Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1238 | 2.8 | 0.23% |
| Eurostoxx Index | 2337.8 | 0.280 | 0.01% |
| Oil (WTI) | 88.04 | 0.640 | 0.73% |
| US Dollar Index (DXY) | 76.438 | 0.043 | 0.06% |
| 10 Year Govt Bond Yield | 2.21% | -0.01% |
Futures are flat this morning as the market waits to see what comes out of Europe. The WSJ has a story this morning about the brightening outlook for Corporate America. It raises an interesting point regarding consumers – what they actually do can be different from what they say. Consumers can feel tapped out and miserable, but when the 10-year old car has had it, they buy a new one. Consumption can only be deferred for so long, and we have had a retrenching consumer for 3 years now.
The Obama administration is working on a new housing plan – one which eases the requirements for refinancing. Credit is so tight right now that borrowers who are current but have little or no equity are unable to refinance. This move is intended to break that dynamic. Will it prevent home prices from dropping? Probably not, as the first-time homebuyer is not really in a position to buy a house, and prices aren’t cheap enough to entice professional investors to take the liquidity risk and step into the market.
Merger Monday is back upon us with a bear hug in the pipeline space and a deal in the cloud computing space. CAT reported better than expected earnings.
No major economic data today – Case-Schiller comes out tomorrow.
Filed under: Uncategorized |
All Things in Moderation 
Simon Johnson has a few comments regarding Europe and he links to a piece in the NYTimes that has part of the picture, the part that's transparent anyway.But you might think also about what is not in the NYT graphic because we lack reliable information. For example, what is the exposure of US financial institutions to European debt, directly or indirectly, through derivatives transactions of any kind?The opaqueness of derivative markets means that most investors can only guess at what could happen. Most of the relevant regulators and supervisors with whom I have talked seem also to be largely in the dark – remember the experience of AIG in 2008.Cross-border bank exposures through loans and other holdings are publicly disclosed – data from the Bank for International Settlements are represented by the arrows in the NYT graphic. These data are surely not perfect, but they do convey the main points and they tell you where to focus attention.Why do we not require publication of similar data, preferably by financial institution, for all derivative transactions – including both gross and supposedly net exposures across borders?
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Back from wonderful Grand Canyon trip!"A better approach would involve a number of substantive changes. First, and perhaps most fundamentally, credit standards for those seeking to buy homes are too high and too rigorous. The characteristics of the average successful applicant in 2004 would make that applicant among the most risky today. The pattern should be the opposite."I quote Lawrence Summers. Yesterday he seems to have called for the re-bubbling of the housing market.If it is not clear, I disapprove.
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Welcome back Mark. I rarely approve of much if anything Larry Summers has to say. From what I've read this morning though Obama is pushing for lowering standards on refinancing for people who are either underwater or close to it on their mortgages. It's unclear to me how he would do that or if that would re-bubble the housing market. Inquiring minds want to know.Isn't the Grand Canyon spectacular? We go every couple of years on our way to or from NM where my sister lives.
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Here's what I could find so far on the new re-fi standards and apparently he's got something up is sleeve regarding student loans as well. Apparently there's more at the WSJ, but I don't read that anymore, paywall.The Obama administration has been working with the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, to find ways to make it easier for borrowers to switch to cheaper loans even if they have little to no equity in their homes.The FHFA intends to loosen the terms of the two-year-old Home Affordable Refinance Program (HARP), which helps borrowers who have been making mortgage payments on time but who have not been able to refinance as their home values have dropped.The Wall Street Journal reported that the changes should boost refinancing because they will let banks avoid the risk of any "buy-back" on a HARP mortgage as long as borrowers have made their last six mortgage payments and they prove that they have a job or another source of passive income.They are also set to reduce loan fees that Fannie and Freddie charge and waive fees on borrowers that refinance into loans with shorter terms, the Journal said.
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IMO, this can't re-bubble the housing market. Bubbles are a psychological phenomenon this one was based on the theory that you can't lose money in residential real estate. (similar to the logic in the late 90s, where the only risk in the stock market was being underinvested). Once those theories are torpedoed, that thinking doesn't come back for a generation at least. Ask someone in their 20s or 30s about the stock market, which hasn't gone anywhere for 12 years. The idea is to allow current homeowners to take advantage of lower rates and refinance in the hopes that it gives them a little more disposable income and takes some homes off the market, at the margin.
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Brent — are you suggesting the downturn in housing is going to create a generation of renters? (looking for clarification, as you seem to be suggesting that potential buyers will stay out of the market regardless of what incentives are thrown their way)
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The first time homebuyer is absent for a couple of reasons – first, the lax lending terms of the real estate bubble "borrowed" some first time homebuyers from the future. In other words, the ones who would have accumulated a big enough downpayment to buy a starter home now, bought one in 2005 – 2006. These are the "older" first time homebuyers.Second, the younger first time homebuyer is either unemployed or feels like their job is hanging by a thread. Even if they were confident enough to buy real estate, lending standards are so tight many can't get credit anyway. I don't foresee a generation of renters, but I do foresee one of two options:a) the economy stagnates, and home prices grind lower to the point the young first time homebuyer can easily afford to buy, orb) the economy starts taking off, and home prices stagnate for a decade. As incomes rise, more and more first time homebuyers will be able to afford today's (still elevated) prices.
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Latest from Frank Rich"The Class War Has BegunAnd the very classlessness of our society makes the conflict more volatile, not less.By Frank RichPublished Oct 23, 2011"The Class War Has Begun
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Here's Jim Pethokoukis's take on Obama's loan initiative is interesting in that he calls it window dressing. Just burnishing my Rightie street cred.
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The reckoning with capitalism’s failures over the past three decades, both in America and the globe beyond, may well be on hold until the top one percent becomes persuaded that its own economic fate is tied to the other 99 percent’s. Which is to say things may have to get worse before they get better.From the Frank Rich piece.
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Another thing to ponder, did high gas prices eat up any "stimulus" benefit?. If you'll remember, gas prices in the spring and summer of 2008 were over $4 / gallon in many areas, destroying a lot of families disposable income. Now, with "quantitative easing" and debt monetization, our inflation rate is pretty high. No, not the way it's currently configured, but the way in was configured in the '70's and '80's. If you use that method, we're at 12% a year. If you use the government unemplo
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Oops. To continue, if you use the governmental unemployment metrics from the same time period you get an U3 rate of over 12%shadowstats.com is a great site for that kind of stuff.
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Also worth a read:"The Coffee Summit Eliot Spitzer talks capitalism with one of the 99 percent. Published Oct 21, 2011" The Coffee SummitIf the Occupy Wall Street protester interviewed here is representative, the Democrats are going to be incredibly frustrated trying to harness this movement to do anything at all.
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Ugh. Struggling with work and unpaid insurance claims and oversights on my part (I'm filing an appeal on claim non-payment, but I'm way late, so I'm assuming it's going to be rejected out of hand). Then, looking forward to a bunch of work issues come the end of the week. This is not going to be a big week on ATiM for me. Need more contributors. 😉
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Super busy here also Kevin. I spent an hour on hold with three different departments re our health insurance renewal. I think I have it worked out finally. Also big overseas order coming in this week so we're dealing with customs, delivery etc. I'll see everyone later tonight. Maybe someone else could put up a bits & pieces for tonight.
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Oh and Wed. we're having an on site audit by Workman's Comp…………..sheesh. I guess they don't believe it's just the two of us running our business. When she checks out the office/bedroom maybe she'll believe me. They're checking our payroll records and ledger etc. Luckily, we're honest.
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"Oh and Wed. we're having an on site audit by Workman's Comp…………..sheesh. I guess they don't believe it's just the two of us running our business. When she checks out the office/bedroom maybe she'll believe me. They're checking our payroll records and ledger etc. Luckily, we're honest. "Did you file a claim or something?
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No, no one's ever filed a claim here. I canceled our insurance though as we no longer have employees, just me and I don't count. I kept it open for a year just in case but they want a $600 premium which I decided is pointless so we canceled.
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