The Bankers Are Coming! The Bankers Are Coming!
Some housing bubble news from Wall Street and Washington. Associated Press, “Lennar Corp., one of the nation’s largest homebuilders, said Thursday it swung to a loss in the first quarter as it absorbed charges to write down asset values and costs, while new home sales and prices sank. Sales fell 62 percent to $1.06 billion from $2.79 billion in the year-ago period. The average selling price fell 8 percent.”
“Deliveries of new homes were down 60 percent to 3,596 homes. New home orders were down 57 percent to 3,045, with a cancellation rate of 26 percent.”
“For Lennar, the average sales price of homes delivered dropped to $278,000, down from $303,000 in the year-ago period, partly due to higher sales incentives offered to homebuyers. The company averaged $48,000 in incentives per home delivered in the first quarter, compared to $45,500 per home delivered in the first quarter of 2007.”
“‘Home inventories have been expanding due to the high number of foreclosures, negotiated ’short sales,’ and stretched homeowners looking to sell homes they can no longer afford’ said CEO Stuart Miller. ‘While sales are occurring and clearing prices are being reached, the pace of overall housing inventory growth is exceeding absorption at the current time.’”
“The news comes a day after the Commerce Department reported that sales of new homes fell in February for the fourth straight month, pushing activity down to a 13-year low.”
The LA Times. “Driven by a ‘brazen obsession’ with generating sub-prime mortgages, Irvine’s New Century Financial Corp. engaged in improper accounting that overstated its profit and allowed top executives to reap millions of dollars in inflated or undeserved bonuses, a U.S. Bankruptcy Court examiner said in a report released Wednesday.”
“Michael J. Missal’s report said senior managers ‘turned a blind eye’ to the ‘ticking time bomb’ created by the high-risk lending in 2005 and 2006. At the same time, Missal said, New Century’s auditor, KPMG, contributed to the problems by failing to exercise due care in reviewing its books, leading to material misstatements in New Century’s financial reports.”
“Certain…bonus payments to executives may be recovered ‘under unjust enrichment and bankruptcy law theories,’ he said.”
The New York Times. “The 580-page report documents how New Century lowered its reserves for loans that investors were forcing it to buy back even as such repurchases were surging. Had it not changed its accounting, the company would have reported a loss rather a profit in the second half of 2006.”
“The company first acknowledged that its accounting was wrong in February 2007 and sought bankruptcy protection less than two months later as its lenders stopped doing business with it. New Century was the first large mortgage company to fail and its quick demise marked the beginning of the end for the heady era of cheap money that helped home prices soar.”
“The report described New Century, once a Wall Street darling, as a company bent on making loans, layering ‘the risk of loan products upon the risks of loose underwriting standards.’”
“Some 70 percent of the loans originated by New Century featured low initial ‘teaser’ interest rates designed to increase after a period of time. The report said 40 percent of the company’s loans were so-called stated-income loans that don’t require borrowers to verify their income.”
From Bloomberg. “FGIC Corp.,the bond insurer owned by Blackstone Group LP and PMI Group Inc., said it’s walking away from an agreement to provide $1.9 billion in guarantees on mortgage-linked securities because Credit Agricole SA and IKB Deutsche Industriebank didn’t live up to their side of the deal.”
“FGIC ‘has no further obligation’ because certain responsibilities weren’t met and IKB, the German bank that’s had to be bailed out four times since July, misrepresented its condition, the insurer said in a statement today.”
“‘These guys should have a new motto: Heads we win, tails we rescind,’ said Julian Mann, the VP for fixed income at First Pacific Advisors LLC, which manages $3.4 billion of bonds.”
The Union Leader. “Joseph Vignolo says he had no trouble making ends meet before he was laid off about five years ago. Last fall, he says, his savings ran out and he and his family couldn’t keep up with the mortgage payments home. After months of delinquency, the home was foreclosed on and put on the auction block.”
“Yesterday, Vignolo protested as a brief auction was held at the property. During the brief event, the home was sold back to the bank, according to an auctioneer from Quincy, Mass. The property has an assessed value of $319,900, according to property records.”
“Vignolo’s wife and 16-year-old daughter have already moved out, but Vignolo remained at the property after the auction. He said he’ll stay put until he’s forced out, but he won’t resort to violence.”
“‘Instead of ‘the British are coming, the British are coming,’ it’s ‘the bankers are coming, the bankers are coming,’ he said, standing in his driveway before the late-morning auction.”
“No one attempted to remove Vignolo from the property yesterday morning. He started an argument with the auctioneer and accused one man who came of being a real-estate flipper.”
“His actions may be unique, but Vignolo’s situation is familiar to many throughout the country. New Hampshire saw a 96 percent increase in foreclosures last year, and the trend is expected to grow this year.”
“Vignolo said he could’ve made a deal and walked away with money, but he decided to make a statement instead. He said he shouldn’t be forced to leave the home where his family has lived for years. ‘It’s not about the money. It’s not about the money at all,’ he said. ‘It’s about the principle of the thing.’”
The Wall Street Journal. “This week John McCain and Hillary Clinton both used the housing-market upheaval to offer a window on what their Presidencies would look like. The contrast in philosophy and program is something voters should pay attention to.”
“Mr. McCain’s approach is his description of how we got into this mess. He doesn’t merely blame Wall Street or ‘predatory’ lenders, though he does fault both along the way. Instead, he offers a largely accurate description of how the housing and credit bubbles arose, driven by lax lending standards fed by a belief that housing prices could only go up. Then add some financial innovation that is now being stress-tested — and found wanting.”
“The major flaw in this presentation is that it leaves out the Federal Reserve, whose far too easy monetary policy helped to create the subsidy for mortgage and other debt in the first place. But the virtue of Mr. McCain’s overall diagnosis is that it doesn’t treat all borrowers as victims, and instead assumes that everyone shares some responsibility for getting wrapped up in the housing mania.”
“Refreshingly, too, the Arizona Senator framed his policy response around personal accountability for bad choices. He thus rejected one favorite Bush White House-Democratic idea of the moment, which is to lower or drop the downpayment requirement for loans backed by the Federal Housing Administration.”
“As Mr. McCain pointed out, such no-downpayment loans were part of the mania problem. One reason the FHA has fewer subprime problems than private lenders is that its borrowers had skin in the game.”
“What he does seem to understand…is that most Americans are responsible borrowers who don’t want to underwrite the losses of those who aren’t. In that, he is politically smarter than Senators Clinton and Obama.”
“McCain defended his housing plan today. ‘We may have to do more, but to raise taxes as Senator Obama wants to do or some kind of massive bailout, that is a needless expenditure’ of taxpayer dollars, McCain said.”
“Obama today reiterated his call for reworking existing subprime loans into affordable, long-term fixed loans and creating a foreclosure prevention fund to help keep Americans in their homes. He has pledged that as president, he would seek a mortgage-tax credit for homeowners and crack down on mortgage fraud and predatory lenders.”
“Obama mocked John McCain on Wednesday for urging government restraint in responding to the mortgage crisis, saying the Republican would ‘just sit back and watch’ as millions of Americans lost their homes.”
“‘We’ve been down this road before, (he said). It’s the idea that government has no role at all in solving the challenges facing working families — that all we can do is hand out tax breaks for the wealthiest few and let the chips fall where they may.’”
The Denver Post. “Developers of downtown condominium projects are raising their prices, even as much of the metro area is in the midst of a housing slump. Great Gulf Group will raise prices soon for the 200 residences in its 51-story tower by up to 5 percent.”
“‘It’s typical of any project to raise pricing as units sell,’ said Dee Chirafisi of Kentwood City Properties. ‘It really reinforces the value for the early investors who got in months ago. They have some instant equity, and they know the pricing is heading in that direction rather than the developer doing discounts.’”
“Many potential buyers have not reserved or put condos under contract because, given the broader housing market, they’re waiting for prices to drop.”
“‘I think the public was anticipating that would happen because of everything they hear about the market,’ she said. ‘But raising the prices is the way to get projects sold. You’ve got to give people deadlines.’”
“Among the other reasons for price increases on new projects are unexpected costs for building the project, leaving the developer no choice but to raise prices. Another is when the market allows it — and that seems to be the case with downtown condos.”
“‘If the market is telling you there is more than enough demand for the supply you are providing, that gives you the opportunity to raise prices,’ said Byron Koste, director of the real-estate center at the University of Colorado at Boulder.”
“Koste said downtown is distinct from the rest of the metro market, where prices and sales have been dropping for months. ‘It’s a good place to consider investing,’ he said. ‘They’re not making more downtown.’”
From Realty Check. “A week ago last Monday, when several employees of Bear Stearns were leaving the building with cartons and plants, Ray Schmitz, an associate broker at Coldwell Banker Previews International in New York City, was standing outside the building, handing out his business card.”
“Schmitz says he’s waiting for the fallout, not just at Bear, but up and down Wall Street and beyond. The housing bubble that inflated hedge fund coffers is now doing just the opposite on the way down, and that threatens the up-‘til-now unshakeable Manhattan real estate market.”
“‘Time on the market has increased,’ admits Schmitz, ‘and there’s been nervousness.’”
From Reuters. “Less than 48 hours after news broke that Bear Stearns would be bought for a fire-sale price, the wives of two of the firm’s senior investment bankers called their high-end interior designer to cancel their contracts.”
“‘We only had about $50,000 worth of final touches,’ to go, ‘and the wife called me last week and said stop,’ said an interior designer, Darren Henault, whose work has been featured in magazines like Vanity Fair and Elle Decor.”
“‘She said that they’re not poor, and are never going to be poor,’ Henault said, ‘but their capacity for discretionary income for things like window valances just went out the window.’”
“The wife of one of the Bear Stearns banker had planned to spend about $300,000 on the couple’s apartment in the next three months, Henault said.”
“Tom Martignetti, who owns the brasserie Bar Martignetti and a nightclub in New York, said sales of bottles of Champagne and vodka had tumbled about 25 percent since last year. To secure a table at his clubs, customers must buy three or four bottles at $300 to $550 each. The financial sector accounts for about 90 percent of these sales, which make up the bulk of a nightclub’s revenue, Martignetti said.”
“It is now easier to get a table at a top restaurant at the last minute midweek, due to the decline in reservations from the financial industry.”
“‘The nightlife and restaurant industry is based on celebrating,’ Martignetti said. ‘And a lot of my customer base has lost their jobs or are worried about losing their jobs - so nobody is celebrating.’”
“Businesses around Bear Stearns’s New York headquarters, including a nearby Audi car showroom, said fewer bankers were browsing on their lunch hours.”
“Daniel Crowley, a sales associate at Charles Tyrwhitt in the Bear Stearns building, said foot traffic past the high-end suit retailer had diminished, and traffic is a ‘huge’ component of sales since an attractive window display can lure customers.”
“Kenneth Kleinart of Floral Impressions in New York said he had not yet seen any slowdown in flower orders. ‘A few people have ordered flowers’ for Bear offices ‘just to cheer them up,’ he said. ‘They say it’s like a morgue over there.’”
“Home sales slumped this year in Greenwich, Connecticut, as North America’s hedge-fund capital experiences the effects of the credit crisis that has slashed Wall Street payrolls and profits.”
“January and February home sales fell 29 percent to 75 houses in the town that’s home to more than 100 hedge funds, property broker Prudential Connecticut Realty said yesterday.”
“There were 106 sales in the year-earlier period for the town that’s an hour’s drive from Manhattan. The total value of properties sold dropped 18 percent to $215.1 million, according to the report.”
“Financial sector jobs radiating from Manhattan are the primary driver of Greenwich real estate, according to brokers. Located about 35 miles northeast of Manhattan, the town of some 61,000 people has attracted financiers including…former Citigroup Chairman Sanford Weill.”
“Sales of houses for less than $2 million fell 26 percent to 42 single-family homes and sales of residences for more than $2 million declined 33 percent to 33, according to Prudential.”
“Former Citigroup CEO Charles Prince put his five-bedroom Tudor-style home up for sale there for $6.15 million in January, three months after stepping down as head of what was then the largest U.S. bank.”
“‘There is just no urgency, either for buyers or sellers,’ said John W.M. Cooke, a Prudential broker who tracks the data. ‘It’s sort of a standoff here really, except if you are buying $5 million houses.’”
“Certain…bonus payments to executives may be recovered ‘under unjust enrichment and bankruptcy law theories,’ he said.”
Thats it ? I want some perp walks here, banning from ever doing business again, jail time and heavy fines for these corporate creeps.
Sigh, read the article…
Where do you see any indication of Federal Charges in that article leading to jail time ?
“Missal said certain officers and directors might also be exposed to various other claims for certain actions or their failure to act, but he added that they also had significant legal defenses.”
It’s a bankruptcy thing, not crimonal. And the articles go into the Enron-like things about it. Remember how long it took for Enron trials to start?
Now there’s an idea. If white collar criminals were put on trial more quickly, we might have less of this. And maybe congress, etc, should focus on reforms like that instead of…keeping house prices up? (ahem, McCain staff..)
Blows me away that KPMG is in this kind of trouble. My first employer out of school.
“If white collar criminals were put on trial more quickly, we might have less of this. And maybe congress, etc, should focus on reforms like that instead of…keeping house prices up? (ahem, McCain staff..)”
Amen, brothuh! That’s what I want to see. There’s no downside for many of these white collar criminals. I think it would actually be a lot of fun if Congress seriously and with a great deal of glee and vigor went after these guys. I mean, the US keeps getting compared to Rome in its decline, but I wanna see some real bread and circuses, like Mozilo Maximus getting thrown to the lions. Maybe we could wrap a Bear Stearns wife or two in some curtain valences and toss her into a Florida canal full of gators.
Here’s the deal. Our lovely system continues to look the other way when high dollar douche bags rob the public while jailing petty thieves. By proceeding in this way, those who run and profit most from system and the protected wealthy elite face an every increasing risk of getting hung from light poles. In hindsight, the tipping point will be obvious but we won’t know it’s happening until after it happens.
..risk of getting hung from light poles..
ah well.. No risk, no gain.
You’re confusing risk with criminality.
..You’re confusing risk with criminality…
Criminality? I am confused.. i think you skipped a step.
When were you elected judge, jury and executioner?
“There’s no downside for many of these white collar criminals.”
Exactly. How many people would willingly sign up for 2-3 years in Club Fed for a nice $15 million dollar bonus? $5+ mil a year for 3 years of soft time? Sure beats working the rest of your life.
Yes you’re correct on one count. You’re confused.
Txchick, why does that blow you away? Common practice to balance risk vs. losing a client.
One of FDR’s terms was “malefactors of great wealth”
I thought CEOs and CFOs the other hotshots made the big money because they took the greatest risk; the greater the risk the greater the reward. But I sure as hell haven’t seen any of these guys exposed to any risk. Maybe it’s time to make that risk real and balance the reward equation.
Imagine that, we repeal the Glass-Stiegel act in 1999, and what follows? The Enron debacle, the dot-com bust and the greatest boom and subsequent housing collapse ever.
read the article?
No way, Jose. Just condense it down to a 10-second highlight bit. Thats all my media-braiwnwashed, MTV/VH1/BET reality-watchin, 7-minute-segmented, ad-driven, ticker-tape-scrolling, breaking-news-banner, brady-bunch-window-talking-head-spewing, politician-backlsapping, CEO-cheerleading, plasma-viewing, GameBoy-addicted self can handle . . .
I am an American Comsumer. I am Legion.
Soon to be…”I am Legend!”
This is outrageous. They are actually going to make the gangsters give back the money? This is no way to run a 3rd world country!
I would like to see every stockholder wiped out and every senior corporate officer and board member charged for what ever crime we can find on the books, if the FED has to guarantee/save any financial firm from bankruptcy! Then, that company is strictly regulated by who ever is assigned the responsibility of doing so. imho
(mg/ms)
If the tax payer is going to eat the big enchalida, on this man made crisis, I want my “pound of flesh”. By the way, can we sue or jail government officials that were “asleep at the wheel” on this one?
This, I suspect will end up like the French Revolution! The elites and their cohorts were first in line for the guillotine!
there’s more than a few Bolsheviks hangin’ out on this blog..
I suspect it will be somewhat like the French Revolution, with modern weaponry replacing pitchforks…
Bolshevicks on this blog? There doesn’t seem to be any evidence for that. Can you come up with anything specific? Conflicts over exactly what rules and rates should be and how all that should be enforced seems to be about the extent of conflict here, at least since the trolls of the trade have felt unwelcome.
One of the advantages of swift enforcement is that smaller punishments and sometimes mere fines can do the work. This is important because while strong punishments may provide entertainment for gawkers, there is little reason to believe that strong punishments actually deter crime.
The Enron trials should have started soon after the criminality began, not well after the whole enterprise had failed massively. Numerous Enron top players did get their lives pretty much thoroughly evicerated eventually.
“All successful revolutions are the kicking in of a rotten door.”
John Kenneth Galbraith
“The Enron trials should have started soon after the criminality began, not well after the whole enterprise had failed massively.”
Not when the Enron rascals play golf with the very judicial/governmental guys that will prosecuting them Moley.
“The elites and their cohorts were first in line for the guillotine!”
Followed in short order by the first crop of revolutionaries, who were judged insufficiently zealous, and then the second crop of revolutionaries, and then the third, until people got so tired of tripping over heads that they installed a dictator who got a million more people killed.
Call me a reactionary or whatever, but I think Edmund Burke had the Jacobins’ number.
“Vignolo said he could’ve made a deal and walked away with money, but he decided to make a statement instead. He said he shouldn’t be forced to leave the home where his family has lived for years. ‘It’s not about the money. It’s not about the money at all,’ he said. ‘It’s about the principle of the thing.’”
Where does one start with a statement like this?
Well, *HE* said he could have walked away with money. But what he thinks counts for little, since by all accounts, the man is a fool. My guess is that he thinks his house is worth more than it really is, still stuck in 2006 Wishing Price Dreamland.
Denial
Anger
Bargaining
Depression
Insanity
RE: Denial
Anger
Bargaining
Depression
Insanity
Suicide
Hmmm. Wife and daughter have moved out, he’s been out of work for years and it’s not about the money?
This guy is days away from going postal. I live about 20 miles away from him so I’ll keep an eye on the local news programs
Going loan loco is this decade’s, going postal…
Public records have Vignolo’s home assessed at $319K and that he paid $212K for it in 2000. Instead of selling five years ago and buying a smaller/cheaper house or renting, he refinanced in 2003, 2005, and 2007 until his original mortgage of $190K was up to $276K. Now, as he breaks contracts he signed, he expects the public to rally to his support. And here I thought engineers were supposed to be the smart ones…
Engineers take plenty of math and science classes, but no finance or accounting classes.
No, economics is required for all the engineering programs I’ve ever looked at, so that isn’t the problem. When people are smart in one context, not only does that tend not to translate to other contexts, it tends to result in a lot of casual dismissiveness of the unfamiliar. Attempting to teach engineers economic theory usually just results in engineers discovering that economics as a field is a swampland of guesswork and handwaving which to engineers carries little muster or value. The unfortunate result is that they stop paying attention to that stuff early on rather than taking from it basic lessons that might be useful.
There is such a thing called “dumb engineer” just like in any other profession: Doctors, nurses, economists, CFOs, CEOs. The last two kind of rare, but they are there.
Maybe this guy was a dumbo out and out. In the past normal engineers were not required to be financial wizards. These days one has to learn many skills in addition to the profession. Hence the half baked approach by the so called smart ones to get rich quickly - because every one is doing it!
He’s probably been living off his refis and is angry because the home ATM closed down and he’s got to go back to work.
No wonder he has such strong feelings about his home. Kinda like they took the teat away before he was weaned
‘It’s about the principle of the thing.’
You haven’t made payments and you expect to live there anyway ? Where are YOUR principals Mr “I’m a victim” Deadbeat.
i imgine he won’t resort to violence against the bankers like he said but the house is fair game for destruction i suppose
He’s too much of a crybaby ninny to lash out at the bankers. He’ll just go home and beat on his wife and kid instead.
What a loser.
This guys house was assessed at 300k plus. If he had downsized 5 years ago when he lost his job, he could have sold at near peak, walked away with a big chunk of change, and preserved his dignity and independence.
he obviously is not that bright
and i thought people were smart ditech told me so
There is entitlement mentality among most homeowners. They think they shouldn’t lose the house if they lose their jobs. This person’s probably reached a peak value in fall 2005 (as most houses in MA did), that was t years after he lost his job. I bet he thought prices will keep going up forever and didn’t want to sell. Now that prices are dropping, he remembered that he has no income to pay his mortgage!
I only regret that I have but one loan to lose for my country…
“‘Instead of ‘the British are coming, the British are coming,’ it’s ‘the bankers are coming, the bankers are coming,’ he said, standing in his driveway before the late-morning auction.”
Its a New England thingie. But I think the motto is:
“Live free and don’t work”
1 if by loan
2 if by see ya
dude, you have an extremely “sharp mind”. Go for it!
Also, I should have said I like your turn of words, ie., sharp wit and a perverted way of looking at the world. lol
Give me liberty from my debt
Just heard John Adams say on HBO last night that he had to study politics and war so his children could have the liberty of studying mathematics and commerce, and his grandchildren could study art and poetry.
I think maybe we need to have a refresher course on step #2.
Acquisition without amortization is fantasy. (Apologies to James Otis.)
“The wife of one of the Bear Stearns banker had planned to spend about $300,000 on the couple’s apartment in the next three months, Henault said.”
I planned on spending that much in the next 10 years on LIVING expenses !
Go get a copy of Architectural Digest and have a look.
Once you recover from the dry heaves, see what passes in NY as a “home” for a “young family.”
I love architecture and interior design but I can barely stand to look at it anymore.
” love architecture and interior design but I can barely stand to look at it anymore.”
Me, too, but I cancelled my subscription. It was that issue with Goldie Hawn’s Manhattan apartment (remember? all tricked out like a Buddhist temple?) that finally put me over the edge. Still subscribe to Dwell, though.
This is depressing beyond belief……..I’m wondering where I’m going to get a few thousand bucks to pay the IRS and the divorce lawyer (child custody issue, Round 2), and these jackholes are able to piss away that kind of money.
This country is screwed up beyond redemption. Stupidity has been subsidized so much and so long, that it is now the norm.
Time to go eat my Glock……..
Preach it, Gulfstream! And put the Glock down. Walk away slowly. It’ll be okay. Your HBB homies have your back.
I’m actually starting to hope for a Chernobyl-like meltdown of society……I am actually better equipped to survive/prosper in that scenario vs. the way things are now.
Pissed-off old guy + investments in lead (and lead delivery systems) = Upward mobility
:)
I hate to say it, but I am with you Gulfstream. I realize the hardships, but I need to remind myself and this blog about every 2-3 weeks, that this country needs a full-blown enema the way contestants on biggest loser need 1 meal (salad) a day, rather than 3 meals of pizza.
“Stupidity has been subsidized…”
Excellent take and comment about the current state of affairs in this country. It appears that more and more people want the goobermint to take care of them from cradle to grave. To make matters worse these same people complain about said goobers. Talk about stupid and biting the hand that feeds you!
You stop that scary talk! Lots of people don’t even have a nice Glock to play with and you want to eat yours. Come on, now, that deevorce crap will resolve in time. Meanwhile it’s looking like guillotine time any minute for the jackholes. Don’t be blowing your head off and miss all the fun.
I’m reminded of a scene from a serbian film about a families problems after the Yugoslavia circled the drain and everything went to hell in a handbasket (the first time not this next one) anywho….
this father is siting on the balcony of a run down apartment block. Smoking a cig, and wondering how it came to this. He gets worked up by the fact that he needs to work for a month just to earn enough to fix his broken toilet. Pulls out a gun a blows his head off.
I need to believe that it won’t come to that in the US but you never know given the stupendous level of incompetence of those in power.
Time to go eat my Glock……..
No, no—that’s too much iron in your diet. Just HELOC your dwelling and run away to Mexico.
My advice, find a lawyer/girlfriend anything to represent you. Its a whole lot cheaper, and if you whisper in her ear sweet promises, you may see its to her best interest not to overcharge you. I call it “kicking the can down the road”!
Later the situation may be worst, however it solves your immediate problem!
Look at it from the positive side, years from now you will laugh at the whole situation, and it beats making love to a Glock!
Think of it as a “rite of passage”, like pimples, first kiss, etc. You get the message.
Everyone goes thru this stage of their life. Cheer up, you could be upside down in a mortgage with only renting as your option.
Aren’t you a Gulfstream pilot? Who is riding in the back, mother Teresa?
PS: Get a real gun, a Sig Sauer.
Now I shall duck and cover.
I wonder what percentage of Bear employees are under water financially?
It is my understanding that it was very common for these guys to NOT sell stock, but instead borrow against it for their lifestyles/homes, etc.
Even if you only borrow 25% of the stock value for your life, losing 85% of value in one trading day will finish you financially…
RE: I wonder what percentage of Bear employees are under water financially?
JP sought to keep any broker with a $500k book which was about 12 people.
The rest get thrown to the sharks.
More like to the remora’s.
JPM’s the shark here.
The Denver Post. “Developers of downtown condominium projects are raising their prices, even as much of the metro area is in the midst of a housing slump. Great Gulf Group will raise prices soon for the 200 residences in its 51-story tower by up to 5 percent.”
“‘It’s typical of any project to raise pricing as units sell,’ said Dee Chirafisi of Kentwood City Properties. ‘It really reinforces the value for the early investors who got in months ago. They have some instant equity, and they know the pricing is heading in that direction rather than the developer doing discounts.’”
Real estate prices in the Denver metro area have fallen 5% YOY, but with respect to new high-rise condominimums slated for construction they are still making threats that you need to buy now or be priced out forever. I went to some open houses this weekend. Downtown I saw condo prices ranging from $300 to $750 per sq. foot, with HOA fees between $200 and $1000 per month. It is unbelievable. Most of the two bedroom only come with one car garage. No denial here folks.
Case-Shiller Index Price Rate Change For the Past 6 Months:
Denver -12.76%
Tim,
I have given up even looking downtown, as pricing is so unhinged from salary here it is scary to even consider what will happen to some of these condo/loft buildings. Employment has held up well in the Denver metro following the great purge of 2002, but if it goes, look out below.
I hear you and share your frustration. As I have stated numerous times, although metro Denver is down, good areas intown are flat or still increasing in the areas I like. Denver has ugly suburbs though except for the foothills (e.g., Genesee or Evergreen) which suffer from long commutes, which is especially bad during ski season. The foothills are down 5-10% currently, making them more tempting daily.
I have been looking in Morrison, Pine, Willow Springs and areas West. Prices are holding, but inventory is growing. The work hours wouldn’t leave me in much of a commute(same for you from the sounds). I am booking a vacation today, it is my remedy for whenever I talk myself into becoming house poor.
DenverLowBaller - I guess there is a bright side. I’m from the East Coast and miss high density vibrant areas, so I think it is better that we get rid of the remaining parking lots downtown and build luxury high rises and Class A office and commerical space, even if we dont need it, and then let it all crash, then to leave all the parking lots alone. I just wouldnt pay for a downtown condo right now.
Hoover…oops I mean McCain 2008! Yeah that’s the ticket.
Ok old Mc sounds pretty good in this instance I have to admit.
Read this if you can stand it. There really is only one choice.
http://www.politico.com/blogs/bensmith/0308/Stimulus_II.html
I never realised how vomit inducing Obama was until I READ his words and didn’t listen to them. I agree with some aspects of his speech, but it sure does seem that our economy would be truly F’ed under his watch.
“The bedrock of our economic success is the American Dream. It’s a dream shared in big cities and small towns; across races, regions and religions — that if you work hard, you can support a family; that if you get sick, there will be health care you can afford; that you can retire with the dignity and security and respect that you have earned; that your kids can get a good education, and young people can go to college even if they’re not rich. That is our common hope across this country. That is the American Dream. ”
Yes sir, we will take the Socialist dream. Starring Freddy Kreuger as the Treasury Secretary and Jason Voorhees as the Federal Reserve Chairman. I can’t believe I may actually vote for McCain…..I’m so depressed.
Yeah, ’cause the Republican vision we’ve had for the past seven years has worked *so* well. If you think that what Obama’s pushing is socialism, well, I’d guess you’ve never lived in a truly socialist country.
Pick up a copy of Paul Krugman’s ‘Conscience of a Liberal’ sometime. The lessons of the last century will make much more sense after reading it.
I am afraid that I agree with you, and I have voted for democrats for 30 years, except for John Anderson.
I voted Andersen 1980, Perot 1992, Nader 2000 other than that it has been Democrat but not this time. McCain will get my vote, Hillary and Obama are disgusting, talk about MORAL HAZARD>
I agree, the day they started letting poor people into colleges was the start of the downfall of the British Empire. Poor people wanting an education? Preposterous! The lower classes should know their place in society!
Hey I was and still a poor person with a college education! At least I am not on a construction site (like my brothers) pulling $29.00/hr with union benefits (must be honest, this was past tense).
The day we started demanding that everybody go to college was the day we ended up with (1) college graduates who could barely write; (2) liberal-arts majors manning the register at every retail store; and (3) not a decent plumber to be found anywhere.
We’ve given everyone a college education, at the price of dumbing a college education down to what a high school education used to be.
Skip,
Give me a break. I grew up dirt poor and we all went to college. Not Harvard like Obama, but good enough. We had a work ethic at home and we studied and paid attention and won scholarships (private) to help out. I got an entry-level job at a publishing company and started a Master’s by going to class part-time on Saturday mornings. There was a fat young lady there who always had a biggie coke from McDonalds. We talked about affirmative action in class and she said she “couldn’t afford to be a full-time Master’s student if her mother wasn’t Mexican” (she got grants). Her father was Irish American. I didn’t qualify because I was unfortunately born to immigrants from Europe who came three hundred years ago.
Public school is free, but you get what you pay for. I just teach my kids at home with a classical curriculum. None of the presidential candidates are for real choice in education. It’s take their government version or pay for private. Hill and Bill’s kid went to a private school, and I’m sure Obama’s will as well.
BEFORE you actually go ‘there’ ie thinking about voting for grandpa, just consider who he picks as running mate.
It could get even worse.
It doesn’t matter who he picks as a running mate. If McCain wins, Cheney will be the real power behind the throne. Republicans don’t run candidates; they run puppets.
I’d vote for McCain if it weren’t for the fact he finished 5th from bottom in the Naval Academy, violated the military code of conduct while a POW, cheated on his first wife, cheated on his current wife, was a card-carrying member of the Keating Five, and thinks we should stay in Iraq for 100 years if necessary. I also think McCain is about as intelligent as Chimp, which is beyond scary.
As Harry Truman once said, you Republicans stop lying about us and we’ll stop telling the truth about you.
Umm…great grades in military schools represent…what, exactly? Answer: An ability to keep your nose clean in a highly structured environment. Demerits for coloring outside the box go smack against your GPA.
I’m not sure the environment we find ourselves in today is best negotiated by dogmatic thinking.
Everybody who graduates from one of the service academies knows enough to get the job done. There are no Fifi-fied liberal arts curricula. I admire the ones who have the steel to gut it out — the better to eventually make the tough calls — and the imagination to make mid course corrections in response to emerging facts.
We undervalue the service academies’ careful cultivation of integrity and that quaint, old fashioned concept - honor.
My first choice companion will always be the anchor man from a service academy who has had his a– kicked in the field. Much more likely survivor in these uncertain times than the 4.0 GPA Stanford MBA. He’d beat the MBA hands down in the humor department as well.
JMHO.
Wow, I never vote because they are all a bunch of gasbags, I will be voting this time. It seems I never vote for someone, I only vote against someone.
Lane
Let’s give the hundred years in Iraq guy a chance because it would be much better to spend our money in the Middle East instead of electing someone from the last party that managed to balance the budget. The numbers he is talking about are similar to what the Iraq adventure costs every week or two. If only Mr. Obama’s proposals would result in many being killed then maybe they might be supported by conservatives.
So you don’t have the fear that McCain = Bush 3rd term?
I can’t shake that fear after all the a** ki**ing.
To reward work and make retirement secure, we’ll provide an income tax cut of up to $1000 for a working family, and eliminate income taxes altogether for any retiree making less than $50,000 per year.
So what defines a retiree? Can you retire at age 25 making less than 50K per year and pay no taxes?
I heard his comments on the radio over the weekend. He was very clear about no help whatsoever to speculators or second home purchasers.
Have you Arizona HBBers been spamming his inbox?
I haven’t been. Scout’s honor.
I don’t think it fookin’ matters. Run the mouth with pretty words (Hil, or Obama) or put on a serious face and talk about responsibility (that old guy), the end result will be the same, so far as I can see. There is no fixing this situation, there just are not enough bux or fast words.
McCain is the only one getting it right. And I’m a “liberal.” Why can’t the Democrats see that keeping folks in homes they can’t afford only helps the lenders, not the home borrowers?
“Why can’t the Democrats see that keeping folks in homes they can’t afford only helps the lenders, not the home borrowers?”
Because they’re pandering for votes. It’s what successful politicians do best. None of these schemes will keep prices from their downward spiral. Nothing. McCain is pandering to a different group, mainly the “personal responsibility” hypocrites. You know who they are… The ones who condemn anybody and everybody who has fallen on hard times. And they never stop condemning until it is one of them or their family members who need assistance. Case in point; Rush Limbaugh. For years he suggested drug users should be jailed yet pled and whined for the very compassion he with held from others.
I’m amazed how you know all this about everything else…
Most all posters on this blog are proponents of personal responsibility. I think there are some liberal hypocrites here that find it convienient to condemn fiscal irresponsibility, while they excuse personal irresponsibility. This election presents an interesting conundrum for those on the left.
Not really. Jawboning “personal responsibility” lost its effect very much like demonizing gays and non-Christians. Looks like the screechmonkeys will have to find some new material to mislead.
Jingle mail, jingle mail, jingle all the way!
Oh, what fun it is to kick
The lenders in the Aaa-hey!
Jingle mail, jingle mail, jingle all the way!
Oh, what fun it is to kick
The lenders in the Aaa!
I gotta admit, on this McCain is right…but he doesn’t connect the dots and see that the disastrous and unnecessary war in Iraq is eating this country’s economy alive. The Iraq war is all being financed by debt…
There is little such a program could do anyway, unless it came attached to a gigantic forgiveness clause to ge the loan down to a small enough amount to be affordable anyway. Really a moot issue, and you had better believe I will be voting this year.
Don’t let a decent person get in the way of your hearing their speech. It is all about getting elected.
And Then it is about, as it always is, CONGRESS, and the Senate who are the numskulls we all see voted in.
They are the ones who pass things, sexually harass underage interns, do footsy ‘wide stance ‘ style, or hookers and yet we see then once in awhile in your district pandering locally.
Why vote them in again and again.
Congress and Senate are the ones who make and pass laws. They can even override a presidents veto.
So, no matter who is in office, it is congress and senate who we need to vote outa here.
Pennsylvania primary coming up. I can’t decide whether to go to the polls or stay home. I did register Democrat this year just so I could vote in the primary (prior to this was non-party affiliated). Now I’m unsure.
If you want to go with the winner in PA, it’s HRC.
Phila. mayor Nutter and Fast Eddie are for her.
“Koste said downtown is distinct from the rest of the metro market, where prices and sales have been dropping for months. ‘It’s a good place to consider investing,’ he said. ‘They’re not making more downtown.’”
Actually, if Denver has a real downtown, they just made it. Not an easy trick to turn, but lots of people have tried.
The LODO/16th Street Mall area is in midst of a huge building boom. It doesnt look too bad, but when I go home after 9 pm on weekdays it’s pretty much dead. I think they are a little late to the party.
The DNC is in August, gotta make it purdy. Mucho tax breaks to the developers to get it done. And oh what a circus it is shaping up to be. I’ll be watching it via satellite from Buzios.
Brazil I assume. Just had friends come back from Rio. Sounded amazing.
Yep. This will put me in double digit trips to Brazil(wife’s from Sao Paulo). Put it on your must visit before death list. Buzios(N of Rio) and Angra dos Reis(S of Rio) are awesome. I kick myself for not buying land or home in either place when the $ to Real was 1/4. Mato Grosso & Pantanal kick ass, too. Dinner for 12 for $50 US, those were the days.
“‘She said that they’re not poor, and are never going to be poor,’ Henault said, ‘but their capacity for discretionary income for things like window valances just went out the window.’”
Never going to be poor, eh? Bend over and give us a place to put those window valences.
can’t afford window valances? I’m not the best seamstress, but I know they’re pretty easy to construct. It’s basically two hems on a long strip of fabric. The skinnier hem is for the rod.
She must mean those built-in jobs. But damm, girl, who ever heard of window valances being used as a quality of life indicator?
I always thought discretionary income was for fun things like vacations and boats.
This window valance story is right out of the 80s…check out Bonfire of the Vanities. When ibanker Sherman’s life went south, so did his wife’s balloon window valances…
Tsk. Oh Phillygal. Obviously you think too small (wink!!)
I just about brought out my pitchfork and torch reading this stuff about the wives.
I’m sure she left out a key word, “…income for things like custom window valences…”
You could a reverse Gone with the Wind situation where the housewives rip up their gowns and sew valences out of them…
“…and bent over, holding a scrap of silk lining torn from the inside of Louis Vuiton handbag, she screamed by God I swear, I shall never be tacky again!!!“
hilarious
I just sent this to former university English/Writing professor because I’m sure it will crack her up. Maybe you should be doing satirical novels spoofing classics.
income for things like luxury custom window valences
What happened to the popcorn?
From the original post:
“‘The nightlife and restaurant industry is based on celebrating,’ Martignetti said. ‘And a lot of my customer base has lost their jobs or are worried about losing their jobs - so nobody is celebrating.’”
Here in Tucson, I’ve been seeing a turndown in this sector since ‘06.
Latest data point: Yesterday evening, I went to a monthly gathering at a bar/restaurant in downtown Tucson. A couple of years ago, this event attracted dozens of people. I doubt that one dozen people showed up yesterday.
“To secure a table at his club, customers must buy three or four bottles at $300 to $550 each.”
Everyone that goes there is nuts.
Combo
it used to be only the “elite” could gain entry to the “vip” section in these nightclubs but the promoters very intelligently i might add started this bottle service crap
so any nerdy jackass with money to burn can feel special
and i am sure the models just love these knuckleheads
Bold off! OK now?
Thank you, my eyes were screaming, STOP!
“Everyone that goes there is nuts.”
Just stupid. It’s a clip joint! Haven’t these people watched any old film noir movies? I would suggest Jules Dassen’s “Night and the City” for a nice look at a British clip joint at work back in their heyday.
http://en.wikipedia.org/wiki/Clip_joint
‘And a lot of my customer base has lost their jobs or are worried about losing their jobs - so nobody is celebrating.’”
I read this an could only wish that I were in NY so I could go in and celebrate. I’d have a large sign saying ‘let’s celebrate the loss of more jobs on WS’ and have a large picture of Jim Cramer sitting on the table top. Of course one would have to notify the MSM in advance.
Sounds like a good HBB meetup to me. We could have NYCdj provide the music.
Anytime slim…..just name the place and time….check out the video on my handle…some friends of mine The Catholic Girls…
Thanks, DJ. BTW, I loved that Catholic Girls video.
“FGIC Corp.,the bond insurer owned by Blackstone Group LP and PMI Group Inc., said it’s walking away from an agreement to provide $1.9 billion in guarantees on mortgage-linked securities because Credit Agricole SA and IKB Deutsche Industriebank didn’t live up to their side of the deal.”
I wonder if FGIC insured any of the Bear Sterns stuff that the Fed will hire Blackstone to manage?
A few weeks ago SCA rescinded its CDS obligation on $3.1 billion in mortgage securities issued by Merrill Lynch. In response, Merrill Lynch sued. Now FGIC backs out on a $1.9 billion CDS. It seems like a trend is developing.
“It seems like a trend is developing.”
The Great Unwind.
Welcome to subprime’s ghost town
http://money.cnn.com/2008/03/27/news/economy/irvine_subprime/index.htm
IRVINE, Calif. (CNNMoney.com) — The subprime mortgage meltdown has shaken the entire U.S. economy. But nowhere might the impact be as stark as Irvine, California, a planned community nestled between Los Angeles and San Diego.
A year ago at this time, Irvine was home to 18 subprime lenders, including many of the leaders in the field, such as New Century Financial and Option One. Then, in what seemed like the blink of an eye, 4,100 good-paying white collar jobs were gone, or roughly 2% of the city’s work force.
” in what seemed like the blink of an eye, 4,100 good-paying white collar jobs were gone, or roughly 2% of the city’s work force.”
But what about all those jobs of lessor pay that are gone? Lawn care, beauty shops, cleaners, pool cleaners, exterminators, etc.
Dude…
Don’t forget the bartenders and waitresses. They’ve gone from getting great tips to starvation wages and reduced hours! Don’t forget about that article that had the Newport beach Lamberghini dealership flying its flag at half mast for New Century’s BK.
Got Popcorn?
Neil
Irvine is like Orange County, only more so.
Is this a joke?
” Federal Reserve Chairman Ben Bernanke said in testimony before Congress that mark-to-market accounting is “one of the major problems we have in the current environment”. ”
Excuse me, the reason for this systemic Enron-style fiasco is exactly because trillions of dollars in debt securities and derivatives are “not marked-to-market”. Now Bernanke wants to eliminate the “marking-to-market” which is the de facto equilvalent to destroying the capitalist marketplace.
Perhaps someone can explain to me why we even need a capitalist system when nothing of real productive value is produced. Rampant Level 3 accounting fraud exists where assets are assigned an arbitrary valuation undisciplined by the marketplace. We can just make believe valuations of every asset class with the official blessing of Federal Reserve regulators.
I dont know the context, but avoiding the disclosure of losses and write-downs in a declining market by eliminating the need to value assets at current market value appears to solve nothing except to hide the problem. When faced with a difficult accounting problem, such as valuing assets for which there is a limited market, adopting an f’it position may be the easiest solution, but not necessarily the best. The bigger issue is whether expected bailouts can be taken into account when doing mark-to-market calculations. Hmmmm.
If you ignore the signs of cancer and think positive thoughts your medical problem (oh excuse me, “medical issue”) will go away.
Tim, If you have time, would you please expand on the “expected bailouts can be taken into account when doing mark-to-market calculations”? If I interpret your meaning correctly, it seems to be more than a “hmmmm.”
Several of the plans I have seen either in the form of bailouts, or in the form of the investment banks banding together and creating new entities, have included transfering crap paper to a third party entity to get it off their books. Sometimes at prices at par or some other amount higher than current market conditions would otherwise dictate. If you can transfer your assets off your books in the form of repo or some other arrangement to a third party, even if only temporarily, at a price higher than you could otherwise could get, can you claim that the price such entity would pay is the mark-to-market valuation even though everyone knows its an off market trade?
One related issue. Say for example the subject entity is one that buys the crap for par or some other inflated price, with the invesment bank having an obligation to purchase the crap back at the same price at a later date, in such a scenario the crap never hits the market. Thus, lowering market supply, and having a distorting effect on the overall market (e.g., if it was all dumped on the open market at one time, presumably the market would continually spiral downward).
What Mr. Bernanke would like to do is temporarily eliminate Basel II margin requirements. (Temporarily for the next 6 yrs or so).
A prearranged swap or buy back does not satisfy MTM requirements.
Even if they do not satisfy MTM requirements directly, couldnt such programs nonetheless indirectly impact the equation by artifically altering the market?
lol!
I think the people of the world have woken up to the falsehoods! Its to late to cover your tracts now in the hope that fudging the financial statements will solve the problem. They can avoid “mark to market” all they want, but now no one will believe them if this should pass. Its called lack of “trust”.
“Obama mocked John McCain on Wednesday for urging government restraint in responding to the mortgage crisis, saying the Republican would ‘just sit back and watch’ as millions of Americans lost their homes.”
Obama has lost my vote. I have no problem “sitting back and watching” as millions of asshat realtwhores, mortgage brokers, and ignorant sheeple lose their 5,10,15 “sweet deal” properties they thought they would make a killing on. Ya know, I was skeptical of McCain’s economic smarts, and still am, but I suspect he must have astute advisers.
I have no problem “sitting back and watching”…
Me neither. Pass the popcorn.
Make that three of us.
McCain stole Don Luskin as a economic adviser from Ron Paul.
Four, Obama and HC’s bailout plans are beyond idiotic
Like Reagan.
yeah, there’s a hero (eye roll)
And here’s an eye roll right back atcha.
It’s not about economics. As others have pointed out, the Iraq War is the most economically poisonous foreign endeavor the US has ever engaged in.
It’s about votes. My understanding is that 75% of US voters are opposed to any FB bailout.
One thing to keep in mind though - when the new President takes office his or her policy on the housing bust is going to be virtually moot. But not on Iraq.
I think the most economically poisonous foreign endeavor the US has ever engaged in is its 38 year policy of relying on importing the bulk of its energy needs from people who hate it. The invasion of Iraq is only a subset of that. The housing bust and its consequences will be the major issue of the next administration.
McCain is senile but as long as he can read from a tele-prompter he sounds OK.
Two of McCain’s advisor’s are Jack Kemp & Phil Gramm. I remember when those guys dismantled the wall between the banks and the buy-side analysts. A few years later we got Enron. If I want to just look at the US balance sheet over the last 20 years I see the greatest transfer of wealth in US history which just happens to be about the same time as the republicans controlled congress (1994-2006). I should point out democrats signed on to most of the laws that made this possible so their hands are not clean either.
PS: I voted for Ron Paul in the primary.
Sending McCain some more money tonight via his web site. Time to support folks who go against the bail out crowd.
Yeah, this is the smartest thing I’ve heard McCain say. Considering I’ve heard NOTHING smart said by either Democratic candidate, I guess I know where my vote’s going.
Even if no bailout can work, I won’t vote for a candidate that is pushing one now. Makes me too mad, and I’m tired of being mad all the damned time.
same boat here. My heart may be with Obama, but my interests as a JBR lie with McCain apparently. Plus I’m now no longer of draft age.
McCain has said other smart things along the vein. He lost Michigan’s primary by telling people, quite frankly, that the manufacturing jobs aren’t coming back and they should adjust. He’s waffled on stuff like immigration, taxes, etc, but it takes balls to tell the electorate to get a clue with regards to their economic well being. People should be training themselves to be layoff proof. They should pick up a skill or trade in addition to the one they have to make sure they can work. And they should have 6 months worth of expenses in a liquid financial instrument in case they do get laid off. This is basic shit you learn when growing up. My grandparents horded their money exactly for this reason. And for that reason, they owned three homes.
The wife of one of the Bear Stearns banker had planned to spend about $300,000 on the couple’s apartment in the next three months
How do you spend that much on an apartment? Powder coat the whole thing in cocaine?
One way is to pay $300k to an interior designer who then proceeds to IKEA and Raymour and Flanigan to spend $25k on house furnishings and then pockets the rest.
Try this. I love this chair. Wanna guess the price?
http://www.chaircouture.com/
$7K
oooh that was a nice little diversion from work…
I like how they take the originals and rework them. But if I were in the market for a hairy chair, I’d go for the Lila in the Original collection.
Coincidentally, just saw some bergeres featured in Elle Decor. Liked a couple , both more traditional than the chair couture offerings.
Powder coat the whole thing in cocaine?
OK so that’s not an actual Freudian slip, but boy did your subconscious just start shouting. Please let us know if you are throwing a party anytime soon.
Not me. I was just trying to imagine an obscene way to spend money and that came to mind. I don’t really know if cocaine would be that expensive or if you could make the powder coat process work with it.
The image of cocaine being an expensive way to spend money probably reflects my having been raised on “Miami Vice” more than anything else.
“In a community where public services have failed to keep abreast of private consumption things are very different. Here, in an atmosphere of private opulence and public squalor, the private goods have full sway.”
John Kenneth Galbraith
“No one attempted to remove Vignolo from the property yesterday morning. He started an argument with the auctioneer and accused one man who came of being a real-estate flipper.”
ROTFLMAO
Oh… I want to buy that man a drink. (Note: I’m assuming he really is serious about Dali Lama like “non-violence.”)
Add to his vocabulary “FB!”
Got Popcorn?
Neil
“Joseph Vignolo says he had no trouble making ends meet before he was laid off about five years ago. Last fall, he says, his savings ran out and he and his family couldn’t keep up with the mortgage payments home. After months of delinquency, the home was foreclosed on and put on the auction block.”
Five years?! In all that time this “engineer” couldn’t find another job that covered his expenses? Why did he go through so many other jobs in the meantime (that he somehow lost)? I guess he was satisfied to dig into his savings month after month and then expect some kind of award when he was broke. I can only assume his wife was not working?
“Vignolo said he could’ve made a deal and walked away with money, but he decided to make a statement instead. He said he shouldn’t be forced to leave the home where his family has lived for years. ‘It’s not about the money. It’s not about the money at all,’ he said. ‘It’s about the principle of the thing.’”
Principle? How about the principle of paying for your mistakes and not expecting “someone” to save you? This guy could have walked away with money but chose to make a fool of himself.
Puphut, be easy on the guy, he is holding out for a management position. LOL
Lane
Maybe head of FEMA.
“Former Citigroup CEO Charles Prince put his five-bedroom Tudor-style home up for sale there for $6.15 million in January, three months after stepping down as head of what was then the largest U.S. bank.”
Can we get a collection going for the chuckster position, to help him out of his problems?
Poor thing only got a measly $30 Million or so, when he was asked to leave, last year.
“Former Citigroup CEO Charles Prince put his five-bedroom Tudor-style home up for sale there for $6.15 million in January, three months after stepping down as head of what was then the largest U.S. bank.”
This is highly distressing. We have a moral obligation to help the American people stay in their homes.
‘It’s not about the money. It’s not about the money at all,’ he said. ‘It’s about the principle of the thing.’
**********
Ahhh… But, you see, with a bank it *is* about money.
–
Bankers Imitating Home-Sellers!
According to Meredith Whitney, the best financial analyst of late, on CNBC said that bankers and financiers are NOT selling the assets they need to sell because they think that they will get a higher price later. Another quote: “Even the financial I like I don’t like.”!
Jas
The buildup up of REO inventory is going to be interesting for me in that so many of these “young gun” hot-shot bankers freshly minted from business schools have never seen a downturn like this one.
I wonder if there is a way of determining the age of bansters that capitulate first. See, I am thinking the older guys who have seen 1 or 2 cycles are going to be smart enough to move quicker than the 27-35 crowd who has always been insulated by mommy and daddy.
Then again, maybe all the old guys got out while the getting was good and left all this mess to the “young guns.”
From a bit further into Obama speech:
Senator McCain argues that government should do nothing to protect borrowers and lenders who’ve made bad decisions, or taken on excessive risk. On this point, I agree. But the Dodd-Frank package is not a bailout for lenders or investors who gambled recklessly, as they will take losses. It is not a windfall for borrowers, as they will have to share any capital gain. Instead, it offers a responsible and fair way to help bring an end to the foreclosure crisis. It asks both sides to sacrifice, while preventing a long-term collapse that could have enormous ramifications for the most responsible lenders and borrowers, as well as the American people as a whole. That is what Senator McCain ignores.
TxChick please tell me you aren’t serious about Mccain? for godssake man all his people are the ones who allowed this clusterfug to happen in the first place. Wait, he’s been busy strolling thru Baghdad I guess.
Like the other 2 candidates are any better!
LOL!
Crappy, crappier, crappiest. Fill them in anywhere you like.
Talk about being stuck bwtwixt a rock, hard place, and immoveable object. This is def. the election for that.
It truly is sad that these 3 noodleheads are the best this country can come up with. I could name 5 on this board alone who would do better, even though they probably wouldn’t want the job.
Lets see…
Palmetto (maybe he is more in line for Attorney General)
Az Lender (frugal lender, may be more in line for Sec. of Treasury)
Bill in Maryland (I think, it’s him) Fed Chair. Like his stand on PMs, good to have something back the currency.
Anyone of you guys could do the job, as well as countless others on this board. I know you wouldn’t, I’m just sayin’, that’s all!
let me guess there, OCD: you voted for bush 2x. Am i right? Less crappy than Gore, then less crappy than Kerry?
Darn reponse gotten eaten. Short of it, yes, I did vote Bush twice. I personally think he was better than Gore. Kerry , I am not so sure about. Kerry could have done all that Bush did.
Anywho, I have also voted Buchanan, Nader, and Clinton, so I guess my craziness allows me the Bush slips.
Well, not this time around. Told my wife to use the baseball bat on me if I go near the election booth this time around. None of these a$$hats represents me. Not even remotely.
tell her to use plenty of rosin.
Perhaps the Dems should do away with primaries. The pandering to the loony left scares the bejesus out the common folk. If the repub’s brought out the Rev. Wright videos, in the general election, the Dems could scream racism. Good ole Hil and Bill did the repubs a huge favor.
My wife wants Lorena Bobbitt to be Surgeon General.
And you’re still married? A glutton for punishment.
I still think the really qualified individuals didn’t even apply for the job. Who wants to take responsibility for this clusterf*#k? This problem has no solution!
imho
Actually i agree. I thought Huckabee and romney and them were purely cannon fodder to be sacrificed to the Dems. Somebody in some smoky backroom must be chuckling over some nice bourbon that people are taking McCain seriously. Dick Cheney is that you?
Ok, I’ll go along with BO’s bailout, but I want $250k in T-bills, for not having participated in the whole mania, and to compensate for the effects on inflation the bailout will undoubtedly cause.
Let’s present the FBs with that - they get reduced principals and fixed rates - we get a quarter million dollars or more tax free. Is that “fair”?
I like my solution better, posted above!
Left out of Obama’s statement…the plan puts you and me on the hook for losses if the borrowers do not repay on the refinanced loans. And why would they, they still don’t have any equity and they still haven’t exhibited the capacity to live within their means. It would also require tax payer money in the form of a credit subsidy for the FHA guarantees. In other words, it’s a bailout! There is no free lunch here.
Unfortunately this is true.
http://seattlepi.nwsource.com/horsey/viewbydate.asp?id=1735
“all his people are the ones who allowed this clusterfug to happen in the first place”
Maybe I missed something, but were Democrats in Congress clamoring for increased mortgage regulation at any time since 2003?
“Michael J. Missal’s report said senior managers ‘turned a blind eye’ to the ‘ticking time bomb’ created by the high-risk lending in 2005 and 2006. At the same time, Missal said, New Century’s auditor, KPMG, contributed to the problems by failing to exercise due care in reviewing its books, leading to material misstatements in New Century’s financial reports.”
Reviewing books is so last Century, as far as accounting practices are concerned…
‘It’s not about the money. It’s not about the money at all,’ he said. ‘It’s about the principle of the thing.’
It’s not the principle, it’s all about the money…
The First Assisted Investment Bank Merger
For many years the FDIC did away with insolvent, small banks through the “assisted merger” mechanism. The FDIC would induce a large, well-capitalized bank to merge with an insolvent, small bank. The incentive for the large bank would be the FDIC’s purchase at par (or slightly below), of the small bank’s problem assets. This resolution technique is usually cheaper than an FDIC payout to insured depositors.
The Bear Stearns / Morgan Chase merger has all of the characteristics of a Fed-assisted merger (Bear Stearns plays the role of the insolvent, small bank). Press reports indicate that the assistance provided by the Fed is as follows. The Fed will create a limited liability company; let’s call it LLC. Black Rock Partners will manage LLC for a fee. The Fed will loan LLC $29 billion while Morgan Chase will loan LLC $1 billion. The Morgan Chase debt will be subordinate (will incur losses before the Fed debt). The interest rate on these 10-year loans will be 2.5%, the Fed discount rate (don’t know if the rate floats). LLC will use the $30 billion to buy, at above market price, mortgage-related assets of Morgan Chase acquired in the merger. The assistance then is $30 billion (sales price) - $1 billion (Morgan Chase loan) - FMV of the assets sold to LLC. Moreover, Morgan Chase gets $29 billion in cash (instead of securities) with which to play.
There is no explicit statutory authority for the Fed to facilitate assisted investment bank mergers. Of course there is no explicit statutory prohibition of such transactions. Barring any interference from Congress, I expect that this assisted merger is the first of several to come. Also, this may be the model for any rescues of the creditors of FNMA, FHLMC, and the FHLBs (should the need arise).
“A week ago last Monday, when several employees of Bear Stearns were leaving the building with cartons and plants, Ray Schmitz, an associate broker at Coldwell Banker Previews International in New York City, was standing outside the building, handing out his business card.”
May not be as painful as a Joshua Tree, but I’ll bet several business cards inserted in an unorganized fashion could be a bit scratchy.
“FGIC ‘has no further obligation’ because certain responsibilities weren’t met and IKB, the German bank that’s had to be bailed out four times since July, misrepresented its condition, the insurer said in a statement today.”
Ha, pretty funny to see a bank enduring the same reneging that health insurers have been hitting their covered patients with for years!
Saw an interesting report on CNN last night. It was Anderson Cooper. Not that I watch regularly, but I caught this as I was surfing the tube.
A woman who worked for Slime-Mart got hit by a big rig and was awarded 470K. Seems that Sam Walton’s old company had a wee-small line in the health insurance policy that said it could collect any damages one of their insured was awarded. While I agree with the law that she signed the contract, how about a little love. It isn’t like Wal-Mart is broke. It is already bad enough that the husband divorced her so she could get more Medicare.
Story just made me sick. This is one time I wouldn’t have a problem with judicial activism if the courts told Slime-Mart to go screw themselves.
Also, I am sure the line in the policy that allows them to collect is written in a 4 font Gothic. I know, get a lwayer to read before signing. Then again, who plans on getting smashed by an 18-wheeler.
As an aside this women has no short-term memory because of the accident.
Whole thing made me want to vomit and reinforced my resolve to not shop there, even if I can save a nickel on toilet paper.
I’d be surprised if Wal-Mart got the whole award, assuming it consisted of pain & suffering and lost income as well as medical expenses.
It’s actually very common — almost universal, in fact — for insurance policies to contain “subrogation” policies, where if you sustain damages that are paid by an insurance company and then recover those damages from the person who caused them, the insurance company has the right to be reimbursed out of the award for what it paid on your behalf.
James Cayne (former CEO of Bear Sterns) sold over 5.61 million shares of company stock Tuesday at $10.82 a share, according to a company filing with the Securities and Exchange Commission on Thursday.
Cayne, the company’s second largest shareholder, lost an estimated $477.8 million on JPMorgan’s initial offer, based on his holdings at the start of 2008, when Bear Stearns stock was trading at $88.35.
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Well, $ 60 million’s nothing to sneeze at but it still feels good to see this rare case of a CEO feeling the “invisible hand”. On the other hand, this Enron..ish style of business is starting to get embarrasing.
60M is a lot when you just spent half of it in cash on an apartment in NYC just as the market there is starting to descend.
Anybody here invest in the stock market? Your choice just got a lot easier
http://www.politico.com/blogs/bensmith/0308/Obama_talks_capgains_rate_with_CNBC.html
thanks Tx, the more i read about Obama the more i like him. How much $$ do you need anyway?
But is taxing them *really* going to help the middle class?
Gotta love the waffle when it came down to specifics there. He is proposing a 50% increase in the tax levels.
He had the “it’s within that range then it’s not going to distort, I think, economic decision making” remark. Distort the economic thinking… What does he think that means?
Someone fed him some lines and slightly detailed questioning showed his grasp on the issues. None.
Regressive tax/spend policies. I wish the guy wasn’t planning to give all the money away to welfare/foodstamps/unemployment. It be a little easier to swallow him getting into the white house.
I worry that Obama might tap Rubin for the treasury again or some of his ilk. Then it will litteraly be fire up the printing press time.
Just bad policy decisions. Its making me miss Bill Clinton and I hated the guy.
“And as part of my overall approach to housing, I actually want to provide an additional 10 percent mortgage deduction, a credit, mortgage interest credit, for those who currently don’t itemize. Because if you live in a house that’s pretty expensive, like I do, and I itemize, I get a pretty big break from Uncle Sam. If you own a $100,000 house and you’re making 65, $75,000 a year, you’re not getting that same deduction. I think that they deserve a break as well. That will actually help relieve some of the pressure on homeowners. “
I think Congress should eliminate tax breaks for homeowners, included in sweeping tax reform (sweep the tax code away entirely). Obviously it’s benefiting the rich, according to Obama.
McCain said he’d vote for a fair tax or a flat tax. I hate the income tax code with its 350 deductions. Waste of time for Americans.
How about capping the mortgage interest deduction to a percentage of income. That would stop people from heloc’ing the h*ll out of their homes. Makes too much sense, I guess.
Raise the capital gains tax and give more mortgage interest deductions, huh? Sounds like Obama wants to re-inflate the housing bubble… and this sounds good to you Catspit? do you know why you read this blog? Automatic raises in minimum wage? hurts small businesses doesn’t it? I suppose you’re a Walmart fan also.
“Automatic raises in minimum wage? hurts small businesses doesn’t it? ”
No. And if you have any data showing otherwise, I’d love to see it.
Sen. OBAMA: Well, look, there’s no doubt that anything I do is going to be premised on what the economic situation is when I take office. I’m going to be sworn in in January, we don’t know what the economy’s going to look like at that point. And, you know, the thing you can–you can be assured of is that I’m not going to making these decisions based on ideology. I’m not a dogmatist. I know that some, you know, my opponents to the right would like to paint me as this wooly-eyed, you know, liberal or wild-eyed…
back to me…
Wow. Just wow. So, that 8 month horizon is so far off, eh?
Where is the long term vision and proposals this guy is thinking of? Tax breaks for infastructure for electric vehicles… no. Incentives for investment… nothing. Just tax increases.
Great.
And we have McCain. And Hillary.
Oh goody goody.
I voted for Andersen in 1980, Perot in 1992 and Nader in 2000. I voted for a Democrat in the other Presidential elections. I’ll vote McCain this time. Hillary and Obama disgust me, talk about MORAL HAZARD.
This may help financial inst. diffculties in housing
and Foreclosures sector.Put a moratorium on foreclosures by
freezing rates to 3% over life time of mortage even go to
forty-to fifty year mortage. Saving most homes, and banking and
financial inst. will not be at a complete lost.They will regain
in the future and will not be left with unrepairable properties, and complete lost of revenue. and tax cuts for five years till the
adverage American family regain strenght. Lost properties to a lending institution a complete failure, not a penny gained.The people walk away . the American people with no help though our Goverment,no help from a Goverment , The American people built
also not a dime in taxes is gain .IT’s to late to blame the homeowners,the financial inst.It’s time to find a solution. and not the problem.