HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008: BUBBLETALK - New thread to talk about the mortgage meltdown and housing collapse

August 17, 2007

BUBBLETALK - New thread to talk about the mortgage meltdown and housing collapse

Keep it clean, don't post full articles, use tinyurl.com for long links, let me know what I missed, talk about general stuff here, and have a good chat

281 comments:

1 – 200 of 281 Newer› Newest»

stocksystm said...: Here in Tampa asking prices are still sticky (around $150 per square foot), although selling prices are down about 10% YOY. Inventory has swelled to 3 times what it was 2 years ago and has remained flat at 18,000+ for about 5 months.

It will be interesting to see the impact of the credit crunch over the next year. I expect inventory will go over 20,000 and prices will fall at least another 10%. After that who knows, but you can't rule out a real crash of 50% in prices.; August 07, 2007 6:03 PM
Anonymous said...: Hillary :

"HPers are suckers!!!"
http://tinyurl.com/2xykfx; August 07, 2007 6:04 PM
Anonymous said...: Will Hele Ben cut and destroy more of my savings?; August 07, 2007 6:23 PM
Mammoth said...: .
.
When there is blood in the water, the sharks appear.

While working on my recently-vacated rental house yesterday evening, there was a knock on the door. It was a woman in her mid-40’s – right at that age where their appearance really starts going downhill. She said that she was a friend of the neighbors down the street, and pointed to a house. She had noticed the occupants moving out, wanted to know if I was going to sell the house, and asked if I could use the services of a realtor.

Rather than take the proffered business card she was holding, I just looked at her up and down and gave her ‘THE LOOK’ while repeating her words, “could I use the services of a realtor.”

She understood the message, got an uncomfortable look on her face, and immediately left.

Priceless!
-Mammoth; August 07, 2007 7:11 PM
Anonymous said...: Ohio threatens ratings lawsuit
by Elizabeth Pfeuti 07-08-2007

US - Three credit rating agencies could find themselves in court if the attorney general of Ohio believes there is a case to prosecute over their part in mortgage securitisation marketing.

Marc Dann, attorney general of Ohio, has accused Fitch, Moody’s and Standard & Poor’s of leading pension funds to believe that triple A rated tranches of collateralised debt obligations (CDOs) were near risk free.

Dann’s press secretary told Global Pensions the issue was a priority for the attorney general and preliminary investigations were underway.

She added: “In Ohio, we lead the nation in investigating foreclosure, predatory lending and misdeeds. More people should be held accountable for what is happening in this country.”

Dann has maintained the agencies had a responsibility to investors not to underplay the risk associated with securities backed by sub-prime mortgages. However, agencies state that any rating given should not be taken as proven fact.

According to the Fitch code of conduct: “Users of ratings should be aware that Fitch’s ratings are opinions reflecting the ability of an entity or a securities issue to meet financial commitments such as interest, preferred dividends, and repayment of principal, in accordance with their terms. Ratings are not themselves facts, and therefore cannot be described as being ‘accurate’ or ‘inaccurate’.”

Nigel Sillis, director of research, fixed income and currency at Barings, commented: “Credit rating agencies may have to reassess their usual first amendment defence following recent events.”

He continued: “Their relationships when putting together these deals are different to those with corporate bond providers, they are more of a two-way process. Not all triple As are born the same.”

He concluded: “The significance and implications of these close relationships has become increasingly more apparent over the last few weeks and could be tested under recent stress conditions. I would not be surprised to see this played out in court.”

Both Sillis and Dann agreed CDO vehicles were highly complex vehicles needing third party certification to guide investors’ choices.

Moody’s downgraded 451 tranches of mortgage-backed CDOs on 10 July 2007, with another 184 placed on its watch list the day after.

A press release from Moody’s said these actions were a result of a 2006 review. However, the statement continued: “Recent data shows that the first line sub-prime mortgage loans securitised in 2006 have delinquency rates that are higher than original expectations.”

The Ohio department tasked with gathering information on the ratings agencies is expected to report at the end of the summer.

Fitch was unavailable for comment while Moody’s or S&P declined to comment.; August 07, 2007 7:34 PM
Anonymous said...: Another wrinkle in the Bear Stearns Hedge Fund issue. This is definitely going to generate more confidence in the brand:

Aug. 7 (Bloomberg) — Bear Stearns Cos.’ decision to liquidate two bankrupt hedge funds in the Cayman Islands instead of New York may limit creditors’ and investors’ ability to get their money back.

While most of their assets are in New York, the funds filed for bankruptcy protection July 31 in a court in the Caymans, where they are incorporated. The bank also used a 2005 bankruptcy law to ask a U.S. judge in Manhattan to block all lawsuits against the funds and protect their U.S. assets during the Caymans proceedings.

http://www.bloomberg.com/apps/news?pid=20601087&sid=awRQv0XawGk0&refer=hom

Marky Mark; August 07, 2007 8:00 PM
az_mtb said...: The Fed just voted to keep the interest rate the same, just as expected...Inflation still their main concern.

http://tinyurl.com/33qdxp; August 07, 2007 8:14 PM
Abrey said...: Hey, Keith, I'm first! Got a good question for you and others to ponder. I'm planning to move out of a friend's house where I've been living for the past several years, trying to ride out the bubble madness, and rent a house somewhere in Southern California, possibly sometime later this year. What would be a good way to know whether my landlord is financially underwater so I can avoid certain unpleasant repercussions later on (such as finding an eviction/foreclosure notice on the front door one evening when I come home from work, and then have to move in a hurry)? Great website.; August 07, 2007 8:30 PM
Anonymous said...: To all the DOPES, DOLTS and 1000 Word Douches:

I'm going to explain what happened in the market today.
Anybody with a brain knew the Fed was going to hold steady.
But irrational DOPES, DOLTS and 1000 Word Douches (as well as tin-foil hatters) wanted cream icing on top. (Fed mentioning easing rates in the future)
So they panicked and cried and took their jacks home with them.
Then the smart money waited a few minutes, then swooped in and picked up bargains.

Next time I won't be so generous and explain why you are losing so much money.....I'll just take it from you.; August 07, 2007 9:12 PM
Anonymous said...: Another one bites the dust!
Luminent Mortgage Capital, Inc.
LUM $1.08 -75.34%
Over 31 million shares dumped in one day! PANIC!; August 07, 2007 9:36 PM
Anonymous said...: The Fed left rates alone today. Maybe tomorrow they'll close up shop and go home - if they have a home.; August 07, 2007 9:36 PM
Mr.SanDiego said...: This is interesting. A website that lets you find bad neighbors before you move.

http://www.rottenneighbor.com; August 07, 2007 9:41 PM
Will said...: I don't really agree with al the doom and gloom on this site, but I think we'll all agree that Cramer flipping out is funny. Sorry I don't have a tiny URL...

http://www.businessweek.com/the_thread/hotproperty/; August 07, 2007 9:57 PM
Anonymous said...: pkk (grandma here)

If what Jim Cramer said is true that
behind the scenes,ie the situation is
far worse than publicly acknowledged,
and I have no reason to doubt what he
says, what exactly does he mean?

Is he referring to the kind of blog
chatter seen here, but not talked
about on MS tv, or is he referring
to facts not even mention herein?

Anyone?; August 07, 2007 10:03 PM
Anonymous said...: Consumer Credit Up In June:
http://tinyurl.com/yo4e6l

the insanity continues...; August 07, 2007 10:04 PM
benevolentstranger.blogspot.com said...: finally a new thread...only now I have nothing to say...dough; August 07, 2007 10:12 PM
Anonymous said...: Yes!! The rat pack at the Fed is playing hard ball. Check this out:

...Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information... [link]

Benny, William, and the gang are hanging tough. BOOYAH!! (I love you Benny!!) XOX signed, Edgar; August 07, 2007 10:15 PM
Anonymous said...: Will the scarcity of financing options, down payment requirements and rising mortgage rates be the last three nails in the coffin for housing? Did I miss anything?; August 07, 2007 11:12 PM
Anonymous said...: blah blah blah stock market crash

DOW UP 500 this week

blah blah blah blah end of the world

blah blah

HP: the black of losers, always in style; August 07, 2007 11:25 PM
Roccman said...: .
.
.
.
.
First again?; August 08, 2007 12:46 AM
Anonymous said...: I am glad to see this happening. There are so many hacks in the industry, they need to be cleaned out. Perfect example, Quick Loan Funding. Also, homeowners who took home equity out to buy toys deserve to suffer. I can't believe the stupidity.; August 08, 2007 12:52 AM
The_Scum said...: First!

What the hell happened with the HB stocks today?; August 08, 2007 1:20 AM
Anonymous said...: It's Fed Speculating Time Again

Tis' the season and there is a ton of speculation out there about what the Fed will say and or do today. Sooner or later, folks are going to realize that Greenspan no longer Chairs the Fed. Bernanke does not want the Fed to be the focus and has no desire to lower rates in response to imbecilic lending.

There is no "credit shortage" out there. There is a "stupid credit shortage," though, and that is actually healthy. Sally and Paul who want to have $400,000 loaned to them with no money down, no credit check and pay interest only for two years probably will begin to find this more difficult, if not impossible - and you know what, this also is good. Bernanke will not finance stupidity by flushing the market with funds to bail these folks out.

What will he do? The same thing he has done since taking office - nothing. He is watching inflation and until that is under wraps, rates will stay where they are, at historically low levels. The economy is growing at a very healthy and retrained rate, unemployment is virtually non-existent, corporate profits are growing at near double digit rates and corporations are so flush with cash they are buying back their own shares at a pace never seen before. So, just because the DOW and S&P drop 4%, we should just abandon the plan and lower rates to re-energize the fools who got themselves in a hole in the first place? No way . . .

Here is proof of why emotion should not rule the Fed. Watch Jim Cramer, in a WWF's Vince McMahon inspired act have a Fed meltdown two weeks after saying sub-prime is "completely meaningless, it has no meaning whatsoever." Laughable.....

Sam Zell was on CNBC last week and he was talking about housing. He said simply that there was no "meltdown" and that housing starts were slowing to historically normal levels. The last three years were an aberration and at 1.4 to 1.6 million starts, we have settled into a "normal" range. Since when did normal require a rate cut?

I think Greenspan enjoyed the market jolting effects of his incoherent ramblings when at the Fed. This is proven by his inexplicable clarity since he left office as exemplified by his call of a "1/3 chance of US recession in 2007." He misses the rush of the market reacting to him. Bernanke has no such desire and if anything, seems to wish the Fed to fade to an after thought when it comes to the markets. If the Fed becomes real predictable, the effects of their actions is minimized. Once Wall St. figures out that rates will not come down until inflation is well under wraps, we can end this speculation every month or two. We can talk about a rate cut when we see proof that inflation is waning.

If you want to know when to panic, it is easy; the day Bernanke surprises us with a rate cut, things are far worse than we think.

http://biz.yahoo.com/
seekingalpha/070807/
43790_id.html?.v=1; August 08, 2007 1:37 AM
Anonymous said...: HomeBanc bails out of home mortgage lending biz

Unable to borrow on its lines of credit and unable to fund its mortgage loan funding obligations starting Aug. 6, HomeBanc Corp. reported Tuesday it will leave the mortgage loan origination business.

Atlanta-based HomeBanc (NYSE: HMB - News) said it does not plan to fund any future mortgage loans, and is no longer accepting any mortgage loan applications or funding any mortgage loans previously originated and not yet funded. The company said it is investigating a course of action to preserve the value of its remaining assets.

"In light of the extraordinary difficulties that HomeBanc continues to face in the mortgage loan origination market, we feel that it is in the best interests of the company to exit this business so that we can focus on preserving the value of our investment portfolio assets and loan servicing operations," said Kevin D. Race, HomeBanc president and CEO.

http://biz.yahoo.com/bizj/070807/
1502464.html?.v=3; August 08, 2007 1:58 AM
Anonymous said...: China threatens 'nuclear option' of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency.

http://www.telegraph.co.uk/money/
main.jhtml?xml=/money/2007/08/07/
bcnchina107a.xml&CMP=ILC-
mostviewedbox; August 08, 2007 2:00 AM
Anonymous said...: Impac Mortgage Holdings Inc. said on Tuesday that it has stopped funding so-called Alt-A mortgages, but has met all margin calls so far.

Impac also said it has negotiated the sale of $1 billion of mortgages the company held using borrowed money. That's out of a total of $1.6 billion held on such financed facilities, the company noted.

Impac shares slumped 36% to $1.09 on Tuesday, before being halted. The stock has lost more than 85% of its value so far this year.
Impac said it stopped buying Alt-A mortgages because of volatility in the secondary home loan market and disruptions in the process that allows mortgage originators to sell off, or securitize, the loans they offer.

Alt-A loans were originally designed for borrowers with clean credit records, but with other issues that often meant they provided fewer documents or even no documents showing what they earned.

Delinquencies on Alt-A mortgages have risen this year as problems in the industry spread from the subprime part of the market.

http://www.marketwatch.com/news/
story/impac-stops-funding-alt-
loans-has/story.aspx?guid=
%7B6C5FFC57-9C46-4E57-8806-
8BC23DA2AE5B%7D&dist=hplatest; August 08, 2007 2:04 AM
Anonymous said...: Bernanke ordeal has Greenspan written all over it, but today Bernanke was tough enough to said no change.

http://www.reuters.com/article/
reutersEdge/idUSN0641192720070807

"Years and years of easy monetary policy under Greenspan created a tremendous amount of excess liquidity, which caused a total mispricing of risk," said Frank Hsu, director of global fixed-income at Fimat. "Now we're getting payback."

Indeed, rising default rates in the U.S. subprime mortgage industry, which targets borrowers with sketchy credit, have begun to jeopardize asset prices worldwide.

Analysts trace this debacle back to Greenspan, who not only cheered on the Internet boom but also battled its bust with yet another dollop of cheap credit.

"He got carried away, caught in the 'new economy' hoopla," said Alan Ruskin, chief international strategist at RBS Greenwich. "That's ultimately proved quite problematic."; August 08, 2007 2:19 AM
Anonymous said...: If you thought the era of flippers, Kiyosaki acolytes, Trump wannabes, and Real Estate get-rich-quick MLM seminars was over,
you would be dead wrong.

It's is alive, well and thriving.

It won't end until every last penny of every last blue collar worker is depleted, until all 401ks of the gullible are decimated, until all possible sneaky avenues to-wring-money-out-of-unwatchful-banks are exhausted.

Only then will the dust settle, the dawn will break anew, and we might once again purchase a house to live in.

http://tinyurl.com/2rgeya; August 08, 2007 2:24 AM
gregoryw said...: http://biz.yahoo.com/e/070608/tol10-q.html

Read that if you need a good laugh today. It's TOL's quarterly report. It contains gems such as:

"At April 30, 2007, we were selling from 325 communities compared to 300 communities at October 31, 2006 and 275 communities at April 30, 2006. We expect to be selling from approximately 332 communities at October 31, 2007."

Keep building!; August 08, 2007 2:37 AM
RJ said...: The only statistics that matter now:

Projected demand for oil in five years - approx. 95.8 million barrels per day.

Projected supply - anywhere between 75 - 80 million barrels per day depending on depletion rates and new projects coming on line.

There are no viable alternatives coming online on a sufficient scale to mitigate the effects on the global economy while the spread between supply and demand continues to grow into the foreseeable future.

(PEMEX has already stated that production from their Cantarell field will probably be insignificant within 7 years with serious consequences for U.S. oil consumption.)

Most of the growth fueling the equities markets has been the emerging markets. Within a couple of years energy shortages will start to limit economic growth in Asia. Once the markets figure out that the global economy is not a perpetual growth machine they will crash. What emerges is anyone's guess. But we're living during one of those great transitions in history when civilizations adapt and transform or collapse. We're not exempt from the limits of nature regardless of our technological efficiency in using energy and we're about to experience the unforgiving nature of those limits.
The Great Mortgage Collapse is nothing but the finale to the last desperate attempt to keep the delusion of never ending economic growth alive.
Spend some time seriously researching what is truly going on in China and India. They are a tragic farce of an attempt to replicate the lifestyle of the West which was only made possible by abundant cheap energy.
I pray the endgame to the struggle for control of global energy resources doesn't end up going nuclear.; August 08, 2007 2:45 AM
Anonymous said...: FLASH FLASH FLASH:
China threatens to "nuke" the US dollar!

Don't think they haven't been planning this all along...........

http://tinyurl.com/267s4n; August 08, 2007 2:45 AM
Anonymous said...: Here is a link to a UK newspaper (The Telegraph) and an article discussing Chinese threats to use their massive foreign currency reserves to trigger a dollar collapse. This goes to the whole obvious point about our profligacy: you can't be the richest nation in the world for long if you are also the world's biggest debtor. --PUBLIUS

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml; August 08, 2007 2:47 AM
Anonymous said...: 112 major U.S. lenders have "imploded"

http://ml-implode.com/; August 08, 2007 3:14 AM
Anonymous said...: Is it getting hot in here?

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

China Threatening to tank the dollar if the US doesn't play nice; August 08, 2007 3:15 AM
Anonymous said...: HedgiePanic?
Maybe not though,this is a scam ,and I think the Taxpayer(Sheep),and 401kers will be bailing these crooks out.
Fun to watch in any case.BTW Crude is gonna get killed.; August 08, 2007 3:33 AM
Anonymous said...: China threatens 'nuclear option' of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

http://tinyurl.com/267s4n; August 08, 2007 4:00 AM
Anonymous said...: Even borrowers with good credit records who can afford a large down payment are finding rates surprisingly steep if they can't qualify for a loan that can be sold to Fannie or Freddie. Rates on prime jumbo loans have risen so fast that "nobody in their right mind would pull the trigger" and accept one now, unless they couldn't delay a home purchase, said Darren Weisberg, president of PFG Mortgage Services Inc., a mortgage broker in Lake Forest, Ill.

Some lenders are pulling the plug on whole categories of loans. Yesterday, National City Corp., a Cleveland banking company, said it has suspended its offerings of home-equity loans or lines of credit made through brokers rather than the bank's branches. The company cited market conditions.

pwnd; August 08, 2007 4:38 AM
Anonymous said...: August 7, 2007
Hedge funds hit critical list worldwide
Financial Times

Hedge funds globally suffered their second-worst week in four years during the final full trading week of July as continuing concerns about the spread of US credit problems took their toll on performance.

The Hedge Fund Research index of investable hedge funds, one of the most widely followed hedge fund performance benchmarks, fell by just over 3 per cent in the week beginning Monday July 23 as global markets fluctuated wildly.

It represented the worst week of performance since the week beginning March 26 this year, when the index fell 3.4 per cent as global stock markets suffered a sudden sharp sell-off.

Jeffrey Larson, founder of Sowood Capital, one fund that collapsed due to the market turmoil, said recently that the pain inflicted during the week of July 23 led to his eventual decision to transfer his fund's credit portfolio to Chicago's Citadel Investments.

"Each day brought greater and greater losses," he said.

HFR was due to report full-year figures for its entire database of hedge fund managers in New York late on Tuesday. Investors are keenly awaiting indications of July performance from index providers and hedge fund managers, many of whom are expected to report big losses for the month.

Other recent losers include Braddock Financial, which is closing its $300m Galena fund due to losses on subprime.

The Horizon Fund was down 32.9 per cent in June and sources close to the fund suggested it may have endured more problems in July, while the Eidos Structured credit fund was down 8 per cent in June.

Kevin Harrington, director of research at Clarium Capital, a macro fund that has avoided the meltdown, said: "Some of the funds that got into trouble have long lock-ups, and it was the margin calls that triggered their crisis. Once that starts, it's a daisy chain".

Bear Stearns gave early indications of the extent of problems related to hedge fund investments in the subprime market, when it ran into problem with two of its hedge funds, which it is now liquidating. It has also suffered problems in a third hedge fund.
Copyright The Financial Times Ltd. All rights reserved.; August 08, 2007 5:29 AM
Anonymous said...: The US trade deficit with China could probably be fix by exporting US aseptic Milk products.

Just sell the Chinese pizza, ice cream, and Lactose intolerance medication.

http://news.bbc.co.uk/2/hi/
uk_news/magazine/6934709.stm

China's growing love of dairy products is threatening to push UK prices up. But why are the Chinese drinking more milk and why does it affect the whole world?

The Chinese Premier Wen Jiabao says he has a dream. And this dream sounds like something from a 1950s public education film.

"I have a dream to provide every Chinese, especially children, sufficient milk each day."

Catching up

Specifically, he wants to make sure everyone gets one jin, or half a kilogram, which is a fair amount for a nation usually characterised as lactose intolerant.

According to the UN Food and Agriculture Organization, China's consumption of milk has gone from 26 kilocalories per person per day in 2002 to 43 in 2005.

"Milk and meat was very expensive [and rationed] before the 1980s. Even if you had this [ration] ticket you still had to join a long queue."

Professor James Watson, of Harvard University, an anthropologist specialising in diet, dismisses the notion that an admiration for the West is behind changes, insisting availability is the key.

"It doesn't indicate they are becoming more Western, it just means they like ice cream.

"When I first went to Hong Kong in the 1960s, I would bring in little pieces of New Zealand cheese. At one point the landlord, a Cantonese guy, saw the cheese and got violently ill just by the sight. It grossed him out, as much the idea of eating rotten cow's milk as anything. Now his grandchildren are eating pizza and processed cheese."

As well as planning for more milk consumption, the Chinese government is making every effort to increase production, recently rising to the third biggest producer in the world behind the US and India.

The businesses are doing dairy on a massive scale using imported Friesian cows.

The one confusing factor is that of lactose intolerance. The majority of Chinese adults suffer a deficiency of lactase, the enzyme needed to break down the lactose in milk and the common trigger for lactose intolerance.

Cheese and processed milk products are low in lactose, there is lactose-free milk, and there are many adults that suffer no, or only limited, intolerance.; August 08, 2007 6:33 AM
Anonymous said...: Get ready for Mr. Bush's next speech. It should be something along the lines of "Now go out and get a mortgage and buy a house! It's good for you and good for the economy."

And just to spur people on, he could add a Federal rent tax, that puts a 20% tax on all rents collected, and add a separate "homeowner's deduction" separate from the deductibility of mortgage interest.

Just like he did with the $300 per taxpayer he sent out after being elected (just before 9/11 - remember that?). "Now go out and spend it" was what he said at the time.

W. What a serious bozo.; August 08, 2007 6:36 AM
Anonymous said...: Japan's Economy Probably Expanded Fast Enough for Rates to Rise

Japan's economy expanded 0.9 percent in the second quarter, according to a survey, fast enough to encourage the central bank to raise interest rates as soon as this month.

Growth in the world's second-largest economy in the three months ended June 30 probably slowed from 3.3 percent in the first quarter, according to the median estimate of 27 economists surveyed by Bloomberg News. The Cabinet Office will release gross domestic product at 8:50 a.m. on Aug. 13.

The report will be the last main indicator of the economy's strength before the central bank begins its next meeting to decide whether to raise its key overnight rate from 0.5 percent, the lowest among industrialized nations. Governor Toshihiko Fukui last month indicated he may be willing to raise borrowing costs ``even if the numbers are a bit weak.''

``Fukui has said he's prepared for a moderation,'' said David Cohen, director of Asia economic forecasting at Action Economics in Singapore. ``If GDP is consistent with the moderate growth that the BOJ has been talking about, and the financial- market turmoil cools down, I would expect them to raise rates.''

Investors see a 55 percent chance the bank will raise the rate when its two-day meeting concludes Aug. 23.

http://www.bloomberg.com/apps/
news?pid=20601101&sid=
aelhk8DV9VFk; August 08, 2007 6:37 AM
Anonymous said...: Just a few personal notes. It is really hard, the times are tough...I lost my job (mortgage-related) last week and my GF who is a realtor has had a lot of trouble getting enough commissions the last two months or so. We live in my place which is now officially "underwater" on the mortgage; mortgage due to reset later this year which will be a reall challenge. All of this has me sweating bullets. There have been a lot of fights latey, lots of screaming/weeping, late night stuff, GF accuses me of not "stepping up to the plate" and taking care of her enough even though I pay ALL the mortgage, ultilities, take her out to dinner, etc etc. I know its just her frayed nerves talking though and we still really love each other. Still, its harder than its ever been.

This little bump in the market has everyone spooked and its gone on a lot longer than I thought it would and even though everyone knows it will be over soon it is tough to keep focused on POSITIVE THOUGHTS. Me and GF had a long talk over breakfast today and we decided that we ABSOLUTELY, POSITIVELY MUST think POSITIVE and ONLY POSITIVE. We both understand that postive energy is manifested by positive ideas and that wallowing in negativity only brings you down, creates negative vibrations and so on. There is A LOT OF NEGATIVITY and people surrenduring to DOOM AND GLOOM "CHICKEN LITTLE" stuff, which is NOT the way to go! We went shopping after that and although I felt a little guilty about putting stuff on the credit card when no money is coming in, we both agreed that it would help us to nurture a more POSITIVE, PROACTIVE mental environment which would in turn help to manifest the FORWARD MOMENUTM and OPPORTUNITIES we need right now. A few hours later with a nice new sofa and curtains, we really did feel better about ourselves, had a nice dinner with a great bottle of Pinot and some ootoro sashimi the Japanese fish market guy keeps under the counter for "special" customers like us :-) . So even though it might seem like an indulgence it is ABSOLUTELY NECESSARY to keep our karmic momentum in a positive light.

We also agreed to start keeping journals where we will invision where we WILL BE (not "want to be") in six months, one year, five years, etc. Also positive visualizations centered around healing natural enviroments, traveling to our "safe zones" in our minds and manifesting warm, glowing energy. We both agreed NOT to read the papers or watch the news for the next two weeks and see how that goes...right now the media is whipping up NEGATIVE ENERGY and SCARE MONGERING that serves no purpose but to feed society's fears...very irresponsible!! I got so angry at the coverage about the real estate scene, I don't understand how the media (both local and national) can be so irresponsible and actually even (I think it is fair to say) morally reprehensible as to make money from people's FEARS and ANXIETIES when they should be enhancing the positive right now when our society really needs it the most! Anway, after all our talks and romantic private time I am really feeling 110% better and I know things will pick up SOON, by the end of August AT THE LATEST. I have sent out over 70 resumes but even more importantly I am working with my brother to start OUR OWN lending/finance operation. No solid leads yet but LOTS positive feedback from various contacts which has been VERY encouraging. And we both understand that with our large networks of associates and our combined experience we can turn this "downturn" into a chance to finally break free of the drudgery of working for others and MANIFEST OUR REAL DREAMS by working for ourselves. So in the long run, despite the troubles, this experience will turn out to be the best thing that ever happened, I am convinced. I am so fortunate to have a supportive GF and a loving family and a support network of friends and collegues who can keep the positive energy FOCUSED and FLOWING for the benefit of us all. We are living in exciting times!; August 08, 2007 6:46 AM
Anonymous said...: Mortgage Fears Drive Up Rates On Jumbo Loans

Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors.

This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. Normally, mortgage rates move in tandem with Treasurys, but market jitters have caused investors to ditch mortgage securities.

Lenders -- having already slashed lending to subprime borrowers, as those with weak credit records are known -- now are jacking up rates on jumbo mortgages for prime borrowers. These mortgages exceed the $417,000 limit for loans eligible for purchase and guarantee by Fannie and Freddie. They account for about 16% of the total mortgage market, according to Inside Mortgage Finance, a trade publication, and are especially prevalent in California, New Jersey, New York City, Washington, D.C., and other locales with high home costs.

Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.

The higher costs for such loans will put further downward pressure on home prices in areas where homes typically bought by middle-class people can easily cost $500,000 to $700,000.

http://tinyurl.com/2e6vyg; August 08, 2007 7:05 AM
Anonymous said...: If it is Japanese culture not to spend other people money then is it time to start raising minimum wage in Japan from $5.59 an hour to $7.25 an hour?

If Japan want to increase its consumers spending then perhaps the Japanese government should start increasing minimum wage instead of flooding the World with excess global liquidity.

http://news.yahoo.com/photo/
070726/ids_photos_wl/
r2290821723.jpg

People wait for Japanese Prime Minister Shinzo Abe's stumping speech for Sunday's upper house election on a pedestrian overpass in Matsudo, near Tokyo July 26, 2007. The "working poor" feels left behind in Japan's economic recovery the ruling Liberal Democratic Party (LDP) is touting as one of its major achievements as it heads into Sunday's election for parliament's upper house.

Widespread anxiety among the low-paid in Japan, where the minimum wage averages 673 yen ($5.59) an hour, is one source of rising support for opposition parties, almost all of whom have promised to do more to help those on low incomes. REUTERS/Toru Hanai (JAPAN)

http://news.yahoo.com/s/afp/
20070729/lf_afp/
lifestylejapancharity
mysteryoffbeat_070729023457

Residents of a Tokyo apartment building are baffled after a total of 1.81 million yen (15,210 dollars) was found in 18 mailboxes by Saturday, a police spokesman said.

"The money was in identical plain envelopes, which were unsealed and carried no names or messages," the spokesman told AFP.

But residents became "spooked" rather than pleased with the anonymous gifts -- and were too upright to pocket the money secretly.

"Some people initially suspected they were fake bills. When they realised the bills were real, they reported them to us," the spokesman said.

The predominantly middle-class apartment building in Tokyo is not alone. An envelope with one million yen was left in the mailbox of a 31-year-old woman in the western city of Kobe on Wednesday.

Police admit they have no idea who is leaving the cash -- whether a few people are behind the bizarre giveaways or if Japan is witnessing a craze of copycat benevolence.

Since June, dozens of city halls and other public buildings across the country have reported finding neatly packaged envelopes full of cash in men's restrooms.

The bathroom money has come with identical letters asking people to do good deeds -- leading to speculation that the benefactor may be a public servant trying to cheer up his profession or perhaps a member of a new-age religion.

Japanese cash dropoffs are not always so neat.

On Wednesday, bills worth 960,000 yen were inexplicably seen "falling" in front of a convenience store.

"We can just say the money came from the skies," a puzzled police official said. "There were other passers-by outside and customers in the store but the incident caused no confusion," he said.

"People thought it was too eerie to touch."; August 08, 2007 7:29 AM
beebs said...: They're finally auctioning houses in the neighborhood. I must get a weekend paper to look-see.

beebs; August 08, 2007 7:30 AM
Anonymous said...: The Japanese economical problem is of it own self doing.

BOJ is pumping excess global liquidity into the World to bring up spending in Japan when all the Japanese government needs to do is close the gap between the poor and middle class.

http://news.bbc.co.uk/2/hi/
business/6445087.stm

Japan sets up minimum wage raise

The cabinet has approved an updated wage bill that is aimed at narrowing the gap between rich and poor in the world's second-largest economy.

Unions have called for higher wages as Japan emerges from a decade of problems and corporate profits start to pick up.

However, the bill needs Parliamentary approval, and some observers argue that it does not go far enough.

"The government is effectively postponing the issue," said Takahide Kiuchi of Nomura Securities.

Round tables

One criticism is that the updated bill does not give the level that the wage should be raised to from the current national average of 673 yen (£3) an hour.

Instead it continues to leave the job of setting minimum wage levels to committees in each of Japan's prefectures, meaning levels look set to continue to vary widely across the country.

"The government says it aims to boost the minimum wage on a scale that has not been seen in the last 40 years, but its plan only stipulates that the minimum wage will be decided at round-table committees," Nomura's Mr Kiuchi said.

One of the main concerns for politicians and observers over recent years has been the growing disparity between the haves and have-nots of Japan.; August 08, 2007 7:39 AM
Anonymous said...: I was watching CSPAN last night - yeah I know I need help - and the CEO of Freddie was speaking to the Urban League. He basically said Freddie and other will do their best to help out homeowners in any way they can.

He said foreclosures hurt lenders more than borrowers. Foreclosures drop the value of a home by 40% (sounds too high but that is what he said). So he said a lender would rather swallow a 20% loss by refinancing the borrower into a lower rate than take a 40% loss by allowing the foreclosure.

So if you are waiting for all those millions of foreclosures to come online, you might want to rethink that strategy. It will not be happening.; August 08, 2007 12:06 PM
BrianM said...: "Angry Homeowners Take to the Web"
The outside of Susan Sabin's house in Lenexa, Kan., is covered with lemons: lemon-shaped foam cutouts, twinkling lemon Christmas lights, and a lemon-adorned wreath on the front door. If you go to her Web site, you can see for yourself. You'll also see photographs of splintered beams, bowed floors, and a graphic that declares: "Pulte Homes sold me a lemon!"
Read the article here

Must suck. Newly built crap-shacks were overpriced to begin with and now are falling apart.; August 08, 2007 1:41 PM
Anonymous said...: Ted Kennedy wants to make the minimum wage $9.50 in the US and with Dems in control and W. ready give them anything they want in exchange for not pulling the plug in Iraq it will happen.

You voted for communists, you got communism. Don't be surprised.; August 08, 2007 2:53 PM
The Thinker said...: Why do people always refer to home ownership as "the American dream"? I thought the American dream was a life of prosperity. How did the concept of prosperity become embodied in the ownership of a home, especially when homes are purchased with only 20% or less down?; August 08, 2007 3:12 PM
Anonymous said...: Ted Kennedy aka 'The Swimmer'!; August 08, 2007 4:31 PM
Anonymous said...: "Ted Kennedy wants to make the minimum wage $9.50 in the US and with Dems in control and W. ready give them anything they want in exchange for not pulling the plug in Iraq it will happen."

Ted Kennedy is an inept stinking drunk who is also pro-illegal alien. Yes - the Dems are bad but that's what you get after the failed leadership of W.; August 08, 2007 4:57 PM
Anonymous said...: Another subprime lender bites the dust.

HOUSTON — Aegis Mortgage Corp., which on Monday had stopped taking new applications and said it could not meet its obligations, laid off a “substantial” number of its 1,300 workers on Tuesday.

The company said it is maintaining its servicing businesses.

The company, whose owners include private-equity firm Cerberus Capital Management, said the layoffs came as a result of the problems in the secondary mortgage market.

It still was not clear Tuesday what happened with the company’s Baton Rouge office on Rieger Road, next to the former Siegen Village cinema. Phone calls Monday and Tuesday to spokeswoman Pat Wente were not returned from the corporate office in Houston.

Aegis vacated the 40,000-square-foot location on Rieger about two months ago, said Branon Pesnell, an agent who is marketing the listing for Beau Box Commercial Real Estate.

Aegis Mortgage has 1,300 workers nationwide in about 30 U.S. branches.

Wente, responding to other media, said she could not comment on how many workers lost their jobs Tuesday. Houston television station KTRK reported the number was about 1,000.

Just a day earlier, the company had said that despite the business slowdown, its branches were open and its workers were on the job.

“We believe that making these changes in our business operations and the resulting staff reductions are necessary to address our financial challenges. We sincerely regret the impact that this necessary decision will have on our employees,” Chief Executive Dan Gilbert said in a statement.

On Monday, Aegis Mortgage had announced that besides no longer being able to accept any more loan applications, it also could not fund loans in the pipeline.; August 08, 2007 5:01 PM
Anonymous said...: Housing and Refinancing

For the last several years, the strong economy was a result of the consumer
tapping his ever-rising home equity....at least that's what CNBC and their ilk spewed. Now that the continuous equity infusion has come to a screeching halt, we're told that it doesn't really matter....that full employment and the strength of the economy itself is strong enough to overcome all the housing woes. What?; August 08, 2007 5:03 PM
Anonymous said...: To the anon poster above and his girlfriend: you two deserve (deceive?) each other. Stop fornicating, dump her, cut up the credit cards, and get real jobs actually producing something of value.; August 08, 2007 5:26 PM
Anonymous said...: So I should tell my lender, hey I think im going to forclose wanna drop that rate and loan ammount?

Brilliant!

Hope the go for it; August 08, 2007 6:32 PM
Anonymous said...: Mammoth, from the looks of your profile I am guessing you are single. Sad is the day when a 40ish Realtor wants nothing to do with you. You sexist pig. Unfortunately uneducated women are subjected to the likes of your perverted kind. Your post says far more about you than it does about realtors. I guess when all the realtors dry up you will have to go looking for attention elsewhere. Or perhaps you will spend more time here to charm us all with your lovely stories of how pathetic you are.; August 08, 2007 6:46 PM
Anonymous said...: the market has been up for two days despite all the bad news. dopes must be delirious...; August 08, 2007 6:55 PM
Anonymous said...: >>>> Anonymous said...

Another wrinkle in the Bear Stearns Hedge Fund issue. This is definitely going to generate more confidence in the brand:

Aug. 7 (Bloomberg) — Bear Stearns Cos.’ decision to liquidate two bankrupt hedge funds in the Cayman Islands instead of New York may limit creditors’ and investors’ ability to get their money back.

While most of their assets are in New York, the funds filed for bankruptcy protection July 31 in a court in the Caymans, where they are incorporated. The bank also used a 2005 bankruptcy law to ask a U.S. judge in Manhattan to block all lawsuits against the funds and protect their U.S. assets during the Caymans proceedings.

http://www.bloomberg.com/apps/news?pid=20601087&sid=awRQv0XawGk0&refer=hom

Marky Mark <<<

so bear stearns has offshore accounts in the cayman islands huh?

so let us speak now of offshore bank activity shall we?....; August 08, 2007 6:58 PM
Anonymous said...: Home ownership has really become house debtership for many in this country - you own the home *only* when you're done making payments.

"The American Dream" will very soon become "The American Nighmare" for many in this country.

Many of the ones that can hang on, will be working so much just to keep up with the monthly payments that their "quality of life" will be quickly eroding.

Many people in this country were bought on the belief that their self-worth somehow improves by buying into a house mortgage, even if renting makes more sense financially.

It's pure nonsense, but so many people still believe this, even as the residential realestate market plunges further and further.

The Thinker said...
Why do people always refer to home ownership as "the American dream"? I thought the American dream was a life of prosperity. How did the concept of prosperity become embodied in the ownership of a home, especially when homes are purchased with only 20% or less down?; August 08, 2007 7:10 PM
Anonymous said...: http://www.imf.org/external/pubs/cat/longres.cfm?sk=21200.0

Nice article on the subprime crisis from the IMF. You should do a post on it Keith.; August 08, 2007 7:32 PM
Anonymous said...: To the anonymous shallow guy (August 08, 2007 6:46 AM) with the eaually shallow girfriend living off credit....

You really need to get your priorites straight. How is it that you are trying to be al zne and positive but posting to a HOUSING PANIC SITE??? You make no sense. You sound liek you are wrting whiel on heave drugs. I cousl not believe you bought a new couch of all thing sto make yourself feel better. Good luck when you have no house to put it in. Resale value isn't great for used furniture. If you re so positive then you should try to not focus on buying expensive fish and wine to make yourself feel better. Try just liivign off nothing and paying your damn bills for once. You might be surprised at how that makes you fee a bit less stressed out. Instead of eating out all the time, if your girlfriend loves you, try cooking at home. Seems liek with the way you spend it is probably too late for you to be saved. You will loose it all. spendthrift. Then who gets stuck with the bill? ALl us people who pay ours! Thanks a lot JA! I don;t even get to drink expensive wine and eat expensive fish. Hopefully once you have lost it all you will finally relaize that you need to get your priorities straight.

By the way, this is coming from a 30yr old woman who has watched her friends treat men this way and walk away with ah eft y savings accout. What deos she do with all he rmoney while you pay the bills? Not only will you have no place to livw but you will need to change your taste in women so that you can get one that will not only want you for your "money" aka, credit that she helps destroy.; August 08, 2007 7:52 PM
Anonymous said...: August 08, 2007 6:46 AM Annon:

Feel sorry for you but reality out weighs Feng Shui every day, no matter how much positive "energy" you channel...; August 08, 2007 8:11 PM
Anonymous said...: >>>The Thinker said...

Why do people always refer to home ownership as "the American dream"? I thought the American dream was a life of prosperity. How did the concept of prosperity become embodied in the ownership of a home, especially when homes are purchased with only 20% or less down?

August 08, 2007 3:12 PM <<

good question. i think it started just after world war 2 and when they created the GI Bill....; August 08, 2007 8:33 PM
Anonymous said...: "Anonymous said...

To the anonymous shallow guy (August 08, 2007 6:46 AM) with the eaually shallow girfriend living off credit....

You really need to get your priorites straight. How is it that you are trying to be al zne and positive but posting to a HOUSING PANIC SITE???"

Wow, someone got trolled...

But everything on the Internet has to be true, right?; August 08, 2007 8:53 PM
Anonymous said...: Welcome to market crazy land

2:30pm Market is up almost 200 points

3:30pm Market goes slightly negative

4:00pm Market back up 150 points.

WTF?

Jymkata.; August 08, 2007 9:33 PM
Mammoth said...: To 40ish non-realtor 6:46 PM,
Usually I don’t respond to moronic responses to my posts but since you are obviously convinced that you are special, I will make an exception.

First, you guessed wrong.
Second, realtors want nothing to do with anybody unless it involves getting paid an obscene commission fee.

Third, sticks and stones may…

Fourth, half the fun of being here is reading all the “over the top” comments and posting one every now and then, just to get a rise out of the people who take life way too seriously.

And fifth, you are obviously prone to jumping to conclusions, have a big chip on your shoulder, are so conceited and ugly that you thought my post was directed at you, and are a childish name-caller.

If your skin is so thin that you are offended by what you read on HP, then go blog somewhere else like on “Rainbows & Unicorns.blog.”
-Mammoth; August 08, 2007 9:33 PM
Mammoth said...: “Many people in this country were bought on the belief that their self-worth somehow improves by buying into a house mortgage, even if renting makes more sense financially.”
-------------------------------
Many people in this country are under the illusion that material possessions improve their self-worth.

Self-worth comes from the inside, not from the outside.
-Mammoth; August 08, 2007 9:34 PM
Anonymous said...: Did you see the NAR revised their predictions upwards, and the stock market believed them? I guess hope always springs eternal.

http://www.forbes.com/home/markets/2007/08/08/home-builders-housing-markets-equity-cx_er_0808markets36.html; August 08, 2007 9:48 PM
Anonymous said...: August 08, 2007 6:46 AM sounds like that Stuart Smalley character on Saturday Night Live.

Think positive thoughts,yeah OK whatever chump. My advice is better start practicing saying "Would you like to supersize that?".

And let me guess you live in SoCal right? I wish you nothing but unspeakable pain and suffering, for you and your little skank of a GF.

That is all.; August 08, 2007 9:56 PM
Anonymous said...: I wonder what Mammoth looks like?; August 08, 2007 10:10 PM
The Thinker said...: All of this BS about home ownership being the American Dream is nothing more than REIC advertising, however, this party line has so frequently been picked up by politicians such as President Bush that people have accepted it as true that owning a house is the American Dream.

Its amazing how these subtle distortions of reality can go unnoticed and then so readily be adopted by the population at large.

Another good example is how the RIAA has spent so much advertising money trying to make the point that copying a CD is "stealing" that people now accept it as unquestionable fact that there is no difference between copying your friend's CD and shoplifting a CD from Walmart shelves.

If the human mind is a computer, then language is its operating system. That is to say, we think in words. Advertisers know that by introducing subtle changes to the language people use, the way people think can also be changed.; August 08, 2007 10:11 PM
Anonymous said...: I'm sick an tired of the mindless drivel on this blog. I'm sitting here in Miami Beach, with a million dollars cash in the bank and cannot afford a freaking 3 bedroom condo here. That's what reality is. A good 3BR on the water in a decent building is still priced around 3.9 Million dollars. Oh yeah, they reduced it from 4 Million. What you imbecile moron HP'ers don't get is that even with all the condo glut in downtown Miami, the real desirable places and buildings will never go down in value. Well that is of course until a Category 5 evens the playing field.; August 08, 2007 10:18 PM
Anonymous said...: Any comments about Jack's "The Mortgage Expert" column?

http://tinyurl.com/2krwf6; August 08, 2007 11:45 PM
Anonymous said...: Any HPer true believers read this book?
http://tinyurl.com/2k7fec

curious to get a HP true believer perspective; August 08, 2007 11:50 PM
burn baby burn said...: An HPer’s point by point analysis of this dumbass.

This guy wants to Casey but, I think he is dumber than Casey.

“I lost my job (mortgage-related)”

Good now get some real skills and an honest job.

“We live in my place which is now officially "underwater"”

Send back the keys”
“on the mortgage; mortgage due to reset later this year which will be a reall challenge.”

See above
“All of this has me sweating bullets.”

Good it should you are in a lot of trouble

“There have been a lot of fights latey, lots of screaming/weeping, late night stuff”

There will be many more break up now the longer you stay together the worse it will end

“I pay ALL the mortgage, ultilities, take her out to dinner, etc etc.”

You did before you lost your job.

“This little bump in the market has everyone spooked and its gone on a lot longer than I thought it would”

I hear the recovery is set mid 2009 but they keep pushing that back

“and even though everyone knows it will be over soon”
Denial is not just the longest river in Africa

“There is A LOT OF NEGATIVITY and people surrenduring to DOOM AND GLOOM "CHICKEN LITTLE" stuff”
People are starting to figure it out

“POSITIVE THOUGHTS. Me and GF had a long talk over breakfast today and we decided that we ABSOLUTELY, POSITIVELY MUST think POSITIVE and ONLY POSITIVE. We both understand that postive energy is manifested by positive ideas and that wallowing in negativity only brings you down, creates negative vibrations and so on.”
This is such a load of shit I am not going to say anything
“I felt a little guilty about putting stuff on the credit card when no money is coming in”
As you should! Wait till you start using one card to pay another card off minimum payment of course.
“A few hours later with a nice new sofa and curtains, we really did feel better about ourselves,”

Save the packing materials they will come in handy when you get foreclosed on. As long as both of you feel good that is what is important. Never lose sight of that.

“So even though it might seem like an indulgence it is ABSOLUTELY NECESSARY to keep our karmic momentum in a positive light.”

Spoken just like an addict you need Debtors Anonymous!

“We both agreed NOT to read the papers or watch the news for the next two weeks and see how that goes...right now the media is whipping up NEGATIVE ENERGY and SCARE MONGERING that serves no purpose but to feed society's fears...very irresponsible!! I got so angry at the coverage about the real estate scene, I don't understand how the media (both local and national) can be so irresponsible and actually even (I think it is fair to say) morally”

Wow where to start yes ignorance is always preferable to knowledge. /if you do not read the paper how is your GF going to know which “Club” she should “Dance” at?

“I am working with my brother to start OUR OWN lending/finance operation. No solid leads yet but LOTS positive feedback from various contacts which has been VERY encouraging. And we both understand that with our large networks of associates and our combined experience we can turn this "downturn" into a chance to finally break free of the drudgery of working for others and MANIFEST OUR REAL DREAMS by working for ourselves. So in the long run, despite the troubles, this experience will turn out to be the best thing that ever happened”

Goog luck with that. Here is a clue for you no one needs your services in the Mortgage industry(sic) that is why they shit canned you.; August 09, 2007 12:17 AM
Anonymous said...: Anon 9:56 PM,

You didn't "get it" did you?

Clearly you are a complete and utter imbecile and moron.

Anon 6:46AM, Bravo, well written.; August 09, 2007 1:31 AM
Anonymous said...: cashcow you're right. Desirable areas will not go down and that goes for Miami and everywhere else. Sure maybe prices will drop a couple of bucks here or there, no more.

Shitholes like San Bernardino will fall 50% no disagreement there from me. So what? They could give homes away for free and I wouldn't live there. Same with anywhere in the IE.

Areas I do want to live in like Pasadena, Sherman Oaks, Pacific Palisades etc are still going up in price even now with all the mortgage issues. People who can afford to live there, can afford it whether mortgage rates are 6% or 8%. If you think a $2M home in Pasadena will be affected by what happens in San Mexicodino you're wrong.; August 09, 2007 1:37 AM
Anonymous said...: mammoth, I find your type offensive. I bet that realtor is working hard at finding a new job so she won't have to deal with middle aged men who are so fond of themselves. You may just be providing a worthwhile service here riding the world of the realtor. And baby this bitch don't play with unicorns, had you said that to me I'd have sent my husband after you. Good luck with your marriage, she's just trying to figure out where all the money is before she leaves you, you control freak.; August 09, 2007 1:43 AM
Anonymous said...: cash cow, Im sick of hearing you drivel period.; August 09, 2007 1:43 AM
Anonymous said...: >>>Mammoth said...

“Many people in this country were bought on the belief that their self-worth somehow improves by buying into a house mortgage, even if renting makes more sense financially.”
-------------------------------
Many people in this country are under the illusion that material possessions improve their self-worth.

Self-worth comes from the inside, not from the outside.
-Mammoth

August 08, 2007 9:34 PM <<<

true. would a young person learn this by watching a VH1 reality show? or any other mindwashing show on television. So many young women have been brainwashed into thinking that a man is only as good as his bank account. This too has been learned from television. Television has done more to destroy the american culture than any other concept of our modern lives.; August 09, 2007 1:47 AM
Anonymous said...: How To Effectively Deal w/ a Mortgage Broker:

by Jack "The Mortgage Professor"
http://tinyurl.com/2drz82

any HPers who have already gone thru the process a few times have any opinions on his article?; August 09, 2007 2:09 AM
Roccman said...: rj said "I pray the endgame to the struggle for control of global energy resources doesn't end up going nuclear. "

It will..

it can be no other way.

if we don't go nuc we loose for sure...if we do... we have .05% chance of being the last nation standing.

cornered animals are dangerous...predatory cornered animals are worse.

this will not end well.; August 09, 2007 2:24 AM
Anonymous said...: KW said:"Many people in this country were bought on the belief that their self-worth somehow improves by buying into a house mortgage, even if renting makes more sense financially".

Agree KW! I dont know why people think renting is so bad, it feels like we are looked down on. So sad...I dont care, but it seems some of our friends actually feel sorry for us, I just dont understand it.

All of us here know why the RE industry coin a sales pitch of "starter home"... people that bought homes in the 1930s-1940's that had income to spare, stayed in their smallish house until they died. Cant people look back in history to determine why that is?

I wish people were more thankful for what they have, instead of wishing for that big McMansion in the sky.

This recession/depression will put housing in a very different perspective for ex-homeowners and new homebuyers, which is a good thing.; August 09, 2007 3:34 AM
Anonymous said...: 114 major U.S. lenders have "imploded"

http://ml-implode.com/; August 09, 2007 5:54 AM
stocksystm said...: Bloomberg:

"BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings after concern over U.S. subprime mortgage losses roiled credit markets.

The funds had about 2 billion euros ($2.76 billion) of assets on July 27, including 700 million euros in subprime loans rated AA or higher. The Paris-based bank said today that it will stop calculating the net asset value for the funds, Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia"

Just 8 days ago the head honcho was saying there wasn't a problem, in that these loans were rated AAA and AA. God...once the ARM resets really start hitting with force this is going to get uglier and uglier.; August 09, 2007 12:07 PM
Anonymous said...: Somebody get the Goldman Alpha story from today's WSJ ...; August 09, 2007 12:09 PM
Anonymous said...: GOLD TO THE MOON ALICE!!!!!!; August 09, 2007 12:09 PM
Anonymous said...: anon 6:46

Thanks for that post. I snorted juice out my nose reading that.

Each sentence reminded me of someone different. This one: "......some ootoro sashimi the Japanese fish market guy keeps under the counter for "special" customers like us :-) was the best.

In all seriousness, I think you should tighten it up, re work a few of the sentences and submit it as satire to a few magazines. It is a great theme and very timely.; August 09, 2007 12:19 PM
lili98 said...: Watching CNBC...panic on the trading floor... I guess, ECB injected 95billion euros after European credit markets seized up.; August 09, 2007 1:50 PM
lili98 said...: Fed just injected 12 billion dollars into the banking reserve system! CNBC saying some on floor asking for an immediate interest rate cut>; August 09, 2007 1:59 PM
Anonymous said...: Guess this has been posted already, but ...
http://tinyurl.com/39ned8
Cramer on Colbert - now a man of the people.; August 09, 2007 3:02 PM
BrianM said...: NPR: Calif. Suburb Makes Lenders Care for Foreclosed Homes

Morning Edition, August 9, 2007 · Home foreclosures jumped nearly 60 percent during the first half of the year, and many of those foreclosed houses are now sitting vacant. But in Chula Vista, Calif., residents passed a law requiring lenders to hire a management company to look after vacant houses when a buyer defaults.
NPR Link; August 09, 2007 3:02 PM
Anonymous said...: My prediction at 10:00EST:

DOW UP (yes up) 200 by 3:00pm; August 09, 2007 3:04 PM
Anonymous said...: The housing crash is the fault of all the negative comments from bloggers and websites. If everyone had just said nice things about real estate I could have bought a home in my lower-middle-class California neighborhood for $400,000 in 2006 and sold it for $1.2 million today.; August 09, 2007 3:14 PM
Anonymous said...: LauraVella said...

Agree KW! I dont know why people think renting is so bad, it feels like we are looked down on. So sad...I dont care, but it seems some of our friends actually feel sorry for us, I just dont understand it.

----------------

Amen sister. I feel the same way sometimes, I feel sorry for myself even LOL. In all seriousness I know my wife cringes when she tells people we rent, almost like telling them she has a disease.

I personally don't give a fuck what people think, about renting or anything else. I was mocked in 2006 when I started renting. I was called Mr. Sadball for being negative on housing.

Two couples I know have been trying to sell their home for over 6 months. One of them was going to move out of state for a great job opportunity. Couldn't sell, ended up not moving, ended up not taking the new job. I haven't said it but I know they know that had they been renters, they'd be there now. Oh well as long as they're living the "American dream" of home ownership right?

I am slowly being proved right, but I will not be an asshole and gloat. As the saying goes, living well is the best revenge.

To be quite honest even if prices do fall to where I think they should I don't know if I will want to buy again. Renting's less work. Someone mows my lawn, cleans my pool, cleans the gutters, sprays for pests all for the grand sum of $0 to me. When my fridge broke, I called the landlord. When the A/C started making a funny noise, I called the landlord. The alarm system needed updating, landlord paid for it.

Why go back to paying for all that myself?; August 09, 2007 3:26 PM
Anonymous said...: Kieth:

Cramer was on Colbert last night- it was pretty good; August 09, 2007 4:05 PM
az_mtb said...: Keith.....excellent housing article from the Motley Fool.

http://tinyurl.com/yw6x4r; August 09, 2007 4:18 PM
BrianM said...: Fewer Mexicans seen sending money home from U.S.

By Adriana Garcia

WASHINGTON (Reuters) - A lower percentage of Latin American workers living in the United States is sending money to family members back home, a report showed on Wednesday.
Reuters article here; August 09, 2007 5:58 PM
Anonymous said...: @Anonymoron 1:43 AM. I make you sick? You must be some brain amputated renter living in a 1 BR or studio shit shack playing hide and seek with the cock roaches. Unless you have something meaningful to contribute, kiss my property owning butt. Idiot!!!; August 09, 2007 6:08 PM
Anonymous said...: I'm confused.

DR Horton is up as is Toll and KB Homes. SRS (Ultra Short R/E) is also up all the while the broad market is down 2% based on subprime issues.

Can someone please explain this phenomenon to me.

I give up trying to figure out any logic in what stock markets do.; August 09, 2007 6:17 PM
Unknown said...: We are poised to lose 80% of our GDP based on the housing mess...how does one come to this conclusion?

Per Jim Willie: "...$2 to 3 trillion in bond losses from CDO plus MBS bonds at a minimum. Match that with $4 to 6 trillion in home equity losses at least. Included in my estimate is the collateral damage of another $1 trillion in losses to high grade mortgage bonds and corporate bonds."; August 09, 2007 6:43 PM
Anonymous said...: Like Mr. Sanders, Joel Kaufman, president of Pittsburgh National Lending, works primarily with subprime lenders. When he saw problems developing in the subprime market several months ago, his South Side-based company changed its approach to getting customers qualified for loans. In the past, Mr. Kaufman would submit a customer's loan application to a single lender, then submit it to a different lender only if the first one did not work out.

Now, he said, "We like to submit our loans to at least three different lenders" from the outset.

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

Now we know why mortgage applications have surged recently.; August 09, 2007 7:11 PM
benevolentstranger.blogspot.com said...: HOUSTON, ST.LOUIS, NEW YORK CITY...
WE HAVE A PROBLEM!!! This is obviously not contained.

How many world banks does it take to "confirm" the psychology that everything is "ok"?

At least Korea won't play by your rules. Unfortunately Canada, Japan, and UK will.

Nobody wants our credit, our debt, our real estate, our cars, our paper "money" and pretty soon our stocks.

I feel like we are stuck in that VISA commercial where everything was moving at a fast pace and then halted because some joe schmow paid with paper dollars and then the whole economy crashed and stood still.; August 09, 2007 7:30 PM
Anonymous said...: My god!!! Just got into a discussion with a guy here at work. He was saying that he welcomes the bailout, because what will he do when he can't afford his ARM? He said it wasn't fair, how heartless to put millions on the streets. I said why would you buy something you can't afford long term? No answer except it wasn't fair. My opinion is basically tough shit!!!!

Oh, and the Chimperors opinion is also tough shit - NO BAILOUT!!!!; August 09, 2007 8:04 PM
Anonymous said...: Does anyone really believe that the fed has to cut rates next month? Apparently, the market is positive they will. I'm not so sure. Since they haven't moved yet, I hope they don't bail out all the suckers.

---------------------------------

Market prices near 100% odds of September rate cut: analysts

By Nick Godt
Last Update: 10:22 AM ET Aug 9, 2007

NEW YORK (MarketWatch) -- The market is now pricing in nearly 100% odds that the Federal Reserve will cut interest rates by the end of September, analysts at Action Economics said. Following news that French bank BNP Paribas suspended three funds due to a lack of liquitity, Fed fund futures, which price the odds of moves in the central bank's key rate, rallied amid safe-haven moves, Action Economics said. The result is that the market "now show a 25 basis point rate cut by next month with nearly 100% probability, with another 25 basis cut seen as increasingly likely by the end of the first quarter [of next year]," it said.; August 09, 2007 8:16 PM
Anonymous said...: I just thought of a great "Stupid Question of the Day" (not meant ot be offensive):

Do you think there will be a frequent occurrence of "jewish lightning" as a result of people being upside-down on their mortgages?; August 09, 2007 8:19 PM
Anonymous said...: Another guy I spoke to said all the HP stuff and media stuff concerning the housing is all bullshit and media prop and that everything is fine and that they economy is the best its ever been. Appearently he is dillusional...; August 09, 2007 8:20 PM
Unknown said...: I wonder how DOPEY did in the markets today. Everything is going great, right? Oh, that was 387 DOOOWWWWWNNN on the DOW...oops. More of the same for Friday, have fun DOPEY.; August 09, 2007 9:18 PM
Anonymous said...: Dow industrials forfeit more than 380 points, end at day's worst level
.
.
.

DOPES, where are you?; August 09, 2007 9:19 PM
Anonymous said...: William said...
>>>
I don't really agree with al the doom and gloom on this site, but I think we'll all agree that Cramer flipping out is funny. Sorry I don't have a tiny URL...

http://www.businessweek.com/the_thread/hotproperty/

August 07, 2007 9:57 PM <<<

oh come on william. come over to the dark side....; August 09, 2007 9:21 PM
Anonymous said...: RJ said...

The only statistics that matter now:

Projected demand for oil in five years - approx. 95.8 million barrels per day.

Projected supply - anywhere between 75 - 80 million barrels per day depending on depletion rates and new projects coming on line.

There are no viable alternatives coming online on a sufficient scale to mitigate the effects on the global economy while the spread between supply and demand continues to grow into the foreseeable future.

(PEMEX has already stated that production from their Cantarell field will probably be insignificant within 7 years with serious consequences for U.S. oil consumption.)

Most of the growth fueling the equities markets has been the emerging markets. Within a couple of years energy shortages will start to limit economic growth in Asia. Once the markets figure out that the global economy is not a perpetual growth machine they will crash. What emerges is anyone's guess. But we're living during one of those great transitions in history when civilizations adapt and transform or collapse. We're not exempt from the limits of nature regardless of our technological efficiency in using energy and we're about to experience the unforgiving nature of those limits.
The Great Mortgage Collapse is nothing but the finale to the last desperate attempt to keep the delusion of never ending economic growth alive.
Spend some time seriously researching what is truly going on in China and India. They are a tragic farce of an attempt to replicate the lifestyle of the West which was only made possible by abundant cheap energy.
I pray the endgame to the struggle for control of global energy resources doesn't end up going nuclear.

August 08, 2007 2:45 AM <<<

rj, the world is swimming in oil. may i ask you? who benefits from the myth of oil shortages? hmmm?; August 09, 2007 9:23 PM
Anonymous said...: hillary bailout is here...$1B will be $100B in no time

fannie and freddie ceiling is being raised...Bush says no today, by next week it will be a yes

This stock market mini-crash is going to be bad news for housing bears; August 09, 2007 9:53 PM
Anonymous said...: There is a former colleague of mine that I used to be fairly close with. We live about 1000 miles apart but used to email/call each other frequently. Then slowly but surely he started brushing me off. I was confused, thinking did I say something, do something to him? Didn't make any sense.

Then it hit me. He lives in Florida. He has a 4500 sq ft home. He bought in 2004. I sold in 2005 and have been a bear on real estate. He also has 2 new cars, a couple of kids and a wife that doesn't work. I rent, have no kids, drive an old POS car, and have a wife who makes $90K. I have no debt and a swelling bank account. I don't know the details of his finances, but I can't see them being all too sound.

If I were him I'd probably be pissed off at me too.

Sad that this thing insanity has killed off a friendship. Any else lose friendships over your views?; August 09, 2007 10:47 PM
Anonymous said...: RON PAUL will be on Kudlow & Co. tomorrow; August 09, 2007 10:50 PM
Anonymous said...: Hey sheeple, get to know your "wonderful" GOP party, the same one that makes up phony wars to transfer your hard working money to their cronies:

"Rep. Bob Allen cites fear of black men, weather in oral sex arrest.

Representative Bob Allen, a Republican in the Florida House of Representatives, blamed the weather and his fear of black men for offering $20 to perform oral sex on a man in a public park. The man turned out to be an undercover police officer, who promptly arrested Allen.

Titusville Officer Danny Kavanaugh who was on plainclothes duty says he observed Allen entering the washroom twice. Kavanaugh said he was drying his hands in a stall when Allen peered over the stall door.

The officer's report said that after peering over the stall a second time, Allen pushed open the door and joined Kavanaugh inside. Allen muttered "'hi,'v" and then said, "'this is kind of a public place, isn't it,'" the report said.

Kavanaugh wrote that he asked Allen about going somewhere else and Allen suggested going "across the bridge, it's quieter over there."

"Well look, man, I'm trying to make some money; you think you can hook me up with 20 bucks?" Kavanaugh wrote in the report that he had asked Allen.

The Republican lawmaker, the report said, replied, "Sure, I can do that, but this place is too public."

According to Kavanaugh's statement, the officer said, "do you want just (oral sex)?" and Allen replied, "I was thinking you would want one."
It was at that point Allen was arrested.

When Allen was loaded into the patrol car, the statement said, he asked if "it would help" that he was a state legislator.

"No," the officer said.

Soon after taking office in 2001, Allen was one of 21 Florida legislators to sign Gov. Jeb Bush's friend-of-the-court brief supporting the state's ban on gays adopting children.

In March, he co-sponsored an unsuccessful bill that would have enhanced penalties for "offenses involving unnatural and lascivious acts" such as indecent exposure.

The Florida Times Union reports: "In his seven years in the Legislature Rep. Bob Allen of Merritt Island has built up a 92 percent approval rating with the Christian Coalition of Florida on issues like abortion, marriage and pornography."

You sheeple, are geniuses!!! Now go on read bibble and kiss Karl Rove's picture before going to bed.; August 09, 2007 10:57 PM
Anonymous said...: "cashcow you're right. Desirable areas will not go down and that goes for Miami and everywhere else."

Bwahahahahaha...Miami, desirable area? The funniest thing I've read today.

Thanks for making me spill Diet Coke on my keyboard.; August 09, 2007 11:05 PM
Mammoth said...: 40ish non realtor said...
mammoth, I find your type offensive. I bet that realtor is working hard at finding a new job so she won't have to deal with middle aged men who are so fond of themselves. You may just be providing a worthwhile service here riding the world of the realtor. And baby this bitch don't play with unicorns, had you said that to me I'd have sent my husband after you. Good luck with your marriage, she's just trying to figure out where all the money is before she leaves you, you control freak.
August 09, 2007 1:43 AM
-----------------
40ish non realtor, I find your type clueless. That realtor had better find a new job because her trade is dying.

You called yourself the “b-word” and nobody would disagree. And oooh, I am scared of your husband, who I bet you have trained to sit if you tell him to sit, run when you tell him to run, and chase down bloggers who piss you off. Now, who is the control freak?

Living with somebody with your cranky personality, the poor sap likely rues the day that he said, “I do” and is contemplating just how to make his exit with his nuts and wallet intact.

And every time that he looks at your face in the morning, he remembers what you looked like years ago, and just wilts inside.

“It was a woman in her mid-40’s – right at that age where their appearance really starts going downhill.” So THAT’s what triggered your emotional response to my original post! You identify with this every single time you look in a mirror! It sucks to see yourself, doesn’t it?

And what also set you off is that you in fact ARE a realtor, despite the handle you chose for yourself.

You are a liar just like most of the others in your profession – admit it! No get back out there knocking on doors looking for new listings, and enjoy your ramen dinner tonight.

Mammoth; August 09, 2007 11:06 PM
Anonymous said...: "I'm sick an tired of the mindless drivel on this blog. I'm sitting here in Miami Beach, with a million dollars cash in the bank and cannot afford a freaking 3 bedroom condo here."

Hey cashcow, first of all, we don't believe that an idiot like you can ever put a million dollars together, if it's not borrowed with fraudulent loans. Second, I live in Miami Beach and there are plenty of 3 bedrooms oceanfront for less than 500k. With $3.3 million you buy a mansion in Fisher Island, Venetian Islands, Coral Gables, Biscayne Bay, Palmetto Bay, Pinecrest, etc. You are a tool and a liar.; August 09, 2007 11:39 PM
Anonymous said...: BIG NEWS!! You thought today's market action was brutal, just wait till tomorrow morning!!

Ready for Countrywide to crash tomorrow morning at the opening bell? Here it comes!!!!!!!!

From CNBC just 5 minutes ago: Breaking news - Countrywide just announced a writedown from $1B to $800M and possible jeopardy to their available backing. Noted that this could "signifiganty affect earnings".

More to come...; August 10, 2007 12:23 AM
Anonymous said...: http://www.weissgroupinc.com/whitepaper1/Housing_white_paper.pdf; August 10, 2007 12:30 AM
Anonymous said...: More about Countrywide from the WSJ Online site, they also have a link there to the SEC filing. Look out tomorrow!!

Countrywide Hit by Credit Market Woes

Countrywide Financial Corp. faces "unprecedented disruptions" in debt and mortgage-finance markets that could hurt earnings and the company's financial condition, the Calabasas, Calif., lender said in a regulatory filing. (Read the SEC filing)

The company, the largest U.S. home mortgage lender in terms of loan volume, said reduced demand from investors is prompting it to retain more of ...; August 10, 2007 12:35 AM
Anonymous said...: To anon with the realtor GF...

Your post has to be a satire, correct?

Nobody in their right mind would post what you did on a website like this unless it was satire. BTW, if it is satire... then it is VERY good! Perhaps you should write for the Onion.; August 10, 2007 12:42 AM
Anonymous said...: More from Countrywide's 10Q filing (note this was added):

Item 1A of our 2006 Annual Report presents risk factors that may impact the Company’s future results. In light of recent developments in the mortgage, housing and secondary markets, those risk factors are supplemented by the following risk factor:

Debt and secondary mortgage market conditions could have a material adverse impact on our earnings and financial condition

We have significant financing needs that we meet through the capital markets, including the debt and secondary mortgage markets. These markets are currently experiencing unprecedented disruptions, which could have an adverse impact on the Company’s earnings and financial condition, particularly in the short term.

Current conditions in the debt markets include reduced liquidity and increased credit risk premiums for certain market participants. These conditions, which increase the cost and reduce the availability of debt, may continue or worsen in the future. The Company attempts to mitigate the impact of debt market disruptions by obtaining adequate committed and uncommitted facilities from a variety of reliable sources. There can be no assurance, however, that the Company will be successful in these efforts, that such facilities will be adequate or that the cost of debt will allow us to operate at profitable levels. The Company’s cost of debt is also dependent on its maintaining investment-grade credit ratings. Since the Company is highly dependent on the availability of credit to finance its operations, disruptions in the debt markets or a reduction in our credit ratings, could have an adverse impact on our earnings and financial condition, particularly in the short term.

The secondary mortgage markets are also currently experiencing unprecedented disruptions resulting from reduced investor demand for mortgage loans and mortgage-backed securities and increased investor yield requirements for those loans and securities. These conditions may continue or worsen in the future. In light of current conditions, we expect to retain a larger portion of mortgage loans and mortgage-backed securities than we would in other environments. While our capital and liquidity positions are currently strong and we believe we have sufficient capacity to hold additional mortgage loans and mortgage backed securities until investor demand improves and yield requirements moderate, our capacity to retain mortgage loans and mortgage backed securities is not unlimited. As a result, a prolonged period of secondary market illiquidity may reduce our loan production volumes and could have an adverse impact on our future earnings and financial condition.; August 10, 2007 12:44 AM
Anonymous said...: WHat's the all the talk about the CFC? I don't understand what they are saying.; August 10, 2007 12:49 AM
Anonymous said...: The "Great American Dream" - of owning "a great American home" actually started with Thomas Jefferson's back in the late 1700's, and his been going forward in leaps, bounds, booms and busts ever since.; August 10, 2007 12:55 AM
Samuel Adams said...: Uh-oh. News out on Countrywide. Almost looks like the press statements we have seen on other lenders that are no longer with us.

QUOTE:
BREAKING ON CNBC!

Countrywide Financial is now stating (CFC-NYSE) that they MAY NOT BE ABLE TO SECURE FINANCING OR LOAN SUPPORT for their mortgage portfolios. The problem has been expanded from subprime into other branches of their managed portfolios.

Loans previously thought as secure lines of credit are no longer guaranteed.

Gang, I'm trying to get into the OSCAR site but my internet connection is crap tonight.

As soon as I can get the SEC fiing in full, I will post it.

This is HUGE.

I'm talking MAJOR LEAGUE DOT.
http://www.timebomb2000.com/vb/showthread.php?t=251936; August 10, 2007 1:02 AM
Anonymous said...: CFC story means fed lowers next week...maybe even tomorrow. All of this happening so fast will come back and bite us in the ass I fear. Let me explain.

Had AHM failed then 2 weeks later BNP does their shit, then 3 weeks later CFC is one thing. It's bad news but oh well shit happens. But all of it happening one day after the next it will cause panic. And when there is panic bad shit happens.

You get Hillary's bailout. You get Freddie and Fannie raising caps. You get Bernake doing the emergency lowering. You get the ECB thworing money all over.

What this will mean is a ton of money propping up home prices for many more years to come. Add in a year or two of 10% inflation and prices may actually even start rising again soon.

Careful what you wish for Keith. You got the housing panic. But it will be an empty victory I'm afraid.; August 10, 2007 1:29 AM
Anonymous said...: Finally this afternoon, that anoying ad is gone from Yahoo's webpage advertising a home loan with no SS# needed!

Todays stock market killed the beast.; August 10, 2007 1:37 AM
Unknown said...: haha look at this guy

http://content.hamptonroads.com/story.cfm?story=126210&ran=23054

the WHOLE housing market is a racket!
its just totally hidden (like all good ponzi) until the collapse then all the investors line up crying foul and see each other.; August 10, 2007 1:46 AM
Anonymous said...: Mortgage sales plunge almost 90 percent since May

http://tinyurl.com/2uu76r

"In July, mortgage sales plunged to $11.2 billion nationwide, from $41.6 billion in June and $92.2 billion in May, according to FBR Investment Management, which tracks the data."

Can you say DEPRESSION.

I knew you could.

kochevnik; August 10, 2007 1:52 AM
Anonymous said...: MAJOR LEAGUE DOT.

what does "DOT" stand for?; August 10, 2007 2:07 AM
Anonymous said...: Countrywide Hit by Credit Market Woes
By JAMES R. HAGERTY
August 9, 2007 7:31 p.m.

Countrywide Financial Corp. faces "unprecedented disruptions" in debt and mortgage-finance markets that could hurt earnings and the company's financial condition, the Calabasas, Calif., lender said in a regulatory filing. (Read the SEC filing)

The company, the largest U.S. home mortgage lender in terms of loan volume, said reduced demand from investors is prompting it to retain more of its loans rather than selling them. The company also has been shoring up its finances. "While we believe we have adequate funding liquidity," it said in a quarterly filing with the Securities and Exchange Commission, "the situation is rapidly evolving and the impact on the company is unknown."
See the SEC filing from Countrywide Financial.

Payments were at least 30 days late on about 20% of "nonprime" mortgages serviced by Countrywide as of June 30, up from 14% a year earlier. Nonprime includes loans to people with weak credit records and high debt in relation to their income, as well as to people who don't document their income or assets. On prime home equity loans, the delinquency rate was 3.7%, up from 1.5% a year before. For all loans, the rate was 5%, up from 3.9%.

In a sign of the growing difficulty in selling loans, Countrywide said that it transferred $1 billion of nonprime mortgages from its "held for sale" category to "held for investment" in the first half. Countrywide marked the value of those loans down to $800 million. It also decided to retain as investments, rather than sell, $700 million of prime home equity loans, marking them down to $600 million. Countrywide has said many of those home equity loans were second-lien mortgages used by people who put little or no money down in buying a house.

And in predictable CFC news:

NEW YORK (AP) -- The chairman and chief executive of mortgage lender Countrywide Financial Corp. exercised options for 92,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing Wednesday
In a Form 4 filed with the SEC, Angelo R. Mozilo reported he exercised the options for shares on Wednesday for $14.69 apiece and then sold all of them the same day for $28.74 apiece.; August 10, 2007 2:07 AM
Anonymous said...: NEW YORK (Reuters) - Goldman Sachs Group shares fell nearly 6 percent on Thursday after another of its hedge funds posted losses and reportedly sold positions.
North American Equity Opportunities, which started the year with about $767 million in assets, was down more than 15 percent this year through July 27, a person familiar with the situation said.

Declines at that fund follow a 12 percent drop in the last two weeks at Global Alpha, Goldman's flagship $9 billion macro hedge fund. That fund is down 16 percent for the year and traders have said the fund is selling parts of its portfolio.

Goldman denied talk on Wednesday it was liquidating the fund and declined further comment. On Thursday, the bank declined to comment on the North American Equity Opportunities fund.

Equity Opportunities is a market neutral stock fund that takes long and short bets. The smaller fund, like Global Alpha, relies on computer-driven "quantitative" trading models.

Goldman shares fell $11.05, or 5.7 percent, to $182.25 on Thursday. Since June 13, Goldman has fallen 22 percent,; August 10, 2007 2:11 AM
Anonymous said...: Mammoth, yadda yadda yadda
Mammoth=attention whore
love 40ish non realtor; August 10, 2007 3:04 AM
Anonymous said...: well it is about time for the dreaded al quaeda to blow up a dirty bomb on wall street, thereby closing the area to workers for months and during this time period all records of sub prime cdo's etc at the various wall street banks, would shall we say.......grow legs........and vanish.......; August 10, 2007 3:28 AM
FlyingMonkeyWarrior said...: @ Anonymous August 08, 2007 6:46 AM
Are you Casey Serin?; August 10, 2007 3:31 AM
stuckinthecity said...: Cramer just admitted that he is RENTING!!!!!

hahahahahah

get a clue people.; August 10, 2007 4:12 AM
Anonymous said...: 115 major U.S. lenders have "imploded"

http://ml-implode.com/; August 10, 2007 6:23 AM
Anonymous said...: Countrywide Financial Corp. (CFC)

After Hours: 25.00 Down 3.66 (12.77%) as of Aug 9 on 08/09/07

Last Trade: 28.66

http://finance.yahoo.com/q/mh?s=CFC; August 10, 2007 6:31 AM
Anonymous said...: CREDIT WORTHINESS! CREDIT WORTHINESS! CREDIT WORTHINESS!

People are confused.

The problem is not about liquidity, there is a glut of liquidity in the market place.

The problem is with CREDIT WORTHINESS, Carry Trade Investors are wising up. Why pour more good credit into a risky position with little return when corporate junk bonds outside of the housing sectors posed less risk and higher return.

Let the central banks be the creditors of last resort.

ECB picked up 94.8 billion euros (130.2 billion dollars) of the bad debt.

US Federal Reserve picked up 24 billion dollars of the bad debt.

BOJ picked up one trillion yen (USD 8.4 billion) of the bad debt.

http://sg.news.yahoo.com/
afp/20070810/tbs-us-japan-economy-
bank-property-e5c2383.html

A BoJ spokesman said the central bank had "judged it would be better to offer (ample) funds."

"They needed to stabilise money market interest rates," said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo.

"This increase in interest rates globally is reflecting the increasing credit risk of some financial institutions," he said.

The main concern is that if the banks and investment houses become increasingly reluctant to provide funds, the broader economy as a whole will slow since businesses will not be able to finance their operations.

If that happens, there could be a destructive knock-on effect as spending and employment fall, running the risk in a worst case scenario of a recession, where growth turns negative.

Normally, central banks would then cut interest rates but if lenders remain worried about possible exposure to US home loan securities that could be worthless, then they will only want to lend at higher rates.

Shirakawa, a former BoJ official, said the BoJ's move should not be confused with a monetary loosening to support economic growth.; August 10, 2007 7:10 AM
Anonymous said...: A sea of liquidity and not a drop to be given to US subprime mortgage backed securities.

http://www.pbs.org/nbr/site/
onair/transcripts/070809c/

KANGAS: Bill Gross, given that liquidity problem at one of Europe's largest banks, BNP Paribas, are we looking at the start of a contagion where it is not just a U.S. problem, but a global one.

GROSS: Well Paul, it a global one from the standpoint of the sub- primes being present in many global portfolios. And you know liquidity is really a state of mind. It's between the ears as opposed to in a balance sheet. And to the extent that people are afraid of making loans to other institutions, when one institution is unwilling to basically extend a loan to another for fear that a portfolio that they have might contain a sub- prime, then that's really what's behind the problem.

IT'S NOT THAT THERE IS NOT CREDIT AVAILABILITY. IT'S NOT THAT THERE IS NOT AN APPROPRIATE PRICE FOR THAT CREDIT. IT'S JUST THAT PEOPLE ARE UNWILLING TO EXTEND A HAND AT THE MOMENT BECAUSE THERE IS A LOT OF FEAR.; August 10, 2007 7:31 AM
Anonymous said...: How can Fannie Mae and Freddie Mac put a price on FEAR?

http://www.pbs.org/nbr/site/
onair/transcripts/070809c/

YASTINE: Bob Hormats, a question for you because one of the keys as Bill Gross just mentioned is liquidity. And you can't have liquidity until somebody put a price on these sub-prime mortgage securities. There has been some discussion about bringing Fannie Mae and Freddie Mac in, allowing them to buy some of these kinds of sub-prime products to put a price and provide liquidity. What is your sense about whether that discussion will continue forward here and whether it's the right one to have take place in this situation?

HORMATS: Well, it will certainly continue forward. There is going to be a lot of pressure on them to do that. And they seem to be at least discussing the prospects of taking some action. It's not a panacea because they can't really intervene in all parts of the market.

But I do think that the pressures are on them and political pressures are something they have to deal with and probably will. But let's not look at that as a miracle for the whole set of issues. There are a lot of other issues out there that their intervention is not going to be able to wipe away.; August 10, 2007 7:33 AM
Anonymous said...: The Australian dollar shed as much as 2 percent in less than 24 hours as investors retreated from riskier bets after Wall Street stocks dived on news a French bank had frozen funds exposed to troubled U.S. credit markets.

The widening fallout from the U.S. subprime mortgage mess prompted three central banks to inject temporary liquidity to support their respective financial systems.

"These moves are aimed at ensuring the adequate functioning of banks during a temporary crisis," said Stephen Roberts, chief economist at Grange Securities, a unit of Lehman Brothers.

http://news.ninemsn.com.au/
article.aspx?id=285295; August 10, 2007 7:39 AM
Anonymous said...: Is yen carry trade unwinding?

http://www.canada.com/
nationalpost/financialpost/
story.html?id=2723d480-f500-
41a9-ac45-89d27de65a57&k=47204

"We had a bit of unwinding of the carry trade again which basically hurt everything except the yen and the franc,"

In carry trades, investors borrow low-yielding currencies like the yen to invest in higher-yielding assets like the Canadian, New Zealand and Australian dollars.

The Canadian dollar was rattled on Thursday as signs that turmoil in U.S. credit markets was spreading abroad forced investors to flee riskier assets while domestic housing data also weighed on the currency.

The news prompted major central banks, including the Bank of Canada, to inject funds into money markets to try to calm credit markets and meet liquidity needs.

"Canadian dollar is also being hit in the cross current of concerns about global growth and a bit of a pullback in oil and other commodity prices well."; August 10, 2007 7:45 AM
Anonymous said...: Yen Gains Against Major Counterparts

The yen moved higher against the other majors on Thursday in New York as Japan recorded a foreign capital inflow of 894.2 billion yen on domestic securities for the recent week. The yen moved away from recently-visited lows against the euro, dollar and sterling.

The yen gained against the pound on Thursday in New York. The Japanese currency moved higher against the British currency for several hours, hitting as high as 239.01 at 9 a.m. ET. It fell back in the late morning, but then bounced back to its resistance level in the late afternoon.. The rise took the yen away from the two-week low it reached on Wednesday. Traders considered data showing that the UK trade deficit had narrowed to 3.6 billion pounds in June.

The yen advanced against the euro on Thursday in New York and found a nine-day high. The currency began to rise at around 2:30 a.m. ET and moved as high as 161.51 at 9 a.m. ET. It slipped back to 162.43 by 12:40 p.m. ET. Trading took place after the ECB stepped in to offer cash to borrowers after the overnight lending rates moved to their highest level in nearly six years. It fell in the late morning, but rallied again in the afternoon to get back near the high.

The yen moved higher against the dollar on Thursday in New York and moved away from a two-week low. The Japanese currency began to rally at around 2 a.m. and has continued to move higher throughout the morning. It moved to as high as 118.22 at 9 a.m. ET. It cooled back slightly in the late morning but then climbed again in the afternoon to extend its high for the day. The yen traded at 118.15 at 5 p.m. ET. Traders considered weekly jobless claims data from the U.S. that came in higher than expected.

http://www.rttnews.com/FOREX/
Currency_mkt.asp?date=08/09/
2007&item=119; August 10, 2007 7:48 AM
Anonymous said...: It's not looking good for Goldman Sachs's Global Alpha fund.

Despite rumors that the investment bank would wind up the ailing quantitative fund, Goldman Sachs continues to stand by its unit.

It was widely reported in the media on Thursday that Global Alpha, a mega $9 billion hedge fund in Goldman's asset management group, was down 16% for the year.

According to people familiar with the matter, the fund has suffered the most in the last few months, when the markets were especially volatile.

http://www.forbes.com/home_europe/
markets/2007/08/09/
goldman-sachs-alpha-markets-
equity-cx_er_0809markets07.html; August 10, 2007 7:51 AM
Anonymous said...: The Inverted pyramid of global liquidity

75% of liquidity goes into DERIVATIVES

13% of liquidity goes into SECURITISED DEBT

11% of liquidity goes into BROAD MONEY

1% of liquidity goes into POWER MONEY

http://www.marketoracle.co.uk/
index.php?name=News&file=
article&sid=205

The global liquidity pyramid is stopping the US Dollar from collapsing

What's stopping the US Dollar from doing what it must – and collapsing...?

"Global demand for the Dollar is now driven by the explosion in Dollar-denominated assets," writes Dan Denning from Melbourne, "almost completely out of the control of central banks."

Dan says these "assets" are the preferred retirement vehicles for millions of Western Baby Boomers...and the quickest way for money shufflers in London, Washington, Sydney and elsewhere to get rich on the flow of cash. They outweigh government-issued money – referred to as 'power money' by Independent Strategy in the chart above – by a factor of 85 times.

"Only a radical increase in official interest rates or a radical decline in Dollar confidence will change the incentives to create new assets denominated in Dollars," says Denning.

Will either event happen in 2007? Or will gold have much further to rise before the scramble for settlement hits...and $340 trillion in derivatives – plus $59 trillion in bonds – tries to turn itself into $4 trillion of government-issued money?; August 10, 2007 8:02 AM
Anonymous said...: "even though everyone knows it will be over soon"

I'm sorry, it's just ten minutes after the Titanic hit the iceberg. Get your $hit together and hunker down.; August 10, 2007 8:50 AM
Anonymous said...: The upside down financial pyramid.

http://business.inquirer.net/
money/breakingnews/
view_article.php?article_id=
81708

The sub-prime lending crisis roiling Western financial markets was born in the financial excesses that helped fuel the US real estate boom that went bust in 2006.

Lured by the prospect of quick profits by buying securities backed by mortgages held by people with risky credit histories -- the so-called sub-prime sector -- investment funds flocked into this high-stakes gamble.

But the double-whammy of the collapse of the housing bubble in mid-2006 and a rise in interest rates left many sub-prime borrowers struggling to meet payments.

While housing prices were rising, homeowners could borrow on their home equity to make their mortgage payments. But when the value of their homes fell, credit dried up.

In this heated environment, increasingly sophisticated financial products derived from mortgages a range of securities called mortgage-based securities (MBS) or asset-based securities (ABS), and their variants such as collateralized debt obligations (CDOs). The idea is to securitize the loans by bundling them in bonds.

But when homebuyers began to have trouble paying off their mortgages, they unleashed a chain reaction that little by little has rippled to the top of the financial pyramid.; August 10, 2007 9:25 AM
Anonymous said...: Two-year foreclosure outlook gloomy

How bad is the sub-prime mortgage meltdown?

The short answer is nobody knows for sure, but the indicators don't look good.

In May, payments were late on at least 12.4% of sub-prime mortgages. That number includes properties already in foreclosure or taken back by lenders. That was a 10-year high, and up from 6.72% a year earlier, said Michael Youngblood, the top mortgage-bond analyst at Arlington, Va.-based Friedman, Billings, Ramsey Group Inc. By May 2008, he predicted, the rate would be 14.6%, the highest ever.

Among so-called Alt-A mortgages, or loans to borrowers with atypical credit, the rate was 2.69% in May, compared with 0.89% in May 2006. Youngblood forecast that would rise to 3.92% in May 2008.

And among jumbo mortgages -- loans of more than $417,000 -- the rate was 0.37% in May, up from 0.22%. Youngblood predicts that will hit 0.53% in May 2008.

http://www.latimes.com/business/
printedition/la-fi-subprime10
aug10,1,7131102.story?coll=
la-headlines-pe-business&ctrack
=1&cset=true; August 10, 2007 9:36 AM
Anonymous said...: Countrywide Financial Corp., the biggest U.S. mortgage lender, said it faces ``unprecedented disruptions'' that may crimp profit, suggesting a credit crunch that started with the U.S. subprime market will spread.

Countrywide won't be able to sell as many of its loans as expected because investor demand has dried up, the Calabasas, California-based company said in a filing with the U.S. Securities and Exchange Commission. It also said it may have difficulty obtaining financing from creditors. Shares of the company fell as much as 13 percent in after-hours trading.

``The secondary market and funding liquidity situation is rapidly evolving, and the potential impact on the company is unknown,'' Countrywide said. ``These conditions may continue or worsen in the future.''

Investors have stopped buying loans made to the riskiest borrowers, leaving hedge funds, banks and securities firms unable to find accurate prices for their holdings. BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds yesterday because it couldn't ``fairly'' assess the value of subprime mortgage holdings. Banks roiled by the crisis are shifting assets into cash, prompting the European Central Bank to loan them an unprecedented 94.8 billion euros ($130 billion) yesterday.

Washington Mutual Inc., the biggest U.S. savings and loan, said yesterday in its own filing that liquidity in the market for mortgages made to borrowers below the top credit grade had ``diminished significantly.''

http://www.bloomberg.com/apps/
news?pid=20601203&sid=
awWmNtGguiq0&refer=insurance; August 10, 2007 9:39 AM
Anonymous said...: Bush Rules Out B&C Bailout

President Bush, at a news conference Wednesday afternoon, ruled out any type of taxpayer bailout for lenders threatened by the subprime crisis.

According to news reports on the president's remarks, he also dismissed proposals to grant Fannie Mae and Freddie Mac greater leeway in increasing their balance sheets.

Fannie has asked its regulator for permission to increase the cap on its on-balance-sheet portfolio, a move that could increase liquidity in the secondary market.

http://mortgageservicingnews.com/
plus/; August 10, 2007 9:41 AM
Anonymous said...: Stephen Colbert interviews Jim Cramer about his meltdown.

http://tinyurl.com/2yhsnv; August 10, 2007 9:42 AM
Anonymous said...: Foreclosure notices in Gilbert and Ahwatukee Foothills jumped 240 percent in the first six months compared with the same period a year earlier, as more homeowners struggle to afford the higher-priced homes in these communities.

Other areas of the Southeast Valley also were hit hard, especially in the south. Notices jumped 183 percent in Chandler and Sun Lakes, 116 percent in Mesa, and 97 percent in Tempe, according to the Information Market.

Homeowners are struggling throughout the Phoenix area. It has become harder to sell homes, and lenders have tightened their standards and are less likely to allow refinancing.

The Arizona Regional Multiple Listing Service said about 19,000 homes were on the market in June in the Southeast Valley, with 1,973 selling, taking an average of 90 days.

Barry Kramer, owner of Keller Williams Realty Ahwatukee Foothills, said the people hurting the most are investors and those who bought in the past year or two.

"The majority were investors, and those who bought late in the cycle and they overbought," Kramer said.

"They got late into the game, and they didn't do their homework. They got a little greedy."

http://www.azcentral.com/
community/gilbert/articles/
0809gr-foreclose0809.html; August 10, 2007 9:45 AM
Anonymous said...: A senior European banking source reports that the interbank money market closed down this morning for two to three hours, for the first time ever. Rumors had spread that the German Bundesbank was holding an emergency meeting because of a collapse of a major German bank, believed to be Westdeutsches Landesbank, one of the largest in Germany. The Bundesbank then released a statement saying that the meeting was to discuss the IKB banking crisis.

The source said that a Westdeutsches Landesbank failure would have collapsed the entire global financial system. The source underlined that this ongoing crisis is far worse then anything he has witnessed.

The next threat to the banking system in Germany, which will have obvious global ramifications, is what is called Asset Backed Commissioned Paper. Banks issue these to customers such as hedge funds and other banks, which, theoretically, can draw on them in case of emergency. The problem is that banks have been issuing far more then they should have. The deadline for the hedge funds and other customers to draw on these ABC-Ps is between August 13 and 15. If their customers rush to draw on them, this will be unsustainable for the banks.

The source said that these ABC-Ps were involved in the IKB bank crisis, because its Rhineland Funding unit had drawn on one of these, forcing IKB to cover it. Then IKB requested to draw on one of these ABC-Ps it had with Deutsche Bank, but the latter refused to honor it, and IKB collapsed.

Another senior banking source told EIR that he too had heard that the interbank money market had closed, and it had been closed under orders of the European Central Bank (ECB), so that the latter could funnel emergency credit to selected, troubled banks.

http://www.larouchepac.com/news/
2007/08/09/
bankers-report-interbank-lending
-shut-two-hours-over-german-.html; August 10, 2007 9:58 AM
Anonymous said...: @Anonymbecile 11:39 PM
I can imagine that you live in some of the beautiful shit holes between Euclid and Pennsylvania right around 7th and 8th Street. You know where the mentally impaired hang around. I dare you show me a 3 bedroom in Setai, Villagio, Continuum 1 or 2, Murano, Icon for under 3 Million bucks. But then of course a clown like you would not know that bussing tables on Lincoln road. Mindless freaking jackass meathead.; August 10, 2007 11:56 AM
Anonymous said...: Anonymous said...
Mortgage sales plunge almost 90 percent since May

http://tinyurl.com/2uu76r

"In July, mortgage sales plunged to $11.2 billion nationwide, from $41.6 billion in June and $92.2 billion in May, according to FBR Investment Management, which tracks the data."

Can you say DEPRESSION.

I knew you could.

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

That doesn't mean there are 90% fewere mortgages issued,just that 90% fewer mortgages were sold in the secondary market. Not the same thing.; August 10, 2007 1:14 PM
Anonymous said...: And the Very Highly Paid Expert Fund Managers and Mortgage Co CEOS didn't remember the Basics of Nature & Finance, misleading the public into being over confident and leading the greedy train. The Public needs to think for and trust itself.; August 10, 2007 1:43 PM
Anonymous said...: From the excellent immobilienblasen blog for 10 Aug:
http://tinyurl.com/2j6425

Second Major Bailout Underway In Germany ?

WOW! It is getting ugly here in Germany. Once more there is a rumor that a public bank is in deep deep trouble. And i have to agree that the entire structure is somewhat similar to the IKB debacle The main goal for Sachsen LB is to provide their local region Sachsen (like a state in the US) with financing and expertise ( ironic, isn´t it...).......It will be interesting to see what will happen the next few days. I´ll bet there will be lots of meetings over the weekend..... The rumor is coming via the well respected "Frankfurter Allgemeine Zeitung" . The FAZ is one of the top 5 newspapers in Germany .; August 10, 2007 2:00 PM
Anonymous said...: I found a most excellent "time warp" article about getting buyers to bid your house up above asking price. Hilarious!!

http://www.mint.com/blog/finance-core/financial-tips-for-selling-your-home/; August 10, 2007 2:38 PM
Anonymous said...: CFC tanks almost 18% in pre-open trading.

http://tinyurl.com/267yh5; August 10, 2007 2:49 PM
Anonymous said...: DOW down 1%!!!

Run for the hills.

DOPES; August 10, 2007 3:28 PM
Anonymous said...: Anon said:"Sad that this thing insanity has killed off a friendship. Any else lose friendships over your views"?

Yes, I have a dear friend whom I think will not be speaking with us in the near future because they are in a house that they cant afford. Two years ago, I asked her if they would sell soon, she said, they would sell in 5 years, didnt want to go through the hassle of moving....I tried to expain what was happening with the housing market, she did mention their mortgage (which she was not happy about) was only going up 2% a month after the increase....

What could I say to that? Tell her she and her husband didnt know what they signed when they bought this place back in 2003?

I feel more sorry for her husband, since it wasnt his idea to "upgrade" to a new home in a more affluent neighborhood...

She had the nerve to complain to me 6 months ago, that he doesnt make enough money...

The historic housing crash is going to be a life changing event in many households.

Friends will be lost because of it.; August 10, 2007 3:34 PM
FlyingMonkeyWarrior said...: Anon said:"Sad that this thing insanity has killed off a friendship. Any else lose friendships over your views"?
*****************
Yep, only it was my Mom and three sisters and their families.
I have posted the story here before.

nuff said.; August 10, 2007 4:28 PM
Anonymous said...: The Fed added $35 billion to the economy on Friday:

http://www.marketwatch.com/news/story/fed-injects-16-bln-liquidity/story.aspx?guid=%7BFE2C8BED-051B-41E2-B088-A4FC095F35D6%7D; August 10, 2007 4:33 PM
Anonymous said...: Fed bailout in progress!!!

Panic is now over!

"Fed Adds Another $16 Billion in Reserves to System, Following $19 Billion Injection Earlier Today"

DOPES!!!; August 10, 2007 4:58 PM
Anonymous said...: SOME CRASH

DOPES; August 10, 2007 5:03 PM
Unknown said...: We have just had MASSIVE liquidity injections by the European Central Bank and the US Fed, but stocks are sliding anyway.

WE ARE NOW IN FULL-BLOWN PANIC MODE.

Have a nice day all you dolts who thumbed your noses at gold, silver and other wise safe havens.; August 10, 2007 6:00 PM
Unknown said...: SOME CRASH

DOPES

_______

You're the dope. You're not paying attention. Not only is a crash underway, but it is the Mother Of All Crashes.

Fools like you will die in poverty.; August 10, 2007 6:00 PM
Unknown said...: Fed bailout in progress!!!

Panic is now over!

_________

The markets only responded in a knee-jerk reaction to this feeble attempt by the Fed to bail out something that CANNOT BE BAILED OUT.

There are enormous forces at work that are beyond the power of the US Fed or the European Central Bank to deal with.

At least 80% of the GDP of the USA is about to be lost.

NOW is the time to wake up and educated yourselves, morons. If you haven't by now, you have NO EXCUSES.; August 10, 2007 6:03 PM
Anonymous said...: Feds come to the Elite's rescue. All danger averted - stocks only down 26pts as of 1:30 Friday afternoon and rising.

Move along now, nothing to see here.; August 10, 2007 6:26 PM
Anonymous said...: Time to housing panic.

Down payments are back. Income verification back. No more no docs. PMI is back.

CNBC says a San Diego doctor with an 800 credit score and willing to put 35% down got turned down by the lender because the market for jumbo loans is changing so fast. In addition, the same people pre-qualified for loans are now being told they'll have to pay 1.5% more.

The interviewee said this "will be devastating for the housing market".

Just never come back from that August vacation folks...; August 10, 2007 6:29 PM
Anonymous said...: "At least 80% of the GDP of the USA is about to be lost."

During the great depression 80% of the GDP was not lost.

Dude you need a hobby and some fresh air.; August 10, 2007 6:31 PM
Anonymous said...: FLASH:
DOW JONES IS UP 7% YTD

FLASH:
HPERS ARE IDIOTS FOR BUYING 5% CDS

DOPES; August 10, 2007 6:33 PM
Anonymous said...: FLASH:
DOW JONES IS UP 7% YTD

FLASH:
HPERS ARE IDIOTS FOR BUYING 5% CDS

DOPES; August 10, 2007 6:33 PM
Anonymous said...: Breaking news:

Fed dumps third batch of worthless dollars today on the markets.

Thanks alot Ben!! That will fix everything!!!; August 10, 2007 6:48 PM
Unknown said...: During the great depression 80% of the GDP was not lost.

Dude you need a hobby and some fresh air.

_________

Got hobbies, get fresh air each day.

You ought to look into that number and how it was arrived at.

EIGHTY PERCENT. Get your mind around it.; August 10, 2007 6:52 PM
Unknown said...: FLASH:
DOW JONES IS UP 7% YTD

FLASH:
HPERS ARE IDIOTS FOR BUYING 5% CDS

DOPES

_______

If you believe in the stock market, I'm sure you're buying into this week's dips.

Let's hear your plays.

PUNTER.; August 10, 2007 6:53 PM
Roccman said...: And now for Act II

The DieOff...; August 10, 2007 7:04 PM
Anonymous said...: Punter...hardly.

I bought KBH Friday @ $31.

I bought Cisco and Sun yesterday and bought some more today.

Fed is lowering like it's 2001 I am saying nasdaq 2800 end of year.

I bought on the late Feb dip and sold in early May. I think this is just a repeat of that.; August 10, 2007 7:12 PM
Anonymous said...: "CNBC says a San Diego doctor with an 800 credit score and willing to put 35% down got turned down by the lender because the market for jumbo loans is changing so fast. In addition, the same people pre-qualified for loans are now being told they'll have to pay 1.5% more."

What was his income? What was the price of the house? Just cuz you have an 800 FICO doesn't mean shit if you make $150K and want to buy a $1M house.

I'm sure if he were looking for a $600K home on $150K income he'd be signing papers as I type.; August 10, 2007 7:16 PM
Anonymous said...: By order of Congress, the Federal Reserve has a dual mandate, to keep inflation low and employment high.

http://www.businessweek.com/
magazine/content/07_34/
b4047041.htm

The market's current craziness is a perfect test case for Bernanke's circumspect approach because there's no evidence so far of a major systemic crisis that would require him to abandon his theories and open the monetary floodgates. Yes, stock and junk bond prices have fallen, the subprime mortgage market is in dire straits, and a few Wall Street firms, including Bear Stearns, have taken a hit. But elsewhere, contagion is more of a future worry than a present-day reality. Over the past year, there has been an infinitesimal 0.1 percentage point increase in the yield on corporate bonds rated A by Standard & Poor's, according to a Merrill Lynch & Co. index. Even B-rated bonds, classified as junk, have seen their yields go up only 0.6 percentage points over the past year, to just under 9%, and rose 1.7 points since February, after a dip during the winter. That hurt, but it's pretty small compared with 1998, when markets really did seize up. Then, yields on B-rated bonds leaped 3.1 points in five months, to over 12%. Under then-Chairman Alan Greenspan, the Fed reacted by slashing interest rates--creating the conditions, some critics say, for the stock-market bubble of 1999 and 2000.

Bernanke's approach recognizes that the Fed can't be all things to all people. If the Fed lowered rates to rescue subprime borrowers and their lenders, it would raise the risk of excessive borrowing and speculation in other sectors, possibly causing higher inflation and a stock bubble.

Bernanke's approach is being supported by many of his fellow academic economists. Among the most prominent is Allan H. Meltzer, a Carnegie-Mellon University monetary economist who is writing a history of the Fed. "The people on Wall Street are making a lot of noise because they don't like to lose money, and we can all understand that," he says. "But...it would be a huge mistake to change policy to rescue a bunch of people who made stupid mistakes." In fact, argues Meltzer, losses by speculators could clean out the financial markets and make them healthier. "Capitalism without failure is like religion without sin," Meltzer says. "It doesn't work."

Wall Streeters, with their seven- and eight-figure pay, are hardly sympathetic figures. Unfortunately for millions of subprime borrowers, they, too, are directly under the Fed's interest-rate hammer. Strangely enough, they might be better off if the subprime problems did spill over to the rest of the economy, because then the Fed would be forced to cut rates. As it is, subprime borrowers and other players in the housing market are bearing the brunt of the Fed's inflation-fighting campaign.

In fact, the strongest economic argument against Bernanke's stand is that it harms the poor and middle class when inflation is actually well in hand. The Fed's own preferred measure, the price index for personal consumption expenditures excluding food and energy, rose just 1.9% in the year ended June 2007.

But Bernanke fears tight labor markets could reignite inflation. Meanwhile he's alert to signs of a general credit crunch, through his eyes and ears at the market-savvy Federal Reserve Bank of New York. "I don't think the Fed is in the dark on what's happening in the credit markets," says Brian P. Sack, a senior economist at Macroeconomic Advisers who once co-authored a paper with Bernanke.; August 10, 2007 7:51 PM
Anonymous said...: Just a small hint of the future for MBS Investors

http://biz.yahoo.com/bizj/070810/
1505244.html?.v=1

HomeBanc Mortgage Corp., Atlanta's largest independent mortgage company, has filed for Chapter 11 bankruptcy protection.

HomeBanc filed for bankruptcy late Thursday in the U.S. Bankruptcy Court's Delaware district.

HomeBanc, according to the filing, has $5.1 billion in assets, and $4.9 billion in liabilities.

The filing insulates the company from repaying its debts to some of the nation's largest mortgage financiers, who have captured headlines in recent days as the mortgage and credit markets have deteriorated.

HomeBanc's top creditors, the filing states, include: J.P. Morgan Chase Bank, KeyBank, U.S. Bank, BNP Paribas, Deutsche Bank, Bear Stearns Mortgage Capital Corp. and First Charter, among others. Earlier this week, Paris-based BNP Paribas, France's largest bank, shut down three multi-billion-dollar investment funds that were heavily invested in mortgage securities like HomeBanc's mortgages.; August 10, 2007 7:59 PM
Anonymous said...: Countrywide, WaMu fall on heightened mortgage worry

Countrywide Financial Corp CFC led shares of U.S. mortgage companies lower on Friday as investors received fresh reminders that a shortage of liquidity might crimp profits.

Shares of Countrywide fell as much as 13.7 percent after the largest U.S. mortgage lender said in a regulatory filing that it was facing "unprecedented disruptions" in the market to buy and sell home loans, and that the ultimate impact was unknown.

Washington Mutual Inc WM the largest U.S. savings and loan, said in a separate filing that market liquidity had "diminished significantly," and that it would be "adversely affected" while this persisted. Its shares fell as much as 5.6 percent.

Decliners included MGIC Investment Corp MTG which fell as much as 19.8 percent after a JPMorgan Chase analyst downgraded the mortgage insurer to "underweight" from "overweight."

Two mortgage investors also suffered large declines. Anworth Mortgage Asset Corp ANH slid as much as 25.1 percent after a unit received a default notice, and Thornburg Mortgage Inc TMA which also makes loans, fell as much as 18.5 percent after two credit agencies downgraded its ratings deeper into "junk" status."

Countrywide's decline followed recent comments by several company executives, including Chief Executive Angelo Mozilo, acknowledging the tough market but assuring investors that the lender had sufficient liquidity to ride it out and thrive.

As evidence grows that defaults are spreading beyond riskier "subprime" borrowers to people once considered good credit risks, investors have refused to buy many loans rated below "prime," forcing Countrywide and rivals to keep more loans themselves.

"There wasn't much new that the market didn't already know" in Countrywide's filing, said Ryan Lentell, an equity analyst at Morningstar Inc. in Chicago. "It's scary for a lot of people to see it in writing for the first time."

Mortgage lenders, meanwhile, have tightened their standards, ending some of the riskier or exotic mortgages that contributed to rising defaults. At Countrywide and Washington Mutual, for example, the adjustable-rate mortgage whose rate jumps up after two years is no longer available to subprime borrowers.

Countrywide and Washington Mutual did not immediately respond to requests for comment.

http://biz.yahoo.com/rb/070810/
mortgage_lenders.html?.v=1; August 10, 2007 8:05 PM
Anonymous said...: Most economists see BOJ rate hike in August-survey

Nearly three-quarters of economists surveyed see the Bank of Japan (BOJ) lifting interest rates this month, a government-affiliated association said on Thursday.

The monthly survey by Japan's Economic Planning Association (EPA) showed 26 of 35 economists who responded expect the BOJ to lift the key overnight call rate target from the current 0.5 percent at its policy meeting on Aug. 22-23.

That compared with 23 out of 32 respondents in the previous survey who predicted a BOJ move this month.

Investors expect the BOJ to raise the key policy rate to a 12-year high of 0.75 percent this month, although the global credit squeeze that has hit equity markets has caused some to think the central bank may wait.

http://asia.news.yahoo.com/
070809/3/3642m.html; August 10, 2007 8:12 PM
Anonymous said...: With BOJ pumping so much excess global liquidity into the World, Tricksters are saying "If There's a Will There's a Way".

MBS Investors kiss your money good bye.

http://www.contracostatimes.com/
ci_6590986?source=rss%20&nclick_
check=1

With the median price of East Bay homes well above the $417,000 barrier.

Mortgage agents in the East Bay scrambled on Thursday to find alternative home loan programs for consumers who have been squeezed by a worsening credit crunch unleashed by the housing meltdown.

Some banks still offer jumbo loans. But they charge such a high rate that the loan effectively disappears, said Guy Schwartz, manager of CMG's Walnut Creek office.

"The bank prices it so high that they're sending a signal: They don't want to do the loan at all," Schwartz said.

As a result, loan officers and home finance brokers have been forced to fashion new loan products that would be feasible for borrowers and palatable to nervous banks.

Plenty of alternative kinds of loans are being floated by loan agents, said John Holmgren, principal owner of Oakland-based Holmgren & Associates and president of the East Bay chapter of the California Associate of Mortgage Agents.

"Fully half of the loans that we had in process had to be massaged in some way," Holmgren said.

Among the workarounds: Holmgren suggests that borrowers obtain loans with fixed interest rates of five to 10 years. Or they could find a co-signer. Or they could provide a larger down payment.

"We are just starting to come up with some solutions," said Kris Raman, president of American Funding Solutions in Dublin. "This whole thing only started a few days ago."

Raman has proposed that borrowers obtain a first and second loan that together would total as much as $600,000.

The first mortgage would total as much as $417,000 and be a conforming loan at attractive interest rates. The second loan on the house would reach as much as $200,000. Of course, the interest rate on the secondary loan would be about 8 percent or 9 percent, which would be about 2 points higher than the first mortgage, Raman said.

CMG Financial plans to offer 30-year loans that begin with a fixed rate of about 5.5 percent the first year, 6.5 percent the second year, and 7.5 percent the third year. Starting in the fourth year, the loan would be re-evaluated for a market interest rate and the payments could be recalculated, George said.

Both CMG Financial and Carzino Mortgage offer a product called the Home Ownership Accelerator. This loan enables people to pay the principal first on their home loans and let the interest be based on the remaining balance. The idea is to pay off the loan years earlier than normal.; August 10, 2007 8:24 PM
Unknown said...: Anonymous said...
Punter...hardly.

I bought KBH Friday @ $31.

I bought Cisco and Sun yesterday and bought some more today.

Fed is lowering like it's 2001 I am saying nasdaq 2800 end of year.

I bought on the late Feb dip and sold in early May. I think this is just a repeat of that.

______

Yes, clearly a punter, and an idiot to boot.; August 10, 2007 8:25 PM
Anonymous said...: S&P500 up for the day.
Up for the week.
Up for the year.

Some crash.

DOPES!!; August 10, 2007 8:37 PM
Anonymous said...: Who is going to buy all those lair loans when Hedge Funds are saying there are easier way of making money in Corporate debt then MBS securities?

Mortgage Brokers who are now rubbing their greedy hands saying "Where There's Will There's a Way" Know.

They are lining up waiting for the central banks to drop those cash.

http://www.washingtonpost.com/
wp-dyn/content/article/2007/08/10/
AR2007081000689.html

Market Volatility Continues on Wall Street Fed and Other Central Banks Pump More Money Into Financial Systems

The Fed really didn't want to get involved. In the last 24 hours, I think we've seen some instability come to what are otherwise some healthy sectors of the market."

The Fed injected an extra $19 billion of reserves into the financial system at 8:25 a.m., Friday, followed by another $16 billion just before 11 a.m., and $3 billion more just before 2 p.m.; August 10, 2007 8:39 PM
Anonymous said...: Federal Reserve Pumps Another $38B Into US Financial System Friday to Stem Credit Turmoil

The Federal Reserve, trying to calm turmoil on Wall Street, announced Friday that it will pump as much money as needed into the U.S. financial system to help overcome the ill effects of a spreading credit crunch.

The Fed, in a short statement, said it will provide "reserves as necessary" to help the markets safely make their way. The central bank did not provide details but said it would do all it can to "facilitate the orderly functioning of financial markets."

The Fed pushed $38 billion in temporary reserves into the system Friday, on top of a similar move the day before.

Financial markets in the United States and around the globe have been shaken by fears about spreading credit problems that started with home mortgages for those with tarnished credit histories. Investors are worried that these problems will infect the larger financial system and possibly hurt the U.S. economy.

The Fed's action may have eased some investors' anxieties. The Dow Jones industrials were down around 90 points in afternoon trading Friday following much sharper losses near the start of the session.

Presidential spokeswoman Dana Perino said the Fed is an independent body, and the White House will not comment on its decisions.

"But I can assure you that there are many of the president's advisers who are keeping a very close eye on all the market activity and making sure that policies are put in place to keep our economy strong and growing," she told reporters in Kennebunkport, Maine, where President Bush is spending the weekend.

The current financial turmoil provides the biggest test yet to Federal Reserve Chairman Ben Bernanke, who took the helm last year.

http://biz.yahoo.com/ap/070810/
fed_liquidity.html?.v=31; August 10, 2007 8:44 PM
Anonymous said...: Here is the Friday after market close bomb shell.

Goldman's Global Alpha Falls 26% in 2007, People Say (Update3)

By Katherine Burton and Jenny Strasburg

Aug. 10 (Bloomberg) -- Goldman Sachs Group Inc.'s $8 billion Global Alpha hedge fund has fallen 26 percent so far this year, a decline that may prompt more investors to withdraw their money, according to people familiar with the fund.

Goldman's largest hedge fund, managed by Mark Carhart and Raymond Iwanowsk, has dropped almost 40 percent since July 31, 2006, said the people, who declined to be named because the fund is private. The Standard & Poor's 500 Index of the biggest U.S. stocks has returned 16 percent during the same period.

``It's hard to imagine how investors can maintain confidence, because their losses have been taking place over a long period of time, starting last year,'' said Virginia Parker, who helps oversee about $1.8 billion at Parker Global Strategies LLC in Stamford, Connecticut. ``There has been a broad range of market climates, and the fund has not demonstrated the ability to excel in any of them.''

Quantitative, or ``quant,'' hedge funds in the U.S., including those run by Goldman, Highbridge Capital Management LLC, AQR Capital Management LLC and Tykhe Capital LLC, have lost money in August as credit spreads have widened and stock-price volatility has jumped, jarring the computer models the managers use to make their bets.

The $1.7 trillion hedge-fund industry has been roiled by declines in the credit and equities markets during the past two months. Two hedge funds managed by Bear Stearns Cos. collapsed and Sowood Capital Management LP, run by a former manager of Harvard University's endowment, is shutting down after a 60 percent loss.

Simons's Decline

James Simons's $29 billion Renaissance Institutional Equities Fund has fallen 8.7 percent this month, hurt by swings in securities prices, the 69-year-old said yesterday in a letter to investors. The two-year-old fund now has fallen 7.4 percent since the beginning of January.

Goldman spokesman Peter Rose declined to comment.

Global Alpha's performance has reduced the fees paid to New York-based Goldman. The biggest U.S. securities firm booked $700 million from the fund following its 2005 gain of 40 percent.

Goldman's fund-management unit had a record $758 billion under management at the end of May, generating more than $1 billion in fees for the firm during the second quarter. Alternative investments including hedge funds such as Global Alpha made up $151 billion of the funds under management, an 18 percent increase from a year earlier.

Executive Change

Still, the firm showed zero net new money into the alternatives during the second quarter after collecting $2 billion in the first quarter and $32 billion during 2006. On June 26, Goldman said Eric Schwartz, co-head of asset management since 2003, would step down in the next few months and leave Peter Kraus in charge of the fund unit.

Goldman's Global Alpha losses may lead to more redemptions. Withdrawals for the fund's $6.2 billion offshore version totaled $394 million in the month ended June 30, according to an investor who declined to be identified. That was almost three times the $142 million in new money added.

Global Alpha decreased 8 percent during the last full week of July and was down 16 percent from the beginning of January through Aug. 3. There is an Aug. 15 deadline for Global Alpha investors who want to redeem money on Sept. 30.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net ; Jenny Strasburg in New York at jstrasburg@bloomberg.net ;

Last Updated: August 10, 2007 18:03 EDT; August 11, 2007 12:21 AM
Anonymous said...: Everything has been based on GREED!; August 11, 2007 1:57 AM
Anonymous said...: LEND down 50% after market today...gonna be a panic selloff worlwide monday...; August 11, 2007 2:03 AM
Anonymous said...: did i hear the fed announce loud and clear this week that it will screw savers in good times and bad times; August 11, 2007 2:43 AM
Anonymous said...: Look, rich man's welfare:

http://www.chron.com/disp/story.mpl/ap/fn/5044718.html

Feds are buying 38 Billion in "Assets" err mortgage backed crap on Wall Street.

Looks like a bailout afterall and as the dollar declines, our houses will increase through inflation.

Nobody in Washington looks out for bitter renters. You guys lose again!; August 11, 2007 3:35 AM
Roccman said...: Collapse of a Major German Bank

Quote:
Bankers Report Interbank Lending Shut For Two Hours Over German Bank Crisis

August 9, 2007 (LPAC)--A senior European banking source reports that the interbank money market closed down this morning for two to three hours, for the first time ever. Rumors had spread that the German Bundesbank was holding an emergency meeting because of a collapse of a major German bank, believed to be Westdeutsches Landesbank, one of the largest in Germany. The Bundesbank then released a statement saying that the meeting was to discuss the IKB banking crisis.
The source said that a Westdeutsches Landesbank failure would have collapsed the entire global financial system. The source underlined that this ongoing crisis is far worse then anything he has witnessed.

The next threat to the banking system in Germany, which will have obvious global ramifications, is what is called Asset Backed Commissioned Paper. Banks issue these to customers such as hedge funds and other banks, which, theoretically, can draw on them in case of emergency. The problem is that banks have been issuing far more then they should have. The deadline for the hedge funds and other customers to draw on these ABC-Ps is between August 13 and 15. If their customers rush to draw on them, this will be unsustainable for the banks.

The source said that these ABC-Ps were involved in the IKB bank crisis, because its Rhineland Funding unit had drawn on one of these, forcing IKB to cover it. Then IKB requested to draw on one of these ABC-Ps it had with Deutsche Bank, but the latter refused to honor it, and IKB collapsed.

Another senior banking source told EIR that he too had heard that the interbank money market had closed, and it had been closed under orders of the European Central Bank (ECB), so that the latter could funnel emergency credit to selected, troubled banks.

Meanwhile Bloomberg News reported that the ECB, in an "unprecedented" response to banks in desperate need of cash, loaned 94.8 billion euros to these banks. This followed a jump in overnight lending rates the banks charge each other, to the highest level in six years.; August 11, 2007 4:46 AM
Anonymous said...: Wow, some of you seem to be getting pretty heated! Oh well, great post anyways!; August 11, 2007 5:35 AM
Anonymous said...: Crisis spreads from US lenders to UK hedge funds
By Stephen Foley and Danny Fortson
Published: 11 August 2007

Ben Bernanke was cast yesterday in the role of firefighter, called to the scene to tackle wildfires that are springing up all over the financial system.

All sorts of companies are feeling the heat, not just at the source of the blaze - the market for home loans to low-income Americans, where Countrywide Financial is one of the biggest lenders - but also elsewhere, as the fires spot and jump to other countries and other financial industries. Man Group, the hedge fund manager whose shares continued their meltdown in London yesterday, has barely any exposure to the US sub-prime market, but it too is being licked by the flames.

But how has the wildfire spread from Countrywide to Man? Countrywide's shares slid on the New York Stock Exchange yesterday after the company warned that "unprecedented disruptions" in the secondary market for home loans meant it will be unable to sell on the mortgages that it is writing. That means less funding for future loans, and a potential cash crunch. Dozens of smaller rivals have gone out of business.

Angelo Mozilo, chief executive of Countrywide, used to lash out at people who said funding mortgages for risky borrowers would come back to haunt the company. Suggesting that low-income Americans should be denied mortgages was tantamount to saying "let them eat cake", he used to say. Now, Wall Street is describing these loans as "toxic waste" and won't touch any bonds backed by them. That in turn has led to a slump in the value of all mortgage-backed bonds, especially collateralized debt obligations (CDOs). Hedge funds that traded CDOs can no longer be sure what their assets are worth, so the banks that lend to them want more collateral or - worse - their money back.

So hedge funds everywhere have been dumping other assets to raise cash, leading to a maelstrom of liquidations that have sent some of the most predictable trading strategies to produce horrific results. Computer trading programs at so-called "quant" funds (it is short for quantative) that were previously the most sought-after investments in the hedge fund industry have produced big losses this week.

For example, former US government code cracker James Simons is the most expensive hedge fund manager in the world and personally earned $1bn from his computer-based hedge fund, Renaissance Tecchnologies. But Renaissance told investors yesterday that it is down 9 per cent since the start of August, while Man's flagship hedge fund, AHL, also a quant fund, was already down 6.8 per cent in the first week. Man shareholders are not waiting until the latest performance figures, out next Tuesday, before heading for the hills. The world's largest publicly quoted hedge fund manager, Man has seen nearly a quarter of its market value lopped off in the last month alone, a rout that was capped by the worst two-day drop in the company's history at the end of the week.

It is a baptism of fire for Peter Clarke, who recently took over as chief executive. Man has pulled the proposed US float of its Man Dual Absolute Return Fund, while the July listing of its futures brokerage arm MF Global was a disaster. It has shed 21 per cent in its first month as a public company.; August 11, 2007 5:49 AM
Anonymous said...: Markets: Keeping the Bears at Bay
Liquidity moves are only short-term fixes. Policymakers and investors need more information—and fast—before the credit crisis can be solved

by Ben Steverman

For a moment there, it was looking like a classic financial crisis: First, fear from the spreading subprime loan mess, then panic, as investors tried bail out en masse. "If enough people decide this is a global meltdown, they can make it happen," says Paolo Pasquariello, a professor at University of Michigan's Ross School of Business who studies financial crises. "The Fed is trying to prevent a self-fulfilling prophecy from taking place."

On a smaller scale, it's like the classic "run on the bank," repeated in economic history and books and movies countless times. As George Bailey, played by Jimmy Stewart, told a crowd of anxious depositors at his family's bank in It's a Wonderful Life: "You're thinking of this place all wrong, as if I had the money back in a safe. The money's not here. Your money's in Joe's house…And in the Kennedy house, and Mrs. Macklin's house, and a hundred others."
The Global Stage

At least the residents of Bedford Falls knew where those houses were. The far-flung, global nature of the subprime crisis means that banks in Europe and Asia could be exposed to foreclosures in the U.S. market.

Indeed, investors' panic this week was spurred by the realization that, for the first time, problems with some U.S. credit markets might be going global. French bank BNP Paribas suspended three hedge funds with subprime holdings because of what it called the "complete evaporation of liquidity in certain market segments" (see BusinessWeek.com, 8/9/07, "Subprime: The Ugly American Hits Europe"). Until then, market worries seemed to be easing a bit. The Federal Reserve refused to cut interest rates on Aug. 7, insisting inflation was a greater threat to the economy than credit-market disruptions.
Recalling September 11

George Bailey was able to ease depositors' fears with some quick thinking and a good speech. It took more than that to ease the rising global panic attack. The European Central Bank acted quickly, and along with the Federal Reserve in the U.S. and various other central banks, pumped hundreds of billions of dollars into the world's banking system.

The last time the Fed stepped in with that kind of liquidity was in the week after the September 11 terrorist attacks, when it injected some $334 billion into the markets from Sept. 12 through Sept. 19, 2001. The Fed said on Friday, Aug. 10, it could purchase even more securities over the weekend if needed and indicated that it is likely to funnel more money into the markets next week.

Such a move would mirror the Fed's actions in 2001 when it made multiple infusions of cash over several days to stabilize the U.S. financial markets, with an initial buy of $38 billion in paper on Sept. 12, 2001. The move on Aug. 10 was the biggest single-day boost the Fed has given the markets since Sept. 14, 2001, when it provided $81 billion in short-term financing to Wall Street.
More Than a Hiccup

Figuratively, here's what happened, says Gabriel Stein of London-based Lombard Street Research: While panicked depositors stood outside the banks wanting to withdraw their money, a van from the central bank was parked out back, unloading cash into the vault. The ECB did "exactly the right thing" by acting as a lender of last resort, he says. "In the short term, [central banks] do have the power to provide a little bit of confidence to the markets," adds Reena Aggarwal, a finance professor at Georgetown University.

But what about the long term? And, by taking swift action, didn't central banks acknowledge that this is no longer just a hiccup for financial markets but a full-blown crisis for the world economy? Fear is the fuel that drives a financial crisis forward.; August 11, 2007 6:39 AM