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188 comments on DrumBeat: August 28, 2007

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Stoneleigh on August 28, 2007 - 9:11am Permalink | Subthread | Comments top

A new Round-Up has been posted at TOD:Canada.

The developing credit crunch is looking less contained by the day, despite the recent bounce in the equity markets. The interconnectedness of global markets really becomes apparent when contagion threatens to spread.

Following on from the Montebello SPP summit, Naomi Klein brings us an interesting twist on the right of protestors to be heard - surveillance as the new participatory democracy.

More commentators are weighing in on the question of Newfoundland oil royalties, while a pipeline capacity shortage looms in Alberta and potential conflict brews in BC over coal bed methane.


Top 25 Quotes on the Credit Crisis of 'O7

The U.S. economy, once the envy of the world, is now viewed across the globe with suspicion. America has become shackled by an immovable mountain of debt that endangers its prosperity and threatens to bring the rest of the world economy crashing down with it. The ongoing sub-prime mortgage crisis, a result of irresponsible lending policies designed to generate commissions for unscrupulous brokers, presages far deeper problems in a U.S. economy that is beginning to resemble a giant smoke-and-mirrors Ponzi scheme. And this has not been lost on the rest of the world. - Hamid Varzi, International Tribune

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Leanan on August 28, 2007 - 9:18am Permalink | Subthread | Parent | Comments top

More economic news...

Credit card defaults keep rising, report says

American consumers are defaulting on their credit cards at a sharply higher rate compared to last year, in what could be another consequence of the recent subprime mortgage market crisis, according to a report published Tuesday.

In addition, late payments are also up, cardholders are showing signs they are less willing to pay and credit card companies have written off 30 percent more payments during the first half of this year versus a year ago, the Financial Times reported.

And CNN has this little snippet on their "breaking news" banner:

U.S. home prices in 20 cities sink 3.5 percent in June from year-ago period, Reuters reports. More soon.

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Leanan on August 28, 2007 - 3:36pm Permalink | Subthread | Parent | Comments top

Home prices: Steepest drop in 20 years; no recovery soon

U.S. home prices fell 3.2% in the second quarter, the steepest rate of decline since Standard & Poor's began its nationwide housing index in 1987, the group said Tuesday.

The decline in home prices around the nation shows no evidence of a market recovery anytime soon, one of the architects of the index said.

MacroMarkets Chief Economist Robert Shiller said the declining residential real estate market "shows no signs of slowing down."

The report came a day after the National Association of Realtors said sales of existing homes dropped for a fifth straight month in July while the number of unsold homes shot up to a record level.

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Samsara on August 28, 2007 - 11:31pm Permalink | Subthread | Parent | Comments top

More economic news...

Credit crisis to claim Wall Street casualties

Four US investment banks are about to give investors their first look at wounds inflicted by the sub-prime collapse

Analysts and investors believe that banks, led by Goldman Sachs, Morgan Stanley, Lehman Brothers and Bear Stearns, are preparing to unveil falls in fixed-income trading, debt securities and mortgage securities.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_...

The sub-prime mortgage-driven credit rout had not kicked in when the main Wall Street players delivered their second-quarter numbers.

The credit crisis is set to force Wall Street's top investment banks to take big asset writedowns and reveal credit crunch wounds to some of their key businesses when they brief investors on third-quarter results next month.

The value of any debt instruments on their books, or any debt deal they were working on, has to be reduced.

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River on August 28, 2007 - 12:12pm Permalink | Subthread | Parent | Comments top

EYE ON AMERICA
Your move, Mr Bernanke
By Walter T Molano

http://www.atimes.com/atimes/Global_Economy/IH29Dj01.html

'There is a consensus in the northern latitudes of the Western Hemisphere that the US Federal Reserve under chairman Ben Bernanke will magically solve the markets' woes. Asset prices rallied last week, as television commentators debated whether the US central bank would cut interest rates by 25 or 50 basis points. Politicians from both sides of the aisle called for a reduction in rates and an increase in liquidity. Although the United States insists on central-bank independence as a precondition for multilateral assistance, it does not feel it should be held to the same standard. The televised assurances by senior politicians that the Fed would ease interest rates made a mockery of the nation's monetary authorities. Moreover, the notion that a reduction in interest rates would solve the ongoing credit crunch was a naive understanding of the damage that has been done.'...snip...

'Banks are slashing lines of credit, paring back trading positions and refusing to roll over commercial-paper obligations because they must husband their cash. That is why a 50-basis-point cut or a 400-basis-point reduction in Fed Funds will not do anything to restore confidence. It is also the reason the markets will panic the day after the Fed's hand is forced on September 18, when they realize that financial institutions will still be unable to move the collateralized derivative structures off their books.'...snip...

'That is why, regardless of what the Federal Open Market Committee does on September 18, bank regulators, risk officers and boards of directors will think twice before buying another collateralized derivative obligation. Without limitless access to credit, US consumers will have to reduce spending, thus marking the onset of a global contraction.'...snip...

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new account on August 28, 2007 - 12:50pm Permalink | Subthread | Parent | Comments top

Just imagine the market reaction were the US to undertake a unilateral attack on Iran.

The result won't be the US Peso. It will be the US Kopek. The sub-Kopek.

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Cid Yama on August 29, 2007 - 4:14am Permalink | Subthread | Parent | Comments top

The World Markets are in the midst of a Ponzi Security Fraud Crisis. 'Confidence' cannot recover all of the wealth bled off and stolen in the course of the worldwide Ponzi scam. These people want to be bailed out before the skeletons start coming out of the closets and warrants start being issued. Trust me, a lot of people will be going to jail before this is all over. Fact is, the level of fraud was so high, there isn't enough money in the world to bail them out. Besides, it's already on the downhill slide and picking up speed. Stabilizing the markets briefly will not restore the scam. Everyone knows, or at least should suspect, these paper assets are worthless. No one will touch them again even if the markets were flush with money and confidence. A Ponzi Scam requires ever more buyers at the front end in order to pay off the ones at the back end just to stay afloat. The game has been called and cannot be revived. The most they could hope for would be additional time to flee to a country without extradition. Since they defrauded most of the countries in the world, that might be difficult.

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