Bits Bucket For August 31, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Homeowner fraud exacerbates mortgage crisis
http://www.pe.com/business/local/stories/PE_News_Local_S_cheaters31.45b183a.html
• This month, Fannie Mae, the giant government-sponsored enterprise that buys and guarantee mortgages, began enforcing new guidelines that could help stop the practice, called “buy and bail.”
• Michael Pfeifer, an Orange County lawyer who specializes in recovering losses from mortgage fraud for lenders, estimated that one-quarter of the “short sales” in this market would fail to meet the criteria of arm’s-length transactions.
• A 55-year-old man said he let a house in southern Corona go to foreclosure and bought another in Lake Elsinore, lowering his monthly payments from $5,200 to $2,100. He wanted to remain anonymous because what he did “could be construed as fraud,” he said.
He had seven money orders for $500 apiece made out to himself and asked a friend to sign a rental agreement so he could deceive the lender into believing he had rented out his first house and therefore could afford to buy a second one, he said.
His Christian beliefs told him lying was wrong, and his parents had taught him to pay his debts, he said.
“The only way I can justify it (lying to his lender) is that I think a lot of people made a lot of money selling bad mortgages to anyone who walked in the door,” he said.
People can justify anything for cash. Dear Lord, I am only stealing because everyone else is doing it. The new parable: rob before you get robbed. New beatitude: the fraudsters shall inherit the earth.
old evang parable: they believe in life after death
new evang parable: they believe in life after debt.
His Christian beliefs told him lying was wrong, and his parents had taught him to pay his debts, he said.
But of course he justified lying and cheating.
At the same time that surveys show that most Americans distrust atheist more than politicians and used car salesmen, the reality is that less than 1% of incarcerated people in the U.S. prisons are atheists. Over 99% of prisoners believe in some God.
I trust atheists far more than I would trust a religionist.
I guess Hurricane Gustav may not hit the bubble areas of LA and TX, and clean out the McMansion glut….
Maybe it will knock out some refineries and oil rigs, and gas will go back up to $4.50 a gal…
Whoever gets sworn in on Jan 20,2009 will be wishing they didn’t win.
My prediction is hurricane Gustav will cause massive damage to the gulf coast.As the government is moving in to the gulf a cascade event earth quake will rip along the San Andreas from Cochella to San Francisco. Which will cause Mt Rainier to blow, in turn causing Yellowstone’s caldera to blow, causing the farm land of the plains to die, in which millions of people starve and freeze to death from the winter.
The earth produces the best special effects.
Here’s a blast from my past anyway.
“You can’t fool Mother Nature.”
http://www.youtube.com/watch?v=LLrTPrp-fW8
Your geology is a little off. What we need for Mt. Rainer to blow is the Juan De Fuca plate to slip about 10 to 15 meters into the mantle. As the plate slips a 9.5 magnitude earthquake will occur unleashing a tsunami that races into the coast and inundates Seattle and Portland.
When things looked equally grim in March of 1933, who could have guessed that just 36 years (2 generations) later, we would set foot on the moon and been the envy of the world?
The future is coming whether you like it or not…
Yes a Dumbed Down Future…sorry Alad, were is the vision of anybody today?
We get 4 mediocre people running for pres…and who has a clue about housing fraud
They all voted to encourage housing fraud by not going after the people who had loans forgiven.
That is a far cry from a Vision of landing on the Moon.
I wouldn’t underestimate us.
For now i would, maybe after a massive depression we will return to our greatness.
I wish i could find someone smart, bright, and on the ball to hire me….Everyday i feel like being smart is a Handicap in today’s world.
I know this is not a religious setting but I truly hope that your blind faith theory works this time. We don’t too many other options at the moment.
Obama is not mediocre! Perhaps the man who on Tuesday said that the VP has to be someone who can take over on day 1 is a tad mediocre.
I think the run-up in oil was just the oil companies trying to find a new price point to maximize profits. Maximum profit occurs when the price*quantity rectangle has the maximum area. Go to high with price and quantity drops off and so does profit.
I’m guessing they discovered that around 4 bucks a gallon, the US and world consumers do significantly change petroleum-use habits, and suspect their overall profits were not optimal.
They’ve got the data now. Before 2006, the excuse for gas price run-ups was ’boutique fuels’. Then in 2006, Katrina was the excuse. Then, just recently, it was global demand.
Recall that for many, many years - decades - gas was less than 2 dollars a gallon. I suspect the hurricane can wipe out all the oil rigs it wants and gas now won’t move too much.
Pall over McCain’s convention
By Andrew Ward in Washington
Published: August 31 2008 19:54 | Last updated: August 31 2008 19:54
Preparations for the Republican national convention were in chaos on Sunday as several party leaders said they planned to stay away because of Hurricane Gustav, casting a pall over John McCain’s plans to use the event as a springboard into the final two months of the presidential election.
President George W. Bush and Dick Cheney, the vice-president, both cancelled planned appearances on the first day of the convention in Minneapolis today, citing the need to be in Washington to oversee the federal response to the storm.
New Orleans is being evacuated again??? I was looking at real estate in the French Quarter, and it is like nothing had ever happened. Million dollar homes, etc. still on sale in a “100 year flood zone” that happens every 3-4 years, apparently.
http://realestate.nytimes.com/sales/LA/Orleans_County/New_Orleans
“A local Realtor was behind bars Friday after deputies found on sale at his garage sale items valued at more than $20,000 missing from a woman’s home.”
http://www.gainesville.com/article/20080829/NEWS/808309962&title=Police_arrest_area_Realtor_in_theft
It could only happen in Florida, that an unburied St. Joseph statue is worth 20 grandidos~
========================================
“The woman realized on Aug. 22 that she was missing a wooden statue valued at $20,000, which had been sitting on a mantle. She contacted her Realtor to ask who had shown the home and, through electronic records, learned Wolford obtained a key to the home on Aug. 20, the day she last remembered seeing the statute on the mantle, deputies reported.”
Interesting. We had a case here in San Diego about 10 years ago where they caught a serial rapist because he got inside a woman’s home via the lockbox. A Realtor. He was given a 400 year sentence. Yay!
I know of a Cptn/pilot who apparently put his wife in the wood chipper. They were never able to convict the guy.
Apparently he cleans really well. And, gosh, not all RE agents are bad, as are pilots of SW or Continental etc.
Just sayin..!
‘The expensive statue had been marked for the garage sale at $12, according to an arrest report.’
Too bad I wasn’t there to buy it, although I would have argued him down to 8 or 9 bucks. Assuming it was a nice statue. I love garage sales here in Olympia, they’re like antique stores. I think it’s ’cause it’s a relatively rich area with an older population and they only have a kid or two.
I wonder if they also have any thieving realtors around!
I once held an Academy Award* statue in my hands, and man are they hefty…
You’d probably get $57 just for the scrap value alone.
* How Green Was My Valley
This happens more often than realtors and other homes salespeople like to admit.
My husband and I collect small toys and when we sold our primary residence years ago (we were still living in the property while it was on the market) after a few showings we had to remove all the toys (and anything else of marginal value not nailed to the floor) from the property and put them somewhere else secure. Why? Because people looking at our homes would dig through our belongings (even those on high shelves and in closed cabinets), and those with families with small children would allow their kids to try to pick up our stuff and walk off with it, or let their kids run into the backyard and watch them try to steal the fake koi out of the koi pond. You’d be surprised by the amount of real estate agents who would pay no attention at all to this sort of thing. (When I told a decades long time realtor family member this, he about had a heart attack. He said in his day and age people in real estate agency had lost jobs when they failed to notice clients stealing items from sellers’ homes while they were showing properties).
Also, at one of the toy collecting websites I used to frequent, there were threads all the time about people’s collectibles and custom artwork being stolen when their homes were being shown, with a couple incidents of the stolen items showing up on Ebay being resold!
If I ever sell a home again, its going to completely devoid of any decoration whatsoever, and completely empty if possible.
“You’d be surprised by the amount of real estate agents who would pay no attention at all to this sort of thing.”
No, I wouldn’t.
Alan Mark and Tony Mark of Prudential Malibu Realty recently provided omelets — cooked to order by a private chef — to those agents who made the trek to their new $36-million Broadbeach Road listing. With a salad and pastry bar on the side, agents could order their omelets prepared with 20 different fresh fillings. Spinach with feta cheese, anyone? To quote from the Malibu Assn. of Realtors’ Caravan West weekly bulletin, “This is the beach house of your dreams! . . . And everybody’s favorite omelet bar!” By all accounts, the $1,000 spread was well-attended.
http://www.latimes.com/features/printedition/home/la-hm-caravan30-2008aug30,0,7794339.story
• I’ll have a frittata with rye toast and I’ll offer 34.5 million for the house. BTW, do you have any cinnamon fried cakes? Or, I would have made an offer on the property, but their omelet and wine selections were not to my liking. They offered a 2003 B & E Vineyard Merlot instead of a more palatable 2003 Miner Merlot - fools.
So in Boynton Beach FL. I am renting a house where my landlord and 60 other owners out of 500 homes are not paying the HOA fees. The HOA sent me a letter indicating any homeowner (tenant) which is not current on the HOA payment will not be able to acquire the new gate access pass. 30 days to comply. This should violate my quiet enjoyment clause in my lease. Been fighting with the landlord to let me out of my lease because she is in foreclosure, but she threatens to go after me if I don’t pay my rent up until the Sherrif tosses me. I am current on my rent, but if she does not bring the HOA current, I assume the lease is void?
You may wish to contact the State Attorney General’s office and also do some research as to what your rights are. You do have some rights here, and your landlady is clearly in the wrong.
It is truly sickening that this landlord is threatening to “go after you” if you don’t pay but SHE IS NOT PAYING HER MORTGAGE but still expects money from you.
I wouldn’t pay her a dime again but simply pay the HOA fee so I could stay there and be able to get in and out of there.
Screw that landlord, what a piece of work, she wants your free money.
You could really screw her by telling her that you contacted the bank and made payment arrangements to pay them directly.
Exactly.
Bring the copy of the HOA letter to the HOA office, tell them what is going on. Then, go out and buy a tape recorder and start taping any and all phone conversations you have with your landlord. It IS legal in most states nowadays (since about 1995/6) to tape record coversations without the other party on the other end of the line knowing that you are doing so.
Double check this carefully - if you are in the wrong to tape record conversations in Florida (assumng that is where you live), you most definitely will be held accountable if you break the law. Naturally, you want to save all voice mails and e-mails, too.
Keep all copies of ANY written communication with your landlord, no matter the subject. Build a dossier of her character.
Also, you should try to put pen to paper for all future correspondence to your landlord. If your communicae is important enough, mail it by certified mail.
This landlord could really make things very difficult for you if she wanted. And it appears she might just be the type. If she has access to your account numbers, watch out. This is a text-book identity theft scenario.
You have your wish, being denied access is a violation of the lease terms by the landlord.
I see you suing the landlord for you deposit back plus moving expenses. A LEASE WORKS BOTH WAYS..no kidding
So no access no rent..
and yes call the sheriff and have her arrested if she tries to lock you out…that is is illegal in all 50 states even floriddah
If fact sue the HOA too, they cannot deny you access either…and call the police on them…
You can only be tossed out by a sheriff with a court order after you LOSE in court…
so the HOA is wrong too….
In the lease it should say who pays the hoa fees.If she does not pay them so you can enjoy and access the property I would think that is a violation of lease terms.You should not pay until the hoa fees are paid.How are you going to get to the property if you don’t have an access code.Maybe you could get the code from a neighbor.
I would suggest a lawyer….umm no kidding…….lots of them will give you a free 1/2 hour consultation.
But this is a serious question for renters… Maybe ask a judge for OSC order to show cause you have a valid lease.
Your landlord and the HOA is treading on thin ice…. you have far more rights then you think…
the HOA is in essence threatening to lock you out…i could see you winning some $$$$ if you sue them, and maybe setting a new precedent in law.
“How are you going to get to the property if you don’t have an access code.”
Old Indian trick…order a pizza, follow him in.
Bob, sorry you have to join the renterz hell.
Play possum.
If you are willing to continue paying rent under these unique circumstances, pay the HOA dues and subtract it from next months rent check. Send your landlord a copy of the receipt.
pay to an escrow account………
Didn’t someone write about this here quite a while ago? They were saying that legally, as a landlord, you can’t collect rent while in foreclosure… anyone? This scenario will play itself over and over as more “landlords” see their tenants as their only reliable income while they are in foreclosure and possibly without a job.
Has anyone seen O’Bama’s TV ad addressing the economy? Sheesh, I nearly messed myself. First, disses McCain for not knowing how may houses he owns. So far, so good. Then, the ad goes into how the wealthy are doing fine, and then the kicker: Voice-over says “But how are things going for folks like you?” It’s the shot of the “folks” that really got me. The “folks” look like a sad-sack, down in the mouth Anglo couple, middle class with a touch of a white-trash, Appalachian sort of look. Kind of like those people in Pennsylvania he accused of clinging to guns, bigotry and Bibles. Real elitist type stuff. Growing up in an advertising and public relations family, I tend to be sensitive to these visual cues.
Anyway, my point, and I do have one, was that I found the ad offensive in a drippingly elite sort of away. No Hispanic or African Americans in the ad. And don’t think that wasn’t done on purpose.
The heck with both candidates. I’m voting for Ron Paul.
Actually, I just saw the ad again (it’s pretty constant). The last line is something like “Maybe McCain thinks the economy is working for folks like him, but how are things going (cue the sad-sack Anglo couple) for YOU?”
This is the kind of relevant economic question i would ask the WUSSIE candidates for pres.
Should tenants be legally locked out of their homes because the Deadbeat landlord has not paid his HOA fees?
——————————-
The HOA sent me a letter indicating any homeowner (tenant) which is not current on the HOA payment will not be able to acquire the new gate access pass. 30 days to comply.
“The heck with both candidates. I’m voting for Ron Paul”.
As am I, but the herd won’t. They’ll cling the their party all the way to the bitter end.
Exactly. It’ll be a cold day in hell before I vote for either McCain or O’Bama.
I wish Paulsen was running for President.
Wow that was a name from the past. We do need some more humor in the race. Stephen Colbert was running for President for a short time.
I vote: Daffy Duck!
He’s has the most “experience” ….in getting blasted of anybody in modern history.
Pat or Hank?
Good question Mugsy.
I’m for Pat Paulsen.
Identity politics really drives me crazy, too. Sadly, both parties engage in this practice. It is either alienating or condescending.
During the 2005 CA recall election, the principal Dem candidate, Lt. Gov. Cruz Bustamante, basically ran a “La Raza” campaign. This was a good example of alienating identity politics. There was not a single white person in any of Bustamante’s commercials. He’d be shown at a rally, the camera would pan over the audience, and every single face in the crowd would be nonwhite. He deliberately exaggerated his Hispanic accent so that in voice-overs he sounded like someone who had just crossed the border a year ago. The commercials didn’t talk about policy, the state’s problems, or what Bustamante planned to do if elected governor; the only theme was “we have arrived,” “it’s our turn,” etc. Naturally, by “we” and “our” he wasn’t referring to white people.
This was so alienating. I usually have a pretty thick skin when it comes to political antics, assuming that all politicians are worthless. And ethnicity has always been part of democratic (small “D”) politics since time immemorial, everyone prefers to vote for someone they can relate to. But when a campaign is PURELY about identity politics? That’s just wrong.
Alternatively, identity politics can be condescending. The 2000 and 2004 election were full of condescending identity politics. In 2004, John Kerry had a photo op where he visited a sporting goods store in Ohio and asked the clerk — I’m not making this up, I saw it on video — “can I get me a huntin’ license here?” That was so offensive on so many levels. It (a) presumes that voters are so stupid that they won’t realize that Kerry doesn’t actually talk like that (”get me” and “huntin’”); (b) reveals that Kerry was such a clueless elitist that he assumed that people from rural Ohio — Ohio! — sound like the characters on “Hee-Haw”; and (c) assumes that voters will actually be affected by this.
The 2000 election had even more egregious examples. George W. Bush was probably the worst offender. He actually ran his campaign as a — I kid you not — “Washington Outsider.” It’s like, Hello?!?! Your dad was the freakin’ President! Your grandfather was a Senator! Your whole flipping family is in politics! But Bush just figured he could insult the intelligence of the voters like that and get away with it — and he was right, I voted for him in 2004 (and would do so again — sigh.) But the even worse part was how he pronounced “Washington” when proclaiming that he was a “Washington Outsider.” He said “WAR-shington.” “Ah’m a WAR-shington outsider,” he would tell the audience in his speeches. My head would almost explode every time I heard that. It’s like, dude, you went to Yale, Harvard, and Exeter, your dad was the freakin’ President, and you expect us to believe that you don’t know how to pronounce “Washington” correctly? How stupid do you think we are? Miraculously, once Bush became President he started pronouncing it the right way.
Does this color my view of how politicians will deal with the housing crisis? Indeed it does!
Looks to me like both parties are having their own dysfunctional meltdowns. They have no freakin’ idea what appeals to the people and in their current mode of operation, they never will.
O’Bama is right about “change”, we need it badly. I really doubt if it will come from him, though.
The key is local elections, really. Those people who are elected at state and local levels, some of them are the ones who go on to “War-shing-ton”. We had a nasty little Fascist piece of goods try to run for local office here in the Tampa Bay area and the lady he was running against clipped his wings but good, using his own nasty tactics against him. It was a beautiful moment.
The whole neocon movement is OVER, but someone forgot to send the memo to McCain.
–
Dopes need their FIX! Each party provides its dopes with what they need. It is quite amazing how people remain faithful to a party, some for life.
Jas
Joe Schmoe:
“But Bush just figured he could insult the intelligence of the voters like that and get away with it — and he was right, I voted for him in 2004 (and would do so again — sigh.)”
-
SHAME ON YOU!
“You can fool some of the people all the time, and those are the ones you want to concentrate on.”
’ssshrubery
Well he got you to vote for him!
“When a true genius appears in this world, you may know him by this sign, that the dunces are all in confederacy against him.”
Jonathon Swift
“Growing up in an advertising and public relations family, I tend to be sensitive to these visual cues.”
Then maybe you don’t understand “targeted advertising” and should turn your TV off of the remainder of the election.
Yeah, if that was targeted advertising, then it was “targeted” to African Americans, Hispanics, other minorities and nasty minded elites, sticking a thumb in the eye of Anglo middle class Americans. It was so obviously an inside joke and reflective of O’Bama’s elitist dem mindset.
what’s an AA?
people from Africa in America are very productive and hate AA’s
Obama should ask himself in his ad - how he feels in his $1.4 million dollar house arranged purchase through his racketeer buddy neighbor. Obama and his wife earned $4,000,000 last year and have the balls to say they will raise taxes on people who earn much less than they did $200,000 to $250,000 on up!
It’s all so very Al Gore, too….who feigns support of the common man and Planet Earth by giving a whopping $2,000 to charity in a calendar year and using other people’s *carbon credits* to light up his grand manse in Tennessee.
These elitist liberals never change, do they?
Their theme song should be Seger’s “Still The Same”.
We are now at the intersection of Blind Faith and Bind Faith, in matters economic and political…
Blind faith works best usually in a religious setting, as there is no proof whatsoever that said beliefs are correct or false, the perfect ruse.
This was Wall Street’s plan of action as well, but as we are finding out daily, their belief system lacks credibility.
The elephant party bound itself to faith on Friday, showing the world just how bankrupt their credibility is, currently.
Do you guys know if someone can block their zestimate on zillow? I was checking on a house and it had no zestimate.It is a condo and others nearby have on.
Here is the address:
913 Marvin Gardens Way, rocklin ca 95765
It was put on the market for 299k 4 days ago.I feel like the owner has blocked people from looking at the zestimate.
The rent on Marvin Gardens (maxed out w/ Mc Hotel) is $1200.00 each time you land upon it.
“Blind faith works best usually in a religious setting…”
Blind faith produces many GOP votes where the conservative alpha-male also decides how his homely wife’s ballot is filled-in.
Is this really how idiotic the partisan comments are going to become? What a waste of time. Like there aren’t generation after generation of families that have voted strictly Democrat. And many of those people aren’t going to be winning any beauty contests. You and Bestwishes must be related. This is really getting stupid.
Can we stick to the issues and leave the sexist remarks and name calling out?
–
We agree! You wouldn’t believe how long I have been saying that. Incessant doping is part of instilling and keeping blind faith.
Jas
Hi aladinsane.
Depending upon which particular cesspool of politics we’re dumped in, you can hate either DEM or REP.
Personally I blame every bad thing on the Democrats.
We could make a great comedy writing team!
If you know what I mean.
and i think you do
I’m still mystified why Harriet Miers wasn’t the aborted pick for veep, instead of Sarah Palin?
It is sad that these elections reveal so much ugliness on both sides. I don’t care who you vote for but things like this are just awful.
http://tinyurl.com/5h52fz
Laughing about a Cat5 hurricane sends a chill down my spine. I just want an election where one side or another wins decisively.
Think VP = Vag!na Power
Having passed through that portal, or owning one, doesn’t give anybody any special advantage, because we can all relate.
So she is good because she has a vagina?
What about her stand on issues and who she is has a person.
Nice to see sexism on both sides exist.
Yea blame the war on the democrats, the deficit, the housing bubble, the fact the Osama bin Laden is still on the loose, and the lousy economy. That would be fine if a democrat was in the oval office, however we all know that is not correct.
Survival of Big Florida Bank In Doubt
by Martin D. Weiss, Ph.D.
First, the subprime mess clobbered subprime lenders like Countrywide Financial.
Then, the cancer spread to America’s largest banks that invested heavily in risky mortgage-backed securities.
Now, it’s metastasizing again — spreading to regional and state banks as well.
Two prime examples: Integrity Bank of Alpharetta, Ga., which just failed Friday with nearly a billion in deposits … plus an even larger bank in trouble: BankUnited Financial Corp.
BankUnited is Florida’s largest bank with 85 branches in 13 counties and with total assets of $14.2 billion.
In the first three quarters of last year, it reaped a profit of $23.2 million. The first three quarters of 2008? $200 million in losses!
Why? Because a whopping 58% of the bank’s “assets” are option ARMs.
Like other adjustable-rate mortgages, option ARMs lure in unqualified homebuyers with bargain-basement interest rates … then jack up rates — and loan payments — in later years. What’s worse, each month, an option ARM gives borrowers three choices:
Option #1. Pay principle and interest normally.
Option #2. Pay interest only.
Option #3. Make a bare minimum payment that doesn’t even cover all the interest due.
What happens to the unpaid interest? It gets tacked on to the unpaid balance.
The big time bomb: Borrowers are only allowed to do that for a pre-specified period of time or until their loan balance rises to a certain threshold, typically 110% or 115% of the original loan amount.
When that happens, they have to make the full payment — principle AND interest … which can be many times higher than the minimum payments.
That’s why massive numbers of borrowers are choosing a fourth “option” which no one anticipated: No payment whatsoever. In other words, DEFAULT.
And that’s also why …
The Amount of Non-Performing Loans
At BankUnited Has Surged 770%
Just in the Last Twelve Months!
And if you think that’s bad, the loans the bank doesn’t expect to be repaid has soared a staggering 1,964% since this time last year.
Meanwhile, the non-performing loans in BankUnited’s portfolio are rising at the rate of 10% per month — and the number of foreclosures in the bank’s inventory is up 18% in July alone.
Now, the government is demanding that BankUnited raise $400 million of new capital and offset losses on its $10 billion of home loans.
Bottom line: BankUnited’s stock is already down 91% in 12 months. And analysts are warning that it’s likely to fail!
BankUnited Is DEFINITELY
Not the Only Bank in This Soup!
If BankUnited were an anomaly, it wouldn’t be such big news. But the fact is, the cancer that’s brining down Florida’s largest bank has also reached a raft of other financial institutions stuck with massive amounts of option ARMs.
At Bank of America, the $25.4 billion in option ARMs it acquired when it bought Countrywide are sinking fast. A whopping 72% of the borrowers aren’t even paying all the interest due on these loans. One in eight is at least ninety days late on payments.
At Wachovia, the story is similar: Wachovia bought Golden West Financial at the peak of the real estate bubble in 2006 and as a result now has $122 billion of option ARMs in its portfolio — a staggering 25% of its total assets. Some 14% of those option ARM customers already have zero — or negative — equity in their homes. And that’s only going to get worse as home prices depreciate further.
Bank Shot, back pocket, carom off of cash.
And you wonder how their regulators ever allowed this? It is much harder for small and mid-size banks to get away with this stuff. Their internal auditors should be civilly and criminally liable. The external auditors should have their funding stripped. This is a failure on a massive scale.
I just missed getting hit by the other shoe dropping!
that was close…
I don’t understand the people who support criminal charges in these cases. When a business is run badly, the owners are (appropriately) the ultimate losers. Game over. Why does anyone have to go to jail?
If an owner doesn’t like the way a company is run, then hire someone else to run it. If an owner is uninvolved, then he deserves whatever he gets. I don’t see why the taxpayer has to act as the watchdog to make sure lazy owners still get paid. That’s just another example of socializing losses (costs of doing business).
“Why does anyone have to go to jail?”
Because that is what needs to happen when people break laws. Do you really believe that this was just incompetence and that nobody broke any laws? I’m living under the assumption that the laws were thrown to the wind by these “businessmen”.
I’m not sure if anyone broke laws, but if they did I guess I’m saying that being incompetent shouldn’t be against the law. Why is the govt in the business of ensuring that employees are good at their job? I mean, if there is outright theft or something like that by an individual employee that’s one thing, but that’s not what we’re talking about here.
Any threshhold for criminal charges should be very high and criminal law should not be used as a method for subsidizing business operations.
Can we really sit here, on the last day of August 2008, and be so silly in believing that any bank that was doing a lot of option ARMs wasn’t engaging in illegal activities on a grand scale? This is not my first day on the HBB and I did not just fall off of a turnip wagon.
You’re missing my point. Perhaps there is some law such as “You cannot make loans that are likely to go bad.”
If there is such a law and if there were banks breaking that law (which I have no problem stipulating) then what I’m saying is that there shouldn’t be a law. That is an operational/business issue and the govt shouldn’t be spending tax dollars to ensure businesses operate profitably.
One real example is Sarbanes-Oxley, which essentially is a way for govt to step in to ensure that executives are reporting fairly. Why should govt do this? If an employee of a company is operating the company in such a way that distorts figures (e.g. is unable to accurately report on how much of some particular asset the company owns) then that employee should be fired by the owner and any negative effects (costs) should be born by the owners, not by taxpayers.
Those types of laws are a way for business costs/risks to be born by the taxpayer while the owner(s) just gets the benefit of the policy which replaced what would otherwise be good business management by the owner.
I agree completely with NYCityBoy!
OH great now we have an elephant party, what’s next? Clowns?
Pin the tail on the donkey.
Pin the donkey on the tale.
“A lie does not consist in the indirect position of words, but in the desire and intention, by false speaking, to deceive and injure your neighbor.”
Jonathon Swift-boat
Went to an Elephant Party to reminisce about missed trends
A chance to share old memories and get America going again
When I got to the Elephant Party, they all looked the same
No one recognized me, I didn’t give my name
http://www.youtube.com/watch?v=H3fs2FO1zYo&feature=related
The O.C. orange blossom debacle redux …or…Home Sweet Home Alabama?
While something may smell fishy about this taxpayer responsible debt to Wall Street…it won’t be from the X-mas envelop containing Bank of Opportunity or JP Morgan’s executive performance bonus.
“A bankruptcy filing by Jefferson County over its sewer debt would be the biggest by a U.S. local government since Orange County, California, filed for protection in December 1994.”
“Bank of America had no immediate comment. JPMorgan Chase could not be immediately reached for comment. Several other lenders and insurers involved were either not available to comment or declined comment.”
“Jefferson County’s sewer financing was also dogged by local scandal. The U.S. Securities and Exchange Commission sued three people, including Birmingham’s mayor, for alleged fraud in connection with interest-rate swaps tied to the bonds.”
Lenders mulling new offer in Alabama debt standoff:
http://www.reuters.com/article/newsOne/idUSN2945951220080829?sp=true
In my on again, off again quest for land, I looked at a deeply discounted parcel in this same Jefferson County a couple of months ago. It always pays to look at the EPA website to check out ground and surface water contamination stats. Turns out Jefferson is in the top 10% from the standpoint of unspecifiable (unremediable) ground and surface water contaminants. I guess the solution is to build new sewers rather than to identify and punish the polluters.
This is one more case of the market impact of pollution. Anybody who thinks ecological building and living costs too much needs to have their heads examined.
Word to the wise - before you buy ANYWHERE, check out the EPA and local websites for contamination, and Census Bureau/NOAA (can’t remember which and too lazy to look in my bookmarks) for drought and rainfall trends. The next world war will be fought over water, with sticks and stones.
I have made offers on two houses, through an agent that I know and don’t mind (he was doing rentals during the housing bubble and didn’t profit from it) He agrees with EVERYTHING I say about the bubble and crash.
The listing agents are being difficult and saying “they will not present my offers to the bank”.
They seem to be making decisions for the bank on whether my offers are any good or not.
My latest offer house in default for 440,000 LP issued July.
I offered 180,000, cash listing agent said “she has to present to the home- owner but will NOT present this offer to the bank as it is to low”.
Why am I even bothering? I thought the listing agent had to present ALL offers to the bank.
I wish this was an REO property but that is at least a year down the road.
The house is still in good shape, owners just moved out and didn’t ruin anything.
They bought the land ( 1.36 acres) in 1999 for 21,000 then paid 145,900 for new home with pool to be built.
Over the years borrowed several hundred thousand, outside of the landscaping and a shed, I don’t see anything they would have done to improve the home with all of that extra cash that stole from the bank.
With 281 bank owned properties and 729 more in pre- foreclosure in zip 33470 you would think that the banks would be happy to have an offer like this.
I am starting to think I will be signing another year on my lease.
Freaking bubble, has now delayed my life for another year.
I’m curious…
Did you circumvent the agent and talk directly with the bank about the property? It might be worth a shot, just for your own education if nothing else. You likely won’t be able to land this given property, so what have you got to loose by going to the bank?
I’d bet most banks nowadays are willing to put some heat on RE agents. If I was a bank trying to unload REOs, I sure as hell would want agents that inform me of ALL offers. I’d guess that banks would blacklist agents like the one you dealt with in a heartbeat.
I have not but I think I will try that. The problem is that it is only LP and not REO yet, that is at least a year down the road.
That’s right. The banks have to continue the charade of higher valuations to the bitter point of capitulation because then their books would have to indicate true market value. I hate this waiting game.
SKB:
Why the urgency to buy now?
Time is on your side, yes it is.
I know that I have time…….I just want to make my purchase for MY price and not have to pay rent anymore. It is costing me 1400.00 per month.
If I can pay 1999-2000 prices I will jump on it.
I am going in long term as this is our last home for retirement.
Play hardball with your landlord and ask for month-to-month, instead of committing yourself to 12 rounds.
I suspect you pay your rent timely and have been an ideal renter, compared to the usual rabble they have to deal with.
Make this work to your advantage…
Yeh but he can’t get no, satisfaction.
And he tried..
The unelected, activist Fed has taken myriad actions in the past year to boost liquidity, presumably using a form of taxation (aka the printing press) as its source of funds. Is this legal, from a Constitutional perspective, or do they pretty much make up their own rules as they go along, above the Constitution and the will of the American electorate?
And how has this plethora of actions succeeded thus far towards ending the Insolvency Crisis?
CHRONOLOGY-Fed actions to boost liquidity
Thu Aug 28, 2008 6:58pm EDT
Aug 28 (Reuters) - The U.S. Federal Reserve has taken various measures to help strained money markets after a global liquidity crunch erupted in August last year.
Following is a chronology of events.
…
“And how has this plethoria of actions succeded thus far towards ending the Insolvency Crisis?”
Well, we’re still here aren’t we? After hundreds of billions of dollars of writeoffs (money disappearing into thin air) the money to keep our economy running has to come from somewhere.
The Fed is the lender of last resort; Like it or not, that’s its job.
Traditionally, the “lender of last resort” function was conducted through the discount window, and the loans came with moral suasion and attached strings. If investment banks begin to suspect that profligate lending will be rewarded with big liquidity injections sans penalties, the result will be support for Wall Street’s favored “privatize profits, socialize losses” business model.
The Fed is going to do whatever it thinks will work. This may not be pleasant for many of us, but there it is.
Megabank, Inc is sure to take note of a potential profit opportunity in the next crisis period, and plan accordingly.
Methinks that after the dust has settled on the crisis du juor, there will be a period of serious soul searching in the world’s central banking community over what shape future crisis management policy should take. Perhaps they will take rational expectations into consideration in a future attempt to create mechanisms for crisis management which do not inadvertently encourage foolish and destructive risk taking.
Previous switch error, so who knows what may get posted.
However, I reject the validity of the entire concept of a central bank being the lender of last resort. In our system of goverance - as written in the Constitution, interpretations by various entitites notwithstanding - the people are the lender of last resort. If the government wants something, they are supposed to convince the people that what they need is so important that the people are willing to be taxed.
The concept is a deceptive way of usurping the sovereignty of the people. Now, the sovereign power is the Fed. They are the body who can determine the course of action, not the people, as the Fed has the power to create money, legally.
As for the lesser of two evils, I won’t accept either. If given the choice of being robbed of $100 or $200, I choose neither. I won’t allow to be robbed of anything. Many people accept being given two evils and picking the lesser of the two.
That form of argumentation can be effective to the unsuspecting player, but it is a fallacious form of argumentation. It is based on the underlying error of saying there are only two options when many more are available. With us or against us, like it or not, either black or white are all examples of this fallacious form of argumentation and are used more and more in all forms of media today. I’m not interested in most of the “only two availabe.”
“… the people are the lender of last resort.”
The people don’t have any money to lend. The people are broke.
The last people who were the lenders of last resort were J.P. Morgan and his fellow bankers who came to the rescue in 1906.
The Fed is crowding out an opportunity for Megabank, Inc to rescue its sinking peers. They should stand aside and let the investment banking community wallow a bit in the crisis of their own creation.
“…As for the lesser of two evils, I won’t accept either. If given the choice of being robbed of $100 or $200, I choose neither. I won’t allow to be robbed of anything.”
You must be a descendant of Thoreau.
Finance & Economics
The European Central Bank
Closing the dustbin lid
Aug 28th 2008
From The Economist print edition
Banks will soon find it a bit harder to game the euro-zone’s liquidity support
NO ONE could accuse the European Central Bank (ECB) of taking its lead from America. While policymakers there contemplate the salvation of Fannie Mae and Freddie Mac, the troubled government-sponsored mortgage firms, the ECB is set to tighten up its rules to ensure that what it offers to banks is strictly liquidity support, and nothing more. A change to the rules that govern its money-market operations could be agreed on by the bank at its next rate-setting meeting on September 3rd and 4th.
If so, it will mark a minor reversal in a global trend. As the credit crunch has intensified, central banks have relaxed the conditions for supplying ready cash to commercial banks. The Federal Reserve has made loans available for longer, and to more banks, to provide some security of funding. The Bank of England has temporarily widened the range of securities it accepts to include less pukka bonds, such as asset-backed securities (ABS).
“As the credit crunch has intensified, central banks have relaxed the conditions for supplying cash to commercial banks.”
The next step is getting the commercial banks to begin making loans again. As of now they are only offering loans to those who don’t need to borrow. Those who need to borrow can pound sand.
“As of now they are only offering loans to those who don’t need to borrow. Those who need to borrow can pound sand.”
The Fed’s below-market-interest loan allocation process seems haphazard and undemocratic. Only Megabank, Inc need apply.
Will the Fed follow the leader?
ECB to tackle abuse of liquidity aid
By Ralph Atkins in Frankfurt
Published: August 25 2008 03:00 | Last updated: August 25 2008 03:00
The European Central Bank is close to announcing a clampdown on possible abuses by banks of its financial market liquidity-supporting operations, a member of its governing council has indicated.
Yves Mersch, governor of Luxembourg’s central bank, said at the weekend that ECB policymakers had agreed a “certain amount” of refinement to the central bank’s rules. His comments are the clearest indication yet that the ECB will act on worries that banks are taking advantage of its relatively generous system, possibly building up problems for the future.
…
Mr Mersch told Bloomberg in an interview at the gathering of central bankers in Jackson Hole in the US, that, “at the margins there can still be cases where you see dangers of gaming the system”.
‘…Is this legal, from a Constitutional perspective”
Which Constitution doeth you speak of?
Shrub’s: “I’m the Decider”…or… Cheney’s: “I’m immune from answering” Shadow Gov’t?
“Dude, this doesn’t happen…in the real real world”
from the movi: “The Crow”
Here is a partial answer to my question about crisis management success:
Measure for measure
Banks continue to tighten credit, and their own belts—Citigroup has even restricted colour photocopying. What liquidity they have is being jealously hoarded, partly out of distrust of one another, but mostly in anticipation of refinancing requirements on bonds that they issued with abandon in the credit boom. The spread over expected central-bank rates that they charge one another for short-term cash has risen to three times the level that it was in January. Worse, derivatives markets point to a further increase. Another measure of trust, or lack of it, the index of the “counterparty” risk that derivatives dealers pose, is creeping back towards its March peak.
Nor have investors grown any more confident about their ability to price the banks’ toxic mortgage-backed assets: Merrill Lynch’s cut-price sale of collateralised-debt obligations in July has had few imitators. Lehman Brothers has tried unsuccessfully to sell a pile of iffy securities backed by commercial mortgages all summer.
The woes of Fannie Mae and Freddie Mac weigh on these efforts. Bankers feel obliged to advise clients against snapping up distressed securitised assets until the mortgage giants are put on a firmer footing, says one. And banks themselves are exposed: paper issued by the mortgage agencies accounts for roughly half of their total securities portfolios, estimates CreditSights, a research firm. American banks own much of the preferred stock (a hybrid of debt and equity) that the two firms issued. They were attracted by the preference shares’ combination of a low risk weighting and decent yield, says Ira Jersey of Credit Suisse, but have seen their prices tumble on fears that they will be wiped out if the government moves to prop the agencies up. Although only a few regional lenders would be seriously hurt by this, it would add to the pain of many. JPMorgan Chase has just become the first bank to write down its holdings, saying it may lose $600m, or half the value it had put on them. That may start a trend.
Worse, banks have come to rely on issuing their own preference shares to raise capital, and will find that harder if holders of Fannie’s and Freddie’s paper suffer losses. Banks have raised a total of $265 billion of capital since last summer, says UBS. With much of that issuance underwater, investors are understandably wary of throwing good money after bad.
Contagion also spreads through the market for credit-default swaps. Banks have busily written such insurance contracts on Fannie’s and Freddie’s $20 billion of subordinated debt, which sits below senior debt in their capital structures. If the debt’s holders suffer losses in a bail-out, triggering a “credit event”, banks that had sold the swaps would face huge payouts. The amounts involved are “impossible to calculate but far from trivial”, says one sombre analyst. As the bard wrote: “When sorrows come, they come not single spies, but in battalions.”
I hear every paper-clip is being accounted for over @ Citibank, except the ones involving money.
Who took my red Swingline stapler? Now we’re playing for keeps.
Soak the sheeple. Save the wolves.
Sunday Herald
Scotland’s award-winning independent newspaper
Est 1999
August 31, 2008
Have we really never had it so bad?
ANALYSIS: By Iain Macwhirter
SO, IS it the worst economic crisis in 60 years? Worse than the 1970s with its hyperinflation and the three-day week? Worse than the recession of 1990-92 when hundreds of thousands of people lost their homes in the property crunch? Alistair Darling may have let his words run away with him - he has now insisted that he didn’t intend to be quite so apocalyptic in his assessment of the credit crunch. However, he was only reflecting a view which is pretty widely held by people in the financial community.
George Soros, the billionaire who made his fortune betting against the pound during the Exchange Rate Mechanism crisis of 1992, has been saying for most of the last year that this is the worst economic dislocation since the Great Depression in the 1930s. Professor Nouriel Ruobini of New York University has also been talking about financial armageddon. Many others agree with him, though few express their fears openly for fear of being accused of alarmism and “talking ourselves into a recession”.
But there are good reasons for alarm. The dynamics of this crisis are disturbingly similar to what happened to the world economy in the late 1920s, when irresponsible lending by banks - primarily, but not exclusively, in America - led to huge asset bubbles in real estate and equities which burst, creating bank failures and a restriction of credit which became the Great Depression.
Professor Bear, you’re the “Tiger Woods” of “Polly Annaism”
And this years winner for the “Eyeore Award of Economics” is:
Smokey the Bear!…just kidding…Professor Bear…again.
Thanks for the ribbing
Here, here.
Applause, applause
The Press Association
Unsold properties plan for councils
2 days ago
Councils could get help to buy repossessed and unsold properties under new plans to be announced by the Government, it has been reported.
The measures, which are expected to be announced next week, will give councils and housing associations the means to intervene in the flagging property market.
Local authorities will be able to offer financial help to borrowers unable to pay their mortgages in return for a stake in their homes or outright ownership, according to The Times.
It is understood the measures will be aimed at first-time buyers and people on low incomes, particularly young families.
The extent of the housing crash was disclosed on Thursday with the latest figures showing the average UK property had lost 10.5% of its value during the past 12 months - the biggest fall in prices since 1990.
Liberal Democrat Treasury spokesman Vince Cable said it was likely about 300,000 people now owed more on their mortgage than their property was worth, and he warned that the figure could quadruple if price falls continued over the next year.
Update from my cousin in Seattle, who is thinking of trying to sell their house…
We met with our real estate agent again yesterday. She’s about 3 years
older than us and has 30 years experience in real estate both with the
mortgage side as well as being an expert agent. She also knows many in
the banking side. She gave us an estimate of our home’s value based on
the current market place and her figure was lower than we expected by
about $15,000. Even after the new roof and furnace. Home prices are
dropping everywhere here now and, indeed, all over America. During the
boom just a few years ago, homes were selling at an 11 percent monthly
clip in this area. Now it’s only 4 percent per month. Definitely a
buyer’s market now and she predicted home values would drop another 10
percent in the Seattle area in another year. She said the mortgage
crisis was even worse than the media is reporting and we’ve seen only
the ‘tip of the iceberg.’ She said lenders who, during the boom, would
lend just about anything to anyone are now very persnickety about who
gets loans as well as the homes they’re buying. If rates go up, it
will make it still worse. She didn’t mean to come across as gloomy,
but she met her match with me because I’m even gloomier!
Anyway, like I said, after a careful analysis of our home and the
market, our home is worth less than we thought. It’s discouraging, but
I believe her because she’s tops in her field. She charges a big
commission too, but if we go with her she guarantees she’ll sell our
home within 6 months or we’ll owe her nothing. She suggests if we
sell, we should wait about a year for homes to come down further
before we buy another. Home prices should be coming down everywhere.
This will cause a lot of pain and suffering as too many people have
seen their homes as an ‘investment’ and not simply a place to live.
Big mistake! Trouble is, all investments are in jeopardy. 401k’s can
and have been going down with the stock market. The Fed is running a
casino and they have their fat thumb on the roulette wheel.
“If rates go up, it will make it still worse.”
That’s not gloomy…that’s music to my ears!
Wacky Wabbit: “Eh, lets go with a nice round number Daffy…say 14.5 % mortgage interest for 18 months”
Yosemite Sam: “Now hold on there varmit, them’s fightin’ words! That’s like shooting a hummingbird with a 12 gauge shotgun”
Wacky Wabbit: “Eh, listen Doc…its Albatross season in America…and they’s very BIG birds…and we’re out numbered & they leave very big messy doo-doo as they fly by.
Yosemite Sam: “I see’s wabbit…well, I guess I can loan you some dynamite. I was saving it for the bank safe but Foghorn says there’s nothing in it…just bundles & bundles of green paper”
‘Definitely a buyer’s market now and she predicted home values would drop another 10 percent in the Seattle area in another year.’
Wheeeee! I guess it’s NOT ‘different here’. But only a 10% drop? That’s IT?! Let’s try to do better than that, shall we? Okay!
And maybe, oh, maybe my lovely beautiful Thurston county will not become an entirely paved over hell of discontented commuting Seattlites! Ahhhh….
she guarantees she’ll sell our home within 6 months or we’ll owe her nothing
Which is no different than any other realtor. You sign a contract, often 6 mos. and if the contract expires that’s that. You don’t owe anything unless the house sells.
Is the realtor implying that her deal is different? Does that make anyone else question her honesty and integrity?
Just put a for sale sign out front, lower the price by the 6% and put an ad in the paper. If its priced right it will sell.
I just figured out how we make our citizenry figure out what’s what, economically.
’ssshrubery and corp’se hoisted their color-coded jolly rogers, to better scare us about how bad terrorism was, and to sway elections…
Why not hoist color-coded jolly rogers all over Wall Street?
Which color are we on, now?
What’s the color for Defcon 1?
Razzberry
A brief touch of recent history
“…Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior)….”
Mr. Ben S. Bernanke
November 21, 2002
Willy-nilly 1. Whether desired or not: After her boss fell sick, she willy-nilly found herself directing the project.
2. Without order or plan; haphazardly.
From this simple abode, it appears that the Federal Reserve has acted without order or a plan. Reactive to each impending collapse. So I guess these must be the “practical Policies that approximate” willy-nilly behavior.
Have a great labor day and rest of the weekend all.
Would that be a…
Moral Haphazard?
Haphazard reactions to each impending collapse give me the willy-nillies.
Bernanke prepared an entirely lifetime to be completely unprepared. What a dope!
Read Jason Hommels’ latest missive concerning the great Silver short last week:
Silver Stock Report
by Jason Hommel, August 31st, 2008
On August 23rd, I linked Ted Butler’s article, showcasing market manipulation in silver at the COMEX:
http://silverstockreport.com/2008/freemarketshortages.html
Ted Butler released an article “The Smoking Gun”, where he revealed that two banks sold 27,000 paper contracts for about 139 million ounces of silver, from July 1 to August 5th, which depressed the paper price at the COMEX. Many are saying this is Ted’s greatest article, as it is better proof of market manipulation than any other evidence we’ve ever seen.
http://news.silverseek.com/TedButler/1219417468.php
Two days later, another man, Gene Arensberg, did some 7th grade math, and put the amount of the silver sold short into context for us.
http://www.resourceinvestor.com/pebble.asp?relid=45611
“A short position of 33,805 contracts is a big number. It represents 169,025,000 ounces of silver. That is a net short position by two U.S. banks of 5,257 tonnes on silver worth about $2.7 billion at $16.00 the ounce.”
$2.7 billion worth of “silver sold” has important implications, as even more 7th Grade Math will show.
The CPM Group has estimated that out of the 550 million ounces of silver produce by the mines, only about 60 million ounces are purchased by investors annually; the rest, and more (from recycling and government selling) goes to industry, jewelry, and photography.
The 60 million ounces purchased by investors, at an average of $13/oz., as 7th Grade Math shows, is $780 million dollars, or less than $1 billion.
Interesting. Let’s use more 7th Grade Math to compare those two numbers. $2.7 billion divided by $.78 billion = 3.46.
See, two U.S. banks sold 3.46 times as much silver in a month, as investors worldwide, bought in an entire year.
Doing more math, we can divide annnual investor demand by 12 months, to see what investors buy in a typical month.
$.78 billion / 12 = $.065 billion, or $65 million.
Doing more math, we can compare what the two big banks sold in a month, to what investors buy in a month.
$2.7 billion / $.065 billion = 41.53
Wow. In one month, the banks sold 41.53 times as much silver promises as investors buy silver. No wonder the price went down.
But the idiots who don’t know basic 7th grade math, and who refuse to do 7th grade math, or who think those people who do know how to do 7th grade math.
‘A crisis is a terrible thing to waste,’ director says
Published Thursday August 28th, 2008
By STEPHEN LLEWELLYN
llewellyn.stephen@dailygleaner.com
The economic perfect storm that has been battering New Brunswick’s forest industry for years is now bearing down on the province’s competitors, says Don Roberts, managing director of CIBC World Markets Inc.
“Not that misery loves company but bring it on,” he said. “This isn’t bad news for us.”
In the past two years, a strong Canadian dollar combined with low wood prices, a collapsing U.S. housing sector, high energy costs and higher labour and environmental costs have closed mills across New Brunswick and thrown thousands out of work.
Now those same factors are starting to hit New Brunswick’s forestry competitors in South America and Scandinavia, said Roberts.
“I don’t want to seem flippant, but a crisis is a terrible thing to waste,” he said.
Leaders
Fannie Mae and Freddie Mac
Fire the bazooka
Aug 28th 2008
From The Economist print edition
It is time to nationalise America’s mortgage giants—and then to dismantle them
That Bazooka is now a.b.c. gum.
I bought some bubble gum
Bazooka bazooka bubble gum
PAGE ONE
The Fannie & Freddie Question
Treasury’s Paulson Struggles With the Mortgage Crisis
By DEBORAH SOLOMON
August 30, 2008; Page A1
WASHINGTON — In Henry M. Paulson’s first month as Treasury secretary, two deputies flagged Fannie Mae and Freddie Mac as significant risks to the economy. He didn’t share their level of concern. When he was at Goldman Sachs, he told the aides, the mortgage giants weren’t on the list of things that kept him up at night.
Two years later, they’re at the top of his list. Mr. Paulson is embroiled in emergency planning on ways to shore up the companies to avert a destabilizing jolt to the U.S. economy and the world’s financial system.
Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in,Washington
Published: August 29 2008 03:00 | Last updated: August 29 2008 03:00
Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae and Freddie Mac by a quarter since the end of June.
The sale by China’s fourth- largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.
To the extent the GSEs helped set the stage for falling home prices, don’t they technically deserve credit for helping to make housing more affordable?
Decision time for Fannie and Freddie
DOUGLAS HAMILTON
September 01 2008
Comment
Hank Paulson, the US Treasury Secretary, has some tough decisions to make in the next few weeks on what measures he should take to support troubled Fannie Mae and Freddie Mac, America’s biggest mortgage finance companies.
…
The two firms claim they make home ownership more affordable by lowering the interest rates on the 30-year mortgages they guarantee. They account for up to nine out of 10 secondary mortgages in America, and owe or guarantee about $5.3 trillion.
But the sub-prime mortgage crisis and the housing slump in America, that has left some parts of the country looking like ghost towns, has taken its toll on Fannie and Freddie. Their finances have been highly strained by rising defaults and falling house prices.
Is G0d punishing the Republicans?
And can hurricanes really go as far north as Minneapolis?
Gustav threatens Republican convention
By Sheila McNulty in Houston
Published: August 29 2008 19:23 | Last updated: August 31 2008 11:53
God may not be able to punish the Republicans, but women may be able to. I’ve got a sister in Ohio; she and her husband are moving out of the country for a job assignment. I called her yesterday to see how the packing and house selling was going.
She’s never been much into politics, but mentioned that she was so offended by McCain’s choice of Palin that she’s now getting an absentee ballot so she can vote for Obama and have it count in Ohio. She mentioned that her husband would vote for McCain so she’s not going to do anything to help him get a ballot. If he wants one he has to get one on his own. I had to laugh; this is totally unlike her at all.
“she was so offended by McCain’s choice of Palin”
Many of we males at my office used to privately chuckle how our female co-workers would be backstabbing each other and some could not even work for a female supervisor. Human nature is always in the mix.
My wife, who is retired from a male dominated career, felt like women’s qualifications for promotions were often of no importance while whatever the male candidate had done was relevent and significant. This is all very interesting since something like 54% of the electorate are women and I am guessing maybe 5 to 7% are African American males. I do not have a dog in this fight but will enjoy watching this play itself out.
yeah, sure she is
Which disaster threat looks worse for Republican election prospects? Is it Hurricane Gustav, or twin twisters Fannie and Freddie?
P.S. I realize the meltdown of the GSEs is due to a bipartisan effort. But the Republicans have the misfortune of being the incumbent party in the WH when the situation has come to a head.
Bush, Cheney, Schwarzenegger won’t attend GOP
I can’t possibly believe the Gropenator is going to skip a pass on giving a tight squeeze & hug to McDame.
Ann Coulter & Sarah the Barracuda… in the powder room at the same time..”young republicans” are going to have wet dreams for a month.
http://news.yahoo.com/s/ap/20080831/ap_on_el_pr/cvn_convention_rdp
“I realize the meltdown of the GSEs is due to a bipartisan effort.”
So, lets see the Shrub appointed Greenspent & the Republican Congress voted for his approval?
Which came first… 1% Fed interest rates or defaulting mortgages @ Fannie & Feddie?
Clinton also would have to have appointed him twice for 4 year terms, Bush the elder once, and Reagan first appointed him to the chairmanship.
unfortunate but somewhat ironic that Dobson asked folks to pray for ‘rain of biblical proportions’ for democrats big night. I wonder if God is sending a message?
“I wonder if God is sending a message?”
Maybe some of the money, that imho would be waisted on a boring Convention, can now be redirected to people who will be affected by the huricane. Brings to mind that Garth Brooks song “Thank God for Unanswered Prayers.”
Let us discuss the X Factor, the fact that all homes aren’t created equal…
We sold our house about 3 years ago, and it was an unremarkable 1967 tract home that had a fairly bare-bones kitchen remodel in the early 1980’s, and that was it.
When we bought it just after the turn of the century, the Realtor made note that the state of the art summer of love-era intercom system (it took about 30 seconds to warm up) still worked.
It took us a month to sell our white elephant, in a hot market.
Would our house even rate a passing glance, up against homes with $35k bathrooms and foo-foo galore, by today’s discriminating buyers?
The x-factor tends to fade in a hot market, and comes back with a vengeance when there is an 11+ month supply of homes from which to choose.
When a man is drunk all women are beautiful. When he sobers up, that wealth of beauty has surprisingly slipped out the window.
The girls all get prettier at closing time: enjoy!
http://www.youtube.com/watch?v=yNAgVPs8MDA&feature=related
Give me old with character and cheap…….we have a 1960’s style sputnik lamp in our dining area….cool….i would never ever replace it ever if i bought this place.
Plus 9 foot ceilings storage above the doors….character not soul less stainless and granite
Porcine beautician bottom callers are grasping at straws, sticks and bricks as they search high and low for signs that real estate crash will soon end.
The key missing ingredient in this article’s analysis is the effect of falling prices on incentives for loan owners to walk away from underwater loans. The writer also fails to connect banks’ reluctance to lend to their fear of catching falling knife collateral. Tightening credit tends to reduce purchase demand, which exacerbates price declines. Turtles’ backs get crushed all the way down. A growing glut of foreclosures tends to undercut the argument that falling prices will reduce supply going forward.
And this is kind of obvious, but bears repeating: A one-month white noise blip in a time series does not a trend make, even in the first derivative. Pretending otherwise provided Karl Case with a nice opportunity to propagate some white noise in the media.
Home prices still falling, but a little more slowly
August 31, 2008
The first hint of good news about housing showed up last week.
But it was tentative.
Home prices are still declining, dropping a shocking 15.9 percent nationally from a year earlier. But the pace of the decline slowed. In other words, the decline is awful, but seemingly not as bad as it has been.
It was enough to catch the attention of Karl Case, one of two people who designed the Case-Shiller Index, a key barometer for watching home prices. With the release of June numbers last week, he said, a three-month trend perhaps suggests that the worst of the housing wreck has occurred.
Others say the bottom may be far off. There is an 11-month supply of homes on the market, twice what’s considered normal. And the way to get rid of homes in a glutted market is to cut prices. Once some of the homes on the market clear out, there will be less competition and prices can stabilize.
Sorry, I should have said “three-month trend.” But Karl neglected to mention that the Case-Shiller index is not seasonally adjusted. Don’t prices normally go up during the summer when more buyers and sellers are in the market, and fall back during the holiday season when the market thins out?
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Case-Shiller doesn’t have seasonality because it looks at the prices of the same homes sold earlier. Radar Logic has seasonality.
Case-Shiller takes lot of care in doing price comparisons over time.
Jas
Case is a shill. We have discussed this here before. Some of the dumbest comments on this disaster can be directly attributed to him. This index may bear his name but he is still a fool.
“…because it looks at the prices of the same homes sold earlier.”
This fact does not preclude seasonal adjustment. The latest data point each month reflects the price of homes that recently sold, regardless of when they sold for the first time.
I think I have a very simple way of telling when the bottom will be. When new home sales equal the total of building permits and housing starts. The data recently released shows housing starts of 965k, building permits of 937k, and new home sales of 515k. So if 1.9 million new homes come on the market in the next year and only half a million get sold it seems like a lot of inventory will be building up.
Save your home
August 31, 2008
One of every 171 U.S. households has received a foreclosure filing in recent months, a record rate. A new book, “Stop Foreclosure Now: The Complete Guide to Saving Your Home and Your Credit” by Lloyd Segal (AMACOM, $19.95), offers valuable information to help you avoid the tragedy of losing your home.
Are we there yet, are we there yet, are we there yet, …?
Alan Mark and Tony Mark of Prudential Malibu Realty recently provided omelets — cooked to order by a private chef — to those agents who made the trek to their new $36-million Broadbeach Road listing. With a salad and pastry bar on the side, agents could order their omelets prepared with 20 different fresh fillings. Spinach with feta cheese, anyone? To quote from the Malibu Assn. of Realtors’ Caravan West weekly bulletin, “This is the beach house of your dreams! . . . And everybody’s favorite omelet bar!” By all accounts, the $1,000 spread was well-attended.
http://www.latimes.com/features/printedition/home/la-hm-caravan30-2008aug30,0,7794339.story
I’ll have a frittata with rye toast and I’ll offer 34.5 million for the house. BTW, do you have any cinnamon fried cakes? Or, I would have made an offer on the property, but their omelet and wine selections were not to my liking. They offered a 2003 B & E Vineyard Merlot instead of a more palatable 2003 Miner Merlot - fools.
I made out with my first boy on that beach.
my old man paid 30k for our rat infested cabin.
four years ago the most expensive home on my old street was 20 million. what’s up with this 23 mill crap?
deep breath, go shopping!
I have a suggestion to improve the quality of information to online home shoppers: Include the entire listing history of asking prices from when a home is first listed through the present, in order to document failed attempts at attracting a buyer through lowering the price. In fact, I suggest laws be passed to require such disclosure, as the time-honored deceptive advertising practice of taking homes off the market then re-marketing them as though they are new listings would best be stamped out.
HOUSING SCENE
LEW SICHELMAN
Online listings turn sour over time
August 31, 2008
…
It’s for these and other reasons that Realtor.com’s Samuelson is leading a campaign to have listings on his site updated every 15 minutes. He also wants every listing “time-stamped” so consumers can see exactly when information was last refreshed.
“This really matters,” he says. “The most sophisticated tools for searching and analyzing listings are only as good as the freshness of the data.”
Samuelson’s goal is to have each of the 909 multiple listing services that feed Realtor.com update their listings once every 15 minutes.
Homeowner fraud exacerbates mortgage crisis
http://www.pe.com/business/local/stories/PE_News_Local_S_cheaters31.45b183a.html
This month, Fannie Mae, the giant government-sponsored enterprise that buys and guarantee mortgages, began enforcing new guidelines that could help stop the practice, called “buy and bail.”
Michael Pfeifer, an Orange County lawyer who specializes in recovering losses from mortgage fraud for lenders, estimated that one-quarter of the “short sales” in this market would fail to meet the criteria of arm’s-length transactions.
A 55-year-old man said he let a house in southern Corona go to foreclosure and bought another in Lake Elsinore, lowering his monthly payments from $5,200 to $2,100. He wanted to remain anonymous because what he did “could be construed as fraud,” he said.
He had seven money orders for $500 apiece made out to himself and asked a friend to sign a rental agreement so he could deceive the lender into believing he had rented out his first house and therefore could afford to buy a second one, he said.
His Christian beliefs told him lying was wrong, and his parents had taught him to pay his debts, he said.
“The only way I can justify it (lying to his lender) is that I think a lot of people made a lot of money selling bad mortgages to anyone who walked in the door,” he said.
Anything can be justified for the purpose of stuffing cash in the pocket. Oh, Lord, the only reson I am stealing is that everyone else is doing it and that’s ok. The new parable: rob from others after you feel you have been robbed. Or the new beatitude: The fraudsters shall inherit more real estate.
I grew up in the city of angles, and world-record attempts were often set there, in terms of vanity.
Everybody wanted to look younger, egged on by the looks of tv weathermen, who seemed to have not weathered much in their quarter of a century on the job, or the aging super-models that would not go silently in the night, or the movie stars that wanted their very own living immortality, vis a vis the scalpel, hypodermic or Heloc…
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European agency warns of possible Botox side effects
Months after US authorities sounded the alarm, European officials are warning of dangerous possible side effects from the wrinkle-smoothing injection Botox, according to a German news report.
The London-based European Medicines Agency had by August 2007 recorded more than 600 cases of negative effects potentially linked to the popular cosmetic treatment, Focus news weekly reported in its issue to be released Monday.
In 28 cases Botox users died.
http://www.breitbart.com/article.php?id=080831112913.4m0opcce&show_article=1
Obama will increase taxes on Big Oil …
“But Palin also pushed through a tax increase on oil and gas producers last year that doubled the state’s energy revenues to more than $10 billion.
That increase was blasted by BP and ConocoPhillips, who cited it a reason they postponed new projects in the state.”
It must be really tough as a Governor…to run a state like Alaska…that has revenue flowing from it’s nose like a snotty little 2 year old. I hear it’s very unpopular… those yearly state rebate checks for every man woman & child, …now if Sarah the Barracuda can just get the “lower 48″ to copy what she has done in Alaska, (with more off-shore drilling)she might get most of Billary’s votes after all.
McSame & McDame: Drill now! It will have an immediate effect on America’s family budget, just in time for a happy Christmas Season in a 124 days.
Like I said…Governor of Alaska..during this economic slow down…very, very difficult job…takes outstanding management skills to DISTRIBUTE $1,000’s of free money to every man, woman, & child.
“Nearly every man, woman and child received $1,654 each in last year’s distribution. This year’s payout is expected to be higher, but it hasn’t been calculated yet. (estimated @ $2,000 each)
But added to this year’s check will be an extra $1,200 from the state’s oil-rich treasury to help offset high energy prices, a factor driving the early distribution.”
Plus, Shrubs stimulus check…
Family of 4:
2,000 x4 Permafrost fund + 1,200 Rebate + 1800 Stimulus= $11,000 per year
(I’m not sure if the 1,200.00 is per family or per adult)
Well, unleaded in Calif… Aug 31st apprx: $3.90
So, how this quote plays out to those in the lower 48 NOT getting $11,000 free money?
“Some villages are paying almost three times the national average for a gallon of unleaded gasoline, currently at $3.74 a gallon according to the Energy Department. The state’s largest city also isn’t exempt. Last week, Anchorage had the highest gas prices in the nation, $4.37 a gallon, among the 7,000 gas stations surveyed, according to a Lundberg Survey.”
http://www.newsminer.com/news/2008/aug/18/alaska-permanent-fund-dividends-be-distributed-ear/
In Labor Day weekend message, Bush says recent signs should give Americans hope on economy
http://biz.yahoo.com/ap/080830/bush.html
He praised the impact of the current stimulus package in language that suggested he remains opposed to another.
“The economic stimulus package that I signed earlier this year is having its intended effect,” the president said. “Many Americans who received tax rebates are spending them. Businesses are taking advantage of tax incentives to purchase new equipment this year. And there are signs that the stimulus package will continue to have a beneficial impact on the economy in the second half of the year.”
Still, despite his optimistic outlook, Bush took care to express sympathy with those grappling daily with pocketbook worries.
“There are families across our country struggling to make ends meet,” he said. “There is an understandable concern about the high price of gas and food. And many Americans are worried about the health of our housing and job markets. I share these concerns about our economy.”
It’s nice of him to share and it’s good to know that things are better than they appear to be.
He’s truly a Mockavelian character…
“…I share these concerns about our economy.”
Shrub: “Laura, is there any left over Wagyu spare ribs?, …those pretzel’s were not very filling, especially without an ice cold beer.”
Besides being Republicans with the lowest “approval ratings” of the American public, Nixon & Shrub will both leave the White House… with one last “free” ride on the Presidential Helicopter.
IKE
Speaking of Ike….
“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid.”
President Dwight D. Eisenhower, l952
I wasn`t talking about Dwight D. Eisenhower
I”m having a beer now laughing about: “we’re near the bottom” & Economist have “officially” located “ground zero” of the housing debacle.
Sometimes you have to imagine another person’s point of view:
From my Uncle in Kansas, he tells it with high drama & a smile
A Kansas lawyer runs a stop sign and gets pulled over by a unseen patrol officer.
He thinks that he is smarter than the cop because he is a lawyer from Manhattan and is certain that he has a better education then any wheat field cop. He decides to prove this to himself and have some fun at the rural cops expense!
Officer says: ” Licence and registration, please.”
Kansas Lawyer says: “What for?”
Officer says: “Ya didn’t come to a complete stop at the stop sign.”
Kansas Lawyer says: “I slowed down, and no one was coming.”
Officer says: “Ya still didn’t come to a complete stop.
Kansas Lawyer says: “What’s the difference?”
Officer says: “The difference is, ya have to come to complete stop, that’s the law.”
Kansas Lawyer says: “But I slowed way down…I looked real carefully in all directions.”
Officer starts writing in the ticket book..
Kansas Lawyer says: “looked here, I slowed way way down…I looked real carefully in all directions…I almost stopped”
Officer keeps on writing…
Kansas Lawyer (extremely frustrated) says: “I almost stopped…I slowed way down. I looked to make sure it was clear…I..I..”
Suddenly… the Officer grasps the man by the scruff of his neck
quickly taking out his baton…he chokes up on the handle and starts rapidly rapping like hell on top of the of the lawyer head and says,
“Now…do ya want me to stop, or just slow down?”
http://palmsprings.craigslist.org/apa/821479983.html
6BD house never lived in…ONLY $2,200 month for 5 FIVE yr lease.
Anyone up for it, if its real. I could pay half.
I have had interesting roomies before, so why not now!
$2,200.
Check out photos. I could wear my Scarlet O’hara Drapery Dress and hat as seen on Carol Burnett’s skit.
Looking to respond to this ad.
Hurry!