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Drilling for oil

Today, I read an article by Robert Samuelson in the Washington Post advising that the U.S. allow drilling for oil in previous no-go drilling zones because the cost of oil is rising. Originally, I agreed with his assessment. Today, I have grave doubts whether drilling in environmentally sensitive areas is a good idea. What caught my eye in what Samuelson […]

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More on HBOS

The Lex column in Yesterday’s FT highlights what many market players are thinking about the company’s £4 billion ($8 billion) rights issue: the economic outlook in the UK is worse than feared. “The main potential explanation for the apparent excess capital is that the board’s outlook for the real economy is worse than stated. Retail bankers’ ears are fairly close […]

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Housing Prices

Housing Prices

This blog entry will serve as a timeline to track housing prices over time as they are reported. US: S&P/Case-Shiller Index 2007 03 27 S&P/Case-Shiller Home Price Index Declined 0.2% 2007 04 24 S&P/Case-Shiller Home Price Index Fell 1% in Year 2007 05 29 U.S. Home Prices Drop for the First Time in 16 Years 2007 06 26 U.S. Metropolitan […]

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The Windfall Profit Tax: Bad Idea

With oil prices edging up near $120 a barrel, isn’t it time for a Windfall Profits tax on oil companies in order to alleviate the burden of the high cost of oil? The short answer is no. Let me explain why.

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HBOS to raise new capital

As I predicted on Saturday, HBOS has got caught up in the global mortgage meltdown. Bloomberg reports: HBOS Plc, the U.K.’s biggest mortgage lender, will sell 4 billion pounds ($8 billion) of shares to bolster capital depleted by asset writedowns and a deteriorating housing market. As the UK housing market has only begun to turn down and the Halifax (which […]

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Another massive write-down: Deutsche Bank

Deutsche Bank released earnings that showed a loss for the first time in five years as they wrote down $4.2 billion in equity as a result of the global credit crisis. While Deutsche Bank has got off well because of reduced exposure to sub-prime, I fully expect more writedowns as the credit crisis continues. Deutsche Bank has a very large […]

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CPI understates inflation

When you hear about inflation on TV, don’t you often wonder why the official number seems lower than inflation feels to you when you go shopping? It’s an open secret in Washington, but the Consumer Price Index (CPI), the common measure of inflation, understates inflation. How this occurred is not entirely clear, although many speculate. However, what is clear is […]

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Santander: US, Spanish and UK mortgage exposure

If you are looking for companies that have yet to write down massive amounts of losses in this global credit meltdown, look no further than Banco Santander. The Spanish Bank holds a major position in the Spanish mortgage and construction boom. The Spanish property market is heading south quickly and I fully anticipate losses to build there soon. In addition, […]

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Globalization hits a brick wall

As I suggested in my blog titled ‘The U.S. Economy 2008,’ protectionism is the obvious outcome to a global economic downturn. As the economy turns down, people feel frustrated and angry. They look for scapegoats and turn to economic nationalism and protectionism as a release valve. I said the following in March: “Experience shows that these painful steps will only […]

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News Roundup: 28 Apr 2008

Buffett Says Recession May Be Worse Than Feared (Yahoo! News, 4/28/2008)One Guy Who Has Seen It All Doesn’t Like What He Sees Now (WSJ, 4/26/2008)Ignore nonsense that credit crisis is over (Stene Pearlstein, Fort Wayne Journal Gazette (4/27/2008)Raised in boom times, many Gen-X and Yers see their dreams go bust (LA Times, 4/28/2008)Property Tax Revolt (WSJ, 4/28/2008)Vacant Homes Hit Record […]

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Where’s HBOS?

Looking through old e-mails, I read an article from the FT in 2006 that surfaced claiming that HBOS (Halifax Bank of Scotland)were poised and ready to go offer loans for 125% of value. That’s right, HBOS thought it a good idea to cover 95% of the house price and loan another 30% over appraised value unsecured as a personal loan.

Now that the UK has joined the housing bust, one must ask where are the massive writedowns that have to be sitting on HBOS’ books? Why aren’t they looking to do another rights issue like RBS? I fully expect some pretty horrific things coming from HBOS as the housing crisis heats up in Britain.

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Spain’s problems

There was heavy overbuilding in Spain as the global housing bubble caught fire there these past years. Now, Spain’s bubble has burst and it is having dire economic consequences. The Spanish National Statistics Office released the most recent unemployment figures showing an enormous jump from 8.6% to 9.6% in one month, the largest monthly change for 15 years (see story). […]

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