TGIF!
Stocks are down today following the AIG news as expected.
I mentioned the Japan announcement in the comments section last night but I wanted to spend some time on it this morning. It looks like Japan is following the SEC in terms of forcing the banks to provide details on their assets and their subprime losses.
A Japanese regulator told Bloomberg the following yesterday:
"May 8 (Bloomberg) -- Japan's Financial Services Agency has called on major banks to disclose details of assets and losses related to subprime mortgages before they announce full-year earnings, Nikkei English News reported, without saying where it got the information.
The Japanese financial regulator has asked banks that hold collateralized debt obligations to provide asset balances for the subprime-related portions as well as details on guarantees attached to their holdings, the news service said.
Life and non-life insurance companies would supply the information by the time they report earnings for the first half of the year, Nikkei said. The FSA also plans to ask major brokerages that have already released full-year financial statements to make disclosures when they post first-quarter results, Nikkei said.
The FSA will use disclosure guidelines compiled by the Financial Stability Forum, which consists of monetary authorities from Japan, the U.S. and Europe, the news service reported. The FSA may take steps to urge improvements if financial institutions fail to comply, Nikkei said."
My Take:
This is another positive step towards providing the transparency that we need in order to start recovering from the housing debacle. Of course when the losses are announced its going to be painful for the markets.
Japan already knows what happens when you fail to force the banks to reveal their losses. The Japanese regulators failed to force them to become transparent in the 1990's, and the result was a lost decade where their stock market went down from 38,000 to the 13,000 level where it now stands.
The Japanese lost all faith in the banks and financial markets after the Nikkei plummeted over 60%. Their interest rates have been at zero for years up until about a month ago(inflation!) because of the lack of demand for lending due to lack of trust, and the pain of being burned so badly financially. It destroyed their currency and housing still is not back to where it was before the bubble burst almost two decades ago
Lets just hope our government also learns from this mistake and follows through with what the SEC announced on Wednesday. This cleansing of the system is going to hurt but it will be positive.
Economists: Rebate checks won't help
Economists are not expecting the rebate checks to be much of a help for the economy in the second quarter.
May 9 (Bloomberg) -- The Bush administration's tax rebates won't prevent the U.S. economy from stagnating in the second quarter as soaring food and fuel bills hurt consumers, a Bloomberg News survey showed.
``Consumers have gone into the bunkers,'' said Ken Goldstein, an economist at the Conference Board, the New York- based research group that tracks confidence. They ``fear that their budgets are getting squeezed tighter and tighter.''
The economy will grow at a 0.1 percent annual rate from April to June, the least since the 2001 recession, according to the median estimate of 54 economists surveyed from May 2 to May 8. Household spending may rise at a 0.5 percent pace, half the first quarter's gain and the smallest increase in 17 years.
``The economy continues to get tougher and the paycheck cycle is more pronounced for customers than in past months,'' Eduardo Castro-Wright, chief executive officer of Wal-Mart's U.S. stores, said yesterday in a statement. ``As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past.''
My Take:
Wow this is a shocker!..Yeah right. This was a dumb idea from the beginning. The government might as well just grabbed $150 billion and just threw it out the window.
What will $600 get you in this inflation ridden economy? 5 Tanks of gas for the SUV and a few cases of beer? Consumers are in debt up to their eyeballs so I expect the majority of this to go towards paying down debt, or into the savings account as people watch prices rise everywhere.
The end of the month drop off that Walmart talks about above is starting to get a lot of attention on the street. This is not a good sign folks. It means many are starting to run out of money before the end of the month and have to cut back spending dramatically.
This is another sign of weakness in the economy. I had a friend that went to TJ Maxx the other day and said it was a mad house. I guess the days of finding deals and wearing polyester clothes from a discount retailer are back.
Look at the bright side, at least you get to go back to that beautiful home that takes 50% of paycheck every month! You can thank Wall St. for being in this situation.
The greed of the pigmen the last 7 years has destroyed our standard of living and put our economy on the verge of collapse. We will be paying the consequences for years.
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