The US government has finally decided to nationalise the two home loan giants, Fannie Mae and Freddie Mac. Readers will remember I forecast this would be necessary a year ago, in a letter to the Financial Times. I argued then that ‘a buyer of last resort, such as the Federal government, would probably now need […]
Chemicals and the Economy
US house prices keep on falling
US house prices, according to today’s S&P/Case-Shiller Index, are still falling quite sharply. As shown in the chart, they are now down 17% versus last year. The key influence, according to S&P, is that ‘the markets that were the high-flyers during the recent real estate boom continue to be the ones that are leading the […]
High inflation, or global downturn?
Central bankers had it easy over the past decade. Now they are going to have to earn their money. Inflation is rising rapidly, and growth rates are falling. But unfortunately, as I first noted back in March, they still seem to have differing ideas about what policies will best counter these twin challenges.
US house prices carry on falling
Every month, it seems, the US housing market gets worse. Spring should have provided some respite, as it is the peak time for sales. But instead, as the chart shows, the benchmark S&P/Case-Shiller house price index fell again to a new record low, and is now 14% below this time last year. ‘There are very […]
Budgeting for a downturn
The ‘consensus forecast’ for 2008 is very optimistic, as I commented in my post-EPCA note. It says oil will remain at $70/bbl, that debt market problems will be contained, and that petchem margins will remain at 2007 levels. This is unusual, as the consensus is normally a base case scenario, with upside and downside variants. […]
Thursday’s child has far to go
The past two Thursdays have seen extraordinary things happen in financial markets. Last Thursday, BNP Paribas suspended redemptions on 3 of its funds, forcing the ECB to inject €95bn of liquidity into the financial system. Yesterday, the largest US mortgage lender, Countrywide Financial, had to raise an emergency €11.5bn loan in order to continue trading, […]
Every mania has its illusion
All the world’s media are now carrying accounts of the ‘liar loans’ and fraud that has accompanied the growth in US mortgage lending in recent years. How did this come about? All manias gain their strength from a widely believed ‘fact’ that turns out to have been an illusion. With subprime mortgage loans, the ‘fact’ […]
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