December 06, 2007

PIMCO nukes US housing - predicts 30% fall from peak and says Bush/Paulson plan "reeks of moral hazard"


Nice to see HP isn't the only one who think George Bush and Henry Paulson are corrupt incompetent tone-deaf idiots, and that the US housing market is in the early stages of a historic Japan-like crash.

I swear, it amazes me that we ended up with such incompetent leadership in DC. Bush and Paulson are the new Dukes of (Moral) Hazard.


But then again, the American people voted for these losers, and the leadership of a democracy reflects the people. 'Nuff said.

BOTTOM LINE - THIS BUSH/PAULSON HOUSING GAMBLER MORAL HAZARD BAILOUT MUST BE STOPPED AT ALL COSTS. AMERICAN BUSINESS PRACTICES WILL HAVE NO CREDIBILITY WORLDWIDE IF THIS GOES THROUGH, AND WE'LL BE NO WORSE THAN VENEZUELA OR ZIMBABWE

US home prices may bottom out in 2010, Pimco says

A senior manager at the world's biggest bond fund criticized a federal mortgage rescue plan as short-sighted and said U.S. home prices may not hit bottom until 2010.

U.S. home prices may fall as much as 30 percent from the market's peak and likely won't trough until 2009 to 2010, according to Mark Kiesel, a portfolio manager at Pacific Investment Management Co.

"The question is, do we do it over a period of two to three years, or do we do it in 10?" Kiesel said in an interview. "Japan chose 10, and that didn't work so well."

Kiesel, a longtime bear on the U.S. housing market, also questioned merits of a plan that President George W. Bush is expected to unveil on Thursday to help struggling American homeowners avoid foreclosure.

"This reeks of moral hazard," Kiesel said. "This is pure politics as we enter an election year, and it's not going to help the problem. It's going to prolong the bubble."

Kiesel said government interference in the free market may do more harm than good.

"A government bailout which alters contractual interest payments to bondholders will fuel moral hazard problems and raise mortgage rates for future borrowers and home buyers," he said. "This is not a path we want to head down in which government intervention bails out homeowners who failed to act responsibly."

30 comments:

Tyrone said...

Amen, PIMCO!!

Anonymous said...

Public is not buying it, Harris interactive poll

When asked which statement most closely reflects their views on plans allowing federal agencies to "increase the size of the loans they can insure and purchase, and to reduce down-payment requirements," 66% of respondents agreed that "these proposals are nothing more than a taxpayer-funded bailout of banks and lenders that provided and profited from these risky loans." Thirty-four percent believed "a taxpayer-backed refinance program is necessary to avoid an increase in foreclosures that could reduce home values across the country."

Sixty percent of respondents said taxpayers would be most negatively affected if the government were to "bail out the subprime mortgage market." Much smaller numbers felt that "homeowners who hold subprime mortgages" (5%), "lenders who issue subprime mortgages" (5%), or "Wall Street banks who profit from subprime mortgages" (5%) would be most negatively affected.

When asked who would benefit most from a bailout, 30% of respondents identified lenders who issue subprime mortgages, 18% said Wall Street banks who profit from subprime mortgages, while just 26% cited homeowners as the main beneficiaries.

Participants were then asked about proposals for taxpayer funding "to subsidize mortgage payments, or subsidize the cost of refinancing subprime loans." Forty-five percent indicated they strongly or somewhat opposed such a plan, while only 29% indicated they strongly/somewhat supported it, and 12% indicated they didn't know or were not sure.

http://www.prnewswire.com/mnr/ntu/31017/

raynla said...

!






Damn... Daisy was fine back in the day!

rayNLA

Anonymous said...

If PIMCO estimates that U.S. prices will crash 30%, then the hot markets will experience unprecedented drops.

Already in the outlying WDC/NoVA neighborhoods prices are down 45%, same in Riverside and S.B. Counties in outlying Los Angeles. Same with condos in Miami.

I cannot imagine prices dropping more than that without foreign and bank investors swoping in, buying up millions of homes, and setting up Property Management divisions to profit from this.

keith said...

Watching Bush right now on CNN. Here's my liveblog notes

* Why does this feel like 1929? Anyone see Hoover?

* Odd to see Bush admitting to the disaster - isn't he the "Ownership Society" pimp

* Bush says we shouldn't bail out speculators and lenders. ISN'T THIS EXACTLY WHAT THIS JACKASS IS RECOMMENDING? Nobody is buying this BS anymore.

* This shouldn't calm the markets. This should be panicking the market. We're in a whole new heap of sh*t now.

* His offer: Refi, FHA or freeze rate for 5 years. My offer: Let the free market take care of itself.

* Why is he calling these housing gamblers "Home Owners". Doesn't he understand they don't own their homes and that's why we're in this mess?

* Bush's message for "homeowners" - call 1-800-995-HOPE. My message for HP'ers - call this number and express your outrage. Prank 'em too if you feel like it.

Anonymous said...

PANIC IS IN THE AIR!!!!!!!!!

Anonymous said...

The bailout plans from your retarded Dimwitcrat morons:


John Edwards, the Democratic presidential candidate and former senator from North Carolina, on Wednesday proposed a seven-year freeze in subprime interest rates, as well as a new fund to help distressed borrowers.

Mrs. Clinton visited the Nasdaq stock market in New York on Wednesday and assailed Wall Street firms for the mortgage mess. She called for a 90-day moratorium on subprime foreclosures and a rate freeze that would apply to all borrowers current on payments and some who have fallen behind.

Senator Barack Obama of Illinois jumped ahead of many of his Democratic presidential rivals in September with detailed recommendations that included a government rescue fund,


Those morons are determined to take taxpayer money to pay the mortgages ie bankers for the bad loans. J6P owes $500,000 on his shack at 13% to CountryWide and the Dimwitcrats want to take your money and pay those extortionate rates to Angelo Mozilo.

Anonymous said...

Now that I think about it, let them freeze rates on loans made up until July 2005 for the next 5 years, that way, all the crappy loans will reset en masse about 2011/2012 and it will be like a neutron bomb went off in every city in the country.

westwest888 said...

S&P says that rate adjustments would lead to downgrades of bonds. Save homeowners, screw investors.

Anonymous said...

Good job, G.W.
Part II of promoting ownership society.

C'on people, give him a credit not to leave this mess for the next administration like the Iraq war.

Counterpoint said...

Given how accurate HP’ers have been in foreseeing the collapse of the bubble, I’m amazed at the surprise of many that the government is now attempting to moderate its effect. Rail all you want about moral hazard and REIC bad actors. You’ll get no disagreement here. But, it would be na├»ve in the extreme to think that politicians would simply let the market self correct, without policy action. Be happy that this plan is as modest as it is. At least, no taxpayer funds are involved (apparently). Anyway, this plan’s actually going to speed up the decline in housing prices, as credit dries up and mortgage rates increase. This will more than offset any stabilizing effect of any modest slowing in the foreclosure rate.

k.w. - southern ca. said...

Bernanke has his marching orders.

However, this bail-out will only make matters far worse.

Regardless of any botched bail-out plan that may be put into place,
housing prices will fall far more than they have now - it just may take awhile longer to finally reach the bottom, but it will happen.

The banks made sure to free themselves of the huge loses in residential real-estate, and the investors who backed these housing loans (across the entire sector - not just subprime) will be left holding the bag, and you can bet that these wealthy people will not take such a bail-out without a fight.

Also, let's not forget that 401K's and pension funds will also be impacted negatively by this bail-out.


The basic problem still remains:

Most people's salaries do not even come close to supporting the house loans they took out, and now with far fewer buyers and credit drying up, people will be stuck in these houses for years to come - provided they never lose their job or get sick within the next 15-30 years.

Anonymous said...

Hey westwest888:

without investors there would be no homeowners. what a moronic statement.

Pay cash for a house without credit availability and see what its worth. 20-25% of what theyre worth NOW. Credit availability is made possible by investors that provide financing. Screw them and all liquidity in the US real estate market will dry up like a SE US lake.

keith said...

Bush got the # wrong - it's 888 995 HOPE

Call but you just get put on hold, not worth the effort

I was going to try to see if they could help me get the $100 I lost in Vegas back

Anonymous said...

MMMM Daisy Duke was tasty

Dino said...

* Bush's message for "homeowners" - call 1-800-995-HOPE. My message for HP'ers - call this number and express your outrage. Prank 'em too if you feel like it.

---

Do it from a payphone. You nenver know who is recording these calls. Remember who you're dealing with.

Anonymous said...

Participants were then asked about proposals for taxpayer funding "to subsidize mortgage payments, or subsidize the cost of refinancing subprime loans." Forty-five percent indicated they strongly or somewhat opposed such a plan, while only 29% indicated they strongly/somewhat supported it,

The 29% who strongly support this fund are Hitlary/Obama/Edwards supporters. Those Three Stooges have all proposed a FB bailout fund using taxpayer money taht will end up going straight to Wall Street.

Anonymous said...

Here's the correct # to call:

1-888-995-DOPE

porn* said...

I called the hope hotline and I got a sex talk line.Anyone have the real number so I can get the 100k I lost back on my vegas homes?I am homeless liveing under a bridge and surfing the net from starbucks.

brokersleaveyoubroke said...

Moodys also said they expect house prices to drop 30 percent in the next two years.

Eric said...

30%? Maybe in the areas that didn't skyrocket in value overnight. I can't see anything less than 50% in places like Vegas and AZ.

Bigdaddy said...

Where is the bailout for all of the people that lost $$$ in the market crash of 2000? How about a bailout for the ENRON, MCI, and Adelphia shareholders?

Mortgage Servicers are IDIOTS said...

The bond holders are going to have their contracts altered either way. At least with the "bail out" they will be altered and their may be cash flow at the end. The current "alteration" is payments stop, and forclosure lawyers get rich. The investors in this garbage paper should be thanking Bush for this plan. It has saved them from a culture of stupid.

brokersleaveyoubroke said...

Eric said
30%? Maybe in the areas that didn't skyrocket in value overnight. I can't see anything less than 50% in places like Vegas and AZ.

Yes, correct, they said 30% on average but much more in bubble cities. That average includes places like rural NY and PA where prices have been just about flat for the last five years.

Peter T said...

Japan - that is operative word for the next months (and Fannie and Freddie if they fail). Do we want to repeat the mistakes that Japan made and live in a 14-year on-an-off recession? Or do we want the situation to be cleared and done over with in a few years? The Saveings&Loans crash was bad, but it was dealt with reasonably fast.

Peter T said...

> Forty-five percent indicated they strongly or somewhat opposed such a (bail-out) plan, while only 29% indicated they strongly/somewhat supported it...

Only 45 to 29? That is bad indeed. Maybe the 29% should be asked by how much more taxes they would like to pay for bailing out those who willingly went in this mess?

Anonymous said...

To Keith and all of the other HP'ers:

I TOLD YOU SO!!!! I posted several times here on this blog that I bought a 750K townhouse in Chicago with 3% down and with a hybrid ARM loan.

Guess what? I will make out like a bandit and you won't! You fools keep predicting the world financial system and the sky is falling syndrome. Keep saying the same thing losers. You lost, I won!

Anonymous said...

PIMCO isn't the good guy in this. They have their agenda. They want to push Helicopter Ben to lower the interest rate as fast as possible. Why? Because that makes the value of their bond holdings rise.

Anonymous said...

I TOLD YOU SO!!!! I posted several times here on this blog that I bought a 750K townhouse in Chicago with 3% down and with a hybrid ARM loan.

I see pain in your future. Remember us when you are totally broke, with your credit shot, and unemployed. You're toast. You won't qualify for the bailout. bwahahaha

Anonymous said...

Anonymous said...

To Keith and all of the other HP'ers:

I TOLD YOU SO!!!! I posted several times here on this blog that I bought a 750K townhouse in Chicago with 3% down and with a hybrid ARM loan.

Guess what? I will make out like a bandit and you won't! You fools keep predicting the world financial system and the sky is falling syndrome. Keep saying the same thing losers. You lost, I won!

December 07, 2007 12:54 AM

----

How did you win exaclty? Your TH will be worth $400K in 5 years yet you will still owe $750K.

And even at 3% your mortgage is still more than what that same TH could be rented for.

If that's winning I want to lose.