Daily Digest

Daily Digest 8/2 - The New Way To Foreclose, RI City Declares Bankruptcy, Japanese Find Radioactivity On Their Own

Tuesday, August 2, 2011, 10:42 AM
  • Bulldoze: The New Way To Foreclose
  • Word War Two: After Calling Bernanke A "Hooligan", Putin Now Says America Is "A Parasite" Living Off The Global Economy
  • "I'm Preparing For The Complete Meltdown Of Our Financial System"
  • Rhode Island city declares bankruptcy
  • Calculated Risk Chart Gallery
  • That Which Is Too Fearful To Speak: The Demise of the Consumer Economy
  • HSBC Plans to Cut 30,000 Jobs While Hiring in Emerging Markets
  • Japanese Find Radioactivity on Their Own

Our 'What Should I Do?' guide has steps to cook, see & stay warm in times of power outage

Economy

Bulldoze: The New Way To Foreclose (dons)

Banks have a new remedy to America's ailing housing market: Bulldozers. There are nearly 1.7 million homes in the U.S. in some state of foreclosure. Banks already own some of these homes and will soon have repossessed many more. Many housing economists worry that near constant stream of home sales from banks could keep housing prices down for years to come. But what if some of those homes never hit the market.

Increasingly, it appears banks are turning to demolition teams instead of realtors to rid them of their least valuable repossessed homes. Last month, Bank of America announced plans to demolish 100 foreclosed homes in the Cleveland area. The land is then going to be donated back to the local government authorities. BofA says the recent donations in Cleveland are part of a larger plan to rid itself of its least saleable properties, many of which, according to a company spokesperson, are worth less than $10,000. BofA has already donated 100 homes in Detroit and 150 in Chicago, and may add as many as nine more cities by the end of the year.

Word War Two: After Calling Bernanke A "Hooligan", Putin Now Says America Is "A Parasite" Living Off The Global Economy (pinecarr)

Three weeks ago Putin called Bernanke a hooligan. Since that remark came from the (allegedly) largest oil producing country in the world, it provoked nary a peep from America's foreign department. Today, he decided to ratchet up the rhetoric, and in a speech to a Kremlin youth group told his listeners what the bulk of the rest of the world thinks of America: ""They are living beyond their means and shifting a part of the weight of their problems to the world economy," Putin told a Kremlin youth group while touring its summer camp north of Moscow. "They are living like parasites off the global economy and their monopoly of the dollar.""

"I'm Preparing For The Complete Meltdown Of Our Financial System" (David B.)

Dilbert comic from 7/31/2011

Rhode Island city declares bankruptcy (David B., Johnny Oxygen)

They said the city would have run a deficit of $5.6 million by June 30, 2012 -- with revenues expected at $16.4 million and expenses at $22 million -- if they hadn’t moved to make the changes.

Calculated Risk Chart Gallery (Phil H.)

That Which Is Too Fearful To Speak: The Demise of the Consumer Economy (pinecarr)

The consumer-debt-based economy is toast, but everyone's too terrified by its demise to acknowledge this reality, never mind consider a new model. The entire creaking economy is based on a few ideas which no longer work…

HSBC Plans to Cut 30,000 Jobs While Hiring in Emerging Markets (Johnny Oxygen)

HSBC Holdings Plc plans to eliminate 30,000 jobs by the end of 2013, or about 10 percent of staff at Europe’s largest bank, to curtail surging salary costs while hiring more people in emerging markets.

HSBC already has cut 5,000 of the jobs and may hire 3,000 to 4,000 people a year in emerging markets, Gulliver told journalists. The 30,000 jobs exclude employees leaving when assets are sold, he said. The target doesn’t take into account cuts that could follow the U.K. Independent Commission on Banking’s report in September, Gulliver said. The panel may force lenders to separate consumer and investment banking units.

Environment

Japanese Find Radioactivity on Their Own (jdargis)

Local officials kept telling her that their remote village was safe, even though it was less than 20 miles from the crippled Fukushima Daiichi nuclear power plant. But her daughter remained dubious, especially since no one from the government had taken radiation readings near their home.

So starting in April, Mrs. Okoshi began using her dosimeter to check nearby forest roads and rice paddies. What she found was startling. Near one sewage ditch, the meter beeped wildly, and the screen read 67 microsieverts per hour, a potentially harmful level. Mrs. Okoshi and a cousin who lives nearby worked up the courage to confront elected officials, who did not respond, confirming their worry that the government was not doing its job.

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."

9 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4168
Geithner unsure if U.S. debt to be downgraded -ABC

"Italian and Spanish 10-year bonds dropped, pushing yields up to euro-era records versus benchmark German bunds, on concern that slowing growth will hamper efforts to tame the nations’ debt loads."
"The yield on 10-year Italian bonds jumped 18 basis points to 6.18 percent as of 8:48 a.m. in London, the most since November 1997. The 4.75 percent security maturity in September 2021 fell 1.21, or 12.1 euros per 1,000-euro ($1,420) face amount, to 90.025. That increased the difference in yield, or spread, over bunds, to 374 basis points, the most since before the euro was introduced in 1999.

Spanish Yield ‘Risks’

Spanish 10-year yields surged 16 basis points to 6.36 percent, pushing the spread over similar-maturity German debt up 19 basis points to 393 basis points. A 6.5 percent yield will be a key level for Spain, RBS’s Sian said.

“Anything materially above that risks an acceleration like we saw for Greece, Ireland and Portugal,” he said. “The political willingness to backstop the European Union is now what the market needs.”"

 

"The yield premium investors demand to hold Belgian 10-year bonds instead of benchmark bunds widened to a euro-era record of 202 basis points before an auction of as much as 2.8 billion euros of 105-and 168 day bills."

"Bill Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., said the compromise reached by Congress won’t make a “significant dent” in the U.S. deficit.

“In addition to an existing nearly $10 trillion of outstanding Treasury debt, the U.S. has a near unfathomable $66 trillion of future liabilities at ‘net present cost,” Gross wrote in a monthly investment outlook posted on the Newport Beach, California-based company’s website today. "
 

 

"The U.S. may lose its AAA rating because the agreement reached by lawmakers to lift the nation’s debt limit falls short of the deficit reductions sought by Standard & Poor’s, according to Barclays Capital’s Michael Pond. "

"U.S. Treasury Secretary Timothy Geithner said he is not sure whether the bitterly fought debt agreement to be considered on Tuesday by the U.S. Senate will avoid a downgrade of the U.S. top-tier credit rating.

Geithner, in an interview with ABC News aired on Tuesday, also said he thought the risk of the U.S. economy slipping into a double-dip recession was low, but added that the battle over the debt limit and the threat of default had damaged confidence in the economy."
 

  • Other news, headlines and opinion:

Japan primes markets for FX intervention-BOJ easing combo

Australian Corporates Face US$548 Billion Of Debt Refinancing Through 2015 -S&P

Central Falls Bankruptcy Driven by Pensions Casts Shadow Over Rhode Island

SKorean Central Bank Buys Gold After Long Hiatus and Bank of Korea buys gold as dollar, euro lose clout

Debt dooms US to low-growth economy, say academics

EU not considering rescue plans for Italy, Spain

Fed May Weigh More Stimulus on Flagging Recovery

Zapatero Postpones Planned Vacation as Spanish Bond Yields Surge Toward 7%

Debt Deal Puts U.S. on Austerity Path as Economy Falters

Homeownership Rate Drops to 13-Year Low

Chinese agency warns of U.S. debt downgrade

nojones's picture
nojones
Status: Member (Offline)
Joined: Sep 28 2010
Posts: 6
Chart Gallery

WOW!

This gtallery really put it into perspective for me.  I knew things were bad for the labor market, but I didn't realize how bad.

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
A few quick macro thoughts

A few quick macro thoughts on the debt deal -  J.P. Morgan - As you are no doubt aware, a deal appears imminent to resolve the debt ceiling impasse. We see four main economic implications of this deal

  • 1) No default. This had always been a low probability (<1%) very high cost outcome, which now seems off the table.
  • 2) An eventual S&P downgrade is still more likely than not, though we think this would occur after the fiscal commission completes its task later this year. We see no major implications for borrowing costs due to the actions of one or more rating agencies.
  • 3) No stabilization in longer-run fiscal outlook. A stable debt-to-GDP ratio, commonly associated with sustainable fiscal policy, is not achieved within the ten -year horizon. Thus, this agreement should be seen more of a first step toward sustainability.
  • 4) Impending fiscal drag for 2012 remains intact. The deal does nothing to extend the various stimulus measure which will expire next year: we continue to believe federal fiscal policy will subtract around 1.5%-points from GDP growth in 2012.
Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3176
Fed might buy more Treasury bonds - I'm shocked

http://www.bloomberg.com/news/2011-08-02/fed-policy-makers-may-consider-additional-stimulus-as-u-s-economy-slows.html

Quote:

Chairman Ben S. Bernanke said in congressional testimony in July that the Fed may take new action if the economy stalls, including beginning a third round of bond purchases. The central bank could also cut the interest rate it pays banks on excess reserves and pledge to hold its assets at a record high and interest rates at record lows for a longer period, he said.

Any effort by Bernanke to expand the Fed’s $2.87 trillion balance sheet would probably meet resistance from district Fed presidents, including Philadelphia’s Charles Plosser, who have said bond purchases and low borrowing costs have already pushed up long-term inflation risks too high.

Quote:

“Given current inflation trends, additional monetary stimulus at this juncture seems likely to raise inflation to undesirably high levels and do little to spur real growth,” Richmond Fed President Jeffrey Lacker said in a speech last week. He is a voting member of the FOMC next year.

Internal relations may get testy with the Fed.

Doug

badScooter's picture
badScooter
Status: Silver Member (Offline)
Joined: Jun 20 2011
Posts: 152
chart

I "get it", I really do, but every once in a while someone manages to come up with a new chart that just makes me want to drain a bottle of cheap whiskey and shoot myself.  Thanks, Calc Risk! 

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2247
re Japanese Find Radioactivity on Their Own

Great article on the Japanese woman monitoring local radiation herself, Jeanine!  It's the people who ask the questions who find the information!

Phil Williams's picture
Phil Williams
Status: Gold Member (Offline)
Joined: Oct 14 2009
Posts: 345
Gold/ Silver up, the Dow down

Any thoughts on this dynamic of the past few days. Eric Sprott talked about it as something the Fed certainly does not want people to start to see as correlative. He talks about it on the FSN link below.

 

 http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/07/27/02/eric-sprott/silver-take-down-and-why-silver-is-set-to-explode

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