Bits Bucket And Craigslist Finds For August 10, 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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WAMU.
LOL.
Seriously though, it couldn’t happen to nicer people.
That’s where I bank. My perfectly good old bank, Bank United, was swallowed by those WaMu schmucks.
That’s how I got there too. I was at Bank United.
Astoria Federal Easy Checking for the win.
“My perfectly good old bank, Bank United, was swallowed by those WaMu schmucks.”
I don’t like to jump into opinions, but I must say WaMU has been very good to me. All 3 branches that I frequent have friendly people and good account choices. I’m also in S. Florida which has very few good choices for banking. After bad experiences with two others maybe it just seems as though WaMu is good. It’s at least the least of all evils where I live.
“WAMU.
LOL.
Seriously though, it couldn’t happen to nicer people. ”
I was long on WaMu because of the dividend, but after carefully going through their assets, I realized that even a relatively small increase in defaults is going to hurt them badly. They are just too dependent on mortgages and consumer lending. I dumped a few other banks too but kept C and BAC. Needless to say, they never mention anything in their quarterly report from last quarter about how mortgage defaults can cost them their a$$. At least the information was clear enough for us investors to make our own decision.
What is going on with WAMU ?
Sh!t is hitting the fan at WAMU.
Washington Mutual shares drop
Fri Aug 10, 2007 7:31AM EDT
Washington Mutual shares drop
Countrywide tumbles on mortgage woes
Gold stabilizes but sentiment still nervous
More Business & Investing News…
NEW YORK (Reuters) - Shares of Washington Mutual Inc. (WM.N: Quote, Profile, Research) shares fell before the opening bell on Friday after the No. 1 U.S. savings and loan said its ability to raise liquidity by selling home loans will be “adversely affected” while difficulties in the mortgage market persist.
Washington Mutual shares were down 7.2 percent at $34.10 in electronic composite trading.
http://www.reuters.com/article/hotStocksNews/idUSN1038800020070810
http://www.tiny.cc/fu3jc
Fed is buying up these unwanted (unpriced) MBS. .
I don’t see how anyone can give a grain of salt to the balance sheets issued by WM and other lenders. As far as I understand, they’re allowed to keep worthless REOs at market peak values, rather than marking them down to what they’re really worth. You simply cannot apply the normal rules of the game when deciding whether to invest in these companies. It amazes me that so many do (i.e., there are still buyers out there for these stocks, or all of them would have collapsed).
We have a federal reserve and gov’t that are running on the “new paradigm” system of gov’t. Fiat currency, PPT, learned lessons from the past (study of the great depression and what they’d do now). With the PPT’s power to buy any security, it really is a Greenspan (now Bernanke) put. Look what is happening today. The fed is giving up this money and using these unpriceable MBS as collateral. It really is just a big confidence game. As I have said many times before, the federal reserve can only print money (faster or slower), but they are always printing. This keeps everything going. Problem is that now it is so predicatible. Eventually it will end in a bad way, my guess is that we still have a number of years. So, in a way RE, Gold, commodities are the true store of money. Given this, it makes sense to use all the free easy money that is slowly being generated by the Fed to buy and hold these assets. We are running on fumes when it makes more sense to peddle houses to ourselves than to really try to work for a living.
Will there be more Kool-Aid spitting today?
Cramer was on NBC this morning with a big pitcher of sugar water spouting how a rate cut would be the only way to save everything. Which leads me to believe that either these guys are incredibly good actors or simply don’t know what is happening. I guess Ivy league MBAs aren’t taught about how to earn money, just how to beg the powers for cheap money to skim.
I am incredibly amazed at how fast this thing is crumbling. Undoubtedly due in large part to the great equalizer - the internet. Any coincidence people are starting to chirp about how it should be censored and monitored?….
Did he really have a big pitcher of sugar water?
Does anyone listen to what Cramer says? I’m definitely not market savvy, but even I think he’s a schmuck.
Watching that spot this morning just turned up the heat for me. I’m starting to get really pissed about this mess. I have done absolutely nothing to contribute to any of it, yet it will probably suck me under with all those who did. What lesson do I learn at that point? Being responsible does not pay.
You’ll have to humor me, because damn near everything I know about economics I’ve picked up on Ben’s blog, but I have a basic econ question:
1.)The fed the other day said that inflation was a primary concern.
2.)I thought that increasing rates was a way to fight inflation.
3.)They left the rate alone.
Why didn’t they raise the rate?
Confucius say, if you want to understand what a man is doing, watch his hands, not his lips.
Because they knew that the coming credit crunch would kill the economy and lower commodity prices. Oil is currently selling off. As soon as that filters through to other prices then they will have enough headroom to fire up the printing presses and begin the bailouts without the danger of igniting hyperinflation.
IMO, if they said what they really think, the stock market would plunge another 1000 points. Or it could be that Ben & George were in the same graduating class at Harvard. That would explain a lot.
So, are you done yet covering your short sales yet, sweeny texas?
They didn’t raise the rate because they were (and obviously, are) MUCH more concerned about keeping liquidity in the market. An article this morning said that the Fed Funds Rate actually went up to 6% yesterday because the banks are basically out of reserves and have no money to lend each other in the overnight market. The Fed had to step in with something like $19 billion to bring the rate back down to 5.25%. Then it still went up to 5.375% after that.
Basically, if the Fed gives in on this there will really be bad news (much worse then we have right now) because they are the “lender of last resort”. If the Fed isn’t able to keep the rate at 5.25% then there will really be a panic and a run on the entire banking system. Think 1930-33 and all the runs on the banks at that time. If the Fed raises rates that will mean even less liquidity in the market and will just make for more bad news.
The reason they aren’t listening to Cramer right now and lowering rates is because they are probably concerned that they might not be able to actually hit a lower rate, or if they do they will have to put so much cash into the economy that it will make the inflation issue much worse.
Personally, since I have mortgage, and my business sells a lot overseas, I would love to see them lower the Fed Funds Rate and cause more inflation and a weaker dollar. That would be great, except if all the banks failed.
That is my take on the current situation.
Anon - very interesting comment - thanks.
This blog is so fascinating…I love hearing everyone’s take. Among lots of other subjects, I studied econ in college, but like Nathan, I’ve learned far more on this blog.
You have to wonder why the Feds stopped tracking M3. If they kept tracking it, I wouldn’t be surprised all old school economist fall over to their graves.
“I have done absolutely nothing to contribute to any of it,”
Not true Eascoaster. According to a real estate assocation rep, you’re stupid and you’re gonna pay the price because prices are low and there’s plenty of inventory. You sat it out for too long and now prices are going back up….
On a more serious note, I’ve never heard such pouting and whining from adults in my life. I think it proves the RE scum cannot escape from their positions in residential RE and they are holding the market hostage until people like us pay the ransom.
It’s not gonna happen.
Cramer recommended yesterday that people dump Washington Mutual .
Oh, a bit of grumbling is OK, with the market falling off a cliff, it shakes up the best of us too.
The market is not falling off a cliff. It’s less than 10% off its all-time high. Hardly a catastrophe. The time to get stressed is if the market drops 20% or more off its all time high. That’s in the neighborhood of Dow 11,200.
That’s a LONG way from where we are at now.
Suck it up, Illinois Bob. All will be fine.
Eudemon:
On what do you base your opinion about DOW 11,200 being a long way away?
I am! i am! Been short before (and happy) Currently have a few BZH puts (they just told the world they will be late on their 10K filing) and also hope GS bites the dust too
he’s a schmuck. Schmuck is a whimsical term, assuming some intelligence., He is more like BOZO the Clown.
CNBC is the Comedy Netwook for Investors
“Does anyone listen to what Cramer says? I’m definitely not market savvy, but even I think he’s a schmuck.”
On this blog, no. But in the big world the people are still hungry for easy money and quick profits and wealth without work. Cramer entertains and promises and this is enough for the uneducated masses.
I think we tend to get so into common sense thinking on this blog (with some extreme opinions thrown in to keep us on our toes) that we forget the majority of people still believe real estate can go up 20% a year indefinitely if the damn Fed would just lower rates by one percent. This (sadly a) majority will run to whatever snake oil is being sold next, and Cramer has a heck of a lot of oil. They believe anything that sounds plausible whether from a politician, a minister, a teacher or a “guru,” and refuse to spend a minute to do a gut check on whether it even makes sense. Unfortunately, I also think you will see more of this over time instead of less, as people tend to gravitate towards like thinkers and make their world smaller and smaller with even less dissenting opinions. (Something we too have to watch out for.)
He said the problem was CONTAINED. Really.
Cramer was on the Colbert Report 8/8/07. I caught the second showing on CC last night.
http://tinyurl.com/2dq4dc
I think this is one of the signs of the apocalypse according to Stucco >; )
RE: am incredibly amazed at how fast this thing is crumbling
Not me…I saw how the appraisal field began corrupting itself when the FEDS set up their licensing mandates for the states back in 1993.
It was the beginning of a gradual slide in the ethics and professionalim culminating in the majestic blow-up we are witnessing now.
The MGS bagholder’s never had a clue.
Real estate appraisers in essence are the auditor’s of the real estate purchase process. In previous times they pretty much kept the game, straight and clean. If you didn’t…you were gone, which was the total antithesis what you now have had running full bore for the last 4 years.
Trash and corrupt the profession by the licensing of dishonest, unethical, poorly trained hacks, and you end up with a situation the is an emulation of Enron with their dirty books.
Except the failure of Enron will absolutely pale with what’s coming.
Good points and I agree 100% . When the appraisal process just became a hitting the mark process for the RE industry ,than it was all over . Not only do they not know what the value of these MBS and CDO’s are at this date ,but all appraisals are out of whack also . I have never seen anything like it .
WiZ~
Not only do they not know what the value of these MBS and CDO’s are at this date ,but all appraisals are out of whack also . I have never seen anything like it .
This is the true horror.
It’s all a total and complete disconnect.
As you note, everything connected to the issuance of MBS and CDO’s from the borrower’s financial situation to the credibility of the appraisal report has been fabriciated!
The creditor’s ain’t got a clue what’s in their “asset” bag.
I remember once I got a call back to do a foreclosure appraisal on a multi-unit complex I had previously appraised during the late 80’s boom.
I was new in biz, and got enormous pressure to fudge on an equity percentage in the creation of a capitialization rate.
Should have seen the cold sweat roll down my back as I went thru that property. It was the most uncomfortable feelin’ I ever had in 25 years in the biz.
While the place has been run by an absentee landlord with zip maintenace for the last 5 years, I was horrified when the numbers finally rolled up and I knew the bank was goin’ to eat around a quarter mil in 1992 dollars.
Can’t imagine what’s runnin’ down the backs of these cats who have lost and are losing billions.
Damn right there’s never been anything like it.
Your a good man hd74man . Every loan I ever made I looked at the appraisal first .What do you have if you don’t have a sound appraisal ,and sometimes I would go out and drive the comps. These were the old time standards in leading as you know .
I’m sure the system in recent years pushed out the good appraisers in favor of the rubber-stampers and this was the shame of it all .
Someone on the tube today said the MBS’s and CDO’s was a way of spreading out risk . What a silly notion that you can make bad appraisals and bad loans ,and it will be ok because you spread out the risk ,so it’s AAA paper ,and real estate always goes up . So they are saying the 50% loss is spread out …they are nuts .
Anybody who has ever been involved in the appraisal process knowns the appraisal is the backbone of the loan .
testify brutha….u are right on
dd, what’s the latest in FL from what you’re seeing?
I don’t think it has anything to do with the internet. It has everything to do with people panic and that panic spreading. And the Fed will probably have Cramer knocked off soon because he is the one spreading the panic faster then anyone else.
The internet has been a leading indicator on this one. The ONLY place I have seen anyone really talking about the coming crisis over the past 2-3 years has been blogs on the internet and nothing from the MSM. Now the MSM got a nice big slap in the face so they are forced to report on the story.
Bloomberg is parading before the camera, one after another, all of the equity shills they can drag off the streets who are unanimously crying ‘buy stocks now or be forever left out of the market’. Sounds familiar, don’t it?
http://www.bloomberg.com/apps/news?pid=20601103&sid=a.pPEmZeZZCk&refer=us
Wrong! The last two paragraphs got me. The smartest money people in the world don’t have a “model” for whats going on.Why? They all so have no common sense.
They couldn’t model the effects of “too much easy money for too long”?
No one understood housing affordability?
If Alan Greenspan had been taken more seriously in his effort to raise rates after fully spiking the punchbowl in ‘03, the gorging on global credit that made all these hedgie and banker Pig Men sick wouldn’t have occurred. Instead, they knew he was a softie and realized they could play longer by ignoring him.
A little tougher medicine from Mr. Greenspan along the way would have cured the addiction.
Black Friday?
thank God it’s contained!
jeez- hold onto your seats.
It is contained…. to planet Earth.
Can we export subprime to Ceti Alpha Prime nebula? Maybe they do not know about RE and FB’s there.
We could, but we can expect them eventually attack us 40 trillion light years from now. Do we want to risk that?
t.g.i.f.
The Game Is Finished
Les jeux sont fait.
You’re mine now, Bueller.
good one, Tom…
Black and blue Friday, with some broken ribs and a ruptured spleen. It’s all good.
Things happening fast this morning.
marketwatch.com has a bright red emergency banner of doom:
“FEDERAL FUNDS FUTURES POINT TO FED RESORTING TO EMERGENCY RATE CUT”
Oh boy, even more inflation!
Now I see the light on what the gold bugs have posted here now and again. Is it too late to buy gold?
Never too late as gold will probably be sold in the paper futures market to cover losses elsewhere. I would be incredibly surprised to see gold catch a bid that sticks and rises in these conditions. If/when the turmoil subsides I do expect gold (spot market) to rise significantly as the excess liquidity used in these sterilization operations finds it’s way into “old school” safe havens. I would like to see the NYMEX futures market decouple from the spot market price just to be sure. Just my humble opinion.
Of course not. Gold futures dropped nearly 2% yesterday. They have been following the stock market since I started paying attention. Gold is still overpriced.
I hear Wampum and Yap Stones are this year’s “in” investment, in lieu of the curiously attractive yellow metal…
Darn - I was buying shells and glass beads. IMO PMs will go lower in the intermediate. Long term - nothing more proven to maintain your savings. In today’s all fiat environment and global markets it could prove to perform well even in the event of deflation - which is where we’re headed soon enough. If you don’t fully understand what happens to a leveraged fiat system once growth stops, I’d suggest you better get reading.
Funny how fiat money and fiat cars both worked for awhile…
GS —
The moment goldbugs are waiting for is what’s called the “disconnect”, which is when gold and silver stop moving in parallel with the market, and start moving independently. Lately, gold and silver have been moving in concert with the market averages (which makes little sense to goldbugs). When we see the DOW plunge and gold and silver rise (today is a promising example) then we’ll be in a gold bull-run. But with the exeption of small 1 or 2 day disconnects we’ve mostly seen gold and silver track the market. So in answer to your question — no it’s definitely not too late. Gold hasn’t broken out yet.
Secondly — if you look at the highs ($800’s) for gold in the early 80’s and adjust for inflation, you’re looking at an inflation adjusted high of $2500. Which means that gold is extremely cheap compared to past historical highs right now.
It’s definitely not too late.
Expect to see bigger moves in miners and metal-plays in the near term though. (eg: GG has outperformed GLD, and SLW has outperformed SLV)
Good luck.
Anyone have advice on where to invest in gold? Are we talking actually buying gold coins or what gold funds are people in, so I can do some research? Thanks.
read Peter Schiff’s CRASH PROOF to get ideas on how to invest. Best to avoid the Gold ETF because it’s just paper, regardless of what they say.
Thanks Laura.
Cutting the fed funds rate while the ECB pumps in cash.
More money, lower short term rates = Steep IR curve?
this will certainly make the housing bubble in Europe worse; EU homeprices are still surging, rates are historically low, lending is as crazy as ever and all this ECB money is like throwing oil on the fire
nhz, Sounds like when you guys do blow up over there we’ll be able to see it from otter space!
Didn’t the Fed just say “No rate cut” a couple of days ago? Me confused. But considering the source, I am willing to maintain the assumption that this is an unfounded, politically-motivated rumor.
Anybody have any figures on how much *news* television viewership has spiked this week? Cramer must be LOVING his ratings numbers this week.
Yet, I suspect they’re still not getting the viewership returns that Anna Nicole or Paris Hilton news achieves.
That second loan from the ECB and BOJ injection news can’t be helping any.
“The European Central Bank today made a second loan to banks to alleviate a money shortage sparked by concerns over investments in U.S. mortgages. Today’s loan of 61.05 billion euros ($83.4 billion) brings the two-day total of money lent to 155.85 billion euros ($212.9 billion).
….Today, the Bank of Japan made similar moves to supply cash.”
Dutch stockmarket down 13% in a few weeks, German Dax down a little over 10%; finally some mild punishment for years of reckless financial speculation. Maybe the bigger losses in Europe are caused by the fact that most of the toxic waste is held in Europe?
Countrywide telegraphing it’s in deep doo doo?
http://money.cnn.com/news/newsfeeds/articles/djf500/200708100004DOWJONESDJONLINE000009_FORTUNE5.htm
UPDATE: Countrywide: Secondary Mortage Market Conditions ‘unprecedented’
SAN FRANCISCO (Dow Jones) — Countrywide Financial Corp., the largest U.S. mortgage lender, said Thursday that “unprecedented” poor conditions in the secondary-mortgage market are causing it to retain a greater proportion of mortgage loans than it sells.
Well why not hold onto these “great” opportunities? Don’t they know the RE only goes up?
“…causing it to retain a greater proportion of mortgage loans than it sells.”
This is good. A return to sanity in mortgage lending underwriting standards is sure to follow if this trend (away from subslime securitization) continues for long.
“…that “unprecedented” poor conditions in the secondary-mortgage market are causing it to retain a greater proportion of mortgage loans than it sells.”
Nobody will buy our high risk $hit, so we have to retain it.
I think CFC is trying to say it doesn’t like being anal retentive in today’s environment. Better to let it go and give it to someone else.
What does ‘unprecedented’ mean in this context other than “heads up, guys, we are spending our last ten million dollars on bankruptcy attorneys, like, today.”
1 week ago
Countrywid says “Everything is fine”
Wed Orangzillo sells a bunch of options (exercises them for a $1.2 million profit.
Countrywide yesterday says “Crap is about to hit the fan”
Countrywide is probably weeks from bankruptcy.
Will FDIC be able to cover all these bogus paper that will float to the top after the Titanic heads to its watery grave?
I would keep less than a 100K in any bank or credit union right now and keep 90 days of real cash in hand to cover expenses day-to-day.
A lot of closures may be coming.
Oh, I sure hope not, sounds like Great D II. Grandparents lost all of their tiny bit of savings in the ’30s. A simple man (house painter raising 4 kids!) Mom remembered clearly 70+ years later, her Mom’s face a white as a ghost, tell them Dad lost his job.
“I would keep less than a 100K in any bank or credit union right now and keep 90 days of real cash in hand to cover expenses day-to-day.”
Good advice. I am thinking about people who follow the news on the msm. For them, there has been paucity of info on the gathering storm clouds, very little honest reporting that would allow folks to take reasonable precautions for themselves, and now the skies open up. This is not good for the political or social fabric…
They don’t want to tell the masses the truth because we might all start pulling our investments out too. They’re trying to prevent a stampede.
If you structure you accounts correctly you can have more than $100,000 in FDIC insurance. Go to http://www.fdic.gov or http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html for more details.
One strategy may be to own some tangible assets in whole (without liens/debt attached) that can be sold in a true crisis/depression situation. Something like a used-Honda that will retain its intrinsic/utility-value no matter what the markets, banks, or currencies do. Of course you also have to think about storing some emergency gas for the car somewhere, but that’s a whole another question.
How about a paid off 2004 325i?
> 2000 BMWs for sale on ebay.
One should ALWAYS keep less than $100K in any one cash account, whether times are good or bad.
That’s exactly why I keep sending folks to this blog.
MSNBC/CNBC are rather entertaining this morning. The SEC is checking out Goldman et al for “hidden” subprime exposure evidently, rumors running rampant. Kramer was on the the phone with Tucker and said (again) that people should just walk away from houses if they were upside down.
Who is Tucker???
the kid with the bow tie and smart alec mouth.
Homer Simpson, albeit an fictional character, utters more intelligent lines than Tucker (I’m a fruitastic preppy) Carlson!
And “upside down” meaning borrowed more that the house was worth in 1999? uh huh…
Yeah, too bad the SEC wasn’t on them last December when they were valuing them for bonus purposes.
But on the good side, I’ve had a small SEC investigation myself for trading in an illiquid security (with no finding of wrongdoing) and I can tell you that once they get ahold of you, it’s hard as hell to get rid of them.
I worked at a bank in the 90’s and agree, they are also pretty sharp for gubmint employees;-) and one of the talking heads was screaming “no bonuses this year” I laughed at that.. they may not have JOBS by the end of the year.
I bet the SEC is on CFC for classic “Pump and Dump”
Oh really? I wonder if they noticed similar problems in the building industry?
Unless your last name is Bush. Didn’t he wiggle out of a run in with the SEC once?
Yea - I think it was cattle futures.
How sad, no bonuses this year on Wall Street.
Contagion/Containment
When Bernanke and his minions speak of “containment” regarding sub-prime could it be that we are misunderstanding him as he actually means that all these defaults will not have an impact on the US banking system? With hindsight quite clear, it appears that most of the $$$ that fueled the housing stupidity did not come from banks but hedge funds/private equity irrespective of that funds geographic location.
Am I oversimplifying or is the world not understanding BB?
Banks may not directly own the securities but they lent a lot of money to the hedgies to buy those securities. If they go down the banks won’t get paid back.
The BS hedge fund blow up started when their bank siezed the assets and tried to sell them. Banks are plenty exposed to this.
I call for Bernanke’s resignation…so we can “contain” the damage…
Shhhh… You’ll make “Chuck Ponzi” mad talking like that. He hearts HeliBen.
Are you stepping up to take his place?
Although I don’t agree with his policy ideas, he doesn’t deserve to be villified right now. No, that should be the man truly responsible for this mess, AG himself.
I do not blame Mr. Bernanke. It is an inherited position that has taken 20 years to get to this mess.
He kept saying “contained and won’t effect the broader economy”. It is clearly effecting the broader economy.
Bernanke, Paulson Were Wrong: Subprime Contagion Is Spreading
By Bob Ivry
Enlarge Image
Federal Reserve Chairman Ben S. Bernanke
Aug. 10 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke was wrong.
So were U.S. Treasury Secretary Henry Paulson and Merrill Lynch & Co. Chief Executive Officer Stanley O’Neal.
The subprime mortgage industry’s problems were contained, they all said. It turns out that the turmoil was contagious.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.pPEmZeZZCk&refer=home
Malinvestment Influenza
No known cure…
I am Containmentholio…
Are you threatening me?
ROTFL!
My favorite line from that series and very apropo for today is,
“You stink of DEATH, boy!”
Yes a few days ago the wallstreet wizards all pointed their wands at the market and said “reparo”. What the dark lords did not know was that that spell was only good for a few days and when you deal with dark things the come back is very bad.
Well there’s the problem.
They should have used “leviosa”.
this is getting alot uglier alot faster then i imagined
all i have to say is thank you ben jones and all other long time posters on the hbb as i am happily renting
What a glorious day this will be!
The glorious day for you will be the one when that greasy little Brylcreem Bandit in Bakersfield takes the perp walk. Be sure and get pictures.
I carry my camera and cell phone with me everyday. Waiting for the call…I will post the story here and pop a bottle of my finest in celebration.
I hope they wear orange jumpsuits in Kern County. That would be sweet.
So do I !!
Perhaps all us Kern Kounty readers could meet at an appropriate watering trough to clink glasses at the happy event? Let us know and I’ll bring an appropriate vintage.
(Chateaux du ScumPonde 2005, maybe?)
CFC down 17% in early trading.
Good thing the Tan Man cashed out, he will not feel any pain…
and I’m sure what he has left is collared.
Where is the SEC???
This guy said all is well last week, then yesterday, after dumping a few million more shares, oops we are F’d.
pretty good market timing on his part huh?
what a slimeball he is
Mozillio: Just goes to show that there’s no limit to greed and stupidity…
You know, anyone even considering buying CFC in this market is so looney, that they deserve what they get.
Technically, I guess, the SEC should be having “discussions” with him, but since only total idiots are buying right now, it really doesn’t matter.
But he will let his employees know that he feels their pain.
Fed funds at 6% (acutal rate @5.25), look for the FED to pump some more cash into the system…
Is Mugabi the head of the US FED? LMAO!!!
LOL!!
They pumped in $19 Billion today. Yesterday it was what? $25 Billion?
Who needs the M3? They stopped publishing it to save a few million that it costs to publish it.
I bet the PPT goes to work today.
who cares, ECB already pumped 200 billion in two days …
that’s a one year budget for the smaller EU countries.
When J6P wakes up to how screwed they are (and it’s finally happening) there is nothing the PPT can do to keep the markets and economy from crashing.
i have a friend who left ny for vegas. he made it a whole 4 months
and now he is back. well anyway he is a mortgage broker and just was hired by countrywide. (not so sure about job security these days) well anyway he called me to borrow money the other day which i thought was odd.
Can you say ex-friend?
Actually it’s even. Even worse than you think.
Off topic even for the off topic thread.
I’m going to NY next week (two days teaching for work, then visiting). Anyone have any recommendations for good shows at the fringe festival. I might have time to catch a few.
Also, planning a one day road trip to Philly in the near future to catch the King Tut exhibit at the Franklin Institute. Can anyone recommend a good place for lunch or supper in that area? I haven’t been to Philly since glee club tour. Don’t remember a thing except that you could actually touch the Liberty Bell - and I caught pink eye.
That King Tut thing is amazing. I love Egyptian artifacts and looking at that stuff. Be sure and get the program too.
Just got the ticket. And they took Am Ex rewards points to pay for it! Same rate as converting the points to cash (terrible compared to other redemptions), but I want to be rid of the things so I can dump the card.
Go see the Richard Serra show at MOMA. Very cool.
Polly,
Please find time for a stroll in Central Park when you are in the City. The Conservancy has done a wonderful job and Olmstead and Vaux would be proud. The Met. museum has a nice roof garden, and in the early evening, a nice place for a drink and a gorgeous view of the town.
Oh, I expect my sister-in-law and I will find time to push the baby niece around Central Park, especially if the weather is a little less humid. They live on the UWS just a few blocks from the AMNH. I think my brother is mostly going to be busy.
Let me specify that I went to law school in the city and lived in Brookly and Jersey City for many years. Love NY. Miss it a ton. Just like my job in DC better than anything I did up there. NY law firms stink. As a tax lawyer, I could have gone hedgie, but I value my soul a little too much to sell it like that.
go to the recently refurbished classic Bookbinders restaurant. stone cold mortal lock for a great meal.
You can’t touch the bell anymore
I recommend Buddakan (325 Chestnut St) for lunch or dinner.
If you’re into jazz, I’ve heard Zanzibar Blue is pretty decent. Other then that South Street used to have some good restaurant’s but it’s been forever since I’ve eaten in downtown Philly.
In Philly go to Geno’s or Pat’s for cheesesteaks. For dinner try Buddakan or Pod.
Polly -
you’ve got good suggestions from the Philly posters, but if you want to stay close to the Franklin Institute,
Dock Street Brewery and Restaurant is just a few blocks away. Easily walkable. It’s got a nice atmosphere and the beer is great if you like microbrews.
I haven’t been there in a while, and didn’t realize it had become so Francophilic. But what the heck nous aimons bien les Français n’est-ce pas?
If you’re into blood sports the bull-baiting around Wall Street could be pretty entertaining next week.
Visit Fall (aka Wall) St. but only if you’re not allergic to the smell of blood.
Where are the RE bulls? Have they all lost their homes (and net connection) to foreclosure?
I am up way too early, I skipped my morning workout to hear all the
talking heads on Bloomberg/CNBC.
Finally seeing blood in the streets…
Dude you are on fire. Did you have a can of whoop azz as a side dish to your Cheerios today?
LOL.
Oh man. It’s ARMageddoning real good!
“ARMageddon”
LOL!
Can you say “ARMageddonouttahere?”
“Where are the RE bulls”
Well, one was quoted in the very last paragraph of Ben’s California post last night. The president of I think the CA Desert Assn of Realtors rhetorically asked why people are not jumping in to buy, considering that prices are the lowest in years and inventory the largest. Then she rhetorically answered herself by saying buyers are “trying to time the market” and that they are stupid to do so. imo SHE is stupid for not seeing that almost anything can be rented much cheaper than it can be bought. In such circumstances the only rationale for buying would be an expectation of near-time price run-ups. ha ha, no chance of that
ah yes, and Imploder posted this reply which is worthy of a repeat:
“No, dumbA$$….would be buyers just watched the trained monkey pulled the cork out of the constipated elephants A$$ and are already on high ground… The 40ft brown wave you see rapidly approaching ain’t chocolate pudding… suggest you start paddling….”
I suspect we are within weeks if not days of the RE market totally freezing up. With this contagion in the mortgage market anyone without a very good credit score and downpayment is going to be locked out shortly (if not already). Add in REO’s with all that is happening in the credit markets and we are looking at a waterfall in pricing come fall. It’s going to become pretty hard for a seller to stay out in front of this wave of repricing (not that many of them have been trying very hard).
How about a round of your specialty for all the Home-debtors and Hedge Fund losers?
It was Augur’s PAP’s that inspired my search for the efficient Joshua tree.
well auger can you serve a few up for the helocked fb trying to sell his/her overpriced pos and drowning in lease payments on that luxury auto
No Kidding (both to Crisp and MG)! I’ve been laying off the references to being “armageddon’d” for as long as possible but I think we are rapidly approaching the point where I can no longer contain myself! There is some major league ass-pounding going on around the world right now, just incredible! My wife can’t get me away from this computer the past few days. Damn that addiction gene!
Plus many people don’t buy in the fall because:
1)Kids are in school
2)The holidays are coming
3)No one wants to move in the winter for the states that have bad weather
Bloomberg reporting HomeBanc filing BK protection.
Are we going to talk about Cramer today?
I have never seen him and don’t know what he looks like, but there is an awful lot of scorn thrown on him, internetically speaking. What I don’t get is why everyone feeling so continues to watches him so religiously. Why even bother, then?
Suppose it must be some old sicko morbid fascination fixation thingy
cbs next fall big brother 9
with jim cramer,angelo mozillo, david liareah, and a special appearence by alan greenspan and lawrence funyun
it will be filed in one of those empty mcmansions in the inland empire with no ac
I tried to watch big brother but it’s too nauseating.
However, the cast you describe would be required TV viewing in philly-g crib.
I compare kramer to the tele tubbbies, you know it is wrong but there is something compelling about the colors/sounds etc.
Cramer is a guy who knows how to make money . . . for himself. He’s willing to act like a buffoon and be ridiculed so he can write books and be paid by CNBC without risking his own money in the markets. He loves to talk about trading stocks but I’ve always heard that his wife (former hedge fund trader) runs the money and keeps them in fixed income stuff. He made a fortune on the street.com IPO and I doubt risks more than play money anymore.
He has a pathetic need to be liked though . That’s kind of sad. The real Cramer jackals are on the TSCM Yahoo board. That’s my favorite internet destination other than here.
I don’t doubt the intelligence, it is the the delivery that drives me nuts, but yesterday he said he rented so I should be more tolerant.
He claimed last December on Real Money that he and his wife had repurchased real estate sold allegedly earlier in the year. He may be “renting” an apartment in Manhattan but unless he was lying then, he has a farm house in Bucks County and a house in New Jersey, as well as “investment” properties. He called the “bottom” of the housing downturn late last year.
In his now infamous “just walk away” vid, he says he’s sold all his RE.
He loves to talk about trading stocks but I’ve always heard that his wife (former hedge fund trader) runs the money and keeps them in fixed income stuff.
Mrs. Cramer = “The Trading Goddess”
It’s kinda like the beginning of the movie, Training Day, where Denzel’s character admits that newspapers are chock full of bulls*** but provide him with entertainment. But the fact that he rents and has told “scuba divers” to “walk away” speaks volumes.
‘Internetically”. Interesting term, have never heard it before. Did you come up with that yourself or am I an out-of-touch dolt?
Could be both, of course.
http://biz.yahoo.com/ap/070810/europe_market_jitters.html?.v=5
ECB back at it today… pumping hard!
CFC now down 21% premarket - LMAO!!
Finally, some sweet sweet free market justice.
Also, as to this propping up the financial system. Pooh I say. It’s hypocritical to the extreme. No-one ever suggested we should bail out things like the ship building industry. So sauce for the goose.
We spent plenty trying to keep a shipbuilding industry in the US until the 1980’s.
FED injects 19 Billion into the market. I bet it freaks out the market more than it helps.
All the central banks are doing this! And yes, it seems to be freaking out all the markets:
Mortgage Losses Echo in Europe and on Wall Street
Just found out the FED used $19 Billion worth of collateral from these banks in exchange for $19 Billion in liquidity.
They guy on CNBC said, “I can not think of a time when they have accepted MBS as collateral”
This stuff is CRAP!
It’s spelled B-A-I-L-O-U-T.
BTW, I’ve got a 2001 Kia that my daughter totalled last month.
I’m going to call the fed and ask for $1m with the junk car as collateral. I’m sure they’ll allow it, since the car is worth more than this mBS.
The fed goes into the market almost every day. The difference here is they are trading funds for MBS.
There was a FED rule change, I think in 2004, that allowed Open Market ops to accept MBS as collateral in conjunction with Treasuries. I think what is meant is that this is the first time that only MBS were used as collateral.
Here is a little quote from a speech that Greenspan gave in Jan, 1997.
“When there is confidence in the integrity of government, monetary authorities — the central bank and the finance ministry — can issue unlimited claims denominated in their own currencies and can guarantee or stand ready to guarantee the obligations of private issuers as they see fit. This power has profound implications for both good and ill for our economies.
Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. They can discount loans and other assets of banks or other private depository institutions, thereby converting potentially illiquid private assets into riskless claims on the government in the form of deposits at the central bank.
That all of these claims on government are readily accepted reflects the fact that a government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.”
Doesn’t sound to me like the FED has a problem with accepting a hand-written IOU as collateral, as long as they feel it is necessary to further the goals of the FED. IMO
Agreed. I’ve read that speech before. He at least mentions that fiat is a double edged sword and drops the caveat “When there is confidence”. As most are aware now over the last few days, confidence is everything.
That does appear to be the “sand in the vaseline” doesn’t it? (confidence)
“When there is confidence in the integrity of government….”
A huge caveat.
Environmentalist will chain themselves to trees because the they would have to chop everyone of them down to print enough money to bailout the economy.
I spoke with someone in a RE related biz last night. Person was considering filing for bankruptcy due to having 3 credit cards pull funding on any further charges. I hadn’t heard this was spreading to CC’s. Also, this person got the idea from a co-worker that just filed, who was speculating in houses locally and is folding on 3 SFRs.
“when the whip comes down.”
“I hadn’t heard this was spreading to CC’s.”
I bet not 50% of the general population could live day to day, week to week, if it required cash to so. I am being generous using the 50% number.
If credit cards start experiencing a credit crunch, then all I can say is, WOW!
I can. Then again I live like crap, so……
By whose definition do you live like crap? Probably not by mine - or by the standards of most here. They tried to sell us a lifestyle and a lot of us weren’t buying it - now they very well may be paying for their folly.
Amen! To me, “living like crap” is wondering how the hell you’re going to get the money to pay this month’s credit card bills, let alone next month’s bills.
And I’ve been there, so I know it well. Never again.
Ditto, that statement. I racked the CC up a bit last month payed it off 100%. They haven’t got 1 cent of % out of me in YEARS
And no the CC is NOT your rainy day fund / savings account. When will the sheepie learn?
My FB relatives said yesterday they made a huge mistake. After buying one full price specuvestment in St Lucie, they bought a second foreclosure last Aug, rented it in May to a FB who walked on the bank, and have only collected 1 month’s rent from him since May. They are hoping to break-even now.
If they admit to making a huge mistake, they know full well they aren’t going to break even. Why don’t you ever hear people say, “we’re just hoping to limit our losses to $50,000,” or 10%, or some other number that actually rerepresents the result of some analysis. No, everyone is hoping to “break even.” In fact, they are going to lose everything.
They are embarassed and just saving face. Here is a list of some of their costs thus far:
– 20 pct down payment or 50K opportunity costs.
– Property improvement costs including washer/dryer, blinds, yard improvements, ceiling fans, and so on.
– Property search costs.
– Mortgage carrying costs for months not rented.
– Difference in mortgage carrying costs and rent.
– Eviction costs.
– Management costs.
– Selling costs.
– One year property taxes thus far.
– One year property insurance thus far.
– Post eviction property improvement costs.
– Loss on sale costs.
– And finally, lubricant costs.
Alice: Ralph there’s only one thing you can do. Only one thing. You just gotta go down there and give them back the $5, 000 and tell them the truth.
Ralph: They don’t care about the $5, 000. This installment is on the stands now. They’ll be laughed out of the business. What are they going to put in the next installment? Bus driver won’t die from scratching fleas?
The Honeymooners (~1955)
“They are hoping to break-even now. ”
That ship has sailed.
Sticking your mortgage on your creditcard bill $2371.39
Knowing they’ll never get a red Cent from you…
Priceless~
Credit card receivables are also securitized and sold. At least they were when I was working at a Wall Street firm (OK,it was Broad Street, same diff). If the securitization market is tightening, it will tighten with credit cards too.
Sorry, that I haven’t mentioned this earlier. I never even connected the general credit crunch with those deals. Should have been obvious. Again, sorry.
We also securitized debt for sales of large industrial equipment. Also car loans - lots and lots and lots of car loans. Oddly enough, not a lot of mortgages, but that was a long time ago and just one firm. What you work on, depends on the client mix of the firm and which project teams you get assigned to.
S&C or FF?
We are nearby.
S&C - 3 1/2 long years. It was quite a while ago.
Ben, if the credit crunch spreads to credit cards, game over.
This is a huge story, if someone in the MSM is reading this!
Agreed. Wow.
Plunge protection Team at work : ). Trying to pump liquidity in the system to support prices.
Kiss the Dollar bye bye!
why? the ECB is pumping 5-10 times harder; the euro may go down first.
For my own selfish reasons (paid in USD, all living expenses in EUR), I’d kinda like to see that. It’s been hanging around $1.365-$1.38 the last few weeks.
But, yeah, I see the downside to that in the larger scheme of things.
They were touting large cap stocks because they make there money overseas and when it gets converted, it makes them more money. Like Magic. Nevermind you that inflation is the reason.
Morons! I guess they expect the fools to fall for it and sadly they will.
U.S. July import prices rise 1.5%, biggest since March
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B099CE0D2%2DA5EE%2D401B%2DA287%2DF7AB36D62357%7D&siteid=mktw
INFLATION!
Frontpage news in Britain.
Investors have bought the financial equivalent of poisoned mutton dressed as prime lamb
http://news.bbc.co.uk/2/hi/business/6939757.stm
World shares fall on credit fears
Markets have fallen sharply again in Friday trading, a day after markets in the US and Europe suffered heavy losses amid fears of a global credit crunch.
Billions of dollars were wiped off share values, affecting businesses and individual investors alike.
In morning trade, the London share index fell 3.1%, the Paris index was down 3% and German shares fell 1.6%.
Analysts say the crisis could make it harder for banks, firms and consumers to get access to loans and cash.
If this persists, it could lead to a global recession.
The plung protection teams at work?
Cash injections
Global markets have been rattled by worries over financial institutions’ exposure to bad credit in the US sub-prime mortgage market.
Sub-prime lenders offer loans to consumers with a poor credit history.
As a result of these problems, banks have suddenly started charging significantly more for the money they lend to each other, signalling that they are looking to limit their risks.
For their part, central banks around the world have moved to prop up markets by lending money to banks who might be in trouble.
The European Central Bank injected cash into the money market for a second day, as did other central banks worldwide.
The ECB move was to “assure orderly conditions in the euro money markets”.
The bank injected 61.05 bn euros (£41.65bn; $84.2bn) into the eurozone money markets on Friday.
Japan’s central bank had earlier pumped one trillion yen ($8.5bn; £4.2bn) into the financial system to boost liquidity.
Asian jitters
The jitters come a day after the FTSE closed down nearly 2%, and following an overnight decline of close to 3% on the Dow Jones index in New York.
At close of trade in Japan, the Nikkei share index was down 2.4%, at 16,764.1.
In Hong Kong, the Hang Seng index ended the day down 2.88% at 21,799.96, after trade was suspended early because of a tropical cyclone warning.
South Korea’s central bank said it would also intervene if necessary in financial markets to counter the international turmoil.
The Reserve Bank of Australia on Friday added more than twice the usual amount of money into the banking system, injecting A$4.95bn ($4.19bn; £2.08bn) in its regular morning money market operation.
Central banks in Malaysia, Indonesia and the Philippines intervened to sell dollars to support their currencies.
On Thursday the US’s main Dow Jones index fell 387.18 points, or 2.8%, to 13,270.68. The S&P 500 shed 3% and the Nasdaq lost 2.2%.
Housing market wobble
BNP Paribas announced on Thursday that it was suspending three investment funds worth 2bn euros because of problems with the US sub-prime mortgage sector
In recent months, the number of loan defaults has increased because of higher interest rates, raising concerns that the wobble in the housing market will affect other parts of the economy and then start hurting other nations.
The worry is that should banks make losses, it would hurt their earnings and their profitability, making them less willing to fund the takeovers and buyouts that have underpinned much of the stock markets’ recent gains.
The recent collapse of American Home Mortgage, the 10th largest lender in the US, has intensified those concerns.
The declines in the US markets came despite attempts by President George W Bush to calm market fears.
“We’ve got blind panic… and obviously a complete lack of confidence”
Tony Craze, Dawntrader.co.uk
Many more financial institutions may come out in the future to say they have been making losses on the back of the sub-prime problems
Martin Arnold, CommSec
Sorry if already posted:
http://articles.moneycentral.msn.com/Banking/Advice/AnxiousHomeBuildersPileOnIncentives.aspx
“Perfect Storm for Quant Funds–Nothing Working”
“The turmoil in the equity and credit markets has created a “perfect storm” that led to losses for hedge funds employing mathematical strategies, according to a Citigroup Inc. strategist.
Most quantitative strategies, such as investing solely on the basis of share value or changes in analysts’ earnings estimates, are resulting in declines, Manolis Liodakis, a London-based strategist at Citigroup, wrote in a report dated yesterday. The event is rare in an environment where volatility has increased.
“Nothing seems to be working,” Liodakis wrote. “Previously uncorrelated factors have recently been falling with the same pace, leaving investors with very few places to hide.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3xa5ABlNlbA&refer=home
Quants take too long to react. With volatility they are increasingly on the wrong side of trades.
Let the shakeout begin!
How much money is Lone Star losing by going forward with the purchase of Accredited (LEND)?
They are going forward with the purchase. LEND says if the deal does not go through, they face BK.
If you are a private investor in Lone Star, would you be pissed? How much will they lose?
Gambling that Lone Star is going to get funding to purchase Accredited is not my cup of tea. Since I am to lazy to do the math on the risk, my guesstimate is that LEND is worth ~$4.50. If the purchase does not occur BK, if funding is possible $12.50.
Actually, I would say that LEND is worth more like -23, when you look at their net assets and liabilities, given all of the non-performing paper that a future buyer will get stuck with. If they had any positive value at all, they wouldn’t need to threaten BK if not bought.
LOL,
There are real assets at LEND, valuing the assets is difficult. What I was referring to was a risk/reward analysis of BK/Takeover and pricing the stock accordingly. The proposed takeover price was $15.00/share. I just do not know of any solvent banks that could touch this now.
Maybe it’s my optimism again. I have a bunch of shorts, dependent on these clowns being insolvent
The way that I see it is that if you write $60B of loans in a year, keep $1B for expenses and profit - then those loans better be really good, as there is VERY little room to absorb buybacks - particularly with properly values plunging, 100% financing, etc. Even if you have, say $5B in assets, you can really be pounded when the buybacks begin, and maybe go underwater.
That’s why I think it is possible for these guys to have a negative value. Another way to look at it is that GM might (or soon might) be willing to pay someone to take GMAC, provided they took the debts and future obligations also.
Gold approaching $700 an ounce. Great job Bernanke.
HyperInflation or StagHyperInflation?
Also, Merrill Lynch analyst says Countrywide has the strength to survive.
Does anyone know how many shares or loans Merrill has in / towards Countrywide?
Just saw all the bearish comments about gold earlier in the thread. Gold overpriced? Compared to what - the price of houses, the price of oil? I don’t think so.
I’m not bearish long term, but in the short term I see it being potentially liquidated to bail out losing positions in other markets. Long term? Up.
That was yesterday.
I’m not so sure if it will only be a one day event. That’s why I wish I had a better read on the physical market.
I’m not sure of anything. But I think gold (and food) look cheap here relative to oil, real estate, and stocks. Just like if (when) RE goes down 15% it will look more expensive than it does today, if gold goes up 15% it will look cheaper than it does today. It has a lot of upside.
Paul,
What do you think food is made of? Oil and natural gas (10 calories of hydrocarbon energy go into each calorie of food energy). We literally eat oil.
How is gold and silver pulled out of the ground and processed? Using big, huge industrial machines that consume huge amounts of hydrocarbon energy.
At least that’s the way I see it.
Your argument: there’s a one-to-one correspondence between the price of any input of a product and the price of that product. Ignore other inputs and final demand. Brilliant. Why isn’t there an exact relationship preserved between all prices at all times? Why doesn’t corn cost $10 a bushel or more right now?
I’m still getting the “transfer balances at 4.99% for the life of the balance” offers from my credit cards. I don’t see it spreading to cc yet.
How soon before owning is seen as a negative instead of a positive on loan aps?
But it has spread. 4.99% is 100 b.p. higher than the 3.99% we were getting just last year, and well off the low of 1.99%. With the charges of $75 to $100, not to mention the hit to your credit score, you can no longer arbitrage CC debt into the money market. Still beats the hell out of a mortgage, though, if you’re so inclined and your cash is a little short, and lets you avoid prying paperwork, liens, excessive closing costs, and even insurance.
U.S. stocks are at the beginning of a bear market in which benchmark indexes may fall more than 30 percent, investor Marc Faber said.
Faber, managing director of Marc Faber Ltd. and publisher of The Gloom, Boom & Doom Report, said losses in mortgage-backed bonds are not “contained or easily solvable” with interest rate cuts by the Federal Reserve. He called for the Dow Jones Industrial Average to drop below 12,000 in an interview today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aeYtlAQSOkSk&refer=home
Next week Hedge funds have to reveal how much they lost in July. They will cause even bigger losses for August.
Many will become more Bearish (the ones that survive) and suppress the market.
What did the FED use as collateral for injecting liquidity in the system? Mortgage Backed Securities.
This is a bailout!
I don’t know, kinda token resistance so they could say they tried. With a trillion $ worth mortgages resetting over next year (not to mention other forms of debts), they would need to do this every day for a few years.
This poor guy is losing his home to CFC.
http://tinyurl.com/2ulhdj
Good thing I didn’t have a cup of coffee in hand while reading that post. I almost choked. Something tells me that’s about to become the norm…
Holy hell is this country in trouble.
I read it too. Pretty sad. Especially the part where they have two kids, 4 and 2 years old. Lots of innocent, TRULY innocent, people are getting hurt.
One of the responses:
“Killing yourself would be the best option. Then your kids might end up be raised by someone with brains. ”
I know, I know but I thought it was funny…
I’m hardly the most responsible guy around, but whenever I read something like that, I feel so good having not dug such a hole for myself.
That said, a number of the commenters in that thread were calling BS on the story. A mortgage industry guy who doesn’t know the mechanics of foreclosure? Maybe a little suspicious.
The $19 billion injection by the Fed was ONLY using MBS as collateral. They are targeting taking the MBS out of play! Here comes the bailout! Fed buys up the garbage and takes the loss off the table. ARGGGG
And the FED and Paulson said it was contained.
This is contageous!
“The subprime mortgage industry’s problems were contained, they all said. It turns out that the turmoil was contagious.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.pPEmZeZZCk&refer=home
“And the FED and Paulson said it was contained.”
Sounds like they are openly containing it right now if they are injecting liquidity collateralized by MBS.
I don’t understand why we are concerned with a federal bailout, as though it would be an isolated incident, since such action would only be a single episode in what is already a serial, multi-year bailout.
80s S&L / junk bond / lbo –>
90s real estate (LTCM?) –>
90s tech stocks –>
00s real estate –>
10s pm’s –> booze, butts, bullets…
We’re hoping that the gubment will stop doing the bailouts as all they do is encourage risky behavior that is destroying the economy.
Let the bozos know they will be the bag holders for the messes they create, and maybe, just maybe, they’ll stop making so many messes.
There is a shock in learning that what the tinfoil hat crowd has been alleging all along may in fact be true.
For the record, I prefer a teflon foil hat on my noggin…
And I prefer mine with pretty pink and lavender rhinestones on it.
If the FED owns all the MBS, don’t they technically own the houses that are mortagaed? That is New World Order stuff. Go ahead and fit me for my tin foil hat, size 9.5…..
Took $19 billion on $35 billion of offerings. Trying to find out what the grade, maturity and lowest interest rate (highest price) accepted was. Fed always wants collateralized securities, but is this really collateral? - they used to only take Fed agencies or bankers’ acceptances (besides Treasuries), so it does feel a little balioutish.
OK, they’re only holding it over the weekend, so they probably only paid up a few b.p. over normal collateral- as long as they are only pushing the funds rate back down to 5.25 I guess you can’t say it’s a big change in policy - yet.
This is from Bloomberg:
“The Fed’s New York branch provided $19 billion through the purchase of mortgage-backed securities — the type of debt that investors are unloading after a jump in delinquencies on U.S. subprime mortgages.”
Looks like a Fed bail out of the Hedgies & the Wall Street investment banks to me.
Paid for by anyone foolish enough to be long $US…
Prime jumbo loans getting still more expensive, as prime conforming loans stay low…about a 70 basis point spread…a flight to the “safety” of Fannie and Freddy that other *prime* loans don’t have:
http://tinyurl.com/2zwoec
What happens when Freddie and Fannie hit their cap and can’t buy any more?
Maybe AIG somehow comes into the action at that point?
We are almost at the precipice of capitulation. In about two weeks people whose mortgages that are going to reset in October will get letters detailing the damages. Many of these people will try to sell. We already have a record number of homes for sale. The fall is also usually the worst time of the year to sell a house. Credit is getting tighter and lending may actually shut down for a little while.
We are not at armageddon right now, but it is coming.
Dumb question, I’m sure, but why is October the magic month for mortgages to reset. Weren’t people buying homes every day throughout the years?
Lending has shut down. All of it virtually. I know about 6 appraisers and not one order came in this week. I got one review for suspected fraud.
There once was a Realtor from Nantucket
Whose new occupation was selling a bucket…
Original Recipe or Extra Crispy?
Great line from Mark Haines on CNBC…
If you can keep your wits while everyone else is loosing theirs……
….maybe you just don’t get it.
IF
If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:
If you can dream–and not make dreams your master,
If you can think–and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ‘em up with worn-out tools:
If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: “Hold on!”
If you can talk with crowds and keep your virtue,
Or walk with kings–nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And–which is more–you’ll be a Man, my son!
–Rudyard Kipling
Wisdom GS! Thanks.
‘If’ happened to be Ayn Rand’s favorite.
GS, thanks, I love that.
Thank you GS ,I needed that .
“When the tides of life turn against you,
and the current upsets your boat.
Don’t waste those tears on what might have been,
just lay on your back and float.”
Ed Norton
Thanks for IF and thanks so much for ED Norton’s!!! Hahahaha. I imagine him reciting that with his vest and t shirt in that Brooklyn accent…perfect! and really spot on!
Fantastic! Thanks GS….it’s been a while since I’ve seen this one from Kipling.
I finally liked one of his statements. He looks up at the board and says “Market looks like crap”
Close italics
LA Times as a cheerleader for the housing industry? Today, not so much:
Two-year foreclosure outlook gloomy
http://tinyurl.com/2jsvxm
Rocked by uncertainty
Dow takes another hit on fears rooted in the mortgage meltdown
http://tinyurl.com/2oh44j
How a ‘liquidity crisis’ could affect Main Street
http://tinyurl.com/3c9qqq
Countrywide sees trouble ahead
http://tinyurl.com/2twlvj
Of course you still have the one titled “Mortgage rates lowest since June”:
http://tinyurl.com/2rx67s
“Rates on 30-year, fixed-rate mortgages averaged 6.59% this week, down from 6.68% last week and the lowest since early June, mortgage company Freddie Mac said.”
Still a bit of spin, as a good many of the recent 30 year mortgages in SoCal are “jumbo” loans (greater than $417,000), not the ones that Fannie and Freddy take (”conforming” loans).
Oooohh, the CEO of Fannie is on the telly. (CNBC). Shouldn’t he make his company file financial reports before he starts making appearances?
They have a permanent gentleman’s agreement with the NYSE that exempts them from the requirement to file in order to avoid delisting.
Dow NYSE down 100 points in 2 minutes
http://video.google.com/videoplay?docid=-1393776214264698170
Charlie Rose interviewing Nassim Taleb and two economic reporters
Jeff Cooper is my muse. IMO, the smartest trader I’ve ever known.
http://www.minyanville.com/articles/index.php?a=13651
“A Generational Credit Crunch”
I had a discussion along these lines over lunch yesterday…
There’s going to be a snapper in here somewhere. The March lows on the S&P were ~1368. If it gets that low it would be a hell of a double bottom, better to buy I would think, and I sure will try it.
You are one smart chick, txchick57. Seriously.
And that would be one hell of a double bottom, indicative of a hugely oversold market.
How oversold did things get in 1987 though?
More than this. We’re in the process of a tectonic shift though, I think, have to seesaw back and forth awhile before the bottom finally drops out.
It off?
A very interesting thing is happening. Mortgage brokers are reporting that fraud is at all-time high. That is, they are seeing more and more fraudulent documentation as this squeeze tightens.
Fraud out of control
from: http://www.bloomberg.com/apps/news?pid=20601103&sid=a.pPEmZeZZCk&refer=us
CEO Kenneth Lewis, who said June 20 that the housing slump was just about over.
“We’re seeing the worst of it,” Lewis said.
hahah! don’t you wish, Mr. Lewis. we’re just getting started.
loving my front-row seat.
mina
i’m thinking the Dow is at 12500 by the end of the day.
That’s some brave limb-crawling. Just saw a 13060 print, so you’ve got a good start. You’re definitely in with a chance.
Look on Bernanke’s face in the photo of the linked article is classic deer in the headlights. He has no clue as to what to do and he knows it!!
Yer doin a heckuva job, Bernie.
Remember back to that time when you knew you had gotten yourself in over your head, and couldn’t get out of it? Bernanke has looked that way ever since he put his right hand in the air and took the oath.
–
NY Fed bought Mortgage-Backed Securities and not just do a repo.
This IS Fraud. This artificially raises the prices of MBS than what the mkt value would be sans Fed intervention. Who are they helping? Fed is a part of US govt.
Jas
They are clearly helping whoever owns said MBS through a dillution of the value of dollar holdings. Not sure who holds many dollars these days, though…
Jas,
The Fed is NOT a governmental agency. It is a private corporation that makes a profit through its lending to member banks.
But it has a government monopoly on printing money. When it takes a loss, it just prints money to pay it.
People borrowed money and bought MBSs and CDOs with it, using those assets as collateral. Now they are getting hit with margin calls they can’t pay because they can’t sell the CDOs and MBSs.
So, let me understand. The Fed is lending money to people with MBS as colatteral. The Fed isn’t technically buying the MBSs. It takes the MBSs off the market as the owner can’t sell them without paying back the Fed loans…. right? The current holder is able to meet their margin calls with the money it borrowed against the MBS.
We’re just “transferring” the leverege to the Fed. If you loaned money to an MBS holder, you get your money back from money the Fed printed. The Fed won’t hit you with a margin call, so you don’t have to sell what you can’t sell.
So, when the defaults are translated into losses, the owner of the MBSs still takes the hit since it has to pay back the Fed. IF that company goes bankrupt, then the Fed takes the MBSs and takes them and is hit with the rest of the losses.
When the Fed takes the “hit” it simply doesn’t take the money it printed back out of the system.
Do I have this correct?
Not a bailout of the MBS holders… A bailout of the people that loaned money to the MBS holders.
Not the junkies, just the people that loaned money to the junkies.
SUCKS!!!!!
–
I know that but Fed has govt. sanctioned monopoly. The worst of public-private combinations are seen in the US, e.g., sickness-care payment system.
Jas
The Fed and European Central Banks have opened the taps yesterday and today all that “liquidity” is getting shucked into the black hole of hollowed hedge funds and a hollow economy that it is not making any difference. It is stilling falling.
This thing is bigger than any printing press or its electronic version can do or create or paper over.
Do Wall Street gamblers have a special passion for bungee jumping?
http://www.marketwatch.com/tools/marketsummary/
I’m actually buying heavy in one stock. Sun Micro (SUNW). They had a great quarter and this is a bargain price here. Not to say it won’t be more of a bargain but I’m willing to take that chance.
like to here that…buying and selling that stock is a money maker.
they aint goin anywhere, I think a reverse split is in the cards on SUNW.
Yeah, I sold it last week at 5.35 so this is a nice buy back.
bought the pre announcement jitters at 4.82 out in 12 hours at 5.25
I bought SUNW at $3.90 a few years back. Bought and dumped a bunch of times and it finally hit 6 and I was out. Made about 150% on it, but it sucked watching the small moves.
My puts are all gone. It was a major windfall in two days. Now I’m looking for the long entry. Might not be for a day or two yet.
I am buying some stocks for long positions in Toronto. Mining stocks got hit pretty hard and there may be large upside potential.
Hoz, as the market whipsaws, remember that people playing shorts such as yourself are responsible for a considerable portion of the movement.
Not that there’s anything wrong with that - after all, this is a capitalist system.
I would just hope that you’re not among the many traversing online boards far and wide, promoting fear, doom and havoc, with the intent of profiting off of the general populace’s fear and ignorance.
No, I do not mention any stocks I am long or short (with one exception that I mentioned to TxChick 2 weeks ago and I feel really bad about mentioning it), I will mention mutual funds that I use to park moneys. I do not have to “promoting fear, doom and havoc”. The ineptitude of the government does that for me.
I will tell any one that asks about my losers and I have quite a few. I do not write about my profits.
I think you were correct the other day when you mentioned that 2/3rd of the population would not be affected. “The general populace’s fear and ignorance” is based on the reality of the moment. They cannot pay their bills, they already know somebody that is in deep doodoo, salaries are not going up and companies are laying people off in record numbers. They are worried if they will have a job in 6 months.
So I or any other mope like me caused this world wide credit crunch? I don’t think so. This is reality.
A US stock market that is fundamentally over priced, US Government bond market that is over priced and US Real Estate that is over priced has led us to this dangerous spot.
I have posted that I am not long any US stocks, I am short quite a few. I am buying stocks in companies in Canada, South Africa, Brazil today. I am net long stocks in Japan, Korea and China.
If it were not for shorts like me and others the stock market would be down 1000 points today (if not more). It is Friday and there is short covering. Without short buying - the market would be in a freefall.
To pretend that the difficulties in the US is the housing market, is to bury your head in the sand. It is not possible to get a credit crunch on 2.5% of mortgages defaulting. Almost all banks allot a minimum of 5% coverage. This crunch is the result of mispricing the derivatives and CSE’s getting hit with new margin requirements. The problem is who do they get out to? This makes LTCM, which was a disaster for Asia and Russia, look like chump change.
SUNW has gone nowhere in 5 years!
How do you guys feel about Hewlett Packard (HPQ)?
txchick57,
Not for nothing, as Sun did have a decent quarter, but they can’t compete (on price) with Dell and HP in the server/workstation market and they have much to prove in the commodity chip market that Texas Instruments and others play in. The server business is all cheap 686/linux/clusters these days and Sun is behind the curve.
If business spending slows considerably, HP and Dell will cut margins to maintain market share. Sun will be out in the cold. Might be a decent short-term trade (haven’t looked at the charts), but I wouldn’t bet on it as a long-term hold.
borrowing from the current vernacular, i informed my landlord today that i would need him to inject about 3 months of liquidity into my bank account in order to stave off any potential instability caused by my failure to pay him his rent.
Quite a deal for those hedgies and banker Pig Men, no doubt.
don’t miss Cramer on street.com video today, trashing OFHEO chief Lockhart, saying the guy is a friend of Bush and oh, wants to evict you from your home– OFHEO is being so mean to benevolent fannie mae. Cramer: deranged AND morally bankrupt.
We are gathered here…
Peter Schiff (Euro Pacific Capital) and caller get into it. Almost alll this weeks radio show was about the bubble- good stuff 8/8 show
http://europac.net/radioshow_archives.asp
I come not to praise Bernanke
But to bury him…
Looks like PPT isn’t working out very well this morning.
“Looks like PPT isn’t working out very well this morning.”
Hmmm, not too bad…S&P is up 1/2 a percent right now. Maybe look for long term rationality, but short term, whipsaws…
Is the FED now taking advice from Cramer? And what is with the announcement? Doesn’t announcing this sort of thing potentially contribute to the sense of panic which seems to be gripping the financial markets at the moment?
THE FED
Fed announces move to provide liquidity to market
By Greg Robb, MarketWatch
Last Update: 9:38 AM ET Aug 10, 2007
WASHINGTON (MarketWatch) — The Federal Reserve said Friday it’s providing liquidity “to facilitate the orderly functioning of financial markets.”
In a brief statement, the Fed said it will provide reserves “as necessary” through open market operations to promote trading in the federal funds market at rates close to 5.25%.
Earlier Friday, the New York Federal Reserve said the Fed bought $19 billion in three-day repurchase agreements in mortgage-backed securities.
In its statement, the Fed said banks may experience “unusual funding needs because of dislocations in money and credit markets.”
“As always, the discount window is available as a source of funding,” the statement said.
http://www.marketwatch.com/news/story/fed-says-providing-liquidity-facilitate/story.aspx?guid=%7B36B05802%2DBA9D%2D4BA8%2DA901%2DD88521577888%7D
oh my GOD, Donald Trump on CNBC this morning saying Bernake is wrong and needs to drop interest rates a full POINT! this guy is clueless…he is telling people to renegotiate their mortgages with the banks - the banks dont have the mortgages!!! Holy Cluelessness Combover!
thats because Trump condo flippers are taking a bath
also the interest on his casinos is putting him under
It worked for him. He also wants a government bailout to prevent the “millions who may be homeless”. Translation he wants bailout of credit market to keep his own boat afloat.
Wow.
It seems like The Great Unwinding is here.
Should be an interesting day.
Lots of blood in the water but no sharks to take away the carcasses.
Everybody is selling.
Trump just came on CNBC. Started off in hail-fellow-well-met mode, saying it was interesting times, good time to do a deal. Three minutes later was in Armageddon mode, saying Fed needs to lower rates now, today, by 1%, and if they don’t than they are (meaning: I am) screwed.
Got Armageddon? Trump clearly has a nice chunk.
It makes me sick how some of the talking business heads are calling for a Fed drop of a point now . They want the punch bowl spiked , and the bagholder to change to a bailout ,in spite of the rates being low enough . It really makes me sick when the talking heads act like they are concerned with the average Joe . One talking head was calling for Greenspan to come back . It’s all sick ,such short term thinking .
A full point? Panic is in the air - I wonder if these spudheads realize their zaniness is starting the scare the straights?
Panic big time in the air . Investors aren’t going to be interested in funding this inflated real estate market for a long time ,so why in the hell do they think that a Fed rate cut will make investors want to invest in mortgage backed securities ?
edgewater john –
Sure they know it. They are counting on it. If you can’t make the money talking things up into the stratosphere, then you can make it talking it down into the abyss.
Some people do both.
Donald Trump just said that if the FED doesn’t lower rates by at least 1% we will have “more than a Recession!!”
Wow.. things are getting bad.
Black Friday?
Friday, August 10, 2007… the day it spilled over.
I want this month - August to be a 20% correction month.
The day the lie that it would not/was not spilling over finally had no affect!!
This is beginning to appear like the year 2000 for stocks. I’m in better financial shape now than back then. I diversified more into municipal bonds, savings bonds, money market funds, CDs, T-bills, and precious metals, of course. This will give me extra confidence to fall back on because I’m going to fully invest in my 401k and IRA in 2008, just like I have been doing over the last 18 years. My investing amount is larger and I get free matching contributions. Chicken littles will be left in the dust as they swear off stocks for good.
Go ahead and hide your fiat money under the mattress.
Very close to getting long here and looking for a snapper. I’d like to buy a double bottom of today’s low or a slight undercut.
Bill, you’re starting to remind me of the “Apply directly to the forehead” commercial. We all know you bought the 10-year at 5.23 - nice call. But, I’m sorry, I didn’t get the exact figure on your portfolio balance today. Was it $785,496? P.S. - We’re all gonna be “left in the dust” in another 30 or 40 years or so, less for some of us.
lol
He’ll die with all of it and no kids to leave it to.
good joke. It’s going to American Cancer Society and American Heart Association. Better to go there than to bring more people into the world to trash the planet.
Paul. I don’t really care about the portfolio balance today. I’m in for the long haul. I’m going to put $30,000 into mutual funds in the next 12 months - mostly after January. A year later it will be $35,000 (I’m turning 50 in 2009). I dollar cost average. Like the professional financial advisors suggest - I’m talking about Vanguard’s Jack Bogle, et al. I doubt if anyone on this blog regularly writes financial columns in the magazines at Borders - or in the finance books there either!
I know! I know! I knew how old you are, too. And where you’re from, and where you went to school and where you want to retire! I think it’s great! I’m a conservative investor, too, if not as flush as you, just waiting for house prices to come down a bit! Personally, I’m ready for some software engineering or Central-Valley-growing-up anecdotes! Seriously!
Bill, gotta agree with you here. If you can’t beat ‘em (the fed, treasury, fiat money system) join ‘em. Paper is worthless. They will print their way out of this mess just as they have done countless times. With a real PPT in place, they can manipulate their way out of just about anything. Nowhere to hide in paper as every country is fiat.
See, what’s going to be good for Aladinsane’s gold, will be good for the stock market. He forgets there are gold mining stocks, oil company stocks, stocks in companies that have real earnings. Those companies are real and are not electronic (better tell that to him).
I’m not a real believer in the PPT, but it’s hard to fathom who might have been behind the spike which traded up the values of the major indices starting around 10:40am.
This from CNNFN.com
“Stocks bounce off lows after Fed adds $16 billion more in liquidity to banking system.”
It was a direct response to the Fed adding another $16 billion in liquidity. Okay, the liquidity came after, but the Fed may have indicated they were taking bids…..
I guess I can buy that, but it seems a little perverse to get happy about equities over evidence that the Fed is far from happy about the state of the financial world.
Every new injection of liquidity is another booster-rocket strapped on to the price of gold and silver. There’s little doubt left that we will be repeating the gold bull-run of the late 1970’s very soon. People are starting to “get it” in terms of the security of the greenback. When joe sixpack “gets it” then hang on. It doesn’t take much interest to get gold to double from here.
You are not a believer, yet it is a proven fact that it exists. Please educate yourself.
I should have said that I’m not a believer in the theory that they have been acting surreptitiously in the market at times like these.
my guess is that all the reflexive “dip means buying opportunity” types are in the market today. the real news will be monday, after everybody has had a weekend to digest all the bad news. remember mondays are famous for market crashes. . .
So gold is going up today. Bloomberg headline says gold price is picking up due to people seeking a safe haven in regard to the subprime mess:
http://www.bloomberg.com/apps/news?pid=20601012&sid=aayPibU3PJPc&refer=commodities
Who would ever have expected that?
Me, for one.
I’ve been a renter since we bought manhatten from the feather friends.. could prices go back to those times?? anythoughts.. I been renting long enough it’s time to buy something before we run out of land again
Nice try, you RE troll. I know all realtor is good spellers and gramer good also!
mgugy,
do not rag on dum raltors. they try to mak maony ole fashin way.
Matter (Gold)
Vs.
Anti Matter (computer blips)
so…no stock is a good stock…ever?
Sure, some stocks can be good sometimes. But you need a sound monetary system to be able to do economic calculations with any reasonable expectations of getting good answers. We don’t have that.
peter schiff called it but I invested with his company and lost 20k in 10 days.. nice to call it but take care of your clients!
–
Second Purchases of $16B
NY Fed bought $16B MBS for which there was no bid! Free market in action!
How do we know that Fed didn’t overpay?
Pretty soon Fed will own all the bad mortgage debt out there. And over the years it will own all the defaulted homes. Today the Fed is much better at managing the economy than during 1930s? We shall find out over the next three years.
Jas
How’s this for a headline?:
“Mortgage meltdown contagion
A grim forecast has economists more pessimistic over how far the collapse will spread to the rest of the economy.”
http://money.cnn.com/2007/08/10/real_estate/mortgage_meltdown_crushing_other_markets/index.htm
Remind me to look up the word “contained”. Maybe I should get the same dictionary as Paulson or Bernanke?
Miami’s the new Manhattan! This is your last chance! It’s like the last day of a sale at Nieman-Marcus! (I just heard it on CNBC, so I know it’s true.)
I think I better go the beach.:)
From 12/31/06 -
Peter Schiff talking about the coming credit crunch and being laughed at, literally:
http://www.europac.net/Schiff-Fox-12-31-06_lg.asp
Thanks for the link, that was enjoyable. I watched it twice, I liked it so much. But what is that horrid ramen noodle stuff on that one REtard’s head? ‘Tom Adkins’? It’s worse than Trumps nasty felty looking flap.
Having suffered from insults all my life just because I have naturally curly hair (NCH), I must protest. Just because someone has NCH doesn’t automatically make them an idiot or a lowlife. Interestingly, the only times cops have pulled me over (no ticket resulted) was when I was “driving while curly”. Now I pay $550 a year to straighten my hair just because of the assumptions that some folks make about those of us with NCH.
Sally - Bad move - you shouldn’t have given it away - you could’ve adopted a new hairstyle for the blog, maybe something like Maria B. - she never has a bad hair day. Me, I have hair something like John Edwards.
Isn’t Tom Adkins Erin Burnett’s husband?
That’s what I heard.
Roidy
Sally,
there are provisions in the Americans with Disabilities Act that address your situation. Call 1-800-Got-A-’DoRag for more info.
Besides not wanting to add to the world’s population, THE main reason I choose never to have children was that I wouldn’t wish my NCH on anyone…I didn’t want my kid to have to endure all the cruel taunts I’d heard over the years. I so relate to the African-American ladies on the Rutgers basketball team who Imus insulted by referring to them as “nappy-headed.” I am so grateful for the hair-straightening products available now, so that I can lead a normal life!
What a bunch of nut sacks…. CNBC reporting on vulture capitalists sweeping in and buying catching knives in Florida. All reports always end with a jovial exchange… so, anchor says “Ha ha, have you found a place for yourself down there?” reporter, “Ha ha. No, I just got in last night so havent’ seen anything but this project… ha ha ha…” cut.
We’re suposed to beleive ANYTHING they say when they fly a guy down to read a script? What, did the developer PAY them to do the report? Or did he just by ad time on their local NBC affeliat and got the national news to do a commercial for him too?
I’m SOOOOOOO sick of product placement in the NEWS!!!!!
–
Same report — Blackstone got huge loan to build luxury condo tower(s) with prices in $2M range.
Jas
I am waiting for the reports of lawsuits. So far, not much.
that’s because there’s still a sucker born every minute, darrell.
case in point: a guy down the street had his 2 br condo up for sale for 18 months. paid 105K in 05. listed for 139K right after.
down to 135, down to 130, down to 120. he sold it yesterday for 105K! so here’s the kicker: girl up the street just bought an IDENTICAL condo for………155K!!!! proving once again that there’s always a chump out there waiting to become another FB.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aWvmnW7kB4rM&refer=us
Here’s the punch line. The FED buying mortgage backed debt. They don’t care if it’s ever paid back or not, they’re monitizing housing now. What will that do to housing prices? I certainly don’t know. What I have known all along, though, is that math and morals are not worth much nowdays. You can’t predict the future based on what makes sense or what is right. We’re at the mercy of power hungry greedy politicians and bankers.
“What I have known all along, though, is that math and morals are not worth much nowdays.”
********
Thanks to the local dotcom mania and now housing, I’ve had the opportunity to see this up close - all within a decade!
Maybe that structural sistemic crisis is unfolding now? If so, there are no safe place anywhere now. IMHO it is not the end, we’ll see it next week.
Actually the Fed is not buying the MBS-PCs. They’re being taken as collateral for very short-term loans. It’s a repurchase agreement transaction which is simply collateralized lending. On the borrower’s side the transaction is called a reverse repurchase agreement and it is accounted for as a borrowing, not a sale. It becomes a sale only if the borrower defaults and the lender takes the securities to satisfy the debt.
Gee,now the REIC can look at us all with a smirk on their face and say that real estate NEVER goes down.
cnnmoney.com has a “mortgage meltdown contagion” headline and they are asking readers to “talkback” on the following questions:
Will the subprime crisis trigger a recession? And what do you think the government’s role should be?
There aren’t any “yes, help us!!” responses…yet. Oh man, I hope the government doesn’t cave in and try to save all the FBs. This correction is absolutely necessary and the sooner we get it over with the better.
From Stephany in IL:
“The government needs to step in and STOP the foreclosures. They need to help we THE AMERICAN CITIZENS ! I have worked all my life (Legal Assistant), finally got my American Dream at the age of 48 and now I lost my job (like many others)and I am being pushed around like a rag doll from employment agencies. So I have a two-fold situation (no job and probably no townhome soon) and I know I am not the only one. WAKE UP folks, we are in a serious crisis and need help.”
The government needs to step in and STOP the foreclosures.
One of the greatest freedoms we have is the freedom to FAIL. This isn’t
East Germany yet.
Was it GetStucco who said the Fed wouldn’t let the Dow fall below 13,000? If so, he was correct! Dow up 30!
Nothing convinces me more that the PPT is real than watching the last hour of the mkts. PPT tried SOOO hard today to get all indexes back to green, even if up only $1…but actual mkts prevailed.
http://americandreamproject.org/blog/2007/08/09/fake-wealth/
Fake Wealth
Stocks Rebound After Fed Adds Liquidity
Friday August 10, 12:29 pm ET
By Tim Paradis, AP Business Writer
http://tinyurl.com/2j88bm
“Federal Reserve policy makers “are trying to do everything they can short of cutting the federal funds rate” to try to calm the markets, said Ed Yardeni, president of Yardeni Research in Great Neck, N.Y.
But, he said, “I think they probably have to cut rates, and probably before their scheduled September meeting.”"
Maybe if people pout and stamp their feet and hold their breath until they turn blue, the Fed will reconvene a special meeting to cut rates.
War on savers indeed.
The Fed Primes The Pump
Liz Moyer, 08.10.07, 11:53 AM ET
http://tinyurl.com/2fn2q2
“The Federal Reserve continued to pump money in to the system Friday but sent a message to the markets that they shouldn’t expect to see an emergency rate cut, at least not today.”
I especially like the part “at least not today”. LOL.
And don’t let it be lost that we are using the words “Fed” and “pump” together.
Where did the 38 billion come from? Where does it go? How can I get some?
$laughter, interrupted…
http://www.youtube.com/watch?v=qOUh1K14BTU&mode=related&search=
“The industrial situation of the United States is absolutely sound and our credit situation is in no way critical. . . .” 1929 Charles E. Mitchell, chairman of the great National City Bank of New York
Taken from Chapter 13 (anyone see the irony) of a book someone here recommended a few weeks ago called “Only Yesterday” by Frederic Lewis Allen.
I found it online at http://xroads.virginia.edu/~HYPER/ALLEN/cover.html
Chapter 13, Titled Crash can be found here:
http://xroads.virginia.edu/~HYPER/ALLEN/ch13.html
Thanks, I will read this tonight.
Where did the 38billion the fed dumped into the market come from?
Where does it go? How can I get some?
WHERE DID THE 38 BILLION COME FROM? Where did it go? Hom do I get some?
Third Repo by the Fed Today (weekend repo)!
I think that this was a regular repo, as no details were mentioned on Bloomberg.
“Bankers’ Mischief” always leads to catastrophe, which was Schumpeter’s way of characterizing depressions in the US.
Thanks to the Fed, there has never been as much irresponsible lending, by third, forth, fifth, parties, to make a quick buck, as took place in the US during the past five years.
When bankers turn into salesman, as Schumpeter noted in connection with catastrophes, it is all over for the financial system. It always ends in some sort of collapse that leads to depressions and not just recessions.
Jas
–
David Lereah is back! He is now an expert commentator!! He is on the boobtube right now (on CNBC).
He says that CA is very stubborn because prices are not coming down as they should. Vow!
Jas
Liareah encouraged millions of people to become greedy mortgage slaves, then is now encouraging them to foreclose and get bad credit history.
Nice job Liareah!
Holy toasts, 400 posts?! Is that a record for this blog?
Not even close.
Yippee #402
Looks like it’s time for all of us bloggers to start writing our local papers opinion colums and let our voices be heard for NO BAILOUT!
Good time to get into some long term investment foreclosures!
Maybe buy a condo building or two in Miami for cents to the dollar… wait, noone will finance me.