Tuesday, June 30, 2009

Great Recession Roundup — June 30, 2009

Items of Interest:

Joel Kotkin / Forbes:
Did Homeowners Cause The Great Recession? -- Once considered sacrosanct by conservatives and social democrats alike, homeownership is increasingly seen as a form of economic derangement. The critics of the small owner include economists like Paul Krugman and Ed Glaeser, who identify the over-hot pursuit of homes as one critical cause for the recession. Others suggest it would be perhaps nobler to put money into something more consequential, like stocks.

Homeowners also get spanked by leading new urbanists, like Brookings scholar and urban real estate developer Chris Leinberger. He lays blame for the downturn not on unscrupulous financiers but squarely on aspiring suburban home buyers. "Sprawl," he intones, "is the root cause of the financial crisis." ...

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Bloomberg:
Shiller Sees ‘Improvement’ in Rate of Home-Price Drop -- Home prices saw a “striking improvement in the rate of decline” in April and trading in funds launched today indicates investors believe the U.S. housing slump is nearing a bottom, said Yale University economist Robert Shiller.

“At this point, people are thinking the fall is over,” Shiller, co-founder of the home price index that bears his name, said in a Bloomberg Radio interview today. “The market is predicting the declines are over.” ...

“My guess would be that home prices are going to level off -- they’re not going to keep falling,” Shiller said in a separate interview with Bloomberg Television. Still, it’s “hard to predict” a speculative market, and “I am not optimistic that we’re going to see any sharp rebound.” ...
related:
WSJ: Home Prices Drop at Slower Pace
Seeking Alpha: Housing Index's Possible Silver Lining
Diana Olick / CNBC Realty Check: Home Prices: Are We There Yet?
CNN: Home prices drop, but at a slower rate

Henry Blodget / Clusterstock:
House Price Crash Rate Finally Beginning To Ease

Andrew Sullivan / The Daily Dish: Nearing The Bottom?
Calculated Risk: House Prices: The Long Tail -- With record delinquencies, record foreclosures, few move-up buyers (impacting the mid-to-high end), a huge overhang of inventory, I believe prices will continue to fall in many areas.
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Bespoke:
Would You Buy This Stock? -- Would you buy a stock whose chart looks like the one below? It had a nice run but has pulled back quite a bit over the last couple of years.

The S&P/Case-Shiller 10-City Composite Median Home Price indexThe chart above is of the S&P/Case-Shiller 10-City Composite Median Home Price index...
related:
Housing Wire: Prices in Major Markets Return to 2003 Levels
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Bloomberg:
Delinquencies Double on Least-Risky Loans, U.S. Says --Delinquency rates on the least-risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure.

Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report...
discussion:
Mish's Global Economic Analysis:
Home Loan Delinquencies Double on Prime Loans; Foreclosure Filings Top 300,000 3rd Straight Month
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Blown Mortgage:
New Report Links Foreclosures and Homelessness -- The Foreclosure to Homelessness: The Forgotten Victims of the Foreclosure Crisis report released last week provides insight into how foreclosures have affected homeless populations around the country. Based on surveys completed by 178 organizations across the U.S. that provide services to individuals and families experiencing homelessness it was determined that the nation’s homeless population has been directly impacted by foreclosure and that the is likely to increase along with the number of foreclosures. Nearly 80 percent of the respondents reported that at least some of their clients became homeless due to foreclosure...
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John Boudreau / Mercury News:
This recession is so bad not even sex sells -- “How bad is this recession? Even sex doesn’t sell.

That’s the glum assessment of those in the adult entertainment industry, hundreds of whom gathered last week for the annual Cybernet Expo conference in San Francisco. The industry, now a multibillion-dollar online business, has discovered that people just aren’t willing to click-to-pay for vice the way they once did . . .
discussion:
Barry Ritholtz / The Big Picture: Recession Hard On Porn Stars
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John Mauldin / Minyanville:
No End in Sight for Recession -- I recently heard someone on CNBC talking about how the market was getting ready to rise, and that the recovery had started. (This was based on the fact that the S&P 500's 50-day moving average was rising above its 200-day moving average.) I listened to this babbling for another 2 minutes or so, then had to turn it off.

We keep hearing that the market is "telling us something" -- usually that the recession's going to end, and that the market looks out about 6 months. This is rubbish...
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Wrapping up the Bernie Madoff Ponzie Scheme
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Rasmussen Reports:
42% Say Climate Change Bill Will Hurt The Economy — Americans have mixed feelings about the historic climate change bill that passed the House on Friday, but 42% say it will hurt the U.S. economy...
discussion:
John / Power Line: He Thinks You're Stupid...
Poll Tracker: Americans Don't Like the Climate Bill, Worried About Economic Impact
Michael Goldfarb / Weekly Standard: Krugman's Traitors — A new poll from Rasmussen on cap and trade:
Scared Monkeys: 42% of Americans Say “Cap & Trade” Bill will Hurt the Economy ... Thanks Obama
Sammy Benoit / YID With LID: Rasmussen—America Says Tax & Trade Bill Will Hurt Economy
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Roger C. Altman / Wall Street Journal:
We'll Need to Raise Taxes Soon -- Expect Congress to seriously consider a value-added tax.

Only five months after Inauguration Day, the focus of Washington's economic and domestic policy is already shifting. This reflects the emergence of much larger budget deficits than anyone expected. Indeed, federal deficits may average a stunning $1 trillion annually over the next 10 years. This worsened outlook is stirring unease on Main Street and beginning to reorder priorities for President Barack Obama and the Democratic congressional leadership. By 2010, reducing the deficit will become their primary focus...
discussion:
J.D. Foster / The Foundry: Obama's Battle of the Bulging Deficit
Noam Scheiber / The New Republic: The Right and Wrong Deficits to Worry About
Joe Weisenthal / Clusterstock: Tax Hikes, Coming Soon!
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Monday, June 29, 2009

Great Recession Roundup — June 29, 2009

Items of Interest:

NY Times:
Paper Avalanche Buries Plan to Stem Foreclosures -- Somewhere on earth, there must be a more difficult task than this: persuading American mortgage companies to lower payments for homeowners who can no longer afford their loans. But as Karina Montenegro struggles to accomplish this feat for a troubled borrower, she strains to imagine a more futile pursuit.

Ms. Montenegro, an intern at a local company that seeks loan modifications, dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished — for the third time since November...

related:
Bloomberg:
Housing in Peril as Obama Fails to Get Breakthrough -- Bankers’ reluctance to finance buyers who won’t live in properties is one barrier to a turnaround. Stricter qualifying rules and a rise in the cost of residential loans to 5.42 percent have impeded new mortgage lending, which is at a 13-year low. An inventory of 2.1 million unoccupied houses on the market, created by the fastest foreclosure pace in history, may be a drag on a revival...

Bill Fleckenstein / MSN Money:
Realty Fervor Takes Aim at Reality -- The real-estate balloon has deflated, but there's still plenty of hot air surrounding home prices. Let us now appraise industry lobbying efforts to lift valuations.

As the aftermath of the real-estate/credit bubble enters its second year, let's begin by devoting our attention to two key cogs in that wheel: the National Association of Realtors and the National Association of Mortgage Brokers.

For both organizations, the operative words are: long on bombast, short on shame...
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S. Reddy / NY Times:
When Is It Cheaper to Ditch a Home Than Pay? -- Foreclosures aren’t only due to homeowners facing a cash crunch. One out of four defaults on mortgage loans is “strategic,” a new study says, due to a mortgage’s value exceeding the value of a house even if the homeowner can afford to pay.

Strategic default is most likely when home values have fallen by more than 15%, according to the study by authors of the Financial Trust Index, a joint project of the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management...
discussion:
Calculated Risk: New Research on Walking Away
Seeking Alpha: The Paradox of Strategic Mortgage Defaults
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NY Times:
Living With Less -- The human side of the global recession.

Reader Photos: Picturing the Recession

Recession Rates in Las Vegas----
NY Times:
Are Parents Thinking Differently About Education? -- The phone keeps ringing at the Upper West Side office of Robin Aronow, an educational consultant and schools guru: anxious families suddenly rethinking whether they can afford private school, distressed parents wondering what to do if their children don’t make it into vaunted gifted and talented programs.

As well-off families confront the new contours of their budgets, education may emerge as an attractive, if painful, place to cut. Families who shunned the public school system may now be tempted to transfer to the nearest P.S., and those just starting a family may look to move to a neighborhood with a rich concentration of esteemed public schools...

----Employees are proving stoical in the face of pay cuts and compulsory unpaid leave
Economist:
The quiet Americans -- Employees are proving stoical in the face of pay cuts and compulsory unpaid leave

BACK when times were better and the newspaper industry wasn’t fighting for dear life, reporters at the Cleveland Plain Dealer would regularly grumble at the measly pay increases their union negotiated. Last month, when the union announced it had negotiated a 12% pay cut in exchange for a promise of no lay-offs, there was applause. “It took me aback,” says Harlan Spector, a medical reporter and one of the negotiators.

Like many long-standing economic relationships, “wage stickiness” is being tested by the savagery of the recession. Ordinarily, when unemployment shoots up wages do not tend to fall: they simply grow more slowly. Why the price of labour responds less to demand than that of other commodities is a bit of a puzzle. In the 1990s Truman Bewley of Yale University interviewed hundreds of employers and discovered that, faced with a slump in demand, they would rather lay some workers off than cut the pay or hours of everybody. The sackings devastated those directly affected, but broad cuts to pay and hours hurt everybody’s morale. “The main drawback of pay cuts is that they fill the air with disappointment and an impression of breach of promise, which dissolve the glue holding the organisation together,” he wrote in 1997...
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Guardian.co.uk:
Recovery threatened by toxic assets still hidden in key banks -- Taxpayers around the world still face potentially large losses because governments have failed to act quickly enough to remove toxic assets from the balance sheets of key banks, the world's leading central bankers warn today...
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bea.gov:
Real GDP -- Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 5.5 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to final estimates released by the Bureau of Economic Analysis. In the fourth ...
discussion:
KeithHennessey.com / Economics Roundtable: Understanding first quarter GDP
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Calculated Risk:
Auto Sales Expected to be near 10 Million SAAR in June -- There will be a flood of data released over the next three days, including the June employment numbers on Thursday. Other highlights include Case-Shiller house prices tomorrow and auto sales on Wednesday. Several analysts expect an increase in auto sales in June, compared to May, on a seasonally adjusted annual rate (SAAR) basis...
related:
USA Today:
Ford boosts production 16% as June car sales show strength — Ford is boosting its third-quarter production schedule after seeing more demand for its cars and trucks in June, the company ...
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Jack Healy / New York Times:
Madoff Sentenced to 150 Years in Prison for Ponzi Scheme — A federal judge sentenced Bernard L. Madoff to 150 years in prison on Monday for operating a huge Ponzi scheme that devastated thousands of people, calling his crimes “extraordinarily evil.” — In pronouncing the sentence …
discussion:
Joe Weisenthal & Kamelia Angelova / Clusterstock: Madoff's Little Helpers
Allan Dodds Frank / The Daily Beast: The Madoff Family Splinters
Jill Schlesinger / The Huffington Post: Madoff: 150 Years Doesn't Seem Like Enough
Steve M. / No More Mister Nice Blog: YOU THINK THIS IS VENGEANCE? I'LL SHOW YOU VENGEANCE.
Reuters: Madoff sentenced to 150 years in prison
Tom Watson / My Dirty Life & Times: Death to Madoff! — I know he's committed the financial crime …
Jeralyn / TalkLeft: Bernard Madoff Sentenced to 150 Years
Hamilton Nolan / Gawker: Locked Up for Life: Madoff Sentenced to 150 Years In Prison
ProPublica: Madoff Gets 150 Years; His Client Jeffry Picower Gets $5 Billion
Melissa McEwan / Shakesville: Madoff Sentenced — Let me be perfectly clear: I have no sympathy …
Scott Reeves / Minyanville: Madoff To Be Free in July, 2159
Joe Windish / The Moderate Voice: Madoff Gets 150 Year Sentence
Jeremy Taylor / Asylum: Book of Justice Hits Friendless Bernie Madoff Hard
Libby Spencer / The Impolitic: Madoff pays, Banksters still free
Josh Weiner / Air America Media blogs: Madoff To Receive Sentence Today
Truthdig: 150 Years in the Slammer for Madoff
Pamela Leavey / The Democratic Daily: Madoff Sentenced to 150 Years
Taylor Marsh: Is Madoff Worse than a Child Molester?
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Friday, June 26, 2009

Great Recession Roundup — June 26, 2009

Items of Interest:

Bloomberg:
Surging U.S. Savings Rate Reduces Dependence on China -- Government data today showed that the household savings rate rose to 6.9 percent in May, the highest since December 1993, as personal spending increased less than incomes. The rate in April 2008 was zero.

Most of the rise in income in May was due to one-time government stimulus payments to seniors, said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Americans’ newfound frugality is pinching airlines such as Chicago-based UAL Corp., which is cutting staff amid dwindling demand for leisure travel. Donations to charities dropped last year for the first time since 1987, and they’re in danger of declining further in 2009...

discussion:
David Goldman / Inner Workings:
The Rise in the Savings Rate Has Only Begun -- In a recent post entitled, “The Stealth Deterioration in Asset Quality,” I argued that the rise in the US savings rate had only begun. That implies falling consumption, a weak housing market, and an L-shaped recession as far as the eye can see...

Catherine Rampell / Economix:
Savings Rates Rising Toward Mediocrity
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Jeff Cox / CNBC:
Five Reasons Housing Market Still Hasn't Recovered Yet -- What happened to the housing recovery?

Despite hopes that the market would begin showing signs of life this spring, the latest housing data suggests otherwise. Instead, the sector remains stubbornly moribund—trapped in a spiral of declining prices, increasing mortgage rates, unemployment and several unforeseen factors...
  1. Unemployment
  2. Credit Availability
  3. Price Pressures
  4. Appraisals
  5. Short Sales
related:
S. Fitch & M. Woolsey / Forbes: The Other Shoe Is Dropping in Real Estate
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Home Valuation Code of Conduct and appraisals improperly using distressed sales as comps were causing contracts to fall out due to faulty valuationsTom Lindmark / Seeking Alpha:
Appraisals: The Latest Housing Battlefield Heats Up -- The National Association of Home Builders has joined the National Association of Realtors in the fight to roll back the Home Valuation Code of Conduct. Actually, I’m not sure they want to roll back the HVCC so much as they want to dictate the methodology that appraisers currently use to arrive at a value for a house. I’ll get back to that in a moment...

appraisals improperly using distressed sales as comps were causing contracts to fall out due to faulty valuations...
related:
Housing Wire:
Industry Players Bring the Heat over HVCC
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Hummer Bummer

BBC:
China ‘to block’ Hummer takeover — A Chinese firm's bid to buy the gas-guzzling Hummer car brand will be blocked on environmental grounds, according to Chinese state radio. — Sichuan Tengzhong Heavy Industrial Machinery emerged as the surprise buyer for the brand earlier this year...
discussion:
Dave Schuler / Outside The Beltway: China to Block Hummer Acquisition?
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John M. Broder / New York Times:
House Passes Bill to Address Threat of Climate Change — Overcoming deep divisions within its Democratic majority, the House passed legislation on Friday intended to address the threat of global warming and transform the way the United States produces and uses energy...
discussion:
Arun Irizarry / Gawker: The Government Might Do Something About This “Global Warming” Thing
Alex Steffen / Worldchanging: U.S. House Acknowledges Planetary Atmosphere!
Yale Environment 360: U.S. House of Representatives Passes Historic Bill Limiting CO2 Emissions
David Corn / MoJo Blog Posts: When Is a Climate Bill Not a Climate Bill? — As I noted earlier …
Josh Harkinson / MoJo Blog Posts: Climate Bill Passes the House
Kate Galbraith / Green Inc.: Climate Bill Passes House
John M. Broder / The Caucus: Obama Lobbies Lawmakers on Energy Bill
Steve J. / RADAMISTO: THE WORLD IS ENDING AGAIN!

related:
Nate Silver / FiveThirtyEight:
Cap-and-Trade, State-by-State — Regional considerations tend to loom larger in debates over environmental policy than in other sorts of affairs. Some states consume more energy than others. Some states have more carbon-intensive economies than others. Some states are more or less likely…

Alan Viard / The American: The Cap-and-Trade Giveaway
Investor's Business Daily: The Cap-and-Trade Bill is an Economic Disaster
Bradford Plumer / New Republic: Last-Minute Frenzy Before Climate Vote
Conor Clarke / Atlantic: What Waxman-Markey Will Do To The Economy
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MarketWatch:
Four banks fail, bringing 2009 tally to 44 -- Four banks in Georgia, Minnesota and California were closed by regulators Friday, as the ongoing credit crisis continued to claim victims...
related:
Calculated Risk:
Bank Failures #43 & #44: MetroPacific Bank, Irvine, CA, Horizon Bank, Pine City, Minnesota
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FT.com
Deflation dogs Japan with sharp fall in prices — Japan's consumer prices fell 1.1 per cent in the year to May, the steepest drop since records began in 1970, with slack household consumption increasingly blamed as the country's second bout of deflation deepens
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Ron Lieber / NY Times:
Your Money: Et Tu, AARP? Good Guys Cut 401s, Too -- The AARP saving cash by cutting the match to its 401(k) plan is akin to the Teamsters hiring nonunion labor...
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Thursday, June 25, 2009

Great Recession Roundup — June 25, 2009

Items of Interest:

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Nouriel Roubini aka Dr. Doom Has Some Good NewsJames Fallows / The Atlantic:
Dr. Doom Has Some Good News -- Nouriel Roubini, the New York University economist who accurately forecast the bursting of the housing bubble and the resulting economic contraction, has become famous for his pessimism—he has been the gloomiest of the doomsayers. Which is what makes his current outlook surprising: Roubini believes that the Obama administration’s policy makers—and especially the much-maligned Tim Geithner—have gotten a lot right. Pitfalls may still abound, but he is now projecting an end to the recession, and he sees growth ahead.

On March 28, 2007, Federal Reserve Chairman Ben Bernanke appeared before the congressional Joint Economic Committee to discuss trends in the U.S. economy. Everyone was concerned about the “substantial correction in the housing market,” he noted in his prepared remarks. Fortunately, “the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” Better still, “the weakness in housing and in some parts of manufacturing does not appear to have spilled over to any significant extent to other sectors of the economy.” On that day, the Dow Jones industrial average was above 12,000, the S&P 500 was above 1,400, and the U.S. unemployment rate was 4.4 percent...
related:
Nouriel Roubini / Global EconoMonitor:
Recent Bloomberg Roubini Interview -- Nouriel Roubini Says U.S. Economy `Sort of Stabilizing'

Mike O'Rourke / TheStreet.com: The Bubble of Bearishness Bursts
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Wall Street Journal:
The Cap and Tax Fiction -- Democrats off-loading economics to pass climate change bill.

House Speaker Nancy Pelosi has put cap-and-trade legislation on a forced march through the House, and the bill may get a full vote as early as Friday. It looks as if the Democrats will have to destroy the discipline of economics to get it done.

Despite House Energy and Commerce Chairman Henry Waxman's many payoffs to Members, rural and Blue Dog Democrats remain wary of voting for a bill that will impose crushing costs on their home-district businesses and consumers. The leadership's solution to this problem is to simply claim the bill defies the laws of economics...
discussion:
Henry Waxman: His bill to fight global warming means largest tax hike in world history.Myron / Ebell / NY Post:
TROJAN HEARSE -- 'CAP AND TRADE' = ECONOMY-KILLER

The House votes this week on the American Clean Energy and Security Act -- which claims to be about slowing global warming, but in fact is a massive tax hike that would vastly expand the federal government's power over the economy.

Indeed, the Waxman-Markey bill (as it's commonly called, after its two chief sponsors) would be the largest tax increase in world history, as well as transfer vast wealth from consumers to big-business special interests...

Todd Darling / LA Times: Cap-and-Trade Bill Contains Smoke & Mirrors
Ed Morrissey / Hot Air: WSJ: Cap-and-tax a great deal ... if you don't measure the costs
Chad Pergram / Fox News: Gore to Talk Climate Change With House Democrats Thursday
Michelle Malkin: ManBearPig to the rescue: Gore lobbies for cap-and-tax …
Pat Austin / And So it Goes in Shreveport: Cap 'n Tax and Mary Katherine Ham
Robert Stacy McCain / The Other McCain: No transparency on energy billUPDATE: House must ‘come to its senses’
Gateway Pundit: Dems Cap & Trade Bill Biggest Tax in US History
Nick Loris / The Foundry: Cap and Trade Hits the Poor the Hardest
Lawhawk / A Blog For All: Has Congress Actually Read The Climate Change Bill?
Jay Stevens / Left in the West: Too much selfishness and greed
Nate Silver / FiveThirtyEight: The Environmental Indifference Point
Steven T. Dennis / Roll Call: Pelosi: Gore No Longer Needed to Lobby Democrats on Climate
The Barrister / Maggie's Farm: Cap & Trade — If passed, it would be the biggest tax in US history.
Jehuda / The Rhetorican: UPDATED: A National Energy Tax! For All Americans??
Jennifer Rubin / Commentary: Flotsam and Jetsam — A harrowing tale of “Abduction,” from Iran.
Dan / Riehl World View: Captain Climate To Arrive In Blimp
Lisa Lerer / The Politico: Gore stays in Tenn. to work phones
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FederalReserve.gov:
Testimony by Chairman Bernanke on the acquisition of Merrill Lynch by Bank of America -- Chairman Towns, Ranking Member Issa, and other members of the Committee, I appreciate the opportunity to discuss the Federal Reserve's role in the acquisition by the Bank of America Corporation of Merrill Lynch & Co., Inc. I believe that the Federal Reserve acted with the highest integrity throughout its discussions with Bank of America ...
related:
BBC News
Bernanke defends Fed on bank deal — The head of the US Federal Reserve says it acted with "integrity" in Bank of America's takeover of Merrill Lynch...

L.A. Times
Bernanke says he didn't bully BofA to buy Merrill — Federal Reserve Chairman Ben Bernanke told Congress today he didn't pressure Bank of America into acquiring Merrill Lynch in a deal that ultimately cost taxpayers $20 billion.
----Goldman Sachs: Engineering Every Major Market Manipulation Since The Great Depression
Zero Hedge:
Goldman Sachs: "Engineering Every Major Market Manipulation Since The Great Depression" -- With a subtitle like "From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again" run, don't walk, to your nearest kiosk and buy Matt Taibbi's latest piece in Rolling Stone magazine. One of the best comprehensive profiles of Government Sachs done ...
The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates...

The bank's unprecedented reach and power have enabled it to turn all of Americain to a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere - high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to payoff bail-outs. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense. Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth - pure profit for rich individuals...

If America is now circling the drain, Goldman Sachs has found a way to be that drain...
discussion:
Felix Salmon / Economics Roundtable: Matt Taibbi vs Goldman Sachs
Drea / Business Pundit: Matt Taibbi’s “The Great American Bubble Machine” Demystifies Goldman Sachs

related:
Guardian: Goldman to make record bonus payout

Jeff Macke / Minyanville:
Congress Gives Goldman One More Free Pass -- Hank Paulson and Ed Liddy managed to testify for several days without ever answering why Goldman Sachs got favorable deals from the government, what role they played in those negotiations...
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Wall Street Journal:
Downwardly Mobile: Living on Less in the City -- An Upper East Sider Negotiates Job Loss; Discounts on Haircuts, Dental Work ...
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DealBook:
Fed Scales Back Some Lending Programs -- The Federal Reserve moved for the first time to scale back several emergency lending programs started last fall, at the height of the financial crisis. related items...

Annys Shin / Wash Post Business:
Fed Extending Many Emergency Lending Programs — The Federal Reserve said today that it was extending many of its emergency lending programs through February because conditions in financial markets remain strained...
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Financial Times:
Inflation - the real threat to sustained recovery -- The rise in global stock prices from early March to mid-June is arguably the primary cause of the surprising positive turn in the economic environment. The $12,000bn of newly created corporate equity value has added significantly to the capital buffer that supports the debt issued by financial and non-financial companies. Corporate debt, as a ...
related:
Catherine Holahan / MSN Money: Is Inflation Our Next Big Worry?

Mark Thoma / Economist:
Greenspan: Equity Prices are a Key to Recovery — Maybe there was a Greenspan put after all?: Inflation - the real threat to sustained recovery, by Alan Greenspan, Commentary, Financial Times: The rise in global stock prices from early March to mid-June is arguably the primary cause of the...

Reuters: China Should Buy Gold to Hedge Dollar Fall
David Goldman / Inner Workings: Will China Buy Gold?
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Lynnley Browning / NY Times:
Florida Man Pleads Guilty in UBS Tax Case -- A wealthy American client of UBS pleaded guilty to tax fraud, the latest victory for the federal government in its crackdown on UBS and its offshore private banking accounts...
discussion:
Paul Caron / TaxProf Blog
First UBS Client Pleads Guilty to Offshore Tax Evasion — The Department of Justice and IRS announced that the first UBS client pleaded guilty today to tax evasion. Steven Michael Rubinstein, a Boca Raton accountant, pleaded guilty to filing a false 2004 tax return by failing to disclose the existence of a Swiss bank account maintained by UBS...
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Wednesday, June 24, 2009

Great Recession Roundup — June 24, 2009

Items of Interest:

CNN Money:
New home sales fall unexpectedly -- Sales ticked down 0.6% last month, down 32.8% from last year.

Sales of newly constructed homes fell unexpectedly in May and were down almost a third from last-year's levels, a government report said Wednesday.

New home sales ticked down 0.6% last month to a seasonally-adjusted annual rate of 342,000, the Commerce Department reported. That was from a revised reading of 344,000 in April.

Analysts expected the rate of new home sales to rise to 360,000, according to a consensus estimate of economists compiled by Briefing.com.

New home sales were 32.8% below the same month a year ago, when the estimate stood at a 509,000 annual rate...

"Newly constructed homes simply cannot compete with the values found in the existing home market," said Bob Walters, chief economist at Quicken Loans...

related:
U.S. Census Department: New Residential Home Sales Report

discussion:
The Big Picture: New Home Sales
Seeking Alpha: Disappointing New Home Sales Continue to Pummel Homebuilders

Calculated Risk:
New Home Sales: Record Low for May — The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 342 thousand. This is essentially the same as the revised rate of 344 thousand in April. Click on graph for larger image in new window. The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Note the Red columns for 2009...

[the] graph shows New Home Sales vs. recessions for the last 45 years. New Home sales have fallen off a cliff...

New Home Sales vs. recessions for the last 45 years
Calculated Risk:
Distressing Gap: Ratio of Existing to New Home Sales
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FederalReserve.gov
FOMC statement -- Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit...
related:
CNN Money:
Fed sees signs of hope — The Federal Reserve kept its key interest rate near zero Wednesday, and said in a statement that although the U.S. economy remains weak, there are signs of a recovery...

Edmund / NY Times: Fed Board Maintains the Status Quo
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Reuters.com:
Fed accused of "cover-up" in BofA deal-lawmaker — The Federal Reserve sought to hide its involvement in Bank of America Corp's (BAC.N) acquisition of Merrill Lynch as Merrill's financial condition worsened, the top Republican on the House Oversight and Government Reform Committee said on Wednesday...
discussion:
George White / Dealscape: Congress to grill Bernanke on BofA-Merrill
Bloomberg: Rep. Issa Says Fed ‘Engaged in a Cover-Up’ on Merrill-Bofa
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Center for American Progress:
The Two Trillion Dollar Solution — Saving Money by Modernizing the Health Care System — Fundamental health system reform involving just three strategies will lead to federal savings of about $550 billion over the next decade …
discussion:
Art Levine / The Huffington Post: Health Care Lobbyists vs. The People: The Final Showdown
pr.thinkprogress.org: Beyond The Public Option
Matthew Yglesias / Myglesias: Some Health Care Reports
Kate Phillips / The Caucus: MoveOn Hammers Feinstein on Health Care Remarks
Paul Starr / American Prospect: The Perils of a Public Healthcare Plan
related:
Paul Krugman / NY Times: Obama messes up on health care, big time

Matthew Yglesias / Myglesias:
Baucus Regrets Not Including Single-Payer in the Health Care Mix
discussion:
David M. Herszenhorn / NY Times: Baucus Grabs Pacesetter Role on Health Bill
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Alex Crippen / CNBC Buffett Watch:
Warren Buffett to CNBC: U.S. Economy In “Shambles” .. No Signs of Recovery Yet -- In a live interview on CNBC today, Warren Buffett said there has been little progress over the past few months in the "economic war" being fought by the country. "We haven't got the economy moving yet," he told Becky Quick...
discussion:
Matthew Vadum / AmSpecBlog: How Stupid Does Barney Frank Think Americans Are? -- Frank, who is intelligent enough to understand how the economy works, refuses to acknowledge that he played any role in the financial crisis and his prescription for what ails America is more poison.

Meanwhile, as Frank plots the final destruction of American capitalism, Warren Buffett defies the pundits and the Obama administration by saying there is no economic recovery underway...
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Calculated Risk:
Report: Record Credit Card Charge-offs -- US credit card chargeoffs break new record - Moody's The U.S. monthly credit card chargeoff rate surpassed 10 percent and hit a sixth straight record high in May, Moody's Investors Services said on Wednesday ... The chargeoff rate index -- which measures credit card loans the banks do not expect to be repaid -- rose to 10.62 percent ...
related:
ConsumerAffairs.com:
Chase Credit Cards — I received a noticed in the mail that my credit card payment was going up from 180 monthly to 435. I have a very low fixed interest rate on both cards and since they couldn't raise the rate they raised the payment to 5% of the balance. I am retired and this means that I will be not be eating very much in the future...
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