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Tuesday, August 21, 2007

Super China

While we panic over here, the Chinese are calmly stepping on the brakes again.

China Raises Rates for Fourth Time to Cool Inflation (Update1): "China raised interest rates for the fourth time since March to cool the world's fastest-growing major economy after inflation surged to a 10-year high.

The benchmark one-year lending rate will increase 0.18 percentage point to 7.02 percent tomorrow, the People's Bank of China said on its Web site. The one-year deposit rate will rise 0.27 percentage point to 3.6 percent.

China's economy grew at the fastest pace in more than 12 years in the second quarter on investment and exports. Consumer prices climbed 5.6 percent in July as the cost of food soared, while the central bank later cautioned that inflationary pressures were broadening."
The Chinese market remains invincible... for now. That bubble too will burst... Eventually.

Bank of England Loaned Money at Penalty Interest Rate (Update4): "The Bank of England said it loaned money at its penalty interest rate for the first time in more than a month after the U.S. subprime mortgage crisis prompted commercial banks to seek loans from other central banks.
The U.K. central bank loaned 314 million pounds ($628 million) from its standing facility at 6.75 percent yesterday, according to its daily report on money market operations in London today. The facility was last tapped on July 17."

How badly wounded is the bank that required the emergency funding? How many others are out there teetering on the brink? So many questions...

SachsenLB Has EU3 Billion in Subprime, Person Says (Update2): "Landesbank Sachsen Girozentrale, the German state-owned bank getting emergency funding, has about 3 billion euros ($4 billion) in investments linked to U.S. subprime mortgages, according to a person with knowledge of the matter."

Doh. The poor German tax payer gets to eat the loss in classic European socialism style.

German Investor Confidence Falls to Eight-Month Low (Update3): "Investor confidence in Germany, Europe's largest economy, fell more than economists forecast to an eight-month low in August as equity markets tumbled.
The ZEW Center for European Economic Research in Mannheim today said its index of investor and analyst expectations dropped to minus 6.9 from 10.4 in July. That's the lowest since December. Economists expected a decline to minus 1.5, according to the median of 36 forecasts in a Bloomberg News survey."

Capital One Closes GreenPoint Mortgage, Idling 1,900 (Update4): "Capital One Financial Corp. shut its GreenPoint Mortgage unit, eliminating 1,900 jobs, and lowered its earnings forecast as the worst U.S. housing slump in 16 years erodes demand for home loans."

Another victim of subprime slime.

Treasury Bill Yields Fall Most Since 1987 on Money Fund Demand: "Yields on U.S. Treasury bills fell the most in two decades on demand for the safest securities amid concern over a widening credit crunch.

Bill yields have fallen five straight days as money market funds dumped asset-backed commercial paper in favor of the shortest-maturity government debt. Three-month yields dropped the most since the stock market crash of 1987 and more than in the wake of the Sept. 11, 2001, terror attacks in the U.S, as funds shunned assets that may be linked to a weakening mortgage market."

The curve is steepening like there's no tomorrow... not quite unexpected really, seeing as there really is no tomorrow for some of these guys...
U.S. Home Foreclosures Almost Doubled in July, RealtyTrac Says: "U.S. homes in the foreclosure process almost doubled in July from a year earlier as variable-rate mortgages reset higher, leaving more homeowners unable to make their payments, according to RealtyTrac Inc., a seller of foreclosure data.

Lenders sent 179,599 notices of default, scheduled auctions or bank repossessions last month, a 93 percent increase, with the highest rates per household in Nevada, Georgia and Michigan. California, Florida and Michigan had the most homes caught in the foreclosure process, Irvine, California-based RealtyTrac said today in a statement."