It’s Desperation Time
Some housing bubble news from Wall Street and Washington. Bloomberg, “Subprime mortgage bonds created in the first half of 2007 contain loans that are going delinquent at the fastest rate ever, according to Moody’s Investors Service. The average rate of ’serious loan delinquencies’ in the securities has been higher than 2006 bonds, Moody’s analysts Ariel Weil and Amita Shrivastava wrote. Serious loan delinquencies are those 60 days or more past due, including properties in foreclosure or already foreclosed upon.”
“‘It is shocking what you see,’ said Kyle Bass a hedge fund that reported a 400 percent return on its bet the U.S. housing market would fall. ‘Anything securitized in 2007 has got to have the worst collateral performance of any trust I’ve seen in my life.’”
“Data in the Moody’s report suggests that accelerating delinquencies from 2007 bonds are likely to eclipse 2006.”
“Many of the loans that investors shunned in 2006 were able to be successfully securitized in 2007 because of the limited availability of new loans to purchase, according to Andrew Chow, who manages about $7 billion in asset-backed bonds and mortgage securities.”
“‘It’s not surprising that the performance of that type of loan is in fact even worse than the average of 2006 because these are the loans that were rejected from those deals,’ Chow said.”
The Financial Times. “A high proportion of the worst-performing loans from 2006 originated in California, Moody’s said. It identified falling house prices as a contributor to the overall poor performance of the 2006 vintage, and California has been particularly hard hit by house price depreciation.”
The Associated Press. “Investment bank Merrill Lynch & Co. said Friday credit and mortgage woes will lead to it post a third-quarter loss…after taking roughly $5 billion in writedowns. The bulk of the losses will come from marking down the value of collateralized debt obligations and subprime mortgages.”
“Rising delinquencies and defaults among mortgages, especially subprime loans, has led to the near disappearance of investors willing to buy the loans. Without an investor market, the value of the loans decreases.”
The Dow Jones Newswires. “Merrill noted it ’significantly reduced’ its exposure to those products during the quarter.”
“Citigroup Inc. and UBS AG said on Monday they would record multi- billion dollar write-downs for the quarter.”
“Earlier Friday, Washington Mutual Inc. said it expects to set aside $975 million on a pretax basis in the third quarter to cover potential future loan losses and record a $150 million write-down on mortgage loans it planned to sell because of the summer’s credit crunch.”
“Washington Mutual said the additional reserves ‘reflects ongoing weakness in the housing market, primarily as it affects subprime and home equity loans, as well as growth in the company’s loan portfolio.”
“The mortgage write-down is due to loans Washington Mutual planned to sell that instead were moved to the company’s investment portfolio due to the credit- market seizure that essentially dried up demand for mortgage-related securities.”
“The third quarter’s results also will include nearly $150 million in pretax trading losses and pretax impairment losses of about $110 million on investment- grade mortgage-backed securities that are available for sale.”
“Washington Mutual has cut its lending staff 28 percent since the end of 2005, the company said in a presentation Sept. 10 in New York. The lender fired about 1,000 people last month as it closed two divisions.”
“‘You’re going to find a lot of companies having to come clean with these assets on their balance sheets,’ said Terry Wakefield, a mortgage-industry consultant. ‘There’s still somewhere between $75 billion and $150 billion of write-offs that have not yet occurred, and they’re going to surface as the quarterly earnings process unfolds.’”
The Independent. “Irish banks face taking a €1bn bad loans hit between this year and 2009 as a slowing domestic property market leads to rising defaults among mortgage holders and commercial property and development borrowers, according to Swiss investment banking giant UBS.”
“‘In our (stress) test, we assume that Irish house prices fall 5pc a year for the next three years and grow 2pc in 2010, and the number of home movers falls by 32pc over the next three years,’ UBS said. ‘If we assume that 20pc of the Irish mortgage market has an LTV of greater than 85pc, it implies €25bn of at-risk loans on the banks’ balance sheets.’”
“Barratt Developments Plc and Taylor Wimpey Plc fell in London trading after ABN Amro cut its recommendation on U.K. homebuilders, citing a deteriorating outlook for the market.”
“The tighter credit market, which forced mortgage lender Northern Rock Plc to seek emergency funding, has further sapped the confidence of home seekers, the London-based analyst said. House prices are likely to be flat during 2008 and 2009, and they may even fall, said ABN’s William Jones.”
The Evening Times. “Banks are raising their rates in response to the interbank lending rate, or Libor rate, hitting a six-year high after the crisis in the US sub-prime market.”
“‘In the past month we have seen a move away from what the Bank of England does with its interest rates being the be-all and end-all of what happens on the mortgage market,’ said Louise Cuming, head of mortgages at moneysuper market.com. ‘It now has a mind of its own. All lenders are looking at their bottom line and its costing them more to borrow money and that is going to be passed on to the consumer.’”
The Sydney Morning Herald. “Calls for greater regulation of non-bank lending have increased after 50,000 RAMS home-loan customers were hit with a second interest rate rise in six weeks.”
“The struggling RAMS was thrown a lifeline when Australia’s fourth-largest bank, Westpac, agreed to buy the troubled non-bank lender’s branches. Despite the rescue package, the non-bank lender this week raised rates on its full-documentation and low-documentation variable loans.”
From MarketWatch. “The U.S. attorney in Brooklyn has started a criminal investigation into a pair of hedge funds run by Bear Stearns Cos. that had positions in mortgage-backed securities and subsequently collapsed last summer, The Wall Street Journal reported.”
The Wall Street Journal. “A court victory by a shareholder of Countrywide Financial Corp. promises to fuel further public debate over the mortgage lender’s executive compensation just as it is struggling to regain investor confidence.”
“Angelo Mozilo, the lender’s chairman and CEO, has opposed a push by some shareholders for an advisory vote on compensation, also has argued that companies need to pay whatever it takes to attract the best talent. ‘If anybody makes a billion dollars, that’s America,’ he said in an interview earlier this year. ‘That’s terrific.’”
From Reuters. “Brookfield Homes Corp on Friday said net new orders for the third quarter fell more than 50 percent to 130 units, on continued weakness in home buyers’ confidence and high inventories levels.”
From CNN Money. “Brookfield had lower than anticipated net new orders in the third quarter, and now anticipates approximately 1,000 home closings for 2007. The decline in third quarter net new orders arose primarily in the Southland and San Diego/Riverside markets where…the demand was impacted by job losses and tighter lending standards.”
“In accordance with SFAS 144 ‘Accounting for the Impairment or Disposal of Long-Lived Assets,’ the company regularly reviews its housing and land assets for recoverability. With market conditions having deteriorated further in recent months, in particular, in the Central Valley and Inland Empire of California, the company has continued to lower its expectation of future revenues on its projects.”
“As a result, the company anticipates impairment charges and write-downs on its housing and land inventory for the three months ended September 30, 2007 in the range of $40 million to $50 million.”
The Palm Beach Post. “Troubled homebuilder Standard Pacific made headlines last month with its push to sell 200 homes in 10 days in Southern California. To lure buyers, it dangled free plasma TVs and cut-rate mortgages.”
“While Standard Pacific didn’t advertise its ‘Mission: Possible’ promotion in Palm Beach County, it did unload a chunk of vacant land here last week for 20 percent less than it paid at the height of the housing boom. Standard Pacific didn’t include a TV, but it did give the buyer a mortgage.”
“When D.R. Horton Inc., the second- biggest U.S. homebuilder, couldn’t sell the one-bedroom condominium in San Diego it listed for $349,800, the property was auctioned as a last resort for 37 percent less.”
“D.R. Horton, with annual revenue of about $11 billion, and Hovnanian Enterprises Inc. now face the worst choice in the worst residential real estate slump since the 1930s. They’re selling homes at any price they can get.”
“‘It’s desperation time and some companies may not make it,’ said Alex Barron, an industry analyst. ‘At this point in the housing cycle, if you have too much debt, it’s hard to get out from under it.’”
“Homebuilder profits depend on the cost of land, said John Burns, president of John Burns Real Estate Consulting in Irvine, California. Companies can still make money building on land purchased before the 2005 peak of the five-year U.S. housing boom, though price declines of as little as 10 percent might wipe out those profits, he said.”
“‘They are all losing money,’ Burns said. ‘They’ll talk in terms of gross margin and it sounds like they made money, but they actually lost money because they didn’t make their costs.’”
“During Hovnanian’s ‘Deal of the Century’ promotion last month, the company sold a 2,900-square foot five-bedroom, three- bathroom house in Royal Palm Beach, Florida, for $525,000, said Kathy Bell, who bought a house with the same floor plan down the street for $575,000 in March 2006.”
“‘It really stinks,’ said Bell, who lives in Hovnanian’s development in Royal Palm Beach, Florida. ‘We were here in the beginning and we didn’t get any deals. It’s very upsetting.’”
“‘We might discount a home 20 percent if the profit margin was 30 percent, but we haven’t discounted any properties 40 percent, which some homebuilders are doing to raise cash,’ said WCI Communities Inc. Chief Financial Officer Jim Dietz.”
“D.R. Horton overcame qualms about its image with the Sept. 29 auction of 56 unsold San Diego condominiums. ‘I ran the numbers and the condos sold for between 68 cents and 74 cents on the dollar based on the original asking prices,’ said said Steven Moran, an agent with Century 21 Award in San Diego, who attended with 11 clients.”
“A condo with an enclosed balcony and an indoor parking spot was originally listed at $349,800 and sold for $220,000, Moran said. D.R. Horton also threw in a washer-dryer and $2,500 toward closing costs, Moran said.”
“Data in the Moody’s report suggests that accelerating delinquencies from 2007 bonds are likely to eclipse 2006.”
It takes two to tango. FBs and FLs.
“A high proportion of the worst-performing loans from 2006 originated in California, Moody’s said. It identified falling house prices as a contributor to the overall poor performance of the 2006 vintage, and California has been particularly hard hit by house price depreciation.”
May I offer a glass of 06′ Cavern-eh?
It has a delicate depreciation, overtones of overloans and a deliberate finish, perhaps because of the poor $oil, in which it was planted?
Where’s John F?
Right here, why?
I think he asked because you seem to be the one delusional person left on this blog.
Play nice, or else you’ll have to go stand in the internet corner…
How do you like that gold action today?
Where’s the price declines in WestLA, the beach communities, Santa Monica, Laguna Niguel, Encino….all this bad news and all I hear is, “just wait prices are going down 50%”….I’ll believe it when I see it in those areas….many more paid-off and pre-2000 owners in those areas that can hold on until things turn around in 5-7 years…
I think there is a lot of pent-up demand out there and transactions are occuring in those areas at or only slightly below asking prices…the IE and central valley is a whole different story…..
really choppy, all over the place
like me
I think he asked because you seem to be the one delusional person left on this blog.
Y’all need to lay off JohnF. He is only saying that the $hit has not hit the fan in certain locations. In other locations, yes, it’s a big pile of dripping brown goo but there is some heavy-duty delusion still going on in places like Santa Monica. Somebody, please find me a SFR that isn’t priced like we’re in Zimbabwe or Weimar Germany. What, you mean the entire town of 100,000 consists of nothing but millionaires?
John F,
How much will a decent 2000 sq/ft 3/2 rent for in Santa Monica and how much would it cost to purchase?
I’m never down that way, so I really don’t know.
It has a delicate depreciation, overtones of overloans and a deliberate finish, perhaps because of the poor $oil, in which it was planted?
brilliant, alad, lol…
absolutely brilliant !
“‘It is shocking what you see,’ said Kyle Bass a hedge fund that reported a 400 percent return on its bet the U.S. housing market would fall. ‘Anything securitized in 2007 has got to have the worst collateral performance of any trust I’ve seen in my life.’”
It clearly wasn’t too shocking to Mr. Bass who profited handsomely from the problems. Kudos to him.
I don’t see how any one could not notice the increasingly lax lending standards and outright fraud that was occuring. Too bad Mr. Bass’ hedge fund is not open to smaller investors like most of us.
It may be one of the biggest turn of events this year. Everyone has been saying that 2006 was the peak of problems, but looks like it isn’t.
And, as house prices (collateral) decline, the earlier loans could well become problematical as well. In fact, the ARMS will be worse over time as the rates continue to ratchet upwards. What is the traditional number 3-5 years out are the worst - in the old days people usually qualified at first, then as life events caught up with them and house price appreciation was still not enough to cover real estate fees and such. After about 5 years, normally, people had enough equity and income inflation to keep them going onwards.
What I think we’re going to see in the coming years is a combination of the early contagin as the folks who just plain didn’t qualify get flushed out first, but a gradual ramping in defaults as the more traditional problems build and are magnified by the fact that there are so many marginal buyers.
What we’re also going to see is that if these folks hang on for 5 or more years the deferred maintenance is going to start to show. I don’t think there has even been a time when so many people have been so house poor. They just don’t have the money for paint/roofing etc. It takes a while to show, but it just gets worse the longer it’s put off. Couple that with today’s “engineered” materials which require protection from the elements and there could be another crisis in about 10 years when this stuff becomes structurally unsound.
except last time ARM’s were big rates were coming down= yikes
That is an interesting point–the gradual dissolution of more and more houses, on a quieter scale. We’ve all seen many articles about crap houses built as crap from day one, or seen the POS’s themselves, and Gawd knows, ain’t no lack in that department, but I see I’ve had an image in my mind of bubble-built vs. non bubble built, as if there is a very clear distinction in quality there, and always will be a distinction, and a dramatic and obvious one. Like when I spit whenever I pass a DR Horton chancre. And I do not spit when I pass a charming old built in 1960’s bungalow.
You are right–houses, new or old, take lots of work to just plain old maintain, forget about the remodeling or upgrades. Stretched homeowners, just hanging on, will be less able to do the little but necessary things that add up to big things. Entropy loves termites and mildew.
What is the traditional number 3-5 years out are the worst -
That is a point worth discussing… even if no further resets occur, the worst of the pain will be in 2008 to 2010. Yet we have the greatest number of resets to wade through in the next nine months. Gulp!
Got popcorn?
Neil
So many people are in teaser rate neg-am mortgages that resets may well dwarf the “random stuff happens” effects. I would tend to anticipate a sharp reset peak, than a decline to a lingering plateau caused by traditional “poo happens” causes. If we don’t have a big wage/price spiral, that plateau could last for longer than the usual 3-5 years because people will have negligible or negative equity for so long because of declining prices.
quality of building materials is a huge issue–leaving aside shoddy construction during the boom–I’ve heard the design life of stick built mcMansions is 25 years. If this is true 30 year mortgages last 5 years longet than the houses they are financing!
Wow, even Detroit at its worst never managed to do ‘planned obsolescence’ that well…
For many houses’ potential longevity, simply take a look at northern Mexican construction and how it holds up - built by the same people!
i’m sure the 200K people who got jobs in August and September can easily afford these houses.
FYI - In August, 220K jobs were created “out of thin air”. Not sure on the number for September…
I can tell you what 1 of those new hires is.
She is the wife of a realtor. The realtor hasn’t made anywhere near as much now as the good ol’ days. So she now works at a department store.
This stat is another false bump. I am pretty sure she is not the only spouse who has been forced back into the labor market.
All those commissioned income households now have to revert to payroll based income. These employment numbers are half truths.
Now you have more people earning wages far below what they had last year when they were spending like crazy.
Our entire government has turned into a half truth or worse.
Or more likely the wife is already a real estate agent (I refuse to use the word that rhymes with whore). And now she has a second job at the department store.
Can someone answer me where we made all these jobs when we know the losses in the RE and banking sectors? Are they all burger flipping jobs?
Healthcare - more work at homers screwing up people’s claim forms and denying benefits
Government - can’t we all just work there?
Professional services - bulkin’ up those legal departments - we’re gonna have a tidal wave of litigation
Professional services - bulkin’ up those legal departments - we’re gonna have a tidal wave of litigation
I’ve heard rumors of law firms getting ready to do some layoffs.
Some practice areas (real estate, M&A) are slowing down and layoffs will likely take place in firms that are heavily tilted that way. BK/creditors rights depts are going to take up some of the slack. Demand for white collar criminal defense might also start spiking up if/when indictments start flying around.
Supposedly, all of the real estate attorneys just put on a different hat and do bankruptcies and work-outs. It’s all the same basic area of the law (finance), anyway.
No. In 1990, the firm I was at (huge Dallas firm) laid off half the real estate group and many corporate types too. They added in our group (the bankruptcy section) but did not move anyone from RE into it.
Different markets react differently. In the MW, a lot of rebranding took place and presto, the real estate finance group just glommed onto BK/creditors rights. NYC firms just canned people by the dozens with hardly any thought. It was not uncommon to deal with 4 attys on a file because the preceding 3 got swept away and after a while it became almost humorous.
TX firms may have done likewise, I just don’t know because I didn’t have any dealings with them then. My recall is that several were still reeling from the ‘86 crash of that oil bidness when the 90s recession rolled around, so there may have been more than one reason for whacking attys in unproductive practice groups.
The great thing about litigation is that it’s pretty steady across cycles. On the way up, everybody’s scrapping for a bigger share of the windfall profits; on the way down, everybody’s scrambling to place blame and pick over the corpses of doomed companies before the money’s all gone and the insurance limits are reached.
It’s a birth/death jobs model. The key work is model…they aren’t actually counting jobs. Remember how well loan models worked?
A very true and accurate observation.
See Nouriel Roubini’s comments on the jobs numbers and the birth/death model from October 2nd:
http://www.rgemonitor.com/blog/roubini/
(Scroll down for his Oct. 2nd comments. His comments on the jobs numbers today are at the top.)
“Also the BLS employment figure are totally distorted by a biased birth/death model for new jobs in new firms. The BLS statisticians created over 1 million jobs - that may not exist - for the last 12 months based on that flawed model. About 75% of job creation in the last 12 months is based on this statistical model rather than actual establishment survey data.”
you mean they are not using census, IRS or unemployment data?
nope!
“Angelo Mozilo, the lender’s chairman and CEO, has opposed a push by some shareholders for an advisory vote on compensation, also has argued that companies need to pay whatever it takes to attract the best talent. ‘If anybody makes a billion dollars, that’s America,’ he said in an interview earlier this year. ‘That’s terrific.’”
Heaven forbid the actual owners of the company have a say in how much the employees get paid eh Mozillo? Remember buddy, you’re an employee too. You just may consider being at least polite to the business owners, even if you can’t bring yourself to show respect.
SPF: you don’t want to know
Well, he should buy some sunscreen.
Be nice. He needs those hundreds of millions of dollars to pay for the education of his 9 grandkids. I am guessing they are spoiled little pricks.
Except he isn’t just an employee. He has a contract. All the CEO’s do. And they big bucks when they are kicked out.
So he’s a contract employee. Still an employee, and still in need of reminding who actually owns the outfit.
stick this in your job number:
CFC planning to lay off 14k.
Rumor mill going at full tilt.
I am so angry that savers have been punished. Got gold? GOT RON PAUL??
http://www.ronpaul2008.com
“D.R. Horton, with annual revenue of about $11 billion, and Hovnanian Enterprises Inc. now face the worst choice in the worst residential real estate slump since the 1930s. They’re selling homes at any price they can get.”
Since the 30’s? That’s pretty serious. But guess what? They’re both up on trading today. FANTASTIC!!!
Homies are having a good run; I’m waiting for it to break before shorting it again.
It’s a survival play IMO even though I don’t know squat about stocks….Some won’t make it but the survivor will increase market share….
Increase market share in what market? They may have destroyed their market for an entire generation. They overbuilt perhaps 10 million housing units in the past 10 years.
Pirates of Recompense
My new name for TPTB on that walled street…
Pirates of Payment, or just Payment Pirates has better alliteration.
Although I do appreciate your basic sound comparison to Pirates of Penzance.
“Banks are raising their rates in response to the interbank lending rate, or Libor rate, hitting a six-year high after the crisis in the US sub-prime market.”
How can the government persuade lenders to keep ARM rates fixed at teaser levels when lender borrowing costs keep rising?
soon the teaser rate will just cover the weekend
hmmmm aren’t most ARM’s tied to the Libor?
ex: Libor +5.5%
“The U.S. attorney in Brooklyn has started a criminal investigation into a pair of hedge funds run by Bear Stearns Cos. that had positions in mortgage-backed securities and subsequently collapsed last summer, The Wall Street Journal reported.”
*********
Maybe they will find out it was criminal not to “idiot proof” the models they were working with on those crap funds.
Or, perhaps instead (because the Pig Man managers and minions were so out of touch), at least have a basic understanding of housing affordability.
People win political campaigns prosecuting this kind of stuff.
It’s housing bubble blowback.
I agree.
Except that unless one of these fund collapses causes a penionser somewhere to lose their monthly payout (a pension manager recklessly seeking yield), the aggrieved in this case are a small set of the wealthy.
Or at least that’s what would be expected.
“‘It’s desperation time and some companies may not make it,’ said Alex Barron, an industry analyst. ‘At this point in the housing cycle, if you have too much debt, it’s hard to get out from under it.’”
Some of these guys are going to continue building and collecting paychecks until their lenders cut them off. They will not go willingly. They will be forced to exit. It’s the lenders call now.
Sounds much like FBs biding time while burning through their permanent income until foreclosure time…
Always remember….”builders build, because lenders lend”….no other reason than that….
So right John F . The lenders should cut off the builders .Don’t we already have enough homes/condos that need to be moved? I hate powers proposing bail-outs when they don’t ask the parties that are creating the problem to change their behavior .
To give credit where credit is due, my Dad always said that…..he was a RE lawyer and owned a title company in the midwest in the 70’s and 80’s…
No! No! No!
Let them lend and let them build - this might slightly delay your plans to buy in the final bust, but each additional overvalued house built and heavily financed works to reduce the price of all houses in a demand / supply downturn.
Build on I say! Build on…..
“They bought their tickets……they knew what they were getting into…..I say….. Let ‘em Crash!”
Personal responsibility is so passe. Our toe tappin’ CONgressmen said so.
They went to Circus Maximus and gotten eaten by the lions. That’s their fault, not mine.
“‘It is shocking what you see,’ said Kyle Bass a hedge fund that reported a 400 percent return on its bet the U.S. housing market would fall. ‘Anything securitized in 2007 has got to have the worst collateral performance of any trust I’ve seen in my life.’”
“Data in the Moody’s report suggests that accelerating delinquencies from 2007 bonds are likely to eclipse 2006.”
wow. Now line up the criminals and put them in jail.
Unbelievable. Nobody gives a F$%$# except the dollars they can skim from others to live big. Lots of freeloaders out their constantly looking for a handout or bailout because they made a stupid greedy decision.
PLEASE VOTE FOR RON PAUL.
You vote for anyone else you are wasting your vote. NOTHING WILL CHANGE DEMOCRAP OR REPUB.
I saw my first “Ron Paul” sign posted in an empty lot near my neighborhood in Newport Beach. He’s catching on.
Saw my first RP yard sign myself here in Detroit…a big one out by the road.
He’s raising real money too, over $5 million in the last reporting. His campaign is for real.
Saw a RP sign on a overpass on the I 5 in Burbank.
i missed that when i was out there this wkend…. good!!!
Sadly, for those of you who know who Aaron Russo was, he passed away August 24th, 2007. He was truly a ‘Great American’ (and not the Sean Hannity BS type). He was instrumental in Ron Paul’s launch for the Presidency.
‘From Freedom To Fascism’ was his documentary. He was a music and movie producer. ‘The Rose’ was one of his movies, and ‘The Who’ was one of his finds (I believe).
“He was truly a ‘Great American’ ”
Indeed! He certainly put his money where his mouth was.
Agreed. I think “Freedom to Fascism” went a bit over the top in a couple places, but it’s still an absolute must watch for every American.
I got an email from his mailing list and they’re apparently selling copies of the movie for $1. It hink it’s in lots of 100, but still that’s dam cheap.
This is the movie that Greenspan and Bernankadonk butt REALLY don’t want you to see.
Earnest, Seattle Renter, & others-
Its nice to know, I am in the company of other fans of The Constitution. Aaron Russo and Ron Paul represent the bright minds that should be in our political theatre, not the charlatans we have on stage.
We don’t watch TV (going on 14 years), so I didn’t know if the MSM mentioned Aaron’s death. What a courageous soul.
You vote for anyone else you are wasting your vote. NOTHING WILL CHANGE DEMOCRAP OR REPUB.
Renterfornow, I have never voted Repub in my life, although I was not antirepublican, just independent. W changed all that. I kind of like what Paul says about the economy and Irak. He is the one guy I agree wholeheartedly with in those matters, although I don’t know his position on other issues. However, how am I to be sure that, in the off chance that he becomes prez, his administration would not be run by the same monkeys who orchestrated the ruin of this country with W? He is running as a Republican, after all. I might vote for him, but that is keeping me on the fence. I’m done with neocons and their ilk. I want them out. As far as I can tell as of right now, I might not vote at all this time around.
You should always vote though. When the 2-party candidates suck(which is pretty much all the time now) vote for one of the third parties. They may not win, but every vote they DO get pushes them a little closer to the public eye.
I personally have found that’s a better alternative to not voting. I really understand the temptation to not vote given our main choices but too many have given too much so that we can do it.
Don’t worry about “neocons.” There are plenty of other kinds of conservatives, and Paul’s not likely to have much use for the “neo” variety.
(This assumes that we’re using “neocons” for its actual meaning, i.e. “Jewish former leftists who switched sides in the seventies and went to write for the Weekly Standard”, as opposed to the common uninformed sense of “anybody to the left of me.”)
oops…meant “to the right of me,” not “left.”
RP is a rep and there are way too many planks in their platform that I don’t agree with. Why isn’t he an independent? There is no possibility he will even survive the primaries that start in 3 months. And for every person that changes registration to Rep so they can vote for him, will be putting more $ into whomever becomes the Rep candidate. Unless you can change the entire system, he couldn’t get done what he believes in even if elected. Until we move into publically funded elections with no private $ from anyone, the two parties will continue to rule the roost.
are you crazy!
Ghandi didn’t start out with anyone but himself. If everyone spent their life being a fence-sitter like yourself nothing will change.
I say go ahead and have everyone switch to REP for the primaries. Big deal if they get more money to campaign with. They can spend any ungodly amount they want next year. We will be is such deep doo that it won’t matter how much the Rep nominee throws at the campaign they wont win unless it is Ron.
And if everyone is writing Ron off because he is only one man. Call his campaign office and tell them when Ron wins you will quit your job and go to DC and work for his administration for 8 years.
I say the next topic for the weekend should be to organize the HBB bloggers, figure out who wants to work in which executive branch job and help Ron fix the mess we are in.
If I remeber the scene from the Robin Williams movie the Adminstration has something like 15,000 posistions to fill.
PS I want to be the Ambassador to Thahiti.
“‘It’s desperation time and some companies may not make it,’ said Alex Barron, an industry analyst. ‘At this point in the housing cycle, if you have too much debt, it’s hard to get out from under it.’”
Desperation time? That is just plain silly. The building sector has bottomed out, and their share prices are in rally mode to prove it. Granted that BZH is looking a bit shaky, but certainly the glass is much more than half full?
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
Just because top economic dogs say the worst is over doesn’t make it true. Far from it. There has never been a better time to catch a falling knife!
The most amazing part of the situation at hand is not that it is different this time, but rather that it is almost exactly the same as always.
Investors need reality check in counting on financial turmoil being over
By RACHEL BECK | Associated Press
1:20 PM EDT, October 5, 2007
NEW YORK - The sugar rush that the Federal Reserve gave the stock market with a larger-than-expected interest rate cut surely has gone to investors’ heads. It’s time for a reality check.
Share purchasers seem to be betting that most of the bad news regarding the credit and housing crises is already out and better times are ahead — even though there is very little evidence pointing that way.
…
It’s no surprise that stocks are rising. It has happened 100 percent of the time in the first month after a Fed rate cut, and the average increase during that time is nearly 4 percent, according to Merrill Lynch.
We’re just above that now — since the Fed’s Sept. 18 surprisingly big half-point rate cut that brought its benchmark overnight bank loan rate to 4.75 percent, the Standard & Poor’s 500 index has climbed about 4.3 percent.
But after those initial gains, the market historically has tracked how the economy responds to the rate cut. And given today’s conditions — with housing and credit market stress still evident — much needs to change to arrest the economy’s slide. Ninety percent of the economic data released in the last month has come in below expectations, according to Merrill Lynch.
http://www.sun-sentinel.com/business/yourmoney/sfl-1005investors,0,7616407.story
I’m long that group (homebuilders) for a trade as noted a couple of days ago. It all spends the same.
I’m slowly building a short in TOL.
“During Hovnanian’s ‘Deal of the Century’ promotion last month, the company sold a 2,900-square foot five-bedroom, three- bathroom house in Royal Palm Beach, Florida, for $525,000, said Kathy Bell, who bought a house with the same floor plan down the street for $575,000 in March 2006.”
“‘It really stinks,’ said Bell, who lives in Hovnanian’s development in Royal Palm Beach, Florida. ‘We were here in the beginning and we didn’t get any deals. It’s very upsetting.’”
Yo lady stop your whining. You signed the contract. BLAME YOURSELF MFOR OVER PAYING. STOP LOOKING FOR HANDOUTS.
RON PAUL!
Indeed! I’m so sick of hearing complaints from the greater fools that think buying a home guarantees them annual appreciation. They probably haven’t gotten a raise in the past 5 years, but they can’t see the disconnect between that sky-high housing prices. In general people are morons. Anyone who refuses to accept that the prices reached in 2005-06 are irrational and unsustainsable, deserves to be smacked down. I wouldn’t be so critical if they would just admit that they overpaid. NO BAILOUTS FOR THE FBs!!!
“‘It really stinks,’ said Bell, who lives in Hovnanian’s development in Royal Palm Beach, Florida. ‘We were here in the beginning and we didn’t get any deals. It’s very upsetting.’”
Relax, Ms. Bell… the winning bidder at the auction didn’t get much of a deal either.
Excellent point.
Unless she’s complaining about defective construction, she got exactly the deal that she agreed to: This home at that price.
“Everyone has been saying that 2006 was the peak of problems, but looks like it isn’t.”
Not everyone. I’ve been telling clients and agents alike that it was just the beginning. After going thru the 90’s in SoCal, we heard in ‘93 it was supposed to be the end, but it didnt turn until ‘97. Anyone who puts a short term timeline on this mess is a fool.
Well, I’m glad it’s all over and things are getting better! Move along now, nothing to see here!
“A high proportion of the worst-performing loans from 2006 originated in California, Moody’s said. It identified falling house prices as a contributor to the overall poor performance of the 2006 vintage…”
A suggested rewording:
“A high proportion of the worst-performing loans from 2006 originated in California, Moody’s said. It identified their inept rating, due to a too-cozy relationship with securitizers, as a contributor to the overall poor performance of the 2006 vintage…”
as a short excercise, here’s a short list of inflated costs in a tiny little business up here in ORegon:
Healt care, up 40% ytd
Yellow page adverts, up 12% ytd
Banking Service Charge, up 109% ytd
ADP payroll processing charges, up 17% ytd
Officers life insurance, up a whopping 400% ytd
3 in-house price increases: total 6% (2% per quarter)
Business down 40 %
LETS talk jobs:
Layoffs at multiple lumber mills
Dell Computer call Center shut down
Brunswick Boat mfg, just laid off 40% (and moving to smaller sized boat mfg)
So, there it is folks, inflation contained, and job growth.
I really am having major difficulties trying to reconcile the difference in what the government is reporting and my own anecdotal evidence.
I agree with you on the stats. Was in upscale Gelsons Markets in Irvine last week and they said they just had one worst months since the store opened several years ago. My cleaning lady said she has lost 4 major clients in the past two months. Wonder if the housing market is to blame?
Dell
Roseburg, OR
Computer manufacturer Dell closed its Roseburg, Ore., call center on Thursday, five years after it opened. More than 200 employees will lose their jobs. A spokesman said the Round Rock-based company announced plans in May to reduce employment worldwide by 10 percent. He said the Roseburg location is the only such U.S. center to close.
Approximate Affected Workforce: 101-500
Source: The Houston Chronicle - August 3, 2007
In Portland
DaimlerChrysler AG January 27, 2007 Automotive
American Equity Mortgage Inc. July 7, 2007 Financial Services
Enuclia Semiconductor Inc. June 13, 2007 High Technology
Nike Inc. April 4, 2007 Manufacturing
Trillium Family Services September 24, 2007 Non Profit
Trillium IMHO is a leading indicator of future disasters: People are no longer donating to small not for profits.
Trillium Family Services
Portland, OR
A state plan to encourage more community-based care for kids with mental illnesses has backfired on Oregon’s largest provider of children’s mental health services. Leaders at Portland-based Trillium Family Services this week said they would cut 20 percent of the nonprofit’s work force — 94 employees — and close several money-losing outpatient programs around the state to halt deep financial losses. The agency laid off an additional 30 workers earlier this summer. The cuts will take effect over the next 90 days. The retrenchment means Trillium will serve thousands fewer children than the 8,600 it cared for last year. “We are no longer in the position to subsidize government contracts that don’t pay for themselves,” said Trillium’s Chief Executive Officer. Outpatient programs are Trillium’s biggest money-losers — to survive, the agency is returning to its core business of residential care for severely ill children and scaling back longtime efforts to become a full-service provider.
Approximate Affected Workforce: 51-100
Source: Business Journal of Portland - September 24, 2007
jeebus Hoz, ya found me.
I have stats for every county and most cities over 10K in the US. I try to keep ‘real time’.
I look for expanding employment. I look for investment opportunities.
hoz - what do you have for hartford, ct???
I work for AMCC - a semiconductor company. We’ve recently had 10% layoffs….high paying jobs..gone….
…job growth..isn’t it amazing what we can do with statistisics….
This from yesterday. Temporary? Time will tell.
Housing slump forces temporary closure of Weyerhaeuser mills
FEDERAL WAY, Wash. - Weyerhaeuser Co. said Thursday it plans to close seven saw mills in Washington and Oregon for two weeks because of low demand in the national housing market.
Mills in Aberdeen, Green Mountain and Longview, Wash.; and Dallas, Warrenton, Boardman and Coburg, Ore., will be closed from Nov. 19-23 and Dec. 24-28, Shawn Watson, spokesman for the Federal Way-based lumber and paper producer, told The Daily World of Aberdeen.
Watson could not immediately confirm how many workers would be affected or whether they would be paid for those weeks.
http://tinyurl.com/2cuyyj
Ahhhh… Back to the good old TechWrech days… An IT I was working for made a decision that they were shutting down for 2 weeks of xmas and new years. If you had vacation, use it. If not(didn’t have vaca, or refused to burn it), you’re not getting a check.
Ernest, I’m with you on the “temporary” aspect of these mill closings. A lot of lumber is now being shipped in from South America, because its cheaper.
“During Hovnanian’s ‘Deal of the Century’ promotion last month, the company sold a 2,900-square foot five-bedroom, three- bathroom house in Royal Palm Beach, Florida, for $525,000, said Kathy Bell, who bought a house with the same floor plan down the street for $575,000 in March 2006.”
“When D.R. Horton Inc., the second- biggest U.S. homebuilder, couldn’t sell the one-bedroom condominium in San Diego it listed for $349,800, the property was auctioned as a last resort for 37 percent less.”
I’m sorry, I don’t care where you live, these numbers are totally insane. And 37% less than totally insane is still insane.
Yeah, well 525K for ANYTHING in Royal Palm Beach is totally batsh*t insane as well. RPB is in the middle of nothing, surrounded on all sides by nothing, and close to nothing. It’s in the middle of the state, HOT, HOT, HOT without a breeze, no good commuter roads to get anywhere….
You get the picture. RPB is NOT what you are thinking of when you picture “Palm Beach” in your head, that’s for sure. Philadephia might be closer to the beach (in time) then you are from out there…
At that price that’s exactly what I pictured…..at or close to the beach, as in an ocean. A gated community maybe.
It is communities like these that are really going to topple this house of cards. As Michael mentioned, Royal Palm Beach is a pit. I was born and raised in West Palm Beach and I would not live in RPB at any price, much less $150/sft.
RPB’s only redeeming quality has always been affordability. It is where the poor whites fled in the 80’s when their older urban neighborhoods were taken over by minorities and immigrants. A decade ago I don’t think there was a single home in the area selling for more than $150K and the median was probably around $70K.
Lenders aren’t looking at 30% losses on these loans; they will be more like 60%. And since this is where most of the recent building was actually done these losses will be extraordinary.
isn’t that falsely misleading? royal palm pond. royal palm toxic waste dump. royal palm swimmin’ hole. but BEACH??? WTF
Interesting article on global economy:
http://tinyurl.com/yr5cqq
From the link…
“But the biggest U.S. export right now isn’t tractors or ball bearings or computer consulting or anything else American industry does. Our biggest export is inflation. And our No. 1 inflation customer is China.
Why should you care? Because the damage to China’s economy could be enough to send it spinning out of control, with grim consequences for the rest of the global economy.”
Nice article. Sums up the whole situation without the hysteria. Good find. Thanks.
“During Hovnanian’s ‘Deal of the Century’ promotion last month, the company sold a 2,900-square foot five-bedroom, three- bathroom house in Royal Palm Beach, Florida, for $525,000, said Kathy Bell, who bought a house with the same floor plan down the street for $575,000 in March 2006.”
That’s still way too much for that house in RPB. The 50K off obviously wasn’t even 10%. What’s the big deal? That house should be 375-400K right now. That’s it.
Amen. Anyone paying ANYTHING north of 100/sq/ft in RPB is going to take a serious bath in the coming years… See my post above, but basically, there are MUCH better areas that are actually close to civilization that are now approaching 100/sq/ft. RPB selling at 150 (as above) or higher??
Totally insane.
Hovnanian did great with that auction - only ~ 30% under bubble up asking price - 2 years from now builders would be overjoyed to get by with that kind of haircut.
I work for AMCC, a semiconductor company. We’ve recently had 10% layoffs….high paying jobs..gone….
…job growth..isn’t it amazing what we can do with statistisics….
I used to love that stock but it has died. Is that company ever coming back?
“Many of the loans that investors shunned in 2006 were able to be successfully securitized in 2007 because of the limited availability of new loans to purchase, according to Andrew Chow, who manages about $7 billion in asset-backed bonds and mortgage securities.”
So the 2007 bonds are actually 2006 loans, packaged up to the very last suckers before the August reckoning?
Can someone explain how the unemployment rate went up to 4.7% when the non farm payroll actually increased ? I am confused with the numbers. What’s the basis for revising the previous months payroll numbers numbers ?
About a third of the populaiton isn’t considered employable (retired, children, students, those who aren’t even looking) so they don’t go into the unemployeed numerator (nor the divisor) so if jobs rise, but more of the non-employables return to unemployeed but seeking both can rise.
Thanks.. Makes sense…
“About a third of the populaiton isn’t considered employable ”
Based on what I’ve witnessed, that number should be a bit higher..
Chicken Little is Bullish on Bankruptcy
“Investment bank Merrill Lynch & Co. said Friday credit and mortgage woes will lead to it post a third-quarter loss…after taking roughly $5 billion in writedowns. The bulk of the losses will come from marking down the value of collateralized debt obligations and subprime mortgages.”
“Rising delinquencies and defaults among mortgages, especially subprime loans, has led to the near disappearance of investors willing to buy the loans. Without an investor market, the value of the loans decreases.”
http://wcvarones.blogspot.com/2007/10/blog-post.html
did anyone checkout this link left by crisp&cole its too funny!
Very funny! Just the same, I could do without the mental images of the “naked orange body”.
Man de la tan, aka Le Grande Orange
will be the whipping boy, ala ken lay
for this debacle~
ROFLMAO! Lovely, just lovely…
“Investment bank Merrill Lynch & Co. said Friday credit and mortgage woes will lead to it post a third-quarter loss…after taking roughly $5 billion in writedowns. The bulk of the losses will come from marking down the value of collateralized debt obligations and subprime mortgages.”
Expect to see a big one of these soon. I’ve heard where Wells Fargo has had some ‘interesting’ financial games going on. Thankfully I got out of them as a bank well over a year ago.
Need a pint of B negative Plasma, stat!
“Troubled homebuilder Standard Pacific made headlines last month with its push to sell 200 homes in 10 days in Southern California. To lure buyers, it dangled free plasma TVs and cut-rate mortgages.”
The Canadians are getting all cocky with their pumped up loonie:
OTTAWA - The Bank of Canada has intervened in financial markets for a sixth consecutive session, to improve liquidity and keep its key overnight interest rate close to the 4.5 per cent target.
The central bank injected another $420 million Friday, on top of $4.857 billion for the previous five sessions. The move came as the Canadian dollar soared 1.59 cents US to 101.85 cents US following a strong Canadian employment report.
Bank of Canada deputy governor David Longworth said Wednesday the central bank is prepared to continue to intervene.
He had said in a speech that market liquidity, which has been a concern since the credit crisis in August, should return to normal over time.
Thanks, Helicopter Dave!