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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (85709)	8/30/2007 9:40:35 AM
From: Paul Kern	Read Replies (1) \| Respond to of 110194

U.S. Economy Expanded at a Revised 4% Annual Rate (Update2) By Courtney Schlisserman Aug. 30 (Bloomberg) -- The U.S. economy expanded in the second quarter at the fastest pace in more than a year as exports surged and business spending accelerated. Growth was revised up to a 4 percent annual rate, according to a report today from the Commerce Department in Washington. The median forecast of economists polled by Bloomberg News was 4.1 percent. The economy grew at a 0.6 percent pace in the first quarter. The outlook for the second half of 2007 has soured in recent weeks as concern about subprime mortgages restricted access to credit. Federal Reserve policy makers this month said risks to growth had ``increased appreciably'' and economists at JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. are among those that have reduced forecasts. ``It's setting us up for slightly slower growth in the second half,'' said Neal Soss, chief economist at Credit Suisse in New York. The housing slump is ``likely to persist.'' The median forecast in the Bloomberg News survey reflected responses from 81 economists. Estimates ranged from 3.2 percent to 4.5 percent. Commerce last month calculated the second-quarter growth rate at 3.4 percent Claims Increase First-time claims for jobless benefits unexpectedly rose last week to the highest level since April, a Labor Department also showed. Applications climbed by 9,000 to 334,000 in the week that ended Aug. 25, suggesting the housing recession and related turmoil in credit markets are costing jobs. A bigger jump in exports and smaller gain in imports contributed to a reduction in the trade deficit, the report on gross domestic product showed. Trade contributed 1.4 percentage points to growth, the most since 1996. Spending on corporate construction projects and new equipment also boosted growth. Commercial construction jumped 28 percent, the most since 1981. Investment in equipment increased at a 4.3 percent pace, almost double the previous estimate. Inventories, which were forecast to play a role in the projected increase in growth, were little changed from the July report. The Fed's preferred inflation measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.3 percent annual rate, the smallest gain in four years. Fed policy makers on Aug. 17 cut the rate charged on direct loans to banks to increase the availability of capital after global stock markets plunged on concern that the subprime default crisis would spread. Fed Change In highlighting risks to growth, policy makers reversed their stance from their last meeting on Aug. 7 that inflation was the biggest concern for the economic expansion. Traders and economists expect the Fed to lower its benchmark overnight lending rate between banks at or before policy makers next meet on Sept. 18. Chairman Ben S. Bernanke will discuss housing and monetary policy tomorrow, when he addresses the Kansas City Fed's annual symposium in Jackson Hole, Wyoming. Declines in residential construction subtracted 0.6 percentage point from growth in the second quarter, more than previously estimated. Housing will probably deduct about a percentage point from economic growth at least through early 2008, according to economists at JPMorgan Chase. Lower Forecasts As a result, growth will average 2.25 percent in the six months starting in October, a percentage point less than previously projected, Bruce Kasman, JPMorgan Chase's chief economist, said in a note to clients last week. Lehman Brothers lowered its forecast last week for the period covering October through June 2008 to 1.8 percent, almost a half percentage point less than previously thought. In one of the earliest economic readings to cover August, consumer confidence dropped by the most in two years, the Conference Board said this week. The measure retreated to 105 this month and the share of people who said jobs are plentiful declined. In today's report consumer spending, which accounts for about 70 percent of the economy, was revised up to an annual rate of 1.4 percent from an initial estimate of 1.3 percent. The gain was still the smallest in a year. ``Our consumer is impacted obviously because they see the value of their homes go down, there's a sort of wealth effect,'' Farooq Kathwari, chief executive officer of Ethan Allen Interiors Inc., said in an interview on Aug. 28. ``Yet they're still interested in furnishing their homes, they're still buying.'' Profits Grow The borrowing restrictions that banks are enforcing are a challenge to potential homebuyers and to some businesses, economists said. Still, growing profits will help support business spending. Today's GDP report included a first look at corporate profits for the quarter. Earnings adjusted for the value of inventories and depreciation of capital expenditures, known as profits from current production, rose 6.4 percent, the most in more than a year, to an annual rate of $1.65 trillion. Compared with a year earlier, profits were up 4.5 percent. To contact the report on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net Last Updated: August 30, 2007 08:51 ED

To: Paul Kern who wrote (85709)	8/30/2007 9:49:55 AM
From: 10K a day	Respond to of 110194

It's gonna be a mess. When one of the assignee fails to perform attorney of shellA will sue shellB and so on and so on. The attorneys will make a lot of money. And nobody is the original player and nobody really knows what or who they are suing. but they may know they didn't get paid. or something. :/ Wall street's gonna love it. It's gonna be a sue fest. And wallstreet will own a lot of houses too. It's gonna be awesome.

To: Paul Kern who wrote (85709)	8/30/2007 9:59:38 AM
From: stan_hughes	Read Replies (3) \| Respond to of 110194

Allow me to play a bit of Devil's Advocate here for everyone's educational benefit -- if I was a Pension Fund manager who was about to pay out a sum to purchase a CDS to reduce my risk of loss on something exotic in my portfolio, a reasonable person might expect me to probably put some effort into evaluating whether my CDS counterparty had the ability to make good in the event of a default. IOW, as a steward of third-party funds, I wouldn't accept a guarantee to cover my losses from the guy on the corner running a squeegie across my windshield -- I'd be wanting to see a financial entity of some substance on the other side of the deal, otherwise it would plainly be an empty promise, and by buying such an instrument I'd just be throwing away my premium to some Jack and his magic beans. That being the case, how does CDS viability come to degrade to the point where it ceases to be a legitimate guarantee without fraud occurring? It seems to me that at some point in the re-assignment process someone would have to knowingly transfer the liability (perhaps multiple times) to an entity clearly incapable and/or without any history of performing in the event of a claim (which is insurance fraud). Got any inputs on this subject?