Saturday, September 29, 2007
The counter argument to this is that some items are falling in price like cars, shoes and computers. Here's the problem: I'm not dumping my 2005 Ford Taurus which is now worth $8000 because new ones have gone from $21,000 to $19,000. The cheap shoes are not worth wearing or buying. Is shopping for cheap Chinese crap at WalMart supposed to be an enriching experience? Again, my PC is two years old, am I supposed to cheer that a 3Ghz processor is now only $1200?
All this needs to be against a back drop of 8% health insurance increases, gasoline prices that have doubled in 3 years, a 50% increase in electricity (thank you, Keyspan). Wait until the oil bills hit this winter. There's a picture that summarizes this scenario:
Well, not so far. From this interest rate newsletter I get from HSH Associates:
Mortgages: Rate Spreads Narrowing
September 28, 2007 -- Short-term interest rates may be lower, but fixed mortgage rates are drifting in the other direction, according to the nation's leading survey of good-credit mortgage prices. The average 30-year fixed rate mortgage (FRM) rose by two basis points this week to close the week at 6.82%. Hybrid 5/1 ARMs, often a popular alternative to the benchmark FRM, slipped backwards by seven basis points to 6.54%.
I've been intrigued by the scathing criticism of Barry Ritholz and Peter Schiff, gentlemen featured on Larry Kudlow's CNCBC show. I guess we're seeing the "Helicopter Ben" effect after all, swooping down to the rescue of investment firms and the banks who made the risky loans.
It's welfare for the rich!
Sunday, September 9, 2007
Countrywide (CFC), the lender laid low by the troubles in the mortgage market, is prepared to slash up to 20% of its work force.There's another lender, not a bank, but a speciality lender who does business with the richest of Americans, whose default rate is about .1% (slight exaggeration) who may very well go out of business: Thornburg Mortgage (TMA). This analysis comes from Jim Cramer, NCBC host of Mad Money.
The California-based mortgage banker said Friday afternoon that it could shed 10,000 to 12,000 workers in the next three months. The eliminations will occur "in areas most impacted by lower mortgage market origination volumes," the company said.Countrywide, for those of you who do not know is the nation's largest home lender.
He's got this theory that the Fed is seeking to crush any mortgage provider who is not a deposit-holding bank. On Kudlow and Co., Larry Kudlow is claiming that he banks are hoarding cash so as to crush the investment bank who have been honing in on their business for years. Hence, the Fed's discount window rate cut has done nothing to settle things down.
This is an interesting thread that I'll be following. The Fed Chairman seems intent on creating a Depression at this point.
Monday, September 3, 2007
Sunday, September 2, 2007
Matthew Campbell Times Online (Paris)
WHEN Christine Lagarde, France’s first female finance minister, returned to Paris in 2005 after a six-year stint at an American law firm, she was bewildered by the change that had come over her countrymen. Nobody seemed that keen on working.
“They were more interested in chatting about their holidays, about their long weekends,” said Lagarde, a willowy figure of 51 in an elegant suit. “Doing nothing was very much the mantra and work was disregarded.”
Since then Lagarde, former head of Baker & McKenzie, the world’s largest law firm, has set an example: her diligence has helped to turn her into the most powerful woman in France, the key general in President Nicolas Sarkozy’s campaign to get the country working again.
Speaking of France: I was eyeballing investing in Total S.A. (TOT), until I heard that they are basically financing Iranian terrorists in Iraq killing American soldiers. Hmm... that'd definitely go against my investing ethos.Perhaps there will be other investment opportunities now that the French have decided to rejoin the real world.
Like in my other blog, I choose sides and make no apologies for it.