August 30, 2007

Bits Bucket And Craigslist Finds For August 30, 2007

Please post off-topic ideas, links and Craigslist finds here.




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359 Comments »

Comment by wmbz
2007-08-30 04:22:59

Help!
The FED should stay the hell out! They screwed it all up to start with.

http://news.yahoo.com/s/ap/20070829/ap_on_bi_ge/bernanke_mortgages;_ylt=AlthXO4QYJugI1cGB5m2cTOyBhIF

Comment by luvs_footie
2007-08-30 04:35:11

“Schumer has said he plans to offer legislation when Congress returns in September to boost investment caps on Fannie Mae and Freddie Mac “to increase their flexibility to participate in loan modifications with borrowers and lending institutions.” So far, the Bush administration has opposed raising the caps. A few years ago, the two mortgage giants suffered multibillion-dollar accounting scandals.

He also has urged Bernanke and the administration to support a plan in Congress to provide $100 million to nonprofit housing groups to help troubled subprime borrowers refinance their homes.”

The biggest subprime borrower wants to help the little subprime borrowers………………..

Bwhahahahaha

Comment by nhz
2007-08-30 05:35:34

as mentioned before, such a plan is already used in the Netherlands and it has worked for years to magically keep the housing market levitating while draining the government budget. Netherlands spends more on housing subsidies than on education and healthcare …

Comment by SFC
2007-08-30 06:27:13

In spite of that, I would guess the public education system is much better in the Netherlands than the US. What is the dropout rate? Is it possible to graduate from high school without being able to read and write, add and subtract? I bet that the percentage of recent high school graduates who speak fluent english is higher in the Netherlands than in Miami.

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Comment by hd74man
2007-08-30 06:40:12

I bet that the percentage of recent high school graduates who speak fluent english is higher in the Netherlands than in Miami.

You mean there’s something wrong with Ebonics?

 
Comment by nhz
2007-08-30 07:26:52

can’t compare Netherlands with US; we have lots of variation within the country as well (generally more problems in the big cities). But the output of our education system is definitely far, far worse than 25 years ago - up to the university level.

 
Comment by Brian in Chicago
2007-08-30 07:50:25

But the output of our education system is definitely far, far worse than 25 years ago - up to the university level.

I have this suspicion that outside of China and India this may be true around the entire world.

 
Comment by Gwynster
2007-08-30 07:55:12

“up to the university level.”

Hmm have spent any time on one of our large campuses? We’re now mimicing the trends at high schools. Prop them up and spit them out. Sure we still graduating some of the best and the brightest but we are also spitting out a large portion clearly would not have graduated 15-20 yrs ago.

 
Comment by Margaret Jones
2007-08-30 08:36:30

That assumes that they could have gotten into college in the first place.

 
Comment by aNYCdj
2007-08-30 08:37:37

Money Talks Boolsheet Walks……kolledgez make moneee.

I think we need to close about 1/3 of our kolledgez, in America, because we really don’t need them. We really need more good plumbers and auto mechanics and trades, So we need to spend more for HS vocational training.

You would be shocked at how many people cant fix anything. The outcry from our “edukatshunol intitudes” will be deafening.

 
Comment by Misstrial
2007-08-30 09:06:53

Actual eubonics math questions (Oakland Public School District):

1. Duane has an AK47 with a 30 round clip. If he misses 6 out of 10 shots and shoots 13 times at each drive by shooting, how many drive by shootings can he attempt before he has to reload?

2. If Jose has two ounces of cocaine and he sells an 8 ball to Jackson for $320 and 2 grams to Billy for $85 per gram, what is the street value of the balance of the cocaine if he doesn’t cut it?

3. Rufus is pimping for three girls. If the price is $65 for each trick, how many tricks will each girl have to turn so Rufus can pay for his $800 per day crack habit?

4. Jerome wants to cut his 1/2 pound of Heroin to make 20% more profit. How many ounces of cut will he need?

5. Willie gets $200 for stealing a BMW, $50 for a Chevy and $100 for a 4×4. If he has stolen 2 BMW’s and 3 4×4’s, how many Chevy’s will he have to steal to make $800?

6. Raul is in prison for 6 years for murder. He got $10,000 for the hit. If his common law wife is spending $100 per month, how much money will he have left when he gets out of prison and how many years will he get for killing her since she spent his money?

7. If the average spray paint can covers 22 square feet and the average letter is 3 square feet, how many letters can a tagger spray with 3 cans of paint?

8. Hector knocked up six girls in his gang. There are 27 girls in the gang. What percentage of the girls in the gang has Hector knocked up?

~Misstrial

 
Comment by MacAttack
2007-08-30 09:41:24

Nonsense, nonsense. In 1986 I was a TA for junior-level writing seminars in the biz college at a state university. Students were required upon entering the classroom to write an essay, freehand, on a topic revealed after they sat down. I was shocked - but then, figured this was my competition, so I would be just fine. As for the Ebonics bit, Misstrial, I dare you to walk through West Oakland, even in daylight.

 
Comment by Mole Man
2007-08-30 10:22:16

Those are not actual ebonics questions, and it misses the point entirely. People have been so aggressive about pushing standard American business English that dialects have been stigmatized. Especially early on most of the early talk about Eubonics was simply intended to recognize that it is a dialect and not just bad or stupid language.

Dialects of English are common all over the US with all races, with alternative pronounciations from the East Coast and Bible Belt spoken primarily by white Europeans being prominent. Just because someone starts off with a drawl or naturally uses one in colloquial conversation does not mean they can’t speak business English, and there is no great glory in supressing a local dialect in favor of homogenized speech.

 
Comment by Misstrial
2007-08-30 10:59:46

MacAttack:

These questions are current, not from 1986. Check online; even Los Angeles unified is using these. And please don’t mess with me re “As for the Ebonics bit, Misstrial, I dare you to walk through West Oakland, even in daylight.” I will forward your comment to the appropriate agency. As for you, why not send them a “get-aquainted” e-mail: http://sandiego.fbi.gov/contact.htm

As for you, MoleMan: I figured you out long ago. Your username explains it all.

~Misstrial

 
2007-08-30 11:38:02

y’all ‘dialect’ relativism people are sho nuff morons (or morans). Sure dialects have been around in ALL cultures….but in ALL cultures, there is still class and superiority of the noble/upper dialect vs the peasant/lower class. It is only American idiots who think otherwise.

 
Comment by phillygal
2007-08-30 12:17:28

…not to mention when you have one standard of proper usage and pronunciation, communication becomes easier across the board.

 
Comment by Remain Calm. All is Well
2007-08-30 12:53:28

Misstrial wrote:
Actual eubonics math questions (Oakland Public School District):

I call BS. These questions are a joke - been circulating over the ‘net for years.

Please provide some evidence/reference/link about their actual use in Oakland schools (or schools anywhere).

 
Comment by aflurry
2007-08-30 13:47:02

“in ALL cultures, there is still class and superiority of the noble/upper dialect vs the peasant/lower class.”

as in ALL questions of superiority or inferiority it depends on who you talk to, don’t it?

“…not to mention when you have one standard of proper usage and pronunciation, communication becomes easier across the board.”

maybe they aren’t speaking that way to talk to you.

why does everyone ignore history entirely when talking about american culture?

 
Comment by aflurry
2007-08-30 13:49:49

and i sincerely can’t think of one “noble/upper” american dialect.

honestly, i can’t…. can anyone help with with that?

 
Comment by Sammy Schadenfreude
2007-08-30 14:55:39

I can’t believe that any thinking person would fall for an e-mail hoax as obvious as the “Eubonics Math Quiz.”

 
 
 
Comment by GetStucco
2007-08-30 06:12:12

“A few years ago, the two mortgage giants suffered multibillion-dollar accounting scandals.”

At least those have been entirely resolved, RIGHT???

Comment by nhz
2007-08-30 07:28:04

just take it as a cue for how CDO and other problems at the big investment banks will be cured ;-)

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Comment by rms
2007-08-30 07:04:02

“Schumer has said he plans to offer legislation when Congress returns in September to boost investment caps on Fannie Mae and Freddie Mac “to increase their flexibility to participate in loan modifications with borrowers and lending institutions.””

As much as I hate the federal reserve system it is still better than having the politicans take turns at the printing press controls.

Comment by ajas
2007-08-30 07:43:13

I believe that’s where the gold standard argument comes in.

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Comment by sweeny texas
2007-08-30 08:39:33

luvs, I am politically an independent, which means I usually vote for Democrats. Most “conservatives” seem to believe that the working class should be grateful for the trickle-down economy we now have. Chuck Schumer used to be a favorite of mine for his pro-labor stance on most issues. But, like all politicians, money eventually got to him and he’s forgotten who he should be working for. His bailout plan, in whatever form, will end up helping only his wealthy political contributors on Wall Street.

Comment by polly
2007-08-30 09:21:22

The republicans in the sentate will filibuster anything that Schumer proposes. If that doesn’t work, the president will veto it. Just because it is from Schumer. Proposals that won’t become law are no danger to the system. As a matter of fact, by taking up time, it migh prevent other bailout proposals from getting out of committee. Could be useful in a way.

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Comment by sweeny texas
2007-08-30 09:40:42

It’s pretty ironic that George and the Republicans in Congress are against a bailout. I’m surprised they haven’t been inundated with e-mails from Wall Street begging for one.

Once the message gets through, George will be saying, “What I said before, nevermind. A federal bailout is neceserious after all.”

 
 
 
Comment by MacAttack
2007-08-30 09:37:22

As a liberal Democrat, I vehemently OPPOSE this. Not too often I find myself on the Bush side of the fence, but this is one of those times. No, Chuck, NO! One hopes it’s mere pandering to voters.

Comment by sweeny texas
2007-08-30 11:27:02

Or maybe Chuck doesn’t understand who the bailout really helps… He could be that stupid, I suppose.

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Comment by SanFranciscoBayAreaGal
2007-08-30 12:44:52

Oh no, he perfectly understands who the bail out is for and it is not for the average American citizen.

 
 
 
 
Comment by NYCityBoy
2007-08-30 04:35:39

“Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can’t afford to refinance or even sell their home.”

How many things are wrong with this section of that article? The entire gyst of that article is, “we need to find a way to pawn this problem off onto our kids and their kids.”

The system is broken.

Comment by Ben Jones
2007-08-30 04:39:50

Refer to this bit from my last Wednsday post:

‘Foster knows of two or three Folsom couples in their 20’s who allowed the bank to foreclose on their homes, opting to rent instead. ‘They weren’t even behind on their mortgage,’ Foster said. ‘They just figured they could rent a house for half the payment, and twice the square footage.’

Comment by NYCityBoy
2007-08-30 04:44:03

Wow!!!!

That translates to: No equity and no hope of equity any time soon so why pay more in “rent”. I can’t believe they actually realized they were “loan owners” and not “homeowners”.

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Comment by Big V
2007-08-30 10:06:21

Homedebtors.

 
 
Comment by WT Economist
2007-08-30 05:01:48

Bingo. Let’s say it again. Any government subsidies prior to foreclosure and resale at lower prices bail out investors, how borrowers.

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Comment by BubbleViewer
2007-08-30 06:52:43

So many people were not buying a “house.” They were buying a “payment.” That’s all.

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Comment by scdave
2007-08-30 07:34:34

Bingo B/V…..Same crap happens with all the other consumer goods (Car’s,Boats, etc.)

 
 
Comment by Ghostwriter
2007-08-30 09:52:30

Foster knows of two or three Folsom couples in their 20’s who allowed the bank to foreclose on their homes, opting to rent instead. ‘They weren’t even behind on their mortgage,’ Foster said. ‘They just figured they could rent a house for half the payment, and twice the square footage.’

Problem is with the loose credit you could buy another home in a year after foreclosure. We may be going back to the 7 year time lapse and they’ll be screwed for a long time to come. If credit tightens, they may not even be able to buy cars pretty soon, or they’ll pay exhorbitant interest rates on the loans.

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Comment by kcdallas
2007-08-30 05:44:34

That part seems to be the view of the AP writer, Jeannine Aversa. I hope she doesn’t keep framing the debate in that way. She seems to write tons of high-impact news items.

 
 
Comment by palmetto
2007-08-30 04:38:31

Well, sure, you know darned well that if ANYTHING takes place during this administration, it will turn out to be one big screw-up. You can take that to the bank.

I received a very polite but emphatic bitching-out by a European/Middle Eastern lady regarding the activities of the US abroad over recent years. “We used to look up to you” was the way she put it. Her viewpoint was that the international community is very pissed off right now and can’t even believe some of the things that have taken place, not the least of which is the sale of the rotten, valueless securities purchased by foreign banks and other entities. I’m a bit weary of having all international woes blamed on the US, but I’d be pretty pissed off too if I’d been sold a pig in a poke. There is a feeling out there that economic distress around the globe traces back to the US.

Comment by NYCityBoy
2007-08-30 04:46:36

Did you remind her of a few of the things that Europeans and Middle Easterners have in their, not so distant pasts, that don’t exactly make them very credible. I agree that we need to “LEAD” again but I run into enough Eurotrash in this city that I don’t want to be lectured by them.

Comment by palmetto
2007-08-30 04:53:50

I don’t care for the lectures, either, and a good discussion of England with the lady turned on some light bulbs for her. However, I find it interesting that the US can conduct unsavory military actions and yet, the straw that breaks the camel’s back, so to speak, is our imploding housing market and how it affects the global economy. In other words, MONEY seems to be what really puts a bee in the international bonnet. Like I said: Globalization. THE WORST. IDEA. EVER. If there’s a bright side of the housing bubble, it is that it just might break down the whole screwed-up global system of finance and show it up for the fragile system it is.

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Comment by awaiting wipeout
2007-08-30 05:20:27

Palmetto,
You are so right about globalization. Jerome Corsi is an expert in The New World Order, NAFTA, and the FRB.

http://worldnetdaily.com/news/article.asp?ARTICLE_ID=57369

I can’t even say the pledge anymore. This isn’t America anymore, the place my 104 yr old granny came to through Ellis Island.

I personally think all this bail out talk is just that. Its a confidence game.

 
Comment by nhz
2007-08-30 05:41:43

just wait until the EU housing bubble bursts…

EU politicians are now shouting out loud about unfair Wall Street tactics, while assuring the public that the EU housing market is sound and strictly based on fundamentals. And of course the EU has ‘NO subprime lending’ (we don’t use the word subprime here but it’s still the same type of loans and the same type of buyers).

Unfortunately, what’s happening in the US now only seems to strengthen the EU bubble because of lower mortgage rates, unlimited helicopter drops from the ECB (carte blanche from Trichet for all the big speculators) and even more sloppy loan policies (possibly due to higher competition from US mortgage providers on the EU market).

 
Comment by In Colorado
2007-08-30 07:12:37

Amazing the excuses they come up with for surrendering our sovereignty. What, are we incapable of managing a flu epidemic.

Gov’t of, by and for big business, and the shareholders for which they stand!

 
Comment by Patricia
2007-08-30 08:05:04

my question is this, who is going to buy the products that these companies manufacture? car companies, computer companies, etc. If you take away the good paying jobs for cheaper labor, wiping out the middle class, who are you selling to? Do they give Mexicans a better deal? I don’t think they pay enough over there to purchase a 30k vehicle.

 
Comment by In Colorado
2007-08-30 10:50:01

When we are all poor they plan on selling us little 2 cylinder fibreglass bodied cars for $3000. Believe it or not, big biz has a plan for when we are all poor. They’ll sell us shampoo in single use sized packets (think ketchup at a fast food place).

 
 
Comment by unknownpoltroon
2007-08-30 05:59:27

That argument only works if we aren’t directly modeling our actions after the worst examples of what Europe and the middle east has done for the past 100 years. Invading sovereign countries cause we fel lie it, legalizing torture, keeping POWs indefinitely without trial, mysterious internal spying on our own citizens, out of control leaders, corporate control of gvt, complete contempt of the law by leaders, removal of constitutional protections of our citizens. I mean, come on, if they want to lecture us because were following the fascism cookbook, I dont see how we can complain. Don’t we keep lecturing other countries “How could you let it go that far? Why didnt you DO somenthing?!?!?”

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Comment by Falconsitter
2007-08-30 10:56:07

“keeping POWs without trial….”

POWs are not criminals. They are prisoners of war, which can be held until the end of hostilities
The last I heard, Al Queda was still in the business of trying to kill Americans, here and overseas. Which means that hostilities have not ended.

I have an idea! Why don’t we just cut loose all the guys in Guantanamo? Let them bunk with all the people who have been protesting the existence of Guantanamo! I’m sure that they will find some way to show their gratitude.

Someone told me one “Don’t bitch about a problem without offering a solution” So what is your solution? Put them on trial? Here? Under our Criminal Justice System? You must be joking.
Since they don’t have any useful military power of their own, it just annoys me that all the Euros want us to use our muscle to fix these problems (many of which were caused by decisions their governments made…..see Yugoslavia/The Balkans), but they want veto power on how we address the problem (either diplomatically or militarily)

 
Comment by aflurry
2007-08-30 13:57:08

“So what is your solution? Put them on trial? Here? Under our Criminal Justice System? You must be joking.”

Well, that’s pretty confusing. If you hate America, then leave it Falconsitter.

 
 
Comment by sagesse
2007-08-30 12:34:05

I very vehemently object to the term Eurotrash. If this is the level you want to have a discussion on this blog, then this is my last visit here. I feel extremely offended.

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Comment by justone
2007-08-30 13:25:36

Sagesse, I sympathize. As a low-income minority, I find this blog hard to stomach at times. But some of the economics-focused discussions are useful. Americans love posturing and pushing buttons, you have to learn to sidestep it. If there is something of value here for you, don’t be driven off too easily.

 
Comment by Sammy Schadenfreude
2007-08-30 14:12:48

Hey Sagesse,

Eurotrash, eurotrash, eurotrash. There - are your panties in a proper twist? Good. Because if you get “extremely offended” at the occasional disparaging comments that get bandied around in here, as part of a vibrant phenomenom called FREE SPEECH, then you need to kindly take your uptight Eurotrash backside to I’mAWhineyHineyHole.com or some similar neutered, insipid, politically-correct forum for the mentally circumscribed, rather than a bastion of opinionated free-thinkers that this blog is.

 
Comment by Mary Lee
2007-08-30 14:12:48

Stay sagesse….. People who use terms like that embarass many, if not most of us. There’s been a concerted campaign for decades to encourage “America’s always best/first”.

Learning the truth threatens the ignorant. At least this week we learned one area where America is first: citizens owning guns. As one observer said, “Al Quaeda has nothing on us”.

America has fallen very far the past 25+ years, and it’s going to take a further fall before folk start to look around and ask what’s happening.

We’re now shorter, with higher infant mortality, poorer health care, more income inequality, shorter vacations, higher obesity, higher imprisonment…..the list is actually much longer, including shorter lives…..than more than a dozen other developed countries.

But boy are we proud of ourselves……

 
Comment by Sammy Schadenfreude
2007-08-30 14:43:29

As a low-income minority, I find this blog hard to stomach at times. But some of the economics-focused discussions are useful.

Hey Justone,

I’m pretty certain that if I popped into a forum where most of the posters were “low-income minorities”, I’d see a few things that might be hard for me to stomach too. All the same, I hope you stick around and say your piece in here, recognizing, of course, that sometimes there’s going to be some heat in the kitchen.

There’s a lot of posters in here who may be on the opposite end of the spectrum from me in terms of political and social views, race, ethnicity, religion, you name it, and I’ve probably managed to offend or annoy most of them at one time or another. Still, I read what they have to say, especially when its thought-provoking and presents a different but valid point of view. And you’re right, if you can get past a lot of the more inflammatory comments in here, there’s a whole wealth of information and insights that can be extremely valuable regardless of race, ethnicity, socieoeconomic status, etc.

 
Comment by Sammy Schadenfreude
2007-08-30 14:54:03

Learning the truth threatens the ignorant. At least this week we learned one area where America is first: citizens owning guns. As one observer said, “Al Quaeda has nothing on us”.

Speaking of ‘ignorant’, the above comment was quite possibly the most imbecilic thing I’ve ever read in here. Yes, America has the highest rate of gun ownership - and I’m proud to own my share - but that does not equate to al-Qa’ida (spell it right, please)-style Islamic fanaticism and murderous attacks on innocents, despite what your clueless “observer” spouts from his/her ivory tower. Like the vast majority of gun owners, my weapons will NEVER be aimed or fired at another human being unless I am in a genuinely life-threatening situation. I’m sure they never taught you this in what politically-correct liberal arts la-la land where you got your Gender Studies or Art Appreciation degree, but the only reason we have a Constitution and Bill of Rights is because those were won WITH FORCE OF ARMS - and the 2nd Ammendent is the ultimate guarenteer that those individual liberties will be respected.

Please tell me which country you would like to be deported to.

 
 
 
Comment by luvs_footie
2007-08-30 04:54:35

palmetto,

I have on two occasions visited your country and the Americans I met there were some of the most generous and nicest people you could ever wish to meet. It seems to me your Administration and your Banksters do you Americans a great dis-service. At the moment here in Australia, America is starting to stink.

Comment by palmetto
2007-08-30 05:03:41

luvs, that was more or less the sentiment from this lady. She was speaking to me as one citizen of the world to another, the idea being that we ought to speak truth to power in the US. In other words, the people need to speak up and loudly. That’s why the petition is a good thing.

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Comment by nhz
2007-08-30 05:45:40

I think the feeling is similar in most of Europe. Many EU citizens hate the US government / policies (and sometimes their own governments that blindly follow the US) but at the same time people don’t think negatively about US citizens and probably still admire them for the same reasons that people in Europe have looked up to the US for a long time.

 
Comment by cassiopeia
2007-08-30 15:31:47

palmetto, nhz, I second that. America has given so much to the world in terms of values that what is happening now seems particularly sad and hard to believe. Many people in the world make the distinction between American people and their values and the government du jour. This one is subverting the values in the name of those values and that is hard to swallow. So sad.

 
 
Comment by ChrisO
2007-08-30 06:49:34

Australia has a decent government, I think, but Europeans are hardly ones to lecture Americans on anything to do with government. Western Europe is ruled by a bunch of self-dealing, unaccountable plutocrats who make the Bush Administration seem like brain surgeons. France even has a special university that churns out a regular supply of these governmental dunderheads.

My opinion: the USA should get our troops the hell out of Europe and the Middle East, and let the bastards take care of their own affairs. I’m sick of subsidizing their security.

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Comment by ajas
2007-08-30 09:42:44

“their security” — LOL!

 
 
Comment by AmazingRuss
2007-08-30 09:17:54

Americans deal differently with individuals and groups….we’ll invite you over for dinner and be kind as can be if we meet you face to face, but when you are a group of foreigners in a faraway place we can’t locate on a map, you are either a threat or an income stream.

Maybe that’s why we have so many immigrants.

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Comment by ahansen
2007-08-30 10:39:40

Wry chuckle.

 
 
 
Comment by Lou Minatti
2007-08-30 05:37:02

“Her viewpoint was that the international community is very pissed off right now and can’t even believe some of the things that have taken place, not the least of which is the sale of the rotten, valueless securities purchased by foreign banks and other entities.”

Those poor foreign banks and trading firms. They were senseless sheep, led to the slaughter. They are like children, totally innocent and unknowing. The bankers in Frankfurt and London cannot accept any blame because they are uneducated dolts who know nothing about finance.

Is that what you want me to believe?

 
Comment by phillygal
2007-08-30 05:55:23

I received a very polite but emphatic bitching-out by a European/Middle Eastern lady

OK palm, she was either polite or a biatch.

you can’t have it both ways.

 
Comment by BP
2007-08-30 06:04:56

You can complain about OUR government, I DO complain about OUR government but for heavens sake don’t let some eurotrash lecture you about OUR government.

Comment by phillygal
2007-08-30 06:09:00

Lately I’ve been thinking of traveling to Europe to see my folks. One of things I have to consider is: Do I really feel getting drilled - again - about American foreign policy?

The answer: Of course not.

So, none of my American dollars for you, mouthy Europeans.
Not this year anyway. I do miss my aunt though.

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Comment by hd74man
2007-08-30 06:51:24

RE: don’t let some eurotrash lecture you

Two years ago I was out and about the English Mid-Lands visiting the remnants of old WW II 8th Air Force airfields,
which is an intellectual hobby of mine.

Whenever, I encountered the countryside farmers who now have possession of the land to ask permission to wander about, they sure used the opportunity bend my ear about George W.

I admit to being caught by surprised by the negative attitudes from this particular group.

These people were far from being any form of London Euro-Trash.

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Comment by In Colorado
2007-08-30 07:16:55

Did you tell them that Bush’s approval rating is at an all time low?

 
 
Comment by Sartre
2007-08-30 07:06:06

I guess now that american tax payer does not subsidize european defense like it did to the tune of billions, the love has faded a bit. But not to worry, the resurgent, neo-nationalist (read neo nazi) Russia will teach them about love and long term commitment within the next decade.

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Comment by hd74man
2007-08-30 10:12:27

But not to worry, the resurgent, neo-nationalist (read neo nazi) Russia will teach them about love and long term commitment within the next decade.

Yeah, I saw them on an NBC newsclip last night going to summer fitness brainwashing camp.

All that went thru my mind was that cold war film of Krushchev banging his fist on the podium hollering, “We will bury you”, as legions of Commie youth goosestepped in the background.

The lazy, historically ignorant, spoiled-rotten, soccer mom protected kids of this country are goners.

 
 
 
Comment by bozwood
2007-08-30 06:45:45

wow, just went to Italy and had a long conversation with one of the locals who said that there are many people who support the US and what we are doing, but that all you really hear from is the people who don’t.

Comment by Lou Minatti
2007-08-30 07:26:16

How is it that hundreds (?) of BB readers have known this would end in disaster FOR YEARS, yet financial hotshots raking in millions in bonuses had no idea? I have a lowly BS from a state university and knew this was stinky.

Answer: They all knew what was going on. To claim “we didn’t know the risk, Moody’s lied to us, honest!” is highly disingenuous. These financial hotshot salesmen, whether in Frankfurt, New York or Tokyo, they all knew what was going on. As long as they got their enormous bonus checks, they were fine with the status quo.

Whiners in Europe can go pound sand, along with their Wall Street bretheren.

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Comment by Misstrial
2007-08-30 10:50:14

“How is it that hundreds (?) of BB readers have known this would end in disaster FOR YEARS, yet financial hotshots raking in millions in bonuses had no idea? I have a lowly BS from a state university and knew this was stinky.

Answer: They all knew what was going on. To claim “we didn’t know the risk, Moody’s lied to us, honest!” is highly disingenuous. These financial hotshot salesmen, whether in Frankfurt, New York or Tokyo, they all knew what was going on. As long as they got their enormous bonus checks, they were fine with the status quo.”

*APPLAUDS LOU!*

~Misstrial

 
 
Comment by nhz
2007-08-30 07:32:51

well, that’s definitely NOT true, the polls in most of Europe are extremely clear about that. The only exception are the new EU (former Eastern Europe / Balkan) countries where people still look up to the US irrespective of their foreign policy.

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Comment by chris hauser
2007-08-30 06:51:56

you don’t see us buying their mortgage bonds……….

 
Comment by Chicago Bubble Blog
2007-08-30 07:06:52

“Well, sure, you know darned well that if ANYTHING takes place during this administration, it will turn out to be one big screw-up.”

There are plenty of Dems working their hardest to permanently screw up this housing mess. Let’s stay on point.

 
Comment by Blano
2007-08-30 07:59:55

Frankly, except for Australia and a couple other true US friends, I don’t give two s**ts what the rest of the world thinks. The last thing we want to do is be like the rest of the world.

 
Comment by Deron
2007-08-30 08:15:31

palmetto
That lady is frankly quite myopic and seems to suffer from memory loss. Remind me again what foreign economies looked like in 2001-2002? The crap loans were made to increase consumption, pulling the US out of recession. The American consumer single-handedly pulled many foreign economies out of a looming depression. But a little success has made them incredibly arrogant.

Taking on that debt was a terrible idea. Short-term benefit for a huge long-term cost. Not the least of which is having to put up with arrogant foreigners who would be very poor had the whole episode never happened. Not to worry, they’ll be much poorer than us again after the dust settles.

 
Comment by Civil
2007-08-30 08:38:07

(3rd try posting - leaving out the link to the article this time to see if it works - hope all 3 posts don’t show up at once.)

“The Elephant in the Barrel” - a good article on the bad things that happen geopolitically due to a weak dollar. (Google it or find it at discovery.org site or at online.wsj.com)

I think what the lady was saying is the same - many of the bad things that she is seeing come out of the US economically are enabled by a falling dollar and associated loose money.

Probably the worst thing the Bush administration has done is to allow the dollar to weaken. Reagan did the same things as Bush - supply side economics and an activist foreign policy - and all was good as the dollar was strengthening after going down hill in the 70’s. Bush does the same things but with the dollar falling (a la Nixon) and all is bad.

 
Comment by Big V
2007-08-30 10:09:50

All of these foreign investment banks were given the same information as everyone else when they decided to buy this crap paper. Yes, I know, the ratings were off. But it was OBVIOUS to any fool that the ratings were off. They should have put on their thinking caps before making huge investments in something they knew nothing about. Accountability, people!

“People are screwed.”

-Big V

 
Comment by MMG
2007-08-30 10:11:14

actually just coming back from a breif trip to London, on the news whenever they mention financial market problems, they attach (due to subprime lending in the US) at the end.

 
Comment by salinasron
2007-08-30 10:36:46

“can’t even believe some of the things that have taken place, not the least of which is the sale of the rotten, valueless securities purchased by foreign banks and other entities. I’m a bit weary of having all international woes blamed on the US, but I’d be pretty pissed off too if I’d been sold a pig in a poke.”

bankers are paid to do ‘due diligence’, if they get hoodwinked shame on them as they have the inside track.

 
 
Comment by guess who's
2007-08-30 05:24:31

How does one help a person make $15K a year stay in a $700K house?

Comment by kcdallas
2007-08-30 05:51:00

Guess they need to use almost entirely Other People’s Money.

Comment by daniel
2007-08-30 06:25:34

the europeans can kiss my ass all day long. every one of their investors that sucked up all those worthless securities bought the same damn yachts, vacation homes and other amenities. now they find out it’s all bogus? too bad. they’re just as f’d as everyone else. it ain’t a country thing, stupid……..it’s a global moving of capital from one class to the other. america was just the latest conduit.

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Comment by phillygal
2007-08-30 06:30:32

the europeans can kiss my ass all day long.

all DAMM day

lol

 
 
 
Comment by GetStucco
2007-08-30 06:11:13

One would probably use welfare (transfer) payments, but call it something else (foreclosure forbearance?).

 
 
Comment by hd74man
2007-08-30 06:38:04

No need for FED intervention. Everything’s contained.

http://biz.yahoo.com/ap/070830/economy.html?.v=9

Comment by GetStucco
2007-08-30 06:40:23

The economy is breaking the Fed’s speed limit. Time for a FFR hike to nip inflationary pressures in the bud.

“AP
Economy Grows at Fastest Pace in a Year
Thursday August 30, 8:44 am ET
By Martin Crutsinger, AP Economics Writer
Economy Surges Ahead at 4 Percent Annual Rate in Spring Despite Housing Troubles

Comment by scdave
2007-08-30 07:51:23

I hear what you are saying Stucco but IMO, a rate hike now would send the USA into a severe recession at a minimum…I take some inflation instead….

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Comment by MMG
2007-08-30 12:41:59

screw inflation, I take deflation.

 
 
Comment by david cee
2007-08-30 09:04:05

“Economy Surges Ahead at 4 Percent Annual Rate in Spring Despite Housing Troubles“

Hey, Stucco, I am still having doubts on any numbers reported by the government. They make Enron accounting look legitimate, with their constant revisions. If I have to accept the government reports of “low” inflation in this high home prices, high gas prices, high food prices enviornment..
what government reports am I suppossed to believe?

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Comment by neuromance
2007-08-30 06:55:47

Dodd is a puppet of the Financial Services industry. They are his biggest contributor:

http://opensecrets.org/politicians/allindus.asp?CID=N00000581

A good site to figure out politicians’ motivations:

http://opensecrets.org/

 
Comment by ulua
2007-08-30 07:49:14

Perhaps what Bernanke is saying here is that the industry needs to be more creative in solving this problem? Maybe no more free money?

 
Comment by Professor Bear
2007-08-30 14:16:36

Wolf: Central banks should not rescue fools

Sometimes a picture is worth a thousand words, notes the FT’s Martin Wolf in his Wednesday column, contemplating a recent photograph showing Christopher Dodd, chairman of the US senate’s banking committee, flanked by Hank Paulson, Treasury secretary, and Ben Bernanke, Fed governor.

Mr Bernanke was portrayed as what Wolf saw as “a performer in a political circus”. “Mr Dodd even announced Mr Bernanke’s policies: the latter had, said Mr Dodd, told him he would use ‘all the tools’ at his disposal to contain market turmoil and prevent it from damaging the economy. The Fed has its orders: save Main Street and rescue Wall Street.”

Such panic-driven politicisation is almost certain to lead to both overreaction and the creation of bad precedents, warns Wolf, asking: “What then would be the right response to this latest scrape that supposedly sophisticated financial markets have fallen into?”

http://ftalphaville.ft.com/blog/2007/08/29/6889/wolf-central-banks-should-not-rescue-fools/

Comment by Professor Bear
2007-08-30 14:56:14

Here is a link to the entire Martin Wolf piece. I sure hope the SF Fed bank’s prez brings her husband along to the Jackson Hole pow-wow, so he can explain the relevance of his lemons market paper to central banking. Turns out the subprime market was a market for lemons, which naturally ended with a death spiral.

Central banks should not rescue fools
By Martin Wolf
Published: August 28 2007 19:27 | Last updated: August 28 2007 19:27

Sometimes a picture is worth a thousand words. The one last Wednesday showing Christopher Dodd, chairman of the US senate’s banking committee, flanked by Hank Paulson, Treasury secretary, and Ben Bernanke, governor of the Federal Reserve, was such a picture. This showed Mr Bernanke as a performer in a political circus. Mr Dodd even announced Mr Bernanke’s policies: the latter had, said Mr Dodd, told him he would use “all the tools” at his disposal to contain market turmoil and prevent it from damaging the economy. The Fed has its orders: save Main Street and rescue Wall Street.

Such panic-driven politicisation is almost certain to lead to both overreaction and the creation of bad precedents. What then would be the right response to this latest scrape that supposedly sophisticated financial markets have fallen into?

The question is how to help the system without encouraging even more bad behaviour. This is such an important question because the system has been so crisis-prone, as Larry Summers points out (“This is where Fannie and Freddie step in”, August 27). I think of the underlying game as “seek the sucker”: sucker number one is persuaded to borrow too much; sucker number two is sold the debt created by lending to sucker number one; sucker number three is the taxpayer who rescues the players who became rich from lending to sucker number one and selling to sucker number two.

The most recent game is a particularly creative one. This time the geniuses seem to have created a “lemons crisis”, after the celebrated paper by the Nobel laureate George Akerlof*. Consider the market in used cars. Suppose buyers cannot tell the difference between good cars and bad ones (lemons). They will then offer only an average price for cars. Sellers will withdraw any good cars from the market. This may continue until the market disappears entirely.

Now suppose central banks did, instead, refuse to intervene in the afflicted markets. What would happen? Sellers must turn lemons into apples, pears, strawberries and all the rest. In other words, they must demonstrate the precise properties of what they are trying to offload. Where they cannot do this, they may have to hold securities to maturity. Meanwhile, vulture funds would invest in obtaining requisite knowledge. Losses will also have to be written off. How much of the market in securitised lending would survive this shake-out, I have no idea. But I do not care either. That is for the players to decide, after they realise the consequences of getting it wrong.

Burned children fear the fire. If some of the biggest and most powerful institutions in the world have been playing with fire, they need to feel the burns. It is not the central banks’ job to rescue them by creating a market in the incomprehensible. It is their job to preserve the banking system and the health of the economy. Neither seems now to be in grave danger.

Decisions made in panic are almost always bad ones. Stick to principles and let the masters of the financial system sort themselves out. They are paid enough to do so, after all.

http://www.ft.com/cms/s/0/d3db8c86-5564-11dc-b971-0000779fd2ac.html

Comment by Professor Bear
2007-08-30 15:20:56

OK, the link doesn’t work. I guess I just got lucky…

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Comment by Professor Bear
2007-08-30 15:47:26

Glad to hear some open debate among smart people on this moral hazard issue. Black box institutional procedures (like Fed-engineered bailouts of Wall Street) are subject to hysteresis. Shining the beacon of open discussion on bad policy practice can lead to reform.

Jim O’Neill: I so often agree with Martin, but on this one, I think he is very wide of the mark. The Fed needed to do what it did, and will need to do more, to rescue millions of people in the US who are, in any case, going to suffer from large negative equity from their houses losing value. Martin appears to, indirectly, be suggesting that individuals should know the value of the housing market, which is not very reasonable in my view.

Posted by: Jim O’Neill | 29 Aug 2007 13:31:30 | Report this comment

Martin Wolf: I think Jim, whom I greatly respect, is seriously missing the point.

The Fed may need to rescue the US economy by cutting rates, as I argued the previous weeks. But it is not its responsibility to rescue imprudent borrowers. If Congress wishes to do that, so be it. The fools, I wrote of, are not these people, in any case, but those who invested in dud paper put together by people engaged in his business - the Landesbanken, pension funds and all the rest. They must not be rescued, nor must the institutions that have made vast fortunes out of creating this paper, nor even the securitised markets themselves. They must sort themselves out, using the skilled and highly paid people employed by institutions like Goldman Sachs.

I hardly dare to say this, but Jim is confusing the interests of Wall Street with those of hapless home-buyers suckered into borrowing more than they can afford. It is a good populist line. But it is highly misleading. I have some (limited) sympathy for the home-buyers, but none for the financial institutions and investors. It is they that must not be rescued.

One final comment. Yes, home purchasers cannot know the value of the housing market. But they should know what they can afford and so should those who lend to them.

http://blogs.ft.com/wolfforum/2007/08/central-banks-s.html

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Comment by NYCityBoy
2007-08-30 04:33:13

Did anybody catch Hovnainian on CNBC at 7:00 a.m.? I was in the subway at that time. The lead in stated that good ole Ara’s message to Bernanke was, “drop rates now”. How do these crooks get away with this? If the world were fair, Mr. Hov would be walking around on two broken legs right now.

Comment by novasold
2007-08-30 04:41:39

Yep.

They had a whole spread on the housing crisis (remember when they denied it even existed not long ago) this a.m.

Not once did anyone mention the fact that prices are too high and that the fundamentals don’t support these prices.

In other words: FED unless you raise the rates the economy is toast.

 
Comment by KayLaw
2007-08-30 06:10:51

I’m so sick of CNBC begging for a rate cut. I wouldn’t suggest we play a “rate cut” drinking game while watching them because half of us would die of alcohol poisoning. It’s all they talk about!

Comment by Michael Fink
2007-08-30 06:51:23

ROFL.

We must be about the same age; that was a game we played all the time in college. Born around 77?

:)

Comment by CarrieAnn
2007-08-30 09:40:21

They were around before that. I was born in 61 and played HIBob (drinking everytime they said that on the Bob Newhart show) and played another version during a Celtics/Lakers game in ‘81. We only used shot glasses of beer but….

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Comment by Blano
2007-08-30 10:17:38

I was born in ‘60 and used to enjoy many a game of beergammon.

 
 
 
 
Comment by Tom
2007-08-30 06:55:20

Ara’s message to Bernanke was, “drop rates now”.

Bernanke’s message to Ara, “go fook yourself loser”.

I think Bernanke might be a sadist like OlympiaGal and he has some popcorn and marshmallows and is just enjoying watching these people burn….. nah : )

And just messing with you OlympiaGal, although the sadistical rants are funny.

Comment by Olympiagal
2007-08-30 09:59:32

You mean because the other day I kept suggesting and/or hoping that realtors would soon be consumed by cannibals or else angry former home owners?
I was just hungry ’cause I hadn’t had breakfast that day. Once I ate lunch I calmed down and assumed my normal sunny and forgiving disposition.

Comment by SanFranciscoBayAreaGal
2007-08-30 12:56:10

LOL

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Comment by San Diego RE Bear
2007-08-30 15:08:21

Are realtors red meat or white meat? Even when your credit is in the dumpster you really should take care of your arteries. :D

(And on the list of strange questions because it is too d*mn hot - anyone else notice none of use capitalize realtor anymore? Or “TM” it? :D :D )

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Comment by Darrell_in_PHX
2007-08-30 07:35:41

He says that home building has to continue because it stimulates so many other parts of the economy. So, despite having WAY more houses than we need, we need to cut rates so he and his buds can keep building.

Comment by Deron
2007-08-30 08:25:48

Maybe we can build a few more ‘bridges to nowhere’ or just pay people to dig holes then fill them in. Ara is casting himself as the “indispensable employer.” If we want that kind of crap again, we can just re-create the agencies that helped to prolong the Great Depression like the WPA.

 
Comment by Big V
2007-08-30 14:28:22

That’s cool, cause continued building will reduce the cost of housing down to like 20% of it’s current number. As long as they still protect the environment, then I’m good with it.

 
 
 
Comment by novasold
2007-08-30 04:42:28

whoops, drop the rates.

Too early.

Comment by GetStucco
2007-08-30 06:22:50

They would probably have to raise rates at this point to convince the markets that the Bernanke pledge is not just another name for the Greenspan put.

Wall Street rallies on Bernanke pledge
By Eoin Callan in Washington and Anuj Gangahar and Saskia Scholtes in New York
Published: August 29 2007 23:45 | Last updated: August 29 2007 23:45

Wall Street stocks rallied strongly on Wednesday after Ben Bernanke offered reassurance that the Federal Reserve was “closely monitoring developments” in financial markets and was “prepared to act” if required.

Investors were heartened by the assurances from the Fed chairman in a letter to Senator Charles Schumer that was circulated on Wednesday in Washington.

http://www.ft.com/cms/s/0/131a4566-567f-11dc-ab9c-0000779fd2ac.html

Comment by salinasron
2007-08-30 10:47:55

“Investors were heartened by the assurances from the Fed chairman in a letter to Senator Charles Schumer that was circulated on Wednesday in Washington.”

He thar Schumer, how does it feel to be the Fed’s Red Herring?

 
Comment by Big V
2007-08-30 14:29:43

The fed reassured no such thing.

 
 
 
Comment by peninsula renter
2007-08-30 04:47:19

It’s still different here… 3325 Shelter Creek, San Bruno,CA

I saw this 1b/1b condo listed for ~$285k a couple months ago, then it disappeared. Suddenly just popped back up and the listing is now for $299k

LOL :-) DOM now 164 days and counting…

(sorry, login req’d, couldn’t find link on another site…)
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=714061&page=1&property_type=CONDO&mls=mls_ca_ba&cKey=nzm6kl6m&source=CAREIL

BTW, short sales listed on ziprealty for this county have gone from 36 to 64 in the last 2 months.

Comment by SanFranciscoBayAreaGal
2007-08-30 12:58:05

Hey peninsula renter, I live and rent in SSF.

 
 
Comment by bizarroworld
2007-08-30 04:54:30

So if J6P can’t afford/doesn’t want a depreciating 500k home on 40k income now, he will be able to keep the home if the fed cuts rates? I think the fed should allow everyone to get a 500k home and have it paid for by the government, but the home buyer would of course be responsible for lawncare. It’s a win/win, the fed doesn’t have to cut already low rates, the home builders could keep putting up poorly built mcmansions at a large profit, J6P gets his “dream” home for nothing and the mortgage brokers would profit by turning to landscaping!

Comment by Danni
2007-08-30 05:02:56

Forgive me, but I’ve been reading this blog for a couple of years now but somewhere along the way I missed what J6P is supposed to mean. (I’ve seen it quite of few times but only now have the nerve to ask )

Comment by palmetto
2007-08-30 05:04:58

Joe Six-Pack, as in a six-pack of beer.

Comment by Danni
2007-08-30 05:06:32

LMAO
DUH!

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Comment by Danni
2007-08-30 05:07:51

Time to get that second cup of coffee.

 
Comment by Tom
2007-08-30 07:14:48

DCC

Danni Cup of Coffee

 
 
Comment by JungleJim
2007-08-30 05:19:18

Jose six-pack

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Comment by luvs_footie
2007-08-30 05:35:47

No way Jose :smile:

 
Comment by Sobay
2007-08-30 06:37:19

Juan Six Pack - we in Ca use Meximath

 
Comment by michael
2007-08-30 07:20:07

wouldn’t that be something like:

ses paquete de juan

 
Comment by Big V
2007-08-30 14:31:39

A 6-pack of Juan?

 
 
 
 
Comment by IllinoisBob
2007-08-30 05:15:49

Also, here in the Chicago area, if you want to be less than 20 miles from the city center & closer to the jobs a decent 3/2 will cost ya 700K, vs 200 - 300K 5 years ago. With better than 2x J6P’s income, that is still 8 -9 times income. Point is the !@#$% prices are affecting a large swath of the population and agree the solution is drop the stupid prices and not stick us with even higher inflation rates if the Greenspan put is executed.

Comment by In Colorado
2007-08-30 07:20:07

I wonder how much Bob Hartley’s (Bob Newheart show) lakefront apartment would fetch these days?

Comment by edgewaterjohn
2007-08-30 07:47:44

In a sixties era highrise (contemporary of the orig. Newhart show) - low end - $220k upper end $400k. That’s for a 2 bdrm. Older vintage buildings will go for higher, but I believe Bob was in a “Modern” building. In the neighborhood the show was set - probably $400k plus.

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Comment by Brian in Chicago
2007-08-30 08:01:40

Yes but the HOA fees are likely to be $1000/mo.

Lot’s of old blue-hairs with no mortgage demand their services but won’t approve a special assessment to improve energy efficiency. I believe the Mies Van der Rohe building at 830 N LSD might be the first of the mid-century moderns to undergo an extensive redo and I think I heard the number to be in the $20-30 million range. That’s what you get for waiting so long! On the other hand, I doubt many of the residents have made a mortgage payment in 3 decades and once the redo is complete the operating costs will be a fraction of what they were before.

 
Comment by edgewaterjohn
2007-08-30 10:38:58

B.I.C. That’s an accurate picture of the situation facing many high rises. Repairs are killers, and I’ve learned first hand the costs of new windows, plumbing, risers etc. While my place suits my needs perfectly - I firmly believe that many condo buyers around town in recent years have no idea what they signed up for - not in terms of their units, their buildings, or their neighborhoods.

 
 
Comment by FED Up
2007-08-30 10:07:20

The buildings in the opening sequence of The Bob Newhart Show - http://www.marina-city.com/CondoRentalsSales.htm

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Comment by edgewaterjohn
2007-08-30 10:33:29

While featured in the opening title sequence - Bob didn’t live in Marina City. The apartment set had regular shaped rooms - rooms in Marina City are somewhat pie shaped and irregular with low ceilings - knowledge picked up from an overnight tryst or two over the years.

 
Comment by In Colorado
2007-08-30 12:47:18

Didn’t they always show a more boxy shaped building by the lakefront just before he got home? Of course the view from his balcony was of the city.

We bought a few seasons of the old show on DVD. What’s neat is that our kids really like it, especially when compared to a lot of today’s trash that pretends to be funny.

 
Comment by SanFranciscoBayAreaGal
2007-08-30 13:01:12

It was one of my favorite shows to watch. Loved Bill Daly role in the show.

 
Comment by Anna
2007-08-30 20:47:01

According to imdb.com, Bob and Emily Hartley lived at 5901 North Sheridan Road in the Edgewater neighborhood. In the opening sequence it looks like his office was in the Uptown Federal building near the Wrigley building on Michigan Avenue.

 
 
 
Comment by Brian in Chicago
2007-08-30 07:46:25

I’m willing to pay a premium to live 7 blocks from my office, but not that much. Renting is the way to go. In the past 2 years my rent has increased by about 15% but it is still a bargain compared to buying. Developers have noticed… In my hood, high-rise (~50 floors) apartments are going up. Over in the Lakeshore East neighborhood, the newest building is a high-rise apartment building. The building they just started constructing will be 1/3rd hotel, 1/3 condo, and 1/3 rental.

I guess you can always turn a building into condos once the market value is back up to what they are looking for.

PS - my building went from about 75% full to completely full as they raised the rents. I’m thinking more and more people are discovering the advantages of renting so close to the central business district.

 
Comment by Jay_Huhman
2007-08-30 08:16:24

Let’s be realistic. A nice 3/2 does not generally cost 700K within 20 miles of Chicago. That 250K place 5 years ago is 375K or so now.

Prices in Chicago are up about 65% since 2000 according to the Case-Schiller index.

 
 
Comment by Ghostwriter
2007-08-30 10:03:18

So if J6P can’t afford/doesn’t want a depreciating 500k home on 40k income now, he will be able to keep the home if the fed cuts rates?

If the FED cuts rates to zero he still can’t afford a 500k home on 40k salary. If he can, I’m buying a 1.2M home with my salary. No one outside this blog seems to get that most of the people that are in this mess do NOT have an income to support the house payment even with no interest. They couldn’t even pay the principle over 30 years without being totally strapped.

 
 
Comment by IllinoisBob
2007-08-30 05:00:27

More wonderful news … Freddie Mac said net profit fell 45% to $764 million as credit loss provisions increased.

Comment by WT Economist
2007-08-30 05:05:00

Hey, at least they are laying to money aside, and have profits to use for that purpose.

I’ve been thinking that for Wall Street the credit crisis will be over by Christmas. Why? Because the financial crap assembly line broke down with some excrement in the factory, having already come in from the borrowers and having yet to go out to the marks.

Well, Wall Street is the factory. They’ve got a big mess, but if nothing else comes in they survive, they’ll recover after the first of the year, although a bad smell will remain for some time.

Their problem will end, and everyone else’s will begin.

Comment by cynicalgirl
2007-08-30 05:26:52

I disagree. It’s going to be a lousy Christmas. Retail sales are being affected by the mortgage crises, and that speaks volumes.

Comment by Boston Bruce
2007-08-30 05:42:19

Never underestimate the American consumer’s capacity to spend money they don’t have.

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Comment by Hoz
2007-08-30 06:03:05

True.

The only ‘if’ in the equation.

If the consumer spends moneys, we do not go into a recession.

 
Comment by ChrisO
2007-08-30 06:51:41

That only works as long as the credit cards hold out. You think many FBs are going to make it until December?

 
Comment by edgewaterjohn
2007-08-30 07:31:49

Remember, real patriots spend.

 
Comment by Chrisusc
2007-08-30 08:30:12

“If the consumer spends moneys, we do not go into a recession.”

Exactly Hoz. That is the real question. Then the rest of us know what to do next. I am still thinking of buying a two-year old car, but am too scared to pull the trigger. I’ll just keep driving my 10yr old purple car till it drops I suppose. Or at least until the dealer get really hungry and then cut prices in half…

 
 
 
Comment by Ghostwriter
2007-08-30 10:07:22

They hinted yesterday that some hedge funds will be laying off right after labor day. This to avoid paying bonuses.

Comment by salinasron
2007-08-30 10:52:48

LMAO. Yeah, lay the lower tier off so you can still hand out the big bonus to those on top. Potential movie scripts grow by the day.

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Comment by Big V
2007-08-30 14:35:18

The perforated colon is the acute trauma. The chronic condition will be the systemic infection, and the side-effects of the cure will likely include nausea, diarrhea, and dizzyness.

 
 
Comment by Chip
2007-08-30 07:06:45

“Freddie Mac said net profit fell 45% to $764 million as credit loss provisions increased.”

Hopefully enough in congress will see that and get the message that any loosening of Fannie/Freddie lending criteria is a tax-money rathole that they won’t be able to hide well enough. Their mindset might be, better to blame a huge loss on others than eat a smaller but substantial one and have it blamed on you. Throw some sympathy money around and nail the barn door shut.

Comment by Anon In DC
2007-08-30 09:50:21

Chip, Hi. You think Congress is worried about taxpayer money ? Do you want to buy a bridge in Brooklyn ? ;)

 
 
 
Comment by Carolina W
2007-08-30 05:19:16

I have to comment on how the bubble has affected our area, Greenville County, SC. I am in disbelief. We are seeing an absolute tidal wave of people moving into the area - I mean it is unreal. This county has about 500,000 people, and the infrastructure is getting crushed. The kids wanted to go to Red Robin for a burger last night. A ten minute drive in regular traffic took 35 minutes, as the 2 lane roads were absolute parking lots. We decided to count the number of out of state plates while we waited. One in six. We used to see a fairly large number, mostly from NC, GA, people here on business maybe. Now the plates are CA, MA, TONS of OH and MI, and is ALL OF FL moving here???
We have 60 homes in our n’hood. None are available for sale (250K-325K). Our next door neighbor sold 3 months ago, had 30 showings in 28 days, received full price.
One more thing. The relocators used to come here for a job transfer, often drove a nice BMW, Mercedes, Acura, Honda, or newer SUV typically. Now we are getting many who don’t have jobs lined up, and drive a crummy domestic econobox, or if they are from OH, a beat up old minivan. God help us. Rant over.

Comment by flatffplan
2007-08-30 05:54:56

want real trouble- try an area w declining population

Comment by Vermonter
2007-08-30 06:07:35

Can agree with that one. VT has some minor growth problems but a quick trip across the lake to the Plattsburgh region is enough to be thankful for the problems of abundance.

Comment by ET-chicago
2007-08-30 07:40:09

Vermont seems to handle growth and sprawl better than almost every other state, far as I can tell.

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Comment by rj
2007-08-30 11:32:10

I’m thinking of moving to Vermont if that Second Vermont Republic movement ever takes off.

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Comment by Paid4Now
2007-08-30 06:57:57

Declining pop. is great for bargains. Not so good for finding a job once you’ve found the house. I recently returned to Atlanta from Michigan for a high school reunion. Ugh. I wouldn’t live in Cobb County for anything anymore. Talk about strip mall suburban hell. I’ll take the declining population over ever expanding sprawl any day…as long as I can find a job!

 
Comment by scdave
2007-08-30 08:01:25

It’s the home affordability locusts that are coming…..A house for 250K we can afford on our modest pension and social security checks…Also, IMO, there is a perception that the Carolina’s are safer & not morally bankrupt….

Comment by salinasron
2007-08-30 10:57:11

Dave, I don’t know many people around the country that can retire and buy a $250K house. Any idea what the average Joe makes in retirement?

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Comment by BP
2007-08-30 05:57:58

Getting the same thing here in my neck of the woods. The growth however is somewhat checked by the overly priced real estate, taxes and cost of living. In my neighborhood prices are up almost 40% is past two years.

Comment by Mary Lee
2007-08-30 14:44:58

That’s the story of the Rogue Valley. Folk from Cali started coming here (weather close as possible to CA) over a decade ago. Very cheap housing then. Today our prices would be more appropriate to CA.

“Old days” listings between 600-800. Today over 3000. Oodles of FSBO. Many price-reduced signs, but prices down by minute increments. Majority of the population has no clue. Don’t see what the subprime mess has to do with us. Can’t envision a reasonable home for under 400K (shy 2,000 sq ft).

Predict many homes will come off the market to wait for that mystical spring resurgence of panting buyers. Hubris annoys.

 
 
Comment by Robert in Florida
2007-08-30 06:02:32

is ALL OF FL moving here???
No, just the ones from NJ, NY, MI, who moved to Florida and now that they screwed that…..well, I guess you know.

Comment by JayInMD
2007-08-30 08:24:52

Half Backs and I don’t mean Caroilina Panther football players.

 
 
Comment by phillygal
2007-08-30 06:03:59

I feel for you.

We’ve experienced similar in my area, but not from out-of-staters, mainly from regional mover-uppers. A lot of city escapees. An influx of non-natives really does change the character and flavor of a place.

Our new people don’t drive beat up vans, though. They’re definitely in the “show car” state of mind. Escalades all over the darn place.

Comment by hd74man
2007-08-30 10:03:18

RE: An influx of non-natives really does change the character and flavor of a place.

Nothing more than a contemporary version of the
Depression 30 era “Oakies”, looking for a job and a cheap place to live.

They are living testiment to the government propaganda that you can run an economy on tech and information.

 
 
Comment by lizziebeth
2007-08-30 06:25:53

You have your friendly developers and politicians in their pockets to thank!
I have to agree with your anger. Even though I’m not a southerner, it makes me sick to see these wonderful southern towns taken over! We lived in Charlotte 15 years ago. We embraced the area for what it was small, christian valued southern city. Came back 10 years later and all that was out the window. Schools can’t celebrate Christmas, traffic, too many strip malls……. Turns out the local politicians were backed by the developers and allowed uncontrolled growth.

We’re back in Florida and I can honestly say that SC and NC is where most Floridians want to move. People were cashing out of their falsely inflated homes and moving up to this area for the affordable cost of living. Homes aren’t selling here so the growth in your area should slow down substantially!

Comment by Tom
2007-08-30 07:22:03

Still renting Lizzie?

Comment by lizziebeth
2007-08-30 07:59:21

Yep, been throwing around some low ball bids, but still no takers! Had one house but it was a foreclosure and one of the lien holders wouldn’t release. The house is now a million dollar(peak price) dump! We wouldn’t touch it with a ten foot pole now! They think they can get more money than we offered. Ha! Realtors hate my guts, but it sure is fun watching them squirm. I want to puke everytime I hear “this is an amazing price for this house”!!! I have to admit though, I’m tired of renting, but it will be a cold day in hell when I pay anything over 2002 prices!

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Comment by Chrisusc
2007-08-30 08:33:17

“I have to admit though, I’m tired of renting, but it will be a cold day in hell when I pay anything over 2002 prices!”

Agreed. Although some people here think it may go back to 1997 prices, so then I think if I buy at 2002 prices, I may have to come here and admit that I am in the FB class of 2008/2009.

 
Comment by lizziebeth
2007-08-30 09:21:00

1997 prices in my area would be a 75% decline. In some areas starter homes where most of the specuvestors were this may happen. Most of the increases here happened between 2003 and 2005. We have been on the sidelines for almost 3 years now. We can handle another 25% decrease and are willing to take that chance. My children need a home that they can visit with their children! Renting was a great option for the past three years, but it’s time to have our own home. At 50% off peak prices, I’m okay with being a FB of the 2007-2008 class.

 
 
 
 
Comment by Mike in Miami
2007-08-30 06:49:47

The Carolinas are getting crushed from real estate and property tax refugees from Florida. I believe it. A few days ago on CNN they had an article that Miami is the second poorest city with a population over 250K. Sure couldn’t tell by the housing prices.

 
Comment by 45north
2007-08-30 06:59:33

Carolina W: Google Maps, Greenville, just north of I85, good stuff Carolina!

 
Comment by Bill in Carolina
2007-08-30 07:27:25

Carolina W,

You must have missed the builder ads in Sunday’s Greenville birdcage liner. For the first time I’m seeing discounts like Lennar’s “Up to $25K off” and Ryan’s “All options at half price.” So all those new arrivals to the area must be renting.

But then I saw an article where a new lakefront subdivision just started selling its lots, and 33 of 102 lots sold in just a week.

Truly a mixed bag.

Comment by JimmyB
2007-08-30 07:36:23

That is the oldest trick in the bag. Developers say that have great sales the first week to motivate others to buy “or lose out.” I bet the sales were 1/3 of that or less.

 
 
Comment by Cmyst
2007-08-30 08:37:39

A lot of people in Cali seem to fantasize about moving to SC. And I think there IS a perception that it will be like returning to some place/time in US history that actually never was.
But be prepared. We moved to the Houston area in the 80’s when unemployment was around 10% in the Midwest and it seemed like every other family had the same idea. There were people camping under the highway overpasses, and there was widespread ill-feeling towards what they called “the black plates” (MI license plates were black at the time). People that think economic disaster can’t happen to them, or in our time, or in their part of the world are in for some fun times!

 
Comment by Margaret Jones
2007-08-30 10:23:20

Are you on the Eastside of Greenville? I think we’re practically neighbors.

Comment by Carolina W
2007-08-30 11:33:39

What if I answered that I took Pelham Rd to Roper Mtn. Rd to Garlington to get our Red Robin burgers at that Anytown, America monstrosity “The Shoppes at Greenridge” ;)

Comment by Margaret Jones
2007-08-30 11:52:42

No distance at all. I’m in downtown Greer, just off North Main, and two blocks from Wade Hampton. We have a house that has been in the family for around 70 years. My daughter bought her grandfather’s house after he died last year. He bought it in the mid1960’s.

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Comment by bacon
2007-08-30 05:21:09

Freddie Mac results out:

“Freddie Mac today reported second quarter net income of $764 million, or $1.02 per diluted common share, compared to net income of $1.4 billion, or $1.93 per diluted common share, for the same period in 2006. The company also reported an increase in fair value of net assets attributable to common stockholders, before capital transactions, of approximately $800 million for the second quarter, compared to an increase of $1.4 billion for the same period a year ago. Compared to the first quarter of 2007, the company reported increases in both net income and growth in fair value primarily due to gains on mark-to- market items.”

how do they recognize mark to market gains in this market?

Comment by NYCityBoy
2007-08-30 05:31:53

Voodoo economics is how.

Comment by bacon
2007-08-30 05:57:12

more blackbox/black magic accounting analogous to Enron?

http://www.freddiemac.com/investors/er/pdf/2007fin-tbls_083007.pdf

“The mark-to-market gains during the second quarter of 2007 primarily reflect the impact of increasing long-term interest rates on the value of the company’s credit guarantee activities, partially offset by security impairments largely related to the anticipated sale of certain seasoned collateral securities.”

i don’t *get* it…

“Attribution of changes in fair value relies on models, assumptions, and other measurement techniques that evolve over time.”

okay, now i get it.

Comment by kcdallas
2007-08-30 06:24:03

They’re cashing the money they expect to get from ARM resets?

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Comment by bacon
2007-08-30 07:16:27

sounds like it. conf call @ 10am.

 
 
Comment by bluto
2007-08-30 07:20:07

When you insure a loan (which is the core business of the enterprises) you provide a promise to repay (guarantee obligation) in exchange for a portion of the interest payment(guarantee asset).

FASB requires that you find the value of those interest payments and track how it changes. Since you are just getting a portion of interest, an easy way to mark to market these securities is to track the value of Interest Only securities that trade in the markets. Interest only securities pay based on the interest portion of cash flows on a mortgage. When the mortgage is pre-paid, they stop.

Because of that feature, the main factor in how an interest only mortgage security changes in value is it’s chance of being prepaid. As rates increase the likelihood of a prepayment decline (who refinances into a higher mortgage rate) so the likely length of interest payments increases and the value of your security goes up quickly.

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Comment by bacon
2007-08-30 07:50:01

thanks much.

so their models are betting against a rate hike or just taking into account the current environment?

 
Comment by bluto
2007-08-30 08:10:17

Mark to market models typically track the change in the current environment, without attempting to predict the future aside from the inferences of the market–however, in the case of an IO security you’re sort of doing both. An IO is little more than a vehicle to bet on changes in interest rates.

Something similar would be using the change in odds in a football game to decide your team’s chance of winning. As expectations shift, the odds change so tracking the current environement them means you are effectively making some prediction about the future (through the markets).

 
Comment by Deron
2007-08-30 08:47:07

The chance of prepayment will fall in a rising rate environment. However in the current mix, marking up the value of the guarantee is exactly the wrong thing to do. The chances of default are rising rapidly, so the actual liability associated with the insurance is rising. However, I’m sure their model does not reflect that change.

 
Comment by bluto
2007-08-30 08:51:05

The risk of default is market in the guarantee obligation, it’s separate so investors can see how the effects separately. Plus one side is easy to mark while the other requires pretty substantial modeling.

 
Comment by AKron
2007-08-30 08:51:45

“As rates increase the likelihood of a prepayment decline (who refinances into a higher mortgage rate) so the likely length of interest payments increases and the value of your security goes up quickly.”

I would think that the opposite would be true. If prepayment is abnormally low, the effective maturity of the bond increases. Then the holders are ’stuck’ with a bond paying interest based on old mortgages (with lower interest rates) at a time when interest rates are rising. Any time you have a long-maturity bond and interest rates rise, the value of the bond tumbles. This is in addition to any loss in value due to possibility of default.

 
Comment by bluto
2007-08-30 09:24:57

True and the extention risk is real for a mortgage bond, but for most rate moves the primary valuation factor is where on the callable portion of the curve you are. With an interest only security, that duration lengthening just massively increased your expected payments. Here’s an example.

http://spreadsheets.google.com/ccc?key=p8QV0hmBXJ4w8azZWT1pHYg&hl=en_US

I made up a payment extention to show the point.

 
 
 
 
 
Comment by Brandon
2007-08-30 05:21:26

Wholesale priced? Never knew you you could buy homes at volume prices. This ad claims a $131k price drop for this home in Eagle, ID. (insert Larry Craig joke here).
http://boise.craigslist.org/rfs/409271881.html

 
Comment by kckid
2007-08-30 05:22:01

MBS Valuation

Level 1 Market
Level 2 Model
Level 3 Make Believe

Level 3 is going to be a problem.

Comment by Michael Fink
2007-08-30 07:05:34

Level 4 Drunken Sailor

Which, unfortunately is where we are now. :(

 
 
Comment by Sic Semper Realtor
2007-08-30 05:24:36

I heard a commercial for Centex homes (here in MN). The whole commercial was how “easy” it is to build a home. Centex has everything you need to pick out under one roof. Please go out of business soon.

My sister lives in Green Bay. Her neighbors had a house built this summer and were planning to sell their old house and move into the new one in September. Thing is, they didn’t list it until June, still hasn’t sold yet. They were so confident it would sell because “their house is special”. The best part - the guy is a mortgage broker. No national bubble indeed.

Comment by Sic Semper Realtor
2007-08-30 05:29:44

Oh, one other thing I was pondering last night that I’ve not seen discussed here a whole bunch. Are there going to be bunch of boomers who are currently fine retirement-wise but will try to bail out their cretin offspring? In the process, both will end up in the poor house, er apartment?

Comment by txchick57
2007-08-30 05:36:26

LOL. Reason no. 4389 why childfree rocks.

I’m leaving all my money to my French Bulldogs like Leona Helmsley.

Speaking of that, got an email from someone in NYC trying to get a surgery done that a lot of bulldogs need. It cost me $500 in Tyler, Texas by a super bulldog vet. NYC price - $7,700 and even if you have that much, “they aren’t accepting new patients.”

How does anyone afford to live there?

Comment by novasold
2007-08-30 05:52:07

It might be worth her while to fly to Texas for the surgery. Cheaper even with the flight!!

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Comment by M.B.A.
2007-08-30 06:20:39

Frenchies? Love them! How many?

Do you breed them?

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Comment by M.B.A.
2007-08-30 06:21:17

p.s. agree w/ you:
DOGS: yea!
KIDS: nay!

 
Comment by cfoofmofo
2007-08-30 06:39:55

No kids, no dogs and no cats! Complete Freedom! By choice and never been happier. Oh, and the house is always clean!

 
Comment by txchick57
2007-08-30 07:24:27

I have four of them. No, I don’t breed them, I rescue them.

 
Comment by scdave
2007-08-30 08:19:10

I rescue also….Got two….

 
Comment by sweeny texas
2007-08-30 08:30:55

I’ve got 3 kids, although if it had been left up to me, I would have none. They are expensive, they’re dirty, and they grow up to be assholes like the rest of us. But they sure have helped me get my priorities straight in this crazy life, and they are a hoot.

 
Comment by FutureVulture
2007-08-30 08:48:40

I don’t breed them, I rescue them.

No more doggie bailouts! They knew what they were getting into…

 
Comment by txchick57
2007-08-30 09:09:55

lol

 
Comment by Anon In DC
2007-08-30 10:01:07

Just looked them up on the web. Those French Bulldogs are cute.

 
Comment by M.B.A.
2007-08-30 12:02:00

beyond cute.

rescues are the best!

 
Comment by paul
2007-08-31 17:38:59

Umm…Don’t you mean “Freedom” Bulldog?

Paul

 
 
Comment by hwy50ina49dodge
2007-08-30 06:52:27

Where’s you’re creativity?

Yeah mean… you’re not giving anything… to the Bill & Melinda Gates Foundation…Warren will be very disappointed.

Can’t you find some poor West Texas bastard that’s trying to make a living farming 20# Trout and leave him an small anonymous donation. :-)

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Comment by Chip
2007-08-30 07:12:46

Chick — does the surgery stop their thunder?

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Comment by NYCityBoy
2007-08-30 07:15:33

“How does anyone afford to live there?”

We don’t own bulldogs.

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Comment by bubbleglum
2007-08-30 07:31:46

“How does anyone afford to live there?”

You don’t own bulldogs there.

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Comment by AKron
2007-08-30 08:53:59

“I’m leaving all my money to my French Bulldogs like Leona Helmsley.”

You named one of your bulldogs Leona Helmsley? Good choice. ;)

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Comment by GPBlank
2007-08-30 09:31:28

We “inherited” a cat with a trust fund for her care. Hubby’s an attorney and did the pet trust. Estate bene’s get the residual after trust fund kitty meets her maker.

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Comment by Blano
2007-08-30 10:12:10

Can’t you speed that up a little??

 
 
 
Comment by Vermonter
2007-08-30 06:03:31

There might be a bunch of boomers who try to bail out their cretin offspring. The view from around here that it’s the other way around:

My Mom: no money, living off of SS, part-time job, and in Section 8 housing

My Dad: a tiny bit of interhertance from his parents, living in a trailer park (home paid for). Thinks he will retire like dear old dad at 65 with only SS to cover him.

My Aunt: some retirement savings, may well bail out cretin offspring (who is 18) at some point. However, she has very little self dicipline and usually has credit card debt. She also has at least 20 years to go on a mortgage.

and my in-laws: In 2000, I would guess they were worth close to $1 million dollars. Since then they have chased every bubble (lost their shirts on Enron and tech stocks) and started supporting my grandmother in law in a lifestyle which is modest but nonetheless she cannot afford. They have several rental houses which they bought close to the peak.

So at this point, I’m looking for some boomer relatives who will have enough money to bail me out. Please adopt me. You’ll have extremely cute looking grandchildren. ;)

Comment by hd74man
2007-08-30 14:22:39

RE: There might be a bunch of boomers who try to bail out their cretin offspring. The view from around here that it’s the other way around

The legacy of a 50% divorce rate.

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Comment by Bill in Carolina
2007-08-30 07:35:18

We’re recent retiree here and we don’t worry about our kids’ finances. The married one and spouse live off just one income, putting the other into savings and investments. The unmarried one shares a rental with a roommate and also saves a significant part of paycheck. No cable, no digital toys, older Toyota. Even more of a cheapskate than we were at that age!

 
Comment by Ghostwriter
2007-08-30 10:40:20

Oh, one other thing I was pondering last night that I’ve not seen discussed here a whole bunch. Are there going to be bunch of boomers who are currently fine retirement-wise but will try to bail out their cretin offspring? In the process, both will end up in the poor house, er apartment?

Not this boomer. We’re retiring next summer in our mid to late 50’s. My children have been taught that they have to have a downpayment to buy a house. I also pounded 15 year fixed in their heads. Both are very sensible with money.

Our house is paid for, our children both have college degrees that we paid for in cash, except for the small amount of student loans they got. What I do see is a huge percentage of boomers who have heloc’d their house to send their kids to college. After mine started, I can’t tell you how many people asked if we had gotten a home equity loan to pay for school. Everyone of them thought this was the way to go. So now you have boomers whose houses were nearly paid off, borrowing $100-200k or more to send their kids to college. A lot of them have told us they won’t be retiring for a long time because of the mortgage.

We’re going to be retiring on a nice income, and my only regret is that with the prices in FL we won’t be going where we thought we would be. I have relatives up North and in the South and we really wanted to split our time. We may rent 2 or 3 months a year, but there’s no way I would buy anything there now. What was $100sf is now still $200 or more a sq ft. Now I probably won’t buy unless it hits $60-75sf, just because of the burden with taxes and insurance. I’m not giving up my paid for 2000sf colonial on 6 acres for a box on a postage size stamp size lot with HOA, outrageous taxes and sky high insurance. Oh yeah, FL has a lot of correcting to do.

Comment by Bill in Phoenix
2007-08-30 12:17:55

I don’t have any children, but have a nephew and niece. The nephew is 31 and worked one year in his entire life. No bailouts for that kid. Frog on a log waiting for a fly to come by.

They don’t know my income, nor my net worth. Their mom does not either.

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Comment by Alison
2007-08-30 05:25:15

I’m visiting mom in orlando. She came home from work yesterday and told me Lennar homes shut down their Orlando division. They sent all the employees home and locked the doors. One of her coworker’s sister works there. I didn’t see anything in the Orlando Sentinel this morning. Ben? Any info?

Comment by Tom
2007-08-30 07:11:52

Lennar has a big building in Sarasota too. It’s been empty for a few weeks.

 
Comment by Russell A
2007-08-30 07:25:46

I haven’t seen anything, but if you were a Lennar employee would you rather be laid off or forced to search for bombs?

http://www.orlandosentinel.com/news/local/orange/orl-bomb30_107aug30,0,125433.story

 
 
Comment by guess who's
2007-08-30 05:34:31

Why is everyone asking the FED to lower rates? Isn’t that how we got into this mess? Seems to me, we should be letting the proverbial sh@t hit the fan and starting over again. I don’t understand it. Asking the FED to lower the rates to fix the problem is like asking a drug addict to increase his dosage to get over his addiction. It’s time to lock this addict in a room and let the painful withdrawal run its course!

Comment by Crapburner
2007-08-30 06:58:48

Fed could drop rates to zero and it would affect the outcome. Prices will fall because affordability is the issue. BB could inflate to his hearts and his bankers he is beholden too’s desire but it is like pushing a string.

10 dollar an hour service jobs will not buy 400K homes and 40K vehicles.

The economy for the great majority of Americans is dead.

In 2010 you will have 10% rich and 90 % poor….good recipe for revolts and usurpations.

As Neil would say, got popcorn.

Comment by Kime
2007-08-30 07:14:30

I guess you mean it wouldn’t affect the outcome.

 
Comment by Chip
2007-08-30 07:22:57

“Fed could drop rates to zero and it would[n't] affect the outcome.”

I agree with that, in that there is no one left who trusts MBS paper enough to buy it anymore. Even the politicians do not want Fannie, Freddie and FHA to underwrite/hold every mortgage written. The banks will get the business back and the wink-wink loans should be toast. House prices, in general, cannot remain so far outside the normal rent ratio in that environment - impossible.

Some would argue that inflation will solve it. However, it seems to me that higher inflation would push a lot of ARMs to max rates faster, accelerating foreclosures — the opposite of what politicians want. The bitter truth is that *somebody* has to pay and even politicians probably realize that other than foreigners, who then will be reluctant to be burned twice, they risk an uprising if they don’t make the guilty pay. IMO.

 
Comment by In Colorado
2007-08-30 07:28:25

Someone asked me the other day if the super rich don’t realize that they are killing the goose that lays the golden eggs?

My response was that until their hands are tied behind their backs and are either facing a firing squad or are face down on a guillotine, it never occurs to them that perhaps they have gone too far.

Comment by BP
2007-08-30 07:55:28

Greed does not know income level.

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Comment by Deron
2007-08-30 09:00:36

This is where a little morality and patriotism would come in handy. There have been a bunch of philosophical streams that have denigrated both religiously-based morality and any form of national-patriotic-group identity (at least in the West) for many decades. Primarily, these are based on theories of moral equivalence like multiculturalism or postmodernism. Or they can simply be amoral and anti-religious like objectivism.

When you balkanize a population, either through reinforcing ethnic differences or by disclaiming any responsibility for your neighbor, what other result should we have expected?

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Comment by CarrieAnn
2007-08-30 10:12:45

“When you balkanize a population, either through reinforcing ethnic differences or by disclaiming any responsibility for your neighbor, what other result should we have expected?”

A friend of mine was reading me excerpts from an essay(?) by Nancy Cantor, Syracuse University Chancellor. I believe it was called something like “Insiders and Outsiders”. It referenced the damage done by myopic thinking. Although I’m sure she was trying to kick some local Syracusans in the behind with it, she identified the problem as a national phenomonon. Soon to be brought to a party platform near you?

 
 
 
Comment by edgewaterjohn
2007-08-30 07:42:04

The television will make sure no one gets out of hand - that and obesity.

Comment by oxide
2007-08-30 08:00:01

Good point. How many people nowadays could even lift a pitchfork with two arms, much less with one? (need the other arm for the torch,and they probably can’t lift that either.)

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Comment by michael
2007-08-30 07:52:45

lol…revolt. americans will need to stand alot fracking more oppression before we get to that.

hell american fat asses aren’t even motivated to get out and exercise or even vote much less revolt.

Comment by In Colorado
2007-08-30 08:13:48

Wait until their Visa cards are taken away and the pickup truck is repo’d.

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Comment by In Colorado
2007-08-30 08:16:24

Oh, and when their wages are garnished to pay back all those bills, while the average wage drops even more, and they need to speak Spanish to get/keep thier crummy job.

 
 
Comment by scdave
2007-08-30 08:33:17

I agree Michael….Its now a “What’s in it for Me” mentality….It takes a village is just wishful thinking IMO…….

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Comment by Ghostwriter
2007-08-30 10:45:08

What I really don’t GET is why everyone thinks rates are high. We would have died and gone heaven the first 10 years of married life if rates had been where they are now. The current rates are LOW, what’s everyone whining about.

 
 
Comment by kahunabear
2007-08-30 05:35:24
Comment by Professor Bear
2007-08-30 07:10:06

It is the Bernanke pledge from now on…

Wall Street rallies on Bernanke pledge
By Eoin Callan in Washington and Anuj Gangahar and Saskia Scholtes in New York
Published: August 29 2007 23:45 | Last updated: August 29 2007 23:45
http://www.ft.com/cms/s/0/131a4566-567f-11dc-ab9c-0000779fd2ac.html

 
 
Comment by txchick57
2007-08-30 05:38:42

gdp comes in a tiny tad under expectations.

maybe we go down 200 again today.

Comment by Hoz
2007-08-30 06:11:26

“…The Labor Department reported Thursday that applications for unemployment benefits totaled 334,000, an increase of 9,000 from the previous week.

That gain caught analysts by surprise. They had been forecasting that jobless claims would fall by around 2,000….”

I was expecting 340K. I should stop doing my own research. I guess a lot of layoffs took jobs in Ardmore.

Comment by GetStucco
2007-08-30 06:32:13

Hoz –

Nothing wrong w/doing your own research, but don’t forget to factor new hiring into your employment equations…

 
 
Comment by daniel
2007-08-30 06:31:17

….or up 300, chick, depending on how emphatically the PPT wants to setup the holiday mood. you know the deal.

 
Comment by Tom
2007-08-30 06:49:47

lol I think I looked at Finance.Yahoo.Com and it said, GDP up!

 
Comment by Tom
2007-08-30 06:50:51

Oops meant “GDP grows at fastest rate in a year”

 
 
Comment by michael f
2007-08-30 05:49:07

H&R Block Inc (HRB.N) Chief Executive Mark Ernst on Thursday said the U.S. mortgage lending market may be facing its greatest crunch since the 1930s, when the country was in the Great Depression.

Earlier Thursday, H&R Block said it is renegotiating the sale of its subprime lending unit Option One Mortgage Corp. to Cerberus Capital Management LP.

The unit has suffered mounting losses and reduced staffing by more than half this year, and now has about 400 staff handling loan originations, Ernst said on a conference call.

Option One has also tightened its lending criteria because investors won’t buy many kinds of loans, amid “fear of anything that’s subprime,” he said.

“The mortgage origination market is in the midst of the most severe dislocation that it has seen in years, maybe the most severe since the 1930s,” Ernst said.

Comment by hd74man
2007-08-30 19:19:35

RE: Option One Mortgage Corp.

Now there’s an operation that underwrote some real garbage.

-Ex Fleet Bank junk mill.

In fact the homes which I inspected were repeatedly so bad,
I refused to accept anymore appraisal assignments from them.

Sorry to all you Fritz’s out there.

 
 
Comment by flatffplan
2007-08-30 05:51:45

COMMERCIAL - what’s going on w commercial RE in your hood ?
N VA is softening , suddenly listings galore

Comment by agentjmf
2007-08-30 06:52:43

Which type of commercial?

Comment by flatffplan
2007-08-30 07:06:40

3 story office building - suddenly we have competition

Comment by agentjmf
2007-08-30 07:24:39

don’t track office space in my area (los angeles county), however i’m noticing a significant rise in multi-family and more short sales and foreclosures.

on a side note, i’m also noticing alot of folks that bought pre-2000 “chasing the bottom” and listing at lower prices than their “wish list” neighbors and still able to actualize a hefty profit. i love it.

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Comment by scdave
2007-08-30 08:38:21

Commercial property listings have increased significantly the past few months on the west coast….Asking prices still high though….6% caps…

 
 
 
 
Comment by chris hauser
2007-08-30 07:08:50

you could see the rise in for lease signs in the dc metro area 6-12+ months ago. a lot of commercial purchases in 05 & 06 were bought on anticipation of rollovers/rising rents etc etc.
the catch up in tax assessments and insurance going up to cover increased values is also cutting demand.

 
Comment by Chip
2007-08-30 07:28:23

Feels like it’s softening here in central Florida, except maybe out NW of Apopka. Unfortunately, what I see most is the Mom & Pops closing. Also, not much new big-box activity and restaurant traffic looks down, particularly given the vacation time of year.

Drove the Western Beltway yesterday for the first time in a year and they are building away out there, but I don’t know who they’re going to sell all that stuff to.

 
Comment by zeropointzero
2007-08-30 07:50:39

I noticed a completely empty office new-ish pair of office buildings by the Inova Health complex in Springfield a few days ago. I couldn’t tell if it was just finished or what — but it had a sign that I believe indicated the entire buildings were available — and not a car in the lot at 4:00 pm on a Tuesday.

Just seemed like the kind of building that would have “someone” in it by this point.

Comment by NovaWatcher
2007-08-30 09:20:19

I moved here in 2002, and there has been empty office space along 28 and 50 since then. Add the new construction with the larger set-backs (protection from car bombs), and you are getting an increase in commerical RE when there are still visible vacancies.

 
 
 
Comment by michael f
2007-08-30 05:56:37

I heard from a friend who works on Wall Street that in Europe, CDOs backed by sub prime mortgages were sold to “mom and pop” individuals over there. They were told by their brokers these are just like AAA bonds but pay higher interest rates. At least here in the states from what I can tell these CDOs were not sold to many small retail customers but only so call “sophisicated inverstors” which usually means a net worth of $1 million or more, and large investment funds. That is one reason regulators in Europe want to investigate S&P and Moodys.

Comment by chris hauser
2007-08-30 07:10:53

no criticism intended——–they were rated based on THE MODEL. it’s all in the DISCLOSURES.

 
Comment by nhz
2007-08-30 07:40:55

I think the reality is that the bulk of the CDO stuff ended up with the big EU pension funds. I don’t think they will report about their positions before summer of 2008, probably they hope that by that time Bernanke has worked his economagic to turn around their losses. Or maybe they don’t even know that there is bad stuff in their portfolios; as long as you don’t look you can pretend nothing is wrong.

Comment by Deron
2007-08-30 09:27:52

“My eyes are closed. The monster can’t hurt me … “

 
 
 
Comment by Hondje
2007-08-30 06:20:33

Looks like Bernanke isn’t buying the Cramer/Kudlow/Gross “cut the damn Fed Funds Rate” idea:
http://www.reuters.com/article/ousiv/idUSL3050022820070830

“Officials acknowledge the perception of bailing out investors exists and if allowed to grow, could erode the credibility they need for keeping inflation low and encourage lax attitudes toward risk,” the article said.

“They hope that taking time to weigh the economy’s need for rate cuts will help discourage investors from thinking Fed officials are overly concerned with falling asset prices

Comment by GetStucco
2007-08-30 06:29:12

It only seems fair to not concern themselves with falling asset prices. After all, they did not concern themselves with rising prices during the bubble of their own making. And besides, so long as markets stay liquid, what does it matter whether the assets which remain liquid in trade have rising or falling prices?

Comment by chris hauser
2007-08-30 07:18:05

he will cut fed funds tomorrow, august 31.

Comment by txchick57
2007-08-30 07:22:37

I”m afraid of that too so I’ve dumped half my puts into the gap down this a.m. Irritates the hell out of me.

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Comment by Professor Bear
2007-08-30 11:46:46

Could you please narrow down your prediction of the FFR cut’s timing to the exact minute and second so that gamblers can get prepare their strategies to make a killing?

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Comment by txchick57
2007-08-30 06:49:20

My god. Intelligent life exists.

Comment by scdave
2007-08-30 08:44:59

I agree….I think its going under 5% also by the Sep.18th meeting…

 
Comment by Hoz
2007-08-30 10:48:53

Reminds me of a professor I had many decades ago “On every planet we have explored, we believe we found intelligent life.”

The only planet we have explored is Earth.

 
 
 
Comment by Olympiagal
2007-08-30 06:36:00

An interesting article.
But wait, perhaps Cramer will have another comical meltdown on-air again today. I can only hope, because I enjoyed the last fit-pitching very much. Maybe this time he will fling himself to the floor and drum his heels and threaten to hold his breath until he gets a rate cut–that could change Bernanke’s mind right there.

Comment by Tom
2007-08-30 06:49:08

I’d hope he would hold his breath. He might float away and come crashing down like that Hot Air Balloon last week. He is just so full of hot air. I know you would get a kick out of that.

You need to find yourself a good Realtor/Mortgage Broker Masochist.

 
 
Comment by Chad
2007-08-30 06:49:47

OMG, what a bunch of morons!!!!!!!!!!!! Apparently some analysts can’t read.

“AP
Jobless Claims Show Unexpected Increase
Thursday August 30, 8:45 am ET
Government Reports Jobless Claims Climbed Last Week, Surprising Analysts

WASHINGTON (AP) — The number of newly laid off workers filing for unemployment benefits unexpectedly rose last week.
The Labor Department reported Thursday that applications for unemployment benefits totaled 334,000, an increase of 9,000 from the previous week.

That gain caught analysts by surprise. They had been forecasting that jobless claims would fall by around 2,000.

Analysts are closely watching to see whether recent financial market turmoil will have an impact on business hiring decisions.”

Comment by Tom
2007-08-30 06:51:59

They should lay off 2,000 analysts for sucking.

Comment by Chad
2007-08-30 07:15:59

Isn’t a Senator getting laid off for that? ;)

Comment by Tom
2007-08-30 07:22:58

You bet. I think these analysts are spending too much time in the bathroom and not enough time looking at data.

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Comment by Crapburner
2007-08-30 07:26:52

Should da stuck to spuds instead of swimsuit area…..

How many in the senate are dopers, perverts, manipulators, etc. I can see why anyone of integrity leaves Washington as fast as possible.

Washington = Hollywood for Ugly People.

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Comment by Ben Jones
2007-08-30 06:57:57

Get Stucco/Professor Bear,

Flip flopping between names is creating a lot of work for me that I don’t need. Please pick one screen name and stick with it.

Comment by Tom
2007-08-30 07:10:14

I think if wordpress sees multiple names from the same IP it puts them in quarantine until blog owner approval.

 
Comment by Hondje
2007-08-30 07:19:06

I vote for Professor Bear over GetStucco :)

Comment by lavi d
2007-08-30 09:13:50

I vote for Professor Bear over GetStucco

I thought they were different people and have come to enjoy them both.

Comment by Housing Wizard
2007-08-30 10:14:10

I will give you a buck if you go back to GetStucco .

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Comment by hd74man
2007-08-30 19:26:47

RE: I will give you a buck if you go back to GetStucco

I’ll chip in 50 cents to the GS kitty.

 
 
 
 
 
Comment by Leighsong
2007-08-30 07:17:11

test

 
Comment by kckid
2007-08-30 07:32:46

ABC morning show was talking about it being a great time to buy a home because of pricing and inventory levels. The commentator thought sending 1099 to FB to IRS was an unbelieveable hardship. She said that this use to be dischargeable in bankruptcy but no longer under current law. She said that the average FICO in the USA was 620. If she is correct, is the top end of subprime.

Comment by Darrell_in_PHX
2007-08-30 07:46:25

Average or medain.

If lots of pople are way below median, but the people above, are tighly packed at just above medain, it would really bring down the mean far below median.

Comment by kckid
2007-08-30 07:59:32

The Web site myFICO.com reports the breakdown of the general population’s FICO scores as:

20 percent below 620

20 percent between 620 and 690

20 percent between 690 and 745

20 percent between 745 and 780

20 percent above 780

 
Comment by NovaWatcher
2007-08-30 09:24:20

If lots of pople are way below median…

if half of the US is considered “lots”, then yes, lots of people are below the median.

 
 
Comment by Ghostwriter
2007-08-30 10:53:49

She said that this use to be dischargeable in bankruptcy but no longer under current law.

Yeah that used to irritate me to no end. How many of you know people who filed bankruptcy multiple times and walked away scot free, just to do it again in a few years.

Comment by sweeny texas
2007-08-30 12:50:26

Donald Trump has filed bankruptcy 3 times, pays alimony out the ass, and is still a billionaire. Is this a great country or what?

Comment by San Diego RE Bear
2007-08-30 15:40:33

I’m often opposed to alimony, but I think those women really, really deserve it. God knows sleeping with that man and having his children is not a job I could stomach. :D

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Comment by sweeny texas
2007-08-30 18:44:57

tee hee!

 
 
 
 
 
Comment by mrktMaven FL
2007-08-30 08:06:07

According to Bloomberg commercial paper market continues to shrink:

Commercial paper outstanding has fallen by $244.1 billion in the past three weeks as more than 20 companies and funds including Cheyne Finance and Thornburg Mortgage Co. fail to find buyers for new paper after losses on some mortgage-related securities scared investors into safer investments. An $18 billion auction yesterday for two-year U.S. government debt drew the most demand since 1992….

Commercial paper is bought by money market funds and mutual funds that invest in short-term debt securities. In asset-backed commercial paper, the cash is used to buy mortgages, bonds, credit card and trade receivables, as well as car loans. Some of the programs are backed by subprime loans. Subprime loans are issued to borrowers with poor credit or high debt.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ao0yhVcoj7Vs&refer=home

Comment by Hoz
2007-08-30 08:55:21

The commercial paper market has dropped from 2.1T to 1.89T in the last three weeks. There are an exceptionally large number of ABCP maturing tomorrow. If there is no rollover… Next week we will see the damage.

 
Comment by Deron
2007-08-30 09:57:01

If there is any doubt about the scale of deflation, keep in mind that total US dollar currency in existence is $68 billion. Nearly 4x that amount has been destroyed in the CP credit market alone on three weeks. Currency inflation sufficient to offset just what’s happened so far would be glaringly obvious.

Comment by Hoz
2007-08-30 10:40:41

Deron, I don’t think it is deflation - it is insolvency.

The credit is drying up because people and companies cannot pay their bills. The interest rate on ABCP went from 6.5% three weeks ago to todays 8.7% and it is going higher.

Default not deflation. There is no decrease in the money supply the price to get the moneys has gotten dear.

Comment by Deron
2007-08-30 12:44:52

Hoz
I’m pretty sure that less credit shrinks the money supply regardless of how it happens. If the debtor pays off the loans, credit shrinks by that amount as do the broader measures of “money” supply. If the debtor defaults, money supply shrinks and the creditor also has a loss, which may force further contraction of credit as other loans may be called in or go unmade in the future. Refusal to borrow or lend will shrink the money supply, whether that is due to inability to make the loan or refusal to accept market terms.

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Comment by mrktMaven FL
2007-08-30 12:54:56

It’s like the world spinning backwards.

 
Comment by Deron
2007-08-30 13:42:03

mrktMaven
I thought it was more like playing country music backwards - at least for savers.

 
 
 
 
 
Comment by mrktMaven FL
2007-08-30 08:12:11

Credit crunch tightening grip on England’s money markets:

Aug. 30 (Bloomberg) — The Bank of England, acting as the lender of last resort, extended 1.6 billion pounds ($3.2 billion) at its highest rate, suggesting commercial banks are reluctant to provide credit after the collapse of the U.S. subprime-mortgage market….

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFYH1NWj806w&refer=home

 
Comment by mrktMaven FL
2007-08-30 08:18:30

The carnage spreads to England. Lenders pull loan offers and raise rates in Britain:

Aug. 30 (Bloomberg) — U.K. lenders responsible for 12 percent of the nation’s mortgages are tightening standards for loans on house purchases, withdrawing offers and raising the cost for borrowers with less than perfect credit….

http://www.bloomberg.com/apps/news?pid=20601109&sid=aLHJ4TKSRS90&refer=home

 
Comment by In Colorado
2007-08-30 08:25:42

Toyota’s president conceded that the subprime fiasco will impact US sales. I wonder who will buy all those expensive Lexus and Toyota trucks/suvs now? Or any brand of big azz trucks/SUVs for that matter?

Comment by Anthony
2007-08-30 09:02:13

Lexus…all it is an overpriced, POS toyota. This housing bubble will really serve it to those automakers. Heck, the head of AutoNation was raggin’ on the Federal Rerserve to “cut interest rates now!”

Nice to see all the smugness of the past few years is rapidly diminishing.

Comment by Ghostwriter
2007-08-30 10:56:40

Heck, the head of AutoNation was raggin’ on the Federal Rerserve to “cut interest rates now!”

If they can’t pay their mortgages, they ain’t buyin cars dimwit.

 
 
Comment by rosie
2007-08-30 09:45:59

G.M. truck plant in Oshawa Ontario announced 1000 job losses in Jan,08 citing low sales due to housing bust in U.S. Seems we are not immune in the great white, but listening to the experts you would think that it can’t happen here.

Comment by ulua
2007-08-30 13:23:58

Never listen to the experts!

 
 
Comment by Groundhogday
2007-08-30 10:04:12

We bought a Prius last week and were able to negotiate $1.5k off list (down to $22k). I know that doesn’t seem like much, but in the past it is has been completely impossible to negotiate on the Prius. Toyota is certainly feeling a change.

 
 
Comment by redhead68
2007-08-30 08:29:08

I apologize if this has already been posted.

“…last Wednesday…anonymous parties agreed to buy and sell 120,000 SPY September call options using deep-in the-money strikes ranging from 60 to 95.”

http://www.moneymorning.com/2007/08/29/this-900-million-bet-has-global-traders-talking%e2%80%a6/

I’m not particularly market-saavy, but I sense something scary in all this.
Any thoughts?

Comment by Chip
2007-08-30 08:41:22

Sounds like a Soros move. But that is based on nothing — I don’t know enough about this stuff to give an intelligent answer, other than to opine that the Chinese theory seems the weakest one, given their overwhelming need to look good and make happy through the Olympics.

 
 
Comment by Bubbleiscious
2007-08-30 08:54:48

SHORT SALE- Ok, there is (I think) a great deal in a very nice neighborhood. Homes were going for approx. $525,000 up to $700,000. There are many, many (did I say ‘many”?) homes in foreclosure in this area. In fact there is a home across from this one that’s been deserted for at least 6 months.

re: short sale- These people bought the home 2 years ago for approx. $485,000. They are now asking $369,000! It’s a 2800 sq ft, home on a 13,000 sq ft lot, in a school district and the nicest area in this city.

Here’s the thing…honestly, we (first time home buyers) need to get closer to $315,000 or so. Would they laugh at us if we offer less than $369,000? Can you even offer less on a short sale? The MLS says the home needs TLC, which is a shame, for the outside is gorgeous.

Maybe we should wait until prices truly come down to where we need for them to be? Many homes have now come down $50,000-$100,000.

This is crazy!

Comment by michael
2007-08-30 09:23:12

someone is gonna tell to take the amount it would cost to rent the place and mutliply it times a certain “rule of thumb” number.

i would tell you but i can’t remember what that number is.

: )

Comment by daniel
2007-08-30 09:46:19

offer him 250K and stare right through him. if he refuses, wait 60 days and offer him 225K. it’s the only thing these knuckleheads understand.

 
Comment by Jas Jain
2007-08-30 10:10:24


The number used to be 7*12, or 84 times the current monthly rent. There were times when smart people in NYC were able to buy at 36 times the monthly rent. Guess what, some of them, or their heirs, are now real estate multi-billionaires.

Stupid people are not known for their patience!

Jas

 
 
Comment by marionsucks
2007-08-30 10:52:46

I don’t know where You live. But where I’m at ,things got a long way to go.( to the Bottom)
It amazes Me that even here ( with all the doom and gloomers , like Me) People still think something that went up 300% when things were crazy, won’t go down more than 10%,20% or 30% when the , SH!/ hits the Fan.

PS. sorry if this post comes out bold. I didn’t do anything , but everything I type comes out that way on my screen. Not sure how this is going to look to You.

PSS. I rented a New 3/2 1100 SF house for $900 a Month 2 years ago. I just saw a New 2 story , 5/3/2 with a Den, Family room. ( 3050 Sf Plus Garage) for $1000. ( Yesterday) .

I like my Landlord but I thing it may be time to Move.

 
Comment by hd74man
2007-08-30 19:41:51

Maybe we should wait until prices truly come down to where we need for them to be? Many homes have now come down $50,000-$100,000.

You need to track values for similar amenitied properties right back to 1998 and see what you come up with.

Then reconcile local income levels with median and average prices.

Also see if you can scratch together enough single family rental data to establish a Gross Rent Multiplier and formulate a rough Income Approach.

Probably lookin’ at a 40/50% decline from current levels.

If you like add 3% per annum for inflation to your data.

This crash has a long way to run.

Don’t catch a falling knife.

 
 
Comment by txchick57
Comment by redhead68
2007-08-30 09:54:33

Thanks for the link!

 
 
Comment by Hoz
2007-08-30 09:45:56

The myth of the GDP
Aug 30, 2007
Hoz

2000 GDP $9.817T or EU9.43T
2007 GDP est $11.75T or EU8.78T

2000 Euro Average 1.0414
2007 Euro Average (to date) 1.33898

Comment by Hoz
2007-08-30 10:25:41

2007 est $13.75T EU10.27T

At least it is growth over the last 7 yrs!

 
 
Comment by Jas Jain
2007-08-30 09:54:59


Goldchain Silverknife came out with the most bearish research note of any on Wealth Street. Price decline of 7% in 2007 and another 7% in 2008. As prices fall more and more people with take Cramer’s advice: Walk Away!

We are still in the first inning of this game.

Jas

Comment by txchick57
2007-08-30 10:26:35

Jas, see the reverse H&S forming on the S&P? I’m not willing to give back what I’ve made this month getting squeezed by these crooks. They are teeing the bears up IMO. We might see 1515 - 1525 again which would be a very nice entry.

Comment by Jas Jain
2007-08-30 10:52:48


I am not a technician but an e-friend is a very good one. He says that there a triple bottom may be forming.

You are right about the Crooks. The Fed discount rate cut on Friday of options expiration transferred tens of billions from bears to the bulls (the price of options determined at the opening prices of the indexes). One bull said that the Fed nailed the bears “beautifully.” Yes, we are playing in the crooks’ game and we better know it.

Jas

 
Comment by Jas Jain
2007-08-30 10:56:07


Sorry, Chick, he did say the same thing that you said — a reverse head-and-shoulder in SPX. The triple bottom was on something else. He sends me lot of market e-mails.

Jas

Comment by txchick57
2007-08-30 11:24:34

There would be a triple bottom on a retest of S&P 1375. I have also been watching for that. A break of that would be bad and also probably P&F break. But a successful retest (which would probably include a false breakdown) would imply a strong move in the other direction.

I’m getting warmer toward technology. Some that is. I’ve established a call leap position in Ciena after their report today. Also, I’ve been reading that internet security companies are doing very well. Any info on that?

TX

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Comment by Jas Jain
2007-08-30 11:42:50


“Also, I’ve been reading that internet security companies are doing very well. Any info on that?”

No, actually I have not been following the Internet security companies. During recession/depression techs do poorly, but there are always some segments that do well, or relatively well. I wouldn’t be surprised if IS companies do well.

Jas

 
 
 
 
 
Comment by Nathan
2007-08-30 10:04:27

“Here’s the thing…honestly, we (first time home buyers) need to get closer to $315,000 or so. Would they laugh at us if we offer less than $369,000? Can you even offer less on a short sale? The MLS says the home needs TLC, which is a shame, for the outside is gorgeous.”

Yes you should make your offer about 25% less than the asking price and if the property needs TLC you better factor that in as well. The price they are asking $369K is probably way overpriced based on one of those BPO (Broker Price Opinons). You have nothing to loose so why not low ball the offer.

 
Comment by Deron
2007-08-30 10:12:27

Lehman is the latest to cut earnings estimates for the I-bank/broker sector:

“Lehman’s analysts lowered profit estimates over uncertainty that’s been roiling the credit markets.
Lehman’s comments follow a Standard & Poor’s report issued Wednesday that said the brokers could see their earnings fall as much as 70% in their fiscal third quarters.

http://tinyurl.com/yuocsf

also:
“In one of the starkest assessments of the financial sector to date, Charles Dumas at Lombard Street Research said he thinks the financial sector has reached the end of a 25-year boom in profit growth.”

Hmmm.
25 years of expanding credit / debt burden
25 years without a meaningful recession
25 years of rising consumption and apparent prosperity
25 years rising stocks almost everywhere

Waddaya mean it’s over? Can’t the Fed just wave its magic wand and make it go away? Looks like we’re about to learn some lessons about debt that grandma and grandpa knew a long time ago.

Comment by txchick57
2007-08-30 10:27:56

Brokers were a nice short sell when we were talking about it in May or so. Now, I think you could get squeezed first before they finally tank.

Comment by Deron
2007-08-30 11:15:14

I’ve been short these guys for a few months. I did cover one position, but with so many of them on an August fiscal quarter the chance for very near-term earnings collapse is high. Almost all of the major independent I-banks are on an August quarter - GS, MS, BSC, LEH. ML is the big exception. They will know how bad the quarter was by early next week and the word will start to leak out. Basically, they have until tomorrow to orchestrate a squeeze.

Once you get into next week, there is the potential for pre-announcements. The 2 companies with the greatest dependence on the credit/bond markets are LEH and BSC, which also happen to be likely to report first. They both usually report in the first half of the month following quarter end.

 
 
 
Comment by Olympiagal
2007-08-30 10:25:41

Besides, I wouldn’t really urge anyone to eat realtors, even if they had skipped breakfast and were super hungry.
I mean, think of all the icky chemicals, various pharmaceuticals, exotic germs and assorted plastic inserts floating around inside your average realtor.
Unhealthy, as well as tedious to extract prior to dining.

Comment by Ghostwriter
2007-08-30 11:02:41

Plus you might cut your mouth on all the diamonds and rolex watches.

 
 
Comment by Olympiagal
2007-08-30 10:26:35

Ooops, sorry–that post was supposed to go in further up the thread.

 
Comment by Professor Bear
2007-08-30 11:51:59

Wall Street cargo cultists demand that Bearcranky make obvious hints this weekend about a future rate cut announcement or else…

MARKET SNAPSHOT
Stocks mixed in volatile trading; tech shares gain
By Polya Lesova, MarketWatch
Last Update: 1:48 PM ET Aug 30, 2007

NEW YORK (MarketWatch) — U.S. stocks were mixed in volatile trading Thursday, as tech stocks advanced, while the broader market remained jittery ahead of Federal Reserve Chairman Ben Bernanke’s speech tomorrow.

“We’ve got Ben Bernanke talking tomorrow so the market is just a little nervous about what he might say,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

“The market wants and expects a rate cut at the Sept. 18 [Federal Reserve] meeting,” Pado said. “What they want to hear is Bernanke make comments that clearly indicate that the Fed is going to act. Anything less than that is going to be negative for the market.”

http://www.marketwatch.com/news/story/stocks-mixed-volatile-trading-tech/story.aspx?guid=%7B88921ECF%2DBE11%2D428C%2DA116%2DDAB78B7AE8C8%7D

Comment by Professor Bear
2007-08-30 11:54:44

Wall Street grading system for Federal Reserve Chairman:

Stocks always go up: A+

Stocks usually go up: B

Stocks always go up, in the long run: C-

Stocks don’t always go up: F

 
 
Comment by SunDevil
2007-08-30 11:55:54

I have seen it mentioned before, but do not want to search through all the comments from the past weeks. Can anyone provide some gold buying websites that are reliable and have low over the spot fees? Right now I am looking at APMEX and their (1oz) Gold Eagles which have a $24.95 over the spot price. Thanks for any help

Comment by SunDevil
2007-08-30 11:59:15

Also another thing. Do you guys who actually have physical gold currency for a rainy day get anything other than 1oz gold pieces, ie (1/2), (1/4), (/10)? Thanks again.

Comment by technovelist
2007-08-30 19:44:42

Try kitco.com. They have very good customer service and have been in business a long time.

As for physical, the problem with the small sizes is that they have very high premiums as a rule. But having a small percentage of your gold in small sizes is probably a good idea nonetheless, just in case.

 
 
 
Comment by Hoz
2007-08-30 12:09:46

AIG is asking its clients about any exposure to subprime and ABCP . AIG insures board of directors of most major corporations from investor/shareholder lawsuits. AIG believes there is more bad news to come.

All bad paper is now deemed Subprime, whether it is commercial, Alt ‘A’ or prime full doc as well as the Subprime home loans.

Companies do not wish to answer these questions because the Insurance agency can subsequently deny claims. There are expected to be hundreds of lawsuits involving “subprime” related issues.

Comment by txchick57
2007-08-30 12:55:39

Oh yes. The litigation will be glorious.

 
 
Comment by NoVa RE Supernova
2007-08-30 12:16:28

http://www.larouchepub.com/other/2007/3433-34centbank_bailouts.html

Executive Intelligence Review analysis: Recovery is Only Possible if Central Bank Bailouts Stop.

[What the Wall Street-controlled financial media doesn't dare tell you].

 
Comment by Rental Watch
2007-08-30 12:21:25

I’d like for someone to opine on fractional reserve system/currency valuations/trade surplusses, etc.

I’m trying to wrap my head around the creation of money through fractional reserve requirements, and the impact of the globalization of financial markets on the money supply in some places based on differing fractional reserve requirements–and potential impact on currencies.

What are the dynamics today?

In the US, my understanding is that the fractional reserve requirement is 10%, so a $100 deposit can create money in the system of $1,000. In Eurozone, the fractional reserve requirement that I saw in Wikipedia is 2%, so a $100 deposit can create money in the system of $5,000. Money flowing into Europe creates more credit than the same amount of money flowing out of the US reduces credit.

Generally, the US is running a trade deficit (money flowing out of the US), and Europe a surplus (money flowing into Europe). Seems like a move into Europe from the US is inflationary (more money supply–a dollar going to Europe takes $10 out of the US money supply, and adds $50 in Europe). Money is flowing into China as well, which has a reserve requirement of 12%, so that is somewhat globally deflationary.

I understand that it’s more complex than this, and that fluctuations in currencies can help keep these flows somewhat in check.

However, imbalances in mass financial terms don’t seem to correct overnight, the money sloshes around the globe, growing and shrinking money supplies variably based on reserve requirements, trade imbalances, and currency valuations. Now overlay that with capital flows across borders…

The more I try to put the pieces together in my mind, the more muddied the picture gets. Long term, it seems like these things work themselves out, as long as governments let financial and currency markets work. However, in the short term imbalances can arise.

So is it true that the effect of Europe having a low reserve requirement and running a trade surplus that there is more money available to be invested in US debt? Is this why RMBS’s melting down is requiring the ECB to pump more cash into their system than ours (banks are essentially more highly levered, so more liquidity is required with the same moves in asset valuations)? Is a move that would be considered “small” in asset values in the US have a 5x impact when considered in European terms?

And the most important question–if Europe begins running a trade deficit, what is the impact globally? Will credit tightening be exacerbated here by European banks being more cautious regarding their investments in the US?

Has anyone else given this issue any thought? I’m just beginning to think about these kind of issues, so I may be waaaayyyyy off in my thinking, and way wrong the directions I’m going with my thinking, but it seems like differing reserve requirements would have interesting ancillary effects as the money sloshes around the globe…

All in all, is Euro appreciation is bad for the amount of global credit?

Forgive me, my international economics/banking and currency was never my strongest suit, and I’m very, very rusty.

 
Comment by Deron
2007-08-30 12:36:53

This could be a bit of a wakeup call. The ratings agencies had to be either incompetent or complicit. How else do you go from AAA to near default in one move? Any wonder why nobody wants to buy asset-backed commercial paper? Any wonder nobody trusts bond ratings or the ratings agencies? Any wonder why nobody wants to lend, even against AAA-rated collateral?

Unsafe at Any Rating, CDO Speeds to CCC From AAA: Mark Gilbert

“Last week, Standard & Poor’s butchered the ratings on $3.2 billion of debt from structured investment vehicles spawned by Solent Capital Partners LLP in London and Avendis Group in Geneva. About $254 million was slashed from the top AAA grade to CCC+ and CCC — slides of 16 and 17 levels, triggered by their investments in mortgage-backed bonds.
http://tinyurl.com/2tluvt

Comment by Professor Bear
2007-08-30 19:15:58

“How else do you go from AAA to near default in one move?”

Perhaps it has something to do with 21st Century accounting standards? After all, didn’t Enron go from Fortune 50 status to BK in less than a year? The name of the game is to hide the bad news and negative accounts off balance sheet or with mark to fantasy valuations while playing pump-and-dump to the very point all the rats jump off the sinking ship.

If you happen to be a sufficiently large bank or lender, then there is no need to go BK, as the Fed will help you stay afloat by declaring you too-big-to-fail, much the same as the Japanese gaijin (zombie companies) of the 1990s. Exhibit A: Countryslide.

 
 
Comment by Bubbleiscious
2007-08-30 12:50:55

Thanks for the help on my Short Sale situation! I’ve read on other forums that short sales are a pain and that banks take their time dealing with them. Aren’t they supposed to be quick because they are trying to dump the house before foreclosure?

Thanks

 
Comment by Remain Calm. All is Well
2007-08-30 12:55:31

Misstrial wrote:
Actual eubonics math questions (Oakland Public School District):

I call BS. These questions are a joke - been circulating over the ‘net for years.

Please provide some evidence/reference/link about their actual use in Oakland schools (or schools anywhere).

 
Comment by mrktMaven FL
2007-08-30 13:05:29

A rate cut does not matter and the coming Sept. 19 panic. From the Asia Times courtesy R. Winter:

Banks are slashing lines of credit, paring back trading positions and refusing to roll over commercial-paper obligations because they must husband their cash. That is why a 50-basis-point cut or a 400-basis-point reduction in Fed Funds will not do anything to restore confidence. It is also the reason the markets will panic the day after the Fed’s hand is forced on September 18, when they realize that financial institutions will still be unable to move the collateralized derivative structures off their books….

That is why, regardless of what the Federal Open Market Committee does on September 18, bank regulators, risk officers and boards of directors will think twice before buying another collateralized derivative obligation. Without limitless access to credit, US consumers will have to reduce spending, thus marking the onset of a global contraction.

http://www.atimes.com/atimes/Global_Economy/IH29Dj01.html

Comment by Professor Bear
2007-08-30 14:58:44

“Without limitless access to credit, US consumers will have to reduce spending, thus marking the onset of a global contraction.”

The Fed certainly is astute enough to realize this. My guess would be that plans are in place to use well-placed helicopter drops of liquidity into the hands of negative-savings-constrained consumers to enable them to spend the economy into recovery from the current non-recession.

 
Comment by Professor Bear
2007-08-30 15:18:09

Important point from the linked article:

“Although the United States insists on central-bank independence
as a precondition for multilateral assistance, it does not feel it should be held to the same standard. The televised assurances by senior politicians that the Fed would ease interest rates made a mockery of the nation’s monetary authorities. Moreover, the notion that a reduction in interest rates would solve the ongoing credit crunch was a naive understanding of the damage that has been done.”

 
 
Comment by mrktMaven FL
2007-08-30 13:36:22

Ha! Ha! Ha!

Aug. 30 (Bloomberg) — A federal judge refused to grant permanent protection from U.S. lawsuits for Bear Stearns Cos.’ two bankrupt hedge funds, finding the Cayman Islands was not the proper principal jurisdiction for them to liquidate assets….

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGtSK4F0HPTo&refer=home

 
Comment by mrktMaven FL
2007-08-30 13:42:23

More panic anyone? The rout continues:

Aug. 30 (Bloomberg) — Treasury three-month bill yields fell for a third day as investors fled asset-backed commercial paper and opted for the safety of government debt….

“There’s that fear of commercial paper that’s driving people into the bills market,” said Nasri Toutoungi, who oversees $23 billion of bonds in Hartford, Connecticut, at Hartford Investment Management Co. “It’s becoming irrational.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeS76wg4rb2o&refer=home

 
Comment by Professor Bear
2007-08-30 15:16:21

Big name economists are calling attention to the imprudence of letting Fannie and Freddie bail out Wall Street’s greatest fools.

August 26, 2007
This is where Fannie and Freddie step in
By Lawrence Summers

I am among the many with serious doubts about the wisdom of the government quasi-guarantees that supported the government-sponsored entities, Fannie Mae, the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp , as they have operated in the mortgage market. But surely if there is ever a moment when they should expand their activities it is now, when mortgage liquidity is drying up. No doubt, credit standards in the subprime market were too low for too long. Now, as borrowers face higher costs as their adjustable rate mortgages are reset, is not the time for the authorities to get religion and discourage the provision of credit.

This crisis could have a silver lining if it leads to the careful reflection on these vital questions.

The writer is the Charles W. Eliot professor at Harvard University

August 26, 2007 in US policy, World markets | Permalink
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Comments

Alan Metzler: I think intervention of the type proposed would be a mistake. Innovation has taken much of credit risk and default risk out of the banking system and distributed to many different places. No one knows where. The effective means of limiting risk is to let the losses be borne by the lenders. Bailouts encourage the kind of reckless lending that gave us the no equity loans many of which will default. Failure of hedge funds is a far better regulator than governmental regulation.

Posted by: Allan Meltzer | 29 Aug 2007 18:31:00 | Report this comment

Martin Wolf: I find myself in full and complete agreement with Allan. Let the lenders lose. It is high time! People shouldn’t borrow more than they can afford. Lenders should be taught to beware.

Posted by: Martin Wolf | 29 Aug 2007 20:11:33 | Report this comment

 
Comment by openwater747
2007-08-30 18:57:37

Regarding the ebonics debate. I’m originally from Oakland and was dismayed when the whole ebonics thing came about. I asked my folks about it, they still reside in Oakland, and what it bolied down to, was the Oakland Public School Board was attempting to get funding from the state by classifying “ebonics” as a distinct language from English. No one really believed it was, it was just a tool, a dumb shot in the dark ( very lawyerly I might add) to get extra state funding for another language to be taught ( after English and possibly Spanish). I’m sure those board members would love to go back in time an take a mulligan on that one. What a black eye for my home town( no pun intended, really) :)

 
Comment by are they crazy
2007-08-30 22:32:24

Prez Shrub to the rescue with his plan to help the poor homeowners. So screwed up I wouldn’t even know where to start.

 
Comment by moom
Comment by Deron
2007-08-30 23:32:23

“By allowing the agency to back loans for delinquent borrowers, the FHA estimates it can help an additional 80,000 homeowners qualify for refinancing in 2008″

OK. The impact is going to be essentially zero this year and nearly zero next year. 80,000 is a drop in the bucket compared to the number of foreclosures we’re going to see this year, much less in 2008.

Looks like a good move to me. Largely symbolic and helps to defuse the political pressure for something really dangerous and stupid. If there are actual risk-based premiums, it will be a small subsidy but won’t keep people in houses where they are in over their head. Really marginal impact.

 
 
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