Saturday, May 9, 2009

SAR #9129/Weekender

What are the chances they've got it right this time?

Beauty and Truth: The unemployment data is not hopeful - half a million jobs lost is half a million fewer consumers. The unemployment rate continues higher and the private sector continues to lose jobs. U3 increased to 8.9%, U6 to 15.8%. If you subtract the 'revisions' and the increased Census Bureau employment (132,000 net jobs), you end up with a 671,000 loss rather than the rosy 539,000 reported. Over 25% of the 13.7 million unemployed Americans have been out of work for more than six months, the highest percentage of long-term unemployed in the 61 years that reading has been tracked.

On the Other Hand: Crude oil is either set to reach $52.65 a barrel in the near term, or to fall to $45 a barrel by July. I'm glad all my money is tied up in Scotch.

Five, Count'em, Six: Why the stress wasn't stressful: (1) Banks were allowd a debt/net ratio of 25:1, not the pre-disaster 12:1 required by the SEC. (2) The 8.5% loss rate postulated for CRE is a joke. (3) The fake 1Q09 earnings were treated as though they were real, rather than paper pushing. (4) Transferring numbers from here to there on a ledger doesn't actually make it new money. (5) The banks were allowed to mark their own take-home tests. Oh, and (6) The final scores were negotiated between the testers and the tested and it got pretty testy.

Basics: Just as you suspected, the fundamental difference between the rich and the poor is greed. A close second is a fortuitous choice of fathers.

Explication: The jobs of 800 voters in Rep. Hinchey's (D-NY) district depend on the $835 million a year the new presidential helicopter costs. Obama does not want (nor need) the chopper. Hinchey does. There goes another billion.

Also Ran: Despite suspiciously sound banks, a slight uptick in existing home sales, a small dip in unemployment, etc, there's one thing missing. Demand. If Tom in the next cubicle gets let go, everyone who knows him gets a little more edgy, cuts back a little bit more, buys a cheaper pair of jeans and so on, until suddenly, Mary down the hall is 'let go' too. Etcetera.

Same But Different: Retailers are reporting upbeat same-store results. But that really should read: "Surviving retailers report that some customers from bankrupt competing stores are wandering in from time to time."

Company: On the lighter side, Toyota lost more in the last quarter than GM did in all of the last year. Seems there's enough misery to go around.

Low Milage: To the $2.4 trillion homeowners lost in their house equity last year, add the same amount this year plus the loss of $2.5 trillion in lines of credit on MC/Visa and that's $7.5 trillion in purchasing power out the window. That's half of the US GDP gone missing, a GDP that is 70% consumer spending - and that largely debt driven.

The Usual Suspect: Russia's Deputy PM warns that Eastern Europe could face a new energy crisis next winter if Ukraine doesn't buy more natural gas from Russia now and stockpile it. He also suggested that Ukraine's gas infrastructure is insufficient to handle the volume required. Either way, it's going to be their fault, not Russia's.

Diet is as Diet Does: As I've long suspected, people get fat because they eat too much. Putting down the fork and leaving the table is still the best exercise.

Putting the Bull in the Market: Most of the top 25 originators of subprime mortgages were financed by BofA, Citigroup, Goldman Sachs, JP Morgan and Wells Fargo - to the tune of about $1 trillion. These same buffoons have garnered $700 billion in taxpayer rewards. The stress isn't theirs, either. It belongs to the taxpayers.

Ah, shoots: Consumer credit fell $11 billion last month. That's $11 billion they didn't spend, too. But that's not enough to make the $2.5 trillion in outstanding credit look any more reasonable.

Essay Question: "Why Has the Securitization Market Dried Up?" And I want something more than "because they ran out of greater fools."

Old Adage: My wife claimed our boat was a hole in the water into which we kept throwing money. Tanker owners' wives are saying the same thing as ship owners are making no rental income carrying oil from the Middle East to the US, while paying $3,500 a day for fuel. At least I had sails.

Follow-up: A 30-year follow-up study of 54,000 smokers shows - once again and "strongly" - that smoking will kill you. Too bad we don't have 54,000 earths and 30 years to study global warming.

Let the Good Times Roll: Fannie Mae has lost another $23 billion, needs an increase in its allowance because "its entire mortgage portfolio was experiencing increases in delinquency and default rates."

Porn O'Graph: Down on the farm.

Porn O'Graph: Down on the farm, part II.

Porn O'Graph: Down on the farm, Part III, You are here.


Phil said...

I absolutely love your sense of snark.

OSR said...
This comment has been removed by the author.
OSR said...

Tanker owners' wives are saying the same thing as ship owners are making no rental income carrying oil from the Middle East to the US, while paying $3,500 a day for fuel.I'm not so sure. NAT has stayed profitable and maintained a 15% over the last 4Qs.