The Housing Bubble

Breaking news……………

H&R Block To Close Option One Unit Amidst $22 Billion in Write Downs
Credit Woes Continue
Tuesday December, 4th, 22:51 pm ET

Tanman asks F&F to step up…

http://www.latimes.com/business/la-fi-wrap4dec04,1,7687210.story?coll=la-headlines-business&ctrack=7&cset=true

Revaluation fever…………….?

http://in.reuters.com/article/asiaCompanyAndMarkets/idINL0225453820071202

$30,000.00 Per…

http://www.usatoday.com/money/economy/2007-12-03-debt_N.htm?loc=interstitialskip

Florida’s Pension Fund Contaminated!! Looks like ole Jeb left Florida holding the bag.

“Florida’s pension fund owns more than $1 billion of the same downgraded and defaulted debt that sparked a run on a state investment pool for local governments and forced officials to freeze withdrawals.

“These were highly inappropriate investments for taxpayers’ money,” said Joseph Mason, a finance professor at Drexel University in Philadelphia. “This is the tip of the iceberg for pension funds. We know the paper is sitting there. There are substantial subprime-related losses that haven’t shown up yet.””

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEWz6lIRbqE4&refer=home

Very different. China has new use(s) for children!

http://www.atimes.com/atimes/China_Business/IL04Cb02.html

China’s toddler tycoons
By Catherine Jiang

SHENZHEN - Like its economy, China’s stock market has unique Chinese characteristics. Allowing children to hold shares in enterprises and trade in publicly-listed stocks is one of these and this policy has exposed a gray area in China’s legal system which is now drawing increasing public attention…

…According to the Legal Daily newspaper Ma Hongman, an economic commentator for Shanghai TV said that “the children shareholder” phenomenon is a challenge to the Chinese stock market management system and it is important for a public company such as the Bank of Beijing to be transparent and meet international standards when it goes public, especially when it has a large number of underage shareholders…

WOW! That’s a whole new perspective for me!

A good video………..(Tom Hougaard) this guy makes sense.

Lower interest rates!!!!!!! Huge mistake.

http://www.cnn.com/video/#/video/business/2007/12/04/intv.mortgage.intervention.hougaard.cnn

Husband bought a ‘93 car with 38k miles on it (”a garage queen”).
Good car too.
Should I get him a license plate frame that says “Don’t laugh its paid for” ?

~Misstrial

Ah, just what us consumers…ahem…customers…er…citizens need:

http://www.charlotte.com/123/story/390194.html

NYC… “It’s different here”

Talking with a colleague yesterday afternoon. This man is old enough (ready for retirement) and smart enough(PE, civil) to know better but is typically way out of his league from a professional perspective. He insisted that NYC is different and EVERYONE in NYC is a millionare and all these folks will support the ongoing residential high rise development along the Hudson in the lower Hudson Valley. W’ere talking 750K condos…. thousands of them. Of course he went on to say that it’s commutable to NYC blah blah blah.

Did I mention he reviews plans and specs for builders on the side?

food prices to rise:

BEIJING—Food prices are set to rise around the globe after years of decline, with climate change making it harder for the world’s poorest to get adequate food, according to a report released Tuesday.

more stories like thisRising global temperatures as well as growing food consumption in rapidly developing countries such as China and India are pressuring the world food system, meaning that food prices will rise for the foreseeable future, according to the International Food Policy Research Institute.

http://tinyurl.com/yuq37z

Motto on money…

The motto, “In God We Trust” did not appear on U.S. paper money until 50 years ago. It was first used some U.S. coins in the 1860s, but did not make it onto the one-cent coin until 1909. The Founding Fathers had nothing to do with it. They did not approve of mottoes on money.

Here’s the story of how the motto came to be from The Wall St. Journal.
http://online.wsj.com/article/SB119638635589108899.html?mod=googlenews_wsj

Olympiagal~~best to you.

This is a very good read.

Deal To Save Borrowers, Lenders In Subprime Slide Has Fatal Flaws

The Bush administration, federal regulators and big banks are “aggressively pursuing,” in the words of Treasury Secretary Henry Paulson, a deal to save some mortgage borrowers and their lenders from facing the consequences of their bad decisions. The deal, called “Hope Now,” could be called “Hope Now, Worry Later.”

The willingness of a Republican president to endorse such mass-scale interference in the private markets doesn’t bode well for future interest rates on all American consumer financing, including mortgages, because investors will see that the political risk is far greater than they had thought.

http://www.ibdeditorials.com/IBDArticles.aspx?id=281573786489215

Mortgage Rate Freeze
http://www.stockmania.com/index.php?showimage=105

What about those who had theirs just reset? And do future borrowers get the same freeze feature when they don’t pay? Does this eliminate or change adjustables forever because there will always be the risk that the terms will be alterered? What a mess.

Deal To Save Borrowers, Lenders In Subprime Slide Has Fatal Flaws

http://www.ibdeditorials.com/IBDArticles.aspx?id=281573786489215

The Bush administration, federal regulators and big banks are “aggressively pursuing,” in the words of Treasury Secretary Henry Paulson, a deal to save some mortgage borrowers and their lenders from facing the consequences of their bad decisions. The deal, called “Hope Now,” could be called “Hope Now, Worry Later.”

This a good read.

In our paper today top front page:
Stock down, Adams opts for retirement at Huntington

Marty Adams was president of Sky Bank here in our area, which Huntington aquired July 1, 2007 for $3.6 billion. Adams was to be the new CEO of Huntington at the end of 2009, when Thomas Hoaglin retired. However Sky made loans to Franklin Credit Management Corp. for 17 years and the loans totalled $1.5 billion as of Sept 30th. Huntington stocks dropped after it was announced that they would have to take up to a $300 million charge off, and report a 4th quarter loss. I guess Hoaglin has put off plans to retire. Wonder how much of that $1.5B is going to go bad.

I know flaffleplan and others think the DC area will not feel any pain until the last gov. worker walks the plank but methinks they be wrong.

The mall traffic is way off. The strip mall with the Microcenter is only half full on week-ends.

A housing story from NM (Alb.)

My 78 year old mom who is going blind went to sell her house. She is going to move into a condo my sister bought for her about 2 blocks from their home. The house had a cash offer in the first week it went on the market. The buyer wanted to close fast. They put down the “ernest money.” That check bounced. They showed up at closing with a check written for 10k to much. They asked the title company to write them a check for the difference. They said “no.” So the women sends her son to the bank to get a new check while she completes the paperwork. Son never comes back. The women leaves. The next day she calls my Mom and asks for the keys. Fortunately my sis was there and took care of things including talking to the cops and AG.

They had to have the utilities turned back on. Their real estate agent told my sis that he had shown them at least 50 houses before they settled on my Moms. Fishing for widows is my guess. He leaves in tears. His wife is out of work and he needed the commision for Christmas.

loonie pain;

Another London manufacturer may shut down, as the U.S. housing slump, coupled with the rising Canadian loonie, are hurting Vytec Corp.

The vinyl siding manufacturer on Midpark Crescent has been told it is “under review” by its French parent company, Saint Gobain, which has six siding manufacturing plants in North America and is looking to close one, Terry Off, Vytec president, said yesterday.

http://lfpress.ca/newsstand/Business/2007/12/04/4706207-sun.html

A quote from a WSJ article on private equity today. I don’t have the paper with me, and it’s subscriber only, but according to the head of one of the firms, this is true:

“Increases in market leverage benefit the seller by immediately raising the price; the buyer is worse off because he is arguably taking more risk for the same return.”

He was talking about LBOs, and explaining why the returns might not be what was expected, because people overpayed for companies. But it seems to be right on for the housing market as well.

Some “affordability” mortgages.

If someone can get the direct quote it is worth reposting.

Missoula’s first subprime sob story, though it’s more a pitch for the local food bank.

Yup, they came looking for open spaces, and ended up with empty wallets.

http://sarasota.craigslist.org/rfs/498247607.html

A ‘professionally decorated’ 1973 2/1 mobile home.
Only 129K!
Can close quickly!

WTF?!

The dollar slide resumes; that was quick wasn’t it?

http://quotes.ino.com/chart/?s=NYBOT_DX&v=d3

–
David Rosenberg: “We’re convinced the hard landing has already arrived”

“We’re convinced the hard landing has already arrived — Today’s message is a somber one because as the consensus fusses around as to whether recession odds are 30%, 40% or 50%, we’re convinced more than ever that the hard landing has already arrived.

“…Financial conditions have actually tightened [Fed IS Impotent!] — The reason why the Fed may have to go 50bp on December 11, by the way, is because since the last rate cut in late October, financial conditions have actually tightened around 50 basis points, Libor is all the way back to 5.13% and the TED spread is hovering near 200 basis points which is about 170 basis points north of the norm.

“…Housing recession is morphing into an outright depression — Over the past three months, new home sales have plunged at a 30% annual rate and the levels are tracing out 11-year lows. Median home prices have cracked and are now down 13% y/y – the sharpest deflation rate since Sept/70. The strains are seen in the median number of months it is taking the builders to sell their finished product – 5.9 months in October, which is the longest stretch since 1991 (versus 3.7 months a year ago). As an aside, sales of completed units are down 11% y/y right now but inventories are up 14%. So while the builders lay
claim that they are working off their backlogs, the reality is that the inventorysales ratio for newly completed homes at 7.64x is well above 6.0x a year ago and the highest in 12 years.

“…The profits recession has arrived — Sixth, the profits recession arrived in the third quarter and this is key since business income tends to lead capital spending and job creation. The corporate profit data from the third quarter GDP report were very downbeat, and keep in mind that these are earnings from current operations – they do not include writedowns. Pre-tax corporate earnings actually contracted 1.2% QoQ, and this took the YoY trend down to just +1.9% from +4.3% in 2Q and +22.7% a year ago. This is, in fact, the softest all-economy profit growth since the fourth quarter of 2001. The story doesn’t end there – corporate profits derived from domestic economic activity fell 3.1% QoQ – the third falloff in the past four quarters (financials were down 5.6% QoQ and this is useful because this figure is net of writedowns). Such a negative string has not been posted since the 2001 recession. The y/y trend is now officially in recession terrain at -4.2% – a big swing from +27% a year ago.

“…A whiff of deflation in 3Q earnings report — From a corporate sector standpoint, there was a whiff of DEFLATION in that third quarter earnings report – pricing power was notably absent. For all the bellyaching about food and fuels and the veracity of the Consumer Price Index, what we saw was the price deflator in the nonfarm nonfinancial corporate sector drop 0.35% QoQ or a 1.4% annual rate, which last happened in the fourth quarter of 1957

“…Consumer confidence at recessionary levels — Eighth point here – consumer confidence (Conference Board version) slid 7.9 points in November – to 87.3 from 99.5. This was the fourth consecutive decline and brings the level down to Oct/05, right after Katrina hit. The nearby peak was 111.9 in July so this represents a 25 point plunge over a 4-month span, which has not occurred since October/02 when the economy seemed poised to double-dip back into recession following the Enron and WorldCom fiascos. Moreover, there have been only two times in the past that consumer confidence fell this much at this time of the year – in 2001 and 1991. Both represented recessionary phases in the economy – maybe it will be different this time but we are not convinced.”

I stand by my prediction of recession to have begun in Sep/Oct’07 and depression during 2008-2010.

Jas

I don’t know if anyone reads John Mauldin but he posted a very insightful letter today on his site.

‘The Wages of Financial Sin’
http://www.investorsinsight.com/otb.aspx

Leann

Don’t see much coverage but the Retail Chain Index was down 2%.

At least some of the media outlets are printing skeptical aritcles about Paulson’s plan.

http://www.nytimes.com/2007/12/04/business/04debt.html?ref=business

Hopefully the more sunlight this plan sees the more people will realize what crap it is.

Forecasting steady to higher prices.
http://www.suburbanchicagonews.com/heraldnews/news/679052,4_3_JO04_HOUSING_S1.article

Northern Rock employees get hefty Christmas bonus

“Employees at Northern Rock have won a pay rise and hefty Christmas bonus, even though the beleaguered bank is relying on almost £30bn of public money to keep it afloat.

Staff will receive a £200 bonus plus a one-off payment of 2% of their salary, on top of a 4% pay rise. The deal was hammered out last week with the Unite union.

According to The Shields Gazette, Northern Rock was warned by Unite that without its staff there would be no company left to rescue.

Northern Rock denied reports today that senior staff such as assistant directors would benefit from the package….”

http://tinyurl.com/2bfbxe

God I love criminal capitalism! Its almost as much fun as reading about Chicago Politics.

Crash that ‘won’t happen here’ looms large

“… Britain may have witnessed a tripling in house prices over the past decade and now have the highest level of personal debt of any country in the G7, but “it’s different this time”. The United States may be in the throes of the biggest boom-bust cycle in its history, but “it won’t happen here”.

Well, you believe that if you want to. The UK is facing at best a painful correction in the property market and at worst a full-blown crash that could wipe about £50,000 off the value of the average home over the next few years. Why? Because none of the explanations for the UK being a special case really stack up. If the British property market looks like a bubble, feels like a bubble, smells like a bubble, then it is a bubble….”

http://tinyurl.com/yrtdlq

Goldman Analyst a Crackhead…

Dec. 4 (Bloomberg) — Goldman Sachs Group Inc.’s Chief Investment Strategist Abby Joseph Cohen said the Standard & Poor’s 500 Index will rise 14 percent by the end of next year to a record 1,675 “as recession fears fade.”
“U.S. stocks will offer moderate gains and will dramatically outperform bonds over a 12-month horizon,” New York-based Cohen wrote in a report today. “Recession will likely be avoided, due to strength in exports and capital spending by corporations and governments, and thanks to a vigilant and flexible Federal Reserve.” (per Bloomberg, this a.m.).

“I stand by my prediction of recession to have begun in Sep/Oct’07 and depression during 2008-2010.

Jas ”

I could easily believe that we’re heading for a depression if we aren’t in one right now. How much have house prices fallen in the last year? 10%? 20%? I’m thinking around 25% in a few areas, and this is only stage 1. The housing market will be down for years…maybe in 2015 it may pick up again. As they say in physics, what goes up must come down, and this is going to be a doozy in the housing market. Do I see it as the end of the human race? Hardly. People are saying all sorts of stupid stuff about how the housing market will meltdown and send us back to the dark ages. How exactly they don’t really say. Same thing with the stock market. When the stock market dropped from 11000 down to 8000 in 2000 - 2003, we didn’t have rioting and looting. Could the Dow fall back down to 7500? Sure. Given the level of fraud and manipulation, that’s about all the Dow is really worth, maybe not even 7000. The NASDAQ and the S&P 500 are basically worthless, most of the stocks there don’t have any real world value. I’ve seen these companies. They’ve been open for years and they still don’t turn a profit? I don’t think a meltdown of the financial market will cause a breakdown in society. Look, if the whole US economy is a fraud, and everyone knows it, then do you expect anyone to be surprised if the whole thing falls down? Everyone knows that housing is in for a big fall and most parts of the USA won’t recover from it. But it’s not something to lose sleep over. We probably are already in a depression of some sort but the world today is much better than the world of 80 years ago.

This made my husband lose his mind last night and tell me we had to go get a pre-qual letter sometime in the next three months… which I think is too soon. House is gorgeous, but our price point is $350,000. I’m pretty sure this baby will be hid up higher than that. At any rate, it sets new comps. Wheeeee!

http://orangecounty.craigslist.org/rfs/496397436.html

Illegal immigration problem? (article is on China not setting up Social Security network to help the Chinese spend some of their moneys)

“The authorities here are at least aware of the problem, ushering in a pensions reform that bears the hallmarks of the “defined contribution” schemes now rampant in, say, the UK. Pension assets under management are growing rapidly and the national social security fund - said to be eyeing stakes in US private equity firms - is likely to see its own assets increase within 20 years from the current €27.5bn to €97bn.

But the demographics - even in a country of 1.3 billion plus 200 million largely illegal migrant workers - are startling. …”

http://tinyurl.com/28h5z3
Guardian

This guy nailed what`s going on.

sorry don`t know how to post a link here but here it is http://market-ticker.denninger.net/

Smart take on the Paulson plan from a good mortgage broker (yes, there is such a thing…) here in the Twin Cities: http://tinyurl.com/ywh8rw.

Desperation? But without photos, I smell a scam…

http://chicago.craigslist.org/nwc/apa/497872206.html

Do you feel your investments are safe?

Lose a little more sleep every night, wondering whether they are contaminated with financial toxicity?

An Irrelevant Fed: Thimbles of Water in a Forest Fire

http://www.hussman.net/wmc/wmc071204.htm

“What about hyper inflation and the collapse of all fiat currencies? I don’t think joe six pack see’s that coming? The stockmarket is just a casino for the rich to get richer.
The only way out of this mess that the current powers that be know is to inflate inflate inflate ”

I’m doubtful that would have hyperinflation like they did in Germany or Yugoslavia. For one, it would be a political death wish to the current administration. Two, there really isn’t any way the Fed could hyperinflate itself out of debt. Sure, prices could be rising by the minute on gas and food, but given that most Americans don’t have any savings, the overpriced stuff would just sit there. I wouldn’t be surprised if we actually did have hyperinflation in some form, the foods in the grocery stores would probably pile up. Also, there’s no way any currency can inflate ad infinitum. It’s mathematically impossible. In any case, technically in way we have had hyperinflation; look at your derivatives markets. At about the same time housing took off, so did precious metals and other commodities.

“…the world today is much better than the world of 80 years ago.” Yes, but what about 50 years ago? ”

We are much better off than 50 years ago too. People seem to think that the 1950s were paradise on earth. Hardly. 50 years ago life was much harder. Life expectancy was maybe 10 - 20 years shorter than today. We lived in the fear of the Cold War. And what about America? Was America an utopia to live in? No. It was illegal to own gold, illegal to do a bunch of stuff. The US government had many more regulations that it threw at people vs. today. Was society more libertarian? Hardly. If you stepped out of line, you were thrown into jail without trial. Minorities who stepped out of line could have been killed on the spot. We had just as many taxes and intrusive laws back then versus today. People in this country whine and complain about how people were moral back then. They apparently forgot that the older crowd of today didn’t always conduct themselves in a civil manner. Who was it that passed Social Security and Medicare and inflated the military? The older crowd. These entitlement programs were started by the “Greatest” Generation.

Spikes in bank lending rates raise fears as year-end nears
By David Oakley and Gillian Tett in London
Published: December 4 2007 02:00 | Last updated: December 4 2007 02:00

European and UK bank lending rates hit levels not seen for several years yesterday as banks sought funds to cover their commitments for the start of 2008 amid a tightening credit squeeze.

Sterling one-month interbank rates spiked more than 60 basis points to the highest levels since the end of 1998.

European one-month rates rose to levels not seen since May 2001. US rates were also at abnormally high levels.

Senior bankers insist the problems are primarily linked to the end of the year.

But others fear the rising sense of paralysis in the money markets could have dangerous repercussions for the financial system.

http://www.ft.com/cms/s/0/e97b0ebe-a20c-11dc-a13b-0000779fd2ac.html

http://www.reuters.com/article/bondsNews/idUSN0417448620071204

Can you say “Bankrupt?”

חנוכה שמח (Happy Hanukkah) to everyone! I hope your HOA lets you put a menorah in the window!

The link to this article (on marketwatch.com’s home page) reads So much for containment.
U.S. subprime issues have claimed yet another victim. (MarketWatch First Take)

MARKETWATCH FIRST TAKE
Subprime woes spread north of the border
Analysis: Canada cuts rates in response to U.S. woes
By MarketWatch
Last update: 11:03 a.m. EST Dec. 4, 2007

WASHINGTON (MarketWatch) — With the Bank of Canada cutting interest rates on Tuesday, the U.S. subprime mess has thus claimed another victim, contrary to the happy talk from U.S. officials earlier in the year that it would remain “contained” to a small sector of the U.S. economy.
The bank explicitly cited the contagion from subprime in its statement announcing the quarter-point cut in the overnight rate to 4.25%. See full story.

“Global financial market difficulties related to the valuation of structured products and anticipated losses on U.S. subprime mortgages have worsened since mid-October, and are expected to persist for a longer period of time,” the bank said.

http://www.marketwatch.com/news/story/subprime-woes-spread-north-border/story.aspx?guid=%7B7DEE04F2%2D668F%2D4882%2DB85D%2D59CD0D389D8B%7D

http://www.usatoday.com/money/economy/housing/closetohome/2007-12-03-prescott_N.htm?loc=interstitialskip

Dateline: Prescott AZ. Apparently, being down 26% in sales volume and 20% in sales price YOY qualifies your city to gain the headline:

“Retirees help market stay somewhat stable”

Rate cut reasoning
Published: December 4 2007 19:42 | Last updated: December 4 2007 19:42

There is an imperative in any crisis: to do something, anything, to respond to it. In the case of the credit squeeze, central banks have most of the tools, hence vocal demands, especially from market participants, that they cut interest rates. The Bank of England’s monetary policy committee meets on Thursday, yet if it is to cut, it can only be as an indirect response to the credit markets.

Some have argued that central banks should cut rates to restore normal conditions to the credit markets. Yet even with lower rates commercial banks are unlikely to lend to each other for three months at anything close to base rates. Default swaps on debt issued by the banks suggests it is now credit risk, not a liquidity shortage, that is driving money market premiums. The Fed has cut rates twice without normalising the money markets.

http://www.ft.com/cms/s/0beaeaa8-a2a0-11dc-81c4-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F0beaeaa8-a2a0-11dc-81c4-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

1/2 point down on the DJIA tis a mere flesh wound, plus a nice opportunity for the Fed to pump in liquidity, in order to keep the stock market buoyant, if not outright frothy.

Don’t let the gloomsters over at MarketWatch.com scare you — buy the dip!

December 4, 2007 4:25 P.M.EST
BULLETIN
U.S. STOCKS SINK DEEPER IN FINAL HOUR, DRAGGED DOWN BY FINANCIALS
Downgrades seal day’s doom
Markets slide as a spate of downgrades for financials fuels more
credit-market concerns, while Nokia, Merck updates disappoint.

marketwatch.com

This cartoon made me chuckle. Co-worker sent it to me.

http://www.time.com/time/cartoonsoftheweek/0,29489,1689765_1495823,00.html

THE FED
Growth risks dominate landscape
Economists see Fed poised to cut rates next week
By Greg Robb, MarketWatch
Last update: 2:08 p.m. EST Dec. 4, 2007

WASHINGTON (MarketWatch) — In the end, it wasn’t really much of a contest.

After the last Federal Open Market Committee meeting on Oct 31, the Fed said the struggle between the forces pushing the economy sharply lower and the pressures building to force inflation higher were locked in a struggle that was too close to call.

But over the last six weeks, risks of an economic downturn have emerged as the clear winner.

The bad news is not just the return of the financial-market-turmoil-that-no-one-understands. Economic data since the last formal FOMC meeting have been ridiculously one-sided towards a slowdown.

Importantly, the housing market downturn has started to “spill over” and push down consumer and business spending.

http://www.marketwatch.com/news/story/growth-risks-emerge-front-center/story.aspx?guid=%7B367BE6C7%2DEF30%2D40F8%2D8EFA%2D26A6DAA842C3%7D

The Bush administration’s plan is being aimed at homeowners who are making payments on time at lower introductory mortgage rates but cannot afford a higher adjusted rate. The Federal Deposit Insurance Corp. estimates that 1.1 million borrowers are in that situation.

Still, many categories of risky loans aren’t included in the plan at this point, other analysts noted, including loans in which borrowers used “piggyback” home equity loans to finance a home purchase and loans in which borrowers weren’t required to document their income.

“Many government and policy makers feel this is a subprime problem, which is completely wrong,” Friedman Billings Ramsey analyst Paul J. Miller Jr. wrote in a research note Tuesday. “The plan will not rescue the housing market.”

And loan modifications, regardless of who qualifies, aren’t a panacea, Miller added, estimating that about half of modified loans default anyway over the long run.

Bush Housing Rescue Plan May Fall Short

http://www.chron.com/disp/story.mpl/ap/fn/5351605.html

Paulson: Taxpayers Should Bail Out Subprime

http://www.fool.com/investing/general/2007/12/04/paulson-taxpayers-should-bail-out-subprime.aspx

This is probably the dumbest and most venal of the cavalcade of bailout plans. It’s venal because it would shift the cost of homebuyer and Wall Street greed onto innocent bystanders — us, the people who fund those bonds. It’s dumb because it presumes that municipalities are smart enough to allocate capital intelligently in the mortgage markets.

I would love to hear Hank P. explain to us how local governments will acquire the requisite expertise to assess mortgage risk or values so that they can effectively buy, sell, refinance, and/or insure mortgages.

Keep in mind, this is a job so complex and fraught with risk that it was royally screwed up by a multibillion-dollar industry full of “experts” — that is, until the going got tough and they decided to throw in the towel. There’s no way municipalities can be expected to make good decisions about whom to bail out, or what the right price would be.

AFTER HOURS
Fannie Mae cuts dividend; shares fall
By Carla Mozee, MarketWatch
Last update: 6:18 p.m. EST Dec. 4, 2007

SAN FRANCISCO (MarketWatch) — Shares of Fannie Mae dropped late Tuesday after the mortgage lender said that it will cut its quarterly dividend to boost its capital in the wake of the subprime-mortgage crisis.
The stock (FNM 35.18, -1.07, -2.9%) was down 3.9% at $33.82 in recent trades. It said that it will cut its dividend by 30% to 35 cents from 50 cents a share beginning in the first quarter of 2008. The company also announced that it will raise $7 billion by selling nonconvertible preferred stock in one or more offerings this month.

http://www.marketwatch.com/news/story/fannie-mae-slices-dividend-guess/story.aspx?guid=%7B6FD7D75B%2D14DA%2D469E%2DA38A%2D11F87062F2D8%7D

Paulson’s Plan to Punish the Public

http://www.fool.com/investing/general/2007/11/30/paulsons-plan-to-punish-the-public.aspx?source=iflfollnk0000003

About the rate freeze …
http://money.cnn.com/2007/12/03/real_estate/investors_obstacle_to_mortgage_plan/index.htm?postversion=2007120415
“The [investor] will say, ‘Wait a minute. The government can come back in a few years and alter contracts based on economic emergencies,’” he said…Investors will want a higher return from their securities, and charge more for that added risk. “Because of government intervention, people will pay too much for their houses.”

This is exactly, what’s gonna happen. Future home buyers will have to pay the bill for bail-out plans by higher interest rates.

Fannie Mae Cutting Dividend 30 Percent, Selling $7 Billion in Preferred Stock to Raise Capital
http://biz.yahoo.com/ap/071204/fannie_mae_capital.html

Now it’s starting to get really funny…

Here’s one from CL that is truly amazing:

11/28 — price 700K

http://newyork.craigslist.org/stn/rfs/492788119.html

Didn’t sell in 6 days, raised the price another 50K:

12/4 — price 750K

http://newyork.craigslist.org/stn/rfs/499089033.html

It strikes me quite funny that so many HBBer’s are ridiculing the idea of a depression using (ironically) the same logic that LVlandlord (among others) used to ridicule the idea of a housing bubble.

Maybe the bailout proponents will get so preoccupied with the finger pointing blame game that they will forget to pass any bailout measures.

Paulson’s role in subprime crisis questioned
By Stephanie Kirchgaessner and Krishna Guha in Washington
Published: December 4 2007 22:22 | Last updated: December 4 2007 22:22

The political tensions over the US subprime mortgage meltdown rose on Tuesday as the chairman of the powerful Senate banking committee questioned the role of treasury secretary Hank Paulson in the crisis.

Chris Dodd, the Democratic senator from Connecticut who is running for president, said he was “deeply concerned” about a column in The New York Times that accused Goldman Sachs of “injecting dangerous financial products into the world’s commercial bloodstream” during Mr Paulson’s tenure as chief executive of the company.

http://www.ft.com/cms/s/e2ed6322-a2b5-11dc-81c4-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe2ed6322-a2b5-11dc-81c4-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

Paulson dismisses Citigroup talk
By David Wighton in New York
Published: December 4 2007 01:11 | Last updated: December 4 2007 01:11

Hank Paulson said on Monday he intends to stay as US Treasury secretary for the rest of the Bush presidency, quashing rumours that he might leave to become head of Citigroup.

“Let me say I’m going to be running full speed here at the Treasury right up until the end of President Bush’s term, that is what I am focused on and I’m focused on doing everything I can to help the US economy,” he said on CNBC on Monday.

http://www.ft.com/cms/s/63b04a5e-a204-11dc-a13b-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F63b04a5e-a204-11dc-a13b-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus