by Calculated Risk on 2/12/2012 06:00:00 PM

The vote just finished, and the NY Times is reporting the austerity bill has passed.

From Athens News: Live news blog, Feb 12-13

In the final tally, 199 MPs voted in favour and 74 against the second bailout memorandum.

Parliament voted in favor of new austerity bill. All of KKE, Syriza and Democratic Left MPs voted No, as well as 21 New Democracy MPs (one in four- ND has 83 MPs in total) and 13 Pasok MPs. Laos MPs voted No, leader absent, the two former ministers voted Yes. All but one Democratic Alliance MPs voted Yes.

The next key date is Thursday. From the NY Times: Greek Protesters Clash With Police Before Vote

“The reason for the urgency is that by Thursday the euro group must approve the release of rescue funding,” Mr. Venizelos said.

The push was also needed, he said, to meet a March 5 deadline to swap bonds between the government and private debt holders. That debt swap, Mr. Venizelos said, would allow Greece to make a $19 billion bond payment on March 20 to avoid default.

by Calculated Risk on 2/12/2012 01:05:00 PM

Someone sent me an article by Dylan Ratigan in the HuffPo: On the Mortgage Settlement: There Is No Political Solution to a Math Problem

Unfortunately some of the numbers are incorrect.

Ratigan wrote:

"Roughly half of homeowners with mortgages are underwater, which means they owe more than they own ..."

This is way too high. According to Zillow, 28.6 percent of all single-family homes with mortgages had negative equity in Q3 2011. And according to CoreLogic, "10.7 million, or 22.1 percent, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011".

And many of these homeowners were only slightly underwater, and will probably keep making their mortgages payments (especially if they are eligible for the new HARP program).

And on the employment-population ratio and the participation rate:

[T]his is by far the worst recovery we've had since the end of World War II. The best way to measure this is not through traditional unemployment indices (which can be gamed), but by asking the question of how many Americans are working as a percentage of the population. In 2007, this was 63 out of 100. Today, it's a full five percentage points lower. The ratio hasn't been this bad since the early 1980s recession, and remember, we're in a recovery. And the labor force participation rate is dropping, which is a long-term bigger crisis.

Ratigan is referring to the employment-population ratio, but as I've pointed out several times, this ratio is being impacted by demographics. A decline in the participation rate has been predicted for years, and a decline in the participation rate pushes down the overall employment-population ratio. So the employment-population ratio is not "the best way" to measure the recovery, and the decline in the participation rate is not a "crisis".

Click on graph for larger image.

During this period of a significant shift in demographics, it helps to look at the employment-population ratio for the prime working age group (25 to 54 years old). This leaves out most changes in demographics (although this can be impacted by the ratio of men to women in the prime working age cohort and other factors).

For this key demographic, it appears the employment situation for men is improving a little, but the employment situation for women is still lagging behind.

Ratigan also wrote:

[R]oughly thirty million jobs ... will bring America back to full employment.

Currently, according to the BLS household report, there are 12.8 million unemployed out of a labor force of 154.4 million, or about 8.3% unemployed. If full unemployment is 5% (structural unemployment is probably a little higher), then the US economy is short 5 million jobs - not 30 million.

Based on his comment about the employment-population ratio and the participation rate, Ratigan is probably expecting the participation rate to increase significantly. That isn't going to happen (see this post).

There are plenty of issues currently with negative equity and unemployment, but it is important to get the size of the problems correct.

Yesterday:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/12/2012 09:25:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Feb 10, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Something new and unusual happened to the Unofficial Problem Bank List since its publication, the institution count was unchanged for two consecutive weeks. This week there were two removals and two additions, which leaves the list at 958 institutions. Assets were virtually unchanged as well at $389.6 billion. A year ago, the list held 944 institutions with assets of $412.95 billion.

The two removals that came from failure are SCB Bank, Shelbyville, IN ($200 million Ticker: BRBI) and Charter National Bank and Trust, Hoffman Estates, IL ($98 million). The two additions are Alliance Bank & Trust Company, Gastonia, NC ($216 million Ticker: ABTO) and United Bank of Philadelphia, Philadelphia, PA ($78 million). Next week, we anticipate the OCC will release its actions through mid-January 2012.

Yesterday:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/11/2012 10:52:00 PM

From the WSJ: Greek Party Leaders Urge Yes Vote on Austerity

The bills that will be voted on midnight Sunday include a set of austerity cuts, structural reforms and the terms of a debt restructuring. They need to get a majority in parliament if Greece is to receive a second, EUR130-billion ($171 billion) bailout from its official-sector creditors, the European Union, the European Central Banks and the International Monetary Fund.

From the Athens News: PM warns of collapse if bailout deal rejected

"This agreement will decide the country's future," [Prime minister Lucas Papademos] said. "We are just a breath away from ground zero."

"A disorderly default would set the country on a disastrous adventure," Papademos said. "Living standards would collapse and it would lead sooner or later to an exit from the euro."

Failing to adopt the bill, he said, "would disrupt imports of fuel, medicine and machinery".

From the New York Times: Greek Leaders Urge Lawmakers to Approve Debt Deal

Earlier:
• Summary for Week ending February 10th
• Schedule for Week of February 12th

by Calculated Risk on 2/11/2012 01:36:00 PM

Earlier:
• Summary for Week ending February 10th

The key reports this week are January retail sales on Tuesday, and January housing starts on Thursday. The NAHB builder confidence report for February will be released on Wednesday.

For manufacturing, the February NY Fed (Empire state) and Philly Fed surveys, and the January Industrial Production and Capacity Utilization report will be released this week.

On prices, the January Producer Price index (PPI) will be released Thursday, and CPI will be released on Friday.

----- Monday, Feb 13th-----
No economic releases scheduled.

----- Tuesday, Feb 14th -----
7:30 AM: NFIB Small Business Optimism Index for January.

Click on graph for larger image in graph gallery.

This graph shows the small business optimism index since 1986. The index increased to 93.8 in December from 92.0 in November. That was the fourth increase in a row after declining for six consecutive months.  The consensus is for an increase to 95.0.

8:30 AM: Retail Sales for January.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales are up 20.4% from the bottom, and now 5.9% above the pre-recession peak (not inflation adjusted).

The consensus is for retail sales to increase 0.7% in January, and for retail sales ex-autos to increase 0.5%.

9:00 AM: Ceridian-UCLA Pulse of Commerce Index™ This is the diesel fuel index for January (a measure of transportation).

10:00 AM: Manufacturing and Trade: Inventories and Sales for December (Business inventories). The consensus is for 0.4% increase in inventories.

----- Wednesday, Feb 15th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index was especially weak last year, although this does not include all the cash buyers.

8:30 AM ET: NY Fed Empire Manufacturing Survey for February. The consensus is for a reading of +14.1, up from +13.5 in January (above zero is expansion).

9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for January.

This shows industrial production since 1967. Industrial production increased in December to 95.3, and previous months were revised up slightly.

The consensus is for a 0.6% increase in Industrial Production in December, and for Capacity Utilization to increase to 78.6% (from 78.1%).

10:00 AM: The February NAHB homebuilder survey. The consensus is for a reading of 26, up slightly from 25 in January. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

2:00 PM: FOMC Minutes, Meeting of January 24-25, 2010.

----- Thursday, Feb 16th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 365,000 from 358,000 last week.

8:30 AM: Housing Starts for January.

This shows the huge collapse following the housing bubble, and that total housing starts have been increasing a little lately, but have mostly moved sideways for about two years and a half years. Multi-family starts increased in 2011 - although from a very low level. Single family starts appear to be increasing lately, but are still mostly "moving sideways".

The consensus is for an increase in total housing starts to 670,000 (SAAR) from 657,000 (SAAR) in December.

8:30 AM: Producer Price Index for January. The consensus is for a 0.3% increase in producer prices (0.1% increase in core).

9:00 AM: Fed Chairman Ben Bernanke speaks: "Community Banking" At the FDIC Conference on the Future of Community Banking, Arlington, Virginia

10:00 AM: Philly Fed Survey for February. The consensus is for a reading of 8.4, up from 7.3 last month (above zero indicates expansion).

10:00 AM: Mortgage Bankers Association (MBA) 4th Quarter 2011 National Delinquency Survey (NDS).

This graph shows the percent of loans delinquent by days past due in Q3. Based on other data, the delinquency rate probably was unchanged or only declined slightly in Q4.

However the key problem is the large number of seriously delinquent loans (90+ days and in the foreclosure process). With the mortgage servicer settlement, the delinquency rate will probably start falling faster by mid-2012 (a combination of more modifications and more foreclosures).

----- Friday, Feb 17th -----
8:30 AM: Consumer Price Index for January. The consensus is a 0.3% increase in prices. The consensus for core CPI to increase 0.2%.

10:00 AM: Conference Board Leading Indicators for January. The consensus is for a 0.5% increase in this index.