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Jon Stewart's take on the economy.

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A few stories from across the pond ... From The Times: UK economy heads for ‘horror movie’ BRITAIN is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices, according to a leading forecasting group. ... Peter Spencer, chief economist at the Item club, said: “Both on the high street and in the housing market it is going to get a great

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From the Financial Times: US builders forced to sell off holdings (Hat tip Terry) Demand for new homes on the outskirts of US towns has fallen spectacularly in the last three years, while foreclosures and speculative building have created a far greater supply of homes than there are buyers. At the same time, soaring fuel costs have made the long commute to work that much less attractive. The

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Stu says thanks! From Stu: "I’d like to thank the 885 CR readers who have voted on my form so far. They were a tremendous resource whether complimenting me or challenging me to be better." Check out the 12 cartoons that made the cut: Stu's Real Estate Cartoons

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Several years ago I predicted that the National Debt would reach $10 trillion by the time President Bush left office. For a short period (thanks to the housing bubble), it looked like the deficit would be less than I projected. Now that the housing bust is hitting government revenues, it looks like the $10 trillion projection will be close. The current National debt is $9.518 trillion (see

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From Bloomberg: Fed's Stern Says Rate Rise Can't Wait for Crisis End ``We can't wait until we clearly observe the financial markets at normal, the economy growing robustly, and so on and so forth, before we reverse course,'' Stern, president of the Federal Reserve Bank of Minneapolis, said in an interview today. ... ``We're pretty well-positioned for the downside risks we might encounter from

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From Bloomberg: Agency Mortgage-Bond Spreads Rise as Freddie Mac Ponders Sales The difference between yields on Fannie Mae's current- coupon, 30-year fixed-rate mortgage bonds and 10-year government notes widened 5 basis points to 206 basis points [a four-month high], according to data compiled by Bloomberg. This is still below the spread in March of 238 bps. The increase today is apparently due

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Haven't we been here before? Ah, yes ... Click on graph for larger image in new window. This cartoon was drawn in 1993 by Eric G. Lewis, a freelance cartoonist living in Orange County, CA (used with permission). The following graph puts the cartoon into context. The graph compares real Case-Shiller house prices for Los Angeles and the Composite 10 and 20 Index (10 and 20 large cities). The

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From MarketWatch: Citigroup swings to loss on $7.2 billion write-down Citigroup ... said on Friday that it lost money for the third consecutive quarter after writing down $7.2 billion of investments related to fixed-income weakness and consumer credit woes. ... The consumer area showed worse performance than some other businesses on a quarter-to-quarter level, as the $3 billion second-quarter

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From the WSJ: Mortgage Giant Freddie Mac Considers Major Stock Sale Freddie Mac ... is considering raising capital by selling as much as $10 billion in new shares to investors ... The main buyers for any new-stock issues are likely to be existing shareholders world-wide, according to one person involved in the discussion, adding that a definitive plan hasn't yet been determined. In the short

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From Jon Lansner at the O.C. Register: O.C. office construction plummets 91% Voit Commercial Brokerage reports that construction of O.C. office buildings plunged 90.8% in the second quarter to 325,276 square feet. Last year in the second quarter, 3.5 million square feet was under construction. ... All the added space pushed the second quarter office vacancy rate to 14.46%. A year [ago], vacancies

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Cartoonist Stu Reese has drawn a series of a real estate related cartoons. Here is his main site: Stu's Views. Stu has generously offered to allow CR readers to preview, rate and offer suggestions on his new real estate cartoons. Here is the preview page (removed) with 18 cartoons. This will only be posted for a short period. You guys know real estate - and you know funny too - I'm sure

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Conference Call: (hat tip Brian) all emphasis added Comments on the economy: “While these credit metrics reflect modest credit pressure in the second quarter, there was a more pronounced deterioration in economic indicators. We assume this will translate into additional credit pressure in future quarters causing us to increase our [provisions for losses] in the second quarter. You may recall

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From the WSJ: Write-Downs Push Merrill Lynch Into Red for 4th Straight Quarter Merrill Lynch & Co. posted its fourth consecutive quarterly loss on $9.75 billion in additional write-downs on assets tied to the tanking housing market. ... The negative revenue resulted from $3.5 billion in write-downs on collateralized debt obligations, a $2.9 billion loss related to hedges with financial guarantors

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Update: Here is the Merrill Press Release. (hat tip Dwight) From MarketWatch: Merrill reports quarterly net loss of $4.65 billionMerrill Lynch ... reported a $4.65 billion second-quarter net loss late Thursday as the brokerage firm continued to be hit by write-downs on large mortgage-related exposures. On Capital One: Capital One income falls 40% on drop in U.S. card income Capital One ...

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From DataQuick: Bay Area median price dives below $500K; sales near record low The median price paid for a Bay Area home plunged to $485,000 in June, marking the first time in more than four years that it was below the half-million mark, DataQuick Information Systems reported. The price barometer fell an unprecedented 27 percent from its record level a year ago as more sellers settled for less,

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Mr. Dimon of JP Morgan, via Housing Wire:“Prime [mortgage book] looks terrible,” he told analysts on the call. “And we’re sorry, and there’s nothing else we can say."

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First, the reason overall starts were higher in June was because a pending change in the building code in New York temporarily boosted multi-family starts. See: New York Anomaly Lifts Housing Starts “All the increase in headline starts and permits reflects a rush to begin multi-family construction projects ahead of a change in the N.Y.C. building code.” Ian Shepherdson, an economist at High

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Here is the Philadelphia Fed Index for July activity released today: Business Outlook Survey. Here are a couple key point: Manufacturing is contracting, but not getting crushed like in previous recessions. This is helping to keep the unemployment rate from rising too quickly. Prices are rising. "The prices paid index increased six points, to 75.6, its highest reading since March 1980."

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We had so much fun--I use this word advisedly--with IndyMac and moral hazard yesterday that I have to return to the well. It's a nice deep one. From Bloomberg this morning:July 17 (Bloomberg) -- IndyMac Bancorp Inc.'s collapse may spur withdrawals from banks ranging from First BanCorp in Puerto Rico to Los Angeles-based Nara Bancorp Inc. as customers trim accounts below the $100,000 limit on

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From the WSJ: J.P. Morgan's Net Falls 53%. A few excerpts: Chief Executive Jamie Dimon said he expects "the economic environment to continue to be weak -- and to likely get weaker -- and for the capital markets to remain under stress." He added that "since substantial risks still remain on our balance sheet, these factors will likely affect our business for the remainder of the year or longer."

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The key number in the release was that single-family starts were at 647 thousand in June; the lowest level since 1991. Single-family permits were at 613 thousand in June, suggesting starts will fall even further next month. Multi-family starts is volatile month-to-month, so the headline number for starts increased. Also employment (in residential construction) tends to follow completions.

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Form Bloomberg: China's Economic Growth Cools to Slowest Since 2005 China's economic expansion cooled to the slowest pace since 2005, handing more ammunition to Chinese officials calling for reduced gains by the yuan as the outlook for exports dims. Gross domestic product grew 10.1 percent in the second quarter from a year earlier, down from 10.6 percent in the first ... This isn't much of a

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Reading the Fed minutes today, it appears that as of the last FOMC meeting in June, most FOMC members were once again missing the downside risks to the economy. Chairman Bernanke somewhat corrected that mistake in his testimony over the last two days as he acknowledged the "significant downside risks to the outlook for growth". As of yesterday - before the stock market rally today - market

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Note that foreclosure resales were 41.1% of all resales in June! From DataQuick: Southland home sales drag along bottom Home sales in Southern California continued at their slowest pace in more than two decades last month ... A total of 17,424 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 3.0

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