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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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http://www.guardian.co.uk/business/2012/feb/10/greece-bailout-euro-strikes
Greece doesn’t look very “contained” to me, despite MSM cheery assurances of recent days.
Papademos to Ministers: Back Bailout or Quit
By Maria Petrakis and Simon Kennedy - Feb 10, 2012 11:25 AM PT
Greek Prime Minister Lucas Papademos told members of his government they must back deeper budget cuts needed to prevent financial collapse or quit, as political dissension threatened to unwind the country’s second bailout.
Papademos said failure to secure the 130 billion-euro ($171 billion) rescue package that’s under negotiation threatened 11 million Greeks with a default that would halt the payment of wages and pensions and shut down schools, hospitals and businesses. He spoke after five ministers resigned in two hours and protesters clashed with police in Athens.
“Some say default would be preferable,” Papademos told a Cabinet meeting in Athens this evening, according to an e-mailed transcript from his office. “They are woefully mistaken. What is of the essence right now is to do whatever we can to approve the new plan and let the loan accord proceed.”
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Riot police detain protesters during an anti-austerity demonstration in Athens on Feb. 10, 2012. Photographer: Alkis Konstantinidis/EPA
Greece Denied on Aid as Austerity Raises Euro Risk
Feb. 10 (Bloomberg) — European finance ministers held back a rescue package for Greece in a rebuff that left lawmakers in Athens under government pressure to endorse a newly minted austerity plan or exit the euro. Owen Thomas, Linzie Janis and David Tweed report on Bloomberg Television’s “Countdown.” (Source: Bloomberg)
Protesters during an anti-austerity demonstration outside the Greek Parliament in Athens on Feb. 10, 2012. Photographer: Petros Giannakouris/AP
Riot police with a protester in Athens on Feb. 10, 2012. Photographer: Thanassis Stavrakis/AP
Stocks’ worst day of year
Blue chips down by triple digits, and if the DJIA ends down at least 100 points it would be for the first time this year. Worries that efforts to keep Greece from defaulting were falling apart weighed on stocks.
Will “rough justice” suffice to lay the the robo-signing fiasco to rest?
The Post’s View
‘Robo-signing’ deal is rough justice
By Editorial Board, Published: February 9
AT LONG LAST, federal and state authorities have reached an out-of-court settlement with five leading mortgage lenders, a major step in resolving the furor over “robo-signing” and other dubious foreclosure practices that came to light in October 2010. Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will pony up $26 billion in return for a measure of legal immunity; the figure could grow to $30 billion if an additional nine banks join the deal. The Obama administration and state attorneys general said the deal would salve an ailing housing market and deliver justice to “victim borrowers,” as U.S. Attorney General Eric H. Holder Jr. put it.
Actually, it’s rough justice — very rough — in a case of rampant, but essentially victimless, alleged law-breaking. Yes, lenders cut multiple legal corners as they coped with an unprecedented volume of delinquent loans; but few, if any, homeowners lost their homes as a result. It’s surely appropriate to hold banks accountable for alleged dishonesty, but it’s far from clear why the deal includes $1.5 billion for 750,000 people foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, without particular evidence that they were “victims” of robo-signing or anything else. That’s about $2,000 each, a windfall for which neighbors who rented, or borrowed only what they could afford, will not be eligible.
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This is a complete and total bank-friendly deal. My understanding is that they get 50% credit for writing down loans that they service but do not own. So they can write down say $20 billion of loans that they own and take the loss. Or they can write down $40 billion of loans that are owned by someone else, for example pension funds, and the pension funds take the loss. Anyone want to bet which they will do?
On top of that, once they convert these loans, they become taxpayer guaranteed. So if they still default, we pick up the tab, not the banks.
“…they become taxpayer guaranteed. So if they still default, we pick up the tab, not the banks.”
Why did you have to dash my hopes that the banksters would finally have to pay a dear price for systemic fraud?
For the past few years, any time there’s any decision or policy or ruling that the government is going to make, I assume it will be for the benefit of the bankers, because they’re in charge. Bankers run the country, not Obama, not congress. I’ve been doing that, and so I’m never surprised. 100% of the time it’s for the bankers. If something also benefits the people, that’s only a coincidence.
Read this if you want to be bummed out:
http://www.nakedcapitalism.com/2012/02/the-top-twelve-reasons-why-you-should-hate-the-mortgage-settlement.html
Yves was on NBC last night for 5 seconds under her real name. She got one sentence in. I don’t even know why they bothered. By the time you realized it was her, she was offscreen.
http://www.msnbc.msn.com/id/3032619/#46333522
On her blog she shares that they told her to really dumb it down. Our MSM are so pathetic.
I wish bloggers like she and HBB’s Ben Jones could get more air time. It’s the sober assessments that need to get out there. Ben, I know you are busy and am happy you have the work but I have always wished we’d get to hear more of your sentiments. They are very well thought out and usually seem to cut through to the heart of the matter.
This is a complete and total bank-friendly deal.
Which is something that the Occupy movement must be paying very close attention to. Expect to see some very interesting protests in the coming months.
What Occupy movement?
It isn’t “justice” at all. It’s another privileged buyout. NO prosecutions.
No one held accountable. Just a fine. That’s right another “settlement”, without prosecution. Business goes on as usually, and, gee how draconian, after robbing the taxpayers of hundreds of billions of dollars, to quote the Post…..”$26 billion in return for a measure of legal immunity”.
I think it’s actual FULL legal immunity, but I wouldn’t expect the post to be in favor of prosecutions or to present this theft of the American taxpayer as anything but really rough on the crooks. It’s their people who are on the ropes.
“$26 billion in return for a measure of legal immunity”
It’s not really a fine so much as a cost of doing business. And I am sure if you analyze the financial engineering behind the headline story, you could probably figure out how Main Street is eventually going to pay a fair chunk of the $26 bn.
Not only does business go on as usual but if you read the article in the New York Times magazine last weekend they’re already whining that Frank-Dodd unjustly places too many limitations on them and they can’t make money anymore. Their plan now that everything is government guaranteed is to just keep pumping out the loans no matter what the risk. It appears they really do believe they can reinflate the bubble.
Man when we finally do get to the crash that should have happened in 2001 pre all this credit pushing it is going to be ugly.
http://nymag.com/news/features/wall-street-2012-2/
“Their plan now that everything is government guaranteed is to just keep pumping out the loans no matter what the risk.”
Nobody could have seen the moral hazard with Uncle Sam guaranteeing everything in sight!
Real Estate valuations down 30% is kind of crash-ish. Yet the banks look good. A headline hit of $26Billion also makes the banks look good, as if they were solvent. They are still paying big bonuses and people are demonstrating in the streets against the bank’s greed. It’s all good PR and in a perverse way gives us confidence in the financial system.
They are still paying big bonuses
There have been a lot of recent headlines claiming that this year the bonuses are getting slashed. Does that mean you think that’s just the same old MSM PR job?
Whatever you guys decide to talk about this weekend, it will have to happen without me. I’m off to NYC for niece’s birthday. So while you all discuss the ramifications of [spring selling season/bank settlement/a messy Greek default/whatever] someone chime in with my specialties. I wouldn’t want y’all to miss out on “Darn those facts” or “Being evils isn’t illegal. Only doing something against the law is illegal.”
I’m going to be at a wizard reading party. I think it used to be fairy princesses, but the birthday girl (or her parents) updated the story topics.
(Be Safe & have fun!)
“I’m going to be at a wizard reading party.”
Eyes was going climb Pikes Peak, twirl in a 360 degree circle with a Native $haman’s Ocotillo stick wand: Chanting: “America Heal thy $elf” but eyes guess it’ll have to wait ’till the end of August, … $orry. :-/
Make sure you wear a sweater!
http://cograilway.com/webcam.htm
Hey Polly, have fun. I will try my best not to post too many ignorant comments about the law in your absence.
dang we would love to buy ya a beer…. check out the link i’m actually going to finally do something with my website
Sometime when I’m not going to be helping my brother and sister in law keep my parents safe and happy. Mom can’t stand NYC. It makes her nervous.
The first time they dropped me off at my apartment at the start of my second year of law school (I was in a dorm first year), they helped me pump up an air mattress and left me all alone with no furniture of any kind. Just the air mattress on the floor and a few boxes of books and clothes. I had to run around NYC to get a bed that afternoon (it was pouring) and take the bus to IKEA from Port Authority (back when it was seriously dangerous) the day after that to buy my own furniture. Then I had to build it all myself while interviewing for summer jobs.
When they dropped my brother off for grad school in Michigan, they stayed for a week, helping him find an apartment and furnishing it for him.
Well i know what you mean when it wasn’t safe……I grew up an hour away in southern CT..always took the train to GC ….took me a while to even drive in NYC but once i got used to it, it never bothered me since.
I’m also just across the river in queens and can see the new WTC from my picture window all lit up at night
When they dropped my brother off for grad school in Michigan, they stayed for a week, helping him find an apartment and furnishing it for him.
Sounds like how things ran in my family. Course my Dad would have explained it was because they knew I could handle everything just fine and they weren’t so sure about the others. I have a sneaking suspicion your family looked at you as able to conquer anything.
I’m most likely going to be doing a weekend photo shoot here in Tucson. Need to give the prospect a call about my estimate. Hope her very wealthy corporate employer doesn’t balk.
The high Stepping Cliffs ‘Communities” of upstate SC are gone ,swirled into deserved bankruptcy yesterday .Not sure what is going to happen to the $150. a round golf clubs. And there is zero tears from locals for all the rich carpetbaggers with all that cash invested in a small mountain lot. Good riddance, we wish the land could now be restored to it’s former state.
“we wish the land could now be restored to it’s former state.”
We got a Dam we’re hopin’ to do the same idea/thing out her in CA. You gotta $tart $omewhere, $omeplace eyes reckon.
Yeah so we could stop importing OJ from china….
we wish the land could now be restored to it’s former state.
I get mine from Brazil.
My Flipper co-worker says homes are being snapped up with mutiple bids here in S. CA. Every home I have been watching has sold.
Banks have cut a sweet deal , etc.
The housing bottoms in. I wish it would have gone down more but you know you can’t fight the FED.
I think the FED will keep rates low well into the future so any double dip will be met with Trillions of dollars.
expect big inflation in 2015
You have to ask yourself why the Fed rate is staying low.
I am at wits’ end… I am surrounded by zombie homes, and yet there is nothing worthy of renting in places I want to live. I have a bad feeling my LL is going to try to sell because homes in my ‘hood are actually selling (the ones that actually get listed)… and they’re selling for about $100k more than I would be able to afford.
We might get some down payment assistance from grammy and call it a day.
Muggy….
Buy the bounce?
Follow the herd and lock in long term over your head? 30 years over your head Muggy? Why would you do this to your family? To avoid a couple weeks of boxing? Throw Grammy’s money in the fire and then tell her you are so sorry in a few years when she needs it? Your kids will remember the strain of the budget a lot more than if you owned or rented, moved after a few years or played the oak tree.
All of my stories about how poor we were are from when my dad was paying a mortgage on a house that Grammy lent the downpayment on. He had a good job the whole time. He was in over his head. Housing turned south and we had to move for his job. He took a bath. So did Grammy.
The trouble with buying when you don’t have a downpayment is that you also will not be able to extract yourself easily if things go south just a teeny tiny little bit, actually not if they do not grow significantly.
Some leading indicators are suggesting that the next leg down is at the door, and that it is significant. Cling to your freedom Muggy. Be Responsible.
I was hoping Ben’s weekend topic would be about the ramifications of the AG agreements. Aside from any monetary awards, I’m interested in whether or not some of this shadow inventory starts to be released although we did find out yesterday GSE inventory is not included. Also I’m interested in hearing if anyone has an idea about how long will the delay be before we see it released?
Could it be that shadow inventory will soon be entered into the mix? Will it be a deluge or a trickle? In tight markets such as mine, will I even notice? Will it produce the never before seen in my market sheriff at the door?
Over the entire span of this experience, there have only been 2 homes we passed on thinking the prices would collapse more that we mourn the loss. Two out of hundreds we’ve looked at over years of watching the inventory. If another came our way I think we’d grab it this time. But more than likely it’ll be another year w/o seeing too much of anything. Why do I want to tie a noose around our necks for “meh”? Remember, Muggy, this market can only move sideways. Jobs/incomes are not improving. Credit will not be any looser than it is today. The other people “grabbing” those homes may be investors with cash who may be buying bulk at lower prices than you’d be allowed. I personally wouldn’t seek to compete with them.