Empiric Student Property Share Discussion Threads

[briarberry] 30/3/2009 10:20

There's little doubt that Eastern Europe's credit crunch will ricochet back into Western Europe. Most Eastern Europe banking systems are dominated by Western European banks. Indeed, this could add another $130 billion to the losses that European banks have already incurred. Such a loss would destroy nearly another 10% of tier one capital (equity capital plus disclosed reserves) in Western European banks.

[briarberry] 29/3/2009 23:03

March 27 – Bloomberg (Jurjen van de Pol): "European industrial orders dropped the most on record in January as the global recession forced companies to cut production, reducing demand for equipment and machinery. Industrial orders in the euro area fell 34% from the year-earlier month

[briarberry] 29/3/2009 18:38

I've been reading a few comments about oil stocks. My conclusion so far...

Western oil companies will be taxed to death by our high spending Western governments, as tax revenues are falling at an alarming rate.

So they might not be such a good buy and hold for the dividends afterall :(

[briarberry] 29/3/2009 15:47

Will the ECB print ? No decision has been taken yet...


The bank's vice-president Lucas Papademos (ex-MIT, a heavy-weight) said: "It may be warranted that the central bank purchases private sector bonds to enhance liquidity. No decision has been taken, but it is a possibility that could improve the markets".

"Potential measures could include an extension of the maturity of the central bank liquidity provided to banks and purchases of private debt securities in the secondary market".

By Ambrose Evans-Pritchard

[briarberry] 25/3/2009 22:49

Banks still have piles of off balance sheet sh*t (Barclays SuperSIV etc)...


Banks' Hidden Junk Menaces $1 Trillion Purge: David Reilly

Commentary by David Reilly

March 25 (Bloomberg) -- The U.S. government wants to clear as much as $1 trillion in soured loans and securities from bank balance sheets with its latest bailout plan.

That might prove a short-term respite. No sooner might the Treasury Department mop up those assets than $1 trillion or more in new ones spring up to take their place.

That is due to the potential return of assets held in so- called off-balance-sheet vehicles that banks may soon have to put back onto their books. The end result may be that banks are in no better shape to increase lending even after the government bailout.

So investors betting for quick solutions to the financial crisis could be disappointed. The tangled web that banks wove over the years will take a long time to undo.

At the end of 2008, for example, off-balance-sheet assets at just the four biggest U.S. banks -- Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. -- were about $5.2 trillion, according to their 2008 annual filings.

Even if only a portion of those assets return to the banks - - as much as $1 trillion is one dark possibility -- it would take up lending capacity the government is trying to free.

The hidden assets that may return to banks consist of mortgages, credit-card debts and auto loans, among others. Over the years, banks bundled them together and sold them to investors as securities.

Whether these assets are "troubled" or "toxic," their return to bank balance sheets could slow efforts to get credit flowing again. After all, banks shed the loans to make their balance sheets look smaller, allowing them to hold less capital to act as a buffer against losses. Until a couple of years ago, that boosted profits.

Inflated the Bubble

It also helped inflate the credit bubble, even as these accounting maneuvers made it harder for investors and regulators to see how much risk banks actually faced.

Accounting rulemakers now want banks to bring some of those assets back onto their books. They are trying to crack down on transactions that banks used to sidestep rules inspired by the off-balance-sheet antics that led to Enron Corp.'s collapse. Of course, there is a danger that the rulemakers will backtrack, especially given recent congressional efforts to twist rules that will let banks polish their books.

Investors have all but forgotten these out-of-sight assets. That's a mistake.

(more)

[briarberry] 25/3/2009 18:45

'Shadow' Supply Of Foreclosures May Delay Housing's Recovery

BY KATHLEEN DOLER - FOR INVESTOR'S BUSINESS DAILY - 3/24/2009

Even as a few rays of hope peek out for housing, a dark cloud of unlisted and unsold foreclosed homes threatens to further delay a recovery and undermine lenders' financials.

The government is riding in with new programs almost every week, including Monday, that may rescue lenders. But they also cause paralysis in the short term.

Lenders are holding "between 600,000 and 700,000 residential properties that are not on the multiple listing service (MLS)," said Rick Sharga, senior vice president at RealtyTrac, a foreclosure listing firm in Irvine, Calif.

This shadow supply isn't counted as part of the housing inventory. There were 3.8 million existing homes on the market in February, equal to 9.7 months' worth at the current sales pace.

Add in the shadow supply and selling all the available homes will take even longer, and that suggests prices have even further to fall.

There has been some good news on the home front. February existing-home sales rose 5.1%, the best monthly gain in years. Housing starts shot up 22.2% from a record low. Low mortgage rates and falling prices have made homes more affordable - though that doesn't help if you can't get a loan or you've lost your job.

Meanwhile, foreclosure activity has been artificially suppressed. Mortgage delinquency rates have continued to soar in the last several months even as the new foreclosure rate has held steady. That's due to government moratoriums or voluntary lender halts. But most experts say eventually most of those homes will be foreclosed.

Lenders also may be understating the impact foreclosures will have on their balance sheets. And the shadow is likely to grow as more homeowners default.

(more)

[briarberry] 25/3/2009 14:56

WASHINGTON (AP) -- New home sales rebounded unexpectedly last month, but were still the second-worst on record and remained well below last year's levels, according to data released Wednesday.

February's sales were still down by more than 40 percent from the same month a year earlier. The median sales price fell to $209,000, a record 18 percent drop from the same month last year. The median price is the midpoint, where half sell for more and half for less.

[briarberry] 25/3/2009 13:54

California bond sale exceeds expectations - LA Times - only 61 billion to go...

LA Times reports ravenous investor demand allowed California to boost the size of its sale of infrastructure bonds Tuesday to $6.54 billion from a planned $4 billion, and to close out the deal a day early. The offering, the state's first sale of longer-term bonds since June, didn't come cheap for taxpayers: The longest-term bond, maturing in 2038, will pay investors an annualized tax-free yield of 6.1%. By contrast, California paid a yield of 5.3% on bonds of that maturity in the June sale. The deal allowed Treasurer Bill Lockyer to reduce to $61 billion the state's backlog of voter-approved bonds to be sold, and to provide funds for building projects stalled by months of budget wrangling in Sacramento. "Investors stepped up and showed their confidence in California," Lockyer said.

[briarberry] 25/3/2009 13:48

Durable Goods Orders sounds good on the surface but...

The biggest negative in the report were downward revisions to January and December. January was revised to minus 7.3 percent from minus 5.2 percent while December was revised to minus 4.6 from minus 1.5.

[briarberry] 24/3/2009 22:57

Still waiting to see if the bailout of Eastern Europe is going to be more trillions...


March 24 (Bloomberg) -- Czech Prime Minister Mirek Topolanek lost a no-confidence vote after coalition and independent lawmakers backed the opposition's bid to make him the latest political victim of the global economic crisis.

Hungarian Prime Minister Ferenc Gyurcsany said on March 22 he would step down in favor of a premier capable of gaining "wider political support" for moves to fight the economic recession. Latvia's government resigned last month as the contraction sparked rioting and the Lithuanian administration that presided over the Baltic nation's economic decline was turned out in elections in the fall.



March 24 (Bloomberg) -- Romanian talks with the International Monetary Fund over a financing package assumed the economy may shrink as much as 4 percent this year, widening the budget deficit, a central bank adviser said.



March 24 (Bloomberg) -- Serbian central bank Governor Radovan Jelasic said "good progress" has been made in talks with the International Monetary Fund toward bulking up a $516 million loan agreement signed last year as much as eight-fold.



March 24 (Bloomberg) -- Lithuania's credit rating was cut to the second-lowest investment grade by Standard & Poor's as the Baltic nation's economic outlook deteriorates and its chances of adopting the euro quickly fade.



March 24 (Bloomberg) -- The International Monetary Fund said it will double credit limits for countries struggling with the financial crisis and relax loan conditions for emerging nations that need short-term assistance.



March 24 (Bloomberg) -- The Baltic currency pegs are a "slow-burning fuse" that will deepen the region's economic crisis before eventually collapsing, with devaluations of as much as 50 percent, Royal Bank of Scotland Group Plc said.

Latvia, Estonia and Lithuania have kept fixed pegs to the euro throughout the global financial crisis, even as their economies suffer the deepest recessions in the European Union and Latvia receives a 7.5 billion-euro ($10.2 billion) bailout from the International Monetary Fund.



March 24 (Bloomberg) -- Russian Finance Minister Alexei Kudrin said the country's banks face a second wave of problems from companies in the real sector that fail to repay loans.

The Cabinet last week approved a revised budget with the first deficit in a decade of 2.98 trillion rubles, or 7.4 percent of projected gross domestic product. The budget contains 1.6 trillion rubles in anti-crisis spending.

[briarberry] 24/3/2009 15:42

How big will US bailout bubble get, there are calls for more and more money, where will it stop ???


Mistakes Beget Greater Mistakes:

March 18 – Bloomberg (Kathleen Hays and Dakin Campbell): "Bill Gross, co-chief investment officer of Pacific Investment Management Co., said the Federal Reserve's purchases of Treasuries and mortgage securities won't be enough to awaken the economy. 'We need more than that,' Gross said... The Fed's balance sheet 'will probably have to grow to about $5 trillion or $6 trillion,' he said."





Fed and Treasury - Putting off Hard Choices with Easy Money (and Probable Chaos)

John P. Hussman, Ph.D.

A continued policy of protecting all of these bondholders would eventually require U.S. citizens to be put on the hook for something on the order of $10-14 trillion. We are nowhere near the end of this process.

We simply cannot make these bad investments whole unless we are willing to hand the next 10-20 years of U.S. private savings over to the bondholders who financed reckless lending.



(jail not bail)

[briarberry] 23/3/2009 17:42

bailout bubble update, everything is trillions now-a-days...


After months of delay, the Treasury Department details a plan Monday to clear out as much as $1 trillion in so-called toxic assets from the financial sector in an effort to strengthen the banks enough to get them to lend again.

[briarberry] 20/3/2009 13:34

Chart of the Day
It's no secret that it's bad out there. Today's chart helps provide some perspective as to the magnitude of the current economic decline. Today's chart illustrates that 12-month, as-reported S&P 500 earnings have declined over 80% over the past 18 months, making this by far the largest decline on record (the data goes back to 1936). In fact, real earnings have dropped to a level not seen since the 1930s and 40s – the back end of the Great Depression. While earnings have been struggling since Q3 2007, it was the latest quarter (Q4 2008 the first full quarter following the financial meltdown), where the real damage was done. During Q4 2008, the S&P 500 came in with its first negative earnings quarter ever and the amount lost during the quarter was more than the index has ever earned during a single quarter.

[briarberry] 19/3/2009 14:33

Mexican manufacturing declined 14.9 percent in January from a year ago, the statistics institute said. Mexico, the third- largest trading partner of the U.S., saw exports fall 32 percent to $15.2 billion in January, the institute reported March 10.

[briarberry] 19/3/2009 12:54

Continuing jobless claims for the March 7 week rose a very steep 185,000 to a record 5.473 million. It's taking longer and longer for the jobless to find work.

[briarberry] 18/3/2009 21:40

The Fed will print trillions...


The Federal Reserve announced Wednesday it will spend up to $300 billion over the next six months to buy long-term government bonds, a new step aimed at lifting the country out of recession by lowering rates on mortgages and other consumer debt.

The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion.

.
In addition, the Fed said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

The program -- which is rolling out this week -- currently is focused on spurring lending for autos, education, credit cards and loans for business equipment. The government already has announced an expansion to include commercial real-estate assets. Any broadening of the program would be beyond that area.

[briarberry] 18/3/2009 19:05

The Fed has to print, not so many foreign buyers now...


Foreign demand for U.S. financial assets appears to be easing, no surprise given the nation's surging deficit but still posing a possible risk, and an important risk, to the nation's stimulus efforts which must be financed to a large degree by foreigners. Long-term flows are showing weakness in two of the last three available months of data, with net long-term transactions down a very steep $43.0 billion in January for an outflow that underscores the $25.6 billion outflow in November.

Foreign investors continue to divest their U.S. agency holdings which fell a massive $22.5 billion in the month on top of December's even more massive $37.4 billion. Foreigners were also net sellers of corporate bonds, down $8.4 billion in the month. But foreigners continue to buy Treasuries, up $10.7 billion in the month with holdings by China up again, another $12.2 billion on top of December's $14.2 billion.

[briarberry] 18/3/2009 18:23

*DJ FOMC: To Buy Up To $750B More Of Agency MBS

*DJ FOMC: Total Purchases Of Agency MBS Would Be Up to $1.25T

[briarberry] 13/3/2009 09:12

Chinese premier Wen Jiabao

In a separate and unusually forthright comment on the health of the US economy, Mr Wen admitted he was "worried" about the safety of China's huge holding of US government debt.

"We have lent huge amounts of money to the United States. Of course we are concerned about the safety of our assets," Mr Wen added. "To be honest, I am a little bit worried and I would like to... call on the United States to honour its word and remain a credible nation and ensure the safety of Chinese assets."



(The USA is already printing to buy mortgage debt)

"China is worried that the U.S. may solve its problems by printing money, which will stoke inflation," said Zhao Qingming,
"If the U.S. can make sure this won't happen, then China will continue to invest."

[briarberry] 13/3/2009 00:13

The USA is going to need more money...


On March 24, a judge may push Jefferson County, Ala., into the largest U.S. municipal bankruptcy in history. Warren Buffett has warned investors not to be beguiled by the muni sector's history of low default rates. Monoline insurance, once a mainstay of the muni market, is a shadow of its former self. No wonder muni bonds have been under pressure.

There is some merit to Mr. Buffett's warning. Some 58% of the $2.67 trillion pool of muni bonds is covered by monoline insurers or other guarantors, according to Municipal Market Advisors, a research and consultancy firm. Mr. Buffett argues this perceived backstop could lead stakeholders to resist making concessions to avoid default. And with public finances strained and the economy on its back, default risk is clearly rising.

[briarberry] 12/3/2009 23:02

No more 'mark to market', in other words, US banks are insolvent but lets all pretend they're not because we cannot afford to keep bailing them out everytime house prices fall...


House panel gets FASB pledge on accounting rule
House panel gets pledge from FASB head to try to act on accounting rule in 3 weeks
Marcy Gordon, AP Business Writer
Thursday March 12, 2009, 3:49 pm EDT

WASHINGTON (AP) -- A House panel wrung a pledge Thursday from the head of an accounting board to try to issue guidelines in three weeks that will ease rules that force banks to value assets at current prices.

The commitment by the chairman of the independent Financial Accounting Standards Board came amid a muscular display of congressional power at a hearing on the so-called mark-to-market accounting rules. The head of the House panel, Rep. Paul Kanjorski, D-Pa., had held out the threat of legislation to pressure the standard-setting board and the Securities and Exchange Commission to take steps that would give relief to battered banks.

[briarberry] 11/3/2009 19:02

Treasury Budget

Five months into the government's fiscal year and the deficit is already at $764.5 billion, about three times higher than this time last year! Year-to-date receipts are down 17 percent reflecting low tax payments, while outlays -- reflecting government stimulus -- are up 32 percent. The February deficit totaled $192.8 billion.


(and the US is printing billions every month)

Separately, the government purchased $12.7 billion of mortgage agency debt vs. $22.6 billion in January.