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Wednesday, May 6, 2009

Great Recession Roundup — May 6, 2009

Items of Interest:

Wall Street Journal:
Citi, GMAC, Wells Need New Capital — J.P. Morgan, AmEx, Goldman Won't Need New Capital; Shortfalls for Citi, Morgan Stanley — Results of the government's stress tests of the nation's largest 19 banks started to trickle out Wednesday, highlighting the burgeoning gaps between the industry's strong and weak players...

Megan McArdle:
The Price of the King's Shilling — Apparently, the $34 billion figure is good news because Bank of America (BAC) has all those preferreds at Treasury that can be converted to common stock, leaving Treasury with $34 billion of common and $11 billion of preferreds. But Joe Weisenthal asks a good question...
Steven Greenhouse / NY Times:
Bright Spot in Downturn: New Hiring Is Robust — Everyone knows the grim news — unemployment in the United States has jumped to 8.5 percent, a 25-year high, and is racing toward double digits. Since November, the nation has lost more than three million jobs.

But not everyone knows the brighter side to the equation: deep in the maw of the deepest recession since the Great Depression, millions are still being hired.

So, while 4.8 million workers were laid off or chose to leave their jobs in February, employers across the country hired 4.3 million workers that month, according to the Bureau of Labor Statistics...
David Leonhardt / NY Times
As Joblessness Slows, Recovery Could Stir -- Ben Bernanke sounded more optimistic on Tuesday than he has in a long time, and President Obama has talked about glimmers of hope. The stock market has risen 34 percent from its 2009 nadir.

On Friday morning, we will get the clearest sign yet of whether these glimmers are real...

Cory BookerBloomberg:
New Jersey Can’t Afford Government, Booker Says -- New Jersey’s tax-strapped residents can’t afford their government and the state needs to rein in the mounting costs of public worker benefits, said the mayor of Newark, the state’s largest city.

Cory Booker, 40, said rising expenses for health care, pensions and salaries are impinging on government finances.

Operations need to be streamlined in a state with 566 towns and cities, 617 school districts and 21 counties, Booker said during a meeting with Bloomberg editors and on Bloomberg Radio today...
Rich Default on Luxury Homes Like Subprime Victims -- Chuck Dayton put down a quarter of the $950,000 purchase price when he bought his house in Newport Beach, California, in 2004. He was making $500,000 a year with his drywall company and he expected home values to keep rising.

Then the mortgage market collapsed, new construction stopped and builders no longer needed his services. Dayton, 43, went into default four months ago because he couldn’t afford payments on the three-bedroom home, located within a block of the Pacific Ocean. He hopes his lender will agree to sell the seven-year-old house for less than he owes to avoid a foreclosure.

“It’s just wait and see right now,” Dayton said.

Borrowers such as Dayton, whose 2004 compensation was almost 10 times the median U.S. household income, are becoming trapped by the same issue facing the poorest subprime homeowners: falling home prices erase equity and make it impossible to sell or refinance without losing money...
Phoenix Coyotes Go Bankrupt, Forget To Tell NHL -- The Phoenix Coyotes filed for Chapter 11 bankruptcy yesterday and their reorganization plan includes a sale to noted rich guy Jim Balsillie, who wants to give Canada its seventh hockey team back. There might be one small hitch in the plan, however. No one told the NHL front office....
Puck Daddy:
Coyotes file for Chapter 11; Balsillie bids to move them to Ontario

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