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

To: CalculatedRisk who wrote (48566)	3/24/2006 1:18:34 AM
From: mishedlo	Respond to of 116555

The Frankenstein Economy is here. Today, Joe can borrow against the theoretical future value of his home and the statistical probability that he'll have the future income stream needed to pay it back. There is no Ed at the bank to know or care whether Joe can actually pay back a loan, or if he actually uses the money to make home repairs or buy eight tons of snow to build a ski slope in his back yard to snow board in August. The connection between Joe and his newly minted debt today is a collateralized debt obligation, part of a securitized interest in a pool of non-mortgage assets, and Joe's default risk is perhaps sold in a portfolio of private label subordinate pieces to a pension fund of a municipality in Germany. Who's the counterparty of the credit derivative that's hedging Joe's default risk, you ask? No you didn't. You don't know what the heck I'm talking about. Don't feel bad. Ninety nine percent of the lenders selling these loans don't either. They just know the money is there to lend and they'd better lend it or their competition will. [...] itulip.com

To: CalculatedRisk who wrote (48566)	3/24/2006 1:20:57 AM
From: mishedlo	Respond to of 116555

WASHINGTON — As President Bush embarks on a new effort to shore up public support for the war in Iraq, an uncle of the commander in chief is collecting $2.7 million in cash and stock from the recent sale of a company that profited from the war. latimes.com

To: CalculatedRisk who wrote (48566)	3/24/2006 1:22:06 AM
From: mishedlo	Respond to of 116555

N.Z. Economy Contracts for First Time in Five Years quote.bloomberg.com March 24 (Bloomberg) -- New Zealand's economy contracted for the first time in more than five years in the fourth quarter, sending the currency to a 22-month low on speculation the central bank will cut interest rates to avoid a recession. The economy shrank 0.1 percent from the third quarter, when it grew a revised 0.1 percent, Statistics New Zealand said in Wellington today. Economists surveyed by Bloomberg News expected 0.2 percent growth.

To: CalculatedRisk who wrote (48566)	3/24/2006 1:24:10 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Venezuela to Cut Size of Oil Drill Areas biz.yahoo.com Thursday March 23, 6:51 pm ET Venezuela to Reduce Size of Oil Drilling Areas by 60 Percent Under Proposed Law CARACAS, Venezuela (AP) -- Private oil companies that won 32 operating contracts in the 1990s will see drilling acreage included in the original contracts cut by 60 percent under a proposed law, Oil Minister Rafael Ramirez said Thursday. Ramirez said the contracts cover 15,500 square miles, but will be reduced to 6,000 square miles because most of the acreage has not been developed. A year ago, the state-oil company Petroleos de Venezuela SA, or PDVSA, said it would compensate oil companies for the contract changes by granting additional drilling areas. "Although these are areas with extraordinary prospects, we believe that 14,500 kilometers is sufficient for the business plan that we have with the mixed companies," Ramirez said. Companies affected by the move include Brazil's Petrobras, Spanish-Argentine Repsol YPF, U.S.-based Chevron Corp. and France's Total SA. Venezuela is converting the contracts into "mixed companies" where PDVSA will hold majority stakes in the fields the companies used to run on their own. Ramirez said PDVSA will launch natural gas licensing rounds to develop the 9,800 square miles that will fall under its control under the new legislation. "A lot of these areas have large quantities of gas reserves," he said.

To: CalculatedRisk who wrote (48566)	3/24/2006 1:28:30 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

China does not plan to emulate U.S. GSEs - adviser today.reuters.com Thu Mar 23, 2006 9:08 AM ET "The Chinese are adamant about having private sector mortgage lenders that are not reliant on government subsidies," the former regulator of the two U.S. government sponsored enterprises (GSE) told a bond conference in Italy. Falcon said Freddie and Fannie were created during the Depression in the 1930s, and Americans are still living with their unintended consequences. "The unintended consequences are their portfolios create systemic risk to the financial system," Falcon told Reuters on the sidelines of the conference. Freddie and Fannie hold a combined $1.4 trillion in mortgage portfolios. Senator Richard Shelby, a Republican from Alabama, along with the Federal Reserve and the White House argue that the portfolios pose a risk to the financial system of the world's largest economy by aggregating interest rate risk, and requiring the two listed companies to engage in extensive and complicated hedging.