July 10, 2007

FLASH: The center no longer holds, and today was the day when it all fell apart. S&P admits to the biggest financial con game of all time.


In order for the Great Housing Con Game to work, the bagholders (the buyers of the toxic subprime and liar's loan crap) had to believe that one day they'd get paid back. Even though this garbage was being lent out to people who lied about their jobs, their income and their ability to pay. Or worse yet to people with no jobs, no credit, no income, no honesty, no problem gaming the system themselves and absolutely positively no possible way to make good on the loans once the Ponzi Scheme ended.

Yes, think
Casey Serin. Think David Crisp. Think of all the get-rich-quick failed flippers, think the $30,000 income families buying $800,000 homes, think Phoenix, think Miami, think all the sheeple who thought real estate could only go up and up.

So why did the bagholders of these mortgages (China, hedge funds, pension funds, overseas investors), which were so nicely bundled up into neat little CDO's, think they'd get paid back? Why did they think that obvious hilarious loan garbage was worth the price they were paying?

Because the "unbiased ratings agencies" told them so.

Well, not anymore. S&P, one of the three major CDO ratings agencies, now staring lawsuits, jail sentences and the collapse of their game straight in the face,
bitchslapped the housing and mortgage market today and simply came clean, in one of the ugliest financial mea-culpas I've ever seen. Simply put, the charade is over. And hundreds of billions, more likley trillions, will now be lost.

So now, the housing collapse goes into overdrive. The Subprime and Alt-A industries die. Hedge funds worldwide fail. Pension funds screw their retirees. Markets crash. China gets pissed. Lending tightens even more. Demand plummets even more. And home prices crash even faster.


It's all over folks. Now we just count up the damage and look for someone to blame.

S&P finally says subprime is mostly junk - New methodology is death knell for the troubled industry

WASHINGTON (MarketWatch) - Standard & Poor's just drove a huge harpoon into the heart of the mortgage credit bubble and it's going to take a long time to clean up the mess once the beast finally dies.

S&P, one of the three main credit-rating agencies that served as enablers of the subprime mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to.

But the bigger news is that S&P isn't going along with the charade any more. S&P said it would change its methodology for ratings hundreds of billions of dollars in residential mortgage-backed securities.

And it would review its ratings on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.

A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.

S&P's announcement is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home. Fewer stressed homeowners will be able to refinance their mortgage, thus extending and exacerbating the housing bust.

"We do not foresee the poor performance abating," S&P said. Prices will fall, and foreclosures will rise. More mortgage fraud will be uncovered as the tide goes out.

For true HP wonks, you can read the whole nasty report here.

86 comments:

Shakster said...

Don't forget those 401ks.
Just think,all that free money going to these guys ,no questions asked,they can lose it(steal it),and in the end it's all Iraqs fault.
What could be better?Iran must know who's to blame this time.

Anonymous said...

GO ALL CASH NOW!!!

christiangustafson said...

Hurrah! Hurrah! Let the deflationary end-times begin! Leave no debtor standing!

ARCHIVIST said...

Quoting my favorite HP Anon to date:


"I'm so happy, I'm going to spank the monkey again, for the third time today.
I want to see blood in the streets, people jumping off buldings, marriages dissolve, and realty scum pimping their offspring to toothless Wal-Mart white trash shoppers. "


HAHAHAHAHAHAHA!!!!!

captures my sentiments EXACTLY!

Anonymous said...

Playing out exactly as predicted (by us here!)

RJ said...

Holy crap! The USD index dived below 81. It's now only worth .7284 Euro. The 10 yr. is holding at 5.12. It won't go down unless everyone starts fleeing to Treasuries. That will provide a temporary respite but not long term.
So when does the taxpayer bailout begin? In the meantime, it will be interesting to see if the sell-off on Wall St. starts in earnest tomorrow. I'm sure Paulson and Bernanke have been putting in the OT with the PPT to keep the markets from a total collapse. I'm glad I'm out of the market.
Holy crap, alot of Americans are going to get hurt.

AAPL@$18 said...

This is so huge yet I've yet to see the media talk about it. I wonder if anyone will this evening. This should have compelled editors to produce huge headlines in the news today. Thank you for this site although the blind circle jerk around Ron Paul, who's aligned himself with white supremacist groups without apologies for at least a decade, is disturbing but hey, one can have it all.

Jot this day down in your iCals. Today is the beginning of the end.

Dale said...

The markets are definitely spooked by this- Dow off nearly 150 and S&P off 22 points as I post this. Wonder if the PPT will intervene? Scratch that- wonder if their inevitable intervention will mean jack shit.

HiMomItsMe said...

Lets not start sucking each others @*&^'s just yet.

We have to get farther to the right on that famous reset chart. The defaults actually have to stack up-and they will.

Saying that, I went all cash last week, just in time! no more stocks for me for a while.

f u stock market.
hello self directed ira! no more 401k nazi puttin my cash in stocks.

Anonymous said...

Can you say depression

EconE said...

I was wondering when this was going to happen.

Still...just a start.

Anonymous said...

None of this matters because the economy is booming! The stock market is...er, iPhones are selling like hotcakes!!! That's proof right there that home prices will keep going up forever!

keith said...

Here's some quotes from the report. Amazing. Wonder how long they knew all of this before deciding to come clean in one big hit. Months? Years? Since they started reading HP? Since their lawyers told them they could get shut down?

"On a macroeconomic level, we expect that the U.S. housing market .. will continue to decline before it improves, and prices will continue to come under stress"

"Although property values have decreased slightly, additional declines are expeced" TRANSLATION - HEAD FOR THE HILLS

"While our .. model assumes property value declines of 22% for the BBB and lower rating category stress environments, with higher property value declines for the higher rating category stress environments" - TRANSLATION - A 22% PRICE CUT WOULD BE FANTASTIC, BUT WE SEE EVEN WORSE

"As lenders have tightened underwriting guidelines, fewer refinance options may be available to these borrowers" - TRANSLATION - HOMEDEBOTRS ARE STUCK AND SCREWED AND THE HOUSING ATM IS CLOSED

"current findings of fraud were in excess of previous industry highs" - TRANSLATION - WHAT DID YOU EXPECT WHEN NOBODY WAS MINDING THE F*CKING STORE!

"Beginning in the next few days, we expect that the majority of the ratings on the classes that have been placed on CreditWatch negatie will be downgraded" - TRANSLATION - IT'S GONNA BE AN UGLY JULY AND WE'RE JUST GETTING STARTED

Anonymous said...

Well its about TIME!!!

Anonymous said...

now moodys has down graded 399 more mortgage securities

Anonymous said...

And China just executed a Gov official for making their exports look bad. Just think what would happen to these douche bags in China for doing this...POW!

honica jewinski said...

This is great news no doubt. I still don't think it will make prices decline throughout the country unfortunately, as someone mentioned earlier, the USD index is @ 81. The jews at the fed reserve are making those presses smoke baby! So, the same $200,000 house in 2004 will sell for $200,000 in 2008. The only differance being what those 200,000 DOLLARS are worth. If the jews keep printing at the pace they are currently, they'll soon have the same purchasing power as the pre WWII German Mark.

Frank@NeverColdCall.com said...

Wow, I hope the McJobs program has openings for all those mortgage peddlers who are at the "game over" stage.

Frank@NeverColdCall.com said...

Wow, I hope the McJobs program has openings for all those mortgage peddlers who are at the "game over" stage.

kitchenstove said...

I can't watch. I can't bare to look. I'm keeping my eyes covered. Later on I will go out to the shed and get whatever materials I need to set up booby traps around the house.

Anonymous said...

Even the pro real estate guys are backing down now.

http://www.therealestatebloggers.com/2007/07/10/dollar-drops-on-subprime-mortgage-fallout-concerns/

keith said...

Like a waterfall, the CDO tranches will implode - from the lowest quality first to the highest quality last

Why the highest quality? Because even people with great credit and great incomes buying houses they can afford can lose their real estate jobs and suffer massive losses on their homes too.

Manias, Panics and Crashes told us everything that has happened and everything that is going to happen. There will be no surprises - not for HP'ers at least

Today was a very important day

Anonymous said...

From Terri M.:
I'm one of those mortgage brokers that everyone's bashing these days. I predicted this "slump" over a year ago - the stuff I've seen would make your head spin. And my updated prediction? This is only the tip of the iceberg. I think this is going to be something that we've never seen before. Down here in the trenches it's pretty unbelievable. I did my first mortgage in 1980 & it sickens me what this industry has turned into. Yes, there are "bad" brokers; I myself worked with one that tried to get a loan approved for a beautician that stated her income as $8K a month. But the programs that were being offered by these investors...sorry, but they deserve what they're getting now.

Mortgages available to people I wouldn't lend a pencil to! Realtors & builders also had their part in it. Pushing higher priced homes & then strong-arming the loan officers ("if you can't get them done I know another loan officer that can"). And let's not forget the homebuyer. Oh, the stories I could tell you! O.K. 1 prime example: Couple in their early 20's. I had to turn them down for their mortgage because their monthly payments were already at 54% of their GROSS monthly income - & that was not including their proposed house payment! He got mad at me - saying I was the only person that had ever told him no to a credit request.

My response was that's exactly why I had to. His response was he'd find someone else to give him the loan, and he did. Sorry, I can't feel sorry for someone like that when they wind up in foreclosure. It's gotten almost impossible to get a loan approved, between standards being tightened to the level we were at in the 80's, appraisals being shredded, and the public either having bad credit or being over-extended. And it's going to get worse. The ARM's that are scheduled to reset are double what they were last year, and '08 is about the same. I've moved over to doing commercial loans instead...and I'm renting.

http://www.cnbc.com/id/19697791

Keyser Soze said...

Please bear with me!
I'm trying to get a handle on this toxic sub-prime mess. Will someone smarter than me please correct me if I am wrong...but please don't hurt your arm patting yourself on the back...lol.
Assumption: From what I read, the toxic sub-primes were packaged as a CDO with 90-95% good loans...
1) therefore, the investors who purchased a hedge fund with said loans are f*cked, since the hedge funds only paid 10% cash, and borrowed 90%, for these CDOs. Whether it was a bank, a pension fund, or an individual who purchased these hedge fund shares...they will lose 100% of their investment.
2) BUT.....entities which DIRECTLY purchased a CDO and paid cash for it, will only lose the amount of bad loans, which could be as little as 2% up to a maximum of 10%, since said toxic loans. Hell, I've lost more than 10% on several investments over the course of my lifetime.

It would be interesting to know what % of these toxic loans are leveraged?

These are interesting times, but I'm not yet convinced of the end of civilization as we know it.

SPECTRE of Deflation said...

Keith said...

It's all over folks. Now we just count up the damage and look for someone to blame.

And those of us smart enough to see the handwriting on the wall will now stand back while the debacle unfolds, and then we pounce once the various asset classes correct big time. WEEEEEEEEEE!!

keith said...

"Mark to Market" anyone?

How long until IndyMac comes clean?

You wonder who's auditing the lenders' books, and if they'll get sued too

I see jailtime, frog marches, investigations, congressional hearings and dot-com deja-vu

SPECTRE of Deflation said...

And then we have this beauty that I think they are trying to pass off as journalism although it's nothing but cheerleading for more consumer borrowing if ya can believe it. Nevermind that the American consumer is literally drowning in liquidity...I mean debt. How they can print this garbage is beyond me! Wake up sheeple!!!

U.S. consumers aren't stupid
Commentary: It's perfectly rational to spend the money now
By MarketWatch
Last Update: 9:04 AM ET Jul 10, 2007


LONDON (MarketWatch) -- U.S. consumers borrowed more money in May.
In fact, they increased their borrowing at a 6.4% annual rate. See related story.
The nearly universal assumption that goes with the headline is that U.S. consumers borrowed more money than they should have.
But did they?
Marketers go through all kinds of efforts to influence the decision to spend. Yet for everybody except the super-wealthy, price remains the single most important factor in any transaction.
And for American consumers, the decision to buy now -- even if it is lots of cheap plastic stuff made in China that they didn't really need -- makes perfect sense. It makes sense because the dollar remains relatively strong against the yuan.
Sure, economists argue that the artificially depressed yuan amounts to a subsidy that actually costs America jobs and crimps its GDP. That may all be true. But it doesn't mean that U.S. consumers are stupid.
On the contrary, they're probably among the savviest shoppers in the world, and when they recognize a bargain, they find the means to take advantage of it.
Someday, when all the money's gone, and the baby boomers are broke and living in underfunded retirement homes collecting 20 cents on every dollar of Social Security tax they paid, they may regret all the big screen TVs they bought in their second youths.
But life is an unknown quantity. And who knows? By then, the U.S. may be exporting coal to China and India to run all the power plants they're building now to run the factories to make this stuff.
And even if it all does turn out to have been a case of American subsidization of the world's economy, there are worse things to do with your money than helping to create jobs for a few hundred million people.
- Tom Bemis

SPECTRE of Deflation said...

AAPL@$18 said...
This is so huge yet I've yet to see the media talk about it. I wonder if anyone will this evening. This should have compelled editors to produce huge headlines in the news today. Thank you for this site although the blind circle jerk around Ron Paul, who's aligned himself with white supremacist groups without apologies for at least a decade, is disturbing but hey, one can have it all.

Jot this day down in your iCals. Today is the beginning of the end.

And don't think for a moment that the lame street media would have it any other way although with the Internet the gatekeepers of information find themselves suddenly screwed.

SPECTRE of Deflation said...

Dale said...
The markets are definitely spooked by this- Dow off nearly 150 and S&P off 22 points as I post this. Wonder if the PPT will intervene? Scratch that- wonder if their inevitable intervention will mean jack shit.

Intervene? Hell they are throwing everything they have at this including the kitchen sink. You want desperation? How about Goldman and Morgan upgrading GM with a price target of $42 and $50 repectively.

Anonymous said...

Keyser soze,
It's the usual suspects (sub-slime & Alt-A) that will blow up. I forgot the exact numbers, but something like 40% of all loan made in 2004-06 fall into that category. Lets assume that about 50% of those will default with a 50% recovery rate on investment that means 10% of all money loaned out in the last 3 years is bye, bye. Some with riskier bets will get hit significantly harder than others, but certainly not the end of the world.

Anonymous said...

China today executed 2 Officials responsible for their Food/Drug Administration labelling.
If S&P, Moody's and Fitch were Chinese companies, Where their CEO would be now??

SPECTRE of Deflation said...

Now if we could just get the FED Chairman to tell the truth. The man is a liar on his inflation comments today. Inflation is an over supply of money stock and/or credit expansion. Too few goods being chased by way too many dollars, yet the quote below is expected to be taken at face value.
Time to duct tape my head to keep it from exploding:


"Undoubtedly, the state of inflation expectations greatly influences actual inflation and thus the central bank's ability to achieve price stability. But what do we mean, precisely, by "the state of inflation expectations"? How should we measure inflation expectations, and how should we use that information for forecasting and controlling inflation?"



"Undoubtedly, the state of inflation expectations greatly influences actual inflation and thus the central bank's ability to achieve price stability. But what do we mean, precisely, by "the state of inflation expectations"? How should we measure inflation expectations, and how should we use that information for forecasting and controlling inflation?"

SPECTRE of Deflation said...

Coming hard and fast now Keith. Moody's downgrades 399:


New York, July 10, 2007 -- Moody's Investors Service today announced negative rating actions on 431 securities originated in 2006 and backed by subprime first lien mortgage loans. The negative rating actions affect securities with an original face value of over $5.2 billion, representing 1.2% of the dollar volume and 6.8% of the securities rated by Moody's in 2006 that were backed by subprime first lien loans.

Of the 431 rating actions taken today, Moody's downgraded 399 securities and placed an additional 32 securities on review for possible downgrade. One of the downgraded securities remains on review for possible further downgrade. The vast majority of rating actions taken today impacted securities originally rated Baa or lower. The 239 securities originally rated Baa on which action was taken represented 19% of the total number of Baa ratings issued in 2006; the 185 securities originally rated Ba on which action was taken represented 42% of the total number of Ba ratings issued in 2006; and, the 7 securities originally rated A on which action was taken represented 0.6% of the total number of A ratings issued in 2006. No action was taken on securities rated Aaa or Aa. . . .

Recent data shows that the first lien subprime mortgage loans securitized in 2006 have delinquency rates that are higher than original expectations. Those loans were originated in an environment of aggressive underwriting. This aggressive underwriting combined with prolonged, slowing home price appreciation has caused significant loan performance deterioration and is the primary factor in these rating actions. In addition, Moody's analysis shows that the transactions backed by collateral originated by Fremont Investment & Loan, Long Beach Mortgage Company, New Century Mortgage Corporation and WMC Mortgage Corp. have been performing below the average of the 2006 vintage and represent about 60% of the rating actions taken today. . . .

Moody's has noted a persistent negative trend in severe delinquencies for first lien subprime mortgage loans securitized in 2006. For example, the 90+ day delinquency rate for loans securitized in 2006 has increased from 7.9% in March 2007 to 10.8% in May 2007. However, losses have remained relatively low, with the May cumulative loss rate reaching only 0.30%.

As part of the recently completed review of all 2006 subprime RMBS, Moody's said it examined the portion of each pool that was severely delinquent -- that is, over 90 days past due, in foreclosure or held as "real estate owned" -- and assessed the amount of credit enhancement available to the rated tranches in the form of subordination and excess spread. "Early defaulting borrowers often exhibit distinct characteristics: they are more likely to be first-time home buyers, speculators, or are over-leveraged or have 80%-20% first-second lien loan combinations," said Weill. Consequently, the early defaulters may exhibit different behavior than other borrowers in the pool. Those borrowers may face other challenges in the next few months when rate and payment resets take effect, especially in the absence of effective loan modifications.

In analyzing loans that are severely delinquent, Moody's said it considered a number of scenarios based on various assumptions about the percentage of currently delinquent loans that would eventually default (the "roll rate") and the expected severity of loss given default. The roll rates used were: for over 90 days delinquent: 50%, 75% and 90%; for those loans in foreclosure and held as real estate owned: 95% and 100%. While these roll rates are higher than those that have been realized historically, Moody's believes that these loans, with their high vacancy rates and high "no contact" rates, are more likely to default than other subprime loans.

The severity rates Moody's assumed ranged from 25%-30% (in particular, for deals with strong coverage from mortgage insurance), to 40% (for most originators), to 50% for originators whose mortgage assets are revealing particularly high severe delinquency rates.

For the portion of each pool that is not severely delinquent, Moody's increased its original loss expectations for the pool by a stress factor of 20% which is consistent with the increased loss expectations that the rating agency published in its March 2007 report: "Challenging Times for the US Subprime Mortgage Market."

While we considered both the projected losses associated with the seriously delinquent loans (the "pipeline losses") as well as the projected losses associated with the remaining portion of the pool, we gave more weight to the pipeline losses.

from the powerfull oz said...

President Bush and his GOP staff members today said in a news conference, "The housing bubble was started by an Al-Qaida terrorist cell, operating from a cave in northen Afghanistan in 2000, and if we pull out of Iraq now, they will attack America."

SPECTRE of Deflation said...

Now they want to sell the steaming pile to whom? Little late there fellas!


US Broker-Dealer Circulating List Of Subprime Bonds For Sale

DOW JONES NEWSWIRES
July 10, 2007 4:02 p.m.



By Danielle Reed

Of DOW JONES NEWSWIRES



NEW YORK (Dow Jones)--Amid continued concerns about subprime mortgages, a broker dealer is circulating offerings for subprime mortgage-backed bonds - cheap, according to a source familiar with the offerings.

In what one investor characterized Tuesday as a "fire sale," a broker dealer - which the investor said was John Devaney's United Capital Markets, a Key Biscayne, Fla., firm with assets heavily tied to subprime mortgages that recently stopped letting investors withdraw money from four hedge funds - circulated a list of subprime mortgage bonds for sale.

Dow Jones Newswires received a copy of the list - known as an offering sheet - by e-mail. A spokesman for United Capital declined to comment.

The low prices of the bonds may point to a continued broad-based cheapening of the whole subprime sector.

Offering sheets are not the same as bid lists, in that the former are a routine way in which companies offer their inventory for sale, which they often do on a regular basis. Offering sheets list prices and identify the company that is selling the bonds.

Bid lists, on the other hand, are more like auctions, and companies will - frequently anonymously - list bonds for sale without prices to see what the market will bring.

The offering was for 11 different classes of bonds totalling $82 million, including $10 million in below-investment-grade subprime mortgage-backed bonds from an Ameriquest Mortgage issuer at 58 cents on the dollar.

Other below-investment-grade bonds from separate issuers were listed as sold, with final offering prices for two such bonds listed at 45 cents and 28 cents on the dollar. There was also $32 million in AAA-rated bonds listed at 92 cents on the dollar.

SPECTRE of Deflation said...

The 6 month and 10 year are both yielding 5.02%. Let me guess again...a flight to quality? LOL! They take us for morons!

Anonymous said...

PLANET OF THE APES PEOPLE!!!!

PLANET OF THE APES!

Anonymous said...

No one on Wall St. is worried...

They have one of their own in charge of the Treasury, and their bought & paid for guy in the White House.

They will just cool their heels and wait for the federal bailout, which will be very bad news for the dollar.

slingshot said...

You HP tools misunderestimate the power of the Fed and it's other central bank buddies around the world. They will inflate away this problem. Why? Because they can.

So go ahead and wait for the crash. You'll look awfully foolish when the DOW hits 30K, and your landlord slips a note under the door that your rent is going up again by 10%, this month! Inflation is the future.

* * bubble news flash * * said...

FIRST TIME EVER IN THE MSM!!!!!!

NPR News - 6:30 PM EST 7/10/2007

A NPR reporter just said, "It's not a housing slump, it's a HOUSING CRISES!!!!

BOOM!!!!!! IMPEACH THE CHIMP!

DLK82

borkafatty said...

HiMomItsMe said...

Lets not start sucking each others @*&^'s just yet.

We have to get farther to the right on that famous reset chart. The defaults actually have to stack up-and they will.

--------

Agreed...For the lonely Subprime Borrower I have this small bit of advice...get out now!!..if you are waiting and hoping this will go away when you wake up in the morning you are lying to yourself in a big way...pack your shit while you still can and walk, call the lender and tell him or her the keys are in the mailbox.

As of this moment you can count on a 30 o 35% increase in your monthly nut.

YOU HAVE BEEN WARNED!!!

Anonymous said...

Try to sell your overpriced over leveraged house now,tick tick tick

Anonymous said...

Any ideas on where gold & silver are going as a result of the sub-prime-induced mortgage pool and CDO meltdown? I've got both physical and a PM stock fund (in my IRA).

Anonymous said...

from the powerfull oz said...
President Bush and his GOP staff members today said in a news conference, "The housing bubble was started by an Al-Qaida terrorist cell, operating from a cave in northen Afghanistan in 2000, and if we pull out of Iraq now, they will attack America."

July 10, 2007 10:20 PM

===================================================
How true!

But what scares me is all of the kung fu grip morons we have here at home.

SPECTRE of Deflation said...

slingshot said...
You HP tools misunderestimate the power of the Fed and it's other central bank buddies around the world. They will inflate away this problem. Why? Because they can.

So go ahead and wait for the crash. You'll look awfully foolish when the DOW hits 30K, and your landlord slips a note under the door that your rent is going up again by 10%, this month! Inflation is the future.

Click your heels three times Dorothy. LOL!

Anonymous said...

So go ahead and wait for the crash. You'll look awfully foolish when the DOW hits 30K, and your landlord slips a note under the door that your rent is going up again by 10%, this month! Inflation is the future.
====================================================
If the DOW hits 30,000, gold will hit $10 million!

By the way, landlords can try to raise rents, but will the public be able to pay in a hyperinflationary environment? It didn't work for the Weimar Republic.

Anonymous said...

But Suzanne said!

But Gret Swann said!

Anonymous said...

Don't forget about July 16th. That is when the Bear has to come clean and tell its investors how much their investment is now worth. My guess at least a 50% haircut. Once that happens, all hell breaks lose as everyone now has a new "mark". S&P and Moodys just trying to get into the life raft before the tsunami hits. Won't help, the cluster fuck circle jerk that was this FIRE credit bubble BS is going down in flames.

Welcome to the Kessel, hope you enjoy your stay....the Battle of Sprawlingrad has begun.

Anonymous said...

Anonymous said...

No one on Wall St. is worried...

They have one of their own in charge of the Treasury, and their bought & paid for guy in the White House.

They will just cool their heels and wait for the federal bailout, which will be very bad news for the dollar.

+++++++++++++++++++

I agree with the above. The entire thing is a fraud, built on a scam, teetering atop a lie. There will be a bailout. If there's one thing Americans want when there are problems is MORE GOVERNMENT.

Guy Daley said...

I read somewhere that the vast majority of print, television and radio media is owned by 5 or 6 corporations.

Maybe it took this long for TPTB to get there financial bets in order. So now its time to let the dogs loose, tell S&P to get there house in order.

I doubt very much that S&P coming clean after all this time when everybody but a tree stump troll knew what was coming, was by accident.

Blood in the streets? You bet ya (trolls, not today you idiots, give it time to unwind...damn stumps). Especially when the realtywhores are competing for jobs with the illegals that won't leave.

Anonymous said...

Planet of the Apes:

"Can I be Dr. Zaius?"

Anonymous said...

Freddy Krueger and Jason didn't retire...

Instead they found jobs on Wall Street dismembering mortgages and serving them up as CDOs and CLOs.

All while w looks the other way!

Anonymous said...

And China just executed a Gov official for making their exports look bad. Just think what would happen to these douche bags in China for doing this...POW!

In America, what would have happened to that Chinese guy?

A Presidential Medal of Freedom,

Awarded for defending free enterprise against treacherous socialist liberals who hate successful pharmaceutical businessmen which make our country great.

--- GWB, at the pardon/medal award ceremony.

Anonymous said...

Did you hear that? They've shut down the main reactor!


We're doomed.
-- C3FBO

Joel said...

So if the stock market is poised for a fall, where do you put your money? My 401k has such few options I don't know what to do.

Anonymous said...

matter of time....

SeattleMoose said...

You all are a bunch of chicken littles....

Didn't y'awl here that Microsoft is unveiling a polka dot Zune!!

At least THAT will keep us safe up here in Seattle!!

devestment said...

I'm watching a slow train wreck from the top of a crashing wave.

Anonymous said...

There seems to be alot of homoerotic imagery and references in these posts. Has anyone else noticed this? What's up with that?

Anonymous said...

26 charged in $200m subprime case

US officials charged 26 people with conspiracy and fraud, alleging in a criminal indictment unsealed on Tuesday that they used invented purchasers, stolen identities and inflated appraisals to fraudulently obtain subprime mortgages on more than $200m in property in and around New York City.

Jerj said...

Yeah, landlords can't raise rents too much. At some point you can just go rent out a vacant, foreclosed (or never bought) McHome in the exurbs for so much cheaper it'll cover the $4 gas cost for the commute and then some!!

One thing though - whoever is assuming 50% default rates on subslime and ALT-A is a bit off....but I think we can probably pencil in ~25%/10% before things get bad enough that the govmint intervenes. Still, catastrophic losses when you factor in the 300 ton anvil of CDO's and derivatives balanced on that porcelain pig.

SPECTRE of Deflation said...

Anonymous said...
Don't forget about July 16th. That is when the Bear has to come clean and tell its investors how much their investment is now worth. My guess at least a 50% haircut. Once that happens, all hell breaks lose as everyone now has a new "mark". S&P and Moodys just trying to get into the life raft before the tsunami hits. Won't help, the cluster fuck circle jerk that was this FIRE credit bubble BS is going down in flames.

Welcome to the Kessel, hope you enjoy your stay....the Battle of Sprawlingrad has begun.

The Hedge Funds will be blowing up like a WW II movie, and forget about Redemptions if ya ain't out already.

Shakster said...

slingshot said...
You HP tools misunderestimate the power of the Fed and it's other central bank buddies around the world. They will inflate away this problem. Why? Because they can.

So go ahead and wait for the crash. You'll look awfully foolish when the DOW hits 30K, and your landlord slips a note under the door that your rent is going up again by 10%, this month! Inflation is the future
___________________________________
Why that's great news There Jockstrap,uh slingblade,whatever.
So now what?Everyone keep moving along,nothing to see here.
Chommp Chommp ,some popcorn slingsnot.
Which dildoe factory did you graduate from?

AuAgPb said...

China today executed 2 Officials responsible for their Food/Drug Administration labelling.
If S&P, Moody's and Fitch were Chinese companies, Where their CEO would be now??


A bullet in the head is boring. I want the gory, er, glory of some Wall Street ass taking a header into the concrete from 67 floors up. And I want it in High Definition damn it!!!

I think the Dollar will take the first dive.

Mitchell said...

"think Casey Serin"

Everything about the Casey soap opera is a preview of how the big picture will unfold, I think.

kitchenstove said...

Slingshot said...

"You HP tools misunderestimate the power of the Fed and it's other central bank buddies around the world. They will inflate away this problem. Why? Because they can.

So go ahead and wait for the crash. You'll look awfully foolish when the DOW hits 30K, and your landlord slips a note under the door that your rent is going up again by 10%, this month! Inflation is the future."

Misunderestimate, huh? I guess you also believe that human being and fish can coexist peacefully. See, I love to use Bushisms too.

In response to your actual point, things would be bleak either way. Depression or hyperinflation? Tough choice, especially since they both mean ruin for scores of people and quite possibly the entire country this time.

Anonymous said...

Look out below folks housing prices are comin on down this FALL.
My landlord called the other day and asked if I would care to stay a couple of extra months. They were moving in here after selling their other home. They live in a neighborhood where houses sell in days usually. 28 days 3 open houses not a soul looking. Wonder how long I will be here??

Anyway game on folks don't you wish you had an ARM that was pegged to the chimps approval rating? I guess no money to be made at 0%.

Also if you are planning to vacation out of the country better get your tickets now. There will be alot of executives making one way trips the next few months!!!

sequoia512

Anonymous said...

I wonder if high end homes will fall if all the CEOs go to jail or commit suicide. There will be blood in the streets folks.

Anonymous said...

I recommend an ultra short fund known as DOG. This fund will short the DOW 30. It is at a low point and ready to blast off. Good luck!

Anonymous said...

Got guns?
Got ammo?
Got MREs?
Got propane?
Got water?
Got gold?

Anonymous said...

I can't believe some of the people here taking glee at other's misfortune. Grow up and get a life.

I'm bearish on housing but the people here need some medication. The stock market went down 1% today, and people are talking about the end of the world. Good grief.

burn baby burn said...

Zilow is off line I always wondered when then got really ugly if they would let us watch. Now I know the answer is no know that info was too much power.

Technical Difficulties…
By: Zillow Team, Zillow.com | July 9, 2007

As you may have seen on the site, we are experiencing some technical difficulties. We hope to be back up very shortly and apologize for any inconvenience this may cause.

UPDATE: All is well and back running. Thanks for your patience.

I have heard of people being block out of 401k's when they wanted to make changes this is bad this is really bad like game over bad.

Vera said...

Seems like the country's been on a theme the past decade - do what you want without thinking about the consequences.

Ugh.

Still got desperate denial out there though - read a comment thread on LA Curbed today where people were downright abusive - using all the old memes about So Cal real estate (they aren't growing more land et alia) and mocking the folks saying it will go down, down, down...

Anonymous said...

slingshot said...
You HP tools misunderestimate the power of the Fed and it's other central bank buddies around the world. They will inflate away this problem. Why? Because they can.

So go ahead and wait for the crash. You'll look awfully foolish when the DOW hits 30K, and your landlord slips a note under the door that your rent is going up again by 10%, this month! Inflation is the future.

July 10, 2007 10:39 PM
---------

That won't fly unless They want to pay a matching wage. Which They don't. i.e. Mexicans, China, et al

a new gold bug said...

about gold and silver:

Good forum

Gold Is Money

Anonymous said...

Let's talk turkey!

How will all of this affect interest rates? home prices? availibility of credit?

Leave the CDO and derivitives behind.

What will happen to the newly married's getting out of college getting a home?

corvinus said...

The yen just soared from 123.2 to 121.2 per dollar.

Looks like the carry trade is blowing up.

Along with Au and Ag, I'd get Swiss Francs in cash... they were also being used in the carry trade, but their home country is probably less susceptible to being nuked by Mad Kim.

K.W. - Southern Ca. said...

This will hit us all in the pocket book ... with higher taxes, banking fees, and utility costs to
name just a few.

christiangustafson said...
Hurrah! Hurrah! Let the deflationary end-times begin! Leave no debtor standing!

K.W. - Southern Ca. said...

Let us know when you come
and visit planet Earth.

~~~

Anonymous said...
None of this matters because the economy is booming! The stock market is...er, iPhones are selling like hotcakes!!! That's proof right there that home prices will keep going up forever!

Anonymous said...

Joel said...
So if the stock market is poised for a fall, where do you put your money? My 401k has such few options I don't know what to do.


LauraVella said: Very true Joel. I found that most companies only have four funds to chose from, none of them good.

Try to transfer to a money market fund. It may go down alittle, but not nearly as much as other funds that are heavy in financials or Reits...

Anonymous said...

Look out below folks housing prices are comin on down this FALL.


Lauravella said: Sept & Oct will definitely be brutal months for homeowners. It will finally dawn on them this subprime mess is affecting them...in selling to anyone - no one will be able to qualify for loans. Prices will plumet by end of the year.

Anonymous said...

What will happen to the newly married's getting out of college getting a home?

They'll work hard and save money for 5 to 10 years until they have a %20 down payment for a house.......or they'll lay around playing video games and living off their parents.....or they'll get drafted to fight in the middle east. I kinda feel sorry for the next generation.

Anonymous said...

Planet of the Apes:

"Can I be Dr. Zaius?"

July 10, 2007 11:23 PM


"Get your hands off of me you damn dirty ape!"

Anonymous said...

I am only posting Anonymously because Google has my account all messed up.

I resent the posts with the comments about people "lying" to get mortgages or using otherwise underhanded means. The fact is that many of these subprime lenders were and are crooks of the highest order. ("We'll even do the paperwork for you". Oh yes, you can count on that!) It would be nice to see them exposed for what they are instead of blaming the victims all the time.

We had the misfortune of meeting up with lenders who fabricated paperwork, created false HUD documents etc. None would have come to light if we had not later researched (after losing our home) and these facts were discovered. We settled out of court--only because it would have meant another 2 years of ridiculous appeals by them.

In my opinion a lot of these subprime lenders deserve to get kicked in the pants. BTW, one of them also committed securities fraud as well.

Not all customers lie. I resent the fact that we victims are portrayed as crooks when we were "taken to the cleaners" by these sociopathic professionals. I feel like a rape victim who was blamed for her own violation.

I also have no sympathy for the greed which artifically inflated housing prices. In my area I watched as prices doubled within a year, quickly pricing themselves out of reach of the average consumer.

I've been waiting to buy again and already seeing price drops of $20,000 or more. Keep 'em coming. I have no tears for those who wanted to get rich quick leaving others literally "out in the cold".

Anonymous said...

Well, the markets did take a hit...but it's up 2% today.

Still waiting for housing to be affordable in the DC area. My salary alone is $20K over the median FAMILY income, I have over $150K in the bank, but I can only afford a junk house.

kitchenstove said...

Anon 6:56 PM,

A lot of homeowners did lie on their loans. Some did it on their own, some with their mortgage broker's help and encouragement, and perhaps there were some like you who had it happen without knowing about it, but I don't see how one party is more to blame than another in any of those situations.

Why did so many homeowners believe they could afford these houses they were buying without somebody somewhere lying their a$$ off? The majority of FBs had to have known from the beginning that the only way they would be able to afford these over - priced houses was through some kind of miracle in the form of exotic financing (low interest rates helped too). Even if the mortgage broker said he/she would take care of it (out of sight out of mind), the FBs went along with it no questions asked and no concerns because they wanted the house no matter what and it was like banks and lenders were giving away free money. So instead of buying something within their means they went out and purchased houses at prices they knew were over their heads. That is, out of reach unless the mortgage broker (with Greenspan's and Lereah's approval) worked a little magic with the wave of his/her ARM and other toxic potions.