The thinking behind the Late Great Housing Bubble. What was wrong with this picture?

August 09, 2007

The thinking behind the Late Great Housing Bubble. What was wrong with this picture?

Hey everyone, if we just pay more and more and more and more for our houses, we'll all get rich!!!

44 comments:

Anonymous said...: sounds like the mumblings of a disillusioned troll; August 09, 2007 1:11 PM
Anonymous said...: Sound like a plan to me ....; August 09, 2007 1:32 PM
Anonymous said...: ALL TROLLS BRACE FOR IMPACT!!!!!; August 09, 2007 1:47 PM
Roccman said...: Quote:
Aug. 9 (Bloomberg) -- The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.

The so-called London interbank offered rate in dollars is the highest since the start of 2001.

The benchmark borrowing rate is rising on concern banks face growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is ``closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.''

``Liquidity in the market has completely dried up as investors aren't recycling their money back because of subprime concerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.''

Bank of America Corp. and UBS AG said their overnight borrowing costs rose 65 basis points to 6.00 percentage points. Royal Bank of Canada said its costs rose to 6.00 percentage points from 5.37 percentage points. Barclays also said it needs to pay 6.00 percentage points to borrow overnight in dollars, up from 5.38 percentage points yesterday.

For Bank of America, the increase in overnight borrowing costs was the biggest since the Federal Open Markets Committee raised interest rates at the end of June 2004.

BNP Paribas SA, France's biggest bank, today halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings on concern about subprime mortgage losses.

The ECB in Frankfurt said in its statement today that ``there are tensions in the euro money market notwithstanding the normal supply of aggregate euro liquidity.''

Three-month dollar Libor increased to 5.5 percent from 5.38 percent

The only time our FED ever did that was the day after 9/11!!!

Futures down hard this morning on the above news.

CNBC again had a trader calling for an immediate rate cut.; August 09, 2007 2:45 PM
Roccman said...: ECB pumping 130 billion into the system to avoid liquidity crisis.

Bloomberg says that the ECB has NEVER, EVER done an injection as big as this. NOT EVER.; August 09, 2007 2:57 PM
Anonymous said...: From a Bloomberg article today. One word...DAMN!

Bank of America Corp. and UBS AG said their overnight borrowing costs rose 65 basis points to 6.00 percentage points. Royal Bank of Canada said its costs rose to 6.00 percentage points from 5.37 percentage points. Barclays also said it needs to pay 6.00 percentage points to borrow overnight in dollars, up from 5.38 percentage points yesterday.; August 09, 2007 3:02 PM
Anonymous said...: If you are invested in a Hedgie, you might want to secure your investment before the door closes. It's plain to see that creditors and investors are screwed because they will all stop redemptions, and take a holiday in the Caymans while they BK the funds:

“Blocking investors from withdrawals ``was a very good decision because it avoids huge redemptions,'' said Jean-Edouard Reymond, who helps manage $63 billion at Union Bancaire Gestion Institutionelle SA in Paris. ``If they had had redemptions they would have been obliged to sell the securities they might have in their portfolio at very cheap market prices.''; August 09, 2007 3:14 PM
Anonymous said...: These markets are toast:

ECB Offers Unlimited Cash as Bank Lending Costs Soar (Update4)

By Gavin Finch and Steve Rothwell

(Bloomberg) -- The European Central Bank, in an unprecedented response to a sudden demand for cash from banks roiled by the subprime mortgage collapse in the U.S., loaned 94.8 billion euros ($130.2 billion) to assuage a credit crunch.

The overnight rates banks charge each other to lend in dollars jumped to the highest in six years. The London interbank offered rate rose to 5.86 percent today from 5.35 percent and in euros gained to 4.31 percent from 4.11 percent.

The ECB said it would provide unlimited cash as the fastest increase in overnight Libor since June 2004 signaled banks are reducing the supply of money just when investors are retreating because of losses from the U.S. mortgage slump. BNP Paribas SA halted withdrawals from three investment funds today because the French bank couldn't value its holdings. Stocks in the U.S. and Europe fell and Treasury bonds rose, a turnaround from the past three days when investors concluded that credit market risks were abating.

``Liquidity in the market has completely dried up as investors aren't recycling their money back because of subprime concerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.''

The ECB said today it provided the largest amount ever in a single so-called ``fine-tuning'' operation, exceeding the 69.3 billion euros provided on Sept. 12, 2001, the day after the terror attacks on New York.

Fed Reserves

``Banks reacted to the ECB's `sale' offer in a similar way one would react to a sale in a department store'' and ``got all the money they could,'' said Ulrich Karrasch, a money market trader at HVB Group in Munich.

The U.S. Federal Reserve added $12 billion in temporary reserves to the banking system today when it arranged 14-day repurchase agreements, or repos, about the amount analysts predicted. Just two days ago, the Fed said ``tighter'' credit conditions aren't a threat to economic growth.

Fed spokesman David Skidmore declined to comment on the increases in overnight money-market rates.

The ECB's announcement added to investor nervousness, pushing Europe's Dow Jones Stoxx 600 Index down 2.1 percent and the Standard & Poor's 500 Index of U.S. shares down 1.6 percent to 1,473.74. U.S. Treasury notes gained for the first time in four days as investors sought the safest assets, cutting yields on two-year notes by 13 basis points, or 0.13 percentage point, to 4.52 percent.

Corporate Bond Risk

The euro fell 0.9 percent to $1.3672, its biggest decline in more than a year. It dropped 2 percent versus the yen in the largest slump in two years.

``The one down side to the ECB doing something is that it may suggest there are more issues out there,'' said Barry Moran a euro-money market trader at the Bank of Ireland in Dublin. ``People are nervous.''

Credit-default swaps on the CDX North American Investment- Grade Index rose 10 basis points to 70 basis points, according to Phoenix Partners Group in New York, reflecting an increase in the perceived risk of owning corporate bonds.

Three-month dollar Libor rose to 5.5 percent from 5.38 percent.

`Extraordinarily Serious'

Concerns increased as BNP Paribas, France's biggest bank, stopped investors withdrawing from funds with assets totaling 2 billion euros because it couldn't ``fairly'' value their holdings after the sell-off in credit markets.

``For some of the securities there are just no prices,'' Alain Papiasse, head of BNP Paribas's asset management and services division, said in an interview. ``As there are no prices, we can't calculate the value of the funds.''

Dutch investment bank NIBC Holding NV also said it had lost at least 137 million euros on subprime investments.

For Bank of America Corp., the No. 2 U.S. bank by assets, today's increase in overnight borrowing costs was the biggest since the Federal Open Markets Committee raised interest rates at the end of June 2004. For UBS AG in Zurich, it was the largest jump since Europe's No. 1 bank by assets said in August 2004 that it may have overestimated its value-at-risk by more than 20 percent.

Both banks said their overnight borrowing costs rose 65 basis points to 6 percent. Royal Bank of Canada and Barclays Plc also said they're paying 6 percent.

``This is an old-fashioned credit crunch,'' Chris Low, the chief economist at FTN Financial in New York, said in a report today. ``This is not a small thing. A credit crunch, when the short-term credit markets seize up, is extraordinarily serious, almost always the precursor of a significant recession.''; August 09, 2007 3:17 PM
Anonymous said...: They are trotting out "all hat and no cattle" at 10:30 this morning. That should take care of any problems. Wasn't he out pimping yesterday?; August 09, 2007 3:23 PM
Anonymous said...: The perpertual celloman of USSA Titanic has jumped overboard..."and you can stick that f**king Paranoid up to your collective *sses!"; August 09, 2007 3:40 PM
Anonymous said...: This from an SI thread. Damn man, I really hate this for those rotten bastards who are filthy rich. END SARCASM!

Looks like the Cayman Island trick might not work.

Judge Grants Temp Restraining Order For Bear Stearns Funds

Last update: 8/9/2007 11:01:12 AM
(MORE TO FOLLOW) Dow Jones Newswires
August 09, 2007 11:01 ET (15:01 GMT); August 09, 2007 4:05 PM
Anonymous said...: So simple, but so true. Anyone who doubts there is a gigantic housing bubble needs re-read that quote and then contemplate about what has gone on during the last 10 years in the housing market. What a joke, used homes quadrupling in value in crappy neighborhoods. Its amazing that people still refuse to recognize the problem. I just laugh now at how ridiculous this thing has become. There are homes for sale in Orange County, CA where I live that trust me you wouldn't want to live in that literally would take two executive level paying jobs along with substantial down payment to afford. I am not talking about blue collar neighborhoods, I am talking about neighborhoods that have graffiti covered walls, the worst schools in the state, and criminals walking around with raider jerseys and tattoos on their necks.; August 09, 2007 4:15 PM
Anonymous said...: "It doesn't matter what it costs, I can get you a payment of $2800 with this great 1% loan. You're going to make a killing, real estate always goes up."; August 09, 2007 4:38 PM
Anonymous said...: "Glory Days are over for US equities and the Economy" - Ian Shepherdson at the Financial Times. . .

Just read one of the best overviews of the US debt problems - "unlike corporations which can cut employees and production in a short period of time during a recession. . .it is not possible for everyone (consumers) to downsize (housing) at the same time. . .so the correction will take much longer than a corporate recession.". . .FIVE years he predicts. . .great reading - may only be "dead tree" edition, but perhaps at ft.com. . .; August 09, 2007 4:45 PM
Anonymous said...: Don't look now, but the Russians are back to a Cold War footing. It's all good, so don't worry about a thing:

http://news.bbc.co.uk/2/hi/europe/6938856.stm

Russians resume Cold War air runs

Russian bombers have flown to the US island of Guam in the Pacific in a surprise manoeuvre reminiscent of the Cold War era.

Two Tu-95 turboprops flew this week to Guam, home to a big US military base, Russian Maj Gen Pavel Androsov said.

They "exchanged smiles" with US pilots who scrambled to track them, he added.

The sorties, believed to be the first since the Cold War ended, come as Russia stresses a more assertive foreign policy, correspondents say.

The flight is part of a pattern of more expansive Russian military operations in recent weeks, says BBC diplomatic correspondent.; August 09, 2007 4:50 PM
Anonymous said...: El Presidente' Jorge' is more full of shit than a Christmas Turkey. This news comes when at the same time it's being reported that drug cartels are teaming up with terrorists. Perfect.

Border Folly [Mark Krikorian]

The National Guard is being pulled off the border a year early, reports Jerry Seper at the Washington Times. Great — the border's secure! Oh, maybe not — the DEA reports that Islamic terrorist groups are working with the Mexican drug cartels. So I guess the National Guard deployment really was just a political stunt after all.; August 09, 2007 5:01 PM
Unknown said...: Its worse than that.

Some people have been selling homes back and forth amongst thier 'group' of conspirators. Its REALLY common and normally not found out.

The crisp and cole debacle is a tiny little window into the realy world. They only got caught due to being really high profile (huge mistake) and defaulting on all the loans at the same time (another mistake, leveraged too far).

The people with only a few forclosures spread between each cell of thier financial terrorist group will never be caught or noticed. Its just 'a buncha forclosures' instead of 'system fraud and abuse'.; August 09, 2007 6:32 PM
RiperDurian said...: What are you talking about?

IT ONLY GOES UP!; August 09, 2007 6:32 PM
RiperDurian said...: But 2006 was:

THE THIRD BEST YEAR EVER!; August 09, 2007 6:33 PM
RiperDurian said...: C'mon gotta buy now or be priced out until the rapture...

and Beyond!; August 09, 2007 6:36 PM
Anonymous said...: I've got some $40,000 tulip bulbs that will help with property values.; August 09, 2007 6:54 PM
Bill said...: Nice little *.PDF for all the dopes who think this is contained...good reading..oh and from the looks of things the china men do have some of our risk yes,,,but so does the Germans and French:

http://www.dealbreaker.com/images/
pdf/HaymanJuly07.pdf; August 09, 2007 7:13 PM
wine country dude said...: Everyone knew, or should have known, that this was a game of musical chairs. While the music was playing, though, it was pretty sweet, as our friend in West Sac would say.; August 09, 2007 7:17 PM
Anonymous said...: "A man is rich in proportion tothe number of things
which he can afford to let alone."

from the chapter "Where I Lived and What I Lived For" in Walden; August 09, 2007 7:24 PM
Anonymous said...: It's called a pyramid scheme. It's illegal but is being practiced in the open by everyone. Arrests and prosecutions need to be made.; August 09, 2007 7:36 PM
Anonymous said...: Most ARMs are tied to libor! This is really bad news for FBs!.

Heck, look at what's going on in the European money market this morning -- the overnight London Interbank Offered Rate, or LIBOR, is surging. It just soared to 5.86% from 5.35, according to the British Bankers Association, putting it at the highest level since the start of 2001. 3-month LIBOR rose to 5.5% from 5.38%. 6-month LIBOR climbed to 5.39% from 5.34%. The European Central Bank has responded by lending the market the euro equivalent of $130 billion.; August 09, 2007 7:51 PM
JWM in SD said...: Well yes, exactly Keith. That one sentence pretty much sums up the whole problem withe permabull arguments now doesn't it.

Remember this one: Trees dont grow to the sky....; August 09, 2007 8:32 PM
Anonymous said...: Where's the "DOPE"? Hey dope, where are yah? DOW is down 300 points today, DOPE. How is your ytd return now, DOPE? Everything still look rosy to you DOPE? Credit crunch now manifesting in Europe, DOPE. Global credit crunch on its way, DOPE!

Still think this is a minor correction, DOPE? Oh, and a poll on CNBC says that people who favor no bailout and NO lowering of interest rates to save the carcasses of the stupid and the corrupt outnumber those who think the opposite by a factor of 2 to 1.

DOPE!; August 09, 2007 8:35 PM
Unknown said...: Just another long, hard day of shuffling the eck chairs on the Titanic......; August 09, 2007 9:37 PM
brokersleaveyoubroke said...: Oops, DOW stumbled a bit today. Let's see, a few trillion of CDO's sitting in funds around the world and nobody will touch them with a ten foot pole. We should start getting a daily barrage of news of funds that freeze assets. I wish one of the trolls would explain how we're going to get out of this mess.
P.S. No government in the world has that kind of cash for a bail out.; August 09, 2007 9:58 PM
az_mtb said...: Hey Keith, Fannie Mae just announced that they are delaying their quarterly report/ SEC filing

http://tinyurl.com/3xp325; August 09, 2007 10:42 PM
Anonymous said...: This chart shows the potential for damage for all mortgages.

http://www.oftwominds.com/blogaug07/sublime-subprime.html?ref=patrick.net; August 09, 2007 10:45 PM
Anonymous said...: Cramer called you out today. He said, "And to the guy who tried to take me apart, I rent so take that!"

LOL

It was on Mad Money in the first 10 minutes.; August 09, 2007 11:09 PM
Anonymous said...: The ECB said today it provided the largest amount ever in a single so-called "fine-tuning" operation, exceeding the 69.3 billion euros given on Sept. 12, 2001, the day after the terror attacks on New York.
___________________________________
This was 93billion Euros.
The last time things were this bad was ......NEVER.
911 was a cover anyway.
12billion by the FED today.
---------------------------------
Millionaires will be synonimous with Stupid if this keeps up.
How did that many millionaires,who are sooooo smart end up in this situation?
As dumb as Taxpayers are,the Millionaires may come out looking like nothing happened.The Taxpayers will be the dorks again.; August 09, 2007 11:16 PM
Anonymous said...: I bet alot of the foreclosures are realtroll wannabe flips. They took it in both ends as they should for their duplicity.; August 10, 2007 12:34 AM
Anonymous said...: It took advantage of "uninformed consumers."

You can afford this $350,000 house (thats worth only $274,500) for only $950 a month!* until we raise the payments on you - that is.; August 10, 2007 12:34 AM
Anonymous said...: Sounds like musical chairs, except the last one holding the house is screwed...get out while the getting is good. We just got an offer on our house and close on 9/7...couldn't be here soon enough. Going from a bitter owner to a rich renter. The investors I am renting the new house from have out of pocket expenses of over $3400 on the house we are renting for $2600. Sounds like a deal to me...now please I need some advice where do we put the money we are getting for our houses? Seems like no place is safe now.

Small Hat; August 10, 2007 1:26 AM
Anonymous said...: Still think this is a minor correction, DOPE? Oh, and a poll on CNBC says that people who favor no bailout and NO lowering of interest rates to save the carcasses of the stupid and the corrupt outnumber those who think the opposite by a factor of 2 to 1.

DOPE!

August 09, 2007 8:35 PM

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

A poll on CNBC...real scientific. A Gallup poll released last week shows 55% want a federal bailout.; August 10, 2007 1:32 AM
Anonymous said...: Where is DOPES? He's been awfully calm the last couple of days.; August 10, 2007 1:49 AM
Anonymous said...: The very words the DOPES guy lives by.; August 10, 2007 2:12 AM
Anonymous said...: "Just one more dollar into that slot machine and I'll be rich"!; August 10, 2007 2:29 AM
Anonymous said...: “Blocking investors from withdrawals ``was a very good decision because it avoids huge redemptions,'' said Jean-Edouard Reymond, who helps manage $63 billion at Union Bancaire Gestion Institutionelle SA in Paris. ``If they had had redemptions they would have been obliged to sell the securities they might have in their portfolio at very cheap market prices.''

This person is full of crap. They would sell their crap, but they can't catch a bid. What to do? Let's halt redemptions and pretend there's no problem. Hey Mr. Reymond, your portfolio is worthless. NO ONE WANTS YOUR CRAP! It's AAA TOXIC CRAP!; August 10, 2007 2:46 AM
Anonymous said...: Hedge fund investors deserve a good reaming for their stupidity and greed.; August 10, 2007 5:39 AM
Anonymous said...: but we all were multimillionaires there for a while...just that we could not cash it in and had to pay property taxes on that yearly aSSESSMENT and in a few places that ammounts to double digit numbers of percents ...suckers....; August 10, 2007 10:34 PM