Morris family house update: Take it, Ty! The exterior is done

The "Real" Economy Is Dying: Q4 "Going to Be a Bloodbath," Whalen Says
Posted Oct 05, 2009 01:49pm EDT by Aaron Task in Investing, Recession, Banking
Related: XLF, SKF, FAS, FAZ, MS, GS, HCBK
Stocks rallied to start the week thanks to a better-than-expected ISM services sector report and a Goldman Sachs upgrade of big banks, including Wells Fargo, Comerica and Capital One.
But all is not right in either the economy or the banking sector, according to Christopher Whalen, managing director at Institutional Risk Analytics. In fact, Whalen says most observers are drawing the wrong economic conclusions from the stock market's robust rally.

"Why is liquidity going into the financial sector? It's because the real economy is dying [and] everyone is fleeing into the stocks and bonds because they're liquid at the moment," Whalen says. "That's not a good sign."

The banking sector's assets shrunk by about $300 billion per quarter in the first half of 2009, a sign of banks hoarding cash in anticipation of additional future losses, according to Whalen. "The real economy is shrinking because of a lack of credit."

The shrinkage will continue into 2010, Whalen predicts, suggesting the banking sector hasn't yet seen the peak in loan losses. Institutional Risk Analytics forecasts the FDIC will ultimately need $300 billion to $400 billion to recoup losses to its bank insurance fund.(In other words, the $45 billion the FDIC sought to raise last week by asking banks to prepay fees is just a drop in the bucket.)

"Investors should think about this because the fourth quarter in the banking industry is going to be a bloodbath," says Whalen, who believes smaller and regional banks like Hudson City Bancorp may come into favor vs. larger peers, which have dramatically outperformed since the March lows.

"When you see the markets rallying when the real economy is shrinking that tells you this [recovery] is not going to be very enduring," Whalen says.

In this regard, Whalen finds himself in philosophical agreement with Nouriel Roubini, George Soros and Meredith Whitney, among other "prophets of the apocalypse" who've once again been raising red flags in recent days.
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It is failing because it is being run on principles and plicieis left over from Bushco. If Mr. Obama were able to mold this himself from the start, then it would be a magnificent success - just like every other program he has put in place.

badgerone wrote:

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Just like cash for clunkers right...Thought I told you to lay off the Booze

Cash for Clunkers was a huge success. It was the shot in the arm that the auto industry needed at a time they needed it most. Same for the $8,000 home buying incentive. That is what is propping up the housing industry right now and allowing them to show positive numbers.

Admit it. Mr. Obama is the light at the end of the tunnel left over from the Bushco era.

ACORN is going to give me a house...

The best way to increase jobs is to increase taxes on the new businesses on Payne Ave....Take those profits and use them to create "Grarage Sale inspector" positions....and provide cable Tv allowances.....lol

badgerone wrote:

<quoted text>
Just like cash for clunkers right...Thought I told you to lay off the Booze

Cash for Clunkers was a national success.
Pull your head from your *** once in a while, take a fresh breath....

Welfare Wanda wrote:

ACORN is going to give me a house...

Sorry but, ACORN has no Minnesota contracts and by the way, your an idiot!

IrishMN wrote:

<quoted text>
Cash for Clunkers was a huge success. It was the shot in the arm that the auto industry needed at a time they needed it most. Same for the $8,000 home buying incentive. That is what is propping up the housing industry right now and allowing them to show positive numbers.
Admit it. Mr. Obama is the light at the end of the tunnel left over from the Bushco era.

Guess you missed the latest auto data, auto sales have CRASHED. All cash for clunkers did was move people that were going to buy a car later and bribed them to buy it now. Since the bribe was removed, the sales went back to dismal territory and removed quite a few cars from service that lower income people would buy as used cars.

The housing bribe will work the same way.

It's a false economy and all it does extend the problem.

It is time for all homeowners to reconsider making their mortgages payments even if they can afford to. Big Business and Big Government got us in this mess and when the bonfire got to big and flamed up on Wall Street they famous duo got together once again to save themselves at our expense.
We the people, need to give the power to what is left of our honest elected and appointed officials to take them on.
We have all been lied to long enough.