Even Mass Delusions Have Their Moments Of Clarity
It’s Friday desk clearing time for this blogger. “Eric Adams remembers well the surge of foreclosures that occurred when Utah’s economy bottomed out in the 1980s. Banks were pushing foreclosed properties onto the market in hopes of recouping their losses, glutting an already depressed market. In some ways, Adams, a Realtor in Provo, said the current mortgage crisis is far worse. In 25 years of doing foreclosure sales, he’s never seen more foreclosed homes for sale. Adams said the banks have learned lessons from the 1980s in how to deal with them. Back then, Adams said the banks’ first instinct was to sell houses as quickly as possible and cut their losses.”
“‘They are trying to balance between being aggressive [in clearing their inventory] and fair,’ Adams said.”
“As Michelle Polak was looking for a house last year, she was disgusted by most foreclosed homes she visited. She remembers seeing ruined carpets, and noticing missing appliances and reeking smells. It looked as if homeowners were ‘letting their homes go to crap’ and had much more going wrong than just falling behind on bills, said Polak.”
“In the four west-side communities, about 1,350 properties have been reported as real- estate owned, meaning no buyer has come forward and the property may be sitting empty. In West Valley City’s 84120 ZIP code, which includes Polak’s neighborhood, there are 410 foreclosures — more than double the number there two years ago, said Layne Morris of the city’s community-preservation department.”
“And during the past few years, he added, there’s been an increase in calls from residents complaining about foreclosed homes that have not been maintained, some for as long as a year. There has also been a spike in police calls about people living in vacant homes or teens hanging out inside. Morris said there hasn’t been a drug bust in a foreclosed home, but he’s ’sure there’s a drug element there.’ A vacant house ‘just attracts all the wrong things,’ he said.”
“No one in the quiet old neighborhood on the city’s near west side knew the three Pizano brothers very well. When they moved away…the whole neighborhood has been stuck, for the four years since then, with the repercussions of the foreclosed home they left behind. At times, its yard has become an untended eyesore, with weeds five feet tall. Its dropping, bargain price has kept others from selling their homes for what seemed like a fair amount.”
“Ricardo Feliciano, the empty home’s other next-door neighbor, started worrying last year that he could lose his job in a plastics factory. He planted a ‘for sale’ sign out front. Feliciano hoped to get $176,000 — enough to pay off his own refinanced mortgage. But nobody was interested. ‘I realized nobody is going to buy my house for 176 when there’s that house next door selling for 119,’ Feliciano says. ‘You see some houses for sale for $30,000 or $40,000, after foreclosures. How can I compete with that?’”
“Foreclosures in Lee County hit a three-year low in May — but more than half were homesteaded residences. Some banks are more receptive than they were a year ago to non-foreclosure solutions for people in trouble with their mortgages, said Eddie Felton, executive director of the nonprofit Fort Myers-based Home Ownership Resource Center. Other banks are simply not foreclosing on some houses, Felton said. ‘I got a call recently from somebody who hasn’t made a payment in almost three years’ but still isn’t being foreclosed.”
“During the housing boom there was no hotter commodity. At the height of frenzied buying, people stood in long lines just for a chance to put a deposit down and secure a unit. Often the unit was immediately resold, or flipped, several times for a profit. The deflation of the market was felt most strongly in the condo market, which has been hit by waves of defaults. Investors walked away from units bought at inflated prices and stopped paying dues.”
“Stephen Demchak, treasurer of the Second Bayshore Condominium Association in Bradenton, said the new law will help associations the most by making banks pay up to one year’s worth of back dues when they foreclose. ‘We still need to come up with a method where the banks must complete their foreclosures in a much quicker time,’ Demchak said. ‘When you’re missing two years of association fees, that puts a real strain on the budget. If this goes on any longer we are going to have to go to a special assessment.’”
“Janice Swansen says she takes care of her condo. But when her neighbor walked away from his, the mess started seeping into her walls. ‘I started looking through and there was a mosaic of paisley on the kitchen walls. I looked a little bit more and oh my God its mold,’ she said.”
“Swansen said she knew it wouldn’t be too long before the growing mold appeared in her home too. So she called the homeowner, his mortgage company and her homeowners association. ‘Everyone who got back to me said, ‘This is your problem,’ she said.”
“Fort Myers Code Enforcement Officer Mike Titmuss said the housing bust has left many condos and town homes sitting empty - leaving neighbors to deal with the consequences. ‘Whatever common element that’s failing in that building, she may be responsible for it if she wants to get it fixed because nobody else is paying their fees,’ he said. ‘We’ve been dealing with some of these situations for a couple of years The majority, if they are going to lose it, they are going to walk away from the violation and not repair them.’”
“Local leaders, residents and housing activists launched a campaign Thursday to crack down on foreclosed homes that have been allowed to deteriorate and blight their communities. ‘We are here to let the community know that they have this important tool to use against the banks,’ City Councilman Richard Alarc told a news conference in front of a Pacoima home that was taken over by gang members after the bank foreclosed on the property earlier this year.”
“A spokeswoman for the California Bankers Association said the industry supported passage of a 2008 state law that allows local governments to impose fines up to $1,000 a day on legal owners who aren’t maintaining their property. But she noted that banks face some legal obstacles in maintaining foreclosed properties because they may not officially take ownership until many months after the homeowner has left the residence.”
“‘Where some of the disconnect is, from the industry perspective, until the foreclosure process is complete - and in California, that process could take well up to a year and possibly even more than that - the bank’s not the legal owner of that property,’ said Beth Mills of the Bankers Association. ‘Until that whole process is complete, the bank’s not the legal owner of the property, and it’s not their responsibility to maintain the property because frankly they’re not the legal owners of it yet.’”
“A bill that would help homeowners avoid foreclosure while seeking a loan modification is scheduled to be heard on the state Senate floor this week, but it faces an uncertain future with opponents arguing it adds hurdles to an already-complex process and duplicates existing guidelines. Former San Jose homeowner Gina Gates-Portales said the bill sounds good to her. Her former home in Evergreen was foreclosed on in November as she was preparing documents her lender had asked for in support of her loan modification application.”
“‘All along, I’m thinking, ‘Someone’s going to realize this is a big mistake,’ she said. ‘These servicers are not doing their jobs ethically, and their excuse that ‘Oh, we’re just overwhelmed’ is not an excuse.”
“Gates-Portales tried and failed to get her foreclosure rescinded and is now renting a condo, having moved in April out of her home of eight years.”
“Arizona’s housing market is deep into the process of flushing out its bad mortgage debt. But lenders and borrowers of troubled commercial real-estate loans continue to live a lie. Commercial real-estate brokers have coined a phrase, ‘extend and pretend,’ to describe lenders’ sluggish response to the billions of dollars in bad commercial mortgages on their books.”
“Commercial real-estate investor Biff Ruttenberg said pretending-and-extending hurts job-market recovery by prolonging economic uncertainty, which makes employers hold back on their expansion and hiring plans. ‘If you don’t think that hurts everybody, then you don’t live in the same world I do,’ he said.”
“Fortunately for building owners hoping to hang in there, the majority of banks and other lenders still shudder at the thought of taking charge of dozens, perhaps hundreds or even thousands of office towers, distribution warehouses, shopping centers and failed condominium projects. ‘The banks, right now, do not want the property back,’ said Michael Haenel, executive VP for real-estate firm Cassidy Turley BRE Commercial in Phoenix. ‘They do not want to sell it for 25 cents on the dollar.’”
“There’s an obvious problem with lenders’ current strategy, according to Pete Bolton, managing director of commercial real-estate firm Grubb & Ellis Co. in Phoenix: It doesn’t lead anywhere. ‘Their strategy requires a market turnaround,’ Bolton said. ‘That’s a long shot.’”
“Through April, the Pueblo Regional Building Department reported $2.4 million worth of commercial construction permits, down from $29.9 million last year and $169.5 million in 2008. Nick Pannunzio, CEO of Premier Homes, one of the top home builders in Pueblo and Colorado Springs, said he can empathize with commercial contractors’ worries. ‘I’ve been riding the roller coaster down with housing. They talk about the bottom and that the next year it can’t be worse and then it is. Unfortunately, commercial follows housing,’ Pannunzio said.”
“Two years ago no one wanted to buy Corey and Carrie McMillen’s three-bedroom townhouse in Oella. The couple tried again this winter and had more success: Within a month of listing their home, they found a buyer. ‘Our first open house landed us our buyers,’ Corey said.”
“The sale enabled them to purchase a four-bedroom house in Woodbine. And, it allowed them to join the ranks of recent home buyers benefiting from low interest rates, government incentives and reduced home prices that have fueled what some real estate agents say could be a turnaround in the area’s housing market.”
“While house sale data look favorable, not everyone is convinced the recession is over for real estate. Paul Revelle, owner of a land development company in Howard County, said builders have not been actively purchasing property for new houses in the county. ‘I think it means we might be bumping along the bottom here,’ he said. ‘Something good will have to happen to get us off the bottom.’”
“Right now Howard County is working with 2 1/2 years’ worth of inventory, with roughly 1,500 lots not being purchased by builders, he said. ‘We have a big inventory of lots that are not being bought,’ he said. ‘Now when they start to go, then I’ll believe that we’re out of the recession.’”
“In the first sign that home sales have suffered since the expiration of the $8,000 tax credit, pending sales were off in May for the first time in 10 months, according to the Massachusetts Association of Realtors. ‘It’s payback,’ said Gus Faucher of Economy.com.”
“The first-time homebuyer credit, as well as $1.4 trillion in debt purchases by the Federal Reserve, served their purpose: lowering mortgage rates and restoring life to the worst housing slump since the Depression. But applications to buy homes plummeted by nearly a third to 13-year lows after tax credits of up to $8,000 ended on April 30, proving that the incentive pulled sales forward, the Mortgage Bankers Association found.”
“Few expect the housing market to turn bubbly, with unemployment and underemployment still high and banks seen repossessing nearly one million homes this year. Households are also busy rebuilding balance sheets and are still as much as $9 trillion dollars down in net worth from the peak, noted Mike Fratantoni, VP of research and economics at the Mortgage Bankers Association. ‘It’s back to a fundamentals market where there are no gimmicks,’ said Fratantoni.”
“The CEO of Moody’s Corp. says his company’s inaccurate ratings of mortgage-related investments were ‘deeply disappointing’ but investors shouldn’t rely on ratings to buy or sell securities. Asked why Moody’s ratings failed leading up to the housing crisis, former managing director Eric Kolchinsky blamed a ‘factory mentality’ where resource-strapped employees were pressured to rate as many deals as possible to grow the company’s market share.”
“Bankers, in turn, knew they could get their investments rated quickly, even if they didn’t provide Moody’s with enough advance notice to properly evaluate the product, Kolchinsky said. ‘Bankers knew we couldn’t say no to a deal,’ he said. ‘They took advantage of that.’”
“Today’s Financial Crisis Inquiry Commission hearings targeted the ratings agencies who slapped AAA ratings on securities that were later found to be worthless. Committee Chairman and former California state treasurer Phil Angelides brought his ‘A’ game to the proceedings. Here are some of his best zingers. ‘Even the dumbest kid in the class gets 10 percent on their exams.’ —To Moody’s chief executive Raymond McDaniel, citing the company’s 90 percent downgrade of its housing-market-linked ratings.”
“‘Flipping a coin would have been five times better,’ than Moody’s ratings of mortgage-backed securities in the run-up to the financial crisis.”
“Moody’s stakeholder Warren Buffett: ‘Rising prices were a narcotic.’ Angelides: ‘You don’t want your police trading in crack.’”
“Kolchinsky described an environment in which bankers bullied analysts and withheld information from them. Exactly once, Kolchinsky testified, was he able to refuse to rate a security. In general, he said, ‘no’ wasn’t an answer, even if analysts were dubious about the quality of the information they had to form a rating, since saying no would mean giving up lucrative fees.”
“Another witness, former senior vice president Mark Froeba, said in a written statement that there was a ‘palpable erosion of institutional support’ for any action, like tougher rating standards, which might cause Moody’s to lose business to a competitor.”
“Buffett and Moody’s CEO Raymond McDaniel kept coming back to a different point: that the severity of the housing downturn caught practically everyone off guard. The real culprit in the breakdown of so many ratings, they held, wasn’t a lack of corporate integrity or analyst independence but the unforeseen national drop in home prices. ‘The entire American public was caught up in the belief that house prices could not fall dramatically,’ said Buffett. ‘That’s the nature of bubbles — they become mass delusions.’”
“But as the day of testimony illustrated, even mass delusions have their moments of clarity. One of those came from inside Moody’s, in late 2006, when Mark Zandi, the firm’s star economist, warned that some markets might be due for a housing crash.”
From Forbes. “When FCIC Chairman, Phil Angelides, asked Buffett whether McDaniel should still be at the helm of the company, Buffett evaded the question, stating, ‘In this particular case I would say they made a mistake that virtually everybody in the country made.’”
“Buffett who currently owns 30 million shares of Moody’s and has recently sold 18 million shares, worth about half a billion dollars, says he doesn’t put the entire blame of the financial crisis on the ratings agencies, saying to journalists before the hearing that the housing bubble was, ‘a 4-star bubble and the rating agencies missed it…Looking back they should have recognized it. But like I said, they didn’t recognize it and neither did I…there are many to blame, financial institutions, investors, the media.’”
The Housing Bubble Blog, May 2005. “(Buffett) and Munger issued stern new warnings about the residential real estate ‘bubble.’ ‘A lot of the psychological well-being of the American public comes from how well they’ve done with their house over the years. If indeed there’s been a bubble, and it’s pricked at some point, the net effect on Berkshire might well be positive [because the company's financial strength would allow it to buy real-estate-related businesses at bargain prices].’”
“We’re like an incredibly rich family that owns so much land they can’t travel to the ends of their domain. And they sit on the front porch and consume a little bit of everything that comes in, all the riches of the land, and they consume roughly 6 percent more than they produce. And they pay for it by selling off land at the edge of the landholdings that can’t see. They trade away a little piece every day or take out a mortgage on a piece.”
“Buffett to Munger: ‘What do you think the end will be?’ Munger: ‘Bad.’”
‘There’s an obvious problem with lenders’ current strategy, according to Pete Bolton, managing director of commercial real-estate firm Grubb & Ellis Co. in Phoenix: It doesn’t lead anywhere. ‘Their strategy requires a market turnaround,’ Bolton said. ‘
On top of a dozen other economic, legal and moral failings, this is the reason the shadow inventory gambit will fail.
They have a strategy?
“They have a strategy?”
Either that or they found another box of hand grenades to play with.
‘There’s an obvious problem with lenders’ current strategy, according to Pete Bolton, managing director of commercial real-estate firm Grubb & Ellis Co. in Phoenix: It doesn’t lead anywhere. ‘Their strategy requires a market turnaround,’ Bolton said.’
This is one of the greatest quotes I’ve read in some time. I’d like a few bankers to take a look at it.
It is indeed a good quote, and that strategy BTW, is being shared by countless FBs, state/muni governments, and many, many candle shoppes and pirate stores too.
Hoping thing turn around soon has been the strategy of most people and companies.
And since in many markets prices are still high by conventional measures median income/median price, purchase price/rental return etc. it would seem to be a tactic doomed to failure.
‘applications to buy homes plummeted by nearly a third to 13-year lows after tax credits ended on April 30′
I’ll just let that hang out there…
Thanks for the info Ben
My sense is that the tax credit will be back in some form in 2011, if not sooner.
If nothing else, the National Association of Realtors is a lobbying organization and 2010 is a mid-term election year.
Robbing from future demand, is that the right strategy?Pretty soon they will run out of buyers again.
I wish to respectfully disagree, Ol’Bubba.
Reason: I seem to recall reading that each $8,000 tax credit is costing the feds more than $40,000. The deficit hawks will be all over that one like vultures are all over carrion.
There is no serious buzz in DC about an extension. This one was very carefully timed to end as the alleged big spring/summer selling season picks up steam so that the natural peak of the selling season could cover the lack of artificial stimulus from the credit. I think the chance of this working is somewhere between zip and zilch, but I’m pretty sure that was the theory.
Oh, and the stats on the fraud are going to hamper any new program even more. Someone is going to have to convince Congress that they can check that people qualify before they get the money. Which requires a lot of manpower. Which costs money. Which brings you back to Slim’s point. Oh, and checking for qualifications ahead of time means that it is harder for folks to use it as their downpayment (how did that work anyway? were there brisge loan programs?), which messes up the works too.
My guess is this strategy has run its course.
You both make sound, logical arguments. Sound logical arguments are of little value when dealing with the U.S. Congress and those that aspire to be elected to congress.
My point is that the NAR is primarily a lobbying organization and this is the mid-term election year.
The NAR will serve up plenty of sound bites for the politicians to use in front of the cameras and they’ll open up their checkbooks as well.
It’s probably a little early for the serious buzz to start in Washington because the April 30 contracts/June 30 closing dates have not run their course yet.
The tax credits thing was part of the ‘government will never let prices go down - ever’ line of thinking, that trolls were fond of. Sure enough, it ends and apps crash. IMO, it’s a mistake to think that DC is all powerful.
“There is no serious buzz in DC about an extension.”
I expect this to change in the wake of an alarmed response to the vaporization of demand that is currently underway…
“Someone is going to have to convince Congress that they can check that people qualify before they get the money.”
Given the PR apparatus that provides great propaganda cover to anything these guys do, why would they even care? Just look at the quality of FHA lending since they kicked it into overdrive to paper over the 2007 subprime implosion if you need some evidence…
“The tax credits thing was part of the ‘government will never let prices go down - ever’ line of thinking, that trolls were fond of. Sure enough, it ends and apps crash. IMO, it’s a mistake to think that DC is all powerful.”
True and the collateral damage from those loose canons in DC and their little friends on Wall Street, can and will inflict their heavy collateral damage upon the general population. At the very least, they will really leave one helleva a lot of bruises.
Whizzz…Booom!
Yikes, there goes another ARM …and a couple of Legs…just ” Walking Away” !!
here in California we still have a $10,000 tax credit (non-refundable). I’m sure the talk of another Federal credit won’t talk until that is exhausted (already exhausted 57% of the $100 million set aside BTW and its only 35 days old).
“check that people qualify before they get the money”
I am madder than a wet hen about “Section (3): Basis of Determination” buried deep in Fin Reg bill…REQUIRING me to obtain verification of my clients’ income, credit history, job status, and other financial obligations. I have been SUCH a happy no-doc lender. Two words cover everything. DOWN PAYMENT. But no, Mister Dodd is going to protect my borrowers from me and from themselves.
My reaction is, I’ve still got four deals pending, and I’m going to hope that they all close before the bill is actually signed.
Yes. MBA’s data release got little to no air play.
The reality is out there… all of it. Massive, burgeoning inventory, sales at a fraction of the peak yet based on the discussions with all the J6Paks I know, a realtor or two that I’m working with and current asking prices, the attempt at keeping the illusion alive knows no bounds.
Want proof? An upstate NY Goober stated to me yesterday, “they’re not building anymore land”.
‘applications to buy homes plummeted by nearly a third to 13-year lows after tax credits ended on April 30′
I have a co-worker with a house on the market in Julian who’s leaving the area for a promotion. There were a few sales in Julian, mainly 2 bed/2 bath to retirees, in the few months leading up to the expiration of the credit. Otherwise, pretty dead for awhile and now totally dead. He at least has the potential for a third party buyer (employer) at some price (maybe still less than what’s owed), if it doesn’t sell otherwise. It’s currently priced below every other comparably sized property on the market except for one that’s in poor condition. There’s been no traffic at all which suggests that the market price, whatever it is, is lower than the low end of all of the current asking prices. Apparently there have been no sales of comparably sized properties in about a year.
Not specific to Julian, my guess is the tax credit lured in speculators/investors, but otherwise there are few that can afford most properties at current prices. It looks like the price standoff is back for now. Prices are going to have to come down for sales to recover.
SDGreg,
Can’t afford the ‘prices’ ( or the commute! ) It’s been awhile since I rolled thru there but isn’t that a lengthy drive from any employment?
It’s not a short commute, but doesn’t involve freeways as do some equally as long (timewise) commutes.
My guess is what’s happening there isn’t too different from the general trends for the broader area, but I would be surprised if the details weren’t different given that it’s a fairly isolated market.
I’d guess the mix of recent buyers isn’t all that close to the overall mix of “owners”.
as someone who has a twice-daily 40 minute freeway commute, I would much rather travel on a freeway than on something smaller. Even when they’re crowded, they’re much safer.
“Buffett who currently owns 30 million shares of Moody’s and has recently sold 18 million shares, worth about half a billion dollars, says he doesn’t put the entire blame of the financial crisis on the ratings agencies, saying to journalists before the hearing that the housing bubble was, ‘a 4-star bubble and the rating agencies missed it…Looking back they should have recognized it. But like I said, they didn’t recognize it and neither did I…there are many to blame, financial institutions, investors, the media.’”
4 -star bubble true but Ben and others here SAW it for what it was …to include the Fraud and Grand Larceny that accompanied it.
My problem with this show, is that we’re watching a bunch of 4-star Crooks, Clowns and associated Miscreants from the gov’t to Wall Street and including the MSM, still running the entire freakin’ Circus.
It’s nice to know at least that I am smarter than Buffet.
I sold in ‘05.
Investors qualified for the tax credit?
How much are they asking for a 2/2 in Julian? The only market for that town has got to be 2nd homes, there are no jobs, and when I rode my motorcycle through there I didn’t see any hospitals or supermarkets for retirees.
I remember back a few years ago, you could get some pretty good apple jack in Julian. Not much going on there except a few Yuppies and lost Bappies spending a few $.
Clearly, we can print up more fraud credits to paper our way out of this Depression… I think… maybe? Hehehe…
The original CNN story on Warren Buffett is still up at CNN…..
They also warned that they do not see a clear future for pharmaceutical stocks, that GM and Ford face severe trouble over pension and health costs, that hedge funds could wreak havoc in a market decline…..
Warren Buffett says he never saw the bubble coming. What a liar - even Jimmy Buffett could see the bubble.
Warren should (if it’s true) keep that information to himself. Not seeing this bubble coming is criminal for someone running a company the size of BH. Warren has always been a very conservative investor, so his company made it through the crash reasonably well. But to admit that he never saw it coming? Come on Warren, we expect better from you!
I wish he would go away!
Given his advanced age that could happen any day.
He’s been talking his book lately. Something about our culture gives successful investors an inordinate amount of personal credibility, when that success increasingly is politically-driven.
“Warren Buffett says he never saw the bubble coming. What a liar - even Jimmy Buffett could see the bubble.”
Having watched the video, I think that’s a little B.S.ing on his part. BH had a big stake in Moody’s which has been reduced somewhat but is still sizable enough to matter. I think what he’s saying is a cover for Moody’s, at least until BH can further reduce their stake in Moody’s.
You are correct. The comment was made to defend Moody’s from attack. He has a substantial financial interest in Moody’s. Of course it wasn’t true.
But then why, with all the media attention on his testimony this week, could the press not do a 2 minute search and find what I did?
BINGO Ben.
But then why, with all the media attention on his testimony this week, could the press not do a 2 minute search and find what I did?
Because they are paid to not do so?
“The comment was made to defend Moody’s from attack.”
Are you sure the Oracle of Omaha has not gone senile? Given that he and Munger were openly discussing the housing bubble back in 2005, his current claim that ‘no one could have seen it coming’ raises questions…
No, he has not gone senile, he did what all smart people did during the bubble! Saw the elevator going up, rode it up, and bailed out quickly when he saw it slowing.
Heck, if you are making money, big money, during a bubble expansion, are you the type to stop making money before you have taken all you can! Nope.
They all rode the elevator, but didn’t tell the other passengers about the ride down.
When you are sitting on the outside of the building and not in the elevator, it is easy to say that it is very risky to ride that elevator, as it will eventually come down.
Remember people supported the President as he sent the money out to the people, and now , facing the downside, will claim that they knew that the government would have to take it back , sooner or later, it all of the time.
And, I sat on the outside, and asked myself why they don’t understand that the money being received was to be taken back in taxes from the public.
Jacko
agreed pressboardbox.
Buffett isn’t blind or stupid. He is a liar and he should be called on it.
This monster was creeping across the economic and financial sky like a total eclipse intent on blocking out the mid-day Sun.
mikey,
“total eclipse intent on blocking out the mid-day Sun.”
Awful close to the song “Total Eclipse of the Heart” by Bonnie Tyler.
“Warren Buffett says he never saw the bubble coming. What a liar - even Jimmy Buffett could see the bubble.”
Some folks claim that Suzanne is to blame.
(From 2005 HBB post:)
“(Buffett) and Munger issued stern new warnings about the residential real estate ‘bubble.’ ‘A lot of the psychological well-being of the American public comes from how well they’ve done with their house over the years. If indeed there’s been a bubble, and it’s pricked at some point, the net effect on Berkshire might well be positive [because the company's financial strength would allow it to buy real-estate-related businesses at bargain prices].’”
And now Buffett says, ‘No one could have seen it coming’? Has the man gone senile?
“Asked why Moody’s ratings failed leading up to the housing crisis, former managing director Eric Kolchinsky blamed a ‘factory mentality’ where resource-strapped employees were pressured to rate as many deals as possible to grow the company’s market share.”
“Bankers, in turn, knew they could get their investments rated quickly, even if they didn’t provide Moody’s with enough advance notice to properly evaluate the product, Kolchinsky said. ‘Bankers knew we couldn’t say no to a deal,’ he said. ‘They took advantage of that.’”
Good to know that now that they are desperate for revenues, rather than being overwhelmed with deals, they will be more selective in what they choose to rate and harder on their customers.
The culture often presents the desperate businessman going over to the dark side under pressure, like the thieving salesman in Glengary Glen Ross or the arsonist garment manufacturer in Save the Tiger. But greed seems to motivate as much crime as fear.
“The CEO of Moody’s Corp. says his company’s inaccurate ratings of mortgage-related investments were ‘deeply disappointing’ but investors shouldn’t rely on ratings to buy or sell securities.”
Then why do we need ratings agencies if the data are not to be relied on? Geeze.
“Even the dumbest kid in the class gets 10% on their exams” LOL!
( I thought it was 25% but whatever? )
Good gah-rief! What school is this? I can remember going to schools where it was possible to get a zero on an exam.
Arizona Slim,
The old joke in the Navy was that ( you could build points just by getting your social security number right! )
We had guys ( with one foot in the Brig ) that would “gaff off” the exam and mark “C” for every multiple guess and walk off w/ a 25%.
Maybe the ratings should have a disclaimer, something like: “All rating are for entertainment purposes only,” like palm readers. and other worthless prognosticators.
“for entertainment purposes only” Damn!
Not to rush to the monolines defense but there ‘was’ a great deal of historic precedent that they were leaning ( mightily ) on? In the past.., 30 yr. FRM underwritten within trad. guidelines were, basically good as gold!
Rendering of Legal Opinion and whatnot were really nothing more than a formality. I guess the question, at what point ’should’ they have become alarmed? Concerned even?
And very little history on negatively ammortizing loans, CLTVs greater than 95%, DTIs nort of of around 50%. And no real history of bonds created from pools of bonds from the lower tranches of those. Why anybody could imagine that the chances of default on those bonds were not already highly correlated is beyond me.
It reminds me of Enron’s various off-balance-sheet entities, many of which were run by a very prestigious Houston law firm, which consistently found no conflicts of interest or irregularities. At the time I said that the only difference between those lawyers and a rubber stamp was that one cost 99 cents and the other cost $500 per hour. The ratings agencies basically strip-mined their own judgment.
Then why do we need ratings agencies
Because Pension funds and retirement funds require these ratings so that their retirees can get good safe investments.
measton,
And we’ll vigorously argue that because..?
True, like finding an ejection seat ( Approved by the FAA ) with the pilot still ‘in’ it? Right now, ERISA/DOL/IPS ( all designed to ‘protect’ plan participants have become a millstone. Or EBSA for that matter.
This isn’t an argument for “less regulation” really more pleading to level the playing field!
And now they are saying that the tax payers have to make up the difference. Pension funds using 8% returns should be 3 or 4. Only if your GS. Screw J6Pk and the tax payers. Put your money on double Zero for a better chance.
“Eric Adams remembers well the surge of foreclosures that occurred when Utah’s economy bottomed out in the 1980s. … Adams, a Realtor in Provo, said the current mortgage crisis is far worse. ”
Remember the guys on the San Diego Creative Investors Forum? The one guy had a couple of houses in Florida that were taking a dive in value and he was stressed, but the great thing that was saving him was the value of his house in Utah was going up, up, up. I think he was a taco bell manager or somehting like that.
“…but the great thing that was saving him was the value of his house in Utah was going up, up, up.”
A black swan guano bomb has landed on Taco Jeff’s head!
AWrenter, what was that guys name?
You know, the first million is always the toughest.
Jeff or something?
Yes, I think it was Jeff. Those guys were pretty arrogant whenever someone from the HBB tried to point of the folly in their plans
It just dawned on me: The same court rulings that say a bank has to prove ownership of a house before it can go after FBs could be turned right around and protect the banks from being liable for the upkeep of a vacated property.
HOWEVER, it is one thing for a bank to not want to take responsibility for a $50,000 house with a $150,000 mortgage and $20,000 in work required. It is another for a government not to foreclose on a bank for tax and nuisance fine liens.
The state and local response to this is to change the rules for seizing delinquent property and do so ASAP, with ruthless code enforcement.
I never understood why local governments didn’t start doing this ASAP. Put a letter in the mailbox informing them that if they don’t abate code violations, they’ll be abated and them billed, and if that’s not paid in 90 days, the house seized as collateral and sold.
If the damn HOAs can do it, the municipalities SURELY can.
And, if no one’s picking up the mail, then what happens?
BTW, in my neighborhood, a foreclosed house had its mailbox smashed, then stolen.
‘The same court rulings that say a bank has to prove ownership of a house before it can go after FBs could be turned right around and protect the banks from being liable for the upkeep of a vacated property.’
That’s what I see all the time. ‘We’re trying to work with the homeowner (who left a year ago), we’re modifying loans.’ They take just enough action to keep their hand in, but don’t make the leap that puts them on the hook. It’s a fecking game.
In Milwaukee, the banks are REFUSING to take title to the FBBers houses, even being offered deed in lieu. They are liable for taxes, insurance and maintenance imposed by the City.
There are very few NEW foreclosures here. All the 30 or so houses built by specuvestors in 2006/2007 have been foreclosed. Maybe a third of them have been sold (at steep “discounts”) and are now occupied.
Adding the purchase cost of our 2005 foreclosure to the renovation and replacement dollars (roof, heat pump) we’ve put into it, we’re in the hole. On a percentage and dollar basis we could take the hit if we had to sell today. Others who bought at “market” prices in 2005-2007 are very much in the hole. But the sellers of existing, older homes and their realtors are still in denial. It’s like the foreclosure listings are invisible, yet they’re right out there on the MLS.
One of those came from inside Moody’s, in late 2006, when Mark Zandi, the firm’s star economist, warned that some markets might be due for a housing crash.
late 2006? yeah he was really good at predicting the future.
‘Cause Ben started the early, Blogger version of the HBB in what, late 2005? There were a bunch of us who saw the RE market and said “Hmm… that can’t be right,” just to be told something like “Shut up, we’re all going to be wealthy.”
Late 2004
My bad. But my original point stands, by late 2006, the bubble should have been OBVIOUS to anybody who looked at the residential real estate market. Nobody gets points for prognostication in my book by talking about the possiblity of a fall in RE prices at that late a date.
The timing was fortuitous, as that is exactly when I started seriously reading up on the subject of asset price bubbles and collapses.
Negative. Ben started this blog in late 2004. I found it in early ‘05 and it saved my sanity.
Count me as an HBB discoverer during the spring of 2006. And what a sanity-saver, source of entertainment, and educational resource it has been. Yay, Ben!
06 for me also….
I was late to the party. I think it was late 2007 or very early 2008.
BTW, my very first post got me called a troll because of my name. It always made me laugh.
Late 2005, after coming here from the blog that gave us the term “FB.” And I found that one because I knew that the traditional method for determining how much house you could afford was to go with three times your salary, but the only houses available in my area (Sacramento area) that were even close to that were tiny condos or townhouses… and we couldn’t afford those either. I knew something had to be wrong, and finding Another FB and this blog were indicators that no, I wasn’t crazy, everybody was acting stupidly.
Incidentally, the information on timelines– when things were going down– was not only accurate, but highly helpful. The house we bought last year was priced a lot closer to what houses are going for this year (solid bones but ugly, which is what we wanted for our very particular taste) and is far below what those tiny condos were going for in 2005. And not incidentally, priced according to traditional fundamentals…
He really stuck his neck out with that call. Talk about profiles in courage. But he managed to stay on the media’s speed dial, because I see him quoted all the time when he should be anonymously selling life insurance.
snake charmer,
LOL, “I” get it. Most of us have remained blissfully anon. and Ben really put it all on the line! ( I’m sure there were times when he wish he had done exactly that? )
As mentioned here before, the Zandi family lived near the Slim family when I was growing up. I was in Girl Scouts with an older sister of Mark’s. I remember her as a quiet, serious person. We weren’t close friends. (My Girl Scout buddies were a lot more talkative.)
As for Mark, I think he was younger than my fellow Scout. I never met him.
But my mother taught at the high school where another one of the Zandi boys would give speeches on the dangers of drunk driving. He’d survived an accident in which he’d been driving drunk, and it left him quite brain damaged.
He got around the area by bicycle, and this included riding the shoulders of PA Route 3. A pretty dicey ride, if you ask me. Mom thought so too.
I used to like what Zandi had to say, until he went all commie on us and started to insist that the government had to keep prices from falling. I never understood how someone could see that prices were completely unsustainable and then reconcile that with the idea that it could somehow be sustained.
But then again, that’s exactly what Robert Shiller and that clown CEO at PIMCO did too.
I’m wondering if government didn’t get to a lot of these guys, and put pressure on them to stop their negative talk, suggesting that they were scaring people and causing panic, hurting the market even more. That’s the only explanation I can come up with.
Bought my last house in late 04 even though Gary Shilling (like Ben, apparently) was already telling cogent stories in Forbes about why the RE crash must come soon. Found HBB spring 06. Had to read HBB for a few months before I woke up on Memorial Day 06 saying wait a minute, it won’t be Different Here. That’s when I sold the house. Reported $1,000 cap gain after writing off everything in the whole world as an expense of improving the house.
And here we still are, waiting for the 2012 turnaround that we agreed on several years ago. Even if pressboardbox is now saying 30 years, I’m not agreeing yet.
Condos here in NYC are still priced at least 25% too high, IMHO, but I cannot bring myself to sell a small home that I otherwise am very happy with. At the end of the day, I might feel like the tech investor that rode stock to the moon and back. But I will still be living in a home I can afford. If I sold and the unexpected happened–prices stabilized or appreciated–I would be devastated, because renting something comparable is over three times my current ownership costs.
Get what you can get for it today because its going to be less tomorrow…… for many years to come.
NYCResident said renting would be 3x their cost of owning. If that’s true, it sounds like they’ve owned the place for a long time. Can’t blame them for not wanting to triple their monthly housing expenses, so here’s a case where ownership makes sense.
If prices are going to go down then ownership NEVER makes sense.
Not true, Lesser. For example, my mom and dad bought their retirement house in 1978 for $86,000 in Ventura, CA. They paid it off in 1984. They watched it ride up but didn’t sell because it was the perfect place for their retirement. Now my dad is gone, and mom is still happy there. It has depreciated 50% since the high of 2006, but so what? She pays no mortgage, has perfect weather without the neat for AC or much heating, loves her back yard garden. She has more-than adequate savings for her retirement. Why should she have sold her house and uprooted herself for a few hundred thousand four years ago when she’s happy where she is?
She is a one woman argument for house-ownership.
You make the point I’ve always made here - the reason to buy rather than rent is so that you can pay the bloody thing off in 10-15 years ideally, 20 years max.
Buying can in some instances still make sense even if prices are trending down, if the typical sale price to monthly rent ratios are low enough, property taxes are low, etc. It’s just another factor in the buy-vs-rent calculation. Of course in today’s markets that’s nowhere near the case.
Well it’s just as silly to compare a RE purchase/sale decision with an optimally timed purchase/sale decision as it is to do the same with the stock market. In hindsight the inflection points are obvious, but at the time, they’re not. The best that you can reasonably do is see whether prices look high or low based on historic averages. Prices still look high in most areas, but not crazy insane what were they thinking high.
iftheshoefits,
Right, and obviously ( with the deck stacked against us even in the ‘best’ of times? ) you want to give yourself every advantage in the world!
In the end, I’m more a fan of “expensive money -to- cheap assets” ( not vice versa… ) but no one here has any business doling blanket one-size-fits-all advice. All of our circumstances are unique.
Personally ( if you’ve seen OR’s weather this “Spring” ) I’d give anything to be in Ventura Cali! But again, I’m reluctant to draw analogies from the 70’s? I don’t think it’s fair to give younger couples that advice necessarily either. Certainly we shouldn’t portray it as a given.
“Applications to buy homes plummeted by nearly a third to 13-year lows after tax credits ended on April 30.” I’ll just let that hang out there…”
I think it all comes down to impatience. You only have one life to live, your kids are only kids for a brief moment, and most want that life to include their own home.
And you have the banks, the government, the sellers — everyone holding out to get people to pay more. Yesterday we heard from several informed buyers that they had purchased despite knowing prices could fall further — it’s just that time of life. In my case, in the previous bubble, we had to hold out SEVEN YEARS from1987 to 1994 just to buy at a price I considered fair.
The stock market is working on the same principle. People are counting on a return on their savings to help finance their retirement or their kids’ higher education. How long are they willing to hold their money back at a 0% return to avoid getting hosed by excessive stock prices? It has been more than a decade since the peak.
Same with commercial real estate that is being extended and pretended.
We’re talking about letting go of dreams. A home of one’s own. A secure retirement. For local governments, decent public services at decent tax rates as the expected rate of return on pension funds is adjusted for reality. For bankers, a career at a bank that might no longer exist. Etc.
We’re talking about letting go of dreams ??
WT Economist,
Before you get blasted from all sides here..?
You’re not talking about running out “and buying TEN homes” ( if ‘think’ it’s such a damn good ‘value’! ) Or going “all in” in the stock market ( hey it’s YOUR funeral pal! ) right?
Could it be that you’re simply referring to living your life in a somewhat normal fashion? Kids don’t know Mommy & Daddy got a steal ( or hosed ) on their mortgage. It won’t matter much to them.
I’ve never heard an adult child make such a reference. What I ‘have’ heard from adults is “All I remember about my childhood is that we moved around a lot!” No one wants to be that parent. Of course, plenty of flippers “moved around a lot” too but I think going forward we can safely dismiss that.
Yep. Joe Sixpack has this dream of a home of his own, and a retirement funded by investment returns. A dream, not cold blooded rational calculation.
The inflation of asset prices means that dream may be unattainable, or at least deferred by a substantial percentage of a lifetime. Or in the former case the dream may become a nightmare. Rationality requires forgetting about buying a house, and accepting that 0% return — and adjusting one’s whole expectation of life around reality.
Well, that’s going to take some time.
“Rationality requires forgetting about buying a house, and accepting that 0% return — and adjusting one’s whole expectation of life around reality.”
Indeed, this is the bleak new reality facing people now.
“bleak new reality”
Oh I don’t think anyone is arguing that. Just thought it was refreshing after months ( years ) of agonizing over economic data that someone took the time to put a face with the name of pain.
Even assuming we have an economy strikingly similar to Japan’s, did ‘they’ stop having children altogether? Stop manufacturing, working, buying a home? Did those that swore off investing in their own market fare any better in mmkt’s at 0%?
All during the ramp-up, children ( be they living or imaginary ) were used as rationalization for buying way… more home than any family could ever possibly use! I think we’ve seen the folly of that, particularly when it comes to vac./2nd/college homes. But at some point, we as a nation will press on with our lives.
Over the last few days we’ve had several take the plunge. By their own admition, they’re not sure if the timing was right. Be that as it may, I think if ardent BB’s are considering it, then J6P certainly must be? That’s all WT was trying to share.
And that fact that the sellers and financiers are putting too high a price on those dreams, expecting Joe Sixpack will not be able to hold out.
As I said, I waited SEVEN YEARS to buy. When someone finally met the price, it was a 97-year-old woman who had moved in with her daugher two years earlier and only had one year to live. She wanted what her neighbor had gotten from the bank at the peak in 1987.
Now instead of old ladies holding out, we have banks. With the government working to both push J6P and help the sellers hold out.
“and only had one year to live”
God love the old gal ( but can you say, From my cold dead hand? ) Yeah, and I’m not arguing from a tech. standpoint, or necessarily an emotional one either.
For the most part, unless you’re being shown an exceptional value, best to keep it in your pants for now. It should be apparent though that telling young couples… people in general that:
There’s no point in your -ever- buying a home, resign yourself to a -lifetime- of renting and fruity landlords in even worse finances than yourselves and it may make sense to just go ahead and BUY a U-Haul rather than rent one!?
isn’t going to win a lot of people over either.
Not necessary to accept 0% return now. Perfectly possible to lend at about 8% on CHEAP houses. With as little as $50K to throw around, any one of you is welcome to take some business that I don’t want…and the only reason I don’t want it is that I don’t want too many eggs in a certain county’s basket.
Really! - have not been inviting you guys into my business before, because loan demand was Not There. Well, it’s there NOW because the banks are REALLY not lending.
Really! - have not been inviting you guys into my business before, because loan demand was Not There. Well, it’s there NOW
Interesting, AZ…
I’ve wondered about this kind of thing - the idea of pooling capital here. I recall AB Dada talking about investing in local businesses, and know about your lending….for those of us without enough cash in the bank to buy in to such things (nor the know-how!), such investments aren’t accessible.
But if you had an LLC or some such….
“We’re talking about letting go of dreams ??” Dreams…
I have these awful re-occurring nightmares of being upside down. I’m trapped downstairs and in between a broke condo association, a heavy metal rock band and SWAT Team busting of a gang of armed meth heads. Auuugh…..
Then, I wake up to quiet reality, speed dial my LL and remind him my grass needs cutting again and I’m going on a trip, so watch the place and my stuff .
Life is good and I’m sure not ready to buy into somebody else’s house or condo problems, especially at these current Dream Prices.
“It has been more than a decade since the peak.”
By contrast, it has been over two decades since the peak in the Japanese market, and it is still not clear whether a bottom is in! While the stock market cannot go down forever, it clearly can go down for a generation or so…
Dow 10,000!
Yes, this could go on for a generation.
Churn, Churn, Churn!!
Think of the fees as people jump in and out of the market, all while being fleeced every step of the way. No direct path to success is a key part of a fraud/churn based economy.
Dow will be 8600 and then down to 6600. Look at the charts and the candlesticks.
“Applications to buy homes plummeted by nearly a third to 13-year lows…”
It will be interesting to see whether this sudden evaporation of false (government-engineered) demand is met by a severe drop in the rate of sales, severe housing price declines or some combination. This is a wonderful natural experiment in what happens in a decentralized market when a government subsidy is eliminated.
* The Wall Street Journal
* HEARD ON THE STREET
* JUNE 4, 2010
Mortgage Mystery at the FHA
By PETER EAVIS
There’s a big head-scratcher hanging over the mortgage market.
Government-controlled Fannie Mae and Freddie Mac buy mortgages from banks and mortgage companies. Now, as they face the costs of huge defaults, both are scouring their books to identify loans they should never have been sold, often because borrower data weren’t true. And mortgage makers are making big payments to Fannie and Freddie as reimbursement for these badly underwritten loans.
…starting in 2007, to support a collapsing housing market, the FHA started to back huge amounts of mortgages. As the securitization markets closed down for subprime loans, many lenders were apparently able to place many poor-quality mortgages with the FHA. In its 2008 fiscal year, the FHA backed $205 billion of mortgages, up from $85 billion in 2007. And the 2008 loans are showing a high default rate; 24% were past-due as of last September, the latest FHA figures show.
Of course, a high default rate doesn’t necessarily indicate that many loans breached the FHA’s underwriting guidelines. The recession would have been enough for many FHA borrowers to default on properly underwritten loans.
Still, there are indications that many 2007 and 2008 loans could have had faulty underwriting. For instance, in the past year, the FHA has stopped taking loans from scores of mortgage makers, in the belief they were making too many bad loans. In theory, those lenders are more likely to have breached underwriting criteria in the past than their rivals. The trouble is, some firms have collapsed after being shut off by the FHA, potentially leaving no money to make good on shoddy loans anyway.
The FHA says it is currently reviewing past loans but won’t give an idea of how many underwriting breaches it has found. If taxpayers were stuck with dross, they deserve to know.
I was going over the FNM 10-k ending 3/10 this week. I’ll post the REO numbers on the forum today or this weekend; their ‘portfolio’ is exploding.
But since their $400K federal expenditure limit has been eliminated, what does it matter if their portfolio ‘explodes’?
All so predictable. The FHA (and GSE) socialization of losses program is the next leg down. The losses are getting too big to hide and they’ll have to retreat from the market to nurse their wounds. That will leave the Fed as the only potential buyer of mortgage securities, but they already own a trillion or so, with nobody (?) to sell them to.
“She remembers seeing ruined carpets, and noticing missing appliances and reeking smells. It looked as if homeowners were ‘letting their homes go to crap’ and had much more going wrong than just falling behind on bills, said Polak.”
Simple solution: When only crappy homes are available at affordable prices, stay out of the housing market.
Got a point there, Cantankerous. And, unless you really enjoy buying, cleaning, and repairing busted-up houses, stay on the sidelines.
This is also part of the goal. Prices may go down, but quality will go down evern further… and then we can tear down these houses and build grossly oversized McMansions to sell at high prices!
Churn, Churn, Churn!
To everything, churn, churn, churn, there is a season, churn, churn, churn…
A time to buy, a time to sell;
A time to borrow, a time to pay;
A time to refi, a time to flip …
The stock market crash must be getting pretty serious, as Toll Bros’ ongoing plunge protection floor of $20/share has collapsed…
I never did understand why Toll’s stock price correction got stuck at $20/share against the complete evaporization of demand for new luxury McMansion construction. I always assumed it must have been an oligopolistic market-weather-making maneuver by Megabank, Inc or some other gargantuously large financial entity to write out-of-the-money put options with strike prices at below $20 a share in order to lure me and other fools to purchase them on an obvious collapse of housing demand that should have obliterated Toll Brothers and other Wall Street favored Megabuilders, then use plunge protection measures to make sure we were never in the money.
This is one of the reasons I advocate breaking up Megabank, Inc. There is no fairness in the asset markets when some private firms are too big to fail and sufficiently big to create their own market weather and profit from it. This transforms the role of asset markets into a form of piracy rather than a mechanism for allocating investment dollars to their most profitable uses.
This is beautiful…… some guy into dirty diapers.
http://gawker.com/5555393/wisconsin-diaper-thief-gets-off-easy
Didn’t we have a guy that went by the username DroopyDiapers?
Important clarification:
2006 predates the onset of the global banking panic, which was not until August 2007. Hence the Euro dropping back to 2006 levels against the dollar represents a highly significant exchange rate adjustment.
P.S. I have a new BBQ grill and am looking forward to consuming affordably-priced red meat this summer, thanks to the strong dollar.
Friday June 4, 2010
Bloomberg
Euro Falls Below $1.20 for First Time Since 2006 on Debt Crisis
June 04, 2010, 1:48 PM EDT
By Ben Levisohn and Catarina Saraiva
June 4 (Bloomberg) — The euro tumbled below $1.20 for the first time in more than four years as speculation the European sovereign-debt crisis is widening helped push investors to the safest currencies.
The dollar and the yen rose against all of their major counterparts as a lower-than-forecast U.S. payrolls report fueled concern the U.S. economic recovery may be slowing, damping demand for growth-linked currencies. A spokesman for Hungary’s government said it isn’t “an exaggeration” to talk about default, boosting demand for the Swiss franc as a haven.
“The euro is caught in a permanent, apparently unresolvable slide because of the tempo of bad news coming out of Europe,” said Jonathan Lewis, founding principal of New York-based Samson Capital Advisors LLC, which manages $6.9 billion. “The market is so bearish on the euro, it’s looking under any rock to find information that supports that conclusion.”
…
* Hogs, Cattle Fall as Dollar Gain May Curb Demand for U.S. Meat
* Yen Advances Versus Dollar, Ending Four-Day Loss; Loonie Gains
* Treasuries Fall on U.S. Recovery Signs, Greece Rescue Request
* Swiss Franc Strengthens Through 1.40 per Euro for First Time
* Bank of Montreal Profit Rises on Lending, Trading (Update3)
Linky
Currently 46% of all sales in Metro Boise Idaho are distressed properties. That makes it difficult for new construction to move forward which is where my niche is.
Just wait until the Fed unwinds its MBS purchase program and shadow inventory eventually hits the market. It’s a tough time to be a builder in the wake of a record housing mania which resulted in several years of housing construction at levels that far exceeded the sustainable level of new home demand, both in terms of the number of homes and the price tags.
On the subject of Toll Brothers visit their models and you most likely will find 2007 pricing and they act like a problem where not us, we sold 8 houses last week they proclaim.
Quick check of county records, they haven’t sold eight houses in eight months in this community we visited.
Oh well, congressmen can lie about their service records I guess a home builder can lie about the state of the housing mess?
And, as a Slim family friend who’s a former Toll employee can attest, the quality control on Toll housing construction is pretty low. As in, guaranteed for five years. Then they fall apart.
“I used to like what Zandi had to say, until he went all commie on us and started to insist that the government had to keep prices from falling. I never understood how someone could see that prices were completely unsustainable and then reconcile that with the idea that it could somehow be sustained.
But then again, that’s exactly what Robert Shiller and that clown CEO at PIMCO did too.”
It was very disappointing to see.
The reporter not checking past statements against what Buffet said is pretty bad too, passing off a lie as the truth. Same as it ever was.
DA BEARS!
Bears burn up the market
Dow ends below 10,000; indexes off 2% over the week
Pop goes the bond balloon: Fund investors may be buying into a bubble.
Grim U.S. payrolls report and new worries about the euro zone send stocks into a tailspin.
CAPITOL REPORT: FINANCIAL REFORM
Bigger and riskier?
As bank-reform rules inch closer to becoming
law, observers say major changes might not be enough to ward off a future financial crisis.
• Life for Goldman after Lloyd Blankfein (First Take)
• Crude down 4%; worst drop since February
“Pop goes the bond balloon: Fund investors may be buying into a bubble.”
There are yet trillions of dollars destined to go “poof” before this Great Contraction has run its course.
IMHO an investor’s job - and a saver’s job - is to make sure none of these dollars belongs to him.
“When they moved away…the whole neighborhood has been stuck, for the four years since then, with the repercussions of the foreclosed home they left behind. At times, its yard has become an untended eyesore, with weeds five feet tall. Its dropping, bargain price has kept others from selling their homes for what seemed like a fair amount.”
I never get this mentality. If the house next door is empty and the grass is a foot tall, get out your lawnmower and cut the grass. Get all the neighbors together and take turns, each one doing it every week. Doing this prevents 5 foot tall weeds. It’s not rocket science people.
agree with you in general, Eddie. However, I think there’s a difference between someone who CAN’T take care of the place (elderly/infirm), and someone who’s simply lazy (ie a bank who just doesn’t care to put in any maintenance)….
In the end, you’re right - they could put a little effort into it to not have so much to complain about.
This is all such good entertaining theater. I can hardly wait until it hits here in Houston. We’re always behind the curve with this stuff. But not with the oil and gas industry seemingly starting to free-fall, maybe it’s our turn.