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A government big enough to give you everything you want, is strong enough to take everything you have.
–Gerald Ford
Jim Sinclair’s Commentary
Curtail QE? Yeah sure!
U.S. Home Vacancies Rise to 18.8 Million on Defaults (Update1)
By Kathleen M. Howley
Oct. 29 (Bloomberg) — About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.
The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.
The worst U.S. housing crash since the Great Depression has led to a record number of foreclosures and shaved almost a third off property values. The S&P/Case-Shiller Index of 20 cities in August was 29 percent below its 2006 high, after rising for four consecutive months.
“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.”
Sales of new U.S. homes fell 3.6 percent in September to an annual pace of 402,000, the Commerce Department said yesterday. That was lower than the 440,000 median forecast of 75 economists surveyed by Bloomberg News.
Jim Sinclair’s Commentary
It is encouraging that FASB is defending mark to market for fair value. As long as the bank holder of an asset is free to select any price as fair value no value will be fair.
"Herz said "fair value might have provided an early warning" and contributed to investor confidence in a recovery."
Keep accounting separate from U.S. bank regs-FASB
Thu Oct 29, 2009 12:54pm EDT
By Emily Chasan
NEW YORK, Oct 29 (Reuters) – Bank and securities regulators should "clearly delineate" their efforts to maintain economic stability from accounting rulemaking, the top U.S. accounting standard setter said on Thursday.
Robert Herz, chairman of the U.S. Financial Accounting Standards Board, said regulators should separate their rules on regulatory capital requirements designed to maintain economic stability from accounting rules designed to promote transparency.
"Both are essential public policy goals," Herz said in comments to the New York Society of Security Analysts.
Regulators should use U.S. Generally Accepted Accounting Principles (GAAP) as a "baseline" to evaluate bank health, rather than a primary measure, he said.
U.S. accounting rulemakers have been blamed by many investors and financial industry experts for accelerating the financial crisis by requiring a broader use of "mark-to-market," or "fair value," accounting that required companies to put a market value on financial instruments.
Thoughts For The Day:
The Federal Reserve will complete its $300 billion Treasury purchase program this week. Then what?
The Homebuyers’ tax credit is to be extended through April 2010 under a deal reached by key senators. Tax credits to the bottom line have a power impact on the Federal Budget Deficit enlargement program.
Jim Sinclair’s Commentary
I believe you should have all the commentary behind the real statistics, not only to help you now, but also when and if there is a turnaround.
It is a by subscription service. I have no financial arrangement with Mr. Williams directly or indirectly.
- Recession Is Not Over
- Quarterly GDP Growth Is Not Sustainable, with 92% of Growth in Nonrecurring Factors
- Annual GDP Down 2.3% (5.7% SGS)
- 4th-Quarter GDP Should Resume Quarter-to-Quarter Decline
- Durables Goods Orders at 1997 Level
- Help-Wanted Adverting at New 58-Year Low
From http://www.shadowstats.com/
Jim Sinclair’s Commentary
Take it away and it goes away.
Motor vehicle production contributed 1.66% to GDP, as the Cash-for-Clunkers program increased demand for cars in the quarter. This figure will plunge subsequently as automotive demand may have shifted in time, but has not actually grown in the aggregate. The government role was also evident in the 23% increase in home construction, as tax credits to first time homebuyers has juiced demand in the sector.
Jim Sinclair’s Commentary
Please note that China is totally on the other side of this equation and growing at a significant clip.
This entire thesis is predicated on the technical end of a recession and the assumption the world is growing out of poor business conditions.
It is further predicated on an assumption that the financial crisis and credit conditions, a product thereof, is not apt to return.
It is major international Management of Perspective Economics, an unspoken school of economic reasoning that has been adopted internationally.
The Fed underneath the rhetoric knows better.
Bernanke, Shirakawa Trail Gjedrem Amid Policy Split
By Simon Kennedy
Oct. 29 (Bloomberg) — The global monetary policy divide is widening as the Federal Reserve, Bank of Japan and major counterparts lag behind Norway and Australia in raising interest rates, a trend that’s set to continue into 2010.
While Fed Chairman Ben S. Bernanke and BOJ Governor Masaaki Shirakawa may soon unwind some of their emergency measures, JPMorgan Chase & Co. doesn’t expect a Group of Seven member to lift rates before the third quarter. The divergence may boost the currencies of those nations shifting first, with New York University professor Nouriel Roubini warning low U.S. rates may be generating “huge” bubbles as investors borrow dollars to invest in other assets.
“The big boys are going to hold off raising rates for the foreseeable future,” said Jay Bryson, global economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Their economies have been decimated and are going to take some time to recover even with better global growth.”
The Norges Bank, under Governor Svein Gjedrem, yesterday cited higher-than-expected inflation in pushing its benchmark rate up a quarter point to 1.5 percent and signaling steeper increases than it previously forecast. In August, Bank of Israel Governor Stanley Fischer boosted his benchmark a quarter point to 0.75 percent, while Reserve Bank of Australia Governor Glenn Stevens raised to 3.25 percent from a 49-year low of 3 percent on Oct 6.
Jim Sinclair’s Commentary
He visits Russia and now the USA to inform them of what?
Washington caught off guard by Netanyahu visit
Israel says PM did not consult Obama ahead of trip because meeting on peace process unnecessary
Yitzhak Benhorin
Published: 10.25.09, 09:32 / Israel News
WASHINGTON – Prime Minister Benjamin Netanyahu’s intention to visit Washington for the annual UJC General Assembly has surprised many on Capitol Hill and was apparently not coordinated with the Obama administration.
An American source told Ynet Sunday that news of the visit had been received with reserved astonishment.
The Obama administration has not yet responded to questions of whether a meeting with Netanyahu was forthcoming due to their surprise over the unscheduled visit. On the other hand, failure to invite Netanyahu to the White House may be perceived as a diplomatic crisis.
Sources in Jerusalem say Netanyahu did indeed decide to attend the GA without first consulting President Barack Obama, but that since the latter would also be present at the event the two may meet in any case.
The sources say a summit between the two leaders would be superfluous at this point in the peace process, and for this reason an official meeting has not been scheduled.
Jim Sinclair’s Commentary
The following is compliments of the Green Hornet.
Pluto next?
Jim Sinclair’s Commentary
Great, the Recession is over in Wall Street.
What’s Still Wrong with Wall Street
By ALLAN SLOAN Thursday, Oct. 29, 2009
Are you furious? If not, you should be. The giant financial institutions that make up Wall Street have been bailed out, thanks to trillions of dollars of our money, and are on track to hand out record-breaking multibillion-dollar bonuses while millions of regular folks are hurting. Even outside the gilded halls of Wall Street, there’s no shortage of good cheer: many economists say the Great Recession has ended, and Federal Reserve Chairman Ben Bernanke keeps seeing "green shoots" in the economy.
But the only green shoots that many non–Wall Street types have seen lately are the weeds sprouting in the parking lots of abandoned malls. Unemployment is marching toward 10%, and house foreclosures are still rising. If you’re a day late with your credit-card payment or overdrawn by a few bucks on your ATM card, the bank (which your tax money helped bail out) is still sticking you with obscene fees and charges. Hence the question that so many of us are asking: Where’s my bailout?
Jim Sinclair’s Commentary
CIT is to middle American business financing what Lehman was to OTC derivatives.
It is one thing to beat or not beat bankruptcy but it is critical that CIT is able to run day to day business at competitive rates and in volume. I doubt that it can do either now or in the future few years.
This is the overriding story of the past few month that few really understand the implications of.
New CIT aid is in hedges
It’s now fund group vs. Icahn
By JOSH KOSMAN
Last Updated: 3:26 AM, October 29, 2009
Posted: 1:07 AM, October 29, 2009
A group of hedge funds yesterday offered to lend troubled finance company CIT Group $4.5 billion in order to shore up creditor support for a controversial debt swap, pitting the funds against billionaire activist investor Carl Icahn, who wants the swap voted down.
The lifeline, extended by a group that includes Silver Point Capital, comes as CIT’s lenders must decide by midnight tonight whether to support a company-proposed debt exchange, a separate pre-packaged bankruptcy plan or neither proposal.
Icahn has spent this week urging creditors to reject both proposals in order for the company to default on its loans and give a bankruptcy court control of the company, which can then sell most of its $60 billion in assets and use the proceeds to pay off $42 billion in debt.
CIT provides financing to 1 million businesses, including Dunkin’ Brands franchisees.
In making the loan to CIT, Silver Point is putting its support behind the company’s board and management, whom Icahn has criticized as being responsible for CIT’s woes.
