Existing home sales/more existing home sales (Calculated Risk) Existing homes sales were down sharply from November, but the Nov number was high because of folks rushing to take advantage of the first time homebuyers tax credit, which has since been extended. Anyway, existing home sales were actually up versus January ’09.
The Euro’s final battleground: Spain (Fidler, WSJ) The folks at Variant Perception warned the world about the impending disaster in Spain last August. Here’s a copy of their report, which they’ve graciously allowed me to share. (Though they’re famous for that one, they do write about more than Spain.) Anyway, Spain’s economic problems are prompting mainstream discussion that the euro could actually collapse. Greece is small enough that it can be rescued by Germany and France. Spain not so much.
Rogoff says China crisis may trigger regional slump (Ito/Rial, Bloomberg)
Fed to get $200 billion boost (Hilsenrath, WSJ) The Treasury will borrow the money and put it on deposit at the Fed. Bernanke could use that money to fund Fed interventions in the economy instead of printing more money.
You don’t keep paying for something that you own.
From FirstAmerican Core Logic:
…more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide.
Cross-posted from today’s NYT.
Killing zombies isn’t just a job for horror-movie heroines. It’s also one of Sheila Bair’s primary tasks. And the Federal Deposit Insurance Corp chief’s challenge has increased as the number of scary banks on the regulator’s watch list has spiked. Thankfully, there’s no financial excuse to keep FDIC from quickly exterminating the industry’s living dead.
FDIC has $66 billion in cash (FDIC) The quarterly banking profile was released today. The headline in some press will be that the DIF’s net worth is -$20.9 billion, but that ignores $46 billion of new cash recorded as deferred revenue, along with FDIC’s contingent loss reserve. Still not enough to swallow a major bank, were one to fail. But FDIC has cash to deal with the problem bank list, which now stands at 702 institutions (up from 552 last quarter and 252 a year ago) and $403 billion of assets…
Reader note: As always, this post will be updated as bank failures are announced. One large one so far tonight…and it was acquired by OneWest, the former IndyMac, which was the subject of a controversial web video a week ago. The video went viral and FDIC was forced to respond. Though the video was badly misguided, the episode highlighted the fact that FDIC doesn’t provide as much disclosure as it could about loss-share agreements. But before getting to bank failures, a note on upcoming FDIC news.
No, not really.
Raising the discount rate a quarter point is a start, but as the Fed went to pains to explain, it doesn’t indicate broader tightening of credit. For that we have to wait for some combination of the Fed shrinking its balance sheet along with a hike in the Fed funds rate and, perhaps more importantly, a hike in the rate paid on banks’ excess reserves.
Worldwide cumulative current account (Wikipedia) Interesting chart…
Fed officials debated shrinking balance sheet (Bloomberg) The latest FOMC minutes were released. The Fed is ever so slowly moving towards shrinking its balance sheet. Most likely it will happen without outright asset sales. Bernanke can let the balance sheet shrink slowly as mortgages underlying MBS are prepaid.
New flower for North Korea may be succession ploy (Lim, Bloomberg)
Greece’s Goldman Sachs swaps spawn EU dispute on disclosure (Martinuzzi/Finch, Bloomberg) Greece was rebuked as early as 2004 by the EU for “deficit inaccuracies,” and again last month for under-reporting deficit figures for the past decade. The latest disclosure about swaps used to hide debt may make a bailout more distasteful, but won’t stop it. Too much is at stake.
Wall St. helped Greece to mask debt, fueling Europe’s crisis (Story/Thomas Jr./Schwartz) When an addict is hooked on a drugs, whose fault is it? The guy selling him the junk? Or his own for getting hooked in the first place? It’s convenient (and not entirely wrong) to blame bankers, mortgage brokers, real estate agents and others who sell us debt to finance more lavish lifestyles than we can afford. They do so to generate income via transaction fees. But at the end of the day, the Greek government knew what it was doing. As do most folks piling on leverage…
With the problem bank list 552 names long, and the unofficial list even longer, one might expect FDIC to pick up the pace of bank closures. Yet here we are, six Fridays into the new year, and only 16 banks have been put into receivership, with none this week and only one last week. At that rate, we’ll see 136 closures in 2010, short of the 140 that were closed last year.
China tightens rules on bank lending to curb inflation (Bradsher, NYT) Banks in China are chock full o’ excess reserves. Because their economy is growing, loan demand is healthy, so excess reserves are being lent out….multiplying the money supply and causing inflation. U.S. stocks are taking it on the chin because China is the world’s main economic driver at the moment…moves to cool it down, while totally prudent, are bad for stocks.