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Thursday, November 6, 2008

Credit Crunch Roundup — November 6, 2008

Items of Interest:

UK, Europe central banks cut key rates -- In response to the global economy, the Bank of England lowers a key rate by a third and ECB cuts by half-point.

European and British central banks cut interest rates on Thursday, responding to the increasing concern about economic conditions throughout the world.

The European Central Bank cut its minimum bid rate on the main refinancing operations of the Eurosystem by one half percentage point, to 3.25%...

BBC News:
UK House prices down 2.2% in October -- House prices fell by another 2.2% in October, says the Halifax, pushing the drop in house prices to 13.7% over the past year.

The latest fall means that the average UK home now costs £168,176, nearly £30,000 less than a year ago.

The Halifax said this meant prices were now back to the level of October 2005.

The lender said conditions in the market remained "challenging" because of economic conditions and the dearth of mortgages.

The Halifax's latest survey of house prices chimes closely with that of its big rival the Nationwide building society, which last week said prices had fallen by 14.6% in the past year...
One-Month Treasuries Still Indicate Fear -- The yield on the One-Month Treasury Note is currently at 0.09%, which is still extremely low by historical standards. This indicates that investors continue to flock to the safest of safe haven assets, and we are by no means out of the woods yet in terms of the credit crisis.

One-Month Treasuries Still Indicate Fear----
GM Executive: Next 100 Days Critical For GM, US Auto Industry -- A top General Motors Corp. (GM) executive on Wednesday said the next 100 days could represent the most crucial time in the history of the troubled company and entire U.S. auto industry.

Troy Clarke, president of GM North America, urged auto industry executives to make the case to Washington leaders that the failure of auto companies would have devastating effects on the economy...

Clarke made a case that domestic auto makers, despite decades of downsizing and job cuts, remain relevant to the national economy. GM, Chrysler and Ford Motor Co. (F), he said, spend $35 billion a year on payroll in the U.S. and provide benefits to 750,000 retirees....
Holman Jenkins / Wall Street Journal:
Yes, Detroit Can Be Fixed - For that guy elected yesterday, a puzzle is how Detroit's auto makers should be reshaped by the hand of government -- with a taxpayer bailout or by letting bankruptcy judges take charge? Both fixes have their fans, yet neither would really solve the industry's essential problem.

Here's a better idea, one you haven't heard before, involving a contemporary curse word seldom used in the debate over the auto makers: "deregulation." ...
Mounting job losses fueling foreclosures -- Bad loans were originally the main culprit driving homeowners into foreclosure. But now it's unemployment that's fueling the mortgage meltdown.

For years, bad loans and their aftershocks have been sending homeowners into foreclosure. Now its lost jobs that are putting troubled borrowers over the edge.

As the economy tanks, unemployment is the major factor driving a much larger proportion of foreclosures now than in the earlier stages of the mortgage meltdown.

In June, 45.5% of all delinquencies reported by Freddie Mac (FRE, Fortune 500) were due to unemployment or the loss of income, according to the company. That's a rise from a level of 36.3% in 2006...
Wall Street Journal:
U.S. Explores Its Options With TARP -- The Treasury Department said it is exploring additional ways to apply a $700 billion financial-industry rescue package approved by Congress in October.

"Treasury is committed to deploying the [Troubled Asset Relief Program] aggressively and is actively considering additional programs to strengthen financial institutions, restore the flow of lending, and address the many challenges to our financial markets posed by the ongoing housing correction," the Treasury said in its report, delivered to Congress Tuesday.

The program, known as TARP, was passed by Congress last month in response to the crisis in financial markets this year. It gives the Treasury wide latitude to purchase illiquid assets and stakes in financial firms, among other measures...

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia