Links to important economic news

unlike jsmith, i'll present all the charts. some are up, most are down, and some are sideways. for many, results are seasonal. but, i'd caution that for all unemployment is increasing.

http://www.calculatedriskblog.com/2009/04/april-economic-summary-in-graphs.html

and see the zero hedge graphs of GDP contributors earlier lister.

btw, check out non-residential expenditures, that and credit cards (and local govenment spending) will explain the next leg down.

Signs of improvment in NY Fed manufacturing survey...

http://www.ny.frb.org/survey/empire/empiresurvey_overview.html

Signs of improvment in Richmond Fed manufacturing survey...

http://www.richmondfed.org/research/regional_economy/surveys_of_business_conditions/manufacturing/2009/pdfs/mfg_04_28_09.pdf

Signs of improvment in Dallas Fed manufacturing survey...

http://dallasfed.org/data/outlook/2009/tmos0904.html

Signs of improvement in KC Fed manufacturing survey...

http://www.kansascityfed.org/MFGSURV/PR_2009-04-27.html

jsmith, thanks!!! i'll have a look at those shortly.

kansas city fed, stable with several indexes at historically low levels. give me a fucking break and go start your own thread. awful and stable is the new killing it.

The decline in dallas slowed. Six month outlook improved. Hopefully. In six months this recession will be two years old.

http://www.nakedcapitalism.com/2009/05/is-optimism-all-its-cracked-up-to-be.html

calculated risk does a serious of charts each month showing activity. restaurants and architectural billings showed the greatest improvement, although both are still negative. it is an interesting snapshot, and shows where the improvements put us in terms of longer term activity.

http://www.calculatedriskblog.com/2009/04/april-economic-summary-in-graphs.html

This doesn't look so good. The Fed may have come to the end of its rope, effectiveness wise.

http://market-ticker.org/archives/1002-Oh-Beeeeen-10y-Ts.html

another day, another way the taxpayer is getting shafted by the Fed:

http://www.nakedcapitalism.com/2009/04/fed-to-prop-up-commercial-real-estate.html

I think they're trying to do this stuff as quickly as they can before momentum gathers to stop this crap.

sorry, jsmith, that was poorly done on my part. this is certainly not "my" thread, and good news is welcome. some analysis rather than just linkage would be nice, although once again that would just be my preference.

This still needs to go to the senate. Credit card reform. This is both very, very good news, and very, very bad news.

http://www.bloomberg.com/apps/news?pid=20601070&sid=aNgwyOHrk.5U&refer=politics

If congress truly wanted to help the consumer, it would add a provision instructing the credit rating agencies to remove the outstanding percentage of debt portion of the FICO score, and substitute something that would enable lenders to make an appropriate decision regarding repayment ability.

If you are carrying any revolving debt, your FICO score may soon plummet as credit card companies decrease and eliminate credit lines. It's going to get lean and mean, and cash will be king.

This is an extremely accessible piece by Jim Jubak that explains the long-term hurdles we face. UD has discussed this repeatedly.

http://articles.moneycentral.msn.com/Investing/JubaksJournal/only-1-way-out-of-big-economic-hole.aspx?page=1

very interesting...he touches on the issue of interest rates that continues to fascinate and confuse me. in a truly deflationary environment (defined as most consumers believing they should forego purchases as long as possible because the price will be lower in the future) there is no reason to borrow money except for an emergency. so interest rates remain very low even though the government borrowing continues to grow? but then, all of the pensions, insurance companies, banks, etc that "need" investment income to meet their obligations (which are often fixed regardless of interest rates) go bad needing further government intervention? not a pretty picture.

cc, a couple of days ago I posted a chart from CNN money that showed the Fed and the US gov't had committed over $10 trillion, mostly to the finance world. At some point they will have filled all the deflationary holes, but money will still be needed as life goes forward.

Barry Ritholtz today links to a report that analyzes the GDP figures. If you back out the bizarre benefit of imports falling off a cliff, GDP actually declined at a 12% annualized rate. And that's before the PCE and DPI figures are revised, as they will have to be.

http://www.ritholtz.com/blog/2009/05/weak-imports-goose-gdp/

and of course, this isn't being reported in the so called main stream media? so, unless imports continue to decline, maintaining the status quo will result in continuing to be down by 6%?

exactly.

i think i'm wrong there. 12% if imports and exports maintain the same ratio this quarter. that's the status quo without the import reduction bump. my head hurts.

AR, did you see this piece on banks' defeat of mortgage cramdowns? I just cannot believe it. This would be an efficient way to clean up some of these mortgage problems, cheaper for taxpayers, but not ideal for banks. Guess who won?

http://baselinescenario.com/2009/04/30/bankruptcy-cramdowns-defeated-in-senate/

I think that's why the administration is trying to support the credit card reform bill so vocally. credit cards affect most people of low to moderate income. protecting their rights there will cost the banks much less, potentially, than any reform to the bankruptcy proceedings.

Cramdowns in many regions wouldn't really hurt the banks that much. They're not even taking possession of the foreclosed properties, and in some areas up to two-thirds of the foreclosed properties are being withheld from the market. There's a great piece somewhere on the terrifyingly fast descent occurring in the alt-A mortgages. I'll post it when I find it.

evnyc, cramdowns are also a very good way of promoting good underwriting standards. you're going to think twice about making a loan if you know a judge can unilaterally change the terms in bankruptcy.

Aboutready, I completely agree. I just don't understand how these bankers have managed to avoid taking even the slightest bit of pain in this. They also had their fingers all over the bankruptcy reform act and in many ways shot themselves in the foot: pile on the debt, then squeeze when the consumer can't pay and shut off any legal mechanisms to resolve the problem. I'd never say that consumers weren't enthusiastic participants, but these banks are not just zombies, they are also schizoid.

The only source I have on the Alt-A mortgage debacle currently snowballing isn't exactly authoritative, so I'd prefer not to post it here (poorly written, but funny and pretty spot-on in spite of this). I'd just be setting myself up for a ransacking if I post it here. Would love to see what you have, though.

Here it is:

http://www.housingwire.com/2009/05/01/for-mortgages-a-pain-in-the-alt-a/

In the quit looking up thread I posted a link to the NYTs, regarding a letter sent to Robert Reich on the issue of balance of power. In keeping the financial system afloat, they have only succeeded in consolodating financial companies and making them even larger, and more dangerous, than before. And weaker, in many cases. What a cluster.

evnyc, check this out. it's from msnbc's market update.

Senate votes down mortgage-relief bill
The Senate late Thursday voted against a controversial measure to modify delinquent mortgages for troubled homeowners, dealing a blow to the Obama administration.

The "cram-down" provision failed on a 51-45 vote, with about a dozen Democrats voting against the bill -- one that had been a key component of President Barack Obama's foreclosure-prevention plan.

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"The result will be higher interest rates for home loans and fewer Americans will be able to afford to buy a house," Sen. Jon Kyl, R-Ariz., said late Thursday. "The answer is not to incentivize bankruptcy by making it the means to save one's home."

The bill garnered little support from the financial industry, with the exception of Citigroup. Democrats had negotiated with JPMorgan Chase (JPM, news, msgs), Wells Fargo and Bank of America, but they failed to get their support.

DEMOCRATS WERE NEGOTIATING WITH THE BANKS TO MAKE CHANGES THAT WOULD AFFECT THE BANKS. What is wrong with this country?

Many things, it seems to me. Where is the cavalry? Why are our elected officials not standing up for us taxpayers? I feel like the world's biggest chump. I think this older post on NPR Planet Money about sums up the situation: banks are holding us hostage, and we don't have an effective negotiator.

http://www.npr.org/templates/story/story.php?storyId=101224460

Ok, i'm inviting scorn here, but a couple of respected sites have linked to the HuffPo piece on bankers continuing to act like royalty, so here goes.

http://angrybear.blogspot.com/2009/05/why-are-bankers-still-being-treated.html

and from that article I pulled up the video. a must watch.

http://americannewsproject.com/videos/mortgage-bankers-celebrate-victory

great piece in voxeu about the banking industry during the depression. 80% of commercial bank deposits were recovered by depositors. It was the investment banking world that caused the greatest dislocations.

http://www.voxeu.org/index.php?q=node/3523

evnyc, that NPR piece is quite chilling. it doesn't have to be that way, and the optimist in me (such as she is) thinks that timing is everything. we may half fail with the first efforts, which will be half or wholly tragic depending on your perspective, but going forward I'm trying to find some potential rays of light.

great interview with Rosenberg, of Merrill fame. where is this stock market run-up coming from?

http://zerohedge.blogspot.com/2009/05/shooting-shoots.html

this is awesome. it's an interactive tool that will be updated weekly and shows you what crap the fed is holding.

http://blogs.wsj.com/economics/2009/04/30/a-look-inside-feds-balance-sheet-43009-update/

this is confusing. Markman has gone bullish (by Markman's standards). Markman v. Rosenberg, who would you take?

http://articles.moneycentral.msn.com/Investing/SuperModels/stocks-rising-on-a-raft-of-regrets.aspx

cc, keep hope alive.

http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html?pagewanted=1

Great piece from the Stern business school analyzing pay in the financial industry. Conclusion: pay rises with deregulation, was at its highest both preceding the depression and during our current mess, and they were paid about 40% more than labor value models would predict.

http://sternfinance.blogspot.com/2008/11/are-banker-over-paid-thomas-philippon.html

I hesitate to post this, because the quoting is not attributed, but the quote is fascinating. discusses the perceived cheer at inventory reductions, noting that if there are no going-forward orders, the reductions are not that meaningful. a funny read.

http://www.businessinsider.com/henry-blodget-about-that-gdp-inventory-decline-2009-5

On the wage deflation issue:

http://www.nytimes.com/2009/05/04/opinion/04krugman.html

Real Estate market won't come back until wages do. References to Trump Place 15% rent roll back. Rental market usually recovers before Real Estate values too.

Equity Residential First-Quarter Net Income Declines (Update2)
2009-04-29 22:38:05.292 GMT

(Adds CEO comment and forecast starting in sixth paragraph)

By Oshrat Carmiel
April 29 (Bloomberg) -- Equity Residential’s first-quarter
profit fell as rising joblessness restricted the pool of
potential tenants and the company, the largest U.S. real estate
investment trust that owns apartments, offered rent reductions.
Net income dropped to $77.2 million, or 28 cents a share,
from $134.5 million, or 50 cents, the Chicago-based company said
in a statement today. Funds from operations, a measure of cash
flow used by REITs, fell to 57 cents a share from 58 cents. FFO
was forecast to be 55 cents, according to the median estimate of
18 analysts in a Bloomberg survey.
“If you don’t have a job it’s tough to rent an
apartment,” Ross Smotrich, a REIT analyst at Barclays Capital,
said in an interview before Equity Residential released its
earnings report. He rates the company “equal weight,
positive.”
The Bloomberg Apartment REIT Index fell 52 percent during
the past year, exceeding a 39 percent drop in the Standard &
Poor’s 500 Index. Nationwide, apartment rents fell 1.1 percent
in the first quarter to $984 on average, according to Reis Inc.,
a New York-based research firm. Vacancies climbed to 7.2 percent
from 6.6 percent in the fourth quarter as the U.S. unemployment
rate climbed to 8.5 percent.
The country has lost 5.1 million jobs since the recession
began in December 2007, according to the Labor Department.
“Continuing job losses leave us cautious for the remainder
of the year,” said Chief Executive Officer David Neithercut in
a statement. “Yet we believe that steady rents and current
occupancy of 94 percent position us well as we enter our primary
leasing season.”
The company forecast funds from operations of between 53
cents a share and 58 cents a share for the second quarter.

New York Market

In New York City, unemployment rose to 8.1 percent in
February from 6.9 percent in January, a record month-to-month
increase, according to the state Labor Department.
Equity Residential, founded by billionaire investor Sam
Zell, derives 10 percent of its net operating income -- its
largest share - from properties in the New York metropolitan
area, according to its annual report filed in February. The
company lowered its asking rents in Manhattan by at least 13
percent since February, said Michael Levy, an analyst with
Macquarie Capital USA Inc. in a March 24 note.
In its Trump Place buildings on New York’s Upper West Side,
the company cut asking rents by 15 percent, Levy wrote.
Equity Residential drew 8.4 percent of its net operating
income from South Florida and 7.8 percent from Los Angeles, both
areas where an unsold homes and condos compete for would-be
renters, William Acheson, an analyst with Benchmark Co. LLC in
New York, said in an interview before today’s release.
“You can rent the single-family home for $1,000 as opposed
to an apartment renting for the same amount,” he said.
Net operating income for apartment landlords is derived by
subtracting a property’s operating expenses from rental income.
Equity Residential owns or has stakes in more than 550
properties in 23 states, according to its Web site.

thoroughly enjoyed the obama NYT interview; unfortunately, i think the latest krugman piece has more substance. virutally everyone i know has either gotten a reduction or is expecting one. becomes an easy tool for managment---makes them seem like good guys, saving jobs but as krugman points out, it becomes insidious.

another example of the the unthinkable. could not imagine doing this even a year ago.

cc, I agree that things are very grim. But from a policy perspective Rahm said something recently that is worth remembering. He said something to the effect that you have no idea what it's like to go in and get the job done. For everything you achieve, you may have to delay, or even lose a bit, in another area. I don't have tremendously high hopes for our economy in the short or medium term, there was simply too much destruction for it to be contained without a great deal of pain. But in terms of our president, I'm feeling the love again. Barry Ritholtz has a thought-provoking piece today. If he is right, and it is what I have been hoping for for weeks, then we may see a new phase of the game. If he's wrong, well, I'll just try to keep hope alive.

http://www.ritholtz.com/blog/2009/05/chrysler-bankruptcy-and-insolvent-banks/

no real surprise here. people are shorting the banks. like crazy.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aAbmnwDjaZ1s&refer=home

hhoray!

Only 4 more years until Real Estate recovers!

Interesting article in the New Yorker on the size of the financial industry. Financial industry should be about the same size as it was in 1996? Maybe that's the price point for Manhattan real estate we should be looking at. maybe not.

http://www.newyorker.com/talk/financial/2009/05/11/090511ta_talk_surowiecki

"sorry, jsmith, that was poorly done on my part. this is certainly not "my" thread, and good news is welcome."

I accept your apology.. now continuing on with the recovery story:

http://www.nytimes.com/2009/05/05/business/economy/05turnaround.html?_r=1&hp

http://www.bloomberg.com/apps/news?pid=20601068&sid=aOz3u8ezDLU4&refer=economy

jsmith, for the record, i'm not a permabear. i have no money invested in any way that would benefit. i'm just looking for rational bases for hope, and i'm sorry the sacramento market (to date) won't do it for me.

China is playing more games than you could possibly keep track of part time. If you'd like to follow, take a look at brad setser, or michael pettis.

"China is playing more games than you could possibly keep track of part time"

aboutready: what'cha mean? Don't have intelligence, patience or stomach to read thru all that stuff.

Thanks.

deal book april 21st

With the global economic downturn deepening and confidence in the financial system still elusive, the International Monetary Fund estimates that banks and other financial institutions face aggregate losses of $4.1 trillion in the value of their holdings as a result of the crisis, Mark Landler of The New York Times reported from Washington.

In its global financial stability report, released Tuesday, the fund estimated that financial institutions would have to write down an estimated $2.7 trillion in loans and securities originating in the United States from 2007 to 2010. That estimate is up from $2.2 trillion in the fund’s report in January, and $1.4 trillion last October.

The financial crisis “is likely to be deep and long lasting,” the report said, noting that global financial stability has deteriorated further since its October report, especially in emerging markets, particularly in Europe, where banks face more write-downs and may require fresh equity, even as businesses seek to refinance debt.

The authorities “have been proactive in responding to the crisis,” the fund said, but “policies are being challenged by the scale of resources required.”

The fund also cast doubt on recent market optimism, noting that in spite of “some improvements in short-term liquidity conditions and the opening of some term funding markets, other measures of instability have deteriorated to record or near-record levels.”

The report has become a closely watched barometer of the severity of the crisis, in which the fund has taken a leading role, dispensing more than $55 billion in loans. Leaders of Group of 20 nations agreed in London this month to provide about $1 trillion in new financing for the organization. Among European countries, Hungary, Serbia, Romania, Iceland, Ukraine, Belarus and Latvia have all sought loans from the fund since the start of the crisis.

On Tuesday, Colombia became the second Latin American country to seek aid, requesting $10.4 billion. On Friday, the fund approved a $47 billion line of credit for Mexico, making it the first country to qualify for a lending facility for strong-performing emerging economies.

Underscoring the degree to which credit-related losses have spread beyond the United States, losses in loans and securities originating in Europe are now estimated at $1.12 trillion. Japan remains comparatively insulated, with projected losses of $149 billion. Until this report, the fund had not tried to calculate the potential losses from “toxic assets” outside the United States.

Banks are expected to shoulder about two-thirds of the write-downs, the fund estimated, though other institutions, like pension funds and insurance companies, also face heavy losses.

Banks have raised about $900 billion in fresh capital since the crisis began, the fund said, but that is far outweighed by $2.8 trillion in credit-related losses. The fund estimates that the banks have already taken about one-third, or $1 trillion, of those write-downs.

The report also illustrates the uneven pace of the response to the crisis. The fund estimates that in the United States, for example, banks reported $510 billion in write-downs by the end of 2008 and face an additional $550 billion in 2009 and 2010. In the euro zone, banks reported just $154 billion in write-downs by the end of last year and still face $750 billion. British banks are in somewhat better shape: having written down $110 billion, they face $200 billion more, the fund said.

Riversider, the numbers are so ugly, but as frightening to me is the fact that they keep going up.

It can Always be worse!

Three friends had a good friend named Joe and he was, naturally, an eternal optimist. At every bad situation he would always say ''It could have been worse.'' His friends hated that quality about him, so they came up with a story so horrible that not even Joe could come up with a bright side.
So the next day, only two of his friends showed up for a golf date.
Joe asked, ''Where's Gary?''
And one of his friends said, ''Didn't you hear? Yesterday, Gary found his wife in bed with another man, shot them both, and then turned the gun on himself.''
Joe says,''Well it could have been worse.''
Both his friends said, ''How in hell could it be worse? Your best friend just killed himself!''

Joe says, ''If it had happened two days ago, I'd be dead now!

The nail in the coffin..

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/04/AR2009050400703.html

Brilliant. "For the first time in my life I know who the Treasure secretary is, and I don't like it."

http://www.theonion.com/content/news/nation_ready_to_be_lied_to_about

Once ‘Very Good Rent Payers’ Now Facing Eviction

...
Even some affluent people in high-end places are finding themselves facing off with landlords. One man, laid off by Merrill Lynch, was forced to move out of his $5,700 apartment in TriBeCa, owing $20,000 in back rent. Todd Nahins, a lawyer who represents owners of luxury residential buildings, has been busy negotiating payment plans for tenants in arrears.

http://www.nytimes.com/2009/05/05/nyregion/05evict.html?hp

HT1 - the fall of the middle class. rings some bells with historians.

dwell - here's a quick one that I ran into today. basically, the lack of transparency in China makes the US look see through. i'll look for some examples from more scholarly sources later for you.

http://zerohedge.blogspot.com/2009/04/false-chinese-driven-rally-in-copper.html

Also, there was this that I posted earlier, which received no comments, but I found highly interesting:

http://www.nakedcapitalism.com/2009/04/guest-post-breaking-news-china-has-been.html

the think the one from the onion is about all i can deal with today.

p.s. best part for me is that there is a little (and growing) part of me that completely agrees---enough honesty...its killing me!

cc, when I say keep hope alive, I mean it.

http://www.calculatedriskblog.com/2009/05/wsj-about-10-of-19-banks-will-need.html

"Citi, BofA, Wells ... the constant leaks are pretty amazing ..."

I'm starting to see a method to this madness.

really...

cannot for the life of me understand BAC's stock price yesterday...was everyone assuming that it was much worse?

everyone knows what it is. it's a game. you can go along for the ride, or stand by the side. as i can only do mutual funds, and am overly cautious, i stand by the side.

i do feel for those poor 401k investors though, and i really hope the pensions cashed out, although i doubt it. consumer confidence figures may really suck next time.

oh, and the talking heads on CNBC? they should be ashamed of themselves.

Interesting macroeconomic piece on signalling, etc.

http://econlog.econlib.org/archives/2009/05/more_thoughts_o.html

"Workers view wage rates as signals of their employer's long-term commitment to their welfare. Thus, a wage cut is a particularly negative signal, and it is difficult to cut wages in a downturn without causing major problems."

Simon Johnson doesn't share my optimism. I think I can reconcile the adminstration's stance (or current lack thereof) with his position. good on Charlie Munger. describing banks as gamey, venal and stupid.

http://baselinescenario.com/2009/05/05/all-about-optics-predicting-stress-test-outcomes/

“We need to remove from the investment banking and the commercial banking industries a lot of the practices and prerogatives that they have so lovingly possessed,” Munger said. “If they are too big to fail, they are too big to be allowed to be as gamey and venal as they’ve been — and as stupid as they’ve been.”

From The Atlantic

May 5 2009, 10:26 am by Conor Clarke
Five Reasons Why You Should Worry About Tax Havens
I have a funny feeling that when someone like Michelle Malkin spends a couple of sentences mocking the administration's plan to change the rules for by which international business income is taxed (it is both a "knee-slapper" and a "snort-inducer"), it's because she doesn't understand it. Corporate tax havens are complicated. Really complicated!

But whatever you think of the corporate tax in general -- and in a tax fantasy world, we might want to scrap it in exchange for other things -- it's clear that the current system for taxing international business income is screwy and needs changing. Whether or not the president's plan is the right solution is something I will try to take up in a later post. But for now, here are five problems with the current system for taxing international corporate income:

1. The United States has a high statutory corporate tax rate, but a relatively low effective rate. This suggests that the corporate tax base is quite narrow, and the government is raising less revenue than it could be.

And, in large part, that's because of the ease with which American companies can protect income through the magic of tax alchemy. Here's a comparison of corporate rates across OECD countries (the graphs are from a good paper from Brookings):
corporate tax rate.jpgBut as a percentage of GDP, the US raises relatively little revenue:
corporate tax rates and GDP.jpg2. The current system wasn't intended for a global economy, and it isn't very responsive to the realities of a global economy. Under current law, US firms must account for income and expenses separately for each country in which they operate. But this is largely arbitrary: international companies have production processes that span several continents and dozens of countries.

3. The current system create really does create artificial incentives for American companies to invest abroad. There is, of course, absolutely no reason why American companies shouldn't invest abroad. And it is perfectly rational for companies to pursue the lower rates that they can get abroad. But no one makes a robust philosophical argument for why the government should be engaging in industrial policy -- and all the attendant inefficiencies of industrial policy -- such that American companies send more money abroad than they otherwise would. If you are a fan of the free market, you shouldn't want to encourage or discourage it. The current system encourages it.

How? Two big ways, known as the "deferral rule" and the "check-the-box rule."

The deferral rule let's US companies avoid US corporate taxes by not repatriating profits earned abroad. If an American company builds a plant in Ireland, it will only pay US taxes on the profits from that plant if the profits are returned to the US. That's sounds fair, except that the American company can still deduct the cost of building the plant from the taxes it already pays. This means the government is subsidizing investments abroad.

The check-the-box rule is much more direct: It let's US companies shift income between a parent company and a subsidiary in another country, and avoid paying taxes on that income.

4. The current system hinges on artificial distinctions between legal entities of little or no practical difference. International subsidiaries are taxed differently from international branches, which in turn are taxed differently from hybrid entities -- branches in one country and subsidiaries in another -- that get the best of both worlds. Um, what?

5. As #3 suggests, the current system is hideously complex. More than 800 rules govern how companies must account for international income and expenses. Compliance is costly, and complexity breeds unfairness. Large companies have an easier time paying compliance costs than smaller ones. But everyone whines, and rightfully so.

A definite recovery - there is very little doubt now that's where we're headed..

http://bloomberg.com/apps/news?pid=20601068&sid=atAfztowxgvo&refer=economy

you're kidding right?

afraid not. in a recovery happens in an economy, but doesn't help 99% of the people of that economy, is it really a recovery?

on another topic, this is worrisome (and it seems a bit early to me, although i had been reading similar things, not as factually based, earlier in the week). world doesn't like our government's debt so much right now. i must get the links, but china has been busy happily forming trading relations (without the dollar, i might add) with Brazil and others.

http://www.nytimes.com/2009/05/04/business/economy/04debt.html?_r=1

Worry is like interest paid in advance on a debt that never comes due. - George Lang

i am not.. are you saying we are never going to recover and th

i am not.. are you saying we are never going to recover and that we are going to be spiralling downward forever?

No, I am saying that we will most likely be a repeat of Japan, hopefully not Zimbawe.

A recovery is relative. Just to throw out some numbers, not that I'm saying these will be the real ones, but say that an economy shrinks at an annual rate of 6% for nine months. Start your baseline number at 100, now you are down to 95.5% (roughly) of where you were (but your population has continued to grow). Now say you grow at an annual rate of 1% the next quarter. Now you'd be roughly at 95.77% of where you started at. Yes, it's better than falling, but we need over 100,000 jobs to be created monthly just to remain at the same level of unemployment, even under the old, falsely positive GDP numbers we weren't creating enough jobs. We're going to be behind for years. Companies will become profitable again, because they will have fired so many people and reduced wages.

"Yes, it's better than falling"

Exactly.. that's the key - recovery = improvement. you have to start somewhere. And who would be against a recovery?

"We're going to be behind for years"
That's ok - I'm using the stevejhx/OED definition of "headed" as explained here:
http://www.streeteasy.com/nyc/talk/discussion/6284-approaching-10000-manhattan-listings

maybe I didn't make myself clear. we're "heading" toward more unemployment, tons of it, regardless of a "recovery." the other things are getting worse more slowly, and barring a nuclear financial meltdown (don't be too quick to discount), we may see anemic growth for a few years before things do actually get better.

my complaint is that it could have been (hopefully it will be) done better.

I don't see a full recovery of our economy without a recovery of the housing market.
Unfortunately, this article confirms that it may take the housing market many, many years before it recovers.
http://www.bloomberg.com/apps/news?pid=20601039&sid=aiiT.sNeq2YQ&

sledgehammer, your comment makes me think. what exactly would be a full recovery? back to the status quo? that doesn't seem so lovely, now that the truth of the situation is being revealed. The only way I could foresee the housing market to recover truly, would be for a huge increase in population and/or a huge increase in real income (or a handy-dandy bubble, which they seem to be working on as we write, which would once again be disastrous).

of course, I haven't read your posted article yet. I'll go do so and maybe get some answers (negative though they may be).

Few escape blame over subprime explosion

By Edward Luce

Published: May 6 2009 05:02 | Last updated: May 6 2009 05:02

Chronicling the explosion of subprime mortgages is a bit like reading Murder on the Orient Express. As in the novel, in which everyone is revealed to have had a hand in the murder, America’s subprime story implicates almost every power centre – including the Bush administration, the Federal Reserve and the Democratic party.

Take Roland Arnall, founder and chief executive of Ameriquest Mortgage Co, the California-based company that made more than $80bn in subprime mortgages between 2005 and 2007.
EDITOR’S CHOICE
Subprime lobbyists in $370m battle - May-06
Interactive graphic: Subprime lobbyist spending - May-05
CPI investigation: Subprime meltdown - May-06
In depth: US banks - Apr-03

Ameriquest was repeatedly held up by regulators and courts for abusive lending practices, most recently in 2006 when it agreed to pay a $325m fine after it was shown it had misled borrowers, falsified documents and pressed appraisers to inflate home values.

The company, which has since closed, gave $263,000 to George W. Bush in campaign contributions. Mr Arnall, who died last year, went on to become Mr Bush’s ambassador to the Netherlands. To keep things even-handed, his company donated $1.57m to the Democratic party.

Between 2005 and 2007, which was the peak of subprime lending, the top 25 subprime originators made almost $1,000bn in loans to more than 5m borrowers, many of whom have had their homes repossessed, says the Center for Public Integrity, a Washington-based journalistic watchdog.

CPI contacted the chief executives or former CEOs of all of the 25 originators. Most did not respond. Of those that did, Goldman Sachs said in a statement: “As an industry, we collectively neglected to raise enough questions about whether some of the trends and practices that became commonplace really served the public’s long-term interest.”

Those loans lit the fuse that led to the global financial meltdown. The Fed, which refused to tighten regulation of these non-bank companies, since it is charged only with direct regulation of banks, told Congress it would be too expensive to provide oversight.

Last October Alan Greenspan, former Fed chairman, told a congressional committee: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself especially, are in a state of shocked disbelief.” But resistance to regulation went deeper than Mr Greenspan’s ideological objections.

The CPI investigation shows most originators spent millions of dollars lobbying Washington in the mid-1990s, much of it to prevent new legislation that would tighten restrictions on subprime lending.

The financial sector has spent $3.5bn in the past decade lobbying in Washington and made $2.2bn in campaign donations, says the Center for Responsive Politics, an independent watchdog.

The CPI investigation shows that at least 21 of the 25 top subprime originators, most of which are bankrupt, were either owned or financed by the biggest recipients of troubled asset relief funds, including Citibank, Bank of America, Wells Fargo and JPMorgan – also the largest political donors in Washington.

HSBC, the British bank, is listed as the eighth largest subprime originator because of its purchase of Decision One in 1999 and Household International in 2003. From 1999 to 2008 HSBC donated more than $6.4m and spent $21m on lobbying activities in Washington.

“The largest American and European banks made the bubble in subprime lending possible by financing it on the front end, so they could reap the huge rewards from securitising and selling mortgage-backed securities on the back end,” says Bill Buzenberg, who led the investigation. “Washington was warned repeatedly over the last decade that these high-cost loans represented a systemic risk to the economy. It is hard to believe the major banks were unaware of what was going on, or what the consequences might ultimately be.”

Among the other top originators were New Century Financial Corp, which was alleged by investigators in its 2007 bankruptcy proceedings to have had an “aggressive manner that elevated the risks to dangerous and ultimately fatal levels”. Its largest financial backer was Goldman Sachs, which has received $10bn in Tarp bail-out funds.

One of the few to remain in business is Wells Fargo Financial, which is owned by the bank, which made $51bn in subprime loans between 2005 and 2007 and which spent almost $18m on election donations and lobbying – again almost equally between Democrats and Republicans. Barack Obama was its largest individual recipient with $201,000 in election expenses.

According to the CPI, all the laws that helped fuel the subprime crisis remain. Since the late 1990s there have been attempts to tighten up regulation through legislation. But each time it was shot down.

The report highlights a new bill, sponsored by Barney Frank, a Democratic congressman, which would create “assignee liability provisions” that would make mortgage securitisers res-ponsible for abuses in the original mortgages.

If such a law had been on the books earlier, says CPI, the subprime crisis might never have happened.

http://www.ft.com/cms/s/0/574b50b6-39ba-11de-b82d-00144feabdc0.html

http://paul.kedrosky.com/archives/2009/04/milken_roundtab.html

Unafraid In Greenwich Connecticut
Clifford S. Asness
Managing and Founding Principal
AQR Capital Management, LLC

The President has just harshly castigated hedge fund managers for being unwilling to take his administration’s bid for their Chrysler bonds. He called them “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”

The responses of hedge fund managers have been, appropriately, outrage, but generally have been anonymous for fear of going on the record against a powerful President (an exception, though still in the form of a “group letter,” was the superb note from “The Committee of Chrysler Non-TARP Lenders,” some of the points of which I echo here, and a relatively few firms, like Oppenheimer, that have publicly defended themselves). Furthermore, one by one the managers and banks are said to be caving to the President’s wishes out of justifiable fear.

I run an approximately twenty billion dollar money management firm that offers hedge funds as well as public mutual funds and unhedged traditional investments. My company is not involved in the Chrysler situation, but I am still aghast at the President’s comments (of course, these are my own views, not those of my company). Furthermore, for some reason I was not born with the common sense to keep it to myself, though my title should more accurately be called “Not Afraid Enough” as I am indeed fearful writing this… It’s really a bad idea to speak out.

Angering the President is a mistake, and my views will annoy half my clients. I hope my clients will understand that I’m entitled to my voice and to speak it loudly, just as they are in this great country. I hope they will also like that I do not think I have the right to intentionally “sacrifice” their money without their permission.

Here’s a shock. When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back. However, they know, or should know, they take the risk of not being paid back. But if such a bad event happens, it usually does not result in a complete loss. A firm in bankruptcy still has assets. It’s not always a pretty process. Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first.

The process already has built-in partial protections for employees and pensions, and can set lenders’ contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend. But, without this recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.

The above is how it works in America, or how it’s supposed to work. The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler’s creditors. Some bond holders thought this plan unfair. Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court. So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process. But, as his quotes above show, the President thought they were being unpatriotic or worse.

Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrifice”, they are stealing. Clients of hedge funds include, among others, pension funds of all kinds of workers, unionized and not.

The managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their personal political views. That’s how the system works. If you hired an investment professional and he could preserve more of your money in a financial disaster, but instead he decided to spend it on the UAW so you could “share in the sacrifice”, you would not be happy.

Let’s quickly review a few side issues.

The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.

Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities. That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous. That hedge funds might not participate in these programs because of fear of getting sucked into some toxic demagoguery that ends in arbitrary punishment for trying to work with the Treasury is distressing. Some useful programs, like those designed to help finance consumer loans, won’t work because of this irresponsible hectoring.

Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying.

The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people’s money. The President’s comments here are backwards and libelous. Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protesters soon. Hedge funds really need a community organizer.

This is America. We have a free enterprise system that has worked spectacularly for us for two hundred plus years. When it fails it fixes itself. Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.

I am ready for my “personalized” tax rate now.

Hedge funds are a great stalking horse.

Riversider, if you haven't already seen it, Dealbreaker has a hilariously contentious relationship with AQR and it slinging some fairly serious mud their way again (I think it was yesterday or the day before). Supposedly AQR employees are fleeing like rates from a sinking ship. I think cliffie has some other worries he should be attending to right now. Regarding hedge funds, go long pitchforks.

Here's a piece on economic reporting, which discusses coverage of the bubble meltdown and our current awful media coverage. Sadly, I think many people in certain areas would disagree, saying that as long as people think things are better, they will be better.

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=05&year=2009&base_name=lets_get_some_bad_news

Let's Get Some Bad News

The housing bubble was fed in part by incredibly bad economic reporting. Reporters should have been reporting on little else since the bubble was so obviously far more important than anything else taking place in the business/economic arena in the years 2002-2207. However, as we know, the vast majority of reporters slavishly followed the lead of Alan Greenspan and other top economists and said that things are just great.

They seem to still be following this practice. To counter this "let's spread the good news" cheerleading, let's talk about some really bad news that got almost no attention in the media.

last week, the Bureau of Labor Statistics released its employment cost index for the first quarter. The index showed that employment cost (wages and benefits) growth had slowed to just a 1.2 percent annual rate in the first quarter. In the private sector the rate was just 0.8 percent. This is below the current rate of inflation. It also is a sharp slowdown from the prior quarter, which raises the possibility that wage growth will slow even further in the current quarter.

If wages slow further, then purchasing power will fall further, thereby slowing the recovery. This is a piece of really bad news that swamps by an order of magnitude the items presented as good news in this and other news articles. (Wage and benefit income accounts for about 60 percent of national income.) If reporters would focus more on reporting the news rather than repeating what the Fed chairman says the public would be much better informed.

--Dean Baker

Obama shoots and scores!!

http://www.businessinsider.com/hedge-funds-lose-judge-okays-chrysler-fiat-deal-2009-5

Modern-day Pecora Commission coming? I read one Republican senator claimed such a commission would be a good justification for delaying any more relief/stimulus measures, prudent to wait until commission releases findings. Hardy-har-har.

http://www.ritholtz.com/blog/2009/05/congress-quietly-moves-pecora-commission/

from Monkeybusiness.
May 06, 2009
Freddie Was Pressured By Regulator Over Accounting Disclosure.
Back on March 2 when Freddie Mac CEO David Moffett resigned, I wrote this;

From Bloomberg News;

March 2 (Bloomberg) -- Freddie Mac Chief Executive Officer David Moffett resigned six months after being tapped by the government to lead the second-largest U.S. mortgage finance- company amid the housing slump. Freddie said that Moffett, 57, “indicated that he wants to return to a role in the financial-services sector,” and a spokeswoman said he wasn’t asked to step down by the company’s regulator or the Obama administration. McLean, Virginia-based Freddie said in an e-mailed statement today that it expects to name an interim replacement before March 13.

Allow me to translate Mr. Moffett's explanation of "wanting to return to a role in the financial services sector"

"I did not know when I was tapped for this gig that I was to be little more than the head security guard at "The Mall of Forgotten Toys." I thought there would at least be some financial management going on. Instead my job is to buy whatever toxic garbage Treasury tells me to buy as well as guarantee mortgages that go against our GSE charter. I've been around the block a few times and I know as sure as the sun rises in the east and sets in the west, when we announce a $75 billion quarterly loss due to this activity at the end of 2009, I'll get blamed and NOBODY at Treasury will come to my defense."

Today in The Washington Post Zachary Goldfarb wrote Freddie Pressured Over Accounting Disclosure.

Freddie Mac's regulator pressed the company to withhold information related to the proposal from a federal filing, concerned that this seemingly arcane discussion of accounting practices could add billions of dollars to the government's cost of bailing out financial firms, two people familiar with the matter said.

But the company's executives refused, the sources said. They worried that removing the information from the report to the Securities and Exchange Commission could expose them to accusations they'd hid required details from regulators.

Freddie management was rightfully concerned that if they didn't properly account for the activities they were taking, on behalf of the Treasury Department, and didn't discuss them with the SEC, they would be open to charges that they withheld information from investors. Freddie Mac is still a public company. More from Goldfarb's article;

In March, Freddie Mac executives, including Kellermann, had tussled with FHFA over whether to disclose to investors that government management was undermining profitability and may cost the company about $30 billion, sources familiar with the dispute said. The regulator had urged Freddie not to do so, three sources said. The company threatened to appeal to the SEC and ultimately disclosed the possible cost. An FHFA official has said that it did not try to prevent the disclosure.

This potential expense was related to the Obama administration's housing recovery program, for which Freddie Mac playing a part in modifying the mortgages of homeowners facing foreclosure. Many of these loans had been bundled into securities. So to modify the mortgages, Freddie Mac has to pluck them out of the securities, which entails reassessing the value of the loans and marking them down to their current market price. The company might then have to record a charge to reflect these decreased values.

The article goes on to point out that Freddie was also pressured not to send a pre-filing memo to the SEC that detailed the different accounting methods that might be applied, regarding the loan modifications. One of the accounting methods that Freddie rejected as not properly conservative, was one being used by Fannie Mae. The FHFA didn't like that and since they monitor communication between Freddie and the SEC, pressured Freddie not to send the memo. The FHFA of course, denies putting any pressure on Freddie. Read the article.

We are really starting to get a very disturbing picture around how the government has been disregarding the law to get the results they want. Is Ken Lewis lying about the pressure put on him to close BofA's purchase of Merrill Lynch? Are the Non-TARP creditors lying about being threatened by the government to play ball in this Chrysler deal? Is Freddie lying about this story? I don't think so. I think what I wrote back in March about David Moffett's resignation was on the money and I'm no genius or swami. The rule of law works both ways and breaking it in the name of the ends justifying the means isn't what the U.S.A. is all about.

Email this • Share on Facebook

Posted by Eric Salzman on May 06, 2009 at 02:30 PM in FANNIE & FREDDIE | Permalink | Comments (0)

http://www.forbes.com/2009/05/06/stress-tests-banking-business-wall-street-confidence.html

Riversider, i'm definitely heading back to depression. There is one more tactical scenario (possibly two) that is possible for my hope to have been warranted, but I fear that will not come to pass. This deliberate leaking thing has become kind of creepy, a rove-esque sort of tactic.

It's all about testing the waters, and being able to disavow.

i have slipped over the side to raging paranoia as in the whole game is rigged. watching BAC stock over the last two days makes my head spin. this morning, i awakened to the article in the times about the $33 billion problem, saw the futures at around 7:15 saying that BAC would open up down 1.10. by 9:15--futures were showing up $1.10. overall, the stock is up around $3 in the last two days.

how can this not be rigged?

That's what I was thinking earlier, I guess I'm just getting a bit impatient for the avowal, but it's still early days. I can understand the desire to weigh interests, avoiding a collapse, but so much is going forward now that I fear the retracement might become nearly impossible.

a trader whose comments I read on another blog mentioned that today that a bunch of traders threw in the towel and decided to quit fighting the uptrend. that might be a very good sign that a crash will come, or that the s&p will hit 1000. cc, can't you remember what the last run-up felt like? Bad news daily met with shrugs and higher stocks.

Goldman's having one hell of a trading year thus far.

Ken Lewis, Perella Weinberg Partners, David kellerman, David Moffett...something is up. I feel it.. Too many unrelated parties are alleging the same thing. See post from 4 hours ago.. I hope I'm wrong.

Riversider, I remember when they announced TARP they also announced that the GSE's would be taking on crap to a massive tune monthly. Just a way to circumvent Congress (such as they are, but at least it would be a public process).

This does have the feel of heading up to something big.

A lot of people on Wall Street knew David Kellerman. Overwhelming consensus is great guy. Last person you would expect to take his life. I cannot only imagine the pressure he was under..

broken record time...

as recently as yesterday, BAC was saying everywhere that they didn't need to raise $10 billion...now they need to raise $33 billion and no one says anything? so...in theory...the market already knew that they needed to raise at least $10 billion but feared it might be 10 times that so $33 billion is a relief? or, its rigged.

zerohedge reporting on the trimtabs employment report. not so rosy.

http://zerohedge.blogspot.com/2009/05/real-unemployment-report.html

cc, I wonder if they want to make some more money by luring the poor retail investors back out of their money markets. pump, get the poor suckers back in so "volume" makes it look like a real bull, ride it up for awhile, then dump.

insiders still unloading like mad.

As expected the purpose of the stress tests..STALL u& MANAGE PUBLIC EXPECTATIONS....
from the Washington Post...
Bank Tests Yield Early Progress
Firms Race to Shore Up Books

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By Binyamin Appelbaum
Washington Post Staff Writer
Wednesday, May 6, 2009

The Obama administration's plan to "stress-test" 19 large banks is yielding benefits even before the findings are released tomorrow.
This Story

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Major Banks Fare Better Than Projected in Stress Tests
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Markets Close Higher on News of Stress Tests
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Bank Tests Yield Early Progress

The announcement of the tests in February roiled the markets initially. But the 12-week wait for results has since provided a respite, allowing investors to breathe deeply and giving time for a raft of federal rescue programs to start showing results.

The banks, eager to demonstrate that they don't need more federal aid, have spent the time racing to get stronger. The healthiest banks, such as Goldman Sachs and J.P. Morgan Chase, have tried to show that they can walk without government crutches, for example by issuing debt without federal assistance. Weaker banks such as Citigroup have agreed to sell valuable business units and moved with greater urgency to offload troubled assets.
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The main purpose of the stress tests remains largely unfulfilled. Federal officials want banks to raise more capital, from the government if necessary, so that they will have the financial strength to increase lending and help lift the economy from recession. The success of that process, which begins tomorrow and could take six months, ultimately will depend in large part on whether investors believe the government's assertion that many banks are healthy and deserving candidates for new investment. Otherwise, investors might not provide the needed capital.

But in persuading investors to wait patiently for the results, the Obama administration has already succeeded in achieving a goal that largely eluded its predecessor.

"The administration gets full credit for designing and communicating that there would be a new mechanism to determine needs across the system. This was a sophisticated way to establish a timetable that was readily understandable to the market," said David Nason, a Treasury aide in the Bush administration who now works for Promontory Financial.

The seeds of the stress test were planted in the fall, after Henry M. Paulson Jr., then Treasury secretary, forced nine of the largest banks to accept investments totaling $125 billion. This first round of money was intended to stabilize the financial system, but Treasury officials recognized that some of those banks would need more money. The idea of conducting a special examination to determine the needs of each bank emerged as a logical approach, participants recalled.

The deteriorating condition of Citigroup, however, forced the government to act before a plan was complete. A second ad hoc rescue soon followed, for Bank of America, further frustrating senior officials such as Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., who pushed for the development of a standardized approach.

The major innovation introduced in February by Treasury Secretary Timothy F. Geithner was the emphasis on measuring all of the major banks against common standards, leveling out differences in the way firms projected losses.

At the time, the Treasury did not plan to disclose the results to the public, adhering to the long-standing practice of banking regulators that such information is kept secret to preserve confidence in banks and keep information from rivals.

But senior officials said it became clear that investors would dismiss the stress tests unless the government provided data to back its assertions about which banks were healthy and which needed additional capital. The government now plans to release about 150 pages of detailed findings tomorrow, an unprecedented portrait of the nation's largest banks.

Many financial analysts regard this transparency as one of the virtues of the stress tests because it allows investors to differentiate among banks, encouraging renewed investment in the strongest firms.
The government has tried to manage public expectations about the tests by arguing that the banks will be fine while acknowledging that they have big problems. Financial analysts said the government's efforts have calmed the markets.
This Story

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Major Banks Fare Better Than Projected in Stress Tests
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Markets Close Higher on News of Stress Tests
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Bank Tests Yield Early Progress

Bank of America's share price has climbed by 129 percent since the tests were launched. Wells Fargo is up 78 percent, even though both companies are likely to be ordered by the government to raise additional capital. Even Citigroup, the most troubled of the large banks, has risen 27 percent.

"I think the stress test itself really spooked the system, and I think the government did a lot of damage control over the stress tests to kind of tell people that it's going to be okay," said Paul Miller, a financial analyst with FBR Capital Markets.

Miller said recent events have helped the government's case, as the largest banks posted strong first-quarter earnings goosed by a combination of diminished competition on Wall Street and the flow of cheap loans from the Federal Reserve.
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Still, Miller cautioned that the stress-test process may not be enough to repair problems at the weakest firms. Senior administration officials said all 19 tested banks probably could survive the downturn without more capital by cutting back on lending and hoarding their resources. By forcing the banks to accept more capital, the government hopes to convince them that they are safe in increasing lending. The point of the stress tests is not to rescue banks from failure, they said. It is to rescue the economy.

The government hopes the new capital will come mostly from private investors. But many banks are likely to receive additional support from the government. The Treasury has allowed banks to exchange common shares for the government's preferred shares, eliminating required dividend payments.

Banks that do not require additional capital are likely to push for permission to repay the government's existing investments.

The government has allowed 11 smaller banks to repay the money, but it has not yet allowed any larger banks to do so. Some government officials said banks should not be allowed to repay the Treasury while continuing to tap other sources of aid, such as a Federal Deposit Insurance Corp. program that allows banks to issue debt at lower interest rates by guaranteeing repayment.

A senior government official said Monday that companies would be allowed to repay federal investments only once they demonstrate an ability to issue debt outside the shelter of the FDIC's program. The government plans to impose other conditions on repayment, as well, the official said. The Treasury may announce the details as early as today.

J.P. Morgan, Goldman Sachs and BB&T have successfully issued debt in recent weeks without a government guarantee.

Fed's Yellen Says Econmoy at Inflection point

http://www.bloomberg.com/apps/news?pid=20601068&sid=ajrff4XA6bmQ&refer=economy

Globally as well..

http://bloomberg.com/apps/news?pid=20601068&sid=aIm15cuxyt0c&refer=economy

A Housing Crash Update

By MIKE WHITNEY

Why is the press misleading the public about housing? The housing market is crashing. There are no "green shoots" or "glimmers of hope"; the market is worn to a stump, it's kaput. Still, whenever new housing figures are released, they're crunched and tweaked and spin-dried until they tell a totally different story; a hopeful story about an elusive "light in the tunnel". But there is no light in the tunnel; it's dark as pitch as far as the eye can see. There’s no sign of a turnaround or a "bottom" in housing at all; not yet, at least. The real estate market is freefalling and it looks like it’s got a long way to go. So why are the media still peddling the same "rose-colored" claptrap that put the country in this pickle to begin with?

Read more...

http://www.counterpunch.org/whitney04242009.html

Construction spending rising

http://online.wsj.com/article/SB124144656237183413.html

I like Yellen.

"A recovery, once it takes hold, will be “frustratingly tepid,” she said."

jsmith, do you read what I post, or only post what you read? just curious. if you do read it, I'd really love to hear your take on the Dean Baker post that the wage and income deflation news far outweighs any "green shoots" we've seen to date. He is very highly respected, btw. Not just a talking head.

I also believe that you quoted Calculated Risk earlier. You do know that he expects construction spending, due to decreased non-residential expenditures, to "fall off a cliff" the next 12-18 months.

by the by, I wouldn't trust anything based on numbers out of China, so don't bother to post those, unless you don't care about credibility in the slightest.

do you even read what you post, or just look at headlines? because I see alot more mixed messages than you do.

From Today's Washington Post(things did not change after the crash until the Pecora Commission which took a few years...)

By Dina ElBoghdady
Washington Post Staff Writer
Thursday, May 7, 2009
Many of the banks receiving billions of dollars in federal aid owned or bankrolled subprime lenders that directly contributed to the unraveling of the global economy, according to a new report.

While many portrayed themselves as unwitting victims of the subprime mortgage meltdown, the banks also enabled that kind of lending because it was lucrative, according to the Center for Public Integrity, a nonprofit investigative reporting group funded largely by charitable foundations. The group analyzed federal data on 7.2 million mortgages made from 2005 through 2007, a period that covers the peak and collapse of subprime lending.

The report oversimplifies the problem and ignores the complexities of the market, said Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents some of the nation's largest lenders. "To say we are victims is understating, and to say we are enablers is overstating," he said.

Banks that received federal bailout money financed at least 21 of the top 25 subprime lenders, the investigation found. They owned these lenders, extended credit to them, or bought their loans and then sold them as securities.
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Wells Fargo, J.P. Morgan Chase, Citigroup, Regions Financial Corp., GMAC, Capital One and the insurance company American International Group all owned subprime lenders, according to the center's tally. AIG still owns one of those lenders, American General Finance. Ten of the top 25 subprime lenders have paid to settle claims related to abusive lending, and 20 of them have closed, stopped lending or sold themselves.

The largest subprime lender, California-based Countrywide Financial, received cash and credit from various banks, including Bank of America, which purchased the company in July 2008 during the subprime meltdown.

The center's report also maintains that government officials were slow to react to warnings about the subprime crisis. It says that the top 25 subprime lenders spent at least $280 million on campaign donations and lobbying in the past decade.

In the first half of this decade, when home prices shot up, Americans raced to subprime loans, seduced by easy credit available to people with poor credit or little cash.

The federal government played its part in fueling the appetite for subprime loans, according to numerous analyses in recent years. After the technology stock bust of 2001, the Federal Reserve cut a key short-term interest rate to rev up the economy, enabling lenders to borrow money at low rates, lend that cash to home buyers and then sell the loans as securities to other institutions.

The authors of the articles, published at http://www.publicintegrity.org, said they tried to reach top-ranking officials at each bank with mixed results. Bank of America did not respond. A Wells Fargo spokesman said 93 of every 100 of its customers were current by the end of last year, which it said was a testament to how carefully it vets borrowers. And a Capital One spokeswoman said that the subsidiary cited in the report is not a subprime lender but rather a lender of Alt-A loans, which require little or no verification of income