- by New Deal democrat
The Spanish economy contracted 0.3% in the first quarter of 2012, the second straight quarter of economic decline, officially putting the economy into recession, according to preliminary data released by the national statistics office. In the fourth-quarter of 2011, gross domestic product fell 0.3%. On an annual basis, GDP fell 0.4% in the first quarter, compared to a 0.3% annual rise in GDP in the fourth quarter of 2011. The government is targeting a 0.2% rise in GDP for 2013, but expects the economy to contract 1.7% this year. Economists polled by FactSet Research had forecast a 0.4% contraction in the first quarter, matching an estimate by the Bank of Spain
"This action is completely without merit and we will contest it vigorously. Barclays is satisfied that it provides sufficient information to enable a client to make an informed, commercial decision about the products it offers."
"The only way that banks will win back the public's trust is to become better citizens. That starts with how we behave, and in demonstrating we act with trust and integrity.How very true!
At banks this means the interests of customers and clients must be at the very heart of every decision made."
- by New Deal democratwe are just beginning to ring the bells on a new, raging, eight-alarm fire within our economy which may (this is by no means inconceivable, at this point) undermine virtually all efforts at a recovery, to date, from the get-go; thus, further propelling our country into a downward trajectory which may already require generations to fully overcome. For the moment, we're calling this: "The U.S. Foreclosure Fraud Crisis."Didn't happen. He was wrong.
For the second time in two years, our country's mortgage industry is imploding before our eyes. .... The proverbial sh*t's hitting the fan on this one, bigtime, just like the previous mortgage meltdown. And, the rumors are getting beyond scary, in terms of the implications these events may wrought with regard to our already-teetering economy.Still didn't happen. He was still wrong.
Is Wall St. Imploding, Again? Krugman: It's "very, very bad."
here's the latest big story, the business lede from Friday's NYT, with all of the bloody details which point out that this week--just like that week in mid-September 2008--may very well end up being another pivotal point (for all the wrong reasons) in our nation's economic history... .... The story provides the narrative over the past few days... --market uncertainty, worries about "the financials;" --everyone thought this would pass quickly, but that's looking "less and less likely;" .... The calendar tells us it's October 15th, but it sure looks like it's Groundhog Day to me.That didn't happen either. He was wrong.
isn't it now crystal clear to many of those that are following the Mozilo story, that it's just the tip of an iceberg of a lengthy list of memorialized events which all tell us that the entire mortgage mess is just a major chapter in a much bigger story of crony capitalism and corporate kleptocracy gone awry; a story which may soon record a second collapse of many major, too-big-to-fail (TBTF) Wall Street firms -- one which is not-so-quietly playing out over this weekend, but still unbeknownst to most. .... And if you're still doubting what's immediately ahead for the U.S. mortgage industry and the largest/TBTF Wall Street banks, and consequently much of our economy, you may want to checkout these three articles relating to the incredible pounding they're taking (quietly, behind the scenes, this weekend) Bank of America Wells Fargo .... just hours after I posted a diary, entitled: "Is Wall St. Imploding, Again? Krugman: It's "very, very bad," on Friday, had I known that the news on Mozilo would occur later that day, I would have retitled that post not as a question but as a statement of FACT: "Wall Street Is Imploding, Again.FACT: wrong. Again.
When mortgages are "securitized" by the banks that originate them ("sponsors"), such as Bank of America -- whom we're slowly learning, this weekend, due to developments in a New Jersey bankruptcy hearing last week, may have actually and completely fallen into the insolvency abyss -- they're subject to a "pooling and servicing agreement."As of Friday it's stock was still trading on the NYSE. He was wrong.
While you may not have heard about it yet (you probably will start noticing it in the MSM soon, if not this morning), it appears that over the past 18 hours our country's largest bank, Bank of America, may have entered into the final stage(s) of a fairly swift implosion. .... Apparently, the BofA story from ten days ago was just a teaser for the main act which started playing out on the MSM stage roughly 18 hours ago. Yesterday, MSM and blog stories started surfacing concerning two separate issues ... which provides an update to the story I started covering 10 days ago), with either one providing more than sufficient cause to drive the two-trillion-dollar behemoth into receivership, or worse--that place where almost all divine oligarchic institutions have gone of late: taxpayer exponential bailout hell. As you'll see, below, the bank is very much in Wikileaks' sights, and it's all but formally confirmed that they will be the subject of Julian Assange's next planned data dump, sometime in January. .... Any way one might look at these most recent developments, IMHO, from a myriad of perspectives, this latest BofA chapter in the over-arching story of our country's recent financial woes could easily turn out to be THE biggest nightmare yet. One thing that's obvious, if only for the past few hours, is that whatever's going down right now is happening very swiftly.The "biggest nightmare yet" apparently vaporized with awakening that day. He was wrong.
Our country's largest bank has all but taken a final dive into the abyss. And, if you take a look at the lead in Sunday's NY Times, we're reminded it's not just the federal budgets that are hurting here. We're reminded that it's the United STATES of America: "Mounting State Debts Stoke Fears of a Looming Crisis." In Sunday's NY Times' lead, Michael Cooper and Mary Williams Walsh talk of an ongoing, massive collapse in state and municipal budgets around the country. Mounting State Debts Stoke Fears of a Looming Crisis By MICHAEL COOPER and MARY WILLIAMS WALSH New York Times December 5, 2010 ...Some of the same people who warned of the looming subprime crisis two years ago are ringing alarm bells again. Their message: Not just small towns or dying Rust Belt cities, but also large states like Illinois and California are increasingly at risk... The journalists focus upon commentary from Wall Street analyst Meredith Whitney, someone who's gained a well-earned reputation (she's also one of my favorites) for prescience due to the fact that she was one of the first to warn us of a mortgage meltdown. She now "...sees similar problems with state and local government finances."As of Friday its stock was trading at $8.25 a share. He was and is still wrong.
As we turn the page of the calendar into 2011, here are some stunningly inconvenient truths about our so-called economic "recovery..." Many of our country's states and municipalities are in dire financial straits, and many may default in 2011.Meredith Whitney had one of the most spectacularly wrong predictions for all of 2011, and he was right along with her for the ride. He was wrong.
Up until now, the concept of states filing bankruptcy has been a moot point. According to various legal precedents, basic definitions of sovereign law, and the U.S. Constitution, it simply couldn't happen. Up until now... as today's New York Times' lead also informs us: "Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions..." The article does note: "It would be difficult to get a bill through Congress, not only because of the constitutional questions and the complexities of bankruptcy law, but also because of fears that even talk of such a law could make the states' problems worse." And, it's possible that our federal "lawmakers might decide to stop short of a full-blown bankruptcy proposal," opting for something along the lines of what was established to guide New York City through its fiscal crisis in 1975, which was the Municipal Assistance Corporation. But, call it what you wish for political purposes, there are many synonyms for the word: "bankruptcy."I'll outsource the response to this, to Calculated Risk:
A recent article in the NY Times about "discussions" on state bankruptcies. Not Gonna Happen. Economix has California’s state treasurer, Bill Lockyer response: State Bankruptcies? ‘Ludicrous,’ He Says “It’s a cynical proposal, intended to incite a panic in response to a phony crisis,” Mr. Lockyer said in a conference call with journalists. “Killer bees, space aliens, and now it’s the invasion of the bankrupt states.” The state budget issues are serious. And the U.S. debt and deficit issues are serious too. But I've ignored the "debt ceiling" and "state bankruptcy" discussions for a reason - they are nonsense."Nonsense." I couldn't have said it better myself. He was wrong.
But are we already encountering problems selling our government debt to underwrite this? In his still-vague proposals, Geithner supports pouring an additional two trillion dollars in taxpayer funds to "stabilize" our nation's financial services sector and to get the credit markets flowing, once again. This assumes our government is even able to finance that debt with the sale of T-bills and bonds, etc. And, contrary to popular belief and the reality that the U.S. may just print money without any adverse consequences, we're already quickly learning--the hard way--that there's a limited market for our nation's unbridled debt, "Treasuries Drop as Dealers Digest $67 Billion in Notes, BondsAs Krugman has reminded us many times, treasury bond rates have fallen since then. The Pied Piper of Doom was wrong.
QUESTION #3: Are the much ballyhooed "Quantitative Easing" efforts of Fed Chair Ben Bernanke failing miserably out of the gate? THE ANSWER: Initial results indicate this may be the case. In an effort to keep interest on the federal debt low (read: manageable), the Fed poured the first piece of its $1.2 trillion 2009 QE budget, or $300,000,000,000 of taxpayers' funds, into the purchase of US T-bills in mid-March. Interest rates immediately dropped dramatically as a result of that. But, market activity over the past week now has 10-year notes eclipsing rates in the market from the day before Bernanke flipped the proverbial Quantitative Easing switch, roughly six weeks ago. $300 billion to keep interest rates on our debt suppressed for six weeks? That's only $50 billion a week to buy down interest on our debt, only to see market demand for U.S. debt slacken dramatically shortly thereafter. Such a deal!To the contrary, the even lower rates now for treasuries show us that relative to other investments, U.S. is still a safe haven. He was still wrong.
QUESTION #4: From a purely market-driven perspective, are Wall Street bailout funding efforts inherently at odds with efforts to fund most of the other government-sponsored stimulus/bailout/Main Street programs? THE ANSWER: also appears to be, "Yes." Come to think of it, it's really just common sense, as the Business Insider blog tells us: "How Government Guaranteed Bank Debt May CRUSH Public Borrowing." If other government programs are offering better, guaranteed returns than T-bills and municipal bonds, etc., it's only logical that investors will be driven to those other investment vehicles.Treasuries were yielding less than 2% last week. He was spectacularly wrong, and spectacularly trumpeting a very Coolidge-like view as the one and only true progressivism as He Himself defined it for his acolytes.
- by New Deal democrat
If public employment had grown the way it did under Bush, we’d have 1.3 million more government workers, and probably an unemployment rate of 7 percent or less.
For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.So, about that doctrine: appeals to the wonders of confidence are something Herbert Hoover would have found completely familiar — and faith in the confidence fairy has worked out about as well for modern Europe as it did for Hoover’s America. All around Europe’s periphery, from Spain to Latvia, austerity policies have produced Depression-level slumps and Depression-level unemployment; the confidence fairy is nowhere to be seen, not even in Britain, whose turn to austerity two years ago was greeted with loud hosannas by policy elites on both sides of the Atlantic.None of this should come as news, since the failure of austerity policies to deliver as promised has long been obvious. Yet European leaders spent years in denial, insisting that their policies would start working any day now, and celebrating supposed triumphs on the flimsiest of evidence. Notably, the long-suffering (literally) Irish have been hailed as a success story not once but twice, in early 2010 and again in the fall of 2011. Each time the supposed success turned out to be a mirage; three years into its austerity program, Ireland has yet to show any sign of real recovery from a slump that has driven the unemployment rate to almost 15 percent
But while China’s industrial subsidies, trade policies, undervalued currency and lack of enforcement for intellectual property rights all remain sticking points for the United States, there is at least one area in which the playing field seems to be slowly leveling: the cheap labor that has made China’s factories nearly unbeatable is not so cheap anymore.A shortage of labor means higher cost.China has experienced sporadic labor shortages, which in turn have driven up its once rock-bottom labor costs. This trend is particularly evident in the weeks following China’s Spring Festival, or New Year, when more than 100 million rural migrants return to the countryside to spend the year’s biggest holiday with family. Coaxing those same migrants back into the urban work force has proven increasingly difficult.This year has been no exception. Although nearly two weeks have passed since the Lantern Festival that officially marks the end of the 15-day holiday, cities across China are still facing a serious labor shortfall. In order to lure new workers and retain the old, some companies give employees sizable bonuses just for coming back to work, while others offer cash for every new employee they bring along with them. And in many areas, wage increases ranging from 10 to 30 percent have become the norm.Despite all this, cities like Beijing, Shenzhen and Guangzhou are still short hundreds of thousands of migrant workers. Shandong Province is missing a full third of its migrant work force, and Hubei Province reports a loss of more than 600,000 workers. Last week, the Chinese government released a report describing this year’s post-Spring Festival labor shortage as not only more pronounced than in years past, but also longer-lasting and wider in scope.Numerous factors underlie China’s mounting labor woes. Until now the country has been able to achieve its stunning economic growth by shifting large numbers of farmers into nonagricultural jobs. Over the past several years economists have warned that China may be reaching the so-called Lewis Turning Point — the stage at which the rural surplus labor pool effectively runs dry and wages begin to rapidly increase.
I don't think you'll be seeing much more of that "other" blogger's economic spin on behalf of the status quo over at Ritholtz' blog, going forward. (A little birdie told me that. And, I think it's an accurate statement. We shall see...)Barry Ritholtz' The Big Picture blog, April 25, 2012:
According to the third ONS estimate, GDP had fallen by 0.3% in the fourth quarter of 2011, 0.1 percentage points weaker than reported in the second release. The ONS had also revised down the path for household consumption during 2011 such that the level at the end of the year was 0.5% lower than previously estimated. Together with an upward revision to households’ income, this implied a sizable revision upwards to the estimated household saving rate. This now appeared to have fallen back only modestly since its peak in 2009.
In line with the usual pre-release arrangements, the Governor informed the Committee that manufacturing output had fallen by 1% in February and that output in January had been revised down. This was somewhat at odds with the more positive message from the corresponding business surveys. The data on service sector output in January were consistent with solid growth in services in the first quarter of 2012. The CIPS/Markit indices for manufacturing, services and construction had all risen in March and the composite expectations balance had reached its highest level in over a year. The BCC Quarterly Economic Survey had recorded rising sales balances for both manufacturing and services in the first quarter. And the Bank’s Agents had reported a broad-based, if still modest, pickup in output growth over the previous three months. Consistent with these reports, household and corporate broad money growth had increased in January and February on a three-month annualised basis.
For the second month in a row, the ONS had reported a particularly large contraction in construction output, which it estimated to have fallen by around 12% in each of December and January on a non-seasonally adjusted basis. Even if activity were to rise strongly in February and March, measured construction output was likely to show a very sharp fall in the first quarter as a whole. This was at odds with other indicators of construction activity from CIPS/Markit, Experian and the Bank’s Agents, which had generally pointed to much smaller declines around the turn of the year. Although construction orders had been weak, the Construction Products Association was expecting only a modest reduction in output during the year as a whole.Here are the relevant data points from Markit:
In the absence of revisions to the latest vintage of data, the contraction in measured construction output was likely to depress measured GDP growth significantly in the first quarter. Indeed, it was possible that the ONS’s preliminary estimate for GDP could record a fall in aggregate output. In the second quarter, some activity was likely to be lost because of the extra bank holiday associated with the Queen’s Diamond Jubilee celebrations. With output having already contracted in the fourth quarter of last year, the Committee could not rule out the publication of official data showing GDP falling for three successive quarters. Nevertheless, the Committee’s judgement was that, abstracting from both the puzzling weakness in measured construction output and the impact of one-off factors, the economy appeared likely to be expanding, albeit only modestly, in the first half of the yearAnd now, just to add the icing on the cake, we learn that the UK is in a technical recession (from the office of national statistics)
As explained by Reuters:
- The chained volume measure of GDP decreased by 0.2 per cent in Q1 2012
- Output of the production industries decreased by 0.4 per cent in Q1 2012, following a decrease of 1.3 per cent in the previous quarter
- Construction sector output decreased by 3.0 per cent in Q1 2012, following a decrease of 0.2 per cent in the previous quarter
- Output of the service industries increased by 0.1 per cent in Q1 2012, following a decrease of 0.1 per cent in the previous quarter
- GDP in volume terms is flat in Q1 2012, when compared with Q1 2011
Britain's economy has fallen into its second recession since the financial crisis after an shock contraction at the start of 2012, heaping pressure on Prime Minister David Cameron's government as it reels from a series of political missteps.For a good summation of the report and what this means, here is a link to the FT Money Supply Blog
Britain's Conservative-Liberal Democrat coalition has seen its support crumble after weeks of criticism over unpopular tax measures in last month's budget, and is under further pressure from revelations about its close links with media tycoon Rupert Murdoch.
With local elections taking place on May 3, there could hardly be worse timing for Wednesday's news from the Office for National Statistics that Britain's gross domestic product fell 0.2 percent in the first quarter of 2012 on top of a 0.3 percent decline at the end of 2011.
Most economists had expected Britain's economy to eke out modest growth in early 2012, but these forecasts were upset by the biggest fall in construction output in three years, coupled with a slump in financial services and oil and gas extraction.
| Month | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|---|
| January | --- | -7.5% | -11.5% | -5.8% | -8.7% | +2.9% |
| February | --- | -7.8% | -12.0% | -5.2% | -8.4% | +4.1% |
| March | --- | -8.3% | -10.9% | -5.0% | -7.3% | +3.7% |
| April | -2.7% | -8.6% | -9.6% | -5.0% | -6.8% | --- |
| May | -3.5% | -9.1% | -8.1% | -5.0% | -5.6% | --- |
| June | -5.0% | -9.8% | -7.0% | -5.0% | -4.4% | --- |
| July | -5.4% | -10.4% | -6.1% | -5.1% | -4.2% | --- |
| August | -6.0% | -10.6% | -5.5% | -6.1% | -2.8% | --- |
| September | -6.2% | -11.1% | -5.1% | -6.6% | -1.7% | --- |
| October | -6.7% | -11.4% | -4.5% | -7.0% | -0.9% | --- |
| November | -6.6% | -11.7% | -4.5% | -6.7% | -0.7% | --- |
| December | -7.2% | -11.4% | -5.6% | -7.8% | +1.1% | --- |
Nationally, asking prices on for-sale homes – which lead sales prices by approximately two or more months – were 1.4 percent higher in March than one quarter ago. Prices increased month over month 0.9 percent in March and 0.6 percent in February. The Trulia Price Monitor is seasonally adjusted, so these monthly and quarterly increases are on top of typical springtime price jumps. . . . According to the Monitor, asking prices had been declining prior to February and reached a low in January. Throughout 2011, asking prices rose slightly in several months of the year, but never more than 0.2 percent in a month. Asking prices in March were 0.7 percent below their level one year earlier.Here's their graph of seasonally adjusted monthly changes in asking prices for the last year:
Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as February 20 and averaged for the month indicates that with increasing spring transactions has come an increase of prices (the typical trend) with the national index increasing 0.71% since January but falling 3.76% below the level seen in February 2011.This is still the best YoY comparison in the Radar Logic series in over a year, as shown by the red shaded area in the graph below:
shows national home prices, including distressed sales, declined on a year-over-year basis by 2.0 percent in February 2012 and by 0.8 percent compared to January 2012, the seventh consecutive monthly decline. Excluding distressed sales, month-over-month prices increased 0.7 percent in February from January. The CoreLogic HPI® also showed that year-over-year prices declined by 0.8 percent in February 2012 compared to February 2011.Here is the graph of their most recent data:
U.S. house prices rose 0.3 percent on a seasonally adjusted basis from January to February ... While prices in January were unchanged according to initial estimates reported in the last [House Price Index] release, the January result has been revised downward to reflect a 0.5 percent decrease. For the 12 months ending in February, U.S. prices rose 0.4 percent, the first 12-month increase since the July 2006 - July 2007 interval.That this repeat sales index has bottomed can be easily seen in their accompanying graph:
