Friday financials: end of “March Madness” means it’s time to file taxes, bankruptcy!


The sun is shining. The snow is melting. The soil is finally softening. Oh, and so are those financial markets. But you already knew that. So on this bright Friday, we offer you, dear readers, more light at the end of that dark, long tunnel. The zinc lining in the dark cloud. It’s Friday Financials!

Met Council’s 2008 economic report full of (strained) good cheer
by Tom Elko, Minnesota Monitor
Fri Apr 04, 2008 at 2:22:58 PM

[Twin Cities metro] The Metropolitan Council has released its annual report on regional economic indicators (.pdf). Full of rankings and year to year growth percentages, the report puts our best facts forward to portray an optimistic future for the Twin Cities, but not even the Met Council’s sunny outlook will warm every heart.

According to the report, “metro area job growth has slowed considerably” in 2006 and 2007. From 2000 to 2007, net employment growth was 1.8 percent, ranking 17th among the top 25 Metropolitan Statistical Areas (MSAs) and equating to just 31,600 new jobs. Not only has job growth been slowing, but per capita income only increased 2.9 percent from 2000 to 2006, ranking 16th in top 25 MSAs. These indicators reflect the growing stagnation of what has traditionally been a very vibrant regional economy.

The effects of the housing crunch are also reflected in the data. Household budget stress is the “share of households that are cost-burdened in their present housing.” Despite ranking as 9th most affordable metro area, Twin Cities housing costs create household budgeting troubles for 48 percent of renters and 36 percent of homeowners.

The real estate market for business is suffering as well. Office vacancy rates were at 13.8 percent for the fourth quarter of 2007, above the national average of 12.8 percent.

• The Labor Department announced today that 80,000 jobs were lost in March, the third consecutive month to see job losses. Unemployment also rose to 5.1 percent, up from 4.8 percent the previous month. The good news? It sounds like there will be quite a few jobs opening up for those skilled in processing bankruptcy paperwork! Filings in March were up 29.4 percent compared to the year prior. In fact, if filings continue at the current rate (4,000 a day) there could be as many as one million filed by the end of the year.

# You know those foreclosures that are happening all over the cities? According to a recent study by the Federal Reserve Bank (via), 37 percent of ARMs in Minnesota will reset in the next 12 months. Fifty-six percent of the current subprime loans have already had late payments in the last year. The good news? It’s really hard to find the zinc here. So let’s try this: At least we’re not in Kansas. That state’s subprime interest rates shot up to 9.53 percent at the end of December, according to the same study. Minnesota’s subprime borrowers are dealing with an average reset interest rate of about 8.72 percent.

# One trillion dollars: In his new book “The Trillion Dollar Meltdown,” lawyer, author and former investment banker Charles R. Morris predicts there will be more than $1 trillion in defaults and write-downs over the next year. The good news? We’re on a bit of a picnic right now. “The sad truth,” he says, “is that subprime is just the first big boulder in an avalanche of asset write-downs that will rattle on through much of 2008.” Enjoy the little blanket bash while it lasts!