HousingPANIC Quote of the Day

"This will go down as one of the biggest financial illusions the world has EVER seen"

- Randall W. Forsyth, writing in Barron's - Aug 2007


For you wonks, here's a bit more from the Barron's piece, care of WC:

How did this all come about? A (bearish) hedge-fund operator, in a letter to his investors, describes how a senior Wall Street marketing director recounted the genesis of the current situation:

"'Real money' (U.S. insurance companies, pension funds, etc.) accounts had stopped purchasing mezzanine tranches of U.S. subprime debt in late 2003 and [Wall Street] needed a mechanism that could enable them to 'mark up' these loans, package them opaquely, and EXPORT THE NEWLY PACKAGED RISK TO UNWITTING BUYERS IN ASIA AND CENTRAL EUROPE!!!!

"He told me with a straight face that these CDOs were the only way to get rid of the riskiest tranches of subprime debt. Interestingly enough, these buyers (mainland Chinese banks, the Chinese Government, Taiwanese banks, Korean banks, German banks, French banks, U.K. banks) possess the 'excess' pools of liquidity around the globe. These pools are basically derived from two sources: 1) massive trade surpluses with the U.S. in U.S. dollars, 2) petrodollar recyclers. These two pools of excess capital are U.S. dollar-denominated and have had a virtually insatiable demand for U.S. dollar-denominated debt... until now."

These investors then had standing orders on Wall Street desks for any U.S. debt rated triple-A. Through the "alchemy of CDOs" and "the help of the ratings agencies," the CDO managers collected triple-B and triple-B-minus subprime and repackaged them so the top tier got paid out first. Then leverage the lower mezzanine tranches by 10-20 times and, "POOF... you magically have 80% of the structure rated 'AAA' by the ratings agencies, despite the underlying collateral being a collection of BBB and BBB- rated assets."

The letter concludes: "This will go down as one of the biggest financial illusions the world has EVER seen."

I can't believe what I'm seeing. Here's your chance HP'ers to own a "Countrywide Owned Property". COP. Wow.

I'm truly amazed and that doesn't happen much. "Countrywide Owned Property". Is that like "Lexus Pre-Owned". A badge of distinction? A mark of quality?

Oooh, nice home Bob. Is this a 'Countrywide Owned"? Very nice!!!

Here's Countrywide's website where they list all the homes where the owners simply walked away and gave Countrywide back the keys, and Countrywide couldn't pawn the stench off to your pension fund or China.

Take it for a run, and let me know what you think. And to think, we're just getting started. And yes, Desperate Homedebtors who want to sell aren't just competing with the desperate homebuilders (who dropped prices at least 10% last month in their firesale). They're competing against the lenders who just want the dead wood off their books.

I've linked to the Arizona page, and it's amazing to see the number of homes $500,000+.

Nice move Orange Angelo cashing out those hundreds of millions of $$$ of CFC stock. Nice f*cking move Angelo.

Looking for a bargain on a home?A Countrywide owned property (lender-owned), also sometimes referred to as a REO (real estate owned) home or property is often a way to get a good deal on a home or an investment property. You can use the tool below to search for Countrywide owned properties in your area.