Bits Bucket And Craigslist Finds For November 21, 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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Black Wednesday?
The PPT has your back. Get in there and buy some financials for the country.
lol, I’d say go buy some Microsoft for your country.
Wall Street mantra…
“I regret that I have but one lie, to give to my country”
Google?
Apple?
nah, Bill’s rich enough already.
He’ll just send your money to Africa…
Microsoft, a company notorious for downplaying expectations, has basically given the all clear for the next year. Unless they change that, to me, it’s a nobrainer to buy support on it.
Yes, during these troubled times, stick with the companies that provide the basic necessities of life:
1. computers and computer software,
2. alcohol,
3. toilet paper, and
4. kotex.
I have always loved casino stocks. I’m trying to figure out how to play the imminent recession - by buying more vice stocks, assuming the masses will console themselves with the bottle and the dim rooms of Vegas, or by shunning them, assuming the consumer will be too tapped out.
I’d be shunning them, this go round…
There is going to be a backlash against gambling in this country, as it figures out that there is no free lunch and has to get back to work, eventually.
Besides, where will they get the do re mi to tempt fate?
MSFT down 2 cents. Well above last week’s low.
I rest my case.
Do you know ANYONE who likes Vista? Not even the computer stores.
I sense another Service Pack debacle.
“I have always loved casino stocks.”
Suggestions:
GOOG
AAPL
SBUX
MSFT
I like Vista, running it since RTM on a couple systems. It has bugs but has been noticeably improved in the last 6 months via Windows update. Service Pack 1 should make most happy and switch over. Same thing happened with XP. Hell I switched to Windows 2000 at beta 3, as I did not like Windows 98. People always seem to bitch and moan about new versions of Windows.
Apple can have big bugs such as the recent File Move Data Loss and the Firewall Wizard that says you are completely protected and it forgets to actually protect everything and no none seems to notice.
Such are the politics of PCs.
“Do you know ANYONE who likes Vista?’
I have Vista Basic on my new Del Inspiron 531. Could have payed double and got Vista home Premuim but for my requirements home basic is ok. Anyway after using Windows 98me for 8 years this new Vista Operating system is like jumping from the stone age into the space age in one leap. Anyway, My new dell came packaged as a basic bare bones system anyway, got it cheap thru e-bay, paid cash for it($329.00 w/out monitor), and it is completely expandable and upgradable. Main thing is the processor is an AMD Athlon 64 x2 dual core 4400 , plenty of power for my needs. My main hangup is that i only got 1 gig Memory-will add more within a year.
Not a perfect OS but for light-medium home office-recreational users, basic essential tasks, and if you do a lot of blogging-internet surfing and are at or below intermediate user level the Windows Vista system OK.
In less than a year I will upgrade to Vista premium if the basic turns out to be a limited , problem-plagued OS. So far i have experienced few problems in setup and execution except a few minor glitches here and there.
Am pretty much stuck on Microsoft/IE /Windows/dell.
Here where I work we won’t touch Vista with our ten foot poles.
Personally, I’m looking at buying companies that run or sell Linux. A free OS will have great appeal in a recession…
Plus it works REALLY well. I’m thoroughly impressed with the new Ubuntu on my laptop. It’s a crap Acer laptop that was about the cheapest thing I could find, and Ubuntu picked up all the hardware on it(except the wireless card - and that only took a few minutes of fiddling to get it to work) and it runs it VERY well.
If you’re ok with Openoffice for your office suite(I actually prefer it myself), and just want to surf the web, read email, watch movies(youtube and otherwise), and play classic arcade games, you just can’t beat Linux.
It does everything I need and want it to and more, was REALLY easy to install(Ubuntu), and you can’t beat the price.
This can only increase in popularity if there is any kind of serious recession. And if you’re reading this on this blog, I can probably guess how you feel about the chances of that happening.
My $.02
Okay, the problem with that? I have to use MS Access and ESRI ArcGIS for work. YES, there are open source alternatives. NO, I do not need a second job converting files back and forth.
I HATE WINDOWS, but for me, it is a necessary evil. (Fortunately, with this bus driving thing, I have only done Access jobs as a sideline, but if I get that promotion back into planning that I want, guess what? Windoze all day long.)
Thank goodness my HORRID G5 desktop is still running (btw, up yours, IBM!!), because if I had to come HOME to MORE WINDOZE I think I might have to shoot myself in the head.
Apple: love the OS, love the look, hate the cr** hardware.
Oh, one more thing–Seattle, I think you’re right about the “free” part, but only as it pertains to the overseas market and the pirated software market.
I’m not terribly confident that MSFT will have a lot of success selling software at MSRP in the years to come. Recall in the early 1990’s that they actually built their monopoly through rampant piracy. Then, in the boom years, they leaned on local governments and small businesses to pay them for all the stolen site licenses … your first taste of crack is free …
I’m not sure what the pirated software market has to do with Linux. Nothing I run under Linux is pirated.
I see Winblows as a necessary evil as well, which is why I dual boot my laptop with XP. Since I bought the thing a year ago, I think I have booted XP up like 3-5 times total. The rest is Ubuntu.
As far as Access goes, I think open office has an Access compatible db client included, but I’m, not totally sure about that. I use it because it reads/writes Word documents, excell spreadsheets, and powerpoint. Plus it’s totally free.
It sounds like you need to run a specialized app and there might not be a viable open source alternative for you. IT happens.
But for someone like my dad, retired and just wants to surf the net, read email, burn digital pics to DVD, etc, Linux works great.
He never needs to worry about viruses or crap like that either, and due to the fundamental security design inherent in Unix and Unix-like OSes, he probably never will.
Don’t even get me started about stability. There’s just no comparison. I’ll just say that after many years of running it, I’ve never had a problem with any of my Linux boxen that I didn’t have myself directly to blame for.
In the case of Linux, the first taste and a lifetime supply of crack are still free.
However, for the “you get what you pay for” dingalings out there, if you really want to you CAN pay for Linux. It’s actually worth doing if you’re new because they give you very good phone and email support along with it. I think both Redhat and Ubuntu offer support along with a nice media kit and book if you don’t mind paying. I bet you’d still pay less than you would for M$ products….
In a large user environment, say 2,500+ users, you can’t beat Microsoft’s highly grained permissions and nested groups ability. OTOH, a purpose built Linux SCADA servers are fast and lean, something W2k3 can’t do because of its overweight architecture.
rms……are you THE RMS?
Google ($1k stock my @$$) and Apple are bubbly…everybody is singing their praises. I am so tired of hearing “tech” and “emerging markets”… it’s only a matter of time until those bubbles blow up.
“rms…are you THE RMS?”
Dunno, what’s (who’s) on your mind?
Richard M. Stallman. Founder of the GNU Project and the Free Software Foundation. The dude we owe much of the kick ass free/open source software to.
“Richard M. Stallman. Founder of the GNU Project and the Free Software Foundation. The dude we owe much of the kick ass free/open source software to.”
Sorry, I still wipe my hands on my trousers.
You sarcastic naysayers. Don’t you know that everbody’s going shopping on Friday!? By today’s standards, that should be enough to catapult the DJIA back up over 14K!
“…sarcastic naysayers.”
I like the sound of that.
Take a look at Roubini’s blog if you haven’t been there lately. “Financial Meltdown” is the term of the day.
Don’t forget William Safire’s “nattering nabobs of negativity”?
It was about the only bright thing Spiro Agnew ever said.
tee hee…
Spiro always looked like he was high on something. And sometimes you come up with funny shit in that condition.
Or so I’ve heard…
That’s when I come up with
FRIDAY? How about THURSDAY. KMART ran a circular announcing that they will be open from 7AM to 9PM on Thanksgiving Day. Praise!
Geeze, can’t minimum wage workers at least get a day off on Thanksgiving? Not that they have much to be thankful for.
amen…
I’ll be celebrating “Buy Nothing” day on Friday in anticipation of the coming shopocalypse.
It’s a real event now. Take a look at http://reverendbilly.org/ or google “buy nothing day” for more details.
It’s basically a protest against mindless consumerism, and I think it’s a good thing. Maybe if people had been observing this day by actually buying nothing instead of HELOCing their homes for trinkets made of chinese plastic, we wouldn’t be in such a pickle.
Just a thought…
Don’t worry about dire predictions, as they often times fizzle. For instance, remember the Y2K problem? (I mean the one which was supposed to wreak havoc by messing up computer clocks or somesuch, not the tech stock bust).
13,000 or bust by day’s end!
Stocks Set for Sharp Fall
A Wall Street Journal Online NEWS ROUNDUP
Word Count: 642 | Companies Featured in This Article: Limited Brands, Children’s Place, Abercrombie & Fitch, Freddie Mac, Hewlett-Packard
U.S. stocks were poised to drop sharply Wednesday, with investors reacting to a tumble in stocks overseas, continuing weakness for the dollar against most of its major rivals, and the possible climb of crude-oil futures over $100 a barrel.
About an hour before the start of regular trading, Dow Jones Industrial Average futures tumbled approximately 133 points, or roughly 1%, to 12927. Standard & Poor’s 500 index futures dropped 16.70 to 1429. Nasdaq 100 index futures slumped by 21 points to around 2014. Futures activity isn’t always an accurate predictor of trading in the regular session.
http://online.wsj.com/article/SB119564697692200484.html?mod=hpp_us_whats_news
The local evang/tax evader/militia church was out on the street, guns at the ready on December 31, 1999, til about noon the next day…
In case Y2K reared it’s ugly head~
Still above where I got in yesterday but 1400 is the next level to watch. Here’s something to think about. Possible hedge fund liquidations again. This is from Kass on Realmoney.
Arguably, this is the hardest market to navigate in years, and this is manifested in the likely closure of some sizable hedge funds. Those liquidations might be contributing to the recent spate of selling.
Case in point: brilliant hedge fund manager Ed Lampert, whose canvas of Sears Holdings (SHLD - Cramer’s Take - Stockpickr - Rating), AutoNation (AN - Cramer’s Take - Stockpickr - Rating), AutoZone (AZO - Cramer’s Take - Stockpickr - Rating), Citigroup (C - Cramer’s Take - Stockpickr - Rating) and others looks worse than Sotheby’s recent weak auction of Impressionist paintings.
BTW, I don’t think this market has been hard to navigate at all but I guess it is when you’re trying to move billions of dollars around.
Good skill today young lady.
Being a big player in this sort of market, is akin to being a white elephant trying to knit a sweater…
All the major U.S. stock market indexes look frozen at the moment…
“Imperio!”
http://www.marketwatch.com/tools/marketsummary/
http://en.wikipedia.org/wiki/Unforgivable_Curses#Imperio_.28The_Imperius_Curse.29
Anyone else notice NAR’s national campaign getting more air time on Bloomberg Radio? A.M and P.M commute time you’re guaranteed to hear NAR happytalk including “It’s a great time to buy a ‘home’” and “interesting rates are at historic lows”…. Their campaign seems to be geared to sellers. Also I’ve noticed RE signs coming down and FSBO going up.
Also, Bloomberg reported this morning that FreddieMac needs 6 Billion to stay solvent.
I’ve said it before, and I’ll say it again. The rise in the GSE loan limit is not to help the buyers. It is to generate higher fees on safer loans to keep the GSEs solvent.
Darrell,
Do you have any idea of who would bear the cost of raising GSE loan limits? I am guessing it would not be wealthy shareholders at the GSEs (which are private corporations)…
“Home Sales Fall in 47 States in 3Q
From Associated Press
November 21, 2007 10:14 AM EST
WASHINGTON - Sales of existing homes fell in 47 states during the July-September quarter as the housing market’s slump worsened, a real estate trade group reported Wednesday.”
This spot at the end had me laugh; it seemed like something out of an Onion piece:
“Trade group officials emphasize the real estate market is not a national one, and conditions vary - sometimes dramatically - from market to market.”
17 Reasons…
http://www.marketwatch.com/news/story/seventeen-reasons-america-actually-needs/story.aspx?guid=%7B08D803FF%2D60CE%2D4868%2DBDB8%2DD0CFFE9851B0%7D
Excellent common sense article.
From the article;
“Instead, everyone persists in the childlike fairy tale that “all growth is good” and “all recessions are bad,” a bad hangover of the ’90s “new economy” ideology. So for the folks at the Fed, Treasury and Wall Street, “eternal growth” is still America’s mantra.”
Sounds remarkably similar to the sick notion that all tax relief is good and all taxes are bad.
‘Sounds remarkably similar to the sick notion that all tax relief is good and all taxes are bad’
Well then pony up to the tax bar exeter…
I’m there and so are you but we have some missing invitees.
100 years of war = 100 years of profit*
*Bush motto
Ben,
We need to tax the rich, which of course, means anyone that makes more than the person requesting the tax.
As evidence, when making proposals about fixing the AMT, comgress was suggesting raising taxes on “high income” individuals as defined as greater than $200K a year income. And, on CNBC we have Maria Bartaromo repeatedly saying, but I don’t consider $200K a year to be high income.
Yeah, 4x the median household income…. Top 2% in the nation for income… Yeah, you’re right. That isn’t high income… because it is less than she makes, and by definition, she’s not rich.
No matter how much you make, the people that need taxed more are the people that make more than you.
I think we need to spend less.
Spending less is a wise option, just very difficult during a time of two wars.
There’s your solution.
In a government budget just like a home budget there are 2 fronts to the battle. 1 is income, 2 is spending. I argue that the spending front is more important because it’s the one you can most easily control. If you define wealth as I do: the ability to continue living for X amount of time if you stopped working today voluntarily or involuntarily, then net worth and spending is everything.
The government needs to go on a diet, and yes that does mean cutbacks in government services that all of us enjoy.
“yes that does mean cutbacks in government services that all of us enjoy.”
- I’d first rather cut back on the waste that none of us really enjoy, maybe except a few. I just read not too long ago about farming subsidies being given to very rich farms that don’t need it and rich individuals who bought farming land (without really tending to it) just to qualify for a subsidy. If you also add things like this black hole called the Iraq War, I think we could really save money. Additionally, the pork programs that Congress supports to pay back people who supported their campaigns. I’d rather see things like this first than cutting back on road construction (remember the bridge in Minn.) or education (excluding administrative pork that also helps nobody but a few).
Also, it sometimes bothers me that we hear over and over again this story about being at war with terror but nobody mentions who is going to pay for it.
Spending is not an all or nothing proposition, be it government or personal. As we all know here, paying close attention to HOW one spends can greatly impact one’s fiscal health.
Smart spending - which on the government side would include better efficiency and getting rid of the corruption - is ok.
Agree.
I just spent a few weeks in Canada looking at Real Estate. I had never been there before. The Canadians have a much higher rate of taxation than we do. Interestingly enough, they seem to run a much smoother operation. I had to talk to several government agiencies during my visit - the competence of their public service personnel and the level of service were astounding when compared to the US.
I think we’d complain less about our level of taxation if we actually got something for our money.
“I think we need to spend less.”
You’re stating the overplayed but obvious mantra Ben. I agree in priniciple but the reality is far different. I have to ask…. Why compound the problem by NOT generating the minimum revenue required to fund basic operations? The wealthiest element successfully managed to blow smoke up the collective ass of the middleclass so as to obscure the fact they are essentially robbing the US Treasury under the guise of “tax relief”. Have YOUR taxes gone down? I’m willing to wager they haven’t so why cheerlead for lower taxes when the burden ultimately gets shifted to you and me? The entire tax whining mantra is BS and I think the least sophisticated are finally figuring it out.
Basic operations like empire to keep oil prices low? Oh wait…
I have long since passed the life event which brought me to my spending senses. I really wonder what it well take to bring our congress to their “just can’t do this anymore” moment.
I agree there too but I believe the money would be spent regardless. Personally I prefer it be spent on life instead of death, war and paying off dictators.
Darrell, although a national sales tax would be much preferable to an income tax, the real problem with the federal tax code is its inequality.
You’ve got brain surgeons paying a 35% tax rate on their income, and multi-million dollar hedge fund managers paying 15%.
WTF? Anyone?
Bueller…?
I think a national sales tax is a bad idea. It would only promote the black market of goods. It also would shift the percentage cost even more from the rich to the middle class/poor. Additionally, most of Europe has a national sales tax AND also an income taxes. I think both would eventually happen, not a national sales tax by itself.
Any sales or income tax is inherently unfair without exclusions at the bottom end. Keep what we got, take away the cap gains exclusions and raise the top mariginal rates up to 50% and cut the remaining marginal rates in half.
This means that the brain surgeon is an idiot - setup the partnership the same way hedge fund sets up its partnership and pay the same 15% rate. Duh. Oh, but see, the brain surgeon -wants- to withdraw all the money he/she makes every year to have a yet another flashy car.
Don’t tax you
Don’t tax me
Tax the man
Behind the tree
- Ronald Reagan
Not to start throwing grenades regarding the tax postings above, but can anyone explain to me why in a pure fiat system, we have Federal taxes at all?
That was purely rhetorical and I am throwing verbal grenades… the government receives all it needs to run by printing new monies and borrowing. Taxes are a small part of that, but serve the purpose of hiding the printing of new monies from the average person who doesn’t understand the system. It also puts the brakes on corporate growth and spending by consumers, limiting inflation. Lastly it is a tool of wealth redistribution and social engineering.
Talking about raising or lowering taxes without discussing that inflation is a hidden tax and is derived from the fact that our system of money and banking is purely fiat, with no discipline on the borrower/creator and that our banking system and corporate leaders encourage the government to overspend on everything for their profit, at the expense of the people.
We need to stop waging wars we can’t afford, dramatically cut government spending, and kill the various free trade agreements that have gutted our manufacturing base. We need to start exporting more than we import so that we have a positive trade balance. None of this will happen because those in power, whether government or industry, will not benefit (or perceive that they won’t benefit). The people will benefit, but that is not their agenda…
Sorry about the rant, but I’m pissed today. Last night on NBC news, they highlighted an FB in Boston who’s teaser loan reset. Countrywide adjusted the loan terms and lowered the rate to keep the FB in his house. This guy bought more house that he could afford, and was bailed out. Talk about Moral Hazard. Meanwhile, my family lives in a cramped apartment in our multi because we try to be fiscally responsible. Maybe it was reading “Atlas Shrugged” recently, but I am really starting to hate the system as it exists today…
‘Countrywide adjusted the loan terms and lowered the rate to keep the FB in his house. This guy bought more house that he could afford, and was bailed out.’
I disagree. He was hoisted even higher on his own Joshua Tree. He’ll be in foreclosure eventually, IMO.
“NOT generating the minimum revenue required to fund basic operations”
There you have it…what is considered “basic operations”?
Operations outlined in the constitution?
Prescription drug benefits?
Health care for everyone?
Let’s face it, the “truly rich” (the ones that can afford to charter jets for their campaign trips) can afford to structure their holdings in a way that they themselves pay very little taxes (”my breakfast, lunch, and dinner are all business expenses, and my mansion is owned by my business for entertaining purposes”). The ones ‘they’ want to soak are the ones that pay more in taxes than many people *make* in a year. The doctors I mentioned that were renting, etc., were making about $250K-$300K a year and paying about $75K-$80K a year in *federal* taxes…and then let’s add California state income taxes, property taxes, fuel taxes, and you can see why I don’t buy the “the rich don’t pay their fair share” argument. The “ultra rich” may not, but the ‘professionals’ I know are paying a boatload of taxes.
I don’t know, Ben. I have a nephew who bought an LA condo for $400K with an interest only adjustable in 2004. I haven’t asked them their initial rate or when they reset, but I would guess that they have been paying the low teaser rate for the last three years, which is the equivalent of a very low rent. If Schwarzenegger allows him to lock in at that low rate, he can avoid the otherwise inevitable reset and continue making low payments for years to come.
What did in the nazis, was fighting World War 2 on too many fronts, too far apart.
We are waste deep in a 2 front war, with ’ssshrubery & co. wanting to turn it into a 3 fronter…
Possibly, as I’m sure that family is stretched and has no room for error, else Countrywide wouldn’t have adjusted the loan. If job loss or an unexpected expense comes along, maybe they still lose the house in foreclosure. Meanwhile, there is one more house that is not on the market depressing prices and increasing supply in Mass…
What is very disconcerting to me is that Paulson is pushing for mass adjustments now. This could soften the market correction and possibly put a floor on housing if done on a large enough scale. The damage may already be done in Florida and California because of the dual problems of oversupply due to overbuilding and increasing foreclosures, but here in Mass, it isn’t about oversupply, but affordability. Delaying the foreclosures in this area could very well put a floor on housing and screw the bubblesitters like me… delaying the price adjustments until inflation/income catches up.
“This means that the brain surgeon is an idiot - setup the partnership the same way hedge fund sets up its partnership”
The tax man will bitch slap you, laugh while doing it, and get away with it…you can’t pay yourself a $5000 a year salary and say the rest of your doctorly income is investment income, unlike running a hedge fund and paying yourself a $500K salary, and saying the remaining $50M is “investment income”.
As for doctors and flashy cars, give me a break, it’s not like I don’t see a fair share of brand new Cadillac Escalades on big-ol flashy chrome rims in LA, and not all of them are doctors (!!!).
Lets face it, the whole US economy is (currently) built on the notion of flash and showing off, even in the “working class” neighborhoods.
When people speak about the rich, I am sure they mean the ultra rich. I hear what you are saying, but not what you are proposing. If the ultra rich are cheating the system, they shouldn’t be allowed to anymore than someone who steals a loaf of bread from a 7 11.
As far as your surgeon friend is concerned, I don’t really feel sorry for him. He still gets a very good amount after taxes. We also pay a fair share of taxes. I’m not whining about it. I just wish the people at the higher levels would also do their fair share.
arroyogrande,
I have to agree with you there. I’m not sure about before, but in the 1980s there was this huge shift to flash and excess. I grew up in the 70s and 80s and remember programs like Lifestyles of The Rich and the Famous, etc. That whole mentality has trickled-down into the general population where people are more concerned with what they have on their backs than what they have in their banks.
As an ex Navy guy, I think we need to cut the Navy budget by AT LEAST half. The air craft carrier based navy is as obsolete now as the battleship based navy was in 1941. In-air refueling and long range cruise missles have made the air craft carrier a $100 billion sitting duck.. No, a $100 billion bicycle for a sitting duck.
We also need to slice anything involving anti-missle defense from the military budget. It is just super expensive make work to keep the military industrial complex a high paying place for admirals and generals to retire to.
That said, we have to address the two fastest growing areas of government spending, or they will quickly suck up any spending cuts we make elsewhere… Social Security and Medicare.
We need to cut spending 25% or more, but 80% of the budget is Soicial Security, Medicare, defense, VA, and interest on the debt.
We MUST make drastic cuts in Social Security and Medicare AND defense AND VA. Once we get the budget deficit to turn into a surplus, the interest on the debt will take care of itself.
I know you don’t want generational warfare, but unfortunatly, NO significant federal budget spending cuts can be made without massive cuts to Social Security and Medicare.
It’s that old voting against their actual interests, as opposed to their perceived interests.
something to think about social security and medicare/medicaid
http://krugman.blogs.nytimes.com/2007/11/17/long-run-budget-math/
So agreed, Darrell …
My aunt and grandfather served in the Navy and Marines, and my father spent most of his career working for DOD and defense subcontractors. The waste (remember the 80’s when it actually could still shock people) is outrageous, and more so when it’s on useless boondoggles like SDI. The Pentagon needs to go on a diet, and bad.
Why are we spending billions on CRAP like the Osprey and B-2? Why do we have crappy equipment that goes down and kills marines in Quantico–at home!?
We used to have the best minds in the world creating the best equipment and systems in the world … now we have credit cards being handed out to PO’s to spend on whatever, giant money-wasting DARPA projects following cockamamie woo-woo premises, and a lot of stuffed suits getting paid big bucks to push papers around while the troops get diddled out of proper rations, armor, and medical care when they get home.
Why did I just wake up in a 3rd world kleptocracy and where the hell did my country go?
arroyogrande,
Funny enough, you are wrong. Ever noticed how hedge funds are setup? Ever noticed that the management companies that manage the hedge fund are separate entities? Gee… I wonder, how many “private practices” are setup that way? Oh, right. None. Funny, but quite a few law firms are setup that way. I wonder if attorneys are just dumb.
“Gee… I wonder, how many “private practices” are setup that way?”
Then name them…I can easily name 10 cancer docs that don’t have that set-up, and that pay $85K or so federal taxes on $300K yearly income. Again, speculating that every doctor has a tax dodge set-up and is “not paying his or her fair share” in taxes is ignorant.
How about this…if they *are* all using tax dodges (as hedge fund managers are) then what effect would raising the taxes on “high earners” have? It wouldn’t affect the ones doing the tax dodges…just the ones *already* paying high taxes.
Then name them…I can easily name 10 cancer docs that don’t have that set-up, and that pay $85K or so federal taxes on $300K yearly income. Again, speculating that every doctor has a tax dodge set-up and is “not paying his or her fair share” in taxes is ignorant.
I do not know any doctors office that has a proper structure to minimize tax liabilities for docs. I know of law firms that are structured to minimize the tax liabilities of attorneys.
Tell them to spend $50k-$100k and have attorneys establish their legal structures to minimize the tax liabilities.
How about this…if they *are* all using tax dodges (as hedge fund managers are) then what effect would raising the taxes on “high earners” have? It wouldn’t affect the ones doing the tax dodges…just the ones *already* paying high taxes.
These are not tax dodges. They are in the tax code. Use the tax code as it is written, not as some would like it to be written.
No one is forcing you to itemize your deductions. You are, however, are not bright if you do not itemize your deductions.
Sorry, I did not correctly identify the 2nd question -
The issue of raising taxes on those that are rich enough to use every method of minimizing their tax income is that it creates a barrier for those -under- the “ubber rich” class joining the “rich class” and that’s exactly what you do not want to happen if upward mobility is the goal.
Arroyo, I think you’re fightin’ a losing battle hear, son.
Evil Capitalist is either:
1. a tax attorney,
2. a hedge fund manager, or
3. a career politician.
“You are, however, are not bright if you do not itemize your deductions.”
Now this one has to be the most utterly dumbest statement I’ve read on this blog since coming here in early ‘05. Lets see…. Lets dive deep in the borrowing pool to become a debt slave so I can pay a 7% premium so I can pay 1 dollar to get back 20 cents???
Ben…. you need a top 10 list of retards.
Of course, what do I know.
I can’t even spell “heer”.
Now this one has to be the most utterly dumbest statement I’ve read on this blog since coming here in early ‘05. Lets see…. Lets dive deep in the borrowing pool to become a debt slave so I can pay a 7% premium so I can pay 1 dollar to get back 20 cents???
Ben…. you need a top 10 list of retards
Exeter, you are an idiot or IRS must love you, or both.
Your choices are to give government either X or Y. You must give it one or the other. The only thing that determines if you give X or Y is your desire to itemize your deductions. You are also assured that should you bother to itemize the likelyhood is that you have to give Y ( where X is significantly higher than Y ). Should, as the result of itemization, Y become to be higher than X you can scream “Do over” and pay X. With this given, only extremely stupid person would not itemize the deductions.
Congratulations, Evil.
You just vaulted to the top of exeter’s list.
My guess is he’s an newly minted wage slave or not old enough to know better.
Want to spend less? Two words — senior citizen. I don’t mean future senior citizen. I mean those who were “at or over 55″ when Bush said the words, when proposing to screw those who were not.
That’s where the money goes, people.
Right on Ben!
“Instead, everyone persists in the childlike fairy tale that “all growth is good” and “all recessions are bad,” a bad hangover of the ’90s “new economy” ideology. So for the folks at the Fed, Treasury and Wall Street, “eternal growth” is still America’s mantra.”
You can also take this into psychology. Today, you are no longer allowed to feel “bad” or “depressed”. If you do, there is something wrong with you that needs to be fixed by medication. That alone is a sign of a sick society.
I agree with most of his points, but I see no connection between recession and privatization. And of course your classic government model is to spend MORE compared to receipts during a recession than an expansion.
Actually, the classic model was of course to spend less because there was nothing to spend … but Keynes brought the British deficit spending model here.
The Brits were quite proud of their National Debt in the 19th century. Hey, all the great empires have them, why not us?
The sad thing was, it started as social spending to “prime the pump” in severe economic downturns (as Keynesianism preaches), to be paid off in the recovery, but somewhere in the 1960’s it turned into a backdoor for funding unnecessary foreign wars. I mean, Viet Nam? How did that serve our national interest? Anyone? What about all the dirty wars in South America? Ummm…
Iraq? Uh….get back to you on that one….
Bottom line: if Otto von Bismarck wouldn’t have done it, it’s probably a really stupid idea. BTW, Bismarck ALWAYS had an exit strategy, and ALWAYS was thinking two moves ahead.
And Kissinger is a douche.
Volker /Regan
it was like chemo that worked
Carter surprisingly put Volcker in office. It cost him dearly. No Carter fan here, but Carter gets the credit for a smart decision.
As I understand it, Carter had little choice, as the stability of the U.S. financial system was in severe doubt (does that wring any bells?)…
Blasphemous Wipeout Blasphemous!!!!!
C deregulated airlins and trans= super cool
Ford had 51 spending vetoes = GOD
Leave it to the one trick pony to get it wrong again.
‘he can…continue making low payments for years to come.’
Eggzactly.
But Ben, with my nephew’s presumed low interest rate (half the rate of prime), he is paying less in mortgage/taxes than he would to rent the place, so he will choose to stay. Now admittedly, he won’t have mobility, but he could stay there and save money. I just don’t think it’s fair that these otherwise California FBs will be rewarded for their reckless behavior with permanently low interest rates.
“As far as your surgeon friend is concerned, I don’t really feel sorry for him. He still gets a very good amount after taxes. We also pay a fair share of taxes. I’m not whining about it. I just wish the people at the higher levels would also do their fair share. ”
I agree. The “ultra” rich have heavy-hitting tax attourneys and advisors that scare the s**t out of IRS auditors. That’s why the IRS will keep going after the little guys. Easy pickings. Remember when it got so bad, they had hearings during the Clinton administration? I’m not saying they weren’t guilty, but some folks were commiting suicide from being mega-intimidated by the IRS. I wonder–as proprtional groups, how many uber-rich commited suicide or were even audited compared to the middle-class every year?
DOC
Countrywides REO listings have taken some pretty significant price adjustments. One listing I’ve watched since spring is now down to $275k from 380k . A 30% haircut in 8 months?
Just sit back and wait folks…. no hurry.
Mr. Freeze decides that legal contracts don’t matter.
http://www.hsgrafix.com/images/portfolio/mr-freeze.jpg
“Losing your home in a foreclosure is an emotional crash that can take years to recover from, but we don’t have to sit idly by and watch the American dream turn into the American nightmare. We must take steps at both the state and federal level to make sure future mortgages are on more sound economic footing. In the meantime, by working together, we can protect the American dream and our economy without hurting the American taxpayer,” said Governor Schwarzenegger.”
http://gov.ca.gov/index.php?/press-release/8147/
“we can save tens of thousands of people from being added to the foreclosure lists.”
1) Tens of thousands won’t make a bit of difference in the face of the millions of foreclosures that are coming.
2) Keep them in their overpriced houses, for as long as possible, paying as much as possible.
Who is going to get stuck with the bill for whatever measures desperate politicians rush through to “save tens of thousands of people from being added to the foreclosure lists”? Or is the problem too big to fix (other than calming people down with soothing words)?
But ensuring that FUTURE mortgages are sustainable does nothing to help FBs with CURRENT mortgages that they are unable to make payments on. In fact, necessary as it is, by putting downward pressure on prices, it make it harder for current borrowers to sell their way out of foreclosure.
There HAVE been some duped into mortgages that they didn’t think that they were signing up for. There are some marginal cases that can be helped by workouts. But the majority of FBs were given ample notice of their terms, and should have (and in many cases DID) realized that they were unable to carry the notes to term. They gambled on the appreciation fairy continuing here long engagement and they lost. The best thing for them and the rest of us is foreclosure and repricing of the RE market.
Newsflash…
The desperation has sunk in, here in Kally-forn-ia
A new law is being proposed to cryogenically freeze both the house and it’s occupants, until the next housing bubble.
Ted Williams Act?
“Walt Disney Act” would go over better here…
Be like Walt!
If more were like Mr. Walt Disney, there would be a lot fewer problems.
“The Walt Disney Company’s legacy of charitable giving started with its founders. Under Walt and Roy Disney, relationships were formed with Boys Clubs of America, now known as the Boys and Girls Clubs of America, as well as the U.S. Marine Corps’ Toys for Tots program, nearly 60 years ago. Walt also gave financial support to St. Joseph’s Hospital, across the street from the studio, and even had Disney Legend Mary Blair create the Disney murals to decorate the hospital’s children’s wing….Most of the donations focused on supporting charities dedicated to helping children in need, a focus that the company still holds….”
The Disney of today, bears no resemblance to Walt Disney.
There are some smart people on this blog, what happens to the upper middle class first time RE investor, whos combined family income is $ 150,000-200,000 ( middle class in the northeast/cal.) who walks away as a FB’er. What I mean is, these guys/gals have good non-RE incomes, no real debt, decide to try for the big flip. They buy no money down, pre-construction investment in FL., lets say in JULY ‘06. Home/ condo has been sitting empty since Nov. ‘06. Potential loss right now of $120,000 ( includes mortgage payments and taxes) This is all hypothetical, by the way, but may be typical of late boom investors. If they walk away, can lenders/tax collectors go after considerable other income and savings? If loss of credit is their only other loss at this point, handing the keys to the lender is the best option, no?
If it wasn’t their primary residence, I don’t see why the bank can’t go after them for everything.
Most of the FB’s didn’t have any assets to lose, hence the “phantom income” forgiveness letter.
It might be a good thing that the gubmint decided not to collect on those tax bills. They’ve cut down the IRS so much that if they put resources into going after broke people with no jobs for money, they’d lose out on shaking down the big fish.
Sounds like he’s getting the banks/investors to take the “voluntary” hit for this. Hey, if they want to take the hit for it, I have no problem with it…it will just sink Countrywide and GMAC faster than they had originally forecasted…imagine trying to sell those loans when they have to liquidate?
I do have a problem with the banks taking the hit. Most everyone participated in the sham and this will help artificially keep housing prices higher. I don’t see where this is good for anyone except the lying FBs. Does this apply to ALL loans? Even flippers and specuvestors?
“his will help artificially keep housing prices higher”
Read the article…they are talking about helping “tens of thousands” out of a possible 1/2 million in the next two years.
If you take “tens of thousands” to mean 50,000 sub-prime borrowers, then you are only keeping afloat 10% of the California sup-prime resets in the next two years.
That’s NOT going to save the California housing market.
You can assuage these loans only so long in an attempt to stem the tide of foreclosure, but you can’t assuage the property taxes and those CC payments that around May 2008 should bring housing to its knees. Game is over but WS and BB just haven’t figured that out yet.
The Schwarzenegger plan applies to people who occupy their houses.
More smoke and mirrors. None of these lenders will :
(1) continue an option ARM indefinitely with noprincipal coming in; nor
(2) take an interest rate that is below prime and allow the borrowerto go on paying at those ridiculous 2,3 , or 4% teaser rates.
Those who used those loans did so for one reason and one reason only: They could NOT afford a fixed mortgage even at the lowest prime rate available .
Yes they will, IF they are already bankrupt if marked-to-market. In that case doing this gives them more time before they have to throw in the towel.
Aren’t the long years of dread worse than the quick pain of amputation?
“A brave man eats his spinach once, but a coward eats it a thousand times.”
Dollar Plunges to 2-Year Low Against Yen in Asian Trading
TOKYO (AP) — The dollar hit a two-year low against the yen Wednesday in Asia, as falling Tokyo stocks and the murky outlook for global equity markets drove players to scale back risky investments.
The dollar fell as low as 108.89 yen at one point, the lowest since Sept. 5, 2005. The euro also kept rising to new highs against rose to US$1.4836 from US$1.4815.
Crude Oil Prices Break $99 on Worries About Inadequate Winter Supplies
Crude oil prices rose above a record $99 per barrel Wednesday as worries about inadequate winter supplies in the Northern Hemisphere and news of refinery problems stoked bullish sentiment.
The declining U.S. dollar and speculation that the U.S. Federal Reserve will again cut interest rates also boosted prices. Some investors put their money into oil contracts, betting that gains in their price will offset dollar weakness.
Did you guys see the big hits Fan and Fred took yesterday? It’s stunning.
I sold my stocks in March, and was comparing prices a few weeks ago…
Fannie Mae was one of the few winners @ $59 a share, up from my selling price of $54.
Not anymore.
I alway thought that they held only the conservative mortgages, what happened guys? If the 30 fixed, 20% down, full doc, prime mortgages are buckling this early, we are leaving the purgatory and heading straight to HELL
I looked them up at FannieMae.com, and was suprised too.
I thought they only insured gov-backed for 3% down pay to help first-timers get in the door, but nope. They offer exotics like I/O, 40-year fixed, ARM’s, balloons, and some weird “Flex” thing that may or may not require a down payment and is “not restricted based on how much money you earn,” ha ha.
And they usually only require 3% down, if that. They might as well be Countrywide, IMO.
We have to get away from this crazy lending and certainly not raise it to 1 million dollars . The Powers that be and the real estate industry just can’t accept the fact that a huge mistake was made with these loans and they got to get back to prudent lending or they will just make more bad loans .
Right now ,making any loan that doesn’t have a huge down payment is a” catch a falling knife loan “. For the Fed Chairman and certain senators to even suggest using government backed loans during a real estate crash is a Wall Street/lender bail out .They can insure loans in the private sector also . The government needs to force these lenders to weed out their own bad loans and re-write the borderline cases at their own expense if the lenders want to cut loan loss and avoid a foreclosure .After everything is said and done ,than maybe the Feds can give a loan to some of these banks ,carrying a high interest rate ,so the taxpayers make money off these creeps for years, but only if the system is overhauled and purged to prevent future corruption .Just my 2 cents so the real parties pay for their folly instead of the taxpayers .
Conveniently missing from the front pages of Marketwatch, CNBC, etc.
Interestingly, insiders are loading up on stock:
http://www.reuters.com/article/bankingfinancial-SP/idUSN2063542520071121
Load ‘er up on a day when the stock was punished, knowing full well that sooner or later it will get pumped back up with some BS bailout rumors.
knowing full well that sooner or later it will get pumped back up with some BS bailout rumors.
Yeah, well, maybe yes and maybe no. At this point, though, it looks like a good bet.
It’s Armegeddon for the GSEs. But nonetheless, I am sure some Congressional analyst is sitting behind closed doors as I type, trying to figure out how to involve the GSEs in a taxpayer-funded mortgage bailout.
Lets call this what it is ,the Banks need big loans . Let the government give them big loans (so they can remain solvent ),and charge a interest rate on those loans ,and the banks will just make less for years paying back the loan to the taxpayers . This will force the lenders into rewriting borderline loans ,and the rest will be a outright loss . Right now the lenders aren’t serious about re-writes because they expect a bail out .So what if the lenders make 6 % on a loan for 5 years instead of 11% ,it’s better than a foreclosure and they will have enough forclosures to deal with . The attempt to put current bad loans in the hands of a third party (government backed loans ) isn’t workable ,and the current lender can draw up a new contract with the FB if they re-write the loan ,and it can be done at lower costs (no commissioned salesperson making money off it ).
Paulson eats a huge helping of humble pie
http://online.wsj.com/article/SB119560994442300035.html?mod=hps_us_whats_news
Another Paulson classic. Hey Hoz, ya gonna win baby?
http://tinyurl.com/3dcoop
Maybe, but If it is not set up quickly (3 weeks), it will be to late for the banks. Forced liquidation of CDOs coming.
“Forced liquidation of CDOs coming.”
Ah, Hoz, from your lips to God’s ears.
is this the thesis underpinning your Dow 11000 call?
I’d love to see that happen for sure. I was thinking it would happen in January and there’d be a chance to get short/puts in Dec sometime. Maybe I’m thinking too much.
Bloomberg News: “More than $350 billion of collateralized debt obligations comprising asset-backed securities may become ‘distressed’ because of credit rating downgrades.”
How about the Cerebrus “problem” with the Chrysler debt? Pressure on them now to liquidate other stuff? How’s the ROI been this year?
“…Securitization volume has fallen off a cliff around the world and in the euro zone.
Thus far this month, only about 2.2 billion euros in securitized deals were done in the euro zone, according to Unicredit data, as against about 26 billion in October and about 50 billion in June, before the market disruption began….”
Reurers
BlackRock, Blackwater…
but in reality, based upon performance…
They should be named:
RedRock and Redwater
CDO dumping ground still sinking;
ACA CAPITAL, A LEADING INSURER OF SUBPRIME mortgage-bond securitizations, is drawing relentlessly closer to “bagel-land” — that dismal place where a stock’s price is zero — with its shares sinking in recent months from around 7 to a low of 1.51 late last week.
The proximate cause of this slide was the disclosure on Nov. 9 that Standard & Poor’s had put ACA (ticker: ACA) on negative Creditwatch and might cut its credit rating from the current single-A.
http://online.barrons.com/article/follow_up.html
NBC Nightly News talked about Countrywide re-working some ARMs to help stave off foreclosures. The total number helped so far: about 200.
Well they are trying, BUT if the FB bought a $500K house and the FB only made $150K income then I can’t see how CW can help the FB at all.
Sean_from_NVA,
Under that scenario, Countrywide could do a workout! Its the $850k home by the couple making $80k that is the challenge. We see this scenario all over California.
Got popcorn?
Neil
Right Neil ,its the big loans that has Countrywide worried ,and that is why they want the 1 million dollar loan bail out .
I think there are a number of borrowers that are now paying a adjusted up payment of 10 or 11% on these toxic adjustable ,(that can”t refinance because of no equity) . These borrowers could survive if the rate was 6 or 7 % . If the banks don’t want a foreclosure ,just rewrite the loan and make a smaller profit for 5 years .
Because the lenders/realtors promised (lied )borrowers that they could refinance ,I think lenders should attempt to re-write the loans . It’s not that the borrowers deserve a re-write ,it’s just that it’s not as costly to the bank to save a loan verses a foreclosure .The speculators and people who can’t even pay a teaser rate are toast as far as loan re-writes go .
Ah, come on! The gubmnt is helping. Didn’t they just do a mass mailing?
Exactly!
Or the folks making 45k while mommy stays home and they bought a 400k house. They may have qualified with 2 incomes which weren’t enough to begin with but now the SAHM is putting her foot down and refusing to go back to work. Welcome to the escalating divorce rate. Dad might as well give up because chances are her job is long gone anyways.
These people have no chance at a workout.
The FB in Boston they highlighted supposedly got a lower fixed interest rate when Countrywide adjusted the loan terms to keep his family in the house… BTW his monthly payment went from $2900/mo to $4000/mo. This was not a low income “Subprime” family if they were paying $2900/mo before their mortgage reset.
The only reason Countrywide adjusted the loan is because they would of loss more money if they foreclosed instead . I bet the new loan terms only go for 5 or so years .
I wonder if they try to throw in some recourse lanuage in these workouts…
ITEM: “From April to July in 1980, a barrel of oil sold for US$39.50. Using the government consumer price index (CPI) numbers, that record-high price per barrel is now estimated at between US$90-US$102 in today’s dollars.” An interesting fact to toss out during a lull in the Thanksgiving Day dinner conversation tomorrow.
An average house in a decent neighborhood in el lay was $100k in 1980, and in the latest bubble, got up to $700k
Using the same ratio:
Could an “oil bubble” raise a barrel of crude to $280?
That’d make gas $9.99 a gallon, or thereabouts…
Or conversely, could that $700k house fall back to $250k?
We keep building more houses. We burn oil & its gone. In 1980 the nuts were claiming oil was running out but the geologists said there were plenty of new fields opening up.
This time the geologists are the ones saying supply is going into permanent decline.
I’m waiting for the Fall of the House of Saud…
*Continuation from yesterday’s car thread*
I think I am going to wait. Every dealer had so much inventory it was amazing. These guys have to be suffering just like everyone else. I have to believe better deals for cars are just around the corner; maybe in 3-4 months it’ll be obvious this ship won’t be turning around.
Also, man, cars these days are too plasticy!
More random thoughts:
Is anyone familiar with the auto industry? If the southeast has too much inventory, do they just ship to some other region? Also, it seems that used prices are higher here in Florida.
I can’t help but think that auto sales have to have fallen off a cliff with the death of MEW’s.
This is an interesting line of thought. All of the dealers in the Amarillo TX and surrounding areas are advertising that they need used car trade ins because there is a shortage. If it was just 1 dealer I might not believe it but they are all offering wierd incentives just to show up and let them appraise your beater.
It’s just a psych 101 “do anything” move.
Getting you in the door, is job number 1…
A big gimmick. Saturn sends me these adverts every four months, claiming to beat KBB by some amount…
..
Now is the time to go out and get a nice used full-sized truck, if you desire such a thing.
I recently bought a 2006 Silverado 4X4 here in FL for $14,500. Only has 28,000 miles..Wholesale at the Statesville, NC block this truck will bring around $ 18,500 !!!. Blue Book is around $ 21,000. I will never be upside down on this vehicle.
Here in Central Florida, dealers are desperate and nobody wants to buy a gas guzzlin’ truck.
Had the same salesman send me a card thanking me for buying and also offering me $ 200.00 for every person that I could send his way to buy from him.
That has never happened to me before.
..
A lotta dying contractors in FL.
Driving to town the other Day I noticed 2 vacant lots full of Work Trucks and Vans. People parking them on the side of the road with 4 sale signs and phone numbers.
Reminds Me of the late 70’s . RE crashed, Gas went through the roof. People losing jobs. You could buy a Primo Gas Hog for about a Hundred Bucks.
I recently bought a 2006 Silverado 4X4 here in FL for $14,500. Only has 28,000 miles..Wholesale at the Statesville, NC block this truck will bring around $ 18,500 !!!. Blue Book is around $ 21,000. I will never be upside down on this vehicle.
How much is a new one? How long is the total bumper to bumper warranty? How many MPG does it get?
Used with a 36K warranty I really don’t see this as a great deal. Modern computer controlled american made cars are very expensive to service.
Yours may be a good deal. The ones I see here in Texas, used trucks sell for way too much. Everyone thinks used is a better deal. IMO, the dealers have plenty on the lot and more incentive to cut good deals.
..
I got a great deal. So says my dad, who owned a VW/Mercedes/Chrysler dealership for 30+ years.
Purchased from a GM dealer, it has 3/39 Bumper to Bumper warranty ( they add 3,000 miles when it resells ). Also, recertified GM so I also get 5/100,000 powertrain warranty.
I get 10 MPG pulling my boat, 15 MPG driving around town, and 20MPG on the highway. I only drive 7 miles each way to work.
It was used so the dealership probably owned it on the books. ( Healthy dealerships try to stay away from bank financing of used units…they typically floorplan their new inventory..) I tried to haggle even lower and the guy looked at me like I was nuts.
This truck was a “loss leader” for them. A good deal for me.
..
Nope. Manufacturers tend to book sales when a car is shipped to a dealership, not when a dealership sells a car.
The issue is dealerships. Even if Ford/GM/Toyota want to move the cars somewhere else, they can’t make it happen. The only way the manufacturers can adjust the inventory is by offering insentives/changing the kick-back for making numbers at the end of the year (that’s why you can -always- buy a new car for dealercost less 4% ).
put a wanted ad on craigslist -let the bidding begin
Just wait it out and buy a 2 or 3 year old car for next to nothing, in 6 to 9 months.
New car prices can only go so low, a car in the hands of a FB is a whole different matter.
“Just wait it out and buy a 2 or 3 year old car for next to nothing, in 6 to 9 months.”
That’s what I’m thinking right now.
“a car in the hands of a FB is a whole different matter. ”
I think in the order of things, particularly in Florida, car trumps house. I think FB’s will let go of everything BUT the car. They’ll need that in the “next life.”
If you’re in FLA, get a Flex Fuel car, that is, if Charlie Crist gets his way on trade with Brazil for ethanol. That’s the logical way to do ethanol.
Don’t forget, your mileage drops about 30% on a tank of E85. So if regular is $3.30, anything over $2.30/gal for E85 costs you more. That’s a difficult price point, even with the tax incentives.
I was considering bidding on a ‘72 Honds Z600 that was on ebay last week. With a two cylinder air cooled engine, that’s a car for high gas prices.
“New car prices can only go so low, a car in the hands of a FB is a whole different matter.”
I don’t know if I want to buy a used car that has the rank odor of someone thats been sleeping in it for the last six months…
But that only applies to those who paid cash, or actually, with the bank’s HELOC money.
I’ll be shopping for a 2004 Toyota Heloc 4×4 truck in about a year’s time…
This bit of news should make SUVs and large vehicles a lot cheaper in the spring, but a Prius will cost you more:
On Monday, Guy Caruso, head of the U.S. government’s Energy Information Administration broke the bad news; although he never mentioned the dreaded words “peak oil,” the situation he describes is coming awfully close. The first announcement was that according to EIA models, gasoline prices are due to go up another 20 cents a gallon in the next few weeks. Considering that the AAA had just announced that the average U.S. price was now $3.10, having gone up by 30 cents in the last few weeks, this piece of news made headlines from coast to coast.
The IEA ominously reports that the OECD still continues to draw down stockpiles by nearly 30 million barrels in September and 21 million in October. Japanese crude stocks are at close to the lowest level in 20 years. Although OECD stockpiles are still close to average, the trends are not good. Since summer, the world has been using more oil than it has been producing, a situation that can not go on much longer without devastating consequences.
http://energybulletin.net/37209.html
Wonder what a ‘99 Volvo S70 w/68K would fetch?
Psyche!! She’s my baby and not for sale!
I am looking to buy a loader/backhoe for some land clearing..I should be able to get quite a good deal this spring as the contractors will be loosing their equipment.
..I remember my old 1971 volvo 144s… Of course it caught fire, darn those Zenith-Strombergs.
I am amazed that people are still trying to do flips in this market. I found this for the Braintree, MA area, 128 Beachwood Rd.
Back in August 2007:
List #: 70621043 , 4 Bd/1Ba colonial, 1925 vintage, Handyman special Listed for $279K, sold for $270K. Settled date Sep 11 2007 . Bought by RE agent.
Now a search for GF is on:
Nov 03, 2007: Status: New Listing, List Number: 70672869, Braintree, 128 Beechwood Rd., List Price: $349,900, 4 bedrooms and 2 baths, Single Family, Living Area: 1,453 Square Feet
Nov 21, 2007: Status: Price Change, List Number: 70672869
Braintree, 128 Beechwood Rd., List Price: $339,900, 4 bedrooms and 2 baths, Single Family, Living Area: 1,510 Square Feet
————————
I’d think it takes more than -10K & a miraculous increase of 57 sq ft living area in 3 weeks to trap the next fool.
It’s the realtors drinking the NAR Kool-Aid that account for this behavior.
A friend of mine just told me that there was a bidding war for a home in his neighborhood. Asking price was about 5% under last year’s prices. It sold for over the asking price. That amazes me, unless, of course, they were realtors bidding against each other, lol.
Oh man. I need to get on a post more often.
1. I work above a RE office in Folsom, big name. Some of my co-workers were smoking outside, and one of the RE agents came up and asked them if they wanted to buy a house. I am not making this up. My coworkers dress like retards at the office, and most of them don’t have cars.
2. My wife’s parents own a beautiful custom house on 5 acres outside Sacramento. They were at one point considering selling, a few years ago and had shown their house to a few agents. One of them randomly called my mother in law a few days ago to let her know that prices in her county were going up! The problem is that she’s the type of person that believes this stuff, if it weren’t for my wife and I and our constant doom & gloom of course.
3. There have been like 4 new for sale listsings on my street. One was a flip! It had an auction sign on it for a little, then it sold for 215k (Orangevale, ca). There was like no activity for a couple weeks, then the house was overrun by workers. Putting in a new lawn in little squares, painting, they put it a really tacky front door with a long oval window (one of those faux etched POS from home depot. I was almost starting to lose faith thinking that someone bought it but nope! Century 21 sign appears all of the sudden, this one brighter and more colorful than the others. “Remodled”, “Come inside!”, “Please buy my bad investment!”. etc etc.
Maybe they would sell more if they had bigger signs, billboards for every house. Awesome.
This is the same thing I’ve been seeing in Yolo. Last years foreclosures and auctions are back on the market with a fresh coat of paint and 5k worth of new appliances
/barf
The second bathroom is crucial.
They could easily have put in $70k of work - plenty of crews available. But Braintree - brings to mind an SNL skit with Glenn Close on a How To Get Around New England game show.
H: My house to Roxbury?
GC: Why would anyone want to go to Roxbury?
H: Correct!
Koolaid anyone?
http://dallas.craigslist.org/wan/485388879.html
The person has no money and wants to get into real estate flipping. Quite smart, can’t lose!
“i don’t have any money saved up or anything like that but i am really eager to get in real estate”
Sounds about right, as long as she feels good about herself she should make a well deserved killing, everyone knows RE only goes up!
Meant to put he or she.
I don’t think Terry needs a mentor, I think Terry needs to be introduced to the shift, comma, and period keys on his/her keyboard.
“I don’t think Terry needs a mentor, I think Terry needs to be introduced to the shift, comma, and period keys on his/her keyboard.”
I laughed out load at this one, thanks.
This looks like something posted by Terri’s ex-boyfriend to cause annoying phone calls for Terri all day and night.
My only suggestion to her would be to start on something smaller, like a yucca or an agave plant, before working up to the mighty Joshua tree…
…and please Youtube the progress…
Full page ad in today’s business section says that I can make a FORTUNE off of foreclosures in my area. Man, I’m going to be rich, rich I tell you, rich$! And it’s only $1200 for the seminar this weekend at a luxury hotel!
This doesn’t bode well for today’s market:
http://tinyurl.com/2d5oj6
U.S. Notes Surge as Stocks Drop; Ten-Year Yield Falls Below 4%
“We’re seeing extreme fear in the market and that’s causing massive buying” of Treasuries, said Christoph Kind, a Frankfurt- based fund manager at Frankfurt Trust Investment GmbH, which manages about $9 billion in fixed-income assets. “There’s very high risk aversion.”
There’s your “bank run”
Just a mouse click away, to the perceived safety of Treasuries…
But wait … don’t we hear of China and others doing some massive selling of U.S dollars? If they’re selling dollars then yields on Treasuries should rise, not drop.
Yield drops = price rises
Let me say it another way:
If everyone is selling dollars then the price of treasuries should drop, causing their yields to rise. But the yields are dropping, not rising, thus people are buying Treasuries, not selling them.
No, the Treasury will buy their own treasuries with freshly-printed money to keep the long end of the curve under control. Google ‘monetinzing debt’.
and thus all these buyers are idiots, because the real value of these notes (e.g. measured in gold) drops by 1% a day or so lately …
When Treasuries and gold are the only things going up, you can be certain that panic is gripping the markets with fear.
Here we go with this “gold” thing again…
When the guarantee of the United States Government is worth less than an ornament hangin’ around the neck of some high-maintenance woman, I will be looking for a slow boat to China.
Holy shit, batman!
I just realized how scary that sounds.
Yes indeedy Billy. I was there, during the Panic of ‘07
Not when you have US fund managers dumping US corporate bonds to buy perceived safety. An ideal time for sovereign funds to dump US Notes.
Government notes world wide are soaring.
Widely anticipated disasters seldom turn out as bad as expected. It is the unexpected disasters that you have to worry about (like month after month of “worse than expected” news on Wall Street, for example).
We seem to be the only ones cognizant of how bad things really are…
A friend that i’ve been relating bubble news to, tells me all the time:
“It’s like you know everything a week or 2, in advance of it happening”
Always looking for a way to hustle a buck, I came up with this yesterday.
Prospective buyer about to place offer for 400K. Realtor (A) about to be lone recipient of full 6% commission 24K. Buyer works deal with hungry realtor (B) to act as a buyers agent. The catch here is that realtor (B) and buyer have a side deal to split realtor (B) commission typically 25% of the total.
So, you bring in realtor (B) who has really done squat and you give them say 25% of the 25% of the commission. Realtor (B) share is about 6K of which you 4500.
Thoughts?
Save $400K by not buying the house.
lmao. Right on VT’er.
Good one! A $400k buyer.
Smiles,
Leigh
You only can make deals with the broker, not the sales agent, who works for the broker. It’s kind of like the car salesman, who has to keep going back and forth to his manager.
Tax records are your friends. Contact the owner of the place directly and have the owner bitch-slap realtor.
Herb’s got an interesting one up today about the Freddie conference call.
http://blogs.marketwatch.com/greenberg/2007/11/drilling-deeper-into-the-freddie-fiasco/
That one rendered me speachless.
I do not see a MLEC in my crystal ball.
So they DO know the price of their priceless!
grrr…
Leigh
Yeah, that is a shocker. And if you aren’t obligated to buy it for a price, why not just quote a high one?
In any event, the defaults will eventually eliminate the need to speculate on value.
Paulson Shifts on Mortgages
By Deborah Solomon
Word Count: 759 |
Companies Featured in This Article: Fannie Mae, Freddie Mac
WASHINGTON — U.S. Treasury Secretary Henry Paulson, concerned that millions of homeowners aren’t being helped quickly enough, is pressing the mortgage-service industry to help broad swaths of borrowers qualify for better loans instead of dealing with mortgage problems on a case-by-case basis.
http://online.wsj.com/article/SB119560994442300035.html?mod=hpp_us_whats_news
and obviously, the mortage industry has to unload these ‘better loans’ in broad swaths to unsuspecting foreigners and pension funds before they find out that something is wrong with the US mortgage market …
Just exactly what leads you to believe that anyone might suspect something is wrong with the U.S. mortgage market?
spent to much time on some US websites I guess, sorry ;-(
honestly: my uncle questioned a representative from the biggest Dutch pension fund last week about their US mortgage debt losses (they have been boasting for years how they loaded up on these gorgeous investments, and said they made 17% profit on them in 2006). They still state they have zero losses, all the talk about credit losses is nonsense. This one fund controls about 350 billion euros of government pensions …
If they lost around $3 Billion, they’d at least look legitimate.
So, do you think that Paulson is an idiot and has finally figured out what’s going on, or did he know all along but was trying to put off the inevitable? Finally, the powers-that-be are admitting what people on Ben’s blog have been repeating for years.
Paulson was hired to give Wall Street enough time to unload all their crap to other parties, and to keep up the impression (as long as possible) that all is well in the mighty US Empire.
We know houses should be 4X median income or 10X annual rent. But, I have a new benchmark of when it will be time to buy.
I’ve asked almost every homeowner I know who has owned their home for over 5 years if they could afford their house at today’s price. The answer is always “no”.
So my new benchmark for prices is when people could afford to buy the home they now live in will be a realistic market.
Great point! Add “Most homeowners could afford to buy their own house” to the list of rules of thumb for when to buy.
So true. Unfortunately, here in the Bay Area I have been hearing for 5 years people saying they could not afford to buy their house if they were not already in.
It’s worse than that. Let’s say I could afford the house I’m in at inflated prices. Could I have afforded it as a 32-year-old? Well, that is who people will have to sell to.
That is the “what is the income of the neighborhood and what will they income buy” approach.
It is most reliable method of calculating the value.
An area will attract residents of certain economic level. What they can afford to pay n rent or morgage is what the price range would be.
And here lies the argument I have with those who say that “These people just bought too much house.” What really happened is that they agreed to pay too much. After the big rollback in prices, what people can afford just might be closer to what they thought that they could afford in 2005.
Agree 100% with you, jim.
Most people were just looking for houses that they could easily have afforded before the credit bubble. It’s not “too much house” that’s the problem, it’s “too much debt.”
“We know houses should be 4X median income…”
That’s a tall order if mom’s at home raising kids.
“Rationality is the recognition of the fact that existence exists, that nothing can alter the truth and nothing can take precedence over that act of perceiving it, which is thinking—that the mind is one’s only judge of values and one’s only guide of action—that reason is an absolute that permits no compromise—that a concession to the irrational invalidates one’s consciousness and turns it from the task of perceiving to the task of faking reality—that the alleged short-cut to knowledge, which is faith, is only a short-circuit destroying the mind—that the acceptance of a mystical invention is a wish for the annihilation of existence and, properly, annihilates one’s consciousness.”
John Galt
Careful with the quotes…Ed is gonna get all angry.
The truth will set you free .
So far the truth has just made me alternate between anger and depression… I should have taken the blue pill.
Fannie Sinking
http://www.stockmania.com/index.php?showimage=98
Will Uncle Sam come to the rescue? I would guess probably so.
Uncle Sam looks like he has a bad hangover, of debt.
He has been through a lot lately.
Oops, I meant Freddie!
Fannie looks like a skank…
Those two kids are nuthin’ but trouble.
LOL!
Some aspects of the housing situation not included in the Paulson interview (at least in the WSJ summary):
1) Some of the various housing-related bills aimed at offering relief rely on involving the GSEs.
2) The GSEs are under subpoena over possible purchases of loans based on fraudulently inflated appraisals.
3) The GSE balance sheet problems don’t appear to be contained, based on the free fall in their stock prices underway.
4) The proposal to have the FHA offer zero-downpayment loans with government guarantees sounds like an effort to turn the FHA into a subprime lender. Given the health of the private subprime sector, I am wondering if the government will be able to make more successful use of this mortgage lending innovation?
Excerpts: ‘This Is an Extraordinary Situation’
Paulson on Credit Crunch, Homeowner Woes,
Reforms for Federal Housing Administration
November 21, 2007
Below are edited excerpts of the discussion U.S. Treasury Secretary Henry Paulson Jr. had Tuesday with Wall Street Journal reporter Deborah Solomon. (See related article.)
…
On why Congress should pass various housing-related bills aimed at offering relief:
“This is not business as usual. This is an extraordinary situation.”
“How many of the homeowners are going to be facing issues in advance? How many are going into default with no conversations? Are there people who are going into default who need criteria? This is very frustrating. I’m not trying to deal with politics. This is individual homeowners and capital markets and our economy.”
http://online.wsj.com/article/SB119559752745199749.html?mod=hpp_us_whats_news
November 20, 2007, 12:45 pm
Wrong Said Fred
Posted by David Gaffen
Ready or not, Freddie is not-so-steady. Shares of mortgage financier Freddie Mac were taking it on the chin today, making a poor-looking chart into an ugly one after the company’s earnings debacle.
A 28% decline in shares usually brings some kind of buyer out of the woodwork. However, even bottom-feeders are casting a wary eye at the ski-slope-off-a-cliff pattern in these shares, saying the relative cheapness exhibited by the stock now is only that — cheap — and the declines don’t guarantee anything more than a trading bounce in the future (one that could be happening already).
(fred_c_20071120123428.jpg
Here lies good old Fred.)
“It’s probably not safe to try to catch the bottom with the housing market or in this stock in particular,” writes Corey Rosenbloom, on his Afraid to Trade blog. “It’s best not to trade against trends.”
http://blogs.wsj.com/marketbeat/2007/11/20/wrong-said-fred/
I’m angry about Schwarzenegger’s bailout. The bailout will freeze interest rates for houseowners whose adjustable rates are about to reset, who have not missed a payment, and who can prove that they can’t afford the reset. Four lenders, including Countrywide, have agreed to participate. This will allow a lot of FBs to hang in at their bargain teaser rates, thus propping up unreasonable prices.
With lots more of these “save our homes” bailout measures, there is a chance the U.S. housing bust can be drawn out over a 15 year period, similar to the Japanese housing bust (1990-2005 or so). Freezing interest rates on ARMs will not fix the problem of unrepayable principle balances, but it will help deepen the freeze in the credit markets, as the downside risk of loaning out money increases when loan contracts can be retroactively modified by government decree.
California fending off foreclosures
Tuesday, November 20, 2007
By Paul Leonard, Special to the Los Angeles Times
The focus of California policymakers for much of this year has swung from one crisis to another — from prison reform to the state budget and, most recently, to health-care reform and water. Yet the issue that arguably poses the greatest economic and social threat to California’s families — widespread and accelerating foreclosures — has barely registered on state lawmakers’ radar. Meanwhile, media coverage of families at risk of losing their homes has awakened the rest of the state to the real mortgage horrors some of our neighbors are facing. One family profiled in this newspaper saw its monthly mortgage payment grow by US$800.
http://www.chinapost.com.tw/editorial/2007/11/21/131794/California-fending.htm
Who pays for this forebearance? It ain’t free.
I am hoping it is shareholders in the stocks (especially executive officers) of these 4 big sump-prime lenders who get to foot the bill.
Governor, 4 big lenders agree on plan to stall high mortgage rates
Carolyn Said, Chronicle Staff Writer
Wednesday, November 21, 2007
Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.
Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/21/BUG5TGAIA.DTL
Does anyone know the precise terms and conditions of
these reworked loans?
I will speculate that the lenders just tacked the reset
interest differential onto the backend of the loan.
As noted in a previous posting, all the reworks will really
do is prolong the freeze and/or tighten credit availability
even further.
Further, based on reported numbers of “tens of thousands”
it appears the lenders and Arnold most benefit via PR as a
stunt value.
Not that Arnold would ever get involved in any stunt work :
Would be interesting to see “their proof of not being able to afford the payment” and what the FB claimed as income to qualify for the loan. If loan fraud, no freeze.
Gosh, my income has shrunk by 62%! Look at my pay stubs, way under where I was when I bought the house! This economy is the pits!
Apps down.
http://biz.yahoo.com/ap/071121/mortgage_applications.html?.v=1
Pulled this little snip from Minyanville.
Peter Clarke, the head of Man Group, the worlds biggest listed hedge fund manager, predicts that “more than one in ten of all hedge funds will go out of business this year as the rate of failures double.” Keep that in the back of your mind as we weigh end-of-day redemption potential.
LOL, Right now it is 2 out of 10 that have already closed this year.
Pathetic, isn’t it? But I guess it’s easy for me to be judgmental as I believe the key to outperformance in the absence of locked in arbitrage deals or stuff like that is to be smaller and more nimble.
Did you get any FXP ETFs yesterday? I hope
yah, I had to look up the symbol after you mentioned it.
confession, i did
Hi Tx,
This is from Bloomberg and I need a whole bottle of aspirin.
There are 30 SIVs that held securities worth $400 billion when the mortgage meltdown began in July, according to Moody’s Investors Service. Their net asset value fell more than 30 percent from July to mid-November. As of the first week of November, SIVs had been forced to sell at least $75 billion of assets as investors retreated from all but the safest bets.
See why my brain hurts?
Leigh
I see no reason this market cannot rally past 13,000 by day’s end. Just keep your powder dry until the last hour of the day, then buy the dip!
http://www.marketwatch.com/Quotes/?symb=indu
And they’re off! Down over 100 pts at the bell. Here’s wishing for 12,800 today.
I’m getting more bullish by the minute, short term of course.
Suspect we’ll see a break of 1420 cause that sets off a lot of technical stuff. The close will tell.
LEI down .5, jumped on some more dec djx 125’s. Not a huge reaction to the numbers.
Your wish was granted. Guess the PPT didn’t come through today.
PPT is drawing a line at 12,900. DJIA 13K or bust by day’s end…
you need to watch the s&p. thats where the action is
The DJIA is where the headline is. (I am more interested in the propaganda role of the stock market than the investing game…)
The plebes only ever hear one thing, the DJIA number.
The plebes are mostly deaf. All they hear is blah, blah, blah, then occasionally they catch a few words from a stranger on the bus, “I am buying Citigroup cuz of the yield”. They go home, hit their buy button on the computer and throw their moneys away.
I thunk trading curbs were gone? The DJIA looks curbed at 12,900…
FINANCIAL STOCKS
Mortgage-related shares again lead retreat
By Greg Morcroft, MarketWatch
Last Update: 9:50 AM ET Nov 21, 2007
NEW YORK (MarketWatch) — Mortgage-related shares pressured the broader financial sector again on Wednesday as concerns over falling home prices and lenders’ ability to fund operations rattled investors before the Thanksgiving holiday.
Also in focus was a warning from Treasury Secretary Hank Paulson that mortgage foreclosures will rise sharply next year. Paulson said the number of potential home-loan defaults “will be significantly bigger” in 2008 than this year.
http://www.marketwatch.com/news/story/mortgage-related-shares-again-lead-financial/story.aspx?guid=%7BCA950461%2D243A%2D4827%2DB929%2D772D6108ACE3%7D
“potential home-loan defaults”
Translation: If at all possible, we are going to pass bailout measures to make sure that potential is not realized.
But what if the principle balance is too high for households to ever hope to repay the debt? The only way out appears to be a higher wage inflation rate.
The good news: The stock market always goes up, in the long run.
The bad news: In the long run, we are all dead.
GETTING GOING
By JONATHAN CLEMENTS
A Nervous Investor’s Guide
To Overcoming Market Jitters
November 21, 2007; Page D1
Stocks will be a great investment over the next 30 years — if we can just get through tomorrow.
Once again, the financial markets are slapping us around, offering a stinging reminder of how quickly stocks can drop. The Dow Jones Industrial Average has slumped 8% since its Oct. 9 all-time high.
http://online.wsj.com/article/SB119559690224099659.html?mod=money_page_left_hs
–
November 21, 2007
CNBC: “Can You Believe Them [Fed & Tr. Sec.] Anymore?”
That was the rhetorical question asked by Steve Liesman, the economics reporter regarding their forecasts for the economy and housing.
Blind faith in the Tr. Sec., during early 1870s, and in the Fed, during 1920s, was rampant. Financial markets participants believed, then, that they would never allow a depression because of the extraordinary powers that they have to right, i.e., save, the economy. Once again, blind faith will lead to disappointment and greater despair than during the last two major depressions in the US. How stupid one has to be to believe that the Fed can avoid deflation and depression? Both are caused by a sharp fall in the households’ demand. And the fall in the demand has already begun; it will turn very sharp early next year.
Jas
well, seems to me the FED is still very good at avoiding deflation, with M3 surging at 15% and actual inflation (using honest pre-Greenspam calculations) close to 12%. While US homeprices are one of the few areas worldwide where there is some deflation, even that is very mild IMHO if you look at the broad market (not in individual cases obviously). What is 10% down after a more than 100% runup? Nothing more than a small bump on the road to Weimar.
We will have a depression anyway, but it will be an inflationary one; deflationary depressions like 1930 are the exception to the rule, ain’t gonna happen (certainly not with B-52 Ben at the helm).
–
Maybe, you need to read the US economy’s history. Was depression of 1830s inflationary? Was the depression of 1870s inflationary? Was the depression of 1930s inflationary? You get the picture, I hope.
I realize that all the inflationists are smarter than the US Treasury bond market. The 10-year yield is 3.99%!
Ignorant people still believe in money supply numbers despite failures after failures of money supply data as guide. Greenspan admitted that in early 1990s the money supply data stopped working.
INFLATION IS CAUSED BY MONEY AVAILABLE TO SPEND AND NOT MONEY SITTING IN BANKS EARNING T-Bill INTEREST.
My cost of living refuses to go up!
Jas
Ignorant people still believe in money supply numbers despite failures after failures of money supply data as guide.”
What money supply data? The government hides it now because the numbers are too high.
My cost of living refuses to go up!”
Which cost of living refuses to go up; food, fuel, education, medicine? You should share your secrets with the rest of us, or maybe you should sit on the Federal Reserve because only you, and they, believe that inflation is not occurring. Care to explain how $100 oil is deflationary?
As for history, it is telling that you want to discuss the 1830s and ignore the 1970s. If you really believe deflation is occuring you should be holding as many dollars as possible because they are increasing in value, correct?
You really expose yourself to ridicule with such foolish statements.
So you don’t buy food or gas?
I don’t think anyone could actually believe the things you write. I call troll.
Jain’s in vain, because his whole reason for being revolves around something that isn’t happening…
If he was quiet about it, we might forget how wrong he’s been.
but, no.
apparently Jas is living in the only deflationary hole in the universe where all the money created by the FED gets annihilated … good for him, but for most of us cost of food, healthcare, local taxes, energy, education etc. etc. is rising at something like 10% yoy. No sign of deflation.
as for history: maybe the US had more deflationary depressions, I don’t know anything about that. I do know that in Europe nearly all depressions were inflationary (obviously, they can be deflationary for a very short time when the whole system breaks down; good luck profiting from that if you still have some money left).
When you are on a gold standard you get deflation (as the fractional reserve fraud unwinds). Without gold you get 1970’s style inflation.
Policy maker’s mortgage-mess conundrum:
1) I need to take action to fix the mortgage mess lest my constituents accuse me of doing nothing to save them from their plight.
2) Anything beyond talk about taking action is likely to worsen the mess.
And meanwhile another failed policy:
Reuters
“The Taliban has shown itself to be a truly resurgent force,” the Senlis Council, an independent think-tank with a permanent presence in Afghanistan, wrote in a study entitled “Stumbling into Chaos: Afghanistan on the brink”.
“Its ability to establish a presence throughout the country is now proven beyond doubt,” it said. “The insurgency now controls vast swaths of unchallenged territory including rural areas, some district centers, and important road arteries.”
Senlis said its research had established that the Taliban, driven out of Afghanistan by the U.S. invasion in late 2001, had rebuilt a permanent presence in 54 percent of the country and was finding it easy to recruit new followers.
While Iraq is showing the first signs of an improvement in security, Afghanistan’s situation is becoming more precarious, Senlis argued, underlining the need for a rapid increase in troop numbers in a country that is larger than Iraq.
“In order to prevent NATO’s defeat at the hands of the Taliban, a rejuvenated ‘coalition of the willing’ is needed,” the report said, calling the proposal ‘NATO Plus’.
“Every NATO state is mandated to contribute to this new force, with a firm level of commitment that will provide a total force size of 80,000.”
“It is a sad indictment of the current state of Afghanistan that the question now appears to be not if the Taliban will return to Kabul, but when,” the report said.
“Their oft-stated aim of reaching the city in 2008 appears more viable than ever.”
Afghanistan has a well deserved reputation for rendering modern state of the art armies useless, no matter what century they hail from, 19th, 20th or 21st.
Too true. The Brits lost an entire army in Afghan in the early 19th century, the Afghan war was an anvil that helped break the Soviet Union, and we’re learning the same lessons the hard way. Place is a hopeless burial ground for outsiders. Number One on the list of Undesirable Real Estate–Avoid at All Costs.
Because the Dutch army is in Afghanistan (helping the US forces) we get our daily feed of lies about how great the campaign against the Taliban is going. It’s a bit of Iraq-light with the usual ingredients like embedded journalists who tell everything but the truth, huge amounts of innocent civilian casualties (but nobody gives a damn), rumours about torture by NATO forces and their US/Afghan friends, and from time to time some Dutch casualties because or road bombs or suicide attacks. Of course the Dutch still state that they are helping the Afghan people to rebuilt, but in reality more than 95% of time and money is spent on destruction. The politicians have trouble finding all the money they need for supporting the combat operations, and as the amount of military casualties is slowly increasing the Dutch population is getting less happy with the situation (which they didn’t support from the start anyway).
I’m curious to know if Thanksgiving get-togethers will have an impact on the market. That is, after everyone gets together and exchanges stories about how bad things are, versus prior years when everyone talked about how rich they were due to their brilliant RE moves, will it be noticeable next week. It would be interesting to know whether the market has shown changes in previous years based on the general mood going in to the holiday.
At least in our family, Thanksgiving seems to be the holiday for discussing politics, religion and economics.
Then again, this may be more noticeable in terms of consumer confidence and not the market, since the market seems driven by forces beyond us trivial small investors.
Well if history is any guide, we should get lots of Schadenfredue inducing stories told here. Angry FBs around the turkey. Hopefully not to many of us bubble believers saying “I told you so.”
i’ve already heard that one of my relatives is refusing to attend the holiday because of his foolish real estate decisions. i say trying to save face!!!!!
Here we are at yesterday’s lows on the S&P and early in the day too.
Are you suggesting it is time to buy the dip?
Just remember, the bigger the dip, the larger the rally that is sure to follow!
This is registration site (Trader Daily) or I would just post the link but it’s good.
Article
The Beat of the Street : Berating the Raters
The jig might soon be up for the credit-rating agencies, among the most conflicted industries ever concocted.
By: Charles Gasparino
November 2007 , Page 60
RATING AGENCIES ARE under fire again. That’s not exactly surprising, given their abysmal record in doing what they get paid to do — weighing the risks for investors and traders who buy bonds. But this time, the stakes are higher and the damage created by their incompetence is more extensive. Put simply: The rating agencies significantly contributed to the subprime crisis that caused the credit crunch this past summer and that may sink the economy into recession. | The agencies will argue that that’s a huge overstatement, that all those pools of subprime loans they rated way above investment grade blew up because of a once-in-a-lifetime housing-price meltdown — or that the true culprits in this fiasco were the banks that pooled the loans. “We have policies to promote the independence of our rating process,” a Standard & Poor’s spokesman stressed in a statement. A Fitch Investors spokesman echoed that.
Well, the rating agencies are wrong — and regulators are waking up to the fact that something has to change. It began with recent hearings about the subprime crisis on Capitol Hill, and according to Christopher Cox, the chairman of the Securities and Exchange Commission, it could very well continue with new, sweeping federal regulatory oversight. Enforcement could, for once, hold the bond raters accountable for their actions — or, more to the point, their inaction.
Even Federal Reserve chairman Ben Bernanke is keeping an eye on the rating agencies’ colossal screw-up. During hearings last month, when grilled about their role in the subprime crisis, he said recent legislation will make the rating agencies “more transparent,” before adding: “We’ll see how that works in the future.”
Which leads us to Cox and the SEC.
“We’ve got the budget to do it, and we now have the people in place,” the chairman says about the SEC’s new interest in making sure the agencies do their job. In an interview with Trader Monthly, Cox said the SEC’s New York City offices will be leading the effort, and with good reason. The Big Apple is home to the three big rating agencies: Moody’s Investors Service, S&P and Fitch. Cox said the SEC’s market-surveillance unit and Office of Compliance Inspections and Examinations will divvy up the regulatory duties. The enforcement division, he added, will be ready to bring cases referred to it by these divisions.
When I asked Cox if he expects cases in the future, he replied: “Sure, over time.” Then he added, “What we’ve got going, if anything, I can’t talk about.”
During a recent hearing, Congresswoman Carolyn Maloney (D–New York) implored with exasperation, “How could the credit-rating agencies be so wrong consistently?” She then enumerated their many errors. The agencies, she said, were “wrong on Mexico, wrong on Asia, wrong on Enron, wrong on subprime. . . . ”
People have been asking that same question for years, and getting the same slew of nonsensical answers — everything from “the rating agencies can’t force the Enrons of the world to provide honest accounting” to “the rating agencies employ second-rate people who can’t get a job at a big Wall Street firm.”
A better question is the one I’ve been posing to SEC officials, and to Cox during our recent interview: How did the agencies get away with being so wrong so many times without the SEC coming down hard? Remember, the agency screw-ups wouldn’t have been so bad if the agencies weren’t so powerful. Bonds, as everyone knows, can’t be sold without a rating, often two. If a company can’t sell debt to finance its operations, if a city can’t issue bonds to build roads and bridges because investors don’t believe in the integrity of the ratings, the economy is toast. With so much power comes responsibility to get things right.
Cox and his staff seem to have recognized the obvious: The agencies aren’t staffed by evil monsters, but they’ve been getting away with financial murder for years because of lax regulation. Remarkably, Cox and his staff say they were powerless to crack down on the bond raters until new legislation was passed last year that paved the way for more rating agencies to exist (previously, the Big Three had a near-monopoly) and giving the SEC — for the first time — direct oversight responsibilities.
To be fair to Cox, he’s new at being chief of the SEC — he took the job two years ago after a long career as a Congressman from blowup-scarred Orange County, California. But the bureaucracy he inherited has once again shown its ineptitude. It’s hard for me to believe the SEC needed an act of Congress to crack down on a business so vital to the securities markets. The bottom line, as far as I’m concerned: The SEC ignored the problem because it believed it had too many more important battles to fight, enabling the bond raters to make money through one of the most flawed and conflicted business models in corporate America. The bond raters are supposed to be working for investors (hence the name Moody’s Investors Service, for example) by assigning letter grades to a bond’s ability to make principal and interest payments. The reality is much different. In rating-world lexicon, AAA means that barring nuclear war, the bonds are good. D means they’re either nearing or in default. The raters say they do work for investors, but that’s in conflict with the way their business model works. Rating agencies are paid by those they rate: companies, municipalities or, in the case of the subprime market, the big Wall Street firms that packaged the loans and sold them to investors.
This conflict has posed huge problems. Municipalities have canceled contracts with rating agencies that took a negative view, and hired those who were easier graders. All that saber-rattling had an impact. I can remember how former New Jersey Governor Christine Todd Whitman attacked a particularly tough rater at Standard & Poor’s, who subsequently withdrew from the team that gave the green light to some suspect financing by the state. Such conflicts were at the heart of the rating agencies that missed Enron and a passel of other financial catastrophes. Kenneth Lay, after all, was a valuable client. With a strong economy and a booming housing market, no one seemed to think twice about the fact that the rating agencies were beginning to make big bucks in the subprime-loan market, where their conflicted business model posed a broader problem to the housing market and the entire economy. Over the past decade, packaging subprime loans into sellable securities has been a huge business for Wall Street. Raters who were the easiest graders of the pools of subprime loans — those that demanded the least equity to back up all those CDOs being sold in recent years — got the business. Those who didn’t got left out.
Don’t just take my word for it — listen to a source of mine who until recently was employed at a Big Three rating agency. “Most people don’t really know how the bond raters compete in the structured-finance area,” he says. “[At my agency], we tried to do our best, but we also understood the conflicts. We all assumed that if we pounded the table too much we’d be left out of the deal.”
The rating agencies, in effect, became regulators — by handing out all those investment-grade ratings to the CDOs, they were allowing the banks to lend money. Analysts I speak to say the agencies may have been the single most important factor in the recent housing boom — and now bust — by enabling all those subprime loans to be packaged and sold.
It’s hard to believe a bunch of geeks in New York working at places like S&P, Moody’s and Fitch have so much power, but they do. It’s the dirty little secret of Wall Street that, finally, the SEC seems to understand. Cox conceded to me that the rating agencies were given far too much power by lawmakers. “They were empowered by laws and legislation,” he says, that mandated the need to get ratings from the Big Three before bonds could come to market. New legislation, Cox says, will take power away from the Big Three by making it easier for new bond-rating houses to be created. The SEC, he adds, will scrutinize their activities like never before. “We now have a model for competition with the additional check of much more regulation.”
Cox isn’t really prescribing a free-market solution by saying additional rating agencies will help cure the problem, because the same old conflicted business model will continue to exist. One way to foster a more strident, less conflicted rating system would be to force the investor, not the bond issuer, to pay the bill. If that happened, we might not have rating agencies at all, because most investors understand just how lousy their analysis has been. Given their recent track record, envisioning a world without Moody’s, Fitch and S&P isn’t necessarily a scary thing.
Charles Gasparino is a former Wall Street Journal investigative reporter and the author of the just-published book King of the Club: Richard Grasso and the Survival of the New York Stock Exchange. He is currently on-air editor at CNBC.
Just watching the dec djx 125’s 61 calls traded vs 490 puts. Bottom is in?
lol. remember when you couldn’t give puts away?
Asset Deflation Driving Move Toward Recession
Minyanville Staff Nov 20, 2007 1:45 pm
With home foreclosures rising, we are seeing higher and higher loss severity among financial institutions.
The following is the latest missive from Minyan Peter, author of such recent popular articles as Bank Earnings Post Mortem and A Closer Look At Mastercard’s Earnings.
A quick pre-Thanksgiving quiz: Kryptonite is to Superman as ______ is to banks?
The answer: asset deflation.
http://www.minyanville.com/articles/index/a/14950
I read that yesterday, excellent piece. Did you ever finish that Pynchon novel?
Treasuries Rally as Stocks Drop; Ten-Year Yield Falls Below 4%
Nov. 21 (Bloomberg) — Treasuries rallied, sending 10-year note yields below 4 percent for the first time since 2005, as a decline in global stocks spurred demand for the safety of government debt.
Bonds rose as U.S. equities fell and oil increased to within 71 cents of $100 a barrel. The spread, or difference in yield, between two- and 10-year notes widened to the most since early 2005 on speculation the Federal Reserve may have to lower interest rates again even as inflation accelerates.
“What we’re seeing is a panic demand,” said David Ader, head of U.S. government bond strategy in Greenwich, Connecticut, at RBS Greenwich Capital. “Liquidity is a great problem.”
Still waiting for news on this clusterfook…
ACA Capital May Get `Thrown to Wolves,’ JPMorgan Says
Nov. 21 (Bloomberg) — ACA Capital Holdings Inc. will probably have its credit rating cut, forcing banks to take on as much as $60 billion of collateralized debt obligations, JPMorgan Chase & Co. analyst Andrew Wessel said.
“ACA is a likely candidate to get thrown to the wolves first,” Wessel said in an interview today. Standard & Poor’s on Nov. 9 began considering ACA’s A rating for a downgrade after the New York-based insurer posted a $1.04 billion third-quarter loss.
A downgrade by S&P of at least two levels to below A- would force ACA to post collateral against some of the debt, which it probably can’t afford, the company said in a filing this week. Banks would then likely have to bring their $60 billion of ACA- guaranteed CDOS back onto their books, Wessel said.
As New Home Sales Stall, Deals Abound
http://biz.yahoo.com/bizwk/071121/nov2007db20071120947656.html?.v=1
Bonuses for the Agents
Pierce Haney, a Realtor with RE/MAX Capital City in Austin, Tex., said the reasons for the shrinking gap between new and used homes vary from place to place. In Austin, many older homes are in the vibrant downtown where buyers pay a premium to live. But builders have been building on cheaper land, away from the city, and now have to work hard to attract buyers. They’re not only offering incentives to buyers, they’re giving agents special bonuses and free vacations for bringing in buyers.
“If you could sell about five new homes next month as a Realtor, you could probably take a trip to Paris, a cruise to the Caribbean, a trip to Australia and an all expense paid trip to Las Vegas and still make a commission on top of that,” Haney said.
and that’s why there was never a better time to buy a home
“They’re not only offering incentives to buyers, they’re giving agents special bonuses and free vacations for bringing in buyers. “If you could sell about five new homes next month as a Realtor, you could probably take a trip to Paris, a cruise to the Caribbean, a trip to Australia and an all expense paid trip to Las Vegas and still make a commission on top of that,” Haney said.”
Or… they could reduce the price of the house even further! Anyone here want to send their RE on a cruise? No? Didn’t think so.
FT.com
Growth fears depress Wall Street
Wednesday November 21, 10:25 am ET
http://biz.yahoo.com/ft/071121/fto112120071045594654.html?.v=1
”The FOMC minutes showed a Fed leaving the door open for more easing, as the central tendency for growth in 2008 is 1.8 to 2.5 per cent, below capacity,” said TJ Marta, strategist at RBC Capital Markets. ”The central tendency for core Personal Consumption Expenditure inflation is 1.7 to1.9 per cent contained within the 1 to 2 per cent unofficial comfort zone.”
this may have been covered here, but i am so tired of wall street betting on rate cuts! how can they want that so much when if they do make that stupid move, it will just keep driving up the inflation! they need to realize that the “consumer” will not spend if the price of food and oil keeps going up! what a bunch of morons!!!
“hey need to realize that the “consumer” will not spend if the price of food and oil keeps going up! what a bunch of morons”
Either consumers will reign in spending, and wall street will “realize” (the hard way), or consumers will keep spending (by selling their organs on the black market?), and wall street will be proven right.
No biggie.
Temporarily closed about half my positions - mostly financials. Everybody have a great Thanksgiving. Until next week. Out of here.
Home Sales Declined in 47 States in 3Q
Wednesday November 21, 11:28 am ET
By Alan Zibel, AP Business Writer
As Housing Market Woes Worsen, Trade Group Says Third-Quarter Home Sales Fell in 47 States
http://biz.yahoo.com/ap/071121/home_sales_realtors.html?.v=3
Another month, another terrible job by the business media in reporting housing data released by the U.S. government. As usual, the headline mills out there are carrying misleading information, either because they can’t understand the statistics they’re reading, or because they don’t care to report the numbers truthfully.
For instance, this story began the day with the patently false title of “New Home Construction Up Last Month,” and carried a blurb reading, “Construction of new homes and apartments rebounded in October by the largest amount in eight months…”
That’s utterly, irresponsibly wrong, and writer Martin Crutsinger and the AP should be ashamed. No journalist who actually understands what he’s talking about would ever utter such garbage. (Indeed, judging from the extensively revised article now replacing the original, Crutsinger and the AP seem to have belatedly decided to reverse their conclusion.)
Prepare for More Housing Bull
http://www.fool.com/investing/general/2007/11/20/prepare-for-more-housing-bull.aspx
aladinsane: “Mr. Freeze decides that legal contracts don’t matter…In the meantime, by working together, we can protect the American dream and our economy without hurting the American taxpayer,” said Governor Schwarzenegger.””
From the article:
“we can save tens of thousands of people from being added to the foreclosure lists….If these lenders are willing to meet more than halfway…keep subprime mortgage borrowers at their initial interest rate …A half million Californians have subprime loans that will jump to higher rates in the next two years. ”
Folks, let’s assume that “tens of thousands” is about 50,000 sub prime borrowers. That equals only 10% of the “half million (Californian) subprime loans that will jump to higher rates in the next two years”
10% “saved” from foreclosure…I don’t think that that will stop the market from continuing to correct, do any of you?
And think of the investors that will now be taking a hit on their future interest stream…and what that will do to available credit.
Law of unintended consequences…
CNNMoney.com
Santa rally in danger
Wednesday November 21, 11:28 am ET
http://biz.yahoo.com/cnnm/071121/112007_markets_santa.html?.v=2
“Robert Loest, portfolio manager at Integrity Funds, said that a late December rally could depend on what the Fed does on Dec. 11.
“If they don’t cut rates, expect to see a bloodbath,” he said. “Even if they do cut, but it’s only by a quarter-point, you could see selling anyway.”"
Did he write a letter to Santa Ben? “We want a pony, a barbie doll, a rate cut, and a pretty dress for mommy. And the rate cut better be more than 25 basis points!”
Little do they realize that rather than having toys made by elves at the North Pole, the presents are really stolen from future generations in the form of deficit spending and dollar devaluaiton.
Los Angeles, watch out below, this could get rough:
Los Angeles Times:
Writers strike could cost $21.3 million a day
http://tinyurl.com/26l7p8
“A continuing dispute would have an acute effect on the region’s economy, according to a film group’s conservative estimates.”
“Hollywood is a more dominant force in the region today…Los Angeles also is more dependent than ever on television production, which has taken the biggest hit in the strike.”
…
“That will translate into a loss of 15,000 jobs and $21.3 million a day in direct spending, according to FilmL.A.”
…
“FilmL.A.’s estimate is conservative because it only takes into account jobs in the industry, not the scores of jobs at restaurants, hotels and other businesses that service Hollywood. The entertainment industry accounts for almost 7% of Los Angeles County’s $442-billion economy.”
The timing of this silly strike, couldn’t have been much worse…
The city of angles is about to go TILT, game over.
Yet more on the California governator’s proposal to modify some sub-prime loans to keep teaser rates…this article is about a Federal plan, similar to what Schwarzenegger is talking about, but with a caveat:
LA Times
Agency’s plan to lower defaults
http://tinyurl.com/2rf9zu
“Regulator proposes paying loan servicers to modify mortgages.”
“The agency’s proposal is more limited in scope than one from Sheila Bair, chair of the Federal Deposit Insurance Corp…Critics say Bair’s idea won’t work because mortgage servicing companies have a legal responsibility to modify loans only if they’re confident the changes would be helpful to the homeowner and the owner of the loan. Companies can be held liable if they permit modifications that are not in the best interest of investors.”
Remember, Arnold’s plan “builds off a proposal put forward by Federal Deposit Insurance Corporation Chair Sheila Bair”.
Found this graphic on minyanville.com and thought it was hilarious. It compares Japan’s land prices with the comments we have heard from real estate “experts” about the U.S. housing market.
https://image.minyanville.com/assets/FCK_Aug2007/File/NewCharts/japanlandprices.jpg
Oops, The Big Freeze is On…
Europe Suspends Mortgage Bond Trading Between Banks
Nov. 21 (Bloomberg) — European banks agreed to suspend trading in the $2.8 trillion market for mortgage debt known as covered bonds to halt a slump that has closed the region’s main source of financing for home lenders.
The European Covered Bond Council, an industry group that represents securities firms and borrowers, recommended banks withdraw from trades for the first time in its three-year history until Nov. 26. Banks are still obliged to provide prices to investors, according to the statement today.
Banks including Barclays Capital, HSBC Holdings Plc and UniCredit SpA took the step as investors shun bank debt on concern lenders face more mortgage-related losses. Abbey National Plc, the U.K. home lender owned by Banco Santander SA, became the third financial company to cancel an offering of covered bonds within a week today as investors demanded banks pay the highest interest premiums to sell bonds in the 12 years since Merrill Lynch & Co. began collecting the data. “
Here is some worse-than-expected news from the Conference Board to fuel a late-day stock market rally. Calling all turkeys to buy the dip!
U.S. Economy: Leading Index Fell More Than Forecast (Update2)
By Courtney Schlisserman and Joe Richter
Nov. 21 (Bloomberg) — The U.S. economy may continue to slow into 2008, according to a measure of its performance over the next three to six months.
The Conference Board’s index of leading economic indicators fell 0.5 percent in October after a 0.1 percent increase that was smaller than previously estimated, the New York-based group said today. A separate report showed consumer confidence weakened this month.
The figures, coming a day after the Federal Reserve lowered its growth forecast for next year, add to concern that the credit collapse is causing consumers and businesses to cut spending. The deepening housing recession will constrain the expansion again this quarter, slicing growth to about 1 percent, from around 5 percent in the previous three months, economists predict.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGDkM15TGA40&refer=home
Oh boy…T-bond yield curve is fully inverted out to five years now.
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 3.625 10/31/2009 101-04+ / 3.01 0-11½ / -.193 13:38
3-Year 4.500 05/15/2010 103-26+ / 2.89 0-13+ / -.174 13:38
5-Year 3.875 10/31/2012 102-11+ / 3.35 0-28+ / -.194 13:38
http://www.bloomberg.com/markets/rates/index.html
Ok now I’m getting a lil P.O.’d….
Not only does the Gubinator attempt to defeat free markets. The e-mail link on his web page does not work.
Page:
http://www.governor.ca.gov/state/govsite/gov_contacts.jsp
e-mail link near top of page that does not work:
http://www.govmail.ca.gov/
And I send the webmaster(link at bottom of page) an e-mail letting them know, and I get back an e-mail falure notification.
Webmaster e-mail:
http://www.governor.ca.gov/state/govsite/gov_feedback.jsp?BV_SessionID=@@@@1498566100.1195671890@@@@&BV_EngineID=cccjaddmiffkkmkcfngcfkmdffidfng.0
So now they have taken away my voice, I’m sure they just don’t want me to get a soar throat errr soar fingers.
At least Ben is here for us to vent & I can always donate more to Ron Paul.
Blame this on the holiday. Never plan to do anything useful online over a holiday.
SEC Requests Documents From MGIC
SEC Requests Documents About MGIC’s Investment in C-BASS and Terminated Deal With Radian
NEW YORK (AP) — MGIC Investment Corp. and Radian Group Inc. said Wednesday that regulators have sought information about their stakes in a troubled venture that invested in subprime mortgages.
The two mortgage insurers added that the venture’s debt was restructured recently in an attempt to stave off a bankruptcy filing.
http://biz.yahoo.com/ap/071121/mgic_investment_sec.html?.v=4
I have to post this before HGTV deletes it again. You can’t pay for comedy this good!
“☼Flowergardengirl☼ Posted Nov 21, 2007 02:51 PM
Here is the report:
http://alaskaoregonwesternwashington.bbb.org/WWWRoot/Re…b=1296&firm=22038545
They failed and they do not resolve issues with their clients. I wrote about this last night to try and help those here at hgtv. Maybe you will believe the BBB if you don’t believe me.
I hope I have helped someone not go through the pain I’m going through. If you were to go to the zillow site and see their comparison for my house for our county, they compare my house for fair market value from $122,000 to? my house is valued by a quality realtor—Thank you REALTORS!! at $239,900. I have it listed for quick sale at $229,900 Zillow has it on their home page that pops up when my zip code is entered at $180,000
I can not get them to remove my house—I currently called the Fox news station and am hoping they may be interested in this story since the BBB has tried to get this company to respond with no answers. “
“You can’t pay for comedy this good!”
Problem: Bad publicity.
Solution: Call a news crew!
Ding! Ding! Ding! Ding! Confirmed Dow Theory Sell Signal!!
Rejoice! The Bull is dead! The Bull is dead! The reign of the Bear begins!
Dow Theory (USA Today)
http://tinyurl.com/36c2pl
Try not to catch yourself a falling knife, in either housing or stocks…
MARK HULBERT
Dow Theory says sell
Commentary: All three Dow Theory newsletters I follow are now bearish
By Mark Hulbert, MarketWatch
Last Update: 4:35 PM ET Nov 21, 2007
ANNANDALE, Va. (MarketWatch) — With the Dow Jones Industrial Average’s finish on Wednesday below its August lows, the three Dow Theory newsletters I track are solidly in the bearish camp.
http://www.marketwatch.com/news/story/wednesdays-close-triggers-dow-theory/story.aspx?guid=%7BA7562248%2D7392%2D4891%2D8FDE%2D79619507C729%7D
and then there’s that pesky Yen again
https://image.minyanville.com/assets/FCK_Aug2007/File/christy/tafel1.jpg
Better pass this little nugget from the article on to BIP/BIM:
“Upon testing this neural network version of the Dow Theory over the nearly 70-year period from 1930 to the end of 1997, they found that it beat a buy-and-hold by an annual average of 4.4 percentage points per year. Their study appeared in the August 1998 Journal of Finance.”
To his credit, it sounds like BIM has diversified into credit storm-shelter assets.
Hulbert’s extremely bearish article on the Dow Theory sell signal is the mother of all contrarian signals. When he is this bearish, it is a sure sign that a bear market bottom is nearly in. Buy the dip now, and brag to your friends one year from now that you were buying when everyone else was panic selling (just like JP Morgan suggested smart investors should do).
dow bounce
Treasuries Rally as Stocks Drop; Ten-Year Yield Falls Below 4%
By Daniel Kruger and Lydia Thew
Nov. 21 (Bloomberg) — Treasuries rallied, sending 10-year note yields below 4 percent for the first time since 2005, as a decline in global stocks spurred demand for the safety of government debt.
“Treasury yields are based on the fear gauge of the day, and fear is at high levels,” said Andrew Harding, who helps manage $16 billion as chief investment officer for fixed income in Cleveland at Allegiant Asset Management.
http://www.bloomberg.com/apps/news?pid=20602007&sid=asbcIbOlmKIQ&refer=rates
Fears of slowdown in US hit markets
By Michael Mackenzie in London
Published: November 21 2007 19:51 | Last updated: November 21 2007 19:51
A growing realisation that the global economy will not escape a US slowdown saw stocks around the world tumble on Wednesday while investors sought safety in government bonds.
Fears intensified amid concerns that more bad news from banks could emerge while US markets are closed for Thursday’s Thanksgiving holiday.
http://www.ft.com/cms/s/596aaf08-9868-11dc-8ca7-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F596aaf08-9868-11dc-8ca7-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Ha!
http://london.craigslist.co.uk/rfs/485970146.html
lol!
British FB’s!~
Japanese asset manager scapegoats U.S. for threatening global growth…
Asian Stocks Decline on Concern Subprime Woes Will Increase
By Chen Shiyin and Patrick Rial
Nov. 22 (Bloomberg) — Asian stocks fell to a two-month low, extending a global rout triggered by concern widening credit- market losses will slow global growth.
National Australia Bank Ltd., the nation’s largest, fell after saying it may have to take over debt sold by Rams Home Loans Group if the mortgage company fails to secure funding. Toyota Motor Corp. and Nintendo Co. dropped as the yen traded near a two-year high and after home prices fell in a third of U.S. cities, fuelling concern consumer spending will slow.
“This is a difficult period,” said Hideo Arimura, who helps oversee $26 billion at Mizuho Asset Management Co. in Tokyo. “There’s no telling how far the yen is going to rise against the dollar and the U.S. continues to threaten global growth.”
http://www.bloomberg.com/apps/news?pid=20601080&sid=aFZ_.UCYWFL8&refer=asia
Japan’s Topix Stock Index’s Drop Signals Bear Market (Update2)
By Elizabeth Stanton
Nov. 22 (Bloomberg) — Japan became the first of the world’s 10 biggest stock markets to enter a bear market since the summer’s U.S. subprime-mortgage collapse after the Topix index declined 20 percent from its 2007 peak to yesterday.
The 39-year-old Topix, the broadest gauge of equity prices in the world’s second-largest economy, fell 2.1 percent yesterday to 1,438.72, the lowest since October 2005 and down 20.8 percent from its 2007 high of 1,816.97 on Feb. 26.
http://www.bloomberg.com/apps/news?pid=20601101&sid=aeiPhgIHRiaM&refer=japan
Are Wall Street’s year-end bonuses already baked into the cake?
U.S. Two-Year Interest-Rate Swap Spread Reaches 19-Year High
By Liz Capo McCormick
Nov. 21 (Bloomberg) — The price to exchange fixed for floating interest-rate payments for two years surged to the highest since at least 1988 as banks’ borrowing costs rose and speculation grew that credit-market losses will deepen.
The jump in the so-called interest-rate swap spread comes as Freddie Mac, the second-largest U.S. mortgage finance company, said yesterday it would seek to add reserves amid the worst housing slump in at least 16 years. The three-month dollar- denominated London interbank offered rate, a key indicator of banks’ willingness to lend, rose a sixth day.
“The liquidity is so bad,” said Jeffrey Gundlach, chief investment officer at Los Angeles-based TCW Group Inc., which has about $145 billion under management. “You have a growing awareness that the problem is simply open-ended on the downside. This is about the ugliest year-end ever.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=anrMu2caVwA0&refer=home
Is it safe to ignore rhetoric out of Fed governors hinting at no more FFR cuts? CBOT futures contract prices suggest so.
Futures contracts on the Chicago Board of Trade showed an 86 percent chance the central bank will lower its target rate another quarter-point to 4.25 percent next month.
http://www.bloomberg.com/apps/news?pid=20601087&sid=anrMu2caVwA0&refer=home
Deflationary pressure drags Dr. Copper down a few notches…
Market Scan
Credit Crunch Cuts Into Copper
Ruthie Ackerman, 11.21.07, 7:30 PM ET
Shares of copper-mining companies tumbled on Wednesday after investors already jittery about a slowing United States economy got some more bad news in the form of weak consumer confidence data, following on the heels of Tuesday’s disappointing housing-start numbers.
Copper has been hit hard over the last few months as sagging real estate construction cut into consumption of the metal, sending prices down. Copper consumption in the U.S. is down 6% to 7% this year from last, said John Mothersole, metals analyst at Global Insight. Copper futures dropped 4.1%, to $2.94, on Wednesday afternoon.
http://www.forbes.com/markets/2007/11/21/copper-china-newmont-markets-equity-cx_ra_1121markets38.html
Interesting stock chart (DRYS)… any comments?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=DRYS&time=9&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Home Page » Overview
DryShips Inc. is a global shipping transportation company specialising in the transportation of drybulk cargoes.
Our executive offices are located in Amaroussion, Greece and we have been listed on the New York Nasdaq Exchange since February 2005 and trade under the symbol “DRYS“.
Our vessels are able to trade worldwide in a multitude of trade routes carrying a wide range of cargoes for a number of industries.
Our capesize and Panamax drybulk carriers carry predominantly coal and iron ore for energy and steel production as well as grain for feedstocks.
Our handymax and Handysize drybulk carriers carry iron and steel products, fertilizers, minerals, forest products, ores, bauxite, alumina, cement and other construction materials. These raw materials and products are used as production inputs in a number of industries. We transport these various cargoes on several geographical routes.
I showed my wife this stock chart. She is neither a Wall Street observer nor hobbyist like myself, but her comment was prescient, nonetheless:
“It looks like someone is having a heart attack.”
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=FNM&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=8&freq=1&startdate=&enddate=&hiddenTrue=&comp=cfc+fre&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
Risk premiums are the new black.
Emerging-Market Bonds Decline on Deepening U.S. Subprime Slump
By Lester Pimentel
Nov. 21 (Bloomberg) — Emerging-market bonds fell, pushing the risk premium over U.S. Treasuries to the widest since 2005, as mounting subprime mortgage losses prompted investors to flee high-yielding assets.
The spread, or extra yield, investors demand to own emerging-market dollar bonds instead of U.S. Treasuries widened 9 basis point to 2.56 percentage points at 2:22 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI Plus index. A basis point equals 0.01 percentage point. It’s the biggest yield difference since Oct. 28, 2005.
“Emerging markets are falling for the same reasons all other spread markets are getting whacked,” said David Bessey, who helps manage more than $7 billion of emerging-market securities for Prudential Financial Inc. in Newark, New Jersey. “It’s part and parcel of the same thing: the fallout of the subprime market.”
http://www.bloomberg.com/apps/news?pid=20601086&sid=aFTuOlg5Tpr8&refer=news
Poof! 2007 S&P 500 Index gains are gone. Of course, the picture looks far worse to foreign investors in U.S. equities, who have eaten exchange rate moves as well as stock price declines.
U.S. Stocks Fall, Wiping Out 2007 Gain for S&P 500; Exxon Drops
By Eric Martin
Nov. 21 (Bloomberg) — U.S. stocks fell, wiping out this year’s gain for the Standard & Poor’s 500 Index, after concern that losses from mortgage defaults will spread through the economy pushed down shares of banks and commodities producers.
American Express Co. tumbled to the lowest in 14 months after Morgan Stanley recommended investors sell shares of the third-largest credit-card network. Exxon Mobil Corp., the biggest U.S. oil company, dropped after oil retreated. Circuit City Stores Inc., the second-largest consumer-electronics chain, declined to a four-year low after JPMorgan said it may not find a buyer to turn around its business until next year.
The S&P 500 lost 22.93, or 1.6 percent, to 1,416.77, leaving it with a 0.1 percent loss on the year.
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