nvm

[Cutlass]

David Rosenberg of Gluskin Sheff in Canada has the economist's dozen of rules to remember.

Rosie's rules to remember:

I'm willing to corroborate my evidence, offer my view of Mr. Bond, talk about the consumer and make a market call but this is probably not the place.

If you think it's worthy of another thread let me know since I'm always interested in conflicting views. I'm more in love with my partner than my forecast...

Be interesting to see what you have to say about that.

 

[mrt144]

David Rosenberg of Gluskin Sheff in Canada has the economist's dozen of rules to remember.

Rosie's rules to remember:

I'm willing to corroborate my evidence, offer my view of Mr. Bond, talk about the consumer and make a market call but this is probably not the place.

If you think it's worthy of another thread let me know since I'm always interested in conflicting views. I'm more in love with my partner than my forecast...

Interesting that David Rosenberg brings up Cherry Blossoms in the past 2 weeks.

 

[Whomp]

Be interesting to see what you have to say about that.

OK maybe on Monday depending on whether others are interested in discussing it.

Interesting that David Rosenberg brings up Cherry Blossoms in the past 2 weeks.

Green shoots turning brown now.

 

[mrt144]

The thing that's kind of hard to handle is when your own thesis hasn't changed but other people have gone parabolic from potential recovery to things are still pretty bleak.

 

[Integral]

OK maybe on Monday depending on whether others are interested in discussing it.

I'd certainly be interested.

To make this post semi-useful -

Office of Workforce Security
UI Weekly Claims

In the week ending June 13, the advance figure for seasonally adjusted initial claims was 608,000, an increase of 3,000 from the previous week's revised figure of 605,000. The 4-week moving average was 615,750, a decrease of 7,000 from the previous week's revised average of 622,750.

 

[RedRalph]

from time mag

With his round face and sad eyes, Oracio Sandoval, 33, sits at a Los Angeles County welfare office in Carson, Calif., armed with a thick pile of job-application forms. Out of work since January, Sandoval is struggling to stay afloat financially. Married with two children, he and his wife used to make $3,000 a month. Now they rely on her $800 from Starbucks and their CalWORKs payment of $250. "It's not much, but it helps. We just barely make ends meet for rent and the bills. I am not sure how much longer we can go on like this," he says.

Related
Stories
California's Fight over What to Cut
The Great California Fiscal Earthquake
More Related
Is California the State Closest to Economic Ruin?
California’s Day of Reckoning: The Fight over What to Cut
The Great California Fiscal Earthquake
Sandoval, like many of California's 39 million residents, is caught up in the pain of the worst recession in 50 years and a state's flailing attempt to balance its books by making brutal cuts in programs long seen as essential. The Sandoval family is but one of more than 154,000 welfare cases in Los Angeles County. Governor Arnold Schwarzenegger says the state should abolish its welfare program. Doing so would save $1.3 billion and rip a large gaping hole in the safety net that now keeps more than 500,000 California families like the Sandovals out of homeless shelters.
(Read "With a New Budget, Now Californians Brace for the Pain")

States across the nation are suffering the effects of lost tax revenue in the worst economic downturn since the Great Depression. California's woes are similar and different in kind, played out on a grand scale in a state that boasts the world's eighth largest economy and a Hollywood star in the lead role. After voters rejected a slew of convoluted budget-balancing measures, the governor has proposed cuts to programs that would make California more like a struggling Third World state than 21st century America: welfare subsistence benefits would end, 1 million poor children would lose health care, college aid for the state's best and brightest would be phased out, nonviolent prisoners would be released, hundreds of state parks would be shuttered, and thousands of teachers would lose their jobs.
(Read about the 25 people to blame for the financial crisis.)

"California could become the only state in the First World without subsistence benefits for poor children," says Frank Mecca, executive director of the County Welfare Directors Association of California. If California ends CalWORKs, the state's welfare-to-work program, it would save $1.3 billion but lose three times that amount in federal money. (Since President Bill Clinton's reform, welfare has been run by the states, which receive block grants from the Federal Government that they spend as they wish. Mecca says no other state has ever said no to the federal money, nor has one proposed a flat-out elimination of welfare for families with children.)
(Read "Can Marijuana Help Rescue California's Economy?")


As California faces a $25 billion budget shortfall, which it must resolve by July 1, the state is on the brink of financial disaster, and ripples from its fiscal collapse could adversely affect both the nation's economic rebound and, potentially, the Federal Government's credit status. The Republican governor and GOP legislators say they will not raise taxes, especially after Schwarzenegger and six Republican legislators joined a budget deal with Democrats in February that combined deep cuts and $12.8 billion in higher taxes. Now the budget shortfall has spiked again as state tax receipts have dropped 27% from a year ago. Democrats and advocates for programs under the knife will fight the cuts, but neither money nor time are on their side.

In addition to its multibillion-dollar deficit, California faces a severe cash-flow crisis and state controller John Chiang warns that the state could run out of money in July. California has the worst credit rating among the 50 states, so its leaders have pressed the Obama Administration and Congress to act as a co-signer on the state's borrowing. As with AIG, California officials argued, the state is too big to fail. "A fiscal meltdown by California ... would surely destabilize the U.S., if not worldwide financial markets," state treasurer Bill Lockyer wrote U.S. Treasury Secretary Timothy Geithner on May 13. Yet experts say such action by the Federal Government, while not a bailout, could possibly endanger the nation's AAA credit rating. Without short-term assistance, California could plunge deeper into chaos and become a drag on the nation's economic recovery.
(The Page: "California Budget Deadlock Broken.")

This week, however, the Obama Administration said it was not going to do anything to help California right now, believing that the state should try to get its budget mess in order first. There are good reasons for the Treasury not to rush to California's aid. If it backstops Sacramento, rewarding the state's bad behavior, it would set an example for other states to follow. A nightmare scenario: the Federal Government backs California's loans, which leads to a downgrading of the Treasury's credit rating and the unnerving of the global credit markets. Spooked, the Chinese government, which currently bankrolls a large portion of the U.S. deficit, decides to take its money elsewhere. The ripples from California's crisis would then extend far beyond the Sandovals and other families on the wrong end of the budget ax.

 

[Rashiminos]

Count 4.

Why can't our government spend the way out of this? Global consequences, that's why.

Count 5.

Subprimes being absorbed by large, GSE banks doesn't mean that their issues have been resolved.

 

[Snorrius]

Most of it was not sold, it was just consumed by US soldiers and the war effort in general.

It still helps: those who works in military industry were paid, so they could spend money for goods of others. It also allow to keep industry afloat - because it have something to do as well as people in it. WWII allowed US to restart their economy, get control over European economies, and to make dollar world currencies which in its turn allowed to finance their economy on expense of others ala "colonial style" but in economical sense.

If we were actually looking at the collapse of the current financial system, then Australia, Poland and South Korea would be in trouble right now. But as said, last I heard, these are three economies saying afloat.

They just (will) enter(ed) it slightly later then others. At the other side, you can check examples of the countries which had less fat such as Latvia. This is what awaits a lot of other countries which relied too much on consumerism and services.

When you make predictions, do you do it with the bias of expecting the system to fail, or do you make at least some sort of attempt to remain neutral?

Obviously I am neutral. Did not I say all the world will be hit?

 

[Integral]

State and local unemployment for May is out.

REGIONAL AND STATE EMPLOYMENT AND UNEMPLOYMENT: MAY 2009

Regional and state unemployment rates were nearly all higher in May. Forty-eight states and the District of Columbia recorded over-the-month unemployment rate increases, 1 state registered a rate decrease, and 1 state had no rate change, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the year, jobless rates were higher in all 50 states and the District of Columbia. The national unemployment rate rose from 8.9 percent in April to 9.4 percent in May, which was 3.9 percentage points higher than a year earlier.

In May, nonfarm payroll employment decreased in 39 states and increased in 11 states and the District of Columbia. The largest over-the-month decrease in the level of employment occurred in California (-68,900), followed by Florida (-61,000), Texas (-24,700), and Michigan (-23,900). Arizona and Florida experienced the largest over-the-month percentage decreases in employment (-0.8 percent each), followed by Oklahoma (-0.7 percent) and Arkansas, Kentucky, and Michigan (-0.6 percent each).

 

[mrt144]

State and local unemployment for May is out.

Interesting to note that most states with monthly gains are all less than 10k and mostly rural while the ones with the biggest losses are mostly urban and have a large population.

 

[mrt144]

http://www.bloomberg.com/apps/news?pid=20601087&sid=al5p85mlike0

June 19 (Bloomberg) -- President Barack Obama’s program to help more homeowners refinance may be expanded to include borrowers who owe more than 105 percent of their homes’ values, Federal Housing Finance Agency Director James Lockhart said.

The Obama administration is considering allowing Fannie Mae and Freddie Mac to refinance loans with current loan-to-value ratios of 125 percent or higher, Lockhart said at a National Association of Real Estate Editors Association conference in Washington yesterday.

The Home Affordable refinancing program, announced Feb. 18, is part of the U.S. government’s efforts to stem soaring foreclosures and bolster consumer spending.

The 125 percent level on loan-to-values would preserve the ability of Fannie Mae and Freddie Mac to package and sell the debt into so-called real estate mortgage investment conduits, he said. While 125 percent loan-to-value ratio is on the table, Lockhart said “it’s not necessarily the number we’re going to end up with.”

The program has been “seeing a slowdown” as mortgage rates increase, he said. The average rate on a typical 30-year fixed loan was 5.38 percent this week ended yesterday, according to McLean Virginia-based Freddie Mac. The rate is up from a record low of 4.78 percent at the end of April.

Under the program, borrowers with loans already owned or guaranteed by Washington-based Fannie Mae or Freddie Mac who have loan-to-value ratios of 80 percent to 105 percent and aren’t delinquent can refinance without buying mortgage insurance, or paying for more insurance than they already have.

Warehouse Lending

Lockhart also said yesterday that his agency, the companies’ regulator, is looking at ways for Fannie Mae and Freddie Mac to help the so-called warehouse lending market, which provides financing to smaller, independent mortgage companies, amid a credit crunch.

While Fannie Mae and Freddie Mac are prohibited by law from lending directly to other firms, Lockhart said they may be able to provide the market some liquidity by committing to purchase multifamily and other loans. The U.S. seized Fannie Mae and Freddie Mac and put them under FHFA’s control in September.

Dow Jones and Bankrate.com reported the comments earlier.

Haha, really? We haven't learned anything, have we?

 

[JerichoHill]

Interesting to note that most states with monthly gains are all less than 10k and mostly rural while the ones with the biggest losses are mostly urban and have a large population.

Not really. One economic unit is more dynamic than the other.

 

[mrt144]

Not really. One economic unit is more dynamic than the other.

Is there a way to report 11 states show employment gains MoM and show the dynamic difference?

 

[JerichoHill]

http://www.bloomberg.com/apps/news?pid=20601087&sid=al5p85mlike0



Haha, really? We haven't learned anything, have we?

You don't get it. You have to think through the article instead of a gut-reaction

This applies to homeowner's who's mortgages were normal fair, but who were adversely affected by their neighbors. Foreclosures depress home values in their area. If you, MRT bought a place and did it within traditional guidelines (ie smart) but your neighbors didn't, and they foreclosed, by no fault of your own your home would be underwater via neighborhood value depreciation.

So explain, how ensuring that folks who played by the rules are not impacted by the reckless actions of those who didn't, is bad policy? What do YOU tell the 30 yr fixed rate prime owner-occupied mortgage holders whose california home dipped 35% in value because half their neighborhood bought on option arms repeatedly.

 

[JerichoHill]

Is there a way to report 11 states show employment gains MoM and show the dynamic difference?

Umm, yeah. I didn't pull that out of my butt ya know? Its on BLS somewhere

10 chars.

You're talking a rural, moreso locally based, agricultural / staple industry economies vs. urban, moreso competitive, service industry based economies.

 

[Stolen Rutters]

Michigan jobless rate for May, 14.1%... hmm, still worse than every other state but not as bad as I was expecting (with Chrysler in bankruptcy and completely shut down that month I thought it would be closer to 14.5%-15%). GM is mostly shut down this month and next. I wonder if they count any of these temporary shut downs in that jobless number.

http://www.milmi.org/

 

[mrt144]

You don't get it. You have to think through the article instead of a gut-reaction

This applies to homeowner's who's mortgages were normal fair, but who were adversely affected by their neighbors. Foreclosures depress home values in their area. If you, MRT bought a place and did it within traditional guidelines (ie smart) but your neighbors didn't, and they foreclosed, by no fault of your own your home would be underwater via neighborhood value depreciation.

So explain, how ensuring that folks who played by the rules are not impacted by the reckless actions of those who didn't, is bad policy? What do YOU tell the 30 yr fixed rate prime owner-occupied mortgage holders whose california home dipped 35% in value because half their neighborhood bought on option arms repeatedly.

The only thing I'd press for in this case is reappraisal of property taxes. I knew that there was the possibility of home price depreciation when I bought the house due to external forces. Playing by the rules, as you state it, seems to be saying that one of the rules is to be ignorant or a Pollyanna.

You seem to be pushing that home ownership should be immune to externalities or as risk free as possible for the individual buyer. Why? Who absorbs that risk? Owning a house in itself should already have the explicit risk that the value of your home isn't always up to you and is affected by your neighbors and comps and financing rates and availability.

This proposal would be somewhat like my broker giving me more margin if the value of my holdings fell. Should there be a general obligation for brokers to do that? Through no fault of my own, the market price of securities I held fell in price and now I should be let off the hook?

Allowing a refinance (and not recast, obviously) with such high LTV is only going to lessen the risk of default (however minutely) and even then, you could still very well be underwater at the time you want to sell.

The frog is still being boiled and still doesn't know it and this proposal puts a lid on the frog.

 

[mrt144]

Umm, yeah. I didn't pull that out of my butt ya know? Its on BLS somewhere

10 chars.

You're talking a rural, moreso locally based, agricultural / staple industry economies vs. urban, moreso competitive, service industry based economies.

I'm criticizing the way reports like this are rereported, not you. For instance one could report that 11 states showed gains in employment and leave it at that without actually exploring or reading between the lines that they were "less dynamic". A "Green Shoot" could form from the former statement rather than an exploration of the latter information.

 

[Stolen Rutters]

edit - nevermind. What I mean is Economy in Michigan = Not fun.

 

[PiMan]

It still helps: those who works in military industry were paid, so they could spend money for goods of others. It also allow to keep industry afloat - because it have something to do as well as people in it. WWII allowed US to restart their economy, get control over European economies, and to make dollar world currencies which in its turn allowed to finance their economy on expense of others ala "colonial style" but in economical sense.

Local spending would help more. Take Australia's response for example; the government started by giving money directly to every taxpayer whom met certain conditions (low income, has children and I think there were a couple of other ways to get it); later they gave money ($900) to every taxpayer earning less than AU$80000 per year. This skips the middleman of industry, before it gets reinvested in industry but people spending the money.
All this is as well as more traditional stimulus methods, which involve direct investment in industries and government projects.

Obviously I am neutral. Did not I say all the world will be hit?

You misunderstand me. Are you approaching this with the opinion that the economies are unsustainable and will crash? Any bias in what you think the result will be before you start any research, will be clear in your results.
You manage to find evidence of impending doom, because you are looking for it.
Religious people find evidence of God because they are looking for it.
Members of the Flat Earth Society find evidence that the Earth is flat and of a world government conspiracy because they are looking for it.