Battered Housing Market On The Verge Of Stabilizing
Some housing bubble news from Wall Street and Washington. “The Pending Home Sales Index…remained 18.4 percent below the October 2006 index of 106.8 The PHSI in the Northeast is 11.1 percent below a year ago. In the West, the index is 16.9 percent lower than October 2006. The index in the Midwest is 11.7 percent below a year ago. In the South, the index is 25.3 percent below October 2006.”
“New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million 2006; no sustained improvement is seen for new homes until 2009. Housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year.”
The Associated Press. “The trade group’s seasonally adjusted index of pending sales for existing homes (was) the third-largest year-over year decline on record.”
“The revised monthly forecast from the National Association of Realtors, which followed nine straight months of downward revisions, calls for U.S. existing home sales to fall 12.5 percent this year to 5.67 million,- the lowest level since 2002.”
“Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving.’”
The New York Times. “UBS became the latest Western bank to seek a financial lifeline from the cash-rich East today, selling a stake of more than 10 percent to investors from Singapore and the Middle East as it wrote down $10 billion more in mortgage-related assets.”
“The two investors — the Government of Singapore Investment Corporation and an unidentified Middle East investor — will inject $9.7 billion and $1.8 billion, respectively, into the troubled Swiss bank.”
“For UBS, said said David Williams, the head of banking research in London at (an) investment bank, it was an ‘interesting and depressing’ day. ‘Only a year ago,’ he noted, ‘this was considered one of the most financially sound institutions in the world.’”
From Business Week. “Lloyds TSB PLC said Monday that it was taking a $410.6 million hit from its exposure to the global credit crisis. The 201-million pound writedown came from an array of financial instruments affected by the crunch, including an 89 million pound ($181.8 million) exposure to mortgage-backed bonds and a 90 million pound ($183.8 million) exposure to Cancara, a ‘conduit’ company used to raise short-term funds.”
“A further 22 million pounds ($44.9 million) was lost on structured investment vehicles, or SIVs.”
Dow Jones Newswires. “French bank Societe Generale SA on Monday said it will bail out an $4.3 billion investment fund it owns that was hit by the global credit turmoil. The move by France’s second-largest bank by market value, to take this fund, a structured investment vehicle or SIV, onto its own balance sheet underscores still deteriorating liquidity conditions in credit markets.”
“As of Nov. 30, PACE had a total asset size of $4.3 billion and is composed of 75% of Moody’s Aaa rated assets, 13% rated Aa, 9% rated A, and 3% rated Baa.”
“Pierre Chedeville, a Paris-based analyst said this is obviously bad news for SocGen. ‘But, above all, it shows that the crisis is not over yet, contrary to what some people thought,’ he added.”
From Bloomberg. “Societe Generale is following London-based HSBC Holdings Plc and Rabobank Groep NV of Utrecht, Netherlands, in rescuing structured investment vehicles. Societe Generale was ‘very close’ to having to cede control of its Premier Asset Collateralized Entity Ltd., or PACE, to an outside trustee, Standard & Poor’s said Dec. 7.”
“‘They jumped before they were pushed to avoid being forced to sell assets,’ said Nigel Myer, a credit analyst in London.”
“The bailouts by Societe Generale, HSBC and Rabobank further limit the role of the proposed $80 billion ‘SuperSIV’ fund being set up by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. and sponsored by U.S. Treasury Secretary Henry Paulson.”
“The so-called master liquidity enhancement conduit, or M- LEC, is aimed at addressing the fallout from U.S. home loan defaults. Investors have shunned the short-term debt used by SIVs to finance purchases of higher-yielding securities because of concern about holdings related to mortgages.”
“Today, after a month of false starts, a new superfund created by the banks to keep the crisis in housing-related debt from deepening will begin raising money from financial institutions. But the role of this new entity, established at the behest of the Treasury, is already coming into question. And HSBC and several other European banks are moving to solve their problems on their own.”
“The new superfund, announced with much fanfare in mid-October, now looks increasingly irrelevant. Originally it was thought that the entity, called M-LEC, might raise as much as $80 billion that could prevent a sharp sell-off in securities owned by structured investment vehicles, or SIVs. Now, the M-LEC, known on Wall Street as the Super SIV, may raise just $60 billion, in part because many of the troubled SIVs are winding down themselves.”
“‘Who needs a Super SIV anyway?’ asks Alex Roever, a JPMorgan Chase fixed-income analyst, in a new research report. ‘There certainly seems to be a shrinking supply of SIVs to save.’”
The Wall Street Journal. “Over the past decade, Wall Street built a market for more than $2 trillion in securities sold globally and backed by loans to U.S. homeowners on two long-accepted beliefs and one newer one. The prevailing logic: The value of the American home would never fall nationwide, and people would almost always make their mortgage payments.”
“In a matter of months, though, much of the promise of the new financial architecture — together with its underlying assumptions — has proven to be a mirage.”
“The new financial system, shifting risk from banks to securities markets, has worked ‘pretty well’ up until now, says former Federal Reserve Chairman Paul Volcker. ‘We’re going to find out if it works well for a major-league crisis.’”
“Housing fits a pattern George Soros, the 77-year-old chairman of Soros Fund Management, has observed since he entered the investment business in the 1960s. But often a flood of capital makes an asset’s fundamentals seem sounder than they really are, attracting even more capital.”
“‘Eventually, you reach a turning point,’ he says, ‘where the value of the collateral begins to decline, which reduces the willingness to lend, which reinforces the fall in the value of the collateral.’”
“‘There usually has to be a flaw in people’s perceptions to set a boom-bust sequence into motion,’ Mr. Soros says. In the case of housing, he says, it was the assumption that, because home prices fall nationwide only in a severe economic slump, a diversified portfolio of U.S. mortgages made for a very safe investment.”
“‘We’ve seen an unprecedented decline in market liquidity, really beyond what we thought possible,’ says Noel Kirnon, executive VP in charge of structured finance at Moody’s Investors Service, one of the two large ratings firms.”
The Washington Post. “It will take years to determine who bears the primary responsibility for the current mortgage mess. But a piece of the puzzle fell into place last week with a story by my Post colleague David Hilzenrath about Freddie Mac’s decision in 2005 to begin dealing in a significant way with ‘piggyback’ loans that effectively allowed homeowners to borrow more than 80 percent of a property’s value — the limit set by Freddie’s congressional charter.”
“‘I think that what happened over time is we found that our own caution was making us less and less relevant, and we weren’t sure, quite frankly, that our competitors [on Wall Street] were being crazy,’ explained Anthony Piszel, Freddie’s chief financial officer. ‘Could we have run for the hills and said we’re not going to do any of that? What if things didn’t go down? We would basically be just taking our whole future and giving it away.’”
National Mortgage News. “Rags to riches loan officer/loan broker stories. “Imagine my surprise when I attended a family reunion two years ago and found out that my niece’s new husband is now a loan officer. Now mind you, he is a decent guy, but for crying out loud he has zero training in finance and was previously waiting tables. It gets even better. Then my older sister comes to me and tells me that she is now a loan officer! Yikes, this girl is a hairdresser. She can’t manage her own finances and of course has zero training as well!’ — R.W.”
The Telegraph. “The seven pillars of global demand over the last year - measured by current account deficits - have been the United States ($793bn) (£388bn), Spain ($126bn), Britain ($87bn), Australian ($50bn) Italy ($48bn), Greece ($42bn), and Turkey ($34bn). Most are facing a housing bust. All are in trouble.”
“Note that Goldman Sachs, Morgan Stanley, and Lehman Brothers, have all begun to tear up the ‘decoupling” manual. - the pre-crunch script assuring us that the world could get along fine as the US buckled.’”
“‘What began as a U.S.-specific shock is morphing into a global shock,’ said Peter Berezin, a Goldman Sachs strategist. ‘There is a clear risk that some of the hot housing markets in Europe and some emerging markets will cool dramatically.’”
“In Europe, not a single junk bond has been issued since August. Spreads on Euribor - the rate used to price mortgages in Spain, France, Italy, and Ireland - reached 93 basis points last week, a new record. This is tantamount to four rate rises for homeowners.”
“Investors expect the global credit squeeze to continue beyond the first quarter of 2008, according to the Bank for International Settlements.”
“Models using derivatives based on money-market rates signal ‘expectations of a persistent lack of liquidity and lasting concerns about counterparty risk,’ the BIS said in its latest quarterly survey.”
The Independent. “Let’s just pretend that 2006 never happened. Certainly, it shouldn’t have happened. The Stalinesque idea of airbrushing last year from the economic history books came from Ulster Bank economist Pat McArdle.”
“The blip was caused by the housing market, and ended because of it. Once people finally got it into their heads that house prices were too high, they stopped buying. So few sales are taking place that figures for current prices are largely meaningless.”
“In a rational world, the 12per cent rise would not have taken place and prices would have fallen as rates rose. A drop of 5-10 per cent might have maintained affordability at its historically stable figure of around 28 per cent of disposable income. Now, even allowing for rising incomes, they will have to fall by 15-20 per cent. This has probably happened already, but few are willing to sell. Until now.”
“The world is not rational and there are few things as irrational as a market in the grip of manic optimism or terror. It is remarkable, though, how they tend to exhibit the same characteristics. The US market turned down some months before ours, and is worth watching. For the first 15 months or so, sellers maintained their asking prices. Then they cracked.”
“Lo and behold, some 15 months after the Irish downturn comes news that apartments in Ashtown, Co Dublin, have had their prices cut by 20 per cent. The danger, as other developers well know, is that once this starts, it can go beyond what is rational.”
“In the early Nineties, Irish houses were so cheap they could be bought with little more than 20 per cent of disposable income.”
The Gazette. “For years, observers have asked when the Dubai housing market was going to crash. Yet every year, prices for the upscale homes, villas and condominiums going up across the city of 1.6 million people show no sign of faltering.”
“‘This is what people ask and we never know the answer,’ said Linda Mahoney, the Montreal-born CEO of the Dubai real estate agency Better Homes.”
“‘But there’s no bubble,’ insisted Mahoney, who has about 400 employees. ‘You know how many years I’ve been listening to this bubble stuff? The economy here is very strong. This doesn’t have a flavour-of-the-month feeling.’”
“‘Ever since I came here, people said this couldn’t possibly continue,’ DMG managing director Bernard Walsh said. ‘But it does. The ambition is endless.’”
“According to the database company Proleads, there are 3,400 active construction projects in these Gulf countries, with a total combined value exceeding $2.4 trillion.”
“‘It’s like Las Vegas on crack,’ one Canadian businesswoman observed.”
“Robert Lee, executive director of investment projects with the Dubai government-run real-estate group Nakheel, said his company’s grandiose projects - including three man-made islands in the shape of palms - are based on due diligence.”
“‘Coming from the West we’re trained to be risk-aware. Here, we’re trained to take smart risks,’ the Vancouver native said. ‘When a consultant says you can’t do it, we say: ‘Great, we’ll do it because no one else will be doing it.’”
‘UBS became the latest Western bank to seek a financial lifeline from the cash-rich East today, selling a stake of more than 10 percent to investors from Singapore and the Middle East as it wrote down $10 billion more in mortgage-related assets.’
‘The two investors — the Government of Singapore Investment Corporation and an unidentified Middle East investor — will inject $9.7 billion and $1.8 billion, respectively, into the troubled Swiss bank.’
‘French bank Societe Generale SA on Monday said it will bail out an $4.3 billion investment fund it owns that was hit by the global credit turmoil.’
When everyone was freaking out about the loan modification plan last week, a couple of posters said some super giant plan had to be done because otherwise some major financial corporations would go under, and the government would never allow that.
These developments show that it is more likely that the deckchairs get rearranged and that like Citi, these guys just have to give up equity to the cash-rich.
Again today, many bubble billions gone, no bail out in sight.
I see no disappearing bubble billions. All I see is a steadily-rising stock market.
All I see is a range bound stock market bouncing back and forth between 13K and 14K as the value of our dollar is quickly inflated away. The stock market is the proverbial “watch the distracting right hand as the left hand robs you blind” fake out. The more people watch those numbers with eyes glazed over, the more they become blinded to the “man behind curtain”.
right, I said that last week. We’re in a very wide trading range.
I said this a couple of weeks ago: Sell at 14K, buy at 13K, lather, rinse, repeat.
However, I don’t advise anyone without inside information on when this pattern will break to try this at home.
you don’t need inside information. A chart will do just fine.
The stock market is completely detached from reality, IMO. I don’t see it hitting 11,000 by the end of the year as Hoz had suggested. Instead, I foresee an all time high. Of course, I have absolutely no basis for this other than a hunch. And, I am NOT qualified to even discuss such matters as Hoz, and other posters, are.
How hard would it be to tweak with the numbers on Wall Street, anyway?
Everythings computerized, it’s not like it’s 1929 and we are reliant upon a ticker-tape machine, spitting out numbers.
Bingo! Computers are far more easy to rig than, say, ticker-tape machines or ballot boxes with manual tallies…
Spoke to a bitter FB today. She does not like the plan. After getting burnt, she does not trust the lenders and now the administration. Thinks it’s another scam.
She questions what happens after 5 years. Stopped making payments 2 months ago and is only concerned about a fresh start. She will not even waste her time looking into the plan.
Sounds like she didn’t like to “waste” her time assessing her true financial situation, reading mortgage documents, or doing market research, either. She’s getting what she rightly deserves. Ho hum, another one bites the dust.
It sounds like she has learned from her experience. Good for her! It’s always best to be able to critically think your way through a situation before involvement, or to learn form other’s mistakes if needed. But most people learn form actually screwing up, although it seems lately most don’t want to admit their stupidity and lean from their mistakes.
Although she’d have been better off not getting in her current situation, it’s refreshing to see someone admit their mistake and learn something from the experience.
But… but… she doesn’t TRUST our Dear Leaders!? Surely, the greedy pigs - I mean, helpful investment experts - on Wall Street wouldn’t have put together this plan to avoid any losses themselves while foisting the problem onto everyone else, would they? And it’s not like they’ll stand to make even more money bleeding F’d buyers dry over the coming years or anything… and it’s not like the government wants to delay the housing Correction until the next administration… surely not! Hahahaha!
RE: Scams…
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving.’”
Since Fannie and Fred won’t purchase mortgages from a market designated as declining in a 1004 appraisal, Yun’s making this pathetic attempt to distort current market conditions in the hope of a GSE/FHA/HUD bail-out to sustain starving legions of realtwhores.
The NAR propogandists never cease to amaze.
“Bucking conventional wisdom, (the) trade group [NAR] said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
From the Online Etymology Dictionary:
‘verge (n.)
‘”edge, rim,” 1459, from M.Fr. verge “rod or wand of office,” hence “scope, territory dominated,” from L. virga “shoot, rod stick,” of unknown origin. Earliest attested sense in Eng. is now-obsolete meaning “male member, penis” (c.1400)….’
The “battered” housing market “inched” its way “up” and is on the “verge” of stabilizing according to the “bucking” NAR? Doesn’t this actually mean that the housing market is totally f–ked?
“Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
Perhaps the NAR will bail them out with their rosy outlook for 2008! Then again, who listens to the NAR. The NAR is like the boy who cried wolf one too many times, but in the NAR’s case, it has been at least 9 times they have been incorrectly calling wolf.
I think the NAR stepped in the wolf crap and is trying to wipe it off on the public!
If you step in WOLF CRAP you can get rid of the crap but you cannot get rid of the smell!!!
Dubai? Dubai’s bubble will pop when we quit buying oil. Dubai is one of the few places that really is different, and special.
Dubai:
“‘It’s like Las Vegas on crack,’ one Canadian businesswoman observed.”
We all know how well Las Vegas is doing.
I wonder how much a construction crane will rent for in 2010? I bet pretty cheap!
Got popcorn?
Neil
I run a website/blog focusing on the Harrahs chain of casinos and hotels. I usually receive upwards of 50-100 emails weekly from people submitting their comments on their experiences or news regarding the HET chain.
I can tell you that the LV housing market is not the only thing that is flopping. This is the first year that I’ve received a huge influx of emails from people who don’t gamble much but who received offers for free/comped stays over New Year’s Eve in LV. Usually the hotels are booked up well in advance, but as of today there are still rooms available.
My last trip to LV showed the casino virtually dead (this is Paris LV), but a month before that it was swamped. I’m visiting again in January, as I did this January, and will compare numbers. Can’t be good for the industry. Then again, who has money to gamble?
I’ve noticed Reno and Tahoe have become a LOT less crowded on weekends.
Are you a fellow local?
Nah, I visit a few times a year. I prefer that area to Vegas. Cheaper, more stuff to do, and better attitude towards visitors.
The 1st National Bank of your house’s ATM machine isn’t dispensing Benjamins anymore.
I’d imagine pit bosses are downright stingy nowadays about whom they give a marker to, in terms of giving credit to the debt challenged.
Thus, gambling suffers horribly.
It looks as if the Reno economy is already on life support. Developers just received the go ahead to abandon projects from the city. The whole area is going to get absolutely hammered.
You better believe it’s going to get hammered. The boom produced far too much growth to be sustaiined during this downturn. Without housing, there’s not much for people to turn to. A lot of pain followed by out-migration to find work.
Get a load of this guy on the renorealtyblog:
http://www.renorealtyblog.com/2007/12/reno-sparks-rea.html#comments
from the link:
“On a second side note, I am thinking about building 16 condos on my property near the University similar to 8 on Center. I think there might me a niche hear for that modern loft style architecture here in Reno, especially near the University. What do you guys think about $350K for a 1000 sq. ft unit? Am I crazy??=) I figure about $3.2m to build-worth $5.6m completed. I’m looking for investors.”
Congratulations BB, you certainly showed Mr Murray where to place the Joshua Tree, with the utmost decorum. Well done!
Then again, who has money to gamble?
My renter friends in tech.
Still rooms for new years?!? Oh boy… that’s ugly. I group of coworkers are going to play hookie and head to Vegas. They had no trouble, mid-week, getting good rooms cheap.
What happened to the conventions? (Is it a normal dead time or is this an indicator?)
Got popcorn?
Neil
Mid week after Christmas and before New Year is traditionally dead.
Next big convention is the National Electronics show the 7th of January.
The Indian casinos out here in Coachella Valley are way less crowded than they were even in the summer. They’re bringing in busloads of Asians from LA. Lots of promotions, too - free casino play, free hotel stays, etc.
I don’t know why I didn’t make the connection, but when I was in Puerto Rico last month one of the hotels I stayed at gave my wife and I some free casino credits to use when we checked in. We walked through the casino to get to one of the restaurants and it didn’t look very crowded at all. We joined the many people not gambling.
Brian: I always gamble on their dime - it’s a win-win for me. I’m one of those that always walks out with my winnings. I only play slots and rarely lose. I learned my lesson 30 years ago on a dollar slot machine. Quickly won $900 and fed it all back in - I was so upset. Moved to a quarter slot, won $25, went back to the dollar slot and won $100 and said that’s it I’m out of here. Didn’t really lose any of my money and whole goal was to go home with a bucket of silver dollars for my kid, but doing that once was all it took for me.
I was a heavy better in the past. The offers Harrah’s is now sending me are very very good. I thought it was rather odd as well. Link your website I would love to see it.
Link requested by Fecaltime!: http://www.hetinfo.com
Just got rates for this week. Harrahs $65.ThursFri and 85 on Sat.
I may rent at LV.
At this rate,
I’m not a big gambler either (never play slots, haven’t ever gotten anything comped - not even a buffet meal ticket due to the lack of number of hours played) but my mailbox has also been full of Vegas casino deals including $89 mid week rooms at the Venetian’s new Palazzo (and it hasn’t even opened yet). What’s up with that? Advance reservations are that bad???
You know, Harrah’s might be a real good candidate for my short pick referenced on this morning’s bits.
The PPS hasn’t fallen off (yet). They carry almost 2X valuation in debt. They are thoroughly tied into hedonism and cater to wannabees.
THX dada. There are so many gems found among the rubble at HBB.
dude: Be cautious. HET has negotiated a private takeover, so the stock has a ceiling value of the takeover bid. Of course shorting it is an option, but I wonder if the takeover will set their bid price as the stock price it will close at before falling off the market.
thx again, I was unaware.
Which blog, I’m a break-even VP player who has 7* status. Haven’t been using it much of late.
Heck, I’m thinking about buying a crane and driving it to work, Cranes will be cheaper than a Hyundai!! Do they run on ethanol?? …or a Dozer, or front end loader. Sweeeet!!
Hey now - don’t go bashing my Xena Princess Warrior (Hyndai Sonata). She was inexpensive, but not cheap. She’s got a V6, leather, sunroof and looks like a mini Jag, great warranty and drives like a dream. Gets about 30 mpg on hwy and 22 in town.
I have always wondered out loud to what extent organized
crime has been exposed either directly or indirectly to
the melt down in the credit markets.
Of course, one of the biggest problems organized crime
is faced with is how to launder all that money.
It would seem that buying MBS/CDO’s from wall street would
be the perfect mechanism to obfuscate the orgins of all
that cash, plus get a nifty return to boot.
Now that the party is blowing up, how will they react to
the fact that they are losing money?
These folks have never been known to be nice guys.
I just wonder if Louie “fat nuckles” Affuso and his
“capital recovery team” have already paid a little
visit to thier buddies on Wall street.
I’ll bet those guys don’t need the SEC to put
“Rules and Regulations enforcement” into place!
Dubai is making itself into a “no tax, no regulations, lots of sun” haven for the well-to-do Europeans looking to escape their 50% income taxes and 20% VAT’s.
Dubai’s reliance on oil is marginal. It’s all trade, especially shipping.
As to Dow, it can be anything if you inflate the currency enough. Between 1968 and 1983, the stock market stayed at the same numerical level (~ 800) but had 75% of value beaten out of it due to the intervening inflation.
Real estate (and gold) went up during those years but you couldn’t be a bull nor a bear in equities … and bonds … fugeaboutit.
I wonder if the Islamists have their eyes on Dubai.
Who are “Islamists”? Why would Islamists “have their eyes on Dubai”?
Your question really shows amazingly deep seated ignorance about the whole middle east. The really big moves of Islam as a political force are in Egypt and Saudi Arabia where they are coupled with democratization, oddly enough. Iran would never have gone with any kind of Islamic revolution if we hadn’t completely trashed their government and civil society back in 1950. The small trade oriented city-states like Dubai and Qatar have always been under pressure from the power players in the area and so have ceeded land and authority, but they have remained relatively strong and independent. There is no struggle there anything like what there is in Sudan or Kenya or Morrocco.
Why is it considered acceptible for Americans to have this kind of ignorance of the world? Saudi Arabia is the center of Islamic culture, so we put bases there. Iran is one of the oldest and historically strongest Islamic states, so we destroy it. Lebanon is too close to Israel for comfort, so we repeatedly let Israel do whatever their blackened hearts want there. Then we reduce Iraq to a smoldering ruin and this spawns speculation of what Islamists might target next? The real question is what the US will target for rampant destruction and slaughter next. Why do Americans hate our freedoms?
Saudi Arabia is the center of Islamic culture
You mean Wahabi culture.
BTW, you seem to have an axe to grind.
Why did all our ancestors come to America?
To get away from all the crappy foreigners they used to live around.
Personal observation……..I have had the opportunity to meet a few Joe/Juan/Pierre/Habib/Phan Six-Packs ……they typically don’t know much more about the US than we know about them……mainly, what they see on TV.
Bank of America Freezes Institutional Investor Fund, CNBC Says
By Chris Dolmetsch
Dec. 10 (Bloomberg) — Bank of America Corp. has frozen its Columbia Strategic Cash Portfolio fund, which is marketed to institutional investors and has about $12 billion in assets, financial news network CNBC reported, citing unidentified people in money management.
Bank of America sent a letter saying that the company will no longer take subscriptions or redemptions as a “direct result” of the subprime-mortgage credit crisis, CNBC reported, citing the people.
The fund, which isn’t marketed to smaller retail investors, apparently had invested in some debt securities that are being affected by the crisis, CNBC said.
To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net .
http://www.bloomberg.com/apps/news?pid=20601087&sid=afqn7SOfKZjI&refer=home
Thanks, I had been trying to find that story online.
Let them eat cake…
that fund broke the buck
That’s supposed to be a big deal, isn’t it, but has anybody noticed??
Which tells you somebody is working hard to keep you from noticing. This is absolutely the wrong time of year to be dispensing bad news. Find a rug and sweep it under.
Apparently at least the hedge fund industry is weathering the credit crunch extremely well. Try to find a story about a hedge fund blowing up since August if you don’t believe me.
Check back on Dec. 31. Remember those liquidations at days’ end in the Nov. correction?
How can a hedgefund “blow up” if it is frozen. But YES there are stories about double-digit losses again, esp. in quant funds. It’s just not MSM interesting anymore.
Prof. Bear:
I believe thats because every hf that did not blow up well before is actually hedged. They must have counter-party blow up or get impaired for heir hedges to blow into their face. Right now they are losing their shirt on one side but they are making it quite well on the other side making HF balance sheet positive. The thing is that if their side is in black, their counter-party is severely in red!
Good thing we’re not in a credit crunch having another $11 Billion in funds frozen. Why… that might effect J6P’s ability to borrow money.
Off topic. Anyone else think J6P is going to scream when the hops shortage makes beer expensive? Oh… they can buy Ale (no hops) or two buck Chuck… There is just so much in the works that will add to this ’squish down.’
Let them drink Ale!
Got popcorn?
Neil
‘Anyone else think J6P is going to scream when the hops shortage makes beer expensive?’
I do a little writing and talk to a lot of brewers. They are planning to make stuff that doesn’t use as much hops. Hefes, cider, etc.
Hefes? Finally a CPI substitution that I am willing to accept!
Your kidding. Can’t we grow hops here?
I’m told the price of Italian wine will be going up. But I never figured out why it was cheaper to ship water and class (neither light) across the ocean than down from Upstate New York.
Hefes? I too accept that as a direct CPI substitution. How could I forget that Hefes take less Hops.
Phew. “Mission accomplished.’
Got popcorn?
Neil
WT
We grow a lot of hops, but from what I understand, it takes a few years to cultivate the root stock. Plus, really hoppy beers have surged in popularity the last few years and the industry didn’t prepare.
Screwing around with housing and the stock market is a non event, but when they mess with beer, the true cost becomes apparent to all. One of the primary food groups. (along with single malts and chocolates)
lol. I never noticed those layers on the food pyramid before. Thank you for looking after my health.
“Hefes? Finally a CPI substitution that I am willing to accept!”
You and me both, brudda!
Wheat beers are also going up. Hefes are not immune! LOL
And corn squeezings were never meant to be burned in a car. The flow from the worm goes into the bottle.
Dammit Hoz, will you not rain on my parade just this once!
Just kidding- Goldilocks is still making wheat beers in Minneapolis. Sorry to upset you Mr. JP
And a new copper worm for my (never used - honest!) still just cost $7 up from $2.25 last year.
Oddly enough, BofA raised my credit card line just last week from $27,000 to $38,000, even though I told them I was happy with the $20,000 LoC I had last year. I pay the bill on time each month in full (some months charging up as much as the full balance) before the statement cuts, so my credit report usually shows a $0 balance. Remember that even if you pay your bill in full, if you show a balance at statement time, it reflects on your credit report and FICO score.
I’ve been trying to get a CD at a reasonable rate from BofA (we have 12 CDs that usually expire at least one per month as our only form of US dollar “investment”) but BofA’s rates have seemingly fallen compared to other “desperate” banks.
Although compared to other banks, $12 billion is a perfect multiple of the “Everything is OK we only lost $3 billion” mark. Does that mean that BofA is 4x “everything is OK”?
BofA recently put restrictions on the amount of funds which can be transferred out electronically, by day and month.
Yeah, Citi and BOFA are both still raising our card limits $3000 or so every 6 months… I guess they are running out of qualified customers.
What will the banks do to drum up business when so many folks’ credit cards are maxed out and they can’t refi to pay them. Also, what will the entire credit industry to when so many FICO scores nosedive between foreclosures, maxed out credit cards, defaulting auto, student and other unsecured loans?
I dunno, Crazy. But, on this blog, and in other places, I’m starting to see a movement taking shape. Call it the Pay Cash movement or the Debt-Free movement. It seems to be a reaction to the negative consequences of credit, credit, credit.
I’m starting to see a movement taking shape. Call it the Pay Cash movement or the Debt-Free movement.
I’ve been seeing the same thing, but I often wonder if I’m in a bubble of my own — is this notion really spreading, or is it just acted upon by anti-consumerist contrarians?
(I don’t know the answer.)
“Call it the Pay Cash movement or the Debt-Free movement.”
More to the point, it’s the “don’t buy stuff you cannot afford” movement:
http://youtube.com/watch?v=cmAm8GNJ_IA
“Let me see that…’if you you don’t have any money, you should not buy anything’. Hmmm, sounds interesting”
Interestingly enough, I am not sure how many catch this, but we are no longer represented by the common press as citizens, but as “consumers” - The average American consumer … this month consumers … Consumer confidence has…
I’m starting to aggressively pay off my credit cards. I’m finally starting to make some money after graduating from school, and uh, paying off my credit cards seems like the best possible investment I can make right now.
Comment by ET-Chicago
2007-12-10 12:15:07
I’m starting to see a movement taking shape. Call it the Pay Cash movement or the Debt-Free movement.
I’ve been seeing the but I often wonder if I’m in a bubble of my own — is this notion really spreading, or is it just acted upon by anti-consumerist contrarians?
Contrarian? Nope, iconoclastic and very very fond of being cheap (most people try to be polite and call it frugal ……) My mantras have always been ‘only a fool pays retail’ and ‘don’t pay someone to do a task for you - learn how to do it yourself.’
I learned the behavior from my great-grandfather who talked about the depression of ‘93 (that is 1893 for you non-economic historians) and both sets of grandparents who were adults when 1929 happened. My maternal grandparents actually started a business in 1931 at the height of the depression, made it succeed and it lasted until my parents retired. I always did think that the strain of those times took 10 years off my grandparents’ lives.
Being very close to my older family members, I grew up with the attitude of use it up, fix it, and make it do or do without - and NEVER borrow money or use credit unless there is no other recourse and it is an emergency. The great-grands and grandparents didn’t use credit cards, didn’t run bank loans or lines of credit and with them, it was pay cash or do without.
To top it off, the period of time that was my specialization in history and economics was the 1930s (and leading into and out of that.)
Close to 30 years ago when a very good prime rate was around 10%, my then-new husband and I went to buy a house. I very nearly pulled the plug on the whole thing when I saw the total for principal and interest on a fixed. I had just gotten over my horrified reaction to the bank’s suggestion of considering an ARM instead of a fixed when I had figured out how high payments could go. I’m told that after I looked at the principal plus interest total, my voice was nearly shrieking when I said “I’m paying HOW MUCH for this place??? Oh my god…..I don’t think so….Yieeeee!” It took my husband a couple hours of to get me to agree to it by going through the tax deduction, and running the rent versus buy cost and, finally by pointing out that my very very large 4-footed animals needed a home and the board bill for all my horses was more than the cost of the mortgage, barn staff and the feed put together. (It was the last point that carried the argument but if it hadn’t been for the animals it could have gone the other way.)
The cost of that house is NOT the sticker price if bought on credit. The actual cost of buying that house is the sticker price PLUS the interest (less any tax deductions.) The same applies to anything that you by on credit rather than paying cash. Realtors and I do not deal well with each other.
No - paying cash and not using credit is hardly a new fad around here. Maybe I’m just in the wrong century or something.
I am planning on being 100% debt free over the next 3 years. I have a 30 yr fixed and a small heloc that combined are less than 50% of my home value easily. I live in a non-bubble or small bubble area (Nashville) in a desirable older neighborhood.
Other than that, I have zero credit card debt, car loans, school loans, etc. I am going to sell and move out of the area and rent. When I by a new car, it will be cash and I don’t even like to use the credit cards I have. Sometimes I forget about my less than $10 balances and it messes up my credit when they go 30 days late. So I decided not to ever use them.
Tiger: We use credit cards almost only for business purchases (which are quite big). I’ve also had a 30-day late once on a $27 balance (the credit line was $35,000, ugh). I emailed the President of the company and he had it reversed and it fell off my credit report in less than 1 month.
Now, all my cards are set to autopay the minimum just in case. Last month I sent a payment online for the full amount (somewhere in the realm of $15,000) and it never “took” so the autopay kicked in. Because I set up the payment on the credit card company’s site, and they acknowledged that I did in fact make the payment on their site, they refunded me the interest charged and put it through a few days later. Again, good communication on my part (and a little bit of harassing!) went a long way.
Too bad credit scores don’t differentiate between absentminded personalities and people who really couldn’t pay. I also, got my credit score bumped up too, but with a dispute I filed myself.
Regarding the uptick in pending sales, an anecdotal piece of evidence I’ve been hearing from people is that “Now is the best time to buy.”
This is from private homeowners, not realtors or those with any links to the RE and related industries. FYI.
Do you mean the almost meaningless MOM number?
‘ The National Association of Realtors’ index of pending home sales increased 0.6 percent to 87.2, following a revised 1.4 percent gain in September that was higher than previously estimated, the group said today in Washington.’
‘The gains in September and October follow the biggest back- to-back declines since record keeping began in 2001.’
Was this the October number? I hate to use weather as a excuse but I think most of the East and Midwest had an unusually warm October.
Here too. It was 83 degrees on Friday and Saturday.
No it wasn’t the weather.
These real estate things run in about 17 year cycles. After the intital drop, there will be a slight bounce back up caused by those who are overly quick to anticipate the bottom. Then the slide begins again and goes even further.
The intial euphoria of buyers when prices start to decline causes them to rush in as they don’t (a) have the patience to wait it out nor (b) the acumen to figureout what is going on and they are afraid ‘they will miss out.’
So you get an uptick that may go 1/3rd or so back towards peak but there are not enough of them to sustain it and too many other factors militating against it. Then the real long slide kicks in.
Patience my children. I’m counseling ‘do not buy’ until 2010 at the earliest and 2011/2012 would be better yet. (All those nasty option-ARMs and hybrid-ARMS which are over double the number of the subprimes need to explode yet.)
Dead cat bounce, as it were, eh?
Yeah - but being someone who is owned by 2 cats, I’m not allowed to use that expression.
After-the-fact graphs showing the rise and fall in markets and prices always look so smooth and nice with definable movements. Thing is those cover a lagre time period. In fact the rise and fall of the market and prices kind of moves like a drunk - 2 steps forward, 1/2 a stagger step back, pause, stumble 6 forward, turn around and stagger 3 back and meander off …. When viewed over time, it looks smooth but when examined close up it has its tiny peaks and valleys that form into a overall trend.
I have never understood “The Market” as in Wall St types. They are so-o-o-o nervous and jump at shadows in the dark. every leaf rustling is some omen or portend or ‘new trend.’ I have seen flocks of birds with a dog rushing at them that are calmer than investors.
To put it another way, markets usually fall in waves. If you gently nudge a marble off the top of a long flight of steps you will get the picture.
Very good call on the cycle Ann. In New England right now, we’re exactly at the 1990 point in terms of pricing and market sentiment. It wasn’t until after 1993 did the real capitulation begin. Yes, Beantown was an exception due to the life sciences biz there but the rest of it was toast from 94-2001.
“‘There usually has to be a flaw in people’s perceptions to set a boom-bust sequence into motion,’ Mr. Soros says. In the case of housing, he says, it was the assumption that, because home prices fall nationwide only in a severe economic slump, a diversified portfolio of U.S. mortgages made for a very safe investment.”
Yet the underlying fundamentals screamed we were in trouble years ago. Just because a bust or several busts happened because of this or that in the past doesn’t mean you can ignore all other possibilities just because those particular ingredients don’t for the time exist. For years we here at the HBB had to endure the talk of “there cannot be a bust because busts are always preceded by economic downurns”. With that thinking so many ignored what was fundamentally wrong with everything in this recent boom. Now, the thing that pisses me off is the current “wow, who could’ve seen this coming?” Answer: Anybody with their eyes open!
From the WSJ article:
‘At first, home prices rose for good reason. With the economy in recession, the Fed slashed interest rates in 2001 and kept them low until mid-2004. That, plus an influx of foreign savings to the U.S., kept mortgage rates low. Former Fed Chairman Alan Greenspan frequently argued there could be no housing bubble. The high cost and inconvenience of moving ‘are significant impediments to speculative trading and…development of price bubbles,’ he said in late 2004.’
‘But rising home prices may have given both buyers and lenders a false sense of the market’s stability and security.’
Former Fed Chairman Alan Greenspan frequently argued there could be no housing bubble. The high cost and inconvenience of moving ‘are significant impediments to speculative trading and…development of price bubbles,’ he said in late 2004.
To the greedy, “inconvenience” is a minor thing, especially when there’s the perception that a lotta money can be made.
Going to work for a year is pretty darn inconvenitent. Buy a house, and sell it 6 months later and pocket a year’s income…
Hmmmm… move twice… or go to work for a year??? Tough choice.
So many people are slobs that they need to keep moving so they can enjoy a clean house for a couple weeks (or days).
So true Salad - when we were looking at houses back in 03 I was amazed at how people left their houses when they knew someone was going to be looking. Dog crap on the floor, piles of junk everywhere, filthy baths and kitchens - what is that all about. When we were selling out house in 06, we kept it immaculate and packed up a lot of our personal stuff. Then again, I do what I call maid service every day - general pick up, put away and wipe down room to room - takes all of about 30 mins. My girls were raised with 2 rules - you take it out, you put it away and you mess it up, you clean it up. If everyone in the house lives by those rules, there’s never much to clean up.
That’s the secret. If you spend 20 minutes a day just dealing with the clutter/mail/dirty laundry it really makes a difference. I have friends with weekly housekeepers and their places are pigstys between visits. OTH, my sister is a manic cleaner, her place looks like an unlived-in model home. I often stage minor accidents to watch her go ballistic.
“Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
It looks like the bottom callers were right after all about the housing market bottoming out by the end of 2007.
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving.’”
Since the market is now steadily improving, there is no need for further Fed rate cuts nor for any kind of housing market bailout. The market clearly does best when left to its own devices without the distortionary effect of govt intervention.
You need to put [SARCASM] icons on posts like these.
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving.’”
Where exactly are these markets, Larry? You guys realize that Larry will be asked to fall on his sword pretty soon and the NAR will have another shill.
Heck, I’ll take the job.
many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving - ON WHAT PLANET? I want a little of whatever he’s smoking.
Zimbabwe
No bottom called at this presentation:
http://uanews.org/node/17237
BTW, I was there, and lemme tell you, it was not a fun place to be. Nothing like being in a room with hundreds of stressed-out real estate agents and other REIC-ers.
AZ_rob?
Many of them stressed-out RE agents have “investment properties” that are in the red, and their interest only loans are resetting.
The first ones who go back to former jobs as waiters, hair dressers
will get to eat. Late ones will not have any job to go back to.
Funny you should mention that, Ken. One of the guys at my table was a real estate agent seeking other lines of work.
3/4 yr ago went to Mathis Bros to be chased around by salespeople, just something ‘fun’ to do on a football sunday,(see how expensive furniture from China is) and the 2 sales people were ex RE agents. They said they weren’t making any money in early 07 hence This new sales job. YIkes is what I was thinking in Jan 07.
“Many of them stressed-out RE agents have “investment properties” that are in the red, and their interest only loans are resetting.”
These dumb asses leveraged up on the same “investment” they conned everyone else into buying and now any suggestion other than a red hot market is downright blasphemous to the RE spinmeisters. I believe 100% it is this reason that prices are “sticky”.
RE scum is sooooooo screwed.
The housing market is always in the process of stabilizing. That’s what price movements are: the market process of prices reaching an equilibrium point that is constantly adjusting based on the supply of homes, the demand for homes, and the cash supply available to buy homes.
When prices were going up, it was the same thing: the market was stabilizing against the new influx of cash/credit created by the Federal Reserve and the fractional reserve banking institutions. New cash = more cash = more demand for houses = prices go up. That’s an act of stabilizing.
Now that cash/credit is reduced, the market is in a current act of stabilizing by pushing most prices downward.
The title is just wrong. A title would be “The housing market is currently stabilizing causing prices to fall.” The housing market can never be “stable” because people move, money is continuously created out of thin air by the Fed and by fractional reserve banking institutions, and new homes are built as old homes are destroyed.
“‘Who needs a Super SIV anyway?’ asks Alex Roever, a JPMorgan Chase fixed-income analyst, in a new research report. ‘There certainly seems to be a shrinking supply of SIVs to save.’”
The SIV situation appears to be another one where the market is doing a perfectly good job of shrinking the problem down to manageable size without the distortionary, moral-hazard-inducing effect of govt intervention.
Just like the foreclosure issue will (eventually) take care of itself…and leave people (on both sides) a little wiser for their troubles.
Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and…
Bwaaahahahahahahahaaa!!!!
Bucking conventional wisdom and any evidence…
I guess they have to do something to sell homes.
Its not affordability.
Got popcorn?
Neil
Don’t take December sales or foreclosure numbers too seriously. Lender have informal moratoriums on foreclosure proceedings during the holiday season, so the numbers drop. The drop is not due to any major change in fundamentals or market realities. They just don’t want bad press for kicking out widows and orphans on Christmas.
Sales numbers - who tries to sell their house in December, right before year-end? Who would buy then? The only people I can think of are those who have to do a like-kind exchange for tax purposes, and there aren’t all that many who need that or even understand it.
What this means is that the numbers will deteriorate even further in January. The problems are deferred, not solved.
I continue to maintain that the lenders and managers are trying to defer everything bad until next year. We’ll see what happens in 1q 2008, but I keep some cash on hand just in case.
There were open houses all over town yesterday. I don’t remember it being like that here before. I mean this is Montana and it was freezing out.
“Rags to riches loan officer/loan broker stories. “Imagine my surprise when I attended a family reunion two years ago and found out that my niece’s new husband is now a loan officer. Now mind you, he is a decent guy, but for crying out loud he has zero training in finance and was previously waiting tables. It gets even better. Then my older sister comes to me and tells me that she is now a loan officer! Yikes, this girl is a hairdresser. She can’t manage her own finances and of course has zero training as well!’ — R.W.”
I knew it was over when i too started to get calls from long time clients saying that they’ve decided to go with their brother, who, surprise-surprise, was now a loan officer. Then it became the church friend, the fellow softball team member, the baby sitter, their favorite grocery clerk - all of them had become LO’s over night. None of them knew a damn thing about the biz except what they learned very quickly, and that was which product made the biggest commission. To make matters worse, because all these new LO’s were family members, close friends, or fellow church goers, they immidiately gained a level of trust that should be earned by anybody dealing with your money. And, as we now see in the evidence, that blind trust was grossly misused and abused.
No doubt about it, the mortgage industry is/was/has become the cluster F or all cluster Fs.
LOL Have any of them came back to you, trying to get you to undo the mess? I have…funny stuff.
You better believe it. The one that was indicative of what was happening was a case of a Filipino couple I had worked with in the past. I hadn’t seen them in over 3 years when they walked into my office with a statement in hand and a sob story. It seems the Filipino community is a tight knit group with strong ties and a lotta trust. Well, apparently a smooth talking Filipino LO from Sacramento stepped into the local Filipino community and used that trust to clean-up. He sold almost everyone a toxic OpARM with flat-out lies and deception. My couple didn’t realize something was wrong until thay decided to take a closer look at the statement, the statement they brought in that day. What a surprise when they discovered they now owed 11k more on the principle of their house. They had been sucked in by the idea of a ridiculously low payment. The end result was they lost the 5.375% 30yrfxed i had put them into years before and ended up with a toxic loan with a 5 year pre-pay. Now, I agree with any who say that the folks that got sucked into this should have known better. Regardless, the dude that perpetrated the mess needs to be fed his balls.
Ex, you’ve said it right about the Filipino community being tight. I’ve heard it referred to as the Bamboo Curtain. As in, you mess with the Bamboo Curtain, and you’ve got big trouble.
OTOH, if you develop a good reputation with one member of this community, oh, boy. You are in Referral City.
There was a huge story in the PE about a similar scam in the IE that targeted the same folks - some investment scam with them all buying multiple houses, company was supposed to make payments until rollover, etc. I think it was church friends and they were soliciting other family and friends up in Sacto. I wonder if it’s connected?
Yea Crazy, that was the RE agent doing biz in DHS mostly and some Indio, if I recall. The ‘cops/feds’ couldnt’ find this particular RE “agent” anywhere.
No sympathy from me. A friend of mine who’s Asian goes to Asian doctors, mechanics, etc., all of whom deal with him and other Asian clients or customers on a cash-only basis. All of them, needless to say, are tax cheats. Many only want to deal with other Asians and reinforce their own “community” to the exclusion of non-Asians. So if they get screwed by their own kind, it might be the kind of “diversity” lesson that was long overdue.
ex,
That one jumped out at me too. It’s bad enough most states don’t have ANY tracking on these people but add in a boom and who knows what kind of crowd you’re going to draw? I’m hardly an Ivy League guy so I don’t grudge someone for not having a ton of formal education, but for Godsakes what happened to the whole apprenticeship thing?
My first L.O had been in the business for almost 8 years before she was allowed to originate her own loans. Carol was a receptionist, assistant and processor for some time! She learned the business from the bottom up. The brokerage industry did the same thing. You got a Series 6 license and peddled muni bonds and mutual funds (…. typically less volatile) before you were allowed to “pitch stock”. What happened?
Mortgage lending professionals need to be held to at least the same kind of regulations handed out to securities dealers. Here we have the largest investment most will ever make and it’s being sold by anyone who can fill in a blank. I feel increased accountability comes before getting folks educated, not that the latter isn’t importnat. If someone who wants to be an LO sees the strong potential of getting his/her a$$ fried for doing something stupid, they’re going to get themselves educated…….or else.
(I knew it was over when i too started to get calls from long time clients saying that they’ve decided to go with their brother, who, surprise-surprise, was now a loan officer.)
I have a cousin who wanted to be a stockbroker. Took the tests and everything. Then he realized that in order to earn commissions, he was being heavily pressured to sell financial excrement to his family and friends. This was back in the 1990s.
He quit, and is now a HS football coach and teacher.
Come to think of it, one of our daughter’s friends went to beauty school and it was like an Associates program. I think she went a full 2 years (not that it’s all that much training) but certainly more than a hairdresser attempting to BECOME a MB will ever get!
yah, but she DOES have to use scissors, could be dangerous
and the hairspray can ‘kill ya’.whew. PU.
Yeah, it is amazing that you have to literally jump through HOOPS in order to cut hair, adopt a cat/dog, or adopt a child, but get a loan this past few yrs, or have babies … nada zip you don’t need the sense god gave ya.
I bet the holidays will be fun at the houses of these people with such kind hearted friends and family.
From the Washington Post article linked in Ben’s thread:
“Given the continuing concern of regulators and Congress about Freddie’s safety and soundness, you’d think the chief financial officer could come up with a better excuse than “all the other kids were doing it.”
Freddie, Fannie and Wall Street CEOS and CFO’s get $millions/year in compensation to follow the herd.
“all the other kids were doing it.”
That is the best excuse ever invented in the history of mankind.
Not permitted to MY kids.
The principle is generally only applicable to grown ups.
In my experience, it is more so with adults. Kids tend to follow crowds, but in tight-knit, non-intermingling groups. Adults are one big herd of lemmings.
Totally - watched Southpark ever?
Domestic battered housing?
This is worth reading
http://www.minyanville.com/articles/fre-fnm-xom-SLB-Ginnie-Mae/index/a/15157
Yes it is - thank you.
http://www.azcentral.com/business/articles/1209biz-cr-daylaborbiz1210.html
“Some Chandler businesses are taking a hit this holiday season as their main clientele - undocumented immigrants - leaves the city before the state’s new hiring law goes into effect on Jan. 1.
Shops, such as Quintero Jewelry & More, are struggling to stay afloat as customers either pack up and move or save money while they see how the new law will affect them.”
This news makes me sad like winning the lotto (which I never play. A tax on people that a really bad at math).
Oh, these poor businesses that cater to illegals are seeing their revenue dry up… cry me a freaking river!!!
Hmmm… I can’t seem to find my tissue box. And, for some reason, I can’t seem to find the tears either.
The illlegals had a very good thing going. Pay them in cash, they pay no income tax, they drive with no car insurance and walked into any hospital and get free care. Like the flippers and builders and RE agents they are now getting what they got coming to them.
This really is going to shake out for the better, the illlegas get booted and the free loaders who wanted to get rich quick can now take the jobs of the fleeing MEXICANS AND WORK FOR A BUCK?
This is just dumb immigrant bashing. The reason there are illegals is because we let the legal path into the country whither away to the point that it fails everyone. Ten year waits? Get real! The rule that forces emergency rooms to dispense free care is a huge problem at many levels even without illegals, but we have only ourselves to blame because that is the rule that we hold our health care system to. Mexicans and others came flooding into this country in large part because of what agribusiness subsidies and NAFTA did to their economies, and again all of that was what we did under our own control. All you are doing is engaging in racist fingerpointing because that is easier than actually working with fellow Americans to fix the problems that we created for ourselves right here at home.
My family has had nothing but trouble with immigrants ever since we came to this country.
So, Mole Man, now that you’re done defending illegal immigrants (who take our jobs while importing crime, drugs, and poverty) and terrorists who happen to call themselves “Muslim” (though they really aren’t) who have been busy flying planes into our skyscrapers, invading other nations, and killing tens of thousands in the past few decades alone, are you going to next defend the Wall Street crooks who spawned this housing Bubble?
Porque los gringos tienen siempre toda la culpa por todos.
Granted that there are plenty of Americans at fault for the costs mass illegal immigration imposes on the country, I’m not about to let the illegal imigrants themselves off scot-free. It takes two to tango.
“Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
That’s a polite way of saying these idiots are blowing smoke up your arse, Mr. and Mrs. 6Pack.
“Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving.’”
Hey Flyover Larry!
Aren’t all markets local, by definition?
If I recall my Medical terminology correctly it is quite possible to be “Stabilized” and on life support at the same time.
Mathematically, the peak to trough is represented by the well known sine curve…so the deceleration of the decline in price marks the mid point of the curve. What this means is that we are halfway through the RE price correction….25-35 cents on the dollar is the bottom in some areas of Florida.
Fear and Loathing in Dubai, A Savage Journey in Search of the Oil Earnings Dream
“‘It’s like Las Vegas on crack,’ one Canadian businesswoman observed.”
Until the balance sheets reflect the off balance sheet crap and they are marked to market, nobody knows (or wants to know) the truth.
But from these actions – could it be anything but bad news (selling treasury stock, 10 B write down, cancel the 2007 dividend, sell part of your company (soul) to the arabs, etc.).
If this was any generic company – the stock would tank…
So what is keeping it up?
So the world doesn’t care anymore about massive write downs, canceling dividends, fake assets and selling treasury stock???
I remember the last time people said “things are different this time” with these same ideas and pets.com was at $350 a share…
And as for CHIMA – wait until the arabs want to run your company according to sharia law.
An insane individual is the mope that parks the $90,000 car at the train station to commute to work. Why shouldn’t these stocks go up? The confusion is treating the stock as if it is a business. Stocks are intangible. Hope springs eternal.
“In the early Nineties, Irish houses were so cheap they could be bought with little more than 20 per cent of disposable income.”
It is true a home in Ireland or Wales could be bought for $30K in the early 90’s. These are now in the $400K region. There is absolutely no correlation to local incomes or economic factors at all as far as I can tell. Mostly folks moving away from the greater London area with bucketloads of house profit…
Here in Ireland there is not a lot of subprime as would be defined in America. However banks have been throwing 10X people’s income to buy
crappy 2 bed apartment’s.Recently a developer dropped the asking price of new apartments by €100,000
http://www.ireland.com/newspaper/property/2007/1206/1196838981191.html
Part of it was ascension into the Euro zone. With jobs able to move more easily than ever and everyone in Europe using the same money, companies moved and hired where the costs were lowest. Before the euro, Ireland was pretty much a third-world country.
This happened in Spain as well.
However, I do agree things went too far in both countries with housing prices.
“Bucking conventional wisdom, (the) trade group said the battered housing market is on the verge of stabilizing and inched up its outlook for 2007 and 2008 home sales.”
Once again the media proves itself to be utterly incapable in their core practice: reporting.
For the 1000th time: To report a quote from a blatantly biased organization (or David Lereah) without simultaneously reporting from a non-biased source *IS BIASED*. It elevates the person or organization being quoted to the level of an ‘authority’.
Furthermore, this particular situation is so extreme a responsible reporter should really include a sentence or two like: “The trade group has been wrong about every single one of it’s market predictions for the past few years. The group is distinctly biased in favor of increased market volume and higher prices”.
Of course, they’ll never say that because they’re inept little pawns and frankly they’re not that bright. The media shares the blame here. Every time I read a “bubble” article in the MSM now I just want to say, “Where were you three years ago?”
chalk one up for the blogoshpere.
Off topic a bit - but today is supposedly ‘Black Monday’ at Washington Mutual with layoffs being announced at 2:30pst - I’m not sure of numbers yet, but some departments are losing 2/3 of their staff today….
Kinda goes with the Bk Mgr saying mo ago that clientele were leaving because of fees, fees for This,That, and everything (paraphrasing) so “please let me fix this for you so we won’t lose you as well, Wamu doesn’t want to lose more clients”
STG.
Nothing needed fixing, but they were sure conciliatory %>
M-LEC Maneuver
“The new superfund, announced with much fanfare in mid-October, now looks increasingly irrelevant. Originally it was thought that the entity, called M-LEC, might raise as much as $80 billion that could prevent a sharp sell-off in securities owned by structured investment vehicles, or SIVs. Now, the M-LEC, known on Wall Street as the Super SIV, may raise just $60 billion, in part because many of the troubled SIVs are winding down themselves.”
The anticipated size of the M-LEC is far more volatile than the stock market these days. I have seen recent estimates in print on the range from $60 bn to $100 bn.
“The Realtors group also forecast the median price for U.S. existing homes…rise 0.3 percent next year to $218,300.”
Larry Yun, is this increase next year “in the bag”?
0.3% will be, of course, negative in real terms, unless somehow a bunch of oil is discovered and refineries are built in the next couple of months and gasoline goes back to $1.
It is even negative in real terms using the traditional five-times leverage of 20% down. 0.3% would be 1.5% earned on a 20% down payment… I’ll take T-bills instead, thanks.
On the 218k house, a 0.3% increase is about $652.00
Get in now or be priced out forever!
And how much will Property Taxes go up Larry? Seems like just about every muni is looking at increasing their levies soon.
“Housing fits a pattern George Soros, the 77-year-old chairman of Soros Fund Management, has observed since he entered the investment business in the 1960s. But often a flood of capital makes an asset’s fundamentals seem sounder than they really are, attracting even more capital.”
Fools rush in, where traders fear to tread.
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing”
Larry, do you mean “exaggerated negative coverage” like comments from the CEO of Wells Fargo?
Business Journal
November 16, 2007
Wells Fargo CEO says housing worst since Great Depression
http://tinyurl.com/yswk8k
“”We have not seen a nationwide decline in housing like this since the Great Depression,” Stumpf told those attending a Merrill Lynch & Co. (NYSE: MER) investment conference.”
Larry, you need to talk to these uninformed CEOs of these small financial companies (like Wells Fargo)…they are “harshing your mellow”, man!
If you want to have a good time (legally), I highly recommend grabbing an RSS feed of Google News, with the following search (yes, include the quotes):
“never been a better time to buy”
I grab the RSS feed for updates only in the last 7 days.
According to Google News, I can trust that it has never been a better time to buy in:
Skokie, IL
Northern Ireland
Liverpool UK
Southern Spain
Ohio
Bristol UK
There’s also never been a better time to buy a home PC, a digital camera, and Swiss wines.
Honetly, this is the best fun of any morning for me lately.
That’s right in at least one sense. With the introduction of the Nikon D300, mankind has finally made a digital camera I am eager to own. Too bad they’re backordered everywhere for now, but I can easily afford the $1,800 one costs with the money I’ve saved by renting.
I still shoot slide film. Haven’t found a digital camera I’m willing to switch to until now.
I’m a Nikon man myself, both film and digital. I still use an older model D50 but I have phenomenal lenses, and resolution isn’t that important to me. I do just fine with 4 megapixels if the lens is high quality and the lighting is proper.
A friend of mine was bragging about his 10 megapixel camera that just shot awful portraits. I guess it’s similar to horsepower: give me a 2 liter Subaru Impreza with an upgraded suspension, sticky tires, and a snowy day, and I’ll put the horsepower factor to rest.
I’ve seen the D300, and I’d love to upgrade, but I just can’t see the need for the time being. Maybe in the next year, but my photography time has been cut way down in the last 2 years, so I’m not in a rush.
I just got back from Australia, and I bought a Nikon D40 for this trip. Very nice. I wish I did buy the longer lens though, for 18-300mm i think for $700. oh well, next trip I will. d40 is great for $420 refurbed with 18-55mm lens.
And I still have my Nikon F (50mm,28mm,200mm tele lens) that I carried all over Japan, Taiwan, Viet-nam, Thailand in the late 60’s. Still takes great pictures, far better than most dig’s. I only dig it out for family pic’s (annual) and shot the rest by dig. I’ll have to check out the new D300 though.
A kindred spirit. I love my old Nikon (bought in 78) that my daughter just had refurbished for me because she trashed it after borrowing it. When kids were little I got an old instamatic because kids don’t wait for you to make all the settings for a perfect shot. There’s nothing like real film shots with a great camera. Love shooting B&W. I want a little digital for quick junk shots, but for real art, gotta love a good SLR film camera.
A lot of very, very nice SLRs now go for about $100-150 on eBay. I don’t worry about breaking my N90 anymore, cuz I can get another one dirt cheap. Lenses are a different story, at least with Nikkors, thanks to Nikon’s commitment to backwards compatibility.
The thing about the D300 is I could see myself using it for another 10 years, with no worries about it becoming obsolete or outgrowing its features. I’ve never thought that about a digital camera before.
I love Velvia, but this next summer will probably be the last hiking season I’ll shoot with it.
but for real art, gotta love a good SLR film camera.
IMO nothing can replace the satisfaction of seeing your images come up in darkroom trays. However, there is so much opportunity for creativity working with digital files, it can get addictive.
Does anyone have any suggestions on cameras that combine the SLR and digital capabilities? Keeping it under $2k plz…
The D300 is $1800. Lenses cost more, of course, but if you have already bought into Nikon you’re all set there.
The D200 is around $1400 and a fine-looking digital SLR, if you don’t mind a couple million fewer pixels and some reduced functionality.
I personal believe Canon is the way to go if you are starting from scratch with a digital SLR. The have a huge lead in sensor performance compared to Nikon. I grew up on an FM2 and was a Nikon fan but became a Canon Convert. If cash is tight then spend the money on good lens first and buy a quality used body. In the digital world something better comes out every 18-24 months. Canon’s 40D is an outstanding body. If you want a full frame sensor then wait until the 5D replacement comes out early next year. For those who want a bargain then purchase a 30D or a 5d used after the replacement comes out.
I have owned Nikons all my life. Have an F2, F100, and
Nikonos III.
Shoot film 100%.
3 big issues with digital image capture:
1) Can’t beat the “film look”.
2) Overall Image quality is still superior,
especially dynamic range. Ditto for colorimetry.
Resolution is not the only parameter to measure,
Film still has superior MTF (modulation transfer
function) characteristics.
2) No problems archiving film either. 50 years from now,
my negative/slide will still be readable with nothing more
than a light and a lens.
Archiving digital data is a HUGE issue.
To make my point: Anyone out there have a 8″ floppy
drive reader? How about a 1/4″ streaming tape drive?
How does anyone know if that picture CD will still be readable
in the future? Will you still be able to read the directory
structure if it becomes obsolete? Ditto for the file format
itself. What about lossly compression? What about
error correction on data recovery? Will anyone have
a workable physical reader to even mount the media?
My philosophy is: If its worth shooting, its worth shooting on film.
If I need an electronic copy, I just scan my neg/slide.
BTW.. Scanners are always improving. Thus the neg
I scan today can be re-scanned years from now with
even better results..
The best of both worlds!
octal: I agree with you 100%, but a few comments:
1. I use some really awesome and fairly expensive “film grain” emulation software with Photoshop, and I’m definitely happy with the results. Most people have commented about my use of film when I used digital with processing. The better plug-ins emulate hundreds of film varieties, and they work decently enough.
2. MTF/OTF is an issue that will take a LONG time for the digis to compensate properly for. But there’s some concerns in regards to the optical film future: does Fuji even make the Provia 100F still, and will they continue to? I sure hope so. I do think this is an area that will improve in digitals quickly as more film professionals start moving to the digital market just based on the declining profit margins the industry is facing.
3. Archiving is not a problem for me, and has never been. I still have data logs from a BBS I ran in 1987, all due to the fact that I utilized and continue to utilize a very strong document backup procedure that has all my data readily available in the most modern form. As hard drives get bigger, they continously meet my needs as the years go on. 10MB in 1987 was standard, but I had 40MB drives that mirrorer each other (SCSI was expensive then too!). Now most of my data is held across three data centers that provide nearly real-time access to data going back 15+ years if needed. What’s the purpose? Not much, other than having a history of my thoughts and desires and activities, but it’s fun to dig back into the old days. Now that Google is talking about providing storage online, I think the days of worrying about data will be long gone. I personally don’t mind at all if someone mines my data, even my financial data — I have absolutely no concern about privacy issues or the fear of someone stealing my identity.
When it comes to photos, I prefer negatives, yes, but the sheer size and hassle of dealing with film in terms of archiving and properly tagging everything makes me crazy. Flickr is “good enough” for now, but I think better pro-level services will come to light. I am not a professional photographer, but the ones I know who are license nearly all their works to the stock photo sites, where their photos are likely to be held forever. I’m always amazed at the quantity of the photos out there on those sites — who go through great troubles to back things up forever.
Portable storage is useless in a world where larger server farms can hold quadrabytes of information, letting each user only use what they need, and pay for it through advertising.
“Freddie Mac’s decision in 2005 to begin dealing in a significant way with ‘piggyback’ loans…“‘I think that what happened over time is we found that our own caution was making us less and less relevant, and we weren’t sure, quite frankly, that our competitors [on Wall Street] were being crazy,’…‘Could we have run for the hills and said we’re not going to do any of that? What if things didn’t go down? We would basically be just taking our whole future and giving it away.’””
So instead, you ignored the “what if things *do* go down question”.
“What if things didn’t go down?”
And if a frog had wings, it wouldn’t bump its @ss a-hoppin.
Sometimes I wonder if the barrier to entry for some of these powerful financial positions isn’t just a tad too low.
Let me see if I have this correct. FRE did it because everyone else was. I guess its just like when you tell your mom about a stupid stunt your thinking about just because everyone else is doing it and she asks if everyone jumped off a bridge would you do it too? Thats the logic I see at work in that statement. And thats how Warren Buffett differs from these clowns. He won’t do something stupid just because everyone else is. He’ll retain his money, let the idiots write bad policys and when it crashes down on the idiots, hes there with his capital itact ready to write intelligent, profitable and prudently low risk policies. Gee, how did he ever get so rich????
“In Europe, not a single junk bond has been issued since August. Spreads on Euribor - the rate used to price mortgages in Spain, France, Italy, and Ireland - reached 93 basis points last week, a new record. This is tantamount to four rate rises for homeowners.”
93 bps when every government is trying to free up credit insolvency. In the US, the spread of conventional to Jumbo has gone up 80bps in the last 10 days. This is full doc with at least 20% equity.
Wow…
‘not a single junk bond has been issued’
Isn’t going to help the I-bank revenue…
Creeping rates, Fannie and Freddie doing preperatory steps to require a larger down payment…
All must be well. To think, the darkest months of the home sales year are January and February. I cannot wait to see their Case-Shiller!
Got popcorn?
Neil
Regarding the “Who do we blame for this mess” game, anybody see this in the LA Times yesterday? It’s an OpEd by Stephen Fraser, writer and editor. Note the Times doesn’t mention he’s a far-left socialist.
http://tinyurl.com/2wa9cc
hope they don’t blame the 1998 community banking house in every pot law
“What makes Wall Street’s latest crisis so portentous, however, is the way it is interacting with, and infecting, healthier parts of the economy.”
Yes, “healthier parts of the economy” that were supercharged (until recently) by people spending more than they made or could afford, partially due to the credit bubble itself. You can’t have it both ways…either the bubble helped, and now is ready to hurt the economy, or there is no bubble. It wasn’t a “Goldilocks” economy to begin with…Goldilocks was attracted to the party because of a punchbowl spiked with everclear and overproof rum. Now the bears are knocking on the door, wanting everyone to clear out…or things will get ugly.
Watch out for those boogeyman socialists… They’re hiding behind every tree ready leap out and get you.
I’m hardly kidding when I say that if one lives in San Francisco and is a fair-minded, rational person - they are hiding behind nearly every tree ready to leap out and snag you.
Boo! Gunna getcha gunna getcha!
“It will take years to determine who bears the primary responsibility for the current mortgage mess. But a piece of the puzzle fell into place last week with a story by my Post colleague David Hilzenrath about Freddie Mac’s decision in 2005 to begin dealing in a significant way with ‘piggyback’ loans that effectively allowed homeowners to borrow more than 80 percent of a property’s value — the limit set by Freddie’s congressional charter.”
“‘I think that what happened over time is we found that our own caution was making us less and less relevant, and we weren’t sure, quite frankly, that our competitors [on Wall Street] were being crazy,’ explained Anthony Piszel, Freddie’s chief financial officer. ‘Could we have run for the hills and said we’re not going to do any of that? What if things didn’t go down? We would basically be just taking our whole future and giving it away.’”
translation:
They upped the ante… so we tried to out-crazy them, said Piszel.
“‘There usually has to be a flaw in people’s perceptions to set a boom-bust sequence into motion,’ Mr. Soros says.”
I suspect a monetary policy of systematically inflating asset prices would provide sufficient impetus to create flawed perceptions.
Given Soros’ quote, and since the SF Bay Area absolutely lives on boom-bust sequences (and not just in housing), I’d have to say that there must frequently be many flawed perceptions around here.
That explains some things, such as the existence of those socialists exeter was mentioning earlier.
Treasury Increases US Debt Costs to Aid Bankers and Brokers
On December 3rd the Treasury issued a press release to announce new limits on savings bond purchases. The annual purchase limits were reduced from $120k to $20k. Beginning January 1st an individual may only buy annually $10k in EE Bonds (5k paper, 5k electronic) and $10k in I Bonds (5k paper, 5k electronic). The limit was last so low in 1973.
I suspect that soon Treasury will raise the minimum amount for Treasury Direct purchases of T-Bills, T-Notes, and T-Bonds. Currently it’s $1k. They’ll probably raise it to $50k.
The objective is to push risk-adverse, small investors into bank CDs, Treasury MMFs (fees for fund managers) and brokerage purchases of Notes and Bonds (commissions for brokers).
That’s not very sporting.
Link?
http://www.treasurydirect.gov/news/pressroom/pressroom_reducedpurchaselimit.htm
The following is the link.
http://www.treasurydirect.gov/news/pressroom/pressroom_reducedpurchaselimit.htm
(My previous post didn’t show up.)
FHLMC Puts the Squeeze on Servicers
FHLMC servicers are required to remit to investors P&I payments on delinquent loans until such time as FHLMC buys the delinquent loan out of the pool. At that time the servicer is reimbursed. That is why there are capital requirements to become a FHLMC servicer. Generally, FHLMC buys out a loan when it is 120 days delinquent. It looks like the servicers will now have to carry the deadbeats longer.
McLean, VA – Freddie Mac (NYSE: FRE) announced today that the company will generally purchase mortgages that are 120 days or more delinquent from pools underlying Mortgage Participation Certificates (”PCs”) when:
the mortgages have been modified;
a foreclosure sale occurs;
the mortgages are delinquent for 24 months; or
the cost of guarantee payments to security holders, including advances of interest at the security coupon rate, exceeds the cost of holding the nonperforming loans in its mortgage portfolio.
Barron’s subscribers: Don’t miss Thomas Donlan’s editorial this week:
“Kill All the Lenders”
The mortgage mess is heading toward a bad end
Link Here
“‘Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases,’ said the trade group’s chief economist, Lawrence Yun at a press briefing. ‘Mortgage availability is improving.’”
Yea! Yea! Yea! Heard this $–T before. Mr. Yun has no credibility and just where are prices increasing. The whole country is aware of the down turn and will not bid many peices of RE higher. He is smoking shreaded RE contracts!
Bank Of America fund loss is 18B in 8 days? Or they have been hiding losses?
…
BofA Closing Beleaguered Institutional Cash Fund That Has Withered From $34B to $12B
CHARLOTTE, N.C. (AP) — Bank of America Corp. is liquidating a privately placed, enhanced institutional cash fund amid withering losses on complex asset-backed securities, the bank said Monday.
The Columbia Strategic Cash Portfolio fund for institutional investors that was worth $34 billion on Nov. 30, currently has about $12 billion in assets, the Charlotte-based bank said. The fund will be closed off to new investors, it added.