by Calculated Risk on 4/25/2010 09:01:00 AM

From Reuters: Germany, France signal hard line with Greece (ht Jonathan)

German Finance Minister Wolfgang Schaeuble warned Greece that a tough restructuring of its economy was "unavoidable and an absolute prerequisite" if Berlin and the EU were to approve the aid Greece has requested.

"The fact that neither the EU nor the German government have taken a decision (on providing aid) means the response can be positive as well as negative," Schaeuble told the Sunday edition of German daily Bild.
...
Schaeuble's French counterpart Christine Lagarde promised to hold Greece accountable for "unsuitable economic policies" ... She described the aid package as a "cocktail of indulgence and great strictness," telling the Journal du Dimanche weekly that Greece's partners would closely monitor its progress in restoring order to its creaking finances.

"We will (release the aid) according to their needs and in the case of default on repayment, we will immediately put the foot on the brake," Lagarde said.

There will probably be some more news later today.

by Calculated Risk on 4/24/2010 09:07:00 PM

From the Daily Show ... Wham-O Moves to America

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Wham-O Moves to America
www.thedailyshow.com
Daily Show Full Episodes

by Calculated Risk on 4/24/2010 04:08:00 PM

From Martha Dreyer Duperray at Caribbean Business: Frank Stipes out as Westernbank chief

Westernbank President and CFO Frank Stipes ... resigned [on Friday] ... sources told caribbeanbusinesspr.com that agreement has been reached by the troubled bank to sell several branches to Banco Popular ...

From the Unofficial Problem Bank List - there are three banks in Puerto Rico operating under Cease & Desist orders:

1) Westernbank Puerto Rico in Mayaguez with $11.9 billion in assets.
2) R-G Premier Bank of Puerto Rico in Hato Rey with $6.6 billion in assets.
3) Eurobank in Hato Rey with $2.6 billion in assets

All three are rumored to be out for bid. Last week the FDIC was busy in Illinois. Is this the week for Puerto Rico?

by Calculated Risk on 4/24/2010 11:49:00 AM

An update from David Kestenbaum at Planet Money on their toxic asset: Toxie Update: Our Latest Check Arrives. Oh No.

As you know, we purchased our own toxic asset so we could watch it die.

And she, Toxie, is dying. We just got our latest monthly check, and it's for just $72.41.

We'd been hoping for about $180, but there's been less money coming in from those 2,000-plus mortgages. All the investors in this thing are basically standing in line to get paid. We're near the back of the line, so we take the hit.

But that's not the real problem.

Toxie soon will be actually wasting away. Every month some of the houses that had been foreclosed upon, actually get sold and sold for a loss. As those losses accumulate, Toxie shrinks and eventually there's nothing left.

Our online folks just updated the graphic. Check out the "how long we have left" bar chart. It looks like next month the losses will actually eat into our Toxie, and she'll start to shrink.

I've been thinking of this like we are standing in line to get paid. We're at the back of the line, and there's this monster eating the people behind us. Next month the monster starts chewing on our heels.

And some music ...

Bet Against the American Dream from Alexander Hotz

by Calculated Risk on 4/24/2010 08:49:00 AM

Way back, during the darkest days of the recession, I wrote a couple of optimistic posts about auto sales - Vehicle Sales (Jan 2009) and Looking for the Sun (Feb 2009). By request, here is an update to the U.S. fleet turnover graph.

Click on graph for larger image in new window.

This graph shows the total number of registered vehicles in the U.S. divided by the sales rate through March 2010 - and gives a turnover ratio for the U.S. fleet (this doesn't tell you the age or the composition of the fleet).

The recent wild gyrations were due to the cash-for-clunkers program. Note: We are getting used to wild gyrations in economic numbers - just watch the housing numbers over the next few months!

The estimated ratio for March was just under 21 years - still very high, but well below the peak of almost 27 years. The turnover ratio will probably decline further over the next few years.

As expected some vehicles were removed from the fleet during the recession (scrappage exceeded sales), from RL Polk: Polk Finds More Vehicles Scrapped than Added to Fleet:

More than 14.8 million cars and light trucks were retired from the fleet between July 1, 2008 and September 30, 2009, compared to new registrations of slightly more than 13.6 million, resulting in an overall scrap rate of 6.1 percent. This includes thousands of units scrapped during last year’s CARS program, known as ‘Cash for Clunkers,’ and follows a trend seen by Polk over the past five years.

Polk also reports an increase in the average age of light vehicles on the road, up 21 percent in the past 14 years. The average age for all light vehicles during the 15-month period is 10.2 years ...

Removing vehicles from the fleet reduces the turnover ratio, but most of the expected decline in the ratio will come from further increases in sales.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Light vehicle sales were at a 11.8 million SAAR in March. To bring the turnover ratio down to more normal levels, unit sales will probably have to rise to 14 or 15 million SAAR eventually. Of course cars are lasting longer - note the general uptrend in the first graph - so the turnover ratio probably will not decline to the previous level. Also this says nothing about the composition of the fleet (perhaps smaller cars).