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What’s different about 2008?

I am on record for expecting a serious downturn after the Tech Bubble crashed in 2001. We muddled through for a few years, but ultimately most of the damage was done and gone by 2004. The Tech Bubble was a bubble of asset prices that had little influence on the underlying global financial system. Its crash did have a significant […]

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Look who needs money now: AIG

The list of financial institutions needing capital because they lost so much in the credit crisis grows by the day. Now, its the insurance company AIG. After their abysmal earnings report, they need an enormous $20 billion to tide them over. According to MarketWatch, the news reads: On Friday, AIG completed public offerings of new shares and other securities, raising […]

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The Automatic Earth

I stumbled across an interesting blog over the weekend called “The Automatic Earth.” I had been doing some research into writedowns at financial institutions due to loan losses and asset impairment when a great entry from The Automatic Earth popped up. It said: An important yet mostly neglected little “detail” that will come home to roost, and big time. It’s […]

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Chart of the day: Debt to GDP

Chart of the day: Debt to GDP

Since the beginning of the bull market in 1982, the U.S. has become a society hooked on debt. Total debt (including financial services companies) has nearly doubled as a percentage of GDP in those 25-odd years (from 133% of GDP at $4 trillion of debt in 1981 on GDP of $3 trillion to 221% of GDP at $31 trillion of […]

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Carlyle: Expect protracted credit crisis

The financial services sector has been reeling from over $300 billion in writedowns due to the credit crisis that has spread globally. I expect further losses to hit this sector in the U.S. due to commercial real estate, credit cards, auto, Alt-A mortgages and an inadequate levels of reserves for bad debt. Moreover, losses are due to spread to Europe, […]

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Spanish furniture sales down on housing bust

Update: A more thorough analysis of the Spanish economy is at my post Outlook for Spain: Recession. The leading Spanish Newspaper ABC is reporting that furniture sales are down 20% nationally for the first three months of 2008 due to the housing bust in Spain. As in the US, affected property markets will see the property slowdown spill over into […]

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Spanish local governments struggling with bust

On Friday, the Spanish newspaper ABC reported that Spanish municipalities are being hit hard due to the tax revenue shortfalls emanating from the effects of the Spanish property market crash. The two local governments most affected have been Madrid and Catalonia. “The two municipalities that earned the most from [property-related] taxes, Madrid and Catalonia, in the past year have already […]

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Spanish property market implosion

The Telegraph reported Friday that sales in the Spanish property market have plunged and many British vaction home investors will find themselves under water. “In the clearest sign yet that the boom is over, the developers said the combined value of their sales had plummeted from 1.3?billion euros (£1?billion) to less than 300?million euros (£240?million). There are an estimated two […]

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Avoid consumer stocks

As the downturn takes hold in the U.S., the obvious dilemma for investors is knowing which sectors to avoid. Financial stocks are a sector obviously fraught with risk as they have already sustained enormous losses with many more to come as the downturn takes hold. However, on the other hand, Doug Kass, a famous short seller is taking a bet […]

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Home Equity Lines Pulled

First the banks won’t refinance, then they won’t restructure mortgages, now they’re pulling out all stops in this mortgage mess. They are pulling existing home equity lines of credit. That’s right, in a feeble attempt to save their sorry asses and limit credit losses, you are going to get the shaft. It’s called deleveraging. And, it’s coming to a home […]

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Conspicuous Consumption

I happened upon an article at “The Moderate Voice” about “Conspicuous Consumption” originally posted on UPenn’s Wharton Business School’s website. It’s a great piece of research which explains nicely in part why Blacks and Hispanics tend to have less savings and spend less on education. Blacks and whites appear to have different spending habits only because blacks tend to be […]

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Chart of the day: current account deficit

Chart of the day: current account deficit

The U.S. has been spending more than it earns for years. This deficit spending is measured as the current account deficit. The graph here is a depiction of where we were and what we have come to. We had a slight surplus in after the last major recession in 1991. Now the figure is over 170 billion per quarter, down […]

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