Bleedin Housing, Retail & Bank Bailout's
The Housing Debacle continues to bleed... Procter & Gamble beat the number, but forward guidance trailed analyst estimates.
U.S. Steel, the largest U.S.based steelmaker, said Q3 profit tumbled 35% because of falling demand from builders and carmakers in North America and plant shutdowns in Europe.
S&P Case Schiller Home Price Index -5 Full Report
10 city composite decline of 5% shattered June 1991's decline. Lowest on record April 1991 -6.3%.
The 8th consecutive month of negative annual returns & 21st month of decelerating returns. 20 city index -4.4%.
Tampa surpassed Detroit in August, reporting a double-digit annual decline of 10.1%. Detroit followed with -9.3% and San Diego with -8.3%.
Year-over-year and monthly price returns are continuing to either move deeper into negative territory or are experiencing persistent diminishing returns.
Robert J. Shiller, Chief Economist at MacroMarkets:
"At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround."
Target at risk... Young homeowners WITH cash or equity credit, buy home goods & clothing.
41% of Target's sales come from home goods and clothing more than double the rate at Wal Mart.
Target's short interest ratio, 5.73%, is at the highest rate in more than 10 years.
Wal Mart began to feel the effects from subprime defaults and delinquencies last year. Now, its moving up the food chain.
Target's September sales at stores open at least a year rose 1.2%, the lowest in five months and short of a company forecast that had already been cut in half on Sept. 24 after customer visits declined.
The company also lowered its October sales forecast. Shoppers have cut clothing purchases 24% in the past year.
George Whalin, president of Retail Management Consultants:
"(Home goods) is a category of merchandise that's right now suffering and will continue to suffer with the housing situation.
By early next year, we're going to begin to see the job situation get a little more critical than it's been.
Those jobs are going to come both in blue-collar and white-collar areas."
Consumers are already squeezed by higher costs, with higher monthly payments on $600 Billion in ARM resets through the end of 2008...
and layoffs in a cooling economy, John Q. will continue to pull back on his spending, putting Target and retailers higher in the food chain, at risk.
What's the bank bailout all about Alfie?
Inquiring Naybobs need to know how this ponzi scheme or shell game in the ABCP market is staying alive.
How are the large banks rolling their short term ABCP? Read on if you dare...
The FHLB (Federal Home Loan Bank System) is a government lending program, originally set up to revive housing during the Great Depression.
The FHLBs are cooperatives created by President Herbert Hoover in 1932 to spur mortgage lending. Seems they have been pressed back into service of late.
With NO ONE wanting to buy ABCP based on MBS or otherwise... and over $400 Billion in "hung loans" constipating the short term paper market...
Asset backed commercial paper outstanding fell 25% to $883.7 billion as of last week from $1.18 trillion on Aug. 8.
In August and September as interest rates on ABCP asset backed commercial paper rose as high as 5.6%...
In September, ABCP, when it was available, cost as much as 51 basis points more than Libor.
At the same time, the FHLB one month funds at an average of 48 basis points below Libor.
Countrywide, WaMu Hudson City Bancorp and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks.
Countrywide, the largest U.S. mortgage lender, almost doubled borrowings from the Federal Home Loan Bank of Atlanta to $51 billion during the quarter.
Washington Mutual, the largest U.S. savings and loan, boosted its borrowing from the FHLBs by $31 billion.
The government sponsored companies (FHLB) were able to make loans at about 4.9%, saving the private banks about $1 billion in annual interest.
To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September, according to the FHLBs' Office of Finance.
The FHLB's borrow in the bond market and lend the money to their members. FHLB obligations, when combined with the $1.5 trillion debt and $4.7 trillion in bond guarantees...
of GSE's Fannie Mae and Freddie Mac, are 46% more than the $5.04 trillion of Treasury debt held by the public.
The recent sales pushed outstanding debt up 21% to a record $1.15 trillion, an amount that may become a burden to U.S. taxpayers because almost half comes due before 2009.
Sales of mortgage bonds, excluding those issued by Fannie Mae and Freddie Mac have tumbled by 66% to a monthly average of $39 billion from $115 billion in 2006.
The FHLB banks require borrowers to put up mortgages, mortgage bonds and other assets as collateral, and doesn't accept delinquent loans or non AAA rated bonds as collateral. Sounds good?
Investors said the same about mortgage securities, which had home loans as collateral and were given top AAA ratings by S&P and Moody's.
These are very same assets that have not been marked to market, nor have any investor confidence and in which default rates soared and will be increasing in the near future.
Batting 1000... The FHLB has never experienced a credit loss on an advance to a member. But we know all too well what that means.
Some lawmakers said they are concerned the FHLBs are taking on too much debt after they were unable to account properly for their own risks.
Five of the banks, including the Atlanta and Pittsburgh branches, restated earnings from 2001 through 2004, while the Chicago and Topeka branches corrected mistakes from 2001 through 2003.
All of them fixed accounting errors for financial contracts used to protect against swings in interest rates, such as derivatives and CDO's...
The FHLB's outstanding discount notes rose to a record $311 billion in the first three quarters, the most since 2001.
The FHLB last week began to refinance about $144 billion of its so called discount notes sold in August and September and have $276 billion of bonds maturing in 2008 and $174 billion in 2009.
A loss of confidence in the companies could prompt investors to dump FHLB debt, potentially causing the collapse of one or more banks.
If others were unable to meet the liabilities, taxpayers would be on the hook. Hattip to Bloomberg.
U.S. Steel, the largest U.S.based steelmaker, said Q3 profit tumbled 35% because of falling demand from builders and carmakers in North America and plant shutdowns in Europe.
S&P Case Schiller Home Price Index -5 Full Report
10 city composite decline of 5% shattered June 1991's decline. Lowest on record April 1991 -6.3%.
The 8th consecutive month of negative annual returns & 21st month of decelerating returns. 20 city index -4.4%.
Tampa surpassed Detroit in August, reporting a double-digit annual decline of 10.1%. Detroit followed with -9.3% and San Diego with -8.3%.
Year-over-year and monthly price returns are continuing to either move deeper into negative territory or are experiencing persistent diminishing returns.
Robert J. Shiller, Chief Economist at MacroMarkets:
"At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround."
Target at risk... Young homeowners WITH cash or equity credit, buy home goods & clothing.
41% of Target's sales come from home goods and clothing more than double the rate at Wal Mart.
Target's short interest ratio, 5.73%, is at the highest rate in more than 10 years.
Wal Mart began to feel the effects from subprime defaults and delinquencies last year. Now, its moving up the food chain.
Target's September sales at stores open at least a year rose 1.2%, the lowest in five months and short of a company forecast that had already been cut in half on Sept. 24 after customer visits declined.
The company also lowered its October sales forecast. Shoppers have cut clothing purchases 24% in the past year.
George Whalin, president of Retail Management Consultants:
"(Home goods) is a category of merchandise that's right now suffering and will continue to suffer with the housing situation.
By early next year, we're going to begin to see the job situation get a little more critical than it's been.
Those jobs are going to come both in blue-collar and white-collar areas."
Consumers are already squeezed by higher costs, with higher monthly payments on $600 Billion in ARM resets through the end of 2008...
and layoffs in a cooling economy, John Q. will continue to pull back on his spending, putting Target and retailers higher in the food chain, at risk.
What's the bank bailout all about Alfie?
Inquiring Naybobs need to know how this ponzi scheme or shell game in the ABCP market is staying alive.
How are the large banks rolling their short term ABCP? Read on if you dare...
The FHLB (Federal Home Loan Bank System) is a government lending program, originally set up to revive housing during the Great Depression.
The FHLBs are cooperatives created by President Herbert Hoover in 1932 to spur mortgage lending. Seems they have been pressed back into service of late.
With NO ONE wanting to buy ABCP based on MBS or otherwise... and over $400 Billion in "hung loans" constipating the short term paper market...
Asset backed commercial paper outstanding fell 25% to $883.7 billion as of last week from $1.18 trillion on Aug. 8.
In August and September as interest rates on ABCP asset backed commercial paper rose as high as 5.6%...
In September, ABCP, when it was available, cost as much as 51 basis points more than Libor.
At the same time, the FHLB one month funds at an average of 48 basis points below Libor.
Countrywide, WaMu Hudson City Bancorp and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks.
Countrywide, the largest U.S. mortgage lender, almost doubled borrowings from the Federal Home Loan Bank of Atlanta to $51 billion during the quarter.
Washington Mutual, the largest U.S. savings and loan, boosted its borrowing from the FHLBs by $31 billion.
The government sponsored companies (FHLB) were able to make loans at about 4.9%, saving the private banks about $1 billion in annual interest.
To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September, according to the FHLBs' Office of Finance.
The FHLB's borrow in the bond market and lend the money to their members. FHLB obligations, when combined with the $1.5 trillion debt and $4.7 trillion in bond guarantees...
of GSE's Fannie Mae and Freddie Mac, are 46% more than the $5.04 trillion of Treasury debt held by the public.
The recent sales pushed outstanding debt up 21% to a record $1.15 trillion, an amount that may become a burden to U.S. taxpayers because almost half comes due before 2009.
Sales of mortgage bonds, excluding those issued by Fannie Mae and Freddie Mac have tumbled by 66% to a monthly average of $39 billion from $115 billion in 2006.
The FHLB banks require borrowers to put up mortgages, mortgage bonds and other assets as collateral, and doesn't accept delinquent loans or non AAA rated bonds as collateral. Sounds good?
Investors said the same about mortgage securities, which had home loans as collateral and were given top AAA ratings by S&P and Moody's.
These are very same assets that have not been marked to market, nor have any investor confidence and in which default rates soared and will be increasing in the near future.
Batting 1000... The FHLB has never experienced a credit loss on an advance to a member. But we know all too well what that means.
Some lawmakers said they are concerned the FHLBs are taking on too much debt after they were unable to account properly for their own risks.
Five of the banks, including the Atlanta and Pittsburgh branches, restated earnings from 2001 through 2004, while the Chicago and Topeka branches corrected mistakes from 2001 through 2003.
All of them fixed accounting errors for financial contracts used to protect against swings in interest rates, such as derivatives and CDO's...
The FHLB's outstanding discount notes rose to a record $311 billion in the first three quarters, the most since 2001.
The FHLB last week began to refinance about $144 billion of its so called discount notes sold in August and September and have $276 billion of bonds maturing in 2008 and $174 billion in 2009.
A loss of confidence in the companies could prompt investors to dump FHLB debt, potentially causing the collapse of one or more banks.
If others were unable to meet the liabilities, taxpayers would be on the hook. Hattip to Bloomberg.
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