Bits Bucket And Craigslist Finds For December 8, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Has anyone gone out Christmas shopping this week? Is it me or are the places dead?
It was snowing here in Rhode Island but its still hopping. We leased a new SUV this week, the CX-9,(I have to have some luxuries) and the dealership seemed to have some buyers as well. Nothing dramatic and definitely way down from the golden years.
However, I’ve heard stories here and there about refi’s not working out. I still think there is a bit of denial in this area. Although there are more people realizing how bad its gotten. My mother in law works at the city hall and she cant believe the amount of foreclosures.
I read an interesting article yesterday, I’m not sure if it was from this blog or from a link from one of the yahoo homebuilder message boards ( http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/ ) but we hear many people talking about ARMS and perhaps interest only but many mortgages were paid with by Pay Option loans, which are not covered under the Bush plan. These Pay Option Loans were for people with good credit, and there fore were rated AAA. They are the next shoe to drop in the years to come because they allow you to literally purchase a million dollar home and pay a couple thousand a month until you owe up to 125% of the purchase price or was it market value, LOL.
In any event these are probably the next shoe to drop. The fed and government can slow bankruptcies but they cant make it affordable to buy houses, even if they lent at 0% homes would still be to expensive.
How did we get to this point in the first place? Anybody who wanted a home has bought one, even the people that couldnt afford it. Over 70% of the people in this country owned a home, and there were many that owned 2, 3 or 4 homes that they were flipping. The other 30% do not deserve to own homes, someone has to rent.
No my friends this is going to take a long time to unwind.
Excuse me. I’m one of the 30% and I don’t “deserve” to own a house?
lol
I am sure he was talking about himself when he made that remark.
“We leased a new SUV this week, the CX-9″
My wife and I have always paid cash to purchase our vehicles, but hey, that’s just us, living within our means. Go figure.
Since auto loans and leases seem to be the next credit bubble to pop, I’m hereby taking dibs on the acronym “FL.”
BoRI is obviously renting his SUV because he does not deserve to own one. Besides that, he may be trying to avoid catching a falling knife, as high gas prices and empty housing ATMs tend to reduce the value of super-sized gas guzzlers.
If you’re going to lease, at least be smart enough to buy out the lease from some desperate “How-much-a-month-Harry” who is frantic to unload that Beemer or Benz to cover his rising mortgage. You can get some sweet deals, if leasing is your thing.
Final payment on my 2003 Honda Civic is May. I think I’m changing the license plate holder to “Don’t laugh, it’s paid for”. Or maybe I should get one that says 38 mpg (Highway).
FL??? Oh, no, beware. That belongs to one of the Web’s Least Wanted Posters!
“The other 30% do not deserve to own homes, someone has to rent.”
How does one become ‘deserving to own’?
1) Have a rich dad
2) Hit it big in entertainment or finance
3) Be poor enough and in the right sociodemographic category to qualify for free housing
Hard working middle Americans can look forward to renting forever.
I disagree wit #2, You do not need to hit it big. My father taught me “Son if you want to be wealthy or not have to live paycheck to paycheck, you must live below your means and save each and every month. By the time you are my age you will be able to have the financial flexibility that you will not be trapped should things go bad” I have listened to his advice and after 20 years of saving I am in position to survive most any downturn. I was fortunate enough to have a father who understood finances and the economy. He lived with his grandmother who taught him about tough times (the Depression) and he passed this information on to me. The problem with the middle class is they do not tend to think for themselves and are purchasers of liabilities rather then purchasers of real assets. We have heaps and heaps of what we sow and the middle class has consumed their way to our current situation. I am not bashing the middle class because “they do not know what they do not know”. I am middle class but think differently than the middle class. I count my blessings every day that I had a father who explained this to me. I was lucky.
“1) Have a rich dad
2) Hit it big in entertainment or finance
3) Be poor enough and in the right sociodemographic category to qualify for free housing”
4) Move to a lower cost area of the country, but many simply aren’t willing too.
PB, I have felt that “renting forever” feeling for the past 25 years.
How many times are you going to post about your leased Mazda?
Larry King is on the phone for this one.
went to target yesterday, parking lot full but despite only half the registers being open, there was no wait on line. i was in and out in 15 minutes, it was lovely.
I think it is the specialty retailers that are getting squeezed. Wal Mart / Target will be fine IMO.
CompUSA just announced it is getting out of the retail business and will be selling or closing all stores. See story.
That doesn’t surprise me.There are too many big box stores selling electronics.Walmart is selling tvs now and probably have the cheapest prices.Sam’s club has good buys on plasmas.
How about a give plasma, get a chance at winning a plasma tv promotion, in front of a big box store, near you?
Give plasma, get a plasma is funny. I gave blood earlier this week in Chicago’s Loop and there is a weekly drawing for a prize. I think the prize was cash though.
And meanwhile, Fry’s is expanding more and more.
Sony doesn’t make Plasma TV’s. They suck major power and LCDs are getting brighter and better contrast all the time. Plus, there are now 3 color LED driven DLPs on the market. No more color wheel artifacts…
I have done a ton of shopping for home furnishings since we moved up here to Royal Palm Beach.
I have shopped in Rooms To Go, Home Depot, Bed Bath and Beyond and Lowes.
I certainly without a doubt the was the biggest shopper in all stores. The managers were falling all over themselves to get me excellent customer service. Everyone else in the stores (none in Rooms to Go) were not buying anything.
I have also for fun looked at all of the model homes along Royal Palm Beach BLVD. I am always the only person looking.
In the last home (Royal Professional Builders) the salesman said to me “oh, this is the time I usually take my nap”. He also said that he was moving back to Canada and that he has never seen the sales so slow. I drive past these places every day and there is never any customer cars in the lot only the expensive cars that the realtors bought.
The car lots are always empty too and my son has had a heck of a time finding a job.
He did get a job over at a gym (which was mysteriously torched on Thanks Giving) His first paycheck bounced and the owner also owes him for two more weeks of pay. My son has been trying to get his money back with no luck. Talk about a disappointing start to living in America.
He worked for almost a month at this gym and now he is not getting paid. The owner has a ton of excuses for the money not being available and this gym is in WELLINGTON!!! He is now working at 7- Eleven and has been hired over at the cable company to start in January. All jobs except for the cable company were paying him 8.50 an hour.
He now owes his first car insurance payment (156.00) and I am going to have to “bail” him out.
If that gym owner doesn’t pay my son soon, I am going to go to the press with this story, nice looking Canadian boy coming to America to start a new life and gets his first job and paycheck and it bounces. I think the press might be interested in this.
Welcome to President Bush’s and Hillary Clinton’s America.
I had Royal Professional Builders build my house in Wellington. Wally is a good guy you just need to beat him up on the price. You can’t beat poured concrete walls during a hurricane! ( my house went through three with no damage) Wellington will have problems for awhile due to all the posers now having to bail. Also don’t push the poor Canadian line down there due to the fact that Canadians are not the favorite group in South Florida. If you are French Canadian just don’t ever bring it up. I know this may seem harsh but I am just telling you the facts as I born and raised in SFL.
Who said anything about “poor Canadian”.
I said nice looking Canadian boy gets his first check and it bounces.
We moved here from Montreal, Quebec but we are not native from there. My son and I were born in Winnipeg.
My husband (from Boston) who has been serving his country with CBP had us posted up in Quebec.
My son and I have never lived in the USA before this.
FYI, we have been welcomed with open arms just saying we are Canadian moved up here from Montreal. We never even said we are not from Montreal.
I think your theory is flawed.
The Acreage and Royal Palm Beach are toast. That goes for much of the new Wellington also. Wannabe’s took over. I mean, who wants a house right on RPB Blvd? Doesn’t make sense. All of the builders out there are dumping their spec and model homes. By “out there” I mean that place is in the woods. Lots were selling for one tenth of what they are now just 4-5 years ago. As for existing houses, you have beautiful new $600,000 houses right next door to what can only be considered trailer trash.
I have seen plenty of beautiful homes just like that,literally next door to homes with razor wire, old military vehicles, coon dogs and pigs and chickens.
The prices are falling in these areas but not fast like PSL is.
Those homes have fallen 50% already.
Have your son check his W2 carefully with the IRS later. Maybe they will “forget” to write the check to the IRS.
Kiss that cash goodbye! FYI, everyone knows gym jobs, or ANYTHING having to do with a gym, is not secure. A gym job is not really a job. Lower than restaurant work.
We went out Wednesday.
Dollar Tree - spent about $11. In and out, people were milling about, light traffic in store, maybe 35 people, maybe 5 with shopping carts.
Walmart - medium traffic, about half with shopping carts. We spent about $150. Gifts for neices and nephews, nothing over $30 per.
My youngest nephew wants a Transformer. This twit with no cart and nothing in her hands walks into the toy area, as we are trying to located his hearts desire. She gets up in front of me and hubby, blocking the entire display. My hubby shoots me the, oh no you don’t look. I took a few breaths and we laughed about it later. Landed said toy. Checkout was a breeze.
Sentry (food store)…spent $94. I’m going to a social on Sunday, bought expensive cheese, crackers, meats, etc for party tray, and a few other items for home. We practically had the place to ourselves. Checkout was a breeze.
I’m in Wisconsin, and we shopped in a small town, Whitewater.
Leigh
Which cheeses? There are some most excellent dairies in Walworth County.
One of the world’s greatest signs can be seen from the road that runs out to River Falls, Wisconsin.
“Taxidermy and Cheese”
What’s so great about that? That is normal. LOL
Other typical signs
“Trade your deer pelts here” local grocery stores and supermarkets
“Friday coon festival, all the coon you can eat - free! Ladies drink free.” (As if any ladies are going to come in let alone drink while a bunch of us old farts eat ‘coon and hit the Lienie’s).
Not quite up to WI snuff perhaps, but we do have the sign on the road to Kernville that announces:
“Mexican Food. Haircuts.”
The best road sign I ever saw was between Uniontown & Hartville. You can’t beat a neon sign flashing “Septic Tanks”.
All WI cheeses! Sharp cheddar, aged brick, horseraddish something, (too lazy to go look), and a cream white (forget the name), and…er…there’s another, ?
LOL…I picked pretty colors so my plate will look fabulous and taste good too!
Leigh
I was thinking
Steve’s Cheese
Carr Cheese
Cedar Grove Dairy
etc.
Great Wisconsin cheeses now start ~$10/lb (up $4 in the last year).
Creamy white — Grafton? Great stuff.
The mall was dead Thurs noon.. few people.. no lines. One kid waiting for Santa.
Parked right in front of Sears.. there were 4 vacant spots, side by side. I thought it musta been a handicaped zone or something. Walking away, i kept looking over my shoulder for paint or a signpost or something..
CompUSA is closing ALL STORES. Just read that on money.cnn.com. They will be having liquidation sales during the holidays. Might find good deals there : ).
I think retail is seriously screwed with the exception of Costco, Sams, Wal Mart, and Target.
Eddie Lampert is getting crushed for the performance of Sears/KMart. So now where will all that high “quality” job growth come from that the ‘guvamint’ keeps touting in the jobs report?
I noticed the shops were dead . It was great . The retailers had some items listed at full price ,but most items were discounted . Usually the retailers don’t discount items this much before Christmas IMO.
CompUSA= one more puncture to make death by 1000 cuts.
You mean to tell me EL lost his Midas touch or never had it to begin with? I hope it is a lesson for those who put him on a pedestal.
Carlos Slim is used to running the show in Mexico. He dabbled in CompUSA. Welcome to America Mr. Slim. Maybe Gates and Buffet will look at investing in Mexico and giving Slim some competition. He is, after all, now the new richest person in the world.
Job growth??????
NOT HERE……Still out of work, but i did a holiday party last night in Brewster 55 miles away…got there 3 hours early and beat the fast 2-3 inch snowstorm lots of accidents… got a $100 tip too..
But a real job during the week…still nothing….I might be doing a New Orleans zydeco night at a Creole restaurant in Manhattan…I’ll let you know…New Orleans food and music…could be a winner here..
p mail Man
They closed many of their california stores months ago. Their “going out of business sale” was weak at best.
COMPUSA that is
Went to the post office this week. Line was longish but no longer than normal. I would have expected a lot of people mailing packages by this time in December, Maybe it is still too early?
Were people using the self-mail machines? There is no reason to stand in line at the post office. Those machines are great.
This is the post office closest to the White House. No self mail machine. Security I guess. Also might just be too small a post office to bother. But the lines can get very long.
“No self mail machine. Security I guess.”
I posed that question to an employee there about a year ago when I was in town, and that was her answer. Annoying, but understandable.
1750 Pennsylvania Ave post office?
They really do look deep into your eyes and ask you if there is anything dangerous in the package. Kind of disturbing when you think about it - as if someone who was up to something no good wouldn’t be able to say “No, nothing dangerous.”
Yep, same one. And I don’t even like being anywhere in the area around the WH these days, because it seems like security is looking for an excuse to throw a hood over your head and “question” you.
Things are pretty dead in Sacramento at both Roseville and Arden. I was out last weekend and on Thurdsay and it was easy to find parting and zero waiting for sales help. I just bought small personal things since we don’t do Xmas.
It was busy last night at West LA Best Buy. Sorry, all. I contributed to the current account deficit and the economy. I bought a PS3 w/ Rock Band–sweet game!
I don’t know why anyone goes to stores. What little I buy, I do via the net and particularly did so in WLA. No driving, parking or dealing with the public dramas. I even have gifts shipped directly to recipient.
I buy at local stores. It’s called supporting the local economy, which is a better alternative than paying the economic and social costs of local unemployment.
I was at in a mall and at a Macy’s at 9:00 Monday night and it was dead.
With all the “Free Shipping” that is offered on-line, I wouldn’t be surprised that people are shopping from home and work. My brother with two kids is doing alot of his toys shopping from a computer. Instead of asking whether the malls are dead in your area, the question should be “Have you seen the UPS trucks out and about in your area alot lately”?
With my own kids, they have reminded me more than once that they would not mind receiving cash this holiday. This allows them the freedom to buy whatever they want after the holidays on sale/clearance.
I live in Southwestern Ohio and stores are empty here too.
I went shopping on Wednesday between 5:30 & 7:30 P.M. to buy a couple of Gift Certificates and such. Sears Hardware had one clerk at a register and perhaps 2 people in the store. They already close one of the Sears hardware stores this past summer
Blockbusters has a sign on the door they are closing several of the locations. Comp USA is closing all 103 locations after Christmas.
We have another store called Sofa Express and More that is also closing right after Christmas.
The Hallmark store was nearly empty.
Lowe’s had very few customers.
The holiday sales look bleak to me!
In Santa Monica, Ca. last night lots of people milling about the promenade, but no lines in the stores. No lines at Banana Republic, or Old Navy or Pottery Barn. Only a long line at the apple store. No one was walking around with armfuls of packages. It was dead in the restaurants too. Had dinner at the Malibu Charthouse last week and it was so empty we got a window table. The waitress was chatting with the locals and said it was the slowest she’s ever seen it. She said people were scared in Malibu, not of the fires, but of dropping home prices.
Here is what I’m concerned about. IMO, the 5-year “teaser freezer” is a ruse to distract us from the real bailout. I fully believe the PTB will end up foisting the bulk of the resets & guarantees on the taxpayers shoulders. The “private industry” part will end up being very small.
Watch out for the FHA & GSE expansions, not to mention the $170 million budget proposal for HUD counseling and “NeighborWorks” programs. (and we all know that these programs inevitably cost way more than their original budgets)
We need to form a taxpayers’ advocacy group to carefully monitor what they do & be ready with attorneys and a media campaign WHEN (not if) they start sucking our money down the black hole of bailouts.
Henry Paulson
The Administration is taking action to help homeowners, and I’ve called on Congress to do the same before they leave for the year. They need to pass the President’s FHA modernization proposal which, by lowering the down payment requirement, increasing the loan limit and allowing risk-based pricing, will make affordable FHA loans more widely available. This would help refinance another estimated 200,000 families into affordable FHA-insured loans. President Bush has also called on Congress to provide tax relief for mortgage debt forgiven; to create a strong, independent regulator for Fannie Mae and Freddie Mac; and to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancings so that they can reach more struggling homeowners.
http://www.whitehouse.gov/ask/20071207.html
try cagw.org ntu.org or go all the way with lp.org
“I fully believe the PTB will end up foisting the bulk of the resets & guarantees on the taxpayers shoulders.”
This is what I have said all along, and I am sure it is still the objective, though it will take some stealthy financial engineering to accomplish this, as it has come to light that taxpayer-funded bailouts are not exactly the U.S. voters’ most preferred type of policy measure.
We’re both “hand-wringers” PB.
This is also what I’ve feared ever since I figured out what was causing housing prices to rise like they did.
It was beyond obvious, even as early as 2003 in SD, that this would end badly.
If we lowly bloggers could see it, how is it that all the “experts” didn’t see it?
IMO, this was a set-up from the very start (2001).
DO NOT LOWER STANDARDS! Shoddy underwriting and super low interest rates is what got us into this mess. How are they trying to fix it? With more shoddy underwriting and low interest rates. This time, they are trying to offload the noncomforming crap onto the US tax payer. If they do this, I am taking my responsible ass and moving out of this country.
The Ponzi financial structure of debt in our country cannot continue if standards are not lowered continuously. You cannot go back without serious economic damage immediately. They’re postponing the day of reckoning while stealing as much as they can in the meanwhile (they==pigmen like Paulson and his Wall Street buddies).
“If they do this, I am taking my responsible ass and moving out of this country.”
Policies to lower standards seem designed to either chase responsible folks out of the country or to encourage irresponsibility.
Well I can watch the crash and burn and the bonfire from a distance.
Are you really leaving the good ole U.S.A.? Sounds tempting to me, but I would probably have to leave my family behind, which I am not really interested in doing…
The spouse and I are thinking the same thing.
We plan to vamoose if things get to a certain point, (still seems far away) where we feel things have reached a crescendo of idiocy…
Our wealth aside from our house, is already overseas.
Grandfather aladinsane made the mistake of not thinking the unthinkable could happen, in those dark days of the late 1930’s…
‘Are you really leaving the good ole U.S.A.? Sounds tempting to me, but I would probably have to leave my family behind, which I am not really interested in doing…’
Wolverines!
Alidinsane,
What are your triggers for making this decision to leave for more secure pastures?
Do you have a chosen refuge?
I can’t help but remember all those loud celebrities threatening to move out a couple of elections ago. Apparently, it is a lot more fun to stay and complain instead.
Ca Renter….Can’t you just see what these creeps are sitting up . A taxpayers bail out of liar sub-prime loans . This is a pass the bag-holder play .IMHO ,the “teaser freezer ” is just for buying time until the gov. can get these government backed programs going .
In order to spark the market , the next step will be the government backed loans will be used for purchase money and they will be low down and easy qualifying at higher loan amounts .These jerks realize that the easy money has been cut off ,so now ,we the taxpayers will be forced into providing this easy money by the tax payers being the risk bearers of these junk loans already written and the ones they plan to write in the future to get the market going again .
The apparent plan is not right because bad loans are bad loans . I am very disappointed that the government wants to re-spike this crazy easy money lending and attempt to keep real estate prices higher than they should be by making bad high risk loans .
Let the lenders re-write or freeze interest rate on loans they think they can save if they want and just keep the government out of it .The government should be in the business of sustaining prudent underwriting on government backed loans and not alter loan programs to meet the needs of crazy fraudulent lenders and borrowers who made their contracts in the middle of a false real estate mania .
Totally agree, Wiz!
This is clearly not targeted at subprime, those people are already burnt, can’t pay in the long run anyway, and don’t make campaign contributions. No, if they can pull it off, then like most government programs, the program will be drastically expanded, in this case to try to cover the Alt-A and prime resets starting in a year, which will affect a much more cherished target audience for politicians… wait ’til the campaign promises start flowing my friends…
There are some new posts below that go into detail about the trenches of investment that put a new slant into my thinking about just how the bail-out plans will proceed .
If one could predict how the bail out plan is going to go ,than one could predict where the interest rates will be at in one or 2 years and one could predict where the losses are going to fall .
I said a long time ago that absent government intervention it was easy to predict how this bubble would go ,but with government interference and back-room deals ,and possible lawsuit intervention ,it’s a lot harder to predict the course of this correction and who the winners and losers are going to be.
exactly…
I think the admin will structure it via national security - can’t let our economy go in the toilet because it would leave us too vulnerable to foreign entities and terrorists. I think they’ll do is similar to the airline bailouts after 9/11 - some sort of subsidies or tax breaks for the banks.
test
My posts are not showing up, either. Figured it was Ben getting even for too much hand wringing last week…
LOL!!! I was thinking the same thing.
From the Wall Street Opinion (December 7, 2007; Page A16) by Rev. Jesse Jackson:
“…And whatever you call the revived agency, whether its middle name is Finance, Trust or even Mortgage,…”
Here’s my suggested name for a *New* Federal Agency:
H.E.L.P.
Homeowners Evacuating Loans & Properties
President Push:
“…And I have a message for every homeowner worried about rising mortgage payments: The best you can do for your family is to call 1-800-FALSE-HOPE.”
Twit or Taunt?
Synonyms: These verbs refer to making another the butt of amusement or mirth. Ridicule implies purposeful disparagement: “My father discouraged me by ridiculing my performances” (Benjamin Franklin).
To mock is to poke fun at someone, often by mimicking and caricaturing speech or actions: “Seldom he smiles, and smiles in such a sort/As if he mock’d himself, and scorn’d his spirit” (Shakespeare).
Taunt suggests mocking, insulting, or scornful reproach: “taunting him with want of courage to leap into the great pit” (Daniel Defoe).
To twit is to taunt by calling attention to something embarrassing: “The schoolmaster was twitted about the lady who threw him over” (J.M. Barrie).
Deride implies scorn and contempt: “Was all the world in a conspiracy to deride his failure?” (Edith Wharton).
This is for Mr. Bear:
Which name do you think is more “correct” for the “current” SIT-U-ATION ?
At the bottom of the Wall Street Opinion by Rev. Jesse Jackson:
CORRECTIONS & AMPLIFICATIONS:
The Resolution Trust Corporation rescued failing savings and loans. An earlier version of this article misstated the name as the Reconstruction Trust Corporation.
http://online.wsj.com/article/SB119699795437616770.html?mod=googlenews_wsj
And for all you “Bunker Monkey’s” …watching the rust grow on your tin-foil-hats…something for you:
(From The same Rev. Jesse WSJ article listed above:)
“We must move immediately to adopt this Marshall Plan for mortgages or face the prospect of entire neighborhoods and communities becoming depressed and potentially abandoned.”
Next we will see him holding hands with John Edwards and pledging to save all of the “poor victims”.
It’s kind of funny. Both parties are guilty. The ones who bought more home than they could afford and Wall Street for giving them the ability to. I have a strong feeling that it’s ultimately going to be the tax payer holding the bag. Wall Street wants a socialist solution to the problem (hence Paulson and Bush’s plan) and Clinton and Jackson want to give everyone something for nothing. So who will end up “eating the losses”? You got it. The taxpayer.
The trick is using stealth financial engineering to design a taxpayer-funded bailout measure where no tax dollars are spent. Any thoughts on how one might do this?
By offloading things to Fannie or Freddie and / or changing the FHA rules so the craploans now conform to FHA allowing them to be offloaded.
An FHA loan guarantee up to $1m (or a similar guarantee for GSE-purchased loans) might also be effective. Isn’t it interesting how private insurance companies charge their customers a premium, while govt-sponsored insurance programs are cost free, requiring no tax dollars to cover the actuarial liability?
Tom …..Along with all this re-spiking of the punch bowl they plan with turning government backed loans into low down easy money on now new purchases .We, the tax payers become sub-prime loan risk bearers ,when the facts show that these loans are toxic and bad and fraudulent and result in high default rates .
Shouldn’t Paulson be impeached for conflict of interest and sitting the taxpayers up for great loss . Aren’t government officials charged with the duty to prevent losses for the tax-payers ,rather than prevent losses for risk-takers like the Wall Street Lenders and their flake borrowers ?
First , the government has to admit that the problems lie in the fact that it was a speculative real estate mania ,coupled with easy low down fraudulent lending that pushed the prices up ,that are now crashing .
The lenders and borrowers that created the problem are the parties that need to solve the problem and in many cases this just means default of the loan because the borrower can’t afford the loan under any circumstances . So, let the remedy play out in the courts as far as liability goes . As I see it these bail out plans are in a sense a obstruction of justice .If a government knows that the loans had a fraud basis ,than how can they support any bail out of those loans ?
I find it absurd that you hear the bail out politicians saying that if you don’t qualify for the loan you took ,you get a bail out . Bail outs for fraud in lending or bail outs for poorly designed loan programs that were based on no skin in the game ,hit the mark appraisal ,qualifying on teaser rates ,and reliance on real estate always going up don’t make sense ? The lenders designed these faulty easy money loans and proceeded to not even care to underwrite them proper and than they rated them AAA .
I resent the fact that the borrowers , the lenders, and the government feel that I as a taxpayers am not entitled to Justice in the Courts and I have to pay taxes to bail out crime or faulty lending .
Give the banks big gov. loans to keep them solvent and make them pay the taxpayers a high interest rate for those loans .
Any new lending should be based on sound principals and accurate appraisals after the market settles where the real prices should be .
While I say all of the above ,I know the government will attempt to bail out this mess and prolong the correction and obstruct Justice .
The fact that Countrywide Funding got caught holding the bag on a bunch of bad loans ,that the secondary market doesn’t want to buy ,is not the taxpayers problem .
Today in the WSJ editorial page it was Obama’s turn to explain his bail out plan. ” Homeland Insecurity” The Bush Plan does not go far enough. He would give all middle class $1,000.00 payroll tax break, no tax on seniors income up to $50,0000.00, government match on savings accounts for retirement.
Your tax dollars hard at work.
Does Wall Street make “Margin Calls” on Saturday’s?
American Mortgage seeks options after losses
“American Mortgage Acceptance Co said it was exploring strategic options after the real estate investment trust liquidated certain investments to meet… margin calls,… sending its stock down more than 40 percent in after-hours trading.”
“…has sent shocks through the credit market, making debt more expensive, the value of property lower and, pressuring scores of mortgage companies, such as American Mortgage.”
http://www.reuters.com/article/ousiv/idUSN0734043920071207
Newsday on Long Island a pieces on a family who is having trouble paying their mortgage. The comments (including mine) are pretty much on target. Not much sentiment for a bailout.
http://tinyurl.com/26twc4
So many people around here like to act like Long Island is some sort of paradise. Most of them seem to be from Long Island. I just see a place loaded with debt and white trash. This article sums up a huge swath of Long Island pretty well. Now they are all victims.
Now, now, let’s not get into name calling, my sweet.
Not all locations are as pristine as your own.
Yes, LI ain’t all that but it’s the home of my parents, grandparents and great-grandparents and myself.
Generations of people who lived within there means…..
Well, except for my sister, who we don’t speak of.
As a white guy the one term I can use and still be politically correct is “white trash”. And there is a lot of it on the Island.
It’s a place you go if you feel like there’s not enough traffic where you live. And a whole generation of folks who “work for da city” went there from Queens and Brooklyn because they figured they weren’t paying high enough taxes, I think. And so they could trade in a postage-stamp-sized yard for an envelope-sized one! And falling crime for rising crime.
LOL
I spent the summer of ‘69 in Port Washington, when I was alad.
Could somebody give me a paragraph description of it, now?
nycjoe, I think the blog has adopted the term “fat chick on a barstool” when referring to houses on very small lots, just fyi for future postings.
Spent 6 years of my early life in Rocky Point. Some of LI is truly Great Gatsbyland, some of it is like West Virginia with a different accent, and most of the rest is late 40’s/early 50s “Leave it to Beaver” suburbia that wasonce affordable for middlec class families but nowadays much less so. In other words, a good microcosm of America.
The lifestyle definitely isn’t for everyone, though. I remember my dad having to leave the house by 5:45 am in order to make it to work in Bethpage and deciding that I liked sleep too much to do that my entire working lifetime.
yes, most of long island could be nuked.
but have you been out along the supertony north shore??? great neck, kings point, sands point, roslyn, manhasset, oyster bay… we’re talking gatsbyland here. really beautiful digs out there, plenty of uber-rich estates, etc. and plenty of trees …
same is true for a small part (the private homes enclave) of riverdale — not bad for the bronx! but the classless condo developments/apt complexes in riverdale are gonna take a big hit, and deservedly so. “the bronx is up?” for the most part, i don’t think so.
‘but have you been out along the supertony north shore??? great neck, kings point, sands point, roslyn, manhasset, oyster bay… we’re talking gatsbyland here. really beautiful digs out there, plenty of uber-rich estates, etc. and plenty of trees … ‘
Perhaps “Weekends at Bernies” was the new Soylent Green?
If that couple skipped a few meals, they might make their mortgage payment.
I cant seem to post.
Shoot Ben a quick e-mail
thnx I just did. I can only post short messages.
Been probably uses a spam plugin that Word Press provides. It “learns”. As Ben approves your messages it will “learn” that you are fine. It will work itself out.
It may “learn” too late.
Hot Darn!! First post to go through in a year-&-a-half of trying.
Now I can spam away.
Spam,spam,spam spam, spam.
S P A M
/scarcasm off
I read an interesting article this past weekend either from a link posted here or on the yahoo homebuilders message boards http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
It has to do with pay option loans and they are the next shoe to drop. These mortgages are not covered under the Bush plan and they were rated at AAA.
It was snowing here in Rhode Island so I dont think I could give a fair assessment but considering how packed it was on black friday i would imagine most of the shopping was done then.
We leased a new CX-9 and I was surprised at how many other people were buying. It wasnt a stampede or anything but there were a fair amount of buyers. However, we went to a BMW dealer to check out the X5 before buying and that dealer was devoid of any buyers the whole hour we were there. Those BMWs sure look overpriced compared to what you can get on other luxury vehicles. This CX-9 drives every bit as good as the X-5 and my wifes BMW 325i.
The next shoe is home equity and 2nd mortgages, which are going to take huge losses as underwater homeowners get foreclosed on. We have another year and a few months before the Option ARMs start to bite, but HE and 2nds are happening now. Additionally, while Option ARMs will take haircuts, HE and 2nds will be totally obliterated. To top it off, Wamu and Countrywide have sharply increased their HE loans over the past year. Oops.
I’m not boycotting Christmas or anything like that, but I simply choose NOT to participate.
Walmart gets as little of my money as possible…..small town, limited choices.
I see debt people.
From Milwaukee:
MGIC to raise prices on half its mortgages
“It also has said it will stop writing policies altogether for buyers in Florida and California who make mortgage down payments of less than 5%”
http://www.jsonline.com/story/index.aspx?id=694471
sounds like a tiny step in the right direction; still many steps to go before the easy money policies of the last 20 years are reigned in for good. And in Europe there is not even a sign of any lender moving in that direction, seems like they (and government) keep inventing new tricks to keep the party going.
Of all the players that should bear some responsibility for this mess. These guys are the ones who I think have messed up the most. It’s their job to see risk and increase premiums as risk rises.
IMO they should have been leaders in warning about bad loans and falling home prices.
As the government steps in to change contractual agreements between private parties, you will see more and more of this. What will happen when mortgage lending freezes up? Then the call for Fannie and Freddie to step in will happen. They will also buy the “junk” mortgages from Countrywide and then you will see BILLIONS in writedowns from Freddie and Fannie. Who will pick up the tab? The taxpayer.
What will Countrywide then do? They will make garbage loans again and sell them off to Freddie when they do not perform. Freddie and Fannie will book the losses and Countrywide will book the profits.
Tom you are assuming that buyers will step up to the plate again.
The reason why we are in this mess is that anyone that wanted a home bought one. It was a blow off top, so to speak.
Sure there are buyers but no where near as many as there were before. The mortgages that were used to get people in houses are alot more difficult to get.
yes, I expect something like that - also in Europe. Unless WallStreet starts fighting this rewriting of the mortgage rules, but I don’t think they have a problem with the current ’solution’. These are all tricks to keep the debt party going as long as possible, it will prolong the downturn by many years and make the problem even bigger. Not good.
Fannie Mae Plan to Raise Housing Finance Costs Highlights Need for Congressional Action
http://www.reuters.com/article/pressRelease/idUS185342+07-Dec-2007+PRN20071207
Wonderful… Fannie is trying to ward off bankruptcy by charging an extra 1/4% and the home builders object.
“This is no time for Fannie Mae’s business interests to take precedence over its mission responsibility.”
Isn’t the NAHB saying, “I don’t give a damn if Fannie goes belly up, as long as we can sell this pig?”
Wonderful, wonderful, wonderful. Everyone’s out for themselves. Let’s see - if Fannie and Freddie were to go belly up who would buy the mortgages on homes the builders want to sell? Talk about cutting off your nose to spite your face.
Fannie’s mission = help to keep housing prices propped up at unaffordable levels in order to save its share holders?
And the tax payer will bailout Fannie of course. Why? Because of their mission statement which is keeping housing unaffordable for the average American.
“This is no time for Fannie Mae’s business interests to take precedence over its mission responsibility.”
Shut the f— up Mister NAHB. The complete lack of integrity in the housing industry, from top to bottom, should be obvious for all to see by now. Nearly everybody that makes their living from housing has proven to view the laws of this nation as just a minor inconvenience. We need to start over.
The REIC lied, lied and lied again about real estate “always going up,” and now that the crash is in full swing, they are pretending that they saw it all along plus going with hat in hand to the govt pandering for taxpayer-funded bailouts. THIS IS DISGUSTING!
‘ The REIC lied, lied and lied again about real estate “always going up,” ‘
The sobering point is that if you or I or anyone else here lied on our job and got caught, there are good chances our reputation and/or job may be nullified. I may just open my yap next time I hear someone say they sell houses as a used house salesperson. And I am given grief because someone thinks I am trying to scam them for a $10 commission?
Tom you are assuming that buyers are going to step up to the plate again. The reason why we are in this mess is people stopped buying. We had a blow off top, so anyone who ever wanted a house bought in fear they would not be able to do so in the future.
Its more difficult to get a mortgage now as well, so those that do want to own will have to show up with some money and a good credit score.
Well we would “THINK” that to be the case but there is talk of lowering the limits for FHA loans. This now means the gov’t backs the loan if it goes bad while Countrywide and others get to book all the profit. Where is the risk? On the taxpayer of course.
Exactly, Tom!
Exactly, but you have to understand - Paulson says this will not be a bailout.
Opps…. that was yesterday.
A rose by another name…
It’s a “Not Paulson Bailout” by the WSJ’s name.
Now that Rupert Murdoch bought the WSJ, it will just become another Spin Machine. It will lose credibility.
Ben may have to start his own news business, as soon only blogs will have cred.
The WSJ has been a “spin machine” for a long time already. Especially its editorial board.
We are pretty close to that now. AFAIC The Wa Post, NY Time, LA Times, WSJ etc already have little credibility not to mention ABC, CBS, CNN, Fox et al. They are merely mouthpieces and advertisers.
I just wanted to give a little DC insight on the bail out announcement from this week. Now I am hardly a DC insider, but I can see politics affect things at work on occasion.
Oddly enough, the immediate pressure of politics doesn’t usually change much of the substance of what happens (remember I am not in the legislative branch - that may be much different). When a scandal broke in the papers about something that my office regulates, we didn’t completely shift gears. We went back to see if what we already had in the pipeline would help. We documented how it would help. And believe me, a bit of what we were planning got into some higher level speeches than it otherwise would have.
You have to look at what was announced in this light. There was already pressure on the lenders/investors to allow modification of loans to prevent some foreclosures. It was a little political and a lot public opinion. They needed to do at least a little so they would have something to announce to the public to not look like complete bastards. And they needed to do something to keep a law from being passed. Even a law being written up and proposed would have cost them a small fortune in lobbying fees to kill, so cutting this off at the pass was important.
I am sure the administration wanted to keep anything from happening in Congress too. Proposing a small compromise and declaring it a solution to a big problem is something this administration has done before (think stem cell research) and it worked for them. Also, this president is a little obsessed with symbols of leadership.
So, you have private companies planning to allow a few workouts on a piecemeal basis anyway, an administration that wants to “lead” but also wants to cut off the chance of a really big proposal from Congress.
Enter Secretary Paulson.
He puts together a coalition of lenders and tells them to hash out the standards they would be willing to implement for stalling on ARM resets. Exactly what they would have been doing on their own anyway, but all together so no one gets dinged for not doing as much as the next guy. They hash it out a bit quicker than they otherwise would have. And Paulson gets the credit. The president makes the official announcement, but he is really very distanced from this. It has all been sold as Paulson’s doing. I’m sure it was. But if it was something that everyone loved, the president would have been seen as closer to it.
Because they all had to agree to it, I bet this is a little less generous to the FBs than some of them would have come up with themselves (more generous than others), though it is probably happening more quickly than they would have managed. I don’t see this as the start of some avalanche of more and more help for FBs. This is about all they are going to get under this administration. A democratic president and congress might have tried to do more, but they would have found it very difficult to pull it off - pay as you go being the biggest block and they are very fond of that since it distances them from the current administration.
And the negative reaction that a lot of the media is reporting isn’t going to inspire any more big efforts.
Just trying to calm down some of the frazzled nerves around here.
That’s how things happen in the TX legislature too and probably all the other states too. Thanks for taking the time to write that out.
Very good insight, thanks. I can tell you from talking to a couple of buddies who aren’t involved in the bubble, just regular folks, there is a preception that something is being done, so Mission Accomplished. They don’t like even the perception. Folks who try to play by the rules and be prudent even in the face of a mania find small comfort in even the appearance of help for people who shouldn’t have gotten a mortgage in the first place.
Every day I would guess there are about another 1,000 homes that slide into the foreclosure process. That estimate might be low. It might be high. But every day that the parlor game goes on there are a lot of houses going under. This thing is taking care of itself as we all debate, fret and get angry.
Polly has pointed out what takes place behind the scenes. When the government is stalling they are probably at their best. While the bureaucrats and big business sleazeballs negotiate, Mister Market is busy at work. He will take care of these problems with or without their approval.
But it is also a way for them to get super cheap interest rates too.
Hope springs eternal, especially when the hopeful believe a Higher Power (in this case, the guvmnt) will look out for them.
It’s all about keeping the hope alive among the ranks of the FBs so the FBs will take any steps necessary to keep the money flowing into the System.
Not that I’m complaining (nor should any of us) for the FBs continuing mortgage payments will dampen the rate of price decline and thus help prevent a crash.
And just to chime in on the larger objection, taxpayer bailout, the U.S. is technically bankrupt and is unable to pay off the debt it has already accumulated. There is no need to worry about piling on further debt as the dollar is a dead man walking as it is and the country is completely incapable of paying off that debt. With a soon to total 10 Trillion in debt and absolutely no political will from either party to seriously address/curtail spending which now totals an annual deficit approaching 1 trillion (which means we would have to cut almost a trillion in spending just to get to where the country would ONLY owe about 10 trillion), any further piling on of debt from a bailout isn’t going to matter one bit other than bringing us to the scene of the crash that much faster.
It there really a difference in writing off say a 100K Bankruptcy as opposed to a 120K Bankruptcy other than perhaps the level of fun the debtor had while running up the tab?
Sorry to keep bringing it up but I just find it somewhat amusing that collectively we just don’t “get it” when it comes to where this country sits financially.
I am against assisting the financially insane with some mandated federal program that rewards their gamble on RE. I just don’t think it’ll ever matter with regard to someone actually paying for it other than perhaps a quicker decline in the purchasing power of the dollars we are stuck with as legal tender.
the US doesn’t get it but apparently the US creditors still don’t get it either. FB’s on every level, and as long as nobody notices that the situation is unsustainable the FB’s have a heck of a time - both as an individual and as a country.
I think US creditors ARE getting it.
Foreign Banks and investment institutions are finding their AAA investments are in fact, high risk afterall. It’s taken down at least 2 German banks.
Along with losses, goes the reputation of US debt investments. The dollar weakness is also a factor is why US investments are unattractive : Any apparent % return is wiped out by the falling dollar.
The stories of investments impacting local communities grows daily : Witness this one in Norway. http://www.bloomberg.com/apps/news?pid=20601109&sid=a9qUgYWKwSWI&refer=home
“Safe as houses” is an oxymoron.
Krugman summarizes it very well: http://www.nytimes.com/2007/12/03/opinion/03krugman.html?n=Top/Opinion/Editorials and Op-Ed/Op-Ed/Columnists/Paul Krugman
“How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world.
This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created.”
I don’t know why PK thinks the situation is so dire? I see nothing that a little Superfund SIV can’t fix by transferring Wall Street’s massive losses on to the U.S. Treasury’s balance sheet.
“…transferring Wall Street’s massive losses on to the U.S. Treasury’s balance sheet.”
Perhaps this is a bit unfair, as no losses need ever be realized once the SIVs go into the cryogenic holding tank of the Superfund SIV.
PK: “The bottom line is that policy makers left the financial industry free to innovate — and what it did was to innovate itself, and the rest of us, into a big, nasty mess.”
That about sums it up.
It is all about perception, isn’t it?
Mr. Paulson has proposed allowing Municipals to bail out the FBs, expanding FHA authority to go above 100% LTVs, increasing Freddie Mac funding limits. This is not a one and its done action.
I was wondering about that, Hoz. If maybe this wasn’t sort of a mild, “acceptable” first step to greater socialization of the losses. I really can’t stand this Paulson guy. He looks like a total psycho to me, but then again, I haven’t heard him speak, I’ve just seen photos and silent video of the guy. But I’ve seen some of his work and it would seem to confirm my impression. Back when he was being proposed for Treasury Secretary, some folks I know who work in NYC were hyperventilating about what a great choice he was and how he’d be able to keep Bush in line and how he was doing us all a “favor” by taking the job because he certainly didn’t need the money. But, one friend said his job was to “manage the falling dollar”. And also to negotiate with China. Now, when this was said, it was before Paulson was Treasury Secretary. That was a pretty weird thing to say, but the guy who said it works for a hedge fund.
I think Paulson’s PR was way overblown. He might might a good Wall Street thug, but he stinks out loud as Treasury Secretary.
Those are the real bailouts. FHASecure plans to make billions (about 50 billion, I guesstimate) of mortgage loan on equities as low as 3% (no doubt with tweaked appraisals too) which means the taxpayers, not the original scam loan buyers, will take the hit when the homeowners move or give up and the house value falls short of the loan value. With a 6% commission and a 3% down, collateral is inadequate from the word go.
http://www.hud.gov/news/release.cfm?content=pr07-123.cfm
http://www.fha.gov/press/2007-12-03release.cfm
I find it interesting that there’s so much whining about the rate freeze, which won’t cost the taxpayer one penny and certainly doesn’t qualify as a “bailout”, yet scarcely a peep when the feds really *are* bailing out the crooked lenders.
BS on the plan not costing the tax payers a penny!
It is just that the relationship between the MBS/CDO problem and the effect of freezing 240,000 loans has been ignored by most media. Since $300B in worthless CDOs are being transferred to the MLEC, the government will ultimately be the responsible party. We get to pay for the losses.
If the housing market continues to go down, the freeze will cost the US taxpayers ~$240B. If the housing market stays at the same prices, the loss is only $100B, if housing prices go up 10% there is no loss. This is a bailout of the banks and the potential losses have been shifted to the treasury which is still part of the government.
Hoz —
Glad some posters here are experts in seeing through the smoke and mirrors of stealth financial engineering. Many thanks!
Hoz kind of left us hanging there with the bit about shifting losses on to the Treasury Dept’s balance sheet. Where do they go from there?
One potential strategy: Provide ample liquidity to make sure the stock market always goes up. Owners of corporate assets get to keep the real wealth and savers get to pay the taxes out of their steadily-devaluing paper. Sounds like a plan.
‘Owners of corporate assets get to keep the real wealth ‘
Maybe they can get dividends and stock options but in the long run who is gonna repair the physical plants and change your implants? If you are gonna tell me it is those that will work for reduced standards of living then I would say that you are probably looking in the right direction.
100 billion? Where on earth are you getting that number? For starters, the investors will be better off under this rate freeze because they’ll get some money from the freezees rather than the none they’ll get without. Second, many of the CDOs are owned by foreigners and hedge funds and they’re not going to get bailed out by the MLEC (if it even happens). Third, I doubt the entire value of the loans in question is 100 billion - and there’s certainly nothing even possible to lose that much. No mod will wipe out everything, and much of that value (probably 40%+) is already doomed anyway.
“This is not a one and its done action.”
Make no mistake, a new front in the War on Savers was just opened, which explains the big pop in REIC corporate share prices last week. (Happy to add note it quickly fizzled for the GSEs, though…)
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TOL&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=3&freq=7&startdate=&enddate=&hiddenTrue=&comp=kbh+bzh+len+cfc+fre+fnm&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
You may need to hit the “Draw Chart” button a couple of times to get the chart I posted to show up…
gov never helps anything, never has never will
the bubble was their attempt to “help” the 5% that didn’t own homes get them on the cheap
“to see if what we already had in the pipeline would help. We documented how it would help.”
i agree with polly’s analysis. i think this is extremely weak tea ‘bailout’ is more designed to mollify the whiners than to preface a bigger bailout.
if we get a democratic congress and president in ‘08, though, all bets are off.
as far as ‘pay as you go’ is concerned, the senate just approved the extension of the deferral of implementing the alternative minimum tax — without balancing the $50 billion this will supposedly cost the gubmint by concommitant spending cuts or tax increases on higher earners/corporation.
so much for the democrats ‘pay-go’ promises.
imo, the best we can hope for (and possibly of all possible worlds) in ‘08 is a republican president and a democratic congress. there’s a lot to be said for ‘gridlock’ of divided government, as it practically translates into reduced spending — and taxing — of the middle class.
The Dems virtually all voted for the paygo version. They just couldn’t get it past a Republican filibuster. If you want financially responsible government, you need to kick out another 9 Republican Senators so they can’t filibuster.
Any attempt to prolong the agony of the present system should be fought tooth and nail. I support the profligate spending of the useless Bush administration because it crashes this system faster. A monetary system that requires an ever-increasing level of debt to properly function is illegitimate both constitutionally and from a sustainability standpoint. In the long run we are apparently NOT “all dead” as keynes would have us believe, so now we need to rethink what monetary system we are going to use to conduct commerce as we approach the end of the useful life of the current model. I am for one that limits the ability of bankers and politicians to debase the purchasing power of said currency, so is Ron Paul. This system also has the added benefit of already existing within the framework of our constitution, if only we could get our elected leaders to read and follow it.
Well said, we don’t have to reinvent the wheel. It has all been figured out for us. we just have to take back our Country from the bankers!!
Ron Paul 2008
Nice response Auger. My eyes glazed over when I read Fair’s comment and all I could think was moron (see below). So sorry, lack of self control since childhood.
FairEconomist,
Dear friend, Maybe you’re young and don’t know the history of our country. IMO neither party is financially responsible, but the Dems are worse.
Q: Which Political Party took Social Security from the
Independent “Trust Fund” and put it into the
General fund so that Congress could spend it?
A: It was Lyndon Johnson and the Democrat
controlled House and Senate.
——————————————————————–
Q: Which Political Party eliminated the income tax
deduction for Social Security (FICA) withholding?
A: The Democrat Party.
———————————————————————–
Q: Which Political Party started taxing Social
Security annuities?
A: The Democratic Party, with Al Gore casting the
“tie-breaking” deciding vote as President of the
Senate, while he was Vice President of the US
——————————————————————-
Q: Which Political Party decided to start giving
Annuity payments to immigrants?
A: That’s right! Jimmy Carter and the Democrat Party.
Immigrants moved into this country, and at age 65,
began to receive Social Security payments!
The Democrat Party gave these payments to them,
even though they never paid a dime into it!
Lip
Maybe in the past. But in the present, Dems vote to reduce deficits and Republicans vote to increase them. We’ve had more “credit card economics” than we can afford already. And as long as Republicans can filibuster Dem efforts to cut the deficit, we’ll continue to have credit card economics.
Just make sure that the Republican Senators that get kicked out are the liberal Senators. Replace them with true Conservative Democrats like um, a, er well you know who they are.
I can’t understand why people argue about Democrats and Republicans without discussing liberal vs. conservative. IMO there are very few conservative politicians in the Republicans party and virtually none in the Democratic party. That is why we are in the situation we are today. Looking for political solutions by a bunch of self serving liberals who like to call themselves moderates.
Actually if we could purge the Republican party of the burning in eternal oil snake shakers, we might return to a little sanity to our govt.
If you want financially responsible government, you need to kick out another 9 Republican Senators so they can’t filibuster.
Do you honestly believe that? “financially responsible government”
“If you want financially responsible government”
Controlled by dems??? Are you a complete moron?
The Dems vote consistently for a balanced (well, less unbalanced) budget. The Republicans vote consistently for every-larger deficits. We can’t afford any more of their “credit card” economics. It’s bad when individuals do it and worse when governments do.
Thanks Polly. It helps put the pieces in place.
In a related item (and an example of the law of unintended consequences), the pseudo-bailout announcement has the effect of telling FBs that they should stop paying their bills:
http://tinyurl.com/2mxbe4
“But if it was something that everyone loved, the president would have been seen as closer to it.”
Success has many fathers, but failure is an orphan.
Yep. A foreclosure storm is coming. They know it cannot be stopped. As a result of all the hand wringing, however, they’ve got to mill around and act like they are doing something.
Nevertheless, it’s a milestone for long time hb watchers. After years of denying the hb’s existence, the PTB must now address its fallout.
The carnage continues…
Slowing Job Growth Seen as Ominous Sign for Economy
By PETER S. GOODMAN and MICHAEL M. GRYNBAUM
New York Times
Published: December 8, 2007
http://www.nytimes.com/2007/12/08/business/08econ.html
The nation gained a modest 94,000 jobs in November, the Labor Department reported yesterday, pulling back considerably from the previous month in the clearest sign yet that the American economy was headed for a substantial slowdown.
The Labor Picture in November But the jobs report, a much-anticipated indicator of the health of the economy, also provided some comfort that the United States had not slipped into a recession and might not be weakening as rapidly as some experts feared. With business leaders expressing uncertainty about the prospects for further growth, analysts said, a better view of the direction of the economy was not likely to emerge until next year.
“The expansion is intact, but increasingly frayed,” said Mark Zandi, chief economist at Moody’s Economy.com. The job creation numbers are “indicative of a very fragile economy that will come undone unless conditions improve soon.”
The unemployment rate held steady at 4.7 percent for the third consecutive month, as a survey of households found strong growth in the number of people saying they found new jobs last month.
On Wall Street, markets barely moved yesterday, absorbing the jobs data with ambivalence. The employment picture offered assurance that the economy was not plummeting and might continue to expand, sustaining corporate profits. But those very assurances sowed worry that the Federal Reserve would feel less pressure to ease interest rates aggressively when it convened on Tuesday.
I read an interesting article posted either from here or from yahoo’s homebuilder message boards. It was from another blogger who says Pay option loans are the next shoe to drop. They literally allow a buyer to purchase a million dollar home for just a couple thousand a month. It doesnt reset until the value of the home is 125% of the purchase price ( or was it market value?). In any event these loans are not covered by the bush plan and they were rated AAA because they were purchased with people with high credit scores. Here is the article, http://www.blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
It was snowing here in Rhode Island so I dont think I can give a fair assessment on shopping. However, it was slower but I think that is to be expected after the large run on retailers on black friday.
We leased a new CX-9, if anyone is in the market for a nice SUV this is it. I’ve owned the Acura MDX which was a nice car, and I’ve test drove the X-5 many times wanting to justify the cost, but I’ll tell you this very luxurious SUV is very impressive and has many of the features the X-5 has, and some that are missing like touch screen navigation.
I went with a 2 year lease that includes all taxes. Just in case the crap hits the fan, I want a nice easy escape route, thats easy to pay off. LOL
I know one pay option loan from Washington Mutual minimum payment 1,355 interest only 1,964.10 30 year 2,189.67 the minimum has been made for over two years
I know one pay option loan from Washington mutual minimum 1,355.09 interest only 1,964.10 full 30 year payment 2,189.67 the minimum has been made for over two years
My brother is a loan broker in Orange County CA.
He put plenty of people in pay option loans and they were not AAA. Most of these folks could only afford the minimun payment and were counting on the refi down the road.
And as for the ‘Serial Refier’s’ - he made a sweet living off of those clowns.
and you’re proud of what your brother did?
China Tells Banks to Raise Reserves to Cool Economy
By Nipa Piboontanasawat and Li Yanping
Dec. 8 (Bloomberg) — China ordered banks to increase reserves by the most in four years to try to prevent the world’s fastest-growing major economy from overheating.
Lenders must put aside 14.5 percent of deposits as reserves, starting Dec. 25, up from the previous 13.5 percent, the People’s Bank of China said today on its Web site. The ratio is the highest since at least 1987 when the data began and the increase is twice as much as the nine others this year.
The decision comes before a visit to Beijing next week by U.S. Treasury Secretary Henry Paulson, who said Dec. 5 that China’s government should allow the yuan to appreciate at a faster pace to reduce the nation’s record trade surplus. China’s surging exports are pumping cash into the financial system, fueling inflation and concern the economy will overheat.
The larger-than-usual increase “reflects the urgency of inflation concerns of the government,” said Liang Hong, an economist at Goldman Sachs Group Inc. in Hong Kong. “The move will help strengthen the credibility of the central bank and anchor inflationary expectations.”
This could be called: “The Long & Short of it”… or … “familiarity breeds contempt” ?
“…it appeared that Goldman Sachs was “aggressively pushing subprime mortgages that they knew to be of concern while simultaneously shorting collateralized mortgage obligations.”
a Goldman Sachs spokesman told the newspaper it “routinely shorts the securities it underwrites and said that this is disclosed.”
“…about the activities of Goldman Sachs in reportedly selling collateralized mortgage obligations (CMOs) while Paulson led the Wall Street firm.”
http://www.reuters.com/article/politicsNews/idUSN0452668520071204
Are Paulson & Goldman Sachs “Virtual represenatives’? …I ask because it seems like they “Know Nothing” about the “America” I live in each day.
“No taxation without representation”
The point was that the colonies had no representation in Parliament; the British responded that they were “virtually” represented. The Americans said these “virtual representatives” knew nothing about America
http://en.wikipedia.org/wiki/No_taxation_without_representation
I see Paulson as the Treasury equivalent of Alberto Gonzales. God help all, every day this administration is still in power is another day of agony and decline for the US.
That’s not all Goldman is pushing Hwy. They are a menace!
On Thursday November 22, one UK spread betting company had two reasons to celebrate. Not only had it just carried out its 50 millionth trade in eight years but it had also announced that one of the world’s leading investment banks was taking a 10 per cent stake in its business, and becoming a strategic partner “to grow the business over the coming years”. The spread betting firm was CMC Markets. The investment bank was Goldman Sachs (NYSE:GS). And the two announcements were no coincidence.
http://news.yahoo.com/s/ft/20071207/bs_ft/fto120720070043587199;_ylt=AhH.Wh_Io2ztl71I4m7O1I_2ULEF
What is spead betting?
http://www.bullbearings.co.uk/spread.betting.guide.php
Leigh
Tampa Bay Lightning!
http://www.sptimes.com/2007/12/08/Business/Call_it_mortgage_ligh.shtml
“Torching your house may not be a perfect solution,” Quiggle said. “But people think it gets them closer to solvency. It beats bankruptcy or foreclosure and a destruction of your credit rating.”
Can you believe this freakin’ article? It beats destorying your credit rating? Breaking the law and endangering lives is better than losing your FICO??
WTF!!!!!!!!!!??????
My FICO has done alright without arson. God Bless ‘Merika.
Ok, I read through that too fast. The guy interviewed is talking aloud the thought process of the FB’s. Still…
even after your warning, the comments still seemed kinda spooky.. neither of the words “perfect” or “solution” should have been used, much less both of them.
But it gives people “IDEAS”
Exactly Tom. The same folks who couldn’t think through the ramifications of a pay option mortgage or some other toxic loan are now going to practice critical thought concerning the pros & cons of torching their house? They are going to take away that this is a good idea and act accordingly, imo.
Sorry for the duplicate posts. For some reason my Safari browser doesnt work well with this blog. I’ve switched over to Netscape and now I can see all the duplicate posts. UGGGGG Sorry
States’ investment strategies being scrutinized because, oh my, civil servants might have to suffer along with everyone else.
http://news.yahoo.com/s/ap/20071208/ap_on_bi_ge/wall___main
you can cut the pay of gov workers by 10% and none will quit- the private sector scare the sht out of them- people actually get fired !
The ad at the top of the HBB that I see is for this building.
http://www.solariariverdale.com/?gclid=CLKR5qbtmJACFSG8GgoddF_N7w
The amount of condos they have built in Riverdale is overwhelming. The only question that comes to my mind is, “who will buy all of these?” The bubble had a long reach. This is shadow inventory for Manhattan. Riverdale better pray for foreigners.
test
Good Morning Ms. Leigh et al,
We are stuck with a “Hope to be Remembered as a President”, a wonderful program designed to help only those that are so upside down on their houses that they would be better off walking (* LTV > 97% - Current loans with LTV greater than 97% are deemed to be ineligible for refinance under other products so would be deemed to be within Segment 2 [LTV/CLTV determined on information at origination; also if LTV is below 97%, servicer “may” obtain updated home value by AVM, etc.])
How many thought the program read Lower than 97% LTV? You are not eligible if you have equity. This is to stop bank losses.
CDOs are set up with various risk tranches. Because of the nature of the sale of these tranches, the originating institutions own most of the lower rated tranches. If there are moneys, The lower rated tranches are paid before senior tranches are paid. By refinancing and freezing the mopes for 5 years, delaying foreclosure, it reams the senior tranche holders that will then take the greatest loss. Cool, huh?
Most pension plans, 401Ks, money markets, foreign funds own senior tranches. (If the funds defaulted next month, the senior tranches would be paid first and the lower tranches get nothing. Of the 4 CDOs liquidated through default this week, senior tranches got 60%, lower tranches got nothing.)
Ok, Leigh now that the Super SIV formerly known as Prince MLEC is set up and funded. (A few very minor details to finish, but done before Christmas - alas). As I posted before just give the donation to the Salvation Army.
If there are moneys, The lower rated tranches are paid before senior tranches are paid.
moneys? Are you saying that if there is any interest or principal cash flow, junior tranches get it before the senior ones do?
Yes. The junior tranches get interest first if everything is fine, then up the ladder the payments go. In the event of default all remaining goes to senior tranches. This is going to kill the senior tranches, they will receive interest as scheduled, but when these default 5 years down the road (conveniently when many junior tranches are paid off)- they will receive less than if the default were to happen in 2 months.
probably Paulson has figured out that most of the senior tranches are owned by foreign pension funds. Most of these funds probably don’t even know yet (officially) that they own the crap … representatives of the biggest Dutch pension fund still say they don’t have any losses from the subprime fallout, despite the fact that they somehow have many billions invested in high yielding US mortgage debt paper.
If the trenches are set up the way above posts say they are ,than the loans can’t be tampered with because of the prejudice to different trenches . No wonder Paulson is sitting up FHA /Fannie/Freddie to make a new money loan and bail these trenches out .
I just had a thought , the investors filing lawsuits would freeze the trenches anyway .
err.. no.
Dang Hoz! I missed it! Going to look for it now…and not so fast Mister! Hubby and I want to pay up!
Smiles,
Leigh
BlackRock Named Manager of MLEC - Source
“BlackRock Inc was appointed on Friday by the three biggest U.S. banks as lead manager of a super fund that will buy assets from failing investment vehicles as a way to ease the turmoil in credit markets….”
Reuters
http://tinyurl.com/2p3uz7
Is BlackRock Inc part of the CIC’s Working Group? I can’t keep up with these corporate ties…
“The fund will buy assets from structured investment vehicles, or SIVs, which would otherwise be forced to dump their $300 billion of assets to repay debt….Besides those banks that want to see this bail them out of their problem, why would anyone else get involved except for fees?” Rosner said.
.
..New York-based Citigroup manages SIVs with $64.9 billion of debt whose ratings were reduced or put on review by Moody’s Investors Service on Nov. 30. Standard & Poor’s today cut rankings on capital notes of three Citigroup SIVs and 10 other funds. The New York-based rating firm also placed debt of 18 SIVs on negative outlook.
Bank of America, based in Charlotte, North Carolina, and New York-based JPMorgan both run money-market funds that own short-term debt issued by SIVs…”
Bloomberg
http://tinyurl.com/287jyg
Blackrock has Larry Fink. He recently turned down offers as CEO of Merrill and of Citigroup. He is the only hope I have that this will ‘only’ cost the taxpayers $100B. The fund is buying Citigroup’s,Bank of America’s and JP Morgans debt at BASEL II margins. It appears that a 20% swing is total default and a loss of $290B paid by $50B put up by the banks and $240B put up by tax dollars. I would rather be on the banks (and Goldman Sachs) side in getting out of the risk.
“$240B put up by tax dollars”
How will this be charged to taxpayers? I don’t recall hearing any announcement of a taxpayer-funded bailout to the tune of $240 bn.
They are not being transferred at dollar/dollar risk they are being transferred at Basel 2 margin. Every dollar lost has to be added. Essentially the exposure is $240B.
A slight of hand, a twist of the neck et voila.
I am pleased to announce that the signed Schiff book is in the mail to Atlanta Renter.
How many people have read it, Captain?
I didn’t count, but close to a dozen.
I’ve been racking my brains, wondering why Government, Industry and Investors would form a consensus on refinancing defaulting loans.
Well, here’s a 34 page PDF. Cleared things up in my muddle brain!
1 The American Securitization Forum is a broad-based professional forum of over 350 organizations that are active participants in the U.S. securitization market. Among other roles, ASF members act as insurers, investors, financial intermediaries and professional advisers working on securitization transactions. ASF’s mission includes building consensus, pursuing advocacy and delivering education on behalf of the securitization markets and its participants. This statement was developed principally in consultation with ASF’s Subprime Mortgage Finance Task Force and Loan Modifications Working Group, with input from other ASF members and committees. Additional information about the ASF, its members and activities may be found at ASF’s internet website, located at http://www.americansecuritization.com. ASF is an independent, adjunct forum of the Securities Industry and Financial Markets Association.
Warning: PDF
http://www.americansecuritization.com/uploadedFiles/FinalASFStatementonStreamlinedServicingProcedures.pdf
Leigh
Leigh — B-schools should develop a new major in stealth financial engineering, as there is obviously demand for those who can formulate govt programs to extract wealth from middle America to help prop up devalued assets of the ueber rich plus provide poverty relief for Rev Jackson’s clientele without ever raising a dime in taxes.
Ha! Right on P’Bear.
Did you peak at the file?
Leigh
bailout not using taxpayers $$ ?
how about the 170 million for councilors ?
I could do that job. I think I will apply.
- “You should have read the motherfarging documents you farging dumbshot.”
- “Two years ago you thought you were a genius and now you want a fruiting government farging bailout? Here’s 35 cents. Go call somebody that gives a farg.”
- “So you don’t have any income but you want taxpayers to buy you a motherfreaking house? Track down Jimmy Carter. That son-of-a-birch might do it for you.”
- “You are too stupid to live.”
I think I am perfectly qualified for the job.
I concur. But you think too little of yourself…someone has to be head counselor…think big. I also believe you could motivate the other counselors to do their best on the taxpayer’s dime.
good morning
i would like to start by apologizing to to the nyc area hbb’s for
not getting back to you guys regarding getting together, i got super busy working 7 days a week to pay for my penthouse in williamsburgh and my 4 latte a day habit and i phone
no really i have been working alot and kind of drifted off so for that i do apologize and if there is ever another chance to make it up and get together i would like the chance to redeem myself
now that i got that off my chest on to the state of affairs
what a week with this pseudo bailout crap and the holidays in full swing. i have to admit my living situation is getting to me
i have a large 3 bedroom in queens for just me, my wife and my dog and i would like to get into a place of my own.
the thought of moving is not a pleasent one but the thought of catching a falling knife is worse so we will wait
as for long island thanks but no thanks
no kids and no plans so no suburbs for us
i need to just relax and keep saving but my commute
is taking its toll at times, a lot less than a arm would though
ps- if anyone is in the city i will be working at bryant park
selling hot apple cider today after 1pm so come on down and
by a $3 cup the euro trash can’t get enough
(my family has the booth so i am helping out)
the americans share a cup the tourist do not hmmmmm
i wonder why.
if you are in midtown nyc it is hard to belive there is a recession
like atmosphere in this country, due to tourism no doubt
please accept my apology for flaking out
nycboy-adjcnyc and whoever else it may concern
peace and happy holidays to all
How many of 1.2m FBs facing resets will qualify for a teaser freezer? One FT reporter stated an estimate of 90,000; does that sound about right?
(Reminds me of the Million Man March, which aerial photos subsequently revealed to be more of a 200,000 Man March…)
P.S. I believe I posted a link to this story in yesterday’s bits bucket if you need corroboration…
Plastic surgeons are expressing concerns that the mortgage lending crisis is putting a dent in their business. Since when does a boob job qualify as home improvement? Could I put those breast implants on the thirty-year payment plan, please?
Evidence Grows That Consumers Are Pulling Back
By Rhonda L. Rundle and Kelly Evans
Word Count: 1,369 | Companies Featured in This Article: Mentor, Cutera, General Electric
The latest sign that growth in consumer spending, the mainstay of the U.S. economy, is slowing? A nip and tuck in spending on cosmetic surgery.
The slowdown was a hot topic at the meeting of the American Society of Plastic Surgeons in Baltimore this fall. One breast-implant maker sees hints of a slowdown in demand. The number of vision-correction surgeries appears to be falling as well. ” This whole mortgage credit crisis is making people think twice,” said J. Peter Rubin, a Pittsburgh plastic surgeon. “It’s something I’ve noticed and some colleagues have noticed as well.”
http://online.wsj.com/article/SB119707327901017729.html?mod=todays_us_nonsub_page_one
dow cornings deflation.
saggage
It is starting to look like Arizona’s new law punishing businesses that hire illegal aliens will actually take effect on January 1st, 2008. I sure hope so.
http://www.azcentral.com/news/articles/1208sanctionsruling1208.html
AnonyRuss,
On Friday I went to a luncheon where the new law was discussed. On it’s way to limiting the ability of an illegal to gain employment, it will also cause almost every business to contact a law firm. Absolutely Every One!
Why? Because it’s excessively complex and “good faith” attempts to comply do not absolve you of the law or it’s penalties.
So as in many instances when our legislators enact new laws, lawyers are the one that’ll benefit the most.
You have been misinformed. Who sponsored/spoke at this luncheon?
Using E-Verify to screen job applicants provides a safe harbor for employers under the Arizona law.
So, an E-Verify account will be needed. I can live with businesses having to spend some dollars to re-claim our country.
AnonyRuss,
The lawyer who spoke was Julie A Pace, partner at Ballard Spahr Andrews & Ingersoll, LLP, and she spoke at an ASSE meeting.
She spent some time on the fact that E-Verify doesn’t completely absolve the companies of wrongdoing and she quoted an example in the Swift Meat Packing company.
Apparently Swift went “too far” trying to verify the employee’s work eligibility and got sued by the Dept of Justice for $2,500,000. They settled out of court for $200,000.
Then ICE raided 6 of their production facilities and arrested 1,283 employees who were using false documents. This cost Swift about $30,000,000 in lost production and loss of employees.
So on one hand they’re trying too hard and got sued. On the other hand they weren’t doing a good enough job and they lost again. In other words, they’re damned if they do and they’re damned if they don’t, which makes it a lawyers holiday where they get to collect fees either one way or the other.
AR, I must confess that since she’s a lawyer maybe it was self serving to portrait this law in this manner, but as a type of consultant to small businesses, I came away with the thought that I’m not prepared to help anyone because they can (and some will) get fined, get sued, and loose their business licenses.
The ends don’t always justify the means.
“The lawyer who spoke was Julie A Pace, partner at Ballard Spahr Andrews & Ingersoll, LLP, and she spoke at an ASSE meeting.”
It is 11:59 pm Arizona time, so who knows if this will be read, but I just want to state an obvious point. Julie Pace is not just “a” lawyer, she is one of the principal attorneys representing the business interests that sued to prevent the Arizona employer sanctions law from taking effect. She was one of those whose case just failed in federal court in my first link. Out of every member of the Arizona bar, she has one of the biggest agendas when it comes to this issue. I would seek a more practical source for guidance.
I have actually read the law, and while legislation and legislators are rarely perfect (especially with legislative salaries of $24K/year), using E-Verify does provide safe harbor. If you use it to screen applicants, you are covered. You will not be sued for obeying state law.
One can certainly be liable for hiring an illegal alien if there is evidence to prove that a person knew that he was hiring an illegal. If you manage to successfully run someone through E-Verify and then brag to a bunch of people that you just picked the guy up in Nogales, that would overcome the rebuttable presumption that you did not intentionally employ an unauthorized alien.
I made a longer comment that may have been lost, but I just want to clarify one thing. Julie Pace is not just “a” lawyer, she was one of the principal attorneys who represented the business interests trying to overturn the employer sanctions law. She was one of those who lost their challenge in federal court because of ripeness and other procedural issues. She has an agenda, like many folks do, but is probably not the best source for practical legal advice on this matter.
OT — there is a really fugly caricature of HC trying to climb the presidential ladder on the front page of today’s WSJ. Be sure to take a look at it if you are near a news stand today…
Imagine our financial majordomo telling us to spend less on xmas?
“Reserve Bank governor Alan Bollard at the end of yesterday’s quarterly briefing on the economy, jokingly wished everybody “a very happy and cautious spending Christmas”.”
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10481176
Bush plan may spur mortgage proposals
Analysts see jump-start for Congress’ stalled bills
By Alan Zibel
ASSOCIATED PRESS
December 8, 2007
WASHINGTON – Legislative efforts to address the housing crisis were overshadowed this week – but not stymied – by the Bush administration’s promotion of an interest-rate freeze for some borrowers.
Analysts say the Bush plan, described by consumer groups and industry experts as limited in scope, will spur the Democratic-led Congress to more aggressively push proposals that have stalled, including bills that would tighten lending standards and help bankrupt Americans keep their homes.
Sen. Christopher Dodd, D-Conn., is expected to introduce a long-awaited bill next week that is aimed at cracking down on lending abuses.
The Bush administration may have inadvertently re-energized Congress on the housing crisis by overselling the plan, said Bert Ely, a banking consultant based in Alexandria, Va., who is leery of government intervention.
“It’s highly likely that we’re going to hear a chorus of disappointment next spring,” Ely said of the Bush plan. He worries that more far-reaching action – such as a mandatory, rather than voluntary, freeze on interest rates – could cut investment in the U.S. mortgage market, causing a flare-up of the credit crunch that hurt investors around the world this summer and fall.
http://www.signonsandiego.com/uniontrib/20071208/news_1b8mortgage.html
Maybe this is why Bill Gross at PIMCO wants the FED to lower rates to 3% ?
“The value of futures contracts held this month by hedge funds and traders betting against the $ was a record $33.9 billion more than contracts that profit from a gain. Pacific Investment Management Co., which oversees the world’s biggest managed bond fund, is selling dollars against the Brazil Real, Mexican Peso, Korean Won, and Singapore $. “When we think about currencies on a three-to-five-year basis we’re very bullish on emerging markets versus the U.S. dollar,” said Pimco. “That view is only reinforced when you look at interest-rate differentials.”
http://www.larouchepub.com/pr/2007/071203moodys_sivs.html
Moody’s says $105 Billion in SIVs are “Worth Less.” Removing the space would make the title more factually correct.
4.7 percent and holding. Is it typical for the UE rate to level off on a permanently slightly-higher plateau after sharply increasing off a low base for the preceding 1/2 year?
In a word, NO.
And does “the economy” really “fight” to do anything on its own? Interesting word choice there…
Unemployment rate holding steady, helping economy weather housing, credit storms
By Jeannine Aversa
ASSOCIATED PRESS
11:38 a.m. December 7, 2007
WASHINGTON – Employers hired at a moderate pace in November and the unemployment rate held steady at a relatively low 4.7 percent, reassuring signs for an economy that is fighting to avoid a recession.
http://www.signonsandiego.com/news/business/20071207-1138-economy.html
Puzzling last paragraph in p A2 WSJ story from yesterday:
Home Foreclosures Surge to a New High
By SUDEEP REDDY
…
The Fed also said borrowing to banks at its discount window surged over the past week. Discount-window loans jumped to $2,100 million through Wednesday, up from $8 million a week earlier.
Is that large a weekly jump in discount window borrowing normal?
Unemployment LOW……you got to be kidding me!
———————————————————
Levitz closing stores, discounting inventory
By Clint Swett - cswett@sacbee.com
Published 5:26 pm PST Friday, December 7, 2007
Levitz Furniture, the troubled home furnishings retailer that filed for bankruptcy protection last month, is closing all 76 of its stores nationwide, including two retail outlets and a distribution warehouse in Sacramento.
The New York-based company began a liquidation sale at all it stores Thursday.
It’s unclear how many people work at the Sacramento-area stores, but other Levitz stores typically employ 15 to 20 workers.
Employees at the store’s North Highlands and south Sacramento locations referred questions to Levitz’s corporate offices in Manhattan. Officials there did not return calls seeking comment.
The liquidation was launched after a bankruptcy judge last Monday approved the sale of PLVTZ Inc., which does business as Levitz Furniture, to a group of bidders for $57.6 million.
Richard Kaye, a spokesman for Hilco Merchant Resources, one of the winning bidders and the company handling the liquidation, said stores were expected to close after the merchandise was sold - which typically takes eight to 12 weeks.
Prices for furniture are discounted 20 to 50 percent, he said.
You gotta love it…
Pop quiz:
Which country’s housing prices are deflating the fastest?
1. Germany’s
2. Japan’s
3. UK’s
4. USA’s
http://economist.com/finance/displaystory.cfm?story_id=10258987
Soon-to-be-debunked decoupling theory…
This divergence in global housing market trends is welcome support for the theory of “decoupling”, the idea that the fates of the world’s economies are less tied to America than they once were. It is not just emerging markets that are following a different path. In Australia and Sweden, where house prices are still rising rapidly, central banks raised their benchmark interest rates even after the Federal Reserve started to cut rates in America. But in much of the rich world, house prices have moved in tandem over the past decade. Now that America’s housing market is so poorly, the fear of infection elsewhere is spreading like a bad case of the flu.
Risk management
Put out
Dec 6th 2007
From The Economist print edition
The risks posed by CDOs should have been familiar to Wall Street’s finest
HOW did bankers so misunderstand their own creations? The Frankensteins of Wall Street thought they had protected themselves from harm by holding only the safest slices of collateralised-debt obligations (CDOs), enticingly known as “super senior” tranches, while selling the riskier bits to other investors. A report issued this week by JPMorgan, an investment bank, estimated that banks alone held around $216 billion worth of super senior tranches of CDOs backed by assets such as mortgages and issued over the past two years. It now expects losses on these tranches to be “immense”.
http://economist.com/finance/displaystory.cfm?story_id=10259167