Activity Is Below Sustainable Market Fundamentals
Some housing bubble news from Wall Street and Washington. CNN Money, “The meltdown in the mortgage market in August dried up the supply of buyers for homeowners looking to sell their homes, as an industry group report showed the lowest level of homes under contract on record. The National Association of Realtors’ pending home sales index fell to a record low of 85.5 from an upwardly revised 91.4 reading in July.”
“That broke the previous low of 89.8 in September 2001. The index fell 21.5 percent from year-earlier levels, the biggest 12-month drop ever recorded, as the one-month decline of 6.5 percent was third biggest drop on record, trailing only July of this year and the September 2001 period. The trade group started the index in 2001.”
“‘Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments, said Lawrence Yun, NAR senior economist. ‘The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.’”
“‘The impact was greater in high-cost markets that are more dependent on jumbo mortgages. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked,’ Yun said. ‘The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions. Therefore, sales activity in late fall will better reflect market fundamentals.’”
“The PHSI in the West was down 27.1 percent below a year ago. In the Midwest, the index fell 18.0 percent lower than August 2006. The index in the Northeast was 18.3 percent below a year ago. In the South, the index dropped 21.3 percent below August 2006.”
From MarketWatch. “‘This is still absolutely awful, confirming that the existing homes market is now in freefall,’ wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. ‘This is consistent with existing-home sales falling to just 5 million or so,” down 10% from the latest level and 30% from the peak.’”
From Reuters. “Westpac Banking, the fourth-biggest Australian bank, will buy the brand and distribution business of Rams Home Loans Group, swooping onto assets of the lender, which struggled to refinance its debt after the U.S. subprime mortgage crisis.”
“‘Rams looks like a business in run-down, it doesn’t have much of a future at all,’ said Rob Patterson, managing director of Argo Investments. ‘I’m surprised they couldn’t cut a better deal elsewhere, but it’s symptomatic of the times in credit markets.’”
The Australian. “The sad saga of RAMS can partly be blamed on the global credit markets turmoil, which hit the market soon after it floated. Rising defaults among sub-prime lenders in the US turned investors away from residential-backed mortgage securities, the key source of cheap funding for non-bank players.”
“But the brutal reality is RAMS was always a volatile business, regardless of the credit markets. It funds long-term mortgages with short-term funding and is not required to retain capital.”
“For RAMS shareholders, unless a white knight comes along and makes a better offer, they are left with a $14.5 billion loan book, $6.1 billion of which needs refinancing by next February, and $138 million of corporate debt.”
“Quite simply, once shareholders vote on the deal, RAMS will be nothing more than a closed mortgage book that is in run-off mode, with $138 million of corporate debt. This is not a good outcome for RAMS shareholders but it is possibly the company’s only option, given current conditions in credit markets.”
“Shareholders have little choice but to accept the offer, because the company is unable to confirm with any certainty that it can fund the business. And if it can’t do that, the business is worth virtually nothing.”
“It’s now clear that RAMS Home Loans Group’s business model was built on quicksand rather than solid ground, but there has been no real sense of the gravity of the company’s position in its recent warnings to the ASX. Investors might now give consideration as to whether they have grounds for a class action.”
“RAMS was listed only nine weeks ago, after raising $695 million from the public. Founder John Kinghorn retained a 20 per cent stake, so RAMS initially had a market capitalisation of $880 million.”
“On August 14, less than three weeks after listing, RAMS issued a warning that it was being affected by the drying up of liquidity on global debt markets, due to the sub-prime mortgage crisis in the US, but at that stage was continuing to “successfully place” its short-term debt in the XCP market in the US.
From Bloomberg. “Spanish property loan delinquencies may increase as much as 15-fold by the end of 2008 as interest rates rise, Moody’s Investors Service said in a report.”
“Loan-payment arrears by developers and builders may reach 5.5 percent of total property loans from the current 0.37 percent, according to the New York-based ratings company. The increase would mark a ’soft landing’ for Spain’s 12-year property boom, Moody’s said in a report.”
“Spanish builders constructed 750,000 houses and apartments last year, more than France and Germany combined, while annual demand runs about 60 percent of that, according to the Finance Ministry.”
“Moody’s said a ‘hard landing,’ in which loan defaults by developers and builders exceeds 5.5 percent and house prices plunge 20 percent, is a ‘remote’ possibility.”
“Policymakers in Europe and the U.S. have criticized ratings firms for their response to the credit market slump earlier this year.”
“‘We have no concern at all about the strength of the Spanish financial system,’ Deputy Finance Minister David Vegara said at a press conference today in response to the report. ‘I’m not sure what it contributes talking in abstracts,’ Vegara said about today’s Moody’s report. ‘Ratings agencies should take particular care with their communications after what happened in August.’”
“The prices of existing houses and apartments in Madrid fell to 4,277 euros ($6,796) a square meter in the three months to the end of September, a 0.9 percent decline from the previous quarter, according to a) property Web site. In Barcelona, the average asking price fell 0.5 percent to 4,802 euros, said the Web site.”
“Japan’s financial regulator is investigating the exposure of the country’s financial firms to the U.S. subprime mortgage market to gauge the risks facing the world’s second-largest economy.”
“‘We’ve been checking to see if the risk has spread and to what extent firms are exposed to securitised products related to the subprime market,’ said Japan’s financial services minister, Yoshimi Watanabe, at a regular news conference. ‘If we do find any problem, we plan to deal with it quickly,’ he said.”
“‘We have to see whether the U.S. economy achieves a soft landing,’ Japanese Economics Minister Hiroko Ota told a separate news conference.”
“Mitsubishi UFJ Financial Group Inc, Japan’s largest bank, said last month its investments in subprime-related products were a potential risk to earnings. MUFG exposure to subprime-related investments was 280 billion yen ($2.4 billion) as of July, the latest figures it has made available showed.”
“In August, the bank said it wrote down the value of some investments related to subprime products by 5 billion yen.”
“U.S. insurer Prudential Financial Inc said its retirement unit had filed suit against units of State Street Corp seeking restitution for funds sold by State Street that suffered heavy losses.”
“The insurer said in a filing with the U.S. Securities and Exchange Commission that results for the latest quarter would include a pretax charge of about $80 million to reflect payments to clients who suffered losses from the funds.”
“Without notifying Prudential or its retirement plan participants, State Street made ‘undisclosed, highly-leveraged investments in mortgage-related financial instruments,’ Prudential charged in its suit.”
“‘The recent market conditions and lack of liquidity were unprecedented, said State Street spokeswoman Arlene Roberts said in a statement. ‘An unfortunate result … is that some funds lost value.’”
“In its suit, Prudential said State Street had invested in a ‘relatively new’ synthetic index whose returns were linked to 20 subprime U.S. mortgage pools.”
“Former Federal Reserve Chairman Alan Greenspan said there will be ’some rethinking’ of collateralized debt obligations after demand for them helped fuel a bubble in the U.S. subprime mortgage market.”
“‘People always say it’s the subprime market that created this crisis,’ Greenspan told investors. ‘It’s the subprime asset-backed market’ which did, he said. ‘As a consequence of that, there’s going to be some rethinking about collateralized debt obligations.’”
“‘The Wall Street firms were under real pressure to supply asset-backed securities, and the Wall Street firms were pressing the lenders to give them more raw material,’ Greenspan said today. ‘Credit standards just went straight down, and applications for subprime mortgages soared. The consequences of that are evident.’”
“The market for CDOs is already shrinking. Worldwide issuance of CDOs fell to $17.3 billion in September, about a quarter of the monthly average for the past 12 months, according to data from JPMorgan Chase.”
“‘The pricing which in too many cases has been, by some model derivation, four times removed from actual market prices, just doesn’t work,’ Greenspan said.”
The Associated Press. “Former Federal Reserve chairman Alan Greenspan defended the U.S. subprime mortgage market, arguing the repackaging and sale to investors of risky home loans, not the loans themselves, was to blame for the current global credit crisis.”
“‘We are not through with this yet,’ he added, suggesting there could still be what he termed an ‘Act II,’ in which falling house prices feed into slower consumer spending.”
“Greenspan also implicitly criticized the role of ratings agencies in the crisis. ‘The problem was that people took that as a triple-A because ratings agencies said so,’ he said. Yet when they tried to sell the products they ran into difficulties, which shook confidence.”
“‘What we saw was a 180 degree swing from euphoria to fear and what we’ve learned over the generations is that fear is a very formidable challenge,’ Greenspan said.”
“Greenspan defended the role of central banks and market regulators, claiming they do not have the resources to deal with criminal or illegal acts.”
“‘We are not skilled enough in these areas and we shouldn’t be expected to,’ he said. ‘It should be with the states’ attorney general and, frankly, it should be beefed up a considerable amount from where it is at this stage,’ he said.”
‘It should be with the states’ attorney general and, frankly, it should be beefed up a considerable amount from where it is at this stage,’ he said.’
Wait a minute; didn’t we hear over and over how the states were limited because the big operators were in many states? And weren’t these same states waiting and waiting on the Fed’s ‘guidance’? And if the securitization was the problem, isn’t that a Fed and SEC problem too. No mention of house prices being too high, which is the root of the problem.
Lame excuses, and a lame MSM for not calling him on this.
He is sure passing the buck lately. Its like he was asleep the whole time and just woke up…
IMO, he can see his legacy going down with the housing bubble.
He’s a Hjalmar Schacht for our time.
–
“He’s a Hjalmar Schacht for our time.”
Yes, lot of similarities between Germany of the last century and the US of today. Most importantly, financialization of the economy and concentration of wealth in the hands of financial manipulators. Via financial manipulation they were able to take control of asset markets and industrial corporations. The process in the US began some hundred years ago but now it has matured.
History doesn’t repeat but it rhymes. Often times at other places.
Jas
Ben - Good Morning. He also had these pearls of wisdom: “We ought to be opening up our borders to skilled labor from all parts of the world because if we were to do that we would increase the supply of skilled workers that our schools have been unable to create and as a consequence of that we would lower the average wage of skills and reduce the degree of income inequality in this country.” Make us all (except for a few really rich folks) minimum wage workers and that gets rid of inequality??????
He’s hallucinating that they’re all skilled Windows programmers.
Windows programmers or I thought doctors.
And that would hold home prices up how?
Not that I want them to stay high.
IMHO the operative phrase is “the supply of skilled workers that our schools have been unable to create…”. That is an indictment of the education system in the US. Let’s improve the school systems.
People from poor countries would be willing to live 30 to a McMansion. With that many minimum wage incomes, they might be able to pull it off.
I wonder when the “Collective Mortgage” will be invented.
I’m a Windows Programmer. No way in hell am I stupid enough to take out a loan that size. Hahaha. Yeah, get a bunch of skilled labor here and they’re all smart enough not to take the bait. LOL
“IMHO the operative phrase is “the supply of skilled workers that our schools have been unable to create…”. That is an indictment of the education system in the US. Let’s improve the school systems. ”
Problem is none of those people crying to reform education are the least bit interested in improving it. What they want is to profit from these so-called reforms. Textbooks, new reading programs, testing and consulting have been a real goldmine for a lot of people. The Miracle in Education (which NCLB is based on) is one of the biggest whoppers that has ever come out of the state Texas.
Yeah, we should start by filling the Fed Chairman’s job with a “skilled” immigrant. Couldn’t do much worse of a job than Greenspan or Bubble Bendover, and would probably work for 1/1000th of the pay.
I wonder when the “Collective Mortgage” will be invented.
Isn’t that exactly what tenancy in common (TIC) is?
I agree. Seems like every day there is a new quote from him. Smells like an attempt to re-write history. Sad.
Mom always said, don’t play ball in the house.
Al, face it, you were playing ball in the house, running with a stick no less.
Running with $ci$$ors is more like it.
…in his mouth.
Ah… I’ve given up being upset with what AG says.
“‘We are not through with this yet,’ he added, suggesting there could still be what he termed an ‘Act II,’ in which falling house prices feed into slower consumer spending.”
I do love it that he’s parroting what the HBB was saying… at least 28 months ago!
“‘People always say it’s the subprime market that created this crisis,’ Greenspan told investors. ‘It’s the subprime asset-backed market’ which did, he said.
Right, the FB’s found out that their mortgages were sold to investors, got mad and said “that’s it were not going to pay anymore”.
Yes, Greenspan’s “legacy” is fast getting buried and he’s backtracking as fast as he can, denying and obfuscating like a street punk on “Cops”. Pull down his sock and see if there’s a crack pipe tucked into it.
All I need now is an image of him clothed in an economy wrecker t-shirt…
Yes, but notice that he has quickly identified the Chinese stock market bubble. This old dog has either learned a new trick, or he was totally lying earlier when he said he [the Fed] couldn’t identify a bubble while it was occuring.
Yeah, I’d like to strangle him too.
So the reason why the pending sales dropped to an all time record, based on the National Association of Realtor, was because of the mortgage market dried up in August.
What a bunch of bull. Yeah… and the prices that are still sky high had nothing to do with it. Sheesh… freeking clueless idiots. Lots of denial still out there. And that means…. no bottom!!!
“And if the securitization was the problem, isn’t that a Fed and SEC problem too.”
Certainly! However, the PTB championed its issuance without regard, particularly the private label kind. Securitization is at the root of many housing bubble ills. It may be one of the reasons interest rates have been unusually low for this long.
Deregulation is always good, no matter what the underlying circumstances.
Not always… I once thought the same for the electricity sector, which I work in. However, I’ve since come to the conclusion that deregulation of electricity has been a huge debacle that will ultimately have dire long-term consequences for end-use ratepayers.
Also, I have yet to find one “deregulated” industry where the Federal and/or state governments have not interered in the relevant market through direct or indirect subsidies/manipulation.
Revised for accuracy…
“deregulation is always good, no matter what the consequences.”
There, that’s better.
Even though AG job was the safe-keeper and dispenser of the rope, he’s claiming it’s not his fault that after having handed out more than enough rope all these people went and hanged themselves. “Not my fault.”
Actually, Al, yes, it is your fault. If we were using gold or silver as money this problem wouldn’t have happened, but if that were the case you and your masters wouldn’t have earned any interest off of money you printed out of thin air. Yes, it’s your fault.
What about this classic from the article you posted Ben:
“‘We have no concern at all about the strength of the Spanish financial system,’ Deputy Finance Minister David Vegara said at a press conference today in response to the report.
Oh really, is that why Spain has sold every single ounce of gold it had in its vaults. Something reaks of desparation regarding Spain and that guy’s comments are a dead give away they have serious trouble on the horizon
Exactly. Zero concern also implies a belief in zero strength.
Me thinks that the Deputy Finance Minister doth protesteth too much.
I didn’t know the Spanish Government had sold off its entire gold stock. Wow, that’s an end of an era. The Spanish government in the 16-17th century looted the gold of the Americas and brought a huge amount of it back to Europe, making Spain for a very long time the wealthiest nation in the world.
But the huge new hoard of Spanish gold eventually caused a decline in its price due to oversupply, but no one knew about economics back then…
Or now, it seems.
With the utmost respect, securitization is the root of the problem, high prices merely the essence. Without folks to buy the loans, banks and other sorted and sundry financial finaglers would have never been in such a frenzy to lend money. If all you’re doing is underwritng a loan and then immediately selling it off, there is virtually no risk, no matter how overpriced the asset or undercapitalized the borrower. The last several years of artificially low interest rates led financial institutions to seek yield anyplace they could find it. Everybody got a taste (fees for ratings agencies, banks, brokerages, etc.) as risk was offloaded to foreign central banks (holding too many US pesos), pension funds (with more obligations than t-bills could ever cover) and insurance companies (with a huge need for yield to pay claims), just to name a few of the guilty. The actual price of the house didn’t matter one whit as long as it was always moving higher. In fact, prices had no choice but to go up, it was the only way to keep the game going. It all worked beautifully until the first guy blinked and actually asked for real money for the toxic paper they were holding. That’s what started the collapse. The search for yield has morphed into the preservation of capital. Most will be surprised at just how ugly it will get. We’re nowhere near the end.
… It all worked beautifully until the first guy blinked and actually asked for real money…
Who was that guy, anyway?
I blame him.
Blame him?
No way.
The only thing we know it that he’s a member of a super secret group known as “they”. We’ve all heard of them, “they say that…” and “they said it’s…” Ultimately, he’s one of them. Or maybe he’s one of us. I don’t remember. They say memory is the second thing to go.
So right P-girl. It’s like the old pyramid schemes.
(fun)Yun sez, “‘Fewer contracts were being written because of mortgage availability issues”…
But cratering sales figures have nothing to do with the fact that the junk is overpriced 3 and 4x.
Will someone please shoot that douchebag?
“mortgage availability issues”, such as the mortgages required for overpiced houses are so big that no one can qualify?
Plenty of mortgage availability for me. Oh, you mean the strawberry picker buying that $700k house can’t get a mortgage. Yeh, that “problem” ought to be solved by November.
remember a lot of the people are so far under they can’t sell at all. Another substantial portion are sitting on the sideline trying to figure out where the market is at.
Another group is deperatly clinging to hope of a bail out or turn around that isn’t happening.
yeah, I know quite a few in the “clinging to hope” group — their ARMs don’t reset for another year or two, and they’re thinking everything could be solved by then — they don’t realize THEY are the reason it will NOT be solved by then.
Az, a question please. Do you lend only on mobile homes, or on the dirt too?? And have you ever done the buy, sell, hold the note thing with MH’s?? Just curious ’cause I did that for a few years. The dollar amounts were small, but the return was big.
‘The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.’”
Please define “creditworthy” before you decide to use the term so loosely, Mr Yun.
“Therefore, sales activity in late fall will better reflect market fundamentals.”—-Larry Yun
In other words, home sales have even further to plunge.
The NAR has dropped the phrase “sales will stabilize” for the even more opaque “sales will better reflect market fundamentals.”
Hey, I’m ok with predicting “sales will reflect market fundamentals.” Bummer we’ve been talking fundamentals the whole time…
“Fundamentals,” I do not think that word means what you think it means.
Got popcorn?
Neil
Hedge Fundamentals have been the root cause for much of our distress, economically and religiously…
For some unknown reason visions of Jim Mora come to mind:
“Fundamentals?!?…Don’t talk about fundamentals!…You kiddin’ me??…Fundamentals?!?
“In other words, home sales have even further to plunge.”
So do home prices. Plunging home sales are a leading indicator of plunging prices.
Speak of the devil. This was my post over at the Washington Post article “Looking for the Bottom” a couple of days ago:
mad_tiger wrote:
gallegos32 wrote:
“I’m not sure why articles always focus on home sales volume.”
Because sales volume is a forward-looking indicator of inventory. And inventory is a forward-looking indicator of prices. “Months of supply” captures both numbers in one statistic. Since the market is seasonal use year-over-year comparisons.
9/29/2007 1:13:50 PM
wanna borrow my AK? LOL. Of course I’m kidding!!!
I’ll stick with my SAW.
Thank you for the offer.
Why use projectile weapons when a blunt instrument is so much more personal and satisfying?
I personally favor the shovel, as it allows for a great range of expressiveness.
That is hilarious.
Reminds me of the time my old man held a burglar at bay - with a shovel - while waiting for the po-po to arrive. The perp was darn glad to see the cops, too.
You gotta SAW? Nice. I can drill any target at 400m with a three round burst with one. One of the things I miss about the service. But I don’t miss it enough to bother getting a automatic weapon license.
“Will someone please shoot that douchebag?”
Hey! Hey now!! Watch where you are slinging those insults! Don’t you DARE call an innocent douchebag a ‘Yun’! Not now, not EVER!
Bottom has been reached! Return to you homes/rental units.
The Dow Jones U.S. Home Construction index rose as much as 8.4 percent on Tuesday morning and was still up 5.6 percent in late morning trading.
“The anticipation is that we are at or near the bottom of the (housing) market and the only place to go is up,” said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale, Illinois. His firm does not own any home builder stocks, but he follows them closely.
http://tinyurl.com/2tmvkp
Thanks for the laugh, Paul. Put your money where your mouth is.
You know, I don’t think I ever really understood the concept of market bounces based purely on mass psychology rather than fundamentals before all this. It is strange but fascinating.
“we are at or near the bottom of the housing market”
Gives me an opportunity to use my cousin’s new phrase:
DEJA MOO. ( = “we’ve heard this bull before”)
Nice one, az_
A: “The anticipation is that we are at or near the bottom of the (housing) market and the only place to go is up,” said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale, Illinois.
B: “His firm does not own any home builder stocks, but he follows them closely.”
A+B =
C: Most of my clients’ money is buried in worthless CDOs and MBSs. Not to mention the six houses I own.
…and the only place to go is up,”
The key phrase here. They are really at the squeeking point when they state their need for the market to rise. As in ‘it must be close to a bottom because we are toast if it’s not’.
Exactly… like the argument being used by Moody’s… If prices fall more than 5.5%, the entire wolrd is toast. Since it is umlikely the entire world world will be toast, prices are highly unlikely to fall more than 5.5%.
Then the guy from the Spain govt has to call a press conference to assure people that prices won’t fall at all…
Which, in my opinion, means the only thing indicating a 10-20% fall instead of a 50+% fall is a slim delusion that 20% is impossible.
Yun received the usual modern compensation for his efforts…
30 pieces of silver & 15 minutes of fame~
Somewhere, Judas is in envy of you.
“‘The impact was greater in high-cost markets that are more dependent on jumbo mortgages. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked,’ Yun said. ‘The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions. Therefore, sales activity in late fall will better reflect market fundamentals.’”
Cancellations were running well north of 30% at many (most?) big homebuilders even before the credit crunch. The credit crunch knocked the number up to the 40%-50% range, if I remember right.
Yun’s a liar. Again.
“credit crunch problem peaked”!?!
Looks like Son-of-Lareah has spoken!
Notice how every last foreign concern that gets into trouble, goes to the Americano sub-prime blame card?
This can only end badly for the late, as of late not so great, Dollar.
“On August 14, less than three weeks after listing, RAMS issued a warning that it was being affected by the drying up of liquidity on global debt markets, due to the sub-prime mortgage crisis in the US, but at that stage was continuing to “successfully place” its short-term debt in the XCP market in the US.
U.S. = subprime nation
Sounds like a band. I’m sure 5 years from now disaffected garage band from Seattle will be calling themselves SubPrime or SubPrime Nation, or Pressboard Sh!tbox.
Black Mold Rising, Liquidity, The Short Sales, Three Families and a Pizza, The CDOs, Double Foreclosure, The Back Taxes, Duplex To Fourplex, Should Have Rented, The Bitter Renters, The 1099s, Worthless Pension…
Catch a Falling Knife, It’s Different Here, Get Stucco, Overbuilt and Underutilized, Popped Air, Mobile Unit…
Just having tooo much fun today…snort.
Feeding Squirrels, Flipper and the Upside-downs, Mama Walked, The CD-Ho’s
The best one would have to be…
Debtfree (and lovin’ it)!
Mama Walked. LOL As in Roxanne?
If you don’t have anyone on keyboard yet I play a mean church organ.
Countrywide to Double-wide . . . BTW, I got dibs on “singing backup” . . .that is, if I get to wear cellulite-hiding costumes and have my vocals pre-recorded by none other than Britney Spears. I do a mean shimmy. . .
Jinglemail, Casey and the Foreclosures, The Granite Upgrades, The Equity Locusts.
Big Al and the Green $cams
Vacant House , six percent ,BB and the Bailouts .MASSMANIA
Come on now - these claims are only made to prop up the respective national housing & credit markets. Remember, we have plenty of evidence this bubble is worldwide.
It’s simply much easier to blame the good ol’ USA vs. point the finger internally.
We’ve alienated the entire 1st world, our peers…
You reap what you sow.
And somehow, I can’t seem to bring myself to care what Europe thinks of me.
Some of that is healthy, too much is not.
Think of it as cultural parents. The USA should be getting older and wiser, not more stupid and reckless.
Isn’t this larger than Enron?
larger than Enron.. but almost certainly smaller than the Andromeda Nebula.
Everyday I come to this board seeking knowledge and some good fun. Everyday I am rewarded. Thanks.
“But the brutal reality is RAMS was always a volatile business, regardless of the credit markets. It funds long-term mortgages with short-term funding and is not required to retain capital.”
It’s the darn model. It’s kaput.
They must have known it would implode upon launch but they pulled the lever anyway.
For those bearish on the dollar, esp. for those who have bearish positions in the dollar - the 10-day Daily Sentiment Index on the $ is at 95% bearish. That essentially means there are 19 bears for every one bull on the dollar. Draw your own conclusions, but historically if everybody has already sold a (currency, security, commodity, etc) and there are no sellers left, the (currency, etc.) can no longer go down.
Be careful out there.
That’s very good point, gab, but keep in mind that those of use who are bearish on the dollar have not already sold every last dollar we can get our hands on. In my case (blathering AUD NZD ISK BRL for the past year), I still have more assets in USD than in all other currencies combined. If this is a common posture, the USD decline can go quite a bit further before it snaps the other way. Your point is well argued, though.
Put yourself in the position of being a foreigner that is holding Dollars Americano…
It’s been a brutal ride, unseen by most of us.
Everybody wants off this roller coaster, as their stomachs are quea$y at the thought of losing money 24/7
If only we could be so lucky….
“Notice how every last foreign concern that gets into trouble, goes to the Americano sub-prime blame card?”
I remember how every company’s bad earnings were blamed on the Asian flu in 1998.
OK I blame the Asian flu then.
I capitulate.
Yun: ‘The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.’
’sustainable market fundamentals’ - since when did they matter? And what obscure meaning does Yun attribute to this phrase?
‘In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked’
The credit crunch hasn’t peaked; it’s just getting started. Yun and the other idiots currently pumping up the stock market are going to be in for a big surprise if they think the credit crunch is over.
I love how fast he’s willing to call the credit crunch peak and the housing bottom. NAR refused to call the peak of prices even after it passed.
It’s good to see Yun is just as much of a moron as his predecessor, Lereah; furthermore, the press is still dumb enough to quote NAR “chief economists” as though their pronouncements are something other than self-interested shilling.
If the credit floodgates opened, and all borrowers WORTHY of borrowing (let’s go to 1999 underwriting standards) were able to buy, the housing market would still be toast.
It’s not a credit problem, or a liquidity problem, it’s a reality problem following several years of fantasyland type borrowing. The reality is that $2,000 per month of available money after paying taxes and food and clothing cannot pay a $3,000 per month shelter bill.
Yun says the market has bottomed.
I say $2,000
Looks like I shouldn’t use mathematical symbols.
How about for the last line:
“I say $2,000 is less than $3,000, which statement is undebatable?”
I think they meant ‘entitled’ to borrow. It just got typed out as worthy.
“That broke the previous low of 89.8 in September 2001….”
Pending sales are worst than 9/11 and still dropping.
This may be the most devastating report the NAR has ever put out.
I’m sitting here laughing my @ss off at these fools at the NAR.How do these people sleep at night, bunch of crooks.
I am still amazed at the people buying stocks right now.They are going to get taken to the woodshed again.
Woodshed is right. Think about that… on 9/11 everyone sat in front of the TV for weeks. Sales in most industries plummeted. That was also a month everyone feared recession, so people had pulled back their investments to “safe ground.”
Its not good when September looks ugly versus September 2001. Gulp!
Got popcorn?
Neil
I am thinking the stock market is just J6P’s way of selling USD. J6P or his pension fund.
Maybe it is a way of returning USD from overseas.
Indeed. But it would seem that the stock market doesn’t really seem to think that is a bad thing, seeing as how they truly believe in two things. A: That the bottom must surely have been reached by now and B: the Fed will save their whining asses once more with another rate cut.
The problem with that kind of thinking is that it has little to do with the reality of the situation. For one, resetting loans will haunt the market for years. The vast majority of those who used IO and ARM loans did so in 2004-2005, and even up until as recently as the start of this year. What we’re in right now is the start of a non-stop tidal wave of resetting loans. This is why organizations are screaming for debt foregiveness and for even more fantastic loan products in an attempt to stave off the results of a collapsing market totally dependent on how well those who took out said loans fare- which as we are seeing is not well.
In my opinion, it would seem that Wall Street suffers from very short term memory loss.
We’ll get another downward outlook adjustment any day now.
“This may be the most devastating report the NAR has ever put out.” The question is WHY? There is something going on behind the scenes when these guys start honestly reporting the facts.
Sounds like a PR Campaign for the government bail out.
Stay tuned.
Fasten your seatbelts…October resets…lions and tigers and bears, oh my!
You mean that nobody will be able to afford christmas this year!!
Christmas
Ladies and gentlemen, we’re sorry to announce that Christmas has been postponed due to a sudden downpour of knives.. our hope is a double-header on Dec 25, 2008, weather permitting.
As my mom says in her annual dysfunctional Christmas Eve holiday tirade, “There’s not going to be a Christmas this year!!”
“That broke the previous low of 89.8 in September 2001. The index fell 21.5 percent from year-earlier levels, the biggest 12-month drop ever recorded, as the one-month decline of 6.5 percent was third biggest drop on record, trailing only July of this year and the September 2001 period. The trade group started the index in 2001.”
This is great news for the future outlook. A record low pending homes index for August can only mean that the pending homes index has bottomed out, and blue skies are ahead. (Never mind that Japan’s housing market kept crashing for fifteen years after their bubble burst in the early 1990s — it’s different here!)
I’m hoping someone can clarify.
My understanding was that a non-japanese citizen could not directly own japanese RE and this policy forced the decline further down as foreign money couldn’t run in in large amounts. If that is the case, how will that experience affect US policy?
Interesting times…. I’ll have a large glass of US protectionism, on the house of course.
“Moody’s said a ‘hard landing,’ in which loan defaults by developers and builders exceeds 5.5 percent and house prices plunge 20 percent, is a ‘remote’ possibility.”
Hard landing, as in a swan dive…
Into a pool with no water?
You miss the big picture…..
Prices trippled in 10 years. Now a 20% correction is a remote possibility?
Yeah, REMOTE possibility that it will be that small of a correction. 50% is a likley correction, IMO.
I’m beginning to wonder if the annual tradition of just-before-the-holidays layoffs is about to return to this country. I remember eating government cheese on Christmas Eve after my Dad got canned. Ah, good times….
Why would anyone believe what Moody has to say?
Is it me - or does this data, combined with the huge jump in builders’ stocks today just scream “SHORT!!!”?
I’m in at any rate.
Yep, isn’t it nice that you get two shots at shorting them?
Pending home sales fall to record low = home prices should increase!
I tell you with the way news and the stock market have been working these days (Citibank posts huge loss = stock goes up), I wouldn’t be surprised.
Bad = Good
Loss = Gain
The New World Order!
Ah yes…. The new paradigm. slavery is freedom, debt is value, war is peace, black is white, bad is good.
Sarasota is special.
“Without notifying Prudential or its retirement plan participants, State Street made ‘undisclosed, highly-leveraged investments in mortgage-related financial instruments,’ Prudential charged in its suit.”
Understand what happened here. Individuals, companies and (probably) state and local governments gave retirement money to Prudential, which gave money to State Street. People will be losing their retirement money, and this is a CYA suit given that those people will be suing Prudential (which has a great history here).
And we had a recent article about Allstate, which is my home and auto insurer. You know the insurance cycle — investment returns up, premiums down, investment returns down, try to suck it out of policyholders. Looks like a lot of third party damage.
“‘We have no concern at all about the strength of the Spanish financial system,’ Deputy Finance Minister David Vegara said at a press conference today in response to the report. ‘I’m not sure what it contributes talking in abstracts,’ Vegara said about today’s Moody’s report. ‘Ratings agencies should take particular care with their communications after what happened in August.’”
Bugs: “eh Daffy, don’t you have a vacation pond in Spain?”
Daffy: “Yeah Bugsy, it’s way in the south…I have to stay as far away from France as possible…those Frenchie’s…do really bizarre things to a Duck’s body when they cook’em.” …“Page 13…Daffy gets throw’ into a boiling pot again”…”we need a rewrite!…and don’t give it to Foghorn this time!”
Could this partly be due to heloc money drying up?
Ford’s U.S. Sales Plummet 21 Percent
http://tinyurl.com/2xvz95
Of course it is.Most people buy cars from their home equity these days. Unless I fall into some money I will never buy a new car again.Out of college I bought a toyota xcab truck in 1997.That was a mistake.I sold it about 8 months after I bought it.I met an asian guy at a bank and he had an envelope full of cash for me.
Blame it on the credit crunch.
Even factoring out sales reductions to rental car companies their retail sales are down 15%, yet crossover sales are somehow “contributing to efforts to stabilize market share.”
That should be enough “good news” to send the stock higher.
Oddly enough, sales of crossovers and SUVs may go up, for those who can afford a car anyway. With all this debt, the roads will totally suck and you’ll need an SUV to ford a river due to the bridges being out.
Hmm, what SUV would that be? Remember the Jeep Cherokees that foundered in 18 inches of water, TV advertisements to the contrary?
Ford’s plunging sales must be the reason why the brand new Ford I bought last month cost me the same amount in NOMINAL dollars as the brand new Ford I bought in 1988. (No, it didn’t last 20 years, I bought a few in between, too.)
lender, do you mind sharing which model you bought?
I’m considering an Escape. Car, that is.
“‘The impact was greater in high-cost markets that are more dependent on jumbo mortgages. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked,’ Yun said.”
Does anyone remember when the sub prime crunch first appeared how all the pundits said the upper echelons would be isolated from the fallout ? Now it appears they are getting hit worse ! SUPRISE, SUPRISE ! IDIOTS !
“‘The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions. Therefore, sales activity in late fall will better reflect market fundamentals.’”
I bet it will ! I bet sales fall even further before they gain. The high end houses have more margin in them and the builders will cut prices further on them.
We are a long, long way from seeing the bottom of this situation.
As far as mortgage availability, it all comes down to investors willing to give mortgage companies capital, ie buy their MBSes. As long as said investors see high default rates, falling house prices and slow sales, they will steer clear. This is going to get very interesting before its done. The 2008 spring selling season is going to be shocking.
Where are the price declines that should have happened by now? I ran some random SoCal zip codes for median sales price and found the following:
Q1-07 Q2-07 Q3-07
91367 590,000 625,000 646,387
91360 605,000 614,100 635,000
90230 523,000 525,000 694,000
90808 581,000 580,000 600,000
91377 610,000 597,500 621,352
91504 559,500 639,000 643,500
91201 695,000 699,000 746,000
I keep hearing, “just wait everything is going to go down 50%”…where other than the IE and central CA?
Man, you need some schooling. The definition of median price is that which half of the homes sold were above and half below. Given that poorer people have had their credit curtailed more than richer people, it’s no surprise that sales of lower-priced homes have slowed more than higher-priced homes. Thus, the median actually rises simply because fewer low-price homes are selling. It’s a bad metric. What you really should look at are the Case-Shiller numbers, which show declines of a few percent, and then recognize that his metric lags so it’s worse than it suggests.
Nice explanation, Captain. Economists have a name for the sort of bias that one sees in the post-subprime-implosion median price statistic: selectivity bias.
Also known as the “composition problem” in statistics.
I’ll tell you what else has a selectivity bias.
The selectivity of the Fed in cutting rates in an effort to boost the equities markets and bailout the hedgies and banker Pig Men.
And it’s concurrent effect of selective inflation impacts for the common man (and woman).
Excellent observation, CCC. The other metric to examine would probably be “price per square foot”.
By the way, no one says that “price declines should have happened by now” - we all know that prices are a lagging indicator, while inventory is aleading indicator. Since sales have plummeted, there are no real prices that will set the benchmark. This is a well-known phenomenon in housing declines - prices are inelastic (sticky) downward. For instance, I know of a wannabee flipper who is holding on to 3 houses he cannot sell or rent out, and this flipper is paying the monthly payment using credit cards. The prices will remain sticky until the flipper loses the houses to the bank. Then you can expect to see some price declines.
You are using a classic strawman argument.
Nice to have you along as the new resident troll…
LOL!!
It’s been a long time since we’ve had a troll to play with. He really seems like a nice troll too. I like him much better than LV Landlord or VA Infestor.
So then go out this weekend and buy something before your priced out. What are you waiting for?
Too late, I couldn’t afford the 2003 prices….
Ahh… that may be true, that you were priced out in 2003.
However, if you were just patient enough, many a mortgage lender would have “priced you in” by 2004 or 2005.
I don’t know why everyone has been picking on JohnF the past few days. He seems to be asking reasonable questions. And unfortunately, when it comes to certain places that *I* have an interest in, like West L.A., prices have not come down by any metric and the Mexican standoff between buyers and sellers continues. I am still expected to pay well over $700K for a 60-year-old POS 2/1 stucco box. It’s absolutely ludicrous. (Hence the reason I’m renting.)
In TOaks(Ven County) , in couple of zip codes that I track, there are 90+ homes/condos under 500K
There were less than 20 two years ago.
Of these 90, more than half are listings from more than years ago.
It only means some very good homes are selling , provided the price is right.
In this batch of 90+ homes atleast 25% are priced at or equal to 2004 prices.
While it may be true that median ahs not come down, the prices for the same listing is down dramatically.
the number of homes in foreclosure/REO in these 90 are about 10. There were no foreclosures listed in 2005/2006 in this price range
There is a foreclosure listed at 399k for the past 6 months and has not sold yet. it is a 3/2 1200 sq ft.
The fire has not begun yet. well kind of yes. There is one detached home 2000+ sqft boarded up near my condo (I rent). First one I could see boarded.
John F , Patience. I can see the tsunami coming
Here’s a funny solution to that… maybe we can make it a HBB project. Rent a truck, go to Home Depot and buy $10,000 worth of material, then 15 HBBers build a rancher in about 3 days and stick a price tag on top that says. $20,000. Then park it in the Wal-Mart parking lot.
I just built a friggin 12×16 shed. About 64 man hours. I used standard house building (not shed building) construction practices. Real roofing, flashing, vinyl siding, support per spec, $1,800. ‘Nother couple of grand I could have installed a kitchen, insulation, finished heat/A/C, flooring etc… Sh!tboxes should not be $600,000.
“Where are the price declines that should have happened by now?”
I suspect many would-be sellers are holding out hope for Congressional bailouts or other types of cargo drops that might help them avoid having to give their homes away for (near) free.
The house I sold in January of this year is now down 14.5% from it’s peak “value”. According to Zillow it dropped $67,000 in just the last 30 days. I sold it to a Realtor. Bu-ha-ha-ha!
And so ends the greenspan confidence game, economy.
“Greenspan also implicitly criticized the role of ratings agencies in the crisis. ‘The problem was that people took that as a triple-A because ratings agencies said so,’ he said. Yet when they tried to sell the products they ran into difficulties, which shook confidence.”
What makes you think it has ended?
CONfidence seems weak.
If the US economony is based on CONfidence, then it’s a confidence game. Who’s the mark?
Only those that can’t think for themselves, which would be the lion’s share of the population…
either way, your ass is grass
“‘People always say it’s the subprime market that created this crisis,’ Greenspan told investors. ‘It’s the subprime asset-backed market’ which did, he said. ‘As a consequence of that, there’s going to be some rethinking about collateralized debt obligations.’”
Another Yun’n
“Therefore, sales activity in late fall will better reflect market fundamentals.’”
Ok Mr Yun–listen carefully–O-c-t-o-b-e-r resets.
By many accounts, resets this fall are to the tune of $75 BBBBBillion.
Ya just can’t make this stuff up.
As long as the big banks let the bad news trickle out in $3b-$4b bite-sized chunks, I don’t foresee any problems.
P’Bear, you’re better at this than I am, so here goes not much (chuckes) October 15 or 22. Another Black Monday?
From what my teeny brain can gather, in 87, it was all the portfolio insurance hedges, today it’s CDO’s; SIV’s; etc.
I hope you’re right, for what it’s worth!
That old Credit Suisse chart that we were all looking at last spring showed fall 07 resets more in the range of $40B/month, leading me to suppose that “fall” resets will be $120B. Since that time, we’ve seen some different figures and I’m completely confused. All observers seem to agree, though, that resets in the next few months will be higher per month than they were in spring and summer of 2007.
You also have to remember that the Option ARM portion of that graph was positioned at the 5yr recast. Paying the monthly minimum, the loans hit the 115% recast after around 3-3.5 years (roughly).
So, in addition to all the other resets detailed in the graph, we’re going to start to see the leading edge of the Option ARM minimum payment wave… I’ve read it as high as 70-80% of all POAs!
Has anyone looked at the Nasdaq graph? I cannot help but notice that as soon as Ford announced low sales for September.
That must mean a late day rally.
Got popcorn?
Neil
Neil whats is the syntax for the winking icon?
’semicolon’ ‘close parenthesis’
No, I mean the happy face with the wink icon in your original post
I just do happy faces.
It’s semicolon dash end parenthesis, no spaces. Let me check:
oops.
Well, to avoid spamming, I’ll put in a comment:
Alan Greenspan defended the U.S. subprime mortgage market, arguing the repackaging and sale to investors of risky home loans, not the loans themselves, was to blame for the current global credit crisis.”
If there were no repackaging and sale — that is, if banks had to eat their own paper — there would BE no risky home loans in the first place
exactly, exactly. The very reason why az_lender doesn’t make any “bad” loans any more. Made a few in the past, learned how to avoid. No defaults since 2003.
http://codex.wordpress.org/Using_Smilies
Just FYI, one can put in a POPCORN eating smiley face. It’s hilarious and apropos.
Their retail sales are down 15% yoy, so that must be a buy signal.
“Greenspan also implicitly criticized the role of ratings agencies in the crisis. ‘The problem was that people took that as a triple-A because ratings agencies said so,’ he said. Yet when they tried to sell the products they ran into difficulties, which shook confidence.”
——————————————————————————–
I wonder if the rating agencies will now “over correct” to the conservative side?
One way to know for sure that the housing market has not yet bottomed out: Main stream economists’ ongoing string of overly optimistic forecasts continues.
Wall St down on home sales figures
By Michael Mackenzie and Chris Bryant in New York
Published: October 2 2007 14:01 | Last updated: October 2 2007 17:42
Wall Street stocks slipped into reverse gear on Tuesday as pending home sales fell to a record low but as financials continued to rally.
At midday the S&P 500 was down 0.2 per cent at 1543.99. The Nasdaq Composite was down 0.1 per cent at 2739.49 while the Dow Jones Industrial Average was down 0.3 per cent at 14,049.83.
However, the Russell 2000 index of small cap stocks was 0.4 per cent higher at 827.97, catalysed by a spate of merger and acquisition activity.
In economic news the National Association of Realtors said its pending home sales index in August fell 6.5 per cent to 85.5, a record low. The index has fallen 21.5 per cent in the last 12 months and has lost 16.5 per cent in the past two months.
Economists expected a fall of 2.1 per cent, after July registered a 12.2 per cent decline.
http://www.ft.com/cms/s/0/b83c7b28-7064-11dc-a6d1-0000779fd2ac.html
“Economists expected a fall of 2.1 per cent…”
Who are these people masquerading as “economists”?
I mean really, were they paying any attention at all? What - no internet access on the Vineyard? in Aspen? in Jasper? in Europe? WTF!?
Everybody - a quick quiz:
What was going on in August that could have slowed pending home sales further?
but, but…
You didn’t play along doing the carry trade, did you?
“‘We’ve been checking to see if the risk has spread and to what extent firms are exposed to securitised products related to the subprime market,’ said Japan’s financial services minister, Yoshimi Watanabe, at a regular news conference. ‘If we do find any problem, we plan to deal with it quickly,’ he said.”
Hey Ying Yun,
‘The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.’”
Can’t you get in through your shilling brain that houses are not affordable?
As far as buying a house goes, I’m creditworthy cause I’m not even looking for a mortgage.
But why should I overpay? Dummy Yunny isn’t even taking the cash buyers into consideration.
He would consider cash buyers, except he doesn’t like the numbers. Haha. Wouldn’t be ‘prudent’ for a proper Ponzi Scheme.
Found this link refreshing in that it repeats what I have been saying all along….of course I don’t have a harvard degree….
http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/10/02/mortgage_brokers_sleight_of_hand/
Sounds like a significant number of people CAN afford these overpriced homes after all, they are only going to lose them because of crooked mortgage brokers!
Prices significantly deviated from incomes so the mortgage brokeres only enabled this a bit. Along with the Fed, MBS markets and CDO markets.
We aint buying what you’re selling dude.
No, its the prices stupid.
A lawyer saying we need more laws….what a surprise!
All the laws in the world will never stop people from trying to capitalize on a “sure thing”. Prices went stupid because a) the money was easy b) greed was easy. People thought leveraging a house to the hilt was an “easy” way to riches……surprise!
The government would better serve people by simply repeating “Buyer beware” and “You make a stupid financial decision and you’ll pay for it”.
Pounding those two mantras over and over and THEN letting people fail, miserably and with GREAT MEDIA EXPOSURE will do more good than a mountain of legislation.
You, as an individual, want to “help” someone? Fine, go find someone “deserving” and help them. What’s been shown endlessly, on this blog, is that (more often than not) those “deserving” help are pretty hard to find.
FB I work with says to me, normally I’d be against government bailing out business, but since I own two houses and really need to sell 1, I’m rooting for congress to pass FHA reform.
I say, it won’t matter. They may be altering down payment requirements and max limits and such, but they are not altering the debt/income ratios. They still aren’t going to loan people more than about 3x their income, and with a medain income of $50K, there aren’t nearly enough people that will qualify to buy $250K+ houses.
The FHA reform may reduce the number of foreclosures from 6 million to 5.8 million, but it won’t stop prices to returning to historic norm of 3x income… which means a 30-40% drop from current prices…
Yeah… I guess you’re right…. he says.
Darrell,
How anyone thinks your logic will be avoidable is beyond me as well. The game is over. Period. No one will buy MBS for some time to come consequently demand can only plunge from here back to what it was a decade ago (or worse for a while, few will be willing to buy “obviously” depreciating “assets” will they?
Greenspan defended the role of central banks and market regulators, claiming they do not have the resources to deal with criminal or illegal acts.”
OK greenspan no one believes you! Shut up You are primary cause.
Greenspan defended the role of central banks and market regulators, claiming they do not have the resources to deal with criminal or illegal acts.”
So we should have faith in them why?
Funny , back in the old days of lending banks and lenders simply underwrote the loan which prevented fraud ,criminal acts or illegal acts .
Sorry if already posted…Morgan Stanley cuts 600 in mortgage division.
http://news.yahoo.com/s/ap/20071002/ap_on_bi_ge/morgan_stanley_mortgages_2
Nice that the brokers are spreading out these cuts so that the street isn’t deluged with lay off anouncements. 1000 jobs a week for a year is so much better then 50K in one month.
Also means you don’t have to hire more HR people to take care of the lay offs. The ones you have in place can take care of it.
Anyone else irked by the business that are fighting the new “no match” rules being instituted by the Homeland Security?
In the past, employers would receive letters from the IRS saying that the employee’s name didn’t match their social security number. The employer would then ignore the letter.
Now, these no match letters will be coming from Homeland Security and if the employer ignores the letter, they could face massive fines and even criminal punishment.
All the businesses are fighting this saying it will cost them hundreds of millions of dollars to hire people whoes names actually match their social security numbers.
Cry me a freakin’ river!
The businesses are trying to block the rule change saying that the government didn’t take inot account the cost to small businesses.
The government is saying that this isn’t really a change except in who is sending out the letters and wht the letter says. You could always be fined and face criminal charges for hiring illegals. They are just giving you fare warning.
My take on what is going on with imigration.
We know that wages have to come up to prevent house prices from falling a full 40%. If we can get 20% wage inflation, we can make due with only a 20% house price decline.
So, govt decides the only way to get wage inflation is to crack down on businesses hiring illegals. Force them to pay higher wages to legals.
So, seeing this coming the states with a high population of illegals, that don’t want to see the population of their states tank, try to rush through another amnesty bill. The American population rises up in revolt.
Okay, they’re going to have to accept the population declines, and they are going to HAVE to crack down on businesses that hire illegals to get wage inflation.
I think (hope) the court will reject the challenges to Homeland Security using Social Security mismatch info as leads to go after businesses that hire illegals. I hope this will result in lots of illegals leaving the country, and I hope this will result in wage inflation.
It won’t be enough to save housing, but hopefully it will help reduce the drastic wage inequality we’ve been seeing in this country.
All I want to know is when the hell SRS is going to go back up.
Yeah, I finally bought some shares yesterday at $85.90. Should’ve waited….
Seconded. DId i make a mistake? SHould I pick up some more?
Another Mozillo clone from down under?
———————————————–
Kinghorn was noticeably absent from the investor presentation yesterday. It is no surprise given he is one of the only winners out of the RAMS saga, having sold 73 per cent of his business into an $865 million float at the end of July, making a whopping $650 million killing on the way through.
RAMS will no doubt go down as one of the biggest - and quickest - share listing disasters in recent times
Does anyone else smell a massive lawsuit coming?
Kinghorn will be mighty lucky to hang onto that $650 mill..
Here’s a new one: Being too broke to sell
…But another factor was at work: Sellers — not buyers — were in trouble as their closing dates neared.
“Our office had four sales in one week that failed to close because the seller didn’t have the cash,” said the real estate agent, who declined to be identified because she feared office repercussions.
The sellers couldn’t come up with the money?
http://tinyurl.com/34lfg6
I don’t know a single broker who would negotiate their commission down in order to make a sale today.
So, why the problem?
My guess is that the holder of the first DOT wouldn’t agree to a short sale, or, because of securitization COULDN’T agree. Another foreclosure on its way…
Part of what keeps price drops at bay. People are stuck going under water. They can’t reduce thier prices with out negotiating a short sale, bringing cash… I guess many will end up declaring bankruptcy.
It’s different in Manhattan as the party continues:
Manhattan housing prices hit record
http://tinyurl.com/ytb66c
That’s right, FOMC.
Just keep cutting rates to keep that singular party in Manhattan chugging right along!
“‘The Wall Street firms were under real pressure to supply asset-backed securities, and the Wall Street firms were pressing the lenders to give them more raw material,’ Greenspan said today. ‘Credit standards just went straight down, and applications for subprime mortgages soared. The consequences of that are evident.’”
Greenspan apparently is taking a page from the Tan Man. Apparently, the Wall Street firms didn’t really want to sell all of that MBS and CDO crap, but they were under enormous pressure, and so they had no choice. Poor Wall Street firms. This kind of revisionist history is just revolting.
“Gentlemen, you can’t fight in here. This is the war room.”
President Muffley- Dr Strangelove
If I was a business man from China and had 100 trillion dollars and wanted to buy the US sight-unseen, with total liabilities of $50 trillion and 4.5million square miles in the US, that works out to $2.50/sq-ft. How the hell are these people getting $300/sq-ft or more for any house. LOL
“Tell you what, I’ll give you $1.25 a square foot for everything and 10% for moving costs.”
Greenspan> just think you can be asleep at the wheel for years then retire with a tidy amount and now become a guru of what you let happen, what a country?
Greenspan needs to remember when pointing a finger at everyone else, three fingers are pointing at him.
In spite of all the excess money in the CDO markets being available ,had Greenspan raised the rates higher and quicker ,it would of put a end to the bubble sooner .There is no question that raising the Fed rates sooner and higher would of taken the zing out of the housing boom .In fact ,Greenspan should of taken a bold move and raised the Fed rates to 7% in 2004 when it was apparent that froth was all over the place .
“‘The pricing which in too many cases has been, by some model derivation, four times removed from actual market prices, just doesn’t work,’ Greenspan said.”
How is that possible, if market prices are (by definition) set by the free market? Isn’t it part of the very core of Greenspan’s philosophy that free markets are infinite in their wisdom?