The Seeming Ability To Defy Gravity Is Seen As An Illusion
It’s Friday desk clearing time for this blogger. “Jeffrey Finch spelled out the problem in a hand-written letter. ‘I can no longer afford my home,’ he wrote in April to the firm collecting payments for two subprime mortgages the Finches obtained when the couple refinanced their Jamaica Plain home last year. The couple found a solution to their dilemma, a ’short sale,’ in which a lender agrees to accept less than the total amount remaining on the mortgage.”
“HomEq and investors who held their mortgages forgave $168,500 of the couple’s $440,000 total debt, allowing HomeVestors to buy their house for $271,500, renovate it, and resell it for a profit. ‘I expect it to increase’ in coming months, said Robert Caruso, the Bank of America Corp’s national servicing executive.”
“While Denise Finch lost the house in which she grew up, the couple bought a newer one, from HomeVestors, for $152,000 in Charlotte, N.C., where both have family.”
“If you’re looking to buy a new home, the Montgomery area is a buyer’s market. ‘We’re feeling the pinch. There are a tremendous number of homes on the market right now,’ said Taylor Jernigan, president of the Montgomery Area Association of Realtors.”
“‘It is taking longer for people to sell their homes,’ Jernigan said, ‘and they’re getting a slightly lower price.’”
“Jeff Pettyjohn is trying to sell his home in the High Point Terrace area of East Memphis. He says, ‘I thought I could just stick the sign in the yard and it would go quick, but things have slowed down definitely.’”
“He says it used to be easy to sell a house in his neighborhood.’The way I always kind of refer to it is it’s musical houses and the music stopped.’ However, he says he’s still driven to wait for the price he wants. ‘It’s gonna turn back around. So I’m not, I don’t fear that it’s not going to turn back around.’”
“Illinois’ 5,530 homes in foreclosure in July put the state 15th in the nation, RealtyTrac said. Of those, 4,652 were in the Chicago area. Marki Lemons, a Chicago real estate agent who specializes in preforeclosure sales, said banks are now offering ’short’ sales, whereas in a balanced market they were mum about the possibility.”
“‘They’re willing to take less than what’s owed to them, to get it off their books. I’d say on average they’re willing to go down about 20 percent, Lemons said.”
“South Holland real estate agent Daryl Russell said the wave of foreclosures is not the investment bonanza that some clients envision because loans have dried up for them, too.”
“‘I had three deals that were about to close lately, and none of them happened’ because lenders changed their minds, he said. ‘I’m talking about people with 740 credit scores who six months ago could have bought two properties.’”
“‘These days, there is a lot more to this business than just sticking a sign in the yard,’ said Lydia Player, who sells houses in North Dallas neighborhoods. ‘People were used to moving properties quickly, and it was payday every day,’ said Lois Geller, a consultant who advises real estate agents. ‘Now, they are getting a little humble.’”
“Edmonton’s once-torrid housing market is showing clear signs of cooling off, setting the stage for what some observers say could become a buyers’ market over the next six months.”
“‘Over the last couple of months, most new home builders, in terms of sales, have hit a wall. That’s partly because…there’s too much choice out there,’ says David Bates, at Edmonton’s Reid Built Homes.”
“Gregg Becker, Jayman MasterBuilt’s Edmonton-area general manager, sees the same trend unfolding. ‘We’re looking at inventories now that are higher than anything we’ve seen since 1994. We also saw a resale price drop in June for the first time in a long while, and a lot of the major home builders are sitting with a good number of homes in inventory,’ he notes.”
“The Federal Reserve’s sudden discount rate cut may have stimulated rallies across Asia on Monday, but former chief economist of Morgan Stanley, Stephen Roach, believes the world’s central banks were ‘asleep at the switch’ when it mattered, when they might have prevented a credit bubble that is posing a serious threat to global financial markets.”
“Roach traced the current shakeout to the popping of the tech stock bubble, when central banks led by the U.S. made massive injections of liquidity to avoid deflation.”
“The excess liquidity driven by the Federal Reserve’s infusion, to Roach, was the ‘original sin,’ which ‘has allowed one bubble to beget another, from equities to housing to credit.’”
“It should come as no secret that admonitions in favor of thrift would be almost universally ignored. For we as a society appear to be hooked on debt and have been for many years. Indeed, the personal saving rate in the United States has been negative for more than two years.”
“Debt has played a significant role in the ability of our economy to spread the benefits of growth more widely. For many American homeowners, the extraordinary appreciation in the value of those homes bolstered their net wealth.”
“By drawing on that equity windfall to bolster their spending with seemingly little effort, consumers appeared to be able to ‘have their cake and eat it too.’”
“But the deflating housing bubble has changed all that. The adverse consequences seem to be spreading from subprime borrowers to more creditworthy individuals. Thus, the seeming ability to defy gravity in the financial marketplace is coming to be seen as an illusion.”
“The term ‘moral hazard‘ is being bandied about in commentary about the sub-prime mortgage woes currently roiling our financial markets.”
“Many unenlightened commentators suggest that the problem is that lenders have been ‘predatory’ and charged usurious rates. But if the lenders had been charging rates that were actually too high, they would still be in business!”
“Esteemed 19th century British economist, Walter Bagehot, in the book, Lombard Street back in 1873, had the right prescription for failing financial markets: ‘Lend freely against good collateral at a penalty rate.’”
“Seems pretty simple: ascertain the real value of the collateral, raise the rates and continue making loans.”
“As the previous century came to a close amidst a period of great national wealth, American financial institutions began offering mortgage options to consumers not likely to qualify for traditional loans.”
“Politicians are now clamoring for taxpayer bailouts in the interest of subprime lenders in order to both prevent them from going bankrupt and their clients from facing foreclosures. Politicians promoting this program cling to the fallacy that government intervention in failing market sectors can benefit overall economic progress in spite of obvious realities.”
“Regardless of how many families loose their home or how many corporations loose their business as a result of the temporary ‘crisis,’ the national economy will be better when the market is allowed to correct its own flaws than when the government intervenes in the interest of engineering a better result.”
“I would rather not share in the responsibility for the imprudent financial decisions that my fellow Americans make at the consequence of my own monetary standing. No, I would rather enjoy the fruits of my financial stewardship entirely ‘own my own.’”
Another great week of building a housing bubble consensus! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Another sweet week…
Thanks for getting us together.
EVERYONE PLEASE SIGN THIS PETITION TO STOP THE BAILOUT
http://tinyurl.com/ywkfvj
We have to let Congress know that the MAJORITY of Americans are against a bailout of the fraudsters, flippers, liars, and other assorted organized criminals that ran this ponzi scheme. Remember, the squeaky wheel gets the oil. We need to start making some noise NOW!!!
I signed it, and forwarded the link to several others who share our views. Very pleased to see 1600+ signatures as of Friday evening.
“Stocks started out flat but jumped following a stronger-than-expected reading on new homes sales for July. That report followed a reading showing orders to factories for big-ticket goods rose sharply in July.”
LMAO! Oh, man, who believes this stuff anymore? As far as I am concerned, it is such BS.
Right — now new homes are only piling up in inventory at a 511,000 annual rate, given July new home sales running at 870,000 per annum and housing starts running at 1,381,000 per year.
‘Oh, man, who believes this stuff anymore?’
Agreed! The brain trust on the Planet Denial believeth all things. I can hardly wait for the markets to open everyday and watch battle begin. There was a revelation that the banks were alerted to the Fed lowering the rate the evening before the public announcement. NO ONE EVEN COMPLAINS!
The truth is the admistration will do what ever it takes to keep the DOW at its current level. It does nor matter how the vast majority od the people are doing economically, the stock markets will continue to hit their mark.
There could be a severe recession (isn’t it started?), even a depression yet the DOW will still be at 13,000. Who knows, it might even go to 15,000.
And unemployment? That could drop to a reported 4% or so whereas the reality would be 3 or 4 times that.
I no longer believe any economic statistic produced by this admin (and haven’t for the past few years), its all a pan of predetermined fudge.
Good point. The Great Depression is tied so closely to the stock market crash of 1929, that most people equate the two. If the stock market can somehow be propped up (even at the expense of runaway inflation and mountains of debt), the experts can continue to spout about how robust the economy is. Even as middle America is rendered penniless.
A homebuilder, in commenting on this story, had this to say:
“The problem with new home sales reports is that they are approximately 2 years behind. The slump has been around since late 2004. My company has been building and remodeling homes for over 35 years and I can tell you that we are intentional misled on how the market is realy doing. The real estate market is in a slump as well all over the United States. RW Bolin/Crestwood”
Not sure what he means by this, is he saying the report for July is not data from July just past, but July, 2005????? In a way, that would make sense, I’ll bet new home sales went up in July, 2005. But how weird, to be operating on two year old data and issuing it as current. No wonder people are so messed up.
Its about as phoney as the “consumer confidence report”.
a Superhero for our time…
Prestidigitationman
“But the deflating housing bubble has changed all that. The adverse consequences seem to be spreading from subprime borrowers to more creditworthy individuals. Thus, the seeming ability to defy gravity in the financial marketplace is coming to be seen as an illusion.”
“‘I had three deals that were about to close lately, and none of them happened’ because lenders changed their minds, he said. ‘I’m talking about people with 740 credit scores who six months ago could have bought two properties.’”
Obviously nothing wrong with the fact that someone who cannot afford one home could have bought two six months ago. Nope… something must be wrong with the markets; obviously the Fed needs to inject more cash.
Either that or the housing bubble was so big that there is nothing anyone can do to stop it falling apart.
Got popcorn?
Neil
This RE insider’s quote is not entirely correct. Let me try to fix it:
‘I’m talking about people with 740 credit scores who six months ago could have bought
twoten properties.’”There. Now this person makes lots more sense.
Got 10% down?
Always look for the missing facts in an article. They are more telling than was is included. No mention of how much down payment these 740 credit people had. Obviously, because it was purposely left out, zero is the answer. No wonder the lender backed out.
No down? No deal.
You’ve gotta be kidding me…
http://tampa.craigslist.org/rfs/405178181.html
Good Lord! I hope the picture is doctored, ‘cus the erection of that building lifts the term ‘phallic symbol’ to ultimate lenghts.
Man, that was a hard stretch to write.
Sort of symbolic of the whole housing bubble, isn’t it? Ready for anyone who is willing to bend over. Plus, it wants to shrivel, but the Fed keeps pumping Viagra into the system.
You guys crack me up
So….. Donald is managing Dr. Evil’s spaceship in Tampa….nice.
No doubt this tower will also be worth “One Million Dollars” when fully sold out.
(even though the FED will recognize it’s value at “One Hundred Billion Dollars”, since that will ultimately be the collective price paid for the units).
And towering over a stretch of water (symbolizing female).
Trump advertises his condo’s on Craigs list????
It looks like it belongs in the VIP store, not on Craig’s list
“Roach traced the current shakeout to the popping of the tech stock bubble, when central banks led by the U.S. made massive injections of liquidity to avoid deflation.”
But didn’t central banks led by the U.S. make massive injections of liquidity to avoid deflation the past couple of weeks? Is it different this time, or deja vu all over again?
It’s no different this time. I think he means they didn’t learn their lesson the first time around. He’s right we just go from one bubble to another and quickly forget what happened before.
Roach has been right on this for years. He called for a 200 basis point jump in the FFR over four(!) years ago to head off excesses. Fell on deaf ears, of course.
These are pretty minor compared to the injections of 2001-2003. All the FED has done recently is supporting the rate it set + 2.1 or so billion dollars. I don’t recall exactly how much they loaned to DB.
Duck Duck Goose, Hot-Potato, now Musical Chairs (er, houses)
“He says it used to be easy to sell a house in his neighborhood.’The way I always kind of refer to it is it’s musical houses and the music stopped.’”
That’s a bad analogy.
Here’s a better one. It’s like it was musical houses… and they suddenly applied a nice coat of super-glue to all the chairs, stopped the music, and then set alligators free in the room. The renters (losers) fled shrieking from the room while the ones in chairs– well some squirmed, some invited the renters into their laps… some even lit the chair on fire. Eventually, the alligators won.
That’s my analogy.
“It’s gonna turn back around. So I’m not, I don’t fear that it’s not going to turn back around.”
Can I get an english translation of this please ? I don’t speak idiotese.
He’s all tied up in nots ’cause it ain’t gonna turn around.
Good one.
“Seems pretty simple: ascertain the real value of the collateral, raise the rates and continue making loans.”
Easy as pie, indeed, but for one little complication: If you aren’t willing to sell the collateral in order to determine its real value, then you don’t know the real value, and have no basis for accepting it as collateral according to Bagehot’s classic advice.
But I am sure the Fed made sure to use recent comparable sales for valuing all the collateral against which it flooded the market with liquidity these last two weeks, right?
But isn’t that the ultimate trap that underpins this bubble - that the real value of today’s inflated valuations of equities and assets must not be known or disclosed at any cost. The real value of that pile of CDO’s and MBS junk held worldwide is being hidden (so far successfully) by continued cash infusions by the central banks. It will not continue forever. It simpy can’t.
When someone with an agenda controls the money supply it is very hard to place an accurate value on something. One key reason it’s hard to know what is going to happen is so much is in the hands of people whose motives are very hard to discern.
By the way, the houses themselves are still not “marked to market”. Each owner THINKS the house is worth so and so and would scoff at low offers, so you see, we are going to get the same kind of collapse in housing prices as we saw in securities in a few months when sellers MUST sell and find out their house is worth HALF what they thought.
Quite a shock, but the price you pay for living in a fantasy world.
Anybody out there in Montgomery County, MD? What are you seeing as far as sales and/or inventory. Any action?
Well it’s Saturday morning here in Australia and I log on to Yahoo and find the DOW heading for the moon. With all that’s been happening my first reaction was………..I don’t believe it!!!!
Then I thought maybe this is a new era………things just might be different this time. Could this be the new deal?
http://www.metacafe.com/watch/320959/real_levitation_no_trick_no_fake/
Isn’t it something . White is black and black is white ,bad is good and good is bad . I don’t understand how bad news over all about the economy and the future would bring about a 150 point rally .You would think that people would just wait it out but they are convinced that it’s a great buying opportunity in stocks right now . Oh well .
Fair is foul and foul is fair:
hover through the fog and filthy air.
The name may have changed, but the play is still the same.
Good stuff.
Don’t discuss the “Scottish play”! It’s bad luck!
‘would bring about a 150 point rally’
- This was probably short covering.
“‘These days, there is a lot more to this business than just sticking a sign in the yard,’ said Lydia Player, who sells houses in North Dallas neighborhoods. ‘People were used to moving properties quickly, and it was payday every day,’ said Lois Geller, a consultant who advises real estate agents. ‘Now, they are getting a little humble.’”
No kidding. When I sold real estate we all worked 10 and 12 hour days, and were on call 7/365, and it took a lot to get someone’s property sold. Agents now don’t have a clue beyond “putting a sign in the yard”, but they soon will. That’s why most of them will be gone. They’re too lazy to actually work for their money. This next market will tell who’s an agent willing to work to earn a living and who’s a fly-by-night, make-a-quick-buck scam artist.
That’s why they need a “consultant”.
Why 4% of subprime may bring down 64% of the housing market…
As the 4% subprime/no-doc “vital few” borrowers default, they have triggered an avalanche will will soon affect 64% of all mortgage holders. Eventually, the 20% “vital few” whose mortgages, equity lines of credit and other housing-based debt is affected will then have outsized influence on the values of fully 80% of U.S. and global real estate valuations.
The total value of US residential property is now around $19 trillion, according to the Joint Center for Housing Studies at Harvard University. The US Census Bureau calculates that there are around 123.9m housing units in the US. (this includes condos and rental apartments)
Total household debt is $11 trillion: $9 trillion in mortgages and $2 trillion in revolving credit (credit cards, etc.) That means net equity for all 75 million American homeowners is $8 trillion ($19 T - $11 T = $8 T)–including the 25 million households who own their homes free and clear. What if we subtract those folks? Since 1/3 of all homes are owned free and clear, let’s assume about a 1/3 of the $19 trillion is represented by these mortgage-free homes.
That’s $6.5 trillion, which means all 50 million mortgage holders are left with a grand total of $1.5 trillion in net equity. If housing values decline 15%, that’s a $2.85 trillion haircut off net equity. If we set 2/3 of that against mortgaged real estate, (the other 1/3 being a decline in the value of free and clear homes), then the decline collectively suffered by all mortgage holders is $1.9 trillion–enough to put them in a negative equity hole.
This is a staggering conclusion, for it suggests just how a “mere” 4% delinquency/foreclosure rate could trigger a “modest” 15% decline in housing values, which would put the nation’s mortgage holders (if taken in aggregate) under water: the nation’s household debt would exceed the value of the mortgaged residential real estate.
So CNBC + Larry Kudlow, please tell me the “Goldilocks” story again so I can feel warm and fuzzy about the future of the US Economy.
Used to be 80/20 for the “vital few and the trivial many”. Maybe there’s been an amplification effect?
You got it. In California for example its even worse since so few home are owned free and clear. Also a lot of these owned homes are actually in the rustbelt/southern regions and are obviously older homes of lesser value. So your being pretty conservative.
The loses are probably quite a bit higher.
The US housing market is dead for a generation.
But ,I don’t agree with putting a bunch of money into a property to get it sold in a down market either . A clean up job and a paint job ,along with fixing known defects is about all I would put into a house . The cheaper buyers can get the property for ,the more buyers can qualify for the loan .
But , what do I know .The television programs would like people to think that a huge money investment will get their house sold ,but I can’t see how they will re-coup the money in a down market .
“Regardless of how many families loose their home or how many corporations loose their business as a result of the temporary ‘crisis,’ the national economy will be better when the market is allowed to correct its own flaws….”
A recurring usage problem.
Better: Lose lips sink ships, and lose stools stink pools.
Clearly, the housing market needs to lose many loose stools at so many levels.
Arrghh, pet peeve of mine, that “loose” thing. For a second, I was having a horrible half-wit Casey flashback.
Then again, the author is just a high school junior, and I’ll dang sure forgive him that minor slip, given that the rest of of his article seems remarkable cogent for someone of that age. My gawd, is this what high school juniors are writing about these days? Good on him!
Petition to stop the ponzi scheme bailout
http://tinyurl.com/ywkfvj
I’m willing to bet that if someone hit the major search engine message boards regarding housing and the stock market this petition could grow beyond belief.
Don’t just put this here.
One home loan makes your debt larger
And one home loan makes your debt small
And the ones that Greenspan made possible
Don’t do anything at all
Go ask Alan
When the housing market stalls
And if you go chasing rabid returns
You know the bubble boils over in the fall
Tell em’ a hookah smokin’ blogger
Has given you the call
Recall Alan
When he was just small
When men on the chessboard
Get up and tell you what to do
And you’ve just had some kind of mushroom
And your mind is moving low
Go ask Alan
I think he’ll know
When logic and proportion
Have fallen sloppy dead
And the White Knight is talking bad words
And the Red Queen’s” “off with the Fed!”
Remember what the dormouse said
Heed the Fed
http://www.youtube.com/watch?v=reYcNa_N520
Very nice.
Now we need something to the tune of “These Boots were Made for Walking”.
tasty…
You keep saying you’ve got something for me
something you call redemption, but confess
You’ve been messin’ where you shouldn’t have been a messin’
and now someone else is gettin’ all your best
Hedgefunds were made for walking, and that’s just what they’ll do
one of these days you’ll see the principals in the Caymans too
You keep lying, when you oughta be truthin’
and you keep losin’ when you oughta not bet
You keep samin’ when you oughta be changin’
Now what’s right is right, but you ain’t been right yet
Hedgefunds were made for walking, and that’s just what they’ll do
One of those non extradition countries, that one… it’ll do
You keep playin’ where you shouldn’t be playin
and you keep thinkin’ that you´ll never get burnt
Ha! I just found me a brand new box of matches yeah
and what I know you ain’t HAD time to learn
Hedgefunds were made for walking, and that’s just what they’ll do
Are you ready Hedgies?, Start Walkin’
http://www.youtube.com/watch?v=7OU7Nezg7Ls
a lad insane, very nice. Sorry, it should be “…are…” not “…were…”.
I’m thinking of FBs doing the “Cramer” and walking from their houses.
Next loan app I fill out will be no doc on the short side. I will understate every asset I own.
Love it! Keep them coming.
(To the tune of Johnny Cash’s Ring of Fire)
Debt - has burned my name
I’ve lost - most everything
I thought I could
Get rich quick
Oh… but the fire went wild
Now I own five houses made of fire
The price goes down, down, down
And the debt goes higher
And it burns, burns, burns
My credit’s on fire…
That debt of fire…
Five years - were very sweet
Made cash, like Wall Street
I fell for it like a dupe
Now, I’ll never recoup
That debt of fire…
“Regardless of how many families loose their home or how many corporations loose their business as a result of the temporary ‘crisis,’ the national economy will be better when the market is allowed to correct its own flaws than when the government intervenes in the interest of engineering a better result.”
This is exactly what happened in the late 80s and early 90s setting the stage for a nice economic boom in the 1990s.
it happened, but now I question if it was real. I think we are reaping the long-term effects of what started back in the 80s, not 2000
That’s 4,652 short stacks of houses
“Illinois’ 5,530 homes in foreclosure in July put the state 15th in the nation, RealtyTrac said. Of those, 4,652 were in the Chicago area. Marki Lemons, a Chicago real estate agent who specializes in preforeclosure sales, said banks are now offering ’short’ sales, whereas in a balanced market they were mum about the possibility.”
“‘They’re willing to take less than what’s owed to them, to get it off their books. I’d say on average they’re willing to go down about 20 percent, Lemons said.
““‘They’re willing to take less than what’s owed to them, to get it off their books. I’d say on average they’re willing to go down about 20 percent, Lemons said.”
And many smug owners, who are not underwater, doesn’t realize that their comps got torpedoed by 20%.
Fed opens window for asset backed commercial paper piling up on bankers’ floors:
Aug. 24 (Bloomberg) — The Federal Reserve Bank of New York targeted investor gridlock in the asset-backed commercial paper market today, giving banks new information on how they can use such securities as collateral in exchange for central bank loans….
As investors shunned the commercial paper sold by finance companies that held loans such as mortgages, the companies asked banks to buy the securities. The New York Fed’s announcement clarifies that its discount window is prepared to accept these asset-backed securities as collateral from banks….
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahJj8F0ICjrM&refer=home
crap - the fix is in. The fed ends up owning paper that is worth $.25 on the dollar.
This is really dangerous. Even if the mortgages were given to high FICO people who made 10% down payments they could still default. Who wants to keep paying a mortgage on a house worth half the mortgage debt???
FYI-new home sales are DOWN 10.2% July to July.
Month to Month reports are notoriously noisy and of little value other than to keep the rubes at the table for one more losing hand.
“Esteemed 19th century British economist, Walter Bagehot, in the book, Lombard Street back in 1873, had the right prescription for failing financial markets: ‘Lend freely against good collateral at a penalty rate.’”
Funny, isn’t that exactly what the free markets are currently in the process of doing? For example, jumbo loans are still available, but the rates jumped a point-and-a-half… Sounds like a penalty rate to me, and I’m guessing the penalty should go higher as liquidity continues to shrink/adjust.
I did not notice this posted - my apologies -if it was.
Fed bends rules to help two big banks
If the Federal Reserve is waiving a fundamental principle in banking regulation, the credit crunch must still be sapping the strength of America’s biggest banks. Fortune’s Peter Eavis documents an unusual Fed move.
The regulations in question effectively limit a bank’s funding exposure to an affiliate to 10% of the bank’s capital. But the Fed has allowed Citibank and Bank of America to blow through that level. Citigroup and Bank of America are able to lend up to $25 billion apiece under this exemption, according to the Fed. If Citibank used the full amount, “that represents about 30% of Citibank’s total regulatory capital, which is no small exemption,” says Charlie Peabody, banks analyst at Portales Partners.
The Fed says that it made the exemption in the public interest, because it allows Citibank to get liquidity to the brokerage in “the most rapid and cost-effective manner possible.”
So, how serious is this rule-bending? Very. One of the central tenets of banking regulation is that banks with federally insured deposits should never be over-exposed to brokerage subsidiaries; indeed, for decades financial institutions were legally required to keep the two units completely separate. This move by the Fed eats away at the principle.
http://tinyurl.com/246r87
have a nice weekend all.
holy moly, batman
we’re fvcked!
I was just about to move 100K into Citibank, out of Vanguard money market/treasures. Maybe it was safer at Vanguard? Who knows anymore.
“Being right too soon is socially unacceptable.”
Robert A. Heinlein
Money is truthful. If a man speaks of his honor, make him pay cash.
“Think for yourself and question authority.”
Timothy Leary
I would like to hear one person really admit that they or their industry f*cked up. A mortgage broker, a realtor — someone like that. I would like to hear someone say “yes, we were out to lunch, we were greedy jackasses and now there is a huge mess.”
I know that’s rather unlikely.
Merrill could face its own subprime sting.
http://money.cnn.com/2007/08/24/news/companies/merrill_subprime.reut/index.htm?postversion=2007082414
“Jeff Pettyjohn is trying to sell his home in the High Point Terrace area of East Memphis. He says, ‘I thought I could just stick the sign in the yard and it would go quick, but things have slowed down definitely.’”
Huh? Been under a rock for a while Jeff?
I read the HGTV boards occasionally hoping for a little schadenfreud. It’s true that people still believe this, all because they don’t live in CA and therefore their market is hot. You have no idea how delusional those enablers can be.
“Yes, Senator Clinton may prefer a model of “shared responsibility” over an “own your own” system”
Very nice. Sen. Clinton and husband got a mansion in Chappaqua paid for by a political supporter after he left the White House, and announced they were out of the market this spring. With their bases covered, and their assets safely tucked away, it’s time for everyone else to start sharing.
Excuse me while I vomit.
It’s easy to help gamblers when you’re using somebody’s else’s money.
This is the “feminization” of America.
Kindergarten solutions don’t work in the adult world.
This isn’t milk and cookies we’re talking about.
Hello?
Sounds like a couple of big banks will blow up. Is it possible that your savings accounts are in danger? I’d like to believe that they are legally guaranteed by the FDIC, but given the stupid problems with the finance industry, also given the political environment nowadays, could they just seize your money and use it to pay off the bad loans even though you might not have had any loans at all???
Jus seize your money? They already have it — and used it! It’s when too many people like you need their money back that the bank folds.
Actually, it’s when they get below various reserve requirements, and the feds in dark suits (literally!) come marching in the door to take over. My BIL had that happen to him at two banks he worked at some years ago.
As for your deposit, no worries once that happens. The guys in suits take over the bank, deposits generally get folded into another bank, and you have access to your money again. Unless you have over $100k in there, since FDIC insurance doesn’t have to cover you beyond that.
From a freebie Toronto paper — far closer to the truth since it is positing that 14 years is the break point between ‘buying’ and ‘renting’ — a few problems still since they do not acknowledge house prices ever can fall and that if you need to sell in a fall you are out of luck ( a few other false calls).
http://www.eyeweekly.com/eye/issue/issue_08.23.07/city/news.php
I signed the petition posted by Jerry from Richardson. I also have been fighting the proposed subprime bailout in MA. It is truly unfortunate that some people will lose their homes due to stupid decisons. But what about people who are losing their homes because their jobs went to China? Or because medical bills sucked them dry? These one-sided, loopy knee-jerk plans are merely political fluff. Hey - let’s give the folks who are being foreclosed some of those nice trailers that FEMA can’t find. Better yet, lets put Homeland Security in charge of the whole mess.
“Politicians are now clamoring for taxpayer bailouts”
I’ve got an idea… CUT TAXES!!! FOR EVERYBODY!
No they’ll never do that.
“‘Over the last couple of months, most new home builders, in terms of sales, have hit a wall. That’s partly because…there’s too much choice out there,’ says David Bates, at Edmonton’s Reid Built Homes.”
And it also might be partly because they’ve run out of people who are willing to pay San Diego prices to live in a mini-Houston with Arctic winters, whose biggest civic attraction is a shopping mall.
LOL……Brrrrrrrrr!
“Seems pretty simple: ascertain the real value of the collateral, raise the rates and continue making loans.”
But, I borroewd $1 billion in 3-month notes at 4%, from someone that borrowed it as Yen at .5% I used the $1 billion to buy 30-year Sub-Prime MBSs yielding 8%. $40 million a year pure profit for doing nothing!
Now those notes are only worth $600 million.
My 3-month notes are coming due, and I need to borrow $1 billion to roll over my debt. I can’t pay more than 8%, and with negative equity, no one will lend to me for that. I’m not going to just give away my toxic waste MBSs, Therfore, marking to market is not possible.
I surely am not giving $400 million of my own money to pay back my $1 billion.
I can’t be broke, therefore, the Fed must lower rates as low as necessary to get people to loan me $1 billion at less than 8% even though I have -$400 equity.
Not to get too far off track into a religious discussion, but as an atheist I’ve had many discussions with religious people. This current market is taking on a very religious like feel to it to me. The data supported conclusion is repugnant, so the data supported conclusion is wrong. Truth is whatever feels like it has the best outcome to me.
If houses drop 50% in value, then I’m destroyed… therefore all historical precedent and fundamentals guiding markets are wrong… Prices will fall no more than 10%.
Kind of simplistic way to explain it but you do outline the hightpoints >; )
I especially like the nod to the yen carry.
Just because someone says they’re religious doesn’t mean they have a clue (and it also doesn’t mean their brand of religion has any value). However, atheism in and of itself doesn’t “give” you a clue either. I just talked to a guy today who I know from my church. He’s an independent contractor, plus he owns a bed & breakfast, a rental house and a house he’s trying to sell. As soon as he found out I was looking for a place to rent (as I move off a military base), he immediately said he would rent it to me if it doesn’t sell in one more month. Time frame works perfectly for both of us. Neither of us is lacking clues. A lot of other “owe-ners” around here, though, are in total denial, and they insist because they need to sell that they won’t rent their places, and many won’t drop their prices very far either.
“..If houses drop 50% in value, then I’m destroyed..”
As a man thinks in his heart, so is he. [Proverbs 23:7]
Here’s a bargain you’ll be out 70K plus at least another 100k by the time you close on this one!
http://fortmyers.craigslist.org/rfs/404817045.html
You have to be kidding. This guy is really looking for a greater fool.
yeah, the deposit should be refunded since it was delayed so long, > 1 year. The killer delay has shifted a huge market risk onto the buyer. The builder just stalls a little longer and collects a lot of forfeited deposits without having to build anything?