Bits Bucket For March 6, 2009
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March 5, 2009, 2:54 pm
Can Ruth Madoff Keep the Penthouse?
NYTimes-Peter J. Henning, a professor at Wayne State Law School, occasionally writes as a guest blogger for The Deal Professor. Mr. Henning specializes in issues related to white-collar crime and is a former editor of the White Collar Crime Law Prof Blog.
Lawyers for Bernand L. Madoff, the alleged Ponzi scheme operator, have asked that assets worth almost $70 million be exempt from his case because they are actually owned by his wife, Ruth, and have no connection to the fraud. While numerous victims were destroyed financially by the multibillion-dollar scheme, if Mr. Madoff’s legal team gets their way, Ms. Madoff would be allowed to keep the apartment in New York’s Upper East Side, $45 million of municipal bonds, and $17 million in cash held at Wachovia bank.
This has to be a better joke than any ever told by Henny Youngman.
The assets appear to be in Ms. Madoff’s name, and in a legal filing, Mr. Madoff’s lawyers claim that the money is distinct from the Ponzi scheme that prosecutors say he operated for years before confessing in December 2008.
However, simply putting assets into another person’s name, or giving them as a gift, does not necessarily shield them when they are the proceeds of criminal activity.
The government has not yet filed a complete set of criminal charges against Mr. Madoff, and the current deadline for seeking an indictment is March 11. Federal prosecutors can pursue criminal asset forfeiture under a range of statutes that could authorize the seizure of the assets claimed by Ms. Madoff if they are considered to be the product of his crimes.
I seriously hope this prosecution isn’t going to end up another trial of the century farce. Apparently, you can disappear 50B$ in investments without trading a share, and mail millions more out of your 45M$ apartment in violation of good taste if not your bail.
If this prosecution goes totally wrong, he probably won’t even be later charged with the “assisted suicide” of his wife. How high up is that 45M$ apartment?
Stolen property never acquires title. I learned that in my 9th grade civics class.
There are prior cases where ponzi scheme operators took people for $13 million dollars, and rapidly found their way into a life sentence. All gifts were sought out and confiscated. I wonder how the small time guys feel sitting in jail on life sentences watching the big time operators sit free.
Those guys were probably convicted before commencement of their life sentences.
It was the same strategy used by Neil Bush when Silverado Savings and Loan collapsed during the 1980s to prevent the FDIC from collecting the civil court verdict against him. You can’t argue with success!
If they haven’t already, they ought to seize his passport, too.
Well firstly, WHERE exactly did Mrs…. Madoff acquire HER assets? So if I rob a bank and then give the money to my wife she should be allowed to keep that money because she didn’t steal it directly? Perfect! Sign me up.
That aside guys, the “$50 Billion” ( as I have long suspected ) has come into serious question. Auditors now feel that Madoff himself greatly inflated those numbers based on fictitious non-existing “profits”. Harvey Pitt puts the number closer to 17 bil.
He’s “negotiating” a settlement with criminal prosecutors.
Are the prosecutors actually negotiating some kind of plea agreement, or are thy just sitting back and saying “Yeah, right…..”
Just once I wish someone prosecuting one of these jerks would choose principle over expedience. Letting this guy or his direct family walk away with ANYTHING will just encourage more of the same behavior.
Just like a union shop, once you cut some “slack” on the rules, you have to be prepared to let EVERYONE do it.
And hers!
Sounds like Ms. Madoff is an acomplice, trying to hide his ill gotten gains. Charge her too.
NO, NO, and HELL NO.
Hope that answers your question about Mrs. Madoff
In the Duke Cunningham bribery case his wife Nancy tried to make the same argument in order to keep her financial share of their Rancho Santa Fe home. Because the home was bought with ill-gotten gains, her argument didn’t fly.
LOL on the Las Vegas housing market… all of those foreclosures are going to turn into second homes for folks thousands of miles away. Easy break-in targets.
http://www.nytimes.com/2009/03/06/greathomesanddestinations/06vegas.html?hp=&pagewanted=all
calwatch,
Interesting to note that ALL 27 sales Robin Camacho had in 2008 were ALL foreclosures! Ah… nothing like sharing the American Dream huh?
Mr. Bienenfeld said. “For those who can afford to hold on, Las Vegas isn’t going anywhere. It’ll be back.”
Oh man, I don’t think there a city in the U.S. that is easier for me to imagine disappearing into nothing, a ghost town.
It’s in the middle of the desert. Without cheap oil, without abundant electricity (read A/C), without water (being drained from the Colorado) this city shrivels up and blows away.
Bugsy’s dream blows away
That’s what Harry Bienenfeld, 64, of Old Brookville, N.Y., did last year when he bought a 3,200-square-foot, three-bedroom, three-bathroom unit with two terraces for $1.055 million at Turnberry Place,
“When you stay in these hotels, you always feel the pressure to meet your minimums,” said Mr. Bienenfeld, a retired commodities trader who said the last straw was a visit to the Bellagio when he was charged more than $1,000 a night for his room upon checkout because he hadn’t played enough.
————————————–
So he could spend 1000 nights at $1000 a night for the same price as his condo. And this of course doesn’t even include the HOA fees and taxes which have to be at least $1000 a month.
If Bernard Madoff’s wife never had any other job than cooking her husband’s books, and if her claim of inheritance amounted to $28,000 worth of stock (which she allegedly gave to her sister), do any of us beliveve for a minute she is entitled to any stolen millions to perpetuate her opulent lifestyle?
Sanity??
I’m trying to have faith in the justice system on this. Please don’t screw this up. Not now.
It wouldn’t surprise me if she was the real brains behind the operation and Bernie was a cad.
What Bernie really is…is a distraction. One of many, to avert attention from the real show.
If anyone on this board entrusted the majority of their savings to a single entity, let alone person, well - don’t expect others to protect you from yourself. Although DC is into that kinda thing.
Bugsy’s dream blows away. Hmmmmmmmm post is lingering…
RE: If Bernard Madoff’s wife never had any other job than cooking her husband’s books, and if her claim of inheritance amounted to $28,000 worth of stock (which she allegedly gave to her sister), do any of us beliveve for a minute she is entitled to any stolen millions to perpetuate her opulent lifestyle?
Only the small people have to obey the law*.
and pay taxes…
Hi folks, LTNS. I just want to congratulate everyone here who successfully predicted what is happening now. I’m proud to say I was here and played some part in it, however small.
We all deserve a lot more credit and recognition, we were truly way ahead of our time, and by posting on this blog, made some attempt to alert others and make a difference.
Kudos to all and Ben for putting it here,
SR aka Mark.
Gov’t say US unemployment has jumped to 8.1% in Feb.
Wow…and everybody in America has big debt and big GUNS
I’m a relative late comer to the blog, having found it in Sept/Oct 2007. Before that, finding other bears had been very difficult. It certainly gelled my thoughts on the economy that I had pieced together from other sources. Because of assertions made here I switched my assets to treasuries well over a year ago, which has been some comfort.
Participating in this blog and others has made me much more confident in arguing with the herd of permabulls that wanted to marginalize me as a kook. That herd has thinned to virtual non-existence.
My friends are still amazed that I knew so long ago.
I want to brag now.
I saved 3 people at work from the stock market, and 1 person from my old job from the housing market.
I am a fun person to be friends with. Ha.
Big V. At that investment seminar for over 75’s Tuesday, the woman around our table told me I was so informative. YIKES>
Most of the time I learn it all from youse guys.
Too funny - I saved three at work from themselves in the stock market. The number was four but that one individual capitulated to a financial adviser who suggested that “kook” at work (me) was way off base. $200,000.00 losses later, that same individual is now back looking for counsel from me.
I don’t give advice - instead I tell them what I’ve learned and steer folks to this site. I thank you all over the years for the well-rooted perspective I gather here every day. I’m more of a lurker than poster.
The ironic/gleeful part of this story is the financial adviser that labeled me as a kook has filed bankruptcy and is in the process of foreclosure on multiple properties.
From NY Times, pg. 1, March 6, 1933
“Banks Here Act At Once: City Scrip to be Ready Today or Tomorrow to Replace Currency: Emergency Step Praised… Clearing House certificates will be issued in New York, if needed, just as soon as they are printed, possibly today and probably not later than tomorrow, as a result of President Roosevelt’s proclamation last night…[which] not only made the banking holiday national and extended it through Thursday when Congress meets in special session, but it also gave the banks permission to issue scrip…to take the place of regular currency… In both New York and New Jersey the banking holiday was proclaimed [by those state's governors] first for two days — Saturday [4 March] and today — and was to have ended with the close of business this afternoon…All security and commodity exchanges will remain closed, barring unexpected changes in present plans, as long as the bank holiday lasts. The New York Stock Exchange, which took the lead on Saturday in the closing of the market, did not limit its shut-down to any specific period…Possessors of $10 bills and those of larger denominations in many instances have been unable to get change.”
Heck of a bump from the current 30 billion…
MARCH 6, 2009 WSJ
Bill Seeks to Let FDIC Borrow up to $500 Billion
WASHINGTON — Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.
The Connecticut Democrat’s effort — which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner — would give the FDIC access to more money to rebuild its fund that insures consumers’ deposits, which have been hard hit by a string of bank failures.
More
Last week, the FDIC proposed raising fees on banks in order to build up its deposit insurance fund, which had just $19 billion at the end of 2008. That idea provoked protests from banks, which said such a burden would worsen their already shaken condition. The Dodd bill, if it becomes law, would represent an alternative source of funding.
Mr. Dodd’s bill could also give the FDIC more firepower to help address “systemic risks” in the economy, potentially creating another source of bailout funds in addition to the $700 billion already appropriated by Congress.
Mr. Bernanke said in a Feb. 2 letter to Mr. Dodd that such a “mechanism would allow the FDIC to respond expeditiously to emergency situations that may involve substantial risk to the financial system.”
The FDIC would be able to borrow as much as $500 billion until the end of 2010 if the FDIC, Fed, Treasury secretary and White House agree such money is warranted. The bill would allow it to borrow $100 billion absent that approval. Currently, its line of credit with the Treasury is $30 billion.
And where is Treasury getting this money from?? Sheesh.
They make it sound like they have hundreds of billions sitting around looking for something to do.
And where is Treasury getting this money from??
I’m sure the Fed will have no trouble conjuring it from thin air.
They will print it. The FDIC really is the line in the sand.
“Borrow from the Treasury department?”
That’s a good one.
Talk about sub-prime lending…sheesh.
BB is the new Anthony Mozillo.
+1
Oh and minus the Orange tan!
Boehner has that department covered …
I thought phonetically it was pronounced Boner.
Guess instead of Hoovervilles we will have Bonervilles.
Sounds like the FDIC needs lots of money to take down these banks. If I were a bank this would worry me.
Bank owners/shareholders should be worried, but I don’t see it as a huge problem for the account holders. This just means that they are making sure there is enough cash on hand to cover insured account levels. I was doing the same darn thing when I took out some extra student loans in March of my 3rd year of law school to make sure I could cover my living expenses through the bar exam and starting work. It is prudence, not panic.
But I would double and triple check to make sure all bank balances are under $100K - even if you do have more than one person on the account(s). Why mess around with an overworked regulator having to check if both people are valid owners of the account(s)? Just keep it under the minimum (after the higher limit expires) and keep safe.
You are a law school grad DOPE. Of course account holders should be worried. Yeah, they’ll get their cash back but what will it be worth once the government prints enough to make good on all their accounts, given that most of our banks are insolvent?
If they would only teach economics in law school — which I had to study on my own — we wouldn’t have all these dopey world-improvers running amock in the government spending us into oblivion!
Are you for real?
Sticks and stones may break your bones,
and calling people names
makes you look foolish.
Stop calling people a dope, L’AIG, you wife of a man ho you. You and your manuchette both really stink.
Seriously…. who bothers to listen to LAIG?????
A year ago she was proclaiming that the holy grail of the Westside was immune to any price declines.
Sorry… I have been ignoring her postings for ages and ages..
Me too, LA-Architect, but she has come back with a vengance recently and the level of dialog here has suffered for it.
For the record, I intended to respond to taking bets’ actual post which was about banks. Investor girl’s screed would apply to any manner of holding cash whether in a bank, some non-FDIC insured account, short term treasuries or your mattress. It is irrelevant to taking bets’ comment.
As for what I know about economics? Not my specialty like a lot of people around here, but I’ve been around the block. My special contribution is more likely to be about how government works, but Professor Mishkin (yes, *that* Mishkin) didn’t let us out of his Money, Banking and Financial Markets class without a little background. Two years reading and understanding what is posted here hasn’t hurt either.
FWIW, LAIG, I’m pretty sure Bernanke has a background in economics.
Maybe that’s the problem, because academic econ and finance seem (to me) to be rather divorced from the real world.
In fact, academic psychology has embarrassed the economics a few times in the last ten years by showing that their assumed-without-proof models of human behavior are bogus.
The track record of the IMF is similarly embarrassing.
And spewing vitriol at polly because she works for the government does not become a Section 8 landlord like yourself. When it comes to wasteful gov’t programs, I say after you, LA Infestor Gal.
to temporarily borrow
Because in short order they will invest that money, multiply it for whatever they need and quickly be able to repay the loan.
They are smart.
“But, Dr. Evil, there isn’t that much money in the whole world!”
LOL
mini me
WASHINGTON (AP) — Cost-cutting employers are resorting to even bigger layoffs as they scramble to survive the recession, feeding insecurities among those who still have jobs and those who desperately want them.
The Labor Department on Friday is slated to release a report expected to show that February was an especially cruel month for America’s workers.
Employers likely slashed a net total of 648,000 jobs last month, according to economists’ forecasts. If they are right, it would mark the worst month of job losses since the recession started in December 2007. It also would represent the single biggest month of job reductions since October 1949, when the country was just pulling out of a painful recession, although the labor force has grown significantly since then.
“The pace of layoffs is fast and furious,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “We’re still in the teeth of this recession and the bite has not let up at all.”
With employers slashing payrolls, the nation’s unemployment rate is expected to jump to 7.9 percent, from 7.6 percent in January. If that happens, it would mark the highest jobless rate since reaching 8 percent in January 1984, a time when the unemployment rate was still slowly moving down after having topped 10 percent during the early 1980s recession.
8.1% reported vs. 7.9 expected, and the talking heads reported it as good news, less severe than expected! We’re on our way to 10% by mid-year.
If you factor unemployment the way they used to as opposed to the current method it is much closer to 12%. Just keeping us at Apples to Apples.
Useing a 70’s metric, although a 30’s metric may be more appropriate, even I don’t want to see that percentage in writing.
You wouldn’t believe how 95% of the people out there do not realize how we report unemployment *understates* the true number. I talk to incredibly smart and educated people who think the method is the same as the 1970’s… Sigh…
I would not want to see the ’30’s metric. That wouldn’t be pretty. I do not even want to catch a wiff of the number, for I would extrapolate to when I think peak unemployment would occur and that number might keep me from sleeping.
I’m going to stop now, as I really want to rant on this topic of why we do not report unemployment the same as the 1970’s.
Got Popcorn?
Neil
sure; I think the same is going on in Europe. If you add the numbers for ‘unable (unwilling) to work’, ‘looking for work but not entitled to unemployment benefits’ etc. etc. unemployment in some EU countries is already over 20%.
Last week there was a comparison in my newspaper of (deterioration of) economic indicators, and almost all of them were similar or worse than in the 1930’s (which was bad in Europe, but not as bad as in the US). Unemployment numbers (and home prices) are one of the few exceptions.
would not want to see the ’30’s metric. That wouldn’t be pretty. Well, since you asked: NY Times, 5 March 1933, pg. E6
“Buffalo Employed 69 Per Cent…Figures compiled by the State Labor Department show that 69 per cent of the people of Buffalo over 18 years of age were employed at least part of the time during 1932, leaving 31 per cent unemployed.”
Unemployment rate 8.1% nationally…9.1% in Silicon Valley…
www3.signonsandiego.com/stories/2009/mar/06/1n6jobs003530-jobless-rate-county-86-percent/
The jobless rate in San Diego County has now equaled the highest level from the early 90’s, but look at the differences on the graph on how it got there. In the early 90’s it worked it’s way to that level more slowly. This time, the curve has gone nearly parabolic the past few months.
Thanks for the link. That chart is an eye-opener.
If nothing else, at least the U-T has finally stopped going on and on about San Diego’s widely diversified economy that would shelter us from an employment downturn like the 90’s defense industry implosion. So much for it being ‘different this time.’
Had to laugh at this from used house salesconsultant Gary London.
“The stimulus package is only part of the solution,” he said. “People have to feel stimulated from the stimulus to get the economy moving.”
Stimulants for everyone!
Great Link
To infinity and beyondddddddddddddddddddd
Doesn’t look like many people want to work with T.T.Tim, wonder why? Could it be they don’t want to get sucked down the hopper with him. He clearly didn’t have a ‘plan’ as stated so many times. Being the only guy that knows how to ‘fix’ it is a tough job apparently.
Geithner Effort to Staff Treasury Hit by Nazareth’s Withdrawal
By Robert Schmidt and Rebecca Christie
March 6 (Bloomberg) — Treasury Secretary Timothy Geithner’s effort to staff his department and assemble deeper expertise to flesh out his financial-rescue plan received a new blow yesterday with the withdrawals of a potential deputy and undersecretary.
Former U.S. Securities and Exchange Commission member Annette Nazareth took herself out of the running after concern about public scrutiny over her SEC work and frustration at the length of the selection process, according to people familiar with the matter. International Monetary Fund official Caroline Atkinson pulled out of consideration for the Treasury’s top international job, people briefed on the decision said.
The setbacks leave the Treasury chief without any Senate- confirmed senior staff just as he tries to build confidence in his plan to cleanse banks’ balance sheets and jumpstart the market for securities backed by loans. Nazareth’s decision may make it even harder to lure skilled candidates, highlighting the challenge of the nomination process, analysts said.
“The vacuum at the upper levels of the department could hardly have come at a worse time,” said Louis Crandall, chief economist at Jersey City, New Jersey-based Wrightson ICAP LLC. The disarray comes even though “it was clear the moment” the bank-rescue fund “legislation was passed in October that getting the Treasury Department staffed quickly would have to be the top domestic priority for any incoming administration,” he said.
“Doesn’t look like many people want to work with T.T.Tim, wonder why? Could it be they don’t want to get sucked down the hopper with him.”
LOL, wmbz. I think that’s the main reason. Nobody wants to be the fall guy or gal for this dude’s completely asinine “solutions”. Folks like TTT want to get personnel in place ASAP so they can do the dirty work. I’m sure these people are all too familiar with TTT’s “management style”. Of course, they might also have things they don’t want to see the light of day in hearings, that’s a possibility, too. I think Nazareth did the right thing, shows she has a conscience, seeing as how the SEC was totally dysfunctional throughout all of this. Too bad TTT didn’t have a conscience, too.
I seriously doubt anybody working at that level has a “conscience”.
You can project whatever feelings you like onto anybody but the probability is that they are only calculating political odds.
Good for them! That’s how it works.
I think Turbo-Tax Timmay will be jettisoned and nobody wants to be part of that sinkage.
“I think Turbo-Tax Timmay will be jettisoned and nobody wants to be part of that sinkage.”
From your lips to God’s ears.
Yep, you’re probably right about the calculation of political odds. No one wants to associate with a hapless lamer like TTT.
I read that Nazareth had already undergone several vetting interviews. For that reason, I’d guess The One’s team found some skeletons in her closet and they suggested that she remove her name from consideration.
Just my guess.
A scapegoat will be required for every policy failure.
Probably not. The president is very much into the “nobody really knows how to fix this, we’ll try our best, if that doesn’t work we’ll try something else” thing. It is, actually, a very healthy attitude that doesn’t require a scapegoat - the severity of economic meltdown itself is the scapegoat.
Of course, it is premised on the idea that there is something out there that will work, but all government action is based on that premise.
I nominate myself to be the “National Designated Scapegoat”. Blame me for everything.
As long as the pay is equal to the responsibility.
Yahtzee!
Tax Cheatin’ T may even bail of his own accord or he and The President will come to a mutual agreement that the problem needed a new direction?
Someone did note however that when you say you can fix a problem ( and then make it worse! ) YOU OWN IT!
Actually it might be a good spot for a promotion: TTT gets the boot and his #2 steps into the SOT slot.
I think that no one who has any experience at all are CLEAN.
No one IMHO are clear of entanglements, lies, undocumented maids, and being paid off, soooo it would seem that no one is going to be approved for those jobs.
This to me just points out how meaningless the regional banks are. When the Fed was first created it was sold as “not a central bank”, but instead a bunch of regional banks. Well - we see how that works.
Well, and it saddles them with all kinds of anachronisms.
A friend of mine (lives in DC) married a woman (living in Chicago.) They both have accounts at the same MegaBank but they can’t “merge accounts” because they fall under different Fed jurisdictions.
So one of them has to cancel the account, and start a new one in the other jurisdiction.
Ask yourself if this is rational, or whether it is doing a shred of good?
Flying on Skywest and trying to change to Del is the same “banking phenom” their pcs programs do not talk to each other.
Must cancel one reservation and make new on parent corp.
Interesting.
Wish that couple well!
Never mind - I was getting the Treasury and the Federal Reserve mixed up (easy to do these days).
I am going to put my name in the hat and then use the HBB as guidance. The talent of this blog clearly outways anything that D.C. or Wall st could produce.
What do you get when you cross a Greenspan and a Poulson?
I know, it’s an easy one.
The Messiah snubs UK’s PM Brown and subsequently expects to meet with the Queen. (Better photo op’s. Can’t be upstaged by Pelosi and Brad)
Hillary can’t get EU dignitaries name’s correct.
And Tiny Tim can’t get his departent staffed because all the selected idiots don’t want the public to find out they’ve got an illegal nanny on the books and don’t fix their income taxes.
LMAO…And this is from the people expected to “lead”.
Par for the public employment sector.
http://www.reuters.com/article/worldNews/idUSTRE5253XS20090306?sp=true
Oh, get off it 74dude. You are soooo nitpicking. It only makes you look petty and bitter. I think they are doing a good job. They aren’t lying to us or hiding the facts. They are adressing the issues head on. What have the Repubs done for us lately?
AMEN V.
“I think they are doing a good job”
…of trashing capitalism.
…of limiting political speech.
…of attempting to overturn our system of government and implement socialism.
…of creating an enemies list part deux.
…of governing to the far left.
…of getting more media face time in 6 weeks than most presidents get in one year.
…of nominating inept crooks.
…of commiting border and national security suicide.
I could go on but my fingers are tired.
Doing a good job eh? OK. If you consider a 35% drop in the Dow Jones since election day a good job. Or if you consider spending $4T on pork a good job. Is that what you mean by addressing issues head on, making sure my great grand children will be paying off Obama’s debts. Give me a break.
And no lying? What the heck do you call not paying income taxes by Tutbo Tax Timmie and Tommie Limousine Daschle? Put the Kool Aid down for a second.
dunno, but it seems a bit better than taking the first year off on holiday, and then acting all surprised when the country gets attacked by terrorists.
just saying…
Krugman’s column today is extremely good on why things are going as they are (he calls it dithering):
http://www.nytimes.com/2009/03/06/opinion/06krugman.html?em
“Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.”
I think he has nailed it. NPR reported this morning that they want to try to reignite the shadow banking system by providing an incentive and a guarantee to HEDGE FUNDS to get them to buy up asset backed securities. The details were a little shakey, but it was something like the hedge fund puts up $1M, the gov lends them $9M, they buy up asset backed securities and get to keep the first $1M in profit and their liability is limited to the $1M they put up (gov takes hit on the other $9M).
I haven’t been angry until this moment, but if this one goes through, count me on the barricades. I’d actually go to a demonstration to shout down this one and I HATE demonstrations.
How can the hedge funds cover this? They’re hurting as well.
Things must be a LOT worse than we are being told.
John Mauldin has a good piece about this, out today. If I read it correctly, those hedge funds that are large enough to have the talent to analyze the toxic assets correctly stand to make huge profits, at the expense of the taxpayers, by buying debt that mark-to-market is forcing banks to unload. For a while recently, I was wondering how the rich-get-richer assumption could be working and this seems to be the way, at least for some of them.
Second Liens Forgiven: Are You Kidding Me?
Posted By: Diana Olick
Amid the dozens of pages of details of the Obama mortgage modification plan, one new element will likely not make it into the headlines because it’s something of an afterthought.
It has to do with second liens, that is piggy back loans or home equity lines of credit.
Deep deep in the pages of the plan, is paragraph vi. Second Liens: While eligibly loan modifications will not require any participation by second lien holders, the program will include additional incentives to extinguish second liens on loans modified under the program in order to reduce the overall indebtedness of the borrower and improve loan performance. Servicers will be eligible to receive compensation when they contact second lien holders and extinguish valid junior liens. Servicers will be reimbursed for the release according to the specified schedule, and will also receive an extra $250 for obtaining a release of a valid second lien.
So in an effort to help borrowers stay current on their newly modified loan, which is at a nice new 31% debt to income ratio, the government is also going to pay cash money to get servicers to totally wipe out second liens. When I heard this I thought there might have been something funky in my morning muffin.
It’s not that I don’t get the reasoning. Sure, do all you can to help people pay their mortgage, like get rid of other debt. By why stop there? What about car loans? Student loans?? The second liens, in general, were used by borrowers to either buy more home than they could really afford or to use their homes as ATM machines. Yes, some people use home equity lines of credit to pay college tuition.
But I can’t tell you how many homeowners I’ve interviewed (and just take a look at David Faber’s documentary House of Cards to see more) who took out home equity lines to put in a pool or buy a fancy car or put an addition on the house that includes a fancy new kitchen with a Viking six-burner. And I’m supposed to pay for all that?
It’s one thing to suck up the bitter pill in order to save the greater housing market and keep families in their homes, but using taxpayer dollars to give homeowners a free ride on second liens is preposterous. The Obama administration talks a good long line about helping “responsible borrowers.” Second liens can certainly be responsible, but there’s a much much much greyer area in these loans when it comes to actual “need”, and many many people used them irresponsibly.
In fact, if Americans hadn’t taken quite so much money out of their homes during the housing boom, we wouldn’t be in quite the underwater mess we’re in right now.
Questions? Comments? RealtyCheck@cnbc.com
Well, that should push the interest rate on piggyback loans to about 30% moving forward.
A 2nd MTG is basically an unsecured loan now, and the market will compensate for that risk with tighter lending and much higher interest rates.
You don’t need 30% interest if the federal government is providing free universal mortgage insurance.
They’re is disarray, the more they try to take on the fewer FBs their plan will cover.
Stick with the basics, especially in times of disarray. Any help to the commoner is window dressing. The object is to maximize revenue for the banks.
I fervently hope you’re right.
He is. Despite all appearances, there is a limit to how much money Congress will throw at this thing. It is a very large number, but it is not infinite.
“There are liens, damned second liens and people living way BEYOND their means”
…and We, are going learn about and PAY for them All.
My apologies to both Mr Mark Twain & Mr Benjamin Disraeli
Living beyond their Liens.
“Living beyond their Liens.”
Nice!
Lien on me, when you’re not strong, and I’ll be your friend (and mortgage lender), I’ll help to carry on!!!
Alad?? Is that you?
Are you sure the first bank doesn’t have to buy the second lein from the second bank?
I thought that this might be aimed at those banks that provided both loans, as I think many did. The $250 is a farce, so there must be something else in the language that creates an actual incentive to do something - it most definitely is not two hundred and fifty bucks. IMO.
I’m hesitant to post this, as the bill has NOT passed.
Questions, answers on bankruptcy mortgage rewrites
By JULIE HIRSCHFELD DAVIS – 1 hour ago
WASHINGTON (AP) — With foreclosures continuing at a rapid pace, the House has passed a measure to let debt-strapped homeowners seek reduced monthly mortgage payments by filing for bankruptcy. The legislation, passed Thursday, is not yet final and more changes may be made. Some questions and answers about the bill:
AP
The jist: bankruptcy judges cramdown mortgages
Leigh
This bill is ridiculous. The fact that it ignores the fact that people fraudulently misstated their income and will write down the principal to something that they can afford is just ridiculous. You live by the sword, you die by the sword. These people weren’t complaining when their assets were increasing 20% annually.
Imagine, the moron with the 2 million dollar house on the Westside who gets a 1.5 million dollar cramdown???? Seriously it could happen and it is TOTALLY against any free market principles. Comps will remain ridiculously overinflated and will screw new people wanting to purchase a house that their income and savings can support.
i wanna be first…..but i’m a loser
Toooooooo Funny.
Leigh
Maybe next time dj, it takes a lot of effort to be adolescent.
kewl….maybe i should play with the gameboy before posting here.
What did my brother say? Time to buy a house before it goes back up
He was the smart of us…
Nah, you’re alright. You are the first DJ to post on the HBB today.
Test
Gresham Expects Record $1.2 Billion for Commodities Investments
By Claudia Carpenter
March 6 (Bloomberg) — Gresham Investment Management LLC, the New York-based commodities investment company led by Henry Jarecki, has a record $1.2 billion committed from investors betting that inflation will send raw materials higher.
The $1.2 billion due in the next several months is “our biggest inflow of new money since we started accepting outside money in 2005,” Douglas Hepworth, the company’s director of research, said in an interview in Barcelona late yesterday. “It is basically the inflation story. The economic crisis will end at some point.”
Commodities, measured by the Standard & Poor’s GSCI Index of 24 raw materials, have outperformed stocks and lagged behind U.S. Treasuries this year as copper and gasoline rebounded. Government spending to revive economic growth will either boost both growth and inflation or just inflation, Hepworth said.
“I’m talking about the possibility of hyperinflation or stagflation,” Hepworth, 48, said. “We have some people betting on gold because it’s a stagflation bet.”
It’s a “very reasonable bet” that gold will lead gains in commodities this year, he said. Gold has climbed 6.7 percent, compared with 20 percent for copper and 32 percent for gasoline.
“It’s conceivable there will be more pain in commodities before the crisis ends,” Hepworth said. “But people are looking for very significant inflation afterward and that could take the form of inflationary growth if stimulus plans work or stagflation if stimulus plans don’t.”
“It is basically the inflation story. The economic crisis will end at some point.”
This is true. But one can become very broke betting on when this point will come.
Well established trends tend to persist. Cash is still the place to be.
“It is basically the inflation story. The economic crisis will end at some point.”
When the economic crisis ends - the dollar may simply not exist anymore.
The U.S. dollar specifically, I mean.
Right now cash is the Ultimate Financial Solution, nothing else compares. I don’t see that fact changing anytime soon.
In my very strong opinion “diversification” is the Ultimate Financial Solution - right now especially.
(Diversification does include cash.)
The unemployment rate just hit 8.1%. This cuts deeply into the cash flow of those involved in this 8.1% and puts downward pressure on the cash flow of those who are still working.
People’s cash flow has declined but their bills remain, and their bills are paid in cash. Thus the demand for cash intensifies.
Deversify all you want but ultimately you need cash to pays the bills.
Cash rules.
“People’s cash flow has declined but their bills remain, and their bills are paid in cash. Thus the demand for cash intensifies. ”
5.4 million homeowners delinquent or in foreclosure say “Hi - I wouldn’t be too sure about that.”
There again is another case for cash.
Money not paid to banks on mortgages forces a hit to be taken against the banks’ balance sheets, the banks reserves. This money must be replaced else the banks will be declared insolvent.
Thus cash that flows into banks tend to remain in banks to replenish reserves instead of continuing to circle throughout the economy. This action reduces the amount of cash in circulation, making cash scarce.
Exactly, Packman. Imagine how large your checking account would be right now if you hadn’t paid your rent or other bills for the last year. Many FB’s are going to be flush with cash just as inventories hit lows and production is halved. Certainly we will still see deflation in housing and luxury items but I still believe it will be the “deflation in things you want, inflation in things you need” scenario.
FWIW - I think we are definitely seeing significant deflation right now - including in pretty much all asset / commodity classes (especially things you want - but even things you need, to some extent; the line between the two is often gray).
The question is how long will this continue. It will continue - as you say combo - as long as the banks take in but don’t put out. The big question is - when do they start putting out.
We know that the spigot into the banks is on in full force right now from the Fed, through several means (the numbers the past few weeks have been shocking IMO). Sure the banks are loaning *some*, but obviously at very low levels, thus that money being created isn’t flowing out, at least not nearly enough to combat the money destruction that’s occurring.
However:
- At some point the money destruction will cease, with a curve of course.
- You can be sure the spigot from the Fed will stay on full force for a significant time after that happens.
- Banks need to make loans to make a significant profit. They *will* start lending money again in significant quantity, when they see some level of stability in the markets, i.e. they’re happy enough that there are few enough write-downs left.
Who knows when that’ll happen - there are too many factors. When it happens though - I don’t want to be holding a bunch of cash.
I do think there’s enough excess debt/writedowns to still be wrung out such that it’ll probably be 18-24 months. I’m generally not good at timing the market though :-). Personally I’ve got significant cash holdings, though not as high as combo would suggest I’m sure.
Though I guess it depends on what your definition of “cash” is too. Out of curiosity combo - how do you define “cash”?
“The economic crisis will end at some point.”
Not until the “raw material” specuvestors are broken.
I agree.
“It is perceived that all losing bets will be covered with taxpayer money, so GIM is ‘not worried about it’”.
Not sure if this was posted already, as I missed the other day, but this is pretty disgusting:
So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
“It has been very successful — very strong,” John Lawrence, the company’s head of loan servicing, told Mr. Kurland one recent morning in a glass-walled boardroom here at PennyMac’s spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.
http://www.nytimes.com/2009/03/04/business/04penny.html?_r=2&partner=rss&emc=rss
It is disgusting, but they may still take it on the chin if the borrowers in question lose their jobs or even just have to take a pay cut and redefault even at the much lower rates/balances.
This play will be very very successful at some point very close to the bottom of the market and a turn around in employment, but it is probably much too early now.
+1
“Fully 22 percent of Florida mortgage borrowers were at least a month behind on loan payments in the fourth quarter, the Mortgage Bankers Association says today.
The breakdown:
* 4.33% of loans were 30 days past due.
* 2.40% were 60 days past due.
* 4.37% were 90 days or more past due.
* 11.31% were in some stage of foreclosure.
The report looked at 3.6 million Florida mortgages. Nationally, Florida ranked third in delinquencies, second in foreclosures started and first in foreclosure inventory.”
22% of FL borrowers are in some stage of delinquency? OMG, what a nightmare we are going to see down here this year (and next). Does anyone (except us) realize what will happen when 5-10% of all the RE in FL hits the market as REO? We haven’t seen the meat of the declines yet with numbers like this still hanging out there.
Eh gahds. That’s just an amazing amount of pain to go, even though most of FL is down 50% already! And yet people are still holding on for their wishing prices in many areas we look, it’s amazing, it’s as if they just can’t see the tsunami wave that’s building behind them. Where are prices going to be tomorrow? Lower. The day after that? Lower. A year from now? Lower. Why on earth are some of these people still holding on?
“Does anyone (except us) realize what will happen when 5-10% of all the RE in FL hits the market as REO? We haven’t seen the meat of the declines yet with numbers like this still hanging out there.”
Yeah, and some people think it’s bad now. And, amazingly, some don’t. Yep, you heard that right. I had an RE agent try to tell me the other day that her firm was getting multiple offers at full price in a certain retirement community. LMAO! What a freakin’ liar.
In that Washington Post chart from yesterday Michigan was 2nd with an estimated 40% of all mortgages underwater. Combine that with the January 11.6% unemployment rate, and how many of those people are just going to throw in the towel??
I tried to explain this to my wife, “But it’s only 10%”.
Yes, but it is the first 10 pages online when you sort by price
Michael, Palmetto, and the rest of the Florida based gang-
Do you have a sense of how long it will take for the Florida market to work itself out and what pricing level it needs to reach before it’s back to equilibrium?
At the right cost of living, Florida can be a very nice place to live. This ol’ Gator is wondering if that day is 3-, 5-, 10-years away.
Thanks to all for your thoughtful comments.
Ol’ Bubba
If this is multiple choice (3,5, or 10), I would lean towards 3. FL does have a lot going for it, and there is built in demand. Once the prices fall far enough, AND the economy starts to rebound, the migration into FL will continue. However, prices will have fallen 50-75% by that time, and there’s still WAY too much inventory, it’s likely that another home won’t be needed in FL for the next 10 years. However, I do like our chances long-term (MUCH more then AZ and Las Vegas, those places are truly f**ked), and think that we will come out of this reasonably well. Of course, now, given the recession/depression, my original projections of 50% off peak are starting to look downright “NARish”; we are obviously going to fall much further then that.
“However, I do like our chances long-term (MUCH more then AZ and Las Vegas, those places are truly f**ked), and think that we will come out of this reasonably well.”
I like our chances long term also, provided that there’s not some sort of shift in agriculture from Cali to FL, due to the drought out there. That would be disaster.
Palmy:
My guess: Your dairy industry may grow, for better or worse, depending on your point of view. Not a relocation, really, tho.
Cali. way over-expanded and hard herd culls are under way.
I can’t tell yet whether the ominous talk about turning off the irrigation spigot for hundreds of thousands of acres will come to pass this summer. My guess: no.
Overseas markets are drying up for exported almonds. Those growers have made out well in recent years. I don’t think your air is dry enough for almonds. Too many bugs, too.
I always wondered why there wasn’t a bigger marketing push behind pecans, which grow well in North Florida.
Long term (20-30 years) most of Florida will be under water.
I don’t think you guys have the right climate. You also get hurricanes. Our climate is Mediterranean, whereas yours is tropical. Tropical climates are not that great for agriculture.
California has plenty of water, but just not enough water to support all the lushly landscaped housing developments and golf courses east of the Sierras/Cascades. It also doesn’t help that the best farmland has been converted into cities, so now it takes more to irrigate our crops, but I still don’t think Florida is going to replace CA agriculture.
Desalinization anyone??
“I would lean towards 3. FL does have a lot going for it, and there is built in demand. Once the prices fall far enough, AND the economy starts to rebound, the migration into FL will continue.”
My concern is that built in demand. Traditionally it came from retiring industrial workers in the Northeast & Midwest selling their $200K houses and bringing their great pensions to buy a $60K house on the water in Florida.
Their are no more industrial workers. Their are no more pensions. And they can’t sell their homes for anymore than they can buy in Florida. Add $2000 insurance premiums in Florida and the cost equation changes dramatically.
The big chunk of folks moving here were retirees & folks involved in the housing industry. I think Florida is in a world of hurt for a long, long time.
Ol’Bubba, Michael Fink, Palmy….
Michael, I see no “nightmare.”
I’ve said for quite a while that we would see 1997-1999 prices again.
And we shall.
You ask, “Why on earth are some of these people still holding on?”
The answer is simple; it doesn’t cost them anything to hang on.
They stopped paying months ago.
Ol’Bubba, you ask “Do you have a sense of how long it will take for the Florida market to work itself out and what pricing level it needs to reach before it’s back to equilibrium?”
As long as people can stay in the houses for free, they will.
By the way, this is not something I say because I read it somewhere, it’s what I see and hear in my building which is somewhat upscale, not swanky or opulent but nice.
Even the maintenance/engineer guy tells the owners to stop paying.
I am very lucky because a lot of units were owned by Lehman Brothers and are in receivership and this provides stability.
Your answer: when they can’t stay for free we will stabilize.
Palmy, I hope for a lot of agriculture, specially in Homestead.
There is a debate in South Texas about licensing casinos in Hurricane Ike ravaged Galveston to help revitalize the city.
In the hallowed days of the 40’s-50’s, nose thumbing racketeers ran illegal gambling at the far end of a pier that legend says made enforcement hard on the Texas Rangers. Everyone knew there was gambling going on at the famous Balinese Room, presumably including Frank Sinatra, Bob Hope, George Burns, and The Marx Brothers who entertained there. (See wikipedia under “Balinese Room”). By the time any police raiders could run the length of the pier, all the evidence was put away. Sadly for this National Register of Historic Places site, that entire pier was moved by huricane Ike from offshore to a jumbled pile of matchstick pilings strewn over Seawall blvd.
http://www.houstonpress.com/2009-03-05/news/is-casino-gambling-in-the-cards-for-galveston-plan-b/
This article suggests that illegal casino gambling was dying a graceful death at the time, and perhaps went away more from market forces than from persistent efforts of prosecutors. Those market forces have even grown stronger since. It also points out that structurally, having the gambling run by local racketeers probably brought more utility to Galveston’s economy than casinos owned by out-of-state corporations anyway.
Former KB Home CEO Bruce Karatz indicted on fraud charges linked to stock option backdating
LOS ANGELES (AP) — A federal grand jury has charged the former chairman and chief executive of KB Home with multiple counts of fraud and other crimes related to a stock option backdating scheme that authorities say bilked the homebuilder’s shareholders out of millions of dollars.
The 20-count indictment returned Thursday charges Bruce E. Karatz with 15 counts of mail, wire and securities fraud, four counts of making false statements in reports filed with the Securities and Exchange Commission, and one count of lying to the company’s accountants, according to the U.S. attorney for the Central District of California.
Karatz, 63, faces up to 415 years in prison if convicted on all charges.
“Mr. Karatz allegedly broke the rules, and then lied about it, to line his pockets and then to conceal his windfall from his company and the trading public,” said United States Attorney Thomas P. O’Brien.
Karatz, who lives in the Bel Air Estates neighborhood of Los Angeles, agreed in September to pay $7.2 million to settle civil charges of backdating stock options.
Under terms of the settlement, the executive didn’t admit or deny the allegations brought by the SEC, which claimed he profited by more than $6 million from exercising many of his stock options.
Sadly, the homebuilder executives can’t even make money with the benefit of 20-20 hindsight.
“Karatz, 63, faces up to 415 years in prison if convicted on all charges.”
Please, convict this guy on ALL charges.
And put him on life support so he can serve out his full term.
LOL! Yeah, clone him and subject his successive clones to CIA approved “psychological driving” techniques of a 10 minute loop of the HB played over and over….
Then it’s off to electro-shock “therapy”.
Waterboard him. It’s not torture afterall..
Nail this SOB to the roof of one of his POS houses and let the HOT SUN SHINE.
A long trail of honey from an ant hill to his sorry-A$$ butt won’t be a bad investment either
Where is hwy50 with his Bugs Bunny talk about “Karatz”?
Hey DennisN,
So you are around. Not having seen any comments from you yet, I assumed that your Orlane sample kit had come in and that you were out on your new “retirement job.”
Dutch bubble update:
The Dutch government is discussing this and next week how to plug the sudden 30-60 billion hole in the national budget (a huge amount of money for Netherlands). Among one of many proposals is a cap on HMD for mortgages over 1 million euro (most kleptocrats and top level burocrats probably have a mortgage in the 0.5-1 million euro range, so those are safe …). The deficit excludes likely losses on the 1400 billion in liabilities for financial ING, that will likely be nationalised soon.
Probably the biggest gains will come from another round of punishment for savers. Our government taxes assumed profits on financial assets (savings accounts, stocks/bonds, gold etc.). Other assets like homes, yachts, cars and art are totally free from taxes. There is a proposal to boost the assumed income on financial assets, even though most people probably had double digit negative gains over the last year(s). And thanks to the ECB rates on savings accounts are gain below inflation, even before taxes. At the same time the huge gains on housing are still taxfree, totally ridiculous.
Pensions and unemployment benefits will be cut, and some people (not those with high incomes …) will have to pay higher taxes. At the same time the kleptocrats are going to throw more money around to selected parties like banks, homebuilders and all kinds or government workers - just like in the US.
It is very clear that keeping the housing Ponzi scheme running is by far the biggest prority for our government, more important than keeping the economy afloat. Banks and government are openly forcing down rates on savings accounts and mortgages ‘because this is in the national interest’. According to realtors the Dutch housing market is picking up steam lately, with most of the new demand coming from starters. This is not the result of lower prices, but of lower mortgage rates and even looser lending. Inventory for sale is still at a post-WWII record, so I doubt if this trick will work for long.
nhz-
You wrote that 30-60 billion (euros?) is a huge amount of money for the Netherlands.
To help us put this in context, do you know what the population and GDP of the Netherlands? Thanks.
https://www.cia.gov/library/publications/the-world-factbook/print/nl.html
pop. 17 million, GDP about 650 billion euros
I am thinking of moving to Luxembourg. It seems pretty bubbly, especially if one compares prices to nearby areas of Germany, a bit less so to France. I can’t find anything in the news, though. Would Lux be the ultimate case of ‘it can’t happen here / not enough land to crash” mentality?
VERY expensive country IMHO, both general price level and home prices. Of course, because the country is full off high level EU kleptocrats and banksters …
Is it a good place to hide??
not when the sh** starts hitting the fan and the people realize who are the real culprits for what is going on. Unless of course you count on the authorities to protect the real criminals (and who hangs out with them) at all cost.
According to realtors the Dutch housing market is picking up steam lately, with most of the new demand coming from starters. This is not the result of lower prices, but of lower mortgage rates and even looser lending.
They’re saying the same thing in Alaska. Equally clueless about the long term trend.
I’m predicting a double-dip recession/depression. The enonomy will perk up for the midterm election in ‘10, and we’ll have a new downturn in ‘11-’12. If the S&P hits low 600’s soon will it be a buy long or is the chance for BK too high on traditionally strong firms?
Depends on the the firm! This is a “read the balance sheet” environment.
We’ve already had many “blue chip” firms die or shrink in recent years. (ATT … IBM … GE is only financing now, MSFT’s growth is over…). GD-1 saw many big, old firms fail, while others became the success stories.
I think newer firms will have an advantage coming in with lower leasing/RE costs, labor costs (that includes bennies), but higher cost of capital which means they must avoid debt. Debt-laden concerns are in for a world of hurt.
Unemployment rate comes in at 8.1% - at the high end of the consensus range. Dow futures up 70 points on the news.
How many times do we have to say this?
“Buy the rumor, sell on the news”
The market anticipates the problem and moves the other way when the news is announced. People who get their events from CNBC always end up perennialy surprised by this.
Yeah yeah - I know. I think it’s funny though nonetheless.
So if the market is so wise and anticipates everything (like today’s unemployment figure), how come it’s still dropping like a rock?
Perhaps the market is disappointed because the employment situation is ‘worse than expected’?
Ladies and gentlemen, I present the evidence:
MarketWatch dot bomb
March 6 2009 11:26 A.M. EST
Bulletin
GM shares trade at lowest level in 75 years
U.S. payrolls shed 651,000
Jobless rate tops 8% after another grim month’s nonfarm payroll data — while figures from the recent past are revised lower.
I don’t know if it is a bluff, but WSJ reported last night that GM’s management is warming up to the bankruptcy idea in “GM More Open to Bankruptcy.” The going concern notice from the auditors seems to indicate that’s the likely outcome.
The economy has lost 4.4 million jobs since the recession began in December 2007, with more than half coming in the last four months.
Payrolls fell by 655,000 in January and by 681,000 in December, revised down by 161,000 from previous estimates.
…
A leading indicator of labor market conditions — temporary help services — saw 78,000 jobs lost in February.
…
A separate survey of households showed that employment fell by 351,000 in February. Unemployment rose by 851,000.
MarketWatch: Payrolls sink 651,000, jobless rate soars to 8.1%
Look at those revisions, this thing’s compunding with gusto. Will FEB’s revision top 700k next month?
These are very unhealthy numbers for a consumption driven economy. If you add Winston’s revisions, we lost(651 + 161) 812,000 jobs. And, it gets worse:
The number of persons working part time who would prefer to be working full time jumped 787,000 in February to 8.6 million. This category has risen by nearly 4 million since the recession began.
And then there are people like me who are totally off the books and not by choice….Oh and I am not counted in that 8.1%
Gigs come in and they are cash jobs
There’s no way that gov’ts from city hall to the White House are prepared for the plummeting revenues that all this un and underemployment will bring. No way.
Their models, their plans, their stimulus ideas are all geared for the recessionettes of yesteryear.
Correct! That’s why they haven’t a clue what to do, our local dipshit of a mayor recently stated ” we have to take every dime we can get from Washington” He really thinks you can spend yourself out of debt.
RIGHT ON edgewaterjohn !!!!!!!!!!!
My feelings exactly…Now, the question is, how do you bet it ??
>There’s no way that gov’ts from city hall to the White House are prepared for the plummeting revenues that all this un and underemployment will bring. No way.
The White House at least knows that the little people don’t pay taxes
Two questions I would like some answers to -
1. What happened to all the PMI (private mortgage insurance) paid on these mortgages. If below 80% of equity, which some may have been, PMI was usually required.
2. Before anyone is bailed out of mortgage, the loan application should be reviewed to determine if a crime (mortgage fraud) was committed. If this review was required, it would reduce the number of people nuzzling up to the government’s feed trough.
1. PMI went bad because the premiums were too low, and also because so many ppl got piggy back loans, so the first bank did not require PMI.
2. That’s right. Underwriting got thrown out the window because banks were selling their mortgages off to Wall Street. The Wall Street geniuses buying these mortgages never thought to write a contract ensuring any type of underwriting standard. They were dopes. Now that it’s been done, though, they are working overtime to convince everyone that “there’s no point in punishing” those who commited fraud. The story is that we need these people to make our economy whole, so we should “be mature” and forgive them and, essentially, put up with their abuse. Of course this is BS, but that’s their story and they’re sticking to it.
March 6 (Bloomberg) — President Barack Obama now has the distinction of presiding over his own bear market.
The Dow Jones Industrial Average fell 20 percent since Inauguration Day, the fastest drop under a new president in at least 90 years, according to data compiled by Bloomberg. The gauge has lost 53 percent from its October 2007 record of 14,164.53, slipping 4.1 percent to 6,594.44 yesterday.
More than $1.6 trillion has been erased from U.S. equities since Jan. 20 as mounting bank losses and rising unemployment convinced investors the recession is getting worse. The president is in danger of breaking a pattern in which the Dow rallied 9.8 percent on average in the 12 months after a Democrat captured the White House, according to data compiled by Bloomberg.
Well there’s a nice piece of neutral reporting. “His own bear market?” Is Iraq “his own war” too?
This sickness started long before the symptoms appeared. HBB knows that better than anybody.
Oh c’mon, no such inference was made. No one is blaming him for Iraq, so please don’t take escalate claims ‘no’ one is making to exhonerate him from claims that ‘are’ being made.
Again as noted before, when you claim you can “fix” something and then make it worse, you… own it. In ‘this’ particular instance, exponentially worse.
He never said he could fix it. All he ever did was promise not continue with the lies, deceit, and obfuscation that got us here. As long as all that is stopped (oh, and tariffs are raised), then we will recover.
Big V, Respectfully - he did promise to end earmarks. The budget has them in spades, as other posters have pointed out. The examples I have heard on radio include a convicted felon who, having contributed prodigious quid to the campaign chest, is now lining up at the trough for his pro quo. This good citizen is Rep. Inouye’s constituent, heads up yet another (unspecified) brokerage, has been previously convicted, and is currently under Federal indictment. The earmark is to be shared out between him and his officeful of convicted felons. This particular nibble is only $10M, so we should heave a sigh of relief. But it is only one of a host of others.
One counterexample is enough to trash a promise. We are working with the same kinds of swine, who are less organized, less polished, increasingly panicked, and therefore capable of greater instability.
I imagine Hoz would say “don’t bring a knife to a gunfight”.
I do believe this budget was put together before Obama became President. Just a reminder the pork is from both sides of the aisle.
Whatever.
You can believe in the Candy-Crappin’-Unicorn™ but the overwhelming evidence as demonstrated by the presence of Turbo-Tax Timmay and Robert Gates and Lawrence Summers is that it’s more of the same.
This is gonna be the deflationary counterpart to the inflationary Jimmy Carter presidency. Sure to end in a shambles.
PS :- I am NOT a “elephant” partisan by any stretch of the imagination. They’re both f*ckin’ donkeys!
Who would have been your financial dream team, and why don’t you think they were considered?
A bear market is defined by a 20% drop. I don’t believe the goal is to blame Obama, but simply showing that the stock market has dropped far enough to be defined as a bear market since his inaguration
We’ve dropped 50% from the top. If that’s not a bear market, I dunno what is.
“More than $1.6 trillion has been erased from U.S. equities since Jan. 20…”
Cash…
“The president is in danger of breaking a pattern”….
Change you can believe in.
Lol, all the whining about Bammy reminds me of some Leona Helmsley type yelling at the janitor for not sweeping up fast enough and wanting to charge extra after she let the bull wander around the china shop for 8 years.
That “whining” pales in comparison to what went on before Bammy. Did you whine about it 6 months, a year ago??
Blano, IIRC, even the most stalwart were noting, with asperity, that there was nobody home.
NSO,
I have absolutely… no idea where you’re going w/ that one? Here’s the reality, the market is no longer fretting over fundamentals. All those cards are and have been on the table for sometime.
What they ‘are’ fretting about ( -since- the inauguration ) is his following through w/ a lot of socialized programs that are clearly not a priority right now. At least not a priority where the market is concerned.
Bingo!
OK, DinOr, BiLA, Blano, hd74man, L’AIG, etc …
How do you know what a priority is “as far as the market is concerned”? What potentiates a good/stable market? Is it unfettered gains on the backs of globalization and corporate hegemony? I don’t think so. It’s a reliable socioeconomic system that provides an infrastructure with which to do business in an efficient manner. The end goal of all social programs is to provide that infrastructure and preserve it.
I’m not sure I understand the where the question comes from, but either way I don’t claim at all to know what a priority is re: the markets. Or what best defines a good, stable market. I’ve never claimed though that things like endless globalization are necessarily the right answer either.
I have to disagree though profoundly with your end goal statement of “all” social programs. There may have been a time when social programs were designed to help and preserve an economic system, and meet the basic needs of the truly needy. To provide some stability in the valleys of life that we all go through at one time or another.
Those days have passed.
One cannot honestly say IMHO that most social programs implemented these days are for the good of the nation. For example, the fact that illegal alien criminals can access many of those programs immediately and automatically blows your theory out of the water. That’s just one example.
Illegal criminals shouldn’t be allowed to access programs; they shouldn’t be allowed access to hospitals, jobs or anything else either. They should be rounded up and thrown out. Period.
The main goals of social programs the last 40+ years, and maybe even since FDR, has been the expansion of the federal government octopus and the scoring of political points and votes by a certain political party. If someone was truly helped, well that didn’t hurt either.
Why do you think welfare rats, illegal alien criminal supporters, unions, minorities, guvmint employees and the like almost exclusively vote Democrat?? Because of their goal of limited government??
Social programs are by and large becoming little more than government-sponsored bribes.
Most of these social programs should be eliminated. I’m not holding my breath on that one though. Look at what’s going on in New York with even modest budget cut proposals. Kudos to a Democrat for at least trying. However, those who demand you and I support a certain “quality” of services are already out in force protesting.
And that, madame V, is what happens after a while with these social programs. Giving someone something for nothing makes them weak minded and unable to take care of themselves. Think New Orleans after Katrina. Why do you think they ended up being called “entitlements”?? Because it’s gone on so long people think they’re entitled to take our tax dollars for their pet programs. It becomes as natural to them as breathing. Then when you actually try to take something away, they act like they’re being strangled and fight back.
I’m off to the grocery store now where some welfare rat in line in front of me will likely be buying steak for a family of 10 while my kids and I live on hamburger this week. Nice social program.
Corporate tax breaks, grants, subsidies and now bailouts DWARF the spending on social programs.
Google it. GAO it. Census it.
Post Office buys $1.2 million house
LAKE WATEREE, South Carolina (CNN) — At a time when the U.S. Postal Service says it is experiencing a financial crisis, it purchased a $1.2 million home from an employee so he could relocate, a CNN investigation has found.
The Postal Service bought this 8,400-square-foot South Carolina home so an employee could relocate.
The Postal Service bought this 8,400-square-foot South Carolina home so an employee could relocate.
Postal Service spokesman Greg Frey said the home will be resold, as others have been.
“It’s not like we threw away a million dollars,” Frey told CNN. “We are hoping it’s going to go for the appraised value.”
But a real estate agent in the area said the home could be a tough sell in a depressed housing market — and the USPS said it lost an average of more than $58,000 on the 500-plus homes its relocation program bought and sold in 2008.
The 8,400-square-foot, six-bedroom home on Lake Wateree, about 30 miles north of Columbia, is likely to be the last million-dollar home purchased by the Postal Service. A $1 million cap on homes eligible for the relocation program took effect in February, Frey said.
What in the he** does this employee do for the post office that gets him paid well enough to afford a 1.2M dollar 8,400 sq/ft (good god) home?? Did anyone else pick up on that? I thought that Federal salaries capped out at ~150K?
I know Mail handlers that make well over that from all overtime.
“What in the he** does this employee do for the post office that gets him paid well enough to afford a 1.2M dollar 8,400 sq/ft (good god) home??”
Overtime!
Perhaps he had a side-job picking strawberries.
I hear that pays well.
In-f-ing-sane! But some how not surprising, nothing so easy as spending other peoples money. Especially when no one is held accountable.
Fat chance selling that house on that lake for anywhere near that amount!
Looks like the price of stamps is going up again.
Just bought $100 worth of “forever stamps” at post office yesterday.
Will buy more.
Remember, “Just about everyone who works at the post office is an alien.”
MIB II
Newton: Guys, before we start the tape, one more thing - what’s up with anal probing? I mean, do they really come billions of light years just to…
Agent J: Boy… Move!
Why? To trade for food?
Seriously, I consume about $20 of stamps annually. Should I really care if it goes to $40?
Now, if you ran a business, etc. I get the point.
“Why? To trade for food?”
Hmmm…. your right, will buy $200
Food is King.
Thank you.
I always thought those forever stamps were a waste of time and money. Like driving across town to save 10 cents a gallon on gas.
They’re really convenient. Should I have to pop out to buy a “correctional” $0.02 stamp each time they change it? I think I have one stamp left from 5 cycles ago. It just sits there looking forlorn. Maybe I should sell it? LOL
I send out one bill each month (and I’ve been pestering them to accept online payments but no dice!), and the occasional letter, and some postcards, etc.
I’ve been an aggressive user of online banking pretty much the day the rolled it out (which was back in the dark ages.)
I like them, but not for saving money, but rather the convenience. I always hate getting stuck with a handful of old first class stamps and scrounging for a few 1 cent stamps to make them good.
Big problem is forgetting where you put them. I hate that. It is like losing money.
Mom insists on cards, so I need a few, but most actual postage goes on packages and putting $3+ of first class stamps on a package is ridiculous.
I like the forever stamps because some of the first class stamps don’t have the price on them ( when they print them prior to a rate change, and aren’t sure how much they’re going to get to gouge the public ), and 2 years later, I’m trying to figure out if it’s a 39 cent or a 37 cent stamp. I hate to have to go look at pictures of stamps on the internet, but I’ve resorted to it recently. Forever stamps with ugly brown bells on them - mmmmmm gooooood.
“It’s not like we threw away a million dollars,” Frey told CNN. “We are hoping it’s going to go for the appraised value.”
I don’t even know how to respond to crap like this.
Bwahahahahahahahaaahaaa!
Gubmint cheese on the rise…
Record 31.8 million on food stamps
Government shows increase of 700,000 food stamp recipients in a single month.
March 5, 2009: 4:00 PM ET
WASHINGTON (Reuters) — A record 31.8 million Americans received food stamps at the latest count, an increase of 700,000 people in one month with the United States in recession, government figures showed Thursday.
Food stamps, which help poor people buy groceries, are the major U.S. anti-hunger program, forecast to cost at least $51 billion in this fiscal year ending Sept. 30, up $10 billion from fiscal 2008.
“A weakened economy means that many more individuals are turning to SNAP/food stamps,” said the Food Research and Action Center. Last summer food stamps were renamed the Supplemental Nutrition Assistance Program, or SNAP.
0:00 /04:12Living on food stamps
The average food stamp benefit is $115 a month for individuals and $255 a month per household.
I dunno about this.
I’m pretty OK with the whole food stamps thing. Remember it started as “rural poverty” mitigation thing which is why it’s run out of the Dept. of Agriculture.
I wouldn’t want to watch people starve. Would you?
Plus, starving people riot so far better to throw them some cheese than get the Reign of Terror going. The elites know this as well as anyone.
And the cost is miniscule compared to what they are wasting propping up the loser banks!
Food stamps are another subsidy to farmers, that is why it is run out of the Dept of Agriculture.
People wouldn’t starve, they just wouldn’t buy as much bread, milk, cheese, meat, etc. and still be able to afford their cigarettes.
Yeah, yeah, yeah, I know that as well as anyone but back in the day, and it’s hard to imagine that in this land of super-sized porky-pork-porkinsons, people actually starved.
Skip
I wish that’s what people buy on their “snap” $, but I see a lot of high frutose corp syrup cr*p being purchase. Then I think about the Medicaid (called Medi-Cal in Ca.)bill I’ve got to pay through taxes to treat/cure them of whatever.
Hungry people can get very mean very quickly.
I’d rather support food stamps then build more prisons. NPR stated that it costs $70 a DAY for each inmate.
WTF? Team Barry said they had an economic recovery plan ready day one Jan21. This crowd is running around like chickens with their heads cut off…
Uh Oh, White House Seeks Economic Advice From Twitter…
Twitter cofounder and CEO Ev Williams is headed to the White House today.
The administration invited him to join a “young business leaders” summit to discuss the economic crises.
As Ev himself puts it — in a Twitter message, of course — “[this] must mean they’re *really* out of ideas.”
A reminder: With 6 million members and 700% plus growth, Twitter makes no money in the US. (It sells some ads in Japan).
wmbz,
Well, I’m not going to read too much into that. I think the obvious suggestion is to allow people to opt OUT of Social Security, take the fictitious dollars now, pay down their debt and either pay themselves back, or bail on it altogether.
Someone made that suggestion weeks ago and I think it makes more sense now than ever.
IIRC, Twitter has no business model. As in, the kind where the making of money is included.
I have no clue what Twitter is and no reason to bother finding out.
Then you’re older than Gen X and not Twitter’s target market…
Shameless solicitation for investment advice:
The 401k with my previous employer was with Prudential. I have an option now to convert to IRA, with Prudential or with someone else. I was wondering about peoples thoughts with regards to various companies’ - safety and feature-wise. I have another IRA (somewhat smaller) with Fidelity. My main concern is the possibility of bankruptcy and/or nationalization down the road if the SHTF, and what might happen if such a company fails.
Has anyone had experience with such a thing - e.g. did anyone have an IRA with Lehman Bros, and if so - what happened? (or has it happened yet?). It may be apples-to-oranges, but not sure.
Thanks.
My first choice is Vanguard.
Very happy to hear that from someone whose opinion I hold in high esteem.
I like Vanguard too but I foresee huge troubles for them (but that need not concern you.)
Basically, they have sold the public on the bull that is indexing and DCA which is nothing more than “bull market genius” in disguise, and this bull market lasted from 1982-2006 with some hiccups on the way.
Plus, they are facing serious competition from the ETF market.
That having been said, I like them. A lot.
Their corporate structure is unique, and is singularly responsible for why I like them.
“Basically, they have sold the public on the bull that is indexing and DCA which is nothing more than “bull market genius” in disguise”
I’m actually guessing that their “bull market genius” will end up looking ok versus most active managers even after this thoroughly destructive downturn. Yes, they will lose badly, but probably slightly less badly than many others, and may still end up looking ok in the 20-yr or 40-yr average returns.
That said, I stopped believing in indexing for the long-term and am very glad I did. But I still think indexing can be a great low-effort, low-risk approach when the rising tide is lifting all boats.
I’ll probably get back into Vanguard index funds when I think we’ve actually put in a bottom…
“Their corporate structure is unique, and is singularly responsible for why I like them.”
+1.
The problem with the indexers is that they never asked the right questions.
The return on equity between 1985-2006 was larger than inflation + productivity growth - corporate theft.
So the question remains why was there an excess in the first place? You can’t just say “equity premium” because then I’m gonna ask why that number showed up for that premium as opposed to 2x that number of 77x that number.
The fact was it was goosed by debt and leverage which leads us to the natural question which is: what happens when you can’t issue more debt?
And we all know the answer to that question and did long before the SHTF….
Sorry, I don’t believe in any of the following:
indexing
DCA
modern portfolio theory
efficient frontiers
diversification
All a bunch of naive rube-laden h*rseshit intended to separate the sheeple from their money.
packman,
O.K… shameless solution!
http://www.penscotrust.com
E’f ‘em all! Truly, truly run your own show! Go buy a freaking laundramat or something? Buy a business and drive past it every morning on your way to work. Enough already.
This is a direct rollover so there is NO taxable event!
*NOT Investment Advice
LOL - given that the title of the web page includes the words “self directed real estate IRA” - I don’t think so.
A laundramat probably isn’t a bad idea - I had an acquaintance that owned about 5 of them actually. Not sure how he did though. My rule though is “stick with what you know”, and I make enough in my day job (right now at least), so I’ll pass on the small business idea. Maybe down the road.
Nonetheless- are you saying you can use 401k money to start a business without the 10% and tax penalty? I hadn’t heard that, though I haven’t investigated it.
You can do almost anything with an IRA. You have to be careful about not co-mingling. For example, lets say you wanted to invest in timber and bought land to hold onto for X years until its ready to harvest. You (technically) aren’t supposed to go riding your 4 wheeler on that land. If you do, you could get hit with penalties and such (I’m not sure what all those penalties are).
I’m also not certain what would be the best way to structure something like that to prevent problems (you would just need to research that) but my point is you can pretty much invest that money any way you want.
Convert it to wine and store it under your bed. If things get too bad you can drink yourself silly every night. Plus wine always tastes better as it gets older.
I’d say that your best bet is to pick several without ties to an investment bank, and then pick the one with the best computer user interface. I’m in Fidelity, but that is because my first 401(k) was with them. Seems to work. If you prefer a particular family of funds, then go with that one. Seriously, this process is a bit of a pain and takes longer than it should, but it is well worth it to have the information you need easily accessible.
Speaking of Fidelity I got a very “good” phishing e-mail from somewhere imitating a Fidelity e-mail. Compared it to one of their real e-mails and it was a very, very close to a match. The phishing was obvious since it was sent to the wrong e-mail address, didn’t have my name in the salutation and the grammar and content of the message was off, but it was very well done visually.
Called the company (got a real person just by hitting “O” for operator twice) and they said they had heard about it but gave me a place to report it and offered to change all my account identifiers and reset my pin if I liked. I declined since the phishers obviously didn’t have any of my particular information, so it wasn’t targeted to Fidelity customers (not a security breach). I got a similar phishing e-mail from a Bank of America imitator recently and I’ve never had an account there.
I’d say that your best bet is to pick several without ties to an investment bank, and then pick the one with the best computer user interface. I’m in Fidelity, but that is because my first 401(k) was with them. Seems to work.
Speaking of Fidelity I got a very “good” phishing e-mail from somewhere imitating a Fidelity e-mail. Compared it to one of their real e-mails and it was a very, very close to a match. The phishing was obvious since it was sent to the wrong e-mail address, didn’t have my name in the salutation and the grammar and content of the message was off, but it was very well done visually.
Called the company (got a real person just by hitting “O” for operator twice) and they said they had heard about it but gave me a place to report it and offered to change all my account identifiers and reset my pin if I liked. I declined since the phishers obviously didn’t have any of my particular information, so it wasn’t targeted to Fidelity customers (not a security breach). I got a similar phishing e-mail from a Bank of America imitator recently and I’ve never had an account there.
Thanks everyone for the info! I’ll definitely check into Vanguard.
Vanguard’s my favorite. They run it right, keep the fees low and have great customer service. Setting up is a pain because you usually have to open two IRA’s (a Vanguard IRA rollover and a Vanguard Brokerage IRA rollover) but once that’s done they are the best I’ve ever worked with.
Fidelity would be 2nd choice but as they have an advisor arm (meaning mutual funds with loads) and higher fees they just don’t perform as well as Vanguard. Plus, Vanguard is a “mutual company” so once you invest with them you are a part owner too.
“Plus, Vanguard is a “mutual company” so once you invest with them you are a part owner too”
What does it mean? What are the risks/benefits?
Add to existing Fidelity or make new Vanguard. Two most ethical with lowest fees.
I use both Fidelity and Vanguard. Fidelity is fine, however I’m a bit concerned that it’s a family business run as an LLC, with not enough transparency. (Not that public “transparent” companies are any better, LOL).
These days counterparty risk is high enough to make you NOT put all your eggs into one basket.
SD County unemployment rate “worse than expected” but better than most other places in CA
Jobless rate in county at 8.6 percent
10 percent possible, economists warn
By Dean Calbreath
Union-Tribune Staff Writer
2:00 a.m. March 6, 2009
The jobless rate in San Diego County jumped to 8.6 percent in January – matching its highest level in at least two decades – as retail clerks, restaurant waiters and temporary workers hit the unemployment lines, according to data released yesterday by the state.
Economists say they would not be surprised to see the local unemployment rate top 10 percent before the job market stabilizes – which, they say, will probably not occur until the first half of next year.
“It could easily hit 10 percent,” said Alan Gin, economist at the University of San Diego. “This is becoming a self-feeding cycle. People are losing jobs and not spending money, which causes more jobs to be lost.”
Kelly Cunningham, economist at the National University System’s Institute for Policy Research in San Diego, said he had anticipated that the jobless numbers would not be good, “but this is really worse than what we were predicting. I didn’t expect the unemployment number would get this high until summer.”
…
STATE UNEMPLOYMENT FOR JANUARY
LOWEST UNEMPLOYMENT RATES
County Unemployed Rate
Marin 9,000 6.6%
Mono 630 6.7%
San Mateo 27,700 7.2%
Orange 122,800 7.5%
San Francisco 36,100 8.0%
San Luis Obispo11,100 8.0%
Santa Barbara18,300 8.3%
Napa 6,300 8.5%
Sonoma 22,600 8.6%
San Diego 135,100 8.6%
HIGHEST UNEMPLOYMENT RATES
County Unemployed Rate
Colusa 2,890 26.7%
Imperial 17,800 24.2%
Trinity 1,050 20.9%
Merced 20,100 18.9%
Plumas 1,900 18.9%
Yuba 5,200 17.9%
Siskiyou 3,460 17.6%
Sutter 7,400 17.4%
Sierra 290 16.8%
Tulare 33,600 16.2%
The 20.9% unemployment rate in Trinity county California is not really true…everyone is employed growing dope. Ditto for Humboldt, Mendocino, and Del Norte. That is why home prices haven’t fallen here.
Meanwhile, the highest paid government employee in the state of CA is the UC Berkeley football coach. His salary is something like 2.8 million.
Unemployment rate in Josephine county, southern
Oregon is now 14.6% and the city management is in
total denial.
This event has so many aspects, it’s tough to keep track. But at the local level it seems safe to say that current local governments are totally unprepared for the unwinding drop in revenue that all this unemployment will bring.
drop in revenue that all this unemployment will bring ??
Yep…..They will try to hold it off by raiseing taxes and fee’s but it won’t work this time….Damm it !!! I just can’t figure out how to bet this….How do you bet the other side of massive budget deficits other than cash ??
Cure for the deficits:
Pension cuts
Government pay cuts (I know of two across the board Fed pay cuts during the depression.)
Cutting administration layers (ok, unlikely)
Tax increases will only increase unemployment. Every employer I know of is trying to ‘right size’ the business for the current post-tax revenue. This is everything from my barber, auto mechanic, several doctors, flower shops, supermarkets, liquor stores, and any and every sales position I can think of.
In 2002 I was reading reports about how our economy was becoming ‘unstable’ due to the surplus of salespeople in our economy. Why so many? I buy books on my Kindle now. My previous car purchase was online. Craigslist, e-bay, Amazon, etc. fill most of my high end needs with Costco/Sams Club for enough of the rest. Oh… Baby-R-Us is making money off us (new child), but other than a few niches, why so many sales people? The next step is to open the MLS and make Realtors ™ earn their money (rather than being a required road block/expense).
Note: I understand the use of salespeople. But the trend is toward educated ones that provide a value added service.
Got Popcorn?
Neil
Consumers and companies are cutting spending to survive in the current recession, “making the contraction even more severe.” Even if there are banks with sound assets, they wouldn’t lend in an economic decline, he said.
“If you don’t take the right policy action, this U-shaped recession will turn into an L-shaped recession like in Japan in the 1990s,” the professor said.
Bloomberg: Roubini Says Recession May Continue Until End of 2010
Don’t even think about buying a home until after year-end 2010, unless you enjoy trying to catch falling knives.
Thought about you comment yesterday about markets rebounding way before the housing market.
It’s one of those simple almost self evident things, but I had not thought about it until you mentioned it.
There are a lot of consequences to that statement.
Both the housing market and the stock market are doing the mother of all bungee jumps right now, but the bungee chord is stretching out much more slowly in the housing market and hence will not reach maximum depth until long after the stock market. What’s worse, although a fair number of companies may fail in the current episode, many of these have already reached penny stock price levels, while housing in many places is still valued at levels unsupported by local income levels, leaving plenty of room to fall. Finally, once the housing market bottoms out, it may stay there, as there is a huge supply glut of McMansions which presumably will face less end-user demand as the baby boomers age, while the stock market includes a much broader mix of sectors, at least some of which will eventually rebound.
In short, I expect the stock market to (eventually) bounce back, and for this to happen sooner than any recovery in housing. In the worst case scenario, housing will land hard and stay down for a generation.
One difference: Judging from the MSM stories, the stock market gloom is pervasive and extreme. While housing is not exactly doing great, I still hear bottom callers say a bottom will form at year end 2009, which I simply find implausible given labor market dynamics. So my guess is that we are in for more “worse than expected” housing price declines, leading to eventual, but not near-term, capitulation, as sellers remain deluded by false hope for a near-term bottom.
Link ??
http://www.bloomberg.com/apps/news?pid=20601091&sid=ayVsI_55G8.0&refer=india
I ask the daily Fedex delivery guy how shipping volume is…one word: SCARY. I prompted further and he said he’s never seen anything like it. He’s been workin 11 hour days for 12 years and now he’s down to 7-8 hours a day as of mid-Jan, began squealin’ about not being able to make a mortgage payment, etc. I was easy on him but suggested if he thought he need to sell the shack, sell now and undercut anything else in the vincinity by 10%.
The RE puke excuse of “we’re not FL” isn’t going to work anymore. I can’t wait to hear their next excuse.
From today’s Krugman:
Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.
Thus, in a recent interview Tim Geithner, the Treasury secretary, tried to make a distinction between the “basic inherent economic value” of troubled assets and the “artificially depressed value” that those assets command right now.
Oh yeah, the “basic inherent economic value” and the “artificially depressed value!” I tried that line at my last yard sale, as in “This lamp’s basic inherent value is $20, $5 is an artificially depressed value,” but no one bit.
That argument doesn’t work very well on margin calls either.
They are working extremely hard to get the government, by way of guarantees and other schemes, to pay for yesteryear’s junk loans. Clearly, these guys are not working for the people. They are working for Mega-Bank. It’s really shameful. It’s a protection racket.
Clearly, privatize the profits and socialize the losses +1
It’s all an excuse to keep bank failures from happening as quickly, out of fear that another Lehman Brothers situation will develop if mark to market actually occurs. Already the FDIC is projecting it won’t last the year.
The Treasury gang already knows they’re full of $hi#, but feel the alternative (to let the market crash rapidly) is a danger to national security and normal government operation.
‘Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them…’
Are they really that dense, or is it more that they are trying to bamboozle Main Street into graciously consenting to provide a Yucca Mountain repository for Wall Street’s nuclear waste?
Ooo - nice tie-in of recent events.
What the Obama adminstration won’t tell you - the funding for Yucca mountain wasn’t really killed - it was just transferred from the DoE to the Treasury department!
They are just trying to bamboozle the masses who wouldn’t be able to tell their @ss from the elbow in the financial world.
Here, take this quiz:
Define for me:
(a) a security (”are options securities? futures?”)
(b) a bond,
(c) a stock.
See how many people here nail it. The public is going to much much, well, short-bussy.
(a) a security is price. the lower the price the lower the security.
(b)a bond is a claim on on money.
(c) a stock is a claim on equity.
thats about right?
It’s a huge mountain of crap. And they have no idea of what to do with the offal mess.
But it smells and they want to make it go away.
Solutions:
Let’s pretend it doesnt exist = market to model/fantasy.
Let’s warehouse it = bad bank.
Let’s hope it goes away = investors will buy buy the crap.
The PNC death spiral continues.
Way OT, but can anyone recommend a way to find a good vacation rent house in FLA? I’m looking at the Destin-Ft. Walton area.
This is a carry-over from yesterday:
(Comments wont nest below this level)
Comment by Big V
2009-03-06 11:43:15
How can you say that the individual is not getting a penny? The man is living for free. I’m all for walking away, but I’m willing to pay a sherrif to kick this guy out and make him get a rental. That will light a fire under the bank’s ass to either get a paying tenant or sell the place post-haste.
This is a carry-over from yesterday, and may be a repost:
(Comments wont nest below this level)
Comment by Big V
2009-03-06 11:43:15
How can you say that the individual is not getting a penny? The man is living for free. I’m all for walking away, but I’m willing to pay a sherrif to kick this guy out and make him get a rental. That will light a fire under the bank’s ass to either get a paying tenant or sell the place post-haste.
MoT?
USO possibly breaking out. UYG not ready for long yet, but getting closer.
I really like the way this this is crashing, the antithesis of the decrepit old guide that took us through the big pyramid under the church at Cholula.
“Seven steps up, and a rest…”
From yesterday:
[in response to my post responding to someone who asserted that there is no escaping from wage-slavery these days.]
BigV: ‘No offense, but what is your point?
Olympiagal: “Well, I think his point is he doesn’t want to be long-suffering, whether as a ‘consumer’ or a ‘wage-slave’ or as not one of those, as elected by him, after personal consideration and a studied choice, and measured steps taken to effect that choice. (This’s as I take it, and I don’t know Primey, in the meat, but I don’t care, I’m going to take liberties, because he’s not here to complain,)
It seems to me that when Primey writes ‘emancipation’, he means ‘freedom from artificial constraint’.
So, if you want to work in a company, because this effects your planned ends, then super. ”
Olympiagal got my meaning. By “emancipate yourself from wage-slavery”, I did not mean one necessarily has to work for him/herself (heck, I work at a normal wage-based job at a large company whose name you would recognize). I just meant that it is possible to buy your freedom from wage-slavery, in a way similar to the old-fashioned evil kind of slavery.
In my case, I translate that to a portfolio of sufficient size that approx 4% of it is something that I can comfortably but frugally live on. In other words, no longer having to toil to keep body and soul together. I may well continue at work I enjoy, but it will be because it is what I WANT to do, not what I HAVE to do as a slave.
My needs are few; it is not an impossible goal.
I highly recommend the book “Your money or your life”, which is on this very subject. When I first read it, it was like finding someone who could express in a clear way something I already believed.
I commend this point of view.
Good for you, Primey!
Oh, I see. I misunderstood you. I thought you were TXChicking.
What exactly would that be?
She was vegetarian. It’s not like she ate ducks or anything.
Mmmmmmmmm …. crispy duck!
The primary tool used by the wealthy and corporate elite in their ongoing war on the average citizen is wage slavery. I’ve gotten a glimpse of the very top levels of the corporate class of what was once the largest corporation on the planet and the other was literally topshelf/top floor of an un-named, bank that subsequently merged with the largest bank on the planet. Both were scenes out of Caligula at various times. The work with the bank was very brief, <18months. After 6 months working for the bank and developing relationships, I was treated like one of them in some respects. Staying at the 4 Seasons 5 nights a week, chauffers, first class flights to their offshore private banks with side arm equipped private security with me at all times, etc….The experience with the other (a conglomerate for 4 years)was truly a unique experience only a few observe and even fewer who are actual insiders. The contempt for all outside of the inner circle was disturbing, fascinating and an experience I wouldn’t trade for anything, even if I could. Anyways, this conglomerate consistently gave orders to a state regulatory body and they complied…. no lie. All parties were quite aware that they could take down this state agency with a barrage of lawsuits and they had stables of attorneys very capable of doing so. They are all about maintaining power and evading taxes. More resources go into dodging taxes and environmental regulation than does focusing on their core business. Both the bank and the conglomerate shared one primary parallel called arrogance.
I didn’t mean to write all this but wage slavery/class warfare and it’s syphlitic banking cousin the debt treadmill is very real.
PS- One of the coolest things I saw was the Coin and Currency depots. The security, PILES of cash everywhere… just amazing and you’d never know these places exist.
It’s shocking, isn’t it? Also, mind-opening, isn’t it?
You can never go home again.
Disturbing is most descript. Especially the debauchery and self indulgence. And your dead on about never going home again. Those experiences changed by perception of business and profits. Explaining what I experienced and what I saw is most difficult. People just don’t grasp it.
I can verify this is the norm.
It’s really hard to even get 4% these days. And BO is talking about “means testing” everything.
So you’ll get to the point when a frugal person who has saved, say, $4,000,000 on a modest salary will be in the exact same place as his deadbeat neighbors when he retires because he will be “means tested” out of Social Security, Medicare, etc.
I think it’s important to get the word out to J6P this the hit he took in his 401K is directly caused by the guy next door with the HELOC he’s not going to have to pay back. We need to get the masses ANGRY.
Be careful what you wish for reuven. Masses get angry and they don’t care who gets caught in the cross fire.
If you have lost money in your 401K specuvestments, it is your fault. Had you won bigtime you wouldn’t share the wealth wtih your stupid neighbors.
What happens tomorrow, does not cause what you did yesterday.
Speaking of lost money in 401K specuvestments, what ever happened to Bill in Los Angeles? I bet he’s doing some sweet DCA these days!
Still dollar cost averaging. The nice thing is the yield of veiex, vwesx, and vfinx are better than ten year notes. Remember, most of my periodic investing outside my retirement plans are in US Savings bonds, AAA and AA Arizona municipal bonds, and gold as an alternative currency. I’m hedged.
I didn’t lose MY money (though I have a SEP and not a 401K). I’m just saying we need to make people understand cause and effect. Far too many people are sympathetic to these housing handouts because they think owning a home is a “right” and they’re worried about house prices going down if they already own a house. (For the record, I have two 100% paid-up properties and I want housing to return to historical norms).
Anyone who lost money in their 401K should be furious about the handouts to Harry Homedebtor.
Here’s what happened:
Harry Homedebtor used his equity ATM to buy all sorts of junk! That made it appear that our economy was bigger than it really was, and caused stock prices to inflate. We were all told that historical levels for P/Es of 12 were a thing of the past and P/Es of 20 or more are perfectly healthy.
Then, the 401K scam encouraged millions to blindly buy index funds, pouring money into thousands of overpriced companies–companies that any value investor would never touch.
When Harry Homedebtor refused to pay what he borrowed, stock prices tanked.
So why are we giving more money to Harry Homedebtor?
I don’t think most people realize how direct the connection is between deadbeat homedebtors and our stock market performance.
Of course, the market was seriously overvalued, and wise people wouldn’t touch 90% of what was out there. But I maintain that a person doing sensible broad-market investing in a 401K was an order of magnitude more “innocent” than a homedebtor.
I still work with masses of people who REFUSE to even open the envelopes with the quarterly statements for their 403b’s. ( non-profit institution ). I mean, how can you respect someone’s whining when they DON’T WANT TO KNOW ? If there’s bad new, I DO want to know. If I don’t know, I can’t take steps to protect myself in the future. I’ve made my mistakes in life. But at least I try to learn from them.
Heck, PB confessed on this forum that he doesn’t do it.
It’s a human thing - ignorance is bliss, etc.
We’re different.
I was half joking, FPSS. I don’t look at the 401(K) statements very often because I don’t need that money for short term expenditures, and I expect the stock market will eventually recover. Why vex myself over short term moves if I, like Bill in Los Angeles and Bill in Maryland before him, am in the market for the long run?
P.S. I only allocated any 401(K) money into stock during the second half of last year, after the meltdown was in the bag. I am still far below the rule-of-thumb “110 minus your age” stock market allocation, and will gradually build up to that level over the next 10-20 years. But I am frankly quite disinterested in raising my blood pressure over short term movements in the stock market, and will be damned before I waste my time worrying about the short term effects of the meltdown currently underway.
I’ve looked at my 401k statement for the first time since September. Of course it’s much lower now. And it did not kill me. This is a big market cycle. The question is which year is going to be similar to 1933? 2009? 2012?
I still have a lot of years working. I don’t need my 401k or IRA. I still buy stock mutual funds in them regularly - weekly.
The really amazing thing is HBBers laugh at real estate cheerleaders who said that RE is different (i.e. cycles do not apply anymore). The same HBBers are saying cycles do not apply in stocks anymore either. Just as nutty!
Politics is cyclic. We get too much Republican policy, well time for Democrat policy. We are in a grand cycle where huge government control of our lives is settling in. But even that cycle will end in our lifetimes.
Within a couple of years we will have more certainty about the economy. Wwhen we get more certainty, it will be time to sell your biggest gains and buy the out of favor things.
With more certainty and rising employment, the cash hordes currently piled up under mattresses will flood back into stocks. I aim to be sufficiently exposed to the market at that point to enjoy the rocket ride into the sky, and I am willing to watch my 401(K) balance drop in the interim in order to gain such exposure.
So what stage is this? Denial, perhaps?
We’re slowly inching our way toward capitulation.
Another bank failure.
Regulators close Freedom Bank of Georgia; 17th bank failure so far this year
WASHINGTON (AP) — Regulators on Friday shut down Freedom Bank of Georgia, marking the 17th failure this year of a federally insured bank, and more are expected to succumb amid a deepening recession.
The Federal Deposit Insurance Corp. was appointed receiver of the bank, located in Commerce, Ga. It had about $173 million in assets and $161 million in deposits as of March 4.
Sorry if this has already been posted. I really wonder if this is going to keep being extended into infinity?
Fannie Mae extends no-eviction period through end of March
WASHINGTON (AP) — Government-controlled mortgage finance company Fannie Mae said Friday it is extending a halt to evictions on foreclosed properties through the end of this month as it implements pieces of the Obama administration’s plan to help struggling homeowners.
Bobby Brinker has called the bottom at 580 on the S&P.
makes sense…I thought 650 was the bottom…the real bears are calling 450.
Am I wrong or has Bob Brinker whined for low interest rates two or three years ago?
OT, but doesn’t anybody double check stuff anymore???
http://news.yahoo.com/s/afp/20090307/od_afp/russiausdiplomacyoffbeat_20090307074740