Page 2 of 2 CREDIT BUBBLE BULLETIN
Just the facts
Weekly watch by Doug Noland
January 5 - Bloomberg (Andres R. Martinez): "Mexico's manufacturing index fell
to a record low in December because of a worsening recession in the U.S., the
largest consumer of Mexican exports, the Mexican Institute of Financial
Executives said."
Unbalanced Global Economy Watch
January 9 - Bloomberg (Alexandre Deslongchamps): "Canadian employment fell by
almost twice as much as expected in December, led by construction ... Employers
shed a net 34,400 workers after a drop of 70,600 in November, Statistics Canada
said ... The jobless rate rose to a three-year high of 6.6 percent from 6.3
percent the month before."
January 5 - Bloomberg (Hugo Miller): "Auto sales in Canada fell 21% in December
as Honda Motor Co. and Toyota Motor Corp. reported declines of at least 35%."
January 8 - Bloomberg (Emma Ross-Thomas): "European confidence in the economic
outlook fell to the lowest on record and unemployment rose to a two-year high…"
January 9 - Bloomberg (Jennifer Ryan): "U.K. manufacturing plunged in November,
extending its longest streak of declines since 1980, and factories raised
prices at the slowest pace in a year as Britain's recession worsened."
January 7 - Bloomberg (Johan Carlstrom): "Norway's domestic credit growth
slowed to 10.9 percent in November as the economy weakened and unemployment
rose in the wake of the global financial crises."
January 8 - Bloomberg (Zoltan Simon): "Hungarian industrial production fell the
most in more than 16 years in November ... Production dropped 10.1% from a year
earlier…"
January 6 - Bloomberg (Alex Nicholson): "An index of Russian service industries
from banks to mobile phone retailers plummeted to a record in December as signs
the economy is heading for a recession curbed spending."
Bursting Bubble Economy Watch
January 9 - Bloomberg (Shobhana Chandra): "The U.S. lost more jobs in 2008 than
in any year since 1945 as employers fired another 524,000 people in December,
indicating a free-fall in the economy just days before President-elect Barack
Obama takes office. 'Consumers are now going to get more and more scared at the
prospect of losing their job,' said Nariman Behravesh, chief economist at IHS
Global Insight ... The Labor Department reported that the nation lost 2.589
million jobs in 2008, just shy of the 2.75 million decline at the end of World
War II. The unemployment rate climbed ... to 7.2%... the highest level in
almost 16 years."
January 9 - Bloomberg (Bob Willis): "The number of Americans collecting
unemployment benefits surged to a 26-year high as the labor market worsened in
a yearlong recession."
January 5 - Bloomberg (Mike Ramsey and Alan Ohnsman): "General Motors Corp.'s
U.S. sales plunged to a 49-year low in 2008, dragged down by a 31% slide in
December as demand ... Toyota Motor Corp.'s U.S. deliveries plummeted 37% last
month, while Honda Motor Co. slipped 35%, Ford Motor Co. fell 32% and Nissan
Motor Co. was down 31%... Chrysler LLC dived 53%."
January 7 - Bloomberg (Margaret Chadbourn): "Late payments on home equity loans
rose to a record in the third quarter, as consumers remain under stress as
unemployment rises and the credit crisis persists, the American Bankers
Association reported. Home-equity delinquencies rose to 2.63% in the third
quarter from 2.56% in the previous period…"
Central Banker Watch
January 9 - Bloomberg (William Sim): "The Bank of Korea cut its benchmark
interest rate by a half-point to a record low ... The bank's board lowered the
seven-day repurchase rate to 2.5 percent in Seoul today, the fifth reduction
since early October."
January 6 - Bloomberg (Eugene Tang and Chia-Peck Wong): "China's central bank
and banking regulator are formulating a plan to allow developers to raise funds
through real-estate investment trusts, or REITs, hoping to restart construction
projects hamstrung by financing issues. 'The effort is to help developers
because they have tended to rely on commercial banks as the primary source of
funds," Qi Ji, China's vice minister of housing, said…"
MBS/ABS/CDO/CP/Money Funds and Derivatives Watch
January 7 - Bloomberg (Bob Ivry): "Foreclosure sales in the 25 largest U.S.
metropolitan areas almost tripled in the first 10 months of last year as rising
unemployment and falling home values made it tougher for homeowners to sell or
refinance their mortgages. Motivated sales, which include foreclosure auctions
and banks selling homes taken over for non-payment, increased 193% from January
to October 2008 from a year earlier ... Radar Logic Inc. said…"
Real Estate Bust Watch
January 8 - Bloomberg (Kathleen M. Howley): "As the U.S. housing recession
enters its fourth year, there's no sign of a recovery because speculators
account for most of the rise in sales. While the purchases are trimming the
inventory of unsold properties, most of those bought by speculators will likely
return to the market when prices rise again, hampering any recovery, said ...
Joseph Stiglitz and ... Robert Shiller ... 'We're creating a shadow inventory
of homes that will be right back on the market as soon as the economy and the
housing market begin to improve,' said Stiglitz ... 'We could see a double-dip
in the housing recession if that happens.'"
January 7 - Bloomberg (Hui-yong Yu): "Vacancies at U.S. malls and shopping
centers approached 10-year highs in the fourth quarter, and are set to rise
further as declining retail sales put more stores out of business, research
firm Reis Inc. said. Regional mall vacancies rose to 7.1 percent last quarter
from 6.6 percent in the third quarter."
January 6 - Bloomberg (Hui-yong Yu): "Vacancies in U.S. office buildings rose
to 14.4% in the fourth quarter, the highest in three years, and rents fell as
companies cut jobs and landlords boosted concessions, according to Reis Inc."
GSE Watch
January 8 - Bloomberg (Jody Shenn): "The Federal Home Loan Banks face
potentially 'substantial' losses on mortgage bonds, and in a worse-case
scenario only four of the 12 would remain above regulatory capital minimums,
Moody's ... The government may need to put some of the FHLBs, the largest U.S.
borrower after the federal government, into conservatorship or force them into
mergers with others, Moody's said."
Speculator Watch
January 5 - Bloomberg (Saijel Kishan): "Harley International Ltd., a hedge fund
run by ... Euro-Dutch Management Ltd., invested all its assets with Bernard
Madoff ... The fund managed $2.76 billion as of Oct. 31 and returned an average
of 10.9% annually since April 1996…"
January 7 - Bloomberg (Pierre Paulden and Jonathan Keehner): "Apollo Management
LP, the private- equity firm led by Leon Black, holds about $2 billion of loans
from Lyondell Chemical Co., which filed for bankruptcy protection, people with
direct knowledge of the matter said."
Fiscal Watch
January 5 - Bloomberg (Laura Litvan and Brian Faler): "President-elect Barack
Obama told House Speaker Nancy Pelosi he favors a price tag of about $775
billion for the U.S. economic stimulus plan, a Democratic aide said. Obama met
with congressional leaders from both parties at the Capitol yesterday to help
craft and shore up support for a two-year plan to boost the sagging economy ...
'We have to act now to address this crisis and break the momentum of the
recession, or the next few years could be dramatically worse,' Obama told
reporters…"
January 8 - Bloomberg (Terrence Dopp): "Funding for a new rail tunnel from New
Jersey to New York City should be part of a proposed $775 billion federal
economic stimulus package, congressional representatives from the area told
President-elect Barack Obama. Work on the $8.7 billion tunnel may begin this
year and will create 6,000 construction jobs annually for a decade…"
Muni Watch
January 5 - Bloomberg (Terrence Dopp): "New Jersey Governor Jon Corzine
estimated state revenue will drop to $29 billion next fiscal year, constraining
spending and requiring cuts on top of the $2.1 billion he proposed last week to
close the current budget. Corzine said ... revenue for the year that begins
July 1 will fall $1.7 billion below the $30.7 billion now expected…"
California Watch
January 7 - Bloomberg (Michael B. Marois): "California moved closer to running
out of cash and being unable to pay its bills after Governor Arnold
Schwarzenegger vetoed an $18 billion package of tax increases and spending sent
to him by Democrats."
New York Watch
January 9 - Bloomberg (Henry Goldman): "New York City may lose 243,000 jobs,
and declining tax revenue because of Wall Street retrenchment will produce a $7
billion budget gap by the start of the 2011 fiscal year, the city's Independent
Budget Office said."
Crude Liquidity Watch
January 5 - Bloomberg (Arif Sharif): "Banks in the United Arab Emirates and
Kuwait have the highest exposure to the real-estate industry among Middle East
lenders…Gulf News reported, citing ... Credit Suisse ... About 35% of UAE bank
loans are exposed to the property industry as a significant portion of
corporate and personal loans has been invested in real estate … citing Credit
Suisse analysts Mohammad Hawa and Digvijay Singh."
January 6 - Bloomberg (Angus Whitley): "WCT Bhd. plunged the most in almost 14
years in Kuala Lumpur trading after the Malaysian engineering company's $1.3
billion contract to build a racetrack in Dubai was canceled."
Doug Noland is a market strategist for the Prudent Bear Funds.
(Republished with permission from PrudentBear.com.
Copyright 2005-2009 David W Tice & Associates. All rights reserved.)
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