Value No Longer Really Matters
Some housing bubble News from Wall Street and Washington. Bloomberg, “Taylor Wimpey Plc, reeling from the worst U.K. housing slump in 30 years, will write down 660 million pounds ($1.3 billion) of real estate. Taylor Wimpey will write down U.K. land and projects by 550 million pounds. That would be an industry record, according to Merrill Lynch data. Further charges of 70 million pounds and 40 million pounds will be made for sites in the U.S. and Spain.”
“British mortgage lenders have refused to pass on three interest rate cuts since December and have withdrawn loans for those with smaller deposits. This has starved first-time buyers and buy-to-let investors of credit and pushed down house prices.”
“The declines in April were the most widespread since at least records began in 1978, the Royal Institution of Chartered Surveyors.”
“U.K. mortgage approvals fell to the lowest in at least nine years in May. Banks granted 42,000 loans for house purchase, compared with 58,000 in April, the Bank of England said in London today. The result was the lowest since the bank’s series began in 1999.”
“‘For approvals to fall by so much in one month having already collapsed over the last year underlines the ferocity of the housing market slowdown,’ said Alan Clarke, an economist at BNP Paribas SA in London. The report ’suggests the pace of house price declines will continue or even accelerate and the risks to economic growth have also risen.’”
“Trevor Williams, an economist at Lloyds TSB Bank Plc, said today’s ‘huge drop’ in mortgage approvals shows first-time buyers have ‘been abandoning the market almost completely.’ Home loans in May were about one third of last year’s peak.”
“‘There’s no end in sight,’ said David Tinsley, an economist at National Australia Bank in London, who formerly worked for the U.K. central bank. ‘With inflation remaining elevated, we’re unlikely to see rate cuts. But even if we did, it probably wouldn’t help much.’”
The JCN Network. “The Development Bank of Japan said Monday its unconsolidated net profit in fiscal 2007 fell from the previous year to 53.9 billion yen due mainly to losses on U.S. subprime-related and other securities.”
“Losses on securitized products, including those related to U.S. subprime mortgages, totaled 33.8 billion yen on a consolidated basis in the year to March 2008, the government-affiliated bank said.”
“Newly delinquent homeowners outnumbered those who caught up on overdue payments for a 26th straight month in May, according to a trade group that tracks loans to people who put down less than 20 percent.”
“In the worst housing slump since the Great Depression, 67,967 homeowners with mortgage insurance fell at least 60 days behind on their loans, compared with 40,687 who got back on track, the Mortgage Insurance Companies of America reported today.”
“‘There’s no doubt that 2008 is going to continue to be a challenging year,’ said Michael Fraizer, CEO of Genworth Financial Inc., the fourth-largest U.S. mortgage insurer.”
“Insurers are tightening standards on mortgages they cover to stem further losses. The new requirements contributed to a 48 percent drop in the number of policies issued to new homeowners in May, compared with the same month a year earlier, according to the Mortgage Insurance Companies of America.”
“Subprime and Alt-A mortgage bonds, trading at or near record lows, may continue their declines as banks limit purchases of some securities and are forced to sell off what they hold, JPMorgan Chase & Co. analysts said.”
“Prices for typical fixed-rate Alt-A bonds rated AAA have tumbled to near an all-time low of less than $84 per $100 of principal from about $87 in April, JPMorgan said. Subprime debt is also down, as AAA bonds lost 5.1 percent in three months, Lehman Brothers Holdings Inc. index data show.”
“A year after the subprime meltdown roiled credit investors, the market for new non-agency mortgage bonds is no closer to reopening. Banks have a ‘long way to go,’ after raising about $400 billion of capital, JPMorgan analyst Chris Flanagan said in a report.”
“Banks will need about $115 billion simply to offset downgrades among the $1 trillion of AAA subprime and Alt-A bonds, he wrote, as lower quarter-end prices suggest new writedowns.”
“‘In a world of insufficient capital, value no longer really matters,’ Flanagan wrote in the New York-based bank’s June 27 weekly report on securitized debt.”
The Atlanta Journal Constitution. “Georgia’s banks have built up the nation’s heaviest concentration of loans to now-struggling home builders and real estate developers. Nearly $1 out of every $5 on Georgia banks’ loan books bankrolled homebuilders and real estate developers - by far the highest proportion in the state in at least 30 years, according to federal regulators’ data.”
“Nine Georgia banks were among the top 25 banks on a list research firm SNL Financial published earlier this month based on their high ‘Texas ratios’ - a measure used during the savings-and-loan meltdown in the 1980s to gauge increased risk of insolvency.”
“Industry insiders say there are now almost four dozen banks on Georgia’s watch list for problem banks. Robert Braswell, Georgia’s banking commissioner, said the figure is in the ‘right ballpark,’ and has been rising.”
“By 2007, construction and real estate development loans on Georgia banks’ books had mushroomed to more than $41 billion, from $7.4 billion in 2000, according to figures from the FDIC. Such loans equal 19.5 percent of Georgia banks’ total loans.”
“But what got things rolling first was a flood of money into the Atlanta market that helped launch a wave of new banks. According to the Georgia Bankers Association, 109 start-up community banks have been launched in the state since 2000.”
“Meanwhile, subprime loans made it easy for investors to snap up homes that they hoped to flip later for a quick profit.”
” ‘The huge proportion of sales in 2005 and 2006 were financed by subprime mortgages,’ said Walt Moeling, a lawyer with Atlanta firm Powell Goldstein who has been representing local banking firms since 1968. Developers were ’selling every house they [could] build,’ he said, which encouraged them to borrow more money to expand.”
“‘In Atlanta, this is the worst market we’ve had, ever,’ said Moeling. ‘Everything went splat.’”
“Now many of the developers who got those loans are out of business. They’ve saddled the banks with assets worth much less than the loans, including unsold new houses and subdivisions that are growing weeds rather than bungalows.”
“Some insiders call the unfinished subdivisions ‘PVC farms’ for the forests of plastic pipes installed for houses that were never built.”
“Braswell, the state banking commissioner, says the situation sometimes keeps him awake. ‘This one occurred almost overnight,’ Braswell said of the abrupt deterioration of developers’ ability to repay their loans.”
“‘You can warn someone about the pitfalls of over-reliance on one market segment, but some of the guidance may have fallen on deaf ears due to the amount of profits that were being made,’ Braswell said. Still, he said, in hindsight ’state regulators could have sounded the bell more loudly.’”
The Chicago Tribune. “Rev. Jesse Jackson kicked off the five-day annual Rainbow/PUSH Coalition conference by urging people to vote and to remember the struggles of generations who fought for basic rights.”
“Saturday’s discussion focused on home foreclosures, with Illinois Atty. Gen. Lisa Madigan and U.S. Rep. Barney Frank describing their efforts to stem damage from the crisis.”
“Madigan talked about her office’s lawsuit against Countrywide, the nation’s largest mortgage lender. In May, there were 9,670 foreclosure filings in Illinois, up more than 40 percent from May 2007, Madigan said.”
“‘There was clearly a pattern of unfairness, a pattern of deception,’ Madigan said, describing results of a nine-month investigation. ‘What we are seeking to do is make them accountable.’”
“Madigan said that she will seek a 90-day stay on foreclosures, giving her office time to review individual home loans and try to modify them so that owners can afford to keep their houses.”
“Frank, chairman of the House Financial Services Committee, blamed the industry’s problems on a lack of federal regulation.”
“‘These are hardworking, decent people who made a mistake,’ he said. ‘People who listened to deceptive advice.’”
The Herald Tribune. “Like countless other investors in Southwest Florida, U.S. Rep. Vern Buchanan, R-Longboat Key, played the real estate game during the boom and is now suffering the consequences.”
“At least two of his investments, a house overlooking Sarasota Bay and a condominium in the Ritz-Carlton Tower Residences, have turned into significant money losers. All told, Buchanan and his partners spent nearly $33 million on six Southwest Florida properties from 2004 to 2006.”
“In Charlotte County, Buchanan got involved in The Preserve at Boca Creek project at a time when most developers had stopped investing in raw land.”
“It was the summer of 2006, and Buchanan and his three partners — Asher Bernstein, John Murray and Michael Gould — believed there was still room for a high-end project that would include as many as 83 single-family homes and 263 condo units. The partners bought the 153-acre tract from tobacco billionaire Brad Kelley for $15 million.”
“In 2004, Buchanan bought a 5,200-square-foot bayfront home near the Stickney Point Road bridge through his 6430 Hollywood Blvd. LLC for $3.2 million. That four-bedroom house is now on the market with a list price of $2.595 million, or about $600,000 less than Buchanan paid.”
“In January 2005, Buchanan bought a condo at the Ritz Tower Residences for $1.9 million and sold it in November 2006 for $1.6 million, taking a $300,000 loss in the process.”
“‘I guess it doesn’t help to be a congressman,’ said Perry Corneau, a Sarasota condo specialist. ‘Anyone who bought in 2005 or 2006 are going to find prices are lower today.’”
. “Georgia’s banks have built up the nation’s heaviest concentration of loans to now-struggling home builders and real estate developers. Nearly $1 out of every $5 on Georgia banks’ loan books bankrolled homebuilders and real estate developers - by far the highest proportion in the state in at least 30 years, according to federal regulators’ data.”
Five to One, 1 in 5.
http://www.youtube.com/watch?v=9DfG1SNydnc
no one here gets out alive>>>>>>>
great song
Value is the ONLY thing that matters, you freakin’ moron.
Perhaps you don’t know how to gauge it. It requires the ability to read a balance sheet, and perhaps a modicum of critical thought.
Flanagan knows his stuff. If you translate what he said it means “there are no buyers, no matter what you claim its worth.”
He’s saying the cat’s out of the bag. Everyone knows the value will plummet (of these bonds), so no one is buying at today’s “values.”
Got Popcorn?
Neil
No, what he is saying is that prices will plummet.
Not value, prices.
Value is still precisely what it always was.
Terminology matters.
Buffett: “Price is what you pay. Value is what you get.”
He’s saying the cat’s out of the bag. Everyone knows the value will plummet (of these bonds), so no one is buying at today’s “values.”
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and no one will be buying at “tomorrow’s” value or even ever. Junk is junk and will never have value, even at 1 cent on the dollar. WS can hold their junk but never fear the DS’s in DC will buy that junk and us taxpayers will be left holding the junk bag.
I think he means my playstation is worth $800 but after 2 months all i got was 1 bid for $350….i’d better take it.
Yep, The value of something is worth what someone is willing to pay.
I made a deal on a sailboat over the weekend. Book ‘value’ $9000.00 the owner was asking $4800.00 I offered $3000.00. He accepted, He’s happy I’m happy, he needed to sell and I wanted to buy.
Nope, the price of something is what someone will pay.
Do not confuse price and value. Value is based on FCF (free cash flow.)
I disagree with this Ivory Tower definition. If I am a doctor, and I save your life after an auto accident…my service has a very high value to you. I might charge only a few thousand bucks, or it might even be free if the gubmint pays for it, but the value is basically immutable.
Now your ex-husband might think that saving your life had no value at all, even though he is receiving alimony payments from you (free cash flow).
So disassociation of value and price I can understand, but I still think invoking FCF is just an eggheaded way of dodging the fact that the buyer (ie receiver of product or services) is the one who determines value
We’re talking financial products here.
Not immediate un-substitutables. There is a massive distinction.
Of course, the emergency room is not financially rational. Do you want lawyers and contracts while you are bleeding to death?
But that’s precisely why the government interferes into the demand-supply world.
For the record, as libertarian as I am, this is precisely and exactly a “good” use of government. (for the record, extreme emergencies, not the way they seem to be used.)
Well, the example offerered was not used because it was an immediate unsubstitutable, but because it demonstrates the extreme case where ‘value’ can be extremely high for one individual and extremely low for another…for precisely the same service rendered at the same place and time.
I could have substituted a nose job, or a haute couture garment…but the lesson would still be the same. Price=value, but only for the available pool of consumers of the product in question.
I made a deal on a sailboat over the weekend
Not bad. Let’s hope in about 12-18 months you do not have to trade it for a loaf of bread.
Wha’d ya get, wmbz? Congrats. I’m so psyched for you.
I pulled out my old sailing photos (J29) and put one on the fridge as a symbol of “”the goal. It’s right next to the one w/my husband’s feet hanging into air in the near foreground w/most of the photo showing the scenic Mount Madadnock Valley in NH.
Ahhhh, places where all is right the world!
What the heck is value, anyway? Doesn’t the buyer determine that? IMO “value” is what the highest bidder will pay.
The whole RE appraisal business is pretty useless in assessing land value in today’s market. Assessing value of the labor, craftsmanship and materials in the home is about all they can offer these days.
Yep!
Nope.
Value is based on “free cash flow”. It’s not some random feel-good thing based on what someone decided to pay some morning.
Is it hard to evaluate? You betcha.
Does it matter? You betcha.
Demand determines value. Lets say you are in a Danish community and happen to like salted licorice, a popular candy there, you will pay according to quality, the better the candy by local taste the more it will cost within reasonable limits considering what people are willing and able to pay for candy, period. Now lets take that same candy to Irish American Neighborhood and you will discover you could not give that stuff away. What is the value of that candy?
No true businessman evaluates the worth of a “candy” or a “playstation”.
What they do evaluate is what FCF (free cash flow) a “candy business” or a “playstation business” will actually bring.
Does it depend on demand? Heck, yeah.
Does it depend on growth? Heck, yeah.
That’s the hard part.
Of course, boring ol’ fogies like me just put g=0 in that stupid equation. If we were bothering with Internet garbage-ola, we’d just put g < 0 but what the heck do we know about these new-fangled notions?
So according to you, housing should have no value because it doesn’t generate income? For housing, free flowing cash is irrelevant to the seller, just the buyer, and only if other intangibles (aesthetics, lifestyle, convenience) are not important.
If mortgage payment = rent, the value = not being homeless.
You have to pay rent one way or the other. Whether you pay it directly or indirectly is irrelevant.
One always pays rent. If you rent and don’t pay your rent you get your *ss kicked out on the street. If you own and don’t pay your mortgage or your property taxes you get your *ss kicked out on the street. So we are all renters but a mortgage is a pricier rent that the PTB’s would rather get.
Without a stable currency/banking system value and quality are not directly related to price. Prices are now too dependent on the state of the currency than the item being purchased.
Nope. Read above.
Free cash flow is all that matters. If the “true worth” of that free cash is going down, you can always take that into account.
I think we have to go back to Cash is King. If I see a great deal, but have no cash to buy it…I am out of luck. I can borrow the money to buy it, but if my bank is broke too….good luck with that. No matter how good the value might be, if I don’t have the money to buy, It doesn’t matter.
In tough times there are great values all around you. Not everything spins off cash, but many things can be bought on the cheap and sold when things turnaround.
“In a world of insufficient capital, value no longer really matters.” Flanagan said.
I tend to agree with him, since it rings true in many instances.
It is just highly unusual to have so many banks, hedge funds, insurance companies and others so hard up at the same time. I think there are going to be a lot of things that will get sold below their “value”, due to cash being a bit more important to many firms than getting a great deal right now.
In order to have a transaction of anything you nead a ready, willing and able buyer.
Things are getting a little stuck on that “able” requirement…..
One more comment.
If there is any investment capital out there it is equity capital, not debt. Equity capital always requires a higher rate of return than debt capital, which will translate into lower prices all around.
Higher required rate of return = lower asset price
In order to have a transaction of anything you nead a ready, willing and able buyer.
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I see yard sales coming. This “take no prisoners” competitor is going to kick Wally-Marts *ss.
“Taylor Wimpey will write down U.K. land and projects by 550 million pounds. That would be an industry record, according to Merrill Lynch data. Further charges of 70 million pounds and 40 million pounds will be made for sites in the U.S. and Spain.”
We were running out of land in the US, U.K. and Spain, thanks to Wimpey the land hoarder and like-minded fools!
BWAHAHAHAHAHAAA!
You’re stealing my line, professor.
But in the spirit of academic comradery, let me show you how to do it better.
BWAHAHAHHAHHAHHAHAHHHHHHHHHHHHHHHH!!!
That line was around for a while before you took it over, though I admit yours are longer and louder than most I have seen.
Of course.
I’m with T. S. Eliot, “Minor poets borrow, major poets steal.”
Why recreate the wheel, or build a new mouse trap
“Taylor Wimpey will write down U.K. land and projects…”
Wimpey! Wimpey! Wimpey!
“…by 550 million pounds.”
Hefty! Hefty! Hefty!
lol muggy
wimpey also said he would gladly pay you wednesday for a writedown today!
“‘I guess it doesn’t help to be a congressman,’ said Perry Corneau, a Sarasota condo specialist. ‘Anyone who bought in 2005 or 2006 are going to find prices are lower today.’”
I am looking forward to more stories about Congressmen who got burned on their real estate gambling activities.
“I am looking forward to more stories about Congressmen who got burned on their real estate gambling activities.”
Yeah, this is far better than the usual sex scandals and general corruption we’re used to.
I dunno — personally, I find Republican sex scandal stories extremely gratifying.
But, where are the xtube videos, I ask?
Boring. NEXT.
“I dunno — personally, I find Republican sex scandal stories extremely gratifying.”
I’m not sure which I enjoy more, the uniqueness of some or the hypocrisy of others.
I’d be surprised if we don’t have at least one case involving corruption, a sex scandal, and a real estate deal gone bad. There should be plenty with real estate and corruption. All you need is one of those that also involves a sex scandal. Any bets as to who?
I’d be surprised if we don’t have at least one case involving corruption, a sex scandal, and a real estate deal gone bad.
I’m fairly confident we’ll hit the trifecta sooner or later.
Halleluia, brother.
I can hardly wait.
If there was a way to indicate my desperate, short-breathed anticipation for the above, I dunno how you would distinguish it from my general lust?
The Princess in Florida who put her house and self up for sale would have been a great catch for the Ex-NY Governor.
That would have been the trifecta if he hadn’t gotten caught before her brilliant marketing campaign was launched.
If there was a way to indicate my desperate, short-breathed anticipation for the above, I dunno how you would distinguish it from my general lust?
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I would ASSume that you satisfy your “general lust” with YOUR OWN money. The pols satisfy their “general lust” with YOUR money. I, daresay, would think that would be the answer to your question.
“Any bets as to who?”
None, but you know Mozillo was the guy filming it.
:BARF
Didn’t Mr. G in NYC have a tryst and an apartment and a crooked cop? That was indeed gratifying!
Sorry G!
Not that they were having SEX, but that they were HAVING sex.
wasn’t anything in the post about him being corrupt…just that he lost an asston of money.
“The Herald Tribune. ‘Like countless other investors in Southwest Florida, U.S. Rep. Vern Buchanan, R-Longboat Key, played the real estate game during the boom and is now suffering the consequences.’”
And how many of these fools are now voting for bailouts (conflict of interest), or have already voted to eliminate income taxes on forgiven bank loans (conflict of interest)? Does anyone know Buchanan’s record on these bills?
Am I correct that the pols are going to try to pass off this latest lender legislation as a bill to protect the economically disadvantaged?
My impression from months of reading this blog and others, is that the market is in the later stages of clearing out the subprime low end. Already too late for those folks, and least with respect to attempts at restructuring existing debt.
Rather, it’s the economic upper crust that can afford to hold on, and is, and they’re the ones most likely to benefit if this passes. Am I missing something here?
Rather, it’s the economic upper crust that can afford to hold on, and is, and they’re the ones most likely to benefit if this passes. Am I missing something here?
They generally bought with stated income/Alt-A loans and know how to game the system to maintain “excellent credit.” Their loans reset a few years later than the loans in the subprime market, so the fraud and overspending of higher income buyers has been disguised for longer.
Yumm, cheese.
I’ve been posting here since early 2005 as John–I like anonymity–but with so many others I had to change. I’ve been seeing other posts in the same thread that weren’t from me.
Monterey Jack originated in Monterey and was based on a Mexican cheese. The the last name of the producer was “Jacks.” Today there’s a Jacks Park and a Jacks Peak here in Monterey.
it’s the economic upper crust that can afford to hold on ??
That is always the case…
So the economically disadvantaged and minorities that they claim will be helped by the bill are already toast. And, to the extent that the bill might have any effect on the housing market, it would serve to slow down the future price declines, of course to the benefit of the upper-income gamblers. Thus, extending the time until the constituents being pandered to here, could hopefully afford to buy again.
Ben, I sure hope that you’re right, that the market corrections will completely overwhelm this nonsense. I confess to being less than totally persuaded, though - I’ll just have to keep listening and observing. I’m certainly convinced that the outcome of the elections isn’t going to matter to any meaningful extent.
Although I don’t expect any bailout attempt to negate the gravitational forces driving the price avalanche already in progress, I am concerned that some of the biggest perpetrators of the real estate disaster my succeed in weaseling out of their share of the losses. This is something I don’t want to see.
“‘I guess it doesn’t help to be a congressman’
Unless you happen to be a friend of Angelo…
SubKommander Dred
“Some insiders call the unfinished subdivisions ‘PVC farms’ for the forests of plastic pipes installed for houses that were never built.”
“PVC Farms”. I like that term.
(sorry, no lengthy diatribe this posting. but for my “fans”, stay tuned for more hilarity. that is, when I put down the “sauce” long enough. too funny)!
Reminds me of driving around in Latin America in the mid ’90s and seeing Rebar Farms, where somebody got halfway through a building and ran out of funds.
‘Course, it wasn’t entire subdivisions down there, but there was enough rebar for the trendspotters.
More likely they were building in a “pay as you go” manner. I knew many people who built homes this way in Mexico. With high inflation and high interest rates it was the only way to get it done.
Definitely like it. But in typical lazy bubble-player fashion NOTHING will done to recover any of these assets. No lumber will be taken back to unpaid vendors. Not one “high end” bathroom fixture will find it’s way back to suppliers.
Those PVC pipes will be made into bongs before anyone makes the slightest effort to protect their own interests. When I was a kid in HS we had a career counselor that really was a hell of a guy. He used to install TV antennaes back then in the 70’s. When he didn’t get paid in a timely manner he waited until the stiffer was having a big party and then he’d show up saying he didn’t want to make a scene but he needed to be paid or he’d take it down. ( He always collected )
It’s so obvious all of the bubbleticipants were firmly convinced this would be their ticket to becoming independently wealthy, not just a “good run”. Now that the Greater Fool Factory has been shut down they’re so despondent they’re not even doing the normal things you’d expect from any reasonable businessman?
How did he know when the stiffers were having parties? Did he have a network of spies in your town?
Oh I think it was probably just so much BS he said to wow a bunch of HS kids, but it definitely left an impression on us. While we’re discussing “Value” anyway, it’s just amazing to me that there wasn’t the old “hard feelings” and aggressive collection practices taking place post boom?
I mean back in the day if a builder stiffed you on the toilets you delivered you were on his @zz. It’s almost as if every last one of the bubbleticipants knew the gig was up so what was the point? Be it PVC or granite, there was no market for it anyway? Why bother?
So it looks as if the pols are going to try to pass off this latest lender legislation as a bill to protect the economically disadvantaged?
My impression from months of reading this blog and others, is that the market is in the later stages of clearing out the subprime low end. Already too late for those folks, and least with respect to attempts at restructuring existing debt.
Rather, it’s the economic upper crust that can afford to hold on, and is, and they’re the ones most likely to benefit if this passes. Am I missing something here?
“Nine Georgia banks were among the top 25 banks on a list research firm SNL Financial published earlier this month based on their high ‘Texas ratios’ - a measure used during the savings-and-loan meltdown in the 1980s to gauge increased risk of insolvency.”
A ‘Texas ratio’ is a measure of what exactly? I don’t think sexy metonymy can take the place of good ol’ fashioned debt to income ratios.
Did you just say metonymy?
If so, can I marry you?
lol…you can marry me if you can make killer curry, put out regularly, and are willing to move to Alaska.
I own about five hundred books on food and make my own tomato paste each summer.
I also wasted an entire year reading Finnegans Wake on government money. Best year ever! OPM too.
No can do, Alaska. I need my tomatoes. My first and only love. Tomatoes.
We just flirt over the net then. Sigh.
I have a buddy who has a greenhouse filled with tomatoes. He just bought a bunch of ladybugs and uses them so that they stay organic. With 19+ hours of daylight, he can harvest them in about 30 days or so. In the winter, he can use grow-lites.
You can also make like Squanto and use chum salmon bycatch as fertilizer. The bears don’t bother anybody in city limits.
But I would never compete with tomatoes as your only love. Of course, I am much sexier and more erudite than a tomato…but I am simply just unwilling to compete with one. My fragile ego simply couldn’t take it.
Would this be a same sex union?
Freddie Mac shares fall as housing troubles worsen
Fears that those losses could be worse were reinforced Monday as the Mortgage Insurance Companies of America, which represents companies PMI Group Inc. and MGIC Investment Corp. said defaults on loans backed by those companies rose to 68,000 in May, up 48 percent from a year earlier.
May’s level of defaults was the third-highest on record dating back to 1999. Fannie Mae and Freddie Mac require home buyers to pay mortgage insurance when they put down less than 20 percent of their home’s value. Payouts to the lenders are triggered when borrowers miss payments.
http://biz.yahoo.com/ap/080630/freddie_mac_mover.html?.v=1
and the hits just keep on comming!
aladinsane,
I remember you mentioning several times that you have gold stored outside the US. Could you tell me who you recommend for that? It is Perth Mint certificates, or something similar?
Any tips for someone who is new to the gold scene, and wants to have a little out-of-country insurance, as well as some close-at-hand coinage?
Thanks…
I spent many years and millions of miles cultivating relationships overseas, and I wish I could say it’s easy for the average Joe to do what i’ve done, but you’ll have to find your own way of storing your physical Gold overseas, like all of mine is.
Good night and good luck…
There’s no need to stash physical gold overseas. This country is so vast, there are innumerable locations within a two hour radius of nearly any city which would suffice.
There aren’t hundreds of millions of handguns in the hands of desperate people, overseas.
You sound quite paranoid, IMO.
I’m not paranoid, i’ve just seen how the rest of the 1st world functions without having to kill one another, as we do.
I’m not paranoid, i’ve just seen how the rest of the 1st world functions without having to kill one another, as we do.
https://www.kitcomm.com/showthread.php?t=18683
Perth mint is a big, big scam that is about to go belly up along with the Austrailian government.
Buyer beware…take physical delivery.
“Buyer beware…take physical delivery”.
Absolutely 100% correct IMO. There is always someone that will talk about security, nobody knows what you have unless you tell them. Gold and Silver are not hard to store, unless you buy a truck load.
All your gold bars stored on the other side of the world, and all you want is to buy a damned tomato!
How would you store in the US? Like in gold coins? Can you get actually get .999 gold in the US if you don’t buy coins?
“‘In Atlanta, this is the worst market we’ve had, ever,’ said Moeling. ‘Everything went splat.’”
There’s that ’splat’ word again!
The SPLATs keep on coming!
You keep using that word. But I do think it means what you think it means.
Hey…
I’m ok with the REIC calling it a “Splat” market.
Got Popcorn?
Neil
The race pimps have been unusually quite lately, glad to see ‘Ol Jesse pump up the volume a bit. The Rev. Al is busy with the IRS at the moment.
“Rev. Jesse Jackson kicked off the five-day annual Rainbow/PUSH Coalition conference by urging people to vote and to remember the struggles of generations who fought for basic rights.”
“Saturday’s discussion focused on home foreclosures, with Illinois Atty. Gen. Lisa Madigan and U.S. Rep. Barney Frank describing their efforts to stem damage from the crisis.”
“Frank, chairman of the House Financial Services Committee, blamed the industry’s problems on a lack of federal regulation.
“‘These are hardworking, decent people who made a mistake,’ he said. ‘People who listened to deceptive advice.’”
Could anything be more condescending or patronizing? To treat African Americans as if they are all naive suckers in need of rescue is beyond insulting. If I were black, I’d knock Frank across the room, and throw Huckster Jackson on top of him. For years I’ve been amazed by an awful lot of white self-professed liberals and the way they treat and speak of blacks (like bloomin’ retards). Why would anybody want Frank’s pity (which puts HIM in a superior position, as usual). What a jerk.
Pork barrell from Los Angeles County Board of Supervisors.
$3 million allocated for the Malibu “Surfers Hall of Fame” UNBELIEVABLE
David,
I hadn’t read that but it sure is funny. Like most people with enough money to take a vacation haven’t heard of Malibu before?
Yeah! This will put us on the map! Totally doofus play. Here in Portland we’re guessing that the former builders of lofts and condos will be clamoring for public projects to tide them over nicely until this thing blows over. Look for more ridiculous projects on a daily basis.
Like Malibu needs more tourists. But I’m sure that’s what they had in mind.
Well my point was that with residential construction drying up these guys are pimping all kinds of goofy angles to keep themselves employed through this slow spell. Besides it seems to me surfers aren’t the kind of guys that would want or appreciate it anyway. It’s true of MANY guitar players too!
They couldn’t care less what some teeny-bopper thinks. They play to impress other guitar players.
In defense of the Los Angeles County Board of Supervisors…
They could have blown the $3 million on a “Hillary Hall of Fame” instead, so not a complete loss.
What the heck would be on display in a “Hillary Hall of Fame”?
Bill’s stained underwear?
Perhaps it could be filled with donation receipts, the leftovers of a riches to rags story?
Yeah, like the Malibu residents welcome surfers to THEIR beach.
I know of a sea kayaker who got run off of the beach at Malibu for going ashore there.
I would refuse to leave. What are they going to do?
The kayaker was accosted by beach security and told he was on private property and to leave.
The kayaker replied that he was below the mean high tide line thus was not on private property. Nevertheless security ordered him to leave voluntarily or the police would be called and he would be arrested for tresspassing.
It was the kayaker who called the police. When the cop arrived the kayaker successfully pleaded his case, but the cop, even though he agreed with the kayaker about his rights and all, persuaded him that the best thing he could do for himself was to leave. So he left.
This is typical of the residents of Malibu. They don’t own the beach but act as if they do, and their actions are backed up by the establishment.
For years - decades even - public access rights to Malibu Beach have been fought for and won over and over again but still the general public has no beach access.
But let a Pacific storm crash into their beach houses and these people are the first to plead for money to “save the coastline”, which means finance the rebuilding the protective sandbarrier on “their” beach so as to protect their beach houses from the raging surf.
“Nearly $1 out of every $5 on Georgia banks’ loan books bankrolled homebuilders and real estate developers — by far the highest proportion in the state in at least 30 years, according to federal regulators’ data.”
“It doesn’t feel to me that it’s going to be the same,” said Schmidt, who was at the FDIC during the earlier crisis. “It’s not national.” Within the seven Southeastern states where his office supervises 1,100 banks and thrifts, most problem banks are in Georgia and Florida.
“Industry veterans blame the combination of lots of cash plus strong housing demand for fueling a boom that lulled home buyers, developers and bankers into building a pile of development loans of historic proportions. By 2007, construction and real estate development loans on Georgia banks’ books had mushroomed to more than $41 billion, from $7.4 billion in 2000, according to figures from the FDIC. Such loans equal 19.5 percent of Georgia banks’ total loans.”
“Braswell said. Still, he said, in hindsight “state regulators could have sounded the bell more loudly.”
i think the question the reporter should have asked schmidt of the fdic was what were they doing while the banks were loading up their balance sheets with all of the construction loans. they just sat back and did nothing; i wonder how these people still have their jobs. at least the head of the state banking department confessed that they could have done more.
I got bumped from teh other half of my WM 7.5 July puts today. It was a nice ride while it lasted. I surely hope tx and others are right about the summer rally because I do believe I’m positioned ideally for it today.
For Liz Ann Sonders fans:
“…speculators have gotten a comeuppance and we’ve learned that “universal homeownership” is not necessarily a universal good.”
“…they were really just renters…”
Video Interview here:
Bottomless: Home Prices to Fall Another 10-15 Percent, Says Schwab’s Sonders
“Frank, chairman of the House Financial Services Committee, blamed the industry’s problems on a lack of federal regulation.”
My response to Chairman Frank is:
The answer to the foreclosure crisis in the USA was evident at the beginning of the foreclosure crisis. The problem is simple - the United States Congress. The reason: there are no Federal Consumer Banking Regulations that protect a mortgage borrower with a loan form a federally chartered savings bank. The source of this information is the Office of Thrift Supervision (the federal supervisor in the USA of federally chartered savings banks.) (Note that the Office of the Controller of Currency supervises National Banks.) Federal Banking Regulations basically protect banks from those who commit crimes against banks. There are NO federal consumer banking regulations that protect a mortgage loan borrower from their federally chartered savings bank – even if that bank is unethical and commits acts that violate the standards of acceptable national banking standards, harming the mortgage loan borrower. Accordingly, Federally Chartered Savings Banks operate with impunity.
Congress - your elected representatives - have not enacted any federal banking consumer legislation to protect the mortgage borrower from a federally chartered savings bank because the wealthy and powerful banks will not permit this. An example to prove this statement is when Congress backed away from giving power to US Bankruptcy Judges to amend a bankruptcy petitioner’s mortgage loan. Another example is the current Congressional rhetoric to help protect lenders, home builders and Wall Street (hedge funds) with financial aid but not the mortgage loan borrower. A last example is when Congress in 2005 helped protect banks by making it almost impossible for an individual to discharge their credit card balances in bankruptcy. This last example heralds the next crisis - called the “credit crunch”.
My statements are a result of my on going research and my experience in fighting my foreclosure with an 18 billion dollar Federally Chartered Savings Bank. My home of 7 years was sold at foreclosure auction in March 2008 in Cleveland Ohio as the result of a federally chartered savings bank violating the standard rules of nationally accepted banking practices against me, the consumer. The proof of what I say is in the answer to the question: how many federal mortgage loan borrowers in the USA have been able to fight their foreclosure either in the courts or through petitioning the federal government and have won or stayed their foreclosure? Unable to financially continue a counterclaim lawsuit combined with the bank’s legal threat of a frivolous lawsuit against me for fighting my foreclosure, reluctantly, I gave up. The federal mortgage lending system is designed so that the mortgage borrower has no protection and his or her voice is silenced.
Alan Greenspan in his book “The Age of Turbulence” on page 114, describes the Savings and Loan crisis in the 1980s ”. I believe we have a repeat of the 1980s, only worse. Our elected officials have done absolutely nothing to legislate and regulate the savings banks since the last crisis and were so surprised when this crisis started in early 2000. Is this arrogance or ignorance? Mortgage borrowers don’t need a tax bailout, they need a level and fair playing field.
The solution to the Foreclosure Crisis is to elect representatives to the Congress of the United States that represent the people that elected them, and not themselves, They need to pass legislation to protect federal mortgage loan borrowers from the wealthy and powerful banks who violate sound banking practices. Congressman Barney Frank and Senator Christopher Dodd who each chair committees in the House and Senate have not enacted legislation to protect those among us that can not afford the thousands and thousands of dollars needed to hire attorneys to hold our hand at the foreclosure auction as we watch our houses sold for pennies on the dollar. Both of these committees have certainly tried to protect the lenders, the real estate & builders,but not one hint of giving the borrower under the threat or in actual foreclosure any legal avenue to fight this Federally Chartered Savings Bank.
The core problem is not the variable rate mortgages or sub prime loans: it is the lack of regulation and oversight of ALL mortgage loan lenders and the lack of protection for ALL mortgage loan borrowers.
If this crisis was the Titanic, then our elected officials would be in the life boats waving goodbye the women and children still aboard the sinking ship USS Foreclosure.
Michael LittleBig ,Rocky River Ohio
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The solution to the Foreclosure Crisis is to elect representatives to the Congress of the United States that represent the people that elected them, and not themselves,
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The solution is for borrowers to know what the heck they are signing up for and to have some idea of what they can afford.
Hey Vern,
Going All In on the housing bubble doesn’t seem very smart now, Knowhutimean?
“Like countless other investors in Southwest Florida, U.S. Rep. Vern Buchanan, R-Longboat Key, played the real estate game during the boom and is now suffering the consequences.”
“At least two of his investments, a house overlooking Sarasota Bay and a condominium in the Ritz-Carlton Tower Residences, have turned into significant money losers. All told, Buchanan and his partners spent nearly $33 million on six Southwest Florida properties from 2004 to 2006.”