Empiric Student Property Share Discussion Threads

[briarberry] 21/4/2009 23:38

Tonights earnings headlines (or losses headlines)...


Advanced Micro Devices Inc.'s first-quarter loss widened.

Caterpillar posts loss, hurt by weak sales, charge.

Yahoo earnings fell 78% to 8 cents per share, from net 37 cents per share, in the year-ago period.

GM, Chrysler to get $5.5B more in government loans

Merck & Co. posted a 57 percent drop in first-quarter profit

Flash memory maker SanDisk Corp reported a loss of $208 million for its first quarter.

Fulton Financial Q1 profit slumps 81 pct

Capital One Financial Corp. reported a $176.1 million first-quarter loss

(I thought Citi had made a profit, but it didn't for its common share holders)
Citigroup last week posted its best quarter since 2007, but still reported a $966 million loss to common shareholders. Before dividends paid to preferred shareholders, Citigroup posted net income of $1.6 billion

[briarberry] 21/4/2009 16:24

Taxpayer loans to banks become gifts to banks, with spin to make it sound good...


To make the rescue funds go farther, administration officials said Monday they were considering converting some of the loans provided banks under the $218 billion capital purchase program into purchases of common shares, which investors view as a stronger type of capital.



(I guess this will happen in the UK too ???)

[briarberry] 21/4/2009 15:42

Banks earnings - fantasy or blatant fraud ???


Bank Profits Appear Out of Thin Air

With Goldman Sachs, the disappearing month of December didn't quite disappear (it changed its reporting calendar, effectively erasing the impact of a $1.5 billion loss that month); JPMorgan Chase reported a dazzling profit partly because the price of its bonds dropped (theoretically, they could retire them and buy them back at a cheaper price; that's sort of like saying you're richer because the value of your home has dropped); Citigroup pulled the same trick.

Bank of America sold its shares in China Construction Bank to book a big one-time profit, but Ken Lewis heralded the results as "a testament to the value and breadth of the franchise."

Sydney Finkelstein, the Steven Roth professor of management at the Tuck School of Business at Dartmouth College, also pointed out that Bank of America booked a $2.2 billion gain by increasing the value of Merrill Lynch's assets it acquired last quarter to prices that were higher than Merrill kept them.

"Although perfectly legal, this move is also perfectly delusional, because some day soon these assets will be written down to their fair value, and it won't be pretty," he said.

...
"If the federal government let me borrow money at zero percent interest, and then lend it out at 4 to 12 percent interest, even I could make a profit," said Professor Finkelstein of the Tuck School.

...
If the stress test is done honestly, it is impossible to believe that some banks won't fail. If no bank fails, then what's the value of the stress test? To tell us everything is fine, when people know it's not?

[briarberry] 21/4/2009 15:30

April 21 (Bloomberg) -- China's plan to allow Hong Kong companies to issue yuan debt is part of its push to encourage its use as the reserve currency and reduce the role of the U.S. dollar, according to ING Groep NV.

Hong Kong Chief Executive Donald Tsang said on April 18 that the Chinese government will permit the city's lenders to sell yuan-denominated bonds this year. Bank of East Asia Ltd. has applied to Chinese regulators for approval to sell such securities in Hong Kong, the South China Morning Post reported today, citing the bank's management.

[briarberry] 19/4/2009 21:20

Chinese stimulus/bailout bubble...


April 13 – Bloomberg (Chua Kong Ho): "The surge in China's March bank loans and money supply is 'cause for worry' as it means the increase in liquidity behind this year's stock rally will likely weaken, according to UBS AG. New loans rose to 1.89 trillion yuan ($277 billion) in March... M2... grew 25.5%, the most since Bloomberg began compiling data in 1998... 'The liquidity surge is already weakening and is cause for worry," Chen Li, a... strategist at UBS, said... 'Bank lending in the first quarter has almost reached last year's full-year target."

April 12 – Bloomberg (Kevin Hamlin): "China's new lending and money supply surged to records in March, adding to signs that government stimulus efforts are reviving the world's third- largest economy. Loans jumped more than sixfold from a year earlier to 1.89 trillion yuan ($277 billion)... Premier Wen Jiabao said China's economy showed better-than- expected changes in the first quarter after the government adopted a 4 trillion yuan spending plan, the official Xinhua News Agency reported... 'China is unusual in that it has this incredible capacity to mobilize all its institutions -- central government, local governments and the entire banking system -- to boost government-influenced investments,' said Vikram Nehru, the World Bank's... chief Asia economist."


This might be why the US Fed are buying their own Treasuries (printing money)...

April 12 – Bloomberg (Kevin Hamlin): "China's foreign-exchange reserves, the world's biggest, had their smallest gain in eight years... Foreign-currency holdings rose about $7.7 billion in the first quarter to $1.9537 trillion... That was the smallest increase since the second quarter of 2001 and compares with a $40 billion jump in the fourth quarter."

[briarberry] 16/4/2009 23:34

commercial now...


Mall operator files for bankruptcy protection - AP - 9 minutes ago
In its drive to become the second-largest owner of shopping malls in the nation, General Growth Properties Inc. racked up $27 billion in debt. At around 2 a.m. in Chicago on Thursday morning, the retail giant buckled under the weight.

[briarberry] 16/4/2009 22:50

Foreclosures Hit Record High in Q1

The broadest measure of the current real estate/credit/economic crisis can be found in the foreclosure data. And just how improved is that data series these days?

Not very:

"More than 800,000 properties received foreclosure filings in the first quarter of 2009, according to RealtyTrac's latest foreclosure report, released today. That was the highest quarterly total since RealtyTrac began issuing its numbers in the first quarter of 2005 despite a 13 percent decrease in bank repossessions (REOs) from the previous quarter. The increase was driven by a jump in default and auction notice filings on the front end of the foreclosure process, particularly in March when default notices were up 20 percent from the previous month and auction notices were up 29 percent from the previous month."

Bloomberg adds:

"A flood of bank-owned properties is hitting the housing market as the U.S. recession deepens. The unemployment rate jumped to 8.5 percent in March, the highest since 1983, as 663,000 jobs were lost, according to the Labor Department. Home prices fell 19 percent in January from a year earlier, the fastest drop on record, according to the S&P Case/Shiller Index of 20 U.S. cities. The measure has fallen every month on a year-over-year basis since January 2007. Mortgage applications declined last week for the first time in a month, a sign that even with borrowing rates below 5 percent may not be enough to spur a housing recovery."

So much for the vaunted bottom in Real Estate - and the broader economy . . .

[briarberry] 14/4/2009 22:04

Intel

Intel Q1 Revenue $7.1 Billion, Down 13 Percent Sequentially

Intel Q1 net rev $7.15 bln vs $9.67 bln, down 26% year over year

[briarberry] 14/4/2009 15:51

Poland asks for $20.5 billion credit line from IMF

[briarberry] 14/4/2009 00:32

Goldman Sachs, considering GS got a few billion from taxpayers via AIG plus all those other bailouts and accounting fiddles, they didn't do that well...


Goldman Sachs has reported a $1.8bn (£1.2bn) net quarterly profit, beating analyst expectations and a day early.

[briarberry] 13/4/2009 14:49

"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."

- President F.D. Roosevelt, 1933

[briarberry] 13/4/2009 14:31

bailout bubble news...


European Bank Bailout Total: $4 Trillion

EU countries may have moved more slowly to rescue banks, but their total commitments have now reached a staggering sum, Brussels reports

EU governments have committed €3 trillion to bail out banks with guarantees or cash injections in the wake of the global financial crisis, the European Commission said on Wednesday (8 April).

The money has been spent on "guarantee umbrellas, risk shields and recapitalisation measures for the financial sector," Brussels said in a report.

Some €2.3 trillion went to financial guarantee schemes, some €300 billion to recapitalisation schemes, and around €400 billion were spent on other rescue and restructuring programmes.

The commission data also shows that while most member states have offered their banks some special guarantees, many central and eastern European states – including Slovakia, Romania, Poland, Lithuania, Estonia and Bulgaria – have not.

Analysts note that although these countries are as exposed to the crisis as the rest of the member states, their banks are mostly owned by western European ones and their governments do not have enough money for bail outs.

[briarberry] 11/4/2009 16:21

Manufacturing is so yesterday. We make our money by printing it, and the details of distribution are a government function. LOL :)

[briarberry] 11/4/2009 14:44

The Feakonomics view...

I still worry that in the end that the government will have spent trillions too much to fight a recession and that economic growth will suffer for decades. There is a real principal-agent problem at work here. If the government does nothing and we have a huge depression, Bernanke and Obama get blamed. If the government does nothing and we don't have a depression, they don't get much credit.

If the government spends trillions and we still have a huge depression, people will say, "Think how bad things would have been if they hadn't spent those trillions." If they spend trillions and we don't have a depression, people give them credit for averting the depression.

So even if the trillions do nothing, the government still has a strong incentive to appear to be doing something, even if the cost is high. And we will probably never learn whether the trillions were well spent, so we won't know any better the next time around.

[briarberry] 11/4/2009 01:17

Toxic debts could reach $4 trillion, IMF to warn

Gráinne Gilmore - From The Times - April 7, 2009

Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest.

The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.

[briarberry] 07/4/2009 15:01

Stolen from a US BB... This is a good clarification as to how insolvent banks such as Citi can claim they're making a profit. Now that mark to market has been removed. They rob savers with low interest rates and they are now allowed to claim that their mortgages are still worth face value, so no losses.



Operating profits at the banks can be fine.

Operating profits are money in minus money out, basically.

But for many banks their balance sheets (assets and liabilities) are pure fiction. Fairy tales. They are hiding massive losses on bad debts funded with borrowed money, ie bonds.

Eventually, the bonds have to be paid back.

The banks aren't making enough operating profits to make up for the fairy tales on their balance sheets.

So, eventually, when the bond holders want their money back, there won't be enough to pay them off.

So, that is why the taxpayer needs to pay up. So, the bond holders don't lose money.

It's simple actually.

[briarberry] 07/4/2009 00:02

A record number of consumers are falling delinquent or into default on their loans, a problem that some economists say will only get worse this year.

A record 4.2% of consumer loans were delinquent at least 30 days in the fourth quarter, the latest data available, according to the Federal Reserve. Another 4% of consumer loans were in default, meaning they'd been written off by lenders.

Recent data from the American Bankers Association and Moody's rating agency show the same sobering trend: More consumers are paying late - or not at all - on home, car and credit card loans.



(consumption is over 70% of US GDP)

[briarberry] 06/4/2009 23:29

Global reflation...


Having accumulated Trillions of (chiefly dollar) reserves during the Bubble years, China, Russia, India, Brazil, OPEC and others today wield unprecedented power and influence when it comes to the course of international policymaking. U.S. influence has waned remarkably. And the days of the Washington-based IMF responding to global crisis by imposing monetary tightness, fiscal discipline and economic overhaul (i.e. SE Asia 1997) are over. From an analytical perspective, the (U.S.) "Core" and the ("developing") "Periphery" of the world system are these days atypically like-minded when it comes to supporting the cause of unbridled global bailouts, stimulus, and reflationary measures more generally. It all provides ample fodder to fuel the ongoing inflation versus deflation debate. Yet when pondering the prospective global monetary structure perhaps the strongest case is to be made for Ongoing Monetary Disorder.

One could reasonably argue that the "Core" has made such a mess of domestic and global finance that a shift of power out to the "Periphery" couldn't make things any worse. From a Credit perspective, however, there are important nuances. For decades, the U.S.-dominated "dollar reserve" system at least at the margin constrained "Periphery" Credit systems. Regrettably, this dollar-based "system" failed to discipline the U.S. Credit system, and this failing has led to the failure of this monetary structure.

The dysfunctional global "system's" recurring boom and bust cycles saw the "Periphery" hopelessly flooded with hot "money," only to then have these Credit systems crushed by the inevitable reversal of speculative flows. The "Periphery" became absolutely fed up. More importantly, they are now finally in a position to do something about it. A new system is in the works that would seemingly ensure that even the "Periphery" becomes insulated from market discipline.

Today from the Los Angeles Times' Don Lee: "Could the world's currency of choice have the face of Mao Tse-tung on it, not George Washington? Quixotic or not, the Chinese are preparing for that day. In a series of what might be called baby steps, Chinese officials recently have moved to globalize the yuan and promote its influence overseas, with Shanghai designated as command central. Since last December, China has signed deals with six countries, including South Korea, Malaysia and most recently Argentina, for currency swaps that would inject Chinese money into foreign banking systems. That would allow foreign companies to pay for goods they import from China in yuan, bypassing the dollar... Beijing is also taking initiatives to use the yuan... to settle trade accounts between some Chinese provinces and neighboring states... 'The central bank has set promoting the renminbi for payment settlements as the main task for this year's work,' said Shi Lei, an analyst... at Bank of China... China is also spreading the yuan's influence in Asia by making loans and investments in other countries..."

The media and Internet are abuzz with commentary contrasting the declining U.S. position to that of China Rising. For the moment, my analytical focus is not in passing judgment on disconcerting secular trends. I'm instead trying to figure out the more immediate consequences of (moving-target) reflationary policymaking at home and abroad. Many analysts that focus primarily on the U.S. Credit system and economy see only an intractable deflationary spiral. Examining the incredible global policy and monetary backdrop, I see potential "firepower" that I do not want to dismiss or underestimate.

When the technology Bubble burst in 2000, there was an unappreciated fledgling Mortgage Finance Bubble poised to balloon to unimaginable extremes. I have theorized that a Global Government Finance Bubble today exerts a robust inflationary bias, counterbalancing the collapse of the Wall Street Bubble. The extent and duration of this ongoing "counterbalancing" is an open issue of great significance. I view the resuscitation of the IMF and World Bank as critical developments for the unfolding Government Finance Bubble thesis. I view the heightened role of the "Periphery" in global matters as supportive of global "reflation." And, most importantly, I view the dynamic of an increasingly assertive China as integral to global reflationary efforts.

Back in 2000, conventional thinking (including that of the Fed) was convinced the collapse of technology stocks equated to the bursting of THE U.S. Bubble. Similarly, today the bursting of the U.S. Bubble is thought to correspond with the bursting of Bubbles across the globe. Especially when one examines the horrendous numbers coming out of its export sector, it is reasonable to presume that China is intertwined in the U.S. bust. Yet it's my view that China is in fact a historic Bubble – and that it may have commenced what may prove a powerful new phase of inflationary excess.

It is commonly appreciated that China has about $2 TN in reserves to go with its population of 1.3 billion. This alone provides China unprecedented reflationary capabilities. China also maintains a tight relationship between its banking system and government policymakers, and it is worth noting that recent reports have Chinese bank lending posting another eye-opening month of expansion ($234bn!). China is also now aggressively using currency swaps and other financing mechanisms to drive exports and trade, especially in Asia. There is also increased talk of the Chinese government providing global vendor financing for its major industries, a potentially huge development from both China and global perspectives. Clearly, if Chinese industrial policy seeks to elevate the status of key domestic industries, current global tumult provides quite a rare opportunity to press decidedly ahead. Moreover, if China moves to develop its northern region as it has developed the south, there is really no bounds to the amount of "money" that could be spent.

On a short-term basis, the Chinese are (as always) fixated on maintaining social stability. As an analyst, I have to presume this is constructive to reflationary policymaking –especially considering the extraordinary nature of today's global financial and economic risks. To what extent longer-term ambitions of global power and influence also work to spur near-term Chinese stimulus is more difficult to gauge. But until I see something to convince me otherwise, I will assume that today's global backdrop provides China an opportunity to focus on - and move forward with - its long-term objectives. In the age of synchronized global stimulus, I don't see why China wouldn't "compete" fiercely in such endeavors as well. And I believe this dynamic could very well prove a powerful force in spurring global reflation. History may look back at this week's G20 meeting in London as a key inflection point. The "Core" is in shambles, yet the surprising development may turn out to be the Periphery Rising (inflating).

[briarberry] 06/4/2009 23:13

IMF - from last weeks G20 - this adds another trillion to the bailout bubble...


In our age of really big numbers, the G20's pledge of $1.0 TN of loans and guarantees for new IMF (bailout) programs and another $100bn for World Bank lending didn't raise eyebrows. It is nonetheless an incredible case of institutions virtually given up for dead coming back to adrenaline-induced vivacity – and likely sporting greater influence than ever before. "Developing" economies - having feared they had nowhere to turn for help in stabilizing their financial systems and economies - suddenly know precisely where they will be greeted with open arms. IMF director Dominique Strauss-Kahn celebrated the organization's newfound "firepower" and exclaimed, "The IMF is back"! The International Monetary Fund's new resources and mandate must have the "Periphery" pinching themselves with giddiness. Markets are giddy.

www.prudentbear.com

[briarberry] 06/4/2009 00:01

Economic Outlook Discussion with Richard Koo - updated - March 26, 2009




Bill Moyers interview of William K Black

[briarberry] 02/4/2009 21:57

Richard Russell - And I ask myself, could this be the beginning of the battle to take away the reserve status of the dollar?


Debt, debt, everywhere
Richard Russell (BIG snippet)
Dow Theory Letters
Apr 2, 2009

April 1, 2009 Debt, debt, everywhere, and nobody knows how to fix it.

Check this out. The US national debt is now 11.03 trillion. In case you forgot, a trillion is a thousand billion. One year ago the national debt was 9.383 trillion. That means that during the last year we've added 1.652 trillion dollars to the US national debt. Interest must be paid on the debt. We are now COMPOUNDING the national debt at a terrifying, unsustainable rate. As I see it, we are compounding ourselves into national bankruptcy. That or we are in the process of destroying our beloved dollar.

On top of the above, it now requires six dollars of debt to produce one dollar of Gross Domestic Product. But despite our growing debt, our GDP is actually declining. This is tantamount to running up the down escalator. In the end, faith in the dollar must collapse. The dollar, the world's reserve currency, is our "secret weapon." We need materials and goods from overseas. Easy, we can print the dollars to pay for those materials, and our kindly overseas creditors accept our "home-made" dollars in payment. It's a great racket. And it will continue to be -- as long as the dollar is accepted as safe and fair payment. But I have to wonder, how long can this go on? Not forever, in my thinking..

Today I read this in the Financial Times, "China and Argentina in Currency Swap."

"China, which is pushing to end the dominance of the dollar as a worldwide reserve, has agreed to a renminbi 70 billion ($10.24bn) currency swap with Argentina that will allow it to receive renminbi instead of dollars for its exports to the Latin American country.

"Beijing has signed $95 billion of deals since December with Malaysia, South Korea, Hong Kong, Belarus, Indonesia and, now, Argentina in an attempt to unblock trade financing that has been severely curtailed by the crisis."

Russell Comment -- China doesn't want a lot more of the US dollars, and would prefer to deal with other currencies.

And I ask myself, could this be the beginning of the battle to take away the reserve status of the dollar?

[briarberry] 30/3/2009 13:06

What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.




Also it seems that when the mark-to-market rule is removed the banks will not have to admit to losses

Geithner Plan II - more money for banks

[briarberry] 30/3/2009 13:01

U.S. stock futures slump on Monday, as the White House says bankruptcy is a possibility for General Motors and Chrysler

--------------------------------------------------------------------------
The clearest losers appear to be the thousands of bondholders and lenders to both GM and Chrysler. In both cases, administration officials said that the companies were burdened by inordinate amounts of debt that would have to be scrubbed. Chrysler's survival, the administration said, would require "extinguishing the vast majority" of the company's secured debt and all of its unsecured debt and equity.

[briarberry] 30/3/2009 10:33

The financial sector is too big and bloated, it's similar to the 1920s...


Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

The great wealth that the financial sector created and concentrated gave bankers enormous political weight-a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.

(big chart)



Thought to be based on J.P. Morgan