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Where’s My Bailout?
Say Anything —
Because all Americans should be protected from their own stupidity.
Real Personal Spending Declined Sharply in September
Calculated Risk —
As expected - based on the advance GDP report - the BEA reports that real Personal Consumption Expenditures (PCE) declined sharply in September. The year-over-year change in real PCE is now negative for the first time since 1991. The change from June (third month of Q2) to September declined at a 3.9% annual rate, the fastest 3 month decline since 1991. Note: I look at the change in the same month in each quarter (June to September here) to compare to the quarterly GDP report. Here is the story from the WSJ: Consumer Spending Declines
Where’s My Bailout?
The Agitator —
Q3: Office, Malls and Lodging Investment
Calculated Risk —
Here are a couple of graphs for non-residential structure investment based on the underlying details for the Q3 GDP report. Based on tighter lending standards , rising vacancy rates (lower occupancy rate for hotels), and the Architectural Billing index , and declining non-residential construction spending, it appears there will be a sharp slowdown in investment in offices, malls and hotels at the end of 2008 and through 2009. So far this slowdown is not showing up in the BEA numbers. Investment in Malls and Lodging Q2 2008 Click on graph for larger image in new window. Investment in ...
Architecture Billings Index: Falls "precipitously"
Calculated Risk —
I overlooked the ABI this month (hat tip Karl). Here is the American Institute of Architects billing index for September: Architecture Billings Index Falls More than Six Points AIA Architecture Billing Index Click on graph for larger image in new window. Following three consecutive months of signs of greater stability in design activity, the Architecture Billings Index (ABI) fell precipitously , dropping more than six points. As a leading economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending . The American Institute of ...
Frank: Bailout Funds are for Lending
Calculated Risk —
From Reuters: Rep. Frank: bailout funds must be used for lending (hat tip Yal) "I am deeply disappointed that a number of financial institutions are distorting the legislation that Congress passed at the president's request to respond to the credit crisis by making funds available for increased lending," Rep. Barney Frank said in a statement. "Any use of the these funds for any purpose other than lending -- for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. -- is a violation of the terms of the Act." But money is fungible, so how do we tell which funds are being used for which purpose?
Residential Investment and Home Improvement
Calculated Risk —
We frequently discuss "residential investment" (RI) without mentioning the components of RI according to the Bureau of Economic Analysis (BEA). Residential investment includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories. Residential Investment Components Click on graph for larger image in new window. This graph shows the various components of RI as a percent of GDP for the last 50 years. The most important components are investment in single family structures followed by home improvement. Investment in home improvement ($175.2 billion SAAR) is almost ...
Credit Crisis Indicators: Some Progress
Calculated Risk —
LIBOR declined today from Bloomberg: The London interbank offered rate, or Libor, for three month loans in dollars slid 0.16 point to 3.03 percent, the 15th consecutive drop, according to the British Bankers' Association. The rate peaked at 4.81875% on Oct. 10. The yield on 3 month treasuries declined slightly to 0.42% from 0.48%. ( slightly worse ) Usually the 3 month trades below the target Fed Funds rate by around 25 bps, so this is too low with the Fed funds rate at 1.0%. However, the effective Fed Funds rate is even lower ( 0.36% yesterday ), so a 3 month yield of 0.42% is in the right range. I'd like to see ...
IMF to Bailout Pakistan
Calculated Risk —
Form the Telegraph: Pakistan to receive $9bn from IMF in fight against bankruptcy Pakistan is to receive a $9bn (£5.5bn) bail-out loan from the International Monetary Fund as the country has three weeks to stave off bankruptcy. ... The IMF agreed in principle to a billion dollar economic stabilisation plan for Pakistan during a week-long meeting with Pakistani officials in Dubai ... Pakistan needs at least $4bn to avoid defaulting on its foreign debts ... Iceland, Hungary, Ukraine and Pakistan ... the list is growing.
Bank Failure #17: Freedom Bank, Bradenton, Florida
Calculated Risk —
From the FDIC: Fifth Third Bank Acquires All the Deposits of Freedom Bank, Bradenton, Florida Freedom Bank, Bradenton, Florida, was closed today by the Commissioner of the Florida Office of Financial Regulation, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Fifth Third Bank, Grand Rapids, Michigan, to assume all of the deposits of Freedom Bank. ... As of October 17, 2008, Freedom Bank had total assets of $287 million and total deposits of $254 million. Fifth Third agreed to assume all the deposits for a premium of 1.16 ...
FDIC Bank Failures
Calculated Risk —
On Ads: Political ads may not (probably do not!) represent the views of CR or Tanta - but we are happy to take their money. Sorry for any inconvenience. Just to put the 17 bank failures this year into perspective, here are insured bank failures by year since the FDIC was founded: FDIC Bank Failures ...
Court Filing: Plaintiff Objects to Surety Bond due to Credit Crisis
Calculated Risk —
On Ads: Political ads may not (probably do not!) represent the views of CR or Tanta - but we are happy to take their money. Sorry for any inconvenience. In this case, the court ruled for the plaintiff and awarded a multi-million dollar judgment. What makes this interesting is that in this court filing ...
IndyMac Mod Update
Calculated Risk —
Back in August, Tanta wrote: FDIC Mod Plan: Welcome to the Real World I'm going to go out on a limb here and suggest that the FDIC's plan for modifying IndyMac loans is, overall, a great thing. I am glad it is happening and I truly look forward to snickering over the results. And snicker she did just last week: IndyMac-FDIC Mortgage Modification Plan: Still in the Real World The WSJ has another update: FDIC Plan Tests Limits of Leniency The new entity, called IndyMac Federal Bank, has become a laboratory test of whether the FDIC's program can keep people in their homes. While it has already seen some success, the ...
Ben Bernanke, Please Send Me Some Green!
Calculated Risk —
Ben Bernanke, Please Send Me Some Green! (2 min 19 secs)
Citigroup: $1.4 Billion in Losses from Credit Card Securitization
Calculated Risk —
From the Citigroup 10-Q filed with the SEC on Oct 31st (hat tip Ray): In the third quarters of 2008 and 2007, the Company recorded net gains (losses) from securitization of credit card receivables of ($1,443) million and $169 million, and ($1,398) million and $747 million during the first nine months of 2008 and 2007, respectively. And Citigroup on Credit Reserves: The $2.3 billion build in North America Consumer primarily reflected a weakening of leading credit indicators, including higher delinquencies on first mortgages, unsecured personal loans, credit cards and auto loans. Reserves also increased due to trends in the U.S. ...
The Possible Impact of Contracting Manufacturing in China
Calculated Risk —
From Bloomberg: China Manufacturing Contracts as Crisis Trims Exports The Purchasing Managers' Index fell to a seasonally adjusted 44.6 last month from 51.2 in September, the China Federation of Logistics and Purchasing said today ... That was the lowest since the gauge was launched in July 2005. A reading below 50 reflects a contraction, above 50 an expansion. China's cabinet has pledged extra infrastructure spending to stimulate the world's fourth-biggest economy amid the global slowdown. ... ``The government needs effective stimulus measures to spur growth,'' said Wang Qian, a Hong Kong-based economist at JPMorgan Chase & Co. ...
