Mish's Global Economic Trend Analysis |
JPMorgan, Bank of America Forgive Debts that No Longer Exist; Wonderful News! But For Whom? Posted: 29 Sep 2012 06:18 PM PDT In February, five of the nation's largest banks agreed on a $25 billion settlement over widespread, systemic mortgage fraud and related issues. The $25 Billion Deal, announced with huge fanfare, was supposed to help up to a million struggling homeowners, primarily via debt forgiveness. Let's flash forward a few months to see how debt forgiveness is working out in practice. Today, the New York Times notes Banks Forgive Debt That Isn't There. GREETINGS, unhappy homeowners! Here's some wonderful news: "We are canceling the remaining amount you owe Chase!" says a letter that JPMorgan Chase sent recently to thousands of home loan borrowers. "You are approved for a full principal forgiveness of your Home Equity Account," says another, from Bank of America.Wonderful News! But For Whom? If these events are happening on a broad scale, and I suspect they are, that $25 billion settlement will end up costing peanuts. Bear in mind, I have little sympathy for people who themselves purposely took out loans they knew they could never pay back, nor do I have sympathy for people who were willing partners in bank fraud. Regardless, I wondered at the time how the banks would take a $25 billion hit without getting crushed. Well, now we know. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
China New Export New Orders Decline At Fastest Pace in 42 Months; China's Precarious Rebalancing Act Posted: 29 Sep 2012 09:29 AM PDT HSBC China Manufacturing PMI™ shows Output falls at fastest pace since March. Key pointsChina's Precarious Rebalancing Act Discounting the continually over-optimistic comments from Markit economists in general, I would otherwise be puzzled by comments of Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC who said: "Chinese manufacturing growth is likely to be bottoming out. However, the sharper contraction of new export orders and the lingering pressures on job markets mean that Beijing should step up easing to support growth and employment. Fiscal measures should play a more important role in the coming months." What indication is there that manufacturing growth is bottoming out? In the first place, China manufacturing is in contraction, not growth. Moreover, the European recession is strengthening and a US recession is underway (just not recognized yet in my opinion). Thus it would be logical to assume China's export-driven economy is going to take another hit. Trade matters with Japan, and the debate over ownership of islands in the East China Sea are also unsettling. For a discussion, please see Japan PMI: Output and New Orders Contract Further Is Beijing going to step up and support employment and growth? I do not have the answer to that, but China needs to rebalance, and that rebalancing act will be painful. The transition to a consumer-led economy from an export and infrastructure-building economy will be slow and painful, but also very necessary. For further discussion of the need to rebalance and the problems facing China please see.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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