Banks & their foreclosures part deux

Interesting info from CNBC's Diana Olick:

I spoke with Ted Jadlos of LPS Applied Analytics. He says there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties. They are, he believes, working through the huge onslaught of new defaults as fast as possible, but it takes time. He says they are selling REOs at a fast clip as well, within about three months of taking them as REO.

Jadlos notes: Just getting to the average isn’t saying all that much. We need to be close to the four year low to be fully entrenched in a meaningful recovery. Based upon foreclosure and REO timelines, it’s going to take at least 18 months to flush the system of our current problems. But to flush the problems in only 18 months, more problem loans need to leave the system relative to the new problem loans of today and tomorrow. That does not appear to be the case right now—we aren’t clearing faster than new problems are emerging.

The UnderWear Indicator...

Briefly, ahem...men's underwear sales typically are a good indicator of the economy. When sales are short and tight, the economy tends to cling down. When sales are riding high, the economy tends to perk up.

Sales of men's underwear typically are stable because they rank as a necessity. But during times of severe financial strain, men will try to stretch the time between buying new pairs, causing underwear sales to dip.

"It's a prolonged purchase," said Marshal Cohen, senior analyst with the consumer research firm NPD Group. "It's like trying to drive your car an extra 10,000 miles."

The growth in sales of men's underwear began to slow last year as the recession took hold, according to Mintel, another research firm. This year, Mintel expects sales to fall 2.3 percent, the first drop since the company started collecting data in 2003.

But the men's underwear index may also have a silver lining. Mintel predicts that next year, men's underwear sales will fall by 0.5 percent, and as with many economic indicators, a slowing of a decline can be welcomed as a step in the right direction. Retailers are reporting encouraging signs in the men's underwear department

A Dickens Tale: 2 Economies, 1 Country

Seems like everyone is in a Charles Dickens mood this weekend, as many posts on blogs and financial websites are about 2 economies emerging: Marketwatch mentions about how the manufacturing sector is recovering, but the labor market is not.

Mike Shedlock's terrific Global Economics blog makes a great notation about how 2 types of companies have fared well during the credit bubble: Those who stayed away from debt to hoard cash, and those who just relied on bailouts. Companies that were in the middle that did not either have full cash or relied on taxpayer funds have done the worst.

But there's nothing more symbolic of a market approaching a top than when you start reading stories of people abandoning buy and hold strategies for a heavy trading strategy focusing on risky stocks with so-so fundamentals.

The 50-year-old from Naples, Fla., had limited investment knowledge but attended several seminars before starting to trade in May. So far, York said, she's up an average of 40% a month and is trading full time."It's the best job I've ever had, not just for the enjoyment but from the compensation standpoint," said York, who previously sold telecom equipment. "I've replaced a significant six-figure income."

Bear market rally? New Bull Market? bounce?

Let's see...Gold has been relatively flat this year. Stocks are up 53% since the President told ya to buy stocks. The dollar is down. Oil is sorta up depending on what time frame you look at. Natural Gas is low. Real estate in some aspects is making a comeback. So where are we exactly?

We are in a place where lies permeate and are given credence and truth is shied upon. This is what a bear market rally looks like. And like many astute market observers predicted, it can last a long while. Eventually the truth does come out, but usually after the market makers have sucked the general public in (see tech stocks, housing, and maybe green stocks next).

Just desserts- Bernanke's phony identity

You reap what you sow...looks like Ben Bernanke had his identity stolen.

You can't make this stuff up....the irony of a guy who is overinflating the US economy had his account stolen and his money was used to inflate other accounts. And best of all, he had his bank account with Wachovia...

At least ONE Fed official is telling the truth about employment:

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

United Subsidy of America part 2..and your Clunker is Taxable

First big surprise....trading in your clunker for 4500 dollars is TAXABLE...OOPS, talk about forgetting to tell the American consumer that....

Wow...Subprime lenders getting subsidies to write out loans..what a shocker....NOT...

lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.

Much "of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement.

For example JP Morgan Chase, Wells Fargo and Countrywide, are eligible to receive billions of dollars under the program, according to the report.

Preparing for the Worst? Or Expecting the Best?

Looks like Robert Kiyosaki, of Rich Dad Poor Dad fame, thinks the big mess is no where near the end. Interesting article full of good points, some of which I agree with.

Consumer Confidence Index says the opposite..that the majority of people think things are getting better.

Short run, I think things are looking up...long run, I'm thinking Kiyosaki's ideas are more likely to pan out.

America: Land of the Subsidized Investment

Can't decide what's worse for our country....

1) The US underwriting offshore drilling in Brazil to help THEIR companies find oil and then sell it to us at market value... OR

2) The US subsidizing Chinese investors to invest into the US at taxpayers expense up to 6x leverage OR

3) The US about to subsidize toxic loans to banks AGAIN

Banks in trouble all around

The media has done a pretty good job of keeping quiet about it, but we are close to another banking crisis...eerily close. The FDIC is running out of money. Now there is strong news floating out that Guaranty Bank and its 14 billion in assets is about to come to a close.

The good news is that anyone wanting to know possibly which banks may be in trouble can look at this list generated by Calculated Risk (unofficial list)

http://www.calculatedriskblog.com/2009/08/problem-bank-list-unofficial-aug-14.html

All About Housing: Inside Mortgage Agents Report

Comprehensive 80 page report on housing, the banks that do the lending for housing, and all sorts of useful nuggets, such as:

 The market for home purchases can be divided into segments of 26% for
damaged REO, 23% for move-in ready REO, 14% for short sales, and 36% for
non-distressed properties.
 Forty-three percent of homebuyers are first-time homebuyers, 29% are current
homeowners, and another 29% are investors.
 First-time homebuyers account for the majority of move-in ready REO sales while
investors account for the majority of damaged REO sales.

Plus, a breakdown on how the big banks deal with their short sales.

Five Bank FDIC Friday Returns!

The biggest failure of the year, plus 4 other banks are making the FDIC's Friday gig a lot more work on a weekend than any other government employee has ever done!

A good article was written about 12 bubbles that are due to pop...I'll add the FDIC's bank closures as another bubble waiting to pop...they will at some point run out of money.

TARP Money for apartment complexes?

The bill, which is called the TARP for Main Street Act and was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Rep.Velasquez (D-Brooklyn and Manhattan), would use TARP funds that have been returned by banks and plow it into programs that, according to the bill, would create "sustainable financing" for the complexes as well as provide funding for property rehabilitation.

No Food in Detroit= Armed Grocery Deliveries! Is Detroit the Next Farmland?

There isn't a single major chain supermarket in the city, forcing residents to buy food from corner stores. Often less healthy and more expensive food.

As the area's economy worsens --unemployment was over 16% in July -- food stamp applications and pantry visits have surged.

Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased.

But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients.

RipOff City....Bank Overdraft Fees Make them $38 Billion

Here we go again....banks ripping off the consumer while claiming they are providing a service to their bail out partners.

Remember, these are the same assholes who make

70% of the overdrafts happen at a POS terminal or ATM, not by writing a check.

The last statistic is the clear one: There is no reason whatsoever for anyone to take such a hit. The bank knows before they approve the transaction that the money isn't there in the account.

This is not the same thing as a check, which the bank has no way to warn you about before you write it, as there is no "connection" between your checkbook and their computer.

IF we had honest regulators it would be strictly unlawful for a bank to intentionally approve a debit transaction which it knew you did not have the funds to settle unless you had an established overdraft line of credit (at a reasonable APR.)

Take solace in the fact that 1 in 6 banks in Georgia are in a big bag of deep dog crap.

Life in the Recession...401Ks going, mansions not selling, and recessions finishing

Life in the Recession
Insightful piece by Michelle Singletary of the Washington Post. With more and more employers opting out of matching employee contributions, the 401K may have a limited shelf life as an investment vehicle for people. Another casualty of the recession?

Recession is also hurting the sales of mansions, as more and more of them are going on the auction block with auction companies setting up straw buyers to prevent embarrassment for the sellers.

Then there are guys like Dennis Gartman, who is a sage pundit who is saying the recession ended last month.

Others say "Beware the Bear"

Free Cash for old stuff (non-clunker cars!)

Looks like there are a few non Federal programs that let you trade in junk for cash/rebates like the Cash For Clunker programs, as well as several free stuff being given out. Here's a sampling..click the links:

Radio Shack Trade-In Program: Trade your old electronic devices for a gift card
Cash For Refrigerators- Several states are implementing this program
Freebies- Free Food, Free Crest WhiteStrips, etc
Another list of Freebies
A no-penalty Certificate of Deposit...doesn't cost you anything if you at some point need the money and want to close the account or take some out.

Finally, a list of all the places that offer you free money for opening an account, becoming a member, switching credit card accounts, etc.

A look at Underwater Home Mortgages- 50% of homeowners by 2011?

Courtesy of Deutsche Bank- click for 19 page report

Why Hot Waitresses Are A Bad Economic Sign

As a person who enjoys eating out, I have noticed, as I am sure many of you all have, that the quality of service in restaurants is getting better and the wait staff are getting more attractive.

The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.
A Soho restaurateur I know recently received applications from “a couple of classic Eastern European fembots. Once upon a time, these ladies must’ve made $1,500 a night lap dancing. At my place, they’re not going to make that in a week.”

Commercial Real Estate, Rent Reduction, and what it all means

Kudos for Mish for reporting on that office space is down 50% in value, retail vacancy is at 7.5%, and industrial space is at its lowest demand in decades.
Ritholtz has the story on the shadow inventory in housing
But the story of the day belongs to the subject of rent reduction free for all.

Last month, commercial real estate research firm Reis Inc. reported that the steepest rent declines since 2002 occurred at shopping malls between April and the end of June. The threat of vacancies was to blame.

Joe Coradino, who oversees retail leasing for Pennsylvania Real Estate Investment Trust, said last week that "everybody who could was asking for rent relief. It was a free-for-all."

PREIT, which owns Cherry Hill, Willow Grove Park, and other malls, even formed a "lease modification review committee" to handle the influx, Coradino told me yesterday. Requests have finally slowed down, though.

The Gubmint's latest plan to rid of us debt

U.S. Government Stages Fake Coup To Wipe Out National Debt

America's Crappiest Company

It has to be said...GE is a giant hedge fund masquerading itself as an industrial & financial conglomerate. Now comes word from the SEC that GE lied about their earnings (what a shocker). GE has admitted that it wants to reduce their earnings that come from GE Capital (their ambiguous financial arm). On top of that, their "financial network" CNBC should change their name to "Continuous Nonsense Blasted Continuously". Not to mention their dealings with Iran.

Don't get me wrong..I like a lot of what GE makes. They are well positioned to capitalize on green energy (although they may not be selling as many windmills as they thought now that T Boone Pickens is backing off his plans for wind farms). They are also involved very nicely in the water industry. GE can improve itself, but it will require getting rid of its piss poor management and focusing on what made it a global titan...making innovative products that are simple yet worthy of a pent up demand. Then, it will become a dividend paying, steady growth company instead of some wacky bizarre mix of light bulbs, appliances, and subprime mortgages. Bear in mind this post is about GE as a company, not as the stock.

Fannie & Freddie: We probably aren't going to pay taxpayers back

And there you have it, folks. 85 billion down the drain. Fannie & Freddie's regulator says their book is so large that its unreal to expect the quasi government agenices to pay back its debt. When will Social security and Medicare come out with their similar findings?

No matter where you stand on the end of the housing bubble or just a temporary increase, long term it looks like the US made a bad bet in bailing out Fannie & Freddie.