February 07, 2008

WSJ on "Bernanke's Dilemma"

It's all about housing, home prices and HousingPANIC.

Kinda funny how that worked out, eh HP'ers?

Couple of ideas mentioned here that are gaining some heat:

1) A government corporation that buys up the toxic loans, then offers refis to the housing gamblers

2) A government operation (RTC2) that buys up all the foreclosures, rents them out, and eventually resells them

Nah, there was no housing bubble.


Princess Mononoke said...

The fact that they are EVEN considering these radical defensive actions is the GREATEST indicator to all of us how SEVERE this housing situation IS...

Their stupid a$$ denial for the past year (the 'power's that be') should be considered a criminal act. They all knew and repeatedly chose to lie to the public!

And now they are ALL acting like it was all one great BIG surprise... give me a f&*ken break!

SeattleMoose said...

What is wrong a much needed correction? Aren't these same guys the ones who always tout "let the market handle it"?

I guess that when the trumpets blare for "free markets" and "free trade"....it doesn't apply to anything that actually hurts the financial robber barons.

Is the plan to keep it all propped up until Hillary assumes the throne and then comes out with some radical plan that will somehow be easier to digest than if the Chimp offered it up?

Wherever this is going you can be sure that YOU will be the loser and the robber barons will walk away fatter....

Anonymous said...

Selling bonds? Ha ha...

The US treasury auction went bad today. I hear they pulled 90% of the bonds. Nobody, nobody is buying bonds at these rates on a 30 year.

Soon the government is not going to be able to fund itself.

stuck in So Pa said...

RTC2 will wind up as big a joke as RTC1 was. Those with political connections will be getting everything of value sold to them for pennies on the dollar. The crap (those places not worth the price of the match used to burn them down) will be offered to the Joe SixPacks. Even they won't buy, so eventually the hovels wind up burned down (opps!) or torn down, or they just fall down.

Anonymous said...

Years ago, during the Oil RE crash that killed the Southern States, Banks created other "sub-Banks".

These "Sub-Banks" took all the RE losses from the huge amount of foreclosures which occured for about a 5 year time frame (88-93 roughly)

Sounds like an old idea/scheme the Government is going to revive!

eric in vegas said...

Election year posturing. Once everyone has their seat in congress secure the pandering and handouts will stop.

satan is a republican said...

This guy's a wishful thinker when it comes to potential solutions. Use public money to bail out speculators? Sounds great. Penalize the responsible to bail out the irresponsible. Those evil democrats! Oh yeah, the republicans were in charge while the real estate bubble inflated. Never mind.

Just let the democrats finish what the republicans started and bail everybody out. Great plan. Not!

JaneZinfandel said...

So, what if the Fed threw a party and nobody came?


Feb. 7 (Bloomberg) -- Treasuries tumbled after the government's $9 billion auction of 30-year bonds at the lowest yields ever chased away investors.

The longest-maturity U.S. debt fell the most since 2004 as bondholders concluded that yields were too low given the Federal Reserve's determination to cut interest rates and keep the economy out of a recession. Before the government's sale, investors expected a 4.41 percent yield, based on pre-auction trading. The bonds were sold at 4.449 percent.

``The auction went as poorly as one could imagine,'' said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There isn't a lot of demand for bonds at these levels.''

So, we have negative reserves at our major banks

No one wants to buy our bonds to finance our debt

American citizens are in debt up to their eyeballs

So how's them housing prices looking? I want to buy next year at the bottom.



What are your thoughts on someone out there initating a class action lawsuit against the NAR and the MBA??

Think it will happen?

Anonymous said...

Good job Republicans! Romney is out leaving McShitStain as the standard bearer for the GOP!

You've guaranteed another Clinton in the whitehouse by voting for McCain or Romney!! All those dorks that didn't want to "waste" their vote on Ron Paul and voted for the lesser of evils:


Buzz Saw said...

Dilemma my butt, they have a plan. They will bail out all the bag holders and stick the rest of the chumps with the bill. Crash and burn baybee, it is the only way.

Anonymous said...

"Until the storm blows over" - and how many more years will that take? In fact, does the storm "blowing over" mean those who are priced out will remain priced out? Can we have the storm (economic tornado) blow over, yet still have RE prices that make sense?

Anonymous said...

"Support house prices" == "keep house prices unaffordable".

What a bunch of criminals in Washington and Wall Street.

Andrew from Russia said...

If you have problems sustaining your housing bubble, we can offer our best-of-breed, track-record-proven bureaucrats that directed the National Project "Affordable and Comfortable Housing". One immediate result of the Project was the doubling of RE prices in urban areas around 2006. Of course, this takes a chunk of federal budget and requires media cooperation but the result is worth the pain - just imagine a 150 kilodollar slum! Shall we pack these guys for delivery?

Poorman paying said...

This mess will just be prolonged and the people that caused this will get away with all the money they stole. The burden of the losses will fall on the tapped out tax payer. When will it ever end? All I want is to live in peace without getting fleeced by wall street when ever they screwup. I cannot understand how they keep all the profits and we pay all the losses. Yet again, we will push it off into the future along with social insecurity, medi-fraud and universal unhealth care. Can we not see that the future is bankrupt too? My our children, grandchildren, great grandchildren and great great grandchildren forgive us, and not eat us as they will be very hungry.

Yoski said...

So much for free markets. Why not just pass a law that puts the death penalty on anybody that sells an asset for less than what they bought it for. That should fix all our problems.

Poorman paying said...

The storm is here to clean up the mess, as long as we fight it the pressures that have built up will not equalize and the next storm will be just around the corner. These people went to collage? What did they learn? The gross imbalances must be cleared, nature demands it. There's just too much debt!

So far every solution involves a government bail out of the banksters. Here is another "Suggestion" to help the rich financiers, ah I mean the economy: http://wallstreetexaminer.com/blogs/cutting/?p=149

Where was the bail out for the auto workers and before them the steel workers, the coal miners, the share croppers. Why must America be trickle up? How long can this go on? In the end what do the poor get? Debt slavery, National ID cards, bio-implants, violent crime, food riots, blue collar jobs gone, leaving no way to pay back the debt! Wake up folks, this is not getting any better!

I now have an upset stomach. It jus dont seem right! Hell, it aint right. When JULS figures that out there will be a reckoning! Ugh. Now I have a headache.

By the way, good job with the blog. You're very prolific, informative and entertaining. Thanks for the efforts. Can a verb be plural? I guess so, after all consumers benefited from ARMs and sub prime was contained.

Yoski said...

I am so sick and tired about all this talk to bail out banks and speculators. I didn't see any of their profits but now the tax payer is supposed to bail out those criminals. I have a better idea, forced labour camps. Round all those gangsters up, put 'em on a chain gang and let them rebuild our infrastructure.
As far as a recession is concerned, great! Bring it on. We have way too many damn banks anyway. How about that for some radical ideas?
Rant over!

Anonymous said...


Its set in stone now.....government will buy up loans/houses as much as they can get away with to save the banks/investors.

I wonder what effect this will have on housing. probably prop up prices since they are likely to leave 2 million homes vacant for YEARS while they 'process' them. And if they rent them out...rents go down but that isnt important its PRICES of homes they want to prop up.

In Soviet America you dont own house, the house owns you.

Anonymous said...

2) A government operation (RTC2) that buys up all the foreclosures, rents them out, and eventually resells them.

Gee, Sounds a lot like this:

Communist thought has also been traced back to the work of 16th century English writer Thomas More. In his treatise Utopia (1516), More portrayed a society based on common ownership of property, whose rulers administered it through the application of reason.


HOUSE2008 said...

You know, I had a brother who's friend worked two doors down from Greenspan & I asked him how smart the people were there. He looked at me & said "the best". He got picked out of Ivy after his Thesis interviewed ect. we briefly got on the subject of computers I asked him , and to his credit he can keep a secret I said are the computer there pretty sophisticated? he looked at me & said " yeah something like that. like DOD good". Which gets me back to
"And now they are ALL acting like it was all one great BIG surprise... give me a f&*ken break"

it wasn't me thinks. But I can't help think how much MORE complicated the #'s would be when factoring in the global economy. I'm not defending the FED's but then again this isn't 1918 just getting out of the horse & buggy enonomy either. Anyhow his statement the "best" is leaving me saying "reeeally?" Hmmmm.

Anonymous said...

This "solution" still does nothing to make it possible for first time buyers to afford to buy a home.

When we see the psychology shift away from saving the owner-liars and gamblers to helping the next generation of buyers, only then will this historic bust begin to improve.


borkafatty said...

You know I look back when I first found this blog, and was at the time skeptical about all the doom and gloom, I really just went with the flow and had some laughs.

But during the laughs I also learned a lot and did a lot of persoal research about the game we play with housing and credit....and well I have come to one conclusion...Check&Mate...
I see no way we are getting out of the current Fiscal situation with out any scars...I see Asset deflation with higher prices stagnant wages,
( if your working )and through the roof energy costs...
No wonder all the Brazilians are leaving the country...its like a mass exodus...hmm you think they know something we don't???..Ill answer my own question...
"Ya get the Fuck out of Dodge".

Anonymous said...

I have to go out and buy a house so I can get my rent paid by you all. Just being a renter is to expensive. Socialized government housing will be great.

cobra2411 said...

Or how about letting the greedy banks and lenders fail like poor businesses should?

I say let the pigmen have a good squicking or three... :)

Anonymous said...

Well thats the beauty of the free market system. They can't force people to buy, or force banks to make loans. Without those 2 things happening, houses will continue to languish on the market, and people will continue to walk away from their toxic mortgages.

Anonymous said...

Bunch of lousy commies!

Just wait until 90%+ of these no down negative amortization a-holes are all dependent on uncle scam for their continued shelter. When the local realator/party boss tells them to show up for the 'rah rah we love TPTB' rally down at city hall they'll have no choice but to comply.

Well they could try to resist but we already know these losers have no moral fiber.

Unrestrained klepto-capitalism leads to communism, I guess Marx got one thing right after all.

Anonymous said...

The criminal act will be a government entity buying either the toxic products or the houses themselves....don't worry guys the government doesn't have to buy them...someone will when the F'in price gets to a level that makes sense. When an investor can buy a house, pay the Principle, Interest, Taxes, maintenance, and insurance and still have positive cash flow or break even, then there will be billions of dollars ready to buy these places.

Banks and homeowners gambled, they lost. They must pay the piper. Housing needs to be affordable, and any government action which acts counter to this is not helping homeowners, it is helping the BANKS. These faggots already play with a stacked deck, but they got too greedy with the mortgage products and it burnt them. Let them burn.

Anonymous said...

Does anyone remember that there is a war on?

The cost of the war is NOT part of the budget, it's all off the books. We are just printing the money we need to pay for the war.

That being so, where are we supposed to get the money for "A government corporation that buys up the toxic loans"?

There are limits. The war has limited us.

Anonymous said...

Great article in Blomberg - author uses Fed's own simulation demo and gets a prediction of 11% inflation:


However, it now appears that the simulation is no longer on the Fed's web site.

Hmmm. Must be a coincidence.

Anonymous said...

So let me get this strait: Is housing ALL that Wall Street cares about? How can an economy possibly sustain its self it's totally dependant on rising asset prices, with NO goods produced?

First, we were a manufacturing economy. Then a service economy. Then a so-called "knowledge" economy. Ok, ok. So now we're an OWNERSHIP economy. But rather than manufactuers laying off employees due to outsourcing, we have HOUSES laying off their "owners" because their price is no longer going up fast enough to make an income for the inhabitants. Am I right?

jazzmanferg said...

This guy made his tie outta scraps from spiderman's uniform.

Anonymous said...


The Gov't buys up all the foreclosures and rents them out... this might work at first.

BUT the tenants are going to TRASH the places and fast. The Gov't would be the worst landlord. Are the Gov't leaders who sell bonds to raise capital to purchase the junk property, also going to SELL MORE BONDS to raise capital to CLEAN-UP & REPAIR the trashed foreclosuers before they can be rented out? What about all the maintenance cost? Who is going to pay the plumber to install a new hot water tank for the renter? What happens when the furnace goes out?

These ideas are RADICAL. Because this is America, not RUSSIA, at least not yet.

Anonymous said...

The powers plan to lower the Fed rates to nothing first . At the same time the powers are sitting up for a government backed bag-holder to buy up these bad loans and refinance some of the ones that can be saved ,(in other words losses will be to the taxpayers). Loan amounts are being raised for the purpose of taking on the Jumbo bad loan paper .

They will talk about freezing foreclosures ,but this is to buy time to set up the BIG PLAN .

If the government can pull off this transfer of loss ,I would be surprised . They will throw it on in steps . For any property loan that can't go under the government backed loan program ,it will be out-right purchased by the government corporation who will rent it out until the market improves . So, yes the government will get into the renting business via a corporation ,until the market inflates again . Perhaps they will rent to section 8 borrowers .

By the time the public knows what hit them (because the big plan will be done in steps ),it will be all over and done .
It's a massive plan that involves a number of different programs applied at the same time .

What the people in power are doing lately doesn't make sense, and that is the very reason why you know that they are attempting this massive bail-out plan . Yes ,we the taxpayers get to pay for the greedy
gamblers and lenders that created this mess . I call that taxation without representation .

Of course the government can't just come right out and say what they are doing because it's a bail out for the banks and the investments firms and the insurance companies .So, the plans will always be called "The Borrowers Loan Re-Work Plan",or the "Fight Foreclosures Act".

Mind you ,the Banks and Investment firms will take some of the loss ,but not all of it ,and some borrowers and investors will take part of the loss . My point is that the loss will be shared . Doesn't that feel really good when you didn't even buy a house in this stupid mania .

common sense said...

Wait a minute. So, now you're telling me it's not contained?

Paulson, Bernanke, Greenscam, Dodd can all rot in hell for their lies.

a.creampuff said...

Anon 6:58 - bingo! iTulip calls it the bubble economy.

Anonymous said...

The problem is, the Fed has NO IDEA that what we are seeing now is only WAVE ONE of a monster Tsunami about to hit.
Even good old Shiela Bair, of the FDIC, predicts the housing crash is JUST now beginning.

There isn't enough capital in the Banks or at Freddie/Fannie to cover the losses, not to mention, buy up all the mortgages in the US.

This administration has taken away every last incentive for American's to actually try to hold on, and not walk from their houses. Even those that ARE paying on time and CAN pay on time will walk, because they will see that they are just throwing money into a black HOLE!!

Any successful solution will simply allow housing prices to tank, and come back down to the historical mean. When people can once again afford houses with a conventional fixed product...VOILA!! We will have no more housing crisis.

Yep, there will be a lot of pain for those who bought into the whole Ponzi scheme at the top, but it is still the cheapest price to pay and the ONLY WAY to get rid of all these f2#$ing houses, without screwing the economy even further!!

DaveO said...

"Nah, there was no housing bubble."

There was no bubble. As Kendra Todd and Condoflip.com said verbatim, "Bubbles are for bathtubs".

We are so screwed said...

However, it now appears that the simulation is no longer on the Fed's web site.

The Federal Reserve Chairman Game has been deleted from the Federal Reserve's website.

However, it is still available on the Internet Archive.

Play it while you still can...



We are so screwed said...

Here are the numbers to plug into the Fed Chairman Simulator.

Fed Funds History:


Fed Funds Futures:


I created 26% inflation by going to 1% and holding it there.

Greenspan is a poseur!

BananaRepublicrat said...

I knew it would be bad, but I never believed these doofuses would actually bring the whole MFer down.

To quote the immortal George Taylor:

"You finally really did it, you maniacs! You blew it up! Ah, damn you! God damn you all to hell!"