Monday, December 31, 2007

Happy New Year!!

Bloomberg (12.31.07):
"Defaults on privately insured U.S. mortgages rose 35 percent in November from the same month last year, an industry report today showed, adding to evidence the U.S. housing slump is deepening."

Defaults on Insured Mortgages Rise 35% to Record

The two biggest mortgage insurance companies in the US [MGIC Investment Corp. and PMI Group Inc.] both reported losses for the 3rd quarter of 2007, "their first unprofitable quarter as public companies. MGIC sold shares to the public in 1991, PMI in 1995."

And if that wasn't enough. Bloomberg (12.31.07):

"Sales of existing homes in the U.S. matched a record low in November, a sign the housing recession will continue to weigh on the economy in 2008, economists said before a report today."

U.S. November Existing-Home Sales Probably Matched Record Low

Meanwhile, back at the ranch. The Observer (12.30.07):
"John Thain, the new chief executive of Merrill Lynch, is this weekend in talks with Chinese and Middle Eastern sovereign wealth funds that could lead to the sale of another big stake in the US bank in a desperate bid to raise capital, according to sources in London and New York.

The discussions come just days after Thain was forced on Christmas Eve to sell $4.4bn (£2.2bn) of stock to Singapore investment firm Temasek [ed. - at a very nice discount] as part of a wider plan to raise some $7.5bn.

Merrill seeks more funds to avoid crisis

"Merrill Lynch has already taken an $8bn hit related to sub-prime investments, but Wall Street fears that the bank's problems could go far deeper. 'Thain is desperately seeking an additional infusion of foreign capital to bolster Merrill's balance sheet,' said one source. 'It could be done by selling shares or other assets to raise cash.'"

The reason is there are more writedowns on the way. "Fears are mounting that Merrill Lynch will be forced to write down between $10bn and $15bn worth of assets related to CDOs - so called collateralised debt obligations - when it reports financial results next month."

Ahhh, those thrilling days of yesteryear. MSNBC (10.09.06), via Krugman, via Eschaton:

"The U.S. housing market appears to be emerging from its recent travails and the 'worst may well be over,' former Federal Reserve Chairman Alan Greenspan was quoted as saying on Friday."

Greenspan: Housing market worst may be over

Alan "The Maestro" Greenspan: "the story of the central banker many consider to be the nation's greatest ever".

Then again.

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