- Economic Doom is getting Worse!
- Congressman Alan Grayson, on a roll, (H/T Fujisan, Video)
- Report: Some at U.S. diplomatic posts earn less than $1 a day (H/T PulV)
- Beggar thy neighbour
- U.S. credit card defaults rise to new highs (H/TCM)
- Roubini on CNBC: "Yellow weeds", Ken Time Bomb – Interest Rates (Video)
- Loaded Inbound and OUtbound Containers, LA and Long Beach Ports (Chart)
- House Price Puzzle: Mid-to-High End
- Empire State Manufacturing Survey: Conditions worsened modestly in May (Chart)
- Bill Maher With Elizabeth Warren – Good Watch! (Video)
- Germany drags eurozone faster into slump
- Hong Kong suffers record contraction
- A few A(H1N1) Links Dr. Henry Niman’s Map 6,094 U.S. Cases as of this wrtitng, A(H1N1) Current Timeline, CDC Cases
The following laundry list puts the US Economy halfway between the Intensive Care Ward and the National Morgue:
– Endless War spending could subsidize every household in America with $1000 per year
– Income is trending down in the United States, England, and Japan
– US banks loan loss reserves are at a 20-year low while profound losses continue
– Of the nearly 9000 US banks, 1575 of them posted a Q1 loss
– Bernanke claims $2 trillion is needed by the big US banks, but they pass the Stress Test
– Municipal bonds and state finances are disasters, as they each appeal for USGovt aid
– A shocking 20% of US homeowners have loan balances greater than their home values
– Half of modified loans result in foreclosure within several months
– Jobs report for April revealed jobless level at 8.9% (massaged) and 15.8% (actual)
– Jobs Report for April included 66k worse revised job losses for March and February
– Continuing jobless claims at 6.56 million, grew 220k just last week
– CALPERS pension fund is insolvent, USGovt pension PBGC guarantee fund in deep deficit
– FDIC requested $500 billion in additional funds to cover bank failures (giant failure coming)
– Car sales still down 40% annually, with steep Japanese car sales declines also
– Detroit carmakers are closing down plants, with huge ripples through entire supply chain
– GM & Chrysler restructures are extremely likely to result in Chapter 7 liquidation in time
– GM burned $1.3B in Q1, burns $113 million per day, unable to transition to green cars
– Business investment down 38% in Q1, a RELIABLE LEADING INDICATOR
– Durable goods up 9% in Q1, but only after Q4 was pushed down from bank shock
– Inventory reduction not key, but rather inventory/sales ratio, since sales way down
– Economic contraction despite lower energy costs from crude oil, natural gas, gasoline
– Housing was false foundation since 2002, now in stubborn decline, the Giant Albatross
– Distress sales make up 40% of all housing sales, led by underwater sales and foreclosures
– Cramdown Law rejection means open season on foreclosures, more huge bank losses
– Banks admit that home loan are not modified after all, a revolving door to foreclosure
– Option ARMs, Jumbos, and Commercial mortgage defaults are ramping up fast
– Commercial mortgage bonds have $70-100 billion that cannot be refinanced, sure to default
– Staggering decline in consumer credit, -80% in Q3, minus $31.7B in Q4/Q1
Note that final line item. Never in modern US Economic history has consumer credit gone negative. Its growth fell sharply in 3Q2008, but it contracted (reduced, shrunk) by $31.7 billion on an aggregate basis in 4Q2008 and 1Q2009.
Congressman Alan Grayson, on a roll, (H/T Fujisan, Video)[video:http://www.youtube.com/watch?v=QzRJ-5hLGx0&feature=player_embedded]
WASHINGTON (CNN) — A new State Department report says some local employees hired by U.S. embassies and other posts around the world are so poorly paid they have to cut back to one meal a day or send their children to peddle on the streets.
Is this what the first trade war of the global economic crisis looks like?
Ordered by Congress to "buy American" when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.
Outrage spread in Canada, with the Toronto Star last week bemoaning "a plague of protectionist measures in the U.S." and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.
NEW YORK, May 15 (Reuters) – U.S. credit card defaults surged to record highs in April, with American Express, Citigroup, Bank of America and Wells Fargo posting double digit loss rates, as unemployment climbed to its highest level in 26 years.
Credit card defaults often dip in April as consumers receive tax refunds, so the roughly 10 percent rates reported by most major credit card lenders were disheartening, analysts said, cooling hopes of an early recovery in the industry — or the U.S. economy.
"The idea that we were going to rebound was put to rest for a little bit. And it will only get weaker as the year goes on," said Scott Valentin, an analyst at FBR.
* American Express default rates jumps to 10.10 percent
* Bank of America charge-off rate soars to 10.47 percent
* Citi credit card default rate rises to 10.21 percent
4:30 on is most interesting
I’ve linked to a few pieces of the puzzle below.
But this adds up to more supply (in the mid-to-high end) because of rising foreclosures – and limited demand because sellers at the low end are mostly banks or short sales (so there are no move up buyers), and tight financing.
To me, this suggests prices will fall much further in many mid-to-high end areas.
The recession in the eurozone intensified markedly in the first quarter, dragged down by an almost 4 per cent contraction in the German economy.
Gross domestic product in the 16-country region fell by a much larger-than-expected 2.5 per cent in the period – outpacing the US slowdown – according to official data released on Friday. The contraction deepened what was already the worst recession in continental Europe since the second world war. The final quarter of 2008 had seen a 1.6 per cent fall in GDP.
The scale of the slowdown highlighted the dramatic impact of the global crisis on continental Europe. Germany’s export-led economy, the largest in Europe, shrank by 3.8 per cent in the quarter – the largest drop since the country started compiling quarterly data in 1970.
“Spring has not yet arrived in the euro area,” said Julian Callow, European economist at Barclays Capital. The US economy contracted by 1.6 per cent in the first quarter.
The latest data, which sent the euro sharply lower, came at the end of a week in which European policymakers had become more confident, spotting “green shoots” on the horizon. Jean-Claude Trichet, European Central Bank president, on Monday described the global economy at “around the inflection point”.
Economists said forward-looking indicators still suggested that the worst of the eurozone’s recession was over. However, the latest data will increase the pressure on politicians, who were warned this week by the International Monetary Fund that economic recovery in the region next year depended on bolder and more forceful policy action.
Marco Annunziata, chief economist at UniCredit, argued that the first-quarter slump “increased the chances of a better performance in the second quarter”, but had put previous policy responses in a bad light. The data “showed that there was a strong need for a much more forceful, co-ordinated fiscal response right from the start”.
Besides Germany, the pace of economic contraction was particularly severe in the Netherlands, which saw a 2.8 per cent fall in GDP, and Italy, which reported a 2.4 per cent decline.
However, the most dramatic fall was in Slovakia – the eurozone’s newest member – where GDP fell 11.2 per cent compared with the previous three months, reflecting its dependence on exports to Germany and car sales.
In contrast, France continued to fare relatively well amid the global economic storms, thanks to the bigger role played by domestic demand in supporting growth. It reported a 1.2 per cent fall in first-quarter GDP.
The first-quarter eurozone GDP figures may have been exaggerated by companies cutting production faster than demand fell, and running down inventories, economists said. That could result in a rebound in production in the second quarter.
By Xi Chen and Reuters in Hong Kong
Published: May 15 2009 14:40 | Last updated: May 15 2009 14:40
Hong Kong’s economy contracted at the fastest rate since the Asian financial crisis in the first three months of this year as exports passing through the territory saw their biggest drop in more than half a century.
The government on Friday predicted gross domestic product would contract by up to 6.5 per cent this year, after announcing the economy had shrunk at an annual rate of 4.3 per cent in the first quarter of 2009.
The fall in GDP was double that expected by some analysts and followed a plunge in exports and private consumption, plus signs of a deterioration in investment in the likes of buildings, machinery and other business equipment.
Total exports dropped 22.7 per cent in the first three months of 2009 compared with the previous year – the biggest drop since 1954. Overall investment fell by 12.6 per cent and private consumption by 5.5 per cent. The unemployment rate also rose to a 38-month high of 5.2 per cent in the first quarter.
Despite an upturn in the stock and property markets in the past two months, the Hong Kong economy has been hard hit by the global financial crisis because of its dependence on exports.
In February, the economy was forecast to contract 2.5 per cent for 2009. Now the government estimates it to drop between 5.5 and 6.5 per cent.
”It is obviously worse than expected. It tells you how a severe global financial crisis can affect a healthy, small and open economy,” said Dong Tao, chief economist at Credit Suisse.
”Will Hong Kong see a further deterioration? It is not up to Hong Kong — it is up to the rest of the world especially the United States, China and the financial market.”
John Tsang, Hong Kong’s financial secretary, said the government would respond to the downturn by unveiling a new package of stimulus measures in the coming month. But he did not give any clue as to what it might contain and the government came under fire from economists for reacting too late to the economic crisis.
Kevin Lai, senior economist at Daiwa Institute of Research, said the government should have done more to support the economy.
”There was a lack of fiscal support in Hong Kong compared with anywhere else and this fiscal timidity is showing in the GDP numbers,” Mr Lai said. ”The government has already promised to do something within a month, but I’m afraid it is too little too late. They have missed the window of opportunity there.”
A few A(H1N1) Links Dr. Henry Niman’s Map 6,094 U.S. Cases as of this wrtitng, A(H1N1) Current Timeline, CDC Cases