Posted: Tue May 13, 2008 5:52 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Last month I read that the 3rd quarter of 2008 was the bogey for economic collapse, according to a couple ananlyst groups, but they didn't elaborate. I'm guessing that it has to do with Commercial Paper rollover, or lack of it, due to a monsoon of losses in banks from the mortgage thing? Can someone dumb it down for me? _________________ Local fix-it guy..
Posted: Tue May 13, 2008 6:23 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
FreddyH said:
Quote:
The reality is that the American Economy turned around back in February...
This should be preserved as the most misinformed comment ever make on PO News!
Janet Yellen is my favorite of the FED presidents. She is straight forward and I truly believe that she maintains her position with the highest level of integrity. Her comments here are well thought out and she avoids the double speak that became so prevail during the years of the Greenspan reign.
However, even she appears to succumb to the limitations of neo-classical economics. Although aware that energy has an impact on the stability and growth of the economy, she is still tied to the dollar concept of energy. If energy accounts for 8% of the GDP, then a doubling of energy prices should only affect the economy by 8%.
This denies the leverage factor of energy, and its fundamental position in the economic hierarchy. Energy is not a component of the economy, it is its foundation. All economic activity must be initiated by an expenditure of energy and the process can only be completed by its continual input.
For this reason, energy is unique and has a tremendous leverage affect. Believing that there can be a turn around by the end of this year without a reduction in the cost of energy, is to overlook the impact of basic fundamental physical processes. It is the same type of logic that has gotten us into our present dilemma of cascading financial collapses.
Quote:
President's Speech
Speech to the Certified Financial Analysts Institute, Annual Conference
Vancouver, British Columbia
By Janet L. Yellen, President and CEO, Federal Reserve Bank of
San Francisco
For delivery on May 13, 2008, 10:00 AM Pacific time, 1:00 PM Eastern
Download and Print PDF Version (50KB)
PDF presentation charts (324KB)
Credit, Housing, Commodities, and the Economy1
In my assessment of the economy, I will also focus on two additional factors that are shaping the outlook—the downturn in housing markets and the unanticipated surge in food, oil, and other commodity prices. These developments have taken a toll on the U.S. economy, resulting in very weak performance for the past two quarters. To preview my discussion, I expect that the economy’s performance will improve somewhat in the second half of the year. But I am also well aware that the risks surrounding my forecast are unusually large because of uncertainty about how these three factors—the financial turmoil, the housing cycle, and commodity prices—will evolve. Before I begin, let me note, as usual, that these remarks reflect my own views and not necessarily those of my colleagues in the Federal Reserve System. (more)
Scott Burns: "Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada — all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.At the end of 2007, for instance, our collective net worth was $57.7 trillion, an unusual drop from $58.3 trillion at the end of the previous quarter. Divide $57.7 trillion by the $120-a-barrel price of oil, and you get 481 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990."
Quote:
Through the first seven months of this budget year, the federal deficit totals $152.2 billion, nearly double the $80.8 billion deficit during the same period in 2007.
Quote:
Consumer spending excluding autos grew only 0.1 percent last month on a seasonally adjusted basis, less than the 0.6 percent increase in March, said SpendingPulse, the retail data service of MasterCard Advisors, which is a unit of MasterCard Worldwide. "In general, consumers are spending less. Without gasoline, they are spending a lot less," said Kamalesh Rao, director of economic research at MasterCard Advisors. Retail sales excluding cars and gasoline fell 0.7 percent in April versus March.
Even if we aggressively confronted our precarious energy situation, we would no be able to alleviate its dire impact. By ignoring or failing to recognize it, we will not even be able to mitigate it!
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Tue May 13, 2008 7:46 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
shortonoil wrote:
FreddyH said:
Quote:
The reality is that the American Economy turned around back in February...
This should be preserved as the most misinformed comment ever make on PO News!
Janet Yellen is my favorite of the FED presidents.
2007Q4 GDP was 0.6%. 2008Q1 GDP was again 0.6%. My position is that February was the trough and the Economy is on the rebound.
And your quote of Janet Yellen just reinforces it. Thanx, eh!
Quote:
These developments have taken a toll on the U.S. economy, resulting in very weak performance for the past two quarters. To preview my discussion, I expect that the economy’s performance will improve somewhat in the second half of the year.
What part of "will improve somewhat" did u not understand? Initial Jobless Claims have dropped from their high of 410k/wk to 365k/wk. The hiccup is over... _________________ www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits)
Last edited by FreddyH on Tue May 13, 2008 7:56 pm; edited 1 time in total
Joined: Dec 07, 2005 Posts: 1855 Location: Australia
Posted: Tue May 13, 2008 7:55 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
US retail sales ROSE .5% excluding auto sales.
Total purchases including auto however fell .2%.
So just more cases where they try to spin off positive news by excluding the bad news.
With increasing energy prices it will be interesting to see next lot of retail figures. Doubt they will improve (unless the government invents additional methods for making hedonic adjustments of the stats.) _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Joined: Dec 07, 2005 Posts: 1855 Location: Australia
Posted: Tue May 13, 2008 8:37 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Quote:
Libor Poised for Shake-Up as Credibility Is Doubted
May 13 (Bloomberg) -- The benchmark interest rate for $62 trillion of credit derivatives and mortgages for 6 million U.S. homeowners faces its biggest shakeup in a decade as lawmakers question if banks are understating borrowing costs.
For the first time since 1998, the British Bankers' Association is considering changing the way it sets the London interbank offered rate, according to Chief Executive Officer Angela Knight, who is scheduled to appear before a parliamentary committee in London today. ``We've put Libor under review,'
Knight said in an interview. While she declined to discuss specifics, the BBA will announce changes May 30, she said. The BBA, an unregulated London-based trade group, sets Libor by polling 16 banks each day on the rates they pay for loans in dollars, British pounds, euros and eight other currencies. The association is under pressure to show the rates are reliable following complaints by investors that financial institutions weren't telling the truth after the collapse of subprime mortgages nine months ago contaminated credit markets and drove up borrowing costs.
While the BBA set the one-month dollar Libor rate at 2.72 percent on April 7, the Federal Reserve said banks paid 2.82 percent for secured loans later that day. Secured loans typically yield less than unsecured debt.
``The Libor numbers that banks reported to the BBA were a lie,' said Tim Bond, head of global asset allocation at Barclays Capital in London. ``They had been all the way along. The BBA has been trying to investigate them and that's why banks have started to report the right numbers.'…
-END-
Quote:
08:18 Fed Chairman Bernanke says that financial market conditions are "far from normal" - wires
In a speech to be delivered at an Atlanta Fed conference, Bernanke said that while market conditions have improved, they remain far from normal. He added that the Fed stands ready to increase the size of its auctions if warranted.
Sorry no links. THis is from lemetropolecafe paid site. _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Joined: Apr 27, 2007 Posts: 4353 Location: The Great Sonoran Desert
Posted: Tue May 13, 2008 8:41 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Micki wrote:
Quote:
Libor Poised for Shake-Up as Credibility Is Doubted
May 13 (Bloomberg) -- The benchmark interest rate for $62 trillion of credit derivatives and mortgages for 6 million U.S. homeowners faces its biggest shakeup in a decade as lawmakers question if banks are understating borrowing costs.
For the first time since 1998, the British Bankers' Association is considering changing the way it sets the London interbank offered rate, according to Chief Executive Officer Angela Knight, who is scheduled to appear before a parliamentary committee in London today. ``We've put Libor under review,'
Knight said in an interview. While she declined to discuss specifics, the BBA will announce changes May 30, she said. The BBA, an unregulated London-based trade group, sets Libor by polling 16 banks each day on the rates they pay for loans in dollars, British pounds, euros and eight other currencies. The association is under pressure to show the rates are reliable following complaints by investors that financial institutions weren't telling the truth after the collapse of subprime mortgages nine months ago contaminated credit markets and drove up borrowing costs.
While the BBA set the one-month dollar Libor rate at 2.72 percent on April 7, the Federal Reserve said banks paid 2.82 percent for secured loans later that day. Secured loans typically yield less than unsecured debt.
``The Libor numbers that banks reported to the BBA were a lie,' said Tim Bond, head of global asset allocation at Barclays Capital in London. ``They had been all the way along. The BBA has been trying to investigate them and that's why banks have started to report the right numbers.'…
-END-
Quote:
08:18 Fed Chairman Bernanke says that financial market conditions are "far from normal" - wires
In a speech to be delivered at an Atlanta Fed conference, Bernanke said that while market conditions have improved, they remain far from normal. He added that the Fed stands ready to increase the size of its auctions if warranted.
Sorry no links. THis is from lemetropolecafe paid site.
Today it is still a very large and very ugly issue. _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Posted: Wed May 14, 2008 12:18 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Quote:
Soros: Global investing's godfather
George Soros retired as a multibillionaire. But now he's back, hedging his wealth against what he calls the worst economic crisis in 75 years.
Question: In your 50 years in finance you've seen any number of crises. Why is this so
bad?
Answer: Because two bubbles are deflating at once. There's the collapse of housing prices, of course. On top of that there's the end of what I call the superboom of credit expansion that has been going on for 25 years. That was made possible by a stable global financial system in which the dollar was the world's primary currency. Now, for many reasons, the system is in question and nothing has taken its place. That has created great uncertainty.
Q. And for us regular people it means...?
A. The days of rapid financial wealth creation are over. We're now in a period of wealth destruction. It is going to be very hard to preserve your wealth in these circumstance
Based strictly on energy considerations, global economic decline could reach 3% per year, and remain there for better than a decade. This would an economic crash similar to what happened to Germany during WWII. Devastating!
Available Energy
It’s another record in the real estate market, and it’s not a good one. RealtyTrac, the online foreclosure sale site, which has also been tracking foreclosure activity since the beginning of 2005, reports the single largest one-month volume of foreclosure activity it’s ever seen.
Again, they’ve only been doing this for three years, but you get the idea.
Recession? Not So Fast, Say Some
Despite Pain, Economists Begin
Dialing Back Dire Forecasts
By KELLY EVANS and JUSTIN LAHART
May 14, 2008; Page A1
A funny thing happened to the economy on its way to recession: It's taken a detour.
That, at least, is the view of a growing number of economists -- including some who not long ago were saying a recession was all but inevitable. They note that stock and credit markets have steadily improved since the Federal Reserve intervened to keep Bear Stearns Cos. from bankruptcy in early March, while a series of economic reports have been stronger than expected.
Economists also cite swift policy responses, including a sharp reduction in interest rates by the Fed -- to 2% from 5.25% last September -- and the distribution of fiscal-stimulus checks to millions of Americans, as factors possibly easing the downturn.
"A couple months ago it seemed like we were on the abyss," said Jay Bryson, global economist with Wachovia Corp., referring to the seizing up of credit markets and the collapse of Bear Stearns. "Things have changed....The numbers we've seen recently haven't been as bad as we were led to believe just a few months ago."
Wachovia now puts the odds of recession at 45%, down from 90% in April, and expects growth in gross domestic product of 0.6% at an annual rate in the first and second quarters of this year, followed by 1.2% growth in the third and fourth quarters. While he doesn't expect a recession, he says growth will be very weak through next year.
Posted: Thu May 15, 2008 9:37 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
OilFinder2 quoted:
Quote:
Recession? Not So Fast, Say Some
Despite Pain, Economists Begin
Dialing Back Dire Forecasts
OF2, perhaps you should give up on economic reporting until you learn to count to 20 without taking your shoes off. I can find reports that the Eastern Bunny is now sell crack cocaine in the Bronx. Because it is reported doesn’t make it so, especially when we know that it doesn’t correlate with what we can see with our own eyes. To know what is true, just drive through almost any town or city and count the for sale signs.
These clowns based their opinion on labor and consumer spending.
Quote:
Still, Mr. Bryson and other economists note that though two main pillars of the economy, the labor market and consumer spending, have faltered, they have not collapsed as they did in past recessions.
We know the Birth Death Model used for calculating employment doesn’t work. Last month it reported that construction jobs INCREASED by 78,000. Increased in one of the most significant housing down turns in history, right.
Consumer spending only increased last month because of the huge increase in gasoline prices, which is one of its components. Almost everything else went down the tubes!
FED reports TIC -$48.2 billion in March. Foreign investors have left the US market. Financing US deficit spending is going to get impossible if this continues for a few months.
API reports US crude demand dropped 2.4% last year. This could explain the lack of shortages we have been expecting for the last year. As I have reported before the American Petroleum Institute’s reports often differ substantially from the EIA’s. If their report is correct, the contraction has started and the economy will soon start declining to its -3.0% rate for the next decade.
As it did when the housing bubble began to burst, California is leading the way in the next leg: a consumer bust.
Squeezed by rising unemployment, inflation in food and energy costs and plunging home values, Californians are cutting back on spending. Besides causing woes for state and local government, the cutback is giving California's economy another knock and makes further job losses, home repossessions and banking problems more likely.
The figures are pretty bad. The median home price has fallen by 29 percent in the year to March, according to the California Association of Realtors, and repossessions are increasing.
Unemployment hit 6.2 percent in March, up 1.2 percentage points from the same month last year.
But most important, in the 10 months to the end of April, sales tax receipts in California are actually down in absolute terms. Gasoline tax receipts are essentially flat. When you factor in that there would have been considerable inflation during the period, and that some essentials like gasoline would have risen sharply in cost, the picture is clear: Californians are tightening their belts.
And California matters. It accounts for 13 percent of the U.S. economy. ...
Californians are such trend setters
mark _________________ I have days--growing more frequent all the time--when I'm convinced the time is now upon us that some Big Events are about to occur. - Ron Paul
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