August 04, 2007

It was all an illusion. And the lenders and homebuilders have to do whatever they can do to keep the illusion going. Otherwise they stop going.

Cramer had an interesting point on his freak-out on Friday. He recommended that companies like Bear Stearns, who are obviously imploding, should just remain quiet

"Just keep your mouth shut during this period - don't say a thing" he said.

Some companies, like IndyMac and Countrywide, are trying the opposite tact - talking aggressively and confidently on how they're well-positioned for the downfall, how they'll gain share as all their competition goes belly-up, how they have great liquidity and funding and business models, blah blah blah.

In the case of Countrywide, that talk is actually corrupt, as their orange CEO desperately dumps $118 Million in shares as fast as he could while the company at his direction was buying back shares to try to hold the price up for him (unsuccessfully).

So why the lies? Why the aggressive spin?

Because they're scared. They're scared because they know that this whole Ponzi Scheme is now dominoing. And if they show any sign of trouble or weakness publicly, they can get American Home Mortgaged out of business right quick.

Then you have Loan Center of California, which is hilariously and stupidly trying to sue anyone who talk bad about them, or expose the truth.

In the end, none of their spin and blather will matter. Funding lines will get yanked. Toxic loans will get recalled. Market demand for buying junk loans is at zero. Business models will have gone kaput. And hundreds of thousands of REIC will be on the streets, box and plant in hand, unable to make their own mortgage payments.

It's over folks. It's all over. Don't listen to REIC lies. Don't listen to realtors on commission. Don't listen to the Investment Banks. Don't listen to homebuilders who call bottom. And especially don't listen to the liars at the NAR.

It's over.

And all of us here saw it coming. Almost all of us.


Anonymous said...

Karl Rove , that great american patriot, and the GOP will save us

Anonymous said...

On Monday Wachovia will increase 30 yr rate to 8%. This will only add fuel to the fire.

Anonymous said...

The orange dude was very quiet while he was selling his shares at first, then got more vocal & positive to help keep the illusion going, and then after he passed the 100 million mark in redemptions and he could no longer keep a straight face he starting going negative about the market with the silver lining as how this would mean CFC would gain market share, but I think we all now know thats all bull.

I picked up on Cramer's comment too. He's saying "while everyone is hyper-sensitive to anything negative SHUT UP" If you're going under you're going under no need to hasten the process, but if you have a snowballs chance in hell of surviving it do not tempt the gods to see if you can weather the storm by sailing into the choppiest waters, just SHUT-UP and wait on the sidelines and stay out of the way of the forces that are sucking everyone else down. If you do not draw too much attention to yourself and your on the cusp you might just make it.

Hence, not only should Bear be dumping the man in charge of the Bond Department, but the CFO needs to go too after Friday's comments that just but a Big A$$ bulls eye on Bear's back.

crazy jim cramer said...

Another four hedge funds blowing up here due to subprime:

NEW YORK (Reuters) -- Second Curve Capital LLC, the fund group managed by high-profile financial stock investor Thomas Brown, has been hammered by ongoing problems in the subprime lending sector, where he has been outspokenly bullish in the past.

Four funds in the Second Curve portfolio are down between 38 percent to 42 percent in the year through July, according to investors who have seen the numbers.

Repeated calls and e-mails to Brown were not returned. It is unclear how much money the firm has under management.

9/11 was the greatest illusion ever said...

I just closed my doors today and went out of business. I knew its a bad time to start a new home technology business. But at least I tried. Bad times getting worse. At least I rent though. I may move to Canada or Europe next spring. Not sure yet. F*ck this mess.

Saksther thed said...

All the worlds indeed a stage with a Limelight,then BASTILLE DAY!!OFFF WITH THEIR HEADS.

Anonymous said...

I'm thinking CNBC will be letting Cramer go soon. The guy's a ticking timebomb.

SPECTRE of Deflation said...

ABX-HE-BBB- 07-1 7 1

389 0A08AOAC1 35.14 97.47 35.14

Ain't no way you can put lipstick on this pig. There's nothing like a 65% haircut to lighten the ole' portfolio.

Shakster said...

Was noticing the USdollar chart.Love the way it flipped over the handlebars.Hhahhahahhahahhaa.Now I'm no chartist ,but when something goes faceplant on the pavement,well,that can't be good.Unless you own gold.Double HAHA.

Melody said...

Yep, the fat lady sang (very tearfully) I might add.

There was a time no one believed us.

Sh*t happens.

Happily renting in the OC.

Anonymous said...

Orangzillo needs to go to jail.

See what happened to the CEO of QWEST, Nacchio.

gwk said...

Thank you Keith for all the great information over the years, and as one who retired early I love to sit back and watch Squawk, Closing Bell, and especially Mr. Nut Job J. Cramer, and as Bob Hope always said Thanks For The Memories.

Anonymous said...

You should take special pride in being so prescient. You were also doggedly determined to see things the way they really were (are) and not the way the vested interests want you to see them (in their best interest).

Anonymous said...

for the novice

Anonymous said...

Can anyone come up with an estimate of the amount of wealth destruction there will be when prices hit bottom? Add to that the amount of wealth destruction in the stock market. I know the amount of wealth destruction in the stock market so far is one trillion dollars! How much wealth destruction will there be in the CDO junk bond market. Add it up please.

wawawa said...

Yes Keith, we saw it comming.

Here, I want I want to thank Calculated Risk, Mish, Ben’s, Housing Panic and other good blogs.

It was 18 month ago that I started reading these blogs and learned a lot and opened my eyes to underlying realities in the mortgage business and home building industry.

So, 12 month ago I started short selling HB and mortgage companies and my return has been very generous. My point is that, it pays off to do your own homework and do not listen to MSM garbage.

Good Luck to everyone.

Tom said...

Anyone here have short positions on Beazer Homes? (BZH) I am thinking of adding that to my list of PUTs.

bozonian said...

I don't think Mozilo is dishonest. Remember the stuff he says on television might be actionable if it's lies. He's selling shares in small increments and has been for almost a year. While it's not a positive sign, it isn't necessarily a negative sign. Insiders sell stock for many reasons, not always because they are trying to cash out a losing position. Remember, he was selling even as CFC stock was rising.

All the mortgage companies are getting their just dues. Of all people, the guys in charge here knew, or should have know their industry the best, unless they are just rah rah confidence men that borrow their way to wealth and leave someone else holding the bag. That isn't illegal. It's the American way.

These people made their livings taking commissions on deals between two stupid parties, the home owners and the mortgage owners. I don't see any problem with that as long as it was done with full disclosure. I think it's everyone's duty to take advantage of stupid people, especially stupid rich people who invested in these loans and stupid consumers who thought they were going to have a free ride because their house values would always go up.

No bail out. Let nature take its course. The wealth we have now was borrowed from the future and now it's time to pay it back.

As long as the rich and the stupid are the ones getting hurt, I'm not displeased.

zoiks said...

Stock market my arse. It's starting to look more like a Shock market.

And who is this arse-hole Cramer guy anyway, and why is he crying like a little girl on my TeeVee? "His people" are losing their jobs? What kind of business is he in? Textiles?

And Armageddon, what is that anyway? Is that when the buyers and sellers are in a standoff, or when the buyers are sitting on the sidelines?