I believe non-residential project starts were delayed because of lack of labor and materials during the boom. As they are completed, the blue line will take the plunge!
Labor is cheaper and lumber is half what it cost in 2004, land prices generally way down. Steel and concrete and permitting all way up.
All very confusing and muddled. My only guess is that the 4-8 quarter shift may be at or beyond the 8 quarter end of past downturns. That makes some sense in light of the historic run up of both duration and magnitude.
The % of GDP is a pretty good way to gauge "real' inputs. I wonder what the nominal imputs would look like overlayed on top of the second chart. One would presume that the swings would be larger.
Right now the market is happy. However it is a dangerous sign to me that it could turn around this afternoon after FED meeting. It is all about expectation and perception. It depends how the big money interprets it.
Steel and concrete are in great demand and are energy intensive products. Concrete production accounts for more than 10% of all anthropogenic greenhouse gas generation alone.
Land was in a bubble. It isn't going to behave according to classical economics while unwinding.
"I believe non-residential project starts were delayed because of lack of labor and materials during the boom. As they are completed, the blue line will take the plunge!"
In my area we have several large commercial projects nearing completion, none starting up. And there's little or no pre-leasing.
On the horizon, a couple of small apartment complexes seeking city approval. But that's it. Residential construction is completely dead, of course.
ben's thinking... "Main St is a goner, so no sense in stressin' over that. What does Wall St, and more importantly, what do the IBs and member banks want?"
Up here in San Francisco there are Condos that have been for sale for over a year with new projects going up everyday. Consumer groups keep asking for affordable housing but these 1 bedroom condos are priced above 500k. The prices do fall every week though. They will keep building until the floor drops out of prices.
In an earlier comment thread, somebody said US toilet paper - refering to the USD. So this reflect this position:
TEHRAN, April 30 (Reuters) - Iran, the world's fourth-largest oil producer, is conducting all its crude trading in euro and yen, instead of the U.S. dollar, an Iranian official was quoted as saying on Wednesday
ac,
Is that Yen carry or is it the "strengthening dollar"?
The fall off in the Yen appears much more dramatic than rise in the dollar. Plus in a rational world the Yen would probably be one of the stronger currencies versus the dollar.
As I've said in the past, Yen vs. S&P 500 tells you everything you need to know.
Didnt dryfly mention sometime back agricultural land was going thru the roof.
That is correct, it has been but it is also way overvalued compared to rent and the banks have high exposure. One screw up and down this piece of crap comes.
Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday.
The plan, which needs Congress approval, would permit new government loans so borrowers can repay up to 20 percent of the principal they owe on their mortgage, the report said, citing
confidential draft of the proposal.
WASHINGTON, April 30 (Reuters) - The Federal Deposit Insurance Corp proposed a government plan on Wednesday that would allow about 1 million homeowners to pay down as much as 20 percent of the principal on mortgages that are deemed unaffordable.
The program would create a new smaller mortgage and a "Home Ownership Preservation" loan, the FDIC said in a statement.
Investors who own the mortgage would pay the first five years of the interest on the HOP loan. Borrowers would be responsible for payments after that, said the FDIC, which insures deposits for U.S. banks.
"Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday."
I'm not a whiz like some of you here, but this seems like a classic example of pissing into the wind. And not just any piss, either, but expensive US-taxpayer-paid-for piss.
WASHINGTON, April 30 (Reuters) - The Federal Deposit Insurance Corp proposed a government plan on Wednesday that would allow about 1 million homeowners to pay down as much as 20 percent of the principal on mortgages that are deemed unaffordable.
The program would create a new smaller mortgage and a "Home Ownership Preservation" loan, the FDIC said in a statement.
Investors who own the mortgage would pay the first five years of the interest on the HOP loan. Borrowers would be responsible for payments after that, said the FDIC, which insures deposits for U.S. banks.
I don't understand. Does this actually lower the principal?
If it does and I were a person who'd paid for their house in full or had already lost a house to forclosure, I'd be rioting in the streets as they say.
"Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday."
I'm not a whiz like some of you here, but this seems like a classic example of pissing into the wind. And not just any piss, either, but expensive US-taxpayer-paid-for piss.
Plus I think this fundamentally threatens the solvency of the federal government (admittedly a collapse in housing does too) and could lead to a rise in interest rates if the bond market prices in the inevitable inflation or outright default that this additional debt implies.
Realistically I don't think the US has managed its finances in a way that allows it to do massive bailouts.
Thx sterlingerl - I read his stuff often, but lately ever since the BS blowup, he seems to be, well, committed to a cause.
O/T but interesting:
In the first quarter of 2008, the trucking industry experienced the highest same-quarter levels of firms going bankrupt since 2001.
Bankruptcy shut down 925 firms nationwide in the past quarter, according to a report by Tennessee-based Avondale Partners, an investment banking firm with interests including health care, communications, financial services and trucking.
Avondale blamed the spike in trucking failures on companies' inability to collect fuel surcharges that keep up with the rising cost of diesel. Add to that the expense of renewing licenses and insurance, and trucking firms already teetering on the brink were forced into bankruptcy, according to the report.
The recent closures parked an estimated 42,000 trucks, or more than 2 percent of the nation's heavy-duty capacity, according to the report. Smaller firms were hit hardest, but the average size of firms increased to 45 trucks, meaning hard times hit larger firms too.
There were more than 1,100 company failures in the first quarter of 2001. By that year's end, 110,000 trucks were off the road, according to the report.
It would be nice if she can tell us what banks are going to go underwarer rather than worrying about wasting tax-payer money.
Other than the usual notices, they don't do that in advance (because it might precipitate a run on the banks that are weak). You can, however, pull quarterly bank reports from the FDIC site and crunch the numbers yourself.
"Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday."
The FDIC must see this as a $20B bail-out for its insured banks, which would be a $20B bail-out for itself.
The FDIC must see this as a $20B bail-out for its insured banks, which would be a $20B bail-out for itself.
Jack Staub
Probably right!
And this tidy:
NEW YORK, April 30 (Reuters) - The Federal Reserve will undertake a $25 billion Term Securities Lending Facility (TSLF) auction on Thursday, the New York Fed Web site announced on Wednesday.
The Fed will accept Schedule 1 collateral from primary dealers in exchange for Treasuries, with a maximum award of $5 billion.
Dealers can lend out the Treasuries in exchange for short-term cash loans in the $4.5 trillion U.S. repurchase market, to help shore up balance sheets that have been depleted by the credit crisis
I like all the bailout plans. The more the merrier!
With all the competition for bailout attention, and the congess' collective attention span of a hummingbird, none of them will go anywhere, especially in an election year where posturing is the primary task at hand.
Ag land is up and is still showing strength in most of the country. Large pension funds and generally folks with a mattress full of cash have moved into the market. In my part of the world you can generate a 4% to 6% return which has become pretty attractive with an added bonus that land has historically been somewhat of a hedge on inflation. The farm bill looks like it will remain pretty similar to what we have so uncertainty there is slacking off. I do wonder what the corn growers are going to do if ethanal tanks. I was at a meeting last week with several economists that work with congress on farm bill issues. Pictures of starving children are quickly taking the shine off corn for fuel. Not that it ever made sense anyway.
Got this from treasurydirect:
"The Savings Bond Purchase Limitation has been changed to $5,000 per series
and TIN per calendar year. Please cancel any pending purchases that exceed
the yearly $5,000 limit."
Any ideas why? Seems like they are limiting purchases on some items, anyone know the previous limit?
Plus I think this fundamentally threatens the solvency of the federal government
$50B.
I questioned the sanity of Congress' plan to send $50B to Africa to help with their AIDS/malaria crisis at a time when we're in trouble here, but the comment I got was "$50B is chump change." So - $50B towards mortgages to keep the ball rolling, eh, probably not such a dire deal.
I questioned the sanity of Congress' plan to send $50B to Africa to help with their AIDS/malaria crisis at a time when we're in trouble here, but the comment I got was "$50B is chump change." So - $50B towards mortgages to keep the ball rolling, eh, probably not such a dire deal.
BTW, where do I sign up?
The $50 billion of itself isn't the problem, the problem is they keep piling debt on top of debt with no apparent beneficial effects.
Look how well we've done with all the debt piled up in recent years -- all we have now is almost a decade of below trend GDP growth to show for it.
The debt has just been an opiate to numb the pain of economic growth that fell of trend in 2000 and has remained off trend.
It has the appearance of that sort of growing financial and fiscal incompentence that becomes so entrenched it can only be cleaned out by disaster.
CR said: "...As I highlighted this morning, the non-residential investment news has turned negative in Q1 2008. Investment in non-residential structures was off 6.2% at an annualized rate, and investment in equipment and software investment declined 0.7%...."
Okay, let's look at the data.
This assertion comes from here. Look at Table 1, cells T15 and T16.
Nah, the first move's going to be straight up. The new meme is that it's all about the $USD.
Here's a quote from a paid site I frequent:
"The best tonic the Fed could pour into our economy now is taking action to shore up the dollar, ie declare an end to rate cuts and signal looming increases. A stronger dollar means lower oil and gasoline prices. Right now, that is what ails the consumer more than anything else...
Can you hear us, Uncle Ben? "
So, see, in that world, a 25 bp hike and some inflation hawk language is the best of all possible worlds.
OK, now let's all get together and save the recession. All posters on CR agreed that we're in recession and/or recession. If we double our posts and very strictly insist we're there, then we may be able to save the recession. After all, how could it be that this blog was wrong?
Release Date: April 30, 2008
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.
Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.
Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.
The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco.
The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.
Actually, little diatribes towards people you don't know and who have never said anything nasty about you or your ideas definitely do not need to be said.
Ladies & Gentlemen, I think so of you are starting to fall in love with your predictions. Things look somewhat grim to me, but the numbers are what the numbers are. I, personally, don't give a crap about "intellectually dishonest". I care about correct vs incorrect. Now, this looks like it was all inventory build, but at the end of the day plenty of you were discounting that or imagining that it wasn't going to happen and we'd print a negative quarter. Guess what, you were wrong. Suck it up and move on to the next one. And remember to discount the stimulus checks for this one, or you'll just f* it up again.
I'm getting whiplash here. Earlier today the consensus seemed to be that calling people towelheads was perfectly cool and now there are cries that we cannot call an long-term poster an idiot. Can everyone at least be consistent 10-year-olds?
mp said: "Anyone who tells me that CR's argument for recession depends on his assumption of a recession is an idiot."
I think you misunderstood me, and it's probably my fault.
I'm not only saying CR's recession forecast hinges on an assumption of recession, I'm saying that everyone's recession forecast is. CR, all the bearish posters here, and the bearish bloggers with links listed on the right side of the "Calculated Risk" main-page.
And neither one of you has been proven correct or incorrect yet. You're rushing to label as "fact" those measurements that support your viewpoint when it's also true that there are a lot of important revisions to data. This is getting about as stupid as a bunch of doctors standing around a patient yelling "dead!" "alive!" based on whether or not at that exact second or not the heart was actively contracting. And let's not forget those that insist we only measure patient health by airflow and ignore blood altogether. I'm beginning to think I had the right idea during the dot-com boom when I amused myself with plotting a beanie-baby portfolio against Microsoft stock and muttered things about it's all monopoly (tm) money anyhoo.
How can you have falling land prices and rising commodity prices since land is the basis for most commodities?
Something's fishy. Makes no sense to me.
ac | 04.30.08 - 12:33 pm | #
Land is the basis for Ag commodities, but the price of farmland is way up, its the price of urban and suburban land that has been falling. Yes I suppose that since copper is mined from the ground, the basis is land, but only land that contains copper ore. Not to much of a real contradiction between rising commodities and falling land prices.
And the market is happy, happy, happy!
My goodness, frist?
I believe non-residential project starts were delayed because of lack of labor and materials during the boom. As they are completed, the blue line will take the plunge!
month-end, GDP and a fed release on the same day. Gonna be tough to make any assumptions about May until later in the week.
Labor is cheaper and lumber is half what it cost in 2004, land prices generally way down. Steel and concrete and permitting all way up.
All very confusing and muddled. My only guess is that the 4-8 quarter shift may be at or beyond the 8 quarter end of past downturns. That makes some sense in light of the historic run up of both duration and magnitude.
Economic stimulus efforts might have helped except for the prices of things like food and energy. Extra money will be going to gasoline and meat.
Comment threads are the only conversation forums where more emphasis is placed on having the first word than the last.
OT:
But who would have thought that Iran would be the avant-garde and decouple petro from dollars...petro euros anyone?
market feels heavy. energy and materials loosing leadership. I can't think of anyone to take their place.
Also something I think needs more love - my favorite measure of future pain, the Yen carry trade, is making a come back.
The % of GDP is a pretty good way to gauge "real' inputs. I wonder what the nominal imputs would look like overlayed on top of the second chart. One would presume that the swings would be larger.
Right now the market is happy. However it is a dangerous sign to me that it could turn around this afternoon after FED meeting. It is all about expectation and perception. It depends how the big money interprets it.
Labor is cheaper and lumber is half what it cost in 2004, land prices generally way down. Steel and concrete and permitting all way up.
How can you have falling land prices and rising commodity prices since land is the basis for most commodities?
Something's fishy. Makes no sense to me.
Steel and concrete are in great demand and are energy intensive products. Concrete production accounts for more than 10% of all anthropogenic greenhouse gas generation alone.
Land was in a bubble. It isn't going to behave according to classical economics while unwinding.
"I believe non-residential project starts were delayed because of lack of labor and materials during the boom. As they are completed, the blue line will take the plunge!"
In my area we have several large commercial projects nearing completion, none starting up. And there's little or no pre-leasing.
On the horizon, a couple of small apartment complexes seeking city approval. But that's it. Residential construction is completely dead, of course.
ben's thinking... "Main St is a goner, so no sense in stressin' over that. What does Wall St, and more importantly, what do the IBs and member banks want?"
ac | 04.30.08 - 12:33 pm | #
How can you have falling land prices and rising commodity prices since land is the basis for most commodities?
Didnt dryfly mention sometime back agricultural land was going thru the roof.
sbarrkum
Up here in San Francisco there are Condos that have been for sale for over a year with new projects going up everyday. Consumer groups keep asking for affordable housing but these 1 bedroom condos are priced above 500k. The prices do fall every week though. They will keep building until the floor drops out of prices.
The real test of land pricing will be the impending bankruptcy of Landsource and the bidding on 15,000 acres formerly known as Newhall Land & Farming.
ac,
Is that Yen carry or is it the "strengthening dollar"?
In an earlier comment thread, somebody said US toilet paper - refering to the USD. So this reflect this position:
TEHRAN, April 30 (Reuters) - Iran, the world's fourth-largest oil producer, is conducting all its crude trading in euro and yen, instead of the U.S. dollar, an Iranian official was quoted as saying on Wednesday
Didnt dryfly mention sometime back agricultural land was going thru the roof.
We've actually got a lot of cornfields where I live. I'll check into it. Kind of curious myself.
Given the explosion in grain prices it's hard to imagine this not happening.
ac,
Is that Yen carry or is it the "strengthening dollar"?
The fall off in the Yen appears much more dramatic than rise in the dollar. Plus in a rational world the Yen would probably be one of the stronger currencies versus the dollar.
As I've said in the past, Yen vs. S&P 500 tells you everything you need to know.
Didnt dryfly mention sometime back agricultural land was going thru the roof.
That is correct, it has been but it is also way overvalued compared to rent and the banks have high exposure. One screw up and down this piece of crap comes.
Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday.
The plan, which needs Congress approval, would permit new government loans so borrowers can repay up to 20 percent of the principal they owe on their mortgage, the report said, citing
confidential draft of the proposal.
FDIC Finalizing Direct Home Loan Plans: WSJ - CNBC
FDIC's program:
WASHINGTON, April 30 (Reuters) - The Federal Deposit Insurance Corp proposed a government plan on Wednesday that would allow about 1 million homeowners to pay down as much as 20 percent of the principal on mortgages that are deemed unaffordable.
The program would create a new smaller mortgage and a "Home Ownership Preservation" loan, the FDIC said in a statement.
Investors who own the mortgage would pay the first five years of the interest on the HOP loan. Borrowers would be responsible for payments after that, said the FDIC, which insures deposits for U.S. banks.
FDIC wants aid to pay down risky loans
| Reuters
"Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday."
I'm not a whiz like some of you here, but this seems like a classic example of pissing into the wind. And not just any piss, either, but expensive US-taxpayer-paid-for piss.
It would be nice if the CRE were subdivided into Retail, Industrial, and Professional. That might help explain what activity there is and why.
I'd put money on Industrial before either of the others. As the dollar falls, we will be taking up some of the production slack from the far east.
WASHINGTON, April 30 (Reuters) - The Federal Deposit Insurance Corp proposed a government plan on Wednesday that would allow about 1 million homeowners to pay down as much as 20 percent of the principal on mortgages that are deemed unaffordable.
The program would create a new smaller mortgage and a "Home Ownership Preservation" loan, the FDIC said in a statement.
Investors who own the mortgage would pay the first five years of the interest on the HOP loan. Borrowers would be responsible for payments after that, said the FDIC, which insures deposits for U.S. banks.
I don't understand. Does this actually lower the principal?
If it does and I were a person who'd paid for their house in full or had already lost a house to forclosure, I'd be rioting in the streets as they say.
Barley, Karl Denninger over at Market Ticker had a pretty scathing opinion of Bair's crazy plan, worth a read...
The Market Ticker
"Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday."
I'm not a whiz like some of you here, but this seems like a classic example of pissing into the wind. And not just any piss, either, but expensive US-taxpayer-paid-for piss.
Plus I think this fundamentally threatens the solvency of the federal government (admittedly a collapse in housing does too) and could lead to a rise in interest rates if the bond market prices in the inevitable inflation or outright default that this additional debt implies.
Realistically I don't think the US has managed its finances in a way that allows it to do massive bailouts.
"market feels heavy. energy and materials loosing leadership. I can't think of anyone to take their place."
tech, retail, airlines ... basically anything on the other side of the commodity boom/bubble
Why FDIC is worrying about mortgage rather than worrying about banks viability.
May be large number of banks viability is going to be determined by mortgage payment........
It would be nice if she can tell us what banks are going to go underwarer rather than worrying about wasting tax-payer money.
Underwarer?
Undertherer.
Thx sterlingerl - I read his stuff often, but lately ever since the BS blowup, he seems to be, well, committed to a cause.
O/T but interesting:
In the first quarter of 2008, the trucking industry experienced the highest same-quarter levels of firms going bankrupt since 2001.
Bankruptcy shut down 925 firms nationwide in the past quarter, according to a report by Tennessee-based Avondale Partners, an investment banking firm with interests including health care, communications, financial services and trucking.
Avondale blamed the spike in trucking failures on companies' inability to collect fuel surcharges that keep up with the rising cost of diesel. Add to that the expense of renewing licenses and insurance, and trucking firms already teetering on the brink were forced into bankruptcy, according to the report.
The recent closures parked an estimated 42,000 trucks, or more than 2 percent of the nation's heavy-duty capacity, according to the report. Smaller firms were hit hardest, but the average size of firms increased to 45 trucks, meaning hard times hit larger firms too.
There were more than 1,100 company failures in the first quarter of 2001. By that year's end, 110,000 trucks were off the road, according to the report.
Q1 Report: Trucking had highest level of bankruptcy since ‘01 - Central Penn Business Journal
sorry. mistype of underwater.
So this 20% is paid directly to the security holders, who then pay some of it back a bit at a time in "interest"?
Help me understand how this works exactly. The Reuters article is as clear as mud.
If my understanding is correct this is a n f'ing travesty of a plan. Have we lost the capacity to feel shame?
ac says:
"I think this fundamentally threatens the solvency of the federal government"
As if the politicians were really interested. Doing this will mean votes today who cares about tomorrow.
Its only 50B thats only a few months equivlant costs for the Iraq occupation.
btw ac, I would agree w/ your assertion.
Barley, Karl Denninger over at Market Ticker had a pretty scathing opinion of Bair's crazy plan, worth a read...
The video is worth watching too.
More people should be doing that until congress grants the Fed the ability to imprison anybody who questions their authority.
As if the politicians were really interested. Doing this will mean votes today who cares about tomorrow.
Its only 50B thats only a few months equivlant costs for the Iraq occupation.
btw ac, I would agree w/ your assertion.
They'll be forced to if it keeps causing the dollar to fall and the cost of essentials to rise.
Capital flight will be very painful for US consumers and they can still vote (so far).
Here's the details from FDIC website . . . I'm dubious.
FDIC: Home Ownership Preservation Loans
It would be nice if she can tell us what banks are going to go underwarer rather than worrying about wasting tax-payer money.
Other than the usual notices, they don't do that in advance (because it might precipitate a run on the banks that are weak). You can, however, pull quarterly bank reports from the FDIC site and crunch the numbers yourself.
FDIC: Institution Directory
I think Sebastian should fund the mortgages. I mean the economy's future is bright, he could make a bundle.
"Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday."
The FDIC must see this as a $20B bail-out for its insured banks, which would be a $20B bail-out for itself.
The FDIC must see this as a $20B bail-out for its insured banks, which would be a $20B bail-out for itself.
Jack Staub
Probably right!
And this tidy:
NEW YORK, April 30 (Reuters) - The Federal Reserve will undertake a $25 billion Term Securities Lending Facility (TSLF) auction on Thursday, the New York Fed Web site announced on Wednesday.
The Fed will accept Schedule 1 collateral from primary dealers in exchange for Treasuries, with a maximum award of $5 billion.
Dealers can lend out the Treasuries in exchange for short-term cash loans in the $4.5 trillion U.S. repurchase market, to help shore up balance sheets that have been depleted by the credit crisis
Lotsa shoring up going on, huh?
I like all the bailout plans. The more the merrier!
With all the competition for bailout attention, and the congess' collective attention span of a hummingbird, none of them will go anywhere, especially in an election year where posturing is the primary task at hand.
The crack man cometh, the crack man cometh!
I like all the bailout plans. The more the merrier!
Me too.
How can Americans continue gambling for a living if we don't take money from responsible people to pay off everybody else's gambling debts?
Ag land is up and is still showing strength in most of the country. Large pension funds and generally folks with a mattress full of cash have moved into the market. In my part of the world you can generate a 4% to 6% return which has become pretty attractive with an added bonus that land has historically been somewhat of a hedge on inflation. The farm bill looks like it will remain pretty similar to what we have so uncertainty there is slacking off. I do wonder what the corn growers are going to do if ethanal tanks. I was at a meeting last week with several economists that work with congress on farm bill issues. Pictures of starving children are quickly taking the shine off corn for fuel. Not that it ever made sense anyway.
OT:
Stockmarket shows a pump...get ready for a dump. I think -500 -1000pts for May and June. Fundementals still didn't change.
Got this from treasurydirect:
"The Savings Bond Purchase Limitation has been changed to $5,000 per series
and TIN per calendar year. Please cancel any pending purchases that exceed
the yearly $5,000 limit."
Any ideas why? Seems like they are limiting purchases on some items, anyone know the previous limit?
The Fed will accept Schedule 1 collateral from primary dealers in exchange for Treasuries, with a maximum award of $5 billion.
I forget, is used toilet paper schedule 1 or schedule 2?
Ah... So this is what a subsidence economy looks likeĀ !
Watch the video here
404 Not Found
Did that dude just pack his cat in a public storage box to move him?
Did that dude just pack his cat in a public storage box to move him?
Yeah... plus he says he's going to have to sell it a few minutes later.
Plus I think this fundamentally threatens the solvency of the federal government
$50B.
I questioned the sanity of Congress' plan to send $50B to Africa to help with their AIDS/malaria crisis at a time when we're in trouble here, but the comment I got was "$50B is chump change." So - $50B towards mortgages to keep the ball rolling, eh, probably not such a dire deal.
BTW, where do I sign up?
$50B.
I questioned the sanity of Congress' plan to send $50B to Africa to help with their AIDS/malaria crisis at a time when we're in trouble here, but the comment I got was "$50B is chump change." So - $50B towards mortgages to keep the ball rolling, eh, probably not such a dire deal.
BTW, where do I sign up?
The $50 billion of itself isn't the problem, the problem is they keep piling debt on top of debt with no apparent beneficial effects.
Look how well we've done with all the debt piled up in recent years -- all we have now is almost a decade of below trend GDP growth to show for it.
The debt has just been an opiate to numb the pain of economic growth that fell of trend in 2000 and has remained off trend.
It has the appearance of that sort of growing financial and fiscal incompentence that becomes so entrenched it can only be cleaned out by disaster.
CR said: "...As I highlighted this morning, the non-residential investment news has turned negative in Q1 2008. Investment in non-residential structures was off 6.2% at an annualized rate, and investment in equipment and software investment declined 0.7%...."
Okay, let's look at the data.
This assertion comes from here. Look at Table 1, cells T15 and T16.
http://www.bea.gov/newsreleases/national/gdp/2008/xls/gdp108a.xls
Now look at cell J15. In Q3 2005 non-residential structures were off -6.3%, actually a little more than the recent change. Yet there was no recession.
In fact, there were actually two negative quarters back-to-back, with no recession.
In Q4 2006 there was actually a far more-significant drop in equipment and software investment (cell O16), -4.9%, yet there was no recession.
The recession argument depends on the assumption of recession. Without it, viewing the data neutrally, it falls apart.
Sebastia
Nah, the first move's going to be straight up. The new meme is that it's all about the $USD.
Here's a quote from a paid site I frequent:
"The best tonic the Fed could pour into our economy now is taking action to shore up the dollar, ie declare an end to rate cuts and signal looming increases. A stronger dollar means lower oil and gasoline prices. Right now, that is what ails the consumer more than anything else...
Can you hear us, Uncle Ben? "
So, see, in that world, a 25 bp hike and some inflation hawk language is the best of all possible worlds.
SAVE THE RECESSION!!!
OK, now let's all get together and save the recession. All posters on CR agreed that we're in recession and/or recession. If we double our posts and very strictly insist we're there, then we may be able to save the recession. After all, how could it be that this blog was wrong?
O-Joe
75BPS cut
Just kidding
My lucky data, two for two, no recession and another easing.
S.
Sebastian - lets wait until the revisions before we call the .15% "growth" a non-recession.
Release Date: April 30, 2008
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.
Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.
Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.
The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco.
Start to fade for some lunch money...
We can buy it all back in half an hour...
OT, but this needs to be said.
Sebastian, I think you're the dumbest son of a bitch on the planet. O-Joe is the next dumbest.
I also think that both of you are two of the most intellectually dishonest pieces of crap to inhabit the internet.
Both of you rank right up there with some of the best bullshitters around.
Once again Fisher and Plosser make a stand.
mp said: "Sebastian, I think you're the dumbest son of a bitch on the planet."
In reading all the rationalizations today it dawned on me what I'm dealing with on this blog. Your post really drives it home.
S.
The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.
Boilerplate text in the FOMC template.
"OT, but this needs to be said."
Actually, little diatribes towards people you don't know and who have never said anything nasty about you or your ideas definitely do not need to be said.
Sebastian- "...it dawned on me what I'm dealing with on this blog."
Well, I know what I'm dealing with.
A hack.
O/T
mp - wise people criticize actions and opinions and dumb pin heads criticize people
nuf said
So, whither the $? Or is it wither?
So is the Fed statement positive or negative, any opinions?
My first guess is pretty cautious and in no way did they say they are done cutting rates...
Tom Servo writes:
So is the Fed statement positive or negative, any opinions?
Is irresponsible positive of negative?
of = or
Tsk.
"OT, but this needs to be said." Etc.
Ladies & Gentlemen, I think so of you are starting to fall in love with your predictions. Things look somewhat grim to me, but the numbers are what the numbers are. I, personally, don't give a crap about "intellectually dishonest". I care about correct vs incorrect. Now, this looks like it was all inventory build, but at the end of the day plenty of you were discounting that or imagining that it wasn't going to happen and we'd print a negative quarter. Guess what, you were wrong. Suck it up and move on to the next one. And remember to discount the stimulus checks for this one, or you'll just f* it up again.
I'm getting whiplash here. Earlier today the consensus seemed to be that calling people towelheads was perfectly cool and now there are cries that we cannot call an long-term poster an idiot. Can everyone at least be consistent 10-year-olds?
Anyone who tells me that CR's argument for recession depends on his assumption of a recession is an idiot.
What part of "idiot" do you apologists not understand?
mp said: "Anyone who tells me that CR's argument for recession depends on his assumption of a recession is an idiot."
I think you misunderstood me, and it's probably my fault.
I'm not only saying CR's recession forecast hinges on an assumption of recession, I'm saying that everyone's recession forecast is. CR, all the bearish posters here, and the bearish bloggers with links listed on the right side of the "Calculated Risk" main-page.
Sorry for the confusion.
Sebastia
Ah, dueling assumptions. Seb, check that think poking out of your eye.
scav said: "Ah, dueling assumptions..."
I take your point. My assumption is that the facts are what they are, and CR's is that they'll be revised to prove him correct.
Sebastia
And neither one of you has been proven correct or incorrect yet. You're rushing to label as "fact" those measurements that support your viewpoint when it's also true that there are a lot of important revisions to data. This is getting about as stupid as a bunch of doctors standing around a patient yelling "dead!" "alive!" based on whether or not at that exact second or not the heart was actively contracting. And let's not forget those that insist we only measure patient health by airflow and ignore blood altogether. I'm beginning to think I had the right idea during the dot-com boom when I amused myself with plotting a beanie-baby portfolio against Microsoft stock and muttered things about it's all monopoly (tm) money anyhoo.
How can you have falling land prices and rising commodity prices since land is the basis for most commodities?
Something's fishy. Makes no sense to me.
ac | 04.30.08 - 12:33 pm | #
Land is the basis for Ag commodities, but the price of farmland is way up, its the price of urban and suburban land that has been falling. Yes I suppose that since copper is mined from the ground, the basis is land, but only land that contains copper ore. Not to much of a real contradiction between rising commodities and falling land prices.
tell the bitch what you think about her stupid bailout.
chairman@fdic.gov