Bits Bucket For July 29, 2008
Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Notice how nobody quoted in this article utters a peep about the apparent need for home prices to continue falling until they realign with incomes in order for the housing market to recover. What is it about affordability that MSM-quoted ‘experts’ don’t get?
Amid Housing Slump, Glut Eases Slightly
Rising Foreclosures, Tighter Credit Still
Pushing Down Prices; Economists Don’t Expect
Big Boost From Congressional Package
By JAMES R. HAGERTY
July 29, 2008; Page D1
The number of homes on the market is finally falling in much of the U.S., but tight credit and a flood of foreclosures are still pushing home prices down.
Making things worse, a sputtering economy is destroying jobs. That means even more foreclosures and fewer potential home buyers.
…
Perhaps the biggest factor pushing down home prices is the growing glut
of foreclosed homes that banks and mortgage investors must sell. In May,
such homes accounted for nearly 22% of all sales nationwide, Barclays
Capital estimates in a report released last week. In California, Arizona
and Nevada, the share was around 40%.
There are about 721,000 foreclosed homes on the market nationwide, up
from 112,000 two years ago, Barclays Capital estimates. Analysts at
Barclays expect the total to rise 60% before peaking in late 2009.
…
Manhattan, a market that until recently seemed immune to the housing slump, is suffering from the loss of Wall Street jobs and expected cuts in bonuses. A modest price fall in 2009 is “a distinct possibility” for Manhattan, says Jonathan Miller, chief executive officer of Miller Samuel, an appraisal firm based in New York. Jeffrey Jackson, chief economist at the appraisal firm Mitchell, Maxwell & Jackson, says prices already have fallen on mediocre Manhattan apartments — such as those that have little natural light or need repairs — and are likely to fall further. “Demand is very weak right now,” he says.
Yep. Right now it’s all about affordability - that’s why all the foreclosures are happening - people bought more house than they can afford.
However in about two years though - when prices do finally reach affordability levels - prices will continue going down. Why? Supply and demand. There will still be a huge overabundance of supply of unoccupied homes built during the boom.
In about 2.5 years (winter of ‘10/’11 I predict) - practically everyone will be scratching their heads saying “why the heck are prices still coming down?”. Even a lot of people on this board. You watch.
“In about 2.5 years (winter of ‘10/’11 I predict) - practically everyone will be scratching their heads saying “why the heck are prices still coming down?”. Even a lot of people on this board. You watch.”
Not me. There is already a sizable excess of supply and the building continues. As the recession deepens, more people will double-up further increasing the supply excess. It won’t be until the economy begins to recover that the supply excess shrinks and prices flatten (stop falling).
Not me. This black swan is laying eggs which will continue hatching over the next four years.
PB,
Does that mean you’ve retired that bottle of hand lotion?
I have a tiny bottle of hand lotion in my left pocket.
Only to be used in case of emergency.
Hmmm… now if only we had some idea from where that recovery would come? Let’s see: massive amounts of debt on all levels, outsourced workforce, trashed industrial base, scam-based economy, crumbling communities, and kleptocrats leading the way.
Not good…
RE: Hmmm… now if only we had some idea from where that recovery would come? Let’s see: massive amounts of debt on all levels, outsourced workforce, trashed industrial base, scam-based economy, crumbling communities, and kleptocrats leading the way.
Not good…
Hey Pondering…you should be writing front page story leads for the Beantown Glob, LOL.
Maybe people would wake up.
Then again, the crowd at the bar where I was having dinner last night, started yellin’ at the bartender to switch the TV’s over from the national evening news to a re-run of Everybody Loves Raymond.
Then again, the crowd at the bar where I was having dinner last night, started yellin’ at the bartender to switch the TV’s over from the national evening news to a re-run of Everybody Loves Raymond.
Maybe they were tired of listening to the MSM cheerlead for the new “Messiah” OBAMMMAAAA!!!!!!!!! Both are reruns of past comedies!
Don’t forget the Boomers who will need to downsize and/or sell assets in order to fund their retirements.
This could go on much longer than anyone expects.
There is certainly an excess supply of housing nationwide, but how about its distribution?
In the New York area, the Bay Area, Los Angeles County west of the mountains, there is plenty of demand at an affordable price. At an affordable price (or rent), in fact, those driven out to places like the Inland Empire might come back to cut their commute.
On the other hand, there is massive supply in far-out areas like the Inland Empire and far-out suburbs of Phoenix, and “investment” areas like Las Vegas and Downtown Miami.
The question is, if prices are affordable in New York and San Francisco, will people move to these other areas because prices crash to super-affordable levels, thus sucking down prices in desireable areas further? Or will units in the far off places just go begging?
Could be a weekend topic.
I think you correct about the distribution of the supply. The distribution of jobs and wages will also matter with the cost of energy exerting a powerful influence.
Are people flocking to Detroit and Cleveland?
“those driven out to places like the Inland Empire might come back to cut their commute”
But they would have to sell or walk away from their far-out homes first, driving down prices in the remote areas even further.
“in fact, those driven out to places like the Inland Empire might come back to cut their commute.”
They may want to but they won’t be able to unless they are willing to rent. That suburban house will be a millstone around their neck keeping them from coming back. What will happen is they will give up their good paying job in the city,find a lower paid one in the suburbs and decide it’s not all that bad to settle.
It happened that way in Ca. in the ’90’s and it’ll happen with a vengeance this time.
“However in about two years though - when prices do finally reach affordability levels - prices will continue going down. Why? Supply and demand. There will still be a huge overabundance of supply of unoccupied homes built during the boom.”
Boomers on medicare will “demand” more of your disposable income for their medical problems, and don’t forget that mobility scooter with mag wheels. Now buck-up!
Notice how nobody quoted in this article utters a peep about the apparent need for home prices to continue falling until they realign with incomes in order for the housing market to recover.
I’ve been writing to reporters lately, on my latest letter-writing binge, making the point that the housing crisis was when median house prices were 10x median income! The housing crisis is now ENDING, not beginning, because prices are coming down, and it will be OVER when median house prices become about 3.5x median income.
Do they ever reply? Do any of them understand the point you are making?
I’ve been doing the same…some get responses, most don’t. The Boston Globe is my favorite target for no other reason than the revolving door of reporters assigned real estate related beats appear to have done little research, relying instead on a steady diet of MAR/NAR publications.
The “Real Estate” blog on the Globe’s site has yet to publish any of my letters, including the one where I “outed” a Globe reporter’s ingnorance of the fact that property records are public knowledge in the Commonwealth. Another blog post prompted the response from me of “why is declining home prices a disaster for Massachusetts? We’ve spent billions of taxpayer dollars forcing developers and municipalities to create affordable housing: now the market is doing it for free. That isn’t a disaster - that is welcome news for anyone who wants to see the local economy grow in a sustainable manner.”
Alas, that was not published either.
Bad Chile,
You are my hero! The Boston GLOB will soon lose all its Real Estate advertising so hopefully that section will be completely excised soon.
I prefer the Boston Herald, anyways. Its easier to read (opens like a book) and less hoity-toity.
Chile: You are doing good. It’s hard to make a man understand something when his job depends on his not understanding it. In the case of a woman, it is also hard but I feel that the genders are not equal in this regard. I write the MPs and different officials in Canada over the mortgage standards and they ignore me as much as possible.
RE: Boston Globe is my favorite target
Gotta luv these schmucks.
The right hand reports thousands are going thru the financial agony of losing their homes to foreclosure
While the left hand’s snotty little Sunday “Envy me-I’m rich” Magazine pull-out section runs a 3 page story with big full color glossies of some high roller’s $250k “pool house”, complete with bar, big screen, and a bevy of spoiled little brats lounging about deckside.
Just a dispicable publication.
B-b-b-b-b-but The American Consumer’s wealth is eroding!!!
“it will be OVER when median house prices become about 3.5x median income.”
I’m in CA and for me it will be when the house price is 2 x gross income. Or $70-$80 per sq.ft.
“The number of homes on the market is finally falling in much of the U.S.”
This is more likely because sellers are taking homes off the market, not because homes are being sold.
Yep, I’d say there is a lot of shadow inventory, waiting for the Spring when the market recovers due to the new president doing whatever he is going to do!
“The number of homes on the market is finally falling in much of the U.S.”
Only if you look at MLS, which for the most part doesn’t include foreclosures. Foreclosures are now a very large chunk of the market in many areas.
Of the 6 houses that have been on sale on my street, 3 have been taken off the market, 1 is rented, 1 is for rent, and the other is just sitting there.
My inlaws built two town houses despite my warnings and these have now been taken off the market and are being rented. They won’t sell for a loss despite my recomendations.
I’d say a lot of people are going to try to ride this thing out only to find themselves in a deeper hole.
We’re seeing more houses for rent in our area than we’ve seen in the 4+ years living here. Unfortunately, that’s not translated into lower rents…yet.
This is a better ‘hood, so there is real demand for reasonably-priced rentals here (other bubble-sitters who want to ride it out in a nice place).
“apparent need for home prices to continue falling until they realign with incomes”
Hear me out, Prof Bear. 1. There is absolutely, positively, no place to put your investment dollars, the stock market is too volitie and very corrupt.,.
2. Inflation is getting out of control and probably heading much higher (1/2 trillion dollar deficit).
3. Interest rate on borrowed funds for mortgages can be had at around 6%, way below inflation
4. Income taxes are headed higher, so that every tax deduction and tax credit becomes more valuable.
5. The desire to own a home never was made from a rational, economic viewpoint. It’s one of those “right of passage” things
Based on this scenerio, I believe the demand for homes will reutrn to normal rates, not bubble rates, but strong demand soon
If you have enough #2, you don’t need #4
Keep dreaming.
Say this with me,
If the average family cannot afford house prices, house prices will fall.
If you could add
6. Wages are increasing then you may push that bubble higher
Also
7. Nobody lost their job this month
8. Pigs can fly
Unless you can add number 6 people will continue to foreclose or be forced to sell that right of passage.
Uh, huh… so how are people going to pay for these grossly overpriced houses? Endless government stimulus checks? Oh, I suppose that could happen, but when the resulting hyperinflation kicks in, we’ll have bigger problems.
1. Is true - and housing is not a safe place either.
2. Yes, so? As inflation increases and wages remain the same, the price of everything goes up, so less money to spent on overpriced houses.
3. Interest rates don’t matter if you can’t afford the payments, unless you consider toxic loans “affordability products.”
4. Yes, taxes are heading higher, including PROPERTY TAXES. Also, do you realy think a goverment in debt will NOT consider taking away various tax credits? The goal is to make all of your money into their money, and nothing is off the table.
5. Meaningless - “feelings” won’t make a house that is 5 times your income any more affordable.
It has been a source of endless amusement for me that people consider loans with teaser rates to be “affordability products.”
Don’t forget that the alternative minimum tax quickly widdles down that deduction for interest and taxes. So even if there is wage inflation, which won’t happen, the deductions will shrink due to the alternative minimum tax.
Oh Snap!
(bobs head side-to-side)
You just got TOLD, David Cee.
Peace out.
America must not act rashly over inflation
By Mark Gertler
Published: July 28 2008 19:03 | Last updated: July 28 2008 19:03
The startling jump in US consumer price inflation over the past several months has sparked concern over whether the economy is entering an inflationary spiral similar to that of the 1970s.
Lost in most of the commentary about inflation has been a careful inspection of its underlying mechanics. Almost all the recent increase in headline consumer price index inflation is due to rocketing energy and food prices. Inflation excluding energy and food is significantly lower.
The increase in the core CPI over the past year was just 2.4 per cent, slightly above the Federal Reserve’s comfort zone of 1 to 2 per cent. The feeding through of food and energy costs to core prices did produce an uptick this past month. Over the coming year, however, below-capacity output growth and softening oil and commodity prices are likely to push core inflation back towards the comfort zone.
Why care about headline inflation versus core inflation? Simply put, a sustained move of headline inflation to the levels of the 1970s is unlikely without an accompanying increase in the core component. The reason is simple: although they can be highly persistent, rapid increases in the relative prices of energy and food cannot go on indefinitely. Once this process dies down, as long as core inflation remains anchored, headline inflation must converge to it.
History bears this out.
…
Consider the source; Mark Gertler is a Bernanke sock puppet.
from Wikipedia: A specialist in business cycles and monetary policy, he has been an associate and collaborator of Federal Reserve Chairman Ben Bernanke for more than 30 years.
Nuff said.
“…rapid increases in the relative prices of energy and food cannot go on indefinitely.”
Really? Says who?
“…as long as core inflation remains anchored, headline inflation must converge to it.”
Or put another way: As long as rapid increases in food and energy continue, core inflation must converge to it.
A quick reality check. Output of food and energy remain constant at best, demand is going up due to:
1. increasing world population
2. increasing economic prosperity in much of Asia and South America.
So, increasing demand and constant supply, but price increases can not go on indefinitely…interesting.
BS.
The increasing population can’t afford jack spit and the “wealth” in Asia in south america is based on selling junk to america and europe.
In another year they will be dealing with all the malinvestment and over production issues. Something centrally controlled states don’t do well.
Energy use in Asia will probably decline in a recession.
Also figure China is facing a peak population in the next couple decades as a result of the one child policy.
Here’s an article that outlines how the FED and JP Morgan work in concert to manipulate the yield curve.
WARNING: Tin Foil kind of stuff.
http://www.financialsense.com/Market/wrapup.htm
When will the stagflation become an inflationary depression?
Or will we get Professor Bear’s deflationary depression?
Ambrose Evans-Pritchard at The Telegraph in London writes, “The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest.” The reason he says this is, “US bank credit has contracted for three months” and “real US wages fell at almost 10 percent (annualized) over May and June” (which is calculated as nominal wages less the inflationary fall in purchasing power), which makes for “a ferocious squeeze for an economy already in the grip of the property and debt crunch.”
I prefer the term stagpression.
or,
up-the-assion.
Like Hoz said earlier, the consumer credit card and corporate debt defaults are closing in fast possibly before summer ends.
rapid increases in the relative prices of energy and food cannot go on indefinitely
Tell that to families in Zimbabwe
Yeah, but at least they increased the minimum wage to 10 billion Zimbabwe dollars per hour.
And I am firmly convinced that somewhere in the back of his cueball head, Bubbles Ben Bernanke really doesn’t see a problem with this. Hey, everyone over there is a billionaire, so they most be doing things right! Print, print, print more money!
“The reason is simple: although they can be highly persistent, rapid increases in the relative prices of energy and food cannot go on indefinitely.”
But housing could!!!? It would take food and energy inflation a long time to take out as much disposable income to match that ripped away by a $400K+ house or a $30K+ auto. Gee, please tell me when you first sought to warn us that housing prices could not increase indefinitely!!!
The Fed now wishes it could raise interest rates. You can wish in one hand and sh!t in the other, and see which fills up the fastest.
CAPITOL REPORT
No Fed rate hikes seen until next year
But investors should keep alert as most Fed members wish for higher rates
By Greg Robb, MarketWatch
Last update: 3:00 a.m. EDT July 28, 2008
WASHINGTON (MarketWatch) - The Federal Reserve will not be able to hike short-term interest rates until sometime next year, even if most would prefer to do it sooner, former Fed officials and economists say.
Ah, so that was probably the news that just crashed the euro (1-year uptrend vs. US dollar just broke down with a huge move). Bernanke is going to panic even more and drop rates to zero, so Trichet will have to force ECB rates down even more (or else risk a revolt of the kleptocrats in the Euro Parliarment and loose his job).
guess the central banksters are at it again
More precisely “won’t be able to hike until after the new president is sworn in so the official Depression becomes his fault.”
It’s really easy to understand after one filters out the Newspeak.
“Almost all the recent increase in headline consumer price index inflation is due to rocketing energy and food prices. Inflation excluding energy and food is significantly lower.”
Nonsense. They price of things in general is skyrocketing too.
Most of us experience this every day.
And this is not going to abate.
IMF sees no end in sight to credit crisis
By Krishna Guha in Washington
Published: July 28 2008 15:45 | Last updated: July 28 2008 15:45
Global financial markets are “fragile” and indicators of systemic risk remain “elevated” almost a year into the credit crisis, the International Monetary Fund said on Monday.
The fund warned credit growth in the US could fall further as a result of ongoing financial system stress and warned that emerging markets would be tested as global financing conditions tighten and policymakers grapple with rising inflation.
The IMF also noted that house prices had softened in a number of European economies including the UK, raising the possibility of further problems in those markets.
The assessment came in the July update to the Global Financial Stability Report, led by former Bank of Spain governor Jaime Caruana.
The IMF said that while likely losses on US subprime mortgages have “largely been acknowledged” in the form of writedowns, financial institutions faced a second wave of losses on other loans.
Credit quality “across many loan classes has begun to deteriorate with declining house prices and slowing economic growth.”
The IMF said that while likely losses on US subprime mortgages have “largely been acknowledged” in the form of writedowns, financial institutions faced a second wave of losses on other loans.
I think the IMF meant to say “likely losses have only been hinted at in the form of writedowns, whilst corporate accountants furiously re-jigger the numbers behind the scenes and pray to St. Jude” (the patron saint of lost causes).
Paulson guidance on covered bonds
By Paul J Davies in London
Published: July 28 2008 21:29 | Last updated: July 28 2008 21:29
The push to increase US banks’ options for funding mortgage lending received a boost on Monday when Hank Paulson, US Treasury secretary, issued guidelines on the development of a covered bond market.
The Treasury guidance on such bonds – widely used by mortgage banks in Europe but rare in the US – is a significant move towards stimulating US issuance following this month’s crucial policy statement from the Federal Deposit Insurance Corporation.
Covered bonds are a form of secured bank debt that gives investors recourse to an issuing bank’s balance sheet as well as to a pool of collateral – usually high-quality mortgages or public-sector loans – if the bank is unable to repay its debt.
Let me get this straight… Paulson thinks investors would buy loans backed up banks balance sheet?
Yes but Moody’s S and P and Fitch have all agreed to rate the bonds and the banks AAA.
Yeah, that’s the ticket. That’ll do the trick.
Even the dumbest pension fund manager is wise to it now.
Dutch pension fund managers still think US RE crap like Fannie and Freddy paper is the best ticket to get rich. Really! If they are questioned about their US holdings they still say things like that they are ‘in for the long run’.
I think Paulson will have no problem passing all this crap to (ultimately) EU and Asian taxpayers. The pension fund managers couldn’t care less, why admit they did stupid things in the past if their huge income and bonuses do not depend on it anyway?
Are they selling any bridges with that AAA rating?
Merrill
in new cash call and write-offs
By Ben White, Francesco Guerrera and Henny Sender in New York
Published: July 28 2008 23:35 | Last updated: July 29 2008 00:31
Merrill Lynch on Monday underlined the depth of the credit crisis by taking dramatic action to bolster its depleted balance sheet, revealing an $8.5bn (£4.3bn) share offering and $5.7bn in writedowns linked to the sale of toxic mortgage securities.
The move comes only 10 days after the US investment bank reported a $4.6bn second-quarter loss, including a $9.4bn write-down, and announced asset sales aimed at raising $8bn in much needed capital. It has been forced to raise more than $26bn from outside investors, including the latest share offering.
Financial stocks rallied in the days following the earlier announcement as investors grew more confident they had seen the worst of the credit crisis. But the latest Merrill writedowns raise new questions about whether banks themselves understand the extent of
their problems.
Monday’s moves also underscore the crisis facing John Thain, chief executive, as he tries to nurse Merrill back to health. The bulk of the writedowns – and much of the bank’s problems – arise from its role as the largest generator of mortgage-backed collateralised debt obligations.
Definition of a ponzi scheme; that proceeds from new investors are used to pay off prior investors in the scam.
(Excerpt from a CNBC article):
“The most recent round of capital raising was particularly bruising because of provisions Merrill agreed to when it raised money in December and January. Essentially, the investment bank said it would give the investors in those raisings extra compensation if it later issued equity at a lower price.
That meant that in this offering, more than half the shares or share proceeds will go to prior investors, with $2.5 billion paid to compensate Temasek, and another $2.4 billion paid as additional dividends to investors in convertible securities.”
Good catch! Yes, that is the very definition of Ponzi scheme.
So naturally, financials will rally on this Merrill Lynching.
And they did!!!
You just gotta love Wall Street!
It’s double plus good ‘positive’ news, no?
From the Telegraph, “chairman and chief executive John Thain said that the news was positive, because of the fact it has been able to off-load the “substantial majority” of its positions in a certain type of complex debt vehicle.”
from Mr. Barry L. Ritholtz
1. Why did Merrill fail to disclose this write-down to shareholders when they reported on July 17th? The stock was $30.73 then; everyone who bought since then just got totally sandbagged.
2. The Financials — especially Merrill — traded today as if many people knew this was coming. How much non-public information leaked in advance of this announcement? (Isn’t non-public material inside information something the SEC used to care about?)
3. Who really thinks the worst of the write-downs, share issuance, and dilution is behind us? Anyone? Bueller? (These CDOs were vintage 2005. That means we have 06 and 07 yet to go).
4. Anyone think Financials are cheap? You cannot trust the “E,” and the “P” is obviously subject to change. Think they might get cheaper?
5. Who really thinks the Financials have put in a bottom?”
The next question is, who believes anything that comes out of a bankers mouth?
Even the highly rated Moody’s, according to Bloomberg, said it was a positive development. All this positive news makes me want to buy with both hands and then some.
No duckspeak on the blog, Winston.
Ain’t it grand living in a world where everything is much better than expected and it’s always a great time to buy or sell?
Obviously the news on Merill was out before yesterdays open.
A lot was made of Australia’s write down of the CDO debt to 11%. Merrill caused the Australian writedown. Australia held junior debt to Merrill. Merrill notified Australia of the pending sale and Australia reacted immediately.
Merrill is still financing the purchase of the CDOs. This does cause new MTMs for Bank of America and Citigroup among others.
WSJ says the bonds were ultimately sold for about 22 cents on the face value dollar.
“Monday’s moves also underscore the crisis facing John Thain, chief executive, as he tries to nurse Merrill back to health. The bulk of the writedowns - and much of the bank’s problems - arise from its role as the largest generator of mortgage-backed collateralised debt obligations.”
The photos of John Thain don’t sit well with me. I would not enjoy being elderly (unable to politic with a 12-gauge) and having this intense fellow looking after my earnings. He looks like he has the financial appetite of a dragonfly.
Just note a small but important distinction here. ML actually SOLD the paper, rather than just WRITING IT DOWN on their books. That means there was a buyer willing to step in at that price and that ML is done with this portion of its capitulation. Part of the scare for me is that these “expert” accountants were guessing when they were marking to market. Now we have an actual sale in this case. If it was a true sale to a 3rd party it does set some sort of (scary) bottom for these assets.
Yes, ML “sold” the paper, but THEY FINANCED 75% OF THE PURCHASE PRICE. So they really only traded one pile of IOUs for another pile of IOUs. Only in America could this be called “raising cash”.
NOT!
Merrill actually FINANCED 75% of the purchase, and the buyer’s fund is apparently holding nothing other than these CDOs and this debt.
So yes, there was a buyer–but the real purchase price was 25% of the published price, and MER is still on the hook for this debt-waiting-to-go-bad when the real price becomes known. Either that, or they will end up taking this cr*p back on their books when the buyer defaults on said debt.
US credit crisis is hitting the wealthy
By Francesco Guerrera and Saskia Scholtes in New York
Published: July 28 2008 19:36 | Last updated: July 28 2008 19:36
The US financial crisis is spreading from subprime borrowers to wealthier consumers, with evidence mounting that more affluent people are failing to pay their mortgages and credit card balances. Growing concerns over the financial health of richer borrowers are prompting banks and card issuers to tighten lending practices in moves that could futher dampen consumer confidence and spending more.
…
Senior bankers say that after the subprime debacle, the worsening outlook of “prime” portfolios shows the crisis is far from over and could inflict substantial losses on financial institutions.
…
Second-quarter results from financial companies showed rising losses on mortgages and credit cards issued to prime customers as soaring gas prices, the slowing economy and depressed house values took their toll. Jamie Dimon, JPMorgan’s chairman and chief executive, recently told Wall Street analysts that the outlook for prime mortgages was “terrible” and the rate of delinquencies could double or treble from current levels of about 4 per cent.
JPMorgan suffered a $104m loss on its $47bn worth of prime mortgages
in the second quarter, more than double its first-quarter loss, and warned that losses on prime mortgages could reach up to $300m a quarter next year.
JPMorgan has already tightened lending standards for prime borrowers – reducing the size and the volume of these mortgages – especially in areas, such as California, where home prices have been falling sharply.
At American Express, which has traditionally focused on high-spending consumers, second-quarter earnings were down 37 per cent year-over-year. Kenneth Chenault, chairman and chief executive, said the company’s most affluent card-holders were feeling the pinch. “The scope of the economic fall-out was evident even among our longer-term, superprime card members,” he said.
Even the “have mores” have less.
“Senior bankers say that after the subprime debacle, the worsening outlook of “prime” portfolios shows the crisis is far from over and could inflict substantial losses on financial institutions.”
Not surprising. It’s not so much the loan terms and types of loans that’s the problem, but the amount of the loans relative to income. The bath that the lenders are taking is far from over.
This is to be expected. The issue is house value and ability of the “rich” to keep up with their bills.
If a house is bought for $7 million and a few years later won’t get $3 million, then the owner is going to take quite a haircut. The banks don’t want anything to do with this. I’d say it is a welcome development in the housing finance area.
Many of the “wealthy” have been on a spending spree that boggles the mind. I am not surprised that there is a problem. If a person must own apartments and houses all over the place, then that individual is being a financial idiot. Why own apartments/houses in New York, Chicago, Miami, and LA, for personal use when they are there? These are the more expensive “show off” units to boot. Why not get a hotel room? This is vastly more cost effective even at a really good hotel.
Roidy
But … if they go to a good hotel, they are throwing money away on rent
“Why not get a hotel room?”
Because the REIC dog humped the “pied a terre” leg awfully hard this boom. Those from London were told to get a condo in NYC, those in NYC were told to get one in Chicago, those in Chicago were told they need one in Milwaukee, and those in Milwaukee were told to buy in Racine.
And…they were ALL told they could sell for more at any time!
Sell now you, infestors! Before you lose more on your “apartments”. The noose is tightening fast now.
Oh, the NYC ones were told to get one in Paris and London too.
Lovely metaphor, edgewaterjohn. I’m gonna steal it.
If a substantial majority of your wealth is tied up in real estate, go figure. A lot of so called wealthy people were deluded by this mania. They cashed out 401-ks and other assets including their primary residences after the dot com crash and invested in RE using the assumption hard assets never decline. It’s a terrible thing.
This one wealthy professional I met recently was trying to rent us a 3 bdrm condo in a prestigious neighborhood near St. Augustine. After looking around and doing some research, I learned several of the buildings were unfinished b/c the developer went BK and a fast food restaurant with all its glittering lights was going to be installed right outside the master’s window not too far across from the train tracks. Oh, the humanity!
using the assumption hard assets never decline.
In a picky technical sense, dot-coms were hard assets too, even if those hard assets were no more than a single laptop, a server, an espresso maker, and an ergonomic chair. (Total value +/- $20K, but still hard assets).
I think of houses the same way. If you pay 1.2 M for $50K worth of lumber and labor, aren’t you fundamentally committing the same error as buying dot-com stock? Although on a smaller scale.
I know I know, it’s a strange way to look at it. But why not? The “ideas” of home, and that prices always go up is not worth much more than the “idea” of selling pet supplies online.
[another side note to cover my patootie here: the bare ideas are not bad at face value. It's just that there were too many people with the same idea, and only a few survived. In the same way that you don't need pets.com because you can get dog food from Amazon, you don't need Ryland to build you a townhome if there are a thousand Toll Brothers TH's already built.]
Most “financial experts” tell you not to put more than 10% in one thing. That includes real estate.
That way they make as much commission as possible.
That was advice i received from more than one person during this mania. Whenever I told someone I wasn’t comfortable buying a home without 20% down on a 30 yr mtg, the response was always “Well just take a 401k loan”. I know more than person who took a 401k loan to furnish their house, because they had no money left after the purchase. This type of behavior was rampant, unfortunately many people made financial mistakes during this bubble that they will never recover from.
I work at a company that towards the end of the dot-com boom spun off a division and offered shares in the IPO to it’s employees. I participated and ended up losing about 50% of my investment. I saw the same type of behavior with this IPO, people borrowing from their 401ks, thinking there was no way that they could lose money. Financial manias all seem to have the same underpinnings, and I suppose that human nature will always be prone to excess. I just wish that government policy would stop facilitating these asset bubbles.
Not to be too snarky about it but when a company offers its own employees shares in anything, it’s time to short that mother not buy into it.
Ain’t that the truth.
I received stock options from the dotcom I worked for and never exercised them — they only went down, down, down after the IPO. Some of my compatriots at the company lost a lot of shekels betting on a losing horse.
Unfortunately it took a loss of money for me to learn that lesson, but I at least took some of that experience and was able to see through some of the nonsense that was spewed out about real estate.
Oh I don’t know about that. I received stock options from a bio-tech firm and did pretty darn good when I cashed out.
In this day and age 401K loans are foolish. Most people don’t realize that the loans must be paid back before you leave your job or else the remaining balance is considered a distribution subject to income tax and a 10% penalty. When people actually stayed at their jobs for 30 years these loans made sense but they are worthless today. Unfortunately, so many idiots have already done what they suggested to you that the government will have to change this rule too. Just one more bailout for the stupid.
I think the error here is the failure to note the root of the word “wealthy” is “wealth.”
Those with large lifestyles supported by large debts levered against temporarily inflated incomes are not wealthy, although they may temporarily live in the same zip codes as those who are.
The reality will really set in when these “rich” people look at their balance sheet. Since most of these people have most of their wealth tied up in RE (especially their primary house), their balance sheets are going to be ugly. Seeing your home decrease in value by $1m+ does not make most people sleep good at night.
are you sure about that?
I think it depends on what you call ‘rich’. I watched a TV program in early 2007, I think from British BBC (which usually has pretty well researched material), and they showed that the really rich (probably over $10M or so) had been unloading real estate for several years already. Yes, most of them were still invested in RE, but instead of maybe 40% invested they were now 10 or 15% invested. Says a lot … most of these were not ‘clever’ investors, just people with some common economic sense (or good advisors, maybe).
This sounds like more Hocus-Pocus to me, but then I’m really not sure what the heck is going on the financial industry at this point. Perhaps I never did.
A New Way to Generate Mortgages…
The financial establishment came together Monday in search of a new way for banks to come up with cash for home mortgages. Regulators, bankers and traders, led by Treasury Secretary Henry M. Paulson Jr., all pledged to do their best to get a “covered bond market” going in the United States.
Skip to next paragraph
Covered seems to be a synonym for collateralized, but it also has other meanings that may be appropriate in this effort to salvage the housing market. Think of covered wagons, which can be circled in times of crisis.
With banks reluctant to lend their own money for mortgages, and the private securitization market quiescent if not dead, the cost of mortgage loans has been rising even as housing prices fall, making a bad situation worse.
At best, a covered bond market would provide a cheaper source of financing for banks while reassuring investors that their money is safe.
Essentially investors would buy into a pool of mortgages that would be kept on the balance sheet of the bank that made the loans. These would be high-quality loans, and at the first sign of trouble in the underlying mortgages, those mortgages would be replaced in the mortgage pool.
http://www.nytimes.com/2008/07/29/business/economy/29place.html?_r=2&ref=business&oref=slogin&oref=slogin
From wmbz’s link:
That market value would be adjusted according to regional trends in home prices; if home prices declined, mortgages covering those homes might have to be replaced in the pool.
Any mortgage on which payments were at least 60 days overdue would also have to be replaced, so at least in theory the pool would always include good loans, and their value would have to total at least 105 percent of the outstanding bonds. The mortgages would remain on the books of the bank that issued them, and the bank would stand to lose if the loans went bad.
——————-
They keep talking about “just replacing” the bad loans, but what are they going to do with the bad loans? Send them off to Neverland? Sell them? Who takes the loss, as **somebody** has to? Is it the shareholders, the other bondholders, who? If shareholders will be the new “bagholders” of these losses, what will happen to the price of the bank’s stock?
Also, investors can currently buy Fannie/Freddie bonds — that are now fully guaranteed by our govt, right? Why would they buy these “covered bonds” then, when there is the risk of bank failures (even J6 is starting to wonder about problems with FDIC coverage), I doubt they are covered by FDIC.
I’m not getting how this will be a “good thing” for anyone.
Also from the link:
In Washington, Mr. Paulson said that “as we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction.
———————
Uh, no, Mr. Paulson. Falling housing prices — to levels that are truly affordable to working people, without funky loans — are essential to turning the corner on the current housing correction.
From everything I can see, there is NO shortage of mortgage financing. None. There are tons of buyers out there right now lining up to buy every single house that is priced to sell. Things are still getting bid up in bidding wars!!! If it’s not selling, it’s overpriced. Plain and simple.
Will they have a AAA rating? We all know how safe AAA ratings are, don’t we? Sounds like another smoke and mirror scheme an increasingly desperate Wall Street is cooking up. Too bad for them that the world is running out of greater fools.
The main difference between the new “covered” bonds and the vanilla MBS is supposedly more investor transparency (as in loan level data available to bondholders) and recourse. Both transparency and recourse were/are not available in MBS. So in principle this is a good thing. The mechanics of this and how it will be accomplished is another story. The 4 major banks will be main issuers, so a bit of a monopoly thing going on there, and in fact will do the same thing FNM and FRE are doing right now. So time will tell how this will play out, but in general on paper, looks like a good thing and a return to old school lending practices where loans are kept on the books of banks who originate them, unlike in the last few years where they were just pushed through the chain, packaged, repackaged and sold. We know now how well that played out:))
PAUL B. FARRELL
Socialist America, Part 2 … The Joker’s wild!
Solution: Cure Wall Street’s hangover with this 12-step intervention
By Paul B. Farrell, MarketWatch
Last update: 7:07 p.m. EDT July 28, 2008
ARROYO GRANDE, Calif. (MarketWatch) — Dark Knight. Gotham City. “I am the agent of chaos,” says “The Joker,” the perfect metaphor for a binging alcoholic. “The only sensible way to live in this world is without rules.”
Yes, he wants free trade, deregulation, privatization and globalization. The Joker imagery mirrors today’s world: America in chaos. Democracy in chaos. Capitalism in chaos. And Wall Street at the epicenter. Listen:
“There is no question about it. Wall Street got drunk,” said President George W. Bush recently as he blamed America’s economic crisis on an out-of-control Wall Street. “It got drunk and now it’s got a hangover … The question is how long will it [take to] sober up and not try to do all these fancy financial instruments.”
Brilliant diagnosis! Dr. Bush not only exposes Wall Street’s underlying psychological and moral defects. He not only warns us of a new Wall Street disaster dead ahead (real drunks rarely change). He makes clear why American capitalism is turning into a socialist economy.
you ain’t seen nothing yet
you down w the World Tax?
Hey,
I posted the article yesterday in the California section. It was a good read.
Since when is the US system of fascism acceptable?
With comments like that…Shrub will not be getting any Wall Street invites to speak at $750,000 per hour and “all you can chew” pretzels…he’ll have plenty of time to dwell & self-reflect on the Cheney-Shrub “Legacy” as he drives around his Crawford, Tayhos ranch in his Ford F-350 Superduty pickup with a log splitter, a chain saw, and igloo cooler filled with lemonade & pretzels, the secret service are not supposed to help load the truck but what the heck they’re fine fellows and besides who will notice anyways?
98 days to g…highways filled with passing…1 way U-Haul rentals.
If there’s one thing GW knows it’s drunks so I’m going to give him credit on this one for identifying the drunk, but I”m also going to hold him accountable for
1. Telling bartenders that they can serve drunks as long as they can stand.
2. Telling the cops that they shouldn’t stop or prosecute drunk drivers.
3. Telling his wife not to leave him because the beatings only occur when he’s drunk and besides he said he was sorry.
With comments like that…Shrub will not be getting any Wall Street invites to speak at $750,000 per hour and “all you can chew” pretzels…he’ll have plenty of time to dwell & self-reflect on the Cheney-Shrub “Legacy” as he drives around his Crawford, Tayhos ranch in his Ford F-350 Superduty pickup with a log splitter, a chain saw, and igloo cooler filled with lemonade & pretzels, the secret service are not supposed to help load the truck but what the heck they’re fine fellows and besides who will notice anyways?
98 days to go…highways filled with passing…1 way U-Haul rentals.
Our Empire Of Debt…. Some amazing charts IMHO…
http://downstreamventures.yuku.com/topic/2004/t/The-Grand-Summary-Our-Empire-of-Debt-Is-Collapsing.html
I’m in Central FL this week, working at a Client’s site. I turned on the car radio and heard 7 ads in a row for “Credit Repair”, Get-rich-quick schemes, “earn-money-with-Ebay,” “Get the Laptop YOU DESERVE even if you have NO CREDIT”, etc. It was unbelievable. People out here must be desperate!
They may run these ads back home (94087), too, but since I only listen to the Classical station and the commercial-free Jazz station, I don’t hear them. But I don’t think radio ads back in Northern CA are exclusively aimed at people who are broke and foolish….
I get this on Sirius also. My favorite is the guy who was on “Flip this House” (or somesuch flipper show) selling DVDs to help people get rich like he did.
It’s pretty obvious that this is his new racket now that the market has turned down. What a scam.
When in Central FLA for biz the first thing I did at the airport was scan and preset whatever Dance and Latin stations I could find on the rental car radio. Unless of course either your wallet or soul is in need of “salvation”.
ex bank chief calls for taxpayers to save his pals asses in official report.
UK mulls mortgage market options
Here’s an idea sir john, let market forces bring house prices down
to realistic levels and you will have no shortage of investors willing
to buy mortgage backed securites.
Sounds a lot like what Paul McCulley said in his last missive, which was sent in John Mauldin’s latest e-mail. Here’s his gem:
Time to Lever Up Uncle Sam’s Balance Sheet
As Keynes taught us long ago, that somebody is the same somebody that needs to step up spending to break the paradox of thrift: the federal government, which needs to lever up its balance sheet to absorb assets being shed through private sector delevering, so as to avoid pernicious asset deflation. That’s a fiscal policy operation and, fortunately or unfortunately, fiscal policy is not made by a few learned technocrats above the political fray of the democratic process, but is squarely in the hands of the legislative branch, consisting of 535 politicians, with far more lawyers than economists among them.
From:
The Paradox of Deleveraging - John Mauldin’s Outside the Box E-Letter, sent 7/28/08
Art Levitt interviewed by WBBR’s Tom Kean this a.m. Levitt characterizes Merrill’s J. Thane write down of their MBS by 36% (mark to market) as “a first”, “brave” and “much needed transparency”.
I’m thinking this event is a new phase in the entire unwinding of the housing mania and we may be well on our way to disciplined financing by banks. Oddly, this coincides with Stuttering Hanks roll out of the supposedly “new” covered bond financing scheme. Regardless, I may be making too much of Merrill’s unveiling but I don’t think so.
Moving to purge itself of the tricky mortgage-linked investments that have brought the once-proud firm to its knees, Merrill said that it had sold almost all of the troublesome investments, once valued at nearly $31 billion, at a fire-sale price of 22 cents on the dollar.
…
Mr. Thain hinted at the C.D.O. sale in the quarterly earnings call, in response to a question from Meredith Whitney, an analyst with Oppenheimer & Company.
“Why not, at this point, be the first to purge assets and get it over with? And, if that means raising capital, raise capital,” Ms. Whitney said.
http://www.nytimes.com/2008/07/29/business/29merrill.html
Yep. It’s a positively transparent moment when they announce an 8.5 bil charge and the need to raise additional capital when just days ago they said there was no need.
Maybe some auditor decided he wasn’t going to play along with how they were accounting for this stuff. Suddenly they get religion.
When you have to pay someone a couple billion so you can raise a couple billion more and you have to lend a couple billion to the person buying from you, you might be an FBanker.
When you have to huddle the Congress of the United States together with Treasury and the Fed to save your bacon, you might be an FBanker.
When you have to persuade the SEC to add you to the Do not short list, you might be an FBanker.
class dismissed:
The Massachusetts Educational Financing Authority yesterday said it will not be able to provide student loans this fall for the first time in its 26-year history, leaving more than 40,000 families without an important source of tuition funds just weeks before college classes begin.
http://www.boston.com/business/personalfinance/articles/2008/07/29/no_funds_to_lend_to_40000_students/
That’s good news! That means class will be “empty” (or at least not at capacity) and tution revenue will be down. That means colleges have to lower the price of their product (tution) to attract more buyers/students.
If we could get rid of Sally Mae entirely tution would fall back to levels seen in the 80’s adjusted for inflation. Every time government gets involved in the mortage business it drives up the price in that sector. Housing, education, what’s next? Maybe they’ll start backing car loans once Ford and GM will file for chapter 11.
you forgot healthcare- every time gov has reformed/controlled / helped the cost goes up
why not deregulate
Want a deregulated doctor? Try Mexico; the diploma on the wall may or may not be real. You might die, but at least you will save some dough.
booga booga
Because every time the government gets involved in something and that something subsequently goes to shit, the government uses the excuse that its gone to shit as a reason for MORE government intervention.
Ed, you mean something like the MidEast? Or CAFTA and NAFTA? Or maybe something like WhiteHouse pressure on the Federal Reserve to keep rates artificially low?
Ed you mean gov should just stay out of the way
You mean like they did for the housing bubble - Again low interest rates didn’t cause this fraud did, fraud by realtors, appraisers, mortgage companies, rating agencies, investment houses ect.
Fraud was the vehicle by which cheap money made its way into the market. You can’t ignore the effects of that cheap money on the market just so you can defend the righteousness of govt.
One other thought, did realtors, appraisers, mortgage copmanies, rating agencies, investment houses, etc. just all of the sudden get greedy or dishonest or stupid in about 2003, all at the same time? What was the case before that, they were all a bunch of alter boys?
The logic that suddenly all these people in all these different professions suddenly changed doesn’t pass the smile test. There had to have been an underlying catalyst.
The catalyst was no regulation.
If the government had just stopped the conflicts of interest at the rating agencies or required securitizers to hold a portion of the loans they sold this thing would have been much smaller. If they had forced fannie and Freddie to only buy good and verified loans this thing would be a lot smaller.
Why?
Because Countrywide ect wouldn’t have been able to off load crap for cash, thus they would have had less money to loan and they would have had to hold their loans (meaning no doc loans wouldn’t exist). House prices would not have rocketed upward.
This is a problem with regulation
Gov failed
Time to vote in a new Gov top to bottom.
Were those requirements in existance and then removed?
There was a pretty sudden run up starting in the early 2000’s. I (and others) propose the catalyst was (among other things perhaps) primarily the influx of money from the dramatically lowered interest rates through mid-2005.
In your opinon, exactly which regulations existed that were keeping the top on this whole thing that were suddenly removed?
And by the way, “no regulation” is not a valid answer to “what was the catalyst?”. Did the regulations you speak of exist before and then get removed? That would be a catalyst. Or if some regulations were added, that coud be a catalyst. For something to be a catalyst, it must have a been a changing factor.
I do agree with you on the final point though.
Gov failed
Except I’m not foolish enough to believe that voting in a different set of bozos is really going to change anything. Maybe govt, any govt, is just inherently incapable of managing a money supply (or apparently even a restaraunt for that matter).
Government failed to regulate, AND interest rates were supressed to fight deflation (still don’t know why everyone’s out to fight deflation when inflation is the more dangerous of the two, IMHO).
Low interest rates forced investors further out on the risk curve, which fed the unregulated mortgage beast.
If rates were allowed to be completely controlled by the “free market,” we probably would not have had this mess. OTOH, if things were properly regulated, we probably wouldn’t have the mess either. There’s more than one way to manage risks.
There are ample examples of states trying to reign in predatory lending only to have the Bush white house come to the aid of the lenders.
There’s rolling back Glass Steagle which happened under Clinton.
Securitization got started in the 80’s but according to Wikipedia the first CRA loans to low and moderate income borrowers started being securitized in the late 90’s.
These new structures should have been regulated but weren’t, and more importantly the rating agencies and their blatant conflicts of interest should have been regulated.
The gov failed - Here is a nice 2003 SEC testimonial.
http://www.sec.gov/news/testimony/ts040203aln.html
http://www.nysscpa.org/cpajournal/2004/504/perspectives/nv6.htm
If I push a rock down a hill, but don’t build a wall, or dig a ditch, or any of the other hundred things I might can do to prevent the natural results of the rock rolling down the hill, no one in there right mind would say the reason for the rock rolling down hill was because we were missing a wall.
No one except an apologist that is. Why do you defend the incompetence of your govt?
We’ve been apologizing for it for 7 long years now.
… why not deregulate
Good thinkin’.
What better place to deregulate, huh?
I love it when for-profit corporations police themselves — works out every time — particularly when our health (and lives) are at stake.
Another check mark for the deflation folks.
Yep.
Repeat after me (something I’ve said many times, and will continue to say)…
“It’s not inflation vs. deflation… it’s simultaneous inflation of necessities and deflation of luxuries.”
“It’s not inflation vs. deflation… it’s simultaneous inflation of necessities and deflation of luxuries.”
“It’s not inflation vs. deflation… it’s simultaneous inflation of necessities and deflation of luxuries.”
(P.S. Education is a luxury, as are new homes and new cars)
Yep, just got a very nice deal on a new car - nearly $8000 off of the MSRP!
Maybe I could have got it cheaper if I had waited, but it was the right color, right specs and the right time for a new car for me!
“It’s not inflation vs. deflation…it’s simultaneous inflation of necessities and deflation of luxuries.”
Don’t confuse cause and effect. Don’t confuse deflation with falling prices or inflation with rising prices.
“It’s not inflation vs. deflation… it’s simultaneous ……”
rise in price of necessities and rise in price of most other things too (besides houses and some electronics).
“Don’t confuse cause and effect. Don’t confuse deflation with falling prices or inflation with rising prices.”
I know what you’re talking about combotechie - but you’re the one that agreed with Asparagus’ deflation comment w/respect to falling tuition prices.
I know technically inflation/deflation is supposed to be defined as expansion/contraction of the money supply; at least in many folks’ views (I believe including yours). However I would challenge anyone to provide an adequate definition of exactly what “money supply” is. I’ve yet to see one.
Mike: you forgot that the states used to provide a larger share of their universities’ funding. For example, during a funding crisis earlier in this decade, Maryland cut funding for Universities, which forced UMD to raise tuition by 25% in one year. Similarly, Virginia provides such a small share of UVA’s funding (7%?), that they’ve contemplated going private.
EPA Managers Warned Not to Answer Inquiries
Only Press Officers Are Allowed To Talk to Media, Investigators
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/28/AR2008072801198.html?hpid=sec-nation
A senior official in the Environmental Protection Agency’s enforcement office has warned managers they should direct inquiries from reporters, congressional investigators and the agency’s inspector general to designated officials rather than answering the questions themselves, according to an e-mail obtained by The Washington Post.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003826333
“Six weeks after The Washington Post reported her efforts to restore media coverage of funerals, Gray was demoted. Twelve days ago, the Army fired her. ‘Had I not put my foot down, had I just gone along with it and not said regulations were being violated, I’m sure I’d still be there,’ said the jobless Gray, who, over lunch yesterday in Crystal City, recounted what she is certain is her retaliatory dismissal. “It’s about doing the right thing.”
As with most other Departments of Bush, the truth will set you free (to find a new job).
Limpbaugh’s fanatics will dismiss these “stories” as… “disgruntled Bush Whackers”
“I worked in the Chenny-Shrub “Era” …here is my real real story”:
“We where on the “A’ team… we were young, smart and had the “right” orientation… politically, ideologically, religiously, philosophically…I mean our brains all were “tie-dye white”…if we walked into a party with Limpbaugh & Cheney & Rove in the same room, we had wet dreams for two weeks. One morning while waking up to Fox news, I suddenly realized how blessed my life was, how unbelievable that my career was attached to such a “Legacy”. Then suddenly in the last 6 months of the second term of the “Decider’s” reign… things began to “unravel”. It all started when…”
I awoke in the Twilight Zone this morning.
Went to my computer at 5:30AM as usual. After that, everything made no sense (or even less sense than usual).
I thought I was reading CNN, then I saw this story: “McCain backs 16 month timeline for withdrawl of troop in Iraq”!! WTF??? What happened to “100 years”?
So, I switched over to the online edition of my trusty WSJ, surely sanity shall reign. Er, not really, as I was assaulted with the following headline: “Obamanomics Could Send Economy Into Tailspin”!! WTF X 10!! Phew, I’m glad they pointed that out, I wouldn’t of wanted us to make a mistake in November and consign the economy to the garbage can!!
Then my wife came downstairs and asked me what was wrong. After I told her I wasn’t feeling well she admitted that she had redirected all my “Favorites” to The Onion web site!
We laughed, we did.
Funny story, NJ!
South Africa can expect another 50bps rate hike come mid-August.
Is electricty supply still affecting mining?
It’s stable for now. As far as I know mines are have reduced their electricity usage about 5%. However any plans for expansion are now severely under pressure. There was also a planned aluminium smelter (an electricity hog if ever there was one) on the East coast that is now being seriously reconsidered.
http://www.nytimes.com/2008/07/28/washington/28coburn.html?ref=politics
Other than Ron Paul, “Dr. No” seems to be the only one worried about runaway spending.
Congress to Halt Closing of Unprofitable Starbucks
“Democrats in Congress today plan to introduce a bill to halt the recently-announced closing of some 600 Starbucks coffee stores, noting that the displacement of 12,000 Starbucks baristas would overwhelm government aid offices not prepared to handle so many clients for whom English is a second language.
Baristas, those who serve Starbucks beverages, speak a peculiar dialect that combines pseudo-Italian and American slang with inflections borrowed from ancient hemp-smoking cultures.
“These people can’t just walk out of Starbucks and get a job at a grocery store or a factory,” said House Majority Leader Nancy Pelosi, D-CA. “They would need ESL classes and cultural training to learn how to relate to ordinary Americans and function in society.”
Rep. Pelosi’s bill would subsidize the 600 money-losing Starbucks locations by giving away millions of taxpayer dollars in so-called ‘Venti Vouchers’ to residents of these hard-hit neighborhoods. If the effort fails to revive the flagging stores, Rep. Pelosi said Democrats would “seriously consider nationalizing the coffee industry to ensure the free flow of java at fair prices.”
“This is just another one of our heroic Democrat efforts to protect Americans from the impact of the Bush economic policies,” said Rep. Pelosi. “Under this president, America has become a cold and desolate place where corporations cut unprofitable activities to focus on increasing the bottom line, and returning value to shareholders. When Democrats retake the White House next year, we will reverse that trend.”
Scrappleface
Is fiction catching up to the truth…or is truth finally catching up with fiction?
LOL!
The scariest part about this post is that you can actually believe it. Shudder.
This article is some kind of hoax, right?
“Now and then there is a person born who is so unlucky that he runs into accidents which started out to happen to somebody else.”
Don Marquis
Hoz, you’re killing me! lol
“America has become a cold and desolate place where corporations cut unprofitable activities to focus on increasing the bottom line, and returning value to shareholders.”
From last weeks issue of: “The Oilrag” Herald, I hear the Angels calling:
“The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University’s James A. Baker III Institute for Public Policy.”
Big Oil profits steered to investors:
http://news.yahoo.com/s/ap/20080721/ap_on_bi_ge/oil_profits
Companies buy their own stock back when they cannot invest that money expanding their business.
That is an argument for lower oil prices in the future.
It is an argument for higher oil prices in the future. Oil companies can’t find any new fields to invest in.
Does this have the “effect” of increasing share price?…do CEO’s and upper Managment get any stock shares during the course of a fiscal year? Would it be “possible” that this could increase the amount of US Dollars $$$$$$$$ that they can possibly stuff into “their own” pockets? Why would you want to go through all the trouble of “drilling” when this seems a simpler, quicker, better strategy…especially, if “they” only plan to be “around” for a couple of more years before “they”: …have to resign… to spend more time with their families?
Naw, not a chance…as George Carlin says: “They CARE about YOU!
This is exactly what is happening.
Insider sales of XOM and others have been fairly impressive.
These guys have been lied about their proven oil reserves, it’s been proven again and again.
The only good news from this is they will have less money to lobby our government .
Is this from the “Onion” as well ????
no
from Scrappleface
If this were true, surely a grassroots rally in Portland would be behind it.
LOL, good one, Hoz!
There was a “venti voucher” (Starbucks coupon) in my local paper this weekend.
Well, its in the recycling bin now.
Okay, stupid question time. Where does the FDIC keep the $53 billion (pre IndyMac)? In a bank? If so in a checking or savings account? If in a bank who insures it?
That’s a tough one to document but i imagine they are into Treasuries and similar..
Go to fdic.com and hit the About tab.. scroll down.
Plans & Reports
Review the FDIC’s budget, strategic plans, and financial reports.
Annual Reports
Privacy Program
Strategic Plans
Financial Reports
They may publish the list of whatever is in the Fund portfolio.. may not.
Here’s a page that might hold some clues:
II. Financial Highlights
Deposit Insurance Fund Performance
http://www.fdic.gov/about/strategic/report/2007highlight/fin_hi.html#difp
A few weeks ago I wrote about my impending divorce. I found out some stuff since then, so my wife and I have come to an agreement. I wanted to get some opinions on this. I think it would be good, but maybe it won’t be.
We just had our house appraised, in the current market it’s $95k. Housing prices have been flat here for years. I owe $37k, with 10 years left after refinancing for 15 years.
I will refi/heloc/cash out, whatever you want to call it, and give my ex $40,000. I would rather do that than give her my liquid cash (about $40k sitting in bank accounts, not including my IRAs), so that I still have a good cash cushion for emergencies. I would still have a good amount of equity, and I can’t imagine that a new house bought in Houston in 1995 for $67k that went to $100k would drop back down to $67k. It’s not a bad neighborhood, just a quite middle-class kinda place. I figure the new balance on my mortgage would be about 1.2x my income.
Bad idea or not? Should I just sell it and rent a place somewhere? Renting a 2-bedroom place would cost me about as much, although I would’t have any maintenance hassles.
If I’m reading that right, you’ll owe a total $87k ($37k now owed, plus $40k for your ex-wife) on a house with an appraised value of $95k. She’ll walk away with $40k, you’ll walk away with $40k plus whatever equity available less the balance owed.
First, I don’t know if you’ll be able to cash-out for that high a percentage for the house’s appraised value in a declining market (you describe it as flat, but later say that its dropped 5%, from $100k to $95k). Especially if you are going from two incomes to one income. Regardless, I think that you’ll find that banks will be insisting on more than $8k cushion between what’s owed and appraised value, even if it’s just 1.2x income. I suspect that you’ll find that about $75k is the most that a bank will be able to loan to you in this environment.
Second, you really need to compare the interest rates between what you’re paying now and what you’d have to pay on any refi. Then compare that to what your cash will be earning and decide whether or not you really need to be holding $40k in cash.
If it were me and it could be sold for $95k, then I would just sell. Hold onto whatever your share of the cash the sale yields, rent for a few years and save whatever you can, and then buy for cash when the market bottoms out in 2010-12 and interest rates are considerably higher than they are today.
I would still have a good amount of equity, and I can’t imagine that a new house bought in Houston in 1995 for $67k that went to $100k would drop back down to $67k.
All it needs to do is drop below $95k and you’ll be underwater.
The scenario you describe sounds like you’re going to be stuck with a debt obligation on a declining asset. And in a house that now has bad memories attached to it. I realize moving is a royal pain, but if you can get a decent rental in a nice neighborhood, sell the POS and start fresh.
RE: but if you can get a decent rental in a nice neighborhood, sell the POS and start fresh.
Relative to this point…Don’t be afraid of the transition of going from a single family detached house to an apartment.
The thought totally depressed me after 25 years of home ownership.
However, I ended up in a great complex with beautiful lawns, landscaping, and flower gardens.
No lawns to mow.
No shrubs to trim.
No neighbor’s dog poop to clean up.
Apartment living frees up an incredible amount of time that one accustomed to SFDH living doesn’t think about.
Thanks, the new mortgage would be $77k, not $87k. So the new balance would be $77k on a house appraised at $95k. Would it be hard to get a $40k loan when I have $40k sitting in the bank and there would be close to $20k in “equity” still left in the house? Things have tightened up that much? Yikes. Well, if that’s the case and I can’t get the loan we’ll just have to sell and split the proceeds.
Don’t want to sell the house because we agreed to joint custody and I want my son to stay in the same house and go to the same school and keep his friends. He wants to stay with me, and the ex already has an apartment lined up. There are no kids there for him to play with.
oh didn’t know you had a son.
Posted below before I saw this. It appears you’re a lot less selfish than ex, from what I recall of your tale, and also taking into consideration the concern for your son.
Best to you -
LOL. Oops, 37 + 40 = 77, not 87. I shouldn’t try to do math before morning coffee.
In terms of qualification, I don’t think that the lender would really care about you having $40k as there’s no guarantee for him that there would still be that asset to go after in the event of foreclosure. The underwriting standards are pretty rigid and a 80% LTV (or possibly lower) is probably not negotiable.
Now maybe you could refi close to $77k on $95k in appraised value with good credit, etc. But the other thing to keep in mind is the fees associated. That would be a couple thousand, and you’d probably be looking at a higher interest rate. I don’t know if it would be worth it.
If you have a ~$64k income ($77k/1.2), how much could you save a year if you only had the pay the current mortgage (ie, not refi)? Maybe the thing the do is not refinance, offer your wife $20k cash, and see if she would accept the remaining $20k plus interest over 2-3 years in monthly or quarterly installments. Until she’s paid in full, she stays on the deed but not the mortgage.
I’m not an attorney so I don’t know if that’s possible, but if things are amicable it might be better to see if something along those lines could be worked out.
80% may be the max you can legally HELOC to in TX, anyway. (I heard that once)
Keep the house; consider any potential loss as a counterweight to your son’s well being. Although most young kids adapt well, some dont. You’ll do well by this; I speak from experiencing a very similar situation. Good luck to all of your family.
Don’t forget that selling costs should be deducted from the “value” of the house before splitting the equity.
You may enjoy being more liquid in your new life. Why be locked in a depreciating debt prison when freedom road is otherwise open to you?
I wouldn’t know from experience, but one has to assume it’s a lot better to be a newly-minted bachelor in a residence with no ghost of former spouse lurking…
Agree, phillygal.
I’d sell and rent. You never know what might happen in the future WRT job transfers, etc.
Some other facts to consider: I have no debt. None. Except the mortgage. This is my HOME, not just a house. My son has known no other place. The ex will sign off on giving me the house. The extra $10k I am throwing in so that she can eliminate 4/5 of her credit card debt. (I still can’t believe she racked up $50,000 in credit card debt AND WE HAVE NOTHING TO SHOW FOR IT, but that’s a different matter.)
Like I said, I was made aware of certain things and she’s not going to stick me with half her debt and take half my IRA and half my cash, so for that I am grateful.
I am not looking at this as an investment. Is it really likely that my house in Houston will depreciate from $95k to $77k or below and put me under water until the market recovers? That’s close to what I paid for the house in 1995! And so what if it does? Since I plan to live here 10 more years, does that really matter?
I’ve been looking at rental apartments, and decent 2-bedroom units in the good school district we’re in run about the same as my monthly mortgage payment, taxes and insurance.
You should give her less than 40K. 95K-37K=60K half would be 30K.
Factor in cost of sales and its more like 55K. Not sure what the other factors in your finances are.
Does she have a job and savings? Are you paying child support? Did she work while married?
She is getting two thirds of the equity so if you sold the house, split 50-50 and bought it again you’d be almost even considering transacion costs.
Sell the house and every thing in it. Get your self about ½ dozen new girl friends. If you lose a few bucks big deal. Enjoy being a bachelor. You are responsible for three things
1) love tryst
2) Dinner parties.
3) Drunken blowouts.
Remember age always goes up.
http://www.youtube.com/watch?v=aa4q4FywsN0
How New Yorkers feel about bombing Saskatchewan.
CBC Rick Mercer travels America
We are friggin doomed!!!
A couple more doomed examples:
http://www.youtube.com/watch?v=nYmTEmUYj_8&NR=1
We’re losing the ability to think
By LEONARD PITTS JR.
lpitts@miamiherald.com
http://www.miamiherald.com/living/columnists/leonard-pitts/story/618348.html
I received this from a friend while discussing the housing mess.
But here is the REAL problem. About 3 years ago, Congress threatened to pass legislation that punished financial institutions for not lending to high-risk borrowers. Since people with poor credit were not able to buy a home, they filed a lawsuit against the lenders for discrimination. To prevent a Congressional Bill lenders raised the amount of borrowing to 120% of the home’s value, and were basically forced to write loans to people with bad credit or who didn’t qualify based on lower incomes.
People with excellent credit jumped on this bandwagon and also took advantage of the “freebies”, and took out loans for speculation purposes. After all, there was no way housing could fall back.
That’s the REAL cause of this most recent bubble. Congress forcing the banks to loan to unqualified people.
Did this really all start because of threat of punishment by Congress and an impending discrimination lawsuit?
Sounds like an urban legend, but I can’t find it on snopes. I’d ask for more details on the claim. I don’t believe any of those things actually happened.
Its true; the loans were supposed to cover needed seller closing cost, repairs, insulation, handicap upgrades etc. We know how well that worked out.
I vaguely remember Maxine Waters complaining that her many of her constituents couldn’t get FHA loans. IIRC, the FHA loan credit requirements are something along the lines of:
- 2 or fewer 30 day lates in the last 2 years
- no BK in the last 2 years
- no foreclosures in the last 3 years
- two years of continuous employment with steady or increasing income
So basically if you’re not a deadbeat, you can get an FHA loan.
Piques my interest as well. Ask your friend to provide some evidence - e.g. a link or something at least.
To be honest - it wouldn’t surprise me. I personally don’t believe this bubble is accidental - the PTB know that the best way to grow their power is via crisis. A little push here and there, usually in the guise of noble intentions (”Think of the children!”, “Think of the minorities!”, “Think of the underprivileged!”, etc.) is often all it takes to bring about such crises.
However that being said - I do think it’s gotten more out of hand than the PTB anticipated.
Yes the huge profits companies like Countrywide made off processing these loans and then selling them after applying lipstick had nothing to do with it. This post is laughable. Even if there is any truth to it I’d more likely believe that the banks used this as cover, just as banks have pushed through tax payer funded bailouts with the story that the entire economy is at risk if they are allowed to fail, and oil companies put up adds saying that a windfall tax would hurt pensioners. Think of the pensioners they cried.
I have emailed my friend and asked for links to articles that can back up the alleged lawsuit and Congressional legislation threat.
The Community Reinvestment Act might be what she’s referring to?
http://www.ffiec.gov/cra/default.htm
Critics claim that government policy encouraged the development of the subprime debacle through legislation like the CRA, which in effect forces banks to lend to the same otherwise uncreditworthy consumers they are now being criticized for accepting.[2] [3] Defenders of CRA disagree, pointing out that half of all subprime loans were made by institutions that are not subject to CRA and another substantial share of subprime loans were made by subsidiaries of banks that do not fully come under CRA.
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
OR THIS:
The Equal Credit Opportunity Act [ECOA], 15 U.S.C. 1691 et seq. prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.
http://www.usdoj.gov/crt/housing/housing_ecoa.htm
————————-
Both force lender to make loans available to people who should not get them, IMHO. This is also the problem when they talk about lack of “risk-based” pricing of loans — difficult to know where the line is drawn between risk-based pricing and “discrimination.”
CRA didn’t force banks to lower standards. If a bank says we will only make loans in this city with a 20% down payment and we will only loan 3x income, then it just has to offer this type of loan accross the city. CRA did not mandate no doc loans, negative amortization loans, 0% down loans ect.
It did push securitization, which is the main problem as I have stated.
Yesterday, People magazine was mentioned (the FDIC ad) and there was some discussion about that. I admitted that my guilty pleasure is USWeekly. Well, in USWeekly this month they have coined a new phrase. They show outfits that stars wear and then show how you can get a similar outfit for much less. They’ve always had that section in the magazine, but they now have a word they use to describe someone who can still dress fashionably for less $$. “Recessionista”.
My point in sharing this is that the “R” word has now seeped into weekly rags. No longer being denied (though still being spun as not a real big deal).
When a ‘Makeover’ Goes Bust
A reality show’s dream house goes into foreclosure after its owners use it as collateral and default.
Hank Stuever
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/28/AR2008072802587.html?hpid=topnews
CHICAGO (CBS) ― CBS 2 News has learned that the Bennigan’s Restaurant chain has shut its doors.
The manager of a Bennigan’s in Calumet City told CBS 2 Tuesday morning that he was informed of the shutdown from his regional manager at 12:10 a.m. today in a phone call.
Bennigan’s was founded in 1976, and is owned and operated by Metromedia Restaurant Group. The restaurant has locations in 32 states.
The Bennigan’s Web site did not indicate the chain was closing, and still advertised a Jameson barbecue menu and other special promotions.
No more money for extravagances.
“…at 12:10 a.m. today in a phone call”
“dude, I was at the Cheetah’s strip club when my boss called to say “The Company” was closing down and not to bother opening in the morning…at first I thought he was joking, when I realized he wasn’t…I thought about it for a few seconds…then bought everyone in the joint a round and ordered more $1.00 bills…I somehow remembered…I still had “equity” I could borrow from in my HELCO! Besides, I could always borrow from one of my twin brothers….one works in banking and the other is on Wall Street, I’m covered.
How many more jobs lost?
The Calumet City location? Get outta here! I has customers at a plant near there and that’s where we always took them for lunch.
Gee whiz, I think this recession thing is starting to follow my foot steps!
All kidding aside, natiowide overnight business shutdowns are not big consumer confidence builders.
http://www.amarillo.com/stories/070208/new_106877772.shtml
looks like only 10 of them closed.
Nationwide closings: http://www.nbc5i.com/money/17024807/detail.html
my bad…. guess that stuff at the beginning of the month was the canary in the coal mine
It definitely appears to be national. Here’s an article that says the two restaurants in Ocala, Florida are closing:
http://tinyurl.com/5aqpdb
I vote: Dave & Buster’s…next!
Its sad when psudeo-Irish restaurants with lots of flair can’t make it in today’s society.
Where will I get my fill of “Soup Shenanigans” and “O’Yummy Desserts”?
(PS: Bennigan’s has the slowest corporate site ever, I just discovered — unless Bennigan’s patrons are overloading the server in an attempt to find out if their neighborhood corporate chain got the ax.)
It’s national.
According to the Chicago Tribune, many (all?) of their restaurants across the country were ordered to close after the parent company filed for Chapter 7 bankrupcy, including the two in downdown Chicago:
Two Bennigans locations along Michigan Avenue were locked and empty at 10 a.m. Tuesday morning, though both normally open by 8 a.m. for breakfast. Both restaurants posted signs on plain printer paper near their entrances announcing that they were closed …
… Chapter 7 bankruptcy implies liquidation, not reorganization of a financially troubled company. That means the shuttered stores are not likely to reopen.
Steak and Ale is gone too (same company):
National restaurant chains Bennigan’s and Steak & Ale have closed their doors and filed for Chapter 7 bankruptcy protection, shuttering more than 300 locations and letting go of thousands of employees.
It is one of the country’s largest restaurant bankruptcies and eliminates two sit-down chains that have been part of the casual-dining landscape for decades. The chains will liquidate and aren’t likely to re-open.
Mortgaged to the World
MARTIN MAYER
“…First, the Treasury will be allowed to advance money to Fannie and Freddie (and even to buy their stocks) in unlimited quantities to keep them afloat — in any fashion Mr. Paulson sees fit. Yet the Constitution requires that “no money shall be drawn from the Treasury, but in consequence of appropriations made by law.” Even in wartime, budgets for the military specify how much is to be spent for what purposes.
Second, as an alternative to increasing the national debt, Mr. Paulson wants to let the two mortgage lenders become preferred customers of the Fed’s discount window, with the authority to pawn their own securities for cash. But only Congress has the constitutional power to borrow on the credit of the United States. Wright Patman, who headed the House Banking Committee from 1963 to 1975, liked to say that the Constitution gave Congress exclusive power to coin money and regulate its value, and that power was merely “farmed out” to the Federal Reserve….
This brings us to the Exchange Stabilization Fund, which could give the government the means to save Fannie and Freddie without ignoring the Constitution. The fund was started in 1934 as a place to set aside the profits credited to the government when President Franklin Roosevelt took possession of the nation’s monetary gold. It’s been used sparingly ever since, perhaps most notably when Treasury Secretary Robert Rubin used it to extend a $20 billion line of credit to Mexico in 1995.
The net wealth of the fund, most of which can be realized with the stroke of a pen, is about $41 billion. Among the uses specified when it was created was maintaining “orderly exchange arrangements and an orderly system of exchange rates.” Nothing could be more disruptive of orderly exchange arrangements than even the hint of a default at Fannie and Freddie….”
http://www.nytimes.com/2008/07/29/opinion/29mayer.html?pagewanted=1&_r=1
An interesting aspect of congressional law. Once again our congress violates the constitution to appear to be proactive. Throw our reps in jail.
Breaking free from dollar hegemony
By Henry C K Liu
The vast expansion of US-led globalized trade since the Cold War ended in 1991 had been fueled by unsustainable serial debt bubbles built on dollar hegemony, which came into existence on a global scale with the emergence of deregulated global financial markets that made cross-border flow of funds routine since the 1990s.
http://www.atimes.com/atimes/China_Business/JG30Cb01.html
Ben check this out: a statement is that the reason we had to bail out Fannie and Freddie is because of all the foreign central banks that hold the paper, which could retailiate against losses by refusing to finance our future debts.
http://www.nytimes.com/2008/07/29/opinion/29mayer.html?ref=opinion
“Mortgaged to the World”
“These foreign-government accounts now hold $985 billion worth of Fannie and Freddie paper. It explains why, in mid-July, Secretary Paulson (as well as Senator Chris Dodd, the Connecticut Democrat who heads the Senate Banking Committee) began giving press conferences about how sound the two firms really were, no need to worry. Behind the scenes, Treasury officials overseas made phone calls to the local central banks and finance ministries, stressing that the two mortgage giants would weather the storm. ”
“If the government had not guaranteed the full payments of principal and interest on their paper, the foreign governments that own so much of it might have had to show losses on their dollar-denominated accounts. To say the least, this would make them reluctant to continue to finance our trade deficit, our wars and the strength (such as it is) of our dollar. Our interest rates, and not just for mortgages, would soar.”
“So the debate about whether dishonest lenders and dumb borrowers should have been bailed out was really meaningless — the conclusion was foregone. The international position of the dollar had to be defended against even the hint of possible failure at Fannie and Freddie; they had to be saved at all costs.”
Of course, from the point of view of savers having higher interest rates is not a bad thing, but that point evidently escapes most people.
To say Peter Schiff is bearish is like saying Tiger Woods is an okay golfer, or China has a small problem with air quality. The president of Connecticut-based Euro Pacific Capital Inc. is so pessimistic about the U.S. economy that he lives in a rented house and keeps the vast majority of his and his clients’ money outside the country, a healthy chunk of it in gold and energy stocks.
“America is finished. We are going to destroy this country. Our economy is just going to unravel,” he told me yesterday. “The question is how much money is the world going to lose before it writes us off?”
Apocalyptic forecasts are a dime a dozen these days, so why should anyone pay attention to Mr. Schiff? Because his past predictions have proved uncannily accurate.
http://www.theglobeandmail.com/servlet/story/LAC.20080729.RHEINZL29/TPStory/Business
An interesting “tidbit” of an article by the author, journalist Barbara Ehrenreich (Nickeled and Dimed) on suicide as a way to deal with credit card debt.
http://tinyurl.com/5osqsb
“The alternative is to value yourself more than any amount of money and turn the guns, metaphorically speaking, in the other direction. It wasn’t God, or some abstract economic climate change, that caused the credit crisis. Actual humans — often masked as financial institutions — did that, (and you can find a convenient list of names in Nomi Prins’s article in the current issue of Mother Jones.) Most of them, except for a tiny few facing trials, are still high rollers, fattening themselves on the blood and tears of ordinary debtors. I know it’s so 1930s, but may I suggest a march on Wall Street?”
So don’t shoot yourself, shoot your broker?
Sure, why not? I really don’t care who dies, but one way or another we need to reduce the global population from 6.6B to around <1B. Six rounds in the standard revolver, so emptying the gun on 6 others is a more effective solution than just using one round on yourself.
Dropping populations are NOT the way to solve financial crises these days. Economies whose underpinings are “Must-Have-Growth” couldn’t handle it.
I’m not talking about solving an economic crisis, I’m concerned about a population that cannot be sustained by the Earth’s finite resources.
700M to 1.2B is about the long-term carrying capacity of the Earth’s population. Since 1800, its increased dramatically, particularly after 1950. One way or another, we will return to that point over the next few hundred years.
What good is access to the balance sheet of a bank with off-balance-sheet toxic mortgage waste dumps of unknown proportions? (Not suggesting this is the case for the banks mentioned here; actually I have no idea about what lurks beneath their living room rugs.)
Four big banks to kick-start covered bond market
By Greg Robb, MarketWatch
Last update: 3:50 p.m. EDT July 28, 2008
WASHINGTON (MarketWatch) - Appearing alongside Treasury Secretary Henry Paulson, representatives of the four largest U.S. banks agreed Monday to kick-start a market for covered bonds - an alternative way to provide mortgage loans - in the United States.
Covered bonds were first created in Germany and are in widespread use in Europe.
Under the practice, a bank borrows funds to lend to homeowners and holds the mortgages on its books. It uses the proceeds of the mortgages to repay investors.
“Covered bonds are a promising financing vehicle and we believe this market can grow in the United States,” Paulson said at a press conference pushing the covered bond idea.
“The key to the U.S. economy making a major improvement will be turning the corner on housing finance, the housing correction. We’re not going to be able to do that unless we have availability of mortgage financing and this is an attractive new source,” Paulson said at a press conference.
The theory is that these bonds may be able to quickly help the housing market get back on its feet. At the moment, the traditional way in the U.S. to generate liquidity in mortgage markets has ground to a virtual halt.
Under this practice, mortgage originators sell mortgages to financial institutions who package them into securities and then re-sell them.
Investors have been unwilling to buy almost anything mortgage related over the past year.
Covered bonds are considered more secure than mortgage-backed securities because the purchasers of the bonds have a direct claim on the issuer’s balance sheet.
“The hope and the bet” of Paulson is that covered bonds will be attractive to investors and will be a better tool of getting liquidity into the system, said Michael Durrer, a lawyer at Sidley Austin in London and an expert on covered bonds.
“Covered bonds may be more attractive to investors, in the near future anyway,” Durrer said. Representatives of Bank of America, Citigroup, JP Morgan Chase & Co and Wells Fargo said that they would help kick start the market. “We look forward to being leading issuers as the U.S. covered market develops,” the four banks said in a statement.
Under this approach, commercial banks may be able to take some market share away from the two mortgage giants, Fannie Mae (FNM 10.62, +0.31, +3.0%) and Freddie Mac (FRE 7.56, -0.16, -2.1%) .
I’m all for this. The more of other people’s money goes into replenishing bank’s balance sheets the less money they’ll take from me.
“Covered bonds may be more attractive to investors, in the near future anyway,”
Translation: “My God, that’s Moose Turd Pie. It’s good though”.
“first created in Germany” when? (Just checking
)
Courtesy of shirt.woot.com, sung to the tune of “Teddy Bear’s Picnic”
Gentrifiwhat?
When you go down to the woods today
You’re in for a big surprise
Because they sold off most of the woods last week
And they put in a high rise
The flooring guys came down Tuesday morn
And yesterday they hung all the doors
Today’s the day they come in and do all the painting
The teddy bears had been there for years
But they didn’t have a deed
The little old lady who once owned the woods
Her son sold them out of greed
And now he lives in Chesapeake Bay
And all the bears have no where to play
Today’s the day the condos are going to be painted
Moving day for teddy bears
Only their anguished stares
Won’t help them get back their holiday
Good times at the picnic land
Never come back again
A court order just came down today
There might be a stadium
For that team which never wins
But threatened to move away
And at six o’clock the security people
Will march them all away
Because there’s no place here for teddy bears.
The rooms are nice and quite reasonable
As long as you’re middle class
But bears are quite unemployable
With no thumbs you can’t handle tasks
They’re sad and bored and just sit all day
Gosh, this could never raise the crime rate
But hey, who cares, that high rise is now being painted
State sales and use tax collection.
Since states and other municipalities will be having revenue shortfalls (see today’s announcement by Patterson and Bloomberg regarding NY), I have the feeling we may be facing more rigorous efforts to collect these taxes. In the past, states have been somewhat lax in the area of use taxes. Now it may represent a source of additional revenues. Could there be any connection with the new requirement that credit card purchases be reported to the IRS?
qaxbami, that was exactly my thought when I saw the NY Post article yesterday. There is an entry on NYS tax forms asking if you’ve incurred unpaid sales tax obligation. For the past 2 years I’ve claimed and paid(<$50) just to avoid getting hammered on out of state purchases.
Nope. The credit card provision is to catch small businesses that under report their income. The information is going to be reported aggregated by recipient, not the spender. So, if a small business reports $300,000 of receipts for the year and $299,000 of expenses, it only has $1000 of taxable income. If the aggregated credit card info from Discover, Mastercard and Visa indicate that it received $1,500,000 in just credit card payments, there is a decent chance it is underreporting its gross receipts.
The IRS is very very very restricted in the kind of information it is allowed to share with the states, though the reverse isn’t true. Even if the numbers were reported by purchaser, since the state has no record of what your instate credit card purchases are, it wouldn’t be able to figure out how much you owed in use tax. I’ve never heard of a use tax that you have to pay even if you already paid sales tax to your state of residence. Nevermind that sales tax isn’t owed on internet purchases.
Stocks jump after consumer confidence data
The Conference Board’s index of consumer confidence rose to 51.9 in July from 51 in June, a welcome signal for investors worried about the mood of investors, which is key because their spending accounts for more than two-thirds of U.S. economic activity.
http://biz.yahoo.com/ap/080729/wall_street.html
check out the typing error. i guess the investors are worried about the other investors now! question, who do they poll to get the confidence reading? i can tell you that here in bakerspatch the consumers are not very confident at all.
consumer confidence index= Joe Six Pack Stupidity Index….
And it was making new highs 2001-2007.
Case-Shiller is down by 15.8% YOY, compared to 4.8% for the OFHEO Index. I take this as an indication the high end is dropping much faster than the low end now, as the OFHEO Index excludes homes priced above the conforming loan limit.
ECONOMIC REPORT
<a Home prices down 15.8% in past year, S&P says
Seven of 20 cities tally monthly price gains in May, Case-Shiller data show
By Rex Nutting, MarketWatch
Last update: 9:42 a.m. EDT July 29, 2008
WASHINGTON (MarketWatch) — Home prices in 20 major U.S. cities have fallen a record 15.8% in the past year, as prices dropped in all areas tracked by the Case-Shiller home price index, Standard & Poor’s reported Tuesday.
Prices in 10 cities fell 16.9% in the past year.
Prices thus are at the same levels as they were in the summer of 2004, which means four years of appreciation have been effectively wiped out. Prices are down 18.4% from peak levels seen two years ago.
Home prices fell 0.9% in May compared with April, although seven of the 10 cities showed a month-to-month increase, which David Blitzer of S&P termed a “possible bright spot.” The pace of the monthly decline has slowed for three months in a row, having peaked at 2.6% in February.
Prices in the so-called bubble regions continued to plunge at a rapid pace in May.
Prices in Miami fell 3.6%, while prices in Las Vegas and Phoenix fell by more than 2.5%. On the other hand, prices rose 1% in Atlanta, Boston, Denver and Dallas.
What goes up, comes down
Home prices surged in 2003 through 2006, climbing by a cumulative 52%, according to Case-Shiller. Since then, however, homeowners have given up half of the gains from earlier in the decade as the housing and credit bubbles burst.
Falling prices have eroded Americans’ wealth, cutting into their ability to borrow against the equity in their homes or refinance their mortgages or sell for a profit. Millions of Americans now owe more on their homes than they’re worth.
The falling home values could also trigger higher monthly payments for many homeowners with negative-amortization loans.
But falling prices are likely a necessary ingredient if the housing market’s to work out its excesses and begin growing again.
The Case-Shiller index tracks sales of the same homes over time, so it’s not influenced by the mix of homes sold in a period. Unlike the home price index from the federal Office of Federal Housing Enterprise Oversight, the Case-Shiller gauge tracks homes with nonconforming loans, such as subprime loans or jumbo loans, which were common in the frothiest markets.
Last week, OFHEO said prices in its monthly index had fallen 4.8% in the past year.
Two other key differences, unless I’m mistaken:
1. Case-Shiller includes only resales, OFHEO includes new homes. This should be counter to the discrepancy though, as new home prices are falling faster than resales, thus one would think OFHEO would be falling faster.
2. Case-Shiller includes both mortgaged and non-mortgaged homes, whereas OFHEO only includes mortgaged homes. (I may be wrong about that though).
Even though OFHEO only includes conforming - I find it very hard to believe that there are that many loans above the 417k limit (which was raised a few months ago I’m sure you know). Surely that wouldn’t account for the discrepancy, would it?
Question though - might OFHEO exclude other “non-conforming” loans - e.g. I/O, ARM, etc? If so then this certainly would explain the discrepancy.
Otherwise - I’m guessing the discrepancy is more due to how they collect their numbers. For some reason OFHEO seems to be much more of a lagging indicator in general than Case-Shiller. E.g. OFHEO shows the national average really starting to climb inordinately in 2001, whereas Case-Shiller shows the climb beginning in 1999.
By definition, repeat-sales indexes (of which Case-Shiller and OFHEO indexes are examples) do not consider the value of new homes.
“The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties.”
http://www.ofheo.gov/hpi.aspx?Nav=269
20 cities vs. whole country?
That’s probably it. Major cities and their suburbs in general got much more bubbly than rural areas, which probably accounts for the difference.
HBB quick quizz:
Name three companies from the following that will report AFTER 4PM?:-)
My picks: 1. Starmucks 2. Exxonmobile 3. Chevron
Wednesday:
Quarterly earnings reports due from Walt Disney, IAC/InterActiveCorp, Comcast, Avon Products, Corning, Office Depot, Prudential Financial, Reynolds American, Starbucks and Visa.
Thursday:
Commerce Department reports on second-quarter gross domestic product.
Labor Department reports on weekly jobless benefit claims.
Freddie Mac reports on mortgage rates.
Quarterly earnings reports due from: Aetna, Altria Group, American Electric Power, Cablevision Systems, CBS, CVS Caremark, Eastman Kodak, ExxonMobil, Goodyear Tire & Rubber, International Paper, Kellogg, Marathon Oil, MasterCard, Motorola and Newell Rubbermaid.
Friday:
Labor Department reports on nonfarm employment and the unemployment rate for July.
Commerce Department reports on construction spending for June.
Major automakers report U.S. auto sales.
Quarterly earnings reports due from: Chevron, Cigna, KBR, NYSE Euronext, Sun Microsystems and Washington Post.
So if the “banks” are not increasing car loans, nor increasing home loans, nor increasing student loans, nor increasing commercial loans, nor increasing credit card limits, nor increasing “equity” loans…what are they increasing?… I mean besides “reverse” mortgage loans?
Am I missing something here?
They’re increasing the shortage of ready cash.
At the risk of stirring up the gold bugs’ hornet’s nest, I feel compelled to point out that gold and oil prices are dropping at high rates today.
Annualized rate of decline (based on today’s price movements):
Gold ((1-12.60/(12.60+925.20))^360-1)*100 = -99.2 pct annualized
Oil ((1-3.98/(3.98+120.75))^360-1)*100 = -99.999 pct annualized
same for the euro, dropping just as fast as Gold today.
buy US$ now or be priced out forever
central bank manipulation if you ask me …
JPY/USD manipulation today.
Gold
07/27/07 $660 today $921
Oil
07/27/07 $73.30 today $120.75
Do keep up your mathematical extrapolations, Prof. They are priceless.
is there a point to this? so if it goes up tomorrow, you are saying this will be like +99%?
Home-Price Declines Accelerate
Consumer Confidence Rises Slightly
By SHARA TIBKEN and MICHAEL S. DERBY
July 29, 2008 10:21 a.m.
The S&P/Case-Shiller home-price index, a closely watched gauge of U.S. home prices, show price declines continued to worsen in May, with every region measured showing year-over-year drops for the second straight month.
Separately, consumers’ take on the economy stagnated in July, although there was some sign moods may be improving over the economy’s longer run prospects, a report Tuesday said.
According to the S&P/Case-Shiller indices, home prices in 10 major metropolitan areas fell by a record 17% from a year earlier and 1% from April. In 20 major metropolitan areas, home prices dropped 16% from a year earlier — another record drop — and 0.9% from April.
Reduced, but not stupid or desperate
Now I have never seen such sign before.
If only he had built six 1,433 square foot houses instead.
Could it be turned into a nursing home?
Phew! Glad to know the S&P/Case-Shiller Index decline was better than expected — only 15.3 pct and not 16 pct as economists had predicted.
US home prices plunge by 15.8%
By James Politi in Washington
Published: July 29 2008 14:47 | Last updated: July 29 2008 15:57
US home prices fell sharply in May by a record 15.8 per cent, according to data released on Tuesday, offering scant evidence that the ailing US housing industry is on the path to recovery even as fresh figures showed consumer confidence has improved for the first time this year.
The closely-followed Standard & Poor’s Case-Shiller index, which tracks home prices in 20 large US cities, had fallen by 15.3 per cent in April, setting the earlier high-water mark for decreases on a year-on-year basis.
All 20 metropolitan areas surveyed experienced price declines over the year, with the worst drop – 28.4 per cent – in Las Vegas. The most modest decline – 0.2 per cent - was in Charlotte, North Carolina.
The data marked a slight improvement over economists’ average expectations of a 16 per cent fall in the 20-city index.
Fears remain over Libor gap
By Michael Mackenzie in New York
Published: July 28 2008 16:24 | Last updated: July 28 2008 16:24
Libor, the measure of inter-bank interest rates that is a key barometer of the health of the credit markets, continues to signal problems a year into the credit crunch and raises doubts about whether the financials’ share prices are close to a bottom.
The daily setting of floating interest rates is used to calculate prices on loans, mortgages and the vast derivatives markets. There is a growing realisation that the all-clear signal for the banking sector will not sound until the difference between Libor and the overnight rates set by central banks narrows from its current elevated levels.
“The persistence of fear one year later remains very troubling,” says Jim Paulsen, chief investment strategist at Wells Capital Management. “The equity market is still fearful and that is fanned by what investors see in the present level of Libor, credit default swaps and interest rate swap spreads.”
just wait until we have an unmanipulated Libor rate, then we can see the real size of the problem.
Hi PB , I read your post wrong yesterday. the new law is as I thought it was, forgive debt above 90% of CURRENT appraised value.
From MSN business
——————————————————————————-
It works like this: The lender has to forgive all the debt above 90% of the home’s current appraised value. If that leaves you scratching your head, here is a hypothetical example, using round numbers:
Sometime before Jan. 1 this year, you bought a house for $125,000 and got an ARM for $110,000 after making a $15,000 down payment. But the house lost value. Now it’s worth $100,000, based on an appraisal. Meanwhile, the ARM’s rate went up, and you can’t afford the full payment every month.
Under this law, the lender would forgive everything you owe above $90,000. Let’s say that you owe $105,000 of that original $110,000 loan. The lender would forgive $15,000, and let you pay off the loan for $90,000. The lender would not be allowed to seek any of that $15,000 later.
That allows you to find another lender who would underwrite a $90,000 mortgage to be insured by the FHA. That loan amount would include the upfront FHA insurance premium of roughly $2,700.
The 1.5% Anual Insurance Premium is why this is no help to high cost houseing areas. If the house is written down to where the note is 200K you got a 3K payment. Still a lot to middle America but manageable. In Bubblevilles, that previous 600K home is written down to a 480K note. Your insurance premium is $7200, at $600 a month if you borrow it add interest. As a one time payment for most the Sheople in these areas it is Fantasy Land.
isn’t this insurance premium ridiculously high? In Netherlands people pay 0.45% extra over the total loan amount when closing the mortgage. In return they get full mortgage insurance (if you can’t pay off the home, a special fund - effectively the government - will do that for you; you can never end up with a loss).
The premium used to be only 0.35% one year ago or so, and it is easily recouped because lenders offer far lower rates (like 0.5% discount) to people who have this semi-gov mortgage insurance, as the risk to the lender is considered close to zero, like with Fannie/Freddie stuff in the US. So effectively the mortgage insurance is free for the buyer (a free put option from the Dutch government).
Of course these premiums are based on forever rising home prices, but isn’t that the assumption for the whole US plan too?
The WORST thing about buying a house is not the $100,000’s of dollars in instant equity you are risking.
It is getting put onto the “this guy needs to buy our mortgage life/jobloss insurance” lists. I have been getting 1 or more letters in the mail per day for several weeks now. (Only one today, thankfully.)
Oh well, at least you can rip the physical letters into shreds without opening them, as opposed to email spam.
Filed under: “Are you smarter than a 5th Grader” … or… “I think I’ll lay in the hammock & review the fine print in my 401K statement”
“…Safety nets that supported working families in previous generations — employer-provided health benefits, affordable housing, college and retirement savings — have steadily eroded, Gosselin explains.
“Many of risks have been handed over in ways that people didn’t notice, and requires them to do jobs that are spectacularly complex,” explains Gosselin. “We need to be our own investment bankers for retirement and college savings, insurance brokers to understand our homeowners’ policies, and lawyers to understand all the documents that get handed to us. It’s not that we can’t do these jobs — but people have lives to lead and don’t do lots of these jobs.”
http://finance.yahoo.com/expert/article/moneyhappy/95501
This is why I believe our standard of living is far lower than it was a few decades ago.
Ever since corporations were encouraged to increase margins by using third-world labor costs and US-based selling prices (paid for by increasing US
citizens’consumers’ debt loads), out country has been heading in a downward spiral.mud for dinner again?
The craftsmanship is rough and the finished products are uneven. But customers do not object. This is Cité Soleil, Haiti’s most notorious slum, and these platters are not to hold food. They are food.
Brittle and gritty - and as revolting as they sound - these are “mud cakes”. For years they have been consumed by impoverished pregnant women seeking calcium, a risky and medically unproven supplement, but now the cakes have become a staple for entire families.
http://www.guardian.co.uk/world/2008/jul/29/food.internationalaidanddevelopment
“People want out of here. It’s like we’re almost dead people.”
It’s rumored …that’s what is being whispered behind Cheney’s back over at the “Shadow Gov’t” Vice President Offices…only 98 days left.
And somewhere, out there, there are kleptocrats who are angry that the mud is being eaten by somebody else since it is THEIR mud, just as everything in the world belongs to THEM.
Haiti is not very far away; desperate Haitians can reach the US by boat. Expect the politicians to be shocked when this becomes a problem, even though it is quite predictable.
Don’t let the Feds hear about this. Looks like a viable substitute for cheese or milk in their inflation calculators.
“And demand for oil in the U.S. — the world’s thirstiest consumer — continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department’s Energy Information Administration said Monday.”
1 barrel = 42 gallons
891,000 x 42 = 37,422,000 x $4.15 per retail price = - $155,301,300.00 per day!
(Bernie Mac voice): “Listen America, I’m talking to you…we can do better than this…200 million folks using a measley less -2 gallons a week = 400 million gallons less consumption per week @ $4.15 = $1.157 Billion $$$$$$$$$$$$$ savings per week…means we can twist those Oilrag heads down to at least $4.03 by election time…We can do it America…we can…of course it might just be easier & quicker to just go out and start drilling new oil…now that I think about it, never mind America, just keep on doing what you’ve been doing, conservation ain’t all that it’s “cracked” up to be.”
Oil falls over $3 on demand worries:
http://news.yahoo.com/s/ap/20080729/ap_on_bi_ge/oil_prices
“And demand for oil in the U.S. - the world’s thirstiest consumer - continues to fall …”
This meshes well with my Seal Beach Tanker Index which is my observation that the currently six anchored and empty tankers offshore indicated a declining demand for imported crude.
These tankers began to accumulate perhaps six or eight months ago; they’d pull up to the port, unload their cargo of crude, then sit offshore awaiting orders to go get some more crude - orders that never came.
“Promises never to raise taxes have bedeviled past Republican officeholders. Before being elected president in 1988, George H.W. Bush said, “Read my lips, no new taxes.” But facing severe budget problems, he reneged on the promise. Some conservative groups never forgave him.”
“…Club for Growth, a Washington anti-tax group”
Funny name for a group that has “stunted” thinking don’t you think?
McCain backs off his no-new-tax pledge:
http://news.yahoo.com/s/ap/20080729/ap_on_el_pr/mccain_taxes
Gotta pay the bills somehow. If tax cuts can’t spur new revenues and growth that will eventually pay the bill, the bill still has to be paid.
Short term borrowing to increase production is fine. But when “borrow and spend” without a plan to pay off debts is the strategy, game over.
I have a few friends who still don’t acknowledge the disastrous “borrow and spend” binge this country has been on.
It’s cost $$$$$$$$$$$$$$ money to “store” crude oil…just ask Goldman Sachs / Morgan Stanley ? et al….what they currently charge at their storage facilities…worldwide.
Wall Street & Oil…no connection what so ever…urban legend myth.
The longest-serving GOP senator has been indicted on seven criminal counts:
Alaska Senator Theodore F. Stevens (R) was charged today with seven counts of making false statements on his financial disclosure forms in an indictment unsealed in federal court in the District this afternoon.
Linky
You may know him as Senator “The Internet Is A Series Of Tubes” Stevens.
Ooops, re-linky.
“The indictment unsealed Tuesday says the items included: home improvements to his vacation home in Alaska, including a new first floor, garage, wraparound deck, plumbing, electrical wiring; as well as a Viking gas grill, furniture and tools. He also was accused of failing to report swapping an old Ford for a new Land Rover to be driven by one of his children.”
Any possibility he was able to use any of the Chenny-Shrub tax breaks over the last 7 & 1/2 years?
McSame help out a fellow Republican brother in the “Chamber” …extend those wealthy tax breaks…make it a “top priority” in the coming weeks of your campaign…you can’t leave him hanging there waiting for a Shrub pardon.
For Lip:
Let’s keep it simple: “Drill for more oil on new land with new leases!”
America isn’t giving the “Oil Companies” any “special” tax breaks these days are they? Think I’ll fax Cheney over at his “Shadow” Gov’t Office for some “public” data.
“Prosecutors said Stevens “took multiple steps to continue” receiving things from oil services company VECO Corp., and its founder, Bill Allen. At the time, the indictment says, Allen and other VECO employees were soliciting Stevens for “multiple official actions …. knowing that Stevens could and did use his official position and his office on behalf of VECO during that same time period.”
VECO’s requests included funding and other aid for the oil services company’s projects and partnerships in Pakistan and Russia. It also included federal grants from several agencies — as well as help in building a national gas pipeline in Alaska’s North Slope Region, according to the indictment filed in U.S. District Court in Washington.”
Is this the guy that wanted to create a loop through Denali National Park that would open car traffic to the whole park?
If so, he should have had his head on a stick for that suggestion alone.
Something odd about picture number 7 (count horizontally)
Redfin.com
Nice doggie. Hopefully it doesn’t bite….
WTF???
“Look Dear! If you hold the pictures up to your nose, the house looks twice as big!”
Look, it’s Clifford!
I am surprised no one has mentioned the two bank failures over the weekend. Find the the full story at
http://www.busrep.co.za/index.php?fSectionId=566&fArticleId=4529064
On Friday, the treasury’s Office of the Comptroller of the Currency took over First Heritage Bank of California and First National Bank of Nevada, declaring that both were undercapitalised and faced losses that would wipe out their capital.
“To raise revenues, Peters said the federal government should make it simpler for states to adopt privately run tolling systems and easier for them to attract private sector infrastructure investments.”
Like I asker a few days ago: Do the wealthiest 1% of American’s use public roads?
I tell ya… the Republicans & Limpbaughs ideas are just hitting on the pulse of the average citizen concerns these days…you might say, they’re on a roll!
More road privatization, fewer gas taxes: Bush official:
http://www.reuters.com/article/domesticNews/idUSN2932866620080729
Great idea
Then Goldman Sachs can buy all of the North bound roads and triple the fee to use them or just stop making repairs. Yes they’ll loose the contract and then they’ll move on to the East bound roads. They’ll pay off the politicians to buy the roads for pennies on the dollar.
Tax GAS make Saudi Arabia pay for our addiction.There is no reason for inefficient tolls.
Something tells me…in the end…Old George “got it” about the problems of the modern world and it’s peoples.
“…about the advantages of getting older…”It’s a great time of life, you get to take advantage of people and you’re not responsible for anything,” he says on the album. He adds that he discovered a popular pastime could be had gathering family members around and pretending to have Alzheimer’s.
“You say, ‘Who are you people and where’s my horse?”
Carlin gets last laugh on death:
http://www.cnn.com/2008/SHOWBIZ/07/28/carlin.album.ap/index.html
Major earthquake jolt here in Orange CA
Not a joke!
Just had a big earthquake here in So Calif.
too bad, wrong side of the country … I think the US needs a good shakeup in the Washington DC area.
They’ll get their shake-up in November.
Yehaw! Just had a quake!!!
A 5.8 in Chino Hills, west of Riverside, CA.
Single soft jolt, very strong down here in Costa Mesa.
Sorry bout the off topic posts
Very long and rolling - in fact I thought it was a truck going over a nearby pothole, until I realised that it was going on for several seconds longer than normal. This in Van Nuys, right by the airport.
Cats are now pacing around like, well, nervous cats.
Watch out for the aftershocks…epicentre near Pomona
My daughter just called all shook up. She’s on the 6th floor of Cedars of Lebanon Hospital toward BH’s.
Dutch Bubble update:
Dutch consumer confidence is cratering, biggest drop in history this month. But according to the Ministry of Truth there is nothing to worry about, it is all flawed perception: the Dutch economy is in great shape (manager/CEO incomes are higher than ever for sure…), salaries are rising much faster than inflation (NOT …), people are still on a spending binge (they have to, with all the inflation going on) and home prices (the source of all prosperity) are still rising in Housing Bubble Central.
Some pundits wonder if the cratering confidence might have some influence on purchasing of big ticket items like … a new home?
“America is finished. We are going to destroy this country. Our economy is just going to unravel,” Peter Schiff told me yesterday. “The question is how much money is the world going to lose before it writes us off?”
http://www.theglobeandmail.com/servlet/story/LAC.20080729.RHEINZL29/TPStory/Business
More than 1,800 people showed up to help ABC’s “Extreme Makeover” team demolish a family’s decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.
Three years later, the reality TV show’s most ambitious project at the time has become the latest victim of the foreclosure crisis.
After the Harper family used the two-story home as collateral for a $450,000 loan, it’s set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.
http://tinyurl.com/62kpzj
This story is a perfect example of why you can’t give people shit.
Oh my word….. another rekleptican senator headed for the unemployment line. What is it with the moral upstanding family values reklepticans and getting arrested/raping boys/buying hookers/using illegal drugs and forced to resign?????????
http://ap.google.com/article/ALeqM5imj_wFFOOGWsLjY9pvVWN-FcG-ZgD927OA4G0
Um, it said “federal indictment.”
Hmmm… lets see… Joe Six Pack gets arrested for disorderly conduct. $100 fine.
Joe Six Pack gets indicted (i.e, felonious in nature)…. gee, I sure would prefer indictment! NOT!