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High Anxiety
by Portfolio Staff
Jul 25 2008
Jul 25 2008
Thursday's drubbing shows that investors don't think the world's financial giants are anywhere near safe ground, and new foreclosure numbers aren't helping.
If the Dow crumbling almost 300 points yesterday wasn't enough to make Wall Street seem a little hotter and stickier on a summer Friday, climbing home-foreclosure results are setting up more pain for financial giants.
Plummeting home prices and a generally weak economy sparked Americans foreclosure filings to more than double in the second quarter compared to last year, RealtyTrac said today in a statement.
Those numbers, combined with home-sales reports and surely more public concern about banks, are setting up continued anxiety about the health of banks and securities firms. That concern—which led the sector to its worst single day since 2000—spread internationally as Asian and European markets were down. The only bright spot was that oil prices continued to slip.
Only CNBC's Larry "Drill, drill, drill" Kudlow seemed to think things were turning around for the financials and that the wide-ranging problems they were facing were 80 percent complete. While swirling rumors that Lehman Brothers was considering off-loading its Neuberger Berman asset-management unit to raise cash might have comforted its shareholders, it sent further scary signals to the rest of us.
And despite the recent investments in the sector, the housing market showed few signs of turning around despite the promise of help from Washington.
According to a Bloomberg report on the numbers, one in every 171 U.S. homeowners lost their house to foreclosure, received a default notice, or was warned of a pending auction—an increase of 121 percent from a year earlier and a 14 percent rise from the first quarter.
Almost 740,000 properties were in some stage of the foreclosure process, the most since January 2005, when RealtyTrac began tracking the numbers.
This latest set of stats is likely to send a bit of a shiver through a market already sweating the health of large financial companies. On Thursday, Citigroup, Washington Mutual, and Merrill Lynch led the way down. The pressure on Washington Mutual was such that the bank had to issue a public statement of financial health to quell rumors of deeper problems.
The pros are worried too. According to 24/7WallSt.com, Bill Gross, bond management genius and head man at Pimco, has recently said that the total write-offs for the mortgage disaster will total $1 trillion. At most, half of that has made it through the financial system.
Plummeting home prices and a generally weak economy sparked Americans foreclosure filings to more than double in the second quarter compared to last year, RealtyTrac said today in a statement.
Those numbers, combined with home-sales reports and surely more public concern about banks, are setting up continued anxiety about the health of banks and securities firms. That concern—which led the sector to its worst single day since 2000—spread internationally as Asian and European markets were down. The only bright spot was that oil prices continued to slip.
Only CNBC's Larry "Drill, drill, drill" Kudlow seemed to think things were turning around for the financials and that the wide-ranging problems they were facing were 80 percent complete. While swirling rumors that Lehman Brothers was considering off-loading its Neuberger Berman asset-management unit to raise cash might have comforted its shareholders, it sent further scary signals to the rest of us.
And despite the recent investments in the sector, the housing market showed few signs of turning around despite the promise of help from Washington.
According to a Bloomberg report on the numbers, one in every 171 U.S. homeowners lost their house to foreclosure, received a default notice, or was warned of a pending auction—an increase of 121 percent from a year earlier and a 14 percent rise from the first quarter.
Almost 740,000 properties were in some stage of the foreclosure process, the most since January 2005, when RealtyTrac began tracking the numbers.
This latest set of stats is likely to send a bit of a shiver through a market already sweating the health of large financial companies. On Thursday, Citigroup, Washington Mutual, and Merrill Lynch led the way down. The pressure on Washington Mutual was such that the bank had to issue a public statement of financial health to quell rumors of deeper problems.
The pros are worried too. According to 24/7WallSt.com, Bill Gross, bond management genius and head man at Pimco, has recently said that the total write-offs for the mortgage disaster will total $1 trillion. At most, half of that has made it through the financial system.
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