by Calculated Risk on 11/07/2009 07:40:00 PM

Brian Wargo writes at the Las Vegas Sun: Construction nears standstill

The state bird of Nevada, the construction crane, is on the endangered species list.

... there are nine commercial projects of consequence under construction off from the Strip in Southern Nevada. Once most of those projects wind down early next year, there’s not much in the pipeline and development will essentially cease ... the long-range outlook ... is that there won’t be another major casino project built on the Strip for another decade. ...

As these remaining projects are completed thousands of construction workers will leave Las Vegas - impacting the local housing market and the Las Vegas economy.

“Once CityCenter is done, that is going to be it for a while,” [Steve Holloway, executive director of Associated General Contractors of Las Vegas] said. “It is going to be ugly. ... I think Southern Nevada is going to remain in this recession two to five more years.”

In many bubble areas, people thought high levels of construction activity and real estate related employment were the norm. I pointed out the obvious in 2005: "the areas most at risk have had the greatest increase in real estate related jobs". As usual, Vegas took the building boom to excess ...

by Calculated Risk on 11/07/2009 05:13:00 PM

From the Independent: Personal insolvencies rise to new record as unemployment bites

More people than ever before were declared insolvent in England and Wales during the third quarter of the year. Figures released by the Insolvency Service yesterday reveal that there were 35,242 personal insolvencies over the three months to the end of September, up by 28 per cent on the same period of 2008 ...

There was a decrease in corporate insolvencies in the U.K.

For the most recent stats in the U.S., from the American Bankruptcy Institute: October Consumer Bankruptcy Filings Reach New Highs, Up 28 Percent Over Last Year and a graph of U.S. personal bankruptcy filings here.

by Calculated Risk on 11/07/2009 01:09:00 PM

From the LA Times: United Commercial Bank is shut down, sold to East West Bancorp

Toppled by loan losses and misstated financial reports, San Francisco's United Commercial Bank was shut down by regulators Friday night ...

United Commercial's collapse may cause a greater-than-usual stir because a year ago the federal government invested $299 million in bailout funds in the bank in exchange for preferred stock, which was made worthless by the failure.

In addition, the FDIC said the collapse would cost the federal deposit insurance fund an estimated $1.4 billion.
...
United Commercial was burned by commercial lending losses, especially loans to developers and home builders during the housing boom. But it also was tainted by a financial scandal that resulted in a shake-up of its top management.

UCBH announced in September that its financial reports could not be trusted because of the "deliberate and improper actions and omissions of certain bank officers," who had understated losses in "an apparent desire to downplay deteriorating financial conditions."

UCBH Holdings, Inc. received $298,737,000 under the Troubled Asset Relief Program one year ago.

by Calculated Risk on 11/07/2009 09:08:00 AM

From The Telegraph: Bank of England says financiers are fuelling an economic 'doom loop'

On the eve of the G20 meeting of finance ministers in Scotland, Andy Haldane, the Bank's executive director for financial stability warned that the relationship between the state and banks represents a "doom loop" which will keep inflicting crises on the public unless arrested.

The warning, which follows Governor Mervyn King's call for investment banks to be split from their high street wings, is the most radical yet from the Bank, and comes amid growing concern that the G20 has abandoned any plans for far-reaching reforms.
...
Mr Haldane, who was a key part of a Bank unit which was among the first to warn, well ahead of the crisis, of a dangerous gap between what banks had in their balance sheets and what they were lending customers ...

Not much has been done to reform the banking system despite warnings from BofE's King, former Fed Chairman Paul Volcker, BofE's Haldane and others. As Haldane says, no reform equals a "doom loop".

by Calculated Risk on 11/06/2009 11:59:00 PM

From David Leonhardt at the NY Times: Broader Measure of Unemployment Stands at 17.5% Excerpts:

Officially, the Labor Department’s broad measure of unemployment goes back only to 1994. But early this year, with the help of economists at the department, The New York Times created a version that estimates it going back to 1970.
...
If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous high was 17.1 percent, in December 1982.

There is much more in the article, but this suggest that the BLS' "Alternative measure of labor underutilization U-6"¹ is now at the highest level since the Great Depression.

¹ "Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers"