excellent - Dick Bove Sees Hope For Banks - Steve Forbes - The analyst whose call on BankAtlantic inspired a SLAPP lawsuit is optimistic about banking’s future - video at Forbes.com

————

FICO Scores Show Flaws as U.S. Banks Cut Consumer Credit Lines - By Alexis Leondis -… “Reductions to a consumer’s line of credit based upon the lending institutions’ overall appetite for risk has little or no bearing on a consumer’s own risk of default,” said Gutierrez, chairman of the House Subcommittee on Financial Institutions and Consumer Credit. … - Bloomberg
————

SoberLook - US Banks Will Roll the Wall of Maturing Debt - Author: Walter Kurtz - From NYT DealBook “Barclays Capital has analyzed financial company debt among United States institutions coming due over the next decade. During the rest of the year, for example, roughly $172 billion in debt will mature; in 2010, an additional $245 billion comes due. That amounts to about $25billion a month in debt rolling into a market with a shortage of buyers willing to invest in it.” - Riskcenter.com

————

George Soros: Obama Team Falls Short in Financial System Overhaul - Posted by: Mara Der Hovanesian - George Soros spoke to a full house of bankers, lawyers, Wall Street types and journalists this morning at Bryant Park Grill behind the landmark New York Public Library this morning. … He says that political rhetoric and “story telling” is shielding Americans from the harsh truth that the financial system is still in dire need of a dramatic overhaul and that our living standards based on debt and over-spending must be changed. “The political discourse is effectively manipulating reality,” he said. “The electorate needs to be concerned with the truth.” … - BusinessWeek Blogs

Last week I asked my doctor, “Should I reduce my alcohol intake, and consume more fruit and grains?” She replied, “No, not at all.  Wine is made from fruit.  Brandy is distilled wine, which means they take the water out of the fruity stuff so you get even more of the goodness that way. Beer is also made out of grain. Bottoms up!”

Alcohol is proven, by college students around the globe, to increase confidence. But why is confidence, or a lack of confidence, so important when it comes to the economy? Just like some diseases spread through being contagious, so does confidence. You’re at a party and overhear someone, or hear of someone, who says, “You know, things are getting better…” And so you start to look for signs to verify that. When people are confident they will go out and buy, invest, and lend. Math-a-letes, far smarter than me, have developed correlation models between how confident the public is, shown in various surveys, and the GDP of a country. And in fact if you look back at the depressions in the 1890’s, or 1930’s, what is obvious is a lack of confidence, and people are distrusting. (In the dictionary “confidence” means trust or belief, and in fact comes from the Latin “fido”, meaning “I trust”. “Credit” comes from credo in Latin, meaning “I believe”. See, who said you never learn anything new?)

Yesterday the Conference Board announced that Consumer Confidence dropped to 49.3 in June from 54.8 in May. Based on that alone, you would believe that the economy is not out of the woods yet – which is probably true. The S&P/Case-Shiller Home Price Index of 20 U.S. Cities decreased 18.1% in April from a year earlier following an 18.7 percent drop in March. But the measure was down 0.6 percent in April from the prior month, the best performance since June 2008, and eight of the 20 cities showed an increase in prices from March. In the last 12 months the worst performers were Phoenix (-35%), Las Vegas (-32%) and San Francisco (-28%). In more news, the Chicago Purchasing Managers Manufacturing Activity index rose to 39.9% in June from 34.9% in May, although a reading below 50 indicates a continued contraction.

Although the 10-yr yield is at a 1-month low, why aren’t rates lower? Well, as has been mentioned, not only is the government selling lots of bonds (supply goes up, so unless demand goes up prices will go down, and thus rates move higher) but there are also fears that a big increase in debt-fueled government spending will push up inflation. Tomorrow we have the Employment report, which is predicted to show Non-farm Payrolls down 363,000, with the unemployment rate hitting 9.6%, already at the highest level in more than 25 years. Today we have Construction Spending and Institute of Supply Manager’s Survey, and ahead of those numbers the yield on the 10-yr is at 3.58% and mortgages are worse by .250 in price.

Things slow at your lock desk? With these higher rates, mortgage applications fell last week by the most since February. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan was -19%, with the refinancing gauge down 30 percent, and purchases down 4.5 percent.

In other business/moral news, Russia closed down its casinos overnight as gambling was banned nationwide, which may impact over 300,000 workers. According to the Reuters story, “Vladimir Putin, now prime minister, came up with the idea in 2006 when he was president after the Interior Ministry linked several gaming operations in Moscow to Georgian organized crime. The Kremlin plans to restrict gambling to Las Vegas-style gaming zones in four rarely visited regions deemed to need investment, including one near the North Korea border, but nothing has been built and critics say the zones will fail. Though gaming establishments knew the shutdown date for at least a year, few thought the government would go through with it, but officials moved in overnight to close them down.”

Starting today, Wells Fargo wholesale is offering the Freddie Mac Relief Refinance Mortgage and DU Refi Plus programs in combination with the High Balance Conforming Loan programs.

How is the mortgage relief program going? The Treasury Department has approved three more firms for its mortgage relief program: National City Bank of Miamisburg, Ohio; Technology Credit Union of San Jose, Calif., and Citizens First Wholesale Mortgage Co. of The Villages, Fla. This brings the number of companies participating in the mortgage effort to 23 with the total amount authorized for all of the firms rising to $17.98 billion out of a maximum of $50 billion the government has said it could spend on this program. The money is being provided to support the government’s effort to combat a wave of mortgage foreclosures by giving incentives for homeowners to modify their existing mortgages.

Finally, this from the latest issue of “Women’s Health”:
“Do you have feelings of inadequacy? Do you suffer from shyness? Do you sometimes wish you were more assertive?
If you answered yes to ANY of these questions, ask your doctor or pharmacist about Margaritas.
Margaritas are the safe, natural way to feel better and more confident, about yourself and your actions.
Margaritas can help ease you out of, your shyness and let you tell the world that you’re ready and willing to, do just about anything.
You will notice the benefits of Margaritas almost immediately and with a, regimen of regular doses you can overcome any obstacles that prevent you, from living the life you want to live.
Shyness and awkwardness will be a thing of the past and you will discover many talents you never knew you had. Stop hiding and start living with Margaritas.
Margaritas may not be right for everyone. Women who are pregnant or, nursing should not use Margaritas. However, women who wouldn’t mind nursing or becoming pregnant are encouraged to try it.
Side effects may include: Dizziness,  nausea,  vomiting,  incarceration, loss of motor control, loss of clothing, loss of money, loss of virginity, table dancing, headache, dehydration, dry mouth, and a desire to sing Karaoke,
The FINE PRINT on bottles says: WARNING: The consumption of Margaritas may make you think you are, whispering when you are not. The consumption of Margaritas may cause you to tell your friends over and over again that you love them. The consumption of Margaritas may cause you to think you can sing.
WARNING: The consumption of Margaritas may make you think you can, logically converse with members of the opposite sex without spitting.”

Rob

(For archived commentaries, check www.robchrisman.com,

or to subscribe/unsubscibe write to rchrisman@robchrisman.com)

Are you a glass Half-Full or Half-Empty person? In these very challenging times, the first 181 days of 2009 may go down as one of the most memorable times in U.S. history. The question will be if it will be a good memory or not. The combination of economic data and period items mark this time in history, so you make the decision:

• President Obama, the first U.S. afro-American President, is inaugurated on January 20, 2009.
• The U.S. economy is in economic recession after real estate and financial crisis starting in 2008.
• Super Bowl XLIII on February 1, 2009 sees the Pittsburgh Steelers defeat the Arizona Cardinal 27-23 for their 6^th overall NFL Title.
• The DJIA saw a 587 point fall from January 2 to June 20, 2009 or 6.5% drop as companies struggle for earnings and a path to recovery.
• Energy prices climb, as oil prices fluctuate from a low $40 per barrel to $70 in late June. And according to AAA, the National Average for Regular Gas Price per gallon rises from approximately $1.80 on June 2 to over $2.60 by June 30, 2009, but down dramatically from $4.09 per gallon this time last year.
• The NHL saw a renewed battle from last year’s Stanley Cup Finals, but this time the Pittsburgh Penguins defeat the Detroit Red Wings in 7 games, for their 3^rd Stanley Cup.
• The U.S. unemployment rate continues to rise, closing in on double-digits, starting from 7.6% in January to 9.4% in May, a 24% increase. Will the stimulus package bring relief?
• Home values fall hardest in history, as according to S&P Case-Schiller Home Price Index the national average fell approximately 20%. But prices have started to stabilize in many areas.
• The yield curve steepens; as the 2YR CMT was .88% on January 2 and currently at 1.11%, while the 10YR CMT was 2.46% on January 2 and currently at 3.53%, with a spread of the two indices of 1.58% in January and currently at 2.42%. Many fear inflationary pressures, but historically still low rates overall.
• The NBA saw the Kobe Bryant led L.A. Lakers defeat the Orlando Magic for their 15^th overall NBA Title.
• The FDIC has closed 44 banks year-to-date.
• Financier Bernie Madoff convicted in $50B ponzi scheme and sentenced to 150 years.
• The U.S. Big 3 Auto Companies become 1, as GMC and Chrysler file for bankruptcy.
• The U.S. mourns the deaths of some famous Americans; Dom DeLuise, Ed McMahon, Farah Fawcett and Michael Jackson.
• Tiger Woods makes recovery from injury to win 2 PGA Tournaments in 2009.
• Mortgage originations increase over 71% in Q1’ 09 compared to Q4 ’08.

Will the combination of increased government debt and lower consumer spending keep rates low long enough to spur on the recovery? Or is the calm before the storm? The U.S. economy has recovered before and found momentum to go forward. So Half-Full or Half-Empty?

Scott is Principal of SBW Advisors, an advisory and consulting firm servicing the mortgage, banking and credit union industries. With over 25 years experience, they can offers services in Secondary Marketing, Warehousing, Broker to Banker transitions, Servicing and Accounting. You can reach Scott via www.SBWAdvisors.com and email at scott@SBWAdvisors.com

short paper - Guest Post: The Future - Deflation - Posted by Tyler Durden - Submitted by James Perry - Zero Hedge

————

A Faster Lost Decade? - Is the United States economy headed for a Japan-style lost decade? Evoking our February, 2008, item “Faster Markets,” Slate’s Daniel Gross suggests that the deep, ongoing recession in the United States may unfold much more quickly than Japan’s analogous bubble-bust of the 1990s. This is good stuff: … - Float Blog at Interlake Capital

————

Consumer Spending: Savings Will Soon Drive Increased Spending - Bill Conerly - I’ve been saying that consumer spending would soon increase.  It has not happened yet, but consumers are now in position to get going.  The key concept is that consumers have not been income constrained, as a group.  In the aggregate, they are simply scared. - Businomics Blog

————

The Mysteries of the Housing Wealth Effect - The saving rate has risen, surprise, surprise, surprise. The housing wealth effect is one of the most well-known phenomena in economics. The basic point is that people will spend more as a result of their housing wealth. Estimates of the size of the effect vary, but most are in the range of 5-7 percent, meaning that people will spend 5-7 cents each year out of every dollar of housing wealth.. Because of this wealth effect, it is not surprising that the saving rate has now risen from below zero to above 6.0 percent - Dean Baker Beat The Press Blog

————

Lottery Winners & Mt. Pelosi: Ruined by Good Luck - By Bill Bonner - on the fate of lottery winners (read this) and the mountain of money we are creating - Daily Reckoning
————

Did Homeowners Cause The Great Recession? - Joel Kotkin - Welcome to the new feudal age. - Forbes

————

Freddie Mac Delinquencies and Unemployment Rate - by CalculatedRisk - Yesterday I posted a graph of the Freddie Mac delinquency rate by month since 2005. I was asked if I could add the unemployment rate … so by request ..

SEVERELY Bearish Treasury Development - From Marketwatch: NEW YORK (MarketWatch) — Dresdner Kleinwort Securities has withdrawn from the Federal Reserve’s primary U.S. government security dealers, the U.S. central bank said Friday.  The change is net neutral in terms of numbers as a new dealer just came online, but in general this is a major net negative for the Treasury market. - The Market Ticker

————

How to: I Hedged my Gas Prices Today - … I took the simple income approach, which was to sell puts against the gas ETF UGA. I sold two puts with an October expiry for .95 each = $190, or ~$180 after commission. With UGA trading over $32 per share, gas prices will need to drop 15% in order for the UGA shares to even approach breakeven.  … - Everyday Finance

————

The Collapse Of The Non-Backstopped Agency Market - Posted by Tyler Durden - … And just in case you are curious who it is that purchases all those low, low coupon MBS out there: the Federal Reserve has bought almost half a trillion at a coupon less than 4.5%. Does Ben Bernanke honestly believe that taxpayers generating a 4.5% return is enough to continue to finance the homeownership mania? … - Zero Hedge

————

Foreclosure Auction Bidding Wars - by CalculatedRisk - First from Matt Padilla: Frenzied bidding on discounted foreclosures … also has a video

————

Six Reasons Housing Will Still Go Down    - Written by Christian DeHaeme - Taipan Publishing Group
————

good and bad - Florida Home Sales Increase for 9th Straight Month - Mark Perry -  Carpe Diem Blog
————

Bond Dealers Say Worst Over as Demand Soars at Sales - By Daniel Kruger - Wall Street’s largest bond-trading firms say the worst may be over for investors in Treasuries after government securities posted their biggest first-half losses in at least three decades. … “We have seen an incredible amount of demand,” said Richard Tang, head of fixed-income sales at primary dealer RBS Securities Inc. in Stamford, Connecticut. “A lot of it is asset reallocation, out of risk assets and commodities. It’s been significant. … - Bloomberg

————

Financial Services M&A to Continue Despite Credit Meltdown, Says Tiburon Study - By Donna Mitchell - … Despite the credit-market meltdown, Roame predicts that as many as 200 mergers and acquisitions among financial services firms, valued at about $1 trillion per year, will take place by 2013.  … - Financial Planning

I overheard the kids last night talking about doing chores. My daughter said, “If we stop dusting, we could use the coffee table for a message board!” Speaking of message boards, I have seen a few analysts state that they believe property appraisals are keeping a lid on values. More precisely, when home prices start to increase near the end of a recession, even though buyers are willing to pay more, appraisals often come in lower than the agreed-upon price because they’re based on comparable sales from three to six months earlier, when prices were bottoming. Some blame the HVCC rules that force the broker to go through the lender’s management company rather than ordering an appraisal directly from the appraiser. Others, however, believe that the new appraisal process is preventing agents from pushing buyers into purchases above market value, and these values are about the same as they were some months ago.

CitiMortgage announced that beginning next week, on the 11^th, Fannie Mae Expanded Approval (EA) and Freddie Mac A-Minus programs will be discontinued and that they will no longer accept loans with DU findings of EA or LP findings of A-Minus, with the exception of Community Lending and CalPERS products. “MyCommunityMortgage and Home Possible programs will continue to accept EA and A-minus findings respectively.”

MGIC reminds their clients that as of tomorrow California is considered a Tier 2 state, like boarding Southwest Airline’s in the “B” group instead of the “A” group, and that two unit properties will no longer be eligible for insurance in Restricted Markets. In addition, after tomorrow nontraditional credit will be limited to a maximum LTV of 90% in all markets, 2-unit properties will be ineligible in all Restricted Markets, and MGIC is renaming its Restricted Markets and Restricted States segments to “Tier One” and “Tier Two”
Restricted Markets.

How does one reconcile the fact that the unemployment rate in Japan is at a 5 1/2 year high, yet their stock market rose yesterday to give them their best quarterly gain (23%) since 1995? Or folks seem to be ignoring the fact that five institutions (insured by the FDIC), including two each in Georgia and California and one in Minnesota, were closed last Friday, bringing the total for 2009 to 45. The FDIC estimates the total cost of the five failures alone to its Deposit Insurance Fund to be $264.2 million?

As many thought, our markets have been a little choppy since last week’s FOMC meeting. The Fed believes that the economy will be slow for quite some time, yet they are in an early-stage exit strategy of its “quantative” easing. And if the economy has indeed bottomed out, in spite of the looming foreclosures, unemployment, commercial real estate issues, etc., etc., rate markets will worry about inflation. And don’t forget the supply issues – although there are no auctions this week, next week we will see, and have to absorb, probably $75-80 billion of 3-, 10- and 30-year securities. For economic news, later this morning we will see Consumer Confidence and the Chicago Purchasing Manager’s Survey, but for now the 10-yr (3.53%), 5-yr, and mortgage prices are all roughly worse by .250 versus yesterday afternoon’s levels due to the news and continued worries about higher rates if the economy picks up steam.

Why men don’t write advice columns:

Dear Walter:

I hope you can help me here. The other day I set off for work leaving my husband in the house watching the TV as usual.

I hadn’t gone more than a mile down the road when my engine conked out and the car shuddered to a halt. I walked back home to get my husband’s help.
When I got home I couldn’t believe my eyes. He was in the bedroom with a neighbor lady making mad passionate love to her.

I am 32, my husband is 34 and we have been married for twelve years. When I confronted him, he broke down and admitted that he’d been having an affair for the past six months.

I told him to stop or I would leave him. He was let go from his job six months ago and he says he has been feeling increasingly depressed and worthless. I love him very much, but ever since I gave him the ultimatum he has become increasingly distant. I don’t feel I can get through to him anymore.

Can you please help?

Sincerely, Puzzled in Poughkeepsie

Dear Puzzled:

A car stalling after being driven a short distance can be caused by a variety of faults with the engine. Start by checking that there is no debris in the fuel line. If it is clear, check the jubilee clips holding the vacuum hoses onto the intake manifold. If none of these approaches solves the problem, it could be that the fuel pump itself is faulty, causing low fuel delivery pressure to the carburetor float chamber or fuel injection system.

I hope this helps.

Walter

Rob

(For archived commentaries, check www.robchrisman.com,

or to subscribe/unsubscibe write to rchrisman@robchrisman.com