The car is at the center of the biggest boom in subprime lending since the mortgage crisis, and The NY Times reports, similar to how a red-hot mortgage market once coaxed millions of borrowers into recklessly tapping the equity in their homes, the new boom is also leading people to take out risky lines of credit known as title loans. Will we never learn?!!
This post was published at Zero Hedge on 12/26/2014.
Slavery? Or A Bet Gone Bad?
Where have I heard this whine before?
Moscow (AFP) – When Olga Savelyeva took out a $226,000 mortgage to buy a small apartment on the outskirts of Moscow in 2008, she could never have imagined that the ruble would lose more than half its value in a few short years.
But Savelyeva’s $2,090 monthly instalments have skyrocketed in ruble terms due to the Russian currency’s dive against the dollar. The resulting jump in monthly payments from 49,000 to 115,000 rubles now devours most of her family’s income.
Oh well.
Remember that people in Hungary did this as well — and their banks were forced to convert their foreign-currency issues mortgages to forints in order to bail them out.
Why should these people get bailed out when they got a lower interest rate — the entire point of doing this in the first place — in exchange for the risk that something would go wrong with the currency exchange rate?
It’s not like Russia isn’t known for beating its chest in the international arena, is it? Why no, it’s not!
Should these sorts of loans be banned? Maybe, but they weren’t — and the people who took them out not only knew the risks they did it to obtain a tangible benefit for which there is always a price.
Well, now the price is upon them.
Stupid actions are only deterred by consequences.
This post was published at Market-Ticker on Dec 26, 2014.
As we sarcastically noted this morning, “one group of Federal workers that is definitely not taking the day off, is the trading desk located on the 9th floor of the New York Fed, responsible for such things as preserving the “fair” value of the bond and the stock market and avoiding any sharp downward moves.” And sure enough, with stocks levitating, here are the fabulous 5 left of the 285-plus Bloomberg Users at the NY Fed who are maintaining the world’s status quo today…
This post was published at Zero Hedge on 12/26/2014.
It appears that not only did Janet Yellen’s soothing words from last week decouple the broad US equity market from any fears about oil prices, but energy stocks themselves now have absolutely no relationship with the underlying raw material that drives their business (and it’s not like the Contango provides much support). Now where have we seen this before?
This post was published at Zero Hedge on 12/26/2014.
The following video was published by X22Report on Dec 26, 2014
In this news brief we will discuss the latest news on the economic collapse. We look to see if things are really that different. The central bank will not stop at just confiscating your wealth they will want your life. They want to enslave the people.
2014… same as 2013 – stocks up, economic growth down!
This post was published at Zero Hedge on 12/26/2014.
S&P 500 profits are 86% higher than they would be if accounting standards of the national accounts were used, Pelham Smithers Associates notes. And the gap between the two measures is widening, the research firm finds.
So I guess my estimate was off a bit. I suggested at least 50%. Blackrock’s source is asserting 86% (the above quote sourced from Zerohedge LINK). That means that this stock market is BY FAR the most overvalued in the history of this country. Have fun with that one!
This post was published at Investment Research Dynamics on December 26, 2014.
Trading volumes today are running at the lowest pace since 2006, crude oil prices ae testing back towards fresh 5 year lows, and Treasury yields are all lower… so it should come as absolutely no surprise that the S&P 500, Dow Industrials, and Russell 2000 have all hit fresh intraday record highs today.
SPY volume at it lowest since 2006…
This post was published at Zero Hedge on 12/26/2014.
The following video was published by FutureMoneyTrends on Dec 26, 2014
US GDP growth reaching 5% in Q3 raises lots of questions. Are things finally getting better? Is the economy reaching breakout speed? Is Fed tightening now on our doorstep? Is this the beginning of a sustained upward trend or the apex of our economy before we get dragged down by global conditions?
The chart below shows quarterly GDP growth since the financial crisis. After struggling near 2% annualized growth for many years, the last five quarters make it appear that the economy has shifted gears. This in the face of a sputtering global landscape. It’s also rather remarkable that we are seeing growth without inflation … truly a Goldilocks environment, but how long will it last?
This week’s GDP figure caused a severe pullback in Treasuries. In the blue circle below you can see the massive spike in the 10-year yield as Treasury prices sold off. Rising interest rates reduce the value of existing bonds and it appears many investors interpreted the GDP data as implying that we may soon see rates ratchet higher.
This post was published at FinancialSense on 12/26/2014.
Back in June 2013, when Deutsche Bank opened a gold vault in Singapore which could hold up to metric 200 tons, the German bank was euphoric about the prospects for storing physical gold: “Gold has traditionally been stored in London, Zurich and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve,” Mark Smallwood, Deutsche Asset & Wealth Management’s head of wealth planning in the Asia-Pacific region, told The Wall Street Journal.
Mark was correct and thanks to the ongoing decline in gold prices, Chinese and Indian demand for the metal, the physical metal that is, not its various paper manifestations, has risen to record levels. Alas, one thing Mark did not know is that in early 2014, a German regulator would reveal that “precious metals manipulation was worse than the Libor scandal” and as a result, shortly thereafter the biggest German bank (and largest bank in the world by notional derivative exposure) – which is currently being probed for gold-rigging – would quietly liquidate its entire physical precious metals trading group.
Which means that Deutsche Bank’s Singapore gold vault, barely a year old, is about to go on sale.
But while one can debate when the Singapore will see a “for sale” sign attached to the front door, one thing is clear: Deutsche Bank’s massive, and even newer, gold vault in London is already looking for offers. According to Reuters, Deutsche Bank is “open to offers for its London-based gold vault following the closure of its physical precious metals business, three sources familiar with the matter said on Wednesday.”
This post was published at Zero Hedge on 12/26/2014.
In Russia, the overnight lending rates between banks has soared to 19%, a sign of widespread and warranted mistrust between banks, as one bank has failed. To stabilize the situation, Putin is considering bank deposit insurance up to an amount equivalent rate of about $26,000.
Meanwhile, and although Russia is still burning through currency reserves, the value of the Ruble has been rising.
CNN Money reports Russia Empties the Vault to Prop Up Ruble.
So far this year the central bank has burned through more than $110 billion in foreign currency supplies. That’s more than a quarter of what it has in reserves right now.
Spending has ramped up in the last few weeks. Since the start of December, the central bank has blown through more than $21 billion.
That, along with a series of other measures to support the banking sector, has helped to stabilize the ruble.
[Mish comment: Actually, blowing through reserves is destabilizing, but other measures such as the huge hike in interest rates is indeed stabilizing]
This post was published at Global Economic Analysis on December 26, 2014.
Some interesting insight into the legacy of the Great Recession that we are carrying over into 2015. From the start of 2008 through 2014:
Average increase in gross debt of all advanced economies was 27.2 percentage points of GDP, with a range from a decrease of 21 percentage points for Norway and an increase of 88.5 percentage points for Ireland. Thus, the average annualised rate of increase in government debt over the period was around 3.47 percentage points of GDP with a range of -2.76 percentage points annualised decline for Norway and a 9.48 percentage points annualised increase in Ireland. Average change in the gross government debt of the group of countries where debt declined over the crisis was -12.0 percentage points of GDP. There were only 3 countries in this group.
This post was published at True Economics on December 26, 2014.
always chuckle when I see articles or pundits talking about how “wonderful” fracking is, and how “profitable” it will be.
On the contrary side, I also chuckle when I hear people talk about how much money they’ll “save” converting to natural gas, as if such is a sure thing.
Why? Well, right here is “Exhibit A”:
As you can see very large changes in the price of natural gas are normal. Natural gas is a somewhat-local commodity; unlike many others it is very difficult to ship it across oceans (the simplest and most-economic means of transport is by pipeline) and as a consequence the market for it tends to be concentrated within a given landmass. This in turn means that supply in, for instance, Russia has little or no impact on the price of the commodity here in the United States, and vice-versa.
There are those clowns that have tried to argue that converting trucks, for example, to LNG is a good idea. Well, diesel fuel has been materially-elevated in price compared against history for quite some time. But how would you like to try to plan your cost of operation as a trucking company if the cost of the fuel to run the trucks commonly varied by a factor of three, and over the last 30 years has varied by a factor of ten, with many large excursions in price exceeding 100%?
This post was published at Market-Ticker on 2014-12-26.
‘Memory is fiction. So is the future. But there is some truth in fiction.’
When they woke Thursday morning, the banks had been closed on the east coast for 2 hours. Electronic payment systems worked select areas only, government services, food, and energy distribution.
In 24 hours those remaining systems were overwhelmed with volume and confusion. Forty-eight hours later a Federal state of emergency had been issued. All broadcasts were official. The media now fully blackened. Hospitals closed. Panic had taken over. In the lead up:
Low (manipulated) interest rates had created a false dawn in oil production. It was like salt in the open wound of failed banking policy. Higher real estate and equity prices were one thing. But energy inflation was threatening the credibility of central bankers.
They would need the political cover to continue propping markets.
They were spinning plates in order to keep the plates spinning, but they couldn’t keep spinning forever. Beginning in June, they started knocking down the price. A series of end of the day low volume spoof trades triggered technical fund selling.
This post was published at Silver-Coin-Investor on Dec 26, 2014.
We Americans no longer carry gold and silver money in our pockets and purses as our grandparents did during their lives. But we still carry the history, legacy and spirit of those gold and silver coins in our language – with more meaning than you might imagine.
‘Sound money’ has a clear message recognized for centuries around the world. It describes the musical, metallic ring of a gold, silver, or copper coin dropped on any hard surface of glass, stone, wood, or metal. Sound money literally refers to real wealth, with a natural, unmistakable signature of honesty and integrity, as opposed to the swishy paper and plastic debt used almost exclusively today.
The term ‘sound money’ is believed to come from Ancient Rome, where small silver coins were standard in everyday commerce, for paying Roman soldiers to buying exotic goods from all corners of the known world. As Rome squandered its wealth, it found what seemed an easy shortcut to shore up the treasury. It gradually debased those silver coins with common metals, ultimately cutting the silver content to just 5 percent.
But that didn’t fool anyone for long, most of all disciplined Roman soldiers, who did not appreciate being paid with worthless mystery metal in return for risking their lives on Rome’s bloody battlefields.
Do You Want True Money or a Debased Dud?
Not every Roman soldier had room in his gear for a touchstone, usually fieldstone or slate, also used to test the purity of metals. But they quickly discovered the difference in the sound of true money and a debased dud.
This post was published at GoldSeek on 26 December 2014.
Early Warning Signs of a Housing Bubble Reforming | RealtyTrac Report
Housing Bubble 2 Goes Nuts: San Francisco Home Sales Plunge 20%, Prices Soar 27%
San Francisco is known for its mindboggling booms and breathtaking busts as the hot money from all over the world ebbs and flows amidst startup frenzies and IPO manias.
And now the hot money is flowing. It has created a delirious craziness in the housing market, surrounded by an environment where app makers without revenues but with big dreams and the word ‘disrupt’ in their description are worth billions and draw so much cash from investors that they struggle harder to burn through it all than to disrupt anything.
So I read with fatalist amusement in SF Curbed that the most expensive home on the market in early November is still on the market. At the time, SF Curbed described it this way:
Raw food chef Roxanne Klein and her entrepreneur/guitar-CEO husband, Michael Klein, have put their neoclassical-revival mega-manse on the market for $39 million. The couple have only owned the seven-bedroom, 16,000-square-foot home, located at 2701 Broadway, for two and a half years, having picked it up from real-estate mogul Ron Zeff for $27 million back in 2012…. The ask is a full $12 million above the last sale price, though the present owners haven’t so much as changed the paint in the au pair suite.
We have previously observed that while pundits are happy to focus on non-GAAP earnings which over the past several years have become a total farce, the reality is that GAAP EPS for the S&P in 2014 will be 1.3% lower than a year ago, and that as a result of crashing energy company profits, 2015 GAAP EPS will be lower still, meaning that contrary to the propaganda, the US will see two consecutive years of declining wage growth. That said, not even we expected to read the following shocker revealing just how naked the corporate profitability emperor truly is, and coming from the world’s largest asset manager on top of everything.
This post was published at Zero Hedge on 12/26/2014.
Some interesting insight into the legacy of the Great Recession that we are carrying over into 2015. From the start of 2008 through 2014:
Average increase in gross debt of all advanced economies was 27.2 percentage points of GDP, with a range from a decrease of 21 percentage points for Norway and an increase of 88.5 percentage points for Ireland. Thus, the average annualised rate of increase in government debt over the period was around 3.47 percentage points of GDP with a range of -2.76 percentage points annualised decline for Norway and a 9.48 percentage points annualised increase in Ireland. Average change in the gross government debt of the group of countries where debt declined over the crisis was -12.0 percentage points of GDP. There were only 3 countries in this group. Average increase in gross government debt of the group of countries with benign levels of increase (levels of increase consistent roughly with offsetting GDP contraction over the crisis period) was 4.8 percentage points of GDP. There were only 5 countries in this group and only two of these were in Europe, with none (at the time of the crisis onset) being members of the euro area.
This post was published at True Economics on December 26, 2014.
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