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John over at Bronte Capital found this gem of a Newspeak-ish disclosure in a filing from troubled mortgage insurer MGIC:
In accordance with industry practice, loans approved by Government Sponsored Enterprise and other automated underwriting systems under “doc waiver” programs that do not require verification of borrower income are classified by us as “full documentation."
Right. But of course they are.
There was an interesting panel today in New York featuring Paul Volcker, Joe Stiglitz, and Robert Mundell. It's lengthy, but worth watching. Kudos to Barry for the find.
click for video
Teresa Tritch, a member of the board of editors of the New York Times, moderates. Heidi Hartman, president of the Institute for Women's policy research, and Marina Whitman, a professor at the University of Michigan, also speak.
00:00:00 Tritch introduces roundtable participants.
00:01:28 Mundell: current crisis vs. Great Depression
00:05:33 Mundell: need to reduce corporate taxes
00:08:05 Volcker: financial crisis "without precedent"
00:14:48 Volcker: rebuild U.S. banks from "ground up"
00:19:56 Stiglitz: "long, deep downturn" in economy
00:21:34 Stiglitz: government response, bank rescue
00:33:30 Questions: Volcker, Mundell on world currency
00:44:29 Participants on fiscal stimulus, U.S. deficit
00:57:55 Stiglitz on government regulation, innovation
01:00:46 Volcker, Mundell, Stiglitz on global currency
01:07:18 Participants make summary remarks.
Running time 01:19:59
Two keeper book covers from the deranged stock market past. Both increasingly look like their authors slipped a decimal point.
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With Dow futures having hit circuit-breakers on declines early this morning, it's worth reminding yourself what the current limits are:
Level 1 Halt
A 1,100-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.Level 2 Halt
A 2,200-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.Level 3 Halt
A 3,350-point drop will halt trading for the remainder of the day regardless of when the decline occurs.
In short, the Dow circuitbreaker numbers to watch today, should selling pick up again, are 7,591.25, 6.491.25, and 5,341.25.
I had someone email me a variant on this thought this morning, so I thought I'd share it here. Market participants aren't to be trusted at times like this because they're watching their world come down around them, and it makes them prone to extremes of pessimism. Imagine if stock markets were run by soon-to-be ex-Chrysler employees and you begin to see the inherent bias in the system.
I'm not saying the current economic pessimism is unwarranted, because it is. But I am saying it's worth reminding yourself why we see some of the extremes of sentiment that we do.
Remarkable to me how many people are newly discovering that either accidentally or on purpose they are newly foreign exchange traders. This quote from a WSJ piece earlier in the week drove that point home:
Hungary is at the center of the storm. "We have problems once again that we thought were gone years ago," says Judit Berczeli, a divorced mother of two who is struggling with her foreign-currency mortgage on a small apartment on the outskirts of Budapest.
A run on the currency threatens the country's businesses and households because the cost of existing debts is soaring, while banks are choking off new lending. Many Hungarian companies and consumers also have borrowed heavily in euros, Swiss francs and other foreign currencies, where they could get lower interest rates and against which the forint had done well for years. With its fall, they are all the more strapped for cash.
Ms. Berczeli, a 40-year-old manicurist, pays her mortgage of €200, or about $250, in cash each month. On Wednesday she went to the bank to exchange some of her forints, and found that it cost 284 forints to buy one euro -- up from 240 forints a few weeks ago. "This is striking pretty close to home," she says.
[via WSJ]
As Vince Farrell says, what in the world is a single mother in Budapest doing playing in current markets for mortgages? Sadly, however, she is not along, as incredible cross-currency moves are slamming people, tacit or actual forex traders alike.
How surreal is it in San Diego real estate right now? The city just broke ground on a footbridge downtown across a busy road and joining one luxury hotel to another luxury hotel plus the Petco Park baseball stadium. Trouble is, the cost of the bridge has ballooned, and one hotel hasn't been completed, and other hotel plan has been abandoned.
The upshot? We have a largely taxpayer-funded $26.8-million (up from $12.8-million) bridge all set to join two parking lots. Call it a bridge to nowhere, from nowhere.
[via SOSD]
I'm a big fan of drive-by economic indicators, the sort of data that people disclose by their actions, as opposed to via surveys and the like on which they often lie. A case in point: Highway traffic in California.
You can't help but notice here in southern California that it's newly much lighter on the roads. No matter the time of day, it is far easier to get around than it was even a scant few weeks ago. There are simply aren't as many cars on the roads, as California suffers from having entered recession earlier than the rest of the country. That has many consequences, ranging from reduced gas consumption, to lower greenhouse gas emissions, and so on.
Check the following chart to see how traffic has declined across the state -– as measured by normalized delays –- over the the last year:
[Data via CalTrans/PeMS]
Okay, this is really off-color, but …. the trouble with sending threatening letters containing white powder to financial services executives is that the letters will likely be fought over. Mine! No, that's mine!
More here.
No idea how I missed this, but there was a wonderfully tongue-in-cheek piece on business/finance books and the stock market from the Journal of Behavioral Finance. Here is a chart that drives it all home:
Source: Exuberant Irrationality: Judging Financial Books by their Covers, Andrew Coors and Lawrence Speidell
Some quick links to items of interest:
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