October 28, 2007

BUBBLETALK - new thread to talk about the housing crash, mortgage meltdown, dollar debacle and realtor famine

Post articles (use tinyurl and hit the highlights), let me know what I missed, talk about what's on your mind, and have a good chat

Ah, the smell of housing napalm in the morning...

348 comments:

1 – 200 of 348   Newer›   Newest»
seifried said...

I actually just ordered $200 US in $1 bills (I'm Canadian eh) to do a money themed border for a decorating project, it was cheaper than getting custom wallpaper trim made.

Anonymous said...

So which falls faster, the value of the dollars us renters are saving, or the prices of the homes we're waiting to buy...what to do, what to do...

Anonymous said...

Check out these price drops:

http://www.cbsnews.com/stories/2007/10/10/eveningnews/main3355299.shtml

Anonymous said...

53% of your readers think Ron Paul will win. This tells me 53% of your readers need medical help and fast.

Anonymous said...

yeah, which falls faster? Either way, it looks like we all may be SOL(shit out of luck)

Shakster said...

The coming months will be a spectacle in the markets.Fun to listen to the MSM hide the carnage,and sugar coat the severity, concealing it with semantics which is the M.O. of the MSM.The MSM panics at times ,and it's funny to listen to.

Anonymous said...

In the "you might be a redneck" spirit...

You know the housing crash has gone mainstream when:

Lolcats get involved.

http://tinyurl.com/yoy6f2

Anonymous said...

How about a poll ranking IQ and who you are choosing for next Prez.

Put me down - 155 and Ron Paul.

I wouold guess the fourth poster in this thread probably is at the other end of the spectrum - 45 and Giuliani.

Anonymous said...

.


Thank you for explaining SOL


.

Roccman said...

In an interview last night on CNN’s “Larry King Live,” the former president of Mexico, Vicente Fox, confirmed the existence of a government plan to create the amero as a new regional currency to replace the U.S. dollar, the Canadian dollar and the Mexican Peso.

Bwhahahahhahahahhahahahhahahahha!!!

Anonymous said...

Mozilo dumped a total of 559670 shares this week.

http://tinyurl.com/2vagoe

Green bracelets anyone?

FlyingMonkeyWarrior said...

At 9:42 AM, Akubi said...

"My life is not adjustable
Stop adjustable rates!!!"
In case you missed it, the picture is hilarious

(sic)as the protesters march in front of countrywide..

NY Times link; http://tinyurl.com/2fqd4l

posted on www.exurbanation.com

FlyingMonkeyWarrior said...

Keith,
With regard to the polls, where are they archived so I can have a look at the end results?
Also, Flippers and Speculators are more responsible for the bubble than any of your current poll choices,imo.

FlyingMonkeyWarrior said...

Now we HP'ers have seen it all. Lennar
Homes built on top of mine field and home owners worry about re-sale value
whilst bomb squads dig up the yards. And I thought the spec bubble was the only thing in Florida driving prices down.
Bet Lennar got this land for a song and then sold the new homes for as much as 1/2 a million dollars.
***********************
snip.

Bombs May Be Buried Under 54 Homes; Crews To Dig Up Properties
Munitions Consultant Finds Metal Objects On All Home Sites

POSTED: 11:35 pm EDT October 11, 2007

ORLANDO, Fla. -- Live explosives possibly buried under more than 50 homes in an Orange County neighborhood has prompted plans to begin digging up properties and may force families from their homes.
The U.S. Army used the land near Odyssey Middle School as a bombing range until 1946. The year after that, three boys playing near the site were crippled by a live explosive but the land was not declared a potential danger by the Army Crops of Engineers until last year.

Thursday night, families from the Warwick subdivision met with Lennar officials to discuss fears that they may be living near or on top of buried explosives.

Lennar home builders told the homeowners that a munitions consultant they recently hired identified metal objects on all 54 of their home sites.

"What happens next is that we go in and start digging these things out of the ground," Lennar Division President Wayne Broedel said.

The digging will uproot lawns and could venture under foundations, the report said.

"Who knows where they are going to be next?" homeowner Christopher Schoembohm said. "Are they going to be under my house or somebody else's house?"

Neighbors said they are worried about the danger and falling property values.

"I just don't want my house to go down in value because of all this," Warwick homeowner Scott Fritz said. "That is my main concern."

link and pics of Found Live Ammo;
http://tinyurl.com/2h8qgc

Anonymous said...

Why does US Treasury wants bring back the 2-28 Option ARM program when they know it is a ticking time bomb for the US Economy.

http://news.yahoo.com/s/nm/
20071013/bs_nm/usa_credit_
sivs_dc_1

Treasury representatives met about two weeks ago with sponsors of these vehicles, Wall Street banks and investors to discuss "how to alleviate some of the issues in the SIV market," one source informed of the meeting by participants said.

SIVs are investment vehicles that raise cash by issuing short-term debt called commercial paper and use the proceeds to buy higher-yielding securities, often tied to U.S. mortgages. The vehicles, often set up by banks, make money by pocketing the difference between their funding costs and investment returns.

One plan that was discussed at the meeting involved setting up a "super fund" where "each SIV in the market could pledge up to one-third of its assets and get financing," the source said.

A government source also confirmed that there is a Treasury initiative to ease funding costs in the SIV market.

The plan could also get backing banks outside the United States. The Financial Services Authority, the United Kingdom's markets regulator, has suggested that UK banks consider participating in the plan, the Wall Street Journal reported.

The fund, which is tentatively called Master-Liquidity Enhancement Conduit, or M-LEC, could be announced as early as Monday, if banks agree, the Journal reported.
U.S. treasury Secretary Henry Paulson is scheduled to speak on Tuesday in Washington on home ownership, mortgage markets, and the U.S. economy.

The investment vehicles have been unable to sell new commercial paper for months as investors fearful of contagion from subprime mortgages have shunned most types of asset-backed commercial paper. As a result, many SIVs have run into trouble.

Anonymous said...

Are Major lenders who actively pushed option ARMs during the heyday housing boom years now desperately looking for suckers for SIV

http://realtytimes.com/rtcpages/
20060821_lendersworry.htm

Option ARM "Reset" Payment Spikes Worry Mortgage Lenders, Regulators

Many option ARMs are scheduled to reset to higher payments this year and next -- an estimated half trillion dollars worth during 2006 alone, according to mortgage giant Freddie Mac. Federal and state financial institution regulators, along with some prominent lenders, worry that not all borrowers now making minimum payments are aware of the size of the monthly payment increases they may soon face. Worse yet, some of these loans were made to people who were on the financial bubble to begin with: their credit was stretched to make even the minimum payments necessary to afford the house they purchased.

Federal and state financial regulators are expected to address the option ARM situation within the coming two months with new guidance for all types of mortgage lenders. Among the key requirements expected in the guidelines: Never extend minimum-payment plans to borrowers with sub-par credit scores, and never make loans to purchasers without thoroughly describing the mechanics of payment resets before the closing.

How big an increase might the borrower anticipate? The prototype letter, sent to a hypothetical California borrower with a $402,000 current mortgage balance, indicates that the customer's current minimum payments are running at $1,348.47. If the mortgage reset at today's applicable interest rate of 7.625 percent, the monthly payment due would jump by $1,539.13 to $2,887.60 -- more than double. If prevailing interest rates were even higher at the reset, the payment jump would be even bigger.

Anonymous said...

Question:

NEED OPTION ARM, O/O, STATED/STATED, REFI C/O, SFR, FICO 724, 80% ltv

I have it there but their inhouse processor made the mistake of ordering an appraisal we asked her not to (we were going to provide our own that way they just do a drive by.) Their value came in $70,000 less than ours.

We provided them afterwards a very solid appraisal but not it has to go into an appeal with their appraisal dept.

Apparently I heard from and inside person at World Savings that the appraisal dept is instructed to bring values in 20% less than it should be.

I don't know if that is true but it really sucks if it is. By someone making a simple error of not listening to us we have a dead deal with them.

Answer:

I worked as an appraiser and in appraisal management for many years at World Savings before entering wholesale origination.

I can assure you that we were/are never instructed to come in at anything lower or higher than current market value.

Our appraisers are not allowed to get a value estimate so they wouldn't even know if they are cutting a "value" unless they get an outside appraisal to review.

If they are found to be either over or under appraising they will not be appraising with us for long.

http://forum.brokeroutpost.com/
loans/forum/2/174203.htm

Anonymous said...

Mortgage fraud on rise

Mortgage brokers, appraisers, title agents, loan officers and phony buyers took out more than $50 million in fraudulent home loans to buy luxury condos in South Beach and homes in Southwest Ranches, federal prosecutors have charged.

Some of the 18 defendants allegedly created counterfeit documents like fake W-2s and pay stubs to dupe lenders - and, in some cases, innocent buyers.

In several cases, fraudulent appraisals were used to jack up property values so the defendants could extract large sums from new mortgages in what are commonly called cash-back-at-closing schemes.

U.S. Attorney R. Alexander Acosta also has announced a new federal-state mortgage fraud initiative that will step up investigations and prosecutions in Florida.

The state leads the nation in suspected home loan fraud.

Mortgage giant Fannie Mae reported in June that four of the five ZIP Codes containing the largest share of Florida's questionable loans were in Miami-Dade County, where Mayor Carlos Alvarez announced his own mortgage fraud task force to address the problem locally. Such fraud has been seen in the Keys, as well.

Timothy Delaney, assistant special agent in charge of the Miami office of the FBI, said his office had 50 open investigations into suspected mortgage fraud, with three new multimillion-dollar cases opened just last month.

“Over the next several months, you should expect to see a number of similar mortgage fraud schemes indicted here in South Florida,” Acosta said.

Acosta said mortgage fraud is widespread, affecting neighborhoods across all socioeconomic strata, and involving professional insiders at almost every stage of the loan process.

In a case made public last month, prosecutors charged mortgage broker Richard Crowder II, attorney Gary Mark Mills and Wachovia loan officer Karen Lynn Sullivan with conspiring to obtain $42 million in bogus loans used to buy 17 condos on South Beach.

http://www.keynoter.com/articles/
2007/10/13/business/biz01.txt

Anonymous said...

Faced with a real estate market that won't budge and a stock price that won't stop slipping, Florida's largest private landowner is taking a chain saw to its operations.

During the real estate boom, St. Joe flourished, even launching a PR campaign to rebrand the Florida Panhandle as Florida's "Great Northwest." The company's stock topped $80 a share in mid July 2005. But when home sales slowed, St. Joe's stock started on a downward skid. From about $60 in May, the company's shares closed Monday at $34.04, down 11 cents.

The result? In those five months, more than $1-billion of the company's market value vanished. The company's profit dropped in four of the last six quarters, and sales have not risen since the third quarter of 2005.

For the first six months of this year, the company said it sold 247 homes or homesites. That's down from 518 a year ago. Statewide, home sales were down 41 percent in the second quarter, according to the National Association of Realtors.

As part of its restructuring, St. Joe intends to sell "nonstrategic" assets including the Sunshine State Cypress Mill in rural Liberty County west of Tallahassee and unspecified parcels with commercial entitlements.

Also "priced to sell," according to the company, are 1,200 developed homesites and about 190 homes. Most of these residential properties are in a 200-mile swath across northwest Florida.

The draconian moves by one of the state's most prominent and politically connected real estate firms are the strongest signal yet that Florida's struggling housing market has yet to hit bottom.

http://www.sptimes.com/2007/10/09
/Business/Fla_developer_calls_r.
shtml

Anonymous said...

Is house price falling in Bay Area or just normalizing?

165/sq feet a fair price for a new house in Union City.

$825,000 for 5000 sq feet house

http://www.redfin.com/stingray/do/
printable-listing?listing-id=1208295

Shakster said...

Flyingmonkeywarrior---Your post about Lennar building onMine Fields---------------------------
California City California was also built on an abandoned US Navy/MarineCorps bombing range.Over the years,and as recently as 2 years ago live ,highly dangerous bombs have been unearthed by residents.Some were ready to blow ,and the Government had to step in ,and explode them.For anyone wanting a super cheap POS crapbox with built in demolition when you're ready to remodel might think"Why Not Cal City?"The schools had to be gone over by professional locators to make sure they were safe,and kids routinely turn up with little bombs as souveneirs.The captain combats of the world would love that craphole.

Anonymous said...

1929 Here again

getyourselfconnected said...

Whistling past the graveyard is the phrase that comes to mind looking at the plan to make a "Super Conduit Fund" to buy crappy mortgage paper by the big banks.
http://www.nytimes.com/2007/10/14/business/14bank.html

This is not going to end well.

Anonymous said...

Words for the sellers one way to end the pain....


Lower the price bitch!

Anonymous said...

Baldwin Park near downtown Orlando was built on a Navy base from the 50's. There is no telling what they poured down the drain back then.

Anonymous said...

Will Cheney Nuke Arizona?

Dick Cheney & Vigilant Shield: Will a Missing Nuke from the B-52 Incident be used in a Simulated Terrorist Attack?

Click Here

Anonymous said...

Wall Street Chop Shop

I used to work for one of the oldest and largest financial services companies in the world. But you wouldn't have known it from looking at the sign on the outside of the building. You see, the firm kept its name out of public view when it came to this business: the sub prime mortgage lending racket.

Why?

This Wall Street firm, spoken about in hushed tones around country clubs and cocktail parties, DOES NOT want to have its name associated with the financial services equivalent of a chop shop or a whore house. Oh no. It just wants the money associated with this despicable operation, and none of the press. Questions in the media about the propriety of these activities might cause discomfort for investors. Certain public appearances need to be maintained, after all.

This firm premeditated the exit from the crash unfolding before our eyes, both legally and in terms of public relations, years in advance.

Here's what it did.

area 51 said...

FLASH:
$80B Bailout fund in the works.
(Bet it won't stop @ $80B)

Visions of LTCM bank bailout cooperation dancing in my head.

They even want to bring the UK in on the deal.

Sorry all you goldbugs, DOPES, DOLTS, 1000 Word Douches and tinfoil hatters.....

It's all over,
no recession,
no end of the world,
no full stop.

Everything back to normal, stocks will continue up. You all get to keep buying your communist Chinese crap....

But damn, how the hell am I gonna unload all my worthless ammo and MREs???!!!

Check it out.........
http://tinyurl.com/2ntuxt

Anonymous said...

okay everybody, so now that everyone is learning that they are going to loose money hand over fist. I did not include myself in this mortgage mess, but it appears that I am involved by virtue of the local grocery store. The prices of food have shot up so much I thought gas was bad. One day I go into costo the eggs are maybe 1.50 for 18 I go back in a week later I buy 1 carton of eggs a week (not anymore)the price shot up to 2.30. I don't know else is going up but that I noticed. The price of ground beef (?) has gone from a miserly 2.00 to around 3.50 is is going up so fast you have to grab it before the meat man comes out to put a new tag on it. The inflation is starting to hit so be forewarned. I told everyone about the shopping at the stores and then Wal-Mart admitted folks are not shopping there as much anymore. They said it's because the Mexican's quit shopping there. So now I notice the price of food and it is going to be a choice once again. Feed your family pay your (rent) mortgage, or gas your car. It's a cruel world out there, the rich folks are going to get their money, period. There is nothing you or anyone can do about it. Did anyone read that article about America being forced into a third world by Vicente Fox sending his "I want a better life" people here. If they continue to drive down wages so they can get the job and then turn around and buy 8 valve disel oversized ford f 10's then we are doomed. That is not a better life but a sign that they are materialistic and can only get have that "better life" in America. Not even bothering to learn the language, no wonder Ford is still in business. I guess that is a plus for my union brother and sister, whom I hope are American's not illegal and or living here on expired visa's.

Anonymous said...

Banks May Pool Billions to Avert Securities Sell-Off

The proposal echoes the 1998 bailout of the hedge fund Long Term Capital Management, when a group of big banks came together to prevent the fund from collapsing after it made a series of bad bets. And the current round of crisis-driven collaboration illustrates the heightened level of concern among both government and financial players.

While there are signs that the broader credit markets have begun to stabilize after the Federal Reserve lowered interest rates last month, a pocket of the commercial paper market remains under siege: structured investment vehicles, known as SIVs. The fear is that problems with these vehicles could infect the broader economy.

SIVs, which issue short-term notes to invest in longer-term securities with higher yields, are often organized by banks but are not actually owned or held by them. They are supposed to be financed through the issuance of commercial paper backed by pools of home loans and credit card debt, but the loss of confidence in the quality of subprime mortgage bonds has also tainted these securities.

Analysts say that investors have all but stopped buying SIV-affiliated commercial paper, and the worry is that the 30 or so SIVs will unload billions of dollars of mortgage-related assets all at once. That would put intense pressure on prices. As Wall Street firms and hedge funds mark value of similar investments they held to their new lower values, they face potentially huge hits to their profits.

Still, the impact on the biggest banks is even more severe. In times of crisis, they are committed — either legally or to maintain their reputations — to stepping in to buy those securities. Banks have already been buying significant amounts of commercial paper in recent weeks, even though they did not have to. But if they are forced to bring those assets onto their balance sheets, they might be less willing to lend to businesses and consumers. That could set off a credit crunch and thrust the economy into a recession.

http://www.nytimes.com/2007/10/
14/business/14bank.html

Anonymous said...

Is it a Bird? Is it a Plane? No, it's Superconduit!

There's a certain amount of sense to this idea: as Citigroup and other banks find themselves at the mercy of their off-balance sheet structured investment vehicles, or SIVs, they should just create one enormous pool with $100 billion or so in really hard-to-value structured debt, which would be too big to fail, which could roll over its own short-term obligations relatively easily, and which could act as a buyer of stuff which no one else seems to want right now.

But boy is it going to be hard to work this one out in practice. For one thing, there are going to be very tough negotiations on the subject of how best to value the SIVs which will be rolled up into the new "superconduit":

Bank-affiliated SIVs selling assets into the superconduit will have to agree on how to price those assets. Some SIVs may value the securities differently. There have been several meetings since the initial Sunday meeting, both at Treasury and in New York.

And then there's the question of how to account for what sounds like explicit guarantees from the banks creating it.

Because the superconduit would be backed by the big banks themselves, it's expected this would reassure investors and make them more willing to buy its short-term debt, or commercial paper...
Two banks in the discussions with Citigroup, Bank of America Corp. and J.P. Morgan Chase & Co., would participate not because they have SIVs -- they don't -- but because they would earn fees for helping arrange the superconduit, according to people briefed on the discussions. The superconduit's debt would be fully backed by participating banks, they said.

How much capital would the Federal Reserve require that the banks set aside to cover these guarantees? This could end up being a very expensive operation, in terms of eating up shareholders' equity, just as the banks are being increasingly reintermediated and see big balance-sheet demands looming in the future.

If all these issues can be hammered out, however, with the help of some "moral suasion" from Treasury, then this would be a great example of the banking sector coming up with its own solution to a problem ultimately of its own making. And if it costs enough to hurt then, frankly, so much the better.

http://www.portfolio.com/views/
blogs/market-movers/2007/10/13/
is-it-a-bird-is-it-a-plane-no-
its-superconduit

Anonymous said...

The Yellow-Light Economy

Who could have imagined that the stock market would hit record highs so soon after the credit crunch and the housing collapse?

Or that the credit markets would already have begun opening up again, albeit with a much greater spread than in June between interest on private debt and interest on treasuries?

The August panic seems like ancient history. It originated in the contagious fear that the pyramid of securities based on subprime mortgages of unknowable worth was wobbly and might collapse.

So where are we in the tug of war between bulls and bears?

The bears, looking at the glass half empty, see corporate America concerned by a still-real risk of contraction. The credit squeeze is eased, but not yet over. In the next 60 days, nearly $1 trillion of commercial paper will have to be rolled over, and nobody is quite sure where the money to refinance it will come from. If business can't access working capital for its daily needs, firms will have to shrink their operations. The business concern over the economy has also slowed payroll growth.

The bulls, seeing a glass half full, focus on impressive growth in other sectors: high business profits; growing nonresidential construction; expanding business fixed investments; and soaring exports benefiting from the lower dollar. Inventories are low, and balance sheets are strong. The companies in the S&P 500 alone have $2.8 trillion in cash balances, and returns on equity are still running in the high teens. The corporate world is not coming to an end.

So the bears and the bulls are in rough balance. Most accept that the likeliest best outcome is that we will have a couple of quarters of subdued growth and then see a gradual strengthening next year, especially if the housing correction has worked through and doesn't unduly depress consumer spending.

The big unknown—the fulcrum, maybe—is that there is perhaps $500 trillion in outstanding derivatives contracts, some of them in instruments so complex that investor after investor has admitted to not being able to know the value of those newfangled assets. In other words, it will be several more months before the bear-bull tug of war can be resolved.

http://www.usnews.com/articles/
opinion/mzuckerman/2007/10/12/
where-our-economy-stands.html?
s_cid=rss:where-our-economy-
stands.html

Anonymous said...

Of the Bay Area's 236 ZIP codes, 25 are foreclosure hot spots - places where more than eight of every 1,000 homes were repossessed by lenders this year.

Neighborhoods with affordable home prices, a historical popularity with minority home buyers, and a lot of new construction have been more prone than others to spikes in foreclosures, according to a Chronicle analysis of housing and census data.

Another big predictor of foreclosure hot spots is how far home prices have tumbled in a neighborhood since the Bay Area housing market peaked in spring 2006. That's because many recent homeowners put little or no money down and used riskier mortgages; as a result, they may now be "under water," owing more on the properties than they are worth.

Bay Area residents who lived in ZIP codes where home prices fell by 10 percent or more since the market peak in May 2006 were three times more likely to have ended up in foreclosure last year, according to The Chronicle's analysis, which compared foreclosure data from DataQuick with an index of home price changes from First American LoanPerformance.

Many people were victims of bad timing. For instance, even if homeowners used a risky mortgage to swing the purchase of a brand-new home in a reasonably priced neighborhood five years ago, they would likely have built up significant equity from the home-price escalation of recent years. As a result, if they were facing a rate reset on an adjustable loan, they would potentially have enough equity to move to a safer mortgage, or to sell and still make a profit.

http://www.sfgate.com/cgi-bin/
article.cgi?f=/c/a/2007/10/14/
MNVPSEMVQ.DTL&feed=rss.news

Anonymous said...

The first from The New Statesman: "If hedge funds were a country, it would be the eighth-biggest on the planet. They can sink whole economies, and have the potential to crash the entire global financial system. Yet they are beyond regulation. We should be very afraid."

So Smith is afraid, very afraid. Afraid because such an analysis doesn't seem to apply to the instruments being used to reduce risk. The problem lies in what The New Statesman defines what a hedge fund is. There's more.

Dr Ben Bernanke, chairman of the US Federal Reserve, the most important financial supervisor of all, was quizzed by the US Senate Banking Committee about whether derivatives - complex financial instruments liberally used by these hedge funds - should be regulated.

He commented: "Derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and use them properly."

Yes, be afraid, very afraid. These instruments are not only used by sophisticated financial institutions but are a considerable component of most self-respecting pensions, managed funds, and a host of other vehicles used by the men and women of the street.

Hedge funds/ Alternative Investment Strategies (AIS), or whatever you want to call them; stopped being an elitist tool some time ago. Regulators wake up.

http://www.gulf-news.com/
business/Markets/10160047.html

Anonymous said...

Subprime financing. Nuts and Bolts

The idea of creating securities backed by pools of mortgage debt has been around for a couple of decades, at least.

But what used to be a fairly straightforward process has a lot more complex bells and whistles that can be incorporated into the process now.

Wall Street wizards have cooked up an alphabet soup of variations on the simple idea of mortgage "securitization," which is basically aimed at turning an asset that can't be easily traded, into one which can be.

Here's a look at some financial products related to mortgages.

ABS: Asset backed securities are bonds or notes backed by pools of financial assets, typically with predictable income flows. When mortgages are used, they are often called mortgage-backed securities (MBS).

ABCP: Asset backed commercial paper takes things a step further. A company or legally created "conduit" acquires long-term mortgage debt as an asset. It then uses that to underwrite its issuance of short-term commercial paper. It can reap a profit on the difference in long and short-term rates, but it's a financial high wire act because the short term commercial paper needs to be refinanced frequently.

CDO: Collateralized debt obligation is a security backed by a pool of mortgages which are sliced into several portions, called tranches which represent different levels of risk. Each is also assigned a pecking order for writing off bad loans in the CDO. The tranche with the highest risk loans also take the hit on writeoffs first. If it survives, it also gets the highest interest rate payments.

Synthetic CDOs: These are derivatives created by some hedge funds which can track mortgage-backed CDOS. Synthetic CDOs were one way hedge funds increased their exposure, and potential gains and losses, to the mortgage-backed investments.

http://www.canada.com/
ottawacitizen/news/observer/
story.html?id=7c98d797-0d6b-
4f55-bda4-884acc7dcbec

marmar said...

The Housing Bubble strikes again:

"A Novato man apparently shot and critically injured his wife before he committed suicide inside the couple's home, authorities said today.

The 5:55 p.m. incident Friday at 105 Atherton Oaks Drive was reported by a 911 call from a neighbor. None of the couple's three young children was injured. One of them ran to the neighbor's home to report what happened, said Marin County Sheriff's Sgt. Mike Crain.

Authorities identified the dead man as Abraham Magana, 45, a landscaping contractor who had appeared on Home and Garden TV, and the hospitalized woman as Abelina Magana, a local real estate agent."

I wish this was the only murder suicide in the SF Bay Area due to crushing mortgage debt. Sadly, it's the fourth I've read about this year!

Anonymous said...

area 51 makes DOPES look like a rocket scientist.

FlyingMonkeyWarrior said...

@ Shakster,
RE; "The schools had to be gone over by professional locators to make sure they were safe,and kids routinely turn up with little bombs as souveneirs.The captain combats of the world would love that craphole.

+++++++++++++++++
Yep, here to about the school part. That Lennar community Elementary School was gone over and over and barely opened in time for this fall's school year. The MSM never said anything about the homes till a few days ago.

*******************

@ anon,

Baldwin Park near downtown Orlando, was partially built with millions in corporate welfare from the City, the land was sold to the developers for a song by the Feds when Pres. Clinton cut our military spending, and single family rich are the new Home Owners, I reckon.

The developer did have to scrape the top 6 to 12 inches of soil off of the site before building the McMansions because of toxins from the old military golf course and VA Hospital, I believe.

Couldn't give me one and I was born there at at The Navy Training Center (NTC) Hospital.

FlyingMonkeyWarrior said...

Do Not Even Get Me Started.
FMW
source WSJ-online

Income-Inequality Gap Widens
Boom in Financial Markets
Parallels Rise in Share
For Wealthiest Americans
By GREG IP
October 12, 2007

The richest Americans' share of national income has hit a postwar record, surpassing the highs reached in the 1990s bull market, and underlining the divergence of economic fortunes blamed for fueling anxiety among American workers.


snip;

President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps. And what needs to be done about the inequality of income is to make sure people have got good education, starting with young kids. That's why No Child Left Behind is such an important component of making sure that America is competitive in the 21st century."

snip;

Jason Furman, a scholar at the Brookings Institution and an adviser to Democratic politicians, said: "We've had a 30-year trend of increasing inequality.

snip;

Until this summer, soaring stock prices and buoyant credit markets had produced spectacular payouts for private-equity and hedge-fund managers, and investment bankers.

One study by University of Chicago academics Steven Kaplan and Joshua Rauh concludes that in 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.

Mr. Rauh said "it's hard to escape the notion" that the rising share of income going to the very richest is, in part, "a Wall Street, financial industry-based story."

url; here
http://tinyurl.com/2zrzqm
or here
http://online.wsj.com/article/SB11921582
2413557069.html?mod=rss_whats_news_us

W.C. Varones said...

Mozilo Memo Challenge

There's a new Mozilo memo to Countrywide employees here.

HP'ers are encouraged to print the memo and post it at their local Countrywide office, then send pictures to wcvarones@yahoo.com

LauraVella said...

Here's a front page article on bay area forclosures listed by zip code and county for the bay area.

http://www.sfgate.com/cgi-bin/object/article?o=1&f=/c/a/2007/10/14/MNVPSEMVQ.DTL&type=business

LauraVella said...

"there is perhaps $500 trillion in outstanding derivatives contracts, some of them in instruments so complex that investor after investor has admitted to not being able to know the value of those newfangled assets. "

------
How are banks and investment companies going to get away with selling anything debt (derivatives) packaged up pretty, and marketed as "asset investments" ever again to overseas investors?

Thats that old saying something about fool me once...

bob said...

This is going to sound really dumb, but I can't seem find this anywhere: what does "FB homeowner" mean?

Anonymous said...

CREDIT WORTHINESS when will banks own up it.

Should SIVs have a partial liquidity facility to help achieve an orderly sale process, with cash drawn down to cover near-term liabilities.

So why make a Super conduit.

If an SIV breaches its major capital loss test, defaults on its debt or becomes insolvent, it enters a mandatory wind-down process whereby assets are sold to pay down debt.

In other words Banks that loan out their solid credit rating, could get their solid credit rating dropped to junk status.

Who were these banks that lent their solid credit rating to develop SIVs for mortgage companies to sell their Option Arm.

Anonymous said...

If I borrowed money to buy shares in a company that went out of business, I would need to pay back that loan out of my own pocket.

Why shouldn't the same principal apply to the banks behind these SIVs and the investors who fell for their sales pitch?

http://dcx.bloggingstocks.com/2007
/10/14/hank-paulsons-got-an-enron
-like-crisis-that-could-swamp-
citigro/

Hank Paulson's got an Enron-like crisis that could swamp Citigroup (C) and JPMorgan (JPM)

Like the partnerships that sunk Enron, these banks don't have to account for the SIVs until a time of crisis -- at which point they're required -- legally or to preserve their reputations -- to step in and buy them. (As a brief reminder, Enron had created off-balance sheet partnerships backed by huge borrowing which enriched its executives while hiding Enron's money-losing operations).

In the case of the SIVs, nobody wants to discuss just how big the problem could be. My hunch is that the problem is so big that the banks and Treasury department are worried that an accurate accounting would deeply spook the financial markets -- leading people to withdraw their money from the stock markets and the banks that are on the hook for these SIVs. That's why they're working on a semi-secret government-arranged bail out. (Incidentally, I think the fear of how big the write off of this toxic waste would be is the real reason behind the Fed's September 19th 50 basis point rate cut.)

The Treasury Department proposal calls for the creation of a "Super-SIV," or a SIV-like fund fully backed by several of the world's biggest banks to provide emergency financing. The Super-SIV would issue short-term notes to finance the purchase of assets held by the SIVs affiliated with the banks, with the hope of reassuring investors.

It sounds to me like a non-starter. First, the interests of different banks are at odds with each other and this plan will only work if they can all agree. For instance, big banks will argue over the amount of capital each bank would need to contribute, how it would be administrated, and the fee structures and cost burdens.

Secondly, the basic problem is that the Super SIV -- which sounds like some kind of viral epidemic -- appears to me to be putting lipstick on a pig while giving the banks a huge fee payday. It doesn't solve the underlying problem which is that investors borrowed huge amounts of money to buy toxic waste -- they need to pay the price for their mistakes.

Anonymous said...

SIV Rescue Plan: Will it Get Done?

The closest analogue (a bunch of firms that in the ordinary course of events are competitors collaborating on a rescue) was the bailout of Long Term Capital Management, which allowed the firm to avert a collapse and be wound down instead. The SIV program, suffers from being more complicated and less time pressured (the prospect of being hanged at dawn wonderfully focuses the mind).

To wit: with LTCM, it was clear what was in the deal, namely, the entire firm. All of its positions were hemorrhaging. Similarly, it was reasonably clear who ought to be in the deal. The Fed had rounded up its major creditors (although Bear Stearns infamously took exception). It was also fairly clear who would manage the assets. Everyone agreed that the LTCM management should be kept in place; the open governance issues were on how much they should be paid, what sort of supervision should be put in place, and who should be involved in oversight.

By contrast, with the SIVs, it isn't clear which banks will provide assets from their affiliated SIVs, aside from Citigroup (note that JP Morgan and Bank of America, the only two other banks mentioned so far, would not be putting assets into the new conduit, since they don't have SIVs, but merely providing services to the vehicle). Banks with SIVs that are believed to be candidates for this vehicle but haven't been consulted in its design may take exception to some of its provisions.

It seems that there are a zillion decisions that have to be made for this idea to get off the ground, far more than for LTCM. A New York Times story reports on some of the open issues:

But whether the banks would buy the assets directly or just buy the short-term debt is still unclear, according to people briefed on the situation. So are other aspects, like the amount of capital each bank would need to contribute, how it would be administrated, and the fee structures and cost burdens.


If this list is accurate, it sounds like pretty much everything is up in the air, and it seems inconsistent with the report in the Journal that the plan could be announced as early as Monday (unless that announcement is something like "We're working on it"). The Times gives the impression that the working group isn't even at the letter of intent stage (an outline of key terms), much the less a definitive agreement (the development of the governing contracts). Forgive me for using an M&A metaphor, but bear in mind that many letters of intent fail to mature into successful deals.

And no one has fessed up that the nasty bit will be valuing the assets that go into this vehicle. That needs to be done for any legal transfer to take place. But that is also a highly contentious issue, particularly since a tidbit in a Reuters story suggests that the new conduit may be only for the worst assets in the SIVs:

One plan that was discussed at the meeting involved setting up a "super fund" where "each SIV in the market could pledge up to one-third of its assets and get financing," the source said.


This resembles the "good bank/bad bank" structure used to deal with some of the failures of large savings & loans in the early 1990s. The bad assets were hived off into a separate entity with new management and raised new capital; the old, cleaned up bank was recapitalized in a diminished form. The two banks, one with distressed assets, the other with solid, easy to evaluate ones, appealed to very different type of investors.

The problem the SIVs have is that there isn't a functioning market for some (many?) of the assets they hold, therefore no reliable price. Using book value would be appealing from one standpoint, since no one would recognize any losses when they move assets from the old SIV into the new entity, but that approach will almost certainly be deemed to be unacceptable by the SIV owners, since some funds no doubt hold similar assets on their books at very different prices, depending on when and how they acquired them.

http://www.nakedcapitalism.com/
2007/10/siv-rescue-plan-will-it
-get-done.html

Anonymous said...

With BOJ and US Federal Reserve opening the liquidity pump to save SIV the Excess Global Liquidity has to go somewhere.

How about a Commodities CDO.

http://www.larouchepac.com/news/
2007/10/13/hedge-funds-pile-
commodities.html

Hedge Funds Pile into Commodities

An article in www.bullionvault.com gives an impressive account of how hedge funds are plunging into commodity speculation, creating all sorts of new derivative instruments, cooking "a '70s-style inflation -- or worse."

"Wall Street and the City are suddenly piling into the commodity markets... The PhD's who cooked up the U.S. housing bubble are now applying their haute finance skills to gearing up the cost of natural resources. Hence, the complexity of the very latest commodity offerings. Expect a side-order of inflation to reach your dining table as a result very soon!

"When unlimited money-supply growth crashes into rising demand for limited-supply essentials -- such as natural gas, copper, soybeans and cocoa -- the result is sure to be price inflation as violent as the monetary inflation that preceded it. Add a sudden wall of money from Wall Street, the City, Frankfurt, Paris and Tokyo... all seeking a growth market to replace the can't-lose gamble of home-loan trading and credit... and the surge in basic resource prices will only accelerate. Now add a little pixie dust... plus a dollop of leverage... and voila! One '70s-style inflation -- or worse -- cooked to order.

"`An army of structured credit experts is studying products such as Collateralized Commodity Obligations -- or CCOs,' reports Reuters, `tied to the performance of a portfolio of underlying commodities, such as precious metals or energy prices.' In a CCO, `the issuer sells protection on the underlying commodity portfolio to the counterparty under what is known as a trigger swap agreement. To fund its obligations under the swap, the issuer sells notes in the amount of the protection sold, according to Fitch Ratings. Proceeds from the notes then serve as collateral for the issuer's exposure under the swap until it matures. At maturity the issuer liquidates the remaining asset and returns the proceeds to noteholders.'

"With it so far? My guess is -- and at least I'll confess it's just guesswork -- is that the Reuters journalist and most likely the bulk of investors about to start buying CCOs have no idea quite what these products are, either. All they'll see, instead, is a steady stream of potential income. Provided, of course, that the CCOs pay out at maturity.

"In other words, bond managers and fixed-income traders whacked by the collapse of mortgage-backed debt, can now put commodities into their portfolios -- and just in time, too, for the runaway inflation about to hit thanks to monetary over-supply and heavily-geared financial buying. The magic of finance has turned consumable lumps of natural resources into a stream of income...without the bother of digging the earth or planting a crop."

Anonymous said...

Why should speculators and hedge funds waste their money buying SIV when their a new game in town.

BOJ and US Federal Reverse are pinned in a box with their hands tied.

US Treasury is affair to admit it by they looking for a weaker US Dollar policy.

If you think Crude Oil Price are high now, you haven't seen anything yet.

http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=2007-10-
10T200115Z_01_N10257579_
RTRIDST_0_CREDIT-CDOS-
FACTBOX.XML&pageNumber
=1&imageid=&cap=&sz=
13&WTModLoc=InvArt-
C1-ArticlePage1

Collateralized commodity obligations, a new CDO

Collateralized debt obligations, or CDOs, had been the fastest growing class of bonds until the credit crisis hit this summer.

Investors wary of CDOs' exposure to risky subprime mortgages are now looking at alternative classes of CDOs linked to commodity prices and other securities. For details, see [ID:N09417744].

The following is an explanation of collateralized commodity obligations, or CCOs, and emerging market CDOs, which necessitates an explanation of other forms of CDOs.

COLLATERALIZED COMMODITY OBLIGATIONS: CCOs are credit structures in which risk is repackaged to provide investors with a return that is linked to the performance of an underlying portfolio of commodities, according to Fitch Ratings.

By referencing a diversified portfolio and using a synthetic CDO structure, arranging banks have transformed commodities to a ratable credit product.

Here's how a typical CCO works. The issuer sells protection on the underlying commodity portfolio to the swap counterparty under what is known as a "trigger swap agreement."

To fund its obligations under the swap, the issuer sells notes in the amount of the protection sold, according to Fitch. Proceeds from the notes then serve as collateral for the issuer's exposure under the swap until it matures.

At maturity the issuer liquidates the remaining asset and returns the proceeds to noteholders.

Like CDOs, the risk of owning CCOs depends on the structure's exposure to declining assets and the degree of diversification of the CCO.

The risk is if there is a "trigger event," in which the valuation price of a reference commodity falls below a predetermined trigger price at a specified time or over a specified period.

In this case, CCOs that reference a low number of highly correlated commodities, such as a portfolio of energy assets, would be perceived as more risky than a CCO referencing a more diverse portfolio of commodities.

EMERGING MARKET BOND CDO: A CDO backed by emerging market debt. Sales of $881 million in 2006 compared with $1.6 billion in 2005. Investors burned by investments in subprime loans are now starting to look at emerging markets for value.

CASH FLOW CDO: These CDOs pay investors directly from the interest and principal payments to the underlying debt. These make up the bulk of CDOs.

SYNTHETIC CDO: A structured or corporate bond CDO created with contracts referencing the value of a bond, instead of the bond itself. Synthetic CDOs sell insurance against default of the referenced collateral with credit default swaps.

Anonymous said...

166 major U.S. lending operations have "imploded"

http://ml-implode.com/

Anonymous said...

Why would anyone want to purchase MBS tied to CDO or SIV base on liar loans.

Why do US Treasury think anyone would buy MBS(SIV) and pour more good money into bad investment when there is a new game in town Commodity(CDO).

http://www.signonsandiego.com/
news/business/calbreath/
20071014-9999-mz1b14calbre.html

In recent weeks, the mortgage industry has put out the word that it is shocked, simply shocked at the amount of fraud involved in home loans.

“People are deceiving lenders at an alarming rate,” said Jonathan Kempner, who heads the Mortgage Bankers Association.

Citing FBI estimates that mortgage fraud may have totaled as much as $4.2 billion in 2006, Kempner said the fraud has contributed to the recent wave of loan delinquencies and foreclosures.

But how innocent is the mortgage industry? Were lenders, as Kempner said, “the principal victims of mortgage fraud”? Or did the industry, with its lax standards, create an atmosphere in which fraud became pervasive? And did some mortgage firms aid and abet the fraud?

“(The mortgage lenders) knew the bad credit quality of the loans being originated, they took their profits, and now the ship sinks,” said Bob Simpson, president of Investors Mortgage Asset Recovery Co. in Irvine. “They will all walk away rich. And we are left with neighborhoods full of foreclosures.”

Simpson, whose company investigates mortgage insurance claims, said he has found that many mortgage brokers encouraged borrowers to overstate their income to qualify for high-priced mortgages. He tells of how a mortgage broker told one of his employees he could qualify for a modest home loan based on his salary.

“But if that loan's not enough for you, we'll use stated income,” the broker said. “Stated income” is the industry buzzword for estimating a borrower's salary. That, in many cases, means lying about what you make.

Simpson tells of how a manicurist gained a jumbo mortgage using a loan application that said she was making $90,000 per year. An exterminator gained a loan by saying he made $132,000. A rental car worker was listed as making $144,000.

Simpson can't believe the mortgage firms were unaware of what was going on. “How can you look at a loan application saying that some part-time manicurist working out of her home is making $7,500 a month without being a little suspicious?” he asked.

Mark Miller, a bankruptcy attorney in San Diego, said some brokers wrote “backward loans.” If a house was priced at $500,000, for instance, the broker would calculate what kind of income would be necessary for a $500,000 loan and then pencil that into the application.

Of course, the borrowers weren't really making enough money to afford the mortgage, especially after the interest rates on their adjustable loans headed skyward. So the homes eventually went into foreclosure and the owners declared bankruptcy, which is how they landed in Miller's office.

Naturally, the borrower was usually a willing participant in these lies. When home prices were skyrocketing, some buyers were so eager to enter the market that they didn't mind lying to get a loan.

But there's anecdotal evidence suggests that not all borrowers knew about the lies in their loan applications.

Simpson said he has run across loan applications in which false information appears to have been added by the mortgage broker. “You can tell by the handwriting,” he said.

Anonymous said...

SIV super fund went from 100 billion on Friday down to 75 billion in just one day.

Beginning to sounds like a bad ideal to pour good money into a bad investment.

http://www.ft.com/cms/s/0
/4550b8c6-7a8d-11dc-9bee-
0000779fd2ac.html?nclick_check=1

Citigroup, Bank of America and JPMorgan are on Monday expected to announce plans for a fund to buy mortgage-linked securities in an attempt to allay fears of a downward price-spiral that would hit the balance sheets of big banks.

A person familiar with the discussions said that US banks collectively were expected to put up credit guarantees worth about $75bn for the fund, named the Single-Master Liquidity Enhancement Conduit (SMLEC).

Anonymous said...

Not like the collapse of the US Dollar need anymore help with the SIV Crisis, but US Treasury sell not going to help matter much either.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=ac_
PajNAGlzc&refer=home

Treasury Sales May Rise 50 Percent as Deficit Suddenly Swells

``All else being equal, greater supply should lead to higher yields,'' said Michael Pond, an interest-rate strategist in New York at Barclays, the securities unit of London-based Barclays Plc. The firm anticipates spending to exceed revenue by $200 billion this year.

`Higher Yields'

Selling Treasuries is the government's main way of funding the gap. The yield on the benchmark 10-year note due in 2017 rose 5 basis points, or 0.05 percentage point, to 4.68 percent last week, according to bond broker Cantor Fitzgerald LP in New York. The price of the 4 3/4 percent security due in August 2017 fell 11/32, or $3.44 per $1,000 face amount, to 100 16/32.

Sales of Treasuries may increase for the first time since 2004 as the U.S. federal budget deficit expands, jeopardizing the biggest bond rally in five years.

Government auctions of bills, notes and bonds in the fiscal year that started this month may rise more than 50 percent to $220 billion, according to UBS Securities LLC, one of the 21 primary dealers that underwrite Treasury auctions. The first decline in corporate tax revenue since 2003 increased the shortfall by 12 percent to $162.8 billion for the year ended in September, from $144.8 billion in the 12 months through April.

With the Federal Reserve cutting interest rates to keep the economy from falling into recession and inflation slowing, an increase in net sales would mar an otherwise bullish outlook for U.S. government debt, which has returned 4.3 percent this year, Merrill Lynch & Co. index data show. Less than six months ago, Treasury officials credited a shrinking deficit for allowing them to eliminate sales of three-year notes.

``Unless the economy turns on a dime and starts to show strength again, we're going to be looking at increased Treasury issuance beginning with bills later this year and spreading out across all Treasuries beginning in the first quarter,'' said William O'Donnell, head of U.S. government bond strategy at Zurich-based UBS AG's securities unit in Stamford, Connecticut.

Anonymous said...

These "SIVs" (and SPEs and SPVs) are nothing more than institutionalized fraude, pure and simple.

There is NO, and I repeat NO, valid, ethical reason to create an arms-length entity, then dump assets into it, to THEN be re-packaged, sold, re-sold, ad infinitum. Period.

The REAL reason for the rise and of these vehicles is to be able to skirt regulations regarding capital requirements, hide losses, reduce profits, obscure the balance sheet and avoid responsibility for the success or failure of the entity.

The fact that the so-called "regulators" allow such skullduggery should be all you need to know to do exactly what you (and I have done):

Duck and try to stay out of the way as the system implodes.

http://boards.prudentbear.com/
bbs_read.asp?mid=572037&tid=
572037&fid=1&start=1&sr=
1&sb=1&snsa=A#M572037

Anonymous said...

Treasury offers spur to banks’ debt scheme

The idea of setting up a “super-conduit” to address problems with off-balance sheet units, such as structured investment vehicles and conduits, emerged three weeks ago, when the US Treasury summoned leading bankers to discuss ways of reviving the mortgage-backed securities market and tackling the threats posed by the vehicles.

SIVs and conduits were seen as vulnerable to an old-style bank run as a result of the drying up of the asset-backed commercial paper market in August and September. By the time the super-conduit idea was ­discussed the ABC market appeared to be stabilising, but the risk of a run remained.

That situation posed wider concerns, as the SIVs and conduits are linked to some of the world’s largest banks and financial institutions. The issue was highlighted in August when it emerged that two German banks, IKB and Sachsen LB, had, in effect, imploded as a result of an inability to fund their SIVs.

What was needed, some bankers argued, was a super-conduit with the backing of leading financial institutions, to buy mortgage-linked securities from the existing SIVs and conduits and remake them into products that were more attractive to a nervous market.

Someone familiar with the discussions said the idea was “a private-sector developed and proposed solution”. There were “ideas circulating” at the banks. “Treasury knew there were proposals out there and said, ‘Why don’t we talk about them?’ ”

The Treasury played a ­crucial role in bringing the parties together, helping to “mediate the conversation” by offering perspectives when there were disagreements. “These are major competitors – of course it can get tense at times.”

Several banks, including Citigroup, offered ideas for designing the scheme. Citi has created more SIVs than almost any other bank in recent years and, though its executives insist these vehicles are relatively healthy, it has come under particular scrutiny.

The person familiar with the meetings denied that the super-conduit plan was in any way anti-competitive. “Granted there are people who would benefit from watching Citi bleed to death, but everybody agreed at the first meeting this was something positive.”

Bank of America had been “as integral in getting this done as Citigroup” and JPMorgan had been “half-committed” before climbing on board last week.

http://www.ft.com/cms/s/0/
2d3da098-7aa9-11dc-9bee-
0000779fd2ac.html

Anonymous said...

Didn't Ben Bernanke go to Robert Rubin prior to lowering Fed Fund Rate.

What is Robert Rubin connection to the SIV fall out.

http://news.yahoo.com/s/nm/
20071013/us_nm/citigroup_
rubin_dc_4

Two senior Citigroup Inc executives are leaving amid big write-downs, but some investors reckon that Robert Rubin, the former U.S. Treasury Secretary and one of Citigroup's most senior executives, should be held more accountable.

Citi, which last week said it expects to post a 60 percent decline in third quarter earnings amid trading and loan losses, said late on Thursday that trading chief Thomas Maheras was leaving, as would co-head of fixed income Randy Barker. The company is expected to report results on Monday.

Maheras worked closely with Rubin and both were involved in the largest U.S. bank's decision several years ago to take more trading risk, according to a senior former employee.

As Citi wrestles with high expenses, some investors are questioning whether Rubin is worth his high price.

Rubin, chairman of the board's executive committee, received about $17.3 million of compensation and realized $12.1 million from exercising stock and option awards for 2006, making him one of the bank's five highest-paid employees.

"He's a consultant there. He's offering strategic suggestions. You don't pay someone as much money as he gets for just guidance. Citi has to justify that presence and, if they can't, that's a pretty easy line item to cut," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon, which owns Citi shares.

Anonymous said...

Flyingmonkeywarrior said that flippers and speculators are more responsible for the bubble than any of Keith's poll choices .

I agree ,especially if you consider builders part of the speculator group .

So many of the people who bought in the last three years of the bubble were short term speculators .The REIC had to sell the investment aspect of purchasing real estate in order to keep this ball going ,otherwise the prices didn't make sense.In my opinion ,the people who bought between 1999 and 2002 were more it for home ownership ,but got carried away after they saw the prices go up .

Anonymous said...

A fire sale of assets could lift borrowing costs globally, trigger big losses from investors and force banks to further write down some holdings on their balance sheets.

The fund is the latest response to a global credit hangover after at least three years of easy credit that fueled massive mortgage lending in the United States and spurred record levels of leveraged buyouts.

Citigroup, JPMorgan Chase & Co and Bank of America Corp are involved in the discussions, according to people familiar with the situation.

The three banks declined to comment.

http://www.chinadaily.com.cn/
world/2007-10/15/content_
6173842.htm

Anonymous said...

Yen carry trade will return to again play a large role in driving capital inflow to Asian stock markets - including the Thai bourse - if the Bank of Japan (BOJ) decides to hold its rate at its next meeting, the head of United Securities said late last week.

Yen carry trade occurs when hedge funds, investors and companies borrow ultra-low-interest-rate yen and reinvest those funds in higher-yielding assets elsewhere.

Yen carry trade has recently boosted many stock markets in Asia to record highs.

http://nationmultimedia.com/2007/
10/15/business/business_30052370.
php

Anonymous said...

Why ECB May Raise Rates

Markets are re-evaluating the possibility of an increase in official euro-zone interest rates after a series of hawkish remarks by European Central Bank policy makers.

"Overall, I believe that risks to ending up with a higher-than-expected baseline inflation rate are considerable," ECB Governing Council member Nicholas Garganas said in an interview with Dow Jones Newswires published Friday.

Despite signs of slowing economic growth, policy makers have emphasized that rising prices for oil and food likely will push the inflation rate above the ECB's ceiling of just under 2% into early next year. Last week, several policy makers stressed that a planned interest-rate increase in September was postponed by the August credit crisis but not necessarily dropped altogether.

ECB Governing Council member Axel Weber, who also heads Germany's central bank, said Thursday in a speech, "There is a danger that...there will be a need for additional action [on interest rates], especially since the price rises are taking place on a broad front and are no longer only attributable to energy and food prices." His remarks sent German share prices lower early Friday and lent support to the euro.

http://online.wsj.com/article/
SB119241068720158835.html

Anonymous said...

Moody beginning to downgrade Option Arm lenders.

https://www.theasianbanker.com/
A556C5/Update.nsf/0/
B0F8DE99ABCA7A38482573740047
D143?Opendocument

Moody's Investors Service changed the rating outlook on Downey Financial Corp (issuer rating of Baa2) and its thrift subsidiary Downey Saving and Loan Association (bank financial strength rating of C-, issuer rating and long term deposits of Baa1, short-term deposits of P-2) to negative from stable.

"The outlook change reflects the deterioration in Downey's financial metrics due to asset quality issues, as well financial and franchise concerns as Downey's loan portfolio continues to decline," said Moody's Vice-President Craig Emrick. Downey is a mono-line mortgage institution which has historically focused on the option ARM loan product.

Anonymous said...

This Week on Wall Street, Investors Will Sift Through a Huge Batch of Earnings Reports

The deluge of reports will include results from banks like Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp.; and industrial companies including Caterpillar Inc. and Honeywell International Inc.

At this point, Wall Street is anticipating a fairly weak third quarter overall, but it expects corporate growth to bounce back robustly in the fourth quarter. Any indication that companies aren't rebounding as well as the market is hoping could derail the stock market, which has risen back into record territory.

The National Association of Home Builders releases its housing market index Tuesday. On Wednesday, the Labor Department releases its August reading on consumer prices, the Federal Reserve puts out its Beige Book on economic conditions around the country, and the Commerce Department reports on housing starts. And Thursday, the Conference Board releases its September index of leading economic indicators.

Meanwhile, Wall Street will be listening to speeches from some Fed officials during the week -- including Chairman Ben Bernanke, who is scheduled to speak at a St. Louis Fed conference Friday. The markets are split on whether policy makers will lower interest rates again when they meet Oct. 30-31.

http://biz.yahoo.com/ap/071014/
wall_street_week_ahead.html

Anonymous said...

Centex Corp. before Friday's opening bell said it expects to take about $1 billion worth of fiscal-second quarter charges to write down land values as home builders' balance sheets continue to shrink.

http://www.marketwatch.com/news/
story/centex-book-about-1-bln/
story.aspx?guid=%7BA96B717D%
2D2FC7%2D4AB3%2D9AFF%2D62163
FABA94E%7D&siteid=yhoof

Anonymous said...

Home builders likely to see further downgrades


The downgrade of three home builders into junk territory by Moody's Investors Service may only be the start of a rash of cuts of high grade builders into high yield, which may present funding challenges for some companies.

Lennar and Centex were both cut by two notches, while Pulte was cut one notch, all to "Ba1," one level below investment grade.

http://biz.yahoo.com/rb/071012/
markets_credit.html?.v=1

Anonymous said...

Countrywide Financial Corp. said Thursday its mortgage fundings for September fell 44 percent from the same period a year ago, and the mortgage lender is now facing a potential federal investigation over the timing of stock sales by its chief executive.

During the past few months, rising delinquency and default rates have caused demand for these securities to all but dry up, especially subprime loans. The collapse of the secondary market, coupled with the deteriorating housing market, has led to a steep drop in mortgage origination volume nationwide.

http://biz.yahoo.com/ap/071012/
countrywide_mortgages.html?.v=2

Stuck in So Pa said...

I see that Pulte is going to try a big sale (ala Hovnanian) down in Baltimore.

"The three-day sales blitz, an attempt to shed excess inventory in Pulte's 51 markets across the nation, marks the second such event in Maryland by a national builder."

Overpriced crap holes around Fort McHenry, even with up to $100,000 off, are still overpriced crap holes, in a REALLY bad section of town. The fort is still nice to visit, getting to it is scary!

I wonder how many dumb a$$ed sheeple will take the bait?

Russ said...

Bear Stearns' Bad Bet
Two Bear Stearns hedge funds soared by specializing in exotic securities and unorthodox practices. Then they imploded

http://tinyurl.com/2woc65

I remember HP covering the BS drama some time ago; especially the attempt by BS to unload the junk debt to the public through "Everquest financial". This story proceeds to describe the whole debacle, though not in such a hard-hitting fashion.

IMO It goes way to easy on BS and Cioffi in particular; for his trying to con the public into this sucker's investment as a means of bailing himself out. They barely mention that a large respected Wall St firm was trying to con clients in order to shift investment losses off of its own books.

I would be shocked to discover this type of behavior in a firm I did business with, and would never take seriously their advice. But there it is (or was) for all to see and nobody even apears to be the little-bit red-faced about it.

Anonymous said...

TO THE ANON-A-DUMBASS:

STOP POSTING ALL THOSE GODDAMN ARTICLES WITH NO COMMENTS.

This isn't CNN and you're not a reporter.

Anonymous said...

This weekend I read a book about the history of Yamhill Oregon written by an old timer. At first I thought it was just skimmable but I ended up reading the whole thing in one sitting.

Two things struck me the hardest. The first was that the author of the book, being 80 had gotten a lot of his info as a kid talking to old timers who were around when the first white settler arrived. So just those two lifetimes covered everything from the first cows/people arriving to the modern day. Very very quick when viewed this way.

Second was that during the Great Depression, the author's father ran a feed store - giving out feed on credit that kept a lot of people fed. During that time, many many people came to the feed store offering to trade their entire land holdings (usually hundreds of acres of prime farm land) in exchange for their feed bill and a small amount of cash (probably enough for gas money to get out of town).

The owner of the feed store refused - the words used were: we didn't even have enough money for gas money to go look at these places - they were essentially WORTHLESS - even the county couldn't get people to pay the taxes to take all this land over.

Prime ag land within 30 miles of a major city - WORTHLESS.

Personally, I think this is where we are headed. There is no bottom to this housing market - just a bottomless pit.

FB on my wife's BBS was so happy to buy in Phoenix this week - price got knocked down from 650k to 500k - what a deal !!!

What happens when it's worth 100k less next year and the years after that ?

DaveO said...

Anyone see this?:

http://www.fakepaycheckstubs.com/

I guess there's no reason why anyone can't get a loan for however much they want, for the low low cost of $49.95 (is this even legal?). Fear not the ability to repay the loan; buying a house today is more important than paying it back tomorrow.

In other news, read http://tinyurl.com/2pog2c. See, there's nothing to be worried about.

Anonymous said...

That situation posed wider concerns, as the SIVs and conduits are linked to some of the world’s largest banks and financial institutions. The issue was highlighted in August when it emerged that two German banks, IKB and Sachsen LB, had, in effect, imploded as a result of an inability to fund their SIVs.
_________________________

This is what's REALLY going on. If this "super conduit" can't be cobbled together, it's obvious that Citibank will go under....

DaveO said...

Look what I just came across. It's from 1992, and it's eery considering today's market:

http://tinyurl.com/ypcqmr

My favorite part:

"'We thought that La Jolla would be immune to any downturn,' muses Sam. 'We were wrong.'"

How far we haven't come (as a society)!

Anonymous said...

Not sure if this was already posted here, but a new reality show in Scottsdale:

http://www.azcentral.com/business/articles/1014biz-abg-foreclosuretv1015.html

Anonymous said...

Russ, the point you made about BS is why the market for CDOs MBSCs and all other debt is getting riskier and more expensive. Calculated Risk has a post on the ABX indexes declining big time.

Debt markets are imploding as investors choke on too much debt. This of course means that long term interest rates will go up.

getyourselfconnected said...

I am thinking that the proposed banking bailout plan by Citi and pals may cause more unease in the market than they may have wanted. After all, the losses by the banks and mortgage issues were supposed to be over after early September, now things may take more than 3 weeks to settle out? Who would have thought that? Check out an analogy of the plan to a time dilation effect on a spaceship:
http://economicdisconnect.blogspot.com/2007/10/warning-objects-in-mirror-are-closer.html

LauraVella said...

Gentle Ben today said: "Housing woes will slow down growth"


http://biz.yahoo.com/ap/071015/bernanke.html


No kidding Ben. This country needs manufacturing jobs, not houses!

Anonymous said...

----OIL------ $86 / BARREL

----MILK------- $4.29/ GALLON

----GAS----- 2.99/ GALLON

Anonymous said...

Like laughing all the way to the Bank. That how afraid the US Treasury is.

No government money was involved in the bail out SIV super fund.

What do you call weakening of the US Dollar. It is an invisible tax.

Come on Hanky Panky, you don't take everyone for a fool.

Bailing out the big boys on everyone else nickel.

Let the free market take care of the of the Option ARMs.

http://www.telegraph.co.uk/money/
main.jhtml?xml=/money/2007/10/16/
cnmlec116.xml

Paulson admits fears over $80bn bail-out fund

He first raised the issue at a specially convened meeting of 10 banks four weeks ago in Washington to discuss a private-sector solution to the problems.

However in spite of the Treasury's obvious role in facilitating the new master conduit, Mr Paulson was at pains yesterday to point out that no government money was involved in the plan.

Mr Paulson, the former chairman and chief executive of Goldman Sachs, said that there has been a lack of transparency when it comes to conduits and structured investment vehicles (SIVs), which banks use to hold pools of mortgage securities off their balance sheets.

He admitted: "The regulators didn't have clear enough visibility with what was going on in terms of these off-balance-sheet SIVs."

Anonymous said...

Citigroup Inc. said Monday its third-quarter profit dropped 57 percent after the biggest U.S. bank took a hit of more than $3 billion in mortgage-backed security losses, leveraged debt write-downs, and fixed-income trading losses.

Citigroup, which also boosted loan-loss provisions by $2.24 billion, said net income fell to $2.38 billion, or 47 cents per share, in the July to September period. That's down from $5.51 billion, or $1.10 a share, in the same period a year earlier. Revenue in the quarter rose 6 percent to $22.66 billion from $21.42 billion a year earlier.

http://www.kdrv.com/
news.cfm?go=bu5

Anonymous said...

Federal Reserve giving allot of transparency.

Is he going to cut or raise.

http://biz.yahoo.com/ap/071015/
bernanke.html

Bernanke once again pledged to "act as needed" to help financial markets -- which have suffered through several months of turbulence

http://money.cnn.com/2007/10/15/
news/economy/bernanke_speech/
index.htm?cnn=yes

In a speech to the New York Economic Club Monday night, Federal Reserve Chairman Ben Bernanke said the central bank's rate cut in September has shown signs of success, but cautioned that lenders and investors must bear responsibility for financial decisions that caused the subprime mortgage meltdown.

"Although the Federal Reserve can seek to provide a more stable economic background that will benefit both investors and non-investors, the truth is that it can hardly insulate investors from risk, even if it wished to do so," Bernanke said, adding that "over the past few months...those who made bad investment decisions lost money."

Investors looking for a sign that the Fed may cut rates again at the conclusion of a two-day meeting on October 31 may be disappointed though. He indicated that the Fed "was prepared to reverse the policy easing if inflation pressures proved stronger than expected."

Anonymous said...

Crude oil rose above $86 a barrel for the first time in New York on concern Turkish forces may pursue Kurdish militants in Iraq, curbing shipments as refiners prepare for the peak-demand heating season.

Prices climbed as much as 3 percent because Turkey's military may attack Kurdish bases in Iraq, which has the world's third-largest oil reserves. Futures also increased after the Organization of Petroleum Exporting Countries said production outside the group will be lower than previously forecast.

``Everything imaginable is going wrong as far as the oil market is concerned,'' said Robert Ebel, chairman of the energy program at the Center for Strategic and International Studies in Washington. ``Turkey is saber rattling, Iraq isn't calming down, Iran is also saber rattling and supplies are tight.''

Crude oil for November delivery rose $2.44, or 2.9 percent, to settle at a record $86.13 a barrel at 2:54 p.m. on the New York Mercantile Exchange. Oil reached $86.22, the highest since the contract was introduced in 1983. This is the fifth straight rise. Prices are 47 percent higher than a year ago.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
aJRxX0R0agKg&refer=worldwide

Anonymous said...

Gold rose to the highest since 1980 as record energy costs and a weakening dollar boosted the appeal of the precious metal as a hedge against inflation. Silver declined.

``Oil is at a record high, and in the face of a slumping dollar, you've got a recipe for gold to shoot higher,'' said Matt Zeman, metals trader at LaSalle Futures Group Inc. in Chicago.

``The dollar continues to weaken,'' said Dennis Gartman, economist and editor of the Suffolk, Virginia-based Gartman Letter, who recommended clients buy gold last week. ``Crude oil and other commodity prices continue to rise. And under those circumstances, gold shall continue to move from the lower left to the upper right on the charts.''

http://www.bloomberg.com/apps/
news?pid=20601012&sid=
aUH.LzTIn59Y&refer=commodities

Anonymous said...

Does it make sense not to count Food and Energy when measuring for Inflation.

With the weakness in the US Dollar, Food and Energy will be the first to be going up.

Maybe Wall Street do not understand Main Street.

http://www.fxstreet.com/news/
forex-news/article.aspx?StoryId
=5de6a238-6325-4b80-84e5-
a09df36c9fa9

Greenspan questioned whether the notion of measuring inflation through the price changes of "core" items stripped of food and energy still made sense.

"Well, remember the notion of looking at a core price requires that you presume that energy and food have no long-term trend and that their fluctuations are essentially random," he said.

"That is now becoming an increasingly questioned premise with agricultural supply not keeping up with rapidly rising demand, especially from developing nations."

Asked about the strength of emerging markets, Greenspan replied that there's no evidence that they're weakening.

Speaking about the housing market, Greenspan said,"Well, first of all, we certainly haven't seen the worst of housing." He said the major constraint on the U.S. at the moment "is a very large overhang of newly built, but vacant homes which homebuilders find very expensive to maintain and are gradually beginning to throw them on the market."

This, he said, was forcing prices down, hurting new home construction and, more importantly, "it's lowering the equity buffer in homes, which means that the very large holdings of asset-backed securities, specifically subprime asset-backed, are potentially threatened with respect to a greater degree of foreclosure than is currently discounted in the marketplace."

The effect of the credit crunch on the U.S. economy will almost certainly be seen in the current quarter, former Federal Reserve Chairman Alan Greenspan said Monday.

Interviewed on CNBC, Greenspan said that while the credit crunch was easing, its impact on Libor and other major rates would have a residual effect and "is going to slow the economy down to a certain extent."

He said that while it couldn't be seen in the third quarter data, "we are almost certainly going to see it in the coming quarter."

The residual effect of the credit tightness will linger into the the first quarter as well, Greenspan said, in what he added will be a "shock to the system."

However, he said that the odds of a recession are "still less than 50/50."

Anonymous said...

I think you should cover this, it is the beginning of the end of social security. Note that it says, nowhere in the constitution are government payouts guaranteed. But, wait a moment, what about all the money we are paying in right now, as Gen X/Y, when do we see that, oh never!? Then we better be paying into our own retirement accounts, oh and wait we have student loans to pay. I say lets have a massive bird-flu epidemic, thin the baby boomers somewhat.

http://www.foxnews.com/story/0,2933,301997,00.html

FlyingMonkeyWarrior said...

I say lets have a massive bird-flu epidemic, thin the baby boomers somewhat.
-----------------
Anon,

You talk(type) about wiping out a segment of the population with a bio weapon and hide behind anon?

Eff u anon, what you are immune to the flu?

Hitler and Pol Pot are your dead uncles?

Your Mom and Dad are already dead?

You work for Imadinnerjacket?

There are Supremest boards or Terror boards where you would fit in and be welcome.

I hope the FBI is watching you and the likes of you.

A Young Boomer who pays their own way

Anonymous said...

Have you seen this - the DOJ bashing realtor laws across the nation? Maybe it's old, but this is the first time I've seen this info: http://www.usdoj.gov/atr/public/real_estate/index.htm

and here: http://blog.seattlepi.nwsource.com/venture/archives/123551.asp?from=blog_last3

LauraVella said...

Anon said: "Is he going to cut or raise"....


I held out hope Bernanke would do the right thing, and raise rates. Instead, he shocked the nation and he dropped them - not 25 bp, but a whopping 50bp.

folks, this is extremely troubling...we are not only going to have a recession - it's going to be more on the scale of a greater recession...I hope everyone is prepared for more hyper-inflation on food and oil.

I predict Bernanke will at least drop rates another 25bp. He's flat- out telling us he's saving his friends on Wall Street first.

Thanks for nothing, Ben...

Anonymous said...

Anonymous said...
TO THE ANON-A-DUMBASS:

STOP POSTING ALL THOSE GODDAMN ARTICLES WITH NO COMMENTS.

This isn't CNN and you're not a reporter.

October 15, 2007 6:24 PM

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


I have to agree with this guy, enough already, your clogging up this thread and its annoying.

Get a f@cking job!

troll said...

Dow 14k soon!

Dopes!




I feel like I've said that before, is it groundhogs day?

ApleAnee said...

FlyingMonkeyWarrior said...

I say lets have a massive bird-flu epidemic, thin the baby boomers somewhat.

Silly monkey. Bird flu doesn't kill the young and the old like reglur ol' flu. It kills those with strong immune systems (breeding age). The immune system goes haywire, turns on the body and eats it.

Actually, if this happened the world would be left with the old and the young. Maybe we could just start over and the old ones could teach the young the lessons that this group apparently wasn't taught? Give dem liddle ones piggy banks?

Anonymous said...

.


Gotta luv it,


Imadinnerjacket!


THANX FMW


.

Anonymous said...

Sign the petition to stop this mess:

http://financialpetition.org/

Anonymous said...

To they guy who wants IQ posted along with presidential candidate preference, here's mine:

IQ - 163
Candidate - Giuliani

Guess the "intellectually challenged" like you with IQ's below 160 are voting for Ron Paul?

Anonymous said...

The untouchable Manhattan market has just been touched by the real estate bear, see http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/10/manhattan-real-.html as well as NYC housing trends (contrary to what you here in the media its downward) at http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/10/ny-housing-tren.html

and for those who are really bearish, there is the coming land recesssion, part 1 http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/10/straight-talk-5.html and part II http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/10/straight-talk-6.html

Finally we can discuss bubble, banks and builders (caution, this gets ugly), see http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/10/bubbles-banks-1.html

W.C. Varones said...

Free fax to your Senators and Congresscritter to tell them NO BAILOUTS!

http://financialpetition.org/

Anonymous said...

Seth @ the fool on the Paulson:

http://www.fool.com/investing/general/2007/10/16/more-housing-hanky-panky.aspx

Recommend it and help spread the word...

getyourselfconnected said...

Things are getting interesting indeed.
I have two ideas that keep me uneasy:
1. Will the government try to put some kind of floor under home prices?
2. Will things get to the point that the US is in such tough shape, America effectively trades Taiwan to China so they keep buying our debt?


http://economicdisconnect.blogspot.com/2007/10/terrifying-tuesday.html

Anonymous said...

Dear Mr. 163 IQ :

If your man Giuliani wins you'll have to let me know how that works out for you - you know ... having a guy 5 SD below you in IQ running the country and telling you how to live your life.

Why intelligent people continue to agree to be lead by complete soulless morons is beyond me.

Seriously ... on the one hand we have a man of utter integrity, honesty, great intelligence and character - Dr. Paul - a guy whose record is nothing but consistent and honorable - even in the toughest of times.

On the other we have a lying cheating scumbag whose political manipulations are legendary - responsible for the death/illness and incarcerations of thousands (at a minimum). A guy who has the moral fiber of a snake, who destroyed his own family and surrounds himself with sycophantic criminals and human filth.

Hmmmmm .... decisions .... decisions - so hard to choose between the two. Not.

Anyways, no worries. Hillary will be our next Pres - and we'll be deep in the Great Depression ReLoaded the next time we get to 'vote'.

Hope you know how to grow veggies and hunt Mr. 163 - those are the skills you'll need in 2015.

Signed,
Mr. 155 IQ

FlyingMonkeyWarrior said...

LOL @ ApleAnee. You're right of course.
I logged on this morning before I had a sip of first coffee, with my usual HP anticipation, and that was the first thing I read.
The Boomer contrived fowl flu die off comment really got a bee in my boomer bonnet.
Thanks.
(-:

P.S. and thanks anon 5:19 PM

Anonymous said...

'Bubble Blogger' Takes on Housing Market
Patrick Killelea Is Part of a New Breed of Bloggers, but Do the Data Back Up His Claims?


http://tinyurl.com/25bk65

http://abcnews.go.com/Nightline/story?id=3731415&page=1

Anonymous said...

167 major U.S. lending operations have "imploded"

http://ml-implode.com/

Anonymous said...

How can Henry Paulson keep a weak Dollar Policy and encourage Foreigners to buy U.S. Assets.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
avxx0Tqp8le0&refer=home

Foreigners Sold Record $69.3 Billion in U.S. Assets

Foreigners dumped American assets as mortgage defaults triggered a surge in borrowing costs that spurred central banks to flood the banking system with cash and forced the Federal Reserve to reduce interest rates. Fed Chairman Ben S. Bernanke said yesterday that markets have strengthened since August, though a full recovery ``is likely to take some time.''

``It highlights the point that foreign investment isn't an entitlement,'' said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York, the world's largest custodian bank with over $20 trillion in assets. Still, ``I wouldn't say this suggested a longer-term trend of people dumping U.S. assets. It's just a one-off number.''

The Treasury's reporting on long-term securities captures international purchases of U.S. government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy mortgages.

Including short-term securities such as Treasury bills, foreigners sold a net $163 billion, compared with a gain in the previous month.

Anonymous said...

Did Paulson share the issues and problems he discussed with Bernanke at the lunch meeting with "market participants" so they'd be on the same page?

That isn't, by the way, the "job" of the Treasury secretary.

In fact, keeping Wall Street insiders abreast of what regulators and, especially, the Federal Reserve are thinking is about the furthest thing from Treasury's role.

http://www.gata.org/node/5619

But if I had snitched about something confidential and I thought that a defense would be necessary, I'd also go with the tried and true excuse -- it's my job.

DID Federal Reserve Chairman Ben Bernanke give away any secrets to Treasury Secretary Hank Paulson when the two had an hour-long lunch on Aug. 16?

And did Paulson share what he and Bernanke discussed with anyone in the hours immediately after that lunch?

Those are two key questions that the Securities & Exchange Commission needs to address if the integrity of the financial markets is to be protected.

Those points are particularly pertinent because Paulson has confessed that he "talks regularly to market participants," the kind of folks who could profit handsomely from the slightest hint as to what the chairman of the Fed is thinking.

The lunch in question took place between noon and 1 p.m. on Thursday, Aug. 16, according to documents received from Bernanke by Wharton School lecturer Ken Thomas.

That's the day stock prices were sharply lower because banks and mortgage companies were starting to give the bad news about the amount of subprime loan defaults on their books.

But in the final hour of trading on Wall Street stocks suddenly reversed course, turning what had been a 344-point rout in the Dow Jones industrial index into just a 16-point loss.

The stock market rally took place within two hours of Bernanke and Paulson breaking bread.

The only explanation at the time for the final-hour rally was a rumor that the Federal Reserve was going to "hold a press conference." The next day newspapers said the stock move was puzzling.

Anonymous said...

If Hanky Panky can not be trusted, what is a speculator or Hedge Fund to do?

How about buy Commodities CDO.

It is the new game in town.

It is only like the next great Bubble.

If the US Treasury is not going to define the US Dollar, then the "Flow of Funds" really only have limited place to go.

http://www.fool.com/investing/
general/2007/10/16/more-housing-
hanky-panky.aspx

More Housing Hanky-Panky

He surely wasn't calling for "orderly" markets (as he did yesterday) while the greatest housing bubble we've ever seen was inflating homebuyer egos and Wall Street paychecks. It's only now that the party is over that "order" must prevail. But in my opinion, "order" has come to mean "increasing."

Now, Paulson -- like all the other politicians in Washington -- is scrambling for a way to fix the mess without any pain for anyone. Obviously, this is absurd. Billions of dollars in fictional equity were created via the housing Ponzi scheme, and these guys are dead set on preserving as much of it as possible, no matter what the cost.

"We must help as many able homeowners as possible stay in their homes," Paulson said. "Foreclosures are costly and painful for homeowners."

Yeah, well, too bad. That's what happens when you allow people who make $50,000 a year to buy $500,000 homes on gimmicky loans that apply a pretend interest rate up front.

Paulson tried to give a nod to the old-fashioned notion of personal responsibility by telling the kids at Georgetown, "When investors are relieved of the cost of bad decisions, they are more likely to repeat their mistakes. I have no interest in bailing out lenders or property speculators."

Ha! C'mon, Hank! Pull the other one. We know that's a bunch of bunk because it comes on the heels of the sleight-of-hand bailout plan you brokered and announced yesterday. OK, you didn't offer a bailout specifically aimed at the lenders or speculators, but you're doing anything you can to shore up the books at the wellspring of credit.

Foolish final thought
Answer us this, Mr. Paulson. How do you propose to encourage liquid lending markets while simultaneously relieving overstretched homebuyers of their contractual obligations to the (regrettably) lousy ARMs they took out in order to buy those overpriced McMansions?

Someone's gotta pay. And if it's not going to be the debtors leaving the homes, and if it's not going to be Hank's buddies on Wall Street, who does that leave?

Us. The responsible majority of Americans. Remember us? The people who didn't go out and do stupid things with our money?

Naw, of course not. We're not the ones making all the noise.

Anonymous said...

Let's call a spade a spade and this Super SIV isn't it.

It more like a friend helping a friend with other people money.

http://www.washingtonpost.com/
wp-dyn/content/article/2007/10/
16/AR2007101602151.html?nav=
rss_opinion/columns

Only on Wall Street -- and in its political annex, the U.S. Treasury -- could someone think that the way to prevent a meltdown in structured investment vehicles is to create a giant structured investment vehicle.

Anonymous said...

Simply put, neither money market fund mangers or their clients get paid enough to take on complex ill-understood risk.

http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=2007-10-16
T121402Z_01_L16382513_RTRIDST_
0_MARKETS-COLUMN-SUPERSIV.XML

Scooby Doo superfund can't flee subprime mess

Like a villain in a Scooby Doo cartoon, the banks behind the new $80 billion bailout fund are essentially saying, "We would have gotten away with it, if it wasn't for those pesky subprime loans."

Problem is, the issue was never just subprime loans, it is the far wider and deeper problem of loans made on overly optimistic assumptions secured on U.S. real estate, which is now in a once in a generation slump.

Of the $370 billion of assets held by SIVs, which sought to make money by buying long term debt and borrowing short through the commercial paper market, fully 23 percent are mortgage-related debt, with another 11 percent in CDO structured debt vehicles that can be presumed to hold some mortgage exposure.

Some of those loans, though no doubt "highly rated" by the ratings agencies, will have been made to borrowers in the class above subprime or on houses in areas, such as California and Florida, where values are falling quickly.

For the banks to simply allow the SIVs to dump paper on the market, or absorb it on their balance sheets, would cause a number of very serious and negative effects.

Beyond the hits to their own reputations, a disorganized forced sale of these assets would not just hit those who are selling, but force many banks themselves to write down similar assets in similar ways.

That, in combination with being forced to take assets back on to bank balance sheets which are already stretched, would harden and deepen the credit crunch.

Banks would have less to lend and be less willing to do it at attractive rates. This in turn would dampen economic demand and prompt more defaults in both the corporate and personal sector.

As you can see, credit cycles are as vicious on the way down as they are self-reinforcing on the way up.

Anonymous said...

What does Goldman know that other brokerages firm don't.

Why is Goldman buying so much subprime companies when other are dumping.

Is China (Blackstone Group) willing to become an SIV investor, because someone gave them a hint that Federal Reserve will lower interest rate by another half point on Oct 31.

http://www.reuters.com/article/
marketsNews/idUKN1622554320071016?
rpc=44

Goldman bought residential servicer Avelo Mortgage, and in February acquired South Carolina lender Senderra Funding.

Now Goldman Sachs Group Inc has emerged as the final bidder for Litton Loan Servicing LP, the subprime mortgage servicing unit of Credit-Based Asset Servicing and Securitization LLC, and a deal could close in 60 days, people familiar with the situation said Tuesday.

Goldman Sachs, the world's largest investment bank by market value, has been in talks with C-BASS, a subprime mortgage investment venture jointly owned by MGIC Investment Corp and Radian Group Inc, for about a month.

Negotiations surrounding the complex transaction could still break down. Obstacles to reaching the finish line include getting approval from C-BASS creditors and ultimately from every state mortgage regulator where Houston-based Litton does business, the sources said.

Litton, which serviced $6.58 billion of loans at the end of June, is expected to fetch $400 million to $500 million in a sale, one person familiar with the matter said.

C-BASS, which buys subprime mortgages and repackages them into securities, in August hired Blackstone Group as its financial adviser. MGIC and Radian on Sept. 5 warned that their C-BASS stakes worth $1 billion in June, probably had no value.

Anonymous said...

Didn't CEO John G. Stumpf recently said the company weren't doing that bad.

http://business.timesonline.co.uk/
tol/business/industry_sectors/
banking_and_finance/
article2674166.ece

Wells Fargo takes heavy hit for bad home loans

Four mortgage banks in the United States revealed the impact of mounting losses from the American credit crisis and housing recession yesterday, as Wells Fargo admitted to a $490 million (£241 million) charge to cover bad home loans.

Wells Fargo is the fifth-biggest American mortgage lender and boasts Warren Buffett as its largest shareholder. His Berkshire Hathaway investment group owns 7.7 per cent of the stock as of June 30, according to Thomson ShareWatch. Wells Fargo has more than 3,200 branches in 23 US states and $548.7 billion of assets.

The bank said yesterday that it had written off $490 million of bad mortgages in the third quarter of the year as America slides into its worst housing recession for 16 years.

Anonymous said...

If Japan and China won't buy the SIV then who will.

The British and Caymans hedge funds, might as well be the Plunge Protection Team

http://www.telegraph.co.uk/money/
main.jhtml?xml=/money/2007/10/16/
bcnchina116.xml

Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

Central banks in Singapore, Korea, Taiwan, and Vietnam have all begun to cut purchases of US bonds, or signalled an intent to do so. In effect, they are giving up trying to hold down their currencies because the policy is starting to set off inflation.

The Treasury data would have been even worse if it had not been for $60bn of inflows from hedge funds based in Britain and the Caymans, which needed to cover US positions at the height of the credit crunch.

Anonymous said...

Just got tis email this morning: It's hard to say if this is desperation or just pathetic. I think desperation may be a few years away.

From: J
Sent: Tuesday, October 16, 2007 5:37 PM
Subject: SAVE THIS WEEKEND at Ave Maria!

In our recent e-mail correspondence you shared with me your desire to live at Ave Maria.

Pulte Homes nationally is having a sale this weekend and BelleraWalk at Ave Maria will be included. Now is the time to purchase your dream home!

It is a buyer’s market….. FOR THOSE THAT BUY!

Interest rates are at one of the lowest points in history! There have been only four other times interest rates have been this low since 1972. Currently, rates are hovering around 6.625%.

What are you risking by not purchasing this weekend?

Pricing and availability! Purchasing a home is similar to buying stock. No one knows when the low has hit or when the height of the market has peaked. All you can see now is prices are LOW, especially with the savings offered this weekend. Another great reason to purchase now: Get the BEST home site available on the street! Make your neighbors envious of YOUR HOME. Get the better view, a larger home site, or the last side-loading garage.

Don’t forget, just because you lock into our pricing and availability now doesn’t require you to start paying your mortgage or putting more than 10% down in 2007! Closing dates are staggered throughout 2008, depending on the street. Take advantage of the savings now, but closing dates are not changing.

Don’t wait until someone else has your home- for a lower price on Friday Oct. 19th through Sunday Oct. 21st.

Sales pricing and availability will be determined Wed. Oct 17th….Please e-mail me back if you are interested in saving some cash!

BrianM said...

NY Times:

Mortgage Office Manager Charged With Identity Theft and Grand Larceny
By THOMAS J. LUECK and BRUCE LAMBERT
Published: October 16, 2007

The first report of a stolen identity and of the opening of a bogus charge account at Home Depot in the victim’s name came from a Queens resident, according to the police. Within a week, five more people complained that they, too, had been victimized.

Investigators said they found a common link: all six had applied for loans at the same local mortgage office. Further investigation found still more victims, and fraud estimated to total more than $1 million, the police said.

Yesterday, they arrested the branch manager of the mortgage office, Jacob Milton, 41, and his sister, Nira Niru, 38, both of Port Washington in Nassau County. They were charged with identity theft, grand larceny and scheming to defraud.

LauraVella said...

Anon said: "If Japan and China won't buy the SIV then who will".


Exactly.

Burn me once-shame on you.
Burn me twice-shame on me.

Mammoth said...

Keith,

Noting some of the comments here re: Boomers, it appears that you need to start a new thread on "Boomer Bashing."

BTW, there was an article in the news the other day about how the first Boomer, who was born a few seconds after midnight on 1/1/46, has just applied for Social Security.

(Try Googling this article.)

The article also went on to mention that 10,000 Boomers a day will begin receiving benefits. Check it out!

Downtown O-town said...

Over capacity.

I have been waiting for that to come up more -- even on Housing Panic and other bubble blogs.

I saw somewhere (sorry, no source) that there are a million homes in progess to be completed this coming year. Seems high to me -- but we know that it is a lot -- with all these national and local builders. And they have to build to live -- like sharks they must keep moving.

And, I read that 70% of American households now own their own home.

And, there are millions of homes vacant -- it could go to 6 million.

This morning some reporter asked the President what he would do to jumpstart housing sales.

Over capacity sprang to my mind.

Maybe . . . we finally have more than enough housing units in America for every houshold that actually wants to tie themselves down to a mortgage (admittedly, that is most Americans.)

At some point we surely will. Maybe we are there.

Maybe the last new buyer, has bought. Figuretively, of course.

Yes, I know, new young housleholds are formed every day. But, similarly, older Americans die and vacate their housing units.

Over-capacity -- are we there ? I think maybe so.

And, when supply exceeds demand, then prices go down . . .

Downtown Orlando

brokersleaveyoubroke said...

Oops, S&P just downgraded another 30 billion in mortgage backed securities. Hmmm, is using the words mortgage and security in the same sentence a new oxymoron? Stocks are down again. The dollar is down again. Oil is up again, just pennies away from $90. But don't despair, someone in washington will explain how this is all contained and there's nothing to worry about.

Anonymous said...

The WSJ does a good job of disguising the real motive behind the new “Super-Conduit” (aka the Bailout fund) but in the last paragraph, buried in Section C-3, they reveal the truth:

“The goal is to reassure investors and make them more willing to buy its short-term debt.” So, the fund is really just a way of rearranging the marketplace until the next crop of gullible investors sprouts up and buys more mortgage-backed garbage.

Officials in the Treasury Dept----working with their colleagues at Citigroup, J.P. Morgan and Bank of America---have concocted a scheme to rescue the banks from their massive losses in mortgage-backed securities.

The group is planning to set up a $100 billion emergency fund which will purchase non-performing assets for short term debt.

In truth, the fund is a bailout which provides the financial giants with an excuse for not reporting their enormous losses from bad bets.

“There is today an incredibly speculative financial sector hell bent on sustaining Credit and asset Bubbles – and perfectly content to adulterate our functional system of “money” in the process. The Federal Reserve is perceived to condone the whole affair and is openly willing to employ all measures to avoid bursting Bubbles. And in a contemporary world of acutely fragile finance structures, this ensures that bust avoidance translates briskly to bubble perpetuation and speculator delight.”

http://www.lightbluetrading.com/
bank-news/its-time-for-the-banks
-to-face-the-hangman-by-mike-
whitney/

Anonymous said...

One of the United States' leading analysts on financial risk, told EIR on October 16, that the proposed Master Liquidity Enhancement Conduit (M-LEC) scheme will not function, and probably won't even get off the ground. He predicted a wave of bank failures. "What is so good about rolling up hundreds of billions worth of illiquid assets-- these SIVs [Structured Investment Vehicles] and conduits-- into one super-conduit?

"Seriously, this won't even come into existence. Once you go over the terms of the new super conduit [M-LEC], who would purchase from it? Why would investors purchase Citigroup's SIV assets when they are in a super-conduit, when the same investors wouldn't purchase Citigroup's SIV assets, when Citigroup offered them separately?"

He underscored that Citigroup is in serious trouble, saying "the U.S. banks don't have sufficient equity for what's ahead. The ratio of their equity to their assets is 8%; they need 25%. All of America's bank holding companies have collectively $110 billion in capital. But Citigroup could suffer $20 to $40 billion in losses; they don't have enough capital. The U.S. banks don't have enough capital to handle their on-balance sheet and off-balance sheet losses."

He asserted that one of the directions in which the crisis may be heading "is a federal bail-out. But the banks' problems are too big; it is too big to bail out."

http://www.larouchepac.com/news/
2007/10/16/analyst-tell-eir-
super-conduit-m-lec-scheme-
wont-come-existe.html

getyourselfconnected said...

I was wondering why there has not been a serious degradation of the major economic indicators (employment,GDP,consumer spending)thus far due to the housing bust.
"Houston, why don't we have a problem?"

http://economicdisconnect.blogspot.com/2007/10/houston-why-dont-we-have-problem.html

Anonymous said...

The Milwaukee-based operator of Mortgage Guaranty Insurance Corp.
recorded a $303 million after-tax impairment charge for its devalued investment in a subprime mortgage affiliate, driving the mortgage insurer to a large loss in the third quarter.

MGIC may not see profit through 2008

http://eastbay.bizjournals.com/
eastbay/othercities/milwaukee/
stories/2007/10/15/daily28.html?
b=1192420800^1536225

Anonymous said...

S&P Downgrades $23 Billion in Securities

Standard & Poor's said Wednesday it cut the ratings on 1,713 classes of securities backed by mortgages issued in the first six months of this year, worth some $23.35 billion.

The securities are backed by subprime, alt-A and home-equity loans. Those three types of loans have gone increasing delinquent and into default in recent months.

http://bob.wjla.com/headlines/
1007/464681.html

Anonymous said...

Washington Mutual Records $967 Million Loan Loss Charge

Washington Mutual better be offering 7% for their CD if they want savers to take risk with them.

What about FDIC, better check out the length of time in which FDIC have to pay you back your 100,000 in a major financial crisis.

http://money.cnn.com//news/
newsfeeds/articles/djf500/
200710171754DOWJONESDJONLINE
000935_FORTUNE5.htm

Washington Mutual Inc.'s (WM) third-quarter net income plummeted 72% as the company took a bruising hit to cover home-loan losses.

The Seattle company, the largest U.S. savings and loan warned net income would drop 75% for the quarter, joining other financial-services firms reporting big writedowns and loan-loss provisions to reflect this summer's credit-market storm and worsening loan quality.

"We're building reserves in anticipation of continued increases in nonperforming assets and chargeoffs," Chairman and Chief Executive Kerry Killinger told Dow Jones Newswires. "It simply takes a while to work through the challenges in the housing market."

Kent said...

The Orange Man finally gets investigated!! WSJ 10/18/07


SEC Reviews Countrywide CEO Stock Sales
By KARA SCANNELL and JAMES R. HAGERTY
October 18, 2007

The Securities and Exchange Commission has opened an informal investigation into stock sales by Countrywide Financial Corp.'s chief executive officer, according to people familiar with the matter, deepening problems at the nation's largest mortgage lender.

MORE ON COUNTRYWIDE



Mozilo
• Suit Puts Executive Pay at Countrywide Under Scrutiny
10/05/07
• Countrywide Aims to Repair Reputation
10/03/07
• Countrywide to Cut up to 12,000 Jobs
09/08/07Countrywide is one of a dozen companies the SEC is investigating in connection with the fallout from rising defaults on some home loans. At least one area of inquiry, these people say, involves stock sales by founder and Chief Executive Officer Angelo Mozilo through prearranged executive sales plans.

MT in DC said...

Keith,
Another Housing Bubble Youtube video: http://www.youtube.com/watch?v=Q3peAYJSJSg

LauraVella said...

Here's a funny youtube video titled:

Britney Spears explains the subprime Housing Bubble Crash

Anonymous said...

im conserned and have a ?
1.if people cant afford homes then they would have to rent.then renting would become to expensive and people would live in the gutter or do you see a rent price devaluation comming also.
2. when will the fed put back the m3 in its calculations for inflation.
4.I believe the Biff and Buffy's in america are to stupid to realize what is happening.
5.When folks start blabing anything for it to really believeable please site it in APA format so it can be proven. other wise it is just usless nonsense. thanks

area 51 said...

FLASH:

Keith,
this is a few hours old, surprised you haven't, FLASHED it yet.

Mozilo under "informal" investigation by SEC for insider stock sales.

Check it out:
http://tinyurl.com/2mnonj

FlyingMonkeyWarrior said...

Noting some of the comments here re: Boomers, it appears that you need to start a new thread on "Boomer Bashing."
______________________
Mammoth,
I did not think you were the type to judge someone by their age, younger or older than you.
This request seams out of character with your other posts over the years.
Just sayin.

Blowfly said...

Last night I had a dream, a real dream not a motherf*cking WET DREAM! I dreamed that I was the smart leader and we had a smart congress instead of the morons and imbeciles running this country. I dreamed that a new law was passed dealing with illegal immigration. The 21 million (in reality probably 38 million cocks*ckers) illegals would be given an opportunity to stay in the US under the following conditions:

1. In order to remain in the country each illegal family must purchase one of the millions of homes on the market.

2. Each buyer must come up with a down payment of at least 20%. If unable there would be a provision that a maximum of 3 illegal scumbag families could join together to buy the house but then they would have to all shack up together in it (maximum occupancy 20 bodies).

3. Renting (which is moronic anyway) and sending money to Mexico would be a 2nd degree felony for any illegal immigrant with a penalty of 10 years in federal prison.

4. Whoever cannot buy a home, Miami condo, 1BR shit-hole condo conversion or form a dirt bag illegal purchasing co-op will be deported or indefinitely imprisoned with hard labor in the salt mines if such individual is undeportable.

Does each one of you stupid, un-educated wannabe economist rentard mofos understand why it is time to vote for BLOWFLY? At least I have a plan to deal with the housing crisis.

lunatic fringe said...

Hey Keith,

How about putting up an actual post to promote Karl Denninger's petition for financial responsibility?

http://financialpetition.org/

Anonymous said...

SF bay area rents on the rise:

http://tinyurl.com/36ngr6

DaveO said...

Can someone please explain this to me?:

http://tinyurl.com/yve6gd

The article basically says that the Euro is at a new record against the dollar, and that the dollar is very weak. It says that as a result of this, Bernanke will likely lower interest rates.

WTF? Lower them? Wouldn't that make the dollar even weaker, not stronger?

Mammoth said...

“I did not think you were the type to judge someone by their age, younger or older than you.”
-------------
Hey, FMW, remember that I am a Boomer too. I just like the Boomer threads on HP for their entertainment!

You know from my posts that I do not paint everyone (in a group) with the same broad brush - except realtors.

Please do not misread my post and assume that I am bashing others for their age. That is not the case at all!

It is just fun to munch on popcorn and watch the fur fly.

One of my favorite posts on a previous Boomer thread here was when, in the midst of Boomers bashing the Gen-X/Gen-Y/Gen-?, one Boomer pointed out that the older generations need to embrace the younger folks and share some of that knowledge which is usually attained by years of experience.

Peace
-Mammoth

buzz saw said...

I actually had the good sense to skip blowfly's latest. Hurray for me!

Anonymous said...

Just saw this on newsweek.com. This is about a couple who spent $750k on their house in total. Another poor victim of the concocted fallacy that housing will never loose value.

The house is oh sooo nice. Ill come down to Florida and offer you $195k for it. That is all I think it is worth.

http://www.newsweek.com/id/52608

DaveO said...

Shakster said...
"The coming months will be a spectacle in the markets.Fun to listen to the MSM hide the carnage,and sugar coat the severity, concealing it with semantics which is the M.O. of the MSM.The MSM panics at times ,and it's funny to listen to."

This article mentions why the media won't give the unmitigated, unadulterated, immutable truth, more so now than ever in history:

http://tinyurl.com/yqeovh

Anonymous said...

Sheara Reich thinks she got a good deal on a condo in DC that dropped from $415K to $375K. Anyone else think this same condo could have been purchased for about $250K in another year or two?

http://realestate.yahoo.com/Real_estate_news/story;_ylt=AnMoPYKdrimcJ5Htt3rHCW6kF7kF?s=rej/item-df00940969d73c85cde4b339f89812a4.html

LauraVella said...

Anon said:"What is so good about rolling up hundreds of billions worth of illiquid assets-- these SIVs [Structured Investment Vehicles] and conduits-- into one super-conduit?"

Right. It doesnt do any good. Same old debt, just repackage. Banks have no way around this subprime mess.

Where are all the prime loans they said were on their books?

This proves none of the mortgage loans given out like candy over the last 5 years were to buyers that could handle the spike in payments after the teaser rate expired.

How bad this is will be confirmed when Bernanke lowers that rate yet again next week.

Keyser Soze said...

What a difference 2 years make.

2005 - Both buyer and seller received checks @ real estate closings.

2007 - Both buyer and seller had to bring a check to the real estate closing.

FlyingMonkeyWarrior said...

It is just fun to munch on popcorn and watch the fur fly.

One of my favorite posts on a previous Boomer thread here was when, in the midst of Boomers bashing the Gen-X/Gen-Y/Gen-?, one Boomer pointed out that the older generations need to embrace the younger folks and share some of that knowledge which is usually attained by years of experience.

Peace
-Mammoth
---------------
That is what I thought, my friend.
Ditto.
Peace out.
fmw

Anonymous said...

I know CNBC is full of permabulls and pump monkeys like Cramer but when I hear over and over that the sub prime is contained and the worst is over and the write downs are basicly booked I just get pissed off.

Check out the rating updates on the 2007 vintage fresh off the press.. $24 Billion in RMBS slashed from AA+ to BBB and lower check out the last page.. Yeah the credit crunch is contained.. yeah commercial paper is not drying up.. yeah foreign capital is not fleeing the US market..

http://standardandpoors.com/spf/pdf/fixedincome/FINAL_2007_LIST.pdf

Compared to the crap out there the new ratings could be a 40-50% haircut? Maybe more? Trending down!!
http://www.markit.com/information/products/abx.html

Anonymous said...

Possibly this topic has already been covered, and I apologize if so. I heard from a source in the mortgage industry that homes being repossessed by the banks are being tallied as 'sold' by the National and State agencies such as NAR. When a house is foreclosed, and ownership goes back to the bank, it registers as a sale, and the sale price is recorded as the original price (possibly going back to 2005 highs) paid for the house plus all fees incurred during the original escrow. Could this possibly be true?

Anonymous said...

Why buy MBS SIV if you can not get your money back.

The new game in town is Commodity CDO.

http://investing.reuters.co.uk/
news/articleinvesting.aspx?
type=breakingFundsNews&storyID
=2007-10-18T073327Z_01_L18631453
_RTRIDST_0_CHEYNE-SIV.XML

Cheyne Finance, a structured investment vehicle (SIV) managed by UK hedge fund Cheyne Capital Management Ltd, has become the first SIV to stop repaying its short-term debt, the Financial Times reported on Thursday.

The paper said the move came after the administrator of the troubled vehicle, which analysts say amounts to about $6.6 billion, won court backing to declare it in breach of insolvency tests.

The paper quoted a partner at administrator Deloitte as saying the insolvency would not force it into a "firesale" of assets but would make a sale easier.

Cheyne Capital Management was not immediately available for comment.

Anonymous said...

There is a website www.movetolasvegas.com

There are some really stupid people on that board listening to one realtor and mortgage broker....

This is a post that I found that made no sense at all on the board.

"Seriously, I miss you guys and think maybe this is the time to buy in LV.
Just like the stock market...buy low! Also, anybody looking to buy in LV,
contact Rhonda. She is best friend you can ever have when your looking
for a house in Vegas!"

Crazy, huh?`Check it out for yourself!

Anonymous said...

Come on Uncle Benny, the new Commodity CDO needs a big boost to get more speculators on board how about lowing interest rate again to weaken the US Dollar some more.

It might even, just might save the collapsing MBS market - NOT!

http://www.nytimes.com/2007/10/19/
business/19place.html?ex=
1193371200&en=0806485c555af2b0&ei
=5040&partner=MOREOVERNEWS

Banks’ Plan to Help May Itself Need Help

Does the rescue plan for the credit markets need to be saved?

The plan is still being developed, but the roughly $75 billion effort to snap up troubled securities is struggling to get off the ground, days after it was disclosed by the country’s three biggest banks with the support of the Treasury Department.

Citigroup, Bank of America, and JPMorgan Chase back the plan but are just beginning to hammer out the details. Bank regulators are aware of the discussions but some say they are out of the loop. And market participants are puzzled, with investors like Pimco and T. Rowe Price balking at buying in.

Mr. Gross, whose firm manages about $700 billion in assets but does not hold asset-backed commercial paper issued by S.I.V.’s, said the situation reminded him of Japanese banks that refused to sell or write off troubled loans at distressed prices in the 1990s.Jim McDonald, a T. Rowe Price portfolio manager who holds commercial paper issued by four S.I.V.’s, said his initial reaction was negative. “Our credit analysts have more questions,” he said. “Their take on the whole thing is that the only benefit to this program is that it might give S.I.V.’s a longer time to sell their assets.”

christiangustafson said...

The California Dream was featured on "Oprah" today. YOU MUST READ THIS:

http://www2.oprah.com/money/credit/slide/200710/credit_20071018_284_101.jhtml

Phil and Felice really have $135,000 in credit card debt. They also pay $1,700 a month for their three cars.

Their two mortgages total $658,000. Because their mortgage is a negative amortized loan, Suze says that means their mortgage will increase by $20,000 every year. "There is no longer any equity in this home at all, and all you are paying is $1,800 a month on it and that is to adjust in a few months up to $3,300 a month," she says.

They are also two weeks behind on their mortgage payment. "There is no money left in any bank accounts. All your credit limits are almost used up," Suze says. "And Felice is willing to say 'I am in trouble' because she can no longer get any cash advances to pay the bills."

...

Suze won't back down—Felice and Phil must leave California. "I love California—love it," she says. "But it is one of the most expensive
states that you can live in throughout the entire United States. They have one of the highest state income taxes around." By moving to a state with a lower income tax—or one that has no state income tax, like Washington—Suze says you can give yourself a 5 to 10 percent salary increase.


Suze Orman was just being nice pretending that these schmucks can ever dig out of this hole. They are roadkill. PLEASE DON'T MOVE TO SEATTLE. PLEASE, NO.

Anonymous said...

Will the dollar's decline sparks a significant rise in inflation and becomes disorderly after US Dollar index fall below 50.

Will the US Dollar Index blow pass 76.

The fundamentals say that US Dollar Index should continue to slide.

The new game in town is Commodity CDO so why invest in MBS SIV.

http://www.reuters.com/article/
reutersEdge/idUSN1835391420071018

In all likelihood, the U.S. Treasury will not step in to save the dollar any time soon and the Bush administration may be the first since the gold standard was dropped in 1971 to not intervene in the currency market. In fact, the Treasury has not stepped into the currency market since September 2000, when it helped prop up the euro.

The dollar's downward march seems in line with one of Paulson's oft-repeated phrases: that exchange rates should be set in competitive markets based on fundamentals.

Anonymous said...

Uncle Benny how about a surprise interest rate drop.

The new game in town needs a big boost.

Watch Commodity CDO push crude oil over 100 after uncle Benny drop rate.

http://www.safehaven.com/
article-8641.htm

Is this credit crunch crisis over? What might be coming next?

The sub-prime is only the 1st layer of the onion being peeled, there is much worse danger yet to be revealed.

It is amazing to see the high growth in all kinds of fixed income products during last 10 years called SIVs (structured investment Vehicles) such as RMBSs (residential mortgage backed securities), CDOs (collateralized debt obligations), ABS (asset backed securities for credit cards and auto loans), and all the OTC (over the counter) erotic and complex credit derivatives associated with them created and held by Wall St banks and financial institutions.

This has been the largest financial alchemy after the medieval gold alchemy. Similar to medieval, this could turn out to be a pipe dream.

The questions to be asked: Are these products really securitized, collateralized and backed by anything as claimed? Are these OTC credit derivatives really creating value as claimed?

In general, most of these derivatives are unregulated, lack of any standards, no transparency, not public traded, no bid/ask price but an assigned "price" by the black box computer model, and no clearinghouse to guarantee anything.

Their values thus returns are marked to model instead of marked to market, when in trouble, they are totally dependent on the balance sheet of their counterparts for survivability.

Anonymous said...

CODE RED Uncle Benny: "Commercial paper is a dead market"

What are you waiting for.

Give Commodity CDO a boost.

Let see if crude oil can go over $100.

http://abcnews.go.com/
Business/wireStory?id=3746964

Investor jitters about credit markets edged up a notch on Thursday after U.S. asset backed commercial paper issuance shrank for a 10th straight week in spite of a plan by key banks to shore it up.

A major Wall Street bank's earnings miss added to nervousness that the past two months' fallout from faltering lending markets was far from over, while tighter credit conditions appeared to sour a candy maker's prospects.

The total asset-backed market has withered by as much as 25 percent from its record size in early August, and now stands at its smallest in 18 months, Federal Reserve data showed on Thursday.

Anonymous said...

Uncle Benny it is no secret you will need to use all of your bullets to bailout the speculators.

Just drop interest rate to zero.

Commodity CDO really like a big boost.

Maybe you can send Crude Oil price to $200 if you cut rate to zero.

http://www.dailyreckoning.com.au/
fed-bailout/2007/10/18/

U.S. Fed Bailout Corroding Capitalism and the U.S. Dollar

Welcome to Fed’s “Bail-Out Nation.”

America, the Land of the Free, is quickly becoming the “Land of the Freebie,” especially for members of the millionaire corporate elite who make multi-billion dollar mistakes… with someone else’s money. This unfortunate state of affairs is jeopardizing the dollar’s value, as well as its hard-won reserve-currency status.

As for discipline; forget it. The coddled capitalists of America’s high finance never receive a slap on the wrist for any misdeed whatsoever.

American corporations are crawling with these leeches. Using other people’s money, they engage in moronic speculations, knowing that success will multiply their net worth dramatically and that failure will produce negligible negative consequences. And sometimes even failure produces success, thanks to the Federal Reserve’s well-established penchant for bailing out speculators.

Anonymous said...

Help Uncle Benny, Help.

Collateralized Commodity Obligations, or CCOs, that are tied to the performance of a portfolio of underlying commodities, such as precious metals or energy prices.

http://www.reuters.com/article/
reutersEdge/idUSN0941774420071011

Investors and fund managers bitten by the collapse in subprime mortgages are now looking for new opportunities to trade bonds linked to traditionally volatile commodity prices and risky emerging markets.

While the ensuing credit crunch from the subprime collapse reduced liquidity and rocked markets globally, there are some who see a comeback in packaging commodities and emerging market securities

Anonymous said...

Uncle Benny now you could be a dove and a hero.

http://www.reuters.com/article/
reutersEdge/idUSN1733039220071018

Funds avoiding credit crunch bid up oil prices

A rush of investor cash is rallying oil and other commodity prices as big-money funds seek alternatives to markets battered by the global credit crunch.

Oil has surged to new records over the past week while gold has held near 28-year highs in part due to a cash injection from funds avoiding asset classes such as mortgage-backed bonds and credit derivatives.

The subprime crisis also has helped send the dollar to record lows against other major currencies, further pushing up commodity prices, experts said.

"Part of the rally is attributable to the weaker dollar," said Bill Ciraco, trader at Para Advisors LLC. "But definitely some of the rally is attributable to flow of funds."

U.S. oil prices have jumped around 10 percent over the past week and struck a record high $89 a barrel during intraday trade on Wednesday. Gold, frequently used as a hedge against inflation, touched levels not seen since 1980.

The gains added to a five-year rise in commodity prices driven by skyrocketing demand growth from emerging economies including China.

In addition to surging physical demand, the commodities and energy rally has been fueled by hot money from speculators seeking big returns. Prices have also gotten a boost as more conservative portfolio investors have diversified into commodities and energy as a hedge against inflation and potential losses in their primary investments.

Anonymous said...

Cheyne Finance might be the first not to pay SIV debt, but it won't be the last.

Will another one bite the dust

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
aEacPeg9pmLg&refer=home

Rhinebridge Commercial Paper SIV May Not Repay Debt

Rhinebridge Plc, the IKB Deutsche Industriebank AG structured investment vehicle that has lost about half its value, is unlikely to repay all its debt.

Rhinebridge suffered a ``mandatory acceleration event'' after IKB's asset management arm determined the SIV may be unable to pay back debt coming due, the Dublin-based fund said in a Regulatory News Service release. Rhinebridge had $1.2 billion in commercial paper outstanding as of Oct. 5, according to Fitch Ratings.

Anonymous said...

170 major U.S. lending operations have "imploded"

http://ml-implode.com/

Anonymous said...

Will China raise rate again?

http://english.eastday.com/eastday
/englishedition/node20676/
userobject1ai3173030.html

Zhou hints at more interest rate jumps

"We don't rule out steeper or more frequent moves if necessary," Zhou, governor of the People's Bank of China, said during an interview with reporters at the 17th National Congress of the Communist Party of China in Beijing. Controls so far "haven't been very effective," he acknowledged.

Anonymous said...

Is this credit crunch crisis over? What might be coming next?
___________________________________


Hyperinflation

WizCoder said...

so fast?
www.mortagesave.com

westwest888 said...

http://tinyurl.com/2rjp26

"State Dept. Urged to Shut Saudi School in Fairfax"

Oh that constitution, so antiquated. Let's bypass it so we can scare everyone and persecute a defenseless group while alienating one of our only middle east allies so that we can start a war pursuant to the policies outlined by our think tanks.

LauraVella said...

With today being the 20th aniversay of black Monday 1987, the stock market is suspiciously quiet today.

Is it the calm before the storm?

Blowfly said...

-When the night is darkest and you are gripped by fear and terror, when you are about to loose it all, when there is no way out, when you know there is no escaping the count....

It's time to visit Blowfly on Myspace. From Myspace to your face! Rentards, realtwhores and FBitches need not apply!!!

Miami Condos not marked to market, now marked to Blowfly!

Anonymous said...

Oprah, "Keeping Up with the Joneses"

http://tinyurl.com/yre3zz

Anonymous said...

Wow, the person that allow the Credit Worthiness Crisis to happen is saying Super SIV Fund won't work.

Then what will.

http://www.marketwatch.com/news/
story/greenspan-warns-risks-
super-siv/story.aspx?guid=
%7BC540594C-C282-491F-9AEA-
DE796A880621%7D

Former Federal Reserve Chairman Alan Greenspan said the "Super SIV" fund could have serious repercussions, according to an interview with the Emerging Market newspaper and posted on its Web site Friday.

In the article, Greenspan said the "Super SIV" - the $75 billion Master Liquidity Enhancement Conduit designed to take on the assets of troubled investments - runs the risk of further undermining already brittle confidence in besieged credit markets.

Greenspan said it wasn't clear to him that the benefits of that kind of fund outweigh the risks, according to the report.

Anonymous said...

Today it came out (quietly of course) that Buffett never even considered buying any (ANY!!) of the companies that floated his name to get a pop from the equities sheeples.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad0OvQgcATwI&refer=home

Go read it - you'll get a laugh.

Anonymous said...

Bond managers and fixed-income traders whacked by the collapse of mortgage-backed debt, can now put commodities into their portfolios -- and just in time, too, for the runaway inflation about to hit thanks to monetary over-supply and heavily-geared financial buying. The magic of finance has turned consumable lumps of natural resources into a stream of income.

http://www.larouchepac.com/news/
2007/10/13/hedge-funds-pile-
commodities.html

"Wall Street and the City are suddenly piling into the commodity markets... The PhD's who cooked up the U.S. housing bubble are now applying their haute finance skills to gearing up the cost of natural resources. Hence, the complexity of the very latest commodity offerings. Expect a side-order of inflation to reach your dining table as a result very soon!

"When unlimited money-supply growth crashes into rising demand for limited-supply essentials -- such as natural gas, copper, soybeans and cocoa -- the result is sure to be price inflation as violent as the monetary inflation that preceded it. Add a sudden wall of money from Wall Street, the City, Frankfurt, Paris and Tokyo... all seeking a growth market to replace the can't-lose gamble of home-loan trading and credit... and the surge in basic resource prices will only accelerate. Now add a little pixie dust... plus a dollop of leverage... and voila! One '70s-style inflation -- or worse -- cooked to order.

"`An army of structured credit experts is studying products such as Collateralized Commodity Obligations -- or CCOs,' reports Reuters, `tied to the performance of a portfolio of underlying commodities, such as precious metals or energy prices.' In a CCO, `the issuer sells protection on the underlying commodity portfolio to the counterparty under what is known as a trigger swap agreement. To fund its obligations under the swap, the issuer sells notes in the amount of the protection sold, according to Fitch Ratings. Proceeds from the notes then serve as collateral for the issuer's exposure under the swap until it matures. At maturity the issuer liquidates the remaining asset and returns the proceeds to noteholders.'

Anonymous said...

Warren Buffett said banks should keep SIV on the balance sheet so people know what is going on.

Make allot of sense, why didn't Hanky Panky think of that.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
aScsDTnJd5M8&refer=home

Buffett Avoids Bear Stearns, Countrywide Financial

Billionaire Warren Buffett said his Berkshire Hathaway Inc. won't buy a stake in Bear Stearns Cos. and that he ``never came close'' to acquiring shares of mortgage lender Countrywide Financial Corp., which fell 61 percent this year.

Buffett denied a New York Times report published last month that said he might buy as much as 20 percent of New York-based Bear Stearns, the fifth-largest U.S. securities firm, during an interview on News Corp.'s Fox Business Network.

``That was an incorrect story,'' he said. ``We were not taking a stake. That one had no basis.''

Buffett said he was skeptical about the U.S. Treasury's plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.

``I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said. ``It would be better to have them on the balance sheets so everyone would know what's going on''

Anonymous said...

Do you think they are onto something.

http://www.bloomberg.com/apps/
news?pid=20601086&sid=
ap2dhESt16bs&refer=latin_america

Crude Oil Breaches $90 a Barrel on Dollar Drop Against Euro

``The weak dollar is pushing the price higher,'' said Simon Wardell, energy research manager with Global Insight Inc. in London. ``It's hard to see how this is going to turn around quickly.''

``This is a financially driven market,'' Luis Giusti, the former head of Venezuela's state oil company, said in an interview. ``Investors are going into crude futures to hedge against a weakening dollar.'' Giusti is a board member of the London-based Centre for Global Energy Studies.

happycamper said...

Perhaps you haven't noticed but the stock market is getting pounded today...just like the housing market.

Anonymous said...

Great, Bernanke lost control and is chasing his tail.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
aa_XnjqS_Av4&refer=home

Federal Reserve Chairman Ben S. Bernanke said assessing the economy is a ``formidable challenge'' and that officials must review multiple scenarios in setting interest rates when they are unsure about the outlook.

Anonymous said...

Come on Bernanke crash the US Dollar Index.

Speculators and Hedge Fund need to make their money back on Collateralized commodity obligations - the new CDO

http://www.portfolio.com/views/
blogs/daily-brief/2007/10/19/
ben-bernankes-uncertainty-
principle

With the clock ticking down on the next meeting of the Federal Reserve's policymaking committee and traders betting on another rate cut this month, Fed chairman Ben Bernanke gave a little talk about uncertainty today.

Anonymous said...

New bill to ban "yield spread premiums" or YSP.

http://www.mortgagenewswatch.com/
newsviewer.php?ppa=%3Aqsvv%5F%5
CgghmolkRTmj%23%3A%40%24bfem
%5E%21

Rep. Chris Murphy, D-5, has introduced legislation he claims will put an end to a bonus scheme that has seen thousands of Connecticut borrowers paying higher mortgage interest rates than necessary.

Murphy said Tuesday that his bill would ban "yield spread premiums" -- bonuses paid to brokers when they sell customers loans with higher interest rates.

Murphy said the payments are "essentially kickbacks" to mortgage brokers to put homeowners in higher cost loans.

"It is really unbelievable that tens of thousands of homeowners in Connecticut are paying more for their mortgage than they otherwise have to," Murphy said. "There is absolutely no public benefit to this practice."

Nearly 90 percent of all subprime mortgages include "yield spread premiums" paid to the mortgage originator.

Murphy said that he hopes his proposal will be incorporated into legislation that the House Financial Services Committee is considering that would provide long-term reforms to the subprime mortgage crisis, which is gripping the housing and financial markets.

Anonymous said...

Does this mean Citigroup will need to book their lost now.

http://www.iht.com/articles/ap/
2007/10/19/business/
NA-FIN-COM-US-Citigroup-SIVs.php

Citigroup Inc. confirmed Friday it has secured enough funding to cover the $80 billion (€56 billion) in assets held in its structured investment vehicles — at least until the end of the year.

This means Citigroup will not have to sell the debt underlying the seven SIVs it manages at bargain-basement prices, which would translate to losses for the bank.

Anonymous said...

Powers vow to limit credit crisis damage
By JEANNINE AVERSA, AP Economics Writer, 9 minutes ago

http://tinyurl.com/342tcv

Finance officials from the world's top economic powers pledged Friday to do all they can to limit damage to the global economy from a jarring credit crisis as Wall Street took another plunge.

"We remained committed to doing our part in sustaining strong global growth," the finance officials said in a joint statement. While saying the functioning of global financial markets was improving somewhat, they warned that "uneven conditions are likely to persist for some time and will require close monitoring."

The turmoil that financial markets have suffered through in recent months dominated the Group of Seven discussions, which were hosted by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. Besides, the United States, the other members of the G7 are Japan, Germany, France, Britain, Italy and Canada.

The finance officials didn't spell out a specific course of action. Rather, they sought to strike a confident tone that they are on top of the situation. Finance officials also said they will seek to learn the causes and lessons from the turmoil.

THIS ARTICLE WOULD BE HILARIOUS IS IT WASN'T SO INCREDIBLY DEPRESSING.

Anonymous said...

Why is it the Inflation is low in the US (Except for Food and Energy, because people do not need to feed their kids or provide heat to keep their kids warm in the winter), yet Canada's inflation rate had jumped to 2.5 per cent.

http://www.news957.com/news/
national/article.jsp?content=
n1019103A

The Canadian dollar hit a 33-year record high Friday, flying well past the $1.03 US mark on news that Canada's inflation rate had jumped to 2.5 per cent, stalling speculation that interest rates may be coming down.

The loonie opened at 103.42 cents US, up 0.72 of a cent from Thursday, and kept going, nearing 104 cents US at one point. It ended the day up 0.85 of a cent to 103.55 cents US - a level last seen in mid-1976.

"The market was almost looking for a trigger to drive the dollar above $1.03, and inflation was it," said BMO Nesbitt Burns economist Douglas Porter.

Anonymous said...

The only victims are the young college grads who will be priced out, because Bernanke did not have the discipline to stop this madness.

At least the kids will be staying with mom and dad for a very long time.

http://washington.bizjournals.com/
washington/stories/2007/10/22/
story4.html

Aurora shuts down, victim of mortgage meltdown

Aurora Loan Services LLC, a division of Lehman Bros. Holdings Inc., closed the doors on its 26,495-square-foot office on Professional Drive as part of a larger strategy by Lehman Bros. to stem the losses from subprime and Alt-A financing.

Aurora specialized in Alt-A mortgages, which aren't necessarily extended to those with poor credit, but still don't carry many of the standards abided by Fannie Mae and Freddie Mac.

John said...

The subprime carnage is still continuing. See post:

http://bankingpanic.blogspot.com/

Anonymous said...

Stock Market Plunges 366 points!!!


I wonder if monday is going to get
ugly.

Goldilocks has just been surrounded
and she is high on extassy (low rates)

Anonymous said...

Will Fed Fund Rate and ECB interest rate be the same next month.

http://www.reuters.com/article/
ousivMolt/idUSN1928019420071020

European Central Bank President Jean-Claude Trichet on Friday said the ECB needed to remain vigilant in combating inflation, warning of upward pressures from rising energy costs.

"We have said that monetary policy must remain vigilant in maintaining price stability," Trichet told a news briefing after a meeting of central bankers and finance ministers from Group of Seven nations.

"Any further increases of oil and commodities, oil and gas, are very much at the heart of your question -- and are triggering an inflationary impact and a depressive impact on the economy," Trichet said in response to a question.

Anonymous said...

Just as I suspected would happen when he said he had a funny feeling this week, Keith "obviously" predicted the markets fall today. Don't you all get tired of being so negative about the USA and the dollar? I am assuming that none of you have jobs, because working for worthless dollars just isn't worth the time. You might as well hang out in your armageddon bunkers and lay your heads on all the gold bars you obviously own. The rest of society is going to continue on with our daily lives, trying to enrich our own lives and the lives of others, and if the stock market crashes and/or the housing market crashes, life will go on. Oh -- and I am assuming that all of you who are so negative towards realtors and REICs never sold any real estate for more money than it was worth in 2001... because if you did, you are a hypocrite.

Peace.

Anonymous said...

Come on Uncle Benny drop interest rate to zero and save the environment by bring gas price up to $10/gallon.

Speculators and hedge funds need to make some money in the new commodity CDO.

http://www.msnbc.msn.com/id/
21381254/

Jim Ammons grumbles to himself every time he fills up his Ford Expedition, but he says gas prices would have to almost quadruple to $10 a gallon before he’d ditch his SUV.

Still, paying $55 to fill his 20 gallon tank isn’t easy for the information specialist.

Anonymous said...

Come on Uncle Benny lower interest rate to zero, Speculators and Hedge Funds are really hurting out there.

Speculators and hedge funds need the weaker US Dollar to get the price of Commodity up.

http://www.adirondackdailyenter
prise.com/oniWire/
oniWireDetails.asp?articleID=
30139&state=&category=
National%20News

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade.

With the fastest-rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods.

Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again later this year.

Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs.

Egg prices were 44 percent higher, while milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics.

Anonymous said...

If the Japanese yen were to reflect economic fundamentals it should be 79.8 yen to the US Dollar right now.

http://www.reuters.com/article/
companyNewsAndPR/
idUSWBT00779220071020

Japanese Finance Minister Fukushiro Nukaga said on Friday that he told his Group of Seven counterparts that the yen should reflect Japan's economic fundamentals.

Edgar said...

Keefer, you'll love [this]:

If CW doesn’t pay on scheduled paydate is there any legal recourse? I am in CA and getting paid per WARN. Was direct deposit until today. HR (India) said they mailed (??) it and I should get a few days. Does anyone have any good contact info for HR (phone, email) in US?

Doesn’t bode well if they are late with payroll does it? Man the stock plummeted to 15.23 today.

Any info or help would be great in this difficult time.

Thanks!


Check's in the mail. Bwahaha!!

Edgar said...

Ha ha! CFC going down. Dive! Dive! Ah-ooo-ga!

W.C. Varones said...

Thoughts on SIVs.

Anonymous said...

Did all the Banks come clean by reporting their loss in third quarters. Or are there other level 1 asset, level 2 asset, or level 3 asset that they are not reporting.

http://www.dailyreckoning.com.au/
goldman-sachs-2/2007/10/19/

Only Goldman Sachs escaped the carnage.

So how did Goldman - “increasingly perceived as the world’s biggest hedge fund” according to the IHT - succeed where everyone else failed?

Goldman Sachs cleaned up during this summer’s collapse in subprime mortgage bonds…by selling the subprime mortgage-backed market short.

None of the other big banks, however, had the chutzpah to short the very market in junk they’d given birth to - not yet, at least.

And few banks seem to have created bonds quite as toxic as Goldman did.

Citigroup reported a 57% drop in third- quarter earnings.

Bank of America reported a 32% drop in earnings.

J.P.Morgan has marked down $186 million in bad mortgages plus $339 million in debt-derivatives for June-Sept.

National City Corp. of Cleveland projects mortgage-book losses of $160 million for Q3.

Washington Mutual says it expects a 75% drop in profits.

Sovereign has raised its bad-debt provision three times over to $155 million, adding another $35 million in mortgage-loan charges and writedowns.

Credit Suisse warned of a 29% drop in operating profits.

Nomura says it expects to lose $621 million by shutting its US mortgage division after heavy losses taken over the summer.

Merrill Lynch wrote down $5.5 billion in subprime and leveraged-loan losses for June to Sept., with around $4.5bn lost to bad home-loans alone.

“Deutsche Bank joins a conga line of banks coming clean,” says FinancialWeek. “Swiss bank exposes holes in Q3 results,” adds a French newswire, reporting that UBS, the world’s biggest wealth manager, expects to lose $3.4 billion on its subprime mortgage book.

Anonymous said...

How big is the derivatives market since this article has been written.

http://www.portfolio.com/
news-markets/national-news/
portfolio/2007/03/29/
The-300-Trillion-Time-Bomb/

For hundreds of years, the way to solve problems in the financial market was clear: Get Wall Street’s titans in one place and knock heads. It took only 24 brokers gathered under a buttonwood tree to form what became the New York Stock Exchange.  J. Pierpont Morgan locked several dozen bankers inside his famous library on Madison Avenue to solve the panic of 1907. And in 1998, New York Fed president William McDonough convened representatives from the biggest Wall Street firms, 14 of which then bailed out Long-Term Capital Management.

Less than a decade later, financial markets have become vastly more complex. And they are no longer in the hands of a select few.

Markets are tied together in ways that regulators and even Wall Street professionals struggle to comprehend. Bonds are bound to stocks, which are tied to currencies around the world.

The binding threads are derivatives, and the brightest minds on Wall Street worry about how they work—especially as stock markets around the world hit a bump.

The term derivatives describes an array of financial contracts whose value is deter­mined by, or derived from, an underlying asset such as a stock or currency.

The deriva­tives market, one of the fastest-growing areas of finance, is estimated at $300 trillion.

A subset of that—credit default swaps, which are derivatives based on com­panies’ creditworthiness—last year reached $26 trillion, twice the size of the U.S. economy.

In their most benign form, derivatives are probably the greatest financial innovation of the past 25 years.

They have helped smooth currency and interest-rate fluctuations by allowing investors to protect themselves.

But when it comes to the really big stuff—such as global market collapses—derivatives could turn from vaccine to contagion.

Investors use them as a form of insurance, which may give a false sense of security. “A financial crisis is likely to be a global event, not a local event, and derivatives will probably help make that happen,” says Joe Brandon, C.E.O. of General Re, a reinsurer owned by Berkshire Hathaway.

L'Emmerdeur said...

I'm sure you are going to want to post about Auto-Ramen Restaurants:

http://tinyurl.com/36vx45

Also, seeing as you got your hands on a time machine and are posting from October 2008, how much have real estate prices fallen by then? ;)

Scottsdale real estate said...

The stock market seems to be reeling... things are really going downhill quickly!

getyourselfconnected said...

The banks are playing a game of chicken right now, daring to let let them fail:

http://economicdisconnect.blogspot.com/2007/10/superfund-strong-arm-and-game-of.html

LauraVella said...

Here's a great article posted on SFGate today: Want a life of leisure? - be a renter.

A mere three months after the move, it's possible I've already spent more time with my feet propped up out on the deck than I ever spent relaxing in the yard of the house where we lived for six years.

I sink into the cushions of a wicker armchair that was rarely used because it was in our guest room and listen to CDs long unplayed because they lived in the same room as our TV.

It sounds as if we traded up residences, doesn't it? Even though our new place isn't quite as big or well cared for as our last, that's how it feels to my husband and me. But the truth is, we traded out of the Bay Area real estate market and returned to the world of Navajo white walls, moving into a rental house less than a mile from the one we sold.

And after just two paragraphs, some of the homeowners reading this are looking wistful, saying to themselves, or maybe a loved one nearby, "I wish I could do that." The rest are exclaiming, "What, are you crazy?" Scorching or icy, booming or busting, there's nothing like California's housing market for animated conversations - and, it turned out for us, unconventional decisions.

We bought our three-bedroom, 21/2-bathroom townhouse in Alameda for $348,000 in July 2001, during a slight lull in the booming market. We didn't overreach, putting down 20 percent (proceeds from the sale of a one-bedroom condo) and ultimately landing a 30-year mortgage at 57/8 percent with payments of about $1,750, plus homeowners association dues of $220 - less than $2,000 a month. But within five years, it was clear that with property taxes, skyrocketing dues, a $6,500 HOA roof assessment and a few other misfortunes that caused us to tap into some equity, our house was costing us nearly $3,000 a month.

In the meantime, the place had appreciated into the mid-$500,000s. We had made money - but we didn't have any; the house had it all. If a car died, if the HOA demanded another $6,500, if a couple of weeks passed without a paycheck or the kitchen was to be brought into the 21st century, there would be more borrowing on the house. In the event of a Big One - earthquake or market collapse - we'd have debt and no equity.

Some people say, well, that's the way it should be - you struggle to pay off your house so that you don't have to struggle in your golden years. Rent a house, and you'll just be throwing money away, helping someone else buy a house instead of buying your own, funding their American dream, not yours.

We answer that there's no way we'd be living in that house long enough to pay for it, that our dream is to leave the Bay Area in five or six years and live a slower, cheaper life. And we agreed that if we're only to live in this most beautiful region in the country for a few more years, it would be nice to enjoy them rather than to worry through them.

The numbers told us that we could liquidate our house and rent a nice house nearby for $2,000, which was slightly less than we were paying for mortgage plus dues alone, not to mention property taxes, home-equity loan and maintenance. We could save and invest the payout, and - so that we don't have to struggle in our golden years - we could maximize our 401(k) and IRA contributions to offset the loss of our mortgage tax deduction.

And so, we did it.

We put our house - at the bottom of a still thriving and busy Alameda market - up for sale with a discount broker May 2, and in less than a month were in contract at $552,000, with a close-of-escrow date set for June 29. Everything went well - the only problem proved to be finding another place to live.

We were up front about our wish to settle in a house for several years, and hoped prospective landlords would be equally up front with us. So there were a couple of opportunities we let pass because it seemed the landlords were looking for temporary tenants. A good tip-off: One wanted to keep all her stuff in the garage.

We also steered away from houses with more than two bedrooms. It had been nice having a dedicated guest room, but we just didn't have enough company to justify the space.

We were also appalled to see some houses like ours that were built in 1970 and are still living in 1970. In one, the avocado range was such a mess that we could not believe it would work. Another still had the gold suede wallpaper that was probably a decorator touch in the year it was built.

We also had the pet problem. The problem was: We don't have one. Incredibly, during the month or so we looked at rental houses, there were two nice two-bedroom houses that were pet friendly. And so instead of two child-free, pet-free adults with jobs and assets being perhaps prime candidates for these homes, we were vying with all of the renters with big dogs who couldn't even apply for other neighborhood houses.

At this point, we made a contingency plan to put all of our stuff in storage and live in a hotel for however long it took us to find a house we liked. We didn't like this plan much, but we both like to golf and thought we could make it into a living vacation by choosing a hotel across a street from a golf course. This plan sounded more appealing than the idea of moving into 1970.

As typically happens when you hope for the best but plan for the worst, one of the pet-friendly houses turned out to be the right one for us. And the longer we are there and the pet odor dissipates, the clearer it becomes that it is really a great house for us, better for us than the house we owned.

It has no planted garden - but it does have three outdoor spaces ideal for container gardening, and one of the outdoor spaces is practically an outdoor room, on a shaded upstairs deck that overlooks other houses and a driveway yet offers a view of nothing but trees and sky once you take a seat. It has no guest room, but we decided to sleep in the slightly smaller bedroom and turn the bigger one into a multipurpose space (with computer, stereo, books and bed) where company can feel comfortable for a few days. It has not been updated much over the years, but the property management company quickly answers to health or safety matters. Everything about the kitchen seems miniature - the oven won't even hold a cookie sheet - yet the range works fine and the food tastes as good as ever, if not a little better.

The move forced us to downscale, donate, recycle and sell many of the things that had been taking up space in our old place, so we are lighter in other areas besides just bills. A richer shade of paint on the walls would enhance the artwork on them, but we don't fuss over that because, well, the walls aren't ours.

Wish you were us? Think we're crazy? Whatever. Excuse us while we go up to the deck and relax.


Sell to rent
-- When fate dictates a move, you're ready to go.

-- Unless you're blowing the profits on fancy cars and vacations, you'll have money to buy again if you want to.

-- Maximized 401(k) and IRA savings can offset loss of the mortgage interest tax deduction.

-- Over the short run, renting is cheaper than buying.

-- If the housing market crashes, you'll still be worth something.

Keep the house
-- If something needs repair or cosmetic work, you can do it yourself.

-- Paint the walls any color you want.

-- Mortgage interest can represent a huge tax deduction.

-- Many experts believe there's no better long-term investment than California real estate.

-- If the stock market crashes, you'll have a roof over your head.

E-mail Susan Fornoff at sfornoff@sfchronicle.com.

Prophet of Panic said...

Fund manager askes that the Orange One be removed from his position.


http://biz.yahoo.com/ap/071020/countrywide_financial_ceo.html

FlyingMonkeyWarrior said...

Mr. Gross, whose firm manages about $700 billion in assets but does not hold asset-backed commercial paper issued by S.I.V.’s, said the situation reminded him of Japanese banks that refused to sell or write off troubled loans at distressed prices in the 1990s.
______________________
Does this remind you readers of any one?????
Makes me tink of the desperate home debtor trying to sell, but refusing to 'mark to market', because they will not walk away with enough money at the closing, so they are following the market down for months and months, to no avail.

Trailer Flipper said...

seeing as you got?????????
______________________
L'Emmerdeur,
WTF kind of English is that for a new potser criticizing a typo on this established board????

Anonymous said...

Keith

Why do so many people get so mad at hearing the truth.?

It truly boggles the mind, these are the people that have their head in the sand. The media of today is controlled by this administration.

The facts are coming in and people
are getting more pissed at blogs
reporting the news. This site should be used as a means to prepare.


"A FAILURE TO PREPARE IS PREPARING TO FAIL!"

Anonymous said...

Living Paycheck to Paycheck Gets Harder

http://tinyurl.com/2kqch4

FlyingMonkeyWarrior said...

Did you know about this Keith?

Please join us this November 5th for the largest one day political donation event in history. Our goal is to bring together 100,000 people to donate $100 each, creating a one day donation total of $10,000,000.

Please subscribe via feedburner below to confirm your commitment to donate. Each day you'll receive an email with our total number of subscribers. In this way we will know exactly where we stand in our efforts. Our goal is 100,000 subscribers.

Please subscribe now. Please spread the word. Thank you.

http://thisnovember5th.com/

FlyingMonkeyWarrior said...

PS; Sorry, Remember November the 5th above is for Ron Paul.

bickerer said...

Just gave a hundred to the Ron Paul campaign (and feeling good about it)!

Anonymous said...

Not again, everyone knows BOJ has no credibility left.

http://www.bloomberg.com/apps/
news?pid=20601080&sid=au5rMeb_
PvoI&refer=asia

BOJ Is Committed to Raising Interest Rates, Muto Says

The Bank of Japan remains committed to raising interest rates as the world's second-largest economy extends its expansion, Deputy Governor Toshiro Muto said.

``The Bank of Japan will gradually adjust the level of interest rates in accordance with the pace of improvements in the economy and prices and check risk factors,'' Muto said at an annual meeting of Japanese credit cooperatives today in Tokyo.

Anonymous said...

ECB may get their wish to raise rate.

http://www.reuters.com/article/
companyNewsAndPR/
idUSL2153088920071021

The European Central Bank is ready to act if medium-term inflation rises above 2 percent, ECB Governing Council member Nicholas Garganas said late on Saturday.

"We will not hesitate to move if there are serious indications and if our evaluations and analysis of the new data shows that it is very likely that the dangers we foresee for an increase in inflation above 2 percent in the medium term will materialise," Garganas said in Washington in comments broadcast on Greek state TV.

Garganas was speaking to reporters at a joint press conference with Greece's Finance Minister George Alogoskoufis on the sidelines of an IMF meeting.

Anonymous said...

Hanky Panky, Do you like Apples, how do you like them Apples.

http://www.larouchepac.com/news/
2007/10/21/peoples-bank-china-
tells-washington-no-major-
currency-rate-c.html

People's Bank of China Tells Washington: No Major Currency Rate Changes

Wu Xiaoling, the Deputy Governor of the People's Bank of China, put a damper on the hopes of economics gurus gathered on Oct. 18th at the Peterson Institute of International Economics that China would soon revalue the reminbi (RMB).

They were gathered at the occasion of a forum to discuss the issue of the RMB exchange rate, with some claiming that the RMB was undervalued by 30% or 50%, and others, more aware of the insanity of these claims, demanding a more ``moderate'' 15% revaluation ``for starters.''

All of this gobbledygook was given a cold shower by Madame Wu in her comments at lunch. While Madame Wu, a rather feisty lady who had been appointed to the PBOC post by Zhu Rongji, had more important things to do than to listen to these clowns, she did agree to come to the luncheon to make some comments.

``Solely adjusting the exchange rate would hurt the Chinese economy and the world economy,'' she told them. ``We have seen how in Europe the `shock therapy' actually hurt the economies that adopted it. We are more patient than you are.

We are moving in that direction [toward more flexible exchange rates] but in a smooth manner. That will benefit us all,'' she said.

When asked by one of the audience to say how long that would take, Madame Wu replied, ``I can't give you a timetable, since I am not as good a forecaster as you all are.'' She then added that China would at some point have to move toward reducing the trade surplus. ``The current setting doesn't benefit the people. For the benefit of the Chinese people, we will try to reduce the trade surplus,'' she said.

Joshua said...

I am currently trying to sell a house in the city officially regarded as the worst hit by the housing crash.

It isn't particularly a matter of poor timing. This is in fact my only time. My grandfather owned the house until he died. It was then given to my mother and my uncle. About a year and a half ago my mother bought out my uncle. Then one year ago my mother died. Myself and my younger brother and sister then took ownership. I have no capability to pay the monthly loan back that my mother took out on the house to buy my uncle's half, so essentially because of this housing crash, I inherited nothing but about $150,000 in debt. The only way I can pay it off is to sell the house or rent it out. This is for me a ridiculously horrible situation, and the first time something on a national level has really affected me. If I go about this the wrong way, I can end up broke, in debt, bad credit, and homeless. My best case scenario is to end up $20,000 lighter in the pocket and without anything to show for it.

Fuck you loan companies. Fuck you very much.

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