Friday, February 19, 2010
The Markit iTraxx Crossover index measuring yields on lower-grade debt has jumped by almost 130 basis points since mid-January to 514, while the main index of investment grade bonds has jumped by a third to 93. "This is the biggest move since the financial crisis in early 2009, said Gavan Nolan, Markit's credit analyst.
"The index is a leading indicator so it is a warning signal. This is being driven by volatility in sovereign debt, with Greece being the biggest issue at the moment but tightening in China could be a bigger negative catalyst in the long-term," he said. (more)
Get Over It because there will be no Housing Boom This Decade – 5 Factors That Will Drag Housing Down in the Next Ten Years.
In the midst of all the bailouts you might have missed that last month, in perma-bubble Southern California the median price of the entire regional market fell by $17,500. This was the first regional price drop since April of 2009. Now one month doesn’t make a trend of course but if you only listen to the real estate industry and banking cabal you would think that all of a sudden we are circa 2003 real estate. There is this pervasive speculative attitude once again in the air even in the face of a 12.4 percent unemployment rate. The unemployment situation was revised last month nationwide and the BLS upped the number of jobs lost in this recession from the “low” 7 million to 8.4 million. So basically we were underestimating how “good” things were for an entire year (the BLS has suspect numbers because of their methodology). Yet this is part of the new economic psychology where real data is ignored in exchange for bread and circus statistics and political theatre. The reality is we are not going to see any sort of housing boom for the next decade. In fact, housing will be weak for the next ten years (at least) regardless of what the government and Wall Street attempts to do. (more)
That’s because the deleveraging process necessitated by the financial crisis will curb economic activity by governments, banks, and individuals, the New York University professor told CNBC.
But central banks and governments have to be careful not to add more stimuli to counter this situation, lest they join Greece in amassing unmanageable budget deficits.
In any case, investors will see that budget deficits have to be monetized, crowding out investment in the private sector, Roubini says. (more)
The action won't directly affect borrowing costs for millions of Americans. But with the worst of the crisis over, it brings the Fed's main crisis lending program closer to normal.
The Fed chose to bump up the so-called "discount" lending rate by one-quarter point to 0.75 percent. It takes effect Friday.
The central bank said the step should not be seen as a signal that it will soon boost interest rates for consumers and businesses. It repeated its pledge to keep such rates at record-low levels for an "extended period" to foster the economic recovery. (more)
With a $12.3 trillion national debt and $55 trillion in unfunded obligations for programs such as Social Security, Medicare and Medicaid, with total Federal Reserve and Treasury bailout commitments now at $11.8 trillion, of which $3.6 trillion has already been spent the U.S. need to take steps immediately to protect themselves from the potential loss of the purchasing power of their U.S. Dollars, inflation.us warns. (more)
The Labor Department said Thursday that first-time claims for unemployment benefits rose by 31,000 to a seasonally adjusted 473,000. Analysts expected a small decline.
The increase followed a drop of 41,000 in the previous week which had raised hopes that the labor market, which has lost 8.4 million jobs since the recession began in December 2007, could be improving. (more)
Can you trust national averages? As bad as the jobless data you hear are, you have not been told the whole truth. If you think the terrible impact of America ’s Great Recession is shown by an official unemployment rate of about 10 percent, think again.
Economic inequality and the myth of Reagan trickle down logic are shown by new data from the Center for Labor Market Studies at Northeastern University in Boston . The report noted: “What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets.” The researchers found a correlation between household income and unemployment rate in the last quarter of 2009: Look carefully at these numbers and see how unemployment rises as income drops: (more)