Empiric Student Property Share Discussion Threads

[briarberry] 10/5/2008 23:41

Gulf States, inflation over 9%

(FT.com) Saudi Arabia's oil-fuelled boom is producing massive investment in infrastructure projects but is also leading to growing social pressure as inflation spirals, reaching 9.6% in March year on year. Although lower than in Qatar and the United Arab Emirates, the inflation rate is tormenting a country accustomed to near zero inflation."


May 5 – Bloomberg (Maria Levitov): " Russia's inflation rate rose to 14.3%, the highest since April 2003, led by rising food costs. The inflation rate rose from 13.3% in March..."


May 9 – Bloomberg (Kartik Goyal): "India's inflation accelerated at the fastest pace in almost 3 1/2 years... Wholesale prices rose 7.61%... from a year earlier..."

[briarberry] 10/5/2008 20:07

Tennessee's Governor plans to lay off 2,000 state workers.

Governor Bredesen says tax revenue collections deteriorated dramatically over the past couple of weeks and while he hopes the state's economic problems won't last for much longer, he says the future isn't looking good right now.

[briarberry] 10/5/2008 19:30

Sounds like even the FDIC expects an increase in bank failures - The tip of the iceberg in commercial RE constuction loans...


Federal regulators close Arkansas bank ANB Financial
Friday May 9, 8:45 pm ET
ANB Financial banks closed by federal regulators over 'unsafe and unsound' practices

BENTONVILLE, Ark. (AP) -- Federal regulators says they've closed ANB Financial National Association banks after discovering "unsafe and unsound" business practices there.

David Barr, a spokesman for the Federal Deposit Insurance Corp. says many customers served by the bank's nine locations had accounts under $100,000, which will be fully insured by the government. Barr says customers can continue to write checks and draw money from ATMs through the weekend.

Barr says Pulaski Bank and Trust Co. agreed to assume control over ANB Financial's bank locations, which will be open Monday.

As of Jan. 31, federal regulators say ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.

It was the third closure this year of an FDIC-insured bank. Douglass National Bank, a Missouri bank with $58.5 million in assets, was shut in January; another Missouri institution with assets of $18.7 million, Hume Bank, was shut down in March.

Both were dwarfed in size of ANB Financial, where regulators found lax lending standards, mostly for construction and development loans for projects in Utah, Idaho and Wyoming, as well as Arkansas.

Observers have been watching for signs of bank distress resulting from the mortgage crisis. Profits at federally insured U.S. banks and thrifts plunged to a 16-year low in the fourth quarter as institutions set aside a record-high amount to cover losses from sour mortgages.

The FDIC is planning to beef up its staff, including temporarily hiring up to 25 retired FDIC employees who worked in the agency's more than 200-person division that handles failed banks. They will handle an anticipated increase in bank failure

[briarberry] 10/5/2008 13:45

Who Has More Level 3 Assets Than Capital?
Bennet Sedacca May 07

Finally, Level Three assets are the least liquid of the firms' trading assets and therefore are valued using what are called "unobservable inputs."

Level Three assets include real estate, mortgage-backed securities, private equity investments and possibly even "undertakings of great advantage, but nobody to know what they are" (cf. South Sea Bubble).

The three magic words that make an asset a Level 3 asset are "no observable inputs." What this means is that not only are they hard to price, but nearly impossible to sell.

Recently there's been such deterioration in all types of mortgages that more and more assets are finding their way into this category. Also, this is the first time insurance companies have made the list. I think the list will continue to grow.

Ten companies now have more Level 3 assets than capital. In order they are (as a % of total shareholder equity:

1) Bear Stearns (BSC): 313.97%
2) Morgan Stanley (MS): 234.88%
3) Merrill Lynch (MER): 225.4%
4) Goldman Sachs (GS): 191.56%
5) Lehman (LEH): 171.18%
6) Fannie Mae (FNM): 161.48%
7) Northwest Air (NWA): 142.02%
8) Citigroup ©: 125.06%
9) Prudential (PRU): 119.36%
10) Hartford (HIG): 108.52%

So now we have insurance companies joining the party. Yes, the contagion is spreading and no, it's not over. Not even close. C just had to pay 8.5% for $2 billion in preferreds. One of these days, there will be no takers

[briarberry] 09/5/2008 01:00

US commercial bankruptcy filings jumped 56% in April from a year earlier, court records show.

Business bankruptcy filings rose to 5,173, while total bankruptcy filings, including those by individuals, were up by 37% to 93,096.

The figures were compiled from US court records by data provider AACER.

[briarberry] 09/5/2008 00:59

$300 billion in federal loan guarantees - More money for fat & lazy Americans. Although it still probably won't help, for example, it doesn't help people who lose their jobs and miss mortgage payments etc. And lenders have to agree to reduce the principal of a borrower's existing mortgage - not sure how keen they'll be, especially when asked to continue to make new loans in the future, this would make the taxpayer the only mortgage provider LOL. For a country that keeps spending money that they haven't got, I'm more and more surprised they haven't already got a currency crisis...


WASHINGTON -- House Democrats, joined by Republicans from states hard hit by the foreclosure crisis, voted Thursday to pass a wide-ranging package of new loan guarantees, tax credits and financial regulation aimed at righting the housing market.

The House voted 266-154 in favor of the centerpiece of the legislation -- $300 billion in federal loan guarantees -- despite a veto threat from the White House. Almost 40 Republicans voted with Democrats to pass the measure, providing solid bipartisan support but falling 25 votes short of the two-thirds majority needed to override a potential veto.

"This is about trying to reach out to people who have been savaged in many ways by this economy," House Majority Leader Steny Hoyer said of the bill during floor debate.

[briarberry] 08/5/2008 22:15

American International Group Inc., the world's largest insurer by assets, posted a $7.81 billion loss as writedowns tied to the U.S. housing slump wiped out profit for a second straight quarter. The company also announced plans to raise $12.5 billion in capital.

[briarberry] 07/5/2008 23:21

Robbing Peter to Pay Paulson - WSE Pro Fed Report

The Fed gave the market a little help today with a big repo, but they took a lot of it back with a sale of permanent assets from the SOMA for the second day in a row. Once again Bernanke and Co. is taking away from the SOMA (System Open Market Account) what it gives to the TAF (Term Auction Facility), resulting in no additional liquidity on balance. It hurts the market because it robs the Primary Dealer Peters to pay the poor bank Pauls.

The Fed also has to deal with a big wad of new short term Treasury supply hitting the market tomorrow, and the expectation that the Treasury will also need to float an enormous Cash Management Bill (CMB) next week to pay off $74 billion in maturing Notes and Bonds. That's not to mention that they are just having problems paying the daily bills of government as revenues are collapsing. The increasing pressure is reflected in the relentless rise of T-bill rates since the day before taxes were collected on April 15. The corollary in the market is a rising dolor.

[briarberry] 07/5/2008 20:27

DJ MARKET TALK: Fed's Stabilization Has A Cost

3:12 (Dow Jones) The Fed's machinations are gibberish to the average person,
Minyanville's "Mr. Practical" says, which is why the Fed's able to do what
it's doing: slowly nationalize the banking system. "The stabilization that
everyone is giddy about has its costs," he writes. "Stabilization is not a
working banking system. The cost of bailing out the banking system will be
borne by the US taxpayer and middle class, he notes. "The system is broken,"
he adds. "Every action by the Fed says so. Those that anticipate a shallow
recession still do not understand this." (PJV)

[briarberry] 07/5/2008 18:23

DJ OIL FUTURES: Nymex Crude Rises High As $123.12/Bbl, Up $1.28

[briarberry] 07/5/2008 15:38

Coming soon to a california city near you as tax revenue continues to decline!

The City of Vallejo in CA voted tonight to declare chapter 9 bankruptcy. They are 16 million in the hole and the unions won't make wage concessions.



The city council's unanimous decision makes the San Francisco suburb the largest city in California ever to file for bankruptcy and the first local government in the state to seek protection from creditors because it ran out of an ADVFN competitorid the worst housing slump in the U.S. in 26 years.

The city of 117,000 is facing ballooning labor costs and declining housing-related tax revenue that have left it near insolvency. The city expects a $16 million deficit for the coming fiscal year that starts July 1. Under bankruptcy protection, city services would keep running. It would freeze all creditor claims while officials devise a plan for emerging from bankruptcy.

[briarberry] 06/5/2008 23:13

Ben Banky - do you think he's panicing yet ???


Bernanke warns of dangers posed by surging home foreclosures, urges Congress to act

WASHINGTON (AP) -- A rising tide of late mortgage payments and home foreclosures poses considerable dangers to the national economy, Federal Reserve Chairman Ben Bernanke warned anew Monday as he urged Congress to take additional steps to alleviate the problems.

To provide more relief, Bernanke again called on Congress to give the Federal Housing Administration, which insures mortgages, more flexibility to help distressed borrowers at risk of losing their homes. He also again urged lawmakers to move ahead on legislation revamping Fannie Mae and Freddie Mac, which finance mortgages. And, he called on the two mortgage giants to quickly raise new capital.

[briarberry] 06/5/2008 22:27

Peak Oil - Matt Simmons latest (not read it all yet)(link from gold thread)

[briarberry] 06/5/2008 21:26

CSCO profit down 3%

GAAP Results

Earnings per Share $ 0.29* $ 0.30 - 3.3%

[briarberry] 06/5/2008 21:18

Swiss bank UBS, hard hit by the U.S. subprime crisis, reported a first-quarter loss of $10.97 billion and said Tuesday it will slash almost 7 percent of its work force.

[briarberry] 06/5/2008 16:20

Fannie Mae reported it lost $2.2 billion, or $2.57 a share, in the first quarter, compared to earnings of $961 million, or 85 cents a share a year earlier.

Fannie said it plans to raise $6 billion in additional capital through a new stock issue. It also intends to preserve capital by slashing its dividend 28% to 25 cents a quarter, starting in the third quarter.

Still, Fannie is struggling with rising loan losses caused by problems in the housing market. It raised its loan loss reserves to $5.2 billion from $3.4 billion three months earlier.

At the end of the quarter about 1.15% of single family homes it backs were seriously delinquent. That's up from the 0.98% that were that far behind at the end of 2007.

It also announced that the fair value of its net assets plunged to $12.2 billion at the end of the quarter from $35.8 billion at the start of the period. It blamed market volatility and home price declines for that fall.

As part of its turnaround plans, Fannie announced a new refinancing option for homeowners whose loans are owned by Fannie who are up-to-date in their payments but now owe more than their home is now worth. It would allow those homeowners to refinance at up to 120% of the home's current value.

Previously, Fannie would only purchase loans in which homeowners held considerable equity in the property.

Net revenue rose to $3.8 billion from $3.1 billion, while its market share in new mortgage-backed securities that were backed by single-family home loans rose to 50.1% from 48.5% three months earlier.



Fannie Posts Loss, To Raise Capital As Order Lifted
DOW JONES NEWSWIRES

Results were hurt by $4.4 billion in losses on derivatives and trading securities, as well as $3.2 billion in credit-related expenses,

Those write-downs don't tell the whole story. Fannie also said the fair value of its net assets plunged by $23.6 billion over the three-month period to $12.2 billion on March 31. Those losses didn't hurt the company's profits, however, because the company changed its accounting practices to recognize the losses only when they are realized.

[briarberry] 05/5/2008 21:49

Defaults Rising Rapidly - For 'Pick-a-Pay' Option Mortgages
By RUTH SIMON

On Tuesday, Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due, up from 5.7% at the end of December and 1% a year earlier.

Meanwhile, at FirstFed Financial Corp., 30% of borrowers whose loans recast to this higher level fell behind on their payments in the fourth quarter. Most other lenders won't see large numbers of resets until at least 2009 or 2010.

[briarberry] 05/5/2008 20:24

Fed Says `Historical Highs' of Banks Tighten Lending Standards

By Scott Lanman

May 5 (Bloomberg) -- The Federal Reserve said the proportion of U.S. banks making it tougher for companies and consumers to borrow approached a record in the past three months as the credit crunch deepened.

A net 70 percent of banks increased loan rates over their cost of funds for commercial and industrial borrowing, according to the central bank's quarterly survey of senior loan officers released today in Washington. That compares with 45 percent in the January survey, the Fed said.

[briarberry] 05/5/2008 13:57

vehicle sales, briefing haven't updated their chart yet...

say the top number is 14.4

Nasadaq news said the domestic number is 10.4

[briarberry] 05/5/2008 11:53

MEW or HELOC...


Fresh news out...S&P pulled a slick one. They STOPPED rating second mortgage RMBS citing "anamolous and unprecedented" borrower behavior. Here is a little piece from Bloomberg that enhances the previous story very well, calling all Home Equity loans 'junk'.



Remember, this is a $1.3 TRILLION market with the bulk belonging to very few banks such as BofA, Wells, Chase, CITI, Countrywide, WAMU, National City, GMAC and IndyMac. I put a couple of nice quotes below. This could turn out to be a fairly large story in the making.

Home Equity Lines of Credit and loans (HELOC, HEL's, second mortgages) were the true 'Home ATM Machine' and could be a big wipe-out for the big banks. These loans were mostly used to avoid Mortgage Insurance on purchase and refinance loans over 80% LTV and went up to 100% of the house value in recent years. As a matter of fact, an appraisal or full documentation was often not required. These loans were very easy to get and primarily relied upon an electronic evaluation of the property value and credit score alone.

(more...)

From Mr Mortgage.

quote

>>> Remember, this is a $1.3 TRILLION market

Subprime was something like $700-800 bln. Alt-A 800-900 as I recall. Ah, don't worry, it's all contained!

(commercial property loans are going to suffer too, a lot of which are held at regional banks)

[briarberry] 05/5/2008 00:25

The Consumer Federation of America estimates that credit card debt held by consumers is about $850 billion, some four times what it was in 1990. The group says the average debt for those 58 percent of card-holding households that do not pay their balance in full every month is about $17,000



We also know from a study done by Fitch that 30% of all credit cards are exhibiting patterns of use and payment that show high risk of default. Since we can assume that none of the 42% of the people who pay off monthly are at risk of default (for obvious reasons) this means that about half of the people carrying balances are currently at high risk of default on their credit card bills.

[briarberry] 04/5/2008 23:19

The Coming Collapse of the Middle Class

University of Califonia Television

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America's credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class. Series: "UC Berkeley Graduate Council Lectures" [6/2007] [Public Affairs] [Business] [Show ID: 12620]

(nearly an hour)

[briarberry] 03/5/2008 16:20

GDP growth is all unreported inflation (I guess this is very old news to people on here now)...


An Inconvenient Adjustment:
BY CHRIS PUPLAVA

Nominal GDP is adjusted by the GDP deflator to measure real GDP growth with the inflation component removed to measure the increase in economic output and not an increase in the level of prices. The GDP deflator has been consistently below the stated inflation rate as measured by the headline CPI numbers, with a lower GDP deflator leading to a higher real GDP number.

We are currently unofficially in an officially defined recession using headline CPI, though real GDP growth would look even more dismal if one were to use the pre-Clinton era CPI, the CPI calculated before adjustments made under the Clinton administration. The pre-Clinton CPI inflation rate is currently growing at over 7% YOY and the CPI rate using the methodologies in place in 1980 shows inflation at nearly 12%.