Bits Bucket And Craigslist Finds For September 20, 2007
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
September 20, 2007
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Hmmm, so what did BB latest helicopter drop accomplish?
Roidy
It’s pushed gold to nearly $740. Oil is at $82. So, obviously it has helped to contain any threat of inflation.
The Canadian dollar is now equal to the American Peso.
What a joke.
lol
We should change the name of our currency to the “dinero.”
No Ma$
I thought it was going to the “Amero”? And it was going to have Vincente fox on the 500 Amero and GW on the 1000 Amero, the rest will be folk figures from univision tv, like bee man, hobo and scantily clad school girl.
“dinero” implies that its actually money.
This should open the door for Americans to sell blankets made in the USA on the beach in Mexico.
Best quote I’ve seen yet about the rate drop:
“Bernanke just handed a beer to the recovering addict that is our economy.”
I think I saw it on Fark.com
American Peso. You got that right.
Only two thing that moves the gold market: Arabs and Indians. These are the only people who really buy gold with the kind of money that matters. Saudis decoupling interest rates should thus be good for gold.
It was a completely boneheaded move. Economy’s going to tank, anyway, and foreclosures and housing devaluation will proceed apace. The only thing it accomplished was to devalue the dollar and screw savers. No upside to the move. At least, if rates had been raised, there would have been some value to savings.
You say you want a revolution
Well you know
We all want to change the world
I think we need to wipe the slate clean. Remove every incumbent. Put in avg joes with common sense - not billionaires.
I saw a poll earlier this week that 11% of the people thought congress was doing a good job. Who are these people?
I saw a poll earlier this week that 11% of the people thought congress was doing a good job. Who are these people?
So 89% of people actually have a brain. 11% is a very poor rating, even worse than Bush’s, if that’s possible. Getting rid of the millionaires is the best idea. Most in there now have no touch with reality or how the majority of people really live in this country. That’s why they could care less about SS, health care, the price of gas or the price of groceries. A family on minimum wage or barely above would use their whole paycheck just to pay the premium on health care.
Mr. Marx call your office please, someone is using your material.
BB definitely was reading Marx when he dropped the fed rate. Bail out the hedge fund managers and other rich people. Corporate Marxism.
Yes, the executive branch gets all the attention and does get into/cause a lot of trouble, but IMO CONgress has always been where the real corruption is at - its animal house full of ne’er do wells whose sole function is to leech off this nation.
Agree totally about the executive and legislative branch. So can someone tell me why the ne’er do wells still get elected by probably the 89% that is unhappy?
Agree that the executive and legislative branches are corrupt and need a thorough cleaning. So why do the ne’er do wells still get elected by probably 89% of the population?
Flounder: May I have ten thousand marbles, please?
“BB definitely was reading Marx when he dropped the fed rate.”
Is that Karl or Groucho?
Guys:
Come on! If it’s true that 89% of people are unhappy with Congress, then why don’t 89% of people actually vote? It’s because they’re lazy, take no responsibility, yet want to reserve the right to complain. Let’s get real here.
Hasn’t anyone but me gotten tired of voting for the “lesser of two evils”? Until there is someone running for office whom I am hood winked into thinking is somehow different than every other as$clown that has run for public office before him/her, I am staying out of the voting booth. Besides, what’s up with the voting machines? How do I know that my vote won’t “accidentally” be cast for the opposing candidate. That would suck. Wittbelle: A kinder, gentler anarchist
Hasn’t anyone but me gotten tired of voting for the “lesser of two evils”?
Exactly wittbelle, the problem isn’t who we vote for. The problem is who we’re offered to decide between. The whole primary process is a joke and it needs to be jettisoned if we ever want to truly get beyond the manipulated farce that the process is. I truly think in this day and age of mass communication, we need every state to have its primary on the same day. Then all votes would be created equal.
Now that’s my kind of woman!
And there you have it Folks! The quintessential reason why these steaming turds we call congresscritters keep getting re-elected. Folks like Wittbelle who just give up and do nothing.
I’m tempted to do the same thing sometimes, but here’s what I do instead.
I go to the voting booth and vote for ANY other candidate on the ballot that’s not an (R) or (D). Anyone. Yes I know the Libertarians have some nutjobs in their number, and their political philosophy might be a bit out there. So what? Doesn’t mean they wouldn’t do a better job if elected. Honestly, how could they be any worse?
Same goes for the Green party. Give one of them a chance, or at least let your vote be counted among those of us who reject the two big parties.
Worst case scenario: They actually get elected and turn out to be as corrupt and devoid pf principles as the a$$clowns we currently employ to run OUR government.
How are we any worse off at that point? Even with this worst case, we will have lit a fire under the a$$es of the two major parties, so we’re still better off.
And maybe, just maybe they would do the right thing occasionally. Like letting the greedy jerkoffs who borrowed too much to speculate on overpriced McCrapsions pay for their mistakes. Or stop the Federal government from considering my disabled mom a criminal for using the glaucoma medicine that her doctor prescribed(I’ll give you a hint - it has a 6000+ year safety record that’s better than aspirin’s, but is still illegal under federal law).
WittBelle: Please vote. Just not for the two major parties. If there’s nobody on there from a third party for a particular position, write someone in. I promise I’ll do the same.
Yes, Term Limits for all of them.
Term limits? Hell, padded cells for all of them. Except Ron Paul and maybe a few others.
“remove every incumbent. Put in avg joes”
haha, first thing they do is install granite countertops in congress, and maybe add a deck.
ummm yeah - but my qualifier is COMMON SENSE! J6Ps don’t all have that - for sure!!!!
LOL, ajas
Hey MBA:
I don’t have that much confidence in Average Joe. Remember, he’s the guy that went out and spent his kid’s college fund and his own retirement fund on a $700,000 house. Not smart.
I’m beginning to think that the only way out of this housing mess is to inflate. In nominal terms, the fb’s come out whole.
I’m in Charlotte, NC and I wonder if buying an affordable house with a 6.25% mortgage makes sense as an inflation hedge. Around here you can still get a decent house for $180k and up.
Last week I was speaking with my landlord’s property manager. He used the phrase, “there’s a shit storm coming” to describe the coming foreclosures.
With the dollar tanking, any estimates on what the 30 year mortgage rates will be in the spring of 2008?
“I’m beginning to think that the only way out of this housing mess is to inflate. In nominal terms, the fb’s come out whole.”
Bingo. That’s what they did after the stock market peak in March 2001. S/P 500 is still a little below the nominal peak 7+ years later, yet M3 has grown 45%+. So while the stock market has returned to earlier nominal levels, it’s still down 45%, less dividends received, call it 35% in real terms. IMO, same thing will happen with housing 5 years from now (7 years after the peak). After declining nominally in the interim, they’ll be back to today’s levels in 5 years, but the money supply will be up 50%.
If you’re going to be in the house 5+ years, you have 20% down, and can afford the payment at a normal 30 year fixed rate amortization, buy today. I did back in 2005, in much less bubbly Portland Oregon, and I don’t regret it. I’m planning on buying a 3rd house in 2011-2013 only after I can find one that I can rent with positive cash flow from day 1.
Got diversified assets?
Why buy with 20% down? Buy with 20% down, house loses 20% you lose 20%. Buy with 5% down, house loses 20%, you lose 5% and walk away if you’re seriously underwater.
Interests rates are so low that the payment will barely be noticable between 5% and 20% down. So why take all that added risk if someone will lend you 95% (or even 100%) and take the risk themselves?
” After declining nominally in the interim, they’ll be back to today’s levels in 5 years, but the money supply will be up 50%.”
Wrong, wrong, and really wrong. I’m rushing here this morning and I’ve gotta jet, so I let some of the more knowledgble than I enlighen you further, but I doubt you’ll see home prices at todays prices for the next 20 years or maybe even your lifetime. Your assumption has at its core the idea that this inflation game can go on in perpetuity. It can’t and won’t. Read your history my friend, understanding that there is nothing new under the sun. We’ve played this inflation game to its limit, now it’s time to reap what we’ve sown.
Of course what they inflate and wages don’t budge? What if all those extra dollars they print runs straight out the trade deficit to China instead of to domestic workers? Will that save the housing market?
Bingo, Ben can only inflate our way out of the housing collapse if wages inflate to make houses more affordable. With global competitiveness, I just don’t see that happening. Central banks have been inflating like crazy for the past 7 years, but NONE of that money has showed up in wages.
Our Housing Bubble Blog slogan should be:
It’s about affordability, stupid!
Tax holiday: eliminate the 10% and 15% income tax brackets for 4 years.
Hi Bubba:
Normally, real estate is an excellent inflation hedge. However, since today’s prices already have 10 years of inflation priced in, now is a bad time to buy. Wait a couple years, save up as much as you can to avoid paying that high interest rate down the line, and then buy something at reasonable prices.
“I’m in Charlotte, NC and I wonder if buying an affordable house with a 6.25% mortgage makes sense as an inflation hedge.”
Left San Jose, CA and bought a new 3/2 house in fly-over country for $72/sqft. The wife and kids are happy with it, and I landed a nice job too. The economy is growing here, albeit slowly compared to CA, but it is growth, so our house will move along with the CPI; we won’t make a windfall on it, but we won’t take a bath either. Downside: the icy winters.
Ok, slightly naive question here….if it was so boneheaded, why did they do it?? To prop up the stock market, help their buddies, or something else??
Someone else here wrote that maybe the Fed has written off the housing market and is trying to save the rest. They had to know things like gold and oil rising and the dollar tanking were going to happen. Where’s the upside??
Upside is strictly for “Da Boyz” on wall st. Party on you greedy bastards.
I think this is an admission that collectively as a country our debt is out of hand. Government, local govt, corporate, mortgages, student loans, and credit cards. Total debt is about 3x GDP, to much to service let alone ever pay back.
The only way out is to hyperinflate the dollar.
Im beginning to think all my real estate industry friends were right.
Real Estate is an inflation hedge, if the dollar becomes worthless
Real Estate is a tax shelter, in a hyperinflation environmnet, 40% of interest payments on savings go to taxes thus inflation becomes a huge tax on savers.
You can live in a house, but you cant do anything with worthless dollars.
Everyone who said, “dont worry about the adjusted rate, you can refinance later”. Maybe they were right because YOU CAN refinance later with worthless dollars.
What do to with investments. Buy oil and minining stocks, and foreign stocks. Get a margin account and margin it up to 30% of your stock balance. (you can repay it with cheaper dollars)
Open a bank account in Mexico, because it has a stable currency and a more stable government.
Everything you said sounded so good until the investing down under, part…
Open a bank account in Mexico? Tell me you weren’t serious with that one.
My gold digging stepgrandmother in her neverending quest to get her hands on ALL Grandpa’s money convinced him to put a bunch of his money in a mexican bank. This was in the early 90’s. It didn’t turn out so well. Actually all her greedy little plans lost a bundle. A cool million dollars in the 80’s reduced to $35 thousand dollars by the mid 90’s. Best part was the leacherous old coot lived to be nearly a 100.
Invest up north.
Just moved from FXE & FXY to FXC . . . would like some FXA too
UPSIDE
The falling dollar FORCES big money holders to spend as fast as they can…….you gotta think global on this one.
They are spending the dollars as fast as they can cause they are not ever gonna be a strong as they are right now.
as strong
“The only thing it accomplished was to devalue the dollar and screw savers.”
It also hinted at a sense of panic from within the Fed.
There has been speculation that tanking the dollar was on the agenda–it forces China to revalue the yuan upwards, and will cause the Saudis to decouple from the dollar peg. The other Gulf states lowered their interest rates in lockstep with the Feds, but apparently the Saudis are pissed and are refusing to play along.
I do think they wanted to hit China, and assumed as an exporter, they couldn’t do much. As for the Saudis, I’m guessing they may be a little surprised they ain’t playing.
Someone posted late last night an FT article that said Kuwait already decoupled months ago. That’s gratitude for you. LOL
I’m sure a lot of this has been orchestrated with other central banks. It looks very suspicious to me that the euro is holding falt today just above 1.40 to the dollar, while gold and some other currencies (NZ/Aussie $ etc.) are soaring again vs. the euro. I’m sure the ECB is playing nicely along with the lunatics from the FED.
Gulf states and interest rates? i thought these guys believed that charging interest is a sin.
I wouldn’t say there was “no upside” to the move. My GLD and SLV now have a fire under them. Gold and silver are going to go to the moon.
A wall street friend of mine told me last night that he wouldn’t be surprised to see silver double by the end of this year.
Thanks Bernanke!
Sohonyc:
That’s great for people who have no confidence in the dollar, but remember that the Federal Reserve has a mandate to do two things:
1. Prevent the US banking system from failing
2. Protect the US dollar
It’s important for a country to protect its currency and to maintain confidence in it. If gold has become more important than the dollar, then we are all in big trouble.
no, we discussed this a couple of weeks ago: the Fed is required BY LAW (some fruitcake Carter-era Act) to minimize the unemployment rate (subject to maleable government statistics) and to minimize inflation (ditto.)
Chillidoggg:
I think I missed that thread. Can you provide a link to that law? I’m interested in reading it, but too lazy to search for it.
Thanks,
Big V
sorry, big v, ain’ t noone here lazier than me. Professor Bear or GetStucco (are these two like Michael and Latoya - never see the two of them together?) posted it originally.
It got stock prices up and may precipitate a bull run into the new year, based on the old “Greenspan Put” for their buddies on Wall Street.
Just need one more big bonus score to buy up what’s left of America.
Big P~
I’m tellin’ ya…Greenspam and Bernake are the Hitler and Himmler of contemporary US economics.
These bastards have totally buried us now.
These military employees in Iraq want to come home?
Soon as these guys hit US soil they’re gonna get RIF’ed tomake way for the financial Federal tsunami of entitlement pay-outs to 77 million boomers.
Ain’t no way you’re gonna run a $$$600 billion military and pay for the SS & Medicare for this crowd.
And the dollar is tanking, as predicted. Euro is $1.40, that’s another new high.
I guess this isn’t the time to buy that new 25K French stove, I guess. Damn
tx - that may fall into the category of ‘worthless crap’
Maybe I’ll put my circa 1975 Krugerrand on a chain and wear it around my neck they way they did back then. Saturday Night Fever style.
“…wear it around my neck”
Don’t get a flat tire…
chick - you are quite the character. FYI Jordache jeans 2 sizes too small are a faux pas! Tacky bling is debatable!
PLEASE txchick
, the $25k stoves are only floor models at Williams & Sonoma stores 
nobody buys a $25k La Cornue….the real serious cook gets the $100+ model
I know. I’ve seen that one. The copper one. Amazing. One of the few things I’ve ever had object lust for.
Wait for some high-end restarants to tank and grab it on the cheap. The bowery in nyc has a half-dozen restarant supply places that sell used stoves, walk-ins and what not.
Of course, shipping it across country may be a deal-breaker.
Hey txchick57
“I know. I’ve seen that one. The copper one. Amazing. One of the few things I’ve ever had object lust for.”
Me TOOOOOO!!! I lust for the $100K custom model, maybe I could sell a rental, you sell some stocks and we can afford one together, we can ship it back and forth. Do you think Texas would want to tax you 3% in property tax on your stove
would that qualify under a 1031 tax deferred exchange , anybody know ??
I have an enameled one in a cream color but when I saw that copper one, I wanted to punt mine to the curb.
They need to charge a luxury tax on that (and I am sure they would find a way)
the euro is tanking just the same, if you compare to other currencies or gold.
Euro is outpacing CHF and GBP - the swissy is due to climb in a big way, it ignored the interest change this week.
This article about the Saudis interest rate move is disturbing:
http://www.forbes.com/markets/feeds/afx/2007/09/20/afx4137783.html
Big Wall Street firms now have a ’security’ blanket. From Bloomberg:
Sept. 20 (Bloomberg) — Goldman Sachs Group Inc., the world’s largest securities firm, emerged from the worst credit markets in at least nine years to report Wall Street’s only profit gain, after the sale of a power company boosted trading revenue.
Net income rose 79 percent in the third quarter to $2.85 billion, or $6.13 a share, from $1.59 billion, or $3.26, a year earlier, the New York-based company said today in a statement. Earnings beat the $4.35-a-share average estimate of 18 analysts surveyed by Bloomberg, the seventh straight quarter that Goldman has surpassed expectations.
http://www.bloomberg.com/apps/news?pid=20601087&sid=asQgeqqs04XU&refer=home
I just don’t believe much financial reporting anymore. Soldman Suchs is probably in the crapper big time. More rigged numbers.
I meant $oldman $uchs.
whatever happens, the FED will bail them out and make sure the fat bonuses keep flowing; so it doesn’t matter if the numbers are rigged anyway …
I don’t either. I need to cancel all my magazine subscriptions. They are all writte by “reporters” who are in the bag for someone.
I was reading this month’s National Geographic Adventure magazine, and somehow the idea of an Angeleno buying a house in Vegas, because they liked to hike and ride bikes, made it into the story…
This is a magazine about doing cool outdoor stuff, not buying houses.
I’ve found good reads in the New Yorker, Vanity Fair and Rolling Stone.
Goldman’s numbers were boosted from a big gain on sale in an energy company. Would have missed otherwise. Bear Stearns numbers are much worse than even the expected disaster.
http://biz.yahoo.com/ap/070920/earns_bear_stearns.html?.v=3
The Treasury Sec is the ex-CEO of Goldman.
When one looks at their own work environment, one would realize that most individuals know a significant amount of folks both one level above and one level below them-mostly through work interaction.
Folks share information in formal and informal settings most of the time. Is it so incredible to believe that the ex-Goldman CEO, who now runs the Treasury, didn’t leave behind his thoughts on what needed to happen? Of course he does. This is not that difficult to understand when viewed through the prism of human action.
So… in an era where the average shlub inflates his income by 50% or more on his mortgage papers to buy a house that is appraise at twice it’s real value by crooked appraisers / lenders, so that crooked lenders can sell the garbage to “investors” who believe it is AAA-rated thanks to crooked rating agencies, we’re to believe that Goldma $ucks is rolling in money this quarter? I am shocked that all the banks didn’t just make up numbers, declare victory, and go home. But, since the goal is to make the dollar worthless, who knows - maybe they have infinite dollars that are worth nothing… or debt is wealth to them… or something… it is all funny-money accounting at this point.
I guess Goldmember Scks was tipped off about the rate change on August 16th. That would pump up their profits. Fooken scumbag crook Paulson leaked out the info to his boyz.
The company that I worked for did something similar. Our financials suck, so we sold one of our core businesses to bump up our bottom line. This must be an admission that we are expecting unstoppable losses for the foreseeable future, so might as well try to get whatever we can right now.
Here is your answer.
http://www.urbansurvival.com/week.htm
Thanks, augur, I enjoyed that.
You are welcome! BTW, I’m in the White Mountains of New Hampshire for some leaf peeping the rest of the month. I’m hoping to time my “bathroom break” in order to leave a “momento” in Bretton Woods this morning!
“I’m hoping to time my “bathroom break” in order to leave a “momento” in Bretton Woods this morning!”
Dang, augur, are ya going to leave them a little cable? You just gave me a good laugh!
You bet! They’ll probably mistake it for their “floating currency”.
Nice one augur…always enjoy your posts.
RE: I’m in the White Mountains of New Hampshire for some leaf peeping the rest of the month. I’m hoping to time my “bathroom break” in order to leave a “momento” in Bretton Woods this morning!
Be sure to stop in and have a Best Brown Ale at “The Moat Brewery” in North Conway. Great food and micro’s.
It’s right off Rt. 16 on the north side of town.
Latest on the House version of the “bailout”. No payments to homeowners…
http://www.dailykos.com/story/2007/9/11/115539/457
Uh…that post is dated 9/11/07. Quite a lot can change in nine days during a financial panic.
Damn……..it sure is hard to make a rock float !!!
http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/shares/3/23193/default.stm
Gives new meaning to the phrase “Sink like a rock”.
I thought it was interesting that when the Bk if England (King) was asked if any other Banks were having problems he said he had no comment.
it has already been mentioned several times that Barclays used the special BOE credit facility. Works probably just like with the ECB: they deny everything until it surfaces through other sources (like the Deutsche Bank news from today, which was in the rumour mill several weeks ago already).
It’s funny how the chart shows the 52 week low at 257, when it’s currently at 199.80.
No housing problems in Vegas. Just educational experiences!
The news is bad, but it’s not all bad, he said.
“Yeah, people are out of work, people are going to lose their homes. But it’s going to turn around,” the president of Home Builders Research said. “I hope we’ll be talking about this as an educational experience two or three years from now.”
ReviewJournal:
http://www.lvrj.com/business/9892907.html
Does anybody really think its Temporary???? Look what happened when the FDIC raised its limits to $100K from $40K per account in the 80’s, the S&L’s went crazy with all that insured money/
===============
As Congress weighs remedies for the mortgage-market crisis, Treasury Secretary Henry Paulson is signaling that the Bush administration would consider allowing the big mortgage companies Fannie Mae and Freddie Mac to temporarily buy, bundle and sell as securities loans exceeding $417,000.
probably just a temporary as the 200 billion emergency loans from the ECB and all the other goodies for the big speculator crowd.
Just like our temporary invasion of Iraq - we were supposed to be out within 6 months.
Sort of like the “emergency” lowering of interest rates by Greenspan after 2001
(I never heard that the US would leave Iraq in 6 months)
It was one of Rumsfeld’s gems.
I heard it, but never believed it.
Looks like BB did some good for gold…………….
http://goldprice.org/
Is Cash still King?
Compared to houses, trucks, RVs, boats, etc., cash is indeed still king.
Have to agree - there will be bargains galore. Desperate folks who bought cars, trucks and toys with equity, own them free and clear and can sell for pennies on the dollar when they need cash.
I am thinking about moving half of my savings into Gold. As far as I can tell it is the safest investment with the most growth potential.
Dan
Gold is safe and by definition has neither decline nor appreciation potential. It is probably the ultimate store of value and will preserve your purchasing power. If inflation continues to accelerate it will be an outstanding place to be. If we fall into deflation, it will retain purchasing power but fall in nominal dollar terms.
Hey Deron,
We’ve discussed physical gold vs. gold ETFs..I would value your opinion. Thanks.
You assume that all things equal except the value of the dollar. If demand for gold increases then its purchasing power will also increase. Over the last 30 years the demand for gold had been relatively low because the dollar has been treated “like gold”.
e.g. the dollar and not gold has been the basis of the world money supply since 1973 (aka the dollar standard).
spike
I’m not a big fan of the ETFs. If you’re buying gold because you think the financial system may collapse, you want physical gold (or silver). The ETF is just a paper promise and so subject to default risk in a meltdown. I have a very small percentage (just over 1%) of my savings in gold coins and have for years. I don’t consider it an investment - more like holdout “go to hell” money for a worst case scenario.
If you’re looking to speculate on dollar inflation, the GLD is fine. Certainly better than those POS TIPS that pay based on bogus CPI numbers. I prefer to use my capital to short credit junkie companies cut off from their fix hedged against stocks of consumer staples firms that should benefit from inflation or hold up well in deflation.
The whole world is betting on inflation right now but I’m not sure it will work out that way. I still think a deflationary credit implosion is more likely or I’d be out speculating on commodities right alongside them. Just remember, ETFs for speculation, physical gold for security.
Long time reader (2+ years, rarely comment, mostly come here to read and learn). It’s been truly fascinating to watch the discussion here these years and then slowly see the situation unfold as pretty much predicted here with only slight variations.
So what is your realistic prediction for the next 6/12/18 months?
Prepare for economic recession. From the NYT’s Floyd Norris (It’s free now):
THE employment statistics and the bond market are combining to send out a warning that has been heard only rarely in the past two decades: A recession is coming in the United States.
The two charts show the double warning. Both charts warned of an economic downturn before the 1990 and 2001 recessions, and they are doing so again.
http://www.nytimes.com/2007/09/15/business/15chart.html
Stock market goes to fifty million on the dow.
We might well already be in a recession. (The NBER only dates these when they are clearly visible through the rear view mirror.)
PB, By any reasonable standards of measure the US has been in a recession since 2000. The reason that it has not been reported as such is that the American people are not used to thinking in global terms. But compared to the foreign currency basket the US GDP is the same as it was in 2000, there has been dubious increase in GDP.
Get out of debt. Go to cash; keep this cash in safe, liquid accounts. Stash some cash in your mattress.
If you have a good job then keep it. If you are close to retirement, put it off.
Interesting times are at hand.
You hit on a sore spot with me. Thought I’d be quasi-retired, as in working for myself, by this June. Watching over the past couple of years, I’ve chosen to stay in my current position and wait for the fireworks to fizzle out.
Not what I had in mind, but ya gotta admit it’s one he!! of a show..
I don’t know how long the government, GSEs, and Fed can extend this thing, but our economy is on the skids. House prices are going down, right along with housing-related items such as autos, tools, building/gardening supplies, etc.
I don’t know what will happen to the dollar, but Beartrap Bernanke has indicated that he will make it crash, preferring inflation over deflation. If so, then stocks will go up and so should gold.
However, I have no way of knowing at what point the natural forces of the market will overtake the forces of intervention. That’s why I’m not making any more bets on stocks, bonds, metals, and such.
I’m certainly no financial expert, but I think it’s safest right now to stick your money in a savings account and await the bottom of the housing market in a couple years. Then buy yourself a house and a car at cheap prices using as little financing as possible.
I’m sure that in two years time, some blogger or another will rise from the ashes declaring that his/her investment strategy (gold, stocks, technical trading, whatever) was proven right. But which one will it be? I don’t know. The only one I’m sure of is that real estate and it’s associated consumer goods will be CHEAPER LATER.
A little off topic, but this blog is really about debt and inflation:
Picked up some Cottonelle t.p. yesterday, it felt light. Got home and compared it to another package from last month. The “Double Roll” has shrunk from 352 squares per roll to 308, and the squares are SMALLER also. The old rolls were 44 sq. ft. per roll, the new are 35.9 sq. ft., price unchanged. That is 18.4% shrinkage, or a stealth price increase of 18.4%. Unbelievable. 18.4%!!!!
(Kimberly-Clark Corp. 1-800-553-3639 hint hint)
Got to expect this. Kind of like the hidden deflation in housing prices, due to builder incentives.
Speaking of which, does anyone think housing will become cheap, rather than return to normal affordability, as a result of this?
In the Northeast and Pacific Coast we had a 1980s-style price boom, but in most of the rest of the country there was a supply boom, or a demand collapse. If people are mobile enough the effect of that could spread. Affordability would be further increased if local governments stopped forcing people to consume more housing than they want to, and allows large houses to be subdivided.
“if local governments stopped forcing people to consume more housing than they want to, and allows large houses to be subdivided.”
LMAO! That is already happening around here, with illegal immigrant extended families. Since the govs look the other way, I’m assuming they’re allowing it in practice.
“When I’m president, privatization is off the table because it’s not the answer to anything.”
Who said this?
I don’t know but it’s a damn good idea.
Whoever said it has the right idea.
Hugo Chavez?
Hillary Rodham, September 3, 2007 AARP Legislative Conference
Uncle Hugo has made some mighty kind gestures to thousands of elderly and low income folks here in the USA.
How about you?
Killary Rodam Klinton, September 3, 2007 AARP Legislative Conference
Amen and good for her.
Boy, would I love to see her be reminded of that statement. Piratization has been an enormous scam, allegedly replacing guvmint inefficiencies with lean, mean profit-delivering machines….
What a crock. Best example of privatizing the profits/socializing the costs they’ve come up with yet.
P - why is extended family living bad? It used to be the norm here and still is in many countries and among many legal immigrants here - particularly Koreans in SoCal.
I’ve been saying this for months, the product downsizing has really been incredible. Even He!!manns mayo is now 30 oz it’s always been a quart since i was a kid! Not to mention Ice cream is now 56 oz, no more half gallons
I’m surprised. It was my impression that the cost of products has fallen to rock bottom levels compared with the cost of packaging, shipping, advertizing, debt service and executive bonuses. How much do they really save?
Skippy peanut butter is 17oz not 18…. most jellies lost an ounce or 2, look at cereal, find the one pound box anymore….its 15 oz or less. Most name brand instant coffee is now 7oz or 200Grams even lowly tuna fish is now 6oz instead of 6 1/2 oz then 6 3/8 then 6 1/8… less tuna more water.
Entemann’s cakes dont fill up the box anymore, whats scary is they downsize the product then have a promotion and SCREAM: 15% more ice cream FREE, or 25% more donuts FREE…and the product is back to its original size before downsizing….sneaky
Funny. I had noticed that the can of tuna I have been eating since high school used to really max out two sandwiches if you piled it really high. Now you can get two slightly-tuna flavored bread sandwiches out of a can.
Sunflower seed addict here…
2 for a $ bags of Frito Lay went from 2 1/2 oz’s weight per bag last month, to 2 1/4 oz’s this month
Coffee, cereal, cottage cheese, paper products…it’s stealth inflation, as opposed to in your face stuff like meat and milk prices.
I lived in Mexico City during the hyper inflation days. Back then the gov’t set the price of staples, like bread (bolillos), milk, cookimg oil etc. As inflation would increase producers costs and eventually make it unprofitable to sell product, the staples would simply dissappear from store shelves. At that point you would have to resort to substitutes that were not price controlled. So while there would be no fresh milk in the store, there would be a huge mountain of cans of evaporated milk (not price controlled). The mom and pop baleries would slowly shrink (illegally) the size of bolillos.
Eventually the gov’t would blink and raise the prices of staples (except for tortillas, which were subsidized back then). Suddenly store shelves would be magically restocked. Of course, within a few weeks they would also decree an increase in the minimum wage, which would daisy chain wage increases across the board for higher wage earners. IIRC interest rates were about 60% or more.
Eventually Mexico its fiscal house in order and lopped 3 zeros off the currency. So a blue 50,000 peso bill became a blue 50 “new” peso bill (with the same artwork). I remember when 1 dollar bough 3000 “old” pesos. Today it buys about 11 “new” pesos.
Curiosly the word “Peso” means “weight”, perhaps as in weight of gold or silver?
Many years ago (thirty, maybe) a pet store began selling milk to the public as pet food at a substantial discount to what milk sold for in the grocery stores.
This milk was pasturized and homiginized just
as “regular” milk was; in fact it was the same milk.
The public was quick to catch on and began to buy pet shop milk in large quantities for consumption by their families.
This is is when the authorities stepped in and shut down the pet shop’s milk sales; The price of milk sold for human consumption is controlled by the guvmunt and the guvmunt was not amused at discovering humans were not paying the full price for the milk they were consuming.
In Colorado, I don’t want to get into this one-upmanship thing as to which country is the worst steward of its currency. The big old US of A might still claim the price, after all, but check this brief history of the Argentine currency since 1970
The Peso Ley 18.188 (ARL) replaced the Peso Moneda Nacional at 1 Peso Ley equal to 100 Peso Moneda Nacional on January 1, 1970; the Peso Argentino (ARP-Ley 22.707) replaced the Peso Ley on June 1, 1983 at 1 Peso Argentino equal to 10,000 Peso Ley; the Austral (ARA-Decreto 1096/85) replaced the Peso Argentino on June 14, 1985 at 1 Austral equal to 1000 Peso Argentino; and the Peso Convertible (ARS-Decreto 2128/91) replaced the Austral on January 1, 1992 at 1 Peso Convertible equal to 10,000 Australes. The Peso Convertible was pegged to the Dollar at par when a currency board was established on April 1, 1991, ending decades of inflation. In December 2001, a new currency, the Argentino, was proposed as a third currency alongside the Peso and US Dollar, but it was never introduced. On January 6, 2002, the Peso Convertible broke its link to the US Dollar.
Oh, I know that Argentina was the hyper inflation champ for quite some time. I can only imagine what people had to do down there to get by. I imaging that payrolls were paid more than once a week just to keep pace. Imagine prices going up daily at the supermarket.
Imagine prices going up daily at the supermarket.
They, did go up. By the hour.
When I traveled to Europe a fair amount, i’d always buy a bundle of 100 brand new banknotes from the collapsed country d’jour, beforehand, for like $6 to 10, from a dealer in collectible currency
I’d have my pick of dozens of different failed countries, many of which attempted to rename their currency’s, as to do away with the old paper’s bad moniker.
In Argentina, Pesos became Australs
In Peru, Sols became Intis
and many more, trust me…
So around train stations, i’d clandestinely drop a Bolivian 10,000 Peso Banknote or 2 on the ground, and watch the lucky finders reaction, as I dig watching us.
Countries go out of business all the time…
But do we really use all of the square? Come on now…
I say recycle the squares.
Ewww.
Use the other side to write a letter to your Sentator.
I noticed that chicken tenders from Manor House (I believe this is the right company) have also shrunk. These got me through college, I could eat them three or four nights a week.
The last bag I bought had undergone a “face-lift.” When I compared it to an old one in my freezer, they had decreased the size by two chicken tenders (each bag has about 20 for $7.99). They’re still awesome though, I think I got my grandmother addicted to them as well.
Well, I guess if you want the new pack to last just as long as the old you’ll have to follow Sheryl Crow’s advice and use only one square per sitting, thus doing your part to stop (so-called) global warming. Gotta look at the bright side.
Blano, lol.
This is happening with everything at the grocery store. Family size chips shrunk by several ounces. For a while sizes of everything were shrinking and prices were the same. Now the prices on the smaller sizes are going up big time. So if you look at the shrinking sizes and the higher prices, we’re getting smacked hard. Just think about what you spent on groceries say 2 years ago compared to today. It’s scary.
Go to Sams Club and you’ll find all the super size packaging at rock bottom prices. The $50 a year membership fee is recouped in no time. Plus at Sams Club gas is 5-10 cents cheaper - my cars use 93 Octane and Sams Club can be 20 cents less on occasion for premium.
I know Sams Club is run by the evil Walmart Corp, if you can’t stand to give your money to them, BJs or Costco is as cheap. Seriously if you shop at grocery stores you’re throwing money down the toilet.
While this is true, prices have zoomed at Sams as well. But their prices definitely beat the suoermarkets.
“Seriously if you shop at grocery stores you’re throwing money down the toilet. ” You mean like buying 93 octane? Does your owners manual require that?
Yep.
One car requires 90.5 to 93, the other one requires 91 to 93.
My only options are 87, 89 and 93, hence I have to put in 93. If 91 were an option I would go with 91.
I’m not about to ruin my engines to save 10 cents a gallon though.
Sam’s Club is where I noticed the chips were reduced by several ounces but the price stayed the same. I do buy most of my bulk stuff there. But it’s the manufacturers that are quietly ripping us off as they reduce sizes.
Go to Sams Club and you’ll find all the super size packaging at rock bottom prices.
Just like Joe6Pack thinks in terms of “monthly payment” on a car or house, they probably only thing of meal cost in terms of single servings too. They buy the 4 Oz mustard at 10x the price per Oz as the 16 Oz.
I remember when a pound of coffee was really a pound!
Hmmmm a girl implying her age…LOL
OK i too can remember when a can of coffee was a pound.
I can remember when it came in a can.
those were dark days…
General Mills big profit jump reported yesterday was in large part due to putting less cerial in each box.
For a decade or more it has been important to be very vigelent about the cash / uom numbers that most stores add to the price on the shelf.
You mean to tell me Bernanke has been moonlighting at Kimberly-Clark? Suddenly it all makes sense! After all, he did wipe his ass with the dollar the other day….
On a side note, I just went and got a bunch of those Jefferson dollars from my bank, I plan to hand them out to trick-or-treaters on halloween instead of candy.
Uncle Buck on Life Support
http://www.stockmania.com/2007_09_20_archive.html
Moody’s is expecting the housing market to “bottom” by the middle of ‘08 in Stockton after a 25% peak to trough fall? Try ‘09 / ”10, kook aid STRONG at Moody’s
Double-digit home price drops coming
Three quarters of housing markets - many in crashing Sun Belt areas - face price declines over next few years.
NEW YORK (CNNMoney.com) — Over the next few years, more than three-quarters of the nation’s housing markets will suffer some decline in home prices. Many will experience double-digit hits in a forecast that has worsened considerably in recent months.
According to an analysis conducted by Moody’s Economy.com, declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 of the cities will experience price drops of 1 percent or more.
Nationally, Moody’s is projecting an average price decline of 7.7 percent. That’s a jump from the 6.6 percent total price drop that the company was forecasting in June and more than twice that of last October’s forecast of a 3.6 percent price decrease.
The Stockton, Calif., metro area, where Moody’s predicts a 25 percent price drop, will be the hardest hit among the 100 most populated cities surveyed.
Prices in Stockton - in California’s Central Valley - rose quickly through 2005 as many would-be Bay Area buyers, frozen out of the expensive San Francisco area housing market, moved in. That influx drove up the median, single-family home price to about $375,000. Stockton prices peaked during the first quarter of 2006 and have gone downhill since. Prices likely won’t turn around until the end of next year.
http://money.cnn.com/2007/09/19/real_estate/steep_home_price_drops_coming/index.htm?postversion=2007091915
As the recession and job losses are kicking in and the wave of foreclosures continues, housing will begin to recover? Late ‘08 seems much too early.
Greg, I think we’ll be hearing something like this for a number of years into the future: Housing will begin to recover in late ‘08, ‘09, 10, 11, 12, 13, 14, 15, etc. Sooner or later someone will be correct. But really, anyone who says ‘08 or even ‘09 is just an idiot or a shill at this point, or someone who is desperately trying to make words reality.
Someone else looked at one of the previous housing market downturns on the west coast, and dug up the newspaper articles (LA Times I believe). Over and over, the headlines called bottom. I’m sure it will repeat.
Nationally jobs are still bumping along. I don’t know anyone unemployed anymore. Most of my friends that are job hopping are getting raises, of course inflation in goods may mitigate the gains, but still…
The takeaway from the LA 90’s plot: Housing prices bottomed 18 months after foreclosures peaked.
Given the size and scope of the differences between now and then, I think that’s 18 months is a minimum number this time.
They are using the wrong words. How about predictions for when housing affordability will start getting worse again?
I am a (higher-end) IT consultant. The consulting market has been weakening since last spring and turned deadly silent at the end of July 2007. I can guarantee you that we are either in recession already or getting there fast. The job market follows usually 3-6 months later. Brace yourself.
– JK
Moody’s is expecting the housing market to “bottom” by the middle of ‘08 in Stockton after a 25% peak to trough fall?
And we all know how much we can believe anything Moody’s says.
Hey, atleast they are admitting that housing DOES go down. Earlier this year there was no bubble and we were all koolaid drinkers.
That’s ridiculous. As of August, Stockton was already down over 19% from it’s median price peak last year. These people expect us to believe that, in the wake of massive foreclosures, the city will only fall another 5-6%? That is extremely optimistic, if you ask me.
Here in little ol’ Norfolk Virginia (greater metro area is called Hampton Roads), financing just fell through on _the_ premiere condo tower. It’s been a roller coaster of delays. Finally they were pounding pilings amid stagnant to no sales, and it looked like it was going to happen (city even gave the rich 22 million to help). Then BAM, no funding. Inventory is increasing like mad, sales are falling off (16 or 17% down YoY Aug to Aug in VaBeach), but the local paper isn’t talking about it.
The Virginian-Pilot was running a series of stories last month about projects in greater Hampton Roads that had stalled or hadn’t made it off the ground. That condo tower in dwtn Norfolk was one of the projects profiled that was on life support.
There is a condo complex on Wesleyan behind a jr. high that was being built when I was visiting MIL in August. The framing for one of those buildings went up in less than a day. When we left in the morning to hit the beach it was a pile of wood and when we got back later that afternoon it was already freestanding. Some real quality construction there. Not many of the construction workers looked like they had lived in Virginia for very long either. I have a feeling that English is not the first language used at the worksite.
The framing for one of those buildings went up in less than a day. When we left in the morning to hit the beach it was a pile of wood and when we got back later that afternoon it was already freestanding. Some real quality construction there. Not many of the construction workers looked like they had lived in Virginia for very long either. I have a feeling that English is not the first language used at the worksite.
Amish construction crews really are amazing aren’t they? That condo you saw them frame will still be there 200 years from now.
The Spectrum “luxury” condo’s at Norfolk’s Willoughby Spit are also on hold, nobody has touched the construction site in around 6 months. There simply is not enough people in the area who make enough money for all these ‘luxury” homes and condos they have built or are building.
http://www.norfolkspectrum.com/
The haves that lucked into being able to buy $400-500K properties by way of moving up seem to think that they did something smart to put themselves in their predicament, versus just getting lucky. The feel that everyone else looking to buy should suffer whatever.
Although I do hear older people say “If I had to buy my house now on my salary, I could never do it… and I ain’t living large.”
OH WELL, each month that passes brings us closer to the housing judgment day.
Are we headed for an epic bear market?
http://articles.moneycentral.msn.com/Investing/SuperModels/AreWeHeadedForAnEpicBearMarket.aspx?page=1
I read a lot and this is probably the best article I’ve read about the situation in a long while. Thank you. It’s also the reason why I am not bitter about the 50 point cut. We are heading for one hell of a deflationary spiral. The great unravelling is upon us.
Time to begin auto-rotation for that soft landing.
Yes, Goldilocks looks like she is about to vomit…big time!
These dopes don’t even have the flaps down yet.
On an aircraft you pull the power levers back and start to drop the flaps.
On a helicopter, you pull the cyclic stick back into your lap and then start to drop the collective stick to the floorboard and then the auto-rotation begins…
Unless you’re Helicopter Ben, in which case you dump the gas tanks onto the raging forest fire below and wonder why it doesn’t go out as the helicopter, now lacking fuel, crashes.
but…but… it can’t happen to my helicopter! there’s still stacks of money that haven’t been tossed out yet!
I predict that when all economic numbers come in over the next couple of weeks, the FED’s realizes that it was a mistake to make the cut, a few more lenders go under, inflation shows its ugly head even more, unemployment rises as well as the predicted foreclosures that there will be no more rate cuts for fear of making a already bad situation worse…
The question is, who will report these “numbers”? The media is so far up big business’ arse that no one is dishing, (except the blogs). Then, like the Bakersfield blogger pointed out yesterday, the media whines because they couldn’t confirm sources. Here’s a source: a working brain.
That would be cool, but it appears that Ben is married to a rate-cutting campaign because his only real goal is to prevent banks from failing. He’ll use whatever fake inflation numbers he needs to justify the next cut.
there will be no more rate cuts for fear of making a already bad situation worse…
Annette, I was kind of holding some hope of this until Tuesday. Those guys are not stupid. They knew what they were doing and they went ahead anyway. Don’t you think they know even better than us what next month’s numbers will show? I do not trust them any more to have the guts to take a stand. It’s an election year, don’t forget that. The Republicans have lost all credibility and no Democratic government can be expected to tighten the screws of the economy. It’s over.
OK, maybe I’m a little too gloomy today because last night I saw this absolutely amazing German film called The Downfall, about HItler’s last days and the fall of Berlin. It shows Hitler playing around with maps and bitching about his cowardly generals while the Russians pelted government buildings with artillery and the civilians ran for their lives. It’s a very good film to make you see how far delusion can go and how long it can be sustained even in the face of total defeat. I recommend it.
I think we will see a decrease in the supply of dollars (due to debut unravelling exceeding new debt creation) AND an even BIGGER drop in the demand for the dollar world wide. The net effect will be falling prices on luxuries and rising prices on necessities. Either way the purchasing power of the dollar will actually decrease and if it survives at all it will no longer be the world’s reserve currency.
“he foresees hard times as an optimistic era of too much liquidity, too much leverage and too much financial engineering slowly and inevitably deflates.”
Too much financial engineering. Exactly. To where a Frankenstein monster is created that does only the bidding of DaBoyz and da bankstas. Well, despite rate cuts and what have you, it’s over. And with the end of that game, begins another, part of which can be getting those who tried to get us. There is ample opportunity for justice, to turn things around. I believe the citizens of the US will be looking for a scapegoat. While the mirror is a good place to start for many who contributed or looked the other way, there are some really bad cats who deserve massive payback. In the end, all of this may turn out to be a good thing. I think people are very sick of the fact that criminality, whether at Main Street or Wall Street level, has become a way of life.
“Through late last month, according to Das, as much as $300 billion in leveraged finance loans had been “orphaned,” which means that they can’t be sold off or used as collateral.”
New t-shirt:
On the front:
“Take me home”
On the back:
I’m an “Orphaned” derivative
Two days after the champagne toasting — here comes the drop today…
Two days after the champagne toasting — here comes the drop…
I would like to see at least one more epic bear market before I leave this world. I am beginning to wonder if one will ever be allowed to start again. I know it’s sick but I LOVED the early 2000 - 2003 period. I had the best years of my trading life then. And in ‘02, I traded the long side over half the time!
Don’t worry, help is on the way! I see a grizzly lurking and growling behind the trees.
Bear markets these days have to be epic. Since 1987, the Fed has never allowed one to take its natural course. So bear mkts can only result from Fed failure after long periods of growing imbalances. A pity for the economy.
Bingo! Systemic risk has to increase to the point where the Fed can no longer contain it in order for a bear market to occur.
The question is, how long can they keep the current imbalance going?
Grizzly on Steriods! Sounds like a horror flick.
“I would like to see at least one more epic bear market before I leave this world. I am beginning to wonder if one will ever be allowed to start again. I know it’s sick but I LOVED the early 2000 - 2003 period. I had the best years of my trading life then. And in ‘02, I traded the long side over half the time! ”
Don’t worry TX, they can only take interest rates to zero before they go find another hole to crawl out of. Did you trade the Nikkei down from 40,000 to 8,000? I’d keep a plaque on my wall if I had called that one.
No, I generally don’t mess with foreign securities. Now that there are all these ETFs though, it might be worthwhile.
I spend some time on the Yahoo finance message boards and I GUARANTEE you that loads of people have used home equity to invest in the market. LOADSSSSSSSS! They watch Jim Cramer and think they can pick stocks. Not to mention credit card advances. So on a large scale you have the situation Das referred to in the MSN article, banks borrowing against borrowed money that’s been lent to them by someone who borrowed it from somewhere else. Then, you have the micro market, these day traders naked shorting stocks they “purchased” with borrowed money against home equity they don’t have. What a clusterf#@k.
It’s dot.com all over again. Most used home equity and cc to invest in the dot.coms. In the end that will be what will affect the market, because many will have to cash out just to eat.
Clicked on a Lending Tree ad on my computer this morning. Still offering interest only, but now they have charts that show if you get an ARM what the payments will be in 1 yr and 3. They also have in the body that you have to have a credit score of only 620, but they’ll only do 80% LTV. The teaser rate for one month ad is gone for right now. Anyone else reading any of these companies ads to see what they’re disclosing
I used to love when they would “recommend” realtors on their site. What they failed to tell you is that anyone could be listed if they paid the $1000 fee to be on there. I’m sure the sleeziest took advantage of this.
I’ll be sad if the IO-loan goes away. I’ve been self employed my entire life, and while I have never had a mortgage not paid off in 5 years, IO loans make total sense for me.
The last mortgage I had was IO and it was paid off in 4 years on a dinky condo that I actually used and then “rented” to my brother. The minimum payment was somewhere around $475/month, but I regularly paid $3000/month when the income checks were big. Only once or twice did I pay under $1000, usually because of late payments by a multitude of clients.
For me, the qualification stage for an IO loan is based on being able to affording 3X the IO payment. This is significantly more principal paid that any other loan, with the upside that I can cover slower months without concern.
Yes, the IO loan was greatly abused by brokers and idiot homedebtors, but it is also a very good vehicle for investors when they know who the debtor is, and for debtors who have fluctuating incomes. We’ve had months where we take in $20k, and months where we take in $2k. Our budgeted income each year is based on 3X the previous year’s lowest 4 months of income, and everything else is used for debt payoff first, and then long term savings (gold/silver). If I made $160k last year, but my bottom 4 months of income totaled, $14k, we estimated our current year’s income budget at $42k, and lived based on that income. The extra $138k, after taxes, left us with more than double our living income for long term considerations.
The key to safe living: live well below your means. I drove a 1996 Corolla for 10 years (no power locks or windows), the wife drove a 1993 Blazer that we still use a few times a week. Our friends, who made 1/2 of what we did, drive BMWs (leased) and can “afford” $100 dinners 3 times a week. When I’m 45, I’ll do that fun stuff more often.
I’ll be sad if the IO-loan goes away. I’ve been self employed my entire life, and while I have never had a mortgage not paid off in 5 years, IO loans make total sense for me.
Be happy that you don’t need as large of a loan (lower prices) and can pay off in 3 years… without the IO loan in the marketplace. That IO loan is what caused all the speculators/”investors” to buy 4+ houses each.
“The key to safe living: live well below your means.”
Great post A.B. Dada. We live the same lifestyle. We are early retirees with total freedom who will buy a house as soon as it makes sense. We will borrow the money for the house and pay it off in 5 years or less to maintain financial dicipline. Is this a great country or what?
I haven’t seen a lender commercial in a long time.
I am, however, receiving multiple credit card offers each day in the mail, but none of them are as good as the cards I currently have.
Sept. 20 (Bloomberg) — Bear Stearns Cos., the securities firm hit the hardest by the collapse of the subprime mortgage market, reported its biggest profit decline since at least 1998 as rising U.S. home-loan defaults reduced bond-trading revenue.
Third-quarter net income dropped 61 percent to $171 million, or $1.16 a share, in the three months ended Aug. 31 from $438 million, or $3.02, a year earlier, the New York-based firm said today in a statement. Profit fell short of the average estimate of $1.79 a share from 14 analysts surveyed by Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9muIhEmqUKk&refer=home
If they are making profits, they are doing better than might have been expected (or is the case in reality?)
I think the direction is the important thing to note. The third quarter dates back to before the crisis started hitting hard. The 4th quarter is where the really bad news and losses will start to be reported.
So they raised the FHA limit to $730,000 thanks to Barney Frank (D-MA). Wait a minute wasn’t the great Democrat revolution of2006 supposed to signal new fiscal constraint? Didn’t Nancy and Harry promise to rein in the out of control spending?
I’m no expert in these matters but spending billions of dollars in bailing out home owners via FHA loans doesn’t seem to conform with those promises.
Barney Frank had nothing to do with FHA stepping in to bankroll the bankrupt. It was all GW and his FHA secretary. Mr. Frank proposed shutting down sub-prime lending.
Is that a done deal? Did I miss something? Is it for refinances only or new purchases and is it 700K everywhere?
still subject to the whims of the senate and gwb, can’t imagine that someone make $250K a year (what you need to make to qualify for a $700k loan) needs the feds to bail them out.
You wouldn’t think so but I could produce about 6 of them for you right now among my aquaintances. 250K income and they live on all $1M of it
The median list price for a used SFR on the MLS in the zip code where we reside (SD 92127) currently stands at $1,283,450, which is admittedly $16,000 cheaper than one weak ago and $116,000 cheaper than its level earlier this year, but nonetheless still out of reach for a household earning $250,000 per year without the aid of a government subsidy.
It is in the U.S. national interest to help wealthy San Diegans be able to afford their $1m+ homes!
P.S. For those who are curious, the one-week $16K drop in the median list price represents an annualized rate of decline of 48.6%. You can check this for yourself by entering the following formula into the search line in google:
100*((1283450/1300000)^52-1)
“Barney Frank had nothing to do with FHA stepping in to bankroll the bankrupt. It was all GW and his FHA secretary. Mr. Frank proposed shutting down sub-prime lending”
Barney Frank has been pushing for this for a long time. Bush has said numerous times he is against raising the caps and who knows may grow a pair and veto this. Try to take your “I hate W” blinders off for 30 seconds and see what is really happening. The Democrats are pushing for bailouts. Hillary, OIbama, Frank, Shumer and of course Dodd are leading the charge on this. Maybe you should have thought about that in 2006 when you voted for this group. Don’t vote for socialists and then be surprised when they give you socialism.
Summary: House Passes Mortgage Plan
By The Associated Press
MORTGAGE HELP: The House on Tuesday approved a plan to expand federal backing of mortgages in hopes of helping struggling homeowners avoid foreclosure. The bill is Congress’ first stand-alone bill in response to the recent mortgage-market tumult. Rep. Barney Frank said he wanted to whisk the measure, which exceeds limits favored by the Bush administration, to the Senate.
Don’t vote for socialists and then be surprised when they give you socialism.
(Roll eyes.)
“President Bush also has urged Congress to pass FHA modernization, which is part of a package of measures Mr. Bush has proposed to help homeowners through the subprime meltdown.”
http://online.wsj.com/article/SB118979099245127810.html?mod=googlenews_wsj
yeah cuz there’s nothing socialistic about the medicare drug benefit.
It’s called starving the beast. GW is doubtless amused at his pharma cronies getting wealthier via guvmint regs which prohibit reduced pricing….while passing the cost on to J6P, who falls for the brilliant, macho, misleading soundbytes. Poetic justice in spades.
Bush appeared on prime time news yesterday and indicated that he “will do whatever is necessary to stem foreclosures including asking FHA to intervene.”
So I guess Bush is a socialist too.
He’s no fiscal conservative that’s for damn sure.
Try to take your “I hate W” blinders off for 30 seconds and see what is really happening.
(whispering) why is he here?
maybe he works for the RNC
Thats my guess.
JJGA:
Can you please tell me what Obama’s bailout plan is? I thought he just wanted to outlaw predatory mortgage lending. Also, didn’t the Republicans go along on this bill? From the article that I read, there were only a few Republicans voting no.
Obama’s website mentions nothing of the housing crash. I think he’s been pretty conservative on this one.
Maybe this quote of his was mistakenly left off his website then:
“We need to help struggling borrowers to weather this storm. One way to protect innocent homeowners — at least until this crisis passes — is to establish a fund to help people refinance or sell to avoid foreclosure.”
Establish a fund to help people avoid foreclosure. As in use my tax dollars to bail people out. Where have I heard that before?
Or how about this gem?
Owning a home represents a big part of the American dream and all Americans — no matter what their income level — should have the power to reach for that dream.
No matter the income. Hearthat everyone? If you make $6 an hour it is your right to own a home damn it!!
You were saying something about Obama being conservative…..
Those quotes are really ambiguous. His language leads me to believe he’s trying to leave himself open to take a firm position later. The fact that housing isn’t even on his website is very telling.
I mean, a fund to help people refinance or sell might just be adding more credit counselors to some preexisting hotline. “Reaching” for a dream is not the same as obtaining that dream. Perhaps I’ll write him an e-mail and see if I can get him to tell me what he’s really thinking.
Here’s the mail I sent:
Hi.
Can you please tell me what Barack wants to do about the current housing crash? Does he intend to bail out people who can’t afford their houses? Does he intend to bail out banks that made irresponsible loans? Is he more interested in preventing overpriced houses from going into foreclosure, or in allowing house prices to become affordable again for average Americans?
Thanks for your time,
Big V
This is all basically a bunch of peeing in the wind, isn’t it? Regardless of whether a loan is FHA-guaranteed, the numbers either work or they don’t. All this could possibly do is provide a few more FBs to be chewed up and spit out over the next few years. In any event, it sounds like the Wall Street money to back toxic loans is gone, and the banks aren’t going to issue such loans without Wall Street backing. Congress could raise the FHA limit to $1 trillion and it wouldn’t make any difference.
Then why is everyone here so upset by it? It isn’t peeing in the wind at all. It won’t save every foreclosure from happening, but if it saves 25%, it will have a huge impact on home prices.
But as others have already said, how many FBs are really going to qualify for refinancing under FHA guidelines? They have zero or negative equity, and no amount of refinancing can suddenly make a $500k house affordable to someone with $50k household income.
All this could possibly do is extend the pain a little longer.
At some point in the past a lender thought the $500K house was affordbale on $50K. If that same loan is now guarateed by the feds, why wouldn’t that same lender re-issue it?
As for FHA guidelines, read what happened a little more closely. The guidelines were changed to essentially say anyone with a pulse now qualifies. No downpayment needed. Bad credit OK. Sounds like an TV ad from 2005.
I am seriously thinking what the hell, go buy something myself. If the govt wants to throw out money, I want my cut too. God knows I will never get a dime of social security, medicare or any other program since I am too “rich”, might as well get something while the getting’s good from housing.
Perhaps we will enter a state of perpetual foreclosures.
“Buyers” will purchase a house and live for free until
the eviction process catches up.
Then, that process repeats all over again.
In effect, the FHA will be handing out free rent money.
Since foreclosed housing will likely be trashed, that will
create jobs for construction and repair workers.
Welcome to the new sharecropper society.
That is interesting. However, I still doubt it will be enough to prop up housing prices. It might make the decline a little more gradual, I guess. Assuming that this bill actually gets enacted.
RE: the FHA will be handing out free rent money.
These idiots previously underwrote scads of trashed, worn out, housing stock back in the ‘90/’91 bust.
Then the evolution of sub-prime took all the business away. (praise God for the US taxpayer).
The fraudsters are now just lookin’ for another guarantor for their shit loans now that the private market won’t take it.
Don’t think value drops will derail the deadbeat refi train.
Hilliary/Obama will declare a payment moratorium as part of their election ploys and make the current mortgage holders eat the equity differential.
Call it all a group short sale to the Federal government.
The best way to get the boys and girls in Washington D.C. back to reality is to require them to live by the same rules as the rest of us: the same retirement options (Social Security), the same health care options, the same civil laws, and yes, term limits, to get us away from professional politicians. The greatest threat to our country is the professional politician who is wants to be seen as a “Mother Theresa” of benevolence with someone elses (the Taxpayers) money. Most of the levels of complexity in our current federal system of civil code (including tax law) point to protections for various constituencies created to garner policitical contributions in order to maintain power (reelection). It is a nasty cycle of adding layers and layers of corruption. Our Republic, like the proverbial free market, needs a “good flushing” once in a while to clear out the old soggy debris that keeps building up in Washington! In other words, we need to throw the bums out, via the voting booth.
As for the economy, if I may use the dam preventing flooding metaphor, how high can the government build the proverbial dam to keep the “waters of adjustment” from overrunning the dam protecting the American economy? The pressure will keep building until the dam is overwhelmed. The higher the government builds the dam, the more severe will be the impact of the adjustments when the dam finally fails. It is inevitable. And the water keeps rising…..
Unfortunately, I think term limits would increase the influence of lobbyists, think tanks, party leadership, etc. as they provide “the benefit of their experience” to the perpetually freshmen Congress.
Well I think Ron Paul said it best, if the role of government is to protect liberties (and not to redistribute the nations wealth) then these lobbyists would have VERY little to gain.
We have term limits in Ohio and unfortunately we now have a bunch of inexperienced idiots who spend 2 terms in office learning the ropes to the point that they could actually make an intelligent decision, and then they’re out. There’s advantages and disadvantages both ways.
Keeps looking like the housing crunch is not having much affect on jobs (yet):
Unemployment Claims Make Surprise Drop
http://tinyurl.com/yqww9q
Bernanke: Fed to propose additional consumer protections against mortgage foreclosure. Details soon.
Wait…..there is always calm before the storm…
My *guess* is perhaps this is due to lots of people retiring and not enough young people entering the work force. The older boomers are in their 60s now. IIRC, Japan didn’t see a massive spike in unemployment after their economic collapse because there were so many older people retiring anyways. Maybe I’m wrong.
This is the point my dad made to me last night. There are not enough new workers entering to make up for the ones retiring. This credit crunch will keep a lot of the older ones in the work force once they realize they have no retirement savings. Net effect will be higher competition for jobs with simultaneous scale back in production, but that will be a year or two from now.
Keeping retirement age employees in the workforce also aids the ailing social security system.
The workers add money to the system by continuing to work rather than drawing money out of the system by becoming retired.
Yes, that explanation has popped up before, but the comparison between the Japanese who retired in the 1990s and Americans who are now starting to retire is a tenuous one at best. Aside from their prodigious saving, those Japanese retirees tended to settle into much more sustainable retirement patterns - living with family, smaller homes, etc. Boomer retirees (not all by ANY means), on the other hand, still expect to build that eco-friendly home in NM, jet set across the globe, take up scuba diving, etc. - all on their vaunted retirement savings.
That’s because half the US workforce is on 1099’s now and DO NOT qualify for unemployment. The only people from this whole housing mess that might get unemployment that I can see are the home depot and lowe’s workers.
Dude, everything that has happended in the economy over the past year has been “unexpected”. That tells me that our revered economists have their heads up their culos.
Here’s a story regarding a local DFW builder who up and quit building, took people’s deposits, stiffed the subs, and left multiple properties various stages of construction.
http://www.wfaa.com/sharedcontent/dws/wfaa/sstoler/stories/wfaa070919_lj_unfinishedhouse.ec1ea346.html
Par for the course around here. There are a lot of fly by night builders and not just in the exurbs like Princeton. As for the aggrieved buyer’s 3K deposit, I’d tell that loser to get a life, he’s never going to see that again and be happy it was only 3K.
http://biz.yahoo.com/ap/070920/jobless_claims.html?.v=5
Unemployment makes a surprising drop, so why did the FED cut rates again?
National Retail Federation sez to look for the crappiest Xmas since 2002.
Good. Who needs presents piled high around a tree? Who needs to buy poisoned toys for their tots? Who really needs to buy much of anything, except clothes and shoes for growing kids?
A huge consumer pull-back is just what the doctor ordered…have a nice Christmas or Hannaka without all the credit debt.
They can count on me not to upset their forecast. Don’t buy their garbage people, bring ‘em to their knees this xmas.
Actually I am doing some toy shopping later today. Got a 10% off coupon at ToysRUs. I’d rather have my money in Legos than dollars right now.
Sorry, I should have been more clear, I did not mean to imply in any way that one should hold dollars - rather instead of buying toxic consumer garbage - start CDs in certain foreign currencies or such for the kiddies.
Still, Legos (the real stuff anyway) rock - you’ll be making a fine pruchase with those W. Funny how kids’ toys really became dumbed down here in the states - while in Europe and Japan building toys, models, and other toys that stimulate the imagination and build useful skills are much more plentiful even today.
Christmas can still be fun if one of the two working parents loses a job, though. That leaves time for making treats, building playhoues/doll houses, taking neighborhood kids out caroling. X-mas doesn’t have to be expensive.
test
Real estate revival? Not soon
Fed’s rate cut, legislative reforms aren’t expected to spell immediate relief
By Dean Calbreath
STAFF WRITER
September 20, 2007
Although Wall Street has been exuberant for the past two days about the Federal Reserve’s decision to cut a key interest rate, the reaction on Main Street has been more muted.
Mortgage and real estate brokers say that the Fed’s decision will help some homeowners pay off their bills instead of going into foreclosure. In addition, a congressional initiative to ease lending restrictions at the Federal Housing Administration may bring buyers to the market.
But most say that the interest rate cuts and legislative reforms will not immediately revive the real estate market. Instead, home prices and sales will stagnate or decline deep into next year, with no recovery until late 2008 or early 2009, they say.
That’s not much different from what people were predicting before the Fed made its cut.
“I believe the market will weaken more in the next few months, and it may weaken over the next year,” said Gary London, president of the London Group of Realty Advisors in San Diego.
“We’re two years into a housing downturn, and it’s not unreasonable to expect another year of this,” he said.
http://www.signonsandiego.com/uniontrib/20070920/news_1b20fed.html
Prices, home building both slide in August
By Martin Crutsinger
ASSOCIATED PRESS
September 20, 2007
WASHINGTON – Consumer prices posted a rare decline in August, while the battered housing industry saw construction fall to the slowest pace in 12 years.
http://www.signonsandiego.com/uniontrib/20070920/news_1b20economy.html
Vacancy rate for S.D. units in decline
Few apartments open; rents rising
By Emmet Pierce
STAFF WRITER
September 20, 2007
San Diego County’s apartment complex vacancy rate has dropped to 2.58 percent from 4.54 percent over the past six months, as a national credit crunch has restricted access to mortgage loans.
A report released yesterday by MarketPointe Realty Advisors showed a dramatic reversal from March, when vacancies were at the highest level in 12 years.
The semiannual poll, called RentalTrends, also showed the price of rentals rising, said Robert D. Martinez, director of research.
“Countywide, we had a $30-a-month increase over six months, 2.43 percent,” he said. “The average rental rate is $1,291.”
Landlords have growing bargaining power as tight credit and mounting foreclosures have put more households on the rental market.
http://www.signonsandiego.com/uniontrib/20070920/news_1b20rent.html
Economist estimates inflation-adjusted value of $23 trillion housing market could fall by $3 trillion by next year
http://tinyurl.com/2r2yq4
but nobody will notice as inflation and the War on Savers have switched into high gear. I wouldn’t be surprised if US homeprices start climbing again soon, just like happened in Europe shortly after the inception of the ECB/euro. Around 2001 there were 10-30% pricedrops in some EU markets; they proved to be nothing more than small bumps in the road thanks to the liquidity orgy from the ECB. One could say that EU homeprices are no longer rising in real terms but who cares, when you can still take out a full income out of your home every year thanks to the nominal increase in value?
This is the wild card. I see Congress fumbling all over themselves to characterize $700K+ as the new “affordability” threshold.
just wait … add another B-52 rate cut and HBB’ers will be stumbling over each other to buy those 700K+ McMansions with their last savings. This tricked has worked in the Netherlands to make real estate a sure and safe bet for everyone (especialy those without any money of their own), so why wouldn’t it work in the US? If there is any logic in the FEDs actions, it must be that they think they can get away with it. I just wonder what the Chinese are thinking …
That might work in Old Europe, but our housing bubble is popping, and there is nothing Congress nor the Fed can do to stop the downward momentum at this point. There is just too big a gap between incomes and home prices, not to mention too many unoccupied, unneeded McMansions, for this to play out any differently. At best, social engineering measures currently underway will inadvertently succeed in dragging the correction out for fifteen years, following in Japan’s missteps of the period from 1990-2005.
One more thing… there are not enough potential buyers with bank sitting on the sidelines for your “HBB’ers stumbling all over each other to buy 700K+ McMansions” scenario to have any heft. Too many Americans drank the koolaide over the past few years, as the REIC inadvertently cannibalized its demand for the next decade.
One more thing … today is the first day I saw a MSM article suggesting that real estate might not be a very good investment…
Dear nhz,
The Fed rate cut will only serve to prevent bank failures. This is truly annoying, since there are some banks who deserve to fail. However, most mortgages are tied to the LIBOR.
Furthermore, the Fed rate cut can only reduce short-term interest rates (which will go up anyway due to short-term risk). Because banks are not willing to take excessive inflation risk, those wishing to refinance into a 30-year fixed will still have to pay over 6% interest (which is low), and can’t afford it. Most of these folks can’t afford any more than about 2% interest.
Yeah, if any in congress are smart enough to figure out what kind of income someone would actually need to qualify for a loan.
Schiller is funny and optimistic! California will lose $2T in the next 12 months. Ergo, Florida must appreciate in value, cool.
Bernanke Opposes Bigger Mortgages for Fannie, Freddie (Update1)
By James Tyson
Sept. 19 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke opposed a push to allow Fannie Mae and Freddie Mac to buy mortgages higher than $417,000, saying it may undermine efforts to strengthen regulation of the two largest U.S. mortgage finance companies.
A proposal in Congress to increase the limit “would be ill- advised if it has the practical effect of reducing the incentives to achieve meaningful” regulatory tightening over the companies, Bernanke said in a Sept. 17 letter to Representative Barney Frank of Massachusetts, Chairman of the House Financial Services Committee.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0.agqXFxu_Y&refer=home
nice trick, the proposal will pass anyway and the FED can blame Congress for what will happen next. Instead of FB’s there will be many more F** taxpayers.
i just think it’s completely hilarious that ben opposes the increase right after he lowered the fed fund and discount rates.
kettle meet pot.
Methinks he dost protest too mildly.
This idea of “temporarily” increasing the GSE conforming loan limit is utter nonsense. Once the limit is increased and home prices permanently adjust upwards to reflect the increased GSE subsidy limit, another increase in the GSE limit will be needed to help make still-more-expensive homes “affordable” once again.
Business News
2 home financing giants to aid with sub-prime woes
Fannie Mae and Freddie Mac’s regulator relaxes some limits so they can help more borrowers.
From Reuters
September 20, 2007
WASHINGTON — – Fannie Mae and Freddie Mac, the biggest sources of home financing, can buy $20 billion more in sub-prime mortgages under rules unveiled Wednesday to help revive a market crippled by tighter lending standards.
The Office of Federal Housing Enterprise Oversight, the mortgage finance companies’ federal regulator, agreed to relax restrictions on their investment holdings, although it did not eliminate existing caps on those loan portfolios.
The moves are meant to help Fannie Mae and Freddie Mac “provide greater assistance to sub-prime borrowers and others who may have trouble refinancing their existing mortgages,” James Lockhart, director of the oversight office, said in a statement.
However, Lockhart also said that he would block “any major increases in the [investment] portfolio levels.”
The regulator agreed to let both companies buy more sub-prime loans and eased Fannie Mae’s investment limit to the level imposed on Freddie Mac. The oversight office also agreed to eliminate some stringent bookkeeping measures that further constrained the investments, which are valued at a combined $1.4 trillion.
Sub-prime loans are extended at high interest rates to borrowers with spotty credit histories. The companies’ allies in Washington have for months called on the oversight office to give Fannie and Freddie more investment leeway so they can buy sub-prime loans now shunned by other investors as too risky.
Fannie and Freddie have already pledged to increase their sub-prime investments and the oversight office’s move will help them to buy or securitize some $20 billion of the troubled mortgages in the next six months, Lockhart said.
The Bush administration has opposed giving the companies fresh tools to expand their presence in the market, so the oversight office decision was seen as a softening in that stance.
Both companies welcomed the news, but said they needed more freedom to buy home loans to help stabilize the roiling market. Fannie has called for the investment cap to be raised by at least 10%.
…
“At this point, we’re reluctant to say this frees [them] to buy tens of billions of new conforming assets,” Vogel wrote in a note to clients. Conforming loans are those that do not exceed $417,000, including both prime and sub-prime debt.
The companies’ allies have called for that loan level to be raised, a move Federal Reserve Chairman Ben S. Bernanke said should only be done on a temporary basis.
“If the Congress is inclined to move in this direction, it should consider whether such action could be taken in a way that makes the change explicitly temporary as well as promptly implemented,” Bernanke wrote in a letter to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
If Congress were to raise the conforming loan limit, it should make the step “explicitly temporary as well as promptly implemented,” Bernanke wrote.
Frank released the letter Wednesday.
The Fed chief also suggested that the companies’ investment holdings be trimmed and tied to their goal of increasing access to affordable housing.
http://www.latimes.com/business/la-fi-fanfred20sep20,1,7204356.story?coll=la-headlines-business
DAVID CALLAWAY
Could a run on a bank happen in the U.S.?
Commentary: Let’s not be smug. Of course it could.
By David Callaway, MarketWatch
Last Update: 12:01 AM ET Sep 20, 2007
SAN FRANCISCO (MarketWatch) — It seems like only a few weeks ago that bankers and financial gurus around the world were confidently predicting that the subprime mortgage mess in the U.S. was a local problem that would not affect the global markets.
Then came last Friday, and we all awoke to pictures of British savers lined up in Depression-era, breadline formation to yank their funds out of Northern Rock (UK:NRK: news, chart, profile) after the British banking company said it needed to be bailed out by the Bank of England. By Monday, people had begun withdrawing money from other British banks, and by the time things calmed down the government had to step in and pledge to stand behind all deposits at Northern Rock.
Our own experts were quick to point out that such a run is unlikely to happen in the U.S., given that we have a different banking system with more extensive guarantees on deposits, etc. Don’t bet on it.
http://www.marketwatch.com/News/Story/Story.aspx?column=David+Callaway
What happened at CFC back in August? A run was averted according to Mozillo.
Averted? No it wasn’t. The bank didn’t fail, but it still had a run.
Um… didn’t we already have runs on Countrywide?
Yeah, like a problem that only affects the US can be characterized as “local”. Last time I checked, that type of contagion would be defined as “national”.
Saudis about to break the dollar peg:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/19/bcnsaudi119.xml
In the immortal words of homer simpson: “Its funny because its true”
“There is now a growing danger that global investors will start to shun the US bond markets. The latest US government data on foreign holdings released this week show a collapse in purchases of US bonds from $97bn to just $19bn in July, with outright net sales of US Treasuries.”
Boy, *that* will help the housing market. Not.
*Sigh*…hadn’t we been talking about similar consequences for a rate cut earlier this year?
Sorry if this shows up twice, looks like the 1st one got lost:
Barney Frank is andwas the leading charge to raise the FHA cap to $730K. Blame Bush all you want, it is simply not the case. You voted for socialists in 2006, you are getting socialism. Don’t be so shocked.
Summary: House Passes Mortgage Plan
By The Associated Press
MORTGAGE HELP: The House on Tuesday approved a plan to expand federal backing of mortgages in hopes of helping struggling homeowners avoid foreclosure. The bill is Congress’ first stand-alone bill in response to the recent mortgage-market tumult. Rep. Barney Frank said he wanted to whisk the measure, which exceeds limits favored by the Bush administration, to the Senate.
I’ll be blaming Bush when he signs the mofo, tyvm.
They’re all socialists if they think it will get them re-elected. From what I saw Lizzy Dole was the sole one to vote against it, so it involves everyone in the house but her regardless of party.
Here is a prayer for our D-ratic Congressmen as they contemplate how best to solve the foreclosure crisis.
“Lord, enlighten thou our enemies,” prayed 19th century British economist and moral philosopher John Stuart Mill in his “Essay on Coleridge.” “Sharpen their wits, give acuteness to their perceptions, and consecutiveness and clearness to their reasoning powers. We are in danger from their folly, not from their wisdom: their weakness is what fills us with apprehension, not their strength.”
http://www.salon.com/news/feature/2006/11/17/milton_friedman/index_np.html
test
I have a friend that is a barometer of sorts…
I pleaded with her to sell her house in el lay in early 2006 and she listed it, but got greedy, asked too much and nothing happened.
I recently convinced her to buy physical Gold and she’s gung ho, but after waiting for the money to come from the sales of stocks, it’s gone up 5%, and now she doesn’t want to buy now, as it’s too high.
She has the Midas Touch, in reverse…
“I recently convinced her to buy physical Gold and she’s gung ho, but after waiting for the money to come from the sales of stocks, it’s gone up 5%, and now she doesn’t want to buy now, as it’s too high.
She has the Midas Touch, in reverse… ”
You should have had her reading the blog, ’sane… I got my gold 1.5 weeks ago, but if it goes to an all time high ($3000/oz.) it won’t make much difference.
Markets are down this morning. Gold and Silver are up.
Welcome to the trend for the next year.
That’s what the goldbugs have been looking for. A decoupling of gold prices from stock prices. I believe it’s a buy signal for gold, but my husband and I have agreed to stop taking any risk with our money, since we might need it soon to buy a house.
i’d say as long as real estate is falling, the war on many savers won’t matter because that’s what most people are saving for. As long as this money gets spent on real estate in the future, the value of your savings is actually going up in real real estate dollar terms. I guess at the end you want to save for the things that are going down in value. Buy low, sell high. The stock market will soon follow the real estate crash.
Has Fed Risked Creating Moral Hazard?
By David Wessel
Word Count: 821
Federal Reserve Chairman Ben Bernanke and his colleagues clearly explained why they cut interest rates this week by one-half percentage point: “To help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets.”
But a vocal chorus is complaining that Bernanke & Co., instead, just bailed out a bunch of greedy speculators, imprudent lenders and short-sighted home buyers who got too-good-to-be-true mortgages.
“This is like adding Jack Daniels to the AA-meeting punch bowl,” emailed Rob Brantley, a Washington consultant. “The market’s reaction provides proof.”
151 proof, I would add.
http://online.wsj.com/article/SB119025102955233333.html?mod=hpp_us_whats_news
I love the Jack analogy. Now THAT is an A.A. meeting I would gladly attend.
When I was in college we would go to Tijuana to buy pure sugar cane alcohol that was something like 192 proof. I think you’re only supposed to use the stuff to clean furniture. We drank it.
Mr. Market is in hangover mode today after two days of post-Fed drunken debauchery. He desperately wants to correct but the PPT just won’t let him.
http://www.marketwatch.com/tools/marketsummary/
After jubilation about DAX gains yesterday, the headline today is, in the same ‘Spiegel’: “The banks themselves don’t know how deep they are involved in the (mortgage) crisis”.
Deutsche Bank was down over 3%. Ackermann estimated losses at 30 billion. They can’t find buyers for 220 Billion of debt. They will not hire four thousand new employees as planned. They are confident, otherwise. They have Alan (did anyone see him last night on the comedy channel - very babbly).
OK, now that we know where the first 50 billion or so went (two bailouts plus Deutsche Bank?) we can start guessing where those other 400 or so billion euro from the ECB ended up.
I think mighty Ben should simply declare drops in stock and home prices illegal (maybe with an exception for gold/silver stocks). Something similar worked perfectly in Zimbabwe!
WASHINGTON (MarketWatch) — More delinquencies and foreclosures can be expected in the subprime, adjustable-rate mortgage market as borrowers face interest-rate resets, Federal Reserve Chairman Ben Bernanke said Thursday.
Hey Ben (Jones), stop the presses! The Great Inflator says there’s trouble in the subprime market. There are going to be, FORECLOSURES! I’m in shock. Ben, please, get the word out, the Great Inflator has spoken! These pronouncements are even greater than those of the Great Obfuscator! These guys are intellectual giants before whom we must cower!
/bitter sarcasm off
sure sign of a short-term bottom in subprime problems
Probably just trying to justify further rate cuts. Make the people think the cuts will help THEM.
Builder stocks are dropping like a rock. Burn baby burn! Time to buy GOOG?
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
Question: There are quite a few homes here in Riverside, CA. that are already bank owned after first being purchased 1-2 months ago. Can homes go back to the bank that quickly or are these misprints?
I found the home I want! Perfect location, size, and everything (though it has a dirt backyard and not a bit of cement in the back). It’s lender owned and they’re asking $499,000 (this same home is going for $600,000 down the street). When can I offer $300,000? Ok, I mean when will they consider such a low offer? I’m going to cry if someone buys that home!
I’ve watched 3 that I had my eye on be sold for more than I was willing to pay. If you want to play this game you must have patience and accumualte multiple “dream homes”. As ones is sold 3 are being added. Time is on our side do not fall in lust over a home.
“I’m going to cry if someone buys that home!”
Then buy it. If you can afford it (comfortably), you have a very steady job (so that you won’t have to move within ten years), you have emergency savings, and you really like the area, then take the plunge. Who cares if property values go down further, you’re buying the thing to live in.
Just make sure that you don’t *have to* or *want to* move in the next ten years.
Myself, I don’t “fall in love” with the perfect home any more…perhaps because I’ve seen/toured so many homes in the last 5 years. I know what I like and really want, and I know enough about home construction to know that if I get a “ordinary” house at a low enough price, I can make it a dream home…even to the point of tearing out drywall and moving non-load bearing walls.
I just refuse to buy at a point where it effects my quality of life with mortgage payments that eat up most of my income…or where the risk of moving means I may have to bring (large amounts of) money to the table should I be forced to sell (through job changes, medical emergencies, whatever).
What is a “home”? Do you mean a house?
Real estate flacks have gotten people used to buying “homes,” or being “Homeowners.” It sound more cozy and desirable than calling the structure what it is, a house.
Note that they have failed to get people to call a condo a “home.” They still call it a condo.
err…. townHOMES. How dare you call them a condo!!!! Real-turdesque language is sickening.
Yeah, that one really bugs me. A townhouse is not supposed to come with an HOA. But now we have “townhouse-style condos”, commonly referred to as “townhomes” all with HOAs up the wazoo.
Labor units use credit units to try to procure dwelling units.
You can offer it at any time. The Bank may not (probably won’t) take it, but you can make it clear it’s a standing offer for a set amount of time. Who knows, they might come to their senses, or may just need fast cash one day.
“I’m going to cry if someone buys that home!”
Go lie down and wait for this feeling to pass.
Dear Bubbliscious:
If someone else buys that house, don’t cry. There is a very high lieklyhood they will be forclosed on too. Just wait it out. If it was meant to be, then it will feel right to you AND your pocket book.
Just got off the phone with one of the bigger retail Gold merchants in Los Angeles…
He figured buyers outnumbered sellers by a 4 to 1 ratio~
More importantly, he told me that no single seller, has sold more than 20 troy ounces, the past 2 months
He hasn’t had to wholesale gold in months, although nobody wants junk silver bags and those have been wholesaled off, lately.
one for one with canadian dollar.
That’s friggin loonie!
–
I remember when I first went to Canada in 1976 (I was at SUNY, Buffalo) and canadian dollar was worth US$1.2-1.30.
Jas
When I went to Japan in 1975 I got 280 yen for a dollar.
Guys, I have a new question that I don’t think has been covered here, and it’s important.
If MBS-holders own the asset, who’s paying the carrying costs when the homes go back to the servicer (bank)? And who decides when the REOs get unloaded? Can the servicer act unilaterally? I wish we could get an unemployed CFC securities trader to share a contract example with us.
No one. What are the carrying costs besides property taxes? utilities get turned off, lawns die, windows get broken, copper is stripped.
OH SH&T!
http://tinyurl.com/2vtq6x
Roidy
The more I learn, the more it sounds like our gubmint/elitist types are doing the same kind of cheerleading Herbert Hoover & Co. did in 1929 and 1930.
And we all know how THAT turned out …
Sigh.
A couple of months ago I believed that we were in the second inning of a long game. I am now of the opinion that it is still the first inning. This is going to take a long time to play out. Contrary to the Stock Markets in the US which currently seem to be holding their own (remember Wall Street bonuses are calculated on September 30 closing prices), the commercial finance is in disarray.
A bizarre float from Sherry Cooper, Phd economics and former Federal Reserve employee is to combine the Canadian Dollar and the US dollar into a single currency unit. This proposed currency unit “would also cut the costs of currency exchange and hedging and it would simplify Canadian tourist spending in the U.S. and around the world. It might also reduce central bank costs.”
I love economic idea floats. If no negative reaction then the idea keeps getting larger. The idea is great for the US dollar, but Canada is a commodity currency. I doubt very much that our friends to the north would like to enjoy the debacle about to occur on the US dollar.
Grasping with nothing in reach.
Someone posted today a link to an article that quotes a derivative expert who says (if I recall correctly) they’re still playing the national anthem before a game that’s going to go into extra innings.
Yes, that article was on MSN.com:
http://articles.moneycentral.msn.com/Commentary/Experts/Markman/Jon_Markman.aspx?msn=1
Has Sherry at the Fed thought to ask the Canadians what they think of this lame brain scheme? I mean, they are a sovereign nation, with a democratic government and yes, strong, patriotic feelings. This looks as likely a prospect as our earlier failed attempts to invade Canada. I’m waiting for Canada to start building a wall and stationing RCMPs along the border to keep desperate, wetback Americans from illegally crossing to safety.
Um….I don’t want your stinkin’ “dollar” thankyouverymuch.
I want to email a letter like this to some politicians and newspapers:
The more you try to prop up home prices, the more damage you will do to the economy.
House prices are at stratospheric levels now, vastly beyond most people’s purchasing power. This has led to people getting exotic and dangerous loans if they want a house.
By providing government purchase of, and insurance for massive mortgages, you merely bail out lenders and hedge funds who created the credit bubble and made irresponsible loans.
You’re not helping out the little guy by guaranteeing lenders will be paid for super-jumbo, 500,000-plus dollar loans.
If you bail lenders out, house prices will stay stratospheric, and lenders will continue to make irresponsible lending decisions. This will lead to continued financial hemorrhaging, because, in order to purchase a house, people will continue to take out toxic loans.
Most homeowners who purchased before the bubble say that they would not be able to afford their houses at today’s prices. Don’t force their children to become lifelong debtors merely to enrich the hedge fund managers and financial services corporations’ executives.
Might add there’s a lot more little guys voting than big guys, that always gets them.
Anybody have a link to a video of Bendover Bernanke being questioned by Ron Paul? I heard that RP ripped Bendover a new one about “causing inflation by debasing the currency for all Americans” or something like that. Just want to get confirmation. Go Ron Paul!!!
I’m in beautiful Vienna today. Great weather. Might be prudent to make a side trip to visit the Gnomes in the mountains…
I thought Bernanke lowered interest rates? The TNX is up to 4.64%. Guess I heard wrong.
The Fed needs to work harder on containing that long bond inflation risk premium.
Here are some fantastically entertaining comments on the state of U.S. monetary policy:
“by SkinnyCat
1 hour ago
How does Bubble Ben intend to “foster price stability ” and still think market “do tend to self-correct”, with all these bail-outs?
There is price stability because the Chinese is stupid to peg their yuan to the US$ and importing our inflation, not because of Fed’s policy. Fed’s policy is inflationary and anti-price stability.
If this is the 60s when there is no globalization and no cheap labour Chinese manufacturing for cents so Corporate American can make a dollar, inflation would have been running in the 7 - 8% range with such inflationary policies.
Market can self correct if there is no intervention. Greenspan created the bubble and before the market can self-correct bubble Ben pump more air into the bubble. What self-correction is he smoking about?”
http://www.marketwatch.com/news/story/story.aspx?guid=%7B2D9C1931%2DF3EB%2D4B80%2DBE88%2DF7423A7EF64E%7D&siteid=rss#comments
My Lord the USD is getting crushed today.
anyone besides me got their eye on the 10yr treasury yield today?
interesting to say the least.
Setting the stage for a 1987-style stock market crash. Hopefully the PPT stands in the ready with liquidity fire hoses in hand.
http://www.bloomberg.com/markets/rates/index.html
Can either one of you please explain the significance of that chart??? What’s so significant about the 10 yr. Treasury??
It is about 99% correlated with l-t (30-yr fixed) mortgage rates. Not that many folks can afford to buy a depreciating unaffordably-priced home with a fixed rate mortgage in Bubbleville or anything, but it could prove psychologically significant.
i.e. when the 10yr treasury yield goes up, so to mortgage rates.
The other thing: Stocks and l-t T-bonds are portfolio substitutes. If it were not for market intervention, a higher l-t T-bond yield would naturally result in lower stock market valuations. Of course, AG pretty much admitted in his 60 Minute interview last Sunday that the Fed targets stock prices, so perhaps this does not matter much…
Price going down and wield going up means people are selling treasuries. Why be locked into low interest rates in a money unit which is collapsing?
Treasuries and the dollar were being seen as safe. Now they’re being seen as being tied to a brick and the ship is going down.
Glad that CPI number came in so low earlier this week, because otherwise all this inflation news would seem somewhat alarming.
CURRENCIES AND COMMODITIES
Downers for dollar
Greenback drops sharply on Saudi speculation. Euro tops $1.40 mark for first time, while Canadian dollar achieves first parity since the ’70s.
• Off The News adds up their dollars Audio
• Treasurys slide further on inflation fears
Crude climbs past $83
Futures mark new intraday high.
• Gold tacks on 2% as dollar sinks
http://www.marketwatch.com/
And Oct is coming up.
Blimey! It’s not working. It’s not working.
Sept. 20 (Bloomberg) — The U.S. commercial paper market shrank for a sixth week, extending the biggest slump in at least seven years and signaling Federal Reserve interest rate cuts haven’t yet drawn investors back to short-term debt.
Short-term debt maturing in 270 days or less fell $48.1 billion in the week ended yesterday to a seasonally adjusted $1.87 trillion, including a $32.1 billion decline in financial commercial paper. Asset-backed debt dropped $15.6 billion, according to the Fed in Washington.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3LypU5Fk7eY&refer=home
The social engineers at the Fed have no remedy for the loss of the banking system’s most precious form of capital: trust.
Sept. 20 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said the odds of a recession remain “somewhat more” than one in three even after this week’s cut in interest rates, with home prices likely to drop further and hurt consumer spending.
…
“To the extent we see a flattening out of the net worth of households, we would expect to find some erosion in consumer expenditures, but we haven’t seen it yet,” Greenspan said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIYJ4sONrIo0&refer=home
Does obese America really need a bigger Fannie?
Ofheo to Let Fannie Grow
Portfolio By 2% Per Year
By DAMIAN PALETTA
September 19, 2007 10:28 a.m.
http://online.wsj.com/article/SB119021077354432327.html?mod=googlenews_wsj
2%, is that in real or nominal terms?
let’s hope they don’t measure it in some stable currency because then they are in for a lot of trouble
Like $30 billion in extra loans they can hold.
2% nominal, -XX% real?
Doods:
I just took another look at DataQuick. I noticed another “mistake”. They have a few charts, all showing some of the same information. I found one chart that says Sunnyvale’s median house price is up 41%, and another chart showing a 12% increase. How can 41 = 12?
IMPORTANT: BB says the D-rats are full of it when it comes to their proposal to increase the conforming loan limit.
I don’t believe for a second that any such increases will prove temporary, any more than the U.S. invasion of Iraq proved temporary. I hope the Bush administration stays the course in their opposition to this D-rat supported folly.
“Some have suggested that the GSEs could help restore functioning in the secondary markets for non-conforming mortgages (specifically jumbo mortgages, those with principal value greater than $417,000) if the conforming-loan limits were raised. However, in my view, the reason that GSE securitizations are well-accepted in the secondary market is because they come with GSE-provided guarantees of financial performance, which market participants appear to treat as backed by the full faith and credit of the U.S. government, even though this federal guarantee does not exist. Evidently, market participants believe that, in the event of the failure of a GSE, the government would have no alternative but to come to the rescue. The perception, however inaccurate, that the GSEs are fully government-backed implies that investors have few incentives in their role as counterparties or creditors to act to constrain GSE risk-taking. Raising the conforming-loan limit would expand this implied guarantee to another portion of the mortgage market, reducing market discipline further. If, despite these considerations, the Congress were inclined to move in this direction, it should assess whether such action could be taken in a way that is both explicitly temporary and able to be implemented sufficiently promptly to serve its intended purpose. Any benefits that might conceivably accrue to this action would likely be lost if implementation were significantly delayed, as private securitization activity would likely be inhibited in the interim.”
http://www.npr.org/templates/story/story.php?storyId=14560229
Craigslist find! This home is advertised for $45K, but that’s just the down payment, which will be used to … well, you’ll see.
http://orangecounty.craigslist.org/rfs/427138601.html
So, he wants me to give him $45K, AND THEN take a loan for 100% of the appraised value of the house? Ummm… no thanks.
Another thing I’ve noticed in this area is vacation rentals. Here’s one that’s MILES from the beach:
http://orangecounty.craigslist.org/vac/427303162.html
If I had that many kids that I’d need an 8 bedroom mansion for vacation, I probably couldn’t afford to go anyway.
And the photo of the kitchen includes their trash. Thank you very much for this kind of ‘un’-sophisticated offer.
2 year balloon. That’s helpful.
I’m suprised they didn’t go with “Bail us out of our mess. Then it’s your problem!” as the headline.
I assume the more vicious of you are peppering the advertiser of this unique opportunuty with emails along the lines of: “No thanks! But let me know the address so I can bid at the forclosure proceedings”
Yet another inexplicably ugly house. What is it that makes some houses so goddamned ugly?
Purchasing symbols of wealth rather than things that are aesthetically pleasing. \
Like columns and arches on pink stucco boxes in Moreno Valley.
Pacific NorthWest still going strong, with a good media tailwind:
No housing woes in booming Washington state
http://tinyurl.com/38du62
“Their growth is helping Washington, unlike California and some other states, put aside concerns about a housing slump, at least for the near term, added state Treasurer Michael Murphy.
“With employment really strong, there is less likelihood of having defaults on mortgages,” he said, noting Washington’s housing sector is avoiding contagion from mortgage market turmoil arising from “subprime” borrowers unable to make their loan payments.
In contrast, the foreclosure rate in nearby California, whose motto is the Golden State, surged to the second highest in the nation in August, according to a report released on Tuesday by RealtyTrac, a leading real estate data provider.”
I guess it’s different in Washington…no sub-prime or alt-a loans there, and the economy is booming, unlike the rest of the country, where no one was talking about a Goldilocks economy…oh, wait. The economy *was* going well for the rest of the country, and *still* housing is down. At least everyone wants to live in Washington, unlike the rest of the country. Oh wait, isn’t that what Las Vegas said?
They also grow some of the best marijuana in the world in Washington State, of which State Treasure Michael Murphy must be smoking large quantities in order to say dumb stuff like that.
according to Dutch government there is no housing bubble in the Netherlands either; now I can guess why they say that
Thursday, Sept. 20, 2007
Worldwide bubble trouble
By ROBERT J. SHILLER
NEW HAVEN, Connecticut — The future of the housing boom, and the possible financial repercussions of a substantial price decline in coming years, are a matter of mounting concern among governments around the world.
I learned this firsthand while attending this year’s Jackson Hole Symposium in the wilderness of Wyoming, where, ironically, there are almost no homes to buy. The howls of coyotes and bugling of elk rang out at night. But, by day, everyone was talking about real estate.
http://search.japantimes.co.jp/cgi-bin/eo20070920a1.html
Bullsh*t. “No homes to buy” for whom exactly? For those who grill your angus steak and make your bed. You don’t even get down to first page of realtor listings, and prices are at above one million. Same for Alpine.
He was talking about homes around Jackson Hole. Have you been up there? There really are not many houses around that town, and it is a highly desirable area to live in if you like beautiful natural scenery and don’t mind frigidly cold winters.
I have been up there and not my cup of tea. I find other areas much more beautiful. I think part of the appeal of JH is that the super rich pretend to be amongst themselves. Yes, you can look at the Tetons, but I have seen a documentary about Sotheby agents; owners always sell to each other, each time jacking up the price for their ‘ranches’ which are not home to anyone, just oversized phalluses (’look at me’). Matching the oversized breasts of the Tetons maybe, which means ‘big chest’ in English.
We have lots of oversized trophy home phalluses around San Diego, too. Under current market conditions, I foresee a fair amount of shrinkage in the foreseeable future.
I am too belligerent today. I am in Park City, and while number of listings crept up 15 % during the last year, they jumped another 7 % just in the last three weeks. And most are of the three plus chimney kind. It should be interesting what will happen here. In my former street, six (’affordable’ ones) had been for sale in the summer and none sold. (And now back to some productive work for the next days.)
I used to take trout-fishing trips with my dad to Alpine. Beautiful place, but I think of it more like small A-frame hunting/fishing cabins than like million-dollar houses.
As a native Wyomingite (but didn’t grow up there), I don’t even consider Jackson Hole to be part of Wyoming. It’s a little corner of Rodeo Drive or Fifth Avenue that somehow landed in Wyoming.
CURRENCIES
Dollar plunges on fears Saudis might drop peg
Euro breaks above $1.40 for first time; parity for Canadian dollar
…
‘The U.S. dollar is clearly being sacrificed by the Federal Reserve in a last ditch effort to save the mortgage bankers.’
— - Ned Schmidt, Value View Gold report
http://www.marketwatch.com/news/story/dollar-drops-record-low-vs/story.aspx?guid=%7B5FA1CA78%2DD591%2D4DC2%2DBFA1%2DE260625858FB%7D
Interesting how only the Euro and the Pound Sterling are falling against the dollar today. Perhaps the world needs to increase its number of independent central banks.
http://www.bloomberg.com/markets/currencies/eurafr_currencies.html
sure, I’m convinced they play according to BenB’s book. At least BenB is protecting his own country’s financial elite and criminals; the ECB is mostly protecting foreign crooks.
Don’t look now, but the 10-year is up another 15bps today.
While watching the commercial paper market crashing today, Bloomberg, CNN, CNBC etc. all wrote or said “The Fed lowered its benchmark federal funds rate to 4.75 percent and reduced its discount rate, which it charges to lend to banks, a second time to prevent a housing slump from forcing the economy into recession.” I wonder when the MSM will get it correct that the Federal Reserve Bank under the aegis of Mr. Ben Bernanke lowered the discount rate to bail out the banks, Wall Street and the hedge funds. Not one dime of the discount rate has made it to the commercial paper market. I suspect that a few pennies made it to the mortgage market and I literally mean pennies. In the meantime, a new Porsche just increased by $8K in the US - unchanged in Germany.
So Mssrs. Paulson, Bernanke, Cramer, Kudlow et al was it worth sacrificing the well being of over 300 million Americans for the benefit of less than 5% of the population?
You wasted the only piece of ammunition that you had left - lowering the Fed Fund rate - for a measly 2% gain in the stock market and a 5% drop in the dollar. Now what are you going to do?
Sadly the next step in the economic cycle is not fun to ask.
Are you going to institute financial tyranny?
Certainly the opaqueness of the current reporting season suggests this. And your actions regarding the dollar seem to confirm the same.
Humpty Bernanke sat on a wall
Humpty Bernanke let the rate fall
All the finance wizards and all the loan men
Couldn’t kickstart the eCONomy again
This article is unclear on whether the Fed is controlled by “the administration” or by Congress. Could someone please remind me under which branch of government the Fed belongs?
Democrats force Fed to change approach
By Eoin Callan in Washington
Published: September 20 2007 02:13 | Last updated: September 20 2007 02:13
Federal regulators appear to be shifting tack following intensified criticism from Democrats on Capitol Hill over their handling of the mortgage crisis.
Ben Bernanke, chairman of the US Federal Reserve, indicated government-backed lenders could play a limited role in alleviating stress in the so-called jumbo mortgage market.
The Office of Federal Housing Enterprise and Oversight also provided increased flexibility to Fannie Mae and Freddie Mac to provide “greater assistance to subprime borrowers and others who may have difficulty refinancing their existing mortgages in the current environment”.
Senator Charles Schumer told the Financial Times that pressure from Democrats was “finally starting to stir the administration from its slumber. We seem to be getting through”.
http://www.ft.com/cms/s/0/1a212266-6701-11dc-a218-0000779fd2ac.html
frank question - i’m sittin on about 150k cash. what the frack do i do with it? and how?
putting condo on market this weekend. hopefully get 300k+ cash free and clear. what should i do with it? and how?
i’m really losing sleep over all of this mess.
Asking random folks on the Internet what do do with your money isn’t the smartest thing to do.
But, for what it’s worth, I’d buy 4 shares of BRK.A
Sept. 20 (Bloomberg) — – TCW Asset Management, the money manager owned by France’s Societe Generale SA, is selling $3.2 billion of mortgage securities backing collateralized debt obligations after the value of the bonds fell.
A decline in the price of securities in the Westways Funding X market-value CDO managed by TCW triggered a clause that demands assets be sold so holders of the highest-rated pieces don’t incur losses, TCW said today in an e-mailed statement….
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_xzcXIFlqQ4&refer=home
LOL, the devil’s conundrum. So God you want to sue me! Where are you going to get an attorney? So TCW, you want to sell! Where are you going to find a buyer?
Sheesh! 381 comments!
I should save this for tomorrow, but here goes:
Ron Paul v. Bernanke re: Moral Hazard, Fed, & housing bubble.
http://tinyurl.com/3ypx6r
Paul
(now I have to go read from the top…sigh…)
Main Street, get your wallets out and open them up, as you are about to be forced into ponying up for a massive bailout of the lending industry’s fools who made all the bad mortgage loans. Too bad there is nothing to see here for the poor folks who were lured into buying homes they cannot afford, as they will still be unable to pay off $500,000 homes on $30,000 incomes. Perhaps the lenders will be asked to offer them indefinite forbearance in exchange for the bailout deal?
UPDATE 1-US’s Paulson urges GSE expansion, reform bill
Thu Sep 20, 2007 2:27pm ET143
(Adds comments from Paulson’s letter)
WASHINGTON, Sept 20 (Reuters) - U.S. Treasury Secretary Henry Paulson urged a key U.S. senator on Thursday to move quickly on legislation to let housing finance companies Fannie Mae and Freddie Mac temporarily to securitize jumbo loans and to strengthen their regulatory oversight.
Paulson, in a letter to U.S. Senate Banking Committee Chairman Christopher Dodd, said he wanted to discuss changing the charters for the government-sponsored enterprises to let them temporarily buy and securitize loans bigger than the current $417,000 limit and handle mortgages with a loan-to-value ratio exceeding 80 percent without credit enhancements.
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-09-20T182735Z_01_N20427454_RTRIDST_0_USA-SUBPRIME-PAULSON-DODD-UPDATE-1.XML
Lenders should bail out consumers
By Bruce Marks | September 20, 2007
THE HUMAN SIDE of the subprime crisis is that more than 2 million homeowners are at risk of losing their homes. If immediate action is not taken, the repercussions of allowing this meltdown is likely to affect virtually every community, drive the economy into recession, and affect economies overseas. The most effective and just remedy is for the lenders and investors who created these “exotic” products to restructure the loans. This does not require taxpayer dollars to bail out an industry that has profited hugely from this scheme.
http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/09/20/lenders_should_bail_out_consumers/
Come on PB, the sheeple never really owned them in the first place–so stop calling them “their homes!” They are the lenders’ homes, and that’s why they are getting the bailout!
/joke
Welfare for the rich is on the way…
Paulson signals fresh moves to boost liquidity
By Eoin Callan in Washington
Published: September 20 2007 16:53 | Last updated: September 20 2007 19:59
The US on Thursday signalled fresh steps to improve liquidity in credit markets and guard against future shocks to the global financial system.
Hank Paulson, the US Treasury secretary, said government-backed mortgage lenders could play a role in improving credit conditions at the higher end of the US mortgage market.
http://www.ft.com/cms/s/0/60891da2-6789-11dc-9443-0000779fd2ac.html
Isn’t welfare for the rich what the conservative supply side lunatic ideology is all about?
Anyone who took a government-backed mortgage on a “stated income” loan who can’t make the payments should:
1. Be paying federal income tax on the stated income they said they made
2. Go to jail if if they refuse to or can’t
I’m reading this week’s Economist magazine (old-fashioned paper publication) and am so upset I want to cry.
Seems that nearly every presidential candidate–Democrat or Republican–have proposed some sort of mortage bailout for homeowners in trouble.
I think I’d rather leave the country than have more of my income confiscated to bail out Sally Specuvestor and Harry Howmuchamonth from their liar loans. This is an outrage!
I’m a homeowner and I welcome a relaxation in prices! It would keep my property taxes from going up and up.
BTW: I have a great way to subsidize the “bailout”. Make those Specuvestors pay INCOME TAX on their “STATED INCOME” that was on their mortgage applications. I’ve sent letters proposing this to my rep (Anna Eshoo) and I got a form letter back about how she’s helping home “owners” in trouble.