The Housing Bubble

Any previous threads in the last six months about bubble prices in texas? My father somehow thinks the bubble was restricted to the coasts, though arizona and nevada are deemed part of the coast for some reason. Even better, he thinks that suspending mark to market will magically stop the carnage, as though the candy cr*ppin’ unicorn will pop out of nowhere and start providing financial sustenance to those in trouble. Sigh.

Wow, a developer-acquaintance of mine that spent the past two years working full-time on a mansion in an upscale area of LA hasn’t received a single offer on it since putting it up for sale about 2-3 months ago…before you make a bunch of remarks about how he deserves to have his head handed to him for trying to make money by building, I’d like to say that it’s a really sad situation to watch up close, as he physically worked on the project as in like hammering nails and all of that, the whole way through, and has a wife and kids…

In other news, anyone notice the harassment of US naval ships the past few days by Chinese military ships. Maybe I’ve got my tinfoil hat on too tight, but I can’t help but to think this sort of intimidation has something to do with the Chinese demanding that we guarantee the value of their dollar holdings, not to mention backstop their Citibank bonds, Freddie and Fannie holdings, etc. I mean, if you read about the incident, their ships’ behavior was very aggressive and intentional, and they don’t do stuff like that arbitrarily.

Commercial Real Estate may be getting ready for a big leg down. SPG, the big mall owner, is issuing new shares to raise capital, shortly after the incredible move of offering 90% of its dividend in stock in lieu of cash. I have had puts on SPG for a while and am looking forward to a spike. Watch SRS, which could make a big surge beyond 100 on Tuesday.

Will the anti-bailout movement turn violent?

http://pajamasmedia.com/blog/could-americans-discontent-turn-violent/

I may be premature on this purchase, but I essentially got bored of saving when my cash pile hit six figures and the interest dropped like a rock in the last three months. It was a great milestone and I did it in three years.

So, what am I about to buy? My dream car, a Porsche 911 Turbo. Almost bought one in 2006 but I knew what the economy was about to do. I still remember the dealer saying, “buy this used 02, you won’t get hurt on depreciation.” It was a beautiful car but I figured all assets would suffer and held out 27 months since that day. Friday I’m picking up the car for 20k less than I would have paid then, with huge upgrades on the wheels, turbos, suspension, and engine tuning. Plus it looks brand new.

Wife and I still have our joint home down payment savings completely separate from this, and I still have plenty enough to pay off my student loans (which I may do just to be debt free). But the war chest has been tapped in a big way! I feel so weak. But at least I’ll have a good time driving off into the depression. And California needs my sales tax.

VROOOOOOM!

Anyone have any idea what the real estate market is like in Third world countries that attract a lot of American ex-pats?

I have a friend who was telling me that some friends of his bought a villa south of Puerto Vallarta and were planning to retire early to ride out the storm. I was skeptical of any “good deals”, so he showed me some pics, and it was actually a really nice villa with a view of the Pacific. He didn’t know what they got it for, but he thought it was probably still cheap to buy down there.

I suppose if a 100K villa dropped 50% in value over the next 3-5 years, it’s still a better deal than a 500K house in the US simultaneously dropping 50%. Especially if you plan to live there long term off of a fixed income.

This won’t be the only big dog that will give it their plans of ‘paying’ back the gubmint. Once you open your doors to the helping hand the die is cast. Surprise, surprise!

NEW YORK (Reuters) - Eli Broad, a former director and shareholder of AIG who joined other investors last year to hatch a plan to reclaim the insurer from federal ownership, said he has thrown in the towel.

American International Group Inc, once the world’s biggest insurer, had to be bailed out by the U.S. government last September after losses on bad mortgage bets. In exchange, taxpayers got roughly 80 percent ownership, heavily diluting the stake of shareholders.

“If you look at what has happened, I think it is too late,” said Broad, in an interview late on Monday.

“There were all these additional costs” from the federal bailout, which initially carried a heavy interest burden, said Broad. And, “a lot of good people left, and they were trying to sell units,” irking customers who did not like the uncertainty, he added.

AIG last week reported a record $61.7 billion fourth-quarter loss, and received new assistance from the U.S. government after a plan to sell assets to repay debts foundered.

The U.S. said it will keep pumping cash into AIG as needed because of the threat to trading partners from a collapse. It has already put up to $180 billion at AIG’s disposal.

AIG ran into a cash crunch after market declines and rating downgrades required it to post large amounts of collateral to counterparties of credit default swaps written by a financial products unit.

“Savvy” Buyers looking to snap up some ‘instant’ equity. LOL!

News - Local / Metro
Tuesday, Mar. 10, 2009
Foreclosure bus tour set for Columbia
Tour allows area buyers to benefit from U.S. mortgage crisis
By JEFF WILKINSON - jwilkinson@thestate.com

With foreclosures on the rise in Columbia, a group of Columbia-area real estate agents is asking buyers to get on the bus.

Mimicking the popular TLC television show “Deals On a Bus,” the agents hope to match people with properties that are undervalued because of the economy or foreclosure.

It’s thought to be Columbia’s first foreclosure bus tour.
Foreclosure bus

Potential buyers check out a property Sunday during the Myrtle Beach area foreclosure tour organized by Jarrett Bouchette of Bouchette Realty & Investments.

A team of real estate agents is staging what’s believed to be metro Columbia’s first foreclosure caravan.

A team of lenders and inspectors also will be along to answer potential buyers’ questions.

“With the market the way it’s been, there’s just been negative news across the board,” said organizer Lisa Davey with Keller Williams Realty. “This is a way to put a positive spin on things.”

Foreclosure caravans have been popping up nationally, particularly in regions of the country that have been harder hit than metro Columbia.

In South Carolina, foreclosure caravans already have been staged in Charleston and Myrtle Beach. Along with Hilton Head and Dorchester County, they have been the areas in the state most affected by the mortgage crisis.

Nick Kremydas, chief executive officer of the S.C. Realtors trade group, said “listing caravans” have been around for years.

“But we are going to see a lot of creative practices — other kinds of innovative methods as the market continues to redefine itself,” he said.

Agents already have employed free house raffles, kicked in free cars or flat-screen TVs with sales, or offered to make payments for a homeowner who loses his or her job.

Nearly one in nine S.C. homeowners was behind on mortgage payments or in foreclosure in the last three months of 2008, according the Mortgage Bankers Association.

Kremydas said he expects that trough to deepen in the near future. Although foreclosures have leveled out in California, Florida and Texas, where the crisis began, South Carolina is lagging 12 to 24 months behind.

“We’re not at the bottom of the market,” he said. “But barring any further financial collapses, we should start to see a flattening of the market in midsummer or early fall.”

In the meantime, real estate agent Davey said she is trying to find the real deals in a buyer’s market.

“We want to find instant equity in a home and tailor that home to a buyer,” she said

Erina and Merritt Flowers of Blythewood plan to go along for the ride.

They are looking for a 3,200-square-foot or so home in the $350,000 range for their family of four.

“We thought it would be a wonderful opportunity to see what’s out there,” Erina Flowers said. “The timing is right. (Interest) rates are reasonable. And to have all the professionals right there seems very convenient.”

Speaking of commercial real estate:

Ward Parkway Mall in Kansas City facing foreclosure and is scheduled to be sold on the steps of the Jackson County Courthouse on March 26

http://www.kansascity.com/637/story/1076542.html

Deflation looms in China…

HONG KONG: Most economists still do not expect the Chinese economy to suffer a broad decline in prices this year, but statistics released on Tuesday did provide disturbing whiffs of possible deflation.

Consumer prices were 1.6 percent lower last month than a year earlier, the first decline since December, 2002, the National Bureau of Statistics announced in Beijing. February’s result represented a precipitous drop from an inflation rate of 8.7 percent in February of last year, when rising prices were a top priority for the Chinese government.

Producer prices are falling even faster, dragged down mainly by lower prices for oil and other commodities, but also by a glut of factory capacity and a shortage of demand from exporters and Chinese buyers alike. Producer prices were 4.5 percent lower last month than a year earlier, after having shown annual increases of as much as 10 percent as recently as last summer.

There are few signs yet that demand is returning. Commerce Minister Chen Deming warned at a news conference in Beijing on Tuesday that China’s trade had continued to shrink in February — exact figures are due for release later this week. And he cautioned that, “It’s fair to say in coming months we will see quite a grim picture.”

From McClatchynews - Almost $600 Billion in now hidden losses at 5 largest banks could emerge soon:

WASHINGTON — America’s five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their “current” net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.

The banks’ potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama’s economic team must overcome to save institutions it deems too big to fail.

While the potential loss totals include risks reported by Wachovia Bank, which Wells Fargo agreed to acquire in October, they don’t reflect another Pandora’s Box: the impact of Bank of America’s Jan. 1 acquisition of tottering investment bank Merrill Lynch, a major derivatives dealer.

Federal regulators portray the potential loss figures as worst-case. However, the risks of these off-balance sheet investments, once thought minimal, have risen sharply as the U.S. has fallen into the steepest economic downturn since World War II, and the big banks’ share prices have plummeted to unimaginable lows.

With 12.5 million Americans unemployed and consumer spending in a freefall, fears are rising that a spate of corporate bankruptcies could deliver a new, crippling blow to major banks. Because of the trading in derivatives, corporate bankruptcies could cause a chain reaction that deprives the banks of hundreds of billions of dollars in insurance they bought on risky debt or forces them to shell out huge sums to cover debt they guaranteed.

The biggest concerns are the banks’ holdings of contracts known as credit-default swaps, which can provide insurance against defaults on loans such as subprime mortgages or guarantee actual payments for borrowers who walk away from their debts.

The banks’ credit-default swap holdings, with face values in the trillions of dollars, are “a ticking time bomb, and how bad it gets is going to depend on how bad the economy gets,” said Christopher Whalen, a managing director of Institutional Risk Analytics, a company that grades banks on their degree of loss risk from complex investments.

TOO BIG HAS FAILED
Thomas M. Hoenig
President and Chief Executive Officer
Federal Reserve Bank of Kansas City

Omaha, Neb.
March 6, 2009

The views expressed by the author do not necessarily reflect those of the Federal Reserve System, its governors, officers or representatives.

My heroine speaks out in the WSJ Op-ed pages:

Wall Street Journal
* OPINION
* MARCH 10, 2009

Credit Cards Are the Next Credit Crunch
Washington shouldn’t exacerbate the looming problem in consumer credit lines.

By MEREDITH WHITNEY

Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending. Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon. While those numbers look small relative to total mortgage debt of over $10.5 trillion, credit-card debt is revolving and accordingly being paid off and drawn down over and over, creating a critical role in commerce in America.

Just six months ago, I estimated that at least $2 trillion of available credit-card lines would be expunged from the system by the end of 2010. However, today, that estimate now looks optimistic, as available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone. My revised estimates are that over $2 trillion of credit-card lines will be cut inside of 2009, and $2.7 trillion by the end of 2010.

Apologies to Ben, I usually don’t post commentary in entirety, but the link seems to be broken.

The $700 trillion elephant

Commentary: Gargantuan derivatives market weighs on all other issues

By Thomas Kostigen, MarketWatch
Last update: 12:01 a.m. EST March 6, 2009
Comments: 355

SANTA MONICA, Calif. (MarketWatch) — There’s a $700 trillion elephant in the room and it’s time we found out how much it really weighs on the economy.

Derivative contracts total about three-quarters of a quadrillion dollars in “notional” amounts, according to the Bank for International Settlements. These contracts are tallied in notional values because no one really can say how much they are worth.

But valuing them correctly is exactly what we should be doing because these comprise the viral disease that has infected the financial markets and the economies of the world.

Try as we might to salvage the residential real estate market, it’s at best worth $23 trillion in the U.S. We’re struggling to save the stock market, but that’s valued at less than $15 trillion. And we hope to keep the entire U.S. economy from collapsing, yet gross domestic product stands at $14.2 trillion.
Compare any of these to the derivatives market and you can easily see that we are just closing the windows as a tsunami crashes to shore. The total value of all the stock markets in the world amounts to less than $50 trillion, according to the World Federation of Exchanges.

To be sure, the derivatives market is international. But much of the trouble we’re in began with contracts “derived” from the values associated with U.S. residential real estate market. These contracts were engineered based on the various assumptions tied to those values.

Few know what derivatives are worth. I spoke with one derivatives trader who manages billions of dollars and she said she couldn’t even value her portfolio because “no one knows anymore who is on the other side of the trade.”

Derivatives pricing, simply put, is determined by what someone else is willing to pay for the contract. The value is based on an artificial scenario that “X” will be worth “Y” if “Z” happens. Strip away the fantasy, however, and the reality of the situation is akin to a game of musical chairs — without any chairs.

So now the music has finally stopped.

That’s why stabilizing the housing market will do little to take the sting out of the snapback we are going through on Wall Street. Once people’s mortgages were sold off to secondary buyers, and then all sorts of crazy types of derivative securities were devised based on those, and those securities were in turn traded on down the line, there is now little if any relevance to the real estate values on which they were pegged.

We need to identify and determine the real value of derivatives before we give banks and institutions a pass-go with more tax dollars. Otherwise, homeowners will suffer as banks patch up the holes left in their balance sheets by the derivatives gone poof; new credit won’t be extended until the raff of the old credit is put behind.

It isn’t the housing market devaluation, or the sub-prime mortgage market defaults that have us in real trouble. Those are nice fakes to sway attention away from the place where greed truly flourished — trading phony instruments to the tune of $700 trillion.

Let’s figure how to get out from under that. Then maybe the capital will begin to flow again through the markets. Right now, this elephant isn’t just in the room, it’s sitting on us.

Thomas M. Kostigen is the author of You Are Here: Exposing the Vital Link Between What We Do and What That Does to Our Planet (HarperOne). http://www.readyouarehere.com

http://www.marketwatch.com/news/story/The-700-trillion-elephant-room/story.aspx?guid={024DB809-8506-4AA9-83BB-B053FD4E1C11}

Yes now everybody will have a higher percentage of debt to maximum credit line and a lower Fico score. Just what we needed to boost the economy.

Maybe if they actually helped Americans and gave everyone $1000 or $2000 per card, and have our President act like a Father figure, and say now little Americans, do not spend it on booze drugs hookers, gameboys xbox but on new clothes and a new professional done resume so you can look great at job interviews. Maybe get the car fixed or repainted so you will look toan employer if you need to use your car on the job.

Maybe go back to night school to get your GED or finish a training course……use the money wisely

It would cost less then any $3-6-1200 rebate checks, and would be an immediate stimulus to America…..but then we gave debit cards to Katrina “victims” and they blew it out the wazoo…

—————————————————————-
My revised estimates are that over $2 trillion of credit-card lines will be cut inside of 2009, and $2.7 trillion by the end of 2010.

LMAO….. The house-debtor self righteous entitlement mentality is alive and well…

http://tinyurl.com/afhtml

Hi. Sort of non RE question. I am looking to buy some land maybe ten acres or so in the mountains west of Wash, DC. Is weather supposed to be diffrent whether you are on the East or West side of mountian range ? Difference in percipitation or wind any other factors ? Land is just for a small cabin. Prices still very sticky. Probably 3 or more years until they get realistic.
One area of interest is Charlottesville area. The prices are astoundingingly high for both houses and land, considering there is land around for miles and miles and miles.

Mark-to-market accounting debated
Some blame requirement for ‘debt spiral,’ but others say rule isn’t the problem

By Kate Gibson, MarketWatch
March 5, 2009

Equities investors looking for some hope in an ugly market on Thursday pointed to a news report that a House panel next week plans a hearing on mark-to-market accounting rules blamed by many for aggravating the financial sector’s troubles.

But one accounting expert said the brouhaha over the rule has some auditors and CFOs opting to value various assets at the last transacted price. In many cases, that approach isn’t even required — and doesn’t make the most sense.

“The application of the rule has been done in a way to prevent second guessing,” with some using only the last price paid for an asset when other factors such as interest rates and risk premiums can also be legitimately considered, said David Larsen, managing director and member of the portfolio valuation practice at Duff & Phelps.

Reuters on Wednesday quoted a source briefed on the matter who said the subcommittee on capital markets has tentatively slated for next Thursday a hearing on the rules that require assets be valued at current market prices.

Steve Adams, a spokesman for the House Financial Services Committee, did not immediately return calls for comment.
“The accounting rule has been a major contributor to the debt spiral,”said Ed Yardeni, president and chief investment strategist at Yardeni Research Inc.Some financial institutions contend the rule compels them to mark down assets to artificially low prices.

(Reuters) - Stocks jumped on Tuesday, extending strong gains after Rep. Barney Frank said he expects the SEC’s uptick rule to be restored in about a month.

Frank added that mark-to-market accounting rule must be improved and made more flexible. A congressional panel is set to conduct a hearing on Thursday.

INVESTOR ALERT
Financials fuel U.S. surge
latest news
April gold down $18.40, or 2%, to $899.70 an ounce on Globex
MARKETWATCH FIRST TAKE
Fed will take away the punch bowl next time
Commentary: Bernanke proposes paradigm shift in bank regulation
By MarketWatch
Last update: 12:10 p.m. EDT March 10, 2009

WASHINGTON (MarketWatch) — In the middle of the worst hangover since the Depression, Ben Bernanke said Tuesday the Fed will take the punch bowl away if the next party gets too wild, a return to the more-sober policies of William McChesney Martin and Paul Volcker.
Bernanke’s immediate predecessor, Alan Greenspan, hated the role of party pooper, so he changed his job description. So we got two historic asset bubbles and two equally historic crashes.

RE: Marmots

Oly –

You asked about marmots last night. I had one living in engine when I lived in Yellowstone and I think that it was a yellow-bellied marmot. I think that they enjoy the warmth and the covering on the electrical wire. They are basically just big ol’ squirrels.

MrBubble

Help! I’ve been lurking on this blog for three years. Thanks to this blog, I never bought a house in florida. A few times I’ve asked questions and have received great advice. Once again, I find myself in need of advice from the HBB folks.

We have been renting a house that although a nice guy, was a realtor and investor. He has moved away and our lease was up in December. He decided to go for a short sale and hired an attorney. He told us legally he couldn’t do another lease and that we shouldn’t worry because the short sale would take 6 months to a year, even longer. Well, apparently the bank approved a write down in January, which was very quick. The landlord asked us to sign a long term lease, which we never responded as he was looking for an investor to buy and I want to know who my landlord would be before signing a lease….

He said it would only be listed to investors, but two weeks ago, there was my house(his house or the banks house) on realtor.com. He borrowed 1.1 million in two loans and listed it at $595k. It says bank approved and ready for a 45 day close. All of a sudden the showings started. I have been very accommodating and have the house cleaned, burn candles for the showings….. Yesterday the idiot botox, brain dead realtor called 3 times starting at 6:15pm and then waited outside our house until we got home at 7pm. A very interested buyer wanted to show the house at 9am today. I was told 24 hours notice and had plans at the kids school, a sick child…. I said I wouldn’t be able to have the house ready to show and that Wed. would work better.

The Landlord calls me up angry and gives me 30 days notice(verbal) because he needs to show the house…. and botox, brain dead realtor said that the house is a mess(so untrue), and other untrue accusations. BBDR doesn’t like me because I’ve told her she is wrong when she said everyone knows housing has hit rock bottom…….. Even when my husband called landlord, ll said it sounded like realtor wants us out of the house.

My question is: We have no lease and are going month to month. I can’t be ready to move out in 30 days. What rights as a renter with three children, one with a disability, to stay in this home until I can make other arrangements… How long will it take for landlord to evict me? He still legally owns the house. What if the house does sell. How many days do I have before I have to be out?

Landlord hired an attorney and switched all his properties to a land trust, even though this was his primary residence at one time. Why did he do that and how on earth did he get $500k in loans forgiven so quickly????

Thanks for all the advice over the years and especially for convincing me not to buy a home three years ago!

“The world economy is not in a period of negative growth. It is in a period of positive collapse! [But] it is clearing away a generation’s worth of mistakes, misallocations of resources and misplaced confidence.”

~Bill Bonner

Step Right up…..NEXT:

According to a confidential internal document obtained by TheStreet.com, Delphi is instituting three mandatory vacation weeks for 2009, taken during the week of the Independence Day holiday, Thanksgiving and Christmas. Delphi’s Mexican operations will also be affected, but for a shorter period during Thanksgiving. Delphi will encourage salaried employees to purchase additional vacation time during 2009.

Delphi last month canceled life-insurance and health-care coverage for retirees after a bankruptcy judge called it “good business judgment.” This attracted the ire of the National Retiree Legislative Network, whose president, Bill Kadereit, called on President Barack Obama to make good on a campaign promise to reform bankruptcy laws to protect workers and retirees.

The Vulture is a very patient bird!

The Down Index: Hamptons Real Estate Confidential
By Billy Norwich

© ShutterstockThe Etceterist recently sat down for a chat with Mary Slattery, one of the Corcoran Group’s most popular brokers, specializing in East End Long Island deals, big and small. And, always good with sharing, he’s passed along the transcript:

THE ETCETERIST: Is it true that, because of the financial crisis, everything is for sale in the Hamptons and everything can be bought for 50 percent of the asking price?

MARY SLATTERY: Sorry for the buyers, happy for the sellers, but no, that isn’t entirely accurate. Is there a sign in Times Square that says “Hamptons 50% Off”? There must be. But it is an urban legend. Yes, in the very high end, prices are dropping dramatically, but it just goes to show that, in many cases, before this crisis, things were overpriced.

ETC: How about rentals? Fifty percent off listed price, right?

MARY: I think there is a perception in the media that everyone is tanking out here, but that is an incorrect assumption. Some people are and some aren’t and for every seller who has to sell, or put their place up for rent, there is a seller or a renter who is taking his or her house off the market until prices stabilize or come back up, which, of course, they will eventually. They always do.

ETC: But these guys I hear about who are putting in offers via their brokers on houses they haven’t even seen, offering 50 percent less than the asking price — have you heard that?

MARY: A buyer I have worked with over the years recently called me up and told me to put out offers on 16 properties — all sight unseen — priced in the millions. In each case, his offering price was 40 percent to 50 percent less than the listed price.

ETC: You didn’t do it, did you?

MARY: Yes, I did. You have to. We are obligated to present to the sellers all offers on their property no matter how low.

ETC: How many accepted the offers?

MARY: None.

ETC: None? I would have thought …

MARY: Sometimes it might work, but there are other reasons besides financial disaster why people sell their houses. Maybe the house is on the market because they want out of the Hamptons; or their kids are grown; or they want a new decorating project; or they are doing estate planning and don’t want the house in their estate. They don’t have to sell, so they can wait or take the house off the market. Same with renting; a lot of people rent their houses in the summer so they can get out of here, avoid what the Hamptons becomes in summer, like a camp for grown-ups. Maybe this summer they won’t rent — won’t go to Europe, but will stay home.

ETC: But some guys keep offering 50 percent less until they find the people who have to sell. I know of a guy who did that a couple weekends ago. He made offers, sight unseen, on five $4.5 million properties, offering $3 million each — and two offers were accepted.

MARY: Predatory buyers — they aren’t going away. The vulture is a very patient bird.

http://www.wowowow.com/money/down-index-hamptons-real-estate-confidential-232419

He’s been tapped to lead the country through a massive financial crisis, but Timothy Geithner will be lucky to break even on the sale of his own New York house.

The Geithners want to unload the stately Larchmont Tudor and move to Washington.

If you search, there’s exactly one house on sale with those numbers in Larchmont, NY.

Some very questionable color choices and hideous carpets. I do not think Turbo-Tax Timmay and his wife have any gay friends. LOL

And I bet he rides the market down too.

BWAHAHHAHAHAHHAHAHAHHAHAHHAHAHAHHAHHHHHHHHHHHH!!!

From the unentended consequences file:

Merck-Schering merger all due to TARP money. Goodbye 35,000 jobs.

http://www.latimes.com/business/la-fi-merck10-2009mar10,0,1530157.story

I still say that the reason America grew so strong for 50 years was because of jobs and a strong middle class that was able to be developed in America .While this situation created the Entitlement Society and the American Dream ,it still transferred more wealth to
Main Street than other cycles .

How can anyone say that the allowance of money into the America system from all the World Countries ,while giving up the job base to other cheaper wage Nations ,is any different than flooding a area with to many oranges to the point the oranges turn bad , Economic systems have to be controlled .Suppy and demand was upset by this Globalism that padded the pockets of the elite .

Now we got a bunch of middle-class Americans living in tent cities
because they can’t find work and they have gone into foreclosure .
The correction of the problem we are faced with lie in America going back to the system that produced sucess for so many years .THe people that say that a Global wage force should set the standards for production are simply people who benefit by that system that has gone awry . Would you open up your own house to any Tom ,Dick and Harry that wanted to use it for short term gain and give up your wealth and your daughters jobs to the invaders ?
What is wrong with being protective ? A Nation has to be protective in the final analysis . Just a little rant

Hong Kong stock commentator in tears at HSBC plunge

A veteran Hong Kong stock commentator burst into tears during a live television broadcast as she saw HSBC’s shares plunge dramatically seconds before the end of Monday’s trading.

Agnes Wu’s comments on the recent volatility of the banking giant’s Hong Kong-listed shares trailed off as she saw its price slump to 33 Hong Kong dollars (4.23 US) after a last-minute sell order, a clip on Cable News showed.

The order almost doubled the size of Monday’s fall for shares in HSBC, which ended down 24.1 percent, its largest one-day fall on the Hong Kong bourse.

Wu and the anchor of the show were both wide-eyed and they shouted out the closing price in surprise. She was unable to continue talking and shook her head for a few seconds.

The normally tough commentator then started to sob and said: “It’s a heart-wrecking fall.”

She then wiped her right eye, but remained silent until the live show ended.

Wu later told The Standard newspaper she does not hold shares in the financial heavyweight. She explained she could not help bursting into tears because she felt it was unfair for big players to bully small investors.

She said HSBC’s share plunge was the result of short-sellers who wanted to drive down the price and snap up shares after the bank completes a 17.8 billion US dollar rights issue, according to the newspaper.

Even though I can’t stand the old bug eyed moonbat, she isn’t the only one of the D.C. clowns that pull this type of crap. Perhaps one day they’ll have a door malfunction and she’ll get sucked out at around 30,000 feet… Nah, no such luck. Her type just nasty away! LOL!

Pelosi Made Repeated Requests for Military Aircraft, Documents Show
Representatives for Judicial Watch, which obtained e-mails and other documents showing the requests, say House Speaker Nancy Pelosi has treated the Air Force as her “personal airline.”

House Speaker Nancy Pelosi has repeatedly requested military aircraft to shuttle her and her colleagues and family around the country, according to a new report from a conservative watchdog group.

Representatives for Judicial Watch, which obtained e-mails and other documents from a Freedom of Information request, said the correspondence shows Pelosi has abused the system in place to accommodate congressional leaders and treated the Air Force as her “personal airline.”

The e-mails showed repeated attempts by Pelosi aides to request aircraft, sometimes aggressively, and by Department of Defense officials to accommodate them.

“I think that’s above and beyond what other members of Congress are doing and what is expected of our elected officials,” said Jenny Small, a researcher with the group.

The group reported that Pelosi was notorious for making special demands for high-end aircraft, lodging last-minute cancellations, and racking up additional expenses for the military.

In one e-mail, aide Kay King complained to the military that they had not made available any aircraft the House speaker wanted for Memorial Day recess.

“It is my understanding there are NO G5s available for the House during the Memorial Day recess. This is totally unacceptable … The Speaker will want to know where the planes are,” King wrote.

In another, when told a certain type of aircraft would not be available, King wrote: “This is not good news, and we will have some very disappointed folks, as well as a very upset Speaker.”
Pelosi’s office has not yet responded to requests for comment.

The New York Times
March 04, 2009 3:00 pm

My house assessment makes me wish
that maybe I should just be a fish
For a grouper, “being under water” is no trouble
they’re free from the torment of the housing bubble
But as much as I carp about my sinking house and 401(k)
at least I won’t wind up served with a nice Chardonnay.

— Amanda L., Falls Church, Va.

U.S. stocks rose about 5 percent on Tuesday after Citigroup said it was profitable in the first two months of 2009…..Citigroup’s Chief Executive Vikram Pandit also said in a memo the beleaguered bank was confident about its capital strength.

Lol!!!!!!!! How many times have we heard this right before they collaspe? Its very entertaining to watch some of these commentators getting excited over it.

So, how long before Turbo Tax Tim gets a foot in the azz, out the door? Wanna bet?

http://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=670365&z=1236370755850

U.S. mortgage policy draws ire from bond investors
Reuters

Investors say it is ironic that they are shouldering costs of foreclosure prevention as the Obama administration is asking them to put their money to work in the mortgage market, and restart securitizations that have greased the flow of consumer credit. And handing first-liens any loss ahead of second-liens turns a basic law of investment on its head, they said.

“If the contractual rights of bondholders are altered by the state to give one group of investors an advantage over another then we really see the end of investing as we know it,” said Paul Isherwood, chief executive officer at Winston Capital, a Denver-based hedge fund.

“The entire (bankruptcy cramdown) bill is showing that the United States is a country that will alter contracts when it is politically expedient to do so,” said Bill Frey, president of Greenwich, Connecticut-based Greenwich Financial Services, which is leading the lawsuit against Countrywide.

http://biz.yahoo.com/rb/090310/business_us_mortgages_policy_investors.html?.v=5

Why did Toll Bros and KBH share prices fully retrace to opening bell levels within an hour of the close?

TOL $16.13 +1.85 +12.96%

After Hours

$14.28 -1.85 -11.47%

4:54pm 03/10/2009

KBH $9.65 +1.30 +15.57%

4:01pm 03/10/2009

After Hours

$8.35 -1.30 -13.47%

4:54pm 03/10/2009

I thought this was going to be a typical “recession” article, but then:

http://biz.yahoo.com/ap/090310/new_frugality_cheaper_cheapskates.html

NEW YORK (AP) — Amy VanDeventer has always been a cheapskate. The recession is taking her to new extremes.

Before the economy tanked, she was still wearing maternity clothes from her last pregnancy, clipping coupons and using hand-me-downs to dress her daughters, ages 2 and 3. Now, she’s salvaging bagel scraps left on their plates for pizza toppings and cutting lotion bottles in half so she can scrape out the last drops.

“I was already cheap,” said VanDeventer, a 36-year-old mortgage loan underwriter from Broomfield, Colo. “Now I am neurotic about it.”

MORTGAGE LOAN UNDERWRITER?!

So cheap, she doesn’t even waste the time or paper for income verification or a proper appraisal. Next!

Big ad agency trims salaries

http://www.adweek.com/aw/content_display/news/agency/e3i719c968044c38f8cbe53943a45ac9afa

http://www.bloomberg.com/apps/news?pid=20602007&sid=aUrczx2aFaDw&refer=govt_bonds
—

if you read and understand this as recovery in the credit markets, you are mistaken. By giving absolute guarantees of moneys on debt, you are not really pricing debt, unless you are a printer.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aB_bEXwV6g0U&refer=europe
—

here’s GM doing it in Germany with the Opel unit….same story.

I’ll take “What is Irony?” for 400, Alex.

WSJ dot com
* OPINION
* MARCH 11, 2009

The Fed Didn’t Cause the Housing Bubble
Any new regulations should help direct savings toward productive investments.

By ALAN GREENSPAN

We are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s. It will eventually subside and pass into history. But how the interacting and reinforcing causes and effects of this severe contraction are interpreted will shape the reconfiguration of our currently disabled global financial system.
[Commentary] Chad Crowe

There are at least two broad and competing explanations of the origins of this crisis. The first is that the “easy money” policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today’s financial mess.

The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages. Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate.

Bank Rescue Programs: Setting the Stage for More Looting?
Yves Smith | Mar 6, 2009

We have sometimes pointed to a paper by Nobel prize winner George Akerlof (of “markets for lemons” fame) and Paul Romer on the phenomenon of looting. Forgive us for repeating ourselves, but this paper was written in the wake of the savings and loan crisis, and was clearly ignored, because if anyone had heeded their message, we wouldn’t be in the mess we are in.

Akerlof and Romer define looting as an upscale version of bankruptcy fraud, except that bankruptcy fraud gets prosecuted (in theory) but the white collar rent seeking version, where executives and staff pay and perk themselves to the point where it derails the business, somehow never is pursued in the US. From their abstract:

Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society’s expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.

Bankruptcy for profit occurs most commonly when a government guarantees a firm’s debt obligations. The most obvious such guarantee is deposit insurance, but governments also implicitly or explicitly guarantee the policies of insurance companies, the pension obligations of private firms, virtually all the obligations of large or influential firms. These arrangements can create a web of companies that operate under soft budget constraints. To enforce discipline and to limit opportunism by
shareholders, governments make continued access to the guarantees contingent on meeting specific targets for an accounting measure of net worth. However, because net worth is typically a small fraction of total assets for the insured institutions (this, after all, is why they demand and receive the government guarantees), bankruptcy for profit can easily become a more attractive strategy for the owners than maximizing true economic values…

Unfortunately, firms covered by government guarantees are not the only ones that face severely distorted incentives. Looting can spread symbiotically to other markets, bringing to life a whole economic underworld with perverse incentives. The looters in the sector covered by the government guarantees will make trades with unaffiliated firms outside this sector, causing them to produce in a way that helps maximize the looters’ current extractions with no regard for future losses….”

Now sensible people might assume, with the government (and therefore the public at large) having been taken for a ride by issuing guarantees to people who proceeded to abuse the protection given them, that they would therefore be a lot more careful about issuing guarantees. The authorities could become more stringent about issuing them, provide for tougher oversight (including being able to restrict activities in case of violation; there should be a quid pro quo in return for the subsidy), criminalizing certain types of violations. Commonwealth countries have another remedy: directors of companies found to be “trading insolvent”, that is, continuing to operate when they cannot pay their creditors, are PERSONALLY liable.

But as Simon Johnson points out in his Baseline Scenario, with hastily enacted and often muddy rescue programs, the opportunities to loot are increasing. The public’s skepticism of these hasty and desperate measures is warranted.

Why not put the fox in charge of guarding the hen house? There are more hens where all them disemboweled ones lying dead on the ground came from.

Bernanke calls for powerful regulator
By Alan Beattie and Sarah O’Connor in Washington
Published: March 10 2009 13:30 | Last updated: March 10 2009 22:49

The US needs an overarching regulatory authority to prevent a repeat of risks building up unchecked across the financial system and exploding into economic crisis, Ben Bernanke said on Tuesday.

In remarks that echo calls on Capitol Hill for a powerful co-ordinating regulator in the US, the Federal Reserve chairman said the central bank would need to be involved in such a body, if not take the lead role itself.