Bits Bucket And Craigslist Finds For November 15, 2007
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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http://online.barrons.com/article/SB119499399633791914.html
A SHORT-TERM INSTITUTIONAL BOND RUN MANAGED by General Electric Asset Management apparently has suffered losses in mortgage and asset-backed securities and is offering investors the option to redeem their holdings at 96 cents on the dollar.”
. . . .
“Legg Mason, Wachovia and Bank of America have had to provide financial support to their money-market funds to prevent their funds from “breaking the buck,” or falling below the $1 asset value that money funds seek to preserve.”
Ugly
–
Sorry, “cooks” should read “witch doctors.”
Jas
Complete and total disconnect- I received a protest from a lender yesterday regarding my valuation of a home. Enclosed with the protest were 6 sales they wanted me to consider. Five of the sales were in 2005 and the 6th was the subject property in August 2006. Nuff said.
Hopefully your written reply contained a large middle-finger watermark.
Nuff said indeed.
Don’t know about anybody else, but am just curious who the lender is and would appreciate hearing what your response to them will be.
Blano, dime can’t say who the lender is, it is a matter of client confidentiality. His response is letting the valuation stand.
Lenders are not enjoying the devaluations of the homes, it means they were incompetent, lent too much money and it means the prior appraiser screwed up, most likely at their behest or at the behest of their broker.
Oops, sorry!!! Need more coffee.
No worries, Blano. It happens. We also have some attorneys who post on this site and they might outline some points of an RE related case they are dealing with, but they can’t say who the clients are or get too detailed. We tend to think the internet is anonymous, but it is best to err on the side of caution in these matters.
And the internet is not anonymous. It is only anonymous to those who do not understand the underlying technology.
And I thought its anonymous to only those who understood the underlying technology
its anonymous to those who dont understand the underlying technology, not anonymous to those who do understand, and anonymous to those who control the underlying technology.
Why would the lender want to loan more than the place is worth? I would think they’d be happy that you are looking out for them. Or is the lender trying to sell it?
dime is doing foreclosure valuations right now, as I recall. If that’s the case, the money has already been lent, the borrower has defaulted and the lender is now trying to get a valuation for either its books or a foreclosure sale, if I’m reading this correctly. So, if the lender already lent something like $300,000 during the bubble and the place is now only worth $200,000, it’s a bummer. dime is trying to get them to face facts and they don’t wanna face facts.
Hey, lenders, sux to be you!
The purpose of the loan was a fast track refi. The lender was upset that they are upside down more so than the borrower. They, in fact, had to tell their borrower there is no reason to hold onto the property. YIKES!
I would estimate that this is occurring in about 50% of the requests these days.
Here is how requests breakdown.
90% are refi out of IOA’s.
50% never get appraised as the value is less than mortgage amount.
30% cannot meet ratios of LTV even with appraisal
20% are new refi’s 1st timers.
Sales=There ain’t none.
Total appraisal requests outside of foreclosure down 80%.
Here is a stat that makes no sense. Many lenders are not requesting appraisals but are using BPO’s which are $35 product using real estate agents as the valuers. Totally nuts.
Lenders are avoiding appraisers as we are checking three boxes they cannot deal with on the forms. 1: Oversupply 2: Decreasing Values 3: More than 6 months marketing time
Everyone is checking these now and the lenders are denying that this is the case.
I can attest to the fact that the lenders’ butts are really puckered up right now.
RE: Here is a stat that makes no sense. Many lenders are not requesting appraisals but are using BPO’s which are $35 product using real estate agents as the valuers. Totally nuts.
I knew a residential broker who was doing BPO’s on commercial properties up to $500k for a local bank @ $100.00 a shot.
She used to come to me for data when she got “stumped”.
Anyway-ya get what ya pay for in this life.
I have absolutely zero empathy for the lending industry.
At the moment I think them lower than the Mafia.
I’d guess it is a short-sale
RE: I received a protest from a lender yesterday regarding my valuation of a home
Obviously, all the comp’s were given to the lender by a dim-wit sales agent trying to salvage a deal.
You’d think these dolts would have a clue by now.
Interestingly enough, none of the mortgage oversight laws which are evolving here in Mazzland, haven’t even broached the idea of making it a crime to coerce or influence an appraiser’s estimate of fair market value.
All the loan chucks know how important a crooked appraiser is in greasing the wheel.
All just focuses more namby-pampy about rate disclosures.
RE: Lenders are avoiding appraisers as we are checking three boxes they cannot deal with on the forms. 1: Oversupply 2: Decreasing Values 3: More than 6 months marketing time
Fan & Fred won’t buy the loans with these boxes checked.
It’s the kiss of death to a loan deal.
Exactly the same scenario which evolved in the ‘90/’91 bust.
I saw scores of legit honest appraiser’s run out of business because they wouldn’t play the game and blantantly lie.
So….it’s the same ‘ole shite just a different day.
The lender’s havent’ learned a thing.
Did you all see the news about the implementation of FASB 157 being delayed year? Why, what do they need to hide?
From: Fari Hamzei
Sent: Wednesday, November 14, 2007 12:51 PM
To: Jim Schmidt
Subject: Timer Digest Commentary
Well, we got our one day wonder (a bounce) yesterday and this cat showed a lot of life. The November Puts retail traders bought last week became absolutely worthless, and now, the November Calls they bought yesterday should become worthless by tomorrow as the new reality will sink in when traders ask why FASB Rule 157 (Fair Value Measurements) got delayed for one year TODAY. Stay SHORT.
All the best;
Fari Hamzei
Founder
Hamzei Analytics, LLC
Our Blog: [Hamzei Analytics Financial Network]
A bit more on FASB 157.
FASB Rejects Deferral of Statement 157 for Financial Assets and Liabilities
Print article Print article
Refer this article Refer to a friend
© Business Wire 2005
2007-11-15 00:05:07 -
At its Board meeting today, the Financial Accounting Standards Board (FASB) reaffirmed its vote against a blanket deferral of Statement 157, Fair Value Measurements. For fiscal years beginning after November 15, 2007, companies will be required to implement the standard for financial assets and liabilities, as well as for any other
assets and liabilities that are carried at fair value on a recurring basis in financial statements. As a result, Statement 157 becomes effective as originally scheduled in accounting for the financial assets and liabilities of financial institutions.
The Board did, however, provide a one year deferral for the implementation of Statement 157 for other nonfinancial assets and liabilities. An exposure draft will be issued for comment in the near future on this partial deferral. The audiocast of the November 14th meeting is currently available at http://www.fasb.org. More information about topics discussed and decisions reached at the meeting will also be posted on the FASB website in the coming days.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at http://www.fasb.org.
Partial deferral granted for nonfinancial assets and nonfinancial
liabilities
Oh, then why does everyone have their panties in a wad over it?
One interesting effect might be to provide a short term incentive to delay the sale of REO’s. Until they’re converted into a “financial asset,” there would be no requirement to market-value them.
Many pundits (NYT, Barrons, WSJ et al) have apparently not even bothered to read the BIS papers “Guidelines for Computing Capital for Incremental Default Risk in the Trading Book – consultative document”. If they had read rules, regulation and implementation, there would not be any sensationalistic news to sell their schlock.
No, Wednesday was not a dead cat bounce. That will come later. We are not far enough down for a dead cat yet.
Roidy
P.S. We will be and soon.
The overall market is not down very much, but the institutions affected by FASB Rule 157 are down on average 30%+ this year. Yesterday these institutions bounced 3 -8%. A pretty good dead cat bounce.
I still think they are trying to pull a Fasb one.
Why, what do they need to hide?
That most of their assets would be Level 3 and can not be valued by any means except trying to sell them, and that the result of trying to sell them would cause a disasterous write-off? Hmm…. isn’t that what happened with the Bear and a hedge fund that caught everyone’s attention?
The numbers keep coming:
Barclays Writes Down $2.7 Billion on U.S. Subprime
http://tinyurl.com/ywkc8g
Net charges and writedowns were 500 million pounds in the third quarter and 800 million pounds in October, the London-based bank said in a statement today. The bank and the securities unit increased net income and pretax profit for the year through October, Barclays said.
Barclays has marked its securities to markets “where we can find them,” Lucas said. Where there is no market, it has valued them at fair value, he said.
The writedown of 800 million pounds in October is to accommodate “triggers” that may result in further declines in the value of credit-related securities later this year and in 2008, Diamond said.
May result in further declines? Will result is more likely. And what is fair value if these is no market? I’m confused, need coffee.
BBC morning news take on this is that it wasn’t too bad in fact Barclays are doing really well.
http://www.bbc.co.uk/blogs/thereporters/robertpeston/
http://news.bbc.co.uk/1/hi/business/7095809.stm
Yeah right.
3 billion is cool, we went over that yesterday
if banks make 2% roa in good times doesn’t 3 billion count?
Depends on level of assets. But Bogle of Vanguard made a good point today on CNBC. “Non-recurring” expenses or wrietdowns occur so often that when considering the S & P as a whole they must be taken into account. This lowers 2008 expected (reported) earnings from $91/share on the S&P500 to actual (GAAP) earnings of $75, just taking into account long-term average writedowns.
Market then goes from a reasonably-priced 16 X earnings to a rather rich 19 X earnings - big difference. Oh, yeah, and Bogle favors GAAP valuation and says 75% chance of recession.
Reminds me of the “pro forma” results that everyone was pushing in the .com craze… Sure, we lost $100 million, but that was one-time… So we made $20 million….
Next year…. Sure, we lost $100 million, but that was one-time.. so we made $20 million.
Next year… We’re bankrupt with $300 million more debts than assets.
“Barclays has marked its securities to markets “where we can find them,’’ Lucas said. Where there is no market, it has valued them at fair value, he said.”
Is this going to be the new excuse? There’s no market.
I find it incredibly hard to believe that if Barclays picked up the phone and called GS, GS wouldn’t quote them a price.
Put them on ebay for pete’s sake.
maybe ‘fair value’ is what the BOE lends (perpetually …) to Barclays with these securities as collateral?
At least it was less than the ever-popular $3bn writedown amount…
They had one foot on the $3 Billion point line, otherwise it was nothing but net (losses)
Well, I suppose $2.7 bn does round to $3 bn. What is $300m to a major player in the global banking cartel, anyway?
RE: fair value
Nefarious term FIRREA use to use all the time.
I always regarded it as a “buying” time term.
Eventually it gets equated with liquidation value established via an absolute auction.
Bankers dread “absolute”.
Gawd, I haven’t seen the world FIRREA in coon’s age.
Jacksonville local government didn’t even flinch when faced with $60 million shortfall due to lower property tax collections: 3% surcharge on electric bills, effectively immediately.
Ouch!! My MIL will love that.
Thankfully, JEA (Jax Electric Assoc.) doesn’t operate on the beaches, which are separate municipalities. Big city local government is a ruthless power machine.
Solar Panels and wind mills, here we come…..
And for the northeast, think geothermal systems. Or, in a pinch, wood pellet stoves.
Solar works fine in Germany, why not the northeast?
It works fine, it’s just not cost effective. You could easily power your house with solar panels — for about $60K. Even 30% tax credit won’t be much help. That’s why it seems it’s only crazy actors in Hollywood doing it. They’re the only ones who can afford it.
It’s a hurdle, no doubt.
There are other ways to do it, though.
We heloced on our house, to pay for our $27k (after rebate) solar system and the cost to us is $250 a month, for 20 years.
Our electric bill on average, is around $200 a month.
So we are paying $600 more a year, to be able to send you this message, via the sun’s rays.
As the price of oil goes up, we expect that gap to swing to our favor, as our electric grid is largely powered by Black Gold.
What about the solar films we have been hearing about on the Discovery Channel? They could work well in the Northeast, but must not be ready for prime time yet. Maybe never.
The dear Hubbie and I have already agreed on this. When we buy, a solar system is going in asap. In Sacramento, the summers are brutal with plenty of sunshine and utilities expensive (Yolo is still on F!ing PGE - thanks Sac co.). Solar would really reduce that bill plus the reduction in our carbon footprint is something we’d feel good about.
We HAD to go solar just because we’re off the grid. Cool thing is that it’s rolled into our mortgage just like any other home feature ($23k for a 2000 watt array). We enjoy all the modern conveniences, too–just not all at the same time!
Why don’t builders just include solar power systems as an option for buyers? Few people can pony up the bucks for solar after-the-fact, so if it’s rolled into the mortgage, it’s nearly painless.
Using $150/sq ft as an average, a buyer could add a $25k-50k solar system to their home for the “sacrifice” of 150-300 square feet–if my math is right.
I live in the desert and don’t understand why solar was not required on all the new housing. When I lived in HI in 91 everything built was required to at least have enough solar to provide all hot water. Speaking of which, why aren’t the endless hot water heaters required on new building out here, too? At least when they were overbuilding all the mcmansions, they could have done something to make them more energy efficient. One of the 1st things we did was get rid of the old water heater when we lived in the mountains. Could run all sorts of things at once and not run out of hot water and saved about $300 the 1st winter in propane costs.
Speaking of which, why aren’t the endless hot water heaters required on new building out here, too? At least when they were overbuilding all the mcmansions, they could have done something to make them more energy efficient.
That’s an excellent question. The “endless” water heaters are much more efficient than the standard American hot water tank. Ideally, such relatively minor requirements will become part of municipal building codes.
In the larger scheme of things, I’m looking for rising fossil fuel prices + the housing bust to increase efficiencies in new home construction. There are all sorts of inefficiencies built into a non-green modern building. Simply building smarter is a great way to reduce each homes carbon footprint.
(But I’m pro-solar, too.)
I just installed one. It works great. It’s from Japan. It was about $1200 vs. $500 for a tank. I wanted to save space in a very cramped utility room in the basement.
Five years…
http://finance.yahoo.com/real-estate/article/103872/Real-Estate:-Buy,-Sell,-or-Hold;_ylt=Apu764Zd43M9pf422bGNqy27YWsA
Some interesting stuff in that article. The thing that bothers me is that they based their price declines on a return to “normal” price to rent ratio - and then projected a rising rent.
Many of us here have come to the conclusion that with the surplus of available housing, rents will decline. If that projected 12% increase in rents these people used turns out to be a 10% decrease in rents as many here have forecast, then the projections need another $100,000 haircut (+/-, depending on location, location, location)
I don’t need to project falling rents. I’m seeing it around me daily. Some new homes owned by FBs have lowered asking rents by as much as 20%. There is still a record number of rental listings in my area.
Interesting that rents grew around 10% over the 2000 to 2006 period (per the Yahoo story)….that works out to approx. a 1.6% compound yearly increase in rents.
In addition, it should be noted that the 15 year average price to rent ratio that Fortune uses as a baseline for “normal” includes about 6 bubble years. Exclude those bubble years, and the normal price to rent ratio is actual much lower.
For DC they say the price to annual rent ratio is:
-26 today
-16 on average for the last 15 years
-11 in year 2000.
So at first blush it would appear that a 38% correction of the price to rent ratio is in order, when in fact a greater than 50% correction is in order.
Overall, it’s an outstanding article and something that everyone should be paying close attention to.
In five years Baltimore will have dropped more than 27%. It’s already down about 15-20%.
Public School Funds Hit by SIV Debts Hidden in Investment Pools.
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aYE0AghQ5IUA
wow the MSM is coming around, even long term bearish
http://money.cnn.com/magazines/fortune/price_rent_ratios/
That article says the bubble “missed” Dallas. Guess they didn’t see this. Sounds like the neighbor is about to take a 200K hit.
http://dallas.craigslist.org/rfs/479286056.html
“Easy access to highway but not too close. Great city living.”
Sorry, if you are advertising highway access rather than what is within walking distance, preferably including a rapid transit, commuter rail or express bus stop, you don’t have “great city living.” You have bad, high density suburban living.
Or bad medium-density suburban living.
At any rate, Dallas doesn’t strike me as a walking / cycling / mass transit kind of town.
Hey! My burb just upped our sales tax to extend the light rail from the upcoming DFW airport station into Grapevine.
Soon I’ll be able to walk 2 miles then rail into downtown Dallas. As if.
Most of those prices are still assuming too high of median given an affordability thumbrule of 3x annual household income. And that’s if you believe most families can even afford 3x, which I don’t.
That list is for “upscale homes” — homes that sell for twice the median. For DC metro, those prices, and predictions look reasonable. If anything, I would expect more than a 25% decline, but at least they’re in the ballpark.
NOVA- new failed flip in my hood under 400k !
22151
approaching 2004 pricing
8153 COMMUNITY DR, MANASSAS, VA 20109
List Price: $124,900
Prior Sale: $287,000 12/20/2005
Listing Date: 10/10/07
-56.5%
I can’t imagine how bad that residence in Manassas has to be to fetch those prices in this area. At least right now. Means it’s probably a raze-job.
It’s a townhouse. Razing the whole community might be necessary.
“That list is for ‘upscale homes’ — homes that sell for twice the median.”
Yes, I read the web page. What I was trying to say is that there’s no way that the projected listed prices divided by half (i.e., the current median prices) will be affordable using a 3x annual household income thumbrule.
The fact that anyone would feel the projections are reasonable (upscale or not) indicates how brainwashed our society has become with respect to RE prices.
I think they’re indicating that prices will “uncompress” - i.e., the current median priced house went up in value more than the ones currently priced twice the median. Therefore it makes sense that the median house should now drop more than the high-end one.
Putting it concretely, a Compton house that went from $150k to $500k in the last 10 years will likely slump back to $150k, whereas a high-end Malibu house doesn’t need to drop by that large a percentage because it didn’t go UP by that large a percentage.
Most of those prices are still assuming too high of median given an affordability thumbrule of 3x annual household income. And that’s if you believe most families can even afford 3x, which I don’t.
I was thinking about this the other day. There are so many expenses that are fixed, regardless of your income: healthcare, food (assuming a healthy diet), gas (assuming an average car), etc. The lower you are down the economic ladder, the bigger a percetage bite these take, leaving you with less money (%) for housing. And to some degree the opposite is true if you are at the upper end. I would wager that in most cities a family earning below the median income can’t afford 3X.
3X income does not work anymore due to hidden inflation - gas, heating energy, food cost so much more now than 10 years ago, that a better metric would by 2X annual income.
I am holding out for 1.5X for my family (five kids), but as long as we can rent a five bedroom house in an excellent school district for 15% of gross income, who needs to buy a house? I’ve got retirement to save for!
It still seems to optimistic to me. From the related story:
” The adjustment doesn’t come exclusively from a fall in prices - rising rents also help close the gap.”
There a an oversupply of units. I still do not get why anyone thinks rents are going up. What would their numbers look like if rents stayed flat or declined?
Doesn’t the “rising rent” idea assume income growth, of which there has been effectively none since 2000 or so? Or, if income does increase, how much of it will be caused by inflation? And such increases probably won’t even keep up with inflation, which means LESS money to spend on big houses, etc.
I can’t help feeling bitter that suddenly now the MSM is talking about stuff like “price-rent-ratio”, “taxes”, and best of all, “fundamentals”.
Acually, I still don’t hear it enough!
Friends on Long Island still look at me cross eyed when these word happen to slip out of my mouth. Some think I’m nuts, others nod their heads sagely and say “yeah, it should be that way but it never will and the rest of the world figured out how to live in debtors hell, you should too”
I can’t wait until sense and sensiblitiy is the new black!
That’s what happens when they read this blog
Yeah, last night it was everywhere on the news, NBC Nightly News reported on it and then Nightline had their own report as part of a series called “Realty Check”. It was stupid, though. The story was built around the CondoVultures operation in Miami, with its knifecatcher clients. Interestingly, as they were doing the story, they kept cutting away to shots of real vultures circling the Miami condo towers. Probably smelling the bodies of the unskilled laborers that fell and were buried in the cement of one of those condos.
Pooled mortgages may not have retained the right to foreclose, per NYTimes
Some happy homesquatters in Ohio!
Yeah right. THey’ll get that straightened out.
“Hopefully this will convince everybody that the time to work out these home loans is now.” — says the consumer advocate foreclosure lawyer.
In other words, they can’t figure out who owns the motrgage, and so therefore, it’s time to “work out these loans,” i.e. renegotiate/refinance/not foreclose. Backdoor bailout by making banks eat it? NICE TRY, Ms. Consumer advocate! If you don’t know who owns the loan, you don’t know who can renegotiate it either.
And the judge didn’t say not to foreclose, he’s just mad that the banks are cutting a corner by not fully establishing ownership with the physical title. Once the banks find and organize those physical titles and sned them to their matching tranches, judges will be satisfied, and foreclosure will come fast.
The only good thing for FB’s is that in the future, if banks need to actually keep track of which house belongs to which tranche, there may be a little less slicing and dicing of tranches.
[quote]The only good thing for FB’s is that in the future, if banks need to actually keep track of which house belongs to which tranche, there may be a little less slicing and dicing of tranches. [/quote]
Houses do not belong to a tranche. What happens is all the payments for all the mortgages in the whole deal go into one bank account… then the tranches are paid from this account.
Oxide: aren’t the tranches defined by performance? If a borrower never misses a payment then he is AAA, if he was late a year ago then AA? So obviously if the servicer is going for foreclosure then he is in the equity tranche? What if the I bought the equity tranche from you but insisted that you repurchase 100 mortgages then I sold the remaining tranche to XYZ? Does XYZ know what they have?
wait, does this mean that the connection of a particular mortgage to a particular CUSIP is fluid throughout the life of the security?
because that would be retarded.
A lotta poisonous Tranche-ilas out there…
Be careful.
Loans are not rated and they are not assigned to specific pools. If your bonds are in the top 10% tranche, you get your stream of payments as long as at least 10% of the payments in the pool (by value, not number) are being made, no matter who makes them. I haven’t done these deals in a long time, but it makes no sense for each mortgage to be assigned to a particular bond. That would defeat the purpose of pooling. There must be something in the contract that specifies what happens to the proceeds of a forclosure sale. Anyone want to fill in that hole?
wow… just wow, what a mess.
there’s something exquisite about the detail in this clusterfuck.
seems like they need some kind of industry sponsored independent body ala AIMR or DTC to tie percentage ownership on individual CUSIPs to individual properties and to pass through forclosure payments. or at least to act as a unified representative for the the investors. it would hike up the administrative costs on the securities though.
ROFL. They can use the Texas Legislature’s Special Gerrymandering Software System for that.
fair enough.
I got a kick out of a couple of the judge’s comments:
the judge wrote: “The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance. Finally put to the test, their weak legal arguments compel the court to stop them at the gate.”
And:
The plaintiff’s argument that “‘Judge, you just don’t understand how things work,’” the judge wrote, “reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.”
But it won’t help the FB’s. The judge is not stopping foreclosures entirely. He’s just stopping the corner cutting by banks. Banks now have to spend a little money chasing after physcial titles. That’s all.
Exactly. Said that yesterday. There were similar problems although not so convoluted dealing with the FDIC/RTC years ago when they took the assets of failed S&Ls to dispose of.
Let’s say ABC Mortgage originated the loans in a MBS and “forgot” to record the assignment of mortgage. ABC Mortgage didn’t; however, overlook the funds it received to prepare and record said instruments. A year later ABC Mortgage is out of business; not bankruptcy, just folded up. Now the MBS trustee goes to foreclose on some of the defaulted loans. There isn’t anyone to execute an assignment of mortgage. The trustee will have to get a court issued assignment. How many additional months of living for free does that give the homeowner-mortgagor?
But is that all it really is, just a phone call or two to say “send me the title”?? If the loan was packaged and sold somewhere in the world, who’s the ultimate owner?? A Wall Street firm, or some pension fund in Germany??
“But the inability of Deutsche Bank, as trustee for the pools, to produce proof of ownership at the time of the foreclosures will fuel borrowers’ concerns that they are being forced out of their homes by entities that may not even hold the underlying loans.”
I agree. It’s very simple. Provide proof of ownership. Why do the lenders have a difficult time understanding this? If you can’t provide proof of ownership, it sets an ugly precedent for any entity to put a claim on the property. Heck, in one post I read, there are people paying mortgages who are not even sure their payments are going to the right place. Which opens the door to some entity saying “Hey, we didn’t get your payments, we’re foreclosing”.
But if these mortgatges have been pooled, collaterized, tranched, an sold off in pieces all over the planet, who’s to say who owns what? How can one determine the specific owner of a specific mortgage?
That’s what I just asked above. If a loan is really owned by, say, some pension fund in Germany, would the Germans actually start a foreclosure process, or say the heck with it and just write it off??
“But if these mortgatges have been pooled, collaterized, tranched, an sold off in pieces all over the planet, who’s to say who owns what? How can one determine the specific owner of a specific mortgage?”
Therein lies the problem. But you have to provide proof of ownership and if you can’t, well, tough titty. Like the article said, most borrowers don’t protest when foreclosure proceedings are initiated. But in this case, a protest was mounted. Ridiculous that the lawyers for the lenders actually went to court without having the documentation. LOL! I guess it makes for additional fees or something like that. Everyone screwing everyone else, is this a great country, or what?
I’m sure there are international collection agencies who would provide that service. Or, the German pension fund could sell the debt/title back to an American entity and let them foreclose to take the proceeds.
Yes, but once again, it will all come down to producing documentation. I’m sure, after this ruling especially, the American entity will say to the German pension fund “Got proof?”. Of course, maybe I shouldn’t be so sure.
“Litigation: A machine which you go into as a pig and come out of as a sausage.”
Ambrose Bierce
this is just another in the long list of reasons that the world is gonna continue to shun the financial wizards new fangled products spinning out of wall street.
Nobody else bakes sweet tort lawsuits, like we do.
At some point some clever borrowers will file a suit to clear title, serving the last known note holder of record and advertising in the local papers. If lucky, they get a free house and a nice, fixed, unsecured debt.
It is not so simple. Yes it will cost the banks time and effort to prove ownership, but there is a chain of lien and if bank ‘A’ transferred to bank ‘B’ and Bank ‘B is acquired by Bank ‘C’ certain documents may not be properly recorded. The lien is still valid. The cost to establish proof of ownership is around 20K/mortgage. The Deutsche Bank proof of ownership is a technicality that does not invalidate the debt. They are required to show the proof of transfers. Sloppy paperwork. IMHO, this is a non issue.
Nobody else bakes sweet tort lawsuits, like we do.
USA — still Numero Uno in expensive, confounding litigation …
Let the wall street pigs twist in the wind. They’re the ones that thought it was such a bright idea to take mortgages and bundle them into securities so let THEM deconstruct the securities to get to the individual mortgages!
“But Judge that would be too hard and ruin our “investment” packages!”
I love it! It’s like these wall street boys ate a bunch of corn and now they have to pick the kernals out of the crap now that these lumps of dung have fallen back into their hands! Couldn’t have happened to a finer breed of scum.
Damn santa! Thats some beautiful poetry!!!!!!! LMAO.
Great analogy
its actually an absolute great idea…however..factor in greed and thats where it all goes wrong. instead of 6.5 net yields they pushed it to 7.5…8.5% maybe even 9.5% because of greed by investors, wall street ect.. (write in your own) And on the sale end because most of it was ARM portfolio the increase in bad loans was replaced by RESETS on rates and new loans. The spreads on the rates on subprime is way to out of whack……
maybe 1% or 1.5% above an A+ rate would have been better-and i mean fixed. When a subprime ARM rate is 2% above the current fixed rate it makes no sense. Although i had a disagreement with a countrywide guy who tried to tell me the subprime rates were not high enough…
oh-dont get me started on No-Doc subprime people…make that 3% above net yields….disaster…
In the event that the judge rules in the house squatters favor and set a precedence, watch the invisible hand of greed further restrict mortgage availability. I may be wrong but the scenario whereby the squatters remain would squeeze the last drop of snot out of the REIC.
Comments?
Actually, exeter, the ruling in favor of the squatters only amouts to requiring that the real note-holder stand up and prove ownership. Once that is done, the squatters are toast. In the meantime, however, it appears they get to stay. If entities won’t lend based on having to produce documentation, that’s pretty screwy. My doctor’s office demands picture ID from me just to say hello.
It’s ironic that the FB’s are winning this on the basis of no documentation — considering that many FB’s got into those houses on “no documentation” loans themselves.
““This is the miracle of not having securities mapped to the underlying loans,” said Josh Rosner, a specialist in mortgage securities at Graham-Fisher, an independent research firm in New York. “There is no industry repository for mortgage loans. I have heard of instances where the same loan is in two or three pools.”
So if three entities hold rights to a mortgage note, and one negotiates a short sale, do the other two entities have redress against the first entity? These entities are not even in privity with one another - does the investment bank doing the bundling carry that liability?
What a beautiful clusterf*ck!
Wall Street must of set up recourse for foreclosures and collections when they sliced and diced these loans, but wouldn’t it be a mess if somehow Wall Street didn’t really set it up to withstand legal scrunty .What about the title company that insured clear title ?
Why? When housing always goes up?
as described by polly above, it may not even be as simple as individual mortgages being divided into different pools. if the tranches are defined by payment performance, then there is no static relationship between a mortgage and a security.
it’s not so much that the securities were not mapped to the underlying loans, but it wouldn’t be possible to map the securities to the underlying loans, at least not if you wanted the tranches to perform as advertised.
How risky U.S. mortgages polluted the global markets
http://www.marketwatch.com/newscommentary/specialreports
very interesting read.
Got RMBS?
http://www.stockmania.com/index.php?showimage=93
Are credit ratings agencies truly objective and independent with the customers they rate paying the bills?
I remember when I worked for a big company and managers would hire “independent” consultants to do studies. It is funny how those studies always agreed completely with the position of the manager paying the bill.
$oylent Green…
- What is the R in RMBS?
- And what is that green snotty looking stuff? Pigman slime?
R = Residential
Suprime Slime
It is funny how those studies always agreed completely with the position of the manager paying the bill.
I knew a guy who worked for one of those big consulting firms. In his words the reason they were hired was to recommend what management wanted to do in the first place. That way if it blew up, management could say that they hired the best consultants money could buy. If they couldn’t get it right, no one could.
It is a wonder to me than any big companies make money. I guess you have to give credit to all those managers and thei golden patachutes!
Moin
havn´t heard the word CONTAINED for a long long time……
JCPenney
After the completion of a strong Back-to-School season and a favorable response to our early fall merchandise, we were disappointed to see sales weaken dramatically in September and October,” said Myron E. (Mike) Ullman, III, chairman and chief executive officer of JCPenney. “The combination of weak housing conditions, mortgage and credit market concerns, and rising fuel prices has clearly led to a challenging macroeconomic environment for consumers. Along with unseasonable weather, this has created difficult conditions for most retailers, and our third quarter performance shows that JCPenney was not immune to those conditions.
New Rule:
Anytime a retailer blames weather, they are one step in the grave, business-wise.
Oh the weather outside is frightful…
Who is buying up New York?
http://www.nysun.com/article/66478/
It will be interesting to live in a city with 4 million people (not
and half the housing units empty 50 weeks a year. If it happens. Or a cheaper city otherwise.
This talk of foreigners buying US RE has all the hallmarks of the japanese scare of the late 1980’s. We all know how that ended.
If there’s one thing US business is good at, it’s screwing foreigners out of their money. As the Japanese. But I’m sure the people buying in New York have it to lose, so what the hey.
if many of the buyers are from Europe and the EU bubble finally collapses, maybe there will be significant damage to US banks and other financial institutions that are involved in the loans for these properties? I’m wondering who is providing the mortgages for these foreign buyers - I think the normal situation is that the mortgage comes from a lender (office) in the country where the property is - but in this case the collateral for these mortgages is usually EU real estate. How do they share the fallout when the collateral goes up in smoke? Potential downside in Europe is far bigger than in the US …
“How do they share the fallout when the collateral goes up in smoke? Potential downside in Europe is far bigger than in the US …”
True, but apparently nobody learned the lessons of Japan in the 1980s. The current “global” financial system doesn’t really work out for anyone but fund managers. It’s ugly, and it wants to die.
It was a world of credit, banked on lies
A world of fiscal madness, before our very eyes
It’s a world that we share, all must now be aware
It’s a small, small world…
You bow owe the Walt Disney Co $5423.75 in royalties
Ughh. I just had a vision of all those Small World dolls hawking RE and mortgages.
At least Duff beer has some value.
I don’t remember if this is in Irrational Exuberance or not, but it seems to me that urban legends about foreigners buying up US real estate must be the signature death rattle of the deflating bubble.
Pretty soon this will be obvious to all but the realtors here in San Francisco who are trying to peddle all the empty condos in SOMA/South Beach/Mission Bay/Showplace Square.
According to the quoted article, they “know when to buy a sunhat, i.e. in January”. So someone has a lot of confidence in multi million transactions with someone who knows when to buy a sunhat.
Okay. Good.
http://bigpicture.typepad.com/comments/2007/11/fasb-buncha-bit.html
Glad you posted that. Clarified the issue for me. This ought to give the markets a heart attack, or at least a mild stroke. I say “ought to”, doesn’t mean it will.
this is about like BB and BLS using home prices for the next couple years to help “accurately” smooth housing inflation numbers= wow
‘For fiscal years beginning after November 15, 2007, companies will be required to implement the standard …’
So if a company started their fiscal year Nov.1, 2007, they are not required to implement 157?
Is there a fiscal year that is most common among financails? I seem to recall fiscal year ending 3/31 is common.
All the big financials elected early adoption & wrote up everything they could find last winter. The deferral is for real companies that own real stuff, not paper.
Most companies’ fiscal years are calendar years, meaning most have a December 31st year end and January 1st, 2008 is the beginning of their next fiscal year. Many companies “early adopted” this accounting rule, the rest who have calendar year ends will adopt beginnning 1/1/08.
So let me guess…. tens of thousand of empty wigwams will be considered “non-financial assets” so as to continue lying and decieving shareholders and the public.
I don’t think 1500 is in the cards.
No. I have the Jan puts from yesterday and feel good about the position.
Unless Bennie or Paulie pulls a friday surprise.
Right, although we haven’t gotten data that would justify it such as a shockingly bad employment report.
What state(s) would you like to see?
In California yesterday:
Area Trade Bindery Co. is closing down and laying off 84 employees at 157 W. Providencia Ave. in Burbank on Nov. 30.
SI International Inc. is laying off 293 employees at 24000 Avila Road, Suite 2314, in Laguna Niguel on Nov. 30.
Sky Chefs Inc. is laying off 140 employees at 7000 World Way West, in Los Angeles on Nov. 30.
Telecare Corp. is closing down and laying off 47 employees at 3851 Rosecrans St. in San Diego on Dec. 31.
West Marine Product Inc. is closing down and laying off 488 employees at 500 Westridge Dr. in Watsonville on Dec. 24.
Not reflected in the BLS reports though.
LOL - the BLS has them all working in construction now.
BTW, Nice trade on the Puts.
Interesting thing will be the third stab at the ~1375 level. That should tell the intermediate tale. I thought it was a nobrainer to buy it the first two times, not this one.
Pensacola, FL
http://pensacola.craigslist.org/rfs/478926974.html
Property appraiser web-site indicates seller paid $188,300 in 2004, now asking only $325,000. Better hurry, real estate only goes up!
WTF? The ad sez it was built in ‘05….. More subterfuge on the part of the FB?
..
Search a little further…
I am sure that a check on the County Records website will probably reveal an adjustable rate mortgage…..its 2007 so the 3yr reset has probably begun to suck money from said FB’s wallet.
So now, the asshat wants to ditch the house and come away with a cool $136,700 profit….
Then again, I’ll bet Mr. and/or Mrs. FB HELOC’ed the no-money-down house purchase to buy bikes, boats and stuff so they may need the $ 136,700 to make up for the excessive, house fueled consumption.
It’s a common theme, really:)
..
This is prime re?
http://chicago.craigslist.org/wcl/off/479142164.html
for tatoo parlor, swedish message, or piercings… maybe throw in a check chashing and liquor store….
the american dream.
“Men become civilized, not in proportion to their willingness to believe, but in proportion to their readiness to doubt.”
Ambrose Bierce
Beautiful! I guess Mr. Bierce does not regard religon as much of a force of civilisation, then?
MYTHOLOGY, n. The body of a primitive people’s beliefs concerning its origin, early history, heroes, deities and so forth, as distinguished from the true accounts which it invents later.
Mr. Bierce does not regard religon as much of a force of civilisation
It could mean that he thinks religion is a negative force of civilization; that belief (religious or otherwise) emboldens us such that we are less in need of treating others civilly or may, in fact, use our belief and confidence therein to wage war. Whereas humility and doubt cause us to seek others and to work together. It’s all in self-interest, of course.
Some self interests (like cooperation and humility) are more appealing than others (belligerence in the name of one’s own faith-driven tribe).
Do those who believe in the absence of doubts truly believe, or have they just not really thought about it?
Ambrose Bierce DID not believe in religion when he was alive. He died about a hundred years ago, which make his comments even more interesting, ie: the more things change, the more they stay the same. He was a humorist and social commentator who gave Samuel Clemons a run for his money. If you ever want a good laugh, read his book The Devil’s Dictionary”. It’s hilarious.
“Men become civilized, not in proportion to their willingness to believe, but in proportion to their readiness to doubt.”
Ambrose Bierce
Then I am the civilizedest person on the face of this entire planet.
Super! I just knew it, somehow.
Time for CA to call in the cavalry?
HOUSING MARKET BLUES
Budget-gap forecast spurs a call to arms
Pending state shortfall put at nearly $10 billion
By Ed Mendel
STAFF WRITER
November 15, 2007
SACRAMENTO – A grim forecast that the state budget shortfall will grow to nearly $10 billion over the next two years produced calls yesterday for prompt and painful action to begin closing the gap now.
A troubled housing market and a soft economy are the big reasons for lower tax-revenue projections, while a $500 million, court-ordered payment to a teacher pension fund on top of last month’s devastating wildfires and other problems have driven up costs.
http://www.signonsandiego.com/uniontrib/20071115/news_1n15budget.html
My understanding was that the shortfall in California was approaching unfunded liabilities of $500B.
Seriously??? (Gulp…)
CalPers unfunded is $50B
Infrastructure (according to the governors office is $500 - 700B). The state has been authorizing bonds for $30B a crack to get immediate work performed. IMHO, the cost to do the work will drop as the state’s recession continues for a few more years. Ergo $500B give or take a few billion dollars.
I have a feeling that the 10 Billion number is for the public and the real number is much higher, maybe another 0 on that number and your in the ballpark ?
I just finished talking to our agent in Bangkok. He said that when Thai consumers borrowed more than they could afford, it eventually created the Asian economic crisis (around 1997, and a searing but mercifully shortlived event). So, maybe we can learn a bit from this history.
I was in Bangkok just after the SHTF. The largest mall was dead empty…no customers. In South Korea, before the economic crisis, you had to fight to get a cab. After the SHTF cabs would stop and ask me (a foreigner) if I needed a cab. Like I said, it was really searing for those involved.
The next few years could be very interesting.
At least US manufacturing will have a chance to turn around. Decades of currency manipulation by our trading partners have forced the surviving US manufacturers to be very efficient. When the dollar finds the right level, the show should be quite interesting.
currency manipulation by our trading partners
Oh please, in what universe is that? If there is ONE country that does currency manipulation, it is the USA (of course happily assisted by their straw men at the BOJ). All the rest that is happening in the currency world is a result of the US Fed manipulation.
“I was in Bangkok just after the SHTF. The largest mall was dead empty…no customers. In South Korea, before the economic crisis, you had to fight to get a cab. After the SHTF cabs would stop and ask me (a foreigner) if I needed a cab. Like I said, it was really searing for those involved.”
*******
Less searing for me, but I witnessed a variation of that without having to leave my neighborhood.
It was called the dotcom implosion.
The euro is the new black (currency, that is)…
NOW READ THIS
Even in hip-hop and fashion, the dollar is hurting
By Lauren Tara LaCapra
ASSOCIATED PRESS
November 15, 2007
NEW YORK – When people start talking about rappers and supermodels shunning the dollar, you know there’s a problem.
As the greenback recently hit historic lows against other major currencies, rap mogul Jay-Z released a new video in which he flashes euros, not dollars.
http://www.signonsandiego.com/uniontrib/20071115/news_lz1n15read.html
Yep, when shoeshine boys began tipping stocks in 1929 it was time to sell;
When the recent college grad became a millionaire in the dotcom world, it was time to sell;
and when Housing appeared on the cover of Time magazine, it was time to sell.
After a long decline maybe it’s tiume for a bounce in the dollar.
What should the news that supermodels and rappers are diversifying into euros be telling us?
Time to sell euros.
RE: NEW YORK – When people start talking about rappers and supermodels shunning the dollar, you know there’s a problem.
Good…let’em all pack up their gangster bling and thug attire immigrate to Europe.
Good fookiin’ riddence.
You can model the decline of this culure with the evolution of rap and hip/hop.
Hey, hey, did ya kill a copper today!
And supermodels? Yeah, like they have any relevance in the Land of the Obese.
Don’t let the door hit your azz on the way out.
Fo’ shizzle.
nah.
people just got bored of the guitar.
the face of doom is forever imagined in the form of popular culture.
San Diego is predicted to be the first economy to recover from the nonrecession. But how soon? 2010? 2012? 2016? Timing matters a great deal…
HOUSING MARKET BLUES
Prices fall in all corners of Southern California
By Roger Showley
STAFF WRITER
November 15, 2007
Home prices fell last month in all six major Southern California counties for the first time in 12 years, prompting some economists to wonder whether the housing decline will push areas of the state into a recession.
But San Diego County, one of the first markets to see a housing downturn, may be among the first to recover, one prominent economist said.
…
“Oddly enough, I think San Diego is one of the first markets to go south, but I think San Diego is further along in the painful adjustment than others in Southern California,” said Ryan Ratcliff at the UCLA Anderson Forecast.
http://www.signonsandiego.com/uniontrib/20071115/news_1n15socal.html
What happened to the UCLA Anderson Forecast? It used to have decent verifiable information.
FWIW - the Anderson Forecast kept predicting a Bay Area economic turnaround long after it was obvious they were wrong in the early 2000’s.
If one took their predictions at the time and just pushed them back a couple years, they’d begin to look respectable.
It made me think they must making up some of their data.
I have to wonder if part of the story is related to Thornberg’s departure…
” He and other economists said that if any market is heading for recovery, it is San Diego’s. They’re looking at possibly late next year but most likely by early 2009. But other analysts warn that San Diego could experience a recession if economic conditions deteriorate and consumer spending ebbs.”
Of course there is no explanation as to why this miraculous recovery will somehow take place. How big a decline still constitutes a NAR “soft landing”? Would you like a souffle with your foreclosure?
I’ll say this much…the drops in the lower-income areas have been coming along much more quickly & dramatically than I had anticipated.
It’s entirely possible that the very low end in SD sees bottom-ish prices in Q4 2008-Q4 2009. Of course, that does NOT mean a recovery is around the corner, just that the bottom isn’t as far as some might think.
I don’t anticipate a recovery until 2012, and that’s IF the economy (read: jobs & middle-class income) pick up.
PPT is losing its heft…
http://www.marketwatch.com/tools/marketsummary/
no, they are just having some fun in the gold market, they will be back soon with new Viagra for the S&Pooors.
Is the PPT pushing on a string now? Time for the aging bull to take more Viagra…
http://www.marketwatch.com/tools/marketsummary/
PB ,I swear I heard a MSM cheerleader mention the PPT , under his breath ,a couple of days ago ,on the FAST MONEY show on MSNBC .The host or someone wanted to know what the PPT was and than the host quickly changed the subject after the guy said Plunge Protection Team . The comment happened really fast and I wondered if I was hearing things .
Oh, lord, I thought today was Friday, option expiration. I need a vacation.
The first rule of the Plunge Protection Team is that you do not talk about the Plunge Protection Team…. the second rule… well, you get the idea.
Your eyes do not deceive you… It -is- a condo in a 4 story brownstone…
http://philadelphia.craigslist.org/rfs/471873353.html
Yikes, $472 per square foot.
I guess Philly’s trying to keep up with DC and NYC in terms of batty prices.
Eight-fifty?!?!?! Cough-choke-gag-wheeze, eight-fifty?!?!?!
This ain’t nuthin’; it’s actually a reasonable price by last year’s standards. You should see what new condos are listed for in the heart of the city:
E.g.- 16th and Chestnut (just a few blocks from where this brownstone is located: One-br + den from $945K; 2-br from $1.2M; and 3-br from $2.4M. This is high livin’ with concierge, on-site spa and fitness center, but I would bet it doesn’t include parking.
My 1100 sf, mid-scale-rehabbed (Formica, gasp!) row-home, about 8 blocks from the center of the city (read: fringe of the ghetto), sold last year for nearly $400K. No concierge there.
What the hell is in Philly? Do they even have any industry?
For other cities in the US (e.g. Phoenix, Atlanta, Indianapolis, St. louis, DC , NYC, etc.), I can easilly name a few big companies in each city. For Philly, I just draw a blank.
Comcast, Glaxo-SmithKline, Rohm & Haas, CIGNA, are the biggies that I think of. Boatloads of law firms.
Coffins.
Medical, publishing, academia
realtors.
MBIA, Ambac Downgrades May Cost Market $200 Billion
Nov. 15 (Bloomberg) — The crisis of confidence in bond insurers that bestow top credit ratings on debt sold by borrowers from the New York Yankees to Citigroup Inc. may cost investors as much as $200 billion.
The AAA ratings of MBIA Inc., Ambac Financial Group Inc. and their five smaller competitors are being reviewed by Moody’s Investors Service and Fitch Ratings. Without guarantees, $2.4 trillion of bonds may fall in value and some issuers would get shut out of the capital markets.
“We shudder to think of the ramifications,” said Greg Peters, head of credit strategy at New York-based Morgan Stanley, the second-biggest U.S. securities firm by market value. “You have politicians, taxpayers, municipalities, states. It just opens up a Pandora’s box. That is a huge destabilizing force.”
For more than 20 years, the safety of insurance has eased the way for elementary schools, Wall Street banks and thousands of municipalities to sell debt with unquestioned credit quality. Now, mounting downgrades on insured bonds backed by assets such as mortgages are raising doubts about the stability of the guarantors. Armonk, New York-based MBIA, the world’s largest, has a 28 percent probability of default, and Ambac’s is 40 percent, prices of derivatives show.
Moody’s and Fitch, both based in New York, are examining the insurers on concern that a slide in the credit quality of some of the 80,000 securities they guarantee has eroded their capital so much that they no longer deserve AAA ratings.
Ambac, the Red Pill…*
* Side effects include a propensity towards becoming a degenerate gambler, combined with a loss of all of your money, real or imagined.
“The insurers can protect you from one unusual, idiosyncratic event, like a Hurricane Katrina,” said Daniel Castro, chief credit officer of structured finance at GSC Group in New York, which oversees more than $24 billion of debt. “What if you had 20 Hurricane Katrinas and everything is wiped out? That’s what you have right now.”
So would this be a Category 6 $hit$torm, slowly approaching?
So would this be a Category 6…
Sure is. Time to tune to the weather channel
and cook up an extra large batch of popcorn.
Got cash?
Italics OFF..
I spoke to a Realtor ™ here in Lodi CA yesterday who told me he believes the real estate prices have reached the bottom, and will now be heading back up. I asked him how he arrived at his conclusion. He pointed out that the dow rose the other day, and Walmart had a better than expected quarter. There you have it folks… Better get out there and buy buy buy, or be priced out for ever again!
A race to the bottom, in Lodi again.
Hey! Give creedence to the Realtor™ - or you’ll be walking out (if you go)
Down on the corner
Commercial starting to take it on the chin.
http://chicago.craigslist.org/wcl/off/479546926.html
The CMBX spread has gone from 175bps to 325 bps. The BBBs have gone from 800bps to 1100bps. The properties may not show much decline, the deals are still proceeding…the risk is approaching BK. Commercial is about to go the way of the CDO market.
Boy, I wish I could believe that. I keep hearing that the damage will be less “retun on capital” rather than “return of capital.”
“Warren E. Buffett urged Congress yesterday to maintain the estate tax, saying that plans to repeal the tax would benefit a handful of the richest American families and widen income disparity in the United States.
Warren Buffett said on Capitol Hill on Wednesday that the estate tax helps keep the nation from becoming a “plutocracy.”
Mr. Buffett, the billionaire chairman of Berkshire Hathaway, told the Senate Finance Committee that advocates of repeal were “dead wrong” to call the tax a “death tax.”
It would be more appropriate to call it a “death present,” Mr. Buffett, 77, said. “A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy.”…
Mr. Buffett said that in the last 20 years, tax laws have allowed the “superrich” to become richer.
“Tax law changes have benefited this group, including me, in a huge way,” he said. “During that time the average American went exactly nowhere on the economic scale: he’s been on a treadmill while the superrich have been on a spaceship.”…
New York Times
http://tinyurl.com/25l2ha
Nice, Warren.. poison the well on the way out why dontcha..
I despise the notion of people receiving money for doing nothing, e.g., by birthright. The country has it backwards: the easy money (captial gains, inheritance) is taxed at a lower rate while money actually earned (wages) is taxed higher.
I despise the notion of people receiving money for doing nothing
Then we agree..
The govt should not be allowed to take one’s earned wealth and give it to people who did nothing to earn it..
The govt should not be allowed to take one’s earned wealth and give it to people who did nothing to earn it.
Why not pay for the war, or Social Security, or fix the highways, or help out victims of natural disasters, or fund more cancer research? There are plenty of more worthy causes than the spoiled son of the CEO or the bratty daughter of the hedge fund manager. Let’s not forget that these are the wealthiest of the wealthy’s estates here.
don’t leave out the widows and orphans..
..but in a world where estates are confiscated by the State, there is no incentive to create extra wealth. The objective will then be to die broke.
Upon death, the State will take your businesses, farms, copyrights.. residuals from movies and television.. books.
Only a fool would create anything of lasting value.
Go ahead and invent that drug which cures cancer. You are suddenly worth $500 million.. the State then hopes you die.. before you have a chance to hide the money.. or give it away to whom you choose, instead of to whom they would choose.
I see a theme for a best selling book in here.. but should i bother to write it?
Oh for crying out loud. For those why decry the welfare system, ask yourselves if it’s better to pay out a few hundred a month to people down on their luck or poor due to circumstances beyon their control, or pay $45,000.00 a year to keep them in jail when they turn to crime to survive.
Yes there are those who abuse the system, but they are in the minority. Having lived around low income housing in college and knowing many welfare recipients at the time, 90% of them hated it and wanted to get off it asap.
As for the other 10%, I’m all in favor of limitations on total benefits. I despise the idea of someone bringing a child into the world just to get a bigger welfare check. That needs to stop.
That being said, we have to decide whether we want to live in an advanced society or something closer to the feudal sstem. Personally, I choose the former, and that means helping out the less fortunate.
If charity alone were sufficient for this, that would be great, but it simply is not.
Therefore I would choose to have my taxes going to free handouts to the poor or even the lazy any day over war profiteers like Haliburton raping the American taxpayer over the bodies of our service men and women.
The homeless Iraqi vets downtown here didn’t do $hit to earn last month’s pittance from the government, but I certainly don’t begrudge it to them.
An who ever suggested confiscating the entire estate? It’s only the assets worth more than *2 MILLION DOLLARS* that get taxed. And taxing them, even at a high rate like 50% or more certainly doesn’t constitute confiscation.
Plus you still have the first 2 million to disperse as you please.
As for the cure for cancer, I got news for you. They’re not being developed intensely for the same reason no new antibiotics are being developed - there’s no/little money to be made in actually CURING anything.
They only want to develop drugs that people have to take and pay a fortune for for the rest of their lives. Curing doesn’t pay.
Nice system you got there.
Housing is just the tip of the iceberg. This society is quite ill, and narrow unenlightened self interest, carried to the point where we don’t care WHO suffers or how much, is the cause.
Responsible capitalism is great, but when we get to the point where we can’t be bothered to help out the less fortunate, or even just provide a small safety net for those having financial problems, something’s broken, and we become a bit less than human.
ok Seattle.. you think $2 mill is way too much. Then the average auto shop, or apartment house in a big city is way over the limit.
But go ahead and give us a number.. put a limit on how much wealth Americans are allowed to accumulate before it becomes public property.
If the best, brightest and most industrious among us agree with your number, they will stay. Otherwise they will close shop, pull up stakes and escape to a country where their talents are better appreciated.
We cannot all be rich, but neither can we be a nation of peons. Peons do not hire peons.
$100 invested at 10% for 10 years = $259.
$100 invested at 10% for 100 years = $1,378,061.
Money grows exponentially and how much do Paris Hilton’s great grandchildren deserve? The problem with the removal of the “death tax” is that a few families will own all the wealth in a couple generations.
I believe in raising the exemption to $5-10 million per person. A thrifty person can amass this much in their lifetime and should be able to leave their heirs a lifetime of hard work. And an allowance for family farms and business is crucial.
But to allow the extremely wealthy to have their money grow unchecked would lead to an unbelievable disparity between have and have nots.
(And I got hit on this tax with the death of my parents and they did NOT have a big estate, so I do understand the frustration. If they were non-smokers and lived a few more years we would never have been taxed at all even if my Dad did lose it again in his final year and pulled everything out of the trust losing my Mom’s exemption.)
But to allow the extremely wealthy to have their money grow unchecked would lead to an unbelievable disparity between have and have nots.
i don’t understand your meaning of the above .. and would like you to explain before i respond.
btw, i made my last comment before reading yours, and repeated a few things. The reason for the 2001 death tax laws was exactly this.. Farms and businesses and property needed to be liquidated to pay the huge taxes.. now (’07) it’s 45% of anything over $2 mill.
So, where does a kid come up with hundreds of thousands when mom dies? Most times s/he sells dad’s business and 20 employees get fired. Not good, except that a whole lot of people are sorry to see mom go..
There has to be something done about inherited wealth that is contained within a business that cannot be freed without liquidating the business or wealth from huge gains in land value even though the farmers are still farming it. In this scenario farm land (which I’ll use because it is easier than a business) should not be taxed for inheritance unless it is sold someday. To force people to sell the family farm because they have to pay taxes on the land value (i.e. in 2005 which would have been absurd) should not be the intent of any estate tax. There needs to be an exception to avoid losing farm land and small businesses.
However, I would disagree that is the reason for the 2001 tax “overhaul.” Congress could care less about farmers and small business owners. (Small meaning small cap and mid-cap businesses not Mary Kay owners.) The wealthy simply do not want to pay taxes, period. Consider that the wealthiest people in our society basically pay 15% in income tax (Warren Buffett a bit more because unlike Gates he pays a state income tax) while a big family loses deductions for having too many kids through AMT and you start to see a problem.
Wealth cannot grow unchecked. I am sorry if that sounds anti-capitalist but it is true. The example I gave was the growth of $100 dollars. 10 years $259. 100 Years $1.378 million. 150 years over $161 million dollars. 200 years over $18 billion. $100 turns into $18 billion. How many of us who pay taxes on every dime we make really want our great, great grandchildren to have to compete against Paris’s? If this is the growth of $100 how much will her $150,000,000 trust fund grow into in that time period? And yes, I know some of the amount is inflation and it is not the same value as it would be today, but that is true of all of our savings.
I am not a tax the rich type person but I do believe in a progressive tax system. I will gladly pay 35% plus 10.3% CA if I make a couple million a year. I could even handle a flat income tax where everyone pays 25% period although I am unsure how people raising a family on $20,000 a year would survive. I am opposed to a consumption tax because I spend at 70% of my income to survive (the rest is taxes and savings) whereas Bill Gates spends maybe 10% (and probably not that much.) The poorest people should not pay tax on 100% of their income while the richest pay on 1%.
If you really want to put your energy into fighting a horrific tax look at the AMT sometime. Taxed on taxes because you pay too much tax is ridiculous. Not being able to write off your kids because you have too many versus your low salary is cruel. In fact, I’d say the current tax system needs to be simplified but isn’t all that bad. We need to stop the ridiculous spending to lower the rates. Would you really care about paying a 10% federal tax if it was well spent? But having two tax systems is stupid and deceitful. (And yes, Congress is making up the “death tax” and the supposed tax cuts through this stealth tax.) Sorry, nobody gets a hundred million tax free and it’s time for the wealthy to start paying their fair share.
So I think we agree on farms and business not being hurt but I still want an estate tax and I suspect you don’t. Which makes sense if you and your spouse are worth over $4 million soon to be $7 million, soon to be endless, soon to be $2 million.
Contrary to it leading to a disparity between have and have nots, your $100 example seems to show that anyone with $100 can invest it, gain some wealth and leave far greater wealth to his heirs.
Is it your fault that your great-great-grandfather plunked away a hard earned $100 while mine didn’t, and only you inherited a dynasty?
No, it’s not your fault, but i do not like you being wealthy while i am not, so cough it up.
You really don’t think someone can be wealthy on 9 billion instead of 18 billion?
And if all you inherent is $100 you will probably need it to live on versus $150,000,000. Your arguments do not make sense to me. Taking a portion of extreme wealth only limits power not wealth. And my guess is, from statistics not from anything you have said, my wealth is greater than yours so it is definitely not a case of wealth envy.
Thought I would add these to the discussion
“I am proud to be paying taxes in the United States. The only thing is - I could be just as proud for half the money.” — Arthur Godfrey, entertainer
“Did you ever notice that when you put the words ‘The’ and ‘IRS’ together, it spells ‘THEIRS?’” — Author Unknown
“Barrick maintains a hedge book of 9.5 million ounces that supports project financing. It has completely closed its operating hedge contracts to gain from rising gold prices that hit a 28-year high this month.
On gold, Wilkins said prices could easily move to $900 or $1,000 an ounce.
“Just because of the trading nature of gold and the new regime that we are in now, I would say that it could easily move to $900, $1,000 or beyond.”
“It could happen very quickly.”
Edmonton News
I know about the trading nature of gold, but “The new regime that we are in now”, could somebody please explain it to this simple country boy.
“regime of the known knowns”
new regime .. sounds bubbly.
Dutch housing bubble update:
while the Dutch bubble has not burst yet, news about RE related fraud is hitting the newspapers more often. We have daily news messages about a big lawsuit where the ‘real’ mob (they murdered some RE tycoons and their lawyer buddies) is pitted against the real estate mob (who were investing the proceeds from drug deals etc. in Dutch real estate). Yesterday and today there also is a story about some fundmanagers who pocketed millions (maybe more than 100M euro) between themselves by flipping RE portfolios between pensionfunds and developers. The pensioners are not going to be happy … To my surprise the justice department even arrested some of the RE mobsters, but I don’t think they need to be scared. Usually in these cases they get away with 40 hours of community service or something similar, or just a proforma sentence ‘because the case already has done severe damage to their personal reputation’. Looks like the whole RE/mortgage mess in the Netherlands is going to snowball before the bubble bursts. The fraud is everywhere, you just need to look. There must be many high level business leaders and politicians (from the lowest to the highest level) involved, so we will see where it ends; some people must be getting nervous.
RE: Looks like the whole RE/mortgage mess in the Netherlands is going to snowball before the bubble bursts. The fraud is everywhere, you just need to look. There must be many high level business leaders and politicians (from the lowest to the highest level) involved, so we will see where it ends; some people must be getting nervous.
Sounds just like the Nazi Party big-wigs looting Western Europe after the 1940 Blitzkreig.
Fed repo today 47.25B according to Mr. Practical Largest one yet.
I knew there would be $40.25B in rollover.
$19.25 B is 1 day
$20 B is 6 day
$8 B is 14 day
This is net injection of $7 B. The first injection of any liquidity since August.
Have to see what happens tomorrow. If they rollover the $8 B. I suspect there will be no rollover. This is smoke and mirrors to make it appear as if there are actual borrowers. This is insolvency at its best.
FRB
http://tinyurl.com/df5hm
Looks like my question was answered before I even posted…thanks, Hoz.
“This is smoke and mirrors to make it appear as if there are actual borrowers.”
That reminds me of my occasional speculation as to whether smoke and mirrors are used to make it appear there are actual home buyers in falling knife markets (like most if not all of SoCal). Any thoughts on whether and if so, how?
30yr closed at 4.53%
this is now wheels up, plane on fire, over the ocean landing scenario….FED cuts tomorrow.
Just remember your seat cushion may be used as a flotation device, and you will come out just fine.
I’m thinking there will be a “surprise” set for tomorrow. Went out to may on some AMR puts.
Yeah, too much too fast makes Tex a greedy girl, so I’m gonna take half the Januarys off. We’re either gonna double bottom here or crash through the floor. The second half are free now so we’ll play with the house money.
How long before these repos mature and the banks have to pay the Fed …and take back the, *ahem*, collateral they secured the repo with?
1 day?
65 days?
Never?
Does anyone track the repos to see when (if ever?) they “unwind”? I thought that repurchase agreements were just short term financing, and I was just wonder who or what *publicly* tracks when these things get closed out, and when the Fed gets the money back and the banks get back the *cough* collateral.
Since the original injections (? LOL), there has been no new net injections of moneys. To date all the MBS backed repos have been rollover. There is no defined period the FRB has to abide by. The FRB can evergreen the rollovers as they come due. Thus the $47 B reported as “new injections” is primarily rollover.
Yes, I keep track as do many others on the FRB monetary actions.
The FRB chooses the loan terms. for example, there is $20B due tomorrow. The bank may ask for additional time to pay and the FRB may allow this with an injection of new funds to pay off the banks old loans. (Headlines read “Fed injects $20B in new liquidity”, we [all of us] however are to smart to fall for the tired manipulation of moneys, it becomes a sucker trap). smoke and mirrors baby!
Isn’t it cheaper for the banks to keep things parked at the fed vs. taking a hit?
Incidentally, if it hasn’t been posted elsewhere …
NovaStar Financial — one of the companies that rode the subprime boom to dizzying heights — appears to be the latest one whose star is fading. The company’s shares peaked at an adjusted $250 in 2004. They’re off about 50% today to around $2. The news from AP …
“NovaStar Financial Inc.’s stock plummeted Thursday after the beleaguered home lender posted a nearly $600 million loss, said its shares are likely to be booted off the New York Stock Exchange and warned of heightened risk of bankruptcy.
“Many of NovaStar Financial’s competitors — including American Home Mortgage Investment Corp. and New Century Financial Corp. — have gone out of business this year. NovaStar Financial has laid off much of its staff and stopped issuing mortgage loans this year as the mortgage industry plunged into distress.
“For the third quarter, NovaStar lost $598 million. This stemmed from various charges reflecting how much value its portfolio has lost.”
For some perspective on the size of NovaStar, the firm originated $11.2 billion in nonconforming loans in 2006. That compares with almost $60 billion at New Century Financial, which flamed out spectacularly earlier this year.
http://biz.yahoo.com/ap/071115/novastar_mover.html?.v=1
I have also noticed here in the carolinas (N & S I travel both) I am seeing more comercial RE for sale or for lease. But its different here! Yep, its different here alright, we are late to the party, thats what is different.
Lane
“OPEC shouldn’t be blamed for the price of oil; it’s out of our hands,” said Qatari Oil Minister Abdullah bin Hamad al- Attiyah. “It’s speculators who are putting money in oil.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aq3qiOMWpqwc&refer=worldwide
Still, a drop in prices is a buying opportunity, some analysts said. Gold has risen in 11 out of the past 12 weeks.
a trader at R.F. Lafferty Inc. in New York. “The primary trend for gold is up so you want to buy dips.”
The metal is headed for the seventh straight annual gain, the longest winning streak since futures began trading in 1975.
http://www.bloomberg.com/apps/news?pid=20601012&sid=amnX0UNtyfxw&refer=commodities
Are the oil producers the new home builders or lumber mills?
Are gold traders sounding like realestate agents before they accepted the declines? I recall how important the turning point was for housing, as if it were a long time ago.
Are investment uses of gold far in excess of industrial and consumer uses of gold? ‘Puters get thrown away, etc… What is the percentage of gold destruction worldwide?
Did you see the invisible US tank this month?
How would that technology affect housing? Invisible houses, that is.
How much will land cost on the moon base? Crazy fer sure, water on the moon. Water and dirt is all you need.
i saw the tank. There was a short video of a japanese kid online a couple years ago with what appeared to be the same thing.
It looked great, but unfortunately the tech was pretty primative..there is a camera behind the tank. It takes in the scenery behind the tank.
That video is relayed to a projector infront of the tank, (between viewer and tank) and the images are projected onto the tank’s side.
It looks good from only one point of view.
The tank piece talked about having lots of cameras and lots of projectors so the tank is obscured from any angle .. i dunno if it’s practical.
But maybe a tank can be completely covered with LEDs like a TV screen .. And with hundreds of micro-robot cameras running all over the battle field relaying images to some very sophisticated graphics processors.. who knows.. might work..
Wells Fargo CEO Gloomy on Housing
http://biz.yahoo.com/ap/071115/wells_fargo_housing.html?.v=3
“It’s interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine,” Stumpf said.
Great quote.
“…the industry has invented new ways to lose money…”
This is all good! I believe the Fed calls this ‘financial innovation.’
Starbucks just cut earnings guidance. Same store transactions fell for the first time since the data started to be released about three years ago. After hours they are down about 9%…
Looks like people may be starting to curb that $3 per day Latte expense…
Is this bad news the reason for that big pop in their stock price at day’s end today? Because bad news is generally good for share prices in a conundrum-driven market.
http://www.marketwatch.com/quotes/sbux
Earlier post illustrated the effect of the Bubble - the first Starbucks closing. I propose that Starbucks is a fair measure of the underlying economy.
Therefore, as of November 15th, 2007, the first official count stands at -1. How many exist? Count nationally or globally? Probably more open in China than close in the US, but still fun to watch!!
What a concept! Actual laws to protect consumers from predatory subprime lending — and only four years too late.
Barn door left open
All the horses ran away
Hurry, shut the door
Thursday, November 15, 2007
House bill targets subprime lending
In an effort to make sure the subprime mortgage meltdown doesn’t happen again, the House was set to vote today on a bill that would lay down rules for lending. Stacey Vanek-Smith reports.
…
The House bill would make it illegal for lenders to reward brokers for giving out subprime loans, and require that borrowers meet minimum standards. It would also prevent things like prepayment penalties that punish people for paying loans back early. The thing is, a lot of the organizations doling out the shadiest loans were not banks, and they won’t have to follow federal rules. David Lereah is the former chief economist for the National Association of Realtors.
DAVID LEREAH: It was the mortgage brokerage companies that were out there trying to sell a lot of these irresponsible type loans.
Still, Lereah says reigning in the banks will make a big difference. That’s because there won’t be many organizations left to buy up risky loans from lenders like Countrywide.
Lereah says the bill is also an important feel-good measure. He says Wall Street is watching Capitol Hill, and Congress needs to act.
DAVID LEREAH: If there isn’t any legislation, it’s going to prolong the contraction that we’re currently experiencing in real estate. So any type of legislation that’s going in a positive direction for the real estate industry is good legislation at this juncture.
http://marketplace.publicradio.org/display/web/2007/11/15/subprime/
House Passes Bill Curbing Mortgage Brokers
By Damian Paletta and James R. Hagerty
Word Count: 719
WASHINGTON — The House passed legislation to give more protection to home-mortgage borrowers, but deadlocks in the Senate make it unlikely that such a measure can be enacted into law before next year, in the latest sign Congress is struggling to address the nation’s mortgage crisis.
http://online.wsj.com/article/SB119514330797994284.html?mod=hpp_us_whats_news
New resale listings on SD ziprealty.com since 11/13/07 = 200+ homes. How many turkeys do these sellers expect to find in the market over the holiday season?
Who could have anticipated this amazing development: Turns out kitsch-and-sink writedowns thus far may not reflect the full damage tab of the subprime implosion!
Subprime Hits Seem Likely To Keep Coming
By Carrick Mollenkamp, David Reilly and Edward Taylor
Word Count: 826 | Companies Featured in This Article: UBS, Citigroup, Barclays, Merrill Lynch, Bear Stearns
Just weeks after some of the world’s largest banks took tens of billions of dollars in losses on their holdings of debt linked to tainted mortgages, a new concern is emerging: It might not have been enough.
Expectations are growing that UBS AG may face fourth-quarter write-downs of as much as eight billion Swiss francs, or $7.11 billion. Investors and analysts believe that Citigroup Inc. may face more pain after announcing last week that it expected to take write-downs of $8 billion to $11 billion in the fourth quarter. In the third quarter, Citigroup recorded mortgage-related write-downs of $1.8 billion, …
http://online.wsj.com/article/SB119508846028193546.html?mod=todays_us_nonsub_money_and_investing
latest news
Japanese markets extend losses in afternoon session
ASIA MARKETS
Asia dragged down by financials again
By V. Phani Kumar, MarketWatch
Last Update: 10:27 PM ET Nov 15, 2007
HONG KONG (MarketWatch) — Asian markets fell sharply Friday, tracking down the decline on Wall Street, as lingering concerns over the health of global financial markets dragged down financials such as Mizuho Financial Group in Tokyo, National Australia Bank in Sydney and HSBC Holdings in Hong Kong.
http://www.marketwatch.com/news/story/asia-dragged-down-financials-again/story.aspx?guid=%7BE303B785%2DB99F%2D413C%2DBE3C%2D7D132B0FBA3D%7D
BTW, the Nikkei is rapidly closing in on bear territory — off by 18 percen since the onset of the credit crunch (roughly three months time):
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=JP:1804610&sid=123712
Don’t bond yields usually surge on higher-than-expected inflation, to reflect a repricing of the inflation risk premium? The U.S. T-bond market seems out of kilter.
US inflation reaches 14-month high
By Eoin Callan and Krishna Guha in Washington
Published: November 15 2007 15:55 | Last updated: November 15 2007 15:55
Bond yields tumbled as US annual inflation reached a 14-month high and signs of trouble in the economy mounted.
The cost of living increased 3.5 per cent compared to a year ago after consumer prices rose another 0.3 per cent last month, driven by higher fuel costs, according to official figures.
The big jump in prices underlines the Federal Reserve’s concern that inflation could pick up pace and make it more risky to continue cutting interest rates to keep the threat of a recession at bay.
http://www.ft.com/cms/s/0/583aa7e2-938f-11dc-a884-0000779fd2ac.html
Whither the symbiosis?
China fears impact of US slowdown
By Jamil Anderlini in Beijing
Published: November 15 2007 20:15 | Last updated: November 15 2007 20:15
China’s commerce ministry warned on Thursday that a slowing US economy would trigger a drop in Chinese exports that would mark a “turning point” for China’s rapid economic growth.
A global economic slowdown stemming from problems in the US subprime mortgage market and the resulting credit squeeze “will be the biggest challenge to China’s economy next year”, a report from the ministry’s policy research department said.
http://www.ft.com/cms/s/0/007f09b4-93b5-11dc-acd0-0000779fd2ac.html
JAWS sequel? The elephant under the rug appears to have morphed into a great white under the water’s calm surface.
Recession in America
America’s vulnerable economy
Nov 15th 2007
From The Economist print edition
Recession in America looks increasingly likely. Can booming emerging markets save the world economy?
IN 1929, days after the stockmarket crash, the Harvard Economic Society reassured its subscribers: “A severe depression is outside the range of probability”. In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession’s pitiful forecasting record offers little comfort. Our latest assessment (see article) suggests that the United States may well be heading for recession.
http://economist.com/opinion/displayStory.cfm?Story_ID=10134118
It may be a slowdown, or a grim feeling, or a credit crunch, but in no uncertain terms, it’s not a recession.
America’s economy
Getting worried downtown
Nov 15th 2007 | WASHINGTON, DC
From The Economist print edition
Whether or not it’s an official recession, America’s economy will feel grim
http://economist.com/opinion/displaystory.cfm?story_id=10134077
“But the good news may be about to come to an end. The housing downturn has entered a second, more dangerous, phase: one in which the construction rout deepens, price declines accelerate and the wealth effect of falling prices begins to change consumers’ behaviour. The pain will be intensified by a sharp credit crunch, the scale of which is only just becoming clear. And, in the short term, it will be exacerbated by a spike in oil prices—up by 25% since August—that is extreme, even by the standards of recent years. The result is likely to be America’s first consumer-led downturn in close to two decades.
Home is where the rot starts
The biggest source of gloom is housing. Despite almost two years of plunging construction, the collapse of the property bubble is far from finished—and its impact on broader consumer behaviour has barely begun. So far, the housing recession has been a builders’ bust. Housing starts are down by 47% from their peak and residential building now accounts for 4.4% of GDP, down from a record of 6.3% in 2005. That is a big drop, but not yet unusually long or deep by historical standards. Nouriel Roubini and Christian Menegatti, of Roubini Global Economics, point out that the seven other housing recessions since 1960 lasted an average of 32 months and saw housing starts fall by 51%.”
Don’t miss the graph of the S&P/Case-Shiller index from 1988-2006.
Last cyclical peak (1989?) = 108
Last cyclical trough (1996) = 80
Percentage drop in the index over seven year bust (1989-1996) = (80/108-1) X 100% = -26 percent.
Current cycle cyclical peak (2005) = 183
Percentage drop in the index needed to get back to previous cyclical low =
(80/183-1) X 100% = -56 percent.
Given the likely size of the crater left in the ground after the index falls this far, I am guessing it will keep on dropping past 80 this time.
P.S. If the bust lasts the same duration as the last one, it will continue until 2012. But I expect the momentum of a larger percentage drop may entail a larger bust (recall the recent Japanese RE bust, which had a duration of at least 15 years…).
At least the stock market is still holding up…
So far, this brake has been eased by strong gains in financial wealth. Thanks to higher stock prices, American households’ overall assets have still been rising smartly. If the stockmarket loses momentum along with the economy, the wealth effect on consumer spending could appear quite quickly.
SOL alert…
http://www.marketwatch.com/tools/marketsummary/
How can such a bunch of idiots stay employed?
In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started.