A Correction Was Inevitable And Necessary
Some housing bubble news from Wall Street and Washington. Associated Press, “The National Association of Realtors seasonally adjusted index of pending sales for existing homes fell to a reading of 87.6…down 19.2 percent from a year ago. (The) trade group predicted Tuesday that the pace of U.S. home sales will pick up significantly in the second half of 2008, bringing total sales for the year marginally higher than in 2007.”
“‘The exact timing and the strength of a home sales recovery is a bit uncertain,’ Lawrence Yun, the group’s chief economist, said in a statement. ‘A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.’”
“The Realtors group predicted new home sales would fall 13.4 percent this year to 669,000, down from a projected total of 773,000 in 2007.”
“The group did not anticipate 2007’s severe housing market downturn. A year ago, it was predicting more than 6.4 million existing home sales — about 760,000 more than actually happened.”
From Bloomberg. “Tougher lending rules are adding to market woes. A third of planned home sales were canceled or delayed in September, October and November because of loan problems, according to the results of a survey of 2,416 real-estate agents issued yesterday.”
“The Realtors association estimates…purchases of new homes will fall to 669,000 from 773,000.”
From CNN Money. “The National Association of Realtors also said it no longer sees even a modest rebound in existing home prices this year, as it had previously forecast, and pushed back its estimate of a full-year uptick in prices to 2009.”
“The group also cut its existing home price estimate for the current quarter to more than 5 percent below year-ago levels, which would mean the current period would see the steepest drop in that price measure on record.”
“Only a month ago the group’s estimate was for only a 2.5 percent drop in prices in the first quarter.”
“The latest reading on pending home sales is better only than the pace of sales in August and September, when the meltdown in mortgage markets cut off the availability of mortgage financing for many buyers.”
“The November reading is even worse than the 89.8 reading recorded in September 2001. That reading had been the weakest month on record before the current housing downturn.”
From Reuters. “KB Home posted a quarterly loss on Tuesday with abandonment and impairment charges. The company recorded an after-tax noncash charge of $514.2 million to establish a valuation allowance related to deferred tax assets.”
“KB Home also recorded $305.5 million in charges for inventory impairments, land option contract abandonments and impairments on future land sales. Joint venture impairments totaled $97.9 million.”
“New home deliveries fell 22 percent to 8,132 in the quarter from a year earlier and the average selling price fell 11.5 percent to $247,800, KB Home said. For the just-completed quarter, net orders for new homes, an indicator of future sales, were off 32 percent at 2,574. Net orders were down in each geographic region.”
“The cancellation rate for the quarter was unchanged at 58 percent from the year-earlier quarter, but up from the 50 percent reported in the third quarter of 2007.”
From MarketWatch. “‘The challenging market conditions we experienced through the first three quarters of 2007 continued during the fourth quarter,’ said Jeffrey Mezger, KB Home’s CEO. ‘We believe 2008 will be another tough year for the homebuilding industry.’”
“‘KB Home’s speculative inventory, while in line with its peer group, has been increasing as cancellations have spiked in recent months,’ wrote analysts at Majestic Research in a recent report.”
“IndyMac Bancorp Inc’s mortgage loan originations slumped 53 percent in November from a year earlier and may be hurt more as Fannie Mae and Freddie Mac tighten requirements on loans they purchase, the company said.”
“‘Growth in the pipeline and resulting production volume may be negatively impacted by further credit tightening currently being implemented by the GSEs that is requiring IndyMac to implement another round of credit guideline tightening,’ the company said.”
“Delinquencies on prime loans, which include those guaranteed by the GSEs, serviced by IndyMac rose to 6.25 percent in November from 5.8 in October, IndyMac said. In subprime, the percentage of loans in arrears for 30 or more days climbed to 26.87 percent in November from 24.43 percent in October.”
The New York Daily News. “New York will gain just 500 jobs this year - if we’re lucky - according to a scary new city forecast that sees slowdowns on Wall Street, stagnant real estate prices and an ocean of red ink in the city budget future.”
“‘The fiscal picture has dimmed considerably,’ the Independent Budget Office spokesman Doug Turetsky told the Daily News yesterday. ‘There is a fairly significant risk that things could get worse.’”
“If Wall Street loses even more money this year, the agency expects the city’s jobs will shrink by 8,700 this year, rebounding by just 15,000 jobs next year - and that’s if the national economy doesn’t sink into a recession.”
“‘While there appears little reason to think our assumptions are too pessimistic, there is a reasonable chance that they are overly optimistic,’ the IBO said.”
“The city housing market also is projected to finally cool down as prices stagnate or fall and fewer homes and apartments change hands. Commercial real estate deals also are slowing down, the IBO says.”
“‘The Manhattan real estate market is still holding firm. The rest of the city is weakening,’ Turetsky said. ‘The good, strong corporate profits seem to be coming to an end.’”
“”Treasury Secretary Henry Paulson said on Monday the Bush administration was considering how to give the economy a boost as it weathers a housing correction, but does not want to rush. more stories like this”
“Paulson said a correction in the U.S. housing market…was ‘inevitable and necessary’ after years in which banks and other mortgage grantors followed ‘lax’ lending practices and prices had risen too quickly.”
“Paulson said financial institutions were writing down the value of the assets they hold but insisted no one should be ’surprised or disappointed’ to see that happening because the long-term effect will be to strengthen their balance sheets.”
“‘This is market discipline in action and should enhance market confidence over time,’ the former Goldman Sachs CEO said.”
CFC BK rumor - per Bloomberg TV
Ode to Ronnie & the Daytonas…
Little L.T.O., you’re not lookin’ fine
Deduces Wall Street, spankin’ your stock’s behind
Listen to him tanning up, listen to his why-ee-eye-ine
Wa-wa, ( “Yeah, yeah, adios L.T.O.”) wa, wa, wa, wa, wa, wa
(”Yeah, yeah, adios L.T.O.”)
Wa-wa, ( “Yeah, yeah, adios L.T.O.”) wa, wa, wa, wa, wa, wa
(”Yeah, yeah, adios L.T.O.”)
Wa-wa (”Ahhh, adios L.T.O.”) wa, wa, wa, wa, wa, wa
http://www.youtube.com/watch?v=44kg0IENTPU
See that article on them “recreating” documents?
http://www.cnbc.com/id/22552815
NY Times version…
Lender Tells Judge It ‘Recreated’ Letters
By GRETCHEN MORGENSON
Published: January 8, 2008
The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess.
http://www.nytimes.com/2008/01/08/business/08lend.html?ref=business
“A spokesman for the lender, Rick Simon, said: “It is not Countrywide’s policy to create or ‘fabricate’ any documents as evidence …”
Oh, Oh, they’ve got Simon and Simon on the case.
Countrywide halted - pending news-
TOO BIG TO FAIL - LMFAO!!
The CEO has been real quiet lately.
“There is no substance to the rumor that Countrywide is planning to file for bankruptcy,” said Countrywide (CFC, Fortune 500) spokesman Rick Simon in an e-mail received by CNNMoney.com
Good point. On the way up we got the Man himself ruffling his peac**k feathers with the Money Honey on CNBC. Now, we get spokespersons that don’t even speak.
” NEW YORK (Reuters) - Countrywide Financial Corp shares recovered some of their earlier losses after the largest U.S. mortgage lender rejected market speculation on Tuesday that it was planning to seek bankruptcy protection.
In trading following the end of a trading halt, the shares were down $1.00, or 13.1 percent, at $6.64 on the New York Stock Exchange. They had earlier fallen to $5.76.”
I still think they’re toast. Looks like they’ve been faking loan docs…
What’s so bad about faking loan docs? I can’t imagine this violation of the law is anything special in light of the recent wild-wild-west lending environment…
‘What’s so bad about faking loan docs?’
- Agreed. How else were ‘poor’ people allowed to purchase homes for the last 5 years?
- Sorry, meant to say, ‘How else were poor people allowed to purchase two, three, six or eight homes each?’
The allegation is that CFC submitted false docs in bankruptcy procedures to support phony claims (various charges). That’s a felony, like lying under oath. I wonder what very junior officer of CFC will eventually be tagged as the perpetrator.
Countrywide has been doing sleezy dealings in our area (NE Ohio) since the late 90’s. I’m just surprised they haven’t been caught before this.
Systemic risk = policy of protecting financial entities which are deemed to have reached “too-big-to-fail” status. Soon the most successful corporations will all be “too-big-to-fail” thanks to this favoritism. One might term this “economies of fail.”
Dang! Congrats to all the CFC shorts.
Thanks
BAC has lost 2/3 of their investment in CFC in less than six months! Don’t forget about the FHLBB’s $50 billion plus loans to CFC over the last six month too!
Countryfried low of less than $6 bucks today although presently at $6.7 down 11% or so.
BAC = dumb bunnies
http://www.pilkey.com/bookview.php?id=23
I was pretty surprised when BAC spent the $2 billion on CFC stock anyway. It came right about the time that the BAC-LaSalle merger was approved and shorttracked. Coincidence? Or the cost of doing business?
BAC bought senior security convertibles. In the event that CFC goes into BK, BAC (if it has the moneys) can buy the desirable securities from the BK court. Common shareholders get nothing. BAC gets in cheap in a CFC - BK.
Looks like the builder stocks are on their next leg down. It might be harder to sell homes to people who cannot afford them without CFC to provide the financing.
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol%20kbh%20len%20ctx%20dhi%20fnm%20aapl%20goog%20bzh%20phm%20sbux%20peet,cfc
Buh bye CFC…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=CFC&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=13&freq=1&startdate=&enddate=&hiddenTrue=&comp=Enter+Symbol%28s%29%3A&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
Looks like CFC is toast and may not recover. You know there is a problem when their attorney cannot explain questionable documents!
So, if you have a Countrywide mortgage, does it make sense to try to refinance? If so, with which bank?
So, if you have a Countrywide mortgage, does it make sense to try to refinance? If so, with which bank?
No, the BK court will force the sale of the paper they hold and if you do refinance, your mortgage will also be sold.
San Diego December foreclosure stats just out, UGLY….
http://www.foreclosureforum.com/stats.html
Most fascinating data there! BTW, don’t plan on buying until that right column is all in the black once again…
blackred!!! (a la 1997)Gadzooks, NODs in 2007 almost double 1996 (the second worst year)
NODs more-than doubled from 2005 to 2006, then they did so again from 2006 to 2007. This is a black swan from hell. I am willing to guess without looking back any further than 1991 that this kind of YOY ramping up is historically unprecedented.
Countrywide Financial won’t go into bankruptcy until its S&L, Countrywide Bank, is placed into receivership by the OTS. As long as CFC has the S&L it can borrow money and meet current obligations.
By the way, bank receiverships are always done on Fridays after the close of business.
“By the way, bank receiverships are always done on Fridays after the close of business.”
ya dont say…Hmmmm
This Credit Crunch Has Bite
(author is the author of “Traders, Guns & Money”)
http://www.minyanville.com/articles/fnm-GNMA/index/a/15444
An outstanding read!
Quote from the cited article: “This will make substantial depends on bank liquidity and capital. ” What could this mean?
It means when the bankers pee their pants (bank liquidity), they will need to be wearing substantial “depends” diapers.
lol
Lots of typos in Minyanville I notice.
NAR new home sales will sck” since we don’t get commission on them
best you buy used resale house chop chop” yunyum
CFC possible BK
http://www.bloomberg.com/apps/news?pid=20601084&sid=aDUZ.B.jjITM&refer=stocks
Also -
In regard to the credit concerns, several headlines attributed to the selling pressure in financials. 1) Moody’s downgraded 46 Bear Stearns tranches backed by Alt-A Mortgage loans. 2) Moody’s has placed National City’s (NCC 14.47, -0.72) credit rating under review for a possible downgrade. 3) Several troubled CDOs are liquidating over $5 billion in distressed securities this week, according to Reuters.
http://finance.yahoo.com/marketupdate/overview
12:25 pm
I was getting a bit nervous about my SRS (double short CRE) which had gapped higher last week. Today it first covered the gap and now climbed to a new high on this news.
Dang SRS in my “fantasy” account (Marketocracy) blew through the rules limit and made my “fund” non-compliant. I hate making too much Monopoly money…
“‘The exact timing and the strength of a home sales recovery is a bit uncertain,’ Lawrence Yun, the group’s chief economist, said in a statement. ‘A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.’”
Or - given your previous poor guesses, you might want to try for 2012
Right… last year’s prjection was only off by 12%. They predicted flat sales but they actually fell off a cliff. So, they are predicitng flat sales with a rebound. Does that mean they’ll continue to fall off a cliff?
The NAR has missed 10 or more of their forcasts to date. Their lack of credibility and their image has been severly damaged! I get better and useful information from car salespeople than I do from the NAR!
“The National Association of Realtors… predicted Tuesday that the pace of U.S. home sales will pick up significantly in the second half of 2008, bringing total sales for the year marginally higher than in 2007.”
Yun, always the delusional optimist.
If house prices fell to reasonable levels, wouldn’t that cause sales to pick up significantly?
Sure would. Traditional 30 year fixed rate loans. No more than 28% of income to go to PITI. Biggest problem will be the down payments. I’m cool as a vet I can get in without a down if I so desire. Lets get those square footage prices back down in the $80 range. Forget what happened over the last 1/2 decade. Oh and lastly lets turn speculation into a felony.
Oh and lastly lets turn speculation into a felony.
All that needs to be done is for current speculators that took a hit to not receive any sort of bailout or relief. Leave the ones that assisted in creating the current problem out to dry, and that should put the fear of God into possible future speculators.
I’m wondering if it could actually get worse if prices were to drop back to pre 2000 levels. Think about it. Those that made a lot of money did so doing absolutely nothing. That can be very addicting. Junkies don’t stay on heroin for it’s health benefits. It’s the addiction! It would not take much of a spark to get this fire going again I’m afraid. Greed can be a very powerful thing, especially now that they now what it taste like.
Those that made a lot of money did so doing absolutely nothing.
Only because the banks allowed them to do so by HAVING absolutely nothing (no down pay). This time the addicts will have to pay cash for their fix, and I don’t see them showing up at the closing table with $20K in change they got from holding up a 7-11.
And those that profited and got out just aren’t numerous enough to start a frenzy.
But… but… then people could AFFORD to BUY houses… and LIVE in them… and the debt-pushers and churners would be out of jobs if they can’t stick you with huge debt, force you to refinance every few years with more fees, then force you to lose the place in a few more years (and collect more fees)… then get you into a new place (with fees) while selling your old place to some new dupe (with fees)… you get the idea.
And think of the ripple effects: you might buy your furniture and not buy anymore since you don’t have to move every few years to escape exploding mortgages. And you won’t have home equity to use to buy Hummers… and spinning rims for the Hummer… and vacations to nowhere… and so on.
If house prices fell to reasonable levels, wouldn’t that cause sales to pick up significantly?
Yes, only if there are enough qualified buyers who can meet the underwritting standards now in place. However, I think the consumer is tapped out and there are not enough qualified people to buy up the inventory.
Personally I think the issue of enough qualified buyers is a huge issue for 2008 even if there is some closer to affordability numbers.
Plus, do the NAR numbers include foreclosure sales as sales?
I had a lot of fun this morning writing a slightly sarcastic email to someone who was proposing to purchase a “park model” (small mobile home) and lot by making an 8% down payment and borrowing 92% from me. My first paragraph ended with the advice: “Hint — read the newspapers.”
I actually have not made any 90%+ loans in the past three years, and only one in the two years before that.
Yun, always the delusional “economist”.
Don’t cry for him though. He has a lot of kindred spirits to keep him from feeling lonely.
NAR predicting influx of blue unicorns and pink faeries to come in and save the market.
Don’t be ridiculous.
Unicorns are white, not blue. Sometimes with a little iridescence on the horn. :^)
LOL coffee up the nose >; )
don’t ask me why but that cracked me up!
Every bad news release somehow also implies a bottom is soon to come.
Every bad news release somehow also implies a bottom is soon to come.
The NAR is showing their bottom with every press release!
Confucius say, “man who pick bottom too much, have crappy hand.”
Remember when a loss was a loss, not a charge or impairment?
“KB Home also recorded $305.5 million in charges for inventory impairments, land option contract abandonments and impairments on future land sales. Joint venture impairments totaled $97.9 million.”
Agreed. However, change the word and you change the meaning of the word. Change the meaning of the word and you change perception. And perception is reality.
Yeah, don’t pick on the financially impaired, they are handicapped and deserve our compassionate conservatism. Losses are for losers.
All “problems” have vanished — they were replaced with “issues.”
“Paulson said a correction in the U.S. housing market…was ‘inevitable and necessary’ after years in which banks and other mortgage grantors followed ‘lax’ lending practices and prices had risen too quickly.”
So would the market collapse already, please?
Keep cool, aladin, we are winning.
Last call to DC-area HBBers: We will have our first meeting tonight Tuesday 7pm at Capitol City Brewing Co on Capitol Hill, 2 Mass Ave NE. More details are in the BitsBucket, so post any followups there.
JP,
Thanks for taking the time to organize the get together but unfortuanately, I won’t be able to make it.
That just means more beer for the rest of us! Sorry we’ll miss you.
Damnit. I forgot. Maybe next time.
/the one damn day i dont read the damned blog
Ah, DC area = No. VA
“Treasury Secretary Henry Paulson said Tuesday the administration was exploring what would be a significant expansion of the program to help at-risk mortgage holders. Paulson, in an interview on CNBC, said the administration was involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates.”
No bailout here. Move along.
Oh sure, the expansion of a voluntary, no-tax money involved ‘plan’ is a bail-out. Of course these banks want to keep getting paid.
But check under your bed; mean ol Hillary is hidding under there with an army of FBs to eat you!
So Ben, what exactly WOULD constitute a bailout in your opinion? Would raising the limit on FHA loans do it? What is your definition of bailout? To me, any action by the government to prop up prices and limit the downside for those involved in this mess = bailout.
BTW, what does Hillary have to do with this?
To me, a bail-out would make everybody whole. That would require prices being held up indefinitely, which is impossible, IMO. Paulson said as much in this post.
To a large degree, the government has created the bubble and it is collapsing every day. If people want to be outraged, I would suggest targeting the idea that this was allowed to happen in the first place.
I say Hillary cuz she is most closely associated with the BO boogeymen-crowd, and often cited by the screaming Mimis that fear her. BTW, I heard she’s crying in public now.
One thing I’ve noticed in those that see a BO under every rock; you guys seem to want a perfect ending, with no flaws or rough spots. I don’t think things work that way.
I’m worried that I made a bad financial move by having savings and working vs overspending and speculating.
Thats why I’m worried about bailouts.
If I get screwed badly in this I’m going to stop working and just spend time with my family and work the welfare system and/or work under the table.
This is the exact kind of thing that causes society to fail.
Its rewarding bad behavior and punishing good behavior.
We already do enough of that.
If the banks want to take their lumps on those loans fine but I don’t expect it should be on my back via the Fed rate cuts to give the banks free money.
That is stealing my savings and devaluing all of my past work to bail out speculators.
So its a stealth bailout by the banks and keeps the prices unaffordable.
Ben,
I understand your reflexive “not gonna happen” attitude to knee-jerk bail-out posts, but joe mamma definitely has a point. If/when the SHTF for real (as in Dow 8,000, ‘official’ unemployment reaches 10%, major bank failures, etc.), we can expect extreme measures from the feds to do anything to prop up the markets and protect themselves (from angry mobs), damn the consequences. Raising the conforming FHA and/or GSE limits from $417k to $1million and mass-purchasing Alt-As from outfits like CFC would certainly qualify as a major “bailout” to me.
We haven’t seen any true large-scale “bailouts”… yet. That doesn’t mean they won’t/can’t happen if the politicians get desperate enough. Amazing what a cornered rat with a printing press and first-rate military can do.
1997 ? community banking bill -then W for the 2003 doomsday extention and GREENSPIN for 2004 get an arm loan and go for it !
“BTW, I heard she’s crying in public now.”
She is not my candidate, but…poor Hillary. No matter what she does, it’s wrong. For months, people have been calling her cold and unfeeling, a robocandidate. Now, she tears up for a nanosecond (because an old lady was nice to her; imagine!) and people pile on her for that, too. The WSJ is calling it her “Edmund Muskie moment”. I felt sorry for Muskie then, too.
I would suggest targeting the idea that this was allowed to happen in the first place.
Remember the stat of the union address the president gave in 2003? Affordable housing and ownership for everyone. That was their job creation machine that has run out of gas.
‘We haven’t seen any true large-scale “bailouts”… yet.’
Ah, yes, the return of the yets. Well, after having shot down about a thousand of these, ‘I see a BO’ posts, the yets have no credibility left. Again, when has a bubble ever been bailed out, in all of human history?
More a teared-up whimper. It just can’t be fun to go from can’t-lose to being Obama’d in one week.
I guess we define bailout differently. I don’t think everyone needs to be made whole. I agree 100% that the government created the bubble, by inaction and failure to regulate. I guess this is why some of us are so outraged now. NOW they act. Where were they 3 years ago? I think a lot of people here hate the Clinton’s, but I don’t think she is the spokeswoman for the BO crowd. But maybe others see it differently, with the hatred and all.
Regarding a perfect ending, I don’t think a perfect ending is what I want. I’m not even sure what a perfect ending would be. I just don’t like the hypocrisy. But when the bubble was inflating these people all said the free market should not be regulated or messed with. Now that we have massive losses they change their tune. And even though we can disagree NOW whether there has been a bailout or not, I think it is coming. They are giving it to us in small steps, but the most radical steps are coming. I hope you jump on the bandwagon if/when this happens.
Thanks for the reply, Ben. I always enjoy reading what you post, even if I disagree with you from time to time.
I agree that a bailout as you define it is impossible. However, it won’t stop the gov from trying to spend our money.
I define a BO as anything the government does that costs taxpayers money in order to help someone that got into financial trouble in the free market. It may not be a global bailout, but little bailouts on an individual level.
This would include:
1. Altering tax law to delay the time at which debt forgiveness is taxable;
2. Allowing the expansion of tax free bond offerings at the state level to help borrowers who are in trouble.
Ultimately, this mini-bailouts of sorts (bo’s), will not amount to a Bailout (BO), they are too little, too late, and the problem is too large.
The interest rate freeze was a non-event. The best I can tell, the US was encouraging the banks to do something that was in the bank’s best interest anyway (milk those borrowers who can still make payments for all they’re worth before taking back the property).
I expect more mini bo’s that will essentially be handing out a handful of $5 umbrellas in a torrential downpour in NYC. Not enough to keep everyone dry, and not even enough to keep those lucky enough to get one dry indefinitely. Eventually, everyone’s going to get wet.
I agree that a bailout as you define it is impossible. However, it won’t stop the gov from trying to spend our money.
Exactly. The fact that any massive-scale bailout attempt is doomed to fail won’t stop the government from trying it anyway (to show angry voters that they’re trying to “do something”). And in the process, they may very well beggar the responsible and prudent minority to benefit the greedy and reckless majority.
Call it a bailout or not, but something interesting is happening as banks chew off their legs to get free of the trap:
To improve “liquidity,” banks seek to borrow from each other, and the Fed seeks to make that borrowing from each other easier at low low low rates. (Since even when borrowing from the Fed they borrow from each other).
The banks know this easy creation debases the dollar. They don’t just not care, they love it when they borrow, cuz they get to pay back with dollars of less worth.
On the other hand, banks are ever more reluctant to lend out funds, since they know they will be paid back with debased dollars. Dollars that are debased by the very effort of the Fed to increase liquidity.
So the more the Fed pumps loans and lowers rates, the less banks are willing to lend out. The very effort of the bank to improve the velocity of magic money slows down the velocity. The more the Fed wants to loan, the less the banks want to, and things still will grind to a stop. Haven’t they thought this out?
I can only conclude that the polls showed Hillary as cold and calculating, and her handlers told her to humanize herself. Now she has suddenly cried twice in public and now, while talking about how she never talks about herself, she cries about poor me.
This cold and calculating ploy will backfire, because the nation is not ready for a crybaby pres, no matter what.
Re BO-ing candidates: Chris Dodd was the loudest advocate of BO, and he dropped dead in IA. The main benefit is, I stopped getting email from his campaign. (I had once written to him to bitch about BO.)
Ben J. said, “To a large degree, the government has created the bubble and it is collapsing every day. If people want to be outraged, I would suggest targeting the idea that this was allowed to happen in the first place.”
Me, exeter, has been calling for those responsible to be brought in front of the camera to answer for their crimes since Jan 2005.
Then; “I say Hillary cuz she is most closely associated with the BO boogeymen-crowd, and often cited by the screaming Mimis that fear her. BTW, I heard she’s crying in public now.”
Screaming mimi’s, tax whiners, screech monkeys, gun nuts, religious zealots and other assorted extremists and boogeyman fearmongers have a platform here to float their conspiracy theories and fear campaigns. They continue to excuse the perpetrators of this crime and demonize those who had nothing to do with it.
I hear you James. I feel the same way. Ben usually has the right angle on issues but this is one I cannot agree with him on.
‘If I get screwed badly in this I’m going to stop working and just spend time with my family and work the welfare system and/or work under the table.’
‘I hear you James. I feel the same way.’
You don’t have to agree or disagree with anybody. Just explain why, when the housing bubble is collapsing all around us, that such silly angst is warranted? It’s this cry-baby, the worlds-not-fair stuff that is a waste of time and doesn’t make any sense.
Sure, go on welfare, that’s smart! That’s ‘fair.’
Well, boo-hoo, there’s gonna be a fortune made in foreclosures. Make your choices.
Guess this isn’t an issue for you rich blogger types.
“there’s gonna be a fortune made in foreclosures. Make your choices.”
There is a payoff for not being a part of this bubble and keeping a fiscally logical head about it. Not only do the vast majority of us who post here not have massive debt, but we have a fantastic resource (Ben and each other) when the buying times do come.
It is hard to watch and listen as politicians and REIC buffoons attempt yet another pitch for keeping their jobs, but the long and short of it is that housing prices will become reasonable again.
Tax money will be wasted, the wronng causes will be blamed for the bubble itself and we will have to listen to idiots blather about the bottom for years. But we (eventually) will be rewarded for being hard-working, honest, and unwilling to buy into ponzi schemes that were totally illogical. Keep the faith.
No offense, Ben, but most of us can’t quit our day jobs to make a fortune in foreclosures, and that’s the point of this whole thing: I shouldn’t HAVE to be a shark, speculator, flipper, or some other form of semi-parasite, skimming off of society, looking for problems and exploiting them to make a buck. I should be able to work a decent job for decent pay, save and invest my money, and buy a decent house. And if that is no longer the case, than dang it, I am going to be pissed off.
‘I should be able to work a decent job for decent pay, save and invest my money, and buy a decent house.’
And I prove everyday that is more and more possible. These posters ignore that and bury their heads in self pity and paranoia. But by all means, become a tax cheat or go on welfare like James.
I’m not rich, but I have saved every penny I could for years. And I have educated myself for YEARS on foreclosures because I knew where this economy was headed.
I think a few of these people want someone to give them a house. Call Jimmy Carter, he’ll even help you build it.
(I know it’s late & you’ll probably not see this, but…)
Ben,
I think what most of us “hand wringers” are concerned about is the govt’s attempts to minimize the bankers’ losses with our tax money. It doesn’t need to be a 100% bailout.
They will unnecessarily prolong the agony (recession/depression) in an attempt to crete a “soft landing” and the beneficiaries of this will be those who created the mess to beging with…and it will be at our expense.
I don’t think anyone here claims that a bailout would keep prices permanently high or bail the banks/lenders out 100%. That’s not the point.
Of course, all bail-out measures will fail. That’s a fact, and I have yet to see any posters say otherwise. The problems is, how much will **we** suffer while they continue with their failed attempts?
CA renter
I think that people will use this blog as a historical reference in the future. I believe your concern has been documented, more than a few times. How about looking at the data as it comes in and not appearing to be as whiny? That’s my point.
The only likely bailouts that I see now are FNMA and FHLMC and it would be a “nationalization” in that the shareholders would be wiped out. The bondholders would get US guarantees like the depositors and creditors of Northern Rock in the UK.
Don’t forget FHA gurantees.
Actually, what this really means is that Paulson is acknowledging that prime borrowers are in just as much trouble as the subprimes. He completely skipped claiming that the problem is just with subprime and alt-A, but prime should be fine. This is significant.
Of course, so much of the alt-A was for investors, that doing something similar to the subprime program, including an owner occupied requirement, would eliminate all of them.
These voluntary rate freeze things are just that - voluntary. The banks are only doing them because it is in their best interests to do so. Private companies doing what is best for their own businesses is not a government bailout even if a government official suggests that they do it and talks about it a lot.
“New York will gain just 500 jobs this year - if we’re lucky - according to a scary new city forecast that sees slowdowns on Wall Street, stagnant real estate prices and an ocean of red ink in the city budget future.”
I read that report. It is optimisitic.
The worst case scenario does not assume a national recession or a big decline in the stock market. It does not include any assumed need to ramp up pension contributions to make up for losses. It does not assume more government health care costs as private employees lose coverage. There was no discussion of the fiscal consequences of a broader decline on the federal and state governments, and the potential targeting of cuts in state and federal revenues (school aid) against NYC, even though that happens in every downturn. There was no discussion of rising muni interest rates, which Bloomberg News reported yesterday. Etc.
But…but…I live in New York City and *it’s different here*!!!
Heh.
Stop it you doom and gloom’er, the market always goes up.
The other problem with NYC not considered in the discussion is that there are very few young professionals that will touch it with a 100 foot pole: The city is simply too expensive, which has not helped it’s reputation as a livable city. There has been and will continue to be a drain of professionals in general in the city, which in turn might bring back some of the “good ole days” when graffiti was common on the subways and “I love NY” was implemented.
Heck, prices are now reported down in Windsor Terrace, Brooklyn, a neighborhood of personal interest. If this continues, the city might be faced with more people like me choosing to live here, even if they didn’t buy in 1994.
http://beta.therealdeal.com/articles/8405
The bust is now five miles from Manhattan, and getting closer.
Thanks for posting that, WT. I’ve been sniffing around the neighborhood some in the past few months, would like to move the clan over there, but need that 30%+ haircut many of us think is coming. Gives one a shred of hope … kind of like in “The Hustler” when Fast Eddie says after he blows the big match, “I’ll just hustle up another stake and try Fats again.” And Bert tells him, “And maybe you’ll die of old age first.”
Only wish this were true. But they keep coming in waves, dying on the beach, machine-gunned by $4800-a-month 2-bedroom apts. shared 4 ways! No end to these monstrosities going up.
The other problem with NYC not considered in the discussion is that there are very few young professionals that will touch it with a 100 foot pole: The city is simply too expensive, which has not helped it’s reputation as a
livable city.
xxxxxxxxxx
Only wish this were true. But they keep coming in waves, dying on the beach, machine-gunned by $4800-a-month 2-bedroom apts. shared 4 ways! No end to these monstrosities going up.
I recall reading that it took awhile after the market crash of 1929 for the economy to unwind. Many people assumed that the banks and government would patch things up, so there was a lot of denial going around for several months thereafter.
Many of those who were smug in 1929 because they didn’t own stocks became unemployed a year or so later.
Few escaped the consequences of what happened in 1929 and, IMO, few will escape the consequences of what is happening today.
I started a new job in August of 2001. I started taking classes for my LLM (at employer’s request) in January of 2002. A few weeks in, I told my classmates that I was going to be laid off, I just didn’t know when. Actual lay off was in February of 2003. At least they paid for half the LLM.
What did you get your LLM in? I would like to do mine in Taxation. Isabel
I’m sorry, LLM?
An LLM is an advanced degree usually done after the Juris Doctorate (Law school) It is a specialized degree in a specific legal area such as taxation, real estate, family law, international law, intellectual property, etc.
ronin: I think they mean a Master’s degree in Law, something beyond the normal 3-yr law degree.
Isabel,
LLM is in tax. No particular sub-specialty. Moved to DC area before I was done. Finally finished in 2006 with a class at another law school and transferred the credits back to my home institution. Graduated in January 2007.
The funny thing is that jobs were hard to come by in 2003 and 2004 in New York. But the folks willing to move to Florida were getting several offers. I wonder how they are doing now?
I don’t know Polly. Anything related to the Mortgage industry has probably tanked. Maybe an LLM in Bankruptcy/ Securities at this point would be a better bet.:-) I am a federal employee and I do contracts, however I have been doing the VITA (income tax assistance) volunteer thing for the IRS for the last couple of years and that got me very interested in TAX. The University of Alabama has a partial distance learning program that might work for me. I am going to see if the government will do tuition assistance. That might make it worthwhile for me. Isabel.
“‘KB Home’s speculative inventory, while in line with its peer group, has been increasing as cancellations have spiked in recent months,’ wrote analysts at Majestic Research in a recent report.”
“While in line with others” are ominous words. Homebuilders are dead in 2008.
But mom, all my other friends are being allowed too!
Groan… Nothing like watching a herd of lemmings going of a cliff. I can just hear their last sayings as they plummet:
“I won’t give it awayyyyyyyy….” thud.
Got popcorn?
Neil
As each new shoe drops (CFC BK ?) Ultimately it becomes systemic…I am getting a real bad feeling about this one…I hope I am wrong…
I was just about to say, CFC has that Enron look to it. Very similar.
Similar as Chapter 11? Or shiny handcuffs or the sound of clanging cell doors? In my experience, similarities turn up in unexpected places.
Not only that, but both feel redundant. If I remember correctly(?), Enron at the time had seriously downsized their energy-producing sectors to where the company was just another layer of management and fees. When they went down, there weren’t any power outages (ironically, in California the power outages stopped.)
CFC feels the same way. Why “originate” a loan through Tan Man, if the paper is going to be immediately sold to the FHA, or Fannie or the Bank of Scotland? When CFC goes down we’ll just go to the banks directly, like in the good ol’ days.
Those aren’t shoes dropping…
http://www.youtube.com/watch?v=o2QuJ6rM1yM
CFC halted. Denying bankruptcy rumors.
So what does halted mean (for us newbies). Can’t do business for the moment?
I believe they mean that trading of CFC stock has been halted. That’s generally -really- bad news for the stock in question. As an example AHM (American Home Mortgage) stock was trade-stopped on a BK rumor, and then subsequently did file BK. This was back in July, 2007.
it’s truely different at countrywide. they really mean it when they deny BK.
There is absolutely no substance to the rumor that Countrywide is going bankrupt. We’ve got weeks of viability left.
Anybody in NY want to go to this and report back?
http://bigpicture.typepad.com/comments/2008/01/real-estate-con.html
Only if you provide a valium prescription!
Bottom line: the NAR is a trade group with a vested interest in seeing home sales succeed. Why what they mention is written as a ‘report’ is counterproductive, inaccurate, and naturally biased. The ONLY thing this group EVER says is that a rebound is sure to happen in any given next quarter.
I vote for striking the NAR from any financial report. Period.
Why can’t the NAR get a clue and start trying to talk sellers into lowering their reservation prices to levels the market will bear? There are few qualified buyers at current asking prices, so saying “Buy now or you will get priced out forever” is unlikely to work very well.
I agree. I think the tact for real estate agents would be to say, “In a tough market, the lowest price wins.” That would increase their transactions and, ultimately, make them more money. However, the problem is all the real estate agents “own” three or more “investment” properties, so this slogan would crush them.
Even when there wasn’t a housing bubble re agents couldn’t talk sellers down on their prices. They mostly think their house is “different” and worth so much more than buyers think it’s worth. It’s always been like that and always will be. Everyone either wants to make a fast buck or they need so much to get out from under, and they’re too stupid to figure out that buyers really don’t care.
Even when there wasn’t a housing bubble re agents couldn’t talk sellers down on their prices.
I was out and about the other day and came across a listing which is now $625k with a broker. House has been FSBO for about 8 months prior at $800k. In the seller’s mind, I’m sure they are thinking they are taking a “loss” of 175k. In actuality, the home (imo) should be priced around 375k if they want it to sell. This is in ATL, nice neighborhood ITP.
When your paycheck is determined by the sales price, it’s real tough to suggest a lower sales price. Let’s face it, everybody except the buyer makes out better from a higher sales price including the lender/mortgage broker, agent, title insurance escrow…
I really think a flat fee of a couple thousand $$ should be enough for agents considering the effort/knowledge that they provide. Of course, this is only my opinion and over the past 7 years I have been one of those evil flippers/rehabbers that are so despised, so please discount it accordingly.
If you can’t negotiage with an agent for a flat fee of a couple of thousand, you need to find another agent. Isabel.
Jimmy’s 100% correct. The RealTard asshats are leveraged up on the same junk they convinced all the other morons to leverage on. I believe it is this very reason that prices have always been “sticky”.
Why can’t the NAR get a clue and start trying to talk sellers into lowering their reservation prices to levels the market will bear?
GREED among their members!
if i can cut out early i most certainly will attend
i work 2 subway stops away
It’s impossible for CFC to go bankrupt due to internal fraud since we now have Sarbannes-Oxley in place!! (sarcasm off)
Anti-fraud laws just shift the fraud around. Fraud is like a water balloon; you pinch one side and it just bulges out the other.
Sarbox made it harder to manipulate stock prices (and in the process made everything horribly more expensive for honest businessmen, too). So fraudsters simply commenced manipulating real estate prices, where the new regulations didn’t reach.
“The HOPE NOW alliance is a coalition of mortgage industry companies which are seeking to reach at-risk borrowers to help them avoid foreclosures.”
They should have called it “Keep Paying Now, Though There is No Hope Later”
Hope (to Catch a Falling Knife) Now Alliance
Hype Now Alliance
Considering all of these goons are going to be out of office in 12 months, they can say anything. Nothing will happen. This year and next will be the years the skeletons come out of the Bush admin closet. How about Ron Paul for Treasury Secretary ?
Now I’d actually vote for him in the office >; )
RP for Treas: great choice. Let’s start writing to McCain Giuliani Obama etc and suggesting RP for Treasury.
TX,
Would you call yesterday and today a double bottom on BBY?
No. That is one fugly chart.
THX.
‘A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.-
or 09, 10, 11..as a matter of fact when it actually rebounds i will tell you. can i have yuns job.
wow everything slid right off the table after 2pm
Yeah, where’s the mythical PPT when I need them? Oh, that’s right, DOW 12,600 is not a psychologically important number. No wait, the PPT lives in New Hampshire and they left for the poll at 2pm. Yeah, that’s the ticket!
The NAR is a non-serious source of information on the housing market.
They are a sales/cheerleading organization. They do gather data, but they are not a source of serious information. The media goes to them for purportedly unbiased information about the real estate markets and it just makes those media outlets seems that much less reliable.
I closed out all of my positions in SKF and SRS a few minutes before the close today. I can’t help but thinking that with the drops we’ve seen recently some sort of temporary rally has to be coming shortly. I hope I’m not wrong, I need these double-digit gains to offset inflation!
I can’t help but think that with all the drops in home sales / construction / mortgage financing that we’ve seen recently, a bottom is close at hand.
You are thinking value-wise.
Percentage-wise, they have quite a ways to go
“‘The exact timing and the strength of a home sales recovery is a bit uncertain,’ Lawrence Yun, the group’s chief economist, said in a statement. ‘A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.’”
Where does he get this? Do these guys just make stuff up every time they open their mouths? I would like to see a single shard of evidence to support a ‘meaningful recovery’ in existing home sales by as early as this spring.
Hold on a minute - does the San Diego foreclosure chart count NOD’s by property (aka 1 NOD per property) or by the actual NOD (aka 1 NOD for the 1st mtg and 1 for the HELOC, etc.) ?? Might make a big difference when comparing the number of NOD’s historically as I would suspect there are far more properties encumbered by multiple loans today than 15 years ago. And of course you have to factor in all the additional properties that have been built over that span (aka what is the % of NOD’s per total properties)
Clearly there is an explosion in NOD’s (from all-time lows, mind you) but just looking at the raw numbers is not enough. Nevertheless, there’s fire in them there hills…
(In his best Agent Smith voice)
“Do you hear that, Mr. Mozilo? That is the sound of inevitability… the sound of Countrywide’ death. Goodbye, Mr. Mozilo.”
Hahaha! I guess we’ve moved beyond “containment!” I am just waiting for the mainstream media to really get into the mood to scream about the need for lower prices - eventually, the sheeple will obey!