Tag: economy

John Paulson’s Interview With The Financial Crisis Inquiry Commission | zero hedge

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John Paulson, head of the hedge fund that made the ‘Greatest Trade Ever Made’ netting billions in just one day by shorting the subprime real estate finance market, testified before the Financial Crisis Inquiry Commission. This summary of his testimony makes interesting reading and is instructive of the forces at work in the collapse

“If ACA and IKB or Moody’s didn’t like the ~100 subprime reference securities we helped pick for the deal, they could have…not bought the deal or – get this – replaced them with ones they liked better…I couldn’t have gone short if they hadn’t gone long, they agreed on the reference portfolio, it got rated, boom, done” It sounded like he just wanted to say something like “Hello morons?! This is how Finance works, HELLOOO!!!”

The article also contains a link to audio of the testimony.

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Fourth Quarter 2010 Economic Report Card | Nancy D. Sidhu

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According to “advance” estimates of the Bureau of Economic Analysis released last week, the U.S. economy grew by +3.2% last quarter (seasonally adjusted annual rate or SAAR).  This marked the sixth consecutive quarterly increase since the recession ended in mid 2009.  Furthermore, the level of economic activity has finally overtaken that recorded in the last quarter of 2007 (the recession officially began in December 2007).

Progress was evident in many sectors of the economy during the fourth quarter:

Continue reading “Fourth Quarter 2010 Economic Report Card | Nancy D. Sidhu” →

RealtyTrac’s Sharga: Banks still holding 70% of REO from market « HousingWire

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The major kink in the housing market’s recovery, and for the macro economy overall, is the work left to be done on homes currently in the foreclosure process, those about to enter it and the amount of repossessed homes the banks must shed. Striking a proper balance on how to mange this shadow inventory of foreclosures is vital for the banks to show a healthy balance sheet while not dumping too many distressed properties onto the market, further dragging down home prices and values.

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Thanks to Victoria Kuo for bringing this article to our attention- Ed.

Special Report: The haves, the have-nots and the dreamless dead | Reuters

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Wealth concentration. Pay attention. This will become the new metric.

Kapur told clients in 2005 that the United States and a handful of other economies were developing into “plutonomies” where the wealthy few powered economic growth and consumed much of its bounty, while the “multitudinous many” shared the leftovers.

Plutonomies come around only once or twice a century, he argued — 16th century Spain, 17th century Holland, the Gilded Age. The last time it happened in the United States was during the “Roaring 1920s”.

There was money to be made by buying shares of luxury companies that made toys for the rich, he told clients, suggesting a basket of stocks that included upscale retailer Burberry and luxury home builder Toll Brothers.

“When I presented this to clients, they said, ‘Okay, this is interesting because you’re telling me what happened in the 1920s is happening right now, and you obviously know what happened after 1929, right?’,” Kapur said in an interview.

His response? That can’t happen again because we know better now.

“To be perfectly honest…. I certainly didn’t think it would all melt down in 2007. I’d be lying if I said that.”

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