HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008: BUBBLETALK - new thread to talk about the housing collapse

July 24, 2007

BUBBLETALK - new thread to talk about the housing collapse

What's on your mind? Post housing bubble / housing crash article highlights, use tinyurl, let me know what I missed, and have a good chat

317 comments:

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Anonymous said...: LAStyle?

All you HPers, want to go over to:

http://lanl-the-rest-of-the-story.blogspot.com/2007/07/la-housing-market-lanl-health-indicator.html

and clue those egg heads in that their housing market is freaking doomed?; July 16, 2007 2:45 PM
Anonymous said...: Isn't today the day that Bear Stearns postponed its hedge fund earnings announcement? I thought there would be a lot more talk/anticipation.; July 16, 2007 3:02 PM
Anonymous said...: When history is studied, Bush will be known for his wreconomic disaster: weak dollar policy, runaway deficits, pilfering of the treasury by special interests.; July 16, 2007 6:43 PM
Anonymous said...: How about a Gaylord watch? More spin to come!

Nation's head Realtor says market 'isn't down'
Article Launched: 07/16/2007 01:00:00 AM PDT

Don't try to tell Dick Gaylord it's a down housing market, or that there's a housing slump - and don't dare mention the word "bubble."

The congenial Long Beach man, who will assume the role as the nation's head Realtor next year, will argue vehemently that the market "isn't down but just returning to normal."

He has more than 30 years experience, and now the country's largest trade organization, to back him up.

"I don't know that there's ever been a bad time to buy," Gaylord said. "If people will hold on,

there's no bad time to buy in real estate."

Gaylord was speaking last week to reporters at a leadership retreat at the Ritz-Carlton Laguna Niguel in Dana Point, where he spent several days with Chicago-based NAR's new leadership team.

Gaylord, with Re/Max Real Estate Specialists in Long Beach, will be installed in November during ceremonies in Las Vegas as NAR's president for 2008.

The position places the 30-plus-year real estate veteran in a position to be one of the industry's

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mouthpieces, and it puts Gaylord at the helm of the group's national policy efforts.

Gaylord said the group will place a great deal of emphasis on educating its 1.3 million members as well as the public about home buying.

One of his ideas to educate members is to encourage people to undergo real-estate internships before entering the industry.

Much like the 2008 presidential campaign, health care is one of the public policy issues taking center stage in the group's agenda.

"It'll probably be a busy year in (Congress) next year," said NAR Senior Vice President for Government Affairs Jerry Giovaniello.

NAR estimates show more than one-fourth of its members do not have health care.

The leadership team also plans to do more to drive people to its Web site, www.realtor.com, even though it's already the most visited real estate site, in an effort to discourage people from buying and selling homes on their own with the help of certain Web sites.

Another issue the leadership team must take on is the "housing downturn," a phrase with which Gaylord and the rest of the leadership team would take issue.

"We don't quite see the gloom and doom that other people see," said Dale Stinton, NAR's CEO.

Gaylord pointed out that with the exception of a few small dips, home prices have risen almost every year for the past 50 years.

The "housing downturn" may be one of Gaylord's biggest battles, because he has to fight the perception of a housing slump when that's what people see and hear about housing most in headlines, on television and on the Internet.

"I wonder if this hasn't always been the case in people's perception, 'Can these prices go higher?'" was the question Gaylord posed. "The woman who taught me real estate, Isabelle Patterson, used to tell her clients in Long Beach in the '60s that the house she was selling in Belmont Shore for $25,000 would double in value. And people always wondered if that was possible."

Gaylord, a Belmont Shore resident, added, "Homes in Belmont Shore are $1 million and up now."

Don Jergler can be reached at
don.jergler@presstelegram.com; July 16, 2007 10:17 PM
gregoryw said...: Read the basics on howstuffworks.com:

http://tinyurl.com/ywo6j8

"There are all kinds of things that can change the course of the economy, just as there all kinds of things that can change the demand for a particular product. In some cases, a recession might be kicked off by over-production -- a situation in which the supply exceeds the nation's ability to consume.

One factor that generally plays a role in a recession, whether or not it is the cause, is the confidence level of the millions of consumers and producers. If consumers stop feeling confident about their job security or the value of their investments, they won't buy as much stuff. In the current recession, a lot of people who have been laid off are spending as little as possible, and many people who fear they may be laid off are also saving their money. "; July 16, 2007 11:58 PM
Anonymous said...: "Guy Daley"

"But go ahead, buy on a rumor. You didn't even bother to check and see if it was true. You just assumed. Good for you."
-----------------------------------
Was that called for? when did I say I was running out and buying? All I was doing was hoping to stimulate discussion and immediately you start treating me like a child and a lemming. Why is anyone on this board that even questions that maybe there is a rational ending to the housing market problems vs. the constant "We are in a recession, and about to all end up living in card board boxes under bridges" flamed or treated like a half wit. I did not happen to see that article, excuse the !@#$ out of me! I am sorry for having the audacity of trying to stimulate discussion. You compalin that Realtors are rude and constantly trying to shove the same old "housing never goes down" speak down your throat, but you are doing the same thing, just the opposite philosophy. Sorry for taking the moderate road. Maybe if there was a healthy dose of moderation in the beginning of this housing mess, so many would not be suffering a downturn right now. But, oh I forgot, anyone that bought a house MUST be a moron for not renting.....my bad. Seriously - Grow up Guy Daley!; July 17, 2007 2:47 AM
Anonymous said...: Liquidity. Many agree that a vaguely defined factor known as liquidity -- the cash available to investors -- has been one of the market's main drivers.

Liquidity is created in part by low interest rates, which make it easy to borrow.

"You have a dynamic of more dollars chasing fewer shares," he says. As long as interest rates remain low, no more huge investment funds blow up, foreigners keep funneling money into the U.S. and the consumer doesn't stop spending, the thinking goes, liquidity can keep pushing stocks higher.

http://online.wsj.com/article/
SB118454728960567186.html?mod
=googlenews_wsj; July 17, 2007 4:08 AM
Anonymous said...: Strong liquidity inflows to continue: Experts

Q: How have you read this dash to new highs and what do you think is propelling the market momentum at this point?

A: I think it is a combination of the fact that there is an excessive amount of global liquidity chasing stocks not just in India but throughout the world, combine that with the fact that Indian markets have underperformed year to date the other larger regional markets and a bit of underperformance catch up which is happening in the India markets now.

http://www.moneycontrol.com/india/
news/market-outlook/
strong-liquidity-inflows-to-
continue-experts/15/00/292137; July 17, 2007 4:18 AM
Anonymous said...: Glad tidings for clients soaked by Ameriquest

Carolyn Said, Chronicle Staff Writer

Friday, July 13, 2007

About 78,000 Californians who got mortgages from the nation's leading subprime lender will receive letters in the next few days notifying them that they are eligible to split $51 million in restitution for allegedly improper sales practices.

Ameriquest Mortgage Co., a unit of ACC Capital Holdings Corp. of Orange, agreed in January 2006 to a total $325 million settlement with 49 states over its lending practices.

Ameriquest allegedly failed to adequately disclose home-loan terms, failed to disclose whether loans had fixed rates or adjustable rates, refinanced borrowers into inappropriate loans, inflated home appraisals and charged excessive loan origination fees and prepayment penalties.

The practices took place from 1999 through 2005 and affected 725,000 borrowers nationwide. The settlement is among the largest consumer protection cases ever.

Subprime loans have become a huge national issue in the past year as homeowners who received them began to default in record numbers, often because they could not afford high monthly payments after an initial "teaser" period.

Ameriquest did not admit wrongdoing but agreed to modify some of its practices. The private company became well-known for high-pressure sales tactics and aggressive pricing for subprime mortgages, which are higher-cost loans made to borrowers with tarnished credit.

Ameriquest has agreed to ensure that borrowers receive clear explanations of interest rates, discount points, prepayment penalties and other loan terms. It also will change the way it handles appraisals and not encourage borrowers to misstate their income sources and amounts.

Like his counterparts in other states, California Attorney General Jerry Brown began mailing restitution claim forms Thursday to customers eligible for the settlement. The forms indicate the minimum payment customers can expect to receive. Consumers must return claim forms by Sept. 10.

While the average restitution payment is expected to be $812.15, the amount could be larger depending on how many people participate in the settlement. Consumers who accept the restitution give up their right to sue Ameriquest, unless their home goes into foreclosure, in which case they can still sue.

The settlement also involves customers of two Ameriquest-related companies: Town and County Credit Corp. and AMC Mortgage Services Inc., formerly known as Bedford Home Loans.

"Growth in the subprime market has unfairly impacted many consumers as we can see from the rise in foreclosures across the country and particularly in California," said Ginna Green, a spokeswoman for the California office of the Center for Responsible Lending, in Oakland.

While declining to comment specifically on Ameriquest or any other lender, she said some of the most egregious subprime lending practices involved prepayment penalties and adjustable-rate mortgages.

Prepayment penalties "lock consumers into subprime loans and don't give them any opportunity to (refinance into) prime loans, forcing them to pay exorbitant amounts of money to refinance," she said. Some ARMs can reset as much as 11 percentage points higher than the original rates -- "exploding ARMs is what we call them," Green said.

Ameriquest profited hugely during the subprime boom, and expanded into prime loans in 2004. It worked on becoming a household name through such deals as sponsoring the U.S. leg of the Rolling Stones' 2005 tours and the Super Bowl XXXIX halftime show, according to Hoovers.com, a business information Web site.

When the subprime market began to implode, Ameriquest went through a significant downsizing. Starting last year, it closed almost 230 retail offices nationwide and eliminated 3,800 jobs, a third of its workforce.
Ameriquest settlement

What: Settlement over allegedly improper sales practices by subprime giant Ameriquest.

Who: About 78,000 Californians who got mortgages from Ameriquest and affiliated companies from 1999 through 2005 are eligible to split $51 million in restitution.

Where: For more information, see www.ameriquestmultistatesettlement.com or call (800) 420-5875 -- (866) 494-8274 for customers with hearing impairments.

When: Eligible customers must return claim forms by Sept. 10. They forfeit their right to sue Ameriquest in the future, unless their home goes into foreclosure.

Source: Chronicle research

E-mail Carolyn Said at csaid@sfchronicle.com.; July 17, 2007 6:27 AM
Anonymous said...: How do you react to this!!!

HEDGE HORROR
SUBPRIME MELTDOWN COULD WIPE OUT BILLION$
By PAUL THARP
PrintEmailDigg ItRedditPermalinkStory Bottom

July 12, 2007 -- As home foreclosures ricochet through Main Street in rising junk mortgage meltdowns, Wall Street is facing a separate barrage that could swamp its first rich victims - hedge funds for the wealthy.

The financial industry yesterday got more unhinged following a shake-up a day earlier when two credit-rating agencies stripped away the fragile masks of shaky mortgage securities, exposing their worthless sides.

The stunning formal disclosures, which eventually could affect as much as $2 trillion in various mortgage securities, is expected to trigger widespread revaluation of the paper, which some analysts believe could wipe out 40 to 50 percent of their values.

For hedge funds, it would mean having to cover losses by giving back money to clients, even if it means selling off other good assets at a discount to raise money.

"The hedge funds are so over-leveraged, they'll be the first to crack," said Peter Schiff, CEO of Euro Pacific Capital.

Even Wall Street banks such as Merrill Lynch are vulnerable, with analysts saying the crisis could wipe out $132 million, 1.6 percent, of its profits this year.

The housing crunch sent the dollar plunging to a new low against the euro for the second day, to $1.3787. The greenback fell to a 26-year low against the British pound, at $2.0271.

Alarms also were sounded yesterday for the nation's banks when the Federal Deposit Insurance Corp. chief said it is looking "very carefully" at how many banks are holding junk mortgage paper, particularly a tainted and repackaged version of the risky junk bonds, known as collateralized debt obligations (CDOs.)

An estimated $1 trillion of CDOs are said to be parked throughout the investment community.

Moody's, which a day earlier downgraded the basic junk mortgage bonds, escalated its attack yesterday by downgrading $5.2 billion in subprime CDOs, the first agency to do so.

FDIC Chairman Sheila Bair said she expects a CDO time bomb.

"We're going to see more downgrades," Bair said, adding that she expects the bad news to "creep into higher-rated" securities.

"Its going to get worse before it gets better. How much worse, I don't know," Bair said.

paul.tharp@nypost.com; July 17, 2007 6:30 AM
Anonymous said...: I hope this isnt a repost, but you can now take your dreams of homeownership to the PC.

http://www.rustyaxe.com/hf_alpha.php; July 17, 2007 6:33 PM
Anonymous said...: Check out what USA Today wrote in 2002, quoting Dickless Retsinas:

* * *
The result: Housing affordability has reached "crisis" levels in some areas of the country, particularly in big cities on the East and West coasts, housing experts say. "We have to be able to answer the questions, where are our children going to live? Where are our teachers going to live? Where are our firefighters going to live?" says Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies.
* * *

So, in 2002, at the beginning of the bubble, he admits there is an affordability problem, but in 2007, after an additional 100% or so appreciation, it is no longer a problem? I guess I'm just not bright enough to understand things like a Havahd man.

See the full article:
http://tinyurl.com/2sxdc3; July 17, 2007 8:29 PM
Anonymous said...: Carry Trades Take on New Life As Dow Breaks 14,000 (July Seasonality Bonus)

New highs have become a regular daily occurrence in both the currency market and stock market.

Today, not only did the Dow Jones Industrial Average rise above 14,000, but GBP/JPY and AUD/JPY also hit fresh 14 and 15 year highs.

In fact, all of the Yen crosses are up strongly today with USD/JPY setting up for a move back towards 124.

US Dollar: Comments from Fed Chairman Bernanke Could Set a Near Term Bottom

Even though a weak US dollar is good for the economy, Federal Reserve Chairman Ben Bernanke is not expected to say anything that will cause further dollar weakness at tomorrow’s congressional testimony.

The stock market is already trading at very high levels, if the Fed loosens the reins on monetary policy, they risk creating an even bigger bubble.

http://www.dailyfx.com/story/
dailyfx_reports/daily_fundamentals/
df_1184709032177.html; July 18, 2007 2:46 AM
Anonymous said...: Homes Sale Are Increasing to Record Numbers. Its Boom Time.

http://biz.yahoo.com/bw/070717/
20070717005083.html?.v=1

"Our numbers speak for themselves," said Dean Williams, president and CEO of Williams & Williams. "Real estate auction works.

Williams & Williams now sells more foreclosed properties every month than any other brokerage in the world.

Williams & Williams, the world's leading real estate auction firm, celebrates recent record months of stellar sales.

As the rates of foreclosure have continued to escalate across the nation, more and more borrowers have turned to real estate auction as a viable means of bringing liquidity to their assets in a transparent and efficient manner.

"We'll see a peak of delinquency rates this year, but not see a peak in foreclosure until 2008." Williams & Williams' partner, RealtyTrac, which publishes the largest national database of foreclosure and bank-owned properties.; July 18, 2007 4:11 AM
Anonymous said...: Halleulah!!!!!!!!!!!

Loudoun Supervisors condemn illegal immigration

Associated Press - July 17, 2007 7:25 PM ET

LEESBURG, Va. (AP) - Loudoun County supervisors voted today to restrict illegal immigrants' access to county services.

The nine-member Board of Supervisors voted unanimously for the resolution, sponsored by the board's six Republican members. It is similar to one that was passed in Prince William County a week ago.

Supervisor Eugene Delgaudio says Loudoun County has to do something to discourage illegal immigrants from settling in the area. He says they are draining county resources and leading to an increase in crime.

http://tinyurl.com/3xujw6; July 18, 2007 4:18 AM
Anonymous said...: Maui home prices decline in June

The median price of a single-family home on Maui County in June was $654,500, which was down nearly 10 percent from $725,000 in June 2006, according to the Realtors Association of Maui. The latest figures were based on sales of 104 houses, an increase over 87 houses sold in June 2006

http://www.bizjournals.com/pacific/
stories/2007/07/09/daily62.html; July 18, 2007 4:26 AM
Anonymous said...: Moody's Investors Service may cut credit ratings of $318 million of securities backed by so-called Alt A mortgages that were packaged by issuers including Bear Stearns Cos., Lehman Brothers Holdings Inc. and Morgan Stanley.

http://www.bloomberg.com/apps/
news?pid=20601009&sid=
alfvQqePKJ5c&refer=bond; July 18, 2007 4:53 AM
Anonymous said...: Alliance Bancorp, a residential mortgage lender based in Brisbane, Calif., has filed for Chapter 7 bankruptcy and will liquidate its assets.

The company listed assets and debts of more than $100 million each in its bankruptcy petition, which was filed Friday in Delaware.

In a Chapter 7 case, a trustee is appointed to liquidate a company’s assets. It differs from Chapter 11, which allows a company to protect itself from creditors and reorganize through a bankruptcy court.

Alliance could not be reached to comment. A letter posted on the company’s Web site said Alliance shut its doors Friday.

http://www.nytimes.com/
2007/07/17/business/
17alliance.html; July 18, 2007 4:59 AM
Anonymous said...: Bear Stearns said one of its funds was worth nothing and another worth less.

http://online.wsj.com/article/
SB118470713201469384.html?mod=
home_whats_news_us

Investors in two troubled Bear Stearns Cos. hedge funds that made big bets on subprime mortgages have been practically wiped out, the Wall Street firm said yesterday, in more evidence of the turmoil in this corner of the bond market.

Bear said one of its funds was worth nothing and another worth less than a 10th of its value from a few months ago after its subprime trades went bad, according to a letter Bear circulated and to people briefed by the firm. The Wall Street investment bank -- known for its bond-trading savvy -- has had to put up $1.6 billion in rescue financing.; July 18, 2007 5:07 AM
Anonymous said...: Well Bear Stearns just announced investors in two of their hedge funds are hosed. Further, some of the investors in the funds attempted to sell out back in February when the sub-prime factor first reared it's ugly head and were "discouraged" from doing so. Think they're PISSED?!? I believe they're finding a lawyer asap for a class action suit and will go public with their story in the coming months. Wall St. will get a black eye and folks will get queasy about being long in their products. The market will go higher because the big firms need it to point to to restore investor confidence. Then either a terrorist attack or some type of exogenous event will be used to let the air out of the balloon. Wall St. uses the distraction to their advantage and Main St. will bite the bullet.; July 18, 2007 5:29 AM
Anonymous said...: The great summer standoff.

Of course any person who studies housing markets realizes that drops in sales volume are indicators of where prices are heading. Housing is sticky on the way down. But the ironic thing is you don’t hear the housing syndicate jumping up and down for the positive median home prices just released. Why? Because business is horrible and the public is tired of being bamboozled. Just listen to the sentiment of the home builders. The summer bounce isn’t here and we are quickly approaching August. Suddenly visions of infinite double digit gains start to seem more distant. Summer 2007 is a vastly different housing market. For one, the subprime market is imploding. Imploding? Seems abstract to say it that way. How about “no more mortgages for LaLa land investments.” Aside from irresponsible lending and delusional sellers, housing is coming back to Earth from a long vacation to Uranus.

The housing syndicate wants to blame the Fed and anyone championing tighter credit. If it were up to them, we’d be purchasing $2 million dollar homes while inflation goes along at 25 percent and every new buyer ended up in a 70 year multi-generational loan. They wouldn’t care. Sustainability is a word outlawed in the subprime industry. These companies have such little reserves, that a simple credit tightening brought many companies to their knees in a few months. And this on the back of the largest housing bubble in history. They could have easily built up their cash account to weather a storm over the healthy years; but why save when you can make money hand over fist loaning out ridiculous suicide loans? Wall Street ate them up.

Well now, thanks to the transparency of information most people look at the median price and just laugh because they know it is simply absurd and a horrible indicator of the current market. Sellers are still doing baby steps trying to lower prices by $10,000 or $15,000 on a home overpriced by $200,000. So it is in today's market.

http://drhousingbubble.blogspot.com/; July 18, 2007 5:29 AM
Anonymous said...: Yen Carry Trades providing excess global liquidity.

http://www.ft.com/cms/s/
971843d8-34c7-11dc-8c78-
0000779fd2ac.html

Stronger-than-expected inflation data will force Bank of England into further interest rate rises.

London interest rate futures showed traders adding to bets that the BoE's monetary policy committee will soon raise the cost of borrowing by a further 25 basis points to 6 per cent, and that rates could reach 6.25 per cent by the end of the year.; July 18, 2007 5:42 AM
Anonymous said...: BOJ keeps on pumping those emails out to remind speculators to "please borrow in our currency"

http://www.bloomberg.com/apps/
news?pid=20601085&sid=
adUO35lyC1C8

European Central Bank council member Nicholas Garganas said interest rates will need to rise further as stronger economic growth than the bank predicted threatens to fan inflation.

``Based on my assessment of the current information available, I would expect that a further withdrawal of monetary accommodation would be warranted,'' Garganas, who also heads the Greek central bank, said in an interview in Athens yesterday. ``Risks to inflation have increased.''; July 18, 2007 5:50 AM
Anonymous said...: BOJ providing easy access to global liquidity.

"Please borrow our currency"

http://www.canada.com/topics/
news/national/story.html?id=
14dc8f01-5962-476d-929f-
c9fb230d4719&k=41508

The Bank of Canada is widely expected to raise its key interest rate again on September 5.

Canada's annual inflation rate is set to edge higher in June.

The June inflation numbers will be released at 7 a.m. (1100 GMT) on Wednesday.

Analysts forecast, on average, a 2.4 percent jump in the consumer price index from June 2006, compared with 2.2 percent in May.

They expect the core rate, which excludes volatile items like gasoline, to climb to 2.6 percent -- the highest since March 2003.; July 18, 2007 6:06 AM
Anonymous said...: Sharp overseas growth probably had nothing to do with excess global liquidity.

http://www.examiner.com/
a-833070~Merrill_Lynch_Profit_
Climbs_30_Percent.html

Merrill Lynch Profit Climbs 30 Percent

Robust performance from investment banking fees and sharp overseas growth pushed results above Wall Street projections for earnings of $2.02 per share on revenue of $9.25 billion, according to analysts polled by Thomson Financial.; July 18, 2007 6:12 AM
Anonymous said...: You know Keith, whenever the CDO-Subprime subslime story rears it's ugly head, you ought to run a picture at the top of the thread with Freddy Krueger and Jason's heads photoshopped onto some Wall St. suit types. It would be fitting.; July 18, 2007 6:43 AM
Anonymous said...: Bear Stearns getting absolutely hammered in AH trading.

By Alistair Barr
SAN FRANCISCO (Dow Jones) -- A Bear Stearns Cos. hedge fund that made leveraged bets in the subprime mortgage market is worth nearly nothing, according to two people briefed by the investment bank.

Investors have been waiting for Bear (BSC) to update them on the High-Grade Structured Credit Enhanced Leveraged Fund and a larger, less leveraged fund called the High-Grade Structured Credit Fund.

The Wall Street Journal reported on Tuesday that the larger High-Grade Structured Credit Fund is worth roughly 9% of its value at the end of April.

A spokeswoman for Bear did not return calls seeking comment late Tuesday.

The funds, which oversaw more than $10 billion in mortgage-related assets, ran into trouble earlier this year amid rising delinquencies on loans granted to less creditworthy homebuyers. Bear said last month that it would pump as much as $3.2 billion into the larger High-Grade Structured Credit fund but didn't touch the more leveraged one.

The problems roiled the subprime mortgage market and may have triggered big losses and big gains at other hedge funds, depending on which side of the trade managers were on. The crisis also has dented the reputation of New York-based Bear Stearns, which has been known as an expert in the mortgage market.

Bear shares fell $4.11, or 2.9%, to $135.80 during after-hours trading on Tuesday. The stock has dropped 14% so far this year.

> Dow Jones Newswires
07-17-07 1816ET
Copyright (c) 2007 Dow Jones & Company, Inc.; July 18, 2007 7:01 AM
Anonymous said...: Hey troll: rents falling 36%!

Article published Jul 16, 2007

STAFF PHOTO / JASON MCKIBBEN

Instead of flipping this new 1,800-square-foot house in North Port, owner Linda Haese is trying to rent it for just under $1,100 per month.

Life is sweet for North Port renters
A massive supply of vacant homes in the city pushes rents downward and prompts owners to offer incentives

By MICHAEL BRAGA

michael.braga@heraldtribune.com

NORTH PORT -- A large banner hanging outside the Toledo Club Apartments on one of the main arteries in this city attests to distorted condition of the local rental market.

The words on the banner read: "Free Rent."

Whenever a business is willing to offer something for nothing, you had better believe that something is wrong.

In North Port, the problem is chronic oversupply.

"There is an abundance of rentals out there," said Donata Noone, a rental specialist with ERA Sun Coast Real Estate. "Buyers bought homes and condos when the market was good. They then tried to flip them, but realized they couldn't and decided to rent them instead."

But with hundreds of houses, condos and apartments for rent in North Port, not every owner has been able to find a tenant. So rents are plummeting, and so are rental standards.

"We're talking to people we would not have considered two years ago," said Linda Haese, who is trying to rent two new 1,800-square-foot houses. "These are people who don't have deposit money, but are willing to put $25 aside every month. As long as they don't have a criminal record, we're willing to say OK."

Dennis Black, a Port Charlotte appraiser who recently completed a study of North Port's housing market, said apartment building owners are suffering the most.

"Why should tenants renew their leases when they can rent a house for about the same price?" Black asked. "I am told that apartment occupancy is down to 80 percent."

Black explained that 80 percent to 85 percent is the break-even point for apartment owners. He said owners do not start kicking off serious profits until occupancy passes 90 percent.

"They're having trouble right now," Black said.

The Herald-Tribune called six apartment complexes in North Port, including Toledo Club, but five of the managers failed to return the calls.

The only manager willing to talk was Summer McLenon, who runs the Villas of North Port on Biscayne Drive.

McLenon said her complex is unique because rents are subsidized and occupancy is restricted to senior citizens, 62 and older.

"We are almost full," McLenon said. "We've one person moving out in August, and we've not seen a decrease in renters."

McLenon explained that subsidies are provided by the federal government to tenants who are paying more than 30 percent of their income in rent. The result is rents at the Villas of North Port range from $485 to $611 for a one-bedroom apartment.

"People keep coming in from other places where rent is increasing," McLenon said.

For owners of non-subsidized apartment complexes and investment homes, however, the market is far more chaotic.

Everyone contacted by the Herald-Tribune acknowledged that rents are plunging.

"Rents are coming way down because of supply," said Karen St. Pierre, a rental specialist with ERA Advantage Realty. "A 1,800-square-foot house without a pool that rented for $1,400 a year and a half ago is now renting from $900 to $1,000 a month."

That represents a 36 percent drop and has created a wave of resentment among investors, who have seen their taxes and insurance bills move rapidly in the opposite direction.

"Some owners are going crazy," said Noone of Sun Coast Real Estate. "They say they need the higher rent or they'll go bankrupt."

Noone says agents try to explain that it is better to lower rents and keep tenants than to let the house go empty.

"I try to tell them that if their mortgage and payments are $1,500 a month, they should accept a renter willing to pay $1,000 a month, because that means they are covering all but $500 of their cost," Noone said.

Haese, who is trying to rent two houses in North Port, said she attends investor club meetings where she hears horror stories about owners who have been unable to rent houses for as long as five months.

"They're just not dropping their prices fast enough," said Haese, who is offering her houses for just under $1,100 per month.

Haese said she is not making money at that level, and she would like to sell, but the market is glutted with houses for sale.

"I think it will be five or six years before I can get out," she said.

But for people looking to rent houses in North Port, the situation could not be better.

They are being offered new houses with swimming pools at ridiculously low prices.

"It makes much more sense to rent than to buy right now," said Black the Port Charlotte appraiser. "A renter will pay 60 percent of what it costs to own."

Black added that anyone considering buying a house in the city should consider renting for a year first.

"In all likelihood sales prices will go down," he said.

In the meantime, owners and managers are offering renters all kinds of incentives.

"We offered the first month free on our newer homes," said Jeffrey Cristello, who owns five rental properties in North Port. "We're asking for $500 security."

St. Pierre of ERA Advantage said several of her clients are offering similar deals.

"They're offering half a month free and waiving application fees," she said.; July 18, 2007 7:17 AM
Anonymous said...: stock markets setting records every day. HP still talking about crashes and $5000 gold.; July 18, 2007 12:55 PM
Anonymous said...: Bear Sterns & Others Dump ‘Toxic Waste’ on Pensions:

Flashback to a few months ago.........

"At a sales presentation of the bank’s CDOs to 50 public pension fund managers in a Las Vegas hotel ballroom, Jean Fleischhacker, Bear Stearns senior managing director, tells fund managers they can get a 20 percent annual return from the bottom level of a CDO.

“It has a very high cash yield to it,” Fleischhacker says at the March convention. “I think a lot of people are confused about what this product is and how it works.”
Fleischhacker, 45, says she doesn’t associate toxic waste with the equity tranches she’s selling. Pension funds in the U.S. have bought these CDO portions in efforts to boost returns.
Many pension funds, facing growing numbers of retirees, are still reeling from investments that went sour after technology stocks peaked in March 2000. Fund managers buy equity tranches, which are also called “first loss” portions, even though those investments are never given a credit rating by Fitch Group Inc., Moody’s Investors Service or Standard & Poor’s."

The California Public Employees' Retirement System, the nation's largest public pension fund, has invested $140 million in such unrated CDO portions, according to data Calpers provided in response to a public records request. Citigroup Inc., the largest U.S. bank, sold the tranches to Calpers.

``I have trouble understanding public pension funds' delving into equity tranches, unless they know something the market doesn't know,'' says Edward Altman, director of the Fixed Income and Credit Markets program at New York University's Salomon Center for the Study of Financial Institutions.

``That's obviously a very risky play,'' he says. ``If there's a meltdown, which I expect, it will hit those tranches first.''

Calpers spokesman Clark McKinley declined to comment.

Because CDO contents are secretive, fund managers can't easily track the value of the components that go into these bundles. ``You need to monitor the collateral in your investment and make sure you're comfortable there will be no defaults,'' says Satyajit Das, a former Citigroup banker who has written 10 books on debt analysis.

Tough to Track

Most investors can't do that because it's extremely difficult to track the contents of any CDO or its current value, he says. About half of all CDOs sold in the U.S. in 2006 were loaded with subprime mortgage debt, according to Moody's and Morgan Stanley.

http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aW5vEJn3LpVw; July 18, 2007 1:29 PM
Anonymous said...: "We're talking to people we would not have considered two years ago," said Linda Haese, who is trying to rent two new 1,800-square-foot houses. "These are people who don't have deposit money, but are willing to put $25 aside every month. As long as they don't have a criminal record, we're willing to say OK."

================================

And there we have the description of renters in a nutshell....bums. Gee you all must be so proud to be part of that exclusive club.; July 18, 2007 2:04 PM
Anonymous said...: Anyone want to flame me?

The consensus amongst people I talk to is the biggest mistake in this nations's history (up until GW broke all the records) was the introduction of cheap labor (slavery) into America. We have been dealing with some of the world's worst crime and welfare babies ever since.

Soooo.... now we are repeating our mistake with illegal immigrants. Nice.; July 18, 2007 2:21 PM
Anonymous said...: Can anyone out there tell me the 2006 foreclosure filings for MD and the YTD filings for MD.

Also, can someone point me to the number of filings for Charles County MD in june and monthly this year?

And if someone is so kind also let me know where you get this info from.; July 18, 2007 3:42 PM
Anonymous said...: Is inflation really this out of control or is it just me?

Example 1: I'm at Sonic yesterday. I order a #1 combo, burger/fries/coke price is $4.49. As I am enjoying that delicious, yet oh so bad doe me meal, I see a kid out changing the menus. That $4.49 combo is now $4.99 and everything else is about 10% more.

Example 2: I am bidding on a car on ebay. I looked around for shipping quotes. Checked with DAS on Sunday, quote was $450. Checked again today, up to $500, 11% higher.

WTF 10% jump in prices just like that. I was somewhat skeptical of this talk of rampant inflation, but these two events just woke me up.; July 18, 2007 5:53 PM
gregoryw said...: Nice work Wall Street. Do we need to pass some laws?

"Moody's Shut Out of Rating Commercial Mortgage Bonds (Update1)"

http://tinyurl.com/yq9qbh; July 18, 2007 10:57 PM
Anonymous said...: This site offers free advice for each state on how to stop foreclosure. Worth a look if you need to know your state laws.; July 18, 2007 11:13 PM
Anonymous said...: Just saw this and found it full of humor and irony...

http://finance.yahoo.com/loans/article/103238/A-Tale-of-Two-Borrowers; July 19, 2007 12:02 AM
Anonymous said...: We're even seeing the effects here in Australia!

http://tinyurl.com/2yek8d

Aussie hedge fund in crisis

Stuart Washington and Colin Kruger
July 19, 2007 - 9:52AM

Australian hedge fund Basis Capital is understood to be on the brink of collapse as creditors close in over failed

investments linked to hard-hit US subprime mortgages.

According to UK newspaper the Financial Times, creditors have appointed accountants Grant Thornton as restructuring advisors.

According to the report, creditors said Basis missed margin calls on Monday for one of its troubled funds, which lead to the

appointment of Grant Thornton. The firm did not return calls from smh.com.au this morning.

Last week, the Sydney-based hedge fund manager that manages $US2.5 billion has put a limit on withdrawals from two of its

funds that invest in risky debt products known as collateralised debt obligations, expressing fears the funds would otherwise

not survive.

Limits on withdrawals on the two Basis Capital Funds Management funds were imposed after the funds fell during June, by 14

per cent for the BasisYield Alpha Fund, and 9 per cent for the Basis Pac-Rim Opportunity Fund.

A newsletter distributed to unit holders said the imposition of withdrawal limits, known as gates, were "designed at

inception to ensure [the funds'] survival through periods of extreme dislocation such as this".

The newsletter specifically singled out credit ratings agencies' moves to downgrade their ratings for risky debts, which are

being repriced in the wake of large losses stemming from US "subprime" lending to householders.

On Tuesday Moody's Investors Service cut ratings on $5.2 billion of subprime-related debt and Standard & Poor's said it was

preparing to downgrade $12 billion of mortgage bonds, citing a deepening housing slump.

In the US there have been several hedge fund collapses related to the fallout of the subprime lending problems, including two

funds linked to broker Bear Stearns that suffered billions of dollars in losses.

In its newsletter Basis Capital said its "fundamentally sound collateral" had been indiscriminately given a market price,

resulting in the losses.

Basis Capital, headquartered in the Gateway Building near Circular Quay, was established by Steve Howell and Stuart Fowler in

April 1999.

Basis Capital offers two funds with funds under management of $600 million to Australian retail investors, the Basis Yield

Fund and the Basis Aust-Rim Diversified Fund. It was unclear last night whether the problems of the offshore-domiciled funds

were reflected in the Australian domiciled funds. Standard & Poor's rates the Australian funds as five star.; July 19, 2007 4:01 AM
Anonymous said...: “‘There are people like the gentleman across the street who bragged how this was the third home he bought using false documentation,’ Cuthbertson said. ‘He took a sledgehammer and ripped out all of the copper pipes and then left. They’re predatory borrowers.’”; July 19, 2007 5:19 AM
Anonymous said...: A very good and bold move Mr. Bernanke, sacrificing the USD to slow down excess global liquidity.

A weaker dollar should slow down speculation on yen carry trade.

But keep in mind, it could mean raising interest rate to protect the USD from a free fall if the move does not work.

http://business.guardian.co.uk/
useconomy/story/0,,2129417,00.html

Ben Bernanke, chairman of the Federal Reserve, tonight warned that the downturn in the troubled US housing market would get worse before it got better as he pledged action by the central bank to rein in abuses in the sub-prime mortgage market.

Deploring what he described as "the outright fraud" involved in selling some home loans to those on low incomes, Mr Bernanke sent the dollar into a fresh slide when he stressed that the housing market would remain a drag on growth.

Despite new evidence from US government data today that the real estate sector remains in decline, Mr Bernanke provided scant hope that the Fed would cut interest rates in the near future. Inflation remained too high for comfort, he told Congress on the day when the latest figures for consumer prices showed the core measure of the cost of living up by 0.2% in June and by 2.2% on the year.; July 19, 2007 8:16 AM
Anonymous said...: After many failed attempts to intervene in the foreign exchange market to weaken the kiwi, what other options are left for New Zealand Reserve Bank to slow down excess global liquidity.

http://www.nzherald.co.nz/
section/12/story.cfm?c_id=
12&objectid=10452526

Finance Minister Michael Cullen hints at action to stop rise in interest.

The Government has raised the prospect of stepping in to prevent another interest rate rise and stem the dollar's surge.

Finance Minister Michael Cullen yesterday went out of his way to repeatedly highlight a little-known section of the Reserve Bank Act allowing the Government to change the way interest rate decisions are made.

If triggered, section 12 of the act would allow the Government to order the Reserve Bank to base its interest rate decisions on other factors such as the level of the dollar rather than just on inflationary pressures.

http://www.nzherald.co.nz/
section/3/story.cfm?c_id=
3&objectid=10452545

Economists believe it would be unwise for Finance Minister Michael Cullen to attempt to avoid another interest rate rise by suspending the Reserve Bank's inflation focus.

Cameron Bagrie, ANZ's chief economist, says that would be an absurd and rash reaction.

http://www.radioaustralia.net.au/
asiapac/programs/s1954775.htm

BAGRIE: The Reserve Bank has gone with neither confirm nor deny, but I certainly think where there's a little bit of smoke there's going to be a little bit of fire. And the Reserve Bank's been pretty clear in its communication. They do think the New Zealand dollar up around these sort of levels is what they call unjustifiably high. So if the Reserve Bank's got pretty deep pockets they can afford to I guess accumulate a little bit of currency here, accumulate a few US dollars and wait for the New Zealand dollar to go down because I guess it's a bit of a stretch but I think the New Zealand dollar is going to be at 75 cents two years out.

SNOWDON: That might depend on how long the appetite of investors last from low interest rate countries - particularly Japan who are looking for higher returns.

Japan's ultra low interest rate of just half of one per cent means hundreds of thousands of retail investors are doing just like the big boys.

They're borrowing money to invest in New Zealand - its got interest rates of 8 per cent, they're among the highest in the world.

It's called the carry trade. And it means that while the New Zealand dollar booms the Yen keeps getting weaker - it dropped to a record low against the Euro in Asian trade Monday.

But while the New Zealand Reserve Bank is trying to slow down its dollar rise on the one hand, on the other it's likely to raise interest rates again soon according to Danica Hampton, currency strategist at the Bank of New Zealand.; July 19, 2007 8:32 AM
Anonymous said...: Something to think about while I wait to buy a McManxion for 80,000 cash again, although I think of the heating and cooling costs of such a monster... tyrany is corporate controled government mandatory health insurance....and to the degree that makes it necessitatable........; July 19, 2007 6:39 PM
Anonymous said...: as a tax the land, corporate land grab rip off scheme...........mandatory!!!!!; July 19, 2007 6:42 PM
Anonymous said...: My old home town newpaper had an article about 500 acres selling for 950,000 including house..as I would have thought that was the top.. to me that is the top end.... i would have bought it but the busybody politicians would have made using the majority of those acress untenable all do gooders that they be??; July 19, 2007 6:54 PM
Anonymous said...: Please pardon my day dream of a return to opieville and those unconcerned unstressed unworried days, guess i was one of the lucky rich; July 19, 2007 7:01 PM
Anonymous said...: Why no link to the news from DR Horton today that the market won't recover until the end of 2008 and prices may not rise until 2009.

You are slipping, dude.; July 20, 2007 4:19 PM
Anonymous said...: Oops... the commentary was from KBH today not DRH; July 20, 2007 4:21 PM
Anonymous said...: Appears to be more Bullox -

DR Horton has no idea when the
market will actually recover.

Once the ARM resets start, we'll
get a better idea just how far reaching the effects of this housing catastrophy will spread - and spread it will.

~~~
boston observer said...
Why no link to the news from DR Horton today that the market won't recover until the end of 2008 and prices may not rise until 2009.

You are slipping, dude.; July 20, 2007 6:30 PM
Anonymous said...: This is your way to be in South Carolina This weekend: We are organizing a food drive for a children's shelter, which we will give amoung other things Cans of Hormel

SPAM!

To show that you are not just online, support our spam drive by going to this page and donating!

http://www.ronpaulforums.com/showthread.php?t=7897&page=7

:) BTW, this is the "slow" season of shelter's food on hand. Giving to any local food shelter right now is always a good idea!; July 20, 2007 6:50 PM
Anonymous said...: Question: How will mortgage rates change over the next few years? Up or down? And how would a stock market crash affect mortgage rates?; July 20, 2007 7:02 PM
Anonymous said...: Stagflation! Oh man this is getting interesting.

Minyanville
Five Things You Need to Know About Stagflation
Thursday July 19, 3:53 pm ET
By Kevin Depew

Read Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

This afternoon the Federal Reserve released the minutes of the June 27-28 Federal Reserve Open Market Committee meeting. Finally, the public's opportunity to get a close look at what the Fed does behind closed doors. The common theme? The Fed is concerned about downside risks to growth, while simultaneously concerned about upside risks to inflation. Although Bernanke and the Fed have been loathe to label this downside-to-growth/upside-to-inflation concern, we're not. Welcome to the New Staglfation.

What is stagflation? And how do we reconcile slowing growth with higher prices for things we need - food, energy, education, healthcare - and lower prices for things we want - consumer electronics, fashion apparel and just about anything else that can't power, feed, educate or cure us?

Below we take a look at these questions and more. Five Things You Need to Know About Stagflation.

1. Stagflation Defined

The word "stagflation" was reportedly coined by British Tory MP Iain MacLeod in a 1965 speech to Parliament.
"We now have the worst of both worlds - not just inflation on the one side or stagnation on the other. We have a sort of 'stagflation' situation," he said.
In simplest terms, stagflation is inflation + recession... at the same time!
"Impossible," said Keynesian theorists, who in the 1970s comprised the dominant force in economic theory and practice.
According to Keynes, recessions are solved by one thing: inflation. But what solves inflation, according to Keynes? One thing: recession.

2. Ah, General Malaise, I Knew Him Well.

The 1970s saw the United States economy experience simultaneous inflation and high unemployment. The confluence of events leading up to this developed like a perfect storm.
The U.S. was at war in Vietnam at the time and because wars are expensive and require public financing, money supply was increased.
As one would expect, the increase in dollars (the supply of money) led to inflation.
Inflation became so entrenched during the 1970s that people began to anticipate higher prices and therefore did something any rational actor would do: they purchased more goods ahead of time, increasing demand.
Toss in the 1973 Oil Embargo, the collapse of Bretton Woods, and now we have a situation on our hands.
Many people think of Bretton Woods as The Gold Standard. But the difference between the Bretton Woods Agreement and a "real gold standard" with fixed parity, is that under Bretton Woods, while currencies were convertible into gold, countries retained the right to change par values.
Keynes actually described Bretton Woods as the opposite of the gold standard.
Anyway, as these many factors circulated and combined, the result for the U.S. was very high inflation expectations combined with diminished output, high inflation and very high interest rates.

3. Enter The Monetarists

The best known of all Monetarists is Milton Friedman, of course, who was awarded the Nobel Prize in 1976 "for his achievement in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy."
In his book, Monetary History of the United States 1867-1960, Friedman popularized the monetarist mantra that, "inflation is always and everywhere a monetary phenomenon."
Therefore, the "trick" to maintaining an acceptable rate of inflation is simply for the central bank to closely monitor the economy (hmmm, sounds familiar) and use central bank policy to keep the supply and demand for money at equilibrium.
Monetarists, as you can see, have no problem with fiat currency. Instead, monetarists view an artificial inflation of the money supply as "ok" as long as it does not become excessive.
In other words, pumping up the money supply is fine, as long as you do it slowly... perhaps so slowly that people don't notice.
Thanks to stagflation, the Monetarist school of thought, and Friedman in particular, developed the "Expectations-Augmented Phillips Curve."
Professor A.W. Phillips "discovered" the Phillips Curve, which, ahem, "simply" shows the relationship between unemployment and inflation.
Phillips found that there appeared to be a necessary and fixed trade-off between unemployment and inflation. Any attempt by a government to reduce unemployment would lead to increased inflation. Keynesians loved this, of course... until stagflation arrived, breaking the unemployment-inflation relationship.
Friedman, in order to "save" the Phillips Curve, showed how it could be "adapted" to inflation expectations.

4. Hey, It's The Early 80s! Let's Get High On Our Own Supply!

The 80s were known for one thing. No, not that thing, Señor Escobar. That other thing. Supply-side economics.
Supply-side economics is grounded in Jean-Baptiste Say's Law of Markets: There can be no demand without supply.
Supply-side economics holds that the key to economic growth is a combination of low marginal tax rates with monetary policy directed at maintaining price stability.
But its central tenet might be better expressed as the gold-price rule. In order to maintain price stability, the dollar must be anchored to gold. If the price of gold falls below the specified gold price, then there must be a growing demand for money. If it rises above it, then demand for money has decreased.
President Reagan's economic policy (which many attribute to the successful conclusion of the stagflation and/or inflation of the 1970s) is often equated with supply-side economics and a true "free-market" spirit.
However, economic policy under the Reagan administration was clearly only partially grounded in true supply-side theory and Frank Shostak argued several years ago that supply-side economics is not really a free market approach at all:

"In fact, they are very much like the rest of mainstream economics. While mainstream economists advocate the management of demand, supply-siders advocate the management of supply." he wrote. "In the free-market economy, neither demand nor supply is managed. Both consumption and production are equally important in the fulfillment of people's ultimate goal, which is the maintenance of life and well-being. In short, consumption is dependent on production, while production is dependent on consumption. The loose monetary policy of the central bank breaks this unity by creating an environment where it appears that it is possible to consume without production. This unity can be restored by bringing back the market-selected money: gold."

5. 1970s Versus Today

So where are we today? Is this the return of stagflation? Are "inflation expectations" creeping higher?
First, the economy and inflation expectations: One of the key thematic elements in virtually all pricing data at the producer level is the "inability to pass through increases in raw materials costs."
In the 1970s, it was common to see a minimum of 20 commodities in short supply in any given month.
According to the most recent Insitute of Supply Management Report on Business, guess how many commodities are reported to be in short supply?
Would you believe none?
Then why is the Equal-Weighted CRB Commodities Index making yet another all-time high today?
Second, unemployment: Whether or not one believes unemployment figures understate the rate of unemployment, it is true that job growth remains weak while wage growth is stagnant at best.
As the 70s proved, an increase in inflation expectations can produce a cycle of demand that feeds on itself, despite rising unemployment.
But what if that cycle may not repeat itself because of where we are in the credit-cycle which brought us to this point?
What if the consumer no longer has the the appetite for risk?
What if the consumer is in "cut back" mode in response to even the slightest whiff of inflation?
Then what may look like stagflation now might simply be this very transition, the tip of the iceberg, so to speak, between excessive risk-seeking behavior, a seemingly endless appetite for credit, and the correction to the Federal Reserve-engineered credit expansion.
What we see as stagflation looming on the horizon in our side-view mirror today, may be full-blown deflation up-close as dollars are hoarded to pay down excessive debt and reduce, reduce, reduce.
As long as appetites for credit remain healthy, we can continue to happily teeter between inflation and stagflation.
The Fed's ability to "engineer" the economy out of deflation, however, is dependent on that appetite for credit.; July 20, 2007 7:30 PM
Anonymous said...: Man, not a word about the turd CAT served up today! Worst of all, if it was going to be THAT bad, why didn't they pre-announce? How many other turkeys are going to pull the same reporting stunt in the future?

How bad was it today? Even Larry Kudlow's getting worried about the charts coming out of the credit markets now...; July 20, 2007 10:30 PM
Anonymous said...: By the way, Larry Kudlow interviews Hank Paulson on Monday. Could be interesting, if Kudlow actually stops with the softballs and even bothers to go middle-of-the-road.; July 20, 2007 10:58 PM
Anonymous said...: The USD Index broke below 80 today...; July 21, 2007 1:35 AM
Anonymous said...: THIS LOOKS JUST LIKE A GOVERNMENT SNOW JOB

July 13, 2007 -- WASHINGTON thinks we are stupid.

OK, we already knew that. But the latest insult came last Friday when the Labor Department released its latest employment statistics.

Among the lies Washington would like you to believe is that - despite all the gloom in the housing market - there was a nice increase in construction jobs during June.

The numbers are too amazing to believe. In fact, the figures are so unbelievable - as in, "not to be believed" - that even an economist working at the Labor Department hedged on their veracity by admitting that there may be a "lag time" before job losses start to appear.

You decide for yourself if the government is snowing us.

Link to the entire article:

http://www.nypost.com/seven/07132007/business/this_looks_just_like_a_government_snow_job_business_john_crudele.htm

HEY BABY, INFLATION'S UGLY
SMOKE, MIRRORS CAN'T HIDE THE RISING COST OF EVERYTHING

July 19, 2007 -- YOU and I know how bad inflation really is.

We know every time we fill up our cars, go to the supermarket, pay a tuition bill or need to see a doctor.

In fact, even when we want to deceive ourselves it's difficult because inflation is such an in-our-face part of everyday life.

It's almost like when your best friend gives birth to an ugly baby.

You lie and tell her that the kid is beautiful, hoping that some day he will be.

But the parents aren't blind, and they know the kid isn't going to be supporting the family by modeling anytime soon.

Washington has been telling us for years that we have model inflation - it's a beautiful thing to behold especially if you don't consider food and energy costs.

And if you look at housing in a certain light you can ignore the huge run up in prices over the years that are now only partially being reserved.

And computers - ah, those marvelous machines - may go up tremendously in price but can actually cause inflation to retreat because of a novel theory.

I'm going to spend some time over the next few weeks writing about inflation and explaining how Washington - in cahoots with academics who mean well and a media that doesn't know any better - has made the government's calculations of price statistics resemble a Vegas magician's act.

Wave a stick and price increases are there one minute, and gone the next.

Here's the link to the entire article:

http://www.nypost.com/seven/07192007/business/hey_baby__inflations_ugly_business_john_crudele.htm

As the stock market got clobbered yesterday because of the Bear Stearns sub-prime mortgage fiasco, the big question is: who is dumber?

Is it the gullible people who took out mortgages to buy homes they couldn't afford just because interest rates were low?

Or are the really dumb ones the brains on Wall Street who decided that these less than prime mortgages were really good investments.

It's one of those tree-fall-in-the-forest puzzles, so don't bother answering.

Unless someone re-liquefies the housing market so people can sell their homes there is plenty more trouble ahead.

And here's the archieve for his other articles:

http://www.nypost.com/business/columnists/crudele.htm; July 21, 2007 4:32 AM
Anonymous said...: Finance Minister Michael Cullen hint at action to stop rise in interest rate goes no where with speculators as speculators bid Kiwi up.

http://biz.yahoo.com/fxcm/
070720/1184962445495.html?.v=1

Trading at its highest levels since it was floated in 1985; kiwi continues to rip higher on the back of speculation of an RBNZ rate hike next week with NZDUSD currently at 0.7967. Traders maintain positive sentiment for the New Zealand economy citing low unemployment, upbeat immigration, and of course high lending rates as bullish signals for NZD; July 21, 2007 8:31 AM
Anonymous said...: Did BOJ get MOF permission to raise interest rate in August?

http://asia.news.yahoo.com/
070720/3/352du.html

Bank of Japan Governor Toshihiko Fukui will address a meeting in Tokyo on short-term money markets next Tuesday, July 24, the central bank said on Friday.

Fukui will speak from 4:30 to 4:40 p.m. (0730-0740 GMT).

The meeting will discuss a BOJ report on improving functionality of short-term money markets.; July 21, 2007 8:33 AM
Anonymous said...: 100 major U.S. lenders have "imploded"

http://ml-implode.com/; July 21, 2007 9:06 AM
Anonymous said...: “Bernanke has acknowledged that the subprime situation is an issue and it is spreading,”

http://www.business-standard.com/
ft/storypage_test.php?&autono=
291741

Ben Bernanke acknowledged for the first time on Wednesday that credit concerns were spreading beyond the subprime mortgage market as investors showed their worries with a flight to quality, seeking refuge in government bonds and other safe assets.

Derivative indices tracking corporate credit risk on both sides of the Atlantic rose across the board. The dollar weakened, with the New York Board of Trade dollar index falling to a 15-year low during the day.

Bernanke said conditions in the subprime mortgage sector had “deteriorated significantly” and noted “increased concerns among investors about credit risk on some other types of financial instruments”.; July 21, 2007 9:21 AM
Anonymous said...: Signs of the Times

Starting with an "only in America" story - the attempt to build a "city on the hill", the town of Ave Maria, a catholic place for catholic people:
http://tinyurl.com/3bpbx8
"“God’s been good to me. The best way I can use the resources God gave me is to help other people get to heaven,” said Tom Monaghan, 70, a devout Catholic who sold his Domino’s pizza empire for $1 billion (£500 million) and spent about half the proceeds on creating his perfect town."
Will this provide safe haven from the HPC?

Confirmation that US consumers are eating cheaper, unhealthy food:
http://tinyurl.com/32av93
"It can be very confusing being an American. On the one hand, you are being encouraged to tighten your belt, all the better to cope with, say, rising fuel prices; and on the other you are being told to let that belt out a notch or three and tuck into some nice, tasty, calorie-laden and reassuringly cheap fast food."
This could solve the social security conundrum by lowering life expectancy.

The 51st state is also experiencing problems, as an LBO in Britain runs in to stormy weather:
http://tinyurl.com/3dt2te
"Kohlberg Kravis Roberts, the American private equity firm, was in talks with its banks last night to restructure £9 billion of debt to fund its takeover of Alliance Boots after investors refused to back the deal on its original terms."

AND UK interest rates to rise:
http://tinyurl.com/2qyjy9
"The economy powered ahead in the second quarter, growing by an unexpectedly strong 0.8 per cent, data revealed yesterday, strengthening the chances that interest rates will hit 6 per cent by the autumn."

While Chinese authorities are finding it hard keeping their boat upright in the middle of a hurricane:
http://tinyurl.com/37sa9y
"China moved swiftly to clamp down on its runaway growth rate yesterday, raising interest rates for the third time this year and announcing a tax cut to boost saving. The People’s Bank of China raised the one-year deposit rate from 3.06 per cent to 3.33 per cent, and the one-year lending rate from 6.57 per cent to 6.84 per cent."

And, to bring us full circle back to the city on the hill - here's a cardinal's views on Europe, the US and civilisation:
http://tinyurl.com/2kksd7
He even talks of a cyclical rhythm:
"The warning is that there is a cyclical rhythm, where faithfulness is followed by laxity, even idolatry and unfaithfulness. The things of God become instruments of power, used for selfish or wicked purposes. In this spiritual cycle, the people who lost their way in the wilderness were rescued when a prophet appeared to remind them of their sins and show them the way back. Where Europe is in that cycle, and where America is, I leave to your imagination."

All signs of the times, and all in one newspaper. Maybe I'm getting delusional, but I just thought they all tied in together.; July 21, 2007 1:38 PM
Anonymous said...: Just yesterday fri 20 jul.

My wife contacted a realtor about a home in another state. The realtor gave her the info and didn't forget to tell her that, 'it's never been a better time to buy, better do it now'!

Can you believe this!; July 21, 2007 6:12 PM
Anonymous said...: I hate you anonypussy's!; July 21, 2007 6:48 PM
Anonymous said...: PLANET OF THE APES!!!!!!!!!; July 21, 2007 7:06 PM
Anonymous said...: It's from the realtor codebook of last ditch efforts to try to get you to buy on an emotional whim!i.e.

'It's never been a better time to buy'!

'Better buy now, before your priced out of the market'!

'Well, if you can't afford this house, we can find one within your price range'!

'There's lots of interest in this home, better hurry'!

'Real estate only goes up'!

and this lil nugget,

'Well, you must not understand the current or local markets'!

'We have bottomed out, now prices are on the way back up'!

They are all alike!; July 21, 2007 7:38 PM
Anonymous said...: My wife and I were sitting in the terminal at Okaloosa regional airport in Valparasio, Fla. airport last year mid June '06. We had about an hour to kill before our flight. I saw a woman reading a local real estae rag, when she put it down, I asked 'may I see that for a minute' She said, 'you can have it'!
After talking a minute I found out she was a local realtor.

This attractive woman named Debbie, was one of the most honest straight- forward people I have ever met!

She said, "The current local market was so out of whack with reality, it was crazy"!
"Prices have to come (way) down, back to reality"!

Now this was a realtor!

No B.S.; July 21, 2007 7:54 PM
FlyingMonkeyWarrior said...: True Phone Call - A Customer
To Bank Of America
7-21-7

Bank: This is the Bank of America, can I help you?

Customer: Yes, I want to cancel my account. I don't want to do business with you any longer.

Bank: Why?

Customer: You're giving credit to illegal immigrants and I don't think it's right. I'm taking my business elsewhere.

Bank: Well, Mr. Customer, we don't want to see you do that, but we can't stop you. I'll help you close the account. What is your account number?

Customer: (gives account number)

Bank: For security purposes and for your protection,can you please give me the last four digits of your social security number?

Customer: No.

Bank: Mr. Customer, I need to verify your information, but in order to help you, I'll need verification of who you are.

Customer: Why should I give you my social security number? The reason I'm closing my account is that your bank is issuing credit cards to illegal immigrants who don't have social security numbers. You are targeting that audience and want their business. Let's say I'm an illegal immigrant and you've given me a credit card. I have a question about it and call for assistance. You wouldn't be asking me for a Social Security number, would you?

Bank: No sir, I wouldn't.

Customer: Why not?

Bank: Because you would have pressed '2' to speak in Spanish. We don't ask for that information when calling in on the Spanish line.

http://www.snopes.com/politics/immigration/bankofamerica.asp; July 21, 2007 9:06 PM
Anonymous said...: From 6:54

I'll bet that realtor isn't in business any longer due to 'ethical dilema'!

In other words too many ethics and too honest to be a current realtor!; July 21, 2007 10:43 PM
Anonymous said...: Remember, Ted Kennedy's car has killed more people than Dick Cheney's shotgun!; July 22, 2007 12:50 AM
Anonymous said...: "...All I was doing was hoping to stimulate discussion and immediately you start treating me like a child..."

P.S.: I heard a rumor that Buffett was buying. Let's follow suit.; July 22, 2007 1:24 AM
Anonymous said...: China hikes interest rates for third time

By Ambrose Evans-Pritchard
Last Updated: 11:03pm BST 20/07/2007

China has raised interest rates for the third time since March to curb blistering growth and prevent an unstable asset boom.

The central bank raised the benchmark one-year lending rate 0.27 percentage points to 6.84pc.
advertisement

Officials have become increasingly worried about overheating after a surge in the growth rate to 11.9pc in the second quarter. Retail sales were up 15.4pc, proof that China's burgeoning middle class is fast taking to the shopping malls.

Rampant demand is finally spilling over into inflation, touching 4.4pc in June.

Rising inflation in China has global implications since western central banks have been relying on falling prices of Chinese manufactured products to hold down the cost of imports. This benign effect is rapidly going into reverse gear.

Haizhou Huang, an analyst at Barclays Capital, said it was doubtful whether the rate move would be enough to halt speculation on the stock markets.

The key rate paid to savers with deposits at Chinese banks is still just 3.33pc, less than inflation. He said the authorities would have to tighten lending rules yet further and let the yuan rise at a faster rate against the dollar.

China's leaders appear increasingly willing to bite the bullet on yuan appreciation, hoping to head off possible conflict with Washington as the trade surplus rises towards $250bn (£122bn) this year.

The policy of intervening in the currency markets to hold down the yuan has begun to backfire, leading to speculative inflows of money.

The accumulation of over $1,200bn in reserves has now become a key cause of the asset boom and is throwing the Chinese economy off balance.; July 22, 2007 5:16 AM
Anonymous said...: Friday, July 20, 2007
Friday Night Downgrades: More Alt-A

Fitch has affirmed ($2.383 billion) and downgraded/placed on watch negative ($32.2 million) a handful of classes of seven SASCO/Lehman RMBS. The two biggest problems are:

Structured Asset Securities Corp., Lehman Mortgage Trust (LMT), Series 2006-3
--Class A affirmed at 'AAA';
--Class M affirmed at 'AA+';
--Class B1 affirmed at 'AA';
--Class B2 affirmed at 'A';
--Class B3 downgraded to 'BB+' from 'BBB';
--Class B4 downgraded to 'BB' from 'BBB-';
--Class B5 downgraded to 'B' from 'BB';
--Class B6 downgraded to 'CCC/DR2' Distressed Recovery (DR) from 'B'.

For LMT 2006-3, the loans in 90+ delinquency at twelve months seasoning as a percentage of the current pool balance is 3.13%. The CE of the B3, B4, B5 and B6 classes are 1.39%, 1.21%, 0.80% and 0.39% respectively.

Structured Asset Securities Corp., Lehman Mortgage Trust (LMT), Series 2006-7
--Class A affirmed at 'AAA';
--Class M affirmed at 'AA+';
--Class B1 affirmed at 'AA';
--Class B2 affirmed at 'A';
--Class B3 affirmed at 'A-';
--Class B4 affirmed at 'BBB';
--Class B5 rated 'BBB-' placed on Rating Watch Negative;
--Class B6 downgraded to 'BB-' from 'BB';
--Class B7 downgraded to 'CCC/DR1' from 'B'

For LMT 2006-7, the loans in 90+ delinquency at eight months seasoning as a percentage of the current pool balance is 1.70%. The CE of the B5, B6 and B7 classes are 1.19%, 0.81% and 0.38% respectively.

LMT 2006-7 is Alt-A with some scratch & dent mixed in. LMT 2006-3 is Alt-A originated exclusively by Countrywide.

Then there was this:

Fitch Ratings-New York-20 July 2007: Fitch Ratings has taken various rating actions on the following Luminent Mortgage Loan Trust issue:
Series 2006-3:
--Class A affirmed at 'AAA';
--Class II-B-1 affirmed at 'AA';
--Class II-B-2 affirmed at 'A';
--Class II-B-3 affirmed at 'BBB';
--Class II-B-4 downgraded to 'B+' from 'BB';
--Class II-B-5 downgraded to 'CCC' from 'B' and assigned a Distressed Recovery (DR) rating of 'DR2'.

The collateral for subgroup II consists of 1,135 adjustable rate mortgage loans totaling $313,511,042, as of the cut-off date (April 1, 2006). The mortgage pool demonstrated an approximate weighted-average loan-to-value ratio (OLTV) of 76.51%. The weighted average FICO credit score was approximately 712. . . .

The downgraded classes reflect the deterioration in the relationship of CE to future loss expectations and affect approximately $3 million of outstanding certificates. Although the trust has experienced little loss thus far (0.01%), approximately 5.56% (as a percentage of the current pool balance) of loans are 60+ days delinquent at this time. This includes bankruptcy, foreclosures and real estate owned (REO) of 0.15%, 2.62% and 0.71%, respectively. The CE for the II-B-3, II-B-4 and II-B-5 classes is 1.9%, 1.14% and 0.5%, respectively.

The LUM deal is half neg am; 90% of the other half is IO.

Let me point out that so far we're talking about a few classes of a few securities at a modest total dollar amount on these Alt-A downgrades.

That tends to be how things start.

I'm just trying to make sure that if the day comes when the Alt-A downgrades come in a torrent, we are stunned but not surprised.; July 22, 2007 5:31 AM
W.C. Varones said...: Update on Bakersfield's David Crisp, a.k.a. Casey Serin South, here.; July 22, 2007 3:12 PM
Anonymous said...: Will Prime minister Shinzo Abe resign.

http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=
2007-07-20T042918Z_01_T201123_
RTRIDST_0_MARKETS-JAPAN-JGB-
UPDATE-1.XML&pageNumber=
1&imageid=&cap=&sz=
13&WTModLoc=InvArt-C1-ArticlePage1

The BOJ is expected to hike interest rates to a 12-year high of 0.75 percent from the current 0.5 percent next month, but some investors believe the central bank might think twice about a move in August if Prime minister Shinzo Abe were to resign in the wake of a big loss by the ruling party in this month's election.

As uncertainty over the outcome of the election will persist next week, JGB prices are likely to be swayed by moves in the stock market and Treasuries, traders said.

http://www.marketwatch.com/news/
story/japan-firms-rush-out-bonds/
story.aspx?guid=
%7B8D18190A-36E9-4A7F-B05B-
0BBC35C2CD60%7D

A Credit Suisse survey published Friday showed that market interest rates imply a 69% chance that the BOJ will raise the overnight call rate to 0.75% from 0.5% at its two-day board meeting ending Aug. 23.

http://www.ft.com/cms/s/
4b853fcc-387b-11dc-bca9-
0000779fd2ac.html

Japan’s ruling coalition is heading for a crushing defeat in next Sunday’s upper house election, according to several polls released on Sunday.

Such a result would cause political gridlock and could lead to pressure for the resignation of Shinzo Abe, the prime minister.

The polls suggest that the opposition Democratic Party of Japan is outflanking the ruling Liberal Democrats in almost every region, including rural areas that were LDP strongholds.; July 22, 2007 9:09 PM
W.C. Varones said...: Check this out over at Dr. Housing Bubble. It's the story of a young professional couple earning $130,000 per year and how they lost their house.; July 22, 2007 9:42 PM
Anonymous said...: U.S. property is the first going down, Ireland is down 30% in some areas, and the U.K. is starting to tank. The worldwide crash has begun! Listen to this Internet radio broadcast at minesite. Go to the radio player and listen to Dominic Freesby's interview title U.K. Housing, with the U.K. experts, especially the last one. Here's the link-

http://www.minesite.com/webcasts/commodity_watch_radio.html; July 23, 2007 1:22 AM
Anonymous said...: Collectively, we have to ask ourselves why a 6-figure income is literally required now to *manage* the monthly housing payments, taxes and other add-on fees.

This is a sure sign of much worse things to happen.

Let's not forget that some of those earning 6-figure incomes are also in debt up to their eye-balls.

House prices will need to fall much further before we can start
sucking up the glut of excess housing inventory.; July 23, 2007 6:24 AM
Anonymous said...: D'oh! Pricing power gone!

“Occupancy rates in Fort Myers’ big apartment complexes plunged 10.9 percent in the second quarter, according to RealFacts. Rental complexes with 100 or more units were at 87.6 percent occupancy, down 10.9 percent from a year earlier.”; July 23, 2007 3:59 PM
Anonymous said...: tick tick tick

“In the first three months of the year, lenders handled $89 billion in subprime loans, down 41 percent from the end of last year and 47 percent from the same period in 2006, according to National Mortgage News. That follows an 18 percent drop for all of last year.”

“In early 2006, just as the industry began a major downward slide, Orange County boasted four of the Top 10 subprime lenders in the nation. New Century alone did about $60 billion of loans in 2006.”

“New Century today is bankrupt and has sold its major assets. It’s the most dramatic example of a decimated industry. About a dozen subprime lenders in Orange County have shut down, filed for bankruptcy or otherwise scaled back.”

“Tim Rush, a VP with Prudential California Realty…in Cerritos, said account executives working on commission at subprime lenders earned $10,000 to $15,000 a month during subprime’s heyday, and some top producers $20,000 to $30,000.”

“Unfortunately, part of the fat profits came from consumers being steered into higher cost loans, Rush said. ‘You are dealing with people who in most cases don’t have many options,’ Rush said. ‘There have been some heinous abuses.’”; July 23, 2007 4:16 PM
Anonymous said...: DC is different!

According to the data on the NOVA BUBBLE site, homes in the exurbs are being listed as much as 34% BELOW what they sold for just two years ago, and in the neighborhood that I used to live in, between Old Town Alexandria and Mount Vernon, asking prices are down roughly 12% below prior sales.

http://tinyurl.com/yvurna; July 23, 2007 4:37 PM
edd browne said...: Planet of the Apes ?!

We hominids in general are
inclined to take offense at
comparison to you ... you Sapiens.

We like the Net, since we are
perceived as Yale-Oxford types.
Now go back to ruining the Earth.; July 23, 2007 5:40 PM
Anonymous said...: http://tinyurl.com/2ngpwo

occasionally we here at the acme arson company to put it mildly...step on our collective dicks......

however....we have many satisfied customers......if you have a problem house that you want to ....shall we say.......go up in smoke.....

and therefore , the headache that you have goes away, almost magically......

then give us a call.....we can help......

that is

acme arson company

phone br 549

call us.......we can help........sometimes...; July 23, 2007 6:37 PM
Anonymous said...: Manchester United Postpones Debt Refinancing Plans (Update3)

By Kabir Chibber

July 23 (Bloomberg) -- Manchester United Plc, the U.K.'s largest soccer club, postponed plans to refinance 660 million pounds ($1.4 billion) of bonds and loans after demand for high- yield debt fell in the past four weeks.

The English Premier League champions, owned by U.S. billionaire Malcolm Glazer, called off preliminary talks with JPMorgan Chase & Co. to refinance debt, according to a person familiar with the transaction, who declined to be named because the discussions are private. It also shelved discussions with Royal Bank of Scotland Group Plc and Deutsche Bank AG to sell bonds backed by ticket sales, the person said.

The club, currently touring Asia with star players such as new $34 million signing Nani, was seeking ways of reducing interest payments following Glazer's $1.4 billion takeover in 2005. Turmoil in the credit markets prompted by losses on U.S. mortgage securities resulted in more than 20 bond and loan deals worldwide being pulled, delayed or restructured.

``There was some turbulence in the debt market which meant the refinancing has not gone through,'' David Gill, Manchester United's chief executive officer, said at a press conference in Macau on July 21. ``We looked at the opportunity of improving those financial structures to get the costs down a bit more.; July 23, 2007 7:27 PM
Anonymous said...: If you were a fan of the original film, you know apes are superior because "they don't murder their own kind", somehow lost in the re-make. Not to mention an ending which paled in comparison as well.; July 23, 2007 8:42 PM
Anonymous said...: 20 percent less bacon in the new package I bought yesterday, guess in this low inflation world??? they could not jack up the price any higher than the cost tripling they have done over a very short time; July 23, 2007 9:33 PM
Anonymous said...: Keith, you need to funnel all posts through a spell/foul language check program. If a person's post isn't written correctly it doesn't go up.; July 24, 2007 12:02 AM
Anonymous said...: Stop me if you've heard this one:

Wife and I went trolling the open houses on Sat. I saw an ad for a house on the bulletin board at work and checked it out. Price was $317,900.

House was a decent though ordinary 2 yr old 3BR/2BA/2CAR, a bit far out from the downtown (desireable)area. Neighborhood, crappy.(no sidewalks, dried overgrown grass in yards. Mixed new homes and VERY old shacks)

Monday AM, on the bulletin board, same exact house now being offered FOR RENT @ $1245.

Do I need to do the math? Ends up being about $1000/mo. loss in the rent vs. buy equation.

I know....YAWNNNNN.; July 24, 2007 2:00 AM
edd browne said...: Some of my best and erudite hominid friends are bonobos.
They make you Sapien clowns
seem downright whacked.

Bonobos would never stand for ...
http://tinyurl.com/3y3pce; July 24, 2007 2:27 AM
Anonymous said...: Yes, there needs to be a spelling requirement to post. This will solve a lot of problems on the blog.; July 24, 2007 5:20 AM
Anonymous said...: As confusing as things are for mortgage bonds, it's worse for Wall Street engineers' crowning achievement in fee-generating securitisation: collateralised debt obligations, or CDOs.

A CDO is, in effect, a bond backed by other bonds. And in a wondrous bit of alchemy, a CDO creator can take a pool of bonds backed by mostly subprime mortgages and turn it into securities that have AAA credit ratings.

It's all in the slicing and dicing of the underlying portfolio. In theory, the holder of a AAA-rated CDO slice owns a security that has almost no chance of losing principal.

But what, exactly, is backing that CDO slice?

That's the question that many yield-hungry hedge funds and other big investors failed to ask in the boom years, said Christopher Whalen, an analyst at research firm Institutional Risk Analytics, which provides risk analysis to financial firms.

Now, "as mortgage default rates go up, investors are going to find out that what they own is not what they think it is," he said.

That is likely to be the unfolding story of the rest of this year and the first half of 2008.

The fire sale in mortgage securities has yet to begin. But it's coming. The implications for the rest of financial markets aren't clear but when confidence is shaken in one market there usually is collateral damage.; July 24, 2007 5:45 AM
Anonymous said...: U.S. Treasury Secretary Henry M. Paulson, Jr., has joined the chorus of those in high places who are warning of a major worldwide economic downturn.

Paulson was quoted at length in a July 23, 2007, article in Fortune by Rik Kirkland entitled, “The Greatest Economic Boom Ever: Enjoy It While It Lasts.” Paulson’s remarks came in the context of assessing the ability of the highly-leveraged equity, hedge, and derivative markets to withstand the shocks to come. He told Fortune in an interview:

“We haven’t had a global financial shock since 1998. I believe that these large and dramatic increases in private pools of capital and in the credit derivatives markets since then have helped manage and disperse risk and make the economy more efficient. When we do have one—and it’s when, not if; that’s not me being negative, it’s just that we’re not going to defy economic gravity—we’ll be seeing for the first time how some of these instruments perform under stress.”

New Zealand monetary reformer William Hugh McGunnigle wrote recently on an internet discussion site, “Basically today we are attempting to run a 21st century economy using financial tools that are five centuries out of date.

It is like trying to control a sophisticated modern jumbo jet using the control mechanisms appropriate to the machines of World War I.

The whole system is unstable, and the larger it becomes the more likely it is that it will collapse, simply because those controlling it have no inclination to prevent that collapse. We have learned nothing from the financial disaster of 1929-1934.”

http://www.globalresearch.ca/
index.php?context=va&aid=6401; July 24, 2007 7:46 AM
Anonymous said...: Are subprime and option ARM borrowers America greatest terrorist.

http://www.marketwatch.com/news/
story/america-becoming-global-
credit-risk/story.aspx?guid=
%7BAE018C0F-A657-47E0-A53F-
E67A522A775A%7D

Subprimes downgraded. Will Moody's downgrade America's debt next? Actually, that's already happening; our credit rating is collapsing with the dollar.

Foreign banks are dumping dollar reserves, while we gorge on cheap toys and bad pet food. Actually, our biggest "terrorist" threat is internal: Distorted values are downgrading our nation's "creditworthiness." We're like out-of-control kids with stolen credit cards, spending our future with no plans to repay.

Recently Robert Hormats, vice chairman of Goldman Sachs (International), appeared before the U.S. House Budget Committee to "discuss an issue of great economic, financial and national security importance to our country -- the growing dependence of the United States on foreign capital."

Currently we import $1 trillion new debt annually, with no repayment plans. That's a historic break from over two centuries of American policy.

Hormats was in Washington with warnings from his brilliant new book, "The Price of Liberty: Paying for America's Wars." He traces the history of American wartime financing from the Revolution through the War of 1812, the Civil War, the two World Wars and the Cold War to the present.

Conclusion: "One central, constant theme emerges: sound national finances have proved to be indispensable to the country's military strength" and long-term national security.; July 24, 2007 7:56 AM
Anonymous said...: No stopping yen carry trade now, BOJ hands are tied.

http://asia.news.yahoo.com/
070724/3/3589a.html

Shoichi Nakagawa, the LDP's policy chief, said

The Bank of Japan has jurisdiction over monetary policy but it needs to remain on guard against deflation and weak personal consumption, a senior Japanese ruling party official said on Tuesday.

"It is the BOJ that has the power to decide on interest rates, and it is an independent body," Shoichi Nakagawa, the Liberal Democratic Party policy chief, told a news conference.

But the central bank should bear in mind the two major factors for ensuring a sound economic situation, which are an expansion of personal consumption and an end to deflation, he said.

Plus New Zealand rate hike should ensure excess global liquidity to continue.

http://www.bloomberg.com/apps/
news?pid=20601081&sid=
aLBIPNtTTz0Y&refer=australia

New Zealand Dollar May Advance to 80 Cents on Rate Speculation

The New Zealand dollar may rise above 80 U.S. cents to a 22-year high as the prospect of another increase in interest rate this week lures investors to the nation's higher-yielding assets.

The currency has gained 13 percent this year as the central bank raised the benchmark rate three times in a bid to subdue consumer demand, which it says is boosting inflation. There is a 67 percent chance bank Governor Alan Bollard will raise the official cash rate by a quarter-percentage point for a fourth time at his monetary policy review on July 26, according to a Credit Suisse index based on trading in interest-rate swaps.

``All signs are pointing to another hike this week and so 80 cents is definitely on the cards before then,'' said Tony Allen, currency trader at ANZ National Bank Ltd. in Wellington. ``The positive yield differential will continue to appeal.''; July 24, 2007 8:12 AM
Anonymous said...: Thank You BOJ for the excess global liquidity.

It is just a matter of time when Hedge Funds start bring that excess liquidity from India to America.

http://timesofindia.indiatimes.com/
Business/India_Business/
Banks_to_lower_deposits_lending_
rates/articleshow/2228460.cms

Because of rise in deposits and decline in credit offtake, bankers are flush with liquidity.

Banks to lower deposits, lending rates

With banking system facing excess liquidity, interest rates have started softening up. Banks are considering to lower both deposits and lending rates. While it will help companies and individuals, who want bank or home loans, it will affect depositors who depend on interest income.; July 24, 2007 8:19 AM
Anonymous said...: Go yen carry trade go, pump that excess global liquidity.

If BOJ don't care why should you.

http://www.bloomberg.com/apps/
news?pid=20601083&sid=
aRVa3BP0DfPU&refer=currency

N.Z. Dollar May Advance to 83 U.S. Cents, Key Says.

John Key, the former Merrill Lynch & Co. trader who now leads New Zealand's opposition party, said the nation's currency will extend its rally by as much as 3 percent; July 24, 2007 8:30 AM
Anonymous said...: 102 major U.S. lenders have "imploded"

http://ml-implode.com/; July 24, 2007 8:34 AM
Anonymous said...: Canadian Imperial Bank of Commerce could be forced to take a hit of about $100-million this quarter because of its exposure to securities related to the U.S. subprime mortgage market, analysts say.

"The continued weakness in securities related to U.S. subprime housing will likely force CIBC to mark down its exposure to the space, as most of its securities are held in its mark-to-market trading book," RBC Dominion Securities Inc. analyst André-Philippe Hardy wrote in a note to clients yesterday.

"We believe that a $50-million to $100-million markdown is possible."

BMO Nesbitt Burns Inc. analyst Ian de Verteuil recently estimated CIBC could take a charge of $100-million to $150-million this quarter.

It is still in the midst of its fiscal third quarter, which runs to the end of this month. Financial results are scheduled to be released Aug. 30.

"Given that CIBC should earn $675-million after tax in the third quarter, such a charge could amount to about 10 to 15 per cent of quarterly earnings," Mr. de Verteuil wrote in a note to clients.

He is assuming the bank's total exposure, or holdings, of this type of securities could be about $1.2-billion. The bank has not disclosed how much exposure it has and CIBC declined to comment on the analysts' reports yesterday.

http://www.globeinvestor.com/
servlet/story/
GAM.20070724.RCIBC24/GIStory/; July 24, 2007 8:37 AM
Anonymous said...: NEW YORK (Reuters) - Countrywide Financial Corp (NYSE:CFC - News), the largest U.S. mortgage lender, said on Tuesday second-quarter profit fell as mortgage banking pre-tax earnings declined by about half.
Net income for the Calabasas, California-based company fell to $485.1 million, or 81 cents per share, from $722.2 million, or $1.15, a year earlier.

Countrywide also cuts its full-year earnings forecast to a range of $2.70 to $3.30 per share from a previous range of $3.50 to $4.30 per share.

And in other news, the CEO of countrywide is still selling his stock as quickly as he can.; July 24, 2007 1:17 PM
Anonymous said...: YES!

Stop the 'bycicle' posts!!!!!!; July 24, 2007 1:46 PM
Anonymous said...: It's official...Bush is now a perfect asshole.
And to think I voted for him in 2000....I should be drawn, quartered, beaten, sliced up and run through a juicer.; July 24, 2007 2:58 PM
Anonymous said...: Well, several work associates I knew, as well as friends, voted for Bush.

I'm sure many (if not all) feel as you do, but it's Bush and Co. who are responsible for the mess they've created.

Keyser Soze said...
It's official...Bush is now a perfect asshole.
And to think I voted for him in 2000....I should be drawn, quartered, beaten, sliced up and run through a juicer.; July 24, 2007 7:50 PM
Anonymous said...: SOMEBODY B*TCH SLAP THE TROLL!

CURBS IN ON WALL ST.!; July 24, 2007 8:31 PM
Anonymous said...: Expect Spring 2007 Sales Boom in Florida

Get ready for the spring and summer 2007 turnaround:

http://www.floridahomeloan.com/2007/02/expect-spring-sales-florida-mortgage.html

“When existing-home supplies become more balanced between buyers and sellers this spring [2007], we’ll see some modest price gains.”; July 24, 2007 9:31 PM
Anonymous said...: http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+August+2007.htm; July 24, 2007 10:46 PM
Anonymous said...: So what is BOJ next move

http://www.nasdaq.com/aspxcontent/
NewsStory.aspx?cpath=
20070724%5cACQDJON200707240432
DOWJONESDJONLINE000107.htm&

Fukui didn't mention the economy or monetary policy in his speech.

Market players, who speculate that the BOJ policy board may decide to raise the unsecured overnight call loan rate to 0.75% from 0.50% at its August meeting, had been on the lookout for any policy outlook hints.

Market players will be next focus on a speech and news conference by BOJ board member Tadao Noda Thursday in Nara, central of Japan, for clues on the August rate hike chance.; July 25, 2007 3:02 AM
Anonymous said...: How creditable are DQnews low foreclosure numbers when its own statics does not agree.

http://www.dqnews.com/
RRFor0707.shtm

Lenders filed 53,943 Notices of Default (NoDs) during the April-through-June period 2007

Defaults peaked in first-quarter 1996 at 61,541.

http://www.dqnews.com/
RRFor1006.shtm

Defaults peaked in first quarter 1996 at 59,897.

http://www.dqnews.com/
AA1996FOR04.shtm

A total of 44,686 homeowners received Notices of Default (NODs) during the January-to-March period 1996; July 25, 2007 3:38 AM
Anonymous said...: AUSTRALIA'S inflation rate has jumped, driven higher by essential living costs such as petrol and a sharp rise in rents and fruit and vegetable costs, with no relief in sight.

The sharp rise in inflation will add to pressure on the central bank to raise interest rates, possibly next month.

Over the June quarter, the consumer price index (CPI) jumped 1.2 per cent, well above economists' expectations.

In a big hit to Australian households, the most significant price rises this quarter were for fuel (up 9.1 per cent), hospital and medical services (up 3.4 per cent) and fruit costs (up 8.4 per cent).

Other big contributors were rents (up 1.6 per cent), vegetables (up 6.1 per cent), furniture (up 3.9 per cent) and house purchase costs (up 1.0 per cent).

ANZ chief economist Saul Eslake said the rise in rents was the biggest quarterly jump since the September quarter of 1989.

JPMorgan chief economist Stephen Walters said price rises for rent, petrol, food, furniture, hospital care and household goods were expected, but the magnitute of the across-the-board increases was a surprise.

"Clearly, there's a lot of prices pressures out there," he said. "There's a lot more to come over ... the next half of the year."

http://www.news.com.au/business/
story/0,23636,22131597-462,00.html; July 25, 2007 4:36 AM
Anonymous said...: Here are the new highs and lows for the NASDAQ and NYSE today

NYSE NASDAQ

New Hi's 83 78
New Lo's 352 290

For the mindless sheeple that can think of only the DOW thirty, let me explain this to you. The NYSE had 352 NEW 52 week lows versus 83 new 52 weeks highs today. In other words there were 4.25 NEW lows to every single new high. I'm at a loss to break this information down further for the sheeple. For that I need someone that is experienced with instructing the developmentally disabled.

For the NASDAQ composite 290 NEW 52 weeks lows and 78 new highs. A 52 week high or low means that the stock price is the lowest or highest that it has ever been in the last 52 weeks or one year.

In other words, the DOW is ONLY 30 stocks. There are hundreds upon hundreds of OTHER stocks that are doing very poorly, in fact the worse they have performed share price wise in the last 52 weeks.

That being said, this will be my last post on housing panic. I"m tired of the constant posts by simpleminded trolls. They are pissing and shitting in this pool and I want no part of it.; July 25, 2007 4:54 AM
Anonymous said...: If it was not Countrywide Financial then what "News" or "Lack of News" took the Dow down today?

http://www.pbs.org/nbr/site/
onair/transcripts/070724e/

SUSIE GHARIB: So, Mike, is this the beginning of a sharp market correction?

MIKE HOLLAND, CHAIRMAN, HOLLAND & COMPANY: There were some new words that came out of Countrywide Financial today, but other than that, this is not a new development. This is an 18-month-old problem.

SUSIE GHARIB: Exactly. We've had housing problems a long time and yet the Dow broke through 14,000 on a lot of momentum buying. And what was new today? What are the new worries and how serious are they?

MIKE HOLLAND: There was no new worry today, that's the news.

The comments that came out of Countrywide Financial had some scary words in them, the worst housing market since the great depression and things like that and no recovery for at least two years.

These were just more dire than the previous warnings about it. Having said that, the markets know that the credit problems of that part of the world are there.; July 25, 2007 5:04 AM
Anonymous said...: So if inflation is out of control around the World why don't US Federal Reserve Ben Bernanke raise interest rate also?

http://www.canada.com/nationalpost/
financialpost/story.html?id=
63a51be6-c66b-4bbc-9284-
b2f7b8b034cc&k=84353

Stocks tumble on oil, rate hike fears Biggest one-day point drop since 2001

The Toronto Stock Exchange's main index ended sharply lower on Tuesday, battered by weak commodity prices and a blowout May retail sales report heightened expectations of higher interest rates.; July 25, 2007 5:09 AM
Anonymous said...: I had to laugh at this too. It's from April 2004. I wonder how much that condo is worth now?:

"Consider what happened with Dave and Ursula Schryver's
one-bedroom-plus-den basement condominium near Dupont Circle.

The Schryvers put their condo -- which has a small outdoor deck and
parking -- on the market on a recent Saturday for $349,000. More than
100 people showed up to their Sunday open house. Contracts were due by
Tuesday at 3 p.m.

They received six offers. They picked the buyers who gave them a free
rent-back period and were flexible on the closing date. The condo sold
for $404,000, or $55,000 over the asking price.

'These prices are absurd,' said Dave Schryver, who at the same time
admitted it was great to be a seller in Washington these days. 'Four
hundred thousand for a one-bedroom condo?'"; July 25, 2007 5:12 AM
Anonymous said...: Is Jumbo Loan next in line after Alt-A and Subprime?

http://www.washingtonpost.com/
wp-dyn/content/article/2007/07/
21/AR2007072100087_2.html

Jumbo Loan

A mortgage for an amount that exceeds conventional conforming loan limits, which determine which loans can be bought by Fannie Mae and Freddie Mac, the government-sponsored enterprises that are the biggest buyers of residential mortgages in the United States.

In 2007, a loan for a single-family property that exceeds $417,000, or $625,500 in Alaska, Hawaii, Guam and the Virgin Islands.

A loan that must be sold to investors other than Fannie and Freddie, such as insurance companies and banks.

A mortgage that carries a higher-than-conventional interest rate. The interest rate premium usually runs 0.25 to 0.5 percentage points higher on such loans.

A figure set by the Office of Federal Housing Enterprise Oversight, which regulates Fannie and Freddie. The number is adjusted annually based on October-to-October changes in the average sales price of existing homes. The calculation draws on data collected by the Federal Housing Finance Board.

A limit that frequently catches purchasers of even modest homes in areas with relatively expensive housing costs, such as California, New York and the Washington region.

A limit that jumped along with housing prices in the past.

A number that has not been free of controversy, now that housing prices are showing signs of decline. When the October 2006 numbers came in, showing a slight decline to a national average sales price of $306,258, OFHEO postponed changes in the limit. The agency later decided to keep the limit the same for 2007 but is considering changes to how the limit is calculated. Public comment on the issue closed Thursday.; July 25, 2007 5:22 AM
Anonymous said...: San Jose crime rate is among the safest, don't tell that to the girls living in the Bay Area

http://www.mercurynews.com/
ci_6444797?source=most_viewed

San Jose police call it the "most vicious, violent and monstrous crime" the city has seen in years:

Two men robbed, brutally raped and stabbed to death a 46-year-old woman who was walking home Sunday morning.

A 30-year-old man was arrested Monday and authorities are looking for a second suspect.

San, a small woman in stature, was overwhelmed by the two men as she walked down Story Road just after 6 a.m. after leaving the nearby home of relatives, said San Jose police officer Enrique Garcia. She did not know her attackers.

Garcia said the men were thugs looking for someone to rob, sexually assault and kill.

"She was just walking down the street, minding her own business," Garcia said. "These guys were out there trying to find whoever they could first. They approached her, engaged her in conversation, then quickly began assaulting her. It was very brutal, very horrific. At 5-foot-2 and 110 pounds, she had no way of defending herself."

Garcia said the men beat her, then dragged her away from view where they both sexually assaulted her. San was beaten "everywhere on her body" and stabbed numerous times, the officer added. "I'm sure she suffered a lot before she died," he said.

San, who was of Cambodian descent, had lived in San Jose a number of years, Garcia said. "By all accounts, she was a good human being who had many relatives in the area."; July 25, 2007 5:38 AM
Anonymous said...: Wall St smarties do it again: man-made monster escapes

For months, Wall Street's standard line about the massive volume of mortgages made to high-risk borrowers since 2003 was that rising delinquencies on those subprime loans were a manageable problem.

What's more, the line went, the trouble would be "contained", meaning it would be limited to the highest-risk loans and wouldn't spread up to better-quality mortgages or to better-quality mortgage-backed bonds.

Those assertions were all but blown away last week after brokerage Bear Stearns last Tuesday disclosed that investors in two of its hedge funds that owned mortgage-backed securities had lost virtually all their money.

It wasn't that the bonds became completely worthless overnight. Rather, the funds were victims of their heavy use of borrowed money to boost their bond bets. The use of debt, or leverage, magnifies an investor's gains when a portfolio is rising in value but magnifies losses when the portfolio declines.

Still, leverage alone wasn't the problem. In its letter to clients, Bear Stearns reminded the rest of Wall Street what was happening with investors' perceptions of mortgage-backed bonds, even those purported to be of high quality.

Its funds were obliterated, the brokerage said, in part because of "the unprecedented declines in valuations of a number of highly rated (AA and AAA) securities."

For a AAA-rated bond, a serious decline is a drop in the market price from $US1000 to $US950 in a matter of days. It may not look like much but for a security that had the highest possible credit rating, that's a disaster.

What's more, in the subprime loan market, it's now clear that fraud played a big role in the ease with which loans were granted as the housing boom peaked in 2006.

So what are investors supposed to believe about the underlying paperwork that describes a mortgage and the home that secures it?

"You cannot model a bond for the effects of fraud," said Andrew Lahde, head of Lahde Capital Management in Santa Monica, which has been betting this year that mortgage bonds will plummet. "Fraud, by definition, is deception."

The difficulty in evaluating mortgage-backed securities has left potential sellers and buyers far apart. As many traders have described the situation in the past few weeks, a seller puts a bond up for sale hoping to get 80c on the dollar, only to find that potential buyers are offering no more than, say, 40c.

In this environment, "no one believes that AAA is AAA", which just echoes down the rating scale, said Janet Tavakoli, head of Tavakoli Structured Finance in Chicago.

The seller then pulls the bond off the market. He hasn't realised a loss but his anxiety level only rises, because he's still stuck with the security in a worsening market.

As confusing as things are for mortgage bonds, it's worse for Wall Street engineers' crowning achievement in fee-generating securitisation: collateralised debt obligations, or CDOs.

A CDO is, in effect, a bond backed by other bonds. And in a wondrous bit of alchemy, a CDO creator can take a pool of bonds backed by mostly subprime mortgages and turn it into securities that have AAA credit ratings.

It's all in the slicing and dicing of the underlying portfolio. In theory, the holder of a AAA-rated CDO slice owns a security that has almost no chance of losing principal.

But what, exactly, is backing that CDO slice?

That's the question that many yield-hungry hedge funds and other big investors failed to ask in the boom years, said Christopher Whalen, an analyst at research firm Institutional Risk Analytics, which provides risk analysis to financial firms.

Now, "as mortgage default rates go up, investors are going to find out that what they own is not what they think it is," he said.

That is likely to be the unfolding story of the rest of this year and the first half of 2008.

The fire sale in mortgage securities has yet to begin. But it's coming. The implications for the rest of financial markets aren't clear but when confidence is shaken in one market there usually is collateral damage.

http://www.brisbanetimes.com.au/
news/business/wall-st-smarties-
do-it-again-manmade-monster-
escapes/2007/07/23/
1185043031404.html; July 25, 2007 5:53 AM
Anonymous said...: The problem is - Is an "AAA-" rated securitised products really worth an "AAA-" rating

http://www.ft.com/cms/s/
59e40190-3a13-11dc-9d73-
0000779fd2ac,_i_rssPage=
8672feb4-504a-11da-bbd7-
0000779e2340.html

Japan’s large banks could have an aggregate exposure of Y1,000bn ($8.3bn) to the stricken US subprime mortgage market, highlighting the extent to which the problems of low-quality mortgages in the US are affecting investors globally.

According to recent estimates by UBS, which surveyed the top nine banks, the largest exposure to the US subprime sector appears to be through investments in complex financial instruments such as collateralised debt obligations and other securitised products that have subprime loans as their underlying assets.

The exposure at the banks surveyed was slightly more than Y1,000bn as at the end of June, according to the research.

There is also possibly exposure to the subprime market through outstanding investments in hedge funds with exposure to such assets and loans to or investments in subprime mortgage providers, the research says.

The woes of the subprime mortgage market “is a very limited problem” for the Japanese banks, says Brett Hemsley, banking analyst at HSBC in Tokyo.

Japanese banks are exposed mainly to AAA- rated securitised products, so “any losses at the major banks should be offset by this term’s profits”, writes Ms Otsuki.; July 25, 2007 6:13 AM
Anonymous said...: If a man comes to your front door and says he is conducting a survey And asks you to show him your bum, do not show him your bum. This is a scam. He only wants to see your bum. I wish I had got this yesterday. I feel so stupid and cheap. -The Bum http://www.widgetmate.com/posters Some of the best images available for free.; July 25, 2007 9:59 AM
Anonymous said...: "Wall St smarties do it again: man-made monster escapes"

A: More evidence of Freddy Kueger and Jason's handiwork as Wall St. suits.; July 25, 2007 2:17 PM
Anonymous said...: Hi Everyone,

Just wanna say a quick hi and ask a silly question.

Is it possible to get updates of this site in the form of an RSS Feed? I tried looking for one but couldn't find it.

Thanks,
Blue; December 22, 2010 3:24 PM