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The UK is ground zero in the credit crisis

Recently, I have started to shift my focus out of the U.S. and abroad as the subprime crisis has become a global credit crisis. The myth of global de-coupling (assumption that other economies could thrive without the help of the American consumer) is being dispelled daily. Countries to watch are Canada, Mexico, China, India, Spain, Ireland and the UK. But, […]

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Gas Tax Breaks

I am wading into this debate over whether or not the U.S. government should temporarily suspend the federal tax on gasoline this summer. I come down on the side against the tax break. Here’s why?In a post about Windfall taxes on Tuesday, I nixed the idea saying: John McCain and Hillary Clinton are suggesting we declare a tax holiday for […]

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News Round-Up: 2 May 2008

Updated throughout the day US U.S. Loses 20,000 Jobs in April; Unemployment Rate Falls to 5% (Bloomberg, 5/2/2008) Dollar Reserve Status Is Tale of Fading Glory (Bloomberg, 5/2/2008)Bank of America May Not Guarantee Countrywide’s Debt (Bloomberg, 5/2/2008)Homeowners Convert to Costlier Fixed-Rate Mortgages Amid ARM-Twisted Fears (Bloomberg, 5/2/2008)Bernanke-Geithner `Rogue Operation’ Spurs Further Bailout Calls (Bloomberg, 5/2/2008)The Federal Reserve is making inflation […]

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News Round-up

Updated throughout the day USCorrection: Unemployment Insurance Weekly Claims up 35,000 (U.S. Government, 5/1/2008)Unemployment Benefit Rolls Climb to 4-Year High (Bloomberg, 5/1/2008)Recession’s here, economist Kasriel says (Wilmette Life, 5/1/2008)New York Faces $5.1 Billion Budget Gap as `Worst Yet to Come’ (Bloomberg, 5/1/2008)Home Depot to close 15 stores and lay off 1,300 (Times of London, 5/1/2008)Mobius Sees Fed Rates at 1%, […]

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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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