Greenspan Should Have Seen Housing Crisis, Burry Says in Times - Bloomberg.com

A day late and a dollar short.

Where was this guy for the past 20 years?

Greenspan's been a disaster since he got the job, back in 1987.

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San Francisco

April 5 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan should have foreseen the collapse of the U.S. housing market and warned the public, one of the most prominent bettors against the subprime market wrote in a New York Times commentary yesterday.

"He should have seen what was coming and offered a sober, apolitical warning," Michael Burry, who was head of Scion Capital LLC, wrote in the Times. "Everyone would have listened; when he talked about the economy, the world hung on every single word."

"Unfortunately, he did not give good advice," Burry said. In 2005, "Mr. Greenspan trumpeted the expansion of the subprime mortgage market" at a time when "the tide was about to turn," Burry wrote.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZzzeaYVIPME&pos=7

Bond Buyers Demand Record Downgrade Protection: Credit Markets - Bloomberg.com

This is a cheap way to lower the costs of borrowing.

The problem is not ratings downgrades, but rather rising interest rates.

As inflation takes hold, rates are going up.

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San Francisco

April 5 (Bloomberg) -- Bonds with built-in protection against rating cuts are making up a record share of debt issues as investors hedge against a slowdown in the economic recovery.

Anheuser-Busch InBev NV, the brewer of Budweiser and Stella Artois, is among companies issuing so-called step-up bonds, whose interest increases if a borrower is downgraded. Sales surged to $37.3 billion in March, or 12.4 percent of all debt issued, according to data compiled by Bloomberg. Most of the notes are sold in the U.S., where almost half of bonds rated as so-called junk or on the cusp of non- investment grade include the protection.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aa4m61Wu94ys&pos=3

How Texas Escaped the Housing Crisis - ABC News

I'll be damned.

It's written in the state constitution: no cash-out refis.

I'd prefer to change Fannie and Freddie's underwriting guidelines.

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San Francisco

But there is a broader secret to Texas's success, and Washington reformers ought to be paying very close attention. If there's one single thing that Congress can do now to help protect borrowers from the worst lending excesses that fueled the mortgage and financial crises, it's to follow the Lone Star State's lead and put the brakes on "cash-out" refinancing and home-equity lending.

http://abcnews.go.com/Business/TheBigMoney/texas-escaped-housing-crisis/story?id=10243782

Construction Spending in the U.S. Decreases to Seven-Year Low - Bloomberg.com

It will be a long time before commercial real estate recovers.

The world has changed, and the use of commercial space is changing.

Stay away.

Residential will do just fine.

Everybody needs a home, whether they rent or buy.

Maybe it's time to buy an S&L - again.

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San Francisco

April 1 (Bloomberg) -- Construction spending in the U.S. fell in February to the lowest level in more than seven years, signaling this part of the economy remains in a recession.

The 1.3 percent decrease to $846.2 billion, the lowest since November 2002, followed a revised 1.4 percent drop in January that was more than twice as large as previously estimated, Commerce Department figures showed today in Washington.

Housing will be slow to rebound as foreclosures climb and Americans are uncertain about job prospects. At the same time, commercial and government building are also slumping, restrained by a lack of credit and swelling budget deficits.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aK4orcqqi590

Payrolls in U.S. Rose 162,000 in March; Unemployment at 9.7% - Bloomberg.com

Wow.

It's not a big number, but it's earlier than even we thought.

Non-farm payrolls started increasing in QI 2010. Make a note.

The bonds are taking this hard, and are breaking minor support.

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San Francisco

April 2 (Bloomberg) -- Employment in the U.S. increased in March by the most in three years and the unemployment rate held at 9.7 percent as companies gained confidence the economic recovery will be sustained.

Payrolls rose by 162,000 last month, less than anticipated, figures from the Labor Department in Washington showed today. The March increase included 48,000 temporary workers hired by the government to conduct the 2010 census, as well as job gains in manufacturing and health services.

The government revised January and February payroll figures up by a combined 62,000, putting the March gain at 224,000 after including the updated data. Caterpillar Inc. is among companies adding staff, indicating the recovery that began in the second half of 2009 is starting to foster the jobs needed to lift consumer spending and sustain the expansion.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aehAkiag49Hc

U.S. Economy: Factories Drive Growth as Orders Rise (Update1) - Bloomberg.com

Factory orders are an important leading indicator.

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San Francisco

Manufacturers are driving the U.S. economic recovery as the real estate industry struggles to recover from recession, hurting employment, reports today showed.

Factory orders rose 0.6 percent in February after surging 2.5 percent, the Commerce Department said in Washington, while businesses responding to a survey by the Institute for Supply Management-Chicago Inc. grew for a sixth straight month in March. Figures from ADP Employer Services showed an unexpected 23,000 drop in company payrolls this month, led by a slump in construction jobs.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aX8QHc29VHhY

Fed Reveals Bear Stearns Assets It Swallowed in Firm’s Rescue - Bloomberg.com

You'll want to read all of this article.

It shows the types of assets in the Fed's portfolio, and for which they paid hard cash.

Interestingly, they own some CDSs that made them some money.

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San Francisco

April 1 (Bloomberg) -- After months of litigation and political scrutiny, the Federal Reserve yesterday ended a policy of secrecy over its Bear Stearns Cos. bailout.

In a 4:30 p.m. announcement in a week of congressional recess and religious holidays, the central bank released details of securities bought to aid Bear Stearns's takeover by JPMorgan Chase & Co. Bloomberg News sued the Fed for that information.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZA_RWY3IJ2I&pos=3