Ten for Thursday
By Barry Ritholtz - August 6th, 2009, 2:30PM
Here are 10 links for your reading pleasure
• Behind BofA’s Silence on Merrill (WSJ)
• Goldman’s 42 $100MM+ Trading Days In Q2 – An Absolute, Unprecedented Record; Just Two Days Of Trading Losses (ZeroHedge) see also Despite Bailouts, Business as Usual at Goldman (NYT)
• Berkshire May Post ‘Blockbuster’ Results by Buffett’s Measure (Bloomberg)
• What is The Fair Mortgage Collaborative ? (TBP)
• Buy foreclosures now – before it’s too late (CNN/Money)
• Insights from The Big Picture Conference (Video)
• The History of the Stock Market (Mint)
• Dubai Leads World in RE Price Declines (Raising the roof)
• A Map of Science (Metamodern)
Anyrthing else worth adding?
August 6th, 2009 at 2:34 pm
Remember the WSJ piece discrediting Siegel’s 19th century stock market data?
As Paul Harvey would say, here’s the rest of the story…
http://www.erictyson.com/articles/20090805
August 6th, 2009 at 2:35 pm
I think you missed this one, BR:
http://finance.yahoo.com/tech-ticker/article/296786/World’s-Smartest-Economists-Off-to-Fish-and-Drink-in-Maine?tickers=xlf,%5Edji,%5Egspc,dia,spy&sec=topStories&pos=9&asset=&ccode=
Hope you & the Mrs. score some of that $2.50-a-pound lobster (which is cheaper now than hot dogs…) My local restaurants sure haven’t cut their prices to reflect that here in Chicago.
August 6th, 2009 at 2:41 pm
http://www.foxbusiness.com/story/obama-adviser-strongly-defends-stimulus-act/
“One of President Obama’s top economic advisors left the door open this morning for a second stimulus package in 2010 if the current $787 billion economic stimulus plan doesn’t producing desired results by the end of this year.”
Hi There Grandchildren! Would you like to learn the definition of indentured servitude today? I thought you would…
..’pologies to Mr. Rogers…
August 6th, 2009 at 3:02 pm
Buy now or be priced out forever! Hurry, hurry.
August 6th, 2009 at 3:04 pm
NFLX has got it going on. Sounds like a mean lean machine.
August 6th, 2009 at 3:06 pm
probably saw it on CR already but I think it reminds us we aren’t out of the woods.
http://mortgage.freedomblogging.com/2009/08/06/foreclosure-wave-gets-bigger/15037/90-day-chart-big/
August 6th, 2009 at 3:18 pm
Jdamon,
To pick up on your shorting the levered ETF concept from the last thread. Im not sure what exactly you are talking about. If you shorted FAZ and FAS anytime in the past month, you would have gotten hit pretty hard. The point is that the strategy only works if there is back and forth in the market. In a single-direction market (like the last month), the increasing leverage of your position to the ETF that is performing better can quickly cut you down.
Example: $50-$50 allocation to FAZ and FAS on split day 7/10
FAZ down 50% (up $25), FAS up 81% (down $40) – you have lost a quick 15%
August 6th, 2009 at 3:24 pm
I thought this was a short but interesting article from Naked Capitalism via Le Cafe’ Americain’-
“Is Sheila Bair an Unsophisticated Hick?”
http://www.nakedcapitalism.com/2009/08/guest-post-is-sheila-bair-hick.html
excerpt-
“The obvious implication is that Ms. Bair is some hick regulator who is not as sophisticated as, let’s say, Larry Summers, Tim Geithner, or Ben Bernanake when it comes to rewarding their Wall Street cronies . . .”
August 6th, 2009 at 3:24 pm
Buy foreclosures now – before its too late
Hmmmmm….. Interesting article but title and content don’t match. They are expecting another wave of foreclosures in the fall – as the article clearly states (towards the end of course which most people would probably overlook). Wouldn’t this tend to imply that while prices are historically low now, if you have patience and ignore the noise, and focus on the fundamentals and reality facing the economy, you will get a house for even less come the fall/early 2010? (if you can find a lender of course or pay cash)
I have a few new headlines of my own that also fit in to this article with a few word substitutions:
Buy cars now – before its too late
Buy stocks now – before its too late
Short the dollar now – before its too late
Buy oil now – before its too late
August 6th, 2009 at 3:27 pm
http://www.stltoday.com/stltoday/business/stories.nsf/story/264CF0821878A32F862576090003C6FB?OpenDocument
By Tim Bryant
ST. LOUIS POST-DISPATCH
08/05/2009
The lightly occupied Plaza Square apartment complex in downtown St. Louis fetched only $5 million Tuesday at a foreclosure sale prompted by the owner’s failure to repay a $25 million loan.
Natixis Real Estate Capital Inc., which had lent Urban Developers LLC $25 million to buy five of the complex’s six buildings in 2004, outbid two real estate management firms. The other bids were for $1 million and $1.2 million.
————————–
How would you feel if you won the auction on some buildings you loaned out $25M on with a $5M bid….and then finding out the other two bids were both under 25% of what you are paying.
Oops.
August 6th, 2009 at 3:29 pm
Barry, I really think you’ve got the Fair Mortgage Collaborative all wrong.
Some of the founding organizations, including the Center for Responsible Lending & the Consumer Federation of America, have been at the forefront of the effort to pass the Consumer Financial Protection Agency, predatory lending legislation, mortgage cramdown, etc. at the same time that they’re doing this.
August 6th, 2009 at 3:34 pm
Above historically low meant low for last 5 years…. I guess relatively or comparably low might have been better stated.
August 6th, 2009 at 3:36 pm
This seems odd:
New lustre for copper with first investment fund
Of course, there is a challenge with running a physical copper fund, which may explain why it has never been tried before.
Where does one store all that metal? If successful, the fund will need to find a place for between 20,000 and 60,000 tonnes.
Are these fund managers getting desperate for ideas? This just seems like a real bonehead idea to me
August 6th, 2009 at 3:38 pm
Death in the Recession: More Bodies Left Unburied, Time
http://www.time.com/time/nation/article/0,8599,1914780,00.html?cnn=yes
I heard about this and posted a comment a week or so ago after hearing a piece on NPR. Looks like the story caught on and extends beyond the LA Coroner’s Office.
August 6th, 2009 at 3:38 pm
I suppose the next fund idea could be topsoil. They could buy it when it is cheaper than dirt
August 6th, 2009 at 3:40 pm
Death in the Recession: More Bodies Left Unburied, Time
Finally, a use for the mafia. I understand they’ll get rids of the bodies for free. No questions asked.:)
August 6th, 2009 at 3:42 pm
Where the heck is technical analysis on the “Map of Science?”
They leave it out by mistake? Or is it somethin’ else?
August 6th, 2009 at 3:44 pm
This ain’t your kid’s corn snake…..
http://www.wildlifeextra.com/do/ecco.py/view_item?listid=1&listcatid=596&listitemid=5335#cr
for the pic
200+ pound monster snake caught
August 2009. A 17-foot-2-inch Burmese python has been caught and destroyed on private property in Florida’s Okeechobee County. The male snake weighed 207 pounds, and measured 26 inches in diameter. Its stomach contents were examined, but nothing identifiable was found inside.
August 6th, 2009 at 3:51 pm
http://www.businesstimes.com.sg/sub/news/story/0,4574,344851,00.html?
Climate bill to raise US power costs 20% by 2030
“The measure, passed by the House of Representatives and under consideration by the Senate, is likely to increase electricity prices to 12 cents per kilowatt hour in 2030, or 20 per cent higher than the cost if there is no climate law, using 2007 dollars. Before 2025, the price would go up 3-4 per cent, the study says.”
…I am sure it will only be 20% higher…air conditioning is such a 90’s idea anyway…
August 6th, 2009 at 4:03 pm
http://www.chrismartenson.com/blog/fed-buys-last-weeks-treasury-auction/23880
“Good grief! Just last week, when the auction results were announced it was trumpeted to great fanfare that there was “more than sufficient” bid-to-cover, “strong demand” and all the rest.
And now it turns out that 47% (!) of the bonds that were taken by the primary dealers in that auction have been quietly bought by the Fed and permanently secreted to its balance sheet.
They didn’t even wait a full week! ….
This immediate repurchase of newly auction bonds by the Fed tells us that demand for these bonds is not nearly as high as advertised, and that things are not quite as strong as represented.”
August 6th, 2009 at 4:20 pm
ahab, i think its just that she didn’t work for Gs that makes her a hick
banksters strike again!
http://www.businessweek.com/magazine/content/09_33/b4143020536818.htm
August 6th, 2009 at 4:45 pm
“Buy foreclosures now – before it’s too late”
__________
This is bullshit. Show me an area where REO housing sales are strong. According to a residential RE buddy, you can make all the offers you want — you can even have a signed contact — but good luck getting the bank to settlement. After numerous delays and threats of lawsuits, the banks are returning deposits and holding the houses.
August 6th, 2009 at 5:17 pm
re: http://www.ritholtz.com/blog/2009/08/ten-for-thursday/comment-page-1/#comment-201215
Sounds like the perfect contrarian indicator for copper prices, and commodities at large by association.
August 6th, 2009 at 5:18 pm
willid-
the way I look at it- reviewing how and how much banker’s are paid was brought on by the banker’s themselves-
if they didn’t need to resort to taxpayer assistance to stay solvent- need FDIC insured bond issuance and ZERO % rates to remain viable- if they hadn’t sent the economy over a cliff- well then-
we wouldn’t be having this discussion re banker pay
August 6th, 2009 at 5:21 pm
jr Says:
August 6th, 2009 at 4:03 pm
http://www.chrismartenson.com/blog/fed-buys-last-weeks-treasury-auction/23880
////////////////////////////
Yep….yelp….
We are really fucked.
August 6th, 2009 at 5:52 pm
from jr’s link re fed secretive bond purchase-
“A more honest and open approach would have been for the Fed to simply buy them outright at the auction but this way, using “primary dealers” and “POMOs” and all these other extra steps the basic fact that the Fed is openly monetizing US government debt is effectively hidden from a not-too-terribly inquisitive US press and public. ”
monetizing the debt- flooding the markets with cash- which is then used to pump markets- no-one is the wiser because no-one is investigating that the fed is covering almost 50% of the purchases-
unless yields start rising appreciably- the game won’t change- but it would appear they must rise- because it is apparent that there is not enough external demand for our bonds- and alas- people become wise and see that we are following the Zimbabwe solution-
yields have to increase accordingly- when that happens- stock market should take a beating- but what of the USD???
August 6th, 2009 at 5:56 pm
Why didn’t BB tell us about these covert Fed purchases? When he was on his barnstorming tour to be reappointed, that would have been the perfect time….
August 6th, 2009 at 6:13 pm
Bruce, when you are not posting uncomfortable, links to factual evidence, you post uncomfortable questions.. are you single-handedly trying to ruin an inflationary rally? keep up the good work for us and your patients…
August 6th, 2009 at 6:17 pm
it’s all a big shell game Bruce- if I was doing trasactions with the USA- I would demand payment in Au- i.e.- GOLD-
it would appear that the value of our bonds have nowhere to go but down
August 6th, 2009 at 6:24 pm
http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/08/why-did-debt-increase.html
August 6th, 2009 at 6:38 pm
http://seekingalpha.com/article/154024-why-another-stock-market-collapse-could-be-imminent
August 6th, 2009 at 6:53 pm
willid-
that 2nd link should make anyone hesitant to go long- unless for a trade
August 6th, 2009 at 7:01 pm
Willid – People have been predicting an imminent collapse in the markets since April – Not sure many of the folks posting here are long right now, but for me personally, I’ll believe the market is about to collapse when it finally collapses
August 6th, 2009 at 7:19 pm
Thor- you’ll miss the move, dude
August 6th, 2009 at 7:23 pm
Wes – what move buddy?
August 6th, 2009 at 7:30 pm
“Bernanke also urged Congress to keep proposals to audit the Fed away from monetary policy duties.
“A perceived loss of monetary policy independence could raise fears about future inflation,” he warned.
Now you know why. It would also expose the shenanigans worked out between the FED and the banks with respect to Treasury purchases, low interest rates, excess bank reserves, the market’s continuous rally, constrained precious metal prices and the ever levitating USD.
To your point ahab, China and Japan (the new government coming this month) have already indicated that they want future purchases of U.S. Treasuries denominated in their currencies. Speaks volumes for where they think the USD is headed, doesn’t it?
August 6th, 2009 at 7:36 pm
thor-
the move down of course
pat g-
pretty good at reading between the lines pat-
his statement should make anyone nervous
August 6th, 2009 at 7:38 pm
PatG – Can you provide us with a source for your China/Japan claim?
August 6th, 2009 at 7:39 pm
@ ahab
Thanks. With this government, you have to read between the lines because they have their fingers in so many pies…
August 6th, 2009 at 7:43 pm
@ Thor
Sorry. I didn’t mark them but I did read both articles on Real Clear Markets.
August 6th, 2009 at 7:45 pm
Ahab – I thought that’s what Wes was talking about but just wanted to make sure. I have almost no money in the market right now other than some FAS I’ve been lucky with the last few weeks. That’ll get stopped out if it goes down another few points. Once the market turns though, my hope is that it’ll be long and drawn out so even if I miss the start I can certainly jump in afterward (again, with more tight stops)
August 6th, 2009 at 7:46 pm
Thanks Pat – I’ll try to look for them!
August 6th, 2009 at 7:50 pm
One wonders if dr bruce and his Like minded friends on this board would wax indignant about sticking it to our grandchildren if obama’s next round of stimulus was a trillion dollars in TAX CUT a la gwb and not spending. Hmmmmm
August 6th, 2009 at 8:00 pm
Bubba – Buddy, seriously, it’s time to let GWB go. He’s gone. I know it was scary, and you’re probably still having nightmares about him, but it’s over, he went away and he’s not coming back – honest to Pete!
Seriously though – pay attention to what people write on here. Criticism of the current administrations economic policies does not mean the person making those criticisms is a right wing republican, nor does it mean that they were a supporter of GB, in favor of massive tax cuts, a perma-bear, hoping for the US to fail, etc etc. These endless and repeated over-generalizations about everyone who does not agree with your narrowly defined ideology are rather embarrassing.
August 6th, 2009 at 8:01 pm
@ Thor
My Bad! The Chinese article was on Real Clear Markets which I can’t seem to find and the other is here:
http://www.silverbearcafe.com/private/07.09/dump.html
“Back in May, Masaharu Nakagawa, the chief finance spokesman for the opposition, told the BBC that he was worried about the future value of the dollar. He said that if his party were elected in the upcoming national elections, Japan would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen instead of dollars.”
August 6th, 2009 at 8:11 pm
Thor@7:23, from Thor@7:01 -
“I’ll believe the market is about to collapse when it finally collapses”
that would be the move
August 6th, 2009 at 8:34 pm
“Where the heck is technical analysis on the “Map of Science?”
They leave it out by mistake? Or is it somethin’ else?”
It’s right next door to reading the entrails of chickens.
August 6th, 2009 at 8:48 pm
When I look upon seamen, men of science and philosophers, man is the wisest of all beings; when I look upon priests and prophets nothing is as contemptible as man.
Diogenes
August 6th, 2009 at 8:56 pm
Wes-
excellent!- waxing poetic I see-
to all- re Chris Martenson’s outing the Fed- in the US debt laundering scheme- here is ZH’s take-
“Zero Hedge salutes CM for this brilliant piece of sleuthing: now if only the MSM would have the guts to demonstrate the pyramid scheme that the US Bond and Equity markets have become.”
here, here
August 6th, 2009 at 9:01 pm
FANNIE MAE CONTINUES TO DRAW BLOOD FROM THE TAXPAYER
http://truthingold.blogspot.com/2009/08/fannie-mae-drains-another-107-billion.html
August 6th, 2009 at 9:02 pm
@ahab-
the slight of hand of the fed is something else – Helicopter Ben is quite shrewd
confidence game
con man………….
August 6th, 2009 at 9:09 pm
following on daveindenver-
this is cool-
“We expect significant uncertainty regarding the future of our business, including whether we will continue to exist, to continue until February 2010 and beyond,” Fannie Mae said in its regulatory filing.
unreal- but- Bernanke can create money at will- so they will remain solvent- the USA- not so much
August 6th, 2009 at 9:24 pm
@ahab-
i thought i heard/read that fannie and freddie were going to be wound down
good bank – bad bank
wind down the bad bank, preserve the good bank
August 6th, 2009 at 9:59 pm
OK, so we’re going to find out via plunging tax receipts that more jobs have been lost than the BLS has computed. And now we find out that the Treasury issues that were snapped up in the open market included a lot of straw man purchases for the Fed. Sooo we’ll need even more of these sham purchases of Treasuries to try and keep interest rates down as the deficit climbs to over 50%, gotta keep interest rates down to try and sell these foreclosures. It sounds like BB is playing the ultimate high stakes game, he has doubled down on Greenspan’s losing bet
August 6th, 2009 at 10:19 pm
Pat G – Thanks for the article. I can see that working for Japan but can it also work for China? Can they still keep their own currency low if they are buying US debt valued in Yen? Does the US government even offer debt in denominations other than dollars? If not, would they?
August 6th, 2009 at 10:19 pm
sorry, not Yen, Yuan
August 6th, 2009 at 10:28 pm
Cash for clunkers forever, why not? If the US contributed $4500 for each car purchase we, in effect, would be making the rebates the US manufacturers used to make that kept them (barely) profitable. It’s probably cheaper than all the loans we made to keep them out of bankruptcy and then additional loans to keep them out of liquidation.
August 6th, 2009 at 10:46 pm
Pat – Have been reading up a little on the Japanese election. Found the original article you quoted and it’s source with the BBC. Hard to take campaign promises from an opposition part too seriously at this point, also, I was checking the news on the August election in Japan and although the current ruling party is unpopular, it does not look like they will be knocked from power, poll numbers don’t seem to predict a large enough change to bring the opposition party into power. . .
The BBC article which your original link was based on states that it would be difficult for both China and Japan to demand bonds valued in their own currency because it would likely cause panic selling of the dollar which would devastate the value of their current holds. As of May, according the Treasury Department (link below) China now holds 801 billion dollars in treasury securities while Japan holds 677 billion. I don’t think either China or Japan would seriously risk a significant loss in the value of their current holdings simply to safeguard future purchases (although I could be wrong)
Last, I think it’s been argued extensively that China’s talk of having another world reserve currency is just that – talk. Since the crisis began, and all through the “dump the dollar” new cycle, China has accelerated (and continues to accelerate) their holdings in US Treasuries. My guess is that they are doing so in an attempt to keep the value of their own currency low while the dollar’s value has fallen throughout much of this year.
Also – does anyone know where the 2.2 trillion number that people throw around for China’s holdings in US debt comes from? I see different numbers – 1.7 trillion, 1.4 trillion in several news articles but I would be interested in finding the actual number. . . .I’m clearly missing something from the treasuries site. . . .
http://www.treas.gov/tic/mfh.txt
August 6th, 2009 at 10:47 pm
@thor
i wasn’t aware that my post was about gwb
btw im no obamaniac i can assure you that
August 6th, 2009 at 10:57 pm
Bubba – then I apologize, I thought your reference to gwb meant something other than what you intended (and it’s been a long day
August 6th, 2009 at 11:06 pm
@thor
no need to apologize. The one thing i hate more than stupidity is hypocrisy. (not talking about you)
and If i have to ruffle a few feathers to make a point so be it
August 6th, 2009 at 11:37 pm
@ bubba,
imo, if they implement tax cuts as a “solution” well, holy hell, politicians are dumber than I thought.
in more important news, paula abdul is leaving american idol and speculation is swirling it’s b/c of inequality of pay. I always knew goldman sachs was manipulating that show with HFV (High Frequency Voting)
August 6th, 2009 at 11:49 pm
Ben – AI is being taken over by foreigners – Posh Spice is rumored to be taking her place. Another American Icon about to fall by the wayside – what’s the world coming to?
August 6th, 2009 at 11:53 pm
thor,
lol, I know, very important those american idol judges.
August 7th, 2009 at 12:07 am
thor,
I would like to see one of the idol judges demand to be paid in some other fiat beside the dollar, this was a nice indicator last year for a dollar rally. we’ll see.
August 7th, 2009 at 12:17 am
Ben – Silly, don’t be so naive – they’re not being paid in dollars, they pay them in cocaine and vicodin!
August 7th, 2009 at 12:48 am
“imo, if they implement tax cuts as a “solution” well, holy hell, politicians are dumber than I thought.”
won’t get any arguments from me there, Ben.
August 7th, 2009 at 10:00 am
@bubba
I wouldn’t worry about the notion of “tax cuts” ever again…With the bill that Obama & Congress are ringing up (on top of what GWB rang up), there will never be a tax cut in this country again!