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    Daily Digest – June 20

    by Davos

    Saturday, June 20, 2009, 2:40 PM

  • Southern Europe (Repost)
  • British Airways asks staff to work for free
  • U.S. likely to lose AAA rating: Prechter
  • Tuesday, June 16, 2009
  • $13.9 Trillion Total Maximum Government Support Announced
  • JPMorgan Analysts Predict 60% House Price Decline for High End
  • Lots of People Didn’t Get the Memo
  • Shadow Inventory, Jim the Realtor (Video)
  • Didn’t even hit the barn (Chart, Forecasted Unemployment Rate)
  • Financial News Coverage (Video)


Southern Europe (Repost)

Ladies and gentlemen, Hugh is describing a return to something like the global crunch conditions of September and October with the epicenter moving from New York to Barcelona.

If he is right and Latvia becomes the trigger event for a cascade that swamps not just Baltic backwaters but Greece and Spain…Iceland’s GDP was $12bn. Latvia’s GDP is around $36bn. Greek GDP is $350bn. Spanish GDP is $1.4tn. That is a completely different ballgame, and the global exposure to problems of this scale is likely to be made blindingly obvious from the get-go.

And of course any threat of a run on national-level "massive external financing requirements" leads one’s thoughts directly to the United States, which remains as ever extremely reliant on foreign-sourced funding for its banking system.

British Airways asks staff to work for free

British Airways has asked its 40,000 staff to work without pay for up to a month as the ailing airline seeks to cut costs.

The group, which made a record £401 million loss in 2008 amid surging fuel prices and a collapse in premium-fare passengers, is seeking to reduce costs dramatically and has already offered staff unpaid leave or a reduction in hours.

Willie Walsh, BA’s chief executive, has now gone a step further by asking staff to volunteer for between one and four weeks of unpaid work in what he says is a “fight for survival.”

Mr. Walsh, who said last week that he would work for free in July, has set a deadline of June 24 for employees to volunteer for unpaid work. He said that the salary deductions would be spread over three to six months wherever possible

U.S. likely to lose AAA rating: Prechter

NEW YORK (Reuters) – Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.

Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.

Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor’s in May lowered its outlook on Britain, threatening the UK’s top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.

Prechter, speaking at the Reuters Investment Outlook Summit in New York, said he sees investors’ confidence in an economic rebound fading, a trend that will drag the S&P 500 stock index .SPX well below the March 6 intraday low of 666.79 by the end of this year or early next.

"There will be a leg down in stock prices, and it will affect all other areas," including corporate bonds and commodities, said Prechter, who is executive officer at research company Elliott Wave International, based in Gainesville, Georgia.

Prechter, who is known for his bearish views, has repeatedly forecast a steep decline in stocks this year, even as the stock market has rebounded from 12-year lows set in March as optimism about an economic recovery has risen.

Despite the government and Federal Reserve’s massive rescues for financial companies and securities markets, Prechter expects credit markets to clam up again as they did in the first phase of the global financial crisis and for the U.S. economy to sink into a depression.

Although U.S. banks’ recently passed government "stress tests" that assessed the adequacy of their capital levels to absorb losses and have been able to raise some capital in debt and equity markets, "the banking sector is in severe trouble," as more loans turn bad, he said.

The economy "is obviously heading toward a depression," despite the government’s efforts to dodge one, said Prechter.

Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom.

"It’s the next leg down (in stocks) that will make it clear that these things are not true," Prechter said.

 Tuesday, June 16, 2009, Lehman Redux?

The Obama administration has turned back pleas for emergency aid from one of the biggest remaining threats to the economy — the state of California.

$13.9 Trillion Total Maximum Government Support Announced (Tabel)

JPMorgan Analysts Predict 60% House Price Decline for High End

Peak-to-trough declines in excess of 60 percent (compared to 40 percent nationally).

Lots of People Didn’t Get the Memo

Today’s news cycle is anything to go by, it looks like lots of people didn’t get the memo telling them we’re on the road to recovery (a technical snafu, perhaps?).

Shadow Inventory, Jim the Realtor (Video)


Didn’t even hit the barn (Chart, Forecasted Unemployment Rate)

Financial News Coverage (Video)

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