Housing Depression

Thursday, September 4, 2008

Weekly Unemployment Up

The jobless claims for last week unexpectadly turn higher. New claims jumped higher by 15,000 last week. It climbed to a seasonally adjusted 444,000. The prior weeks were revised higher from 425,000 to 429,000.
In a seprate report, US private employers cut 33,000 jobs in August. So tomorrows job numbers is going to be critical.

The jobs markets seems to be barely staying above water. I've been saying two things about housing market. Watch the labor market and the mortgage rates. While mortgage rates have come down a little bit, the labor markets seem to be getting worse.

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Technorati Tags WeeklyJoblessClaims

Wednesday, August 27, 2008

FDIC may need to tap treasury

In yet another waste of tax payers money, the FDIC may have to tap treasury for more funds. According to Sheila Bair, FDIC Chairwoman, it is to cover "short-term cash-flow" pressures. As we have seen, short-term becomes permanent pretty fast.

The last time the FDIC borrowed funds from Treasury came at the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered. That the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis.

We've just had nine failures. FDIC has troubled list of 117. Many more than 117 are probably in danger. Banks like WAMU are probably not even on the list. What happens if they fail? We are only at the beginning of this cycle and FDIC is out of money already?

"I would not rule out the possibility that at some point we may need to tap into [short-term] lines of credit with the Treasury for working capital, not to cover our losses, but just for short-term liquidity purposes," Ms. Bair said in an interview. Ms. Bair said such a scenario was unlikely in the "near term."

As I said before, short-term becomes long-term (or even) permanent very quickly. Just look at the all the lines of credit the Fed is providing.

She said she did not expect the FDIC to take the more dramatic step of tapping a separate $30 billion credit line with Treasury, which has never been used.

It seems like no one "expects" anything bad to happen these days. Let's see how quickly this becomes a reality.

..... The fund's balance fell in the second quarter to $45.2 billion. That is just 1.01% of all insured deposits, low by historical standards.

Once again, the lowest reserves when we need them the most. The drivers were asleep and now the tax payers have to pay the price.

In another move to bolster the insurance fund, Ms. Bair said the agency will propose in October charging higher premiums to thousands of U.S. banks......

Trying to close the barndoor after the horses have left. We are going to raise the rates on banks just as they have low capital and their net incomes are to lowest level since 1991.

http://online.wsj.com/article/SB121977767814673649.html?mod=hpp_us_whats_news

Technorati Tags FDIC,SheilaBair

Monday, August 25, 2008

July Existing Home Sales

Existing home sales increased by 3.1% from last month. Year over year, the sales dropped 13.2%. Inventories rose by 17.9% to 11.2 months supply. That is the highest level since April 2008. Prices dropped by 7.1% compared to last year. June 2008 data was revised lower by 10,000 to 4,850,000.

The drop in price seems to have helped home sales. But with the inventories still rising, it's going to be a while before we see a rebound in housing. There seems to be more downside risk then upside risk.

And as we have said in the past, mortgage rates and labor markets are going to be the keys to prevent housing from a further free-fall.

Technorati Tags July,ExistingHomeSales

More Handouts

This is yet another example of what is wrong with Corporate America and Politicians.

US Automakers have doubled their initial request to $50 billion to develop and build more "fuel-efficient" vehicles. Looks like they did not need help to build gas guzzling SUVs. But now want to use tax payer dollars to build "fuel-efficient" vehicles. But if all this is not ennough, here is the real kicker:

The industry is also seeking fewer restrictions on how the funding is used, the people said today.

So give us the "Loan" to build "Fuel-efficient" vehicles, but we will use it anyway we want. Why not use it to provide bigger incentive to sell SUVs?

Presidential candidate and presumptive Republican nominee Sen. John McCain today gave his support to the proposal.
``Our auto companies are rising to the challenge building the next generation of American cars, but are doing so in times when credit conditions cripple the funding for the facilities and technologies to take the steps to the future,'' he said in an e- mailed statement.
``We should fund it and take action that will assist Detroit and its suppliers in making it through this difficult time of transition,'' he said in the statement.

Yet more example of socialization of America. They had a chance to do this in last ten years, yet they did not do it. What makes anyone think they are going to change all of a sudden?

``This is a horrible idea, another transfer of funds to failed ventures,'' said David Littmann, senior economist for the Mackinac Center for Public Policy in Midland, Michigan, which describes itself as a supporter of free-market ideals. ``If this were a good idea, the market would price the debt accordingly and give them the money.''

Looks like free-market ideals have left the US long time ago. Commercial Banks, investment banks, mortgage companies, home builders, etc. anywhere you look everyone is getting a bailout.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aY4154PYXWD8&refer=home

Thursday, August 21, 2008

Jobless Claims

Jobless claims fell by 13,000 to a seasonally adjusted 432,000. While the jobless claims fell for the week, 432,000 is still very high. The four week moving average moved up to 445,750. This is the highest moving average since Dec. 2001.

For those who are still arguing whether we are in a recession, everyday it seems more and more likely we are in a recession.

This and problems with Fannie and Freddie should make it more interesting for housing. As we have said before, housings got more downside then up at this point.

And don't look for the housing or the economy to rebound anytime soon. I don't hear anymore "optimistic" forecast for the year end recovery.

http://www.cnbc.com/id/26327709

Technorati Tags JoblessClaims

Wednesday, August 20, 2008

Mortgage Applications Fall to Lowest Since 2000

Mortgage Applications at Lowest level since 2000.

The mortgage applications declined 1.5 percent to 419.3. This despite the mortgage rate declining to 6.47 percent from 6.57 percent.

The index for loan purchases was also near historic lows at 314.

This is only one week of data. But it shows you how bad the housing market is. You are always going to find trolls trying to create a bottom. Remember last year, when BOA analyst called a housing bottom. Or last week when Thomas Lee of JP Morgan called a stock market bottom. And just imagine if you had a penny every time some one said the credit crisis was over.
Bottom line is you have to do your own research. The trolls will keep trolling.

http://www.cnbc.com/id/26307016

Technorati Tags MortgageApps

Tuesday, August 19, 2008

July PPI And Housing Starts

From MarketWatch.com:

U.S. producer prices increased by a bigger-than-expected 1.2% in July, the Labor Department reported Tuesday, driven higher by prices for energy, cars, food and other products.
.....
Producer prices are up 9.8% over the past 12 months, which is the most since June 1981.

It looks like food and energy inflation is being passed to wholesale.

Housing starts drop11%.

Separately, the Commerce Department estimated Tuesday that housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July, close to the 960,000 expected by economists.

Technorati Tags PPI,July2008,HousingStarts