Wednesday, June 27, 2012

Today's links

1--Map Shows Which States Are The 'Greeces' Of America, Business Insider

2--Mortgage origination (graphs) 2007 to 2011, Sober Look
3--Case-Shiller Index Shows Home Prices Off Record Lows for April 2012, economic populist

The April 2012 S&P Case Shiller home price index shows a -1.9% decline from a year ago for over 20 metropolitan housing markets and a -2.2% decline for the top 10 housing markets from April 2011. Home prices are now comparable to May 2003 levels for the composite-20 and March 2003 for the composite-10, but up for the month. Both composites are now down -34% from their 2006 home price bubble peaks. March 2012 home prices were record lows. Below is the yearly percent change in the composite-10 and composite-20 Case-Shiller Indices. These are not seasonally adjusted, but comparing from April 2011....

The turmoil in the housing market in the last few years has generated unusual movements that are easily mistaken for shifts in the normal seasonal patterns, resulting in larger seasonal adjustments and misleading results....

Not seasonally adjusted data can create more headline buzz on a month by month basis due to the seasonality of the housing market. S&P does make it clear that data should be compared to a year ago, to remove seasonal patterns, yet claims monthly percentage changes should use not seasonally adjusted indices and data. This seems more invalid than dealing with the statistical anomalies the massive housing bubble burst caused. Below is the seasonally adjusted and not seasonally adjusted Composite-20 Case-Shiller monthly index.....

(From comments) Folks, look, we may have hit a bottom, although I'm not so sure on home prices, but in terms of sales, rolling around there, but over 1 month, just 1 month of data we have some claiming everything is rosy, home prices will rise 10%, sales will increase, construction jobs are coming back and the economy is "on the mend".

This is ridiculous! The NAR especially claims this and has been doing so, no matter what the data says and they are all about realtors, so do not believe their hype.

One month of data does not a trend make at all, not by a long shot. Just unreal how various press and pundits jump on one month's of data and make declarations. You cannot do that, even with a quarter's worth of data. 6 months, ok, you can say something.

4--S&P 500 Q2 Earnings Growth Estimates Tank, Bespoke

The world's economic troubles since the second quarter began have done a number on Q2 earnings growth estimates for the S&P 500.  At the start of March, year-over-year S&P 500 Q2 earnings growth (bottom up) was expected to be +1.2%.  From the start of March through mid-April, this growth estimate steadily increased to a high of +2%, but since then we've seen pretty much a straight line lower.  As of this week, Q2 earnings for the S&P 500 are expected to decline 1.1% versus Q2 2011
5--Mortgage backed securities slowly rebound, WSJ (graph)

6--MBA: Mortgage Applications Decrease in Latest Weekly Survey, calculated risk

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 8 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier.

“Refinance volume fell last week due largely to a fall-off in refinance applications for government loans, which had more than doubled the prior week,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “The large swings in activity were due to the implementation of FHA’s new premiums on streamline refinances, and borrowers timing their applications to lower their premiums.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.88 percent from 3.87 percent, with points decreasing to 0.40 from 0.49 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

7--To Save the Euro, Leave It, NY Times

AS the European economic crisis continues to intensify, policy makers are faced with the need to take ever more extreme measures to prevent a financial cataclysm. Tomorrow, European Union leaders will meet in Brussels to discuss the latest proposals: centralizing banking regulation and putting limits on national spending and borrowing.

A better, bolder and, until now, almost inconceivable solution is for Germany to reintroduce the mark, which would cause the euro to immediately decline in value. Such a devaluation would give troubled economies, especially those of Greece, Italy and Spain, the financial flexibility they need to stabilize themselves.

Although repeated currency devaluations are not the path to prosperity, a weaker euro would give a boost in competitiveness to all members of the monetary union, including France and the Netherlands, which is why they might very well choose to remain in it even if Germany were to gradually leave. A resurgence of manufacturing would also allow the vast unemployment rolls of Spain, Portugal, Greece and other countries to begin to decline. The tremendous loss of human capital and human dignity we are witnessing would ease.

8--Lender regulation and the mortgage crisis, VOX

Ever since the recent mortgage crisis, calls for tighter regulation on lenders have been widespread. But would stricter supervision and regulation of lenders have been any use during the frenzied optimism of a boom? This column argues that it might. It shows that lending by the loosely regulated non-bank companies was associated with higher foreclosure during the housing downturn when compared with lending by the more tightly regulated banks....

Overall the findings support the view that more stringent regulations could have averted some of the volatility on the housing market during the recent boom-bust episode. While we do not study the impact of specific regulations, the results of the paper suggest that enhanced supervision, which is what ultimately differentiated banks from non-banks, could be a first step in the right direction. However, enhanced supervision alone is unlikely to be effective at substantially reducing risky lending without additional mortgage-specific regulations that set higher lending standards and eliminate some of the perverse economic incentives that were behind the boom in risky lending.

9--Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap, Bloomberg

10--Principal Reduction Most Effective Type of Mod: Amherst, DS News

11--US Drug War in Honduras Expands as Human Rights Abuses Increase,

12-- Is “Arab Spring” coming to Latin America, RT

13--Corporate profits hit all-time high as wages hit all-time low, Business Insider


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