We All Really Should Have Known Better This Time Around
Some housing bubble news from Wall Street and Washington. Associated Press, “Sales of existing homes fell in 41 states during the April-June quarter while home prices were down in one-third of the metropolitan areas surveyed, a real estate trade group reported Wednesday. The new figures from the National Association of Realtors underscored the severity of the current housing slump, the worst downturn in 16 years.”
“The states suffering the biggest drop in sales in the second quarter, compared to the same period a year ago, were Florida, down 41.3 percent, and Nevada, down 37.5 percent. Other states with big declines were Arizona, down 23.4 percent; Tennessee, down 21.5 percent; Maryland, down 21.1 percent, and California, down 19.8 percent.”
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
“Shares of Dominion Homes Inc., which sells homes and offers mortgage financing services, dropped to a new year low Wednesday after the company reported a wider second-quarter loss. Revenue, meanwhile, fell 49 percent from the second quarter of 2006. The company said the declining revenue was mainly due to fewer home deliveries and lower average delivery prices.”
“‘While our results are disappointing, they are not surprising given the sustained national housing slump,’ said CEO Douglas G. Borror. ‘Our 2007 planning anticipated that the housing downturn in our markets was reaching its final stages. We now see no sign of recovery before mid-2008,’ he added.”
“Condominium builder WCI Communities Inc. on Tuesday raised the amount of the impairment charges it expects to record in the second quarter. WCI also postponed its second-quarter earnings release, scheduled for Thursday, to Aug. 22.”
“‘The later reporting date will allow WCI to complete its review of real estate inventories and other assets for possible impairment charges,’ the company said in a statement.”
From Reuters. “Countrywide Financial Corp shares fell on Wednesday after the largest U.S. mortgage lender was downgraded to by a Merrill Lynch & Co. analyst, who said bankruptcy may be possible if liquidity worsens.”
“‘If enough financial pressure is placed on Countrywide, or if the market loses confidence in its ability to function properly, then the model can break, leading to an effective insolvency,’ wrote analyst Kenneth Bruce, according to a person who has seen the report. ‘If liquidations occur in a weak market, then it is possible for Countrywide to go bankrupt.’”
From MarketWatch. “Real estate investment trust Impac Mortgage Holdings Inc. said it has suspended funding on so-called Alt-A loans due to liquidity problems in the mortgage markets.”
“‘In light of the continued and widely publicized volatility in the secondary and securitization markets, we have suspended funding on loans previously referred to as Alt-A loans and currently do not have any plans to originate these types of loans in the near future,’ the company said in a press release.”
“‘During the second quarter, the secondary and securitization mortgage markets have deteriorated, become more unpredictable and volatile, making it more difficult to sell loans and securities to investors,’ the company said in a statement.”
“‘In addition, because housing prices have declined, default and credit losses have increased; investors are requiring higher returns, reducing the prices of mortgage loans,’ Impac said.”
“An affiliate of powerful leveraged buyout firm Kohlberg Kravis Roberts & Co. said on Wednesday it will lose about $40 million from selling $5.1 billion in residential mortgages and warned an additional $200 million hit could be coming.”
“KKR Financial blamed the estimated $40 million loss on ‘unprecedented disruptions’ in the residential mortgage market, which have reverberated from the United States to banks in Europe and Asia.”
From Bloomberg. “The U.S. subprime mortgage crisis will cost credit investors about $150 billion in losses worldwide, according to Calyon, the investment banking unit of Credit Agricole SA, France’s third-largest bank by market value. Foreclosures may reach 20 percent of the $1.3 trillion of subprime mortgages outstanding, according to a research note today. Assuming investors can recoup half their investments, losses would be $130 billion, it said.”
“A further $20 billion could also be lost from the $1 trillion of outstanding Alt-A mortgages offered to borrowers with better credit who fell just short of typical standards.”
The Wall Street Journal. “The seizing up of some debt markets because of the subprime-mortgage shakeout has left some investment funds wondering how to value their holdings.”
“Last week, France’s BNP Paribas SA said it would stop the flow of money into and out of three of its investment funds because it couldn’t ‘fairly’ value securities in the funds.”
“When the bank, for example, recently tried to sell about $60 million of bonds backed by U.S. mortgages, it couldn’t find any buyers. Among the brokers it called, ’some of them weren’t even answering the phone,’ says Alain Papiasse, head of BNP’s asset-management and services division.”
“The oft-repeated problem is that the funds, and even some companies, can’t get prices for many debt securities and derivatives with direct or indirect links to loans made to homeowners with spotty credit histories. Given that, they ask, how are they supposed to mark holdings to market when there is no market?”
“One answer is that everything has a price, if it is low enough. That is tough for many managers to swallow if they think the long-term value of a holding isn’t impaired. Trading at such a price is also a difficult prospect if a manager wants to avoid selling into a distressed market.”
“But if there are no buyers to be found, there may be an even worse alternative. ‘Then the price is zero,’ says Jack Ciesielski, editor of the Analyst’s Accounting Observer newsletter. ‘If there’s a bid out there, then there’s a price. Take your pick.’”
“Marking holdings to zero would be an extreme move. BNP’s Mr. Papiasse says the problem was that there simply was no market or price for the assets.”
“To see how funds have marked down their holdings, consider Regions Morgan Keegan Select High Income Fund. It invested $13.5 million in one bond based on a series of mortgage-backed securities issued in 2005 called Terwin Mortgage Trust. By the end of March, the fund listed the bond’s value as $5.9 million, according to its most recent portfolio report to regulators.”
“The value of new subprime securities coming onto the market plummeted 73% in July to $7.1 billion from $25.9 billion in June, according to FBR.”
“Moody’s Investors Service and Standard & Poor’s, the arbiters of creditworthiness, are losing their credibility in the fastest growing part of the bond market.”
“The New York-based ratings firms last month gave a new breed of credit derivatives triple-A ratings, indicating they were as safe as U.S. Treasuries. Now, investors are being offered as little as 70 cents on the dollar for the constant proportion debt obligations.”
“Ratings firms ‘used to be seen as good, objective folks dressed in white, who you could count on to give reliable opinions,’ said Christopher Whalen, an analyst at a research firm that writes software for auditors to determine if banks are accurately valuing their assets. ‘But when they got involved in structuring and pricing these deals, I think they crossed the line. They have lost a lot of credibility.’”
“Bonds backed by mortgages to people with poor credit fell by more than 50 cents on the dollar in June before the companies started to slash their ratings. The firms say they determine the risk of default rather than prices.”
“Frankie Van Cleave says she has paid all her bills on time for more than three decades. But neither solid credit nor her track record running a number of businesses is sparing the 70-year-old from the turmoil in the home-mortgage market.”
“Several mortgage brokers had courted her to refinance a $1 million adjustable-rate mortgage she currently carries on her home. But most of them ‘dropped me like a hot potato’ last week after two appraisals came in below $900,000, she says.”
“Her bank of three decades won’t help her after her monthly mortgage payments recently ballooned to nearly $8,200, so Ms. Van Cleave is working 80 hours a week as a technical writer to make ends meet.”
“‘A good credit record doesn’t count for anything now,’ Ms. Van Cleave says of her futile refinancing effort. ‘If you don’t have assets, forget it.’”
“‘We thought the dust was going to settle, but instead, it just blew up,’ says Mitchell Reiner, president of Mortgage Associates, a Los Angeles-based lender that does business in 48 states. ‘Everyone is being affected.’”
“‘Banks want to see that you have a vested interest in the property,’ says mortgage broker Mark Cohen of the Cohen Financial Group in Beverly Hills, Calif. ‘Everybody thought the damage would be contained to the subprime market but it has spread to A-paper [products].”
“Ms. Van Cleave doesn’t have cash for a refinancing down payment, and she faces a problem hitting more consumers: Appraisers say her home is worth less than her current $1 million mortgage.”
“Ms. Van Cleave concedes she took a risk, borrowing close to the appraised value of her home two years ago, at the market’s peak, to help fund a start-up company that sells a patented fishing-rod holder. She opted for a two-year ARM, with a piggyback mortgage at nearly 12%, and planned to refinance.”
“But the start-up hasn’t taken off, and even as she saw the credit market tightening, she couldn’t afford the penalty to refinance her loans early…Ms. Van Cleave rejects the first two appraisals, saying that one report has factual errors and neither makes fair comparisons with other homes. She believes she is a victim of appraisers who are being pressured by lenders and are ’so afraid they’re going to lose business or have their license taken away.’”
“To Washington state appraiser Bill Hanson, the shift is dramatic. Lenders are demanding more comparable home prices and ‘asking for unrelated information, such as permit numbers for remodeling work,’ he says. ‘Before they would ask: ‘Is the home still there and does the roof leak?’”
From Marketplace. “Kai Ryssdal: Steven Miller, this might sound like a really basic question, but how can it be that they can’t value the assets they have? Miller: Normally…you’d look at where things are trading on an exchange in an actively bid market. But in these markets for structured finance assets…you often have to look beyond the simple price and go to a model, or some sort of complicated analytical tool, to be able to value them.”
“Ryssdal: Because of the credit crunch or liquidity squeeze, or whatever you want to call it, not many people, not many groups are bringing new mortgages to the market. So you guys have no way of figuring out what they should actually be worth in a functioning market.”
“Miller: That’s right.”
“You didn’t have to be Warren Buffet to know that giving people loans for houses they couldn’t afford might come back to bite the economy. And, as Lisa Napoli reports, we all really should have known better this time around.”
“The pundits had the same 20-20 vision back in March of the year 2000, after the tech bubble started to burst. The get-rich quick mentality that has fueled the housing run-up is not terribly different from the dot-com fever at the turn of the century.”
“Financial columnist and author Carolyn Baum says that’s created a perfect climate for run-ups. Carolyn Baum: ‘Both bubbles were a response to periods of low interest rates. Bubbles do not end well. They don’t. Whether it’s tulip bulbs, real estate, they don’t end well.’”
“Greed followed by fear. Economists say the markets are propelled by this cycle. But this time, the bust of the bubble could have a wider and more devastating economic impact. After all, houses are very different from dot-com companies or tech stocks.”
“Steve Pearlstein of the Washington Post: ‘That was just, you know, a lot of money that never was really there just disappeared, it evaporated. But that was investment money. This is about where people live, literally.’”
“Or in a growing number of cases in this housing market, about where they used to live.”
All I have to say is VMWARE is not Google : )
Without getting too far off topic here, I will say that VMWare is definitely a great product, and plenty of IT shops are buying it. Virtualizing and eliminating vast farms of expensive (to buy, and operate) servers is a no brainer. Run right, it seems like an obvious money maker to me.
But take a step back and look at the bigger picture. Microsoft Virtual Server 2008 is a competitor. IBM has a great offering and is in a LOT if big IT shops. Xensource just got bought by Citrix. They are growing. You have Parallels and other open source offerings.
Do I think virtualization is great technology? Yes, do I think VMWare is going to have to compete with a lot of competition and shrinking margins? You betcha.
Many people just aren’t that technical. Jim Cramer hypes it, but what does he know.
i haven’t seen virtual server 2008, but VMWare ESX server is very slick with features MS and others don’t have
MS’s product is more like GSX server which is VMWare’s free product. Neither one has features IT shops want for production applications
I run databases. I can’t run on Virtualization. Even with hypervisors, it is way too slowwwwwwww.
I’ve been a Database administrator for 10 years and agree that Microsoft virtualization SUCKS, but I have been told VMWARE works much better. Oracle Support uses it and an analyst I spoke with said it works great. Granted I would only use it for test and development, but I believe it is an excellent product. Lots of growth!
For development or a small Oracle database it might work.
Try running a production Real Application Cluster / Cluster Ready Services High OLTP or DataWarehouse and no way. It needs the WHOLE SERVER AND THEN SOME! LOL
year ago on a webinar with vmware they specifically said don’t run exchange or SQL or any other db on it since that isn’t what it was made for.
we have internal development and they write a ton of apps. in the past we used to buy pizza boxes for each app and it would use like 5% CPU and 50% of the RAM. now we just put it on vmware instead of buying a new server.
next is we are putting dev and qa on vmware since they have ancient boxes and we don’t want to spend money to buy new ones just to run weblogic
And that makes sense. We have a lot of App servers we have already done that with.
CITRIX !!!!! AHGHHHHH I just had horrible, horrible flashbacks of the nightmares trying to get that POS software to work beyond slow, slower, & backward, when I worked for HealthNet.
God that sofware was so buggy. I was a front line user for years and lemme tell you it never worked right. IT Dept was always promising to repair it, upgrade it, yadda yadda . . . Citrix experts were supposed to fix it . .. and on it went.
I’m no IT expert ; just someone who (tried) to use the software and my testimonial says its full of whiz bang features that never worked properly. Ever.
To not dwell too far off topic for too long; from an expert’s point of view (I am a virtualization engineer, both storage and server side) VMware is an amazing product. We have been doing what VMware does on “big iron” systems for the past 20 years; what VMware brings is that same technology down to the commodity based Intel servers. It has a huge lead on the competetion; and MSFT is just not willing to do what is necessary to truly compete (ditch the Windows kernal as the basis for the virtualization platform). Their biggest competition is from open source projects (like Xen). However, much like the Linux vs. MSFT battle that has raged forever, if VMware can provide a value add and grab the public mindshare (well, you want to virtualize, call up VMware) they are going to be in the same situation that MSFT has been in for the past 10 years. It doesn’t matter what it costs, it will be the defacto standard.
Just an FYI (as I realize most people here are math/number oriented) on savings. Typically ever single server you virtualize, YEAR ONE saves the company 2-3 thousand dollars. It’s just a dramatic cost reduction; servers go from costing 3-6K each to 1K each (and that’s high for a virtual machine). Add in all the other advantages of VMware, and it’s a total no brainer for almost all enterprises with > 20-30 servers.
As you can guess, I am very close to this, I consult on VMware all day; my license plate says ‘VM WZRD’.
Oh, and I also found out yesterday by rejecting an offer from VMware (job offer) I walked away from ~150K in stock options. Yeah, I have had better days.
“Oh, and I also found out yesterday by rejecting an offer from VMware (job offer) I walked away from ~150K in stock options. Yeah, I have had better days.”
Mike, maybe all is not lost yet. They may come back to you with an even sweeter deal, you never know. Since not too many people do what you do, it would not surprise me. With their future, they can afford to give you another look and up the ante.
Ahh, I just mention it to complain, I am happy with my decision (to stay where I am currently). However, it was not until yesterday that the signing bonus (a grant of 3000 shares) was monitized. So, although I still think I made the right decision, it’s never fun to realize you walked away from a 150K signing bonus.
Just to add my two cents I’ve been using VMware converter in conjunction with the server to create the ultimate FREE disaster recovery methodology for small business.
We did a P2V of our SBS2003 and then ran it in VMServer and it worked like a charm. It took a little work to get the networking right but no biggie. Everything worked properly when we went back and put our physical server back on line and restored from backups made on the virtual machine. VMware server and Vmconverter are the best free downloads I have ever used.
Disclaimer: I own VMWare stock.
VMotion is slick. I will give them that.
We are in the process of converting about 300 testbeds to VMware virtual machines running 21 vms per HP DL380 G5. The biggest savings is not in hardware, but in the time required to deploy a fully configured OS. Rapid disaster and screw up recovery is the other big plus.
VMware is a solid company that is making huge inroads into every company here in the Santa Clara valley.
I have been using VMWare quite a bit lately. Still pretty new to it. Not sure if it’s the best thing since sliced bread yet.
What was the best thing before sliced bread?
http://www.thestreet.com/s/kass-ben-stein-whistles-past-mortgage-mess/markets/activetraderupdate/10374378.html?puc=_tscana
(don’t beat up on Ben Stein. I like him. He reminds me of my father)
Let’s hear it for the outspoken minority!
There’s a shout-out to Ben Jones.
ben stein is an idiot
he was on larry kudlow on monday and said that i banks were so cheap it’s like they were giving them away. well the shares are a lot cheaper today
The credibility of IBs and credit ratings agencies is in the toilet. They have a lot of brand image repair work ahead.
This is not going to blow over tomorrow. As evidenced by all the lending disruptions, the packaging business is on ice.
IOWs, they were selling toxic lead and packaging it as gold.
Kinda like China is doing to us. Weird, how what goes around comes around sometimes.
I think he’s a stooge too. Anything on the mark he’s said was total luck. While reading Fleckenstein I’d occasionally check out ben stein’s articles and think to myself “Is this guy on crack?”
don’t beat up on Ben Stein. I like him. He reminds me of my father)
Do You Like Your Father? because Ben Stein is a schmuck
As economists go, Ben Stein is a pretty good actor.
Nice.
(compliment off)
I wish this board had a recomend button for.
(1) Funny, made me smile
(2) Insight, never thought of it that way
(3) Facts, thanks for the info
(4) Great, there goes 10 seconds I’ll never get back.
Anybody know how the market is doing in Naples, FL?
The local NAR here doesn’t release sales information anymore.
http://www.naplesinsider.com/CurrentReport.htm
Tongue-in-cheek link presumably?
Note that Tom’s graph present the market as having returned to normal already. However they assume a consistent 10% growth rate! When the graphs only go back to 2001 (when interest rates first dropped) sure 10% works fine.
The Naples market - like most in west Florida, still has a long ways to go down. And it will overshoot.
Damn, I was just going to say this. At ground level though, speculators are just starting to notice that somethin’ ain’t right.
“But if there are no buyers to be found, there may be an even worse alternative. ‘Then the price is zero,’ says Jack Ciesielski, editor of the Analyst’s Accounting Observer newsletter. ‘If there’s a bid out there, then there’s a price. Take your pick.’”
Where are all the buyers? The casino ran out of money and now they are all going back to walmart for work.There are still people denying there is a housing bubble and will go to their graves preaching real estate only goes up.They are never held accountable for what they say.Look at old videos of cramer who makes a fool out of hisself on bad calls.
Got Tinfoil?
My experience in Naples is that things are still really slow. Figures lie and liars figure.
Some friends of mine are lowbidding in that area (yes I told them to wait) and the inventory is through the roof and foreclosures are all over the place. from what I have seen they have already had a 40% drop in prices.
The value of my dad’s condo went from $110,000 (less than US$100 psf) to $300,000 at the top. It “might” sell at $225,000 today. That would be about a 25% decline. I’d be a buyer of a good quality place at US$100 psf off the beach, US$200 on the beach…. JMHO
Property values in Naples FL are holding up almost as well as property values on Three Mile Island did in March 29, 1979 (the day after the nuke plant had a “slight issue”).
Have you ever seen the video of the part of the core that melted?
Forgive me if this is a repost:
Countrywide Cut by Merrill; Bankruptcy Seen Possible
http://tinyurl.com/2fl9v8
“Countrywide Financial Corp., the biggest U.S. mortgage lender, was downgraded to “sell” by Merrill Lynch & Co., which raised the possibility of bankruptcy if the company loses access to short-term financing.
“We cannot understate the importance of liquidity,” Kenneth Bruce, a Merrill analyst in San Francisco, said in a research note today. “Effective insolvency” would result should creditors force Countrywide to sell assets at depressed prices or investors lose confidence in its ability to raise cash, he wrote.
“If liquidations occur in a weak market, then it is possible for CFC to go bankrupt,” said Bruce, who had rated Countrywide a “buy” since April 2005, according to data compiled by Bloomberg. Countrywide trades under the ticker CFC. ”
…
” Coventree’s problem may spread to the U.S., Bruce said.
“We hesitate to use the word contagion, but this market is feeling awfully similar to the fall of 1998,” he said, referring to the market crisis that resulted from Russia’s debt default and the collapse of hedge fund Long-Term Capital Management LP. “
Sorry, must have missed it in the actual blog post. Time to lay off the overproof rum…
And now the link isn’t going to the correct page. *sigh*
Ahem. If you haven’t looked at Arroyo’s site, do so now. We have one heckuva photographer in our midst.
I just did, wow, great stuff, arroyogrande. Makes me feel good just to look at those pics.
Very nice pics!
Adding my voice to the chorus… Those are stunning! You have an amazing eye.
Nice, what are you shooting these days? I just bought a gorgeous vintage Graflexd for Mr. Gwynster’s B day. Need to pry him away from that Mamiya tramp he’s been hanging out with.
thx!
On the front page of Yahoo:
“Countrywide® Home Loans
Refinance with no hidden fees and no closing costs - Act fast.”
Act fast is right…
Act fast or the dancing Aliens will have to dance some more.
They should be more concerned with selling their REO’s than trying to flush out the last potential FB living sequestered in a cave, assuming they want to stay out of BK.
If they were smart, they’d be offering their homes at a discount, only if you finance through them. Mark those suckers down and get some peforming loans on the books.
The NAR should be in charge of press releases from Iraq
Who do you think they got their cue from?
I meant “took” not “got”.
from CNN money
—-
Despite the continued drop, NAR’s senior economist, Lawrence Yun called the results, “encouraging.” 97 of the 149 metro areas surveyed recorded year-over-year price increases.
“Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006,” he said. “Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets.”
Looking ahead, Yun’s forecast is one of the most optimistic among economists. He predicts home prices will turn slightly positive again by spring of 2008 and rise about 2 percent that year. He said prices will pick up more in 2009.
Buy now everyone. Everything is A OK
So sayeth Lawrence Yun: “Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006,” he said. “Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets.”
1) Why does the NAR use terms like “relatively flat” only when prices go down? If prices has risen by 1.5 percent instead, does anyone think “flat” would be anywhere in that press release. No way.
2) “Recent mortgage disruptions will hold back sales temporarily…” Oh, really? So, is Yun insinuating that subcrime, no-doc, Ninja, liar loans are unavailable only “temporarily”? Sorry, Larry, those programs are gone for good. A big chunk of your “demand” just got locked out of the market. That’s not a disruption. That’s destruction, and it ain’t coming back.
– Judge Smales
“You’ll get nothing and like it”
Is “increasing NAR Yun lies” a “fundamental momentum”?
Yun doesn’t even have the sense to say something nebulous like “The RE market is undergoing some stress but there are signs of improvement”….and just not elaborate.
He’s going to make himself totally unemployable due to the internet keeping a history of his stupidity and/or duplicity.
From the original post:
“Ms. Van Cleave concedes she took a risk, borrowing close to the appraised value of her home two years ago, at the market’s peak, to help fund a start-up company that sells a patented fishing-rod holder. She opted for a two-year ARM, with a piggyback mortgage at nearly 12%, and planned to refinance.”
“But the start-up hasn’t taken off, and even as she saw the credit market tightening, she couldn’t afford the penalty to refinance her loans early…Ms. Van Cleave rejects the first two appraisals, saying that one report has factual errors and neither makes fair comparisons with other homes. She believes she is a victim of appraisers who are being pressured by lenders and are ’so afraid they’re going to lose business or have their license taken away.’”
Somehow, I can’t help but think that the world isn’t crying out for another fishing rod holder.
This fishing pole holder is different.
All fishing pole holders are local. Wait, that’s not it - how does it go again? They’re not making any more fishing pole holders? No, maybe fishing pole holders always go up - that’s it! There’s never been a better time to buy a fishing pole holder!
A couple of more months and my prediction is that she’ll be a “pole holder” for the bank.
She’ll be “holding poles” out on Sunset Blvd.
Dude… she’s 70 years old!!!!!
Even that option is off the table for her.
LOL!
I can’t wait for her to be on that CNBC show with Donny Deutch.
What is it called? The Next Big Thing?
Fishing pole holders? That is so 5 minutes ago.
The quote from Mark Cohen is completely hilarious to me. He handled our first mortgage on our condo about 8 years ago, and ever since we’ve been getting a newsletter from him about once every couple of months, touting how great the market is. The last one talked about how the subprime mess is contained and people in higher end markets don’t have to worry. Uh-huh.
You mean, like this guy?
Wow, $45K in taxes per year.
And why in the world you’d be risking that kind of money at 70 years old is beyond me.
Well maybe she HATES her kids and grandkids and this maybe the best way to leave them ZERO.
Well, for one thing, she can file bankruptcy and not have to worry much about the “means test”. Even if she doesn’t file, pension and SS money is generally not garnishable. Combine that with all the special senior citizen programs and she really doesn’t have much to lose.
That being said, its funny how so many people think a product is wonderful because its patented. I’ve seen some pretty goofy patents in my life.
Refi = recourse loan
I don’t know. A lot more people might have to be fishing in the near future. They will be needing Ms.VanCleve to hold their pole.
The CFC chart has been in a free fall since 7/15.
Bears rejoice!
They’ve also been in free fall since 7:15am.
And I predict they’ll be in free fall for the next 7 minutes and 15 seconds. Like a fractal.
20.16 right now.
Yahoo, bring it on!
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
our team is down 37 to nothing, they have the ball, and all indications are that we will prevail.
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
I have to really make sure I don’t eat or drink while reading this blog. When I read that comment apple ricocheted off my screen.
Even slower sales in a declining market equals stable prices in Mr. Yun’s world (does he have a Ph.D?)??? I gather no one has ever taught him how to read supply/demand charts.
Mr. Yun, a hint.
1. Supply goes up (foreclosures, selling that “sure thing” investment, have some liquidity, etc.) with constant demand then prices go down.
2. Demand goes down (e.g., no more ‘liar loans’) for a constant supply, prices per unit go down.
With both changes you draw on a supply demand chart a neat four sides parallelogram that shows prices drop even further!
Got education?
Neil
the smarty pants finance guys were happy as a clam to mark-to-market when the market was going up…
now that the market is falling, they “can’t find a price”.
I’m getting so tired of this whining by the smartest guys in the room…
Their bosses don’t want to hear them say, “It’s worthless”. If they did, they’d be out of a job today.
I keep picturing the scene from Trading Places where Ackroyd and Murphy are standing on the trading floor while the price of frozen concentrated orange juice is in free fall, just waiting, waiting, waiting for their time to pounce and buy at a steep, steep discount.
There are groups with lots of money, just waiting, waiting, waiting until their time to buy these pools of mortgages to hold onto long term (or at least until things right themselves).
If I could find the smart guys who are tracking these things, and able to buy some mid-range pools (not equity pieces, nor best pieces) at bottom of the barrel prices ($0.10 on the dollar anyone?), I’d be very serious about investing.
The credit market problems will get much more acute, much faster than the (albeit related) housing market problems.
If I could find the smart guys who are tracking these things, and able to buy some mid-range pools (not equity pieces, nor best pieces) at bottom of the barrel prices ($0.10 on the dollar anyone?), I’d be very serious about investing.
Hey Rental Watch –
For what it’s worth, Jim Cramer says Travelers Insurance Co. (TRV) is the “the best of the best” and will be buying the high quality mortgage backed bonds.
I’ll give’em a dollar. Ta-da! There’s a price!
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
“Fundamental momentum”?
Does he mean the fundamental momentum of declining sales volume, rising inventories, rising foreclosures, and stricter lending guidelines?
Take another bong hit, Larry, and watch the flying purple monkeys OBLITERATE your world. Blood in the streets in….3….2….1….
DP
At least there is some truth in what he’s saying… stabilizing price trend… yes the trend has definitely stabilized into a freefall.
I saw in CNN where they were talking about a number of areas that experience YOY price gains. Many of these people are moving simply because their properties were destroyed by natural disasters over the last year. Binghamton, NY for example had a huge flooding disaster a year ago, and many of the residents were forced to relocate - driving the prices up. Take away the disasters and you lose the YOY price gains in many of these areas because but for the loss of their primary residence, most of these people would not have been in the market for a new home.
Who in hell gave a 70-year old woman a $1M mortgage in the first place??
If anyone doubts the pain that will be felt in this downturn, I point to exhibit A…
If anyone doubts that “high end areas” will drop, the prosecution points to exhibit A…
Lending laws (as insane as they are) don’t let you discriminate by age, or even welfare income. Even if you vacuum our tax dollars, you can get a mortgage. Maybe this crisis will reform the lending laws.
Yeah, but you can discriminate on income. You’re telling me this lady was making 300K+ a year? If not, there is NO justification for qualifing her for a 1M dollar MTG.
Just insane.
Maybe she was doing an ‘oval office’ on the 75 yr old Loan Officer , so he tried to help her?
I agree with you. Thank goodness the liar loan gig is up.
At least it wasn’t a 40-year fixed.
Life begins at 110
“Frankie Van Cleave says she has paid all her bills on time for more than three decades. But neither solid credit nor her track record running a number of businesses is sparing the 70-year-old from the turmoil in the home-mortgage market.”
“Several mortgage brokers had courted her to refinance a $1 million adjustable-rate mortgage she currently carries on her home. But most of them ‘dropped me like a hot potato’ last week after two appraisals came in below $900,000, she says.”
“Her bank of three decades won’t help her after her monthly mortgage payments recently ballooned to nearly $8,200, so Ms. Van Cleave is working 80 hours a week as a technical writer to make ends meet.”
Proof that any turd would float in the sea of liquidity seen in the past 25 years. “Business owner” and “1 million dollar adjustable rate mortgage holder” just don’t go in the same sentence. A rising tide raises all ships.
Another article with a 70 yr old and a ARM around 1 million.
Uhm? Are we supposed to bail this kind of fricking bullshit out?
I mean the rest of us are working, cutting expenses, saving and she has a million dollar loan out.
What fricking bills were you paying for the last 30 yrs?
Probably a rolling HELOC to keep financing trips, toys for grankinds (like cars or college educations).
I think my sympathy meter hit a zero.
From Bloomberg. “The U.S. subprime mortgage crisis will cost credit investors about $150 billion in losses worldwide, according to Calyon, the investment banking unit of Credit Agricole SA, France’s third-largest bank by market value. Foreclosures may reach 20 percent of the $1.3 trillion of subprime mortgages outstanding, according to a research note today. Assuming investors can recoup half their investments, losses would be $130 billion, it said.”
“A further $20 billion could also be lost from the $1 trillion of outstanding Alt-A mortgages offered to borrowers with better credit who fell just short of typical standards.”
I’m far more pessimistic at the losses and so has been the bond market. I’m not thinking the bonds will recover as much as these estimates.
Got pocporn?
Neil
O.K. can some one explain this to me. We start with a subprime loan. We carve it up (along with a batch of other loans) into 4 tranches The servicer typically holds the so called Equity Tranche. Now the loan defaults and after the whole mess is cleared we get a 50% loss. How does the AAA tranche get affected, the equity and the next higher tranche gets wiped out but the higher ones are unaffected, why are the AAAs trading at a 30% discount.
Anyone?
May be because the income stream is disrupted and the price of an income stream was built into the price of the bond?
Think of it as a home loan in which you have to go and reborrow all but your payment every month. All it takes is one bad month for your lenders and suddenly no one wants to loan you money again. It doesn’t matter how good your house is (even if it’s priced at 95x rents) when you try to sell it in a matter of days you’re going to take a hit on the price.
The reason the AAAs are trading at a discount is that normally defaults in a pool follow an S shaped curve over time and for most of the 2006 loans we’re entering the upward sloping portion of the S at 2-3% defaults rather than 0.25-0.75% defaults. More interestingly, the size of the junior tranches narrowed as default losses we’re unsustainably low, so a AAA bond has perhaps 8-10% subordination rather than 15-20%. Losing 10% is only painful but not deadly until you’re levered 6x with loans described in the first paragraph. Now try to sell that loss making paper to others who are also levered 6x.
With each lower tranche that gets wiped out, the upper tranches lose one more layer of cushion. That progressively increases the risk to the upper tranche, which pulls its value down.
Think of it this way: Just because a fund has only suffered 50% losses and annihilated the lower tranches, doesn’t mean it won’t drop another 10% and damage the next exposed tranche.
The AAA tranche is usually 80%, the intermediate tranche is 10%, the junk bond tranche is 5%, and the residual is 5%. If all of the loans default and the loss after the REO sales is say 35% then the AAA tranche gets a 19% hit, (35-20)/80.
I don’t think AAAs are trading at a 30% discount, I think that the credit default swap index for AAAs is at 30. This I believe means the cost of default insurance for AAAs has tripled.
I believe the AAAs are at a 5-10% discount. Hedge funds that purchased AAAs with leverage probably have investor losses of 30% plus.
First, you don’t want to confuse REMICs and CDOs…
Stage 1: A large number of mortgages are gathered, with similar characteristics (i.e. 1st lien, prime, less than 90 LTV), into a pool. One or more servicer companies will collect the payments, deal with foreclosures AND put some sort of guarantee on principal.
Stage 2: Out of the value of all these mortgages, a series of tranches are created, say 80-85 percent in AAA, the rest in AA, A, BBB and equity tranches (these may or may not be fixed interest bonds). They are sold by a ‘bond retailer’ such as Citi. This is a REMIC.
Stage 3: A CDO is created. It is much like a mutual fund (often closed), but made up of asset backed securities. Suppose that a particular CDO holds lots of BBB rated MBSs from the tranche described above. This pool is now, itself, converted into a series of tranches, for instance, an AAA tranche that gets first payment from the BBB bonds in the CDO.
The CDO thus adds another layer of instability and complexity. I could easily see the AAA tranche of a CDO taking a much bigger hit than the AAA trance of the original REMIC.
You also are right- the income stream of even the REMIC bonds can be disrupted. Also, the servicer guarantees could fail (if the servicer goes BK), and there is even a lot of risk due to the slowing market increasing the time to loan payoff (i.e. a refi), exposing the bond to more inflation risk- especially bad since interest rates are rising. So a multiplicity of blows are hitting the CDO paper at the same time.
These estimates make no sense to me either. I mean, the Fed alone has magically pumped that much money back in the system already. The bail-out should be complete then.
20% of subprimes will default? We’ll be lucky if that number’s under 50%.
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
As I said in the bits bucket, “recent mortgage disruptions” have created the illusion of “stabilizing price trends in many local markets” by ensuring that low end homes do not sell, meaning the median price of the homes that do sell is higher even if the value of every single individual home is lower.
I guess we’ll have to wait until the bank examiners for sales of REOs, or a recession forces sales by homeowners, to get sales at market in all categories and a real median price.
““stabilizing price trends in many local markets” by ensuring that low end homes do not sell”
Yeah, I had fallen into that trap myself…watching Los Angeles “still not go down” by paying attention to the median (aka “headline”) price.
I finally took a look at Case-Schiller data and OFHEO data and found that house for house, Los Angeles is *already* on the decline. OFHEO data is harder to work with as it only covers sales with “conforming” loans, but I think that Case Schiller uses all same-home sales with tweaks for outliers and errors.
Yes, Los Angeles is ALREADY in decline. Halleluiah for those “priced out of the market forever”.
True, but if reports are correct and jumbo loans are now extremely hard to get, we’ll see a median price crash next month. Especially in high price locales.
Not necessarily. The entire market may be billionares buying houses with cash.
yep and little cherubs sing me to sleep each night and toss fragnant red rose petals in the air while George Clooney rubs my feet.
Great point, I didn’t think of that link to Jumbo/median prices…
An impossibly hard connection to dispute. Nice insight.
“Ms. Van Cleave concedes she took a risk, borrowing close to the appraised value of her home two years ago, at the market’s peak, to help fund a start-up company that sells a patented fishing-rod holder. She opted for a two-year ARM, with a piggyback mortgage at nearly 12%, and planned to refinance.”
This is kind of like opening a Scotch Boutique that only sells Scotch Tape. Note to Frankie, fishing pole holders in the future will be made out of what they always have been, 2 inch PVC cut to length. I can make 8 for my boat for $5. Your business sense sucks.
Patented fishing pole holder?
As AndyinJersey noted, PVC is the material of choice. Heck, the most expensive part is if they add a loop of metal to hold the PVC.
Neil
“Heck, the most expensive part is if they add a loop of metal to hold the PVC.”
That’s where the profit is in this business venture of hers. Don’t try anything funny now that you know, it’s already patented. LOL
Ok AndyInJersey we very well might fish the same waters here in NJ. But I bet you know that one can buy very expensive polished stainless steel rod holders. I have seen some made with different angles to be used for trolling for stripers. At boat shows, I have also seen specialized custom made holders that had been covered with a shiny gold-ish finish that probably would appeal to a 70 year old grandmaw.
Got bunker?
You in Jersey?
I’m in Gloucester Township. Did/do a lot of fishing in the Delaware Bay out of the Maurice River. Seems to be drying up the past few years. Apparently a lot of stripers, but not much else other than big sharks. Back in the day you could go out there and load the boat with 50 or 60 flounder and weakfish. Not much out there anymore. And I don’t think it’s the small fisherman either. 150 boats out there catching 30 keepers each on saturday and sunday in the summer ain’t gonna kill off the fish as much as fertilizer run-off from McMansions and dragnet fishing boats that pull 2,000 each time they dip the net.
admittedly, i woke up late and am half asleep and am probably missing something..
How did spending a million bucks on property help fund a start up company?
She must have paid $500k for the place, then when it’s ‘market value’ went up to $1mil, she HELOC’d and buy a whole lot of PVC and metal straps.
ok.. i see.. This threw me:
“borrowing close to the appraised value of her home two years ago, at the market’s peak, ”
I mistook “market’s peak” to mean the market value didn’t go up since.
But sure, the lender woulda imagined her equity had risen for the next two years and lent her more money.
She didn’t buy for close to a million. She borrowed (refi’d) close to a million.
hehe .. ok.. i’m waking up now. She might be a HBBer at heart and saw what was happening.. a rare opportunity.. took a gamble that probably won’t pay off, but what the hell.. ya can’t take it (debt) with you.
i’m starting to really, really appreciate this woman’s spunk.. hope i got half of it at her age…
“But the start-up hasn’t taken off, and even as she saw the credit market tightening, she couldn’t afford the penalty to refinance her loans early…Ms. Van Cleave rejects the first two appraisals, saying that one report has factual errors and neither makes fair comparisons with other homes. She believes she is a victim of appraisers who are being pressured by lenders and are ’so afraid they’re going to lose business or have their license taken away.’”
Frankie REJECTS the first two appraisals… GOD, do I LOVE THAT comment !
Checkmate Victim Van Cleave
Bet you REJECT Death and Taxes too Frankie but upon Crap Out, we ALL have to PAY sooner or Later
“This is kind of like opening a Scotch Boutique that only sells Scotch Tape”
Where if it’s not Scottish, it’s CRAP!
Speaking as someone with Scottish blood on both sides of the house, the thought of taking out a $1M ARM to start a fishing pole holder business is appalling. Way too much money for my frugal blood.
Even though I’m not Scottish, I’m glad they brought the buffalo nickel back, that way I can pinch it til the buffalo shits.
Dear God, I thought I was the only person who’s ever made this Mike Myers/Kyle Maclachlan/SNL reference!
like coming up with a better skid surface for walkers when a tennis ball is all you need… and all anyone ever uses.
From Marketplace. “Kai Ryssdal: Steven Miller, this might sound like a really basic question, but how can it be that they can’t value the assets they have? Miller: Normally…you’d look at where things are trading on an exchange in an actively bid market. But in these markets for structured finance assets…you often have to look beyond the simple price and go to a model, or some sort of complicated analytical tool, to be able to value them.”
- I did the same thing. I put a dollar bill in an envelope and told my client that it was worth $2.50. I also use the ‘Black Box’ analytical method to reach my idea of the value…which helped to fund my bonus etc. Turns out that it is only worth a few Pesos.
Here is what I have been told by someone who knows. Banks have always held lightly-traded, illiquid assets — loans — and have always marked them to market based on models. They have never been forced to mark them to the price that they would get if they were all dumped at once. So this isn’t as bad as it seems…
Unless a loss of liquidity forces investment banks to all dump these assets at once. Then you might see a real overshoot on the downside, and a reallocation of capital from new mortgages with sensible terms to old mortgages with a high probability of default but low prices.
If I am going to take these securities as collateral (cough, *Fed*, cough), I’m going to want them marked to market, and *not* marked to model or marked to par. If *you* (ie the banks) think you can sell them for more at a future time, fine, then keep them.
also the problem with the models is most of them were based on real estate prices appreciating 6-10% YOY even though the historial average is about 3%. The geniuses who built the models are the ones to blame.
makes sense ..
An collection will sell for less (probably a lot less) as a group than all the individual items would, if sold one at a time.
“An collection will sell for less (probably a lot less) as a group than all the individual items would, if sold one at a time. ”
Wrong. The debt will sell for a higher amount to a third party collector when the dollar amount, or number of accounts, grows larger. When you “sell” the debts in most cases, it is like a reverse bulk discount.
ya mind expanding on that? I’m interested in knowing why.
I’m guessing greater risk distribution.
Sure, because typically on third party debt collections (what I’m referring to here), the third party is calling looking to buy the debt. There is not an urgent need for the originator to sell the debt (in our case). Given this, each successive third party calls you offering more. Even when we have customers going into bankruptcy, we have a third party looking to buy the claim to court amount all the time. I often wonder how they think they are going to actually get any money owed to a non-secured party from a BK company, but I still get offers for 60 cents on the dollar.
As an example, if our third party collection agency were to call me today, I could offer him one account, for say, $5,000 owed us. He might give me a rate of 25%. If I offered him 2 accounts totalling $10K, he might give me 23%. If I gave him more accounts, more $ to collect, his rate would keep going down. He makes more by the more volume and / or dollars he collects.
I should clarify. When I refer to his rate, a lower percentage means that we pay him less. Thusly, 25% means our recovery is 75 cents on the dollar, 20% means our recovery is 80 cents on the dollar, etc.
“..the third party is calling looking to buy the debt. ”
But from what i see, this is not the case here.
From WT Economist’s post “..a loss of liquidity forces investment banks to all dump these assets at once.”
There is no 3rd party calling the lender and asking to buy. There is no demand.
Instead it’s a situation where someone needs to unload a bunch of shaky loans of unknown value onto the market.
It’s simple. Buy the debt. Hire lawyers out of law school to work like drones. You’d be surprised what you can raise even on a Chap 7 by digging into transfers before the filing, etc. The loss on the debt is limited to the salary you pay the lawyer and there are LOTS of new lawyers without jobs so even that isn’t all that much.
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
Wasn’t this the same guy who said he didn’t see prices ever really going down? Now he sees them stabilizing?
He seems to be having problems with his spin machine.
I think the spinning has made him dizzy.
“Appraisers who are being pressured by lenders…A year ago, he says, lenders weren’t as demanding for comparable home prices in the immediate neighborhood, and about 70% of his appraisals ended in approved loans. Today, about 70% of his reports end in rejected loans.”
So appraisers are STILL being pressured to game their opinions, but in the other direction!
Here’s a good snip from the WSJ article. My comment: I’ll bet this snooty OC b**tch didn’t mind selling to and taking fees from “zero down deadbeat borrowers.”
The fluid market is frustrating sterling borrowers such as Orange County real-estate agent Valerie Torelli, who recently sought a mortgage for an investment property she bought in Costa Mesa, Calif. She considered a 30-year fixed-rate mortgage of at least $450,000 for the house, which she plans to rent out until the market improves. She says that despite her high credit score of more than 800, lenders wanted 8.75% for a stated-income jumbo loan or 7.25% with full tax documentation, which she didn’t want to provide. The average 30-year fixed-rate for a nonjumbo loan, known as a conforming loan, is currently 6.64%, according to HSH Associates.
A week ago, her mortgage banker at Washington Mutual Inc. called with a warning that products were being pulled from the market. Ms. Torelli decided to do something she had never done before for a short-term investment: She injected extra cash equity into the house so as to reduce the mortgage to the $417,000 conforming-loan threshold, and locked in a rate of 6.875%. She paid half a point, or 0.5% of the loan’s value, to exempt the loan from a prepayment penalty.
“Jumbo loans weren’t cost effective,” says Ms. Torelli. “I have great credit and relationships but none of it matters. The market isn’t discriminating between me and every deadbeat, zero-down borrower.”
“lenders wanted 8.75% for a stated-income jumbo loan or 7.25% with full tax documentation, which she didn’t want to provide.”
She could have saved a full point by providing 2 tears taxes plus ancillary documentation and saved a full percentage point of rate. how hard is that? Methinks that she would not have qualified going full doc, even though her poop is gold, unlike the deadbeats.
Also, she decided to “injected extra cash equity into the house so as to reduce the mortgage to the $417,000″…wow, sounds like a rich real estate mogul.
However, some of us would call this injection of extra cash equity by it’s more simple and mundane term: a 7.3% down payment.
“or 7.25% with full tax documentation, which she didn’t want to provide.”
Gosh, why do you suppose she didn’t want to document ?
“I have great credit and relationships but none of it matters. The market isn’t discriminating between me and every deadbeat, zero-down borrower.”
No, but it IS discriminating between those that are able and willing to document their income, and those that “didn’t want to provide documentation”. HINT: if someone doesn’t “want” to provide documentation that will save them a 1.5% in interest, they CAN’T document it. Period!
Why wouldn’t she want to provide “full tax documentation”? Does she have something to hide?
Anyway, I’ve got no sympathy for her.
have to chime in on this one as I live in Rancho Santa Margarita. If she has such a grand FICO just provide the full tax documents. Heck, even is she is self-employed, she should have all here receipts, shouldn’t she? Or, as usual, is there more to this story, i.e. doesn’t really make as much as she would have led this poor (Sarcasm) reporter to believe, esp. since the market has been bailing on her.
Well, all I have to say to her is…
SCREW YOU!
You are so right on the money TX on this one. She is some small fry who made some bling the last few years and can’t believe she is being treated like this. Heck, her travel agent can probably vouch for her. So can her fashion salon and tanning salon. Boy, she just can’t believe the banks would do this to her.
What I want to know is what did this woman do for a living, really, before she became an RE agent? Or did she do this from the time she graduated HS or college? Probably another hair stylist/stay at home mom (nothing against that as my wife now stays at home). My point is just the sense of entitlement makes me want to puke.
GET A REAL JOB. AT LEAST ONE THAT PROVIDES A REAL SERVICE, NOT JUST TAKES 6% FOR COMMISSION.
She says that despite her high credit score of more than 800, lenders wanted 8.75% for a stated-income jumbo loan or 7.25% with full tax documentation, which she didn’t want to provide.
Ugh huh… didn’t want to provide. So she wanted a ‘liar loan.”
Ms. Torelli decided to do something she had never done before for a short-term investment: She injected extra cash equity into the house so as to reduce the mortgage to the $417,000 conforming-loan threshold, and locked in a rate of 6.875%. She paid half a point, or 0.5% of the loan’s value, to exempt the loan from a prepayment penalty.
So $35k plus closing costs had to be fed to the alligator. Flipper of genius, eh? And she is not going to even get enough rent to pay off a $417k mortgage. What’s the ROI Realtor ™? Hmmm?
BTW, what sells for $450k in that area? That has to be tiny!
Got popcorn?
Neil
Probably took a bunch of cash advances on credit cards for that “extra injection.”
She needs an extra injection of joshua tree…
See, this is one entertaining aspect of the real estate industry in orange county. These mortgage brokers, real estate agents, account execs have probably been making huge incomes the last couple years. It’s not really “lying” because up until august 3, 2007 (the day that stated died) they were making money that could justify the purchase… if not exactly paying taxes on it.
But now you have a whole huge population that signed up for investments that demand fixed (or increasing) monthly payments that will have to come from an income that is cratering. Hope you saved some of that money while it was still coming in!
Now she’s just a dead beat 7.3% down borrower.
“Jumbo loans weren’t cost effective,” says Ms. Torelli. “I have great credit and relationships but none of it matters. The market isn’t discriminating between me and every deadbeat, zero-down borrower.”
I would bet she got rich off the same people she now calls deadbeats? What a POS she is.
I think I’m going to run down to the OC County Recorder’s office at lunch (i.e. now) and peruse through Ms. Torelli’s holdings in this great county, and the loans she’s using to finance them.
What the heck. It’s a nice day, if you don’t mind Texas weather.
12 months from now, she’ll be unable to service the loan she got since she’s going to “rent it until the market improves.”
8.75% for a stated-income jumbo loan or 7.25% with full tax documentation, which she didn’t want to provide.
didn’t want to == couldn’t
She should quit whining… 8.75% on 100 LTV Stated is a sweeeet deal, nowadays (see the latest Countrywide rate chart- they won’t even do over 90 LTV Stated):
https://www.cwbc.com/PdfFiles/WLDBC%20CA.pdf
“Moody’s Investors Service and Standard & Poor’s, the arbiters of creditworthiness, are losing their credibility in the fastest growing part of the bond market.”
Losing… active tense. Means there is more credibility to lose.
And their bonds were compared to rating hookers in 6″ heals with tramp stamps as “take her home to mom” girls. So exactly where is it dropping to?
Wasn’t it Pimco’s manager who made the comment? (Forgetting his name.)
Got popcorn?
Neil
Bill Gross.
Neil,
Why do we even bother with these ratings agenices. Didn’t someone post about one of these raters as conveniently not taking into account piggyback loans? These guys are just as corrupt/in bed/clueless/greedy/boughtpaid for/you fill in the blank as the rest of the WS boyz.
Bottom line is you have to do serious due diligence. The ratings boyz ain’t gonna do it for you. They are looking out for “their friends.”
Just another loophole. Like getting your machanic friend to stick an inspection sticker on your old clunker with a bad headgasket, worn out catalytic converter, and misadjusted carburetor for $25, only MUCH worse for everyone. The ratings companies just helped the WS boyz buy up crap from mortgage companies who wanted to offload their stinking turds quickly so that the WS boyz could then quickly offload that turd to foreigners and local pension funds. The whole thing could be imagined as a restaurant where the chef goes into the bathroom, turds on a platter, covers it, hands it to the waiter, the waiter drops it off at the table while simultaneously getting the customers credit card and then disappearing out the backdoor with the chef and busboy.
Last laugh belongs to the customer when the credit card is declined.
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
Define temporarily. Will the credit ratings agencies suddenly start stamping AAA on worthless paper again? Will foreign bagholders suddenly regain their appetites for worthless AAA paper? Will burnt speculators develop amnesia and forget their follies?
Get real man! There are huge disruptions in risk markets across the globe. It’s not coming back soon. Things are going to get worse, much worse.
http://jeffmatthewsisnotmakingthisup.blogspot.com/2007/08/when-gamma-of-beta-begins-to-lose-its.html
“Everybody thought the damage would be contained to the subprime market”
Not everyone…
The “crowd” was a bunch of lemmings on the way up and are now a bunch of lemmings on the way down.
The meltdown is bad and will get worse, but everyone now is marking everything to zero, the provebial throwing out the baby with the bath water.
The computer models says sell, so they do and then justify the selling with more selling, justifying….. etc etc. The oposite of what they did on the way up.
CNBC et al were stupid cheerleaders on the way up, now that things have turned, they will keep viewers by screaming the sky is falling. Is it raining? Yes, it’s pouring and a tornado is coming, but they sky is not falling. So be wary about listening to the doom and gloom from CNBC, et al. They haven’t been very reliable so far, so be wary about their doom and gloom hyperbole.
‘If liquidations occur in a weak market, then it is possible for Countrywide to go bankrupt.’”
Angelo, Sunset Tan just called. They want you to bring cash this Thursday; your last check bounced.
Oh thanks Jen, I’ve got popcorn on my computer screen now!
Frankie Van Cleave says she has paid all her bills on time for more than three decades. But neither solid credit nor her track record running a number of businesses is sparing the 70-year-old from the turmoil in the home-mortgage market. Several mortgage brokers had courted her to refinance a $1 million adjustable-rate mortgage she currently carries on her home. But most of them ‘dropped me like a hot potato’ last week after two appraisals came in below $900,000, she says. Her bank of three decades won’t help her after her monthly mortgage payments recently ballooned to nearly $8,200, so Ms. Van Cleave is working 80 hours a week as a technical writer to make ends meet. ‘A good credit record doesn’t count for anything now,’ Ms. Van Cleave says of her futile refinancing effort. ‘If you don’t have assets, forget it.’”
Maybe they don’t want to loan you money because you’re a dumb$hit:
“Ms. Van Cleave concedes she took a risk, borrowing close to the appraised value of her home two years ago, at the market’s peak, to help fund a start-up company that sells a patented fishing-rod holder. She opted for a two-year ARM, with a piggyback mortgage at nearly 12%, and planned to refinance. But the start-up hasn’t taken off…”
$8200 a month and working 80 hours a week. I’m glad I am a bitter renter who has time to go fishing with my fancy new fishing rod holder.
And at 70 yrs old, I’ll be retired, swinging in a hammock sipping G & Ts. Forget working 80 hrs a week.
Why does she need a patented fishing rod holder with all those “ARMs”?
“The U.S. subprime mortgage crisis will cost credit investors about $150 billion in losses worldwide,…”
Anybody know how much the mortgage houses made off subprime? I’m betting the losses outweigh the profits in the end.
watcher, the theme of losses outweighing the profits seems to be playing out right now in a number of area, at least to this social observer (me). I was wondering about that yesterday, with all the news of the massive Mattel toy recall. In the end, will it have really benefitted anyone to have done business with China? I’m not so sure, when you look at the loss of profits to recall. (Of course, it is interesting to me to see what seems to be a mutual poisoning taking place between China and the US. They give us poisoned products, US based businesses gives them poisoned securities). And for those who buy Chinese products, even ones that are seemingly harmless, just to save a few pennies or $$ (and in many cases, because there aren’t any others), is the savings worth the poor quality, and the possibility of hidden dangers (makes me wonder what’s in other Chinese products, even like clothing, and how it may be affecting us in ways we don’t even know).
In the future, will it have been worth it to build houses with cheap materials and cheap, illegal labor? Will the HBs be able to withstand the class action suits that are yet to come?
Is it really worth it to cheat, cut corners, break laws and poison people, just for a little bit more money? Will it really be worth it to the ultra-wealthy when they daren’t go out in public unless heavily bodyguarded, or live in a palatial home unless under constant, heavy security? Greed is a poison, IMHO, affecting not only the victim, but the victimizer.
Palmetto speaks the truth. Again.
Palmetto, I love you, in a brotherly kind of way. You are always right on. When I saw the recall I immediately thought of you and this…
Globalization…
“Worst. Idea. Ever!”
What really pisses me off is how so many want it both ways. Oh we have to outsorce because it is so hard to do business in the US, i.e. taxes, immigration, laws, etc. When in reality they just want to maximize profits.
However, when crap like this happens because we can’t tell China how to regulate, they all come screaming back and so do the “toy” buyers. Geez, did you really think that paying pennies to employees in China was going to get you some quality manufacturing?
Get a grip, people.
However, when crap like this happens because we can’t tell China how to regulate, they all come screaming back and so do the “toy” buyers.
And: message to the “gubment can’t do anything” crowd: we regulate things like drug safety, food safety and consumer product safety for a reason.
Self-policing by corporations is a crock. Relying on a developing nation’s government that’s hellbent on expansion at any cost is even worse.
Tesifah, brother! You are preachin’ to the choir here. The costs down the road are going to be enormous. You think this bubble is bad, wait until the globalization/cheap labor costs (more than just monetary) come home to fully roost. You can only make so much crappy crap (plain ol’ crap is the better made stuff) before the rubber band snaps.
“Will it really be worth it to the ultra-wealthy when they daren’t go out in public unless heavily bodyguarded, or live in a palatial home unless under constant, heavy security?”
Sadly enough, to most of them, it will be worth it. Note all the gated communities and security companies around already. Anyhoo, how will we ever have a good 3rd world economy if we don’t get a 3rd world elite? ;|
i think it’s easy to estimate their loss point. It would be a loss if defaults exceed the interest rate on the loans.
If they loaned $100K to 100 people at 5%, total loaned out is $10 million. Potential income from loans is $500K.
If 5% of the loans default, 5 x 100K = $500K subtracted from earnings.. this is the break-even point.
Any more than 5% default and the lender takes a loss.
maybe i’m wrong.. been wrong twice today already.
yeah, i’m wrong.. i assumed a one year loan period.
i’m gonna sit back and avoid sharp objects today.. got a mild case of brain lock.
Check out this Tammy Wynette-style lament about the current CDO/hedge fund situation:
http://www.youtube.com/watch?v=LtcnXLDnXvs
This site cracks me up. In like 20 minutes there’s already 62 posts worth of unremitting ball-busting. My kind of people! LOL
It was all pent up frustration from the past 2-3 years…
And some of my posts are still in the que.
And we’re still not done.
I think many people will lose by not realizing that house Percentage Decreases are much more significant than house Percentage Increases. For example:
prices 200% gain and hold profit = 200%
prices 200% gain and 5% drop profit = 185%
prices 200% gain and 10% drop profit = 170%
prices 200% gain and 20% drop profit = 140%
prices 200% gain and 40% drop profit = 50%
prices 200% gain and 67% drop profit = 0%
dont forget n years of property tax and insurance. holding costs, decling value of dollar. 6% sales comission. 1.5% to the title company. maintenance and depreciation.
0% price gain for 3 years = 30% real loss
“Whether it’s tulip bulbs, real estate, they don’t end well.”
Where are all of the housing bulls? It’s getting boring having everyone agree with us.
They’re finishing up the granite-counters that they’re DIYing to add another $50K of “equity” to their hovels.
Why is anyone surprised at this mess?
Bubbles occur continuously in an economic cycle. Some are small, some are big; this one is HUGE.
Prices still remind me of the beanie babies craze. Anyone remember that? As soon as I saw it, I could tell you that no stuffed animal is worth more than $50. Yet many paid hundreds for the ‘priviledge’ of owning a ’special’ beanie baby.
As it always happens, the bubble popped and their prices came back to normal. And guess what? No one is out there looking to pay $$$s for a beanie baby now, regardless of what their previous ‘worth’ was.
Very similar here. Prices went completely out of whack. Everything RE had logic removed from its system. Now prices are returning where they should be, with the probability of them returning to their previous price level at ZERO. (Find me any bubble that had this type of price recovery)
Now with prices returning to normal, people won’t have to HELOC to buy, they’ll have more money with a smaller house payment.
The flea market I frequent for used LPs often has enormous piles of beanies for sale dirt cheap … the only takers — and those seem to be few — are six year-old girls.
We’ll see how bad it gets in RE.
?! Unless that fishing pole holder was made out of diamond-encrusted palladium, why the $1M?
If I can’t set up a company and get it perking along with $20K, tops, I don’t endulge.
This makes no sense.
Maybe she was trying to get “Magnum Fishing Pole Holder 3000″ kiosks in Guy Harvey restaurants.
http://www.guyharveysislandgrill.net/Welcome.html
Check the pictures. That’s what it looked like when I was there, no one in the place. The emptiness is not staged. And yes, the chick that works the giftshop is megahot too, just like her picture. No airbrushing there.
Since last summer, I’ve been to a lot of Tucson restaurants and retail stores that have an echo in them.
However, I would like to report an exception: Miss Saigon Vietnamese Restaurant. Just east of the University of Arizona campus. Place had a line out front when I went last week.
Mind you, school doesn’t start until next week, so a dead-of-summer line is something to see. And the food was quite good.
Easy one…
Company car - Lexus SUV - 75K loaded
Class A office space - 10K/mo NNN
Travel expenses (mostly Europe) - 100K/yr
Plastic surgery for 70 year old - 100K
Company yacht - 100K
Misc expenses - 100K
New custom Harley (what the heck!) - 50K
More?
Comment by bottomfisherman
2007-08-15 11:19:36
Easy one…
Company car - Lexus SUV - 75K loaded
Class A office space - 10K/mo NNN
Travel expenses (mostly Europe) - 100K/yr
Plastic surgery for 70 year old - 100K
Company yacht - 100K
Misc expenses - 100K
New custom Harley (what the heck!) - 50K
More?
Watching a 70 year old woman bend over and take it like a Russian pornstress = Pricele$$
God, that’s an awful image.
The expression on her face when she cannot refinance… priceless!
just a large booth for a larger company at a Vegas trade show can run a couple hundred thousand.. between 5 different Unions who get top dollar to set up, move stuff around and break it down for you, plus expenses for travel, a couple employees getting paid overtime, and booth rental and all sorts of odd and ends and stuff. . and not including gambling money.
but from there, a million dollars in sales is nothing..
Almost every tackle shop in the country and many more world wide will want to try out a new product… no matter if the product sucks or not.. new stuff always sells, at first.
http://money.cnn.com/2007/08/15/real_estate/NAR_home_prices_lower/index.htm
Yun knows how to look at the bright side:
“Despite the continued drop, NAR’s senior economist, Lawrence Yun called the results, “encouraging.” 97 of the 149 metro areas surveyed recorded year-over-year price increases.”
The Doctor: “Mr. Yun, we’ll have to amputate your right arm”.
Mr. Yun: “I find that encouraging, I will still have 50% of my arms left”.
This is REQUIRED reading, and re-reading, for any of you who’s still inclined to believe what the “analysts” say about a stock.
How analysts missed a meltdown
http://articles.moneycentral.msn.com/Investing/SimpleStrategies/HowAnalystsMissedAMeltdown.aspx
Much like realtwhores, these shills’ only goal is to lead the sheeple to the slaughter. All of them, from cooky Cramer to cocaine Kudlow, are in it to produce profits for their masters and themselves.
For those of you who still choose to be fooled by these clowns, just remember “FREE advice is worth what you paid for it.”
Or they could have just read this blog.
http://www.foreclosure.com/
Foreclosures: 208,702
Preforeclosures: 268,210
Bankruptcies: 307,991
FSBOs: 46,837
Tax Liens: 607,173
That’s a buttload of tax liens.
Sure is, and a leading indicator???
Just remember who really owns your home, even if it is paid off. Keep in mind there is no such thing as allodial title anymore. A few states claim it, but when further inspected, it doesn’t hold up.
Wow, perhaps a good time to start looking at purchasing some?
“Blood in the Water” in Florida property market.
“There’s a lot of blood in the water and there’s a lot more to come,” Grimes said.
Fort Myers “is by far the worst housing market that we’re in,” J. Larry Sorsby, executive vice president and chief financial officer of home builder Hovnanian Enterprises Inc., told Reuters.
“I’m so inundated with properties I couldn’t tell you,” he added. “We have a ton of inventory, a ton of new properties coming into inventory.”
“I’m so inundated with properties I couldn’t tell you,” he added. “We have a ton of inventory, a ton of new properties coming into inventory.”
So… apparently it’s a great time to buy right? How come he forgot to say that?
oops here is the link…
http://tinyurl.com/3culum
I use my brother the doctor as a leading indicator. If he is buying real estate (like the $1.5M plus home he just bought in Fla. from a FB who bought it 4 years ago for $500,000), it is clearly not “time to buy.”
[“Frankie Van Cleave says she has paid all her bills on time for more than three decades. But neither solid credit nor her track record running a number of businesses is sparing the 70-year-old from the turmoil in the home-mortgage market.”
“Several mortgage brokers had courted her to refinance a $1 million adjustable-rate mortgage she currently carries on her home. But most of them ‘dropped me like a hot potato’ last week after two appraisals came in below $900,000, she says.”
“Her bank of three decades won’t help her after her monthly mortgage payments recently ballooned to nearly $8,200, so Ms. Van Cleave is working 80 hours a week as a technical writer to make ends meet.”]
What am I missing here? She’s 70 so she’s lived through at least one housing bust and should know better and she has the smarts to be a technical writer, run businesses etc. and gets caught up with a million-dollar mortgage that she can’t pay? Did she have a bad case of greed or something?
It was different this time.
Let the balls continue to be busted:
American ingenutiy at its finest.
We are doomed.
Nice research. I had a look at the video. I don’t fish so I don’t know how useful it is but it’s $60 and they expect $50 million in sales over the next 10 years. It looks like something that you could make with stuff from Home Depot for a lot less than $60.
they’ll sell a gazillion of them.. and 99.9% of these will end up in the attic or hung on the wall of the garage to gather dust.. don’t be suprised if you get one as a gift.
833,333 sh!tty father’s day gifts.
As a fisherman, this thing is total crap. Who the hell wants to tote a rooftop TV antenna with them to go fishing. PVC hammered into sand works just fine. Not only that, but I can easily see the whole friggin thing going to the bottom with a fishing pole entangled in it and a 8 pound Striped Bass suffocating and starving to death at the other end of the line. Sounds like a EPA problem as well as a waste of money.
Just watched the video. Dude, fish or get laid on the beach. Choose one. You don’t need to do both at the same time.
Also, the rod holder holes the rod right in the middle or even at the end of the pole. Good way to break the rod. Duh.
Good lord, this site looks like a joke! Infomercial ready! I’m not a big fisherman, but I thought that when you just stuck it in a pvc pipe, more upright, that it was easier to tell when your line was being nibbled on. When you have two pressure points on the rod, how easy would it be to see that, expecially when the damn thing is practically parallel to the ground?
i come from a fishing family.. and i have absolutely no doubt that whoever designed that was not a fisherman.. and this disconnect between inventor and the field of expertise is very common in the field of “invention”
We all have something we enjoy doing and know a lot about.. perhaps more than some experts.. we just rarely take the time to think of and experiment with improvements or new ideas.
A compulsive inventor/businessman, on the otherhand probably knows nothing about what he’s inventing and couldn’t tell the diufference between an improvement and a detriment.. the only goal being to get patent rights on something that qualifies as “new”.
To be quite honest with everyone here, I really don’t care if the whole housing market goes south in the next year. I’d say that the majority of the economic growth in this country is nothing but scams and fraud. Since the vast majority of Americans participated in this grift, I honestly think they deserve to lose everything. These FBs and such are the same people who flip you off in traffic, they cheat on their taxes (while advocating for higher taxes on everyone else), they cheat in their workplace, and stupid America can’t figure out why your government reams you in the rear. I’m going to laugh when this housing market falls back to 1999 prices, and I won’t give a hoot about any of the homeowners in the process. A lot of people here seem to think that the baby boomers are responsable. Realistically, pretty much all of the generations in this country are responsable. I don’t really care if the majority of home buyers in the last few years get reamed big time, you tried to ream your neighbors and your families and that’s reflected in the government everyone rallies against here. I hate to break it to everyone, but the Bush Administration is doing exactly what the public wants. It’s a reflection of society, a something for nothing attitude. You won’t have much of a national economy once the housing/finance economy goes south. I suppose they could sell each other gold and silver and start a new bubble, but that won’t last. A gold standard has nothing to do with whether your country is sustainable or not irregardless of whatever the gold bugs say.
Aerya, this goes back to something that has been discussed a while ago on this blog. Hey, I have no problem with someone working 40 years salving away finally getting something. The problem is that so few want to put in the time. So many want the world by the time they are 25. I have said so many times now I am disgusted, but if everyone wants to retire and still live the high life at 45, who is going to get the real work done? You see, we want it both ways in this country. We want the McMansion, the glorious vacation every year, the Escalade and Benz/BMW, private lessons and school for Hailey and Tyler, plus all the other toys, i.e. the SeaDoos, granite countertops, etc. However, we don’t want to work for it.
Palmetto has stated that credit is linked to inflation. He won’t get an argument from me. However, look at it this way. Credit has enabled people to buy things they ordinarily wouldn’t have, IF THEY HAD TO SAVE FOR IT! This in turn casues inflation since everyone can now buy the big ticket item. Also, a devaluation of the dollar so prices have to go up. As a corollary, easy credit also deludes people into thinking that they can have everything without the work and sweat.
For example, I know Mr. Banker will loan 10X my income for a home. Bingo, I know live like the BIG BOYZ on TV shows. No real thought about the price. On the other hand, if I have to come up with even 20-30% down on something that is 10X my income, you better believe that I am thinking long and hard about it.
You see, credit may make the purchase of things easier in some instances. However, it cheapens the value of everything causing inflation and it makes everyone believe that they can buy without the hard work and saving needing to make such purchases.
“…Bush Administration is doing exactly what the public wants”
Bugs: “eh,…I don’t think so.”
What the public wants is for… Mr. Push to pull his head out of Cheney’s a$$
For your amusement re: hedge fund/CDO woes:
http://www.youtube.com/watch?v=LtcnXLDnXvs
http://articles.moneycentral.msn.com/Investing/Extra/WhyYouCantTrustYourLender.aspx?page=all
Extra8/15/2007 12:01 AM ET
Nitwit lenders put the economy at risk — again
As the latest scheme unwinds, we see once again that lenders will loan money to almost anyone, even if it puts the whole system at risk. Protect yourself and your home — because they won’t.
By Scott Burns
Stocks are down now. Down, UP!, Down, UP!, Down again.
Volatility is the name of the game.
have we seen any other stocks blow up like the mortgage brokers and homebuilders have? Any banks/
I last looked at 2pm-Up 72. At 3pm- Down 44.
I’m starting to think the PPT has an evil twin that just took over.
There’s probably some forced liquidation going on.
That PPT sure is clever. They’ve got me so outfoxed today I can’t even figure out what they’re doing. Of course we’re just mortals; they’re the PPT.
Dude,
It seems that the Fed’s pumping cannot overcome the end of day big trades! (End of day is usually when the mutual funds and hedge funds execute their trades.)
In other words, J6P must be moving money to “high ground.”
Its only starting. Below 13,000 (DJIA).
Got popcorn?
Neil
Next stop Neil? Maybe a 5000 Dow and an 800 S&P and 75K houses again.
A lot of Hummers on lawns for sale on the way down, too.
DJIA is down 8.4% since it reached the high of more than 14K. That’s gotta hurt the bulls.
What is that I heard, 10% lower is a recession, 20% is a depression. This thing is going to continue to spiral out of control. Just wait until the 2 or 3 of the big mortgage lenders, Thornburg and Countryload, go broke. 5K might not be out of the question. I was thinking 7-9K, but that was before I heard the news regarding the lenders this morning.
This thing is losing 2% daily. With so many bailing, the PPT and FED cannot keep up. I think the endgame is near. It is all over but the shouting and selloffs at this point.
you forgot the crying.
http://tinyurl.com/yw3p2n
Nitwit lenders put the economy at risk — again
As the latest scheme unwinds, we see once again that lenders will loan money to almost anyone, even if it puts the whole system at risk. Protect yourself and your home — because they won’t.
By Scott Burns
Scott Burns used to write for the Dallas Morning Snooze and was a regular columnist during the previous bust. He knows whereof he speaks.
Sharks are circling Countrywide:
http://bakersfieldbubble.blogspot.com
Yep, down -17.50% and falling as of Noon PST.
Buy the dips and sell the bankruptcies.
Countrywide goes and you can kiss the housing market goodbye.
Question for Neil, did we think it would ever happen this fast? Man, I knew this was big and out of control, but even you gave it what, October? Not picking on you at all. Just amazed at fast this is all unraveling.
Gott love it though. Sure, we are the doom and gloomers. Not really. We on this blog are the ones who saw through the smoke and mirrors of this whole mess.
Once again, you cannot loan 950K to households earning 50-90K and think that it will turn out okay. I don’t understand how all these so-called whiz kids missed it. I know they let their commissions/bonuses/greed get in the way of clear thinking, but anyone who didn’t see this coming was just nuts.
Sure Joe. I know you really make 80K a year, but since you are a nice guy (and i will get a nice commission and eventually sell this garbaget) I will approve the 876K loan for you.
What outrage. I am so pissed. Let these maggots squirm.
Imagine what the forced liquidation of all those REOs would do in your neck of the woods Crispy >; )
High time to lower CFC into the piranha tank and strip that baby clean.
In case no one posted this yet:
Basis Capital Tells Investors Loss May Exceed 80%
OUCH!
Basis Capital’s Aust-Rim Diversified Fund, which had A$332 million under management at March, is not in default and is meeting margin calls, the fund said in the letter. Redemptions have been halted in both funds.
I’ve yet to hear of a hedge fund who halted disbursements that hasn’t later told investors “sorry, you get nothing.” Any exceptions this cycle?
Conan O’Brien’s comedy skit with Cramer comes to mind. “TRICKLE DOWN!” I think the rich might tighten the belt a notch or two soon. (In other words, don’t hold your breath Mr. Porche or Massarati saleman.)
Got popcorn?
Neil
Maserati, dude, Maserati. BTW, Lamborghini has posted record sales first half ‘07.
This is good stuff, NAHB’s Seiders vs. Lawrence Yun of the NAR.
Here’s the Bloomberg Video
The contrast is pretty amazing. Yun is saying home prices are rising which is of course ridiculous. At least the NAHB guy gets to keep his dignity.
LOL.
http://www.thestreet.com/s/mitt-romney-hit-by-mortgage-meltdown/funds/followmoney/10374379.html?puc=_tscana
As long as we’re ripping on Romney, check out the first story from Tucson’s alt-paper:
http://www.tucsonweekly.com/gbase/Currents/Content?oid=98003
Ron Paul’s very monetary values may save him. Poetic justice.
” Romney spokesman Kevin Madden says the investment is held in blind trust. “All the decisions with regard to the trust are made by the trustee, without any knowledge from the governor.”
Argh! Can’t politicians quit lying for a second?!?! This same thing came up with Cheeny. If all the decisions are made by the trustee, it is not necessarily a blind trust. It is a blind trust (note the word blind) only if the politician does not know about the holdings at all. Since he knows what is in his trust, it is not a blind trust, and is obviously a source of conflicts of interest.
I just returned from a business trip to the Oregon Wine counry area looking at potential ag property and also went up into the Tacoma-Puyallup and much of Southwestern Washington. Looks like Hot money was causing a strong building boom. Hard to describe the extent of the building in many rural areas both RI and Commerical but there seems little fundamental economic underline values particuliar outside of Boeing and MSFT for jobs. The wine country of Oregon looks like a huge flip in progress with the California Teachers Retirement Fund being very active buying property and developing vineyards with the idea of subing the vineyeards into various size homes/winery business downstream. The Puyallup area outside of Tacoma has become a giant stripmall extending for miles, very sad. Lots of homes forsale and forlease signs on commerical buildings, looks like a huge flop in progress.
“The wine country of Oregon looks like a huge flip in progress with the California Teachers Retirement Fund being very active buying property and developing vineyards with the idea of subing the vineyeards into various size homes/winery business downstream.”
I don’t even know how to comment on this.
I don’t either, other than to say I hope it fails miserably. Sorry, teachers, but your fund leaders shouldn’t be speculating in wine.
Just Say No. LOL
Apparently this isn’t a Drug Free School Zone.
No tradeable rallies until a couple of serious bankruptcies occur and we see chick’s 800-900 down day? In other words, the close tomorrow?
or ~1365 - 1375 S&P. I’m not buying any more until we get there. I’ve been going in a little at a time. This is U-G-L-Y. Bet you read tomorrow some hedge fund had to liquidate stocks today.
Pretty major volume at the end of the day, you’re probably right.
short S&P, buy sds.
I’m a long-term investor, so I want sub-1200 on the S&P. Perhaps some time after J6P gets his 3Q statement. Mid-October?
As I understand it, the hedgies found out today how much in redemptions is being requested for the end of september. So they don’t NEED to sell until then.
Perhaps someone was taking the old advice, “Don’t panic. But if you’re going to panic, panic first!”
Quickie from Marketwatch.com’s latest headline of “Stocks down again…”:
“‘The best case scenario is we don’t get any headlines regarding the subprime mess, and maybe we can weather the storm,’ said Peter Cardillo, chief market economist at Avalon Partners.’”
Hhhhmmm…you may want to consider turning off your computer/television and ignoring that newspaper soaking out on your front lawn for the next 6-24 months, then.
* As an aside, I’d just like to thank you all for being a huge part of educating this newbie. At 32 years old, I’m only just now educating myself as to what are the consequences to buying (or not buying) what may very well be the largest purchase I ever make.
The wit combined with intelligence (w/ just a dash of ball-busting) keeps me coming back for more. Besides, where else could I find such a wealth of financial/real estate/mortgage know-how combined with all the “Princess Bride” and “So I Married an Axe Murderer” quotes I can eat?
The new figures from the National Association of Realtors underscored the severity of the current housing slump, the worst downturn in 16 years.”
How can this be? They have been saying everything is fine! ha,ha,ha
Greed followed by fear
It is more like Greed followed by fear followed by loss of investment, followed by financial ruin and having to start over again at the beginning in about 10 or more years.
“‘Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets,’ said Lawrence Yun, senior economist for the Realtors.”
Lawerence Yun is another bubble head economist who cannot get out from behind his desk to see the real world of RE. We are no where near a bottom. Infact ,he probably cannot reach his own bottom because if he could he might see crap he has never seen before.