Empiric Student Property Share Discussion Threads

[briarberry] 11/5/2009 23:14

Why the Banks Still Aren't Fixed

Massive defaults. For most of the past 50 years, the loss rate on all bank loans has stayed well under 2 percent. The Fed estimates that over the next two years the loss rate could reach 9.1 percent. You know all those historical comparisons that end with "the worst since the Great Depression"? Well, 9.1 percent would be EVEN WORSE than during the 1930s. Still looking forward to a soft landing or a quick recovery?

The Fed projects that the median loss rate could hit 8 percent on mortgages, 10.6 percent on commercial real estate loans, and 22.3 percent on credit card loans. A number of banks that made riskier loans face loss rates that are much higher. Banks can't just absorb losses of that magnitude and briskly bounce back. To survive, they'll have to sell assets, hoard cash, curtail lending, and simply wait it out. None of that generates economic growth.

[briarberry] 11/5/2009 15:21

White House: Budget deficit to top $1.8 trillion, 4 times 2008's record

With the economy performing worse than hoped, revised White House figures point to deepening budget deficits, with the government borrowing almost 50 cents for every dollar it spends this year.

[briarberry] 10/5/2009 17:20

Oil exporters are living off their savings = less money to buy treasuries etc + higher oil prices in the future...


The Mideast's oil exporters have faced a tough time with crude prices now about 60 percent below their mid-2008 peak of $147 per barrel.

Together, these nations account for 65 percent of global oil reserves and 45 percent of natural gas reserves. Surging oil prices in the past couple of years translated into stuffed treasuries.

But as oil prices fell, so too did Mideast oil exporters' surpluses which, between 2004 and 2008, amounted to about $1.3 trillion, according to the IMF.

Now, those countries are projected to run a cumulative deficit this year of $10 billion. That compares with a $400 billion surplus in 2008, the report said.

[briarberry] 10/5/2009 16:59

Europe

There is at least one more boil to lance before we put this debt debacle behind us. The IMF says eurozone banks have so far written down a fifth of likely losses compared to half for US banks.

Germany's BaFin regulator goes further, warning of $1.1 trillion of toxic assets on German bank books. Landesbanken are a calamity. If the IMF and BaFin are right, Europe has not yet had its crisis. When it does, we will see a second stress pulse through Eastern Europe and Club Med.

[briarberry] 10/5/2009 00:39

Profits in the first quarter, with nearly 90% of companies reporting, are down over 50% from last year and are 18% less than estimates.

[briarberry] 09/5/2009 22:56

In real terms the market (SnPee) made a bottom in 82. Interest rates were 13% on the long end and over 20% on the short end

[briarberry] 09/5/2009 19:50

Bailout bubble - The EU is printing now too...


May 8 – Bloomberg (Matthew Brockett): "Jean-Claude Trichet has dragged the European Central Bank into a new era by pursuing direct asset purchases over the objections of Germany's Bundesbank. President Trichet... announced the ECB will buy 60 billion euros ($80 billion) of covered bonds, taking markets by surprise after Bundesbank chief Axel Weber had campaigned against such a policy. For a central bank that's been slow to follow counterparts around the world, the move marks a change in mentality toward battling the financial crisis."

[briarberry] 09/5/2009 19:22

Bailout bubble - FNM are reflating the system but they are losing money, I guess they are refinancing even those who cannot repay their mortgages, I bet the banks are pleased to unload those mortages to FNM...


FNM lost $23 billion last quarter and will ask the taxpayer for another $19 billion

This morning Fannie Mae reported a worse-than-expected first quarter loss of $23.2bn. In just three quarters, Fannie has reported losses totaling $77.4bn. No worries, however. Fannie's debt spreads this week tightened another 12 to 31 bps (down from November's 159bps) and Fannie MBS spreads narrowed an additional 9 to 83 (down from November's 232bps). Despite unprecedented losses and massive capital shortfalls, the GSEs have nonetheless become major players in the unfolding Government Finance Bubble. An insolvent Fannie requested an additional $19bn of government assistance this morning.

Today from Fannie: "In March, Fannie Mae provided $93.3 billion in liquidity to the market through Net Retained Commitments of $5.4 billion and $87.8 billion in MBS Issuance... March refinance volume increased to $77 billion, nearly twice the refinancing volume reported in February and our largest refinance month since 2003. We expect that our refinance volumes will remain above historical norms in the near future... Fannie Mae began accepting deliveries of refinance mortgage originations under the Making Home Affordable program in April 2009."

Fannie's "Book of Business" (retained mortgages and MBS guarantees) expanded at a 12.3% rate during March to $3.144 TN (largest increase since February 2008). Fannie MBS guarantees grew at a 15.4% annualized pace during March to $2.640 TN. The $31.4bn increase in guarantees was the largest in 13 months. The company's "New Business Acquisitions" jumped to $92.8bn from February's $53.8bn and January's $28.8bn.

The current wave of mortgage refinancings is the strongest since the powerful – and system reliquefying - 2002/3 refi boom. The few analysts that even care are generally discounting the systematic impact of refinancings. They argue that there is today dramatically less equity available to extract and spend. From an economic perspective, I don't have a big issue with this analysis. But from a systemic risk perspective, the unfolding refi boom is anything but inconsequential.

By the end of the year, I would not be surprised to see upwards of $1.0 TN of "private" mortgage exposure having been shifted to the various government-related agencies (Fannie, Freddie, Ginnie, FHA, and FHLB). The wholesale transfer of various private sector risks to "Washington" is a key facet of the Government Finance Bubble. Nowhere is such redistribution accomplished as effectively and surreptitiously as when the mortgage marketplace is incited to refinance by (Fed-induced) collapsing yields. Think in terms of our government placing its stamp of guarantee on hundreds of billions of risky, illiquid and unappealing mortgage securities – transforming them into coveted "money"-like agency securities. Such dynamics work wonders... Previous holders of these mortgages receive cash, while the entire marketplace benefits from higher mortgage/MBS prices.


www.prudentbear.com

[briarberry] 09/5/2009 14:52

Peak oil, is Thorium the next Uranium ???


Thorium, as well as uranium and plutonium, can be used as fuel in a nuclear reactor. Although not fissile itself, 232Th will absorb slow neutrons to produce 233U, which is fissile. Hence, like 238U, it is fertile. Theoretically thorium is more suitable fuel source than uranium: thorium is at least 4-5 times more abundant in nature than all of uranium isotopes combined; thorium is fairly evenly spread around Earth with a lot of countries having huge supplies of it; preparation of thorium fuel does not require difficult & expensive enrichment process; thorium fuel cycle creates mainly Uranium-233 which can be used for making nuclear weapons




Uranium-233 is produced by the neutron irradiation of thorium-232.

Breeding uranium-233 from thorium feedstock is the long-term strategy of the nuclear power program of India, which has substantial thorium reserves. Breeding can be done in either fast reactors or thermal reactors. Outside of India, interest in the thorium-based fuel cycle is not great, although the world's reserves of thorium are three times those of uranium.



Uranium = 59 years at current world usage (19 years at half US rate)


Naturally occurring thorium is composed of one isotope: 232Th with a half-life of 14.05 billion years.

[briarberry] 09/5/2009 04:16

BullionVault.com - The Queen's Awards for Enterprise: Innovation 2009

HER MAJESTY THE QUEEN has been graciously pleased to confer Her Awards in 2009 upon the following business units in recognition of their outstanding achievements in Innovation:

BullionVault.com London W6 Gold bullion dealing and storage for private investors

[briarberry] 09/5/2009 02:22

Andy Xie from 27 April...

Many who argue for a bull case are actually hoping for another bubble. The thinking is that if enough people believe in the bull case, their money keeps it going, rising asset prices support demand growth, corporate earnings improve, and the bull case is validated. The hope for another bubble is widespread in the world today. Even policymakers are secretly hoping for another bubble. They all remember how good life was during the bubble. The crisis has weighed down on everyone's spirits. It seems that "doing the right thing" is just too hard.
...
The false hope today may feel good but it only delays necessary reforms. It actually makes things worse. As governments spend money to revive the past, they won't be left with money required to ease the pain caused by structural reforms in the future. The world is behaving like a bankrupt drug addict, spending welfare checks to feed an addiction. Once the checks are all spent, the addict has to go cold turkey to kick the habit.



stats...

U.S. financial sector debt – the source of all problems in this crisis. It has not come down, despite all the talk about deleveraging. It stood at $17.2 trillion at the end of 2008, higher than $15.8 trillion in September 2007, when the crisis began.
...
By the end of 2008, households' net wealth in the U.S. had declined by $13 trillion or 20 percent from its peak in 2007... On the other hand, U.S. household debt has not fallen. It stood at $13.8 trillion at the end of 2008. For the first time since the 1930s, aggregate household debt would exceed the value of the property that households own in the U.S.

[briarberry] 09/5/2009 01:26

Stress tests - I guess the amount of new capital said to be needed was lowered to the amount that the banks could easily raise...


Fed Cut Billions Off Some Initial Capital-Shortfall Estimates

The Federal Reserve at the last minute significantly scaled back the size of the capital hole facing some of the nation's biggest banks, following days of intense bargaining over the stringency of the stress tests.

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

Even though the overall reaction to the stress tests is generally positive, the haggling between the government and the banks shows the sometimes-tense nature of the negotiations that occurred before the final results were announced ...

[briarberry] 08/5/2009 16:30

Fannie asks for another $19 billion

[briarberry] 08/5/2009 13:40

April 2009 Net Birth/Death Adjustment, not seasonally adjusted

added 226,000 fantasy jobs

[briarberry] 08/5/2009 13:31

Nonfarm payroll employment continued to decline in April (-539,000), and
the unemployment rate rose from 8.5 to 8.9 percent

[briarberry] 08/5/2009 12:11

Wal-Mart, in a sign of weakness, will no longer report sales on a monthly basis.

[briarberry] 08/5/2009 01:53

stress tests

The projected $600 billion in losses over the next two years under the "more adverse" scenario are in addition to the estimated $400 billion in losses and write downs are already taken by these 19 banks. Because of existing resources, future earnings, and planned transactions, the Fed estimates the banks need to raise $75 billion in capital. This is a huge question mark: Is this enough?

[briarberry] 08/5/2009 01:53

Property stats...

Real-estate Web site Zillow.com said that overall, the number of borrowers who are underwater climbed to 26.9 million at the end of the first quarter from 16.3 million at the end of the fourth quarter.

whereas

Moody's Economy.com estimates that of 78.2 million owner-occupied single-family homes, 14.8 million borrowers, or 19%, owed more than their homes were worth at the end of the first quarter, up from 13.6 million at the end of last year.

...
The number of U.S. homes valued at more than $729,750, the jumbo-loan limit in the most affluent areas, entering the foreclosure process jumped 127 percent during the first 10 weeks of this year from the same period of 2008, data compiled by RealtyTrac Inc. of Irvine, California, show. The rate rose 72 percent for homes valued at less than $417,000 and 78 percent for all homes

...
The homeowner association delinquency rate can serve as a leading indicator of sorts because homeowners usually stop paying dues before they stop paying their mortgage. The 90-day delinquency rate on dues for the 260 homeowner associations in California managed by Merit Property Management jumped to 5.3% in March from 2.8% last June. Delinquencies first spiked to 2.6% in December 2007 from 0.8% in March 2007.

The rising number of HOA delinquencies and the boost in pre-foreclosure notices could be a harbinger of things to come. "There's reason to believe in California there may be a second wave of foreclosures," [Andrew Schlegel, Merit communities financial vice president] says.

...
Commercial property values fell 21.5 percent through February from their October 2007 peak, according to Moody's Investors Service.

Properties bought in 2006 are now worth on average 11 percent less than their original price, and those bought in 2007 are worth almost 20 percent less, Moody's said.

Mortgages on rental apartment buildings posted the highest delinquency rate of securitized commercial property loans in April, rising to 5.24 percent from 3.86 percent in March, Trepp said.

[briarberry] 08/5/2009 01:15

The rise in continuing claims to 6.35 million was registered for the week ending April 25, the latest data available. That was up from 6.30 million in the previous week and marked the highest tally on records dating to 1967.

Meanwhile, the Federal Reserve on Thursday said consumer borrowing dropped 5.2 percent in March, the biggest percentage decline since December 1990. In dollar terms, the $11.1 billion plunge was the largest on records dating to 1943, and more than three times what economists expected.

[briarberry] 06/5/2009 13:28

ADP estimates private payrolls fell 491,000 in April, indicating an easing rate of job losses


it did peak at -742 last month

[briarberry] 05/5/2009 16:21

GMAC posts wider loss, citing tough loan markets

[briarberry] 05/5/2009 15:56

"Federal Reserve Chairman Ben S. Bernanke warned that another shock to the financial system would undercut the central bank's forecast that the U.S. recession will give way this year to a slow recovery. "

""The most recent information on the labor market -- the number of new and continuing claims for unemployment insurance through late April -- suggests that we are likely to see further sizable job losses and increased unemployment in coming months," Bernanke said today. "

""The supply of mortgage credit is still relatively tight, and mortgage activity remains heavily dependent on the support of government programs or the government-sponsored enterprises," Bernanke said."