“We Are Experiencing Home Price Depreciation Almost Like Never Before, With the Exception of the Great Depression”
July 25th, 2007Via: Bloomberg:
The U.S. stock market tumbled the most in four months after Countrywide Financial Corp.’s earnings prompted concern the housing crisis is spreading.
Shares of homebuilders sank to their lowest since 2003 and financial companies dropped after Countrywide, the largest U.S. mortgage lender, said more borrowers are falling behind on home- equity loan payments. DuPont Co., the third-biggest U.S. chemical maker, posted its steepest decline in two years after sliding home sales cut demand for paint and countertops.
The retreat accelerated after Countrywide Chief Executive Officer Angelo Mozilo said “difficult” conditions caused by subprime mortgage defaults may persist, and demand is unlikely to rebound until 2009. The Dow Jones Industrial Average plunged 226 points, sparking a sell-off from Brazil to Canada.
…
Countrywide slumped $3.56, or 10 percent, to $30.50 for the steepest drop in the S&P 500 and its biggest decline since October 2004. The lender said second-quarter net income was 81 cents a share compared with $1.15 a share a year earlier. It was expected to earn 90 cents, the average of 13 analyst estimates compiled by Bloomberg.
`Almost Like Never Before’
“We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,” CEO Mozilo said of the housing slump during a three-hour conference call with investors.
Other financial firms dropped. JPMorgan Chase & Co., the third-biggest U.S. bank, lost $1.81 to $45.34, reaching the lowest price since September 2006. Citigroup Inc., the largest U.S. bank, fell $1.55 to $49.31.
Countrywide is preparing for an increase in missed payments in prime loans, or those granted to borrowers with good credit histories. In the second-quarter, overdue payments cut profits by $388 million. The company set aside almost five times as much money for loan losses this quarter compared with a year earlier. Of the $292.9 million earmarked to cover losses, $181 million is related to prime home-equity loans.
Dollar Gaps Up, Central Banks Sell Gold
July 25th, 2007WARNING: This is not a recommendation to buy sell or hold any financial instrument.
HAHA! I love it. It’s gold dumping time in Europe.
And how about that U.S. Dollar index…
Via: Market Watch:
The dollar rose to a two-week high against the euro and gained against the yen early Wednesday, rebounding from multi-year lows it touched in the previous session.
Theresa Duncan, Jeremy Blake, the Devil and Dick Cheney
July 25th, 2007Theresa Duncan announced that she was working on an essay called, “The Devil and Dick Cheney.” Two days later, she was dead and now Jeremy Blake, her boyfriend, is missing. According to legend, he was last seen taking off his clothes and wading out into the ocean. While his body has not been found, his wallet, clothing and a suicide note were found under the boardwalk.
That’s just the beginning, but of what, precicely, I’m quite sure we’ll never know.
Jeff Wells is following the story here and here. He points out the even weirder tributaries and dark backwaters, for those of you who dare to look.
Here’s the New York Times version, for whatever that’s worth.
Halliburton Used Bribery Network to Bloat War Costs
July 25th, 2007In other news, Halliburton’s second-quarter net income more than doubled.
Via: New York Times:
Federal investigators have uncovered what they describe as a sweeping network of kickbacks, bribes and fraud involving at least eight employees and subcontractors of KBR, the former Halliburton subsidiary, in a scheme to inflate charges for flying freight into Iraq in support of the war, according to court papers unsealed yesterday.
The latest conviction in the cases related to the scheme came yesterday, when a former Houston-based executive for an air-freight carrier hired by KBR pleaded guilty in federal district court to dispensing bribes and then lying to federal investigators. The executive, Kevin Andre Smoot, 43, of The Woodlands, Tex., served as a managing director for Eagle Global Logistics Incorporated, a carrier that received a subcontract from KBR to ship the freight.
The guilty plea by Mr. Smoot is the second by an Eagle executive in the case. But the papers describing his plea indicate that investigators believe at least one more Eagle employee and five KBR employees, all so far unnamed, were also involved. Mr. Smoot alone admitted to delivering bribes, called gratuities in the legalistic language of the court papers, to the employees of KBR on some 90 occasions between 2002 and 2005.
New Insights on the Soviet Union’s Collapse
July 25th, 2007Via: Christian Science Monitor:
In November, the Brookings Institution will publish the English translation of “Collapse of an Empire: Lessons for Modern Russia,” now a bestseller in Russia. Written by Yegor Gaidar, an economist who was Russia’s acting prime minister between 1991 and 1994, the book uses information from Soviet archives to tell the story of the last few years of the Soviet Union. It tries to shoot down the “myth” held by most Russians that the Soviet Union was “a dynamically developing world superpower until usurpers initiated disastrous reforms.” It also warns that Russia should avoid the peril of another collapse in oil prices.
What happened, states Mr. Gaidar, is that Soviet grain production stagnated between 1966 and 1990. Meanwhile, 80 million people moved from farms to cities. New Soviet output of oil and gas was not sufficiently expanded to provide the hard currency needed to buy grain abroad. Eventually, the Soviets had to borrow foreign money to buy grain.
Mikhail Gorbachev, the last leader of the Soviet Union, told a meeting of the Communist Party, “We are buying [the grain] because we cannot survive without it,” noted Gaidar in a talk to the American Enterprise Institute (AEI) in Washington last fall. An associate of Mr. Gorbachev had warned in March 1991 of the risk of famine in June if foreign grain wasn’t obtained.
Related: Orlov: Closing the ‘Collapse Gap’
CALIFORNIA FORCLOSURES INCREASE 799% OVER SAME PERIOD LAST YEAR
July 25th, 2007Via: Los Angeles Times:
A sagging real estate market and tighter lending standards are exacting a rapidly growing toll on Californians, forcing them from their homes in record numbers, figures released today show.
Foreclosures in the state during the second quarter totaled 17,408, up 799% from the same period last year. The current rate handily eclipsed the previous foreclosure peak set in 1996, when the state was in the final throes of six-year slump.
Research Credit: EG
FDA Says Food Recall Is Urgent Health Threat
July 24th, 2007What can you do about this? See Farmlet for ideas.
Via: Reuters:
A recall of canned meat products and dog food made at a Georgia plant due to botulism fears could involve tens of millions of cans that pose an urgent public health threat, U.S. officials said on Monday.
U.S. food regulators appealed to consumers and retailers to find and dispose of the cans.
Two people in Texas and two others in Indiana remain seriously ill and hospitalized with botulism poisoning associated with eating Castleberry’s Hot Dog Chili Sauce, officials said.
“This is a very big recall,” David Elder of the U.S. Food and Drug Administration’s office of regulatory affairs told reporters, deeming it an “urgent public health matter.”
“These products can hurt people. And they have to be off the store shelves. And consumers have to discard any that they have at home,” Elder added.
U.S. officials said an outbreak of botulism due to a commercially canned food is extremely rare and has not occurred in the United States in more than three decades.
Castleberry’s Food Co. said on Saturday it had voluntarily expanded a recall of hot dog chili sauce and canned meat products originally announced on July 18 due to a risk of botulinum toxin, a bacterium that can cause botulism.
Castleberry’s is a unit of Connors Bros. Income Fund’s Bumble Bee Foods division.
The recall by Castleberry’s originally affected 10 products. The expanded move involves more than 80 types of stew, chili, hash and other products as well as pet food sold under a variety of brand names.
“You’re talking about tens of millions of cans that may have been involved. That doesn’t mean that’s how many are still out on shelves. But that’s sort of the scale,” added Robert Bracket, director of the FDA’s Center for Food Safety and Applied Nutrition.
U.S. DOLLAR INDEX CROSSES BELOW 80
July 24th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Latest is USDX down .23 to 79.99. Will it get a foot hold, or slip off the cliff??? I thought we would see a bounce off of 80; at least a feeble one. If it’s going to happen, this is the make or break moment.
Gold hasn’t caught up yet. This USDX action, without upside follow through on the gold, should, and I repeat should, act like compressing a spring. It could get weird. If gold gaps up, traders will want to be aware of the major overhead resistance at around 714.25 (weekly high set back in 2006) going forward.
The New Zealand Dollar is gapping to new highs. Up nearly a full cent today at around 81 now! I would expect the government to announce emergency measures at any moment. The break above 80 put blood in the water, and now it’s a feeding frenzy. Panic buying is the order of the day; logic has gone out the window. I have no idea what’s going to happen here, but it feels like a blow off top, but who knows…
Best of luck to all who have placed their bets. (If you use any national currency, you’re a gambler, whether you know it or not.)
Dead Farmers Got $1.1 Billion from USDA
July 24th, 2007Via: MSNBC:
The U.S. Department of Agriculture distributed $1.1 billion over seven years to the estates or companies of deceased farmers and routinely failed to conduct reviews required to ensure that the payments were properly made, according to a government report.
In a selection of 181 cases from 1999 to 2005, the Government Accountability Office found that officials approved payments without any review 40 percent of the time.
The report cited a 1,900-acre soybean and corn farm in Illinois that collected $400,000 on behalf of an owner who lived in Florida before his death in 1995. The company did not notify the government of the death but certified each year that the dead shareholder, who owned 40 percent of the company, was “actively engaged” in managing the farm.
Barcelona Hit by Major Power Outage
July 23rd, 2007Muy frágil.
Via: Washington Post:
MADRID, Spain — A major power outage hit Barcelona on Monday, snarling traffic, hobbling public transportation and knocking out electricity to homes and businesses in much of Spain’s second-largest city.
The outage began around 11 a.m. and affected traffic signals in much of the city center as well as several lines of the subway system, officials said. Police were posted at major intersections to keep traffic flowing.
The problem continued more than three hours later, although Red Electrica, the company that manages Spain’s power grid, said more than half the power supply had been restored.
Red Electrica said a cable had fallen down at one substation and shortly thereafter, two other substations lost all power, with a fire breaking out at one of them. The cause of the fire was not immediately known.
At least one major Barcelona hospital, Hospital Clinic i Provincial, was relying on a generator, said spokesman Marc de Semir. It is being used to light operating theaters, while regular hospital rooms and administrative offices were either without power or using dimmed lights, he said.
