A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
Nice work twist
Someone needs to do a photochop with Casey in it.
some people made alot of money and end up better finacially and a chance out of the rat race and corporate slavery. Was i wrong to buy sell houses to have a house paid of in cash and cash reserves and positive cashflowing properties at 37. or should i work hard until 65 and hope for ss and 401k managed by some scumbag and get cancer a 60 and die before enjoying my 40 plus year of hard work like family members i know. Or try to make money through leverage and hard work and save and invest in me not some bullshit stock market scam, because stocks are scams and are just a money schemes. P/E almost mean nothing as far as price. At least with properties i lock in a fixed rate and know my cost and rents do go up and my mortgage stays the same and will bepaid of some day.
Dood knife catchers are STILL buying in here and there (rare but happening)We will need a 2008,2009,2010 edition of this valuable, priceless book!!!!
To anon,"some people made alot of money and end up better finacially"The same thing can be said of the "bullshit stock market scam" you attack in the same post.Maybe you surfed the lunacy wave and came out ahead. But, don't delude yourself.A bubble is a bubble.
Anonymous said . . ."Was i wrong to buy sell houses to have a house paid of in cash and cash reserves and positive cashflowing properties at 37. or should i work hard until 65 and hope for ss and 401k managed by some scumbag and get cancer a 60 and die before enjoying my 40 plus year of hard work like family members i know. Or try to make money through leverage and hard work and save and invest in me not some bullshit stock market scam, because stocks are scams and are just a money schemes. P/E almost mean nothing as far as price. At least with properties i lock in a fixed rate and know my cost and rents do go up and my mortgage stays the same and will bepaid of some day."Yes, you were wrong, because flipping houses involves royally ripping off buyers, many probably using exotic, un-repayable loans) to benefit yourself, regardless of harm down the line (consider the small, often unwary, investors who put up the money for all this Wall Street nonsense; consider the freakish run-up in housing prices hurting anyone who needs a house; consider the run-up in tax bills hurting everyone who owns a house). Your use of the word "leverage" says it all. How many of your buyers are now upside down in their loans or facing foreclosure or worse? How many will be? The get it while you can mentality is the downfall of the entire world.The answer to your second question: Yes, you should work hard to sixty-seven or however long it takes to survive without hurting others. Out of five or more billion humans on this planet, what makes your life the most important?
How about a Dummies book for hedge fund managers chasing high yield investments like CDOs? Their method for handling the meltdown is to tell memebers they can't sell out of the fund now. D'oh!
The original Dummies book author has posted a reply at the book's official site. Twist and I have both commented. I'm hoping that we can keep the discussion within "Doom Family Values," at least over there. Thanks!
Speaking of Knife Catchers:Check this outhttp://www.liveleak.com/view?i=b7b_1184009780
Does this mean they are going back to the standards they used to use before the deal became more important than their ethics?S&P May Cut $12 Billion of Subprime Mortgage Bonds (Update1)By Mark PittmanEnlarge Image"For Sale" and "Open House" signsJuly 10 (Bloomberg) -- Standard & Poor's said it may cut credit ratings on $12 billion in bonds backed by subprime mortgages because losses will rise beyond its previous expectations.Ratings of 612 classes of residential mortgage-backed securities were placed on CreditWatch with negative implications, New York-based S&P said today in an e-mailed statement. The bonds represent 2.1 percent of the $565.3 billion of similar bonds rated by S&P during 2006.``We expect that the U.S. housing market, especially the subprime sector, will continue to decline before it improves, and home prices will continue to come under stress,'' S&P said. ``Weakness in the property markets continues to exacerbate losses, with little prospect for improvement in the near term.''Investors have criticized S&P, Moody's Investors Service and Fitch Ratings because their ratings on bonds backed by mortgages to people with poor or limited credit don't reflect the fastest default rate in a decade. Prices of some bonds backed by subprime mortgages have declined by more than 50 cents on the dollar in the past few months while their credit ratings haven't changed.``We do not foresee the poor performance abating,'' S&P said. ``Loss rates, which are being fueled by shifting patterns in loss behavior and further evidence of lower underwriting standards and misrepresentations in the mortgage market, remain in excess of historical precedents and our initial assumptions.''S&P said it also plans to change the methods it uses to rate existing and new mortgage bonds to reflect the increased likelihood of mortgage defaults and losses.S&P spokesman Chris Atkins declined comment prior to the teleconference.(S&P will host a conference call at 10 a.m. New York time. To listen, dial +1-888-324-0379 in the U.S. or +1-210-234-6980 internationally. Conference ID#: 1197033, passcode: SANDP)To contact the reporter on this story: Mark Pittman in New York at email@example.com .Last Updated: July 10, 2007 09:33 EDT
Where I live in Az live rents have been going down the last 2 years.So much for "rents go up"
Haven't had many comments recently, but today IS the day. . .Home Depot and S&P downgrades of CDO's is putting the "Fear of God" in Wall Street. . .run for cover of Treasuries is the name of the game. . .people on Main Street just don't get it - real estate is NOT local this time - the National (international?) credit crunch will take away any chance of a recovery in Phoenix or even Chicago. . .down down we go. . .bottom of housing market likely in 2010.
The PPT has been very very busy:GENERAL MOTOR'S MARKET LEADERSHIP HAS COME COURTESYOF THE PLUNGE PROTECTION TEAMby Eric EnglundJuly 9, 2007Two hedge funds, managed by Bear Stearns, are on the verge of liquidation due to making highly leveraged bets on securities backed by subprime mortgages. Bear Stearns’ woes have investors worried that any negative developments in the credit markets will also drag down the stock market – which has become quite volatile since the bad news, from Bear Stearns, surfaced. To be sure, the ripple effects of the subprime-mortgage implosion will continue to roil the credit and stock markets. But is the subprime-mortgage bust truly large enough to drag down Wall Street, and its precious Dow Jones Industrial Average, with it? If the recent performance of General Motors’ stock is an indicator, the Working Group on Financial Markets (aka: the Plunge Protection Team) is answering this question with a resounding "yes."As Karen De Coster and I asserted in our essay General Motors, Market Engineering, and "Confidence" Protection, the Working Group manipulates General Motors’ stock in order to prop up the Dow Jones Industrial Average so as to maintain investor confidence in the stock market, Wall Street, and the economy in general. Indeed, based upon our assertion, General Motors’ stock definitely has big shoes to fill. In light of GM’s stunning performance, during the exact period of Bear Stearns’ hedge fund catastrophes, the "General" is strutting up and down Wall Street as if he is Sasquatch…with members of the Plunge Protection Team peering from behind the curtain in delight.This past quarter – April 1, 2007 to June 30, 2007 – has been a barnburner for GM’s stock. Through this period, the Dow Jones Industrial Average was up by 8.5% while GM was up by nearly 23%; talk about market leadership. During the trading week of June 25th, when Wall Street was really feeling the heat of Bear Stearns’ meltdown, General Motors’ stock closed the week up by 6.6%. This isn’t just leadership; no, the General is fearlessly spearheading the stock market’s charge upward. And it gets even better; for during this hard-charging week, GM’s stock hit a 52-week high which tallies up to nearly a 43% gain from its 52-week low. General Motors’ stock, most certainly, closed this last quarter with a magnificent performance that served to steady a jittery stock market.Interestingly enough, this magical week began with an upgrade from a Wall Street brokerage powerhouse. On June 25th, Goldman Sachs analyst Robert Barry put out a "buy" recommendation on General Motors citing his rather dull insight that "GM can make a compelling case to UAW members that material wage and benefit cuts are needed…And we suspect members and retirees are increasingly amenable to such cuts." Although this won’t go down as an awe-inspiring recommendation, the reasoning is much less important than putting the prestige of Goldman Sachs’ name behind General Motors’ stock. And this is where, in my opinion, the heavy hand of the Plunge Protection Team has been exposed yet again.So let’s connect a few important dots here. For openers, the four key members of the Plunge Protection Team (which reports directly to the President of the United States) are the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Securities and Exchange Commission, and the Chairman of the Commodity Futures Trading Commission. Henry M. Paulson is the current Secretary of the Treasury. Before being sworn in as the Secretary of the Treasury last year, Mr. Paulson was the Chairman and Chief Executive Officer of – you guessed it – Goldman Sachs. Thus, Henry Paulson was once the aforementioned Robert Barry’s boss. In light of this, it is highly plausible that Goldman Sachs’ buy recommendation – regarding GM stock – was a political favor to help the Plunge Protection Team do damage control on Wall Street.Now, let’s look a little deeper into the company whose common stock Robert Barry so uninspiringly recommended to American investors. Upon reviewing GM’s December 31, 2006 fiscal year-end audited financial statement, I certainly can see why Mr. Barry was so bland. To analyze General Motors’ 12/31/06 FYE financial statement is to understand that this once great company is likely heading towards bankruptcy. Here are the gruesome details:GM’s "as stated" net worth is negative $5.4 billion By fully discounting intangible assets, which includes deferred tax assets, GM’s net worth is arguably negative $48.5 billion (refer to Note 13 of GM’s 12/31/06 financial statement) GM’s as stated working capital is negative $3.7 billion By fully discounting current deferred tax assets, GM’s working capital drops to negative $14 billion General Motors’ total liabilities amount to a staggering $190.4 billion GM’s net loss, in 2006, was nearly $2 billion In spite of the "General’s" ill financial health, Robert Barry proclaimed a 52-week target price of $42 per share. This target price was simply pulled out of thin air. Without earnings and without a tangible net worth, it is impossible to apply basic analytical tools – such as a price-to-earnings ratio and a price-to-book-value ratio – in order to derive a rational target price-per-share for General Motors’ common stock. Since most "investors" are financially illiterate, it is easy for Wall Street analysts to get away with making such absurd proclamations.This is not to say that Robert Barry didn’t comprehend the gravity of GM’s financial condition. When Barry stated that "GM can make a compelling case to UAW members that material wage and benefit cuts are needed" he clearly understood the grim reality of General Motors’ financial situation. In essence, Barry’s "buy" recommendation is based upon the bizarre logic that although GM’s acute financial weakness may be a "strength" when bargaining for concessions from the UAW, that investors should ignore this extreme financial fragility – but the UAW should not – so go out and purchase GM stock today. After all, this company just may survive if its negotiations, with the UAW, go exceedingly well. And what if the UAW doesn’t give an inch? Heck, let’s not spoil the convincing case (wink, wink, nod, nod) made by Goldman Sachs’ star auto-industry analyst.There is little doubt that Robert Barry "took one for the team"…the Plunge Protection Team that is. Typically, a "buy" recommendation is accompanied by exciting and positive developments regarding the company being analyzed. All Barry could muster was tortured logic intertwined into an insipid endorsement of a company teetering on failure. But the deed was done. Goldman Sachs’ endorsement, of GM, gave the Plunge Protection Team the cover it desired to continue pushing GM’s share price higher; thereby providing market leadership investors yearn for when instability is afoot.As I see it, the intense manipulation of GM’s stock indicates that the Plunge Protection Team is frightfully worried about the damage subprime mortgages will inflict upon Wall Street. In the end, it is quite ironic that General Motors’ financial condition really isn’t substantially different relative to the financially-strapped individuals who are defaulting on the very mortgages that toppled Bear Stearns’ hedge funds.
...get cancer, you are cancer. housing flippers drove up this market and should be sued for their illgotten gains just like in any pyramid scam.Yes, the answer to your question is yes. You should work for a living. You should actually try to learn a real skill and PRODUCE something meaningful. Buying and selling houses is just lame, and it's why the terrorists hate us!
anonypussy 6:43 said . . . "Was i wrong to buy sell houses to have a house paid of in cash and cash reserves and positive cashflowing properties at 37."-----------------------------Wow. Apparently, mastery of the English language is not a prerequisite for success at flipping houses.Also, dumbass, obtaining positive cash flow properties is totally different than flipping houses. The former is sound investment, whereas the latter is speculation.In most of the country right now, it is nearly impossible to obtain a property from which you can derrive a positive cash flow.
Housing Panic is well named - S&P just pulled the plug on the whole charade today. . .CDO junk bonds at .20 cents anyone?. . .houses for 50% of in 3 years. . .
S&P Puts Subprime-Backed DebtOn Notice of Possible DowngradeBy ALISTAIR BARRJuly 10, 2007 12:40 p.m.Influential rating agency Standard & Poor's said on Tuesday that it may downgrade $12 billion of subprime mortgage-backed securities because losses in this low-end part of the home-loan market have increased and will probably get worse.Credit ratings on 612 classes of residential mortgage-backed securities (RMBS) backed by U.S. subprime collateral have been put on CreditWatch with negative implications, S&P said. Beginning in the next few days, the agency said most of these classes will be downgraded.
Man I wish I had the channels to buy some of the CDO junk at 20 cents on the buck. Probably a decent roll of the dice at that level. They're getting priced as if ALL the underlying mortgages are going to default.
Spectre of Deflation- Good Post. Keyword-Financially Illiterate.Just says it all.
Housing Panic is well named - S&P just pulled the plug on the whole charade today. . .CDO junk bonds at .20 cents anyone?. . .houses for 50% of in 3 years. . .The guys at S&P are plagiarizing this blog!Here is the entire report:http://tinyurl.com/392rjuLOSS PATTERNSTotal aggregate losses on all subprime transactions issued since the fourt quarter of 2005 is 29 basis points, as compared with 7 basis points for similar transactions issued in 2000. Transactions from the 2000 vintage are used as a comparison because they were, up until now, the worst performing vintage of this decade. ECONOMIC FACTORSOn a macroeconomic level, we expect that the U.S. housing market, especially the subprime sector, will continue to decline before it improves, and home prices will continue to come under stress. Weakness in the property marketscontinues to exacerbate losses, with little prospect for improvement in thenear term. Furthermore, we expect losses will continue to increase, as borrowers experience rising loan payments due to the resetting terms of their adjustable-rate loans and principal amortization that occurs after the interest-only period ends for both adjustable-rate and fixed-rate loans.
Not be outdone by Goldman Sachs, JP Morgan put a $50 price target on GM. [I'm betting they all bought some killer weed with their bonuses.]The band plays on even as it did while the Titanic sank.
Anonymous said... S&P Puts Subprime-Backed DebtOn Notice of Possible DowngradeBy ALISTAIR BARRJuly 10, 2007 12:40 p.m.Influential rating agency Standard & Poor's said on Tuesday that it may downgrade $12 billion of subprime mortgage-backed securities because losses in this low-end part of the home-loan market have increased and will probably get worse.Credit ratings on 612 classes of residential mortgage-backed securities (RMBS) backed by U.S. subprime collateral have been put on CreditWatch with negative implications, S&P said. Beginning in the next few days, the agency said most of these classes will be downgraded. Cover your ass has starting blooming I see! Never mind that stanards were changed in 2005 and in Feb. 2007 as well. OOPSY!
"Housing Flippers" didn't drive up "the market", the supply of "EasyMoney" courtesy of Fed drove up the demand and the price for houses. Flippers were just in the right place in the right time, bought low, sold high, made some money. They just rode the wave, and the smart ones have probably sold and are sitting on that pile of cash waiting for another one.If you want to blame somebody, blame the Fed and the banking community and such for relaxing lending practices.
"Or try to make money through leverage and hard work and save and invest in me not some bullshit stock market scam, because stocks are scams and are just a money schemes. P/E almost mean nothing as far as price"Damn you're stupid. Bet you never checked on average yearly returns on stocks versus real estate for the last 100 years. You'd be sorely disappointed.
Anonymous said... Buying and selling houses is just lame, and it's why the terrorists hate us! The terrorists (I mean Islamic moderates and radicals) also hate everything that is not from the time of the prophet Muhammed.
Hmm maybe as part of the taxpayer bailout they'll send a free copy to every homedebtor in Scottsdale.
Karl says:I am a real estate agent in Phoenix, AZ and I have been in this biz for over 20 years. Far and away, this is the worst market I have ever experienced and I have seen some whoppers let me tell you!! The buyers with whom I have been working of late by all reasonable definitions of that term are not buyers at all - merely "look-ers" and "wait-ers". What's a hardcore, professional real estate agent to do? More importantly, what's a serious seller to do in a market like this - give their house away? Some actually are doing just that - but to the banks and other lenders holding their notes; via deeds in lieu of foreclosure!! It's absolutely pitiful what I have seen lately, Diana. And the true irony of the whole pathetic situation is the buying public's reluctance to jump into this market and make the best home deals of their lives now that they have the selling public and homebuilders just where they want them - on their knees crying, begging, and pleading their broken hearts out!! My God, it's unbelievable, Diana! Buyers have been moaning and groaning and complaining non-stop in past years about skyrocketing home prices and the greed of sellers and homebuilders, and now that these same sellers and homebuilders are beside themselves with grief and sorrow and are willing to do almost anything to sell their homes, the same buyers are just standing there with their thumbs in their ears like imbeciles waiting for the invisible bottom to hit them in their thick skulls!! It is absolute insanity out there!! The dreams of homeownership have been committed to the funny farm. It is now a field of tears. http://www.cnbc.com/id/19697791
But Greg Swann said everything would be OK!
Like with all bubbles in this capitalist shithole culture, a few will end up having gotten fabulously wealthy while many will suffer, even those who didn't participate in the bubble. Meaning renters, those who owned before the bubble, everyone. The economic mess will engulf not just those who took the risks and failed but also those who were merely bystanders.Hopefully there will then be a deep, ugly, global depression that results in a vengeful, angry, global socialist revolution. Don't laugh. Capitalism has the same potential for widespread failure as the last incarnation of socialism did. But this time when socialism comes back we'll do it better, meaner and with more conviction.
I bet "Devil's Advocate" is really Casey Serin. The guys bashing GM forget that a new Camaro will be in production soon. Don't underestimate our fellow Americans who spend $25K for pile of Crap Harleys and $25K classes on flipping homes. They may all run out and buy $50K Camaros...
jerj said:"Man I wish I had the channels to buy some of the CDO junk at 20 cents on the buck. Probably a decent roll of the dice at that level. They're getting priced as if ALL the underlying mortgages are going to default". Laura Vella said: All the mortgages will be defaulting because no one can qualify at these prices thats why everyone had to get subprime loans. It's going to be horrific...where are those darn trolls now??
Karl said:"The buyers with whom I have been working of late by all reasonable definitions of that term are not buyers at all - merely "look-ers" and "wait-ers". LauraVella said: My husband and I don't want to be lookers or waiters but we have to because we can't qualify for a house unless we get a subprime loan-the sad part is we both have 800 credit scores! Bottom line is, we want to buy but we don't want a non traditional loan. It's pretty simple... really.
Buyers have been moaning and groaning for years about skyrocketing home prices.....and rightly so!Home builders and sellers besides themselves with grief?Cry me a river! I've made reasonable offers that were shrugged off as "you don't understand the local market"!
I rent with no debt,and I wish I was divorced!
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