While we're on OT chartfest, here's a beauty from propertyshark in nyc -- which I am going to ship posthaste to anyone yapping on about how nyc is immune to the RE bubble.
"March consumer credit up $13.46B
Americans loaded up on credit card debt and closed-end loans for cars, holidays and education, the Federal Reserve Board reports.
May 7 2007: 3:36 PM EDT
WASHINGTON (Reuters) -- U.S. consumer credit rose by a much bigger than expected $13.46 billion in March as Americans loaded up on both credit card debt and closed-end loans for cars, holidays and education, a Federal Reserve Board report showed Monday.
Consumer credit rose at a 6.7 percent annual rate in March to $2.425 trillion, while previously reported increases for February and January were revised higher, the Fed said.
The February gain was revised to $5.56 billion from $2.97 billion, while January's was boosted to $8.42 billion from $6.61 billion previously.
March revolving credit, made up of credit and charge cards, rose $6.77 billion, or a 9.2 percent rate, the largest gain since November.
March nonrevolving credit, made up of closed-end consumer loans, rose $6.69 billion, or a 5.3 percent rate, the biggest gain since January."
AC wrote: Looks like consumers may be turning back to credit cards in the wake of falling MEW
Actually, AC, they didn't. The reported increase is mostly from the seasonal adjustment. Whereas last year consumer credit was paid down by 10.1 billion from Feb to March, this year in March the consumer was only able to reduce debt by a scant .9 billion.
So it is worse than you would think - first, there is no support in this release for the idea that consumers will be able to use credit to boost spending, and second, the consumers don't seem to be reducing that roadblock to spending. The change between March of last year and March of this year is marked. I think it shows the impact of gas prices, because the Jan/Feb paydown was similar between years.
One category this in March of this year that saw a big increase in outstanding debt (actual) was non-revolving to finance companies. Normally, that does not make me see $$ for the general economy.
Credit in securitized pools dropped significantly.
This looks very similar to the NACM CMI report for April which deals with commercial credit. There's more stress on the credit/spending side of the economy than a lot of analysts want to see - and at some point they will have to stop blaming the weather.
Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.
According to Zurich-based Credit Suisse, 82 percent of subprime mortgages have an adjustable rate provision, meaning that payments start with low or ``teaser'' rates and adjust to a higher rate after a set number of years.
OMAHA, Neb. (MarketWatch) - Rising delinquencies and defaults in the subprime mortgage business probably won't be a big threat to the U.S. economy, Warren Buffett said on Saturday.
Still, the Berkshire Hathaway chairman said some of the company's construction-related businesses are being hit by the slowdown in home building, and that could continue "for quite a while."
Meanwhile, over in China where the yuan printed by the PBoC to convert all those export revenues at 7.7 to the dollar are flooding the financial system, the Shanghai Composite Index is now up 2.99% on the day (down from 3.17% a few minutes ago). Let's see, 250 more trading days at this pace and it will be up by a factor of 1580. But that would be only 2-1/2 years of bubble. The Tokyo and NASDAQ bubbles took five years to play out -- 625 trading days more; uhmmm, 1.0299 to the 875th power is ... 156.9 billion times. Ahh, the wonders of compounding.
Just imagine how much the Chinese will be willing to pay for Rockefeller Center.
CR, while there is a short term correlation on broker fees and investments there also seems to be a 3 fold increase of broker fees over the long run from 1960 to today from .25% to .75% GDP. One may argue that today the broker job is more efficient thanks to cell phones and computer databases. So what caused this massive increase?
8000 hedge fund managers, loaded down with overpriced and illiquid assets. Tremendous overlap throughout the portfolios.
Picture these same fund managers in a WalMart with shopping carts overloaded with the goods, first one through the exit gets to sell at a profit, the others are left with a capital depreciation strategy.
"But it was not only European and Asian banks, insurance companies, and hedge funds and pension funds that will suffer, wealthy Japanese investors may suffer the greatest losses of all. It is believed that the highest-yielding but riskiest tranches (risk level) of the subprime CDOs were bought by wealthy individual Japanese investors.
The head of structured finance research at Nomura Securities, Mark Adelson, said these investors did not fully understand the risk they were taking, depending instead upon the ratings given by credit agencies such as Moodys or the advice of those managing the security.
"A partial understanding of it is often no better than no understanding," Adelson said. "The devil is in the details; if you understand it vaguely, you can get your lights punched out."
So when will the lawsuits start to happen? It seems that the Moodys ratings were greatly at odds with the forseeable outcome, especially with respect to the 2006 vintage. From Moody's website;
"So Moody's takes a different perspective. We focus on the fundamental factors that will drive each rated entity's ability and willingness to meet its credit obligations over the long term.
As a rule of thumb, we look out over a time horizon of five-to-ten years at least through one full economic cycle. Moody's ratings do not ratchet up or down in response to short-term events such as quarterly earnings reports.
Rather, our emphasis is on a qualitative assessment of the "plausible crisis scenarios" that a rated borrower is likely to face and the fundamental investor protections that would enable management to continue to meet debt payments should the worst occur."
This from a company that is doing massive downgrading in a matter of months. Looks like the private sector watchdog was asleep or bought off. Or maybe they will use the current favorite excuse -"No one could have imagined."
On the foreclosure front, Foreclosures.com is reporting today that April foreclosures of all types are up over 100% from April 2006, but down approximately 15% from March 2007. They also note that April 2006 foreclosures had declined from March 2006.
Are foreclosures a seasonal thing? Is it more analytically correct to compare YOY numbers, as opposed to month-to-month?
I'm having trouble with the GDP percentages down the left. I was shocked by the idea of brokers taking in 1% of the US GDP. I tracked down the numbers (from the BEA link) I found that the brokers' fees commissions were $10.948B for 2006. Looking elsewhere on BEA (BEA : Page Not Found for the GDP, I see that the GDP for 2006 was $13.2466T. That would mean that the brokers' fees would be 0.08265% of GDP; is the scale off by a factor of 10?
I would be fascinated to know a little more about current multifamily vacancies, especially broken down by region of the nation, urban/suburban/small town, etc. Anyone know of such a map?
charts from dallas fed re housing
http://dallasfed.org/data/data/Housing-charts.pdf
Looks like consumers may be turning back to credit cards in the wake of falling MEW:
Revolving credit like credit cards, meanwhile, climbed by $6.8 billion, or 9.2% annualized.
U.S. consumer credit rises most since November
While we're on OT chartfest, here's a beauty from propertyshark in nyc -- which I am going to ship posthaste to anyone yapping on about how nyc is immune to the RE bubble.
PropertyShark Maps
Following on ac's post on consumer credit, here's another article on it from Reuters via CNN/Money.
CNNMoney.com: 404 Page Not Found
"March consumer credit up $13.46B
Americans loaded up on credit card debt and closed-end loans for cars, holidays and education, the Federal Reserve Board reports.
May 7 2007: 3:36 PM EDT
WASHINGTON (Reuters) -- U.S. consumer credit rose by a much bigger than expected $13.46 billion in March as Americans loaded up on both credit card debt and closed-end loans for cars, holidays and education, a Federal Reserve Board report showed Monday.
Consumer credit rose at a 6.7 percent annual rate in March to $2.425 trillion, while previously reported increases for February and January were revised higher, the Fed said.
The February gain was revised to $5.56 billion from $2.97 billion, while January's was boosted to $8.42 billion from $6.61 billion previously.
March revolving credit, made up of credit and charge cards, rose $6.77 billion, or a 9.2 percent rate, the largest gain since November.
March nonrevolving credit, made up of closed-end consumer loans, rose $6.69 billion, or a 5.3 percent rate, the biggest gain since January."
AC wrote: Looks like consumers may be turning back to credit cards in the wake of falling MEW
Actually, AC, they didn't. The reported increase is mostly from the seasonal adjustment. Whereas last year consumer credit was paid down by 10.1 billion from Feb to March, this year in March the consumer was only able to reduce debt by a scant .9 billion.
So it is worse than you would think - first, there is no support in this release for the idea that consumers will be able to use credit to boost spending, and second, the consumers don't seem to be reducing that roadblock to spending. The change between March of last year and March of this year is marked. I think it shows the impact of gas prices, because the Jan/Feb paydown was similar between years.
One category this in March of this year that saw a big increase in outstanding debt (actual) was non-revolving to finance companies. Normally, that does not make me see $$ for the general economy.
Credit in securitized pools dropped significantly.
This looks very similar to the NACM CMI report for April which deals with commercial credit. There's more stress on the credit/spending side of the economy than a lot of analysts want to see - and at some point they will have to stop blaming the weather.
April Foreclosure Filings More Than Double Over 2006
April Foreclosure Filings More Than Double Over 2006 (Update1) - Bloomberg.com
Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.
According to Zurich-based Credit Suisse, 82 percent of subprime mortgages have an adjustable rate provision, meaning that payments start with low or ``teaser'' rates and adjust to a higher rate after a set number of years.
Subprime crisis not big threat: Buffett
Buffett says subprime crisis not a big threat to U.S. economy - MarketWatch
OMAHA, Neb. (MarketWatch) - Rising delinquencies and defaults in the subprime mortgage business probably won't be a big threat to the U.S. economy, Warren Buffett said on Saturday.
Still, the Berkshire Hathaway chairman said some of the company's construction-related businesses are being hit by the slowdown in home building, and that could continue "for quite a while."
Meanwhile, over in China where the yuan printed by the PBoC to convert all those export revenues at 7.7 to the dollar are flooding the financial system, the Shanghai Composite Index is now up 2.99% on the day (down from 3.17% a few minutes ago). Let's see, 250 more trading days at this pace and it will be up by a factor of 1580. But that would be only 2-1/2 years of bubble. The Tokyo and NASDAQ bubbles took five years to play out -- 625 trading days more; uhmmm, 1.0299 to the 875th power is ... 156.9 billion times. Ahh, the wonders of compounding.
Just imagine how much the Chinese will be willing to pay for Rockefeller Center.
Great, great comments. What a blog!
I am completely serious. Wow.
In that spirit, here is
Arbogast's Argument For A Soft Landing!
Does it really matter to the American economy if there are tons of empty, decaying houses around?
No.
Did the popping of the dot-com bubble affect the American economy?
No.
Does the war in Iraq exert any economic effect?
No.
Will it matter if a few hundred thousand construction jobs are lost?
No.
Is employment strong?
Yes.
If employment is strong, then does it really matter in the slightest what happens in housing?
No.
Is housing a tempest in a teapot?
Yes.
NAR comes out with its proposed rules for lenders:
Real Estate Data, Statistics, Demographics, & Trends: NAR Current News
cal,
I only got as far as "Nar helps people who want to buy a home..."
No. They help those who want to SELL a home.
CR, while there is a short term correlation on broker fees and investments there also seems to be a 3 fold increase of broker fees over the long run from 1960 to today from .25% to .75% GDP. One may argue that today the broker job is more efficient thanks to cell phones and computer databases. So what caused this massive increase?
GW: it is the national craze about RE.
All NAR wants is tighter, flexible standards.
Tanta: 404 Error, No such article | Chron.com - Houston Chronicle
Image to cherish for the future...
8000 hedge fund managers, loaded down with overpriced and illiquid assets. Tremendous overlap throughout the portfolios.
Picture these same fund managers in a WalMart with shopping carts overloaded with the goods, first one through the exit gets to sell at a profit, the others are left with a capital depreciation strategy.
Who is the greater fool now?
From Darry Schoon at Financial Sense.com:
"But it was not only European and Asian banks, insurance companies, and hedge funds and pension funds that will suffer, wealthy Japanese investors may suffer the greatest losses of all. It is believed that the highest-yielding but riskiest tranches (risk level) of the subprime CDOs were bought by wealthy individual Japanese investors.
The head of structured finance research at Nomura Securities, Mark Adelson, said these investors did not fully understand the risk they were taking, depending instead upon the ratings given by credit agencies such as Moodys or the advice of those managing the security.
"A partial understanding of it is often no better than no understanding," Adelson said. "The devil is in the details; if you understand it vaguely, you can get your lights punched out."
So when will the lawsuits start to happen? It seems that the Moodys ratings were greatly at odds with the forseeable outcome, especially with respect to the 2006 vintage. From Moody's website;
"So Moody's takes a different perspective. We focus on the fundamental factors that will drive each rated entity's ability and willingness to meet its credit obligations over the long term.
As a rule of thumb, we look out over a time horizon of five-to-ten years at least through one full economic cycle. Moody's ratings do not ratchet up or down in response to short-term events such as quarterly earnings reports.
Rather, our emphasis is on a qualitative assessment of the "plausible crisis scenarios" that a rated borrower is likely to face and the fundamental investor protections that would enable management to continue to meet debt payments should the worst occur."
This from a company that is doing massive downgrading in a matter of months. Looks like the private sector watchdog was asleep or bought off. Or maybe they will use the current favorite excuse -"No one could have imagined."
arbogast, there's an apparent typo in your comment. It should read,
Is employment strong?
No.
Or perhaps you've not read this Merrill Lynch analysis of the recent employment data releases.
On the foreclosure front, Foreclosures.com is reporting today that April foreclosures of all types are up over 100% from April 2006, but down approximately 15% from March 2007. They also note that April 2006 foreclosures had declined from March 2006.
Are foreclosures a seasonal thing? Is it more analytically correct to compare YOY numbers, as opposed to month-to-month?
gw,
BROKER INCREASE=LARGER YSP'S
ARBO,
Defense Spending is helping the economy ..we need the war.
Def of oxymoron: NAR= "adopt higher lending standards while allowing more flexibility for lenders"
wash, rinse, repeat:
Realtors Association Cuts 2007 Home Sales Forecast - CNBC
I'm having trouble with the GDP percentages down the left. I was shocked by the idea of brokers taking in 1% of the US GDP. I tracked down the numbers (from the BEA link) I found that the brokers' fees commissions were $10.948B for 2006. Looking elsewhere on BEA (BEA : Page Not Found for the GDP, I see that the GDP for 2006 was $13.2466T. That would mean that the brokers' fees would be 0.08265% of GDP; is the scale off by a factor of 10?
I was also shocked at the 1%, not sure I understood all the info though.
AA
I would be fascinated to know a little more about current multifamily vacancies, especially broken down by region of the nation, urban/suburban/small town, etc. Anyone know of such a map?
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