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By Jeff Harding Some good numbers, if you see a decline in GDP as “good,” came out today. GDP only contracted at a 1% annual rate versus an anticipated –1.5% rate. The interesting thing was that every article I read on it (WSJ, Bloomberg, AP, Reuters, NYT) all had stories to the effect that “its over,” [...] By Jeff Harding Our banks are not in good health. By any measure they are still fragile because their capital ratios remain low. What does this mean? The Tangible Common Equity (TCE) Ratio is the equity of a bank minus its preferred shares, goodwill and intelligible assets as a percentage of tangible assets. The Tangible Common Equity [...] By Jeff Harding To follow up on yesterday’s article on China’s dilemma—the $1.5 trillion is US debt they hold—it seems that this week’s Treasury auctions ran into trouble: Shaky auctions of Treasury notes this week reignited concerns about whether the government can attract buyers from China and elsewhere to soak up trillions in new [...] By Jeff Harding This was in the Wall Street Journal this morning. You’ll love it. By Jeff Harding We’ve don’t have a problem with China. China has a problem with us. They hold $801.5 billion of US Treasuries and another $720 billion of US agency debt. That’s $1.521 trillion, which is substantial to say the least. When you think about it, it is very nice of them to finance our [...] By Jeff Harding The Wall Street Journal reported on the fact banks are still contracting credit. They reported that the 15 largest banks’ loans shrank by 2.8% in the second quarter. They blamed it on tighter lending standards and lesser demand for loans. Here is David Rosenberg’s (Gluskin Sheff) take on the data: AN ‘F’ IN FINANCE We highlighted [...] By Jeff Harding The S&P Case-Shiller housing report for May came out today and the Wall Street Journal and others ran this headline: “Home Prices Rise Across U.S.: Bargain Hunting, Low Rates Drive First Gain in 3 Years; Double Dip Still Possible.” Wow, that’s big news. But it didn’t sound right. Then I realized that these were [...] By Jeff Harding This is a really interesting article from the Wall Street Journal comparing this recession with other post-WWII recessions. I’ve added emphasis to the interesting stuff. This is bit of Recession 101, but you will like it. What makes the current recession so bad? Other downturns have been more painful by some measures, but none [...] By Jeff Harding Housing is continuing to strengthen in terms of sales, but prices are still falling. This suggests that buyers are still being drawn in for bargains, but foreclosures and short sales are a significant portion of the market: 31% in June. More important is that inventory of new homes went down [...] By Jeff Harding I collected some interesting statistical data this week that I want to share. They are good indicators of what’s happening in the economy. They speak for themselves. Click on a chart to enlarge it. Total Credit Market Debt as a Percentage of GDP
By Jeff Harding While Laurence Meyer is no longer a governor (1996 to 2002) of the Federal Reserve, his commentary on the economy is widely followed. In comments very few commentators picked up last week he said that we won’t return to full employment for six years. His reasoning was that the Fed, in order to control [...] By Jeff Harding This article by Dr. Frank Shostak just came in from the Mises Institute. Dr. Shostak is the former chief economist at Man Financial, the largest investment fund in the world, and now chief economist for MF Global, the trading arm of Man that was spun off into a separate [...] By Jeff Harding The Germans have a way with language. They invent words no one should have thought of. Take “schadenfreude” for example. Who else would have thought up the concept of taking pleasure from someone else’s loss. (Schaden = loss; Freude = pleasure.) It’s a secret pleasure, a gloating where you think [...] By Jeff Harding I got this from Calculated Risk. 30 year mortgage rates are creeping up according to the Mortgage Bankers Association: The average contract interest rate for 30-year fixed-rate mortgages increased to 5.31 percent from 5.05 percent, with points increasing to 1.18 from 1.12 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. Also loan applications are [...] By Jeff Harding New York Times columnist and Nobel prize winning economist Paul Krugman says (“The Joys of Sachs”) that record profits are good for Goldman Sachs and bad for the country. Professor Krugman’s view is that the economy has been “financialized” since the “deregulation” of the Reagan Administration. That is, more and more [...] By Jeff Harding Just in case you missed this, Neil Bardofsky, the guy in charge of auditing TARP and related programs, said yesterday that “U.S. taxpayers may be on the hook for as much as $2.37 trillion to bolster the economy and bail out financial companies.” This includes all obligations by the Fed and Treasury, including [...] The Daily Capitalist Predicts the Future …… By Jeff Harding…….. There is an endless supply of bad news I could report but most of you who follow the daily news know much of that. I have occasionally been accused of ignoring the good news and placing an unfair emphasis on the bad news to [...] By Jeff Harding I have long stated that this economic crisis is the biggest the world has ever seen, including the 1930s. I say that because this crisis has penetrated every corner of the globe. US bankers weren’t the only ones securitizing debt at a record pace: many other countries adopted these innovative [...] By Jeff Harding Here are the latest musings by David Rosenberg, Chief Economist at Gluskin Sheff, formerly Chief Economist for Merrill Lynch, who called the Crash. He’s always worth listening to. IS THE U.S. DOLLAR NEXT? It is the second anniversary of the credit crunch and after all of the fiscal and monetary [...] Why do they call it “investing?” Jon Stewart takes on Cramer — again. Hilarious. If the video doesn’t load, go here.
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