I don’t have much sympathy for the big builders. Especially when they say things likes this….
“Perhaps as the presidential campaign heats up and moves to the front page, negative articles about housing will move off the front page,” he said. “Then, hopefully, the positive underpinnings of low interest rates, low unemployment and a decent economy Click Here to continue reading.
I guess you could call it a sign of the times we live in–the economic times we live in, I mean. I don’t carefully follow the price of all groceries when I do my weekly shopping, but I do keep a regular eye on the price of a gallon of milk. The recent trend has [to read more click here…]
I have a hard time writing about the current financial problems afflicting this country. Every day I have been reading about a new company that is losing billions of dollars for some reason or other. Wake me up when somebody manages to lose a trillion dollars or a major bank goes bankrupt. The only thing Click Here to continue reading.
Today everyone was freaking out about how fast the dollar fell. As Marco Man said…
Well, you can’t say that Macro Man didn’t warn you. More than two months ago, he suggested that Fed easing of 0.50% or more could generate a ‘dollar down bubble.’ After the initial Fed easing, he warned that the buck was toast. And so it’s come to pass, with the USD falling steadily since he first voiced his concerns. Until recently, however, the dollar’s decline has been relatively orderly, and not characteristic of the “throw caution to the wind” price action that one normally associates with bubbles. All that may have changed today, however, as the buck is falling hard against every currency under the sun, including erstwhile whipping-boy the yen. It looks like the real meat of the dollar down bubble has begun.
We wonders if the dollar is really in a reverse bubble right now. But regardless of whether Marco Man is right or not, the falling dollar is starting to make people sit up and take notice. This from AP….
Wall Street suffered its second big drop in a week Wednesday, with investors worried about spreading fallout from the credit crisis at banks and about a dollar that just keeps getting weaker. The Dow Jones industrial average fell more than 360 points – just about matching its plunge of last Thursday.
A passel of worries tormented investors, including the dollar, which swooned amid speculation that China will seek to diversify some of its foreign currency stockpiles beyond the greenback. Meanwhile, a record loss from General Motors Corp. owing to an accounting adjustment further dragged on sentiment.
Oil traded above $98 per barrel for the first time before retreating, and gold pushed higher, moves exacerbated by an anemic dollar.
The 13-nation euro hit a fresh record against the dollar – rising to $1.4729 – before falling back. The dollar fell not only against the euro but in Asia following a report that a senior Chinese political figure said China should diversify its $1.43 trillion foreign exchange reserves into the euro and other strong currencies.
On top of all this, people are getting increasingly concerned about the health of the banks. But right now, all those worries are still in the speculative stage.
A French NGO has been caught kidnapping African children for their “own good”.
Mexico has been hit with serious flooding that temporally halted oil exports.
Oil hit 97 dollars a barrel. It is almost there.
This chart may reveal who the next bad news boys of the banking world will be.
I have never had much use for peak oil believers. Their arguments are generally not worth the time it takes to read them. But my arrogant dismissal of peak oil has been shaken by Stuart Staniford. Unlike most peak oilers, Mr. Staniford really gives you something to think about.
While I was reading Mr. Staniford’s Click Here to continue reading.
China has been letting its currency appreciate a little bit lately. This from Brad Setser’s blog…
In his most recent post, Mr. Pettis notes that the RMB’s pace of appreciation picked up last week. That’s true, but the rapid appreciation last week came after an extended period when the RMB was stuck at 7.5 even as the dollar was falling.
China basically sat out the dollar’s fall in September and October — or rather, it opted to follow the dollar down v. host of currencies. A bit of appreciation against the dollar just undoes some of the RMB’s recent depreciation against the euro.
More importantly, as Mr. Pettis notes, expectations of RMB appreciation have picked up. If the market is right and the RMB appreciates by 7% over the next year, simple Chinese bank deposits look mighty attractive.
This is something to watch. China may decided that faster appreciation may be just the ticket to deal with its fuel problems. After all, if the RMB can buy more dollars it can also buy more oil. I don’t think 7% is enough to greatly help though. But if oil prices keep going up in dollar terms, it may encourage them to increase the pace of appreciation.
This would increase the pressure on the dollar (because China would not be supporting it as heavily) and would raise the price of US imports. This would increase US inflation.
In other news, Citi bank has confessed that they have lost between $8 billion to $11 billion more than originally confessed to. They also got rid of their CEO. Calculated Risk had this to say about the Citi press release…
The press release is stunning – this could just be the beginning of the write downs! They claim they will be able to maintain their dividend – I doubt it.
These losses are very dependent on house prices – “fair value of these super senior exposures is based on estimates about, among other things, future housing prices” – I’d love to see their estimate of future price declines (they are probably too optimistic.)
What happens if one of those many Citi pier loans goes bad? Ouch.
If the markets share Calculated Risk’s reaction, this could be an interesting week on Wall Street. One thing that ought to worry anyone with enough sense to keep their heart beating is the fact that Citi still seems to have no clue of what their losses are going be. Either that or they are lying through their teeth. I suspect that it is some of both.
And while all this is all very interesting, the world does not solely revolve around American and its economic issues. Things like politics and religion come into play as well. That is why it is worth keeping your eye on Pakistan. Musharraf has just declared emergency rule. As the Christian Science Monitor says…
In a dramatic move that made explicit his desperation to preserve near-absolute power, Pakistani President Pervez Musharraf declared a state of emergency Saturday, effectively eliminating the opposition that has built against him in recent months.
In doing so, Mr. Musharraf introduced a new “provisional constitutional order” – a move many say looks more like martial law. Despite his assertions to the contrary, his decision has little to do with terrorism, analysts say, adding that his was a political calculation. With the Supreme Court threatening to declare his presidency illegal in a ruling this week, Musharraf struck preemptively against his foes.
Under the emergency order, he has sacked more than half of the Supreme Court, jailed up to 500 opposition party leaders, and shut down the independent media – assuming that the US has invested too much in him and the war on terror to withdraw its patronage. The order may also delay parliamentary elections, which had been scheduled to take place before Jan. 15.
This is a pattern that has been repeated many times in Pakistan’s history. Typical, the army eventually gets tired of backing an unpopular ruler and they kick him out. But is there really anyone out there that the Pakistani Army can stomach? Maybe if Musharraf becomes too much of a liability they will just replace one general with another.
China raised gasoline and diesel prices Thursday by about 10 percent to curb demand amid shortages that have caused long lines at filling stations and disrupted trucking in key export areas.
Oil companies have blamed the shortages, which began last week, on a lack of refining capacity. Government controls have forced refiners to pay the difference between soaring market prices for crude and lower retail prices at the pump. Some refiners responded by cutting output.
10 percent is not enough of an increase if China wants to keep the Yuan pegged to the dollar.
Forgive the title. I know I shouldn’t be making easy, thoughtless puns on crass holidays, but judge for yourself when you have read.
At the end of every month we are substantially shy of our shipping quota, and at the end of every month the shipping manager asks for any available help from the rest of Click Here to continue reading.
Tyler Cowen says…
The housing sector is down twenty percent and the price of oil is flirting with $90 a barrel, maybe $100 to come. Yet the quarterly growth rate was just reported at 3.9%, led by surges in consumer spending and exports. It is wrong to think we have turned the corner, but Click Here to continue reading.