Bits Bucket And Craigslist Finds For January 11, 2008
Please post off-topic ideas, links and Craigslsit finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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BOA ate CFC
Death Wish.
Just at the point when the operational effectiveness of megalenders has been severely called into doubt, we get a marriage between two of them! The “too-big-to-fail” status of CFC seems to have carried the day — never mind all them foreclosures.
I wonder though just how much of CFC BOA will keep. Gotta be some major house cleaning in sight.
Bank of America expects $670-million in after-tax cost savings in the transaction, or 11 per cent of the expense base of the two companies’ mortgage operations.
So long, it’s been good to know you.
RE: Gotta be some major house cleaning in sight.
Tan Man comin’ out of the deal with a cool $36.5 million.
Excuse me while I pull the wastebasket closer, I’m feeling rather queasy
The deal is “good for the housing sector,” Hovnanian (HOV, news, msgs) CEO Ara Hovnanian told CNBC. Hovnanian believes the housing market is near a bottom and that Bank of America may be getting a good deal.
http://tinyurl.com/2amvgz
CFC was not too big to fail and that is why the merger occurred. CFC is supervised by OTS; BOA is supervised by OCC. The deposits of both are insured by the FDIC. CFC’s S&L must have been on the brink of insolvency and the FDIC didn’t want to take the loss. BOA is too big to fail so by putting CFC into BOA the FDIC pushes its problems out into the future. The merger also helps out the FHLB-Atlanta which is a major creditor of CFC’s S&L (BOA is now the debtor).
Note that the acquisition is a stock-only deal; no cash paid to CFC shareholders by BOA. In all likelihood the deal was instigated by the regulators. It’s also likely that BOA obtained a lot of regulatory forebearance from the FDIC and OCC (why else would they buy such a turkey). Probably the forebearance has to do with “looking the other way” when it comes to assigning a book value to CFC’s assets. For example, loans with a true market value of 80% of par might end up on BOA’s books at 97% of par.
Who knows how this will turn out for BOA. Of course it’s now easier to value CFC’s stock. Simply multiply the BOA share price by .18.
Probably hard to value the CDS on the CFC books. If BOA was a counterparty do these CDS just go away?
Yes. But it’s no benefit to BOA. If BOA is on the insurer end of the CDS the CDS is terminated but BOA now owns the high-risk assets. The risk of loss to BOA is the same if not more (some CDSs have caps).
I think you’re right. Somone will make BAC whole and it really comes down to the taxpayers in the end.
Taxpayers will be getting it in the end, all right.
Ben?
Oh, Beeen?
Tell us it ain’t so!
I am sick of wasting time with people that insist on making up scenarios. They just type it, and it’s so. I prefer to deal in facts. Actually this deal shows no one is too big to fail. Just yesterday, ‘experts’ were saying in the Washington Post article that the gov was going to be forced to nationalize CFC. Ha.
“I prefer to deal in facts”…
I’m with you Ben…here’s a fact:
Warren Buffett spent some cash yesterday, not for Bof A or Countrywide…but for a railroad company…what doesn’t he know…and when didn’t he know it?
Ben, I like dealing in facts myself.
Problem is, we really don’t know what the facts are at this stage. On the face of it, this deal makes the fearless leaders of Bank of America look like raving loonies.
There’s got to be more to the story…
The way I look at it is: in for a penny, in for a pound. Or doubling down. Or whatever you want to call it - nobody is immune from the temptation to try to rescue a bad investment, especially when you now get so much more so much cheaper and get the chance to work your BofA magic, throw out Mozilo, and so forth. The only chance BofA had to make good on their first investment was to do this - may sound irrational, but at least it does make more sense than zero-down payment lending to deadbeats.
If you have ever bought a classic car (or other classic item) you know how this works.
For example:
Completely restored 1963 Triumph motocycle cost: $5000. One check one purchase price.
My thought way over priced.
I bought a fixer upper Triumph for $1200.00 After paint, new chrome, parts etc. Final cost over $6000.00 not including my time. Made purchase a little at a time, and then added up the total cost. So it did not seem like I paid that much for the fixer upper.
One thing that always baffles me is that companies always buy a competitor, or other business and look at ROI and never look at what it would take to “make” the business.
It does not. If BOA is holding the same paper that CFC does and such paper is not trading, then BOA can argue paper represents any value BOA wants. If CFC goes into BK, it will be forced to sell paper establishing the market value for this paper. BOA does not want that. Buying CFC to protect BOA’s balance sheet it perfectly reasonable.
Actually CFC’s cute logo is worth at least $10B in goodwill.
News flash: JPMorgan Chase is buying WaMu.
It definitely looks like a conspiracy now.
I am organizing my militia as we speak…
You can take everything east of the Mississippi, Sweeny, but Sammy’s Legions are laying claim to everything to the West.
Same story - different era.
Economic downturns are a great medium for the strong to swallow the weak. There are certain banks that are indeed too big to fail - these happen to be the same banks that have strong ties to the government. They haven’t changed since the early 1900’s, when the same thing went on.
JP Morgan Chase
Citibank
Bank of America
are the big 3 retail banks now, that will end up coming out of this smelling like roses. In the Great Depression is it was JP Morgan, Chase Manhattan, City Bank of New York (now Citibank). So it’s the same players, with BofA being the new kid on the block.
Same thing for the investment houses - Bear Stearns etc. Sure they’ll have some hit from the downturn, but in the end they’ll emerge the victors, by gobbling up smaller competitors or forcing them out of business.
Greetings from the people’s republic of Kaly/forn/yia
Sweeney, where can I sign up?
Who needs a time machine when you can watch dinosaurs mating in real time??
Gadfly, stop it. You’re making me laugh too hard.
“CFC’s S&L must have been on the brink of insolvency and the FDIC didn’t want to take the loss. ”
Yep. CFC had their warehouse line pulled yesterday. So did IndyMac Bank.
At this point the government is not going to make BOA “whole.” The OCC and FDIC will just look the other way when balance-sheet insolvency threatens. It will be like the Bank of Japan’s ignoring, for many years, all of the insolvent, large Japanese banks.
CFC had borrowed $10B from BofA. They were VERY invested in making sure the CFC didn’t fail…
BofA didn’t BUY CFC, they absorbed it.
The silver lining: CFC showed that affordable asset prices some times come to those willing to wait.
The only way I can see this being desirable for BofA is if they got a wink/nod from the Fed, Treasury and the Federal Home loan bank system, leaving the tax payer to clean up all of the ‘collateral’ countrywide left in the federal banking system.
Why else would they even want CFC….it is a heaping pile of bad debt unless we, the tax payers, are covering their bad debt.
according to the Greenberg blog, we are.
You should read the blog as mentioned: http://blogs.marketwatch.com/greenberg/
I am stunned at the level of side ‘deals’ - why cant the markets just work
‘1. The Fed is behind the deal. (Today’s thought: It’s as likely as yesterday.)’
I expect a future ongoing explosion in the number of (unannounced) Fed-brokered deals.
“A Texas-based provider of warehouse lines is removing Countrywide Home Loans and IndyMac Bank from its approved investor list because movement in their share prices resembles that of other imploded lenders.”
Foul!!!
Don’t these guys know they are suppose to wait until the Rating Agencies downgrade CFC and IndyMac?
How many times do we have to tell ya, “No peaking at the stock price or the ABX index”!
peaking=peeking. Too much excitement today!
How about this one.
3. As part of the deal, the government likely agrees to guarantee BofA against Countrywide-related losses. (There was nothing in the press release about that, so let’s give them the benefit of the doubt and say BofA is shouldering all of the risk and at this price it believes the risk is worth the reward.)
You think the $4 billion purchase price is “Net” or “Gross” of CFC preferred shares?
Rumors going round about $4 billion being gross, so less preferred may leave something like $1.5 billion to the common shareholders. Thoughts?
Expecting BAC to get taken to the cleaners today with CFC longs and speculative shorts piling on BAC short to lock up the conversion value. Could lead to a “death spiral” in the stock price of both companies. Should be a wild ride!
Ding ding ding!
I was thinking along similar lines. I personally believe a high level announcement will shed light on this issue come Jan 28.
“The silver lining: CFC showed that affordable asset prices some times come to those willing to wait.”
Perhaps BOA is the source of the bankrupcy rumor that drove the stock price down.
Not necessarily. The debts are not worth zero. They may trade for 40 cents on the dollar, for example, but if BOC bought the entire company for a lower price than the deadbeat loans are worth, it would make the deal profitable.
Important to note that the Fed’s magic wand came up impotent yesterday.
Kenneth Lewis planned this one perfectly. First the 2 bil injection and then they doubled down on the CFC buyout. If bofa can turn this around Ken makes a windfall . If bofa barfs then Ken gets the multimillion dollar severance package. Truly a win win - only in america
Looks like they’re coming for txchick -
http://www.reuters.com/article/marketsNews/idUKN1021705420080111?rpc=44
I didn’t know anything and I just bought the stock in the open market. Did nothing wrong.
Wonder if the hbb logs are admissible in court
Sure. Anything is. And I have been hassled by the SEC in the past about trading in an illiquid stock, nothing to do with a buyout. That was minor and I didn’t do anything wrong there either but after that experience, I would say no amount of profit is with the ordeal of dealing with the SEC. My conscience is totally clear.
Plus, if I did know and bought the stock, do you think I’d be stupid enough to post it on a public board?
My apologies regarding the pun. Moving forward I’ll refrain.
Well, there was insider trading by BOA. If CFC had gone into receivership and THEN been taken over in an FDIC-brokered deal over a weekend, then all the original stockholders — including BOA — would have been wiped out. And, BOA would have to have admitted the loss.
So BofA would rather delay taking this loss, and take a much bigger loss 6 mo from now. Brilliant!
Nice system we got huh? If the top guys crash and burn, they get millions, if we don’t keep up with the widget machine, we get canned.
It is typical for “intelligence analysts” of any stripe to attribute actions they don’t understand to leaks rather than smarts on the part of others. That way they can hunt the mole down rather than facing the possibility of truth.
Tan man has hundreds of thousands of underwater options at $9.94
I wonder how much his severance will be…any guesses??? 50 million $100 million?
I wonder how much his severance will be?..
“He could be entitled to an exit package of roughly $72 million. That would be on top of the $410 million in pay, including $285 million in option gains, that Mozilo has taken home since he became Countrywide’s CEO in 1999.”
RE: I wonder how much his severance will be…any guesses??? 50 million $100 million?
According to Reuters he pulled $35.5 mil.
Interesting thought just put forward on CNBC.
We know BoA already put in $2 billion. They were also a part of the later deal that opened (what was it? $18 billion?) $18 billion in lines of credit to CFC. So, what if BoA already had $4 billion+ on lines of credit.
If CFC went bankrupt, BoA easily could have lost more than the $4 billion they just paid for CFC.
So, let CFC go under and lose all you loaned them. Put yourself into an insolvancy state.
OR
Buy them out. Use your name and credit to refi the outstanding debt at better terms, and HOPE!
but BoA is now responsible for future losses. THey cannot walk away (unless there was a side deal with regulators, Fed, FDIC etc)
“…and to affirm our position as the nation’s premier lender to consumers,” Lewis said in a statement.”
In this market, they view this as a desirable thing.
I have a one of those “no fee” refinancing offers in my trash from BoA. If they drop the interest rate over a full point farther, they can match my current loan. Keep trying Mr. Lewis.
big fish eats sick fish
..poison just gets diluted
Banks Plead… This speaks volumes and would be funny if it wasn’t so pathetic.
http://www.nytimes.com/2008/01/11/business/11norris.html?_r=1&ref=business&oref=slogin
“No one anticipated a day when potentially hundreds of thousands of residential mortgage loans would be modified,” said Alison Utermohlen, an official of the Mortgage Bankers Association who has led the effort to get the accounting rules relaxed.
That’s the problem in a nutshell. Just like the “unsinkable” Titanic, they didn’t want to waste any effort on putting enough lifeboats on board for everyone. They created a system where “Nothing can possible go wrong…wrong…wrong…”
“No one anticipated a day when potentially hundreds of thousands of residential mortgage loans would be modified,” said Alison Utermohlen, an official of the Mortgage Bankers Association who has led the effort to get the accounting rules relaxed.
I did. Just didn’t mention it here. The thing is, why wouldn’t a lender adjust the interest rate to what they would have gotten on a 30 year fixed at the time of title transfer? There really wasn’t much difference between, say 5.3% and 5.7%, was there? If I were lender, I’d make that modification rather than deal with a foreclosure. Of course, it’s more complicated than that, but you get the idea.
Merrill Lynch to Take $15 Billion Mortgage Writedown, NYT Says
Merrill’s writedown is more than the $12 billion analysts had estimated
Canada job market isn’t looking good, the CAD took a big hit at 7:00am EST announcement.
Canada’s housing market defied repeated calls for a slowdown last year, even as the U.S. housing market went through a dismal and protracted slump. Although no one is calling for a U.S.-style meltdown in Canada, the recent weakness has economists talking about how much Canada’s real estate market will taper off in 2008.
Mr. Mulraine emphasized in the report that the Canadian housing market is in “reasonable” shape, with “an expectation for some moderate adjustments during 2008.”
Yeah right.
No US-style meltdown in Canada, “experts” say
reasonable shape = on the edge of a cliff
a bit soft = falling of the cliff
expecting a soft landing = haven’t actually hit the jagged rocks yet
in recession = bloody, pulpy, oozing mess
If those posters yesterday who said their MIL or FIL or mom or dad who was selling their Canadian homes in the summmer…perhaps you should encourage them to sell NOW>
Get their cash now.
Not the “selling season” in canada.. at least be the first outa the gate when the snow thaws, ice breaks etc !!
Weren’t the earlier estimates 4, 5 or 8 billion? Before you know it, they’ll be up to 20-30 billion and nobody will blink an eye.
And since they’ll get a cash infusion the stock price will level off or rise and everybody gets their bonuses next December! What a strange, sick world finance is. It must be great to live without your conscience turned on.
the “whisper number” was supposedly 15B and the high end estimates was 12B. This is just what I have read.
Do you know id this is on top of the $8 billion they already admitted to?
Giant Write-Down Is Seen for Merrill
http://tinyurl.com/ypmanz
Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.
The containment contiues to unravel
Last year was about containing subprime; this year it is about containing the slower-than-normal ongoing economic expansion.
Xmas bonuses for 2008 look to be in jeopardy.
They almost always find a way to get those bonuses rolled out, by hook or by crook. Even with multi-billion dollar enemas in the, uh, pipeline.
That ticks me off. They find a way, because if I don’t say anything to mess up your bonus, then you won’t try to interfere with mine, we’ll all make sure we all get bonuses, and no one cares because it’s the shareholder etc who get screwed.
I work for a mom-and-pop software company and they’re attitude is, hell no we’re not doing well so you don’t get any stinking bonuses. It’s mean and stingy but the company is still here after others have come and gone with their extravagant compensation promises.
Stepping beyond subprime
The credit crunch promises more gloom yet for banks
http://tinyurl.com/27kcsu
As fears of an American recession grow, so do worries about a general deterioration of credit. Commercial property looks more precarious by the day, as do car loans, student loans and credit-card debt. All of these were, like residential mortgages, fed into Wall Street’s stalled securitisation machine. Many now sit in complex products with the same questionable credit ratings.
Looks like the current deteriorating credit conditions are just the tip of the proverbial iceberg.
Ben is going to have one hell of a Washington and Wall Street thread today, but here is a couple he might otherwise pass on.
Central banks in denial on stagflation, per Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601039&sid=aDp8nnhLXdpg&refer=home
“Central bankers aren’t stupid. They understand the options facing them. Yet, like deer frozen in the headlights of an oncoming car, they seem unable or unwilling to wholeheartedly attack either the slow-growth problems facing the global economy or the inflation pressures. Instead, by adopting half measures, they act as if they are trying to wish the world’s difficulties away and continue to let them fester. By so doing, they increase the probability of eventually being overwhelmed by stagflation.”
And, per the Financial Times, Moody’s says the United States might lose it’s AAA credit rating.
http://www.ft.com/cms/s/0/40f3a2be-bfa9-11dc-8052-0000779fd2ac.html?nclick_check=1
“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.”
Hey wait a minute, I thought all those extra regressive Social Security payroll taxes my generation and those after have paid since 1983, when the payroll tax was raised based on the recommendations of the “Greenspan Commission,” have been placed
in a “lock box” to fund our retirements? You mean they are all just IOUs from past generations who spent the money, but promised us that we could tax our children into poverty? And didn’t Greenspan decide the Social Security trust fund should be full of fictional government debt, not corporate assets, because he didn’t want a sovereign wealth fund having an influence on business?
Hmmm.
“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”
What utter crapola. One cannot help but notice that defense spending is never mentioned.
That’s because defense spending is much smaller than current health care and social security spending (and the latter two will grow much more rapidly over the next 20 years).
Her Greenspan’s crediblity is shot.
He’ll eventually take honors for having ushered in the coming Depression.
I think this bear market will disprove Vanguard (Bogle)’s premise that index funds outperform their non-index peers. If everyone is honest, index funds are ok but in a world with sheep and wolves in sheep’s clothing such a shotgun approach is fundamentally flawed.
the thing is, they can be used with charts or market timing in a retirement account that for whatever reason, does not allow access to individual stocks or etfs.
Maybe they’re overweight QID!
Yes but there are often penalties in place to dissuade market timers. But my point was that an index fund would buy all the top banks (or whatever sector you look at) rather than pick and choose the good ones from the bad.
This will be prime time to find good fund managers.
But then they’ll quit and start a hedge fund b/c the pay is so much better….
I depends on for whom.
I don’t spend my time researching individual companies, trying to discover information that is not widely known. So I either accept the market return with as few fees as possible, or trust someone else to invest my money. And right now I don’t trust anyone.
What I have done is shift more money to short term treasuries over the past three years, and less to everything else. I haven’t had a better idea. Something tells me all the other assets are toast until they crash, then any old asset (investment grade bonds (for real) with a 9% coupon, stocks with a 15 PE and 4% dividends based on cyclical low earnings, real estate with a 10% cap rate) will do.
SOL moment for CA state budget
http://www.signonsandiego.com/uniontrib/20080111/news_1n11budget.html
“The federal courts are considering whether to impose a population cap on California’s overcrowded prisons that could force an early release. More than 170,000 inmates are packed into prisons and about 16,000 sleep outside cells in gyms, classrooms and other areas.”
‘Nuff said. Send a bill to Mexico and some Central American countries.
We have the most inmates of any country, by far.
We view it as a business opportunity, it appears…
In our prisons, we incarcerate 750 per 100,000 citizens.
French Guiana… a penal colony, is in 2nd with 630 per 100k
Canada is down the list, with 107 per 100k
Mexico can only muster 198 per 100k
http://www.kcl.ac.uk//depsta/rel/icps/worldbrief/highest_to_lowest_rates.php
And our proportions are off. We need to lockup fewer nonviolent drug offenders and more white collar criminals, politicians, and CEOs.
Agreed , why can’t more white collar criminals, politicians and CEOs be convicted…?
WEALTHY.
We have the largest number of ex-mates also… invading law breakers walking the streets free.
Better yet, why not follow Maricopa County’s lead and put them up in tents, feed them green bologna sandwiches for lunch and dinner, and make them wear pink underwear.
For some reason, the pink really offends our brethren from south of the border.
maricopa Joe for prez
Making inmates wear pink underwear is petty and malicious. These guys are already being locked up & having their freedom taken away. State-sponsored humiliation only demeans and debases the authority of the state.
Don’t even get me started on privatized prisons or prison industries.
Wow, with a name like Sammy Schadenfreude I figured you’d be happier about inmate humiliation & misery.
Nonsense. Maricopa Joe just has good taste in panties. Everyone should wear pink underwear. Why, I am right now, in fact! And I feel great, and much better than if I was wearing plain old dumb white underwear.
From what I have read, many of these guys don’t mind being locked up. If pink undies are a deterrent, they I say go for it!
RE: Everyone should wear pink underwear. Why, I am right now, in fact!
Noon-time national news reports Britney also clad in pink panties today!
No indication on exactly who did the checking though…
“The federal courts are considering whether to impose a population cap on California’s overcrowded prisons that could force an early release. More than 170,000 inmates are packed into prisons and about 16,000 sleep outside cells in gyms, classrooms and other areas.”
Here’s a simple solution, call it the Devils island approach:
Take one of the islands off the CA coast or cordon off a section of Catalina island, build cheap barracks on those islands, and just ship the immates there. Minimal costs in prison upkeep and guard force needed, just a few coast guard vessels patroling around the islands. Do simple airship food drops via parchute or drop food off a loading dock and let the immates scavange the food.
It would save CA billions plus solve the prison overcrowding mess. Not exactly humane and it would entail sacrificing an island or two but rather that than release these animals out on the streets, thus forcing CA residents of big cities to stock up on guns, ammo, tear gas, throw up palisades and perimeter floodlamps around their castles, and survive thru attrition via the darwinian survival of fittest in mean streets of LA or Oakland or what ever mean gritty metro area U are unfor tunate to live in.
Australia?
I think i saw this movie. It didn’t end well…
A ‘Lord of the Flies’ scenario is pretty harsh for all those non-violent drug offenders, isn’t it? How about just suspending the War on (certain people who use certain types of) Drugs?
Send the nonviolent types to Iraq.
Hey did you hear, it snowed in Baghdad…first time ever.
Weird weather phenom or??? GW.
Just air drop drugs onto the island. Burning or otherwise destroying it is probably more costly.
I’ve seen this movie also. I believe they called it Escape from New York.
I hear they escaped from LA too. Seems more relevant for the CA system
‘Nuff said. Send a bill to Mexico and some Central American countries.
Why not just send the prisoners back?
Because the prison-industrial complex, which pays your politicians to lock up huge numbers of people so they can make big profits at your expense, wouldn’t approve.
The inmates released from CA or any state will go onto the mkt with no jobs, and none to be had, especially with never convicted people already looking for jobs..
Sure it will save CA some $ and other states, but yikes to what avail.
Consumer Confidence Sinks to Record Low
http://tinyurl.com/2ehohp
According to the RBC Cash Index, confidence tumbled to a mark of 56.3 in early January. That compares with a reading of 65.9 in December — and a benchmark of 100 — and was the worst since the index began in 2002.
A big news day for economic bad news.
Hummin’ Black Hawks
Bernanke indicates rate cuts coming
Fed chief talks bluntly about economic slide
By Louis Uchitelle and Michael M. Grynbaum
NEW YORK TIMES NEWS SERVICE
January 11, 2008
http://www.signonsandiego.com/uniontrib/20080111/news_1b11bernanke.html
Gold to 900. Oil to ?
itching to short GLD. Haven’t done it yet.
I haven’t seen a technical setup for shorting. Just broke out of a pennant to the upside, as expected…do you normally short strength? Just wondering.
Sorry for the dumb question. But how do you start buying and selling gold? How do you set up an account to buy and sell? Is it similar to buying and selling stocks online? I have only bought gold to use in production and sold scrap to refiners.
No, that’s why I haven’t done it.
What are your predictions for gold over the next year? I have almost a pound of gold I can cash in and I also have to buy gold, for my business over the next year. I don’t know how long I should wait to sell the scrap gold I have. It’s done nothing but plateau and go up some more for years.
Fundamentals are very strong. If I had some I wanted to sell I would do any time, in small amounts, as I expect a correction before we hit 1000. If I was a buyer (and I am a buyer) I would buy the dips. Gold has sudden dramatic dips that make good opportunities and flush weak hands. My last buy was on the big mid-November dip when I bought under 800. Patience is necessary in the gold market. Long-term, gold is cheap under 1000.
I send my gold to a refiner. It’s scrap, so I can’t sell little by little. I send in around 5k worth at a time. I really hope gold doesn’t go much above 1k/oz. I don’t want to raise my prices. Where do you see the price in a year?
Where do you see the price in a year?”
If I knew that I wouldn’t be working. The only answer I have is ‘higher’. Long-term forecasts by some very smart people are +2000 and even +3000. The problem is that we think of gold in terms of dollars. What will a dollar be worth in a year?
Gold is the real reserve currency of the world, and the world is becoming aware of that.
Holiday shopping season was worst in five years
Bargain chains outdid full-price counterparts
By Michael Barbaro
NEW YORK TIMES NEWS SERVICE
January 11, 2008
http://www.signonsandiego.com/uniontrib/20080111/news_1b11retail.html
Holiday shopping season was worst in five years
Isn’t this the time frame of the bubble?
central bank divergence:
FRANKFURT: The world’s top two central bankers sent sharply diverging messages about their economic priorities Thursday. The head of the European Central Bank signaled another interest rate increase was possible because of concern about inflation, while the U.S. Federal Reserve chairman indicated he was ready to cut U.S. rates to stave off a recession.
http://www.iht.com/articles/2008/01/10/business/euecon.php
Bank of America and Countrywide getting married. Do you think there could be any “surprises” on the honeymoon? Like “Whoa, baby, I never imagined your losses would be THAT big!” or “Holy cow, what’s that smell coming from YOUR portfolio?”
are you saying they didn’t do the deed before they got married?
I’d say they did the deed to lots of customers…
“Honey I agree I should of told sooner, but I was afraid you wouldn’t marry me if you knew about my wooden leg, false teeth, chronic incontinence, bald head, hooker past, and gender change procedure. Can’t you just love me for who I am”?
A fella might get married to such a woman at the end of a gun barrel but it doesn’t mean that he will consumate the marriage. Probably just keep the skank out of sight and busy on the back forty plowing fields would be my guess.
I see both the bride and groom eloping, no fancy wedding ceremoney…
Can you imagine what the pre-nup looks like?
War and Peace?
Better yet (and keeping Russian), I’d say the pre-nup reads like Catch-22…
commodities to remain ’supported’:
Jan. 11 (Bloomberg) — Commodities will be “well supported” by rising demand and curbs on supply even as the U.S. economy slows, Goldman Sachs Group Inc. said.
“Supply and demand offsets to the weaker economic backdrop will largely keep supportive fundamentals intact,” analysts led by Jeffrey Currie wrote in a report today. Any price declines on concerns over economic growth are a “buying opportunity,” the bank said.
http://tinyurl.com/yvbfmj
Any good ideas on how to buy commodities? I have looked up the RICI but don’t know how to buy it or a similair ETF?
banks don’t want to follow rules:
When you are shoveling money, keeping track of the paperwork is an awful burden.
As the mortgage mess grows, we are learning more and more about just how sloppy things were in the mortgage-issuing business as loans were churned out, carved into securities and sold off.
Judges have blocked some foreclosures with rulings that purchasers of mortgages could not prove that they owned them. The buyers of the mortgages complain that it is unfair to ask them to have complied with detailed rules.
http://tinyurl.com/yvxhjv
dems and goppers now offering spend spend spend plans to bail EVERYONE out
go RP
He did speak truth on the recession question. Over their heads! Or no one wants to admit that EZ money isn’t the answer. But he acts like such a crazy man, trying to say too much all at once, that they all dismiss him.
I’m a Thompson gal but I respect Ron Paul on the econ stuff, though I don’t consider him an expert by any means. But we have plenty of experts don’t we.
A ‘deadfred’ gal?
Yup, pretty much.
It’s because there IS so much to say. At least he’s not spitting out the same shallow dribble as everyone else, including FT. I’d also say he’s far more an expert on economics than BB, or W, or AG, or, the list goes on. . .
Yes I agree and I wasn’t trying to diss him. The question was what would he do and he really went to what caused the recession. Which is okay by me because I don’t think the others even understand what happened.
I can see he has problems as a candidate that the others exploit. As far as economic expertise, it’s hard to know when the regular PhD economists disagree on everything.
the economists with a prominent voice usually get everything wrong, and miss every single recession that ever occurs. worse, they completely miss or just don’t care about the (negative) impact of monetary policy on the economy. at least ron acknowledges these things, recessions, the fact that the fed works against the interest of the general public. maybe most economists don’t mention these things simply because they lack the juevos.
With all the foreign investment coming into the banks et al, will the stadiums and ballparks get new names?
Burj-al-arab Yankee stadium? I’d pay to see that happen! Maybe Great Wall Fenway park would be more acceptable (and more descriptive too).
“…will the stadiums and ballparks get new names”
First will come… the “new” owners
Just throwing it out there
http://www.reuters.com/article/marketsNews/idUKN1019453020080110?rpc=44&pageNumber=2&virtualBrandChannel=0
Cien was a hell of a buy at 26.
And I thank you. Picked up Apr30 calls cheap on your tip. –Mike
LBO underwriting revenues down 38%.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDXAKsr5p.iQ&refer=home
Here is where things get nasty. Wall Street has taken losses, but these have been offset by profits on activity. The real question is, how do financial firms make money going forward? I also heard today that law firms are laying off, as they have less financial work (though they will be plenty of workout work coming up).
Impact on NYC? I see limited harm in employment, but huge declines in wages (bonuses) and profits. In addition to state personal income and corporate income tax, NYC has a local personal income and corporate income tax. So most NYC residents will experience this through soaring taxes and collapsing services.
UK gloom:
Bovis Homes has revealed a 19 per cent drop in forward sales and warned of difficult housing market conditions for 2008 and is the third house builder this week to report a slowdown in sales.
It also said that it had sold 6 per cent fewer homes during 2007, with legal completions falling from 3,123 in 2006 to 2,930 last year
http://tinyurl.com/2ype2n
Consumer Confidence Sinks to Record Low
Friday January 11, 6:38 am ET
By Jeannine Aversa, AP Economics Writer
Consumer Confidence Sinks to Record Low Over Worry About Jobs, Energy Costs, and Foreclosures
WASHINGTON (AP) — Consumer confidence fell to an all-time low as worries about jobs, energy bills and home foreclosures darkened people’s feelings about the country’s economic health and their own financial well-being.”
Our FIRE economy (Finance, Insurance, Real Estate) getting hosed with tons of cold water these days.
MSM= consumer is “gloomy”
Reality = wolf is truly at the door for millions
MSM= consumer is “gloomy”
Translation: consumer is broke and is unable to take on more debt.
RE: (Finance, Insurance, Real Estate)
5% unemployment numbers are pure fiction as these businesses contract with legions of independant contractor’s who never show up in the FED stats.
Better have a spouse with tenure working in the public ed sector
This Hillary will be sorely missed…
It’s a rare honor for a living person to be on a banknote, (aside from a monarch or leader) and Sir Edmund was on the New Zealand $5.00 banknote, testimony to his legendary status whilst amongst the living…
Rest In Peace
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10482156
Most definately - he was a hero to young Pullet here.
R.I.P Sir Hillary.
Your optimism, grit and generosity will be missed.
We need more people like you in the world.
“It’s a rare honor for a living person to be on a banknote, (aside from a monarch or leader) and Sir Edmund was on the New Zealand $5.00 banknote, testimony to his legendary status whilst amongst the living”
I have great admiration for those who pursuit the sport of Mountain climbing and peak scaling. It is a hazardous and high risk activity(read Mallory)requiring 150% total dedication and sacrifice but IMO well worth it if U have the desire and Financial means to pursuit it. One of my ‘What if’s in life’ was to be a devoted peak climber. Only touched it briefly- 1 mountaineering seminar in palisades in 1993- but can relate to the exhileration and thrills of this rarified activity.
A true hero of the 20th century.
I’d like to go into this weekend dressed to the nines, er, nine hundreds that is.
Already touched it. Let’s hope it holds better than $100 oil.
You won’t hear me complaining.
Feel the pain:
Friends of ours just sold their house some weeks ago. They’d had it on the market for six months, reduced prices several times, and really had to get rid of it because they’ve moved to the Northeast for jobs. They were darn happy to get rid of that albatross, even though they lost money on it. But the hard part:
They had to bring almost $50k with them to the closing table just to get rid of the house. Ouch!
“They had to bring almost $50k with them to the closing table just to get rid of the house. Ouch!”
BWHAHAHAA….. Let me guess…. until the closing, they believe real estate only goes up right? Up in a friggin mushroom cloud.
Actually, until about three months into their sales attempts, they did believe that. That’s because they’d been doing the two-year flip thing with their houses for the last 10 years.
In this case, they convinced themselves that it was just bad timing and bad luck, just a temporary glitch, and sure it was painful, but THEY ARE ALREADY BUYING THEIR NEXT FLIP up in Boston — because Boston is different than the DC market, and Boston will always be in demand.
“THEY ARE ALREADY BUYING THEIR NEXT FLIP IN BOSTON.”
Ah, The Great Wealth Distribution Machine at work.
Exactly.
Advise them to be super-careful about choosing their city, their neighborhood and even their block. Prices are currently all over the place in Boston and ‘burbs, with some neighborhoods (like Harvard Square) holding firm while others (Lexington, Sudbury) are starting to crash.
..but THEY ARE ALREADY BUYING THEIR NEXT FLIP up in Boston — because Boston is different than the DC market, and Boston will always be in demand.
Ain’t the lenders always forgive the borrower’s debt at a short sale?
The lenders COULD forgive it. But why should they give such a gift? In this case especially, the borrowers had enough money to cough up to clear the loan — a loan which they signed for, of course, promising to pay it back. Allowing a short sale would have put a $50k dent in the lender’s finances for no good reason.
perfect timing for B of A to become the nations largest loan servicer. Anyone know what happens to the tarnished and foreclosable loans. the deal really burns the shareholders. the only profiters were at 4-5-6bucks a share.
Anybody else notice how Greenspan has become conspicuously absent recently? He must now know, if he didn’t before, that stuff is about to hit the fan.
the old fart is skiing in Aspen or sunning on his private yacht or private island. Maybe not, his wife is still on tv, with her face rejuvenations and new hair coloring..spouting horshit.
RE: the old fart is skiing in Aspen or sunning on his private yacht or private island. Maybe not, his wife is still on tv, with her face rejuvenations and new hair coloring..spouting horshit.
Bet he doesnt’ get laid too often.
Teachers’ Union Is Leery of Effort to Limit Taxes
ALBANY — Gov. Eliot Spitzer’s plan to contain the rising property taxes that support New York’s schools could mean a confrontation with the state’s largest teachers’ union, whose president said on Thursday he was wary of a new commission leading the effort…
Mr. Suozzi, a Democrat and an old political rival of the governor’s, will have subpoena power in his role leading the panel, which will recommend how to impose a ceiling on future tax increases made by school districts.
Mr. Suozzi is known for his bitter clashes with the Patrolmen’s Benevolent Association over police pay in Nassau County. After he became the executive of the financially burdened county in 2002, Mr. Suozzi discovered and publicized the fact that the total average compensation of police officers, including overtime, was more than $100,000, a negotiating tactic that enraged the police union.”
http://www.nytimes.com/2008/01/11/nyregion/11teachers.html?_r=1&oref=slogin
I know from personal experience that messing with a Suozzi is not a good idea. Worked for someone by that name (but not on Long Island), and, oh brother. Talk about coming from the Attila the Hun school of management. Resigning from that job was one of the happiest days of my life.
I think the cap is a great idea since the sheeple voter feels compelled to vote for higher school taxes every freakin’ year for the sake of the children (guilt). School taxes have increased 3x the rate of inflation, so there needs to be some accountabilty from these money-sucking school monsters. It’s the only way that the taxpayer can be saved from themselves. It appears to have helped Mass. and NJ, so why not give it a go?
OIL GOING DOWN!
Goldman Sachs, which said Wednesday the U.S. economy will fall into recession in the second quarter, on Thursday said there’s a 50% chance of recession in Japan, the world’s second-largest economy. The U.S. and Japan account for a third of the world’s oil consumption.
Meanwhile, millions of those new $3000 Tata brand cars in in India who knows how many Chery brand cars in China will more than pick up the slack.
Environmetalists in India are already denouncing Tata’s new car as a disaster for India.
Merrill is up guys. The market is talking. Are you listening?
I am listening real good. GS is also showing a lot of strength this morning.
Just sitting in cash, watching the tape, waiting for the pop to pounce.
Todd-o says Bear Stearns is trading like a takeover candidate. Just saying . . .
Is that a reverse H&S on the SPY/SPX over the last five days/five minute time frame?
looking like one . . . you know there’s always a drip back down when you have a washout like the other day. I’ll know I’m wrong and will stop out if the s&p breaks the 52 week low.
Hey, if CFC can get married there’s hope for everyone.
Coming to a Walmart near you.
http://quote.yahoo.com/family-home/article/104166/Tata-Reveals-World’s-Cheapest-Car
adding a bit to index longs. To me, this is a nobrainer. Maybe I have no brain
10,000 apply for 400 Wal-Mart positions
http://www.ajc.com/metro/content/metro/dekalb/stories/2008/01/10/walmartfollo_0111.html
1 out of 25, will be the lucky winners of being gainfully employed.
And who are we to say that Wal-Mart does not provide good jobs - obviously 10,000 people are pleased with the level of wages and benefits they would receive at WalMart.
Just because they need the job doesn’t mean they don’t think it sucks balls.
Can someone email this article to the White House so we can stop hearing Bush blather on about how the Mexicans are doing jobs that white America doesn’t want to do?
Nope. We should eliminate government intervention in the labor markets. Let people join unions if the wage is not high enough. Just because you (and I) don’t want to work at Walmart doesn’t mean these 10,000 applicants think it ’sucks balls’.
No other ‘balls to suck’ in their region.
Doesn’t mean they will like the daily Rahrah rallys.
And being ON CALL 24 hrs daily
“Just because they need the job doesn’t mean they don’t think it sucks balls.”
LMFAO
All it means is that it beats being unemployed.
I think that the unemployment benefit that I am eligible for would be better than a WalMart paycheck. Of course, I am eligible for the maximum benefit.
Interestingly, those are the guys that are buying Jaguar and Land Rover.
If anybody can show wreckless abandon, Countrywide can.
lets think about who’s on deck.
black box indicates the builders are up next for some serious rumor mongering, panic induced rational selling behaivior…as the vultures circle the carcass…
Beazer or Hov is probably a good bet on straddle type of trade…its getting punchy.
I got some Bear Stearns
AND I DON’T KNOW ANYTHING.
Lololol thank you for the late-morning laugh.
hahaha. consider your statement documented.
(RE: Yesterday’s discussion about Southern Values and migration)
One segment this housing bubble has really hurt is local culture. I’m a fan of mobility but strongly against the ’suburbization’ of America.
Looking at local communities now, nothing seems different. I visit different states for my work and if I didn’t know any better (think ‘Truman Show’), I would swear it was the same place. Each city has the same shops, the same boring bland suburbs, strip malls, auto dealers, etc. In some ways this is good - it allows people to feel at home far away, but it has really removed regional varieties in the way of live.
Florida has suffered greatly in the past decade. I came to the state in 2000, right before the great boom. It was a nice place with quaint small towns, and around the Tampa area what were once distinct agriculture communities are replaced with strip malls and foreign car dealers. My family was farmers and I stopped by a tractor store in a small outlier town to Tampa to chat with the owner about a particular tractor he had on display. He saw my car and coldly mentioned that “Yuppie city people like yourself are ruining our way of life”. I couldn’t help but agree.
Let’s hope that there is a sudden reversion in this country and that the failure of the housing market will bring this change about. I just want to get back to the comfortable neighborhoods and good neighbors who watch out for each other, not watch each other’s home valuations with envy and play ‘keep-up-the-Joneses’.
Let’s hope that there is a sudden reversion in this country and that the failure of the housing market will bring this change about. I just want to get back to the comfortable neighborhoods and good neighbors who watch out for each other, not watch each other’s home valuations with envy and play ‘keep-up-the-Joneses’.
Testify! And then do it again.
Well, I really thought after 9/11 this country would re-examine it’s priorities, maybe think about how our foreign policy effects the rest of the world, take the ol’ “long hard look” at itself, etc. I mean, I thought some introspection might result. I was naive.
Instead, we got lots of flag waving, lots of “Greatest country in the World!”, and an unnecessary war. As Lily Tomlin once said,
“No matter how cynical you get, it is impossible to keep up.”
At this point, I shudder to think what will be unleashed in this country in the face of a real economic downturn aka “depression”.
http://biz.yahoo.com/tm/080110/16646.html?.v=1
Some poorly preforming Gold stocks article suggests NOT buying these 4.
RFMD yikes this one is falling off a cliff but why? Makes componet chip sets for Phones.
How’s Nokia doing? That would be the answer.
If you think RFMD is a “tell” then short Nokia
http://biz.yahoo.com/ts/080111/10398264.html?.v=1
Yes thats right RFMD sells big to Nokia. is it a tell I don’t know ? good Idea to think about though.
apparently they laid the weakness off to GSM products
OK thats like CFC saying they have weakness in Mortgage products? thats about all RFMD makes is GSM products a European and Asian phone modulation standard. RFMD bread and butter is Power Amplifiers for cell phones or handsets as they call them now. for NOK.
I guess NOK warned that business is crummy. you were quick to point that out. You follow Tech?
Yep. Telecom and semiconductors, some software.
I’ve acknowledged my disinfranchised opinion of W.
before on this blog-but this continuing Clintonista crapola…I simply can’t find the words…
When the fook are these people going to go away.
http://www.politico.com/news/stories/0108/7842.html
Trust must good people of Flyover Country to handle this problem. The People’s Republics of Clownifornia and NYC never seen to get it that they are vastly outnumbered by Bubba and Lula Mae.
It’s gonna be a long, long time before the people of Flyover Country vote for another Texas Clown, that’s for certain.
I wouldn’t bet on that if the right one came along. Unfortunately, I don’t know if there are any “right ones” here at the moment.
Ann R already passed on ..
No good ones in site. And TX is kinda flat so you could see them coming into sight
You can’t vote? Why?
“I’ve acknowledged my disinfranchised opinion of W.”
This will thrill you all
http://www.marketwatch.com/news/story/countrywides-mozilo-entitled-115-mln/story.aspx?guid={19F5F34F-40A7-4812-AB7B-7801A54FBBC8}
OOps
Countrywide’s Mozilo entitled to $115 mln severance -report
Last update: 8:51 a.m. EST Jan. 11, 2008Print E-mail RSS Disable Live Quotes
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Countrywide Financial Corp. (CFC:Countrywide Financial Corp
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10:30am 01/11/2008
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Sponsored by:
CFC 6.45, -1.30, -16.8%) founder Angelo Mozilo is entitled to $115 million in severance-related pay if his troubled company is acquired by Bank of America Corp. (BAC:bank of america corporation com
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Last: 38.45-0.85-2.16%
10:30am 01/11/2008
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BAC 38.45, -0.85, -2.2%) , The Los Angeles Times, citing regulatory filings, reported Friday.
The newspaper said free rides on the company jet are also included in Mozilo’s departure deal, and the company will pick up his country club bills until 2011.
Shareholders and employees get screwed again.
As per Russ Winter’s calculation, my family will be spending around $420 to fund Mozilo’s tanning beds.
lmao
$PF: 115 Million
I’ll take 10% of his pay/package and I can do the same job; pushing the company to BK and it saves the company 135 mill. lol.
http://www.reuters.com/article/marketsNews/idUKN1023516720080111?rpc=44
” In May, Mozilo and many other leaders in the mortgage industry still seemed to be in denial over the depth of the subprime lending crisis.
He was in no mood for soul-searching about what went wrong as industry executives gathered in Manhattan for a Mortgage Bankers Association conference.
CHANGING THE RULES
“You’ve got to be careful here about blaming ourselves too much,” Mozilo told the gathering.
The real culprits, he argued, were the Federal Reserve and its series of interest rate hikes, crooked real estate speculators, falling housing prices and regulators’ attacks on interest-only and other risky subprime mortgages.
Unmentioned by Mozilo were the industry’s loose lending policies and mortgage products such as “liar loans,” which gave borrowers money at higher rates without verifying their income.
But last April, in a speech in Beverly Hills, California, Mozilo conceded Countrywide lost its compass and chased risky customers as competition in that market increased.
Names like Ameriquest, New Century, NovaStar Financial and Ownit Mortgage Solutions set a new lowered standard, changing the rules of the game, Mozilo said.
“Traditional lenders such as ourselves looked around and said, ‘Well maybe there’s a (new) paradigm here,’” Mozilo said. “‘Maybe we’ve just been wrong. Maybe you can originate these loans safely without verifications, without documentation,’” Mozilo said”
haha. new paradigm. I wonder why casino doesn’t try this new paradigm with no $ down on any gambling; I bet they will bring in tons of business. jeez.
‘“You’ve got to be careful here about blaming ourselves too much,” Mozilo told the gathering.’
Blame away, please.
I hope that his name sinks to the same level as, say, Ken Lay and “Chainsaw” Al Dunlap.
An executive gets 115 million USD to run a company into the ground.
Is this fraudulent? Criminal?
Truly incredible. Legalized bank robbery (CFC is FDIC insured, right?)
“$115 million in severance-related pay”
It is just terrible how Wall Street treats CEOs of failed lenders.
Mozilo deserves to be severed… from limb to limb.
We need to have a classic McCarthy style inquisition of CFC and the entire mortgage industry.
Grab yer guns. I’m in.
RE: Grab yer guns. I’m in.
The jig is up.
J6P who, without his residential quasi-yearly ATM HELOC withdrawal-realizing he is now dead azz broke- is finally gonna come to his senses that while he’s been worryin’ about whether Britney has her panties on or off today, the system’s been looted.
Violent crime to soar over the next 2 years.
“the system’s been looted.”
Hang those responsible from the lightpoles shall we? You in?
Do it on a broken light please.
BWHAHAHAHA…..Another subprime marriage
“JPMorgan, WaMu have held prelim merger talks: report”
http://www.reuters.com/article/businessNews/idUSWEN334620080111?feedType=RSS&feedName=businessNews
This reminds me of the aftermath of the last real estate crisis in the early 1990s. Manufacturer’s Hanover, Chase Manhattan, Chemical Bank, JP Morgan, and much else merged into one organization — with about as many NYC jobs as each one of them used to have.
Saloman, Smith Barney, Citibank, Travelers, Etc. also merged.
Shearson, Lehman, AMEX, etc.
WaMu Has Discussed Merger With JP Morgan Chase
City of Cleveland sues 21 banks over foreclosures -
http://tinyurl.com/22r92p
LOL - this is funny, and sad, in so many ways.
It really points out the lack of personal responsibility - sue others for your bad decisions.
It points out how badly municipalities are going to be hurt by this downturn, by reduced tax revenue. Also how foolish these municipalities were to rely on this bubble-based revenue.
Also - I would imagine other cities will also join the fray. In the end this will probably hit the banks’ bottom line to some extent - having to fight off these lawsuits, even if they win (which I’m sure they will).
Without looking into date - I’ll bet the financial law profession did really well during the Great Depression. Right now I wish I was there. They’ll be sad witnesses to the innards of the carnage, but they’ll make out like bandits.
I disagree…there was a lot greed by the bankers in letting the smaller banks do the dirty work so they could buy mortgages from them and repackage them to be sold elsewhere. The bankers deserved to be sued because they knowingly participated in predatory lending practices.
Finally, a clear explanation ….
http://www.youtube.com/watch?v=SJ_qK4g6ntM&eurl
It’s Credit and it’s Crunchy …. uk humor …
http://www.youtube.com/watch?v=br8mOmH9frE&NR=1
Golden Parachute
http://www.stockmania.com/index.php?showimage=132
Brilliant! CFC should have been banned with the rest of the CFCs (Chloroflourocarbons)
txchick57,
What do you make of today’s SIRI chart? Some are speculating that a leak of merger news got out and
’smart’early money is spiking it up, and we might see an announcement today after hours.I’m skeptical, I would expect a higher volume, higher price spike on a real leak.
Ha. I just commented on that. It will show up eventually. I’m all over that. Got in two days ago and added today.
If I tell you how long I’ve been in, will you promise not to laugh?
there’s nothing to laugh about. In ‘05 and early ‘06, I used to trade siri for tenths of penny. You could do that in those days.
I bought in early ‘06, but I’m guessing those tenths of pennies you’re talking about are option contracts, ’cause the share price certainly wasn’t.
No, you could buy on one ecn and sell to another with that small spread. brut to island for instance. you had to buy huge amounts to make it worthwhile but that is how it traded at the time.
Wow, that is much higher level than I thought anyone actually traded. I’m totally retail, how did you even get access to that kind of stuff? And wouldn’t stock price movement be a huge risk?
See, my problem is I bought and held. And held. And am still holding.
ya’ll might want to look at SIRI for a spec play. As Fil sez on Minyanville, hard to imagine how the govt could vote that merger down after creating a mortgage banking oligarchy today.
(I got into siri 2 days ago and added today)
US public finances feel the pinch
“…Mr Orszag said one big reason for this increase was the rise in the share of national income going to corporate profits at the expense of owners of debt and labour.
“Since debt is tax preferred relative to corporate profits, that has a significant effect on tax receipts.”
The corporate profit share, he said, “would likely decline in response to a weaker economy” – undermining corporate tax receipts.
Some economists believe that, in addition to cyclical factors, the repricing of credit under way in financial markets could also lead to a shift in the national income share back from corporate profits to debt.
If this happened, corporate tax revenues could surprise on the downside even relative to growth in the coming years, just as they surprised on the upside in the past few years. Mr Orszag declined to comment on whether this might happen.”
FT
http://tinyurl.com/2o9brq
IMHO the BAC purchase of CFC was orchestrated/coordinated by the Federal Reserve. If the Federal Reserve caused this action, it was the right thing to occur. The action is timely, targeted and temporary. The three T’s for successful intervention.
We have just entered the 2nd inning.
and in other govt news. Still like cos that sell to VZ, et al
http://biz.yahoo.com/ap/080107/telecom_contract.html?.v=2
“…Telecommunications companies have repeatedly cut off FBI access to wiretaps of alleged terrorists and criminal suspects because the bureau did not pay its phone bills, according to the results of an audit released yesterday….”
Washington Post
http://tinyurl.com/yp2a4p
that’s right goddammit. Pay your bills. LOL
“IMHO the BAC purchase of CFC was orchestrated/coordinated by the Federal Reserve. If the Federal Reserve caused this action, it was the right thing to occur. The action is timely, targeted and temporary. The three T’s for successful intervention.”
Does this mean that BAC will be spinning CFC back off soon?
No.
Timing was to keep CFC from filing BK
Target restore confidence in the US banking system before they all fold.
Temporary - Allow SWFs to buy Bank of America bypassing Congress.
timing= floor the stock price for MORE time.
target=too big to fail institution
temp= aint gonna pass muster, merger fails as should CFC.
I think its great a lot of folks made money on this one, stronger more talented hands are all over this POS.
“IMHO the BAC purchase of CFC was orchestrated/coordinated by the Federal Reserve. If the Federal Reserve caused this action, it was the right thing to occur. The action is timely, targeted and temporary. The three T’s for successful intervention.”
If by “timely” you mean “two years too late” then yeah I guess it’s timely.
No where better to put it, so some related personal events to share.
Last week, I made an offer on a house in our neighborhood. Personal situation is complex, but bottom line is I can afford it (Offer was at 1.5x my last year’s income, around 1.0x this years probable income). This house had been on the market for around 6 months, gone off MLS the latter part of December, and was just relisted with no change in asking/wishing price.
Our offer was 9% less than the asking price, and within $1k of the November 2003 sales price. The sellers situation is a divorce and a job transfer out of state. I find out there is a relocation company involved in the sales decision process and they want to see proof of my ability to afford. ok, no problem.
In the end, they came down a total of less than 2% from their asking price, while I stop at 1.5% over my original offer. Nothing special about this house, except for us: 100 yards from my MIL and on the end of a quiet cull-de-sac. But that’s no reason to overpay.
Looking at the original mortgage amount, they must have bought with no money down, and rolled closing costs into the loan! Doing a quick amortization with the assumptions they got good rates for the time shows that after commissions and fees, they probably can’t lower the price more than another 1.5% max without bringing a check to the table.
I’ll check back in on them in a few months. Will be interesting to see what the situation is like then.
this is in Austin?
No. Rockwall. I split my time between Rockwall and Austin, and form what I can see of Austin RE, I will continue to rent in Austin for the foreseeable future.
To better explain, I am staring down the big D (outcome of this is uncertain), and trying to sell the current Rockwall house and set the wife and kids up in something more appropriate for the long term. (we don’t need 14 rooms, really) We can handle the dual places, and will be super aggressive on moving the old place (only need like $45/sq ft to be positive). Moving them now/sooner will help the situation a lot.
You wanna send me the details on the old place? MLS listing? I know people who are looking, heaven help them.
gymnastgal32 at yahoo dot com
Sure. I’ll send some your way later (meetings for the rest of the day, ugh)
Where is this?
Rockwall, Tx
SPF just fell off the charts…
guess the pump and dump is game on.(or vice versa)
Bored. Hasn’t even come close to challenging the weekly low, although a weekly close under 1406 is problematic.
It’s a beautiful warm sunny day and I’d rather be in the back yard.
SPF=Standard Pacific LP.(gotta look back to the comment about the home builders I made this morning)
52 wk low was 2.09, stock went to 1.47 intra-day, closed at 2.20, selling after hours down to 1.94… 20 million shares traded hands on avg volume of 4 million.
chick, I dont bash your calls, or anyone elses…
ZILLOW = BIG MANIPULATION
I frequently check Zillow and there valuations are garbage.
1) Chart does sometimes not match last sale. Curve is 20% above the last sale price.
2) They change the valuation of the past.
3) They change the valuation curves, so it looks like the prices always go up at current time.
4) Properties are just taken out, if the price does not fit valuation of surrounding houses.
The PPT is running late today, took em till 3:20.
I really know spit about stocks, but the high and lows both have been getting lower since this summer. I am keeping my puts for now.
You know “spit”, and you’re buying puts? Hmmm…
He didnt say he was making money.
An article coming out on the ‘deflation’ side of the inflation-deflation debate:
‘The Deflation Time-bomb’ by Mike Whitney
http://www.smirkingchimp.com/thread/12073
What the upcoming recession “will look like” has been the topic of a fierce debate on the Internet. Everyone seems to agree that this is not a typical economic downturn resulting from overproduction, under-consumption or malinvestment. Rather, it is the crashing of humongous equity bubbles that were generated by the Fed’s abusive expansion of credit and the unprecedented proliferation of opaque structured-debt instruments. Many believe that the unwinding of these bubbles will trigger a round of hyper-inflation which is already evident in soaring food, energy and health care costs. These prices are bound to increase substantially as the Fed continues to cut rates and further undermine the dollar.
But the real issue (it seems to me) is the unfathomable loss of market capitalization, the growing insolvency of maxed-out consumers, and the inability of the banks to freely extend credit to responsible loan applicants. These three things are likely to drag down all asset-classes, slow business activity to a crawl, and compel consumers to hoard rather than spend. The dollar will strengthen in an deflationary environment. (if that is any consolation?)
From the “time bomb” article above. Interesting.
I posted this on the other(desk clearing) thread, but if anyone’s interested, here is the memo that was just released containing Mozilo’s “message to the troops” about the buyout:
http://www.reuters.com/article/gc06/idUSN1132319220080111
And I’ll say it again: I’ve never seen a picture of the guy before today and holy shiate is he ever fsckin ~CREEPY~