Posts filed under “Finance”
I noted earlier that the oddity of imports versus exports calculation would produce a positive contribution to GDP. Let’s look at the details of this, and find a way to understand what this means.
First, off conceptualize the difference between what imports and exports are. At the most basic level, Imports represent our consumption of overseas production, i.e., We buy what they make.
Exports are where overseas consumers purchase our production, i.e., They buy what we make.
What were the specifics of the GDP data regarding import/export?
-Real imports of goods and services decreased 15.1%
-Real exports of goods and services decreased 7.0%
So in Q2, both consumption by us of overseas goods and services and by them of US made goods and serivces declined significantly.
The Differential between imports and exports — who dropped fastest — was the key to this quarter’s GDP data.
According to Bloomberg, Decreasing Exports subtracted 0.76% from GDP. At the same time, falling Imports added 2.14%. Net contribution of the fact that Imports are free falling twice as fast as Exports are = 1.38%.
If they were both falling at the same rate — if Europe and Asia’s consumers were hurting as much as ours – GDP would have been -2.38%.
If it seems weird to you that the ratio of domestic and overseas shrinking economies and their reduced consumption somehow turned into a positive GDP contributor, well, welcome to the wonderful world of government statistics.
There will be some good news and some bad news this morning at 8:30. That’s when GDP will be released. The Good News will be that we are no longer contracting at the painful rate of 6% annually; Call it the end of the Freefall period we saw from September 2008 to March 2009. The…Read More
I have the lead quote in the this page one NYT Business section article on the Markets — which came out prior to this NFP: “Less-worse isn’t the same as better,” said Barry Ritholtz, chief executive of FusionIQ, a research firm. “We want to see ‘good.’ In order to grow profits, in order for earnings…Read More
Last week, we saw Continuing Claims decrease — proof, said the green shooters, of the imminent economic recovery. Only, not so much: Those of you (who can still afford the luxury of) a trusty Bloomberg will note the ‘exhaustion rate’ for jobless benefits – EXHTRATE – reveals that people are not leaving the pool of…Read More
My friend David Grais has started a blog devoted to structured finance and the law. David is a very skilled litigator who spent most of his career doing corporate defense work, but has defected from the Dark Side to become a plaintiff lawyer working on a number of very important ABS cases.
David just posted a comment on the his firm’s blog [http://www.absinvestoradvocate.com] that has some interesting insights about the Obama Administration’s plans for “reforming” the securitization markets. His comment follows below. — Chris
Proving yet again that it has become a puppet of its sell-side parent SIFMA, the American Securitization Forum has just released a 241-page study that it commissioned from National Economic Research Associates, Inc. (here) to prove that securitization increases the amount and lowers the cost of consumer credit. It is as though the White Star Line commissioned a book on the RMS Titanic in which the author was told to extol the power of Titanic’s engines, the elegance of the china in its dining rooms, and the verve of its dance bands, while strictly ignoring its shortage of lifeboats.
There is only one question worth asking about securitization: why did securitization become the seedbed of the broadest and costliest epidemic of fraud in history? Until we face that question squarely and answer it honestly, securitization will remain in its coma. Unfortunately, the Obama Administration missed a chance to address that question in its plan to regulate the securitization market. (See the post immediately below.) ASF’s sponsorship of the NERA report is more insidious. By a combination of forbidding mathematics and emollient prose (“Recent experience appears to demonstrate readily that securitization is not inherently ‘good’ or ‘bad.’”), ASF tries to whisk us past that looming question and past the one measure that will best restore confidence in securitization: effective redress for investors against those that turned securitization from a useful financial tool into an orgy of misconduct.
In today’s WSJ, we learn of the proposed shift in standards for retail stock brokers — from “Suitability” to “Fiduciary:” “Buried in President Obama’s proposed regulatory overhaul is a change that could upend Wall Street: Brokers would be held to a higher “fiduciary” standard that would compel them to place their client’s interests ahead of…Read More
Two interesting articles in today’s NYT touch upon some of our favorite themes: Indebtedness of Consumers, the poor condition of bailed out banks, and the ongoing softness in the labor market. The first is a front page article on the Credit Card firms reducing debt for delinquent borrowers, noting “The creditors would rather have a…Read More
Another pair of charts courtesy of the terrific Ron Griess of The Chart Store. The first looks at the 2000 bubble in Technology, and how stocks behaved after that crash. The second is a look at a similar boom and bust — the financial sector bubble and collapse. The technology boom was actually bigger than…Read More
Floyd Norris on the bad — and worsening — loan problem: “OVERALL loan quality at American banks is the worst in at least a quarter century, and the quality of loans is deteriorating at the fastest pace ever, according to statistics released this week by the Federal Deposit Insurance Corporation. The report highlighted that even…Read More