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Government Housing Support Update
74 days ago | Comment
by CalculatedRiskAs everyone knows there has been a massive government effort to support house prices. Some of this has been aimed at limiting supply (modification programs, various foreclosure moratoria), and some has been aimed at increasing demand (tax credit, lower mortgage rates, loose lending standards).
Here is a quote from Secretary Geithner from a recent Newsweek interview by Daniel Gross:"We were very careful from the beginning ... to say that we are going to focus the bulk of the financial force on bringing interest rates and mortgage rates down to cushion the fall in housing prices and help stabilize home values, which will feed into people's basic sense of financial stability."
To help keep this straight, here is a list of the status of a number of programs:Government Housing Support Update
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Exclusive: Nexus One full specs detailed, invite-only retail sales starting January 5th?
75 days ago | Comment
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We know you're itching to get your hands on a Nexus One -- Google's managed to build buzz here the way only a couple companies in the world know how. Unfortunately, it sounds like you're going to need to cross your fingers (or pull out that eBay emergency stash) to get one out of the gate, because we've got some intel here suggesting that it'll be available only by "invitation" at first. Our tipster doesn't have information on how those invites are going to be determined, other than the fact that it's Google doing the inviting -- if we had to guess, current registered developers are a strong possibility -- but the good news, we suppose, is that T-Mobile will apparently sell the phone directly at some to-be-determined point in the future. Oh, but that's not all -- we've got specs, too. Lots of them. Here are the highlights, but follow the break for the whole shebang:
Exclusive: Nexus One full specs detailed, invite-only retail sales starting January 5th?
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Fannie And Freddie Receive Unlimited Future Funds To Stay Afloat
76 days ago | Comment
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The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.
The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government's estimate this summer of $170 billion over 10 years.
Treasury Department officials said it will now use a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors. Under the formula, financial support would increase according to how much each firm loses in a quarter. The cap in place at the end of 2012 would apply thereafter.
By making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress.
While most analysts say the companies are unlikely to use the full $400 billion, Treasury officials said they decided to lift the caps to eliminate any uncertainty among investors about the government's commitments. But the timing of the announcement on a traditionally slow news day raised eyebrows.
Fannie And Freddie Receive Unlimited Future Funds To Stay Afloat
Related articles by Zemanta- U.S. Treasury Ends Cap on Fannie, Freddie Lifeline for 3 Years (businessweek.com)
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Gravity will drag the $US
78 days ago | Comment
by Rebecca Wilder
The US dollar ($US) is on a roller coaster. And since S&P downgraded Greece to BBB+, the dollar has been on the rise. One can attribute the recent shift in the $US to many things - improving US economic conditions, return to risk, or relative weakness in other G7 countries, whatever. But what is clear, is that the dollar's gaining some strength, 4.7% since the beginning of December on a trade-weighted basis.
But this is not sustainable. As economic recoveries diverge (i.e., the G7 recovery is expected to be slower than that in key emerging markets), the dollar will likely fall. That's just gravity, and a necessary condition for sorting out global trade flows.
Gravity will drag the $US
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Default Nation
79 days ago | Comment
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Daniel Gross
Strategic defaults—the phenomenon of people who could continue to make payments on the mortgages on their homes deciding to walk away from their obligations—are rising. According to the Wall Street Journal, strategic defaults are likely to exceed 1 million in 2009. This is making some worry about the very future of capitalism. Georgetown University business ethics professor George Brenkert told the Journal that borrowers who can afford to stay current are morally required to do so, and that were Americans to conclude they could just walk away from obligations, it would be disastrous. Mortgage Bankers Association CEO John Courson wondered about "the message they will send to their family and their kids and their friends?" Blogger Megan McArdle expressed disdain for people who chose to indulge themselves on consumer goods and services while not keeping current with their mortgages.
Um, do any of these people read the Wall Street Journal? Strategic defaults are the American way, and I'm not talking about strapped middle-class borrowers who prefer spending money on vacations to staying current on their payments. Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time.
Morgan Stanley, for example, is a gigantic corporation. As of the second quarter, it boasted total capital of $213.2 billion. It certainly has the ability to make good on obligations incurred by its many operating units. But earlier this month Morgan Stanley said it would turn over five San Francisco office buildings to lenders rather than pay the debt on them. Why? Morgan Stanley foolishly paid top dollar for the buildings in 2007, when prices were really high. The values have plummeted, and tenants are hard to come by. "This isn't a default or foreclosure situation," spokeswoman Alyson Barnes told Bloomberg News. "We are going to give them the properties to get out of the loan obligation." Smells like a strategic default to me.Related articles by Zemanta- Mortgage delinquencies hit record high (msnbc.msn.com)
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Google Mobile Phone – The Nexus One
80 days ago | Comment
The Apple iPhone is probably the handset that generates the most chatter on the web. Anything and everything regarding the iPhone is eagerly lapped up by fans of the device, and Apple do a good job of capitalising on this.
Recently, though, the most talked about phone is a handset that may not even exist, the fabled Google Phone. There is a lot of talk about the possibility of Google producing their own handset, hardware and firmware, and has been for years now. The rumours first started before the launch of Android, where Google were rumoured to be making their own phone, only for the Android operating system to be announced. The first phone running on the Android OS, the G1, released soon after.
The rumours have never really gone away though, and in the last few weeks they have returned with some force, with internet chatter reaching fever pitch. To be honest, it is hard to sort out the ‘could be true’ rumours from the ‘you’ve got to be kidding’ stuff. As the talk started to rise in level, it came to light that Google had in fact given some of their employees an ‘unknown’ handset, running on Android 2.1. This news soon spread across the web, with the Google employees openly talking about the phone on Twitter.
Google Mobile Phone – The Nexus One
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U.S. foreclosures top 1 million, report finds
80 days ago | Comment
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By Jim Puzzanghera
Troubled home loans continued to mount in the nation's banks in the third quarter as even once-solid borrowers increasingly fell behind on their mortgage payments.
For the first time, foreclosures on mortgages serviced by U.S. national banks and savings and loans topped the 1 million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency. The percentage of prime borrowers whose loans were more than 60 days past due doubled from the July to September period a year ago, while more than half of all homeowners whose payment had been lowered through modification plans re-defaulted.
The report, which covers about 34 million loans or about 65 percent of all U.S. mortgages, underscores the obstacles facing policymakers trying to strengthen the nation's housing market. Persistent unemployment is making it tough for millions of homeowners to pay their home loans.
In addition, many people whose monthly installments have been lowered through mortgage modification programs still are unable to keep up.
Current and performing mortgages serviced by national banks and thrifts fell to 87.2 percent — the sixth-straight quarter that the quality of their home loan portfolios has slipped.
"Mortgage performance continued to decline as a result of continuing adverse economic conditions, including rising unemployment and loss in home values," the report said.
U.S. foreclosures top 1 million, report finds
Related articles by Zemanta- Serious U.S. mortgage delinquencies rise (msnbc.msn.com)
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Change Nobody Believes In
80 days ago | Comment
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And tidings of comfort and joy from Harry Reid too. The Senate Majority Leader has decided that the last few days before Christmas are the opportune moment for a narrow majority of Democrats to stuff ObamaCare through the Senate to meet an arbitrary White House deadline. Barring some extraordinary reversal, it now seems as if they have the 60 votes they need to jump off this cliff, with one-seventh of the economy in tow.
Mr. Obama promised a new era of transparent good government, yet on Saturday morning Mr. Reid threw out the 2,100-page bill that the world's greatest deliberative body spent just 17 days debating and replaced it with a new "manager's amendment" that was stapled together in covert partisan negotiations. Democrats are barely even bothering to pretend to care what's in it, not that any Senator had the chance to digest it in the 38 hours before the first cloture vote at 1 a.m. this morning. After procedural motions that allow for no amendments, the final vote could come at 9 p.m. on December 24.
Even in World War I there was a Christmas truce.
The rushed, secretive way that a bill this destructive and unpopular is being forced on the country shows that "reform" has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it, as Finance Chairman Max Baucus admitted on the floor last week. The only goal is to ram it into law while the political window is still open, and clean up the mess later.
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Small-business bankruptcies rise 81% in California
80 days ago | Comment
By Nathan Olivarez-Giles
The Obama administration's new plan to give a boost to small businesses reflects continued trouble in that sector, which is facing new failures even as much of the nation's economy is stabilizing.
As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors over the last year. The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration's office of advocacy.
"While bankruptcies are up, overall, small-business closures are up even more," Headd said.
California has been particularly hard hit. The latest data show small-business bankruptcies up 81% in the state for the 12 months ended Sept. 30, compared with the previous year. Filings nationwide were up 44%, according to the credit analysis firm Equifax Inc.
The actual number of small businesses in trouble is probably higher, experts said, because many owners file for personal bankruptcy rather than seek protection for the business.
Small-business bankruptcies rise 81% in California
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States' jobless funds are being drained in recession
80 days ago | Comment
By Peter Whoriskey
The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.
The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.
Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.
States' jobless funds are being drained in recession
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Trillions Of Troubles Ahead
80 days ago | Comment
Bert DohmenNot too long ago, a billion dollars in a governmental budget was a lot of money. Then we got into hundreds of billions. People understood that this was a lot, just because of all the zeros. Now, unfortunately, the number has become small: the world "trillion," as in $1.2 trillion for health care reform, seems so tiny. But it has 12 zeroes behind it, which is so easy to forget.If the government stays on the course it's been on for the past forty years without a radical change, the federal government will soon have a $10 trillion budget.In other words, the federal budget deficit will be $1.4 trillion. Just to make the size more visible, that's $1,400 billion.Our colleague Rob Arnott, who always does terrific research, wrote in his recent report that "at all levels, federal, state, local and GSEs, the total public debt is now at 141% of GDP. That puts the United States in some elite company--only Japan, Lebanon and Zimbabwe are higher. That's only the start. Add household debt (highest in the world at 99% of GDP) and corporate debt (highest in the world at 317% of GDP, not even counting off-balance-sheet swaps and derivatives) and our total debt is 557% of GDP. Less than three years ago our total indebtedness crossed 500% of GDP for the first time."Add the unfunded portion of entitlement programs and we're at 840% of GDP.Trillions Of Troubles Ahead
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There Is No Way Out Of This Box....
80 days ago | Comment
by Karl Denninger... that does not involve serious pain.
Go ahead folks - tell me how we can simply ignore this.How we can pretend that the outstanding debt does not have to come back down to reasonable levels.That these levels are "reasonable" - and that these rates of growth are "reasonable."This is the "magic of compounding" writ large - and in a fashion that is going to inflict severe pain on our population - and the longer we wait to deal with it, the worse it will be.Bernanke, who was at The Fed during Greenspan's time there, should have used his "education" - his claimed knowledge of economics - to make a lot of noise about this and demand that interest rates NOT be lowered to further encourage more debt-based consumption.He did exactly the opposite.As this decade wore on he should have sounded the alarm on our debt binge in all sectors, especially in the financial and consumer sectors where the growth in indebtedness has been the highest.He did exactly the opposite.Since this crisis began, in fact, every single government official who has spoken on the matter has emphasized even more lending, that is, cranking the amount of debt outstanding even higher, and The Federal Government has made good on their intent by, in the last year, spending more than $1.7 trillion dollars they did not have - that is, they borrowed even more.There Is No Way Out Of This Box....
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