Friday, January 7, 2011

Massachusetts Bank Bomb

I refuse to even discuss the jobs report this morning because it was so ridiculous.  500,000 people disappeared from the workforce which lowered the unemployment rate down to 9.4%.

Where in the hell did these people go?  Mars?  How did the unemployment rate drop this much when we only created 103,000 jobs? This just wreaks of total desperation.  Let the clowns in Washington report whatever stats they want.  I will wait for revisions.

In case you are curious as to why the market is starting to roll over look no further than this:

"NEW YORK (Reuters) - Wells Fargo & Co and US Bancorp lost a ruling by Massachusetts' top court on Friday that found the banks failed to show they held the mortgages at the time they foreclosed on two homes.


The ruling could cause other foreclosure sales to be invalidated, especially where lenders may not have all of the underlying documentation.

It may also be significant in the realm of securitization, where mortgages are packaged into securities to be sold to investors.

In midday trading, Wells Fargo shares were down $1.03 or 3.2 percent at $31.12, while U.S. Bancorp shares were down 1.3 percent at $25.95.

The KBW Bank Index, which includes both lenders, was down 1.7 percent."

My Take:

This was a Supreme Court ruling which means it can go no further folks.  All along I figured it would be one of the extremely liberal states that blew foreclosuregate wide open.

This will have a rippling effect but the severity of it is unknown.  This ruling potentially has the ability to unravel the banks as their MBS holdings become worthless.  It also opens them up to lawsuits from the pension holders and anyone else that bought these worthless securities.

However, as we have seen before, you can never underestimate what the scumbag banks are able to get done in DC so I will withhold judgment on the fallout of this ruling.

The bank stocks rolled over on the news and the rest of the market then followed.  The Illinois news and the weak jobs report didn't help things either.

Hold on tight folks.  Things are going to get a whole lot more interesting.

7 comments:

Anonymous said...

"Where in the hell did these people go? Mars? How did the unemployment rate drop this much when we only created 103,000 jobs?"

Just so you know, the unemployment rate is calculated by the number of people "looking for work". Thus if you decide not to look for work you dont count towards unemployment.

This makes sense to some degree. If a woman was fired and instead of looking for a job decides to get pregnant and become a full time mom, its unreasonable to count her against the unemployment rolls for the next 20 years.

Still, what likely happens is that people temporarily "give up looking, waiting for a better climate" and when they do, they too are no longer considered "unemployed".

In this case, the 100K added jobs is too small to take down the unemployment rate that much. Thus, the majority of the decline is likely due to people giving up (perhaps permanently like the mom, more likely temporarily like the 2nd case described).

IMO the real important number here is the jobs added, which at 100K gets a "meh". The unemployment number is too fluid for me to take it to seriously.

Anonymous said...

BTW, I should have mentioned, watch what happens when the economy starts adding 200, 300, 400K jobs. More than likely, this will be the signal for those that temporarily gave up looking to start looking again. Thus, I could very easily see a time where unemployment spikes to back over 10%, but thats actually a good thing, because jobs are being added to the economy.

Jeff said...

"Still, what likely happens is that people temporarily "give up looking, waiting for a better climate" and when they do, they too are no longer considered "unemployed"

Anon

I hear ya.

The problem is these people end up losing their job skills which makes it even tougher to find work.

Also, I'd like to know where this hiring is going to come from. I see no industry that's in growth mode other than energy perhaps.

These people are going to be "waiting" a long time.

getyourselfconnected said...

I saw someone call is a MASS murder of MBS! Too funny. This will get fixed pronto I imagine by a new law. Jobs numbers were terrible again, but hope springs eternal it seems.

Anonymous said...

"Also, I'd like to know where this hiring is going to come from."

I have no idea. I was only trying to point out wrt the original question:

"How did the unemployment rate drop this much when we only created 103,000 jobs?"

The response above is your answer...

Jeff said...

anon

Thanks. I think it's going to be an interesting to see how this all plays out.

Get

Thats funny. HOpe always springs eternal on WAll St. I think it's going to eventually turn into anger as things don't get better.

Time will tell.

Anonymous said...

Unlike the big-name financial institutions, local banks have an interest in seeing their communities grow. The reason for this is that as the employment rate goes up so too does the housing market. That means more mortgages, savings/checking accounts, etc. Find a local Massachusetts Bank where valuable benefits are offered that vary from low interest loans to free or discounted services.