Republicans are right — it’s a cap-and-tax bill,” Wirth, a climate-change negotiator during President Bill Clinton’s administration, said in an Aug. 14 interview. “That’s what it is because they are raising revenue to do all sorts of things, especially to take care of the coal industry, and it makes no sense.”

A system to cap carbon emissions and then create a market for the trading of pollution allowances is the centerpiece of President Barack Obama’s proposal to fight global warming. Wirth, who helped craft a successful emissions-trading market two decades ago that cut sulfur-dioxide pollution causing acid rain, is among Democrats questioning House-passed legislation set to be taken up next month in the Senate.

“I’m not critical of cap-and-trade,” said Wirth, head of the UN Foundation, a philanthropy established in 1998 with $1 billion from medial mogul Ted Turner. “But it has to be used in a targeted and disciplined way, and what has happened is it’s gotten out of control.”

Wirth, who represented Colorado in the Senate, says the House-passed plan is “too broad across the economy.” Instead of capping carbon pollution generally, the measure should focus solely on coal-fired power plants, he said

Americans: Serfs Ruled by Oligarchs Paul Craig Roberts

http://www.counterpunch.org/roberts08192009.html

Re-post. Florida “loses” population for the first time in 46 years. 56,000 people or some such thing. But I don’t entirely believe this. There is sort of a shadow population here, families living 2 and 3 to a house, dwellings rented in the name of a single person who has roommates, etc. However, if this is a trend, let it continue. Florida has a fragile environment that can’t really support an ever-growing population. Not to mention, if air conditioning weren’t readily available, this state would be toast.

http://www.tampabay.com/news/business/economicdevelopment/article1026447.ece

Chinese stock shares are off by about 20 pct so far this month. Wasn’t that the percentage amount by which the US stock market crashed on Black Monday (Oct 19, 1987)?

But no worries — we have been assured by the IMF that the global economic recovery is underway. Further, the Asian economies are decoupled from the rest of the world, so no worries.

* WALL STREET JOURNAL
* ASIA MARKETS
* AUGUST 20, 2009

China Leads Declines in Asia

By COLIN NG IN SINGAPORE and CHRIS OLIVER IN HONG KONG

Shanghai stocks dropped 4.3% Wednesday, leading a broad Asian selloff for the second time this week, amid concerns over further tightening in credit conditions and a lack of market-supportive measures from Beijing.

Chinese resource companies posted some of the biggest losses, particularly copper producers, tracking a decline in metals prices and pointing to uncertainty surrounding the Chinese economy.

“Investors are worried about whether the [Chinese] government will adopt further tightening measures,” said Ben Kwong, chief operating officer of KGI Securities in Hong Kong.

China’s benchmark Shanghai Composite index is now down about 20% since its Aug. 4 peak. Also in China, the Shenzhen Composite Index was off 4.9%.
…

Who moved my green shoots? (But I see nothing here that an ongoing rally on all the major US stock market indexes can’t fix…)

Indications
Aug 19, 2009, 7:36 a.m. EST
U.S. stock index futures point lower

By William L. Watts, MarketWatch

LONDON (MarketWatch) — U.S. stock index futures fell Wednesday, pointing to a lower open for Wall Street following another in a recent string of sharp drops by Chinese shares.

Futures on the S&P 500 index fell 9 points to 980.60, while Nasdaq 100 futures dropped 18.25 points to 1,568.75. Futures on the Dow Jones Industrial Average fell 74 points.

U.S. stocks posted a modest rebound Tuesday, a day after taking their biggest tumble in six weeks. The Dow Jones Industrial Average (INDU 9,218, +82.60, +0.90%) advanced 0.9%, the S&P 500 Index (SPX 989.67, +9.94, +1.01%) gained 1% and the Nasdaq Composite (COMP 1,956, +25.08, +1.30%) logged a 1.3% gain.

Strategists were unimpressed by the bounce.

“The move higher in equities and commodities yesterday [was] relatively small. The S&P 500 was not even able to retest 992.40, Monday’s breakout level,” wrote Naeem Wahid, strategist at Bank of Scotland.

The weak tone, accompanied by a relatively light economic data calendar, “does not bode well for pro-risk trading today,” Wahid said, in a note to clients.

After focusing for several weeks on better-than-expected earnings data, investors are now turning their attention back to the overall macroeconomic picture, said Joshua Raymond, a strategist at City Index.

Despite some signs of recovery, investors aren’t convinced the scale of the market’s rally since March is justified by the global economic picture, he said.

China’s top stock markets saw heavy falls Wednesday, with the Shanghai Composite Index falling 4.3% and the Shenzhen Composite Index ending 4.9% lower. Resource companies led the way down.

Elsewhere in Asia, Hong Kong’s Hang Seng Index fell 1.7%, while Japan’s Nikkei Stock Average of 225 companies closed 0.8% lower.
…

Don’t know nothin’ about no rationing, but Obamacare is D.O.A. Long live your grandma!

* The Wall Street Journal
* OPINION
* AUGUST 18, 2009, 7:16 P.M. ET

ObamaCare Is All About Rationing

Overspending is far preferable to artificially limiting the availability of new procedures and technologies.

By MARTIN FELDSTEIN

Although administration officials are eager to deny it, rationing health care is central to President Barack Obama’s health plan. The Obama strategy is to reduce health costs by rationing the services that we and future generations of patients will receive.

The White House Council of Economic Advisers issued a report in June explaining the Obama administration’s goal of reducing projected health spending by 30% over the next two decades. That reduction would be achieved by eliminating “high cost, low-value treatments,” by “implementing a set of performance measures that all providers would adopt,” and by “directly targeting individual providers . . . (and other) high-end outliers.”
…

It looks like the Plunge Protection Team has another busy day ahead of it:

Marketwatch dot com

Before the Bell
Countdown to the open:

Index Futures:

SP 500 978.60 -11.00 -1.11%

DOW 9,127 -80.00 -0.87%

NASDAQ 1,566 -21.00 -1.32%

Financial Times
German data fuel deflation fears

By Ralph Atkins in Frankfurt

Published: August 19 2009 11:32 | Last updated: August 19 2009 11:32

German producer prices have recorded their largest year-on-year fall since the second world war, highlighting the weakness of inflationary pressures across Europe.

Prices of industrial products were 7.8 per cent lower in July than 12 months earlier, the steepest such fall since records began in 1949, the German federal statistics office reported.
…

PB, interesting article yesterday on deflation. It seems the only ones that should fear deflation are CEO’s, RE investors, debtors and our government.

Obama backs off snitch plan, shuts down informer email site
August 18, 1:33 PMOrlando Republican Examiner

Some two weeks ago, in a two part article, I reported on the Obama Administration’s effort to collect information on individuals and groups that spoke in opposition to the President’s health care initiative. On the White House health care reform website, persons who received emails the Administration characterized as ‘fishy’ were encouraged to forward a copy to the government site.
After a public outcry at the Obama attempt to gather names and identifying information about his opponents, his minions have quietly backpedaled. Without making any kind of public pronouncement on the matter, the snitch mailbox has been shut down. While the ‘snitch’ email address still appears in the White House website, emails sent to it trigger the following response:

flag@whitehouse.gov
“SMTP error from remote mail server after RCPT TO::
host mailhub-wh2.whitehouse.gov [63.161.169.140]:
550 5.2.1 … The email address you just sent a message to is no longer in service.We are now accepting your feedback about health insurance reform via:http://www.whitehouse.gov/realitycheck”

The White House has created a new web page in which it solicits questions and suggestions about health care reform via email. However, it contains the following statement:

“Please refrain from submitting any individual’s personal information, including their email address, without their permission.”

I should have added commodity producers.

Why failing to mark bad assets to the market and bailing out insolvent banks makes 2009 look just like 1929 -

Let me remind everyone of the last time we played this game with unbridled, fraudulent credit creation: The 1920s.

After the ‘29 crash things seemed to stabilize. By the middle of 1930 all of the economists of the day predicted that the worst had been avoided and growth was just around the corner. The stock market had recovered to early 1929 figures and it appeared that we had stared into the abyss - but had “saved ourselves”. Among them:

“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“I am convinced that through these measures we have reestablished confidence.”
- Herbert Hoover, December 1929

“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929

“For the immediate future, at least, the outlook (stocks) is bright.”
- Irving Fisher, Ph.D. in Economics, in early 1930

“…there are indications that the severest phase of the recession is over…”
- Harvard Economic Society (HES) Jan 18, 1930

“There is nothing in the situation to be disturbed about.”
- Secretary of the Treasury Andrew Mellon, Feb 1930

“The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
- Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930

“… the outlook continues favorable…”
- HES Mar 29, 1930

“… the outlook is favorable…”
- HES Apr 19, 1930

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
- Herbert Hoover, President of the United States, May 1, 1930

“…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…”
- HES May 17, 1930

“Gentleman, you have come sixty days too late. The depression is over.”
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

“… irregular and conflicting movements of business should soon give way to a sustained recovery…”
- HES June 28, 1930

“… the present depression has about spent its force…”
- HES, Aug 30, 1930

Notice anything similar to the pronouncements of Krugman, Cramer, Kneale, President Obama, Geithner, Bernanke and dozens more?

In 1930 they could not have been more wrong; by failing to immediately force the bad debt and bogus asset claims out into the open, clearing the system, government set the stage for a grueling decade that would prove the most difficult economically our nation has faced to date.

We are headed directly for the same outcome, for the same reason. History will repeat, not because it is destined to, but because in response to lying, cheating and fraud the same errors are being made today that were made then.

The view of all of the “great pundits and policy wonks”, including Bernanke, Geithner, Paulson, Summers and more is that if we “backstop” the credit system we can “muddle through.” The problem with such a thesis is that doing so requires a continual injection of borrowed money and leaves the system on life support, unable to spur the very economic recovery you need to get out of the hole.

Much of this error in thought process comes from the fact that all of these people going back to Rubin, Greenspan and more, had their hand in the creation of the policies and acts that led to the problem in the first place, including the lying - and therefore you’re asking someone to repudiate a policy they have espoused for 20 years or more.

That’s darn unlikely.

Unfortunately the math is never wrong and debt-based monetary systems require a sound and trustworthy web of intermediaries to function. We cannot obtain a strong, durable recovery without clearing the credit transmission mechanism, and doing that requires honest marks. That, in turn, mandates the closure of all the insolvent institutions, a colossal but inescapable task.

Yet it must be done if we want to return to economic prosperity, and if we fail to do so then we are simply one “event” away from a “sudden stop” outcome that nobody with half a brain wants to see occur. While it certainly is possible that we could “avoid” this and wind up with an outcome more akin to Japan, is it worth the risk of a full-on meltdown so the modern-day robber barons can keep their mansion in The Hamptons and not go to prison for their sins?

I think not.

(From K.Denninger)

In Appraisal Shift, Lenders Gain Power and Critics

NYTimes

Mike Kennedy, a real estate appraiser in Monroe, N.Y., was examining a suburban house a few years ago when he discovered five feet of water in the basement. The mortgage broker arranging the owner’s refinancing asked him to pretend it was not there.

Brokers, real estate agents and banks asked appraisers to do a lot of pretending during the housing boom, pumping up values while ignoring defects. While Mr. Kennedy says he never complied, many appraisers did, some of them thinking they had no choice if they wanted work. A profession that should have been a brake on the spiral in home prices instead became a big contributor.

On May 1, a sweeping change took effect that was meant to reduce the conflicts of interest in home appraisals while safeguarding the independence of the people who do them.

Brokers and real estate agents can no longer order appraisals. Lenders now control the entire process.

The Home Valuation Code of Conduct is setting off a bitter battle. Mortgage brokers, lenders, real estate agents, regulators and appraisers are all arguing over whether an effort to fix one problem has created many new ones.

BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH (CR, FPSS)
But, it is different in MA. We have a diverse economy, and we are immune!!!!
http://www.boston.com/business/ticker/2009/08/foreclosures_ri.html

ACT Independent.org decries BO’s military adventures:

Seven months into the new administration, it is clear that Obama is on his way to failure and worse, potentially dragging a whole range of progressive causes down to defeat. For so many disappointed activists, the honeymoon is over and the thrill is gone, and what remains is a trail of broken promises and betrayals. The question is no longer how to save Obama, but how to defend causes that were here long before Obama arrived, and will be here long after he is gone. In 1979, it was evident to Sen. Ted Kennedy that Jimmy Carter was wrecking the Democratic Party and had to be opposed. Kennedy fell short of the nomination, but his valiant campaign undoubtedly did much to keep the Democratic opposition alive during the long nightmare of Reagan-Bush. Today, a timely primary challenge to Obama by a candidate without Kennedy’s baggage might capture the nomination and avoid the new nightmare of a Mitt Romney presidency. In the short run, we need a revival of the peace movement on the Afghanistan issue.

AFGHAN-PAKISTAN WAR ESCALATES TOWARD A DECADE OF SLAUGHTER

During July, 41 US soldiers, 34 NATO troops, and thousands of civilians died in Afghanistan and Pakistan, meaning that this war is already as bad as Iraq, and deteriorating faster. Obama’s hand-picked commander is Gen. McChrystal, who, in a macabre mockery of Obama’s election promises, was implicated in torture in Iraq. (New York Times, May 31, 2009) Obama is escalating the Afghan war way beyond Bush, but behind the scenes McChrystal is already demanding a doubling of US troop strength. Official Washington knows that Obama has signed off on ten years of war,­ in effect, an endless commitment: “As the Obama administration expands U.S. involvement in Afghanistan, military experts are warning that the United States is taking on security and political commitments that will last at least a decade and a cost that will probably eclipse that of the Iraq war.” (Walter Pincus, Washington Post, August 9, 2009) At this stage in the Iraq war, there were mass demonstrations against Bush, which he ignored. Today, it would be much harder for Obama to ignore similar actions, but the peace movement leaders are AWOL, silent, nowhere to be found. For the rest of us, naked aggression by Obama is still aggression. We must mount mass demonstrations in 2009 against the Afghan war before Iran, Pakistan, and even China or Russia become embroiled. We are sick and tired of foreign wars and we want all US troops brought home from the Iraq and Afghan war zones, immediately. We also want Joe Biden to shut his big mouth and stop making trouble with the Russians in Georgia, Ukraine, and Poland, since the stakes here could include nuclear war.

Deere Down…

Deere’s Profit Falls 27%; 2009 Sales Forecast Is Cut.

Aug. 19 (Bloomberg) — Deere & Co., the world’s largest maker of farm equipment, said third-quarter profit dropped 27 percent and lowered its 2009 sales forecast amid declining demand for lawn and construction machinery.

Net income fell to $420 million, or 99 cents a share, in the three months ended July 31, from $575.2 million, or $1.32, a year ago, Moline, Illinois-based Deere said today in a statement. Revenue fell 24 percent to $5.89 billion.

Deere’s quarterly sales dropped for the second consecutive quarter on a year-over-year basis as the global recession and construction slump reduced demand for machinery, including lawn tractors. Deere forecast fourth-quarter equipment sales will decline 34 percent.

“The fourth quarter is weaker, and it’s uncertain what next year will be like,” Eli Lustgarten, an analyst with Longbow Securities in Independence, Ohio, said today in a telephone interview.

Deere forecast 2009 equipment sales will drop 21 percent, down from an estimate on May 20 of a 19 percent decline. The company kept its forecast of 2009 net income at $1.1 billion, which Lustgarten said indicates the company will only break even in the fourth quarter.

those countries will need to leapfrog over about 700 years of social development before they even approach having what the West considers basic human rights

And that won’t happen until they successfully marginalize Islam like Christianity is in the western world.

Good luck.

The Greenback Effect - NYTimes Op-Ed
By WARREN E. BUFFETT
Published: August 18, 2009

Omaha -

IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions.

The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.

To be sure, we’ve been doing this for a reason I resoundingly applaud. Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage and decisiveness. Fortunately, the Federal Reserve and key economic officials in both the Bush and Obama administrations responded more than ably to the need.

They made mistakes, of course. How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.

The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

…………..

An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money. Let’s look at the prospects for each individually — and in combination.

The current account deficit — dollars that we force-feed to the rest of the world and that must then be invested — will be $400 billion or so this year. Assume, in a relatively benign scenario, that all of this is directed by the recipients — China leads the list — to purchases of United States debt. Never mind that this all-Treasuries allocation is no sure thing: some countries may decide that purchasing American stocks, real estate or entire companies makes more sense than soaking up dollar-denominated bonds. Rumblings to that effect have recently increased.

Then take the second element of the scenario — borrowing from our own citizens. Assume that Americans save $500 billion, far above what they’ve saved recently but perhaps consistent with the changing national mood. Finally, assume that these citizens opt to put all their savings into United States Treasuries (partly through intermediaries like banks).

Even with these heroic assumptions, the Treasury will be obliged to find another $900 billion to finance the remainder of the $1.8 trillion of debt it is issuing. Washington’s printing presses will need to work overtime.

Slowing them down will require extraordinary political will. With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap.

Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

The following was posted late yesterday:

Slim - Clean bores the old fashion way. Rod, patches, solvent, and gun oil. Although recently, I have switched to a modern synthetic solvent/oil combination. Sometimes a brass wire brush is necessary if I’ve been shooting cast bullets that tend to leave behind chunks of lead in your barrel. Does the bore snake work for ya on your rifles/pistols/shotguns? I’m open to new ideas. Oh, and what’s up with the porch light at the Slim Ranch?

Here are my responses:

1. I use the rod, patches, solvent, and gun oil to clean Old Bessie. She really appreciates the attention. The bore snake method seems a bit too hurried to me.

2. The solar porch light is having some serious issues with the super-bright City of Tucson street light. My light’s been calling it quits in the wee hours of the morning. Not good. So, I’ve been affixing duct tape patches to the photo cell, in hopes of blocking some of that street light illumination. Am still trying to come up with the ideal patch that will cause my light to shine until dawn. If this patching thing doesn’t work, I’ll have to move the light to a darker location.

“The United States economy is now out of the emergency room and appears to be on a slow path to recovery”

Really? What has changed aside from an enormous hospital bill? If the US got emergency-room care from the government, then they got the words most expensive band-aid ever applied to a wound. “That’ll be $13 trillion for today’s visit. When can we schedule your next thirty appointments to change the bandage?”

Good thing Barry’s on vaction, gives him a chance to re-read the script. Bad news, comb over Joe’s out flapping his gum’s, and bound to step in it.

Obama Goes Postal, Lands in Dead-Letter Office.

Aug. 18 (Bloomberg) — “UPS and FedEx are doing just fine. It’s the Post Office that’s always having problems.” — Barack Obama, Aug. 11, 2009

No institution has been the butt of more government- inefficiency jokes than the U.S. Postal Service. Maybe the Department of Motor Vehicles.

The only way the post office can stay in business is its government subsidy. The USPS lost $2.4 billion in the quarter ended in June and projects a net loss of $7 billion in fiscal 2009, outstanding debt of more than $10 billion and a cash shortfall of $1 billion. It was moved to intensive care — the Government Accountability Office’s list of “high risk” cases - - last month and told to shape up. (It must be the only entity that hasn’t cashed in on TARP!)

That didn’t stop President Barack Obama from holding up the post office as an example at a town hall meeting in Portsmouth, New Hampshire, last week.

When Obama compared the post office to UPS and FedEx, he was clearly hoping to assuage voter concerns about a public health-care option undercutting and eliminating private insurance.

What he did instead was conjure up visions of long lines and interminable waits. Why do we need or want a health-care system that works like the post office?

What’s more, if the USPS is struggling to compete with private companies, as Obama implied, why introduce a government health-care option that would operate at the same disadvantage?

Obama Unscripted

These are just two of the questions someone listening to the president’s health-insurance reform roadshow might want to ask.

Impromptu Obamanomics is getting scarier by the day. For all the president’s touted intelligence, his un-teleprompted comments reveal a basic misunderstanding of capitalist principles.

US Housing Market Could Be Facing Another Bubble: Shiller
August 19, 2009, 11:04 am EDT

The housing market, which already has been battered by the worst collapse since the Great Depression, could be setting itself for another bubble, well-known economist Robert Shiller told CNBC.

With home affordability at a 40-year high, there is “absolutley” a possibility that the housing market will face another bubble in the next five years, said Shiller, an economics professor at Yale, co-founder of MacroMarkets and co-developer of the monthly Case-Shiller home price index.

“The low interest rates, the affordability is leaning that way and the ratios are back down,” Shiller said in a live interview. “I get glimmers of excitement among some people, but we still have a high inventory of unsold homes, and we still have a lot of weariness because of the recent experience.”

Although the most recent Case-Shiller report showed that US home prices posted their first monthly increase in almost three years, the sector-and the economy-are still a long way from recovery, Shiller said. Another round of stimulus money and revival of the credit markets is the only way the economy will shake out of this rough patch, Shiller said.

“It’s clearly not over yet,” he said. “It’s not obvious that people are really ready to spend again. That may take years to rekindle that normalcy.”

Dollar just did a nosedive, with commodities subsequently up (e.g. oil over $73). Anyone know what’s up? BB say something bad?

The conversation after Ahansen’s post yesterday caused me to wax lyrical. I dedicate the poem at the end of the comments to our favorite bear wrestler.

Additionally, I found an interesting news story that explains why dear wifey and I only have girls:

http://www2.macleans.ca/2009/08/17/why-women-keep-getting-prettier/

From the story, “The fairer among us also tend to conceive more daughters than sons.”

“My Bad! Woman’s House Mistakenly Auctioned by Bank
A Homestead woman’s home was auctioned to the highest bidder

You know times are tough when people are getting kicked out of their house when it’s not even for sale.
That’s what happened to Anna Ramirez after she found all of her stuff out on the front lawn of her Homestead home last week and a strange man demanding she get out of his newly purchased house…

…The man who bought the house told Ramirez he paid $87,000 for it, which shocked Ramirez, who bought the house for $260,000….

…A mistake in the Miami-Dade Clerk’s Office appears to be behind the mishap, which landed Ramirez homeless for more than 24 hours.
The sale was eventually reversed by a Miami-Dade judge, allowing Ramirez to return to her old digs. Ramirez said she wants to sue for the damage to her furniture.
Ramirez has lived in the house for three years and recently refinanced the home with the bank.”

http://www.nbcmiami.com/news/local-beat/Womans-House-Mistakenly-Auctioned-by-Bank-53583357.html

I keep hearing over and over that C4C is “working.”

I keep hearing over and over that the $8k homebuyers’ credit is “working.”

What on earth do they mean by “working”? If by “working” they mean that giving people FREE money (subsidized by the rest of us) will cause them to go SPEND it, then yeah I guess it is working! Gee, whodathunkit?!

Aug. 19 (Bloomberg) — On the chance I might suffer Terri Schiavo’s horrific fate, suspended between life and death as family members battled, I went to a lawyer.

I signed a document that says what treatment, if any, I would want under similar circumstances. It names the person and two backups who would speak for me in case I couldn’t.

Grateful for advice on how to get what I want even when incapacitated, I wish the same for all those who want that peace of mind for themselves and their families.

They could get the help, but for the partisan lies told by demagoguing politicians who swift-boated an innocuous provision in House health-care reform legislation.

Thanks to them, a once bipartisan idea aimed at sparing families their very own Schiavo drama came to be labeled as government-sponsored euthanasia, even Nazism.

It’s only one provision, a mere six pages in the 1,018-page House bill. But the politically motivated whoppers that have all but killed the proposed consultations make the spreaders of these falsehoods unworthy of belief in anything associated with the bill.

Not that we should take the word of any politician in this debate. President Barack Obama’s claims about the plan’s cost and how it would be paid for deserve serious fact-checking.

But for pure demagoguery, Sarah Palin gets the prize for most outrageous. And smelling blood, stalwarts of the Republican Party jumped in. They infected the debate with a fever of fear that spread quickly among the vulnerable, the gullible and those already angry or suspicious.

Various Versions

The lie got told and re-told in various versions by former House Speaker Newt Gingrich, Republican National Chairman Michael Steele, House Republican leader John Boehner and Senator Charles Grassley, among others.

To be clear, the consultation idea would force not a single patient to go for end-of-life counseling. (Frankly, I wish someone would force some of my procrastinating loved ones to prepare for the worst.)

It merely says that if a Medicare recipient WANTS such a consultation with a health provider once every five years, Medicare will pay for it. Those gravely ill could go more often.

Obama plan creates ‘Public Option’ malpractice law firm

By: Scott Ott Examiner Columnist August 18, 2009
News fairly unbalanced. We report. You decipher.

With multimillion-dollar jury awards in medical malpractice suits driving up the cost of liability insurance for physicians — and thus the cost of health care to consumers — President Barack Obama today backed a health care malpractice reform plan that would create a “public option” law firm to sue doctors for “reasonable” damages.

“We need to keep these ambulance-chasers honest,” Obama said. “These sharks are becoming obscenely wealthy by tugging the heartstrings of compassionate jurors, who then grant ridiculous damage awards for pain and suffering, which makes malpractice insurance rates skyrocket and jacks the price of health care for everyone.”

The president said, “No one knows better than the U.S. Congress how desperately we need a public option malpractice firm to boost choice and competition. Most members are either lawyers like me, or got elected by befriending lawyers who became major campaign contributors. I’m sure they’ll be receptive to my plan because they have that rare combination of being public servants who are committed to equal justice under law.”

The public option medical malpractice firm will sue a doctors for actual damages and expenses, and a 10 percent fee to cover the cost of preparing the case.

“By having one group of lawyers in the land who act with unquestioned integrity,” said the president, “we’ll force the private-sector bloodsuckers to drastically reduce their fees.”

House Speaker Nancy Pelosi, D-Calf., and Senate Majority Leader Harry Reid, D-Nev., released a joint statement hailing the president’s proposal, and noting that “every private enterprise in America would benefit from a public option alternative, and we’re confident attorneys will embrace the personal sacrifice.”

Wells Fargo sued over home equity lines of credit
Customer files lawsuit against Wells Fargo over reductions in home equity lines of credit. Wednesday August 19, 2009,

NEW YORK (AP) — The banking unit of Wells Fargo & Co. is facing a lawsuit claiming it illegally reduced the size of customers’ home equity lines of credit.

The suit, which was filed in Illinois, claims Wells Fargo failed to accurately assess the value of customers’ houses before deciding to cut the size of their credit lines. San Francisco-based Wells Fargo is being accused of using unreliable computer models that wrongly valued home prices too low to justify cutting the size of customers’ loans.

Home equity lines of credit are similar to credit cards in that a customer has a credit limit and can continue to borrow money until the limit is reached. Once a portion is paid off, it again becomes accessible to borrow. But, home equity lines of credit are backed by a borrower’s property, whereas credit cares are unsecured.

Michael Hickman, who filed the lawsuit on behalf of himself and is seeking class action status for it, claims Wells Fargo also did not provide proper notice that the bank was reducing the size of the credit lines.

The bank’s notice for reducing the lines also did not specifically provide a new estimated value for the property or the method used to determine the houses value. Hickman’s lawsuit said that information was needed so a customer could challenge the change in the credit limit and try and reinstate the previous limit.

CON-doh! conversion hell here in Jax, FL. Several conversions sold during the boom were later found with building defects. Special assessments as high as $500-600 a month on top of bubblicious prices/mortgages. Now, they are only cash sales — no bank will finance — 40 - 60K!

I’m glad I sat this bubble out. I actually looked at these places during the peak. Oh, the humanity!

General Motors Cancels Buick SUV One Week After Announcing It.

Aug. 19 (Bloomberg) — General Motors Co. said it canceled plans for a new Buick sport-utility vehicle announced Aug. 6 after potential customers said the model lacked the “premium characteristics” they expect from the brand.

The decision was made Aug. 14, after GM earlier in the week showed the SUV and other future vehicles to consumers, dealers, employees, analysts and news reporters, Vice Chairman Tom Stephens said on a company blog. The plans for the SUV called for a plug-in hybrid version, which also was canceled, he wrote.

The speed of the cancellation shows that GM since emerging from bankruptcy last month “is listening and moving quickly,” Stephens wrote. Chief Executive Officer Fritz Henderson has said he wants to transform the Detroit-based company to be more responsive to customers and make decisions quickly.

“It’s obviously a sign of a faster GM and a GM more open to outside feedback,” said Jim Hall, principal of auto consulting firm 2953 Analytics in Birmingham, Michigan. “It also suggests there were already concerns inside the company about the product.”

The plug-in hybrid technology that was to be used for the Buick SUV will be applied to another vehicle, with no delay, that GM will discuss soon, Stephens wrote.

At the new-product event, the planned SUV “received consistent feedback from large parts of all the audiences that it didn’t fit the premium characteristics that customers have come to expect from Buick,” he wrote.

Clunk!
Word is the talented gubmint folks running the clunk program, will be promoted with cash bonuses, to head the sure to be successful sickness care system. Who’s acronym has yet to be determined. They would like to transfer all of their C4C stationary and offical looking documents if possible. Cash4Cripples was immediately shot down by the team Barry brain trust however.

NY dealers pull out of clunkers program.
Aug 19

NEW YORK (AP) - Hundreds of auto dealers in the New York area have withdrawn from the government’s Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They’re also worried about getting repaid.

“(The government) needs to move the system forward and they need to start paying these dealers,” said Mark Schienberg, the group’s president. “This is a cash-dependent business.”

The program offers up to $4,500 to shoppers who trade in vehicles getting 18 mpg or less for a more fuel-efficient car or truck. Dealers pay the rebates out of pocket, then must wait to be reimbursed by the government. But administrative snags and heavy paperwork have created a backlog of unpaid claims.

Schienberg said the group’s dealers have been repaid for only about 2 percent of the clunkers deals they’ve made so far.

Many dealers have said they are worried they won’t get repaid at all, while others have waited so long to get reimbursed they don’t have the cash to fund any more rebates, Schienberg said.

“The program is a great program in the sense that it’s creating a lot of floor traffic that a lot of dealers haven’t seen in a long time,” he said.

“But it’s in the hands of this enormous bureaucracy and regulatory agency,” he added. “If they don’t get out of their own way, this program is going to be a huge failure.”

Question guys….

I know people buying houses they couldnt afford doesnt get much love here…

http://money.cnn.com/galleries/2009/real_estate/0908/gallery.Life_after_foreclosure/index.html

My questions is, I sort of feel sorry for these people. They were really stupid. Looking back, it makes me wonder how anyone could have fallen for the adjustable rate mortgage. It seems so stupid that they couldnt see they could not pay for these houses at the natural rate. Almost everyone of them had adjustable rate mortgages. It seems to me, before you get approved for an adjustable rate mortgage, you should be approved first at the rate it could go to….I honestly think this whole debacle could have been prevented if banks had done a litmus test on those it lent to. If the banks didnt lend the money, this would have never happened. People were so selfish and only saw the initial low payments, it all seems so childish and greedy. These people had a hard falling back down to earth….

Is that just me?

This idea that Cash-for-Clunkers or Dough-for-Dumps will somehow build sales momentum is pure rubbish. What these programs will quite obviously succeed in doing is shifting tomorrow’s demand for cars and houses into the current period.

Who will be left to buy consumer durables tomorrow? (And did the financial engineers who designed these programs consider that issue?)

MarketWatch First Take

Aug 19, 2009, 1:14 p.m. EST
‘Cash for Clunkers’ runs its course
Commentary: Can the automakers sustain whipped-up sales momentum?

Will ‘Cash for Clunkers’ backfire on automakers?

By MarketWatch

SAN FRANCISCO (MarketWatch) — Everyone knew this day was coming.

“Cash for clunkers,” the federal rebate program designed to juice car sales while ridding the roads of dirty old gas guzzlers, is slowing down.

According to auto analysts at Edmunds.com, the number of folks visiting dealer showrooms with “purchase intent” is down 31% from late July, when there was a frenzied rush to grab up to $4,500 worth of government rebates for clunkers traded in for thriftier new vehicles. People know a deal when they see one.

The plan was arguably the most targeted, timely and successful of the government’s many efforts to revive a struggling U.S. economy.

In fact, it was so popular it burned through its initial $1 billion funding in less than two weeks, prompting Congress to pony up another $2 billion at the impassioned behest of an industry suddenly unable to crank out cars conforming to gas-mileage eligibility criteria fast enough to meet demand.

And that could have unintended consequences.
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The Specter of Debt Revolt Is Haunting Europe
Why Iceland and Latvia Won’t (and Can’t) Pay for the Kleptocrats’ Ripoffs
By MICHAEL HUDSON

In the wake of the world crash populations are asking not only whether debts should be paid, but whether they can be paid! If they can’t be, then trying to pay will only shrink economics further, preventing them from becoming viable. This is what has led past structural adjustment programs to fail.

For the past decade Iceland has been a kind of controlled experiment, an extreme test case of neoliberal free-market ideology. What has been tested has been whether there is a limit to how far a population can be pushed into debt-dependency. Is there a limit, a point at which government will draw a line against by taking on public responsibility for private debts beyond any reasonable capacity to pay without drastically slashing public spending on education, health care and other basic services?

The problem for the post-Soviet economies such as Latvia is that independence in 1991 did not bring the hoped-for Western living standards. Like Iceland, these countries remain dependent on imports for their consumer goods and capital equipment. Their trade deficits have been financed by the global property bubble – borrowing in foreign currency against property that was free of debt at the time of independence. Now these assets are fully “loaned up,” the bubble has burst and payback time has arrived. No more credit is flowing to the Baltics from Swedish banks, to Hungary from Austrian banks, or to Iceland from Britain and the Netherlands. Unemployment is rising and governments are slashing healthcare and education budgets. The resulting economic shrinkage is leaving large swaths of real estate with negative equity…

(link to article): http://tinyurl.com/kkslvb

…No doubt the post-Soviet countries are watching, along with Latin American, African and other sovereign debtors whose growth has been stunted by the predatory austerity programs that IMF, World Bank and EU neoliberals imposed in recent decades. The post-Bretton Woods era is over. We should all celebrate.

Michael Hudson is Distinguished Prof. of Economics at UMKC. In 2006 he was Prof. of Economics and Director of Economic Research at the Riga Graduate School of Law in Latvia. His website is michael-hudson.com.

“A little rebellion now and then is a good thing and as necessary in the political world as storms in the physical.”

~Thomas Jefferson

Bond Report

Aug 19, 2009, 3:53 p.m. EST
Treasurys maintain gains after Fed buyback
Fed schedules fewer purchases in coming weeks

By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) — Treasury prices traded higher Wednesday, staging a rally that pushed 10-year yields to levels last seen more than a month ago, as the bond market digested the Federal Reserve Bank of New York’s purchase of $2.599 billion in government debt.

Yields on the 10-year note fell 6 basis points to 3.45%, after earlier touching the lowest on a closing basis since mid-July.

Two-year note yields also fell, off 4 basis points to 0.99%, falling below 1% for the first time since July 22.

Bond prices move inversely to their yields.

For the Fed’s buyback, bond dealers submitted $13.087 billion in debt maturing between 2020 and 2026. See details on Fed’s Web site.

When the Fed last bought debt in that range, it purchased about $3 billion.

Fed policy makers said last week they will slow purchases to finish the buybacks in October, a month later than previously anticipated.

“It looks like the scaling-down of operations has begun,” said George Goncalves, chief fixed-income rates strategist at Cantor Fitzgerald, one of the 18 primary government security dealers that trades with the Fed.

According to Morgan Stanley, the U.S. central bank has bought more than $262 billion of the $300 billion in U.S. debt it promised in March to purchase in an effort to keep borrowing costs, particularly for companies and homebuyers, affordable.
…
Never mind that super-duper low interest rates have the side effect of keeping home prices (and the principle balance of the loan an average buyer needs to purchase one) unaffordable.

http://www.nbcmiami.com/news/local-beat/Womans-House-Mistakenly-Auctioned-by-Bank-53583357.html?yhp=1

Whoops, someones house got auctioned right out from under them.

Well, there ya go,there is no oversight and no responsibility to do the right thing, BUT the gov has given the banks millions of dollars and they in turn gave themselves huge bonuses.

The boomers will be bitchin to the man about their “health” care “rights” while stoned on their azz LOL!

Baby boomers still getting high.

WASHINGTON (Reuters) - Middle aged baby boomers are still turning on to illegal drugs forty years after Woodstock, doubling the rates of illicit drug use by the previous generation, according to a government study released on Wednesday.

The rates of people aged 50 to 59 who admit to using illicit drugs in the past year nearly doubled from 5.1 percent in 2002 to 9.4 percent in 2007 while rates among all other age groups are the same or decreasing, the U.S. Substance Abuse and Mental Health Services Administration reported.

“These findings show that many in the Woodstock generation continue to use illicit drugs as they age,” said SAMHSA Acting Administrator Eric Broderick. “This continued use poses medical risks to these individuals and is likely to put further strains on the nation’s healthcare system — highlighting the value of preventing drug use from ever starting.”

Baby boomers are the post World War II generation born between 1946 and 1964. The data used in the study came from various surveys including 16,656 men and women participating in the 2002 through 2007 National Surveys on Drug Use and Health. Click here to read the full report.

The study surveyed use of marijuana, cocaine, heroin, hallucinogens, inhalants and prescription drugs used non-medically.

At the other end of the age spectrum, the rate for those aged 18-25 who admitted to using illicit drugs was relatively unchanged at 19.7 percent, from 19.8 percent the previous year and 20.2 percent in 2002.

HUGE news after hours!

“The U.S. government’s budget office will announce next week the federal deficit for fiscal 2009 will total $1.58 trillion, about $262 billion lower than a forecast in May, an administration official said on Wednesday.”

news.yahoo.com/s/nm/20090819/pl_nm/us_economy_usa_deficit_2

I bet this will be good for at least a 300pt rally tomorrow. Clearly the rate of increase of the deficit is decreasing.

RICHMOND, Va. – Something unusual is cropping up alongside the tomatoes, eggplant and okra in Scott Byars’ vegetable garden — the elephantine leaves of 30 tobacco plants.

Driven largely by ever-rising tobacco prices, he’s among a growing number of smokers who have turned to their green thumbs to cultivate tobacco plants to blend their own cigarettes, cigars and chew. Byars normally pays $5 for a five-pack of cigars and $3 for a tin of snuff; the seed cost him $9.

“I want to get to where I don’t have to go to the store and buy tobacco, but I’ll just be able to supply my own from one year to the next,” Byars said.

In urban lots and on rural acres, smokers and smokeless tobacco users are planting Virginia Gold, Goose Creek Red, Yellow Twist Bud and dozens of other tobacco varieties.

Although most people still buy from big tobacco, the movement took off in April when the tax on cigarettes went up 62 cents to $1.01 a pack. Large tax increases were also imposed on other tobacco products, and tobacco companies upped prices even more to compensate for lost sales.

Some seed suppliers have reported a tenfold increase in sales as some of the country’s 43.3 million smokers look for a cheaper way to get their nicotine fix in a down economy. Cigarettes cost an average of $4.35 a pack, home growers can make that amount for about 30 cents.

It’s the latest do-it-yourself movement as others repair their own cars, swap used clothes and cancel yard work services to save money.

Don’t smoke but I’ve become quite the mechanic, bought a sewing machine and fix most of the stuff around my house n

German July Producer Prices Drop Most in 60 Years (Update1)
By Gabi Thesing and Christian Vits

Aug. 19 (Bloomberg) — German producer prices fell at the fastest pace in 60 years last month as energy costs declined.

Prices dropped 7.8 percent from a year earlier after falling 4.6 percent in June, the Federal Statistics Office in Wiesbaden said today. That’s the biggest decline since the office started to calculate the series in 1949 and exceeded economists’ forecast for a 6.5 percent drop, according to the median of 21 estimates in a Bloomberg News survey.

The price of crude oil has dropped more than 50 percent from a record in July 2008, while weaker demand is also weighing on inflation. The European Central Bank, which has cut its benchmark interest rate to a record low of 1 percent, has downplayed the threat of deflation in the euro-region economy.

“Producers’ pricing power is declining and one could see the data as a first sign of deflation,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “However, deflation is only dangerous if it lasts and I expect producer prices to return to positive territory by year-end.”
…

UPI dot com
Business News
Canada experiences 2nd month of deflation
Published: Aug. 19, 2009 at 8:01 AM

OTTAWA, Aug. 19 (UPI) — Consumer prices in Canada fell 0.9 percent in July on an annual basis, the second consecutive monthly decline, Statistics Canada reported Wednesday.

“The decrease was due primarily to a 12-month decline of 23.4 percent in prices for energy products, particularly gasoline,” the agency said.

On the heels of a 0.3 percent overall decrease in June, prices fell in three of the eight major sectors: transportation, which includes gasoline, shelter and clothing/footwear, the report said. Transportation costs fell 1.6 percent, shelter prices decreased 2 percent and clothing and footwear prices were down 2.1 percent.

San Francisco Chronicle

If CPI is negative, assessed values could fall
Kathleen Pender
Wednesday, August 19, 2009

Don’t count your chickens just yet, but if inflation remains low or negative between now and October, people in California who have never received a property tax reduction could get a small one next fiscal year, even if their homes are worth far more than their assessed value.

Under Proposition 13, property is generally reassessed only when there is a change of ownership. After that, its assessed value is adjusted annually by an inflation factor not to exceed 2 percent. New construction also adds to a property’s assessed value. Property taxes are generally 1 percent of assessed value, excluding local taxes.

A separate measure, Proposition 8, allows for a temporary reduction in assessed value when the market value of a property falls below its assessed value of the previous year. Prop. 8 has reduced assessments on many homes purchased within the past few years, but not on homes purchased many years ago that are still worth more than their owners paid, plus the inflation factor.

The inflation factor is the percentage change in the California Consumer Price Index for the 12 months ending the previous October.

From October 2007 through October 2008, the California CPI was up 3.5 percent. So property tax assessments for fiscal 2009-10 - which will be mailed out this fall - will go up by the maximum 2 percent, unless there is a Prop. 8 reduction. (People in some counties received a notice about their 2009-10 taxes this summer.)

Since Prop. 13 passed in 1978, this inflation factor has been less than 2 percent five times, but never negative.

However, between October 2008 and June 2009 (the most recent month for which data are available), the California CPI fell 0.7 percent. You can track this number at links.sfgate.com/ZHYE.

If this number stays negative through October, assessed values could go down by that percentage when tax bills for next fiscal year are sent out in fall 2010 - even on homes worth more than their assessed values.

News from Reuters
CA-BUSINESS Summary
19/08/09
…
Central bankers to mull crisis lessons at retreat

WASHINGTON (Reuters) - Two years after the start of the worst global financial crisis since the Great Depression of the 1930s, policy-makers from around the world gather this week to think about how to prevent it from happening again. The Kansas City Federal Reserve’s yearly conference at a mountain retreat in Jackson Hole, Wyoming, will draw central bankers and top economists together at a time when the crisis appears to be easing, with the global economy on the mend.

Here’s a great put down by Barney Frank. I guess the woman(reportedly a Lyndon LaRouche supporter) forgot Barney Frank is Jewish.

http://www.youtube.com/watchv=nYlZiWK2Iy8&feature=player_embedded

Now that major hostilities in the US financial crisis have ended, will a Chinese bear market fill the void?

P.S. Aren’t bubbles and bears fundamentally opposite? How can a market become bearish and also bubble at the same time?

Shanghai market becoming bearish
Asset bubble feared growing in China
By Jack Healy and Bettina Wassener
NEW YORK TIMES NEWS SERVICE
2:00 a.m. August 20, 2009

NEW YORK — As the United States lurches toward recovery, many investors are looking to China to help lift the global economy and stoke financial markets.

But fears that China’s muscular expansion could weaken turned the country’s main stock index into a bear market yesterday, clouding some of those hopes.

The Shanghai composite index closed down 4.3 percent, capping a string of sell-offs that has pushed the market down by 20 percent in just two weeks.

Investors have grown increasingly worried that an asset bubble could be forming in China, fueled by a $586 billion economic stimulus package and an even more aggressive, state-directed lending program that has led banks to filter hundreds of billions of yuan into infrastructure projects.

The mass of easy cash has helped China’s giant economy expand at a 7.1 percent clip this year and propelled a 90 percent rise in the Shanghai market. Now, economists worry that the government’s quick fix has been tilted too heavily toward investment, rather than consumption, setting the stage for unbalanced growth, a surge in bad loans and mounting government debt.

“If you are worried about the pace of recovery, you are looking to see where growth is going to be,” said Quincy Krosby, a market strategist at Prudential Financial. “To have a pullback is normal. The question you have to worry about is, ‘Is the Shanghai market a harbinger?’ ”
…

Are higher jobless claims good or bad for the stock market?

- “Bull” case: Additional stimulus may soon be on the way to pour liquidity on withering green shoots .

market pulse

Aug 20, 2009, 8:30 a.m. EST
U.S. jobless claims rise by 15,000 in latest week
By Robert Schroeder

WASHINGTON (MarketWatch) — Initial claims for state unemployment benefits rose by 15,000 to 576,000 in the week ending Aug. 15, the Labor Department reported Thursday. It was the highest level since July 25. The four-week average of initial claims also rose, by 4,250 to 570,000, and continuing claims climbed as well. For the week ending Aug. 8, continuing claims rose by 2,000 to 6.24 million. It was also the highest since July 25.

A key US retailers post “worse than expected” results:

Aug 20, 2009, 7:50 a.m. EST
Sears Holdings swings to loss as sales slump

By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) — Sears Holdings Corp. on Thursday reported a surprise loss for the second quarter, hurt by store-closing and pension costs and lower demand for home appliance and apparel.

The Hoffman Estates, Ill.-based retailer (SHLD 73.76, -0.65, -0.87%) swung to a loss of $94 million, or 79 cents a share, compared to a profit of $65 million, or 50 cents a share, a year earlier.

Revenue in the quarter ended Aug. 1 fell 10% to $10.6 billion from $11.8 billion. Foreign currency translation impact hurt sales by $126 million alone, Sears said.

Excluding one-time items, the firm, majority owned by Chairman Edward Lampert’s ESL Investments, said it would have lost 17 cents a share. Analysts, on average, estimated Sears would earn 42 cents a share, according to FactSet.

Sears shares fell 4.3% in pre-market trading.

The operator of about 3,900 Sears and Kmart stores said U.S. comparable-store sales slumped 8.6%, including a 13% decline at Sears and a 3.9% decrease at Kmart.
…

Time for these analysts to buy some new clocks, as the ones they are watching have stopped ticking.

Asia Markets

Aug 20, 2009, 3:32 a.m. EST
Analysts stay bullish as Shanghai flirts with bear territory

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) — As Chinese stocks near technical bear-market territory, several analysts are maintaining their bullish predictions, saying market dips likely in the near term may present a strong opening for patient investors.

Chinese stocks have undergone a sharp correction this month, as investors sold off shares on concerns that Chinese regulators disapproved of recent rises in bank lending and property prices and could fine-tune policies to avert asset bubbles, hurting equities in the process.

In fact, UBS Research’s China strategist John Tang wrote in a report that a further correction was likely over the next 30 days.

“We argue that the market needs to factor in more short-term regulatory risks, and the coming [corporate] interim reports might have a bigger impact on the index than previously anticipated,” Tang wrote.

He added, however, that the correction may present “a better entry point likely for the bull market into 2010.”
…