Bits Bucket And Craigslist Finds For August 4, 2007
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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I’ve noticed a reduction in inventory in the Wesley Chapel (North of Tampa, FL) are lately. Inventory (3/3/2 or larger) was floating in the 900-930 range for the last year or so until about a month ago when it started dropping. Today its at 872 per Realtor.com. So are houses really selling? If so, what would be driving those sales? School starting up again soon? Have you guys seen this in other locations?
Some may have been taken off the market for awhile and then later put back on the market, so it won’t look like it’s been on the market for a long time. Also, many may be up for rental since they can’t sell it.
If you have a “no recourse” loan, you’re better off trying to rent it out ’til the Bank takes it back than selling it for a loss! That’s why a large part of what’s theoretically “inventory” isn’t in MLS at any given time.
..maybe some of them have left the 900-930 and relocated to a price range below that…
super bowl 08 dude
what the latest trends are indicating.
» Immigrants Lift U.S. Housing Market
ROFLOW - hispanicals are defaulting like crazy
Remember when we heard that risk markets are different and how banks have new models? Remember hearing about Bank of America and Citigroup wanting to lend to Hispanics because the market was huge and underserved? Serves them right.
Somehow I think everybody is “defaulting like crazy” and it isn’t just one segment of our society…
I know, but now we see that it was them asking to take advantage of another market segment.
“Bank of America and Citigroup wanting to lend to Hispanics”
Uh, not Hispanics, I thought it was illegals, the majority of which appear to be of some sort of Hispanic origin. This is the whole sad side of the illegal immigration debacle. The folks at LaRaza and other similar activist groups have (deliberately, it seems) painted an entire ethnic/cultural group with their own nasty brush. In other words, since it is difficult to justify law breaking, it had to be turned into an ethnic/cultural issue. Americans of Hispanic origin should never have allowed that to happen.
Don’t get me wrong, I am vehemently against illegal immigration, it is dividing the country and contributing to its ruin. But I grew up Catholic, in a largely Catholic neighborhood full of Irish, Polish, Italian and Hispanic (mainly Cuban and Puerto Rican) families. I am sorry to see the whole illegal immigration movement degenerate from a very valid issue of whether or not laws should be observed, to a very confused, special interest issue.
“…banks have new models?”
Home builders also had new models…
I think what the article meant to say was that immigrants are lifting appliances and copper piping from vacant flipper and FB houses.
Don’t worry about it, things are still crashing as expected.
You’re just seeing some noise when you look at some micro cases. The key thing now is that lending has just about dried up (since lenders can’t dump their loans on others anymore, but that’s for a different thread). So, minor ups and downs mean little when the market is (now) so oversaturated.
Most times, in this market, it is because 1) They have been taken of the market knowing that the chances of selling before the end of the year area very slim or 2)They found renters due to the timing of school starting and families wanting to live in a certain school district . This is happening in other areas as well..
Attribute it to FORECLOSURES! And people deciding, oh, I will just rent it till the market returns. Good Luck!
If this has already been posted forgive me. Karl Denninger writes the Market Ticker blog, it is excellent. Anyhow he penned a letter to Chris Dodd that should be read and copied by all and sent to their respective member of Congress. The letter is at the following link in pdf format:
http://market-ticker.denninger.net/index.html
Scroll down a little to about the eighth paragraph…
Please check the link. I don’t see a PDF file.
The link is here:
http://www.denninger.net/mortgages.pdf
Sometimes as house go thru the foreclosure process they’re pulled off the market and then later they’ll reappear under the realtor the bank or mortgage company uses. Also they’ll disappear and a few weeks later show up under another RE company.
Sometimes as house go thru the foreclosure process
Sorry about my above post. Not awake yet I guess.
Part of the reduction is listed houses being foreclosed upon.
A bit more of this crash and I’ll pull out of the (short) stock market - and, of course, give my cut to Ben.
Many thanks to Ben and others for giving me the confidence to hold out while things were in suspended animation (i.e., REIC stocks refused to drop). Many thanks also to the geniuses at Wall Street for holding up the prices for so long that I was able to muster the confidence needed to short the daylights out of these companies.
Yesterday was a great day, I look forward to (hopefully) many more.
I have been thinking about getting into the short game (still searching for my confidence). Would you please share what stocks you think are still good shorts?
Don’t ask me, my record’s been atrocious in investing.
My general rule, this time, was that if a company involved in this scandal is priced within 20% of its 52 week max (which is generally its lifetime max), it is a good candidate to fall - so my decisions were based on that and nothing else (I wouldn’t trust their financials if my life depended on it). So, I was staying away from stocks that have already fallen dramatically, as it wouldn’t take much for them to tick up and slam me. (given the past week’s crash, there may not be much of those 20 percenters left)
As for specifics, I’ll leave it up to the people with far more experience than me to pick the next round.
Currently short HOV, BZH, KBH & ABK. The HB’s have been great so far. Since the HBs have taken a severe pounding lately, I am thinking of drifting away. Future plans are puts on LEH, GS, CAT, AKAM (yes the high tech wonderkind of the old tech boom reached $327/sh in ‘99 only to crash to ~$1 a few years later. They are at it again only $33 this time, but with a p/e of 77). The thoughts are if we go into a broad based market decline, the lunatic fringes will be hurting.
Just for gits and shiggles, I signed up to Jim Craemers’ Beat the Street game and took the $100k play money and shorted the HB’s. I currently rank above 99.5% of the drones that worship this turetic tool. About 22,000 players (CNBC drones) can’t seem to apply Jim’s advice in make believe, imagine how bad they are with real money.
The homebuilders are due for a technical retrace in the next week or two. All bets off if we go ‘87 style next week (low odds though).
“…if we go ‘87 style next week (low odds though).”
I don’t see it happening, as technical innovations have been adopted since 1987 to make sure that stock market corrections play out in an orderly fashion (translation: over weeks if not months, not just in one day).
How does that work, that stock mkts are kept from going down too far in one day? For example, say one day I want to sell my stock because I want to get out of the mkt. Does my stock broker just say to me - “Nuh-uh - you can’t sell today because the mkt’s gone down to much. We can’t place your trade until tomorrow.” ???
Make that “the mkt’s gone down TOO much”…
Yup. That’s exactly what happens. That’s the “circuit breakers” they occasionally talk about.
“How does that work, that stock mkts are kept from going down too far in one day?”
Not sure how that works, but it definitely shows up in the data. In particular, since late 2003, there is a measurably drop in the frequency of large volatility days compared to before then.
After this past weeks action I would stay on the sidelines until the market settles down. I think that the Fed will provide some relief to the markets later next week in the langague that it uses. I think if the Fed eased next week they would lose so much credibility. So market probably goes down Monday into Tuesday and then the relief rally comes. If any of the homebuilders and financials recover let the shorting party begin. BSC, CFC, HOV, TOL etc. I would also look at some of the mid to higher level retailers as their business will probably drop soon.
If it dips below 13000 on Mon or Tues I think we’ll see some more panic.
I think for this very reason the DJIA will not be allowed to dip below 13K.
Prediction: The U.S. headline indexes will be mysteriously flat on Fed meeting days. (Probably a good play in there for day traders of options who know how to work volatility spreads — e.g., write puts and calls out of the money to either side while the Fed keeps the lid on volatility.)
VTDan, it has taken me a year to learn a simple lesson. You either need to be a bear or you need to be a bull. If you try to short on some stocks and go long on other stocks you will just screw up one time after another.
My favorite shorts are still some of the builders. I think KBH, LEN, TOL, RYL & CTX still have a ways to go down. My nemesis is AMZN and I would love to see that go down. I’m sure I will continue to pick away at it. There is no reason for AMZN to be at $78 as we stumble into a downturn in consumer spending.
Whatever you do, be careful. But understand you either need to be positive or negative. It’s hard to be both at the same time.
The P/E is outrageous there.
I attributed AMZN’s ‘turn around’ to be cut back on spending rather than it growing.
I’m thinking about 2nd tier of shorts that still have not dropped. I added Black and Decker puts.
One’s I really want are furniture and fittings related. They normally overborrow then get hit with declining sales/loans still requiring servicing.
I posted this somewhere on here before, but Black & Decker said their door lock products have all but shut down. No demand, because they’re mostly needed in new construction. I read it somewhere last week.
But there is a boom business in the Repo world for the re-keying of those doors at all those forclosed homes. Look for their parts segments to explode with demand. Not as good as a complete knob, but you take what you can get.
“You either need to be a bear or you need to be a bull.”
Volatility plays are possible which require no such commitment.
I most definitely a bear, I was once an AAPL bull, but sold that a few weeks ago. I have never shorted things because I was afraid of unexpected upticks and short squeezes.
I would suspect that there is an abnormal amount of shorting going on in this market which makes me even more concerned about “irrational” upticks.
Thoughts?
Yes, Short % of Float (as of 10-Jul-07) HOV 65.7%, BZH 56.4%, KBH 24.0%. “Normal” stock like XOM 0.8% (from Yahoo). There could be a short squeeze, but the feeble attempts at rallying so far has be met with another swift kick downward. I am planning on lightening up on the shorts & switching to puts in other sectors like investment banks.
If you are “new” to shorting, do not short. You will likely lose your shirt. You’d be better off buying short funds (i.e. ETF’s) that do the shorting for you. Two that come to mind are SRS and SDS. If you do buy either of these funds, be sure to enter a “stop loss.” If you don’t know what a stop loss is, stay away from the stock market until you gain more knowledge.
Take a look at http://www.proshares.com for their full family. I think these ETFs are one of the best tools I have. You can trade any market: Bear or Bull but you can’t be sheep !
Warning on SRS and SDS is that they are x2 exposed short. They are not for the feint hearted. Normal stop losses will not apply as they are magnified. You can be whipsawed like crazy. I’ve seen them go down 10% in a few days which can stress you but if you believe the trend, then you can hang onto them. For the record, SRS/SKF positions are 95% of my 401K but this is a snapshot as of today. I am not advocating this as a prudent choice but as an extremely opportunistic position. I am prepared to reduce this to cash for any near term dead cat bounce. To which I will re-enter for next wave.
Long term, housing/finance stocks are where NASDAQ was in 2000. The mania has burst and people are coming to their senses 1 by 1.
Gambling with your retirement money? Isn’t that what some of these fools have been doing with housing?
the 401ks have been gambling with your retirement moneys. Buying over inflated assets is gambling.
You may call it gambling, I am very comfortable with it: It is a high probability speculation based on current market trend and absolutely lousy fundamentals. I am not a buy and holder and have been trading for a number of years. This is the best opportunity I’ve seen for years and this is why I’ve been balls to the wall in this position.
My 401k account is self directed (ie/ I can trade bonds, stocks and mutual funds) and unlike, mutual funds only options, I can sell at any time in the market day.
SRS and SKF are temporary positions that I monitor throughout the day. You should also note that unlike housing, ETFS are liquid.
I have my money in SRS and was wondering what exactly causes it to go down and up? Also is there a point if the market crashes that it makes sense to finally sell this? I was trying to take a little profit here and there with lots of selling and buying but I just don’t want to go through the hassle of a ton of little trades on my taxes. So I am trying to ride this as its going up and down.
SRS is 2x inverse of Dow Jones US Real Estate index. It that index goes down by 1%, you go up 2%. If it goes up by 1%, you go down by 2%.
Surprisingly it is not really housebuilders but REITs. IYR is another fund that tracks it. Their site gives an indication of weighting http://www.ishares.com/fund_info/detail.jhtml?symbol=IYR&qt=IYR
It makes sense to sell it after a market crashes when that crash results in exhaustion. There are no more sellers of the stock that makes up that index. Another reason maybe you can make more money somewhere else.
A final reason to sell “SRS” is when everyone else is on board as a ‘can’t loose’ and the pigman will organize a 10% rally on the IYR to shake out the weak hands on SRS which will now be down 20%. SRS has attracted some volume and will not go up without some retracement.
Hmmm. Ive got some SRS. I was planning on waiting a few more weeks at least until the mortgage markets melt down a bit more. What do you think might be a good indicator that its done?
“If you are “new” to shorting, do not short. You will likely lose your shirt.”
How does someone ever become not “new” to shorting if they follow this advice?
It is kind of like being a teenager looking for some credit (in the old days) but not being able to get a loan or credit card because you’ve never had any credit history.
I agree with you. I didn’t know anything about shorting until I started it. I barely know what “buy to cover” means. But I do see my account balance going through the roof.
Ive started looking at shorting and options. I flat out do not understand how they works, or the risks. My plan is after reading a dummies book or two, and doing some research, to start doing it on paper, and make sure i understand the process. Then I’m planning on starting with extriemly low amounts to test the process untill i do understand it. THEN i will loose my shirt.
I stand by what I say: If you are new to the stock market, you should first understand the long side. When you’ve got a basic understanding, learn the short side. Start with 100 shares and experiment. But if you enter the market by shorting without an full understanding of the risks, you’ll definitely lose your shirt. Most people can’t master the long side, and even less the short side, which is why ETFs are so great. The risk of shorting is that you have “unlimited” risk. I’ve seen guys get completely wiped out by shorting stocks because they didn’t appreciate the risks. Oh, that’s funny, that’s what happened in the housing market - people didn’t appreciate what COULD GO WRONG. When shorting, when you’re wrong, you’re really screwed if you’re not careful.
Dan
While I’ve shorted the builders, it looks like their decline is reaching the exhaustion point for the near term and we may be looking at another flat to up period like this past fall and winter. They’re pretty much trading below book value now, so further declines are dependent on hom much money they use from operations and how big a hit they have to take from writing down the their inventory of land and houses - difficult to forecast since they don’t give you much detail.
My best ideas now are the “financial enablers” who profited from and promoted the credit bubble. Top of the list are the investment banks. They made a ton of money securitizing bad loans, advising on LBO and lending to hedge funds. All activities that are either going away or suddenly being recognized as risky. Earnings are going to get slammed and there will probably be big writedowns. Biggest bond exposure is Bear Stearns (BSC) and Lehman (LEH) but problems at Lehman aren’t as fully recognized. Once it starts to really slam stocks, Goldman (GS) is my next target.
Best idea right now is Ambac (ABK). They are a bond insurer, who writes coverage on lower-rated bonds so the issuer can get a higher rating. Think of them as an MGIC for junk-rated corporations. Their customers are the type of issuers whose bonds put Sowood out of business. Corporate defaults have been at record lows since another idiot lender was always lined up to bail out anyone in trouble. They’ve been writing flood insurance during a drought. Now it’s started to rain and there’s this crazy guy over there building an ark …
Rating service Moody’s (MCO) is another enabler. They got 40% of earnings from “structured finance” - ie. CDOs and ABS. The things are barely being issued now since demand has dried up, which will put a big hole in profits for MCO. Not to mention the cost of defending themselves from all the pending lawsuits and the potential liabilities if they lose.
Most HB’s were trading in the teens way back in 2000 just before Greenspan decided irrational exuberance should be the exclusive pervue on home mortgages.
But I’d rather start a betting pool on how much money the HB’s and Financial Houses throw at politicians up for election next year.
“I’m from the government and I am here to help the crisis.”
I would urge caution to NOT use logic to predict the market. We have a perfect storm of a pervasive financial disaster for consumers (voters) and politicians who want to keep their jobs.
Yes, thanks Ben and fellow bloggers. My primary investing theme for the past two years has been puts on the HBs (long commodities has been the secondary theme). I cashed out my remaining HB puts (BZH and HOV) on the spike down Wednesday and I am not sure I will re-enter absent a fairly big bounce. It just seems like the risk-reward is not there. Then again, I stopped playing the subprimes a while back, so what do I know?
Current shorts are all lenders/insurers: CFC, FED, DSL, ABK, BKUNA, CORS, MBI. I also closed out half of these Friday before the close. Who knows what the Fed will do on Tuesday? I still think the lenders/insurers have a good risk-reward on the downside. My only concern is that this trade seems too obvious.
Anyway, thanks so much to all who participate in this blog. I am not sure what I will do investment wise once the popping is complete because I suspect I will not see something so obvious again and it is primarily this blog that made things SO obvious.
Inventory on our area has been rising steadily (Columbia, S.C.) for the first time in three years I can feel that “the buy it now” euphoria has hit the exists. Developers in the downtown area are building Condo’s left and right. They have never sold well here, but of course it’s different this time. One realtor is calling himself an ” Urban lifestyle scientist”!
like “downtown” asheville and lubbock
new condo capitals
Condos should have remained a niche market and not been hawked to the masses. Between school/work/travel a small condo suits my needs perfectly - but that’s not the case for the vast majority of Americans.
If anything the preceived demand for condos by the likes of these “urban lifestyle scientists” is really a clear indication that the middle class is on the ropes. In complete denial about the erosion of their earning power many have turned to granite & stainless to try to hang on in the rat race.
The coming bust just might obliterate many of those contrived condo markets in towns and small cities. Big city markets will be hit hard too - and it’s something that’s concerning me more and more everyday.
Eh, theyre ok as a cheap alternative to buying a house.
Yes, when a condo costs 1/3 what a SFH costs - I would agree - and acted accordingly in fact. But, $300k plus for an apartment - sorry not buying it. Of course the problem is so won’t many, many others in the coming years.
(Columbia, S.C.)
Hey, wmbz, what’s the deal with that guy who got arrested in Columbia for calling his neighbor a “cheap bastard” for hiring illegals to do work on his home? That was a real show stopper. Of all the places in this country, Columbia is not a place I think of as having a fetish for being politically correct.
Palmetto, I missed that story! You correct about us not being particularly P.C. Of course when we do make national news we generally come across like a bunch of toothless hick rednecks.
Hey, who else has a State Treasurer busted for a POUND of coke?
One realtor is calling himself an ” Urban lifestyle scientist”!
OMG I can’t stop laughing. Later when everything goes south he can call himself an “Urban Blight Scientist”
This is an interesting link this morning.
http://www.urbansurvival.com/week.htm
Two comments: The first story should give everyone an insight to our future with regard to tyrannical rule and searches. (there is a link to the article)
The second is a story/insight into some amazing realtor denial of what is happening. They really don’t “get it” yet.
Thanks for the link, augur. Loved the comments contributed by one of our own, Jas Jain. Absolutely, the construction industry has contributed horrendous waste in their insane over-building. Cue the wrecking ball.
The second is a story/insight into some amazing realtor denial of what is happening. They really don’t “get it” yet.
Oh they get it. They just don’t want anyone else to “get it”.
‘The flaw, so it seems, is that the originators of CMO theory believed that under almost all conditions they could think of (in more predictable times - pre-9/11) was that people would always pay their mortgage ahead of everything else.’
Yeah. Boo yah.
Wow! That Cramer video is PRICELESS!!! Thanks for this link.
Here in Michigan, everyone is talking about how the market is going down hill and people are very scared of the future and what it will bring. Our state officials are in denial and can’t make a decision on anything. Schools are coming up short for money and people are complaining about their assessments going up while property values are going down. It looks like bragging rights are out the window.
Don’t worry- Grannholm will offset that by increasing taxes on the few surviving people and busnesses in MI. Typical politician- parasite behavior and what else do people expect? How do ALL governments get money? Easy, they just take it from you!
inMI they had out taxpayer dough like mad- lots of business bribes, kinda sad
Ahh yes, the governmental re-allocation of resources. It really is a noble theory, but waste and inefficiency increase exponentially with the size of a bureauocracy. When fraud, waste and abuse are discovered, what does any good bureauocracy do? Organize a committee to investigate, hire consultants, set up meetings and hearings, send employees out to do research, hire a firm to take polls, etc. They spend (waste) more $$ and man hours in trying to stop waste and gain political leverage. In the end, the bureauocracy gets bigger, more complex, inherently more wasteful and inefficient and then the whole cycle starts over. Semantics aside, governments historically produce only one product- more government. I’m no anarchist, I just believe that smaller, simpler, more efficient and more nimble government is better.
gov unions scare me more than terrorists
“I just believe that smaller, simpler, more efficient and more nimble government is better.”
Testify, brothah! Cue Ron Paul.
I work for a gov union and I will tell u that no one else holds govt feet to the fire on waste and curruption than the workers and thier unions.
Hey, Will. Govt union member here. Thanks for your help.
My sister lives in MI and it’s a very expensive state to live in. It’s going to have some major correction coming.
–
MI is in recession and would lead the nation in getting into the next depression. Flint and Detroit areas used to be Silicon Valley of the early 1900s. Tells you what lies ahead for California in the decades to come. The WW II was the best thing that happened to California economy and land prices, but that party is coming to an end.
BTW, according to David Rosenberg of ML 42% of the US economy is in recession (I think that he means geographically).
Jas
I met some guys who moved here (FL) from Michigan. They think the job market here is great compared to there. Honestly, the job market sucks in FL too. But then they told me you can’t even get a fast food job there and how everyone is out of work. Now to hear that it is getting worse? Is Burker King doing layoffs now?
The trend in FL is more people moving out than moving in. That will support the price of homes.
Michigan is laying off in every area imaginable. However if they think the wages in FL are comparable to what they made in MI, they’re in for a shock. I lived there(FL) many years ago and FL wages for the same jobs were less than Ohio’s, which is not known as being a high paying state. It was fine then, because it was cheap to live in FL, but not now.
We thought about retiring back down to FL, but it’s priced itself right out of the market since 2000.
MI and FL will see depression. There just isn’t any avoiding it.
Hopefully the politicians don’t screw things up too badly. That’s the things that makes me worry that nationally this will get worse. Nothing like smoot-hawley.
Got popcorn?
Neil
AHM made about $60B in loans with a staff of about 7,000 people. Looking at their financials, AHM’s revenues were about $1B per year. In other words, if I understand this correctly, AHM will sell their $60B in loans for about $61B, and keep the $1B difference, using it for paying their workers and for earnings. This equates to about 2% of the money that they see – so for a typical loan of $600k, AHM gets to keep $10k. This is somewhat similar to Walmart, which has tons of money pass through their stores, but they only keep a small percentage.
What this means is that they have VERY little money from which to cover bad loans. For example, if the $61B value of their loans in one year drops to, say, $59B, then they have to come up with $2B to cover them. The specific scenario is that, of the $61B they wrote, loan defaults have cost the downstream investors, say $2B, and AHM simply doesn’t have that kind of money laying around, even if TOTALLY liquidated, down to the last corporate jet.
Now, if take that a bit further and figure that the loss is $5B, then, not only are they insolvent, but their net value is HIGHLY NEGATIVE. Given that, why would anyone be dumb enough to buy out the company – as they would inherit those debts, and probably a lot more. So, like New Century earlier this year, and probably lots of stocks later this year, all traces of AHM will simply disappear.
It took a while, but is the hangover that Wall Street is now waking up to this month.
It was built on high volume. Churn out as many loans as possible. The business was dead from the get go, but no one thought the gravy train would stop……. until it did.
Meant it was a broken business model. Not dead. It’s dead now.
Agree - and good point.
If they expanded continuously and if housing prices continued to go up, then they could stay in business and make decent money…but they never had a chance once the bump hit.
It was fun (for them) while it lasted and it must have blown their mind that people would give them money to lend and would buy their stock. Talk about mass stupidity.
Ponzi Finance at its finest.
Don’t miss the Cramer meltdown on credit market
http://www.cnbc.com/id/15840232?video=452808336
Why do I always get nauseous when I watch this guy? It is the jittery motions he makes while endlessly flailing around the stage, or the toxic waste that spews from his mouth?
Boy, he really is a c*cks*cker. Two weeks ago his Boyz were proclaiming “Dow 14,000″ and how smart they are. Now we are supposed to see a rate cut to hand billions more over to his pig friends. Not once did he hold his buddies accountable for creating this mess. Let them rot.
The most disgusting statement during his tantrum:
“You can’t get a darn loan unless you are rich like me.”
I thought he said, “You can’t even get a loan if you are rich like me!!!”
Watch it again and see.
Yep, thats what he said!
Go to 2:58. He says, “You can’t get a darn loan if (studder) you were rich like me.”
I didn’t hear “unless”.
It is the jittery motions he makes while endlessly flailing around the stage…
I think it’s his attempt to build tension by constantly cutting off his interviewer and his obvious need to have to crank himself up into “performance” mode. It seems obvious to me that it’s the “performance” that he depends on for popularity.
GOOD GOD!! - That poor lady.
But one has to consider is it really as bad as he says? If it is next week could be worth watching on the big screen.
Got popcorn?
“That poor lady”
Have you ever watched her on CNBC? She is scum in Prada. She is such a mega-shill that it is nearly impossible to listen to her. She was jumping on somebody the other day because they were saying the market is in trouble. Yes, Erin Burnett is just as bad as Cramer. And there is something about Cramer’s little meltdown that seemed very staged to me. She was just a prop.
I have not watched CNBC for a long time and just started watching to see the market drop.
i thing cramer was calling a top to this market. when cramer turns bearish its time to bail.
When TBKAC (The Buffoon Known As Cramer ™) turns truly bearish, it will be a clear contrarian sign for me to go long again. The key word here is “truly,” not simply his pedantic ravings for a Bernanke Put.
Caught it “the Cramer meltdown”. That poor girl looked like she thought she was going to have to give him CPR after he had the “big” one.
I love that video. It shows how far the Wall Street Gangsters are taking it up the wazoo.
You got to love it!
Maybe Cramer has shorted the markets and plans to profit with his antics? That is what good acting is all about.
That’s what I was thinking.
It does have some appearance of being staged. Cramer speaks his mind! Well, at least folks can get an education from his videos years to come about how to react to a big boys game. Someone should call him a wahhh-bulance.
I could not play that link because I’m one of those grumpy non-Windows users.
If anyone else is having trouble, the same video is available on You Tube
Re:Cramer
Can anyone explain what the “fixed income” market is?
This is a really lame explanation:
Fixed income: Investments in structured debt instruments (bonds). You give someone a pile of money and they promise to pay it back with interest. The lower your expectations of return (low interest) the greater the chance that they will pay you back. The greater your demand for returns (higher interest) the more likely it might not work out that way.
The problem has been for the last 5 to 7 years is that everyone was charging the minimal amount of interest on everything.
All of a sudden they have a Come to Jesus moment and think that’s probably a bad idea. And now no one has a clue on how to fix it without letting a couple of trillion dollars vanish into thin air.
Cramer: Got Bear???
He is taking this very personally. I cannot wait to hear how many $mmmillions he has lost.
Watching that tool and his bug-eyed, spittle-spewing meltdown filled me with, well, schadenfreude! You can tell his Wall Street pals are putting intense pressure on him to use his bully-pulpit to round up the last of the solvent sheeple and throw them into the breach to try to stave of catastrophe until the big boys can bail.
Home Myths Meet Reality
Builders Were Supposed To Handle Downturn; What Went Wrong?
By MICHAEL CORKERY
August 4, 2007; Page B1
…
It wasn’t supposed to happen like this. Today’s home builders were thought to be better-capitalized, savvier and more geographically diverse than many of their predecessors in the last downturn, in the early 1990s. While many are expected to weather the slump, concern is mounting about the balance sheets of a growing number of companies.
http://online.wsj.com/article/SB118618271832887837.html?mod=todays_us_nonsub_money_and_investing
That’s what you get for being Gullible. Everyone here was shorting the market. I think we should be the ones running hedge funds.
This story about the builders’ “new business model” contains little if anything that was not predicted on this blog going back to early 2005.
Builders are struggling with a glut of land at the same time that home prices are falling.
I guess everyone doesn’t have a shortage of land.
Savy is not what I have seen working for them these last 5 years. All of them were chasing the market up. They could not keep up with the fast and loose lending standards. The managers did not care about anything except getting the work done yesterday. Starting the next tract one was more important. Just build more more more. Sell before the party was over, because it always comes to an end.
Don’t let anyone fool you into thinking housing costs so much to build. An obscene amount of money was spent on the rush to build.
Amid Mortgage Tumult, Worries About Curbs On Borrowing Spread
By Justin Lahart and Susan Carey
Word Count: 866 | Companies Featured in This Article: Bear Stearns, American Home Mortgage Investment, UBS, Credit Suisse, Genesis Lease, Aircastle
The recent turmoil in credit markets has put some mortgage lenders out of business, forced the shutdown of some hedge funds and virtually frozen the leveraged-buyout activity that was helping propel stocks. Now the worry is that the pain could spread more broadly into the economy by crimping corporate and consumer borrowing.
It was another tumultuous week, with rumors flying on Wall Street and the stock market posting wide swings. Treasury bonds rallied Friday as investors sought their safety.
“The worry is there will be a cramp in the financial system where nobody can borrow money,“…
http://online.wsj.com/article/SB118615040902687347.html?mod=todays_us_nonsub_money_and_investing
“a cramp in the financial system”
Cramps always precede a good purge, a “draining of liquidity”, so to speak.
What? Why didn’t anyone mention this BEFORE I fell in love with the housing bubble?
I think CNN is full of it! More feel good news for the sheepie. Oh the bashing of the investment banks is overdone, righhht GS?
Banking on a strong recovery
Stock Spotlight: Major bank stocks have been socked by credit market problems. But analysts believe some banks have been unfairly punished.
NEW YORK (CNNMoney.com) — The past five years were heady times for financial services companies as they lent money out at low interest rates to home buyers and corporations alike and watched profits soar.
But when it became apparent a few months ago that many banks handed out too much money too easily and that some borrowers weren’t able to pay back their loans, the market panicked.
Companies like Countrywide, a big mortgage lender that had lots of subprime borrowers — borrowers with less-than-perfect credit — were hit the hardest, but even those with less exposure to the subprime housing market weren’t spared by the sell-off.
And now, the market is worried that the corporate debt market could also be heading into trouble, fueling further fears of a looming banking crisis.
But is this already priced in the shares of many bank stocks? The recent panic may have created some great values for investors.
Investment banks tank
Shares of Bear Stearns are down 20 percent in just the past month and other investment banks have plummeted as well. Lehman Brothers (Charts, Fortune 500) has lost 19 percent; Goldman Sachs (Charts, Fortune 500) has shed 17 percent; and Merrill Lynch (Charts, Fortune 500) has fallen 15 percent. In all but Goldman’s case, the subprime problems have wiped out stock gains made during an otherwise bountiful past year for the firms.
http://money.cnn.com/2007/08/03/markets/spotlight_banking_stocks/index.htm?postversion=2007080313
In response to CNN (based on my earlier comment):
Yes, when stock prices go down, bargains may pop up, as those companies may make structural changes that improve the bottom line and bring them back to life.
However, when your company is stuck with creditors demanding 5 times your net worth, due to just some of their loans non-performing - YOU ARE TOAST. That’s the difference here and why bargain hunters should stick with real companies that produce something.
You mean something like this company:
Berkshire profit rises 33 pct
http://www.reuters.com/article/hotStocksNews/idUSN0339968020070803?pageNumber=2
He said at Berkshire’s May 5 annual shareholder meeting that he was betting on one currency that would “surprise you.”
So am I
and will continue too do so.
Thats why the market will be up on Monday. Sheeple rushing in thinking they are getting a deal. The market will be up and down like a yoyo with the long term trend down.
Up 200, down 300, up 200, down 400, up 300, down 100, up 100, down 300. You get the idea.
Yes, because that’s the best way to squeeze out every last drop of juicy goodness from the kool-aid slurpin’ suckas.
Buy now!
GS, I always appreciate your posts because so often you back up what you say with an appropriate source. Thanks for all your efforts - you add so much to this blog!!
Appreciate a word of thanks. Usually all I hear on a personal level is abuse from the occasional troll who still bothers to post here…
Ben, I believe yesterday to be a red letter day (3rd August 2007) and the real turning point in the deflating of the worlds biggest ever credit and real estate bubble. Now for the fallout……. and let’s hope we never see anything like it again.
What really bites about this bubble is the HUGE amount of money wasted in unneeded housing, when it could have been invested, in say industry (what’s left of it). But instead it all went to housing that is TOTALLY not needed by this country, at this time, and will likely rot.
It was fake money anyway created by double column accounting. It never really existed, and now its gone just like the easter bunny and santa claus
Exactly. That’s what makes bubbles so bad. They give people the false illusion of prosperity.
The Truth Fairy has shown up, though…
“Truth Fairy”
I got cut off - “Truth Fairy” — very clever!
I don’t agree. It was real money, and it has been transferred.
The money was real to pension funds that invested in AAA rated securities, just to see them get wiped out (or soon to be wiped out). Ditto for 401Ks, etc.
It was real money, but the people who received it (the brokers, builders, and especially investors) should have never been allowed anywhere near it - they got (in many cases) our money.
Destroying the excess credit / fake money is the central purpose of a financial bubble. It pulls all of the artificially created “money” into a speculative frenzy so it can be destroyed in the subsequent collapse. It’s the only way that market forces can adjust things in a world of central bank money manipulation. Like pain, bursting bubbles are nature’s way of telling you that you’ve screwed up.
It’s to bad most shareholders, home buyers, investors just don’t understand how the private federal reserve “makes up” money and then makes its available for loans. This credit scam will go down in history and it will be years before it is finally understood untell the next generation falls again for the same credit free for all. History repeats. Nothing new.
IMHO when easy Al tried to “save” the US economy he forgot about the boyz. Oh what a great rip roaring PARTY they had. His hope was that the $ would have gone into business expansion (i.e. technology), but naah, lets trash the lending standards until a strawberry picker is qualified to “buy” a new 500K home `:-)
I agree. I think we’ll see some rallies, but the overall trend will be down, down, down from the peak. The fall of the stock market is being managed, IMHO, but then, I’m no financial genius.
If you need to create inflation anyway, why not do it when nobody is looking (i.e., when they are too busy worrying about a bear swoon on the headline U.S. stock market indexes)?
GS, The easy answer is that we are a bubble economic model. True for over 30 yrs. The problem becomes; what is the next bubble?
As economy softens, so does job creation
Growth slips, but labor holding up well overall
By Jeremy W. Peters
NEW YORK TIMES NEWS SERVICE
August 4, 2007
Job creation in the United States slackened in July, extending a trend of softening employment growth that mirrors the modestly downward path of the economy.
http://www.signonsandiego.com/uniontrib/20070804/news_1b4economy.html
22 years gets you back to 1985. Can any old timers comment on whether it was worse in 1980-1982 or now?
Mortgage, credit worries push stocks, dollar lower
By Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
August 4, 2007
NEW YORK – Stocks tumbled yesterday on fears that the worsening ills in the mortgage and debt markets could soon take a significant toll on consumers, businesses and the overall economy.
The latest decline capped a volatile two weeks on Wall Street in which the stock market has swung wildly from day to day, reflecting rising uncertainty about the outlook for markets and the risks plaguing the economy. The biggest moves lately have often occurred shortly before trading closed.
Indeed, the market dropped particularly sharply yesterday afternoon after investors were rattled by remarks by executives at Bear Stearns, the investment bank that has been heavily involved in mortgage securities. The firm’s assurances about its own financial position were overshadowed by bleak comments by its chief financial officer about the credit markets.
“I have been at this for 22 years, and this is about as bad as I have seen it in the fixed-income market,” said Samuel L. Molinaro Jr., Bear Stearns’ chief financial officer.
http://www.signonsandiego.com/uniontrib/20070804/news_1b4market.html
That Was No Vacation for Stock, Bond Investors
A 281.42-Point Loss Caps a Seesaw Week;
Treasurys Draw Money
By PETER A. MCKAY and GREG IP
August 4, 2007; Page B1
Concern about worsening credit problems hammered financial stocks, sending the market into a late-day spiral and raising the specter of further declines.
Investor jitters were intensified when Standard & Poor’s changed its outlook on Bear Stearns’s long-term credit to negative from stable, citing risks from the Wall Street firm’s exposure to mortgages and other credit instruments.
The Dow Jones Industrial Average, which had roared above 14000 for the first time in July, ended an up-and-down week by sliding 281.42 points, or 2.1%, to 13181.91. The Dow Jones U.S. Financial Services Index shed 3.9% — the worst performance of any of the 18 sectors tracked by Dow Jones Indexes.
…
“Even our nonfinancial stocks are getting hit by guilt by association with the financials,” said Craig Hester, chief executive of asset-management firm Hester Capital Management, referring to losses in his firm’s portfolio Friday.
“Fear has totally taken over today,” he added. “I think this could turn into a full 10% market correction, although I don’t see things getting much worse than that.”
http://online.wsj.com/article/SB118618206038387836.html?mod=todays_us_nonsub_money_and_investing
“I think this could turn into a full 10% market correction, although I don’t see things getting much worse than that.”
Why do these people continue to say the same things over and over? Sounds like the same crap we heard from the RE industry.
“There is no housing bubble.”
Yesterday on one of the CNBC shows everone agreed that Tech stocks would lead the market back. They also had the CEO of Hovanian on who said that the problems were the news media making everyone feel negative about housing. No tough questions - like what is your current cancellation rate? Or with most studies showing that almost 70% of people own a house who is left to buy a house? Or since the median price of a house in the US is 230k and the median household income is about 46k is it responsible to urge people to buy a house that is 5 times their income?
Tech stocks would lead the market back.
I’m sure txchick57 would take issue with that.
Exactly, no one knows how this will play out. If my tin foil wrapped intuitions can be dismissed - so then why can’t those who have incessantly been calling a bottom is also be written off?
The fact is that a large economy based so heavily on personal consumption has not been tested in this manner - and predictions based wholly on a miniscule postwar timeframe are laughable.
Yes. Heck even our current monetary system is only 36 years old since we got off the gold standard. Add in all the complex derivatives and financial dark matter and there is really no way of knowing exactly how things will play out. We are charting new territory here with no historical precedent.
“financial dark matter”
LOL
“I think this could turn into a full 10% market correction, although I don’t see things getting much worse than that.”
And that is exactly why there will continue to be shorting opportunities for the foreseeable future.
There were 10% mortgage rates back then (mid 80s). But affordability was essentially the same because house prices were lower.
Excuse me, but that is just plain wrong. Maybe you were not old enough to be aware what was going on back then. People who could not sell their homes were giving mortgages to people. Their were also a lot of people assuming the mortgage as well. Also check out the payment at 10% on a 140k house and then at 7% on the 140k house and you will find that that 3% difference is just about $300 per month. In the mid 1980’s $300 a month was a huge difference.
Mortgage rates hit 15% or more in the lat 1970’s and early 1980’s. In August 1982 the fed eased and interest rates started to fall.
This is a nice site for historical interest rate statistics: http://www.federalreserve.gov/RELEASES/h15/data.htm
30 year peaked early in 1982 with a second rise in the spring of 1984. 10 year rates peaked early in 1982.
Cash was king in the early 1980’s.
Except for 1999-2000, conventional (30-yr) mortgage rates dropped every year from 1988-2003, when they hit a temporarily-low plateau. Since 2003, they have been gradually increasing, with the biggest increase no the flip-side of the cycle from 2005-2006.
Most recent weekly release (6.68) is also higher than all years since 2001. Looks like the cyclical low in mortgage rates has reversed (not that anyone buys with a conventional mortgage any more!); stick a fork in bubble pricing.
“Contract interest rates on commitments for fixed-rate first mortgages. Source: FHLMC.”
DATE, MORTGNA
1988, 10.34
1989, 10.32
1990, 10.13
1991, 9.25
1992, 8.40
1993, 7.33
1994, 8.35
1995, 7.95
1996, 7.80
1997, 7.60
1998, 6.94
1999, 7.43
2000, 8.06
2001, 6.97
2002, 6.54
2003, 5.82
2004, 5.84
2005, 5.86
2006, 6.41
08/02/2007, 6.68
Here is a piece (from the NY Fed) arguing that interest rates are a “fundamental” determinant of housing market values:
Jonathan McCarthy and Richard W. Peach
Are Home Prices the Next “Bubble”?
http://www.newyorkfed.org/research/epr/04v10n3/0412mcca.pdf
A quote:
“4. Critique of the Bubble Evidence
The two measures of home price fundamentals presented
above both support the notion of a home price bubble and
suggest that home prices are likely to fall, at least in real terms, in the near future. However, these measures have flaws that call into question these conclusions.
First, neither measure takes interest rates into account.
Clearly, interest rates should matter in assessing the existence of a bubble because they influence home ownership
affordability and because they represent the yield on a
competing asset in a household’s portfolio. The downward
trend in nominal mortgage interest rates—a major feature of
the housing market over the past decade—thus has significant
implications for home ownership affordability (the homeprice-to-income ratio) and for the equilibrium return on
housing (the rent-to-price ratio). Accounting for this trend in
interest rates in the analysis casts doubt on the existence of a bubble.”
I guess since interest rates have backed up to levels last seen during the 2001-2002 period, market values have implicitly done the same?
“Can any old timers comment on whether it was worse in 1980-1982 or now?”
Money was still available for borrowing back then, but the rates were 15% to 21% depending on the type of loan. Needless to say, the construction industry was dead. There was also a flood of Mexicans back then as Reagan forced wages downward. However, the worst to come was just around the corner, liability. A run-away tort system and the high insurance rates to support it are still a curse that makes the U.S. non-competitive in the world.
It was bad in ‘82, high energy costs, interest rates peaked at around 21% so unless someone bought a house land contract or purchase contract nothing moved. However that said, prior to that period of tight credit, people could not buy without 20-33% down and good credit. No 2nd loans, no relative handout (they checked your bank statements for a couple years back). This is a tsunami coming compared to that. People already in houses in the early 80’s usually did not lose them, because they had lots of equity invested and they actually “qualified” to get the loans to buy them. Even people buying in the early 80’s on land contract had to give the seller 20% down. But the economy virtually came to a standstill. I think this time you’re not going to see a stand still so much as a wild ride backwards.
“However that said, prior to that period of tight credit, people could not buy without 20-33% down and good credit. No 2nd loans, no relative handout (they checked your bank statements for a couple years back). This is a tsunami coming compared to that.”
Excellent post! IMO, the key difference this time is the role of subprime (and all other forms of high-risk lending) in driving prices up to unsustainable levels, just before the subprime industry went the way of the twin towers. It doesn’t look like there is much price support at this point…
I was 20 years old in 1980 and living in S. Cali. Back then I worked a bit as a landscape construction contractor ( without a license but I was a kid saving for college ) anyway no shortage of work and many folks in Morrison ranch Aqoura hills CA were flippers and didn’t care about the long term look of the trees and plants they were not going to be there in 3 years anyway. This whole idea of getting rich on RE goes way back in Cali and it was only in 1990 that the SHTF. I don’t remember 1980 as being bad. people were still buying and RE was still going up with a climax in 1990. I don’t remember all these crazy mortgages like borrowing your down payment , interest only, etc. I remember Junk bonds and ZZZZ best carpet and the savings and loan crisis. Back then when the economy got bad and folks coundn’t move to a new house they fixed up the house they had. I think the 1980’s recession hit other parts of the country much harder. Ton of people moving to Ca back then. Regan really pumped the defense spending anyone could get a job in electronics. It was the golden age.
GetStucco, in 1980 interest rates were 21% for the most credit worthy borrowers. Companies could not sell their products if they had to be financed because of the high interest rate.
Prices for products went up weekly in many cases because of the
high inflation. I would say things were worse then than now.
I am 62 years old and have lived through many ups and downs
in the economy. The Arab oil embargo in about 1973 caused
gasoline to double in price almost overnight. There were long
gas lines at service stations. There have been many scary times in the past so what we are going through now is not too bad when
compared to the past. It may get worse but it is not so bad now.
Great insights! The older I get, the more aware I become of one of your key points: Many crises of yesteryear, which have since faded into the benign realm of fading memory, seemed much worse in real time time than the crisis du juor.
Hi GetStucco,
When I purchased a brand new 1980 Pontiac Sunbird the interest rate at that time was 18%.
My interest rate on my 1987 Toyota Celica ST was an unbelievable 11%! But further back, in the 1979 to 1981 time frame I remember television talk shows such as Merv Griffin or Phil Donohue had guests who were survivalists and telling the audience that they (the audience) are doomed if they live in big cities. Those people had me much more worried than the posters on this blog. Julian Simon (google search the name), a professor at the University of Maryland, singlehandedly refuted the “Club of Rome” and its “limits to growth” theory. The point is that doomsayers assume all variables are known and they keep repeating that same mistake over and over. They disregard change. Hence I have one foot in the door of doom (precious metals, T-bills, savings bonds, municipal bonds) and the golden age - stocks.
BTW: I remember one Merv Griffin show in the 1970s when a kooky guest, some psychic, said that America will enter a golden age soon. The bastadge got lucky and was right!
The local fishwrap (South Hillsborough county, Tampa Bay area) has a very confused article on the local effects of the housing bubble. The print edition in which this article appeared had a thick real estate insert published by the local Century 21 franchise, so why am I not surprised that the writer fawns all over the president of the franchise? This is what happens when newspapers are dependent upon advertising $$ from the REIC. I think the writer would actually like to tell the real story of what is actually going on around here (a couple of weeks ago the lead story was about the sheriff’s office and Code Department having to knock down a perfectly good house because it was one of 50 abandoned properties in the area) and he sort of hints at it, and then whitewashes the whole thing and gives kudos to his advertiser. Sigh. I know the writer knows better, but part of his paycheck comes from RE advertising $$.
http://www.observernews.net/artman/publish/article_002330.shtml
“In 2008, the first wave of baby boomers, flush with pension plans and retirement accounts, will begin retiring – and they will certainly notice the quiet pace and peaceful existence that can be had in this area. They will notice because the tide has indeed risen and the area is even more attractive than it was before the previous wave.”
Sheesh. I’m shocked, I tell you, shocked!
You mean like this?
EXACTLY like that! luvs, you are a riot! I darned near spit coffee all over the keyboard. That icon says it all. I was just so stunned when I read that article. I live in the area and I see the problems everywhere. Obviously the guy has not travelled through the half-built subdivisions like I have, or seen the grafitti tagging, etc.
South Hillsborough has long had an inferiority complex, it was considered the red-headed stepchild of the rest of Hillsborough County. The bubble made it desirable, because there was so much undeveloped land, much of it formerly agricultural. Also it was the last area on Tampa Bay with undeveloped waterfront land, which is heresy to a developer. But here’s the catch: you can’t swim in that water. Some people do swim in it, but they really shouldn’t. You can go boating (for as long as the hull of your craft doesn’t rot, or dissolve if there’s an acid water spill from one of the fertilizer plants) and you can fish (provided you don’t mind eating what you catch from the bay). But a look up the bay toward the power, fertilizer, sulfur and de-sal plants, not to mention the Port, is depressing, like something out of a nightmare.
Great icon!!!
working in print media must sck bigtime
lie to live -then die anyway
That realtwhore Beggins was the biggest cheerleader during the run up of this whole giant psychotic episode, and now wants to be quoted as the voice of reason. As in “house prices should never have been this high” or “if you don’t have to sell your home, stay out of the market”. Guess what? I’ll put a FSBO sign on my lawn any time I please. He’s got listings in my neighborhood 24 months old. That’s stale.
Monday is going to be interesting. If the market goes into a free fall, it really is possible the Fed will cut rates - market will immediately reverse course. The question is - will a rate cut save the market? And what about the poor dollar. It’s not easy being a short in today’s market but we waited a long time for payday. It’s best to stand aside as the stock market, credit market, and housing market crumble. Finally, people have recognized there are problems - the people on this blog saw it coming - but few others did.
Where’s txchick? Busy writing deposit slips, I hope.
She had a death in the family. She said she won’t be around for a while.
wow, I am so sorry. thanks for letting me know, I had no idea. My thoughts and prayers are with her.
I’ve missed her too.
Cutting rates would be interesting…but it cannot solve the problems with these loans, unless, maybe the rates were cut back to 1% or so.
The people watching their ARMs reset and recast will not even notice a 0.50 drop, as it means that their $1500/month loan becomes $2500, rather than $2600 next month. It helps a bit, a very small bit, but they’d still be idiots to not turn in the keys.
A rate cut is a band aid that will allow the party to go on. Eventually you will end up in a situation like Japan. 0% interest rates and a stagnating economy. The only difference is they saved, we spend. Not good.
…and in a “grow or die” world - stagnation is simply not an option. I wonder how many out there realize that - that right now economic stagnation is more than enough to do us in? Are there any business models out there that even acknowledge that possibility?
If you’ve been watching the foreign exchange markets, the dollar continues to get wacked. If the Fed lowers rates, you might get to see something that doesn’t happen very often - the currency traders will take over, and they can truly humble governments, including their pet central banks.
Collapse the dollar, and all that crap at Walmart and Toyota’s will double in price very quickly, and mortgage rates will shoot through the roof. Actually, they are shooting through the roof already, but a dollar collapse will add fuel to the fire.
If China ever wants to sink the Dollar and become the worldwide standard, monetarily…
This is their month to do it.
Don’t expect it to be orderly…
Mentioned this on another thread but the KC Fed is hosting their annual Jackson Hole get together late this month. RE is THE topic and Dr. Robert Shiller and other RE economists are guests. I would think the Fed would not act until they’ve had a chance to ponder the full implications. Might change wording this meeting but rates not likely. If things are bad enough, I’d look for a cut between meetings but after Jackson Hole. That would be patterned on Greenspan’s surprise cut in Oct 1998.
Most other countries are rasing rates, a US rate cut would be very bad for the dollar. besides the fed only controlls short rates anyway.
Few weird things in the DC area. These are all from the “Express” a free tabloid that the Washington Post puts out in yellow boxes at metro stations and in the downtown area. Not aimed at the high end of the DC market, but not a gossip rag either. Carries brief news recap, sports scores, a few comics, crossword/sudoku, and ads, lots of ads.
One day this week two one sixth page realtor ads shared a page with an ad for a GMAT prep class and some movie listings. At the bottom in very small print of one was a disclaimer saying that the ad was not intended to solicit properties currently listed for sale. Kind of funny since the ad was set up as an announcement about how to get a report “How to Sell a House that Didn’t Sell”. Yup, not trying to solicit listings until the moment the other agent’s contract expires. Do not read if you have a contract with another realtor. Right. Pull the other one.
The other one was weirder. Headline of the ad was “Special Report solves the “My home isn’t selling” problem.” At the bottom in itsy bitsy type? “Pardon our proactive and agressive marketing. Not intended to solicit other brokers listings.”
Pardon our proactive and agressive marketing? I’d love to see them writing apologies to the other home owners in a neighborhood begging pardon for agressive pricing for the one they have for sale. Or begging pardon of their clients for getting them to buy too much house the last time they bought. But, no. Realtors only apologize to other realtors. Guess we know where their loyalties lie.
Also saw a full page ad at the back of the paper two days in a row soliciting auto loan refinancing at the Agriculture Credit Union. They could cut your rate by as much as 3%! To be very fair, they did not seem to be offering equity withdrawal on refinancing of car loans. But that raises a point - since a car loses a lot of value when it is driven off the lot, will they refi at a number that is higher than the current value of the car? Should they? Seems an iffy business practice to me.
better yet let’s close Dept of AG
DOE 1&2
these agencies w Soviet sounding names have never improved the life of one taxpayer
Agriculture Federal Credit Union is no more a part of the Department of Agriculture than WAMU is part of George Washington. I’m sure it was started by Dept. of Agriculture employees but anyone with almost any connection to Washington DC (work, live, worship, volunteer, attend school in, etc.) can be a member.
I can see a role for USDA as a small clearinghouse for distributing information. Better if the farmers did it themselves, but that is a lot of organizing, and the big corporate farmers would use it to disadvantage the smaller ones. Bet it would have taken a few thousand employees before the internet. Now, a few hundred could probably handle it. Also, the production of food is a security issue, so it would be nice if someone was keeping track of what was going on and could warn the federal government if horrible nationwide trends emerged. Yeah, I can see a role for about 200-300 people.
Current workforce of USDA is about 100,000.
Totally agree on dumping the subsidies - no one gave my father any money to make sure he could stay in his job or that his children could have the same job he had. Same on the marketing subsidies they hand out. If you can’t sell your product, make it better, make it cheaper or make less of it. Or figure out how to sell it yourself.
A curious subsidy in California’s Central Valley, allows for the growing of cotton, a notoriously thirsty plant…
We get rid of middle class jobs by the millions, but we continue to grow a crop better left grown in the 3rd world countries, and not using our precious freshwater resources.
Meet The King of California~
http://www.amazon.com/King-California-Boswell-Making-American/dp/1586480286
Good used books priced from 2 Cents…
California farmers also get subsidies for rice, another thirsty plant!
Talk of $250,000 cap on farm subsidies draws fire from Sen. Boxer
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, August 2, 2007
(08-02) 04:00 PDT Washington — Sen. Barbara Boxer said Wednesday she would not support a $250,000 limit on farmers receiving federal crop subsidies, saying it would be a disaster for the state’s cotton and rice growers.
“It’s not an easy issue for California,” Boxer said. “We have our rice people and we have our cotton people.”
http://www.commondreams.org/headlines01/1219-01.htm
“the production of food is a security issue, so it would be nice if someone was keeping track of what was going on and could warn the federal government if horrible nationwide trends emerged.”
The USDA has devolved into a political entity, many of its safeguarding functions have been reduced or misdirected at the behest of congressional and admin pressure led by lobbyists.
Safety of the food supply is not job one.
A good source, from a calm, respected expert is Marion Nestle’s, What to Eat, published 2007. Her heavily sourced observations on the USDA are enlightening. That and her previous books are on Amazon…or your public library.
Here is the link I meant to post concerning California rice farmers getting subsidies: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/02/MN8KRBFAT1.DTL&type=printable
Sorry if this post is not in the correct order - I keep trying to correct an incorrect link I posted, concerning California rice farmers getting subsidies. Here is the link I meant to post concerning California rice farmers getting subsidies: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/02/MN8KRBFAT1.DTL&type=printable
“…have never improved the life of one taxpayer”
You saying farmers don’t pay their taxes?
Sorry if this post is not in the correct order - I keep trying to correct an incorrect link I posted, concerning California rice farmers getting subsidies. Here is the correct one. I haven’t had much sleep lately - the financial news has been too exciting - it’s like watching a thriller movie. http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/02/MN8KRBFAT1.DTL&type=printable
And now I’m sorry for the multiple posts!!!
“Hell isn’t merely paved with good intentions; it’s walled and roofed with them. Yes, and furnished too.”
Aldous Huxley
polly:
I was shopping for a new car last month (didn’t end up buying one b/c they wouldn’t give me a good enough deal) and the Toyota guy told me the average financing rate for the month of June was 10.9%. That’s the average. So it tells me that mostly subprime buyers are buying new vehicles now.
Maybe that is at the root of that car refinance ad.
Now that is really interesting. They are offering a rate “as low as 6.5%” and the big red print says “we could cut your rate by as much as 3%.” I wonder if the red printing is accurate? Because if they are only reducing rates by 3%, that would mean only people who snagged a below average financing rate of 9.5% would be eligible for their lowest advertised rate of 6.5%.
I’m starting to think that despite the lurid yellow background color and the hot red coupe depicted in the middle of the page, this ad was very carefully crafted to avoid bumping up against bait and switch laws.
I think I had a 9% interest rate on my first car loan. But that was in 1987. Actually, it was my only car loan. I bought this one for cash.
You have all witnessed the opening gambit, in the end of American financial hegemony, as we knew it…
What caused it?
Hedgemoney (or lack of)
Bear Stearns triggers Dow crash
Investment bank Bear Stearns precipitated one of the worst market slumps of the year yesterday after admitting that the US credit markets were the worst it had seen in more than two decades.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/04/cndow104.xml
I bet people think it’s a deal now and will buy it on Monday.
or the Plunge Protection Team will create more liquidity to buy.
Why do you think the FED eliminated the M3?
Should be the other way around. Let M3 eliminate the FED.
Yes and we can then bring back the trusts, monopiles, child labor, 60 hour work week, etc.
The FED was created because the “money trusts” were loosing marketshare and power. The big banks controlled less than 1/3 of the market when the FED was put in place. Then after a series of booms / busts the FED systematically put the vast majority of other pre-FED banks out of business.
It might reach that point if the undocumented helicopter drops of M3 get too out of hand…
Anyone know where i could find M3 data?
For M3 stats (not official but one of the more popular sites for the statistic): http://www.shadowstats.com/cgi-bin/sgs/data
and this is a good article about M3 worldwide (hint, we’re not the only ones running the printing presses overtime):
http://news.goldseek.com/GoldSeek/1185894180.php
The hardest cut of all?
The 1st baby boomers eligible for social security moolah, receive their 1st payment, starting in 2008.
They’ll get their money, but hyperinflation will do it’s thing, and that $1633.47 monthly payment, may have the buying power of a few hundred bux, a year from now.
Or less?
A bad way out of all these promises made to the workers now retiring. Just devalue the dollar to a level were the payouts won’t bankrupt the government. I don’t see how that can work unless foriegn money continues to invest in treasuries keeping rates low. And if that happens as the dollar goes down then these investors deserve the losses they will take as if all our bad mortgages they bought are not enough.
I think the US will just increase the number of younger immigrants so there are more young workers than old retired people. japan won’t do this and have deflation as a result. So I expect quantity of life to go up in the USA and quality to go down.
From Goldilocks to Gridlock — Will Bear Stearns survive the credit crunch?
SAN FRANCISCO (MarketWatch) — Bear Stearns said on Friday that it is preserving capital to weather the current storm in credit markets, but investors took little solace as the bank’s shares continued to fall.
“We’ve been in a mode where the appropriate path is to preserve our capital and try to weather the storm,” Chief Financial Officer Sam Molinaro said during a conference call with analysts.
He also said that he doesn’t foresee any share buybacks soon.
“When we get back to more normal times, we get back to a philosophy where buying shares may be an appropriate strategy,” Molinaro explained. “Right now our goal has been to preserve liquidity and make sure that we were abundantly liquid and can weather the storm.”
http://www.marketwatch.com/News/Story/Story.aspx?guid={84BFA9A5-CF97-4D79-9E9D-A9B91E7A3C99}
There’s more:
The Wall Street Journal, citing an unnamed source, reported Saturday that the securities firm’s board will meet on Monday to discuss the exit of Warren Spector, who oversees Bear’s entire capital markets business.
The New York Post in its Saturday edition quoted an insider, reportedly briefed about the firing, who said: “Warren never got out in front of this - in fact, it got worse on a daily basis and eventually put the firm at risk.”
The updated link:
http://www.marketwatch.com/News/Story/Story.aspx?guid={84BFA9A5-CF97-4D79-9E9D-A9B91E7A3C99}
I don’t know what’s going on with the curly braces. It works when you copy and paste the entire link into your browser’s address bar.
Butterfly effect rears its ugly head in global subprime contagion…
Credit market brothel raided
4 Aug, 2007, 0448 hrs IST, AGENCIES
LONDON: As the financial-liquidity police raid the credit-market brothel, even the piano player faces arrest. The malaise enveloping global markets is becoming increasingly indiscriminate in choosing its victims.
At the start of July, Tunisia hired Daiwa Securities SMBC and Nikko Citigroup to help its central bank sell yen-denominated bonds. By the time the fund-raising finished this week, Tunisia’s borrowing costs had risen by almost a quarter of a percentage point.
So the taxpayers of an African nation suffer because Joe Blow in Detroit can’t pay his mortgage.
http://economictimes.indiatimes.com/News/International__Business/Credit_market_brothel_raided/articleshow/2254809.cms
Well, the taxpayers in Africa benefitted when mortgages were being handed out like candy. So, it only makes sense the the process can work in reverse.
Broker Outpost.
Predicting the market is dead. They sound desperate.
What are the steps again? Denial? Anger? Fear? Acceptance?
http://forum.brokeroutpost.com/loans/forum/2/149393.htm
* Denial (this isn’t happening to me!)
* Anger (why is this happening to me?)
* Bargaining (I promise I’ll be a better person if…)
* Depression (I don’t care anymore)
* Acceptance (I’m ready for whatever comes)
Not sure where mortgagemessiah’s @$$-kicking advice fits in to the above scheme (maybe denial?):
“Okay, all you crybabies! Listen up!
Quit crying and go out there and work it! There is stil (SIC)business out there! The days of you being handed deals while you sit your fat rearends playing Tetris are over! So quit crying and work it! Work Saturday and Sundays if you have to. Work until 10 pm if you have to. You need to Adapt, improvise and overcome!”
naw, that is anger.
I like the one who said he was going to go join the sheriff’s department. What the heck makes him think the sheriff will want him? Because he knows how to deceive people into thinking they have a fixed rate loan when they really have a floating one? Because he knows how to encourage people with little income to overstate their income on a no doc loan? How does this qualify one for a career in law enforcement?
“How does this qualify one for a career in law enforcement?”
Maybe he plans to take bribes from organized crime bosses?
like the one who said he was going to go join the sheriff’s department. What the heck makes him think the sheriff will want him?
It’s because he knows all the addresses where the bad loans were made and where to take up the sheriff sale signs.
Well you know, he helped people get into those homes, and he might as well get them out of their homes (by evicting them of course).
There would be some interesting stories of how he would be greeted by those he gave bad loans to when he showed up to evict his former clients.
Having worked in law enforcement, most are sociopaths - trust me, he’ll fit right in.
“How does this qualify one for a career in law enforcement?”
It would be a real leg up in Louisiana! Boss Hog country.
Another precious thread:
http://forum.brokeroutpost.com/loans/forum/2/149231.htm
Q. Just curious, but how does everyone here feel about having worked in the industry that is practically bringing the American economy to its knees?
TonyInLosAngeles
Posted - 08/03/2007 : 1:37:56 PM
A1. Like that black and white film of the cowboy riding a rocket….Yeeehaaaa
United Marketing
Posted - 08/03/2007 : 1:40:42 PM
A2. Finally… I feel powerful in some way
OMG! One of them actually was whining that in her area there are a lot of immigrants with great credit scores and lots of money in the bank but no tax returns.
She called this having a hard time documenting income.
I call it tax fraud.
To be fair, a few people jumped on her for this. She claims to have her own shop and to be on the verge of having to close. Couldn’t happen to a nicer person. I suppose it never occured to her to suggest to her clients that they pay their taxes?
Heads are rolling at Bear.
Aug. 4 (Bloomberg) — Bear Stearns Cos., the manager of two hedge funds that collapsed last month, plans to oust Warren Spector, chief of bond and stock trading, the Wall Street Journal reported, citing an unidentified person familiar with the matter.
The company’s board will meet on Aug. 6 to discuss the departure of Spector, one of its two presidents, who was widely viewed as a leading candidate to become chief executive officer, the Journal reported….
http://www.bloomberg.com/apps/news?pid=20601087&sid=aakWze4YilpA&refer=home
“Spector…who was widely viewed as a leading candidate to become chief executive officer…”
Downside: No year-end bonus for Spector this year.
Upside: Wall Street takes very good care of their own. As a punishment for taking the firm temporarily down the tubes,
he will walk away with a retirement package that any middle-class American would liken to winning the lottery, and he will have little trouble snapping up another position, should he choose to do so.
at a hedge fund, which will pay better too
Cerberus, Fortress or Citadel, or a private equity group like Carlyle would be my best guesses…can we open a betting pool?
I do hope that folks noticed that the Bear Stearns funds that went bk filed for chapter 15, because they were registered in the Cayman Islands. The details are always fun.
Blackstone?
BTW, check out this list of names (all companies that keep appearing in stories about behind-the-scenes bailouts of collapsing hedge funds and other corporations on the brink):
Blackstone
Cerberus
Citadel
Fortress
Those names all have that W-crony military-industrial ring to them. I am sure it is just coincidental, though…
Well, to be perfectly fair, he would be a great source of information for the hedgies that are betting against housing. I mean, he knows exectly what they were doing as they set up this bomb.
Poor Sphincter, er, Spector.
In other news this morning:
The violence in Iraq is contained.
The bombings in Pakistan are contained.
Nuclear enrichment has been contained to Iran.
Lying and deceit on the part of government officials has been contained.
…and the collapse in subprime infrastructure has been contained to Minneapolis.
(Just a little cranky this morning)
Minneapolis.
No word yet from our friend Clouseau?
Don’t fret. Think about the numbers. More people died in Minneapolis of accidents or heart attacks NOT related to the bridge failure than to it. And every few days some HBBer probably has a death in the family, if not themselves.
NEW YORK (MarketWatch) — Weyerhaeuser Co.’s second-quarter net earnings plunged more than 89% due to the slumping U.S. housing market as well as various one-time charges, the world’s largest producer of timber for plywood said Friday….
As one of the top suppliers of plywood and other building materials, Weyerhaeuser has taken a clubbing as the U.S. housing market continues its decline. The company’s wood-product business swung to a loss in the recent quarter at $123 million, compared with a gain of $131 million last year, while earnings from its timberland business declined 36.6% to $142 million from $224 million last year.
http://www.marketwatch.com/news/story/weyerhaeusers-net-plunges-89-slump/story.aspx?guid=%7B87F2C022%2D5CBE%2D4DD6%2DB04E%2D7F0D70294A99%7D
I wonder if Wall Streeters will get their bonuses this year. Ahh, the sweet smell of fear.
The fed has some major decisions to make. Hopefully, they will protect the dollar.
Plan B?
http://www.spartacus.schoolnet.co.uk/USAwallst.jpg
“Hopefully, they will protect the dollar.”
So far, so bad…
FOREX-Dollar tumbles vs yen, Swiss on credit fears
Fri Aug 3, 2007 9:19 PM BST135
By Vivianne Rodrigues
NEW YORK, Aug 3 (Reuters) - The dollar tumbled on Friday, hitting two-year lows versus the Swiss franc, as fears about losses in the credit sector intensified after Bear Stearns said fixed-income markets were the worst in more than two decades.
http://investing.reuters.co.uk/news/articleinvesting.aspx?type=usDollarRpt&storyID=2007-08-03T201908Z_01_N03362353_RTRIDST_0_MARKETS-FOREX-UPDATE-16.XML
Anonymous broker with scary tip avoids becoming the messenger who gets killed…
UPDATE: Any Bailout Of Home-loan Mess Would Be Limited, Experts Say
Dow Jones
August 03, 2007: 03:45 PM EST
SAN FRANCISCO (Dow Jones) — The crisis in the mortgage market has increased the likelihood that the Federal government could intervene in some way to alleviate a credit squeeze.
However, Congress and government-sponsored enterprises like Fannie Mae (FNM) and Freddie Mac (FRE) might only offer limited support.
Some parts of the secondary mortgage market have ground to a halt in recent days as investors shun many types of mortgage securities that don’t conform to Fannie and Freddie’s standards.
A broker at Ace Mortgage Funding LLC, a leading mortgage brokerage firm, estimated on Friday that 90% of these so-called non-conforming home loans have disappeared in the past three days, leaving home buyers with far fewer options. The broker declined to be identified because they didn’t want to be seen as exacerbating housing market problems.
The crisis in mortgage availability could prompt action from Congress, several mortgage market experts said.
…
Mike Perry, chief executive of mortgage lender IndyMac Bancorp (IMB) said on Thursday that he got a phone call this week from U.S. Sen. Christopher Dodd, D- Conn., who asked whether Congress can help the U.S. mortgage industry in any way.
At a hearing in Washington D.C. on Thursday, Dodd said that he’d spoken this week with several mortgage bankers “to solicit their opinions as to what they thought was happening and what solutions may lay out there to try to deal with this seizing up of credit that is really getting rather dramatic.”
http://money.cnn.com/news/newsfeeds/articles/djhighlights/200708031545DOWJONESDJONLINE000825.htm
What’s with the propensity of certain private equity and/or hedge funds to always be waiting in the wings to snap up so many failing U.S. companies?
Favorite choices:
Blackstone
Cerberus (aka Fluffy the Three-headed Dog)
Citadel
And last I recall reading, the Chrysler deal had fallen through due to the credit crunch. What gave?
Cerberus completes Chrysler purchase
By James Politi in New York
Published: August 3 2007 18:21 | Last updated: August 3 2007 18:21
Cerberus Capital Management on Friday closed its $7.4bn acquisition of Chrysler after reaching an agreement with DaimlerChrysler to jointly take on $2bn in debt to help finance the deal amid the turmoil in the credit markets.
http://www.ft.com/cms/s/b65669da-41e4-11dc-8328-0000779fd2ac.html
I think it can not be said too often that looking at the Board of Directors of these firms is instructive–they are heavily loaded with former politicos and heavily-connected insiders. I think we should consider that a clue.
GS
The banks sold the debt at 95. Took a huge hit - loss equal to 10-20x the fee on the bridge loan. That led to the mid-week relief rally in stocks and a slowing of the junk bond collapse. Some fools think it showed a reopening of the credit window. Reality is the terms were so bad and the banks lost so much money, it virtually ensures that no deals will be done until things change drastically.
US consumer spending slows
By Eoin Callan in Washington
Published: July 31 2007 14:39 | Last updated: July 31 2007 14:39
US consumer spending rose at the slowest pace in nine months in June in a sign of cooling household demand.
Spending rose 0.1 per cent after a gain of 0.6 per cent the previous month, according to the Commerce Department.
The slowdown is likely to be a source of concern for policymakers, although many economists expect consumer spending to hold up amid strong hiring and rising incomes.
http://www.ft.com/cms/s/49f13e5e-3f6a-11dc-b034-0000779fd2ac.html
…many economists expect consumer spending to hold up amid strong hiring and rising incomes.
Signs of cooling in US labour market
By Eoin Callan in Washington
Published: August 3 2007 14:47 | Last updated: August 3 2007 22:44
The US unemployment rate rose unexpectedly last month to 4.6 per cent, in a sign the labour market is cooling.
Employers added fewer staff to their payrolls than Wall Street economists were expecting, as hiring increased by 92,000 after a gain of 126,000 in June, according to the Department of Labor. The government also lowered its estimate of job creation in the previous two months by 8,000, bringing the annual growth in payrolls below 1.4 per cent for the first time since 2004.
The slowdown in hiring underlined investor fears that economic growth is vulnerable to a downturn in job creation, viewed as one of the main supports for consumer spending amid the worst housing downturn in 16 years.
http://www.ft.com/cms/s/f7f395b8-41c4-11dc-8328-0000779fd2ac.html
“unemployment rate rose unexpectedly”
Did the Financial Times really write “unexpectedly”? Unexpected by whom? With RE and it’s related “industries” (from construction, lending, securitization,home furnishings, title and appraisal firms, et.al) underpinning the US service economy, what was “unexpected”? That reality would never surface?
Were the editors of the FT drunk when they passed on this sentence?
Well I would not expect to see these folks show up in unemployment as they are all 1099’s.
Jas had an interesting comment on George’s blog yesterday
http://www.urbansurvival.com/week.htm
“Bernanke now, and Greenspan before him, knew it: if consumption debt falters, It’s Over. And remember, Employment follows the economy, employment is a lagging indicator.”
Yikes . . . .
Is Bear Stearns Shaken or Stirred?
Two hedge funds fail.
At first they agree to shore them up then renege.
A third fund is on withdrawal lock.
Tarnished brand. Lost confidence.
S & P Downgrade.
Like resets, lawsuits are coming.
CEO says no buybacks; wants to stay liquid to weather storm.
Cramer’s “You have no idea rant/plea.”
IOW Ben, send lawyers, guns and money.
Finger pointing and firings. You don’t fire stars.
What’s next?
Note: Martinis are murky when shaken.
The economic war is playing out very much like the opening rounds of world war 2…
The “phony war” part is now over, and the real fireworks financially, will fly, frequently~
There have been 3 countries affected by our hedgefunds, Australia, France and Germany, and the cancer that is spreading, all started on Wall Street, and in this blame game world, we look like an easy target?
Sink The Dollar!
And not to forget, The USA, Canada, Forgottonia, New Enamatoria and California.
But why sink the dollar? It really isn’t going anywhere, nothing to worry about. I have an idea lets take down all the assets at the same time and get rid of all our minions!
“A rate cut is a band aid that will allow the party to go on.”
Again, in some of the high-priced bubble markets (California for one), even lowering rates won’t allow the party to go on. The punchbowl has officially been taken away in the form of higher credit standards (requiring down payments, no “stated income” (aka ‘liar’) mortgages for w-2 wage earners, etc.) If you actually make people QUALIFY for loans in Cali, using real numbers and a real cash outlay, Cali markets are toast. Period. End of story. (Unless you cut rates to what, maybe 2%, but even then…)
Sorry if this is already posted, Jim Cramer pulling back the curtain on the wizard of oz.
http://www.thestreet.com/markets/activetraderupdate/10372191.html
Income Inequality
Overlay this map on your favorite housing bubble area for extra crunchy goodness.
All areas are created unequal, but some are more unequal than others.
Earlier, I posted a reference to an article on California farmers getting subsidies for growing rice (a very thirsty plant). I gave the wrong link and after trying 12 times to correct my post, I’m adding a correction here, way out of place.
Talk of $250,000 cap on farm subsidies draws fire from Sen. Boxer
Carolyn Lochhead, Chronicle Washington Bureau
Thursday, August 2, 2007
(08-02) 04:00 PDT Washington — Sen. Barbara Boxer said Wednesday she would not support a $250,000 limit on farmers receiving federal crop subsidies, saying it would be a disaster for the state’s cotton and rice growers.
“It’s not an easy issue for California,” Boxer said. “We have our rice people and we have our cotton people.”
Here is the correct link. http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/02/MN8KRBFAT1.DTL&type=printable
Here is a correction to one of my previous posts, concerning farm subsidies given to California farmers to grow rice, a very thirsty plant. The correct link is this one. http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/02/MN8KRBFAT1.DTL&type=printable
RE Skank update:
Friday, I posted on Weekend Topics about a Temecula real estate agent who despite being informed that the person she was trying to sell an overpriced POS to was mentally impaired, and after assuring me that she “valued her ethics and professionalism” went ahead with the escrow. Today she did me one better. After being stood up at the signing on Tuesday as her client was being committed to a mental facility, she began calling his office assistant trying to convince him to drive down to Temecula, pick up the papers then smuggle them into the LOCKED PSYCH WARD for him to sign!
She told the poor assistant that she “had a contract with him, and he was legally obligated to sign it.”
You can’t write this stuff….
Unfreaking real…I am stunned by her “ethics and professionalism”.
There must be some way to fry this chiquita…where’s JimatLaw and Misstrial. We need their input.
I will respond because lawyers usually don’t like to respond to direct questions . I think a contract made with a person who is deemed to be of unsound mind is a voidable contract .Somebody should report this jerk to the real estate board ,or their broker ,or maybe the FBI ,or the lender involved in the transaction .
Actually I had a case one time where a listing broker was trying to hide the seller on a underpriced listing . As it turned
out the seller was not of sane mind and the listing broker had planned on turning or flipping the property after they passed the property off to a straw buyer .To make a long story short , the deal was stopped by me ,and the seller ended up getting 3x’s the amount ,(this was back in the 70’s).
How sad that in order to have any legal basis for action we have to let her go through with this. Maybe that’s why they invented “karma?” Thanks to everyone for your good advice.
I hate to spoil this with encouraging words but I tend to be non-pessimist only because of how Julian Simon almost singlehandedly brought down the socialist Club of Rome and their ilk when it looked as though SHTF would be true back in 1980…
http://www.cato.org/pubs/policy_report/cpr-20n2-1.html
People are the ultimate resource.
“So for more than 15 years I was privileged to occupy a front-row seat from which I watched as Simon thoroughly and often single-handedly capsized the prevailing Malthusian orthodoxy. He routed nearly every prominent environmental scaremonger of our time: from the Club of Rome, to Paul Ehrlich, to Lester Brown, to Al Gore. (After reading Earth in the Balance, Julian was convinced that Gore was one of the most dangerous men and one of the shallowest thinkers in all of American politics.)”
- Stephen Moore of The Cato Institute
The article on Simon seemed a bit dated as it closed: “Two weeks before Julian died, I was driving through central Iowa and was surprised and delighted to find gasoline selling for 89 cents a gallon. I hadn’t seen gas prices that low since before the OPEC embargo in the early 1970s. I instantly thought of Julian. It was one of those little real-world events that confirm that he was right all along.”