Comments on: You know it’s bad when reality hits Wall Street

By: CWash

CWash — Wed, 28 Nov 2007 05:34:44 +0000

One more obsessive outburst, then I’ll get back on my meds! No Worries!

The bad news is like a dam bursting today:

“U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday. The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index’s history.”

“Personal bankruptcy filings for the first three quarters of 2007 totaled more than all bankruptcy filings in 2006. A 40.2% increase. Business filings are up 40.5%. ”

“Soaring eurozone inflation is threatening fresh difficulties for the European Central Bank as it fights to calm tensions in financial markets that are casting a shadow over economic growth in the 13-country region. The Federal Reserve faces a similar dilemma in the US, in spite of sharply slowing growth.”

“US consumer confidence in early November fell to its lowest level since the aftermath of Hurricane Katrina, the Conference Board said on Tuesday”

“Gazprom warns of record gas prices ahead …. be prepared for the price of gas to rise by up to another 17 per cent, reaching new highs next year because of the rise in the price of oil, the deputy chief executive of Gazprom has warned”

By: CWash

CWash — Wed, 28 Nov 2007 04:40:27 +0000

And more from the BBC:

Freddie Mac, the company that provides financing and guarantees to US mortgage lenders, is to sell $6bn (£2.9bn) of shares to cover more bad debt losses.
It said the money was needed “in light of actual and anticipated losses”.

The move comes only a week after Freddie Mac said it was setting aside £1.2bn to cover bad debts for the three months from July to September.

Most of the main US lenders have now revealed exposure to bad mortgage debt centred on the sub-prime sector.

By: CWash

CWash — Wed, 28 Nov 2007 04:25:40 +0000

More Bad News. AP just reported this story about one of our country’s better managed banks:

Wells Fargo intends to liquidate $11.9 billion in home equity loans that have been flagged as major problems. The nettlesome loans represent about 14 percent of the bank’s total home equity portfolio of $83.4 billion.
Like several of its peers, Wells Fargo will take its lumps in the fourth quarter by recognizing $1.4 billion in pre-tax losses, with most of the trouble concentrated in a bundle of high-risk home equity loans that the bank intends to purge from its books.

By: CWash

CWash — Wed, 28 Nov 2007 04:07:51 +0000

Today Abu Dhabi Investment Group put on their white hats, and led the cavalry charge to rescue the American economy, spreading billions of oil dollars into the coffers of Citigroup, and indirectly into other US investment funds. Thankfully they, at least temporarily, rescued millions of 401k holders retirement funds. They did not do it from the kindness of their hearts, but because we owe the OPEC nations so very much, they can not allow us to fail. (Donald Trump economics 101) Even Iran, joined in the effort, saying they will step up production, thus halting march to 100 dollar a barrel oil, at least for awhile.
The ensuing stock market rally, sometimes know as a dead cat bounce because even a cat will bounce after being dropped from a high building, is not on firm footing. More bad economic was unfolding as the rally took place. Housing prices across fell again last month, and the so called ‘Black Friday’ shopping frenzy after thanksgiving was long on bargain hunting, short on profit for average retailers. Consumers appear to be tapped out, in spite of a flood of cash being pumped into the system by central banks around the world amid more subprime meltdowns. Perhaps some cheaper oil may give them a small boost.
The Paris Hilton crowd seems to be doing well, mega-yacht sales are soaring this season. Trickle down works for some in Great Briton, where the Pound is now over two bucks. A few bank failures don’t worry the filthy rich.

By: CWash

CWash — Tue, 27 Nov 2007 14:53:46 +0000

We are now officially in a stock market “correction”, having lost over 10%.
Some say that is “nothing to worry about. Happened many times in the past. Everything will be OK if nobody does anything stupid.”
We look at or REPUG leadership, and ask “How can we ever trust them NOT to do something stupid?”

note to self: Must not smugly say “I told you so”, since it now appears that I am cheering on economic failure.