Bits Bucket And Craigslist Finds For February 14, 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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Feb. 14 (Bloomberg) — UBS AG won’t buy auction-rate securities that fail to attract enough bidders….
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBWFmXciVohM&refer=home
More wonderful news for UBS, and the boyz are in rally mode?
UBS Is Expecting a Difficult 2008
ZURICH (Reuters) - Swiss bank UBS has revealed $26.6 billion in exposure to risky U.S. mortgages distinct from subprime loans, increasing its vulnerability to the global credit crisis and sending its shares sharply lower.
Shares in the bank, which declined to say if it would return to profit in early 2008, were trading down 5.9 percent at 38.46 francs at 5:45 a.m. EST.
UBS said on Thursday the newly unveiled exposure, announced together with full-year and fourth-quarter results, was to so-called Alt-A mortgages, which are of higher quality than subprime loans but also considered risky.
UBS has taken about $18 billion of dollars in write-downs on its exposure to U.S. subprime mortgages, which at the end of December amounted to a net $27.594 billion, making it one of the biggest casualties of the global credit crunch.
http://www.nytimes.com/reuters/business/business-ubs-result.html?hp
Bank of America Corp. estimated in a report that 80 percent of all auctions of bonds sold by cities, hospitals and student loan agencies were unsuccessful yesterday….
The failures show the widening impact of the bursting of the U.S. housing bubble….
Bonds are @ the Mendoza Line, in terms of batting average…
http://en.wikipedia.org/wiki/Mendoza_Line
aladinsane: Mendoza Line. And I thought I knew baseball.
It’s a can of corn, that many bonds won’t be back next season.
So we’re saying these bonds definitely *weren’t* on steroids?
‘It’s a can of corn’
I also like ‘high cheese’, ‘put some pepper on it’.
I have no problem remembering food-based cliches or colloquialisms or whatever those phrases are, but I simply cannot get any other sort right. Years ago I told someone I was ‘going to peel my eyes’ (instead of ‘keep my eyes peeled’), and on that day I stopped using cliches. It seemed better that way.
My favorite was always “chin music.”
“More wonderful news for UBS…”
I am glad, the pain couldn’t have been inflicted by Economic Gods to a nicer bunch of people! UBS, HSBC and Citi. They are all richly deserving.
The fools who run an adjacent county saw the interest rate on their auction-rate variable bonds jump from 3% to 10%. The county supervisors are wondering from where they’ll get the needed extra cash. When interest rates were so low across the yield curve why didn’t the county borrow at a fixed rate? Seems like the county supervisors acted the same as foolish, irresponsible home buyers.
Exactly. I do not understand why people use adjusted rate at this historical low rate era. It makes more sense to use adjusted rate when it has historical high rate.
Yep, apparently the bond market is collapsing…
“…And the Swiss are having none of it. So, yesterday, New York City’s Health and Hospitals Corp.’s auction of $64.9 million failed. Likewise, the Port Authority (of New York and New Jersey), saw its auction debt soar to 20 percent on Feb. 12 from 4.3 percent a week ago.”
http://www.smirkingchimp.com/thread/12836
http://biz.yahoo.com/rb/080214/banks_mortgage.html?.v=3
We all knew this was coming. Any thoughts? It is hard to see even the spineless monsters we currently have running the show caving to this. But I don’t put anything past the morons in D.C.
I just read this in Wall Street Journal. I love my country, but I hate it’s ways. No wonder people in the world don’t like us. What losers that elected officials would even consider this with all of the other freebies they have been giving out.
Sick to my stomach.
If I could work up the negativity some of you guys do this early in the morning, I probably would never get out of bed.
I guess you haven’t noticed what’s going on. Last year, every REIC ‘expert’ was shouting rebound. Now, they all are screaming disaster. So which is it? Are you going to play along?
On the heels of the Dataquick numbers in California, this morning there is a big report on how unaffordable housing still is. If we on this blog can’t make the connection that what is happening is a overall positive, how do we expect the media and the public to do so?
Let wall street huff and puff. I tried to tell anyone that would listen, !in 2005!, that our experience in Texas was that people who are underwater generally walk away. Now we see even people who could afford the payments doing just that. What makes anyone think that people who CAN’T afford the payments will want to hang in there? Jeebus, where’s my coffee…
Yesterday our governmnet handed out $176 billion of “free money” and brought Roger Clemens before a committee about HGH. A little cynicism about these fools seems to be well-placed. They possess a combination of corruption and stupidity that should make everybody nervous. I don’t think that’s a sign of overwhelming negativity. I hope the coffee is good this morning. I don’t drink that sh-t.
Well it makes me want to puke. I am sick of these fools trying to save other fools from their own stupidity. From the big banks down to the FB’s, let them drown….consequences be damned. It is time for some personal responsibility to come back to this planet. I doubt anything will work at this point but it is just another kick in the balls to the hardworking savers who have done the right thing over the past few years.
Sorry, but you touched this one off.
What in the he** is Congress doing trying to figure out if a baseball player used steroids or not? How is this a matter of national importance that they need to address? This is either a legal matter (if he can be proven to have obtained the drugs illegally), or a MLB manner (should he be banned from the game). What the he** is Congress wasting time on this for, especially as VERY important issues are all around them; things that need their attention. It’s not like there is nothing better to do; the country is at war, the finanical markets are in crisis, the American citizen is WAY overextended on credit.. And the best thing you can do is figure out if these guys used LEGAL prescription drugs in an “off-label” manner? My god, this seriously blows my mind; what the heck are they thinking?
It’s easy camera time, plain and simple.
Does the MLB have a special monopoly exemption like the NFL? It becomes Congress’ inquisition when a blessed monopoly business (the MLB) is not regulating themselves correctly.
Since when has Congress ever cared about what a private business does? I also enjoy how the “ethics” committee has spoken out about Larry Craig (wide stance) yet failed to give a cr*p about someone who took $2 million in bribes (Duke Cunningham). When will they get our priorities straight?
The sports page used to be the only part of the newspaper where there were clearly defined winners and losers, but not so much, anymore.
One aspect of professional sports that’s going to be interesting, is all those big money long-term contracts, for tens and hundreds of Millions of Dollars.
I expect most of them to be voided…
When I was a lad, Sandy Koufax and Don Drysdale held out for $167k each in salary, in the year 1966.
Koufax pitched a perfect game in Sept 1965, and was the mvp of the world series that year, as well.
They were unsucessful, in their bargaining attempts…
Both the NFL and MLB have anti-trust exemptions, which is the excuse that congress uses to involve itself. Look at this way, if congress is grilling Clemens they can’t be busy doing the real damage that is done when politicians try to “solve” problems.
“What in the he** is Congress doing trying to figure out if a baseball player used steroids or not? How is this a matter of national importance that they need to address?”
J6P cares a lot more about whether Clemens used steroids than about whether and how Fannie Mae or Freddie Mac might be used to execute a housing bailout. To the extent that J6P and some of his pals make it to the voting booth, CONgress needs to show they care.
What in the he** is Congress doing trying to figure out if a baseball player used steroids or not?
Bread and circus my friend, bread and circus…
I think it’s now a good time for Congress to again hold hearings on the lyrics of rock’n'roll tunes and the visual content of computer games. A major election year is the best time for politicians to demonstrate how they protect our children.
I also think these Clemmons hearings are pretty foolish. But for the record, Baseball does have a special exemption from the Anti-Trust laws and therefore it is realistic that Congress hold hearings on MLB. These ones just happen to be silly.
Congress should investigate how many bankers were high on coke when they cooked up MBS’s.
Meanwhile, while the whole world was focused on whether some baseball player pumped up on HGH, the Senate voted in favor of allowing Bush to not only continue spying domestically with no oversight but also to forgive the Telecom companies who bent over and knowingly broke the law instead of having the balls to question the illegal request and blowing the whistle.
Don’t for a second think that the asshats running the dog&pony show in congress yesterday weren’t aware that there were much bigger world issues that needed attending.
This country is screwed.
Words of wisdom Ben.
If…
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
…
–Rudyard Kipling–
Ben is right. During the boom years we predicted eventual disaster and waited and waited. The way things were going thought we had to wait for another decade for the bubble to burst. Now suddenly (perhaps August 2007 was the turing point), we find the scenario unfodling to our liking, may be even better than we realistically expected. All the band-aid schemes (how many? 4 or 5 of them already?) have made no difference to the downhill slide. So, I for one, am quite positve. I have cash, I aim to profit from the major economic dislocation that is occurring. No more negative thoughts. Gather your loved ones and chart your economic future. This is a once in a lifetime opportunity!
Well put NeilT!
“This is a once in a lifetime opportunity!”
Sort of like the day you were born
And we wonder were real estate agents come up with their terminology…
Exactly my thoughts! Those who did not drink the kool-aid can profit by those who made the mistake and consumed the kool-aid. Let’s keep the preasure up in a positive way to help bring the housing mess back to normal levels.
NeilT
Well spoken!! LOOK FOREWARD!!!
I actually think the turning point was in Feb/ March of 07 with the change in lending regulations and took 6 months to work through the system but of course this is debatable.
I hope you are right Ben.
Because if the government was to guarantee mortgages, the question would arise “at what price.” Par?
I don’t think banks doubt people will walk away. I think they want future generations of Americans to pay when they do.
How can you “guarantee” (i.e., insure) against a contingency which has already played out? The only way I can think of to do this would involve fraud…
If we on this blog can’t make the connection that what is happening is a overall positive, how do we expect the media and the public to do so?
Housing is still unaffordable in most areas. However, when all of the air comes out of the housing bubble and prices fall back in line with inflation, rentals and incomes, the housing market will then pick up steam and move forward.
Until then, there will be much pain as those who lived beyond their means and for those who tried to manipulate the market by driving prices up through deceptive sales practices in the realtors, brokers, banks and wallstreet.
If we on this blog can’t make the connection that what is happening is a overall positive, how do we expect the media and the public to do so?
It may help to keep in mind that 67% of the population of this country owns a home (or two or three). For the vast majority, their home is the largest asset they own. A price correction in the national housing market is not a positive to the majority of owners as it is decreasing their paper net worth. It is a positive to those of us who have been priced out and/or rent and would like to buy. It is a positive to those who would rather buy at the bottom of a cycle in order to increase profit and over time. It is a positive to investors who view this pricing correction as a chance to profit from market dislocation.
Our view is not the norm. It’s why so many can only see the negative. They are on the wrong side of the trade… restoring affordability is a noble thought, but it comes at the expense of many current owners. I don’t expect anyone, public, media, or government to view this as a positive. Necessary, yes, but not positive…
No, 40 % own their house and 30% rent. The rest rent from a bank. And BTW, just about every article on the web that has comments looks just like the HBB. So yes, I think it is the norm.
The 40% who own outright are seeing their paper net worth decline due to prices decline. The 30% who “rent from the bank”, are leveraged up and are seeing even bigger percentage declines, on the order of 200-300% losses on their downpayment. Like I said, the majority of “owners” are on the wrong side of the trade.
How many of the 87 million households who own (or have a mortgage) are positive about losing money, whether real or imagined? Do you think they care that real estate will be more affordable to those who rent? Do you think those boomers who viewed their house as their retirement vehicle will be happy to see that idea vanish while their children get more affordable housing? Do you think local government will view the loss of tax revenue and the budget cuts as a positive?
Ben, you and I disagree regarding whether mainstream media, the public, corporations, and government view this dislocation as a positive. My feeling is it is based on the underlying motives of those entities mentioned and whether or not they are positioned to profit… most are not. At the end of the day, my wife and I will profit… my parents, friends, and extended family will not. It’s a bitter pill to swallow.
At the end of the day, my wife and I will profit…
You won’t profit if you are trying to sell a house that is overpriced and not in-line with local incomes, etc. Ben is correct!
You won’t profit either if your funds are in the wrong place as the credit implosion gathers pace and a lot of previously “safe” harbours become awfully stormy ports. As much or more money may/will be lost by innocent people that are trying to build their nest eggs when the banks and brokerages likely really start to go under.
So WHERE are you putting your money for safety, if during all this restructuring the banks have a run, and even if they don’t have a run, they can keep your money at any time. The FDIC only insures the money is safe, but the fine print states they don’t have to release the funds for, is it 7 or 10 yrs. So, even though it is safe, it is safe from ‘you’.
So, WHERE are ya’ll putting your savings so You can get to it and profit from it when the prices are affordable to our salaries?
Fwiw, splitting up some at different “safe” banks all of which are on deposit on demand or redeemable. Also have bought physical gold and silver coins over time and now am even resorting to “The First National Bank of the Mattress” for greenbacks.
No stocks, no stock market….. more and more simplicity, and actively trying to keep away from the madness of crowds (along with their extraordinary popular delusions).
Ben this will not stop the collapse; however, as those people walk away insured by the Federal government, it will cost the US taxpayers, what, $100B, $200B, $400B more than the $155B that has already been spent on the stimulus package, and the only effect it will have (besides bankrupting my kids’ generation even more) will be to have this pain last a little bit longer.
I would dare say that a lot of us aren’t that worried that government action like this will stop the correction. What we are worried about is the wholesale printing of money in order to *attempt* a bailout, and the whole banking industry (the architects of this mess) being bailed out with our $$$s.
Between the hundreds of billions spent on Iraq, and the perhaps hundreds of billions that is being considered to be spent on an S&L-type bailout of the lending companies, I wonder at what point the currency actually enters a crisis, due to supermassive debt.
FYI, some info on the S&L bailout:
http://en.wikipedia.org/wiki/Savings_and_Loan_crisis
Yeah, I know. Yesterday a guy was posting about $100 bread. I have been hearing that stuff my whole life.
Having watched things hit the fan after Black Monday in W. Colo (when Exxon pulled out of oil shale) and the entire economy of much of Colorado’s Western Slope collapsed, I have to agree with Ben. Human behavior is quite predictable, don’t make it more complex than it really is - humans basically look out for themselves and their own when times get hard. This is the foundation of all economics, I don’t care what complex algorhythms you may try to use to express this, it’s quite simple. Economics is a behavioral science, after all, even though economists try to make it into a hard science. It’s really not much different from sociology. It’s all the study of systems of how humans act.
Having said that, I believe poeple will walk, they’ll live in campers and move around and do whatever it takes to survive. The overly complex governmental systems can’t modify that behavior in the long run, all they can do is ride the tide and try to hold back the masses.
BTW, I’m happy today because Bernake says there won’t be a recession.
BWHAHAHAH!!!! Dumb fool, we’re already deep in one. Unbelievable.
Lots of snow in Utah, brownouts. Very pretty.
But are that many Fannie Mae/Freddie Mac backed loans walking? Isn’t the walking away mostly the lower end loans? I mean, honestly while I know there are LOTS of people who might walk away, no one I know is close to that sort of situation. The only one that might be a remote chance is 100% due to a divorce where the ex-wife caused much of the pain, and that isn’t really related to the current economic woes — it’s more related to the way the US Courts work.
So I think we have quite a bit of pain coming, but let’s face it — the pain is in the laps of those who have participated over the past few years. And that is only a select portion of the population since many people have owned for years.
I really don’t think it will matter who made the loan or what its terms are. When the threshold of benefit to pain is reached, people will walk. We’re already seeing people walk who can make the payment but consider it to now be a bad investment.
“Yeah, I know. Yesterday a guy was posting about $100 bread. I have been hearing that stuff my whole life.”
Ben, I was doing some research for my class yesterday about recent social disasters that have gone unrecognized by our kids’ generations. I am telling them to take note of what’s going on right now with mortgages, but more importantly, what could happen economically if we had a revisitation of a pandemic or major famine. The largest single event killer of human populations was the 1918 influenza outbreak. More people died in that year than in the worst four years of Bubonic Plague. Bodies were piled up three deep in the streets of Philadelphia for burial. That was less than 100 years ago and few people know about it.
We also think of cannibalism as being a primitive and mostly illegal activity nowadays, but as recently as Mao’s Great Leap forward (1950’s-60’s), people were munching down on each other for lack of bread. So yeah, when it all comes down to value… I’d take bread over gold.
BTW- I hope that none of the above ever happens on earth again! But I am not naive enough to believe that these events are irrepeatable. One wonders why so few people are aware of them.
“ex Wife caused the pain” WTF.. know plenty of the ex Husbands who cause pain 10 yrs later. WTF?
There are a few of you on this site who have personal issues to deal with.
Ben, you seem to ignore that Texas was just Texas. This is impacting California, the economic crown jewel of the USA. Probably doesn’t hurt that Washington D.C. has perhaps some of the most foolish house prices in the USA - congress members often own property in their home area and in WDC. Makes them investors…
I’m sorry Ben, I have to disagree.
1. Congress won’t cave to the banks, but notice that, unlike Kudlow/Cramer, banks aren’t dumb enough to ask for help directly. Instead, banks framing the argument in “save our families/hope now/do it for the children/don’t throw my baby in the street” terminology that makes CNN salivate and Orwell blush. Sure, WE think it through, but it took me 5 years of Nightly Business Report and 2.5 years of HBBlog to get to this level. What makes you think Congress is thinking this through — in an election year?
2. What makes anyone think that people who CAN’T afford the payments will want to hang in there?
This generation of homeowers was stupid enough to sign the papers in the first place. They can’t even think past Britney’s next two months of rehab, not to mention thinking past the next two months of teaser rate option payments. What makes you think they’re calculating out the next 2-3 years, which is how much time it would take to come out even after a BK? I even had a PhD friend tell me that “oh, if only Congress can keep them in their home for a few months…”
To reference Orwell again, all they have is a vague idea that PAYMENT GOOD!! BK BAD!! So, they see a lifeline and grab at it. The lifeline is so long that they can’t see it isn’t attached to anything, nor can they see that land is closer than the length of the lifeline.
A man who is drowning will reach out for any branch!! I think given the option people will not walk if given another branch to grab hold of. They worry about what school that their kids go to, what will the neighbors think etc. The question is “are their enough branches and are the branches long and strong enough to rescue how many (%) FB”. I tend to think at best it will cause an orderly unwinding of this credit debt cycle but more than likely will will have a few shocks that were unpredictable”
Ben…2 Million Foreclosures in the next 2 years, can’t get to positive about that trend. And with Hoover the Second as president for 10 more months, could we be in for a depression.
Depends on your perspective. The way I see it, two million foreclosures means sanity is imposing itself on two million FBs and “investors” who never should have been in those houses to begin with. The more badly the lenders get burned, the more reason they’ll have for returning to conservative, sound lending principles. That doesn’t bother me in the least, nor does it bother me that legions of FBs are learning the consequences of greed, stupidity, and irresponsibility. In fact, it’s amusing to watch it happen, knowing the end state will be Sammy & Family parked in a nice new home that we didn’t overextend ourselves to buy.
In general I feel a sense of serenity, good humor, and yes, schadenfreude about the way things are developing. Massive amounts of speculative excess are being purged from the system and that’s a good thing. As a renter, who in early 2004 had a tough sell convincing my wife that it wasn’t time to buy, I’d say events are developing very much in our favor. A little more time, a little more patience. The sellers are still way too greedy, stuborn, and delusional, but watching the fear and desperation set in will be worth the wait.
I’ll take Ben’s coffee over the REIC’s Kool-Aid any day!
I just snorted with laughter when I read this. The banks can ask anything they want, (I think we still have free speech but it’s been awhile since I read the Patriot Act) but that doesn’t mean they’ll get it. I think I’ll ask Congress for a pony!
B..b..but I thought free markets were “good”… and government intervention was “bad”?
sohonyc…. Thats is true only when they’re making obscene, unearned profits. When times get tough, hypocrisy becomes paramount and the same obscene profiteers extend their golden cup.
The jig is up.
i’m a big fan of the free market’s, but am tired of seeing how capitalism has begun to work in our country- privatize the profits and socialize the risk. Seriously, when the profits are rolling in, the successful are hailed as financial geniuses. When times are tough, they beg the government to come to the rescue. Too bad! All of the effing financial wizards on Wall St. need to lay in the beds they have made- don’t leave it up to the tax payers to bail them out.
“but am tired of seeing how capitalism has begun to work in our country-”
Not to mention that elections and other areas of government have been “privatized” as well, thus taking away more power from the peeps.
What we’ve seen is not true free markets, but elitists gaming the system to their advantage, then whining to the govmint when things go against them. Screw ‘em.
All the bankers crying about the walkaways whose behavior they never “modeled” has really changed my mood over the past few weeks. The walkaways are doing more to help the market correct than the knifecatchers, and they are not wasting time either. The gov’t sponsored plans are failing, and eventually the FBs will realize there is no Hope Now or whatever, and the walkaways will increase dramatically. Public tax revenues will fall, crippling the local governments ability to overspend on worthless schemes. Neither the repubs or dems have any power to stop this, the economic landscape is shifting as we speak.
Well said Spike. The sheer magnitude of this debacle renders any talk or hope of an FB bailout empty puffs of hot air. Yes, there’s going to be hardship, but that’s what ultimately develops character and forces people to get their priorities in order - something that’s long overdue in this country. As much as I despise people who don’t honor their obligations, that pales in comparison to the contempt I have for the “Axis of Weasels” that conspired, in league with loose lending, to shoehorn FBs into financial commitments that no responsible lending system would ever have countenanced. So, it’s with pure glee that I watch the lenders get saddled with rapidly-increasing inventories of foreclosed properties, and anticipate home values plunging as each drop causes more underwater FBs to exercise the jingle mail option. Sanity is returning, and it’s a beautiful thing to behold.
Thank you for “axis of weasels”….I plan on using it
That’s the way it should be, but I guess the big boys think they’re the exception. And then they wonder why people want them to be regulated to hell and back.
As I’ve said before, when some of the Wall Street firms actually die, we’ll be making progress. ‘Til then, they should be considered the enemy of the common man no matter what side of the aisle they might be on.
“Til then, they should be considered the enemy of the common man no matter what side of the aisle they might be on.”
Well said. But getting J6P to wrap his empty skull around that fact has been difficult…. Until now.
Agreed. There’s been much criticism here about the “sheeple,” but maybe that’s one good thing that can come out of all this…….more people’s eyes are being opened.
“There’s been much criticism here about the “sheeple,” but maybe that’s one good thing that can come out of all this…….more people’s eyes are being opened.”
I often hear this sentiment expressed, from people of all political stripes. Yeah, there’ are problems in this country, but American’s still have it “so good” that they aren’t going to wake up to the problems until something REALLY bad happens. I say this is bullsh*t.
Look at Brazil. Huge disparities in income level. Rich walled communities, surrounded by favelas. The poor are the majority, and they could “rise up” against their oppressors, but it doesn’t happen. And it’s not because of strict gun-control laws - they’ve got plenty of guns, even the children. You can’t tell me that the oligarchy in this country wouldn’t be completely happy with seeing it turn into Brazil. I don’t think they have any regard for anyone who isn’t worth multiples of millions. People who are just trying to survive are very easy to “cow”. Poor Brazilians are busy enough trying to survive, this makes it easier for inequalities to go unchecked. The best bulwark against tyranny is a strong middle class.
To expect that somehow things are going to get so bad that the sheeple will “wake up” is crazy. Things getting worse just means things will get worse, and more people will be worried about scraping by and less worried about the big picture. We’ve got to work to improve things bit by bit, even if it means choosing a “lesser of two evils” like we could’ve with Gore instead of Bush. Yeah, Gore was not a great candidate, but the lesser of two evils is still LESS EVIL. And we’ll have to do this in the face of widespread ignorance and stupidity, without expecting that people will somehow become less ignorant and stupid when confronted with extreme hardship. If anything, that will open the door for extremely poor decision-making, such as has been foisted on this country since 9/11.
The “it’s gotta get worse before it gets better” argument doesn’t work for me…
Applause!! Preach it bro. Wholeheartedly agree.
I agree with you that this country will turn into a second world style country. I think it will happen slow enough that no one will do anything about it. Sort of like boiling a lobster.
AMEN AMEN.
Bub Diddley
That was truly an awesome post.
Maybe, but they don’t have the history this country has of free-thinkers and emphasis on democracy and peoples’ rights. Whether or not we have a true democracy, it is a part of our worldview. And there are songs about the American revolution still being sung in this country (We fired our guns and the British kept a’comin. There wasn’t nigh as many as there was a while ago. We fired once more and they began to runnin’ down the Mississippi to the Gulf of Mexico.) And the rednecks I know are nobody’s toadies, damn straight.
Writers Strike. I think that is the ONLY reason the Sheeple have started to pay attention, cause they don’t have anything to distract them but gladiators and reruns from 3 yrs ago. Honest, ya gotta thank the writers for getting sheeple to finally Pay Attention. Otherwise, while everyone would have been watching tv, while you were doing the bills, you would have gotten no sympathy from the family, just shhhhhs because they wanted to hear the tv.
pardon me but when have there ever been “free markets” in our lifetime. I’d be happy with fierce competition in a transparent well regulated marketplace.
The banks need to look at who received a bonus related to mortgages in the last five years and ask them to give the money back. This is where it needs to start BEFORE going to the federal government. I remember when Wall Street was all excited about their record bonuses…get THAT money back for asking tax payers to pay anything.
Bwaaahaaaahaaaa
That’ll be the day!!!
Wage garnishing and asset seizure for power players.
Hee! Hee!
“The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government, according to a report in the Wall Street Journal on Thursday.”
Carry on with the grand Kabuki dance of ad hoc disaster relief to poor, unfortunate Wall Street banks, who could not have possibly foreseen the situation they now face! How will they fund those massive bonuses if the taxpayer is not now asked to chip in his part to make up for their gambling missteps?
http://en.wikipedia.org/wiki/Kabuki
gambling missteps?
That is exactly how wallstreet is being run, like a casino where the odds are in favor of the house (Wallstreet). They, Wallstreet and the big banks have realized the weakness of the investor and consumers and are profiting off of their stupidity. When the addicted gambleing addict loses, they run to the goverment crying we need help bailing us out of our gambleing debts.
almost. The gambling addict learned how to count cards and now the wallstreet/casino types are crying foul to the government.
“The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government”
The thought is, “hey, you bailed out the savings and loan industry back in the day, now you have to do the same for us, or it will tank the US (and possibly world) economy. Look at it as financial blackmail.
Again, if you sit on your tush and don’t write your Senators and Congresspeople about why this is a bad idea, and write them soon, I don’t see why this won’t be a done deal. Congress has *already* said that they are willing to “throw more money at the problem”.
On target arroyogrande. If we are silent and fail to communicate our objections we cannot call this what it really is, taxation without representation.
The government did not “bail out” the S&L sector. It put about 1/3 of the S&Ls out of business through receivership (100% loss to shareholders). I have no objection to the government doing the same to investment and commercial banks and paying off the small savers (FDIC) and small investors (SIPC, a GSE that the government would bailout if necessary).
I just sent an e-mail again to Gary Miller my O.C, House of Rep. Buffoon.
Interestingly enough I received a “Form Letter” last week saying basically how great they (Congress)are for bailing everyone out. Obviously my previous e-mails are completely ignored and more importantly most people must be sending communication saying we need a Bail-out.
I have written multiple times over the last 2 years, and all the actions taken and letters sent to me are exactly opposite of what I desire.
Talk about a Mute Voice. I am no longer Angry, now I am just disillusioned.
I had exactly the same experience with my two Senators. I wrote a thoughtful letter detailing my objections to any bailout scheme, discussed the socialization of risk, indicated that they would NOT get my vote if they went through with a bailout and that I would be watching their votes closely - what did I get back (three months later)? A form reply saying how they were working on a bailout scheme and how they appreciated my support for one!!! They never even read the mail. P*ssed me off big time.
I am convinced that if one of the presidential candidates stood up and said ‘Sorry, you f**ked up. Too bad” they would get tremendous support. Everyone I talk to is against a bailout, for either banks or borrowers (although it’s the same thing). When people understand that because they have been paying their bills they will get screwed while the FB with no skin in the game will be given money, people will be pretty angry.
“I have written multiple times over the last 2 years, and all the actions taken and letters sent to me are exactly opposite of what I desire.”
I had that same experience with Barbara Boxer…I presented reasons why I didn’t think it was such a good idea to increase the conforming loan limit, and all I got back was a form email stating how great it was that she supported raising the conforming loan limit.
Every time i write a letter to one of my elected officials, they reply with a “position paper”.
A posted comment about why they are doing what is best, but thank you for your “comments”.
We went through this with Mel Martinez here in Florida when we was proposing Amnesty for his fellow aliens. We got nowhere.
Now, it seems, ALL the Presidential Candidates are pro-illegal, open-border, spend-taxpayer-money, create “equality”, world-government sycophants.
Do you think it will do any good to pen them a letter?
Bailed us out in the day….and don’t forget that was REAGAN.
Mid 80’s and Neil Bush in Silverado Savings Loan in Colorado. Bush,remember that name? Yep “we” all want to be like reaguns. Misremembering Reagan.
Chris Dodd already proposed this about a week or two ago, in the form of a “Home Ownership Preservation Corporation.” Google the term. Basically, it will pay lenders for their bad loans.
NAR is not one of the top 3 political contributors just because they like parting with their money. When the sh*t hits the fan, they expect the politicians to do what is necessary to keep the contributors in positive cash flow.
Is that like saying, ” I was bad” but would you pay off my badness so I won’t see it anymore?
Well, New York City Boy ..Didn’t I say this was the Master plan …pass the bad loans to taxpayers…. (as if those loans aren’t going to default ).The other part of the master plan will be for the government to buy vacant real estate . Funny thing about doing a re-write on a loan ,you got to have a borrower that you can even find ,so therefore there is a need for outright purchases of real estate .
Cracked me up how Paulson and BB said in essence that they were encouraging Lenders and Investment Firms to take their losses .The lenders have no choice in taking some losses because they can’t get this bail-out plan to work fast enough .
Debt Spreads… Funny how that happens, ‘containment’ ain’t so easy after all.
http://www.ft.com/cms/s/0/4e5d3dec-da8a-11dc-9bb9-0000779fd2ac.html?nclick_check=1
Becky Quick was complaining about this on CNBC. She is such a goat-faced little tool.
She should be on ESPN doing sports with that voice.
Appraisers are NOT to be trusted
“It used to be a formality,” said Grabel. “Now it’s, ‘Lets do the appraisal first and see what value comes in.” Lenders are scrutinizing them to a degree unheard of during the boom. They don’t want to lend $160,000 on an appraised value of $200,000 unless they’re sure the house is truly worth that.
Ted Grose, a past president of the California Association of Mortgage Brokers, said lenders now often conduct what he called “bench reviews” of appraisals. “They have an experienced, independent third-party go over the appraisal to make sure the numbers are accurate,” he said.
“They don’t want to lend $160,000 on an appraised value of $200,000 unless they’re sure the house is truly worth that.”
Whoa. Slow down. Am I understanding this correctly? They don’t want to lend money on an asset unless the asset is actually worth what some jerky little appraiser says it’s worth? That is awful. I thought this was America, where a man was free to value assets any way he chose fit. I am so disillusioned by honesty and integrity creeping into the system. I’m writing my congressman.
And here’s another whoh slow down too: Lending $160K on a $200K home is the number for 20% DOWN PAYMENT. Are the days of 100% financing over? That will bring down prices quicker than anything.
In some area’s yes, in other’s no, I have 2 friends both with less the great credit getting mortgages with no money down, the mortagages are well within there abiblity to pay….But you would think banks would at least want 5 percent down at a min…
This is what happens when they realize that they might not be able to unload this loan to somebody else. All of a sudden, this sort of thing MATTERS because they might not be playing with OPM (other people’s money) anymore. Like a poker game that just switched from matchsticks to real stakes, it’s a VERY different game.
I bet before it is all said and done, the GSE’s will be doing No Doc loans and loans that are upside down. Think I’ll stop paying my mortgage.
I got a local government survey on “housing affordability,” recently and was struck by the fact that they wanted to know what my mortgage payment was, and not the market price of my home. Mortgage payments don’t reflect the cost of getting a home because of two factors. Some of us bought pre-bubble so our cost is much less than recent buyers. Some people got cash-out refis so their mortgage also reflects the cost of SUVs and Plasma-screen TVs. Then it occured to me, this may not reflect the cost of buying a house, but it sure DOES reflect the cost of keeping a house.
Good thing the housing market burst is contained. It would be a shame if it started affecting students’ ability to borrow money for college.
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080214/POLITICS/802140370
“Blaming a credit crunch rooted in the collapse of the sub-prime home loan market, Michigan will not offer new loans through MI-LOAN, a program created in 1990 to help bridge the gap between federally subsidized loans — which are capped — and the rising cost of tuition.”
Damn. Well I guess it does matter when mortgage brokers commit fraud, appraisers inflate values, and borrowers make up the income they make.
Popping the student loan bubble will be a great thing. Maybe affordability can be returned to housing and education at the same time. Do you think that would make us more competitive in the world marketplace? I sure do.
‘Popping the student loan bubble will be a great thing’.
That has been the #1 unpaid personal debt for a number of years.
the amount of student loan debt is huge
kids out of school owing major $$$ and the funny thing is
alot of them do not even work in the field in which they
studied and borrowed to get
Part of the problem is the easy money is affecting student loans same as housing. Kids are borrowing way more than they need for actual schooling costs and living a much higher standard than the old “starving student” one of the past. The ads for loans up to $40K are crazy.
I know what you mean. Today it seems that all college students drive late model cars, go on fancy vacations, etc. Then as mentioned above they graduate with a ton of debt, and end up waiting tables at chain restaurants because they can’t land jobs in their fields of study.
Keeps ‘em busy on the hamster wheel. And do not think corporations large and small do not us this debt amount in hiring and negotiating salary. I interviewed a state college grad, liberal arts, who’s councelor told them not to worry about the debt, you will easily make $60K 1st year out! Schools are not doing their students an favors.
You hit the nail on the head “crazy”. I borrowed a total of $10k as an undergrad, then continued to live like an undergrad for my first year of employment to pay it all off. And living like an undergrad for me meant peanut butter and jelly, two pairs of jeans, shared housing, and a 15 year old car held together (literally) with duct tape.
Today every kid has to have a new condo, new 4×4, scuba diving for spring break, etc… They take out massive loans, Dad helocs the house, and students work 40 hours a week while pretending to be enrolled full time. The thought that you might have to sacrifice for an education is so, like 1980.
And living like an undergrad for me meant peanut butter and jelly, two pairs of jeans, shared housing, and a 15 year old car held together (literally) with duct tape.
Ah yes, I remember it well.
Peanut butter was a luxury. To this day I still cannot eat Top Ramen.
If affordability becomes a factor in higher education, watch the Boston area go to dogs. The area has a lock on a big percentage of WORLD’s student-$$.
The silver lining: At least for now, education is a leading U.S. export product.
Down the road, this could bite us in the behind (just like the outsourcing of our manufacturing base will bite us) as the seeds of research programs planted by repatriated academics, who were trained in our top graduate programs, take root back home.
Down the road, this could bite us in the behind
It’s already biting us in the rear as more and more professional jobs are being outsourced to emerging countries such as India, China and South America. The jobs are Information technology, engineering, acounting, etc. Why are these jobs leaving? These countries have a lower cost of living in terms of housing (except in major cities), healthcare, etc. The consumer in the USA needs to wake up and control their spending/credit debt and housing prices need drop back to affordable levels in order for the USA workers to be competitive in the world.
Nah, the endowments some of these Boston-area universities have will keep students coming as more scolarships and financial aid will come from the university itself. Besides, with the drop in the dollar, foreigners are getting a deal on our institutions of higher education. We still have the best Universities in the world… I could go into some detail regarding my experience with foreign-educated workers in IT vs. US educated. There is quite the quality gap.
Correct. Harvard just announced that middle class kids will be able to attend for free and that even upper middle class kids will only pay about 10-20% of list price. Smart move, as it will give them the pick of the litter. Every smart middle class kid will be applying at Harvard. Other Ivy league schools will probably follow their lead.
But they’re frontin’, that’s all that matters.
I could not have said it better!!!
The director of financial aid at Michigan State thought the state was in good shape???? Where the hell has he been the last few years??
Does this mean colleges will have to stop raising tuition so fast?
“It would be a shame if…”
It would be a shame if it were affecting X’s ability to borrow money for Y (stick any group of potential borrowers in for X and any project in for Y). Unfortunately, the fallout from lenders having poured good monies down a rat hole imposes pecuniary externalities on everybody who might want or need to borrow money going forward.
Same thing happening in Montana.
Remember the ‘mother of all yard sale’ discussions we used to have?
‘Car and truck repossessions this year are headed for the highest level in at least a decade, thanks to easy credit and a faltering economy, says an economist for one of the largest wholesale auto auction services.’
‘So many vehicles are being snatched from owners who stop making payments that some repo operators and auto auctioneers say lots are overflowing.’
Used cars will be give-away cheap, by late this year…
New ones are barely selling, and they might get reasonable compared to sticker price, (like 25-40% off of list) and I expect used ones to sell for around 25% of current blue book values.
Are you trying to lure in Jas from the sidelines or something?
where has jas been? not that i miss him all that much
Things that aren’t needed will go down in price, things that are needed will go up in price.
push me-pull me economy.
Things imported will go up in price. Things produced domestically will go down in price. Unfortunately, we produce very few consumer goods at home.
Milk? Wheat? Corn? They’re produced here and they’ve all been going up.
Alad - could you please contact me at d564lkt at yahoo dot com
Thanks
In my experience used cars hold their value better in hard times, because there is more demand for used (and consequently less demand for new). During boom times its the opposite, as everybody wants a new car.
Older used cars are actually more expensive in Mexico, so I think that’s true.
Please don’t think I’m a cold-harted vulture, but my husband has been driving a 1992 Toyota Corolla that we paid cash for in 1997. My 19-year-old son starts to college next year and we want to put him in the Toyota and buy my husband something else, small, fuel-efficient and a few years old.
How can I find these repo lots here in St. Petersburg? We want to pay $5,000 or $6,000 cash which may be unrealistic but is what we can afford.
“How can I find these repo lots here in St. Petersburg?”
I’d start by talking to a guy who drives a tow truck.
Kay, it’s not unrealistic. I am looking to do the same thing. Definitely check Tampa Bay Craigslist.
The Colorado craigslist sellers are for the most part delusional. Very few real deals on things like used cars and furniture.
Look for public auctions, but it caveat emptor. Have a code reader handy and plug it to the OBD-II port under the steering wheel. Check everything and be prepared to walk away if you don’t like the deals. All deals are cash only, you will also need to take into account the fees that you will be charged into the price that you are willing to pay.
There are other options that are dealer-only and for that you need to work out a deal with a deal ahead of schedule and make sure that you are not being taken.
That is why going to public auctions, because it allows you to see what the mark to market values are for Toyotas.
I hope this helps you out and speaking from experience here.
try a ford taurus se
cheapest thing on wheels
every day you pretend you rented it at the airport
I suspect Kay wants something that will last 15 years, like her Toyota. A Ford Taurus is a 6- to 8-year car, max.
Taurus trannies break well before reaching 100K. Be prepared to spend 3K when that happens.
We have Taurus fleet cars at work, which are replaced every year. Employees get first dibs to buy these and with few exceptions the have trannie problems as early as 50K miles.
I bought my Ford Taurus (’97, purchased in 2001) from my employer’s fleet. You had to pay higher of remaining amount on the loan or the presumed auction value. Found one that was 4 years old so the loan was paid off, had been used by an older engineer who treated it right, and the transmission had already blown and been replaced about 4 months earlier. 67K miles then, has over a 100K now and still turns over on the first crank of the key - plus no fan belt.
It’s boring, but I’m driving it till it drops. I paid about $5K and I think that included the $500 for the 6 month warranty.
My understanding is that Ford fixed the tranmission problem that was endemic in the ’95’s, ’96’s and ’97’s around ‘99 or 2000. If you can find an older Consumer Reports used car buying guide (around 2002 or so), you might be able to find out exactly when Ford improved its transmissions.
I would rather sell than buy at an auction. I wonder if this will change once home and auto auctions finally overflow with inventory and buyers go away?
I agree! I’ve seen “repo agent wanted” ads on Craigslist: http://boise.craigslist.org/sec/563676505.html so the industry must be picking up. And then yesterday, I read about 84 month car loans from GM and Toyota- crazy!
has been deleted by author. Guessing ‘author’ is getting to many people wanting a job.
TxChic, here’s a blog you may enjoy:
http://swamplot.com/
It’s a snark-filled blog about Houston real estate, only it’s fairly professional.
Ha! Good one. I’ll definitely book mark it.
The Mortgage Bankers Association says default rates on all outstanding home loans in the US have reached 7.3pc, the highest level since modern records began in the 1970s.
Arrears on “prime” mortgages have reached a record 4pc… The arrears rate on US auto loans has reached 7.1pc. Defaults on home equity loans have jumped to 5.7pc.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/13/cnusa113.xml
http://money.cnn.com/2008/02/13/pf/_blue_chips.moneymag/index.htm?postversion=2008021406
Just look at the charts on some of their picks and tell me their wonderstocks aren’t going to see 40% falls in the next two years.
While sub-prime and close kin “Alt A” total $2,000bn (£1,019bn) of debt, the prime market in all its forms is roughly $8,000bn. If prime default rates rise on their current trajectory, they could ultimately cause huge financial damage.
Cramer and boyz’s dealer must have access to some good stuff, but even the Stones had to come down for air.
Washington Post
Predatory Lenders’ Partner in Crime
How the Bush Administration Stopped the States From Stepping In to Help Consumers
By Eliot Spitzer
Thursday, February 14, 2008; Page A25
“…In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation. …”
http://tinyurl.com/2nnkda
“…preempting all state predatory lending laws, thereby rendering them inoperative…”
Is that constitutional?
“Is that constitutional?”
I don’t know, but shrub couldn’t give a crap less about the Constitution and apparently, CONgress is so cowed, they can’t wait to assist him in shredding that document. No Constitution, no US, and never forget it. Wiretaps, anyone?
Interstate commerce, anything that can be pushed into the mold of that means feds get to overrule the states.
As commander-in-chief of the armed forces, and chief executive officer of the US government, the president can do whatever he wants. That’s essentially a paraphrasing of the former Attorney General’s opinion on the constitutional powers of the executive branch.
I
Spitzer for President……….
At least we would have a Positive choice for a change.
Just like Nixon & the the last “housing boom”…the worst “real” damage…is still yet to be “uncovered” … & I’m an optimist!
wow a BUSH BAD article in WAPO
that’s news !
So that’s it. Usury laws are off the books.
The other day I saw a TV ad offering personal, unsecured loans. The fine print was displayed large enough and long enough for me to note the APR: 99.75 percent!
Ha, lets just not forget that it is -STATES- that allow for those rates to be charged - thanks to Georgia, Nevada, etc.
Heard a good reasoning why congress isn’t going after an impeachment Now, because there are so many other serious things they can get the Dick George show into jail for.
Sort of like Al Capone, they have something with Teeth.
Bushco’s entire purpose was to high jack this country and make themselves wealthy. They are not stupid people. It will take years to uncover the breadth and depth of their abuses. God speed to the next president.
Speaker: Housing market buoyant
Media exaggerate downturn, Realtor group’s economist says
http://tinyurl.com/2kozqy
(February 14, 2008) — The U.S. economy can grow at a healthy pace if consumers don’t buy into the national media story that the weak housing market will cause a recession, the chief economist of the National Association of Realtors said Wednesday in Rochester.
“Paraphrasing Franklin Delano Roosevelt, what I fear is fear itself,” Lawrence Yun said at a Greater Rochester Association of Realtors luncheon at the Hyatt Regency.
Yun said national housing statistics show buyers with the means to afford a house are hesitant to enter the market even though prices are falling.
“It becomes a self-fulfilling prophecy where this excessive pessimism leads to an additional downfall of the housing market,” he said.
David Fiedler, chief executive of ESL Federal Credit Union, which sponsored the luncheon, said Yun made a good argument for a bullish view of the housing market, which wasn’t a surprise given his position.
“It was upbeat, but he did a good job of supporting it with facts,” said Fiedler, who has an economics degree from the University of Minnesota. “He was very credible. If you look at the (housing market) closely, it isn’t as bad as it might appear.”
A number of other laughable quotes are in the article. This is funnier than reading Dilbert in the morning. Hopefully this doesn’t post twice.
“…he did a good job of supporting it with facts…”
Really? Funny, because the only numbers cited in that article come from the NAR itself.
Flyover Larry’s pumping the crowd with worn out F.D.R. quotes - yeah that’s plenty of reason to sign away decades of your labor (life).
This statement was a gem:
Yun said national housing statistics show buyers with the means to afford a house are hesitant to enter the market even though prices are falling.
So he expects people with money to buy a house that is likely to keep depreciating in value for a while? I can hear it now from the real estate crowd - You must buy a house now before prices fall any further!
“Yun said national housing statistics show buyers with the means to afford a house are hesitant to enter the market even though prices are falling.”
(Potential) buyers with the means to afford a house are hesitant to enter the market BECAUSE prices are falling.
“He corroborated the widely shared notion that the Rochester area’s housing market has avoided the boom and bust of other parts of the country and said the area’s low housing prices and educated work force could one day attract big corporations. However, Yun’s hypothesis did not include the effect of local property taxes. ”
What would Yun know about CNYs ability to attract new business? Since he didn’t understand the property taxes in this area, its probably safe to bet he doesn’t understand the state’s tax burden on businesses either.
“Media exaggerate downturn, Realtor group’s economist says”
Media exaggerates NAR economist’s expertise, I says.
lol pb.
Last weekend went to Fargo ND and then drove to Lake of Woods to ice fish with two carpenter brothers. They are working but it has slowed. From 2/808 Fargo Forum…”A marketing campaign promoting the strenght of Fargo-Moorehead’s housing market now has a slogan: “Great Homes. Great Rates. It’s Time. The housing market is strong, and we want people to understand that, “We’re different here” said…president of the F-M Area Assoc. of Realtors.”
Everyone wants to live there!
“Prowler needs a jump”
well i got selected to serve on jury duty in a civil case, i start tomorrow. anyway across the street from the courthouse there is a
“forelcosure store” i will try and take a picture and email to ben
study up on Jury Nullification and judge the LAW in addition to the FACTS of the case. If the LAW is unconstitutional hang the jury even if the FACTS show they broke the “law” and even if you personally think what they did was “bad”. Disregard the instructions from the Judge!
And don’t forget to not mention to the judge or lawyers that you’re familiar with the concept, lest you get thrown off the jury
Sorry if this is a repost…
San Diego: Housing trendsetter?
Area ‘appears to be a little further along’ than region
By Roger Showley
STAFF WRITER
February 14, 2008
As San Diego goes, so goes Southern California.
Housing prices and sales were down last month in all six counties in the region, DataQuick Information Systems reported yesterday.
http://www.signonsandiego.com/uniontrib/20080214/news_1b14housing.html
FREDDIE MAC CHANGES MORTGAGE INSURER ELIGIBILITY RULES TO CAP PREMIUM CEDES ON CAPTIVE REINSURANCE
25% Cap on Gross Risk/Premium Cedes To Support MI Capital, Claims Paying Capacity
McLean, VA – Freddie Mac (NYSE: FRE) today announced it is temporarily changing its Private Mortgage Insurer Eligibility Requirements [PDF 160K] in order to increase the claims-paying and capital retention capacities of its mortgage insurance counterparties during the current market correction. …”
Freddiemac.com
http://tinyurl.com/yuqjfx
So much for being able to underwrite Jumbos over 80%
So much for the $500K+ California SFR market. (20 pct of $500K = $100K in downpayment monies.)
breaking news- the nyc consumer binge rages on
http://racked.com/archives/2008/02/14/live_at_barneys_sample_sale_wh.php
Debt Crisis Hits a Dynasty
By Robert Frank
“When M. Brian and Basil Maher sold their family’s shipping business last July for more than $1 billion, they quickly put the money in a safe place.
Or so they thought.
The two brothers handed much of it to Lehman Brothers Holdings Inc. with marching orders to make only the most conservative, cashlike investments. Within weeks, however, they had lost access to more than a quarter-billion dollars….”
WSJ
http://tinyurl.com/2sy3ts
I couldn’t access the entire article, but I get the general idea. This is an example of the transfer of wealth from producers to parasites. The family built a shipping business, and shipping is a legitimate, productive enterprise. Lehman did the same thing here in FLA, with shrub’s bro presiding over the transfer of some state pension fund money into the hands of the bloodsuckers.
“shrub’s bro”
Jeb Bush & Dan Quayle: 2012
A bird in a shrub is worth two in a “white house” … need to make coffee now ;-(
Sounds like they would have been better off buying gold…
Countrywide CEO to Get $10 Million
Countrywide Financial Corp. said Chief Executive Angelo Mozilo is eligible in April to receive stock awards valued at $10 million under his employment agreement.”
WSJ
How does $10 m compare to the amount he cashed out of CFC while he piloted the company into a tailspin?
Subprime litigation
“Where are all the lawsuits? Banks and pension funds have lost hundreds of billions of dollars since credit markets froze up, yet surprisingly few institutional investors have made their way to the courthouse. The identity of the one exception and its legal team helps explain why. Barclays is suing Bear Stearns over hedge fund losses, and the UK-based bank has convinced Linklaters’ New York office to represent it. The giant law firm had occasionally done work for Bear, but Barclays is one of Linklaters’ most important clients.
Most disgruntled investors in London have not been so lucky. At least three major London law firms have turned away clients seeking to recover money they put into complex derivative products that later lost money. Though the would-be plaintiffs are mid-sized institutions that regularly hire London law firms, their potential targets are the major international banks on whom the biggest law firms depend for their daily bread.
The major New York law firms have similar conflicts, but plaintiffs there have other places to turn. They can participate in a class-action lawsuit or hire one of the many small, high-quality litigation firms that serve as hired guns in commercial brawls. In New York, by several accounts, negotiations between angry investors and the big Wall Street houses are starting to get underway. If these do not result in private settlements, court filings will follow.
The dearth of similar options in London is creating an opening for the US litigation specialists. Several well-known firms have recently launched overseas offices and are hunting for European institutional clients. Meanwhile, cultural resistance among Europeans against bringing claims in the US seems to be breaking down. If institutional investors who lost money in structured finance writedowns end up in the arms of US plaintiffs’ lawyers, UK law firms will only have themselves to blame.”
FT Lex
http://tinyurl.com/27h32s
(copied whole article requires subscription so link may not work)
“WE’RE sliding into recession, or worse, and Washington is turning to the normal remedies for economic downturns. But the normal remedies are not likely to work this time, because this isn’t a normal downturn.
The problem lies deeper. It is the culmination of three decades during which American consumers have spent beyond their means. That era is now coming to an end. Consumers have run out of ways to keep the spending binge going.”
http://www.nytimes.com/2008/02/13/opinion/13reich.html?_r=1&ref=opinion&oref=slogin
The ship is sinking and we’ve already thrown all the ballast overboard. Greenspan put the best ballast in the last rowboat and got away in time, leaving poor Bernanke to simultaneously patch and bail.
Starve the beast. Cut back and save. It’s patriotic.
Our dollars are our real votes! The political trainwreck playing out on the nightly news is just a poorly written reality show.
The normal remedies are from a time when over 30% of US employment was in manufacturing, we were a net exporter of goods, and the US was self-sufficient in energy. The economists of today, who are in their 50s, were in grad school in the 1970s. They learned their craft from teachers who conducted research in the 1950s and 1960s. The US economy is very different today; only 10% of employment is in manufacturing and we are net importers of goods and energy.
Well the traditional remedies are intended to remedy a lack of money to be put to productive uses. But what we’ve had over the past few years is vastly more credit than productive uses for it. So it’s been shuttling between the equities and real estate without spending much time out in Michigan making factories and hiring workers.
This has to be a Post of the Day. I’ve saving the text to my hard drive.
Go*&%#dam commie!!
“MBIA, the world’s biggest bond insurer, is planning to hit back at hedge fund heavy William A. Ackman, who has long been betting against the insurers’ shares.
MBIA, whose shares have fallen more than 80 percent since the start of 2007, plans on Thursday to urge lawmakers to curb the short-sellers beating down its stock, and to push rating agencies to revamp how they assess bond insurers.
In written testimony for a subcommittee of the U.S. House Committee on Financial Services, MBIA said that short sellers like Mr. Ackman, founder of hedge fund Pershing Square Capital Management, have worked hard to undermine market confidence in the bond insurers.
MBIA said lawmakers should help restore confidence in the bond insurers, because their failure could have far-reaching effects on the U.S. and global economies.
In testimony that specifically targets Mr. Ackman, MBIA wrote that the House Subcommittee on Capital Markets should work with the Securities and Exchange Commission to curtail “the unscrupulous and dangerous market manipulation activities of short sellers,” trying to undermine market confidence in MBIA to drive the company’s share price to nearly zero….”
http://tinyurl.com/yos32y
Dealbook NYT
Oh, I don’t think Crissy Cox at the SEC is going to be much help…He’s sort of busy right now with distribution of $$$$$$$$$$ “fines & fee” money back to the “victims & other “family members”…moreover, he has to concentrate on desk clearing & moving company priorities.
“In written testimony for a subcommittee of the U.S. House Committee on Financial Services, MBIA said that short sellers like Mr. Ackman, founder of hedge fund Pershing Square Capital Management, have worked hard to undermine market confidence in the bond insurers.”
I’m sure that MBIA investing in CDO’s and CDS’s, along with the rest of corporate America, has nothing to do with their demise, price-wise.
Here is something.
MSM is getting it.
Be nice NYcityboy.
http://www.rutledgeblog.com/
“As I have been arguing, the black hole that the U.S. real estate market has fallen into is an asset market issue, not a GDP story.”
That reminds me of a question I have for any NIPA accountants in the virtual room. If the banking industry “writes down,” say, $100 bn in subprime losses, does that enter GDP somehow? It certainly seems as though this should have some kind of national income implications. I am vaguely familiar with the fact that GDP accounting does not deal correctly with capital losses (e.g., “writedowns” of the aggregate value of the U.S. housing stock and such).
Shadow victims of the mortgage crisis: renters
February 13, 2008
The Bush administration’s announcement Tuesday that it would put the foreclosure process on hold for 30 days to rescue struggling homeowners came several weeks too late for Mike Salgado.
And he’s not even a homeowner.
Salgado, 40, is one of many renters who have found themselves homeless after their cash-strapped landlords stopped making mortgage payments and their houses or apartment buildings were foreclosed upon.
The California Apartment Assn., the state’s largest organization of rental property owners, estimates that as much as a quarter of all foreclosed single-family residences are occupied by renters. The number of renters ensnared in the foreclosure fiasco is even larger when duplexes and other multi-unit buildings are factored in….”
http://tinyurl.com/2z7lfs
LA Times
California renters are victims of the pecuniary externality created by the lending industry’s flood of money into the hands of unqualified buyers. Artificially (and temporarily) high home prices resulted, and priced-out renters consequently were compelled to bid up the price of the substitute asset (rental housing).
Markert headed for higher open? What a laugh.
Today’s investing conundrum:
- Stocks down
- Gold down
- Bonds down
http://www.marketwatch.com/tools/marketsummary/
BULLETIN>> BERNANKE: FED HAS BEEN AGGRESSIVE, STANDS READY TO DO MORE
Seems like the selloff on stocks kicked into overdrive when that BULLETIN showed up…
daily price fluctuations are meaningless
They need not be. Back in the day, the stock market actually moved from day-to-day in response to news. I would suggest that today’s selloff is actually a throwback, as the market began selling off almost as soon as BB’s news barrage hit the MSM megaphone.
you mean daily fluctuations like October 19, 1987 ?
–
In financial markets, Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) dropped by 508 points to 1739 (22.6%),[1] and on which similar enormous drops occurred around the world. By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, Spain 31%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%.
http://en.wikipedia.org/wiki/Black_Monday_(1987)
Price fluctuations were quite meaningful on that day. However, the plunge protection measures undertaken by AG in the ensuing days institutionalized a new era of Fed intervention in the asset markets, which have served to interfere with the U.S. stock market’s ability to rationally discount news into asset prices.
Here is a bit of meaningless news which has no implications for today’s stock market action…
MARKET SNAPSHOT
Early path of least resistance is lower
Wall Street’s unimpressed by what Bernanke has to say, with stocks trading broadly lower on the heels of a three-day winning streak.
• Movers & Shakers | Solid gains in Europe | Dollar, yen play defense
FINANCIALS | Subprime Today
UBS posts first full-year net loss
No respite: Swiss banking giant says 2008 to be “difficult.”
marketwatch.com
Glasnost in action…
01. Bernanke: Housing, credit, labor markets are risks to growth
10:07 AM ET, Feb 14, 2008 - 1 minute ago
02. Bernanke says downside risks remain
10:06 AM ET, Feb 14, 2008 - 2 minutes ago
…
04. Bernanke sees no end to housing market downturn
10:04 AM ET, Feb 14, 2008 - 4 minutes ago
05. Bernanke: Critical to see if rate cuts are working
10:03 AM ET, Feb 14, 2008 - 5 minutes ago
06. Bernanke sees economy “improving” after slow growth period
10:02 AM ET, Feb 14, 2008 - 6 minutes ago
07. Bernanke says inflation should moderate this year
10:02 AM ET, Feb 14, 2008 - 6 minutes ago
08. Bernanke: Credit squeeze will continue to dampen growth
10:02 AM ET, Feb 14, 2008 - 6 minutes ago
…
10. Fed has been aggressive, ready to do more: Bernanke
10:01 AM ET, Feb 14, 2008 - 7 minutes ago
TxChick — Are you going long today? Looks like there is a floor under stock prices, as it would reflect badly on BB if the market tanked on the day when he unleashed a gazillion bullish remarks in the MSM.
Before Brad or anyone else jumps in to point out that not all the bullet points were bullish (e.g., housing will remain in the tank until kingdom come), note the only remark that really counts is this one:
“10. Fed has been aggressive, ready to do more: Bernanke
10:01 AM ET, Feb 14, 2008 - 7 minutes ago”
Batten Down the Hatches, the Financial Hurricane’s On Its Way.
http://seekingalpha.com/article/64588-batten-down-the-hatches-the-financial-hurricane-s-on-its-way?
The Fed Won’t Save Us
Jeremy Grantham, “one of the grandest of thinkers and most eloquent of oracles,” tells Barron’s that today’s bear market is like none we’ve seen — the difference being unprecedented financial globalization and a first-ever global bubble in virtually all asset prices. Grantham scoffs at the idea government-supplied stimulus can stop the bear
http://seekingalpha.com/article/63969-the-fed-won-t-save-us-but-here-s-how-to-make-money-barron-s-interview-with-jeremy-grantham
Freddie Mac loosens PMI rules to aid mortgage insurers
By Greg Morcroft
Last update: 7:44 a.m. EST Feb. 14, 2008
NEW YORK (MarketWatch) — Government sponsored mortgage giant Freddie Mac said Thursday that it is temporarily changing its rules for private mortgage insurance companies to allow them to retain more capital and rebuild there balance sheets, which have been damaged badly by the housing and credit crises. “Triggered by the ongoing decline in home prices and poor performance of subprime, Alt A and other higher-risk mortgages”, Freddie Mac said, “the temporary change is intended to allow mortgage insurers to retain more insurance premiums to pay current claims and re-build their capital base.” Freddie also said it is suspending certain rules that automatically trigger new requirements for insurers that are downgraded by rating agencies below a certain level. The new rules take effect on June 1, the company said.
1 Comment (view all)
“Taxpayers holding the bag AGAIN. Sick and tired of tall these bail out. Get all those executives who got millions in options and salaries to forfeit them. They don’t deserve to keep a cent.
- SkinnyCat”
http://www.marketwatch.com/news/story/freddie-mac-loosens-pmi-rules/story.aspx?guid=%7B44D35769%2DDF36%2D4209%2D8ED4%2D59439AE7A99F%7D
“rebuild there balance sheets”
I tell you we are doomed DOOMED!
Locked Out 2008: The Housing Boom and Beyond
The irony of the recent softening in home prices is that while it has put thousands of homeowners at risk of foreclosure, it has had little impact on the affordability of housing for the typical California family.
Locked Out 2008: A Profile of California’s Counties
A supplement to Locked Out 2008 provides county-specific data on California’s housing crisis.
http://www.cbp.org/
Txchick - Did you get you short in on Bidu?
I’m banging on my “the world will end” drums this morning.
http://seekingalpha.com/article/64641-there-seems-little-upside-left-for-baidu
whacked it out yesterday afternoon at 298. What in heaven’s name the buyer was thinking, I have no idea.
I have a bridge for sale - send that buyer my way.
Some property in Cali for sale too.
Everything is growing except for the aggregate value of corporate shares…
February 14, 2008 10:06 A.M.EST
BULLETIN BERNANKE: FED HAS BEEN AGGRESSIVE, STANDS READY TO DO MORE
Bernanke: Fed stands ready
Fed chief, testifying on Capitol Hill, sees signs of upturn.
• Paulson: Economy to grow, albeit slowly | SEC to mull rating rules
• Export growth spells narrower trade gap | Lower jobless claims
http://www.marketwatch.com/
My head is spinning…
“… sees signs of upturn.”
Bernanke Warns Economy Worsening
By JEANNINE AVERSA – 6 minutes ago
http://ap.google.com/article/ALeqM5hrmK0A1bWGKEu9CNpBjssmBgOYaAD8UQ6LOO0
‘…and a reluctance by skittish lenders to make “jumbo” home loans exceeding $417,000 have aggravated problems in the housing market.’
This supposed reluctance really makes no sense, taken out of context. If a reputable buyer who earned $1m/year tried to obtain a $417,000 loan, bankers would line up in the rain without umbrellas in hand to obtain his business. It is the idea of making loans in excess of $417,000 to people whose permanent incomes are insufficient to make repayment likely which has suddenly gone out of fashion. I personally don’t see any problem here which taxpayer-funded guarantees could not fix, though.
Everything.
Sucks.
Real.
Bad.
All.
The.
Time.
(just trying to fit in)
Brad — Sorry to see you have joined the chorus of gloomsters. Your posts are normally so optimistic.
Brad:
Gold has performed very nicely, as your beloved Orwell’s Fargo showed it’s true colors and is just as knee deep in financial waste, as anybody else.
I have to point out that the MSM and top policymakers have taken over trumpeting the gloom-and-doom message at this point. This blog has been a leading indicator, and I will predict right now that if Ben is still blogging by the time the housing market is due for a turnaround, posters on this blog will announce it six months before the MSM.
Ah but the big question is..when will that be ? What does your crystal ball say PB ?
My only crystal ball is time invested reading financial articles in the MSM plus this blog… “It” is currently saying no more than BB and Bob Toll about when the downturn in housing will end.
And Brad, I am sad to say, but
Really.
Sarcastic.
All.
The.
Time.
will not help you fit in with most of the posters here.
It’s valentines day. That’s a really good reason to feel more pissy.
Bernanke Warns Economy Worsening
By JEANNINE AVERSA – 6 minutes ago
http://ap.google.com/article/ALeqM5hrmK0A1bWGKEu9CNpBjssmBgOYaAD8UQ6LOO0
My crystal ball is showing higher fixed rate mortgage rates in the near future…
“30-Year Bond 4.61% +0.09 +2.06%
10-Year Bond 3.80% +0.10 +2.73%”
http://www.marketwatch.com/tools/marketsummary/
Already on the way up…it’s “in the bag”:
bankrate.com
http://tinyurl.com/2qcxhw
Was your crytal ball made in China?
http://www.kaboodle.com/reviews/150mm-optically-clear-crystal-ball
No, but low U.S. mortgage rates were made there.
I agree with your assessment of higher fixed mortgages. Wanted to provide a warning that some crystal balls are made in China and may give skewed data.
My crystal ball was made in China and only tells what’s happening 20 minutes ahead of time, leaving you hungry for more information.
Up, up and away…
“30-Year Bond 4.65% +0.14 +3.13%
10-Year Bond 3.82% +0.12 +3.36%”
LA County to Close Most Health Care Clinics…budget deficits kick in.
Expect daydreams of “universal health care” to hit the dirt as well, when financial reality sets in after the election.
http://www.latimes.com/news/local/la-me-clinics14feb14,0,4449521.story
They could put on a clinic for government fiscal malfeasance…
More cut-rate monetary policy in the offing…
THE FED
Fed on point, Bernanke says
Ready to do more if they uncover signs outlook is deteriorating
By Greg Robb, MarketWatch
Last update: 10:12 a.m. EST Feb. 14, 2008
WASHINGTON (MarketWatch) — As the economy moves though dangerous territory on the edge of recession, Federal Reserve Chairman Ben Bernanke said the central bank has assumed the point position, ready to cut interest rates further if fresh signs of a weaker-than-expected economy emerge.
“The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,” Bernanke told the Senate Banking Committee in prepared testimony.
http://www.marketwatch.com/news/story/bernanke-fed-has-been-aggressive/story.aspx?guid=%7BF60CC8E2%2D5389%2D4922%2DB2EB%2D1C348BD1501C%7D
Nice anology by Paulson.
Sub-prime was just the spark. The debt markets were the over grown and dried out forest that was ready to go up in flames.
Current drill of BB, Cox,and Paulson by Senators on TV is a little more intense than prior Senate hearings .
BB is building up to ask for expansion of the GSE’s loan programs IMHO .
Grand Kabuki dance of govt bailouts…
In Wisconsin there have been lots of Obama and Clinton ads hitting the airwaves in preparation for the primary on Tuesday.
One of Clinton’s ads states she is the only candidate to have a plan to freeze foreclosures for thirty days.
WOW - how quick would banks start requiring 20%+ down or not approve a mortgage if this were to occur?
Hillary has a plan to freeze foreclosures until she is elected.
Like clockwork Paulson and BB are asking for a GSE reform bill . GSE’s the new sub-prime bag-holder of choice .Can this proposal be any closer to my take that this proposal would take place right after they passed the increase in loan amounts .
Have you seen the Wisconsin Obama ads? The one I like is the one where he wants to eliminate tax credits for companies that outsource their work to other countries. Tax credits for only those companies that invest in American jobs.
I may just may vote for this guy!
This little news item caused billions of dollars to change hands. The DOJ does make an interesting read for those just learning about markets.
Review of the Regulatory
Structure Associated With
Financial Institutions
http://tinyurl.com/2dx84x
California home prices still unaffordable
Despite recent declines in the cost of California real estate, median home prices remain unaffordable throughout the state, according to a report by a liberal research and advocacy group calling on the governor and state lawmakers to confront the issue.
The authors of “Locked Out 2008: The Housing Boom and Beyond,” the study released today by the California Budget Project of Sacramento, said median incomes aren’t enough to buy median-priced homes in every county it studied, 36 of the state’s 58. The report assumes homes are out of reach if households have to dedicate more than 30 percent of their income to housing costs, the level above which the U.S. Department of Housing and Urban Development says people may have difficulty affording necessities such as food, clothing and transportation.
SF Gate, 2/14/08
http://tinyurl.com/22lv2y
I found this comment to lakewashington’s link interesting:
“lostnative wrote:
Do you guys realize that over here in England, they are showing ads on TV with Arnie (yes, the governator) inviting people to move to California?? The ads show people working in Disneyland and having meetings on the beach etc. They show the ads on Discovery channel so I guess they’re hoping for a relatively high-class demographic but I’m still amazed that the governor is actually encouraging people to move there. I wonder if he’s running the same ads on Mexican TV??”
Well, if “they” want to wait in line at the airport and be subject to touch & feel warm welcomes & good-bye’s by homeland security and pay extra $$$$$$$$ money for bringing a 2nd luggage, then I think there is more than enough incentive for them to come to California…I find it rather curious the English really enjoy going to Disneyland and walking around with those Mickey Mouse hats, but hey, Arnie has more insights on “European” motivations than I do, that’s for sure.
If I were English, I’d much rather spend my time and money in Portugal. Much cheaper and closer, and arguably more beautiful, than California.
Saw it on tv the other night, in S.Cal.
He was Skiing and all the wonderful skiing slopes.. snowboarders …all looked so enticing. Lots ofPR.
With all this talk of negativity- I’d just like to point out that it brought a big smile to my face to see somebody at CNN, in this article on home price declines, finally recognize that the NAR might not be the best source of objective data on the real estate market-
“The NAR take on price trends, usually an optimistic one, was that recent steps taken in Washington would lead to improved conditions later this year. “
Here is my version of pollyanna, if we weren’t bombarded with bs all day long everyday, but serious balance of information,good/bad, then perhaps ‘we’ wouldn’t sound so pessimistic. I personally would approve of a balance of information, not just who got rich, who wears Manola Blahniks, and who vacations where. Which is all consumerism of course.I would approve of information that is just and balanced, like seeing the flag draped coffins of our returning soldiers so in a way we can pay our respects to them. But we see nothing, but consumerism.
Just saying, would be nice to see a balance of life.
Not exorbinate excess by our CEOs etc. And politicians getting away with nothing we could/would get away with.
WTO rules against China over trade
By Frances Williams in Geneva
Published: February 14 2008 00:19 | Last updated: February 14 2008 02:24
The World Trade Organisation on Wednesday ruled against China in a complaint over import duties on car parts from the US, the European Union and Canada. The ruling is the first official condemnation of China’s trade practices since it joined the WTO in 2001.
US officials confirmed that a WTO dispute panel, in an interim judgment given to the parties, had “in all major respects … agreed with the US that China has acted inconsistently with its WTO commitments…
Beijing had argued that the surcharge was necessary to prevent circumvention of the car duty by importing large chunks of vehicles for local assembly. The three complainants claimed it was a protectionist device to discourage imports and build up China’s domestic motor manufacturing industry….
Ms Schwab, speaking at the Institute for International Economics, a Washington think-tank, struck an optimistic note on agriculture – “These are going to be tough calls but they are manageable.” – and less so on industrial goods – “This is certainly not a step designed to take us closer to ministers making choices.”
FT
http://tinyurl.com/2n6sam
“I’ll be your new best friend [if] you’ll be my Valentine”
Susan Schwab
Questions for those who know about economics.
Currently, depository monetary reserve requirements are 10% of demand deposits over $50 mil, and 0% of MMDAs and time deposits. The most recent government data show $582 bil in DDAs. That means at most banking monetary reserves should be $58 bil. The actual amount is less due to the small institution exemptions and MMF sweep features of some checking accounts. So at best reserve deposit requirements are 0.4% of total depository assets ($13,500 billion for banks, S&Ls, and CUs). Given the above, of what real importance to the economy is the Fed Funds rate?
The submitted budget for the FY ending Sep 2009 shows a deficit of about $400 bil. Add to this the cost of the wars in Iraq and Afghanistan (left out as usual), $125 bil, and the economic stimulus program, $165 bil, and we have a projected deficit of $685 bil. Publicly held US debt is about $5 tril. About half of this debt matures every year. So if the budget was balanced the Treasury would have to offer debt securities of $2,500 bil in FY 2009. If the deficit adds $685 bil to this amount (an increase of 27%) isn’t it likely that Treasury yields will begin to rise sometime after Oct 1 of this year?
Well, I don’t know what you just implied…but if it can somehow be spun into… that mortgage rates are head for 14% + then I vote yes!
Just talked to a guy in Texas who has a 1,000 sq ft house in W. Colorado, 70 years old on a big lot, in decent shape, some new upgrades (roof, flooring, etc.). He’s interested in trading it for my new Toyota p/u and camper.
Ben’s right, there will be HUGE opportunities to those able to act on them. It’s just starting. (No, not interested in the trade, will wait for something better - LOL).
On the radio yesterday I heard an ad for Toll Brothers announcing that they would be having open houses this weekend with chinese food and to come on out; I didn’t get the internet addy but I believe at least somewhere in the SF bay area.
Later on the same radio station there was an ad for used BMW’s. The ad claimed that they were the best place to buy because their cars were ‘certified’. My crystal ball tells me that BMW and Mercedes will be seeing an accumulated inventory of used cars.
General Tso’s Chicken: $11
Getting somebody to roll, for Toll?
Priceless
“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.”
Bob Campbell
http://tinyurl.com/yqabfs
Quoted in Mr. Bill Fleckenstein’s column Feb 11
(”…Hello. My name is Robert Campbell and I wrote Timing the Real Estate Market to help both professionals and ordinary people make the most money in real estate with the least amount of risk. Based on a major breakthrough in tracking and predicting real estate trends, my book reveals the real estate timing technique that I call The Campbell Method. …”)
Robert used to be a semi-regular poster here. May have been before your time, Hoz.
I remember Mr. Robert Campbell. Astute observations, witty remarks. I did not connect the name from the HBB with the flier for market timing the SD housing collapse. lol
He’s on the SDCIA regularly too.
American companies are falling behind in technology
By Bob Suh
“…Meanwhile the Chinese are aggressively investing in web services in a “leap-frogging” event similar to the Korean and Japanese adoption of mobile technologies. In our research, 70 per cent of Chinese companies are committing a major part of their business to web services, compared with 48 per cent and 42 per cent for European and US companies respectively. As companies use these new standards for communicating with other systems, people and companies, they cut manual business process costs to one-10th of current levels and can flexibly change features and services in less time for substantially less money.
US companies may be spending more but they are not spending better. Spending on the Sarbanes-Oxley compliance law and mergers and acquisitions integration is consuming most discretionary capital. This has delayed crucial new projects and left old systems to support ageing processes. The first automated processes are seldom the best.
The best productivity gains come when companies replace, rather than window-dress, current applications. As information technology has become the dominant form of capital expenditure in the US, we fail to recognise one big difference between a computer system and a tractor. A tractor can predictably age and depreciate over five years, yet a computer system can become obsolete overnight with one download of a rival’s latest feature….”
FT
http://tinyurl.com/2w4993
The FT still does not get it. It is not SOX, it is the preferential treatment given to quick profits as opposed to setting up long term gains. Japan, China, India, Korea set up 5 to 20 year plans. Long term planning in the US is 6 months.
SEC probing rating agency procedures
By Greg Morcroft
Last update: 1:11 p.m. EST Feb. 14, 2008
http://www.marketwatch.com/news/story/sec-probing-rating-agency-procedures/story.aspx?guid=%7BA603A76A%2DD1EE%2D4D49%2DA45F%2D58FF0256DCF2%7D&dist=hplatest
http://www.dqnews.com/ZIPLAT.shtm
LA Times zipcode data out for January. It’s brutal, as expected.
Thanks for the heads up…that got me into looking at my saved DQ data:
LA County January median home $/sq. ft. 2007: $396
LA County January median home $/sq. ft. 2008: $336
A 15% year-over-year drop in median house price per square foot for LA County.
Also…
Sales of single family homes, LA County, Jan 2007: 4855
Sales of single family homes, LA County, Jan 2008: 2382
One more observation…
If you bought in LA in 2006 or early 2007, and only put 10% down (or less), you are likely already “underwater” on your purchase.
Friend of mine purchased 3/2 in 05′ (Central Calif.) for 415k against my advice.
Home Zillows now at 280K and dropping. 30 percent freakin’ haircut. Man that’s gotta hurt. We don’t talk about it. He dropped my apartment last week and asked “when are you going to move?” I told him I was keeping my powder dry and waiting for prices to align with equivalent rents.
I keep thinking how bizarre it would be to buy a place in his neighborhood at 50% or more off what he paid…and it could happen.
DOC
Just remembering, nostalgically, how my arrogant realtor neighbor made fun of my interior color choices years ago (my favorites) saying how they weren’t good for resale. That was 1999, and up to a few weeks ago I had a beautiful rustic red tuscan kitchen, which one painter refused to redo saying it was too pretty to change. At the time, I told him (the realtor)that I was planning to live here for awhile and wanted to enjoy my surroundings - you know, that old “house is a home” thing???? His plan was to buy his house and sell it a few months later… cha-ching, but his wife put her foot down and stopped it. I passed him last week driving a rather decrepit vehicle, and he didn’t look as arrogant anymore.
There’s still plenty of fools on this ship…
FOR SALE BY OWNER!!! This weekend only- construction on this flip begins this coming Tuesday. In an effort to secure another “FLIP” we are offering this house at a reduced price if it goes under contract by Tuesday 2/19/08
http://tinyurl.com/2h22pb
So why is the Office of the Comptroller of the Currency not be skewered over all of this? They are the ones who sued the state regulators to get them to back off.
Roidy
US Treasury, agency debt issuance to explode - UBS
Investors will also be faced with net issuance of $114 billion in debt from government-sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Bank system as lenders rely on the GSEs for mortgage funding, UBS strategist Ivan Hrazdira said on the call. But the “agency” debt may outperform Treasuries given the surge in government sales.
Yields on the so-called “rates products” could jump should the increased supply coincide with an easing of the global credit crunch, the strategists said. Central banks that are major buyers of Treasury and “agency” debt are also likely to slow their accumulation of U.S. dollar reserves, reducing demand, they said.
“When the starting gun for the rush back into credit has been fired, we believe Treasuries could suffer greatly in the mad rush for yield,” they said.
http://www.reuters.com/article/marketsNews/idUKN1444723120080214?rpc=44
Monolines given five days to find funds
By Aline Van Duyn in Washington and Michael Mackenzie in New York
Published: February 14 2008 14:54 | Last updated: February 14 2008 21:47
Eliot Spitzer, New York governor, on Thursday gave bond insurers three to five business days to find fresh capital, or face a potential break-up by state regulators who want to safeguard the municipal bond markets.
Mr Spitzer’s warning came shortly before Moody’s Investors Service highlighted the concerns about the bond insurers by withdrawing its triple-A credit rating for privately held Financial Guaranty Insurance Company.
http://www.ft.com/cms/s/3b313712-db09-11dc-9fdd-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F3b313712-db09-11dc-9fdd-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Spitzer Discusses Options For Bond Insurance Industry
By Judith Burns and Michael R. Crittenden
Word Count: 583 | Companies Featured in This Article: MBIA, Ambac Financial Group
WASHINGTON — Regulators may need to take further steps within the next week to address problems in the bond insurance industry to prevent them from posing an economic threat that extends beyond Wall Street, New York Gov. Eliot Spitzer told lawmakers Thursday.
While downplaying the idea of a government bailout of financial guaranty firms, Spitzer said the next step may be to have troubled financial guaranty firms split their operations into two companies. Such a division would divide the municipal bond insurance business from the business of insuring riskier asset-backed securities and other structured finance arrangements.
http://online.wsj.com/article/SB120303419189870081.html?mod=hpp_us_whats_news
Mr. Spitzer is not totally innocent of the carnage going on in the monoline industry. When asked by Mr. William Ackman to investigate Ambac and MBIA back in 2003, Mr. Spitzer chose instead to investigate Mr. Ackman at the instigation of MBIA. If Mr. Ackman’s due diligence had been observed by the laws of the state of New York perhaps it would be a different world.
There is far more political drama in waiting for things to blow up before cleanup, than in taking preemptive measures to avoid blowups to begin with.
Moody’s, S&P’s Dark Secrets May Live in E-mails: Jonathan Weil
Commentary by Jonathan Weil
Feb. 13 (Bloomberg) — So, Andrew Cuomo, you really want to clean up the credit-rating companies? You want your dad’s old job after Eliot Spitzer moves on? You want to be a rock star?
Then show us the e-mails.
That’s right. Show us the e-mails, baby!
Forget litigation strategy, or constitutional subtleties like tainting the jury pool and violating corporations’ civil rights.
If you’ve got the goods on Moody’s Investors Service, Standard & Poor’s or Fitch Ratings, let’s see them. If you don’t, get them. And if you can’t, quit slamming the credit raters and announcing how vigilant you are.
http://www.bloomberg.com/apps/news?pid=20601039&sid=adk5g.L3jkis&refer=home
KAI RYSSDAL: You wanna know why economists drive regular people nuts? Because they say things like this:
BEN BERNANKE: “At present my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt.”
Followed seconds later by this:
BERNANKE: “It is important to recognize that downside risks to growth remain, including the possibilities the housing market or the labor market may deteriorate to an extent beyond that currently anticipated or that credit conditions may tighten substantially further.”
In other words, we’re fine — unless the things that’ve been happening for the past six months keep on happening.
That was Fed Chairman Ben Bernanke on Capitol Hill today testifying before the Senate Banking Committee. He had company at the witness table. Christpher Cox, the chairman of the Securities and Exchange Commission was there, as was Treasury Secretary Henry Paulson.
Senators from both sides of the aisle asked Mr. Paulson why the government’s not doing more about the subprime crisis. And after a bit of that he let us know what he really thinks.
HENRY PAULSON: “I didn’t create this problem. I’m working to try to do something about it. If this effort doesn’t work, then we’ll make adjustments in it. But, again, there are going to be …. I don’t mean to sound heartless, because I’ll tell you, when you’re there and you look at the abuses and you look at the predatory lending abuses, and you look at some of the … it’s heart rending. But what we’re doing is trying to deal with it. And about all I can say to you is if you’ve got other ideas for me, for Pennsylvania, send ‘em on in.”
We ought to note nobody took him up on that offer.
http://marketplace.publicradio.org/display/web/2008/02/14/sec/
KAI RYSSDAL: It’s not only ordinary investors who don’t know what to do with their money anymore. Research out today says professional money managers are more risk averse now than they’ve been since September 11th. Our New York Bureau Chief Jill Barshay has more.
JILL BARSHAY: Money managers don’t like cash. It doesn’t earn them much money. They prefer to invest in stocks and bonds. But they’ve been selling hard over the past two months. Nearly 5 percent of a typical portfolio is now parked in cash. So says a new survey by Merrill Lynch.
Lakshman Achuthan is the managing director of Economic Cycle Research Institute. He says the pros stock up on cash when they think stocks and bonds are too risky.
Lakshman Achuthan: It’s like if you were speeding down a highway and you came upon a very dense fog. You would certainly slow down before going further.
Achuthan says the more cash investors have, the safer they’ll be if markets tank. But hoarding cash is bad for the economy.
Achuthan: Businesses need access to funding from money managers. Now if the money managers are averse to purchasing stocks or bonds, and they’d rather hold cash, in essence it’s putting a lid on the amount that businesses can grow and economic growth.
http://marketplace.publicradio.org/display/web/2008/02/14/risk_aversion/
Given current credit market conditions, underwater homeowners are not the only parties who might do best by walking away from their obligations. Apparently, worrying about one’s reputation is a problem of the past.
Banks advised to walk away from big deals
By Henny Sender in New York
Published: February 14 2008 22:03 | Last updated: February 14 2008 22:03
Leading banks are being advised that it would be cheaper to walk away from big buy-out deals than incur further losses on their funding commitments, increasing the chances that more high-profile private equity transactions will collapse.
This advice from lawyers contrasts with the conventional wisdom that banks would risk serious damage to their reputations if they were to drop out of deals.
http://www.ft.com/cms/s/5becb572-db30-11dc-9fdd-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F5becb572-db30-11dc-9fdd-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
The Bang-bang control era has commenced at the Fed…
Economy & Fed
Rate cuts consign gradualism to history
By Krishna Guha in Washington
Published: January 31 2008 01:00 | Last updated: January 31 2008 01:00
Is the era of gradualism at the Federal Reserve over? After 125 basis points of interest rate cuts in the space of eight days some economists are asking whether the US central bank is taking a new approach to monetary policy.
They see the new approach as one that emphasises getting rates down quickly to whatever level looks appropriate in the light of new information, rather than moving in a series of incremental steps.
http://en.wikipedia.org/wiki/Bang-bang_control
http://www.ft.com/cms/s/87bc4dc0-cf96-11dc-854a-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F87bc4dc0-cf96-11dc-854a-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Current median used SFR list price in Rancho Bernardo (our San Diego nbhd / zip code 92127) = $1,150,000. This is $50,000 less than the last time I checked (within the past month). The 2007 drip — drip — drip of gradually declining prices is turning into a rapid drop…
Here is a better one yet: Rancho Santa Fe 92067 showed a median used SFR list price of $3,950,000 forever. I just checked — it is down to $3,695,000 — $255,000 less than last time I checked. Take your time if that is what you are hoping to pay for your executive mansion, as there are currently 5 homes out of the 187 SFRs on ziprealty’s used SFR inventory at exactly that price point.