The Housing Bubble

Fannie and Freddie ask for $7 billion more; Could it lead to actual reform? By Allen McDuffee - The Washington Post

Freddie Mac, the mortgage finance house, said Monday that it will ask for an additional $1.5 billion of taxpayer money to make up for losses stemming from weak housing markets.

The request falls on the heels of an announcement last week by Freddie Mac’s sister organization, Fannie Mae, that it will need $5.1 billion to make up its shortfall. The two coincide with Standard & Poor’s downgrade of the U.S. government’s credit rating from AAA status to AA+, which has the potential to affect the institutions’ lending and collecting abilities.

But how the Treasury Department chooses to respond to the requests of Fannie Mae and Freddie Mac could be the catalyst for definitive reform of the institutions.

Both the Obama administration and Congress have insisted on reform of the two entities since 2008, but few steps to reform have been taken by either branch on this politically charged issue.

“No one should be surprised by the request for more funding,” said Heritage Foundation’s James Gattuso.

“It’s a reminder that while the other bailouts that began in 2008 have been or are being resolved, the taxpayer bailout of Fannie and Freddie are continuing,” said Gattuso.

The government seized both institutions nearly three years ago in the midst of the financial crisis, with Freddie Mac having drawn $65.2 billion from the government since September 2008.

Nonetheless, Gattuso concedes, the Treasury Department may have no choice but to provide the funds requested, which “only underscores the necessity of fixing the system so that taxpayers are not again put in such a position.”

But Gattuso is not arguing for reform so much as abolition.

“Such reform should include a gradual but definitive liquidation of Fannie Mae and Freddie Mac, and their replacement by private institutions that enjoy no federal guarantees,” he said.

Regulator sues Goldman Sachs over risky mortgages
Credit union regulator sues Goldman Sachs for more than $491 million over risky mortgages

LOS ANGELES (AP) — The U.S. regulator of credit unions on Tuesday sued Goldman Sachs & Co. for more than $491 million in damages over losses incurred by two failed credit unions that purchased mortgage-backed securities underwritten by the investment bank.

The complaint filed by the National Credit Union Administration in U.S. District Court in Los Angeles is the latest lawsuit brought by the federal regulatory agency against a major bank as it seeks to recover billions in losses related to risky mortgage-backed securities that brought down credit unions in recent years.

Buyers of mortgage-backed securities, mostly banks, pension funds and other big investors, made money from the investments if the underlying debt was paid off. But as U.S. homeowners started falling behind on their mortgages and defaulted in droves in 2007, the securities failed and their buyers lost billions.

In the complaint, which also names as defendants several issuers of mortgage-backed securities, regulators claim that the documents used in offering the securities contained untrue statements or omissions as to how risky the investments were.

As a result, U.S. Central Federal Credit Union in Lenexa, Kan., and Western Corporate Federal Credit Union in San Dimas, Calif., acquired the mortgage-backed securities, believing the risk of loss was minimal, according to the complaint.

However, even though virtually all of the securities had a triple-A rating, they represented a substantial risk of losses, the NCUA claims. And when the investments’ market value plummeted, the credit unions — two of the nation’s largest — failed.

The NCUA placed the two credit unions into conservatorship in March 2009. In October of 2010, it placed them into involuntary liquidation.

Goldman Sachs declined to comment Tuesday.

The clueless news-readers on our local NBC news affiliate are bubbling over this morning. Saying things such as … With the good news that the fed will keep interested rates low for the next 2 years, this will encourage people to get back into the stock market. Grow their 401k’s and help borrowers receive the funds they need to grow their business.

At one point I really thought two of them would jump up and high-5 each other.

California Risks ‘Drastic’ Budget Cuts as Receipts Miss Forecast
Bloomberg - Aug 10, 2011

California faces “drastic” cuts to universities, schools and social programs if revenue continues to trail budget forecasts, the state controller said after July collections fell short by about 10 percent.

A series of “triggers” written into the most-populous state’s $86 billion general-fund budget would cut spending on universities, home care for seniors and the disabled, libraries and other programs if revenue falls $1 billion short of plan. A $2 billion gap would mean a seven-day cut in the school year and an end to busing subsidies.

“This is what we’ve been fearful of,” Debra Brown, a lobbyist for the California School Boards Association, said yesterday in a telephone interview. “This brings us a half- billion dollars closer to the trigger going off.”

Revenue in July, the first month of the 2012 fiscal year, was $538.8 million less than forecast, according to figures released yesterday by Controller John Chiang.

“The cuts we have already made have really hurt students, the elderly, the poor and others,” Gil Duran, a spokesman for Governor Jerry Brown, said by telephone. “A further round of cuts is not something we would like to see happen.”

California joins states from Maine to Washington facing possible budget cuts as the fiscal year begins following projected gaps totaling $527 billion from 2008 to 2013. Cities including Chicago, the third largest in the U.S. by population, also are preparing for cuts as federal subsidies decline.
Ohio Bracing

Ohio Governor John Kasich has asked aides to monitor collections to determine whether the state needs to reduce planned spending. Revenue for July trailed the budget forecast by $16 million, or 1.3 percent, according to preliminary data.

In Michigan, tax revenue from May to July climbed almost 11 percent from the same period in 2010, according to legislative data. Collections may weaken if the U.S. economy slows, according to the state’s House Fiscal Agency in Lansing.

Chicago Mayor Rahm Emanuel said July 29 that the city’s projected deficit had widened to $635.7 million and that cuts were needed. Maine and Washington have also begun mapping out further reductions, according to local newspaper reports. In 26 states, tax receipts are projected to rise less than 5 percent in fiscal 2012, and will fall in six, the National Conference of State Legislatures said yesterday in a San Antonio meeting.

Bernanke’s Interest-Rate Time-frame Draws Most Negative Votes in 18 Years - Bloomberg

Federal Reserve Chairman Ben S. Bernanke’s plan to hold interest rates near zero through at least mid-2013 provoked the most opposition among voting policy makers in 18 years as central bank consensus frayed.

The Fed chief achieved unanimous support on the Federal Open Market Committee in 2008 when he lowered interest rates to near zero, and in 2009 when he launched $1.73 trillion in bond purchases. Last year, his plan to buy another $600 billion in assets drew one dissent. Yesterday, three policy makers dissented from the decision to apply a specific date to the Fed’s low rate pledge for the first time.

Bernanke’s move shows that a Fed chairman can govern with more than two opposing votes, opening the door to bolder action if necessary, said Roberto Perli, a former economist in the Fed’s Division of Monetary Affairs, which helps craft the language of the FOMC statements.

“We have reached the point where Bernanke is taking control and saying we have to do the right thing no matter how many people dissent,” said Perli, a managing director at International Strategy & Investment Group in Washington. “It shows the committee can move forward.”

Seven members of the panel favored the action. Richard Fisher, president of the Federal Reserve Bank of Dallas, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis voted no, preferring to maintain the existing “extended period” language. The last time three FOMC voters dissented was on Nov. 17, 1992, under Bernanke’s predecessor, Alan Greenspan.

David Cameron to rioters: STOP! Or I’ll yell stop again!

Strapped Americans try to stretch car dollars
By Mike Chalmers, USA TODAY

For the past four months, Margaret McCormick’s 2001 Toyota Celica has been sitting in the parking lot of her condo complex, with one flat tire and a broken transmission.

“To fix it, I need $1,000, but I just don’t have it,” says McCormick, of New Castle, Del., who has been out of work for two years.

McCormick is among a growing number of Americans struggling to keep their cars on the road, as job losses and gas at just under $4 a gallon take huge bites out of their wallets, a new AAA survey shows.

“Many Americans rely on their cars for their livelihood, and losing access to them could be financially devastating,” says Jim Lardear, director of public and government affairs for AAA Mid-Atlantic.

The AAA survey found:

•More than half of American drivers — 54% — said they don’t want the financial burden of a new car, so they’re keeping their older ones running.

•One in four drivers said they have neglected repairs and maintenance on their vehicles in the past year because of the slow economy, increasing the likelihood that they’ll face a major, costly repair.

•Yet 28% of drivers could not afford a $2,000 repair bill, while 18% could not pay a $1,000 tab.

“People who used to be religious 3,000-mile oil changers are now 5,000-mile oil changers,” says Phillip Weir, owner of Greenhill Auto Service in Wilmington, Del. “Those who were 5,000-mile changes are now 7-, 8- or 9,000-mile changers.”

Jiffy Lube, the nation’s largest quick-lube chain, has been moving away from the theory that oil should be changed every 3,000 miles. It has begun using customer driving habits and the recommendations from their car’s owner’s manual to determine need.

Jim Wilkinson, owner of Jim’s Auto Service in Lake City, Fla., says many customers fix only what’s necessary and put off routine maintenance.

“They bring in a car for an oil change, and we find three things that it needs, and the customer says, ‘What do I have to fix and what can I let go for a while?’” Wilkinson says.

That can cost more money in the long run, mechanics say.

Ty Hearne, owner of Dun Rite Auto Clinic in Newport, Del., says one customer delayed replacing the timing belt on his 2005 Kia Spectra, which would have cost a few hundred dollars. The belt broke, causing major engine damage, and now the customer can’t afford the few thousand dollars for the repairs.

“Lack of money just cost him more money,” Hearne said.

The economy also has changed how customers decide when the cost of repairs outweighs the cost of a new car.

“Back in the day, you’d see cars that need a thousand dollars worth of work, and the owner says, ‘Oh, that car isn’t worth fixing; I’ll get a new one,’ ” Hearne said. “I don’t hear that too much these days.”

When it’s time to pay a repair bill, mechanics say, they can see their customers’ pain.

“You see a lot of, ‘Let’s try this credit card,’” said Chuck Halpern, owner of Columbia Auto Repair in St. Louis, who saw one customer spread a $450 repair bill over four cards.

Today house. Big home, tiny lot:

http://www.zillow.com/homedetails/4-Alderleaf-Ct-Germantown-MD-20874/37082181_zpid/#{scid=hdp-site-map-list-address}

1983 2500 sq ft 3/3 home on 0.1 acre. Location OK

Jun 1989 Sold $90K
Sep 2008 Listed $375K
March 2009 some idiot bought the house for $339K
June 2011 short sale listed $255K

Probably not a bad price, but there’s very little yard.

Finding DC area homes on Zillow is becoming difficult. There are hundreds of condos, hundreds of townhomes, and dozens of McMansions. But there are few sensible-looking SFH in the middle. If they are $230K, they need crackshacks which need $30K of work. If they don’t need work, they are $330K. My guess is that the sensible people who live in the sensible houses are the ones who kept their jobs, or bought the house 15 years ago and can afford a ~$700 payment indefinitely.

This video can’t be helping real estate values in “hip” areas. Better sharpen their forks…

http://abcasiapacific.com/news/2011-08-10/chefs-fight-back-against-looters-with-kitchen/2832500

Another house:

http://www.zillow.com/homedetails/13812-Parkland-Dr-Rockville-MD-20853/37303370_zpid/#{scid=hdp-site-map-list-address}

1953 3/1 0.21 standard ranch on acre. Pretty good location, but it’s close to the Spanish-by-immersion neighborhood.

$215K.

This is one of the few houses that has dropped to the 2002 price range.

Yeah this should help…

With police struggling, some residents stood guard to protect their neighborhoods. Outside a Sikh temple in Southall, west London, residents vowed to defend their place of worship if mobs of young rioters appeared. Another group marched through Enfield, in north London, aiming to deter looters.

One far-right group said about 1,000 of its members were taking to the streets to deter rioters.

“We’re going to stop the riots — police obviously can’t handle it,” Stephen Lennon, leader of the far-right English Defense League, told The Associated Press. He warned that he couldn’t guarantee there wouldn’t be violent clashes with rioting youths.

Anders Behring Breivik, who has confessed to the bombing and massacre that killed 77 people in Norway last month, has cited the EDL as an inspiration.

http://news.yahoo.com/police-calm-london-riots-flare-across-uk-013858305.html

Mortgage applications rose last week: MBA

NEW YORK (Reuters) - Applications for home mortgages rose last week as interest rates fell to their lowest level this year, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 21.7 percent in the week ended August 5.

The MBA’s seasonally adjusted index of refinancing applications rose 30.4 percent to its highest level this year, while the gauge of loan requests for home purchases fell 0.9 percent.

The refinance share of mortgage activity increased to 75.6 percent of total applications from 70.1 percent the previous week.

Fixed 30-year mortgage rates averaged 4.37 percent in the week, down 8 basis points from the week before. (Reporting by Alexandra Alper; Editing by Diane Craft)

Goldman says QE3 likely after dovish Fed statement
August 10, 2011

SINGAPORE (Reuters) - Goldman Sachs said on Wednesday a third round of quantitative easing from the Federal Reserve is likely after the U.S. Federal Reserve promised to keep rates at extraordinarily low levels for at least two more years.

“We now see a greater-than-even chance that the FOMC will resume quantitative easing later this year or in early 2012. We have changed our call because today’s statement suggests that the committee’s reaction function to incoming economic news is more dovish than we had previously thought,” Jan Hatzius, chief economist at the firm, said in a note.

Can the Middle Class be Saved?

The Great Recession has accelerated the hollowing-out of the American middle class. And it has illuminated the widening divide between most of America and the super-rich. Both developments herald grave consequences. Here is how we can bridge the gap between us.

By Don Peck

From the article:

“Autor isolates the winnowing of middle-skill, middle-class jobs as one of several labor-market developments that are profoundly reshaping U.S. society. The others are rising pay at the top, falling wages for the less educated, and “lagging labor market gains for males.” “All,” he writes, “predate the Great Recession. But the available data suggest that the Great Recession has reinforced these trends.”

For more than 30 years, the American economy has been in the midst of a sea change, shifting from industry to services and information, and integrating itself far more tightly into a single, global market for goods, labor, and capital. To some degree, this transformation has felt disruptive all along. But the pace of the change has quickened since the turn of the millennium, and even more so since the crash. Companies have figured out how to harness exponential increases in computing power better and faster. Global supply chains, meanwhile, have grown both tighter and more supple since the late 1990s—the result of improving information technology and of freer trade—making routine work easier to relocate. And of course China, India, and other developing countries have fully emerged as economic powerhouses, capable of producing large volumes of high-value goods and services.”

http://www.theatlantic.com/magazine/archive/2011/09/can-the-middle-class-be-saved/8600/

Young, angry and unemployed/under-employed, a volatile mix. Class warfare in the most extreme sense. The hooligans can’t even afford to take out their frustrations at football matches, too expensive.

Realtors Are Liars®

Continued from yesterday’s Bs&Bs,

Alpha:
“And my unanswered question to Al about which economies pulled out of the depression earliest is that Germany, Japan, and Italy were some of the earliest to pull out because of their respective government’s highly ramped-up military spending.”

I shouldn’t even have mentioned some recovering earlier, because it isn’t relevant to my original statement. Exiting the great depression is not the same as breaking a downward economic spiral. Pretty much every nation had hit bottom (as in the spiral ended) in the early 30s. GDP had quit falling, but hadn’t started growing either.

You may or may not be correct about war preparations causing the recovery*, but even if you are correct it doesn’t prove that government spending can break a deflationary spiral which ended years before the war preparations.

* Rio’s graph suggest recovery in the US began before war preparations. GDP started an uptick in the early 30s, and unemployment started falling mid decade. The recovery did, however, accelerate when the war began.

Union thugs: 0
Wisconsin taxpayers: 1
————–
Wisconsin’s bad losers
Washington Post | 08/10/2011 | Marc Thiessen

Last fall, when Republicans wrested 20 state legislative chambers and 10 governorships from the Democrats, some on the left refused to accept the results. In Wisconsin, Democrats were particularly apoplectic. Democratic legislators fled across state lines and hid out in motel rooms in order to prevent Gov. Scott Walker from enacting the agenda on which he and newly elected GOP legislators had campaigned. They failed. Walker passed legislation to reform collective bargaining and balanced a $3.6 billion deficit despite the Democrats’ efforts at obstruction.

Not to be deterred, Wisconsin Democrats and their union allies promised to take their revenge by launching recall elections against eight vulnerable Republican senators. They promised the recalls would stop Walker’s agenda and have national implications – sending a message to Republicans in other states that they would pay a price for changing their collective bargaining laws. Unions poured millions into the fight to take back the state Senate from GOP control.

It appears that the Democrats have failed at this as well. Republicans have reportedly held onto four of the six seats in play, keeping control of the state Senate by a narrow 17-16 margin. (The GOP may be able to gain back the losses next week, when two Democrats face recall elections.) John Hogan, director of the Committee to Elect a Republican Senate, told the Milwaukee Journal Sentinel, “Voters gave us a mandate last fall. . . . They backed us up again (Tuesday). Voters told us loud and clear, ‘Stay the course. Things are working.’ ” The vote will indeed send a signal to other states – but not the one the Democrats and labor unions intended.

We all know this but when will Obummer finally stand up and admit it too?

http://blogs.telegraph.co.uk/news/katharinebirbalsingh/100099830/these-riots-were-about-race-why-ignore-the-fact/

Amazon UK’s riot gear sales soar: Aluminum bats up 6,000%

By Julianne Pepitone
@CNNMoneyTech
August 9, 2011: 2:37 PM ET

NEW YORK (CNNMoney) — Aluminum bats, police nightsticks and other weapons dominated the “movers and shakers” list of hot-selling items in Amazon.uk’s Sports shop on Tuesday as riots spread across Britain for the third day.

British newspaper The Guardian flagged the Amazon sales spike in its running live-blog on the rioting. The outbreak of violence began in London’s Tottenham neighborhood after police fatally shot a local 29-year-old man, Mark Duggan, on August 4. Riots and looting soon spread to other British towns, and the government called in police forces.

By mid-day Tuesday, the top five sales-rank gainers in Amazon.uk’s “sports & leisure” category were all baseball bats and a “military police telescopic tonfa” — somewhat similar to a nightstick.

http://money.cnn.com/2011/08/09/technology/amazon_riot/ - -

Yep… looks like yesterday’s up move was just a short-squeeze as I expected.

I would not be suprised if we closed at -600 today.

The Fed’s mid-2013, is non-news. Did anyone really expect us to be anywhere else 2 years from now?

The message the Fed may not have meant to send: A recessionless-recession is on the way…

Highlighting Just How Negative the FOMC Statement Really Was
Posted: August 9, 2011 at 3:30 pm

If you pick through the FOMC statement made by Ben Bernanke and friends today, you will get a picture of just how bad things are in the economy. We transposed the entire statement and highlighted the sentences that had a negative tone to them. They did not call it a recession, but maybe they might admit to a recessionless-recession….

-Jon C. Ogg
…

“It has been an issue for the young girls, the catcalling, the ‘hey girlie,’”

I have seen this at Wal Mart in Jupiter, a group of Guatemalan men harassing young girls. When caught they put their heads down and walk quickly away.

Closing of Palm Beach County day-labor center leaves workers back on the streets

By Mitra Malek Palm Beach Post Staff Writer
Posted: 8:38 a.m. Wednesday, Aug. 10, 2011

LOXAHATCHEE GROVES — Workers are back at street corners along Okeechobee Boulevard, hoping to trade manual toil for money.

Buena Fe, one of only two day-labor centers in Palm Beach County, closed last month.

The slow economy forced the hand of the church that ran the center, said the Rev. Calvin Lyerla of Acts II Worship Center.

“We just could no longer justify the expense,” Lyerla said.

Only 15 to 20 workers came to Buena Fe daily this year, about half the number compared with early days. And only 8 to 10 employers used the center daily for the same period. The center registered a total of 1,065 workers and 87 employers.

For a while, Buena Fe boomed. Plenty of migrant workers, most from Mexico and Guatemala, “It has been an issue for the young girls, the catcalling, the ‘hey girlie,’” , biked to the double-wide trailer on Okeechobee Boulevard. That kept drivers and workers safe; Okeechobee Boulevard is a quick-moving thoroughfare that doesn’t lend itself to the stop-and-go traffic of employers scouting for laborers.

Loxahatchee Groves Landowners Association President Marge Herzog also is concerned about whether children waiting at bus stops near the corners in pre-dawn hours will be comfortable with a group of men nearby.

“It has been an issue for the young girls, the catcalling, the ‘hey girlie,’” said Herzog, who was vice mayor when opened.

Buena Fe’s shuttering follows that of the Lake Worth Resource Center, which closed in December after two years. El Sol in Jupiter is still open, launching in September 2006.

Since everyone knows QE3 is in the bag, there should be little ’shock and awe’ effect on prices when it is eventually announced, but lots of (negative) ’shock and awe’ if traders are disappointed.

QE3 is still ‘inevitable’
August 9, 2011, 5:26 PM

The Federal Reserve didn’t announce any quantitative easing measures in its statement, but the probability of QE3 is still inevitable, according to Robert Barone, an investment adviser representative at Ancora West Advisors in Reno, Nev.

The Fed recognized that the economy is weakening, he said, and the committee said downside risks to the economic outlook have increased.

“Let’s remember that Bernanke told Congress in July that the Fed would intervene to buy Treasurys if the economy began to stall or if deflation re-emerged as a threat,” said Barone. The vote among Fed officials was 7-3, so Federal Reserve Chairman Ben Bernanke may just “have to wait for weaker economic data to emerge to get the FOMC support he desires.”

-Myra Saefong

Filed under: Don’t change! Don’t Change! Don’t Change! …or…is Hummer a noun or adjective?

Ford’s aggressive electrification strategy includes the launch of five electrified vehicles in North America by 2012 and Europe by 2013. The new Focus Electric is a zero-emissions, gasoline-free version of Ford’s popular global Focus model.

I read somewhere that baseball bat sales have gone through the roof in the UK. Apparently they are partial to wooden bats.

Looks like the stock market is getting stronger. That is, it is falling closer to fair value, at which point it will have a solid foundation. But there is a long way to go.

More banks are starting to eat their own. Of course the only effect the cuts will have on the top dogs is to increase “their” bottom lines.

ITEM: Bank of New York Mellon plans to cut 1,500 jobs, or about 3 pct of workforce. August 10, 2011

NEW YORK (AP) — Bank of New York Mellon Corp. says it will cut about 1,500 jobs, or 3 percent of its work force, in another sign of the banking industry’s struggles.

CEO Bob Kelly says the bank’s revenue has been growing but that “expenses have been growing unsustainably faster.”

The bank says it will freeze hiring and reduce the use of temporary workers, consultants and contractors to try to minimize layoffs. It has also been trying to trim expenses in other areas.

Its shares fell 60 cents, or 2.8 percent, to $20.51 on morning trading.

BNY Mellon, the country’s sixth-largest by assets, has flown under the radar for much of the financial crisis, losing money in the third quarter of 2009 but otherwise staying profitable.

Hooligans Run Wild in Britain

While watching videos of the riots in London, Manchester, and elsewhere last night I was struck by one impressive scene in which an entire row of shops had smashed windows and were being looted…except one. Right in the middle was a bookstore that had not been touched. It was entirely unscathed, while all the others were wrecks.

Two possibilities came to mind: 1/ These marauding youths held books in such high regard they left the shop alone, or 2/ Books held no value for them whatever. They weren’t worth taking.

Naturally, I suspect the latter.

No the flapping heads on CNBC are saying that if congress could reach a grand bargain, DOW would be up 1500 in a day.

What? Cutting spending and raising taxes will put us into deep recession. How is a deep recession good for stocks?

Bond Investors Show Faith in Fed After S&P Cut- Bloomberg

The $9.4 trillion U.S. government bond market is proving Federal Reserve Chairman Ben S. Bernanke matters more than Standard & Poor’s.

PepsiCo Joins Honda Bracing for Weak Demand -(Bloomberg)

From soft-drink producers to wristwatch companies and automakers to cable TV providers, corporations worldwide are seeing weak consumer demand.

PepsiCo Inc.’s chief executive officer said companies need to see increased demand for their products before they will start putting cash to work on expansion. Watchmaker Fossil Inc. (FOSL) predicted disappointing profit because of reduced consumer spending, and Honda Motor Co. said the possibility of delayed car purchases may lead to a revised forecast. Cablevision Systems Corp. (CVC) said customers are dropping subscriptions.

“You’ve got to stimulate demand growth,” said Indra Nooyi, CEO of Purchase, New York-based PepsiCo, in an interview. “Until we stimulate primary consumption, the cash will continue to sit on the sidelines.”

The companies’ warnings follow a cut to the U.S. credit rating on Aug. 5 and a two-week rout in global equity markets as investors dumped stocks in favor of gold and Treasuries. With three European countries having required bailouts, concern over weakening demand and rising unemployment is spreading. A report yesterday said confidence among small businesses fell in July for the fifth consecutive month as the sales outlook dimmed.

“It could be structured by cows and we would rate it,” one S&P analyst wrote to another in 2007.

“These guys personify amateur hour.”

$tandard & make’emPoor, = “True$editionist$$erialEnabler$™”

“Boycott ‘em!” (& their Fee$ible Opinionbaiter$ Progno$tication$)

S&P Slammed After U.S. Downgrade:
By Yahoo! News | Daily Ticker

U.S. solvency.

Still, it’s not just Team Obama that isn’t lining up behind S&P. Rep. Eric Cantor, the number two Republican in the House, urged his colleagues Monday to maintain a hard line against tax increases, despite S&P’s clear statement that it acted in part because of Repubican intransigence on the issue.

More important, far from running away from U.S. Treasury bonds, investors are flocking to them, suggesting that they see the chances of a default as slimmer than ever.

S&P’s critics argue that the credit raters are digging in on what amounts to a self-fulfilling prophecy. The decision “smacked of an institution starting with a conclusion and shaping any arguments to fit it”

["it'll be Ea$y pea$y lemon $queezy" Minister for International Development Simon Foster]

["No it won't, ...it'll be Difficult, Difficult, lemon Difficult!" Minister for International Development aide, Toby]

“The debt is issued in dollars. That means it is payable in dollars. The U.S. government prints dollars,…”This means that if for some reason the government was unable to tax or borrow to raise the money to pay its debt then it could always print it. This may carry a risk of inflation, but S&P is not in the business of making inflation predictions, they are in the business of assessing the likelihood that debt will be repaid.”

Elsewhere in the blogosphere, there have even been questions about S&P’s basic competence. “To say that S&P analysts aren’t the sharpest tools in the drawer is a massive understatement,” writes one prominent finance blogger and former lawyer for an investment bank, who claims to have had “extensive” experience with all three major ratings agencies. “These guys personify amateur hour.”

The chickens have been trying to come home to roost for a long,long time, but have been shooed off each time. This time the outcome is shaping up to be different.

European Shares Extend Losses, French Banks Plunge
10 Aug 2011 | By: Reuters

European shares fell further in late trade on Wednesday as French bank Societe Generale sank to its lowest level in 2-1/2 years.

The steep fall in SocGen’s shares, its biggest one day percentage fall in 23 years, was initially attributed by traders to concerns that France might lose its triple-A credit rating.

However, its share price continued to drop even after all three major ratings agencies had confirmed France’s triple-A rating. That prompted new rumours to emerge about the outlook of the bank.

SocGen was not immediately available for comment.

SocGen fell more than 21 percent at one point to as low as 20.16 euros, its weakest since March 2009.

White House Said to Set Goal to Ease Pressure on Housing Prices

“The Obama administration is seeking ideas from investors on how to convert thousands of foreclosed properties into rental homes, administration officials said.”

I officially give up.

Some timely quotes from Gerald Celente ,Director of Trend Journel ,
he said in essence …..

” …when the money stops flowing to the man on the street ,the
blood starts flowing in the streets .”

‘…the Bail Outs were a cover up and merger of State and Coporate
powers that went to the Ultra rich and everyone else has gotten poorer .”

“Wall Street is a rigged game .”

“US going into greatest Depression and the World will follow .”
“…you can’t spend your way out of problems ,you have to produce your way out of problems. ”

“…..the 2008 Bail Outs were the wrong choice .”

He also thinks that they might put a cap on Gold eventually .He also thinks the comparisions the Experts make with the 1930 Depression
are not accurate with this recession and the conditions were totally different

This guy has been accurate a lot of times for 30 years . He also believes that the riots World wide are due to lack of money in the hands of the workers ,(now a lot unemployed ), while the corrupted upper elite is taking all
the money . He believes in the near future there will be more crime ,riots ,and you name it .

Korean Stock Broker Leaps to Death Amid Market Plunge
South Korean trader texted colleagues his sorrow over losses
By Greg Wilson- NBC

A South Korean stock broker jumped to his death from a high-rise office amid worldwide market turmoil.

The 48-year-old broker, identified only as “Seo,” sent text messages to colleagues expressing regret over severe losses, just minutes before leaping to his death Wednesday in the city of Daegu, according to Chief investigator Lee Kang-ho.

We gave up cable at least 5 years ago. I don’t miss it in the least.

~ Pay TV industry loses record number of subscribers
Subscribers hang up on cable and satellite in 2Q; cos. blame economy as Internet threat looms

NEW YORK (AP) — The weak economy is hitting Americans where they spend a lot of their free time: at the TV set.

They’re canceling or forgoing cable and satellite TV subscriptions in record numbers, according to an analysis by The Associated Press of the companies’ quarterly earnings reports.

The U.S. subscription-TV industry first showed a small net loss of subscribers a year ago. This year, that trickle has turned into a stream. The chief cause appears to be persistently high unemployment and a housing market that has many people living with their parents, reducing the need for a separate cable bill.

But it’s also possible that people are canceling cable, or never signing up in the first place, because they’re watching cheap Internet video. Such a threat has been hanging over the industry. If that’s the case, viewers can expect more restrictions on online video, as TV companies and Hollywood studios try to make sure that they get paid for what they produce.

Remember when they kept saying:
sub-prime is contained…
losses won’t be any bigger than…
not a solvancy problem…
not a systemic risk…

All I’ve been hearing for 3 days is how this is not 2008.

If they have to say it….

Stocks start to drop, margin calls go out. People say, sorry, can’t make my margin calls, banks that loaned the money lose their tier 1 capital. People hear banks are experiencing tier 1 capital shrinkage, they move their deposits….

An interesting comment on HBB the other day - a landlord who was losing his rental property had to pay the relocation costs of his tenant.

Banks lent money to us, insured most of them thru F&F, and then sold the mortgages (but kept the administration and fees) in a bundle to WS who in turn sold them to investors, some of whom resold them at a profit and this bundle resale happened several times in some instances.

Now BofA wants to sell their admin package. Are they doing this because they can see the day when F&F will remove their insurance (just like other insurance companies do) because fraud might have been involved which probably invalidates the insurance contract.

I hope Uncle Sam doesn’t fall for this. Removal of the insurance package would cause a lot of trouble, but it is appropriate where fraudalent mortgages have been created.

Someone other than the gov has to be held responsible for the housing sales delay and the treat of removing the insurance might be the trick.

Lets take our medicine.

Hey investors, how does that BP play look to you buying from now on into weakness with 2/3 value still shaved off for poor management and exposure in 90 countries? Duh?

Obama to meet Bernanke Wednesday

Obama - Help a brother out, Mr. Bernank!
Bernanke - No worries Mr Prezdent, I have passed on your message to my bosses.
Obama -What do they say?
Bernanke - They like you. They would like you to be around for some time to come.
Obama - That’s what I am talking about!

Are these ups in this market short squeezes? Pffft. Gonna go wash the dishes and wait to just read how it ends.

CarrieAnn ..looks like it’s down 285 right this second .

Bank of America CEO: new shares are not an option

NEW YORK (Reuters) - Bank of America Corp (NYSE:BAC - News) will not continue to boost its capital through new share offerings after diluting its shares so much during the financial crisis, Chief Executive Brian Moynihan said.

The comment underscores the bank’s limited options as it wrestles with mortgage losses and higher capital needs. Moynihan was speaking on a call on Wednesday with more than 6,000 investors and analysts, which was organized by Fairholme Capital Management, one of the bank’s biggest investors.

The bank has other ways to improve its capital position, including selling assets, said Chief Financial Officer Bruce Thompson.

“As we look at capital and growing capital beyond the end of 2012, we have a number of levers that we will look to continue to utilize,” Thompson said.

Analysts in June estimated that the bank could need to boost capital by $50 billion to comply with new capital requirements. CEO Moynihan said last month that the bank can generate the new capital it needs through earnings.

But the bank may face liabilities from mortgages and mortgage securities that are difficult for investors to forecast.

The days of the box store are numbered.
A small number of wage slaves guarding millions of dollars of goods will not work out for the elite for long.

http://news.yahoo.com/flash-mobsters-crowd-size-tempting-cover-090426131.html

As theft increases expect the elite to employ the same tactics used by the elite world wide when wealth disparity reaches the tipping point.

So when Assad says, screw you, what’s next?

Obama Administration to Call for Syria’s Assad to Step Down
| FoxNews.com

The Obama administration is planning to explicitly call for Syrian President Bashar Assad to step down in coming days, two administration officials told FoxNews.

The State Department signaled for the first time that American efforts to engage the Syrian government are finally over. The White House is expected to lay out the tougher line by the end of this week, possibly on Thursday.

The administration will first consult with the United Nations Security Council as the Treasury Department prepares a new set of sanctions aimed at Assad’s family and his government, the officials told FoxNews.

The unilateral U.S. sanctions being prepared within the Treasury Department will be important to pay attention to, the officials said.

The calls for Assad’s resignation coincide with the rise in international pressure for his administration to end the brutal crackdown on civilian protestors. Rights groups say approximately 1,700 people have been killed since March. An aggressive new military offensive that began with the Muslim holy month of Ramadan a week ago has already killed several hundred.

So after this so called super congress panel of 12, gets it all wrong, what do we get next? A super duper panel of 24?

Federal deficit tops $1T for 3rd straight year

WASHINGTON (AP) — The United States’ budget deficit has topped $1 trillion for a third straight year, adding pressure on Congress and the White House to make more progress on a long-term plan to shrink the growing imbalance.

The Treasury Department said Wednesday that the deficit through July totaled $1.1 trillion. Three years ago, that would have been a record high for the full year.

This year’s deficit is on pace to exceed last year’s imbalance of $1.29 trillion. But it is likely to fall short of the record $1.41 trillion set in 2009.

For the first 10 months of the budget year, spending has risen 2.4 percent while revenue has climbed 8 percent. That’s a sign that more people are working and paying taxes, although unemployment remains high at 9.1 percent.

Record deficits have forced President Barack Obama and Congress to create a 12-member committee of lawmakers tasked with reducing the red ink over the next decade by $1.2 trillion. If the panel cannot agree on a plan by Thanksgiving, severe across-the-board spending cuts would go into effect automatically.

The time will come one day when many manufactures who placed such big bets on China, will regret it. Of course they will want someone else to pay for it.

Ford Feeling Price Pressure in China - Bloomberg

Ford Motor Co. (F), seeking to accelerate its growth in China, said it’s encountering pricing pressure as that auto market slows.

“In the last three or four months, the auto industry clearly is not growing at the rate it was last year or even in the first quarter,” Joe Hinrichs, Ford’s group vice president and Asia chief, said today at the JP Morgan auto conference in Detroit. “We have seen some pricing pressure.”

Ford is spending $1.6 billion to build four factories in China, where it plans to triple its lineup by offering 15 models by mid-decade, Hinrichs said. Ford, still dependent on the U.S. and Europe for most sales and profits, has 2.7 percent of the passenger-vehicle market in China through June, trailing General Motors Co. (GM)’s 10 percent, according to J.D. Power & Associates.

Ford expects the Chinese government to eventually take measures to stimulate auto sales, Hinrichs said. Ford’s sales are up 13 percent to 14 percent so far this year, outpacing the market’s 5 percent growth rate, Hinrichs said.

“The growth rate is not nearly as aggressive” in China as it has been, Hinrichs said.

DOW down 520 on it slow descent back way down, to what? 5000 or 6000? Over the next year.

Fed Up: A Texas Bank Is Calling It Quits
By ROBIN SIDEL - WSJ

Main Street Bank lends most of its money to small businesses and is earning decent profits. But the Kingwood, Texas, bank is about to get out of the banking business.

In an extreme example of the frustration felt by many bankers as regulators toughen their oversight of the nation’s financial institutions, Main Street’s chairman, Thomas Depping, is expected to announce Wednesday that the 27-year-old bank will surrender its banking charter and sell its four branches to a nearby bank.

Texas turnaround: Thomas Depping, chairman of Main Street Bank, plans to give up the bank’s charter.

Mr. Depping plans to set up a new lender that will operate beyond the reach of banking regulators—and the deposit-insurance safety net. Backed by the private investment firm of Microsoft Corp. co-founder Paul Allen, the company won’t be able to call itself a bank, but it will be able to do business the way Mr. Depping wants.

“The regulatory environment makes it very difficult to do what we do,” says Mr. Depping, who last summer saw his bank hit with an enforcement order from the Federal Deposit Insurance Corp.

A spokesman for the FDIC declined to comment on Main Street, a unit of closely held MS Financial Inc. Dan Frasier, director of corporate activities for the Texas Department of Banking, confirmed that Main Street is “working on the process of moving out of the state banking system,” but declined to provide details.

Bankers have long complained about their overseers, but it is rare for a bank to basically close its doors aside from an acquisition or failure. Mr. Depping blames the move on a tightening regulatory noose.

Regulators came under fire in the financial crisis for lax oversight that allowed financial institutions to dole out too much credit to unworthy borrowers. Some bank executives now complain that federal and state agencies have swung to the other extreme, poring over minute details of virtually every loan, including those to small businesses.

“The No. 1 complaint that we hear from community bankers is that they feel that regulators have gone one step too far and are choking off lending,” says Paul Merski, chief economist at the Independent Community Bankers of America, a trade group that represents small banks.

Regulators defend their efforts, saying that intensive oversight is needed to prevent banks from taking too much risk and repeating the behavior that got the industry in trouble.

Mr. Depping has been on a collision course with regulators since 2009, when FDIC examiners began questioning the bank’s large concentration of small-business loans. Nearly all of Main Street’s $175 million loan portfolio has gone to customers like dentists, owners of fast-food franchises and delivery-truck drivers, who use the loans to purchase equipment. The bank’s average loan size is $100,000 to customers who have less than $1 million in annual revenue, Mr. Depping says.

Mr. Depping says that Main Street’s focus on small-business lending has sheltered the bank from much of the devastation that has swept the industry, including 385 bank failures since the start of 2008.

Years of liberal dogma have spawned a generation of amoral, uneducated, welfare dependent, brutalized youngsters
By Max Hastings - Daily Mail UK

A few weeks after the U.S. city of Detroit was ravaged by 1967 race riots in which 43 people died, I was shown around the wrecked areas by a black reporter named Joe Strickland.

He said: ‘Don’t you believe all that stuff people here are giving media folk about how sorry they are about what happened. When they talk to each other, they say: “It was a great fire, man!” ’

I am sure that is what many of the young rioters, black and white, who have burned and looted in England through the past few shocking nights think today.

It was fun. It made life interesting. It got people to notice them. As a girl looter told a BBC reporter, it showed ‘the rich’ and the police that ‘we can do what we like’.

If you live a normal life of absolute futility, which we can assume most of this week’s rioters do, excitement of any kind is welcome. The people who wrecked swathes of property, burned vehicles and terrorized communities have no moral compass to make them susceptible to guilt or shame.

Most have no jobs to go to or exams they might pass. They know no family role models, for most live in homes in which the father is unemployed, or from which he has decamped.

They are illiterate and innumerate, beyond maybe some dexterity with computer games and BlackBerries.

They are essentially wild beasts. I use that phrase advisedly, because it seems appropriate to young people bereft of the discipline that might make them employable; of the conscience that distinguishes between right and wrong.

They respond only to instinctive animal impulses — to eat and drink, have sex, seize or destroy the accessible property of others.

Their behavior on the streets resembled that of the polar bear which attacked a Norwegian tourist camp last week. They were doing what came naturally and, unlike the bear, no one even shot them for it.

A former London police chief spoke a few years ago about the ‘feral children’ on his patch — another way of describing the same reality.

The depressing truth is that at the bottom of our society is a layer of young people with no skills, education, values or aspirations. They do not have what most of us would call ‘lives’: they simply exist.

Nobody has ever dared suggest to them that they need feel any allegiance to anything, least of all Britain or their community. They do not watch royal weddings or notice Test matches or take pride in being Londoners or Scousers or Brummies.

Not only do they know nothing of Britain’s past, they care nothing for its present.

They have their being only in video games and street-fights, casual drug use and crime, sometimes petty, sometimes serious.

The notions of doing a nine-to-five job, marrying and sticking with a wife and kids, taking up DIY or learning to read properly, are beyond their imaginations.

We were talking about the “take all the money and redistribute it, it would end up back in the hands of the rich” arguement.

This got me thinking…..

Let’s say we take some $38T in business, household and corporate debt. This equates to $38T in money somewhere in the system, Tbill, miunicipals, bank account balances, money market deposits, currency, etc.

If the government took the “money” it would be taking ownership of the debts. When the government “takes” that money, what it is doing is saying, okay, instead of owing person ABC or bank XYZ or country USA, NOW you all just owe country USA.

The government owns all the money and then owns all the debt too, so if it simply pays off all the debt it owes itself then.. poof… there is not money or debt. Whoever owns stuff retains ownership in the stuff, but no one has any money or debts. We all have to go barter our stuff for other stuff. But what if the guy that sells gasoline doesn’t want any of my stuff. Yikes.

Oh, that isn’t what we meant… Okay.

Let’s say after the govt has wiped out all money and debt, it prints up, oh, $30T in Tbills, sells them to the Fed at 0%, then puts that money in just borrowed into existance into the new Bank of the People of the USA. The bank creates 300 million-ish checking accounts, one per person in the USA, it deposits $100K into each of them, and sends every American a debit card that draws money against their account. Let’s add that this is the ONLY bank allowed to exist, it pays 0% interest, and it makes NO loans. No one else is allowed to make loans either. Each business and corporation also gets an account, but with $0 starting balance. The federal government gets an accout. Each state gets an account.

The first batch of people that go buy stuff transfer some money to the accounts of the stores. The money then goes to the workers at the stores and to the bussiness that own factories when the store orders more goods to restock, then to the people that work at the factories, then to the raw materials owners when the factories order more materials to make the goods, then the people that work extracting the raw goods from the ground.

Each transaction results in taxes, but because of balnced budgets everywhere, the governments spend all the money they get. There is no buildup of money in government accounts and no addition of money to the economy.

But let’s say we maintain our current trade imbalances in the private sector. Oh, we still have that $500B a year international trade deficit that is money leaking out of the US econmy. Oh well, it will take 60 years for it all to leak out. Let’s not worry about that now.

Peoples’ wages are less than the value they add to make room for business profits. If the businesses spend or distribute as dividnds all this money, then there is no buildup in their account and no money drained from the demand side of the picture. If the people receiving all this money from corporations as dividends decide to spend it all, then no money is drained from the system.

However, since I stated we are maintaining our current imbalnces, the corporations do not spend or distribute all of the money, letting some build up on balance sheets. The money that is distributed as dividends is also not fully spent and balances build up in their accounts because having money makes them powerful.

Money begains to drain out of the system. Demand drops. Economic activity begins to fall as there is less demand becasue there is less money becasue some people are saving, not spending. People that are having balances build up refuse to invest, because as the money drains from the economy, the economy slows and there is no way to have a positive RoI on net new investment in a slowing economy.

And, soon all the money that exists ends up in the hands of the people that own the tools and resources of production since those people are paying wages below value added, and not spending all of the money they receive as income. The econmy grinds to a halt.

Along comes some future guy named Ronnie Raygun that listens to the rich when they say they need to be able to make loans. He deregulates banking and lets those rich people take that money building up in their accounts, start a new bank, and loan it back into the economy with interest. Then, all they money they deposit gets borrowed back into the economy. Instead of demand being the limiting factor, we have supply-side being the limiting factor.

Initially the amount of loans is fairly small as the buildup in the accounts of the rich is only growing slowly. However as they begin collecting more and more from interest, the household budgets get squeezed more and more by interest payments requiring they borrow more and more to maintian their spending. Prices go up faster than wages because the money they are borroing into the system is adding more money to the system. Unprofitable businesses can also borrow money into existance, and slowly become less and less profitable as their interest increases too.

Wait 100 years at 2.5% inflation as the leverage builds up to about 12-13X.

Instead of $30T in “money” there is $360T. Instead of people needing to borrow only a little more money into the econmy to pay their interest and excess spending, they are drowning in debt. The economy begins to collapse under the massive weight of the debt as people begin to fear that it can’t be paid back…

Someone comes on the internet to do a thought expiramant about what would happen if we took the $360B and redistributed it equally to everyone, without addressing the trade imbalances that caused the debt in the first place.

Gold trees DO grow to the sky!

To paraphrase Newman from “Seinfeld:” Platinum? VILE WEED!

“Pay what you owe and you’ll know what you own.” ~Benj. Franklin

I thought the broke hordes would be heading to Vegas to take a chance, guess they couldn’t afford the gas.

ITEM: Las Vegas Hilton reports loss, skips interest payments on loan

The Las Vegas Hilton reported another quarterly loss on Tuesday and disclosed it’s been skipping interest payments on a loan, putting it into default status.

The 2,950-room Paradise Road hotel-casino lost $8.864 million in the second quarter vs. a loss of $9.851 million in 2010’s second quarter.

Amid tough competition and an oversupply of hotel rooms in Las Vegas, net revenue of $45.5 million was down from $47.5 million.

Casino revenue of $14.2 million declined 9.1 percent, the Hilton reported.

The Hilton’s table games played unlucky in the quarter, with their win declining by $800,000; while slot play declined due to a slowdown in business. This resulted in a $1.2 million decline in slot winnings from gamblers.

Hotel room revenue was steady at about $19.3 million, while food and beverage revenue fell 8.6 percent to $14.4 million.

The Hilton’s owner, Colony Resorts LVH Acquisitions LLC, during the quarter said it was notified by Hilton Hotels Corp. that Hilton was not renewing the Las Vegas property’s right to use the Hilton name and room reservation system effective Jan. 3, 2012.

On Tuesday, Colony Resorts LVH said it’s been in “discussions with other major hotel brands” about a new name.

“The company may also reach a similar understanding with Hilton and sign a new license agreement,” Colony Resorts LVH said in its earnings report.

Colony Resorts LVH also reported that it chose not to make monthly interest payments totaling $3.5 million for June, July and August on its $252 million term loan “in order to conserve liquidity for operating and other needs.” The loan makes up the bulk of the company’s $296 million in debt and liabilities.

While the lender is now entitled to exercise various remedies due to the default, Colony Resorts LVH said it’s “currently in discussions with its lender to negotiate a restructuring of its debt, the outcome of which is uncertain.”

I’m hoping one of you has dental knowledge or is a dentist. Our pediatric dentist says my son needs IV sedation to deal with 4 cavities. My son did not respond well to his first round of sedation, so now they want to totally knock him out. The cost of sedation alone is $700. Of course they made my wife feel like our son’s jaw will fall off if we don’t do this.

Any help is appreciated, and apologies for being OT.

This, combined with continued low rates, is going to drive me crazy. Falling home prices = solution, not problem. Are we (HBB’ers) really the only people that see it this way?

BTW, this story keeps popping up, so “fed landlord” must be in the bag. If this goes down, I am going to rent one of these and trash it. “Let’s strip this mother!”

“WASHINGTON (AP) — The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.”

http://hosted.ap.org/dynamic/stories/U/US_GOVERNMENT_HOME_RENTALS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-08-10-13-18-31

Muggy
Just talked to a parent of a 5 year old. She said to be in the room with him, tell him he needs to be a little man, and daddy will hold his hand and be there. She also said that Dentist has no patience.
Knowing you and your wife, you’ve already tried this route. But if not, and they didn’t let you back there, push back on their rules.

What’s wrong with this picture?

California Employment Statistics:

Data Element Current Data
For the Month of June 2011
Civilian Labor Force (seasonally adjusted) 18,043,700
Employment (seasonally adjusted) 15,910,100

California Population
July 2009
36,962,000

Employed percentage of Californians

15,910,100/36,962,000 = 43%.

Less than half of us work here; what are the rest of the folks doing with their time?

Romney, who played mum during the Tea Party’s efforts to use the debt ceiling to send the economy into a downward spiral, is now hammering Obama on the economy. Be careful not to become the Republican pot that calls the Democratic kettle black, Mitt.

Romney, on rare visit to Iowa, rips Obama on economy
By John Whitesides
PELLA, Iowa | Wed Aug 10, 2011 9:24pm EDT

(Reuters) - Mitt Romney, on a rare visit to Iowa on Wednesday, said Americans were “fearful, but not panicked” about the economy and predicted voters would deny President Barack Obama a second term for his economic failures.

The Republican presidential front-runner said Obama would lose in Iowa and elsewhere in the general election in November next year because his policies had impeded economic growth and dented confidence.

“He is not up to the task of leading the country at a time of economic crisis,” Romney told reporters after a round-table
…

“Dump and jump” has supplanted “pump and dump.”

MARKETS
AUGUST 10, 2011, 7:43 P.M. ET

Swelling Volume Is Telling
By BRENDAN CONWAY AND STEVEN RUSSOLILLO

NEW YORK—The stock market’s recent slump has arrived with the soaring trading volume that was conspicuously absent from the early-year advance.

Trading volume over the past five days has been more than twice the 2011 average. The recent trading surge signals much more investor conviction than the light volume during the early-year rally in stocks, market watchers said.

Monday’s plunge was accompanied by the fourth-biggest New York Stock Exchange composite volume in history, as investors dumped stocks and drove the number of shares that changed hands to 9.71 billion.

That landmark session was followed by the 12th-largest day ever, as the Dow Jones Industrial Average snapped back with a 429.92-point gain Tuesday. Volume of late has been the heaviest since the May 2010 “flash crash.” Wednesday’s volume was 8.24 billion shares.

“Increased volume is a reflection of the massive liquidation taking place,” said Rick Bensignor, chief market strategist at Dahlman Rose & Co. More investors now believe that the Standard & Poor’s 500-stock index was overpriced at 1300, with the swoon prompting surging volume as traders look for a new equilibrium, he said.
…

August 8 at 12:44PM by Dennis DiClaudio

Stock Market Commits Suicide After U.S. Credit Rating Downgraded

Does anybody know how Wall Street responded just at the beginning of the fall of Rome?

Wall Street stocks plummeted Monday morning on the first-ever downgrade of the United States’ credit rating, with the Dow Jones Industrial Average plunging as much as 380 points in the first hour of trading.

The move by Standard & Poor’s over the weekend to cut the U.S. rating from AAA to AA-plus shook confidence among global investors and added to worries that the world’s largest economy could sink into a double-dip recession.

Investors dumped stocks and fled into safe havens such as gold, which rose to record highs of more than $1,700 an ounce.

Oh… my… God! This is more serious than I thought!I never thought I’d actually see this day, and now that’s upon me, I almost feel like I’m hallucinating.

Glenn Beck was right!

(I’m scared…)

My wife’s grandfather died of suicide related to economic hardship. It does happen.

Melanie Haiken, Contributor
8/10/2011 @ 12:37PM
Suicide and Financial Crisis: How Real Is the Risk?

Ever since the iconic stories of Wall Street financiers plunging to their deaths in the darkest days of 1929, financial crises have given rise to fears of a suicide spike. And certainly with the events of this week, pundits have wrung their hands over stress levels and the effect of so much uncertainty on the nation’s psyche. Over the years there have been so many gunshot-to-the-head stories following stock fraud outings that they seem to pile up into a mound of anecdotal evidence.

But what do statistics really tell us; does the suicide rate truly rise during times of financial crisis?

Three studies released this spring and summer seem to say yes. Last month a team of British researchers from Cambridge published startling statistics in the respected British medical journal The Lancet revealing that suicides in both the U.S. and Europe increased dramatically in the years between 2007 and 2009, when economies were crumbling, jobs disappearing, and wallets being squeezed. Overall, the suicide rate climbed 5 percent, an amount that’s concerning but doesn’t constitute a spike. However, the researchers tallied data (kept by Eurostat and the World Health Organization) for ten different countries, and found eye-opening distinctions. In Ireland and Greece, two of the hardest-hit economies in Europe, suicides increased by 13 and 17 percent, respectively, while in Finland and Austria, countries with strong social safety nets, the rates either climbed little or not at all.

The study was met with a barrage of questions and criticism, and the researchers did admit to dealing with some “gaps in data.” However, experts pointed out that the suicide numbers correlated with a report issued by the BBC showing a 43% rise in the number of prescriptions for antidepressants written by Britain’s National Health over the past four years.

It’s tempting to jump in and point out that studies like these can document only correlation, they can’t prove causation. And of course there are other factors that could contribute to a rising suicide rate. However, before we get all high and mighty, let’s look at another and much more impressive study published just two months earlier in the American Journal of Public Health, which documented an even stronger connection. In this study, the researchers tallied a massive amount of NIH and CDC data from 1928 to 2007, breaking it down by age group and coordinating it with periods of economic boom and bust.

What they found: Between 1928 and 1933, peak years of the Great Depression, the overall suicide rate in the U.S. was the highest it’s ever been, climbing from 18 to 22 suicides per 100,000 people. From 1932 to 1945, years of relative prosperity, there was a steady decline, followed by small fluctuations throughout the calm and relatively stable 1950s. The suicide rate then rose gradually through the 1960s and 1970s, but in the 1980s it began to decrease, continuing to decline steadily until 2000. (Anyone recall what happened to the economy in 2000?) From 2000 to 2007, the last year for which the researchers had data, the suicide rate was on the rise. Meanwhile, suicide rates among those between the ages of 24 and 65 — the working years — were tied much more closely to economic fluctuations than those for other age groups. It certainly makes you wish this team had had access to numbers from 2007-2009.

It happens.

South Korean stock broker jumps to death off building after heavy financial losses, police say
BY Philip Caulfield
DAILY NEWS STAFF WRITER
Wednesday, August 10th 2011, 11:09 AM

A South Korean stock broker jumped to his death from an apartment building after suffering massive losses in the global financial panic, police said.

South Korean investigators said Wednesday that the 48-year-old man, identified only by his last name, Seo, sent his coworkers remorseful text messages just moments before the high-rise death dive.

Chief investigator Lee Kang-ho said the texts also included an apology to his clients.
…

DJIA 52-week high 12,876.00
Current value 10,719.94

Cumulative loss off peak (so far):

100*(10,719.94-12,876.00)/12,876.00 = -16.7%.

Not even down 20% yet off the recent peak.

‘Tis a mere flesh wound!

Scary footnote to current U.S. economic turmoil: The collapse of the Chinese housing bubble is a shoe that remains to drop.

Government-sponsored ‘affordable housing’ programs don’t work.

ASIA BUSINESS
AUGUST 10, 2011

Cracks in China Housing Push
By DINNY MCMAHON and AARON BACK in Beijing and ESTHER FUNG in Shanghai

China launched its huge low-cost housing push to bolster the economy and stave off social unrest. But it’s being plagued by a shortage of funds and concerns over developers taking dangerous shortcuts. WSJ’s Andy Browne and Dinny McMahon discuss.

Cracks are starting to appear in China’s drive to build low-income housing as concerns rise that a rush to meet government targets is making for shoddy construction, fears made more intense after a train crash last month highlighted the speed with which China carries out many of its infrastructure projects.

The massive state-led investment was supposed to head off social unrest as urban home prices spiraled out of reach of ordinary workers. And many economists forecast that the spending on cheap housing would cushion the impact on the Chinese economy as the government tried to deflate a bubble at the luxury end of the market.

But far from being a magic bullet, the low-income housing push is creating its own problems at a time when a stubbornly high inflation rate is constraining China’s ability to spend its way out of another global downturn.

Premier Wen Jiabao rolled out grand plans in March for 36 million units of public housing as part of China’s current five-year plan from 2011 to 2015. But a report by the state-run Xinhua news agency in May raised alarm bells about the plans’ progress, saying construction had begun on only 30% of this year’s target of 10 million units.

Since then, the push appears to have sped up. In July, Premier Wen said construction on more than half of the 10 million targeted units had begun.

In recent weeks, several reports of shoddy workmanship on low-income housing have appeared in state media, raising concerns about safety and suggesting that the flagship project may have to proceed more slowly than expected.

“If low-income housing construction is blindly devoted to speed, then like the frequent accidents we’ve seen recently, problems will keep occurring…and potentially even end in tragedy,” said an article in the People’s Daily, the official mouthpiece of the Chinese Communist Party, on July 27.

The article appeared just days after the July 23 high-speed train accident that killed 40 people and injured almost 200 near Wenzhou in eastern China. The accident gave rise to a wave of popular anger and accusations that the new rail network had been developed too quickly and without enough focus on quality and safety.

The People’s Daily article didn’t specifically mention the train crash. China has also been plagued by a spate of fatalities on major construction projects this year.

A recent statement on the website of the Ministry of Housing and Urban-Rural Development called on officials to “draw hard lessons from the July 23 Wenzhou rail accident, and ensure the safe construction and quality management of low-income housing and public works.”

The concerns surrounding the low-income housing push adds to worries over the outlook for the Chinese economy, and by extension the global economy, which is heavily dependent on China for growth. On Tuesday, China reported unexpectedly high consumer inflation of 6.5% in July, its highest level in over three years, and faster than the 6.4% year-on-year level in June.

In 2008, Beijing helped support a faltering global economy by unleashing a wave of bank lending that fueled China’s construction industry—and commodity exporters everywhere. Now, with global markets buckling under concerns of a double-dip recession in the U.S. and sovereign-debt woes in Europe, China’s high inflation means it can’t perform a similar trick without watching prices shoot up further.

Finding the cash to fund low-income housing developments is also proving problematic, with local governments cash-strapped from their recent infrastructure building binge, and banks, already constrained in their lending, preferring to give loans to higher-margin projects.

On Tuesday, Tan Huajie, the board secretary of China Vanke Co., the country’s largest property developer by market share, said that the tighter liquidity in the sector was discouraging investment. Vanke saw first-half profit rise 5.9%, a better performance that many of its peers. Analysts say Vanke’s relative success compared with its peers is partly due to its focus on selling small and midsize homes in China’s less-developed cities, a market segment only recently affected by government restrictions on lending.

Developers are chafing at thin margins for low-income housing. Vanke President Yu Liang said that his company has started construction on more than three million square meters of public housing, but that the profit margin on those developments is only 2%. Analysts say the profit margin for developers on a typical residential development is about 30%.

Mr. Yu said Vanke would continue to contribute to the public good as long as it didn’t hurt shareholders’ interests.
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Is the entire developed world economy presently collapsing, or does it merely appear to be collapsing?

U.S. share prices are hardly alone in this market meltdown — it’s global, folks!

A former poster here named Hoz used to regularly explain to us that the challenge of a bear market is to avoid getting wiped out. At this stage of the game, I totally understand what he meant.

The Irish Times - Thursday, August 11, 2011
Stocks hit two-year low on debt contagion fears

Eurostoxx 50: 2,153.77 (–140.47) Frankfurt DAX: 5,613.42 (–303.66) Paris CAC: 3,002.99 (–173.20) EUROPEAN STOCKS fell to a two-year low yesterday, amid specul-ation the region’s debt crisis is spreading and as the Federal Reserve’s plan to hold interest rates failed to ease concern that the economic recovery is stalling.

EON plummeted the most on record, dragging Germany’s DAX down the most since 2008, as the nation’s largest utility said it will reduce its workforce by more than 10 per cent and cut dividends. EON tumbled 11 per cent to €13.82.

The benchmark Stoxx Europe 600 slid 3.8 per cent in London, erasing an earlier advance of 2.2 per cent.

“I am not convinced that what the Fed said will help the market hugely in the medium-to-long term,” said Markus Huber, head of German sales trading at ETX Capital in London.

“More details would be needed on what exactly the Fed is planning to do in case growth continues to slow even more severely,” he said.

Banks retreated 6.7 per cent, the most since March 2009. Société Générale lost 15 per cent to €22.18, the biggest drop since October 2008.

BNP Paribas, France’s largest lender, sank 9.5 per cent to €35.61 and Credit Agricole plummeted 12 per cent to €6.07, a record low.

“Société Générale issued a warning recently, which makes it very vulnerable to market rumours and that’s why the stock is getting hit today,” Mr Huber said.
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