Economic predictions?

[ivan1]

Next in line for bailout?

NEW YORK - Shares of life insurers tumbled on Friday after Standard & Poor's Ratings Services cut its credit ratings on numerous companies, saying the troubled economy is putting increased pressure on their assets.

Among the companies that saw their ratings cut were MetLife Inc., Hartford Financial Services Group Inc., Prudential Financial Inc. and Conseco Inc., among others. The ratings agency said the global economy and "severe equity market declines" would weigh on the companies' operations.

"Given the disarray in the credit and capital markets, most insurers' financial flexibility has decreased in the past six months," the ratings agency wrote in a report on Thursday.

Deutsche Bank analyst Darin Arita said in a client note on Friday that life insurers have been reporting lower operating earnings, high investment losses and growing unrealized losses, and added that the downgrades would likely continue.

Shares across the sector took a beating. MetLife shares plunged $5.03, or 21 percent, to $18.96 in midday trading. Hartford shares lost 90 cents, or 12.6 percent, to $6.26. Prudential shares fell $1.39, or 7.4 percent, to $17.48. Conseco shares slumped 30 cents, or 19.4 percent, to $1.25.

[apk919]

Originally Posted by jordantii

I here ya. You are in the insurance biz, right? It is a double edge sword. But using credit scores to determine driving habits is pretty interesting. I would love to see what the differences actually are. How big is the gap and so fourth?

I bet you could create a lot of skewed statistics using Fair Isaac models. They are terribly inaccurate and filled with false information about consumers. If you knew how the big three operated you would be amazed at what they get paid for and what they don't. Lets just say that they are not in the business of being accurate. Some may see that as a bad thing. But if you wanted to clean up your credit, even if the info is accurate, it can still be wiped clean.

I'm sure there are plenty of circumstances where a person's credit score is misleadingly high or misleadingly low... the problem is that there's limited data and it has limited accuracy...

The point of a credit model (or a prepayment model, actuarial model, etc.) is not to get everyone's score perfectly accurate, but rather to be accurate in aggregate, so the probability of default (or whatever you're modeling) within each interval of scores is as close to the actual average probability as possible.

[jordantii]

Originally Posted by apk919

I'm sure there are plenty of circumstances where a person's credit score is misleadingly high or misleadingly low... the problem is that there's limited data and it has limited accuracy...

The point of a credit model (or a prepayment model, actuarial model, etc.) is not to get everyone's score perfectly accurate, but rather to be accurate in aggregate, so the probability of default (or whatever you're modeling) within each interval of scores is as close to the actual average probability as possible.

I agree with the logic Apk and I can see how it "could"be valuable. But the amount of in accurate data is astounding. And how the data is used is even more astounding.

Let me give you an example of one rule the big three have.

When my company would buy a debt, we were not allowed to report on the status of the debt due to the size of our company. It did not matter that were we running millions and millions through the company. All it had to do with was how many submissions we were going to be making to the big three each and every month. We did not met those minimums.

So some data never even makes it to the report, the good and the bad. This is not fair to either lender or borrower.

We would tell all of our customers to dispute the debt they had with us, no matter what the status of the debt. One for one it would be removed from the credit report. We are talking about mortgages. Big loans with big balances and sometimes long histories. Wiped from all 3 reports like they never existed.

These models are for sale and that is what the big three and F.I. do to make money. The big three makes most of it's money selling information claimed to be accurate. All of those non impacting inquiries on your credit report reflect when some entity "bought" your information. Private companies are getting a good look at what some believe should be private information.

[apk919]

Originally Posted by jordantii

I agree with the logic Apk and I can see how it "could"be valuable. But the amount of in accurate data is astounding. And how the data is used is even more astounding.

Let me give you an example of one rule the big three have.

When my company would buy a debt, we were not allowed to report on the status of the debt due to the size of our company. It did not matter that were we running millions and millions through the company. All it had to do with was how many submissions we were going to be making to the big three each and every month. We did not met those minimums.

So some data never even makes it to the report, the good and the bad. This is not fair to either lender or borrower.

We would tell all of our customers to dispute the debt they had with us, no matter what the status of the debt. One for one it would be removed from the credit report. We are talking about mortgages. Big loans with big balances and sometimes long histories. Wiped from all 3 reports like they never existed.

These models are for sale and that is what the big three and F.I. do to make money. The big three makes most of it's money selling information claimed to be accurate. All of those non impacting inquiries on your credit report reflect when some entity "bought" your information. Private companies are getting a good look at what some believe should be private information.

I'm sure there are plenty of cases where people have things on the record that don't belong, and don't have things that do. It's a good reason to monitor your credit report, either through the free access that the law provides, or a reputable monitoring service.

The fact that the models are for sale should be an incentive for the big three to make them as accurate as possible... don't the consumers of the models (lenders) have an incentive (especially in current times) to have accurate data? I assume there are reasons why they have minimums... maybe they find that smaller submitters are less accurate or even fraudulent (obviously not implying anything about your company).

I spent a lot of time writing, calibrating, testing, and trading from different econometric models... you always had to decide which data you can use to calibrate a model, and inevitably you would have to throw some out for various reasons. The signal to noise (good data to bad data) ratio for some information might not be great, but if you can still pull out a meaningful signal, it's certainly better than nothing.

[PhlypSide]

Wow...

Originally Posted by BostonHerald.com

Economy’s reverse quickens
By Associated Press | Saturday, February 28, 2009

WASHINGTON - The economy is moving in reverse faster than the government can measure.

The contraction for the fourth quarter of 2008 had been estimated at 3.8 percent just a month ago. Then the Commerce Department raised it to an astonishing 6.2 percent yesterday - the largest revision on record. That was the economy’s worst showing in a quarter-century and raised the prospect that the U.S. could suffer its worst year since 1946.

“Consumers are just hunkering down and saying ‘game over,’ and businesses in response are cutting back on investment and employment,” said Brian Bethune, economist at IHS Global Insight.

On Wall Street, stocks fell as investors reacted to the GDP report and other grim financial news. The Dow Jones industrials fell more than 119 points to 7,062.93, its lowest close since May 1, 1997.

Article URL: Economy’s reverse quickens - BostonHerald.com

[Bleu Omdurman]

Channel stuffing anyone?

Originally Posted by Flash G

Interesting pictures...



Growing stocks of unsold cars around the world | Business | guardian.co.uk

Because of the economic slowdown, cars are starting to pile up at manufacturing facilities.



.

[Bleu Omdurman]

Originally Posted by apk919

I give up...

I don't blame you. Some people don't know the difference between a stock and a flow.

[MattG]

AIG continues to deteriorate...when will we hit bottom? We're committing another $30 billion to bail them out, without confidence that further bailouts won't be necessary.

U.S. commits further $30 billion to AIG: sources | Reuters

[tandemracer]

Originally Posted by apk919

The fact that the models are for sale should be an incentive for the big three to make them as accurate as possible... don't the consumers of the models (lenders) have an incentive (especially in current times) to have accurate data? I assume there are reasons why they have minimums... maybe they find that smaller submitters are less accurate or even fraudulent (obviously not implying anything about your company).

I build predictive models using credit data and I used to work at one of the big 3. I can tell you first hand that credit data is a big mess and is rarely absolutely complete and accurate. What the bureaus count on is that when used in aggregate that the data is predictive enough to be able to charge a premium for it. They don't need to be right all the time, just most of the time. Ain't statistics great?

There is a reason that for major decisions most companies will pull scores from all 3 bureaus. There is an assumption that there is incorrect information out there, so the safe route is to pull 3 scores and drop the high and low ones.

Definitely review your credit reports regularly. Especially now with identity fraud on the rise.

[MattG]

Worst job losses in 60 years expected - MarketWatch

More bad news for today. Excerpts:

First, on Monday, the Institute for Supply Management reports back from purchasing managers at manufacturing firms across the nation.
Although few people outside of the financial markets or the economics profession know what it is, the ISM is probably the best single leading indicator marking the end of a recession. The ISM is a diffusion index that measures the breadth of economic distress or success across firms. It asks key executives to judge whether business is getting better or worse.

Once the ISM -- and especially the new-orders component -- turns up decisively, the expansion is typically one to four months away, although in some cases it has turned up as much as a year before the end of a recession.

The ISM plunged to 32.9% in December -- a level only seen at the depths of the very worst recessions -- but it bounced back to 35.6% in January, giving some hope that we'd seen the bottom.

Unfortunately, the ISM is expected to dip back to 34% in February, according to the median forecast of economists surveyed by MarketWatch, as global export markets worsened and U.S. capital spending remained weak.

The key components to watch will be new orders, export orders and inventories. Manufacturers' own inventories are too high, and they judge that their customers' inventories are too high as well. Once customer inventories are worked down, factories can get back to work.

Horrendous payroll numbers

If the ISM is forecast to be awful, the nonfarm payrolls report is expected to be horrendous. The Labor Department is slated to report the figures Friday.

Economists expect payrolls to plunge 630,000 in February, slightly more then the 598,000 lost in January and the 597,000 lost in November. The unemployment rate is expected to climb to 7.9% from 7.6%, breaking through the 7.8% peak in the 1991 recession to the highest level since 1984.

It would mean that a record 4.2 million jobs will have been lost since the recession began in December 2007, with no end in sight.

"Employment losses have deepened considerably in recent months," wrote economists for Wachovia, who expect total losses for the recession to top 6.5 million.

"With total revenue declining at its worst pace since the late 1950s, many businesses and governments are in survival mode and have no choice but to cut jobs," Wachovia economists said

The main evidence for a worsening job market has been the rise in unemployment benefits. First-time claims have risen decisively over 600,000, nearly double the level at the beginning of the recession. Continuing claims are at an all-time high. Consumer surveys also show extreme pessimism about finding a job.

While some forecasters think job losses in February stayed in the ballpark of about 590,000, a few economists think the labor market got much worse in February and are expecting losses of 650,000, 700,000, or in one case, even 800,000.

Translation - we're nowhere near bottom yet.

[PhlypSide]

Global Recession, Global Economic Recession, Global Recession Status :: Dismal Scientist

[Bane]

You guys in CA are making me really nervous about driving my new BMW from Sacramento all the way back to AZ. It sounds like there are thousands of homeless people aimlessly wandering the streets looking for a rich person to pounce on and eat their brains (or steal their wallet).

Makes it even worse that I can't bring a firearm into the People's Republic of California.

[Randy Chase]

I doubt you have to worry at this point, but if anyone thinks the concern over "class warfare" is silly-

Yep, That'll Fix It: Berlin youths torching Porsches, BMWs over economy

French youth like to burn cars on New Year's - and they don't mind lighting a few the rest of the year, either. German youths apparently really get their "arson on" when the economy takes a dip, as it happens to be doing right now. According to Bloomberg, at least 29 luxury vehicles have gone up in flames in Berlin so far this year, instigated by "'youths across Europe who 'perceive their future as rather precarious'."

The torchings in Berlin have been centered on the nicer, gentrified areas of town like Prenzlauer Berg, where some residents feel they are being squeezed out to make room for the moneyed. There is even a group called BMW that is claiming responsibility for some of the fires, but this time the acronym stands for the Movement for Militant Resistance (auf Deutsch, naturlich).

If cars are going up in smoke so quickly right now, perhaps the real question is: What will the disgruntled turn to next when things get worse? The police have created a special unit to investigate the arson, since it's considered a political act, but the advice from a Berlin police commissioner is: "I wouldn't advise someone to park their Porsche on the street."

[Randy Chase]

Industry News: Toyota Now Renting Shipping Vessels To Store Unsold Cars

Toyota sales have slowed down so much in Europe, unsold cars sitting dockside in Malmo, Sweden have outgrown lots, forcing Toyota to rent a shipping vessel as a floating parking lot for 2,500 unsold cars.

We already knew unsold cars were sitting in giant parking lots all over the world, but according to the port operators in Malmo, their 12,500 car capacity lots are full so the cars have to go elsewhere. As a result, Toyota has been forced to contract the services of global car shipper Wallenius Wilhelmsen to park one of their 2,500 car capacity overseas ships in the port to act as a great big floating parking garage. When Toyota not only can't even their cars on to dealer lots, they can't even get 'em off the boat, you know things are getting serious.

[Lotus Fury]

I was pretty optimistic that this down cycle would be short and sharp - until we started hemorrhaging jobs. Now it's pretty damn dark. I hope by the end of the year we will start coming back. I remember laughing when someone said that that Dow would hit 6500 - now that's not that far off and seems very likely if not even lower.

But, still, I am investing in the market and when the good times roll again I am set to make huge gains... and losses until then...

[Randy Chase]

My perspective has also shifted to where I feel strongly things are going to continue to get worse. We may see DOW 5000 or lower. One report I read this morning said we may be in for a long (5-10 year) downturn.

[zuoom]

Originally Posted by Randy Chase

Industry News: Toyota Now Renting Shipping Vessels To Store Unsold Cars

this is a similar strategy that the oil companies used to store crude when it was in low demand n low price.

since it's so cheap to rent n use the ships instead of using land based facilities.

[JoshS]

Originally Posted by Randy Chase

I doubt you have to worry at this point, but if anyone thinks the concern over "class warfare" is silly-

[]

Trust me, you'll never see class warfare. They'll just pick a very small, very visable minority to place the blame on. What, people take responsibility for their own actions? They forced me to buy that house beyond my means. They forced to to drain the high equity out of my house, go on vacations, and buy fancy cars.

[MattG]

Here's some good news for a change! The US dollar is doing well compared to other worldwide currencies. As long as other countries continue to pour money into our system and continue to view the dollar as a 'safe haven', I think we can avoid a potential meltdown of our society and economy.

Weak economy...strong dollar - Mar. 2, 2009

[PhlypSide]

^^^^ Tis the equivalent of a financial "circle jerk", they're all beating off to the dollar, but the really funny(?) part is the international bankers are the ones secretly filming the whole session and using it as blackmail material later.

We're in the midst of a mass delusion, a game of musical chairs. Let's hope it pans out, or at least that the US gets to keep a chair.

I'd recommend buying supplies, equipment, and know-how (training/books) as a hedge.