The Housing Bubble

Washington Post:

“NBC Universal made the first of potentially several rounds of staffing cuts at The Weather Channel (TWC) on Wednesday, axing the entire staff of the “Forecast Earth” environmental program during the middle of NBC’s “Green Week,””

Global Warming has frozen over. Fitting intro to the “Green” presidency. What is the next big media driven political hoax? We can’t live without one.

Gladwell on CNN: The single most important variable in determining whether a plane crashes is not the plane, it’s not the maintenance, it’s not the weather, it’s the culture the pilot comes from. Planes are flown safely when the pilot and co-pilot are in open and honest communication. And in cultures where it is difficult for a junior person to speak openly to a superior, you have lots of plane crashes.

http://www.cnn.com/2008/SHOWBIZ/books/11/21/malcolm.gladwell/index.html

Da change you can believe in, the deflationary boogyman is keeping the FED awake at night. What else can they do but keep on pumping money into the system, that’s all they know.

Obama says drafting bold economic stimulus…
CHICAGO (Reuters) - President-elect Barack Obama said on Saturday that he was crafting an aggressive two-year stimulus plan to revive the troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

Obama gave a bleak assessment of the economy in his most detailed comments on the subject since winning the November 4 election and just a day after U.S. stock markets rallied on his apparent choice of Timothy Geithner, president of the New York Federal Reserve, as Treasury secretary.

“If we don’t act swiftly and boldly, most experts now believe that we could lose millions of jobs next year,” Obama said in a weekly radio address.

“We now risk falling into a deflationary spiral that could increase our massive debt even further,” he said.

http://www.reuters.com/article/politicsNews/idUSTRE4AL24X20081122

You are Right on this one. Its a confidence game. We show you our ratings book and our demographic profile and our rates are slightly below our competitors.

That’s sales, getting them to believe in the “book” and the sales staff is indoctrinated into that mantra.

America has gone through the last decade just refusing to hire anyone who can think outside the box or has any critical thinking skills. And it shows.

Also Palmy Your local cable company pays the cable TV station anywhere from 1 cent to maybe 25 cents per month per subscriber That’s why cable rates are so high YOU are paying for those 500 channels each month

So if Bright house can get on multiple cable systems with say 5,000,000 cable subscribers at 2 cents per month that is $100K a month $1.2 million per year.

Now what if they got 3 cents or 10 cents?

————————————————-
When are advertisers going to wise up and realize that the media numbers they are presented with are probably totally skewed like a Moody’s rating?

Congratulations to the All Blacks, winners of the Rugby League World Cup…

For many of you, this might be your very 1st Haka:

http://www.youtube.com/watch?v=cle20lQg0Qs

I am off this morning to go play golf. Last weekend I was talking to one of the girls who works at a small local bank. She said there were a few months when they were taking back a million dollar house a day! And this is a small bank. She also told me people with $600 dollar a month car payments were coming in to get their home load modified. Yea - right, you can’t keep the Caddie and get a lower house payment.

Just received the first monthly payment from the Failed Florida Flippers. These are people who “bought” a $68K 2004 3BR 2BA house from Deutsche Bank, using a $54,400 loan from me. Their business plan was, rehab in one week, advertise one week, sell to the highest bidder at the end of 2nd-weekend open house. But they set a minimum bid of $79K (Deutsche Bank’s original asking price), and the dozen open house lookers failed to bid. Duh. My thinking is, I’ll take the house before I’ll take a “short sale.” One HBBer said it’s no fun being long-distance LL. I wouldn’t be LL, I’d spend winters in it. Anyway, if I don’t raise a ruckus maybe they’ll just keep on making the payments !?

Got to love classic bipolar genius as a contrary indicator.

In April 2008 AP reported:

“President Mahmoud Ahmadinejad told an oil and gas exhibition in Tehran on Friday that he thought the commodity still had to “discover its real value,”"

“Ahmadinejad called the U.S. currency “a handful of paper” without any global support.

Iran has stopped using the U.S. dollar in its oil transactions with the outside world, switching to currencies such as euro.”

Ahmadinejad made his move about as close to the 1.60 exchange rate peak as one can get. Now the trade is in the 1.25 range. This is the man to watch.

In the early 1980s oil peaked at over $60 and gold $700. Oil fell back to $20 for decades and gold to $350, eventually slumping to $250.

November 2008; After oil falls to $50 from the peak of $147, Ahmadinejad converts financial reserves into gold “to avoid future problems”.

As FPSS would say: Come on Ahmadinejad, try to keep up!

Mercury News

San Jose property owner Salvador Ruiz paid a company $8,950 to renegotiate the terms of his loans on two houses four months ago, but he says they did nothing and haven’t returned his money.

“They tell me everything’s OK, but they haven’t done anything so far,” said Ruiz, who is filing a complaint with the California Department of Real Estate.

With non-profits and banks overwhelmed by the demand for their services from people like Ruiz, an army of consultants has sprung up in San Jose and around the state offering homeowners help getting banks to modify their loans — for a price.

“It’s a relatively new phenomenon,” said California Department of Real Estate spokesman Tom Pool. “It’s becoming an issue. As always, people get very clever when they see an opportunity.”

http://www.mercurynews.com/business/ci_11034787

Bear market indeed!’

Saw 4 of em’ just off the road yesterday, playing the crowd.

From corrupt closing agents to criminal condo flipping, Florida has held the top spot for mortgage fraud in the nation since 2006, according to the FBI.

An April FBI report warns the depressed housing market provides “an ideal climate” to create more victims.

Here’s an example: After falling behind on their mortgage, Henry Gribensk, 56, and his wife Rhonda Schnitzler-Gribensk, 53, received a flood of mailers promising help with foreclosure. One, from a company called Florida Housing Council, seemed promising, Gribensk said.

The company’s owner, Jack Moussa, went to their Loxahatchee home with a stack of documents, which the couple hastily signed, thinking Moussa would help them restore their credit and avoid foreclosure. Instead, the contract transferred their property to a trust controlled by Moussa, making the Gribensks renters and subject to eviction, they allege in a lawsuit.

http://www.sun-sentinel.com/news/nationworld/sfl-flpmortgage1123pnnov23,0,1207601.story

The threat of the sort of massive spates of mortgagee sales seen in the United States is remote. There are a couple of good reasons for that.

Firstly, New Zealanders are good at paying their mortgages on time.

There’s a structural reason for this. In New Zealand, the bank essentially has a right to chase a borrower down for repayment, regardless of where they live.

It’s not possible to simply decide to abandon a big loan and leave it with the house. Returning the keys to the bank in New Zealand is not a solution.

But it is in the US. About half of the states in the US are so-called “non-recourse” states where keys can be handed back to the bank and the borrower can walk away scot-free.

This has been a major factor in the mortgagee sales or “foreclosures” that swept many states late last year and through this year.

California, Nevada and Colorado have been particularly hard hit.

All are “non-recourse” states.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10544519&pnum=0

Citigroup courted disaster when it lost sight of risk

By Eric Dash and Julie Creswell
NEW YORK TIMES NEWS SERVICE

In September 2007, with Wall Street confronting a crisis caused by too many souring mortgages, Citigroup executives gathered in a wood-paneled library to assess their own well-being. There, Citigroup’s chief executive, Charles Prince III, learned for the first time that the bank owned about $43 billion in mortgage-related assets.

Contrarian indicator noted: When financial planners are recommending short funds to Joe Investor, is it about the right time to get long?

GAIL MARKS JARVIS
Investment options for a bear market

November 23, 2008

First, stock market losses left a sting. Now, after a nearly 50 percent decline, the losses feel like an open wound.

That’s especially true for retirees who depend on their savings for living expenses. They’ve watched in horror as even portfolios light on stock mutual funds have lost 20 percent or more.

“I look at their portfolios and I can’t believe my eyes,” said Cathy Curtis, an Oakland financial planner. When she talks to some clients, she said, “I hear their voices quavering, and I know they aren’t sleeping.”

So Curtis, like other planners seeking to soothe clients, has been reaching for something to dull the pain while she urges clients to wait for their stock mutual funds to heal.

The answer: a small dose of a mutual fund that shorts stocks, betting on them to fall. In contrast to the usual stock mutual funds that people buy and hold for the long term, the short funds are designed to make money when the stock market gets ugly. The worse the decline in the stock market, the more money the investor makes in the funds.

But Davis sought a brighter future. She graduated from beauty school, landed a hair stylist job in Ankeny, raised her children to adulthood and saved $3,000, enough to finally close on her own home. It was an exciting day. Davis’ daughters helped move into the Regency-built Meadow Vista Townhomes in Altoona, closer to her work.

She hung a wooden plaque on the wall, the carved letters spelling a single word: Trust.

Three years later, Davis is not far from taking that word down, literally and figuratively. For Davis and thousands across the country, the dream of home ownership is a nightmare as they face foreclosure, their trust waning. In Iowa, roughly 7 percent of mortgages are past due or in foreclosure.

Davis, 53, says she didn’t fully understand the terms of her contract and is three months behind on her mortgage payments. She is begging lenders to work with her. So far they won’t and it could go to court, where her home could soon be one of a startling number foreclosed for sheriff’s sale.

http://www.desmoinesregister.com/article/20081123/NEWS/811230325/-1/ENT05

“Citigroup’s $2 trillion of assets dwarfs companies such as American International Group Inc. that got support from the U.S. government this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.

“Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”

The Fed is sure doing a great job overseeing the banking system. If only we could get one of their top guys into Treasury, they could really go to work on fixing things.

At $300,000 per house, $150,000,000 would buy 500 foreclosures.

I personally don’t understand how buying up foreclosure homes serves a public purpose. But then I passed this Civics Quiz with a score above 90 percent, so perhaps I see the world differently than many pols.

NEWS & NOTES ABOUT REAL ESTATE
Front porch

November 23, 2008

Report supports land-banking program

The Brookings Institution has released “Land Banking as Metropolitan Policy,” a report calling for federal support for land banking programs that reduce blight caused by home foreclosures.

Land banking is the process by which local governments acquire surplus properties and convert them to productive use or hold them for long-term public purposes.
…
The San Diego Reinvestment Task Force, which was formed to improve affordable housing opportunities and support economic development in low-and moderate-income areas, has endorsed a broad foreclosed-home strategy. In part, it calls for creating a land bank that would require as much as $150 million in public and private funds to succeed, said Barry Schultz, CEO of the nonprofit San Diego Capital Collaborative.
…
Historically, land banks have been able to acquire properties where real estate values are greatly depressed. They leverage public liens to gain control of land at little or no cost. Creating a land bank here, where many foreclosed homes still have substantial value, would be much more costly, officials say.

– EMMET PIERCE

This is just awful. What kind of a world would it be if our prized athletes had to take a pay cut? They do so much for society.

http://tinyurl.com/5lqpzs

I saw a man standing on a street corner yesterday. Busy intersection. Holding a sign that said “will work for food.”

My first such siting. But I expect it won’t be the last. How sad…

1989: Fall of Communism

2009: Fall of Consumerism
======================

Consumerism replaced Communism, but what replaces Consumerism?

Sounds like either Citigroup will need to be rescued, or else the markets will have to face another Lehman-style volatility tsunami. The question which puzzles me the most is why they can’t just let private investors buy pieces of Citigroup until it is no longer too-big-to-rescue?

Business
Frantic effort to prop up global titan
4:00AM Monday Nov 24, 2008
People outside Citigroup headquarters on Park Ave. Photo / AP

Citigroup executives today will continue working with Wall St regulators and American Treasury officers to shore up the stricken financial giant and prevent fallout from hitting global markets this week.

sltrib dot com

Anti-Federal Reserve rally attracts more than 100

The Salt Lake Tribune

Diana Jorgensen knows that U.S. Rep. Ron Paul, a Texas Republican and former presidential candidate, might seem “kooky” to some people because of his political opinons. But, when it comes to his idea of repealing the Federal Reserve Act, she agrees “this is a valid, good idea.”
“[The Federal Reserve system] is playing with a lot of people’s lives,” said Jorgensen, a 30-year-old Salt Lake City mom and college student. “They’re stealing from us.”
On Saturday afternoon, Jorgensen, along with more than 100 people, including children, rallied in support of Paul’s legislation to abolish the Federal Reserve. The crowd filled a sidewalk in front of the Federal Reserve Bank of San Francisco at the corner of 100 South and State Street in Salt Lake City.
The event was one of about 40 similar rallies scheduled Saturday nationwide, including New York City, Los Angeles, Miami and El Paso, Texas. In June 2007, Paul introduced the Federal Reserve Board Abolition Act (H.R. 2755) to abolish the Board of Governors of the Federal Reserve System and each federal reserve bank. It was referred to the House Committee on Financial Services.
Many Utah supporters learned about the rallies through a Web site called http://www.endthefed.us. (The site says that on Nov. 22, 1910, a group of bankers met to create what is now the Federal Reserve System.)
Utah groups at the rally included the Utah Minuteman Project and Campaign for Liberty.
Ben Nilson, a 28-year-old
Advertisement
corporate salesman, drove about 90 miles from Logan to lend his support. He and others believe many of the country’s problems, especially the ongoing economic crisis, stem from not following the Constitution and implementing the Federal Reserve System.
“I’m hoping simply that this [rally] awakens people to what’s happening,” Nilson said. “People don’t know [the constitution] is being abused.
Under a bright sky and bundled in coats, protesters stood holding homemade signs that read “Save the Ink! Abolish the Fed!,” “Support H.R. 2755″ and “1913 Screw Job,” referring to the year the Federal Reserve Act became law.
Chaunce Shrewsbury, an 18-year-old Salt Lake City resident, said he started studying about the system a year ago when he learned about Paul’s presidential platform. He hopes lawmakers consider H.R. 2755.
“I care about the future of America,” he said.

It is understood that the Federal Reserve and the US Treasury have now approached all the major US banks – including Morgan Stanley and Goldman Sachs – to ask whether they would be willing to support Citigroup in the unlikely event of its collapse.
…
A worst-case scenario for Citigroup would involve some form of government guarantee of deposits, or a wholesale government takeover – most likely through a conservatorship similar to that undertaken with Fannie Mae and Freddie Mac, the mortgage lenders, earlier this year.

Telegraph

Fab4Ever…

For the benefit of money kiting
There will be a show tonight of trampling
The Henry Paulsons will all be there
Late of Goldman Sachs Fare - what a scene!
Over man and horses hoops and garters
Lastly through a hogshead of real fire!
In this way the 401k will be challenged by the world!

The celebrated 401K
performs defeat on Sunday at Bernankegate
The Henry Paulsons will dance and sing
As money kiting goes about the ring - don’t be late!
Messrs. B. and H. assure the public
Their production will be second to none
And of course Henry The Horse dances default!

The lend begins at ten to six
When Mr. B. performs his tricks without a sound
And Mr. H. will demonstrate
Ten resets he’ll undertake on solid ground
We’ve been some days in preparation
A splendid time is guaranteed for all
And tonight money kiting is topping the bill

http://www.youtube.com/watch?v=LGUB9Zc2Yos

Nov. 23 (Bloomberg) — Congress will send President-elect Barack Obama an economic stimulus package the day he takes office Jan. 20, two Democratic lawmakers said today.

Senator Charles Schumer of New York told ABC “This Week” today the package will be between $500 billion and $700 billion.

The Austrians Were Right
November 20, 2008

Madame Speaker, many Americans are hoping the new administration will solve the economic problems we face. That’s not likely to happen, because the economic advisors to the new President have no more understanding of how to get us out of this mess than previous administrations and Congresses understood how the crisis was brought about in the first place.

Except for a rare few, Members of Congress are unaware of Austrian Free Market economics. For the last 80 years, the legislative, judiciary and executive branches of our government have been totally influenced by Keynesian economics. If they had had any understanding of the Austrian economic explanation of the business cycle, they would have never permitted the dangerous bubbles that always lead to painful corrections.

Today, a major economic crisis is unfolding. New government programs are started daily, and future plans are being made for even more. All are based on the belief that we’re in this mess because free-market capitalism and sound money failed. The obsession is with more spending, bailouts of bad investments, more debt, and further dollar debasement. Many are saying we need an international answer to our problems with the establishment of a world central bank and a single fiat reserve currency. These suggestions are merely more of the same policies that created our mess and are doomed to fail.

At least 90% of the cause for the financial crisis can be laid at the doorstep of the Federal Reserve. It is the manipulation of credit, the money supply, and interest rates that caused the various bubbles to form. Congress added fuel to the fire by various programs and institutions like the Community Reinvestment Act, Fannie Mae and Freddie Mac, FDIC, and HUD mandates, which were all backed up by aggressive court rulings.

The Fed has now doled out close to $2 trillion in subsidized loans to troubled banks and other financial institutions. The Federal Reserve and Treasury constantly brag about the need for “transparency” and “oversight,” but it’s all just talk — they want none of it. They want secrecy while the privileged are rescued at the expense of the middle class.

http://www.house.gov/apps/list/speech/tx14_paul/statement_11_20_08.shtml

Hey FPSS, I’ve got a guess for why you’re expecting 1983 price-levels. Is that when the stock market started surging to unsustainable levels? In other words, when this increasing-leverage-cycle began.

Looking at the long-term S&P-to-GDP curve, there are LONG periods when it is relatively flat in the troughs (40-55, 73-83), and 83 is the last time it started going through the roof.

Think we’ll go back down to 1983 levels for the S&P as well (e.g. 40% of GDP)?

This just in from Atlanta. It seems the Georgia State School Superintendent and her husband have filed for bankruptcy due to the husband’s failed homebuilding business. This, in spite of the fact the Superintendent won $1 million on, “Are You Smarter Than a Fifth Grader?”

It seems she still wants to go through with a plan to donate her game show winnings to charity. Wonder what her family’s creditors and the bankruptcy judge will have to say about that?

Bloomberg Video: Yamada Sees U.S. in `Structural Bear Market’ for Years

http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vOXOY5FCj4gg.asf&vCat=/av&RND=424131945

Tried posting Louise Yamada Bloomberg video. Snagged by filter. Says structural bear market lasting 13 years; S&P could go to 600; markets need several years to repair.

Mendocino coast needs 56+ million dollars…

http://tinyurl.com/68nbnk

…for these 40 or so houses to sell.

There are no jobs in these boonies locations, or not many, yet asking prices are more than in big cities in California. Just continues to amaze me.

Can’t get it up anymore?

Try:

Lie-agra

The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting revolution in America, food riots and tax rebellions - all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.
http://www.infowars.com/?p=5938

Citibank may be seeing withdrawals from worried depositors. This is an e-mail it’s been sending out:

Good news! Citibank is participating in the FDIC’s Temporary Liquidity Guarantee Program. Through December 31, 2009, all of your non-interest and interest bearing checking deposit account balances are fully guaranteed by the FDIC for the entire amount in your account. *

** The deposit insurance coverage limits refer to the total of all deposits that an account holder (or account holders) has at each FDIC-insured bank.

Thousands pick up free vegetables on Colo. farm

PLATTEVILLE, Colo. - A farm couple got a huge surprise when they opened their fields to anyone who wanted to pick up free vegetables left over after the harvest - 40,000 people showed up. Joe and Chris Miller’s fields were picked so clean Saturday that a second day of gleaning - the ancient practice of picking up leftover food in farm fields - was canceled Sunday.

“Overwhelmed is putting it mildly,” Chris Miller said. “People obviously need food.”

She said she expected 5,000 to 10,000 people would show up Saturday to collect free potatoes, carrots and leeks. Instead, an estimated 11,000 vehicles snaked around cornfields and backed up more than two miles. About 30 acres of the 600-acre farm 37 miles north of Denver became a parking lot.

Came across this in The People’s Daily (English):

http://english.peopledaily.com.cn/90001/90776/90884/6538651.html

Although the yuan is appreciating against the dollar and other currencies, the lack of full convertibility along with the huge Chinese dollar reserve holding are a big factor in helping to prop up the dollar.

China is in a powerful but difficult position. In the long run, it will surely go to a full floating exchange rate AND it probably would like to increase its gold reserves/reduce its dollar holdings. It knows that if it does either now that both its domestic level of employment and the world economy could suffer, and it would also cause the dollar to fall, damaging the value of its reserve position. But if there is an inflationary catastrophe in the dollar before it acts, it will be severely damaged.

Ok, so far Citi has consumed over 75 B of private equity, 25 B of government infusions and god knows how many billions of temporary Fed financing. On the top of that they will now get 100 B. For 200B of capital, you could start a new citigroup (2 Trillion) with adequate capital margins and fractional reserves.

This is insanity!!!

Have you wondered why stocks have recently been continuously tanking? Look no further…

Hedge Funds Reduce Stock Holdings
By Jeff Kearns
Bloomberg News
Sunday, November 23, 2008; Page F02

Hedge funds cut stock holdings by almost two-thirds from a year ago, signaling that they are less willing to take risks amid tighter credit and almost $1 trillion in write-downs and losses, Goldman Sachs Group said.

Net holdings of equities decreased to 17 percent from 47 percent a year ago, David Kostin, who leads Goldman’s New York-based portfolio strategy team, wrote in a note.

“Hedge funds may have returned closer to their roots as ‘hedged’ investors, less dependent on market direction to produce returns, migrated away from the levered long strategies that many funds pursued during the upward-trending market of 2002 to 2006,” Kostin said.

PLATTEVILLE, Colo. - A farm couple got a huge surprise when
they opened their fields to anyone who wanted to pick up
free vegetables left over after the harvest - 40,000 people
showed up. Joe and Chris Miller’s fields were picked so
clean Saturday that a second day of gleaning - the ancient
practice of picking up leftover food in farm fields - was
canceled Sunday

“Overwhelmed is putting it mildly,” Chris Miller said.
“People obviously need food.”

She said she expected 5,000 to 10,000 people would show up
Saturday to collect free potatoes, carrots and leeks.
Instead, an estimated 11,000 vehicles snaked around
cornfields and backed up more than two miles. About 30 acres
of the 600-acre farm 37 miles north of Denver became a
parking lot.

Some people parked their cars along two nearby highways to
take to the field with sacks, wagons and barrels.

“Everybody is so depressed about the economy,” said Sandra
Justice of Greeley, who works at a technology company. “This
was a pure party. Everybody having a a great time getting
something for free.”

Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, has described the handling of the bailout as “borderline criminal” because of this and other problems. Klein spoke to Amy Goodman of Democracy Now! on Monday to explain her accusations.

“We were all reassured that there was going to be transparency, accountability, legality,” Klein stated. “But now we’re finding out that, in fact, Henry Paulson has achieved his original goal by stealth, because there is no accountability, and lawmakers are very hesitant to challenge this. … Essentially, what the Bush administration has done is said, ‘We dare you to challenge us and be responsible for the Great Depression.’”

Klein sees three areas of borderline illegality. The first is that rather than being used to get banks lending again, the bailout money “is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers.”

The second is that, without Congressional authorization, “the Treasury Department pushed through a tax windfall for the banks, a piece of legislation that allows the banks to save a huge amount of money when they merge with each other. And the estimate is that this represents a loss of $140 billion worth of tax revenue for the US government.”

The third problem, which dwarfs the $700 billion bailout itself, is that “there’s another $2 trillion that’s been handed out by the Federal Reserve in emergency loans to financial institutions, to banks, that actually we don’t really know who they’re handing the money out to, because, apparently, it’s a secret.”

“If the Fed has accepted distressed assets as collateral in exchange for these loans,” stated Klein, “there’s a very good chance the taxpayers aren’t going to be getting this money back. … So that’s why we’re calling this the ‘trillion-dollar crime scene’ or the ‘multi-trillion-dollar crime scene.’”

Klein argued that Congress should be challenging violations of the bailout legislation, but instead “what they’re saying is, we can’t afford to enforce the law … that somehow, because there’s an economic crisis, legality is a luxury that Congress can’t afford.”

“I’m quite concerned,” Klein stated, “that what we’re seeing from Obama’s team is an accepting of this logic that they need to give the market what it wants, which is continuity, smooth transition, which is really just code for more of the same. … I think we should question all of it. Across the board, I think the assumptions are faulty.”

“The horror…the horror.”

“Bernanke says he erred in gauging mortgage fallout”

http://www.salon.com/wires/ap/business/2008/11/23/D94KRSM80_bernanke_meltdown/index.html

Repeat after me.. Stupidity is universal..
————-
Four Indian realtors lose $33 bn in 8 months: Forbes

Press Trust of India / New York November 21, 2008, 20:16 IST

Hit by the turmoil in equity and property markets, India’s four richest realtors have lost nearly $33 billion (over Rs 1,50,000 crore) since March this year, with the richest of them, K P Singh of DLF, alone accounting for about two-thirds of it, Forbes magazine said.

Listing out the losses suffered by richest property owners in Asia in the ongoing turmoil, in a new report Forbes has named DLF’s Singh, Unitech’s Ramesh Chandra, Chandru Raheja of Mumbai-based Raheja group and Housing Development & Infrastructure’s (HDIL) Rakesh Wadhawan among the eight realty barons from the region.

While Singh has lost $22.2 billion alone since March, Chandra has seen an erosion of about $8.6 billion in his fortune during the same period, when Raheja and Wadhawan have lost about $1.5 billion and $500 million, respectively.

In the latest list of India’s 40 richest people published by Forbes earlier this month, K P Singh was ranked at the eighth spot, while Chandru Raheja and Ramesh Chandra were placed at the 20th and 27th positions, respectively.

Clue;
that was funny reading your little comments.

I just want to say I had my first regular weekend since summer turned into the new America. Where did the time go?
Looking forward to the “demolition team” propping up tomorrow.

I thought the toxic SIV superfund plan was supposed to form a holding pond to hold Citi’s troubled assets for an indefinite period of time. Is the new plan to force future generations of taxpayers to hold the toxic asset pool unhappily ever after?

Financial Times
Citi considers ‘bad bank’ plan
By Henny Sender and Greg Farrell in New York and Andrew Ward in Washington
Published: November 23 2008 20:37 | Last updated: November 23 2008 23:43

Citigroup is working on a plan to stabilise the bank that is expected to include transferring tens of billions of dollars in distressed assets to a government-owned vehicle for at least several years, people familiar with matter said on Sunday.

By massive overbuilding of McMansions, this industry and its boosters burned the chair legs out from under their future prosperity. Now it is up to the taxpayers to respike the punchbowl in order to drive up home prices and encourage them to add more vacant homes to the extant glut.

Wall Street Journal
NOVEMBER 24, 2008
Builders Make Plea for Federal Aid
Critics Warn That Propping Up Housing Demand Will Only Prolong Market’s Woes
By NICK TIMIRAOS

Struggling U.S. auto makers left Washington empty-handed after weeks of pleading for a handout, but that hasn’t deterred home builders from stepping up to lobby Congress for help.

But any federal assistance would require policy makers to figure out how to stimulate demand for housing — the problem at the root of the global financial meltdown — without artificially propping up home values.

Some economists fear federal intervention to help homeowners may instead encourage more overbuilding. Above, unfinished homes in Carlsbad, Calif.

The builders’ lobby is ramping up its sales pitch for a $250 billion stimulus package called “Fix Housing First,” arguing that financial markets won’t recover until home prices stop falling. They are calling for a generous tax credit for home purchases and a federal subsidy that would lower a homeowner’s mortgage rate.

Wall Street Journal
NOVEMBER 24, 2008
Summers Offers Big-Picture Advice to Hedge Fund
By SCOTT PATTERSON

In 2006, Lawrence Summers resigned as president of Harvard University and took a position as a part-time managing director with D.E. Shaw Group, a New York hedge fund with a reputation as one of the most secretive trading outfits in the world.

D.E. Shaw is known for using sophisticated computer-based quantitative strategies to make money on fleeting movements in the stock and bond markets. The fund has been a top performer, returning 15% to 20% a year over the long term, and in two decades has grown into a global powerhouse. But like many funds, it has taken hits in the credit crisis.
…
The hedge fund has been embroiled in the credit crisis that has rocked Wall Street and the global economy. In August 2007, quantitative hedge funds suffered heavy losses, an early sign of trouble. People familiar with D.E. Shaw say its quantitative-trading strategies suffered large losses during the rout, though many recovered later in the year. The fund also weathered large losses during the financial crisis of 1998.

In March 2007, Lehman Brothers, the investment bank that filed for bankruptcy-court protection in September, purchased a 20% stake in D.E. Shaw. After Lehman’s collapse, D.E. Shaw, along with a number of other hedge funds not owned by Lehman, fought to retrieve assets held within the bank’s prime-brokerage units.

Earlier this year, D.E. Shaw launched a unit to invest in distressed asset-backed securities, such as subprime mortgages.

When do we start start hoarding canned food? Me thinks a gun purchase is on the horizon.

Boom turns to gloom as crisis hits Dubai
Fri Nov 21, 2008 9:12am EST
By Thomas Atkins - Analysis

DUBAI (Reuters) - The seaside emirate of Dubai shifted into crisis mode this week as its breakneck building boom stalled, its lending bonanza evaporated and the government pondered wider steps to rescue banks.

Dubai — self-styled bling capital of the Middle East, nightclub hotspot for the teetotalling Gulf and home to the world’s tallest building and biggest mall — has gone pear-shaped.

“It’s gotten pretty ugly out there,” analysts at Nomura Investment Banking wrote in a note this week, describing Dubai’s property market as “a full-scale frenzy in which speculation went largely unchecked until it was very late.”

The result may be a new business model for the emirate, one based less on debt and speculation.