Weekend Topic Suggestions!
And send in your housing bubble pics to:
hbbphotos@gmail.com
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
April 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Amex. Charge… What will the great American consumer do next to continue spending? Slow pays and defaults have now hit American Express, which used to demand payment in full each billing cycle on it’s Gold card. I see Gov. rebate checks coming for certain, which will only work for a short period. I can see no way around a correction this time… Thoughts?
http://www.bloomberg.com/apps/news?pid=20601087&sid=atutQQocOMnA&refer=worldwide
Does AmEx let the cardholder carry a balance now? I’m very out of touch, have never had one of their cards.
Yes they do. I have had a Gold card since ‘86 and staring a few years ago they offered that option. It would appear that Amex followed the same path as the rest, a real shame, you used to have exceptional credit to hold one of their cards. Now it’s coming back to haunt them.
We were cardholders for 17 years…they wanted to raise the annual fees by $25. When my husband asked what he would be getting for this $25 increase they said “uh, nuthin’”. So my husband said “I’m sorry, I’m not in the habit of giving away my money, except to charities.” and cancelled the card.
Never once were we even a day late with a payment…idiots.
They have all different cards now. I use the gold card (because of the points), but I get tons of mailers asking me to transfer my balance to another card that pays interest.
Try the AmEx Blue Card. No fees. We’re getting about $600.00 CASH rebate in February. You must pay off balance every month. We’ve had this card for about 8 years. I hope AmEx problems don’t mess with the rebate plan…….
I have the old green one. My company gave it to me many years ago and I just stuck with it. You do have to pay it off each month. For some reason AmExp bills my old company for the annual fee and for some other (unknown) reason the company still pays for it (even though I retired a few years ago and no longer work there).
When you check out where I work they have a long list of things to get signed off. You won’t be leaving with the (mandatory for travel) company credit card.
One of my bosses left his small company and the company CFO kept charging his company credit card. When the company folded, guess who they went after for the $70K in charges?
The MSM has belatedly called what is happening in housing as a “crash”. Will and at what point will the MSM refer to what’s happening in the housing sector as a “depression”? There are some references to this being the greatest downturn in housing since the Great Depression, but no references yet to this housing bust being a depression in its own right.
“depression”
No matter how bad the correction is you will Never hear the word Depression in the media applied to the present day. The “D” was removed from all Journalism classes years ago. The reason? To negative.
Perhaps we should resurrect it lexical predecessor, “panic.”
I already did that here last year.
My history is a bit weak, but I understand that economic downturns used to be called panics until the Panic of 1907 which was so severe that the word “depression” began to be used in its stead.
Then the 1930s arrived and made the D word taboo.
Peter Schiff discusses this a bit in his book “Crash Proof”. Recession was the next iteration that stuck after “depression”, but I think there were one or two that didn’t catch on. Its all the same thing.
http://www.knoxnews.com/news/2007/dec/06/dont-say-the-r-word-recession-out-loud/
President Jimmy Carter’s anti-inflation czar, economist Alfred Kahn, was admonished for his use of that taboo word. Kahn announced that, henceforth, he would use the word “banana” to describe two or more consecutive quarters of economic shrinkage.
To break the ’70s cycle of stagnation and inflation, he said, might take “the worst banana you ever saw,” and in the early ’80s, Kahn was proved not too terribly wrong.
Exactly. There will be no Depression, even as they run out of soup in the soup lines. The stock market, which will consist of one stock at that point that represents some abstract government super-company, will always be up, and inflation will be contained.
I even have doubts we’ll here the word “Recession” in the sense of “We’re in a recession.” Probably, we’ll be “heading for one” for a while, and then “recovering from one” for years and years, while never being in one.
Where do we go from here?
Confidence Sinks to Record Low
http://biz.yahoo.com/ap/080111/consumer_confidence.html
Downhill on a double black diamond without ski poles.
‘Moody’s Investors Service said on Thursday the United States’ “triple-A” government bond rating could come under pressure in the very long-term if the Medicare and Social Security programs are not reformed.’
“These two programs are the largest threats to the long-term financial health of the United States and to the government’s Aaa rating,” Moody’s analyst Steven Hess said in the agency’s annual report on the United States.
“Medicare and Social Security programs are not reformed”.
And that’s the “third rail”…. Who wants to poke that sleeping Tiger with a sharp stick?
I’ll give up Medicare and Social Security the day CONgress gives up their health care and retirement benefits.
While I can understand your disdain for a “double standard”, but in theory congress does WORK for those benefits. Social Security and Medicare are unconstitutional, while congresses’ health plan is not.
“but in theory congress does WORK for those benefits.”
In theory. OK, then, I’ll give up Medicare and Social Security the day CONgress abolishes the income tax and the Federal Reserve, puts the dollar on the gold standard and repeals the 14th amendment.
IMO you and I have already given it up, Palmy. It just hasn’t been made official yet.
Exactly, Blano. We’re just being softened up for the kill.
Don’t be so dour guys. You’ll get your social security money. It’s just that by the time you start receiving your $1500-$2000/mo check all it’ll buy is a loaf of bread…
Like Devildog says, I anticipate we’ll get something. I suspect the govt would effectively hammer the benefit down to epsilon while maintaining the program. US has a history of not dealing with problems until they reach a crisis - even when people know it’s coming. Current exercise is a simple example.
Comment by VirginiaTechDan
2008-01-11 05:56:17
While I can understand your disdain for a “double standard”, but in theory congress does WORK for those benefits. Social Security and Medicare are unconstitutional, while congresses’ health plan is not.
Get a law degree and do constitutional litigation before you start making such claims. You are so-o-o-o-o-o far off base that such comments are in the category of ‘the earth is flat.’
The stupidity of right-wingers never fails to amaze me. They read some garbage somewhere and they are instant experts on one of the most arcane and sophisticaated areas of law - even though they probably don’t even have a BA.
I disagree. Your implication is that only those with a JD are allowed, and/or competent, to determine what is constitutional. It is part of the Constitution that all members of the legislative branch-at the Federal and state level, all officers of the Judicial branch, and all officers of the Executive branch support the Constitution. Many of those folks do not have a JD (especially all those considered officers in the Judicial and Executive branches). In addition, it is truly “just a piece of paper” if those that fall under its jurisdiction have no understanding of what it says-the electorate.
Social Security is far from being one of the enumerated powers of the legislative branch, hence unconstitutional. As far as health care is concerned, Congress is granted the authority to “receive Compensation for their services.” They certainly have Constitutional authority to pass legislation entitling them to health care. Apparently, the electorate was willing to allow them that entitlement since they still receive it.
As if Moodys Aaa rating of US paper means anything.
10-yr and 30-yr T-bond yields are diverging. My take: The 10-yr is pricing near-term recession, and the 30-yr is pricing long-term inflation. Buy a home now if you want to lock in generational-low long-term yields
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=8&freq=1&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
I don’t get your point. Do you expect the U.S. to default on its debt? This has never happened before; why do you think it is even remotely possible?
You’re reading into my comment GS. It was more of a dig at Moodys than anything else. How did Moodys valuation of mortgage paper work out?
Exeter — No harm intended; just playing devil’s advocate to stimulate discussion.
But I am curious whether Moody’s considers both default risk and currency devaluation risk in rating country debt. I would think default risk would generally be close to nil on sovereign debt (unless govt printing presses stopped working for some reason).
Maybe so but whatever model they use to assess risk doesn’t mean much does it? At least not to me. >Arthur Andersen
Of course the US will default on its debt. All nations eventually do. It is a question of when. The US defaulted on the Continental Congress Dollar and the Confederacy its currency.
When retirement ages increase for social security isn’t that a form of default? When the wage limit to pay social security and medicare have risen, isn’t that a rolling default? When social security benefits are taxed isn’t that a default.
A default is a broken promise in a contract. We can expect more of that from the government and someday a complete renunciation of Federal debt. Again the question is how many years in the future.
Plus, we defaulted in 1971.
Ben — does Moody’s take both default risk and devaluation risk into account in valuing country debt?
I personally don’t see why he entitlement programs couldn’t be tweaked so that they continue to exist on paper but with the benefits sufficiently diluted by inflation that they don’t really pose an outright default risk.
could stop wars, bombs and bullets, and the extravagant congress critters benefits, retirement, etc - there is plenty of money - they just chose to waste it on killing and saving themselves
“…if the Medicare and Social Security programs are not reformed.”
Medicare liabilities are too large to be funded. Social Security is fine, it’s the SSDI or disabilty portion of the program that needs reform; too many young people draining it dry.
“People are anxious because everything sounds pretty awful these days,” said Bill Cheney, chief economist at John Hancock Financial Services Group.
Remember folks, he’s a “chief economist.”
I think I’m begining to grasp those technical terms he’s using.
‘”People are anxious because everything sounds pretty awful these days,” said Bill Cheney, chief economist at John Hancock Financial Services Group.’
BB was quoted on NPR last night saying there would be slow growth in 2008 but no recession. Many folks are still conjecturing that housing will bottom out in 2008. And unemployment has barely notched up off its recent very-low levels. I fail to see the pervasive gloom to which Cheney refers.
Merrill Lynch about to drop a bombshell.
Look out below…………….
Yep….. and UBS is offering bets on C02 emissions!
Sorry……..here’s the story.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aiiE0jWmlcOw&refer=us
Doubt this was not known when the market was selling off the past week. Just because it wasn’t public doesn’t mean it wasn’t known.
Shotgun wedding…………..CFC-BAC.
http://bp2.blogger.com/_wFWqWIH-WFU/R4akK5efY_I/AAAAAAAADWY/bv-GLjG0IWo/s1600-h/Shotgun+Wedding.JPG
This is a wedding that has me humming “The flowers that bloom in ths spring,” from The Mikado. Although Mozillo would have some difficulty trying to “pass for forty-two in the dusk with the light behind him.”
What kind of shills will fit in a shotgun?
Of course, idiot that I am I have mixed up The Mikado and Trial by Jury.
Don’t be too hard on yourself, you’re all you’ve got.
The Debt to the Penny and Who Holds It.
$9,196,451,518,618.93 as of Sept 2007
http://www.treasurydirect.gov/NP/BPDLogin?application=np
It’s official per Bloomberg Radio this a.m.: BoA buys Countrywide.
I’ll be damned. I did good then selling at 8.37. Sold well above the buyout price.
Didn’t someone say yesterday that CFC has 118B in assets? How do you sell the company for 4B?
What was the sales price/share?
It’s a stock deal and you can short both sides if you want to and probably make some money.
Countrywide’s market cap per Yahoo Finace at the close yesterday (7.75) was 4.4B. I don’t know how many s/o/s they are but I’m very happy with what I got for it. It was a day trade and Hoz did everything but wave a red flag at all of you to get in yesterday a.m.
It is an outstanding call by Hoz. I got out at 7.24. chick, what alert software you are using? I was working and didn’t want to monitor this real time for obvious reason. I was floored when yahoo’s delay quote pop 8+; I refreshed the page several times to confirm. LOL.
Shareholders of Countrywide will receive 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide.
http://biz.yahoo.com/ap/080111/countrywide.html
Yeah, you’ve probably seen the high on CFC before it disappears. As I said, you could short both parties and probably make some money if you have time to screw around with it. I personally don’t care, I’m done with it.
BAC is getting pounded premarket - down over a dollar. If its a fixed conversion RATIO watch both companies get the Joshua treatment!
Right. As said above. cfc is at 6.50 almost $2 under my sale price. Damn, sometimes it’s better to be lucky than good!
I will give at least half that profit away.
Where do I sign up to get on that charity list? I’ve got two abandonded cats I took in. They are both now fat and happy. Not too dumb though.
Really wish I had had dry powder yesterday morning, I thought the CFC idea was a good one. Instead, no, all my money is tied up in losers.
Maybe your charity to me should be a kick in the financial head.
So - what happens to the current shorts (like me)? Is a buyback (cover) forced at market price when the transaction occurs? Or does a short position in CFC just translate into a short position in BAC?
I probably wouldn’t mind that, given BAC’s new additional weakness in the mortgage sector :-). Though BAC is down a *lot* already lately, and surely they’re indeed too big to fail, and thus have some artificial support level somewhere.
Assets $118 bn
- Liabilities $114 bn
———————-
Net Worth $4 bn
Morgan/Chase buying 2 or 4 billion in mortgage related CrapWrap from NorthernRock, per WBBR this morning.
This sounds like people are trying to hide the bodies.
That was exactly the response from an economist or talking head yesterday. I can’t recall who because I listen to and read this stuff all the time.
No bits and buckets yet so I must post here. Anyone notice a disturbing trend on Zillow and OSG/Hardtack? Zillow prices up >40% in old haunts and towns in New England. I give zillow little credibility but I’ve come to expect validation and vindication from everywhere now. It just didn’t sit well with me even though I know not to trust it. Also, OSG/Hardtack is showing inventories dropping off dramatically in same locations. Some stuff is still selling, even at outrageous prices according to zillow.
This $hit disturbs me.
I almost threw up in my mouth wathcing the comdey channel (CNBC) this morning. They were discussing the bailout of CFC via BAC and the two professional guests- both Wall Street analysts were 100% bashing this as a terrible move by BAC and made absolutely no sense. The stock bunny host of CNBC actually intereupted them to say that BAC was listening to every word the two analysts were saying and that they did the “most DD they ever did on this deal” and how great this was. Then Kernan and the other puppet said they were in Lewis’ corner and that they backed his great track record.
THEN Kernan chimed in how BS thought the deal was so great they upgraded BAC and how ” nice” that was that BS’s new CEO was helping out BAC. Please… this is a terrible deal and there is no reason to buy this pig with the risk exposure of CFC.
In my twenty years of following the market, I have NEVER seen such a manipulated, controlled, and rigged market as we have today. Totally devoid of fundamentals and ethics. Not ONE word of how this deal was leaked via an “un-named source in WASHINGTON DC” ,and how the massive call buying was done prior to the leak.
Were there a lot of calls bought? I didn’t hear anything about that.
TX…………it’s all over the net
I was out yesterday for most of the action. I bought the stock and went to lunch. Guess the SEC will be busy for awhile.
Something like 76% of them were bought before the announcement.
Keep the receipt
I saw Kernan, too, and I was yelling at the screen. He brings on two guests to give their opinion, and instead of having one for it and one against the CFC-BAC deal, like CNBC usually does, both were against it in vociferous terms.
Kernan essentially said, I don’t care what you two guys say, I’m going to go with Ken Lewis here.
There are so many time bombs left to go off at CFC — fraud, SEC investigations, class-action suits — that BAC is stepping into a mine field. $4 billion in stock. This is going to cost them way more after all the problems come out.
Gasparino is calling it correctly right now, but Steve LIES-man won’t let him get a word in edge-wise.
– Judge Smales
“You’ll get nothing and like it”
Could / did BAC and friends buy tons of calls before the announcement? Is it legal? (Not that there is anything wrong with that if it was illegal…)
no, it’s not legal
Which part? BAC doing it, friends doing it, or both?
Is the SEC supposed to regulate these deals? Or is it part of the Fed’s bank regulation responsibility?
… and does the U.S. financial sector have a rule of law?
Hey Mr. Bear,
I’ve told you before…I’ve personally seen Chrissy Cox shopping at Fascist Island in Newport Beach…. and he was wearing a pink shirt…and…he looked… well fed
Txchick,
read this….http://blogs.marketwatch.com/greenberg/2008/01/the-real-story-on-countrywide/
Ha. Interesting they quoted Dr. J there. I subscribe to his blog but didn’t see it yesterday. Yeah, as usual, the crooks are all over it.
Here’s what Dr. J says this a.m.
There were two extremely unusual blocks of 2,000 contracts trading in CFC yesterday. 1) one block of January 5 calls hit my firm’s HeatSeeker at 9:46:29 am CT on the AMEX and another at 10:58:33 on the PHLX. These two purchases (for $0.75) represent at paper profit of $1.1M by day’s end.
Looks like the credit card industry is facing a plankton die off.
Bernanke was quoted on NPR last night saying the economy will continue growing, albeit more slowly, throughout 2008. Any predictions on how soon this tune will change dramatically?
To wax philosophical for a moment…
The inherent flaw in capitalism is that in the big picture, the earth is a finite resource and therefore infinite growth is impossible, whether in terms of human population or markets. Things just can’t grow forever. Perhaps in ther future there has to be a new sort of economic model based on sustainability rather than endless growth.
But, as they said in Spinal Tap: “That’s too much f****ing perspective!”
Real-world economic reality eventually forces sustainability issues down policy makers throats if they fail to seize the initiative.
Today’s WSJ p. C1 sidebar:
AHEAD OF THE TAPE
By Mark Gongloff
——————-
Hopes Pinned On Exports Look Misplaced
SOME ECONOMISTS believe strong exports will help keep the U.S. out of recession. They might expect too much.
…
The credit-dependent global economic symbiosis, which brought us the first world wide housing bubble, is now going down with the deflating bubble. Good luck with that export-led recovery fairy tale.
Perhaps the symbiosis is not dying, but merely adjusting.
China 2007 trade surplus a record $262bn
By Richard McGregor in Beijing
Published: January 11 2008 07:46 | Last updated: January 11 2008 09:49
China’s trade surplus rose by nearly 50 per cent in 2007 to a new record of $262bn, but the three straight months of the final quarter in which import growth outpaced exports suggests the contentious imbalance may finally be nearing a peak.
Europe also replaced the US as China’s largest export market. Sales to an expanded European Union grew by 29.2 per cent in 2007, compared to just 14 per cent to the US.
http://www.ft.com/cms/s/e83a2524-c013-11dc-b0b7-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe83a2524-c013-11dc-b0b7-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
“Europe also replaced the US as China’s largest export market. Sales to an expanded European Union grew by 29.2 per cent in 2007, compared to just 14 per cent to the US.”
Selling to the Europeans for more money and actually getting paid, instead of iou’s, seems like what i’d do if I were the Chinese.
“SOME ECONOMISTS believe strong exports will help keep the U.S. out of recession.”
Yep, depleted uranium is a wonderful thing.
LOL - good one.
I wouldn’t want to be the shipping company for that cargo though.
How does this news item mesh with the export-led U.S. recovery fairy tale?
U.S. November Trade Deficit Widens More Than Forecast on Oil
By Shobhana Chandra
Jan. 11 (Bloomberg) — The U.S. trade deficit widened more than forecast in November as Americans spent a record amount on imported oil, overshadowing gains in exports.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFKDaEy1ISDA&refer=home
Ode to Deano…
Fairy tales can come true, exports too
If your car won’t start
For its hard, you will find, to be narrow of mind
If your car won’t start
You can go to extremes with impossible schemes
You can laugh when your dreams fall apart at the seams
And life gets more exciting with each passing day
And oil is either in your car, or you won’t go far
Don’t you know that its worth every treasure on earth
If your car won’t start
For as rich as you are its much better by far
To be fiscally smart
http://www.youtube.com/watch?v=urHk3EKvImY
Keep your driving habits… make the effective price of gasoline: $1.60 @ 25mp1/2g
You see what happens when a country with a BILLION+ people wants to be just like America. China & India have soooooooooooooooooooooooooooooooooo many people…I’m certain that quality & safety are…how does Ford say it:
Job #1…I’m also quite certain that the Pacific Ocean will filter out all that pollution blowing East…but hey, it’s not like I’m going to run in the LA marathon or anything in the year 2020…sunrise sunset….sunrise sunset
To the Billions of peoples of China & India…please become just like US
World’s Cheapest Car
“That vow has been much-derided by the global industry which said it would be impossible without sacrificing safety and quality”
http://finance.yahoo.com/family-home/article/104166/Tata-Reveals-World’s-Cheapest-Car;_ylt=ApB7SM3QDScf02XJi0qvVVi7YWsA
We exports lots of stuff, like…. ummm… toxic paper? Depleted Uranium? And… that’s about it.
That should keep the economy humming along for years.
Also export dead PCs which contain lead, an input to toxic paint production.
And Agricultural products. Won’t it be fun to bid against Chindia for food grown in the midwest especially now that the dollar is so, AH, troubled ?
Don’t worry — a promised bottomless series of future Fed interest rate cuts will fix this problem in short order.
BULLETIN
U.S. TRADE DEFICIT’S A SURPRISE, WIDENING TO $63.1 BILLION IN NOVEMBER
ECONOMIC REPORT
Trade gap widens on surge in oil imports
Real exports fall for second straight month in November
By Rex Nutting, MarketWatch
Last update: 8:30 a.m. EST Jan. 11, 2008
WASHINGTON (MarketWatch) - A record increase in imported oil prices in November sent the U.S. trade deficit to the highest level in more than a year, the Commerce Department reported Friday.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B529A47A3%2D7B9C%2D4A13%2DBB31%2D6594ACA03D18%7D&siteid=mktw
How about a weekend topic on local job losses or job gains. The whole thing depends on jobs holding up.
I’d like a weekend topic on what a depression would really be like. Personally, I cannot imagine it. I’ve heard all about the original from lots of my elders, but the reality is that they weren’t too affected because they were all farmers that owned their land and they had food a plenty and didn’t use plumbing/electricity. America is much different now. How would people eat? Would there really be “Hoovervilles”? Would everybody’s electricity and water really get shut off? I’d be interested in “real-world” thought experiments about what it would be like. Thanks.
I think it would be pretty similar to “Road Warriors”.
Mad Max bad first though.
Then we move into Road Warrior bad.
The big difference in a depression this time, as opposed to last time, is that people would have to get used to living without much if any credit, and with much less energy.
One aspect would be a huge shrinkage in square footage per person consumed. People would have to move in with relatives, sparking some real family conflict in some cases. Even if the purchase price of housing became dirt cheap, there is still the operating costs to consider. IMO much of the shrinkage in spending would occur in housing.
Automobiles would be next. Now matter how high energy prices are, gasoline savings alone will not be enough to help. America might shift from two cars back to one, with carpooling, telecommuting, and bicycle commuting.
There will be pressure to allow more mixed use in existing use-separated suburbs, so people can walk to the store. With plenty of people looking for work as peddlers, the milkman and other vendors might make a comeback.
Eating out would become less common.
The MSM would continue to downsize, gradually replaced by semi-pro bloggers and entertainers with less overhead and less costly lifestyles, with new technologies making this feasible.
Colleges and universities would have to cut costs, requiring more teaching from profs, to lower tuition or face losing customers to on-line education.
There will be less air travel. Camping might make a comeback.
The expansion of domestic servants into the middle class will reverse.
And, asset values will deflate relative to goods purchased with work today, reducing the difference in wealth between those with savings and those without.
Anything else.
Camping will make a comeback, but not as recreation, more as necessity. Parts of the US that depend on tourism will suffer severely. There will be spot shortages of motor fuel, interfering with deliveries of critical supplies all over the country. Some institutes of higher education will shut their doors due to lack of students. See Kunstler’s “Long Emergency”
A great book on the last Depression and readily available for a few bucks …. “Ten Lost Years… 1929-1939″ by Barry Broadfoot ….. originally published in 1973 by Doubleday but has been subsequently reprinted several times.
The book is a collection of personal experiences of the last great depression and is a truly incredible and a must read by all.
Don’t be surprised if we all end up exposed to the travails of a true depression sometime in the not too distant future.
A classic book on the 20’s and 30’s is “Only Yesterday”.
Ten Lost Years is very good.
Only Yesterday is dry.
The Day the Bubble Burst is great.
Act I - Housing does not always go up (or Houses do not pay for themselves)
Act II - Cutting Fed rates does not make the stock market go up
Act III - Banks don’t fail, they just get eaten
What other interesting revelations are going to come to light as this drama plays out?
Its probably been covered on these boards before, but if anyone is willing to share their experiences making “low” offers, I’d love to hear about them.
I’ve made my share of them. None were accepted, which is fine. Only one or two of the houses sold, one rented, and the rest are still for sale. It took a lot of time and wasted paper, though, so I guess you could say that I gave up, and decided to wait until the sellers got more realistic.
Next time you offer, include an appendix with an estimate of the holding-costs-since-offer on a few choice properties
One topic of interest to me is just exactly how the recession/depression is most likely to the average person on a day to day basis. I was talking to a friend in Oregon about this last night and she maintains people will still get their houses cleaned, as the average working stiff doesn’t have time to do this (she cleans houses). I said, nope, no go. Same with lots of other services, and she doesn’t believe gas could go down due to lowered demand. I do. Someone want to look ahead in the future one year and describe the average day for the average American? I mean, beyond just using the words “screwed” and “hosed”????
I think Americans will start to save money. With Deflation saving money makes sense though the Government may call it Hoarding and try and tax it.
So different than Inflation where we all saw the buy now or get priced out forever mindset.
FNM is range bound to $30 - $40 / share, likely due to plunge protection life support. I expect it to keep bobbing up and down in this range until about Jan 28 or so…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=FNM&time=9&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Do rate cut announcements made through a megaphone over a loudspeaker system from on top of a soap box help shore up economic weakness? Wall Street traders are voting on this question as I type through asset reallocations…
http://www.marketwatch.com/tools/marketsummary/
Flight to quality (again)… never mind the credit downgrade threat from Moody’s.
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=1&freq=9&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
I am curious if Wall Street is happy with the outcome of yesterday’s emphatic announcement of an implied commitment by the Fed to a bottomless series of future FFR cuts, which looked much like appeasement from my distant vantage point?
Not another write down!
January 11, 2008 1:46 P.M.EST
BULLETIN
Dow’s 200-point write-down
So much for the Ben Bernanke–and–Bank of America rally, with stocks pressured Friday on multiple fronts, including Merrill Lynch write-down and American Express charge. Blue-chip index forfeits as much as 230.
marketwatch.com
Weekend topic question: for the average person - just going to work, raising kids, not invested in much besides simple small 401K, what do all the market shenanigans really mean in their day-to-day lives? I think the bulk of the public are just plain folks living life and I think there needs to be some simple explanations of what is actually happening and how it changes their lives today. Not extrapolations of what could happen or might happen, but what is really happening now. I think if you can’t break it down that way, you really can’t engage the public. Fear mongering for the future just makes the public turn away from information.
“…what do all the market shenanigans really mean in their day-to-day lives?”
Higher future unemployment risk.
Also increased future inflation risk.
And the silver lining: Affordable housing on the way in a bubble market near you.
Worry is what I see.
More lost in IRA this week than monthly salary. Loss of potential investors to fund my startup. Potential loss of home equity (real equity, i.e.: stuff I’ve paid in.)
Other than that? Not much - we just save a larger percentage of the recently-half-sized salary.
Help is on the way — $70 bn worth!
“Hillary Unveils Aggressive Plan to Jumpstart U.S. Economy
by Crystal Patterson
in News, Issues
1/11/2008 10:18 AM”
http://www.hillaryclinton.com/blog/view/?id=25248
Bubba’s gonna take care of her, don’t worry.
Establishing a $30 Billion Emergency Housing Crisis Fund to assist states and cities mitigate the effects of mounting foreclosures. With our economy facing the prospect of substantial contraction as hundreds of thousands of subprime mortgages reset and housing values erode further, Senator Clinton believes that any effective stimulus package must take aggressive action to mitigate this contraction and help as many families as possible remain in their homes.
http://www.hillaryclinton.com/blog/view/?id=25248
My question: Would Franklin Raines be called out of retirement to take over at FNM again if HC gets elected?
Countrywide’s Mozilo May Collect $83 Million After Takeover
By David Scheer and Jesse Westbrook
Jan. 11 (Bloomberg) — Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo may reap $83 million in severance and other compensation after its takeover by Bank of America Corp., according to compensation consultant Brian Foley. The mortgage lender fell 79 percent last year.
Ok so how can Secular Deflation affect America ? I’ve only know Inflation and growth my whole life. Hard to imagine.
I still hear lots of talk about out-of-control population growth and so on too… wait until that turns around here. The entitlement economy is predicated on an increasing population.
We’ll have a ringside seat watching Europe deal with it before it really hits hard here. (Assuming the immigrant flood slows.)
“watching Europe”
And Japan. You raise an important point about the unappreciated role of reproduction (or at least good immigration policy) in maintaining a nation’s economic base.
Bank earnings to be hit as mortgage woes spread
Provisions seen rising as more consumer loans go bad, denting capital
By Alistair Barr, MarketWatch
Last update: 7:01 p.m. EST Jan. 11, 2008
SAN FRANCISCO (MarketWatch) — And now for the next wave of bank blues.
Mortgage woes are spreading to other types of loans as the economy weakens and unemployment rises, producing a secondary pressure trend hitting bank earnings, experts said this week, ahead of closely watched results due soon from industry giants including Citigroup Inc., J.P. Morgan Chase and Wells Fargo & Co.
http://www.marketwatch.com/news/story/bank-earnings-show-mortgage-woes/story.aspx?guid=%7B2E530903%2D6EAE%2D43CB%2D8C18%2D816A5F9B70C8%7D&dist=hplatest
How about if we focus instead on the insinuation that a never-ending series of Fed rate cuts stretches ahead to the infinite future time horizon?
THE FED
Stop obsessing about the Fed, Mishkin pleads
Fed official points to ‘path of monetary policy,’ not outcome of any meeting
By Rex Nutting, MarketWatch
Last update: 1:17 p.m. EST Jan. 11, 2008
http://www.marketwatch.com/news/story/stop-obsessing-about-individual-rate/story.aspx?guid=%7BAEB4338D%2D4437%2D4A96%2DA202%2DAE5D6851B210%7D&dist=TNMostRead
CAPITOL REPORT
Dramatic shift in emphasis at the Fed
Economic risks take center stage, pushing inflation worries to the background
By Greg Robb, MarketWatch
Last update: 12:31 p.m. EST Jan. 11, 2008
http://www.marketwatch.com/news/story/dramatic-change-tone-federal-reserve/story.aspx?guid=%7BDF7EF3C0%2D628C%2D49AD%2D9A1E%2DB452B8883852%7D
WEEKEND TOPIC SUGGESTION: Which do you prefer, Inflation or Recession?
Yes.
I like massive inflationary bubbles in one part of the economy which perfectly balance deflationary bubbles in other sectors. On balance, core inflation may be able to stay at 2 percent forever, especially if all the aforementioned sectors’ inflation is in either ‘non-consumer-good’ (asset) or ‘volatile consumer good’ (food and energy) prices.