Overleveraged Borrowers Are Meeting Falling Home Prices
Some housing bubble news from Wall Street and Washington. Bloomberg, “Defaults by U.S. homeowners with private mortgage insurance jumped by 22 percent last month after house prices fell the most in at least six years, an industry report said. The number of insured borrowers more than 60 days late on their payments climbed to 54,699 in September from 44,791 a year earlier, according to the Washington-based Mortgage Insurance Companies of America.”
“‘The speed and the depth of the deterioration we saw in the third quarter, and in particular the month of September, was greater than we had expected,’ said PMI CEO Stephen Smith in a conference call after reporting a net loss of $86.8 million.”
“Total U.S. losses, including money set aside for future claims, increased fivefold to $348.3 million in the third quarter, the Walnut Creek, California-based insurer said”
“‘Things are going from bad to worse,’ said Ajay Rajadhyaksha, head of fixed-income strategy in New York at Barclays Capital Inc. ‘Overleveraged borrowers are meeting falling home prices.’”
The Associated Press. “Mitsubishi UFJ Financial Group Inc. on Wednesday slashed the outlook for its net profit by 25 percent for the current fiscal year due to subprime-related losses and sluggish domestic lending business.”
“The banking group said estimated losses on investments, including some related to subprime loans, stood around 20 billion yen ($173.91 million) at the end of last month. Its write-down of investments with subprime loan components fiscal first half will be about 5.0 billion yen ($43.48 million), it said.”
From MarketWatch. “The Bank of Japan trimmed Wednesday its forecast for the Asian nation’s economic growth this year and slashed inflation estimates to zero, dashing hopes that Japan had won its long bout with deflation and raising doubts that its longest expansion since World War II is running out of steam.”
“‘The environment overseas has changed, and uncertainty over the global economy persists,’ media reports cited Bank of Japan Governor Toshihiko Fukui as saying at a Tokyo news conference.”
“Fukui also said global growth could be crimped by the ongoing problems gripping the U.S. mortgage market.”
The Sydney Morning Herald. “Borrowers in NSW marginal electorates are defaulting on ‘dramatically’ more loans than they did last year, indicating a rising tide of financial stress, credit check figures show.”
“The biggest increases in borrowers not being able to meet credit card, personal loan and mortgage payments are in drought-affected rural regions and the ‘mortgage belt’ in Sydney’s west.”
“In the federal seat of Calare in the central west, there were 77 per cent more defaults than last year, the figures, released by credit check company Veda Advantage yesterday, show.”
“‘This study demonstrates that a significant number of people living in regional NSW are struggling to repay the credit they owe - a rise in defaults of almost 60 per cent over the previous year indicates the situation is getting desperate for some,’ said general manager Erica Hughes.”
“Nick Collins, an independent London real estate broker who’s had record profits every year since 2003, took a hit in September, and that may be bad news for a U.K. economy built on a housing bubble.”
“Five of his 50 buyers pulled out of purchases, spooked by a run on mortgage lender Northern Rock Plc that left it 2 billion pounds ($4.1 billion) poorer.”
“‘It’s undermined people’s confidence,’ says Collins, who sells homes worth as much as 5 million pounds. ‘The market’s not as frothy and competitive as it was.’”
“Now, with mortgage lending cooling and house prices falling for the first time this year in September, the economy may be in the early stages of a slowdown. ‘U.K. house prices are significantly overvalued and extremely vulnerable to a correction,’ said Danny Gabay, a former Bank of England economist.”
“Consumers have spent some of these gains and loans on goods such as new kitchens and cars they otherwise couldn’t afford, said Alan Clarke, a London-based economist for BNP Paribas SA, France’s biggest bank. ‘The only thing that has been supporting consumer spending growth is wealth gains from house price inflation,’ Clarke says. ‘This is about to disappear.’”
“Gabay says so-called buy-to-let properties, which investors acquire for rental income, are more vulnerable to a fall in prices. The value of new buy-to-let mortgages soared more than 12-fold from 1999 to 2006 to 38.4 billion pounds, or 11 percent of new property loans, according to the Council of Mortgage Lenders.’
From Reuters. “Equity Residential, one of the largest U.S. apartment owners, on Tuesday reported weaker quarterly funds from operations…fell partly because of competition from single-family homes and condominiums for rent.”
“Some markets, such as Florida, Phoenix and Las Vegas, have seen many condominiums or single-family homes appear on the market as rentals, competing with traditional apartments.”
The Consumerist. “Foreclosure tracking firm RealtyTrac has been delivering lots of bad news this year, not least of which is some sobering numbers on Real Estate Owned properties or REOs.”
“And there have been a lot of them. 255,129, according to RealtyTrac’s records.”
“Just how many homes are we talking about? 255,129 is more housing units than the entire city of New Orleans. 255,129 is enough housing to hold about 790,900 people, according to the average family size reported in the 2000 U.S. Census.”
“If those 790,900 people formed a city, ‘Bank Repossessionville’ would be the 13th largest city in the U.S. Right in between Jacksonville, Florida and Indianapolis, Indiana.”
“The 13,674 houses owned by just one lender, Countrywide, are valued at 2,867,767,788.”
The Star Bulletin. “Three months ago, Central Pacific Financial Corp. assured investors it had no exposure to the subprime lending market. But what a difference a quarter makes.”
“The parent of Hawaii’s fourth-largest bank, Central Pacific Bank, said today that third-quarter net income plunged 55.8 percent after it took a $21.2 million provision for loan and lease losses due to a rapid downturn in California residential construction.”
“‘What happened is the national homebuilders took the strategy of just unloading inventory and they discounted it significantly from 10 to 30 percent, and many of our projects were located next to projects that national homebuilders have,’ said Clint Arnoldus, president and chief executive of Central Pacific. ‘All that happened in a very short time.’”
“Arnoldus said he had never seen a downturn occur so quickly. ‘In this case, it’s a rifle shot right into the housing industry because the other economic indicators in California are still relatively strong. What happened in this case is the market got overheated by the subprime mortgages that were created, and that came to a grinding halt. Then the national homebuilders dumped inventory,’ he said.”
“Home prices have further to drop as builders become increasingly concerned about turning over their inventory, former Federal Reserve Chairman Alan Greenspan said.”
“‘We’ve got this huge overhang of newly constructed homes … which are vacant and deteriorating,’ Greenspan told a financial services trade association. ‘You cannot keep a very large inventory of single homes for sale because their value declines. There is very considerable pressure for home builders to unload these on the market and they’re starting to do that.’”
“He said that housing prices will be key to whether the economy begins to contract and will be more of an influence than the turmoil in the credit markets.”
“‘It’s going to depend more on the issue of prices of homes than it will be on the resolution of what has been a fairly significant credit crunch,’ Greenspan said. ‘If we didn’t have the house price problem, we’d be well along on the way of getting out from under this.’”
“The former Fed chief indicated there was more pain coming, even after home prices in 10 major U.S cities showed a 5 percent year-over-year drop in single-family homes in August.”
“‘There is very little evidence that we’re making much progress because sales were falling almost as rapidly as new construction,’ Greenspan said.”
“A Federal Reserve interest rate cut this week won’t be enough to save the reeling housing sector, overwhelmed by unsold homes. ‘We think the more significant problem in the housing sector is the inventory. It’s not just the affordability of the credit, it’s even the access to the credit, which is a question today,’ says Nicolas Retsinas, director of the joint center for housing studies at Harvard University.”
“Order cancellations are escalating as lenders crack down after being burned by mounting defaults and foreclosures. ‘If mortgage rates go down, they still have to make it through the hurdle of credit quality,’ said Gregory Miller, chief economist at SunTrust Banks Inc.”
“‘Banks have been very scorched, very burned by the quality of, in particular, subprime ARMs,” or adjustable-rate mortgages made to borrowers with weak credit histories. “You could end up at that market-clearing, inventory-reducing price, but not be able to get financing. This one’s getting rough,’ he said.”
“The interest rate cut Wall Street believes will buffer the economy from housing market woes is unlikely to boost hard-hit banks and homebuilders much in the near term, analysts say.”
“‘The problems in the housing market, the problems in the credit markets are not easily solved by the Fed cutting rates,’ said Steve East, chief economist for investment bank Friedman Billings, Ramsey & Co.”
“Struggling homebuilders, such as D.R. Horton Inc., Lennar Corp. and Pulte Homes Inc., are faced with tightened lending standards and severely limited demand. Many would-be buyers are unable to qualify for loan approvals, even if rates move lower.”
“Lower interest rates are ‘certainly not the panacea’ for getting the housing market back on track, said UBS homebuilding analyst David Goldberg.”
“Jefferson Harralson, a banking analyst…who follows banks such as Bank of America Corp. and Wachovia Corp., said an acceleration in losses from defaults .seems to be a given, whether or not a rate cut occurs..”
“He says home equity lines of credit will be less likely to default if rates are lower. But that’s hardly a revenue cure for banks in an environment in which housing prices continue to fall and foreclosures continue to rise.”
“‘The home equity business isn’t going to be a growth business,’ Harralson said.”
The Washington Post. “Remember all those stories about how the nose dive in financial markets was the first big test for Federal Reserve Chairman Ben Bernanke, the academic economist who was still developing his feel for the interplay between the central bank and Wall Street?”
“Well, it turns out that was only a midterm. The final exam begins today, when Bernanke will either show that he is capable of standing up to the insatiable demands of Wall Street, or that he is so spooked by the prospect of being blamed (unfairly) for triggering a financial meltdown that he puts the short-term interests of big banks and investment houses before the long-term interests of the global economy.”
“Even if you believe, as some of us do, that the bursting of the housing and credit bubbles will eventually drag the economy into recession, there is little evidence that this is happening yet. And when the economy does begin to hit the wall, there is little the Fed will be able to do, or should do, to prevent it: It is part of the economy’s natural self-correcting process.”
“But what a rate cut surely would do is to encourage investors and bankers in their belief that the Fed is so desperate to avoid a credit crunch that it is willing to reinflate the bubbles and keep the party going anyway it can.”
From the Washington Post article:
“But won’t the markets react badly if those expectations are dashed? For a few days, or even a few weeks, almost certainly they will. But if the Bernanke Fed doesn’t respond to this challenge by showing that it cannot be pushed around by the markets — that it is willing and able to take the heat and insist that Wall Street deal with its problems — the Fed will almost certainly find itself in the same position six weeks from now, and six weeks after that, and six weeks after that.
It would have been better for everyone if the Wall Street herd hadn’t tried to box in the Fed by creating these unrealistic expectations. It would have been better if the markets were focused instead on the unsolved problems in the financial sector, the falling dollar, rising oil prices and the continued deterioration of the housing market. But that’s not the way it worked out.
So now, if the Bernanke Fed wants to retain its credibility and independence — if it wants to have the flexibility to cushion the coming downturn without stoking inflation or creating a new set of bubbles — then there is only one thing to do today:
Look Wall Street in the eye and just say no.”
******
Actually, “looking Wall Street in the eye” would occur if the Fed were raising rates.
Not doing anything is agreeing with the Street’s fantasies.
Anyone besides me want to see Cramer & Kudlow told to STFU by a Fed Increase ?
we’re just 20 minutes away from the Fed decision…
Let’s do a survey. All those who say the Fed cuts the rate, say Aye
My Vote: Aye- as much as I hate to say it.
Aye!!! Even with the gdp showing 3.9% growth. Of course you know whats causing all that growthdon’t you??? Yes, its inflation. With nearly all commentaries from ceo’s talking about dropoffs in demand from everyone from railroads to retail to auto companies, its got to be inflation coming through in that number. No way was it actual economic activity. But benny will cut anyway to please the street and bail out homedebtors.
I am thinking (hoping) they will not. No cut, but language suggesting that they may later.
One minute to go… Stocks @ 81.61…
Something must have happened. I went to take a piss, came back, DOW at 56.33. That’s what I call a FAST dip.
I don’t get it. Wasn’t the rate at 4.75? The statement says cut .25, but sets the target at 4.25 actually a .50 drop. More Fed double speak, or am I wrong?
No cut
really? no cut? holy cow.
Dude it takes a while to post ok
The Fed cut - quarter point.
Marketwatch says:
“The committee [FOMC] said the risks of inflation and growth were balanced.”
If true - why cut?
And 3.9% GDP growth? We need a rate cut…?
I wish the Fed would grow a spine.
Damn it. Yes, they cut .25 of a point. Now, if you all would care to join me, I’m going to join my place in the bread line and pay with my soon-to-be-valueless dollars.
.25 cut
Yeah, I double checked. Per the Fed statements: in September the rate was 4.75 after a .50 cut. Today the announce a .25 cut but slip in an extra .25 stealth cut by announcing the nex target is 4.25, actually a .50 cut.
Is this just government math, or are they trying to pull something? They can’t possibly think no one would notice - is this a typo? If so where’s the typo, the .25 drop (should read .50) or the 4.25 target (should be 4.50)?
I must be going nuts. It says 4.5 target - I must have misread…..
MoMoney,
I’d much rather see the corporatist crowd of Kudlow and his ilk hang from the light posts.
Too drastic. Nobody needs to be hurt to the point of expiration.
I’d settle for just giving them a good ole fashioned pummeling, then having Larry give his brodcast with a big black eye.
the Fed is so desperate to avoid a credit crunch that it is willing to reinflate the bubbles and keep the party going anyway it can.”
The Fed bowed to political preasure and the preasure from Wall Street today by lowering the short term by a quarter point. Brace yourself for the coming inflation and $100+ per Bar. of oil! I think we may be headed for a recession in late 2008 or early 2009.
From the original post:
“He says home equity lines of credit will be less likely to default if rates are lower. But that’s hardly a revenue cure for banks in an environment in which housing prices continue to fall and foreclosures continue to rise.”
“‘The home equity business isn’t going to be a growth business,’ Harralson said.”
Makes me wonder what the banks and other financial institutions are going to push on us now. Charging fees for this, that, and the other thing prompted quite a consumer backlash. And the rates on their savings accounts aren’t exactly prompting people to bust the doors down.
So, people, waddya think will be the next cash cow?
Raising overdraft fees. That’s easy non-interest income and with so many people living pay check to pay check expect banks to raise their overdraft fees.
Blood donation cash advances ?
OT: When the housing market slows, some home sellers drop their asking price. Others give buyers allowances to cover the cost of upgrades or offer help with financing.
Bob and Ricki Husick came up with a more creative twist: Whoever buys their four-bedroom, 31/2-bath home on Fountain Hills Drive in Pine would get their money back after the Husicks die.
http://www.post-gazette.com/pg/07302/829344-30.stm
Wachovia mortgage broker?
Sweet, I’d trust him. Where do I sign!
Not only that, but if the buyers are willing to care for the Husicks in their old age, they could also inherit the Husicks’ retirement home in Arizona
As long as it has a basement that locks from the main floor I’m in!!
“We don’t want you to think we’re trying to trick you,” he said. “You draw it up and we’ll sign it.”
uh huh.. i show up with an Irrevocable Trust to lock in my “inhertiance” and naming me as Trustee over all of your worldly goods, and you’re gonna sign it..
This is just an absurd PR ploy - they will spend every dime before they’re dead and anyone who took this offer would get nothing. What’s amazing and sad is that a newspaper printed this tripe as “news.”
newspaper printed this tripe as “news.”
nothing much we can do about that.. it’s in the Constitution.. “freedom of the psychopathic press” ..
Yep. If they don’t have the money to stay in their house now, what would make anyone think they’ll have it 20(?) years from now? The sooner people like this go BK the better.
Great. Let’s get the papers signed and the deal done — and how about we all go out sailing afterwards? Just the three of us. Yeah, I know it’s a little windy/choppy out there …. but we’ll have a great time. Trust me.
“The Bank of Japan trimmed Wednesday its forecast for the Asian nation’s economic growth this year and slashed inflation estimates to zero…”
LOL. Why stop at zero? Why not slash estimates to -10% inflation? Sure, Japan imports all its’ oil ($94 a barrel and rising!) and is the worlds’ largest food importer but so what? Who cares if the price of gold has doubled in yen in two years? It means nothing don’t you know? The government says neener neener neener, there is no inflation. No more questions, this interview is over!
I lived in Japan from 1990 to 2000. Went back for a visit in June 2007. Surprised to see most food prices were roughly the same and seemed pretty reasonable compared to US food prices.
Fuel prices were a big concern, but not other prices.
Japanese drink very little milk and orange juice and eat relatively little beef. Mostly tea-type drinks, of which there are an endless variety and rice-based dishes. Japan has always made a big deal out of being self-sufficient in rice
Japan is unique because the whole country stopped having large families at the end of WW2. As a result the population is very old and getting older. There aren’t enough young people to buy real estate or hold jobs these days. There’s been massive deflation in Japanese stocks and housing since the late 80s bubble, and with the population dying off they can’t shake it off.
(Note: I visited Japan in 1988 and a bowl of rice with chicken/beef on top cost $6.00-$7.00US. I again visited in 2006 and the same meal cost $3.50US.)
I understand that Japan has suppressed the yen and I accept that a bowl of (government subsidized) rice may be getting cheaper. However, Japanese pay market prices for fuel, imported food, and shipping (+250% in a year). There are obviously inflationary pressures as evidenced by the tremendous gains in yen-priced gold.
Rice in Japan is not subsidized. That would mean they would be paying below world market price. In fact they pay well above world market price due to import restrictions.
If the Fed cuts rates today I am going to buy ten condos. That’s it - i’m just waiting to pull the trigger.
“We still don’t know how bad it’s going to be,” Grasher said. “As these mortgages are resetting at higher rates, people are just saying `no thank you’ and walking away.”
As Charles M. Schulz said, “No problem is so formidable that you can’t walk away from it.”
Another quote from the Pearlstein article in the Wash Post.
“So now, if the Bernanke Fed wants to retain its credibility and independence — if it wants to have the flexibility to cushion the coming downturn without stoking inflation or creating a new set of bubbles — then there is only one thing to do today:
Look Wall Street in the eye and just say no.”
I think Wall St has only one eye, and its kind of brown and puckered…
At this point in time, unfortunately the Federal Reserve cannot say “No”. Merril, which just took $7.9B in losses, is facing a $4-6B loss. The only hope for the banks and financial institutions is a lower rate that would make these credible investments. Aint gonna happen, but they will try.
“…A hedge fund manager who held senior fixed-income management slots at two of Merrill rivals told The Post, “It is one thing to take a $1 billion or $2 billion hit as everything is written down. But writing down $14 billion in ABS CDOs by half or more, after the quarter they had, is very difficult.”
“GLENN SCHORR, ANALYST, UBS: Hey, guys, how are you? Jeff, question for you. As of the end of June, you noted that your ABS CDO related exposure was around $32 billion, 15 as of the end of September. You marked down around 6. Where did the other 11 go? Last I checked, there weren’t a lot of sales on the market.”
Merrill’s post earnings conference.
Wall Street now dictates what the Gov’t does and which way it should go. This is very dangerous, the stock market is like any other game of chance you invest some win, some lose, but the Wall Street people want to be assured they win all the time no matter what the world economy is showing them, just keep the dow above 14k and they are happy.
Everything that is happening right now high commodities, cost of living, housing crunch points to serious issues that the marlet wants the Fed to ignore and they do.
In this scenario that is playing out world wide the stock market should be no higher then 8k instead like housing just a short time ago when it was overvalued the market is following the same course, 14k because a internet site called Google or Yahoo rules the roost this is nuts, the Auto industry is broke, steel is made overseas as is everything else, avg pay in America 17.47 a hour, and gas is going to $4 a gallon that is the real world, yet wall street wants us to believe a keyboard and monitor in someones basement and some suits who sit on the Fed Reserve board who are driven by CNBC yelling lower rates everyday drives the economy?
14k because a internet site called Google or Yahoo rules the roost this is nuts.
this is what blows my mind! what are they trying to push down everyones throat? i dont get it.
I go to Japan every few years and I live in New York City. In the past 8 years I’ve watched as Tokyo gets cheaper and NYC gets way more expensive. Food is incredibly cheap in Japan compared to the US.
Yes, you can buy an $80 melon and a &10 apple, but those are the top of the line delicacies. They also have cheap melons and apples. Just like we have cheap grape juice, and $100 bottles of wine.
Same experience. And you have to love the tei-shoku menu at local restaurants where you can get a delicious, home-cooked, nutritious meal, with coffee for about 750 yen (about 7 bucks), and no tip.
Another big advantage is no need to own car and companies pay for your monthly rail pass. Makes it easy to save money on a moderate salary.
Back in the day, tons of transactions in Nippon were done with cash…
Is this still so?
Lived there 90-93. It was a nearly a 100% cash based society. I bought my K-Car in cash, 106 10,000 Yen notes. It is normal to be carrying $1,000 in cash at times.
Like other people, I go back about every two years. A few years ago, credit cards became widely acceptable and it seems that you can use them just about anywhere now.
que the smoke, check
que the mirrors, roger that
ok boys, no cut, triple overnight operations…fire up the presses… get the Soveriegns on the horn, STAT, and lets pick up some bargains in the market.
brass tacks.
“Some markets, such as Florida, Phoenix and Las Vegas, have seen many condominiums or single-family homes appear on the market as rentals, competing with traditional apartments.”
According to the data I have seen, there is a quarter-by-quarter race between households and housing units from the ownership sector to the rental sector. When more households move to rental, vacancy falls and rents rise, but when more housing units move, the reverse is true. Either way, large-scale landlords are whipsawed by the for-sale housing market.
Eventually the housing units might win. But if enough tenants get burned by having their leases voided by foreclosure, actual apartment buildings owned by professional landlords might look good.
“‘Things are going from bad to worse,’ said Ajay Rajadhyaksha, head of fixed-income strategy in New York at Barclays Capital Inc. ‘Overleveraged borrowers are meeting falling home prices.’”
That really breaks my heart to hear..hee hee, as I sit quietly plotting my revenge on the FB’s:)
“The biggest increases in borrowers not being able to meet credit card, personal loan and mortgage payments are in drought-affected rural regions and the ‘mortgage belt’ in Sydney’s west.”
“In the federal seat of Calare in the central west, there were 77 per cent more defaults than last year, the figures, released by credit check company Veda Advantage yesterday, show.”
Australia is a Lucky Country
Rich in minerals and close to China and a natural supplier for it, all should be aces and everything should be perfect…
They just don’t have much water.
Australia is a few years ahead of us in the drought cycle, so if you are thinking of buying a home when things crash, consider where your water comes from, first and foremost in your searching…
Emperor Norton II (blogging from my Vincent Black Shadow)
Don’t have much water?! They’re _SURROUNDED_ by it!
Seriously… Atomic or Solar powered desalination ftw…
The Marquis DeSal creates an awful lot of brine…
How is Japan doing on the rice self-sufficiency?
I read an interesting article awhile back about rice in general, cultural and agricultural issues, and about a dramatic scandal in Japan when a major rice dealer or distributor was caught adulterating his very expensive Japanese specialty rice with substandard round-eye American rice. It also explored the efforts to increase yield from rice plants.
You know, I’m getting hungry. I’m going to go eat some rice.
Fed funds rate: 25 basis point cut
Discount rate: 25 basis point cut
The fools! And oil nudged over $94/barrel for a while.
So much for Bernanke having any pretense of worry about inflation.
Looks like the big housing bailout strategy is to devalue the currency via inflation, and then all those upside down FB’s will end up in the black again, at least in nominal if not real terms.
FOMC text indicates no cut in next meeting:
The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
http://www.bloomberg.com/apps/news?pid=20601087&sid=apThgPNy9NmY&refer=home
However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction.
this is what they used for an excuse last time when they cut by .50. what a crock of $hit!!! they should have just said wall street barked and we listened!
Dow drops 100 pts. from gains.
Fed Cuts Interest Rate by Quarter Point
http://biz.yahoo.com/ap/071031/fed_interest_rates.html?.v=19
So much for an independent central bank.
“The Federal Reserve, confronted with surging oil prices and a slumping housing market, on Wednesday cut a key interest rate by a quarter-point, the second rate reduction this year.”
Bahahahaha! Oh yeah, cutting the FFR and tanking the U.S. bonar fiat currency is really going to help with oil prices.
Excuse, I need to go take a huge Bernanke now. Hopefully it won’t clog the toilet.
Gonna send him a little “floating currency” are you?
Excuse, I need to go take a huge Bernanke now. Hopefully it won’t clog the toilet.
Best take a plunger or a stick! You can use dollar bills to clean up and save your Charmin, it will soon be worth more.
Hope you don’t need the PPT. They will be busy this afternoon on Wall St.
Don’t forget to wipe your Paulson when you are finished…
I just took a Cramer this morning - it was kind of explosive and really disgusting..and loud!, my god.
lmoa
Me too. And I’d better visit the johnny before I Bernanke all over the place.
..
Bernanke just got back from the Beer Run.
Brought back a quarter keg to quench that late-night thirst !!
Party on, sheeple !!!
..
“‘It’s going to depend more on the issue of prices of homes than it will be on the resolution of what has been a fairly significant credit crunch,’ Greenspan said. ‘If we didn’t have the house price problem, we’d be well along on the way of getting out from under this.’”
Captain of Titanic to 1st Mate: If we didn’t have that Iceberg problem, we’d be well along our way of getting to New York.
What an idiot.
I think this statement is amazing coming from a guy who said there was froth and tiny bubbles in the market. If anyone watch KudBlow&Co last nite, the sytem is TELEGRAPHING what the problem is. I see intense public pressure building against NAR and the REIC as we speak.
Sort of like the pressure that blew the north side off of Mt. St. Helens in 1980?
Housing needs to correct and come down to earth and the Fed is doing every it can to delay a normal and necessary market action. Anyone else see a problem with this. Is it just me thinking that the Fed will make the problem worse.
“Well, it turns out that was only a midterm. The final exam begins today, when Bernanke will either show that he is capable of standing up to the insatiable demands of Wall Street, or that he is so spooked by the prospect of being blamed (unfairly) for triggering a financial meltdown that he puts the short-term interests of big banks and investment houses before the long-term interests of the global economy.”
Cagey B got spooked, but hey…
He’s got a Halloweenie
Rental race to the bottom…
“Equity Residential, one of the largest U.S. apartment owners, on Tuesday reported weaker quarterly funds from operations…fell partly because of competition from single-family homes and condominiums for rent.”
“Some markets, such as Florida, Phoenix and Las Vegas, have seen many condominiums or single-family homes appear on the market as rentals, competing with traditional apartments.”
Bias Is Seen as Landlords Bar Vouchers
http://tinyurl.com/29f5aw
‘…but now, apartment listings routinely exclude voucher holders, marking a significant shift in the way many landlords have come to view the program. Many property owners and real estate agents say the program is overly cumbersome, and in a hot rental market, they say, there is no need to take on a Section 8 tenant.’
I suppose the fact that some families do more damage than the landlord can afford isn’t part of it?
I had friends who rented to a section 8 family. The “voucher” didn’t even come close to market rates for rent, and once the folks were gone it’s not like you can go after them for damages - they’re broke, and their rich uncle isn’t about to cough up the dough either. It’s a sucker’s game.
Would you like to live next to section 8’s? I’m with the landlord’s on this one. They have a right to protect their property. And who wants to pay market rents in a building with section 8s?
I have an acquaintance who co-owns several apartment complexes. He does accept Section 8 in the complex near my house, and you know what? It’s the quietest complex in the area. Really.
He runs a very tight ship, and is quite upfront about the fact that tenants who cause trouble are gone. No exceptions. He also has very strict on-site management.
We, the neighbors, are #1 in his fan club.
Indeed. A friend of mine has over a dozen rental properties, single family homes mostly, but some duplexes and a four-plex. He rented to a few Section-8′ers in years past, but never again. Like you said, the damage they often do before moving on more than offsets the advantage. Was he just unlucky? Maybe, but seems that too many other owners have had similar experiences.
Another reason, he says, is that in a duplex or four-plex their behaviour can drive off the good tenants he wants to keep. And if the Section 8 voucher won’t cover market rent, that’s even worse.
He doesn’t care if you’re black, white, brown, or yellow; just don’t come to him with a Section 8 voucher.
If the so called activists do not like that section 8 tenants are rejected based on discrimination and not market reality, then the so called activists need to band together, buy a few hundred apartment buildings ( which should not be hard in these market as according to the RE ads this is the -best- time to buy ) and rent those units exclusively to section 8 tenants making gobs of money in process.
Its not the activists job to SOLVE problems Evil Capitalist.
Their job is simply to point them out and EVERYONE else is supposed to solve them. Silly man.
Activists want ACTION! They don’t manage the “solutions” they devise, they don’t take any risks and they NEVER put their own money up, that’s the governments job……:)
Oh.. silly me! How could I have been so blind! *head desk*
Is 2 rate cuts enough for the general public to see the pattern that rate cuts are not making mortgage rates go down and homes more affordable?
I can’t see the fed being able to give any more excuses to lower rates after 3.9% gdp growth, a falling dollar and spiking gas prices. If a .5 and .25 cut doesn’t help housing, then how will they justify another cut? Aren’t they supposed to be worried more about much higher fuel prices putting pressure on prices? Why sacrifice inflation for something that will never work? Really, mortgages will be more affordable as people have to spend a lot more on gas and food? It’s not like mortgage rates a high now to begin with.
why worry about the general public if you can shift billions of money from savers and foreigners to you Wall Street friends with every rate cut? B-52 Ben is having the time of his life, you bet!!
So the rich get richer and the poor get poorer, but won’t this backfire as the actual businesses will become less profitable with most of the people having less buying power. You can only move around money so much. If the majority becomes poorer and poorer, then businesses should become less and less profitable. Isn’t it a lot easier for a business to make money in a country with a strong middle class? It just seems like a quick and easy fix for wall street investors that won’t last.
It’s no longer about businesses…..it’s about leveraging and re-leveraging and pumping it up one more time…. The bankers/traders/quants engineered this marvellous new game where they pretend to provide a valuable service, and institutional investors pretend they’re sophisticated enuf to understand this game.
Of course, it’s your money - and mine - these clowns are playing with……and taking home when they’re spectacularly caught. What was the Merrill Lynch bye-bye agreement? $161 mil?
It really is all smoke and mirrors. I feel profoundly saddened…at least when I don’t feel like energetically applying that trout
They are not trying to support the “housing market”. The last thing they will ever worry about is individuals. It’s about banks. They are trying to keep the banks from getting rigor mortis. These rate cuts won’t make easy mortgage money come back.
The market is driving down interest rates trying to hide in T-bills (and google). The Fed is passing the glass. It won’t last. The sucker punch is on its way.
If prices drop another 50% and they get the rate close to 0% that seems like a deal to me. I definitely will buy in. So now that’s what I am waiting for.
Confetti, I guess. LOL, that’s why I said it was gambling.
I don’t know who would be loony toons enough to be buying stocks here but they don’t consult me first so what the hey.
Bug v. Windshield.
They each have their day.
Mr. Loony Toons.
That was a heck of a market ride today, wasn’t it?
I was out for lunch, too bad, there was an nice swing there. This is just nonsense though. They’re trying to recreate the move after the last rate cut, somehow doubt they’ll be able to manage a new high.
a new high ? they have to get back the old high. Not bloody likely. I expect a selloff by insiders after hours today and a big drop at the open tomorrow. The flight to foreign equities will continue.
I think the puts are worth holding onto for the hell of it.
I’d hold ‘em, especially if they’re almost “confetti” right now. Oh wait, I *am* holding some, but mine are January’s and fortunately not (yet) confetti. November is cutting it close, but these market prices might not hold, once the smiles wear off about today’s move.
Those old Confederate Dollars just might be worth MORE than the US Greenbacks before this is all over
I had all my positions right today, but got kicked out all but one in the pre annoucement uptick. An average day for income, but I sweated alot more than usual to get it.
today’s market was a semi-turgid erection at best
Quarter point just makes them feel that they did something, it doesn’t matter if the fed rate is 4.5 or 5.0 at this juncture the patients infection is spreading and a few drugs just slows it done but a cure is not in the offering.
Gold,silver,nat gas, and oil are insane in price as is the total meltdown in housing, it is right in front of everyone to see, the train wreck that the police tell you is not really there, it is a mirage.
What has to be done is very painful, housing has to slide farther done in price for the public to get excited and the investors well they just have to go broke sorry no saving them now, oil drilling must be at least threaten off the Cal and Fla coast, Alaska and if no movement from Opec or power brokers start the platforms so the oil cartel backs off, the fed reserve must make a public statement (fire side chat) that the agency is in the business of bank slovency and core inflation at the world wide level, not propping up the stock market, the Federal Reserve doesn’t care if bonsues are paid at xmas or the avg pay 150k goes down on wall street this is a crisis that all must endure.
None of the above will happen of course because it is simple and to the point , no very rich person or corp can get richer only slightly poorer so they won’t like this?
I’ll admit it was fun being in the $700 Club, if only for a short while…
We should riot in the streets and burn (any useless dollars you might have saved) and pilage.
It is time for a regime change.
#1 Target=Corporatists
‘We should riot in the streets and burn (any useless dollars you might have saved) and pilage.’
Let’s do it! I’m ready!
Oh, yeah, and the regime change stuff will be good, too.
can we wear those blakck hoods like “freedom fighters” wear? those are sooo cool..
I do enjoy drawing out the idealogues who support the status quo. I always wonder though. Why would a wage slave support the corporatists?
why would a wage slave support corporations..
gee.. i dunno.. My theory might be that they are employed and get paid by corporations, and don’t like hunting for work or starving.. And/or, maybe their pension fund is heavily invested in corporations..
Or perhaps the products and services the “slave” enjoys and refuses to live without are produced by wicked, capitalist corporations… stuff like cars and internet connections..
Iff’in you’re gonna crash the system, at least have the sense to first make sure you’re not standing under it.
Yes. Wage slaves should worship the ideology that keeps them enslaved. Puleez.
the funny thing about is that slavery a choice.. complaints aside, they certainly do choose to stay and worship their masters.
But there are no chains or shackles.. we’re all free to work for ourselves, live in a commune or move to Cuba or China..
man.. this anti-corporate stuff is so ’60’s.. another generation of empty talking revolutionaries who will continue to work for The Man or grow up to be The Man..
And the pro-corporate pandering by those who slave for them, regardless how perilous and mindless it is, is so Reaganesque 80’s. There are very few of you left.
And next you’ll tell us that US labor competing with lawless 3rd world countries is patriotic and pro-US.
Watch the dollar die, live and in color:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
The Federal Reserve has now lost any credibility that fighting inflation is an important priority now and in the future. That puts the United States in a dangerous position. People only hold a currency that they can put their trust in. It is easy to be in love with loose monetary policy. It puts problems off, but in the end that is all that it does and it can make them far more treacherous.
the question is how long the dollar will remain weak.. Forever and ever? Then spend your money or invest in foreign currencies or PMs.
if, on the otherhand, a recession is foreseeable, it might be wiser to have some patience.
Wall Street obviously is betting that one will be averted, also due to Fed actions, so where does that leave us?
don’t be so gloomy, it’s Financial Wizardry of the highest quality (approved by Hank and the rest of the Wall Street gang!) and a booming export product for the US.
some more appreciation of Uncle Ben’s Magic would be appropriate
“‘It’s undermined people’s confidence,’ says Collins, who sells homes worth as much as 5 million pounds. ‘The market’s not as frothy and competitive as it was.’”
Comnparing houses, to coffee drinks…
In the U.K.
construction spending up ? wonder if that includes nation building in Iraq ?
Say hello to your new friend, >$100/barrel o’ oil!
Unfreaking believable.
It’s still unbelievably cheap. It only seems high because we’re used to getting it essentially for free.
Compare retail prices of a bottle of water vs. same amount of gasoline. Water costs more. That small amount of gas can propel a Hummer loaded with people up a steep grade hill.
before someone points out the need for water, burning a gallon of gasoline produces about a gallon of water.. people in the hummer won’t die of thirst.
I buy my bottled water from a device that dispenses RO water into a bottle I provide myself. It costs $0.25 per gallon.
“Home prices have further to drop as builders become increasingly concerned about turning over their inventory, former Federal Reserve Chairman Alan Greenspan said.”
Anyone else of hearing and seeing greenspan quoting? This slimy pos made this bubble. His handwriting is all over it. Screw off Greenspan you friggen money printing currency diluter.
“It’s not just the affordability of the credit, it’s even the access to the credit, which is a question today,’ says Nicolas Retsinas, director of the joint center for housing studies at Harvard University.”
Nick, do you think the affordability of houses has anything to do with it?
about one in ten of these economic savants sees even the vaguest connection..
Retsinas and his Harvard pals are as dumb as the mofos at George Mason University. Affordability is such a simple concept and yet it eludes these dimwits. Month after month,year after year, they continue to offer up witless observations. And still get paid. Time to start outsourcing economists.
Book it, Danno!
“Three months ago, Central Pacific Financial Corp. assured investors it had no exposure to the subprime lending market. But what a difference a quarter makes.”
“The parent of Hawaii’s fourth-largest bank, Central Pacific Bank, said today that third-quarter net income plunged 55.8 percent after it took a $21.2 million provision for loan and lease losses due to a rapid downturn in California residential construction.”
Feds cutting rates doesn’t improve FB’s position. Access to credit is key to stimulate economy. Unfortunately, most people are about tapped out, while FBs are maxed out. No income to pay for it.
It’s only going to get worse. Oil is going to hit about $120 by the end of the year. might as well light up your fireplace with dollars because energy prices will go through the roof. Bad….
Economist see things in a macroeconomic sense. All they need to do is to take a trip around america, maybe on route 66 to actually see the plight of our current economy.
“Defaults by U.S. homeowners with private mortgage insurance jumped by 22 percent last month after house prices fell the most in at least six years, an industry report said. The number of insured borrowers more than 60 days late on their payments climbed to 54,699 in September from 44,791 a year earlier, according to the Washington-based Mortgage Insurance Companies of America.”
A heavy load of black swan guano is landing on PMI providers.
Judas has perfect 20/20 vision now…
“He said that housing prices will be key to whether the economy begins to contract and will be more of an influence than the turmoil in the credit markets.”
“‘It’s going to depend more on the issue of prices of homes than it will be on the resolution of what has been a fairly significant credit crunch,’ Greenspan said. ‘If we didn’t have the house price problem, we’d be well along on the way of getting out from under this.’”