I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
British households are now more indebted than those of any other major country in recorded history, it has emerged.
Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.
Wall Street is bracing for regional and small banks to fess up to large losses from their mounting volume of soured construction loans made primarily to home builders.
According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can't repay. Banks are also facing intensifying pressure from federal and state regulators to deal with the problem loans on their books.
"Ambac: Nearly a Penny Stock
Posted by David Gaffen
Serena Ng has this report on the latest indignity suffered by Ambac shares.
Having borne the brunt of a market sell-off in the past year, the nation’s troubled bond insurers are hoping to ride out the crisis as they look for ways to rebuild their businesses. In the meantime, their challenges keep mounting.
abk_art_200_20080702125357.jpg
Ambac shares look more like a cliff than a ski slope.
On Wednesday morning, shares of Ambac Financial Group slumped to a new record low of $1.04. That prompted the New York Stock Exchange to impose an “operational trading halt” on the stock, which means Ambac’s shares will stop trading on the exchange floor for the time being.
The shares will trade on electronic exchanges such as NYSE Arca, and aren’t eligible to return to the exchange floor until they move back above $1.10 and remain there for a whole day. They were recently trading at $1.11. _________________ "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences…"
Sir Winston Churchill
Posted: Thu Jul 03, 2008 2:18 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak wrote:
Homesteader wrote:
"Ambac: Nearly a Penny Stock
Posted by David Gaffen
We have discussed AMBAC many times in the long history of this thread.
I think the first prediction for its failure was in 2007, someone may have beaten me to it.
I still expect Thornburg Mortgage to go under first, but I could be wrong.
So many of these companies have held on longer than imagined, but I don't think many people expected the Fed to devalue the dollar and squander the dollar's position as a reserve currency via super-low interest rates and fantastical "loans for garbage" programs to keep these crippled behemoth fat cat feeding troughs afloat a little bit longer.
``Home arsons follow foreclosure trends, with a lag,'' Quiggle said, pointing to an increase after the last housing slump when the number of blazes reached 116,600 in 1992 from 111,900 in 1990. ``We're facing a potential spike in arson like we've never seen before.''
Look at all the home debtors who have no qualms with endangering their neighbors and society in general.
Posted: Thu Jul 03, 2008 9:32 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Detroit - coming to a suburb near you!
It's probably not the dejected homedebtor setting fire to his soon-to-be former abode, though. Squatters, shiftless wannabe thugs - these are prime suspects.
Quote:
Insurance pays the replacement cost, which rarely covers the mortgage of a property in foreclosure, he said. The value of the land is not covered.
_________________ "It's called the American Dream because you'd have to be asleep to believe it."
Joined: Jun 18, 2005 Posts: 3970 Location: In a van down by the river
Posted: Thu Jul 03, 2008 12:37 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
That is going to create an asset deflationary death spiral.
The more they try and sell the more the prices decline. The further the price drops the more people who were not in trouble before will find themselves upside down. I am not talking about houses anymore, the next step down is in commercial real estate and business.
Posted: Fri Jul 04, 2008 2:13 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Quote:
The private equity house TPG pulled its capital injection into Bradford & Bingley last night after the buy-to-let lender faced a downgrade in its credit rating by Moody's Investors Service.
The £179m investment from the Texan private equity firm was an important but controversial component of a £400m fundraising exercise by the cash-strapped lender which last night won the support of existing institutional investors to fill the gap in the financing exercise. Four firms were ready to step in: Standard Life, Legal & General, Prudential's M&G and Insight, part of HBOS.
Quote:
This will be the third fundraising attempt by B&B and will put its executive chairman, Rod Kent, under intense pressure.
Quote:
Reports of Bradford & Bingley's fundraising in April raised the prospect of banks raising capital to deal with the credit crunch. While B&B initially insisted it did not need to raise cash, it did push Royal Bank of Scotland to admit it would seek £12bn in the largest rights issue in history. Halifax owner HBOS followed with its £4bn rights issue, yet to be completed. Barclays is tapping sovereign wealth funds and a Japanese bank for £4.5bn. It is thought that the fundraising is complete for now, although speculation still surrounds Alliance & Leceister.
Posted: Fri Jul 04, 2008 2:46 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
dorlomin wrote:
Banks struggling for cash.
Something about that just really drove it home for me. Here I am, working hard, trying to pack away some savings...and for what? So the central bank can inflate the money supply 20% and instantly take 2 dimes for every dollar I have, and give it to some other banker buddy as a "loan," which I, as a taxpayer, am responsible to back if said banker buddy loses it on a bad bet, or just out-right steals it?
On top of that, I finally realize that when I get a loan for something, I'm "borrowing" those 2 dimes they stole from me, and paying them interest on it.
Seriously. WTF? And when TSHTF, they get a golden parachute, and I get a "sorry 'bout-cher 401k, but thanks!"
Posted: Fri Jul 04, 2008 3:04 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Quote:
More than four million households have resorted to personal loans or credit cards to cover mortgage or rent payments in the past year.
The financial comparison site Moneysupermarket.com said that many more homeowners could be sucked into a spiral of servicing long-term debt with expensive short-term borrowing when about £30 billion of mortgage deals come to an end this month.
It pointed out that homeowners who take a personal loan to repay a mortgage, but lie about the reason, risk being charged with fraud.
Link, not news to many keen observers here in the UK, but worth sharing with the class. UK families struggling to keep there heads above water. Houses they can no longer afford norsell them they may be in negative equity already.
Quote:
Tell me true tell me why was Jesus crucified
is it for this that daddy died?
was it you? was it me?
did I watch too much t.v.?
Is that a hint of accusation in your eyes?
if it wasn't for the nips
being so good at building ships
the yards would still be open on the clyde
and it can't be much fun for them
beneath the rising sun
with all their kids committing suicide
what have we done maggie what have we done
what have we done to England
should we shout should we scream
"what happened to the post war dream?"
oh Maggie Maggie what have we done?
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Fri Jul 04, 2008 11:10 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Indeed banks selling off assets can create deflationary conditions - if not offset by inflationary actions of the Federal Reserve and other central banks.
But central banks have stepped up - and more. In addition to the Federal Reserve monetizing (that is converting financial company assets into money) about $400 billion in bank/broker assets, foreign central banks are buying US dollars at a rate of about $500 billion per year in the second quarter of 2008. In other words, not only is the US debasing its dollar with low quality assets, but other central banks are debasing their currencies by buying US dollars (which then back up their currencies).
The net result is inflationary in two ways. First, the act of debasing a currency makes it worth less. Second, while the Federal Reserve is not increasing the total amount of assets any faster than usual, other countries are to buy all these US dollars. Therefore the total amount of money keeps increasing (contributing to the growth in US money supply).
My conclusion is, again, that deflation is unlikely and that continued hyperinflation of commodities is likely. I don't even see commodities declining in price in the longer term through the recession, that I previously said would be picking up in force at mid-year.
In the short term, I see oil prices going higher followed by a pull back in September and October. _________________ It's already over, now it's just a matter of adjusting.
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
