The Era of Significant Price Increases Has Come To An End
Some housing bubble news from Wall Street and Washington. Bloomberg, “Standard & Poor’s said today in a report…writedowns from subprime securities will probably rise to $285 billion. The ratings company previously estimated losses of $265 billion in January. The world’s largest banks and securities firms, including Citigroup Inc., UBS AG and Merrill Lynch & Co., have reported more than $188 billion of subprime-related losses since the start of last year, according to data compiled by Bloomberg.”
“‘It is clear that the ultimate credit losses on the more than $1.2 trillion of subprime loans originally granted in the U.S. from 2005 to 2007 will be substantial,’ S&P said in the report, which focused on U.S. subprime asset-backed securities.”
“Future writedowns may come not only from banks but also hedge funds, insurers and institutional investors, S&P said.”
From Reuters. “An affiliate of U.S.-based buyout firm Carlyle Group has defaulted on about $16.6 billion of debt and expects its lenders to seize remaining assets.”
“Carlyle Capital Corp, a fund listed in Amsterdam, said that talks with lenders deteriorated after a drop in the value of its mortgage investments, which it said would result in margin calls of $97.5 million on top of the $400 million it was already facing.”
“A ’successful refinancing is not possible,’ Carlyle Capital said.”
“‘We’ve been expecting, for a while, for the hedge funds to get into trouble,’ said Andrea Cicione, a credit strategist at one of Carlyle Capital’s lenders. ‘We are in a vicious spiral of unwinding years of increasing leverage in the space of a few weeks,’ he said, and no one can say how much leverage must be wrung out before the unwinding comes to an end.”
“Carlyle Capital said the only assets it has left are AAA-rated residential mortgage-backed securities, and it expected lenders to foreclose on this collateral. On Tuesday, the U.S. Federal Reserve expanded a securities lending program to provide short-term liquidity of $200 billion.”
“The Fed ‘clearly could provide an incentive for the banks to let hedge funds go under when they get in trouble, rather than keeping them afloat,’ Cicione said. ‘Now banks can seize the assets and post them as collateral.’”
“The Carlyle Group, based in Washington, DC, has more than $75 billion under management and has attracted a string of high-profile advisers.”
“According to CCC’s annual report, counterparties for its repurchasing agreements as of the end of 2007 were Bank of America, Bear Stearns, BNP Paribas, Calyon, Citigroup, Credit Suisse, Deutsche Bank, ING, JP Morgan, Lehman Brothers, Merrill Lynch and UBS.”
From CNBC. “Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday.”
“‘No country in the world has ever succeeded by debasing its currency,’ he said. ‘That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.’”
“The Fed’s move to accept risky collateral is not part of the central bank’s business, he added. ‘What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That’s absurd,’ Rogers said.”
“A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail.”
“‘Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich,’ he said.”
“Japan’s Shinsei Bank lowered its full-year forecast for a third time on Thursday, hit by widening subprime losses. Shinsei, which still owes the government more than 200 billion yen ($2 billion) from a bailout in the 1990s, has been one of the Japanese banks hardest hit by the subprime crisis.”
“Shinsei spokesman Donald Macintyre said subprime-related losses could total as much as $100 million in the fourth quarter, or the three months to March. That is on top of the $218 million the bank reported as of the end of December.”
“Japan’s banks have so far lost about 600 billion yen from the subprime crisis, according to the Financial Services Agency, Japan’s regulator. That is still just a fraction of the massive hit taken by western banks.”
“Shinsei has taken criticism for being slow to repay the government. ‘From an investment standpoint, Shinsei has very little to offer,’ said Koichi Ogawa, chief portfolio officer at Daiwa SB Investments.”
“Sales of new apartments in Tokyo fell to a 15-year low for February, a research firm said on Thursday. Sellers of apartments in Japan’s major metropolitan areas have been hiking prices to offset the higher cost of land and construction materials, but with wages stagnant and the economy shaky demand has tailed off.”
“The research firm’s data showed that the number of new apartments put up for sale in the Tokyo metropolitan area came to 3,460 units in February, down 28 percent from a year earlier and the sixth straight monthly decline.”
“It was also the lowest level for that month since 1993, after Japan’s economic bubble popped.”
“Irish Life & Permanent’s bank permanent tsb will no longer offer 100 percent mortgages to home buyers due to a slowdown in Ireland’s housing market, a permanent tsb spokesman said on Thursday.”
“An end to Ireland’s decade-old property boom, when prices quadrupled, has put the brakes on years of rapid economic and jobs growth.”
“A permanent tsb spokesman said it will cut the maximum amount it will offer for residential mortgages to 92 percent from 100 percent from the end of March. It began to offer the service over two years ago, spurred by a booming market and competition from rivals.”
“‘We think this is a prudent approach to the current market circumstances,’ he said. ‘The era of significant (house) price increases has come to an end.’”
“The spokesman said permanent tsb would also cut the maximum loan it will offer to investors looking to buy homes to rent, to 80 percent from 90 percent. ‘It is reflecting a changing mortgage market place in Ireland,’ he said.”
The Globe and Mail. “The effects of the U.S. subprime crisis are showing up on the fringe of the Canadian mortgage business. The result is a slow retrenchment in a sector that held about 5 per cent of the Canadian mortgage market before the credit crunch spread from the United States in August.”
“Some offices have been closed, employees have been let go, and fewer so-called alternative products are being offered to borrowers who do not qualify for regular loans.”
“Toronto-based Xceed Mortgage Corp. yesterday suspended its line of uninsured mortgage products, effective immediately. Mississauga-based lender MoneyConnect Inc., meanwhile, told brokers last week that it’s liquidating a portfolio of mortgages.”
“Lenders in this sector that rely on securitization can’t access financing to take on new mortgages, noted Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals.”
“HSBC Financial Corp. Ltd. shut down its mortgage services operation here, closing dozens of locations and cutting about 300 jobs as it exited the subprime mortgage business in North America. GMAC Residential Funding of Canada cut about 70 employees.”
“And Accredited Home Lenders, which could not be reached for comment, appears to have chopped its Canadian work force and stopped accepting new loan applications at its Toronto and Vancouver offices because it could not securitize the loans in Canada.”
“The decrease of uninsured mortgages has caused an increase in business for alternative lender Home Capital Group Inc., whose mortgages are insured by Canada Deposit Insurance Corp. and cover no more than 80 per cent of a home’s value, CEO Gerald Soloway said.”
“The entry of higher-risk mortgage providers into the conservative Canadian market was an anomaly, and he’s happy to see things returning to the way they were.”
“‘I personally think … this is a good thing for the economy long term, because we’ve seen the devastating effect it’s had on the United States with mass foreclosures, mass evictions, great disruption. They thought they were doing a great gift for people letting them into a house with no money down,’ he said. ‘But I think in reality the disruption to society as a whole far outweighs that benefit.’”
The Associated Press. “Treasury Secretary Henry Paulson said Thursday that a presidential working group wants stronger regulatory oversight of mortgage lenders to avert the kind of credit crisis that is dragging the economy down.”
“One recommendation calls for federal and state regulators to strengthen oversight of mortgage lenders and another urges state financial regulators to implement strong nationwide licensing standards for mortgage brokers, according to the group’s report, released Thursday.”
“‘The objective here is to get the balance right — regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it,’ said Paulson, who heads the working group.”
“It includes Federal Reserve Chairman Ben Bernanke and the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission.”
“Bernanke said the group’s recommendations ‘constitute an appropriate and effective response to the deficiencies in our financial framework that contributed to the current turmoil in financial markets.’”
“‘The turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into early 2007,’ the president’s working group concluded. ‘But the loosening of credit standards and terms in the subprime market was symptomatic of a much broader erosion of market discipline on the standards and terms of loans to households and businesses.’”
“‘There is no single, simple solution to the problems that have emerged … yet we have determined that market participants’ behavior must change,’ Paulson added.”
The Philadelphia Inquirer. “For all the Federal Reserve’s efforts to get the nation’s capital markets back on track, what is needed most of all might be time, Kenneth D. Lewis, CEO of Bank of America Corp., said in Philadelphia.”
“‘I think everybody is frustrated at not being able to come up with a solution,’ Lewis said on a visit to the National Constitution Center.”
“‘One wonders if the answer is not just some more time and some more pain before we can set this right,’ the head of the nation’s second-largest bank said.”
“Bank of America…is contending with subprime-mortgage-related losses even though it did not make such loans. The losses are coming from complicated mortgage-related securities held by the company’s investment-banking division and from home-equity loans, Lewis said.”
“The losses on home-equity loans are occurring because many borrowers…now owe more than their houses are worth, so they abandon them, Lewis said.”
“‘It’s actually a sociological factor that we’ve never seen before, because people in the past have always protected their homes above all else,’ Lewis said. ‘Now they are paying their credit card and their automobile loan, but walking away from their house.’”
the ppt got started early today- huge swing on the dow
S&P said subprime writedowns would only hit $285 billion. That sent the market skyrocketing. I guess the market didn’t realize that this is only refering to subprime. What about Alt-A, prime, credit cards, student loans, etc? Total write-downs will dwarf that number.
True, but we all know that the market can’t be bothered to look more than a few days into the future.
After all, Wall St. loves open borders. Do they worry about what will happen when population hits the 500M mark 1 billion? Of course not. That’s “someone else’s problem”.
Add prime home loans to that mix. Lots of high-FICO borrowers obtained mortgage loans that were 5X+ documented, annual income. If Libor stays low these prime borrowers may be saved from interest rate reset problems but will they want to service large debt when they are under water?
Looking at the past three months — you still believe in the PPT? Does Professor Bear even believe in it any more? This is just a little happy moment in a drawn out, wretched, inevitably tragic fall. Sort of like the lighter parts of Kindertotenlieder, where the father has visions of his daughter playing in the sunshine right before she dies of diphtheria.
“Kindertotenlieder”
Sad irony that poor Mahler lost one of his own Kinder.
PB is more like St. Anthony preaching to the fishes from Des Knaben Wunderhorn.
OK. You get the award for most obscure cultural reference of the day. For those of you who, like me, are culturally challenged:
The original Kindertotenlieder were a group of 425 poems written by Rückert in 1833–34 in an outpouring of grief after two of his children had died in an interval of sixteen days. Mahler selected five of the Rückert poems to set as Lieder, which he composed between 1901 and 1904
Thanks — I love obscure cultural references.
You can always count on the Germans for obscure, depressing and difficult-to-spell phenomena for generate a ridiculous metaphor.
They’re pretty good too - I learned one in voice lessons a few years ago.
Love these obscure references! If you’re into Mahler, check out the Ken Russell film, “Mahler.” Quite the musical/visual feast.
Sorry to ask, PPT?
Plunge Protection Team
http://en.wikipedia.org/wiki/Plunge_Protection_Team
A real group that gets credited for every up day on Wall Street that “should not have happened.” You will get tired of the PPT reference everytime someone loses money on the short side.
When things happen that people don’t like, the PPT is invoked. When things go in the direction people want, the PPT is on holiday.
What is clear to people in the “know”, of course, is that PPT is omnipresent, omnipotent, and have plenipotentiary powers.
When people can’t explain why the market goes up, its the PPT. The same way people once explained thunder and lighting as gods fighting. The fact that other markets around the world sometimes behave the same way is quietly ignored. Other people point to the fact that the Fed sometimes acts behind the scenes as “proof” that it must be the PPT that moves the market up.
Thanks for asking; I had PowerPoint, Parts-Per-Trillion, Precipitate … now it all makes sense.
I still believe in them. I suspect the earlier carnage would have been much much worse without them.
I agree.
‘a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into early 2007′
The lending standards dates are questionable, but the fact is subprime lending took off at least by 2002 and exploded in 2003. I’m thinking these guys want to make it seem like this all happened later and very suddenly, since it was on their watch.
it is funny Ben. all the ptb act so surprised at the sheer volume and magnitude of the losses when it was discussed ad nauseum on this blog for quite sometime
what a bunch of liars
I first heard the term “subprime” in a Minnesota bowling alley in December 2003. The guy talking about doing this particular form of lending made it seem like he had been doing a lot of it for quite some time AND that all of it was bad. He laughed about how badly they were sticking it to people.
I would have been tempted to bop the speaker over the head with a bowling ball.
Kind of like sticking it to the man.
http://www.youtube.com/watch?v=sICrLV1px5s&feature=related
Oops,
Here’s the one I really like about sticking it to the man:
http://www.youtube.com/watch?v=sICrLV1px5s&feature=related
Right, someone I met in 2003 described his business as “subprime lending.” I said my business was also subprime lending. Little did I know that my clients, who would not have qualified for that guy’s loans, would prove to be the better risk. LTV, LTV, LTV.
Skin in the game, skin in the game, skin in the game.
I’m thinking these guys want to make it seem like this all happened later and very suddenly, since it was on their watch.
I think you are correct! Being an election year they will try and play the blame game. I would bet that shortly after the election things will blow up again!
RE: the fact is subprime lending took off at least by 2002 and exploded in 2003.
Pretty much agree with those dates Ben.
I shut my appraisal office doors in 2002 because the coercion and insistence on blatant lying coming from the lenders had become virtually intolerable.
However, I think the garbage lending slide really began back in ‘92/’93 when the FEDERAL mandate for appraiser licensing put legions of hacks out on the street allowing the mortgage lenders to shop for whatever value or data fudging they needed.
So by 2002 all the legit and honest appraiser’s had pretty much been run out of business, and it was “Katie bar the door-it’s open season!”, when Greensleaze crashed rates after 9/11.
We knew a few people — who should NOT have qualified to borrow $100 — get these “great” new mortgages back in 2002. IMHO, the credit bubble began in 2001. By 2002, things were well on their way.
They also fail to mention where the RE cycle was BEFORE the credit bubble began. I believe the cycle was at its natural peak by 2001 and would have fallen from there if not for the credit bubble. Check out charts showing sales, prices, etc. over years (sorry, too busy to find them right now).
Without ususual intervention, prices should drop to pre-2001 prices, IF we don’t have a very significant recession/depression. We’ll drop below that if the economy tanks, IMO.
ususual = unusual
No wait, that’s a good slip. Ususual - as in usury, or usurious. Very apropos!
I have to agree with you 100%. I distinctly recall looking at houses in late 2000 and early 2001 and thinking that the prices were too high then. Imagine my surprise when they took off from there and went straight up. The Gov and the REIC set this up to stave off the depths of the dot bomb crash and the 9/11 darkness. Now we all have to pay the piper for the past imprudences.
“stronger regulatory oversight of mortgage lenders to avert the kind of credit crisis that is dragging the economy down” — a few years to late, like closing the barn door after the horses have run off & gotten hit by a train. Anyway, the barn is on fire.
“‘No country in the world has ever succeeded by debasing its currency,’ he said. ‘That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.’”
Reference:
1. Oil prices
2. Dollar to Yen
3. Dollar to Euro
Wow… the faith in the dollar has gone from bullet proof to shakey at a rate that surprises even this bear.
Got Popcorn?
Neil
Not to worry, the S&P has informed us that the worst is over.
http://biz.yahoo.com/ap/080313/wall_street.html
Is this the same S&P that rated all this crap AAA in the first place?
Nah, that was S&Ps evil twin brother.
“We’re safe,” [Ford] said.
“Oh good,” said Arthur.
“We’re in a small galley cabin,” said Ford, “in one of the spaceships of the Vogon Constructor Fleet.”
“Ah,” said Arthur, “this is obviously some strange usage of the word ’safe’ that I wasn’t previously aware of.”
- From Hitchhiker’s Guide to the Galaxy
(Reminded of this by Mr. Paul Kedrosky)
We’re half way there say the people that missed the first half! We’re safe!
Don’t Panic
Finally, a cultural reference that I get.
“Is it Safe?” the Nazi dentist keeps asking Dustin Hoffman in Marathon Man.
“The S&P’s note arrived on the heels of a spate of troubling news.”
Kinda makes you wonder!
I recall looking at S&P’s stock ratings in 1999; two stocks that they were especially ga-ga over were Enron and Worldcom. That told me all that I shall ever need to know about the quality of their analysis.
Not to worry! It is all contained.
Neil, you have to realize that Mr. Paulson et al have no long dollar positions, they are not idiots and since it is trading in foreign currency, I am not sure that this would violate any US fiduciary laws. If you sold dollars and bought any reasonable currency every time one of the politicians said “we favor a strong dollar”, you made a bucket of money.
“Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday.”
“‘No country in the world has ever succeeded by debasing its currency,’ he said. ‘That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.’”
I all can do is nod my head in agreement.
I have been saying over and over that the FED is destroying our money with its cheap money policies, but who am I? Here we have one of the all time greats in stock markets saying Bernanke is an idiot.
Thankyou. Stop trying to help Paulson and his buddies cover up all their fraud and bad bets. Flush the system.
More rate cuts on the way…
I was watching this interview yesterday and could only cheer Jim Rogers on from my living room.
Somebody needs to say it.
Just wait until China lets the yuan appreciate with vengeance to stem the rapid rise of inflation. Everything else before will pale in comparison.
But how fast can they let it appreciate? A pricier Yuan means fewer jobs and they’re generating 8 million/year short of the required number. So much for creating internal demand…
This isn’t going to end well. When oil hits about $120/bbl, even tech will start to see layoffs. (e.g., due to the power required to run data centers).
I wouldn’t be surprised to see a break in the bad news and have one last stock rally. But as to real estate? I just cannot believe anyone when they say sales are improving.
February sales were not encouraging anywhere that has released the data.
Got Popcorn?
Neil
Isn’t the majority of power supplied by coal?
Yes, but don’t count on that saving anybody: Coal price seen rising 3 fold, to hit record - Merrill
Political stability is their number one goal. Runaway inflation isn’t helping the cause. As for a stronger yuan equating to fewer jobs, I don’t see that yet. Export manufacturing away from China is already happening and they are trying to move up the food chain in regards to goods produced. A stronger yuan will help that process along. Construction of larger urban cores will still continue, with or without a weaker yuan. Actually, anything that might stem the commodities boom will be sweet music to their ears as they are a major importer or raw materials.
It is appreciating at a rate that is just fine. A Goldilocks appreciation.
It has never worked in the long term or the medium term
someone explain to me why he didn’t mention the “short” term..
Meaningful omission, perhaps?
Because it can “work” in the short-term — it spurs economic activity which seems like economic prosperity while it’s occurring, but it is actually malinvestment creating a bust and inflation in the long-term. The housing bubble is a great example — it looked good while it was occuring (to many if not most people), but now it sucks. That’s Jim’s point I think. It’s like taking tons of caffeine or any other stimulant — it keeps you pumped up in the short-term, but then later your body has to crash and work it off. So too, creating money and pumping it into the system can create a burst of activity, but it’s a phony burst because creating money out of thin air doesn’t actually create real capital.
He think it’s presently working? If so, he must mean we haven’t faced the real music yet.
can you say petroeuro!
“A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail.”
Wow! Someone who actually gets it. Yes, little pain now is better than a lot of pain later.
Let us remember this:
If you punish production, you get non-production. If you reward non-production, you get non-production.
Uncle Sam should closely follow that quote above for the good of the country, and the world.
Yup. He nailed it in one swing! “Socialism for the Rich”! Finally someone in the MSM said what we all have been thinking. Privatize the profits and socialize the risks is NOT Capitalism. Maybe some sort of Fascism.
“‘Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich,’ he said.”
Amen
Tell the truth and shame the devil, Mr. Rogers!
“that’s not capitalism, that’s socialism for the rich”
Uttered on CNBC, I thought hell froze over. Then I checked again - oh, CNBC Europe. They can hear it, they already know.
Just wait, he will be accused of instigating class warfare.
Come on. By whom?
The supply side crony capitalist moon bats… who else?
Here’s is a riddle. Lyin’ Cocaine Larry Kudlow, the great deny-er of all things good, decent and reasonable, a confirmed globalist, PR whore and supply side charlatan is yammering for the fed to raise rates and has been for 2 weeks. This guy is the best contrarian indicator since Abby Joseph Cohen and as trustworthy as your local car thief.
Jim Rogers isn’t a main stream media guy. He’s an investment banker, IIRC, who moved to Asia from the U.S. Jim Rogers and Marc Faber have been calling the unwinding right from the start of the insanity.
Rogers seems to understand the saying “won the battle, but lost the war”. If you don’t have price stability, you have nothing.
Sounds likes Rogers thinks there is a bailout going on, and is not pleased.
Ahem..’What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That’s absurd’
he must have a direct line to prof.bear
Sounds like Rogers is short the market, and talking his book…
Rogers is long commodities, he’s just calling it like he sees it. He knows no one will listen. He’s so rich he doesn’t need to talk his book.
Rogers is the smartest guy in the room, pretty much all the time. He made his fortune and bailed. He has been honest, and correct, for years. I for one have made money listening to him and he never charged me a cent.
“Rogers is the smartest guy in the room, pretty much all the time. He made his fortune and bailed. He has been honest, and correct, for years. I for one have made money listening to him and he never charged me a cent.”
Does he publish a newsletter or anything else that can help.
I think the era of “Flip that House” shows may be coming to an end. I wonder what kind of shows will replacing them?
“Evict that deadbeat tenant” - Join Tanya Meme as her and her team of real estate pros help a landlord navigate the legal system to evict a deadbeat tennant. Watch as master carpenter Eric Stoemmer fixes the damages left behind.
I actually sent out some program proposals 2 years ago. I suggested they let me go around the country and show these little shacks selling for half a million. Never heard back. It could have done some good, too.
I can’t quite decide whether that kind of program would be entertaining or just pi$$ me off.
There are some shows out there for selling homes. However, they’re really weak. They don’t show the actual final show. Instead they show them helping the seller get to market… sheesh! Show me the sales price and the loss!
Got Popcorn?
Neil
I have seen some “Get it sold” episodes in the Fine Living Network where the house did not sell. The last one was about a woman who had bought another house before she sold the old one. The show ended with her realtor having negotiated with her for the builder of the second house to postpone payments on it until she could get rid of the old one. There was a lot of stress in that woman’s face. I also noticed that many of the shows where the house actually ends up being sold are filmed in Canada.
Demolition is always entertaining, HGTV could create a new game show where two groups of FBers compete to see who can demo a house the fastest using a crowbar and a mallet.
I think a program highlighting FB’s displaying all the toys they bought with their housing ATM would be nice.
“Repo Man” Harry Dean Stanton & Emilio Estevez host this series based on their cult classic. Watch as courageous men and women repossess the cars, trucks, boats, motorcycles and motorhomes of deadbeat America.
Brilliant! I’d watch…..reminds me of that HBO show Family Bonds, where they chase down people who’ve jumped bail.
They’ve already started replacing them with the “follow up” show:
“We just fell in love with the house and decided to live in it ourselves instead of selling”;
“After 8 months on the market, Lisa and Jim are still waiting on an ‘acceptable’ offer on their flip”;
“After a year, Bill sold his flip to another investor for $5k more than he paid for it in 2006. After holding costs and closing fees, he lost $10k”
The show has become quite entertaining . . .
Someone should make a show called “You want HOW MUCH for that house?”, were they show several houses per episode that have sat on the market for 6 months or more because of a ridiculously high price. They could include the sellers’ reactions to “insulting low-ball offers”, and delve into how much the sellers currently owe on the house, along with information on the type of loan used, HELOCs, etc.
There was one fugly home inside and out and sat right next to a fwy, and the homeowners were shocked shocked I say that they were told over the phone the asking price, then the gals came in and said Ewwwwwww you should never ask someone over the phone to price your home. They can’t see what a mess your place is or what is right next to it..fwy…
I guess there are alot of folks who bought just about any darn thing to OWN.
The ‘gals’ hinted that perhaps the value wasn’t anywhere close to the $695 they were asking.. I got the feeling the ‘gals’ were thinking more like half…deer in headlights..
Also, a reality show called “Tan Man”, following Angelo Mozilo around in his daily life as he copes with the fallout of the lending crisis.
I would only watch it if they tortured him at the end of each show. He could lose a finger each episode.
I think the era of “Flip that House” shows may be coming to an end. I wonder what kind of shows will replacing them?
The new show will be called “Flip the Flipper”
‘The new show will be called “Flip the Flipper”’…
Kind of like dwarf-tossing?
How about a show called “That Flipping House!”? It could offer a glimpse into the deteriorating mental state of the FB’s as they lose everything, including their marriage.
LOL
I would TOTALLY watch a show like that!
“JingleMail” - A weekly series showing “real world” cases of FBs wringing every ounce of revenge and profits from their over-leveraged, over-priced real estate before walking. MTV Real-World meets Dog The Bouty Hunter. A Joshua-Tree Production.
just spoke to my wife and her employer whose husband is an attorney @ bear stearns and rumor around the office is possible bankruptcy
BS, ML, Citi, Bank of Aliens- let them all go BK. It won’t take long for new firms to fill the void.
Bank of Aliens
LOL! Maybe they should rename it Bank of Latin America.
“‘It’s actually a sociological factor that we’ve never seen before, because people in the past have always protected their homes above all else,’ Lewis said. ‘Now they are paying their credit card and their automobile loan, but walking away from their house.’”
Now they are protecting their pocket book! Another modeling program that went kaput.
From the WSJ: “Brainstorming About Bailouts”
“Should the government (the U.S. government, that is, not foreign governments’ sovereign wealth funds) put capital into banks?
“I think they should be considering it, at least thinking about it,” Mr. Scholes said. “It seems to me that recapitalizing these entities would give us an opportunity to preserve the assets — as opposed to dissipating their value through liquidation or foreclosure — and provide a way for more capital to be infused into them without destroying value.”
As John Lipsky, No. 2 official at the International Monetary Fund, argued in a speech yesterday: “Policy makers…need to ‘think the unthinkable.’” He called for government “contingency plans” in case “investors aren’t willing, as they have been up to now, to provide capital injections” to banks.
But there’s a conundrum. If the government guarantees or buys debt from the bank, it makes the equity holders better off. If it buys equity and dilutes existing shareholders, it makes debt holders better off.”
Very hard to structure bailouts to not give the appearance of robbing Peter to pay Paul.
The Federal Reserve is putting capital into banks. When the Federal Reserve accepts non investment grade paper as collateral for loans and keeps these loans ‘Evergreen’, they are effectively nationalizing the banks.
“Very hard to structure bailouts to not give the appearance of robbing Peter to pay Paul.”
A fool and my money are soon partners…
“A fool and my money are soon partners…”
I always wondered how a fool got any money. Now I know, he gets yours- “It’s hard to pity a fool if you get too close.” Mr T
If they want to put capital into the banks, then they need to do it THROUGH citizens.
Back to my often repeated plan! Another “stimulus package” but 15x as big. $2 trillion. If you have debt, the money goes to paying down your debt.
Combine this with return of strong debt regulations, federal budget spending cuts and tax increases so that we actually pay back the money.
People in debt get some relief. People looking to buy a house get a down payment. People with cash in the bank are compensated somewhat for loss in purchasing power. People WAY in debt are still fooked.
What happened to the great “ownership society?” Why can’t the banks, hedgies, etc. - own their own nasty bad debts and suffer the consequences. If millions of people can go without medical care because they are the master of their destiny and they should stop sucking the life out of the government, it should be the same for the rich ones.
Why not let the chips fall where they may?
We need to **cleanse** the system.
Throwing good money after bad has dire consequences. Those who made bets based on unreasonable assumptions need to be cleared out so we can get back to building a **real** economy based on building things. Enough with the financial lever-pulling economy!
The faster we get through this, the more likely we can get through the recession and possible avoid a depression.
If they drag it out, people will continue to lose jobs and default on debt which **might have been** paid off if not for the length of the recession/depression.
We will be in a recession until bad debts are cleared out. Do you want it to be a longer, costlier recession, or a quick, very painful one? I prefer the latter.
Don’t you realize how it works? We need rich people, no matter if we need to pay them to be rich, because we will all be rich. Without rich people, we can’t be rich. Got it?
Maybe not an important question in principle, but I am thinking ML is in better shape (or has not admitted to being in such bad shape), compared with BS, Citi and BofA. Am I wrong?
Well not according to their CEO. We can’t trust him?
“Chief Executive Alan Schwartz begged to differ with Wall Street. “There is absolutely no truth to the rumors of liquidity problems,” he said, adding that Bear’s “balance sheet, liquidity, and capital remain strong.”
Looks like we should be askingg one question, what counterparties are exposed to a Bear Stearns failure? Motley Fool asks - Is Bear Stearns Doomed?
Creative destruction in action. (Thanks for the concept, Josesph Schumpeter.)
“The losses on home-equity loans are occurring because many borrowers…now owe more than their houses are worth, so they abandon them, Lewis said.”
“‘It’s actually a sociological factor that we’ve never seen before, because people in the past have always protected their homes above all else,’ Lewis said. ‘Now they are paying their credit card and their automobile loan, but walking away from their house.’”
“Sociological factor” my ass! There’s no mystery here. FBs are waking up to the fact they’re underwater and are merely acting in their own rational economic self-interest. Mortgage lenders handed them a free put, and they’re exercising it. A no-recourse mortgage or HELOC is a lot easier to walk away from now than CC debt, thanks to Bankruptcy “reform”, and they’ll still need a car when they go back to being renters. What the hell else did these Masters of the Universe expect?
There is also a “safety-in-numbers” effect (maybe this is where sociology enters the equation): If everyone is walking on their underwater mortgages, there is less chance that stigma will attach to my bad credit record if I walk.
This still sounds like economics (biology?) to me: Restricting credit to so many folks with blemished credit records would add up to a massive die off of the plankton which feeds banking industry whales.
Someone used the analogy on here the other day “like a herd of zebras running past the lion”.
The lions won’t be able to pick out a particular zebra because they are stampeding en masse.
Just like the zebras stampeded to buy at any cost because they “might be priced out forever” or “they aren’t making anymore land”….now the zebras will hurl themselves off the cliffs and onto the rocks of foreclosure below….denying the lions a single morsel of flesh.
That herd mentality, it works both ways.
I am really, honestly concerned about what financial shape this country will be in when its all over with.
..
Think “One World Government.” That is what we will capitulate to in order to clean up the mess.
You could very well be right. :*(
“never seen before” - false. A friend of mine who lived up in Mammoth in the early 90’s said the whole town went Jingle Mail.
I do love Mammoth. Growing up in the Sierras as I did, I never get tired of visiting, and like to imagine being able to afford a small cabin on a decent sized parcel someday. Of course, that’d be at 75% off todays prices.
“‘It’s actually a sociological factor that we’ve never seen before, because people in the past have always protected their homes above all else,’ Lewis said.
What a MORON. These are our “TOP PEOPLE”??????
Let’s see, in the past, you put 20% DOWN of your hard-earned money and proved to the bank that you didn’t borrow the down-payment. You needed to prove income. You needed to have an INVESTMENT to lose.
New model: You don’t need anything, in fact, we’ll even give you some money at the closing table.
Do you think that may have been a factor??
You sir, and all your Banker-Buddies(tm) are complete and total idiots. You should be bagging groceries, not running a RESERVE BANK of the United States of America.
Proof that “homeownership” never made people responsible.
It’s just that responsible people were the only ones who qualified for mortgages before — as it should be.
IMHO, some people are responsible, some are not. You aren’t going to magically turn deadbeats into responsible, intelligent borrowers by burying them deeper in debt (large mortgages).
A bit like the “cargo cult” PB refers to…if you go through the motions of dressing FBs up in RP’s (responsible people’s) clothing, does it change their character or lead to different outcomes? I think not.
Not that there’s anything wrong with bagging groceries.
i’ll go on limb and guess they think avg. American is really, really dumb. Made W President 2x didn’t we?
And 20% are still blind to the disaster.
Also, 33% believe in UFOs, 34% believe in ghosts and 14% have seen a UFO
People considered the alternatives, and made the best choice they could.
Same thing will happen this year.
Very true. But with 20% sightless and blind and the remaining 80% so fed up with the same old thievery, it won’t make a difference how loud the loony minority cry.
“it won’t make a difference how loud the loony minority cry”
I see you’re a Hillary supporter!
She’s really going to take it all the way, and take the whole stinky Party down with her, isn’t she? What an ego!
When she’s planned and schemed for this office her entire adult life, and when she’s had to endure Bubba and his antics for so long, I can understand why she’s not gonna give up.
“I see you’re a Hillary supporter!”
And you presume this because I’m not part of the belligerent, angry nasty minority? She may as well switch parties as she has far more in common with them.
> And you presume this because I’m not part of the belligerent, angry nasty minority?
You’re a renter?
Oh, come on ex, didn’t you get the joke?
You know - “loony minority”, as in Hillary’s new ploy using veiled racism to try to get ahead of Obama, even though she never will, and will destroy the D-rat party in the process?
And BTW, let’s keep this side discussion going until November - I get the feeling you’re going to be very disappointed trying to classify McCain as part of the “angry minority”. The guy will probably pick Joe Lieberman as his VP - and dominate 60% of the middle voters. Where will that leave the angry communists? Hoping for Change ^TM ?
Trust me, BOTH “20%’s” are going to feel very left out this time around.
“Trust me, BOTH “20%’s” are going to feel very left out this time around.”
Maybe so but better than half of the middle don’t want another 4 years of pain.
“I was at dinner last evening, and halfway through the pudding, this four-year-old child came alone, dragging a little toy cart. And on the cart was a fresh turd. Her own, I suppose. The parents just shook their heads and smiled. I’ve made a big investment in you, Peter. Time and money, and it’s not working. Now, I could just shake my head and smile. But in my house, when a turd appears, we throw it out. We dispose of it. We flush it away. We don’t put it on the table and call it caviar.”
Sir Gerald Moore lecture to Peter Fallow as Peter’s world falls apart - Bonfire of The Vanities
Judging by the Globe and Mail article, there is/was minimal risky lending here in Canada. Looks like the stuff hit the fan in the US in time to minimize market penetration. So our bubbles didn’t have too much of this influence, though speculation, willingness of people to stretch to the edge of their means, and REIC hype were plenty enough. Also makes me think that it will primarily be the recession that pops the bubble as apposed to bad loans doing what comes naturally to them.
I think you’re right Al in that we may dodge the wortst of it here in Canada due to not being able to deduct mortgage interest, requiring down payments, 25 year mortgages being the norm (until very recently).
That said the worldwide magnitude of the problems facing us all might mean only getting 3 limbs chopped off instead of all of them.
This reminds me of Monty Python - ‘It’s just a flesh wound!’
http://www.youtube.com/watch?v=2eMkth8FWno
“All right then, call it a draw.”
Lots of stated income shenanigans in the Greater Vancouver area. When they allowed people to put 5% down and introduced a 40 year amortization, the market jumped up again. Ironically, the continued rise in the market that this prompted convinced almost everyone (even one of our local bear bloggers) that it really is different this time. I started to feel the pressure.
I have also heard of people putting down payments on their credit cards…we’ll see how sensible the lending really was…
“I have also heard of people putting down payments on their credit cards…we’ll see how sensible the lending really was… ”
That’s just crazy talk! Downpayments on credit cards? My God.
5% down? At the peak, in America you could get a house with minus 5% down, meaning you get cash back at closing! Some people did just that and used the “free” money to pay the mortgage or waste it on toys. Then they just walked away a year later.
Yeah we really are different here in Canada. /sarcasm
At the very least ,I would think that the bankers now understand the “skin in the game ” concept of the down payment .In the future any assumption that real estate going up will take care of underwriting mistakes ,will not be the model anymore .
Lenders/investors from the secondary market will call the shot on the new loan terms ,after the fear of dealing with MBS’s is gone and after the market isn’t declining anymore ,(how long will that take ).
Barney Frank was trying to explain the bail-out plan on CNBC today . In so many words Barney said that first the investors/lenders would write down the principal of the loan to market and than the loan would be re-written and transferred to the government insured loans .
Like we have debated here on this blog ,this would cause the good paying borrowers to default also ,(increasing foreclosures ). It would be a unjust reward for bad behavior for the borrower who took on more than they could chew . Also the question becomes than why would the Government than need to buy this so called principal and loan rate modified loan if the lender already turned it into a marketable loan in the secondary market ? Barney Frank went on to say that they were not bailing out banks or investors or speculators ,but he did not explain why that was not the case in that any borrower that would benefit by the purposed bail-out would be a gambler/speculator by the fact that they needed the loan modification to begin with .
Liars Liars their pants should be on fire .
This still doesn’t address the problem that most of these loans were scrutinized. In most cases, the processors don’t have the ability or desire to mark down the current loans to below current market value.
This is like Ben Bernanke’s proposal last week of cram downs… to which the banks replied… Yeah, right!!! Let that will happen!!!!
In the local PHX paper’s site, I was in a discussion with a guy that wanted his lender to refi him to avoid foreclosure. I had to walk him through the MBS bundeling process to show him why his bank would not do it. Right now, it is the MBS holders that are “on the hook”. If the bank refi-s him, the bank is putting itself “on the hook” with a 30% or so loss.
There is nothing in this plan that creates a mechanism for the MBS holders to accept the cram down to allow the refi.
Scrutinized? Did you mean securitized?
“Carlyle Capital said the only assets it has left are AAA-rated residential mortgage-backed securities, and it expected lenders to foreclose on this collateral. On Tuesday”
Anyone else find irony in this? The forecloser being foreclosed upon.
So Darrell …Why do the powers keep talking about these crammed down loan balances ideas and all the others if it’s not possible, as you explain in your post for a high % of the loans . Barney Frank thought it would be possible for 2 million of the loans ? Are they just talking ?Barney Frank seemed pretty serious to me .
” in America you could get a house with minus 5% down, meaning you get cash back at closing!”
hmm, yes. I just heard an ad for such a deal in the Greater Vancouver area yesterday. And we had 0% down etc. etc.
It’s just that even normally sensible people we know did the 5% down, 40 years mortgage (which, do the math on the cost of borrowing that money!!!). Heloc’d it back out, lied on a stated income…etc. Wash, rinse, repeat. It’s global, not American.
Houses in my neighbourhood have gone from 200,000 to almost a million in 8 years. There is a reason that Robert Schiller called us the bubbliest in Vancouver, and it isn’t because we are very cheerful. We are, however, wildly optimistic!
(oops. Schiller = Shiller, Robert)
I live on the Island, this market shows no sign of ending here. 16% increase last year, looks like the same this year. People are moving from the lower mainland and Alberta to retire or live in a more affordable area. Problem is the sawmill is shutting down, the pulp mill isn’t far behind it and the mine is in trouble too. $275 000 for a 3 bedroom rancher. I worry about things ever correcting to an affordable level.
(see my comment below. it didn’t land where I thought it would!)
‘That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.’
Maybe it is a short term debasement.
You might want to sell that theory to the providers of capital who seem to be hurtling into the Four R’s instead — Ringgit, Real, Remnimbi and Rupee.
They’re not buying it and they seem to be voting with something more valuable than an economics degree.
And the beat goes on………..
Congress Considers $15,000 Rebate Checks For All Home Buyers.
http://www.wsbtv.com/news/15575616/detail.html
My good lord.
All right, if they do this I’m going to buy 10 houses, no, 100 houses, take my rebate money to Mexico and UPS my keys to the bank before the first payments are due.
One check per customer, please.
One check per customer, please.
Multiple checks for the unethical and criminal minded!
Rally…….here’s the deal……..you buy a house in Detroit for 1K, you get 15K back, so you get a house and 14K cash at settlement.
Bwhahahahaha
That house won’t be $1k, itll be $16k.
Right — low income housing will become $15,000 less affordable across the board the second that policy passes.
What is it about the folly of demand-side low income housing policy these mopes are missing?
The $15K rebate check certainly would encourage Rally’s response, but I am a little suspicious of the accuracy of the article. The way I heard the proposition last week was, $5K income tax credit in each of the first 3 years of your occupancy of the house. Putting the kibosh on the Flee To Mexico strategy.
hmm.. i think it’d be legal to pay someone a lump sum for their tax rebate privilage.. 3 years.. need at least a 10% return .. 30% over 3 years.
Why wait? Step right up folks. I’ll buy your rebate for $11,000 cash money right here and right now.
…$15,000 tax rebate check to anyone who agrees to buy a home.
They won’t have to force me to take it..
How ridiculous.
It’s tax rebate, not free money. It’s deducted off your taxes little by little. Of course this will just cause house prices not to bottom as low as we thought. The annual savings in taxes will just go into more expensive houses and we are back to square one.
There will be no going back to “square one”.
Hmmm, maybe it’s time to buy a really cheap house, and sell it back and forth with friends and relatives to rack up the “sales”. Maybe get an RE broker or RE lawyer a chunk of the action to decrease transaction costs. People who owe more taxes could re-buy and re-sell several times to rack up the tax savings, $15K a pop.
WHAT A BRILLIANT IDEA CONGRESS!
“Senate Republican leaders have signed on to the rebate check idea”
Idiots.
This is why I gave up on Repulican vs Democrat.
Really is there any difference? The stupidity is just flowing.
talk about desperation..
I have a better idea, why not let people take tax free/penalty free withdrawals from 401ks and IRAs to buy homes?
I heard that this is also being proposed. Looks like America doesn’t want anyone to save, not even in 401k
the future retirement bailout is just another thing hanging in m anxiety closet…
I can just picture the day, 15 years from now, when the govt says, “gee Pen, you’ve saved an awful lot of money over the years, we’re gonna have to ‘re-distribute’ some of it to all those victims that couldn’t save.”
That’s why savers should have offshore accounts. Then the gubbermint couldn’t touch that money, they probably won’t even know.
But I think the recession will change that priority and force people to be savers and the herd mentality will have to change. Debt is *not* wealth as we are learning.
“Debt is *not* wealth as we are learning. ”
Sure it is…. I spent the money, and since there are not work houses or debtor’s prisons, I can walk away without paying it back.
I got to spend it. I don’t have to pay it back.
How is that not wealth.
Heck, the guy I am not paying back can take his bond to the Fed and swap it for a U.S. T bond.
How is it not wealth?
Savings are for closers.
“We’re adding a little something to this month’s sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize?
[Holds up prize]
Second prize is a set of steak knives. Third prize is you’re fired. “
test
Bernanke Playbook Gives Hints on Fed’s Next Moves:
Commentary by Mark Gilbert
Yield Guarantees
The central bank would pledge itself to unlimited purchases of
Treasury notes to prevent yields from rising above a preset target
level, Bernanke said. “If operating in relatively short- dated
Treasury debt proved insufficient, the Fed could also attempt to cap
yields of Treasury securities at still longer maturities, say three to
six years.”
In the 1940s, “the Fed maintained a ceiling of 2.5 percent on
long-term Treasury bonds for nearly a decade,” Bernanke noted. It
also enforced caps on 12-month Treasury certificates and 90-day
Treasury bills during part of that period.
The speech also suggests that European Central Bank President
Jean-Claude Trichet’s pleas for the U.S. to speak out against the
dollar’s decline to a record against the euro will continue to fall on
deaf ears.
“It’s worth noting that there have been times when exchange-rate
policy has been an effective weapon against deflation,” Bernanke
said, citing the 40 percent devaluation of the dollar against gold
enacted in 1933 to 1934. “The devaluation and the rapid increase in
money supply it permitted ended the U.S. deflation remarkably quickly.
Monetary actions can have powerful effects on the economy.”
“The devaluation and the rapid increase in
money supply it permitted ended the U.S. deflation remarkably quickly.
Monetary actions can have powerful effects on the economy.’’
………….and the U.S. economy continued its slow spiral into deeper DEPRESSION, until FDR managed to get us into WAR. Then, with War production, and massive savings plans and RATIONING, the economy was brought back productive uses making war materials.
Is that the plan, Ben??
It didn’t hurt that the war destroyed the productive capacity of most of our foreign competition either.
Who in their right mind would buy US treasury or park their money in a 3.5% CD? My dad’s making an average of 10% long-term returns in stocks and funds, many foreign.
Bye Fl, Perhaps you could share some of those stocks and funds that your Dad is getting that 10% long term return on. I’m very curious? Are you invested the same way?
I have some invested long term in those funds. Spread your eggs and stay for the long term, do not panic and sell on the dips, buy more in fact. It never goes to zero. Treasuries and CD’s are for wimps. You get ripped off on the poor returns. Single stocks give the best returns but with some risk. Most funds are very safe and return around 10% long term.
We have some in emerging technology that’s returning 25% annually. It’s a bubble, we are going to sell at the peak
Who? People who can’t stomach higher risk, for one reason or another.
CDs are FDIC (or NCUA) insured and the money is guaranteed to be there when you need it, unlike that invested in stocks, funds, etc.
FDIC insured? Better hope the FDIC doesn’t default or take up to 99 years to reimbruise you.
The FDIC isn’t as much insurance imo, as it is propaganda born out of The New Deal. A VP of a Fortune 500, told me it took 5 years to recover her $ in the S&L crisis, and that dwarfs this crisis. In my CEU class, we heard it wasn’t $1:$1, it was cents, and the instructor was an ex-employee of the FDIC. Who knows, but people think the next month, their $ is there again. I doubt its fast, should many nationals blow up in the same time frame.
The FDIC just passes a failed bank’s accounts off to a healthy bank, usually over the weekend. The shift is seamless and customers’ checks and ATM cards still work like normal.
Then it may sell the failed bank’s assets and attempt to pay off non-FDIC insured deposits. These people may wait months.
Observe the insured limits and all will be well.
There is no specified timeline for reimbursement for deposits covered by the FDIC. The outcome described by joeyinCalif is one that has been customary, but then again, “past performance is no guarantee,” etc.
10%, 9%, 8%….
while I agree that 3.5% is crap, 10% is not much better than the long-term broad market average and may come with a substantial amount of risk and lack of diversification, please provide the period that you reference as your long-term period…
I’m curious as well. From this blog and other info, I don’t see a whole lot of great options for investing (perhaps foreign currencies and gold, but I’m not sophisticated enough to do the former and am very suspicious about the latter).
My husband and I! We are tragically risk-adverse, so we have all the money we made selling our house parked in money market accounts. I think with inflation we are minus about 6 % a year. Sigh.
RE: From CNBC. “Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday.”
-My main man!
….not that I don’t agree with this, but wouldn’t abolishing the Fed in today’s environment be like an A-bomb going off on Wall St.?
What alternative monetary system does Rogers propose? (No proposal w/o a workable alternative should ever be taken seriously, IMHO…)
Let the short rate float. No other changes are needed.
Im a big fan of Rogers myself, but if he keeps runnin his yapper like that….he may get Spitzered.
Vozworth,
OMG too funny. Let’s the imagination run wild.
you fell for that Hook, Line, and Spitzer
sorry people, I just cant let it go.
apologies to Niner.
Voz,
that was my thought. Luckily for him, he moved to China. Did you notice that Spitzer was nailed by the IRS on a 4k SAR (suspicious activity report)? What is the likelihood of anyone being nailed for 4k? Admittedly, he’s identified as a PEP (politically exposed person) but that just makes it easier for the IRS and Justice to sink anyone their political bosses want out of the way.
Yeah, the tabloids and the country ran with the juicy details, but the real story was Spitzer was working on the monoline insurance issue–suddenly he’s history,and the monolines are out of the headlines. Nice country we live in.
when you tap hooker ass, as well as, cash money at the bank…you look like a drug dealer, or some other type of suspicious income evader idiot.
ITs real simple people, do bad things, act guilty while you are doing them and you will get caught.
None of the news has explained whether they nailed Spitzer on his private CC account, or a government CC account. Anybody know? If private, does this mean that all our CC transactions are scrutinized similar to bank deposits/withdrawals? (nothing to hide here, just curious….)
I heard this report on NPR yesterday, the gist was that *every* financial transaction is tracked and evaluated in some crazy system. I didn’t catch it all since I was making dinner…its chaos with a little one “helping”…
“Banks Scrutinize Even Routine Transactions”
http://www.npr.org/templates/story/story.php?storyId=88132229
I guess I missed the vote to allow government to spy on our finances? The forefathers have got to be rolling in their graves.
There are more instances of the abridgement of the freedom of the people by the gradual and silent encroachment of those in power, than by violent and sudden usurpation. – James Madison
Since mortgage rates continue to climb why not raise the fed funds rate to match ?
That’s what I say Mo Money .
“‘It’s actually a sociological factor that we’ve never seen before, because people in the past have always protected their homes above all else,’ Lewis said. ‘Now they are paying their credit card and their automobile loan, but walking away from their house.’”
Wall Street had its new models to work from and now ‘lordy be’ the consumer has come up with a new model of their own. Gotta lov that new label “sociological factor”; sounds like it should be a venereal disease. One thing they both have in common, they are communicable and the effects are readily transmitted from one suffer to another.
People tend to distance themselves from others that have terminal diseases with just a short time to live, or in this case, mortgages.
Mortgage - from Latin mortuus to die.
The American Heritage® Dictionary
Barney Frank ……300B bailout…..video cnbc
http://www.cnbc.com/id/15840232?video=684747309&play=1
“Treasury Secretary Henry Paulson said Thursday that a presidential working group wants stronger regulatory oversight of mortgage lenders to avert the kind of credit crisis that is dragging the economy down.”
Isn’t “presidential working group” a contradiction in terms?
The WSJ STILL Doesn’t Understand House Prices.
http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=03&year=2008&base_name=the_wsj_still_doesnt_understan
CEO says Freddie Mac sees U.S. home prices falling further.
WASHINGTON (MarketWatch) — Already under pressure, U.S. home prices have much further to fall, the chief executive of major mortgage-buyer Freddie Mac said Wednesday.
Speaking to analysts on a conference call, CEO Richard Syron estimated that housing prices, from peak to trough, have dropped only a third as far as he thinks they’re going to. The McLean, Va.-based company’s expecting a peak-to-trough decline of 15% in all.
According to the purchase-only price index of the Office of Federal Housing Enterprise Oversight, or OFHEO, prices are down 2.5% from the peak.
Meanwhile, according to the Case-Shiller national index, prices are down 10.2% from the peak.
http://www.housingzone.com/articleXml/LN759303238.html
only 15% drops? We have seen over 30% drops in select cities in FL and CA. If prices don’t drop more, most of us really are permanently priced out.