The CMBS market gives us an inside look at the credit quality of many CRE loans which are the key to recovery. This article tells you why it's important.
During the Great Recession plenty of money was made betting against the consumer. In 2010, the number of non-business bankruptcy filings grew by 8.8% to 1.5 million. While this number may seem high, it is significantly lower than the 31.5% jump in 2009. In the shadow of bankruptcy lead defaults lies Portfolio Recovery Associates, Inc. (NASDAQ: PRAA). With a market cap of $1.4 billion, PRAA is the leading receivables management company. Read more to see how you can cash in on their ability to collect.
Punchline from Dudley's Puerto Rick speech just hitting the wires: "We must not be overly optimistic about the growth outlook. The coast is not completely clear—the healing process in the aftermath of the crisis takes time and there are still several areas of vulnerability and weakness. In particular, housing activity remains unusually weak and home prices have begun to soften again in many parts of the country. State and local government finances remain under stress, and this is likely to lead to further spending cuts, tax increases, or job losses in this sector that will offset at least a part of the federal fiscal stimulus. To sum up, economic conditions have improved in the past year. Yet, the recovery is still tenuous. And, we are still far from the mark with regard to the Fed's dual mandate. In particular, the unemployment rate is much too high." Word count of iPad: zero.
Ongoing Bad News Forces TEPCO To Blame Computers; Still Unclear How Japan Will Fund Recovery EffortsSubmitted by Tyler Durden on 04/01/2011 07:47 -0400
After first it was disclosed that TEPCO does not know the different between millions and thousands, the firm which is now set to be at least partially nationalized, has decided to blame its computers for the ongoing catastrophic handling of the Fukushima disaster. From NHK: "Tokyo Electric Power Company says it will review all data on radiation
leaked from the damaged Fukushima Daiichi nuclear plant, citing errors
in a computer program. The utility says it found errors in the program used to analyze
radioactive elements and their levels, after some experts noted that
radiation levels of leaked water inside the plant were too high." In other words, every "fact" you have heard so far in the past 3 weeks - you can forget it. And since the BLS is coming, and the Nasdaq is about to fund (105% debt financed) the Japan government's multitrillion restoration effort, it will all be well from now.
Compare and Contrast James Bullard's boilerplate optimism: "U.S. growth prospects remain reasonably good for 2011...quantitative easing was “a classic easing of monetary policy and an effective tool" and "The US is on track for a "reasonable" recovery in 2010...Now it seems like the natural thing is to withdraw the quantitative easing and then as some later point raise interest rates"
The Confidence Board has released its Consumer Confidence Number, which in March went in freefall from the revised previous print of 72, highest in 3 years, to a below consensus 63.4 (expectations of 65). But while this number is largely irrelevant, the Inflation Rate index surged from 5.5 to 6.7, the highest since October 2008.
Wouldn't it be awesome if spin could actually solve problems? Then, you could just say the word 'recovery' every time you gave a speech, ignore any negative data, assume the markets are up because of general economic health and not a mass infusion of cheap money, and it would be so.
...Just the wrong kind of record. At just 250,000, this was the lowest annualized new home sales number ever. So on one hand you have a TV clown tell you the housing market bottomed in August 2008, on the other you have a pathological tax cheat Welcoming all to the Recovery, and on the mutated third hand (thank you Fukushima), reality continues to indicate that the biggest depression in history persists without abating.
As was first disclosed by Zero Hedge, PIMCO trimmed its Treasury holdings in February to zero. While many speculated that the reason is concern for global inflation, we now have the confirmation courtesy of a rhetorical Q&A with Saumil Parikh released by the Newport asset management giant. In a nutshell: "Setting aside immediate oil shocks, we believe global inflation has cyclically troughed and we see a secular upswing in inflation, which naturally will put upward pressure on interest rates. We see three key global factors as potentially adding to inflation over a long horizon: (i) The degradation of sovereign balance sheets and the structural inflexibility of fiscal deficits. (ii) Emerging markets used to export disinflation to the developed world, but over the secular horizon we see them as exporting inflation. (iii) As populations age, they tend to save less and consume more. Demographics may thus become an inflationary force globally, though possibly this risk will be balanced somewhat by demographics in emerging nations. In the near term, we anticipate most, though not all, global central banks are likely to err on the side of allowing inflation to rise above stated or implied targets during 2011. In the U.S., if the economic recovery sputters, the Fed could expand quantitative easing. But further deficit accommodation would pose inflation risks. Obviously nothing new here, and just a confirmation that in order to preserve the Wealth Effect, Bernanke will be forced to put the global Genocide (And Printing)Effect into overdrive.
Here's a simple test of whether the economic recovery is self-sustaining or not: cut Federal spending back to 2007 levels (a $1 trillion reduction) and cancel all Fed intervention such as quantitative easing. If the economy is self-sustaining, it will move forward without Federal spending and Fed intervention. If "self-sustaining" is a fiction, an illusion, a mere figment of propaganda deployed to enable the Status Quo to feast off the remaining productive elements of the U.S. economy, then the economy will absolutely crater.
Does anyone seriously think the global recovery is still intact? Based on what? Does anyone think that stagnant/declining wages, falling real estate values, skyrocketing prices for materials and energy, and belt-tightening by bankrupt States are ideal foundations for higher profits? Anyone who doesn't realize the quake in Japan is a tragic load dumped on a fragile addict's quivering back (i.e. the global recovery) will undoubtedly be surprised by how fast the global economy will start unraveling. Anyone who kept their eyes open is only wondering how a debt and propaganda-fueled recovery lasted this long.
Fragile Consumer Credit Recovery Fizzles As Government Is Responsible For $25 Billion Of $5 Billion Increase, Revolving Credit DropsSubmitted by Tyler Durden on 03/07/2011 18:40 -0400
After consumer credit seemed poised to be at a critical inflection point in December, after total credit increased by $6 billion, and all important revolving (i.e., credit card) credit component increasing by $2.3 billion, and the government - recently the only source of incremental consumer credit - largely absent from the monthly pickup, the January number confirmed this single month occurrence was largely a fluke, and was predicated by the already discussed consumer weakness seen in the beginning of the year. Not only did today's consumer credit update indicate last month's increase was revised lower by 33%, to just $4.1 billion (revolving revised from $2.3 billion to $2.1 billion), the revolving credit improvement is now dead and buried, after there was another drop in total revolving credit to the tune of $4.2 billion, more than wiping out last month's increase and printing the 28th of 29 consecutive monthly declines in revolving credit. Yet what is most troubling is that while non-revolving credit increased by $9.3 billion, $24.9 billion of this increase was due to the Federal Government, while the traditional source of credit: consumer banks, plunged by $15.1 billion M/M, the biggest monthly drop since the securitization-commercial reclassification in March of 2010. In addition all other holders of debt saw their notional amounts decline with the exception of savings institutions which increased by a token $345 million. Unfortunately for the Fed, consumer deleveraging is alive and healthy, meaning that the US government will need to fund the private sector indefinitely in the future, which also means monetization of the relentless surge in debt (note today's record $224 billion monthly budget deficit) will continue.
This may be a highly distasteful proposition, but just for a moment, I want you to sit back, and imagine that you are a member of the corporate banking elite. You are a walking talking disease ridden power mad pustule who naively believes himself intellectually superior to the vast majority of humanity and above the inherent laws of conscience, honor, and general good taste. You are a villain in the purest sense, in that you not only do great harm to the world, you actually SEEK to do great harm to the world, if only to benefit yourself and your exclusive circle of “friends”; a clan of degenerate blood thirsty sociopaths with delusions of omnipotence that stalk the night like Armani wearing Chupacabra exsanguinating the joy from poor unsuspecting cultures. You are capable of anything, and sadly, you take “pride” in this fact…The issue is, how do you convince the general public that all is well until you are ready to unleash hyperinflation and fiscal Armageddon? How do you make them believe with all their hearts that they are not in the midst of a debt meltdown and the end of their financial sovereignty, but basking in a full-on economic recovery?! Here is a step by step guide to fabricating an economic recovery out of thin air….
The latest job Obamatunity in a promising field...
But, but, munis always pay back almost 100 cents on the dollar, even in bankruptcy, right? Wrong. Bankrupt Vallejo just filed a POR to pay back unsecured creditors between 5 and 20 cents. "The city regrets that it cannot pay a higher percentage,” Vallejo officials said in the court filings. “The city lacks the revenues to do so while maintaining an adequate level of municipal services, such as the provision of fire and police protection and the repairing of the city’s streets." Just wait for the reaction when holders of unsecured debt all those other (hundreds of) insolvent cities, towns, and states realize that a 5 cent recovery is all too possible...