Thursday, December 6, 2007

Suprime bailout is deflationary

The subprime bailout plan being orchestrated by the U.S. Treasury Department will have a deflationary effect because it increases risks to lenders and discourages further lending. Interest rates cannot be lowered enough to compensate.

Friday, November 30, 2007

Florida school pool frozen

A report in the New York Times describes a run on an investment pool run by the state of Florida on behalf of local schools. The pool, which has some exposure to subprime mortgage loans, stopped honoring requests for withdrawals November 29.

Thursday, November 29, 2007

Home foreclosures double

Alex Veiga of reports that home foreclosure filings in the U.S. almost doubled in October 2007 from a year earlier.

Less credit means less money

Peter S. Goodman reports in the New York Times that lenders are continuing to be extremely cautious. This implies a contraction not only in credit, but in the money supply.

Wednesday, November 28, 2007

Bill Gross on the banking system

The founder of Pimco questions the soundness of today's banking system.

Home sales and prices fall in October

Reuters reports that sales of existing homes were down in October. Prices fell while unsold inventory increased from a year earlier.

Home prices down a record

Michael M. Grynbaum reported in the New York Times on a record drop in single-family home prices in major U.S. cities.