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There Is No Such Thing As Magic In Finance

It’s Friday desk clearing time for this blogger. “‘It was becoming clear the economic boom of the past 10 years was not sustainable, and that the 2020 assessment roll would reflect the apex of 10 consecutive years of economic prosperity,’ said Santa Clara County Assessor Larry Stone. ‘I had hoped for a gradual decline. I expected the next recession would be a ‘normal’ recession, a ‘soft landing.’ Unfortunately, we are facing a ‘crash landing,’ that one analyst described as like being in a wheelchair pushed down a very long flight of stairs.'”

“You can see the effect of the pandemic in a video shoot at lunchtime in downtown San Francisco — no hustle and no bustle. Many storefronts are boarded up, or gated shut and lots of windows have for lease signs posted. The cost of renting office and retail space is expected to get cheaper, relative to inflation over the next three years because of coronavirus, according to a survey of Bay Area and southern California commercial developers conducted by the Allen Matkins/UCLA Anderson Forecast.”

“‘When you think of a pandemic, it literally is something like a tidal wave and it comes through and it clears out a lot of stuff,’ John Tipton said. ‘It clears out weaker stuff that was just barely hanging on and in some cases it knocks down some good things that quite frankly would’ve just been just fine but for the title wave of the pandemic.'”

“According to Black Knight, Florida’s 10.5-percent May mortgage delinquency rate was fifth-highest among all 50 states and highest in the Sunshine State since January 2010. In the U.S. overall, 4.3 million homeowners were past due or in active foreclosure in May, pushing the national delinquency rate to 7.8 percent, its highest level in almost nine years. Florida’s 14.5 percent May unemployment rate is among significant contributors to increased loan delinquencies and a glut of new properties being posted on the market. Within a year to 18 months, the glut could trigger a 10 to 20 percent decline in housing prices, warned Florida Atlantic University professor and real estate economist Ken H. Johnson, one of the report’s authors.”

“Actress Jennifer Lawrence has sold her Manhattan penthouse at a multimillion-dollar loss. The 4,073-square-foot, three-bedroom condo on the Upper East Side, was last listed for about $12 million – after Lawrence bought it for $15.6 million.”

“We spoke with one landlord in the City of Erie who owns 52 properties. His issue with the moratorium is that he feels one of his liabilities is being taken away. ‘At this point of course there’s not action for us to get the money. There are some programs coming out, but it’s very slow to come to light to see if any more, if any,’ said Glenn Cessna.”

“A large group of retail investors from the Toronto area’s Sikh community are out as much as $9-million after purported land developers pitching housing projects allegedly diverted their investments for their own use, including making a down payment on a 2019 Lamborghini, court records show. In June, Justice Koehnen ordered the developers to disclose the locations of four other luxury vehicles they allegedly own or lease and barred anyone from driving them. The developers objected to this, arguing the matter had not been fully adjudicated and that it would be improper to suspend their ‘ability to use their automobiles.'”

“Justice Koehnen was not persuaded. ‘A party that refuses to comply with court orders to begin with, and then continues its refusal to comply, cannot expect any sympathy for the loss of use of a Lamborghini.'”

“The impending COVID-19 recession will cost UK landlords £5.7bn ($7.4bn) in rental income by 2024, research suggests. The financial impact will see rents in the UK fall by at least 5%, rental service Home Made estimated. This represents £5.7bn of income lost for Britain’s landlords — four times the £1.3bn of rent lost to the 2008 recession. What’s more, the rental economy is not expected to bounce back until early 2024 at the earliest. London is set to be hit hardest, with rent declining by at least 9% — a loss of £3.9bn for landlords.”

“According to Frans Uusiku, Market Researcher Manager at FNB Namibia, rent prices are responding much more rapidly in the parts of the country most heavily impacted by Covid-19. Walvis Bay saw the biggest contraction in rent prices of 29.6%, followed by Ondangwa (-27.4%), Rundu (-25.5%), Oshakati (-15.5%), Ongwediva (-5.7%) and Windhoek (-3.4%).”

“Prices and rent of high-end houses have dropped on reduced demand as expatriates flee from Kenya due to Covid-19 in the six months to June in a period that also saw demand for business and office space reduce. Half year report released Wednesday by Knight Frank shows that prices of prime residential houses in places such as Karen, Lower Kabete, Runda and Muthaiga dipped by 2.9 percent in contrast with a 1.8 percent decline in same period last year. The realtor firm adds that rent for prime houses also dropped by 6.55 percent, being a faster pace when compared with a 1.67 percent drop that was seen in a similar period last year.”

“Home ownership is an instinctive human need but will remain a cherished dream for most Bangladeshis as aspirations alone are not enough to sell houses. The first thing to understand is that the industry is not benefitted by desperate price cuts from developers. Price reduction also harms those who have already purchased their homes at previously higher prices. This creates negativity among investors and the outcome is a downward spiral due to a lack of confidence in the market.”

“From a prospective investor’s viewpoint, buying an apartment in metropolitan Dhaka is not a very attractive proposition either. The ratio of rent to price is very low (between 3 to 4 per cent) whereas the home loan interest is 9 per cent.”

“Queenstown has suddenly become a much cheaper place to rent. Figures show the median weekly rent advertised in Queenstown-Lakes has fallen 28 per cent on a year ago, dropping in June to $550. The number of listings in Queenstown have also soared, by 152 per cent. Trade Me Property spokesperson Aaron Clancy said Queenstown’s $210 rental drop was the biggest in seven years and ‘staggering’ after peaking at $800 in January.”

“There was a huge increase in supply on the West Coast (75 per cent,) Otago (26 per cent) and Southland (24 per cent) compared with a year ago. ‘We believe there are a few factors at play here – the dip in tourism and resulting job losses, landlords moving short term accommodation onto the long term market, , and people moving regions to find work,’ Clancy said.”

“Buyer’s agent Lauren Goudy said poorly performing investor stock in Sydney was dragging down the rest of the market. ‘The area where it is difficult for properties to move at the moment is apartments under $1 million. The reduced number of tenants means rents have come back and if owners can’t find a tenant, those properties are being listed for sale, so there is an oversupply of very ordinary units,’ said Ms Goudy.”

“‘Where you might see discounted stock are modern apartments that are only a few years old that were bought off the plan for fairly high prices at the time and are now not being able to be rented and needing to be sold,’ Melbourne selling agent Jeremy Rosens.”

“Little did Apollo know it back then, but the last $17 point whatever billion Caesars deal was doomed from the very start. That crazy deal was first made public in 2006. By that time the housing bubble had already popped. Few people knew that at the time (some did), but fate was already sealed for a financial crisis. That financial crisis took about two years to filter down through the system once it was triggered. The same exact thing is happening right now, except now it’s much, much more obvious, and much, much worse.”

“It was possible to deny there were any systemic problems in 2006 if you didn’t understand credit cycles. Now, not so much. Just like 14 years ago in 2006, the fate of this new Caesars deal is already sealed. It’s doomed. There is absolutely no chance that this is going to work. Why in the name of all the fictional financial gods, goddesses, and nongendered deities would you want to become the largest casino owner in the world specifically now? It’s like taking on a bunch of anvils right when you’re about to cross seriously rough seas.”

“Just when commercial mortgages are defaulting at a record pace, unemployment is at Great Depression levels, and the entire global banking system is about to completely implode, they’ve taken on the most indebted casino firm in the world. Eldorado and Caesars are now going to drown together. They will not survive this.”

“CEO Tom Reeg said to Bloomberg: ‘The Federal Reserve helped the company sell the loans by pushing official interest rates to almost zero, Reeg said. Early, strong results from casinos, which began reopening in May, also provided a boost. ‘Customers were effectively trapped in their homes for three months,’ said Reeg, who has been with Eldorado for almost a decade. ‘They were anxious to get out and be entertained. They were looking for places they could go, drive to, go back home. It was perfect for the regional casinos.'”

“There’s some great pearls of wisdom here. First of all, the Fed gave us the money and we took it, he says. Great. That’s what the credit cycle is, and Eldorado/Caesars is about to be taken out to the woodshed and whipped by it. Money grows at the Federal Reserve as much as it grows on trees. It just doesn’t. All the Fed can do is dilute and redistribute. There is no such thing as magic in finance.”

“Caesars’ interest expense in 2020 is projected to be $1.354 billion. Operating income $390.6 million. In the best case scenario of synergy and recovery from COVID-19 fear, operating income might inch up gradually, but it’s not going to be enough to cover interest expense, let alone operate at a consistent profit. The debt Eldorado is taking out to finance this deal thanks to the Fed, is going to have to be rolled over long before it comes due. At that point if the dollar hasn’t collapsed completely yet, the Fed will own pretty much the entire bond market.”

“Deutsche, one of the other zombies involved in this deal, is now projecting that the Fed’s balance sheet will reach $20 trillion within the decade. That’s the size of the entire US economy. In my view it’ll get to $20 trillion much sooner, within 2 years is my guess, if it can even get that high before the dollar is completely rejected as a unit of account.”

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This Post Has 94 Comments

  1. ‘the Fed gave us the money and we took it, he says. Great. That’s what the credit cycle is, and Eldorado/Caesars is about to be taken out to the woodshed and whipped by it. Money grows at the Federal Reserve as much as it grows on trees. It just doesn’t. All the Fed can do is dilute and redistribute. There is no such thing as magic in finance’

    Buckle up.

      1. “…the Fed is still riding to the rescue of its Wall Street grifter accomplices.”

        – The arsonists at the Fed are in charge of the fire brigade. This has been going on in a serious way since the GFC of 2008-09, only the numbers are bigger in 2020 by an about a factor of 1000 ($B’s are now $T’s).

        – Esp. since the GFC and even more so now, we’re living in a bizzaro financial world. There’s no price discovery, or normal market signals of interest rates to indicate true value or worth. Housing is distorted by historically low interest rates. There’s nothing (except gold, which can’t be printed) that’s making sense today. The closest analogy to me is John Law and the Mississippi Bubble. History has shown that bubbles always pop and fiat currency regimes don’t end well. History doesn’t necessarily repeat, but it does rhyme. There are no free markets today. We have command-and-control, centrally-planned finance. Socialism in all it’s forms has also never ended well.

        – The pandemic didn’t cause this, the Fed and other CBs caused it all by blowing serial bubbles since late 1990’s. Dot-com bust, housing bust, and now the everything bust. The pandemic was only the pin that popped The Everything Bubble. Note that the Repo markets were blowing up in Sept., 2019, well ahead of the CCP virus.

        – Good luck “investing” in today’s “markets.” I’m sure the Robinhood traders will make out well. /s

        1. The Fed is also competing with other wanna-be reserve currencies run by people who’ve spent a long time doing the pretend-and-extend dance: China and Russia (“corrupt by design” governments and opaque markets) and the EU (corrupt by exigency; where are all those Greek loan payments?). The US is still the floater in the toilet bowl but our financial markets are sliding towards the “corrupt by design” side and it’ll spell the end of the USD as a store of value.

      2. “The Fed Rides to the Rescue of JPMorgan and Citi Again – This Time It’s Their Commercial Real Estate Mortgages”

        I recall King Obama said, “Never again!”

    2. Money grows at the Federal Reserve as much as it grows on trees. It just doesn’t.

      Gold, Bitchez. The ultimate antidote to the Keynesian counterfeiters and racketeers at the Fed.

    3. All the Fed can do is dilute and redistribute. There is no such thing as magic in finance’

      And they’re accelerating the scam.

    5. “Deutsche, one of the other zombies involved in this deal, is now projecting that the Fed’s balance sheet will reach $20 trillion within the decade. That’s the size of the entire US economy. In my view it’ll get to $20 trillion much sooner, within 2 years is my guess, if it can even get that high before the dollar is completely rejected as a unit of account.”
      Ah Zombies, this is akin to what Japan did circa 1980. The companies’ debt never goes away. It will be hidden somewhere in their balance sheets. Large companies will be kept afloat. Small businesses and companies? Not so. They will have to declare bankruptcy to end their misery. After Japan did this, it got them capital asset deflation, with stagnant wages and increase in low wage/ minimum wage jobs, that till today they suffer from the asinine policies taken by its central bank in cahoots with their politicians.

      1. Hopefully we get a violent revolution where the banksters and pols get slaughtered well before that happens.

    6. Is the plan to push the losses onto the dollar, thereby punishing risk averse savers in CDs, savings accounts, and bond investors, while protecting debtors and risk asset HODLers?

      1. Is the plan to push the losses onto the dollar

        Is it ever the plan? Or is it just always the easiest solution to get through today?

  2. I was paging through the WSJ this morning. Many thousands of layoffs, billions gone here, more billions there.

    ‘I had hoped for a gradual decline. I expected the next recession would be a ‘normal’ recession, a ‘soft landing.’ Unfortunately, we are facing a ‘crash landing,’ that one analyst described as like being in a wheelchair pushed down a very long flight of stairs’

    ‘The sun don’t shine on the same dog’s ass all the time.’ – Catfish Hunter.

    1. ‘…like being in a wheelchair pushed down a very long flight of stairs’

      I can’t recall seeing that metaphor previously.

  3. ‘The first thing to understand is that the industry is not benefitted by desperate price cuts from developers. Price reduction also harms those who have already purchased their homes at previously higher prices. This creates negativity among investors and the outcome is a downward spiral due to a lack of confidence in the market’

    ‘From a prospective investor’s viewpoint, buying an apartment in metropolitan Dhaka is not a very attractive proposition either. The ratio of rent to price is very low (between 3 to 4 per cent) whereas the home loan interest is 9 per cent’

    How do those 4% cap rates look now? So how did we get here? Where people buy shacks to lose money day one? Central banking. Too much money in the system.

    What we have here is a dishonest system. I am reminded of when Bernanke split and went on the lecture circuit. At a $150,000 speech, he told the audience he couldn’t qualify for a loan (his shack cost around 800k). I guess this crack was meant to reflect how “lending is air tight!”

    Bernanke is a lion.

    1. March 26, 2020

      “As America heads into a deep recession, the $11 trillion residential-mortgage market is in crisis. Investors who buy home loans packaged into bonds are dumping even those with federal backing because of panic that millions might not make their payments. Yet one risky sector had started to show cracks long before the coronavirus pandemic sparked the worst financial meltdown in 12 years: the federal government’s largest affordable-housing program, whose lenient terms are geared toward marginal borrowers.”

      “As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers. Since 2007, the FHA’s portfolio has tripled in value to more than $1.2 trillion, almost 11% of the market. While private lenders make these loans, they are packaged into Ginnie Mae bonds, common in mutual funds and pensions.”

      “Before Covid-19 started roiling China, a November FHA report found that 27% of borrowers last year spent more than half their incomes on debt, a level it describes as ‘unprecedented.’ The share of FHA loans souring in their first six months has doubled over the last three years to almost 1%.”

      “Not long ago, Alex Castillo drove his shiny black Infiniti SUV through an office park north of the San Antonio airport, along a busy seven-mile stretch of highway that loan officers call ‘Mortgage Row’ because of its abundance of small independent mortgage companies that dominate FHA lending. Castillo, who has the words ‘The Dream Starts Here’ stitched into his jacket, works for Pennsylvania-based American Residential Lending. Oddly, amid the pandemic, his business is booming. His customers locked in FHA mortgages after interest rates plunged this month — adding to federally backed mortgage debt.”

      “‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government,’ Castillo said. ‘Then we just hope and pray that the client doesn’t get foreclosed on.’”

      “In downtown San Antonio, scores of investors stood on a parched lawn beside the city’s historic granite-and-red-sandstone courthouse. It was the first Tuesday of February, the day of the foreclosure auction. Matt Badders, a San Antonio lawyer who represents lenders, auctioned off two houses. The failed mortgages remind him of the run-up to the financial crisis 12 years ago, when lending to customers with spotty credit nearly brought down the world’s financial system. ‘We’re almost back to 2007, when mortgage originators are waking people up on park benches, saying sign here,’ Badders said.”

      “At the auction, the crowd bid on 338 homes, a third with FHA mortgages, according to Roddy’s Foreclosure Listing Service. One house had dual master bedrooms, a game room and granite kitchen counters. It sold for $202,000 — $52,000 less than the homeowner borrowed only two years ago. The taxpayer-backed FHA insurance fund will take a loss.”

      “Dave Stevens, FHA commissioner under President Barack Obama and former chief executive officer of the Mortgage Bankers Association, said a recession will expose hidden risks in home lending. ‘This should be an alarm bell to policymakers,’ Stevens said. ‘Sometimes you get blinded by a good economy and suddenly look at it and see a bubble of defaults coming.’”

      “The federal government has decided it doesn’t want to pursue — and has asked a judge to dismiss — a lawsuit against Utah-based Academy Mortgage Corp. The judge refused. The suit claims the company’s staff would repeatedly feed information into an automated federal underwriting system, manipulating it until the computer gave the green light. ‘Decline is a curse word,’ Plaintiff Gwen Thrower, a former underwriter, quoted a manager as saying. ‘We don’t use it.’”

      http://housingbubble.blog/?p=3070

      ‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government…Then we just hope and pray that the client doesn’t get foreclosed on’

      1. “The taxpayer-backed FHA insurance fund will take a loss.”

        Thank you sir may I have another?

        1. Thank you sir may I have another?

          Absolutely. You’re going to get more whether you like it or not.

        2. On a related topic, all bank accounts are FDIC insured for up to $250K. Not many Americans have this kind of money either in their savings accounts or in their 401K accounts. So the so-called middle class will be made whole. Does anyone know how many trillions it will cost the FDIC or the Fed to do this?

      2. ‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government,’ Castillo said.

        Doesn’t that sound like a man with no skin in the game?

      3. “…are dumping even those with federal backing because of panic that millions might not make their payments.”

        So the payments are not federally guaranteed?

    2. I am reminded of when Bernanke split and went on the lecture circuit.

      He went to work for Citadel – a hedge fund feeding at the FED trough. It’s corruption, pure and simple.

      1. “a hedge fund feeding at the FED trough. It’s corruption, pure and simple.”

        Yep. I bet he also “wrote” a book and got paid millions.

  4. “‘It was becoming clear the economic boom of the past 10 years was not sustainable, and that the 2020 assessment roll would reflect the apex of 10 consecutive years of economic prosperity,’ said Santa Clara County Assessor Larry Stone.

    Wha? A “boom” built on trillions in fake money funneled exclusively to a corrupt and venal .1% in the financial sector, coupled with trillions more in un-repayable debt, was “not sustainable”?!! Who knew!!

  5. Unfortunately, we are facing a ‘crash landing,’ that one analyst described as like being in a wheelchair pushed down a very long flight of stairs.’”

    Realtors are like slinkies. They serve no useful purpose, but it’s fun to push them down the stairs.

  6. In the U.S. overall, 4.3 million homeowners were past due or in active foreclosure in May, pushing the national delinquency rate to 7.8 percent, its highest level in almost nine years.

    Is that a lot?

  7. “We spoke with one landlord in the City of Erie who owns 52 properties.

    Minor point of correction: He “owns” 52 mortgages, but the properties belong to the lender until the last nickel is paid. This RE mogul wanna-be and countless others like him are going to walk as their shacks plunge further underwater, leaving lenders holding the bag.

    1. Minor point of correction: He “owns” 52 mortgages

      More like the 52 mortgages own him.

    2. “… leaving lenders holding the bag.’

      You really mean leaving lenders to pass on the bag.

  8. The first thing to understand is that the industry is not benefitted by desperate price cuts from developers. Price reduction also harms those who have already purchased their homes at previously higher prices.

    Die, speculator scum. Die, REIC media apologists.

    1. “..Price reduction also harms those who have already purchased their homes at previously higher prices…”

      Harm?, Not so fast. Actually, it can help.

      Affected loan owners can now petition for lower property tax assessments as well reduced rates on some forms of insurance. (ie. fire, flood,earthquake)

      I can’t think of one other single consumer product in which lower costs are not considered a good thing.

      1. as well reduced rates on some forms of insurance. (ie. fire, flood,earthquake)

        Which is a huge scam. I once asked an insurance agent a hypothetical question: if a house burns to the ground and is a total loss, will the policy holder be paid the full replacement cost on the policy?

        A: No, they will get what it actually costs to rebuild the house.

        Yet homeowners are forced to pay for $~200 sq ft replacement insurance, when it won’t cost that. Ditto for the personal property portion of the bill. Most furniture and other possessions are worthless, yet you are forced to buy huge amounts of coverage.

        1. “….when it won’t cost that….”

          Yep.

          And you can bet your bippie, that replacement construction will be done with shoddier materials and craftsmanship than the original especially if it was an older home.

          I suppose a detailed contract [at substantial attorney fee cost] could be written calling out specific material standards and practices, but would any current insurance carrier underwrite?

          Crooks are everywhere.

          Can life get any more complicated that it already is?

          2. “…Everyone wants to pick your pocket. A nation of grifters….”

            Pretty well sums up the current situation.

            Pretty sad actually.

            I think 99.9% of the population simply want to raise a family and live out their lives in peace and quiet. It’s just amazing how .1% can rig the economy and basically make life miserable for everyone else. At the end of the day I really wonder how the .1% feel about themselves. Do they have a conscience?

    1. That former far lefty looks a little like the white “peaceful protester” (face shown at 2:30 of the video) who is on video stabbing the black dude in Portland last weekend.

      Black conservative journalist stabbed in Portland says Americans ‘need to wake up,’ ‘start exposing Antifa’

      ‘They don’t really care about Black lives, they are using BLM as a front,’ Andrew Duncomb tells Fox News

      Published 14 hours ago

      “I was stabbed by a known Antifa member by the name of Blake Hampe,” Duncomb told host Tucker Carlson of the Saturday attack. “I felt like I was stabbed, or targeted, specifically due to my location being doxxed … 17 hours before I arrived.”

      https://www.foxnews.com/media/black-conservative-journalist-stabbed-portland-antifa-terrorist

  10. Oh dear. The Fed’s Ponzi markets are showing a peculiar shade of green that looks a lot like red, but that would be un-possible, given the Fed’s deranged money printing to levitate its asset bubbles.

    1. I’m not so sure about the front portico… is it sloping to the right? Other than that, outstanding house. It’s postbellum, which evades some bad baggage. No immediate issues (it’s not falling down), but it would probably take $250K to restore it to former glory. Incredible hardwood. The staircase is to die for. It could be an outstanding mini event venue or AirBnB for a rich wife who needs a hobby.

      1. I once had a Victorian slightly smaller than that but similar in many ways. It was a maintenance nightmare, but it had a better staircase.

        Check out the security bar on the back door! Must be a great neighborhood.

    2. Great style but the house next door burned to the ground recently and the fire department is only a block away. You’ll be like the McCloskys wondering why you tried catching a falling knife.

    1. “plunged to its lowest in 234 years”

      When you start seeing things described this way, it is definitely time to buckle up.

      1. Agreed. The Fed is trying mightily to suppress and distort all the normal price discovery mechanisms, but the ten year bond behaving like this is a huge red flag.

    2. It’s incredible to see investors piling into Treasurys, even as the dollar is selling off on the Forex markets.

  14. The DOW was down 280. It’s completed its V-shaped recovery for the afternoon, as long as there are no booboos in the next 45 min.

      2. Yeah, I saw that. It had to be PPT. Only the PPT or a vaccine could make a U curve like that. Meanwhile, gold is up, bitcoin is up more, and silver went bonkers.

      3. The DOW is still down 7.39% year-to-date. And there’s plenty of clearance below for a lot more crater to come.

        Buckle up!

        1. The DOW is still down 7.39% year-to-date. And there’s plenty of clearance below for a lot more crater to come.

          Sorry, not buying it. The FED stands at the ready with “Unlimited QE.” They are going to park stocks at a permanently high plateau, even if it takes a $20 TRILLION balance sheet.

          1. At the risk of resembling the little boy who pointed out the emperor was parading around in the buff, I submit that the Great and Powerful Fed’s
            Quantitative Easing is Unlimited in name, only.

            There may be stochastic constraints which force their hand if they go too far out on the limb of making Wall Street stock HODLers whole at the expense of everyone else who relies on the dollar as a medium of exchange, unit of account, and store of value.

          2. Rating Action Commentary
            Fitch Revises United States’ Outlook to Negative; Affirms at AAA
            Fri 31 Jul, 2020 – 4:26 PM ET

            Fitch Ratings – New York – 31 Jul 2020: Fitch Ratings has affirmed United States’ Long-Term Foreign-Currency (LTFC) and Local-Currency (LC) Issuer Default Ratings (IDRs) at ‘AAA’ and revised the Outlooks to Negative from Stable.

            KEY RATING DRIVERS

            The U.S. sovereign rating is supported by structural strengths that include the size of the economy, high per capita income and a dynamic business environment. The U.S. benefits from issuing the U.S. dollar, the world’s preeminent reserve currency, and from the associated extraordinary financing flexibility, which has been highlighted once again by developments since March 2020. Fitch considers U.S. debt tolerance to be higher than that of other ‘AAA’ sovereigns.

            However, the Outlook has been revised to Negative to reflect the ongoing deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan, issues that were highlighted in the agency’s last rating review on March 26, 2020. High fiscal deficits and debt were already on a rising medium-term path even before the onset of the huge economic shock precipitated by the coronavirus. They have started to erode the traditional credit strengths of the US. Financing flexibility, assisted by Federal Reserve intervention to restore liquidity to financial markets, does not entirely dispel risks to medium-term debt sustainability, and there is a growing risk that U.S. policymakers will not consolidate public finances sufficiently to stabilize public debt after the pandemic shock has passed. Although a massive policy response has prevented a deeper downturn – such that Fitch expects a less severe contraction in the U.S. in 2020 than in many other advanced economies – the agency has revised down our macroeconomic projections since March and downside risks persist.
            …

          3. At the risk of resembling the little boy who pointed out the emperor was parading around in the buff…

            At a certain point, you morph into the boy who cried wolf.

          4. There may be stochastic constraints which force their hand if they go too far out on the limb

            They seem very willing to take that risk. Do you think they are actually bluffing? If so I think their bluff will be called soon…

          5. They seem very willing to take that risk. Do you think they are actually bluffing? If so I think their bluff will be called soon…

            While the FED jawbones the market weekly, they’re not bluffing when it comes to Unlimited QE. They operate with absolute impunity and the knowledge that there is no other currency that will supplant the US dollar since they are all garbage, so the FED uses it to their fullest advantage.

  16. “According to Black Knight, Florida’s 10.5-percent May mortgage delinquency rate was fifth-highest among all 50 states and highest in the Sunshine State since January 2010. I got out six months ago! I praise the gods any god that I was granted exodus from that state. I dont care if the state county city govt is R or D its messed up in FL TY housing blog!

    1. Between deadbeat tenants with legal protection to live rent free to plummeting property values, has it ever sucked worse to be a landlord?

    1. Pitchforks again. Seriously, where do they get these things in the Hamptons? The same place they got the bricks?

  20. Just as you think things can’t get anymore ClownWorldish …

    Colorado to declare racism a public health crisis

  23. The Federal Reserve is the stealth driver of economic inequality: Ron Paul

    Federal Reserve Chair Jerome Powell and San Francisco Fed President Mary Daly both recently denied that the Federal Reserve’s policies create economic inequality. Unfortunately for Powell, Daly, and other Fed promoters, a cursory look at the Fed’s operations shows that the central bank is the leading cause of economic inequality.

    https://www.ocregister.com/2020/07/13/the-federal-reserve-is-the-stealth-driver-of-economic-inequality-ron-paul/

  24. The Financial Times
    Coronavirus business update 30 days complimentary
    Coronavirus pandemic
    US suffers worst month for Covid-19 cases
    Infections surge in sunbelt region and rising death rates could complicate economic recovery
    A healthcare worker passes on paperwork at a Covid-19 testing site in Miami. Florida reported more than 311,000 cases in July, triple the number of the previous month
    © Lynne Sladky/AP
    Matthew Rocco and Peter Wells in New York yesterday

    An increase in Covid-19 cases across the US south and west this summer has led to July being the nation’s worst month for infections since the pandemic began, hindering efforts to reopen the world’s largest economy.

    The US has confirmed almost 1.86m coronavirus cases since the end of June, representing 41 per cent of the total 4.5m infections since the start of the outbreak, according to Financial Times analysis of Covid Tracking Project data.

    The three most populous states — California, Texas and Florida — have emerged as the new hotspots for the virus in the US and made up a large portion of July’s increase in cases. They have overtaken New York as the states with the most infections since the pandemic began, with more than 400,000 cases each.
    …

    1. What I don’t get is why they are always stating how high the caseload is but conveniently forgetting how low the death rate is now. FL and NY have similar populations and caseloads but the death rate in NY is five times higher.

      1. I think the concern is available hospital beds in a COVID-19 facility; think sterilized unit and trained staff. For example, rural communities usually have to transport their COVID-19 patients into a metro hospital due to a lack of resources.

        1. due to a lack of resources For small hospitals, the main resource is staff trained & experienced sufficiently to deal with the patient’s condition. Patients needing prolonged artificial ventilation tend to do poorly in small hospitals who rarely have to provide that treatment. Several times in my career I wound up bagging patients while we rode together in the back of an ambulance going from St. Nowhere’s Hospital to a major medical center.

      2. the death rate in NY is five times higher.

        Maybe in April, but now NY has 10 deaths per day “with a Covid positive” and FL has over 100.

  25. Can anyone who thinks they understand please explain to me why entertainment figures like to pay millions of dollars to buy overpriced real estate investments and later
    sell at a loss?

    “Actress Jennifer Lawrence has sold her Manhattan penthouse at a multimillion-dollar loss. The 4,073-square-foot, three-bedroom condo on the Upper East Side, was last listed for about $12 million – after Lawrence bought it for $15.6 million.”

      1. Can anyone who thinks they understand please explain to me why entertainment figures like to pay millions of dollars to buy overpriced real estate investments and later
        sell at a loss?

        Athletes and entertainers both tend to peak young…and the young always think the good times will last forever. But they’re trying to be smart and listen to advisors…who are telling them real estate always goes up. If there’s one thing the young and rich are NOT spending their time on it would be reading this blog.

  27. Real Journalist Bari Weiss knew full well she was working for a leading globalist propaganda outfit, the New York Times. As a college student, she led efforts to silence and censor Arab American professors who dared to criticize Israel. Now she’s making the talk show circuit playing a so-faux martyr card after “woke” SJW Red Guard colleagues at the NYT allegedly forced her out. I for one will enjoy seeing the corporate left’s globalist quislings forced out by even more radical-left Real Journalists who will then run these globalist propaganda outfits into the ground, while also fully exposing their collectivist agenda. Good times!

    https://www.foxnews.com/media/bari-weiss-twitter-now-editor-of-ny-times-paper-living-in-fear-of-an-online-mob

    1. “The Waltons are richer than ever, adding $25 billion in the past year to take their combined fortune to an estimated $215 billion. Years of investment in Walmart’s supply chain and e-commerce capabilities saw a surge in first-quarter sales despite widespread carnage in the U.S. retail sector.”

      The fed doesn’t need to bail-out Walmart because they deliver. Sure, their low wage workers have to work hard, but they have better benefits with Walmart than some gas station quick-mart. I know a couple of Walmart IT folks, and they’re well paid and receive regular career training with the latest technologies unlike many government(s) who embrace dysfunction in the name of diversity. My little flyover town is bearable thanks to Walmart. FWIW, one of the Walton’s sons who perished in an Ultralight aircraft accident was a U.S. Army Special Forces combat medic; he wasn’t born with a silver spoon.

      That said, maintain the pressure on the fed!

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