Bits Bucket And Craigslist Finds For November 20, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
May 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Goldman…
http://www.reuters.com/article/ousiv/idUSN1953742020071120
So Goldman is saying that DCO’s will fall another $150B, but at the same time that they themselves have managed their risk and hedged so well that they don’t have to take any write-downs at all.
If true, that’s going to go down as one of the greatest financial coups in all history. I guess the only problem now is whether the counterparties to the hedging can pay up.
-DCO’s
+CDO’s
I think I read where Goldman’s level 3 to equity ratio is in the neighborhood of 200%+. Wouldn’t take much of a write down to wipe that out.
Some of Goldman’s funds have done atrociously. So, who’s got the equity tranches?
I just don’t trust them. They’ll show their colors, probably near February. Just a hunch.
If Goldman Sachs is talking big, we’re really in for a horrorshow. They are so amazingly full of it.
Ochen horrorshow…
Ah Ha! Professor Bear is Russian!
Eto nyeh pravda.
They’ve hedged, but will the companies on the losing end of the hedges be able to pay up.
Goldmen: Okay Mr. Credit Default Swap Owner, my loans fell $50billion and you bet they wouldn’t. Now pay up.
Mr. Credit Default Swap Owner: Yeah right… like I have $50 billion. I couldn’t scrounge up $1 billion in this market, if my LIFE depended on it.
Goldmen: Ooops, looks like we have a $50 billion loss after all. Too bad we paid out $30 billion in bonuses last month, because now we’re insolvant.
Marketwatch reporting on “rumors” of an “emergency rate cut” and a “90%” chance of more cuts in December.
And right next to it is an article about reduced consumer spending due to inflation.
And check out the title of the No. 1 Most Popular “Read” story (as at this moment).
“Seventeen reasons America actually needs a recession”
OK, Paul B. Farrell, time to fess up. What handle do you use here?
I am a Paul Farrell fan. Nothing but common sense.
Won’t surprise me in the least, the dollar bag holders across the pond will just have even more incentive to dump.
The last “emergency rate cut” did a lot of good, didn’t it?
These just provide short entries.
“short entries”
Hahaha!
I’m starting to think that “emergency rate cuts” are just a sop that nobody expects anything from. The real action is in the “injected liquidity” ie, extra dollars created from thin air, that the Fed ‘loans’ to its member banks.
Rates are one thing, electronic helicopter drops of these dollars is flowing like lava from a simmering volcano (whose dome is slowly building regardless)
And who knows what it does that is not so public.
“electronic helicopter drops”
So we did the e.h.d., and nobody was the wiser…
“The real action is in the “injected liquidity”…”
M3 reporting isn’t required. Now move along folks unless ‘ya want get tazered!
Don’t taze me Bro!
Why?
The “CW” is that Bernanke is trying to get the market to accept “no cut” in December. If we assume that is correct, Bernanke would not want any emergency cut at all.
I just can’t see an emergency cut until after a real ‘Come to Jesus’ event.
Excuse me. If the US GDP is still growing, and unemployment is still low, and every government spokesweasel keeps announcing that the economy/dollar is strong, then how could you possibly justify a genuine panic measure (which would be reported as such).
Too much cognitive dissonance there for even J6P to swallow.
RE: spokesweasel
“Spokesweasel”-I like that…right up there with Pig-Men.
More like Marketwatch is “originating” “strong suggestions” of a rate cut. CNBC, and even the guest “analysts” on PBS Nightly Business Report have been doing this for years.
Speaking of Nightly Business Report, check out Alice Rivlin’s commentary last night:
Cutting rates can only make a weak dollar weaker, contributing to inflation and angering our trading partners. Moreover, lower rates would reward investors who made bad decisions and set the stage for a bubble in the next asset class that catches the fancy of the moneyed herd.”
http://www.pbs.org/nbr/site/onair/transcripts/071119d/
Good for her.
But isn’t the problem the 2/10 year curve inversion? Generally speaking we’ve had an inversion or a very minimum spread for a long time now. Lowering the overnight rate would put additional pressure on the 10 year value, thus increasing the 10 year yield?
One of the HBB wizards should offer their expertise on this
How do rumors of more ‘emergency’ rate cuts square with foreign govts looking for an exit from the $US?
Wealthy Nations In Gulf Rethink Peg to Dollar
By Joanna Slater and Chip Cummins
Word Count: 1,112
For many years, oil-rich Persian Gulf states have pegged their currencies to the dollar. Now that link is stoking a bad bout of inflation in their red-hot economies and putting policy makers in a dilemma: Break the dollar peg and risk undermining the U.S. currency, or keep it and face growing local discontent.
The dollar peg has “served the economy…very well in the past,” said Sultan Nasser al-Suweidi, the governor of the United Arab Emirates’ central bank, last week. “However, we have reached a crossroads.”
http://online.wsj.com/article/SB119552599363898773.html?mod=hpp_us_whats_news
The dollar, the citizen (sorry, old habits- I meant “the consumers”), elections, stocks, America, the future… all must successively be sacrificed so that the banks may live.
As the ship is foundering on the rocks because of ill piloting, successive waves are slowly pounding it to pieces, all must be jettisoned: the horses, the gold, the food, the pieces of the ship itself, in a frantic effort to keep it afloat.
Soon it sinks anyhow.
The dollar, the citizen (sorry, old habits- I meant “the consumers”), elections, stocks, America, the future
Consumers are considered much more valuable, which is why the gov’t looks the other way as they sneak across the border by the millions. Citizens, well those folks used to have some confounded sense of “ownership” and “stewardship” for their country. Good thing they have been re-educated.
And under Admiralty law such jetsam is the property of any who pick it up, as opposed to flotsam, the recovery of which entitles the finder to a salvage claim.
The situation is so bad that it isn’t even worth suggesting anymore that the Captain retake the wheel from his girlfriend.
And the ones who start the rumors sell into them.
Housing starts to hit 14 year low. That’s 1993.
Back then I was in construction. I remember making the decision to change jobs. I was young, early 20’s and “knew nothing!” But….I remember reading that people always have beer money so I took a job at Budweiser. Made it through that recession with a great job.
People will continue to drink. We just saw a change in on premise and off premise sales.
In a recession people stay home and drink and bar sales went down.
Sales stayed the same.
Interesting…..
looking for inferior goods/ recession play……….duff beer and ?
Walmart
I had some 99 Cent Store stock I sold earlier in the year, for around $15.
It’s now a little over $8.
That’s as low on the limbo stick as one can go, as far as a stock play goes on a inferior goods retailer, ha.
VICEX
Or work for an energy company.
There’s a headline today in the NYTimes that housing starts went up over the past month. As if some dead-cat-bounce is a sign of a comeback!
As if housing starts increasing are sign of anything good in a country where inventory numbers need to be reduced. They just keep throwin’ logs on the fire.
contained, not contained
Libor soars as credit crunch returns
By Edmund Conway, Economics Editor
Last Updated: 12:53am GMT 20/11/2007
The credit crunch is returning in a virulent form to money markets, experts warned, after City banks raised their wholesale lending rates to the highest level in two months.
Morgan Stanley said that the recent jump in the benchmark London Interbank Offered Rate, which yesterday rose to just under 6.45pc, was not merely a seasonal blip but a major warning sign of pain ahead.
http://tinyurl.com/29×7mt
the tinyurl link is corrupted. it took me to an Asian E-bay site.
Maybe watcher is really a spammer..
no, here is the link, dont know why tinyrul messed up;
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/20/cnlibor120.xml
As a FYI, TinyURL assigns a temporary, random link that will ultimately point to a different page. That’s why I no longer use it to link to articles, etc.
Bubba, had the same thing happen to me the other day with 2 of bizzaroworlds links.
U.S. 2-year swap spread widest since March 1989
Mon Nov 19, 2007 1:25 PM ET
NEW YORK, Nov 19 (Reuters) - The U.S. two-year interest rate swap spread gapped on Monday to its widest level since March 1989, driven by rising interbank lending rates and credit jitters in the money market.
Two-year swap spread bumped up to 92 basis points and last traded at 92.50 basis points on Monday after reaching to 89.25 basis points on Friday.
Be careful out there…this is a bug ya don’t want to catch.
http://www.usatoday.com/money/industries/technology/2007-11-19-spam-storm_N.htm
dollar routed:
Nov. 20 (Bloomberg) — The dollar fell to a record low against the euro and the Swiss franc on speculation a U.S. government report will show a deepening property slump, prompting the Federal Reserve to lower interest rates.
The U.S. currency declined as economists forecast Commerce Department data today will show U.S. housing starts slipped to a 14-year low in October, prompting traders to raise bets the Federal Reserve will cut interest rates by December. The dollar also slid on speculation a group of six Arab nations will change their fixed exchange rates to the U.S. currency.
http://tinyurl.com/2az3s8
I hate black Friday. I love thanksgiving, it’s one my fav holidays, but I just hate that XMas gets to take the Friday of Thxgiving to celebrate consumerism. It’s repulsive…
Anyway, thought you would alll enjoy this article. Check out the quote from this shopper:
“It’s always exciting to get the sale on something,” Wong said. “Even when it’s not on sale, you get sucked into the thrill of buying all these things and bringing the stuff home to try it on.”
http://www.sun-sentinel.com/business/sfl-flzshopping1120sbnov20,0,891346.story?coll=sofla_tab03_layout
How about a buy nothing day instead?
This November 23rd, environmentalists, social activists and concerned citizens in as many as 65 countries will hit the streets for a 24-hour consumer fast in celebration of the 15th annual Buy Nothing Day, a global cultural phenomenon that originated in Vancouver, Canada.
http://adbusters.org/metas/eco/bnd/
I agree Michael.
A month or so ago, I predicted this Black Friday to be a duesy. I don’t want or need anything.
In 2000, my family visited with us for the holidays, with 2 small children. We spent $100 and the tree brimmed with boxes.
I went online at 1201, and purchased toys. Landed a razor scooter for $10!
This year wil make that look expensive!
Smiles,
Leigh
Wong, Yun, Chinas toxic exports….. I’ve had enough of that topic.
this is from one of my European based advisory services. I agree with this guy that shorts could be squeezed the rest of the week and maybe into Dec. too. But that would make a great entry for early ‘08
**********
Anecdotally however, one has the sense that too many hedge funds have succumbed to the temptation to settle too comfortably into a dire outlook. This creates the preconditions for another dramatic short squeeze induced rally and its imminent likelihood will be strengthened by the desire for a “feel-good” rally before the festivities later in the week.
Yea, I kind of worried about this. I have a bunch of puts because it was just to tempting. I also have the feeling like bernake is going to come in with the suprise emergency discount window cut and prople the stock market again.
Oh well, its only worhtless dollars!
So then do what I do - buy precious metals too, and some foreign currencies.
Between shorting and PM, I’ve been making out like a bandit in this “credit crunch”, “subprime crisis” or whatever the MSM term-du-jour is.
(end horn tooting)
Tx –
Thanks for the anecdote. I sold SRS and SKF just now because I was thinking that 20% and 30% respectively is enough for this little chicken and I was worried about your aforementioned “‘feel-good’ rally”. Hate to take the tax hit, but bouncing in and out at 110 has been profitable. Not savvy or brave enough for options (or much else). Bock-bock.
MrBubble
Hey! We have the annual news story of someone being nearly trampled to death at Walmart to look forward to! Those are always a hoot. A madding crowd of sheeple bursting through the doors to grab a $10 DVD player or cheap TV.
Ten Bucks!!
Be right back………………
We’ll look for a nearly-trampled you on CNN.
Psssssssst. Use the internet! You’ll be safer!
Last year there was endless coverage of the fact that some retailers such as Best Buy decided to open at midnight on Thanksgiving. I was aware of this because my relatives had the TV on.
They interviewed one woman who was standing in line in the cold in order to be one of the first shoppers on Black Friday. She said that she didn’t have anything in mind that she wanted to buy, but it was the thing to do, and everyone else was doing it.
And I wonder why people gave in to real estate mania…
That TX, is the best example of natural selection at work.
It cracks me up during this season, people just lose their minds. Not to get too personal, but I am a 6′ guy, 240lbs, and a bodybuilder; I am a rather large guy. And, usually, when I walk through the mall, people don’t “miss” me and walk into me or step right in front of me and have me walk into them.
Not this time of year, people are so out of their minds that sometimes, I will just stand there (in the mall hallways) and people will body check me and nearly (or actually) knock themselves down boucing off of me. It’s comical, it really is; and then the look on their faces when they see who they just delivered their best Mario Lemiux bodycheck to is frieking priceless. Of course, I am always nice about it, but hell, I am not going to say excuse me to these idiots. I was just standing there, you decided it was a good idea to try to check me out of your way. Your problem, not mine. My GF does much better in that crowd, she’s small and can manuver better around the people and stores.
Our society is sick, and much of it (imho) stems from this whole “holiday” season. I tried to make a deal with my GF this year that we would buy no gifts for one another, and only buy things for other people (family and friends) who are much more needy then us. Or, instead of gifts, give a large donation (well, in my book large) to an animal shelter (we are both animal nuts).
Nope. Can’t break that “must get gifts” mentality. Everyone says that XMas is all about giving, not getting. Yeah, right.. I challange others to try exactly what I did. You will VERY quickly find out that the people who tell you that; when confronted with the idea of getting nothing for XMas (and only giving) are horrified… Self-delusion is a powerful force.
Back to the mall!! Maybe I will wear football pads this time; maybe then these morons will notice me (or at least knock themselves out hitting off the pads, doing everyone a huge favor).
ha ha
my mall horror story involves going Christmas shopping with my metrosexual (former) BF. I’m not a mall browser, if I need something, I’m in and out in record time.
I agreed to go to King of Prussia mall with him, to help him pick out gifts for his sisters supposedly. Six hours later, we were still in the mall. Finally I had to go out to his parked car for relief, I just was feeling ill.
He stayed in the mall another hour or so. On the drive home a queasy feeling overcame me. I realized I was going to hurl. BF wouldn’t pull over when I said I needed some fresh air. I actually had to yell: I”M GOING TO THROW UP - and in a flash, that M3 was curbside. (I knew the threat of puke on his pristine leather interior would do the trick).
My stomach contents ended up somewhere in the vicinity of 6th and Spruce - Society Hill!
That was the end of mall Christmas shopping, and of metrosexual BF. We’re still friends, though. I call him when I need hair product advice.
Very funny, phillygal. I’ve learned (as a non-shopper) that it’s good to have one shopper and one non-shopper in a relationship. The shopping has to be done by someone. As my wife recognizes her own shopping vulnerabilities, she has granted me veto power over her purchases, which I strategically use on occasion.
It’s not for nothing that Romero’s Dawn of the Dead was set in a mall. Zombies!!
“We are the Hollow Men,
The stuffed men
Leaning together
headpiece filled with straw alas
our voices when we whisper together
are quiet and meaningless
as wind in dry grass or
rats’ feet over broken glass
in our dry cellar.”
Or something like that. I wanted to adapt Coleridge for HBB purposes, but I think that it suffices to describe the state of things. Not with a bang, but a whimper.
MrBubble
phillygal, you’re high maintenance, making him pull over like that. I mean, couldn’t you just stick your head out the window?
Hmmm…
King of Prussia Mall @ XMas; a metrosexual, shop-a-holic BF scootin’ around in what is regarded as one of the most overpriced & over-rated of all sports cars.
…Ugh…
No wonder you wanted to puke.
metrosexual(?)
Good Morning!
A different oil perspective:
http://online.wsj.com/article/SB119543677899797558.html?mod=fpa_mostpop
The story reminds me of the realtors who claimed that prices would plato instead of decline.
I think Socratic pricing might be more apt. The only thing FB’s knew about true value, was that they knew nothing.
I’m reading Plato Symposium right now - daughter picked out for me. Last year was Socrates. There is so much to learn about human nature reading the old dudes.
Been reading Adam Smith this month. He’s pretty windy, but makes some really interesting points. Found a good quote today, but I misplaced it.
He is constantly bitching about how capital–shopkeepers, shopmasters, landlords, kulaks, etc–conspire to get laws passed to diddle their customers and push wages below sustenance level. He also thinks monopolies are bad for the consumer and for morals. Hehe.
Oh yeah, the quote was about how the poorest of the poor will be found working any occupation that the rich do for fun. Eg, gardening, knitting, etc.
LMAO!
Plato? As in “The Republic?” Or one of his other works?
hehe
leighsong,
peak oil has already happened, as far as i can tell, about a year ago.
and it doesn’t matter if oil reaches $500/barrel. EROEI is the real measure of peak oil. when it takes a barrel invested to get a barrel out of the ground, it is ‘game over’. in the 1930s they got 30 barrels for every barrel invested. now we are rapidly closing in on 1 barrel in to get 1 barrel out.
look for peak ‘all crude liquids’ in another year or two. t. boone pickens says we have reached supply peak of 85mbpd, while demand already exceeds 88mbpd. although there may be a brief terminal spike in supply in the next few years to 90+mbpd, essentially we ARE in a very short plateau before terminal decline sets in.
2010? 2012? maybe, but not much longer before that happens.
it is signicant that the wsj is finally, even though somewhat circuitously, embracing this terrifying truth.
brazil’s new find? ok. 8 billion barrels divided by 85mbpd. that’s barely a 3 or month world supply. meaningless in the larger picture.
peak oil — along with peak water, and possibly peak debt — is here.
the saudis aren’t going to bail us out this time. they are peaked out on production.
Hi manhattanite,
The post was not for anti-peak oil. I’ve seen it discussed here before and I thought it would amuse some other posters.
We are of like mind–I also believe Peak was last year
Best,
Leigh
I am in agreement with Peak oil being here. (either we have already hit it or we are going to in the next year). Oil price will remain high. How high depends on whether Bernake lowers interest rates. The lower he goes the higher oil prices will spike. The U.S. recession that is already in effect may have a temporary decline in Oil stocks which will be buying opportunities. I am already overweight in oil and am adding to positions as I see opprotunities. I see oil as a win win. If Bernake lowers rates it will kill the dollar. Oil is priced in dollars so it is a hedge against a falling dollar. If Bernake doesn’t lower rates the U.S. will fall deeper into the recession and oil consumption will slightly decline, providing additional opportunities to purchase oil stocks before the world finally says we have reached peak oil and the panic in prices ensues. I am also looking for alternative energy stocks to purchase but currently they are priced in the stratosphere. They have recently come down but not near the levels necessary to become a BUY. Once all the weak hands and the speculative money are flushed out of the system prices will be reasonable.
I was talking to a co-worker yesterday about housing. He said that all the foreclosures he’s heard about from his friends are not from ARM resets. Instead, he says, these are people who bought their homes on fixed loans, but had to live close to paycheck to paycheck to make the payment. Then when the price of food and gas and health insurance went up and their salaries did not go up with it, they could no longer afford even their fixed payment. And they can’t downsize because they can’t sell.
I forgot to ask if his friends if they had cash-out refied, but this is a class of FB’s I didn’t think about.
Just about everyone stretched to get into the most house they could. We are talking about whole communities of house-poor families. How long do they stick with the pain while watching others walk away and their house value rapidly decline? Pretty tough to stick with the Ramen when a walk will yield the family a windfall from reduced housing expense.
People who actually put down a downpayment and had loans that actually paid off principal are among the “true victims” of this. And those who stretch themselves thin, only to see themselves being forced out by the weakened dollar and resulting price rises should be boiling mad! It’s their no-nothing-down howmuchamonth neighbors who evicted them from their homes.
Any politician who wants to do anything to bail out people with option-ARMS, no-money-down, I/O loans is pure evil. This incudes the vast majority of Congress–democrat and republican–who voted not to tax “forgiven debt” as income. (Which is income, just as much as the income I sweat and bleeed for.)
I agree with you for the most part. But why were ARMs such a bad decision several years back. What about people who bought 20% down but chose a 5 or 7 year ARM because they expected to move out of said house in 5 or 7 years? Are these people bad, because they wanted to pay a lower interest rate but now have lost their “gains” and money down because the market has plummeted?
Anyone paying “BUBBLE PRICES” for housing isn’t bad, just stupid. Sometimes you pay for stupidity.
If they put 20% down, they can cut their losses and sell, but will take a loss. So what?
If they weren’t paying the LOWER mortgage, they would have been paying the full rent.
My heart bleeds.
Stupid people overpaying has created this mess.
An ARM was a bad decision in 2005. Why? Because you can get a 15-year fixed mortgage for 5.5% and a 30-year for 5.85. Whit rates that low, an ARM doesn’t make sense.
And if rates drop, you can refi and NOT TAKE CASH OUT! It’s usually not offered as a “product” unless you ask, but you can get a mortgage for virtually any time period. So if you have a 30-year fixed at 6.5% and 5 years in you can get 5.5%, then you can refi to a 25-year mortgage.
My general point was people who are “losing” their homes now who only paid a low teaser rate and didn’t put any money in aren’t “losing” anything. Their landlords kicked them out, essentially. They bought knowing they could never afford the house, in most cases.
People who bought at the peak of the bubble using conventional fixed-mortgage financing may have been a little misguided about rent vs own, but are the only ones who by any stretch can be called “victims” if they can no longer afford their house due to rising gas and food prices.
Precisely. An ARM on my condo in the late 80s made sense because the interest rates were high, and our payments actually went down for several years as the t-bill rate on which our loan was based dropped. An ARM when interest rates were at 50 year lows only made sense if one expected to do serial refinancing. And we’ve seen how well that worked out.
Well, they probably couldn’t save up the 1000 to do a refi into a fixed in 2003 at near historical minimum rates.
They have to raise taxes on someone because banks will take a loss and hand out a 1099. To balance the process they have to stick it to someone.
“Just about everyone stretched to get into the most house they could.”
so true, and this was the exacerbating “leverage” aspect of the bubble. these huge mcPOS made no sense as far as reasonable living spaces. they were concocted totally as leveraging your investment in a ‘forever’ rising market. and they have just the reverse effect in a ‘forever’ falling market. insane costs to heat and maintain a space that’s completely unrealistic for actual living space — unless we revert to extended family living situations.
so, bring on the bulldozers and whatever step it is in the tulip.com model where they start subdividing mcmansions. personally, i don’t see such subdivisions as workable, architecturally or otherwise.
A credit crunch is predicted by many. How can this end well?
http://www.digitaltransactions.net/newsstory.cfm?newsid=1586
The article is about some kind of PayPal plug in, or am I missing the point??
Credit that we don’t have? Companies are buying up everything in sight, anticipating the consumer’s need…all for naught?
methinks this cannot but end most ill.
One million!
http://online.wsj.com/article/SB119552028786998586.html?mod=googlenews_wsj
I get a sneaky feeling we’ll see a number of domestic bank runs, next week.
Why?
Roidy
The stampede has already started, but this silly computer just can’t compete, in distilling palatable good old fashioned face to face fear.
People have been transferring money willy-nilly into T-Bonds, the rate of interest is not of interest to them, a safe port in the storm, is all they seek.
Fear used to have to line up…
I’m thinking late next week, is when we’ll see it again.
The perfect storm is upon us.
Freddie Mac says Oops!
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayj1OiKpbnA0&refer=home
still hiring and giving raises !
fnm too
Goldman,Lehman Hired to “Advise” Freddie Amid Losses…
Freddie Has 3rd-Quarter Loss, Seeks to Raise Capital
Nov. 20 (Bloomberg) — Freddie Mac, the second-biggest buyer of U.S. mortgages, posted its largest-ever quarterly loss and said it may cut its dividend and raise capital to weather “significant deterioration” in the housing market. The shares fell.
The $2.02 billion third-quarter loss included $1.2 billion of provisions for credit expenses and a $3.6 billion reduction in the value of assets, the McLean, Virginia-based company said in a statement today. Freddie Mac hired Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. to advise it on capital options.
A slump in the value of mortgages reduced core capital to $600 million more than its regulatory requirements, prompting Freddie Mac to seek more money. Fannie Mae, the largest buyer of mortgages, reported on Nov. 9 its loss more than doubled and said home prices will keep falling. Concern that the companies’ credit expenses will rise further sent the stocks tumbling in the past four trading days to the lowest in a decade.
GSE debt was considered safe, now what? Where will the capital infusion come from?
Taxpayer guarantee of GSE-securitized debt up to $1m. Schumer is working on that behind the scenes as I type.
printing press?
I think excessive printing of paper money only comes in the late stages, of our neo-Weimar Republic.
I think I heard something on CNBC about issuing preferred stock. I wasn’t paying close attention, though.
They are going to need an army of people to manage the REOs. And they are going to have to give raises to keep people from fleeing the industry.
If Schumer succeeds in pushing through a Congressional measure to guarantee GSE-securitized debt in amounts up to $1m, will Fannie and Freddie have to first mark their assets to market before the guarantee is added to the U.S. taxpayers’ tab?
OR IS IT SOOO CRUCIAL THAT THE GSEs ARE ENABLED TO CONTINUE FULFILLING THEIR MISSION OF PROVIDING AFFORDABLE HOUSING THAT U.S. TAXPAYERS SHOULD FEEL PRIVELIGED TO ENRICH THE SHAREHOLDERS IN THESE PRIVATE CORPORATIONS?
Freddie Mac Net Loss Widens
By James R. Hagerty
Word Count: 463 | Companies Featured in This Article: Freddie Mac, Fannie Mae
Freddie Mac, sucked into the downward spiral of the U.S. housing and mortgage markets, reported a loss of $2.0 billion for the third quarter and said it is “seriously considering” a 50% cut in its fourth quarter dividend.
Freddie also said it is considering ways to raise additional capital.
Freddie’s results were worse than the $1.4 billion loss recorded 11 days ago by the company’s bigger rival, Fannie Mae.
Losses at Fannie and Freddie constrain their ability to perform their role of funneling money into the mortgage market when other investors are leery …
http://online.wsj.com/article/SB119556248413999149.html?mod=hps_us_whats_news
Oh my, look at FNM and FRE drop like rocks. I remember thinking these were immune a year ago…
I hate buying cars, but I need a new one (not necessarily *new*). Any car buying advice for the seasoned bubble-sitter?
I’d like to wait, but I’m really pushing it with my current beater. Maybe new, with 0% APR and invest in something simple like VGMM as an arb… sit back and watch as the fed destroys any play I make?
If you live in Southern California all you have to do to shop for a car is travel the streets. FSBO cars are parked on the streets everywhere.
New stuff is very competitive with used up FSBO junk. You can get a new Toy corolla for roughly 14k. I think it’s a bargain.
I did the Corolla thing in June, but had to pay more (can’t negotiate worth squat, and couldn’t wait for a sale.) Could have put cash down, but only put down half so I could get a FICO boost. The cost of the interest (less than 1K) will pay for itself if the FICO boost gives me a lower rate, points, etc on an eventual house.
“New stuff is very competitive with used up FSBO junk. You can get a new Toy corolla for roughly 14k. I think it’s a bargain. ”
If you’re thinking about small pickups this might interest U:
I am sold 100% on Toyota’s. Both of my Vehicles , ‘96′ Corolla Sedan and 2002 Ex Cab pickup, never break down and just need oil change ev 5000 miles . Did full carfax & JD powers research before deciding on ‘02′ model Toyota ex cab Pickup which i purchased as a former leased return at 40,000 miles. At time of purchase(early 2005) i had read that this particular 2002 yr model was cited/researched as having the fewest mechanical breakdowns, which after 150,000 total miles and 3 yrs nonstop driving as a delivery vehicle proved 100% correct.
The older Toyota models ( yr 2004 or earlier) may actually be better quality than the newer models , though this is just an opinion cited by some truck buffs i’ve talked to. Do your own research.
I
Honda, new or used.
Asked the same question in August, to replace my mother’s dead Buick. Bought a new Toyota, and was shocked to get 5k for a dead Buick on trade-in. Bought at end of month,did not discuss financing until price was in writing, then paid cash.
Honda, new or used.
My thought exactly. And make sure that you walk out of the dealership a couple of times during your negotiation. Just say, “thanks, I’m going to check out some of the other dealerships,” or “let me go do some research before I decide.”
Yes! No Toyota econoboxes please. After 3 Mazdas, 2 Pontiacs, and a Toyota Corolla, I can definately say that the Toyota was the worst of the lot. They may be reliable, but they aren’t fun to drive. Crappy acceleration and even worse breaking.
Check edmunds or some other reveiw sites and then test drive a half dozen to find one that feels right.
Year end clearance sales are GREAT right now if you are in the market for a new beast. GM (bless their wicked little soul) has finally improved. Got a new one & no defects, like major oil leaks, electrical troubles. etc in the previous years. Paying cash is the best way to go.
Also Muggy, the Consumer Reports reliability report is just out …do check before buying. Some American models came in with high marks, some foreign brands, like Mercedes and the Passat got spanked.
Our daughter is driving a hand me down 2000 Impala with 90K miles. It has been very reliable (we bought it new). My one gripe is that the front disks will warp after abouth 40K miles, so badly that they need replacing ($200). Have done this twice so far.
Maybe your daughter has a heavy foot?
Nah, its a known problem.
after a review of Consumer Reports Used Car Guide, i bought a nearly new Impala last year - i wanted an Accord but it was more than i wanted to pay. the Impala has been absolutely trouble free so far and gets pretty good mileage for a car of that size (low to mid 20’s around town w/AC on).
Was pondering this question myself recently. If you look at total cost of ownership, depreciation is often the biggest expense. Selecting a vehicle that doesn’t depreciate can make for a surprisingly economical choice. A 15 year old Viper, for instance, which can be found with very low miles, is probably all done depreciating. Corvettes from the late 1980’s are probably at the bottom of their price point right now- I suspect they’ll soon start to appreciate. Early 1990’s BMW 8 series already look to be on their way up.
The last 3 cars I’ve owned- I’ve sold for more than I paid, after several years use.
The problem with those cars is that the operational costs (Fuel, Maintenance, & Insurance) will eat you alive. The Corvette less so than the others. So, I was trying to figure out what car would hold it’s value well, but would have lower operational costs. Without thinking too long/hard about it, I decided that Mini Cooper S; 3 or 4 years old, ~50K miles, might be a good choice. Poked around the web a bit, looks like if you shop hard, they can be had for $12K or so.
Good piece of advice: if you are shopping for a new car, and are concerned about resale value- ask a 16 year old boy what you should buy. In 4 or 5 years, he’s going to be your customer.
Except that many 16-year-olds might tell you to buy a Pagani Zonda Roadster (which comes in at a handy $670,000).
One of my cars is a ‘86 4+3 Corvette. Fun to drive, cheap to insure, ridiculously easy to maintain for a do-it-yourself-er, 20mpg average, 126K miles and running like new. Worth more today then what I paid 3 years ago.
My daily driver is a ‘95 Firebird V6 with 257K miles. Never left me stranded, cheap/easy maintenance for a do-it-yourself-er.
Keep the car.. Whatever it needs, fix it, and keep it running. It`s the cheapest way.
You got that Earl. I’m paying $1,300 per year for insurance here in NYC, with just liability. And we’ve never had an accident, and have had just one ticket (her not me) in 15 years.
That’s true, to a point. However, eventually the other costs (in time, aggravation, towing, missed opportunities etc.) from breaking down on the freeway every few months or so outweigh the costs of buying a new(er) car. And, believe me, I HATE to buy cars.
Have to agree with Chris. You also run into parts getting harder to find or can’t find the parts (junkyard doesn’t carry them or the company doesn’t make them). I’m driving a 1982 Oldsmobile Cruiser (station wagon). A gas eater for sure however I love the how it drives, and the metal between me and the car that can hit me.
Just for laughs, go test drive a Suzuki SX4. I have one this week and the car will surprise you. I love their small cars. Suzuki doesn’t have the marketing budget of Hyundai, which I think is an equivalent value, but Suzuki’s are better than most people think. The SX4 lists for 15K.
That’s if you want to buy new. Personally, I wouldn’t spend more than 3-4K on a beater, until this passes. I just got an old VW Golf for $660, off the asking price of $1,000. I’ve got $1,500 total in it now with the muffler and radiator repair and it will run for another 100K miles.
Honda Accord. In eight years (99K miles) of ownership, the ONLY unexpected repair was replacing the lamp for the dashboard clock. Front brakes lasted 80+K, rear brakes were never replaced, shocks/struts never replaced, original tires (Michelin) lasted 65K miles, original battery lasted 5 years. It never even got a wheel alignment.
I discussed the depreciation issue with an actuary from AAA. He said Honda Accords depreciate the least.
I have a used semi-beater Volvo wagon now, but i once had a ‘91 Honda Accord wagon that was still running fine when I sold it — with 331,000 miles on it.
(My ex-father-in-law put the majority of the miles on it.)
I’ve known many people with more than 200K on their Hondas.
Hondas are great cars, if a tad unexciting.
I checked Consumer Reports for best buys in used cars. Then went on the net to shop for my preferred vehicle. When I located it, I called dealer. Next day I went and picked it up. Got a great deal on a great car. Don’t buy new.
If looking for a newer used car I would suggest that you decide on what you want: make model color and what you will pay for it. Than go to an auto broker and let them find the car for you. I did this and got exactly what I wanted from them : make model color and most importantly MY PRICE without having to negotiate as I gave it up front. It took about a month of him searching, calling me with what he found, an my turning down a couple but it worked for me.
PS: I was a CASH buyer.
Most important: Do not set foot in the dealership until you & dealer have already agreed upon the price.
Read this website (particularly its $av0meter listing of recent prices paid by readers for new cars):
http://www.carbuyingtips.com
It’s free. It’s a hoot. I think any HBB fan would love to read these materials.
I combined the lessons from this website with the paid service called Fighting Chance (google it) to buy a new Honda Civic earlier this year. Best $70 I ever spent. BTW I agree with other posters about Hondas - their current crop is great.
Another fun read is an article called “A Day in the Life of Killer Monsoon” by another person.
I have no connection to any of these three other than being a satisfied customer; I’ve recommended the carbuyingtips website on this blog before (incl. as “PDXrenter”).
Where do you live? Subarus last forever, and are nice little cars. You lose a little gas mileage because of the full-time awd, but it’s sure nice to have when you need it.
The Free Markets
http://www.stockmania.com/index.php?showimage=96
Some times the “free market” doesn’t seem so free.
http://en.wikipedia.org/wiki/Free_market
A free market is a market where prices of goods and services are arranged completely by the mutual non-coerced consent of sellers and buyers, determined generally by the supply and demand law with no government interference in the regulation of costs, supply and demand. The opposite of a free market is a controlled market, where government sets or regulates prices directly or through regulating supply and/or demand.
Paulson was last scene pimping the Greenback Dollar, in Ghana.
KahunaBear,
I sure wish I had a talent that rivals yours. I have a small request: Would you consider drawing a cartoon with a Wizard of Oz behind-the-curtain motive?
Professor Bear,
Thanks! Sure. Will do!
Propaganda is the deliberate, systematic attempt to shape perceptions, manipulate cognitions, and direct behaviour to achieve a response that furthers the desired intent of the propagandist.
– Garth S. Jowett and Victoria O’Donnell, Propaganda And Persuasion
http://en.wikipedia.org/wiki/Propaganda
Total gloom and doom today in the financial papers.
The lead item in the WSJ is the prospect of Arab oil exporters dumping the dollar as a pricing currency.
http://online.wsj.com/article/SB119552599363898773.html?mod=hps_us_whats_news
Soon to be free thanks to Rupert Murdock; perhaps we can cancel our paid tree-eating subscription.
And the Chinese are worried about the crashing dollar according to the Financial Times.
http://www.ft.com/cms/s/0/8b1c17dc-96d1-11dc-b2da-0000779fd2ac.html
Now there are rumors of an emergency rate cut, putting further pressure on the dollar.
What does this mean? As expected, in order to save the FBs, the Fed is having to sacrifice the other FBs — future borrowers. With Fannie and Freddie paper losing value, conforming loans are getting more expensive.
But it could get worse. Millions of homeowners are facing foreclosure because they willfully signed (or foolishly signed) mortgages with exploding payments. But our children may have to repay their mortgages in another currency — facing the same situation through no fault of their own.
“Reagan taught us deficits don’t matter.” The Republicans were only doing to our common finances what millions of voters were doing to their personal finances.
Pre “Black Friday” Update:
FED: This is your Captain Benny Boy speaking: “Goldilocks has turned up missing…please aid all deckhands in trying to locate her whereabouts, the Officers do not believe she has fallen overboard, rather it is at this time assumed she is playing one of her little “mischief” pranks on all us and is actually hiding somewhere on board the “Good-Ship-Lollipop” …update on the large icebergs and rouge tsunami waves: smoother sailing is expected in the near future, a charming video with Mr. Cramas$ explaining the “details” will be playing shipwide until Christmas Eve …update on the liquidity virus that has spread about the ship, Dr. Paulson has issued a statement: Don’t worry, be happy it’s all “contained, stabilized & normalized”. Regarding Hedge Fund withdrawls: Please place your withdraw requests at the “discount window” with the “Purser”…Remember…If you hear a loud blowing horn and “gates” slamming closed…DO NOT Panic…there is a “helicopter” on the upper deck…additionally, I believe there are more than enough lifeboats for everyone. Relax… enjoy the rest of your beautiful “Private Equity” sponsored voyage. Oh, also, Pink Floyd will be ending their performance in the “Officers Club” at “midnight”…sorry, as usual, invitation only. All the Best! Looking forward to a prosperous 2008!”
Private Equity Prosperity for the few…suffering for the many…and so it goes…everyone’s basking in distributed sunlight, 8 minutes from the source without Thanks given.
pros·per·i·ty :
–noun, plural -ties.
a successful, flourishing, or thriving condition.
Mabey Larry Crudlow can find Goldylocks for you.
Dollar smashed:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=i
It’s almost time for strong hands to buy the really big dip. Don’t you all remember what a bunch of dupes you felt like in 1988 after you realized the 1987 Black Monday crash was just a bad dream? This is what I predict — the whole nasty November 2007 episode will seem like a bad memory by the middle of 2008, as happy days will return.
(Fair disclaimer: I believe the economy is fundamentally unpredictable.)
IMHO this is just the beginning, they put away the fungo balls and the game is about to start. The national anthem is about to start
Allons enfants de la patria
Le jour de glorie est arrive!
etc.
Rick: How can you close me up? On what grounds?
Captain Renault: I’m shocked, shocked to find that gambling is going on in here!
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
[aloud]
Captain Renault: Everybody out at once!
As I slog through last night’s Cali thread this morning’s chuckle comes courtesy of txchick’s hubby’s musings about retirement and his imminent encounter with her trout.
He just turned 47 for heaven’s sake!
Dang, he is old enough to retire! Why are you making him work? Why is youth wasted on the young?
Does the numeral “47″ trigger some kind of primal angst in men?
BF was really low last nite, contemplating tomorrow - his 47th birthday. I hadn’t seen him this depressed since Sunday, when NASCAR ran its last race of the season.
Just did 46; can’t see how 47 would be different, although my view is that I am now 50, though technically not eligibile for AARP until officially so. AARP at 50 - that’ll depress you.
Not true Mikey(2),
I’m 51 and loving my age. No depression here. Makes me realize how quickly time is going by. Just think when you hit 50 you have lived for a half century.
Does the numeral “47″ trigger some kind of primal angst in men?
Everything with a “4″ in front hurts my head. I can’t even contemplate a “5″, those things suck.
The real problem is that I feel less than 20 on the inside. My delusion is a happy one until I am faced with a mirror.
(And the next person who mentions AARP, well, I’m going to have to ask you to step outside.)
AARP provides excellent car and home owners insurance through The Hartford. Other than that, they are pretty worthless. Maybe their powerful lobbying is worth something tho.
From the More-Than-You-Want-To-Know Department:
4 handle is not to be feared, but 5 sucks, especially if you come from a family of turkey necks, and you’re trying to sell stuff for a living. When I saw my older brother a couple years ago I said that ain’t happening to me. So I’m writing this from Costa Rica, where I am having a little operation tomorrow to have the side of my face pulled out of my neck, where it has started sinking in the last 2-3 years.
I don’t know Philly, but 49 was a miserable year for me. All I could focus on is what hadn’t happened, what I hadn’t done, how little time I had left and on and on. Woke up day of 50 and it completely turned around. While sitting in hot tub drinking Mimosa all I could think about was everything I had done, all the places I had lived and been, all the things I had mastered and how much time I had left to do whatever I wanted. I think some get over the middle aged funk and others turn into those grumpy old people that walk about looking miserable and repelling life.
Younger Next Year: A Guide to Living Like 50 Until You’re 80 and Beyond
http://www.amazon.com/dp/0761134239?tag=youngernextye-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0761134239&adid=0NHC55CPG8MK7DBGQT6X&
A very good read regardless of age.
Is this article for real? Its at functionpix.com
Did the Chief economist at Goldman Sachs really say that this could be bigger than the Great Depression?
I did some googling and found just a couple articles with similar stories. Why wasn’t this reported more widely if it is for real?
2008 is set to be the darkest ever year in financial history according to Goldman Sachs – a new report claims.
The Times reports that the credit crunch is so serious that it may force the US banking system to cut lending by as much as $4,000 billion, prompting a “substantial recession” in the US.
As much as $400 billion could be wiped out from the US banking system prompting fears that the knock-on effect could spell an economic catastrophe on both sides of the Atlantic.
The mass of defaults on high-risk home loans in America has emerged in greater detail over the last 3-4 months but more and more banks and lending institutions are having to own up to the full extent of their losses as the financial world is being rocked to it’s core with the sheer scale of the financial melt-down.
Mr Jan Hatzius, chief economist at Goldman Sachs estimates that with every $1 dollar in losses, equates to the inability of highly leveraged Wall Street lending by $10, as they typically aim for a so-called capital ratio of 10 per cent.
“If leveraged investors see $200 billion of the $400 billion aggregate credit loss, they might need to scale back their lending by $2 trillion,” Mr Hatzius said.
Mr Hatzius’s actual prediction of a $400 billion write-off would reduce lending by $4,000 billion.
“The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognised. It is easy to see how such a shock could produce a substantial recession,” Mr Hatzius said.
“While the uncertainty is huge, the associated downward pressure on lending raises the risk of significant weakness in economic activity.”
Goldman’s forecast predicts further disastrous consequences for global economy, sighting numerous factors such as the cost of the war in Iraq, record oil prices, sub-prime defaults and growing unemployment.
“The potential for an economic implosion and subsequent world recession is huge and could surpass the biggest financial crash in history of that of the Great Depression”.
“Why wasn’t this reported more widely if it is for real?”
Sheeple and bovines are inherently nervous creatures. No MSM reporter wants to be held responsible for scaring them into stampeding over the nearest cliff.
There’s been some interesting discussion on CR that Hatzuis is doing his best to drive the market down, now that Goldman has positioned itself to short the market.
Is this legal? Especially when the Treasury Secretary is a GS alum?
Goldman Sachs is just reiterating what Deutsche Bank wrote last week.
It is somehow reassuring to know that Americans still have the right of free speech (at least those with enough money and political influence).
http://www.businessweek.com/bwdaily/dnflash/content/nov2007/db20071119_601375.htm?chan=top+news_top+news+index_businessweek+exclusives
Seems real enough.
What does Alan Greenspan have to say about this? Haven’t heard from him in 2 weeks.
“2008 is set to be the darkest ever year in financial history according to Goldman Sachs – a new report claims.”
Well, based on their likely bonuses next year… I guess.
The swings in the pms this week, make me think somebody’s on their.
Weird thing though is that the PM downtick over the last couple of weeks was a lot more severe than the dollar’s uptick, which is odd. So the dollar is at new lows today, but PM’s are still way below their highs.
Perhaps due to the end of the India wedding season, or anticipation of weak holiday jewelry sales this year, not sure.
It was margin call time, in the far east…
I like shaking out the weaklings that are forced out by financial urgency. All it does it transfer pms to much stronger hands, than theirs.
Bad short term, good long term…
Can’t we just refer to “it” as “B&B” Friday…
As in: “Ben Bernanke” the “busy bee” printer…manufactures dollars so that people can get “black & blue” with their bodies & their wallets.
Here is a cautionary tale for anyone who dares to deliver bad news to bovines. The bovine brain is quite primitive, and hence is incapable of appropriately chanelling anger. This can give rise to a desire to kill the messenger.
Analyst who downgraded Citigroup threatened
Comment caused broad sell-off, she has been told her life is in danger
updated 2:11 p.m. ET Nov. 4, 2007
NEW YORK - The analyst whose downgrade of Citigroup Inc sparked a broad stock market sell-off on Thursday said she has received several death threats stemming from her research, the Times of London said.
Meredith Whitney of CIBC World Markets Inc late Wednesday downgraded Citigroup to “sector underperformer,” saying the largest U.S. bank by assets might need to raise more than $30 billion of capital and cut its dividend.
http://www.msnbc.msn.com/id/21624488/
As well she should be! LOL
It now appears that Citi’s losses will put the company in the negative for the next 3 reporting periods. She was to kind on the mismanagement.
“I’ll be right here,” she said. “I’ve got some corn flakes and canned vegetables. That’ll be my Thanksgiving.”
Victims of predatory lending practices. op ed in todays New York Times
http://tinyurl.com/24wgxf
This just enrages me. This is not an FB driving a hummer, this is an elderly, ill woman who was lied to by mortgage vultures. I hope she wins her case.
A new word has entered the American lexicon - the TRASH-OUT.
http://www.sbsun.com/news/ci_7501527
get ready for “dot-run”
These business will be merged with those that go in and clean up after a murder /suicide scene…as they say in Texas…it’s ALL bidness.
And I think it’s gonna be a long long time
Till touch down brings me round again to find
I’m not the man they think I am at home
Oh no no no I’m a rocket man
Rocket man burning out his fuse up here alone
http://www.marketwatch.com/tools/marketsummary/
This is a sucker rally.
How long does a sucker rally last compared to, say, a non-sucker rally?
Until smaller investors and shorts get long. Then there are no buyers left and the bottom falls out. I have had the mispleasure (?) of watching Mr. Cramers show Mad Money 2X in my life (only because of the HBB, read him in the street). His method of trading/investing is the worst thing to a persons pocket book. It will get an investor whipsawed. This is a whipsaw market. Smart longs have already pulled out, shorts are just sitting back and collecting interest and asset depreciation.
On a day like today, the market could be down 200 and finish up 200. As the financial stock goes, so will go the market.
November 20, 2007 9:46 A.M.EST
BULLETIN
Street’s bullish, for a change
Wall Street trades broadly higher, but a pair of high-profile stocks — Target and Freddie Mac — came under pressure.
While Wall Street parties on, keep your eye on the blinking numbers posted here:
http://www.marketwatch.com/tools/stockresearch/globalmarkets/
An incredible display of Marketwatch stupidity. Currency conversion of Hungarian Forints and Polish Zloty but not one easy to find quote of the Ringgit. Hungary exports to the US less than 100MM, Malaysia exports to the US $30.23B.
The fuse is a timed debt cord.
Down 1,000 points and counting…
The rocket appears to have landed somewhere out in the middle of the ocean…
New Fed forecast sees slower growth, tame inflation in 2008
By Greg Robb
Last Update: 2:00 PM ET Nov 20, 2007
WASHINGTON (MarketWatch) — The U.S. economy will slow by more than previously thought in 2008 but inflation will remain tame, according to the economic forecasts of top Federal Reserve officials released for the first time on Tuesday.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BE9885F90%2DCDB2%2D4FAF%2D8B5E%2D932A0D6C2413%7D&siteid=mktw
“tame inflation”???
CRUDE HITS NEW RECORD HIGH OF $98.10 A BARREL
FUTURES MOVERS
Oil futures surge above $97 on weaker dollar
Heating oil hits new high on low inventory and cold weather expectations
By Moming Zhou & Polya Lesova, MarketWatch
Last Update: 12:59 PM ET Nov 20, 2007
SAN FRANCISCO (MarketWatch) — Crude-oil futures gained for a third straight session Tuesday, surging above $97 a barrel after the dollar touched a new low against the euro, increasing demand for dollar-denominated oil from holders of other currencies.
Crude for January delivery gained nearly $3 to an intraday high of $97.50 a barrel on the New York Mercantile Exchange. The benchmark contract, on the rise since last Friday, was last up $2.73, or 2.0%, to $97.37 a barrel.
http://www.marketwatch.com/news/story/crude-hits-new-record-high/story.aspx?guid=%7B1A6627DB%2D55E0%2D4614%2D9519%2D5CBB15DD061E%7D&dist=
Slowdown — yes.
Calm inflation? SHOW ME THE MONEY…
They Fed should watch out. Oil can spike at a MUCH higher price than 98$, say $200 to higher. There are quite a few scenarios that would make this a reality -terrorist attack, abandonment of the dollar as pricing tool, etc. I usually don’t get too alarmed over disaster scenarios on Mega Disasters. That show goes on and on about asteroids, earthquakes, Yellowstone eruptions, and more. When that show started talking about oil and ways in which it could spike, I paid attention. The scenarios presented had a real chance of happening and have happened before.
You think housing is a disaster, wait until oil really gets started going up.
Roidy
Lucky inflation is so tame, or this news might be quite worrisome…
Tighter purse strings
Consumers say gas, gift prices will cause them to ease back on spending this year
By Andrea Coombes, MarketWatch
Last Update: 4:08 PM ET Nov 20, 2007
SAN FRANCISCO (MarketWatch) — The highest percentage of consumers in eight years says it is going to ease back on holiday shopping this year, with many Americans citing rising gas and home-heating costs, plus gift prices, as top reasons for their stricter budgeting, according to the eighth annual holiday-spending survey released Monday by the Consumer Federation of America and the Credit Union National Association.
http://www.marketwatch.com/news/story/consumers-say-gas-gift-prices/story.aspx?guid=%7B6607A2A0%2D6752%2D4B65%2D95BD%2D41CC0D7371C0%7D
Rising foreclosure threat seen for Vermont homeowners
…
Tom Candon, deputy commissioner of banking for the Vermont Department of Banking, Insurance, Securities & Health Care Administration, released figures showing there have been 994 foreclosure filings through October of 2007, representing an approximately 30 percent jump over 2006.
http://tinyurl.com/24wnhn
I’ve been wondering, is there any major advantage or disadvantage to going FSBO at a time like this? I know some people that recently listed as FSBO and it seems like a bad move to me, but I wonder if they have just as much of a chance as anyone else. Does anyone have any evidence/experience in this area?
A recent study done by some researchers at SIEPR showed that there was no difference in selling price between FSBO and listing through a Realtor.
From what I’ve seen people are doing FSBO right now because they know they’re taking less on price and are trying to save on the commission. Also, many that didn’t sell traditionally are going FSBO because they’re blaming realtors for not selling the overpriced home in a declining market.
What I’ve yet to see is smart pricing by a FSBO — pricing it 10% less than everything else in the local market. Which is the only way to sell a home right now.
I don’t see the smart pricing either. There are basically two FSBO’s in my neighborhood (including the people I know that just listed) and they are the only houses in the $150-200k range. There is one realtor listed house that is above $200k (keep dreaming). Everything else is between $115-145k, oh and it’s not moving either. While the two FSBO houses do have some advantages, i.e. bigger lots, they also have some disadvantages and I have yet to see a reason as to why they are asking at least 20k more than the realtor listed housing. I wonder if part of it is that people don’t want to listen to the realtors when they tell them where the market really is and so they go out and try it on their own. I can honestly say that I don’t remember seeing a single FSBO sell in the year that I have lived here.
Seems to me that the key to selling right now is finding the few people who HAVE to (or think that they have to) buy. In my neighborhood, the most recent sales have been to people relocating fom out-of state. Those folks, I think, are more likely to use realtors or MLS-based internet sources to find a house. Given the small pool of buyers, I would think that sellers are generally better off with using the MLS.
That said, if there are a lot of homes for sale with realtors in the neighborhood (thus giving an FSBO free marketing), and a seller can undercut his competitors in the neighborhood by the 6% realtor fee, then FSBO might not be a bad idea.
FSBOs are notoriously overpriced, probably even more so in a down market. Only exception is if you can find one (unadvertised) through some network of contacts. People who are desperate prefer going though a third party.
For those of you hankering to liberate some equity, the Reverse Mortgage comes to the rescue:
The product is evolving from meeting basic needs to fulfilling the desires of a new generation of retirees, from funding a vacation getaway or a recreational vehicle to renting a Paris pied-a-terre.
They’ve had those products for a while, but they used to be pitched as a product you’d use if you were, say, 80 years old and wanted some money so you could remain at home.
It could make some sense. Instead of selling your home, letting some “assisted living” place have it, get a reverse mortgage, and use the money to hire maid/nurse/cook services as needed at home.
When you die, of course, the house goes to the reverse mortgage company who hopes that you’ll die sooner than later.
But it’s kind of nice knowing that you can make someone’s investment go awry by living longer!
Used this way, even though the company that’s betting on your death stands to make a lot of $$$, a reverse mortgage isn’t a bad idea. (as long as you don’t have greedy kids that don’t want you to spend “their” inheritance!)
However, using it to find a “vacation getaway” or “RV” is a little silly. Because when your health fails, you’ll have to rely on the medicare system, etc, and be shoved into some public nursing home.
I hope you are joking… Reverse mortgage is a terrible financial decision.
It probably never makes financial sense, but if you’re old, need to generate some income, have a paid-up house, don’t care about who inherits it, and the money you can raise from a reverse mortgage would cover in-home care so you can remain at home, THEN it may not be a bad move.
I just wanted to say congrats to Los Angeles County for joining the “San Diego Club”, and *finally* showing negative year over year median price numbers (dqnews). Woot!
D.R. Horton Swings to 4Q Loss
Tuesday November 20, 9:49 am ET
D.R. Horton Falls to 4th-Quarter Loss on Inventory, Writedown Charges, Still Tops Consensus
http://biz.yahoo.com/ap/071120/earns_d_r_horton.html?.v=7
“Think for yourself and question authority”
Timothy Leary
Aladin… That would require half the population to admit they don’t think for themselves.
You’re asking too much.
“…question authority”
Vietnam arrests foreign citizens: political group
http://www.reuters.com/article/politicsNews/idUSHAN8489620071120
Don’t worry…”Private Equity” & “Global Trade”…it benefits everyone, regardless of some small consequences…here & there…now & again…breathe the deep rich aroma of Starmucks & grap Big Mac… in Hanoi Square.
Housing starts up but trend still lower
http://biz.yahoo.com/rb/071120/usa_economy_housing.html?.v=5
Looks like Cerberus, the 3 headed dog of hades…
Is off the leash.
News from the SF Bay Area:
“Housing crisis leads to job loss” (Contra Costa Times)
http://tinyurl.com/2fpg92
“Bay Area real estate symposium forecasts more gloom” (SF Gate)
http://tinyurl.com/ywmbs7
Hanging out in the Demon-otized Zone, in the penthouse of the $700 Club.
Anyone just catch Jim Rogers on Bloomberg TV?
- (just ended at 12:50 PM Eastern time)
The article below was in our DAILY BREEZE paper today.
At a Kanetca customer appreciation dinner (at the CheeseCake factory the week before last) we sat next to a city worker who said he is a ‘paid clock watcher’ and then told us of all the perks he gets before and after retirement.
Today is Tuesday, November 20, 2007
Originally published Tuesday, November 20, 2007
Updated Monday, November 19, 2007
Shameful pay raises
Daily Breeze Editorial
Los Angeles’ politicians can see that the city’s looming financial crisis requires immediate action but don’t see why it should inconvenience them.
Their automatic pay raises of $7,000 to $9,000 show the hypocrisy of the nation’s highest-paid City Council, which looks everywhere but in the mirror when it comes time to put the brakes on runaway spending.
City budget officials warn that next year they expect to be $75million over budget, and as much as $300 million in two years.
Now surely, salary boosts for City Hall’s 18 politicians - the 15 members of the council, the mayor, the city controller and the city attorney - aren’t going to make much of a difference in a $6.7 billion budget.
But this is not a one-time deal. Since 2005, salaries for those officials have risen 25 percent. This increase will take the City Council members’ salaries from $171,648 to $178,789 - and the other four even higher.
Nor is it isolated to high-paid politicians. Each of these pols has huge personal staffs at high salaries, and many staffers get city cars to take home. And it goes all the way down the ranks of the municipal work force, which is rewarded with compensation packages far beyond what’s available in the private sector.
Meanwhile, the municipal budget has been strained by tanking home sales and prices, which have reduced tax revenues. And payroll costs continue to soar by about 7.5 percent annually.
Mayor Antonio Villaraigosa realized that a pay raise while new rates and taxes are being imposed would look bad, so he refused his $9,283.30 raise, saying, “Being mayor of Los Angeles is reward enough.”
City Controller Laura Chick has long criticized tying city officials’ pay to judges’ salaries - something the city’s voters were tricked into approving in the early 1990s in the name of ethics reform.
But even when the mayor and controller refuse the raises, their pay will automatically catch up next year, and their pensions will still be based on the higher salary.
And it will keep going up.
Without charter reform, the politicians will continue to throw up their hands and complain with feigned sheepishness that they have nothing to do with this darn pay raise.
That must end.
It’s not enough for a few pols to give back their pay raises. The public deserves a re-examination of city salaries from top to bottom and a readjustment where necessary.
Let this be the cry of the city: No more money for City Hall until the politicians cut their pay and their staffs by a third, and then appoint an independent commission to examine the entire compensation structure of the city government.
CFC down big again - 17%. They’re now down about 50% in a three-week period. Ouch.
Holy crap - just in the time to type that, they went down another 4%.
The orange one must be bright purple by now. And Toasted.
Just waiting for the “run” on their bank…
So much for the theory that the Fed granted CFC “too big to fail” status…
What will the Fed do? I am guessing their greatest hope is that they can spark a bear trap rally at some point to help all the bovines on Wall Street collectively forget their memory of seeing a rampaging stampede of elephants emerge from under the living room rug this past August. Perhaps a case of collective amnesia is just the ticket to get the economy back on track?
IRWIN KELLNER
Rough patch or briar patch?
Commentary: U.S. economy melting down
By Dr. Irwin Kellner, MarketWatch
Last Update: 12:04 PM ET Nov 20, 2007
PORT WASHINGTON, N.Y. (MarketWatch) — Whether the Federal Reserve realizes it or not, the United States economy is reeling from a one-two punch of plunging real estate values and a full-blown credit crunch that might not be alleviated with additional rate cuts.
While the Fed might have had a role in creating what has come to be known as the subprime mess, because of the way it has evolved, the Fed’s ability to deal with it is rather limited. There are a number of reasons for this.
http://www.marketwatch.com/news/story/us-economy-melting-down/story.aspx?guid=%7B744EEE81%2D4F92%2D4A09%2DA142%2D4A17CFD35C6D%7D
FRE’s news could have been worse, such as, say, reporting a surprise $3bn writedown of subprime mortgage assets.
Freddie Mac shares dive on $2bn loss
By Daniel Pimlott in New York
Published: November 20 2007 15:13 | Last updated: November 20 2007 15:13
Shares in Freddie Mac, the government sponsored mortgage agency, plunged by as much as 27 per cent after it revealed a surprise $2bn loss in its third quarter - its biggest ever - as it took out large provisions against future credit losses and was forced to mark down the value of securities backed by subprime mortgages that it owns.
http://www.ft.com/cms/s/1a5e1614-9779-11dc-9e08-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F1a5e1614-9779-11dc-9e08-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Freddie Mac investors can look forward to being Ramen eaters…
Ethics in America…
Just heard this pleasantry from a fellow tech support friend. He was doing some work for a guy where someone he knew from a previous mortgage shop now works. Some new guy was all ecstatic about getting a guy a mortgage… Made a comment about how they should be down there giving him a BJ for getting it through… So he got the guy to tell him what the deal was – here’s the new scam from our friendly broker slims (and I don’t know any of these guys, never did any work for them myself… so this is third party to me - but man do I hope they get theirs!).
As we all know what a company can state over the phone about one’s employment is limited – basically they are or are not employed. Sooooo, you need to show income higher then it is? No problem, let me introduce you to Photo Shop, where we can modify anything – including your pay. Scan a few stubs, adjust some numbers – whoo hoo, you’re all set. Oh, Credit score too low? Hey hey – how ‘bout a nice cashier check receipt…
Serious, that’s what he got told. Outright fraud – still raging out there.
YES… this is true….. but old news. This is something that has always been done. Except now that the times are more modern they require something a little more sophisticated than a good old fashioned type writer. The fact, still remains, that the way the lenders/banks protected themselves from this type of fraud (since they are VERY well aware of it) was to double check with the IRS.
The bottom figure you put in your 1003 ap better have matched with the number you submitted to the IRS.
Since the lenders haven’t had much to lose…..
instead they’ve had much to gain by looking the other way (these past 4-5 years) they haven’t been troubling the IRS with such trivial matters !
Took half size Dec. index call position at S&P 1420. I’m too early most of the time.
Looks like a short term hammer bottom will be put in. Had to have one more shakeout. I swear, the more you can think like a criminal, the better you will do in this market.
If I had a hammer
I’d hammer in the morning
I’d hammer in the evening
All over this land
I’d hammer out danger
I’d hammer out a warning…
A lot of good stocks (?) are offered below settlement prices right now.
At times like these, I stick with the indices and ETFs cuz I don’t know what’s going on with individual companies.
ETFs = good.
And is a great way to short a lot of stocks in a single transaction or buying a lot of stocks in a single transaction.
(This is not suitable for any or all, this is suitable for me , my self and I. The UltraShort FTSE/Xinhua China 25 ProShare moves twice in the opposite direction of the Chinese stock market.)
fresh and lotsa volume.
There is something here.
This is a downside bet, betting the Chinese bubble blows up, what could be more euphoric for most Americans than China caught up in a bursting bubble. During the Olympics no less…..think on it.
if dominoes fall:
RE market in UK. It is the next disaster in the making. Then Aussie, Ozzi and China to follow in this order.
think free money.
Caught the djw 125 dec calls for a bounce, maybe 500 pts, not getting too greedy here.
Isn’t buying before T’giving and selling on Friday a criminally-profitable traders’ strategy?
Yeah, the trick is to find the POS that is going to be run up by the retail daytrader types.
You may remember ONSL in 1998? I think it went up 106 points the day after Thanksgiving. I stayed with it for about 55 of those and watched the rest in amazement. Of course, ONSL doesn’t exist any more
The pagan cult of the Salmonincale, which involved men and women whipping borrowers and lenders with a trout around the Palatine in a stupidity rite, continued until the Twenty-fifth century, when Pope Ya Wanna Pie II banned it.
lol
I keep telling myself I’m done for the year. Famous last words.
Given all the recent mortgage mayhem, how can the toxic mortgage Superfund organizers know whether they are putting aside $100bn, $75bn or even $50bn into the containment structure?
P.S. Is BlackRock part of the Prez’s Working Group on FInancial Markets?
Superfund lines up BlackRock
By David Wighton in New York
Published: November 21 2007 00:33 | Last updated: November 21 2007 00:33
BlackRock, the asset manager 49 per cent owned by Merrill Lynch, is set to be signed up as the manager of the $75bn superfund being put together by the top three US banks.
The appointment of BlackRock, one of the world’s leading bond managers, is seen as an important vote of confidence in the plan, which met with initial scepticism from some banks and investors.
http://www.ft.com/cms/s/5af9517c-97c7-11dc-9e08-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F5af9517c-97c7-11dc-9e08-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
If the Fed decision on whether to cut at next month’s meeting depends solely on the housing market situation and market turmoil (with no regard to the withering dollar and import price inflation concerns), I predict another cut. In that case, hints they will not cut would merely add to the ’surprise’ factor, thereby increasing the magnitude of the rate cut party rally on Wall Street.
The record of what went on at last month’s meeting shows that the policymakers debated intensely whether they should wait for more evidence of damage from the housing slump, and the market turmoil and all that before deciding where rates should go. And while most members decided it was wise to buy themselves what you might call some “economic insurance” here, the minutes say that that was a very close call. You could say that we’re now a month beyond that, that that’s history, that things change, but as we’ve mentioned here in recent days, several of these policy makers have been sending strong signals, just lately, that the two cuts they’ve made are probably going to be enough.
http://marketplace.publicradio.org/display/web/2007/11/20/federal_reserve_q/
I truely think that they are trying to fly down the middle of the canyon without hitting the walls (inflation and recession), aka “threading the needle”…getting tougher and tougher, as I think in the distance the walls converge.
Deja vu all over again at U.S. S&Ls?
JILL BARSHAY: Investors piled into savings and loan stocks in August. Back then they looked like a safe haven from the subprime mess. Scott Polakoff is the chief operating officer at the Office of Thrift Supervision. He says S&L earnings fell 84 percent in the third quarter.
SCOTT POLAKOFF: It’s been a long time since we’ve seen that kind of drop — almost 15 or 16 years ago.
Polakoff says large thrifts who sell mortgages to investors took some of the biggest losses. They had to write down some of the mortgages on their books when they couldn’t sell the loans.
POLAKOFF: You have a pipeline of loans that you put into inventory before you sell. As the secondary market liquidity seized up, the prices for those loans fell, not the credit quality, but the prices for those loans fell. That caused institutions who hold those loans for sale to have to adjust them.
Those secondary markets still haven’t recovered, but regulators say the big thrifts that rely on them are still flush with cash. Bob Davis is with America’s Community Bankers. It represents the thrift industry. He says most thrifts don’t use the secondary market. They keep the loans they make on their books. He says the vast majority of the nation’s 800 S&Ls are fine.
http://marketplace.publicradio.org/display/web/2007/11/20/thrifts/
The Croesus Chronicles
Radioactive Paper
Robert Lenzner, 11.19.07, 6:00 AM ET
The calamitous deterioration in the subprime mortgage markets continues to expose vulnerabilities and disturbing financial damage to the cream of commercial and investment banking in the U.S.
It is an enormous black eye for sacrosanct institutions–employing true excesses in the form of financially structured products that involve unknowable levels of leverage. Like the excessive loans to Latin America in the early 1980s and the real-estate-cum-savings-and-loan disaster of the early 1990s, Wall Street has gotten itself into another serious jam that may have deleterious consequences on the markets and the economy.
http://www.forbes.com/business/2007/11/16/croesus-chronicles-radioactive-oped-cz_rl_1119croesus.html
(Comment on Forbes piece I just posted…)
Posted by vdolmstead | 11/19/07 03:45 PM EST
It’s very easy to explain why the losses are so great. Anyone who has watched a bank deal with a repossessed property understands. They don’t act as a knowledgable seller. They act like a panic seller or someone with a hot potato. When the street knows they will hit any bid to turn the property to cash it takes no imagination to guess what kind of bid the buyer will make. I watched a bank accept a bid 60 per cent below the value the house later proved in a rational market. Add to that the thought that 10% declines are very optimistic and you have the recipe for a nasty outcome.
No early end to the credit squeeze
Published: November 20 2007 22:56 | Last updated: November 20 2007 22:56
The credit squeeze is turning from a firm embrace into an uncomfortable bear hug. News on both sides of the Atlantic suggests that lenders will need to raise new capital and, even then, will have to take on less new business. Tighter conditions look set to continue and there is little that anyone can do to ease them.
On Tuesday, Freddie Mac, a repackager of home mortgages sponsored by the US government, announced a $2bn third-quarter loss, and Paragon, a UK mortgage company, announced that it was struggling to renew its financing facilities. Interbank lending rates have crept up again in recent weeks.
http://www.ft.com/cms/s/0/63693124-97ae-11dc-9e08-0000779fd2ac.html?nclick_check=1
I personally don’t believe the author did enough math to conclude that many subprime borrowers could be saved by workouts. The basic problem is that people bought homes they cannot afford, and they will never hope to be able to repay the principle debt balance unless the Fed does a far better job of creating wage inflation than it has recently done. A little futzing around with the loan terms will not be enough for many who face foreclosure.
CAPITAL GAINS
Jane Bryant Quinn
Maybe We Can Work It Out
If banks would modify the loan terms, the majority of at-risk borrowers could pay their mortgages and stay in their homes.
Nov 26, 2007 Issue
http://www.newsweek.com/id/71018