http://www.businessinsider.com/fha-running-out-of-reserves-2012-11
The Federal Housing Administration (FHA) is said to report later this week that it has exhausted its reserves and might have to resort to taxpayer funds for the first time in 78 years, according to The Wall Street Journal's Nick Timiraos.
http://market-ticker.org/akcs-www?post=213915
http://truthingold.blogspot.com/2012/11/its-getting-ugly.html
REPORT: The Federal Housing Agency Is Running Out Of Money And May Need A Bailout
The FHA insures lenders against losses but is said to have been hit by rising mortgage delinquencies.
The WSJ reports that the FHA guarantees fewer mortgages than Fannie Mae or Freddie Mac but now has "more seriously delinquent loans" than both.
"Overall, the FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from one year ago. That represents around 9.6% of its $1.08 trillion in mortgages guarantees.
The FHA's annual audit estimates how much money the agency would need to pay off all claims on projected losses, against how much it has in reserves. Last year, that buffer stood at $1.2 billion, representing around 0.12% of its loan guarantees. Federal law requires the agency to stay above a 2% level, which it breached three years ago.
The decision over whether the FHA will need money from Treasury won't be made until next February, when the White House typically releases its annual budget. Because the FHA has what is known as "permanent and indefinite" budget authority, it wouldn't need to ask Congress for funds; it would automatically receive money from the U.S. Treasury."
The Obama administration has previously said that the FHA would only turn to the Treasury in an extreme scenario. Officials are expected to either raise mortgage-insurance premiums or finish up settlements with banks as an alternative.
On Those Fed Minutes.....
Another howler crosses the wires....
If you happen to believe Zillow then my house has gone up dramatically (ridiculously so) in value over the last few months. You don't think that's related to Obama's election and the well-known connection between Zillow and the Democrats, do you?
I have a suggestion -- anyone publishing such a Zestimate should have to do so in the form of writing a "PUT". That is, by doing so they're writing an option that the owner can choose to exercise if they so wish and "PUT" the house on the publisher for the claimed "value"!
I've long advocated that tax assessors should have to live with this, but we ought to extend it across the board to both appraisers and so-called "web estimates" and similar. In short, put your money where your mouth is or shut up.
I'll make this clear right here and now -- if you think that the Zestimate reflects the actual value of my home as of the date of this posting you may show up at my door with a cashier's check made for that amount (don't bother trying to play a game here; I know what the amount is and printed a copy of the current Zestimate) and it's all yours. This offer expires in 30 days; I may as well take the (fictitious, in my view) capital gain before rates go up on January 1st.
Real personal consumption expenditures rose at a solid pace in August. In September, nominal retail sales, excluding purchases at motor vehicle and parts outlets, increased considerably. Light motor vehicle sales also expanded. Recent data on factors that tend to support household spending were mixed. Real disposable income declined in August, largely reflecting the effect of higher consumer energy prices. In contrast, consumer sentiment rose in September and early October, and continued modest increases in house prices added to households' net worth.Riiight.
If you happen to believe Zillow then my house has gone up dramatically (ridiculously so) in value over the last few months. You don't think that's related to Obama's election and the well-known connection between Zillow and the Democrats, do you?
I have a suggestion -- anyone publishing such a Zestimate should have to do so in the form of writing a "PUT". That is, by doing so they're writing an option that the owner can choose to exercise if they so wish and "PUT" the house on the publisher for the claimed "value"!
I've long advocated that tax assessors should have to live with this, but we ought to extend it across the board to both appraisers and so-called "web estimates" and similar. In short, put your money where your mouth is or shut up.
I'll make this clear right here and now -- if you think that the Zestimate reflects the actual value of my home as of the date of this posting you may show up at my door with a cashier's check made for that amount (don't bother trying to play a game here; I know what the amount is and printed a copy of the current Zestimate) and it's all yours. This offer expires in 30 days; I may as well take the (fictitious, in my view) capital gain before rates go up on January 1st.
Near-term inflation expectations from the Thomson Reuters/University of Michigan Surveys of Consumers declined in September and early October, while longer-term inflation expectations in the survey moved down to near the lower end of the narrow range where they have remained for some time.
Where do people get these "expectations"? Are they all drunk? I mean, look, expectations may be whatever they are, but history is also what it is, and it's a fact. You can't change the disconnect between so-called "expectations" and actual results, especially when it comes to actual budgets and their impact on real people.
I suspect what's going on here is found in this chart:
That which the gummermint covers doesn't go into people's "expectations", you see, because it doesn't come out of their pocket.
Consumer credit expanded briskly in August. Nonrevolving credit continued to increase at a robust pace, mainly reflecting growth in student and auto loans.
Uh, all student loans. Bend over young folks, Bernnake wants his turn and you're the victim, like it or not.
Looking ahead, a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labor market.
Uh, there's been no movement in the labor market. Again, all that's happened is that food stamps have skyrocketed and the labor participation rate has not materially moved.
The Fed's actions have done severe damage to the labor market and consumer sustainability by enabling monstrous Federal Deficits, the latter of which are exactly identical in form and function to a tax.
Since all taxes are paid by people the impact is exactly what you would expect it to be -- it screws people, and since such a tax is not progressive at all (it is in fact regressive as it tends to fall on necessities) it actually screws the least-able to pay the most!
http://truthingold.blogspot.com/2012/11/its-getting-ugly.html
WEDNESDAY, NOVEMBER 14, 2012
It's Getting Ugly
The declining state of the economy, as I've been explaining for a while now, is starting to finally manifest in economic and financial reports. As most of you know, corporate earnings for the 3rd quarter have been pretty dismal, with lots of earnings "misses" occurring.
Second, the Government released its "income statement" for the month of October, the first month of the Govt's Fiscal Year 2013. It showed a $120 billion deficit, substantially higher than was expected and estimated and higher than October 2012's $98.5 billion. Here's the LINK The Government is saying "technicalities" led to a higher deficit. But the OMB didn't seem to know about those technicalities when it projected a $113 billion deficit a couple of weeks ago. Where were these seasonal "technicalities" last year? I smell an accelerating spending deficit coming, which means more printing!
Also, retail sales for October were reported this morning and, not only did the headline number "miss" expectations, but the monthly print was negative - a sequential decline from September. The Obvious "explanation" for this is Hurricane Sandy. But the Government statistical geniuses typically make adjustments to smooth irregularities like that out of the number AND one would have expected to see a pop in retails sales, as areas expecting to be affected would have experienced a "run" on groceries, hardware items and propane. That excuse does not fit. Nevertheless, below is a chart sourced from Zerohedge, with the data sourced from Bloomberg, which shows monthly retail sales:
Finally, I know I've been threatening to post a big report on the housing market, showing its impending demise. I have been collecting data for this and it will take some time to write something meaningful. Since I don't get paid to write this blog, I need to find the time - I'm hoping some time in the next week. What I can say is that, based on looking at the data I've compiled already, the "under the hood" data for the housing market is startlingly weak. I say "startlingly" because the Fed has driven mortgage rates to record lows, the banking industry in conjunction with the Government has prevented a lot of the "shadow inventory" from hitting the market and the Government has rolled out, thru FHA, a massive mortgage purchase and refinance program which is a "sub prime" quality lending program designed to try and really stimulate "organic"/primary residence purchases. All of those measures combined have barely stimulated a "bounce" in the numbers and the market is getting ready to do another big cliff-dive. To be continued...
With respect the Government's spending and debt accumulation situation, I fully anticipate that some way, somehow, after a lot of political grandstanding and accounting chicanery, an agreement to kick the fiscal deficit can down the road will be reached. We already know that the Democrats in the Senate, via Harry Reid's comment last week posted above on the right side of this blog, plan on asking for a $2.4 trillion bump in the Treasury debt limit ceiling. That tells you right there we can expect a deficit of at least $2 trillion for FY 2013. My personal view is that the politicians in DC do not have the mettle required to let the "fiscal cliff" event occur - neither does the President, nor would Romney have either for that matter. As history has shown time and again, the Government will spend and print until the currency ultimately collapses...
The big news yesterday was the fact that a couple of "official" - supposedly professional - organizations issued a statement proclaiming that if the U.S. goes off the fiscal cliff that it would lead to a recession. This revelation would be funny if it weren't so completely pathetic. Talk about understating the obvious. Notwithstanding the fact that on a real inflation basis, not Govt CPI basis, our economy has remained in contraction since at least 2008, if Congress and the President were to allow the "fiscal cliff" mechanism to occur, it would throw our system into economic armegeddon. I went over the numbers earlier this week as to why this would be the case.
The truth is that not only will the fiscal cliff scenario be kicked down the road like the proverbial "can" (anyone know if that's supposed to be a beer can or a soda can? Maybe a can of beans?), but the increasing chasm between expenses and revenues will have to be filled with even more Treasury debt issuance. Tautologically, this means more QE. More QE means even higher prices for gold and silver. The reason more QE will be needed is the same reason the Fed has continued and expanded QE since its inception in 2008: 1) the banks need liquidity or they will collapse; 2) the Treasury needs a new source of cash or interest rates will go to the moon.
To address the Treasury funding requirements, I've got a graph from Zerohedge which shows the steady decline in foreign Treasury purchases since 2009:
Second, the Government released its "income statement" for the month of October, the first month of the Govt's Fiscal Year 2013. It showed a $120 billion deficit, substantially higher than was expected and estimated and higher than October 2012's $98.5 billion. Here's the LINK The Government is saying "technicalities" led to a higher deficit. But the OMB didn't seem to know about those technicalities when it projected a $113 billion deficit a couple of weeks ago. Where were these seasonal "technicalities" last year? I smell an accelerating spending deficit coming, which means more printing!
Also, retail sales for October were reported this morning and, not only did the headline number "miss" expectations, but the monthly print was negative - a sequential decline from September. The Obvious "explanation" for this is Hurricane Sandy. But the Government statistical geniuses typically make adjustments to smooth irregularities like that out of the number AND one would have expected to see a pop in retails sales, as areas expecting to be affected would have experienced a "run" on groceries, hardware items and propane. That excuse does not fit. Nevertheless, below is a chart sourced from Zerohedge, with the data sourced from Bloomberg, which shows monthly retail sales:
(click on chart to enlarge)
Anyone notice anything interesting (the red arrow is my edit)? Not only is the trend for retail sales declining pretty quickly, but it was also declining during the "all-important" back to school season, July - Sept. I think this chart encapsulates the picture of the average American's finances and lack of disposable income. The holiday season spending this year could be exceedingly ugly. It will be interesting to see if the banks roll out some incredible revolving credit deals for the season. If you do see that know that the Federal Reserve is behind that and, ultimately, the Treasury/Government.
Finally, I know I've been threatening to post a big report on the housing market, showing its impending demise. I have been collecting data for this and it will take some time to write something meaningful. Since I don't get paid to write this blog, I need to find the time - I'm hoping some time in the next week. What I can say is that, based on looking at the data I've compiled already, the "under the hood" data for the housing market is startlingly weak. I say "startlingly" because the Fed has driven mortgage rates to record lows, the banking industry in conjunction with the Government has prevented a lot of the "shadow inventory" from hitting the market and the Government has rolled out, thru FHA, a massive mortgage purchase and refinance program which is a "sub prime" quality lending program designed to try and really stimulate "organic"/primary residence purchases. All of those measures combined have barely stimulated a "bounce" in the numbers and the market is getting ready to do another big cliff-dive. To be continued...
With respect the Government's spending and debt accumulation situation, I fully anticipate that some way, somehow, after a lot of political grandstanding and accounting chicanery, an agreement to kick the fiscal deficit can down the road will be reached. We already know that the Democrats in the Senate, via Harry Reid's comment last week posted above on the right side of this blog, plan on asking for a $2.4 trillion bump in the Treasury debt limit ceiling. That tells you right there we can expect a deficit of at least $2 trillion for FY 2013. My personal view is that the politicians in DC do not have the mettle required to let the "fiscal cliff" event occur - neither does the President, nor would Romney have either for that matter. As history has shown time and again, the Government will spend and print until the currency ultimately collapses...
http://truthingold.blogspot.com/2012/11/avoiding-fiscal-cliff-qe-to-infinity.html
( So , to prevent gold and silver from going " off to the races once full bore QE to infinity kicks in after the end of Twist , do we see some trauma introduced ? Do we see the SLV or GLD exposed as the ponzi schemes that they are to try to shake confidence in the PMs ? Does one of the big shorts other than JP Morgan take derivative fall - like Citibank or Nova Scotia ? )
FRIDAY, NOVEMBER 9, 2012
Avoiding The Fiscal Cliff = QE To Infinity
There is no reason to expect that renewed efforts at federal budget deficit reduction will result in anything more than the usual smoke and mirrors, further increasing, not reducing, long-term U.S. sovereign-solvency risk. In reality, the U.S. economy has not recovered, and no recovery is pending. Consumer liquidity remains severely impaired, and broad business activity continues to falter anew. As a result. the actual federal budget deficit going forward will be much worse than the relatively rosy numbers being used as the basis for government negotiations - John Williams, www.shadowstats.comEveryone can draw their own conclusions about how this so-called "fiscal cliff" situation will play out, but the only way it can possibly be "resolved" is by postponing the inevitable. As Williams states: "Accordingly, global market reaction—to a severely deteriorating outlook for U.S. fiscal conditions—increasingly should reflect massive flight from the U.S. dollar and movement into gold and the stronger Western currencies."
The big news yesterday was the fact that a couple of "official" - supposedly professional - organizations issued a statement proclaiming that if the U.S. goes off the fiscal cliff that it would lead to a recession. This revelation would be funny if it weren't so completely pathetic. Talk about understating the obvious. Notwithstanding the fact that on a real inflation basis, not Govt CPI basis, our economy has remained in contraction since at least 2008, if Congress and the President were to allow the "fiscal cliff" mechanism to occur, it would throw our system into economic armegeddon. I went over the numbers earlier this week as to why this would be the case.
The truth is that not only will the fiscal cliff scenario be kicked down the road like the proverbial "can" (anyone know if that's supposed to be a beer can or a soda can? Maybe a can of beans?), but the increasing chasm between expenses and revenues will have to be filled with even more Treasury debt issuance. Tautologically, this means more QE. More QE means even higher prices for gold and silver. The reason more QE will be needed is the same reason the Fed has continued and expanded QE since its inception in 2008: 1) the banks need liquidity or they will collapse; 2) the Treasury needs a new source of cash or interest rates will go to the moon.
To address the Treasury funding requirements, I've got a graph from Zerohedge which shows the steady decline in foreign Treasury purchases since 2009:
(click on chart to enlarge)
Foreign funding of Treasury paper has declined by 55% since 2009. I have not seen this fact reported anywhere in the mainstream media. It should come as no shock, however, as foreign investors are not idiots. They know that money printing devalues the dollar, so they want less of it. China has somewhat maintained its level of Treasury buying lately, but that's because if they are perceived as fleeing the dollar, the dollar would collapse and China would be, in a sense, shooting itself in the head financially. That will change eventually.
The decline in foreign participation in Treasury auctions has been replaced by the Fed's participation, aka QE. The next chart, which I hypothecated from www.clusterstock.com, shows this fact nicely:
This is an interesting chart. Not only does it show graphically the fact that the Fed is increasing the size of its balance sheet by buying Treasuries in order to make up for the loss in foreign participation, but it shows the concomitant correlation of the price of gold. The orange line shows the projected growth in the Fed's balance sheet if it just maintains the existing QE policy. The red line shows the trajectory of the Fed's balance sheet if it implements the highly telegraphed next phase of QE. Everyone can draw their own conclusion as to the expected trajectory for the price of gold under the "red line" scenario.
And the truth is, the red line scenario is the expected policy move given what is already written on the chalkboard in terms of the giant locker room on Capitol Hill. What about when the impending debt ceiling increase has to be increased again by next summer? See where this is headed? QE to infinity.
The metals/miners market seems to have reverted from "sell the rallies" to "buy the dips." What's even more interesting, the metals have had more days recently in which they go higher when the S&P 500 is getting hit. I think the hedge fund margin calls related to the mini-crash in AAPL have run their course, so I think the SPX will get a trading bounce here and the metals will move with it. As the media hype and political show connected to "The Cliff" intensify, the stock market has a lot of downside risk and I fully expect a portion of the money that leaves stocks will flow into the metals.
The decline in foreign participation in Treasury auctions has been replaced by the Fed's participation, aka QE. The next chart, which I hypothecated from www.clusterstock.com, shows this fact nicely:
(click on chart to enlarge)
And the truth is, the red line scenario is the expected policy move given what is already written on the chalkboard in terms of the giant locker room on Capitol Hill. What about when the impending debt ceiling increase has to be increased again by next summer? See where this is headed? QE to infinity.
The metals/miners market seems to have reverted from "sell the rallies" to "buy the dips." What's even more interesting, the metals have had more days recently in which they go higher when the S&P 500 is getting hit. I think the hedge fund margin calls related to the mini-crash in AAPL have run their course, so I think the SPX will get a trading bounce here and the metals will move with it. As the media hype and political show connected to "The Cliff" intensify, the stock market has a lot of downside risk and I fully expect a portion of the money that leaves stocks will flow into the metals.
* * *
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