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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (15007)	11/7/2004 2:11:33 AM
From: mishedlo	Respond to of 116555

Credit Bubble Bulletin snips I found interesting Comments are welcome. Leveraged loans? CDOs Where did these come from? I demand options on leveraged loans so we can offload all of the risk to Mars, Pluto, and France. ng Freddie Mac 2006? How can anything be that complicated? Cash out Refis? What happens when housing prices fall? Medical expenses? Is there an answer? Mish ====================================================================== November 4 – Bloomberg (Karen Brettell): “Two-thirds of leveraged loans issued in the U.S. primary market are packaged into structured products known as collateralized debt obligations, said Standard & Poor’s. ‘CDOs are driving the whole leveraged-loan industry at the moment,’ said Richard Gugliada, managing director of structured finance… CDOs that bundle leveraged loans are in strong demand, though the scarcity of the credits in the primary market is posing challenges for them… Banks create CDOs by packaging assets and using income on the debt to repay investors. They may be leveraged and offer higher returns than their underlying securities. Issuance of loans by U.S. institutions rose to 114 in the third quarter of this year, compared with 65 at the same time last year, and a 2003 total of 91 loans, S&P said.” November 2 – The Wall Street Journal (Jane E. Kim): “At a time when health-care costs are continuing to climb at near-double-digit rates, more Americans are being forced to cut back on their retirement savings and make lifestyle changes to pay for medical care, according to a new survey. About one-quarter of U.S. households that have experienced growing medical bills have reduced their retirement-savings contributions, while nearly half have reported cutting back on their other savings… Nearly 20% say medical bills are making it more difficult to pay for necessities such as food and housing, while one-quarter say they are close to tapping out their savings to pay such bills.” November 3 – Freddie Mac: “In the third quarter of 2004, 60 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages at least five percent higher in amount than the original mortgages, according to Freddie Mac’s quarterly refinance review. This is in contrast to the second quarter of 2004, when 42 percent of refinanced loans had higher new loan amounts… Based on our October outlook for mortgage originations and refi activity in 2004, we expect the amount of home equity cashed-out to total $118 billion. Total equity cashed out in the third quarter is estimated at $41 billion, up from the estimated second quarter cash-out amount of $28.5 billion… The Cash-Out Refinance Report also revealed that properties refinanced during the third quarter of 2004 experienced a median house-price appreciation of 17 percent during the time since the original loan was made, up considerably from the seven percent appreciation on loans refinanced in the second quarter. For loans refinanced in the third quarter of 2004, the median age of the original loan was 2.6 years…” November 3 – Dow Jones (Dawn Kopecki): “Freddie Mac won’t provide investors with timely financial statements until early in 2006, postponing registration with the Securities and Exchange Commission until the middle of that year at the earliest, executives said… The $1.5 trillion mortgage finance company hasn’t reported its financial results on time since late 2002 after Freddie replaced auditor Arthur Andersen with PriceWaterhouseCoopers, which found widespread accounting problems at the company and forced it to restate several years of earnings. Freddie has delayed its statements to sort out its accounting problems and revamp internal systems, something Chief Executive Richard Syron said still needs a lot of work.” Noland Commentary: Never before have financial markets played such a central role in society. More are exposed to marketable securities; more giddily play the mortgage and housing markets; and more have their retirement tied directly to the stock and bond markets. And never before have so many livelihoods been associated with financial and real estate asset prices. The melding of politics to wealth creation – in this case financial wealth - is an innate process, and fanciful notions of an “ownership society” do indeed captivate while in the bosom of an historic asset Bubble. I believe it is reasonable to suggest that had the stock market not recovered, had mortgage rates not dropped to record lows, and had home prices not inflated significantly, the political agenda today would be altogether different. I don’t think one can exaggerate the profound political and social effects of The Great Reflation. And with no intention of being flippant, I do not expect gay marriage to be a major issue in 2008. Why do I have the sense that it is only a matter of time until the administration’s agenda is placed on the back burner to deal with more pressing issues such as financial and economic instability, or even the dollar’s role as the world’s reserve currency? The scenario I find most troubling is an oblivious policymaking team steadfast in its pursuit of a legacy, stubbornly refusing to accept reality, and in no position or having any inclination to cooperate with our global partners. And it is a tragedy that our nation will face its next crisis so ill-prepared and polarized, and in this regard there is certainly plenty of blame to spread around. prudentbear.com

To: Elroy Jetson who wrote (15007)	11/7/2004 2:20:29 AM
From: mishedlo	Read Replies (3) \| Respond to of 116555

President Bush has announced his plan to select Dr. W. David Hager to head up the Food and Drug Administration's (FDA) Reproductive Health Drugs Advisory Committee. The committee has not met for more than two years, during which time its charter lapsed. As a result, the Bush Administration is tasked with filling all eleven positions with new members. This position does not require Congressional approval. The FDA's Reproductive Health Drugs Advisory Committee makes crucial decisions on matters relating to drugs used in the practice of obstetrics, gynecology and related specialties, including hormone therapy, contraception, treatment for infertility, and medical alternatives to surgical procedures for sterilization and pregnancy termination. Dr. Hager, the author of "As Jesus Cared for Women: Restoring Women Then and Now." The book blends biblical accounts of Christ healing women with case studies from Hager's practice. His views of reproductive health care are far outside the mainstream for reproductive technology. Dr. Hager is a practicing OB/GYN who describes himself as "pro-life" and refuses to prescribe contraceptives to unmarried women. In the book Dr. Hager wrote with his wife, entitled "Stress and the Woman's Body," he suggests that women who suffer from premenstrual syndrome should seek help from reading the bible and praying. As an editor and contributing author of "The Reproduction Revolution: A Christian Appraisal of Sexuality Reproductive Technologies and the Family," Dr. Hager appears to have endorsed the medically inaccurate assertion that the common birth control pill is an abortifacient. Is anyone concerned that Dr.Hager's strong religious beliefs may color his assessment of technologies that are necessary to protect women's lives or to preserve and promote women's health? from snopes.com snopes.com plannedparenthood.org ppmarmonte.org now.org