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You really, really need to check out the Best of China Landscape photography pool on Flickr. Take your time, keep the window open a few days as you go through them. It's amazing stuff.
Jul. 25th, 2008
No, it hasn't bottomed out yet
Jul. 25th, 2008 11:32 amFitch Ratings has updated its ratings model, and now predicts housing prices will fall another 25% from current prices nationally. That'll hurt. Meanwhile, Lee County, Florida - one of the centres of the bubble - had 20% declines in June alone. That's not year-to-year; that's in one month.
The IHT is asking, Is America too big to fail, mocking the (supposedly) abrupt switch away from laissez-faire economics. Brad Setser asks is this too big to fail, or too large to save? noting that a lot of necessary adjustments continue not to be made. And the Asia Times is very unhappy with the repeated injections of money, saying of course you have dollar devaluation, what did you expect?
When Dr. Roubini at RGE Monitor talks about nationalisation of the banking system, he's talking about things like this story, showing that US banks primary borrowings from the Fed are at their highest point in history. (Not to mention all the H.3 reserves data I keep pointing to every few weeks.) Mish talks about several ways you know the banking system is unsound, so I'm worried that it's too late to prevent a banking system nationalisation anyway. Brad Setser goes further, and thinks it really has already happened.
By the way, Dr. Roubini thinks that the bear market is no more than halfway over, but even so, it's not armageddon. Which is true. But he does note that it'll take more than US$1 trillion to resolve the housing-related crisis (Bill Gross agrees), even as he explains why he thinks backstopping Fannie Mae and Freddie Mac is cheaper than letting them fail - the decline must be kept orderly, rather than disorderly. He's also anticipating the collapse of Bretton Woods 2, the unofficial set of currency-exchange linkages that took over from the previous gold-based arrangements of Bretton Woods.
Over in is-that-even-legal news, Treasury Secretary Paulson has been urging for the issuance of covered bonds without waiting for Congress to act, which they of course say they have the right to do, but with this crowd? Who knows. Bloomberg quotes a few cheerleaders of the end-run around the legislature, but also quotes people saying this won't take off without legal definition from Congress. I don't know enough about it to really know either way.
Dealing with more specific banks - and this week's rumoured target of FDIC action - Washington Mutual is in trouble as Gimme Credit LLC says unsecured creditors are "pulling funds" from the bank. (I love the name "Gimmie Credit." Well, I guess I just did. Hee.) Mish says if you're over FDIC limits at WaMu, you're crazy - fix that now. Also, there's a difference between "doesn't need to raise capital" and can't raise capital as corporate bond sales plummet. He further notes WaMu's stock trading action is strikingly similar to that of Bear Stearns shortly before they went under, and lists some of the other banks in similar trouble, particularly Corus Bank (CORS), Bank United (BKUNA), and National City Corporation (NCC).
Also, Bank of America says it won't guarantee Countrywide's debt. Well, that'll be a nice lot of lawsuits. Have fun with that, guys.
Fortune magazine wants to know why there's no outrage at the bailout of Freddie Mac and Fannie Mae, which are, after all, private companies. I know a lot of people who are outraged at the lack of outrage of all sorts of vileness, criminality, and corruption over the last several years; why should this be different?
And finally, the FDIC Chair is blaming bloggers for banking system instability, in an effort to punish the innocent, and Congress is talking about new laws to curb oil trading, with a goal of cutting oil to $80/barrel; good luck with that; and the SEC wants to expand its shorting-limits to the entire stock market. Some argue that shorting actually slows the rate of market declines, as shorters must eventually buy the stocks to cover their short positions, and true naked shorts (where that doesn't happen) are already illegal. More misplaced blame? I'm sure we'll see.
ETA: There's something called the Baltic Dry Index. It's not an investable index, you can't speculate on it; it's a measurement of products shipping. It's been falling all month, and particularly over the last few days. Think of it as an indicator of trade.
The IHT is asking, Is America too big to fail, mocking the (supposedly) abrupt switch away from laissez-faire economics. Brad Setser asks is this too big to fail, or too large to save? noting that a lot of necessary adjustments continue not to be made. And the Asia Times is very unhappy with the repeated injections of money, saying of course you have dollar devaluation, what did you expect?
When Dr. Roubini at RGE Monitor talks about nationalisation of the banking system, he's talking about things like this story, showing that US banks primary borrowings from the Fed are at their highest point in history. (Not to mention all the H.3 reserves data I keep pointing to every few weeks.) Mish talks about several ways you know the banking system is unsound, so I'm worried that it's too late to prevent a banking system nationalisation anyway. Brad Setser goes further, and thinks it really has already happened.
By the way, Dr. Roubini thinks that the bear market is no more than halfway over, but even so, it's not armageddon. Which is true. But he does note that it'll take more than US$1 trillion to resolve the housing-related crisis (Bill Gross agrees), even as he explains why he thinks backstopping Fannie Mae and Freddie Mac is cheaper than letting them fail - the decline must be kept orderly, rather than disorderly. He's also anticipating the collapse of Bretton Woods 2, the unofficial set of currency-exchange linkages that took over from the previous gold-based arrangements of Bretton Woods.
Over in is-that-even-legal news, Treasury Secretary Paulson has been urging for the issuance of covered bonds without waiting for Congress to act, which they of course say they have the right to do, but with this crowd? Who knows. Bloomberg quotes a few cheerleaders of the end-run around the legislature, but also quotes people saying this won't take off without legal definition from Congress. I don't know enough about it to really know either way.
Dealing with more specific banks - and this week's rumoured target of FDIC action - Washington Mutual is in trouble as Gimme Credit LLC says unsecured creditors are "pulling funds" from the bank. (I love the name "Gimmie Credit." Well, I guess I just did. Hee.) Mish says if you're over FDIC limits at WaMu, you're crazy - fix that now. Also, there's a difference between "doesn't need to raise capital" and can't raise capital as corporate bond sales plummet. He further notes WaMu's stock trading action is strikingly similar to that of Bear Stearns shortly before they went under, and lists some of the other banks in similar trouble, particularly Corus Bank (CORS), Bank United (BKUNA), and National City Corporation (NCC).
Also, Bank of America says it won't guarantee Countrywide's debt. Well, that'll be a nice lot of lawsuits. Have fun with that, guys.
Fortune magazine wants to know why there's no outrage at the bailout of Freddie Mac and Fannie Mae, which are, after all, private companies. I know a lot of people who are outraged at the lack of outrage of all sorts of vileness, criminality, and corruption over the last several years; why should this be different?
And finally, the FDIC Chair is blaming bloggers for banking system instability, in an effort to punish the innocent, and Congress is talking about new laws to curb oil trading, with a goal of cutting oil to $80/barrel; good luck with that; and the SEC wants to expand its shorting-limits to the entire stock market. Some argue that shorting actually slows the rate of market declines, as shorters must eventually buy the stocks to cover their short positions, and true naked shorts (where that doesn't happen) are already illegal. More misplaced blame? I'm sure we'll see.
ETA: There's something called the Baltic Dry Index. It's not an investable index, you can't speculate on it; it's a measurement of products shipping. It's been falling all month, and particularly over the last few days. Think of it as an indicator of trade.
