December 2009
48 posts
2 tags
Unemployment: New Claims Drop Again
This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims dropped to 432,000. Last week’s number was revised up 2,000. This was significantly better than the Bloomberg consensus range of 445k to 465k 450k. From the report:
In the week ending Dec. 26, the advance figure for seasonally adjusted initial claims was 432,000, a decrease of 22,000 from the...
San Diego Airport
Per online instructions, I arrived at the airport three hours early for my international flight. Observation: the line at security was shorter than the line at Starbucks. With the exception of the woman who threatened me with a body cavity search, everyone was quite friendly. Come to think of it, maybe the offer of the search was an attempt at extreme friendliness.
Australians set new debt record →
benkraal:
Reserve Bank figures show mortgage, credit card and personal loan debts now stand at $1.2 trillion, up 71 per cent from just five years ago and equating to $56,000 for every man, woman and child in the country, News Ltd says.
[…] personal debt now totals 100.4 per cent of Australia’s annual GDP — one of the highest ratios in the developed world.
This is not good.
It could...
2 tags
Unemployment: New Claims Drop
This week’s Unemployment Insurance Weekly Claims Report reminds us that the trend for initial claims is down. After a brief bump up, the downtrend has reasserted itself. Initial claims dropped to 452,000. Last week’s number was unrevised. This was at the low end of the Bloomberg consensus range of 450k to 475k. From the report:
In the week ending Dec. 19, the advance figure for seasonally...
“In theory, fiscal stimulus can cushion the downturn and hasten real recovery by...”
– Edward Harrison in Moving away from stimulus happy talk to focus on malinvestment
Q309 GDP Revised Down, Again →
It was quickly realized that the 3.5% annualized growth for the third quarter was too high an estimate. As the data, particularly the trade deficit data, flowed in, it was revised down to 2.8%. Now everything except the trade deficit has been revised down, bringing the Q3 GDP number to 2.2%. While 3.5% was better than expectations, 2.2% is significantly worse. Fortunately, it’s almost time...
Fictional Reserve Lending And The Myth Of Excess... →
More on the ongoing debate between those expecting immediate inflation/deflation. I realize I’ve linked to some good arguments for both sides recently (and still think deflation is the more pressing concern), but I had to link to this one because of the phrase “Fictional Reserve Lending.” I’m pretty sure any discussion of Fractional Reserve Lending could have the phrase...
Justice or Something
First, we have this post over at naked capitalism: Supreme Court Guts Due Process Protection.
Roman citizens enjoyed a right to a trial, a right of appeal, and could not be tortured, whipped, or executed except if found guilty of treason, and anyone charged with treason could demand a trial in Rome. We have regressed more than 2000 years with this appalling ruling.
The second post quotes...
Senate Passes Unemployment Extension →
Riots canceled.
3 tags
Bank Failure Friday
The FDIC is trying to stay on top of the declining situation with regional banks. Seven banks were added to the FDIC Failed Bank List tonight. Remember that the FDIC has three ways to resolve a failed bank. We get to see all three in action tonight:
RockBridge Commercial Bank, Atlanta, GA - Total deposits of $291.7 million and an estimated hit to the Deposit Insurance Fund (DIF) of $124.2...
Ok... It's a Little Robust
I’ve been watching the dollar index. It has been behaving exactly like I would expect it to. Money has been flowing into UUP, the dollar bullish ETF, at an amazing rate. Gold has had a pullback. But the stock market has displayed unexpected resiliency. We seem to be a bit stuck in a channel between 1080 and 1122, which might not normally be considered bullish, but it isn’t where...
Santa Barbara Daily Sound apologizes for column... →
southpol:
Their bad. Won’t happen again.
Just so everyone knows, nobody in Santa Barbara actually reads this. The dominant local paper is the News-Press, though there’s a never-ending boycott. The Independent is still good (and free).
Update: I just asked my coworker (a recent UCSB grad) if he’d even seen a Daily Sound. He said he hadn’t.
Shaolin Temple's kung fu monks prepare IPO →
Best IPO ever?
Using inflation to erode the US public debt →
I link to this not because I think anyone else will find it interesting (I don’t), but because I’d like to highlight a relatively common analysis mistake.
The fact that less than 10% of the US debt is TIPS doesn’t mean that the rest of our debt is nominal. $2.5 trillion in debt is held by social security. The obligations for those trust funds are indexed to inflation, which has...
US Government Debt at Limit?
I’ve read a few complaints today that the Total Public Debt Outstanding is $12,129,073,186,050.29. That would be larger than the $12,104,000,000,000 allowed by law. This is true, but not all debt is subject to the regulatory limit. You can find this broken down on a daily basis here. Or, look at today’s report here. Total public debt subject to the regulatory limit is...
California Bonds Fail on Advice Bill Lockyer... →
Just in case you got sidetracked by debt problems in Dubai or Greece, here’s a gentle reminder that California, the world’s eighth largest economy, also has some debt problems.
2 tags
Unemployment Claims Up Again
There was less of a move in new claims than last week. We’re still below 500k. That’s the good news from this week’s Unemployment Insurance Weekly Claims Report. Initial claims increased to 480,000. Last week’s number was revised down 1,000. This was above the (rather tight) Bloomberg consensus range of 460k to 470k. From the report:
In the week ending Dec. 12, the advance...
Dollar Thoughts
The Fed announced today that they would hold rates “exceptionally low” for “an extended period.” This is exactly the script that was expected from Time’s person of the year. CPI came in at 0.4% for November, contributing to a 1.8% year over year increase. This is considered to be quite reasonable. PPI, reported yesterday, hit 1.8% for November. This is not considered...
So Much For The Taxpayer Profit In Citi: Treasury... →
This is the story of the evening. Citi shares are (obviously) down to the offering price in after hours trading. This could have gone a little smoother.
Citigroup's "Massive" Tax Break →
WTF? This is incredible.
Tech Ticker puts the figure at $38 billion.
Rolf Winkler points out that without the tax break, Citi’s tangible common equity would have fallen to dangerous levels. Remember those stress tests? TCE was important.
So What's It All About, Costas? →
I thought I would follow up a good link on the problems in Austria with a good link on the problems in Greece (they’re screwed too, remember?). This was actually posted yesterday, but nothing better has been written on the subject. There were some new developments last night (there’s a showdown coming between the public unions and some government officials over how to control costs),...
Bank collapse in Austria brings debt in Eastern... →
There’s quite a wealth of information in this post by Edward Harrison. The only thing I don’t like about it is the beginning. Why start a discussion by scaling up the problem? Using GDP at purchasing power parity to scale a problem for comparison to the US would be worthwhile if the point was to discuss the domestic impacts of the bank failure. Imagine a bank in the US failing with...
Fastest Food Inflation Since Riots Means Milk Up... →
I stockpiled Eggos, but milk just spoils when I buy more than a gallon.
A Good Day for Bailouts and Buyouts
Both the DJIA and the S&P had closing highs for the year. There was a lot of good news today.
The day started with the announcement that Abu Dhabi was going to bail out Dubai World for $10 billion. It’s a little interesting that this enabled a $4.1 billion payment and that some figures were that as much as $5.5 billion was at risk. Maybe things were just a little misreported? No...
Stocks, Dollar Gain as Bonds Drop on Signs of... →
Click for the optimists’ perspective. If you want another way to look at the same data:
There was no volume on the stock market today. In a thinly traded market, prices can move either way quickly.
Bonds are dropping because the last 30 year auction went poorly. That spread to the 10 year. Investors do not trust the dollar over the long run.
The dollar is rallying because in the short...
3 tags
Bank Failure Friday
It’s another hat trick for the FDIC today. Three banks were added to the FDIC Failed Bank List:
Republic Federal Bank, National Association, Miami, FL - Total deposits of approximately $352.7 million and an estimated hit to the Deposit Insurance Fund (DIF) of $122.6 million. This involves one of those loss-share agreements: The FDIC and 1st United Bank entered into a loss-share...
2 tags
Unemployment Claims Creep Up
We’re still below 500k. This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims increased to 474,000. Last week’s number was unrevised. This was in the middle of the Bloomberg consensus range of 450k to 500k (I’ve seen a few headlines calling it worse than expected, which is why I look at the consensus range). From the report:
In the week ending...
Citigroup to Repay TARP, Collapse
jasencomstock:
if you owe the bank $10,000 then you have a problem. if you owe the bank $2,000,000,000,000, then the bank has the problem.
Drew Carey used to joke that he would run stop signs in the rain just to watch the police officer get rained on while writing a ticket. Sometimes it’s not all about keeping the money. If a big, hostile player decided to wage economic warfare on the...
1 tag
Citigroup to Repay TARP, Collapse
There was some good news coming out of Bank of America today. They completed repaying their $45 billion from TARP. And since there was no price tag attached to the loan guarantees, Fed swaps, or other put options courtesy the US taxpayer, they’re now square. Bonuses will now commence.
Feeling a bit left out, Citigroup has announced plans to repay TARP via a $20 billion secondary offering....
Australian Employers Add 31,200 Jobs, Six Times... →
Once again, Australia is showing the world how it’s done.
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Today looked as if the dollar carry trade might unwind. Fortunately, President Obama’s speech had a similar calming effect to Bernanke’s speech yesterday. It should be a little bit frightening that our top officials have to reassure markets that a weaker dollar is still a sure bet. It’s a delicate balance, right now.
The demand for treasuries was strong enough that we were able...
Bernanke, FAQ →
In this context, FAQ is pronounced “Fah-Cue”
Bernanke addresses the following questions:
Where is the economy headed?
What has the Federal Reserve been doing to support the economy and the financial system?
Will the Federal Reserve’s actions lead to higher inflation down the road?
How can we avoid a similar crisis in the future?
My answers differ from those offered by...
“Similarly, the expansion of debt [in China] is also proving less effective in...”
– Yves Smith in Is China’s Capital Spending Bubble About to Deflate?
3 tags
Bank Failure Friday
The FDIC was rested up after the Thanksgiving holiday. Six banks were added to the FDIC Failed Bank List today:
Greater Atlantic Bank, Reston, VA - Total deposits of approximately $179.0 million and an estimated cost to the Deposit Insurance Fund (DIF) of $35 million. Unfortunately, this involved one of those pesky loss-share agreements between the FDIC and Sonabank on $145.0 million of the...
2 tags
Unemployment: 10.0%
You read that correctly, the official unemployment rate just decreased. The November Employment Situation has been released. It blew away expectations. The US jobs number changed by -11,000 last month. The Bloomberg consensus range was -160,000 to -75,000. And while we are losing jobs, people are apparently leaving the workforce faster. The unemployment rate dropped from 10.2% to 10.0%. For the...
1 tag
Some Bearish News
The manufacturing report was a little bullish, but the November 2009 Non-Manufacturing ISM Report On Business was bearish. The index came in at 48.7, indicating contraction. I should mention that I don’t put too much emphasis on this report, but it is worth a glance. From the employment section of the report:
Employment activity in the non-manufacturing sector contracted in November for...
“Immigrants have not only founded big, well-known companies. Foreign-born...”
– Paul Kedrosky and Brad Feld: Start-up Visas Can Jump-Start the Economy - WSJ.com (via nonolet)
No, I’m pretty sure the winning strategy is to gather the best and brightest from around the world, further educate them, and then kick them out. That seems to be the formula, right?
Arizona Maxes Out Line Of Credit In Two Weeks Flat →
Linked to because of the comparison to kiting.
Could Arizona blow up before California? Will the first state failure cascade to all states with budget problems? Will the Treasury backstop more state debt before muni bondholders barf?
2 tags
Unemployment: New Claims Drop to 457k
This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims dropped to 457,000. Last week’s number was revised down 4,000 to 462k. This was better than the Bloomberg consensus range of 471k to 495k. From the report:
In the week ending Nov. 28, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week’s...
Is There Enough Money?
Earlier, I made two posts about the immense size of the debt being issued by the US, and the rest of the world. Both raised the question about whether or not the money even existed to fund the debt. After all, for every borrower, there must be a lender. Right? This is a very static view of the problem, and a dynamic view indicates that the money to fund the deficits can exist.
Kiting
Kiting is...
“Taken all together, the world’s governments will need $1 trillion per month, in...”
– Bill Bonner in Freak Show
More big numbers.
“It’s one of those numbers that’s so unbelievable you have to actually think...”
– Porter Stansberry - The bankruptcy of the United States is now certain (via financegeek)
Fractional Reserve Lending + Kiting = Smooth Sailing?
Rolling debt in the near future shouldn’t be much of a problem. Many dollars that come out of treasuries will go back into treasuries.
Manufacturing, reinvented →
This is cool, if you can make it past the buzz-wordy description (“super-agile distributed corporations?”):
European researchers have created the architecture, hardware and software that will enable super-agile distributed corporations capable of reconfiguring themselves on the fly. It promises to make ‘made-to-order’ a reality for consumers.
1 tag
Anatomy of a Government-Abetted Fraud: Why... →
That is a sweet deal. The loss-share agreement OneWest entered into with the FDIC pays out better on foreclosures than for mods. Left Hand, I’d like to introduce you to Right Hand. You two should probably coordinate a little better.
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November Auto Numbers
The November numbers have come in from the automakers (source).
Ford flat, selling 55 fewer vehicles
GM down 1.8%
Chrysler/Fiat down 25%
Mercedes-Benz plus Smart up 9.1%
Toyota up 2.6%
Hyundai up 46%
Nissan up 20.8%
Honda down 2.9%
Overall that was a SAAR of 10.9 million cars and trucks, up from 10.4 million a year ago. Things aren’t looking great for the domestic manufacturers....
2 tags
ISM: Slightly Less Bullish
The November 2009 Manufacturing ISM Report On Business was released today. The report indicated expansion, but not as much as last month’s report. The ISM PMI (Purchasing Managers’ Index) came in at 53.6, down from 55.7 last month. This was below the Bloomberg consensus range of 53.8 to 56.0. The notes on employment and inventories are of primary interest to me. First, employment:
...
“California is the 8th largest GDP in the world… And traders got all scared when...”
– Chuck Butler in Global Growth Gets Supporting Data
Perspective, though I’m not sure you’d call it an optimistic perspective.
Dubai World to Restructure $26 Billion of Debt →
Quite frankly, I don’t understand what is going on with this debt. Sukuk are odd, bond-like instruments. I do not understand them. They are issued against some sort of asset, and then rented back (which is a lot like an interest payment), and re-purchased at maturity (which is a lot like the final payment of a traditional bond).
I’ve read that creditors have few rights under Dubai...