Category Archives: Economic fundamentals

You Didn’t Read it in the Journal: Profit Outlook Lousy

Is the Wall Street Journal averse to bad news? That may seem a bizarre question to ask about any news organization, since by definition, most news is bad news. But we’ve noted before that the Journal has seemed particularly loath to pick up on certain stories that were covered aggressively in the Financial Times, such […]

Unpaid Condo Fees on the Rise

Calculated Risk pointed us to a Washington Post article that highlighted the sharp increase in member defaults in condominiums and other homeowners’ associations. It’s yet another sign that the troubles we are seeing in the housing market aren’t simply subprime related, but indicative of the unwinding of a broader phenomenon, namely, the unwinding of a […]

"How Does This Recovery Stack Up?"

This post, “Current recovery great for profits, poor by most other measures,” by Josh Bivens at the Economic Policy Institute, speaks for itself: Recent data regarding fourth quarter (2006) growth in U.S. gross domestic product (GDP) allows us to examine how the current recovery, now entering its fifth year, stacks up against the five other […]

Larry Summers’ Grim View of Housing and Its Impact on Markets

This story in today’s Financial Times, “As America falters, policymakers must look ahead,” is remarkable because, as far as I can tell, it is the first time a prominent economist has come out and said the unwinding of the housing bubble is likely to have nasty consequences (actually, take that back, Paul Krugman had a […]

Belated Take on Jim Rogers’ Prediction of Housing Market Meltdown

A couple of days ago, we took a dim view of an “alarmist” (and more important, inaccurate) analysis of alleged real estate losses at commercial banks. The reason we took issue with it was that is was wrong on several critical counts, and its conclusion was therefore off base. We use the word “alarmist” with […]

Optimists and Pessimists on Subprimes and the Markets Generally

As readers may recall, Felix Salmon posted a very critical take, “Is there a looming crisis in the mortgage market?” on Gretchen Morgenson’s New York Times story, “Crisis Looms in Mortgages.” We parsed the two stories, drawing on other sources, in our “Reactions to New York Times Mortgage Market Story.” Since then, the markets took […]

The Tinkerbell Market

One of today’s lessons is to have greater courage in my convictions. In a number of earlier posts (such as “The Rising Tide of Liquidity,” part 2 and part 3 of the same, “Where Has the (Perception of) Risk Gone“) I pointed to how toppy the markets have been, and how much capital has flowed […]

Parsing Greenspan Vs. Bernanke

A good article at Bloomberg, “Bernanke, Greenspan Disagree on Impact of Corporate-Profit Peak,” takes a stab at explaining why, personal issues aside, why the current and former Fed chairman are saying different things about the outlook for the economy. In a nutshell, “It’s the profit margins, stupid.” Corporate profit margins have hit a level unequalled […]

Housing Recovery? What Housing Recovery?

One long-standing skeptic about the housing market is Nouriel Roubini of RGE Monitor. You have to sign up for premium content to get his full story (he does give you an initial free peek), but you can get the drift of the gist from his synopsis, “The housing market is still far from bottoming out:” […]

Surprisingly Strong Words from Martin Wolf

As you may well know, Martin Wolf is the Financial Times’ award winning economics editor and their lead economics commentator. He is thoughtful, measured, articulate, and takes far greater pains than many of his peers not to overstate his data. So it was stunning to see at the top of the home page of the […]

It’s the Fundamentals (Stupid)

We aren’t saying that the market upheaval of last week was caused by fundamentals. It’s hard ex post facto to attribute an unwinding to any one event, or set of events, and in this case, there are many possible culprits. If we had to attribute it to any simple set of causes, it would be […]

Market Fatigue ("This Time It’s the Same")

Here it is, Sunday evening. The Asian markets are opening down. I don’t know about you, but I am already tired of the events of last week. They don’t appear to be ending anytime soon, despite the attempts at reassurance by various people in positions of authority. And no, I didn’t take a beating. It’s […]

What is the Fed Up To?

On the one hand, it’s a relief that the stock markets in the US stabilized today, although the Dow recovering only a bit more than 1/10 of its prior day tumble is hardly a rousing vote of confidence. On the other hand, we have to scratch our heads as to how even this wee bit […]

What Next?

Oooh, if you read DealBreaker.com, it was really miserable to be a trader in the middle of the carnage yesterday. But it’s hard to muster too much sympathy when you recall that the average pay at Goldman last year was just over $620,000. The real test of how serious this really is isn’t simply how […]

Banks May Be Underreserved

The Wall Street Journal reported today, in “No Worries: Banks KeepingLess Money in Reserve,” that banks have been lowering their reserves for loan losses to the point where regulators are now beginning to question whether they are adequate. Now this isn’t exactly surprising. Banks, despite their reputation for being conservative, follow the herd. And it’s […]