A Momentary Correction
Some housing bubble news from Wall Street and Washington. The Boston Globe, “Countrywide Financial Corp., the nation’s largest mortgage firm, said yesterday it has ‘tightened’ up on its lending, and another large provider said it would stop making new loans altogether, deepening the crisis in the nation’s mortgage industry.”
“First Magnus Financial Corp., based in Tucson, which purchases mortgages from loan brokers and is one of the 10 largest mortgage wholesalers in New England, yesterday said it would no longer fund new loans.”
“First Magnus, which has offices in Needham and Lawrence, said the ‘collapse’ of the investment market for mortgages has left it ‘with no viable alternative’ but to cease lending.”
“Rosemary O’Neil, president of the Massachusetts Mortgage Association, said some house hunters are likely to see the industry shake-up as benefiting them in the long run.”
“‘They may decide, ‘Let’s wait until the prices go down some more,’ she said.”
The LA Times. “Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.”
“Bill Ashmore drove his Porsche Cayenne to Countrywide’s Laguna Niguel office and waited half an hour to cash out $500,000, which he then wired to an account at Bank of America.”
“‘It’s because of the fear of the bankruptcy,’ said Ashmore, president of Irvine’s Impac Mortgage Holdings, which escaped bankruptcy itself recently by shutting down virtually all its lending and laying off hundreds of employees.”
“‘It’s got my wife totally freaked out,’ he said. ‘I just don’t want to deal with it. I don’t care about losing 90 days’ interest, I don’t care if it’s FDIC-insured — I just want it out.’”
From Bloomberg. “Countrywide Financial, the nation’s No. 1 mortgage lender, was forced to tap an $11.5 billion line of credit Thursday as the global financial crisis curbed access to short-term financing.”
“‘When a company draws on its bank lines, it just basically gives off the impression that it has run out of options,’ said Christopher Wolfe, managing director at Fitch Ratings, which Thursday dropped Countrywide to BBB+, its third-lowest investment-grade rating. Credit rating agency Moody’s Investors Service downgraded Countrywide’s senior debt rating to ‘Baa3′ from ‘A3.’”
“‘Typically these bank lines are there but not really meant to be used,’ Wolfe said.”
“‘We’re in this situation where one of the biggest home lenders in the country is in significant financial difficulty and is being forced to take fairly extraordinary action to maintain its financial viability,’ said Tony Hughes, managing director of credit risk for Moody’s Economy.com ‘This means the threat of a credit crunch is very real. It means that mortgage finance generally will be hard to come by,’ he said.”
“‘Industry trends are not improving,’ he wrote. ‘Home prices are 13 percent to 14 percent overvalued (which could take several years to play out).’”
The Daily News. “Paul J. Miller, an analyst at Friedman, Billings, Ramsey & Co., said in a research report that Countrywide’s survival depends on how long the mortgage crisis lasts.”
“‘We do believe there is a scenario in which the current liquidity crises last for longer than three months and CFC is forced into bankruptcy,’ he wrote. ‘It will be ugly, but it can happen!’”
“If it persists for more than a month, he said, Countrywide might be forced to sell assets at a deep discount.”
From McClatchy Newspapers. “‘What we’re going through now is unlike anything we’ve seen before. All financial crises have their unique characteristic, this one is characterized by a seizing-up in the home-mortgage market,’ said Lyle Gramley, a former governor of the Federal Reserve System in the 1980s.”
“Gramley was referring to the spate of bankruptcies by companies that issued home loans to risky borrowers — and increasingly companies that gave loans to creditworthy homeowners.”
“Gramley’s concerned that there aren’t good measures right now of how much lenders are pulling back. ‘None of us knows for sure how much credit availability has declined, but to be sure it is substantial,’ he said.”
“The Federal Reserve lowered the interest rate it charges to banks and acknowledged for the first time today that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling the world’s financial markets two months ago.”
“Today’s decision shows policy makers understand ‘the various different tools the central bank has at its disposal,’ said Neal Soss, chief economist at Credit Suisse in New York, who worked as an assistant to former Fed Chairman Paul Volcker. ‘This is a masterful move because it doesn’t actually feed some of the concerns about moral hazard’ of bailing out investors, he said.”
The International Business Times. “On the same December day Merrill Lynch & Co. Inc. paid $1.3 billion for a subprime lender, the world’s largest brokerage got a rude introduction to risky mortgages.”
“Merrill Lynch’s newly minted First Franklin Financial Corp suffered a loss of nearly $300,000 on a soured home loan to a lab assistant from a gritty, blue-collar town north of Boston.”
“Lab assistant Marielite Hardy received $670,000 in loans from First Franklin in March 2006 to buy a multi-family home in Revere, Massachusetts. Her loan application, submitted by mortgage broker National Lending Corp., listed her monthly income as $12,000.”
“This month, First Franklin accused the Houston-based broker of inflating Hardy’s income by about $9,000, according to a lawsuit filed in U.S. District Court in Boston.”
“After funding the Hardy loans, First Franklin sold the first loan on the property to a U.S. unit of London-based bank HSBC in the secondary mortgage market. First Franklin said Hardy did not make a single payment. HSBC demanded First Franklin buy back the loan, according to court records. First Franklin did and then sold it in a distressed sale, taking a $295,908 loss.”
“Several months after First Franklin funded Hardy’s loan, the lender received her wage verification from her employers. The documents showed that her wage income fell far short of justifying the money she received.”
“‘These lenders want to loan money to people without guidelines,’ said Hao Nguyen, National Lending’s operations manager. ‘And then they get burned.’”
“A few bad loans at First Franklin are not a disaster for Merrill Lynch, a financial powerhouse with $1 trillion in assets, But the subprime mortgage industry’s crisis has sidelined Merrill’s strategy for buying the lender in the first place.”
“‘It wasn’t the best move,’ said John Meara, president of Argent Capital, which owned 309,000 Merrill shares at the end of June. ‘It’s not going to make or break the company, and I’m sure the company didn’t factor in what’s happened to the subprime industry. It’s hard to predict Armageddon.’”
From Inman News. “Ratings agencies Moody’s Investors Service and Fitch Ratings have downgraded or are preparing to downgrade billions in securities backed by subprime second-lien mortgages.”
“Bear Stearns Cos. moved to cut jobs at two home-lending units because of the housing slump. The fallout from the subprime-mortgage crisis threatens to cut Bear Stearns’s profit by as much as 13 percent this year.”
“Some investors consider Bear Stearns a possible takeover target now that its market value has dropped to $16.6 billion from $22 billion at the end of its fiscal year in November.”
From Reuters. “Falling stock prices, a slowdown in the housing market and tighter credit could hurt auto sales, although there has been no big impact yet, a senior General Motor Corp executive said on Thursday.”
“‘It is never good when the stock market goes down. It takes wealth out of the economy…people feel poorer and decide to defer major purchases,’ Bob Lutz, GM’s vice chairman and head of product development, told reporters.”
“Like many lenders, GMAC’s ResCap unit has struggled as falling home prices, and rising interest rates have made it tougher for many homeowners to keep up with mortgage payments.”
“GMAC CEO Eric Feldstein said in July that ‘widespread weakness’ in housing would persist this year.”
“Lutz, however, described the downturn as a ‘momentary correction.’ ‘We have a very serious credit crunch in the U.S., but that was triggered by a bubble-like prosperity due to sub-prime mortgages and a building boom that was unjustified,’ he said.”
Was Poole’s interview earlier this week designed to pull the rug out from under the bears, or is there a reasonable explanation? Has the FED gone beyond moral hazards?
The Fed discount window is giving 30 day loans and taking worthless MBS paper as collateral. I’m trying to start a bank so I can get a 30 day loan using old comic books and scratched records for collateral. No moral dilemma here.
So when they start to default, does the FED own these or do the banks have to buy back their junk? Or does Fannie step[ in to rescue the FED and take the worthless toilet paper off their hands?
It’s not clear exactly what the end game will be if “normalcy” doesn’t magically return, which is what has so many people freaked.
Well… My bank might consider taking your collectibles as collateral. I think to answer your question about who might ultimately keep these junk is a fed created member bank named “NewBank”. Do a google search, its all there on the federal reserves website. NewBank, NewSpeak, Echelon, etc. its all there.
At least you can read the comic books.
i read the statement and Poole’s name wasn’t on the list of people that voted for it. there was a run on a bank yesterday and this probably spooked the Fed.
Market is up, but the volume has dropped off and the indexes haven’t been able to penetrate some important technical indicators like the 10 and 200 day averages.
seems it was done to avert a complete panic and to stretch things out so if someone goes belly, give others time to properly hedge themselves and avert a real panic that could cause a severe recession or depression
I agree; they need to stop the runs and free up CP.
However, Poole’s statements seem wholly incongruent with popularly anticipated FED behavior. It’s puzzling.
Yeah, I guess Poole is one of us (i.e., an minority). He’s trying to allow the markets to function, but apparently the rest of the Republican-minded Fed are scared shitless of a properly-functioning market because that would actuall give a fair shake to the little guy.
Poor Poole. He’s the only one who’s right.
I don’t buy it. Poole knew what was going on. He was wearing his poker face. Ever heard of good cop, bad cop? Pay attention! Discount whatever Poole says and bet the other way.
I guess you’re right foreclosure central. Better to find a way to make use of all this than to simply complain about it. But I still hope that some of these players (The CFC guy, whoever leaked the cut yesterday, etc) get caught.
My spouse has stopped with the pissy remarks now about making her stop by the credit union last week & draw a few K in cash.
.. .. which was a chore in itself trying to get large amounts of cash from a credit union. they sure tried to stall & talk her out of it !
“Today’s decision shows policy makers understand ‘the various different tools the central bank has at its disposal,’ said Neal Soss, chief economist at Credit Suisse in New York, who worked as an assistant to former Fed Chairman Paul Volcker. ‘This is a masterful move because it doesn’t actually feed some of the concerns about moral hazard’ of bailing out investors, he said.”
What is he talking about?
What really pisses me off is that the Dow was up over 300 points at the open, and now it’s only at half that! Damn you, Rally Mitigation Team!
That wasn’t a FRB-sparked rally you noticed, that was a reenactment of the Challenger space shuttle shot.
P.S. FRB stands for both Federal Reserve Bank and Front Range Bob. Cute, neh?
I think Poole just had on his poker face when he gave that interview. The Fed never tells the truth about anything. If you want to know what there next move is going to be, watch the money center banks. They will rally very hard the day before another rate cut is announced. The insiders at the banks always get tipped off by the Fed so they can front-run any trade you might want to do. Remember this. Look as see if this happens again right before the next rate cut. The market is rigged.
Turns out Foreclosure Central is right. Bloomberg has the story on how Poole fed the no rate cut lie on Thursday, then skipped the secret meeting so as not to tip his hand. It was all a deliberate charade.
My bad…
I earlier fingered Wayne Gretzky as the hockey player that made a bank run, on Countrywide Bank.
It was ubergoalie Rogie Vachon, instead…
$tick Save, and a Beauty!
Gretzky passes to Jesus. Jesus saves!!
sorry
The one I heard was “Jesus saves! But Gretzky scores on the rebound.”
Nah, its “jesus saves but Georgie gets the rebound” (George Best)
LOL. Great.
The countrywide story from LA sounds like a run on the bank. How things change overnight right now is amaizing.
No kidding. Now Wall Street’s volatility is spilling over into Main Street.
I’ve been a chicken little/tin foil hatter for quite some time now, but if you’d of asked me 12 months ago if I thought Countrywide was going to be at risk of going down, I would of said no way. My, my, my……scary stuff indeed.
At Countrywide in 2005, it was “normal” for a not-too-sharp 26-yr-old paper-pusher two years out of state college to be pulling down $175,000 per year (a relative of mine) in fees and commissions. That seemed way out of wack to me and was proof enough for me that it was a shady enterprise.
Word on the street re: CFC was they have been “stealing” er I mean hiring top lending people away from Wells and BofA for the last 2-3 yrs at hefty premiums. They are top loaded with a lot of “Vice Presidents” making very large base salaries - $150k plus. Add that to the aggressive approach they took in opening many retail lending branches in So Cal (I am sure they did the same elsewhere) during the past 18 mos. and it all starts to add the nails in their coffin.
Plus, you want cocky and arrogant…go walk down the halls at their HQs in Calabases (maybe not so much today:)).
‘They are top loaded with a lot of “Vice Presidents” making very large base salaries - $150k plus.’
Wow — glad that PPT measures are underway to save these high salaried positions…
Dead wrong.
Countrywide pays very low salaries. The reason why they have so many Vice Presidents is that they use titles in lieu of compensation, you won’t get much of a raise, but you get a shiny new title every other year. Vice Presidents make around 75K.
That’s what I have heard. I work for a large bank and know people who went over to CW, did not like the culture/comp, and came back.
Countrywide pays low salaries. The reason they have so many Vice Presidents is that titles are used as a management ploy to avoid paying employees market rates.
Alot of those VPs love titles, and the ones that don’t leave. They have a ton of turnover.
This is like going through a time machine.
I’ve adjusted a few parts of BubbleViewer’s comments:
“In SF and the Valley in 2000, it was ‘normal’ for an average 20-something-yr-old code monkey or dotcom ‘bus dev guy’ a few years out of school to be pulling down a ridiculous salary and to have multiples of $100,000 in stock options due to venture capital and IPO funny money. That seemed way out of wack to me and was proof enough for me that this was not actual enterprise.”
would have, not would of. sorry, couldn’t stop my fingers on the keyboard…it’s an obsession, sorry, sorry.
I looked into a CD with them but was spooked when I talked to the rep on the phone. I wanted to move a CD but make a split deposit. She said they operated on a cashless basis started in on a cheerleading speech. It was very strange.
I do not understand this. What do you mean?
they aint got no cash. bubba
I didn’t understand it either and I’ve been investing in CDs for 11 years. She did -in great detail- tell me what a great concept it was.
I was looking at opening an online account with them a couple years ago. Got spooked when the rep told me their only location with bank functions was somewhere over east, and that my deposit would be sent via UPS from the local CFC office to be processed and then deposited. No insurance during transit. Maybe I misunderstood her. Sounds pretty odd.
I don’t understand how banks can run out of money as long as BB has his printing press working at full capacity?
They won’t run out of money…that’s the whole point of having a baseless fiat currency. The only bag holders are those holding the US dollar.
BB talked to Paulson.
He said “you can’t have the keys to the pool house”.
Paulson said it or BB said it? Me confused (what else is new?).
Are the rumors true that Countrywide bonds which mature in 12 months are now trading at an effective 25%-35% interest rate? If so, not a good sign…
I’ve got a Savingslink account with them. It was 5.31% APY on Wednesday, and it reset to 5.50% APY this morning. Looks like their CDs took a jump overnight too.
Now I wonder if I should leave it there or find somewhere else to park it.
“Gramley’s concerned that there aren’t good measures right now of how much lenders are pulling back. ‘None of us knows for sure how much credit availability has declined, but to be sure it is substantial,’ he said.”
Patience, Mr. Gramley. Good measures will be available, but only with a lag. It will take time for U.S. housing market prices to adjust downwards to reflect the new equilibrium after the vaporization of flippers and the subprime sector.
Don’t forget the vaporization of average Joes with no doc loans and pretty much anyone that can’t put 10% or more down without a FICO close to 700… Man, that’s starting to be quite a crowd!
Also, everybody who was going to buy has already bought, because of the extremely low interest rates over the last few years. Should take the market at least five years to build up demand.
“…vaporization of average Joes with no doc loans and pretty much anyone that can’t put 10% or more down without a FICO close to 700…”
I didn’t forget them. They are covered under ‘vaporization of subprime.’
Wait a minute… if there’s no product, and there’s no one to sell the product to (even if you had one), then there’s no market, which means there’s no business, no employees, no money… I hope bubbleviewer’s relative has a Plan B when his paper pushing job evaporates…
That job was at Countrywide, so I’m sure it’s currently halfway evaporated.
I glanced at Providentfunding.com this morning and was surprised to see the jumbo-A rates were “down” to 8%. Two weeks ago they were 6.625% and last week they shot up to 8.625%. They settled this week at 8.5% but lo and behold, this morning it appeared as if they were down to 8%. Au contrair…that 8% is with paying a point. The highest their rate graph goes is with paying an eigth of a point. Heck, you can’t even get “par” or a rate that costs no points. I could only guess that a no point jumbo-A rate is around 9% now. The fed can pump and inflate all it wants. The housing bubble is toast as is the credit bubble.
In the words of the talking heads on CNBC, money isnt’ going to the right places.
Banks can borrow money with MBS they already hold, but they aren’t using it to buy more MBS or loan money to people that have MBS.
“It’s hard to predict Armageddon”
“‘It wasn’t the best move,’ said John Meara, president of Argent Capital, which owned 309,000 Merrill shares at the end of June. ‘It’s not going to make or break the company, and I’m sure the company didn’t factor in what’s happened to the subprime industry. It’s hard to predict Armageddon.’”
And no one expects the Spanish Inquisition.
We have three weapons: surprise, fear, and Helicopter Ben.
…or a Federal Reserve official with three buttocks.
Anagrams for HOUSING BUBBLE:
Hubbub Legions, I Shogun Bubble, Oh Suing Bubble, Bible Bonus Hug (or Ugh), Bible Bugs Oh No, Glue On Bush Bib, and my personal favorite, I Hugs No Bubble
(from Wordsmith.org)
Is that chair confortable?
It was until the Fed burned the legs out from under it.
” It’s hard to predict Armageddon.”
The consensus on this blog predicted it.
This is hardly financial Armageddon compared to how bad it could (likely will) get in the next couple of decades if oil production truly is at or near its peak and when the entitlement program outlays kick into overdrive.
I assume you knew that already, and I’m only making a rhetorical statement here.
Front Range Bob: we’re not going to have “a couple of decades”
We got popcorn for the show but looked up and saw we were on the stage.
And crying invest tears.
Au contraire. St. John had no problem with that at all.
Of course, he was a little fuzzy about the timing….
(Melody: American Pie)
A short, short time ago…
You can just remember
How those CDOS used to make you smile
And you knew if you had your chance
That you could make those returns dance
And, investors, would be happy for a while
But sub-prime made them shiver
With every default they would quiver
Bad news on the home front
You couldn’t make a placement
I do remember that you cried
When you heard that AHM had fried
And something touched you deep inside
The day the CDO died
So, bye-bye, mister CDO guy
You piled the paper on
When the market was high
And the 2 and 20 made your living so fine
Singing “CDOs will keep me alive
CDOs will keep me alive”
But you never saw the coming fall
That triple AAA was worth naff all
Cos Moodys didn’t tell you so
Did you believe that lead was gold
That Alt-A would be never sold
And that incomes were real on the forms
Well now the writings on the wall
Your investors got a big shortfall
Now HRs got your number
Cos you couldn’t get more dumber
You’re now a lonely poor unwanted buck
With a c.v. but no real pluck
But you knew were out of luck
The day the CDO died
And we were singin
Bye-bye, mister CDO guy
You piled the paper on
When the market was high
And the 2 and 20 made your living so fine
Singing “CDOs will keep me alive
CDOs will keep me alive”
A Plain Wreck, beautifully done…
thanks…a work of art
Good One, thanks!
God, I love this blog!
Friggin brilliant!
Way tooo much time on your hands.
Yes truly a great blog. Thanks Ben and regulars.
Kaybertoss From Canada.
We need someone to call Weird Al to sing it.
Has a spokesperson from Countrywide made any kind of a statement to alleviate their customer’s fears to prevent a run at the bank? I’ve looked and as far as I can tell, they’re not talking.
Their too busy pitch forking cash out the door
what cash?, they operate in a cashless environment
cash advances from lending syndicates.
‘This is a masterful move because it doesn’t actually feed some of the concerns about moral hazard’ of bailing out investors, he said.”
Gimme a friggin break Neal Soss! CNBC is reporting the FED is lending against worthless paper. Paper that no one else on Earth would use as collateral.
mrktmaven;
Steve Leisman on CNBC assured viewers the Fed was accepting ONLY AAA loans as security.
(And we all know what is inside those)
Could the Fed be that dumb?
They’re not dumb; rather, they’re playing the expectations game, and a masterful job they’re doing for the time being, IMHO.
Whether it works or not in the long run is an entirely different story… I’ll guess not.
Got stagflation?
Again, my above post makes the Fed’s exit clear. A new member bank of the New York branch call appropriately enough “NewBank”, similar to “NewSpeak” from Orwell’s “1984″. I think they could dump these currently non-performing assets on NewBank and years later via the magic of the ole printing press recover all the losses.
In a fiat world, that’s how I would do it. Seriously. Japan’s banks held non-performing assets thru the entire deflationary period. Do the same thing here. Maybe not a bad way out for all of us.
there’s a big difference between something being “worthless” and being of unknown value.
MBSs are not worthless.
It’s like finding a couple of counterfeit $20 bills in the till.. While that one is certainly worthless, it puts the value of all the others into question.
Nobody wants to trade any $20s until someone checks them all out and sorts the bad from the good.
Fine, but they are not worth face value either.
agreed ..
Not only that.. their true current value, if it could be calculated, is of no use towards restoring confidence in them.. because market forces that affect their value are themselves rapidly changing.
“Countrywide Financial, the nation’s No. 1 mortgage lender, was forced to tap an $11.5 billion line of credit Thursday….”
Not even SPF-45 can save your skin now, Angelo.
He’s cashed out enough options to buy himself a new skin-suit stiched together from first born children every sub-prime borrower in the nation.
ewwww!
lol
Quid pro quo: Fed gives you a rate cut, you give them an upgrade
August 17, 2007: 11:58 AM EST
BOSTON (Dow Jones) — An analyst at Banc of America Securities upgraded shares of troubled mortgage lender Countrywide Financial Corp. to neutral from sell Friday, saying that tapping its $11.5 billion credit facility should provide Countrywide the time needed to address liquidity and capital concerns.
If hitting a credit line for a weeks worth of operating and funding costs gets you an upgrade then I give up.
Bank of America Securities are crooks. Someone on CFC and LEND message boards hinted that BAC was lurking and had large open bid all day yesterday. So, they must have known of the discount rate cut this morning. And now seeing the upgrade on CFC just proves how much corruption among the big boys.
Wouldn’t surprise me a bit. Kind of like the mob.
If BB was running the jailhouse he’d be serving beers in the drunk tank.
LMAO!
I was wondering about this story on the CFC emergency loans yesterday afternoon, and posted the following to the bits bucket, noting the disconnect between the writer’s opinion about the “tough times” for the banks involved, and the big pop to the banks’ share prices late in the day. Today it all makes sense, including the evidence that Da Boyz had advance notice a fix was in.
—————————————————————————
Comment by Professor Bear
2007-08-16 16:26:25
Can anyone explain what got the bulls so excited today about the CFC plunge protectors of Wall Street? Does the Fed offer unreported compensation to the IBs with which it contracts to carry out plunge protection services?
Banks’ poorly timed loans to Countrywide
J.P. Morgan, Bank of America, Citigroup committed to $11.5 billion in credit
By Alistair Barr, MarketWatch
Last Update: 5:33 PM ET Aug 16, 2007
SAN FRANCISCO (MarketWatch) — Call it unfortunate timing for bankers.
A group of 40 of the world’s largest banks lent Countrywide Financial Corp. (CFC:Last: 18.95-2.34 -10.99% 6:52pm 08/16/2007) $11.5 billion this week under credit agreements that they committed to as far back as 2006.
The loans may help relieve a credit market squeeze on the nation’s largest provider of home mortgages. But they come at a tough time for the banks involved.
Countrywide didn’t disclose which banks lent the money and a spokeswoman didn’t immediately respond to a request for a list of lenders.
However, regulatory filings that Countrywide had provided the Securities and Exchange Commission show that J.P. Morgan Chase (JPM: Last: 45.47+2.47 +5.74% 6:49pm 08/16/2007) , Bank of America (BAC: Last: 49.85+1.62 +3.36% 6:53pm 08/16/2007) , Citigroup Inc. (C: Last: 47.55+1.94 +4.25%) , Lehman Brothers (LEH: Last: 54.75+3.18 +6.17% 6:50pm 08/16/2007) , Merrill Lynch (MER: Last: 71.13+2.19 +3.18% 6:52pm 08/16/2007) and Morgan Stanley (MS: Last: 58.97+2.34 +4.13% 6:52pm 08/16/2007) were among the banks that signed up to the loan commitments.
http://www.marketwatch.com/news/story/countrywides-115-bln-loan-poorly/story.aspx?guid=%7BC3ACE6C6%2D5099%2D474E%2DAFDA%2D06311B44E0A4%7D
Yeah, that’s what I was saying on the bits bucket earlier, but I know my comment was buried. I sure hope some of these corrupt bankers get their due, and I’m not talking about morgage payments from FBs!
morgage = mortgage
BOA is one of the banks that gave Countrywide 11B emergency cash.
Bear Stearns upgraded NFI one day before NFI crashed.
These guys are but crooks.
It’s a good thing that Countrywide didn’t paydown $11.5 Billion in debt or Banc of America would surely have downgraded their stock! I wonder if my FICO score would improve if I borrowed $11.5 Billion? That chunk of change would give me the time I need to address my liquidity and capital concerns.
Frankly, the drama of this fallout has so far surpassed even my wildest dreams. I mean WOW!
Guess I shouldn’t be so surprised. Ponzi schemes collapses, they don’t slowly unwind.
All eyes on consumer spending, that alone will dictate whether we hit a recession and the severity of it.
If “they” don’t fix the jumbo loan problem, the consumer in So. Cal. is toast.
Exactly. The rate went from around 6% to 9% in the past year. For those math whizzes, that means that the “cost” of owning a home in So Cal just went up almost 50%. Ouch!
You just priced out at least half of the remaining 5% of Californians (per Wells Fargo) that can afford a house. And I would be willing to bet that each one of the remaining buyers falls under the AMT, which means that they can’t deduct their property taxes from what I’ve heard.
This is NOT going to unravel slowly. That 3.5 earthquake in LA yesterday was probably caused by homeowners running for the exit.
Actually, jumbo-A went from 6.25% to about 9% in two weeks. Check providentfunding.com. There is absolutely no interest in the secondary market for jumbo-A mortgage backs. The fed is merely pushing on a string. I suppose the only activity at title agencies the last two weeks were deals falling out of escrow. Anybody have anecdotal stories? My dad who lives in Vegas just related to me a story from yesterday where a realtor friend was late to their band practice. The guy had to go by the house of a former client who was hysterical about the Clark County sheriff showing up with a foreclosure notice. I guess the woman hasn’t paid for a few months. This is going to get ugly on a personal note, but the breadth and depth of the carnage will affect everyone.
No, the earthquake was caused by a fart emitted from the giant elephant that still lurks beneath our collective rug.
“They” have a bigger problem than jumbo. “They” need to entirely re-work the mortgage industry that has been the life-blood of housing for the past few years.
The lubricant in the system was the ratings from S&P and Moodys. The managers of OPM in the world would have job security by relying upon those ratings for their investment decisions. It’s rated AAA by Moodys, or S&P, I can buy it without fear for my job.
No longer. The cat is out of the bag. Moody’s and S&P ratings are now worthless, and won’t keep your job safe.
What will the new lubricant be (go ahead, make your joke)? I submit that the only thing it can be is quasi-balance sheet lending. Sell MBS to third parties, yes, but keep 20% of every MBS tranche and pool on your books. THAT should give confidence in the system sufficient to bring investors back.
Justification for buying 5% of any MBS would be that the seller is keeping 20% of the same stuff on their books.
It would bring back confidence AND make underwriting more consistent with what was working before financial engineering. Wall Street banks should encourage this–it will help bring back their fees, AND bring confidence back to the markets.
Without some new confidence building (sorry Fed, your acceptance of MBS as security is a nice act, but not enough), this liquidity crisis will draw out longer, and longer.
Anyone want to start a mortgage business?
“The lubricant in the system was the ratings from S&P and Moodys.”
Bingo. I guess it’s only a matter of time before the SEC investigators show up on the doorsteps of Moody’s and Finch’s with search warrants.
The tricks to making good loans on property is no mystery. Although they may have ignored proper methods for a while, lenders already know how.
Moodys or whoever can take a shot at rating them accurately.. and Wall street can invest in MBS if they want to.. nobody will stop them.
But these investors are no more a part of the mortgage industry than I am a part of the software industry when I buy Microsoft shares.
I beg to differ. The money needs to come from somewhere for the mortgages. The investors provided the money that the lenders lent. When you buy MSFT shares, that money doesn’t give MSFT the needed liquidity to operate.
If the investors stop investing (which they have), there needs to be another source of $ to make the loans. What is the source, if not major institutional investors? Traditional banks? Maybe, but I’m not sure they have enough deposits to make a dent in the liquidity that evaporated.
“Traditional banks? Maybe”
Traditional banks.. exactly. They shouldn’t lend money that they don’t have. This money is my money and your money.. our deposits.. our direct investments, bypassing the Wall street gamblers.
This is going to take a long time.
Investors were buying up subprime mortgages for half a decade before they figured out it was a bad idea. They won’t be much quicker to figure out that some Alt-A and Jumbo loans will work perfectly fine.
In fact, I think it will take them longer than half a decade to figure out. As long as no one is buying jumbo loans, no one will be able to collect any data that demonstrates they are OK. Absence of evidence will be misinterpreted as evidence of absence …
If they go back to traditional underwriting standards, they have decades of evidence to fall back on from before 1998, and the market will right itself.
It’s the only answer that I see. They won’t be able to reinflate the credit bubble with exotic loan products.
“Countrywide might be forced to sell assets at a deep discount…”
If I were a consumer in So. Cal., I’d be looking for a REO listing from Countrywide.
Fifth grade math just kicked it. California houses drop 40 % to 50% with in six months as “few” buyers have real cash for down payments and fewer buy in a falling market. Sorry, sunshine even 365 days a year won’t much matter now. These past few weeks the sunglasses have come off.
That would depend largely on what happens with credit card rates. Can’t make those ARM payments with plastic for very long.
The posters on this blog have been dead-on about everything. Kudos to all.
you betcha:ALL eyes on consumers,
if you are not conducting yourself, as well as, advising all others in your inner circel to circle the wagons and execute the depression strategy, consisting of:
1. pay down debt
2. reduction of conspicuous consumption
3. save money
people are gettting hurt by the coming train wreck, and they dont know it yet.
“It’s hard to predict Armageddon.” Not when you were repeatedly told that the soviet nukes were already on the way.
the other bail - is she in jail ?
listed her monthly income as $12,000.”
“This month, First Franklin accused the Houston-based broker of inflating Hardy’s income by about $9,000, according to a lawsuit filed in U.S. District Court in Boston.”
Are you kidding? She must be a victim. Everyone knows that individuals can’t be responsible for statements that they sign with their own signatures!
Slim checking in from Tucson. The First Magnus implosion has caused quite a stir here. For your reading pleasure, we have the following MSM stories:
1. Impact of collapse widespread - http://www.azstarnet.com/business/196840
2. New loan scramble - http://www.azstarnet.com/business/196833
3. Loans halted - http://www.azstarnet.com/business/196683
4. Economy strong, but… - http://www.tucsoncitizen.com/ss/frontpage/60358.php
And, since we’re all fans of snarky comments here, be sure to read the ones following these stories. Plenty of good stuff.
It’s strange… All of this is finally leaking into the MSM, and I ask around my highly-educated workplace this morning and hardly anyone is aware of the creidt market problem. Those few that are aware something is amiss are sure the Fed will save the day.
Even I have to give Bernanke points for being able to successful make a half-court overtime shot at the buzzer. He’s got my respect today, if only for being an outstanding illusionist with a few tricks up his sleeve.
Bravo, Mr. Bernanke… Well played, for now.
The only thing I agree with in your post is “Bernanke… The Illusionist.”
http://www.theillusionist.com/
Jessica Biel is a total cutie… I enjoyed the movie, and not just for that reason.
i agree.. he’s in control. As long as nobody likes him, he’s doing the right thing.
as far as the vast majority of people still being somewhat clueless, that’s a good thing, imo.. it’ll delay and cushion the slide if the population slowly and gradually comes to the realization that things are changing.
“‘It wasn’t the best move,’ said John Meara, president of Argent Capital, which owned 309,000 Merrill shares at the end of June. ‘It’s not going to make or break the company, and I’m sure the company didn’t factor in what’s happened to the subprime industry. It’s hard to predict Armageddon.’”
Really? Financial Armageddon from this whole housing mess has been predicted here for years!
But people only see what they want to see. People who are really searching for the truth, and not the feel good propaganda that we are fed daily by the MSM, will always know what’s up.
Amos 3:7
“It is difficult to get a man to understand something when his salary depends on his not understanding it.”
– Hesitations 7:11
1 Cor 4:2,
Thanks for the reminder. I suspect more than a few will be drawn closer to the creator in the course of the next few years.
Lip
Citadel and Sneaky Moves Behind the Fed Curtain…
“Penson Worldwide Inc., the securities-clearing firm that went public last year, said some of its government and corporate bonds in accounts at Sentinel Management Group Inc. were sold without notice and in breach of contract.
Sentinel, the cash-management firm that froze client withdrawals on Aug. 14, sold the assets and those of other futures brokers to hedge fund Citadel Investment Group LLC, Penson said in a statement today. Penson said the assets may have been sold at discounts of as much as 30 percent to market prices.
“To liquidate such a portfolio at such a discount to market value constitutes, among other things, a reckless disregard of industry fair practice,” Penson said. The Dallas-based company said it expects to lose $6.5 million unless the sale to Citadel is reversed.
“It is our intention to pursue all legal remedies against Sentinel, Citadel and related parties,” Penson said.
Citadel, which manages $14 billion, stepped in to buy most of the assets of Sowood Capital Management LP last month, after the Boston-based firm’s two hedge funds plunged more than 50 percent amid the rout in credit markets. Citadel also took over the energy trades of Amaranth Advisors LLC when the Greenwich, Connecticut-based hedge fund collapsed in September under more than $6.6 billion in losses on natural gas bets.
Bryan Locke, a spokesman for Chicago-based Citadel, declined to comment today. A woman who answered the phone at Sentinel’s offices in the Chicago suburb of Northbrook, Illinois, said that the firm was not issuing a statement at this time. She declined to provide her name.” (Bloomberg)
I’ve got a sort of dilemma.
I see a house I like a lot and want to bid on. The owner is an older lady whose husband just died of cancer after a long hospitalization. As nasty of a b**tch as I can be, I feel for this seller and don’t want to try to screw her over or lowball her. Her asking price is a bit too high but I like the place and am considering just paying what she wants and let her kick in the closing costs or something.
I know that’s nuts.
Careful there, Chick. Even if you like the house a lot, it’s doubtful that it will like you back.
I don’t believe my eyes.
Hell has really frozen over today. Txchick is long the market AND buying a house.
The world is a very disordered place right now.
Wall Street’s volatility has spilled over into TxChick’s household wealth allocation strategy!
TX — you’re presuming she’ll be hurt if you offer less than asking price. Give her some credit and presume she’s emotionally stable enough to take it. I doubt a lowball offer will “break” her, especially after what she’s been through. You are very considerated, though.
If it’s the house you’ve been looking for, make the offer.
Even though you might have to live there for a while, if it’s the one from a couple of weeks ago, you won’t want to leave for a long time anyway.
txchick57,
i work in healthcare. yes, there are situations that tug at your heart. i’d be careful not to lose your wallet just because you have a kind soul.
Don’t fall for the old lady whose husband just died of cancer trick.
roflow……………
awesome!
If you are in TX, have you checked for mold?
Life’s short and it is a b*tch for some. It never hurts, in the long run, to give a little. Takin’ advantage is not a good thing. Eat the closing cost. It is the right thing to do. If you get bit in the a$$, consider yourself positive in karma.
If her asking price is “a bit to high,” then she is screwing YOU over. If you want the house, just present an offer that is fair, given today’s market - not tomorrow’s or next year’s. Besides, if her number is above market, no one will buy it anyway.
txchick,
I know you’ve been looking and it must be a really sweet place…so give it a few days to imagine it happening….if you still are in love with it, do it, if you can make the numbers work.
Karma works in very mysterious ways. Yours and hers.
Tx,
Let me give a devil’s advocate thought. Did he die of cancer linked to smoking? If he did, you are sort of paying for his bad choice. Not really my answer but a something to think about.
I vote this (^) today’s dumbest comment.
Good logical response. Must be from DC.
Actually, it is a good, logical response. I’ve read the whole thread, and it really is the dumbest thing anyone in here has had to say today. Don’t take it personally. Maybe I’ll win the award tomorrow.
And your logic is……….? She is looking for decision points. Karma is one point, cold reality of life (and death) is another. Smart folks look at all sides and toss out what they want in the end. By the way, with your apparent warm and fuzzy thoughts are you behind bailing out flippers and such?
Logic? What is logical about considering the guy’s cause of death? How does, or should, cause of death impact the price of a house, for God’s sake? And how would TxChick be “paying” for the dead guy’s choice? What is the logical connection?
What if the dead guy’s “long illness” was hospitalization after a car crash? He chose to drive, right? Is that a consideration?
And what does “bailing out flippers and such” have to do with your original comment? I don’t think Tx indicated the widow was a “flipper.”
No you are paying her for his choice.
How many women have gotten their husbands to put the toilet seat down?
Good point. Now that is logic.
went through this scenario less than 6 months ago, a seller that matched my criteria….old, widowed, huge house, needed some care….
I hardballed the sh*t out of the realtor……slapped him around, knocked the nuts out of the first, and only, offer to the realtor….40% off listing price (after 40k reductions over 3 months), asked for a sellers takeback of 10% of Sales price, , she pays all the closing, standard harballing at that time.
House went off the market in 90 days…..appoached very humbly after expiration of the “if you sell you house in 90 days clause”, very humbly offered her, 10% more than the nut cutting offer. She bit, families very happy.. Lot of those old birds are very very savvy
I have some puppys and kittens I need to get rid of. You sound like the right person fro the job.
Tort, you are funny, but leave Jungle man alone. He’s just trying to feed his family like everybody else. LOL
Have you considered working for the Fed? They could use a guy with a little backbone, now that Poole has been thrown from a helicoper.
shazzam. Same thing happens around here. Lots of blue hairs hangin on in beach bungalos with agents door knocking … they keep them on the leash for company I think… eventually the old bird brings in a builder and cashes out with a McMansion in 16 months.
since you all liked that so much. I also made her paint and re-roof prior to closing at her expense.
Nicest house Ive ever owned. It’ll be paid off in roughly 8 years.
I would say use your head & do your homework. Oh course you know the comps. I would base my bid on what is fair. Also take a look @ the recorder of deeds & see what she paid for it.
“I Know that’s nuts.”
I would feel the same way. I always overtip for the same guilty feelings. I so remember what it was like to be poor. However, my wife is not burdened by these dillemas and is always reigning me in.
If you feel bad for her, offer her 20% off, but give it a longish expiration (30 days) so she can hold out for higher offers.
Make her the low-ball offer and then give her a separate gift if you really feal bad for her. Then she can decide whether or not to accept it and you help the housing market correct faster!
Not nuts. You’re a human being. We took the second best offer on our last house because the buyers had a child with a handicap. Funny thing, the buyers turned out to be a big pain in the a$$ and very demanding. We finally threatened to back out and take the better backup offer. The little widow could turn out to be very annoying. I like your idea of asking her to pay closing costs - a good compromise.
become her friend.. she needs one just about now. Who knows where that might lead.
If either is unaware, both of you should remember that there’s more to life than haggling over the sale of a home.
No offense chick, but that’s a bad idea. Six months from now (or less) you’re going to regret it. But if her feelings are more important than your money, go for it. Personally, I’d start at a 30% discount and see what happens. No house is worth full price.
Txchick.
Frist time poster, eternal sponge soaking up knowledge here.
As you experience ” dilemma”, perhaps it’s best to do nothing. When you experience “peace”, enter into it.
‘We have a very serious credit crunch in the U.S., but that was triggered by a bubble-like prosperity due to sub-prime mortgages and a building boom that was unjustified,’ he said.
I know it’s been said quite a bit here — but where the hell were all these “insights” from the “experts” in 2004 or 2005?
It’s a bit late now, innit?
they were here on Bens bb
CFC-Better check your deposits, from the Chicago Tribune…Yikes!!
“However, the turmoil could spook depositors at Countrywide Bank, an Alexandria, Va.-based savings and loan that has grown dramatically since Countrywide Financial bought it in 2000. Nearly 40% of the bank’s $57.7 billion in deposits were not insured by the Federal Deposit Insurance Corp. as of March 31, according to the FDIC website.”
I love how the one guy pulled out $500k from CFC, and stated at the same time that he was pretty comfortable since it was insured by FDIC, but wanted to be safe anyway. Does he not understand that FDIC only insures up to $100k? Not smart. With depositors like this, I can see how 40% of deposits are not insured.
My gaud
I am numbed! The idiot should lose 400K for being sooo STUPID
$100K per DEPOSITOR. I’m sure his spouse was on there. And you can add kids on. And you can add FBO’s, too. Trust me, I asked.
But the guy was an idiot. I would never have put all of my eggs in one basket like that.
And for extra credit, confirm that their insurance premiums at the FDIC are up to date…
I’m assuming though that your kids would need to either have their own account, or have joint custody of the parents account?
Take nothing for granted.
Yeah and wasn’t he a senior exec at a finance company?
…”Nearly 40% of the bank’s $57.7 billion in deposits were not insured by the Federal Deposit Insurance”
My guess is that by Monday..their bank deposits will be…slightly…reduced.
Heli-Ben to the rescue! First, bail out Wall Street, then crank up the copters and flood the world with dollars.
Before you know it, that 500k POS will be worth 1 mill.
And that $1 U.S. note will be worth $0.50.
The fed and their politicos will not hesitate to screw holders of US fiat currency. This is just the beginning. The only thing holding the dollar up at this point are ten carrier battle groups and an Army with several divisions. Economic fundamentals are long gone to warrant the dollar being the reserve currency of the world.
“Before you know it, that 500k POS will be worth 1 mill.”
i dunno what people are talking about.. This is past history.
2002’s 150k POS is NOW costing us 400K.
We have already experienced the “inflation” everyone’s worried about.
next on the agenda is deflation..
You know, the powers that be are going to do whatever they need to do to prop up the economy, stocks, and credit markets. They don’t care about some jerk that took out a mortgage they can’t afford. They care about the people with a lot of money at stake, businesses, banks, lenders, etc.
Things may tank, but not without a lot of intervention by the government.
Yes, the mantra from my senators and rep is “There is a role for government to play”. So, seeing as how they want to do something, I decided it was my civic duty to call and tell them exactly what it is they should do. (no, it did not involve large objects, shoving or posteriors). I called and said that I completely agreed they should play a role and could do so by abolishing the FED. With a reminder that if they stood by idly as the American citizens and their currency were degraded, and global financial systems such as the NAU and Amero were allowed to take hold, I would be happy to stand by idly and watch as American officials were handed over to international courts for justice. Jails in other countries can be most unpleasant.
They are already trying to bail these businesses out.
It’s too late to stop it - the bust has been going on for too long.
Sorry if this has been posted already, but kind of a funny, and informative, read.
http://biz.yahoo.com/minyanville/070817/20070817fivethings_id.html?.v=3
So this is it? Should we all go out and buy now? Or continue to wait? Hell, even txchick is buying!! Am I a fool to wait?
No. Wait one year. That way, at least you will have real, comparable sales with which to evaluate the market value of the house you want to buy.
By “real” I mean transactions that reflect due diligence by lenders - no more inflated appraisals, liar loans or my personal favorite - “cash back” at closing that inflates the final sales price. Don’t know where you live buy you might just be amazed at the difference a year out.
The place I’m looking at wouldn’t sell for months or longer if I didn’t buy it. I just am very fond of that area. It’s full of foreclosures and FB’s burning houses down that they can’t sell (Ben has had stories about it on here) but it’s very pretty, secluded, hilly, heavily treed area. I have given up hope I can ever get anything in places like Sedona or Santa Fe.
I hear ya. Look, if you like the place and can afford it, go buy it. There is a huge difference between someone (you) buying a place she likes for its own sake with eyes wide open and some idiot trying to get rich quick borrowing seven times income.
Yesterday I heard of a REO in Cottonwood that went for $60k, bought a couple of years ago at $140k+.
Why have you given up?
Yeah, why have you? prices are sticky on the way down but you know they will come down… Sedona and Santa Fe will have rashes of foreclosures too.
You might be surprised. There are homes in Sedona now for under 300k. (Well, 3 to be exact). Never thought I would see anything in Sedona under 300 again, but here it is.
txchick,
You LOVE Santa Fe and Sedona…and those insane “listing” prices WILL come down. WAIT. The notion that Sedona will not fall is wrong. WAIT. I can’t tell you the number of antedotes I’m hearing from so-called well-heeled real estate geniuses….they are HURTING! They are hanging on like Ninjas to the rock wall! You WILL get the home of your dreams….just wait.
it’s just a matter of price, and if you can carry the loan comfortably.
Consider that the whole economy will take a severe hit.. how secure is your job.. or how secure is whatever form of future income, assuming it’s needed to make payments.
Lots of seemingly unrelated-to-housing/banking industries will get hurt. People connected to them will likewise get hurt.
I certainly wouldn’t touch anything at more than 50% of 2007 prices.. even then I’d shop around for a desperate seller and try and go lower.
And i’d be careful about picking the location, and try and determine a generally favorable economic forecast of the area.
In other words, do one’s homework like any experienced, successful, professional RE investor would..
It seems the Fed is going to “reinflate” the economy with a Fed Funds Rate cut probably just around the corner. I guess this will make me the fool for trying to save, living within my means, paying my bills on time, etc. What will all my saving bring me? Nothing except the realization that my savings will be worth far less tomorrow than they are today. I should have been like every other J6P and spent my money like it would be worthless tomorrow since that will be the case. At least it would have been fun while it lasted. This is unbelievable.
J6P has been front-running inflation for years by getting rid of his money as quickly as he can; he just didn’t know why he was doing it. Of course now he is broke. Don’t be a J6P, buy stuff that will hold value.
Personally, I rather enjoy watching J6P speculate with depreciating assets.
What’s next, autos, beer? Ooo, how about wine?
What’s next? Water.
Yes, it sure seems that way, but cheer up, the pinch is on and savers might just have some power in the coming year. Right now a lot of those looking to stick it to us - need us to buy their crap - right now! So choose purchases wisely - our dollar is our real vote - don’t buy overpriced crap, avoid big ticket items if possible. And lastly, as many here have already advised - live small -there will be better opportunities.
I know how you feel. Its worse in Japan I hear not that it makes me feel any better though. Invest in good companies that can raise their prices is the best defense I suppose.
Auger-Inn:
Would you mind elaborating on that tin foil hat stuff you were referring to earlier (FEMA detention camps)…or, is there a particular blog that discusses this in more detail?
Thanks, LAIG.
By the way, this could tie in to our topic here regarding housing, some websites are saying there is a plan to destroy the middle class through inflation, overloading them with debt, destroying the real buying power of their incomes, to make way for joining Canada, MX and the US, so that Americans will welcome the Amero as our new currency…
The “Amero?” The internet has provided an outlet for some pretty vivid imaginations out there.
“FEMA Detention Camps?” FEMA could not ‘detain’ a nose bleed, trust me.
FWIW, most of the “big things” that happen are accidental. That is because the small things are purposeful, but are conceived and executed independent of one another. Thus, the outcomes, the unforseen, larger consequences tend to be whopping accidents.
I really doubt there is a “plan” to destroy the middle class, per se.
I really doubt there is a ‘plan’ to save the middle class, per se.
I agree.
Agreed.
The powers that be would like us to believe that most things are accidental. That’s what the MSM tells us constantly, but I doubt it. But if you have some inside info, please share.
“Let them eat cake”.
and
“This administration is doing everything we can to end the stalemate in an efficient way. We’re making the right decisions to bring the solution to an end.”
nothing to see here, move along.
and
“These are not the droids you are looking for”
This thread reminds me of a conversation I had recently about what constitutes a “conspiracy.” Some believe it requires a coordinated, articulated strategy that is hatched in secret ( classic movie stuff). My own view is that similarly situated people who understand the factors that benefit them become “hardwired” to game the system for their own good, even when it screws the general public, without ever having to say so. It is much more banal than the movies want us to believe, but the effect is the same.
I agree.
I don’t why conspiracy theories are so popular to explain any number of negative events or situations. All it takes is self-interest at the expense of the public good and/or stupidity and/or a combination of both. As far as I can tell most of life’s el crapo situations, including the housing bubble arise from these set of circumstances.
Well, I doubt I’ll convince anyone differently but I’ll certainly be happy to try and connect some dots.
KBR (a subsidiary of Haliburton at the time) got a no bid contract to provide detention facilities in the event of an “immigration” emergency. Google KBR and “detention camps” and you’ll get any number of articles to read about them. Here is one I picked at random.
http://robwire.com/?q=node/894
Some are better than others so you may have to search around a bit.
Now, has this administration or any previous administrations demonstrated a concern about border security? I would argue they actually want the borders open judging from their actions. So this doesn’t really square with me. There have been reports of newly built detention facilities sighted but I don’t have a reference and those could be false.
The North American Union is an open secret. Please google for more info. Lou Dobbs has reported it on CNN even.
Here is a site set up to fight the effort.
http://www.stopthenorthamericanunion.com/
There was a bill submitted by a congressman (tancredo?) to outlaw this action but I understand it is buried and won’t be voted on. As you may know, treaties have to be ratified by congress. Agreements do not have to be ratified. Hence the SPP agreement. http://www.spp.gov (where they tell you not to worry, it’s not a conspiracy)
I suspect that it could only get implemented during a martial law scenario although that is just my guess. That is mainly why I am concerned about some false flag event or some other national emergency. (the president has that power through a presidential order).
The Amero is part of the SPP/NAU movement and is referenced here:
http://www.humanevents.com/article.php?id=15017
The NAFTA Superhighway is all part of this effort (I-35) where the PTB is buying up all the land either side of a route from Texas to Canada (400yards across). Here is an article from presidential candidate Ron Paul about this:
http://www.house.gov/paul/tst/tst2006/tst103006.htm
Of course for those of you who live in this rosy world where all is well and conspiracys don’t exist then by all means ignore this news.
The root theory about why is rather complicated and unproveable so I won’t bother. There is more than enough material to at least raise a question or two in the mind of even the most ardent disbeliever. Hope this answered you questions.
I just pulled into Lake Placid, NY and will be out on a hike so I’ll check back later!
Scary. I can’t imagine what these people think we have to gain from such a Union, other than power for themselves of course.
I think even the dullest thinking J6P by now has to figure out he is screwed from illegal immigration, outsourcing, VISA’s, loss of manufacturing jobs and unions, etc. Whether one believes in conspiracies or not, just as an above poster mentioned, it could be just plain greed. But we are definitely turning into a third world country defined as: few wealthy and lots of poor/working class with few middle class. At this point you are either making lots of money and at top of middle class, or you are losing ground and headed towards lower working class. But times are definitely changing…
America’s future…Argentina.
At the moment, Argentina would be a terrific choice… if only they can keep further IMF manipulations from their door…
Thanks auger….. I’m lousy at hauling the hyperlinks in, so greatly appreciate your doing so, not to mention collecting reputable sources in the first place.
Complacency is going to kill us …
Just had a little chat with my neighbor who has been trying to sell for 2 years. He recently lowered the price (last week, I think) by $20K, but called the realtor today and wants to raise it 70K given today’s development with the fed. He said he knew all along the government wouldn’t “rob me of my equity”, and everything would work out in the end. Nice guy. I’m actually happy he’s happy.
OK. I am going into depression now.
That’s fine. It still won’t sell now with tougher underwriting.
“Appraisal comes in”
Appraiser “Sorry, it is overpriced by about 100k”
Neighbor “But the FED just cut rates”
Appraiser “So what, the house is worth less because the house down the street was just foreclosed on and even with this appraisal, the seller needs to put 20% down.”
Neighborhood “We need another rate cut!”
Appriaser “That still won’t fix it idiot”
The govt owes your neighbor his home equity gains.
Or how about this…
Neighbor “So did they make an offer”
Realtor “Well, since the FED is cutting rates they said they want to hold out for a better rate”
Neighbor “But everyone is going to rush in and buy houses now. The NAR said so”
Realtor “We still have 3 years of inventory to work off”
Neighbor “But prices will be going up”
Realtor “Actually, they are going down because now everyone is holding out for better rates. Bernanke, believe it or not, just made my job that much harder because of idiots like you.”
Nice guy perhaps but he sounds like a bonehead if he thinks raising his price will actually work when he could not sell for 2 years at lower prices. Of course all he needs is one other bonehead with enough down for a loan and he will make me sound like a bonehead.
The Fed rate cut will have $0 impact on this guys home price. The Fed rate cut will not help the MBS market one iota. Understanding of the risks inherent in MBS loan pools is just as bad as it was yesterday.
The seller just got a boost of confidence based on his misunderstanding of the financial markets.
yep this is why im still out of the market. looking for another drop before I reenter
My very own spouse, despite my over and over explaining to him the stock market is currently tanking, actually keeps asking “so, if the stock market is down, won’t that make people buy houses? because where are they going to put their money?”. seriously. and he’s got a doctorate. But, fear (on hubby’s part…he still lives in fear, even right now, that if he doesn’t buy thissecond he’ll be priced out.) and greed (the neighbor who refuses to be ‘robbed’ of his right to equity) are so powerful. As is obvious!
oops…i meant to say “explain *why* the stock market…”
I’ve tried to explain it anyway.
I sorta gave up after that bit though lol..
Shel, you need a smarter husband….like me.
This is why graduate degrees are totally overrated. Although Shel is right, fear and greed are powerful motivators.
The enormous amount of inbreeding of Wall Street’s financial products is unbelievable. Every product has so many ties to other products. The result is financial hemophilia.
Being Southern, thinking about Wall Street’s economic inbreeding keeps giving me a mental image of Banjo Boy in Deliverance. Everything sounded good, but….
Banjo Boy fits well.. a classic case of idiot-savant.
Wall street is great at math but needs a compass to locate it’s ass..
Do read this. This guy and I think so much I alike I think we must have been separated at birth. I learned most of what I know from him.
http://www.minyanville.com/articles/NYSE-rate+cut-redemption-/index/a/13769
Minyanville rules… I consider the entire site a must-read on at least a weekly basis, if not daily.
Just read it. Please don’t invite me to your family reunion.
Luv,
Jen
LOL
No problem. Be a wage slave forever.
Jen:
Were you talking to TX Chick? For one, I really appreciate her input. I like being able to glean at least some understanding of her underlying philosphy. She’s nice enough to give me advice now and then (although I’ve usually already done the wrong thing by the time she writes in), and I really would not like for her to stop!
Jen please give us your background and experience. Thanks.
I hope that you and Mr. Cooper are right, TX.
OT: I wonder how much cheaper it is to build now- ? you can probably find a cleared lot w a poured foundation/slab these days
This is good too
http://www.minyanville.com/articles/BZH-CFC-S%26P-QQQQ-DJIA/index/a/13774
I could see that options were wagging the dog…
I just think it s cuz all the bulls are on vacation still and will be back in two weeks.
I completely and 100 pct agree with that analysis.
OK, totally off topic, but I don’t know if anyone is reading bits and buckets to the end.
For our NYC friends, I have an extra ticket to Shakespeare in the Park tonight. If anyone wants it let me know how to e-mail you and we can make arrangements. It will be meet at the theater, part ways at the theater for safety reasons. Only one ticket, and the location isn’t fabulous (row W), but, hey, it’s free and you didn’t have to wait in line. Show is Midsummer Nights Dream at the Delacorte theater in Central Park at 8:00.
Tempting, but I’ll probaby go with the family in a week or two.
If you aren’t aware, they have a big stand-by line, so the ticket won’t be wasted. Just give it back.
Oh, absolutely. I normally would only have taken one, except I realized that someone here might want it. I got in off the stand by line once - Patrick Stewart in the Tempest. It was awsome.
Now that it is here, it is scarier than I thought.
Fed cuts rates and stocks soar.
Well, ARM’s are resetting at a record clip in the next few months. Do you think the big boys are going to offer them teaser rates? No, I bet the Dems get Fannie and Freddit to pick up the load. Might as well keep housing unaffordable and keep the sheeple up to their eyeballs in debt. After all, that is the American Way.
Debt = control + profits. Two big birds with one my-tee heavy stone.
‘NovaStar Financial Inc , a subprime mortgage lender, said on Friday it will fire about 500 employees, or 37 percent of its work force, as it reduces home loans given tough capital markets conditions.’
‘The lender also said it will temporarily stop offering home loans through brokers, and instead continue to offer mortgages through its retail operations.
They should be able to easily find new jobs because of the rate cuts. No need to worry. The FED is looking out for them.
Cat. 3 hurricane heading for TX. Lou Minatti, guess this will end the bull market in Galveston and Houston RE.
Home Depot stock way up! LOL
Gas and Oil up!
Insurance Stocks Way Down!
oil’s going out of style next week
USO might make a great short if it goes up a lot. At least a put.
USO is pretty much broken by design - it uses front-month futures and erodes far quicker than GLD does, for example. Look how flat it’s been most of this year.
Tx, Since you day trade, is this rally coming to soon? 1 hr to close
I haven’t done anything since the open.
No I was hoping for a 600 point rally, oh well . LOL
If you want a picture of the future, imagine a boot stamping on the human face - forever. ~George Orwell
thats a great stamp idea!
Etrade put out a statement yesterday with some stats on their loans. Etrade is really a mortgage lender funded by their brokerage and bank customers. It looks like they tend to the higher-quality stuff. They didn’t put out their past due information.
Their stock bounced betwee $10 and $15 yesterday. Looked like a BK candidate. I want to pull out my money and put it into Fidelity but haven’t had the time to spend an hour on the phone with both companies. If you have opinions on Etrade as to whether or not they are in real trouble, I’m all ears.
This is the first I’ve heard about a bank run in the US in quite some time. I did read about them in Argentina around five or six years ago.
Hey Michael:
I have a feeling we’ll hear something before E*Trade starts to go (as we’ve heard about Countrywide and some of the smaller banks). The thing is, once you’ve taken your money out of E*Trade, how will you know where to put it? Maybe a credit union or something.
Gotta get me one of these action figures for Christmas.
Ben Bernanke Action Figure with Helicopter.
http://tinyurl.com/2c5zju
I love it! Is it real? It could be right up there with the Michael Vick dog chew toy.
I dunno. I wonder if it even flies. It will obviously end in a crash. No pun intended.
Liar.
Seems like the day for lyrics, so…
(To the tune of “Unforgettable” by Nat King Cole)
Unsustainable, thats what you are
Unsustainable though cheer or NAR
Like a subprime loan that clings to me
How the thought of a reset does things to me
Never before has a market been more
Unsustainable in every way
And forever more, thats how you’ll stay
Thats why, bonehead, its incredible
That a scheme so unsustainable
Thinks that I am a sucker too
Unsustainable in every way
And forever more, thats how you’ll stay
Thats why, Mr. NAR, its incredible
That someone so unscrupulous
Thinks that I’m uninformed too
LOL! It’s not helping CP.
Aug. 17 (Bloomberg) — Asset-backed commercial paper yields soared by the most since the Sept. 11, 2001, terrorist attacks after the Federal Reserve cut its discount rate to try to calm financial markets….
The Fed’s action “may help add confidence that action will be taken when it’s necessary, but further action is needed to actually offset the credit contraction we have had,” Ashish Shah, global head of credit strategy at Lehman Brothers Holdings Inc. said in interview from New York. “No one actually wants to tap the Fed window. So while this is good, it doesn’t actually add any liquidity into the system. It’s more of a confidence booster.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aWIgZvYwnrvA&refer=home
Dear Ben (Bernanke, that is),
The only way to clear up the dead, rotten wood in the forests is to let mother nature takes her course. That big fire is long overdue. A drop of water here and there may delay the inevitable but will make it worse when it finally arrives. The fire may be painful to watch but we know the end will be near and the regeneration will soon follow.
Have a bit of discipline and integrity, and not to dance to the tone of the greedy, desperate snake charmers. We already have an Allen G. One more like him at the Feb, we are done!
Sincerely,
A J6P after just one drink
Story from “The Great Depression” by Robert S. McElvaine:
“In the fall of 1929….Albert Wiggin, chairman of Chase National Bank…..used more than $6 million of Chase funds to finance an operation in which he sold short some 42,506 shares of stock in his own bank. In the process, while so many were being wiped out by the Crash, Wiggin netted the not inconsiderable profit of $4,008,538 from the decline in the value of Chase stock.”
This in an era when the median income in America was $750. Farmers that year averaged $250/net income.
Why, oh why do people keep insisting this meltdown is going to affect the ones responsible?
“I am not quite sure what the advantage is in having a few more dollars to spend if the air is too dirty to breathe, the water too polluted to drink, the commuters are losing out in the struggle to get in and out of the city, the streets are filthy, and the schools so bad that the young perhaps wisely stay away, and the hoodlums roll citizens for some of the dollars they saved in the tax cut.” John Kenneth Galbraith
I am sickened by the smugness of the CNBC commentators. They saved Wall Street today, but the rest of us be damned. Of course, then I changed the channel and watched the owners of the coal mine and the so-called mine worker safety administrators lie their a$$es off about what caused the deaths of the miners and their rescuers. That’ll teach me to take a vacation day and spend part of it watching TV. I should have spent the morning on this blog, where I can learn the truth.
That mine had over 300 OSHA violations…it was a death trap.
That skeezy old man that owns it who now appears everywhere looking sorry is a scuzz.
Oh, excuse me, a wealthy man who provided jobs for the working poor.
How about the Michael Vick stories today. I could not read them but just seeing the headlines reminded me of why I do what I do, again.
Another ponsi scheme, but this time the Fed had to bail out the good old boys club, meanwhile don’t dare ask what is left in the treasury for a rainy day they might tell you we can’t find the key to the vault, we will have to have one made in China?
“Lutz, however, described the downturn as a ‘momentary correction.’ ‘We have a very serious credit crunch in the U.S., but that was triggered by a bubble-like prosperity due to sub-prime mortgages and a building boom that was unjustified,’ he said.”
I find it interesting that he did not speak up during the housing boom. Perhaps he was too busy counting his stock option dollars.
Derivative Dangers
I just found this article, written in 11/1999 about the risks of derivatives. Some of it supposes an in-depth knowledge of derivatives, but the author does a great job expressing his points colorfully. And, the current environment makes some of his warnings about risk painfully clear. It’s quite long, but here’s some snips.
———————————————-
By Martin Mayer
Let us agree that the risk of being in a movie theater in a town where some nut has been crying “Fire” in movie theaters can be expressed as:
R=f(ND, WD, WA, NP, AP, DFE, NPBYA)
Where ND is the Number of Doors;
WD is the Width of the Doorways;
WA is the Width of the Aisles;
NP is the Number of People in the Audience;
AP is the Athleticism of the People in the Audience;
DFE is the Distance From the Exit of the seat you occupy; and
NPBYA is the Number of People Between You and the Aisle.
The only factors under your control are DFE and NPBYA, and all of the factors are S-curves, with a steeply ascending measurement of danger beyond a threshold. You cannot determine how urgently you should consider ND, WD and WA, or how much weight you should put on DFE or NPBYA, unless you know NP. If the theater is so dark that you cannot tell the size of the audience, you live in a world of uncertainty, where the calculation of probabilities by mathematical means is analogous to the drunk looking for his lost keys under the lamppost.
In the theater of over-the-counter derivatives contracts entered into behind closed doors, with no register of open interest, you cannot know NP, you cannot know whether ND or WD have kicked into the equation, and you cannot even guess the probability that when you go to the movies you will get out alive. A door that would be wide enough for you to pass through even if you are the tenth of 10 people rushing for the exit would be a killer if a hundred people were trying to escape at once. And in the derivatives context, there is a further problem that the more popular the analysis, the bigger the crowd—and the more likely that leveraging will fill the aisles with fat people at the first whiff of smoke. By the time the Fed bulldozes the wall to get everybody out, there are going to be lots of dead.
…