Monday, May 18, 2009

Links 05/18/2009

Asia will author its own destruction if it triggers a crisis over US bonds – The Telegraph – Ambrose Evans-Pritchard

S&P 500 Earnings Decline: 90% – The Big Picture

Is Trump Broke? – Clusterstock

Smaller Banks Fail Stress Test, Need $24 Billion – Clusterstock

Why Commercial Real Estate Can't Be Saved – Minyanville

Advertising Enters the Age of Ire – Minyanville

In Slump, Networks Scramble Lineups – The New York Times

Estimates are that sales on the five big broadcast networks could decline by as much as 15 percent from last spring, when they sold about $9.2 billion of commercial time ahead of the 2008-9 season.

Distressed property sales hit upscale condos – The Los Angeles Times

Across Southern California, projects conceived during the housing boom, but completed after the bust, are sitting largely vacant. Developers are desperate to unload these units, but they face some particular challenges. Banks often won't provide mortgages to buyers in buildings that are less than 50% occupied, reducing the pool of eligible purchasers. Converting the projects to rentals means even steeper losses because the cash flow often won't cover a developer's construction costs.

Foreclosure Resales: Slow in High Priced Areas – Calculated Risk

If You're Not Petrified of Obama, You're Not Paying Attention – Mish

Credit Card Defaults At Record Highs But Worst Is Yet To Come – Mish

The Faith-Based Economy? – Minyanville

You cannot propose massive increases in spending without creating crushing debt that the markets simply won’t allow, pushing interest rates much higher and really slowing growth and hurting the economy. It’s a simple fact that you cannot increase the debt-to-GDP ratio without limit.

We found the limit on personal and corporate debt this past year. We pushed the limits until the system crashed. And now the US government wants to basically do the same thing. They’re planning to see where the limits on government debt-to-GDP will be. Unless cooler and more rational heads in the Democratic Party prevail, this isn’t going to be pretty. Sometime in the middle of the next decade we’ll hit the wall, and it will make the current crisis pale in comparison.

The only way to solve the problem is to grow GDP more rapidly than debt. And for that to happen, you have to have policies that are shaped for the growth of the economy, or massive savings by consumers. And right now, we have neither. Cap and trade is hugely anti-growth. So are high corporate taxes, and Obama is proposing to effectively raise corporate taxes by closing loopholes for income earned outside the US. Much better would be to lower the overall corporate level to a competitive world rate and then require the offshore income to be taxed. A lower rate would actually increase tax revenues.

Sacramento Real Estate Market Charts - April 2009 – Sacraments Land(ing)

Bodybuilders flee drug testers; event canceled - Breitbart