The US Federal Reserve building in Washington, DC. Troubled US business lender CIT Group is nearing a deal in its talks with federal regulators to obtain a government aid package, The Wall Street Journal reported.
(AFP/File/Karen Bleier)Comment:
Today I gather the news as I listen to native Tibetan Nawang Khechog play his flute on a CD as a cool dry July breeze comes through my window. Nawang hails from my town, more specifically, my neighborhood, and I saw him perform at our downtown bandshell last weekend in front of a huge Tibetan flag and photo of the Dali Lama, in celebration of the Dali Lama's birthday.
I am privileged to have joined the ranks of Mac owners yesterday, for the first time in my life. The loud fan in my old Sony laptop reached a tipping point where I feared I was damaging my ears and could no longer hear the radio or anything else while it was on. The last time I purchased a computer I was still using it for business. In the past, it was always stressful as I would need to transfer lots of important data quickly to be up and functioning within 12 hours or so. This time has seemed like a piece of cake, overall, though I have definitely got some homework to do. And it is SO QUIET! And, by the way, the Apple store which is about a mile from my house, was extremely busy yesterday. When I commented to the salesman about how busy they were, he said it was actually a little slow, for them. In my opinion, no recessionary signs there.
-Kalpa
World Bank Sees ‘Deflationary Spiral’ Risk From Excess Capacity
A failure to address excess capacity in the global economy may cause a “deflationary spiral” that will prolong the financial crisis and result in more company bailouts, World Bank Chief Economist Justin Lin said. “Significant excess capacity has been built up and unless this issue is addressed, we will face a deflationary spiral and the crisis will become protracted,” he said during a lecture at South Africa’s University of Pretoria. “Once excess capacity appears, the economy gets trapped in a vicious cycle,” Lin said. “The financial sector in developed countries may require more rescues in the future and the financial crisis may erupt in some developing nations.” Developing economies can avoid the fallout from the global recession by investing in projects with “returns high enough to generate higher growth,” Lin said, helping to boost government revenue and offset the costs of fiscal stimulus. “The main policy objective should be to create demand as quickly and efficiently as possible.”
Eurozone confirms negative inflation
Prices across the eurozone were lower in June than a year earlier, Eurostat, the EU’s statistical office confirmed on Wednesday, reflecting lower oil and petrol prices rather than a sustained move to deflation. Across the eurozone, prices were 0.1 per cent lower in June than a year earlier, with the fastest drop in prices recorded in Ireland, Portugal, Spain, Belgium and Luxembourg, confirming an earlier “flash estimate” from Eurostat. Although the European Central Bank will be concerned to see inflation falling so rapidly below its target of “below but close to 2 per cent”, it will be reassured that persistent deflation is not yet a likelihood because of a one-off fall in petrol prices affecting the overall inflation rate........ Nick Kounis of Fortis Bank said: “Our sense is that euro zone inflation is not going to be in negative territory for too long. The volatile items which drove it into negative territory - food and energy - are likely to turn around quite sharply in the coming months.”
Industrial activity logs smaller-than-expected dip
Industrial companies cut back production yet again in June but not nearly as deeply as they have been, another sign the recession is easing its grip. The Federal Reserve reported Wednesday that production at America's factories, mines and utilities fell 0.4 percent last month as the recession crimped demand for a wide range of manufactured goods, including cars, machinery and household appliances. The decline, however, was not as bad as May. Industrial activity posted a revised 1.2 percent drop then, which turned out to be slightly worse than first reported. The contraction in industrial activity in June was less than the 0.6 percent decline that economists were projecting, although it marked the eighth month in a row of production cuts.Comment: Please, please tell me what's wrong with me. This story is sooooo... "less bad" that it's less than "less bad" and the market is up 200 points on the news. Please tell me what I am missing, because I'm at a total loss. Plus, it's most definitely the big story of the day for media prominence.
For the second quarter as a whole, industrial production fell at an annual rate of 11.6 percent, not as sharp as the 19.1 percent annualized decline experienced during the first three months of this year. The recession has taken a bite out of demand in the U.S. for all kinds of manufactured goods, especially those related to housing, such as appliances, furniture and building materials. At the same time, factories are coping with less demand from foreign buyers coping with economic problems in their own countries. Given crimped customer appetites, industrial companies idled more of their plants and equipment in June. The overall operating rate fell to 68, a record low dating to 1967. The previous low of 68.2 was in May......
CIT Group’s Borrowers May Find No Shortage of Credit
CIT Group Inc.’s plea for a second federal bailout may be undermined by a survey of 758 small firms that shows most have little trouble getting credit. A “very low” percentage consider financing their “top business problem,” according to June data released yesterday by the National Federation of Independent Businesses. The net percentage of owners reporting loans were harder to get fell to 14 percent from 16 percent, said the NFIB. Regulators at the Treasury, Federal Reserve and Federal Deposit Insurance Corp. are debating whether to risk more taxpayer funds, on top of the $2.33 billion granted to CIT in December, to keep the lender afloat. Standard & Poor’s said this week CIT may go bankrupt without U.S. help. New York-based CIT’s supporters point to 1 million customers who may lose funding, including about 300,000 retailers........
CIT’s small-business unit was the fifth-biggest SBA lender in the first quarter, issuing $44.9 million in loans, the Coleman Report said. Last year, CIT was the top small-business lender at $771.4 million, according to the report, which projects CIT’s volume for this year will drop by $591.8 million. “In the banking world, they’re not enormous,” said Todd McCracken, chief executive officer of the National Small Business Association in an interview. “But in terms of what I would call traditional long-term loans, working capital loans to small companies, they’re a pretty significant player.” The loss of CIT could lead some small businesses to cut staff, he said.
Treasury redeeming last of the long bonds
The Treasury Department said Tuesday it's calling for redemption its 30-year bonds sold in 1984, to reduce the cost of its debt payments. The $5.02 billion of the maturity outstanding carry a coupon of 11.75%, far above the current cost of financing. The current 30-year bond (UST30Y 4.44, +0.07, +1.56%) yields 4.44%. Redeeming the bonds, scheduled to mature in 2014, is expected to save the government $2 billion. Bonds not redeemed on Nov. 15 will stop earning interest, the Treasury said. This is the last long bond security than is callable and will be called, a spokeswomen for the Treasury said.
Investors Say ‘Tarnished’ Fed Shouldn’t Oversee Systemic Risk
Investors led by two former U.S. securities regulators are urging that an independent board monitor firms that pose a risk to markets, breaking with the administration’s plan to give the job to the Federal Reserve. A committee led by former Securities and Exchange Commission Chairmen William Donaldson and Arthur Levitt also said the U.S. should consider limiting banks’ proprietary trading, merge some agencies and bring insurance companies under federal supervision. The group, in a report to be released today, says it’s offering a “bolder” overhaul of market rules than proposed by the Treasury Department last month.........
The task force members include Brooksley Born, former chairman of the Commodity Futures Trading Commission; Bill Miller, chief investment officer of Legg Mason Capital Management Inc.; Harvey Goldschmid, former SEC commissioner, now professor at Columbia Law School. Levitt, a Democrat who headed the SEC from 1993 until 2001, is a board member of Bloomberg LP, parent of Bloomberg News. He is a senior adviser to the Carlyle Group and a consultant to Goldman Sachs Group Inc. Donaldson, the Republican SEC chairman from 2003 through 2005, works at his own firm in New York. The recommendation for a systemic-risk oversight board is a short-term solution, the group said. Once the credit crisis has eased, a “full-fledged regulator” for companied deemed too- big-to-fail should be put in place, the report said.
The group is suggesting an independent oversight board, while some lawmakers propose a federal council comprised of the heads of the Fed, the Treasury and bank regulators to monitor for systemic risks ..........
U.S. Tightens Its Derivatives Vise
The Justice Department's investigation into credit-default swaps is homing in on the role of Markit Group Holdings Ltd. and its ownership by a group of banks that control a large amount of pricing information in the $26 trillion market. In recent weeks, the Justice Department's antitrust division contacted Markit and several large banks that own the company, seeking information on the banks' ownership of Markit and what data they provide to the company, according to people familiar with the matter. The interest of the Justice Department reflects the growth of credit derivatives from an obscure corner of the credit markets into a world-wide business that is drawing increased scrutiny. As the market grew, Markit became the dominant provider of pricing and information. The probe dovetails with a push by the Obama administration for more transparency in the market, which was blamed for helping deepen the credit crisis last year. Credit-default swaps are effectively insurance contracts designed to protect investors against losses on bonds or loans. The contracts are now more often used as a tool to speculate on the health of an issuer.
Investors and competitors have groused about the dominance of Markit and its owners, which comprise the top dealers in the credit-derivatives markets, including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Credit Suisse Group.............
BOJ Extends Credit Policies, Cuts Economic Forecasts
The Bank of Japan extended its emergency-credit programs until the end of the year and cut its economic forecasts as companies struggle to borrow amid the country’s worst postwar recession. “Financial conditions are improving but companies are still unconfident about the outlook for borrowing,” Governor Masaaki Shirakawa told reporters after today’s decision. The central bank said the economy will shrink a record 3.4 percent this fiscal year, more than the 3.1 percent predicted in April. Extending the programs of buying corporate debt from banks and providing them with unlimited loans underscores the central bank’s concern that an economic rebound may be short-lived. Political turbulence ahead of Aug. 30 elections puts a bigger onus on the board to bolster the economy, said Hiroaki Muto.
Monetary policy “will provide the only major support for the economy for now,” said Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The economy is still far from a point that would allow the central bank to scale back the programs.” The policy board also decided to keep the benchmark overnight lending rate at 0.1 percent........
Bair, Bernanke Push to Toughen Plan to Curb Biggest U.S. Banks
Federal Deposit Insurance Corp. Chairman Sheila Bair, with support from Federal Reserve officials, is pushing for tougher measures to curb the size and risk-taking of the nation’s largest financial firms. The FDIC will propose slapping fees on the biggest bank holding companies to the extent that they carry on activities, such as proprietary trading, outside of traditional lending. The idea goes beyond the Obama administration’s regulation-overhaul plan, which would have the Fed adjust capital and liquidity standards for the biggest firms, without any pre-set fees. “What we have suggested is financial disincentives for size and complexity,” Bair said in a July 9 interview. Fed Chairman Ben S. Bernanke told lawmakers last month that restricting size is a “legitimate” option.
Size limits would overturn decades of regulatory tradition that promoted the view that large, diversified institutions were more immune to risks when specific industries or regions slumped. Bair’s proposal is another chapter in the clashes she’s had with Treasury Secretary Timothy Geithner and his department over dealing with banks and the financial crisis. Special fees could hit firms such as Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. that expanded beyond traditional lending and deposit-taking..........
“A financial system characterized by a handful of giant institutions with global reach and a single regulator is making a huge bet that those few banks and their regulator over a long period of time will always make the right decisions,” Bair told the Senate Banking Committee in May.
Wave of Bankruptcies Predicted by Year’s End
A wave of bankruptcies can be expected to roll across Europe and the United States in the second half of the year, according to a D&B study cited by The Handelsblatt on Wednesday. “Notable bankruptcy cases like Arcandor, Qimonda, Shiesser, Märklin and Rosenthal are only a glimmer of those to come in the autumn of winter of 2009,” Martina Neumayr, a risk management expert, told the newspaper Wednesday in Darmstadt. The United States will be hardest hit, according to D&B’s prognosis, with bankruptcies increasing by 60 percent, but European nations will hardly go untouched. Experts foresaw an increase of insolvent companies of 43 percent in Spain, 35 percent in the United Kingdom and 28 percent in France.
In Germany, the rise in bankruptcies is expected to be more limited, at 17 percent, similar to the 16 percent predicted for Japan, the newspaper said. According to Ms. Neumayr, hardest hit will be markets tied to industries already ravaged by bankruptcies, like the automotive sector, as well as small to midsize companies in retail and cottage industries. Such companies have suffered from a drastic drop in orders, and the financial problems that follow. The Handelsblatt called it a vicious circle: the need that companies have for fresh capital, as their cash flow dwindles, is the very thing that scares off lenders.
Raters Sued by Calpers Over Losses
Calpers filed a lawsuit against the three biggest credit-ratings agencies, accusing them of issuing "wildly inaccurate and unreasonably high" ratings on structured investment vehicles that saddled the California pension fund with at least hundreds of millions of dollars in losses. The suit, filed last week in California Superior Court in San Francisco by the nation's largest public pension fund, ratchets up the unflattering scrutiny of Moody's Corp.'s Moody's Investors Service, the Standard & Poor's unit of McGraw-Hill Cos. and Fimalac SA's Fitch Ratings over their culpability for the financial crisis.
The California Public Employees' Retirement System alleges that the methodology used by all three companies to rate the complicated mortgage-backed securities was "seriously flawed in conception and incompetently applied," according to the suit. In 2006, Calpers invested $1.3 billion in three separate SIVs, all of them awarded top triple-A ratings by the ratings agencies. As the financial crisis deepened in 2007 and 2008, Cheyne Finance LLC, Stanfield Victoria Funding LLC and Sigma Finance Inc. defaulted on their payment obligations. Calpers said the resulting losses on its investment could be more than $1 billion........
China’s Foreign-Exchange Reserves Surge, Exceeding $2 Trillion
China’s foreign-exchange reserves, the world’s biggest, topped $2 trillion for the first time as the nation’s economic recovery prompted overseas investors to pump money into stocks and property. The reserves rose a record $178 billion in the second quarter to $2.132 trillion, the People’s Bank of China said today on its Web site. That dwarfs a $7.7 billion gain in the previous three months. The Shanghai Composite Index, the world’s second-best performer, surged 75 percent this year as Premier Wen Jiabao’s stimulus package triggered unprecedented lending and surging investment. The increase in the reserves means China may buy more U.S. Treasuries as the Obama administration expands debt sales to fund a plan to revive growth........
“The pace of foreign-exchange inflows will accelerate in coming months as China’s recovery attracts investors, and that will pose great challenges for monetary policy,” said Lu Zhengwei, an economist at Industrial Bank Co. in Shanghai. The trade surplus was $34.8 billion in the second quarter and foreign direct investment was $21.2 billion, leaving the bulk of the increase in the reserves unaccounted for. Investment returns and currency movements also affect their size. Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong, saw speculative capital and higher valuations for non-dollar assets as the biggest factors. Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong, said speculative capital may have accounted for $50 billion of the increase and gains by the euro for $35 billion.
“The capital inflows have driven up stock and property prices,” said Yang Shengkun, a currency analyst in Beijing at China Citic Bank Co. “Speculators are favoring China because the government’s stimulus package is working quite well, which will help the country to be the first to recover globally.” China’s foreign currency regulator said today it will ease curbs on outflows of capital. The State Administration of Foreign Exchange will expand the sources of capital Chinese can use to fund outbound spending and let companies send investment funds overseas without prior approval, it said in a statement on its Web site today............
Russia's GDP drops by 10.1% in first half of 2009
Russia's gross domestic product contracted by an estimated 10.1% in the first half of 2009 compared to the year-ago period, Economic Development Minister Elvira Nabiullina said on Wednesday, news agency RIA Novosti reported. The Russian government expects the economy to shrink by between 8% and 8.5% in 2009 as a whole.
Rich Russians Returning to U.S. Property Lured by Lower Prices
Russian millionaires are returning to the U.S. property market, lured by distressed sales and the ruble’s rise against the dollar, lawyer Edward Mermelstein said. “The way many look at the U.S. right now is that it’s a bargain,” said Mermelstein, who has arranged about 300 real estate deals for buyers from the former Soviet Union since 2007. Mermelstein, 41, closed two purchases and bid for 20 more residential and commercial properties in New York and Miami for Russian and central Asia clients in the past three months, he said. That compares with no deals or offers in January, he said..........
More than half of the 15 or so Russians he’s helping find U.S. property are new clients, he said. “Now that oil has settled at about $70 a barrel, there’s a little bit of a comfort level,” he said. Oil has averaged $60.14 a barrel in New York trading since April, rising as high as $72.68 on June 11...........
Mermelstein said he closed deals for $1 million and $3.8 million properties last month in New York and has bids for commercial real estate for $25 million to $50 million in the city and New Jersey. He declined to name the clients. “In the next six months to a year we’ll definitely see some high-profile transactions in terms of number and in terms of trophy assets,” Mermelstein said. A Thomas Cooley Law School graduate, Mermelstein founded his firm in 1995 and worked as a real estate broker in college. His first Russian client led to a joint venture on New York and Moscow commercial real estate. His company now focuses on Eastern European clients seeking to invest in the U.S.
The increase in Russian interest in U.S. property mirrors what’s happening in other countries. In London, luxury-home prices advanced in June for the first time in more than a year as Russia and Italian buyers took advantage of the pound’s weakness, London-based broker Knight Frank LLP said June 27. ................
Part-Time Workers Mask Unemployment Woes
In California and a handful of other states, one out of every five people who would like to be working full time is not now doing so. It is a startling sign of the pain that the Great Recession is inflicting, and it is largely missed by the official, oft-repeated statistics on unemployment. The national unemployment rate has risen to 9.5 percent, the highest level in more than a quarter-century. Yet it still excludes all those who have given up looking for a job and those part-time workers who want to be working full time. Include them — as the Labor Department does when calculating its broadest measure of the job market — and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California. In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it...........
After a decade in which household income barely outpaced inflation, a slow recovery could leave many people hard-pressed and frustrated. In just the last week, the Labor Department reported that the number of people filing new claims for jobless benefits dropped — but so did consumer confidence and Mr. Obama’s approval rating. Welcome to the slog. A jobless rate of 20 percent is clearly a bit shocking. It sounds like something out of the Great Depression, and as bad as this recession is, it’s no Great Depression. So what’s going on?
For starters, this rate does include part-time workers who want to be full time. Such people are not quite unemployed or fully employed. On average, they are working three days a week, and many are struggling to get by. Richard Smith (not related to Bernard) and his wife, Lynn, for example, moved from Michigan to Charlotte, N.C., last summer, after he had been laid off from white-collar jobs by both Ford and General Motors in the last five years. But after talking with 35 headhunters and sending out hundreds of applications, Mr. Smith, who’s 58, still hasn’t found full-time work. Instead, he works a few days a week at a golf shop, repairing clubs and making $9.50 an hour. The money has helped the Smiths buy a bargain-basement foreclosed house. “You get depressed, obviously,” he said. “But that never changes my attitude about my capability.”
Part-time workers like Mr. Smith make up about one-third of those counted in the broader rates, which leaves roughly 13 percent of the work force in states like Oregon and Michigan who are completely out of work. And even that is probably an understatement, because it includes only people who have looked for work at some point in the last year. (To be counted in the official jobless rate, someone must have looked in the last four weeks.) Anyone who has spent time in old industrial areas knows that plenty of former factory workers would like a decent-paying job but haven’t looked for one in more than a year.
When I saw these statistics last week, my first reaction was to wonder why there weren’t more tangible signs of joblessness. Many communities are pockmarked with foreclosure signs and postponed construction projects. But unless you go looking for the unemployed, they are mostly invisible. ..............
The New Energy Crisis
James Quinn is a senior director of strategic planning for a major university. James has held high level financial positions with a retailer, homebuilder and a university in his 22-year career.
Matt Simmons has been a lone voice in the wilderness warning Americans about the impending peak-oil crisis. His prediction of a global peak in crude-oil production at 73 million barrels per day in 2005 has proved correct. Worldwide total liquids production peaked at 86 million barrels in 2008. All the "easy" oil and gas in the world has been found. Additional supplies will be found deep below the ocean, in challenging arctic regions, in tar sands, and shale. It will be dramatically more expensive to extract oil from these sources. Oil discoveries have been in a steady decline since the 1970s.
The United States has been dependent on 600 million barrels of oil from Mexico every year. By 2012 Mexico will become a net importer of oil, so 600 million barrels of oil will need to be replaced. Iran’s oil production is in decline as capital investment has been ignored for years. Russia’s production has peaked. Saudi Arabia continues to dissimulate about its ability to ramp up production. Their oil fields are 40 years old and in terminal decline. By 2012, the world will only be able to produce 80 million barrels per day. There's no doubt that demand in 2012 will be higher than today’s 85 million barrels per day as China, India, and other developing countries continue to grow. Even a Wall Street economist could predict what will happen to prices.
Peak oil will have the most dramatic effect on America. We have 5% of the world’s population, but use 25% of the world’s energy. Practically 85% of the world barely uses energy. The world population will likely grow to 10 billion by 2030. Both China and India are selling more cars annually than the US. As people throughout the world enter the middle class, they want cars, TVs, and modern appliances. Energy demand cannot be reversed. Infrastructure constraints will exacerbate the coming energy crisis. The NIMBY crowd has managed to keep any refineries from being built in the US since 1976. Our energy infrastructure is made of steel and is rusting away. It would take trillions to upgrade the energy system and these investments won't be made. Geologists and other experienced oil people are retiring -- and no one is replacing them.
The green agenda -- fully supported by the Obama Administration -- is sweeping the country and will be the final nail in the coffin. And the key to the success of the plan? Ethanol. The government subsidized a fuel that required more energy to produce than it provided. The ill-advised investment in ethanol plants led to a boom -- and the requisite bust when government interferes in the free markets. The use of corn for fuel caused prices to rise for other food crops and meat. With the crash in oil prices, ethanol plants have been going bankrupt at an accelerating rate. "Renewable energy" and "green jobs" are the catchphrases currently in use. But the real inconvenient truth is that the United States depends on oil (see USO), natural gas (see UNG), and coal to supply 87% of its energy, with nuclear power providing another 7%. Solar, wind, and geothermal sources supply only 1.5% of our energy needs...........
Our agriculture industry will bear the brunt of this burden, as tremendous amounts of energy are used in farming. Expect food costs to go up significantly. And since low-income families spend a greater percentage of their income on energy, this bill will damage their finances the most. Our next crisis is bearing down on us.
Comment: Hopefully, readers here are all onto this story, already, but if you're not, read it through carefully and plan accordingly.
Wells sells $600 million in distressed assets at 35 cents on dollar
by Edward Harrison
I got a tip from a friend Andrew about a sale of assets by Wells Fargo (WFC) which raises a number of interesting questions. He sent me the following 14 July article from the Milwaukee Business Journal. Wells Fargo sold $600 million in mostly non-performing subprime loans to Irvine, Calif.-based Arch Bay Capital, National Mortgage News reported, citing sources familiar with the sale. The industry publication said the loans sold for 35 cents on the dollar, about double what most hedge funds were offering. Most of the subprime loans San Francisco-based Wells Fargo sold were originated by once-high flying Accredited Home Loans and NovaStar Financial, both of which originated subprime loans in the Milwaukee area.
…The nice thing about the private non-performing loan market is that none of these messy details have to see the light of day, including the price paid. One banker told me that the 35 cents on the dollar that Arch Bay reportedly paid was twice what some hedge fund bidders were offering. I have calls into Wells and Arch Bay and will update the post if and when I hear back. Does such a sizable deal signal we really don’t need PPIP? Or, looking at it another way, if paying 35 cents on the dollar is a high bid, then I don’t see how PPIP could help banks’ books. The last question is a good one, but I have others.......
As The OC Register says: is 35 cents a high bid? That would suggest massive writedowns waiting to be taken on other assets of similar quality in the Midwest. Think Ohio and Michigan. Where are these assets marked on the books? At 35 cents, higher, or lower? I’m betting much higher. Will we learn more in the WFC Q2 conference call next Wednesday on 22 July? Who else is doing deals like this? And does that mean they are bypassing the PPIP program because they can do these deals privately? Finally, as the OC Register suggests, a 35 cents on the dollar bid means huge writedowns that banks do not want to take – especially banks still on government TARP life support like WFC. To me, this explains very well why the PPIP program was a failure: if banks can sell distressed assets quietly over time to private bidders, they might be able to delay taking writedowns. But, the price discovery involved in the PPIP program would be a blood bath for banks already capital-constrained. This is why the program has failed.
Below is a video from Dylan Ratigan's new show, in which he interviews my cartoon thief, Barry Ritholz, and they discuss the AIG bonuses. I have been a fan of Dylan's for a long time. When he left CNBC I quit watching CNBC altogether.
Visit msnbc.com for Breaking News, World News, and News about the Economy
CA home buying frenzy continues - Orange County house gets 135 bids
"So when the two-story house on Mary Hill Avenue went back on the market this year for just $386,100, offers came pouring in. In three days, 135 buyers had entered bids. By the end of the week, a deal was signed for $501,000 — $115,000 over the asking price. "Some properties, you recommend prices, and they sit on the market for a month or so," he said, noting the only thing close to this experience was a home in Downey that recently drew about 100 bids. So many bids came in after just the first day that agents set a three-day deadline for additional offers. Buyers were so eager, they overlooked the dated fixtures and the need for new paint and carpeting. Ten bids came in at more than $100,000 above the asking price. The highest bid was $525,000. The weakest offer? A low-ball bid of $380,000. About 25 of the buyers were willing to pay cash. And the bank ended up picking the highest all-cash offer to avoid the need for a loan appraisal that, if it came in too low, could hold up the deal."
Comment: Wow. Sounds like the good ol' days.
No job at graduation
..........More recent graduates like Williams-Murray are turning to such "safe-havens" -- graduate school, technical school, small-business starts, overseas fellowships, Peace Corps, Teach for America -- and are hesitant to reemerge until the economy gets back on its feet. Economists say that a recovery, when it comes, could be slow to pick up steam. A CollegeGrad.com survey found that 86% of seniors in the class of 2009 expected to graduate without a job offer. Likewise, a survey by the National Association of Colleges and Employers found that 40% of responding seniors recognized that their first job may not be as lucrative as they hope. "They expect to need financial help from their parents," said Marilyn Mackes, NACE executive director.
Many students are slowly siphoned from their parent's household budgets, especially their health insurance plans, at around age 23. After asking graduates to list the job benefits that are most important to them, medical insurance was at the top spot, followed closely by dental and life insurance, a NACE survey said. But even young adults who have been out of school for some time are finding it more difficult to make ends meet these days, and many of them are returning home in order to cut costs............
New medical, engineering, personal finance and educational degree holders have a better chance of getting a job immediately after college. Even government jobs like law enforcement are stable. Careerbuilder.com says some of the best occupations in the recession are teachers, police officers, insurance sales agents, funeral directors, pharmacy technicians and fast food workers.......
Cashing In on Goldman
Many investors had reason to cheer Goldman Sachs Group's blowout earnings, capping a 73% surge in its stock this year. But Stephen Friedman, who was early to the party, has done particularly well. In December, Mr. Friedman -- a Goldman director and, at that time, also chairman of the Federal Reserve Bank of New York -- bought 37,300 shares at an average of $80.78 apiece, according to regulatory filings. In January, he bought two more slugs totaling 15,300 shares at average prices of $66.19 and $67.12 apiece, respectively. Disclosure of those Goldman purchases in The Wall Street Journal led to Mr. Friedman's departure as chairman of the New York Fed, but he has a few reasons to smile now. Goldman shares trade around $150. Mr. Friedman's paper gain on the shares he bought when the firm was on its knees: a cool $3.9 million.
Colorado public pension short of money
Auditors say Colorado's largest public employee pension fund lost more than $10 billion last year and may need higher taxpayer subsidies and worker contributions to meet its obligations. Auditors told lawmakers on Monday the Public Employees Retirement Association or PERA can now meet only about 52 percent of its obligations. A report to the Legislative Audit Committee says PERA's assets fell from $41.4 billion in December 2007 to $29.5 billion today. It says PERA faces $27.5 billion in unfunded liabilities. Meredith Williams, executive director of PERA, blames the recession and decisions made in the 1990s to increase benefits while lowering contribution ratios for state and local governments. PERA also saw a 26 percent loss in investment in 2008.
"These are horrendous times," Williams said. PERA covers nearly 435,000 public employees, including teachers and court employees who don't receive Social Security benefits. Williams said PERA needed to continue to achieve an average 8.5 percent in investment returns to be solvent in 30 years. Williams said that plan will need to change for long-run sustainability. Auditors said employer contributions for state workers would have to rise to 17.91 percent, from the current 11.03 percent, for the fund to be fully solvent within 30 years. Employer contributions for public-school workers would have to rise to 16.56 percent, from 11.03 percent. Lawmakers would need to approve changes.
Comment: This was a local story in my newspaper today, that I know is being echoed across America (and the UK, and elsewhere). These last statements are frightening. This is why "green shoots" spewing is a dangerous practice. No one wants to make concessions on a personal level on the grounds that this is only temporary, even though deep inside, they may suspect the truth. It offers a good excuse to publicly present a case for business as usual.
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