S&P Rates Subprime Mortgages Higher Than U.S. - Bloomberg:
'via Blog this'
Wednesday, August 31, 2011
Another idiot claiming No recession. Love it !
Employment: Private-Sector Job Creation at 91,000; Layoff Pace Slows - CNBC: "Despite the tepid pace of job growth, which is well below the amount needed to reduce the 9.1 percent unemployment rate, Joel Prakken, chairman of Macroeconomic Advisors, said the economy probably isn't in recession.
"Our best recession probability models say that the likelihood that we're actually in a recession right now is actually very, very small," Prakken told CNBC."
'via Blog this'
"Our best recession probability models say that the likelihood that we're actually in a recession right now is actually very, very small," Prakken told CNBC."
'via Blog this'
Tuesday, August 30, 2011
Low volume levitation on QE anticipation...once again.
Yesterday we said that the "2010 Post-Jackson Hole No Volume Levitation Has Begun." Sure enough Day 2 is in the books. And anyone who recalls those fun days of deranged volatility from a week ago, when the DJIA moved +/- 400 points in a day, you can kiss those goodbye. The new no volume levitation regime is the same as the old no volume levitation regime, experienced so well between August 2010 and March 2011. The market will proceed to price in central planning in its most recent iteration of QE3 day, after day, after day, until September 21, and if nothing is announced then, until November 2, and then December 13, and so on, because the levered beta pursuit, aka "career risk" trade is now back on. It also means that the Fed will soon have to resume monetizing the $2.4 trillion in debt, well above the total excess reserves held by banks currently, that will be issued over the next year (did our good readers forget about all that debt that needs to find a buyer?). And while stocks are picking up the now standard 10 ES points per day, gold will one day very soon declare its independence from this centrally planned bullshit and just take off on its way to a self-imposed gold standard, which also means first 4, then 5, then increasingly more zeroes when expressing its price in reserve bank toiler paper terms. Incidentally, just like last year "nobody" could see QE2 happening, it may be time to put some money in Paulson & Co. which has been all but left for dead - somehow he always pulls out the centrally assisted hail mary in the last minute.
What is truly sad is that our fearless centrally planned leaders have officially run out of ideas and the only thing they can do is regurgitate the same policy error that did not work last year.
Oh well, at least everyone knows by now how it all ends: stocks unchanged for the year, gold up 30%
Monday, August 29, 2011
We are in a recession...again, Based on YoY GDP @ sub 2%
While the key market moving event from last Friday may have been Bernanke's Jackson Hole speech which merely left the door open to future QE episodes, the most important event from an economic standpoint was the first GDP revision Q2, which dropped from preliminary 1.3% to a sub stall speed, in real terms, 1.0%. What is just as important is that as the following chart from Bloomberg demonstrates, the YoY change in real GDP, which is now at 1.5%, is a slam dunk indicator of recession: "Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy." Bernanke agreed that "growth has for the most part been at rates insufficient to achieve sustained reductions in unemployment." And while Bernanke is shifting dangerously into Greenspan territory with the open-ended interpretation of his statement, another thing that is more actionable is the observation that virtually every time real YoY GDP has dropped below 1.5%, this has led to a negative nonfarm payroll number. Granted, the result may not be as shocking as what the Philly Fed implied vis-a-vis this Friday's NFP, but we believe a subzero print in the August labor report will convince the three Fed holdouts that the time for yet another monetary intervention is here (Arab Spring part deux consequences be damned).
Real GDP YoY:
And Real GDP YoY vs NFP:
Also, below is a complete compendium of all the mecroeconomic charts that matter this week:
And lastly, sealing the deal for the "recession" argument is the following data from John Lohman which finds that the collapse in real-time economic data over the past three months is the sharpest in history.
To wit:
Another day, another disappointing real-time indicator declines AND is below consensus estimates. In fact, every manufacturing index for the month of August has missed expectations and signaled further weakness. As Bernanke, the IMF, and most Wall St. economists cling to the notion of a second-half acceleration, the rest of us are witnessing a deterioration in global growth which is unprecedented.
Few pictures sum up this collapse in output better than the chart below which plots the three month change in the “Global Surprise Model” (GSM). I created the GSM in the late 1990’s as a means of tracking how the most important (as measured by timeliness and market response) economic statistics were being reported relative to estimates. Although Goldman, and later Citigroup, created comparable models in the early 2000’s, it remains a very useful tool for tracking the change in economic growth (2nd derivative) relative to consensus forecasts.
As shown, the current three month change is the largest in the history of the model. In other words, the collapse in real-time economic data (such as ISM, German IFO, etc.) over the past three months is the sharpest of the last two decades for which data is available.
Few pictures sum up this collapse in output better than the chart below which plots the three month change in the “Global Surprise Model” (GSM). I created the GSM in the late 1990’s as a means of tracking how the most important (as measured by timeliness and market response) economic statistics were being reported relative to estimates. Although Goldman, and later Citigroup, created comparable models in the early 2000’s, it remains a very useful tool for tracking the change in economic growth (2nd derivative) relative to consensus forecasts.
As shown, the current three month change is the largest in the history of the model. In other words, the collapse in real-time economic data (such as ISM, German IFO, etc.) over the past three months is the sharpest of the last two decades for which data is available.
S&P Volume less than 50% of Average Volume....= 7% Rally!
One simple flowchart describes today's action: If Low Volume => Levitation, the same we had seen repeated over and over and over between August 2010 and March 2011. And to think that the combination of two insolvent Greek banks into one insolvent Greek bank was sufficient to catalyze this move, despite yet another day of bad economic news confirming that the economy is now in a recession. Fear not: the worse it gets, the likelier Bernanke is to announce QE3 on September 21. And if not then, there is November 2. And if not then, there is December 13, and so on. Bernanke may never have to announced QE3 - he just has to keep dangling the carrot before the market that one day, soon, he just may follow through on his promise/threat. In other news, expect CNBC to trot out David Tepper soon to explain the logic of it all yet again.
ES volume: 1.8 million shares: 1.9 million below average
Absolute perspective:
And NYSE volume:
Saturday, August 27, 2011
Money Still Owed In Federal Bailout: $1.5 Trillion Still Owed to Treasury, Federal Reserve
Submitted by Mary Bottari on August 3, 2011 - 12:24
Most of the bailout funds were comprised of aid to banks – the peak outstanding amount was $2.2 trillion in January 2009 – which took place at the height of the financial crisis in the form of loans with below-market interest rates and for questionable collateral to banks directly from the Treasury and Federal Reserve.
The analysis, presented in charts and an online table and program profiles, is based entirely on government records. This comprehensive assessment of the bailout goes beyond the relatively small Troubled Asset Relief Program (TARP) program to look at the rest of the Treasury and Federal Reserve’s multi-trillion dollar response to the financial crisis. It shows that while the TARP bailout of Wall Street (not including the bailout of the auto industry) amounted to $330 billion, the government also quietly spent $4.4 trillion more in efforts to stave off the collapse of the financial and mortgage lending sectors. The majority of these funds ($3.9 trillion) came from the Federal Reserve, which undertook the actions citing an obscure section of its charter. 
A new study released today by the Center for Media and Democracy (CMD) shows that, despite rosy statements about the bailout's impending successful conclusion from federal government officials, $1.5 trillion of the $4.8 trillion in federal bailout funds are still outstanding.
“In order to understand the big picture on the bailout, you have to look beyond TARP and examine the trillions the Federal Reserve has disbursed to keep the big banks above water. $4.8 trillion went out the door to aid financial companies and repair the damage they caused to financial markets, and $1.5 trillion of that is still outstanding,” said Mary Bottari, director of CMD’s Real Economy Project.
TOTAL WALL STREET BAILOUT COST TABLE: You can click here to see our a full list of each bailout program, the amount of money disbursed and the amount of money outstanding in each program.
Mortgage-Backed Securities Purchases
CMD’s study also shows how the government is continuing to prop up the same banks that caused the crisis in its attempt to help the housing market. The government’s housing program – which peaked at $1.6 trillion outstanding in July 2010 – is aimed at keeping mortgage lending flowing by subsidizing deals Fannie Mae and Freddie Mac make with the banks. Treasury and the Federal Reserve’s main approach has been to buy more than a trillion dollars worth of mortgage-backed securities from Fannie Mae and Freddie Mac so that the two government-sponsored enterprises can continue to purchase and bundle mortgages from the banks, which they sell to Fannie and Freddie at a profit. The banks also benefit from the hundreds of billions in direct loans the government has made to Fannie and Freddie, which the GSEs then turn around and make in insurance pay-outs to banks for mortgages that have gone bad.
This massive effort is in stark contrast to the mere $2 billion the Treasury has spent to directly help homeowners stay in their homes via the widely criticized Home Affordable Mortgage Program (HAMP) program. With housing prices continuing to falter and the United States approaching 9.2 million foreclosure filings since the beginning of 2008, HAMP can be described as nothing less than an abject failure.
“The Federal Reserve and the Treasury have spent $1.6 trillion in a bank-shot to save the mortgage lending market by using the same financial companies that got us into this mess,” said Conor Kenny, lead author of the study. “That’s more than 800 times what they’ve spent directly to keep homeowners in their houses, and the banks have made money off the whole thing.”
CMD’s analysis also shows how the $4.8 trillion bailout of the financial sector dwarfs the $600 billion that the Federal Reserve spent on the much-hyped “Quantitative Easing 2” of 2010-2011 that was intended to help the broader economy – not just the financial sector – by lowering interest rates across the board and preventing deflation.
Friday, August 26, 2011
GDP 8-26-2011. Disappointing... again
The first revision to Q1 GDP printed at 1.0%, down from the preliminary Q2 GDP print of 1.3%, and as expected was worse than Wall Street consensus of -1.1%, although it was certainly not as bad as the miss to the preliminary number. Stone McCarthy's forecast of 0.7% is not necessarily wrong: it is probably just early: the final revision to Q2 GDP will come on September 29, one week after the next FOMC meeting, and will be the last sub 1% GDP growth number before we see a negative GDP print for Q3. Personal Consumption printed a little better than expected at 0.4%, higher than consensus of 0.2%. Alas, this number will be whacked massively in Q3. Core PCE was also slightly higher than expectations of 2.1%, coming at 2.2%. The components of the 1.0% revised GDP were: PCE: 0.3%; Fixed Investment: 1.01%, Change in Private Inventories: -0.23%; Exports: 0.41%; Imports -0.31%; and Government consumption -0.18%. This is the third consecutive quarter in which the government has taken away from growth.
Full breakdown below:
And here is why any rumors of a US recovery are greatly exagerated:
And here is Goldman's breakdown:
1. Q2 real GDP growth was revised down to 1.0% (quarter-over-quarter, annualized) in the second estimate, down from 1.3% in the advance report. The revision reflected a reduction in the contribution from inventories to -0.2 percentage points (pp) from +0.2pp previously. Final sales growth-GDP excluding the effects of inventories-was revised up to 1.2% from 1.1% in the advance report. Changes in the components were in line with our expectations. Consumer spending and business fixed investment were revised up, but net exports were revised down. Other components were close to unchanged.
Gold. 8-26-2011 Margins raised and value add reasoning
Western Speculators Sell Gold; Asia and West Buy Bullion - Coin and Bar Supply Increasingly Tight
Gold is higher in most currencies but especially in dollars and Swiss francs. The dollar and European equities are lower due to nervousness prior to Bernanke’s speech at Jackson Hole. Expectations are waning that Federal Reserve Chairman Bernanke will indicate further quantitative easing measures to prop up the ailing U.S. economy – at least in the short term.
Gold is trading at 1,790.80 USD , 1,241.10 EUR , 1,098.90 GBP, 1,422.50 CHF and 137,779 JPY per ounce.
Cross Currency Table
Gold’s London AM fix this morning was USD 1,787.00, EUR 1237.10, GBP 1094.17 per ounce (up from yesterday’s USD 1,716.50, EUR 1191.10, GBP 1049.59 per ounce).
Gold rose sharply from the low of $1,704.25 yesterday and eked out a 0.3% gain. It is too soon to say if the sell off is over though.
Gold is set to finish the week lower as it is 3.7% lower so far on the week. This will embolden the momentum traders on the COMEX. There is also the risk of another margin increase from the CME. Although it is hard to know how they could justify this as gold’s leverage is now in line with most commodities and less than that on US Treasuries.
Gold in US Dollars – Two Weeks (Tick)
The correction was primarily due to the Shanghai and COMEX margin increases. Profit taking and short selling also took place due to gold’s short term very overbought status.
Mitsui in London note the unusual nature of the PM fix yesterday "in an extraordinary afternoon fix in London, gold was pushed down from a starting price of $1,806 to fix at $1,770."
Sharps Pixley’s respected Ross Norman noted that the furious nature of the selling could be motivated by Jackson Hole: "I have never been a fan of conspiracy theories but I do wonder about the manner and timing of the sell-off. Much of the selling was conducted through the London p.m. fixing (when New York was active) which is a favored route for official (central bank) selling rather than being finessed into the market as a fund might prefer. It was, if you like, a statement - and quite a handy and effective one just in advance of the Jackson Hole meeting."
Our conversations with people in the industry and our own experience makes us confident that this is a paper driven sell off drive primarily by speculative, leverage interests on Wall Street.
Bullion dealers and banks have not changed their long term outlook for gold and are ignoring the considerable “noise” and bubble chatter on Twitter and in the media in recent days. This chatter has again come from those who have little understanding of the reality of the gold market.
GoldCore like other bullion dealers, bullion banks and government mints internationally have experienced near record demand for physical bullion coins and bars in recent days.
Overall supplies of small gold coins and bars are at low levels and some refiners are having difficulty meeting demand with some indicating delays in providing stock of six weeks. Perth Mint gold bars (1 oz) at competitive prices remain available in volume.
UBS note that their gold bullion sales to India were the best this week since May – twice the average daily volume.
Robust physical demand from Asia is again clearly seen in premiums for bullion in Asia. In India, ex-duty premiums were $5.82 on the London AM Fix and $10.80 on the London PM Fix with world gold at $1,732.62 and $1,707.10. These are high premiums and show that demand from the sub continent remains very healthy.
Bloomberg Composite Gold Inflation Adjusted Spot Price - U.S. Urban consumers price index (CPURNSA)
High premiums in India have been a fairly good indicator of lows in the world gold price. Sometimes, world gold rises high enough that imports stop.
India’s economy is strong and growing thereby creating a significant‘wealth affect’. There are now more than 83,000 US dollar millionaires in India along with 1 billion people with an affinity for and belief in gold.
India remains a significant buyer today and that is before September which is the big month for gold demand as the Indian wedding season begins.
In Vietnam, local gold was at a premium of $34.22 to world gold of $1,761.90 as inflation has surged in Vietnam on dong depreciation. Limits on gold shipments have been removed for some companies as part of attempts to halt a surge in domestic prices.
Bloomberg reports that in Vietnam, gold rose to as high as 47.1 million dong ($2,263) per tael in Hanoi as of 3 p.m. local time, compared with 45.6 million dong yesterday, according to the Vietnam Posts and Telecommunications. One tael is about 1.2 ounces. “Banks continued to buy dollars to import gold due to the significant gap between domestic and international gold prices,” Viet Capital Securities Joint-Stock Co. wrote in a note late yesterday.
Premiums on gold bars in Hong Kong and Singapore have also been healthy in recent days. "Investors are feeling really comfortable holding the metal at any prices," a Hong Kong-based trader told Dow Jones on Wednesday when gold has corrected to $1844/oz.
In Shanghai yesterday, near record volume saw gold close at a premium of $9.02 to world gold of $1,744.80. China’s total demand for gold has increased on average 14% every year since 2001, but much of it has been propelled by individual investors, Caixin Online reports.
Asians beg to differ with those calling gold a bubble and Asia is clearly a buyer at these levels.
Asians understand gold is a store of value and financial insurance.
Gold's value is that it is a safe haven asset. These are not the claims of a vested interest but an empirical fact backed up by much international academic research.
Thursday, August 25, 2011
Friday, August 19, 2011
Harrisburg, PA Mayor, Linda Thompson is fasting for 3 days and praying to try and resolve the city's Financial problems
Pa. Mayor, Religious Leaders Unite to Fast and Pray for Harrisburg, Christian News
June 22. 2011 original article.
Excerpt
Excerpt
Mayor Linda Thompson of Harrisburg, Pa., is uniting with religious leaders and fasting for three days starting Wednesday for the good of the city amid a financial crisis.
Related Topics
The mayor hopes that during the three days "a cooperative spirit among government leaders, the business community and citizens" will pervade as the city faces various challenges.
The fast will be based on an all liquid diet where dozens of religious leaders from Christian, Jewish, and Muslim faiths will participate. The fast will end Friday evening followed by a prayer service at Goodwin Memorial Baptist Church, where Thompson has been a member for 13 years.
Due to the city’s current financial debt of nearly $300 million and a possible bankruptcy, Thompson believes that “things … are above and beyond my control. I need God. I depend on Him for guidance – spiritual guidance. That's why it's really no struggle for me to join this fast and prayer."
Monday, August 15, 2011
Market rally on extremely low volume 8-15-11
When witnessing this latest vapor volume melt up, what can one say but victory for the bulls... Oh yes, ignore that the relentless rally is on 40% of the past 10 day average volume. 1.8 million ES contracts on 4.46 million 10 DMA. Irrelevant: inverse distribution or something is the conventional spin. Europe is fixed, and no recession is coming - just cover any and all shorts before Google buys them all. Also ignore when a month from today we are back to the level when two ES contracts send the market limit up.
And for those wondering why ES volume actually matters, here is your answer - ES afterhours.
Margin Calls Push Stock Leverage Down Most in Year as S&P 500 Tumbles 12% - Bloomberg......AND Birinyi is still bullish!!
Margin Calls Push Stock Leverage Down Most in Year as S&P 500 Tumbles 12% - Bloomberg
Dumbass Birinyi is interviewed in this article and says he is still bullish!!!
Empire State Index down again. Bad business conditions continue
The first August leading indicator starts off with a thud, after the Empire State manufacturing index just confirmed that the recent brief push higher was, well, transitory. Printing at -7.72, on expectations of 0.00, down from -3.76, the first diffusion index of the month just saw a third consecutive contractionary print in a row, setting the stage for much more ugliness in August. The summary was succint: "Business conditions continue to deteriorate: "The general business conditions index fell four points to -7.7. The new orders index also fell, inching down to -7.8; the negative reading—the third in a row—indicated that orders had declined. The shipments index held steady at 3.0, a sign that shipments were slightly higher over the month. The unfilled orders index continued to drift down, falling three points to -15.2. The delivery time index was little changed at 0.0. The inventories index dropped two points to -7.6, suggesting that inventory levels were down slightly." What is surprising is not that the current outlook is deteriorating, but that for the first time, the future index finally cracked as the hopium has finally ran out: "The future general business conditions index fell twenty-four points to 8.7, its lowest level since February 2009. The future new orders and shipments indexes dropped to their lowest levels since September 2001." I.e., hope is no more. And there is nothing to take its place.
Looking at individual indices, the New Orders index dropped to November 2010, Unfilled Orders dropped to December 2010, Inventories dropped to December 2010 levels, Prices Paid down to November 2010 levels, as as Priced Received. Amusingly the Number of Employees increased modestly from 1.11 to 3.26, coupled with an increase in the Average Employee Workweek: and there's your spin.
And in a special supplementary report, the NY Fed indicated that manufacturer still face difficult finding workers with select skills:
In a series of supplementary questions to the August 2011 Empire State Manufacturing Survey, fi rms were asked how much diffi culty, if any, they were experiencing in fi nding workers profi cient in select skill categories; they were also asked to estimate the costs of the training needed to bring new hires up to speed. The table below shows the results of the survey alongside the results from a parallel survey conducted in March 2007.
Despite the current slack job market, manufacturers’ responses in this month’s survey were not substantially different from those recorded in March 2007, when New York State’s unemployment rate was below 4½ percent. As in the earlier survey, workers with advanced computer skills were seen as the hardest to find: On a scale of 0 to 100, this task received a difficulty rating of slightly more than 61 in this month’s survey—almost identical to the rating it received in 2007. (See the table for a detailed explanation of the diffi culty measure.) Finding workers who are punctual and reliable received the second highest difficulty rating, followed by the task of finding workers with good interpersonal skills; these results, too, mirrored those from the earlier survey.Respondents were also asked to estimate training and related costs for new hires as a percentage of overall compensation. On average, manufacturers indicated that such costs accounted for 6.5 percent of total compensation in the past year, compared with 5.6 percent in a typical year—percentages that closely tracked those cited in the 2007 survey. The median proportion was reported to be 5.0 percent, for both the past year and a typical year.
Finally, in a question not posed previously, manufacturers were asked how much they expected a typical worker’s wage or salary to increase (or decrease) over the next twelve months—not including benefi ts and not including any promotion or change in hours worked. The vast majority of respondents, 79 percent, predicted at least some increase in pay, while 21 percent expected wages to remain unchanged; no respondents anticipated a decline. The average expected pay increase was reported to be 2.4 percent, while the median was 2.8 percent.
Thursday, August 11, 2011
CME Hikes Gold Margins By 22% And Gold Drops by....0.4%, Resumes Climb ...Guess that means fear trumps greed...or...perhaps fear is trumping older fears.
Just after hitting a new all time high of above $1815 in spot gold, the CME immediately sent out a notice to members advising that gold margins for Tier 1 members were increasing by 22% for both initial and maintenance positions, from $4,500 to $5,500. Unfortunately for the CME, this predetermined move was telegraphed to the market weeks ago, and with rumor 57 out of 22 finally turning out correct, this latest move only managed to push gold down modestly, and at last check was once again trading above $1,800. Just like all central bank interventions, which now have a half life between 1 hour and 4 days max, so this latest exchange attempt to subdue prices will fail spectacularly. Naturally, just like in the case of silver, this will merely embolden the CME to proceed with hike after hike, which in turn will kill speculative elements while merely reinforcing the strong hands. End result: in one month gold will be above $2,000 with almost 100% certainty.
In addition, the CME also hiked CHF futures by 443%, Yen futures by 25%, Ruble futures by 36%, as well as TEN, UBE and I3. The only margins that were cut were those of Uranium which dropped from 1320/1200 to 990/900 for initial/maintenance.
CME notice goes out at 6:31 pm, and gold promptly resumes upward climb:
Referencing my post of March 9, 2011 - Laszlo Birinyi said to BUY the market. he is markedly absent from the idiot talking head cabal on CNBC
BUY THE MARKET!!! Says Laszlo Birinyi....let's see what he says in a month or two
Birinyi Buys as Biggest Bull Rally Since `55 Hits Third Year
By - Mar 9, 2011 10:08 AM ET
EADS Asks Airlines to Pay Euros as Dollar Hedge - Bloomberg
EADS Asks Airlines to Pay Euros as Dollar Hedge - Bloomberg
Another spear in the almighty dollar shield. The Fed and the current policy makers will kill it before it's done.
From Bloomberg 08 2011
Emerging Markets
Manufacturers have enjoyed stronger demand from emerging nations such as China and Brazilbefore recent concerns about the European and U.S. economies raised the risk of a global slowdown.
Peoria, Illinois-based Caterpillar, the world’s largest construction- and mining-equipment maker, posted increased profits and sales in the second quarter, largely due to growth overseas, the company said July 22.
“China is doing a good job of balancing growth and inflation, and our expectations for China remain positive,” Chief Executive Officer Douglas Oberhelman said in the statement. “While we’ve seen some softening of growth in China, dealer deliveries to end users were up in the second quarter of 2011 compared with the second quarter of last year.”
The drop in the value of the dollar is one reason for optimism. A weaker dollar benefits American companies by making their products more attractive to buyers overseas. The dollar decreased 7.9 percent in the 12 months ended in July against a weighted basket of currencies from the country’s biggest trading partners.
Friday, August 5, 2011
FORECLOSURES PART 2
Housing's Double Dip Part II: Rising Foreclosures
Published: Friday, 5 Aug 2011 | 12:21 PM ET
Text Size
By: Diana Olick
CNBC Real Estate Reporter
CNBC Real Estate Reporter
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Justin Sullivan | Getty Images Is there a double dip in foreclosures on the horizon? |
Just as we saw a double dip in home prices, we may be seeing another surge in foreclosures.
And just as the home price scenario was caused by artificial government stimulus, in the form of the home buyer tax credit juicing home sales only briefly, the foreclosure scenario was caused by real negligence, in the form of the "robo-signing" paperwork scandal.
Banks and servicers stopped foreclosures entirely for a time after the malpractice was discovered, and courts delayed the process, picking through papers as foreclosures were resubmitted; that is now turning around.
The system is ramping up again, and foreclosure starts are up dramatically, more than 10 percent in June from the previous month, according to Lender Processing Services (LPS). The good news of the past few months has been that while the end game is quickening, as stalled foreclosures are making their way through the system at a faster pace, new delinquencies were decreasing, leading us all to believe that the crisis is abating.
Well think again.
New delinquencies rose 2.4 percent in June, which isn't a lot, but it is still the wrong direction. This as the pipeline is still so clogged that foreclosure timelines continue to rise. The average loan in foreclosure in June was delinquent a record 587 days, and more than 40 percent of 90+-day delinquencies have not made a payment in more than a year. For loans in foreclosure, 35 percent have been delinquent for more than two years, according to LPS.
Today's surprisingly good jobs report for July did not do much to impress economists, who cited still fewer people working in July than June and far fewer job creations on average in the past three months than in three months before that. Bottom line, we need surging jobs to shore up consumer finances and consumer confidence, both of which are vital to housing's recovery.
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Even as Fannie Mae reported a second quarter drop in mortgage delinquencies in its portfolio, chief economist Doug Duncan had this to say about the future:
"Economic growth at the current pace is insufficient to spur sustained, robust job creation, which is required to boost sentiment, spending and housing demand. Our July Fannie Mae National Housing Survey, to be released next Monday, continues to indicate a high level of caution among consumers regarding additional financial commitments. In addition, 70 percent of Americans believe that the economy is moving in the wrong direction, according to our quarterly survey that will be released . The impact of recent financial market volatility on household wealth is an additional setback to confidence and the outlook for the housing market."
If the foreclosure numbers are not improving significantly, which the latest data would indicate, and the weak economy is in fact getting weaker, the Obama administration will have to reverse its course of removing itself from housing and figure out new and better ways to jump back in.
I am constantly amazed, and have been for years, at how little the President speaks of our housing disaster, especially of late. It's what got us into this mess in the first place, and without its strong recovery, the economy cannot walk out of this recession ![[cnbc explains]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_shm0oT9cF4vbCzV8SXHQ5lUL62-z-GyqP1Zf9hZDjZC6yjsbos9EJkdOEuvZJtq4EtSf8d0y75oB09UwKOnUfGUB-NwSeukBk-s6b_ZYljJ1aIQ4jG92rFEf_tmYJ4FLiYPl8_XTYar1JtqC2xIhIIqTn-XfmQPepp9MyOmvgdorEd2gqTftwuz9AdAa4OfQ=s0-d)
on anything but a crippled foot.
on anything but a crippled foot.
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