On Apr 6, 11:38 pm, forbisga...@[EMAIL PROTECTED]
wrote:
> On Apr 6, 8:59 pm, "FrediFizzx" <fredifi...@[EMAIL PROTECTED]
> wrote:
>
>
>
> > <forbisga...@[EMAIL PROTECTED]
> wrote in message
>
> >news:688ecf62-7d36-4145-9aba-c59a99f00cfe@[EMAIL PROTECTED]
> > On Apr 6, 8:03 pm, Blash <bla...@[EMAIL PROTECTED]
> wrote:
>
> > > FrediFizzx wrote on 4/6/08 10:45 PM:
>
> > > > So freakin' what? The US foreclosure rate is barely higher than
the
> > > > year over year average. It's no big deal. But you would understand
> > > > that if you knew anything about economics. Stop pretending that
you
> > > > do.
>
> > > > Fred
>
> > > > <Vide...@[EMAIL PROTECTED]
> wrote in message
> > >
>news:6b39af5c-88f9-4902-a823-306f35878dd1@[EMAIL PROTECTED]
> > > >> foreclosures spreading to wealthy la la lands
>
> > > > [snip copy and paste doom and gloomer BS]
>
> > > You hit it right on the head with this guy......he must spend his
life
> > > scanning for bad news articles to "Copy & Paste" and then cross-post
> > > them
> > > across the net.......
> > > His ONLY claim to fame is writing 100+ word Subject lines.........
>
> > So what is the year over year average forclosure rate? How far
> > off the norm is this year relative to others? Are we within the
> > 70th precentile?
> > ========================
>
> > About 1 percent for the yoy rate. If this year is about 50 percent
> > higher, then we are at about 1.5 percent yoy. It is no big deal
> > compared to the total amount of mortgages.
>
> As a mere human I don't have access to historical data.
Fromhttp://www.mortgagebankers.org/NewsandMedia/PressCenter/60619.htm
>
> The percentage of loans in the foreclosure process was 2.04
> percent of all loans outstanding at the end of the fourth
> quarter, an increase of 35 basis points from the third quarter
> of 2007 and 85 basis points from one year ago.
>
> ...
>
> The increase in foreclosure starts was due to increases for
> both prime and subprime loans. From the previous quarter,
> prime fixed rate loan foreclosure starts remained unchanged
> at 0.22 percent, but prime ARM foreclosure starts increased
> four basis points to 1.06 percent. Subprime fixed foreclosure
> starts increased 14 basis points to 1.52 percent and subprime
> ARM foreclosure starts increased 57 basis points to 5.29 percent.
> FHA foreclosure starts decreased 4 basis points to 0.91 percent
> and VA foreclosure starts remained unchanged at 0.39.
>
> 5.29 percent for subprime means that more than one in 20 subprime
> loans started foreclosure processing last quarter. That's in one
> quarter. If that rate held for a year that would be more than
> one in five subprimes had started foreclosure during the year.
> That's not siginficant?
he is a economist, he does not know.
this article is from the beginnings of the so-called crisis. you will
have to visit the page to see the graph at
http://suddendebt.blogspot.com/search?q=foreclosure
but notice how many homes were sitting empty then, and notice
foreclosure statistics from then. then look at today, more homes are
joining that record, either abandoned, or foreclosed on, and its
feeding on itself as mortgages are turned upside down. almost every
month foreclosures are exceeding the month before.
WEDNESDAY, AUGUST 22, 2007
A Crisis Of Confidence, Or A, B, C ?
Some analysts think that the current credit crisis is not much more
than a tempest in a teapot - a large teapot, to be sure, but a teapot
nonetheless. They call it a "crisis of confidence", as if all that is
missing to make things right is the belief that it will be all right,
i.e. the financial engineer's version of "all you have to fear is fear
itself". This type of crisis may be a step up in urgency from "a
simple re-pricing of risk", as Mr. Secretary Paulson so cleverly
undersates it, but the warning light is supposedly still a pale
yellow.
Overlooking for a moment the simple fact that our credit and asset
economy is by definition based on confidence and that such a crisis is
therefore nothing to sneeze at, let's observe some other hard facts to
dispel the notion of "just a confidence crisis", a wording that
implies that all is taking place inside the cerebellums of panicky
speculators and can thus be promptly cured by swallowing a Blue Pill
of Confidence, also known as Ben & Hankie's Market Virility Enhancer.
Fact A - Record Total Debt
The total amount of debt in the US has reached $46 trillion dollars,
or 338% of GDP - an all time record. Choosing 10% as a semi-arbitrary
percentage for annual debt service (interest and principal), we see
that it translates into 34% of GDP. This huge amount clearly cannot be
met from the "income statement" side of the economy and goes straight
to the "balance sheet". This means that debt has reached an
exponential growth phase connected with pyramiding, or servicing debt
by issuing more debt. Some call this a Ponzi scheme and as with all
cons, confidence is, indeed, crucial.
Fact B - Record Debt in The Financial Sector
One third of that total debt, or 110% of GDP, is now debt of the
financial sector, up from just 60% 10 years ago. Regular cor****ate
debt has remained steady at ~40% for decades (see previous post of
August 18), implying the rapid leveraging of the US economy is
channeled towards the purchase of "assets" and the consumption of
"services" and im****ted goods. To put it simply, America has borrowed
to its eyes to buy suburban homes and all kinds of financial assets,
watch movies and buy im****ted goods. (A book on the current US economy
could be titled "We Also Make Planes").
Fact C - The Fall of Assets
Asset prices are dropping because irrational over-valuation is
eva****ating, not because some fund manager is lacking the proper
levels of testosterone to buy them. For example, real estate prices
got way out of hand when speculators jumped in and created the well-
known bubble. We can observe the results in the Census data relating
to vacant non-seasonal houses that are for-sale-only: in 2Q2007 such
vacancies rose to a record 15.6% (see chart below, click to enlarge).
Naturally, mortgages packaged into CDO's and other financially
engineered permutations are also getting into trouble - not because of
some nebulous lack of confidence, but because borrowers can't service
the debt and can't sell the houses, either. RealtyTrac just announced
that foreclosures jumped 93% from last year.
Data: US Census Bureau
However, there is an instance where "lack of confidence" is the
appropriate term to use, if somewhat mild for what is actually
happening: today, Standard and Poor's downgraded the ratings of two
mortgage-related funds from AAA to CCC and may cut them further, as
they said. If you count the downgrade steps, those are 17 degrees of
separation between prince and pauper and they happened in one go. Yes,
I would call that a lack of confidence. In spades.
now when freddie says no big deal, you can tell he is either speaking
from ignorance, or stupidity, or both. or perhaps from fear. freddie
may own one of these homes.
as millions of homes face foreclosure, and we are sitting with record
amounts of unsold homes, one needs not to be a economist to see there
is a growing problem here.
but freddie is a economic expert, he is heavily invested here,
snicker,
china, the worlds largest economic bubble, a ticking time bomb, short
on water, short on food, heavily polluted, raging inflation, hundreds
of millions of poor, food riots, unsafe food, unstable stock market,
factories that rely on western demand
http://articles.moneycentral.msn.com/Investing/JubaksJournal/ChinasLo...
Journal3/18/2008 12:01 AM ET
China's looming Olympics disaster
The Beijing games are supposed to showcase China's stature on the
world stage. But they're producing protests at home and may shut down
big hunks of the nation's economy.
By Jim Jubak
On March 10, Haile Gebrselassie, the world record holder in the
marathon, ruled out competing in the race at August's Beijing
Olympics. The city's notoriously bad air pollution posed a threat to
his health over the 26.2-mile course, the Ethiopian runner said.
It says a lot about the disaster that's unfolding for the Beijing
games that the withdrawal of an Olympic favorite caused hardly a
ripple. And why should it when bigger stories are brewing? It's
possible that:
* A forced shutdown of Beijing's factories and power
plants during
the games will throw China into an economic downturn.
* Diversion of safe food to the Olympic Village will
cause food riots
elsewhere in China.
* The transfer of 80 billion gallons of water -- equal
to the annual
water consumption of Tucson, Ariz., a city of 535,000 -- from Shaanxi
and other provinces in northwestern China will shut down factories and
agriculture in the region.
Yes, the Beijing Olympics, which were supposed to showcase China to
the world, are still likely to provide exactly the kind of prestige-
building extravaganza that the country's leaders had hoped for. But
domestically, the games are quickly turning into an economic and
political disaster. Once upon a time -- maybe six months ago --
investors (including yours truly) looked on the Olympics as a
guarantee that China's stock market and economy would keep chugging
along through the summer. "Safe until August" was the mantra.
Now, it increasingly looks like the games themselves could be the
catalyst for a significant downturn in China's stock market and
economy.
Steps haven't been enough
Observers already knew that China was serious about cutting air
pollution in Beijing and that, if necessary, the government would shut
down factories and power plants. Pollution had been one of the reasons
China lost its 1993 bid to host the 2000 Olympics, and this time
around, the country promised the International Olympic Committee that
it would clean up Beijing's act before the games.
Officials converted coal-fired furnaces to natural gas. Factories have
been relocated to the suburbs. Millions of trees have been planted to
break the winds that blow dust in from the plains north and west of
the city. Older taxis have been replaced with 80,000 newer models that
produce less pollution. Heavy trucks are permitted to enter the city
only at night. The city expanded its subway system and built a rail
line to connect the air****t to downtown.
And it still hasn't been enough. Thanks to China's rapid economic
growth and Beijing's own stunning growth -- the local economy is up
144% since 2000 -- car owner****p has soared. The city has 3 million
vehicles and is adding 400,000 cars and trucks a year. Power plants
burn cleaner, low-sulfur coal, but they burn a lot more of it: 30
million tons in 2007. A building boom has added 1.7 billion square
feet of construction since 2002, contributing to the city's problem
with dust. Daily concentrations of particulates in Beijing equal those
in New York, Los Angeles, Wa****ngton, Chicago and Atlanta combined.
Desperate for solutions
The only way for the government to deliver anything close to the air-
pollution targets it has promised is to enforce a Draconian short-term
fix: Shut down the sources of pollution for the duration of the games.
Some coal-fired power plants, cement factories, steel-making plants
and chemical plants in Beijing, Tianjin and four neighboring provinces
will be shut for 30 days before the Olympics begin Aug. 8. Ten major
polluters have already been shut, according to the State Environmental
Protection Administration.
Some factories that remain open will not operate at full capacity. For
example, Shougang, this year China's second-largest producer of
construction-grade steel, will cut production in half, to 4 million
metric tons.
Water pollution is, in some ways, easier to fix. Just pump in enough
clean water from surrounding areas to meet the needs of the 16,000
athletes and officials who will arrive in Beijing for the games (and
to make the city look lush and green for an international TV
audience).
One tiny problem: The city and surrounding region aren't exactly
swimming in water. Beijing sits at the edge of the water-poor northern
China plain, more than 90 miles from the sea and distant from any of
China's major rivers. To make up for the deficit in surface water,
Beijing has relied on wells, but the city has pumped water out faster
than it is replaced from natural sources. The groundwater level under
the city has fallen 75 feet in the past 50 years.
Farms without water
To get water for Beijing, surrounding provinces have been ordered to
****p the cleanest water to the capital. In some farm areas, that means
no water from local reservoirs and limited irrigation supply from
local wells. Farmers in some areas have been ordered to grow only
corn, which takes less water but fetches a lower market price than
rice or vegetables. Compensation to poor farmers required to ****p
water to the richer city: about $30. And even that isn't paid to
everyone.
No wonder local officials have been screaming. An Qiyuan, a member of
the Chinese People's Political Consultative Committee for Shaanxi and
former Communist party chief for Shaanxi, went public in the foreign
press with a demand for compensation. "We still need to live," he told
the Financial Times, "so I say the government needs to compensate
Shaanxi. If you don't compensate the m*****, then how can they
survive?"
The theme of starving the poorer countryside for the benefit of the
wealthy cities hits an especially sensitive nerve. The fruits of
China's boom have gone dispro****tionately to city dwellers and the
country's coastal regions.
In 2006, Chinese government figures put annual per capita household
income at $1,475 for urban households and just $450 per capita for
rural households. That inequality has become painfully obvious because
inflation, which hit a 12-year peak in February, has come cra****ng
down hardest on China's poorest. Although overall inflation is running
at just 8.7% annually, food costs soared 23.3%, according to the
National Statistics Bureau. The price of ****k, a staple source of
protein, has climbed 63% since February 2007. The price of cooking oil
has risen 41%.
Ham-handed publicity
It doesn't help stem public outrage that the government just doesn't
seem to get it. In October, as ****k prices were starting to soar out
of control and stories about tainted food supplies were causing
increasing worry, the government staged an elaborate public-relations
event to showcase the special pigs that Qianxihe Food Group (branded
as Lucky Crane in English) would supply for the Olympics. At 10
special farms, carefully chosen pigs were being raised with only the
purest food, air and water. The ****k, according to the China Meat
Research Center, will cost at least twice as much as ****k now on the
market in China.
Think about how that goes over in a country that has recently
witnessed deaths as crowds rushed to buy cheap cooking oil. This ****k
will be absolutely safe to eat, but most Chinese won't be able to
afford it.
All this might not matter to overseas investors if the Chinese stock
market wasn't looking so wobbly right now. Hong Kong's Hang Seng Index
($HSIX) is down 17.6% from the start of 2008. The more volatile
mainland Shanghai market is down 25% since the start of the year.
Recent initial public offerings haven't performed as expected: The
March 10 IPO for China Railway Construction climbed 28% in its first
day of trading in Shanghai. That's shabby compared with the 163%
first-
day gain for PetroChina (PTR, news, msgs) on Oct. 29.
What might be wrong with China's stock markets is, in part, a
reflection of rising anger at the national government in the run-up to
the Beijing Olympics.
Growing distrust of government
The government owns huge numbers of shares in what are nominally
private companies. Roughly 88% of the shares of PetroChina, for
example, are in government hands.
Through reforms introduced a few years back, millions of shares that
were legally locked up can now be sold by the government and its
various agencies. The faith among investors was that Beijing wouldn't
do anything to tank individual stocks or the market in general by
selling too many of these shares. The government would keep the float
for these stocks tiny and thus ensure constantly rising share prices.
The headlines screamed when short-term oil futures hit $110 a barrel.
But the price of oil for future delivery -- as far out as 2016 -- has
topped $100 as well. That's a clear sign, MSN Money's Jim Jubak says,
that the oil market expects inflation to be an issue for a long time.
The government, as far as I can tell from the figures I've been able
to find, doesn't seem to have broken faith with China's investors on
this issue. I don't see any evidence of big sales of shares by
government entities. But what we're seeing in China right now is a
rising sense among investors that they really can't trust the
government to do the right thing by them and a worry that the
government may, whatever its intentions, not be the infallible manager
of all things economic and financial that investors had been counting
on.
A long, crucial to-do list
That's a fear that overseas investors should think about, too: China's
government is about to try to slow runaway inflation while readjusting
the value of the country's currency, keeping the economy growing at
better than 8% a year, reducing income inequality and rebuilding some
parts of the medical and educational infrastructure. Asking any
government to handle all that without a slip is asking a lot.
It's a fear that the government isn't going to be up to it, rather
than any evidence of a meaningful slowdown in economic growth, that is
fueling the malaise in China's stock markets right now.
And the danger is that the Beijing Olympics will feed into that
growing fear. Worried investors, of course, sell. And worried
investors who have lost faith sell the hardest.
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