January 31, 2008

The government and the Fed are throwing in everything they've got in an attempt to halt the financial crash and bank failures. So will it work?

My take: There's more to come - bank failures, monoline bailouts, Fannie and Freddie trouble, foreclosures, hundreds of billions of write-offs, job losses, etc.

I'm not sure how many bullets the government and the Fed have left in their guns - but they're unloading the chambers pretty quick right now. Shockingly quick. And yes, it's an election year, so everyone involved is motivated to keep the incumbents in power and the banks from failing.

I think all this does is delay (again) the real pain. Lowering interest rates to below the rate of inflation is what got us the housing bubble. The Fed is doing it again, they seem to never learn.

They can't re-inflate the housing bubble, since they can't force banks to lend and they can't force sheeple to borrow. But they're doing everything they can to create a new bubble somewhere.

What's your take? How are you investing today? Time to catch falling knives?

I'm on the road the next two days. You know what that usually means...

I know many of you think every time I disappear all hell breaks loose. So enjoy!

Heading from Croatia to France, will try to moderate from cafes, will be settled in Friday night.

I think people in the "third world" countries around the world would be amazed that parts of America are even worse off. Welcome to Detroit.

Welcome to Detroit.

This is what happens when a nation loses its manufacturing base.

This is what happens when corrupt politicians put their interests ahead of the people's.

This is what happens when nobody wants the houses.

This is what will happen to neighborhoods and cities across America, unless we make some drastic and urgent changes.

Detroit - coming to America.

(thanks hp'ers for the vid)

Only in America: From "condoflip.com" to "youwalkaway.com" in a matter of months. Ah, then end of a Ponzi Scheme.

People make money on the way up, and then on the way down. That's what realtors are trying to do, and now you have companies like these

My guess is most of these businesses are going to be scams and bloodsuckers. But it is amazing how quickly we went from condoflip.com to youwalkaway.com

Thanks HP'ers for the link...

HousingPANIC Corrupt Stock Pumper Quote of the Day

"We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008" - Countrywide President and Angelo's chief stock pumper David Sambol, October 2007

and drumroll please... Countrywide's 4th quarter performance, announced this week?

Countrywide Posts $422 Million 4Q Loss

WHOOPSIE! (pssst.. Angelo.. you sold all those shares yet... good... now I'm gonna put the truth out so we don't get arrested, ok? good.)

Sarbanes-Oxley anyone? SEC anyone?


Today show report on desperate homedebtors suing their RE/MAX realtor for fraud

Gee, what a surprise - an agent who deceived the buyers for a commission - hiding neighborhood comps, rushing the close, etc.

At the same time, do f*cked buyers like this have a case? Caveat Emptor anyone? Regardless of how this turns out, reports like this are helping change the collective consciousness in America. Realtors = bad.

Home prices = dropping. Housing bubble = over.

Oh, you'll also notice on this video that the poor husband barely says a word.


There are two sides to the housing crash debate.

You have HP'ers and a slew of real economists who predicted the housing crash before it happened, and now it's happening. And we're also saying we have much, much farther to fall, and that this crash will go worldwide. It's the fundamentals stupid, and they're still WAY out of whack.

And then you have the clueless realtors, mortgage brokers, title agents and other REIC whose livelihoods depend on people NOT wising up, even though they probably know deep down that this whole thing was a giant Ponzi Scheme and mania, but don't want to admit it to others, or even themselves.

Well, here's a hilarious and kinda sad post from that side of the coin, thanks to an eagle-eyed HP'er. You just have to read the comments. You can literally smell the denial, and hatred for sites like HP who popped their precious bubble.

What's funny is that many view HP'ers as pessimists. Actually, we're optimists - we're optimistic that home prices are going to keep crashing, until they come back to reality. We're optimistic that hundreds of thousands of unethical realtors and mortgage brokers are going to go away. And we're optimistic that people are going to be smarter in the future with their money, and with who they trust with financial decisions.

I feel like I'm reading something out of a history book, describing the denial, the cluelessness and the complete lack of a financial education that helped cause the mania, and was still alive and well even as the mania collapsed.

As long as we pay closer attention to the media than we do our own common sense, we will not be at the bottom. The media preaches that we are not at the bottom and when we listen, we confirm that. We keep waiting, and that keeps the perpetuation of the downturn in motion.

We must understand that the moment we feel we are at the bottom, we will be. When investors think the best deals are now, they will be. However, when we listen to those who keep stating that we are not there yet and believe them, we will make them right.

And here's a few choice comments for your reading pleasure...

* It seems like I run into a consumer every day who truly believes the market will continue to plunge. Those same consumers are going to feel pretty silly when they realize the market has turned and they missed the boat!

* As always, you hit the nail on the head. It's a great time to buy, NOW!!!!

* “Smart People Are Buying Real Estate Now”. I love that saying

Bernanke from 2002: "Deflation: Making Sure "It" Doesn't Happen Here"

I see helicopters and printing presses.

I see the US dollar being intentionally destroyed (trust me, living in Europe, I REALLY see the dollar being destroyed).

I see Bernanke being freaked out by deflation, while trying as hard as he can to stoke inflation, and hoping it all comes out in the wash.

I see pissed off Arabs and Chinese holding US dollars and debt.

And I see a new bubble. Somewhere.

Here's Bernanke, in 2002, telling us what he was going to do. And then he did it. Try to get through the whole speech if you can. And invest wisely.

The Congress has given the Fed the responsibility of preserving price stability (among other objectives), which most definitely implies avoiding deflation as well as inflation.

I am confident that the Fed would take whatever means necessary to prevent significant deflation in the United States and, moreover, that the U.S. central bank, in cooperation with other parts of the government as needed, has sufficient policy instruments to ensure that any deflation that might occur would be both mild and brief.

When inflation is already low and the fundamentals of the economy suddenly deteriorate, the central bank should act more preemptively and more aggressively than usual in cutting rates. By moving decisively and early, the Fed may be able to prevent the economy from slipping into deflation, with the special problems that entails.

Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.

By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.

January 30, 2008

Open thread to talk about Bernanke's move today

What does the Fed know and when did they know it?

Or... is the Fed simply trying to create a new (stock) bubble to replace the crashed housing bubble so that our fake economy can continue?


HousingPANIC Quote of the Day

"What motivates a future homeowner to pay 6%+ interest for an asset that is going down in price? It was an easy decision to pay subprime yields of that and then some when housing prices were accelerating at double-digit annual percentages; the benefit was obvious."

"Now however, with prices in negative territory, the risk/reward is tilted towards the renter."

- Bill Gross of PIMCO, January 2008

YouTube Video: Campaign update from Ron Paul

HousingPANIC Stupid Question of the Day

What was the worst investment you ever made?

What was the best?

Miami, San Diego, Tampa, Phoenix, LA, Vegas, Detroit all down double digits in latest Case-Shiller Home Price Index

No surprise for HP'ers.

Remember this index is just a brief look at the US, looking at 20 US metro areas.

But one thing I think you can take away from this record decline reported today is that there aren't 21 reasons to buy a home in a Housing Ponzi Scheme area. There's not even one. We're dropping like a rock now as the fraud gets washed away and we head right back to where we started.

'We reached another grim milestone in the housing market in November,' said Robert Shiller, chief economist at MacroMarkets LLC.

'Not only did the 10-city composite index post another record low in its annual growth rate, but 13 of the 20 metro areas, each with data back to 1991, did the same,' Shiller said.

The weakest market in November was Miami, where prices fell 15.1 pct in the past twelve months. Detroit, Las Vegas, Los Angeles, Phoenix, San Diego and Tampa also posted double digit declines.

There was also this new home sales data that came out earlier, showing a record drop of 26% in volume, a 9-month supply, and prices down 10% from last year. But don't put too much into this faulty report, which doesn't include the massive incentives and records a sale even if the contract is cancelled, which 30%+ are.

Get ready for the Great Bond Insurer Taxpayer Bailout of 2008 - $130 Billion needed to bail out the corrupt pigs




The fact that private companies could lose this much money, with such obvious Ponzi Scheme business practices, is staggering.

And when Peter can't pay Paul, what do you do?

You get the taxpayers to bail Peter out.

This story will be big. The first of many "too big to fail" stories to come. And you think $130 billion is a lot?

Just wait until Fannie and Freddie. That bailout starts with a "T".


Jan. 29 (Bloomberg) -- Bond insurers led by MBIA Inc. and Ambac Financial Group Inc. may lose their top AAA ratings before they benefit from any rescue plan.

The bond insurance industry stands to lose $41 billion on securities linked to subprime and other mortgages, according to JPMorgan Chase & Co. analysts.

Bond insurers' total losses may be as high as $65 billion, according to Independent Strategy, a London-based financial consulting firm set up in 1994 by David Roche, a former head of research at Morgan Stanley. The estimate assumes a loss rate of 18 to 22 percent on $250 billion of credit derivatives linked to U.S. property, plus $90 billion of insurance on foreign real estate.

The insurers will need about $130 billion to cover the losses and to recapitalize, and the cash will have to come from taxpayers, Independent Strategy said in a statement today.

realtor blogger sued for defamation by Opera Tower Miami condo developer Tibor Hollo, and then fired by his gutless agency for expressing his opinion

Of course, Lucas
the blogger will end up successfully fighting this lawsuit, and I hope he counter-sues, but as you all know, for horrible people like Tibor Hollo (pictured above and yes, that's his real picture not a horror movie extra) who bring suits like these against bloggers or publications, it's not about winning, it's about sucking legal fees out of the small-potato target in a mean-spirited and petty way.

Well, thanks to other blogs and the internet, sons of bitches like Tibor Hollo better think twice before bringing frivolous lawsuits against bloggers for expressing their opinions.

So here's my opinion: Tibor Hollo is about to be ruined, in more ways than one. And his Opera Tower project is going to receive so much more
negative publicity over this, that anyone who hadn't bailed before is definitely thinking of bailing now. The Great Miami Condo Crash is going to make mincemeat out of the desperate Miami developers who stupidly built thousands and thousands of unneeded and unwanted condos, and suing a blogger isn't going to change that.

Opera Tower buyers are asking themselves why should they close on a unit whose value has crashed along with the rest of
Miami, the #1 housing crash city in the US today, whose condo price freefall is just getting started? You'd have to be a fool. Buyers are now suing in a desperate attempt to get out of their Opera Tower contracts, and you gotta believe Tibor Hollo's development is going to be on the receiving end of a flood of lawsuits. And watch for a sea of foreclosures and jingle mail for the ones that do stupidly go through with the deal.

And that's my opinion folks. And this, for immigrants like Tibor Hollo who might be unfamilar with it, is the
Constitution of the United States of America. Have at it, express your opinins about Tibor Hollo, and watch Lucas's blog for legal fee fundraising in the future.

And when HP gets sued one day for expressing opinion, I hope you'll all have my back.

Opera Tower, LLC & Tibor Hollo Sues Me for $25M

As some of you may already know, my employment at EWM Realtors was terminated this afternoon. The Miami Herald published a story this evening on their website revealing that the developer of Opera Tower has sued EWM, and myself, for $25M.

Well, the nice thing is that if the Republicans nominate John McCain and not Ron Paul, he'd lose nearly every state.

And I guess the bad news is that the winner might suck too.

John McCain is a pro-illegal-immigration, wrong-on-Iraq, Keating-Five, DC insider, angry old man. Nominating him is suicide for the GOP, in a Bob Dole kinda way. I still think Romney is gonna win it in the end, but the clueless McCain did take Florida last night.

FYI, got an email from the Ron Paul campaign, and his whole strategy now is to pick up delegates wherever he can - especially in the smaller caucus (vs. large primary) states, as he anticipates a brokered convention, where he can be one of the kingmakers.

Nice to see him admit what we've said here for weeks. He's got no shot at winning, but he has an important role to play. And that probably means making sure idiots like McCain or Rudy aren't the nominee, and that as president Romney would pledge to consider the issues important to RP and HP'ers.

January 29, 2008

FLASH: FBI probing 14 un-named companies for mortgage fraud, insider trading and improper lending

First question - WHAT THE F*CK TOOK SO LONG?

Second question - WHAT THE F*CK TOOK SO LONG?

Man, I hope someone there reads HP. And ML-Implode too. It's all here. FROG MARCHES!! WE WANT FROG MARCHES!

Let's guess the 14 companies. Here's my list

1) Countrywide (of course)
2) IndyMac
3) First Federal
4) Wells Fargo
5) WaMu
6) CIT Group
7) Citigroup
8) Merrill Lynch
9) KB Home
10) Toll Brothers
11) Hovnanian
12) Fannie Mae
13) Freddie Mac
14) Bear Stearns

Man, it's tough to get it down to 14. Didn't even have room for MBIA and Ambac.

Thanks HP'ers for the link.

WASHINGTON (Reuters) - The FBI has opened investigations into 14 corporations as part of a crackdown on improper subprime lending, agency officials said on Tuesday.

FBI officials told reporters the probes involved potential violations including accounting fraud and insider trading.

They did not identify the companies, but said the probes reached across the industry to include developers, subprime lenders, companies that securitized loans and investment banks that held them.

The cases could lead to potential civil or criminal charges, the officials said.

The FBI said it was investigating the cases with the U.S. Securities and Exchange Commission, which has opened about three dozen investigations into the subprime market collapse.

HOLY CRAP! Countrywide Toxic Mortgage reports 33% of all its subprimes loans are now delinquent. Nice work Angelo. Got out of those shares in time.

Angelo Mozilo should be arrested today for mortgage fraud, insider trading, Sarbanes-Oxley violations and, well, for just being the most corrupt and sleazy CEO in the world today.

He knew the loans were bad. He knew making "liar's loans" was illegal. He knew the CDO buyers would come back after his orange ass and sue him. He knew Countrywide would have to eat the loans in the end. He knew he had to dump his shares as fast as he could, since they'd be worth nothing. He knew. And Angelo, got some bad news for ya.

We knew too.


And no way in hell BofA completes this transaction as announced. Unless something really, really, really weird is going on behind the scenes.

Countrywide: 1 in 3 subprime mortgages delinquent

Countrywide Financial Corp, the largest U.S. mortgage lender, on Tuesday said more than one in three subprime mortgages were delinquent at year-end in the $1.48 billion portfolio of home loans it services.

Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, up from 29.08 percent in September. It also said borrowers were at least 90 days late on payments on 17.25 percent of subprime mortgages.

HousingPANIC Stupid Question of the Day

It's been quite the ride.

So what do you think is coming next?

Open thread to talk about Bush's LAST state of the union speech

"The state of our union is evident in the number of for-sale signs that we pass before we even hit the first stop sign on our way to our jobs. It is evident in the houses long-ago foreclosed, still sitting vacant with boarded-up windows. The state of our union is dire."

— Rep. Elijah Cummings, D-Md.

Now THIS should be an interesting Fed meeting. What do you think Shock & Awe Helicopter Ben will do this time?

Even though HP'ers predicted it, I'm still amazed at the incompetence or corruption of Bernanke cutting 3/4 point one hour before the stock market was about to open down big last week.

"Stop stock prices from falling on any given day" was NOT part of the Federal Reserve Act as I read it.

But, this is who we have in charge of the world today. And nobody should be surprised, like Hitler's Mein Kampf, Bernanke told us in advance through his writings before he was Fed Governor what he was going to do, and now he's doing it, and everyone acts shocked.

Meanwhile, central bank heads around the world don't play follow the leader this time, knowing if they did they'd send inflation soaring in their own countries, and their currencies plummeting. You know, like the United States. Hey, you see that gold price yesterday? Nuff said.

I think he cuts again, which really makes no sense as he just cut a few hours ago. But that's what the stock market and bankers wants, so that's what their "moral hazard? what moral hazard?" poodle will do. And this meeting should tell you everything you need to know about Bernanke. Don't fight him I say. Join him. And enjoy The Next Bubble, whatever it is.

Time for Bernanke to 'man up' - The Fed needs to show Wall Street that it - and not the markets - is calling the shots.

NEW YORK (CNNMoney.com) -- "This was a sad day for Bernanke," a bond fund manager told me the day after the Federal Reserve cut interest rates by an aggressive half-point back in September.

The manager's argument at that time was that the Fed chairman was showing that it could be bullied by Wall Street.

Since then, the Fed has gotten even easier to push around. The central bank's dramatic three-quarter of a percentage point rate cut last Tuesday was the equivalent of shoving a pacifier in a crying baby's mouth.

HousingPANIC Quote of the Day

"0.75%: The interest rate cut, or Ben Bernanke's blood alcohol level when he made it?"
- Jeff Kreisler, thestreet.com, January 2008

Will the housing crash and mortgage meltdown have singles rethinking what they're looking for in a boyfriend/girlfriend/husband/wife?

Pre-housing crash:

Women: Fell easy for Mr. Maxed-Out Credit Cards, who leased a Mercedes, "bought" a McMansion or "penthouse condo" with a no-down, no-doc, negative-am, interest-only toxic loan, and who she thought had a wildly successful and stable career as a mortgage broker or realtor

Men: Thought single women buying homes was kinda cool and showed financial independence, and had enough cash-out refi loot that she could pay for dinners and vacations too. Never thought to ask how she came up with the money to live in a place like that, and didn't mind having a realtor girlfriend who used to be a stripper.

Post-housing crash:

Women: Interested in guys with no debt, a solid financial portfolio, a 30-year fixed on a home he can afford, and a career having NOTHING to do with real estate. Won't even look at a guy who says he's a realtor, mortgage banker, real estate investor or home flipper. And thinks a good solid education, good morals and respected career are all much sexier than a new leased car.

Men: Won't even consider dating a girl who is upside down on a condo, has an ARM, or is a realtor. And now, after the STD test the most important thing is the credit report.


And for an interesting read on how species adapt their mate preferences based on changing environments, read this intesting piece... Only on HP do you get this stuff, eh?

Hey, brother, can you do me a 110% loan to value interest only negative am no down no doc? No? Well, brother, then can you spare a dime?

It was a giant Ponzi Scheme people. One big giant Housing Ponzi Scheme. Free money for everyone. Unchecked mortgage fraud. Cash back at close no questions asked.

And then the music stopped.

Tent cities, coming to a city near you.

January 28, 2008

Boiler room high pressure sales - the types of people who gamed the mortgage market and took down the world financial system

The world is a better place without people like these pushing toxic loans for a commission.

But after the interest-only, negative-am, no-down, no-doc, easy-money madness, where do the boiler room jockeys go next?

In other words, where's the next bubble?

60 Minutes does a housing crash report: House of Cards. Now get ready for jingle mail all across America as the gamblers turn in the keys and run

The MSM is doing what they do best now - reporting the car crash after the car has crashed.

Pretty honest video with all the usual suspects: foreclosures, overgrown lawns, worthless homes in far-flung suburbs, subprime slime, 105% loans, mortgage fraud, people walking away from their houses, etc.

After watching a report like this, what enrages me is the idea of a government bailout, for people "losing their homes" who got "pushed" into subprime loans. Yes, it's unfortunate, and yes, people are being asked to leave the banks' homes that they can't make the payment on, but THEY'RE NOT THEIR HOMES. THEY CAN'T AFFORD THEM. AND NOW THEY SHOULD JUST WALK AWAY.

Nobody got pushed. They got bribed. They committed mortgage fraud. They took the money. And they're not their homes. They never were. And they need to just walk away and rent. And that's what's happening across America today.

Good. Can't happen fast enough.

Why did millions of people buy "dream homes" when they knew damn well they couldn't afford them, and had no business living in them?

Was it HGTV's "House Hunters", MTV's "Cribs" and all the other housing porn on TV?

Was it women's nesting instinct gone mad?

Was it men who had to keep up with other men?

Was it the mortgage brokers, realtors and builders convincing the sheeple that yes, indeed, they COULD have that dream home and have it now ("don't worry about the payments, you'll make a MINT in appreciation!")

Was it GenX and GenY trying to prove to their Baby Boomer parents that they were as successful as them?

Was it the Baby Boomers wanting to go out with a flash of glory?

Was it the 90's tax law revision that made housing gambling so tempting?

Whatever it was, I hope to never see it again in my lifetime. And the fact that it happened is now crashing the American and world economies.

Bottom line: If you make $50,000 a year you should probably live in a house that reflects that you make $50,000 a year. If you can't make a 20% down payment, you should rent. If your sense of self worth comes from a f*cking house full of Pottery Barn crap, I recommend you reconsider your sense of self worth.

And I especially hope the housing crash causes the REIC's poodles HGTV and TLC go off the air. That would be a start.

PIGS FLY ALERT! A realtor with a conscience asks "Should we be telling folks 'now is a great time to buy' when in fact values are still declining?"

Never thought I'd see the day. I thought I'd only see '21 reasons' and 'bubbles are for bathtubs' forever from these no-morals six percenters.

It's the guilt HP'ers. It must be eating at the little ramen eaters.

The non-stop lies. The never-ending distortion. The spin. The con job. The talking points. And the fact that they knowingly hurt people for their own self-enrichment.

It's gotta be eating at their very souls. Those of 'em that still have one.

Now is a great time to buy Real Estate! Or is it?

Yesterday I received an email from my local REALTOR® Association (OSCAR). In it was a plea request, from our new Association President, asking all REALTORS® to place a one liner in all our ads stating "Now is a great time to buy real estate!"

Now folks, I'm not quite sure how I feel about this. I certainly don't agree that things are as bad as the media portrays but I'm having a hard time getting my head around "Now is a great time to buy real estate!"

Is this request, from our Association, an attempt to manipulate the market? Is it less than truthful? Should we be telling folks "Now is a great time to buy real estate" when in fact, values are still declining? What if I told someone this and they bought based on, "Now is a great time to buy real estate" only to find out three years later, when they need to sell, that their property's value has declined?

Am I over thinking this? Should I just jump on the bandwagon and start running optimistic ads just so I can "put more money in my pocket"?

Why do I feel uncomfortable about this? What am I missing? Please help me out here.

FLASH; Facing an SEC investigation, Congressional inquiry and blowup of his buyout by BofA, Countrywide's Mozilo offers to forego $37 million

Nice try Orangelo.

It's all caving in for you now, eh?

BofA won't complete this transaction as agreed to. Countrywide will file for bankruptcy. Thousands will lose their jobs. You will be arrested for insider trading, Sarb-Ox violations and knowingly enabling mortgage fraud. And like Ebbers before you, those hundreds of millions of ill-gotten gains will be taken by the government as part of your fine.

And you will spend an awfully, awfully long time in prison.

Was it worth it?

Really, Angelo, was it worth it?

AP NewsBreak: Countrywide CEO Mozilo Will Give Up $37.5 Million in Severance Benefits

Countrywide Financial Corp. CEO Angelo Mozilo, under fire over the size of his potential payout from the proposed sale of his troubled mortgage company, says he is forfeiting some $37.5 million in severance pay, fees and perks he was scheduled to receive upon his retirement.

Damon Silvers, associate general counsel of the AFL-CIO, which operates a Web site that tracks executive pay, said that by giving up his severance pay Mozilo "seems to recognize that there's something wrong with this picture."

"It would be best if Countrywide and Bank of America froze all of his compensation until a thorough inquiry could be completed as to exactly what happened at Countrywide," Silvers said, referring to allegations raised in some shareholder lawsuits filed last year that the company failed to warn investors about the depth of its financial troubles.

Countrywide shares closed at $6.02 on Friday, 19.5 percent below what each share would be worth in Bank of America stock if the deal was closed based on the bank's $39.48 closing share price Friday.

HousingPANIC Stupid Question of the Day

Who should be arrested first for knowingly enabling mortgage fraud?

1) Angelo Mozilo
2) Casey Serin
3) Bob Toll
4) Charlie Prince
5) Stan O'Neal
6) Michael Perry
7) The crazy looking dude in this wanted poster
8) The thousands of mortgage brokers across America who did the paperwork
9) The millions of housing gamblers who lied about their incomes
10) Nobody gets arrested, since the United States is no longer a nation of laws

HousingPANIC Quote of the Day

“The Fed’s attitude is that they are here to clean up after bubbles burst, not prevent them from happening in the first place. This is a dangerous and irresponsible and reckless way to run the world’s largest economy.”

- Stephen Roach, Morgan Stanley, January 2008

January 27, 2008

Is Ben Bernanke trying to create a new stock market bubble, to replace the housing bubble, which replaced the stock market bubble?

And will he succeed?

We've lost our manufacturing base, incomes are flat, the spending of the past six years was done on home equity, consumer debt is now the only new way to bring new money into the system, and if we don't get a new asset bubble soon to create wealth and drive spending, we're screwed.

Consider these great quotes, from Bubbles Ben Bernanke, speaking right when the housing bubble was inflating in 2002. You owe it to yourself to read his whole reckless speech. You'll better understand what may be coming next.

And my take - don't be a bull, don't be a bear. Be open minded, be prepared to react to new data, and when they change the rules to the game, remember they control the game.

"Aggressive bubble-poppers would like to see the Fed raise interest rates vigorously and proactively to eliminate potential bubbles in asset prices. To be frank, this recommendation concerns me greatly, and I hope to persuade you that it is antithetical to time-tested principles and sound practices of central banking."

"The Fed cannot reliably identify bubbles in asset prices. Second, even if it could identify bubbles, monetary policy is far too blunt a tool for effective use against them."

It's on sale, so it MUST be a good deal. Right? Right?

Let's say you have an investment, and the price is $1000. Then, two years later, the very same investment is at $2000. So you say to yourself - hey, it was $1000 just a bit ago - I'm not gonna pay $2000 today!

And then the investment falls in price to $1800, still 80% more than it did just 100 weeks ago.

So, is it a good deal? Should you run out and buy it, right?


Note, this is a trick question. You don't have enough information to make an informed answer. But if you're the "we don't get paid unless you buy" NAR or NAHB, your answer is YES! YES! YES! A price drop means it's a great time to buy, regardless of the fundamentals.

But we know how that can turn out.

Here's some hilariously BAD advice from the homebuilders from October 2006. I feel sorry for anyone who tried to catch the falling knife back then. Or tries to today. We've got a long way to go.

As a first-time buyer, should I wait until prices go lower to buy a home?

If you continue to wait, you may never be able to afford to get into the housing market. Even as home prices are currently moderating or in some areas falling, rents continue to climb.

Remember, the sooner you make the jump from renter to home owner, the quicker you begin to create and build up wealth for your family.

Open thread: And then there were five: Romney, McCain, Obama, Clinton and Bloomberg

The next president of the US as stated here previously will be either:

1) John McCain
2) Mitt Romney
3) Barack Obama
4) Hillary Clinton
5) Michael Bloomberg

So who do you support and why, who do you NOT want to win the most, who do you think is gonna win it, and how do you see it playing out from here?

But oh, what a mess the eventual winner will have on his or her hands, thanks to The Worst President Ever, and some really stupid decision making by the majority of US voters these past few years. The good news is that I'd imagine any of these five will be an improvement. Otherwise we're really in for it.

January 26, 2008

HousingPANIC Stupid Question of the Day - Retirement Edition

1) Do you think you'll have enough money for a comfortable retirement?

2) Do you plan on receiving the social security benefits that have been promised to you?

3) What % of your income do you save today for retirement?

4) Where would you like to retire?

5) How old are you, and what age do you plan on retiring?

NAR gets its way as Fannie changes mission from helping poor and middle class buy homes to helping mortgage bankers and lenders make money

This is shameful, this is sick, this is corrupt and this has to be stopped. Allowing the out-of-control and soon-to-fail Fannie and Freddie (via the American taxpayer who will end up bailing them out) to fund mortgages for rich people and California housing gamblers is sick, sick, sick.

But the NAR's and NAHB's army is well financed, our Congresspeople are prostitutes, and HousingPANIC and the bubble blogs are no match against this level of money and corruption. And for now, the MSM refuses to do their job (except for Diana Olick at CNBC).

HousingDoom noticed that Fannie has now changed their website's About Us page to reflect their new focus, and Diana reported the change on her blog. So here it is, in all its corrupt glory:

In 2005: “Our public mission, and our defining goal, is to help more families achieve the American Dream of homeownership. We do that by providing financial products and services that make it possible for low-, moderate-, and middle-income families to buy homes of their own.”

In 2008: “We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. Our job is to help those who house America.”

"Ben Bernanke is a fool... who doesn't understand economics". You might want to listen to Jim Rogers. And get out of US dollars NOW!

I think most of us would agree by now that Ben Bernanke is a traitor and a fool.

Well, there's one way to put your money where your mouth is.


Unfortunately most of you earn and spend US dollars too. You could ask your employer to start paying you in Euros or gold, but you'll just get a big laugh I'd imagine.

So then a few of you might start asking yourself - "do I need to live in the United States anymore? Do I need to work for an employer who insists on paying me in US dollars?"

And THAT will be an interesting moment in your life.

We're been here before, and we'll be here again. We're humans, and we love our bubbles, Ponzi Schemes and financial manias

So do you ever wonder why a discredited hack like RE/MAX's Tom Adkins is always on Fox News and Fox Business Channel?

Tom Adkins is the long haired realtor freak who Peter Schiff always sends to school. I've wondered why such a fool is given airtime. I mean, what exactly are the criteria for becoming an "expert" on Fox News and the Fox Business Channel.

Well, now we know.

You just have to do one of their reporters.

What's most shameful is that Fox News doesn't disclose it when Adkins is on the air, or especially when he's being interviewed by or sitting on the same panel AS HIS WIFE, Fox reporter Brenda Buttner, the anchor for the Bulls & Bears segment where Adkins spouts his bullsh*t.

America deserves more from its media. It's conflicts like these that created the housing bubble (where reporters didn't disclose their real estate holdings when reporting on real estate), and Iraq (where reporters where rewarded with access if they kept to the Bush line)

Adkins shouldn't be on Fox simply because he's been proven so completely wrong. There should at least be a disclaimer - IF YOU FOLLOW THE RECOMMENDATIONS OF THIS REALTOR YOU WILL LOSE EVERYTHING. TOM ADKINS HAS SCREWED ANYONE WHO LISTENED TO HIM, AND HE'S ALSO SCREWING OUR ANCHOR.

And damn, that Buttner sure has bad taste in men. She lets him out of the house looking like that?

HousingPANIC Quote of the Day

We need a plan that stimulates savings and production not more of the reckless borrowing and consumption that got us into this mess in the first place. Ron Pauls plan is the only one that amounts to a step in the right direction.

If you want meaningful change - for the better that is - Ron Paul is the only candidate capable of delivering it. The others merely promise to continue the failed policies that are at the root of our current economic problems.

-Peter Schiff, Economic Advisor to Presidential Candidate Ron Paul, January 2008

Seriously, Peter Schiff is Ron Paul's new economic advisor. Man, it all comes together here on HousingPANIC, eh? What's next, Lawrence Yun and Kendra Todd advising Hillary Clinton?

And how sad is it that Ron Paul's plan has zero chance of getting even looked at, let alone passed. Americans want their money from the sky so they can buy sh*t from Wal-Mart. Savings? Production? We're AMERICA - we don't need to save or produce anymore!

We're doomed. We're run by monkeys, and our population is clueless.

Thanks HP'ers for the link.

Get ready for the lawyers: Subprime Lawsuits Piling Up

The Big Housing Scam will keep lawyers busy for a decade. At least John Edwards will have something to do after the race.

The only problem? Getting money out of bankrupt companies like Countrywide and IndyMac, or realtors whose only asset is a box of ramen.

Subprime Lawsuits Piling Up

A wave of lawsuits is beginning to wash over the troubled U.S. mortgage market and the rest of the financial world. American homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone.

The legal battles stretch from Main Street to Wall Street and beyond. Homeowners and subprime mortgage lenders are squaring off in dozens of cases that claim some lenders engaged in predatory lending practices and other wrongdoing. Cleveland and Baltimore are pursuing cases against Wall Street banks, saying local residents are suffering because the banks fostered the proliferation of high-risk home loans.

'What strikes me here is that this a tainted system from A to Z,'' said Tamar Frankel, a law professor at Boston University. ''Everybody blames everybody else. If you look at what is being said, there isn't one who doesn't blame another and there is half-truth in everything.''

January 25, 2008

America, please tell me you don't want these manipulative scandalous liars back in the White House. End the Bill and Hillary show and move on.

We just went through seven (soon to be eight) years of hell with Bush 2. After going through scandal and impeachment hell the three years before this. And now we're thinking of Clinton 2? Come on!

So the odds-on favorite to be the next President of the United States is THE F*CKING WIFE OF THE IMPEACHED LIAR? Wow.

Hopefully the behavior of Bill Clinton the past few days reminds voters of what a lying sack of sh*t this guy is, and his wife isn't much better. The Clinton campaign is a sad joke, and anyone considering voting for them (yes, 'them') is clueless. To have them back in the White House would be a disaster. Eight more years of party warfare, eight more years of paralysis in DC.

Memo to the Democrats - if you nominate Hillary Clinton, you will lose the next election, one that was yours to win. You won't stand a chance. You may like her, but America hates her and her lying husband.

Now, on to the Republicans. You're pretty f*cked too.

Ah, American Politics 2008. Gotta love it.

HousingPANIC Stupid Question of the Day

What are you going to do with your Housing Crash Rebate money?

HousingPANIC New Word of the Day: StagDeflation

As bond yields tumble and the Fed panics, it's smelling more and more like lagging deflation after the leading inflation. Bizarre, but we're living in bizarre times.

Forget Stagflation. Stagdeflation Sounds Scarier

It's time to (peacefully) overthrow the government of the United States. VOTE EVERY SINGLE INCUMBENT OUT OF OFFICE THIS NOVEMBER

The good news is that the election is coming up. If everyone in America pulled together and did the right thing, EVERY incumbent up for re-election would be voted out of office.

EVERY last stinking one of 'em.

The HousingPANIC 2008 endorsement: The New Guy

Pass it on.

Could you picture the headline? "Election Shocker! Every Member of Congress Sacked in Historic DC House Cleaning"

UPDATE: Bailout Bernanke didn't know about rogue trader, panicked 3/4 point cut now seen as glaring mistake. So, will Bernanke fix his error now?


Congress should immediately call Bernanke in for questioning, and open an investigation into the Fed's behavior since 2001

This latest glaring market-induced mistake should be corrected immediately. The technical sell-off on Monday that had day trader Bernanke panicking on Tuesday is now being reversed, and so should this rate cut.

What is most shameful and scandalous for the Fed is that Societe Generale had informed the Bank of France about what was going on on Monday, YET THE FED AND THE BANK OF FRANCE DID NOT COMMUNICATE, so the Fed went ahead and put in their market stop-loss order on Tuesday morning before the market opened. If they had known the truth, there's NOW WAY IN HELL THEY WOULD HAVE MADE THIS GLARING MISTAKE. NO WAY.

Ben Bernanke should resign, the Fed should be investigated, and this 3/4 point mistake should be reverse post-haste. And if you believe Bernanke made a historic mistake, you might want to think about getting long.

Fed didn't know about SocGen trades on Monday - Revelations spur market to reassess central bank's intentions in a new light

The Federal Reserve was not aware that Societe Generale was unwinding trades in Europe on Monday that had been amassed by a rogue trader at the French bank, a Fed source said Thursday.

Some observers, citing Societe Generale's sensational announcement, say the Fed's dramatic policy remedy may have been too much too fast.

Why the Fed, which usually keeps in contact with the world's central bankers, wasn't aware of this when Bernanke held his emergency policy meeting remains an unanswered question that might dog officials in coming days.

Longer-term, if the Fed was spooked into making an emergency rate cut this week on the back of what was just technical selling, it could further undermine market confidence in Bernanke.

FLASH: Fannie Mae & Freddie Mac regulator calls legislation to raise loan size a MISTAKE, doesn't feel they have sufficient risk management or capital

Gotta love the incompetent corrupt monkeys in Congress intent on screwing the America people because the NAR's lobbyists promised them a bunch of money for their re-election campaigns.

Fannie and Freddie should not be allowed to take on loans (that nobody else in their right minds would buy) up to the new $729,750 limit because they DO NOT HAVE SUFFICIENT CAPITAL, NOR DO THEY HAVE SUFFICIENT RISK MANAGEMENT IN PLACE, and even Bush and Paulson know this.

The eventual writedowns and taxpayer bailout will be in the trillions HP'ers. It'll make Citibank and Merrill's messes look like a day in the park.

This should be illegal. And when there is a Federal bailout of Fannie and Freddie, the congressmen and women who voted for this insanity, AGAINST the wishes of Fannie and Freddie's oversight agency and the Treasury secretary, should be arrested for treason. And the NAR lobbyists who bribed them should be tracked down and dealt with in the public square.


We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.

Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.


Lockhart, Treasury Secretary Henry Paulson Jr. and the White House have repeatedly insisted that any such increase should be tied to broader legislation tightening regulation of the two companies. The decision to include the increase in the economic rescue package flies in the face of those calls, a fact Paulson addressed Thursday.

"I got run down by a bipartisan steamroller," Paulson said at a White House briefing. "Republicans and Democrats were united on this."

HousingPANIC Quote of the Day

"For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over."

- Business Week, November 2, 1929

I KNEW I had seen him somewhere before

January 24, 2008

Here's the 30 year old trader who gave Bailout Ben Bernanke the excuse to cut 3/4 point this week

Bernanke has egg on his face today, as the real story on this week's worldwide stock market turmoil that had Bernanke panicking was one dude doing some trades in a back room.

If it wasn't so strange, it wouldn't be true. So this guy, unbeknownst to Societe Generale, his employer, made £60 billion in bets on the Footsie and other indexes out there. Then this weekend he was found out, and the bank quickly sold off his positions, causing the markets to tank.

And like the planes hitting the towers gave Cheney what he needed, this charade was the perfect excuse for Bank Bailout Ben to hop into action, dropping rates a historical 3/4 point in an emergency cut.

Whoopsie! Now that the truth is out, will Banker's Best Buddy Bailout Bernanke and the Fed do the right thing next week and raise rates 3/4 point?

Don't count on it. Like the bogus employment number a few months ago (that later was reversed) that had Ben and the inkjets cutting their first 1/2 point, they're looking for any excuse to cut rates to 0% so they can bail out their banker buddies.

And that's the way it is.

Rogue trader loses £3.7 BILLION - and 'causes global market crash'

A rogue trader gambled up to £60 billion in the world's biggest banking fraud disaster.

The dealer, named in reports as trader Jerome Kerviel, lost an astonishing £3.6 billion for French bank Société Générale and is today being blamed for this week's global stock market crisis.

They came to light on Saturday after Kerviel, named by the Financial Times and believed to be a junior trader in his 30s who worked in Paris earning less than £75,000, had covered them up for months.

He had been taking enormous bets with the bank's money on the indices that measure movements in European stock markets — such as the FTSE 100. After grilling him for six hours the bank's bosses decided it had to cancel the bets immediately when the markets opened on Monday. Some senior City figures said the "positions" were so huge that dumping them on one day could have been enough to trigger Monday's stock market meltdown, the worst since 9/11.

FLASH: Congress and Bush agree on the Great Domino's Pizza Housing Crash Bailout Plan - large Domino's pizzas for everyone for a year!

A large Domino's with unlimited toppings is only $10.99, so everyone gets 27 to 54 of them with their $300 to $600 election-year gift from the worst politicians ever to grace DC. Tip not included. That's one pizza per week (or every other week if you don't pay taxes) for a year!

Vote for the incumbents! Vote for the people who brought you FREE PIZZA!!!! Forget about the Iraq debacle, the $52 trillion debt and the crashing economy. It's FREE PIZZA for EVERYONE!!!
And don't forget to thank China and the Arabs too - after all they're the one paying for this pizza party.

Oh, about that whole housing crash, dollar meltdown and inflation thing - sorry, they can't do anything about that.

WASHINGTON - Democratic and Republican congressional leaders reached a tentative deal Thursday on tax rebates of $300 to $1,200 per household and business tax cuts to jolt the slumping economy.

The officials, speaking on condition of anonymity, said the two wanted key members of their parties to sign off on the approximately $150 billion accord before any announcement.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining rebates of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes.

FLASH: Merrill Lynch predicts historic 15% crash in US home prices in 2008, falling 10% more in 2009, and falling more in 2010

Love seeing Yun trying to spin his way out of this one. Too bad he can't be sued or arrested.

Merrill says the total decline the next few years will be 20% to 30%. Hell, even those numbers are optimistic, especially for towns like Phoenix, Vegas, Miami, Detroit, Naples, Tampa, Boston, DC, Sacramento, OC, Tucson and oh so many more.

Housing prices to free fall in 2008

According to a Merrill Lynch report, home prices will drop 15 percent this year, and declines will continue in 2009.

NEW YORK (CNNMoney.com) -- The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday.

The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.

By contrast, the National Association of Realtors (NAR) expects housing prices to remain flat in 2008. NAR did cut its home price estimate for the current quarter, however, to a 5.3 percent year-over-year decline, which represents the steepest drop in that price measure on record. But NAR sees an uptick in home prices in the last two quarters of 2008.

"Merrill Lynch's figures are way too pessimistic, and they are unprecedented," Lawrence Yun, the National Association of Realtors chief economist told CNNMoney.com. "There is so much variation in local housing markets, and we see stable price conditions for 2008."

FLASH: If you're the US government, when you find yourself in a hole, keep digging. Congress to raise Fannie and Freddy loan limits

The taxpayer bailout of these two corrupt and mismanaged organizations will now be even bigger, thanks to Congress and the NAR's lobbyists.

We are truly run by corrupt monkeys who will if left unchecked destroy America. Let's see if Bush, who seems to understand the mess Fannie and Freddy are in, signs this trash. It's sad when Bush is the only hope.

Remember this day.

Both sides agreed to allow Fannie Mae and Freddie Mac — government-sponsored companies that are the two biggest U.S. financiers and guarantors of home loans — to buy loans much larger than the current $417,000 limit, aides and lobbyists said.

Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.

Enjoy the schadenfreude, and be glad your job isn't "day trader" (I hope)

Warning - lots of swearing as you'd expect, like "Thank you mister m_____ f_____ stock market - this is how I spend my Sunday night, losing my life's savings". Turn the volume up on the player, and the video starts slow, give him a minute or so for the fun to start.

With stocks, you can see it all go away right there on your computer screen. With houses that's tougher, unless you keep hitting "refresh" at zillow.com I guess.

Also be sure to check out this hilarious video - had me rolling on the floor this morning

Thanks HP'ers for the links

It's time to watch this classic Fox News Peter Schiff video where he goes against RE/MAX's Tom Adkins and blowhard Mike Norman. Guess who was right?

I love this video from 2006. Adkins and Norman are so completely and arrogantly wrong, I don't know why anyone would EVER go to them for financial advice again. Their careers should be over, but I would guess that's already been taken care of.

A special note for Mike Norman: Sir, not only are you an as*hole, blowhard and a jerk, but you're a discredited hack who should never work in the financial realm ever again. You're toast.

A special note for Tom Adkins: Nice hair.

And to Peter Schiff - thank you, you are a man of patience and class to go up against ignorant yahoo's like these two and keep your cool.

Buying stocks? Shorting stocks? Or happy on the sidelines?

* Fed slashing rates down to 0% in a desperate attempt to create a new bubble somewhere, anywhere

* Congress and Bush dropping hundreds of billions of election-year dollars from helicopters (although they can take their lousy $300 and stick it - that don't buy much these days)

* Government spending taxpayer money on banks and insurers too big to fail - including a potential multi-billion dollar nationalization/bailout of MBIA and Ambac - plus the upcoming massive and historic bailouts of Fannie and Freddie

* Fannie jumbo limits going up (since we're run by corrupt monkeys)

* Stock prices down drastically, including juicy ones like Apple, Google and foreign ETFs

* Credit meltdown still just starting, with lots of writedowns and bad news still to come

So, is a stock market recovery starting, or will it just be a brief sucker's rally, followed by an even deeper crash?

My only advice, worth nothing, is to keep an open mind, be patient, and be very, very careful. This market feels like gambling, not investing. DOPES got slaughtered these past few weeks, don't be a DOPES.

(by the way, anyone see the hilarious Societe Generale trader who just lost 'em $7.2 billion secretly making terrible bets on the market - ouch! Wonder how his performance appraisal goes this year)

Do you have any idea how much trouble the realtors, mortgage brokers, lenders, appraisers and mortgage fraudsters have gotten us into?

And to think, it all ties back to stupid f*cking houses. Who would have ever thought.

I sure hope we learned our lesson.
This can't happen again. But in some shape or form, it probably will.

Bubbles and manias seem to be ingrained into human nature. Oh, the folly of man.
500 years from now, they'll be reading about this bubble and crash. And they'll all say - "stupid fools - what were they thinking?"

If something good comes of it, it'll be the death of the realtor profession as they know it. And also the end of no-down, no-doc, negative-am, interest-only liar's loan, mortgage-broker-on-commission bullsh*t.

HousingPANIC Quote of the Day

"The current US downturn could not be more different. House prices are falling, and have further to fall before reaching a more sustainable level (in terms of the price-to-rent ratios as well as several other measures). Core inflation has been above the Federal Reserve’s comfort zone for some years now.

There is no way that either the Fed, the Bank of England or the European Central Bank could, at this stage, create another housing boom even if they wanted to
. Housing downturns have a strong dynamism, which is not easy to break. This is not a great time to take on debts, but to pay them off."

- Wolfgang Munchau, Financial Times, January 2008

January 23, 2008

With mortgage rates falling, and home prices drastically reduced from the peak, are you getting tempted to "buy" during this firesale?

Are you looking?

Do you think you may "buy" this year?

Are you tempted to do some low-ball bidding, or go after a foreclosure?

Or if you're holding off until we've hit bottom - what year do you think that'll be?

Where you live, how much cheaper is it to rent than to "own" the same place?

Bottom line, when it comes to housing - whatcha thinkin?

(And tell us if you're a renter, "owner" or investor, and what town you're in)

Looks like the 3/4 point cut ain't gonna do the trick.

If I would have told you a year ago that the Fed dropped the rate 3/4 of a point in one day, first time in 20 years something like that happened, and the stock market had STILL dropped, you probably would have figured:

1) That the president got shot
2) That a massive natural disaster had hit
3) That a dirty bomb had gone off in a major city
4) That the stock market had crashed 50%


In the end, this 3/4 point cut will be followed up by many more. Bernanke will end up taking rates below the rate of inflation, and we're probably already there today. It's amazing that a 3/4 point cut hit and stocks STILL dropped. That should show you the extent of the mess we're now in.

Another fun day in the markets today. Especially those of you with your stash in nice safe places, who saw all of this coming.

HousingPANIC Stupid Question of the Day

Inflation or Deflation? Both? One and then the other?

Looks to me like Bernanke is betting in deflation, and using inflation and currency depreciation to keep it at bay. Now that's gambling.

What's it gonna be HP'ers? Inflation or Deflation?

Ben Bernanke is spooked. That's one explanation for the Federal Reserve chairman's decision to lead the Open Market Committee in yesterday's unprecedented 75-basis- point cut in the fed funds rate.

The Fed spoke of a ``weakening of the economic outlook and increasing downside risks to growth,'' a vague phrase that reminds us that what Milton Friedman said in 1965 is still true: ``We are all Keynesians now,'' monetary and fiscal fiddlers who think the government has a broad mandate to manage the economy.

But what Bernanke was also saying was that he fears a more general contraction of money and credit. If not outright deflation, then disinflation, a slowdown in price increases.

Dean Baker throws Alan Greenspan under the bus as his precious $8 trillion housing bubble explodes

"It was easy for any competent macroeconomist to recognize that the housing market was in the midst of an unsustainable bubble. By its peak in 2006, the run-up had generated more than $8 trillion in housing bubble wealth. It was inevitable that this bubble would burst and wreak the sort of havoc that we are now seeing.

The housing bubble was allowed to expand to such dangerous proportions because the Fed was not run by a competent macroeconomist. It was run by Alan Greenspan, who used to be the greatest central banker of all time.

Greenspan did nothing to stem the growth of the bubble. In fact, he encouraged its growth by recommending that people take out adjustable rate mortgages. He also dismissed the views of the competent macroeconomists who tried to warn of the bubble, assuring the markets that everything was under control."

FLASH: This is not a misprint: California foreclosures soar 421% from last year

That great sucking sound you hear now is California, as the state hurtles toward a housing-led depression. California seems cursed - earthquakes, fires, riots, mudslides, illegals, Britney Spears, and now a massive housing crash.

A giant wave of defaults and foreclosures is now hitting their shores, and it's getting ugly. As predicted here, the state is now facing massive deficits, home prices are in a death spiral to the bottom, and "for sale" and "foreclosed" are the new signs of the time.


Because California home prices detached from all known metrics - price to income, price to rent, historical price trends - and the Ponzi Scheme made California housing gamblers do really really stupid things - namely take out interest-only and negative-am loans they had no chance of ever paying back, while hoping against hope that the mad appreciation continued.

And then it didn't.

So who gets hurt the most? It's not the homedebtors - having put nothing down they just turn in the keys and walk away, and it wasn't their home anyway, it was the bank's. So it's the banks and CDO buyers - the bagholders and their shareholders, who'll get reemed.

And these toxic avengers are led by Washington Mutual, Countrywide, Wells Fargo, First Federal, IndyMac and CIT Group. The Great California Housing Crash is going to destroy 'em, along with Freddie Mac and Fannie Mae who bought up the junk, haven't marked-to-market, and now can't sell it off. And the US taxpayer is gonna be on the hook.

And that's the way the cookie crumbled.

Report: California foreclosures up 421% in Q4, hit 20-year high

Foreclosures in California hit a 20-year high during the fourth quarter of 2007, a real estate research firm reported Tuesday.

DataQuick Information Systems said 31,676 homes ended up in foreclosure during the quarter ended Dec. 31, the highest number since the company began tracking such numbers in 1988.

The foreclosure figure is a 30.8 percent increase from the previous quarter and a 421.2 percent jump from 6,078 foreclosures in the same the same period of 2006. Homeowners received 81,550 default notices during the quarter, up 12.4 percent from the previous quarter and more than 114 percent from the year-ago period.