Monday, July 6, 2009

Required Reading: Monday, July 6th 2009

The Great American Bubble Machine – Rolling Stone, Matt Taibbi

Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression

UBS: ‘The disaster in Spain will continue’ – Credit Writedowns

The (mythical?) housing wealth effect – VOX

Coffee 'may reverse Alzheimer's' – BBC News

Drinking five cups of coffee a day could reverse memory problems seen in Alzheimer's disease, US scientists say.

Ryanair to make passengers stand – The Telegraph

The low-cost airline would charge passengers less on "bar stools" with seat belts around their waists.

US lurching towards 'debt explosion' with long-term interest rates on course to double – The Telegraph

The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank.

California’s Nightmare Will Kill Obamanomics: Kevin Hassett – Bloomberg

The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat.

Another wave of foreclosures is poised to strike – The Los Angeles Times

"Absolutely," Chase Bank spokesman Tom Kelly said when asked about an impending surge in foreclosures. Since April 6, Chase has approved modifying 138,000 loans under Obama's program. But an undisclosed number of other Chase borrowers didn't meet modification eligibility, and many of those homeowners face possible foreclosure.

Separate from that group, Kelly said, Chase is proceeding to deal with an additional 80,000 borrowers in default whose foreclosure process had been voluntarily halted by the lender starting late last year.

Court Ruling Clears Path for G.M. to Restructure – The New York Times

Offices: Rising Vacancies, Falling Rents – Calculated Risk

Unemployment Rate and Part Time Employees – Calculated Risk

A Second Stimulus Plan? – Calculated Risk


High-rises on hold: What to do with empty lots? – The San Francisco Chronicle

Lobster Prices And Subprime Lending – Matrix

Basically, lobster prices have maintained a high price level for the past decade until the past year because a large portion of the catch was diverted to processing plants in Canada keeping supply of fresh lobsters restrained. These plants were mainly financed by Icelandic banks, who were ultimately driven under because of the subprime mortgage meltdown and now abundant production of lobsters are driving down the price for us.

Sound familiar?

The unemployment timebomb is quietly ticking – The Telegraph, Ambrose Evans-Pritchard

The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2pc, counting the old-fashioned way. The reason why this does not "feel" like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath, but 20m US homeowners are already in negative equity ( data). Evictions are running at a terrifying pace.

A Brand-New Arbitrage Market for California's IOUs – Minyanville, Scott Reeves

“If you are receiving a California IOU and need cash immediately, please contact me,” reads a posting on Craigslist. “I may be of assistance.”

Five Things: The Eventual Upside of Risk Aversion – Minyanville, Kevin Depew