Daily Digest

Daily Digest - August 7

Friday, August 7, 2009, 10:53 AM
  • Deutsche Bank: Construction Loan Defaults Coming
  • 16 Million Homeowners Underwater
  • Foreclosures: One Giant Wave, Still Building
  • On how many different levels is this statement idiotic?
  • $75 Billion In New Treasuries On Deck
  • 2nd U.S. Bank-For-Businesses Facing Bankruptcy
  • Shadow Inventory
  • 2 Trillion in Deficits and House Orders Up Three Elite Jets
  • ICN, Audit the Fed and 18 Million Vacant Homes (Video, H/T iDoctor)
  • Jim Sinclair (Sudio H/T HuckleJohn)
  • Recessions Over: 34,000,000 Use Food Stamps First for the U.S.
  • Please 'Google' Fannie Mae seeks $10.7B in US aid after 2Q loss (Due to AP restrictions)

Economy

Deutsche Bank: Construction Loan Defaults Coming

• By far the riskiest type of loan product in bank portfolios;
• Substantial portion represents loans to homebuilders;
• Market currently penalizing properties with vacancy issues extremely severely;
• Newly constructed (or only partially constructed) properties are the poster children for vacancy problems in CRE;
• Values of most newly constructed properties are down massively;
• Expect extremely high default rates and extremely high loss severity rates, both likely to be in excess of 50%;
• Total expected losses of 25% or more.

In a reversal of the Residential Real Estate market, the exposure for large money center banks is low — smaller regional and community banks have the highest construction loan exposure.

16 Million Homeowners Underwater

The percentage of properties “underwater” is forecast to rise to 48 percent, or 25 million homes, as property prices drop through the first quarter of 2011, according to [Deutsche Bank] analysts Karen Weaver and Ying Shen. I guess Deutsche Bank didn't get the memo about house prices finding a bottom.

Please 'Google' Fannie Mae seeks $10.7B in US aid after 2Q loss (Due to AP restrictions)

Foreclosures: One Giant Wave, Still Building

Note: Graph is for Orange County only.

From Matt Padilla at the O.C. Register: Foreclosure wave gathers momentum

“To say there is a second wave implies the (current) wave has receded,” [Sam Khater, senior economist, First American CoreLogic] “I don’t see that the wave has receded.”
Click on graph for larger image in new window.

This graph is from Matt based on data from American CoreLogic.
Khater said ... federal and state efforts have mostly delayed foreclosures, preventing few. ... So to tune out the noise, just look at the 90-day rate. In Khater’s view it shows “one giant wave.”
UPDATE: Matt provided me with the definitions:

 On how many different levels is this statement idiotic?

On how many different levels is this statement idiotic?
A British newspaper reported Sunday that a group of eminent economists have apologized to Queen Elizabeth II for failing to predict the financial crisis.

The letter of apology to the Queen goes on to say:
“In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.”

$75 Billion In New Treasuries On Deck

If you missed your chance to stock up on double ply UST (T is for toilet) paper, fear not: you will have another chance to buy some again... and again... and again. The first opportunity will be on August 11th and 12th, when a total of $75 billion pieces of paper, backed by another rapidly deflating piece of paper will be made available for your indirect (or is that direct?) auction pleasure.

Specifically:

$37 Billion in Three Year Notes;

$23 Billion in Ten Year Notes;

$15 Billion in Thirty Year Notes;

And here is how America became $304 billion dollars more indebted to China (and Itself compliments of monetization), since July 24. That's a almost a third of a trillion in new debt issued in under a month.

(New LEI?) 2nd U.S. Bank-For-Businesses Facing Bankruptcy

Reuters reported today that American Capital Ltd, another specialist in financing businesses, just reported a 2nd quarter loss of $547 million, while acknowledging it remains in default on a $2.3 billion “credit agreement”. Meanwhile, its operating results produced less than half the revenues analysts had expected.

Shadow Inventory

But this is the ultimate head fake. Those subprime loans are still toxic and there are some $400 billion outstanding and there are some $660 billion in Alt-A loans most of it calling California home:

 2 Trillion in Deficits and House Orders Up Three Elite Jets

Last year, lawmakers excoriated the CEOs of the Big Three automakers for traveling to Washington, D.C., by private jet to attend a hearing about a possible bailout of their companies.

But apparently Congress is not philosophically averse to private air travel: At the end of July, the House approved nearly $200 million for the Air Force to buy three elite Gulfstream jets for ferrying top government officials and Members of Congress.

ICN, Audit the Fed and 18 Million Vacant Homes (Video, H/T iDoctor)

Jim Sinclair (Sudio H/T HuckleJohn)

Recessions Over: 34,000,000 Use Food Stamps First for the U.S.

For the first time, more than 34 million Americans received food stamps, which help poor people buy groceries, government figures said on Thursday, a sign of the longest and one of the deepest recessions since the Great Depression.

21 Comments

hughacland's picture
hughacland
Status: Bronze Member (Offline)
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Posts: 25
Re: Daily Digest - August 7

This is funny! Might also be the best policy!!

http://www.theonion.com/content/video/u_s_government_stages_fake_coup

 

hughacland's picture
hughacland
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Posts: 25
Re: Daily Digest - August 7

This is funny! Might also be the best policy!!

http://www.theonion.com/content/video/u_s_government_stages_fake_coup

 

DavidC's picture
DavidC
Status: Silver Member (Offline)
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Posts: 243
Re: Daily Digest - August 7

I'm finding all this more than a bit worrying - with the rally since March and the big move since the middle of July (which seems to show no signs of abating following today's unemployment data) I get the feeling that a small piece of negative news is going to cause a rush for the exits and that this will happen soon.

This is notwithstanding all the underlying structural issues that still simmer away.

Interestingly (not that I'm a firm believer), I read a post on ZeroHedge today that stated 1014 on S&P is the 38.2% Fibonacci retracement of the bear market move 1576-666. And, being cynical, since we came up from 666 I wouldn't put it past you-know who to start shorting at 1013!

DavidC

Spilldenmark's picture
Spilldenmark
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Re: Daily Digest - August 7

Noticed this earlier, I can't even describe what I'm looking at. Peter Schiff under verbal abuse on live TV? 
Hope it wasnt posted before

 

Headless's picture
Headless
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Posts: 363
Re: Green Shoots

"Green shoots! You want green shoots? Go find a kid with a sinus infection and let him sneeze on you. Then you'll have green shoots!"

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest - August 7

Japan's Future: "It's Going to Be Scary"

http://finance.yahoo.com/techticker/article/297420/Japan's-Future:-

greggignac's picture
greggignac
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Re: Daily Digest - August 7

I have been on this site for awhile and I have promoted it to everyone I know. This is the video that pushed me over the edge. After watching, please send your comments in so we can get this guy off the air. Peter Schiff is a hero for trying to reform the system and doesn't deserve this treatment.

 Here is the email address to save you time.  [email protected]

DavidC's picture
DavidC
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Posts: 243
Re: Daily Digest - August 7

Schiff's treatment on the Ed show was disgusting, I don't think I've ever seen anything like it. I hope any thinking person would immediately side with Schiiff (even though he didn't get the opportunity to say anything!) purely as a result of the atrocious behaviour of his interviewer.

DavidC

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest - August 7

To late to get in?? Get ready Dennis the menes LOL,,,,

http://www.cnbc.com/id/15840232?video=1208750677&play=1

I have never seen a bigger horses a$$ than that poor excuse of a human being that was interviewing Peter Schiff. This was obviously a blatant setup. He must be a big Dodd fan for sure.

For God sake let Peter talk!

Ed obviously missed all his antipsychotic medications this morning.

Something is WAY WRONG with the way Peter Schiff & Dylan Ratigan are treated on some of these programs for being passionate about the truths they know to be real. There must be some real fear in the MSM of this all being exposed & waking people up.

Davos's picture
Davos
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Re: Daily Digest - August 7

 Hello iDoctor:

I watched both of those videos. I'm glad I don't have TV/Cable. What baffled me was his blow off of the nitty gritty when the bear went into the peel back the layers of unemployment. Investing in banks? Hmmm, I must have missed the memo on CRE and Residential, didn't know they got that 5 trillion dollar mess taken care of.

Yikes!

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - August 7

 Hello iDoctor:

I watched both of those videos. I'm glad I don't have TV/Cable. What baffled me was his blow off of the nitty gritty when the bear went into the peel back the layers of unemployment. Investing in banks? Hmmm, I must have missed the memo on CRE and Residential, didn't know they got that 5 trillion dollar mess taken care of.

Yikes!

Headless's picture
Headless
Status: Gold Member (Offline)
Joined: Oct 28 2008
Posts: 363
Re: Schiff vs. Prehistoric man

I am entirely opposed to Schiff's position on healthcare: I believe in a national single-payer plan with all my heart; I say that having lived under such systems while abroad and having had absolutely no complaints--not to mention the peace of mind that comes with knowing the less-fortunate are being cared for and they aren't subjected to humiliation by virtue of birth in the wrong place, family, etc.

That said, this lesser life form from some ancient line of lesser evolved human that "interviewed" Mr. Schiff today obviously has adopted the Goldman Sach's method of pursuing one's personal agenda; that is to say, "Reality, fairness, morality and the law don't really matter, just as long as I can control the environment."

The great thing about such absurd ostentatious displays of stupidity is that Peter will have the last laugh; can anyone here really doubt that? In fact, we should all celebrate the occurrence of such a spectacle as what Peter was subjected to, for this particular human-shaped slime will be a great lesson to those who come after; point in fact: has anyone seen either of those other two idiots that smirked and chuckled themselves into the Guinness World Record Book for Most Stupendious Idiots to be Inteviewed on Live Television? (Could any of you ever forget those smirking cromagnum morons?) 

This retro-evolutionary slimeball we saw today was so spectacularly out of control, without composure, and without the slighest of manners--manners due someone who has been as thoughtful, well-informed, honest--and RIGHT--as Mr. Schiff, that when he (the human-shaped slime) is inevitably proved wrong (in his approach toward a goal whichm unfortunately, he and I share)--as he surely will be--his suffering will be of such great intensity that he will probably--we can only hope--commit suicide in some heinous, painful, slow method that will take years and bring with it the well deserved humiliation for his trespasses against reasonable common sense and courtesy.

Note to Peter: Single payer works. Please start to think in terms of differentials and the peace of mind that comes with knowing you are empathetic toward your fellow human beings--beings who, the vast majority of, don't have a choice in what nature decides to visit upon them. Have a heart Peter! Your lifestyle will never know the difference.

Edit: Having had a minute or two more to think this over; given that the "interview" was so absurd in its attack--and given that I trust nothing, noone, and am avidly seeking conspiracies in even the way the corn flakes line up in my bowl, perhaps this guy is actually a republican plant that was meant to drum up sympathy for the
"Government, get your hands off of my medicare" astroturf efforts... Hmmm. We're not playing checkers, right?

Jasenica's picture
Jasenica
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Posts: 35
Re: Green Shoots
Headless wrote:

"Green shoots! You want green shoots? Go find a kid with a sinus infection and let him sneeze on you. Then you'll have green shoots!"

walstreetpro2 would gain more credibility if he didn't behave like a lunatic. The way to inform the masses is not by ranting on youtube while wielding a baseball bat.

HarryFlashman's picture
HarryFlashman
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Re: Daily Digest - August 7

Just watched the Peter Schiff interview and am dumbfounded.Like the original poster Im speachless.And just like the previous poster I dont agree with Peter about healthcare.The presenter was obviously set-up to try and make Peter look bad.Ed came across as an arse.

 

Im British(but live in Japan) and though our national health system has its faults,its never let me down(and Ive used it a lot)or my family.

 

My Dad died recently,there was no chance he was going to live and they kept giving him treatment (chemotherapy) way beyond the time when it was effective(rationing my arse!).If I was in charge of treatment decisions,knowing the almost certain outcome,Id have cut him off months before he was and just given palliative care,but the inherent morality in the system came through.They kept going to the bitter end because he d put into the system all his working life and deserved everything he got.He got the best too,I know,my doctot brother thought so.So,anybody who says govt run healthcare cant work hasnt lived under it.

 

Its a national disgrace that the U.S.,the richest country thats ever been,cant look after its citizens healthcare needs,a genuine disgrace(and down to someones f$£ked up profit motive,not that profit motives are necessarily bad.....).

Headless's picture
Headless
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Posts: 363
Re: Daily Digest - August 7

Harry Flashman said:

"So,anybody who says govt run healthcare cant work hasnt lived under it."

Ditto. And that's a question that the proponents would be well advised to start asking of the opponents!

That said, I think the most successful thing that the insurance companies have done is to couch the argument in "government run" vs. "private"; that is to say, it's a false dichotomy--in the most important of senses: the only noticable difference in the two would be the demographics. Think of it this way: remove millionaire marketeers and executives; replace with innocent and suffering children et al. The health professionals would still be there, reaping the rewards they always have. And here's the real difference most people would notice: you wouldn't get the impression that your ass was being kissed (for obvious reasons). You'd come to an understanding that the person/people who was/were caring for you really cared. It's a noticable and comforting difference. Ask those who have lived under both systems.

girlflower's picture
girlflower
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Posts: 15
Re: Daily Digest - August 7

Has anyone checked out Singapore's healthcare system?

In Singapore, the government has everyone working contribute to a fund called the Central Provident Fund (CPF). This fund is basically used for retirement and for buying a home, People are allowed to use this fund to buy basic healthcare plans too.

The government allows her citizens and all who has conrtibutions to this CPF Fund to buy insuranace from private providers. It is used for basic healthcare needs (no hair transplant, breast augmentation, etc). There are many options provided by the different insurers, thus cost is lowered... and best benefits suffice! Also, there is the option of co-payment or none...

If you are interested to read more, search under "CPF", "Medishield", "Medisave" in Singapore. Private insurers providing the plans are from AIA Singapore, Great Eastern Singapore, NTUC Singapore, etc., just to name a few...

Note: I am a Singaporean living in USA, so I can say I like Singapore's system better :)

girlflower's picture
girlflower
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Posts: 15
Re: Daily Digest - August 7

My email to the host, the producer and to the Program person:

I watched The Ed Show on 8/6/09 with MUCH disgust. I don't think the host knew what he was talking abt!

The host was supposed to interview Peter Schill, so let him talk pls! We are more interested to listen to him than to the host, for goodness sake!

Also, the host kept putting words into Peter's mouth, and he refused to let Peter explain. Was he afraid to listen to Peter's logics because he knew his made no sense?

Pls, in the future, if the host's intention is NOT to give an interview, don't waste intelligent people's time!
And pls, don't produce such a ridiculous show again!

dps's picture
dps
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Posts: 442
Early 8/8 ...

Found this to be an interesting read.  http://news.yahoo.com/s/ap/20090807/ap_on_re_us/us_baby_bust

ATLANTA – There aren't just fewer jobs in a recession. There are fewer babies, too. U.S. births fell in 2008, the first full year of the recession, marking the first annual decline in births since the start of the decade and ending an American baby boomlet.

The downturn in the economy best explains the drop in maternity, some experts believe. The Great Depression and subsequent recessions all were accompanied by a decline in births, said Carol Hogue, an Emory University professor of maternal and child health and epidemiology.

And the numbers have never rebounded until the economy pulled out of it, she said, calling the 2008 recession the most likely culprit for fewer babies.

It's not clear that it's the only explanation, however. Another expert noted a recent decline in immigration to the U.S. may also be a factor.

The nation recorded about 4,247,000 births last year, down about 68,000 from 2007, according to a new report from the National Center for Health Statistics.

This recession began in December 2007, and since then the economy has lost almost 7 million jobs. Housing foreclosures worsened in 2007 too, and fell into a state of crisis in 2008.

The largest decline in births were in California and Florida, two states hit hardest by the housing crisis.

"I wasn't surprised," Hogue said, of the new numbers, which are not final and will be updated.

But the downturn's effect on the public psychology — and families' willingness to have babies — may not have really hit until the fall of 2008, said Stephanie Ventura of the health statistics center, the agency that put out the report.

Of course, 2007 was a year in which more babies were born in the United States than any other year in the nation's history. In the past, a fluctuation of births by 1 or 2 percent would not be seen as very significant, especially from such an unusual year.

But the drop seems to break an unusual trend. Births had been rising since 2002, and birth rates had been increasing in women of different age groups, said Ventura, chief of the agency's reproductive statistics branch.

The new report is an early count of births from each state, and does not contain demographic breakdowns that might more completely explain whether birth declines occurred in some groups, but not others.

Births were up in January, February and April of 2008 compared to 2007, but were down every month after that except September. The largest declines were in October and November.

Births were down in all but 10 states, primarily the northwest quadrant of the country, including North Dakota, Montana, Wyoming, Idaho, Washington and Alaska.

In contrast, births in California were down by 15,000 and in Florida, by 8,000, compared to 2007.

While the recession probably played an important role in fewer babies, another factor may be the net decline in recent years in immigration to the United States, said Mark Mather, demographer with the Population Reference Bureau.

"If there are fewer immigrants coming to the U.S., there are fewer moms and dads," said Mather, noting that California and Florida are states with large immigrant populations.

"I don't think we have enough data to know for sure what's going on," he added.

About half of U.S. pregnancies are unplanned. But Hogue, the Emory professor, said the recession likely affected the other half.

The recession also may have cut into the number of unplanned pregnancies that progressed to live births, but it's hard to say. Abortion statistics for 2008 are not yet available, Hogue said.

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - August 7

I'm going to comment on the health care discussion:

  • I think what we have in place has room to be improved or totally overhauled
  • Other countries have plans
  • Our country had a Social Security and a Medicare Plan and after decades of running them those plans are insolvent and amassed 63 trillion in debt
  • With respect to SS and Medicare: Most of the money that went into Social Security was looted for budget spending
  • With respect to SS and Medicare: Now that trust fund that is really no more than a bunch of IUO's that the tax payer is on the hook for (We pay twice for the same thing. Had that money have been invested....)
  • We take in 2 trillion and spend 4 trillion (a year) this plan has to cost something
  • What is in th plan (HR 3200)? I have read it and other cliff noted versions of it and all I can say is I have 100 questions and 0 answers, do we want to pass a plan like that
  • Saying XYZ has government run health care is super, but I'm hesitant to equate this to another countries plan until I can understand the bill, and I don't see other countries administrating a 63 trillion dollar off balance debacle like we so sadly did.
  • Also, after seeing a 63 trillion dollar botch job - and that is exactly what it is - I'd want assurances that these folks aren't going to jack this plan up. Their track record is not good in this arena, and if anyone thinks that is a kudos for the health insurance industry please see my first point

 

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Daily Digest - August 7

I'll 2nd that Greggignac!

Washington and the mainstream medai will have nothing to do with conversations that actually make sense over the long term!

Jeff

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Daily Digest - August 7

All hail Octavia!

...pretty funny!

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