Current mood:	busy
Entry tags:	economics

An econ post yay
Here, have a credit-market potpourri, before I get back to music stuff:

No more 100% LTV mortgages in Great Britain, which is not immune from the credit crunch and housing downturn. Meanwhile, Washington Mutual is getting out of the wholesale mortgage business entirely. They were a major wholesaler, so that's going to put another crimp on lending.

One of the current responses (this one by Rep. Mark Kirk (R-IL)) is HR 5649, which nationalises $300B in mortgage debt. Read that again. US$300 billion:

6.A.1) AUTHORITY- The Corporation may issue bonds in an aggregate amount not to exceed $300,000,000,000, which may be sold by the Corporation to obtain funds for carrying out the purposes of this Act, or exchanged as hereinafter provided.

It also forgives underwater portions of loans acquired, lets people pick random-ass payment schedules, and all sorts of junk. It also authorises equity loans. Damn, that's a lot of new debt, and damn, that's one big hunk of nationalisation. But it is the sort of large-scale intervention the IMF wants, only it wants it globally. Hm, difficult.

Incidentally, pending home sales fell more than expected again in February. Boston Fed president Eric Rosengren is shocked! Shocked! that housing hasn't recovered yet.

Auction-rate securities auctions continue to collapse as well. Rates for municipalities are going through the roof, which is bad; Jefferson County, Alabama is desperately trying to avoid the largest government bankruptcy in history. Dole Foods and the Tribune Company are having to draw down on bank lines to avoid default. That's also bad. Student loans are facing more troubles as Education Resources Institute Inc. files Chapter 11. They're a student loan guarantor, reportedly a large one; bad again. But you are starting to see some more credit movement, even if it's discounted nontrivally. (Later reports put that at 85¢/$1, rather than 90¢.) And the commercial real estate bond spreads are, while still very high, out of crazytown. At least, the higher-rated tranches. That's good, too; we'll see whether it lasts.

But overall, the CEO of Morgan Stanley says things are the worst he's seen in 40 years. Alan Greenspan sees that and raises him a decade to 50 years. Oh, and oil bounced off a new intraday record of $112.21/barrel before closing at an astronomical $110.87. I'm already seeing $4/g for diesel; it looks like regular unleaded won't be that far behind.