Daily Digest

Daily Digest 8/17 - Mortgage Arrears Mount, Denmark Cuts Social Services, Deepwater Drilling Concerns

Tuesday, August 17, 2010, 9:54 AM
  • U.S. House Mortgage Arrears Mount
  • Your House Might Be Underwater for Years: Michael Carliner
  • China Moves into Second Place
  • Denmark Starts to Trim Its Admired Safety Net
  • Drilling Permits for Deep Waters Face New Review 
  • The Federal Reserve Enters Decline
  • Questions Linger as Shrimp Season Opens in Gulf
  • A Blueprint For Blue Planet Protection

Crash Course DVDThe Crash Course DVD, featuring live intros and outros by Chris (NTSC or PAL)

Economy

U.S. House Mortgage Arrears Mount (jdargis)

Investors on Monday signalled growing concerns about the US economy, pushing bond yields down to the lowest levels since the height of the crisis. Ten-year Treasury yields dropped 9 basis points to 2.60 per cent, the lowest level since March 2009. Seven-year Treasury yields fell to a record low of 1.98 per cent.

Your House Might Be Underwater for Years: Michael Carliner (jdargis)

We saw what happened in the boom in the middle of the decade -- even though prices soared, demand increased as consumers thought about how much money they would have made had they bought sooner. People bought homes, often with no plans to occupy with an eye toward selling and making a quick profit. In short, the housing market in the middle of the decade had all the characteristics of a bubble.

China Moves into Second Place (Ilene)

So China’s GDP is trending just shy of $6Tn, still a bit behind our $14Tn and, of course, if you look at the EU as a block, they are up around $16Tn so let’s not call it game over just yet. We can still get our GDP back on the growth path if we invest in infrastructure, like China or promote education, like China or manage commodity prices, like China or reign in Corporate greed, like China or provide health care, like China or create a VAT, like China (17%, which raises 1/2 of all Government revenues) - to make sure our corporations don’t avoid paying their fair shares of taxes.

    Crash Course DVDThe Crash Course DVD, featuring live intros and outros by Chris (NTSC or PAL)

Denmark Starts to Trim Its Admired Safety Net (jdargis)

But now Denmark, which allows employers to hire and fire at will while relying on an elaborate system of training, subsidies for those between jobs and aggressive measures to press the unemployed into available openings, is facing its own strains. As a result, it is beginning to tighten up.

Energy

Drilling Permits for Deep Waters Face New Review (jdargis)

The more stringent environmental reviews are part of a wave of new regulation and legislation that promises to fundamentally remake an industry that has operated hand-in-glove with its government overseers for decades.

The Federal Reserve Enters Decline (Sean H.)

The Federal Reserve came into existence during the fattest part of the abundance curve, made possible by the extraction of energy-dense fossil fuels. The early part of the last century was the moment when the world started to transition from Coal to Oil, with the fullness of oil’s resource spread out before the industrial economy like a broad forest.

Environment

Questions Linger as Shrimp Season Opens in Gulf (jdargis)

For the moment, shrimp industry officials are more worried about the consumer confidence that underlies a whole network of fishermen, ice makers, processors and distributors. Shrimp alone in Louisiana is worth more than $100 million a year.

Ewell Smith, the executive director of the Louisiana Seafood Promotion and Marketing Board, said that after the Exxon Valdez oil spill in 1989, Alaska seafood producers “spent $10 million a year for 10 years rebuilding their brand.”

A Blueprint For Blue Planet Protection (Jeff B.)

According to Professor Callum Roberts, of the University of York, one of the leading campaigners and author of The Unnatural History of the Sea, only about 0.1 percent of the sea is completely protected from all exploitation. This should be between 25 and 45 percent to give marine species the best chance of recovery, he said.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

20 Comments

saxplayer00o1's picture
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US, UK rating face greater downgrade risk-Moody's

"China reduced its holdings of Treasury notes and bonds in June by the most ever as yields on US government securities fell amid signs of slower economic growth.

The decline comes as US investors led by banks and mutual funds hold their biggest share of the debt, 50.5 per cent, since August 2007 at the start of the financial crisis, amid signs that a recovery from the longest contraction since the Great Depression has lost momentum."

"Aug. 17 (Bloomberg) -- The Federal Reserve will likely reemerge as the biggest buyer of Treasuries when it resumes purchasing U.S. government securities today to prevent money from draining out of the financial system.

JPMorgan Chase & Co. strategists estimate the Fed will buy about $284 billion in Treasuries over the next year, or more than the combined purchases of Japan and China during the year ended May. Analysts at Credit Suisse Group AG forecast purchases of $307 billion, with $47 billion coming from the proceeds of maturing agency debentures."

"The industry's economic output has plunged by about 80% since 2005, representing a loss of tens of billions of dollars and hundreds of thousands of jobs, according to a report released Monday by the California Homebuilding Foundation and the Center for Strategic Economic Research.

The study found that new housing construction contributed $13.8 billion to the California economy in 2009, down from $67.7 billion in 2005. Employment plummeted to 77,000 last year from 487,000 jobs in 2005 — a drop of 84%."

............................3A) State's home builders report major shrinkage (California)

"Last year the state's home building sector supported 77,000 jobs, compared with 487,000 in 2005.

In 2005, home builders took out 205,000 permits for new single-family houses, apartments and condos in California. Last year: 35,000. "

"Aug. 16 (Bloomberg) -- New Jersey Cigarette Tax Revenue Bonds issued in 2004 were cut to Baa3 by Moody’s Investors Service, its lowest investment-grade level, with a negative outlook because declining consumption may threaten repayment.

As state and federal taxes have risen, consumption of cigarettes has dropped an average of 6 percent a year since 1997, Moody’s said today in a report. That’s almost twice the 3.2 percent rate projected in the bond prospectus, and may mean tax revenue won’t cover debt payments by 2018, Moody’s said."

"More than 7,300 criminal justice employees would have to be laid off if Texas' corrections agency is required to cut its spending by 15 percent, officials said Monday, warning that such a move could force the closure of several prisons and endanger public safety.

The prediction came as state corrections officials made public their budget request for 2012-13. The proposal asks for $6 billion and holds the line on much new spending, but it includes more than $720 million to fund already-promised pay raises for correctional and parole officers, and escalating costs of medical care for prisoners, among other items."

"Investors demanded big premiums from Ireland to buy government bonds on Tuesday, prompting worries over the health of the eurozone debt markets.

Ireland, which has become the focus of concerns in the eurozone in the past week because of nervousness over the final bail-out for its beleaguered financial sector, had to pay higher than expected yields to sell €1.5bn of debt."

"Ireland sold €500m of four-year bonds at a yield of 3.62 per cent compared with a yield of 3.11 per cent in May, when it sold the same maturity.

It sold €1bn of 10-year bonds at a yield of 5.38 per cent. Although these yields are lower than the last time Dublin sold debt of the same maturity at 5.53 per cent in July, they are relatively high.

Ireland also had to pay 12 basis points more than yields of existing 10-year bonds trading in the secondary markets, which have risen sharply in the past week to 5.25 per cent. The yield spread over bunds has also risen close to 3 percentage points, the widest since March."

"NEW YORK (AP) -- The rate at which U.S. homeowners fell behind on their mortgage payments remained stubbornly elevated in the second quarter.

In the three months ended June 30, the number of mortgage holders 60 days or more behind on their payments was 6.67 percent, credit reporting agency TransUnion said Tuesday. That's a big jump from 5.81 percent in the second quarter of last year, and well above the historical norm of 1.5 percent to 2 percent."

"NEW YORK, Aug 17 (Reuters) - Moody's Investors Service said on Tuesday the top AAA ratings of the United States, Great Britain, France and Germany are well positioned but face new challenges that increase the possibility of a downgrade.

The "distance to downgrade" for these four sovereigns has been reduced, the credit rating agency said in a statement, meaning their credit quality within that top category is declining.

They continue to be well positioned based on a forward-looking assessment of their debt dynamics and debt affordability, Moody's added.

"Since the last issue of Moody's Aaa Sovereign Monitor, the debate on the optimal timing of fiscal tightening has effectively been brought to a close for the largest European Aaa-rated governments, as they are now all pursuing deficit reduction measures," said Alexander Kockerbeck, sovereign credit analyst at Moody's.

"In the US, a strategy for debt stabilization is still in the early stages of being developed," Kockerbeck added.

Spain's AAA rating was put on review for a possible downgrade on June 30.

The challenges that Moody's highlighted include the need to revive growth at a time when fiscal stimuli are effectively no longer available; regaining or preserving access to affordable funding through credible medium-term fiscal adjustment programs; and the limited amount of time that governments have to confront problems such as aging populations."

  • Other news and headlines:

Private sector debts reach 1400 tril. won (Korea)

Japan Will Struggle to Halt Yen's Gain Without U.S. Help, Sakakibara Says and Japan Slowdown Amid Yen Rise Adds Pressure for Action

China Seeks Military Capabilities Beyond Its Region, U.S. Says

A Helpless Housing Market Keeps Fannie and Freddie in Limbo and Freddie Mac Ramps Up Pressure On Banks Over Defective Loans

BP Pays Three Times 2009 Interest for Loans Amid $50 Billion Spill Costs

Texas Plans Record $7.8 Billion Tran Sale

Loss Severity on CMBS Loans Exceeding Historical Average

Easier U.S. Bank Lending Standards Fail to Boost Demand, Fed Survey Shows

Cash-strapped Philippine Gov't battles debt

Federal cash to help, not solve, Illinois' Medicaid problems

Number of Women With More Than $50000 in Debt on the Rise

Russian House of Fraud

Lehman Adviser Fees Reach $918 Million in 22 Months

Mortgage Bonds Slumping Amid Concern of `Mega-Refi' Wave: Credit Markets

The worst bet in real estate today: Construction loans

U.S. Imported 388 Million Barrels of Oil in July, Highest Total in 18 Months

Pension costs drive 6.5 percent Minneapolis tax hike proposal

Tax Hikes Loom For Businesses

Full Moon's picture
Full Moon
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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

Number of Women With More Than $50000 in Debt on the Rise

 

 Oh My Gosh !! !!!!    This is more than putting your socks and underwear on the CC.   How are people going to hang on ?

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...
Full Moon wrote:

Number of Women With More Than $50000 in Debt on the Rise

 

 Oh My Gosh !! !!!!    This is more than putting your socks and underwear on the CC.   How are people going to hang on ?

 

Yikes!

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...
Johnny Oxygen wrote:
Full Moon wrote:

Number of Women With More Than $50000 in Debt on the Rise

 

 Oh My Gosh !! !!!!    This is more than putting your socks and underwear on the CC.   How are people going to hang on ?

  

Yikes!

I am going to show this to my husband !    I am an easy keeper (   horse talk  for someone who is low maintance ) . He had better keep me around  instead of trading me in .  {#emotions_dlg.wink}

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...
Russian Scholar Warns Of 'Secret' U.S. Climate Change Weapon… As Muscovites suffer record high temperatures this summer, a Russian political scientist has claimed the United States may be using climate-change weapons to alter the temperatures and crop yields of Russia and other Central Asian countries. In a recent article, Andrei Areshev, deputy director of the Strategic Culture Foundation, wrote, "At the moment, climate weapons may be reaching their target capacity and may be used to provoke droughts, erase crops, and induce various anomalous phenomena in certain countries."  The article has been carried by publications throughout Russia, including "International Affairs," a journal published by the Foreign Ministry and by the state-owned news agency RIA Novosti.
 
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Women and Debt
Full Moon wrote:

Number of Women With More Than $50000 in Debt on the Rise

 Oh My Gosh !! !!!!    This is more than putting your socks and underwear on the CC.   How are people going to hang on ?

We know a lot of women often end up taking care of their men. They are also more likely to be the caregivers of elderly and sick relatives and they'll go into debt to do it. They also end up living longer on less money. So it's not surprising to see such a large number are in such big trouble.

Besides that one thread a while back (Preparing as a Woman for the Crash, http://www.peakprosperity.com/forum/preparing-woman-crash/40721), is there a public forum here specifically for women and women's issues? I haven't really looked around on this site and I should.

Poet

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...
Full Moon wrote:

Number of Women With More Than $50000 in Debt on the Rise

 

 Oh My Gosh !! !!!!    This is more than putting your socks and underwear on the CC.   How are people going to hang on ?

Take this article with a dose of salt.  It is a PR release, not hard news.  And the sample set for the "study" was the folks coming to the debt relief company.  It is hardly scientific. 

 

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

Caught this on Zero Hedge - for those of you who have not seen it, you really should watch this interview of Kyle Bass on CNBC today. ZH calls it the must-watch interview of the week, if not the year. http://www.zerohedge.com/article/must-watch-kyle-bass-interview-there-no-way-i-can-be-long-stocks

Wow - This guy has all the pieces in the right place. I noted that much of what he says corresponds to CM's hypotheses. Well worth the ~20 min watch. I can't believe this was on CNBC!

(Not sure I can embed here so here's the link to the two segments on CNBC)

http://www.cnbc.com/id/15840232/?video=1568273859&play=1

http://www.cnbc.com/id/15840232/?video=1568296901&play=1

 

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...
dave s wrote:
Full Moon wrote:

Number of Women With More Than $50000 in Debt on the Rise

 

 Oh My Gosh !! !!!!    This is more than putting your socks and underwear on the CC.   How are people going to hang on ?

Take this article with a dose of salt.  It is a PR release, not hard news.  And the sample set for the "study" was the folks coming to the debt relief company.  It is hardly scientific. 

 

Thanks Dave; too many "fluff" pieces out there geared to elicit a response that usually serves some other purpose. We should all keep that in mind when we read the many "studies" published on the Internet. 

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

I'd still like to contribute my 'man bites dog' story - Human screws HFT;

From the Norwegian paper Dagens Næringsliv (dn.no);
http://www.dn.no/forsiden/borsMarked/article1956354.ece
(google-translate mangling at
http://translate.google.com/translate?hl=en&sl=no&tl=en&u=http%3A%2F%2Fwww.dn.no%2Fforsiden%2FborsMarked%2Farticle1956354.ece
)

My editorializing;
Day-traders Svend Egil Larsen and Peder Veiby have conducted a series of illegal trades against the foreign brokerage Timber Hill and it's trading robot. They are now facing up to six years of prison time.

Apparently, they have issued small purchase and sale-orders, making the robot misjudge the market situation, and thereby causing it to act less than optimal. To me, this looks very similar to what the HFT-robots are doing today as reported by Karl Denninger and others.

The wins here were modest - Veiby made about half a million crowns (~USD100k), while Larsen made NOK160k (~USD peanuts).

-S

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Massive Coral Die-off Happening Off Indonesia

 

Massive Coral Die-off Happening Off Indonesia

One of the most destructive and swift coral bleaching events ever recorded is under way in the waters off Indonesia, where water temperatures have climbed into the low 90s, according to data released by a conservation group this week.
http://www.msnbc.msn.com/id/38741347/ns/us_news-environment/

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

I had never heard of Kyle Bass before this, but I'm going to be doing a lot of research from here on out!  In fact, I may send some money his way!  I've been out of financial investing for a couple years now, but he seems like he "gets it"!  Really an outstanding piece!  I suggest everyone watch!

Thanks grl for sharing!

grl wrote:

Caught this on Zero Hedge - for those of you who have not seen it, you really should watch this interview of Kyle Bass on CNBC today. ZH calls it the must-watch interview of the week, if not the year. http://www.zerohedge.com/article/must-watch-kyle-bass-interview-there-no-way-i-can-be-long-stocks

Wow - This guy has all the pieces in the right place. I noted that much of what he says corresponds to CM's hypotheses. Well worth the ~20 min watch. I can't believe this was on CNBC!

(Not sure I can embed here so here's the link to the two segments on CNBC)

http://www.cnbc.com/id/15840232/?video=1568273859&play=1

http://www.cnbc.com/id/15840232/?video=1568296901&play=1

 

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

grl

Thanks for the video link.  The part I don't get is where they come up with that 53% debt/GDP number.  I thought our GDP was somewhere around $14 T and our debt just went over $13T (not counting future obligations).  That's a hell of a lot more than 53%.  Can someone explain that?  I think Bass started to, but got cut off.

Doug

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Will
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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...
LogansRun wrote:

I had never heard of Kyle Bass before this, but I'm going to be doing a lot of research from here on out!  In fact, I may send some money his way!  I've been out of financial investing for a couple years now, but he seems like he "gets it"!  Really an outstanding piece!  I suggest everyone watch!

Thanks grl for sharing!

grl wrote:

Caught this on Zero Hedge - for those of you who have not seen it, you really should watch this interview of Kyle Bass on CNBC today. ZH calls it the must-watch interview of the week, if not the year. http://www.zerohedge.com/article/must-watch-kyle-bass-interview-there-no-way-i-can-be-long-stocks

Wow - This guy has all the pieces in the right place. I noted that much of what he says corresponds to CM's hypotheses. Well worth the ~20 min watch. I can't believe this was on CNBC!

(Not sure I can embed here so here's the link to the two segments on CNBC)

http://www.cnbc.com/id/15840232/?video=1568273859&play=1

http://www.cnbc.com/id/15840232/?video=1568296901&play=1

 

 

Kyle Bass is the hedge fund manager who made a billion dollars on the housing bubble meltdown.  He was featured in the CNBC documentary "House of Cards".  If you haven't seen the film, I recommend it.  His part of the story is very interesting as he details his investigation talking to mortgage originiators, Wall Street traders and big bank CEOs prior to going ahead with his winning bet against the housing bubble.

Here is the link to the doc on the CNBC website.  The piece about Bass begins at 63:24.

 

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

Doug, if you notice the specific wording in the 53% number, you will see they are referring to "Debt Held By The Public". The National Debt is comprised of Publicly Held Debt (holders of US Treasuries) PLUS the Intragovernmental Holdings (which are things like IOU's held for Social Security).

Treasury's Debt to the Penny.

Even if we add in the Intragovernmental Holdings, we still have Federal Pension debt, GSE debt, etc...

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

 

$41 billion more in debt today is a lot of pennies:

 

Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding
08/10/2010 8,778,544,682,843.82 4,541,286,254,147.21 13,319,830,936,991.03
08/11/2010 8,778,639,712,764.28 4,529,232,185,228.65 13,307,871,897,992.93
08/12/2010 8,787,069,744,688.51 4,529,979,092,828.61 13,317,048,837,517.12
08/13/2010 8,786,780,915,472.22 4,528,637,036,402.78 13,315,417,951,875.00
08/16/2010 8,825,308,128,496.03 4,531,686,059,845.41 13,356,994,188,341.44

 

 

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

Yes saxplayer, that's ALOT of pennies!

It looks like more and more of the debt is being  rolled over to the long end of the curve, where the Fed has less influence. I suppose as long as the world believes the dollar is a safehaven in times of crisis, our little folly can continue; but at some point, those rates are going to rise. I imagine we'll have a few more market drops and sovereign debt crises to fuel our developing bond bubble. I remember Dr. Martenson suggesting that foreigners will begin to request repayment in currencies other than our own-- I wonder if we have passed that point as we have opted for monetization, or if it is still in the cards?

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Re: Daily Digest 8/17 - Mortgage Arrears Mount, Denmark ...

China cut its holdings of Treasury notes and bonds by the most ever, raising speculation a plunge in U.S. yields that sent two-year rates to a record low has made government securities unattractive.

The Asian nation's holdings of long-term Treasuries fell by $21.2 billion in June to $839.7 billion, a U.S. government report showed yesterday. Total Chinese investment in U.S. debt declined 2.8 percent to $843.7 billion, the least in a year, following a 3.6 percent slide in May.

China, America's largest creditor, is cutting back after scrapping its currency peg in June, giving it less reason to buy dollars and invest them in Treasuries. China is also turning more bullish on Europe and Japan, purchasing bonds of both nations. The shift comes as President Barack Obama increases U.S. debt to record levels, counting on overseas investors to buy, as he borrows to sustain the U.S. economic expansion.

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