May 2010
78 posts
1 tag
The Degradation of Spain
Lina from Spain writes:
Logical: Presently our country is 100% debt-satisfying oriented.
But no degradation in sight: we have survived other crisis over a 20% unemployment rate; meanly that of the 70s (Oil Crisis). Like before, the Labour Government is doing the Tories’ dirty job - or springcleaning. We are in the right path to re-emerge stronger!
While I admire Lina’s...
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Bank Failure Friday
The FDIC was back in force this week. Four banks were added to the FDIC Failed Bank List, though three were grouped into one action:
Granite Community Bank, N.A., Granite Bay, CA - $94.2 million in total deposits and an estimated hit to the Deposit Insurance Fund (DIF) of $17.3 million. This resolution required a loss-share agreement between the FDIC and Tri Counties Bank on $89.3 million of...
Japan plans to build robot moon base by 2020 →
Believing that a moon base is essential for exploration of the solar system, Japan has recently announced plans to send humanoid robots to the moon to construct a robot lunar base. As part of the $2.2 billion project, the robots will begin surveying the moon around 2015, and then build the unmanned base near the moon’s South Pole by 2020.
Why is the Japanese future so much better than ours?...
Moody's Still Likes Spain →
Ok, that’s not the actual headline. Fitch downgraded Spain a notch (from AAA to AA+). Things seem to be degrading there rather quickly. The number of shotgun weddings for banks is quite high. They’ve dropped their GDP and raised their unemployment forecasts.
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No, Really, You Should Read These
Nothing noteworthy happened today on the economics front. But unlike yesterday, I have a few “must reads” for you. They are all on the same topic.
US money supply plunges at 1930s pace as Obama eyes fresh stimulus - This is actually from yesterday, and I didn’t particularly think it was worth linking to. AEP is always worth reading, but I felt there were some severe problems...
Unsolicited Analysis Identifies Risk →
When analyzing an investment, it is important to be able to identify sources of risk. Unsolicited Analysis provides a nice writeup that includes four of the basic risks frequently overlooked by many investors.
the405club asked: In honor of tonight's sponsor, do you prefer OJ with a dash of champagne or champagne with a dash of OJ?
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Unemployment: New Claims Down
We’ve heard this story before: new unemployment claims are easing back down after their recent spike. We’ve made no lasting improvement since December. That’s the main story told by this week’s Unemployment Insurance Weekly Claims Report. New claims came in at 460k while last week’s number was revised up 3k. New claims were near the high end of the Bloomberg consensus range...
Guess What: Australia Isn't Backing Down On... →
So now this is only news because it cancels the last news, which canceled some previous news. You know what? No more on this unless it actually passes.
Questions? →
Tonight’s answers will be brought to you by … Mimosas! They’re not just for breakfast anymore.
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Nothing to See Here
Nothing really noteworthy seemed to happen today. The Dow closed below 10,000, but this hardly seems noteworthy given recent volatility. There isn’t even a big set of “must reads” open in a bunch of browser tabs I want to close.
Instead, I’ll share some things I found at least moderately interesting or entertaining.
Paul Farrell Sees Dow Sinking Below 6,470, End Of...
Trans-Alaska Pipeline, Owned By BP, Shut Down... →
At least the pipeline had an “off” switch.
Ok, make that just "Unsettling"
I thank unsolicitedanalysis for his clarification.
In truth, my dissatisfaction came from my inability to find data to support one explanation over another. Additionally, I consider “dumb money” in credit markets to be considerably smarter than “dumb money” in equity markets. If there’s that much money in euros that needs to be parked somewhere, the outrage for the...
The False Recovery
Please check out this rather impressive 25 Questions To Ask Anyone Who Is Delusional Enough To Believe That This Economic Recovery Is Real, which I found over at Financial Armageddon. Spoiler: things are bad.
I’d like to add a few other tidbits that indicate an extremely unhealthy economy.
Government’s Role in Personal Income Reaches All-Time High. 1 in every 5.5 dollars of...
“It’s one thing that President Obama is spending nearly $2 billion per...”
– Craig Crawford: War Spending Shortcut Takes Hold
Crawford wrote a book with Helen Thomas; this type of rhetoric is consistent with his style. Reminded me of the recent Grayson (D-AwesomeTown) War is Making You Poor Act.
North Korea
I’m pretty good at guessing worst-case scenarios, but what are the reasonable / best case scenarios to come out of these North Korean shenanigans? Maybe Kim just pays a big fine, apologizes for killing a bunch of people with a torpedo, and promises to tone down the crazy just a bit. Is that still an option?
Crystal Ball
Ok, “reading the futures” is a little different than “predicting the future,” but we’re currently looking at some pretty ugly overnight markets (Nikkei currently down just over 3%, though the decline appears to be taking a breather). US futures are looking craptastic (DJIA was off 150 points), though we’ve had some pretty stunning reversals even in the recent...
Spanish Bank News
This weekend, the failure of the Spanish bank CajaSur made news. The bank restructuring will cost $691 million. I actually fell into the “who cares?” camp. If anything, I thought the move was sufficiently early and appropriate. The Spanish banking system, like the rest of the European banks, is quite fragile. However, Spain’s willingness to act gave me confidence (yeah; CNJ,...
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Bank Failure Friday
The FDIC took a bit of a breather this week. Only one bank was added to the FDIC Failed Bank List. Pinehurst Bank, of Saint Paul, MN has failed. From the press release:
The sole branch of Pinehurst Bank will reopen on Saturday as a branch of Coulee Bank.
…
As of March 31, 2010, Pinehurst Bank had approximately $61.2 million in total assets and $58.3 million in total deposits....
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You Aren't Paranoid Enough
Hypothetically, let’s say you just heard someone say that they trusted their kids with a babysitter because the sitter had CPR certification. Are you kidding me? For 30 bucks and 30 minutes, they’ll give CPR certification to anyone. Anyone.
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Inflation Expectations
Jeff Miller asks (and I paraphrase to avoid an awkward poop joke): The Fed created a lot of dollars that are sitting on the banks’ balance sheets. Sure, that money may not be circulating through the economy, but we can all see it. It looks like a giant, coiled spring. Doesn’t that impact inflation expectations? Aren’t inflation expectations enough to drive prices (Friedman, 1968...
dailyrenegade asked: I might be late to this party, but I'm studying for the CFA, and it's a little disconcerting. Any tips, advice, or good info you can offer about the Chartered Financial Analyst program?
Global Bust Round II; Australia Mining Contagion;... →
My link to this has a very narrow target audience. Ben Kraal and I recently had a discussion via email about the Australian Super Tax. Steve Keen was mentioned in the exchange. We were actually discussing possible conspiracy theory type stuff (both for economic merit and for entertainment), not the impacts it might have on the market. Anyway, when I saw both the super-tax and Steve Keen mentioned...
mills asked: What is to be done? Granted dictatorial authority over the globe's financial/economicnsystems, what would you do?
boutofcontext asked: When's your book coming out?
squashed asked: When I see the stock market do things like today, I have a mixed reaction. One part of me says, "Oh, crap! The money's going away." The more nihilistic part of me says, "Die fat cats, die!"
Is this normal?
Is this normal?
unsolicitedanalysis-deactivated asked: Am I too gloomy, or are you also in the doom boat?
Please Ask Me Something →
I’m in unwind mode right now. Any questions while I ponder the fate of a certain pot pie?
Markets are closed; you can stop losing money now
unsolicitedanalysis:
Whee! And tomorrow we take out Dow 10,000. Looks like you don’t get to retire on your mountain of debt and paper, a#$%&les. This f&#%ing generation before us - so smart, weren’t they? Catastrophic geniuses.
Futures are way down. Shorts covered and then became sales. The flight to safety is well underway, killing stocks and buoying treasuries. Commodities got...
Subsidized Housing Allocated Mostly to Officials →
In case you were wondering why, in a recent pick-your-career survey among children in China, “corrupt official” was one of the top responses. Emphasis mine:
In the first large-scale subsidized housing project in Mei County, Shaanxi Province, Xinhua News Agency has reported that of the total subsidized homes, 80 percent have been assigned to officials.
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Unemployment: New Claims Up Sharply
Disappointing data on the employment front. This week’s Unemployment Insurance Weekly Claims Report tells a disappointing story we’ve heard before. Just as we make new inroads on employment stability, a shock drives the numbers higher, erasing several weeks of gains. New claims came in at 471k while last week’s number was revised up 2k. New claims were well above the Bloomberg consensus...
Computer Algorithm Can Recognize Sarcasm →
The article even managed to make the appropriate Simpsons reference.
(via HuffPo)
US state pensions becoming federal issue →
FT reminding us that there are still significant problems in front of us. The pension funding shortfall is estimated to be between one and three trillion dollars. I feel a little let down by the article. It uses Illinois as the example (one of the authors is based in Chicago). I would have preferred to see CalPERS. Remember that they just decided they needed another $600 million from California...
Suddenly, Everyone's In the CRASH Camp, Not Just... →
I’m going to pander to the bulls for a moment.
This short article warns about taking all of the crash predictions as a contrarian indicator. But is a crash something a huge percentage of people can predict? Is it possible for a crash to be a self-fulfilling prophesy when advance notice is given by so many? Obviously the crash itself requires a huge chunk of people to give up at once....
MBA: Mortgage Purchase Applications 'Plummet' to... →
Tax credit expired.
Doomsday Notice
I had a note in my calender to make a post about Greece’s doomsday today. See, if not for the bailout, Greece would be defaulting in a few hours. Now we can only guess when the trigger will be pulled. It would be somewhat fitting if Germany’s insta-ban was the trigger, because that would give us the same doomsday, and I wouldn’t have to change my calender.
Don’t panic,...
“I hope the shortselling ban on ten financial companies is is just a...”
– Edward Harrison in Beggar thy neighbour: Martin Wolf is singing from my songbook
I hadn’t thought of this. If there was a silver lining to this sudden action by Germany, a Greek restructuring would certainly be it. If this scenario plays out, expect France to come out with a similar ban....
High Times in the German Capital: Berlin Set to... →
Some changes to the law are better received than others in Germany.
Bafin Confirms German Ban on Naked Short-Selling... →
This is happening right now.
“They must have realized that a small, indeed a tiny, country like Greece, one...”
– Karl Otto Pöhl, former German central bank head, in a Der Spiegel interview. (via zero hedge).
Even Ambrose Evans-Pritchard has reversed his stance on the Greek bailout:
Personally, I have changed my mind on Greece. My initial reaction earlier this year was that it had to be saved to avoid a...
The Revenue Limits of Tax and Spend →
Whether rates are high or low, evidence shows our tax system won’t collect more than 20% of GDP.
This is being critiqued in several places as well (particularly fun commentary on Financial Armageddon). This further adds to my interest in which path Britain chooses. We will be faced with a similar choice in the near future, and we may be closer to our limits than we anticipate.
Dear Tories, sorry we spent all the money:... →
Funny politics. Since the UK isn’t in the eurozone, they actually aren’t restricted the same way the Greeks are. Fiscal shortfalls in the UK (and the US) do not necessarily need to be closed by cutting spending or increasing tax revenues. They can also be filled by borrowing or printing money. Of course, printing money may make borrowing more difficult. Furthermore, inflation comes...
ECB Offers Banks Term Deposits Offset Bond... →
This is bizarre. When a central bank purchases bonds, it puts new money into the economy. Since that would be inflationary, the central bank can soak up some of the money by selling bonds. For the US, this could be used to change the average maturity of Treasuries (i.e. buy 10 year, sell an equal amount of 2 year). When the ECB does it, it can either change the average maturity or change the...
Chrysler Loan Leads To $1.6 Billion Loss For... →
It now appears that we’ll get a decent amount more back from GM than Chrysler.
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5/14/2010
I’ve written too much today and have started drinking, so you get the rest of this in condensed form.
Moody’s Downgrades Nearly $10bn of Wells Fargo Jumbo Mortgage Securities - The housing crisis is not over. It is working its way up the ladder.
‘Unemployed’ Have Given $6.9 Million In Political Contributions Since 1990 - My favorite bit is this: “So far in the 2010...
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Bank Failure Friday
Four new banks were added to the FDIC Failed Bank List:
Midwest Bank and Trust Company, Elmwood Park, IL - $2.42 billion in total deposits and an estimated hit to the Deposit Insurance Fund (DIF) of $216.4 million. This deal required a loss share agreement with Firstmerit Bank, National Association on $2.27 billion of Midwest Bank and Trust Company’s assets. All 23 branches will be open...
Venezuela Imposing ‘Draconian Clampdown,’ RBS Says →
It’s not exactly news that Venezuela is having currency problems. What was news to me, however, was that they are now considered to have better than even odds of defaulting. Also, note that California makes the top 10 list for highest default probabilities.
