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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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Banks, U.S. near deal to freeze subprime rates: report.
Now this is a new twist.
http://news.yahoo.com/s/nm/20071130/bs_nm/subprime_freeze_dc_1;_ylt=Ar65_g6o6v43C5Yl8HktS48E1vAI
A continued attempt to reward bad behavior on the borrowers part. However a freeze will do nothing more than prolong the inevitable. Of course that’s what we do best.
that’s what gov does-reward negative behavior
Paulson must hate this job
I’ve noticed recently that many of these bail-out stories in the MSM no longer have the option of comments from their readers.
What a country! Raise fixed interest rates on prime borrowers while lower income interest rates on savers while simultaneously destroying the dollar — AND — try to freeze the interest rate (which predicts the rate of default in theory) of the risky loans! Start saving every coin you get, the metal will be worth 10 times their worth when this is done.
The Nickel is the coin to save…
It’s composition is 75% Copper and 25% Nickel, and has over 9 Cents worth of “precious metal” in content, @ current market rates.
Currency rates are the same for every banknote, each has a combustion rate of 451 degrees…
I’m only seeing 6c value on a nickel (20% premium) vs. more than 100% premium for pre-1983 pennies (which are 100% copper vs. newer pennies, which are predominantly zinc).
http://www.coinflation.com/
Yes, pre-83 Cents are the breadwinners, but my eyes aren’t what they used to be, in distinguishing dates on coins…
(full disclosure: I must have around $8.45 in Nickels)
You are ‘good’ then …aladinsane..!
I’m not sure how many people this will help. Maybe a few.
Someone should alert Prof. Bear. He’s so worried about the democrats, but looky what them republicans iz doing. Still think the repubs stand for fiscal responsibility, self-sufficiency and free-market capitalism?? This after the FHLB in Atlanta handed CFC 51 billion. Contract law, what contract law, we don’t need no stinking contract law. Moral hazard, what moral hazard, moral is what we bushies say it is.
“Mortgage-industry lobbyists have argued an across-the-board solution is difficult to apply. Rewriting contracts also risks moral hazard — encouraging borrowers to take on more debt in the expectation of being bailed out if needed later.
“It is really an indiscriminate procedure that would violate the terms of the contract that provide for loan-by-loan decision making,” George Miller, executive director of the American Securitization Forum, said in an interview this month.”
(quoted by Bloomberg this am.)
Bottom line - folks who managed their finances more carefully will be penalized, while people whose budgets would be pinched by the re-sets will get relief. A typical Democrat solution by a Republican administration.
who is in charge since 94?
Silence. And weren’t they so proud and arrogant just a couple years ago.
Did I miss something? I thought the Dems took control of Congress last election cycle? How’s that going?
It’s going great don’t you agree? It takes time to repair the destruction wrought since 1994. And you’ll love what they’re preparing for you.
I was under the impression that we banned CFC’s, bad for the financial atmosphere or something like that?
I’m just hoping this will be exposed as a sham just like Ahhnold’s “victory” for homeowners in California was.
http://www.latimes.com/news/printedition/asection/la-na-scruggs30nov30,1,4570649.story?coll=la-news-a_section
Katrina lawyer at the eye of a storm
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Richard Scruggs’ clients wonder what his indictment may mean for the scores of pending cases against their insurance carriers.
He is a legendary trial lawyer, and one of the richest men in Mississippi. His name graces the music building at his alma mater, Ole Miss. He is the brother-in-law of Republican Sen. Trent Lott, and a friend of the Democratic state attorney general.
The case was even reverberating in the realm of national politics: The Associated Press reported Thursday that a fundraiser for Sen. Hillary Rodham Clinton (D-N.Y.) scheduled for Dec. 15 at Scruggs’ Oxford, Miss., home had been canceled by her presidential campaign. Former President Clinton had been slated to appear.
The indictment, filed in federal court in Oxford, alleges that Scruggs; his son and law partner, David Z. Scruggs; and three other lawyers conspired to bribe Mississippi Circuit Judge Henry L. Lackey with at least $40,000 cash. In exchange, they allegedly hoped for a favorable ruling in the case over $26.5 million in disputed legal fees. The money was part of an $80-million settlement the Scruggs group won on behalf of hundreds of homeowners.
And you wonder why Trent Lott retired now? Lobby and influence..might help his relatives soon.
Retard Gonzales and lyin’ Dick will need all the legal assistance their stolen money can get.
Moral hazard?? Contract law?? Who needs ‘em?
” Rewriting contracts also risks moral hazard — encouraging borrowers to take on more debt in the expectation of being bailed out if needed later.
“It is really an indiscriminate procedure that would violate the terms of the contract that provide for loan-by-loan decision making,” George Miller, executive director of the American Securitization Forum, said in an interview this month.”
(per Bloomberg, this am.)
Couldn’t help but think of the Billy Madison quote:
“Nice try, asswipe. But you’re just delaying the inevitable.”
Hope this isn’t a repost - first seem’s to have gotten eaten…
Strange day indeed:
Cramer gets a clue (and watch the linked video – he’s actually normal…)
http://www.economyincrisis.org/articles/show/1168
And I really can’t believe Nouriel Roubini wrote this – I usually like his analysis, but what the heck????
http://www.rgemonitor.com/blog/roubini
And Cramer didnt’ even go to Riverside, Hemet, Temecula or north to Fresno, Modesto, way outside of SFO…and didn’t even speculate on FL, TX that have lots of areas not sold.
Arnold and other govs have a lot on their plates now.
W/O cigars.
Wow, Cramer actually makes sense when he calms down and stops yelling. They must have switched his meds.
On Nouriel’s piece, he pretty much admitted that his policy wonk side is coming out, and he is trying to propose a workable policy. I get his point - there is no way to deal with a crisis of this magnitude on a case-by-case basis. That leave open the question of whether or not it can be ignored. At this point, the risks are spilling all over the place, so it is probably inevitable that a policy response of some sort will be implemented. If guys like Roubini are part of the discussion, all the better.
So if they can/do freeze rates, I guess we will find out how many these homeowners were speculators. Speculators make money on increased value of the homes, otherwise they will bail. Also, what will do to the holders of these mortgages, such as the Florida state fund which had a run on the deposits?
Again, Washington DC is not thinking about the unintended consequences of their actions. This will end up like IRAQ, I suspect.
Why don’t they simply declare that for the next 20 years or so all mortgages will stay at the minimum teaser rate only (1% or so), for those who cannot afford the normal rate? Now THAT would give a huge boost to home prices! Just put it on the bill for future generations and no one will care.
Oh yes, the EU stockmarkets are already celebrating the news, while inflation in Europe is accelerating everywhere (official inflation now above 3% in most of Europe, Dutch producer prices up nearly 7%, foodprices up over 12%) stocks are up, up, up! Mighty Ben B to the rescue again.
I have a question about this meme, and I hope Ben makes this a topic so it can be answered.
All this talk about teaser rates; do they in fact exist in any significant numbers?
I know neg-ams have teaser payments, but that just means the interest gets capitalised into the principal balance.
I meant to add:
So if they freeze the rate on a neg-am (or to a lesser extent a 5/1 ARM), you’re still going to see payment shock when the loan resets or recasts to full amortisation.
Ok - but what are the mechanics of this deal. As we all know, mortgages are put into large packages (CDO’s) and sold to investors. These bond holders are expecting a specific return on their notes. The banks may not have the right to alter the terms of these mortgages once they are sold. If the Bush admin and congress pass a law altering the nature of these bonds, then it would create more instability in the financial markets. If they monkey with mortgage bonds today - they may toy with credit card bonds tomorrow. Why would anyone invest in a US bank bond when the terms can be changed at will?
Even if the banks are just working with the mortgages on their books, it seems like a bad deal. As everybody knows, the first few years of a mortgage, you pay mostly interest. Massively rolling payments to the back to the note is not really a great solution. Extending the note only adds interest to the front. Eventually, they have to get their principal back. Also, banks are short on cash right now and really can’t afford to be a reformed Scrooge this Christmas. They need money not kind spirits. It also seems very unfair that some people would get their rates frozen while others would not based on whether a bank sold their mortgage or not.
“If the Bush admin and congress pass a law altering the nature of these bonds”
They can NOT pass a statute altering the terms of contracts in existence. Such the a thing would be an ex post facto law - ex post facto means “after the fact” - and it is explicitly prohibited by that thing called the US Constitution.
The best they can do is to beg the financial institutions to delay the rate increases (a freeze) if the institution can. And therein lies the catch. If the institution only services the loan and does not own, they can not alter to the terms of the loan UNLESS every single investor/owner of the loan agrees. Given that the servicing companies can not even figure out who owns the loan to file the foreclosure case properly (ex: getting kicked out of Federal Ct in Ohio), it is highly doubtful that they could find the owners of the loans to get their agreement to changing the terms of the resets.
If the servicing companies do not have the agreement of the owner’s of the loans and fail to reset the rates per the loan requirement, then they get sued by the loan owners for the lost interest income.
I still do not see this slowing down price drops.
There’s just too many empty houses. If these people are able to continue living in the houses they are currently in, because they can afford the lower rate, then they will not be renting some one else’s house. This means a continued downward pressure on rents, which in turn means, as price to rent ratios move back to reality, prices have to drop even further.
The problem currently is oversupply. These people can either stay in their current houses, or rent some other house. Either way, they are using exactly the same amount of supply.
Why not offer citizenship to foreigners that offer to buy houses from us?
There would have to be other criteria to be met before dangling citizenship, but it would be possibly the only way to make them go away…
Imagine how many wealthy Chinese there are, living in Beijing?
Sometimes the air pollution is so bad there, you can’t see farther than a few hundred yards away.
They want to get away, trust me…
“There would have to be other criteria to be met before dangling citizenship”
Of course, they must agree to be subliterate, take money for work under the table, decline to pay taxes, join gangs, traffic in forged documents,bankrupt emergency rooms et. al. We can’t offer citizenship to just anyone.
There just couldn’t possibly be rich people outside of of our borders, could there?
Why not offer citizenship to foreigners that offer to buy houses from us?
No, you got it wrong. The gov’ts policy has always been to import poverty. If you have an education you are not welcome (we would rather export the skilled jobs to your homeland where you would be paid much less than here).
Why not give our troops a house when the come home from Iraq.
Brilliant idea.
We could cut a deal with the oil sheiks. We’ll leave if you buy every GI a house in the US.
Wouldn’t this violate the MBS agreements and force servicers to buy back loans?
I think this will have minimal impact as it will only affect a small portion of the toxic loans out there. Banks can only adjust the terms on loans they originated and control - basically what they got stuck with in the SIVs before they could dump them on some poor unsuspecting schmuck. But I don’t believe they can adjust any of the terms on the junk sold on wall street, heck the investors are having a hard time even proving in court that they hold title on properties they are trying to repo.
Am I wrong on this? To me it just looks like an attempt to save the bacon of the big national banks who are likely to go under if they can’t resolve their SIV dilema quickly.
Ya’ll see this? Funny picture
http://www.huffingtonpost.com/2007/11/29/beckwatch-californicatio_n_74702.html
I’m sure Beck has PO’d liberals everywhere, of course that’s what he’s hoping to do. They get their panties in a wad and he gets lots of free advertisement. It is a funny picture.
But of course, Beck is not really speaking of the real California, but only the Republican myth of California. Realities are often too complex for such simplistic, stereotyping minds like Beck’s to deal with.
Looks like the street is mighty happy about the rate cut…
Any thoughts txchick57?
1486 ES. It broke down at 1490 so I’ll be buying a few more puts this morning.
From yesterdays Dailyreckoning… How can you verify this transaction? There is so much going on behind the scenes that is not being reported.
http://www.dailyreckoning.com/
“But…we live in the 21st century. All financial losses are socialized. The only question right now is how this one will be managed.
“We have some clue with the fact that the Atlanta Federal Home Loan Bank has loaned - get this - $51 billion to Countrywide Financial… (NYSE:CFC) since September 30th. I’m not kidding. California is not in Atlanta, in case you were wondering.
Strange day – Cramer gets a clue (and watch the linked video – he’s actually normal…)
http://www.economyincrisis.org/articles/show/1168
And I really can’t believe Nouriel Roubini wrote this – I usually like his analysis, but what the heck????
http://www.rgemonitor.com/blog/roubini
Donald Kohn said, “But these people are still bearing the costs of their decisions and we should not hold the economy hostage to teach a small segment of the population a lesson. ”
http://www.federalreserve.gov/newsevents/speech/kohn20071128a.htm
Why are they in a position to hold the economy hostage, you @#$@!
Why don’t we limit the amount debt these companies can take? Why don’t we limit the size of these companies? Morgan Stanley, Merrill Lynch and Goldman Sachs - all have over a trillion dollars in liabilities on their balance sheets.
This statement by a Directors at the Federal Reserve says it all. A few fat cats are printing money out of thin air, debasing the currency, paying themselves first, and giving you and I the scraps left over. The big bankers knew all along that Donnie and Benny would be there to bail them out. Screw them
Fed Chief Offers Hint of Rate Cut
Bernanke Predicts ‘Headwinds’ For Consumers
By Neil Irwin
Washington Post Staff Writer
Friday, November 30, 2007; Page D01
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/29/AR2007112901889.html?hpid%3Dtopnews&sub=AR
The chairman of the Federal Reserve said last night that the central bank would take into account recent deterioration in the financial markets as it decides whether to cut interest rates next month.
Hours earlier, the White House released its economic forecast that acknowledged housing would be a drain on the economy next year, but it said tightening credit conditions would not stall business expansion.
Ahead of the central bank’s Dec. 11 meeting, Fed Chairman Ben S. Bernanke said that worsening conditions in credit markets could slow the economy.
The separate developments show how the Fed and the administration are grappling with a deterioration in the housing and credit markets as they set a course for the nation’s economic policy. This month, new strains on global markets for debt have emerged, leading many economists to think there is greater risk of a recession.
Ben S. Bernanke, the chairman of the Fed, laid out in a speech to the Charlotte Chamber of Commerce how he is thinking through the economic situation as the central bank’s policymaking committee prepares to meet Dec. 11. He noted that, by many measures, the labor market is doing well, with job growth and wages both on the rise.
But he said household spending appears to be softening, and that “the combination of higher gas prices, the weak housing market, tighter credit conditions and declines in stock prices seem likely to create some headwinds for the consumer in the months ahead.”
Bernanke said that the central bank was monitoring inflation closely, but he notably did not repeat language describing the risks of inflation and slower growth as “roughly balanced.” Rather, he indicated that worsening conditions in the markets for many kinds of debt could slow the economy.
“These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors,” Bernanke said.
Along with comments by Fed Vice Chairman Donald Kohn on Wednesday, Bernanke’s speech signaled that the central bank was more inclined to cut a key short-term interest rate at its Dec. 11 meeting than it had indicated since its last meeting, Oct. 31. Credit markets appeared to be on the mend then, before tightening again in November.
Bernanke has now put a major “put” under the market for the next two weeks. All bad news has been completely neutered. Party on!
I’m a little concerned about this sort of talk and the downbeat talk coming from the WH. Why be honest all of a sudden. I feel uneasy about this.
Me too.
I would feel better is this language was always accompanied by some real a$$-kicking language.
“Yes we’re lowering rates, but we’re also going after everyone and anyone who got us here. This was a complete debacle and we’re going to make sure it never happens again”
I don’t get that sense from BB. I feel like he’s helping his friends. I want him to be pissed about it.
Might start looking for that MA double top now.
I think you are right.
it’s a nice confluence of mindless momentum in the face of direct fundamental catalysts straight ahead. I’m going to do that one myself.
How far out are you considering ? 6 months?
It looks like he does not have the votes. As a result, Dr. Evil is publicly urging the committee to force another one out. It smells like the committee will be prairie dogging the next rate cut.
I love these guys like Donald Kohn. They spend all their time thinking of fancy words to justify their reasons for bailing out Wall Street. Where were they in February of 2004, when housing was hot and banks were buying up all these Mortgage Backed Securities, setting the conditions to where we are now - where the ‘economy is held hostage’? Didn’t Don see a problem then? Why didn’t he try to do something then?
He was trying hard not to undermine his boss’s (AG’s) policy objectives…
On Kudlow last night Wayne Angel, was begging for an emergency cut to 3%. Art Laugher and I believe one other were pimping for emergency cut to 3.5. What the h@ll is happening? Can it really be that bad?
Kudlow this morning in a panel discussion was cry for a squeeze on the people shorting the dollar. He tried to make a case for a reversal of the dollars fall. He couldn’t get anyone to agree with him. Tough to do in a hollowed out economy,
(single-b rated) says headwinds are coming
Methinks unwinds are coming…
There is just no quick fix, including further rate cuts, to stabilize the current weakness in the housing market,” said CreditSights analysts Frank Lee and Sarah Rowin in a Nov. 23 report to clients.
This appears to me to be more of a political move on the Bush administration to make it look like they are doing something to correct the housing issues. It also looks like the current admiistration is trying to delay the correction to make things look good for the republican party. The housing bubble must correct on it’s own and any rate decrease or setting adjustable rates to fixed rates for the speculators will only delay the correction until the presidential election is over imo. The inevitable will either happen now or in the future!
Now that Big Ben has stepped up to the plate, there will be no recession until at least November 2008. Right?
Of course Bernake is right. Cut the rate, and that will help alleviate high gas prices. After all, the previous cuts over the last two months have proven that.
Ronin,
I like your dry sense of humor here. Another rate cut will probably result in $120/bbl oil. (ouch!).
Got popcorn?
Neil
The rate cuts have also led to some cut rate deals on U.S. stocks! Buy at DJIA 13K and go short at DJIA 14K to ride along on the money pump both directions…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=INDU&time=8&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
Florida Freezes Its Fund as Governments Pull Out
By MARY WILLIAMS WALSH and MICHAEL M. GRYNBAUM –
NY Times
Published: November 30, 2007
http://www.nytimes.com/2007/11/30/business/30invest.html?_r=1&oref=slogin
Seeking to stem a multibillion-dollar run on an investment pool for local governments, top Florida officials voted yesterday to suspend withdrawals from the fund, leaving some towns and school districts worrying about how they would pay their bills.
Local governments in recent weeks have been withdrawing billions of dollars from the fund, fearing losses on investments in debt related to subprime mortgages. The rush to get out of the fund began even though a relatively small percentage of the fund is invested in subprime-related debt, and it is unclear what losses the fund may sustain.
Florida’s troubles were the latest episode in the running crisis in subprime lending that has been troubling the credit markets this fall, hitting homeowners, mortgage providers, hedge funds and Wall Street firms. It was the first time since the problems started that a large state investment pool has been forced to freeze withdrawals.
“If we don’t do something quickly, we’re not going to have an investment pool,” warned Coleman Stipanovich, executive director of the Florida State Board of Administration, which operates the investment fund. He spoke at a special board meeting yesterday, called to decide what to do about the flood of withdrawals.
The state-run fund pools money from local communities so they can get better returns on investments. The Florida fund, known as the Local Government Investment Pool, had about $27 billion in assets until this fall. Its value had fallen to just $15 billion this month because of withdrawals, Mr. Stipanovich told the three-member board, which consists of Governor Charlie Christ; the state attorney general, Bill McCollum; and the state chief financial officer, Alex Sink.
The fund gave back worried investors $3 billion just yesterday, before the window closed, Mr. Stipanovich said.
At the special meeting, the board also considered ways to shore up the investment fund and find emergency money to help cash-short local governments through the crisis. One idea under consideration was tapping into the $137 billion state pension fund for public employees in Florida, which is also controlled by the State Board of Administration.
Per Bloomberg Radio this AM; NAR forecast a 13% decline in sales for 2008.
Seeing as NAR over or understates their numbers, we can presume this decline will actually be 39% or greater.
“NAR forecast a 13% decline in sales for 2008″….”Seeing as NAR over or understates their numbers, we can presume this decline will actually be 39% or greater.”
Touche exeter!
Either that or the MSM trumpeting dark housing stats 24/7 have left them no cover for their blatant lies. I know there are still many naive souls out there but at some point the realtors have got to realize working with the facts is their only hope of long term survival.
The eternal optimists of the Triangle (Raleigh/Durham/Chapel Hill) are at it again. They see a dead cat bounce rise in home values (nominal mind you) as a very positive sign. One points to the area being completely insulated from the US bubble, as if transplants didn’t need the money from their home sale to purchase a house there.
http://www.city-data.com/forum/raleigh-durham-chapel-hill-cary/203854-s-turning-around.html
Identify housing bubble winners and losers.
Which entities survive, fail, survive but should fail?
Homebuilder CEOs were winners. Their shareholders were losers.
NEW YORK (Reuters) - CEO pay in the hard-hit U.S. home-building sector is high compared with most other industries….
Critics say that while billions in shareholder value have been wiped out, executive pay in the sector is not fully reflecting the bad news.
http://www.reuters.com/article/ousiv/idUSN2921176720071130
Currency hyperinflation is a been there, done that gig..
Maybe it’s happened 100 times in the past 100 years, always the same results, eventually a nation’s banknotes becomes a toss-up between being toilet paper and/or money.
This time it’s different, currency is hardly used in our country , credit cards and debit cards rule the waves…
So how does the deal go down, if the actual massive physical overprinting of banknotes doesn’t happen, as in time past?
Some argue credit destruction equals money contraction.
Over the past year, you have outlined several strong arguments for owning gold; however, have you considered the possiblity that we are passed the hyperinflanationay period? The US government does not include home prices in its inflation numbers. It includes equivalent rent. However, over the last four years, home prices doubled.
Respectfully,
Maven
It’s even easier to create 1’s and 0’s in a computer than it is to create paper bills.
I just created about 200 new 1’s and 0’s, as a matter of fact.
Wait - there’s another couple hundred.
Wait…
But don’t you think the ease of creating 1’s and 0’s could contribute to the high current level of worry about the health of the global financial system?
HAL becomes us.
currency is hardly used in our country , credit cards and debit cards rule the waves…
CC is highly recommended for GROCERIES on TV commercials.
amazing.
It seems this term has fallen out of use, but it might be interesting to discuss how the bust might lead to “Vancouver Effect” in much of the US and possibly globally. Back when Vancouver, BC first started to burst at the seams planners deliberately permitted more high rise housing than they expected the market would bear. Developers, anxious to service pent up pressure for units, overbuilt and many went under. The result was enough units being constructed to lower the cost of housing in Vancouver. Effectively, the planners tricked developers and their investors into underwriting a build out of residential towers using private money instead of public funds. This was also accomplished without raising public objection to lowering property values across the board. Has this happened all over again at a grand, even global, scale?
I think you see the glass half full here. Not to be sarcastic, but when bottom hits in the market, cheers for plenty of housing for everyone will be met with scolding and anger, IMHO. It is a good point Mole Man. Greed is good.
Has anyone seen this latest trick by realtors to get suckers to buy? “If you don’t buy now, you won’t be able to get a loan!!!!” Here’s an example:
http://www.metrodcliving.com/urbantrekker/2007/11/2-trillion-of-m.html
Buy now or you will be LOANED OUT FOREVER.
If they freeze rates at the teaser amount could you start another sob story PR campaign for future buyers. Renters that just want to have the american dream and buy a home should have the same opportunity as the people that got the special deal of staying. Besides, once folks aren’t foreclosed on prices will stay artificially high locking out lots of responsible folks. Only good part is that the days of refi and spend will be over. A year after the freeze - what will the housing market look like?
Freezing of Subprime at teaser rates.
http://biz.yahoo.com/rb/071130/usa_subprime_treasury.html?.v=2
nice.
Weekend Topic Proposal:
Maybe it’s a bit early for this, but it might be interesting to those among us with vulturous predilections to know how the at-risk housing stock was build and how it is holding up. Just speaking for myself, I might start looking at some stuff next year or the following year, especially some properties that were overbuilt in more desirable areas.
So how was the workmanship on homes built by Lennar, DH Horton, Standard Pacific, etc.? Did any of the builders put up any quality stuff, or was it all cr4p? Who were the best and the worst of the mass builders?
Good topics.. who built best etc..
Well, according to new neighbors they would Not buy anything built Post ‘95.
Good question sm ll. I also will probably buy in the next year or so . I worry that the current struggling builders are cutting corners to survive. Inside info would be of interest at this juncture. Any builder employees out there with a conscience?
How did you background allow you to detect the housing bubble? I remembered the stock market bubble and noticed the same thing happening in real estate.
My Rosetta Stone was the 1979-80 Silver Bubble…
From $5 to $48 to $10 per Troy Ounce
Got PhD…
Suddenly, a light bulb goes on at the WH…
US subprime plan faces hurdles
By Ben White, Stephanie Kirchgaessner and Saskia Scholtes in New York
Published: November 30 2007 18:53 | Last updated: November 30 2007 18:53
The White House is working on a plan to freeze interest rates on certain subprime home loans, though it faces significant hurdles that could derail its implementation, according to industry executives and others familiar with the situation.
…
One Republican adviser close to the White House said the emergence of the plan reflected the administration’s realisation that the subprime crisis was now a political problem. “We haven’t seen the worst of what is out there. There is beginning to be a recognition of what has transpired and will transpire will have a real economic impact,” the adviser said.
http://www.ft.com/cms/s/0/7ce31266-9f72-11dc-8031-0000779fd2ac.html
FHLB is to U.S. as “building society” is to U.K.?
Homebuyers locked out as mortgages dry up
By Chris Giles, Economics Editor
Published: November 30 2007 02:21 | Last updated: November 30 2007 02:21
Ever since the credit squeeze started to bite four months ago, consumers have been on tenterhooks to discover when the vice would tighten on mortgage borrowing.
On Thursday, Bank of England lending figures fuelled families’ worst fears of being locked out of the housing market. Mortgage approvals fell in October to 88,000, the lowest level since February 2005 and down from 100,000 in September.
Mervyn King, the Bank of England governor, was on Thursday at pains to squash the idea that a fall in mortgage advances was the result of tightening credit. In evidence to the Treasury select committee, he insisted there had been no significant change in the interest rates at which people could borrow. Instead he blamed “a fall in demand”.
But the detailed figures in the BoE document told a different story. Hidden within the sharp overall reduction in October’s mortgage approvals is a divide between building societies, who are still merrily issuing mortgages, and banks and specialist lenders who have slashed the number of mortgages approved in October compared with early summer.
http://www.ft.com/cms/s/0/9ebb3082-9eb7-11dc-b4e4-0000779fd2ac.html
The Silver Lining in Housing’s Demise
By Rich Duprey November 30, 2007
…
This is probably the best time in a while to buy a house. While that sounds like a promo from the National Association of Realtors, it also misses a couple of points.
First, if prices are falling and will keep falling, then why buy today? Why not just wait till next week or next month, and prices will be even cheaper? D.R. Horton (NYSE: DHI) acknowledges that 2008 is going to be even worse than 2007. “There is no way to predict when this thing will bottom,” said Timothy Eller, the CEO of Centex (NYSE: CTX).
Second, assuming you don’t want to wait, could you get the financing to buy a house? Banks have tightened the screws at last on their leaky lending ways, and getting a new mortgage might be possible only for those with the highest credit scores, pristine histories, and a wad of cash to use as a down payment.
http://www.fool.com/investing/value/2007/11/30/the-silver-lining-in-housings-demise.aspx