Wednesday, August 15, 2012

Thursday August 16 Housing and Economic stories



TOP STORIES:

The real crash is dead ahead, as 2008 is forgotten - (www.marketwatch.com) “Facebook will become the poster child for the current social-media bubble,” warns economist Gary Shilling in his latest Forbes column, “just as Pets.com was for the dot-com bubble.” Yes, Wall Street is repeating the 2000 dot-com crash as today’s social-media bubble crashes and burns. Think history folks: Remember 2000-2002? The economy suffered a 30-month recession and a brutal bear market. The Dow Jones Industrial Average peaked at 11,722, then crashed, losing over 4,000 points dropping below 7,500, down more than 43%, with massive losses of more than $8 trillion in market cap. But it gets worse: Shilling’s bluntly warning: “If we aren’t already in a recession, we’re getting very close.” Yes, he’s more reserved than Nobel economist Paul Krugman, whose latest book goes beyond hinting that the America economy is repeating the 2000-2002 recession, His title says it all: “End This Depression Now!”

A Extremely Severe Downturn Is On Its Way - (www.businessinsider.com) The European debt crisis is over! Italy and Spain have it all figured out! The problem isn't unsustainable debt loads, ineffective economic policies and a lack of competitiveness on the global stage. It's that evil short sellers are pushing down the shares of European banks just so they can make a profit. Oy. We've been here before. Since the 2008 financial crisis, securities regulators around the world have waged fruitless wars on short selling.  The short selling bans in Italy and Spain are the latest attempt by sovereign nations to blame traders for their problems. It makes no sense. Short selling, when done legally, is a healthy way for the market to regulate itself. There is nothing inherently wrong with betting that a stock will go down when the fundamentals for a company paint an unhealthy picture. Short sellers, who borrow stocks and sell them with the hopes of returning the shares later at a lower price, were instrumental in highlighting problems at scandal ridden companies like Enron and Tyco in the early part of the "Naughty Aughties."

Only Mario Draghi's ECB can avert global calamity before year's end - (www.telegraph.co.uk) Mario Draghi has promised the moon. The European Central Bank’s council had better deliver on his pledge this week. If it does not, the crisis will surely escalate out of control in August or soon after. e are beyond the point where a quarter point rate cut will achieve anything. Nor will it help to launch a fresh round of "temporary and limited" bond purchases - to use the self-defeating language that Mr Draghi is forced to utter. The only issue that matters at this late stage is whether Germany is willing to let the ECB step up to its responsibility as a global central bank after two years of ideological posturing and take all risk of sovereign default in Spain and Italy off the table - which it can do easily enough once it stops playing politics and obeys the “financial stability” clause (Article 127) of the Lisbon Treaty.

Changed by Wall Street, for Wall Street - (www.nytimes.com) AND so Liborgate drags on and on and on. Last week, two senior Washington officials — Timothy F. Geithner, the Treasury secretary, and Gary Gensler, the head of the Commodity Futures Trading Commission — testified before Congress about the scandal surrounding Libor, the benchmark for global interest rates. No great revelations were forthcoming. As we await the full story, it’s worth remembering how Libor, the London interbank offered rate, became the world standard to begin with. You probably won’t be shocked to learn that in mortgages, at least, Wall Street played a role in pushing Libor over another rate benchmark — one that some bankers say was better for borrowers. Before this scandal made headlines, few people outside of finance knew what Libor was. But according to the Center for Responsible Lending, half of the nation’s adjustable-rate home mortgages are based on it. Since 2002, more than 12 million A.R.M.’s, worth $3.5 trillion, have been indexed to Libor, according to the center.

Spain’s unemployment rate hits record 24.6 percent - (www.washingtonpost.com) The number of people unemployed in Spain hit a record high, official figures showed Friday, as the International Monetary Fund urged European leaders to quickly fulfill their promises to help the country and the 17-country eurozone. The recession-hit country’s unemployment rate rose to 24.63 percent in the second quarter, up 0.19 percentage points from the previous three months, the National Statistics Institute said. The rate is the highest in the eurozone and is worse than Spain’s previous record of 24.55 percent hit in 1994, according to the country’s Labor Force Survey.




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