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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: SGJ who wrote (17643)	8/21/2009 1:41:26 PM
From: Broken_Clock	Respond to of 103300

To: Smiling Bob who wrote (216722) 8/21/2009 12:22:37 PM From: T Rex Read Replies (1) of 216749 California 11.9 % UNEMPLOYMENT zerohedge.com In a dramatic reversal to the moderating trend from the past several months, Mass Layoff Events surged from 256,357 in June to a whopping 336,654 in July, a 31% increase, and surprisingly the second highest reading for the year since January's 388 thousand. ================================== 43 Percent of SD Mortgages Underwater DIEGO.org/articles/2009/08/18/survival/164underwater081709.txt' target='_blank'>http://www.voiceofsanDIEGO.org/articles/2009/08/18/survival/164underwater081709.txt The share of SAN DIEGO homeowners who owe more on their mortgages than their houses could sell for today has grown significantly this year, according to new data released by First American CoreLogic. At the end of June, the number of mortgaged homes in the county that are underwater had grown to 258,253. That's 42.64 percent of all properties with a mortgage. About another 23,000, or about 4 percent, are close to being underwater, the firm said. This means almost 12 percent more homeowners are underwater than were six months previously. At the end of 2008, the share of underwater loans was 30.7 percent. The new numbers for SAN DIEGO are quite a bit higher than the share of underwater loans nationwide. The firm showed more than 15 million loans underwater across the United States, representing about 32 percent of all mortgaged properties. SAN Diego's underwater share is in line with California's, however, which was also 42 percent. This percentage does not count properties are that are owned free and clear, which account for one-quarter of the county's owner-occupied units. Second homes and investment properties aren't counted in that owner-occupied ratio, but loans on such properties might be included in the underwater numbers. Why is this number important? My first look was in December, in this story. Here's why I am very interested to see how this number is changing: For many underwater homeowners, their incomes and monthly payments will allow them to wait to sell until their homes are again worth more than what they owe the bank. But the statistic is an important indication of how many homeowners could be forced into short sales or foreclosure if they lose their jobs, need to move, or fall behind on their payments. Eventually, if the gap grows too large between the balance of the mortgage and the value of the house, some might walk away. Along those lines, here's a word from Mark Fleming, chief economist for First American CoreLogic, who said mortgage risk will stay "very elevated" until negative equity and unemployment numbers decline: Negative equity continues to be the dominant driver of the mortgage market because it leads to foreclosures in the event a borrower experiences some kind of economic shock: job loss, illness or other adverse situation. ============================ If you don't know CR's blog, I suggest you educate yourself...quickly calculatedriskblog.com

To: SGJ who wrote (17643)	8/21/2009 2:10:43 PM
From: Broken_Clock	Respond to of 103300

a few more data points === The Association of American Railroads released its latest traffic data, and both the weekly and cumulative traffic originations are down significantly, however this is likely another data point that would be cheered by the wildly optimistic Philadelphia Fed as yet another piece of information that can only go up from here. Total carloads originated was down -17.1% for the week ending August 15, while the cumulative decline was -18.9%. Also the number of ton-miles has declined by 18% from 1,094 billion to 898 billion. This is probably as good a proxy for the real collapse of the US manufacturing complex and implicitly why any inventory bounce, outside of direct government subsidies, will be very slow in coming (and likely delayed due to increasingly artifical capacity added by the central planners). ---- The Japan External Trade Organization has released its latest trade figures, which paint a grim picture for foreign trade by the world's second largest economy. Year to date imports have dropped by 31.9% to $252.9 billion, while exports have plunged 36.8% to $252.2 billion. Most stunning is the disclosure on trade flows with the United States: exports to the US have dropped by 43.5% to $40.5 billion, resulting in Japan's largest positive trade balance. Another development is that China has now replaced USA as Japan's primary trade destination. However that is not saying much: trade with China has declined for the 8th consecutive month. The last fact is among the primary reasons why the Chinese Central Bank has blown a credit bubble of epic proportions in order to mitigate the unprecedented collapse in Chinese trade with its traditional trade partners.

To: SGJ who wrote (17643)	8/21/2009 2:57:50 PM
From: Broken_Clock	Respond to of 103300

market-ticker.denninger.net Why "Recovery" Calls Are Doomed: The Bezzle God the pumping is getting disgusting. I want to put forward something objective and impossible to argue with: MATH. Let's go back to this chart: $2.5 trillion in consumer credit outstanding. Now let's focus on the underlying fundamental reality of consumer-generated GDP and economic activity in general, and the impact of what I call the rate spread on that activity. Back in 2007 before the mess got out of hand you could get a 5% 1 year CD. That's the savings rate, or what you were paid to save money. In addition prime credit on revolving accounts was typically handed out (like candy) at 9.9% or less. I had credit cards with offered rates under 10% and so did a lot of other people. "Higher risk" but still "standard" rates were in the mid-teens (13-14%), with only penalty rates exceeding 20%. Nearly everyone could avoid a penalty rate by refinancing their house and paying off their credit card with the HELOC if required. Ok. Now we have this "crisis" but due to the lack of will in Congress, regulators and The Fed they fail to force the bad assets out into the open where they are marked to the market and the people who have those bad assets go under. Doing so would result in a lot of bank bankruptcies. This is thought of as "bad", but in fact it is only bad for the banks that have lied - the good banks (and there are some) and credit unions would win huge from such an event, as they'd not only get your deposits but also your loan business. Nonetheless most if not all of the "big banks" are the ones who have Congress in their pocket and they're on the bad list. So in response to this fees and interest rates have gone to the moon. I run no balance on my plastic and have a near-perfect FICO (being "dinged" only because I don't carry balances), charging and paying off every month, generating a very nice "discount" income for any card issuer that gives me credit. Nonetheless I have seen interest rates repriced "for market reasons" up to 13, 14 and in one case to 17.9%. In addition the interest rate available on a 1 year CD has gone down from 5% to 1%. What this does to the "spread" and thus private consumer activity is tremendous. Revolving credit is instantly repriced on the outstanding balance at the new interest rate, as are the CDs when they roll over, typically after a year. For the "typical Grandmother" who was making 5% on her CD and paying 9.9% on her plastic, the spread was 4.9%. That is, 4.9% was the "real cost of credit" to her annualized. Reasonable. Now the credit card is 18.9% and her CD earns 1%. The spread is now 17.9%, or nearly 18%, an increase of 12.8%. For the "subprime" borrower its awful as well. He has no savings, so the CD rate means nothing. But his credit card went from 20% to 36% due to missing one payment. He's seen a spread increase of sixteen percent. Why does this matter? It matters tremendously! Remember, from the above there is $2.5 trillion outstanding in consumer credit. An increase of just ten percent in the spread cost for money means that $250 billion dollars each and every year does not get spent on consumption (and employment of those who make what was consumed), it instead goes to the banks to paper over their fraudulently-marked paper! How big of a deal is this? Our economy (at present) is around $13 trillion dollars (was closer to $14, but heh, 'tis a recession, right?) This is thus a real and permanent 1.92% decrease in private-activity GDP each and every year and it will NEVER GO AWAY so long as "The Bezzle" mandates that the spread be used to cover up the fraudulent accounting at the banks and other financial institutions! Nor does it stop with consumers. Corporations are also paying outrageous spreads over comparable Treasuries to borrow money compared to just a couple of years ago, and that interest once again is going to the banks and other institutions that buy their paper and use the excess spread to paper over THEIR losses on mismarked paper. As such the $250 billion number is almost certainly greatly understating the true amount of the damage. Folks, if you think that this sort of game-playing is somehow "beneficial" to the economy or it is "no big deal" this ought to disabuse you of that notion RIGHT NOW. There is no possible way to generate a durable trend-growth economic recovery ever in the future until this game-playing stops. This is the fundamental reason that Japan never turned the corner and had a durable recovery and it is why we won't either. It simply can't happen. The mathematics make it impossible, as that excess spread comes off GDP each and every year until the bad paper is either removed from the system or amortized and the excess spread disappears. Since most of this paper (especially that related to houses!) has amortization schedules measured in decades and an underwater homeowner cannot refinance, this drain on our economy is going to remain for years, not months. There is only one way to stop it: FORCE all of the bad paper into the open immediately, close all the defunct institutions that this uncovers, and remove the excess liquidity so that the rate spread contracts back to a reasonable level. This means that I will once again be able to get a 5% CD and I will once again see "good credit risks" offered revolving credit at under 10%. While this would trash a bunch of banks (and it should) it would free upwards of $250 billion dollars a year in consumer spending! Our regulators and government officials are both protecting crooked dealing and destroying our economic recovery prospects. Wake up America.