We Have Not Reached The Point Of Stabilization: CEO
Some housing bubble news from Wall Street and Washington. MarketWatch, “Technical Olympic USA Inc. reported a first-quarter loss Thursday. The financial results showed that the Hollywood, Fla.-based company continues to struggle with a difficult housing market and with an investment in a joint venture. ‘These are challenging times for homebuilders,’ said Antonio Mon, the company’s CEO, in the earnings release.”
“The company reported a first-quarter loss of $66 million. The latest results included a $78.9 million estimated pre-tax contingency loss related to the potential restructuring of the Transeastern joint venture, as well as $42 million in charges resulting from inventory and land impairments.”
“‘Currently it is difficult to gauge the timing of a potential housing recovery, as conditions continue to vary greatly. Affordability is improving largely because of lower net pricing driven by extensive use of sales incentives and changes in our product mix,’ the CEO said.”
“‘We are concerned that housing inventories appear to be on the rise again in most of our markets, and sales in March and April were disappointing. This leads us to believe that we have not reached the point of stabilization as we had previously anticipated and that the difficult conditions could persist for the foreseeable future,’ said Mon.”
“The Company’s gross profit margin, excluding impairment and related charges decreased 550 basis points in the first quarter of 2007 to 20.5% from 26.0% in the first quarter of 2006. Home sales gross profit was primarily impacted by higher incentives which increased to $36,400 per delivery for the first quarter of 2007 from $12,000 per delivery for the first quarter of 2006.”
“During the three months ended March 31, 2007, the Company abandoned its rights under certain option agreements which resulted in a 7,600 unit decline in its controlled homesites and approximately $150.0 million in cash savings on future land takedowns.”
“William Lyon Homes today reported pre-tax income for the three months ended March 31, 2007 of $5,804,000, down 87%, as compared to the comparable period a year ago. Consolidated operating revenue decreased 33% for the three months ended March 31, 2007.”
“The Company incurred impairment losses on real estate assets of $3,554,000 for the three months ended March 31, 2007. The impairments were primarily attributable to slower than anticipated home sales and lower than anticipated net revenue due to softening market conditions. Accordingly, the real estate assets were written-down to their estimated fair value.”
“During the first quarter of 2007, the average sales price of homes closed (including joint ventures) was $457,700, down 13% from $529,100 for the comparable period a year ago. The lower average sales price reflects a change in product mix and reduced sales prices and an increase in the use of sales incentives due to the slowing of new orders and competitive pressures.”
The Detroit Free Press. “Shareholders of Pulte Homes heard a downbeat assessment of the nation’s homebuilding market Wednesday at the firm’s annual meeting. ‘The worst may not be behind us,’ Richard Dugas, Pulte’s president and CEO, told shareholders in Birmingham.”
“Later, speaking to a reporter, Dugas said he saw no signs yet of recovery after the worst housing slump since the early 1980s. ‘I think January and February appeared to be on the road to recovery, but after the subprime mortgage issue hit, consumer confidence took another hit, unfortunately, so I’m not sure there’s any light at the end of tunnel right now.’”
“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.’”
The Philly Burbs. “Toll Brothers Inc. executives expect the Horsham-based luxury homebuilding company to turn a profit for the second quarter of 2007, but it will not meet projections for the year.”
“The company’s prime selling season is drawing to a close, said Chairman Robert Toll, who indicated each month’s performance was worse than the previous one this spring. The number of new home contracts slipped 25 percent from last year’s second-quarter performance, he added.”
“The news did not surprise A.G. Edwards & Sons Inc. analyst Gregory Gieber. ‘Anyone who looks to buy one of these houses is already living in a nice house,’ he said.”
“There are two key reasons why the market has not turned around and they are directly connected, Gieber said. ‘You hear a lot about excessive inventory, but the other thing is that the pricing got too damn high,’ he said. ‘Builders and sellers have to understand that they aren’t going to get the prices they’re expecting.’”
From Business Week. “The company’s second-quarter cancellation rate fell to 19% from the prior quarter’s 30%, but this number is still much higher than the 9% cancellation rate in 2006.”
“And ‘it’s not like they’re comparing themselves to tough comps anymore,’ notes Morningstar analyst Eric Landry. Roughly 70% of second-quarter cancellations came from contracts signed more than 30 months ago, Toll added.”
‘”The initial take is that things are still ugly, and there’s no sign of any turnaround anytime soon,’ says Landry, who doesn’t expect to see an upturn for homebuilders until 2008 at the earliest. ‘There’s just too much inventory out there.’”
“For now, homebuilders are still slashing prices to generate more volume, which, Landry says, is the right thing to do. ‘Volume is more critical than price at this point,’ he explains. ‘Many homebuilders have decided that we need to cut prices to get homes sold.’”
“The downturn in the housing market has caught the nation’s homebuilders by surprise, leaving many overextended with costly land they can’t develop and unfinished homes they can’t sell. The financial strain is starting to show. From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months.”
“And in late April, credit analysts at Moody’s Investors Service warned that a number of large homebuilders could fall out of compliance with their debt agreements later this year, leaving them at risk of default unless lenders come to their rescue by agreeing to rework their loans.”
“Some builders are so desperate, in fact, that they’re even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.”
From Reuters. “U.S. mortgage finance company Fannie Mae said on Wednesday that it could not present a timely quarterly report due to unresolved accounting problems.”
“Fannie said it believes its ‘exposure to the Alt-A and subprime mortgage loans… is limited.’ The company said it expects about $1.1 trillion in adjustable-rate mortgages ‘to reset at least once during 2007, with an additional $400 billion scheduled to reset in 2008.’”
The Orange County Register. “ImpacMortgage Holdings Inc. became the latest local lender to falter amid rising loan delinquencies Wednesday as the company laid off 120 workers in Orange County.”
“‘It’s just in the normal cycle of the business. Volumes are down everywhere. We recognize that and we have to let people go,’ said Joseph Tomkinson, Impac’s CEO.”
“Although Impac’s taxable profits and loan volume plunged last year, company officials had insisted the company would weather the downturn because their loans targeted so-called Alt-A borrowers.”
“The company’s announcement did not bode well for the mortgage industry. But many experts thought the move into the Alt-A tier was inevitable as fewer borrowers could qualify for loans.”
“Tomkinson told the Register on March 21 that ‘the sky is not falling’ for the lending industry, which he said was being stampeded by Wall Street investment bankers.”
“At that time, Tomkinson said his company had the funds to cover any loan losses, even though Impac’s percentage of late payers doubled last year from 3.1 percent of the company’s holdings to 6.2 percent.”
Did anyone see Kudlow and Company last night. They had a story that put the most rediculous spin on housing. They talked about 5 cities that we not negative and Kudlow starts saying how he loves the story and how its not all doom and gloom.
Funny stuff
So can this post be the first showing that the MSM is finally “getting” it?
were all 5 oil patch
ok city,tulsa,nola , lafayett, rifle,co ?
I didn’t see it, but usually they’ve been squawking about:
-Seattle
-SF itself (it’s flat, not down)
-Portland city itself (only the city not ‘burbs)
-San Antonio
-Dallas
Here it is…
http://www.paperdinero.com/BNN.aspx?id=179
I can buy in Raliegh at 6% off not 6% up
dallas has foreclosures up
WTF are they yappin abpout
OFhEO report is 6 ? months old
Proof that the bubble is not national! Bwhah
Did not Toll Bros. and Pulte see this coming like the Big Three in Detroit….oil is going up and is harder to find….money supply M3 is being inflated every week as we speak to the point The Fed won’t even report it anymore.
No preplanning or anything beyond a 30-90 day outlook in business now. Batten down the hatches….it is liable to be a rough 2007 and on out….
It is as clear as the freight train that is about to run us over.
Crapburner you make an excellent point. The questions I have are how did we get to this point and can we turn the ship around. I truly think that it all started full force with my generation in the 80s. I am not making a political statement, just based on what I saw and did in the late 80s at USC (Fight On!). At that time we had the Milliken crisis then the S&L damage. I think it is clear that my generation grew up with getting everything it wanted from its parents and this carried over to the real world when we grew up. Your comment about 30-90 day outlook, how true. Don’t we as a country care about the next 50 years? Is it all “Eat, drink, and be Merry, for tomorrow may never come”? I just don’t get the incredible greed factor that now exists. Sure, greed has always been around, but the magnitude is incredible. Does everyone feel they are entitled to a Maserati, a luxury Yacht, a 12K Sq. Ft. home without working for it? On top of that, why does everyone feel they have to have it yesterday? Yes, I know no one likes to think about death in the USA, so we have to have it all yesterday. I guess what I am saying is that I believe that 90% of the economic problem in this country is a combination of the FED and the enormous instant gratification greed factor of people. Well, it can only continue for so long before the whole proverbial house of cards collapses, esp. with the middle class shrinking daily.
I too am an ex-teen of the 80s wondering what went wrong with my generation.
Maybe it is the realization that we’ll get no pensions and we’ll get very little Social Security. We’re the generation trapped between paying out the ARSE for our parents, grandparents and until recenlty, great grandparents.
We HAVE to live it up now, because we’re NEVER going to get to retire.
Don’t waste any brain cells on it. You’re the generation trapped between the Boomers and their Babies. They’re always right, you’re always wrong.
“You’re the generation trapped between the Boomers and their Babies.”
Quite succinct and accurate. It it sometimes hard to find common ground with either group.
right on…any more 35, 36, 37 year olds posting here?
Well, I’m 38, so I think that’s close enough. Still waiting to buy my first house. (I was in school a long time - college and law school - and racked up some debt during that time that I’ve been working hard to pay off before taking on a mortgage).
I so know what you mean. For years people would ask why someone my age was so cynical. I broke it down to a simple saying “Good things are what happen to other people”. This comes from year and years of seeing the boomers get everything for nothing. I think I have to go listen to the Wall now >; )
So true. When I was ready for a job, there were no jobs. When I’m ready for a house (and family) there are no affordble houses. Shafted by the Boomers at every step.
Guess a few in the markets, OCDan, can read the tea leaves with sales at most major chain/big box stores down and the market today down over 100 points…just a start I think.
The cold icy water of reality is coming.
I don’t understand the need for the Maserati, yacht, 12KSF house in the first place. What kind of world citizen is someone like that?
Probably why I don’t have that stuff eh? Could be. But - my brother in law’s kitchen lights burn 1200 watts just over the 100SF granite counter. My whole kitchen, with its six can lights and compact-fluorescent bulbs, burns less than one tenth of that. Money to burn, fine, but resources to burn? Somehow that seems a bit irresponsible to the rest of humanity.
(rant off)
They can always buy a carbon credit from Algore.
Please take you Limbaughesque opinions elsewhere, troll.
That is the idea of carbon credits. Pay off some poor schmuck to burn less so you can keep on partying like it was 1985.
And of course in many cases, the “poor schmuck” will be collecting the money for doing something he was planning to do anyway.
Carbon credits are a fraud. A carbon tax (with a corresponding across-the-board reduction in income tax) is the only way to go.
“Limbaughesque”
Let’s please avoid the references to narcotics addicts, if you don’t mind.
Wait for one of those compact fluorescent’s to break and dump mercury all over your kitchen and cost you hundreds in clean-up costs…
Or so frets CNBC, with parent GE.
Ummm hello people, flourescent light bulbs have always had mercury. Every house in the 70-80s had the flourescent “light box” ceiling in the kitchen.
I blame Reagan and supply-side economists. Certainly, all of the administrations of this century have contributed to the financial destruction of the U.S. including Wilson, FDR, and LBJ primarily, but deficit spending without concern about its consequences began in earnest under Reagan and has accelerated since then. I guess Dick Cheney was wrong when he said “deficits don’t matter.”
I guess you mean “last century”. If you consider the history of the US in the last century a failure, I don’t know what a success could be. Even Reagan contributed something positive to financials: his tax laws didn’t bring taxes just down, but removed a lot of tax loop holes, too. It was a real reform not just gifts for the rich. Unfortunately, the mortgage interest deduction survived.
I see you bought into the fallacy that Reagan cut taxes. Well, I suppose if you don’t consider huge SS payroll increases to be tax increases, you’re right. Add to that that Reagan is responsible for foisting Alan Greenspan on us all.
I suggest you reeducate yourself about Reagan by reading Murray Rothbard’s evisceration of the man:
http://www.lewrockwell.com/rothbard/rothbard60.html
“huge SS payroll increases to be tax increases”
Oh, give me a break about SS payroll taxes. I’ll make you a deal. If it’s such a burdensome tax to “the lower class”, why not just get rid of it for good? That should help out “the lower class”, right? If it’s such a regressive tax, lets get rid of it.
Oh wait, because the lower class benefits from the “tax” at retirement (Social Security, Medicare).
If that is not the case, then join me in helping get rid of that burdensome regresssive tax, OK?
I’ll make you a deal. If it’s such a burdensome tax to “the lower class”, why not just get rid of it for good?
- Do you mean ‘get rid of the tax or the lower class?’
Oh, give me a break about SS payroll taxes. I’ll make you a deal. If it’s such a burdensome tax to “the lower class”, why not just get rid of it for good?
You obviously have no idea what my opinion is of SS.
Yes Mofo, get rid of SS tax. Let the government print money to cover the current expenses. I don’t care if it does cause inflation. Let ME decide how I want to retire. I don’t make even 100k like many on this board claim (although I plan on making it like a good American) but I can handle my retirement just fine. If you want to put a disability tax/insurance system in place, GREAT. SS is fine as a safety net for those unable to work, but not as a catch for mismanagement of personal funds. When was the last time John Hancock borrowed from your retirement fund 401k? They would quickly lose all customer business if they did what the federal government does with SS.
“Even Reagan contributed something positive to financials:”
He burned the legs of the chair we sit in to create a bright light. And took advantage of the fact that debt bubbles take a long time to collapse, especially with such a skilled Wizard of Fed as Alan Greenspan pulling the levers.
Now you were saying?
Peter T: “I don’t know what a success could be.”
This is true.
Procrasting pretending to worry
Solving problems by pushing them aside;
Wasting time like we’ve all the time in the world.
Deliberation instead of solution;
Another term for blatant lies.
Biding time like we’ve all the time in the world.
And I’m not the only one who thinks we’re tying to say
To the heavens and all who’ll hear us,
“Behold what we have made.”
We bring destruction; we bring war without an end
And then we live in hope that tomorrow never comes
That it never comes
I notice an almost complete lack of concern for future generations in America. Witness the way the Iraq war is being put completely on the national credit card. Lying has become accepted (”spin” they call it) and it’s all about getting something for nothing.
“Does everyone feel they are entitled to a Maserati, a luxury Yacht, a 12K Sq. Ft. home without working for it?”
Worse than that, they think they *are* working for it. It’s the same concept as the 20-something internet millionaire circa-1999 that somebody quoted here as saying something along the lines of “you don’t understand how hard I worked those two years”. The entitlement mentality now is that two years of long days means you *deserve* the Maserati, yacht, and 12k ft^2 house. I’m sure the RE Agent that worked long days putting people into homes they couldn’t afford for two years feels exactly the same way.
When credit gets this out of control, you end up with a whole generation of people with no understanding of what it takes to accumulate the capital to actually buy that stuff. People who could *never* accumulate $1M on their own signing for $1M in debt on a regular basis. If they can make the monthly payment, they can “afford” it. No concept of long-term implications, especially when it comes to payments that can change.
Anyway, I think the assumption that they *are* working/producing enough to cover borrowing that kind of capital is even more dangerous than the ones who think they can have it without working. The second group are just trying to ride for free as long as they can, the first group are the ones in for the really rude awakening when they realize they’re not paying the freight on their lifestyle like they thought they were.
Housing market gone and it ain’t no fun, Mon…
Day-O!
“Technical Olympic USA Inc. reported a first-quarter loss Thursday. The financial results showed that the Hollywood, Fla.-based company continues to struggle with a difficult housing market and with an investment in a joint venture. ‘These are challenging times for homebuilders,’ said Antonio Mon, the company’s CEO, in the earnings release.”
Daylight come and you got no home
Pay! Pay pay pay pay pay pay pay pay pay.
come mistah tally man, tally me heloca…
you guys are killing me!
Daylight come and me wanna no home.
Resets come and me lost-a my home.
ya mon I heer ya
Today’s Master Of The Obvious (MOTO)
“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.’”
Paint a giant “C” on that man’s chest. Captain Obvious, TO THE RESCUE!!!
“Sidelines?!” — homeownership goes to 69% from a historic 64%, the number of investment and second, third homes is at all time records…. And there’s people on the “sidelines”. Yeah right.
I highly doubt there are a lot of people on the sidelines. Those people they are referring to have already played the game and are now being placed on injured reserve for at least 7 years. The very few on the sidelines are seeing the severity of the injuries to the players and are getting less interested by the hour.
Very good analogy.
“I’m just here to have fun, these guys are crazy. I’ve got kids at home, today is NOT a good day to go to the hospital.”
“And in late April, credit analysts at Moody’s Investors Service warned that a number of large homebuilders could fall out of compliance with their debt agreements later this year, leaving them at risk of default unless lenders come to their rescue by agreeing to rework their loans.”
“Some builders are so desperate, in fact, that they’re even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.”
Gee, lending to F’d Buyers turned out to be a bad business model, is it any surprise that lending to F’d Builders is also turning out to be a bad business? Remember a few months ago that Florida bank that was facing massive defaults on preconstructin loans?
It’s clowns like these guys that are running this economy or making biiiig decisions about who gets what. No wonder we are screwed. People never change and the problems just get larger and larger because more people are in the process.
Man, this just sucks. I hate all these experts. Where were they when they were cashing those 6-figure commission checks, f&**in bastards!
“Some builders are so desperate, in fact, that they’re even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.”
Hmmm… sounds just like your typical serial refinancer doesn’t it? interesting how they are exactly like the subprime borrowers they exploited
a man will eat out of a trash can if he is hungry enough…
The question is…when will the first major public homebuilder go into bankruptcy? Before the end of this year is my guess.
This is actually a pretty big deal. In the 80’s any warm body could stroll into an S&L and get a large scale construction loan. That commercial lending leniency and subsequent overbuilding lead to the housing bust of the 80’s. These days, a developer has to show a very detailed analysis of a project’s potential worth before a leader can sign off. Also, there is a lot of review and scenario analysis done to make sure the project is viable. So, if builders are having trouble and may be defaulting then things are worse than a lot of “experts” imagined.
“Some builders are so desperate, in fact, that they’re even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.”
This is not good news for builders. I surmise all of those vacant subdivisions with their horrendous carrying costs are really eating up their owners cash.
“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.’”
- Perhaps the problem could be that loan companys are now saying to buyers, “Your income can not support this debt.” No more 100% loans.
Yep, the first time buyers on the food chain can’t qualify (they never could ). The speculators are out of the game ,(unless they are holding a property or if they are stupid ).
I saw that one of the TV stations is going to start a new program advising people on where there are good values in real estate in the United States .Of course this show will be the REIC, lenders and their advertisers version of what a good value is .
The real estate industry is so use to being able to brainwash the public with these investment myths that they keep trying new angles . What about the fact that there isn’t present value in a declining crashing market .
Anything to keep the party going a little while longer. It doesn’t amaze me anymore what the a$$hats come up with. On top of that, it never amazes that the sheeple keep buying into this Ponzi scheme.
Fannie said it believes its “exposure to the Alt-A and subprime mortgage loans… is limited.”
Fannie said that it hopes that…
Fannie says that it has it’s fingers crossed that…
Maybe if they completed their financials like everyone else is required to, they would have a better idea?
And notice that they are now adding Alt-A to the “uh-oh” mix?
(I’m still waiting to see why Alliance Bancorp (prime and alt-a) stopped funding for a week or so…supposedly their warehouse line got pulled?)
Also the mortgage company in the post above did mostly alt-A loans.
Methinks that Fannie is lying out of its fannie!
I suspect that Fannie has very limited exposure to subprime and Alt A loans, but the $1.1 trillion in ARMS (95% 1 yr arms, 5% 3yr arms; index 1 yr US Tbill) that adjust annually are more likely to be held by weak borrowers. That may be the knell.
I think you’re right Hoz. Why would anybody be using ARMs if they could get a nice low fixed rate? If they could, they would have refinced already to a fixed. How will these borrowers feel after the prices fall below what they owe?
I’ve said this for a while (years on this board), but I think that Fannie is purposefully witholding (and being allowed to withold) their statements.
what better way for the fed to quietly monetize bad debt? simple: fed creates money, uses it to purchase bad debt through Fannie Mae.
There are no financials coming out of Fannie, thus how would we know about it? Answer: we can’t. Thus: stealth bailout, with stealth inflation.
Of course the first to benefit are all the big banks. They get the money first, when it is worth more. By the time it works its way through the system to us, we have monetary inflation.
But who would gain from this:
1) the banks (their bad loans suddenly good again)
2) Fannie (no need to give evidence to the obvious: they are insolvent)
3) our congress (can do a bailout for “soft” landing, helping the economy)
4) the Fed. (they can act hawkish by not lowering interest rates, but still flood the system with money keeping ponzi scheme going)
5) the stock markets. The increased liquidity creats higher nominal stock market (DJIA and S&P near all time highs), and keeps faith in the markets. also keeping the banks alive keeps the market going.
who gets hurt
1) taxpayers
2) prudent people
3) those of us who get the money last, once inflation has taken out its chunk.
I’m not usually a tinfoil hatter… but c’mon, how many years does it take to restate financials? and why aren’t they delisted? Answer: think systemic risk.
Very good points!
not really…the statements were just FUBAR and senior management are a bunch of greedy idiots.
that’s the real reason. honestly.
I hadn’t thought of that (intentional withholding the statements). Until now, I had followed the advice not to think of malice when stupidity (or bureaucratic ineptness) is a sufficient explanation. Your points make sense though, unfortunately. Is something similar going on with Freddie Mac, or why would they have singled out Fannie? What would be the best way reacting to it if this suspicion turns out to be true?
I actually just finished a short consulting gig at Fannie Mae and I can report that Fannie does not report it’s financials because Fannie honestly has no idea.
Fannie Mae just restated their income for the last several years to the tune of 6 BILLION dollars ( yes with a B). To do this they hired 1500 consultants and spent 2 BILLION (again with a B). The people responsible for the accounting screw ups ended up getting PROMOTED because the Fannie Mae budgeted 10 Billion for the restatement and it only cost them 8 Billion total, 2 Billion under budget.
I have never seen a company pay such high salarys and offer such an unbelievable benefits (100% health care for life after 5 years, Downpayment assistance upto 30k forgiven after 5 years, etc).
They have VP’s who have no reports. Yes, there are so many VP’s at Fannie Mae they do not have enough regular employees to report to them all.
Many people who tried to fix things and get them to run well are leaving because they do not want to be there when congress comes knocking with supeonas.
It was truly the biggest mess I have ever seen in years of consulting.
Thanks for the info, BDB!
Interesting except where does that leave the rest of the world. The US economy does not exist in a vacuum.
Are our creditors OK with us inflating their reserves away? Perhaps they would have been if we were more effective at holding up our part of the bargain: to keep some semblance of order in the world. I wont say keep the peace but more policing the world to enough to keep economic channels open. However we have lost credibility in that regard. So what value does the rest of the world put on US? How do the US banks and Wall St come out ahead?
The only solution I see for them is to divest. Perhpas this is why Cheney is invested heavy foreign (if you can believe the reports). That’s also where ‘prudent people’ on your who gets hurt list can mitigate the pain. I’d say in the end it will be the only people who will gain are those who run for the exits, i.e. get out of assets dependent on the domestic economy.
Sad but possible in my view. How’s that for tinfoil hat?
HIC,
Agree with you 100%. No way there isn’t something going on behind the scenes with Fannie (and Freddie?).
“Some builders are so desperate, in fact, that they’re even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.”
This is truly amazing considering these people were the recipients of a once in a lifetime liquidity event. Any semblance of prudent management would have set these companies for life.
During the good times, public builders like CTX amassed enormous debt. They squandered this cheep money (along with operating profits) on over-priced land, land options, and inventory.
Now, during more difficult times, the builders are writing off the options, selling land at a steep discount, writing down inventory, and converting their cheep (but short-term) debt more expensive debt.
So, if they take on debt during the good times and take on even more debt during the bad, when exactly do these guys earn profit that their shareholders can enjoy?
anyone have specific sales data on some builder lots that have been dumped recently?
The questions is when their shareholders, whomever they are at this point, will recognize this.
Awesome point chick, and it’s not just the builders. A small fraction of the prudent saw this as you call it - an unsustainable once in a lifetime event, and planned accordingly. The lack of foresight by most is staggering, especially considering they’re supposed to be the pros. I don’t think I’m all that intelligent, but I knew what I needed to be doing 4 years ago. It seems to me, from what I’ve observed, that common sense and intelligence are not synonymous, and rarely walk hand in hand.
Intelligence is a day, wisdom is eternity.
Considering the build quality of recent vintage, do builders really want to remain solvent…
Come on TX, the real “owners” of the companies did take advantage of the “once in lifetime liquidity event” — look at their net worth. A corporation is a shield to hide your own liability while your rape the public.
Same reason lottery winners wind up broke again, I imagine.
Before I started trading I swore I wouldn’t confuse brains with a bull market. Then I made a 600% gain in three weeks and you can guess what happened next. A sudden infusion of unearned money is a lot like alcohol - it becomes hard to think clearly.
OTOH, if they were more experienced and cynical (I’m guessing Toll and Leatherface fall into this category), the point isn’t to set your company for life, it’s to disregard all caution and grab as much profit as possible while the bubble lasts, then bail out with the loot and leave the company to burn.
Gregory Gieber said “……but the other thing is that the pricing got too damn high”
possibly the understatement of the year
I’m going to call it as the quote of the day.
“Currently it is difficult to gauge the timing of a potential housing recovery, as conditions continue to vary greatly,” [the CEO said].
…Currently it is easy to read the Credit Suisse chart and guess that a housing recovery is a good five years away.
My take on the mess that is the housing bubble is this…
We became non competitive in every sense of the word, in terms of manufacturing anything. It can be done quicker, easier, cheaper, elsewhere in the world.
Building houses certainly has a little bit of outside of the country materials involved, but not much and the most valuable part of the puzzle, the actual land itself, couldn’t be undercut by China.
The last desperate throes of Bad Capitalism, building too many houses, as they were building up the bubble.
Shame on all involved.
You made some short term money, but you’ve wrecked the country in doing so.
good post , so true .
It’s also possible that inflating housing values is the only way to generate anything remotely resembling an economy in post-2000 America. But once done, what next? I have no idea where the next bubble is, unless it’s eco-cars or massive governmental involvement in restructuring our energy use footprint. A kind of WPA for techies.
The next bubble:
Government Employees
Next? Just one of the current bubbles.
“We became non competitive in every sense of the word, in terms of manufacturing anything. It can be done quicker, easier, cheaper, elsewhere in the world.”
I have interfaced with and supported tech mfg both domestic and overseas. The critical question here is WHY did it stay so much cheaper everywhere else? Had the natural economic forces resulting from our trade deficits and budget deficits been allowed to do their thing, our mfg would have been able to compete before disappearing, IMO. Printing all that deficit money all these years, and China sequestering it for us to me reeks of a devils bargain that kept China employed well enough to avoid revolution over there and kept America awash in cheap stuff. It’s been a great time to be above the median income in America for a few decades now because all the necessities have been SO cheap (at the expense of the working class). Can’t last much longer, though…I just hope there are factories still standing when we really need to pay locals to make stuff again. We’ve done a reverse Henry Ford, intentionally NOT paying enough so that the workers can buy the product lately. Time will tell whether the new idea was better than his idea in the long run.
My favorite find of the day:
Read Brenda’s comment. I am ROFL.
Thanks!! LMFAO!!
“If these seller would stop lowering the price of their homes and start going up on the prices again, I’ll just bet you the market would start busting again.”
LMFAO!! What a stupid beyatch!
I didn’t have to uproot a Joshua tree once yesterday, but Brenda has me headin’ for the desert once again.
Freakin’ hilarious. Love the comments afterwards.
Oh come on, she HAS to be a troll. NOBODY could be that stupid (could they?)
Don’t think she’s a troll. She took a real broadside from the other commenters. Orlando’s Suzanne.
Hahaha. Go up on prices, not down!
“Well, to heck with the buyers market, I think it is time it should be the sellers market again and only the sellers can do it. Let go up on prices again and just show the buyers they waited to long.
Brenda”
Shut your yap and lower the price, or else price out all your prospective buyers forever.
“Brenda you are right I am going to triple the price of my house.”
Posted by: rob
Which one of you wonderful friends posted that response?
Lower your price, or follow the market down!
Resistance is futile!
Great idea Brenda, stupendous! So good that I think you should let the auto makers in on your little formula, as well as all the major retailers, airlines, service providers, you name it. Screw it! Everyone start raising their prices, ’cause these damn buyers need to be taught a lesson!
F.U. Buyers! your prices are now triple, B*ITCH*s!
Hilarious…I pasted it here so no one would miss it..too, too funny. You go Brenda girl!!
If these seller would stop lowering the price of their homes and start going up on the prices again, I’ll just bet you the market would start busting again. It irks the hell out of me when you see all of the publicity of, sales down, prices down, etc: the buyers are of course going to sit back and wait for the prices to fall more and the market will stay down. The real estate sales people need to start advising the sellers to go up on prices instead of going down, and the media should start printing positive publicity. Our house has been on the market for 6 months now and it has only been shown 3 time. It is a very nice home and if it is ever shown it will sell. In the mean time we sit on it and listen to the negative of it being a buyers market. Well, to heck with the buyers market, I think it is time it should be the sellers market again and only the sellers can do it. Let go up on prices again and just show the buyers they waited to long.
Brenda
“One reason is that the OFHEO index is based only on recent sales, and houses that sell in a down market are likely to be relatively more appealing than average and perhaps hold their values better than other houses do.”
from: Housing Slump Could Lean Heavily on Economy
St Louis Federal Reserve
So Brenda you must not a very appealing house and even with 1,000 people a day moving to Florida, nobody wants your POS.
“St Louis Federal Reserve”
With evidence of the considerable density of “For Sale” signs from River’s U City bicycle ride, it sounds as though St. Louis may suffer comparably to bubble zones on the coast if it turns out that subprime is “not” contained after all…
Well, to heck with the buyers market, I think it is time it should be the sellers market again and only the sellers can do it. Let go up on prices again and just show the buyers they waited to long.
Daddy I want a squirrel! Are you going to get me a squirrel?
Brenda’s theme song:
And I Am Telling You (I’m Not Selling Low)
And I am telling you, I’m not selling low
It’s the best house I’ve ever known
There’s no way I could sell it low
No no no no way
No no no no way
I’m selling at market
I ain’t selling at market
Ain’t selling at market
I just want to make profit
And you
And you
And you . . .
You’re gonna buy it!!!!
I just read Brenda’s post. Yeah, desparation is evident. Who will blink first in this game? Tragically for her, there are no buyers out there to play with here. She is playing with herself!
Tragically for her, there are too many other desperate sellers who have houses they need to unload before their alligators eat them alive. It will be awfully hard for her to convince enough of her fellow desperados to raise the price to a level where nobody will buy, especially when builders and banks with REO will happily underprice any fool who tries.
GetStucco, you know this better than I. The number of people out there who thinks like Brenda is in the majority. Sellers who believe that this is a minor slump and it will pick up next year. A good friend who is a PhD candidate (climatology) thinks this too! I now fullly support the notion that individual insanity is rare, but mass delusion is quite common.
I now fullly support the notion that individual insanity is rare, but mass delusion is quite common.
I love it when an economic conversation turns philosophical.
The posts on this board are so intelligent as a whole, and that’s not just related to economic sense. I rarely post here but I love reading it, you guys all seem like excellent people.
I’ve always considered myself an individualist. The funny thing is at 23 years old (2 years ago) with no experience in the real world dealing with large purchases, mortgages, and real estate, I decided that the current mortgage and real estate standards did not make any sense and I sat on my hands and rented (rather than purchase a house with my first post-college paycheck). The only driving force for me was a basic econ class from college, and my inviduality. I do not believe the people following the herd are inherently dumb… just inherently prone to follow a dumb herd. Fortunately herds scare me, so when I see one, I turn head-on to them, move forward at my leisurely pace, and let them stamped past me in the opposite direction, toward the cliff I was just looking over. I tried warning them, but the only response I got was “MOO”.
Your a wise young man and I’m glad you didn’t get caught in the traps like some of your peers .
It will be awfully hard for her to convince enough of her fellow desperados to raise the price to a level where nobody will buy,
Now wait a minute. Just look at the massive impact a pump-no-gas-day can have! It’s gotta work for a sellers market as well. Spread the news
The internet is priceless for exposing how clueless people can get.
Brenda is so desparate she cannot even apply basic logic to her dilemna. So terrified she is of not retaining the wealth she had imagined she’d acrued she’s become utterly delusional.
The cracks are widening……..
we’ll she’s not going to just give her house away!
Think of all the memories I have here. The meth lab, er I mean kids growing up, my ex-cheatin slime ball, er I mean husband. I mean, I am not oing to give away this home!
“The cracks are widening……..”
Dilated 10cm…head still stuck…
‘Brenda is so desparate she cannot even apply basic logic to her …”
Let alone basic grammar and syntax.
She is playing with herself! Comedy F’n GOLD!
Me thinks Brenda is a brain surgeon. In fact,I am going out on a limb here and saying she is a rocket scientist. I am sure economics is just a mere plaything for her considering her incredible intellect. I am so jealous of her abilities.
Why waste my time on this blog when I can learn so much more from Brenda? Hopefully she’ll start her own blogsite and we can continue enjoying her insights.
How many here think “Brenda” has just about reached the credit limit on here 8-12… visa/mastercard/amex cards?
Brend’a ideas are all about the fake advertising ploy of creating “urgency’. It’s you classic “Buy now or pay more later “.
The real estate industry has been trying to sell the concept of a bottom for a while now so they could create a “urgency factor ” that RE is going up again .Urgency makes people forget about value or affordability . Really, the realtors and the sellers are the ones in a urgent position but they try to tranfer that position onto the buyer so they don’t realize they hold the cards . In fact this mania took away all power from the buyers with the lies and myths and they crammed toxic loans and overpriced homes down the buyers throats .I have never seen anything like it in my life . The buyers should of rebelled a long time ago .
Really, the realtors and the sellers are the ones in a urgent position but they try to tranfer that position onto the buyer so they don’t realize they hold the cards.
Wizard, nice post. Buyers like us did rebel, but there were not enough of us. I swore off buying a house sometime in early 2004, but the party kept going longer for most people. Soon, buyers will have the power, and they might become a little too drunk with it just like the sellers did before. Oh, well, it will be interesting to watch.
There really are some some things that money can’t buy:
Unintentional Humor: Priceless
Complete Detachment from Reality: Priceless
For everything else, there’s ForeclosureCard.
Funniest thing I have read all day.
Funniest thing I have read all day.
Why not? It works for oil companies…
So if Exxon decided to triple its prices, all its customers wouldn’t stampede to Shell?
It’s even worse with the housing market. Not even the oil companies have been able to cartelize and fix prices. How much luck do you think Brenda will have in convincing eleventy thousand Florida sellers to jack their prices up simultaneously? All it takes is one Joe Sixpack who really, really wants to sell his house, to undercut the rest. And of course, every smart Joe (but not Brenda) is doing exactly that.
Lower the price or Let it Rot on the Lot some MORE Brenda
Chicken Little: er, the sky was falling…
“Tomkinson told the Register on March 21 that ‘the sky is not falling’ for the lending industry, which he said was being stampeded by Wall Street investment bankers.”
“William Lyon Homes today reported pre-tax income for the three months ended March 31, 2007 of $5,804,000, down 87%,…”
The good news: At least their pre-tax income is not down by over 100%.
I’m sure they keep telling their accountants “keep it in the black, keep it in the black. Write down that land we overpaid for, but only so much as it keeps us in the black.”
Red ink is inevitable…
I had the same thought.
Why were they exercising options this late in the game…
“U.S. mortgage finance company Fannie Mae said on Wednesday that it could not present a timely quarterly report due to unresolved accounting problems.”
Have they been delisted from the NYSE yet? If not, pray tell why?
Been wondering that myself.
On the other hand, what would the message be if an entity like Fannie Mae was, finally, de-listed?
Would it not create a political as well as financial crisis? Particularly with the state the mortgage finance business is in today?
Two years ago they might have gotten away with it without a panic ensuing. But doing it now……I’ll bet the exchange contorts itself monumentally before that happens.
“It’s astounding that a company could have gone from the gold standard of accounting during the early 90s, to disgrace at the end of 2002″ (RE: Arthur Anderson)
or
“How could an auditor not have seen that something was very much amiss?”
Thank you Lawrence Revsine for your wonderful book “Financial Reporting and Analysis”.
Here it comes…the Fannie Mae “problem” and there anin’t enough useless greenies on the planet to paper this over.
When will be the first one to run to the exits?
“Have they been delisted from the NYSE yet? If not, pray tell why?”
You are so funny. And don’t even DARE respond with “well, it’s a reasonable question”.
I am not saying I expect anything to change, but I am just wondering how this can stand indefinitely without anyone in authority taking action against an obvious and outrageous violation of the rules that everyone is required to follow.
When ever I speak with a stock broker I tell the person the stock market is for suckers and gamed. They laught and ask why I say so.
My response, “has Fannie Mae been delisted and why not?” The response is a nice quiet sound. I tell them to call me when it is a level playing field.
If more people told their stock porker this, maybe the pressure would build?
Another freakin Enron. With all due respect to some of you guys in the business world, THIS IS WHY I HATE CORPORATE AMERICA AND BIG GUBMINT! THIEVING BASTURDS. If any objective person or group audited this co. using real accounting standards, I am sure this co. would be flat broke and negative quite a few billions. Now, multiply this by several hundred other cos. & I get the feeling this economy/country doesn’t have long to go before the big fall.
Here is the link to Fannie Mae story…..from their own website.
http://www.fanniemae.com/newsreleases/2007/4004.jhtml?p=Media&s=News+Releases
A “timely” report? I thought Fannie Mae was barred from using the word “timely” in any reports or communications for the next five years, it being in their case so misleading as to be beyond useless.
“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.’”
I think the problem right now is we don’t have a lot of investors who think subprime MBS is a good value today. What we have is a lot of recently deceased subprime lenders, and a lot of plankton on the sidelines.
“a lot of plankton on the sidelines.”
Importantly, a lot of plankton FORCED to the sidelines with no debt available. I’m sure is lots of plankton that would be happy to buy that Toll home today, with it’s $100,000 “discount”, if only the bank would lend them the money.
We are beyond purely psychological reasons for waiting on the sidelines.
“…lots of plankton that would be happy to buy that Toll home today,…”
That is my point, exactly. There are lots of MSM comments to the effect of “buyers decided this, buyers decided that…”. This is a bunch of BS.
What has happened is not that yesterday’s subprime buyer has suddenly wised up, but rather that that unqualified buyers are now squeezed out of the market by extinction of many subprime lenders who made loans with no underwriting standards. The qualified buyer who does not wish to catch a falling knife is advised to wait until the the subprime premium evaporates and houses are back to affordable pricing.
Yeah, I have had lots of conversations with folks regarding housing. The very simple way to disarm them is to stipulate that everyone WANTS to buy a home, but the point they can’t dispute is that at current prices, people cannot afford to buy a home.
We had all these stories last month about how sellers wouldn’t lower prices and buyers would raise what they were willing to pay. “Each is waiting for the other to blink”, so said the stories.
“What if”, asked I after seeing what my future sis-in-law owes on her home and what she is trying to sell it for, “the sellers CAN’T lower their prices becasue the owe too much, and buyers can’t pay more because they can’t afford it?”
Ugly. Getting uglier fast.
Don’t mind me. I’m just photosynthesizing over here on the sidelines.
It’s hard being green……
“‘It’s just in the normal cycle of the business. Volumes are down everywhere. We recognize that and we have to let people go,’ said Joseph Tomkinson, Impac’s CEO.”
67+ subprime lenders go out of business in the first half of 2007 — just the normal course of business? I would love to hear these wizards of spin characterize what would qualify as abnormal.
Anyone want to guess where that number will be 12/31/07?
IT is not even HALF yet..
“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.’”
With all time high ownership, what we really have is many owners buried in their overpriced houses with no hope of moving up, down, or laterally. Additionally, there are a few potential buyers, such as members of this blog, who are capable of buying but won’t until prices come back to earth. This leaves only a fast evaporating pool of fools in the market. Fortunately for most of the fools, tightening credit standards will save them from themselves.
What will it take to return to affordability?
Will Americans easily give up what we’ve come to agree as a culture is a basic standard of living? Or will a large portion of us just spend ourselves into oblivion refusing to show we’re not so successful as we’ve led on?
What will we give up first? What will we cling to?
I think senior staff member David Crowe, said it best when he said: “‘Something’s got to give. The economy can’t sustain itself with this number of homes on the market,’ “
“No hope of moving up, down, or laterally” , or OUT unless it is being dragged out physically by the sheriff.
“The downturn in the housing market has caught the nation’s homebuilders by surprise, leaving many overextended with costly land they can’t develop and unfinished homes they can’t sell. ”
Now this is just so irritating to me.
HOW MANY TIMES did the homebuilders state very cock-suredly: “we’ve learned our lesson about overbuilding this time… it will never happen again.”
and sure enough, the exact same thing happened, (that was always foreseeable)
being right is so irritating
And this one:
“From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months.”
It is not the small and midsize builders that bother me, though. I don’t know about now, but in the past, smaller builders tended to deliver a better product. Although they added to the mess. I want to see a major or two really get boned and go BK. Especially when I look around here in Florida and see the utter havoc and ugliness they’ve created. Centex has lost its mind. It is STILL building here in the is area. Just started a new development when the others surrounding them are half finished or less than half occupied.
“From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months.”
He might want to change that to read “From California to the Carolinas”!
palmetto…
I don’t remember where you are in Florida but Centex just broke ground on a huge development in North Port. 250K - 550K. I have no idea who is going to end up in these but i sure am not looking to get into the game anytime soon.
Chris
Chris, I’m in an area called SouthShore Tampa Bay. Basically, the Ruskin/Sun City Center/Apollo Beach area, on the shore of the east side of the bay and at the very southern part of Hillsborough County.
Centex just broke ground in North Port? NORTH PORT?? Builders are already in trouble and going BK in North Port and Centex thinks they can sell there? I mean, parts of North Port are nice, but what kind of work is there to support 550K???? I’m shocked, I tell you, shocked!!
‘HOW MANY TIMES did the homebuilders state very cock-suredly: “we’ve learned our lesson about overbuilding this time… it will never happen again.”’
3,284,346,213.285 times, by my count. The fractional part accounts for hedged language, or statements made with fingers crossed behind their backs
‘”The initial take is that things are still ugly, and there’s no sign of any turnaround anytime soon,’ says Landry, who doesn’t expect to see an upturn for homebuilders until 2008 at the earliest. ‘There’s just too much inventory out there.’”
A yea..that would be December 31…2008!
Yeah! Florida builder has a California bagholder for a partner! (for land joint ventures)
From the BusinessWeek
“For its part, Lennar CFO Bruce Gross says the company has mitigated its risk by partnering with strong institutional investors like the pension fund CalPERS and has structured the deal to make sure it isn’t liable for its partners. “Our joint ventures are very strategic and are designed to share the upside opportunity and downside risk with other investors,” says Gross. For now, Wall Street is thinking only about the downside.”
I have seen CALPERS investing in some very risky transactions this month (mostly getting out of dollars). While I was getting out (to high, to fast) of Euro’s, Calpers was purchasing Euro’s. Not a riskless transaction for a pension fund.
Did CALPERS have some horrible investments over the last 2 years that is forcing it to reach for an above average market return?
Drudge is reporting that Walmart has had it worst sales slump in 27 years today posting a lose of 3.5% of sales for the period ending May 4th.
From WSJ online article.
Another crack in the wall
I’ve been looking for Wal-Mart regional sales data. I’m convinced that the Southwest and especially inland Californis areas will show way above average drops - in large part due to the hidden jobs losses of illegal aliens working in the construction industry. They are prime purchasers of Wal-Mart stuff, and their job losses will be unseen until bottom-lines feel the pinch.
I’m of the opinion that Wal-Mart would have hit the wall sooner or later. If you want to stay in business for the long run, you need to have something other than low prices going for you.
Agreed, and their recent interest in Gottschalk’s (a small, Central Valley higher-end retailer) says a lot. When you have real fear that your low-end model may be soon be at risk, then looking at a broader base has appeal. But the timing is very interesting…
I tend to agree, but I have to admit I do shop Wal-Mart (no flaming!). I don’t buy their (adult) clothes or furniture, etc. but I do buy diapers/wipes, toddler clothes, food items, health/beauty items, cleaning items, paper products, some housewares, etc. because - frankly - I can’t find it cheaper anywhere else and I’m a single parent on a tight budget. So those low prices keep me coming back as I’m sure they do for many others.
Lots of people may have to shop at Walmart in the future, as they fall out of the middle class.
I’ve always seen the modern Walmart as another Kmart - building themselves into bankruptcy.
StarFvcks did the same. Just wait until nobody has HELOC money left to buy $10/lb coffee which can be purchased at Trader Joe’s for $3/lb…
This leads us to believe that we have not reached the point of stabilization as we had previously anticipated and that the difficult conditions could persist for the foreseeable future,’ said Mon.”
Translation: we’re f*cked.
“He added, ‘I think the problem right now is that consumers don’t believe that housing is a good value today.”
Heck! Even the bees are getting out of their housing market.
my hood 22151 just reached new peak on inventory homes $375k to 700k
all a bus ride to Pentagon
Everyday the bad news keeps rolling out and the REIC cannot spin it anymore.
A sickening bunch.
Ah, Slightly OFF-TOPIC and yet…
LA HABRA - A 32-year-old man cut off his mother’s head with a circular saw and then died trying to cut off his own head with the power tool Tuesday, authorities said. The bodies were discovered locked in their rented bedroom.
Just after 5:30 a.m., police were called to the 700 block of East Pinehurst Avenue for a family dispute, said La Habra police spokeswoman Cindy Knapp.
Police entered the residence and found the bodies of Guadalupe Ruiz, 60, and her son, Arthur Ruiz, Jr.
The decapitated body of Guadalupe Ruiz lay on a bed. Arthur Ruiz’s body was on a nearby bed and had sustained severe trauma to the neck, Knapp said. The circular saw was next to him.
A child and three other adults were in the home when police arrived. Knapp said several families rented the residence.
Guns don’t kill; CIRCULAR SAWS do!
“The downturn in the housing market has caught the nation’s homebuilders by surprise, leaving many overextended with costly land they can’t develop and unfinished homes they can’t sell.”
But, the bulls told me that the builders had learned from previous bubbles and that’s why this wasn’t one.
I still see that MSM guys are talking more about attitude and psychology.
The real situation is debt exhaustion. Hardly anyone can buy or hold properties at these prices. The loans scream exhaustion.
Option ARM means you can’t service the debt and are going under.
ARM means you better get more income before you can’t service the debt.
Interest Only loans… Can’t make a dent in the principle!!!
Unless we get a big infusion of income then this is over.
What’s a bubble???
——————————————————————————-
EMERGING MARKETS
China at risk of ‘market euphoria’
Booming share market in Middle Kingdom could turn into a bubble if retail-investor speculation isn’t curbed, Goldman Sachs says.
http://www.marketwatch.com/news/story/goldman-sachs-china-risk-market/story.aspx?guid=%7BEF44CF90%2D18BC%2D46E3%2DA096%2D62E0297C9EA0%7D
“On Feb. 27, the Shanghai Composite tumbled nearly 9% on fears that the Chinese government would intervene to slow down the market. The move sparked a sell-off on markets around the world. Read more.
Despite its February plunge, the index recovered its losses and is currently up a whopping 51.3% year-to-date, making China the best performing stock market in the world.”
And the 56 best performing is the US stock market.
If Googles earnings growth was as good as what is being reported from China, I could understand Googles valuation.
“In the first quarter of this year, the weighted average earnings per share of 1,364 listed companies increased by 78.1 percent to 0.098 yuan from 0.055 yuan in the same period last year.”
May 10. 2007
http://tinyurl.com/3a6scy
“Fannie said it believes its ‘exposure to the Alt-A and subprime mortgage loans… is limited.’ The company said it expects about $1.1 trillion in adjustable-rate mortgages ‘to reset at least once during 2007, with an additional $400 billion scheduled to reset in 2008.’”
This my friends (Fannie quote) is the proverbial canary in the coalmine…1.5 trillion…just about 1/4 of the current deficit…add it to the stack … we are in a word…f’d…
crush