A bottom in home prices?
And with the low created by forced and massive foreclosure liquidation auction sales a V shaped bottom is to be expected.
| Survey | -0.9% |
| Actual | 1.7% |
| Prior | 0.1% |
| Revised | -0.2% |
| Survey | n/a |
| Actual | -6.3% |
| Prior | -8.9% |
| Revised | n/a |
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The last thing we need to do is encourage policies that empower billions of foreign consumers to compete with us for scarce real resources and diminish our real terms of trade.
But that’s what happens with an administration that does not understand the monetary system.
Obama seeks ‘Sustained’ Fiscal Stimulus in G-20 Summit Appeal
by Tony Czuczka
Mar 24 (Bloomberg) — President Barack Obama urged fellow Group of 20 leaders to provide a “robust and sustained†fiscal stimulus, saying that “much more†action is needed to fight the global recession.
In an article published today in newspapers including Germany’s Die Welt and the Paris-based International Herald Tribune, Obama also urged increased funding for international lenders and a “common framework†of steps to restore the world economy’s flow of credit.
“Our efforts must begin with swift action to stimulate growth,†Obama said in the article laying out U.S. goals for the G-20 summit in London on April 2. “Other members of the G- 20 have pursued fiscal stimulus as well, and these efforts should be robust and sustained until demand is restored.â€ÂÂ
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The Geithner plan is the latest move in what is shaping up to be the largest upward distribution of real wealth in US history.
Its stated purpose is to provide high enough risk adjusted returns to attract ‘private capital’ at a time where risk perceptions are elevated.
This means ‘market forces’ will offer ultra high returns for the investor class and the financial sector in general to attract the desired private sector participation.
High unemployment will ensure real wages remain ‘well-anchored’.
This means that as productivity and output increases, those gains in real consumption necessarily flow upward.
As the populist administration ironically moves to support investors and the financial sector at the expense of those working productively for a living.
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Looks to me like the theory that a large output gap/high unemployment will control ‘inflation’ (for anything more than the very short term) is about to fall by the wayside, just like the theory that a small output gap would cause higher inflation fell by the wayside in the late ’90s.
UK Inflation Rate Unexpectedly Rose in February
by Svenja O’Donnell
Mar 24 (Bloomberg) — The U.K. inflation rate unexpectedly rose in February after higher food costs and the weakness of the pound sustained price pressures even as Britain’s recession deepened.
Consumer prices rose 3.2 percent from a year earlier, the Office for National Statistics said today in London. The median forecast of 28 economists was for 2.6 percent. Officials said that Bank of England Governor Mervyn King will explain the increase in a letter to the government today after the rate breached its 3 percent upper limit.
“We’ve got such huge spare capacity in the economy,” James Knightley, an economist at ING Financial Markets in London. “Inflation pressures are going to be very weak indeed in the months to come. The process will continue through this year and into the next.”
Maybe.
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The FDIC has a legal responsibility to take over insolvent banks.
They have aggressively done that, including taking over WAMU for liquidity concerns when it was legally solvent.
I view that as overly aggressive, as the banking model includes FDIC insured deposits for the further purpose of not using the liability side of banking as the place for market discipline. And, in fact, legal action vs the FDIC’s response to WAMU’s liquidity issues is not in progress.
So what may have happened subsequently in the case of the major banks getting government capital may have been something like this:
Phone call:
Shiela: Hi Barry, just a head’s up. A couple of major banks are up for exam, and if they don’t pass I’m legally bound to shut them down.
President: We don’t want that to happen, is there anything we can do?
Shiela: Well, you could increase their capital to levels where you can be sure they are legally viable.
Presidents: Thanks!
Next phone call:
President: Hi Ken. We need to get you enough capital right away to make sure you are legally solvent for the coming FDIC exam.
Ken: We are solvent, Barry, we don’t need any capital, but thanks for your concern and the kind offer!
President: Sorry, but we can’t take the chance the FDIC might decide to mark something down, declare some asset impaired, or otherwise cause your capital to fall under the legal minimum and declare you insolvent.
Ken: Ok, whatever you say, but again, we don’t want it or need it. So let me ask one favor- make sure we are allowed to give it back as soon as you feel it’s no longer in the national interest for us to keep it.
President: Thanks!
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Ridiculous, of course, but they are playing the ignorance of our leadership for all its worth. They know we don’t know it’s a bluff, and they have us on the defensive.
That’s what happens with leadership that doesn’t understand its own monetary system, and that we don’t need them or anyone else as buyers of our securities to fund our expenditures.
China calls for new reserve currency
by Jamil Anderlini
Mar 23 (FT) — China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currenciesâ€ÂÂ.
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Thanks- more evidence it all could be turning the corner.
New Supply of ‘jumbo’ financing in pipeline
by Kenneth R. Harney
Mar 22 (LA Times) — LA Times says jumbo mortgage financing to increase – major banks are about to ramp up financing availability into the jumbo mortgage market, not to then securitize the loans but to keep on their own books. The market has been starved for financing since the onset of the credit crunch in ’07. BAC is one of the lenders rolling out a large financing program for jumbos.
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| Survey | n/a |
| Actual | -1.4% |
| Prior | -1.4% |
| Revised | n/a |
| Survey | n/a |
| Actual | -0.4% |
| Prior | -0.1% |
| Revised | n/a |
| Survey | n/a |
| Actual | -1.3% |
| Prior | -1.1% |
| Revised | n/a |
| Survey | n/a |
| Actual | 0.0% |
| Prior | 0.0% |
| Revised | n/a |
| Survey | -0.9% |
| Actual | 1.7% |
| Prior | 0.1% |
| Revised | -0.2% |
| Survey | n/a |
| Actual | -6.3% |
| Prior | -8.9% |
| Revised | n/a |
| Survey | -51 |
| Actual | -20 |
| Prior | -51 |
| Revised | n/a |
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