February 11, 2008

HousingPANIC Stupid Question of the Day

Just checking - is anyone out there still arguing with us that there was an epic housing bubble in America and around the world, a classic Ponzi Scheme and financial mania doomed to collapse?

Anyone? Anyone?

Because ya know, it wasn't too long ago that almost everyone (especially used home salesmen) thought we were just a bunch of quacks.


Anonymous said...

When do we do the victory dance?

Anonymous said...

At phillyblog.com (a forum about Philadelphia) there are a whole slew of realtors (posing as non-realtors) who are disputing that the housing market is in decline. According to them, "it's a great time to buy!" !yay!


Anonymous said...

I don't think anyone is arguing that there was a bubble. The argument is now that we are at the bottom and NOW IS A GREAT TIME TO BUY.

I know this one dude I work with who is buying REITs. He's convinced the housing crash is over.

Whenever the subject comes up I just politely tell him I disagree and change the subject. Nice guy and really smart. Dumb as rocks when it comes to financial matters though.

Looks like I'll have to rent from an FB for life said...

uh...there's people that think that there will be a "correction" in 08 but in their minds they'll just stick to their prices as if the peak was in 07 and think that they will be able to sell in 09 at their stated income-neg-am-ARM-inflated asking price.

Sheeple were dumb enough to buy into the bubble.

Do you really think that they are smart enough to realize that they need to mark to market in order to get their houses sold?

I don't.

Tracedog said...

Unfortunately I dont think there is anything to really dance about. This debacle is going to hurt a lot of undeserving and unsuspecting people.

Marky Mark said...

Yes - nearly 90% of home sellers still asking for bubble prices...

Marky Mark

JaneZinfandel said...

Anonymous said...
When do we do the victory dance?

Not just yet. Original link came from patrick.net. Best rant ever on the subject of Bernanke and the banks and what is coming to a theater near you.


Anonymous said...

Prices still rising in central Oklahoma and they are still building as fast as they can. It is different here, and it is a great time to buy, the Realtor® said so in the newspaper I read last week. Rates are low, the selection is high, buy, buy, buy! This will be a long war.

Boom2Bust.com said...

Keith, I'm not coming across anyone arguing a housing bubble never took place. What I am encountering are articles (3 last week) by the mainstream financial press asking if now is the right time to buy a home.

Peter T said...

I don't see much anymore about house prices, except the releases of the statistics of NAR and Case/Shiller, combined with a sigh that this slump may pass. The general economic malaise has taken over the airwaves, and the bust of the bubble is much less talked about than the bubble itself. Could this be a reason that we always will have another bubble, that they are so much more attractive to talk and think about than busts?

Sitarow said...

No there is no Victory Dance since we all suffer one way or another.

Remember taht people warned about the pending condition of housing in order to prevent prevent what is happending right now.

Remember the term “$^!@ rolls downhill”.

batman said...

It aint a victory dance - we all lose. At least now we are past the denial phase and can start doing something about it. Unfortunately it mostly means living with a HELL of a lot less than we've grown accustomed to.

Marky Mark said...

Florida Taking Its Toll (Brothers) On Daughter's Condo
Posted By:Diana Olick
Topics:Interest Rates | Housing | Real Estate
Sectors:Construction and Materials
Companies:Toll Brothers Inc.

You just can’t make this stuff up. Apparently even a big builder’s daughter can’t seem to keep faith in the Florida housing market. According to an SEC filing, Wendy Topkis, daughter of Toll Brothers co-founder and Vice-Chairman Bruce Toll, is walking away from a Florida condo, just like everyone else. A Toll Bros. condo!! The Palm Beach Post says it best: Et Tu Wendy?

According to the home builder’s proxy statement:

Prior to fiscal 2007, the Company entered into an agreement of sale to build and sell a condominium to Wendy Topkis, Bruce E. Toll’s daughter, and her husband for a purchase price of $2,468,075. In January 2008, the buyers informed the Company that they did not intend to make settlement on the condominium. The Company intends to pursue its rights under the agreement of sale.

Does that mean they’ll sue darling daughter? The company’s general counsel says they are pursuing normal procedures.

Daddy is quoted as saying she just changed her mind because she had another child and the place would be too small, but I’m guessing the 13 percent drop in Florida prices was screaming at her a little louder than the baby. So Wendy just adds to the company’s 61 percent cancellation rate in the Sunshine State.

Now, if Wendy was required to put down the same 7 percent deposit on the new home as everybody else, then she could be out $172,765. Of course, daddy made about seven million dollars last year, so maybe he could help out, or perhaps he wants her to learn about fiscal responsibility the hard way. None of my business of course; just family business…or lack thereof.


makelove2mesuzzane said...

norm coleman, my senator-- through his staff, have told me that it was a "subprime problem." they still don't, in public, believe that there was fraud or a problem with income to price ratios.

ultimately, if the government allows bankruptcy judges to reprice homes, the government will actually be manipulating the market to force some people to pay higher prices while others pay lower prices.

mickeyc21 said...

Yep - people are still arguing.
Direct quote from another blog:
"I can see ahead a second leg of the rally that will be steeper and longer than the first. I have yet to see a convincing bear case for housing. Take my word for it, I would really much rather be in the HousingPanic camp, the trouble is, I can't see there a single well-argued position that I could defend."

E34 in Nova said...

Apparently my realtwhore still thinks "house prices are going up but don't quote me on it"
I posted my story over this past weekend under the open thread section if anyone is interested to read it.

Anonymous said...

I am from Vancouver and am amazed that our local housing market continues to go up. I know that our market is in a bubble but the local press and national media claim it is different here. The press quotes the local real estate boards and CMHC (Central Mortgage and Housing Corporation who guarantee Canadian bank loans) that we are immune to the sub-prime mortgage mess. They claim that our banks are more responsible and Canadian households are more responsible and have not taken on as much debt and the Americans.

We are told that the Olympics are going to keep out housing market growing until at least 2010 and then level off at worst.

There use to be a very good housing blog VHB (Vancouver Housing Blog) that covered the Vancouver bubble and had very good data to support why Vancouver was in a bubble but it suddenly shut down in 2006. We now have no coverage at all in Canada to cover what is happening here. So as a result it is hard to find anyone locally that believes that we are in a bubble.

Anonymous said...

I'm sure you can find a few hundred realtors who will look you in the face and tell you housing is not overpriced and it's a great time to buy.

Anonymous said...

Grandma pkk here--Anybody remember the scene in "Independence Day" where Viveca Fox gestures at the looming
space behemoth and says to Will Smith "That's Why" referring to her agitated state..... well here's another "That's Why!" moment:(from


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The Croesus Chronicles
A Chrysler-Scale Bailout Of Those Monolines
Robert Lenzner, 02.11.08, 6:00 AM ET

Robert Lenzner
About Bob Lenzner

Related Stories
Washington To Bond Insurers: Don't Expect A Bailout
Bond Insurers Need Help--Fast
Europe Shrugs Off SocGen Woes
Fed Cuts Won't Help Lending
You Should Worry About Ambac

Stop dawdling around. We need a Chrysler-scale bailout of the monoline insurers, which are a crucial linchpin of our financial system.

These insurers--which deal in a single insurance product, usually those that guarantee bonds, complex derivatives and other mortgage-type securities issued by banks--are now becoming a wall of worry stretching from Wall Street to Washington.

Many of our most profound problems in the credit markets that are now whacking the stock market and the economy at large began when these insurers, in the interest of greater profits, started deviating from their initial purpose--to guarantee municipal bonds.

In an extraordinary letter written to the chairman of the Federal Reserve and the major state insurance regulators, hedge fund guru William A. Ackman, whose Pershing Square Capital Management has been betting against these insurers for at least five years, says the monolines got into this risky business because of a bureaucratic glitch that resulted in a near total breakdown in the state insurance regulatory oversight system. A junior employee of the New York State Insurance Department, Ackman says, approved a "side letter" that permitted the bond insurance industry to guarantee credit derivatives indirectly.

"Guarantees of speculative derivatives were at the time (and still are) explicitly not permitted under New York statutory insurance law," Ackman writes. And the individual who issued the original permission was unaware of the colossal implications of his action. After the New York ruling, other states followed its lead "in providing access to this loophole," which has neither been challenged nor understood fully until now.

If there is a solution, it's to get the Fed and the banks to agree that the equity in Ambac Financial Group (nyse: ABK - news - people ), MBIA (nyse: MBE - news - people ) and others must be wiped out and that the complex portfolios of derivative contracts and municipal bonds must be put in a separate facility to work out the values over the next five to 10 years. This is crucial since no one--not central banks, not the Treasury, not the cream of investment banking, certainly not the fools running the commercial banks or even the vultures at private equity firms--can determine their liabilities going forward.

Waiting for a passel of banks, investment banks, private equity firms and regulators to decide on apportioning the pain to be suffered by all parties is an all but impossible proposition. Nobody knows the amounts at risk anyway, which would require going bank by bank and examining each counter-party to the transaction. There is no precedent to obtain coordination by all the parties for the quandary posed by the fragile health of insurance companies that have guaranteed a ton of tax-free municipal bonds that might have to be dumped on the market. Not to speak of the derivative insurance contracts covering credit paper that might contain present losses of $40 billion to $70 billion.

What's the risk of a delay or no solution? It's the loss of credit rating by a handful of barely understood insurance companies that from a base of very little capital have guaranteed $150 billion worth of derivatives backed by subprime mortgages, and as much as $1.5 trillion in municipal bonds.

New York University professor Noriel Roubini (see "Look Out Below") believes a credit downgrading will mean more massive write-offs by banks, as well as less credit available for an economy diving into a deep recession.

Time is of the essence, since Ackman, whose Pershing Square fund is massively short on MBIA, is baldly and boldly stirring the pot by exposing the frailties of the system to the regulators, and so to the unsuspecting and confused public.

Ackman claims in his letter that the insurers have "several hundred billion dollars of counter-party exposure to financial institutions around the world, of which $125 billion is for subprime related [collateralized debt obligation] structures"--effectively radioactive and impossible to value investments that have tumbled us into crisis.

Moreover, Ackman reveals for the first time the startling revelation that these insurers are leveraged 100-to-1, just like Long-Term Capital Management, a hedge fund that went under in 1998. But due to the absence of any requirements for full disclosure, it was impossible for the public to know this until now. Ackman also points out that these bond insurers have purposely understated the amount of losses reported to the U.S. Securities and Exchange Commission. This is inexcusable in 21st-century finance, Ackman believes.

Moreover, Ackman has provided a rationale for continued shorting of the monolines while he tells us that Ambac's actual losses from collateralized debt obligations (CDOs) are more than six times management's estimates from the insurer.

An earlier Ackman shot across the bow, aimed at the New York State Insurance Department's superintendent, alerted regulators to other liabilities in "non-taxpayer-supported municipal obligations, including hospitals and other health care exposures; project finance, including tax-exempt housing; toll roads; and other infrastructure guarantees."

Ackman stuck the knife into all parties concerned by charging that "these losses have been hidden ... due to inadequate disclosure."

Croesus isn't overly fond of clich├ęs, but the monolines are the proverbial can of worms. I don't expect few humans outside the murky world of finance to comprehend all the angles and reverberations of this terrible mess. But mess it is--and the longer it isn't resolved, the more terrible could be the consequences.

Hedge fund operator Ackman may know better than anyone else but New York State Insurance Superintendent Eric Dinallo just how rotten the state of Denmark is today. But Ackman has his own selfish self-interest, which is to squeeze every penny he can out of his short position while posing as a world-class savant.

And he's damned right to oppose the insurers taking money out of their reserves to pay dividends to the holding companies so they in turn can pay their shareholders--not Ackman--cash dividends. Ackman is right to warn that "by permitting regular dividends to the holding companies, you [the insurance superintendent] risk undermining your capital raising efforts."

Ackman must be persona non grata at the banks and the rating agencies, perhaps the regulators as well. Still, he has done his homework and is in the process of embarrassing the financial system for its foolishness.

His letter to the Fed and to other central bankers and politicians called for:

1. The disclosure by banks of their CDO exposures. Imagine, we're almost a year into this crisis and still there has not been full disclosure. Croesus loves transparency too, so it's about time.

2. Banks should be required to hold capital against their CDO exposures.

3. Independent directors should be appointed to bond insurance subsidiary boards. Imagine that "substantially all directors of these insurance subsidiaries are executives of the holding companies." Another governance mudhole exposed.

You want to know fear itself? The monolines apparently have guaranteed $1.5 trillion worth of variable-rate munis that might have to be liquidated should credit ratings be lowered. It's like Waiting for Godot, a frightening play whose tone is anxiety-provoking, to say the least. Ackman calls any downgrading of $1.5 trillion in muni bonds the potential linchpin of a systemic risk.

The rot is overwhelming. Who can deal with it? The Fed and Treasury should see this is no time to let the free market deal with a crisis. Yes, there's need for a cleanup of the mess. But first the bailout. Are you listening, Mr. Bernanke and Mr. Paulson? Get going.

Fed Chop

Andrew Hac said...

Because ya know, it wasn't too long ago that almost everyone (especially used home salesmen) thought we were just a bunch of quacks.

----- No, not quacks. More like a nicely roasted snapper turtle.

----- This is the funniest nation on the planet Earth. No doubt about this. No BUT, IF, WHEN, WHAT, WHY. WHO, or HOW...

A story from "OCRegister" described a JaneZinfandel, 38 years old, was having a position as senior funder, responsible for approving or denying loans. Before that in her fat-ass youth 20s, she worked as a waitress and a bartender. This is funny as hell.

And you asked yourself the question over and over again "Why is the Americano so toasted ? ". Well, the answer is: This pitiful nation is comprising mostly of Joe6Pack and JaneZinfandel whom muddles through life having no clue as to why their existence on this planet Earth matters to them or the people around them.

This is an apt analogy like having a cable technician dude managing a project of building the nuclear reactor. Can Joe6pack get the nuclear reactor built ? Hell yes, this is the Americano nation, right. And anything is possible if Joe6Pack put his fat-ass and his bacon-grease sizzling brain to work.

Yes, the Americano is as toasted as a snapper turtle skewered from mouth to ass on a green bamboo stick all sizzling, sputtering, fat popping over a bed of white hot charcoal.

Grilled snapper turtle is YUMMY !!!

Mark in San Diego said...

I was in the Sonoma wine country over the weekend - "renters vs. owners" at a dinner table . . .owners felt the housing crash was just about over. . .renters pointed out ARM resets, liar loans, etc. . .the next morning - Sunday - the Santa Rosa Democrat ran a front page story - LIAR LOANS!!!. . .told how market has a long long way to go because of some many foreclosures. . .our owner friends shut up quickly. . .!

Anonymous said...

Anyone, Bueller, Bueller? Anyone?

Veronica Lodge said...

RE: Just checking - is anyone out there still arguing with us that there was an epic housing bubble in America and around the world, a classic Ponzi Scheme and financial mania doomed to collapse?

Only a few delusional Realtwhores, such as this ONE in Sacramento, CA -- the foreclosure capital of the country:

The next 12 to 18 months could be your best period since the early 1990s to pick up property at depressed prices.

If you're going to be in the game, you've got to be active before it's too late and the market bottoms out and the anticipated gradual rebound begins. The top opportunity markets are right here, right now where real estate values are down the most and where speculators are most eager to bail out of their mistakes at deep discounts.

The difference between the current real estate down cycle and past down cycles is that capital is relatively cheap and available, whether from regular lenders or private equity sources. That's an important point for anyone thinking about whether, and how quickly, to get involved.

When you consider the facts, real estate is the single best investment one can make. Homeownership as a long-term investment has a track record that is virtually unmatched by any other purchase in terms of its real benefits. So if you've been waiting on the sidelines to by a home, get off the fence and buy that home...

I have to wonder how much of this property available for pick up at "depressed prices" was originally sold by this same Realtwhore.

ALL Realtwhores are lying scumbags!


DOPES said...





Anonymous said...

Let's not forget that England had some temporary hiccups before house prices started going up again... so anything is possible.

But this time, I think we have too much downward momentum. The collective mantra that home prices always go up has been broken.

Anonymous said...

3/4 of current home debtors DENY they have lost value in their homes. 1/4 believe their homes have gone UP!


I kid you not!

Santa Fe NM Real Estate said...

I can't see how anyone can argue that there was a bubble!

wc said...

they are still in denial about how far the prices will have to retreat. Oddly enough a realtor did tell my friend's father that he would have to cut his 4bdrm house in a nice area of Jersey from $700 to $450 in order to sell it but the dad thought the realtor was just trying to rip him off. They're now going on month 7 and have already moved out into a nice little assisted living community. It's going to be a long way down.

Anonymous said...

I agree with marky mark - still outrageous prices being PAID for housing. Prices are still very high and stuff is selling. I don't get it - the only thing I can guess is that we are located in a vacation town close to NY and people are willing to pay whatever it takes?....It is still keeping me priced out of the market.

Anonymous said...

Real Estate train wrecks coming to you on 2/14!

Gawd, I just love to watch them!
What's that german word again, for a person who enjoys watching other's pain??


Anonymous said...



mark haines said...

Spring of 2000 was a great time to buy tech stocks. pets.com anyone?
The reality of the bubble will only be understood by the sheeple when thier TV masters tell them about it.

Anonymous said...

My co-worker just bought a new 3200sf house for $167K. It was a 100% LTV at 5.5% fixed. He said prices are dropping like a brick on the new homes. It's the FB's and banks who won't or can't budge.

JaneZinfandel said...

Andrew Hac said...

----- This is the funniest nation on the planet Earth. No doubt about this. No BUT, IF, WHEN, WHAT, WHY. WHO, or HOW...

A story from "OCRegister" described a JaneZinfandel, 38 years old, was having a position as senior funder, responsible for approving or denying loans. Before that in her fat-ass youth 20s, she worked as a waitress and a bartender. This is funny as hell.

Andrew, I been to Jenny Craig. I been to the plastic surgeon. Got augmented and Joe6 left.

I luv BBQ.

Anonymous said...

Yes - nearly 90% of home sellers still asking for bubble prices...

Marky Mark

February 11, 2008 2:01 PM

Well we can probably blame this on FDR, that communist, socialist bastard!

Daphne64 said...

It can't be that much of a problem - President Bush has just announced the US economy is on good long term footing!

Anonymous said...

Bush says the economy is strong - thats what he said....so shut up you tin foil hatters. He's our leader, respect him, obey him, love him.

PS GWB thanks for the money!

Anonymous said...

I so don't care.

I rent. I had a T-bone steak for lunch that would be anyone's envy.

Why should I spend my money on a house that is bound to go down in value?

What for?

What does investing in real estate mean to me? Nothing.

I have money. I have a good life. If I wanted to catch falling knives, I'd join the circus.

Princess Mononoke said...

Daphne and Anon,

You two were being sarcastic about Bush weren't you???

Because he lives on another planet and has absolutely NO clue what the REAL economy looks like right now or near future...

brokersleaveyoubroke said...

Anonymous said...
When do we do the victory dance?

It's nice to know we were right about the housing bubble but I think any celebration will be short lived.
You better do the dance now before incresed local taxes get passed on to owners and renters. Towns, schools, hospitals and state governments are having to pay higher interest to service their outstanding bonds because of the downgrades of the big muni bond insurers. I just read about a hospital that will have to spend half of its operating budget to pay higher interest on its bonds. In the end, if you want to see who's going to get hurt by this mess, just look in the mirror.

just the facts said...

No different than the GOP 9/11 FAKE ATTACK cover-up.

The 9/11 propaganda campaign is still alive and well - all being run by Dick Cheney and his secret team of evil thugs, deep within several agencies. The man behind the curtain. OZ. A team of aggressive war mongers, liars and traitors.

Their BS 9/11 news stories and hijacker trials, etc., are all one massive big lie, scam and cover-up.

The 9/11 truth is alive and well. Boycott all Bush-fvcked mass media companies. Time is running out for them. They will pay for their crimes and unwarrented and illegal war agressions, lies, reckless spending and 9/11 cover-ups.

Nothing new here.

Liberty, Truth and Justice.

Anonymous said...

The monolines and CDO's should be left to rot. The muni's should be picked up by the Feds.

sharpetorium said...

I think they're going to have to find a new term to describe the bubble, because "epic" will be a true understatement when it's all said and done.

You know it's desperate when the NAR is running radio ads with happy, fluffy music and voiceovers from happyhappy homeowners about how NOW is the perfect time to buy. It's never been more perfect sheeples! Jump in! Buy a house! It'll be worth more next year promise!

Some dumbass realtor here in Phoenix posted an add showing the same house 3 times with a line/arrow of 2005, today and then 20?? overtop, with prices falling to 400K (through today) and then rising to 700 grand in 20?? That's right, dude, 20?? because you have no clue and will be very likely out of a job, but who am I to judge?

Anonymous said...

You'd be surprise here in Jersey. Most people think this is a temporary type of slow down.

They keep telling me to buy, buy, buy because if not, it's gonna be to late. It's a great time to buy now, because prices are going to go way higher soon.

Most people here in the NorthEast haven't really felt it yet, since most have desent jobs and most are not losing their homes yet. But we'll see what happens.

Im at a point now, where I just laugh and walk away. No arguments for me anymore.


Daphne64 said...

Princess Mononke:
Yes, I was being sarcastic.

blithely ignorant said...

Will Blythe Masters be known as the genius behind the Great Depression Part Deux?

God, I hope so, because the name Blythe conjures up visions of newspaper headlines depicting him as the Pied Piper, all the while blithely taking down the single greatest nation in the world.

[edit] History
In 1995, J.P. Morgan's Blythe Masters (a 34-year old Cambridge University graduate hired by the bank), developed the first Credit Default Swaps and Collateralized Debt Obligations (CDO).

On April 2nd, 2007, Blythe Masters, head of J.P. Morgan's Global Credit Derivatives group, helped introduce CreditWatchTM to help evaluat credit swaps among other financial instruments.

By the end of 2007 there were an estimated $45,000 billion worth of Credit Default Swap contracts.


Anonymous said...

Real estate prices in the long term never go down. But you HP'ers won't have that, you guys are way too smart for the rest of us. If you are going to invest in real estate for a short term gain and then flip it, then you shouldn't invest in real estate. But if you have a long term horizon, then you don't have much to worry since real estate prices do not decline in the long term.

Anonymous said...

Real estate prices in the long term never go down.

RE is down 18 years in a row in Japan. A Person who bought a home at the peak in 1989 should break even by 2050. Then it's all profits going forward if you don't factor in inflation for those 61 years. LMAO!!!

Anonymous said...

God, I hope so, because the name Blythe conjures up visions of newspaper headlines depicting him as the Pied Piper,

That name makes me think of a WASP wearing a bright yellow sweater and plaid pants on the country club golf course. With a name like Blythe Masters, he's got to be an asshole.

HOUSE2008 said...

Cute duck picture. Should read: I'm the leader where did everyone go?

Anonymous said...

Blythe us a female you uneducated fool.