June 23, 2007

HousingPANIC Stupid Question of the Day

Is the housing bubble and crash a perfect textbook example to this point?

Will there be any surprises along the way?



19 comments:

Anonymous said...

prediction: Freddie and Fannie will go belly-up.

Anonymous said...

textbook, no surprises

OwenF said...

textbook

Anonymous said...

Here's the reason Merrill isn't selling their Bear Stearns CDOs:

[Peter Schiff, president of Euro Pacific Capital] argued that if the bonds in the Bear Stearns Companies Inc. (BSC) funds were auctioned on the open market, much weaker values would be plainly revealed.

"This would force other hedge funds to similarly mark down the value of their holdings. Is it any wonder that Wall street is pulling out the stops to avoid such a catastrophe?," Schiff said.
...
"Their true weakness will finally reveal the abyss into which the housing market is about to plummet," he said.


http://calculatedrisk.blogspot.com/2007/06/schiff-housing-to-plummet-into-abyss.html

Anonymous said...

“‘It’s an industry issue,’ said Brad Hintz. Mr. Hintz was chief financial officer of Lehman Brothers Holdings Inc., the largest mortgage underwriter, for three years before becoming an analyst in 2001. ‘How many other hedge funds are holding similar, illiquid, esoteric securities? What are their true prices? What will happen if more blow up?’”

Anonymous said...

“‘The problem is not what we see happening, but what we don’t see,’ said Joseph Mason, associate professor of finance at Drexel University in Philadelphia and co-author of an 84-page study this year on the CDO market. ‘We don’t know the price of these assets. We don’t know which banks are exposed to this sector. These conditions are the classic conditions for financial crises across history.’”

Anonymous said...

Anxiety intensified Friday about the toll the sub-prime mortgage meltdown is taking on the financial industry at large, as Bear Stearns Cos. pledged to lend $3.2 billion to rescue a hedge fund battered by rising defaults on home loans. The jitters sent stocks tumbling across the board.

"We know that these holdings are not unique to Bear Stearns," said Drexel University professor Joseph R. Mason, co-author of a recent study warning of dangers in securities backed by home loans to high-risk borrowers. "It would be hard to find a Wall Street firm that hasn't created similar funds."

canary said...

"prediction: Freddie and Fannie will go belly-up"

Already happened. Congress put them under direct supervision of the Fed in 2005. Their books are cooked to hide the insolvency. PPT to the rescue once again.

Paul E. Math said...

I have yet to see anything surprising about the trajectory of this housing bubble and its decline.

Perhaps I have been a little surprised by the tenacity of ignorance among realtors, FBs, the MSM, the general public. It surprises me a little that objectivity is in such short supply - most people seem to be more interested in winning an argument than they are in actually being right.

But I probably shouldn't be surprised since I am one of those people who honestly believes that we are all just monkeys with opposable thumbs.

Mark in San Diego said...

In response to a few critics out there on HP (Y2K comparisons, etc.). . .All I have to say is that HP has been 90% accurate in its projections for the past year and a half I have been participating. . .the ONLY mistake we made was the timing - we probably felt the housing crash would be fast (one year or so) rather than the slow motion train wreck it has become. . .a year ago, I thought we would reach bottom by this summer of 2007, but now we/I realize this mess (Bear Stearns is just the tip of the iceberg) will take 5 years or more to sort out. I now use the word "crash" rather than bubble - the bubble has burst, and now the banks are bailing - they "want this junk off the books" by December 31, and are now starting to dump foreclosed houses and condos. . .

Congrats to Keith and all who predicted this mess. . . great to see Wall Street insiders get screwed, but sad about small fry who bought an overpriced shitbox in Phoenix, etc. for 600K.

Anonymous said...

The housing crash is small potatoes compared to the credit market bubble.

I agree with Peter Schiff: it's in Wall St.'s best interest to keep losses off the books as long as possible.

In the meantime the system with continue to shudder. Maybe on the 20th anniversary of the 1987 crash we'll have a real 'hoe down'.

Then you'll be able to forget anyone getting a mortgage with less than 20% down at a double digit interest rate, in a recessionary market. That will really cut home prices. And a gold coin will buy a home!

Anonymous said...

tHAT 600,000 SHTBOX WAS 82,000 IN 2001 AND WAS QUITE NICE

Anonymous said...

This mess reminds me of the Silver Streak with Richard Pryor and Gene Wilder. The engineer is dead. There is a tool box on the throttle adn this bad boy is heading into the station.

Sequoia512

troll brothers said...

The biggest threat to the economy is a severe credit crunch. the second is the Fed lowering rates and triggering massive inflation

Roccman said...

And this is just the appetizer...

bring on peak oil!!!

I give the human species 5 years max before we bring the world population under 1 Billion.

Cheers

Got Bunker?

cowboy bob said...

I remember my parents buying a house at 20% rates back in 1982. Those were tough times. Unemployment was at 11% and the oil bust destroyed RE all across Texas

turdly said...

cowboy bob said...
I remember my parents buying a house at 20% rates back in 1982.
June 23, 2007 8:53 PM

Those of us with LOTS of cash pray for those days. Let the crap eating flippers and the uneducated, unwashed masses live in it. Some of us have prepared. Some danced like the grasshopper.
We own our homes free and clear, we have two years wages in the bank, we will have Realtors working as out maids. Conspicuous consumption is for amateurs.

Anonymous said...

Keith, How's this for a good stupid question of the day?

If NAR reports high numbers on Monday and Tuesday, NAR members will continue to eat Top Raman for another month, because sellers will continue to hold on to their high prices. If NAR reports accurate numbers on Monday and Tuesday, NAR members could start to eating meat again, because panicked sellers would lower their prices to market value, and commissions would come back. How do you think NAR will report the numbers on Monday and Tuesday?

Keith, you are free to use this question.

g said...

Textbook with respect to other crashes in history. Not textbook with respect to other housing downturns. As Shiller said the rise in home prices is unprecedented in US history, which makes what happens next much more unpredictable. It's been a slow motion train wreck until now, but due to the sheer massive size of the bubble they inflated, and the ridiculous structured finance products that sprung off, we still cannot rule out an all-out run for the lifeboats.

Be careful out there.