Empiric Student Property Share Discussion Threads

[briarberry] 08/4/2008 19:42

yes lots of peeps saying the $29bn backing of Bear was illegal...


Volcker Says Fed's Bear Loan Stretches Legal Power (Update1)

By John Brinsley and Anthony Massucci

April 8 (Bloomberg) -- Former Federal Reserve Chairman Paul Volcker questioned the central bank's decision to back a loan to an investment bank, saying the decision was at ``the very edge'' of its legal authority.
----
``What appears to be in substance a direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time-honored central bank mantra in time of crisis: lend freely at high rates against good collateral; test it to the point of no return,'' he said.
----
Volcker said the modern financial system has ``failed the test'' of the marketplace. When asked whether he predicts a ``dollar crisis,'' Volcker said, ``you don't have to predict it, you're in it.''

[briarberry] 08/4/2008 19:19

Student loan company, down 36%

[briarberry] 08/4/2008 15:45

Lots of people are saying a $trillion now...

April 8 (Bloomberg) -- The International Monetary Fund said financial losses stemming from the U.S. mortgage crisis may approach $1 trillion, citing a ``collective failure'' to predict the breadth of the crisis.

[briarberry] 07/4/2008 23:00

Stagflation? Dr. Michael Hudson suggests that the Fed is trying to inflate the US out of trouble (Ben Banky said the recession would curb CPI etc but inflation is still rising)...

Bernanke has lowered the rate by 75 basis points to support the financial markets and real estate prices. The first effect, as you can see, was to force the dollar's exchange rate way down. If you lower the exchange rate, that's going to weaken the dollar against the European and Asian currencies. The weaker the dollar, the more import prices and consumer prices will rise. Central banks are supposed to be maneuvering interest rates in order to hold down commodity prices and consumer prices. But they are now changing their minds, and using interest rates to inflate asset prices. By doing this, they're inflating the overall consumer price level.

So America will try to inflate its way out of debt, mainly by inflating its asset markets. There will be a spillover into consumer prices. This is not so much because high asset prices are letting people borrow against their home equity any longer, but because the dollar is going down against other currencies, raising import prices.

Import prices determine domestic prices. It doesn't matter that they are a small portion of the economy. This also is true for every economy throughout history, by the way, and is the basis of most economic theory. Whoever claims otherwise has no shame.

[briarberry] 07/4/2008 21:37

AA income down 50% from last Q

NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE: AA - News) today announced first quarter 2008 income from continuing operations of $303 million, or $0.37 per diluted share, versus $624 million, or $0.74 per share in the fourth quarter of 2007.

[briarberry] 07/4/2008 21:03

The US$ has been diluted by mortgage debt...



Until 1971 the US dollar was backed by gold. The Dollar is no longer the reserve currency of the world. Until last month it was backed by the sovereign debt of the United States government. One can presume that it is still backed by the full faith and credit of the federal government, no matter what. Although the nature and character of its backing is clearly changing, the final outcome of what it will become exactly is yet to be decided.



Bearing Down on the Fed's Balance Sheet
By Randall W. Forsyth
Barron's

Congress turned its sites this week on the rescue -- don't call it a bailout! -- of Bear Stearns by the Federal Reserve and JPMorgan Chase.

All the principals involved, from Treasury to the Fed to the banks, insisted the deal staved off a certain bankruptcy of Bear on St. Patrick's Day, which would have set off a chain reaction that might have threatened a meltdown of the global financial system.

They're probably right; the risk of letting Bear go bust was too great to take. And since then, financial markets have begun to rebound. Stocks have bounced, but more importantly from the standpoint of the economy, the capital markets have improved materially.

Starting with Lehman Brothers' $4 billion convertible preferred offering earlier this week, the capital markets have become much more receptive, allowing banks and other financial firms to rebuild capital that was hit by writedowns of sub-prime-related assets.

While balance sheets in the private sector are being rebuilt, the opposite is happening to the balance sheet of the nation's central bank. Specifically, the Fed's holdings of U.S. Treasury securities are plummeting. In their place, the Fed's various new-fangled lending facilities to banks and the rest of the financial system are burgeoning.

Since Dec. 6, just before the Fed instituted its Term Auction Facility to auction loans to banks, its holdings of Treasury securities plummeted from $780 billion to an average of $589 billion in the week ended Wednesday.

As MacroMavens' Stephanie Pomboy points out, at this rate the Fed will be out of Treasuries before Labor Day, or Aug. 14 to be exact.

Meantime, TAF lending has climbed to $100 billion. And the Primary Dealer Credit Facility -- representing the opening up of the discount to non-banks -- averaged $38.1 billion in the week ended Wednesday. JPMorgan Chase chief executive Jamie Dimond told Congress that Bear Stearns is borrowing about $25 billion via this facility.

That is apart from the controversial $29 billion that will be provided by the Fed to JPMorgan Chase and backed by Bear Stearns collateral -- which won't happen until the merger closes.

In addition, the Fed lent an average of $64.3 billion a day in Treasuries under its Term Securities Lending Facility in the week to Wednesday, in addition to the $21.3 billion a day in Treasuries lent under its overnight lending scheme. Lending Treasuries in exchange for other, lower-quality and less-liquid securities doesn't expand overall liquidity. But it does give dealers securities that are as good as cash in exchange from securities that, in essence, aren't.

But, wait, there's more. In the week ended Wednesday, so-called Other Fed Assets leapt by $21.4 billion a day, to an average of $64.9 billion. In that category resides foreign assets, such as currency swaps with foreign central banks such as the Swiss National Bank and the European Central Banks.

The latest bank-statement week took in the turn of the quarter, when money markets tighten, especially in skittish times such as these. So, European banks likely turned to their friendly, local central bankers for dollar liquidity, which the central banks apparently obtained by drawing on swap lines to the Fed. And those loans were an asset on the Fed's balance sheet, requiring it to shed Treasuries as an offset.

It's enough to make anybody's head spin. But the key point is that all these new and novel loans are displacing Treasuries on the Fed's balance sheet. That means, in effect, the Fed is taking on far greater credit risk in support of the banking system. (and it is the Fed's Balance Sheet Assets that provide the backing for the Federal Reserve Notes - US currency - in circulation - Jesse)

Indeed, says Robert Rodriguez, chief executive of First Capital Advisors, we have "crossed the Rubicon."

"In our opinion, a new financial system is in process of being created," he writes in a report to shareholders. "Some may refer to it as Pre-Bear Stearns and Post-Bear Stearns."

As it becomes the protector of the financial system, Rodriguez continues, the Fed's focus may be distorted by the credit risks that now reside on its balance sheet. Having these risky assets might influence the Fed to follow a less stringent anti-inflation policy as when it just held Treasuries.

For now, Job 1 for the Fed is to keep the financial system functioning -- even if it compromises its other objectives. Hobson, here's your choice.

[briarberry] 07/4/2008 14:30

Already we have riots, hoarding, panic: the sign of things to come?
Carl Mortished, World Business Editor - March 7, 2008

The spectre of food shortages is casting a shadow across the globe, causing riots in Africa, consumer protests in Europe and panic in food-importing countries. In a world of increasing affluence, the hoarding of rice and wheat has begun. The President of the Philippines made an unprecedented call last week to the Vietnamese Prime Minister, requesting that he promise to supply a quantity of rice.

The personal appeal by Gloria Arroyo to Nguyen Tan Dung for a guarantee was a highly unusual intervention and highlighted the Philippines' dependence on food imports, rice in particular.

"This is a wake-up call," said Robert Zeigler, who heads the International Rice Research Institute. "We have a crisis brewing in rice supply." Half of the planet depends on rice but stocks are at their lowest since the mid1970s when Bangladesh suffered a terrible famine. Rice production will fall this year below the global consumption level of 430 million tonnes.

Wheat is suffering even greater pressures, with prices up 115 per cent in a year. A succession of droughts in Australia has put upward pressure on the cost of a food commodity that is already in short supply. Stocks are at a 40-year low and exports are being restricted from Beijing to Buenos Aires. Ukraine started closing its door to grain exports in June and Russia set a 40 per cent export tariff on wheat in January.

[briarberry] 07/4/2008 00:28

Survivalism, it seems, is not just for survivalists anymore.

Faced with a confluence of diverse threats - a tanking economy, a housing crisis, looming environmental disasters, and a sharp spike in oil prices - people who do not consider themselves extremists are starting to discuss doomsday measures once associated with the social fringes.

[briarberry] 07/4/2008 00:24

The American Nightmare

The destruction of the stabilizing middle class is occurring simultaneously with an extraordinary increase in income inequalities. Not so long ago CEOs were paid 20 times more than the average employee; now some are paid hundreds of times more. The "gilded age" is returning while the value of a college degree is declining.

Outsourcing is eliminating entire American occupations in engineering and information technology. In the US, markets are working to reduce the supply of American engineers as US corporations lay off their American employees and replace them with cheaper Chinese and Indians.

For engineering and IT jobs that remain in the US, fewer are filled by Americans. US firms have learned that they can pay foreigners on H-1B and L-1 work visas lower salaries, force their American employees to train their foreign replacements, and then discharge their American workers. Consequently, there is double-digit unemployment among American software engineers, IT professionals and computer programmers.

American firms advertise openings for H-1B visa holders only. No Americans need apply. Gene Koprowski in TechNewsWorld (August 20) reports that "in excess of 600,000 new visas have been granted during the last five years. Thirty-nine percent of H-1B visas were for workers in computer-related occupations."

In other words, 600,000 Americans lost the occupations in which they have invested their human capital. You can be assured that these 600,000 did not move up to better jobs.

Last July Bill Gates expressed his worries about the precipitous decline in the number of students entering computer science. Why is Bill surprised when he helped to lead the offshore outsourcing movement?

Seeking to protect their careers from being outsourced, Americans are turning to domestic services, such as nursing and teaching. However, H-1B visas threaten these occupations, too. Hospitals struggling with costs and school systems struggling with budgets are importing lower cost foreigners to teach American kids and care for American patients.

In Nevada the Clark County School District has imported teachers from the Philippines. Arizona has imported teachers from New Delhi, India. The New York Department of Education has brought teachers in from Jamaica. Cleveland, Ohio, has imported teachers from India. It goes on and on.

Eventually, all Americans will be working for less except the fat cats at the top, who will earn large bonuses by substituting foreigners for Americans.

[briarberry] 05/4/2008 19:56

Fitch cuts rating on MBIA
The ratings agency downgraded the bond insurer from 'AAA' to 'AA' as its reserves fall by over $3B short.

MBIA insures almost $680 billion in bonds.

[briarberry] 04/4/2008 21:19

US banks still showing relative weakness compared to the SPX

(down 2%)

these 2 fell bringing down BKX
(down 8%)
(down 11%)

[briarberry] 04/4/2008 16:01

Foreign banks flee Spanish property debt
By Ambrose Evans-Pritchard in Madrid
Last Updated: 1:06am BST 04/04/2008

International banks are scrambling to sell their holdings of Spanish mortgage debt at a steep discount, fearing that the country may be sliding into the worst economic downturn in its modern history.

A blizzard of grim data has soured the mood, capped yesterday by a plunge in PMI purchasing managers' index to an all-time low of 40.9. Car sales fell 28pc in March, and even Madrid's legendary tapas bars seem to have lost their late-night sparkle.

Inmobiliaria Colonial - once the country's biggest property group --is in emergency talks with banks after Dubai's Investment Corporation pulled out of a rescue deal.



(this worth reading)

[briarberry] 04/4/2008 15:34

payroll revisions...

The new report also pegged job losses in January and February at 76,000 each month.

Those revisions added an additional 67,000 job losses to previous readings. The Labor Department now estimates that the economy has shed 232,000 jobs in the first three months of this year.

"The revisions are the real surprise in the report," said John Silvia, chief economist for Wachovia. "If we had known it was anything like that, there would not have been any debate going on about whether we were in a recession. It's pretty stark."

[briarberry] 04/4/2008 13:37

Real unemployment rate 9.3%

Total unemployed, plus all marginally attached
workers, plus total employed part time for
economic reasons, as a percent of the civilian
labor force plus all marginally attached
workers...........................................


March 2007 8.3 Now 9.3



THE EMPLOYMENT SITUATION: MARCH 2008

The unemployment rate rose from 4.8 to 5.1 percent in March, and nonfarm
payroll employment continued to trend down (-80,000), the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. Over the past
3 months, payroll employment has declined by 232,000. In March, employment
continued to fall in construction, manufacturing, and employment services,
while health care, food services, and mining added jobs. Average hourly
earnings rose by 5 cents, or 0.3 percent, over the month.

Unemployment (Household Survey Data)

The number of unemployed persons increased by 434,000 to 7.8 million in
March, and the unemployment rate rose by 0.3 percentage point to 5.1 per-
cent. Since March 2007, the number of unemployed persons has increased by
1.1 million, and the unemployment rate has risen by 0.7 percentage point.
(See table A-1.)

Over the month, unemployment rates rose for adult men (to 4.6 percent),
adult women (4.6 percent), and Hispanics (6.9 percent). The jobless rates
edged up for blacks (to 9.0 percent) and whites (4.5 percent), while the
rate for teenagers (15.8 percent) was essentially unchanged. The unemploy-
ment rate for Asians was 3.6 percent, not seasonally adjusted. (See tables
A-1, A-2, and A-3.)

In March, the number of persons unemployed because they lost jobs increased
by 300,000 to 4.2 million. Over the past 12 months, the number of unemployed
job losers has increased by 914,000. (See table A-8.)

Total Employment and the Labor Force (Household Survey Data)

The civilian labor force rose to 153.8 million over the month, offsetting a
decline in the prior month. The labor force participation rate was 66.0 percent
in March and has remained at or near that level since last spring. Total employ-
ment held at 146.0 million. The employment-population ratio was little changed
over the month at 62.6 percent. The ratio was down from its most recent peak of
63.4 percent in December 2006. (See table A-1.)

The number of persons who worked part time for economic reasons, at 4.9 million
in March, was little changed over the month, but has risen by 629,000 over the past
12 months. This category includes persons who indicated that they were working
part time because their hours had been cut back or because they were unable to find
full-time jobs. (See table A-5.)

Persons Not in the Labor Force (Household Survey Data)

About 1.4 million persons (not seasonally adjusted) were marginally attached to
the labor force in March. These individuals wanted and were available for work and
had looked for a job sometime in the prior 12 months. They were not counted as un-
employed because they had not searched for work in the 4 weeks preceding the survey.
Among the marginally attached, there were 401,000 discouraged workers in March, about
the same as a year earlier. Discouraged workers are defined as persons not currently
looking for work specifically because they believed no jobs were available for them.
The other 951,000 persons classified as marginally attached to the labor force in
March cited reasons such as school attendance or family responsibilities. (See
table A-13.)

[briarberry] 04/4/2008 13:32

Nonfarm Payrolls Mar -80K

births deaths +142 (no way small firms + startups hired 142K - no chance)

so -222K jobs

[briarberry] 03/4/2008 19:55

The sheeple are waking up to inflation...

A March CNN poll indicates that 91% of the population is concerned about inflation. I'd ask a member of the remaining 9% what they're thinking - and what levels of relative fiscal comfort allow one not to be concerned about inflation - but I'm entirely surrounded by 91-percenters. So how do we account for the discrepancy between the Federal Reserve's recent assurances that inflation is under control and the 91% of the population that's worried it isn't?

aggressive estimates put the non-Boskinized actual inflation rate north of 7%. (The We're All Gonna Die estimate is more like 10%, but let's not push it.)

[briarberry] 03/4/2008 13:31

Initial Claims 407K (now at recession level)

[briarberry] 03/4/2008 13:06

Made in China
Inflation fear as importers pass on 10-15 per cent price increases
By Michael Fahy

Manchester-based importers who source in China are about to pass on price rises of between 10 and 15 per cent. They say that currency fluctuations, Chinese wage inflation, raw material cost increases and higher freight charges mean that stable or falling prices of manufactured goods are now a thing of the past.

[briarberry] 03/4/2008 01:33

General Motors Corp. report[ed] a 19% skid in U.S. sales of cars and light trucks.
Toyota Motor Corp. ... reported a 10% decline, while Ford Motor Co. had a 14% drop. Chrysler LLC's sales tumbled 19% last month.


I was thinking this chart would look worse than this, but I guess not (not yet anyway)...

[briarberry] 03/4/2008 01:17

global slow down ???

The Shanghai composite index has plunged 45 percent from its high, reached last October. The first quarter of this year, which ended Monday with a huge sell-off, was the worst ever for the market.

Other parts of Asia are as bad, or worse. In India, stock prices have plunged 31 percent in Mumbai; they are off 31 percent in Japan and a whopping 53 percent in Vietnam, another booming economy. Angry investors have burned a securities regulator in effigy in Mumbai, and some are in tears in Ho Chi Minh City, Vietnam.

[briarberry] 02/4/2008 16:44

big market moves tend to happen in bear markets...

The biggest daily SPX moves, both rallies and plunges, tend to happen almost exclusively in bear markets. Only the terminal downleg-ending plunges in full-on bears are able to consistently generate extreme-enough volatility to drive such huge daily moves.

Of the top 12 daily rallies in the SPX over the last decade or so, 9 happened during the brutal SPX bear of 2000 to 2002. And 2 of the remaining 3 happened during the 1998 Russian debt crisis, a short period of extreme bearishness within a bullish trend. I don't think most casual traders realize that bear markets and crises are where the biggest daily rallies erupt. Bull markets are seldom volatile enough to spawn them.

[briarberry] 01/4/2008 21:43

US$ - I cannot imagine much of a bounce in this, maybe a back test...

US$ Trade Weighted Exchange Index: Major Currencies

[briarberry] 01/4/2008 18:03

DETROIT (AP) -- Ford Motor Co. says its March U.S. sales fell 14 percent as demand for its trucks and sport utility vehicles plummeted.
The month was expected to be one of the worst for automakers since 2005 because of consumers' worries about the economy. Ford was the first major automaker to report Tuesday.
Ford's overall sales for the first quarter were down 9 percent.