Tag Archives | US subprime crisis

China’s lending problems begin to worry wider world – too late

Suddenly, people are starting to talk about China and the risks it creates for the global economy.  There is a lifecycle to the way that such issues develop in the general consciousness, as John Mauldin has observed.  And so this development suggests that we are now well along the process, as highlighted in the chart above: […]

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Housing debt challenges the American Dream

The US housing market collapse has wiped out $6tn in wealth since it began in 2006. But even today, little is being done to solve the critical issue – that homeowners took on too much debt, which will never be repaid. As a result, the situation continues to get worse, not better. And some influential […]

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US wages continue to stagnate

The US Fed’s move to launch its QE2 Lifeboat continues its policy of focusing on measures to boost liquidity. Yet as the blog has long argued, today’s problems are based on a lack of solvency not liquidity. Therefore it worries that the Fed’s efforts are likely to miss the mark, again. The above slide, based […]

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No news on Obama’s plans for Fannie and Freddie

Its nearly 18 months since the US government nationalised the 2 home loan giants, Fannie Mae and Freddie Mac, at the start of the September 2008 financial crisis. Today, their current obligations amount to $3.7trn – larger that the total UK economy. And the Wall Street Journal notes that their cumulative losses on home loans […]

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Insolvent US banks can’t lend

Many US policymakers are still in denial about the underlying causes of the downturn. They argue it is due to a lack of liquidity, and are thus encouraging ‘hot money’ to flood into financial markets. But the new ‘bubbles’ created by this wishful thinking, such as today’s $80/bbl oil prices, are making the underlying problem […]

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Just saying ‘No’

I noted back in February that US banks were tightening lending standards into the housing sector. Now they are doing the same with business loans. The New York Times reports today that businesses around the country are finding it more difficult to borrow. As a result, companies that depend on bank financing are having to […]

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Monday, Monday

Monday, Monday, can’t trust that day Monday, Monday, sometimes it just turns out that way Oh Monday morning, you gave me no warning of what was to be These ‘Mamas and Papas’ lyrics certainly sum up Monday this week: • Oil prices went to another record high, just under $140/bbl, as traders worried about the […]

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Central bankers recognise a ‘bubble’

For years, former US Fed Chairman Alan Greenspan said that it was impossible to recognise an ‘asset bubble’ until after it had burst. Thus the dot-com bubble, and the US housing bubble, were able to grow without central bank interference. Now however, Fed Governor Frederic Mishkin has broken ranks and provided this detailed description of […]

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USA adds $746bn to support housing

Housing, as we know, is an absolutely key market for the chemical industry, both directly and indirectly. Directly, each new house accounts for $16k of chemical demand, whilst indirectly, years of rising western house prices has allowed consumers to cash out their gains to spend on Asian imports. Now this virtuous circle has turned with […]

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Asian chemical markets can’t decouple

Its 2 months since I was last in Asia. It is clear that earlier optimism about the region’s resilience in the face of a possible US recession in 2008 has begun to disappear. Typical is the comment by Kanit Saengsubhan of the Thai Fiscal Policy Institute. He sees Thai growth in 2008 falling below earlier […]

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