Getting ugly out there now...
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October 12, 2007
BUBBLETALK - Open thread to talk about the housing collapse, dollar downfall and mortgage meltdown
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«Oldest ‹Older 201 – 379 of 379More Central Banks Ditch the US Dollar
Qatar announced today that their government backed Investment Authority only holds 40 percent of its investments in US dollars down from 99 percent two years ago.
Vietnam also announced that they will be ending their purchases of US dollars.
Although they only have $40 billion worth of reserves, their action raises fears that other Asian central banks like China, Korea, Taiwan or Singapore could follow suit.
http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/More_Central_Banks_Ditch_the_1191532453356.html
IMM specs extend bets against US dollar-CFTC
Currency speculators increased
positions against the U.S. dollar to the biggest of the year for the second straight week, data from the Commodity Futures Trading Commission showed on Friday.
The value of International Monetary Market speculators' net short dollar position rose to $28.46 billion in the week to Oct. 2. That broke the previous high for the year -- $27.53 billion recorded the prior week.
The aggregate dollar position is derived from the net positions of International Monetary Market speculators in yen, euro, British pound, Swiss franc, Canadian and Australian dollars.
http://about.reuters.com/dynamic/
countrypages/mexico/
1191614063nN05470623.ASP
Merrill Lynch & Co.'s announcement Friday that it would take a $5.5 billion hit to third-quarter earnings is exposing the weak oversight exercised by top Merrill executives as it became a big force in the mortgage-securities business.
Wall Street has been reeling from the recent credit crunch tied to questionable home mortgages, with several companies taking multibillion-dollar write-downs. But Merrill is taking the biggest charge and is the only major U.S. firm so far that has said it will report a loss for the third quarter.
The announcement gave a boost to Merrill's shares, which rose $1.89, or 2.5%, to $76.67 in 4 p.m. trading Friday on the New York Stock Exchange. That reflected investors' relief that Merrill is trying to put the problems behind it.
http://online.wsj.com/
article/SB119158978516350109.html
Countrywide...we must protect this house!
http://www.youtube.com/watch?v=32ZLYQqnhzs
@ Keith,
You got a mention on MarketTicker yesterday. Nice Rant really.
snip:
Guys, facts are facts. We've had double-digit inflation in food and energy for the last five years. For those in the middle class this is the real deal and yet it is totally unreported.
What did it drive? It drove consumers to take "home equity" out and spend it to "make up the difference" and keep their lifestyles growing - or just going. That wasn't reported as what it was - blatant fraud and deception - either. Nor was the fact that you can't support home prices at 5x annual incomes, on average, for long - eventually you reach a tipping point where it all comes apart. We are now there and yet there is NOT ONE major media outlet that has HONESTLY reported on any of this.
NOT ONE.
You've heard it here, you've heard it on Housing Panic and a few other sites, but you haven't heard it on CNBullshit, in The Wall Street Journal, The New York Post or anywhere else in the mainstream media.
NOR WILL YOU BECAUSE IF THEY PRINT THAT ALL OF THEIR REAL ESTATE AND MORTGAGE COMPANY ADVERTISING WILL DISAPPEAR OVERNIGHT AND THEY KNOW IT.
URL:
http://tinyurl.com/25tbg2
OR
http://market-ticker.denninger.net/2007/10/finality-
friday-parabolic-blow-off.html
If Act I is credit crunch and Act II is falling house price, what is Act III?
http://www.rockymountainnews.com/
drmn/money/article/
0,2777,DRMN_23908_5713065,00.html
Greenspan defends subprime market
Former Federal Reserve chairman Alan Greenspan defended the U.S. subprime mortgage market, arguing the repackaging and sale to investors of risky home loans - not the loans themselves - was to blame for the current global credit crisis.
Greenspan warned that the long-term effects on the economy are still being determined, but said some early signs point to an easing in the crisis.
"For example, the yields on what has been the poster child of this crisis, asset-backed commercial paper, have jumped up sharply," he said. "It has since come down, but not all the way."
Similarly, the interbank lending rate, which jumped in recent weeks amid fears about insolvencies, has started to come down, but "not all the way," Greenspan said Monday at a public talk in London to promote his new book.
"We are not through with this yet," he added, suggesting an "Act II," in which falling house prices feed into slower consumer spending.
Big Japanese company start buying unhedged Euro bonds due to weak US Dollar.
Also, they will stop buy US Bond
http://news.webindia123.com/
news/articles/Asia/20071005/
785312.html
Japan's Fukoku Mutual Life Insurance Co. said on Friday it had actively bought unhedged euro bonds in the past six months and was likely to buy more euro debt in the second half of the business year that started earlier this week.
The nation's ninth-largest life insurer by assets, which manages about 5.8 trillion yen ($50 billion) of assets on behalf of policy holders, said in an interview with Reuters that the insurer is attracted to euro debt as it expects both the European single currency and euro zone interest rates to climb.
''What we want to buy is euro-denominated assets if the gap between Japanese and overseas interest rates remains wide,'' said Yuuki Sakurai, Fukoku's general manager of financial and investment planning.
''We also believe the dollar is likely to fall, while the euro is expected to rise,'' Sakurai said.
Fukoku is less bullish about dollar bonds as it expects the U.S. subprime problems to linger, keeping the U.S. economy under pressure and the dollar on a downward trend, Sakurai said.
As part of this move, Fukoku is likely to buy more euro, Australian dollar and Canadian dollar-denominated bonds, while it will shed dollar bonds, Sakurai said.
''We don't want to increase dollar bonds, with the economy unlikely to pick up much and the dollar's status as the key currency slipping,'' said Sakurai.
The talking heads on TV get it wrong because they are thinking about the housing mess in the wrong way:
http://economicdisconnect.blogspot.com/2007/10/saturday-disconnect-on-tv.html
holy crap!!!!
you gotta watch "please sell my house" on TLC.
chock fool of retard FBs.
it's better than porn.
oops. it's called "please buy my house".
one of the FBs just hired a spirtual decorator.
I wonder if "realtor" will be a popular Halloween costume this year?
-4,000 new jobs.
Opps! I'm sorry, I meant 110,000 new jobs!
See, my secretary just started with me last week, after she was in training under the bush administration staff. She said her job data typo was due to a new set of eye glasses - that seem to be blurry, but has ordered a new pair.
OK: lets see:
- 4,000
110,000
yup, they look the same if you squint your eyes a little.
Here is a lesson on inflation for all you 1/2 Mule-1/2 Horses....
Let's see, supposedly health care is rising out of control.
Coulda fooled me, I moved from one state where a dental exam was $50 to another where it's $38. Hmmmm...
My prescription is $4.00, hmmmmm. No change whatsoever in my plan at work in 10yrs. If anything it's gotten superior. Still no cost to me. Inflation impact? 0.00%
Ok, gas went up a bit, maybe 30% in 5 yrs, but it's still way lower than the rest of the world, and isn't hurting at all, hmmmmm.
I'm sorry, though, for the thousands of red blooded Americans who had to die for it.
(I know you jackasses can come up with 1 or 2 examples of some sorry ass, lazy ass American whose life is imperiled by the higher gas prices)
Let's see, computers, cell phones, i-Pods, and anything integrated circuit-wise prices are always the fastest declining, hands down, hmmmm. (for mule brains, think pound for pound or apples to apples) e.g. You would never ever hold on to a memory chip, hoping to flip it for a profit.....
Hmmmmm...
Oh BTW, nearly all the capital equipment used to make integrated circuits is MADE IN THE USA and Japan. But that is WAY over your 1/2 Mule-1/2 Horse brains....
OK, what about clothes? A pair of 501 Levi's costs $30. A decent shirt, $20.00 Hmmmm
Housing? Look at rent folks. Last state I left, one of the most desireable right now. Rents have gone up maybe 15% in 7 yrs. Hmmmmm.....
I won't even go into all the cheap Chinese crap you all love so much and want to keep cheap via Ben Bernanke's support of the US $$.
And that's the equation folks, higher costs in one area are vastly compensated for in other areas.
Conclusion, inflation only resides in your 1/2 Mule-1/2 Horse brains.....
JACKASSES!
President Bush is backed into a corner. He can not raise tax to balance the US budget so he must weaken the US Dollar.
EU is also backed into a corner. Either ECB lower interest to strength the US Dollar to the Euro or raise tariff on imported goods to bring back profitability.
Either way EU and US consumers will have to pay.
http://www.azerbaijannews.net/
story/288539
Eureopean exporters up in arms over rise of euro
The euro has traded at record levels these past weeks as the U.S. dollar has continued a multi-year decline.
Now exporters across the 13 European countries that have adopted the euro are seeing profits slashed by the runaway euro, which is pricing their goods and services higher and higher.
Trichet was also concerned at the rapid rise in the euro saying, "We consider excessive volatility very counter-productive from the standpoint of growth."
Europe is preparing to pressure the G-7 when their finance ministers meet later this month.
Call it easy money as excess global liquidity is fed by yen carry trade.
With the Federal Reserve lost of control to curb speculation, the path of less resistance is GREED.
Speculators and hedge funds tested the water and proved that Ben Bernanke is a dove.
http://www.washingtonpost.com/
wp-dyn/content/article/2007/10/
06/AR2007100600116.html?hpid=
moreheadlines
Stocks Are on the Rise Even as the Economy Loses Steam
The economy is slowing, the dollar is falling. Wall Street is laying off workers. Defaults by homeowners are rising. Corporate buyouts have lost momentum.
But none of it has rattled stock market investors. Just weeks after the shock of the summer credit squeeze, they are shaking off one bad report after another, sending shares ever higher.
Did the US Dollar continue to fall after the non-farm payroll report because investors knew Fed will lower interest rate again or is it because the fed made a mistake by lowering interest rate by half percent based on a false report.
Everyone know that unless interest rate returns back to 5.25% the US Dollar will continue to fall.
If the Fed lower interest rate based on a false report then the US Dollar index has allot further to fall at 4.75%.
http://www.prisonplanet.com/
articles/october2007/
061007Dollar.htm
The dollar fell on Friday as a solid U.S. employment report was not enough to convince investors the U.S. economy is growing fast enough to keep the Federal Reserve from cutting interest rates again.
The greenback rose sharply after the data showed September U.S. jobs growth of 110,000, the highest since May, and upwardly revised numbers for August and July, but the rally petered out ahead of the long Columbus Day holiday weekend.
"Even if you get some better news in terms of the employment report balancing out some of the doomsday scenarios for the U.S. economy, we still have a situation in which the Fed has eased and will likely ease further because of the risks to growth, while other central banks are on hold or tightening policy," said Sophia Drossos, currency strategist with Morgan Stanley in New York.
Auction can turn out to be a bad thing for the inexperience home buyers.
Sometimes would be buyers are competing with straw buyers who bid up the price of the foreclosure homes to create a sense of euphoria.
Some of these straw buyers work for the mortgage lenders who has a interest in getting the most out of the auction while other work for the auctioneer.
Remember the housing cycle is broken into three stages:
1) Recovery
2) Boom
3) Slump
In each stages there are three phases.
The phases of each stage is determined by the 7 housing trend.
There are three national trends and four local trends.
The national trends are:
1) Interest Rate
2) Inflation
3) Flow of Funds
The Local trends are:
1) New Constructions
2) Job growth
3) Migration
4) Path of Progress
Next time you go to a Auction remember there are no deals in the first phase of the housing slump.
In the second phase of the housing slump many homes in Auction go back to the mortgage lenders who then realize it was not that smart to use the straw buyers
Normally in the third phase of the housing slump you get the best deals, but by then house price in your local would fall so much that most would be buyers would sit in the auction and not bid unless the house was way under market valve.
http://abclocal.go.com/kgo/
story?section=business&id=5694491
Hundreds of would-be home buyers showed up at a property foreclosure auction hoping to get a good deal.
Nearly 200 homes went up on the auction block.
More than 2,500 shoppers studied their pamphlets, trying to follow the auctioneer's rapid discourse.
The anxiety was heightened by buyers waiting outside, waiting to take anyone's place.
Renita Mason wants to buy a home. She and her husband brought the requisite $5,000 cashiers check.
"At an auction, you figure the price is going to be lower. You have an opportunity to go in here because the bids are starting so low. But then when he starts, the bids jump up so fast," said Mason.
Within 13 seconds, the price on a $1 million home jumped $50,000.
30 seconds later, it jumped another $100,000.
"You hear him go over your range within minutes, you're like 'okay, why am I here?' Because there were no deals," said Kevin Tapscott, prospective buyer.
If you are a saver, start putting your money in a good bank.
It is no longer subprime mortgage lenders going out of business this time it is banks.
http://www.larouchepac.com/news/
2007/10/05/second-u-s-bank-
failure-one-week.html
Second U.S. Bank Failure in One Week
Less than a week after the failure of NetBank, Federal regulators announced the closure of a second bank: Miami Valley Bank of Ohio, with $86.7 million in assets. The bank's uninsured deposits, those in excess of $100,000 per depositor, amount to $14 million. These deposits will only be made good to the extent that Federal Deposit Insurance Corp. (FDIC) can sell Miami Valley Bank assets to cover them.
Miami Valley was a very small bank specializing in residential mortgage lending, reports thestreet.com. Its nonperforming assets were about 3% of total assets on Dec. 31, 2006, but rose to about 13% by the end of March, 2007. It lost $6 million in the first quarter and another $5 million in the second quarter.
So much for the argument of Daniel Reisteter that chartered and regulated banks are not vulnerable in the present systemic financial collapse.
Can a big bank like Washington Mutual fail?
http://seattletimes.nwsource.com/
html/businesstechnology/
2003928956_wamu06.html
WaMu forecasts big drop in profit
The other shoe dropped Friday for Washington Mutual, as the giant Seattle-based thrift said the collapsed housing and mortgage markets will lead to a 75 percent drop in third-quarter profit.
Most of the impact will come from the roughly $975 million WaMu will set aside to cover bad loans — the biggest such step in the company's history — and another $410 million in write downs because its portfolio of mortgage-backed securities and other assets has lost value.
In the third quarter of 2006, WaMu reported a net profit of $748 million, meaning this year's third-quarter profit likely will drop to around $187 million.
It all about CREDIT WORTHINESS, and with the Bernanke's Put how could there be any.
http://www.nypost.com/seven/
10062007/business/
freeze_is_on_at_giant_
mortgage.htm
FREEZE IS ON AT GIANT MORTGAGE HEDGE FUND
Ellington Capital Management, the country's largest mortgage-backed securities hedge fund, sent a letter to investors notifying them that redemptions and withdrawals in two of its funds would be suspended because of a sharp decline in the liquidity of certain mortgage- and asset-backed markets.
The Old Greenwich, Conn.-based hedge fund, which has $5.2 billion in assets, is considered a bellwether for measuring the health of the mortgage-backed securities market.
The fund's redemption suspension covered two mortgage-credit funds with about $1.9 billion in assets between them, according to the investor letter from Michael Vranos, the fund's general partner.
According to the letter, which was obtained by The Post, Ellington's move came after liquidity and value data provided by Wall Street's mortgage-bond desks at the end of September for the bonds in the portfolios varied so widely that Vranos and his colleagues could not assign a fair value to them.
If UBS underestimated something as simple as the principle that giving allot of people money who did not qualify a loan will turn into a crisis, it kind of make you wonder about the level of competency in their hedging strategies.
http://www.chinapost.com.tw/
international/2007/10/07/
125610/UBS%2Dsays.htm
UBS says it underestimated U.S. subprime crisis.
The head of UBS publicly admitted Saturday that the giant Swiss bank had underestimated the crisis in the U.S. subprime home loans credit market, and that several top executives paid for that mistake with their jobs.
Marcel Ospel, UBS president, told the Neue Zuercher Zeitung newspaper the bank had over-invested in subprime-related instruments, even though he stressed its size and other activities would help it pull through.
"We poorly evaluated the impact of changing interest rates" in the United States which triggered the problems in that country's mortgage sector, he said.
DRCM had racked up 380 million Swiss francs (230 million euros, US$325 million) in losses in the U.S. high risk, or subprime, mortgage market before then, making it one of the early victims of the ongoing meltdown.
UBS announced last Monday that it had taken a hit of 4.0 billion Swiss francs (US$3.4 billion, 2.4 billion euros) from its worthless subprime investments.
Seattle-PI.com --Seattle home prices slip from last year
The median price of homes in Seattle dropped last month from a year earlier for the first time since at least 2002, according to statistics released Friday by the Northwest Multiple Listing Service.
The numbers reveal declining appreciation, many more homes for sale and fewer buyers, and they raise questions about what the future might bring. September's median price was down 8.9 percent from August. There were 50 percent more homes on the market in September and 17 percent fewer sales than a year earlier. Pending sales, which can be a better indicator of recent activity, decreased 21 percent.
@ dumb amunals,
I like your anecdotal stories about your personal situation, keep them coming, please.
It is only a mild recession when your neighbors are struggling, and a full on depression when it affects you. Me, I am okay, but here are my realities for you to noodle on.
My Home Insurance: triple in 7 years.
My car insurance: quadruple in 4 years.
My Home State Taxes: from a 2 br 1 ba $700.00 year in 05, to a 1 br 1 ba $1850.00 year in 06, more than double in 2 years (both homesteads).
housing prices; double in 3 years
My cable bill: triple in 7 years
My HOA Fees: double in 1 year.
Medical insurance: 0
dental/eye insurance: 0
Mortgage paid in devalued dollars is hopefully going to balance things out.
signed,
working jackass single mom
Oh my... its going to be just awful for stocks when this tri-fecta of bad news hits the street tomorrow.
Prepare yourselves for a crash landing.
http://www.usatoday.com/money/economy/housing/2007-10-07-leaving-homes_N.htm
Behold I give you Pheonix the Bubble Born Love Child of Suzanne & Greg Swann
Enjoy!!
WAMU is imposing new rules when working with brokers....
http://www.signonsandiego.com/uniontrib/20071007/news_1h07wamu.html
High end furniture mart suffering from the fallout in the housing market...
http://www.fayobserver.com/article_ap?id=111650
Anonymous said...
"The housing collapse isn't affecting all cities, luckily. I live in Charlotte..."
I'll give you the benefit of the doubt and assume you are not a realtor troll. You are sitting on the railroad tracks in denial. If you own property - SELL IT WHILE YOU CAN and DON'T BUY IT IF YOU'RE PLANNING TO. IGNORE THIS WARNING AT YOUR OWN PERIL!!
S&L ghosts hover over housing
Lately I've been getting that déjà vu feeling.
If you lived in Texas through the savings-and-loan debacle of the late 1980s, you probably have been, too.
If you didn't, listen up. What happened to houses in Texas back then may be the template for what happens across the country as the housing bubble pops today.
Many of the circumstances are similar. Consider this list:
A boom environment: Back then, Texas had been in a long building boom fueled by rising oil prices. Housing prices had risen nicely for years. Many Texans who had started with next to nothing were enjoying a new feeling of wealth as they moved from one appreciating house to another.
Today, home prices across the country have been rising handsomely for years, creating unexpected wealth for millions of homeowners.
Finance frenzy: Back then, the savings and loans were encouraged by changed accounting rules to make big development loans, booking unearned profit.
Today,Wall Street has built the perfect pipeline of profit from lending money to selling securitized loans to European and Asian bag holders. In both cases, someone else would pay the price for bad loans – the FDIC then, and investors today.
Down payments: Back then, Texas homebuyers were advised to put as little down as possible because Texas laws prohibited borrowing equity out of your house. As a result, many put only 5 percent down – an amount that would be wiped out by selling costs.
Today, we've been through a long period of lax financing. The Nitwit Sector (my name for lenders) has rushed to provide 100 percent financing to people with no history of debt repayment.
Low interest rates: Back then, builders marketed houses by "buying down" mortgage interest rates for a year or two. After that, the interest rate and monthly payment rose. Many saw their payments rise as the value of their houses fell.
Today, adjustable loans start with "teaser" rates that reset much higher in a year or two. New owners are seeing their payments rise as their home values fall.
Employment: Back then, construction employment loomed large in Texas. So did employment in finance and banking.
Today, construction workers are leaving Florida and other boom areas because construction is coming to a halt. Mortgage brokers are losing their jobs across the country.
http://www.dallasnews.com/
sharedcontent/dws/bus/scottburns/
columns/2007/stories/
DN-burns_07bus.ART.State.
Edition1.35ad6e3.html
When the end of the Cold War reduced defense spending in the early 1990s, Southern California's aerospace industry, which had profited handsomely from the nearly half- century-long arms race, was hit hard, with hundreds of thousands of high-paying jobs evaporating.
A decade later, the dot-com bubble burst and once again it was California, especially the San Francisco Bay Area, that took the brunt as countless technology firms went under and billions in paper wealth vaporized.
Bill Watkins, who runs UC Santa Barbara's Economic Forecast Project, puts it this way: "California is always on the bleeding edge." He and other economists are now wondering whether the implosion of the housing industry, another economic tsunami in California, will have a similar impact.
Three-fourths of the nation's foreclosure actions filed by lenders in August were in California, and the state has accounted for 40 percent of the nation's decline in home sales since 2005. California, moreover, is the home of big-scale lenders, such as Countrywide, whose subprime mortgages have backfired.
The Department of Finance, meanwhile, says in its most recent bulletin that "economic indicators were disappointing in July, a reflection of the worsening of the housing sector downturn. Payroll employment dropped, the state's unemployment rate rose slightly, existing home sales slowed, and residential construction remained sluggish."
So there we have it -- a slowdown of uncertain dimensions but stopping short of a genuine recession, coupled with what Watkins calls "a ton of uncertainty." And, not surprisingly, it's filtering into voters' consciousnesses, as a recent poll by the Public Policy Institute of California indicates.
"A dark mood is settling over the golden state as pessimism about California's economic conditions hits its highest point since 2003," PPIC says in its analysis. "Housing woes and the spectacle of this summer's budget battle are taking their toll on residents' economic outlook -- and affecting everything from trust in government to approval ratings of state and federal leaders."
The slowdown and the public's darkening mood about it have potentially major impacts on political policy. Even a modest slump could have devastating impacts on a state budget that's already running big deficits, and voters may be less likely to approve the financial issues that Gov. Arnold Schwarzenegger and lawmakers want to place on next year's ballot -- including taxes for expanding health care and perhaps education and water and other infrastructure bonds.
http://www.sacbee.com/111/
story/418924.html
Is exotic credit derivatives the next crisis to hit Wall Street?
Do you have a problem understanding how a $100 mortgage can turn into a combined price of $106 with many very creative and exotic products derived from the original $100 in the alchemy process.
http://seekingalpha.com/article/
48975-the-subprime-crisis-has-
quieted-but-hasn-t-gone-away?
source=feed
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, with no clearinghouse to guarantee anything.
By the magic of the structured product groups at Wall St. banks, a large pool of various mortgages are sliced and diced thousands of ways into things such as principal only (POs), interest only (IOs), various tranches by the timing of payments, stripping embedded options to be sold separately. This creates exotic credit derivatives out of nowhere, combined with hard sales pitch to yield hungry financial institutions and funds for their portfolio.
In this financial alchemy process, suddenly the $100 original and simple product turns into many exotic derivative products with a combined price of $106.
Wall St. banks are happy to take a 3% cut ($3) for their commission, bonus and profit due to this "creativity", and the institutions are eager to wait in line to purchase these "higher value" derivative products with seemingly higher yields without thinking about associated higher risk on their cashflows.
Quite the opposite - many of them take even more risk to leverage by borrowing commercial paper to turn a 2-3% spread into a double digit "gain".
Reserve Bank of Australia will likely hike Interest Rate
http://www.theaustralian.news.com
.au/story/0,25197,22546960-643,
00.html
Economists believe positive US news gives the Reserve Bank of Australia greater scope to put the cash rate up to 6.75 per cent in November, despite the global credit markets remaining tight.
It was the first time the Australian dollar had been through that mark since 1984, the year after the domestic currency was floated.
"The Australian dollar was the chief beneficiary of the broad-based sell-off in the US dollar as market reaction to the non-farm payroll data quickly changed," BNP Paribas's foreign exchange dealing desk said.
The US dollar weakened despite the positive economic news and was hammered by news that Fukoko Life, Japan's ninth-largest life insurer, said it was now less bullish on US dollar bonds.
Liquidity, Liquidity, Liquidity
where to put all that liquidity.
The US could use some of those petrodollar. Remember the 70's
http://www.arabnews.com/
?page=6§ion=0&article=
102122&d=6&m=10&y=2007
&pix=business.jpg&category=
Business
Global banking major Credit Suisse warns in its latest research paper on the GCC currencies published last week that “the credibility of the Saudi peg (to the US dollar) is clearly undermined” given the recent volatility of the greenback, and that the pure US dollar peg for GCC currencies is “not a sure thing anymore.”
Further weakening of the US dollar and cuts by the Federal Reserve (Fed) of US interest rates, adds the Swiss bank, have increased the “probability of a revaluation of GCC currencies”.
There is no doubt that domestic GCC macroeconomic conditions are putting strong additional pressure on inflation, beyond imported inflation. Huge spending on expansive infrastructure projects and the limited ability of the GCC economies to absorb the huge liquidity in the region “by means of restrictive monetary policies due to the US dollar peg”, according to Credit Suisse, are the major reasons for rising inflation in the GCC.
At end 2006, average inflation for the six GCC countries (Saudi Arabia, Kuwait, Qatar, UAE, Oman, and Bahrain) amounted to 6 percent - up from below 2 percent at end 2003. The UAE and Qatar are the worst affected. Because supply cannot keep up with demand in the expansive economy, the resultant bottlenecks in supply further fuel inflation.
Despite the suggestion by SAMA Governor Hamad Al-Sayari that inflationary pressures in the Kingdom is not caused by the burgeoning imports, which are all denominated in the US dollar because of the peg, analysts to the contrary reiterate that the US dollar peg does create additional inflationary pressure. For instance, the EU supplies the GCC with an important share of its imports. With the falling US dollar, these imports are becoming more expensive, thus fuelling inflation. As such, a currency revaluation, says Credit Suisse, “would help to contain imported inflation”.
More selloffs for Treasurys in coming sessions to allow the market to adjust to its new expectation.
Treasury prices and yield are opposite of each other. Price drop means rate increase.
http://www.forbes.com/feeds/ap/
2007/10/05/ap4192776.html
Treasury prices sold off sharply Friday after the government's September jobs creation report dimmed hopes for a rate cut later this month.
Investors were disappointed not only by the Labor Department's news of a gain of 110,000 jobs in September, but a revision to the department's report of a decline in jobs in August - instead of losing 4,000 jobs that month, the government now says the economy gained 89,000.
The department also said average hourly earnings rose 0.4 percent, putting year-over-year wage growth at 4.1 percent, a signal of higher inflation
Solid payroll growth and a reversal of the previous month's decline and rising wages may signal inflation risks to continue.
For the Fed, the September jobs report provides cover for the unchanged policy stance we expect at the Oct. 30-31 FOMC meeting.
And the hefty 0.4% September wage gain, and 4.3% year-over-year increase, will heighten concerns that Bernanke & Co. may have used too much policy firepower at the Sept. 18 meeting, as many inflation-wary Fed watchers, including ourselves, thought at the time.
http://www.businessweek.com/
investor/content/oct2007/
pi2007105_921337.htm?chan
=top+news_top+news+index_
businessweek+exclusives
US dollar falls may start deeper plunge
RECENT falls in the US dollar may be the beginning of a steeper plunge, research group Wise-owl.com has warned.
Wise-owl analyst Tim Morris said booming Middle Eastern states such as Saudi Arabia, the United Arab Emirates and Bahrain could "provide another devastating blow for the greenback".
These countries, along with Qatar and Oman, have their currency exchange rates fixed - or "pegged" - to the US dollar and are under increasing pressure to abandon these pegs.
"Their pegged currency regimes have provided a great deal of indirect support for the US dollar over the years, as it forces them to hold large US dollar reserves," he said.
Mr Morris said because exchange rates were pegged, these countries were usually forced to follow the US lead when it dropped interest rates, as it did last month because of the credit crunch and weakening economy.
"The last thing that these booming Arab economies need is an interest rate cut," he said.
"A reduction in borrowing costs would provide further unnecessary stimulation to their economies, potentially igniting inflation.
"Abandoning the US dollar peg is one of the few available means of dealing with these pressures, meaning the Arabian support pillar currently under the US dollar could be in jeopardy."
Kuwait and Syria have already abandoned their US dollar currency pegs this year.
"The downside risks to the US dollar are likely to keep on building as the pressure on Arabian central banks heats up and their patience towards the greenback continues to wane," Mr Morris said.
http://www.news.com.au/business/
story/0,23636,22545872-462,00.html
Parallels between a great boxing match and the US economy:
http://economicdisconnect.blogspot.com/2007/10/week-ahead.html
Does oversea investors feel deceive by false US August non-farm payroll report.
Was it not the smoking gun that the Federal Reserve used to lower interest rate.
With Reserve Bank of Australia more likely to hike interest rate, bond investors will more likely temporary pull money out of US Treasury and wait for the yield to raise before going back in.
In the mean time bond investors will more likely park their money in the Australian and New Zealand treasury bond.
http://www.bloomberg.com/
apps/news?pid=20601081&sid=
alGJv2EYg4KU&refer=australia
Australian and N.Z. Dollars Gain on Demand for Nations' Bonds
The Australian and New Zealand dollars climbed after reports suggested U.S. economic growth will slow, widening the yield advantage held by bonds in the Southern hemisphere nations.
The currencies are the best performers among their 16 most- actively traded counterparts in the past month after the Federal Reserve cut its benchmark rate on Sept. 18. Traders raised bets the Reserve Bank of Australia will increase rates next month on speculation a report on Oct. 24 will show inflation is accelerating, after retail sales figures were stronger than expected this week.
``The yield differentials are certainly not going to narrow and are likely to widen in the future, so the Australian and New Zealand dollars will hold up,'' said Jim Vrondas, manager of corporate business at OzForex Ltd., an online foreign-exchange dealing firm in Sydney.
http://www.news.com.au/heraldsun/
story/0,21985,22548334-5005961,
00.html
Australian dollar hits 23 year-high
The Aussie climbed to US90.06c in overnight trade - its highest level since June 12, 1984 - amid further weakness in the US dollar.
When the Australian foreign exchange market opened formally this morning, the Australian dollar was at US89.93c.
Bank of New Zealand currency strategist Danica Hampton said the Australian dollar had been buoyed by a surge in risk appetite following the release of a report in the US on Friday that suggested the US economic was in better shape than previously thought.
In the end it is all about responsible lending practices and CREDIT WORTHINESS.
With thousands walking away do lenders really have the resource to go after all of those borrowers who have the mean but just walk away?
The more resource lenders use up the more bond investors lose, but still getting back ten cent to the dollar is better then losing everything.
http://www.heraldtribune.com/
article/20071007/REALESTATE/
710071064/1443/BUSINESS16
Lenders giving no slack to deadbeats, but are helping others
Lenders, loan servicers and mortgage investors are going to unprecedented lengths to help deserving borrowers avoid falling behind on their payments and possibly losing their homes. Believe it or not, nobody wins when a house has to be repossessed -- not the borrower, not the community where the borrower lives, not even the lender.
But when it comes to those who can pay but won't, or investors who gambled on ever-rising housing values but came up snake eyes, the gloves are coming off. They will be going after you, and they'll be going after you hard.
They want it known that they are not going after the true hardship cases -- people who are in deep financial trouble because of lost jobs or major debilitating illnesses. They also are not chasing down those who cry foul, maintaining they were misled into taking out high-cost or dangerous mortgages.
But they are coming down hard on the "walkaways," borrowers who have the resources to pay their loans but choose not to, usually because their houses are no longer worth as much as what's owed on them.
"These people always thought they could just walk away," one loss-mitigation specialist told me not too long ago. "But if they have the financial wherewithal, we're going after them. They need to understand there are other consequences behind losing their properties."
REO Horror Story
When an upscale, stone mansion showed up on John Coppola's REO listing sheet, the owner and broker of Century 21 Today in West Haven, Connecticut, could barely contain his excitement.
After all, the home had previously been listed at $1 million and now this turn-of-the-century mansion was in Coppola's hands. But, Coppola's excitement did not last.
“When I entered the home my jaw dropped,” he recalls almost two decades later. “A tornado had hit this area two years before. The rear slate roof had been ripped off the house and it had been exposed to New England weather for the past two years. Every piece of wood work was ruined, floors warped, and plaster walls and ceilings destroyed, this crown jewel was now a handy man special at best.”
Coppola, who thought he had struck gold—or REO heaven to be more exact—realized the best end of the deal was not in his favor. In fact, the home had lost most of its value.
“My million dollar listing did eventually sell for $125,000 as is, unfortunately due to the fact the bank only had a fire policy on the property not covering the damage,” Coppola concluded.
http://www.dsnews.com/
view_story.cfm?id=1615
Excess global liquidity means INFLATION, INFLATION, INFLATION.
The question is where will the flow of funds go.
The carry trade is back in vogue but is the U.S. economy really going to be fine.
Earning reports are coming out, so we will soon find out.
http://www.bloomberg.com/apps/
news?pid=20601087&sid=aJ_67RNps.
MQ&refer=home
Yen Falls as Gains in Stocks Spurs Confidence in Carry Trades
The yen fell to its lowest in two months against the euro as gains in stocks gave traders confidence to increase holdings of higher-yielding assets funded with money borrowed in Japan.
Fitch Downgrades 6 & Affirms 1 Class from 6 First Franklin NIM Deals
http://www.macroworldinvestor.com/m
/m.w?lp=GetStory&id=273978711
Home bidders line up
The allure of foreclosed homes brought another capacity crowd to Modesto Centre Plaza on Monday night. More than 40 homes were auctioned off in an event that drew several hundred bidders and spectators.
The convention center has been the site of several such auctions in recent months, as lenders try to unload properties from owners who could not make their mortgage payments. Monday's auction was conducted by Real Estate Disposition Corp., based in Irvine.
The homes were mainly in Stanislaus County, but some were as far away as Fresno and Tulare counties. The number of successful bids was not disclosed by the auction company.
http://www.modbee.com/business/
story/83242.html
Squatters Settle Into Foreclosed SJ Homes
On Thursday we visited a San Jose home that had recently been foreclosed on. After residents moved out, gangs moved in, taking over the vacant property.
Neighbor Diane Ludwig says she was scared, watching all the activity.
"Drinking, parties and other things. I don't want to mention too much," said Ludwig.
Graffiti covers one side of the house, and around the corner, bullet holes.
"What's so dangerous about this situation is the stray bullets can hit anyone, even a child," said Jamie Matthews, San Jose's code enforcement administrator.
San Jose code enforcement officers boarded up the home and put in a new gate last week after neighbors complained to police. But now, gang members have broken in again and sprayed more graffiti tags on top of the boarded up windows.
"The tags indicate people are still getting back here," said Matthews. "That's why it's critical that we know where these buildings are so we can monitor them on a weekly basis."
And at another foreclosed home we found more evidence of squatters-- two blankets. A window to a bedroom was shattered. Both homes are in east San Jose. That's the area with the most homes in various stages of foreclosure in the city. There are also high numbers of foreclosures in south San Jose and downtown.
Real estate agent Mark Detar of Intero thinks the squatter problem is only beginning.
"With an increase in foreclosures, you're going to see things like this," Detar said. "With a house being vacant, certain elements come into play."
In the past 6 months, San Jose has gotten 150 complaints about vacant properties, many of them foreclosures. Inspectors will first give the owners a chance to take care of any problems. But if they don't, the inspectors will take action.
"Board up the building, clean the property and lien the property so we can recover our costs," said Matthews.
http://cbs5.com/local/
local_story_277200618.html
Subprime Delinquencies Accelerating, Moody's Says
Subprime mortgage bonds created in the first half of 2007 contain loans that are going delinquent at the fastest rate ever, according to Moody's Investors Service.
The average rate of ``serious loan delinquencies'' in the securities has been higher than 2006 bonds, New York-based Moody's analysts Ariel Weil and Amita Shrivastava wrote in a report today. Serious loan delinquencies are those 60 days or more past due, including properties in foreclosure or already foreclosed upon.
``It is shocking what you see,'' said Kyle Bass of Hayman Advisors LP, a Dallas-based hedge fund that reported a 400 percent return on its bet the U.S. housing market would fall. ``Anything securitized in 2007 has got to have the worst collateral performance of any trust I've seen in my life.''
Moody's, Standard & Poor's and Fitch Ratings have been downgrading subprime securities issued in 2006 as defaults on the underlying loans rise to record highs. Fitch said yesterday it's now reviewing ratings on bonds created in 2007.
Moody's has cut ratings or placed on review 496 bonds backed by first mortgages issued last year, or 3 percent of such bonds created in 2006. Through Sept. 21, S&P had cut ratings on 433 securities from last year and backed by subprime loans, or 9.1 percent of the total. Fitch yesterday cut ratings on $18.4 billion of bonds backed by subprime loans.
http://www.bloomberg.com/apps/
news?pid=20601087&sid=aNeudd_
F0RGA&refer=home
Forecast dim for Las Vegas housing market
The prices of new and existing homes have been steadily dropping in Las Vegas since mid-2006 and likely will continue to plummet, according to several professional traders and national economists monitoring the valley's real estate market.
Futures contracts on the housing market that trade on the Chicago Mercantile Exchange indicate that Las Vegas, which saw for several years one of the nation's steepest housing price escalations, now is sliding toward the country's largest price decline.
Investors expect current prices to drop 5.6 percent by May, said Justin Walters, co-founder of Bespoke Investment Group LLC, a New York money management and research firm.
Some other housing analysts see the slump continuing well beyond spring, forecasting drops in Las Vegas home prices of much as 15 percent to 20 percent by 2010.
http://www.lasvegassun.com/sunbin/
stories/nevada/2007/oct/07/
100710276.html
Price drop as much as -43.2% in some area of Sacramento
http://www.dqnews.com/ZIPSACB.shtm
Linked to this in another thread, but here's a humor piece on open houses in the DC area.
Doors Wide Open (via WaPo http://tinyurl.com/2bfxen)
As a buyer's agent
As a buyer's agent, I personally love this market. It's easier to help buyers negotiate.
Wilmington NC Real Estate
Stock markets across Asia rallied Monday, tracking gains on Wall Street Friday after the September jobs report.
Benchmark indexes in South Korea, Australia, Singapore, Indonesia and the Philippines set records. Hong Kong and Chinese markets gained more than 2 percent, as investors on the mainland returned from a week-long holiday to catch up on a global rally.
http://www.sharewatch.com/
story.php?storynumber=46633
A RAMPANT Australian dollar is not all bad news for Australian exporters, with some likely to benefit from cheaper imports needed to produce their export goods.
The Australian dollar today surged to a 23-year high against the US dollar, punching through 90 US cents during overnight trade and holding its ground into the afternoon session.
http://www.news.com.au/mercury/
story/0,22884,22549736-462,00.
html?from=public_rss
Will Asians invests pull money out of US Treasury to put back into their own stock markets.
http://www.marketwatch.com/news/
story/china-may-launch-individual
-investment/story.aspx?guid=
%7BEE05E00E-BA99-47DF-876D-
6B99460B697C%7D
China may allow individual investors to directly invest in Hong Kong-listed shares through designated banks in Tianjin, Shanghai and Shenzhen this month, the Apple Daily reported Monday, citing an unnamed source.
The source said Bank of China Ltd. (3988.HK), Industrial & Commercial Bank of China Ltd. (1398.HK) and China Construction Bank Corp. (0939.HK) will be the designated banks for the investments.
The Chinese-language newspaper cited the source as saying regulators had reached consensus on the plan and the three designated banks are ready.
It said all that remained for the plan to proceed was an announcement by the State Council, the Cabinet.
at a dollar for a concrete block that 400,000 the builder is saying is construction costs could stretch for miles as building, and as the average house does not stretch for miles///someones getting hosed.....
if a mile is 5200 feet apx and the building is 5200 by 30...
Just when analyst said the bubble has burst for the Hang Seng Index the Index surged today climbing back towards Wednesday high.
Is it too soon to call a top to the Hang Seng Index.
http://finance.yahoo.com/q/bc?s
=%5EHSI&t=5d&l=on&z=m&q=l&c=
With Excess Global Liquidity coming from Yen Carry Trade "flow of funds" has to go somewhere.
If the liquidity is not going to be used to fund risky subprime loans in the US then where can it go.
The NIKKEI took a dummy crash in October 19, 1987 then continue to climb until the index topped out at 39,915 on December 29, 1989, can Hang Seng continue to climb.
If not the Hang Seng Index, how about the BSE SENSEX.
When financial bubble deflate in one area it has to go to another area unless the source of the bubble stop to exist. Currently the source of the bubble is still Yen Carry Trade.
http://www.nasdaq.com/aspxcontent/
NewsStory.aspx?cpath=
20071004%5cACQRTT200710042112
RTTRADERUSEQUITY_1126.htm&
For most of September, investors wonder how high Hong Kong's Hang Seng Index would go. Now in October, they're wondering how far it will fall.
For the second straight day, shares in the Hong Kong index declined after setting record highs in seven of the previous eight market days. The market touched an all-time high of 28,256.80 on Tuesday but has fallen more than 1,200 points as investors have chosen to lock in profits. And analysts point to further consolidation.
The global credit squeeze is a "serious crisis" that is not over yet and will have an impact on governments' budgets, the IMF's outgoing head Rodrigo Rato said in an interview published Monday.
Speaking to the Financial Times from Washington, IMF Managing Director Rato said: "Policymakers should not think that the problems will stay at the desk of the bankers."
"Problems are going to come to the real sector, come to the budgets -- that is something we keep telling people."
Rato said that it would be "a few months, probably into next year" before the availability of funds returned to normal levels in the markets, which was "going to have an impact on growth."
Rato added that the credit crunch, sparked earlier this year by concern in the financial markets over high-risk or subprime mortgages in the United States, was "not a storm in a teacup."
"The U.S. is going to slow down ... Growth in Europe looks less strong than before, and in Japan too -- though Japan will probably stay (at about) potential," said Rato, who will be succeeded as IMF chief by former French finance minister Dominique Strauss-Kahn at the end of the month.
http://news.xinhuanet.com/english/
2007-10/08/content_6845175.htm
Federal Trade Commission going after the mortgage lenders
http://www.brandweek.com/bw/
magazine/features/
article_display.jsp?vnu_content_id
=1003654782
A Clear Picture Of Deceit
In light of what many have termed America's subprime mortgage crisis, the Federal Trade Commission has been keeping a close eye on mortgage companies' advertising and marketing campaigns. Last month the FTC decided it had seen enough, and
warned more than 200 lenders about "potentially deceptive" mortgage advertisements that may give borrowers false impressions surrounding the cost of home loans. During a recent Morning Edition spot on National Public Radio, business reporter Jim Zarroli noted that over the past decade, the FTC has brought 21 actions against companies in the mortgage-lending industry, particularly in the subprime market. Several of these cases have resulted in large payouts from mortgage lenders, with courts collectively leveling more than $320 million in fines.
Today's mortgage lenders—subprime or not—that want to avoid heat (to say nothing of fines) from the FTC should rethink their marketing materials so that the imagery speaks to the appropriate target audiences. Not only is the FTC watching, but consumers are too, and if your imagery is not doing the work of speaking your brand message, you're making foes of both of them.
This article about Argentina's economic collapse, very chilling to read what happened to their middle class.
http://www.washingtonpost.com/wp-dyn/articles/A47822-2002Aug5.html
In the past month or so 2 friends have bought houses and a 3rd bought land on on a lake where he is going to build a custom vacation home.
Attitude of all 3 were along the lines of "housing crash? never heard of it". And I can't really blame them, homes are selling in these parts and for the same price they were selling 12-18 months ago.
Let's see, supposedly health care is rising out of control.
Coulda fooled me, I moved from one state where a dental exam was $50 to another where it's $38. Hmmmm...
My prescription is $4.00, hmmmmm. No change whatsoever in my plan at work in 10yrs. If anything it's gotten superior. Still no cost to me. Inflation impact? 0.00%
===================
$4 prescriptions? either you work for the govt or are lying
Just finished my canvas for a new rental in NOVA. Despite all the private rentals out there it is still very difficult to find the right mix in terms of price, amenities, features and location. I finally settled on a mid 80's TH that is in OK walking distance to work in Alexandria & under 2k. About 2k sq ft (due to a finished basement) but no garage. They are the original owners & plan on returning once their larger home becomes an MT nest. This is their only rental and they've rented it out before the bubble. They have lower overhead because their son is a contractor and the owner is an RE agent.
I looked at tons of places and I can't tell you how many people I spoke with were bubble buyers who unless they put 1/2 down could not in any way shape or form have positive cash flow. I shied anyway from many of them because they either were stupid and/or unstable. My girlfriend said landlord finances regarding the rental should not be my concern or a consideration until it hit home.
She lives in an overpriced 1 bd 1 bath condo conversion w/ no parking in MD just across the DC NW line. The conversion occurred just 2 years ago and her neighbor has the exact same unit. After 1 year she noticed someone else living there, who id'ed themselves as a tenant. She just ran into the tenant who was moving out. She complained that the bank was harassing her. My girlfriend asked, why would the bank harass you? The response was that because they were foreclosing on the unit but her lease was not up, so she cut a deal with them to vacate and they broke the lease for her.
Its going to be a mess people, do not buy squat, do not catch a falling knife for an FB, go with LLs that are in it for the long term. Stay away from any LL that purchased during the bubble, the financial instability and/or stupidity will not be worth the hassle. Pre-bubble LL's are a safer bet, but of course the HELOC ATM aspect must still be considered. Private LLs are optimal but they are generally more expensive.
Good luck. I got a 2 year lease where upon I'll survey the housing market damage and see if I can find a place around here that will be valued in accord with fundamentals and not marked to myth/fantasy!!
Billions in Mortgage Writedowns Coming
JPMorgan Chase and Bank of America are expected to join the growing list of banks announcing mortgage writedowns.
The two big lenders to private equity firms are expected to announce losses of about $3 billion on holdings of mortgage securities and leveraged loans this month when they report their third-quarter earnings.
This would bring the total writedowns announced by the world's leading banks to more than $20 billion
http://moneynews.newsmax.com/
money/archives/articles/2007/
10/8/100055.cfm
Presidential candidate Ron Paul has made a dire prediction that the dollar could collapse to absolute zero - precipitating hyper inflation, soaring oil prices and a global economic depression if current policies are continued.
"Once they realize the American people have awakened to the con game that's been going on - I think those people running the banking and monetary system aren't going to be too happy," Paul told the Alex Jones Show on Friday.
The Texas Congressman forecasts that if current policies are prolonged, the dollar could crash all the way to nothing and be forced to start over.
"If Bush is foolish enough to start bombing Iran, that might precipitate such a crisis as oil going to $200 dollars a barrel and really dampening the enthusiasm of the whole dollar," said Paul.
"If they continue what they're doing, it's gonna go to zero, we're gonna have runaway inflation, all paper currencies eventually self-destruct and are ruined, and we're in uncharted waters right now - this is the first time in the history of man you've had no solid currencies around the world and this has been going on for 35 years."
Paul agreed that elitists would seize upon a global depression by posing as the saviors and offering more control, police state and big government as the solution.
"This was the whole thing that started in the last depression," said Paul, "Scare people to death instead of blaming the Federal Reserve for the depression and the financial bubble of the 20's, they said 'well capitalism failed, it was that stupid gold standard', therefore we have to have welfare and of course everything they did prolonged the depression."
http://www.prisonplanet.com/
articles/october2007/081007_
dollar_collapse.htm
Watching for inflation as CPI rises
Taiwan is enjoying steady economic growth on the back of stable exports, but simultaneously the country is facing a higher consumer price index (CPI) caused by rising costs for vegetables, meat and other food.
There also exists an inflation risk resulting from rising costs of imported fuel and commodities here and in most economies across Asia, including China, India, Singapore and the Philippines.
Last week, the government statistics bureau reported that the nation's CPI rose 3.08 percent last month year-on-year. That increase was the highest since October 2005, raising concerns of accelerated price pressure.
http://www.taipeitimes.com/News/
editorials/archives/2007/10/08/
2003382243
Change in peg helps Kuwait curb inflation
Kuwait City: Kuwait's decision to drop the dinar's peg to the dollar in May has helped contain inflationary pressure but more time is needed to assess the full impact, the central bank governor said in remarks published yesterday.
Kuwait dropped its peg to the dollar and linked the dinar to a basket of currencies on May 19, saying the US currency's slide on global markets was fuelling inflation by making some imports more expensive.
The central bank of the Middle East's fourth-largest oil exporter has allowed the dinar to appreciate more than three per cent against the dollar since then.
"The decision [on the] peg has helped in stemming part of the inflationary pressure resulting from a fall of the dollar...," the Al Rai daily quoted Shaikh Salem Abdul Aziz Al Sabah as saying.
Inflation fell to 4.36 per cent in June after staying above five per cent during the previous three months, its highest rate in 12 years.
http://www.gulf-news.com/
business/Economy/10158830.html
Spiralling costs blamed on dollar peg
Oman considered measures including unshackling its rial currency from the tumbling US dollar and price caps to contain rising inflation but decided against such moves, the commerce minister said.
Oman, like other Gulf Arab oil producers, is struggling to contain inflation because its central bank traditionally follows shadow US interest rate policy to maintain the relative value of its dollar-pegged currency.
Oman's inflation accelerated to 5.98% in the year to July, the highest level this year.
Like Saudi Arabia and Bahrain, Oman held back from reducing interest rates to match the September 18 cut in the US, saying domestic economic considerations took precedence when deciding monetary policy.
http://www.arabianbusiness.com/
501780-dollar-peg-to-blame-for-
inflation-minister-says
There is a simpler solution then to getting off of the peg to control inflation in Saudi Arabia and UAE.
Instead of pouring all of their money back into their countries on things that are not useful why not start buying a big Japanese company like Toyota.
Why not control their own future and start their own destiny by buying the technology that can make them the industrial and technological leaders.
For centuries the Arab nations were the technological leaders. Now their institutional knowledge lag that of a third World country.
Instead of building luxury homes and play land with their new found wealth why not buy the respect of nations by buying up the technological know how.
http://www.arabianbusiness.com/
501780-dollar-peg-to-blame-for-
inflation-minister-says
Saudi Arabia's king asked officials last week to explain rising inflation, which hit a seven-year high of 4.4% in August.
In the UAE the economy ministry took out newspaper advertisements on Sunday to warn businesses against price hikes in the run-up to a Muslim holiday next week. Inflation hit a 19-year high of 9.3% in the UAE last year.
The European Central Bank held its benchmark interest rate steady at 4 percent on Thursday, but its leader signaled that the bank was still worried about inflation and has not ruled out future rate increases.
http://money.cnn.com/2007/10/04/news/
international/BOE_interest.ap/
index.htm?postversion=2007100409
Inflation in Germany, Europe's largest economy, accelerated to the highest rate in more than six years in September as prices of heating oil and food rose.
``Inflation risks clearly remain tilted to the upside,'' said Alexander Koch, an economist at Unicredit Markets and Investment Banking in Munich. ``While the ECB has to sit tight for the time being, it will probably resume raising borrowing costs next year.''
http://www.bloomberg.com/apps/
news?pid=20601068&sid=
aCYVXziHJVqU&refer=economy
China's net oil imports up 18 percent
China's net imports of crude oil rose 18.1 percent in the first eight months of the year as the booming country's voracious energy demands continued to grow, state media reported Sunday.
Net imports reached 108.2 million tonnes from January to August, Xinhua news agency said, quoting figures from the General Administration of Customs (GAC).
The world's second-largest oil importer, China has seen its demand for energy rocket as a result of its explosive economic growth, which has been in double digits for four consecutive years.
http://news.yahoo.com/s/afp/
20071007/ts_afp/chinaenergy
oilimports_071007111704
I "think" we popped the housing bubble
???????????
It makes me shiver when I imagine any of you bitter renter peons using the word "think". It is almost certain that all of you are lacking 2 fundamental things (not necessarily in that order):
1. A brain to think with
2. Home ownership (requiring a brain)
Renters just don’t get it. Renting a shit-hole 1BR apartment is not an achievement it is a statement of utter incompetency and lack of character. Since I’m an employer I always look at the employment applications looking for housing status. If you’re over 25 and rent you can forget about getting hired! You sorry ass dip-shit imbeciles. You really don’t get it. I might as well talk to the garbage can. Unf*cking believable!!!
You sorry ass dip-shit imbeciles. You really don’t get it. I might as well talk to the garbage can. Unf*cking believable!!!
Blowfly, I really think you should consider speaking in a more civilized manner. I don't enjoy being insulted. I gave up a 10 year career as a distribution manager for a big clothing manufacturer in order to become a real estate agent. Many of my friends suggested that I would be doing very well in that industry. May I say that I regret this very much now. The last thing I need is someone like yourself adding more vitriol and negativity to my already complicated life. I'm trying to get back into my old industry but my job has now been outsourced. I live only with the hope that the real estate market in California will pick up again soon.
blowfly, you magnificent piece of $hit. The only people you have working for you are the paperboy and the meter maid. Get real loser.
Hi,
This is blowfly.
I have a 40-year mortgage and just realized that (a) I have basically no equity in this property and that (b) by the time I might have as much as, say, 7% equity in it, I will no longer be able to afford the payments and I will have to sell the house to someone who will pay a lot less for it than I did.
Meanwhile, I will still owe the bank tons and tons of money over and own nothing.
Not to mention a ruinous credit rating, which by that point will actually be an impediment to getting a loan.
So I've been drinking a lot. And in a vain attempt to restore some faint sense of dignity I'm pretending that I am a 'somebody' and not just the 9-to-5 mailroom clerk that I actually am.
I hate all of you.
-Blowfly
This is blowfly again; still getting plasshhtered. 'nother confesshhion:
I was trying to ssshcare people into gong out there and buying housshes. Because nothing elsshe seemssh to be working.
Lookssshhh like it didn't work. Oh ssshhh*t this is gonna be awful
Keith, you got to watch this video.
http://www.youtube.com
/watch?v=3aG5G38GzhU
Euro zone turns on China over currency trouble.
"First point China, second point dollar, third point yen," Jean-Claude
Juncker, chairman of the meeting, said.
http://www.cnbc.com/id/21198738?
__source=RSS*tag*&par=RSS
ICEMAN
PEOPLE COME TO THIS BLOG TO GET HELP AND INFORMATION, NOT TO BE INSULTED. THOSE WITH VITAL INFORMATION SHOULD FEEL GOOD TO PASS IT ON NOT SIT BACK AND RIDICULE. MATTERS THAT HAVE COME UPON US ARE VERY SERIOUS AND WE MUST GET AS MANY PEOPLE TO SUCCEED IN THESE COMING BAD TIMES.
IF ANYONE THINKS THE MARKET IS COMING BACK SOON THEY WILL BE SEVERELY MISTAKEN. LOOK FOR JOB OPTIONS IN OTHER SECTORS SUCH AS HEALTH CARE.
THIS AREA IS ABOUT TO GO THROUGH A DOUBLE WHAMMY. THERE ARE A TREMENDOUS AMOUNT OF BABY BOOMERS IN THIS SECTOR THAT ARE ON THE VERGE OF RETIREMENT. OPPORTUNITIES IN THIS SECTOR WILL BE VAST. WHETHER ITS NURSING, TECHNICIANS,
ASSISTANTS, EVEN SKILLED CONSTRUCTION LABOR(MEDICAL RELATED) , THIS SHOULD BE A SAFE CAREER MOVE. HEALTH CARE IS GOING TO HAVE TO EXPAND AND BELIEVE ME THEY ARE JUST STARTING.
THE BABY BOOMERS IN THIS COUNTRY WILL HAVE A HUGE EFFECT ON THE SYSTEM AS THEY REQUIRE MORE CARE.
LAW ENFORCEMENT, SECURITY COMPANIES, OR OTHER SPECIALIZED SKILLED TRADES WILL ALWAYS BE IN DEMAND (ELEVATOR MAITENANCE,
ELECTRICAL MAITENANCE, PLUMBING
MAINTENCE, ETC.) AFTERALL SOMEBODY
HAS TO KEEP EVERYTHING RUNNING.
YOU WOULD BE SURPRISED HOW MUCH OF TODAYS SKILLED LABOR IS ABOUT TO RETIRE AND POSITONS ARE GOING TO BE FILLED BY SOMEONE. IT IS A HUGE PROBLEM NATIONWIDE.
WHEN THE SMOKE SETTLES AND THE PRICES HAVE CRASHED, THEN IT WILL BE TIME FOR THE REAL ESTATE INVESTORS TO COME OUT AND BUY PROPERTIES AT FUNDAMENTALLY SOUND CASH FLOWING PRICES AND RENT OUT TO THESE PEOPLE FROM THE LIST ABOVE.
With this agreement if derivative market should fall China will be on the hook.
Speculators and hedge funds will be keeping an eye on this development.
http://online.wsj.com/article/
SB119186984962152506.html?mod=
googlenews_wsj
The People's Bank of China will introduce trading of forward rate agreements Nov. 1, a new sign that Beijing wants to overhaul its inefficient interest-rate market and further develop a fledgling financial-derivatives sector.
China's central bank said yesterday the agreements, a type of interest-rate derivative, will offer investors another risk-hedging tool, in addition to interest-rate swaps and bond forwards.
I wonder if you can comment on a particular situation, wich I think its an irrational paradox.
Imagine an european country with 10 million souls.
This country has on of the lowest birthrates in the world.
It now has about 9%/10% unemployment rate (mostly amog the young).
It has bult and projected housing for 30 million people.
Recent statistics show that there´s 2 vacant houses for every existing family.
Its capital city has lost 1/4 of its inhabitants in 10 years. It now holds less population than in 1930. This is happening among most middle and large sized cities.
Most city residents are the elder.
Building is unstoppable.
There´s "for sale" signs in almost every building, old or new.
There´s an estimate 500.000+ inventory for sale (nobody knows for sure).
Average wages is around 800/900 USD (or 750 euros) per month.
Job security is almost non existent for youguer generation.
One of europe highest tax burden.
300.000 USD for a run down 30/40/50 year old 2 bedroom apartment with lead plumbing and no parking space is the norm.
99% of mortgages are ajustable rate, every 3 ou 6 months (or not, depending on the European Central Bank policy at the time), payable in 30 to 50 years.
Detached or single family houses are a luxury only for the super rich.
Fix up is not an option, since buying an old apartmnent and fixing it up will end up costing the same as buing a brand new one.
Rental is not an option. In most cases, renting costs the same (or even more) than paying the mortgage.
Families are one of europes most indebted ones. Credit spiral cases has skyrocketed. Foreclosures and auctions too.
My parents bought our apartment 12 years ago for 100.000 USD. Now it´s "worth" at least 3 times that.
Housing prices wont come down, even if its taking 4 years to move a new apartment.
Can you explain me that?
PJ
By the way, most people on their 30´s are still living with their parents because they are priced out, either affected by unemployment or low paid and unsecure jobs.
This means that the generation who would buy houses cant do so. Real estate market has tanked in term of sales but prices aren´t coming down.
PJ
By the way, most people on their 30´s are still living with their parents because they are priced out, either affected by unemployment or low paid and unsecure jobs.
PJ? Probably more like giving a BJ in Bulgaria! But, finally someone on this blog tells the truth. Not only are you renter morons shut out of homeownership forever, you imbecile liars are not even renting. Living with your parents and sleeping on Grandma's sofa! Let Blowfly tell you the real truth. You're neither renters nor are you living with your parents. You are in fact filthy vile smelling homeless dumpster diving bums sitting in an air-conditioned public library on my tax money, posting on this liar blog. Hopefully the next hurricane will sweet the streets clean of scum as yourself. It’s the home owners who pay the taxes not scumbags sleeping under the bridge or renting with housing coupons.
Private Mortgage Insurance:
Where does Private Mortgage Insurance fit into the mortgage
mess?
Shouldn't PMI help with some of
the defaulting mortgage payments?
Doesn't residental loans with less than 15 to 20% down payments require PMI?
How do people avoid PMI with less than 15-20% down?
I wonder if you can comment on a particular situation, wich I think its an irrational paradox.
PJ, this sounds a lot like an Eastern European country. I have seen this happen in a country on the Black Sea, a former Soviet block member. I agree that it defies any rationale how someone that makes $200 per month can own a $300k apartment. Probably in one of the soviet concrete boxes. Makes no sense, therefore it must be a bubble.
KHOV condo project goes up in flames in Jersey City, NJ. Hey, if you can't sell, torch.
From nj.com.
http://tinyurl.com/2aetuc
Bubble Rap
Our Housing market’s a disaster.
House prices are falling faster and faster,
Yo yo yo yo mortgage is really your master,
the fall keeps fallin
The economy keeps crashin
The dollar, yen, euro keep mishmashin,
Crashin, boomin, bashin,
Bernanke is the jester,
Realtwhores and fliptards
are even lesser
beings than that,
China and Us are gonna spat,
Oil is good; gold is better than that,
better get out,
Better get out,
But where to move your pile so it gets phat?
Where to move your pile so it gets phat?
A tale of two cities LA and Dallas with regards to housing. Interesting article.
http://tinyurl.com/2a7tnq
Blowfly said...
By the way, most people on their 30´s are still living with their parents because they are priced out, either affected by unemployment or low paid and unsecure jobs.
PJ? Probably more like giving a BJ in Bulgaria! But, finally someone on this blog tells the truth
===========
BWA HA HA! Dude you made me spill my diet 7-up from laughing.
blowfly as usual makes a point - a very crude point but a good one nonetheless
this e. europe phenomenon is happening in the US as well. lots of houses for sale, a supposed credit crunch and yet a 1200 sq ft house still goes for $900K in LA.
Some crash.
And renters/living with parents losers produce nothing. They contribute nothing to society. All they do is leech off others.
There was a reason only landowners could vote once upon a time. Those who only rent are nothing but transient vagabonds. They have no interest in maintaining a community. That is why renters are despised worldwide. They are like cancers who invade the body and slowly kill it from within.
Great video on Yahoo Financial "One Day Sale" from ABC news.
The CNBC debate poll is here:
http://www.cnbc.com/id/21209903
Guess who is winning the poll, again?
Go RP!
CashCow said:
PJ, this sounds a lot like an Eastern European country. I have seen this happen in a country on the Black Sea, a former Soviet block member. I agree that it defies any rationale how someone that makes $200 per month can own a $300k apartment. Probably in one of the soviet concrete boxes. Makes no sense, therefore it must be a bubble.
-----------------------------------
Nope, its more westerner than you think. And its almost 1000 years old.
Nobody talks about a bubble because there´s no independent real estate information. All of it comes either from real estaters or banks, both interested on climbing housing values.
Oh, and its cheap to hold on a vacant house. Property taxes are a percentage calculated over taxable value (most of then aren´t updated since the property construction. you end up having 30 year old mansions paying less than a new cramped condo).
Recently, city authorities doubled and updated property taxes for vacant houses, trying to force them in the market...
PJ
Beijing real estate floats like a bubble on a bubble
"In real estate you're getting overinflated profits from borrowing money to get cheap land and then selling at inflated prices. And then you've got a stockmarket that is valuing a dollar of earnings at about 40 or 50 times. So you've got a bubble on top of a bubble."
Despite China's efforts to curb real estate speculation, housing prices continue to rise, encouraging even more construction and a frenzy of public stock offerings by big real estate companies.
There have been warnings about a real estate downturn and the dangers of a recent jump in inflation, particularly after the 2008 Olympics in Beijing. But, in spite of talk of housing bubbles, illegal land grabs and corrupt developers, China remains embroiled in a real estate bonanza.
While the US endures a mortgage crisis, investors in Chinese real estate are celebrating and pushing the value of housing and housing shares to new heights.
http://www.smh.com.au/news/
business/beijing-real-
estate-floats-like-a-bubble-
on-a-bubble/2007/10/09/
1191695909148.html
"How do people avoid PMI with less than 15-20% down?"
Buyers were required to have PMI until about the late 1990's when lenders got the bright idea of having buyers use a piggyback loan...
It sounds like the sellers are just going to go down with the ship. Probably lowering the price is the same thing!
Current real estate market worse than '80s, forum told
Listen to this article or download audio file.Click-2-Listen
By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Wednesday, October 10, 2007
WEST PALM BEACH — The housing market in Palm Beach County and the Treasure Coast has turned "brutal" and is getting worse, a veteran mortgage broker said Tuesday.
The stark outlook came from William Davis, president of Private Funding Specialists Inc. in Palm Beach Gardens and past president of the Palm Beach County chapter of the Florida Association of Mortgage Brokers.
"I've seen some tough times, but I've never seen anything like this," Davis told members of the Economic Forum of Palm Beach County.
Davis, a Palm Beach County native who has been a banker and mortgage broker for 37 years, said this slowdown has proven more painful than even the crunch of the early 1980s, when mortgage rates topped 18 percent.
He blamed a combination of factors. A speculative bubble that peaked in late 2005 artificially inflated prices. The subprime mortgage meltdown of recent months has made it tougher for borrowers to land loans. And homes remain priced above what the typical family can afford.
The result, Davis said, is a downturn that's likely to deepen in 2008. He noted a glut of homes for sale.
"It'll make you sicker than West Palm water if I tell you how many homes are for sale," Davis said.
There were 33,708 houses and condos listed for sale in Palm Beach County in August, according to Illustrated Properties Real Estate's analysis of Multiple Listing Service data. Illustrated Properties President Chappy Adams didn't attend Davis' speech but agreed with his conclusions.
"It's pretty bad," Adams said. "We've got a 40-month supply of homes, which has got to be an all-time high. For the foreseeable future, prices are going to keep coming down a bit."
So long as the supply of homes for sale outpaces demand from buyers, Davis said, the region's housing doldrums will continue.
"It'll take a long time to chew through this inventory," Davis said. "It's brutal."
Qatar's energy minister said crude oil prices, which have surged recently to record levels above $80 a barrel, should be more than $100.
"If we take into account inflation from 1972 to the present day, the real and fair price for oil should be more than 100 dollars," Abdullah bin Hamad Al-Attiyah said in remarks aired Tuesday by Al-Jazeera television.
He said such a price was justified by rising inflation, a fall in purchasing power and the weakness of the dollar, which has dropped about 10 percent in value against the euro during the past year.
http://www.pittsburghlive.com/x/
pittsburghtrib/business/
s_531806.html
Wall Street advanced sharply Tuesday as investors interpreted minutes from the Federal Reserve's last meeting as indicating the central bank is ready to keep cutting interest rates to boost the economy.
The Dow Jones industrial average and Standard & Poor's 500 index hit records.
http://wcco.com/business/
finance_story_282110042.html
Signs that people are being taxed by the weaker Dollar.
People are tapping more and more into their Credit Cards to pay for necessities, rather than luxuries
How much longer can the US Treasury run the weaker Dollar Policy?
http://www.news.com.au/adelaidenow/
story/0,22606,22561446-5006368,00
.html
THE automated teller for home loans is empty and Americans are relying increasingly on credit cards to pay their living costs, indicating tough hurdles ahead for US consumer spending and markets.
THE automated teller for home loans is empty and Americans are relying increasingly on credit cards to pay their living costs, indicating tough hurdles ahead for US consumer spending and markets.
Considering that people always have to eat and many Americans have only limited discretion over how much gasoline they use, a period when credit card debt is expanding rapidly while retail sales are contracting points to debt financing of necessities, rather than luxuries.
That, clearly, can't go on forever.
Jumbo mortgage provider Thornburg Mortgage Warns of Higher Q3 Losses
The company said it expects to take a $286 million writedown.
http://seekingalpha.com/article/
49326-thornburg-mortgage-warns-
of-higher-q3-losses?source=feed
The recent global credit squeeze caused by the meltdown of risky U.S. mortgage loans may test the ability of the world's economy to keep expanding, the International Monetary Fund said Wednesday.
The IMF also said government policymakers would be confronted with new problems from the continuing process of globalization and warned against overconfidence that economic stability would continue indefinitely.
http://www.baytownsun.com/
wire.lasso?report=/dynamic/stories/
I/IMF_WORLD_ECONOMY?SITE=
TXBAY&SECTION=HOME&TEMPLATE=
blank.html&CTIME=
2007-10-09-20-07-48
Fitch places two classes of notes issued by Silver Marlin CDO I, Ltd. (Silver Marlin I) on Rating Watch Negative.
The portfolio's exposure to 2006 vintage residential mortgage-backed securities (RMBS) collateral includes 18.6% subprime RMBS and 10.9% prime RMBS.
Exposure to 2007 vintage RMBS collateral includes 8.5% subprime RMBS and 20.5% prime RMBS.
In addition, the portfolio includes structured finance CDOs issued in 2006 (4%) and structured finance CDOs issued in 2007 (12.6%) which have a high concentration of 2006 and 2007 vintage RMBS collateral.
http://www.forbes.com/businesswire/
feeds/businesswire/2007/10/09/
businesswire20071009006586r1.html
Fitch Places $272MM of Ridgeway Court Funding II, Ltd. on Rating Watch Negative
The portfolio's exposure to subprime RMBS includes 34.1% issued in 2006 and 7.9% issued in 2007.
Exposure to structured finance CDOs includes 30.4% issued in 2006 and 10.5% issued in 2007. Furthermore, most of the underlying structured finance CDOs are collateralized by subprime RMBS issued between 2005 and 2007.
As a result, Fitch expects Ridgeway II to experience additional negative rating migration in the near to intermediate term.
http://www.forbes.com/businesswire/
feeds/businesswire/2007/10/09/
businesswire20071009006326r1.html
Fitch lowered a US$50.9 million synthetic CDO that is managed by DBS Group Holdings Ltd
DBS Bank, said in August it had S$2.4 billion (US$1.6 billion) at risk from CDOs after an entity it manages had to seek funding.
The bank sold about US$30.8 million worth of synthetic CDOs through a special purpose vehicle, Fitch Ratings said on Sept. 6.
The DBS-managed CDO has 128 notches downgrade
There are also nine contracts that are on watch for downgrade, Fitch said.
The other CDO, which is referencing 125 global corporate credits at the close of last October, has about 4.4 percent in assets below investment grade, Fitch said.
http://www.taipeitimes.com/News/
worldbiz/archives/2007/10/09/
2003382396
There is NO Such Thing as a Bernanke PUT, but somebody forgot to tell the Hedge Funds.
Bernanke weaken the US Dollar and kept it weak to help speculators and Hedge Funds
People on Main Street paid the price by charging more on their credit cards to pay for higher price necessities like food for the kids and gas to go to work.
http://www.klfy.com/Global/
story.asp?S=7187953
September Best Month for Hedge Funds in Years
Hedge funds across most strategies benefited from the U.S. Federal Reserve's attempt to ease extremely tight credit markets. Strategies which fared worst in August came back strong to erase previous month's losses. Commodity related funds performed extremely well as the Fed rate cut spurred inflationary concerns. The HFN CTA/Managed Futures Average, with 234 products reporting September performance, was +6.15% and is +7.11% YTD.
Energy sector funds also took advantage of oil rising above $80/barrel and the HFN Energy Sector Average finished September +4.99% and is +13.95% YTD. Emerging market funds returned an average of +4.60% and the HFN Emerging Markets Average is +16.79% YTD.
Excellent performance wasn't limited to commodity related strategies. Equity markets surged after the U.S. Fed rate cut and strategies which typically maintain long biases were rewarded.
Long only funds were +3.15% in September while long/short equity managers were +2.98% and the HFN Long Only and Long/Short Equity Averages are +10.55% and +10.66% YTD, respectively.
The fact that long/short equity managers are outperforming long only funds YTD is likely a testament to maintaining short exposure during volatile periods. Other equity related strategies which performed well in September include technology sector funds +8.33%, small/micro cap funds +4.32%, and healthcare sector funds +3.50%.
Macro funds which often position themselves across multiple asset classes appear to have taken advantage of the strong moves seen in interest rate, currency and commodity markets.
The average macro fund was +3.93% in September and the HFN Macro Average is +9.18% YTD. The global macro strategy was one of a handful of strategies tracked by HFN to outperform broad equity markets in the third quarter, returning +3.97% during the difficult three month span.
China resists European pressure on currency
The European Union and China locked horns over exchange rates on Tuesday after authorities in Beijing deflected a European call for a rise in the level of the renminbi.
A foreign ministry spokesman repeated Beijing’s well-honed official line, saying the government would allow the currency to become more flexible “over time”.
Market participants interpreted the action as a signal that China has no intention to yield to foreign pressure for a faster appreciation of the renminbi against the currencies of its western trade partners, although there was no firm evidence of this.
http://www.ft.com/cms/s/0/
80595c6e-7661-11dc-ad83-
0000779fd2ac,dwp_uuid=
f6e7043e-6d68-11da-a4df-
0000779e2340.html
Bond Investors realized that the Federal Reserve lowered interest rate based on a false job report.
The Bernanke's Put was used to help speculators and hedge funds at the expense of the people on Main Street.
http://www.marketwatch.com/news/
story/treasurys-lose-gains-after-
fed/story.aspx?guid=%7B757A62CF
-4E6C-4612-9115-308E829EDB5A%7D
Treasurys fell back slightly in afternoon trade, sending yields higher, after the release of the Federal Reserve's September 18 meeting, when central bankers cut interest rates by a bigger-than-expected 50 basis points.
European government bonds had gained overnight after European Central Bank president Jean Claude Trichet outlined uncertainties about global growth, according to Action Economics.
Saudi Aramco plans to increase oil exports to China by at least 9 percent this year to meet rising demand from refiners in the world's fastest-growing major economy, said two company officials.
Shipments to China may climb to more than 26 million metric tons of crude this year, according to the officials from Saudi Aramco, who asked not to be identified because of company policy. Saudi Arabia's only crude exporter increased oil exports to China by 7.6 percent last year to 23.87 million tons.
China plans to boost refining capacity by 25 percent in the five years to 2010, the government said last March. The nation's state oil companies are building units known as hydrocrackers and cokers to process cheaper varieties of oil from the Middle East with a higher sulfur content.
``Chinese oil companies are more willing to process high- sulfur crude from countries like Saudi Arabia to cut costs,'' said Gong Jinshuang, a Beijing-based senior analyst at China National Petroleum Corp., the nation's largest oil producer, ``The imports from Saudi are poised to rise because the Middle East country is heavily eyeing the huge market here.''
http://www.bloomberg.com/apps/
news?pid=20601080&sid=
apR_GEtiOP9s&refer=asia
A DEAL, A DEAL. . . HAHAHAHA
Distressed Commercial Bank in Illinois
Commercial Bank in Illinois Acquisition Price: $5.5 to $6.5 M Good for mortgage business, investment banking, broker dealer and other business. Charter - Federal ...
Sign up to see the full listing profile.
Mozilo made another $2.8M dumping CFC stock this week.
http://tinyurl.com/2vagoe
We've taken your home equity, we've depleted your savings with high gasoline prices and electricity bills, we've put you into deep debt by selling you things you did not need. We gave you the illusion that you could always, always sell your house if things got dicey. Now we will take it all from you including your dignity and return your status to what it was and should have always been "SLAVE". You are going down Joe Schmoe, you and your family have nothing to look forward to except a life in servitude. The Count hath Taken!
Now we will take it all from you including your dignity and return your status to what it was and should have always been "SLAVE".
Hey count I'm going to take my foot and shove it so hard up your f*cking sh*t ass that you'll puke my toes. You c*cks*cking idiot! You're probably some delusional renter sitting in a rat hole in jig town dreaming of living the high life in a castle and being the count. You can count on one thing and that is Blowfly will come on your mind and make you weak in the knees.
The stock market will keep going up. And maybe even home prices will start rising again.
But gold will rise even more, as the dollar crashes even more.
It won't matter whether you "own" or rent...if you fail to understand the economic earthquakes that are happening and will happen, you will be screwed.
From Bloomberg:
Title: U.S. Existing Home Sales May Drop to Five-Year Low (Update3)
http://tinyurl.com/26r6v9
Rents are FALLING
There is something seriously wrong with Blowfly.
I don't mean its obvious ignorance.
This creature is very sick. At times you have to think it has got to be joking and maybe that's what it tells itself. But the crass dumbf*ck meanness is just too sincere.
Blowfly seek out your nearest mental health professional before something bad happens to you or those near you. If anyone can stand to be near you.
http://tinyurl.com/2l4qvt
My personal trevails...
blowfly is keith. Otherwise, why have comment moderation if you're only going to let stuff like that through anyway?
I have compiled an all inclusive list of what would, could, and will not sink the markets:
http://economicdisconnect.blogspot.com/2007/10/what-would-could-and-will-not-sink.html
Blowfly's Brain said...
There is something seriously wrong with Blowfly.
While I spew vitriol at times, I do need to make a statement about Keith. I appreciate that he allows alternative comment to go through moderation. Otherwise we'd only have yes man yes man yes man comments on this otherwise colorful blog. I admit I love to show my worst side on Housing Panic but it's all meant as a joke, dark adult humor. If you can't take it renter, go and listen to your f*cking pastor at your church. Blowfly is bullish on real estate. So screw you Mr. Who the f*ck are you?
Blowfly has got to be the moderator. Last night, I wrote a perfectly clean post that he chose not to allow (I guess since I'm a Realtor).
Enjoy your hovels, losers. And, buck up: your cash savings that sit in CDs, MM accounts and passbook savings are probably only losing at a 3-4% per annum clip.
Sexy Crazy Mortgage Spot
http://www.youtube.com/watch?v=kBt8Z6Plq2c
Anon said:"The stock market will keep going up. And maybe even home prices will start rising again.
But gold will rise even more, as the dollar crashes even more."
Does anyone really understand what's going on with the stock market?? Google is at $625 and VMW is $107-up $25.00 in less than two weeks.
Crazy these stocks are going up in what should be the worst month for the markets.
I'll have to guess stocks will go up like crazy when the FED lowers the rate again on 10/30.
The pound was firmer following relatively hawkish comments last night from Bank of England governor Mervyn King,,stating that he is reluctant to lower interest rates at this time and that he will pledge to fight inflation.
http://www.insidefutures.com/article/
45486/Sterling%20Gets%20'Boost'
%20From%20BoE%20Governor%20King's%
20Comments..html
Bullish on real estate, Blowfly? Great. I have real estate to sell you in Lee County, Florida. It is ready for IMMEDIATE OCCUPANCY, since it has been vacant for over 2 years.
Don't mind the mold on the front door. As long as you are not prone to allergies, you should be fine. The lawn needs TLC. Once it is mowed, you will be able to see the front door clearly from the street.
And, prices are phenomenal - 50% of the original cost. These houses are located in pristine wetlands - there may even be an alligator in your yard - an upgrade provided by your real estate agent at no extra charge.
The neighborhood is diverse and agricultural in nature with residents from all parts of Mexico and South America involved in the intensive cultivation of plants used in recreational activities.
The pit bulls used to guard their agricultural products will provide you with an added measure of security, at no additional cost.
What more could you want in a neighborhood?
These houses are going nowhere fast, so BUY NOW! Contact me at 1-800-o.u.fool
Fitch Places $190.5MM of Maxim High Grade CDO II, Ltd. on Rating Watch Negative
Maxim II has a static portfolio composed of 64.4% subprime residential mortgage-backed securities (RMBS)
http://home.businesswire.com/portal/
site/moreover/index.jsp?epi-
content=GENERIC&newsId=
20071010006312&newsLang=
en&beanID=1868105982&viewID=
news_view
Fitch Places $791MM of Duke Funding XIII Ltd. on Rating Watch Negative
Duke XIII is a hybrid structured finance collateralized debt obligation (CDO) that closed on June 27, 2007 and is managed by Duke Funding Management, LLC.
At close, the portfolio consisted of 91.4% credit default swaps (CDS), referencing primarily subprime residential mortgage-backed securities (RMBS) assets, and 8.6% cash subprime and prime RMBS.
http://home.businesswire.com/
portal/site/moreover/
index.jsp?epi-content=
GENERIC&newsId=20071010006340&
newsLang=en&beanID=1868105982&
viewID=news_view
The French Treasury said the average accepted 10-year yield at today's auction of Treasury bonds (OATs) rose to 4.44 pct from 4.35 pct last month.
http://www.hemscott.com/news/
latest-news/item.do?newsId=
51178830360960
The prospect that Hong Kong's Hang Seng Index will rise to 30,000 points is ``quite possible,'' said Mark Mobius, who oversees $45 billion in emerging-market stocks at Templeton Asset Management Ltd.
http://www.bloomberg.com/apps/
news?pid=20601080&sid=a0CHfdpNlCCQ
Is Bond Investors sending Bernanke a message
http://www.ny.frb.org/markets/
omo/dmm/fedfundsdata.cfm
Federal funds traded at an effective rate of 4.91% on Tuesday.
From the LOS ANGELES TIMES:
Realtors deal with SLUMP RELATED ISSUES at
convention:
http://tinyurl.com/2kj2nf
and they said Los Angeles was immune from the Bubble
Another day, another $1.2M for Mozilo
http://tinyurl.com/2vagoe
I love media bias. Two stories this morning...
Bloomberg.com: "Home Foreclosures in US Doubled Last Month on Subprime"
CNN.com: "September Foreclosures Fall"
http://money.cnn.com/2007/10/11/real_estate/reclosures/index.htm?postversion=2007101108
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahk5Y..105gQ&refer=home
"The prospect that Hong Kong's Hang Seng Index will rise to 30,000 points is ``quite possible,'' said Mark Mobius, who oversees $45 billion in emerging-market stocks at Templeton Asset Management Ltd."
Statements like this are ment to entice money in right before a crash. Shades of 1929.
Both sides make sense, but I am new to this, what do you think about this article?
http://www.tiny.cc/MortgageMess
Hey, Keith remember THIS?
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=682
Last November, Swanny saw "no discernible result."
Why not ask Ol' Greggy if he sees any discernible change in the Phoenix market NOW?
HAHAHAHAHAHAHAH!
.
Ragin' on blowfly......how fun is this?
.
M&T Bank, the first large U.S. bank to report quarterly results, said Thursday that third-quarter profit fell 5 percent, as revenue declined while losses from mortgages and other loans surged.
Results fell short of analyst forecasts, as M&T doubled the amount it set aside for credit losses to $34 million, and nonperforming loans more than doubled to $371.4 million.
http://www.cnbc.com/id/
21247716?__source=
RSS*tag*&par=RSS
MORGAN Stanley disclosed that its quantitative strategies traders lost $US390 million ($433 million) in a single day in August because of what the bank yesterday said was widespread selling by investors.
The disclosure helped explain the $US480 million quarterly loss in quantitative trading that Morgan Stanley reported last month and highlighted how volatile the markets were in the third quarter as the credit squeeze spread and unnerved investors around the world.
Morgan Stanley reported an overall 7 per cent fall in third-quarter profits.
http://www.theaustralian.news.com.
au/story/0,25197,22569872-36375,
00.html
Moody's cuts Centex, Lennar, Pulte to junk status, , saying it expects bleak housing industry conditions to linger at least until 2009.
Separately, Fitch Ratings said in a report that pressures on home builders are likely to get worse as the housing downturn proves more severe than previously thought.
Moody's downgrades affect about $9.4 billion of debt and $3.25 billion of commercial paper authorizations, the agency said.
Key problems facing home builders include rapidly declining orders, high housing inventories, disruptions in the mortgage market and heavy cancellations, Moody's said in a statement.
Affordability issues are also weighing on key markets while confidence is ebbing among potential home buyers, it added.
It will be challenging for the three companies, as well as for much of the entire industry, to stay in compliance in the coming year with debt leverage covenants, the rating agency said. Covenants are restrictions in borrowing agreements.
http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=
2007-10-11T185749Z_01_N11360075_
RTRIDST_0_HOMEBUILDERS-RATINGS-
MOODYS-UPDATE-3.XML
Foreclosure Activity Decreases 8 Percent in September According to RealtyTrac(R) U.S. Foreclosure Market Report
California reported 51,259 foreclosure filings in September, the most of any state and one foreclosure filing for every 253 households -- the nation's third highest state foreclosure rate. The state's foreclosure activity was down 11 percent from the previous month but still up 246 percent from September 2006.
http://www.klfy.com/Global/
story.asp?S=7198287
Beazer is being investigated by the Securities and Exchange Commission and the U.S. Attorney's office in North Carolina on allegations that it broke rules governing down payment assistance, sold homes to low-income buyers who couldn't afford them, falsified documents and charged higher fees than the regulations allow.
http://www.usatoday.com/money/
economy/housing/2007-10-11-
beazer-homes_N.htm?csp=34
Don't anyone believe in the words CREDIT WORTHINESS anymore.
http://www.reuters.com/article/
newIssuesNews/
idUSN1141547320071011
Moody's Investors Service slashed the ratings on $33.4 billion of first lien subprime mortgage residential mortgage-backed securities (RMBS) from 2006
"Rating migrations have been much more severe for the more deeply subordinated tranches of 2006 subprime deals," Moody's said in a report. The most heavily impacted securities were originally rated "Ba," "Baa," or "A," it said.
Of the $33.4 billion downgraded securities, $3.8 billion remain on review for further downgrade, it said.
Another $23.8 billion of RMBS were also placed on review for downgrade, representing 5.6 percent of subprime first-lien securities rated in 2006. They included, 48 "Aaa" and 529 "Aa"-rated securities, which Moody's said are generally not expected to move by more than three notches.
"Today's rating actions also reflect the steady deterioration in the performance of loans originated during 2006, and significant differences in loan performance by originator," said Moody's.
The Bank of Japan kept interest rates unchanged as widely expected on Thursday, but Governor Toshihiko Fukui said he saw increasing upward pressure on prices, reinforcing expectations he will raise rates by early next year.
http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=2007-10-
11T104433Z_01_T283708_RTRIDST_
0_JAPAN-ECONOMY-UPDATE-3.XML
Oil prices surged past the $83-a-barrel level on Thursday, near record highs, after a US inventory report showed lower-than-expected stockpiles.
http://news.bbc.co.uk/1/hi/
business/7040775.stm
If you think gas price are expensive now, wait until the strike drags out.
http://www.freep.com/apps/
pbcs.dll/article?AID=/
20071011/BUSINESS01/71011021
Employees working at six oil and natural gas facilities owned by Chevron went on strike, according to a statement issued by the San Ramon, Calif.-based oil company. There was no indication of how long the strike might last, according to the Associated Press.
Wow what a bunch of shit! After reading this I am getting my money out of The Johns Hopkins Federal Credit Union.
JHFCU’s Golden A.R.M. is the Answer to the Stormy Mortgage Market
While the news media and other sources have put adjustable-rate mortgages (A.R.M.s) in a bad light recently (because of some versions adversely affecting payments, particularly in the sub-prime market), JHFCU has developed a very unique product that deserves a look. The Credit Union’s “Golden A.R.M.” is VERY different from most variable rate mortgages because it has NO INITIAL TEASER RATE and is tied to PRIME (which just decreased!) vs. the LIBOR (London Interbank Offered Rate – an index on which most adjustable rate mortgages are based). Plus, you get a $1,500 rebate on closing costs!
Key Benefits of our Adjustable Rate Mortgage:
Rate is Prime Minus 2.5% — Currently 5.25% APR*
Rate Adjusts Annually to 2.5% below Prime on Anniversary Date — ensuring a rate that is, in almost all cases, below Prime for the life of the loan
$1,500 in Closing Cost Rebates
Not only is the new Golden A.R.M. based on the Prime Rate, which is the rate banks traditionally offer their best customers, but the rate will be 2.5% BELOW Prime—fixed for one year at the time of settlement and adjusted on the annual anniversary to again be 2.5% below the rate at that time.* So you will, in almost all cases, ALWAYS have a rate that is significantly below Prime! Plus, annual adjustments are capped so they can never increase more than 2% a year. There is also no cap on reductions, so if Prime drops significantly, you benefit from all the decreases (and save on refinancing costs that you might have incurred lowering a fixed rate).
If you currently have a high-rate or a traditional adjustable-rate mortgage, or are looking to purchase a home, the Golden A.R.M. is worth a look. You can save money upfront, plus have the peace of mind that your rate will always be significantly below the Prime Rate. For questions or to apply, contact JHFCU’s mortgage processing partner, Financial Security Consultants, at 410-823-3300.
I'm shocked, SHOCKED that this doesn't have it's own post:
Jim Rogers, financial mastermind on the markets, the fraudulent Fed, bubbles, China, etc etc:
(Credit Great Depression of 2006)
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vjUSJ.lwS8e0.asf
Mozilo made yet another $1.2M on Thursday dumping CFC shares.
http://tinyurl.com/2vagoe
Bloomberg: "Lennar, Centex, Pulte Debt Cut to Junk by Moody's"
http://tinyurl.com/3yv3cv
``Moody's believes that it will be challenging for the three companies, as well as for much of the entire industry, to remain in compliance in the coming year with the debt leverage covenant,'' Marshella and Snider wrote.
I'm glad I found this article with video attached. Saw on ch. 2 news. Homes being sold by developer for much much less than what people paid just in the last year or two. Home buyers are pretty mad. I do love how some try to blame the developer for their loss in value. I just laugh to no end. I would say stop crying on my shoulder and go after the bulls who told you re never goes down.
Also, since Lawrence Yun seems confident that the re market is about to rebound, he should buy these homes at these wonderful discounts. It looks like a real money making opportunity. He could snap up all these discounted properties and sell them next year at a handsom profit.
http://tinyurl.com/yvkw4p
Girl Guide said...
Bullish on real estate, Blowfly? Great. I have real estate to sell you in Lee County, Florida. It is ready for IMMEDIATE OCCUPANCY, since it has been vacant for over 2 years.
So you want to sell your stinking trailer to Blowfly you stupid renter b*tch. Lee County aka Redneck and Trailer Trash Heaven where they have regular Klu Klux Clan ralleys and wear bedsheets over their heads. Do me a favor b*tch, go get back into your fucking doublewide and scratch your hairy ass!
.
AL GORE! Won What?
I'm outta here!
.
Beazer Homes (BZH) reported an almost-impossible-to-believe 68% of its prospective home buyers canceled their orders in the company's fiscal fourth quarter.
* The cancellation rate was almost double the 36% of customers who canceled orders in the third quarter.
keith, I found two pets.com sock puppets. Do you have one of your own?
AND...
Now ADD all of the American workers who either:
Lost their job
Fired
Laid off
Reduced wages
Reduced sales commissions
Reduced bonuses
Reduced hours of work
And you'll see the REAL picture.
Bush, Cheney and the rest of the GOP regime are now considered as a gang of criminals, thieves, liars and mass-murderes. From the fake election results, to the 9/11 fake attacks, to the "no-oath" 9/11 investigation cover-ups, to the lost and unwanted Afgan and Iraq bush-co wars, death and injuries to thousands and thousands of American troops, to the massive authorized home loan scams, moving jobs overseas, not taxing foreign auto imports, the destruction of the US Constitution, providing fake economic data, increased gas prices, triple house prices, to fake national news stories, to illegal torturing, countless international war crimes, illegal spying on ALL americans, consentration camps, illegal profiteering and wasting over $2 trillion in unneeded bush-co theft wars, I would say we have WAY enough information to arrest any republican who supports the bush and cheney criminal regime.
Supporting a criminal (or hiding the truth about a criminal act) is a criminal act. Bush and Cheney need to be impeached and/or arrested ASAP! If you do not support impeachment, you are now considerd a criminal (either for republicans (except for Ron Paul), democrats, independents or mass media CEO's and board members as well)
Burdman
F*ck Al Gore, He lost the election now he is losing his mind. Someone tell him his fifteen minutes is up.
Urgent....Please off yourself you spiral of death, chicken-little vegan asshat.
Urgent....Why don't you kill yourself with all the sky is falling, chicken-little, we are doomed, a$$hat.
Just because they can. Why do lenders raise the rates of ARM's and put people into stress? Seems crazy to see and an easy fix. Sticking to the public is not a good way to move forward.
With all the foreclosures make sure you guys get good home inspections. If they did not pay the mortgage what else did they not pay!
Jeffrey Owen
Owner/Chief Home Inspector
IonHomeInspection.com
Houston, The Woodlands, Katy, Sugar Land
Want to goose mortgage rates higher? Get a job with the government and mess up the count of employment growth.
On Friday, the Labor Department released the monthly employment survey, in which it reported that the economy grew by a net 110,000 jobs in September. That was unsurprising. But another number in the employment report did cause investors to do double takes. The Labor Department revised its August number upward -- way up.
A month earlier, the Labor Department estimated that the economy shrank by 4,000 jobs in August. Now the department says the economy actually gained 89,000 jobs in August. The 93,000-job swing shocked Wall Street (in a pleasant way), and long-term interest rates rose.
The benchmark 30-year fixed-rate mortgage rose 8 basis points to 6.5 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.34 discount and origination points. One year ago, the mortgage index was 6.42 percent; four weeks ago, it was 6.28 percent.
http://ca.biz.yahoo.com/
brn/071011/22266.html?.v=1
Back in the early 1980's when I was foreclosing, taking deeds in lieu of foreclosure, and looking for people who where just plain abandoning homes they were "upside down" on, I was thrown into a crash course on human nature. They go all through the same stages of coping as if losing their home were the death of a loved one. The only difference was that some came to acceptance sooner than others.
The smart ones quit paying as soon as they knew they could no longer keep the home then lived in it for "free" as long as possible. I saved some fools from themselves as they'd dig out a roll of cash and offer to pay current but I wasn't allowed to take cash in the field (as we might be accused of taking bribes or otherwise pocket untraceable money that should have gone on someone's loan).
To most people in the "first world" their home is their security as we've been brainwashed as of late that your equity in your home is your savings account. Losing that is losing everything.
Last year an acquintance (slippery SOB) lost his house to foreclosure but he kept the keys and the lender was slow to change the locks. I think he snuck in at night and slept there for a couple months until he found a woman to move in with. Unfortunately, it will be the sly, shady, and downright dishonest that will survive the best and land on their feet the soonest.
The ones that I really feel sorry for spend every last cent trying to hang onto their house then literally have nothing when they finally really lose it. It's kind of like a fighter pilot so busy trying to save his damaged plane that he flies it right into the ground.
Bush, Cheney and the rest of the GOP regime are now considered as a gang of criminals, thieves, liars and mass-murderes. From the fake election results, to the 9/11 fake attacks, to the "no-oath" 9/11 investigation cover-ups, to the lost and unwanted Afgan and Iraq bush-co wars, death and injuries to thousands and thousands of American troops, to the massive authorized home loan scams, moving jobs overseas, not taxing foreign auto imports, the destruction of the US Constitution, providing fake economic data, increased gas prices, triple house prices, to fake national news stories, to illegal torturing, countless international war crimes, illegal spying on ALL americans, consentration camps, illegal profiteering and wasting over $2 trillion in unneeded bush-co theft wars, I would say we have WAY enough information to arrest any republican who supports the bush and cheney criminal regime.
~~~~~~~~~~~~~~
Whoa! Isn't this a lot to accompolish in 8 years?
U.S. Treasury officials are looking into ways to help investment vehicles called SIVs that have been battered by this summer's credit crisis, sources familiar with the situation said on Friday.
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 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.
Jennifer Zuccarelli, a Treasury spokeswoman, said, "Treasury is always meeting market participants and monitoring market events," but had no comment on any specific Treasury initiative.
Treasury officials also separately met with Wall Street bank treasurers a few days after the SIV meeting to discuss the state of the U.S. asset-backed commercial market, the source said.
A spokesman for JPMorgan Chase declined to comment. A spokeswoman at Citi did not return a call seeking comment.
http://today.reuters.com/news/
articleinvesting.aspx?type=
fundsFundsNews&storyID=
2007-10-12T221200Z_01_N12270090_
RTRIDST_0_USA-CREDIT-SIVS.XML
Recent media coverage on the problems in the subprime mortgage market has featured an alphabet soup of abbreviations, such as MBS, CDO, and SIV. What do these terms stand for? And how do they fit into the mortgage financing process?
http://www.chicagofed.org/
publications/fedletter/
cflnovember2007_244.pdf
Too much innovation in loan securitization leads to trouble, now the U.S. Treasury want to create a SUPER FUND for Structured Investment Vehicles.
Let bet it all on one roll of the dice, the stake are high on this come back bet. Failure could collapse the US Dollar.
Snake Eye, Oh No, there goes the US Dollar
http://www.canada.com/nationalpost
/financialpost/
story.html?id=3c346c32-4bb1-43bf-
98f7-7bea50e159fc&k=53507
Every once in a while, Wall Street comes up with a truly innovative product that profoundly changes the capital markets for decades to come.
These breakthrough products are then subjected to the same incremental innovation cycle that sees them tweaked, then stretched and in some cases perverted beyond recognition to the detriment of all those involved.
"Securitization" (i.e., the process of converting a diverse collection of illiquid assets into packaged securities) has changed the way capital is raised for a broad swath of society's financing needs, whether it's your home mortgage, the lease on your SUV or the hefty loans required to send Junior to university.
Unfortunately, in recent years this basic securitization process has been re-engineered -- and some would say corrupted-- with the creation of a dizzying array of confusing new financial products.
This gallery of complex products includes: - SIVs, structured investment vehicles that engage in the "extreme sport" of borrowing short-term to lend long-term, often with no apparent safety net in the event of a market dislocation; - CDOs or collateralized debt obligations, pools of debt securities that are sliced and diced -- some would say mainly to exploit naive rating-agency formulas; - Mezzanine CDOs made up of the risky mid-sections of other securitizations; - Synthetic CDOs created from derivative contracts representing "virtual" credit risks; and even - CDO-squareds, which are new CDOs made up of a pool of other people's old CDOs that couldn't be sold.
Many of these arcane products have been stuffed with some of the most poorly underwritten mortgage loans in history, and most are about as transparent as swamp water.
Remarkably, through the alchemy of financial engineering, the rating agencies have adorned a large proportion of these instruments with solid A ratings or even their coveted AAA ratings.
As default rates on subprime loans now rise, many of these securities could suffer significant and permanent capital loss within a year or two of their creation -- previously an almost unthinkable concept.
Needed suckers to hold ABCP on their books
http://www.securitization.net/
article.asp?id=1&aid=7624
Spreads were also beginning to recover. Benchmark sponsors such as Citibank, Bank of America and JPMorgan Chase were able to roll paper at spreads of Libor plus 20 to 25 basis points, a bit better than the 45 basis-point spread that they were getting. Money funds have not lost any money, and the widespread expectation is that the short-term market will begin to normalize in the fourth quarter.
There is one major caveat: "All SIVs are in danger of unwinding," one source said.
JPMorgan Securities analysts said investors are worried about what would happen to the SIV market if the $400 billion in assets underlying the MTNs and CP from those vehicles were to liquidate en masse.
"While we believe it is possible that some SIVs can survive the current turmoil, particularly if they are able to secure some form of emergency funding," the bank's analysts wrote recently, "we also feel that this segment of structured finance is at the beginning of a significant consolidation that will winnow the field of SIVs."
One ABCP and SIV market professional was thoroughly fed up with the extent of the market disruption. Investors who actually buy ABCP and SIV paper still want to participate in the market, yet many are constrained by overly cautious portfolio managers and directors who are reacting to headlines.
SIVs forced into deleveraging as sector sees few signs of recovery
http://www.ft.com/cms/s/0/
57a8fe62-785c-11dc-8e4c-0000779
fd2ac.html?nclick_check=1
The short-term funding markets in the US and Europe might be starting to show signs of recovery but the sector that comprises one of their biggest groups of customers is still struggling to gain re-entry.
The market was given a hard illustration of the pain that can be felt this week when it emerged that Axon Financial, a SIV linked with the US hedge fund TPG-Axon, had taken losses of $110m on sales of $3bn of its investments.
In total, the industry sold about $43bn of assets to meet repayments of maturing debt between early July and the end of September, according to data from Moody's, the ratings agency.
There are differences between lenders' attitudes to different SIVs, according to Paul Kerlogue, an analyst at Moody's, with older, more diversified vehicles that also have more diversified sources of funding in place seeing much less shrinkage, or deleveraging, than others.
But even some of the newer SIVs that have grown with startling rapidity - such as those launched by HSBC, the UK bank, and HSH, its German peer - are not suffering as much pain as those run by independent managers, he adds.
"Some of those newer SIVs run by large banks have been given more time," Mr Kerlogue says. "But some of those without a strong bank sponsor needed to make good returns straight away and so had to chase yield on their investments."
Most of those that have faced the biggest difficulties are run by independent managers rather than banks.
Mozilo can't pay employees, hires Bono
``Some markets have been experiencing illiquidity,'' San Francisco Fed President Janet Yellen said in an Oct. 9 speech in Los Angeles, referring to mortgage-backed securities and asset- backed commercial paper. ``This illiquidity has become an enormous problem for companies that specialize in originating mortgages and then bundling them to sell as securities.''
Speculation on ``a bank consortium being formed to address the funding of SIV assets'' helped reduce the interest rates on loans that banks make to each other in dollars in Europe, Jacqueline Cavuoto, a Bear Stearns Cos. analyst in New York, wrote in a note to clients.
The one-month London interbank offered rate, a benchmark for corporate borrowing, has fallen 5 basis points in the past two days, to 5.06 percent. A basis point is 0.01 percentage point. The rate reached 5.82 percent on Sept. 7, up half a percentage point from July, as demand for short-term funds soared.
Fed officials have been monitoring businesses' access to borrowing, where any decline could hurt plans for hiring and spending. Fed Bank of Boston President Eric Rosengren cited the jump in Libor in the past two months as a concern.
``This tightens credit for a variety of U.S. borrowers, since many loans to businesses and many floating rate mortgages are tied to the Libor rate,'' the Boston Fed chief said Oct. 10 in a speech in Portland, Maine.
Holdings by SIVs have dropped to about $320 billion from about $395 billion of assets in July, Moody's Investors Service said this month.
``SIVs are all losing money right now,'' said Chris Low, chief economist at FTN Financial in New York. ``If any one of the conduits dumps'' their holdings of distressed securities, ``it could trigger selling by the others as well, and that's the scenario they're to avoid,'' he said.
http://quote.bloomberg.com/apps/
news?pid=20601087&sid=aR0NCo372Rhw
SIV are important because as more and more subprime ARMs reset, many are being restructured into Option ARMs.
http://www.irvinehousingblog.com/
wp-content/uploads/2007/04/
adjustable-rate-mortgage-
reset-schedule.jpg
An "option ARM" is a loan where the borrower has the option of making either a specified minimum payment, an interest-only payment, or a 15-year or 30-year fixed rate payment in a given month.
Option ARMs are popular because they are usually offered with a very low initial interest rate (a so-called "teaser rate") and a low minimum payment, which permits borrowers to qualify for a much larger loan than would otherwise be possible. When pricing an Option ARM, never focus on the Start Rate of 1% or 2%, consider only the Fully Indexed Rate (FIR) which is the Margin and the current Index being used (12-MTA, LIBOR, etc.).
The London interbank offered rate, or Libor, is an important international benchmark for big companies, US mortgages and corporate deals.
Libor is the interest rate charged by banks for short-term loans to each other and is set daily by the British Bankers' Association (BBA) in London. The loans can be in US dollars, euros, UK pounds or other currencies.
The three-month US dollar-denominated Libor rate generally tracks the Federal Funds rate.
One reason for the rise in Libor, is that many European bank have big commitments in the struggling commercial-paper markets. They are reluctant to lend out dollars, and this is boosting short-term borrowing rates. Some are also concerned that their counterparties in these trades, other banks, might be too weak to pay back the loans.
Investors could find themselves burdened by affiliated investment vehicles that issue tens of billions of dollars in short-term debt known as commercial paper.
The investment vehicles, known as "conduits" and SIVs (which stands for Structured Investment Vehicles), are designed to operate separately from the banks and off their balance sheets.
"GREED and FEAR" and "Path of less Resistance"
FLOW OF FUNDS
Cheap money are going out of structure loans products into the equity markets.
Just when investors are beginning to get happy, US Treasury want to take some risk to create a SUPER FUND for SIV to save their Friends.
http://www.bitsofnews.com/
content/view/6259/
The Fed action has had two effects. First the rate at which banks lend to each other (LIBOR) has fallen by 50 bps in line with the Fed funds reduction. Second the spread between LIBOR and Fed funds is as high as it was before the Fed cut rates.
In July commercial paper traded at about 4bps above Fed funds. That spread is now 62bps. So the rate cut may have boosted the equity indices but it has not flushed the lack of confidence out of the system.
In short the money markets show that banks are still fearful of ugly surprises over the next few months.
Yet happy days are here again, at least for the stock market.
The Dow Jones industrial average rose 77.96, or 0.56 percent, to 14,093.08.
Broader stock indicators also advanced.
The Standard & Poor's 500 index rose 7.39, or 0.48 percent, to 1,561.80.
The tech-dominated Nasdaq composite index rose 33.48, or 1.21 percent, to 2,805.68.
So what is going on?
The monetary easing provided a huge boost to equity markets that had no need of easier money.
In the first 30 trading days after that cut, the Nasdaq Composite gained 23.2%.
It went on to form the tech bubble. This time round though, emerging markets have benefited rather than tech stocks.
US Dollar get weaker as Federal Reserve manipulate Fed Fund Rate by injecting Billions to get it to trade at 4.75%.
Options ARMs -> Libor Rate -> SIV -> Fed Fund Rate -> weaker US Dollar -> higher Foreign Equities
Do you see the connected?
http://www.smartmoney.com/news/
on/index.cfm?story=ON-
20071010-000398-1021
Fed Injects Very Large Repo As Fed Funds Stay Above Target
The Federal Reserve injected a very large $16 billion into the financial system Wednesday morning, as the central bank battled to get the Fed funds rate back to its target level.
The Fed carried out a $16 billion overnight repurchase agreement, or repo. That was much larger than the $5 billion baseline estimate of Wrightson ICAP.
The repo operation comes with the Fed funds rate consistently above the 4.75% target in recent days, with the effective funds rate closing at 4.91% Tuesday.
Wednesday morning, the Fed funds rate was trading around 4.875% before the injection and it was unchanged at 10 a.m. EDT.
The Fed's effort to force down the funds rate comes at the end of the maintenance period - the two-week period during which banks must keep their average reserve levels at the legally required levels.
The higher funds rate suggests banks may be struggling to meet the required reserves levels, forcing the Fed to inject more liquidity.
Option ARM: How Millions of American Will Lose Their Homes
http://www.youtube.com/w
atch?v=biP2JOf5euo
Option ARM -> SIV -> Libor Rate ->
Federal Fund Rate -> Weak US Dollar -> INFLATION
http://latimesblogs.latimes.com/
laland/2007/09/
the-big-wave-of.html
"The big wave of foreclosures is still coming: people who DO occupy their house and who did not necessarily commit fraud to get the loan, but simply took out an Option ARM and have watched their loan balance grow as their house value has dropped.
Those loans allow a low payment for 4-5 years (while the loan balance may be climbing), and since they only jumped in popularity after fixed rates spiked in mid 2003, most of those Option ARMs have not yet even seen the big payment adjustment that's coming.
When their payments double (as they will), many of those borrowers will find themselves with too little equity to either sell or refinance (especially if they had 2nd mortgages on TOP of their Option ARMs).
Throw in the tighter underwriting standards that have been imposed recently (making refinancing that much tougher) and you have a still-coming perfect storm.
The coming crisis is the "Option ARM crisis", which will make the "subprime crisis" look minor in comparison (at least as far as how real estate values are impacted).
"The Option ARM foreclosures will only start in mid 2008 and will climax in 2009-2010. The biggest purveyors of Option ARMs have been Countrywide and Washington Mutual. The percentage of homeowners with Options ARMs is highest in California.
Think of an Option ARM as a bomb with a five year fuse. Millions of fuses are still burning."
http://www.youtube.com/watch?v
=CZS9zZ4QbKc&mode=related&search=
Option ARM is still going strong!
When will they stop?
In a far-reaching response to the global credit crisis, Citigroup Inc. and other big banks are discussing a plan to pool together and financially back as much as $100 billion in shaky mortgage securities and other investments.
The banks met three weeks ago in Washington at the Treasury Department, which convened the talks and is playing a central advisory role, people familiar with the situation said. The meeting was hosted by Treasury's undersecretary for domestic finance, Robert Steel, a former Goldman Sachs Group Inc. official and the top domestic finance adviser to Treasury Secretary Henry Paulson. The Federal Reserve has been kept informed but has left the active role to the Treasury.
In recent weeks, investors have grown concerned about the size of bank-affiliated funds that have invested huge sums in securities tied to shaky U.S. subprime mortgages and other assets. Citigroup, the world's biggest bank by market value, has drawn special scrutiny because it is the largest player in this market.
Citigroup has nearly $100 billion in seven affiliated structured investment vehicles, or SIVs. Globally, SIVs had $400 billion in assets as of Aug. 28, according to Moody's.
Such vehicles are formally independent of the banks that create them. They issue their own short-term debt, usually at relatively low interest rates reflecting their high credit rating. The vehicles use the money to buy higher-yielding longer-term assets such as securities tied to mortgages or receivables from midsize businesses seeking to raise cash.
Many SIVs had trouble rolling over their short-term debt in August because of concerns about the quality of their assets. That contributed to the broader seizing up of credit markets.
The Financial Services Authority, the United Kingdom's markets regulator, has suggested that U.K. banks consider participating in the plan, a person familiar with the situation said. HSBC Holdings PLC, the largest U.K. bank, has an affiliate SIV called Cullinan Finance Ltd. with $35 billion in senior debt. An HSBC representative wasn't immediately available to comment.
If the banks agree, the plan could be announced as early as Monday
http://online.wsj.com/article/
SB119221840415557568.html?mod=
googlenews_wsj
"ALWAYS have a rate that is significantly below Prime! Plus, annual adjustments are capped so they can never increase more than 2% a year".
Buyer Beware! This 2% CAP is based on the entire mortgage balance. They like to word it to sound like your monthly mortage rate is only going up 2%!!!
This happened to a good friend of mine, now they have to refi out of the loan into a fixed.
Anon said:"U.S. Treasury officials are looking into ways to help investment vehicles called SIVs that have been battered by this summer's credit crisis, sources familiar with the situation said on Friday."
-------
In addition to the other derivatives (CDO's MBS, CFO's, Conduits) now there's another one called SIV's?? How much more of this debt junk is out there, that we havent even heard about yet??
Presto chango...debt has been magically transformed into asset backed commercial paper.
When is this mortgage debt crisis is getting worse all the time!
Too much innovation in loan securitization leads to trouble, now the U.S. Treasury want to create a SUPER FUND for Structured Investment Vehicles.
More than likely, this is a fund so our Goberment can buy all the bad loans and derivatives to save Wall Street and the banks.
Guess who will probably have to pay for this in the end?
Us...the taxpayers.
HPers should check out swaptree.com. Swap your unwanted cd, dvd, books, and games for something you want. And its free (except for postage). I haven't bought a new dvd or books for the last 6 months. I'm saving money, big boxes aren't making sales, govt isn't collecting taxes, it's perfect.
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