All financial manias feature easy credit during the upswing, followed by credit contraction during the bust as lenders get stung by bad debt. Sound familiar? From Money and Markets today:
A tsunami of bad loans is sweeping across the country. You can’t open a newspaper without coming across a story chronicling this swift, sharp increase in bad debts ...
From the Wall Street Journal, December 5:
Americans who have stretched themselves financially to buy a home or refinance a mortgage have been falling behind on their loan payments at an unexpectedly rapid pace ... Based on current performance, 2006 is on track to be one of the worst ever for subprime loans.
From the New York Times, December 6:
Delinquencies and foreclosures, though still low by historical standards, are rising fastest among these [subprime] borrowers.
From the Rocky Mountain News, December 5:
It’s official. A record number of real estate foreclosures have been filed in the Denver area this year.
From the Atlanta Journal-Constitution, December 6:
Hundreds of Georgians lost their homes Tuesday ... foreclosures in Georgia are up a stunning 99% in the past year.
The amazing thing is it’s catching the Wall Street “experts” by surprise. Thomas Zimmerman, head of asset-backed securities research at UBS, summed it up by saying, “We are a bit surprised at how fast this has unraveled.”
December 08, 2006
A tsunami of bad debt sweeping across the globe. Run to higher ground everyone!
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24 comments:
If they truly ARE surprised, then they're idiots, and I should quit my job and move to Wall Street.
Now is a GREAT TIME TO:
BUY a house --- NOT
SELL a house -- IF ONLY, I could find a buyer willing to bail me out of my upside down mortgage position.
FILE for Bankruptcy -- NOT, as I missed filing before the new BK laws took effect last year, so now I must payback a huge chunk of my debt in Chapter 13 over 5 years. I can't afford that so BK is out of the question.
The only thing left to do is to CRY and accept my new lot in life as a serf. The rest of my life will be spent slumming in and out of broken-down rental housing. Working two full time jobs to have enough after (tax & wage guarnishment) income to survive on.
The silver lining is that I will have lots of new freinds (as millions of my fellow Americans) will be in the same boat as myself-- and misrery loves company!!!!
Wallstreet is surprised...lol
Just like the crash of the previous Stock Bubble of 2000 !!!
It was all so that the few at the top could steal hundreds of millions of dollars apiece. Builders, mortgage originators, made theirs. Who cares if it crashes the world financial system?
Want to get around garnishment move to texas or florida non garnishment states or working abroad is an option.
The NYSE is doomed, and they don't even know it yet. Where's the PPT? Bwahaha!
Thomas Zimmerman, head of asset-backed securities research at UBS, summed it up by saying, “We are a bit surprised at how fast this has unraveled.”
Duh, the reason those turkeys don't have a clue is because they make way too much money and have no idea how the average American lives. Most of their xmas bonuses would put them in the top 1% just by their bonus.
I'm not bashing them, it is human nature. Even us middle/upper middle class folk are as narrow focused and forget that there are people in this world living on a lot less, especially in third world countries.
Still, the "rentiers", those who live off capital and not production always loose sight of one thing, balance. If the people you lend too can't afford to borrow or pay back what they borrow you loose your capital too! Out-sourcing, off-shoring, eliminating manufacturing jobs to increase stock holders dividends or stock value is short sighted, nothing new for Americans. Better that Americans had bought a few less imports and more goods made by Americans in America. I'd rather pay more if the money stayed home.
Invest in scamster hamsters and hedge hogs, they really rake it in.
Could anyone tell me how the unemployment can be up while "employers add more jobs"?
I'm really confused. When they report job market, shouldn't the number of eleminated jobs also be included?
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http://biz.yahoo.com/ap/061208/economy.html?.v=16
AP
Employers Add More Jobs, Unemployment Up
Friday December 8, 12:54 pm ET
By Jeannine Aversa, AP Economics Writer
Employers Boosted Payrolls by 132,000, Unemployment Rate Edges Up to 4.5
WASHINGTON (AP) -- Employers boosted payrolls by a respectable 132,000 in November, but the unemployment rate edged up to 4.5 percent as jobseekers streamed into the labor market by the thousands with the onrushing holidays.
The tally of new jobs added to the economy last month marked an improvement from the 79,000 new positions generated in October and was the most since September, the Labor Department reported Friday. It was mostly a cheerful economic message at a time of year when shopping peaks.
Although the unemployment rate crept up from a five-year low of 4.4 percent in October, the politically sensitive number also pointed, nevertheless, to a labor market that is in good shape despite a slumping housing market and a struggling auto sector that are weighing on overall economic activity.
"The job market remains sturdy," said Mark Zandi, chief economist at Moody's Economy.com. "It is creating a good number of jobs, unemployment is low and wage gains are strong. That is providing a lot of financial cheer as people make their ways to the malls for the holiday."
Even more wood to the fire single women are buying 22% of homes. I can see the smoke coming from this one in the future.
You Know I often thought of smokeing crack!
From the looks of things and the wave of resets coming in a month I think now is a good time to start.
Like the above poster noted, you cant claim BK, you are flat broke and no where to turn or no one to turn to, ehh! go out in a drug induced stoop.well! it the American way...and with drug use comes crime.
Lock and load folks the game is just begining.
And as a side note I went Bull-shit-mis I mean Christmas shopping with the wife last night, and I am telling you first hand retail stores are slowwwww!
I went to 4 different stores and had no trouble getting in or out...I walked into bestbuy just to browse while the wife was doing her thing, and the Bestbuy Ants were all over me like a Grain of sugar!
Can I help you sir I counted 6 times 6 different people..store head count ( again observing) 12 customers 14 employees, and this is peek shopping time 7:00 pm..
So we were standing at the register had a women in front of me, sure enough credit card whiped out like a holdup at a bank....DECLINED! she had 2 ipods and all the gear, I quote! "oh I am sorry wrong card" pulls out another and put one of the ipods back as she did not want to max out her card...I was just standing there like holy shit..not good...The wife looks at me and says ..I hate when your right.
Anyway I would have to say the holiday season here in New England as far as Retail goes...the numbers are not there..dead!
Toysrus (Ghost-town)
Kohls ( Dead)
BedBath&Beyond (You could here the Crickets)
Bestbuy ( Meager)
Homedepot (gift certs) ( Echos of lost souls)
That is my shopping experiance
..Merry I Wish I had More Equity Xmas Yalls.
Oh and I forgot to mention the women with the declined card had a carriage full of dvd's and other NON-Essential crap that she just left there and the checkout counter, as I assume she did not have the Doe for it.
Out goes the tide. Bad Blood over Bad Loans.
And Lehman Brothers Inc. (LEH ) is trying to recoup $20 million on toxic loans bought years ago from Beverly Hills Estates Funding Inc., whose principal, Charles Elliott Fitzgerald, is believed to have fled the country to a South Pacific island. "While the speculation is that he's offshore, we don't have any leads to his whereabouts," says Michael Wachtell...
This guy fled to a South Pacific Island? HAHAHA!!! This is just the beginning.
Wow, I mean Wow. It amazes me that people will put that kind of stress on themselves just for xmas. They have not only lost their minds but also do not even understand the meaning of xmas.
I have room on my cc's do buy lots of xmas stuff. I don't want to max them out and spend 6 months paying it back. I paid cash for the stuff I bought, ran out of cash and stopped shopping. Nope, didn't get everything I wanted. Nope, I didn't buy everyone on my list a gift. Nope, I don't feel bad I didn't use my credit to buy someone else a gift. What do people not get!!!
People need to create an alternate identity, not steal one, just make one up, then subsume themselves from one into the other and go poof! Course the mechanism by which this might be accomplished is probably too impractical if not impossible, but it's an interesting mind game if nothing else. The name Bill Smith has a nice ring to it, no?
Anybody buying houses that have gone up 300% in the last few years assumed the risk of having their investment implode. Thats what greed gets you. And most of you latte drinking softies dont qualify for bankruptcy because you make a lot of money, even when accounting for your stupid housing investments.
You're right, for most of them they do make too much money to go bankrupt. My guess is that they are going to have to just suck it up - they're going to cry like babies doing it too.
The thing that's really is hurting borrowers is that most of the lenders made these adjusting ticking time bomb loans based on the LIBOR rate instead of the 11th district cost of funds rate. The 11th district cost of funds rate moves more in relation to the U.S. Treasuries. The LIBOR is more related to the UK rates. UK rates are trending up and US Treasuries have actually come down over the last 6 to 9 months. The LIBOR is killing borrowers.
American consumers and borrowers have to smarten up and don't let these scaming lenders suck us in to these killer loans.
How is Raatytrac as a source?
Chicago lists *21,556* forclosures.
Detroit 13,260
Miami 12,270
Las Vegas 10,257
Denver 10,083
Phoenix 5,092
Atlanta 6,739
San Diego 3,755
New York 1,433
SF 601
Boston 555
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I live in Chicago. I know it's f-ed up here. And I know bad news escapes easier from North Korea, than this Communist country, but DAMN! Chi-Town leading the way in foreclosures???
that's www. realtytrac.com
sorry
Chicago lists *21,556* forclosures.
Detroit 13,260
Miami 12,270
Las Vegas 10,257
Denver 10,083
Phoenix 5,092
Atlanta 6,739
San Diego 3,755
New York 1,433
SF 601
Boston 555
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Odd don't you think? I hear they say Chicago doesn't have issues because it is a major center of finance, industry, etc and prices and wages more in line than say Phoenix...which has 1/4 of the number of foreclosures with all those flippers and all those vacant spec homes? What gives? And the lowest on this list, Boston, SF, NY, SD, all very expensive places and yet fewer defaults to date?
It goes to show affordability alone isn't the only issue. Still, who can make sense out of a market like this?
I'm under the impression that realtytrac is fairly accurate. I think you can chalk the numbers up to population. Chicago has a higher population so of course it has more foreclosures.
I realize that doesn't tell the whole story but Chicago does not have the highest per capita foreclosure rate. I believe that honour goes to Denver and then I can't remember who comes next - might be Vegas or Atlanta. I would expect Phoenix to be up there too.
With all those adjustable rate mortgages resetting next year there will be many many more foreclosures. I'll go out on a limb here and say that might have an adverse effect on house prices.
prices in chicago have exceeded income by quite a bit thanks to exotic loans, heavy investing and low income programs.
people got greedy and stupid and now will pay the price.
To understand who he was, you have to go back to another time when the world was powered by the black fuel and the deserts sprouted great cities of pipe and steel. Gone now swept away. For reasons long forgotten, two mighty warrior tribes went to war and touched off a blaze which engulfed them all.
Without fuel they were nothing. They built a house of straw. The thundering machines sputtered and stopped. Their leaders talked and talked and talked. But nothing could stem the avalanche. Their world crumbled. The cities exploded. A whirlwind of looting, a firestorm of fear. Men began to feed on men.
On the roads it was a white line nightmare. Only those mobile enough to scavenge, brutal enough to pillage would survive. The gangs took over the highways, ready to wage war for a tank of juice. And in this maelstrom of decay, ordinary men were battered and smashed.
Except for one man armed with an AK-47, and a Honda full of silver. In the roar of an engine, he lost everything and became a shell of a man, a burnt out, desolate man, a man haunted by the demons of his past. A man who wandered out into the wasteland. And it was here in this blighted place that he learned to live again.
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