Bits Bucket And Craigslist Finds For February 12, 2008
Please post off-topic ideas, links and Craigslist 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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Bad Bets… Poor fellow, it brought tears to his eyes.
http://www.nytimes.com/2008/02/12/business/12hedge.html?_r=1&ref=business&oref=slogin
Couldn’t have happened to a nicer guy. The little Stevie-Cohen-lets get their upcommance.
It’s sad when you realize the market is so much bigger than you are…
Huhh??? Is this the kind of mind we are churning out of our fancier educational institutions? Man, we are deeper sh%$#t than I imagined…
Depression risk might force U.S. to buy assets
Tue Feb 12, 2008 4:19pm EST
By John Parry
NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
http://www.reuters.com/article/ousiv/idUSGOR27660220080212
Person in the cube next to mine just closed on a condo in Northern Va - $260,000 for a brand new 600 square foot studio near the metro. She did 100% financing which I think was possible because it “appraised” for $309,000. A friend of hers also just bought in the building.
This is well within her ability to pay, but I think it is going to be losing value. I warned her a few weeks ago that she might have to bring money to the table if she wants to sell. She agreed, but didn’t care. She feels like a “grown up” now.
This is going to take a long time.
So many people think they are getting deals now and they are just knife catchers.
Oh man, no kidding. Here in WA, I just heard an ad for an I/O loan on an AM station on my way in to work. They did have the decency to add a disclaimer that went like “although with an i/o loan you will not be paying down principle.” Thanks a pantload for that info guys.
This was on the local “liberal” AM station. I wonder if they think the “poor disillusioned socialist liberals who know nothing of how money and business works” would be more susceptible to taking out a crap mortgage?
I can totally see that line of logic. After all, all liberals hate business and know nothing of how to handle money, so they should be prime targets, right?
I realize I’m painting with a broad brush, but I grew up around people who actually think that way about anyone who thinks/believes anything other than hard line conservatism.
Disclaimer: Remeber kids, Liberalism™ and Conservatism™ are the two hairy ass cheeks surrounding the stinking bunghole that is predatory capitalism.*
Oddly enough, the people I know who actually describe themselves as liberals tend to be far more aware of overconsumption issues and are into living a minimalistic(dare I call it conservative?) existence, and would tend to be the last people to borrow too much money frivolously.
SR
* May also apply to the two major political parties
Oddly enough, the people I know who actually describe themselves as liberals tend to be far more aware of overconsumption issues and are into living a minimalistic(dare I call it conservative?) existence, and would tend to be the last people to borrow too much money frivolously.
Hey Seattle -
I’d like to add that of the people I know who consider themselves conservative are actually thoughtless spenders and ignorant of all matters financial. When they say they are conservative, what they really mean is that they are racists (the Mexicans are taking over the country) and think that they pay too much in taxes (as if there are people who actually want to pay taxes). The concern about taxes is a result of their having spent too much and their belief that they could buy more if they had their tax money to spend.
Well, I certainly know people that fit that description. And frankly, I’m inclined to agree with them on the illegal immigration thing. Not out of racist motives, but because I plan to live and retire in this country, where the latter activity can get rather expensive.
People who come here and drive wages down lower the standard of living for every working person, especially those on the lower end. There comes a point where we have to look out for our own, and I believe we’re at that point now.
Someone who comes here and works for cash under the table and no benefits, skews the labor market for everyone, the same way an FB skews the RE market by borrowing more money than they should and paying too much for a house.
Apparently, sometimes they’re one and the same person.
My Dad’s a genuine old school conservative that just believes in smaller government, etc. The real stuff. I respect that. He used to be active in the republican party, in fact that’s where he met my mom.
Cut to ~40 years later, and after the debacle that is our current administration, he’s moved to Canada and likes Obama. Still watches the fox “news” channel though.
Running a country successfully requires you to be liberal when dealing with some things and conservative when dealing with others. The idea that everything has to be dealt with under one approach or the other is simply sub-moronic in my humble opinion.
A good leader is someone who know which to apply for each individual problem, and in what amounts.
See my disclaimer above - I think those who would have us(as a people) neatly divided into the two different camps are the real architects behind this whole housing(and now greater economic) travesty.
I hate to wax conspiratorial, but I have to wonder if some, most, or even all of it wasn’t intentional.
Although I can’t fathom why just yet, unless you go with the “they just want us all to be debt slaves” theory. I’m just not convinced that the PTB really have their sh!t together well enough to plan something like that.
My $.02,
SR
“She feels like a “grown up” now’”
Whenever you have to resort to stupid catch lines like that, you know you’re doing something really dumb. That’s kind of like “it’s the mature thing to do” that people always try to use to prevent you from doing things that are in your best interests. Or, another one I like “You just don’t have the maturity to understand”, another one (used often by investment advisors, in my experience) used to fleece someone out of something.
Your a “grown up” when you handle your business and make prudent decisions. You, buying a home in a cratering market, just showed that “prudent decisions” are not in your vocab. And therefore, the statement above appears to be an oxymoron.
Well, I feel like a child but that doesn’t mean I wear bows and make farting noises in public.
Sheeple are dumb, really dumb.
One of the things I never liked was this notion that once you are a certain age, you must have the boxes ticked in all the right spots. I can see why it would work under normal times but these times are very far from normal.
I can see why it would work under normal times
I can’t even see that.
I’m pushing 50 and I’ve never been a box ticker. I’m lucky to have a strong income, but I’ve worked hard and had a job ever since I was a kid. I live a frugal and completely satisfying life without ever owning a house. I just finished listening to an NPR story about people living in apartments where the landlords couldn’t provide heating oil. I feel for them, but if I’m ever in the same situation it will be difficult times indeed. Being “grown up” is something our society doesn’t really understand anymore.
Never been a home moaner either. Worked and saved all my life. (No inheritance.)
Now I am retired in my 40’s, and have my equity working hard for me in a ‘folio of securities.
Never could see any wisdom in owning aging buildings.
Interestingly, over at the SDREIC board, specuvestors are buying SFHs with 50% or more down. None of these things are cash flowing and never will be at these prices. The only reason you are buying now is because you believe prices are going back up. How stupid can people be?
a house WITH LAND at the right price can help you save money in some ways (vegetable garden, maybe more in the country; you can take energy savings measures; you have more choice over service providers; you can take action quickly to fix things rather than waiting for your LL and seeing your stuff destroyed).
however, house with NO LAND (or CONDO) is a money pit
even house with land is a money pit if you act like the “I’m in debt up to my eyeballs” guy from the loan commercial … remodel house, fill it with crap, two SUVs, riding mower (!?!)
I don’t agree that a condo has no positive points. If the Board is reasonably honest, the shared maintenance is a good thing. For retirees who live in different places winter and summer, there is less need to hire care-taking help, if one’s residence is a condo. But I will agree that condos (like SFHs) are overpriced today. There is no reason at all why one should pay more to buy a condo than to occupy it as a tenant.
I think I’m even more sceptical of box ticking than you are, but there is another issue beyond just the idea of hitting milestones at a certain time - student loans. A lot of graduates these days are starting out with $50 to $100K of student loans or more. That ought to influence how you look at the next step of your life, but I don’t think it does for most recent grads.
Polly…. It seems quite clear, even to the novice that collecting interest payments is extremely lucrative. It has always been clear to me since I was a youngster as I watched my parents collect interest on a house that they held the mortgage on. Everyone (big finance) wants in on it as they know how many stupid people are out there willing to finance the food they buy and the clothes they wear. Borrowers can no longer afford just one more monthly payment.
Agreed. Which is why I made sure that Citibank and all their buddies only got to collect interest off my student loans (about $70K) for a tiny bit less than three years and my credit cards never have. I had a car loan once for a while - three years with 25% down payment and paid it off in less than two. Bought last car for cash.
I really hate debt. It feels like a trap.
It is a trap.
The kids are really getting a bad rap starting out their lives in such serious debt. What I noticed is that the difference between success and failure basically is dependent on how much debt people have. The debt-free get to pick the choicest assignments, and they are the ones who can negotiate the most aggressively and they do.
Taki,
the debt actually raises the stakes. If you’re already $50,000- $100,000 in the hole, high stakes gambling becomes more attractive. Slow and steady is very hard to run when you’re that deep in the hole. Sort of like how the guy who’s losing is the quickest to do double or nothing. It’s hard to accept or believe that you won’t do as well as your parents did.
Debt CAN BE a trap but Debt is NOT a trap. Debt is a tool to leverage ones goals. It has allowed some of the greatest inventions to go mainstream, it has allowed many people to live in a home that is paid off so they can retire without worries. It is a great tool if used properly. The problem is too many people do not understand when and what to finance. NEVER Finance a depreciating required asset unless you can not afford even the most basic form of that necessary asset. A car can be a necessity but pay in cash for a decent one rather then finacne to get an SUV with double duece wheels etc. Without debt our or any other country would not have the prosperity it currently has. Don’t bash the tool because people don’t know how to use it. Bash the people who have abused the tool. Credit and debt levels are like a pendulum it swings back and forth. Currently it has peaked at one end and credit standards are tightening so eventually it will get back to a level where people do not see debt as bad and it isn’t IF used properly!!!!
“One of the things I never liked was this notion that once you are a certain age, you must have the boxes ticked in all the right spots.”
I guess I’ve had that urge, it’s just that the boxes I’ve wanted to check have been way different. The “owning huge house and lotsa stuff” squares were less important to me than “travel to lots of different places” and “do something more interesting than sitting in a cubicle” squares.
I’m also glad to have left the “get married” and the “get divorced a couple-a years later” and “repeat process” squares blank, tho’ these seem to be very popular with others…
Right. I’m heading to see family in Alaska this summer, then to Australia in the winter. Something I never could do when I was a houseowner, as all my extra cash inevitably went to repair something or to pay taxes or whatever. Sweet freedom.
Ah, lucky you! I can’t wait to get back down to Australia sometime (I was only down there for about a month…). But it’s hard to justify going somewhere you’ve already been when there are so many new places to check out.
I’ve never been to anywhere in Asia, so I think Japan is my next goal. May take awhile to save up for that, however, as everything there is extremely expensive and the dollar increasingly worthless…
To quote the great Terence McKenna, “Culture is the ultimate cult.” He also said “Culture is not your friend.” In other words, be careful of doing things just because our culture says that is what should be done.
This isn’t an economic problem its a societal problem. Watching the Clemens saga unfold made me think what’s real anymore? I used to think that sports were real, except pro wrestling, wrong!. The fake economy, bubble house prices, mortgage commitments, wall street, thousandaires, Sadaams wmd’s, Hillary’s tears, ‘reality TV’ and fake boobs. Can anyone, believe anything ,anymore? Is it real or is it memorex?
Reality is what you make of it.
Bingo! Check this out:
In another consumer survey, a Harris Interactive report for Zillow.com found that 77 percent of homeowners from around the country believe the value of their home increased (36 percent) or remained the same (41 percent) in 2007. Only 23 percent believe their home lost value last year.
and buying a house as a form of box ticking is sadly the least of it. people get married and have children for the same reasons. at least you can walk away from your house.
“people get married and have children for the same reasons. at least you can walk away from your house. ”
Psychologists hear what people would never reveal to others…that secretly, many of them wish they never had kids.
DOC
“the other kids are doing it mom”……..
Yeah…I’m never going to have kids! I ticked the buy a house box twice. I can’t wait to rent again at an apartment I really like at a just remodeled nice quiet clean complex, where I’ll do nothing but write one check a month to the landlord.
Didn’t “grown ups” ,ala Greenspan, get us into this mess?
“A friend of hers also just bought in the building.”
Just how far underwater is that “friend” now that your co-worker set a nice new low comp for the building?
misery does love company after all
Oh yes. My co-workers-in-misery (upside-down homeowners) have tried very hard over the last year or two to obtain me as company. Seeing the misery is incentive enough to stay sidelined for a while.
I believe that “just bought” means pretty much simultaneously. Their prices may be a little bit apart based on view and floor, but this isn’t an issue of the friend bought 6 months ago for $50K more.
I think the “appraised” for $50K above the price she paid is more likely from an appraiser hitting the right number for one of the preferred lenders of the building - just basic fraud to allow 100% financing when the 100% financing program doesn’t officially exist anymore and the lender needs to tell the securitizer that there is 15% equity in the deal.
At 5.5% - that’s 1,200 in interest a month. Throw in $200 for condo fee (probably higher) $200 a month property tax (probably higher) - and you’ve got at least $1,600 (maybe more) for a 600 foot studio. Maybe it will be worth about $2,500 in total tax refunds, however.
She probably could have waited another year and found a comparable (although maybe not brand new) 900 sq. ft. 1 bdr for the same price.
How many places did she look at, I wonder? There’s so much new condo (and condo-becoming-apartment) inventory in Alexandria and Arlington.
Was is in Old Town- the shoeboxes across the street from me near Braddock Metro?
It is in Old Town. She said something about the “new Carlysle Square area.” Are you familiar with it?
Biggest problem for me is the idea of a loft with huge windows and no separate place for a bedroom. It is going to cost a fortune to get enough curtains so she can sleep past 6:00 AM in the summer. I know a lot of people love “light” but I don’t want it in my eyes early in the morning in late June.
Carlyle is the name of some big towers and some smaller townhouse/condo buildings just south of the King St. Metro (the eisenhower ave. metro may also be walkable from some of them). There’s also office space, restaurants, new Federal Courts and new Patent Office space in there. It’s enormous - and some of the condos must have pretty rare and excellent views. I know a guy who was part of a development team for a smaller condo back there that is going apartment instead.
Some stuff did really well in pre-sales — some condos above a Whole Foods down there (not part of Carlyle - but very close nearby) sold out during construction — but I see some creeping back into MLS for what they sold for in 2005 (and I expect to see them go lower). The ones I see for sale are non-owner occupied — people rented them for a year and are trying to unload them.
Everything down there is really nicely done - but there’s sooooo much inventory and plenty of perfectly good rental options instead. Nice place to live - but not going to be a good investment.
I live about a mile down the street on Eisenhower Ave and pay 2500/month for a 3 1/2 bedroom, 3 1/2 bath garage townhome (which is too much, but that is another story). I am quite surprised, however, that the places you mention are only going for 250K. A few months back I did a search of Alexandria on one of the local realtwhores’ websites and found a single 1960s era condo going for 299K on Duke Street. In any event, there has been, and continues to be tons of construction in the area and I have seen the sign spinners out in force the last few weeks. I think for the newest place that just opened up, which is across from the Eisenhower metro, is all apartments - they are trying to get $3000/month and I do not think they have rented too many out as evidenced by their continued listing on Craigslist.
I don’t think there is much under 300k in that Carlyle area - at least not yet. The condo above Whole Foods has a 1-bdr for sale for 329k (bought in 05 for 309) - and has other stuff in that price range before (don’t know if they sold, or if they were withdrawn and became rentals). I did see some stuff down eisenhower - garden apt. type condos - under 300 k, though. I use the cbmove.com site - works pretty well (be sure to remember to select 15 results - not 5 - per page, though). 440 condos in the MLS for Alexandria today - but surely a few hundred more available in “new” buildings and craigslist FSBO’s.
Most stuff under 300k (and even under 200k) seems to be in older buildings along Duke Street from Foxchase up to Landmark. Not the most desirable stuff.
Also - great info on the Alexandria city website - sales and assessment info very easy to find. (new assessments coming out in a few days - should be interesting)
Yea have 2 friend who just baught places in Milford, PA which is basicly 3hrs from anything, curently will be 35- 45 min communte for them, but they each got 0 down financing, so the days of zero down are not over by a long shot….The problem is if either loose the current job for any reason finding a new one in a commutable location will be close to imposible….
At $433/ft² how does that compare to other expensive areas around the world like Tokyo?
lol, those apts/condos in Arlington are a joke!
now, getting an old town Alexandria townhouse at the depths of the bust wouldn’t be bad…
would be a vanity thing, though. you’d have to really like Alex. I admit it’s better than the rest of NoVa, but I have a feeling I would get bored quick!
I recall a time when people in cubes, along with their significant other, could only afford 120-150K. Are people in cubes making 90K these days?
Not far from it. I’m not going to tell you my assumption of the exact number, but we work for the federal government, so we can all pretty much guess eachother’s salaries.
WTF??? It’s a studio!
RE: it “appraised” for $309,000.
The inflated appraisal number covered her “downpayment” plus all closing costs and commissions. So it’s a 120% finance job.
Nothing has changed.
The criminal appraiser is still greasing the wheel.
So who the fook is buying the paper?
“Mortgage Crisis Spreads Past Subprime Loans” - NYTimes
“Six of the biggest US banks are expected to announce plans to offer more help to those struggling with mortgages” - BBC News
The parasitic banks realized that the FB-Hosts have little blood left in them. So they decided that those who haven’t parted with any blood for 90 days will be given another 30 days to recover. Let us see. Just prolonging the inevitable: the death of both the hosts and the parasites.
Things do appear to be getting very serious on the default front. I don’t think the system has ever had this many properties to deal with, and considering the securitization mess, lenders are stuck.
Another thing to consider that I have seen here in N AZ. The lenders will hold a house in some stage of default but not actually foreclose for months and months. They postpone the auction repeatedly. My bet; the house isn’t on their books and they aren’t responsible for upkeep and taxes.
This is just delaying the inevitable. Even the WSJ had the “just walk” thing going. There is no way at the end of the day most people are going to pay this sum for 30 years.
Most likely scenario is some form of principal reduction with capital bailouts for the lenders. The sheeple will be knife-catchers without realizing it.
‘Most likely scenario is some form of principal reduction with capital bailouts for the lenders. The sheeple will be knife-catchers without realizing it.’
Uh huh. Even though billions are gone and there is nothing to back up what you say. Keep singing to the paranoid.
Umm, I’m still in the deflation camp, Ben.
They will still try it on the edges. The borderline cases.
Still spells deflation though.
Umm, I’d say you are looking for victim status. Why else would you make up scenarios where you are on the hook?
Ben, you are getting paranoid. Not very becoming of you.
Surely “victim status” (what a peachy pseudo-psychological putdown) is not the only reason to come up with these scenarios.
Even if it’s not “possible”, gratuitous ad hominem attacks are hardly becoming of you.
Are you looking to be a victim? That’s what it looks like ’sheeple’. I’m one of the few people on the web that doesn’t see conspiring bankers under every rock trying to stick it to us po’ taxpayers. Who’s really paranoid?
Ben,
Based on debt/income ratios, it seems to me there will be at least $2 trillion, if not $4 trillion in losses coming.
Banks do not have NEARLY that much, can’t get that much, and FDIC can’t insure that much.
Do the losses get passed to depositors and bond holders? IMO = global depression.
OR, do we print the money needed to make depositors and bond holder whole. We print money as one asset class declines in price. Money = sum of all prices. If there is the same amount of money and one asset class is falling in price, then the prices of others will rise. Inflation during economic slowdown = hyper-inflation.
I think these are our two choices if we continue to allow the leverage to unwind in an uncontrolled fashion.
Well if we are talking paranoid then I have to chirp in with my latest “tin foil”!
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/04/ED5OUPQJ7.DTL&hw=endgame&sn=001&sc=1000
Banks won’t have much to say about it. Once the word’s out (and it’s getting there), people will run from their POS houses like h-e-doublehockeysticks. It’s already happening. Our society condones and breeds irresponsibility, and people who have never been homeowners are now seeing it’s not what they thought it would be. They’re running, and more and more will follow as the culture says it’s OK, in fact, encourages it. All their friends will be telling them it’s the smart thing to do. The banks will either adapt or go under. They wrote loans based on the new paradigm (Wall Street securitization), but thought people would act under the old paradigm (the 50s and 60s form of integrity). SOL.
Your “integrity” comments might stick to the specuvestors and “spend all the equity” desperate homoaners, but what about the earnest buyers who got sold toxic loans (because they were ignorant and didn’t do their due diligence) and paid too much for their house (because of fraud, fraud, fraud)?
They signed up to be slaves, only they didn’t know it. Once they know it, they are going to be looking around for Harriet Tubman.
Americans cherish freedom. Count on it.
“They’re running, and more and more will follow as the culture says it’s OK, in fact, encourages it.”
You know the banks are in trouble when Money Magazine starts advising the Yuppie set to send jingle mail to their lenders.
They wrote loans based on the new paradigm (Wall Street securitization), but thought people would act under the old paradigm (the 50s and 60s form of integrity).
Lost, that about sums it up, doesn’t it. Usually, the most turbulent times in history are the paradigm shifts. A lot has to happen for people to find the duties, freedoms and responsibilities that the new paradigm implies. I have no idea how this is going to unravel, but I have no doubt it will take a looong time for the dust to settle.
Ok auger-inn — you’re on the “list” ! Interesting stuff.
(Hell - we’re probably all on the list here)
I think the bailout is drasticly lower interest rates so the banks can borrow cheap below the inflation rate. Billions are being lost so the FED is trying to create billions by making loans easier to afford. The only borrowers I can see are fast growing third world countries. That didn’t work out too well last time did it.
“Even the WSJ had the “just walk” thing going.”
It is interesting timing: Countrywide and other mortgage holders suddenly decide to expand their FB workout programs days after “just walk” stories spread like wildfire through the MSM. Seems as though some mortgage holders had a rude awakening.
Ben Jones wrote:
Is there any question that the highly connected heads of financial institutions will try to get taxpayer funded bailouts?
You’ve made a good case that a bailout probably won’t work, due to the sheer size of cash required to keep house prices afloat.
But there’s a difference between whether a bailout will “work” and whether it will be attempted.
There are growing “mini” bailout proposals constantly cropping up like mushrooms. Many months ago, I posted about a Loudon County Virginia program which was giving homeowner financial assistance to individuals making up to 116,000 USD salary.
The stimulus package had a price support package in the form of GSE’s buying loans nearly double the size of the ones they can buy now. The Suze Orman piece on Yahoo had several different “homeowner relief” programs.
All I’m saying is, keep your eyes open for cash moving from taxpayers to financial institutions, in an attempt to lessen the losses to those institutions, thus preventing a timely and clear shakeout of the bad investments, and reiterating to the players in the financial system that bad investments will have some consequence, if not to them personally (ha!) then at least to the companies they captain.
‘Is there any question that the highly connected heads of financial institutions will try to get taxpayer funded bailouts?’
Don’t know, don’t care. I spend a few hours everyday getting ready to take advantage of this thing. There are huge opportunities, but some folks will sit around and worry about something out of their control. I just don’t get it.
What is your thought process? I don not mean to ask for a handout and a nice juicy stock tip that “XYZ” is coming out with new gizmos. I mean, would you share some of your thought process that goes into benefiting from likely outcomes and deciding what will be have true value in the future? Or, did I just answer my own question. Actually, did might be a good weekend question; I’d love to listen to many thoughts.
Thank you.
My guess would be to position yourself to take advantage of very cheap property.
Ben, not being trite here, but what are those huge opportunities ? Trying to set myself up, stocks/ or RE, or alternative energ. Or ? praytell.
We were just talking about our plans to benefit this go ’round.
“My guess would be to position yourself to take advantage of very cheap property.”
Yes, there will be some fantastic deals. I’ll be looking in the more established neighborhoods, but in the shoddily-built tract/Mc Mansion neighborhoods that are deteriorating as we speak…??
Tin foil hat on…
Something tells me there’s staff at Haliburton right now working out a plan to make something from all of this. They’ll propose taking the deluge of vacant,unsellable homes off the banks hands. A huge, government contract earmarked for Hailiburton will be drafted of course–to pay for rehabbing, administration costs and maintenance. These houses will be rented to the multitudes displaced and without jobs due to the continued economic downturn, under a section eight-esque subsidized program– all rental profit funneled to Haliburton, of course.
Tin foil hat off…
DOC
When I was in college, I lived in a victorian house that had been divided into apartments during the depression. I’m sure these McMansions are destined to be the rooming houses and apartments of the coming global economic crisis.
RE: I’m sure these McMansions are destined to be the rooming houses and apartments of the coming global economic crisis.
Adios school systems.
Think of it…4 special needs kids with each single mother occupying one bedroom of a 5 bedroom McMansion in a gated community!
Who says the the American Dream is dead!
Also, if they don’t foreclose, then they aren’t responsible for the taxes until it goes to auction and they buy it back from themselves? Is this true?
I don’t think so. The tax goes as a lien on the house. It will be tough for them to resell the house until they have paid off the tax lien. At a minimum it would reduce the value of the house since the new buyer would have to pay it.
But I thought that when the house goes to auction that whoever buys it gets it free and clear. All liens are removed.
Not so? Or is it just tax liens that stick? Please help clarify.
Tax liens never disappear unless agreed upon by the city fathers. They have to agree not to foreclose
So the lien stays with the house even if the person who lived in it moves?
Do you see any cities caving into builders or do you see this as a tool for the city to try and keep people in their homes even if they aren’t paying taxes?
If the house gets sold to pay the tax lien, who gets paid first? The first mortgage holder (bank) or the city?
they won’t cave to the builder if the builder is broke
no more lobsta lunches, no more sweetheart deals
we don’t love you any more
If the City doesn’t get their money, they’ll foreclose. The mortgage holder will typically not lose their holdings over a $2K tax bill so they’ll pay it.
In many areas not only the taxes but also the waterr and sewer bills run with the property. It is possible for these agencys also to foreclose for these amounts.
I agree. Back in the ‘82 depression we lost our house in WV. I was 5 months behind on payments (on 30k mortgage) and had not gotten one letter from bank. I must have been more current then other folks. Only one burn down on my 20 house rural road.
When one FB defaults, it is the FB’s problem. When a million FBs default, it’s the lenders problem…
My bet; the house isn’t on their books and they aren’t responsible for upkeep and taxes.
I would not bet against you on this one. The new mortgage bailout plan is just a plan to delay the forclosure process and drain every cent the consumer has left and place the financial burdon the banks would assume back on the consumer.
In the meantime, as you explained Ben, banks do not have to carry this on their books or be held responsible for the taxes, insurances, CDD and HOA fees.
“Things do appear to be getting very serious on the default front.”
I think that the MSM articles saying to ’send in the keys’ or ‘jingle mail’ has hit a raw nerve.
No. This is evolution of the parasites. Parasites in the wild must reproduce before the host dies. Those that kill the host too quickly leave no offspring. The banks have realized that if the host (borrower) dies (defaults) then the bank has no more capital and dies as well.
“evolution of the…”
Subprime = Ebola
i had one of those possible “shoe shine” moments this morning
the guy who has the coffee cart on 6th ave in chelsea ny near my office was ranting to me about his cost going thru the roof, milk, pastries,bagels,coffee,chewing gum etc etc
and then he said he heard another 20k will lose their homes in the next month or so in the local area
so the coffee cart guy from the middle east who has been here a few years is up to date on things but many americans who grew up here have not a clue what is happening
and another thought, all these desperate to sell fb’s of walkaway jingle mail types are they going to buy a new place? doubt it
everyone wants to be a bitter renter
So will there be a time when it behooves anyone paying a mortgage to stop paying it for a period inorder to extract goodies from the borrower?
Can I get a neato lifetime teaser rate or a principal reduction by pretending to be a deadbeat?
I am almost serious….
correction…at end of first paragraph replace ‘borrower’ with ‘lender’.
Can I get a neato lifetime teaser rate or a principal reduction by pretending to be a deadbeat?
I wish I could act like a deadbeat, but I chose to be responsible instead. *sigh* Honor and integrity look great at the movies, but it’s a sucky way to live…
well … I sleep better at night. nice perk.
I wish I could act like a deadbeat
Me too!!! But whenever I think of it realize that I would be a failure as a deadbeat. It takes something that I don’t have. Rats.
“Honor and integrity look great at the movies, but it’s a sucky way to live…”
Actually, It’s a great way to live, or at least try to live IMO. Sleeping great, not having to repeatedly make s**t up to cover lies, and best of all…Occasionally hearing the positives people say about you when you’re not around.
DOC
Sing the homeowner blues (Palm Beach Post). First one if my favorite!
http://www.palmbeachpost.com/news/content/home_garden/index.html
Great reference Michael, thanks
warning for those that have their money with the ’safe’ ING Direct bank: rumours about mortgage losses for parent company ING are increasing today. Up to now ING keeps saying that their exposure to the US mortgage problems is close to zero. They say about 10% of their portfolio is subprime, the other part being Alt-A. These Alt-A mortgages are mostly on the balance sheet of ING Direct, and according to todays rumours there could be 6-8 billion euro losses on a total of about 29 billion euro US mortgage exposure. Supposedly there could be additional losses due to problems with US credit insurers.
ING stock declined about 40% over the last year; annual report is due next week.
Good report nhz. …. Any reports about HSBCdirect? I’ve got some of my dough there.
– Judge Smales
“You’ll get nothing and like it!”
no idea; just know about ING Direct because their parent company is Dutch …
HSBC Direct is HSBC.
Emigrant Direct is hands down the best online saving bank. Been a happy customer for about 2 years now.
Thanks for the reminder. I don’t think I got the annual interest statement for filing taxes.
I have a few thousand $ stashed away at Emigrant Direct. (Had forgotten about it, being a bitter-renter I can’t even keep track of the money that I am saving every month.)
Thanks! I’ve been wondering…
I was choking paging past Yahoo finance the other day where someone commenting on an article actually said: a 6mo big bank CD to deal with the current low savings interest was stupid: just put your money into ETrade or ING or HSBC where the savings interest was so much higher.
No one wonders why anymore. Why is this wonderful subprime backed bond “paying” more than everyone else. Why are these banks paying so much interest? Why ask why?
IF YOU GO TO BANKRATE.COM
countrywide was paying the highest cd rates recently
my iterest rate on my mm @ fidelity has gone down a bit
with the helicopter drops but i feel safer there
then going to countrywide or e-trade at this point
another thing i can move my money in an instant with the fidelity account unlike a cd from a shaky at best institution
They can no longer roll their short term debt; debt investors don’t want the risk. These banks need to replace wholesale funds with retail, FDIC-insured deposits. To get the retail deposits they must pay above market rates (120-150+ BPs above T-Bills).
“To get the retail deposits they must pay above market rates…”
Or they can start pestering you with HELOC offers and phone calls, like Chase has started to do with me out of the blue. They have the “personal banker” staff at the branch down my street making cold calls to me and my neighbors.
I pass a lot of banks in my weekly travels and the “personal banker” sections are all dead, dead, deadsky.
Funny you mention this Tuxedo. Wifes bank is having a competition between branches to see who can bring in the most deposits in a month. They won last month and tossed them a “small” bone for their effort.
the funny thing is that parent company ING is paying their savers (probably 10% or so of all Dutch savers) a lousy 2% interest on their savings instead of this 6% from ING Direct. Even with the official 1.6% Dutch CPI (utter nonsense of course), they are loosing money every year when taking taxes into account. People aren’t even worrying about the return on their money yet, so worrying about the return of their money is far beyond the horizon.
ING direct has just lowered their rate to 3.2% APY. What’s more interesting is that the reason I have ING Direct accounts is that when the FDIC took over NetBank, they made the deal with ING Direct for the insured accounts. Automatic transfers.
HSBC has been steadily dropping rates as well, a week or two after each rate cut. Such is the way it is.
historic inflation:
NEW YORK: While the world frets about a possible U.S. recession, global inflation has quietly climbed to historic levels, confronting policy makers with tough choices that could end up hurting the euro and lifting Asian currencies.
http://www.iht.com/articles/2008/02/12/business/inflate.php
hilarious: “Some analysts say the aggressive rate cuts may have put the Fed in a better position to focus solely on fighting inflation later this year”
subprime festers in NY
New York City’s 18,000 foreclosure filings last year accounted for more than half of state foreclosure filings in 2007. Now one out of every 40 homes with a mortgage in New York City had a filing as of the end of September 2007, more than twice the rate for the rest of New York State
http://tinyurl.com/yuj3qc
B-but, it’s different here!
I still don’t get the math.
Making loans at 5 or 6% when inflation is 7+% is a money losing operation. An argument has been made that 5% is better than nothing. A counter argument could be made that many bankers that are losing money should just get out of the business.
The problem is that bankers lend just like builders build and farmers farm.
Additionally, the people working for the bank have all the incentive to make the loans and take their cut. They have no personal stake in the long-term future of the bank.
The banks are not going to stop lending until they collapse.
This may sound dumb to you (and me) but you must understand the psychology and institutional mindset behind it.
“A counter argument could be made that many bankers that are losing money should just get out of the business.”
Sounds like they may as well just buy gold and hope for the best.
But the banks are not lending their own money. They are borrowing money at 3% and loaning it out at 5%. They are making the 2% even if the person they are borrowing from is losing.
And who are they borrowing from? Mostly the Chinese I guess. They have to do SOMETHING with all their dollars. They can’t pull them out of the U.S. without killing the exchange rate and shutting down thier economy.
“I don’t get the math.”
This isn’t about math, it’s about hope.
They hope things will turn around, it HAS to turn around, and it WILL turn around because real estate always goes up, and the Fed won’t let the market collapse, and this is an election year, and they’re not making any more land, and now’s a good time to buy, and we’re near the bottom of the cycle, and …
‘This isn’t about math, it’s about hope.’
Extrapolate that to the elections. I told my spouse that this country is looking for a leader with a vision and someone to gives us hope. Politics aside, I bet many people just do not want to feel beaten down if things get tough. They want to be told that things will get better.
People seem to be looking for a leader with the most pleasant platitudes.
Good post, cambotechie.
Making loans at 5 or 6% when inflation is 7+% is a money losing operation.
Speaking of inflation… my mortgage bill was higher this month because of a “review” of my escrow account. When I looked at the numbers for 2008 for insurance and taxes, my insurance had gone up 24% in one year and my taxes had gone up 8%.
I increased my rents by 4% this year, and I’m pretty certain I’ll get a 3% raise, but I’m still running behind. Someone needs to hit the reset button…
It is not your math, but your numbers. Inflation is around 3%, banks are borrowing at 4% and making loans at….. well I for one just got a letter from BofA informing me that they were raising my credit card interest rate to something like 32% pa.
It is not your math, but your numbers. Inflation is around 3%
Where do you see 3% inflation? Did you see my post above? Taxes, 8% higher, insurance 24% higher, rents 4% higher… I will go on… food costs higher, energy costs higher, cost of education higher. I’m not exactly sure where economists see 3% inflation, except in labor. Everywhere I look, things are up more than that.
I have been buying big 100 ounce plastic bottles of detergent. The last big bottle was a joke. It took three full filler-cup measurements to wash a small load. I understand that you are buying very dilute detergent, but it feels as if you are buying very expensive bottled water. You are in fact paying mostly for advertisement, packaging, distribution, retailing, CEO compensation, lawyering, insurance and not much actual product is paid for.
Now here is the kicker: At a time when all of the talk is about increasing fuel and energy costs, these CEOs do not have a problem with the increasing costs of shipping and handling of all this “dead weight”.
Hey, enough with the soap. It’s a TOTAL con, except when you have something that’s greasy or stained. I never use soap anymore, not even to shower or do dishes. Laugh all you want, I save a fortune and I’m quite clean. No chemicals on my skin or down the waterways. OK, have fun with this one (FYI I shower every day).
Baking soda dissolves grease, and it’s cheap. Dilute with water to make “shampoo.” Works. (Rinse with dilute vinegar or your hair will feel weird.)
detergent & stain remover DO work on clothes
your clothes must not get as dirty as mine
believe me, I have tried using less soap, crappier soap … with hot water I can use less, but only to a certain point
I can rinse and agitate all day, but it takes detergent to remove certain stains and grime
sorry
ps–anyone who buys liquid detergent is a tool. CU showed that for dishes, powder and the tabs are superior anyway, AND cheaper, while for laundry, you are paying for water and more expensive packaging, and for fuel to haul the water (H2O is way more dense than soap, doncha know). I know it is hard to find powder soap these days, but if you don’t have an allergy to the enzymes (my wife does, dammit), Tide powder works GREAT, is widely available, and is periodically on sale at a decent price. A little goes a long way. Good stuff! (Now, if only they sold Ivory Snow powder at the store…)
Gator, we agree, you missed this part of my post:
“It’s a TOTAL con, except when you have something that’s greasy or stained.”
I also hate the detergent odor. I can smell it on others now that I don’t use it.
not a gator - look for a product called Dropps - little pouches of enzyme-free liquid detergent. I feel ridiculous recommending a detergent, but it’s so damn nice not to haul something as heavy as a detergent container up & down three flights to my building’s laundry.
3% inflation comes directly from the “All Equipment” category extracted from Marshall & Swift for YOY from Jan 07 to Jan 08
3% inflation comes directly from the “All Equipment” category
You know, I heard a funny joke on Kudlow last night. To wit, did you hear about the statistician who drowned? He drowned in water with a median depth of 2″… the point being that statistics can deceive the truth of the matter just as easily as enlighten.
I don’t buy “equipment” every day, maybe not even every year. About the closest thing I come to buying “equipment” is a new laptop and desktop computer every couple of years. I don’t care about inflation in equipment. I care about inflation in health care, fuel, natural gas, electricity, taxes, food, education, common services, etc. If you can show me the statistic that shows inflation in these items, excluding “equipment”, is 3% I’m all ears…
My property insurance company planned to raise my rate 12% for the next year. I found a different insurance company at 40% less.
well that evens things out my BOA Credit Card rate is currently –fixed— 0.0% Zero point Zero percent– the interest off the 50K pays a few months of rent payments. I need to purchase something—like a condo…..
Crunch Time: Credit Woes Still Threaten Economy
http://tinyurl.com/3c6ktl
In January, no commercial mortgage-backed securities were issued. That’s the first time that’s happened since October 1990!
Just another commentary on how the fed needs to drop interest rates another 100 basis points and fast.
It’s a credit problem. Not liquidity. Lower rates don’t make a bad deal work.
I’m sure you are hoping. Good luck with that alligator!
There is also the related problem of lost trust in the banking system. Fancy financial engineering maneuvers by CBs do nothing to restore lost trust, destroyed by a failed credit rating system.
Yep. The buyout craze was predicated on hidden debt. Buy the company, saddle it with the debt that you used to buy it, and somehow in a year Wall Street would ignore that debt when it came time to sell. This almost-kind-of-sort-of-not-really makes sense in a time of growing earnings and lowering interest. The failure of these deals is a sign of sanity, not crisis. The fact that Wall Street continues to think that all these pier loans will get unjammed with a little Fed easing shows that the nuts are still running the assylum.
Ben, I should have noted that this approach is not one that I favor. I agree that lower rates are not the answer to the credit problem. It’s amazing though how many pundits are certain that lower rates are the answer to all economic ills. I wonder what their approach will be if rates are reduced to near zero and the problem persists?
“It’s a credit problem. Not liquidity. Lower rates don’t make a bad deal work.”
Correction: It is a credit quality problem. To me a classic case of big money wanting returns but not getting any.
“big money wanting returns …” of their principle
Roubini says this is an insolvency problem not a liquidity problem.
I really like his blog, sad that it’s now closed only to subscribers.
The Roubini blog on RGE Monitor still shows the main points he makes every few days in a teaser form without all of the details. It is still very much worth keeping up with for me, and I advise people to come up with the money if they can since he has been useful also in the details of his analysis.
Ben,
I read the paper today and they were talking about Banks announcing “they are going to work with borrowers to find a financial scheme that keeps them in their homes.”
Notice the word scheme.
I think they are running out of schemes and anything at this point just wreaks of desperations. But hey, banks are desperate. Desperate times call for desperate measures.
Meanwhile, Chuck Prince is enjoying Margaritas and running his toes through the sand on some beach in the Virgin Islands while he has millions socked away from doing a horrible job.
I see this partly as a PR stunt to keep the state and national government out of the game. When the governors start moratoriums and rate freezes, then the banks have limited options.
Careful British papers tend to use scheme where we would use plan, makes for an interesting pension review.
If the FBs are 90 days late already, why think that an extra 30 will allow them to work out a plan?
Lower rates don’t make a bad deal work.
On Kudlow and Co. last night, Larry almost had a fit when Gary Shilling stated the Fed was irrelevent in terms of the current credit crisis and that nothing they did with interest rates would help…
Lyin’ Larry provides crystal clear insight into the WallStreet/DC Crime Syndicate. Clearly he’s never understood objectivity or Main Street sentiment and his reliance on the hopeless failure ideology of “free market capitalism” makes him all the more predictable.
capitalism is an unknown ideal. one in which all transactions are voluntary and between private parties and their own negotiated rates. blaming capitalism for mixed economy crises is poor judgment.
Suggesting our current system of privatizing gains and socializing losses as capitalism is a complete lie.
Larry Kudlow will claim inflation is low until he starts seeing inflation in coke prices.
Ben:
This quote says it all:
As for those folks who think still-lower interest rates would reinvigorate demand, Bob Campbell of the San Diego Real Estate Timing newsletter counters with this undeniable fact: “When an asset like real estate becomes overvalued, even if you drop interest rates to zero, you can’t force consumers to borrow more, because they’ve already borrowed too much. Nor can you force lenders to lend, because they’re already puking on ‘bad paper.’ It’s called a liquidity trap.”
Pethokoukis is also a frequent guest on CNBC’s Kudlow & Company.
That’s all I need to know.
Exactly. High Priest of Deception and Lies Kudlow is never without concurrence from losers like Pethokoukis, Laffer etc. Kudlow is the modern day Goebbels of high finance.
Goldylocks Krudlow
If you think you are not going to get paid back, then the rate of interest that you are not going to get paid back is irrelivant.
A $400,000 plain vanilla house at ZERO percent for 30 years is still not affordable to the average person. $13K payments + taxes + insurance+ electric gas water+ repairs…could easily be $17-20K a year…on a $40K salary!
EXACTLY!! A house for $150,000 at 0% interest would cost me the same as rent, and that is just PITI, not maintenance. And I am renting a 3/2/2 right now, that’s only 5 years old. I know I’m not in a bubblicious area, but WHY would I buy? People seem to think the prices won’t come down here, because the prices didn’t get that high, but it just doesn’t make sense to buy.
But if they could just sell their current house for $325k, the jump is totally doable….
…If people would just stop lowballing the $325k and make a real offer….
Right. So what we really need are zero-interest, interest-only, non-recourse loans.
Ding Ding Ding!! Ben, I think we have a winner. Finally, somone has a real solution to the housing crisis!
Hillary Clinton will offer that in a desperate grasp at straws.
Right. So what we really need are zero-interest, interest-only, non-recourse loans.
This sounds like a very interesting forum indeed. Stay tuned.
AFX News Limited
Ahead of the Bell: Credit crunch forum
02.12.08, 6:37 AM ET
WASHINGTON (AP) - Investors critical of bond insurers and credit rating agencies for their roles in the global credit crunch will be on a panel discussion Tuesday focused on related turmoil in financial markets.
Much of the focus of the 12 p.m. EST forum at the Washington-based Hudson Institute is likely to be the role of bond insurers, which pay claims when issuers of debt securities default. Also to be discussed are the three main credit-rating agencies, which have come under fire for being overly optimistic about mortgage investments.
Scheduled to speak are William Ackman of hedge fund Pershing Square Capital Management; investor James Chanos, who became famous earlier this decade for raising early warning flags about energy giant Enron Corp.; Sean Egan, founding principal of independent credit rating firm Egan-Jones Ratings Co.; Ed Grebeck, chief executive debt-strategy firm Tempus Advisors; and Joseph Mason, a Drexel University finance professor.
http://www.forbes.com/markets/feeds/afx/2008/02/12/afx4643796.html
Like to see Ben at one of these.
You’ve got to figure Ackman and Egan will blast away at Moody’s, S&P and Fitch for putting off the monoline downgrade.
Even if the market is already pricing in a downgrade — as Buffett said this morning — a rightful downgrade would caused forced sales by entities that are only allowed to hold AAA paper.
What are the rating agencies waiting for? Who’s leaning on them to hold off? The monolines should’ve been downgrades months ago, and yet the ratings agencies continue to drag their feet. Get on with it.
– Judge Smales
“You’ll get nothing and like it”
“Who’s leaning on them to hold off?”
My question exactly. Let the fire sales begin!
Speaking of Buffet, this is an interesting development:
Buffett says Berkshire offered plan to assume muni liability
http://tinyurl.com/ynkmdc
I’ve wondered when Buffet was going to make a major, nonrecoverable mistake. This is it. This is too big and bad for even the likes of buffet. The exposure is too great!
Note that mortgage foreclosures were frozen this morning. Thirty days. Now we are seeing the real collapse. This is going to get much, much worse.
Roidy
The big concern isn’t forced sales (many high grade holders have provisions not to buy additional low grade paper, but downgraded paper can be held–it’s hard to get any price in a forced sale), it’s bank capital requirements. Under Basel II, banks have to hold a certain amount of capital for AAA paper, more for AA, and on down the line. With a downgrade all the crap would be downgraded, but all of the munis get downgraded as well (and between the two, banks of all stripe get to make a few more tours of the Middle East). Rumors are that downgrades would require something on the order of $70-$100 billion in new capital.
“Rumors are that downgrades would require something on the order of $70-$100 billion in new capital.”
How would banks come up with this? Sounds like interest rates might have to go up quite a bit to attract this much new capital.
Sounds like interest rates might have to go up quite a bit to attract this much new capital.
Which is exactly what the banks are doing right now by raising interest rates on credit cards, etc.
“banks of all stripe get to make a few more tours of the middle east”
Perhaps this is the reason internet cables to the middle east have been cut NINE times - keep them in the dark when loans are requested. (When the cut cables problem first was reported, it was said that a ship’s anchor cut three lines. But has that anchor cut the cable NINE times?)
There’s something hinky about communication problems lately. My blackberry doesn’t connect to the internet, even though it was promised that it would be fixed by today.
Well, to day IS the Microsoft patch Tuesday, and Apple has been updating this week also.
Sorry if this has been posted/discussed before, but did anyone see the Law and Order episode that was recently on about the housing scam (with the quit claim deeds). That was pretty funny, and; in a twist of fate, the perp actually got off (which never seems to happen in that show).
Sign of the times, crooked MTG broker kills someone for money, gets off.. Welcome to the USA.
I saw it. Unfortunatly I think it will just obfuscate the issues with housing for many people.
The “foreclosure rescue” guy was taking the houses and selling them. That is not how foreclosure rescue works. You give someone your house, and they cash-out refi it to the max and let the banks take it. They made it seem like you could get a great deal by buying one of these foreclosure rescues from the scammer. Nope. It gets added to the bank’s losses.
The other thing was cash-back. It showed buyers bringing $50K to the closing table to hand to the seller. They called it cash-back. BS. Cash-back was to the buyer, not the seller. It was a way to inflate comps, not deflate them. Cash-back was another way to overborrow on a house, sticking the lender with more bad debt.
They really mangled reality to make it fit the story they wanted.
Sorry if this is a repeat post from yesterday, but I was a bit puzzled over how the U.S. headline stock market indexes did so well against the backdrop of this devastating bombshell dropped on it by the WSJ editors.
The leveraged loan price graph which accompanies this article is eerily remiscent of the ABX indexes which were dropping like a rock this time last year. Could this graph represent the next shoe falling out of the sky on the debt markets?
“Over the weekend, the world’s top banking authorities warned that the U.S.-led economic slowdown and continued uncertainty about securities could lead banks to further reduce their lending, and choke off economic activity. (Please see related article.)
One sign of investors’ anxiety: Standard & Poor’s said its index of the prices on high-risk corporate loans fell to a record low of 86.28 cents on the dollar at the end of last week.
Few market participants expect defaults on any of this debt to match the elevated levels seen in last year’s rout in the market for risky, or subprime, mortgages. But collectively, they threaten to deepen the financial system’s wounds and create a growing pileup of shaky assets on the books of banks.”
http://online.wsj.com/article/SB120269228578457765.html
6 firms act to help avert foreclosures
The mortgage lenders will team up with nonprofits to reach out to borrowers at risk.
By E. Scott Reckard, Los Angeles Times Staff Writer
February 12, 2008
Struggling to connect with their delinquent customers, a group of six major mortgage lenders is teaming up with nonprofit groups to serve as a go-between.
As part of the program, borrowers who get behind on their payments will receive notice from a financial counseling service “instead of the big, bad bank,” said an executive with one of the lenders.
The plan is expected to be announced today by representatives of the Bush administration and the Hope Now coalition of lenders. Company officials could not speak publicly about the plan in advance of today’s news conference in Washington.
http://www.latimes.com/business/la-fi-mortgages12feb12,1,5253306.story
The banks have a choice: either get serious with workout plans or get lots more jingle mail.
You act like it is this or that.
I think it is this AND that.
They will try to do workouts to keep people in the houses as long as possible, paying as much as possible.
AND prices will keep falling and people will walk away when they are significantly upside down.
Yep, stagger out the defaults and in the meantime, bleed the consumer of every last penny.
Of course, silly me. I keep forgetting that house prices will NEVER start going up again.
staggering losses:
Mark S. Fishman was a modern prince of the markets — a pedigreed money manager who raised billions of dollars at the height of the hedge fund boom.
But last week his dream collapsed. Hobbled by bad trades in the credit markets, Mr. Fishman began to shut the fund he helped found, Sailfish Capital Partners, which oversaw $2 billion just six months ago, investors said.
http://tinyurl.com/2j79pt
Sailfish look awfully like “Selfish.”
That was my exact thought also Incredulous.
debt fire sale?
Holders of funky, hard-to-value mortgage paper are starting to wave the white flag and unload bundles of debt once worth billions of dollars into the secondary market at a fraction of their original values.
Over the next few days, traders of CDO securities expect to see debt once worth approximately $1.8 billion hit the markets. Bids on the individual debt components likely will be sold for values equivalent to 5 cents to 20 cents on the dollar or less. “Sellers are saying, ‘I don’t care if we make money on this, I just want to finally reduce my exposures,’” one hedge fund trader told TheStreet.com.
http://tinyurl.com/3xap8d
“Bids on the individual debt components likely will be sold for values equivalent to 5 cents to 20 cents on the dollar or less.”
Surely the Fed is standing in the wings with a plan to offset the deflationary effects of these fire sales to dump devalued assets?
The real catch here is go back to June/July 07 and the value/impact 1.8bil would have had, then fast forward to today and essentially it’s just another billion here or there. Talk about inflation.
The General take some mighty LUMPS
GM Has Loss of $722 Million on North America Costs (Update1)
Feb. 12 (Bloomberg) — General Motors Corp., the world’s largest automaker, posted a fourth-quarter loss of $722 million after a year-earlier profit on rising costs in North America and a loss at its partially owned GMAC LLC finance unit.
The loss of $1.28 a share compares with a profit of $950 million, or $1.68 a share, for the same quarter a year ago, the Detroit-based automaker said in a statement today. Sales fell to $47 billion.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZNqyVuFUQlI&refer=home
From the NYT
DETROIT (AP) — General Motors Corp. reported the largest annual loss for an automotive company Tuesday and said it is making a new round of buyback offers to U.S. hourly workers as it struggles to turn around its North American business amid a weak economy.
Sounds like the stock market is going to have a great day today!
here’s one for you
http://article.nationalreview.com/?q=NzkzY2I3NzNhOWU4ZTkzNmRiMDMxNjdjODc5NTAwNzA=
That pretty much explains in a nut shell why I could vote for BO and not HC.
Some choice there!
I saw a bumper sticker yesterday… “Republicans for Obama”.
There is hope after all.
I’m a registered “R” and can say that he will have my vote over Juan McCain… There are a lot of people like me I think…plus, I’ve had to deal with HRC as a senator the past too many to count years
I won’t be able to stand it if she is pres!!
There are plenty of political blogs discussing the various issues and what each candidate brings to the table. Certainly, Obama’s swooning 25 and under, year old white males love the messiah and are very vocal about it. But, the fact that a Democrat can compromise the principles of the party to attract Republicans hardly speaks in his favor. These white males will disappear from the Republican party when the boys go back to their video games and when Obama’s empty speeches fade from memory.
Majisto,
If you really are a R at heart how could you ever vote for a guy who is actually to the left of Clinton? Not attacking you, just really curious about his “support”. I get the whole great speaker thing but this guy is far left with no real experience.
Was it not the very same (r) machine making excuses for GW’s lack of exprience.
Such is moral hazard.
I am an independent thinker and voter.
I am an independent thinker and voter.
Me too, PB, registered independent. I’m also leaning toward BO, but I’m second-guessing myself also. Sometimes I think he is the only one I could bring myself to vote for for the only reason I can put my own values and expectations on him because of his short record. To me, HC’s problem is not that she is a woman but that she has been too long part of a system that has brought us where we are (and makes no excuses for it). I like what I hear from BO, and I understand politicians have to say nice things to get our votes. But I am afraid of getting burned (again).
“In a 2001 Democratic Leadership Council study called “The White Male Problem,” William A. Galston — former deputy assistant for domestic policy under Bill Clinton — identified the problem. Beginning with Great Society programs, he highlighted a series of factors that turned white males off the Democratic Party.”
And I doubt Hillary or Obama is going to change this general trend, but we shall see. Obama seems to have a better chance of attracting more men, white or otherwise, not because of any policies, but because he seems to be a likeable guy who can give a great speech. Hillary? forgetaboutit.
Why didn’t the republican party in CA move up their primary, for the good of the party?
I am a Republican and I chaffe at the idea of voting for John McCain. I can’t vote for Huck in good conscience and was actually thinking of “wasting” my vote on principle with a vote for RP or a write-in candidate in the primary (Great state of Texas). If the choice fell between Obama and Hillary, for me, it would have to be O. because I could not take 4 years of H.’s strident voice and teary-eyed manipulations… give me a break- Bill probably shed more real tears than that ice-woman.
I kept my republican registration only because I wanted to be able to vote in the primaries. (PA doesn’t allow indys to vote in party primaries). I’m voting for McCain.
He’s the adult in the room.
BO’s passion and fire are good, but I predict he will not hold up against 1) the HC war machine and 2) the inevitable fall to earth after a spectacular rocket ride to the upper spheres.
HC war machine is cracking. Seems like the rivets weren’t welded properly.
I admit it. I have Obamania.
The dem drama between now and the convention will be quite a show. Another reason to have popcorn.
We have to get through the entire baseball season before the election - a lot can happen between now and then. Obama is learning as he goes, Hillary knows every politico in the world, and McCain is a bit schizo-affective and too old. Perhaps Bloomberg or Nader will jump into the race and mix things up a bit. In Vegas, my money’s on Clinton.
a bit schizo-affective…
It’s interesting how folks throw around clinical terms in order to describe a character or personality trait. If you truly knew someone who suffered schizoaffective disorder, you would understand that this disease renders them incapable of holding down a job for any length of time. Are you a psychiatrist REO Realtor, or do you just play one on this blog?
And it’s not out of love for McCain that I’m taking issue. It’s ’cause I’ve witnessed someone endure that horrible illness. Thoughtless use of clinical terminology does a real disservice to people who are legitimately sick.
Three wiser men
By Chris Giles and Gillian Tett
Published: February 12 2008 02:00 | Last updated: February 12 2008 02:00
Six months ago this week, the world realised the credit party was over. Ever since, the spotlight has been shining on the very core of central banks’ operations - the process of setting interest rates in markets and their skill in easing the first generalised transatlantic liquidity shortage for decades.
None of the institutions at the heart of the crisis - the Federal Reserve, the European Central Bank and the Bank of England - has found the past half year comfortable. The period has been the equivalent of a test-tube experiment in modern central banking, and policymakers now resemble a distinctly uneasy group of scientists: they know what policies they have put into the pot in recent months, but are far from clear why the markets have reacted in certain ways - and even less sure that they have devised the perfect cocktail to stop markets erupting again.
Last weekend in Tokyo, for example, a report from the Financial Stability Forum - a committee of central bankers and supervisors - warned that “there remains a risk that further shocks may lead to a recurrence of the acute liquidity pressures”. Or, as Jean-Claude Trichet, president of the European Central Bank, says: “We are now experiencing an ongoing market correction that is very significant and is multi-dimensional.”
http://www.ft.com/cms/s/0/3e511c26-d90d-11dc-8b22-0000779fd2ac.html
(If you cannot see the whole article through the link, then Google is your friend; search on the terms ‘central bank experiment’)
Hey Ben, it looks like the editorial writers of the Wall Street Journal are at least lurkers, if not contributors, to this blog. Today’s lead WSJ editorial talks about migration from high-tax states to low-tax states, and gives several “U Haul Index” examples to back their theories!
I took a look at that article and came away with the feeling that it was trying to make a political point. Ignore the last paragraph, which begins with “Our friends on the left” and take a look at the states mentioned. North Carolina is a low-tax state? North Carolina is the 19th most expensive state, tax-wise. North Dakota is high-tax? It’s the 39th most expensive state, tax-wise! It also mentions Illinois as high-tax, which is true… to a degree. The high-tax areas are the republican-leaning outer suburbs. If you take two houses with the same value, one in Chicago and the other in the outer burbs, the one in the outer burbs will pay at least double the property tax.
The author is trying to make a high-tax vs. low-tax/republican vs. democrat argument, and fails. He should have just stuck to pointing out the U-Haul index and let the readers make decisions for themselves.
I emailed a writer at NRO who asked “just how bad is it how there?” and told him to read this blog, including the comments. They’re still seeing this as just a way for the donks to hammer on the GOP. Of course Kudlow is a contributor there and everyone else just leaves the econ/WS stuff to him because he’s supposed to be the resident “expert.”
The central bankers can’t all be right
So far the policymakers have had it lucky - now their abilities will be tested
Larry Elliott, economics editor The Guardian, Monday February 11
This is a marvellous time to be a central bank watcher. Mervyn King, Ben Bernanke and Jean-Claude Trichet are going to be the guinea pigs for a global experiment in monetary policy. One of them, almost certainly, is going to be found wanting.
http://www.guardian.co.uk/business/2008/feb/11/economics.bankofenglandgovernor
Hints to experimenters:
1) Trying to second guess Mr Market typically turns out very badly, in the long run.
2) It is far better to lean into the wind, than to create wind yourself.
“It is far better to lean into the wind, than to create wind yourself.”
a la realtwhores with their trumpeting flatulance LOL
I was thinking more along the line of statements like “subprime is contained.”
1) Trying to second guess Mr Market typically turns out very badly, in the long run.
2) It is far better to lean into the wind, than to create wind yourself.
3) If you create wind and pass the wind, it will turn out badly for those around you.
They are all wanting. Two have slashed rates and one pretends to be a hawk while driving money supply to insane levels. It’s perfectly easy to know what these bankers will do because they do the same thing every time they get in trouble; they print money.
“At least one of them, and at most all three, although we aren’t ruling out some sort of two and a half deal…”
The “Problem” is spreading to commercial real estate
Macklowe Receives Default Notice
As His Debt Negotiations Stall
New York developer Harry Macklowe was served a notice of default and the possibility of a foreclosure loomed larger as negotiations with his lenders over $7 billion of debt on seven Manhattan buildings bogged down, according to two people familiar with the matter.
Vornado Realty Trust, a New York real-estate investment trust, which holds some of the subordinate debt, is the most strident opponent of the workout plan, according to two people familiar with the matter.
Because no agreement could be reached by all the lenders to give Mr. Macklowe an extension on his $3.1 billion in debt on four of the seven properties, a special servicer sent out a notice of default yesterday, according to the two people. That move set in motion a series of actions that could lead to a foreclosure.
Mr. Macklowe bought the seven Manhattan skyscrapers from Equity Office Properties Trust a year ago for $7 billion. But all of the financing was done in short-term debt that was due Saturday, and he was unable to pay off the loans.
http://online.wsj.com/article/SB120277733549560767.html?mod=hps_us_whats_news
Somehwere, Sam Zell is laughing. Zell unloaded at the top of the commercial market, and Macklowe was on the wrong side of the trade, and now he’s the single biggest FB standing. And it’s not just these 7 buildings, he’s been shopping the GM building to raise cash for a few months now.
Macklowe’s a big dog, with a less than happy past. He had a couple of landmarked townhouses torn down in the middle of the night a decade ago, and basically got away with it. But now karma seems to have found him.
Macklowe has gone “t*ts up” before. This time, however, he put up a “personal” billion dollar guarantee.
I leave the rest of the story to your imagination.
Yeah, makes you wonder if there’s anything to his newspaper gambit.
‘But now karma seems to have found him.”
Good. I simply love it when Ms. Karma gets involved in situations like these.
Didn’t Zell buy the LA Times? If so he’s an FB himself.
Heard on NPR’s “All Things Considered” yesterday evening:
Housing Gets Seedy and Strange
On Brittain Street in Akron, a lit-up sign with an exotic dancer on it stands as a testament to just how seedy and strange parts of the housing industry became in recent years. Willan was allegedly laundering money from his mortgage fraud ring through this strip club.
Those close to Willan say he was living large — driving fancy cars, partying, dating exotic dancers. He owned a yacht. Attorneys involved with the case say Willan funneled upwards of $700,000 into the strip club, setting it up as a side business to fall back on as his housing company headed into bankruptcy.
Akron is not Manhattan or San Diego. It is a gritty manufacturing town that never had a housing boom. Willan probably wasn’t going to get rich quick buying and selling houses if he played by the rules.
http://www.npr.org/templates/story/story.php?storyId=18885797
IndyMac Posts $509.1 Million Loss as U.S. Housing Slump Deepens
Feb. 12 (Bloomberg) — IndyMac Bancorp Inc., the second- biggest independent U.S. mortgage company, posted a fourth- quarter loss as the housing slump continued into its third year and said it was suspending its dividend “indefinitely.”
The net loss was $509.1 million, or $6.43 a share, compared with a profit of $72.2 million, or 97 cents a share, in the year-earlier period, the company said today in a statement. The average estimate of seven analysts surveyed by Bloomberg was a loss of $1.57 a share.
Chief Executive Officer Michael Perry said in an interview last month that his Pasadena, California-based lender has a “good shot” at rebounding from losses in 2007 and posting a profit in the second half of this year. Falling interest rates on home mortgages may encourage homeowners to refinance and boost IndyMac’s production of loans above previous forecasts, Perry has said.
The company has lost 80 percent of its market value in 12 months as investors speculated on whether the lender can survive as a separate company.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGtinjJk8ylg&refer=home
Who is to blame?
All home lenders, including Indymac, were a part of the problem, and, as Indymac’s CEO, I take full responsibility for the mistakes that we made. However, objective reviewers of this mortgage crisis understand that home lenders and mortgage brokers were not the only ones responsible. Systemic problems in our secondary mortgage markets and credit markets, and our government’s over-stimulation of the housing market via monetary and tax policies (the capital gains tax break on home sales encouraged speculation), were all major factors that contributed to the problem….
http://www.marketwatch.com/news/story/indymac-issues-2007-annual-shareholder/story.aspx?guid=%7B3305AB7F%2DB724%2D4DB9%2DA9AD%2D8764EC7DC6C8%7D&dist=TQP_Mod_pressN
In a world of confidence/trust/solvency? crisis, these guys need better speech writers. I suggest, “Win one for the Indy!”, or “Happy times are here again!” Not “we have a good shot”.
‘Not “we have a good shot”.’
Sounds more like a Las Vegas gambler down to his last dollar than a CEO trying to inspire confidence.
Spitzer: Economy demands more cuts
http://tinyurl.com/2vw3ad
Anglin acknowledged that things could get worse in the 50 days before the start of the new fiscal year.
“I feel like right now we have one foot on firm ground and the other doesn’t know where to land,” she said.
Most states will be going through a reassessment of financial conditions, and the news won’t be good.
that $1 billion upstate stimulus package might be missed.
Buffet on CNBC saying his new bond insurer company has offered to buy all the muncipal bond reinsurance from the monolines. He has NO DESIRE to recapitalize them, or touch ANY of their CDO reinsurance. JUST the municipals.
There goes any justification of a bailout of MBIA and AMBAC based on the need of municipals to be able to get bond insurance.
“There goes any justification of a bailout of MBIA and AMBAC based on the need of municipals to be able to get bond insurance.”
I have never bought in to that whole ‘missing insurance markets’ idea. If anything is ever missing, it is a potential insurance customer who is willing to pay the full cost of insuring the risk he faces.
One company turned down the offer and the two others haven’t responded, Buffett, chairman of Berkshire Hathaway Inc., told CNBC television. Buffett said the proposal doesn’t include the subprime-mortgage related securities that caused more than $5 billion in losses last quarter.
Clever move by Buffett. He’s reducing the incentive to bail his competitors and thus increasing his likely monopoly power.
Thats right lets see if they get bailed out anyway just to let buffett know that the government is the big dog here.
the gubmint is broke. witness how far spitzer got. ie nowhere. they need Buffett and he knows it.
the munis will be begging for Berkshire Hathaway to insure their debts … times are bad for local governments or will be shortly. This offer removes the urgency to bail out the monolines. Game over.
Why would the bond insurers reinsure the least risky part of their business? If they pay cash to reinsure the existing muni obligations they reduce their reserves with respect to the PMI and CDS lines. If they reinsure the munis they will just be digging their hole deeper. I think Buffett is just tweaking their noses out of gleeful malice.
Isn’t it a gas reading the MSM reports on this Buffet offer?! “BUFFET RIDES TO THE RESCUE!” The guy offers to take the monolines’ best customers, leave them with the mortgage rubbish and the stock market jumps? Hilareous!
Home loans drop 35%, lenders say
Borrowing costs should ease this year, lenders say
The number of new mortgages granted to home buyers slumped to just 62,000 in December 2007, according to the Council of Mortgage Lenders (CML).
The figure was 35% lower than at the same point a year ago.
http://news.bbc.co.uk/1/hi/business/7240525.stm
But it will get better,it wil ,it will, it will.
“The figure was 35% lower than at the same point a year ago.”
Luckily for would-be sellers, a 35% drop in the number of new mortgages has no implications for demand (snigger).
Yep, we’ve reached the Wile E. Coyote stage in the UK, support
for these prices has disappeared and gravity is about to kick in.
Can anyone tell me when prices in the US ran off the road, and how long it took before they actually started plummeting into the canyon? Beep! Beep!
Descent has started but we are still strapping on the parachute (Unfortunately, it too has a big Acme sticker on it.)
The parachute pack seems strangely heavy. The roadrunner was last seen replacing the original contents with a lead anvil.
Is this the part where Wile E., realizing he has no parachute, spins his legs wildly midair in an attempt to remain aloft?
Post-Enron Fixes Solved Nothing, As Mortgage-Related Mess Shows
In 2001, politicians saw Enron’s collapse as an unprecedented market failure needing an unprecedented remedy: the Sarbanes-Oxley corporate “reform” act.
Yet, as the mortgage crisis shows, no law can protect investors and the economy from catastrophic misjudgment — and Sarbanes-Oxley may have made things worse.
Enron failed because it overvalued its assets while undervaluing its liabilities. It was easy for Enron to do this because many of its assets were difficult to value. They were worth what Enron said they were — until the market decided otherwise.
http://www.ibdeditorials.com/IBDArticles.aspx?id=287624116208204
GM “misleading” results….
GM hits $.08 profit vs. $.54 expected loss. HUGE BEAT!
Oh… wait. They added in a $1.6 billion tax break. $2.77 a share. OOOPS. They didn’t beat by $.62, they missed by $2.15
Not sure, I am still crunching. The earnings from Asia were high. The $1.6B if used for additional writedowns - might be a wash.
Would love to hear what you have to say about it after the crunching.
If (with capital ‘if’) GM keeps its current projects in place, I would not be surprised (nor should any body ) to see earnings far in excess of $3.08 pershare for 2008. If the dollar drops the 15% I estimate, GM can earn as much as $4.50/sh
You sure don’t have to go far these days before hearing/reading the ‘woe is me’ snippets such as: ‘t-h-e-y told me..’, ‘I never expected..’, ‘who’s going to help me..?’, ‘what can I do now..?’ pleadings. It’s been said again and again, what the hell happened to personal responsibility/consequences for making bad decisions in life? I’m afraid we’ve seen the end of people admitting that they were/are the source of their financial troubles. Today’s New York Times had another of the endless stream of articles about people over their heads (including a six-figure salary Lockheed engineer in trouble) in debt: http://www.nytimes.com/2008/02/12/business/12credit.html
on Cauto last night a new company Mail in the kets dot com for $900 they tell you how long you can stay plus a meeting with a lawyer and a credit manager alreadt hundreds of customers
Comment by Professor Bear
Heard on NPR’s “All Things Considered” yesterday evening:
“On Brittain Street in Akron, a lit-up sign with an exotic dancer on it stands as a testament to just how seedy and strange parts of the housing industry became in recent years. Willan was allegedly laundering money from his mortgage fraud ring through this strip club.”
..Bada Bing
Willan sounds to me like a typical mortgage industry businessman just trying to get by in life…
I need and education….please comment on the following form Bernstein
http://tinyurl.com/2r3o7s
particularly “Nevertheless, the broad US economy is being bolstered by increases in commercial construction and—more importantly—by dramatic growth in exports, aided by a weaker dollar. Significantly, the housing sector represents just 4% of America’s GDP, while exports make up 12%.”
professor please educate me.
The problem isn’t the loss of 4% of the economy represented by “the housing sector”.
The problem is that people have been spending 10% more than they make, largely by borrowing against rising house prices. That is 10% of 66% of the economy = 7% hit JUST from people having to live within their means.
Then there is the hit to the financial sector. Lenders, banks and brokerages have been making huge profits originating and servicing all that debt. As originations and fees turn into default and loss, that is another huge segment of the economy that will be crashing. Already tens of thousands of layoffs of high paying jobs, and lots more high paying jobs that were based on comission that are getting much smaller.
Now let the cut-backs ripple through the economy.
Top policy makers are keeping a brave front, while publicly ignoring many of the uncomfortable facts you mentioned in your post.
“the housing sector represents just 4% of America’s GDP”
BwaHaHaHAAAA!
The entire moral of this story: If you invest $700,000 of stolen money in a strip club, don’t get caught stealing money from your stripper girlfriend’s till.
OK I’ll remember that
test
http://money.cnn.com/2008/02/12/news/newsmakers/warren_buffett.fortune/index.htm?postversion=2008021208
I think Warren has found a few naked swimmers.
Northern VA January numbers are in and they are the worst they have EVER been. Let’s look at Fairfax County VA. Recently named the wealthiest county in the US by Forbes.
———— / Jan 2008 /Jan 2007 / % Change
Avg. Price / 472k / 531k / -11.3%
Median Price / 395k / 456k / -13.4%
Units Sold / 538 / 1004 / -46.4%
http://www.mris.com/reports/stats/route.cfm
The MRIS data for PWC under $500K shows that in Dec 07 there were 354 (and 115 of those $400-$500, so only 239 under $400K) home sales http://www.mris.com/reports/stats/. The PWC government website http://www4.pwcgov.org/realestate/LandRover.asp shows that there were 1,052 sales, of which: 592 (56%) were purchases by mortgage lenders (foreclosures), 157 (15%) were sold by mortgage lenders, 303 (29%) were regular sales or properties not bought or sold by banks. The really scary thing is, the 303 regular sales would also be where any short sales would be hiding as well.
http://spreadsheets.google.com/pub?key=pO0ZuHiGfORq2fd8Gv69dJQ
Ouch - same for Loudoun county (which is the wealthiest per-household in the country, per U.S. census). Down big this past month - 370k vs. 506k at the peak. Ouch.
“It’s a credit problem. Not liquidity. Lower rates don’t make a bad deal work.”
To me it’s a rate of return problem. Who wants to invest in real estate mortgages at current interest rates and asset values? Not me. The rate of return is too low, and there is every possiblity you won’t get it.
Higher rates on CMBS would require higher cap rates, which would require lower sales prices relative to rents and vacancies. Rents and vacancies are likely to worsen in a recession but not so much, because (except perhaps retail) there wasn’t much overbuilding. The problem is the price.
I think the reason no CMBS were issued is the same as in the for-sale housing market a year or so ago — sellers holding out for peak prices, buyers holding out for low interest rates.
Return of the principal, you say?
“The rate of return is too low, and there is every possiblity you won’t get it.”
As Matt_in_Tx points out, there is also a good possibility you will not get back your principle.
Project Lifeline - Bush Administration’s latest scheme to show they care about the ‘Help me! I think I’ve fallen in debt again’ mortgage trouble dopes.
..counting the days till the Bush fun bunch is out of there. They came, they f__ked up, they rode off - just like the black hats in the cowboy movies.
“We resent a philosophy of government that tells fairy tales in November and ghost stories in January.”
Adlai E. Stevenson, Jr.
veni, vidi, vici. Most are oblivious.
“To announce that there must be no criticism of the President, or that we are to stand by the President, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public.”
Theodore Roosevelt
But the damage they inflicted on our Constitutional protections and to principles of int’l law will far outlive their tenure in office.
Not likely to appreciate this comparison.
“…In just a year and four months since his appointment as undersecretary for domestic finance, Steel has quickly become known as Treasury’s go-to guy on Wall Street’s credit woes and the housing downturn. Among Treasury’s senior staff, he has the unique advantage of sharing a close, Batman-and-Robin-like relationship with Paulson, fashioned over nearly 30 years together at Goldman Sachs. After Paulson was anointed the investment bank’s chief executive in 1999, Steel became his vice chairman in 2001….”
http://tinyurl.com/2579zz
Washington Post
Batman and boy blunder. How close is their relationship? Is it going to last? Will they have to get married in MA?
Holy out of control finances, Batman!
Need to send them to NV first … bigamy is illegal in MA. Unless their wives have already divorced them in disgust?
Next Up for the Golden Parachute..AIG’s Sullivan
Feb. 12 (Bloomberg) — American International Group Inc. Chief Executive Officer Martin Sullivan may find his job at stake after an accounting lapse led to a bigger-than-forecast drop in the value of the company’s holdings.
Shares of AIG, the world’s biggest insurer, fell the most in two decades yesterday after it said contracts sold to protect fixed-income investors against losses declined by $4.88 billion in October and November, four times more than a previous estimate. Sullivan had assured investors in December that the writedowns, tied to the U.S. housing market, were “manageable.”
Credit Suisse Net down 72%…
Feb. 12 (Bloomberg) — Credit Suisse Group, Switzerland’s second-biggest bank, said fourth-quarter profit fell 72 percent on lower after writedowns of 1.3 billion Swiss francs ($1.2 billion) on debt and leveraged loans.
Net income dropped to 1.33 billion francs, or 1.21 francs a share, the Zurich-based bank said in a statement today. Credit Suisse rose in Swiss trading after Chief Executive Officer Brady Dougan said in an interview that he expects to see “more constructive markets” by the middle of the year.
Credit Suisse marked down the value of holdings after rising U.S. subprime-mortgage defaults led to more than $145 billion in writedowns and loan losses at the world’s biggest financial companies.”
So, If the (million’s) homeowners are tapped out financially (can not service their interest debt), who is going to “eat it”. Well, it looks like the lender (whether pension funds, insurance companies, foreign investors, etc.).
So who will lend funds for mortgages in the future? How high do you think the interest rates will be after this market stabilizes?
We do not need the FED to raise interest rates, because I suspect the market will, if new homeowners want a mortgage!
Down the “rabbit hole, we go!”
last time I checked, mortgage rates were separating from federal funds rate. Maybe things have changed.
The War Prayer
It was a time of great and exalting excitement. The country was up in arms, the war was on, in every breast burned the holy fire of patriotism; the drums were beating, the bands playing, the toy pistols popping, … in the churches the pastors preached devotion to flag and country and invoked the God of Battles, beseeching His aid in our good cause in outpouring of fervid eloquence which moved every listener.
“O Lord our God, help us to tear their soldiers to bloody shreds with our shells; help us to cover their smiling fields with the pale forms of their patriot dead; help us to drown the thunder of the guns with the shrieks of their wounded, writhing in pain; help us to lay waste their humble homes with a hurricane of fire; help us to wring the hearts of their unoffending widows with unavailing grief; help us to turn them out roofless with their little children to wander unfriended the wastes of their desolated land in rags and hunger and thirst, sports of the sun flames of summer and the icy winds of winter, broken in spirit, worn with travail, imploring Thee for the refuge of the grave and denied it—for our sakes who adore Thee, Lord, blast their hopes, blight their lives, protract their bitter pilgrimage, make heavy their steps, water their way with their tears, stain the white snow with the blood of their wounded feet! We ask it, in the spirit of love, of Him Who is the Source of Love, and Who is ever-faithful refuge and friend of all that are sore beset and seek His aid with humble and contrite hearts. Amen.”
Mark Twain
oh man, I love that guy…
No recession forecast per President Bush and his economic staff
“…Lazear said yesterday that when the government has extended unemployment insurance in the past, the jobless rate has been 5.7 percent or more. It was 4.9 percent in January.
“It would be unprecedented to extend unemployment benefits at a time the unemployment rate is 4.9 percent,” he said. He said that the stimulus bill passed last week will create a half-million more jobs than would have been created otherwise….”
http://tinyurl.com/2fucu2
Washington Post
In a discussion of the problems in financial markets, which now appear to be bleeding into the broader economy, the president’s report argues that imbalances in such markets need to be allowed to work themselves out, suggesting that there will be no major government intervention in the troubled markets for complicated forms of debt.
I apolgize for being stupid, however do you really think that the unemployment rate is this low considering the outsourcing of employees to independent contractor status?
You also have to add 2% for the difference in imprisonment rates between the USA and elsewhere.
Lostcontrol…. you mean that other 10% of the working population who are under employed and never get counted as unemployed? You mean THOSE independent contractors?
Yes, that plus the other independent contractors or are receiving less pay and no benefits, because they were forced out of their regular jobs.
Guys–
We know the government is lying about unemployment. We also know that unemployment is still relatively low for natives in this part of the business cycle due to Mexican construction workers repatriating themselves.
Before we go hysterical, let’s keep in my that we are nowhere near severe unemployment levels. I have friends in Europe … believe me, it gets worse.
It seems silly to be quibbling now, when the pain that may come if layoffs really get rolling will make this all look easy.
And as we send Mr. Paulson to China to beg for more dollars, China gets stabbed in the back again.
Huawei rails at 3Com deal security concerns
“…He added there was no need to change the terms of the $2.2bn deal, under which Bain Capital, the US private equity firm, is seeking to buy 83.5 per cent of 3Com, the US network equipment maker, with Huawei taking the remaining 16.5 per cent.
The deal has sparked concerns in the US because 3Com supplies intrusion prevention technology to the US defence department, designed to protect the Pentagon against cyber attack. The Pentagon believes that hackers in China conducted a massive cyber attack on its systems last year.
Thaddeus McCotter, chairman of the Republican policy committee in the House of Representatives, last month urged US authorities to deny Huawei any part in the 3Com deal, describing the existing buy-out proposal as a “stealth assault on America’s national security”.
Asked about the concerns that the deal could endanger US national security,…”
http://tinyurl.com/yuu6bd
FT \
Feb 11
It is only going to get more difficult to get cooperation from China when the US attempts to bar rational investment. I do not expect this to happen but a ‘what if scenario’; China forces US liquidation of US company assets in China at original investment prices. There are riots in China over this stalled minor investment in the US. We need China as much as they need us.
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
Joan Robinson, Cambridge University
I never met an economist that wouldn’t be missed.
Nice!
I can hear the arguments now that the mortgage servinging companies(read CW, WF, BOA, JPM, eta al) are making to the lenders of their toxic waste. We can not let the mortgage holder “walk away” from their mortgages. What they are not saying, is that they will suffer also, because they also have the toxic waste on their balance sheet.
So, to protect the lenders (and themselves), the lenders will have to eat the costs in the re-balancing (read reduction of interest and principal).
God, I love the way business operates!
Its a shame that I am neither smart enough or low enough to play this game (screw your client while telling him/her that you are helping them)!
what hypcracy!!!
Scrutiny Tightens for Title Insurers
By John R. Wilke
Word Count: 1,069 | Companies Featured in This Article: Fidelity National Title Group, Fidelity National Financial, First American, LandAmerica Financial Group, Stewart Information Services, Wal-Mart Stores
The collapse of the housing boom is bringing harsh new scrutiny to the $17 billion title-insurance business, including allegations that insurers colluded illegally and paid kickbacks to agents or brokers to get business.
In the latest legal challenge, an antitrust suit filed Feb. 1 in federal court in Brooklyn accuses the four firms that dominate title insurance nationwide of illegally fixing prices in New York state. Although insurance firms have limited immunity from antitrust claims because state regulators approve their rates, the suit accuses title firms of concealing improper costs underlying their rate requests.
http://online.wsj.com/article/SB120278805957961351.html?mod=todays_us_nonsub_page_one
Title insurance kickbacks were discussed openly on the pages of Money magazine in 2005, and they’re only prosecuting now?
Chicago - it’s different here … again
Still Selling: Some Area Zip Codes Still Hot
Typical Chicago RE reporting - interview someone who has a vested interest in promoting sales and take it as gospel.
Note: according to that story the SFH market time in my hood - 170 days. Sure, and Lincoln Park and the West Side are lower. That is because these busts always start on the margins and work their way inwards.
Keep watching, once the financial houses really start the layoffs it will get really interesting closer to the Loop. In the meantime, the fact that nearly every single middle class Chicago household has at least one well paid civil servant will likely slow the decline. Of course, that’s only until the city, county and state governments take a closer look at their tax receipts.
Still good here, too SF Chron–”While home values have tumbled across the country, the San Francisco region has pockets of strength where prices continue to rise, albeit modestly compared with the double-digit appreciation of recent years. Not surprisingly, those strongholds are uniformly in affluent areas.”
Link to the pretty “up” picture– “down” washes into the background
http://tinyurl.com/39pxou
Full article
http://tinyurl.com/3drw2e
New chapter in the unraveling of the Great Credit Bubble? The article suggests this development only dates to last Thursday.
Student-Loan Issues Under Stress
By Liz Rappaport and Karen Richardson
Word Count: 745 | Companies Featured in This Article: Goldman Sachs Group, J.P. Morgan Chase, Citigroup, Sallie Mae, American International Group, Standard Chartered
Securities tied to student loans, another seemingly safe corner of the credit markets, are succumbing to the credit crunch.
Wall Street’s financial-engineering machine bundles together long-term student loans and uses them as collateral for short-term investments owned by money-market investors. Since Thursday, auctions of these securities conducted by Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Citigroup Inc. have failed to generate investors’ interest, leaving roughly $3 billion of such securities in a sort of limbo.
http://online.wsj.com/article/SB120269672731158043.html?mod=todays_us_nonsub_money_and_investing
Not in limbo at all, they’re now inventory of the underwriters. I expect they will be reclassified from “held for sale” to “holding to maturity” to avoid mark-to-market. So first all of these bright boys get their firms stuck with MBSs, then LBO loans, and now student loans. I guess next they’ll stick their employers with collateralized auto loans and credit card balances.
Who will prevail in this battle between the Wisdom of Crowds and “The Experts”?
Economy
Economists Weigh Recession Scenarios
by John Ydstie
Lindsay Mangum, NPR
(The National Bureau of Economic Research does not consider a recession as two consecutive quarters of economic decline. Rather, according to the NBER, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months. (Enlarge to see details on the past four recessions.))
All Things Considered, February 11, 2008
…
Recession or Not?
It’s hard for officials to even utter the word “recession.” They have to keep a stiff upper lip and try to keep confidence high — but it’s possible that battle is already lost. A new Associated Press-Ipsos poll reported Monday that 61 percent of Americans believe the country is already in recession. More and more economists are also moving into that camp.
http://www.npr.org/templates/story/story.php?storyId=18893141
ECONOMIC REPORT
Small-business optimism gauge falls to 17-year low
By Rex Nutting, MarketWatch
Last update: 10:29 a.m. EST Feb. 12, 2008
WASHINGTON (MarketWatch) — Small businesses are battening down in expectation of a recession, according to a survey released by a small-business group on Tuesday.
The National Federation of Independent Business index of small-business optimism fell by 2.8 points to 91.8 in January, the lowest since January 1991.
“The index is sending a recession signal,” said NFIB chief economist William Dunkelberg, who noted that hiring plans are currently much stronger than they were in 1991.
“This is not good news, no matter how anyone tries to spin it,” wrote Joshua Shapiro, chief economist for MFR Inc. The decline in the NFIB index “corroborates the steep drop in the ISM non-manufacturing index in the month, a move that was greeted with suspicion by some given its precipitous nature.”
http://www.marketwatch.com/news/story/small-business-optimism-gauge-falls-17-year/story.aspx?guid=%7B8D8DF7EB%2DC9FE%2D4F9E%2D9C48%2DA6A5F0848B20%7D
Unintended consequences of a weak dollar policy
Growers’ profits wilt
A U.S. economic slowdown and a devaluation of the dollar have hurt the flower industry that’s so vital to Colombia
“…Prices for flowers remain flat. The falling value of the U.S. dollar has turned profits into losses. Several farms have closed, laying off thousands of employees. And a trade deal that would give Colombian flowers permanent duty-free entry into the United States may be rejected by the U.S. Congress.
“The business has always faced difficulties, but never more than now,” said Augusto Solano, president of the Colombian Association of Flower Exporters, a trade group in Bogotá.
Part of the problem is heavy reliance on the United States, where nearly six of every 10 flowers sold are imported from Colombia.
Amid an economic slowdown, the U.S. dollar has lost more than one-third of its value against the Colombian peso….”
http://tinyurl.com/23v7lr
Houston Chronicle
Time for Columbia to go back to the ag export they do best.
“Time for Columbia to go back to the ag export they do best.”
Coffee?
Bad news…
I heard Juan Valdez ended up owning 7 SFH’s in Sacramento.
He’s lost 3 of them so far.
You can’t be serious, PB!
You haven’t heard of the, er, nose candy?
I once heard a grad student give a talk about the potential for cassava to become a far more important export crop for Colombia. A wise commentator later suggested to me (over beer) that the talk would have been far more interesting if it had focused on the crop you mentioned.
Columbian flowers are laced with pesticides.
The pesticides used on flowers are a big problem for the workers who tend the flowers, particularly in non-US greenhouses, where companies sometimes use highly toxic chemicals that are banned in the US. Crew bosses often force workers back into the flower houses too soon after spraying, exacerbating the workers’ exposure to the pesticides. (For an excellent overview of such problems, see this Environmental Health Perspectives article on the subject.)
Pesticides on flowers can also be a problem for anyone who handles the flowers—including consumers—since many pesticides are easily absorbed through the skin. And because flowers are not a foodstuff (except in the case of our one weird cousin), the pesticide residue on them is not regulated by the US government.
” Crew bosses often force workers back into the flower houses too soon after spraying, exacerbating the workers’ exposure to the pesticides. (For an excellent overview of such problems, see this Environmental Health Perspectives article on the subject.)”
And these are the “free markets” the ideologues want you and I to compete against. Exposure to pesticides and the resultant disease is what the free market demogogues want for you.
Nice huh?
Ex, it goes on here in the U.S. too, big time. Illegals are often exposed to pesticides (legals, too, for that matter). The aerial sprays drift and affect people in a 20 to 30 mile radius. It’s often just as blatant as the Columbia stuff. Utah had a big problem a few years ago when some reporter did an expose on several illegals dying in the orchards. (Source is somewhere in the Salt Lake Tribune archives.)
yeah, it’s a shame they didn’t give them the duty free deal on nosegays, because we’re pretty sure that other stuff is duty free already!
New Mortgage Rescue Goes Beyond Subprime
By MARCY GORDON
AP Business Writer
WASHINGTON
Tuesday, February 12, 2008 07:29:27 AM PT
At-risk borrowers with all types of mortgages, not just high-cost subprime loans, could be eligible for help under a new plan involving six big home lenders.
The plan, called Project Lifeline, will be announced Tuesday by the Treasury Department and the Department of Housing and Urban Development, said a person familiar with the plan who confirmed earlier news reports about the plan but spoke on condition of anonymity because it had not yet been made public.
Against a backdrop of surging defaults and administration officials’ prodding of the mortgage industry, the plan will allow seriously overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loan terms.
On a pilot basis, the plan will involve six of the largest mortgage lenders, in hopes that more lenders will sign on. The participants are Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., JPMorgan Chase & Co., Washington Mutual Inc. and Wells Fargo & Co.
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8UOQBD81&group=ap.online.headlines.business
I think the big home lenders who made loans that could only be repaid through refi or home sale are getting very nervous. To avoid foreclosure they’re going to follow the lead of the homebuilders. The initial modifications will not involve principal forgiveness. Think of this as the “free” upgrades and other incentives. After that doesn’t work the banks will pressure the FDIC and SEC to allow loss deferral on workout forgiveness (builder equivalent of price reductions). Restructure a defaulted loan and amortize the loss over 10 years instead of taking an immediate accounting charge to net worth. After that doesn’t work I have no idea what the bankers will do? Wish the problem away to the cornfield?
So I was poking around my credit union’s website, and after the Fed cut - the interest rate actually rose .25% overnight for a new mortgage. I think that mortgage rates aren’t going to track the fed like usual. Anyone else notice this?
They never really do . . . it’s a common misconception. Mortgage rates track much closer with 10-year treasuries.
a friend of mine is getting her masters in tax at american university. this peson is speaking and she may have a chance to ask questions.
http://en.wikipedia.org/wiki/Bill_Thomas
just wondering if yall could come up with any good ones for her that may incorporate the housing crash, bubble economies, etc.
thanks for any suggestions in advance.
Well, since he went to Santa Ana Community College & Bakersfried City, ask him if he thinks those are good places to buy $500,000 houses on the cheap or would Chula Vista provide better investment opportunities?
METALS STOCKS
Gold drops on IMF sales reports; platinum gains
By Polya Lesova, MarketWatch
Last update: 10:45 a.m. EST Feb. 12, 2008
NEW YORK (MarketWatch) — Gold futures dropped to trade near $922 an ounce on Tuesday, pressured by reports of upcoming gold sales from the International Monetary Fund.
Gold for April delivery declined $4.20 to $922.50 an ounce on the New York Mercantile Exchange.
“Gold has held above $920, but appears to be carrying out some consolidation following the IMF sales news,” said James Moore, an analyst at TheBullionDesk.com, in a research note.
“However, the fact that dips are still drawing very strong buying interest, and with the rest of the precious complex pushing higher, it seem likely gold will follow,” and eventually challenge its recent high, Moore said.
http://www.marketwatch.com/news/story/gold-drops-imf-sales-reports/story.aspx?guid=%7B45893B12%2DCC9C%2D4A01%2D966C%2DA690EBC7503A%7D
Remember when they could jawbone the price down $30 with an imaginary gold sale by some central bank? Those days are over.
The IMF sales won’t affect the market price of gold. Asian CBs have less than 5% of their reserves in gold. As part of their diversification plan they want to move some US dollars into gold. This is a way they can do it without pushing up the open market price. What will happen is that in the BOE vaults bars will be moved from a cage labelled IMF to cages labelled PRC, ROC, Singapore, Thailand, etc. While at the FRB-NY credit balances will shift from the gold buyers to the IMF. What will the US-dominated IMF do with its new dollar balances? Probably buy the Treasuries that the Asian CBs sold to buy the gold.
txchick - is it time for some puts yet?
I just dumped all my index calls, BIDU stock and Yahoo stock. Probably not ripe for puts yet but soon. My current concern is getting over this ebola I have had for a month now.
Did you get a flu shot? (I highly recommend this if you do not routinely get them every year…)
No I don’t do shots. I prefer to be sick for 6 months
Maybe allergies ?
No, it started out as flu then I got the freakin’ measles and just when that started to go away, the flu came back and now it’s a disgusting cold. Right now, a double barrelled shotgun sounds good.
Don’t do it. I am truly sorry for saying hurtful things which I did not mean last December.
Don’t worry about it. The only thing you could say that would hurt me is that I’m a lousy trader. Even then, you’d have to prove it.
The only thing you could say that would hurt me would be to comment on my passive-aggressive tendencies, and it only hurts cause it is too close to the truth.
Chick, think of all the lost souls that need you (cat and dog souls)! Get better!
Perhaps allergic to Amway and real estate types.
and jehovah’s witlesses
When Buffet speaks everyone listens.
On that note - remember E. F. Hutton with their catchy slogan? A quick search revealed the following below (short version) - funny stuff given the current landscape.
May 2 1985
Hutton agreed to plead guilty to 2,000 counts of mail and wire fraud, as well as pay a $2 million fine plus $750,000 for the cost of the investigation. Hutton also agreed to pay $8 million in restitution–the estimated extra income earned from the fraud. In return, Curnin wrung two major concessions. First, no Hutton executives would be prosecuted (even though the government determined that 25 senior officers masterminded the scheme). Second, the Securities and Exchange Commission allowed Hutton to stay in business; guilty pleas of this magnitude usually result in an individual or firm being permanently barred from the securities industry.
http://en.wikipedia.org/wiki/E.F._Hutton_&_Co.
Not a lot of volume in this rally - should bode well.
Inflation hedge idea: Forever Stamps. Get’em while they last.
‘Forever’ Stamps Save Time, Not Money
By Allan Sloan
Tuesday, March 13, 2007; Page D02
Okay, you’re sitting around dealing with Big Financial Questions. Where’s the stock market going? Will your 401(k) be fat enough for you to retire on caviar rather than cat food? How are you going to pay your kids’ college tuition? Forget all that small stuff. Your new Big Economic Challenge for 2007 comes down to this: Should you speculate in U.S. postage stamps?
Stamp speculation usually means buying collector-quality issues and seeing whether they rise in price. But starting this spring, the U.S. Postal Service will offer you a new way to play the stamp market: the Forever Stamp.
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/12/AR2007031201428.html
In this modern day and age with online banking, how many stamps do you use annually? 30? 40? 100?
Let’s go with 100.
That’s $40 annually. Let’s say it doubles. Should I really care?
Even if you are a business hopefully you should be covering your mailing costs.
Stamps were 4 Cents when I was a wee lad…
Inflation has rocked my world, to the order of 10.
3 cents when I was a tyke. I remember the 1 cent increase which did away with the Statue of Liberty (3 cent) and brought in Honest Abe (4 cent).
To track the true cost of living plot the price of a first class stamp then hand-draw a smooth, fit line (curved or straight, whichever fits best). Extrapolate a bit to get the current cost of living increase.
To get a feel for the local economy, compare the number of times you get brand new Federal Reserve Notes from the ATM to the number of times you get used Federal Reserve Notes. If you always get used notes over a period of months then the local economy is flat or contracting.
With today’s run up in the stock markets (DJIA, NADAQ, and S&P 500), its nice to know there are still “kool-aid” drinkers willing to take the plunge that “things have changed”!
Their efforts have and will continue to set a market “price” for these stocks all the way to the bottom!
Just because it turns out that real estate does not always go up is no reason to give up hope that maybe the stock market will always go up.
I apologize and please do not misconstrue what I have to say, but are you serious?
there’s some tongue in his cheek
Like I’ve mentioned before, the Prof has a PhD in irony. From a top university, I might add.
Project Lifeline
http://www.stockmania.com/?q=node/2177
Lostsa purchasers for future $500k starter homes and trade up McMansions here.
GM with a $39 billion loss. It’s incomprehensible….
http://biz.yahoo.com/ap/080212/earns_gm.html?.v=20
Survivalist conference…
REAL ESTATE
Clouds forming over Orlando
Home builders, in survival mode, head to annual conference
By Amy Hoak, MarketWatch
Last update: 7:31 p.m. EST Feb. 11, 2008
CHICAGO (MarketWatch) — These are dark days for home builders, many of whom are desperately trying to sell off excess housing inventory.
Prospective buyers, concerned that prices will drop even more than they already have — not to mention jittery about the prospect of a recession — aren’t showing up at models and information centers as they once were. And while mortgage interest rates are low, stricter standards to be eligible for those loans are keeping some buyers sidelined. In the meantime, new homes are facing competition from the many existing homes on the market as well as a growing number of foreclosures.
All of this serves as a dismal backdrop for the annual International Builders’ Show, being held in Orlando this week. So far, it appears that market conditions are affecting attendance: Although figures aren’t finalized until after the show, planners said that the number of attendees who registered in advance is down about 12% compared with last year.
http://www.marketwatch.com/news/story/home-builders-seek-survival-tips/story.aspx?guid=%7BF1B2922A%2D8099%2D4A92%2D8A34%2D96A592930654%7D
IndyMac Posts $509.1 Million Loss as U.S. Housing Slump Deepens.
Feb. 12 (Bloomberg) — IndyMac Bancorp Inc., the second- biggest independent U.S. mortgage company, posted a fourth- quarter loss as the housing slump continued into its third year and said it was suspending its dividend “indefinitely.’’
The net loss was $509.1 million, or $6.43 a share, compared with a profit of $72.2 million, or 97 cents a share, in the year-earlier period, the company said today in a statement. The average estimate of seven analysts surveyed by Bloomberg was a loss of $1.57 a share.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGtinjJk8ylg&refer=home
Walked by a news stand this am by the gym and saw that the SF Chronicle was running a housing story on their front page. Ben might want to look it up.
Wow, nice fade. Just doesn’t seem like any rally can stick.
Gee, there’s a term for that …… BEAR MARKET!
Now your jinxing us with 10 minutes left.
This is good one…
This tool wants to sell thier house for $240,000, then rent it back for only $1000/month.
Good luck with that!
http://tinyurl.com/yvgwgr
“…Since 1998, there have been 44 bids valued at more than $10 billion that were initially considered hostile by the board of the target company. Of those, 18 bids, or 41 percent, led to a completed transaction. But 20 of them, or 45 percent, were withdrawn without a deal.
At first glance, those figures might not bode well for Microsoft’s $44.6 billion Yahoo bid. But the results skew the other way when you focus on the biggest of the big hostile bids.
Among the top 10 hostile bids in the last decade, 6 have led to completed deals, 2 were withdrawn and 2 are still pending. One of the withdrawn bids was Elf Aquitaine’s failed attempt to mount a “Pac-Man” defense by offering to buy its hostile suitor, the oil conglomerate TotalFina, whose bid succeeded. …”
Dealbook (NYT)
find the dealbook option monster on Santander Bank. I believe tomorow might be the day for go long big fish swallowing whole the guppy. SOV might swallow tommorow.
the game changes again. Things that cant happen will start happening and people will start to wake up.
PwC kiaboshed a bank, and it moved higher….who’s running the books and signing off? Keating 5 is still in the joint…
While one candidate’s spouse plays the attack dog role, another’s keeps the candidate grounded. I wonder which of these strategies is more likely to succeed with American voters?
Obama’s wife helps add the human touch
By Edward Luce in Washington
Published: February 12 2008 18:58 | Last updated: February 13 2008 01:46
Anyone fearing Barack Obama is succumbing to a “Messiah complex” might be disabused by observing his wife, Michelle Obama, on the campaign trail. An increasingly effective advocate for her husband, Mrs Obama has a tendency to remind people of Mr Obama’s less glamorous qualities.
Having revealed that Mr Obama snores, leaves the butter dish outside the fridge and drops old socks around their three-storey home in Chicago, Mrs Obama was chided by some for apparently impairing her husband’s dignity. Maureen Dowd of the New York Times even accused her of “emasculating” Mr Obama when she should have been elevating him.
http://www.ft.com/cms/s/4de5484c-d999-11dc-bd4d-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F4de5484c-d999-11dc-bd4d-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
just one for the record.
Its gonna be Santander.
8.50 on Santander is in the money.
I really do not make this up.
Seriously,
whose running the numbers on Santander? Whose signing off? I want answer?
Whats the TAF doing? Why are the SWF’s buying so much treasury debt? Why does FED pass long bonds when China is shut down? Why does a 400 bps spread not manifest in the Treasury Market?
Rates mean something.
Senate votes EXPANSION of Spy Powers and protects Phone cos.
well there ya have it.
WTF.
Who is running this country anyway…oh I forgot that idiot and his “Have mores”.
The Short View: Credit rescue?
By John Authers, Investment Editor
Published: February 12 2008 19:10 | Last updated: February 12 2008 19:10
Normally, a beleaguered chief executive is delighted to get a call from Warren Buffett. It may mean the company share price is about to rise.
But the Sage of Omaha’s offer to shore up the monoline bond insurers’ guarantees of municipal bonds was not received that way. One of the three insurers has already turned it down.
It is easy to see why. Mr Buffett is only interested in their muni bonds, the source of their easiest money. He is not interested in the toxic collateralised debt obligations (CDOs) that have brought them to their knees. And he is not prepared to buy their stock.
http://www.ft.com/cms/s/0/a9266bda-d996-11dc-bd4d-0000779fd2ac.html
Hemlines drop at London fashion week
Jess Cartner-Morley, fashion editor
Wednesday February 13, 2008
The Guardian
If hemlines really do rise and fall along with the stock market, the economic forecast for next winter from the London fashion week catwalks is not encouraging. Christopher Kane and Marios Schwab, two of the hottest names in the British fashion industry, yesterday turned their backs on short, sexy dresses in favour of ankle-grazing hemlines and sombre shades of grey.
While Kane’s collection might be a bad omen for the economy, it was great news for the British fashion industry, which has pinned high hopes on the 26-year-old Scottish designer.
http://lifeandhealth.guardian.co.uk/fashion/story/0,,2256025,00.html