Bits Bucket And Craigslist Finds For January 10, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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What’s in your wallet… I don’t have a Cap. One card but I have been told they S…
http://www.bloomberg.com/apps/news?pid=20601103&sid=agYg.EonG2ig&refer=us
but, but folks are using credit cards to pay their morts- isn’t that great for biz !!!???
You could see that one coming a mile a way. Capital One could be the next Countrywide, IMO. Though probably just not quite as dramatic.
What happens when people can no longer pay their CC’s? Then where does the money come from? Do people start hawking stuff at the pawn shop?
“Do people start hawking stuff at the pawn shop”?
I remember in the 80’s during the market contraction, reading about pawn shops in Texas saying folks were hocking everything from Rolexs to chandeliers all the way to bronze baby shoes.
This is true. Pawn shops were overflowing. Part of that was the result of all the toys and such bought during the boom. Sound similar?
Ben, I was sure you would remember… Many pawn shops had drive thru windows. I recall a picture in a Texas paper of a women in line in a station wagon with a crystal chandelier and cases of booze. We are bound to see a repeat except the volume will be ten fold.
You better take your diamond ring
You better pawn it babe
How does it feel to be without a home?
Hahahaha. From jeniuses to paupers in less than 24 months.
Well, being kind of a closet bling lover (in moderation), I’m on the lookout for great deals in that area and am starting to find them. The OC is particularly good.
I’ve been in hundreds of pawn shops, in my life…
The one common denominator between them, is that they have to be jacks of all trades and masters of none.
Oftentimes they deal in goods that have questionable resale value, but in the past have relied upon the fact that around 80% of all goods pawned, get redeemed.
A loan is made based upon a guestimate of true wholesale resale value, usually around 1/2 of what it would sell for on craigslist, or thereabouts.
They make their money (varies widely by state, some states allow egregious interest rates) on the person coming back and redeeming their items, pocketing interest, storage fees, late fees, etc.
The redemption rate is falling steadily, and the collateral is piling up. A few months ago in Florida, many pawnbrokers stopped loaning on construction tools, as they found there were no buyers for them, after the loans defaulted and they tried to sell the tools.
And so it will go with most items.
I wonder what a pawnbroker would lend on a pair of his and hers jetskis, hardly used, with a trailer?
According to the Millionaire Next Door, the business owner most likely to be a millionaire is an auctioneer. That’s because
1: Their business is counter cyclical, they do best when times are hard.
2: They see what overconsumption leads to on a daily basis. This roots most of them in a fear of being put in the position where someone is auctioning off THEIR stuff.
3: They also become subject matter experts on the buying and selling of a lot of stuff, and can snag up great deals and turn around and sell those deals for big profits creating a very lucrative side business.
And they have inside knowledge on what the REAL market value of stuff is. They know up front if a fake bidder is in the mix, or at least on the back side if the sale doesn’t go through.
I’ve been to perhaps 500 auctions in my life, and it’s like a human petting zoo, watching people.
Lots of pawn brokers selling on E-bay these days.
I saw a guy yesterday who specializes in short sales. He says, “Yeah, I make money. I make money by buying low and selling low.”
Speaking of auction, I will be attending an condo/townhome absolute auction later on this month. It said 26-30 units going for whatever the highest bid is. I know what I want to pay (about 55-60% off) and won’t go over that no matter what. What do you think is the best strategy here as far as bidding order? I was thinking let a few bids go through first, to establish a price range, and then bid on the mid-order units. If I bid on the first few, I do not know if I am overpaying or not. If I wait until the last few, some people who are left and haven’t won any bid may try to “salvage the day” by overpaying and I don’t want to compete against those guys.
Anyone else here with real estate absolute auction experience that they can share?
Let the first 10 go, but watch from this vantage point…
Position yourself standing on the side, in front of the 1st row of chairs, and watch the auction from an auctioneer’s perspective.
The easiest way to spot a shill bidding, is their complete robot-like behavior. They’ve got no risk and bid accordingly.
If you see the same shill or shills bidding on most properties, it’s a set-up auction.
Also it shows you the cajoling that goes on, with the ringmen, that are always pleading for another bid…
There is absolutely no urgency on you missing out on real estate deals, this isn’t 2004.
Isn’t shill bidding a crime?
Just because something’s against the law, doesn’t mean it doesn’t happen…
Nudge Nudge, Wink Wink
Find a handfull of others of like mind.
Sit everyone as close to the front and center as possible.
Have someone bid 50%. When they get outbid.
Everyone stand up and leave. Some should laugh at the crowd. Some should audibly say “What a waste of my time”
Lemmings are lemmings. I only matters what the first one does.
” remember in the 80’s during the market contraction, reading about pawn shops in Texas saying folks were hocking everything from Rolexs to chandeliers all the way to bronze baby shoes. ”
I have a ton of stuff i would like to unload but pawn shop is last desperate option. I have gold jewelry, diamonds, collectibles, old LPs, precious stones, ect. I prefer keeping them for now as i like collecting and hanging onto old valuable stuff but if the times get tough i can put this stuff on e-bay or sell on craigslist. Pawn shops for the desperate only and i am not there yet.
Old LPs–have a garage sale. We had a block garage sale and what by far brought the most people (mainly guys) was that some of my neighbors were selling old LPs (we advertised that). They sold tons of them, but I don’t remember how much they were charging.
RE: if the times get tough i can put this stuff on e-bay or sell on craigslist.
You better unload your “collectables” while the baby boomers are still kicking. Once that generation passes on, your Mono recorded, dog-eared covered “Meet he Beatles”album will be worth shite.
Same with the Al Kaline baseball card.
People might go hi-tech use ebay,
Right. Seeing a lot of stupid wishing prices on ebay but that should change soon.
They’ll start with wishing prices… but it will normalize quickly.
Oh… e-bay should be a major winner in this downturn. I wonder how many Massarati’s will end up there?
Got popcorn?
Neil
I own stock in eBay for this very reason.
One major caveat against eBay?
The majority of the transaction are plastic fantastic.
If people had to pay by check or a moneyorder, their biz would dry up considerably.
Neil,
Oh, the # of Maseratis is going up,up, up. And everyone is still wishing. Here’s one I’ve been looking at, as a gauge on the market. Sorry for the long link. It is the lowest priced of the newer cars, and it has been for sale over, and over, and over, and over. . . . .
http://cgi.ebay.com/ebaymotors/2003-Maserati-GT-Spider-Nice-NAV-LowRsrv_W0QQitemZ170180267614QQcmdZViewItem?hash=item170180267614
I bought Ebay and Amazon early. These are the only stocks I own anymore and have zero intention of selling. The other online company I’m watching is Etsy.
This is very interesting. A few years ago, Cap One went into the higher end of the consumer credit card market. They strongly went after costumers with good credit. I am wondering how many people with good credit are now having problems. It’s just like watching the “prime loan” delinquencies tick up on mortgages.
I believe it is because those with good credit are able to borrow heavily to make mortgage payments on credit cards and other sources that we have not seen widespread problems to date. Subprime types had no access to credit cards and other forms of loans, so it all had to be paid for from savings or their job directly. Also those with good credit often have longer teaser rate periods. This does not mean there is no problem here, just that when they do finally blow up they will be a lot bigger losses. Keep in mind many can afford their mortgage and live on credit cards for a long time for food and gas before finally exhausting all options.
Home values will have fallen even more leading to greater mortgage losses and credit card balances will be very high and add to the losses.
Add to this these “prime” consumers will be in effect removed from the mainstream economy for a very long time, resulting in slower sales and yet greater losses.
What this means is that good credit problems just have not shown up as lates yet, but for many the writing is on the wall.
When credit cards drop limits to current balance on people with no hope of paying (layoffs), the expected last ditch safety net of the non-saver will evaporate to much yelling. The real social contract: Low cost credit for all!
Problem with paying your mortgage and using your credit card for daily expenses is that the balance on the cards keeps going higher along with the minimum payments. Pretty soon they can’t make those either.
Before the fall of the Soviet Empire, I always thought if they could have just monkeywrenched our credit system, we’d grind to a halt.
I can see it coming now…
http://money.cnn.com/2008/01/09/news/companies/bofa_countrywide.fortune/index.htm?postversion=2008011004
Countryscam took B of A for a ride….. suckers!!
To all you inflationists who are alarmed at the rate of growth of M3, your solution is at hand.
M1 rules; Cash is king.
You can buy brand new bundles of 100 banknotes from quite a list of failed countries in the past 25 years, for around $6 to $10.
Cash wasn’t king.
Look at the financial difficulties all these folks are having. Every one of them could be solved if they had cash.
Cash is king.
What happens when you can burn your dollars and generate more heat than you could if you bought firewood. People will just start burning their money. Then Ben Bernanke wouldn’t be able to print it fast enough.
Cash isn’t king. Lack of debt is king.
Many people deep in debt have tons of cash. They are not kings - they are prisoners.
“Dollar” is a unit of measure, just like “gallon” or “bushel”. You can’t burn “gallons” or “bushels” without naming the substance. You can burn “gallons of gas” or “bushels of corn”.
Dollars aren’t paper. If a “dollar” was a piece of paper, wouldn’t you have to have a hundred pieces of paper to have a “hundred dollars”? Most people use the word “dollar” daily, without a clue what “dollar” means.
Silver Certificates never claimed to BE “dollars”, they were certificates for dollars of silver. A One Dollar Silver Certificate said, “This certifies that there is on Deposite in the Treasury of the United States of America, One Dollar in Silver, Payable to the Bearer on Demand.” Read that twice.
Historically, in the US, a dollar was by law as a specific weight of silver or a specific weight of gold. If you deposited dollars of silver in a bank you received certificates denominated in dollars equal to the legal “dollar” weight of silver deposited.
Frequently, “Federal Reserve Notes (FRNs)” are mistakenly called “dollars,” just because they look like the redemable “dollar” certificates. FRNs are not dollars, they’re merely “Federal Reserve Accounting Unit Devices” with the word “dollar” printed across the bottom, but the substance removed.
“Many people deep in debt have tons of cash.”
They also have tons of net-worth-sucking parasites.
Unless you make jewelry out of defunct cash of any country.
Those shopping channels are selling chains of coins and making it seem like WOW..If I had thought of keeping all that dirty coinage around.. I coulda been a contenda.
Capital One Profit Expected to Fall Short As Loan Woes Worsen
By Valerie Bauerlein
Word Count: 318 | Companies Featured in This Article: Capital One Financial
Capital One Financial Corp. is expected to announce today that its 2007 profit will fall about 20% short of its previous forecast because of deepening loan troubles and the weakening U.S. economy.
The results by the McLean, Va., credit-card company are the latest sign that mortgage woes are spreading to other types of loans. Capital One is also a major originator of auto loans, and delinquencies have been rising steadily since the summer.
http://online.wsj.com/article/SB119993790408280327.html?mod=hpp_us_whats_news
Didn’t we all predict this? Containment has failed - what is it, about $1 trillion in unsecured credit card debt total? I wonder if that blowing up will have an impact… oh, and did they get around to creative investing with that as well? Are there CDO’s, CDO^2’s, and so on based upon unsecured credit card debt? Unreal!
You are going to want to read this little missive when time permits.
http://www.safehaven.com/article-9183.htm
Another good one from Itulip.
http://www.itulip.com/forums/showthread.php?p=24015#post24015
For Bernanke, a Question of Toughness
http://tinyurl.com/ytvbfc
“Personally, I think we should be at 3 percent right now,” said James Glassman, a senior economist at JPMorgan Chase. “You ask anyone on Wall Street, ‘If Bernanke cuts to 1 percent or 2 percent or 3 percent, would that fix the problem?’ Most people would tell you that would certainly start the healing.”
Healing? Weren’t those same low rates and easy money the reason why there is a problem?
Toughness = leaning into the wind / taking away Wall Street’s punch bowl before the drunken party turns Bacchanalian. So far, so good.
http://en.wikipedia.org/wiki/Bacchanalia
P.S. If Wall Street is loudly complaining that the Fed has not eased enough, that is a good sign BB is doing his job well.
So true!
Are these the same idiots who said Ben over reacted when he lowered .50? While I regard the Fed and its chairman as crooks, I find myself almost sympathizing with them as no matter what they do they will be criticized. Now that I got that out, I’m back to hating them again….
You have to feel a bit of sympathy for anyone playing the hand AG dealt…
Sure, well, one definition of insanity is doing the same thing over and over expecting different results. Like the Bush tax cuts.
Crazy like a fox. The point of the tax cuts is to keep political constituents happy by looking busy in the face of a crisis. Nobody who knows nothin’ about economics believes that handing out $500 (or whatever) per American spender is going to repair a solvency crisis.
Let’s do a thought experiment for a second Professor Bear. What if the government ran the printing presses and handed out one trillion per person in free money?
Certainly there would now be enough money floating around to easily repay all outstanding loans and fix the solvency crisis.
Of course this would also create insta-hyperinflation that would wipe out the accumulated wealth of anyone holding dollars or dollar denominated instruments. The dollar value of real assets, wages etc would rise to a new equilibrium point. Foreign governments would have no choice but to let their currencies float to market value or else allow Americans to buy their assets with funny money.
At the end of the process US entities would have no debts, nothing would have changed in their real wealth, but their fictitious capital would be wiped out. A sort of reset for the system bringing us back to an initial state.
Since the biggest holders of fictitous capital are the power elite this would never be implemented as it goes against their interests.
However, as an earlier poster wrote, “Cash is King”. In a fiat money system how can there be a lack of cash unless the government CHOOSES not to print? Which leads me to beleive that there will be printing at some level at some point. Not anywhere near enough to reset the system but enough to mitigate some of the deflationary pain. As bailouts go, handing out checks would be my preferred method. It doesn’t reward people for bad behavior and counteracts the shrinkage in money suppy due to bank credit being destroyed.
“Of course this would also create insta-hyperinflation that would wipe out the accumulated wealth of anyone holding dollars or dollar denominated instruments.”
What would it do to the liability of those holding dollar-denominated debt?
“Sure, well, one definition of insanity is doing the same thing over and over expecting different results.”
Unfortunatley, I think he actually expects (and wants) the same results: deficits, asset price inflation, widening gap between rich and poor.
Exactly! The middle class MUST be eliminated since people who aren’t working 16 hours a day to get enough food to live to the next day tend to ask questions of the ruling elite and demand silly things like: freedom, justice, etc.
Ben knows if he leaves interest rates where they are, inflation or hyper-inflation is the next logical conclusion…
If he lowers them, he unleashes the dogs of deflation, and the country goes into a 1990’s Japan lookalike economy, going nowhere fast.
I don’t see how we can be on the cusp of inflation and deflation at the same time. One or the other is the underlying trend, IMO.
Exactly, if what you say is true, Rolle’s theorem (http://en.wikipedia.org/wiki/Rolle%27s_theorem) implies that there exists a magic interest rate R which will be neither deflationary nor hyper inflationary. We all know it’s not true - the economy is fscked regardless of what BB does.
Rather, the intermediate value theorem http://en.wikipedia.org/wiki/Intermediate_value_theorem. Sorry my calculus is a little rusty.
Yensoy — Calculus reference appreciated
The Fed walks along a razors edge between those two underlying trends, IMO.
I agree Ben…………but before we can say which it is, we have to clearly define both terms.
EXACTLY. Those who are concerned about deflation are worry about the disapearance of a few trillion dollars from the money supply as the credit bubble evaporates and asset prices fall. Those who are concerned about inflation worry about rising consumer prices, partly driven by the fall of the dollar compared to other currencies. While they’re busy talking past each other, I’m serene in the belief that we can and will have both at the same time.
“Inflation is defined as the increase in the price of some set of goods and services in a given economy over a period of time. It is measured as the percentage rate of change of a price index.[1]
Mainstream economists overwhelmingly agree that high rates of inflation are caused by high rates of growth of the money supply.”
http://en.wikipedia.org/wiki/Inflation
“Deflation is the opposite of inflation. Deflation is the loss of money in the available money supply. For economists especially, the term has been and is sometimes used to refer to a decrease in the size of the money supply (as a proximate cause of the decrease in the general price level). The latter is now more often referred to as a ‘contraction’ of the money supply. During deflation the demand for liquidity goes up, in preference to goods or interest. During deflation the purchasing power of money increases.”
I’m of the belief that the Bernanke Fed sees its main job as balancing the deflationary pressure of an unprecedented decline in U.S. housing market values (at least since the 1930s) by creating inflation in other areas (especially corporate share prices).
http://online.wsj.com/article/SB119993790408280327.html?mod=hpp_us_whats_news
I would like a better understanding of just what the Fed thinks its role is.
Read their lips.
“Inflation is defined as the increase in the price of some set of goods and services in a given economy over a period of time. It is measured as the percentage rate of change of a price index.[1]
Mainstream economists overwhelmingly agree that high rates of inflation are caused by high rates of growth of the money supply.”
For the housing good, the price inflation was caused by high rates of growth in the money supply tied to an explosion of herd stupidity. The money is leaving. What about the stupidity? All the animal analogists expect the herds instincts to turn them back to safety. (Kind of like the lemmings and the buffalo?)
What if the stupidity doesn’t deflate?
PB, the problem with applying these definitions to the current situation IMHO is that what we’re likely to see is a huge contraction in CREDIT, rather than cash. So M3 might fall while M0 stays the same. The prices of things that are/can be bough with borrowed money or used as collateral for further debt (RE and equities) are likely to fall significantly, even as the prices for many imported consumer goods rise. (because a falling dollar shifts the supply/demand curve) While not unprecidented, this belies a simplistic “prices are inversely proportional to the money supply” analysis.
jim A — totally agree the credit contraction can have a huge effect not reflected whatever in M0.
M3 might fall? Come on, there is NO sign of that, it’ s strongly accelerating everywhere around the globe while the US housing bubble has been deflating for about a year now.
besides, I still think defining inflation/deflation by a rise or fall in the general price level is a stupid and pointless definition (nice for economists and other geeks, but not suitable for the real world). Defining it as growth of the money supply is a lot better, but there still is the problem that you have to decide at which Mx number to look, and people don’t agree on that.
IMHO everything points to stagflation (as others have said: inflation in necessary items and deflation in unnecessary items).
While they’re busy talking past each other, I’m serene in the belief that we can and will have both at the same time.
That’s my concern — the worst of both worlds in ’70s-style stagflation. (I’m assuming that’s what you meant, Jim A.)
nhz and ez Yes, there’s alot of agreement ’round thes parts on what will happen, and much less agreement on what to call it.
Also consider what happens as countries around the world stop using the dollar as a reserve currency. All the dollars currently held as reserves come flooding back into the market.
This problem is exacerbated if oil and gold start getting traded in some other currency.
Remember that when the US circles the drain. The biggest consumer of oil will have a significant drop in demand. Nobody else has the means to absorb all that oil in an instant. Oil demand will have to wait for non US consumption and infrastructure to catch up.
Unless of course something else disrupts supply, but, come, on how many times has there been a crisis in the Straits fo Hormuz???????????
The real trend is dual: inflation in everything we NEED and deflation in everything we merely WANT.
ding ding ding
Precisely. As for what to call it, how about “welcome to the 3rd world.”
I complete disagree, I NEED a McMansion and the price of one of those is deflating!!
Hi Ben,
At this point I just want to say how much I’ve truly appreciated this blog; you have created a forum unsurpassed in the annals of American bewilderment at modern economic and fiscal policy! The Great Housing Bubble of the early 21st century was never better predicted, analyzed, discussed, documented, dissected. I think there are probably thousands of people who have saved many thousands of $$$, as a result of this blog. Thanks again.
And again please let me offer to our readers the notion, unpopular as it may be today, that the housing deflation exists in a construct of overall monetary inflation; a riptide, if you will, contemporaneous with a strong incoming tide. These things are NOT mutually exclusive. In fact the extremes of each create the cross current effect.
OK folks, my pitch today is the same as before: Housing prices: current down draft within a chronic monetary inflationary environment.
Thanks.
“…how we can be on the cusp of inflation and deflation…”
Imagine a tug of war between Mr. Market (deflation) and Professor Bernanke (inflation). They are both pulling very hard in opposite directions, and are temporarily balanced. At the point when one of them loses their strength, the trend is resolved.
Inflation can only happen if the money supply grows faster than the average interest rate of all loans. Money supply grows by people taking on more loans. If people stop taking on loans because they no longer qualify then deflation sets in. Deflation will continue until society starts borrowing more money into existence than the interest due.
But like all things, prices for money is ultimately based upon supply and demand. When the rest of the world rejects the dollar then demand for the dollar will fall and prices will rise even as the supply shrinks. This will cause massive inflation on everything that isn’t purchased by debt.
The above is true only in the absence of government intervention. If the government becomes the borrower of last resort (by giving everyone $500) then they can force inflation.
“If people stop taking on loans because they no longer qualify then deflation sets in.”
What about investment banks? Do they fit into your definition of what ‘people’ is?
It sounds to me like both are happening. House and some other asset values rose too far and are now falling back. Depending on exactly what and exactly where something on the order of 10% a year of value is slipping away. At the same time inflation is running around 3-4% or more while growth is going to around 2% or less. That means that inflation is scraping at least 2% a year and possibly a lot more off of everything.
Whether this is inflation or deflation depends on your economic position. Working class folks who are just getting by will see inflation dominate while anyone with large assets especially housing dominant in their portfolio will see mostly deflation. Is there something missing from this simple picture?
We can have both at the same time. Inflation of asset prices and a deflating dollar. The world is global and a fiat system. The dollar is no long backed by gold thus if the dollar disappears they can easily print more thus no deflation. The deflation in its value comes from too many dollars in global circulation and thus its value VS assets is lower. Inflation occurs due to too many dollars in circulation and the fixed income person only had enough dollars for NECESSITIES and thus necessities continue to inflate while consumer discretionary items (TOYS) deflate.
How would that work, lowering interest rates causing deflation? Wouldn’t higher rates tend to shrink the debt pool?
in the current crazy lending climate, lower rates means a growing credit bubble, more punishment for prudent savers etc. so more of the same mess. FAR higher rates are the only cure for the mess that Greenspan made.
Unfortunately, politicians and banksters will never choose to take the bad medicine; it has to be force-feeded to them by external conditions (when most of the damage already has been done….)
Japan was giving Yens away all the way to 0% interest.
Nobody in Japan took out loans to by real estate.
The counter party has to be willing to go into debt.
I saw a post yesterday on (Calc Risk or Mish) that mentioned some laywers at the FED researched the laws to see if the FED can force banks to lend money. Turns out they can.
So Ben gets in the copter, points a lawyer at the Banks and they lend under duress to someone or something that reflates the asset bubble.
Let’s start a hedge fund, volunteer to take on one of these “loans” to buy a few 747’s call it BJ Air. Get an appraisal for the planes at 120% of retail split the diff with Boeing on the back end and head to Brazil for one hell of a party.
It worked for wall street, why can’t we have some fun too!
I like your idea……..except you need to buy Gulfstream G550s Bombardier Global Expresses, or Dassault Falcon 2000EX’s or the new 7X……as big ticket airplanes go, they are more “fluid” assets……:)
‘If he lowers them, he unleashes the dogs of deflation, and the country goes into a 1990’s Japan lookalike economy, going nowhere fast.”
This makes no sense. If he lowers rates, that will provide an inflationary force (though not enough to counteract deflationary forces). That’s exactly why Wall Street wants lower rates: asset price inflation. Japan’s lower rates were an attempt to thwart deflation, not the cause of deflation.
“Healing? Weren’t those same low rates and easy money the reason why there is a problem?”
This is what I don’t understand. I also get annoyed with these talking heads called reporters who have taken on this mantra without questioning it.
It’s like helping an alcoholic by aggressively lowering the cost of liquor. How’s that for healing?
Good analogy.
The low rates were a small factor in the current mess, but the real problem we have today is that people borrowed more than they could ever possibly afford to repay. Loan products like option loans or others with low teaser rates which were used to qualalie borrowers along with no docs etc are the main reason we see the level of problems we see today.
Does anyone have any figures showing what percentages of standard fixed loans are in trouble VS the new toxic ones we hear about all the time?
“The low rates were a small factor in the current mess, but the real problem we have today is that people borrowed more than they could ever possibly afford to repay.”
- Isn’t this all the same thing?
Do NOT ask this question.
Someone asked, “Hey what are these houses really worth, anyway?” last year, and look what happened.
I wish I had that data too. Half the problem is that the media doesn’t use the word “toxic;” i.e. where the mort pay is not static. They mush it all in with “subprime.” Just wait until they find out that Prime can be toxic too.
The real problem is a combination of several bad policies, but if I had to single out just one bad policy that kept this mess spiraling up, it would be the elimination of down payment.
yes, you can clearly see that in Europe. People think a housing bust cannot happen in Europe because we have ‘NO subprime’ (or just a few %). But the reality is that the majority of the EU loans, including fixed rate longterm loans, are very subprime too because they can never be repaid unless homeprices keep growing forever at far above inflation rate. Even stupid government mortgage insurance programs like those in the Netherlands cannot change that - all these programs will go bankrupt once homeprices start falling seriously; and the +/- 1000% appreciation of the last 15-20 years, there is LOTS of room to the downside.
Subprime will become a synonym for toxic, just like Munson because a synonym for loser in the movie Kingpin.
Low rates were not a small problem. They artificially inflated house prices because the STUPID buyers only look at the monthly payment. So a bubble formed and started growing. As the prices rose, more idiots started buying ever more expensive houses because lenders stopped checking credit-worthiness (they must have believed rising prices will keep the collateral safe). So, the problem - “people borrowed more than they could ever possibly repay” - is due to AG starting a bubble with low rates.
I would recommend everyone to read ‘Irrational Exuberance’ from Shiller for more research on this topic; he has a lot of interesting research and analysis on the subject. Difficult to sum up, but I think one can say that low rates did NOT cause the housing bubble, however they certainly allowed the bubble to get a lot bigger than in would have with normal rates. Several earlier housing bubbles (both in US and Europe) started while interest rates were relatively high.
AG engineered this monster bubble by dropping the Fed rates below the inflation rate, in effect making it more profitable to borrow absurd amounts of money to buy endlessly (haha) appreciating houses vs. saving money in a savings account and watching inflation destroy its value.
It was all calculated in advance since lots of people lost everything, which was the goal.
Amen.
“The low rates were a small factor in the current mess, but the real problem we have today is that people borrowed more than they could ever possibly afford to repay.”
Amen. If traditional standards had stayed in place, and people bought a house at 3x their gross income at record low interest rates, folks would be in great shape. But no, low interest rates were seen as an opportunity to buy more house.
‘“Bernanke should be making stronger statements and then backing them up with decisive easing,” said Jan Hatzius, chief domestic economist for Goldman Sachs,…’
Thanks to the Greenspan legacy, the Fed chairman’s job now involves getting up on a soapbox with megaphone in hand and loudly proclaiming how all current and future problems will be fixed with lower interest rates.
Ben could be like Paul Giamatti’s character in the movie Sideways, a teacher of higher education, that’s a fish out of water elsewhere.
It’s 5 pm somewhere, drinks on me…
http://www.chiff.com/a/sideways-wine-tour.htm
p.s.:
Miles Raymond: No, if anyone orders Merlot, I’m leaving. I am NOT drinking any f*cking Merlot!
Let’s just give the job to Cramer, and we can watch his head explode.
it is silly how all these financial bigshots line up on the soapbox to call for FAR lower rates in order to save their a**.
Like the Bill the Pimp in the US and his lackeys in Europe
I hope some day they are going to face the bad consequences of their irresponsible behaviour, they should know better.
A Question of Toughness… That’s a joke, not one of these articles questions the on going trashing of the dollar. It’s all about Wall Street all the time. Hey middle class America you are screwed, and we like it like that!
http://www.nytimes.com/2008/01/10/business/10bernanke.html?_r=1&ref=business&oref=slogin
I agre. How come nobody ever says, hey America, pay cut?
They will when food and gas double in price US
Jan. 3 (Bloomberg) — Wheat rose, marking the biggest two- day gain in four months, as investors bet prices will climb this year because of shrinking stockpiles and growing global demand.
http://www.bloomberg.com/apps/news?pid=20601081&sid=avF3xw5TDfVA&refer=australia
Because it would KILL the arbitragers, and that is pretty much all our economy is anymore.
Borrow at 3%, lend at 6%. Borrow from the Chindia and the oil states, loan to American consumers so we can buy more stuff from Chindia and keep the oil flowing. Repeat.
As Americans get further and further into debt and see wages rise more slowly than inflation, then need more and more credit and cheaper and cheaper rates.
Cut off access to ever growing debt loads at lower and lower rates, and the economy stops.
Adding to my above post….
Think about how many FBs have said they are losing thier house because the price dropped. What? You’re losing your house because you can’t make your payments.
No. Their plan was to buy a house at a low teaser rate, then refi to a new loan with a low teaser rate, then refi with a low teaser rate….. From the time they bought the house, the plan was to have access to an ever growing supply of debt at cheaper and cheaper rates.
But, it isn’t just the house buyers. The whole economy is built on this.
Wages up 1%, consumer spending 4%…. Round of cheers from Wall Street because profitability is up. Repeat for 10 years. Now Wall Street is extatic! Yeah…. look how great the economy is.
What? defaults on debt? Who could have seen that coming. Quick, we need more access to debt at even lower rates to make sure the U.S. consumer can keep spending more and more money that they don’t have. Cut off the debt and the consumer is dead, and then the whole economy is dead, and then the world economy is dead.
The first thing we do, let’s kill all the lawyers.
(2 Henry VI, 4.2.59), Butcher to Jack Cade
Perhaps it would be best if we should kill all the middlemen 1st, and then move on to the Lawyers.
sorry about that Shakespear
agree, and I think the average big corporation (at least in Europe) is not much different than the US consumer. All thriving on cheap credit, with their debt loads often growing much faster than their turnover. All possible because rates have been going down for 20 years or so and credit is cheaper than free (priced below inflation). A large chunk of that corporate debt will probably never be repaid, but who cares … golden parachutes for everyone who participates in this con game.
“Hey middle class America you are screwed, and we like it like that!”
—
In the housing boom, rising prices perversely made extremely risky behavior profitable. (Borrowing far too much, and conversely loaning too much to people who were gambling that they could pay it off somehow by getting someone else to take out a bad loan to cover them.)
Boomers and older folks saw inflation in their lives. It is always in the back of my mind. My parents bought a house for $10400 in 1965. Probably well over 4000 sq ft on 3 levels (mostly finished basement). Their P&I payment was about $100/month. 20 years later when I was in college, my rented room was $300/month.
The boomers that didn’t inherit saving genes are very ill equipped to handle the temptations of the early 2000s economic environment. They KNOW that saving doesn’t work. What works is lots and lots of credit that you pay the bank back with using inflated dollars.
Hi, my name is Matt and I bought a larger house than I needed at historically low interest rates as an “investment” perhaps because I have a gut level “fear and fascination” with inflation. Luckily, perversely, I am also a saver. So with a 20% down payment, maybe my mis-allocation becomes an inflation hedge. Unfortunately, having not bought far far too large a house like many, the hedge size is way too small for much more of a 1% Fed funds rate…
Breaking News
Bank of England holds KEY RATE STEADY AT 5.50%
Also, ECB holds interest rates at 4% (Breaking News, marketwatch.com).
This really puts the Fed up against a wall, right? What can we expect now at the end of the month?
Check-mate
A lower $US?
Stalemate?
I predict 0.50% cut because the Wall Street suits demand it. Watch the Europeans capitulate soon thereafter.
Or not. What happens when the rest of the world stops capitulating? It seems every few weeks or so I keep hearing more currencies depeg from the US$. When they all let the dollar float, then what?
Fed will go to 0, or lower, if needed to keep Wall Street pigs happy. There will then be much “confusion” about how the dollar has reached parity with the peso, or how gas is now $15 a gallon, or why the whole economy has broken down. “Nobody could have seen it coming” as the Wall Street pigs get on their private jets and head off to the Cayman Islands, looking for their next victim to bleed dry.
This is probably a bit late but….
Did anyone see The Simpsons on Sunday. As most of you know, the show opens with Bart writing a message on the school chalkboard. This week it was
“The teacher did not pay too much for her condo”
very funny.
D’ough!
Priceless….. =)
Priceless….. =)
I would’ve seen it… however, I have long since replaced “The Simpsons” w/ “Family Guy”
Right there with ya Timmy Boy…
What the deuce?
“Prices may decline in Shelbyville, but not here in Springfield. We’ve got the climate, the monorail and employment at the nuclear plant is strong. Everyone wants to live here, it’s different here.”
–Lionel Hutz, spokesman for the Springfield Realtors Association
VERY VERY COOL!!!!! You get a star for the day.
correction: spokesman for the Springfield Housing Investment Trust.
RIP, Phil Hartman
yep, I sighed to myself when writing that.
And so Mono means One and Rail means Rail.
And that concludes our intensive 3-week course.
Just lower the effing price.
—————————————————————–
http://www.heraldtribune.com/article/20080110/REALESTATE/801100802
Home builder offers massive rebates that could top $100,000
By AARON KESSLER
aaron.kessler@heraldtribune.com
>>The rebate amounts to 4 percent of the purchase price each year for a period of 10 years.
The money is paid out quarterly, operating almost like an annuity — with checks being cut every three months to potential buyers. For example, for a home priced at $250,000, that would mean an income stream of $10,000 a year for 10 years — a total of $100,000
Yeah and the big what if…..what if he goes bankrupt next month. Get the $100k up front.
I just wonder who are the lenders that are going along with a rebate program like that . Where is the rebate money coming from ? This sort of rebate is just another form of cash back if the seller keeps the prices inflated and the loan is based on the inflated price .
Not only the bankruptcy factor, but the GF (and all the neighbors, for that matter) would be paying inflated property taxes (for years) too!
And if they don’t go bankrupt (unlikely) in the meantime the builder gets to invest the money he got from the greater fool upfront and invest it in something earning more than whatever the fool is paying in interest, or just pay some mehicanos to do some more subpar drywalling and electrical work to complete the last round of house and then go out of business in 18 months.
That’s an even more blatent example of paying the mortgage with money from your mortgage than serial HELOCers.
Here’s something very similar to the “let us use your credit” scam. Proof that if the stock market isn’t in a bubble yet, it’s going that way
http://dallas.craigslist.org/acc/532789897.html
The scam is, this is probably a penny stock pump and dump service trying to stay in “compliance” with the SEC/NASD. When it all bellies up and everyone has lost money, the regulators will come after the sucker who lent their CRD number to this.
Sounds like a good idea. I think I’ll try a similar approach - a “Doctors - lend me your prescription pad” message on Craigslist should work, right?
Tuesday, January 8, 2008
Listen to the show
‘Prime’ homeowners may get help too
Treasury Secretary Henry Paulson at NYSE
Treasury Secretary Henry Paulson said today the Bush administration may expand a program currently aimed at subprime borrowers to assist those with conventional, or “prime,” mortgages. John Dimsdale reports.
http://marketplace.publicradio.org/display/web/2008/01/08/home_sales/
How about us renters? We need help too? Handouts for everyone!
That’s what I was thinking. Why not just helicopter-drop $100,000 in fresh currency on to every American front porch and be done with it? Why favor those who sank themselves in unrepayable debt?
The nazis planned to do a money drop on the UK, but it never happened…
“Operation Bernhard was the name of a secret German plan devised during the Second World War to destabilise the British economy by flooding the country with forged Bank of England £5, £10, £20, and £50 notes.”
http://en.wikipedia.org/wiki/Operation_Bernhard
today my newspaper is complaining that the amount of forged Euro notes in circulation is increasing strongly.
I don’t understand: the ECB has a problem with pumping up the money supply as fast as possible, they get a little help from some small entrepreneurs and now they start complaining? Weird …
With the technology available to the common man, it’d be pretty easy to counterfeit banknotes with great ease.
The reason our new $5’s and $10’s have such garish colors, is to thwart color copiers. The copiers can’t replicate certain color combos.
European banknotes had this feature 15 years ago, we only just caught on a few years ago.
Hey, maybe they can outsource printing US dollars to China or something. Then, we can have hyperinflation AND lead-paint in our dollar bills! Fun for the whole family!
Uh oh that may not work for me. Someone need to tell BB’s pilot that some US taxpayers are not actually residents of the US.
You & I are not in the game they are trying to keep going. Any help they let slip our way leaves the table and hurts the dealer.
I’m screwed too, mine’s paid for. I guess there’s no reward for the financially prudent people.
What a relief. I was starting to feel bad about prime borrowers not receiving their fair share of empty promises.
Recession S.O.S. - goosing growth
Lawmakers are considering a host of options to stimulate the economy, and some may mean more for your bottom line.
By Jeanne Sahadi, CNNMoney.com senior writer
January 9 2008: 12:27 PM EST
…
Some Washington observers are saying only the Federal Reserve has any real chance of steering the economy away from recession and that any moves from lawmakers would be only for the sake of politics in an election year.
What skeptics on both sides of the aisle express concern about is how quickly the measures chosen will take effect and how temporary they will be in nature.
“We’re suspicious of stimulus packages because a lot of the time by the time Congress acts it’s too late to have an effect on a recession,” said Josh Gordon, senior policy analyst at the Concord Coalition, a bipartisan deficit watchdog group.
http://money.cnn.com/2008/01/09/news/economy/stimulus_pkg_advances/index.htm
Which is it? No one has a chance to avoid recession, or it will be quick and painless so it isn’t worth steering?
I am guessing this news will send stocks to the moon today…
Retailers Post Weak December Sales
By Kevin Kingsbury
Word Count: 661 | Companies Featured in This Article: Wal-Mart Stores, Target, Costco Wholesale, Limited, Saks, Macy’s, J.C. Penney, Kohl’s, Mothers Work, Stage Stores, Stein Mart, Cache, American Eagle Outfitters, Hot Topic, Pacific Sunwear of California, Zumiez, Buckle, Wet Seal, Men’s Wearhouse, Zale
A number of retailers are cutting expectations as they post weak December sales figures affected by a sluggish pre-Christmas season.
http://online.wsj.com/article/SB119996760551480659.html?mod=hpp_us_whats_news
Yes, probably will send them up. Doesn’t anyone buy stocks as an investment? I mean something that actually makes a profit and pay dividends? Stocks fall without fundamental causes and rise for the same reason. “Stocks are set to rise today because they were oversold yesteday.” What blather.
I’d love to invest again, get dividends, reinvest the dividends, understand what I’m doing when I’m doing it. I’m so old.
Roidy
Or perhaps irrational exuberance is a transient phenomenon, just like the housing bubble?
INDICATIONS
U.S. stock futures slip as retail reports filter in
Bernanke speech due later; some retailers cut earnings guidance
By Steve Goldstein, MarketWatch
Last update: 8:39 a.m. EST Jan. 10, 2008
LONDON (MarketWatch) — U.S. stock futures slipped on Thursday, as traders were reluctant to continue the late acceleration seen in the last session ahead of a speech from Federal Reserve Chairman Ben Bernanke, with December sales reports from retailers and a warning from Capital One Financial painting a largely bearish picture.
http://www.marketwatch.com/News/Story/Story.aspx?column=Indications
Walmart did better though…. the future of the middle class
Weimart
It looks like Zillow’s changed their methodology yet again. Gotta get rid of those price charts heading straight down.
Does someone in the REIC pay them to produce upwardly-biased market value estimates?
I think their estimates just lag reality. On the way up, the “Zestimates” seemed to be less than the sales prices and now, on the way down it’s the reverse. Also, at least in my area, the Zillow value peaks are substantially after what is usually considered the “peak”.
They definitely miss turning points in the trend. This naturally happens when you drive by looking out the rear view mirror.
They lagged realty for a damned long time in one neighborhood of townhomes I had been tracking. For 9 months, it was giving zestimates of around $440k, whereas the last sales had been in the $365-385k range. The new zestimates are sharply downward, are around 80% of what they had been a week or so ago, and seem to have revised the zestimates for the previous 9 month downward.
Hmmmmm….a for-profit company whose source of revenue comes predominately from the RE and mortgage industries, industries whose revenues increase with higher house prices. I see no reason why Zillow would inject bias into its calculations to show higher house prices…/sarc
I’m not sure how or why but my sister’s house in FL fot a zestimate that went higher than this fall.
It’s a lovely house but….
I smell something rotten.
The Zillow estimate for my crib is at the highest its ever been.
Makes no sense. I am south of Tucson on 7 acres.
desertfox
Ditto my rental in SoBay LA.
My rental apt. building (4 - 1 bedroom units) is down about 100k from it’s peak.
Panhandling abroad… What I don’t get is why anyone (sovereign or other) would loan money to bankers who collectively p!ssed away $50 bn+? Seems rather like pouring gold dust down a rat hole.
Citigroup, Merrill Seek More Foreign Capital
By David Enrich, Randall Smith and Damian Paletta
Word Count: 2,285 | Companies Featured in This Article: Citigroup, Merrill Lynch, UBS, Morgan Stanley
Two of the biggest names on Wall Street are going hat in hand, again, to foreign investors.
http://online.wsj.com/article/SB119993470776680093.html?mod=hpp_us_whats_news
Clearly the SWFs see it as a long term strategic play. That’s a very different perspective from the rest of wall st which is very short sighted.
Besides, the SWFs have to park their money somewhere!
You are right. Better to diversify than to watch those Ameros in the vault devalue before your very eyes.
I guess they figure the kitsch-and-sink accounting has already disclosed all the bad news on- and off-balance sheet at the big IBs?
From this page A1 WSJ story:
‘”The goal is to get a [page] B6 story in the WSJ and have no one mention it,” said a Washington lobbyist who has shepherded a number of foreign-government investments in Wall Street through Congress.’
How is that plan working out for the K-Street Gangsters?
Everyone has shiftless nephews that need jobs far away as executives at banks:
a) where their incompetence can’t be detected amongst the other bad debt pushers
b) they will get 6 figure salaries and huge bonuses befitting their tinge of royal blood
FB in Arizona trying an opportunistic play. I don’t think “BMWBarbee” is going to get 30K for a week in this dump.
http://cgi.ebay.com/Luxury-Party-Super-Bowl-Rental-3-Miles-from-Stadium_W0QQitemZ230210751706QQihZ013QQcategoryZ116092QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
What a godawful red paint job.
Hang a couple (or ten) gilded mirrors on those walls and the spirit of Diana Vreeland may want to rent the space for a week.
looks like blood.
Looks like a whorehouse. Couldn’t imagine waking up to that paint job with a hangover. 30K in Peoria? What is this country coming to?
Yowwwww…my eyes!!!! Peoria! And furnishings from Ross!
I saw this clown on the news about a month ago…a flipper in trouble. 30K will get you the Presential Suite at the Phoenician, limo service to/from the game, unlimited massage, room service…why, dear God, why would anyone rent this inside of the dog’s mouth???
Look at that! A tanning bed in the bedroom!
LOL!!!!
Yikes! I was going to just laugh this one off but that commercial tanning bed in the master is very tempting… hm… only 30k…
The Mozillo suite!
And a water heter next to the flat screnn, wall mounted tv.
Now that’s what I call class!
Heater and screen….my fingers are cold.
Just to pile on, you must look at BMWBarbee’s other items for sale. I love the “Hollywood Style Designer Dog Faux Fur Coat” with a picture of a sad looking whippet + fur coat.
$14.99
“For centuries, the battle of morality was fought between those who claimed that your life belongs to God and those who claimed that it belongs to your neighbors—between those who preached that the good is self-sacrifice for the sake of ghosts in heaven and those who preached that the good is self-sacrifice for the sake of incompetents on earth. And no one came to say that your life belongs to you and that the good is to live it.”
John Galt
And no one came to say that your life belongs to you and that the good is to live it.
Doesn’t that part sound like the me-centered self-help gurus that swarm like mayflies on daytime TV?
(Or am I reading it wrong?)
Is ’70s-style stagflation returning?
By Jim Jubak
That’s the worry among an increasing number of investors as we head into 2008. It’s certainly possible for the year ahead, but it’s unlikely.
http://tinyurl.com/2j7wzl
Baby, can I drive your car?
http://en.wikipedia.org/wiki/Triumph_Stag
’70’s Stag, very funny.
Sorry, in the 70s wages also inflated. They lagged goods & services, but they most certainly inflated along with everything else, up and down the spectrum.
Now, wages are not inflating.
The 70s were really not long ago. These people can do a little research.
What Bush Won’t Say to Help the (Housing) Market
http://www.thestreet.com/s/what-bush-wont-say-to-help-the-market/markets/marketfeatures/10397803.html?
We don’t need no water let the mother ****** burn, burn mother ****** burn.
“California, the state¹s insurance division reports that the number of questionable residential fires in 2007 increased 76 percent over 2006.”
http://money.cnn.com/2008/01/09/news/economy/birger_arson.fortune/index.htm?section=money_topstories
This guy is a Cramer fan. He references Cramer in his article. Cramer is not someone I listen to because he is entertainment. (Larry Kudlow is in the same category.) Cramer does pay lip service to a company’s markets and competence, but he gets it wrong more than right.
Roidy
“True leadership is needed from the top if we are going to battle the two-headed dragon of housing and credit problems.”
Sigh, people still don’t get it. The housing bubble is a result of the credit problem. They are not two different things that just magically happened at the same time by coincidence.
Having seen the author’s picture and having read his article I am reminded of the immortal words of Dean Vernon Wormer:
“Fat, drunk and stupid is no way to go through life, son.”
Two of those adjectives are obviously fitting, and I can’t imagine anyone writing anything this inane whilst sober.
I’m kinda warming up to this new form of socialism.
State proposes to take control of home temps
California utilities would control the temperature of new homes and commercial buildings in emergencies with a radio-controlled thermostat, under a proposed state update to building energy efficiency standards.
Customers could not override the thermostats during “emergency events,” according to the proposal, part of a 236-page revision to building standards. The document is scheduled to be considered by the California Energy Commission, a state agency, on Jan. 30.
The description does not provide any exception for health or safety concerns. It also does not define what are “emergency events.”
http://nctimes.com/articles/2008/01/08/news/top_stories/1_02_261_7_08.txt
Of course you can override the system. Wrap the antenna in aluminum foil. Remove if anyone with a badge knocks on your door, replace when they leave.
A tea candle under the thermostat is the traditional method.
Wouldn’t it be more practical to improve insulation on Calif houses? When visiting friends there, we have noticed that their furnaces kick in and run constantly when its sunny and 55 degrees outside. When conditions are like that here the furnace is idle almost all day.
Good point.
There are vast inefficiencies built into the typical American home (and most commercial buildings, too). More power could be saved through smarter design that in A.) quack Orwellian thermostat overrides or B.) implementing alternative energy strategies without addressing systemic deficiencies first.
Build smarter!
Death to McMansions!
Better yet, death to lame code requirements.
In the big picture the cost of extra insulation is nothing. Its required here in Colorado, even in the newer McMansions. Why doesn’t “enlightened” and “green” California require better insulation?
In Colorado, we’re on the same page.
I meant requiring efficiencies to be built in (insulation, thermal windows, electrical, proper site management, shade trees, water management, etc.) instead of allowing oversized crapboxes to erupt willy nilly.
It’s not that complicated — homeowners would end up with a better product in addition to hidden “greening” (in the sense that the strategies involved don’t always need to be as overt as solar panels for hot water and the like).
Interestingly enough, size matters even more than energy efficient construction. A compact 1500 sq ft 1950’s ranch with 4 inch walls, old windows, etc… will still require less energy to heat than a hyper efficient 4000 sq ft McMansion.
Not in my experience. We know people with much older houses that are half the size of ours, and they have a bigger heating bill than we do.
Easy to work around - just put a bag of ice on the thermostat if it’s too cold, and a lamp on the thermostat if it’s too hot. I had a teacher that did that in grade school, since the thermostat in their room was locked.
now this would get real interesting if they can make the thermostat to prevent the home from really heating up as a result of desperate FB actions … that would sure save a lot of money and energy (for rebuilding the property …).
Insurers expect arson by FBs to increase:
http://money.cnn.com/2008/01/09/news/economy/birger_arson.fortune/index.htm
I had something like that on the side of my air conditioner in NoVA. Apparently the power company could turn off my AC during brown/black-outs. The AC repairman said I could remove it as it was no longer being used.
Credit Crunch Lunch
http://www.stockmania.com/index.php?showimage=131
Just wait til the serve the next course.
Is Honey Bunny one of Fannie’s sisters?
Did they the use the capital one to pay for it? Supect gratuities (think fees) were bundled into the check.
The OC shows its true colors: $0.39 tacos and scratch-offs offered at an open house.
http://orangecounty.craigslist.org/rfs/533874138.html
For the longest time, i’ve often wondered just what sort of mystery meat is in Jack in the Box 2 for 99 Cent, tacos?
Do you really want to know? Sometimes ignorance is bliss.
Paraphrasing Bismark — The public must never know how foreign policy and sausages are made.
Having worked at a meat-packing factory when I was at college….
You. Really. Don’t. Want. To. Know.
I think it is some kind of soy paste. I really don’t care. I rarely eat fast food, but when I do, I like to eat those things until it is running out my ears.
It’s Soylent Yellow. Green coming to a FF joint near you in 2050.
Interesting read from the Big Mo in 2003
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/02-04-2003/0001885208&EDATE=
Big Mo’s recommendations took off!
No down payment (who needs one)
home loan process easier to understand (don’t read, just sign)
reduction and streamlining of loan application docs (skip the useless ones like proving income)
Who says crocodiles don’t cry? Crikey! (If the CIC gig doesn’t pan out, a Hollywood career awaits…)
http://www.signonsandiego.com/uniontrib/20080110/news_1n10clinton.html
1,000 Points Of Numb
Any Canadians catch the Marketplace show last night? It was an expose on the scams Canadian condo developers are pulling.
The reporter pretends to be buying a 1BR condo in the $300k range in Toronto. They go through the process to find pitfalls. They find a 635 sf, 1BR with breakfast bar, stainless steel appliances, underground parking, and a view of the park. They put down $2000 and take their contract to a lawyer.
They find:
- The size, specs, features, upgrades, parking, view, and floor plans are subject to change without notice. The floorplan listed in the contract has no measurements on it. All sales materials and verbal representations are non-binding.
- The model suite in the showroom’s dimensions are 50% larger than the 635 sf listed in the brochure.
- The move-in date can be delayed up to two years, and the deed transfer delayed up to two years past move-in.
An ex-developer called “King Cobra” (he looks the part) describes psychological tactics the developers use. They host cocktail parties for realtors before condos go on sale, and make the venue too small for the number of guests to create a sense of hysteria. The developers pay for people to sleep on the street a week before opening to pretend they are in line to buy. In reality, half the units are under contract at this point.
“The market is driven by hysteria buying,” said Cobra. Later he adds, “If you don’t take your contract to a lawyer, you’re asking for a tomahawk in the head.”
The show also included a few sob stories from FBs in Toronto and Vancouver: canceled developments, altered and shrunken floorplans, moved parking spaces.
These people buying condos in Toronto are nuts. You can get a semi-detached in a good area for the same price. No granite countertops though.
OTOH, people buying anything in Vancouver are nuts.
Yow! Toronto is trying to be NYC. That rowhouse looks like the cheap houses in 19136 (Northeast Philadelphia) where I grew up. The 19136 rowhouses have asking prices just over 110K.
That rowhouse doesn’t look like much, but it’s actually in a desirable area close to downtown.
The “hood” in Toronto is in the suburbs.
BTW here’s the TV progam about the condo marketing. Looks like the same old, same old, everywhere. But the people in Canada don’t seem to have realized that from lineups to bust can take less than 2 years.
Only in America is the “hood” downtown and the affluent area in the suburb. The opposite is true in almost every other country.
Retailers Report Weak Results for December As Gas Prices, Slumping Housing Market Take Toll
By Anne D’Innocenzio, AP Business Writer
NEW YORK (AP) — An already weak holiday shopping season turned out to be even worse than expected for many of the nation’s retailers, who reported Thursday they had disappointing sales results for December. The poor performance raised more concerns about consumer spending, and in turn, the health of the economy.
http://biz.yahoo.com/ap/080110/retail_sales.html
“even worse than expected”
How extraordinary is that?
FORECASTER OF THE MONTH
Year’s top forecaster is getting nervous
Greenwich Capital’s Stanley is most accurate in December, and in 2007
By Rex Nutting, MarketWatch
Last update: 12:01 a.m. EST Jan. 10, 2008
WASHINGTON (MarketWatch) - The most accurate forecaster in December and for all of 2007 is getting a bit nervous about his call that the U.S. economy will avoid recession this year.
“We were feeling reasonably good until last week,” when the nonfarm payrolls figures and the Institute for Supply Management index came in very weak, said Stephen Stanley, chief economist for RBS Greenwich Capital.
http://www.marketwatch.com/news/story/years-top-forecaster-getting-nervous/story.aspx?guid=%7BAC9E1CE2%2DD119%2D4471%2D9C2D%2D46E354684F2F%7D
This is for you, bear:
http://img235.imageshack.us/img235/7258/tearsax1.jpg
Thanks! A picture is indeed worth 1000 words…
1,000 Points Of Wrong
Who could have foreseen this development? (WE DID!)
Weak holiday sales spark profit warnings
By Andria Cheng, MarketWatch
Last update: 8:50 a.m. EST Jan. 10, 2008
NEW YORK (MarketWatch) — U.S. retailers reported disappointing holiday sales in December, which in turn sparked some profit warnings, after promotions, last-minute shopping and gift-card redemptions failed to turn around lackluster performance in the largest sales month of the year.
http://www.marketwatch.com/news/story/weak-december-retail-sales-spark/story.aspx?guid=%7B54E5D424%2DF59C%2D45F2%2DAB00%2D424E4EBB4E8B%7D
Didn’t we all predict this? Huge Black Friday sales because everyone wanted to get the best deals since they planned to cut overall spedning. That is what I did!
Yesterday, a dental assistant told me she did this. She said J. C. Penney had 75% off a lot of fairly nice things so she bought them and was done shopping by the end of November. She said it felt strange not to shop in December, but she’s already paid off the credit cards she used.
Flapping heads on CNBC talking about how Bush tax cuts for the rich need to be made perminant, how 65% of taxes are paid by top 5% of people, etc. Joe Kernan calls Democrats the Demogaugs. Blah, blah, blah…
Then the retail numbers come out. Target off 5%. Khols off 11%. AnnTaylor, Hot Topic, Mens Warehouse, Abercrambie, Hot Topic…. 73% of retailers fail to hit Dec numbers.
The clear pattern in the data is that Americans have cut back on buying clothes, even for the teens that common wisdom said would not be cut.
Oh, except Sachs. Sachs beat estimates.
Sorry rich…. YOU HAVE TO PAY ALL THE TAXES!!!!! Why? No one else has any money. The middle class has been getting 1.5% wage increases with 3%+ inflation for a good 7 years. They can’t pay taxes ’cause they ain’t got no money!
Yes Mr. Richey Rich, it does suck being the only guy with money, doesn’t it… you get stuck paying all the taxes!
Oh, but Wall Mart will save retail. What? Food sales drove sales, and highly discounted electronics (raises hand… I bought a $600 computer for $400 and a $200 digital camera for $130 on black Friday.)
With all the retail sales drops, how long before this translates to cuts on Madison Ave? Aren’t clothes, cars, jewelry the big advertisers? Then it rolls to the TV networks.
How long since Bernanke or Paulson uttered the word “contained”?
Contained to sub-prime… oh, contained to housing. Oh, contained to housing, autos, retail. Oh, contained to the U.S. Oh, contained to planet Earth.
Oh, contained to planet Earth.
Good thing we haven’t invented hyper drive yet! Imagine what a bubble would do to Coruscant!
Here is a humorous video for Star Wars fans. Its a lifetime achievement ceremony for George Lucas. Wait until you see who the emcee is:
http://www.youtube.com/watch?v=p55YD8QhQ3o
Thank you In Colorado.
The emcee was hilarious. I’m both a SW and ST fan.
I just loved the looks on the faces of Harrison Ford, Mark Hamill and Carrie Fisher when the emcee was introduced. Ford can be clearly seen saying “what the…”. They all had a “what’s HE doing here?” look on their faces. Lucas kept his cool, but did look mildly annoyed at first.
Me too. The look on all their faces was priceless. At times George Lucas looked afraid of what HE would do.
It reminds me how good an actor HE is.
ROFLMAO…you made my day!
I especially liked the part where the storm troopers start dragging him away: “I can do Star Wars!”
The tax whining and demonizing of anything not for the wealthiest among us just doesn’t seem to be getting traction anymore.
Thank God.
But don’t the top 5% make 95% of the money? Gee, seems to me they need to be paying more!!!
This just in…. The builder I work for will now begin blessing homes at closing if the buyer wants. I kid you not. I am amazed that I can still be suprised by the cluelessness and stupidity of the executives here at this late date. I don’t for a minute think that this will make any difference, but it shows the level of desperation that has been reached here.
To clarify - what affends me is that the people “blessing” the house don’t have any authority from the big man upstairs and that this is being used as a marketting tool. If you want to have your house blessed I actually recommend it, but I wouldn’t suggest you have your builder hire someone to do it…
Who wants some RE jackass with a Universal Life certificate from the back of Rolling Stone messing with, like, karma and economic trends and The Big Guy and stuff?
One naturally would want one’s own man / woman / guru / theologian to get the blessing right … right?
Well, they actually have some hired chaplains to do it, but to me there’s a big difference between a preacher, priest, bishop , etc. with his own flock, congregation, ward, etc. and some paid-for-hire-will-pray-for-you schmuck. Like you, I assume anyone who actually wants their house blessed will bring in their own person.
There’s just something in me that makes me go off on “industrial chaplains”. They seem to be hired mercenaries to pray to God for you. Well I can pray quite well on my own, thank you.
It was somehow different when I was in the service - we really appreciated the Navy chaplains regardless of their particular faith. They shared in the same hardships and knew what they were talking about when they sympathized or offered advice. Maybe the distinction is they were paid for being in the military and their job happened to be chaplain (although they had other duties as well). A fine line maybe, but it just seems different to me.
Yes, chaplains in the armed services seem different. They’re not mercenary, simply the best available option under difficult, alien, and often life-threatening situations.
Mellow yellow’s like a cat on a hot tin roof, today.
meow~
Quite right, slick. . .
Like a clockwork orange…
Bottom fishing CFC here. Possibly one of those “too big to let wither on the vine” types. Bouncing the shorts would be helpful.
I was glad to see this crappy open. I’m pretty comfortable being long here.
There’s a lot of life left in cien - good call
I doubt at&t and vz will not upgrade networks because they had to disconnect a few FBs for not paying their bills.
Here’s the fed right on queue - lol about FBs not paying the bills - so true.
Well, actually, AT&T (Cingular) and VZ significantly decreased their purchases recently from the telecom supplier that I was laid off from in October (because of decreasing sales). And the few contacts I have left there (the layoff was significant) say that sales are 1/2 of what they were since I left.
Got out of cfc too soon - I can’t believe it.
CFC is trading around 8 now. wow
I believe you are correct. Sloppy opening with few blocks for sale.
Cooper thinks there’s an outside chance we could see one more high in the S&P in the first quarter before the bottom drops out. I can see how that might happen with the right amount of Fed “stimulus” and maybe a DCB in the property market.
I wish in my heart that the Fed can do it ‘right’, but the 3 ‘T’s are to politically connected to do anything but fail. (I do not like the Federal Reserve, but the consequences of failure are far worse.)
At this time, IMHO the Federal Reserve is better off doing nothing than intervening.
Bought some more Countrywide now…. If I am right I will be out of it at $6.25 today. I am playing with OPM on this - not mine until I sell. :>)
I’ll follow you on that one. Made some of my best profits over the years on some of the market’s biggest roaches.
I wish in my heart that the Fed can do it ‘right’, but the 3 ‘T’s are to politically connected to do anything but fail.
Translation?
Treasury bill?
Nobody ever answered my question of who buys a 10 year note?
OV
The three T’s
Target
Timing
Temporary
Any relief has to get to the correct Target - not just available through Congressional actions through legislation, which becomes political and goes to the rich.
The action has to be rapid - Timing is of the essence. By the time Congress acts it will be to late.
The action must be Temporary, not permanent.
Buyers of 10 yr Treasuries are all funds. Flight to safety, e.g. CalPers invests $45B every month. If they were to buy corporate bonds that yield 12% and these companies fail, they have failed to do their fiscal responsibility. Buying US Treasuries is the last refuge of the`incompetent’. As we have all seen from Florida, there are a lot of incompetent managers in existence.
Who wants to be first to sign on to this deal? Not only do you get to live in this architectural train wreck, you get to share the “profit” when it sells. And you’re not throwing your money away on rent.
http://phoenix.craigslist.org/apa/534084893.html
Haha right…….
Did you foreclose and dont really want to rent and throw your money away. Live in these house and pay the mortgage when the market gets better or your situation gets better, we either sell the house and split earnings 50/50 or keep the house at whatever we agree on. Keep in mind do not think of this house being a rental instead of an investment. We will be helping each other out.
lol! That’s a good one. The guy can’t even articulate an English sentence.
That might be a joke, but I’m thinking that something that approximates the inverse would be a good purchasing strategy. Offer someone who isn’t underwater a low price on a house, but agree to a profit sharing arrangement if YOU sell the house within 5-10 years.
So they don’t feel so bad “giving” it to you because they would share in the profits if you sell it. You get a lower price and don’t worry about the profit sharing because 1) you want to stay there a long time, 2) you think the price you offered is fair and prices aren’t going up much over the term of the agreement so you aren’t really giving anything away or 3) both of the above.
I figure you write the agreement with a return of entire purchase price plus a flat moving/selling fee and put in a declining obligation to share profits measured by years since your purchase or amount of “equity” you have based on the original purchase price or some combo of the two. Also have to adjust for capital improvements you pay for.
Just an idea….
Sounds like some kind of warrant or something, maybe convertible bond, lol…….
Greenspan now claiming Fed regulators were hard at work during boom, but if no one tells them about fraud, they can’t find it. WTF??
“Greenspan said in the interview that, while the Fed’s bank examiners were hard at work during the mortgage-lending boom, “we have to be realistic about what regulators can and cannot do.”
“It is extremely rare to uncover fraud other than through whistle-blowers,” he said. “You don’t get at it through internal audits, you don’t get it through outside audits and you certainly don’t get it through bank examinations.” (per Bloomberg this am).
Oh, I guess you can’t spot fraud when a cherry-picker making 8 dollars a hour buys a 700k home . It should of been apparent by the dramatic increase in appreciation and sales transactions from 2003 onward that the real estate market had moved into a speculation market that exceeded income qualifying .IMHO ,I just think they powers thought that appreciation would continue and just level off eventually .The regulators should of realized that people were gambling with the no down/no doc. loans . It’s clear that the builders and their “special lenders” thought the boom would continue for a longer time period .
All I can say is the people in the industry were nuts .There was nothing that could justify these price increases other than a false market of fraud and faulty lending , where risk was not considered .
I question why the Wall Street loan designers never audited these c-ap loans they were receiving from the front lines . Don’t they also have a obligation to audit what they are receiving from commissioned sales people in the loan industry .
What’s the home we rent worth? According to HomeGain, it is hard to pin this number down within $50,000 of their estimate.
16050 BIG SPRINGS WAY
Last Sold 9/30/2004
Sale Price $565,000
Beds/Bath 4/2.0
Square Footage 1835
Home Value Estimate:
$540,721 - $634,760*
Article on CFC from Pittsburgh Tribune-Review:
http://www.pittsburghlive.com/x/pittsburghtrib/news/cityregion/s_546743.html?source=rss&feed=1
“There’s definitely a need for discovery here. These letters are a smoking gun that something is not right in Denmark,” Agresti said. “I just can’t get over what I’m being told here about these re-creations and what the purpose is or was, and what was intended by them. I don’t see any credible reason for doing that, other than to create a perception that notices were timely sent.”
Countrywide…perceptive name: Countrywide Deceit Corporation
I dislike politics (except Illinois’ which are amusing) and generally skip any articles, blogs etc concerning the BS, but this was on the WSJ economic blog and was interesting.
“the incumbent party lost in four of the five election years since 1960 that the Fed eased (the exception was 1996, when the Fed eased once). The reason is clearly that the Fed is usually easing when unemployment is rising, which is bad for incumbents. So the Republicans should hope the Fed stops easing soon – it would be a sign the economy has righted itself.” Greg Ip
Yoga Logic
“I dislike politics (except Illinois’ which are amusing)”
Remember, vote early and often!
Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International
Historical Comparison
Carmen M. Reinhart
University of Maryland and the NBER
and
Kenneth S. Rogoff
Harvard University and the NBER
- conclusion -
“…but in combination nevertheless suggest that if the United States does not experience a significant and protracted growth slowdown, it should either be considered very lucky or even more “special” that most optimistic theories suggest. Indeed, given the severity of most crisis indicators in the run-up to its 2007 financial crisis, the United States should consider itself quite fortunate if its downturn ends up being a relatively short and mild one.”
http://tinyurl.com/2qqlk4
Caution 13 pg pdf
Fed says theyre ready to cut again.
And pow goes the market, as if there was ever a doubt that the FED wasn’t going to cut!
Shorts are being stupid here. There are going to be far better opportunities down the road a ways.
yep
txchick, when do you anticipate these better opportunities. Personally, I’m a chicken about this stuff. I buy proshares only when the market rallies. I’m just worried one of these days the market is going to stop rallying. No loss for me, but a lost opportunity nonetheless.
in March or late February
i wish they would just cut it to 1% and get it the frack over with.
Fed ready to trash the dollar - “aggressive rate cuts” to come. Like I said, they’ll go negative on the rates if they can find a way to do it and just take our money and give it to bums in McMansions.
And Gold is near 900 and Oz and Silver is over 16 per Oz
The FED will let commodity Inflation rage. Deflation of banks’ collateral is the bigger worry for the FED. I wonder how this is going to play out ?
I guess Golman Sucks and JPM are massively long the gold market this time, with just a few more words from the mighty helicopter commander they are pocketing billions
Shorting gold here for a couple points - overbought I think. Trailing stop hit on cfc. Market bounce was smaller than I expected.
Gold at $800 per ounce is somewhere between $250 and $270 in 1980 dollars. It has not peaked. We have stagflation and Ben Bernanke sure is no Paul Volcker. I think gold will be above $1500 per ounce sometime in 2009 or 2010.
Hi Bill , yes I think we are getting momentum with precious metals. people are starting to worry that the FED is not in control. Did you have a good place to buy coins in Phoenix? Thanks I just own the miners.
For Prof GS Bear, TxChick and others interested in economics and markets the link
The EconDirectory:
Traffic Rankings for Business and Economics Websites
Brian Gongol
http://www.gongol.com/lists/bizeconsites/
Where does the HBB rank? (Either not on the list, or I missed it.)
HBB is not an econ blog. This is just a quick link for economic blogs that are for the most part good for ideas.
“A mind is like a parachute it works well when it is open.”
Some alcohol commercial ?
I read quite a few of those.
The avalanche has begun in earnest:
Lennar’s New Homes Fetch 60% Less as U.S. Market Slump Deepens
an. 10 (Bloomberg) — Lennar Corp.’s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar.
That’s how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That’s also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it’s now or later this year.
“If you’re an opportunistic buyer with enough cash and credit, it will be one of the best opportunities for acquiring property in our lifetime,” said Jack McCabe, whose McCabe Research & Consulting LLC in Deerfield Beach, Florida, advises hedge funds and other investors on real estate sales.
….
Goldman Sachs Predicts Grim Year For Newspapers
“The downturn in the housing market has led to a meltdown in real-estate classifieds in particular, with overall real-estate classifieds falling 24.4% in the third quarter of 2007, compared to 2006. Recruitment is down 19.7%, and automobiles 17.7% in the same period.”
http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=74025
Hoz I am out of 10K CFC at 8.37. You f****ing rock, man, I made 30K+ on that trade!
Nice job.
That is wonderful.
how I feel today
http://tinyurl.com/33gkum
I’ve got one like that I can give you but I can’t put it here as it is not as liquid as cfc. Feel free to email me.
Txchick- plz email me
kcarsten@gmail.com
Thx
In the end, the money always ends up with it’s rightful owners…
Congrats~
I just followed him. No credit to me. I went out to lunch and nearly fell out my chair when I saw where it was.
oh yeah..I followed txchick57 and make some nice coins today as well. Alright..way to go
this trade defines the the is so momment.
CFC too big to fail.
BK rumor.
panic selling.
option buying..
BAC rumor takover..
this is what I call “whipping the market” shakes the weakest hands so hard that the unfathomable becomes fathomable only to be defeated by the very thing that is not so.
CFC is finished, Im almost convinced Shittebank is as well, but the pushing and shoving continues.IF you are long CFC at this momment, I would be concerned. Those who say the FED is not pulling the strings only need to look at the movement of the information.
Jan. 10 (Bloomberg) — U.S. stocks rose after Dow Jones Newswires reported that Bank of America Corp., the second-biggest U.S. bank by assets, is in advanced talks to buy Countrywide Financial Corp., the country’s largest mortgage company.
as thoroughly corrupted and manipulated as a system can possibly be. it’s atlantic city with suits and ties on. when the Dow loses a thousand points i’ll be secretly hoping it goes to fifteen hundred.
How can the Dow lose when the Fed has reinstated Greenspan’s implicit commitment to insure against that contingency?
The turnaround begins in Canada:
http://www.reportonbusiness.com/servlet/story/RTGAM.20080110.wbuildingstaff0110/BNStory/robNews/home
“The value of November building permits tumbled by five times as much as economists had been expecting Thursday, the second weak housing report in as many days that suggests the long-awaited slowdown in the Canadian real estate market has arrived.”
4:08pm 01/10/08
American Express to take pretax charge of about $440M in Q4 - MarketWatch
1:58pm 01/10/08
Capital One shows credit woes firmly hitting consumer - Greg Morcroft
that’s nothing but fodder for an intermeeting rate cut
Thus far in 2008 there’s a whole lot of fodder flying through the air.
you mean the consumer drives the economy ? Where are the helicopters ?
Shake, Shakes Here Why do you call yourself Shake? Just curious.
Lots of bubble stops got it up after their hit of viagra but could not get it off…
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
For those interested in the Suffolk County, NY market, the December 2007 numbers are out.
Here are some of my calculations:
– The number of residential listings on the market, 12,425, is the highest in the past 11 years [1997-2007]. This represents a 9% increase in inventory over the same month last year.
– The number of closings, 728, represents a 28% decrease from last December’s total of 1,018.
– The 20 months of inventory also represents the highest in the last 11 years. This represents a 50% increase in months of inventory over the same month last year.
– The median price of $385,000 represents a 3% decrease from the same month last year, and a 4% decrease from the December 2005 peak.
Im not sure if everyone who reads hear fully understands whats happening, so Im jsut gonna share a little anecdote…
Three men came to me today looking for work…
One man came to me tosay and told me he could not pay his bill adn broke down and cried…
Not only has the inventory been stacked to the rafters, but nothings moving.
Three business owners in town called and asked if the biz was for sale….
got the seatbelt bucked real tight?
Electroshock therapy is on the way for the economy.
Central bank success on liquidity is not enough
By Krishna Guha, Michael Mackenzie, Saskia Scholtes and Gillian Tett
Published: January 11 2008 02:00 | Last updated: January 11 2008 02:00
The co-ordinated assault on the money market launched by the world’s central banks a month ago has succeeded in bringing down interbank lending rates - but this alone may not stop the US economy from falling into recession.
…
The danger to the economy today stems much more from a pull-back in bank lending - due to increased expectation of credit losses and digestion of formerly off-balance sheet loans - than on the level of Libor and other rates.
…
The liquidity support operations will help by increasing the effectiveness of monetary policy - which works through the money markets - and reducing the risk that financial institutions amplify the credit problem by hoarding liquidity.
The danger is that even with the partial recovery in liquidity conditions, a negative feedback loop could now take hold.
The credit squeeze already in the pipeline may push the economy into recession, creating wider credit losses that exacerbate balance sheet problems, in turn worsening the squeeze.
Back in August the Fed worried about a narrower version of this feedback loop - between the housing market and the market for housing-related securities. That led to 50 basis points of pre-emptive easing that aimed to short-circuit the feedback loop.
Now the Fed is worried about this feedback loop again, but across the economy as a whole. That suggests it will again adopt a pre-emptive strategy of aggressive up-front rate cuts, probably starting with 50bp on January 30.
http://www.ft.com/cms/s/0/8be1f7ba-bfe7-11dc-8052-0000779fd2ac.html
Clone confessional…
AP Analysis: Bernanke Adopts Greenspan Tone
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON
Thursday, January 10, 2008 09:18:16 PM PT
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8U3A0C04&group=ap.online.headlines.business
Paging Jas Jain… How about a pernicious mix of rising health care costs and falling quality of health services?
Moody’s says spending threatens US rating
By Francesco Guerrera, Aline van Duyn and Daniel Pimlott in New York
Published: January 10 2008 18:36 | Last updated: January 10 2008 18:36
The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday.
The warning over the future of the triple-A rating – granted to US government debt since it was first assessed in 1917 – reflects growing concerns over the country’s ability to retain its financial and economic supremacy.
EDITOR’S CHOICE
Why triple-A ratings are not always top notch - Jan-10
CBO warns on rising healthcare costs - Dec-28
FT series part I: US health plans - Dec-04
In depth: US elections 2008 - Jun-06
US leads on deaths from treatable disease - Jan-08
FT series part II: Walk-in clinics - Dec-05
What happened to the gentleman’s $3 bn writedown?
Giant write-down seen for Merrill: New York Times
By Barbara Kollmeyer
Last update: 1:14 a.m. EST Jan. 11, 2008
Merrill Lynch, the nation’s largest brokerage firm, is expected to report losses of $15 billion stemming from soured mortgage investments, according to a report in the New York Times on Friday. The paper, which cited people who have been briefed on the broker’s plans, said the losses have prompted the firm to raise additional capital from an outside investors, and is in discussions with U.S., Asia and Middle East investors, raising about $4 billion in coming days. The broker was expected to report a write-down of $10 to $12 billion next week by some Wall Street analysts. End of Story
INDEED IT IS!
http://www.marketwatch.com/news/story/giant-write-down-seen-merrill-new/story.aspx?guid=%7BE31D8D4F%2DC979%2D450F%2DA5EB%2DF59B8B733D52%7D&dist=hplatest