For those who missed it, University of Illinois law prof Robert Lawless at Credit Slips posted a nice colourful update to YoY changes in US (personal – I presume) Bankruptcy Filings, state-by-state, along with a table rank-ordering the data. As one might expect, a year into crunchy credit coincidental to @$125 oil, vaulting coal prices, and 50% rises in many softs, the credit-sensitive states are ignominiously on top, with energy and ag states at the bottom. Using my own powers of visual agglomeration, there appears (make what you will of it) to be a decided red-state/blue-state schism to the changes.
Compare (or contrast) this to Business Bankruptcies posted and discussed in the Big Picture a few days ago. While there is some reasonable overlap, Lawless’ pictograph is more indicative of housing distress, and his discussion perhaps more reflective of the actual flashpoints across the country.
6 comments
Comments are closed.
I really don’t see the whole red state/blue state split. Areas that went up the fastest are coming down the fastest, be they Blue State–California Minnesota, Wisconsin, Oregon or Red State–Arizona, Florida, Nevada, Utah, New Mexico (of course New Mexico and Nevada and even some of the others are more “purple states”).
I do think New York to DC is about to get whacked in the second leg of the recession as they be hurt by declines in the finance and government sector. Texas could take a pretty big hit too as they get more government spending than you might think.
Mortgage Applications Decrease in Latest MBA Weekly Survey
http://rismedia.com/wp/2008-07-3…eekly-survey-8/
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending July 25, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 420.8, a decrease of 14.1% on a seasonally adjusted basis from 489.6 one week earlier. On an unadjusted basis, the Index decreased 13.7% compared with the previous week and was down 30.3% compared with the same week one year earlier.
Yup, I think that MBA Mortgage Applications Decrease is a number to taken very seriously. “on an unadjusted basis, the Index decreased 13.7% compared to the previous WEEK” (emphasis added). That one really caught my eye.
Can you say, off a cliff?
I think we have graduated from the Fed pushing on a string to FNM and FRE pushing on a string. Said string being the ever increasingly stringent underwriting standards now rolling through the banking industry. And how, pray tell, are FNM and FRE going to assist in the non-residential real estate bust heading toward us toward us like a very big steamroller?
The magic ingredient that is now well and truly gone: TRUST.
Thank you, Secretary Paulson, Chairman Bernanke, Chairman Cox. Might as well throw in Bair, since she is now a blog reader, and is complicit with the other three. They are making the classic mistake of thinking they are smarter than the market, with stakes of an historical magnitude. Like so many in the past, they will learn the hard way that playing with the market is like playing “Whack-a-mole.” Only the moles start to BITE.
Unfortunately, so will the rest of us learn and, further, we will actually PAY for it.
There are lies, damned lies and outright sophistry. You decide.
I'm not so sure that I would use, unadjusted, a red/blue dichotomy for bankruptcies. However, that is because the red/blue distinction is too coarse, and moreover frozen at one specific moment in time which is an imperfect snapshot of real socio-cultural boundaries. For example, Southern California is of a certainty a 'red state' wheres as Northern California is blue notwithstanding the redness of rural Northeast California. All that's to say that states as a categorizing device are not uniform, and so not so good. Counties are much better, as political operatives know too well, but that's too complex a framework for these distinctions, especially when visual inspection is the method to which our means must default.
However, the ol' Sunbelt, land speculation latifundia areas were all in for property speculation this time round, just as they were in the 80s. Thatis very evident, as is the incontrovertible 'redness' of the Sunbelt areas. They have disproportionately ballooned and deflated. Consider Florida, Arizona, SoCal, and Nevada, and without the full bubble Colorado also. You can tack on Virginia if you want, which is where the most severe DC area bubblization was. Texas was only just getting on board after their near death experience in the S & L meltdown, but there eve bubble patches flecking that excess of expanse. Michigan, Wisconsin, and Ohio don't fit this suggested model in some perspectives, since they never really had a bubble up (although their 'blueness' is no little in question, these are purple states in that metaphorical categorization). However, these areas had rot spots of embedded poverty which saw extensive predatory subprime lending, and it is those areas, now in full meltdown, which have pulled down the numbers in these particular states as I understand it. Perhaps you have a better insight there.
From my perspective, Cass, the land speculation bubble was far more a 'red' phenomena than a 'blue' one, and in that respect I'm with you on this. However, I would put it, without any real data mind you, more in the perspective that the 'red' behavior' would be more like taking out a funny number loan one can't really pay off while betting on appreciation to make the whole sum. The 'blue behavior,' by contrast, might look more like cashing out equity on a HELOC or a 2nd from a sensibly contracted mortgage in the money, only to be left short when prices went over the ledge. Not all property speculation is created equivalent, is I guess my point, although I can't prove that these two kinds of behaviors mapped at a statistically significant level to distinct social communities in various states of the Union.
Make of that what you will, and thanks for the post.
ScottH:
They are making the classic mistake of thinking they are smarter than the market, with stakes of an historical magnitude. Like so many in the past, they will learn the hard way that playing with the market is like playing “Whack-a-mole.” Only the moles start to BITE.
I prefer a “Whack-a-crocodile”
version, getting their asses chewed
off.
A good eye opener…excellent information!!