Wolf Richter

A Very Profitable Part Of Banking Goes Totally To Heck

Refinancing mortgages is phenomenally profitable for banks – one of the few growth sectors actually spawned by the Fed’s herculean efforts to force down long-term interest rates through waves of quantitative easing. Banks went on a hiring binge to shuffle all this paper around and extract fees. But now, with rising rates, that business is getting decimated.

LEAKED: German Government Warns Key Entities Not To Use Windows 8 – Links The NSA

Experts at the German Federal Office for Security in Information Technology (BSI) determined that Windows 8, the touch-screen enabled, super-duper, but sales-challenged operating system is dangerous for data security. It allows Microsoft to control the computer remotely through a backdoor – with keys likely accessible to the NSA.

When “QE Infinity” Turns Into A Pipedream: Hot Money Evaporates, Rout Follows – See Emerging Markets

Printing money and forcing interest rates to near zero, that’s how the Fed and other central banks papered over the Financial Crisis, duct-taped the bursting credit bubble back together, inflated new asset bubbles, and propped up TBTF banks. It accomplished a huge feat: a worldwide tsunami of hot money. Which is now receding.

Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit

The new salvation religion being preached in Japan to a hardened and cynical bunch who’ve lived through one of the worst bubbles and busts in recent history is this: prodigious money-printing will devalue the yen, causing exports to skyrocket and imports to shrink. The resulting trade surplus will save Japan. But the opposite is happening. And fast!

US Tech Companies Raked Over The Coals In China

China is the promised land for our revenue-challenged tech heroes: 1.2 billion consumers, economic growth several times that of the US, and companies splurging on IT. Layer the “cloud” on top, and China is corporate nirvana: a high-growth sector in a high-growth country. Or was nirvana, now that the NSA’s hyperactive spying practices have spilled out.

Retail Woes: They Shopped Till They Dropped

Men’s retailer Jos. A. Bank warned that sales in the quarter plunged 11%. OK, it suffered from management foul-ups, goofy marketing, obnoxious ads, and – at least at the store I looked at – dusty shirts on the shelf. But it isn’t an outlier. It’s the latest entry on a laundry list of revenue-challenged retailers whose woes are spreading relentlessly across the US.

Cisco CEO Reports Record Sales And “Lumpy” Demand, Just Like In November 2007, A Month Before Stocks Began To Crash

Cisco CEO Chambers gushed with positive vibes during the earnings call: “unbelievably strong results,” he said about the quarter. He talked about record revenues. “We have strong momentum,” he said, “very solid execution.” But he lowered guidance, lamented the debacles in China and Japan, and announced layoffs. Then he uttered the word “lumpy.”

This is What Mucks Up Housing, Costs Homeowners Dearly

Home prices have jumped around the country, in some cities over 20% on an annual basis. “Recovery of the housing market,” is what this phenomenon is called. Everyone from President Obama on down has taken credit for it, particularly the Fed, whose handiwork this is. But there is a very ugly fly in this illusory ointment.

Fed: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage….

What rabble-rousers, economists (those banished from the mainstream media), and bloggers have hammered on for years, a study by the San Francisco Fed finally confesses: Quantitative Easing didn’t do a heck of a lot of good for the real economy. The timing of the study is impeccable: the nearing end of QE – and the market mayhem it might cause.

Cracks In China’s Construction Bubble (But It’s Not Going To End)

China’s phenomenal construction bubble, driven by local governments that must keep their economies growing, no matter what the costs, and funded by state-owned megabanks, has led to an equally phenomenal misallocation of capital, overbuilding, waste, ghost cities, empty shopping malls, and now an epidemic of shuttered luxury department stores.