Thursday November 3 20916 Housing and Economic stories

TOP STORIES:

Italy’s Banking System on Verge of Nervous Breakdown - (www.wolfstreet.com) One of the best indicators of whether a financial crisis is in full swing is when senior insiders begin to lose it in public. That’s precisely what happened in Italy on Thursday when Italian senior banker Giuseppe Guzzetti gave a speech at a conference in honor of World Savings Day, an international event that, unbeknownst to 99.9% of mankind, takes place every year on Halloween (Oct. 31). During his address, Guzzetti admitted that Atlante II — one of two bad bank funds created to provide much-needed support to Italy’s crumbling banking sector (the other being its predecessor, Atlante I) — is chronically underfunded. The fund, set up in the spring to help Italy’s most fragile banks, in particular Monte dei Paschi, remove some of the most toxic debt off their balance sheets, has experienced six intense months of activity, “but is now out of breath,” Guzzetti lamented.

How a Pillar of German Banking Lost Its Way - (www.spiegel.de)  For most of its 146 years, Deutsche Bank was the embodiment of German values: reliable and safe. Now, the once-proud institution is facing the abyss. SPIEGEL tells the story of how Deutsche's 1990s rush to join the world banking elite paved the way for its own downfall. Greed, provincialism, cowardice, unfocused aggression, mania, egoism, immaturity, mendacity, incompetence, weakness, pride, blundering, decadence, arrogance, a need for admiration, naiveté: If you are looking for words that explain the fall of Deutsche Bank, you can choose freely and justifiably from among the above list.

U.S. Trucking Companies Slash Fleets Amid "Tepid Shipping Demand" – (www.zerohedge.com) For months now we have been writing about the collapse of class 8 truck orders.  For the month of September, net class 8 orders were down 16% YoY while LTM orders were down a staggering 41%.  In fact, the level of trailing 12-month net orders is the lowest since January 2011 with YoY changes now in negative territory for 19 consecutive months. Therefore, it should come as little surprise that large trucking companies in the U.S. are being forced to slash fleets amid slumping demand and slack capacity.  According to the Wall Street Journal, several U.S. trucking companies, including Swift, Werner and Covenant, have all been forced to cut 1,000s of trucks from their fleets as "overcapacity has driven down pricing."  Of course, all this means that class 8 truck manufactures are unlikely to see an uptick in new orders anytime in the near future with Werner promising it won’t add trucks “until they see meaningful improvement in the freight and rate markets.”

Death By Duration: Austria 70-Year Bond Creams Investors In First Week - (www.bloomberg.com) Austria’s 70-year bond is providing traders with a perfect illustration of the perils of high duration. The nation sold 2 billion euros ($2.2 billion) of the bunds this week, taking advantage of historically low borrowing costs. While that looked like a boon for the government, it left investors subject to extraordinary price swings. A buyer of 10 million euros of the securities saw a paper loss of more than 500,000 euros by the end of Thursday, according to data compiled by Bloomberg. Even as bonds across the world slid, the Austrian security handed traders a bigger-than-average paper loss. Its relatively low coupon and long maturity help produce a high duration factor, meaning it’s price is more volatile. Investors have accepted higher duration as they pay unprecedented prices for longer debt, spurred on by accommodative policies from central banks that crushed yields on shorter-dated securities.

GMO Debate Has Missed One Small Point: They Don't Even Work (To Increase Yields) - (www.nytimes.com)  ... an extensive examination by The New York Times indicates that the debate has missed a more basic problem -- genetic modification in the United States and Canada has not accelerated increases in crop yields or led to an overall reduction in the use of chemical pesticides. The promise of genetic modification was twofold: By making crops immune to the effects of weedkillers and inherently resistant to many pests, they would grow so robustly that they would become indispensable to feeding the world's growing population, while also requiring fewer applications of sprayed pesticides. Twenty years ago, Europe largely rejected genetic modification at the same time the United States and Canada were embracing it. Comparing results on the two continents, using independent data as well as academic and industry research, shows how the technology has fallen short of the promise.

OTHER STORIES:

Solving Social Security woes involve 'a complex set of tradeoffs'  - (www.cnbc.com)
Shadow banks are taking over the mortgage market again - (www.cnbc.com)
Carney Backed by U.K. Business Secretary Amid Resignation Talk  - (www.bloomberg.com)

RBA Seen Calling Time on Five-Year Easing Cycle - (www.bloomberg.com)
Turkey sacks 10,000 more civil servants, shuts media in latest crackdown - (www.reuters.com)