by Calculated Risk on 2/03/2009 09:28:00 AM

From the LA Times: Boom in Inland Empire industrial space is beginning to go bust

As the regional economy continues to sputter, vacancy rates are beginning to climb at warehouses and distribution centers for industrial goods, putting the already hard-hit Inland Empire at further risk of decline and threatening facilities in Los Angeles and Orange counties as well.

After years of high occupancy and rapid construction of cargo hubs, immense spaces are now standing empty. Some fell victim to the collapse of retailers such as Mervyns and Wickes Furniture; others are vacant because the huge national falloff in demand for consumer goods has meant fewer imports and less need for storing and shipping them.
...
Industrial vacancy in the Inland Empire doubled in the last year, from 6.2% in the fourth quarter of 2007 to 12.4% at the end of 2008, according to figures just released by brokerage Cushman & Wakefield.

The area is being hit hard by the housing bust - and now by the declines in trade and retail.

by Calculated Risk on 2/03/2009 01:29:00 AM

From Bloomberg: Australia’s Dollar Strengthens After Rate Cut, Stimulus Plan

[T]he government said it will spend A$42 billion ($26.7 billion) on grants and infrastructure to counter the impact of the global financial crisis. The Reserve Bank of Australia lowered its benchmark rate 1 percentage point to 3.25 percent, two hours after the stimulus package was announced.
...
Australia’s stimulus package includes A$12.7 billion in grants to families and low-income earners and A$28.8 billion for infrastructure. It will help send the nation’s budget into a A$22.5 billion deficit, the first shortfall since fiscal 2001-02.

This is about 4% of GDP, or the equivalent of close to a $600 billion stimulus for the U.S. (as percent of GDP). Although Australia had a housing bubble, they also had a budget surplus and a trade surplus - so I think they are in a stronger position than the U.S. or the U.K.

by Calculated Risk on 2/02/2009 09:10:00 PM

This should come as no surprise ...

From Reuters: FDIC seeks to triple Treasury Dept borrowing power

The Federal Deposit Insurance Corp is seeking to more than triple its credit line with the U.S. Treasury Department to $100 billion ... The FDIC and Congress are working to boost the agency's current $30 billion borrowing power ...

The move comes as the FDIC's deposit insurance fund has shrunk due to a significant uptick in bank failures over the past year. The insurance fund's value dropped 24 percent in the 2008 third quarter to $34.6 billion.
...
"They have no immediate need for it, but they just want to make sure they're not constrained in the decision by a lack of the insurance fund," [U.S. Rep. Barney Frank, chairman of the House Financial Services Committee] told reporters ...

"No immediate need". Famous last words.

by Calculated Risk on 2/02/2009 07:38:00 PM

This is a pretty stunning number ...

From the NY Times: Joblessness Jumps Sharply Among China’s Migrants

About 20 million of the total estimated 130 million migrant workers, whose cheap labor underpins China’s manufacturing sector, have been forced to return to rural areas because of lack of work, according to a survey conducted by the Agriculture Ministry that was cited at a briefing.

In late December, employment officials estimated that at least 10 million migrant workers had lost their jobs in the third quarter of 2008 as waves of factories and businesses shut their doors.

by Calculated Risk on 2/02/2009 03:26:00 PM

From the Fed: The January 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices

In the January survey, the net fractions of respondents that reported having tightened their lending policies on all major loan categories over the previous three months stayed very elevated. Relative to the October survey, these net fractions generally edged down slightly or remained unchanged. Respondents indicated that demand for loans from both businesses and households continued to weaken, on balance, over the survey period.

In response to the special questions on commercial real estate lending, significant net fractions of both foreign and domestic institutions reported having tightened over the past year all loan policies about which they were queried. At the same time, about 15 percent of domestic banks, on net, indicated that the shutdown of the securitization market for commercial mortgage-backed securities (CMBS) since the middle of 2008 has led to an increase in the extension of new commercial real estate loans at their bank.

Click on graph for larger image in new window.

Of particular interest is the increase in tighter lending standards for Commercial Real Estate (CRE) loans. This graph compares investment in non-residential structure with the Fed's loan survey results for lending standards (inverted) and CRE loan demand.

Note that any reading below zero for loan demand means less demand than the previous quarter. This is strong evidence of an imminent slump in CRE investment.

More charts here for residential mortgage, consumer loans and C&I.