Okay, it's time to light the fuse under the political stick of dynamite. Who do you favor in November and why? From war to economics, the two presidential candidates are as different as black and white (seriously, no pun intended).

From the NY Times :

Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era, both of which are brilliantly delineated in a new book, “Unequal Democracy,” by Larry M. Bartels, a professor of political science at Princeton. Understanding them might help voters see what could be at stake, economically speaking, in November.

I call the first fact the Great Partisan Growth Divide. Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans.

The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.

That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.

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From CNBC , that bastion of financial news stuffs:

Pimco’s legendary bond investor Bill Gross said during “Street Signs” Thursday that his firm would be staying out of any and all bank offerings for the foreseeable future.

Banks the world over have raised $400 billion in capital, Gross said, and may need to raise much more. The problem, though, as yesterday’s $1.5 billion preferred offering at Wells Fargo showed, is that the institutional buyers are full, leaving only small investors to pick up the slack.

As Gross said, “There’s only so many billion and a half small investor bank capital deals that can be done from this point forward.”

 Don't say I didn't warn you about Wells Fargo (no wonder why they're raising capital) - see my Wells Fargo work: drill down, the forensic analysis and the Q2 highlights.

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Main Bank of China Is in Need of Capital

By KEITH BRADSHER

HONG KONG — China’s central bank is in a bind.

It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac.

Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank’s tiny capital base. The bank’s capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from the International Monetary Fund.

Now the central bank needs an infusion of capital. Central banks can, of course, print more money, but that would stoke inflation. Instead, the People’s Bank of China has begun discussions with the finance ministry on ways to shore up its capital, said three people familiar with the discussions who insisted on anonymity because the subject is delicate in China.

 This is actually an interesting article and I urge you to read the rest . As you know, I have been bearish on the Asian nations and the chickens are finally coming home to roost. See my China macro update .

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The FDIC said Tuesday it reserved $10 billion in the second quarter to cover the costs of bank failures — a 2,000% increase over the first quarter. The massive provision shaved 18 basis points off the Deposit Insurance Fund's reserve ratio …

The cost to bailout IndyMac bank has risen to a full 25% of the FDIC's available funds. Keep in mind that this is just one failure. Can one imagine if/when WaMu goes kaput.

Troubled banks on the FDIC list rise to 177

FDIC May Borrow Money from Treasury (as if we couldn't see this one coming

Don't Expect Asia to Grow this Quarter 

Cramer Calls the Housing Bottom (contrarian indicator flashing - read the logic behind this article, seriously - now I have to charge for content :-))

 Temasek Raises Stake in Merrill Lynch, Has `Great Confidence' in CEO gThain (contrarian indicator flashing again - reference the success SWFs have had during the credit crisis investment cycle)

Dubai M&A Oasis Lures London Bankers With Bigger Bonuses From Desert Deals - Do you see a bubble?

 Housing Market Still Under Pressure

For the regular readers of my blog, you saw this coming last year and hopefully benefitted from the foresight. See the latest credit crisis summary: The Asset Securitization Crisis Series to date 08/19/2008

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I have fixed the archived links, so all links to all articles are now working properly. This is the Asset Securitization Crisis roadmap to date. Feel free to spread it around.

The Asset Securitization Crisis Analysis road-map to date:

1. Intro: The great housing bull run - creation of asset bubble, Declining lending standards, lax underwriting activities increased the bubble - A comparison with the same during the S&L crisis
2. Securitization - dissimilarity between the S&L and the Subprime Mortgage crises, The bursting of housing bubble - declining home prices and rising foreclosure
3. Counterparty risk analyses - counter-party failure will open up another Pandora's box (must read for anyone who is not a CDS specialist)
4. The consumer finance sector risk is woefully unrecognized, and the US Federal reserve to the rescue 
5. Municipal bond market and the securitization crisis - part I
6. Municipal bond market and the securitization crisis - part 2 (should be read by whoever is not a muni expert - this newsbyte may be worth reading as well)
7. An overview of my personal Regional Bank short prospects Part I: PNC Bank - risky loans skating on razor thin capital, PNC addendum Posts One and Two
8. Reggie Middleton says don't believe Paulson: S&L crisis 2.0, bank failure redux
9. More on the banking backdrop, we've never had so many loans!
10. As I see it, these 32 banks and thrifts are in deep doo-doo!
11. A little more on HELOCs, 2nd lien loans and rose colored glasses
12. Will Countywide cause the next shoe to drop?
13. Capital, Leverage and Loss in the Banking System
14. Doo-Doo bank drill down, part 1 - Wells Fargo
15. Doo-Doo Bank 32 drill down: Part 2 - Popular
16. Doo-Doo Bank 32 drill down: Part 3 - SunTrust Bank
17. The Anatomy of a Sick Bank!
18. Doo Doo Bank 32 Drill Down 1.5: Wells Fargo Bank
19. GE: The Uber Bank???
20. Sun Trust Forensic Analysis
21. Goldman Sachs Snapshot: Risk vs. Reward vs. Reputations on the Street
22. Goldman Sachs Forensic Analysis
23. American Express: When the best of the best start with the shenanigans, what does that mean for the rest..
24. Pt one of three of my opinion of HSBC and the macro factors affecting it 

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China: An Insight into its Past Growth and the Future (also of interest is the HSBC opinion and 2H08 update)

China’s massive growth in the last decade has taken the world by surprise. Currently the fourth largest economy, the country continues to be the second largest manufacturer (in terms of global output). The evolution of China as the “factory of the world” has helped in providing job opportunities to its vast population and record sustained economic growth. The country has led the growth among the emerging markets and is a torch bearer for the evolving upcoming economies of the world.

China holds the highest foreign exchange reserves of US$1.6 trillion as on March 2008. As per World Bank data, the country has grown at an average of 10% each year following the economic reforms of 1978, while other developing nations have grown at an average of 4%. No other country has recorded such sustained economic growth in the last three decades. China’s GDP growth has galloped at a breathless pace in the late 1990s, driven by increasing exports and investments in the country’s infrastructure.  

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UK inflation exceeds Bank interest rate for first time since 1981

Interest rates have fallen below the cost of living for the first time in 27 years.

In a landmark moment for the Bank of England, Britain now has negative real interest rates, news which will heighten calls for the Monetary Policy Committee to raise borrowing costs.

Retail price index inflation (RPI) - the most comprehensive measure of living costs - rose to 5pc last month, according to the Office for National Statistics.

The rate was actually slightly above 5pc - the current level of the Bank's base rate - although it was rounded down to one decimal place.

RPIX, the measure which excludes mortgage payments and was until recently targeted by the Bank, rose beyond even this to 5.3pc. Not only are the inflation rates all at their highest level since the early 1990s, before British economic authorities started targeting inflation, this is the first time mainstream inflation measures have risen above the official bank rate since 1981.

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