Steve Forbes has a massive brainfart: "Here's How to End the Panic". His solution? Just sweep the crap mortgages under the rug. Presto!

Panic?

What panic?

I thought everything was gonna be fine?

I thought there was no housing bubble?

I thought the subprime fallout was contained?

But come on Steve-O. Junking the nation's accounting standards as the solution to the problem? ARE YOU F*CKING OUT OF YOUR MIND?

Yeah, that'll instill even greater confidence worldwide in the ol' USofA. Just fudge the numbers! Cook the books! Brilliant! The numbers aren't bad if you just say they're not bad! Crisis over!

Monkeys I tell ya. Monkeys. And the world may never trust the United States again.

Here's How to End the Panic
Steve Forbes

The Bush administration must take two steps immediately to quickly halt the unending, enervating credit crisis: shore up the anemic dollar and, for the time being, suspend "marking to market" those new financial instruments, such as packages of subprime mortgages.

The Treasury Department and the Fed should get together with the SEC, the Comptroller of the Currency and other bank regulators and announce that financial institutions for the next 12 months will no longer write down the value of exotic financial instruments (primarily packages of subprime mortgages).

Instead, writedowns will occur only when there have been actual losses on those assets. If a mortgage defaults, a bank will then--and only then--recognize the loss.

Bush Administration new 2008 slogan (c/o Henry Paulson): "The worst is just beginning"

Thank you Hank Paulson for saying what we all know was true anyway.

I can't wait to see the bumper stickers!

Thanks doom for the vid

It's not just subprime that's melting down - it's ALL OF IT (negative-am, alt-a, prime, seconds, auto, revolving, student, etc)

I hate reading "the subprime problem", "the subprime meltdown" and "the subprime crisis" in the lazy MSM. Note to the MSM and to the world:

CREDIT IS MELTING DOWN. ALL IF IT. SUBPRIME WAS JUST THE TINY FIRST WAVE. AND TRILLIONS WILL BE LOST. IT WAS A BIG HOUSE OF CARDS BUILT ON FRAUD AND GREED, AND IT AIN'T GETTIN' PAID BACK.

Should be obvious, but for some reason it ain't gettin' through to 'em yet. But it will.

Subprime losses to date – Merrill Lynch – $22.1bn
Citigroup – $18.1bn
UBS – $13.5bn
Morgan Stanley – $9.4bn
HSBC – $3.4bn
Bear Stearns – $3.2bn
Deutsche Bank – $3.2bn
Bank of America – $3bn
Barclays – $2.6bn
RBS – $2.5bn
Freddie Mac – $2bn

Yum! It's Ben Bernanke Credit Crunch for Breakfast Again! Free helicopter included!

Note to the MSM: We are not having a SUBPRIME PROBLEM. We are having a CREDIT PROBLEM as the smart people in the room and many on this blog point out.

SUBPRIME was just the start. Now we move into Alt-A, Option ARMs, Piggybacks, Prime loans, credit card loans, student loans, auto loans, commercial loans and every other credit instrument known to man.

Get those helicopters ready. And say goodbye to the American Dollar, thank you Alan Greenspan and Ben Bernanke.

Here's could-go-bankrupt Countrywide Mortgage's Orange Mozilo on CNBC earlier today

Smooth.

Real smooth.

Here's the video.

Man, I'd check my watch after shaking hands with that cat.

Meanwhile, Maria sure is a softball tosser.

What questions would you ask Mozilo HP'ers? I'll see if he'll give us an interview. He he he.

Interesting to hear him say that CFC can't go to the Fed discount window because if I heard him right, THE BANK HAS NO ASSETS or access to Countrywide Home Loan assets.

Break that one down HP'ers. And yes, I'm short CFC. Nice to see the market call BS on this blatant pump and dump today.

Mozilo also called the Merrill analyst who reported that CFC might go bankrupt "irresponsible" who was yelling fire in a crowded theatre, and who (sob sob) negatively effected 61,000 Countrywide employees. Angelo, Angelo, Angelo, don't blame the messenger. Blame yourself for giving loans to liars while selling hundreds of millions of dollars of your sinking ship.

Angelo Mozilo - the new posterboy for greed, housing bubble style. Will he go the way of Ebbers and Lay? Time will tell.

HousingPANIC Thought of the Day

I doubt most folks understand what "Mark to Market" means to them. But then again, most folks don't really understand much of anything, do they.

In finance and accounting, mark to market is the act of assigning a value to a position held in a financial instrument based on the current market price for that instrument or similar instruments. For example, the final value of a futures contract that expires in 9 months will not be known until it expires. If it is marked to market, for accounting purposes it is assigned the value that it would fetch in the open market currently.

Want to see the housing version of f*ckedcompany.com? Just go to the data section at National Mortgage News

Thought you'd find these numbers and charts interesting. What's most amazing about the charts is how the MSM and NAR spin these housing numbers as "down slightly" or "bottoming" or even "improving". Man, my eyes must deceive.

Keep in mind on the lenders that in many cases, the lender is not the bag-holder. Take Wells Fargo, who makes the loan then gets rid of it as fast as they can like a toxic hot potato. So yes, now that these types of loans are no longer being made, their lending business will collapse, destroying their revenue and profits, but it's the bag-holders that are really gonna take it in the shorts.

Think you're safe putting your cash into money market funds? Think again - they're CDO mortgage investors, and they ain't FDIC insured

The biggest problem with the CDO con-game is that S&P and Moody's hilariously gave this toxic loan cancer AAA or investment grade ratings, so "safe" funds (money markets, pensions, etc) could barrel in.

Oops.

"Cash is King" means one thing. But damn, if cash isn't safe (goodbye dollar) and money markets aren't safe (hello subprime), every asset class is being liquidated to raise cash, and even gold is dropping (hedge fund selling to pay debt) then it's getting tougher and tougher to find safety. Watch the US T-bills be the last island, which in itself is kinda funny since we're $50 trillion in the hole and essentially bankrupt.

Amazing. Good luck out there.

Aug. 20 (Bloomberg) -- Money market funds were invented 37 years ago to offer investors better returns than bank savings accounts while providing a high degree of safety. Most of the $2.5 trillion sitting in these funds is invested in such assets as U.S. Treasury bills, certificates of deposit and short-term commercial debt.

Unlike bank accounts, money market funds aren't insured by the federal government. They almost never fail.

Unbeknownst to most investors, some of the largest money market funds today are putting part of their cash into one of the riskiest debt investments in the world: collateralized debt obligations backed by subprime mortgage loans.

Under SEC rules, money market managers must invest in securities with ``minimal credit risks.'' Joseph Mason, a finance professor at Drexel University in Philadelphia and a former economist at the U.S. Treasury Department, says subprime debt in money market funds is far from safe.

``This creates tremendous risk for today's money market investors,'' says Mason, who wrote an 84-page report on CDOs this year. ``Right now, I'm not comfortable investing anything in CDOs.''

Want to see what "Cash is King" and "Flight to Safety" look like during a period of financial panic and fear? Here you go...

Reading the headlines is like reading "Manias, Panics and Crashes". If ANYONE doubts what happened, what's happening and what's going to happen, then you only have yourselves to blame. This is all just so damn obvious. The canary didn't make it. Meanwhile the lender of last resort, The Fed, is taking mortgage backed securities as collateral. Damn, this is gonna end ugly.

From MPC:

· The final phase is a self-feeding panic, where the bubble bursts. People of wealth and credit scramble to unload whatever they have bought at greater and greater losses, and cash becomes king.

From reality today:

Aug. 20 (Bloomberg) -- Yields on U.S. Treasury bills fell the most in two decades on demand for the safest securities amid concern over a widening credit crunch.

Three-month yields dropped the most since the stock market crash of 1987 and more than in the wake of the Sept. 11, 2001, terror attacks in the U.S, as funds shunned assets that may be linked to a weakening mortgage market.

``The market is totally, absolutely, completely in fear mode,'' said John Jansen, who sells Treasuries at CastleOak Securities LP in New York. ``People are afraid that lots and lots of mortgage paper and mortgage paper derivatives of all sorts is completely opaque and they can't price it.''

FLASH: And then right on schedule the layoffs started at could-go-bankrupt Countrywide Mortgage

Yup, still short CFC...

Hope Angelo can unload a few hundred more million dollars of shares QUICK!!

Report: Countrywide laying off loan originatorsMonday August 20, 12:36 pm ET

Countrywide Financial Corp. has started laying off loan originators, according to a report in Monday's Wall Street Journal, as the credit crunch continues to impact the nation's largest mortgage lender.

The layoffs hit the company's Full Spectrum unit, which handles "Alt-A" loans, which fall between the prime and subprime categories and often are for those applying for loans that don't document their income.

The number of employees laid off was not disclosed. Full Spectrum employed a sales force of about 6,800, with Countrywide as a whole sporting a loan-origination sales force of about 18,000

We knew what was going to happen. And now it's here. This liquidity crush is simply "revulsion" and "discredit". Housing panic is here.

It's panic folks, and it is here. Panic. In all your lives, you'll never see such a thing again. After the biggest financial bubble in the history of humanity, the biggest crash follows. It hath been foretold.

It's time to head to the cellar. Right on schedule, housing panic is now here.

Again, from the textbook:

Ultimately, the markets stop rising and people who have borrowed heavily find themselves overstretched. This is 'distress', which generates unexpected failures, followed by 'revulsion' or 'discredit'.

The final phase is a self-feeding panic, where the bubble bursts. People of wealth and credit scramble to unload whatever they have bought at greater and greater losses, and cash becomes king.

And just one of the headlines from reality today:

ECB injects €98bn but markets are gripped by panic

The European Central Bank released nearly €100bn (£68bn) in emergency funds into the banking system yesterday in an effort to kick-start the crippled credit markets, but its move only sparked panic selling on stock markets across the world.

The sudden cash injection was the largest since 12 September 2001, when the central bank released billions to stabilise the market after the terrorist attacks in New York.

The trigger for the €98bn package was a major overnight spike in inter-bank lending rates that if unremedied threatened to disrupt the normal functioning and stability of Europe's financial system.

As with the other market upheavals in the last month, the root cause was traced to America where the fallout from the meltdown of the market for risky, or sub-prime, loans continues to widen.

How do you like your hedge fund blowups - scrambled or over-easy?

Ah, ya gotta love "our fund isn't blowing up" announcements even though the fund is blowing up. They've gotta do it though - only way to get rid of the assets before they hit firesale pricing.

Deny, Deny, Deny. Then run like the dickens.

LONDON, Aug 9 (Reuters) - Goldman Sachs said on Thursday that it was "business as usual" at its Global Alpha hedge fund but declined further comment on the fund's operations.

The fund has been the subject of persistent speculation for the past couple of days, with Goldman on Tuesday denying market talk that it was liquidating the fund.

On Thursday, French bank BNP Paribas (BNPP.PA: Quote, Profile, Research) froze 1.6 billion euros ($2.21 billion) worth of funds, citing problems over U.S. subprime mortgages.

FLASH: Alt-A "Liar's Loan" king IndyMac admits there's no market for Alt-A loans anymore, "market panicking"

Panic? Did I hear that right? Panic?

Hmmm... And when there's "no market" or "no bid" for something, doesn't that mean the value of that something has just plummeted? Mark to Market anyone? Isn't anyone auditing IndyMac?

(note - I'm short IMB and waiting for the traditional closing up shop and mass layoff announcement)

Impac CEO: No bids for Alt-A

Joseph Tomkinson, head of Impac Mortgage Holdings in Irvine, said his company had to abandon Alt-A loans, which has been its focus since its founding in 1995, because there is no market for the loans right now.

“Right now there is no bid for it,” Tomkinson said. “There should be a bid, but there is no bid. People are taking a breather to see where the market is going. You have a market that is just panicking.”

Impac will switch gears dramatically and try and sell loans to Fannie Mae and Freddie Mac. It used to sell a lot of loans to Fannie but stopped amid intense competition, Tomkinson said. The REIT has to go back to Fannie and Freddie because they’re the only ones buying, he said.

Mortgage Mess: Clean-up in Aisle Three!

Looks like we're not gonna need government regulation of the mortgage market after all. The market is gonna take care of this mess for us

The days of liar's loans, stated income, no-money-down, negative amortization, teaser rate, adjustable rate, high LTV toxic mortgage crap went the way of the pets.com puppet.

Why? Because the loans didn't get paid back, and the bagholders said no-more.

So all of the companies involved in that crap have gone out of business, or are on their way out.

It's funny, the Senate will hold hearings in 2008 on this disaster, all kinds of new laws and regulations will go into effect, and in the end it won't matter. The market, as it always does, cleans up its own messes.

The only problem though is that this mess was massive and historic, and the clean-up will be devastating.

A little regulation would have gone a long way in 2002, 2003, 2004. But now that the market had to do it, versus our corrupted and incompetent Congress and President, the cleanup will go on and on an on...

2007, 2008, 2009, 2010, 2011, 2012, 2013, ...

"Panic". "Meltdown". "Nightmare". Is it just me, or is Housing Panic here?

Seriously, folks, you'd have to be a clueless fool to buy a home in this market. Even if you were one of the few lucky enough to secure financing as the mortgage lenders implode.

It's a bloodbath out there. Hold tight. This week will be wild. Check that - the next few years will be wild. Good luck out there everyone.

Housing Market to Weaken Even Further As Mortgage Industry Takes Cure

"This week is going to be a nightmare," says Melissa Cohn, chief executive of Manhattan Mortgage in New York. Lenders are scaling back so fast that it isn't clear which loans are available or on what terms, and rates are jumping even on large loans, known as jumbos, for prime borrowers.

These stricter lending standards reduce demand for homes and nudge some people who can't refinance toward foreclosure. Higher foreclosures add to a glut of homes on the market in most of the country. And, completing the vicious circle, a weaker housing market comes back to bite the lenders by wiping out owners' equity in their homes and increasing the risk of even more foreclosures down the road.

"The market is in a panic," says Larry Goldstone, president of Thornburg Mortgage Inc., a lender in Santa Fe, N.M. He says he thinks the mortgage-bond market, which supplies most of the money for home mortgages, will calm down within a few months, but the housing market may need at least another year or two to heal.

Get used to these statements from failed mortgage lenders and homebuilders

American Home has ceased taking mortgage applications and has notified all of its production employees that they will be separated effective tomorrow, August 3, 2007. Accordingly, the Company employee base will be reduced from over 7,000 to approximately 750. The Company currently is maintaining its thrift and servicing businesses.

Michael Strauss, American Home's Chief Executive Officer, stated,

"It is with great sadness that American Home has had to take this action which involves so many dedicated employees. The employees affected should understand that this is not a reflection on their efforts or their productivity.

Unfortunately, the market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative."

Take one part IndyMac the Liar's Loan King, one part mortgage meltdown and one part HousingPANIC, what do you get?

You get this quote from IndyMac's CEO (note I'm short IMB):

IndyMac chief calls mortgage market "panicked"

IndyMac Chief Executive Mike Perry told employees in an e-mail on Wednesday that the current turmoil in the mortgage market appears to be broader and more serious than previous disruptions.

"Unfortunately, the private secondary markets ... continue to remain very panicked and illiquid," Perry said.

The Fed's William Poole correctly says the mortgage lenders and homebuilders going out of business were "bad actors" whose punishment was deserved

Damn, this is getting interesting... So interesting that if you work for an Alt-A "Liar's Loan" lender, or a homebuilder targeting people with low incomes and bad credit, and you haven't been laid off yet, you might want to start packing up Monday, and take the plants home now... Doesn't sound like the Fed is gonna be bailing you out...

"This year’s markets punished mostly bad actors and/or poor lending practices. The market’s punishment of unsound financial arrangements has been swift, harsh and without prejudice”

-William Poole, President Federal Reserve Bank of St. Louis, July 2007

Jim Cramer thinks we should care that thousands of investment bankers will be losing their jobs at Goldman Sachs, Bear Stearns etc. Do you care?

I don't know about you, but after years of fleecing America for billions of dollars in illicit personal gains, after years of manipulating our mortgage markets so that home prices grew to unsustainable levels, and after years of insane personal wealth creation for the few at the expense of the masses, frankly, when the mass layoffs come at the investment banks (and they will), I think HP should declare it a holiday.

Ding Dong the Investment Banks are Toast Day

Note to Jim Cramer - America hates your investment banker friends. We'll kick 'em when they're down, and if this was 218 years ago, we'd be lining them up at our version of the Place de la Concorde.

This mess was of their own making, spawned by out of control unregulated greed. The investment bankers have blood on their hands, and now they'll see blood in the streets.

It's getting pretty funny all the crap that comes out on Friday night after market closes. Here's the latest from Alt-A Liar's Loan disaster IndyMac

Nothing will ever beat AHM announcing they weren't paying a dividend (hours before the whole company blew up) at 10pm last Friday night. But here's the latest from "Don't worry - all is well, all is well" IndyMac c/o Blown Mortgage who is all over this mortgage meltdown from the inside...

Bottom line folks - IndyMac in my personal opinion won't be in business in a few more weeks. But regardless of that, what's most important for America is that people who want to buy homes (the few that are left) won't be able to get a loan. Hello Mr. Demand. Meet Mr. Supply. Be sure you talk to Mr. Price.

(and yes, I'm short IMB):

Dear Valued Customer,

In response to recent liquidity issues in the secondary mortgage market, we have found it necessary to revise a number of our program limits and underwriting guidelines. The following revisions became effective for loans that were not rate locked prior to 12:00 p.m. Pacific Time today. The Indymac Lending Guide will be updated to reflect the changes shortly.

Loans affected by the revisions below but rate locked prior to the effective date will be accepted and funded provided all QuickPricer® ratelocks are converted to full e-MITS® submissions by August 10, 2007 and all credit packages are delivered to Indymac by August 17, 2007. In addition, there will be no grace period or “auto-extensions” for clearance of conditions after the rate lock expiration. All loans that were previously delivered and not ratelocked are subject to the revised guidelines.

Program Revisions - Multiple Programs

The following revisions apply to the following programs, where applicable:
• Alt A - Standard Products with loan amounts that exceed the current conforming loan limit
• Alt A - Super Jumbo and Ultra Jumbo Program loans - all loan amounts
• Alt A - Pay Option ARM loans - all loan amounts
• Construction to Permanent Loans with loan amounts that exceed the current conforming
loan limit
• Consumer Residential Lot Loans - all loan amounts
• HELOCs - all loan amounts

Documentation Types:

• Stated Income documentation is available only when one or more of the borrowers is
self-employed for loans with the following characteristics:

• LTV or CLTV greater than 70% or
• Decision Credit Score is less than 700

Stated Income remains available for borrowers with all types of income when the LTV &
CLTV are less than or equal to 70% and the Decision Credit Score is 700 or greater.

• FastForward, No Ratio, NINA, and No Doc documentation types have been eliminated.

Maximum LTV/CLTV: For Alt A - Standard Products, the maximum LTV/CLTV is 95%. For the Lot loan program, the maximum LTV is 80%.

Minimum Decision Credit Score: A minimum Decision Credit Score of 640 is required, unless a higher score is specified in the applicable program limit table.

First Time Homebuyers:

• The maximum LTV/CLTV is 90%
• The minimum Decision Credit Score is 680
• Not eligible for Construction to Permanent loans or Lot loans

Pay Option ARM Products: The following products have been discontinued:

• 12 MAT
• 40 Year 12 MAT
• FlexPay 12 MAT 1 Year
• Flex Pay 3/1 LIBOR

The Flex Pay 5/1 & 7/1 LIBOR products remain available.

For further questions, please contact your Indymac Bank sales representative