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Economy needs full $700 billion, and more

By Lou Barnes, Friday, November 14, 2008.

Flickr photo by <a href="http://flickr.com/photos/toestubber/2662161767/" target=blank>the_toe_stubber</a>.

The credit market thaw paused this week: LIBOR fell just a little; mortgages touched 6 percent and rebounded; short-term Treasury rates are still near zero; and corporate and consumer credit is as scarce and expensive as ever.

Massive, global intervention by central banks and national treasuries has been under way for only a month. It just seems longer when you're having fun. more...

Banks must resume lending

By Lou Barnes, Friday, November 7, 2008.

The credit markets this week continued to thaw. All-important LIBOR fell to 2.38 percent for 90-day money; and one-year is down to 2.84 percent -- ARMs resetting next month will settle just a hair above 5 percent. 30-year mortgage rates with no fees made it to 6 percent, but for the umpteenth time this year stopped at that barrier. more...

Chase away media goblins

By Lou Barnes, Friday, October 31, 2008.

Flickr photo by <a href="http://www.flickr.com/photos/doug88888/2954466648/" target=blank>doug88888</a>.

Ghosts and goblins descended upon us way back in mid-September, deviling civilians and bankers alike in a rolling Halloween that will not end with the dawn. This is the wrong year to sneak up and shout, "BOO!!" That might finish somebody off altogether.

As confusing and frightening as this interval is, there is progress -- a lot of it, and less damage than the leapfroggers of doom would have it. "You think this is bad? Lemme tell you how really bad …" "Oh yeah? That's nothing; wait'll you hear this. …" more...

Standing up the dominoes

By Lou Barnes, Friday, October 24, 2008.

Mortgage rates bottomed at 6 percent early in the week, down 0.75 percent in four days, and are back to 6.25 percent now (lowest fees). Five-something loans will have to wait for stabilization in global credit or effective federal intervention.

The depth of the recession ahead will depend on the job market, and the newest data shows surprising resilience: New claims for unemployment insurance are still inside the 60-day range, just under a half-million weekly. Since the onset of credit collapse on Sept. 15, the real economy has resembled the adversary of the great swordsman, more...

Rescue sidesteps economic 'black hole'

By Lou Barnes, Friday, October 17, 2008.

Flickr image by <a href="http://flickr.com/photos/fdecomite/427241276/">fdecomite</a>.

Four weeks ago yesterday marked the turning point in the Great Run of '08: after the Lehman disaster the White House and Congress vowed to intervene as necessary.

Last Monday afternoon marked the fact of effective intervention, with authorities for the first time moving ahead of the crisis. The Treasury summoned the CEOs of the nine largest bank-survivors and broke the capital shortage by involuntary injection -- an event and scene without American precedent. more...

The Great Run of '08

By Lou Barnes, Friday, October 10, 2008.

I continue to have great confidence that the authorities will succeed in ending the Great Run of '08, and jumpstarting credit. However, there was no progress this week, and financial markets are a shambles not worth talking about.

The Main Street economy downshifted in August, entering a still-steepening decline, but ... but, amazing strength remains and positive developments are baked into nearby cake. more...

Panic misses Main Street

By Lou Barnes, Friday, October 3, 2008.

Mortgage rates are stuck just above 6 percent, but at least they're not blowing up or shut down along with the rest of the credit world. We and our peers are operating normally.

Passage of the rescue bill has pushed up long-term Treasury rates, as markets anticipate large sales of new Treasury bonds to raise bailout cash. The stock market has stopped nauseating freefalls twice this week. These moves also reflect hopes for coordinated global central bank rate cuts over the weekend and a Euro-zone version of our rescue package. more...

Bailout incites 'grassroots rage'

By Lou Barnes, Friday, September 26, 2008.

Mortgage rates are unchanged, about 6.125 percent, just one aspect of completely frozen credit markets, hostage to a political moment without parallel.

The real economy is tipping over: New claims for unemployment insurance last week jumped to 493,000 from the 450,000 range. Orders for durable goods in August plunged 4.5 percent, double the forecast decline, and sales of new homes free-fell 11 percent. more...

Mark this day: The worst is over

By Lou Barnes, Friday, September 19, 2008.

Mark this day: The worst of this crisis has passed. However, not yet the halfway point in time: We are 13 months into this wreck, and you'll sure as hell feel credit-market distress 13 months from now even though the greatest risk has passed.

I wrote last week that I heard "hoofbeats of cavalry on the way" -- for a while this week it looked as though John Wayne had arrived to shoot the settlers and give firewater to the Apaches. more...

The politics of bailout: a waiting game

By Lou Barnes, Friday, September 12, 2008.

Mortgage rates have not been able to hold the early-week low at 5.875 percent, but are no worse than 6 percent for the lowest-fee deals.

The Fannie-Freddie takeover instantly knocked retail mortgage rates down 0.375 percent, but that's been it. The sky-high spread versus the 10-year Treasury note has compressed from 270 basis points to mere cloud-height 235 basis points -- but that's still 70 basis points too high. more...

Is the Fed out of options?

By Lou Barnes, Friday, September 5, 2008.

A big run to Treasurys has pulled mortgage rates down to 6.25 percent, but the spread to the 3.58 percent 10-year T-note remains immense.

Three forces have knocked all Treasury yields down a quarter percent in four days. First, money scrambling to get out of commodities and the euro has to go somewhere, and the first preference of the foreign investor is Treasurys. more...

Fed gets it: Credit crisis trumps inflation

By Lou Barnes, Friday, August 29, 2008.

Mortgage rates improved again this week, slightly, to 6.375 percent and the 10-year T-note trading often just under 3.8 percent, a resistance level since spring. The improvement anticipates a weakening economy, but a further decline in rates will depend on the fact of weakness. A test comes quickly, in the first August data due next week. more...

Fannie-Freddie deathwatch begins

By Lou Barnes, Friday, August 22, 2008.

Mortgage rates bottomed again at 6.5 percent, as they have since May, maintaining a consistently wide spread to the 10-year T-note, which bottomed at 3.8 percent. It will take a substantial negative economic event or news to break below these rates.

Economic data were thin. The July index of leading indicators fell hard, the outsize 0.7 percent drop entirely due to rising claims for unemployment benefits and a big slide in building permits. more...

Feds, don't forget Ginnie, the other GSE

By Lou Barnes, Friday, August 15, 2008.

Mortgage rates are falling, almost 6.5 percent with the lowest fees. All other interest rates are headed down as well, on a glide path parallel to the global economy: the 10-year T-note to 3.83 percent (traded 4.1 percent only a week ago), and the 2-year down to 2.37 percent acknowledges zero probability of a Fed rate hike from its current 2 percent overnight rate.

Domestic data are sliding at shallow slope, but the stuff from overseas is dramatic. more...

'The Crunch' is on the loose

By Lou Barnes, Friday, August 8, 2008.

Mortgage rates are a hair lower, under 6.75 percent now, but spreads to Treasurys have widened despite overt Treasury backing of Fannie and Freddie.

There is a three-track story unfolding today: the U.S. economy, the ex-U.S. global economy, and The Crunch. To maintain clarity and composure, keep 'em separate! more...

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