Bits Bucket And Craigslist Finds For March 14, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
March 14, 2008
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Hammered by toxic blend…
http://www.nytimes.com/2008/03/14/business/14econ.html?_r=2&ref=business&oref=slogin&oref=slogin
My nomination for quote of the day:
“We are nearing levels where it’s probably not a great thing for the dollar to keep weakening,” said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Conn.
Yeah, well Ber-spanky wrote that paper, he might’ve wanted to pay a little less attention to Japan, and a little more to Argentina.
Capital flight ain’t a pretty thing to watch.
Hahahaha! Now that is a “duhhhh….” moment!
Gee, what can go wrong when a heavily import dependent economy with no jobs trashes its currency? Wait - doesn’t $4 a gallon gas indicate “vigorous economy growth” even as energy costs are removed from inflation calculations? Unreal!
“We are nearing levels where it’s probably not a great thing for the dollar to keep weakening,” said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Conn.
Wow. First “The Wall,” then “Dark Side of the Moon,” now he’s a financial analyst. Is there anything Pink Floyd can’t do?
Think “Brain Damage”.
AFX News Limited
Forex - Dollar flounders on recession fears with CPI, Michigan data in view
03.14.08, 5:07 AM ET
Bear Sterns goin’ down.
It’s all contained…so move along people.
http://online.wsj.com/article/SB120550108028136579.html?mod=hpp_us_inside_today
Read this book.
Buy that book.
Caution: Get your copy soon, as the GBP price may keep always going up for the next little while…
$14.93 on Amazon.
A much better deal for those of us who earn Americanos.
Got Popcorn?
Neil
$12.00 on E-bay.
Includes S&H.
Fleck is a price discriminator (more power to him!)…
The picture hurt my eyes!
BB reading anything by AG is as horrifying as the picture!
Leigh
This comment was suppose to be under ‘read this book’ - not sure what happened
Op-Ed Columnist
Betting the Bank
By PAUL KRUGMAN
Published: March 14, 2008
“here’s only so much the Fed — whose resources are limited, and whose mandate doesn’t extend to rescuing the whole financial system — can do when faced with what looks increasingly like one of history’s great financial crises.”
And there you have it: “One of history’s great financial crises”.
Safety in numbers
Unless I missed it, there is no mention of UCLA Anderson School’s rosy forecast in that WSJ piece. Have they destroyed their reputation by staking out an untenable position?
“UCLA Anderson School’s rosy forecast ” they were wrong in 1989 as well difference is I fell for it back then.
The survey suggests the darkening outlook may have made Fed Chairman Ben Bernanke’s job less secure, especially with a new president coming on the job in less than a year. The economists gave the Fed chairman just a 59% chance of being reappointed in 2010. “If a Democrat is elected, he won’t be reappointed, and [presumptive Republican presidential nominee John] McCain may opt for another, too,” said David Resler of Nomura Securities.
McCain will go for AG again.
Oh gawd that’s true, he loves AG. Awww shittt. Oh well, he’ll lose anyway.
As much as I never want AG anywhere near a central bank ever again, much less heading one, nominating him to head the Fed again could provide a couple of forms of amusement:
- Watching Congress grill him at a confirmation hearing about his role in creating this mess
- If he were to somehow be confirmed, watching him try to clean up this colossal mess of his own making
I’d happily forgo the second. No need to add gasoline to what will, by then, be a raging inferno.
I’m not sure why McCain even goes through the motions of being a candidate?
Never has there been such a mutually assured loser, as is he.
Why not spend the money he will have wasted on tv commercials, on something beneficial, instead?
problem is you’re assuming the money is spent by the rich as an investment. it is more like a hand out or short of money laundering. why would a defense contractor advertise jet engine during primetime? certainly not to encourage you to purchase one tomorrow.
“Almost half the economists surveyed said a recession this year could be worse than the 2001 and 1990-91 downturns.”
Gee. Ya think?
probably it is best to ask this kind of question at the end of the year, maybe the predictions will be a bit less off then
For a moment, I misread that as “… the 1930-31 downturns.”
Makes you wonder…
“Most forecasters expect an economic recovery to begin in the second half of this year, as the government’s economic-stimulus package and the interest-rate cuts begin to spur the economy.”
HaHaHaHa HeeHeeHee HO HO!
Oh, an $800 check is going to solve everything. Right!
Only possible if the gov’t lets the loose lenders and borrowers take a bath. The quicker housing prices get back to normal, the better it will be for all of us. It’s going to take a couple years for demand to materialize for a lot of goods.
“Normal” is not $400K in Fresno. Normal is relatively affordable.
You’re optimistic. I think it’ll take more than “a couple years” for demand to come back.
Cases of “Cup-O-Noodles” for everyone.
Slumburbia…
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2008/03/14/carollloyd.DTL
“This month, his essay in the Atlantic magazine provocatively asserts that McMansion developments would deteriorate into crime ridden, impoverished slums.”
I can think of one development around here that is already going that way. This is a very interesting article. Just one more reason to stay mobile and keep options open.
“Just one more reason to stay mobile and keep options open.”
You know it Palm! Play it as it comes - not a time to be chaining yourself down by any means - a horrible time to buy!
The suburbs are a pefect example of what is wrong with our society. They are monotonous, oversized crapboxes owned by people who cannot think for themselves and who do whatever someone else tells them they should be doing.
In Tampa, they are located nowhere near any real infrastructure forcing the owners to drive (in large SUVs nonetheless) for work. However, the shopping is close, especially the large stores filled with Chinese-made trendy junk (Target) that will fill Salvation Army stores in about 5 years.
It’s hard to sympathize with people in tough situations because of the ‘monkey-see-monkey-do’ desire to live in the suburbs.
While I agree about how pathetic suburbs are, the other options aren’t great: you can live in a city, where poverty and crime run rampant. Here in B’more, people get shot regularly, and if you “snitch” to the police about what is going on, they’ll shoot you (if you’re lucky) or firebomb your house and kill everyone inside (if you’re not so lucky.) Not the way I want to live!
Or, you could live in a rural area, but getting a job and keeping it is hard. It’s also hard for folks with special needs (need to be near a hospital because they are older or have chronic conditions, etc.)
Read:
“James Howard Kunstler: The Geography of Nowhere”
It was written in 1993, so far all his predictions look pretty accurate.
I read his weekly “Clusterfuck Nation” chronicle on http://www.kunstler.com. Great stuff.
I’m pretty sure he reads this blog….
Comment by James
2008-03-14 10:51:35
I will now fling my poo at you
That you Kunstler?
I will now fling my poo at you
“As Leinberger notes, new suburbs tend to be situated far from public transport, social services and commerce, so they are particularly bad places for people who can’t afford cars. The housing stock isn’t terribly flexible. Compared to the sturdy older buildings in the city that got chopped up into apartments, it’s not easy to take a production-built house with three bedrooms and turn it into good multifamily housing. What’s more, the neighborhood infrastructure isn’t designed for higher density or commercial uses: The streets are often thinner, the pipes and drainage not built for heavier use.”
While there’s been some discussion on this blog about subdividing McMansions to house multiple families, one problem with McMansions is that even though they’re large, they’re not designed for large numbers of people.
We are going into houses on BPOs [Broker Price Opinions -- pre-foreclosure inspections] that have three and four apartments already — and these are not McMansions, just regular ranches and capes.
One problem I didn’t see covered in the article explicitly is suburban property taxes — the combined carry costs of a mortgage and taxes are not affordable with an average family’s income, so I see more tripling up, along with increased downward pressure on prices, beyond what the bubble is bringing.
We have people making offers on houses taking into account the tax burden — at $500 to $1,000 a month on Long Island, that is having a huge impact on what people can pay for the house itself.
With non-service jobs declining, many have fled into the arms of civil service employment, and with the strengthened voting bloc, they keep getting higher wages [see Vallejo, CA].
Literally, the people with the best quality of life are civil servants, while average workers are getting ground down and forced to compromise their own QOL. Without industry, suburbia is devolving into a ponzi scheme where residential incomes are being squeezed to support overpaid cops, teachers and civil servants.
I’m thinking the suburban tax problem will also act as a population bomb, driving people from the burbs back into denser metro areas — and the only ones left will be the poor and the relatively rich civvies, who are essentially benefitting from the effect of taking in each others’ laundry.
One more point — I also think the bubble disguised the tax problem, as many who were already in houses used HELOCs to support their lifestyle, including paying the local taxes.
The mega shift of tax burden to the working class via property and income taxes will crush the life out of suburbia and the vision of a 3/2 ranch on a lot. This is not going to end well for the perps responsible for the tax shift.
The thought of doubling, much less “tripling up” with any family is supremely nauseating to me. I just endured a two week stay from a family member, and was rejoicing upon their departure. This was one person. My mind cannot even comprehend the idea of another 6-10 people. I think I’d rather live outdoors. Seriously. Cabin fever? Cabin Ebola.
http://www.theatlantic.com/doc/200803/subprime
Same old New Urbanist propaganda. They want the walkable livable sustainable high density urban blah blah blah, and try to use any crisis to impose it. This is the sort of thing that results in downtown condos & loft conversions. They’re trying it here in MISSOULA - talking about co-ops etc, in this little 50k town for crying out loud. When these people start separating fact from their agenda I’ll start taking them seriously.
Ron Paul comments in Congress on Wednesday of possible global economic collapse:
http://rawstory.com/rawreplay/?p=774
Great empires always fail due to their currency - stop acting like an empire, stop policing the world (paraphrased).
Ya gotta love this man!
Leigh
Oh please. Great empires fail because of plague, war, and climatic change. Usually a combination of all three since they tend to feed off each other.
You will search history in vain to find an empire that fell because the cost of foreign holidays, and cheap plastic nicknacks with made in China stamped on them, had suddenly doubled.
LOL! Troll.
Let me recommend, “The Rise and Fall of the Great Powers” by Paul Kennedy. One of my favorite books. Others might already know it, but I discovered it in Asia of all places after a S. Korean student did the equivalent of scoring a perfect 1600/1600 on his college entrance exams on the world history portion of the exam (it was the first time ever). He gave credit mostly to this book. Bit heavy reading, but you might change your mind.
I’ve read the book, and didn’t find it heavy reading. I think he is ignoring other factors. For one thing, that Britain should ever have been a great power is interesting in and of itself - it’s a small, mountainous island on the left hand side of europe. Not much in the way of natural resources, either.
I much prefer Jared Diamond’s Guns, Germs and Steel for a more comprehensive view of the elements involved. The impact of plague on civilisation is underrated by most historians imho - but in both Europe and the America’s it has been the most significant factor by far. It’s very hard to maintain organisational continuity if you lose a third or more of your population over a period of months.
For a view on the significance of actually being a great power of course, it’s hard to beat 1066 and all that, by Sellar and Yeatman.
I 2nd “Guns, Germs & Steel” being of utmost importance, and perhaps the best non-fiction book i’ve ever read…
90% of the indians that lived peaceful lives before white man came along in, died of measles in the 1860’s, in my little town in California.
To put it in perspective, California had the most indians, per capita, by far, of any state in the union.
You’d be hard pressed to round up 100 full blooded indians in the Golden State, today.
They all met similar fates by their unability to combat our diseases.
I got stuck in jury duty this week, but it was good because I could finish reading The Third Chimpanzee, by Jared Diamond. Fascinating read. I think it came before the other two, but I just found it.
Collapse
Haven’t read 1066 and all that, but thanks for the reference; I’ll check it out. Really liked Guns, Germs, & Steel; it’s partially why I don’t stress out too much when my daughter gets dirtied up a bit from playing.
For the record, I don’t disagree that great powers fall because of war, climate change, and disease, but I think completely discounting a country’s fiscal condition as a contributing factor in it’s fall is a rather provincial viewpoint. It sounds like we also disagree as to what a ‘great power’ is. If you don’t think that historic Great Britain or Japan fall under your definition of a great power, well, you’re just as entitled to your opinion.
I think the problem is it’s hard to separate cause and effect. Fiscal stuff is relatively easy to measure, and gets recorded, so historians concentrate on that. However, it gets to be like the Marketwatch’s headlines after a while - notice what happens and find the most likely looking explanation from the records available. No predictive ability whatsoever.
I didn’t say Great Britain wasn’t a great power, we did manage to paint half the globe red at one point after all - i said it was surprising that it became one. For my money, historians need to be able to explain things like that rather better than they currently do.
I know this is a macro vs. micro comparison, but I think chartists and those who follow technical analysis may disagree with your assessment of the numbers of having no predictive ability whatsoever.
As far as Great Britain, not sure why you would find it surprising. I like Kennedy’s argument that it’s financial strength and what was then a novel use of banking and finance in general was the key to it’s rise to military power in the 18th century, which then enabled it to become an industrial power in the 19th.
Not sure where you live, but this would be an interesting conversation to have over coffee sometime.
History does not repeat itself, but it rhymes
It doesn’t take much intuition to know that that will end badly. With the riots in Tibet (once the most spiritually humble place on the planet) you know that mania is spreading faster than small pox in a native american village. This is a time of great potential for spiritually awake humans to stand up and say “this is wrong.” My advice (if you’re asking) is to stay centered, stock up on food, water, money, guns and ammo, and invest in gold, silver, and love for your family and immediate community. TS will HTF very soon. Peace out.
I think if you look at the fall of the roman empire; the welfare/entitlement system did them in. Increasing large amounts of population moved to Rome and lived on welfare.
New economic ventures in the countryside were heavily taxed and became untenable.
That allowed the “barbarian” kingdoms to grow in strength unchecked. Finally when Rome had weakened enough, they attacked and destroyed it.
Also note they allowed a lot of foreigners into their army and non-romans into the empire. The groups also acted to weaken the empire.
There are perhaps similarities to our current situation with Mexicans, Asians and Africans. I think under stress people retreat to a more familiar structure and breaking along race/cultural lines seems the past of least resistance.
Hopefully we avoid the regressive policies that decrease economic activity and this is a non-issue.
Sure doesn’t seem that way in LA.
el lay is 2 worlds that never talk to one another.
The great divide between whites & Hispanics…
My wife is Hispanic and we talk sometimes….
Your name… I need a decoder.
A LA D’Insane… all la is insane
a lad insane
aladin sane
Drives me nuts
http://en.wikipedia.org/wiki/Antonine_Plague
The Roman Empire was hit by several waves of plagues over a hundred year period, co-incident with when most historians date the decline and fall.
So again - it’s hard to separate out cause and effect - the heavy taxation for example, could also be described as people having to pay more in taxes because there were less people to pay. Personally i think there are some system dynamics involved too, and plague or natural disaster acts as a precipitating event - but that’s just imho.
Congrats to you and the misses…
Now about the other 17,999,998 people in the city of angles and the o/c?
My name is whatever you’d like it to be…
When the emperor Constantine decided to become christian, so started the financial fall of the Roman Empire.
By the 3rd of the Constantine emperors in 324 a.d., hyperinflation really took hold.
It went from 800 Denarii to the Gold Aureus, to 4,300 Denarii to the Gold Aureus, in just 23 years.
Sounds so very similar to the decider/dictator we call ’ssshrubery, including the dogma part.
History always repeats, but only if you are paying attention…
And now, to add to the problem, we have monoploistic / oligarcic corporations that take action and sponser new laws specifically designed to shut out competition from some of those independent startup ventures.
For more info, see our laughable patent and copyright systems, and corporate welfare(Haliburton?).
Well, the Roman Empire did last 1,500 years. That was a very long time…
Yeah but in dog years, it works out to 232 years…
Economy Hammered by Toxic Blend of Ailments
http://tinyurl.com/yvxhqc
For American consumers, the surge in commodity prices comes on top of falling home prices, tightening credit conditions and, lately, a weakening job market. The national average 30-year fixed mortgage rate climbed to 6.13 percent on Thursday, from 6.03 percent a week earlier, according to Freddie Mac. The rate on five-year adjustable rate loans jumped to 5.58 percent, from 5.34 percent.
latest news from the EU financial warfront:
Eurozone CPI up 3.3%, highest mark in fourteen years (probably from when they started counting …). Ony in the Netherlands with its more ‘advanced’ statistics inflation is still subdued. Producer prices are also rising at the highest rate in many years (+8%). Labor cost up 2.7% in last quarter, confirming that wages are rising. But as taxes are rising as well, it is doubtful if net income is increasing. The Dutch police forces last week rejected an offer for a +10% wage increase plus some nice extras over the next two years. Everything is set for an inflationairy spiral, but I expect this to turn into stagflation pretty soon. It is unlikely that the housing market will make further gains in the current economic climate, especially with number of homes for sales at record numbers in many markets.
Also some vague statements in the news that suggest EU financial authorities are gearing up for a massive intervention in the banking sector if the subprime crisis keeps spreading and banks fail to disclose their losses (which already has caused huge losses for EU and UK taxpayers).
We are seeing the effects of what happened to America 2 years back. Guess Europe is not “different” after all!
another news tidbit that confirms the inflationary spiral:
one of the Dutch labor unions announced today that it will demand 3.5-4% higher wages this year for ‘normal’ workers (very average jobs in service, healthcare etc.) and 4-4.5% higher wages for members with higher incomes. And this is their opening bid while CPI in the Netherlands is officially still 1.8% …
The other two big unions suggest a 3.5% wage increase for this year, but they may increase their demands next week when the new Dutch CPI numbers are available (some people suggest the CPI may jump from 1.8 to 2.5%). The Dutch government is pressuring employers and unions to keep wages down (except of course for politicians and top management …).
Americans need to demand the same. Then let’s see how Ben Burnake panics. We have seen 10% inflation but wages only 2%
The only way out of the housing fiasco (outside of lower prices) is rising wages. One, or the other, the PTB needs to make a choice.
How? Globalization, and importing 3rd worlders (H-1B & L-1 Visas, illegals) did wages in. Unions can’t keep up with inflation either.
Nice corner that the PTB has painted themselves into… On the one hand allow asset classes to deflate to levels where people can afford them, or on the other hand allow wage inflation (first step is to allow the dollar to drop to new lows, so that foreign labor goes up proportionally, and people like Wipro are unable to provide “low cost, low quality” services)
Hmmmm. Maybe we will get a 3% raise on 15% inflation to make things look good?
There will be no meaningful wage inflation. Globalizing wages is far more important to the PTB than keeping J6P in his house.
Absolutely. Our own management here at work has told us that this is the goal.
The one economic guarantee I’ll give to anyone is that there will be NO meaningful wage-inflation in the US.
Precisely. End goal is to reduce all the commoners in the world to the same living standards - mud huts with goats outside. Enjoy!
We will all be Borats soon.
Who wants to try on the yellow suit first?
Crazy as it sounds, the 3rd world might be the best place to hang out…
It’s not as if the living standard there is going to be changed all that much, compared to the bloodbath that 1st worlders are going to endure.
What kind of unions do you have in the Netherlands?
Here, in Germany, they demand 12%. Subway and busses are on strike in Berlin, because the government only wanted to rise the wages per 5%. The train drivers achieved 10%, the steel workers 6%.
So much for the ECB to lower rates…
–Frank
yeah, but these are general (very big) unions that represent a large chunk of the workforce (e.g. general government employees). Hard for average government workers to go on strike, so they can’t be too demanding
The smaller unions (those that can arrange nasty strikes) are indeed demanding 10-15% wage increases, and often they get it. But because these are small groups, it doesn’t add significantly to average wage increases yet.
The public workers demand 12%, all of them. For now, only public transport is on strike, but a huge nationwide strike is coming.
We may see “Napoli” all over Germany.
The next very important negotiations will start soon in the metal industries. The people are fed up that their income is fading because of inflation.
The German government reports today that real incomes have fallen for three years.
the Dutch Ministry of Truth is solving the problem by no longer reporting (net/gross) personal incomes, they only report ‘disposable income’ now which - if you believe them - is between 12K and 21K euro per year for almost every Dutch citizen (of course, the managers with multi-million euro salaries that pay no tax at all spend all their income on the mortgage, the car lease and their fat pensioncheck company in the Cayman Islands; not much left for the monthly household payments after that).
The impression that some people in Netherlands are much better off with current economic policy must be nothing more than an illusion, so no need for wage increases, strikes and other silly idea
The very idea that we can’t raise American wages because of globalism regarding wages ,is the very problem ,or part of the problem . Could it be that the advance of global markets was without consideration of the problem that would create with the American Job Market . Just like the advance of homeownership was advanced by easy money lending without regard to the effect of to much debt or ability to pay .
The time has come for a analysis of what special interest groups gained the most by the advance of global markets .I don’t think the Wal-Mart spin that Americans get to buy cheap foreign goods at the expense of jobs for the American middle class is a good one . Americans won’t be able to even buy cheap foreign made goods if they don’t have a job to begin with ,(nobody can say that cheap retail jobs are livable wages in terms of prior standards of the middle class in America).
Some of the spin is that Americans are moving toward protectionism in any move toward advancement of American worker interest ,but the actions of the American worker is a cry for survival ,not protection .
So true, Wiz!!
250 foreclosures in a local “safe” zipcode right now in Florida.
in a 5 mile radius the ground is starting to look like scorched earth.
Lennar is advertising “short sale” weekends. Also cutting prices on a small community they are building to the mid 400s, down from a high of upper 700s. Maybe half the homes are occupied, the others have discreet “for sale” signs.
Another builder is cutting prices on townhomes (phase 1 - I don’t see other phases being built anytime soon) … opened pre-construction prices at mid 400s, now trying to just be rid of the ones they built by pricing them in the 280s and sending out tons of email and running radio promos that claim you can own for under 1k a month. I don’t think they’re even going to finish “phase 1″.
A house on a quiet nearby street that at it’s peak was priced at 900k. Tax Valuation for this year is 470k. Last sale price (out of towners from NM) was 670k. Previous sale about a year before was 500k. 10 years earlier sale price was 174k. They had to put a roof on after Hurricanes of 2004, and it’s on about half an acre of usable land (the other quarter is easement). Taxable value, again, 470k, “Zillow.com” market value is 360k. 670k mortgage, maybe? More? Less? They’ve been refurnishing and refurbishing (much like the 500k owner did) but look fairly moved in.
I’m hearing reports of canal and other water-based properties selling quickly in the 250k range - and these are homes in gated communities, not condos.
And grr on blocking my work IP address from posting, though it is probably for the best.
“Tax Valuation for this year is 470k. Last sale price (out of towners from NM) was 670k. Previous sale about a year before was 500k. 10 years earlier sale price was 174k.”
Then 174k is about right for now. For the most part, $450,000 and up is absurd in ANY part of Florida, excepting maybe waterfront in Palm Beach, Sarasota and similar communities.
It may be absurd, but people are paying it.
Sales have slowed, but not stopped. Barnum and Barnum Realtors, I guess.
About time we see progress in that part of Florida. I am not seeing any real progress in half of Florida, however. Prices are only 10% down from the peak in Gainesville and Ocala, the two cities I check on all the time.
However im seeing huge drops in Royal Palm Beach “acreage”
New this week!
$134,900
3 Bed, 2 Bath
1,152 Sq. Ft.
1.48 Acres
(looks decent in the photos)
This is the cheapest one by far. Could be a REO or a fixer upper. Any guesses to what fair pre-bubble price is for that one? $60k? $70k? $80k? I won’t make an offer, they aren’t going to “give it away”
That seems outrageously high for north FL.
Royal Palm Beach/acreage is in PBC which is in southeast Florida.
But I do agree Gainesville and Ocala are now among the most overpriced cities in Florida. It’s almost as expensive as southeast Florida!
Ocala hobby farms also come with a couple of starving horses, a horse trailer, and the F350 dually crew cab with gasoline engine.
Lol about Ocala, Moman!
Bye, Gainesville apparently has the lowest unemployment in the state, and Machen pushed off cuts in enrollment to next year, so we will be hanging on a little longer than the rest of y’all…
Btw, major popcorn on this whole “let’s bring back elected oversight to the state universities and chuck the board of governors” circus. I didn’t realize the board of governors was only created during Jeb’s administration and was a totally backroom kind of thing. Funny, I remember one other person whose office when from elected to unelected under Bush (Kathleen Harris). My, how they’re sweating and steaming and stamping their feet! Mmm, nothing like the smell of hot fresh Schadenfreude in the morning.
Yes, I am speaking of Palm Beach county. I’m seeing houses foreclosing on a 250k note down the street from a nearly identical model for sale for an ambitious 450k. The 400ker and the ones nearby at the same rate have been for sale for over a year each.
What’s the MLS on that property, Bye FL? I can think of a few people with the money to buy it just for the location if it suits their needs, even if it is a teardown.
http://tinyurl.com/232d8r
“It cited FBI statistics showing 46,700 mortgage fraud reports in 2007, a more than 30 percent increase from the year before and twice as many than in 2000.”
“Common kinds of mortgage fraud include misrepresentations of income, employment history, and falsified tax returns or financial statements .”
Based on those examples and the type of lending done in recent years, 46,700 looks like the tip of a very large iceberg.
Yes ,all the more reason for not bailing out loans made between 2005 and 2007 and going for damages for fraud . My point is that the biggest losses are from this period ,and what is the point of responding policy wide as if this is a noble attempt to save homeowners . This is when the most fraud took place , the most speculation ,and the most equity extractions that were bad underwriting .
Address this situation as the crime wave that it was and act accordingly . Prices will fall to where they belong with time ,so any attempt to save the losses I speak of is a bail-out for lenders ,not homeowners .
White House calls for better regulations on mortgage brokers:
http://www.nytimes.com/2008/03/14/business/14paulson.html?ex=1363233600&en=e213cc9a86d77ca2&ei=5124&partner=permalink&exprod=permalink
“The plan, which relies primarily on state regulators and private industry to tighten their oversight of financial markets, calls on states to issue nationwide licensing standards for mortgage brokers.”
Funny, was it not regulations, especially at the state level, that the whitehouse was fighting just a couple of years ago. Didn’t lobbyists
from mortage comapnies pay big bucks to get rid of these
proposed regulations?
Why, yes! Yes they did!
“For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
1. 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.
Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans.”
From:
The Washington Post, Thursday, February 14, 2008; A25
Predatory Lenders’ Partner in Crime
How the Bush Administration Stopped the States From Stepping In to Help Consumers
By Eliot Spitzer
just coincidence Spitzer’s bust happened shortly after this little ditty, I am sure.
coincidence? feh.
Tags
bottom delusional denial mortgage reset subprime write-downs
The Wall St minions can polish the subprime turd all they want. It still stinks.
That was a really funny interview. I caught it on Bloomberg. You should see that analyst. She is hemming and hawing. You can tell she really didn’t want to be there. She has so many caveats to her analysis. Wall Street is really a delusional beast. The Fast Money idiots were going on and on about how it’s all over with now that “the Dow is testing the lows”. It was really funny. The Dow will decline either to day or Monday. It is still range bound.
Roidy
Just wait till ALT-A mortgages hit - that is the next shoe to fall.
Sure enough, but my questions are, How many more freakin’ shoes have we got??? and Do we bend over to pick them up or just walk around barefoot and hope we don’t step into anything???
Don’t bend over unless you don’t mind getting hit in the behind by a shoe.
How many shoes left? Think “centipede”.
I am going to panic first. I have my cash in ING Direct and am moving it. I’ve heard too much about their holdings and recently heard of their offering of a high yield savings-type account that requires investing in mortgage securities. In addition, their thank you letter was a bit disconcerting. I am considering EmigrantDirect but know nothing of their situation. Can anybody provide information on them or suggest an alternative?
just for the record: less than a week after reporting incredibly low US mortgage losses (below 1% on the whole portfolio), ING today reports problems with two of their mortgage holdings based in New Zealand (of all places …). They don’t say if these losses are related to Kiwi mortgages or the US market …
It’s news from two days ago, but got very little coverage.
ING New Zealand Suspends Withdrawals From Two Funds (Update1)
By Tracy Withers
March 12 (Bloomberg) — ING (NZ) Ltd. suspended withdrawals from two funds that own collateralized debt obligations, saying they are being affected by the global “credit crunch.”
Withdrawals from the ING Diversified Yield Fund and the ING Regular Income Fund were halted to protect investors, Marc Lieberman, chief executive officer of ING (NZ) in Auckland, said in an e-mailed statement. About NZ$520 million ($417 million) was invested in the two funds at the end of February.
Since August, rising defaults on U.S. subprime mortgages triggered a global sell-off of CDOs, which are fixed-income securities backed by the loans. The value of the Regular Income Fund fell 25 percent in the year ended Feb. 29 while the Diversified Yield Fund dropped 22 percent, according to the company’s Web site.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abSxJA8iOjOc
Regular Income Fund
Diversified Yield Fund
What’s in a name…
interesting that this is only reported today in the Dutch financial news … and we still don’t know if these are Kiwi or US CDO’s … If these are Kiwi CDO’s it might be an interesting development, given the tiny size of the Kiwi market.
I’m sure banks stuff a lot of their bad paper in funds, that’s why I never trusted those vehicles…
But… S&P said it was over. Happy days are here again…
I love how the sheeple cannot do the math. What are we at, $188 B in writedowns on $1.2 T of bad loans (subprime) plus another near Trillion of bad Alt-A, and look there… Thornburg Mortgage failed with all of those PRIME jumbo loans…
“Prime”: I don’t think that word means what you think it means.
Gotta love Indigo.
Got Popcorn?
Neil
Those ING NZ funds were in partnership with ANZ bank…
The Bank of New Zealand announced yesterday that NZ would be in reccession by the 2nd half of this year.
I recommend you stick with a local plain vanilla bank/S&L/Credit Union that you can trust. I had an emigrant direct account, and relative to ING I think the are safer, but Emigrant’s rate is pretty poor also, 3.3%. Stay away from any bank that is in the top 10 or top 20 for mortgage loans this last decade.
I currently am sticking with my military and employer’s credit unions, pentagon federal (PFCU) http://www.penfed.org (4-5% for CDs but very long terms for these rates); and Patent & Trademark Federal CU (PTOFCU)www.ptofcu.org (5% 4 year CDs). You know they did not get involved in all this toxic waste as they keep everything on their books and are beholden to the shareholders who are the participating members.
I live in metro DC and the local bank with the best rate is provident bank at 4.5% online savings, the market leader in terms of rate. http://www.provident-direct.com
To assist in your search you can look up the ratings for banks provided for a fee at http://www.weissratings.com
the FDIC also has some info but it can be a bit more challenging at:
http://www.fdic.gov/bank/statistical/index.html
I personally recommend you stay away from any bank chartered in Delaware, as the state panders to special interests and their laws are designed to favor the banks and to screw individual account holders. The WSJ recently did a piece that highlights how Delaware gets 100’s of millions in revenue annual due to dormant accounts across the country and how their state government forecasts this are revenue for their annual budget. So the little old lady down the street on the other side of the country that forgets about an old account at one of these banks is actually bankrolling a state she has likely never heard of in case she simply for gets to check on it for a year or two.
Try bankaholic.com and savingadvice. com also to get the best rates
“In addition, their thank you letter was a bit disconcerting.”
What was in their letter that was disconcerting?
Just curious.
It wasn’t anything they wrote, only a feeling. After reading the press on ING , I received the email essentially saying they dodged the sub-prime issue. Perhaps it’s my paranoia, but it reminded me of the “contained” comments that were prevalent a year ago.
“It wasn’t anything they wrote, only a feeling.”
I’m a great believer in following one’s gut feeling. As Andy Grove once said: “Drive deep into the data, then trust your gut”.
I subscribe to the philosophy that each of us knows more than we think we know, that we should pay close attention to the “inner voice” that speaks to us, this voice of the inner-Self.
(FWIW).
I’m going to qualify your statement if you don’t mind Combo. Trust your gut when it tells you to pull your hand away, but trust your mind when deciding to leap.
So you think this all affects ING Direct? How? I’m in there too.
The “Orangemortgage” is by definition sub-prime slime as it was an ARM and they were peddling it for years.
Just curious - how are outfits like Vanguard treas mmkt affected? I know there’s no FDIC there, but I never hear any sort of linkage between Van, Fidelity etc with mortgage mess.
nearly all the US mortgage exposure of parent company ING is on the books of ING Direct, something in the range of 30 billion. They stated very small mortgage losses in last weeks annual report, so most of the fallout is still hidden (maybe because it is reinsured, as with other Dutch financials). ING see themselves as Masters of the Universe, they think they can beat anyone with all those financial wizzkids running around there in Amsterdam. But I seriously doubt that they are the only one that is going to come out of the subslime wars unharmed.
I really shouldn’t have invested all my money in that ING Tulip Fund, in retrospect.
there was a big Dutch fund that speculated in tulip bulbs some years ago, using lots of leverage and big bank loans. They went bust with a bang (surprise!); the small investors that put their money in are still battling in court to get something back. People never learn …
Actually, thankfully…
I invested in tulip bulbs.
One thing about New Zealand banks…
None of them have FDIC-like insurance.
You invests your moneys, you takes your chances.
And 80% of the NZ banks are owned by larger Aussie banks.
Anybody up for a game of bank runny?
“The Voice of San Diego. “In North Park, a curious, but not surprising, thing has happened. Developers built a condominium project, La Boheme, in 2006 with 224 units. They set 45 of them aside as so-called affordable units. The builder is selling three of these identical one-bedroom condos for $183,701 each.”
“They are affordable units, set aside for those with average incomes, as part of a government assistance program that controls their price. Local government must manage and enforce restrictions on who buys these homes, who lives in them and what they do with them over time.”
“The other day, as my colleague, the insightful Ms. Bennett, revealed, one of the normal condos in the development, a place whose value is not controlled by the authorities, went up for sale a few weeks ago.”
“What makes this one interesting is that the asking price for it is less than the prices of those homes set aside as affordable. The sellers are asking $168,000 for the condo.”
“Yes, it has happened. The market, without even trying, just did what the government has spent millions of dollars and hours trying to do.””
Isn’t that ironic? The free market works best as the government keeps learning. I am not surprised to see a $168k price tag as the “affordable” unit serves as comps, people see the $183k tag and refuse to pay that regardless if it’s “affordable” or not. Wonder what those FB’s will do with their $183k unit? Probably just walk away and they will be resold without the “affordable” restriction.
We have a few dozen “affordable” houses in Palm Beach County for $164k to $299k. A quick search finds over 100 houses in Wellington and Royal Palm Beach for under $200k. Also I am seeing the smallest model houses in nice developments with “closeout” prices of $249k to $299k. So much for “affordable” homes when the free market is pusing prices to that “affordable” range and we aren’t near bottom yet!
Nowhere near bottom here, I agree. I’m worried, though, what this turmoil time will mean for school kids; homes being foreclosed around owners and renters. With the new requirements* for proof of residency for various schools, I am not sure if it means more address fraud or less.
*new requirement: You have to sign, under penalty of misdemeanor charges, that you do live where you say you live and are eligible for such and such a school. This is in addition to the old rules of birth certificate for age, and utility bill.
On the one hand, people getting forcibly moved might be moved out of their schools.
On the other hand, the large swaths of empty homes might encourage creative housekeeping and utility account use to move to a school of choice.
“The free market works best as the government keeps learning”
Sorry to disagree, but the free, unregulated market got us into this mess.
‘free, unregulated market got us into this mess’
That has to be the most ridiculous thing I have ever heard. I suppose the ‘government sponsored entities’ that make up the MAJORITY of loans in this country are a product of the market? The ‘quasi-govt’ central bank bubble pushers? The Wall Street crooks that have congress in the pocket? I could go on and on. Give me a break.
“That has to be the most ridiculous thing I have ever heard.”
Don’t hold back here. Tell us how you really feel.
To more accurately characterize the problem, the lack of consumer protection laws and the willingness to disregard and break existing laws and regulations got us into this mess.
YES! It’s already against the law to misstate income on credit apps.
Lender: “You’re employer is McDonalds and you make $160,000 a year sir?”
Borrower: “Yes…..just change DRIVE THRU to Owner in job description. Go ahead and remove that loan for the Hummer H2 as well from the app”
You need to go back and look at who wrote the loans.
Even the die-ahrd Bushies came out and said that Wall St created this disaster because of a lack of regulation.
Bernake, Paulson, Cox…………..not a commie in the bunch and all pressed for more regulatio of Wall St and lending on the grounds that Wall St can not be trusted no to go haring off after the fastest buck regarldess of consequeces
I’m collecting these affordable housing stories, if anyone knows of others. My city pols are talking about an affordable housing levy, and most of them are so clueless about what is happening here. They never venture out of their little enclave downtown. Of course the New Urbanists are trying to piggy-back on the affordability problem to create more density, high rise condos and coops downtown, all the while the new condo conversions are NOT selling…morons.
Do you even know what a New Urbanist is?
Just because somebody wants to build a condo downtown (Billings?) doesn’t make them a New Urbanist. It just makes them a developer.
Yes I know what it is. We’re crawling with them here, and their preferences are pretty well known and based on some of the false assumptions Jane Jacobs made - about NYC for crying out loud - and they want to apply them in our little burg. Plus, the throw in the global warming thing, virtually the kitchen sink, to get what they want. We’re having our own little downtown condo bubble burst right now, and they don’t even take note of it and keep harping on the same old “solutions” that have failed elsewhere in REAL cities. E.g. Los Angeles, per Ben’s last post Thursday.
I’ll defend Jane Jacobs and many of her ideas happily, and think New Urbanism when properly applied, in the right location, is a valid and useful theory — it’s certainly better than the default mechanisms of unregulated suburban sprawl.
That said, I can’t say if A.) it’s right for town or city in Montana, and B.) it’s just a convenient buzzword being thrown around by a bunch of clowns. Lots of people who claim to be New Urbanists are simply latching onto an idea that seems to support their business goals.
To draw an analogy, it’d be foolish of me to dismiss the tenets of conservatism out-of-hand based on their alleged application by our current presidential administration. It’s pretty clear that even if he’s a “real” conservative (a debatable point, no matter what side of the fence you’re on), the president hasn’t done a great job translating ideas into reality.
Which of Jane Jacobs’s “assumptions” do you think are false?
The problem is when people dismiss urban progress as some leftist goal. ET says it good - the idea of New Urbanism has been perverted by some looking to further their own agenda, but the core idea is sound. Urban, good living and renewable lifestyle.
Anyone who doesn’t believe in it should take a couple week tour of South America. There you will see beautiful people living a good life that for the most part is void of materialism and is focused on the family, generally in an urban setting.
I love my country and I love the space we have here, but McMansion subdivision builders have torn up the land, removed all the trees for the sake of building homes for which there is no demand or need.
It is beacuse New Urbanism -is- a leftist goal.
Show me -one- place where it -worked-?
Evil:
Seaside, FL
Kentlands, MD
I’d argue that ongoing development in places such as Madison, WI, Evanston, IL, and Berkeley, CA, has been guided at least in part by the same principles promoted by Duany et al. I consider all three of those cities highly livable.
The main issue with New Urbanism — as opposed to more general anti-sprawl principles promoted by Jacobs and others — is that even when done well, the market often “speaks” by making these places relatively unaffordable for the average person.
On the flip side: I can give you plenty of examples of ill-planned, craptacular, soul-crushing, developer-driven shitburbs. That’s what this is really about, avoiding the worst of unsustainable suburban / exurban sprawl.
there is some truth to what you say moman….of course, semi-interestingly, most of it is “forced” on them by financial realities rather than some lofty ideal.
while it’s true they are more family oriented, some of that is because it’s too darn expensive to go out on your own when salaries in the city for young people are ranging between 3-800/mo.
while rent is cheaper (you get what you pay for) in their sparse apartments, gasoline, electricity, cel phone, etc are things that are MORE expensive than for the US younguns.
secondly, for most people there is very little access to credit and very little used. a lot of older homes in the city have been owned by the family — forever. there is little turnover in housing stock. for good reason — who has 200-300k (for the nicer stuff) laying around in cash? (cheaper homes in sketchier hoods or much smaller apts can be had under 100k — some as low as 50k).
still, that’s a lot of coin given the median salaries, and here…transport is driven into the stratosphere due to 83% tax on autos meaning even the crappiest south am mfg auto is over 14k.
what’s interesting is that when they get money or access to some credit they are very fast to imulate the north am lifestyle (somewhat) and move out to the “burbs” (houses with yards) — of course, the manic consumerism is kept in check (compared to north am) but it’s still here waiting to bubble to the surface…a lot of people actually aspire to this lifestyle since “that’s where the rich people live” and at times take for granted the amazing, walkable city that lies under their feet.
after living in montevideo, uruguay for nearly 2 years (independently and by choice), and visiting most of the other south am cities in the southern cone i can tell you that i see both sides of the coin now — the evil and the splendor (at times) of the ‘burbs.
OT: someone was asking me to tell them about south am living on here a couple of weeks ago and i didn’t respond, but there is a forum where english speakers talk about living in uruguay — www (dot) sociedadsouthron (dot) net
excuse me now, i have to take my puppy down three flights of stairs to go dodge strays (dogs and humans) in the park for her nature call
ciao,
fuBarrio
The problem of the work force not being able to afford housing is very real in many places - and the size of the town is NOT the determining factor. We only have 350 people in the village and around 1100 in the township but have a critical problem with affordable housing as the blasted 2nd home owenrs have driven list prices to a a median of $389,000. To make it worse, many have pulled rental poperties off the market and turned them into weekly vacation rentals. Unfortunately the town still needs people to work in the stores, restaurants, and other businesses and to staff the fire department and EMT squad. And no one would take such jobs and live in an area that they could afford which would then mean a 60 mile commute - 1 (ONE) way.
It is NOT the size of the town - it is the prices and supply that determine whether there is an affordability problem.
Problem is the solutions offered -townhouses, condos and houses on micro-lots where my dogs couldn’t find a place to pee - are not where people want to live. Additionally, by the time the architects and planners get finsihed tarting up the look of the structures so they fit some ‘vision’, the price is stillout of reach. We have one of those developments with its 50 x 95 to 50 x 150 lots and houses under 1500 sq ft with construction costs that hit $140-175 a sq ft for the house alone. They are STILL not affordable by more than 13% of the county.
A beter method of getting work force housing is to use inclusionary zoning and/or real estate fee structures which allow the funding of a land trust to ‘buy down’ housing prices for those who want to live and work in a community and fill the community workforce jobs but whose wages can’t match the price tags. Alternatively or in addition, there can be a program for employer-assistance of purchases.
168K is still outrageous for a one bedroom condo, I don’t care where it is.
Sorry Blano:
I would beg borrow and steal for a $168K condo in midtown/ east side manhattan…at that price it would probably be less then the rent i pay now.
Dont’ get me wrong, not trying to offend anyone, that’s just an incredible amount for a glorified garage.
A thought on how we got here, starting with the industrial revolution.
The western world started the industrial revolution, giving us an amazing competitive advantage in relation to the rest of the world. Profits were very high. Unions stepped in and enforced sharing those profits with the workers under their umbrellas. This set comps that some others could use. Overall, standard of living hit a new high based on the profits generated by the industrial revolution competitive advantage.
Of course every competitive advantage eventually gets duplicated. Manufacturing jobs left the country for lower cost labour. The technology/knowledge revolution replaced this to some extent, but it was easier to duplicate and thus was a short lived competitive advantage.
So what we are left with is high expectations for what our standard of living should be and no competitive advantage to pay for it. Introduce a housing ponzi scheme using securitization to get foreign money to finance it. This gave us the ability to cling to our standard of living for awhile longer.
Thoughts?
The industrial revolution was based on energy, and modern society is based primarily on oil. No more cheap energy makes the current economic, social, and population models unsustainable. Expect wrenching change that will make the world look nothing like today. Global warming has nothing on peak oil.
When oil gets expensive enough, a couple of the 6 bn human brains on the planet will strike pay dirt with an unforeseen new energy technology.
Really? That’s what I keep hearing but the peakoil website says it’s impossible. Alternative energy requires fossil fuels to manufacture in the first place. Is it possible to use solar power to create more alternate energy? Also alternate energy accounts for under 1% of present energy consumption.
Geologists have a hard time thinking in terms of potential technological innovation. Imagine if some economist had proposed back in 1890 that we would all be flying around in airlplanes in 100 years.
“Geologists have a hard time thinking in terms of potential technological innovation.”
Whoa there, Tex.
As a generalized group, I would suggest that geologists are very keen on innovation and are creative. That innovation just happens to be directed towards their job of finding oil and gas most of the time. For example, I believe that we will find a way to drill for the oil we believe to be in Antarctica. That will take a whole lot of future technological innovation to prove it and to drill it.
It might not be what you consider “correct”, but it will be innovative. Remember, a geologist’s job is to find oil and gas…not make solar cells 75% efficient.
“That innovation just happens to be directed towards their job of finding oil and gas most of the time.”
Bingo! They have a vested interest in pushing the Peak Oil theory.
Is this referred to as “just-in-time” energy?
Oil is expensive enough, and all the technology in the world has not reversed depletion of even one field in the world, or created an alternative.
You are pretty much saying that anything which has not already happened can never happen.
You are pretty much making unsubstantiated guesses, versus a hundred years of history.
the Professor compared Gold to cheap Chinese toys, the other day…
Get stucco is sour because he is missing the Gold rise. there is still time to get in. gold is going to 3000 no doubt about it.
Those that can’t predict the future, are condemned to live in the past.
Somebody here needs to plot US media housing prices since 1999 in terms of ounces of gold.
You say that as if history is replete with tales of humans always finding a new energy source when the previous one is depleted.
In reality, it has happened exactly twice in human history. Once when the switch was made from wood to coal, and the second time when the switch was made from coal to oil.
The only “new” energy source discovered in the last 75 years is nuclear, which still only accounts for a small portion of our energy and 0% of our daily transportation.
So I’m not saying it can’t happen, but I would feel a whole lot better if there were 20 or 30 examples, rather than two.
What we are facing is not an “energy” crisis, but rather a liquid fuels crisis, in which the finite liquid fuels required to run modern society are depleting.
The thing is, if you were a scientist just looking at the data, without knowing what species you were looking at, it would be clear to you that hydrocarbons produced a population bloom which is typically followed by a die off.
Unfortunately, our brains simply aren’t wired to handle that type of scenario, so we write it off, dismiss it immediately.
Nuclear batteries?
http://technology.newscientist.com/article/dn13459-disposable-nuclear-reactors-raise-security-fears.html
Nuclear energy accounts for most of France’s TGV power needs. I would say the Tijuana trolley in San Diego also receives nuclear generated power from San Onofre.
What’s that saying?
“Necessity is the mother of all invention.”
So is walking and providing light by candles.
Sorry, I am in a silly mood this morning.
Kinda all makes you wonder how we used to get along before there was oil?
There is a heck of a lot of oil left.
There is a heck of a lot of coal left.
There is an amazing amount of uranium.
Wind power is available in lots of places.
There is plenty of solar power available as well.
If we have to build infastructure to use electric vehicles than we will do it.
In short there isn’t an energy crisis.
There might be a temporary supply crisis cause be speculation on oil and inflation.
It will all end soon as prices collapse.
a couple of the 6 bn human brains on the planet will strike pay dirt with an unforeseen new energy technology We can only hope. I doubt a replacement for cheap & abundant petroleum we currently enjoy will be found on this planet. New energy tech will most likely cost more & be scarcer. The transition from the current energy setup to a new one will be wrenching.
Peak oil is an overall wealth concept. I’m talking distribution. It will be interesting to see if global warming or resource depletion will get us first.
It will be interesting to see if global warming or resource depletion will get us first.
It’s not an either/or, A/B situation.
Large scale stresses on the ecosystem — fossil fuel use, resource depletion, habitat destruction, human population growth, increased environmental toxicity, fresh water depletion — are part of one multi-faceted feedback loop.
That’s the problem.
It’s easy to get fixated on one of aspect of it. There are others. Energy saving in electronics is real, and starting to happen - solar power is getting very close to becoming cost-effective. Solar power is local - you don’t have the appreciable costs of distributing it all over the country which people overlook as part of the oil equation.
So we lose cars as transportation, we still have bicycles - combined with the Internet, which has increased information transportation more than any of the physical transportation revolutions, we’re still way ahead of the 19th and most of the 20th century - and healthier to boot.
For most of history science has been a rich man’s hobby, and confined to a very small elite. With the internet, anybody can join in - and somewhere out there, in some african or indian slum, there’s some kid that’ll have the critical insight that everybody else has missed. God knows, they’ll be motivated.
Humans adapt - it’s what we do best.
ET-Chicago,
I do agree that the two are connected, though one could hit us before the other. We could still have lots of oil in the ground but have cancer rates soar due to pollution, or we could run out of fossil fuels before the air is completely souped up. In fact, if running out of fossil fuels forces us into cleaner living the environment could start healing.
I have been studying alternative energy as my full time job and what I have learned is that any new ideas are quickly suppressed, bought out by big oil and shelved etc. When 200 billion+ per year in profits are at stake, any energy revolution has massive resistance from very powerful interests.
Most people are not familiar with Radiant Energy or the work of Tesla (Inventor of AC Current, AC Electric Motors, etc) and Grey. Check out this link for a do-it-yourself generator that taps radiant energy: http://peswiki.com/energy/Directory:Bedini_SG
Also research Stan Meyer’s water fuel cell. There energy is out there we just need to tap it and break down the active suppression of the powers that be.
I can understand the skeptics, but most skeptics refuse to follow the scientific method and instead rely on human “laws” instead of attempting to explain observable phenomena. I will keep you posted on my test results as I have almost finished building the above mentioned device.
VATechDan: interesting post.
(I’m a big fan of Tesla myself. The genius, not the metal band.)
Somehow, we human beans made do without oil, for tens of thousands of years of our existence…
,,,and the Amish still do - very well, thank you.
http://peakoildebunked.blogspot.com/
Please read this website. And note that the author agrees that Peak Oil is real. He just debunks the “big die off” and other such theories about how catastrophic it will be.
Perhaps there could be a kind of Mad Max doomsday scenario if oil dried up immediately, like turning off a tap. But the change is going to be gradual, over the coming decades. As oil prices increase, markets will help determine alternatives, be they increased fuel efficiency, more dense urban living, alt fuels, etc. We remember markets, right?
Why stop at the Industrial Revolution. Lets go back to the first revolution-agriculture. Prior to that time, humans were mobile family and clans traveling along with their herds. I call them, the food source, “meals on wheels”. Sorry, mixing time periods.
However, imho, mankind’s problems started once populations became fixed to a specific location. All of today’s problems can be traced back to this first revolution-over population, wars, societial job specialization, toxic polution, destruction of plant and animal species. You name it and this is where it all started, imho.
Domestication of animals - read a very interesting paper once that postulated that that was the turning point - and it kind of jibes with your position.
“Guns Germs and Steel” by Jared Diamond for any interested in going way back.
Gasoline is up to $3.47/Gal and diesel $4.29, downstate NY. Went to event at daughters school last nite and overhead 3 different conversations regarding fuel price. The proletariat is pissed.
“The proletariat is pissed.”
Maybe there’s hope for a different pres candidate than what we’re being offered, after all. Weird things happen when people get pissed about the economy. Never mind that decent Americans are being killed and maimed year after year in some desert hellhole far from home to satisfy the itch of little Caligula. Oh, no, it’s the ECONOMY!
I think imho that we have a second look at John Edwards and Ron Paul.
I agree. JE an RP. Puleeze.
That’s peak oil for you. People will look back to 2008 when gas could be had for under $4 a gallon as they moan the $10 tag.
Ask the oil bulls how that peak oil theory worked out for them in 1992.
It’s not peak oil, it’s inflation.
Dang….that’s even worse than here (3.29 and 4.09).
current price $ 9.6/gallon in Netherlands, but certain to go over $ 10 in the next few weeks after the recent oil price runup (takes several weeks at least to get passed into gasoline prices).
Wow…ouch.
The Dutch drive very fuel efficient cars, due to the size of the country and population density the distances are much much smaller, and the public transportation system is excellent, so even at three times the price, the gasoline expenditure burden on the population evens out to about the same or less than here in the US imo.
And the roads are the bomb. I don’t think there’s a pothole in the entire country.
I think you have heard how things were in the Netherlands in the seventies and eighties …
Dutch public transport is fine in the few regions where it is still fully available (the Randstad and surroundings). If you live in the outer provinces, you are out of luck. When I was young public transport was way better, no comparison.
As for fuel efficient cars: maybe on average compared to US gaz guzzlers yes, but my historic city is threatened by huge numbers of SUVs that block the roads and sidewalks. Government is regularly tearing down trees to increase the size of parking lots, so that these ‘efficient’ beasts will fit (most parking lots were designed for the modest cars of 10-20 years ago).
91 octane gas is $NZ1.75 a litre, and diesel is only $NZ 1.25 a litre, in Kiwiland.
$ 3.57 a gal in SoCAL.
$2.84 in St Croix, Virgin Islands. We have the US’s largest oil refinery on Island. Half-owned by Venezuela.
Over $4/gal in St Thomas, 35 miles from here.
People on that island don’t drive much.
Any comments on the disproportionate diesel price? Years back, diesel was often cheaper than gasoline. What factors are driving the high price, relative to gasoline, now?
The EPA mandate of low sulfur emissions, added $.50 to every gallon of diesel fuel.
If that were really factual, then why did diesel prices stay flat when refiners began shipping ULSD in mid 2006???
Here in Europe, it’s demand. In Germany, the tax on diesel is 22ct lower than the tax on gasoline. So, people are buying diesel cars.
But, refineries can’t increase the output of diesel that much, a certain percentage is always gasoline. So, the price for diesel goes up. At the pump, it is only 8ct cheaper than gasoline right now.
US refineries don’t produce enough diesel at the newly required low sulfur levels. Diesel took off when ultra low sulfur took effect. Supply and demand. The old stuff was almost literally cheap sludge.
Read somewhere the price of gasoline has been pushed down by competition from imports of refined gasoline. Europe uses a greater proportion of diesel to power its vehicles. Refineries everywhere can only produce so much diesel, and must produce gasoline. Surplus Euro gasoline is sent to the US.
I’ve been driving all over the USA for 35 years. The number of big rigs has vastly increased during that time. I suspect per capita diesel consumption has increased much more than per capita gasoline consumption, can’t find figures for this, though.
http://www.realtor.com/search/listingdetail.aspx?ctid=44158&typ=1&sid=1fb31ea4fc254a619188efa5fe7fb81f&pg=7&lid=1097001533&lsn=65&srcnt=1652#Detail
Palm Bay
$80,000
2 Bed, 1.5 Bath
1,352 Sq. Ft.
0.23 Acres
(nice small 2 story house)
Can someone Zillow that or predict how much it’s really worth? $40k? $50k?
Zillow says 135k. Houses on the same row for sale in the 180s. Where is Palm Bay? Not PBC.
Ah, north of Port St Lucie, Foreclosure capital of Florida.
PSL, Cape Coral and Ft. Myers are also having tons and tons of foreclosures. Zillow is a year behind in it’s zestimates.
http://www.realtor.com/search/listingdetail.aspx?ctid=44158&typ=1&sid=1fb31ea4fc254a619188efa5fe7fb81f&pg=47&lid=1096446012&lsn=469&srcnt=1652#Detail
$137,500($68.54/foot)
3 Bed, 2 Bath
2,006 Sq. Ft.
0.24 Acres
This one says “short sale” but most of them don’t. Are they “secret”
short sales or REO’s? I am noticing that most of the houses hover around $100/foot with some of them far below $100/foot. Should I assume the cheaper ones are bank’s price and the $100/foot are FB’s price?
Does anyone know what such houses used to cost before the bubble? How much per foot? How much further must those houses drop?
The only way to know is look up previous sales, I’m afraid. I had been doing some research on foreclosures but I don’t have the money or patience to chase them.
I paid about 90$sqft for my home, most of my neighbors about $110 or higher. I think it was a bit overpriced at that, but I don’t know how far down it will fall in my part of PBC.
Where did my reply to you go? I had a long post explaining other cities with many foreclosures and the $100/foot for Palm Bay, but some are closer to $70/foot.
tl;dr so I ate it. Yum. *burp*
Ah, north of Port St Lucie, Foreclosure capital of Florida.
Lol
That’s like saying the plague is a hot zone in one area when the whole city is dying. Florida is toast.
Got Popcorn?
Neil
True, but this is the first locality I’ve heard putting in a night court for foreclosures. Where’s Harry Anderson when you need him?
I sometimes like the data on nextag.NOT the NexTag Estimate: but the data the have if it shows a graph and especially past sale dates.
Here it is. Last sale was $50K in 2002.
In doing searches there zips work better than city/state.
Hope this helps…….
http://real-estate.nextag.com/propID_50629878/781-Brisbane-St-Ne/Palm-Bay/Florida/homes-html
I will not be surprised if the stock market blasts upwards today…(there are no upside trading collars, are there?)
March 14, 2008 8:36 A.M.ET
BULLETIN
FEBRUARY CONSUMER-LEVEL INFLATION AND CORE CPI RATES UNCHANGED
CPI slows inflation’s cooling
Retail-level inflation moderates in February, with rate unchanged versus expectations for a 0.2% increase.
Don’t ignore the fine print. Last I checked, oil was north of $110/bl.
WASHINGTON (MarketWatch) — Led by a quirky decline in energy costs, U.S. consumer inflation moderated in February, opening the door for the Federal Reserve to keep cutting interest rates to support flagging economic growth.
yeah, gotta love the FEDs sense of humor…
Amazing. EVERYONE knows that oil is at an all-time high RIGHT NOW, but because energy prices decline last month, the market rallies??
indications
Inflation data prove pleasing to Wall St.
Stock futures turn on a dime, push into positive territory on the strength of positive inflation data
I was reading Barrons this weekend. An article pointed out that if we calculated inflation by the old standard - that same one that was used in the 70’s, we would be experiencing double digit inflation right now.
I read that same article - I think they estimated that inflation is currently about 11.5% per annum using the pre-manipulation measure. Which means that real GDP growth is, oh, about negative 11.5% per annum.
LOL. Manipulate CPI to show no inflation so you can do a huge rate cut next week. Three quarters is baked in, maybe they will go a full point. Oil to 120 then.
Driving while looking out the rear view mirror seems especially perilous at this sharp bend in history’s road.
I can get around 300 Gallons of the crudest refined oil imaginable, for just one troy oz of the kind…
These 2 non-renewables are all you need to know, in terms of matters financial.
Everything else is beige noise…
Looks like Client 9’s gal’s domestic abuse was of the uniquely New Jersey variety.
“Born Ashley Youmans, Dupre grew up in Seaside Heights and Wall Township by the Jersey Shore. She also mentioned being abused while growing up, saying it forced her to run away - a claim one family friend called ridiculous. ‘She crashed up [her stepdad's] Porsche and wanted another one, and he wouldn’t give it to her, so she left,’ said the friend, who asked her name not be printed. ”
Getting back to Slumburbia, an article yesterday said all those condos in Downtown LA would be the slum, implying that even prosperous central cities will at last be abandoned — gas prices be damned.
Another possibility is that gentrification of viable central cities will continue and brand new exurban housing will be middle class, but older middle-class suburbs with obsolete housing will house the poor.
One thing is for sure. Formerly poor areas turn affluent in booms, while formerly affluent areas turn poor in busts. So we’ll find out.
I hear that girl has offers of millions for her story. She struck it rich, and good for her. Why shouldn’t someone benefit from being screwed by a politician?
I finally closed on my house a couple days ago. I put a “FSBO” sign in the front yard on Jan. 2nd and had it under contract late Jan. (28th or so). The only other advertising we did was to post it on the internal classified system at my work. The buyer closed March 6 and due to inclement weather (a small bit of snow in Arkansas) and then my wife traveling for work, we couldn’t close until this week.
I bought for $71k in 1998 listed it for 103,600 and sold it for 101k. That’s pretty close to the peak price for that neighborhood. I’ve been keeping a spreadsheet of real estate sales numbers for the past year. In Faulkner county (where I lived) sales have been down ~16-17% yoy (give or take a bit) for every month in the last year. They were down 26.6% statewide and 19% for the same county yoy for this past January.
Statewide avg price ws up 1%. For the county, avg price has been up every month for the past year but in decreasing increments. In Jan of last year avg price was up 10% and dropped for the first time since I’ve been keeping track this past Jan by 5%.
Now the wife and I have moved into a family farm property that hasn’t been lived in for a few years (and had renters before that which left it kinda trashed). I plan to stay for about a year and look for either some land (~10-15 acres) to build on or buy with a house. Together with what we saved, made from the house and made from a spec house a couple years ago (plus what we will save this year) we will easily have north of 30%-40% down given the max I’m willing to pay.
I keep waiting waiting for prices to drop and this month is the first good indicator that might happen soon (other neighboring counties are still up) so I’m optimistic. Arkansas seems to follow the rest of the country in most respects, from economic trends to fashion, by about a year. I think I probably cashed out at just the right time. Now it’s a waiting game.
Congratulations, bluprint!!!
I remember seeing ADs to buy Arkansas land and houses 2 years ago. They wanted like $19,900 for 1/4 acre lots(back when Florida lots were $80k plus) and one could get a starter house for $100k. Now im seeing starter houses for $100k in some parts of Florida.
Is Arkansas equally desirable as Florida, just that Arkansas didn’t experience the magnitude of bubble as Florida did?
Two years ago? Come out to L.A. this weekend - you can watch Eric Estrada (aka “Ponch”) sell AR houses all morning.
No…Arkansas sucks. All you yankees should stay right where you are at. Or go to Florida.
In any case, AR certainly didn’t experience the magnitude of bubble as eff el lay, but not many places did. However, there was a bubble in any case. My house was 1144 sq/ft bought new in 1998 for 71 and now 101. Almost a 50% increase in 10 years…I think that’s pretty significant. I’ve kept up with the local RE market for probably close to 10 years. I remember when $100/sqft was for a very high end house. Now that is common. I’ve seen 1/2 acre lots sell for 80k in the past few years (freaking absurd…). That kind of stuff has to come back to earth and I think this might be the year it does.
Good news is busting out all over. I can tell this will be a very good day.
FINANCIALS
Carlyle Capital gets second wind
Carlyle Group’s Rubinstein reportedly inclined to provide some sort of compensation for investors in depleted fund.
TxChick — Is there a name for the appearance of that stock chart? (I am thinking maybe “cliff hanger”?)
Looks like Eliot Spitzer when he thought Kristen was going to be in the bed and instead it was Rosie O’Donnell.
OMGROF!
you bust me up, chick. classic stuff.
I was just reaching for my coffee when I read your comment txchick. Whew, just avoided splattering my screen and keyboard.
Good laugh to start off my day.
Thank you.
“Carlyle Capital used a highly leveraged strategy of borrowing money to fund a $21.7 billion portfolio of mortgage-backed securities issued by Fannie Mae and Freddie Mac.
These securities are often considered to have an implied government guarantee, but their value has nonetheless fallen during the credit crisis as buyers for any kind of mortgage securities have pulled out of the market.”
I guess he’s trying to soothe and retain a few of his fund’s stupider investors.. why? Are the fees high enough to justify it?
Foreclosure Spike in Countrywide’s Final Monthly Update
American Banker | Friday, March 14, 2008
By Kate Berry
Press Release:
“Countrywide Financial Corp.’s foreclosure rate hit its highest level in more than 15 years last month as delinquencies jumped dramatically from a year earlier.
The Calabasas, Calif., lender disclosed the data Thursday in what it said would be its last monthly release of operational results. Its deal to sell itself to Bank of America Corp. is scheduled to close in the third quarter.
The numbers made clear that Countrywide continued to feel the strain of the deteriorating mortgage market in February.
Its foreclosure rate, as a percent of unpaid principal balances in the $1.5 trillion mortgage servicing portfolio, rose 84 basis points from a year earlier and 16 basis points from the end of January, to 1.64%.”
So that reminds me that I wanted to ask how S&P came to the conclusion that the IB write-offs are mostly finished.
Looking for some feedback/opinion.
My wife and I would like to buy when prices become affordable. We’re in NYC but it looks like a long way down before sellers become realistic, and even then this will always be a pricey market. We are thinking of moving to another city. We like metropolitan living and are considering Philadelphia and Providence, RI. We like both and each has it’s merits. If we move, we would rent first and watch the local market.
I’d like to hear what people who know these cities have to say. So if you have a constructive thought (as opposed to a cute little snarky comment:-) Please feel free.
Thanks all.
Go ahead and relocate. NYC is losing population as even lawyers can’t afford more than a 1/1 condo and the rent is beyond what middle class can afford. I talked to this lady who shares an apartment with 3 other roomates, really cramped! Is this what you want?
Philly is much better, but I recommend Pittsburgh where $100k gets you a very nice house in a good, safe neighboorhood.
Dear, unless you know something about Philadelphia, please spare us with “Philly is much better”, ok?
Philadelphia’s pricing in safe neighbourhoods (i.e. where people dont hear gun shots every night) are absolutely insane - $550k for 1 bedroom condo in a brownstone or $770k for a new SFH right next to a bunch of crack houses (that’s a nice area btw )
That’s not what I’ve seen. Townhouses in good neighborhoods for $450K, which will probably become cheaper. And we can rent very nice places for under $1500 as opposed to a 1br/1b here in NYC.
I’d love to know where, because I’d love to upgrade the space I live in.
Have you tried Craigslist?:-}
Yes.
Cheap places are either in the area I’d not allow my girlfriend to walk past 6pm or they are total slums. Townhouse on 1700 Delancey ( on a corner ) is rented out for $4k/mo. 2b/2b + apt at 17th and Pine is $1800/mo. My 1 bedroom + den is $900/mo and it is considered really cheap.
Ed… Did you consider Beantown? With the exception of cold weather, I’d do it in a heartbeat.
We have thought about Boston. The weather is a consideration and the timeline for price drops to affordability might parallel NYC.
weather?? it’s on the Atlantic Ocean. weather is the freaking same as NYC, but with less smog!
ED:
providence is like Bed Sty, far rockaway…
http://www.city-data.com/city/Providence-Rhode-Island.html
Estimated median household income in 2005: $34,202 (it was $26,867 in 2000)
Providence $34,202
Rhode Island: $51,458
Those stats are misleading. Providence has a lot of marginal areas. But the downtown has had a renaissance and is a great place for artists (me). The are converting a lot of older buildings and factories into cool lofts. It’s a very friendly town with good food.
You are a good artist, no question about that…….
But if they do have an active downtown… then heck its just a couple hours train ride back to Manhattan..
Are we going to have another HBB NYC get together?
Had similar thoughts about leaving in the late 1980s. Then ended up staying, for a lot of reasons. By the time those reasons dissipated it was 1994, and we could afford to stay, and we are better off because we did. But it was a long wait.
Have you considered Baltimore? To me, Philly and Baltimore share a lot of characteristics, both positive and negative, but Baltimore has more charm to me — could be because I spent more time there when I was younger.
(Myself, I’d definitely prefer Philly to Providence. But I haven’t spent much time in Providence.)
There’s a reason to not spend time in Provi…..
Could you elaborate?
Corruption like I’ve never seen in other small cities. Maybe the blatant corruption is a sign of arrogance as others attempt to conceal it. Not Provi.
No thanks, I watched “The Wire”.
Don’t do it. Don’t move to Baltimore. It is a little slice of Hades on Earth. The slums are mixed in with the half-way safe neighborhoods, we almost consistently end up on the top 10 most violent city list, the police are corrupt, the place is full of druggies and criminals, etc. Baltimorgue is the origin of the “Stop Snitchin’” DVD, and that sums up the city. Aside from a few areas - which I am sure nobody can really afford - the city is a pit that would be better off flushed into the Bay were it not for the pollution that would cause. I thankfully live about 10 miles outside the “kill zone” of the city, and I wouldn’t move there if somebody paid me.
Oh please, it’s not that bad. There are a lot of great neighborhoods. Baltimore is way too overpriced though, considering the local economy.
http://tinyurl.com/2lv4q3
A relatively bleak forecast:
“We estimate that nonfinancial corporate debt ultimately will have to shrink by 11%-12%. This will generate a decline of five percentage points of real U.S. GDP growth and push the U.S. into recession. Europe’s real GDP growth will contract by two percentage points.
Globally, total credit losses of $1.4 trillion will cause a contraction in world GDP of 2.5 percentage points, or half the current rate of global growth. So the global economy will become a gray, dull world of semi-recession and sticky inflation that will last a long time. Without major policy blunders, however, it won’t be a 1930s-style depression.”
Credit losses and reduction of debt is the destruction of money. Such destruction will make the remaining green paper stuff more precious, more valuable, more difficult to get.
Those who have the bucks or can get them will solve their financial woes; Everyone else is screwed.
Cash is king.
So a question for the crowd:
Right now CountryWide pulls half my mortgage payment twice a month from my bank account. The bank is … in the news like a lot of others, and the big banks have not yet started failing, but I’m watching for signs. Should I continue to let CountryWide pull my mortgage payment twice a month from my Big Bank that might fail, or should I start mailing checks?
The Fed deemed CFC too-big-to-fail last August.
So just be ready to fire off payment out of my non-Big-Bank account if Big-Bank fails? Okay. Thanks.
‘The Fed deemed CFC too-big-to-fail last August.’
You know PB, just making up stuff like that gets old. Link? Facts? Why did they have to agree to be bought out? And wasn’t it revealed that if they weren’t they were doomed?
Just what advantage is there to this blog to make stuff up?
what? People make stuff up on the internet? noooooooooooooooooooooooooooo!
I am not making anything up, but I am admittedly too unmotivated to go back through your archives to dig up the references from last August. But I will agree to follow your guidance — no more posts w/o references.
I remember her comments.
What’s up, Hoz? Check out them l-t T-bond yields this morning —
how low can they go?
P.S. For those readers who are confused on this, lower long-term T-bond yields are tantamount to a higher price on future fixed nominal payments in $US. In fact, a l-t T-bond is no more nor less than a fixed series of nominal future payments in $US.
One more point: A flight to quality move into U.S. T-bonds has the appearance of a vote of confidence in future U.S. economic growth. I would personally be far more worried for our nation’s future prosperity if l-t T-bond yields were going up today.
Just one last point (I promise): Man is there a lot of white noise in those l-t T-bond yields this week!
Here is a bit of evidence in form of a puzzling empirical regularity. How can any individual stock exhibit so little white noise in its intraday price chart? I defer to the financial experts on this blog who can explain such odd price behaviour.
If this price chart were an EKG, any cardiologist could tell immediately that the patient has died.
I guess you are wondering whether or not a FDIC-insured bank failure would affect your mortgage payment being sucessfully delivered. No.
Other than being moved to a nearby healthy bank, check accounts, savings accts, ATM cards, etc are not affected. CD interest rates do not carry over so those may change.. I don’t know about interest rates on moneymarket/savings, etc accounts.. maybe.. scope out the FDIC website for info.
A friend’s internet bank failed and it was rolled to ING - all of her accounts and payments were screwed up totally, which is why I’m asking.
I think diversifying my savings into another bank or credit union is probably the safest course. Tough finding one with out a lot of mortgage problem exposure though.
A friend’s internet bank failed
what bank was that.. i’d like to research it.
http://www.efluxmedia.com/news_Online_Banking_Pioneer_Netbank_Shut_Down_09147.html
Thanks for the link.. i recall this one.
That page is from a Friday. Normal online services are expected to resume sometime around Sunday evening.
It’s common for the FDIC to make the move over a weekend when things slow down.. but i can see where online banking, which takes place 24/7, might feel a few glitches.
oh, I’m sure there are a few glitches. I witnessed a few transfers in Texas back during the late 80s and early 90s; but not online.
I think part of her problems or concerns were with the amount of online only accounts she had set up to pay or be paid; it came up suddenly and she wasn’t ready to “start over” with all of the information with a new bank.
Might have been some debit card issues as well.
Have several accounts at unrelated banks with ACH connections between them. They are unlikely to fail at the same time. Have a brick-and-mortar bank close by linked to all. Online payments of bills still need to be watched closely since online outages and bank failures can occur without warning.
TSLF
http://www.stockmania.com/?q=node/3967
Another classic.
Speaking of Barnum Home Sales, from the New Homes Division:
http://www.palmbeachpost.com/business/content/business/epaper/2008/02/18/m1a_PSLSurvive_0218.html
78$ sqft. Those Conneticut transferrees were robbed. The only silver lining on that I can see is that 1, maybe they can afford it, 2, maybe they don’t mind living in an empty neighborhood if no one else can afford it, 3, maybe they don’t mind living in an abandoned-by-the-builder-incomplete neighborhood if the builder goes belly up like others have in the county, and 4, it was built to new hurricane standards which makes it more likely to survive storms a while.
Oh lord, CBS morning show just had a segment with a gal who kept the house after her divorce, did a cash-out refi to do “responsible remodeling - not live a lavish lifestyle!” It was an int-only option arm, and she ended up with 30k more on the principal. She said she refi’d 6 years ago for the divorce. They had a financial advisor on the show show says it happened 2.5 years ago…sounds like a second refi…and anyway he told her to try get a short sale and she starts tearing up. Gah.
It looked like a great big house, and it’s just her and a son. Probaby refi’d to get her ex off the mortgage, and didn’t care “just do it, where do I sign” types, until they realize what they’ve done. The host whathisname concluded We Have to Do Something to save these poor people..I might vomit.
CBS morning show?
She’ll get 50 marriage proposals before the day is over..
Uh, no, I don’t think so. Not this gal.
i didn’t see it, but a TV appearance practically guarantees it.. Even a foam-at-the-mouth hump-backed cyclops should get at least 49 proposals..
I videotaped a couple of planes colliding on a airport ramp, got my face on the local news, and didn’t get a single proposal and I have 2 eyes
and like she never thought of getting a paying roommate?
how many bedrooms does she have 4 for 2 people?
JPMorgan Chase Funding Bear Stearns
http://biz.yahoo.com/ap/080314/bear_stearns.html
The funding will be provided as necessary for up to 28 days. During that time, JPMorgan Chase will also help Bear Stearns find permanent financing.
Ya beat me to it bizarro. Wasn’t the big boss of BSC just blabbering a few days ago that rumors of a liquidity problems at the company were false?
Poor BSC, place your bets on who is going to eat the carcass.
Assuming there is anyone left to eat the carcass.
Looks like a Wile E. Coyote moment for Bear.
Wall Street will be watching National City (NCC) Friday. The Cleveland-based bank is looking for a buyer, The Wall Street Journal reports, but may be finding it tough to draw interest amid worries about declining home prices and rising loan losses. National City’s fix shows how the pain of the housing bust is being felt even by lenders that didn’t help fuel the boom in hot coastal markets earlier this decade. The Journal mentions in-state rivals KeyCorp (KEY) and Fifth Third (FITB) as possible buyers, but adds that strained balance sheets could make U.S. banks leery of taking on more obligations as the economy slows. Adding to worries at National City, Moody’s downgraded the bank’s debt rating Thursday afternoon, Bloomberg reports. Moody’s said the bank’s “sizable exposure” to housing could lead to “material losses.”
This is somewhat akin to a skanked up hooker looking for a rich white knight. When you put yourself out there like this, you look really desperate . . . How bad is it at National City???
“Monetary Policy Alternatives at the Zero Bound: An Empirical Investigation.”
Mr. Ben Bernanke, Mr. Vincent R. Reinhart, and Mr. Brian P. Sack
“…When that happens, a central bank can no longer stimulate aggregate demand by further interest-rate reductions and must rely on “non-standard” policy alternatives….”
A list of what Mr. Bernanke might try in the future.
http://tinyurl.com/3dhajp
Federal Reserve 2004 caution pdf.
How was the financial fishing yesterday? Is Merrill safe?
The commercial fishing in the PNW has been cancelled. Chinook’s gonna get really pricey.
Fish from the ocean are going to get really pricey in $US terms.
It is scary to still be accumulating the stock I am buying (Ms. TxChick knows which stock - she is the only one I told and she is not allowed to tell anyone upon pain of trout!) - it is the right thing to do. So far I am up, but I worry who will I get out to….
I am too. Following blindly, have to admit.
if I take a wild ass guess is gonna piss you two off?
I have one bank in the watch list thats not participating in the meltdown.
WAG it my friend. Should you be correct. I will allow TxChick tell you after we book our profits.
I’ll take a stab at JP Morgan.
It is not a major money center bank, I would caution any one buying any of those at this time. I would not buy any bank that has credit default swaps outstanding. NO MONEY LEFT.
OHHH, A guessing game, I love Guessing games!!
I guess the Royal Bank of Canada!!
Just my 2 yens worth
remeber, voz has a full time gig in transportation.
but, in order of personal perception:
SOV
FHN
NCC
somebody better get the big roll ups going.
took a while, but I’ve concluded it was Thornburg Mortgage. you’ve tripled your money in 5 days.
Oh, the humanity!
March 14 (Bloomberg) — JPMorgan Chase & Co. and the New York Federal Reserve agreed to provide funding to Bear Stearns Cos. as the securities firm said its cash position has “significantly deteriorated.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGinDE8cViBM&refer=home
Watching BSC premarket this morning was the most fun I’ve had all week. Hope everybody who was snapping it up at $65 is happy. I was eyeing the March 30 puts yesterday, but NOOOOO…
Savers Will Prosper at the Bottom
http://www.minyanville.com/articles/Bernanke-savings-debt-government-barney-frank/index/a/16276
It might take some time but prudent savers willing to delay consumption and go without generally speaking will be vindicated.
Unless their dollars are made worthless
In which case all dollars are worthless, and where does that leave us?
So don’t save in dollars. As the 12-year olds say, like DUH!!!
but, but…
cash is kinky
Spank me, baby, spank me. Spank me till I spit up some gold coins.
Just don’t tell the economists.
I was talkin’ bout Spitzer…
I deny everything then.
They’re just handing money out via stock market these days. That was the plan all along for getting the money into everyone’s hands. Sold SRS this morning for another BIG FAT PROFIT. +9 %
The plan would have worked better if proposed reform to turn the SS pension system into a gret big 401(K) had gone through. Trouble is, almost all the stock is currently in the hands of the residents of Upper
Richistan.
Yep, that was the plan all along.
There are no “efficient” markets, only markets where you churn other peoples’ moneys, and skim off the vig.
Wall St. just looks at the largest pot of money, and wants to “liberate” it. Traditionally, they only wanted the “frictional” fees. With “home equity” they got greedy, and started smoking their own dope.
Next big pot is SS.
After that, there have to be other dopey countries with dopey morons, right?
If we stopped chattering there wouldn’t be a problem apparently.
Alan Schwartz, president and chief executive officer of Bear Stearns, said: “Bear Stearns has been the subject of a multitude of market rumours regarding our liquidity.
“We have tried to confront and dispel these rumors and parse fact from fiction.
“Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated,” he added.
“We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations.”
This Zombie could not even make it to the end of the month. Wasn’t there a movie about junkies called 28 days?
All of sudden those folks buying BSC puts @ 50 the other day look like geniuses
Yeah, Dr. J. laid an egg there.
Is that going to be another Variety headline? Who will bail out jpm? The manipulators got almost 200 pts in 6 minutes today.
PPT just bought the market. Maybe they will buy Bear too?
this is shaping up to be a BSC’s CFC momment.
anybody gonna step into the TBTF panic? When does rational buying occur of BSC?
BB just shot himself in the foot on any dollar intervention with the liquidity comment. Dollar once again getting toasted.
Current dollars are getting toasted, future dollars are going up. What gives?
Gold @ $1005
Added another bunch of index calls. I’d sell some puts but I don’t have the cajones for that.
also added to Ciena. That one looks good
Speaking of puts, i wonder how many street banks were writing under the market? More losses to be taken if todays manipulation doesn’t hold.
Yeah, the ultimate bear fantasy scenario.
Trying to understand Ciena. A possible break higher??
Yeah, it got over the 50 dma early and is being thrown out with the futures. That one’s buyable, so is BIDU, so is FSLR, at least so far.
Yikes….BIDU and FSLR are out of my league. Even that near-30 P/E on Ciena made me choke a bit.
What do you mean by “CFC moment”? Could you please furnish some references?
on one hand you have shoes dropping, and in the other you have domino’s falling.
DONT BAIT. Baiter.
I didn’t bait. I asked for references. If you have none, then you are spreading rumors.
PB, I was baiting……..loosen up, man.
I’m in - bought a 100 shares @ 30 for s#@ and giggles.
I like Ciena better at that price.
I picked up some cien the other day. I like what’s going on over there.
I’m out @ $37. +20 % I think
The much reviled Jim Cramer always went to Harvard, but I think he’s a dropout…..
Gotta love his “buyout” call on BSC at $88 in Jan.
____________________________________________________
Cramer Sees a Bear Stearns (BSC) Buyout
January 24, 2008 11:38 AM EST
At RealMoney.com, Jim Cramer said he thinks Bear Stearns (NYSE: BSC) gets acquired. Cramer said even after the subprime debacle, Bear has good stock trading, good prime brokerage and good fixed income.
Cramer thinks UBS (NYSE: UBS), Deutsche Bank (NYSE: DB), or Credit Suisse (NYSE: CS) could buy the company.
On Monday, rumors surfaced Credit Suisse would buy Bear Stearns. Credit Suisse declined to comment on market rumors, but said they are not interested in making a large “transformational” acquisition.
The recent buyout talk, plus the bounce back in financial stocks, has sent shares of Bear Stearns up over $14 on Tuesday and Wednesday.
I posted in Jan that BSC was going under. The reason it got into financial difficulties is legal difficulties. No firm or individual wishes to be associated with a tainted firm. Nobody can have their reputation associated with a firm that did a truly horrible thing to their clients.
LOL, I picked them as a short sale/long dated put candidate last May, along with UBS.
I remember that, Hoz. I thought of you this morning when I saw the whole thing unravel before my eyes on some cable network while working out at the gym.
I was working out at the gym last night , boy did my arms get tired from lifting those steins. Have a great weekend!
lol. last time i checked haliborton is still doing just great.
BULLETIN
U.S. CONSUMER SENTIMENT HITS 16-YEAR LOW
Consumer sentiment slips in March to 16-year low
By Rex Nutting
Last update: 10:03 a.m. EDT March 14, 2008
March 14, 2008 10:13 A.M.ET
BULLETIN
U.S. CONSUMER SENTIMENT HITS 16-YEAR LOW
Bear Stearns bailout
J.P. Morgan and N.Y. Fed provide funds to strapped Wall St. broker
SKF +10 and out in 60 sec. It’s a world gone mad, I tell you. But bless the HBB for bringing it to my attention. The information and background found on this blog is a national treasure. Bless you all. I need a drink.
Congrats -
A comment on Mr. Eliot Spitzer
from Wired ezine
“…Spitzer, like many high profile Johns, was found out because of suspicious movement from his account to a company called QAT International Inc. A red flag was put on his account alerting the feds to his activities. Now if Client 9 (pictured, right) had paid for his $1,000/hour services with a prepaid credit card would he have gone under the radar?…
Those working it in illegal fields tend to be early adopters, adapting new technologies to their needs. It was drug dealers not doctors after all that made pagers so popular. Now it’s prepaid/disposable phones and credit cards. What other products have been seasoned for the illegal market?”
Wired
http://tinyurl.com/2lpz4h
What if he’d just paid cash?
In New York, Washington or Chicago? Better off carrying a gun. And safer.
GOLD GOLD GOLD GOLD GOLD GOLD GOLD GOLD
GOLD GOLD GOLD GOLD GOLD GOLD GOLD GOLD
GOLD GOLD GOLD GOLD GOLD GOLD GOLD GOLD
GOLD GOLD GOLD GOLD GOLD GOLD GOLD GOLD
Oops, sorry. Never mind.
CRASH
Yep. Looks like a crash:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=d12
And another:
http://finance.yahoo.com/q/bc?s=TMA&t=1y&l=off&z=m&q=l&c=
It’s another good day to be long FOREX, gold and future $US. OK to be long U.S. stocks. Bad day to be long MBS, house or current $US.
Changed your ploy from USD to future USD v/s past USD?
You’re a two-handed economist, aren’t you?
I have no idea what that post means, but I caution you to not get hit in the back of the head by a boomerang.
I mosey over here this morning, and WTF, not one mention of the word gold, so I thought I’d engage in a little gold-baiting. And yes, I hope I don’t get hit by any flying objects too. Thanks for your concern. If my timing is right, I’ll take a +100% gain on TMA, then shortly thereafter, gold crashes 50%, back to my cost basis, and I buy a hundred more oz. with TMA gains. Everything is a risk, including holding paper dollars. Get it now?
Got it.
Care to explain “on TMA”? What price is that? What price do you think Gold will reach and then crash back to 50%?
I think gold will crash, and crash hard and fast, but not until BB sacks up and starts raising interest rates.
Michael,
I’ve never predicted what the price of gold in dollars *will* reach. It could drop back to $500, though unlikely. TMA could go to zero, very likely. BB could start raising interest rates, though not anytime soon. Stock market could crash hard this afternoon. Gold could go to $2400 in a year, TMA to $5 in 3 days. Lots of ‘coulds’. Place ‘yer bets in the big casino.
That requires humility not found in this case.
Nanny Bernanke is on your side. Run with it.
Smells like emergency rate cut:
The Federal Reserve issued a press release that stated it is “monitoring market developments closely and will continue to provide liquidity as needed.” The Board unanimously approved the JPMorgan Chase (JPM 366.66, -1.45) and Bear Stearns (BSC 31.47, -25.53) arrangement. Fed funds futures are now pricing in a 22% chance of a 100 basis point rate cut, with the rest of the odds on a 75 basis point cut. There was no chance of a 100 basis point cut yesterday.
That’s so funny…they just liquefied an additional $200 BILLION by swapping MBSs for treasuries, and now we are facing a 75% chance of a 75 basis point cut and 25% of a HUNDRED basis point cut. This is nucking futs!
So they may cut the fed funds rate to 2%.
Unfortunately for the FED is that they can no longer cut rates once they get to zero percent.
Not everyone from BSC is hurting
http://dealbreaker.com/2008/03/the_pimp_is_you_jimmy.php
It’s good to be the king.
Of course we all know how that ends occasionally.
fwip. chop. thud. Hurrah!
So who here is riding the Bear down today???
Chicken Little is the jockey, on board.
http://blogs.marketwatch.com/greenberg/2008/03/the-big-whoosh-is-this-the-beginning/
The Bear Stearns liquidity crisis may very well go down as the beginning of the big whoosh that must happen before anybody can see the light of day in this financial crisis.
One thing that gets lost in the noise about Bear Stearns, and why a bailout is critical, is that it’s a broker-dealer for many big hedge funds and wealthy individuals.
If the hedge funds and rich folk get caught here, without a net, you imagine possible domino effect throughout the brokerage and banking industries as people start pulling out cash and heading for safer pastures, such as trust companies.
And to think, just yesterday, S&P tried to suggest that the end of the subprime mess was in sight. Hate to break the news to them: The subprime slime was just the tip-o-the-rapidly melting iceberg.
Ha. Herb is my Kristen (figuratively).
I remember him talking about getting long in the fall of 2002. Good time to buy.
“Global warming” is threatening to melt a lot of Wall Street icebergs at the moment.
I thought the cause was “Global Whoring”?
That’s what took some of the heat *off* Wall Street…
Jack Bogle Vanguard on Bloomberg this morning.
1 in 3 chance of a soft depression.
When people talk of new innovative financial products he puts his hand over his wallet.
Too much speculation in stocks not enough long term investors.
In 1929 stock market turnover was 125% last year exceeded 200%.
Sovereign fund bailouts put our future in the hands of our enemies and while appearing to be beneficial today it could be disastrous in the future.
He is currently 35% stocks 65% bonds.
79 years old.
“Slowdown” = soft depression / not a recession?
A soft depression is probably worse than a recession. I wonder what the other 2 in 3 chances would be? Crushing Depression?
What came first?
The soft boiled depression or the full blown recession?
Jack Bogle Vanguard is my investing hero, however I am mostly out of stocks at this time…… sorry jack I will buy back some day over the rainbow
Yeah, this is the one thing I disagree with him on. That and the fact that Vanguard doesn’t offer international bond portfolios.
We agree to disagree. C’est la vie!
Well Duh. When I’m 79, I too, would be less than 35% in stocks and perhaps 55 to 65% in bonds. If Jack Bogle were 35, perhaps the numbers would be 75% stocks, 25% bonds.
http://www.rutledgeblog.com/
Is the sec and congress throwing fasb 157 under the bus already?
So, hearing about the Bear Stearns blow-up, I walked into my classroom this morning for my zero period yearbook class and turned on CNBC. I promptly began screaming at the television — no, I’m not normally THAT teacher.
Anyway, the kids started watching and asking questions. At the end of the period, after I’d explained what was going on (likening it to a lemonade stand that had sold a hundred cups of lemonade when they only had enough to make one, and all hundred kids showed up for their lemonade at the same time — let me know if you can come up with a better analogy) to the best of my admittedly limited ability, the kids asked:
“Ms. Wheels, what do we do?”
I responded by saying, “Don’t ask your parents for any money and don’t buy anything you don’t absolutely need.”
They left a little bit scared. But I think that’s a good thing.
Be careful, in some circles that might be called child abuse.
no doubt! what do you do? you’re teenagers! go smoke dope and have sex!
At least the sex is free.
dammit. I’m gonna have to start handing out condoms.
So much for tenure.
hllnwlz, so good to hear that a true teacher is trying to find a way to make sense of this mess for the coming generation. Those poor kids will suffer all the fallout from their elders’ folly and there is not one thing they did to deserve it. I am also trying in my own small way to develop a family game that will help my kids navigate these things in the future. A kind of Monopoly for our times. I liked your analogy of the lemonade stand.
Hey Cass,
Enjoy your posts.
That’s my biggest worry. The boomers and the hedgies aren’t going to pay for this, my kids are, and they are the least able to make the money they’re going to need to. (Lower middle class, declining district. Lots of remediation necessary for what didn’t happen in elementary and junior high school.)
I’m really afraid for them.
I’m trying, but I don’t know how effective I’m going to be in the long run. Most of them will probably learn the hard way. : (
I have to send my kid to your class!
Here’s one for Jas:
http://www.minyanville.com/articles/bsc-jpm-consumer-cpi-leh-goldilocks/index/a/16278
I am so angry. So, so angry. To say I’m furious would not be an understatement. I feel like one of those people in the lower decks of the Titanic, screaming behind a locked gate as the water laps at my ankles and watching as fat, wealthy, fur-draped white women are gently helped into the lifeboats.
This morning I listened, jaw agape, to Mark Zandi stating, “The taxpayer is going to have to pay for this. There’s no other way out.”
What the fugelhorn?!
Shut up, Mark Zandi. I will cut you! (Credit to Kevin and Bean.)
Scr3w you and your rich banker buddies. Bail yourselves out. Our ridiculously overleveraged, based-on-nothing-more-than-the-voracious-appetites-of-Americans-for-cheap-crap-we-don’t-need economy must DIE.
If the friggin’ English can rebound from the end of their empire, so can we. I went to Oxford. They’re not THAT smart.
It’s time to lock and load, people, and keep Patrick Henry’s immortal words in mind: “Give me liberty, or give me death.”
I’m buying a year’s worth of food and a gun — and I’m not getting on any boats. ;p
Rant off.
Zandi has decided to be the main pronouncer for this stuff. IMO, Moodys should be gutted for what they have done to this country, and yet he has the nerve to say these things. The other guy is Chairman Mao at the Peoples Republic of Pimco. What can you say? We just have to resist it.
again, Chanos was way ahead of the pack on Moody’s.
If I have learned nothing else from this market, it is to listen to the short sellers, not the bulls, when it comes to fundamentals.
Ahh,
So resistance is not futile after all.
the EU keeps mumbling from time to time about going after the US ratings agencies for the subprime fallout etc. It is becoming a recurring theme in political circles, so something is brewing. If major fallout develops in Europe (like big bank collapse or too big taxpayer bailouts) the euro kleptocrats are going to need a scapegoat, and I think the US ratings agencies are a prime candidate.
As for the Pimp, I’m afraid they are too good friends with their euro pension fund buddies for anything serious to happen there. The Dutch pension funds are still very upbeat about investing in US mortgage paper and US companies in general. They have not disclosed any US mortgage losses yet, although the gains of the biggest Dutch pension fund (ABP) mysteriously declined from +12% earlier in the first half of 2007 to an estimated +3% at the end of the year.
When they are in the black, they are geniuses.
When they are in the red, the taxpayer must bail them out.
“When they are in the red, the taxpayer must bail them out.”
Which…makes them even more geniuses!
Heads you win, tails I lose. How could you ask for better odds?
“I will cut you! (Credit to Kevin and Bean.)”
‘I’ll get you, and I’ll make it look like a bloody accident!’ - Mike Meyers as The Cat in the Hat
“I’m buying a year’s worth of food and a gun.”
I am getting a great deal on Sig Sauer 45 $725.00 with 2 magazines and night sight. They are so cheap I am considering getting their compact 40 as well although there are better compact pistols around.
Did anyone see the article on the AR-15 misfire and the individual got arrested for an automatic weapon even though it was a misfire.
latest news
Bush: Housing market is in process of correcting itself
MARKETWATCH FIRST TAKE
Hidden Bear
Commentary: Bailout shows Bear Stearns’ execs were too upbeat
By MarketWatch
Last update: 10:55 a.m. EDT March 14, 2008
“Housing market is in process of correcting itself”
At least El Presidente is right about that.
Mark today on the calender. Wrong ought to be his first name.
Prof Bear,
Someone by the name of John used to post links to HBB related news articles.
I know you used to be Get Stucco, did you also post under the alias John?
Never (but I was briefly Hopeful
)
Never been a john, PB???
Call me strange, but I have never had any craven desires to catch diseases or destroy my family in exchange for a debaucherous night of pleasure.
Stay out of politics then.
poor sap.
When did you stop having any craven desires?
Thanks PB.
“I have never had any craven desires to catch diseases or destroy my family in exchange for a debaucherous night of pleasure.”
Thanking PB, cuz he doesn’t wish to catch a disease? Does that mean if there were no chance of catching a disease it would be OK? What if his family would never ever find out, is it OK?
(sorry PB, lol)
I don’t mind being the butt of anyone’s joke. Hope you don’t mind occasional ribbing, either
And to think, this all began with Taco Bell Jeff and Casey Serin.
2 of Californias best investor minds
LOL…!
PPT is in it big today. Lots of jawboning, too; Bush was mumbling something. One good push and this pig is going to crash.
Yes, it days like this that make me feel that Shrub & “Dickey Boy” Cheney will have a “better” legacy than Herby Hoover. I wish I could old Abe’s thoughts about what has happened to the “people’s” republican party and which tele-evangelist he would accept money from to promote the ideals of the “true” Americans.
Dollar collapsing. Now below 99 yen. Where’s the cash is king guy? He needs to get in there and buy.
I was the one who tempted you by reminding you that dow and gold were close to 1:1….
Watching the press conference at NYEC…
Our Dear Leader “remembers Savings and Loans.” When you could just ask your brother to loot enough to cover your mortgage. Now he has to ask his handlers to loot the entire treasury.
Looks like the Ides of March came a day early.
Looks like the Ides of March came a day early.
It is the Ides, if you are down under…
S.P.Q.A.
It’s a groundhog day for me, as I get 2 March 15th’s for the price of 1.
The Dude of Ides…
Shadow Government Statistics reports (subscription required) that the Ministry of Truth’s CPI report this morning is no longer the usual distortions and half truths. It contains outright lies. They use a not-seasonally-adjusted 0.6% decline in gasoline prices for February, while the data published by the Department of Energy shows a monthly gain of 0.5%. That number, alone, would have brought in the seasonally-adjusted CPI-U at a 0.3% monthly gain, which was the consensus forecast. Add to that the increase in food prices…..
Fed Pledges to Supply Cash
http://tinyurl.com/yur64b
The action won praise from the administration, with President Bush saying that Fed Chairman Ben Bernanke was “doing a good job under tough circumstances.”
I immediately thought of “Again, I want to thank you all for — and, Brownie, you’re doing a heck of a job. The FEMA Director is working 24 — (applause) — they’re working 24 hours a day. “
Bid Wanted:
http://www.reuters.com/article/marketsNews/idUKN1448694920080314?rpc=44
this is like LTCM now. Channeling October 8, 1998. That was a great day to buy.
Are you suggesting this is a good day to buy the dip? Or will Monday be even better? Could be a rather long weekend by the looks of things…
remember, Mondays have never followed through since 1987
This is bigger than LTCM, we are in the “who’s next” phase. You are right about buying solid banks, they will be taken out and shot as well. Still a little early tho imo.
I don’t know who the solid banks are. I sense that the rebound will be led by tech,nasdaq
I’m going after some trucking puts, yrcw and jbht. Yrcw bit off more than it can chew. The rest of the otr companies look ok, 0 debt and decent cash.
Bet Eliot wishes he was still AG. Imagine the hay that will be made with BS and other IB execs.
Mozillo is the Bernie Ebbers of the housing bubble though.
and Henry Blodget speaks!
Pathetic Bear Stearns Bailout: Who to Blame
Posted Mar 14, 2008 11:44am EDT by Henry Blodget in Newsmakers, Recession
Related: bsc, jpm
From Silicon Alley Insider, March 14, 2008:
Get ready. Now that Bear Stearns (BSC) has been forced to run hat in hand to the Fed and whimper that it’s “too big to fail,” the mewling is about to begin:
• It’s not our fault! It’s a run on the bank!
• We never could have seen this coming!
• Blame those jerks who stopped lending us money!
Give us a break. If Bear Stearns goes to zero, there will only be one party to blame: Bear Stearns management.
Yes, companies that live and die on short-term loans (such as every brokerage firm on earth, along with Enron) depend on the cooperation of third-parties. And, yes, when those companies can’t roll over their short-term paper, the folks who actually deliver the death-blow are those that refuse to lend them any more money.
But the first responsibility of any brokerage firm management team is to ensure that under no circumstances can the firm be put in a position where its short-term financiers might lose confidence. This is why there is ultimately only one person who is responsible for the Bear firesale: Bear’s CEO Alan D. Schwartz.
Meanwhile, who will pay for this bailout? Do you really have to ask?
You.
The Fed has promised Bear Stearns savior JP Morgan (JPM) that it will guarantee the value of whatever crap Bear has piled onto its balance sheet. In other words, the Fed is effectively assuming the liabilities of Bear Stearns. And the Fed’s source of capital, ultimately, is you.
Outed by Eliot Spitzer, no less (per Wikipedia).
And yet, regardless of what happens to the company, the executive team walks away with millions.
And everybody thought that I was nuts when I said bail-outs was going to seep into areas that they usually don’t seep into .
First ,whats this number with the FEDS giving JB MORGAN A Loan for BEAR STEARNS . Everyday the “new rules ” kick into gear that really expands the powers of the Feds ,doesn’t it ?
Its interesting that the Fed Chairman was talking today about the regulations of the Banks that did not apply to the mortgage Companies . That just doesn’t pass the smell test .If a mortgage broker is selling a loan to a Federal Regulated entity ,meaning the loan was underwritten for that pass on to a different entity ,than why would the loan itself not be under those guidelines/laws . In addition ,wouldn’t it be crazy law to have regulations on Federally Chartered Lenders ,yet have no laws on the mortgage brokers and agents that underwrite loans that are sold to those entities ? I’m saying that the loan and where it ends up dictates what regulations has been violated . I have said all along, the laws were already on the books . I just wonder why all this noise about creating new laws ,when the laws on the books were violated already .If mortgage brokers are acting as agents or direct sellers to Federally regulated lenders or Investment Banks than why would their rules be different ? Does anyone follow what I’m saying ? I got to take the dog for a walk ,but I will be back .
“Silicon Alley”? Hahahahahahaha, haven’t heard that ludicrous moniker since about 1999. I can’t believe anyone actually pays Henry Blodget to write anything. Or does he give it up for free like message board cranks like us?
I’m a little angry also. What happens if you’ve been filing taxes all along, and decide to alla sudden, ahh, stop?
You don’t get your money back? Your best bet is to work for cash and live modestly below the radar.
I was thinking about that, spit (love the name, grogeous).
If you guys can come up with anything other than living in a cave in the Mojave desert in order to get out of ever paying taxes to this corrupt excuse for a mollycoddling-rich-dudes government, I’m all ears.
Move to a cave in Hawaii. The weather, fishing & gardening possibilities are much better there. =8-)
I like that. Plus, I was born there and know people who will teach me to fish… and maybe invite me over for kalua pig once in a while, if I promise to shower.
From Marketwatch:
“Bear able to do business as usual with new credit : CFO”
All is well, all is well! lol
Bernanke is speaking on the tube right now, telling us things most of us have known for several years. How are these idiots considered “leaders”?
Is that why the market dropped 100 pts? Their credibility is lower than the dollar.
Anyone here who uses a Mac with Dashboard’s stock market widget notice that they stopped updating the 1month, 3 month, 6month, 1yr and 2yr graphs at the top of the market? Anyone who wants to look at the long term decline in the DOW is left with the impression that it is still near its all time high. Screen Capture
BSC bailed out, only in America!
Have a heart, Crispy. Do you expect the Real Housewives of NYC to go without Prada?
How do you think we finish today??
I dunno. If they break 1275, probably at the LOD. I don’t give a damn. I have a bunch of spring and summer index calls which I know I will make money on.
Nothing to see here folks. S&P said yesterday that all of the writedowns are in sight. We’re in the clear - lol.
I just went long UYG. If it goes lower I’ll buy more.
no disrespect chick but this time its different- u have banks now realizing there are not enough dollars to cover the loans outstanding- these guys are starting to realize there are not enough chairs in the room for all the players to sit at- loans will be called post haste no matter what the collateral backing them which will beget more selling
Could be. BIDU bought me these calls, so like I said, don’t give a damn if they go to zero.
Here is to Jimmy:
http://www.youtube.com/watch?v=Tii386gXU30
calling nhz
http://www.thetruthaboutmortgage.com/next-shoe-to-drop-wooden/
that’s very interesting. GMAC got a lot of attention here by providing 110-125% mortgages for expensive homes, no-doc loans and other unusual (and imho very risky) mortgage products. I wonder what is behind the move, do they sense that the Dutch market is going to collapse? Or are they running into trouble passing these toxic Dutch loans to ‘investors’ ?
Reuters
U.S. faces severe recession: NBER’s Feldstein
Friday March 14, 10:55 am ET
By Ros Krasny
BOCA RATON, Florida (Reuters) - The United States is in a recession that could be “substantially more severe” than recent ones, National Bureau of Economic Research President Martin Feldstein said on Friday.
“The situation is very bad, the situation is getting worse, and the risks are that it could get very bad,” Feldstein said in a speech at the Futures Industry Association meeting in Boca Raton, Florida.
“There’s no doubt that this year and next year are going to be very difficult years.”
http://biz.yahoo.com/rb/080314/usa_economy_feldstein.html?.v=1&printer=1
More doom and gloom rate cut justification. Nanny Bernanke is going to save the world. Don’t these guys realize that game is over. It’s time to focus our energy and resources on rebuilding the economy.
For clarification, the NBER is the institution tasked with officially dating the beginning and ending of U.S. GDP recessions.
Just a heads up for those in Northern Colorado and Ben. New Frontier Bank of Greeley reportedly will be hit with at least a cease and desist order in the coming days. This is a bank that grew to over $1.5B in about 8 years - you only do that by taking on way too much risk.
True Confession:
Yesterday I was watching Kudlow with tears streaming down my face. It reminds me of the cry spell I had in July 2001, right before 9/11. A premonition cry.
BB did a good job today.
Unfortunately, I missed Kudlow yesterday. What prompted the cry?
mrmkt;
I think kudlow is scared.
Yep ,I saw a little of Kudlow yesterday , and I know what you mean by a look that Kudlow had on his face Ann .Sometimes I wonder if the cheerleaders really do believe their own spin .
So the Dow is down a little less than 2% at this point. Where is the analyst, rumor, happy smiley sunshine girl, PPT, ect. that will spark the traditional last hour rally to a 1% gain for the day? Time is short.
Roidy
Maybe S&P and Moody’s can reaffirm Ambac’s AAA rating again - just for the heck out it?
Yep. Here we go. Gotta close at 12000, or else.
Ahh, here we are. Dow to less than 1% and climbing. I was worried.
Roidy
now if they push just a tiny bit harder, gold can close above $1000 too. Goldstocks are already firmly in the green
Oopsie, made a little “nipple” and then went back down.
Gosh darn! We really need another 400 point day! We simply cannot have any reality intruding here, then Erin Burnett would again be able to give us her smug little smile on CNCB.
Roidy
Probably some hedge fund having to liquidate by day’s end.
BTW, I keep wondering how the S&P, Dow, and NASDOQ are so coordinated. What gives here? Look at their charts. I cannot believe that this isn’t dangerous, but I’m just a (former) S&P 500 investor. I really don’t understand the implications here.
Roidy
What implications? How could they not be? If I make random subsets of 30 or 500 things out of a large universe they are going to track each other almost exactly. The subsets Dow, S & P, and Nasdaq are not random, but you can only introduce so much non-randomization into the process unless that is precisely what you are aiming for.
You can look at a few stocks running across the ticker at the bottom of the page and know pretty close where the market is. Give me 10 and I’ll tell you whether the NASDAQ or Dow is doing relatively better, and what most sectors are doing. This ain’t rocket science.
On a somewhat-related note, give me the results of one decent-size stable precinct from a state along with that precinct’s results and statewide results from four years ago and I’ll predict the statewide outcome this year within a couple per cent. (I’d rather make a prediction based on one precinct’s data than polling data.)
“If I make random subsets of 30 or 500 things out of a large universe they are going to track each other almost exactly.”
Spare us the bvllsh!t, please.
Paul,
What you say is true. Random sets. Exactly. This stuff is not supposed to be random. These are groups of stocks that represent certain sections of the economy or something like that. S&P 500 is supposed to be a broad index. Dow is 30 stocks that are there to represent our industrial production (what ever the hell that means.) My confusion is due to sheer coordination of all of these indexes. I would believe some general movements, but not to a “scalar multiplier.” It just doesn’t work for me.
Roidy
They act in unison because his trading programs say sell A, buy B and the firm that sells B, her trading program say to buy C. Hedge/hedge all firms end up with the same overvalued crap. 90%+ of the market are funds doing this.
Sounds like a lemmings herd effect you are talking about. I am wondering how this will play out now that some of the lemmings have fallen over the edge of a rather high cliff?
“The United States is in a recession that could be “substantially more severe” than recent ones, National Bureau of Economic Research President Martin Feldstein said on Friday.”
This guy is predicting the recession will be even worse than after WWII.
Incredible!! May give new meaning to fire sales.
It’s over! Sorry, we were just kidding. What a difference a day makes.
March 14 (Bloomberg) — Bear Stearns Cos.’ long-term counterparty credit rating was reduced three levels to BBB by Standard & Poor’s.
The rating may be cut further, New York-based S&P said. The short-term rating was cut to A3 from A1.
It’s going on 3 p.m. and the Dow is down around 300. Almost time for a monoline bailout rumor.
Nah, just getting back from lunch - time to buy!
Omigosh you called that one (for the moment anyways).
Note the LOD. 1274.86
LOL
Yep! and there is massive accumulation - let it drift. mark it up on the close.
I wish I could say I was “scared” today but really, was just bored.
Hah! I need a nap.
It was a head fake.
FED keeps lowering rates what do you think will happen?
Annual percentage yield (APY)3
Rates as of 3/14/2008 3-Month 6-Month 9-Month 12-Month
Currency Name Rate APY Rate APY Rate APY Rate APY
Australian dollar 5.00% 5.09% 5.25% 5.32% 5.25% 5.29% 5.25% 5.25%
Brazilian real 4.62% 4.71% na na na na na na
British pound 2.75% 2.78% 2.88% 2.90% 2.88% 2.89% 2.63% 2.63%
Canadian dollar 1.00% 1.00% 1.00% 1.00% 1.13% 1.13% 1.13% 1.13%
Euro 2.00% 2.02% 2.13% 2.14% 2.13% 2.13% 2.00% 2.00%
Hong Kong dollar 1.00% 1.00% 1.00% 1.00% na na na na
Icelandic krona 8.63% 8.91% na na na na na na
Indian rupee 3.00% 3.03% na na na na na na
Mexican peso 3.50% 3.55% 3.75% 3.79% na na na na
New Zealand 6.00% 6.14% 6.13% 6.22% 6.13% 6.17% 6.13% 6.13%
Norwegian krone 3.00% 3.03% 3.25% 3.28% 3.25% 3.26% 3.00% 3.00%
S. African rand 8.00% 8.24% 8.50% 8.68% na na na na
Swedish krona 2.00% 2.02% 2.13% 2.14% 2.25% 2.26% 2.25% 2.25%
Swiss franc 0.50% 0.50% 0.50% 0.50% 0.75% 0.75% 0.75% 0.75%
From Everbank
It’s melting down…to the helicopters, men!
http://biz.yahoo.com/ap/080314/wall_street.html
lets hope Benny hedged for the skyrocketing fuel cost of his helicopters …
Never thought of Ben Bernanke not being able to fuel up his helicopter. What an irony.
https://personal.vanguard.com/us/funds/bonds
US CD rates 3/14/08
Maturity Rate
3 month 3.50%
6 month 3.65%
9 month 3.65%
1 year 3.70%
18 month 3.80%
2 year 3.80%
3 year 3.90%
4 year 4.00%
Out of my email box:
This came from Hamzei Analytics, who has been very bearish
Dear Jim,
This week, Uncle Ben and Comrade Paulson, with a coordinated attack plan in their back pocket, came in to rescue the Credit Markets, in general, and now we find out, the Bear Stearns & Co. (NYSE: BSC) in particular. BSC is an old primary broker dealer for the Treasury Bills, Notes and Bonds. All of this ahead of Spring Equinox and Mar OX.
Market smelled blood and went short big time. It is a bleak Friday on both Wall Street and Main Streets. With low Consumer Confidence numbers, record gold and oil prices, and a big investment house having its market cap getting clipped by 50%, the bottoming process is well under way.
Given the most recent market action (near -2 sigma on major indices), we fully expect that The President’s Working Group on Financial Markets, better known as PPT, will move in next week and that is the time to hunt for some bargains. Novices better stay on the sidelines till the dust settles.
The FED is scheduled to cut rates next week I think. Might get a bounce on the stock market ? Not too good for savers of dollars.
I wonder if good stocks will be safer than treasuries in the near future?
The rate cut is priced in already.
Will SuperB capture Captain Contagion?
Quotes from the Bear Stearns CEO over the past few days which underscore why you should take CEO and executive team pronouncements with a grain of salt. These are currently on the Marketwatch.com front page:
QUOTES OF THE DAY
‘Ridiculous, absolutely ridiculous.’
— Bear Stearns CEO Alan Schwartz, March 10, addressing liquidity-crunch speculation
‘[O]ur liquidity position in the last 24 hours … significantly deteriorated.’
— Schwartz, March 14
‘[T]o protect against the possibility that the rumor could be true.’
— Schwartz, March 14, on why Bear Stearns turned to J.P. Morgan
‘I should walk over and make a bid for their building, which is really nice.’
— Barry Ritholtz, Ritholtz Research
Unfortunately, SuperB was unable to save these investors:
March 14 (Bloomberg) — Bear Stearns Cos. biggest investors, including Morgan Stanley and billionaire Joseph Lewis, raised their stakes in the fourth quarter, holdings that may be wiped out if the firm collapses.
Lewis, the second-largest shareholder of the New York-based securities firm, added 1.8 million shares to bring his holdings to 9.4 percent as of Dec. 31, according to data compiled by Bloomberg. Morgan Stanley, the third-biggest investor through mutual funds offered to clients, upped its position to 5.4 percent with the purchase of 4.7 million shares.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPngPl0BDD1s&refer=home
Captain Contagion flexes muscles. Don’t worry. SuperB will save us.
March 14 (Bloomberg) — Lehman Brothers Holdings Inc. obtained a $2 billion credit line as the investment bank tried to blunt the stock’s worst drop in almost eight years and assure investors the firm isn’t short on cash.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.G15DlT9EJg&refer=home
In chairman Mao we trust? The Subprime Mortgage Blues
http://www.youtube.com/watch?v=13qWw7waSeM
There was a Realtor from Nantucket,
Who next job was peddling a bucket…
Regular or extra crispy?
Could this be BB theme song? For you Mighty Mouse fans:
Mr. trouble never hangs around,
when he hears the stock market is heading south,
Here I come to save the day!
That means that Bennie Bern is on the way!
Yes sir, when there is a bailout needed,
Bennie Bern will join the fight!
In the bank or on the stock floor,
He’s got the situation well in hand!
We know that when there’s danger, we’ll never dispair;
Because we know that when there’s danger he is there…
In the bank or on the stock floor.
We’re not worrying at all
We just listen for his helicopter
“Here I come to save the day!”
That means that Bennie Bern is on the way.
When there is a bailout needed,
Bennie Bern will joint the fight
“Here I come to save the day!”
That means that Bennie Bern is on the way!
When we arrived in New Zealand a month ago, the weekend real estate section of the NZ Herald had 116 pages of desperation, this weekend it’s up to 128 pages of utter desperation…
Give us a shout when it hits 150. But not before Sunday.
Fred’s helpful hint for the day (shooting for post 500):
Did you know that you can press the space bar and scroll down one page at a time? It’s like the page-down button, or clicking the scroll bar below the button.
Ding ding ding ding ding.
Hello. Anybody there. Where’d everbody go??? Hell, I expected balloons, dancing girls and party favors.
seems like we have our own PPT for HBB. Nice paint job closing with 500+ posts for the day
I was just browsing some listings in realtor dot com and noticed a poll teaser in the right-hand box - “Do you plan on refinancing in 2008?” It was not headed by an “advertisement” banner. Here are the only choices offered:
No, just did.
Yes.
Yes - if rates drop further.
Yes - if costs to refinance drop.
Anything missing? Like, maybe, “No?” Incredibly (to me), 1,295 votes were registered as of the time I looked at it (Fri. Night, EDT).