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I have warned my readers about following myths and legends versus reality and facts several times in the past, particularly as it applies to Goldman Sachs and what I have coined "Name Brand Investing". Very recent developments from Senator Kaufman of Delaware will be putting the spit-shined patina of Wall Street's most powerful bank to the test. Here is a link to the speech that the esteemed Senator from Delaware (yes, the most corporate friendly state in this country). A few excerpts to liven up your morning...

Mr. President, last Thursday, the bankruptcy examiner for Lehman Brothers Holdings Inc. released a 2,200 page report about the demise of the firm which included riveting detail on the firm’s accounting practices.  That report has put in sharp relief what many of us have expected all along:  that fraud and potential criminal conduct were at the heart of the financial crisis.

...  Only further investigation will determine whether the individuals involved can be indicted and convicted of criminal wrongdoing.

I have warned my readers about following myths and legends versus reality and facts several times in the past, particularly as it applies to Goldman Sachs and what I have coined "Name Brand Investing". Very recent developments from Senator Kaufman of Delaware will be putting the spit-shined patina of Wall Street's most powerful bank to the test. Here is a link to the speech that the esteemed Senator from Delaware (yes, the most corporate friendly state in this country). A few excerpts to liven up your morning...

Mr. President, last Thursday, the bankruptcy examiner for Lehman Brothers Holdings Inc. released a 2,200 page report about the demise of the firm which included riveting detail on the firm’s accounting practices.  That report has put in sharp relief what many of us have expected all along:  that fraud and potential criminal conduct were at the heart of the financial crisis.

...  Only further investigation will determine whether the individuals involved can be indicted and convicted of criminal wrongdoing.

Both the number of workers filing new applications for unemployment insurance and producer prices unexpectedly surged, dealing a setback to hopes the economy was showing a strong recovery.

Hmmm... What happens when wages and earning assets go down in value as input prices increase? I have warned of the stagflationary scenario several times in the past as the most likely outcome of the battle between the deflation camp and the inflation camp. See:

• Jobless Claims, Inflation Jump as Economy Wobbles

Both the number of workers filing new applications for unemployment insurance and producer prices unexpectedly surged, dealing a setback to hopes the economy was showing a strong recovery.

Hmmm... What happens when wages and earning assets go down in value as input prices increase? I have warned of the stagflationary scenario several times in the past as the most likely outcome of the battle between the deflation camp and the inflation camp. See:

First, a quick news scan:

• Dubai Debt Delays Revive Fear of Financial Crisis
• US Markets Bracing for Selloff on Dubai Debt Worries
• Stocks Fall as Treasuries, Yen, Swaps Rise on Dubai Attempt to Delay Debt
• Yen Strengthens to 14-Year High, Prompting Speculation Japan to Intervene
• Fujii Says Japan May Contact U.S., Europe After Yen's Jump to 14-Year High
• Abu Dhabi Commercial Bank Is Said to Be Owed $1.9 Billion by Dubai World 
• Treasuries Jump on Demand for Safer Assets After Dubai Asks to Delay Debt
• Sony, Toyota, Japanese Exporters Brace for `Breaking Point' as Yen Surges
• Japan's Hirano Says Rapid Currency Moves Are `Undesirable' as Yen Rallies (you betcha, reference the JPM links which highlight interest rate and currency exposure for JPM below)

My regular readers should remember my warnings on the currency trade risks (Japan's Hirano can testify), and interest rate derivative concentrations (let's see what happens to the counterparty daisy chain if Dubai defaults): "The Next Step in the Bank Implosion Cycle???". As excerpted:

Even more alarming is some of the largest banks in the world, and some of the most respected (and disrespected) banks are heavily leveraged into this trade one way or the other. The alleged swap hedges that these guys allegedly have will be put to the test, and put to the test relatively soon. As I have alleged in previous posts (As the markets climb on top of one big, incestuous pool of concentrated risk... ), you cannot truly hedge multi-billion risks in a closed circle of only 4 counterparties, all of whom are in the same businesses taking the same risks.

Click to expand!

First, a quick news scan:

• Dubai Debt Delays Revive Fear of Financial Crisis
• US Markets Bracing for Selloff on Dubai Debt Worries
• Stocks Fall as Treasuries, Yen, Swaps Rise on Dubai Attempt to Delay Debt
• Yen Strengthens to 14-Year High, Prompting Speculation Japan to Intervene
• Fujii Says Japan May Contact U.S., Europe After Yen's Jump to 14-Year High
• Abu Dhabi Commercial Bank Is Said to Be Owed $1.9 Billion by Dubai World 
• Treasuries Jump on Demand for Safer Assets After Dubai Asks to Delay Debt
• Sony, Toyota, Japanese Exporters Brace for `Breaking Point' as Yen Surges
• Japan's Hirano Says Rapid Currency Moves Are `Undesirable' as Yen Rallies (you betcha, reference the JPM links which highlight interest rate and currency exposure for JPM below)

My regular readers should remember my warnings on the currency trade risks (Japan's Hirano can testify), and interest rate derivative concentrations (let's see what happens to the counterparty daisy chain if Dubai defaults): "The Next Step in the Bank Implosion Cycle???". As excerpted:

Even more alarming is some of the largest banks in the world, and some of the most respected (and disrespected) banks are heavily leveraged into this trade one way or the other. The alleged swap hedges that these guys allegedly have will be put to the test, and put to the test relatively soon. As I have alleged in previous posts (As the markets climb on top of one big, incestuous pool of concentrated risk... ), you cannot truly hedge multi-billion risks in a closed circle of only 4 counterparties, all of whom are in the same businesses taking the same risks.

Click to expand!

Here is the short list of REITs that I have been promising subscribers for the last week:  Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb. I plan on releasing a full forensic report this week (providing it passes the QA check before Friday) which will actually include property level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.

Over two years ago I forecasted a land recession in this country. I featured the work of a guest blogger whom I respect and I believe this is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.

For those who are just starting to follow round two of my commercial real estate analysis, this is what has led us to this point:

• Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals?: The divergence of market prices from fundamentals has reached, if not surpassed, the legendary Dot.Com levels
• Re: Commercial Real Estate and REITs - It's About That Time, again...: self explanatory
  
• Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!): The sell side pump and dump scheme, exposed! 
• I am still developing my REIT thesis: on the redevelopment of the Thesis
• Bad CRE, Rotten Home Loans, and the End of US Banking Prominence?: This is a "MUST READ" for it goes into explicit detail in comparing our current trajectory with that of Japan's 20 year's ago, and the conclusions are quite compelling. I'll paste one graphic here in an attempt to convey the gist of the post to all of those who feel that we are in a "V" shaped recovery (GDP-wise) that can justify CRE reflation...

This really calls into question the usefulness of broad GDP reports in anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.

Here is the short list of REITs that I have been promising subscribers for the last week:  Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb. I plan on releasing a full forensic report this week (providing it passes the QA check before Friday) which will actually include property level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.

Over two years ago I forecasted a land recession in this country. I featured the work of a guest blogger whom I respect and I believe this is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.

For those who are just starting to follow round two of my commercial real estate analysis, this is what has led us to this point:

• Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals?: The divergence of market prices from fundamentals has reached, if not surpassed, the legendary Dot.Com levels
• Re: Commercial Real Estate and REITs - It's About That Time, again...: self explanatory
  
• Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!): The sell side pump and dump scheme, exposed! 
• I am still developing my REIT thesis: on the redevelopment of the Thesis
• Bad CRE, Rotten Home Loans, and the End of US Banking Prominence?: This is a "MUST READ" for it goes into explicit detail in comparing our current trajectory with that of Japan's 20 year's ago, and the conclusions are quite compelling. I'll paste one graphic here in an attempt to convey the gist of the post to all of those who feel that we are in a "V" shaped recovery (GDP-wise) that can justify CRE reflation...

This really calls into question the usefulness of broad GDP reports in anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.

Among the green shoots sprouting today, we have several lenders reporting things are potentially looking better. Let's glance at two:

Loan Delinquencies Increase For Freddie Mac: Freddie Mac said on Friday its mortgage investment portfolio grew by an annualized 7.3 percent rate in September, while delinquencies on loans it guarantees accelerated.

The portfolio increased to $784.2 billion, for an annualized 3.4 percent decrease year to date...

The portfolio size increased on a year-over-year basis. In September 2008, the portfolio was $736.9 billion.

Delinquencies, which increase stress on the company's capital, jumped to 3.33 percent of its book of business in September from 3.13 percent in August and 1.22 percent in September 2008.

 Hmmm. All big lenders are shrinking their portfolio except for the one's outright nationalized. Oh well, there is one thing they nearly all have in common, and that is they are taking credit losses up the wazoo! Most paper over the losses with cute terminology and accounting gimmicks, but we at BoomBustBlog.com know better. After all, if you apply The open source mortgage default model loss rates to these companies' portfolio, the truth is evident.

SunTrust posts 3Q loss but sees some signs improve   22 Oct 2009  -  The Associated Press: ATLANTA - SunTrust Banks Inc. on Thursday posted a big third-quarter loss as it set aside more money to cover bad loans, but said the rate at which mortgages were slipping into delinquency slowed for the first time in a year.

I'm going to review this one in another post since I have so much to say about it.

Among the green shoots sprouting today, we have several lenders reporting things are potentially looking better. Let's glance at two:

Loan Delinquencies Increase For Freddie Mac: Freddie Mac said on Friday its mortgage investment portfolio grew by an annualized 7.3 percent rate in September, while delinquencies on loans it guarantees accelerated.

The portfolio increased to $784.2 billion, for an annualized 3.4 percent decrease year to date...

The portfolio size increased on a year-over-year basis. In September 2008, the portfolio was $736.9 billion.

Delinquencies, which increase stress on the company's capital, jumped to 3.33 percent of its book of business in September from 3.13 percent in August and 1.22 percent in September 2008.

 Hmmm. All big lenders are shrinking their portfolio except for the one's outright nationalized. Oh well, there is one thing they nearly all have in common, and that is they are taking credit losses up the wazoo! Most paper over the losses with cute terminology and accounting gimmicks, but we at BoomBustBlog.com know better. After all, if you apply The open source mortgage default model loss rates to these companies' portfolio, the truth is evident.

SunTrust posts 3Q loss but sees some signs improve   22 Oct 2009  -  The Associated Press: ATLANTA - SunTrust Banks Inc. on Thursday posted a big third-quarter loss as it set aside more money to cover bad loans, but said the rate at which mortgages were slipping into delinquency slowed for the first time in a year.

I'm going to review this one in another post since I have so much to say about it.