oh look, more open tabs!
May. 4th, 2008 12:44 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdOkay, so what else do I have open still, in my econ browser? Let's see!
The Federal Reserve is moving to accept a wider range of funds, including those backed by credit cards and automobile loans as collateral. Jesus, why not just take IOUs? If you add this move - and yet more expansions of the latest rounds of new "liquidity" vehicles - that's $462 billion in cash and Treasuries plus the discount window plus the PCDF and that all adds up to somewhere around US$600Billion with a B in liquidity injection. That's a fuckload of dollars.
Oh, and late Friday night, student loan funds got added to the list, just a few days after Bernanke said that wouldn't happen. So it was going to happen, just after a denial and late in the news cycle.
A mostly non-reported story (except over at Market Ticker) is that a bunch of the "improvements" in bank financial situations over the last month or so has been a mass migration of funds from "Level 2" asset categorisation (distressed market, but sellable) to "Level 3" (no functional market or no sale desired, describe according to model). This lets banks take funds with a paper (or face) value of $N but which are selling for the much smaller $Y and pretend on paper that they're actually still work $N, thus letting them pretend none of those market losses have actually happened. How is this possible? Magic! Plus US$600B in "liquidity injection," as above. How long does this work? I don't know.
But the Fed wants vast new powers to do even more, powers that Mish calls fascist, stating that the "proposal essentially would grant vast authority to the Federal Reserve and the government to virtually control markets. It will give them the ability to gather private market information and unilaterally decide if positions taken with that private money for private investment is somehow negative for the financial system. It could then force the unwinding of those positions. Initially the powers will be used to supposedly prevent over leverage in the system (that the Fed created itself). But it doesn't exclude the situation where a hedge fund that is long puts can be forced to unwind those puts at the government's discretion."
Meanwhile, the Centre for Economic and Policy Research notes a new vacancy record, and states outright that "The rate of price decline will destroy almost $6 trillion in housing wealth this year." There's some discussion of the LA market here, and a Case-Shiller graph of interest here. Good times.
No link for it, but the majority of credit-card users carry a balance month-to-month. That average balance is US$17,000. That makes my eyes bleed. Here's a story about the great business pawn shops are doing, talking about how people are pawning anything and everything to pay for gas. (Or selling things outright on eBay and Craigslist. Or both.) Brad Setser notes that sovereign investors continue to treasury market afloat.
Oh, and Mish finally took apart that jobs report that showed "only" 20,000 jobs lost in the latest reported month. (A gain of 150,000 is needed to keep up with population, btw.) That number is a farce; with almost all sectors actually surveyed showing major job losses, the Fed jiggered the "birth/death model" to create 267,000 jobs statistically, including 45,000 new jobs in construction and 72,000 in professional services, all of which are sectors in continued rapid contraction. You can read the details here. Noriel Roubini provides a similar (tho' smaller) breakdown of the first-quarter GDP results here.
The Federal Reserve is moving to accept a wider range of funds, including those backed by credit cards and automobile loans as collateral. Jesus, why not just take IOUs? If you add this move - and yet more expansions of the latest rounds of new "liquidity" vehicles - that's $462 billion in cash and Treasuries plus the discount window plus the PCDF and that all adds up to somewhere around US$600Billion with a B in liquidity injection. That's a fuckload of dollars.
Oh, and late Friday night, student loan funds got added to the list, just a few days after Bernanke said that wouldn't happen. So it was going to happen, just after a denial and late in the news cycle.
A mostly non-reported story (except over at Market Ticker) is that a bunch of the "improvements" in bank financial situations over the last month or so has been a mass migration of funds from "Level 2" asset categorisation (distressed market, but sellable) to "Level 3" (no functional market or no sale desired, describe according to model). This lets banks take funds with a paper (or face) value of $N but which are selling for the much smaller $Y and pretend on paper that they're actually still work $N, thus letting them pretend none of those market losses have actually happened. How is this possible? Magic! Plus US$600B in "liquidity injection," as above. How long does this work? I don't know.
But the Fed wants vast new powers to do even more, powers that Mish calls fascist, stating that the "proposal essentially would grant vast authority to the Federal Reserve and the government to virtually control markets. It will give them the ability to gather private market information and unilaterally decide if positions taken with that private money for private investment is somehow negative for the financial system. It could then force the unwinding of those positions. Initially the powers will be used to supposedly prevent over leverage in the system (that the Fed created itself). But it doesn't exclude the situation where a hedge fund that is long puts can be forced to unwind those puts at the government's discretion."
Meanwhile, the Centre for Economic and Policy Research notes a new vacancy record, and states outright that "The rate of price decline will destroy almost $6 trillion in housing wealth this year." There's some discussion of the LA market here, and a Case-Shiller graph of interest here. Good times.
No link for it, but the majority of credit-card users carry a balance month-to-month. That average balance is US$17,000. That makes my eyes bleed. Here's a story about the great business pawn shops are doing, talking about how people are pawning anything and everything to pay for gas. (Or selling things outright on eBay and Craigslist. Or both.) Brad Setser notes that sovereign investors continue to treasury market afloat.
Oh, and Mish finally took apart that jobs report that showed "only" 20,000 jobs lost in the latest reported month. (A gain of 150,000 is needed to keep up with population, btw.) That number is a farce; with almost all sectors actually surveyed showing major job losses, the Fed jiggered the "birth/death model" to create 267,000 jobs statistically, including 45,000 new jobs in construction and 72,000 in professional services, all of which are sectors in continued rapid contraction. You can read the details here. Noriel Roubini provides a similar (tho' smaller) breakdown of the first-quarter GDP results here.
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no subject
Date: 2008-05-06 10:16 am (UTC)Interesting to note that the seaborne aggregate (natural gravel and crushed rock products) trade is still in a boom state. I did notice a lot of southward haul of gravel in B-trains from Blaine on down; rather amazes me that given the higher diesel prices it might pay to export gravel or crushrock by road haul southward from Canada.
It's still a low-value commodity whose transport costs far exceed its direct sales value; simple resource analysis thus predicts that stockpiling, if any, should be at the source rather than the endpoint, and it can only be worth a long haul if net demand is high at the far end of the haul. Somebody around Seattle must be wanting a hell of a lot of gravel or crushrock for something, which in turn suggests that not all construction is flatlined there, yet.
Will be interesting to see if difficulties in municipal bond-raising will translate to declines in infrastructure construction: these projects have long lead times, so the headache could persist for some years yet.
no subject
Date: 2008-05-10 12:12 am (UTC)