Category: Economics & Investing

GG was the first of more than a dozen readers to mention this article by Robert Fisk (an outspokenly leftist journal list, so take it with a grain of salt.): The demise of the dollar; In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading. Given the import of the preceding (if it is true), is it any wonder that the USDI is tanking, and the future and spot prices of precious metals are going through the roof? You’ve had plenty …

From the Dr. Housing Bubble blog: Three Westside Shadow Inventory Homes. Santa Monica, Culver City, and Rancho Park. Banks will not Hold Inventory Forever. John S. sent this: Bailout cop: Treasury set ‘unrealistic expectations’ Barofsky, reviewing the first big bailouts to 9 firms, concludes that the government was too rosy to the public about the banks’ health. (Read: They fibbed.) Tom B. thought this might be of interest: Baker Hughes: US Oil, Gas Rig Count Up 7 To 1,024 This Week Damon mentioned: Is world economy still in deep woods? (The IMF announced that it plans to sell 8% of …

Reader Eric S. spotted this: CIT debt swap could cost U.S. more than $1.8 billion By way of Market Oracle, Damon found these two links: News From 1930 and Zero Hedge discusses railroad carloading statistics. Items from The Economatrix: Jim Willie: Systemic Failure Approaches. “Numerous sustaining forces will contribute toward the inexorable path to systemic failure. It will begin with the relapse failure of the US banking system. Citigroup is facing real bankruptcy, whose numerous segments are underwater and growing worse. Bank of America is in a death spiral, whose CEO Ken Lewis departs amidst political and shareholder legal pressures. …

World Bank could run out of money ‘within 12 months’. (Thanks to Chris H. for the link.) Don W. flagged a New York Times piece: Too Rich to Worry? Not in This Downturn. JWR’s comment: When even the uber-wealthy feel the pinch, then it is clear that this is not just a typical market cycle-triggered recession! Items from The Economatrix: Stocks Fall Following Disappointing Jobs Report [Official] Jobless Rate Reaches 9.8% in September Jobs Data Sends Oil Prices Tumbling Below $70 Banks Have Us Flying Blind on Depth of Losses Banks With 20% Unpaid Loans at 18-Year High Amid Recovery …

Greg L. suggested this Housing Storm piece: Is it too early to declare mortgage modifications a complete failure? Reader HPD mentioned this commentary by Mish Shedlock: Collectively, Economists Are A Perpetually Optimistic Lot Ukraine’s Naftogaz indicates default on bonds (Thanks to Danny S. for the link.) The latest installment of the now predictable FDIC Friday Evening Follies: Three more banks go down. (Hat tip to Bill R. for the link.) Items from The Economatrix: Wall Street Money Rains on Senate, Especially Schumer Governments Dip Deeper Into Alcohol-Tax Well Shoppers Cash in on E-Coupons Job Seekers Exceed Openings by Record “Great …

Reader DLF spotted this: Detroit: Too broke to bury their dead Foreclosure Rate Rises 17 Percent. (Thanks to The Other Chris for the link.) A residential real estate shadow inventory case study. Items from The Economatrix: Manufacturing, Employment Pounds Stocks Jobs and Manufacturing Suggest Slow Recovery Banks Trim Use of Emergency Fed Programs September US Auto Sales Fall Amid Clunkers Letdown Natural Gas Tumbles with Most Ever in Storage Unprecedented US Corporate Defaults Seen for 2009 [JWR’s comment: So where is the “recovery” that the CNBC cheering section keeps talking about? I think that a recovery around 2022 may be …

A Year Later, TARP Inspector General Barofsky Sees a ‘Far More Dangerous’ Financial Situation Officials: Fed will need to boost rates quickly. (Thanks to El Jefe Jeff E. for the link.) Bob G. sent the link to this Wall Street Journal piece: Plenty More Bank Losses Expected Globally; Additional $1.5 Trillion in Write-Downs Forecast by End of 2010 Account overdrawn: FDIC Fund Goes Negative. Although the US Treasury is the guarantor of last resort, it now won’t take much to trigger bank runs. (A hat tip to K.T. for the link.) Items from The Economatrix: Hard Times Good for Your …

Reader GG spotted this sobering piece: Corpse of a Thousand Houses. More foreclosures will soon be flooding the market, further depressing the housing market. This is the negative feedback loop (aka “death spiral”) that I’ve been warning about since late 2006. From El Jefe Jeff E.: US large-loan bank losses triple to $53 billion; Regulators say US lenders expected to lose $53 billion in 2009 on loans larger than $20M. Jeff’s comment: “53 Billion is a lot to lose, and they were ‘surprised’ by the losses….I wonder what else is lurking that will cause these banks more surprises.” Also from …

From veteran blog content contributor GG: A $4 billion Postal Service bailout Also from GG: Ten reasons for an imminent stock market crash Reader mark S. flagged this: Another housing slump coming? Analysts say 7 million soon-to-be foreclosed properties have yet to hit the market. Items from The Economatrix: Simmons (Mattress) Plans to File for Chapter 11 Bankruptcy Protection Housing Crash to Resume on Seven Million Foreclosures The Long Slog: Out of Work, Out of Hope Volcker Unleashes Another Volley on the Wizards in Wall Street and D.C. Rare Earths are Vital and China Owns Them All US Issues $7 …

SurvivalBlog’s Editor at Large Michael Z. Williamson sent a link to: Dollar under scrutiny at G20 summit Lost Vegas: Living Underground in Flood Tunnels. In Las Vegas, 1 in every 33 homes is in foreclosure. Where did all the people go? The answer might surprise some. There are an estimated 700 troglodytes live beneath Las Vegas.. Do they realize the mortal danger in the uncommon event of a flood? (A tip of the hat to David R. for the link.) From Jim D.: Social Security strained by early retirements. An ever bigger budget deficit! Items from The Economatrix: FDIC is …

From Paul D.: US faces Armageddon if China and Japan don’t buy debt Investors gird for post-recession inflation HH latched on to this article: U.S. Debt Crisis May Cause ‘Fall of Rome’ Scenario, Duncan Says From FG: Detroit hits 28.9% unemployment Items from The Economatrix: Fed Admits Hiding Gold Swap Arrangements New Jobless Claims Drop Unexpectedly to 530,000 Fed Scales Back Two Emergency Lending Programs Iran Replaces the US Dollar with the Euro New Deadly Dollar Carry Trade Gold to Reach $1,500 This Fall?

Can you spell monetization? Federal Reserve Accounts For 50% of Second Quarter Treasury Purchases (Thanks to GG for the link.) GG also flagged this piece in the Globe and Mail: Desperately seeking an exit strategy. (Roubini says debt monetization and inflation “the path of least resistance”) J.O. suggested this piece by Peter Schiff: Lehman Brothers Revisited Items from The Economatrix: UK: Crude Price “Shock” Next Threat to Recovery UK: Markets in Government-Fueled Bubble Says Hedge Fund Manager US Debt Crisis May Cause “Fall Of Rome” Scenario Things are Getting Better? Thank The Fed for Your Lack of Purchasing Power (The …

FG and Adam W. both flagged this: Homeowners who ‘strategically default’ on loans a growing problem. The article begins: “Who is more likely to walk away from a house and a mortgage — a person with super-prime credit scores or someone with lower scores? Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to “strategically default” — abruptly and intentionally pull the plug and abandon the mortgage — compared with lower-scoring borrowers.” El Jefe Jeff E. recommended this piece by famed …

From Karen H.: Trailing Indicators: Out of a Job, Some Decide to Take a Hike Don’t Trip in Your Search for Higher Bond Yields Blaine sent this: Ten Big Companies Veering Towards Bankruptcy DD flagged a news item: FDIC considers borrowing cash from banks; Insurance fund that protects depositors is quickly running out of money Jim Jubak asks: Will US repeat mistakes of 1937? Items from The Economatrix: Reversal: FDIC May Need Bailout from Banks Ten Big Companies that are Veering Toward Bankruptcy Rebound In Commodities Carry Stocks Higher Oil Rebounds as Dollar Weakens Landmark Decision Promises Massive Relief for …