HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008: BUBBLETALK - Post housing crash articles and random musings here

March 27, 2007

BUBBLETALK - Post housing crash articles and random musings here

If bubbles are for bathtubs...

What are crashes for?

Post article snippets (use tinyurl.com) keep it clean, have a good chat.

444 comments:

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Anonymous said...: Haliburton:

George Soros buy's large quantity of Haliburton stock!; March 13, 2007 6:10 AM
Anonymous said...: No Bubble in Miami I am told. Gee when you enter "reduced" (or the reducometer) in craigs list there are 1000 listings being reduced in price. Enter lower, reduced, discount in craigslist housing section and you get a sense of how things are beyond the screen of MSM or MLS. Try it in your favorite bubble community.; March 13, 2007 6:20 AM
Anonymous said...: dum-dee-dum da dum-de-dum da dum-de-da-da-dum-de-dum...

"But I'm with Mr. Practical. This is the start of something serious not the end of it. A huge downward spiral has begun and there is now no way to stop it. There is simply no way this economy can absorb a knockout punch of what is likely to be another 1,500,000 homes added to the market via foreclosures this year, nor can the economy absorb all the people who are going to be losing their jobs in the upcoming recession when consumers will finally be forced to cut spending.

If 1,500,000 foreclosures sounds high consider that RealtyTrac reported 130,511 new foreclosure filings during January alone, an increase of 19 percent from the previous month and an increase of 25 percent from January 2006. That is an annual rate of 1,566,132 foreclosures (and rising) so an estimate of 1,000,000-1,500,000 could be at the low end, and that is for 2007 alone.

There is a lot of money (credit) going to money heaven over this. Real estate prices are going to take another big hit as a result and banks will liquidate REOs for any price they can get. That will cause a further cascade in home prices which will also prevent many from refinancing. Tens of thousands of homeowners will find they can not refinance, sell, or move because they owe more on their house than what its worth. Those trapped in that situation will feel as if their house owns them as opposed to the other way around. But for now anyway, the start of this downward spiral is for the most part being greeted by a big yawn from the real estate optimists, the optimists at the Fed, and Paulson at the treasury.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/
"; March 13, 2007 6:35 AM
FlyingMonkeyWarrior said...: This comment has been removed by a blog administrator.; March 13, 2007 2:02 PM
FlyingMonkeyWarrior said...: Thousands Riot in China
Reuters

BEIJING—Thousands of Chinese farmers and laid-off workers rioted in central China, attacking police and smashing squad cars, a local official said on Monday, the latest in a string of violent demonstrations.

Nine police cars were burnt during the riot on Friday in the central province of Hunan in which 20,000 people clashed with about 1,000 police armed with guns and electric cattle prods, a local official told Reuters.

"They did it because they were not satisfied with some government behaviour," the official, surnamed Tan, said by telephone from the district of Lingling, which belongs to the Hunan city of Yongzhou.

"They were also unhappy about official corruption," Tan said without elaborating.

The overseas human rights Web site Boxun (www.boxun.com) said the riot was sparked by dissatisfaction with rising public transport costs. The site, which is critical of China, is blocked on the mainland.

The Hunan official said the riot had been quelled and that scores of the rioters were arrested. The government was tracking down the organisers, she said.

Both police and rioters had been injured in the violence, and some of the rioters were sent to hospital, but none was seriously hurt, the official added.

A widening gap between rich and poor, corruption and official abuses of power have fuelled a growing number of demonstrations and riots around China, often sparked by seemingly minor issues.

The government has said the number of "mass incidents" in the country–a term that includes protests, petitions and demonstrations–was about 23,000 last year.

Efforts to reduce inequality and sources of discontent have been a theme of government efforts to improve the livelihoods of its 750 million farmers.; March 13, 2007 2:31 PM
Anonymous said...: Well, the market is in negative territory this morning, so let's wait for the PPT to make it positive around 12 noon to 2PM, as usual.; March 13, 2007 3:19 PM
Anonymous said...: This real estate bubble makes it a perfect time to do real estate short sales.

Cory Barnett
Go to: http://www.FreeShortSaleSecrets.com; March 13, 2007 3:24 PM
Anonymous said...: You gotta love Florida. These cats bought a 4ft deep submerged land, in Coral Gables, from an old lady for $445k. They then turned around and sold it to the government for $7.2 million, for "environmental protection":

"A team of lobbyists helped overcome resistance from the state to collect $7.2 million for submerged lots in Biscayne Bay.
They had a contract to buy the Biscayne Bay bottom and a deal to sell it to the state.
Their team included three Tallahassee lawyers and Miami lobbyist Rodney Barreto, who is also the chairman of the Fish and Wildlife Conservation Commission. Barreto was appointed by then-Gov. Jeb Bush."

http://tinyurl.com/2krunz; March 13, 2007 3:41 PM
Anonymous said...: Top three articles on Bloomberg.com relate to sub-prime lending problems. New Century kicked off the NYSE. Appears to be getting interesting.; March 13, 2007 4:55 PM
Anonymous said...: This article appeared in the March 16, 2007 issue of Executive Intelligence Review.
CARRY TRADE, U.S. MORTGAGES
The Global Financial System
Is Burning at Both Ends
by Paul Gallagher

Only two weeks after the Bank of Japan triggered an unwinding of the yen carry trade with its Feb. 21 interest rate increase, one of the largest U.S. mortgage lending companies, Century Financial, declared itself effectively bankrupt and at the mercy of its bank lenders for more credit—credit those same banks cannot afford to give. And three of those lenders—Morgan Stanley, Merrill Lynch, and Goldman Sachs—by March 3, were being rated by their own securities traders virtually as issuers of junk paper.

During the second half of February and first week of March, the shrinking yen (and Swiss franc) carry trades, and the imploding markets for U.S. mortgage-backed securities, became the hammer and anvil of a disintegrating international financial system which has been blown up by larger and larger debt bubbles ever since the October 1987 stock crash. The biggest of all those bubbles by far—U.S. real estate mortgage values as of the end of 2006, half the assets of the U.S. banking system—is now going down.

"The amount of indebtedness outstanding is greater than could ever be repaid, so the system is hopelessly bankrupt," said leading economist Lyndon LaRouche at the opening of his March 7 webcast from Washington, D.C. Leading nations now must agree to replace that bankrupt system with the "New Bretton Woods" monetary reform LaRouche proposes, and issue new productive credits to replace the masses of collapsing debt—before a complete collapse of the dollar and monetary chaos make that impossible.

London has played a key role in triggering the carry trade reversal, and potential dollar collapse, in a possible repeat of Harold Wilson's British government's role in using a 1966-67 pound sterling crisis to destroy FDR's post-war Bretton Woods system. In the five days preceding the Bank of Japan move, Bank of England governors Mervyn King and David Blanchflower both made public statements that the British pound was overvalued and should fall—and it has fallen most rapidly against the yen. In the huge growth of central banks' currency reserves since 2001, the British pound has benefitted most from outflows from the Japanese yen; and London is in a position to play the game of reversing that flow—and sinking the dollar with it—to gain political control over a global financial crash.

'The Great Unwind Has Started'
To give an idea of what LaRouche is pointing to: Estimates of household debt in the OECD countries are at roughly 90% of total GDP, compared to just 29% in 1990; estimates of corporate debt in those nations at the end of 2006 were at approximately 80% of GDP—compared to 55% in 1995—because of the global "leveraged takeover boom" which reached nearly $4 trillion in takeovers during 2006. The 80%-of-GDP level was 20% above that of 1988, at the collapse of the 1980s takeover boom and the 1987 stock crash.

Since 1995, the yen carry trade—borrowing money in Japanese yen at virtual-zero interest, and investing it in high-interest speculations of all kinds, all over the world—has been the largest single driver of these debt bubbles. Various economists familiar with the yen carry trade, in discussions with EIR since Feb. 21, have estimated its annual pumping rate at anywhere between $300 billion and $1 trillion. Since Feb. 21, despite universal claims at that time in the financial media that Japan's interest-rate hike would "have no impact on the carry trade," it has begun to unwind with a force felt worldwide (see "Japan Interest-Rate Hike Could Collapse the System," EIR, March 2, 2007).

Now, as one economist in Asia wrote March 2, "The huge outflow of yen will come to a halt," and the dollar is likely to go down to 100-105 yen within a short time.

Perhaps the biggest receptacle of this debt speculation, the U.S. mortgage-based securities market, has been struck hard—and it was already disintegrating before the Bank of Japan move and the rise of the yen. As an official of Dresdner Kleinwort bank, which warned clients a month earlier that an explosion could be about to hit the hedge funds from this direction, said on March 2, "We believe 'the great unwind' has now started." As several economists have noted, the uncertainty about how fast this debt will collapse, is caused only by the terra incognita nature of the mortgage securities market, the roughly $30 trillion credit derivatives partly based on it, and the hedge funds which buy, sell, and bet on these debt securities and derivative contracts. These debt markets are opaque: No government, regulator, or market participant knows how concentrated this debt paper is, or who holds it.

On March 2, it became clear that California-based New Century Financial Corp, the second-largest lender of subprime mortgages and one of the biggest mortgage firms overall, was poised to go under, with $40-70 billion in subprime mortgages alone. Its stock had fallen by 93%, and its filing that day said that a failure to obtain waivers from lenders or find new funding sources could cause "substantial doubt" over its ability to remain in business. Since November 2006, some 25 mortgage lenders have failed, but this is by far the biggest. On March 5, Bloomberg reported, "The fate of New Century Financial Corp. may rest with securities firms including Morgan Stanley and UBS that once staked the U.S. mortgage company to more than $17 billion and bought its loans by the thousands." But that same day, traders at Morgan, Merrill, and Goldman were rating their own banks' mortgage securities and credit derivatives at five or six levels below the banks' "official" credit ratings—almost as junk paper.

At the same time, the Crown's Hongkong and Shanghai Banking Corp. (HSBC) confirmed March 5, that it took a $10.6 billion impairment charge, that is, loss, on its bad mortgage loans for 2006.

In fact, the whole subprime mortgage-backed securities market was turning illiquid, freezing up, with interest rates quoted at a radioactive 15% above U.S. Treasury bond rates. The issuance of Residential Mortgage Backed Securities (RMBS) against subprime mortgages, plunged nearly 60% from January to February. In March, even Fannie Mae, Freddie Mac, and the biggest bank purchasers of these mortgages were becoming unable to re-issue them as securities—which made the Federal Reserve's panic issuance of new, restrictive guidelines for them on March 5, appear ludicrous.

By March 7, the contagion of rapidly rising "risk premiums" on debt based on subprime mortgages, had already begun spreading into other debt markets: securities and derivatives based on "mid-prime" mortgages, on European corporate bonds, and then on U.S. commercial mortages.

This contagion is the "disintegration" of the financial system LaRouche speaks of, as increasing categories of unpayable debt can't be rolled over into new debt securities—and it is not stoppable except by a thoroughgoing bankruptcy reorganization, carried out by leading governments.

This meltdown is blasting hard at the real U.S. economy lying underneath. On March 8, Moodys.com estimated, for example, that the housing market, which has been laying off U.S. workers at 25,000-plus/month, is going to escalate its job losses to 75,000/month in the second and third quarters of 2007. Moodys' economist Mark Zandi forecast that "Most lenders ... are not going to fool around; they're going to put the foreclosed properties up for sale fast, at a discount, to move the properties." This will rapidly depress prices and sales. which are already falling. The auto industry is already shrinking at a 10,000 jobs/month pace, and other manufacturing industry is losing 15,000 jobs monthly.

Hedge Funds' Losses
As the opaque, $30 trillion credit derivatives market shakes, the hedge funds and banks that dominate this market are getting hit with widespread losses, by all reports. Trading volume on credit default swaps indexes in European markets was estimated at "three times the average weekly volume," by Deutsche Bank and Dresdner Kleinwort. Volumes on U.S. collateralized debt obligation (CDO) markets were thought to be even larger. "Both [Wall] Street and clients have been caught long.... Some peoples' year was wiped out on Tuesday [Feb. 27]," reported Martin Schüler of Dresdner.

Reports filed on March 6 by three big Europe-based hedge funds (all in the range of $3-8 billion in capital under management) gave a window into the big hedge funds' losses in February and early March, as the carry trades started unwinding and "financial disintegration" accelerated. Man Group's AHL Diversified Futures Ltd. fund dropped 8.2% in first week of March, and has lost 7.2% for the year to date; Winton Capital's Futures Fund lost 5.9% in February, and Transtrend's Enhanced Risk fund fell 4.1% in February, and has lost 5.7% for the year to date.

At the point the Bank of Japan raised rates on Feb. 21, the yen carry trade—or, the "yen short position" in currency markets—was at 97% of its highest volume in history. Last time the yen carry trade reached record levels and then was punctured and quickly "unwound," was in 1998, with the Russian GKO bond default and subsequent meltdown of the large LTCM hedge fund, later admitted by both International Monetary Fund and Federal Reserve officials to have nearly collapsed the international financial system. In that 1998 "unwinding," through early 1999, the dollar fell by more than 20%. Lyndon LaRouche has warned repeatedly that London, and some stupid U.S. economic interests—are threatening to trigger a further 20% dollar plunge, and international monetary and financial chaos.; March 13, 2007 6:08 PM
Anonymous said...: Yeah, I can't understand the big yawn either. Every single economic indicator i've looked at shows that the whirlpool caused by the housing bubble is going to suck everything down with it and yet, in Massachusetts, good old corrupt Massachusetts (particularly Cape Cod and the South Shore), people are barely budging on their over-bloated, over-valued, weather-beaten dogs for houses in their asking prices.

Sure, they've come down a couple of grand here and there but, surprisingly, they sit there, month after month and no one is buying and you're scratching your head saying "huh?"

Look sellers, don't believe your desperate Realtors. You need to come way down. Now, I know you got screwed because you bought high and lord knows, with the massive amount of foreclosures hitting the Cape, that you need to make your money back but, dear child, those days are gone. Sell low, sell now and let's stop this foolishness.

love,
a would-be-homebuyer who isn't even close to buying your crap at these prices.; March 13, 2007 6:52 PM
Anonymous said...: This comment has been removed by a blog administrator.; March 13, 2007 7:21 PM
FlyingMonkeyWarrior said...: Angelo Mozilo sez on CNBC.

FMW is paraphrasing the interview live.

Country Wide will hire people from the busted sub prim lenders, only 7% of Countrywide is sub prim originated lending. Angelo Mozilo also sez on CNBC that the Guts of problem is speculators, who declared homes as primary residences. Over reaction is not prudent and
we need to step back and accommodate re finance before they re set.
Question: Are Mortgage backed securities are the bag holders? They have big balance sheets and are diversified. Also indemnifications are in place for buy back issues, as far as Country Wide is concerned. He sez no soft landing. He sez it will get uglier and

The Fed needs to cut rates to soften the blow.

Negative impact on economy expected. Regulators need to mitigate economy impact of this, as it is too important to the wealth building American people and the people that have re setting loans.

Values are going down and people are exposed and people get angry. Great for Country Wide bad for new home buyers and minorities.

END

New Century trading is frozen on NYSE as of 3;27 p.m. EST.; March 13, 2007 7:38 PM
Anonymous said...: Take 2 -- Any advice for a Bitter Renter in Los Angeles?

I am guessing...that you'll say keep renting. The bust is coming...

Getting so discouraged. HELP!; March 13, 2007 9:35 PM
Anonymous said...: Article from CNN Money today
http://tinyurl.com/2snk87
quotes L Yun as economist of NAR. Maybe even the NAR is seeing that D.Liareah is losing credibility with MSM and sheeple. Hope his mother won't cry when he's tanked.; March 13, 2007 10:59 PM
FlyingMonkeyWarrior said...: CAFR1 NATIONAL RELEASE - 03/13/07 - PRESS RELEASE - TOP PRIORITY

China and the 1 Trillion Dollars (for starters)
By Walter Burien - http://CAFR1.com

As we all know, first cheap and now high-tech Chinese goods have saturated the US Market for well over a decade now.

This created a very large strain on the balance of trade between the US and China.

Additionally, the Chinese government to keep that imbalance running at full steam kept their currency the Yuan pegged to the dollar so that their currency would maintain at a fixed "low" rate to the dollar and thus their manufactured goods would remain cheap in comparison to US Goods where their currency would not appreciate to the dollar and thus cheaper Chinese products.

The US Government and manufactures here in the US were not happy with China's currency strategy and for the last several years put the pressure on China to stop pegging their currency the Yuan to the dollar and move to a basket of currencies to determine the Yuan's value. Well, after severe pressure exerted by the US Government, about six months ago China buckled and un-pegged the Yuan from the dollar and went to a basket of currencies pegged to the Yuan.

This left China holding about 2.5 trillion dollars now up for investment.

Hold on to your hats, here comes the new Merrill Ling or Smith Chang Investment Company to the US. On Friday, March 9th 2007, China announced they were starting an investment company this week in the US and 1 Trillion Dollars would be transferred to the company at this time designated for US Investments and maybe another Trillion Dollars on the way soon. This will make the new Chinese investment company the largest liquid capital for investment company in the US.

For all of those precious metals enthusiasts the following clear statement by China should put a smile on their face. China stated they would use 1/3rd of their investment capital to buy precious metals. Look-out Gold, Silver, Copper, and Platinum, the Chinese are a coming with a trillion or two to bang up your prices. May start this week but in any event, it is a coming.

China will also be investing in the real estate and Stock market also. Isn't it nice that the Chinese will help stabilize the US economy with all of those dollars it has amassed at the cost of US jobs hear. Well, I guess one back has to scratch the other.

China said they still would continue too buy US Treasury notes, so Uncle Sam will still be subsidized to on their debt.

This move by China will cause problems in their own country as orders for goods decline, but then it is about time they gave the US a fair shake in return for the unprecedented growth realized by their own economy over the last decade from those dollars flowing in.

We are looking at one of the major market events of the decade here folks. Keep your eyes open, sit back, and enjoy watching the fun, the Chinese are a coming.

Mark these prices down today, and see where they are one month from now: As of 03/13/07 - CLOSING PRICES: Gold $643.10, Silver $12.73, Copper 2.81, Platinum $1,204.00

And let's not forget the Dollar Index price: 83.40 (a pyridine shift of foreign money flooding into the US for investment is about to occur)

To view all commodity prices: http://www2.barchart.com/mktcom.asp?code=BSTK

Heads Up, the Chinese are a coming!

Walter J. Burien, Jr.
Prior CTA (Commodity Trading Advisor) 1978 - 1992

http://CAFR1.com

PS: As always, "Follow the Money!"; March 13, 2007 11:38 PM
FlyingMonkeyWarrior said...: America’s Subprime Collapse and What It Means for the Rest of the World
Posted by Dan Denning on Mar 13th, 2007

Is the financial apocalypse upon us, with the meltdown in subprime mortgages on the frontiers of risk? Well, America’s subprime collapse is a rather obvious and ominous sign that something’s not right, sort of like cane toads falling from the sky. But what does America’s latest risk ruckus mean for the rest of the world?

“New Century Financial Corp.’s troubles could restrict the availability of credit to rivals in the subprime mortgage industry,” reports Alistair Barr at MarketWatch. New Century’s (NYSE: NEW) shares fell 48% yesterday to close at US$1.66. Other subprime lenders got taken to the woodshed too, with Accredited Home Lenders (NASDAQ: LEND) down 28%, Fremont General Corp. (NYSE: FMT) down 16%, and NovaStar Financial Inc. (NYSE: NFI) down 19%.

All of this is very bad news for shareholders in these firms. And if New Century goes bankrupt, or credit agencies downgrade the mortgage-backed bonds originated by any of these firms, you’ll start to see even more unanticipated consequences of the subprime collapse. But what, really, is going on?

Well, one way to put it is that risk is being repriced. For the American housing market, there is a very important and very negative consequence to this. It means primary lenders are going to be a lot more careful about whom they lend to. It also means the secondary mortgage market-the folks who buy up loans from the originating bank-will also be more careful about the loans they purchase. All of which has one simple result: tighter credit conditions in the American mortgage market, slower home-price appreciation, and fewer new and existing home sales. The housing bull is well and truly gored. But it’s just now starting to bleed.

What does this have to do with the rest of the world? If the supply of cheap money to buy houses in America goes down at the same time the inventory of new and existing homes continues to rise you get a housing slump, which is another way of saying lower GDP in America’s housing-led consumer economy.

The housing/mortgage-lending bubble has been key to America’s global performance over the last five years. Housing related industries have supplied, according to some figures, as many as half of all the new jobs created in America in the last five years. Realtors, mortgage brokers, builders…all of this job and wage growth came from the housing industry. A housing crunch in America, then, is the same as consumer crunch. Job growth slows. Credit conditions tighten. Americans spend less.

Will Americans ever really spend less?

Ah, now we’re at the heart of the trouble with housing. Investors survived the crash in tech stocks because stock market profits (or losses) were never really passed through into the real economy. It was like a night at the casino gone bad. But once you left the casino, no worries.

Losing a gamble on the direction of house prices is a much bigger deal for today’s investors, who are five years closer to a fictional retirement than they were when the tech bubble bottomed. Housing’s bust has real economic consequences.

First, you take out a huge loan (the average loan-to-value ratios on subprime loans last year was 85%, and subprime loans were 30% of all mortgage originations.) But more importantly, the house is the central asset in most personal financial plans. If you can’t rely on your house or rental property for income, if you can’t figure on selling your house at a later date and living off the proceeds, if your house becomes a perpetual, credit-destroying liability instead of an asset, you’ve made a horrible trade.

Millions of Americans have made a horrible trade. And to the extent that these Americans have been confident of rising house prices while spending money they don’t have, the loss of confidence, along with the loss of the dream, will have an impact in the real global economy. Loss of confidence leads to loss of appetite for risk. Disappearing liquidity is next.

What about Australia? We read in today’s Age that the median house price at the bottom end of the housing market in Melbourne grew by 3.6% last year to $290,000. We also read that while rents are up 28% in the last ten years, housing prices are up 154%. This, we are told, is why rents must rise.

But who can afford them? Rents must rise if the expectations of home owners are to be met. But the market, as far as we know, is under no obligation to make home owners happy. And here is how Australia is like America. People buy homes because they want to own them and it’s a lifelong dream for many of us. Lately, with the availability of cheap credit, people buy even more expensive homes, expecting to either sell them later or rent them and generate some passive income.

All of that is fine in theory. But then there is the reality of what the market will bear. Cheap money has driven up home prices so high that entering the housing market is not now a realistic alternative for many first-time buyers. Making credit more available will only lead to greater inflation. More government money for new or first-time buyers will simply be added to the price.

Something has to give in this situation between home-owners looking for yield and renters looking for a roof. Price is what has to give. Reserve Bank Governor Glenn Stevens was surprisingly blunt about it when he said, “Frankly, what you really want is lower prices…the rental yield is very low. A big reason…is that the capital value of these properties is so high.”

Notice he said capital values. This is the problem with real estate. What it’s worth on paper and what the market value is are often different numbers. Stubborn home-owners, drenched in the psychology that home prices always go up, may be reluctant to lower their asking prices. Or, if they are investment property owners, they may push up rents to try and cover the effect of rising interest rates and flat market values.

For the would-be renter, the options are grim. Spend over 30% of your gross income on accommodation and you don’t have much left in discretionary spending (bad for the economy). Move further away from work and spend more on commuting. Or become a Buddhist monk in Thailand. Nearly all of these options involve taking on more debt, which is why we called homeownership “The New Serfdom” way back in 2004 when we wrote The Bull Hunter. An asset is no asset if it requires perpetual debt to carry it.

Dan Denning
The Daily Reckoning Australia

url:
http://www.dailyreckoning.com.au/sub
prime-collapse/2007/03/13/; March 13, 2007 11:49 PM
Anonymous said...: If you were a Japanese Auto Manufacturer and your government manipulated your currency so that you had a 30 percent advantage over your competitors then you should be able to do better then Ford or GM.

In other words, if you could buy a Mitsubishi Evo 9 for 35K or Subaru Impreza WRX STI with Bermbo Brakes for 36K versus a Seleen S281 Mustang for 42K or Ford Mustang SVT for 55K what would you rather buy?

If America had a 30% advantage over Japan and said you could buy a Seleen S281 Mustang or 24K or Ford Mustang SVT for 28K would you still buy a Mitsubishi Evo 9 for or Subaru Impreza WRX STI?

The Bank of Japan gives that advantage to the likes of Toyota, Mitsubishi, Subaru, Honda, and Nissan by keeping their interest rate low to weaken their currency.; March 14, 2007 12:47 AM
Anonymous said...: Investing
Kass: Subprime's Siren Call
By Doug Kass
Street Insight Contributor
3/12/2007 12:39 PM EDT
URL: http://www.thestreet.com/newsanalysis/investing/10343814.html

This column by Doug Kass was originally published on March 12 at 9:12 a.m. EDT on Street Insight. It's being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.
Maybe Jim "El Capitan" Cramer is right when he writes, Get Over Subprime's Collapse and in his view that the brokerage companies will be relatively immune from the subprime carnage.
But I doubt it.
It is far too easy and convenient to dismiss the subprime woes based on the notion that because it is on the cover of The New York Times or on the tongue of many market commentators, it is either discounted or not as bad as it seems. Rather than listen to the comments of others on the Street and in the media, I prefer to deal in facts as opposed to simple and glib sound bites.
Here is a tidbit from Page 132 (yes, I do read every page in these filings!) of Goldman Sachs' (GS) 10-K dated Nov. 24, 2006.
Securitization Activities
The firm securitizes commercial and residential mortgages, home equity and auto loans, government and corporate bonds and other types of financial assets. The firm acts as underwriter of the beneficial interests that are sold to investors. The firm derecognizes financial assets transferred in securitizations provided it has relinquished control over such assets. Transferred assets are accounted for at fair value prior to securitization. Net revenues related to these underwriting activities are recognized in connection with the sales of the underlying beneficial interests to investors.
The firm may retain interests in securitized financial assets, primarily in the form of senior or subordinated securities, including residual interests. Retained interests are accounted for at fair value and are included in "Total financial instruments owned, at fair value" in the consolidated statements of financial condition.
During the years ended November 2006 and November 2005, the firm securitized $103.92 billion and $92.00 billion, respectively, of financial assets, including $67.73 billion and $65.18 billion, respectively, of residential mortgage loans and securities. Cash flows received on retained interests were approximately $801 million and $908 million for the years ended November 2006 and November 2005, respectively. As of November 2006 and November 2005, the firm held $7.08 billion and $6.07 billion of retained interests, respectively, including $5.18 billion and $5.62 billion, respectively, held in QSPEs.
Note to Cramer: El Capitan: I am officially ordering a Code Red!
The Subprime Fungus
"I guess we are a bit surprised at how fast this (subprime) has unraveled." -- Tom Zimmerman, head of Asset-Backed Securities research at UBS, in a recent conference call for institutional investors.
The fungus of subprime credits has grown in scope and in economic consequence over the last three months. We are now beginning to experience a full-blown bursting of the latest asset bubble, which could prove even more devastating than the piercing of the Nasdaqstock bubble in 2000. The impact of the subprime collapse on the availability of mortgage credit -- and, in turn, consumer spending -- is the primary reason why I believe the U.S. economy and corporate profits will materially disappoint most observers, and why the equity markets remain vulnerable.
Many, like Cramer, Larry Kudlow and others, readily dismiss the potential spending consequences of substantially less capacity in the subprime mortgage-lending market and the emerging trend by mainstream originators and lenders to reduce lending in the primary mortgage market and for refinancing cashouts.
Indeed, Jim takes the subprime issue one step further, noting that the mortgage house of pain will have a salutary market and economic result, as it will hasten the Federal Reserve's path toward monetary ease. Shockingly (at least to me), many others can't comprehend the link between mortgage availability and consumer spending, claiming that the correlation between the two variables is unclear.
I have not touched on the outlook for considerably higher credit losses at the financial intermediaries that address the housing market, which I will reserve for a future time. However, I will underscore the perfunctory conference calls and the generally disingenuous role of Wall Street rating agencies, which continue to hide the damage for owners of collateralized product paper as it relates to the collapse of the subprime market. It seems that at the end of every cycle's excesses, the investment community rationalizes the indefensible, owing to the enormous profitability of the products that are being peddled. The higher a market surges, the easier the product is to sell, but the less straightforward the pitch becomes.
Time and time again -- whether it be junk bonds, tax shelters, technology stocks, high-priced IPOs, glowing research reports -- Wall Street (despite former New York Attorney General Spitzer's noble initiatives) continues to exist for the purpose of raising capital (i.e., selling stocks and bonds) and not for the purpose of producing objective research and making clients money.
The brokerages' ties (in packaging and trading mortgage products) and earnings exposure to the subprime collapse -- they have 60% of the market share of the mortgage financing market -- were covered in depth in yesterday's New York Times article by Gretchen Morgenson. (Editor's note: A subscription is necessary to access this link.)
Broadly Negative Multiplier Effect
From my perch, the collapse of the subprime markets -- delinquencies now stand at 12.6% for subprime and 4.7% for the overall mortgage market -- within the context of the $6.5 trillion mortgage securities market will have a broad and negative multiplier effect on mortgage activity (housing turnover) and retail spending. It will also serve to further grease the current slide in new residential construction activity and hasten the drop in home prices.
It is important to understand housing's disproportionate role in terms of buoying employment and industrial production from 2000-06 in order to appreciate how violent the reversal's effect might be on aggregate economic growth. As I wrote back in October 2006:
The real estate industry has been responsible for 40% of the job growth since 2001.
The rise in home prices has provided for 70% of the increase in household net worth since 2001.
The increase in consumer spending and real estate construction spending has contributed to 90% of the growth in GDP since 2001.
Not only did new home construction embark on an era of unprecedented growth, but the broad rise in national home prices gave way to the concept of the "Home as an ATM" -- a source of cash, a substitute for savings and an enabler of the consumption binge (which was above and beyond the income means of the average consumer).
During the 1990s, mortgage equity withdrawals averaged between $20 billion to $80 billion per year, or only about 0.50% of GDP. By contrast, average yearly mortgage equity withdrawals climbed to about $230 billion, or 2% of GDP, over the last five years and peaked at nearly 3% of GDP in the second quarter of 2006 -- or at an annualized yearly rate of almost $400 billion!
Several months ago, Freddie Mac (FRE) forecast that mortgage equity withdrawals will drop by 20% this year and by another 30% in 2008. These projections were done before the subprime fungus spread, and I think its estimates are too high.
In 2006, subprime mortgage loans trebled (to 36%) as a percentage of all mortgages issued. "Liar loans," or non- and low-documented loans that relied on the candor of homebuyers (never an intelligent loan strategy!) doubled (to 40%) over the same time frame. Creative loans, characterized by teaser rates, negative amortization and interest-only, among others, became the New Big Thing in real estate and dominated the mortgages issued in 2006. Refinancing cashouts proliferated, and, according to BankAmerica Securities, the average loan to a subprime borrower rose from 48% of the property's value in 2000 to 82% last year.
While the media have been focused on the D.R. Horton (DHI) CEO's bleak forecast, every quarterly conference call with leading homebuilders last quarter confirmed the mounting restrictions of credit by mortgage lender. Stated simply, it is growing harder and harder to get mortgages. In the interim interval, the subprime market's health has worsened and so has, on a daily basis, the availability of mortgage credit (the lifeblood of our economy's well being).
In light of the recent adverse loan experience and bad publicity, most originators are avoiding these loans like the plague. Today, no mortgage lending officer at any bank or thrift will dare stretch lending standards to home buyers, as the mandate of tightened loan-to-values and higher FICO scores are, increasingly, the directive from financial companies' management.
Moreover, the fixed income market has a diminished appetite for packaged subprime loans and a diminished appetite for any collateralized product that includes subprime loans. It is unlikely that the institutional investors will hunger for this product for some time to come and originators will be faced with the hard reality that subprime loans will face more limited demand in the primary and secondary markets.
With financial intermediaries turning off the mortgage loan spigot, first-time homebuyers and trade-up buyers -- who already are pressed by the lack of affordability (home prices divided by household incomes) -- will have markedly reduced access to the residential real estate markets. As a result, the cyclical decline in housing will be forced into another down leg, just at a time when inventories of unsold homes remain elevated and the volume of ARM resets peaks (in third-quarter 2007). As a consequence, the gradual decline in home prices seen over the last 12 months runs the risk of becoming a full-fledged waterfall slide.
The mortgage market's new reality will serve to immediately (and adversely) affect housing turnover and reduce the demand for expenditures on many products. Exacerbating the decline in personal consumption expenditures will be the virtual disappearance of mortgage equity withdrawals, which have been the straw that has stirred the drink of consumption since 2000.
Spending on everything from appliances, furniture, flooring, roofing, paint, televisions, telephones and tools will suffer from the lower housing turnover and activity. The cessation of refinancing cashouts could have an even broader effect, constraining discretionary spending on restaurants, apparel, vacations, remodeling projects, automobiles and other durables.
With the demand for a broad array of consumer goods and services moderating, corporate profits are at risk -- and will quickly disappoint relative to expectations. Up until now, the service sector has remained healthy (even while housing and autos weakened), but even the buoyancy in services will be pressured and put to the test in the months to come. In the fullness of time, the rate of job growth will decelerate even more markedly than we have seen over the last several months as construction unemployment accelerates and the contagion permeates the broader job market.
More tepid top-line sales growth will weigh on corporate profit margins (one of the cornerstones to my bearish case for equities and valuations) as operating leverage will be difficult to come by. Unfortunately, all this will occur at the same time cost pressures remain high.
The CRB RIND Index -- an index of spot raw material prices -- just made a multiyear high last week, while unit labor costs have upticked to levels not seen in years.
In summary, the credit contagion that started with the fungus of subprime lending will hit an already weakened housing market and could spread to other securitized markets. Its impact will be felt broadly and should have a pronounced negative effect on personal consumption, corporate profits and stock prices. It will suck.; March 14, 2007 1:17 AM
Anonymous said...: http://www.nytimes.com/2007/03/14/business/14lend.html?_r=1&pagewanted=2&oref=slogin

In an appearance on CNBC, Angelo Mozilo, the chief executive of Countrywide, said investors were overreacting to the subprime problems. “This is now becoming a liquidity crisis, an unnecessary one,” he said. “There’s been a rush to judgment.”

- A rush to judgement!?!
what about mozilos bigger, earlier rush to liquidate?!

FrugalJoe@Walla.Com; March 14, 2007 2:57 AM
Anonymous said...: This blog need to be updated more often or I'm going elsewhere.; March 14, 2007 11:44 AM
Anonymous said...: Congress must aid subprime victims: consumer group

RAGE!!!
So I’m intelligent, recognized the housing bubble, was fiscally responsible and didn’t buy an over inflated asset – A house. Now my children and I have to bail these retards out with our future and present tax dollars. This it BS!!!!

http://tinyurl.com/25hcf5; March 14, 2007 3:33 PM
Anonymous said...: Where did everyone go?!; March 14, 2007 5:08 PM
Anonymous said...: Got this from an article on yahoo:

title: "As rates soar, 2.2 million Americans risk losing homes this year"

"During the boom years, when the repayments got too high, home owners could even refinance their loans borrowing against the increased value of their house.

That's exactly what Edwardsen did, remortgaging her home three times between 2002 and 2006.

Each time she got into difficulties, her mortgage broker would offer a new deal. From an original loan of 103,000 dollars, she now owes the credit company some 285,000 dollars even though her monthly income has remained the same.

"They took advantage of the fact that I was so desperate that I needed it. I told her (the broker) I had trouble with it. So she said in three months 'we're going to do this again. We're going refinance you again and the money you take out, you going to use it for your mortgage payments,'" Edwardsen said."

Make the loan payments using the money from the loan???? And she believed this???? freaking amazing.; March 14, 2007 5:25 PM
Anonymous said...: Let it go, almost 2PM, there comes the PPT to get the market out of the toilet. Big red flag: Who in the hell can find anything positive in this market?
It's all rigged!; March 14, 2007 5:27 PM
Anonymous said...: http://www.ft.com/cms/s/48d22ab6-d196-11db-b921-000b5df10621.html

The March market slide rebound has been erased.

Retail sales down. People are afraid to spend money.

ARM defaults at 14% and rising.

Yen rises as carry trade unwinds

And: oil prices rise as "stocks of oil could be heading for the biggest first-quarter decline for more than 10 years after a fall of 1.26m b/d in the first two months of the year."

All this fun, and Peak Oil, too?

Yay for the brave new world!; March 14, 2007 5:32 PM
Anonymous said...: HEY UPDATE THIS BLOG!; March 14, 2007 5:45 PM
Anonymous said...: Great story about GM & Toyota..

BTW, not ONLY is Mozilo dumping shares at a breakneck pace, look at all his executive staff cronies, the whole chain of command @ CFC is dumping shares as fast as they can hit the keypad.; March 14, 2007 6:19 PM
Anonymous said...: Orange County, CA is a wonderful place. There are several intersections off the 5 freeway that are made for racing. You can race the Asian driver in this lowered Honda, the Korean woman in her Lexus, the white middle aged fat Christian in his minivan. Or race the Coto bitch housewife on Oso Parkway. And every car is fast, and every car can beat every other car. What a delight!

The housing is expensive in Orange County, CA and will continue to remain high. Even after the mortgage industry's smoke clears. Because, you see, we will repeat the same exact pattern in the next couple of years. So why worry?

Why worry at all. Does not God take care of all his creatures? If you believed that, you would relax and let life happen.

Or if you thought positively, "Today, the real estate market will appreciate. Today, the real estate market will appreciate" everything would be ok. That's the problem, you are thinking negatively. You are not transforming your thoughts into cold hard cash.

Orange County, CA is the place of positive thinking. I am positively absolutely sure that my maid does not mind her three bus ride from Newport Beach to Santa Ana. If only she thought positively..."If only I had car. I want a car. I want a hummer."; March 14, 2007 7:55 PM
W.C. Varones said...: Senator Chris Dodd proposes massive government bailout of housing speculators.

ttp://wcvarones.blogspot.com/2007/03/chris-dodd-proposes-massive-government.html; March 14, 2007 9:34 PM
Anonymous said...: Keith are you MIA? I am starting to worry that Mozilo sent his gumbas after you..

Better check in and let us know your OK!; March 14, 2007 9:36 PM
Anonymous said...: Anybody home here?; March 14, 2007 10:01 PM
Anonymous said...: here is the letter New Century sent to all its Broker. Basically saying, "Sorreee, we ha no money, Papi pass da chile"

https://lounge.newcentury.com/cms/pdfs/nc.com/broker_letter.pdf; March 15, 2007 12:56 AM
Anonymous said...: ZOMBIES!!!!!!!!!!!!!!!!!

Subprime Foreclosures: The Prisoner's Dilemma

Adrian Ash
BullionVault.com
13 March 2007

"...When house prices fall, foreclosure rates rise. But that only tempts mortgage lenders into making the crash worse..."

"HOUSE PRICES to recover next year," said The Times of London on 17 November, 1989.

Real estate in the United Kingdom had risen three times over on average during the previous 10 years. National prices rose 40% in the last 18 months alone!

But now, suddenly, house prices had stopped rising. When would the good times kick off again?

The Bank of England did all it could, slashing UK interest rates by one-third. Mortgage lenders put on a brave face too, easing their E-Z lending terms further still. And the gentlemen of the press were only too willing to talk up the market.

No wonder, then, that "recovery [was] forecast for house prices in market awash with loan funds," as the Times reported in Jan. 1990. But not even broad money supply growing by 18% year-on-year could stop the rot.

By July 1990, "the bottom of the current house price cycle may have passed," the paper went on. Come the fall of that year, however, The Times had to repeat itself again.

"House prices bottom out...the long slide in house prices could be nearing its end," it said. National prices continued to slide regardless.

By Sept. '91, real house prices - adjusted for inflation - stood 25% down from the peak. "House-price surge is on the way," said The Times, "but wait for it."

No fooling! The following month, Oct. 1991, The Times finally admitted that "Fall in house prices dashes market hopes."

Why so glum - and who was to blame? The mortgage lenders looked guilty. But they were now suffering record late payment rates. At least one major bank looked set to go under.

Mortgages more than 6 months in arrears accounted for 3.5% of all loans outstanding at the start of 1992. Cue The Times to report that "record repossessions are keeping down house prices" - even though the mortgage lenders themselves had long since stopped repossessing when they could possibly help it.

America's mortgage lenders may well try the same remedy in 2007.

US foreclosures rose 42% in 2006 according to RealtyTrac.com, up from 855,000 in 2005 to 1.2 million nationally. But throwing young families out on the street rarely makes for good PR. And during a genuine real-estate slump, it only adds to the downward pressure on home prices.

ForeclosureDeals.com picks up the story:

"If a homeowner can't make his or her monthly mortgage payments...he or she is usually in forced into the position of defaulting on the mortgage, and then the lender must foreclose on the home. After repossession, the lender is the new owner [and] the property is known as a repo home, property repossession, real estate owned property (REO), bank-owned property, foreclosure home, government home, distressed property, repossessed home [or] commercial seized property.

"Whatever name the properties have, they all have one thing in common - the new owners want to sell them as quickly as possible, often even if that means selling the repo homes at a price well below their full market value."

Selling an asset below market value might bring a quick sale. But it also pulls aggregate prices down further. The lesson for US mortgage lenders couldn't be clearer.

Ahead of the United Kingdom's last house-price crash, nine out of every 10 late-paying mortgages more than 12 months in arrears were taken into repossession. By the bottom of the slump, however, the mortgage lenders slashed that kill rate beneath one-in-5.

Fast forward to March 2007, and "it's true that [US] foreclosures could have a negative impact on the housing market if they continue to increase at this rate," said James Saccacio, CEO of RealtyTrac, recently. "In some of the more problematic local markets they already may be contributing to slowing home price appreciation and a glut of homes for sale.

"However, most local markets have been able to re-absorb foreclosure homes without seeing any major damage to the local economy."

For as long as that's true, the collapse of America's subprime lenders may indeed be "contained" as Ben Bernanke would have us believe. But the subprime lenders - trapped in a classic "prisoner's dilemma" - know the dangers posed by forced real estate sales.

The best outcome? Game theory says people will screw their peers every chance that they get. In the "prisoner's dilemma", two players can either help or betray each other. The optimum choice is always to turn state's evidence and get early release - assuming, of course, that the other felon plays it straight and doesn't betray you!

In today's real-estate market, just the same problem's at work. For each individual mortgage lender, the need to cover their ass will mean recovering their assets. But for the industry as a whole, it would be better off leaving late-paying home-owners right where they are. Foreclosing and selling en masse will only push real-estate prices lower, faster.

Either way, a lot of companies and households now look set to go bankrupt. Expect to find zombies wandering both Wall Street and Main Street...carrying debts they cannot repay...lent by finance companies that can't afford to call in their loans.

Adrian Ash

P.S: "Boom days gone forever as house prices still fall," said The Times of London in June '92, three years after the top. But taking that as a contrarian signal - and buying back in - would have cost you money for another four years.

City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is head of research at www.BullionVault.com .

(c) BullionVault 2007; March 15, 2007 1:18 AM
Dr. Brightside said...: Subrime biggest Hoax since Y2k
That's what I say, what say you?

http://drbrightside.blogspot.com/2007/03/subrime-bigger-hoax-than-y2k.html#links; March 15, 2007 2:58 AM
Dr. Brightside said...: Subrime the biggest Hoax since Y2K. I have to agree, what say you?

http://drbrightside.blogspot.com/2007/03/subrime-bigger-hoax-than-y2k.html#links; March 15, 2007 2:59 AM
Anonymous said...: the fed reserve speaks pig latin: "owe me blay"

the dahvid; March 15, 2007 3:25 AM
Anonymous said...: World Liquidity Crisis Emerging
http://tinyurl.com/yolb9m; March 15, 2007 3:27 AM
Anonymous said...: Flat housing market causes rise in rentals

Investors stuck in flat housing market turn to tenants to regain capital

Struggling to recoup expenses in a weak housing market, real estate speculators are flooding Brevard County with inexpensive rental homes, causing heartache for apartment operators and bargains galore for apartment dwellers looking to upgrade their digs.

There were 1,127 homes available for rent this week in the county, according to the Multiple Listing Service. Realtors say that's more than twice as many as they recall seeing, although the exact number of rental homes in years past is not available.

Sheryl Jones of Century 21 had 60 single-family homes to rent last year. This year? She has 130.

"It's a buyer's and a renter's market now," she said

http://tinyurl.com/2nmcja; March 15, 2007 1:44 PM
Anonymous said...: US NEWS & WORLD REPORT

It's Going to Be a Tough Spring for Home Sellers

By Alex Markels

Call them the three stages of real estate grief.

At first, there is denial, like the kind John Davis and his wife, Jeffy, were living in when they put their three-bedroom home in Boulder, Colo., up for sale last April for $850,000. "We were pretty unrealistic," the 47-year-old social worker admits of his hopes for selling the charming but small farmhouse near the city's downtown. "We just figured it's such a great house ... in the perfect neighborhood."

Then, after denial, comes anger. Like the kind he felt six long months later when a buyer made a low-ball offer, then left town for a weeklong hunting trip. "I couldn't even get ahold of him to make a counteroffer," he gripes of the agonizing days leading up to his decision to pull the house from the market and rent it out for a while.

Finally, there is acceptance, a feeling the Davises are now in since relisting their house last month for $140,000 less than the original asking price. "We're finally coming to that place [of acceptance]," Jeffy says of the couple's attitude adjustment. "We're not going below a certain price. And if we need to, we'll find another renter. But we've dropped down to a fair number, and we feel good about that."

After more than a year of hoping they could get what their neighbors did at the market's peak, sellers nationwide are finally coming to grips with an increasingly ugly reality. While not yet in freefall, the country's housing slump is starting to look more like a bust as bulging inventories of unsold houses and an alarming rise in bad loans and foreclosures have helped push the nation's median existing-home price down by $19,600 from its July peak of $230,200. That's an 8.5 percent drop, prompting the first annual price decline since a nationwide recession in 1990.

READ THE REST HERE: www.usnews.com/usnews/biztech/articles/070314/14real.htm; March 15, 2007 5:47 PM
Anonymous said...: Enjoy Keith: HP and The Economist agree:

The Economist: Ponzificating

http://www.economist.com/finance/displaystory.cfm?story_id=8864415

Last month Tim Lee, a strategist at pi Economics, described the whole financial system as “the equivalent of a gigantic Ponzi scheme.”

In one sense, of course, he is right.

The American housing market seems to be suffering from the unravelling of a Ponzi-type system. Subprime loans were offered on generous terms that, implicitly or explicitly, depended on rising house prices. The banks that made these loans bundled them up and sold them in the credit markets to investors, eager for high yields. This was supposed to make the financial system more secure by dispersing risk more widely.

(hello) from France -)

gandalf-tof; March 15, 2007 9:13 PM
Anonymous said...: I think that Keith is getting free vacations from REIC, Lereah, Mozilo, etc, to be away from this Blog. How can you take vacation when the financial world is coming to an end?
BTW, get me a bottle of Brunello di Montalcino while you're there.; March 15, 2007 9:23 PM
Anonymous said...: pay more tax to bail out housing speculators, legitimize inflation creating printed dollars, or pay more tax to build affordable mass housings, not available to present owners, choice determined by the kickbacks, rakeoffs, degree of power over people and properties, skim jobbing profits, constant= more taxes, law paid for by reic,?; March 15, 2007 9:42 PM
Anonymous said...: Man used S&M website to incite rape of former mistress

By Dan Goodin in San Francisco
Published Thursday 15th March 2007 21:05 GMT

A former hedge fund manager man has been ordered to stand trial in superior court for an alleged plot involving an S&M site that can only be described as diabolical. The father of two and former cub scout leader is accused of posing as his estranged mistress and asking that she be abducted and raped to satisfy her sexual-assault fantasies.

The defendant, Albert Hsu, 43, of New Canaan, Connecticut, allegedly posted detailed personal information about the victim, including her picture, home and work addresses, phone number, license plate number, the train she takes to work and the car she usually rides in. Prosecutors claim the posting asked those responding not contact her prior to the abduction because it "would ruin the fantasy," according to news reports here (http://www.stamfordadvocate.com/news/scn-sa-nor.hsu.3.6pcsmar06,0,1305003.story) and here (http://www.nypost.com/seven/03062007/news/regionalnews/perv_set_up_ex_to_be_raped_regionalnews_jana_winter__roddy_boyd__kate_sheehy.htm). Authorities say Hsu hatched his evil plan to seek revenge.
Click here to find out more!

A co-founder and former manager of the Anchor Point Capital LLC hedge fund in Florida, Hsu on Wednesday was ordered to stand trial in superior court. Previously, his case had been assigned to the more lenient domestic violence court. The man had overseen billions of dollars in investments for clients including Xerox and Atlantic Philanthropies.

He was arrested on March 2 and was charged with crimes including attempted kidnapping, attempted sexual assault and criminal impersonation. Hsu is being held on $1m bail. According to reports, he was previously charged in a domestic-violence case that was later dropped. He has a history of mental problems and was put on suicide watch.

The scheme came to light after a man saw the posting on the bondage website collarme.com and called the unidentified mistress. ®; March 16, 2007 12:02 AM
Anonymous said...: Wop, Dago, Kike, Heeb, cracker, Nigger, spook, jungle bunny, spic, frog, limey, gook, dink, Fag, homo, quere, himey....relax people there just words!; March 16, 2007 6:07 AM
Anonymous said...: Will Friday be an economic doomsday?

http://infohype.blogspot.com; March 16, 2007 12:41 PM
Anonymous said...: Ten Ways to Make Your Home Irresistible at an Open House
1. Put fresh or silk flowers in principal rooms for a touch of color.
2. Add a new shower curtain, fresh towels, and new guest soaps to every bath.
3. Set out potpourri or fresh baked goods for a homey smell.
4. Set the table with pretty dishes and candles.
5. Buy a fresh doormat with a clever saying.
6. Take one or two major pieces of furniture out of every room to create a sense of spaciousness.
7. … Ten Ways to Make Your Home Irresistible
Check out the school district. . . .
ExchangeCA.com
La Jolla Real Estate; March 16, 2007 5:28 PM
Anonymous said...: Any drowning in debt drones papapap panicking yet?

if not why not?

LOL!; March 16, 2007 8:17 PM
Anonymous said...: THE SHADOW KNOWS?????

OMG, you just can't get better material than this!

Bob "Dancing on the Bottom" Toll says:

“‘When will the market rebound?’ Toll said. ‘Who knows? The Shadow knows. I have no idea. I would’ve thought that it would’ve rebounded by now and I would’ve been dead wrong, and I was.’”

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.VOKvt1oujI&refer=home; March 17, 2007 12:25 AM
Anonymous said...: CPI - food cost higher due cold weather, what next?

Bee farmer predicts devastation.

An unexplained and drastic decline in the bee population through much of the U.S. is creating a buzz

U.S. media reports refer to the epidemic as “colony collapse disorder,” a scientific mystery that has suddenly killed off countless honeybees in recent months. Some beekeepers have reportedly lost up to 90% of their colonies.

In the U.S., disappearing honeybees are already threatening the pollination of countless crops, including cranberries, apples, blueberries, cherries and almonds.

Between one half and three quarters of honey bees from across the nation are currently in California's San Joaquin Valley to pollinate almonds and other crops,

A third of the world's food production depends upon pollination

Although the cause of the disorder remains unknown, mites and nutrition are two possible causes and the stress of moving hives around the country to different crop sites makes them more vulnerable.

Adding to the problems for Southern California beekeepers is this year's lack of rainfall, which means fewer wildflowers to provide food for bees. Undeveloped areas where the flowers normally grow are also shrinking.

California beekeepers have seen the "colony collapse disorder" before in the 1960s, said Eric Mussen, a honey bee expert at University of California, Davis.

But the scale of the problem and its occurrence across the nation make this year different, bee experts said.

Some yearly losses are normal - about 20 percent, said Sherman. And Applegate said that he believes that most of the reaction to this year's colony collapses is "panic."

http://www.vvdailypress.com/
onset?id=336&template=
article.html; March 17, 2007 6:40 AM
Anonymous said...: China's Inflation Accelerates, Adding Rate Pressure

China's inflation accelerated in February as food prices jumped, adding pressure on the central bank to raise interest rates in the world's fastest-growing major economy.

Consumer prices rose 2.7 percent from a year earlier after gaining 2.2 percent in January, the National Bureau of Statistics said today.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
aAN9tDEhA9Mk&refer=home; March 17, 2007 6:52 AM
Anonymous said...: This summer if you think raising gas price will kill commuters who moved further from work for affordable housing, what do you think about raising food price?

Expect Food Prices to Rise

U.S. consumers generally see corn-based ethanol as a positive move toward enhancing U.S. energy production as well environmental benefits. What they haven't thought about is the potential for increase food prices.

While they won’t see much change in the price of corn flakes or a package tortillas, but growth in U.S. ethanol production – and its increased corn demand – will push meat, eggs and dairy product prices higher.

“It’s not the food made from corn, it’s food from animals that eat corn that will increase,” says Ron Plain, University of Missouri agricultural economist. “This is a major shift for agriculture. In the past, corn producers have grown food for people and feed for livestock. Now we add fuel to the list. I don’t see us doing that without having a lasting impact on the face of agriculture.”

Crop farmers are enjoying the highest corn prices in more than a decade while livestock and poultry producers are feeling the pinch. Plain said this price increase is unlike others the industry has experienced.

For example, corn prices can jump up in a drought year. “But the next year, we plant a new crop, we harvest that crop, and prices come back down," says Plain. “This new demand scenario isn’t like a drought. It will be sustained before, during and after the crop gets planted and harvested. I see corn trading around $4 per bushel for the foreseeable future.”

http://www.porkmag.com/
directories.asp?pgID=
720&ed_id=4841; March 17, 2007 7:10 AM
Anonymous said...: The Financial Times reported that US immigrants (legal or not) wire transfered US$62.3 billion to Latin America and Caribbean in 2006. That was 14% higher than what they sent in 2005. We can assume that most of this money was earned in cash, without paying any taxes, and related to the housing boom, including mortgage fraud and illegal cash backs. That's money that wasn't applied back into the extra infrastructure needed to absorb millions of these new immigrants and their gazillion new babies. Now since the boom is over, those millions of illegals are waiting for some amnesty to fall on their laps, so they can free ride on welfare and other social services, while making cash on the side, as usual, without paying any taxes. Why volunteer to pay taxes if they were working before for cash, under the table? And that figure is only to Latin America, so imagine how much it's to the rest of the world.; March 17, 2007 7:56 AM
Anonymous said...: Mortgage tsunami

http://www.oc-fliptrack.com/

Nice chart - says it all really.; March 17, 2007 9:16 AM
Anonymous said...: China's Central Bank Announces 0.27 Percentage Point Increase in Key Interest Rates

China's central bank said Saturday it will raise key interest rates by more than a quarter percentage point in a move to cool torrid economic growth.

The 0.27 percentage point hike in one-year deposit and lending benchmark rates will go into effect Sunday, the People's Bank of China said.

http://biz.yahoo.com/ap/070317/
china_interest_rates.html?.v=1; March 17, 2007 6:08 PM
Anonymous said...: Cost of living leaps in February

WASHINGTON - Consumer inflation spurted higher in February, reflecting rising costs for gasoline and big jumps for food, while industrial output rebounded sharply, in large part because of the biggest jump in utility production in 17 years.

The Labor Department on Friday reported its Consumer Price Index rose 0.4 percent last month, double January's rise and the largest advance since a like increase in December.

http://www.al.com/business/
birminghamnews/index.ssf?/
base/business/
11741193109160.xml&coll=
2#continue; March 17, 2007 7:09 PM
Anonymous said...: impeach bush and put rove and cheney in jail,whats the big deal; March 17, 2007 7:11 PM
Anonymous said...: The high cost of living here

Did you know that less than half of the people who work in Seattle actually live inside the city? High housing prices are a key factor.

In 2006, the typical Seattle family of four earned $74,300 -- about $30,000 less than the income needed to afford the typical home sold that year.

Because incomes have not kept up with the increasing cost of land and construction over the past six years, the gap between what the typical worker can afford for a one-bedroom apartment and what a developer must charge to cover costs has increased by 192 percent, Farris said.

Just 49 percent of people who work in Seattle live in the city. This means teachers spend more time driving and less on students, and police officers and firefighters live farther from where they work, said John McIlwain, the senior resident fellow for housing at the Urban Land Institute, a national land-use think tank.

The extra driving pumps more greenhouse gases into the atmosphere and, as the cost of fuel rises, will spur people to look for jobs closer to where they can afford to live, he said.

Ultimately, that will limit employers' ability to attract talent and lead more mobile businesses to leave Seattle, McIlwain said. "Jobs follow workers."

http://blog.seattlepi.nwsource.com
/buzz/archives/112575.asp; March 17, 2007 7:20 PM
Anonymous said...: Salary rankings must count cost of living

I liked Mike Arndt's Feb. 28 letter ("Even at 40th, Teachers Earn Good Money"). Because of the Register's generally biased attitude, I am very surprised that you would print such a letter.

I have a chart from sources such as Missouri Economic Research, the National Education Association, the University of Notre Dame and the cost-of-living salary calculator indicating that if you examine the average Iowa teacher's salary with a cost-of-living factor, it ranks about 30th in the nation.

That is just one rank below California. If you just use raw data, California ranks third in the nation for teachers' salaries. Oklahoma ranks 48th, but when cost of living is taken into account, it ranks 23rd.

Many people, including the Register, are enablers to the paranoid cries of the teacher's union and ignore the reality of what it costs the taxpayers to keep up with their demands.

http://desmoinesregister.com/apps/
pbcs.dll/article?AID=/20070307/
OPINION04/703070346/-1/LIFE04; March 17, 2007 7:24 PM
Anonymous said...: Everyone in Southern California was affected by the grocery strike last year. A friend or a family member, along with thousands of other workers, went on strike for four-and-a-half months. They missed out on their wages and cost their companies around $2 billion. At the end of the strike, both the chairmen of the grocery corporations and their employees felt robbed.

Now those same grocery workers and the companies that employ them are back at the negotiating table. Their contract, the source of their grievances, expired Monday, March 5.

The United Food and Commercial Workers and the biggest grocery chains – Albertsons, Ralphs and Vons – have agreed to a two-week extension. They will use this time to negotiate the new contract.

It has been almost six years since their last raise and the cost of living is rising.

http://www.temeculavalleynews.com
/story.asp?story_ID=21408; March 17, 2007 7:32 PM
Anonymous said...: Local inflation rate is up 1 percent for just the month of February

Consumer prices in Southern California increased 1 percent in February and are up 3.5 percent over the past 12 months, the Bureau of Labor Statistics reported today.

The Consumer Price Index for the Orange County-Los Angeles-Riverside area rose as the local cost of housing – calculated to included shelter, furnishing, fuels and utilities, and household operations – rose 1.3 percent in February and 5.7 percent in the past 12 months, BLS said.

The local cost of utility piped natural gas service increased 14.1 percent in February, the federal agency said.

The cost of living in Southern California continued to outpace the rest of the country. Nationally, the CPI rose 0.5 percent in February and 2.4 percent in the past 12 months, BLS said.

http://www.ocregister.com/
ocregister/money/
article_1621772.php; March 17, 2007 7:35 PM
Anonymous said...: NY Times:
http://preview.tinyurl.com/yo2y5n

"It isn't my fault....whine whine whine"; March 17, 2007 7:38 PM
Anonymous said...: BG tuition reflects cost of living: It’s on the rise

Since 1990, tuition has increased about 282 percent.

During the 1990-91 school year, tuition at Bishop Guertin High School was $3,498.

This included a registration fee, and seniors were charged an additional $110 as a graduation fee. With a $60 activities fee to pay for sports, clubs and other aspects of student life, the total tuition was $3,558, and $3,668 for graduating seniors.

As prices go up, so does BG tuition. For those registering for the 2007-08 school year, tuition will be $9,860. With a $150 activity fee and a $300 graduation fee, the total cost is $10,010, and $10,310 for graduating seniors.

http://www.nashuatelegraph.com/
apps/pbcs.dll/article?AID=/
20070311/YOUTH/203110355; March 17, 2007 7:54 PM
Anonymous said...: Wilmington cost of living tops in state but median family income lags well below Raleigh figure

Wilmington ranks as the most expensive North Carolina city to live in, according to survey results released this week by the Greater Wilmington Chamber of Commerce.

Wilmington topped 13 cities and counties in the state, including Raleigh, Charlotte and Winston-Salem, in the quarterly survey compiled by the American Chamber of Commerce Research Association.

The results are based on the price of items as diverse as T-bone steaks, rents, mortgage payments, tennis balls and a gallon of gasoline. Wilmington's costliest sector, not surprisingly, is housing.

The survey shows that housing in Wilmington costs nearly 10 percent more than the national average while housing in Raleigh is 7.1 percent below the national average.

The expense of living in Wilmington stands in contrast to the wages paid in the area. In 2006, the median family income in the greater Wilmington area was $53,900, nearly $18,000 less than in the Raleigh metropolitan area, according to figures from the federal Department of Housing and Urban Development.

The pinch is keenly felt on the low end of the income scale, said Emilie Swearingen, a planner with the city's community development division.

"Affordable housing is a major, major issue," she said. "I am not surprised by the chamber's figures."

http://www.wilmingtonstar.com/
apps/pbcs.dll/article?AID=/
20070228/NEWS/702280404/0/
Business; March 17, 2007 8:09 PM
Anonymous said...: Tucson cost of living up from last year due to housing market.

The cost of living in Tucson is up, according to a news release by the Tucson Metropolitan Chamber of Commerce.

A report by the Council for Community and Economic Research states that although living in Tucson is lower than the national average, it is 2.5% higher than this time last year.

Also noted on the report was that the fourth quarter of 2006 in Tucson also showed a small increase from the 2006 third quarter.

Research officials say most of the increase in the city’s cost of living is because of the housing market.

http://www.fox11az.com/news/
topstories/stories/
KMSB_20070314_ab_
costlivingup.12c2d06e.html; March 17, 2007 8:18 PM
Anonymous said...: Sixty percent of jobs available won't support a family, survey finds

The new Minnesota Job Vacancy Survey shows that the median wage for all job openings in Minnesota remains stuck at $10 per hour, the JOBS NOW Coalition reported.

The survey also shows that three out of five openings pay less than $12 per hour, said JOBS NOW, a nonpartisan coalition that advocates for family-supporting jobs. That means 60 percent of the job openings in the state do not pay enough to support a family, the group said.

JOBS NOW's updated Cost of Living in Minnesota research shows that in a Minnesota family of four with both parents working, each worker must earn a statewide average wage of at least $12.24 per hour just to meet their basic needs.

Overall, the survey found that Job vacancies declined in the fourth quarter of 2006, down 9 percent from one year ago, to 55,250.

http://www.workdayminnesota.org/
index.php?news_6_2938; March 17, 2007 8:22 PM
Anonymous said...: Here is a look at the Az market for all that are interested

http://tinyurl.com/2jvz4e; March 17, 2007 8:29 PM
Anonymous said...: Australia is concerned about inflation and is considering raising rate like China to control inflation.

SHORT-term money market rates climbed on Friday as Reserve Bank warnings about underlying inflation created fears that an official interest rate rise could be imminent.

The yield on the 90-day bank bill rose 17 basis points to 6.372 as financial markets braced for a rate rise as early as April while the dollar was hoisted above US79c.

Fears were heightened by recent comments from Reserve Bank governor Glenn Stevens, who dismissed talk that the Reserve Bank would not take action on rates just because this was an election year.

http://www.smh.com.au/news/
business/
rba-rumblings-over-inflation
-push-up-money-rates/2007/
03/16/1173722748905.html; March 17, 2007 8:49 PM
Anonymous said...: I know this subprime "implosion" makes good headlines and blogs, but give me my 2 cents worth. 10 years in the biz, and know my stuff.

-Subprime lenders dont necessarily have to adjust the rates...its their loan and they can extend all sorts of "amnesty" programs to avoid defaults. Thats just loss mitigation.

-Subprime was supposed to be doomed in 1998 after the LTCM blowup...its still here.

-FHA loans were the original "subprime" and do just fine, one of the few Govt programs that actually makes money.

-"ALT-A" borrowers often make a ton of of the books cash, so that market will be fine. Even drug dealers gotta live somewhere.

-Speculators that knew nothing about Real Estate are getting burned, who cares, Casinos have winners and losers all the time.

-New Hedge funds are being formed right now to buy up the non-performing loans for 50 cents on the dollar...I'm gettting involved in one right now.

-The Realtors who made easy money are screwed, again, who cares, they never were pros in the first place.

So now the strong lenders survived, weak are dead, sounds like business as usual.

Yawn.; March 17, 2007 9:20 PM
Anonymous said...: You thought subprime was bad? Wait until you see what's next.

http://infohype.blogspot.com; March 17, 2007 11:22 PM
Anonymous said...: HELP ME HELP ME!
You just cannot make this stuff up. Incredible:

“....... NovaStar reported to the Securities and Exchange Commission that on Feb. 12 the compensation committee of its board of directors approved bonus payments to NovaStar’s executives for their performance in 2006.”

WHAAAA????? This is after announcing 17% RIF.....

http://www.kansascity.com/mld/kansascity/business/16922036.htm; March 18, 2007 5:09 AM
Anonymous said...: by my calculations, in the last 25 years the average homeowner made more than the average wage ever year, just by owning the average house, note that at todays prices, and the demand for wages to buy, may include "your fired":; March 18, 2007 6:00 AM
Anonymous said...: note that the demand to screw savers is the option of investors and government or higher taxes to bailout investors, who had planned also, to screw savers and renters, or higher taxes to build affordable housings, not including investors, guess the options decided will be decided by the ammounts of insiderisms, kickbacks, skim jobbings rake offs, bribes and make work, powerisms; March 18, 2007 6:05 AM
Anonymous said...: gonna need the government either way, as self-sufficiency and independence is illegal, need government, or government will do you in!!!; March 18, 2007 6:08 AM
Anonymous said...: nobody ever mentioned that elliot ness was being paid from the standard oil monolopy, to keep the alchol stills from producing automobile fuels, the start of the laws for money cartel; March 18, 2007 6:13 AM
Anonymous said...: history is written by the victors; March 18, 2007 6:15 AM
Anonymous said...: "France has neither winter nor summer nor morals. Apart from these
drawbacks it is a fine country. France has usually been governed by
prostitutes."
--Mark Twain
------------------------------
"I would rather have a German division in front of me than a French
one behind me."
--General George S. Patton
------------------------------
"Going to war without France is like going deer hunting without your
accordion."
--General Norman Schwartzkopf
------------------------------
"We can stand here like the French, or we can do something about it."
--Marge Simpson
------------------------------
"As far as I'm concerned, war always means failure."
--Jacques Chirac, President of France
"As far as France is concerned, you're right."
--Rush Limbaugh
------------------------------
"The only time France wants us to go to war is when the German Army
is sitting in Paris sipping coffee."
--Regis Philbin
------------------------------
"You know, the French remind me a little bit of an aging actress of
the 1940s who was still trying to dine out on her looks but doesn't
have the face for it."
--John McCain , U.S. Senator from Arizona
------------------------------
"The last time the French asked for 'more proof' it came marching
into Paris under a German flag."
--David Letterman
------------------------------
"Only thing worse than a Frenchman is a Frenchman who lives in
Canada."
--Ted Nugent
------------------------------
"War without France would be like ... World War II."
--Unknown
------------------------------
"The favorite bumper sticker in Washington D.C. right now is one that
says 'First Iraq, then France.'"
--Tom Brokaw
------------------------------
"What do you expect from a culture and a nation that exerted more of
its national will fighting against Disney World and Big Macs than the
Nazis?"
--Dennis Miller
------------------------------
"It is important to remember that the French have always been there
when they needed us."
--Alan Kent
-----------------------------
"They've taken their own precautions against al-Qa'ida. To prepare
for an attack, each Frenchman is urged to keep duct tape, a white
flag, and a three-day supply of mistresses in the house."
--Argus Hamilton
------------------------------
"Somebody was telling me about the French Army rifle that was being
advertised on eBay the other day --the description was, 'Never shot.
Dropped once.'"
--Rep. Roy Blunt, MO
-----------------------------
"The French will only agree to go to war when we've proven we've
found truffles in Iraq "
--Dennis Miller
------------------------------
Q. What did the mayor of Paris say to the German Army as they entered
the city in WWII?
A. Table for 100,000 m'sieur?
-----------------------------
"Do you know how many Frenchmen it takes to defend Paris? It's not
known, it's never been tried."
--Rep. R. Blount, MO
------------------------------
"Do you know it only took Germany three days to conquer France in
WWII? And that's because it was raining."
--John Xereas, Manager, DC Improv
------------------------------
The AP and UPI reported that the French Government announced after
the London bombings that it has raised its terror alert level from
Run to Hide. The only two higher levels in France are Surrender and
Collaborate. The rise in the alert level was precipitated by a recent
fire which destroyed France 's white flag factory, effectively
disabling their military.
------------------------------
French Ban Fireworks at Euro Disney
(AP), Paris, March 5, 2003
The French Government announced today that it is imposing a ban on
the use of fireworks at Euro Disney. The decision comes the day after
a nightly fireworks display at the park, located just 30 miles
outside of Paris, caused the soldiers at a nearby French Army
garrison to surrender to a group of Czech tourists.; March 18, 2007 2:50 PM
Anonymous said...: For all your France bashing comments, French Army and French Napoleon conquered almost ALL europe... before industrial revolution even began. No trains, no machine guns, no tanks, maybe their might came from their wine.; March 18, 2007 3:36 PM
Anonymous said...: The future of the Asian Bretton Woods system - and indeed of this year's US recovery - depends on the willingness of Asian institutions to go on (and on and on) buying dollars and dollar-denominated bonds. But why should they, if the Japanese economy is - as now seems to be the case - finally coming out of its deflationary slump? In any case, Japan's intervention has not been wholly successful in stemming the dollar's slide: over the past two years, the yen has gone from 135 to 110 against the dollar. In yen terms, the returns on the Bank of Japan's dollar portfolio have been decidedly negative.

Moreover, reliance on exports to the US may not be a long-term option for Asia. In a recent lecture in Washington, Larry Summers, the former US treasury secretary, argued that the US has no alternative but to increase its savings rates if it is to extricate itself from "the most serious problem of low national saving, resulting in dependence on foreign capital, and fiscal unsustainability, that we have faced in the last 50 years". His conclusion is that the world can no longer count on the US to be the consumer of first resort, which means in turn that "the growth plans of others that rely on export- led growth will need to be adjusted in the years ahead".

The Asian dollar dilemma is the euro's opportunity, both economically and politically. First, if the US does cease to be the only functioning engine of global demand, it is imperative that the euro zone step up to the plate, and soon. For too long the European Central Bank has made price stability the "magnetic north" of its policy compass. It has not spent enough time thinking about growth in Europe and the world. For too long ECB interest rates have been about a percentage point above the Fed's, despite the fact that deflation is a bigger threat to the core German economy than it ever has been to the US.

The president of the ECB is now a Frenchman. Maybe Jean-Claude Trichet should remind himself of some history. Thirty-nine years ago, the dollar was coming under pressure as US entanglement in a messy postcolonial war began to grow. It was Charles de Gaulle who called time on the Bretton Woods system, which, he alleged, obliged European economies to import American inflation. This is the moment for someone to call time on Bretton Woods junior. Asians and Europeans alike need to sell their goods somewhere other than to profligate America. And they need to recognise that the emergence of the euro as an alternative reserve currency to the dollar creates a chance to fundamentally shift the centre of gravity of the international economy.

If the Europeans seize their chance, Americans could face the end of half a century of dollar domination. Does it matter? You bet it does.

http://www.energybulletin.net/
807.html; March 18, 2007 5:30 PM
Anonymous said...: Inflation is eating US wage gains
Food, housing, and healthcare costs rose at a 6 percent yearly rate in the past three months.

Some prices – namely for housing, food, and medical care – have been more noticeable than others of late, jumping at a 6 percent annual rate during the three-month period from December through February, the government reported Friday. Retail gasoline prices rose 7 percent in just two weeks, according to a March 12 report by the US Energy Information Administration.

"You're going to see continued [inflationary] pressure," predicts Michael Darda, chief economist at MKM Partners, an investment firm in Greenwich, Conn. "Firms will find the pricing power [to pass along increased costs]. I think it is a broad-based issue.

http://www.csmonitor.com/2007/
0319/p01s01-usec.html; March 18, 2007 5:54 PM
Anonymous said...: The Return Of Inflation?

After months of hibernation, inflation made an appearance Thursday.

Meat prices have jumped as the price of corn has nearly doubled over the past year, mainly due to increased ethanol production.

"More corn is going to cars than cows," Wyss said.

http://www.forbes.com/markets/
emergingmarkets/2007/03/15/
inflation-ppi-update-markets
-equity-cx_rs_0315markets22.html; March 18, 2007 6:00 PM
Anonymous said...: 10 Way To Make Your Home Attractive for Sale

10 More Way to Make your House Irresistible.

1. Photoshop the hell out of your photos. Sharpen them to HD quality.
Make the sky bluer than it can be possibly be. Enrich your colors. Use very wide angle lenses. Wet down your driveway before snapping away. Just like we buy wet vegetables, we want wet driveways.

2. Put on Sade or K-wave music. Find out the music tastes of your buyers and play accordingly. If punkers, Sid Vicious during his heroin days. If Christians, Amy Grant.

3. Find out the religion of the couple coming in to buy. Put up the appropriate symbols and icons on the walls. Have a storage bin for each. Catholics, the crucifix, Protestants, "I Hate Catholics" buttons, Jewish, "A picture of the new Israel after Palestine is wiped out." Buddhist, "Vegan Spread." Atheist? Marx and Hegel textbooks. Mormons? Type up a new addendum that polygamy is now allowed in your city. Muslim, please…no pictures of Muhammad. If Hindu, Shiva Posters. Talk about how you outsourced your entire scrapbook collection operation to India.

4. Add more light. Get incredible lighting with bulbs that emulate sunshine. Make all dark rooms bright.

5. Get them drunk beforehand and talk about the good old days back in ? (Find out)

6. Get rid of the dog shit in the living room and clean the litter box for the first time in a week. If your cat starts playing with their feces like a soccer ball, please lock that cat up.

7. Fake ocean noises pumped in.

8. Play Sheryl Crows “All I Want to Do is Have Some Fun” song.

9. If you live near a busy street or freeway, find white noise to mask it.

10. Rent some actors to play different parts. (This has been done.); March 18, 2007 6:02 PM
Anonymous said...: Inflation Ex-Inflation Returns

Given Thursday's eye-popping Producer Prices - the 12 months ending in February, overall wholesale prices rose 2.5%, the highest reading since August 2006 - there was some concern about Friday's Consumer Prices.

And with good cause: the headline number was plus 0.4%, higher than expected (0.3%).

We are told there is "nothing to worry about here," though: Once we remove everything that has gone up in price (that you need to live on), inflation remains contained. Core prices, excluding food and energy, increased only 0.2% in February.

Consider that February prices for "crude foodstuffs and feedstuffs" were up 18.8% above year-ago levels, it's no surprise that food companies are passing those higher costs to consumers. Wholesale consumer food prices are 6.8% above year-ago levels. The WSJ noted that energy prices increased by 0.9% in February, while gasoline prices rose 0.3%. Natural gas prices swelled 5%.

http://usmarket.seekingalpha.com/
article/29810; March 18, 2007 6:09 PM
Anonymous said...: Will Japan buy oil from Iran in Yen instead of Dollar?

Iran's Oil Minister Kazem Vaziri Hamaneh has said that the Islamic Republic will sell its oil in all currencies.

Iran has already said it will carry out all its oil-industry related equipment purchases in euros instead of dollars and previously said it has informed its oil buyers that they should pay Iran in euros for the crude oil they purchase.

"We need oil currencies," Vaziri said.

Earlier on Wednesday, the media reported that Iran has started talks with a Japanese refiner to receive the payments in euro or yens instead of US Dollars.

Japan is a major importer of Iranian crude and reportedly buys 486,000 barrels of oil per day out of Iran's production of about 3.8 million bpd.

http://www.globalresearch.ca/
index.php?context=
viewArticle&code=
20070318&articleId=5092; March 18, 2007 6:25 PM
Anonymous said...: The French army just had a armament sale, " Like new rifles....only dropped once"!; March 18, 2007 8:10 PM
Anonymous said...: Is Inflation out of Control in Asia, and will Asian inflation be passed onto the American consumers through Asian goods?

China's Central Bank Announces 0.27 Percentage Point Increase in Key Interest Rates due to Inflation concern.

SHORT-term money market rates climbed on Friday as Australia Reserve Bank warnings about underlying inflation created fears that an official interest rate rise could be imminent.

Inflation has remained the main concern of the Indian government and RBI since the last few months. Higher inflation may trigger rate hike by the Indian government.

http://www.myiris.com/newsCentre/
newsPopup.php?fileR=
20070317160531091&dir=2007/
03/17&secID=livenews; March 18, 2007 9:43 PM
Anonymous said...: Currency union by 2010 in the Gulf Arab region is a challenge, but could be achieved if Gulf countries act swiftly, Bahrain’s central bank governor said in remarks published on Sunday.

UAE Central Bank chief Sultan Nasser Al Suweidi has cited imported inflation as one reason for reviewing pegs to the dollar, which fell around 10 percent against the euro last year.

http://www.khaleejtimes.com/
DisplayArticleNew.asp?xfile=
data/business/2007/March/
business_March506.xml§ion=
business; March 18, 2007 9:51 PM
Anonymous said...: The big economic news in the Lehigh Valley is inflation. Have your pay raises over the past four years totaled 20 percent?

The region's consumer price inflation was 6.8 percent in 2006, the highest rate for a calendar year ever measured in the 23-year history of The Morning Call/Kamran Afshar Consumer Price Index.

Sure, the unemployment rate in the Valley ? 4.6 percent in January ? is low by historical standards. Economists consider an unemployment rate of 5 percent to be full employment, meaning anybody who wants a job can get one.

But the chief benefit of working - the spending power that comes with a paycheck - has been substantially eroded by inflation: If you didn't get a pay raise of nearly 7 percent last year, you're actually poorer than you were the year before, assuming your purchases mimic the typical marketbasket of 2,500 goods and services measured in the price index.

Inflation often accompanies sudden economic growth. And the Valley's economy, fueled by the migration of people from higher-cost areas in northern New Jersey/New York and Philadelphia, has been booming.

The influx of newcomers, of course, has increased the demand for (goods) and the prices of housing. The average sale price for an existing home peaked at $237,000 in June, up 80 percent since 2000. (The average sale price, which is subject to seasonal fluctuation, was $215,000 in January.)

But housing is only part of the story, The Morning Call/Kamran Afshar Consumer Price Index shows.

The region's medical care prices rose a whopping 17.1 percent in 2006, driven by a 34 percent rise in prices for hospital services. By contrast, medical care prices rose just 3.6 percent nationally, and 4.1 percent in the Philadelphia region, according to the Bureau of Labor Statistics.

Heating oil prices were up 11.2 percent, while gasoline prices increased 8.9 percent.

http://www.mcall.com/business/
local/all-econ-snapmar18,0,
5943293.story?coll=all-
businesslocal-hed; March 18, 2007 10:07 PM
Anonymous said...: 10 ways to make your home more attractive for sale!

1 Lower the F**king price!

2 See # 1

3 See # 2

4 See # 3

5 See # 4

6 See # 5

7 See # 6

8 See # 7

9 See # 8

10 See prior!; March 19, 2007 2:59 AM
Anonymous said...: The Chinese government says it wants to make more profitable use of its reserves, up to 70 percent of which are thought to be in safe but low-yield Treasuries and other US dollar-denominated assets. Much of the rest is believed to be invested in euros and a small amount in yen.

The growth in China’s reserves has been driven by its surging exports, which is bringing in a flood of foreign currency. That’s forcing the central bank to drain billions of dollars a month from the economy by selling bonds to reduce pressure for prices to rise. The reserves are growing by about $20 billion a month.

“How to properly use such a huge amount of foreign reserves has become a new problem facing us,” Wen said.

At a news conference, Premier Wen Jiabao didn’t answer directly when asked what the new company will invest in. But he appeared to be trying to squelch suggestions it might roil markets by diverting money that Beijing now stockpiles largely in US Treasuries.

http://www.thestatesmanonline.com/
pages/news_detail.php?newsid=
2794§ion=2; March 19, 2007 4:03 AM
Anonymous said...: Can Dollar crash now? What is the effect on world stock markets and economies?

A drop below 78 in dollar index can create a massive wave of selling pressure. If Euro can cross $1.50 mark to one euro, the European currency will reach $2.00 very fast. That will crash the dollar. The dollar index will fall to 65 level – unprecedented.

That will create a massive financial meltdown in the world economies. The exporters to US will go bankrupt. Japan and China will be worst hit. Indian outsourcing industry will end its existence. The Asian exporters will face massive depression.

The scenario for dollar is bad for the short to intermediate term and very bullish on the long term. As the US economy realizes the stealth deflation in the economy, it will create massive gyration within the financial system. Once the Federal Reserve signals a rate cut, dollar collapse in a very violent way. The last thing the currency markets are expecting is a real deflationary recession or depression in the economy. The negative savings rate will finally come to an end. The effect on the stock markets worldwide will be severely negative. The world stock markets can gap open several weeks limit down not letting the individual investors get out of the market.

http://www.indiadaily.com/
editorial/16111.asp; March 19, 2007 4:43 AM
Anonymous said...: http://abclocal.go.com/kabc/story?section=local&id=5132708; March 19, 2007 4:46 AM
Anonymous said...: FB's strike back against REIC; March 19, 2007 8:13 AM
Anonymous said...: "I am going to get right to the point. Housing, especially in California, is dead money for many years to come. Game over. It’s that simple."

But, but, but... Kendra Todd said that it was going to keep going up at a rate of 20% a year for the next 100 years. How can this super intellectual woman be wrong?; March 19, 2007 3:44 PM
Anonymous said...: From CNN:

"Builders are uncertain about the consequences of tightening mortgage lending standards for their home sales down the line, and some are already seeing effects of the subprime shakeout on current sales activity," said David Seiders, chief economist for the industry trade group.

The fundamentals of the market are "still relatively strong," Seiders said in a statement, citing favorable interest rates, solid job and wage growth, and improving affordability due in part to price cuts."

Fundamentals still strong, eh.; March 19, 2007 10:18 PM
FlyingMonkeyWarrior said...: Real-Estate Professionals Say
IRS Snares Them by Mistake

By Kemba J. Dunham
From The Wall Street Journal Online

Some real-estate professionals say they are being mistaken for sometime investors by the Internal Revenue Service, and that could prohibit them from taking advantage of certain tax and economic benefits.

Consider the case of David Friedman, a real-estate broker and property owner in Los Angeles. Like many professionals in the business, he not only sells homes to consumers, he also buys and sells undeveloped land and owns single-family homes that he rents out. He says he works every day and has amassed holdings in Southern California and Oklahoma that are valued at $20 million.

Yet after 20 years in the business, Mr. Friedman finds himself in a battle with the IRS, which is auditing his past tax returns over whether he is really a full-time real-estate professional or one of the many part-time real-estate investors who have sprung up across the country in the past decade.

"Real estate is all that I do, I'm not a contractor or a doctor who does real estate on the side," Mr. Friedman says. "I just think that the IRS has some issues believing that someone truly does this full time."

The distinction is important because full-time real-estate professionals, defined as someone who spends more than half of his working hours in real estate and more than 750 hours a year tending to real-estate activities, can fully deduct losses -- including depreciation, interest expense on loans and property taxes.

But those who don't fit into that category are typically considered to be "passive" real-estate investors with a limited ability to deduct their losses, says Alan Weiner, a CPA and tax partner at the firm of Holtz Rubenstein Reminick LLP in Melville, N.Y.

Robert Marvin, a spokesman for the IRS, said the tax agency can't comment on individual taxpayer cases. However, he indicated that the agency is paying more attention to real-estate activity because it is one of the areas where research shows there is a large tax gap, meaning taxpayers are underreporting income to the IRS. The tax gap in income from rents and royalties is about $13 billion and $11 billion for capital gains. (Income from real-estate activity is included in, but not exclusive to, both categories.) Mr. Marvin said that several thousand returns of real-estate professionals have been audited since last year and approximately 3,000 are under audit now.

But some tax attorneys say these professionals are being unfairly scrutinized. "Unfortunately, real-estate professionals are being caught in a broad net that is intended to catch investors," says Philip Panitz, a federal tax litigator in Westlake Village, Calif., who represents Mr. Friedman. "My clients are real-estate professionals, although the IRS disagrees and they're saying 'prove it.' "

Of the eleven cases Mr. Panitz has pending in the U.S. Tax Court, five involve people who say they are full-time real-estate professionals whom the IRS is trying to reclassify as passive investors. Two years ago, none of his cases involved this issue. "Whenever I see this kind of trend going on, I know some sort of sweep is happening," Mr. Panitz says.

The "passive loss" rule goes back to 1986, when Congress added the measure to stop real-estate investors who were receiving paper-loss deductions, such as depreciation, and using these paper losses to shelter real income from other jobs, Mr. Panitz says.

Real-estate professionals were excluded from this act because real-estate was their job. "If that person had a deduction related to the buying and selling of property, those deductions directly correlated to what they did for a living," Mr. Panitz adds.

Since he has been audited for 2002, Mr. Friedman is now struggling to prove that real estate is his profession. He says he has provided the IRS auditor with every receipt and canceled check related to his business. But they always ask for more proof, he adds, including detailed logs of how he spends his time, a listing of all projects in which he is involved and all the people he talks to on any given day.

"It takes hundreds and hundreds of hours out of my time to provide all these details," he sighs. "I just feel like I'm being harassed."

It has been financially draining as well. Mr. Friedman says that in the past few years, he has spent about $20,000 in fees to his accountant and tax attorney, who are helping him prove his professional status. Because his case is ongoing, those costs could reach $100,000. If the IRS does conclude that Mr. Friedman isn't a real-estate professional, his tax returns for the years in question would have to be adjusted and if one factors in penalties, interest and tax liabilities, he could end up owning the government hundreds of thousands of dollars.; March 19, 2007 11:17 PM
Anonymous said...: US industrial output posted its biggest gain in more than a year, rising a much larger-than-expected 1.0 percent in February, fueled by motor vehicles, high-tech and utilities, a government report said on Friday.

Analysts had widely anticipated a rebound but the gain was five times bigger than Wall Street expectations of a 0.2 percent increase seen in a Reuters poll of economists.

January was upwardly revised to a drop of 0.3 percent after previously being reported down 0.5 percent, the Federal Reserve said. A gain in December was also revised upward.

February’s output advance was the biggest since a 1.1 percent gain in November 2005.

Motor vehicle and parts production rose 3.1 percent in February, partly offsetting a 5.8 percent drop in January. Manufacturing as a whole rose 0.4 percent after a 0.5 percent decline the prior month.

Nonetheless, motor vehicle and parts output was down 3.3 percent from a year ago.

Manufacturing output excluding motor vehicles and parts was up a solid 0.8 percent in February.

Utility output climbed 6.7 percent, the biggest gain since a 7.0 percent rise in December 1989, after a 2.2 percent increase the prior month.

Mining production edged up 0.1 percent after falling 1.3 percent the prior month.

High-tech industries posted a 3.2 percent gain in output after a 2.1 percent increase the prior month. High-tech output was up 29.4 percent from a year ago.

The capacity use rate of factories, mines and utilities rose to a five-month high of 82.0 percent in February from a revised 81.4 percent in January, previously estimated at 81.2 percent.

Analysts polled by Reuters had predicted the overall cap use rate would be 81.3 percent in February.

Capacity use of manufacturing edged up to 80.1 percent from 79.9 percent the prior month. Capacity use of mining was unchanged at 91.2 percent. Utilities climbed to 90.4 percent from 84.8 percent.

http://www.khaleejtimes.com/
DisplayArticleNew.asp?xfile=
data/business/2007/March/
business_March467.xml§ion=
business&col=

However, Midwest manufacturing activity took a breather in January, dragged lower by the auto and machinery sectors.

The Chicago Fed Midwest Manufacturing Index is a monthly estimate of manufacturing output in the region by major industry. The Midwest is defined as the five states comprising the Seventh Federal Reserve District: Illinois, Indiana, Iowa, Michigan, and Wisconsin.

http://manufacturing.net/article/
CA6425944.html

While the rest of the country manufacturing output is red hot, Midwest is not - Why?

Stabenow, Levin Urge Bush to Stand Up for American Jobs

The deliberate actions of Japanese officials to maintain an undervalued yen is not a new problem. In the past, Japan has utilized manipulative financial tools to intervene with currency markets. In dollar terms, the Japanese government spent more than $400 billion to keep the yen weak between 2000 and 2004. These actions resulted in a $3,000 to $7,000 per vehicle subsidy for their exports, giving them an unfair advantage against U.S. automakers. More recently, the Japanese government has instituted a more subtle approach to intervention by commenting when the yen rises to a certain level. The end result is just the same – manipulative trade practices that unfairly punish American manufacturers.

http://www.senate.gov/~levin/
newsroom/release.cfm?id=257890; March 20, 2007 12:28 AM
Anonymous said...: It is not just the Midwest Manufacturing Index that gets impacted by the weak Yen but it impacts global markets as well

European Central Bankers demand a Stronger Yen

Aided by the Euro’s strength against the yen, Japanese exports to the European Union nearly doubled to 1.06-trillion yen in December. But on the flip side, European exports to Japan have waffled between stagnation and deterioration. While Japan is a small market for European exporters, Euro zone finance ministers understand that its exporters will suffer badly in world markets because of cheap competition from Japan in addition to cut-throat competition from China.

“I will read again what we just said in Essen, we reaffirm that exchange rates should reflect economic fundamentals,” said ECB chief Trichet at the Amsterdam Chamber of Commerce and Industry on Feb 15th. “We believe that the Japanese economy is on a sustainable economic path and that exchange rates should reflect these economic fundamentals,” Trichet added.

Earlier on Jan 31st, Bank of France chief Christian Noyer said there was room for the Bank of Japan to raise its interest rates carefully. “I’m concerned about developments in the yen. The yen exchange rate is not in line with an improvement in the Japanese economy and its strength. Japan is one of the engines to drive global growth. A weak yen will cause distortion in the world economy in the medium term.

http://news.goldseek.com/
GoldSeek/1173801600.php; March 20, 2007 1:09 AM
Anonymous said...: Just like the Suzanne clip, I think this gets better with age. Plus, it goes with the whole "WalMart cheap crap from China" thing.

http://tinyurl.com/nzdv6; March 20, 2007 2:06 AM
Anonymous said...: Better than porn:

Kass: Tonight's Special Is Grilled Greenspan
By Doug Kass
Street Insight Contributor
3/19/2007 10:47 AM EDT
URL: http://www.thestreet.com/markets/activetraderupdate/10345196.html

This column by Doug Kass was originally published on March 19 at 8:12 a.m. EST on Street Insight. It's being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.

I will be attending a private meeting with the former Federal Reserve Chairman Alan Greenspan this evening in Palm Beach, Fla.

Over the last week I have asked Street Insight subscribers to email me questions that they would like to be presented to Greenspan -- and, as mentioned, I plan to pick out the two best, which I'll share with you at the end of this column. I have received more than 250 questions for Greenspan from subscribers. Here are some of the best:

1. What is the best way for the banking system to deal with the large numbers of families and individuals who can neither afford their ARM reset payments nor a refinanced fixed-rate mortgage payment in order to limit bank losses and overall economic weakness (i.e., voluntary foreclosure, forced foreclosure, voluntary forced quick sale for a loss, etc.)?

2. Does Greenspan have access to the same information now as he did when in office? Is it as reliable?

3. Since 1975 the Fed has used margin requirements to exercise restraint or ease. Why haven't we used this tool to prevent some of the volatility and leverage in our system?

4. Could it be possible that cutting interest rates would be bullish, not bearish, for the dollar because cheaper interest increases demand for borrowing dollars?

5. What does he think of his encouraging the second round of tax cuts now. Or don't deficits matter anymore?

6. Why did he encourage homeowners to take out adjustable-rate loans in 2004? Didn't such advice ignore long-term trends?

7. Why isn't the Federal Reserve more proactive when it comes to federal debt, the deficit and the impact of inflation?

8. Why didn't he encourage the general public to look at their own situation from a balance sheet perspective? Shouldn't all investors understand their own capital and cash flows long before they ever start investing? Why doesn't the chairman use his position to further the education of the general public?

9. Why doesn't the federal government have audits and issue financial statements on every aspect of government? Why is the federal government exempt when almost every other public entity is required to have such an audit?

10. Why doesn't the federal government hire CFOs and pay them appropriately to manage the assets of the public?

11. What are the biggest threats to the long-term health of the U.S. economy, culture and standard of living?

12. Does he take any responsibility for the Fed's loose monetary policies and weak regulation, which resulted in a housing boom and bust? Is the Fed living up to its mandate of price stability?

13. Reflecting upon his chairmanship and the present state of the U.S. economy, does he believe that more transparency in his previous statements to Congress and the public would have helped prevent the exaggerated fund flows that led to the equity and mortgage loan market dislocations? Does he now support greater and more timely Fed disclosure of its economic assessments and recommendations vis-a-vis Fed monetary and regulatory policies?

14. How likely (or unlikely) is it that the subprime mess could cause a real estate crash that would trigger defaults and spread contagion to emerging markets?

15. Since he is no longer the Fed chief, why does he feel compelled to speak out on the economy? Isn't he undermining Ben Bernanke?

16. What is the real reason why the Fed quit publishing M3 vs. the announced reason that it was too difficult to calculate?

17. Does he believe that Milton Freidman's time frame for inflation to appear after the Fed expands the money supply is still valid? If not, what does he believe the relationship currently is?

18. Looking back on his tenure as Fed chief, what advice would he give Bernanke in regards to taking the air out of bubbles in a more laser-beam fashion so the entire economy/market doesn't have to suffer when one industry or sector gets overheated?

19. If he had known how leveraged the homebuyer would become, would he have voted for the last two or three rate decreases in 2003?

20. What does he believe was his biggest mistake while chairman of the Federal Reserve?

21. Does he believe that rates should be lowered or will be lower by mid-year 2007? Does the U.S. subprime and homebuilder problem materially affect emerging markets, particularly Asia?

22. Hindsight being 20/20, does he believe the reaction by the Fed to the "Y2K-impending-doom" -- the lowering of rates -- was an irresponsible and ridiculous reaction to media reports?

23. Is Vice President Cheney correct in saying "Deficits don't matter"? Does the deficit matter only as a percentage of the GDP?

24. Is the U.S. economy and national security on a sounder footing by investing in war as opposed to education?

25. Does he see the subprime problem as indicative of a class structure in the U.S. economy, where people at the lower tiers have to use economic tricks with huge risks in order to become part of the owning class?

26. Looking back, what would he have done differently regarding interest rates since 2000?

27. As former head of the Federal Reserve, is he concerned that his comments on economic direction have an unwelcome effect back at his old shop?

28. Does the Fed, or more accurately, did his Fed, have a view of itself as one stimulus in an infinite sum of stimuli that allowed the markets to be governed by stochastic (chance) events, or does the Fed view itself as the lead or primary element with the global goal of creating a "steady state"?

29. If the U.S. goes into a recession by year-end, how long does he think the recession will last?

30. The book, "Our Brave New World" by GaveKal Research makes a compelling case that we are in (or will soon enter) a global phase of deflationary boom. Would Greenspan agree with that assessment; if not, what does he think lies ahead -- inflationary bust or boom; deflationary bust or boom? Why has the dollar lost half of its value relative to both gold and oil in the last six years?

31. Can the Fed really stop inflation when government spending is out of control?

32. Does the inverted yield curve imply a recession or, due to global capitol flows, is it less significant?

33. What responsibility do public officials have after serving office to stay out of the crossfire?

34. Because markets pretty much do the job of the Fed in anticipating the general directions of interest rates, why have so many hung on every word he has said over the years?

35. What would his current advice be for those who took his recommendation three years ago and went with adjustable-rate mortgages, especially since many of those people cannot afford their current mortgage payment and can no longer refinance their mortgage?

And the winners are:

1) Looking back on his tenure as Fed chief, what advice would he give Bernanke in regards to taking the air out of bubbles in a more laser-beam fashion so the entire economy/market doesn't have to suffer when one industry or sector has gotten overheated? and

2) Why did he encourage homeowners to take out adjustable-rate loans in 2004? Didn't such advice ignore long-term trends?

Thanks very much to everyone for such spirited responses.

--------------------------------------------------------------------------------
At time of publication, Kass and/or his funds had no positions in stocks mentioned, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd. Until 1996, he was senior portfolio manager at Omega Advisors, a $4 billion investment partnership. Before that he was executive senior vice president and director of institutional equities of First Albany Corporation and JW Charles/CSG. He also was a General Partner of Glickenhaus & Co., and held various positions with Putnam Management and Kidder, Peabody. Kass received his bachelor's from Alfred University, and received a master's of business administration in finance from the University of Pennsylvania's Wharton School in 1972. He co-authored "Citibank: The Ralph Nader Report" with Nader and the Center for the Study of Responsive Law and currently serves as a guest host on CNBC's "Squawk Box."; March 20, 2007 4:48 AM
Anonymous said...: From Herb Greenberg:

Beyond Subprime
I was flabbergasted last Thursday night, on CNBC's Fast Money, when the discussion rolled around to Countrywide Financial (cfc.) I mentioned that I thought option ARMs were the next shoe to fall and Tim Strazzini said they were/are yesterday's news. Is he nuts? Well, actually he's a nice guy -- a bit stuffy, but nice, though when it comes to this issue, definitely NUTS!

Without getting deep into it, take a look at the financial statements of Countrywide, Washington Mutual and a host of companies that do option arms. (These are the loans that let you pay little to no interest or all of the interest.) See how many of those being held for investment are already negatively amortized. (Hint: High percentage.)

Once these things get to 110% to 120% of the principal, they will be forced to do a recast, or refinance. These recasts will be forced on homeowners who were likely paying the bear minimum, many with less than 20% down. Now they'll be forced to ante up considerably more money in cash and/or refinance at sharply higher rates than they were paying. If they couldn't afford the loan before, what makes you think they can afford it now?

If they can't, as sad as it is, it's curtains for them, with a ripple effect shooting through the economy.

This is NOT a subprime issue; these are loans that cut across all FICO scores. They were used heavily in California and elsewhere by people pulling out all stops to either afford a house and/or a lifestyle they really can't. As I noted in my column today quoting Annaly's Mike Farrell, this was a case of people mistaking liquidity for credit performance.

The housing party is likely ending, and industry insiders say they expect to see much off this hit in two to three quarters. Considering the number of million-dollar plus tract homes in California, this could get interesting -- and not in a good way. Maybe none of this will come to pass; personally, I hope it doesn't. Bt if it does, don't say you weren't warned.; March 20, 2007 6:51 AM
Anonymous said...: "Post housing crash articles..." ?
Is it over?; March 20, 2007 7:00 AM
FlyingMonkeyWarrior said...: HAHAHAHAHA There is another Blog at war with Greg Swan.

Greg was called Greg the ripper by another RE Blogger and was invited to debate him on the posts at Bloodhound.
Greg Swan Dive Chickened out, er I mean graciously declined.

http://blog.sellsiusrealestate.com/
blog-debate/showdown-in-blogtown
-first-blogger-debate/2007/03/16/

or

http://tinyurl.com/2555rc

and of course HP was drug into the frey.; March 20, 2007 2:15 PM
FlyingMonkeyWarrior said...: The Attack before the Debate.
Too funny.
Greg the Ripper.
HAHAHAHAHA
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=1164; March 20, 2007 2:37 PM
FlyingMonkeyWarrior said...: Another Great Example of the Government with it's Hand out.
An Occupational License fee is another cash cow $$$ generator for the Gov.

Notices March 2007

URGENT ANNOUNCEMENT FOR INVESTORS:
Are you available tonight to help fight for your rights as a property owner and landlord in Central Florida? Please Read On!

The City of Deltona is having a hearing TONIGHT on a proposed law that will require you, as a property owner, to have an Occupational License for each of your properties, including annual inspections (if your tenant doesn't let them in, you failed!).

Even if you don't own rentals, don't invest in Deltona, or both...it is still CRITICAL that these types of laws don't pass. In our experience, when this passes in one area, other cities soon start thinking about implementing in their area, so Deltona today could be Apopka or Kissimmee tomorrow. Please let the Deltona City Commission know that there are responsible, mature property owners in Florida that do care about their properties AND their tenants!

If you are not able to make it tonight, please send a letter, email, or phone call to the Deltona City Commission expressing your opinion, and attend the second reading on April 16th.

When: Tonight, March 19th, 6:30 pm
Where: Commission Chambers in City Hall, 2345 Providence Blvd. in Deltona
Want to read the proposed ordinance?; March 20, 2007 2:46 PM
Anonymous said...: Interesting article about large cities where real estate is still strong. I live in Manhattan, and prices here are depressingly expensive for me and most other people.

http://www.msnbc.msn.com/id/17553511/site/newsweek/; March 20, 2007 3:25 PM
Anonymous said...: Dear Manhattan Renter,
It will come here, too. With all of the overbuilding in Manhattan and Brooklyn, even a fairly modest recession will cause a serious oversupply as 20-something pseudo-hipsters lose jobs and leave town. Then, of course, more will leave town because NYC won't be as shiny and Disneyland-safe anymore. And then, you'll be getting well into the downward spiral as people who never planned to stay here that long find out that the apartments they've bought aren't worth what they paid, and they run for the exit. Regardless of what anyone says, Manhattan is not immune. Anyone with a sense of history--or who's lived here long enough--will tell you that.

Your friend,
Manhattan Renter 2; March 20, 2007 5:52 PM
Anonymous said...: Well, these graphs pretty much paint the picture, don't they?

http://tinyurl.com/2quby2; March 20, 2007 8:12 PM
Anonymous said...: I live in the midwest and my wife and I combined make around 100k a year. We just relocated to Nashville and I could purchase a place for a tad bit more than I could rent one, so we decided to buy a home.

The mortgage companies we went to approved us for over 250k (our FICO scores are both over 800). When I told the broker that I only wanted a 140k home (an average home in Nashville) she was shocked that I wanted to accept less than I qualified for. I told her that maybe the reason I have an 820 FICO score is because I know how much debt I can comfortably afford.

No wonder foreclosures are skyrocketing.; March 20, 2007 8:40 PM
Anonymous said...: It looks like the Time magazine cover is still quite a ways off.

Check out this baloney that I saw on msn.com after I (and everybody else who did so today!!) was done checking my Hotmail account:

http://tinyurl.com/yownpr; March 20, 2007 9:53 PM
FlyingMonkeyWarrior said...: I would like to point out that since Geo HW Bush presided over the S&L bailout (from which his sons Jeb and Neil profited nicely), and Geo W Bush over this subprime disaster, Bushes will have presided over the two biggest financial scandals in the history of the world.
Written by Jason B on 2007-03-19 11:56:51

http://www.rgemonitor.com/blog/roubini/184125/; March 20, 2007 11:17 PM
Anonymous said...: Yo Keith: Itulip.com has a graph which shows by dollar amount what types of mortgages are due to reset and when. The future is clearly visible.

The graph is imbedded in the story "Can the U.S. economy digest the trillion dollar ARM egg?
March 20, 2007 (iTulip)" on the left side of the site.; March 21, 2007 12:31 AM
Anonymous said...: Looks like Jim Cramer might have said a bit too much on this interview when he bragged about illegally manipulating stock prices as a trader. "A lot of times when I was short, I would create a level of activity beforehand that would drive the futures. . . . It's a fun game," Cramer boasted on tape. You Tube Video; March 21, 2007 1:24 AM
Grumpy said...: Test; March 21, 2007 5:07 AM
Anonymous said...: Pound jumps after strong UK inflation figures

UK rate-setters will be very concerned to see the RPI measure of inflation -- which is often used as the basis for pay deals -- jumped to 4.6 pct in February, its highest level since August 1991.

'The results ... suggest that inflation will be of concern to the BoE, especially with PPI pressures rising, RPI risking higher pay pressures and housing market booming uncontrollably,' said Zaki Kada at Thomson IFR Markets.

'In this context, we suspect the chances of a hike next month are above 50 pct,' he said, adding that strong retail sales figures on Thursday 'could help reinforce this notion'.

http://www.forbes.com/markets/
feeds/afx/2007/03/20/
afx3532090.html; March 21, 2007 5:27 AM
Anonymous said...: Canadian Core Inflation Rate Unexpectedly Accelerates

Canadian core inflation unexpectedly accelerated to a four-year high last month, raising the possibility the central bank will raise interest rates to temper the world's eighth-biggest economy.

The core rate, the measure most closely monitored by the Bank of Canada and which excludes volatile goods such as gasoline, rose 2.4 percent from a year ago, the fastest pace since March 2003, Statistics Canada said today in Ottawa.

The Canadian dollar surged 1.4 percent to 86.15 U.S. cents at 4:04 p.m. in Toronto trading, from 84.95 U.S. cents late yesterday, the biggest increase since June.

http://www.bloomberg.com/apps/
news?pid=20601082&sid=
ao9ssBnBcbnw&refer=canada; March 21, 2007 5:30 AM
Anonymous said...: Something that is currently interrupting the forex market's preoccupation with US housing data is comments coming from China's Central Bank. Bank Chief Zhou said that China will not accumulate more foreign reserves. Excess foreign revenue instead would go to a new agency that seeks to invest the funds in more profitable ventures than the safe, low interest-earning accounts where reserves are often parked. Zhou suggested that China's current reserves, currently above $1 trillion, may be enough. To potentially lose China as a currency customer is..

not a good thing because that would mean a reduced demand for the greenback (and perhaps the Euro too)and that may cause the US dollar to weaken.

http://www.gracecheng.com/
blog/331/China%20reserves%20
talk%20weighs%20on%20the%20US%
20dollar.html; March 21, 2007 6:16 AM
Anonymous said...: US Dollar Trading Flat at 83.08

http://quotes.ino.com/
chart/?s=NYBOT_DX&v=w; March 21, 2007 6:18 AM
FlyingMonkeyWarrior said...: US Dollar Trading Flat at 83.08
))))))))))))))
USD dips to 79 and look out below.

And I see China dumping Dollars is MSM News now, but posted here months ago.

Keith, the anti HP opinion Trolls are back peddling, imo.; March 21, 2007 12:34 PM
Anonymous said...: "Pig in the Pipe" - generational theft. Here's your next wave of concern - yongsters gettting the shaft; why shouldn't they just say "to heck with it"?
http://www.newstatesman.com/200703050030

I'm posting this to the "wither HP" thread, too.; March 21, 2007 1:18 PM
FlyingMonkeyWarrior said...: Dear Keith,

Apparently Greg Swan wants a blog war with one of his own now, but she is not getting sucked in (like I did). But that is okay, I got my handle from him.

She basically told him the blog was not about him.

She has awarded him The Real Weenie Award.

I kind like his new nick name;

Greg the Ripper.
te he.

http://tinyurl.com/yrzaqz

or

http://www.stpaulrealestateblog.com/
weenie/2007/03/powered_by_odeo.html; March 21, 2007 2:54 PM
FlyingMonkeyWarrior said...: The Owner of the Real Estate Weenie Blog has done a pod cast, telling Greg Swan that he can not threaten her into shutting down her blog because he did not like it!
Keith, I hope you will write a satire about your sight all in good fun for the Real Estate Weenie.
One of Greg The Ripper's top Executive Blog authors has quit The Hound as collateral damage.

Casualties of Blog War.

http://blog.inman.com/inmanblog/2007/03/
casualties_of_b.html

Here is the Pod Cast

http://www.stpaulrealestateblog.com/weenie/; March 21, 2007 4:10 PM
blogger said...: Flying - thanks for having my back. My policy on swann dive is to call out his name as the perfect representation of the lying, pompous ramen-eating real estate clerk, but ignore his nobody-is-reading-it blog.

The other bubble bloggers are doing the same, no matter how much he personally attacks, linking to him is 100% what he wants. He wants to be the martyr of realtors.

The guy is not only a creep, but I think he's truly unstable. And the only time his blog ever got any readers is when the flying monkeys from HP went over to call him out.

So, try to ignore him. Like everyone else does. Poor guy. shouldn't he be out trying to find clients or sell houses?; March 21, 2007 4:17 PM
FlyingMonkeyWarrior said...: ignore him. Like everyone else does.
************8
Okay. Your right, his blog has a hand full of yes men commenting to zero comments on some posts.

This new blogger flamer war is about him trying to shut down a Real Estate Clerks "Weenie Award Blog" because he wanted to have "The Cheese Wiz Award". The Real Estate Clerks are Flaming each others Blogs! They posted a Pic Parody of Greg as a Phat Nekkked Kowboy, with a can of Cheese Wiz rather than a Gun in the holster.

He still talks about you by name. We really got under his skin.

Me, I would NEVER post on his sight.

Anyway, obviously I have way too much time on my hands this week, much like the Real Estate Clerks.

Nuff said.

Up Ward and On Ward.; March 21, 2007 4:36 PM
Anonymous said...: DOLLAR TUMBLED on Bernanke Dovish Statement after FOMC meeting.

The dollar tumbled to a two-year low against the euro on Wednesday after the Federal Reserve held rates steady but removed references in its statement to the possibility of more interest rate increases.

"It's altogether a bearish statement for the dollar," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.

"The Fed's statement appears both less confident of the outlook and less optimistic," said Marc Chandler, senior currency strategist at Brown Brothers Harriman in New York.

Traders said that leaves the dollar vulnerable, especially to higher-yielding currencies such as the euro. Markets expect euro zone rates to rise further this year from the current 3.5 percent.

http://investing.reuters.co.uk/
news/articleinvesting.aspx?type=
usDollarRpt&storyID=2007-03-
21T185119Z_01_N21221674_RTRIDST_
0_MARKETS-FOREX-UPDATE-9.XML; March 21, 2007 8:02 PM
Anonymous said...: Kiss the value of your oceanfront condo bye-bye:

"South Florida running out of sand.

For decades, South Florida's beaches have received periodic infusions of fresh sand pumped from offshore to maintain their bountiful curves.

Now, the supply of sunken sand off Miami-Dade and Broward is tapped out.

''For practical purposes,'' said Miami-Dade environmental director Carlos Espinosa, ``we are out of sand.''

It also has major implications for Florida's beach program, which regularly ''renourishes'' a constantly eroding coast with dredge pumps and pipelines.

''When we run out of sand for our beaches, the beaches are going to go bye-bye and that's a serious thing,'' said Steve Higgins, beach erosion administrator for Broward."

http://tinyurl.com/2paz67; March 21, 2007 8:05 PM
Anonymous said...: Will a Weaker DOLLAR unwind the Yen Carry Trade faster? Bernanke the Dove does it again.

The yen will strengthen against the dollar to June 2005 levels within six months, responding to Bank of Japan lending rate increases, according to Merrill Lynch & Co.

The yen, trading at a more than one-week low of 117.83 per dollar, will appreciate to 107 yen per dollar by September, according to a Merrill's research note published today.

http://www.bloomberg.com/apps/
news?pid=20601101&sid=apuWkkWq83_
Y&refer=japan; March 21, 2007 8:08 PM
Anonymous said...: Be informed, HPs: read the books "Crossing the Rubicon" by Michael Ruppert, and "Omnivore's Dilemma by Michael Pollan.

http://tinyurl.com/yx8w5z

http://tinyurl.com/353ns6

http://tinyurl.com/kv8kt; March 21, 2007 8:27 PM
Anonymous said...: http://www.france24.com/
france24Public/en/administration/
afp-news.html?id=070321200630.
q5wgxzg6&cat=null

With a new message, the Fed signals that they agree with Alan Greenspan on the weakness of the US economy.

Recently Ben Bernanke said he did not agree with Alan Greenspan on the weakness of the US economy due to the implosion of foreclosures in the SUBPRIME mortgage business, but today the Fed actions speak stronger then its words

That message was a shot across the bow signaling Forex traders to short the Dollar after the FOMC meeting. The Dollar hits 2-year low vs the Euro as the Fed softens its bias

The Fed dropped a reference to "firming" or hiking rates, substituting the phrase "future policy actions" that would depend on economic data.

In this respect, said Marie-Pierre Ripert at IXIS Corporate and Investment Bank, "the statement is much more dovish than expected as the Fed removed its tightening bias."

The shift is "a significant change suggesting that the recent turmoil in housing markets is clearly a cause for concern for the Fed," Ripert added.; March 22, 2007 2:11 AM
Anonymous said...: The Fed message was not just a concern in the weakness of the Subprime Mortgage Business, but the alt-A Mortgage Business as well.

LoanCity specializing in traditional and alt-A mortgage announces that they ceases funding loans.

Dear LoanCity Broker:

As many of you may know, LoanCity ceases funding loans at the end of day, Mar 20, 2007. All loans that are not funded by Mar 20 will have to be taken elsewhere to close. Because we appreciated your business, we are pleased to offer you an option to have your loan funded elsewhere – our friends at CMG Mortgage will handle all active loans in the LoanCity pipeline, which are currently scheduled to fund later than Mar 20, as these loans can be underwritten, relocked and funded by CMG Mortgage in an expedited manner. In an effort to expedite the transition of your LoanCity pipeline, below is a contact list of regional CMG Mortgage Managers that you can contact to facilitate the transfer and funding of your current deals in LoanCity’s pipeline.

http://www.loancity.com/; March 22, 2007 2:20 AM
Anonymous said...: In addition to New Century who were recently given a cease and desist order, Apex Mortgage and Old Commonwealth Mortgage LLC were also given the same.

The Division issued a Cease and Desist Order against Apex Financial Group Inc., d/b/a Aapex Mortgage (Apex) after an examination of Apex revealed that the company had been subject to at least three enforcement actions in other states. Apex did not disclose these actions to the Division as required. In addition, the company failed to provide access to certain information required by the Division. Apex, headquartered in Brandon, Florida, also has a licensed office in Roslindale, Massachusetts.

Finally, the Division issued a Cease and Desist Order against Old Commonwealth Mortgage LLC, out of Garden City, New York. The sole owner of Old Commonwealth pled guilty to a felony charge of unlawful duplication of computer related material in connection with proprietary information of his former mortgage company employer.

http://www.mass.gov/
?pageID=pressreleases&agId=
Eoca&prModName=ocapressrelease
&prFile=07_03_13_div_banks_
actions_against_mortgage_
companies.xml; March 22, 2007 2:31 AM
Anonymous said...: How can the Federal Reserve not change their message today with People's Choice Home Loan Inc., filing for Chapter 11 bankruptcy protection on Tuesday, and Accredited Home Lenders Holding Co. subject to delisting from the NASDAQ on Monday,

http://today.reuters.com/
news/articleinvesting.aspx?type
=bondsNews&storyID=2007-03-
20T235233Z_01_N20368326_RTRIDST_
0_USA-SUBPRIME-PEOPLESCHOICE-
UPDATE-5.XML

and

http://www.housingwire.com/
2007/03/19/accredited-faces-
nasdaq-delisting-claims-of-
securities-fraud/; March 22, 2007 2:48 AM
Anonymous said...: Of course the Federal Reserve will change its message, how could it afford not to.

Federal Reserve will have to bail out the banks when they know that banks and financial institutions will fail one after the other, even if this means the Dollar will have to collapse.

The banking industry all over the globe is experiencing a boom like never before (in recent history). The loans, mortgages, mergers and acquisitions, investment banking, financial services, brokerage – you name it – all contributed to the super growth in bank stocks. The financial institutions and banks are paying highest ever remunerations. They are also expanding at the rate of fastest asteroid.

Unfortunately, the end of the boom is here. The forty and hundred year banking cycle topped. The deflation in the system is ready to turn the table on the banks, financial institutions and financial services sector in general.

The problem has started with sub prime mortgage market. Soon it will spread to the regular mortgage sector. Then will come the credit cards, car loans and personal as well as student loans. Eventually it will spread to investment banking, corporate borrowing to duel to mergers and acquisitions.

The last stage will be catastrophic when Governments are hit with the possibility of fiscal and financial collapse because of the unprecedented levels of debt.

When banks fail, like in the last several hundred years, there will be run on the banks. The banks and financial institutions will fail one after the other.

http://www.indiadaily.com/
editorial/16076.asp; March 22, 2007 2:56 AM
Anonymous said...: Clearly the Dollar is not flat today, as the Dollar PLUNGE! PLUNGE! PUNGE!

http://quotes.ino.com/chart/
?s=NYBOT_DX&v=w

FOREX Traders smell BLOOD in the Streets as weakness in the SUBPRIME forced the Federal Reserve to change their message today.

There is a 30 to 50 percent chance the world's largest economy will slip into a recession by the end of this year, Morgan Stanley chief economist Stephen Roach said.

He was echoing comments late last month by former Federal Reserve chairman Alan Greenspan, who warned of a recession in the United States but later changed his tone.

Roach said Wednesday that a broader slowdown in US housing as well as the subprime mortgage market crisis will trigger a recession in the United States.

"The bubble [Alan Greenspan] created in the housing market is now bursting and he knows a lot about that," Roach remarked. "Now no longer the chairman [of Federal Reserve], he can actually tell the truth."

"With US economy already slowing to 2 percent, if consumption slows rapidly, the economy is going to slow further. And it is a distinct possibility that it [the economy] will grow between 0 and 1 percent [by the end of this year], right on the brink of an outright recession." He predicts a recession would last four to six quarters.

Referring to the Chinese economy, Roach said 2007 will be a year of change in that Beijing's three-year tightening campaign to slow the economy "will start to work" this year. "This is a tightening campaign that has really not worked. This is the year where it better work," he said.

"The premier has put his reputation on the line," Roach said, referring to Wen Jiabao's remarks at the National People's Congress about achieving a balance in macroeconomic conditions. "China, in my view, now has no choice but to continue tightening, as it attempts to bring its rapidly growing and unbalanced economy under control."

Roach predicts there will be more tightening moves, especially administrative measures by the National Development and Reform Commission this year.

"If China fails this time, this will be bad news for the credibility of Wen Jiabao as a leader and manager of the Chinese economy. I don't think he will allow it to happen."

Roach forecasts the mainland economy will moderate to between 9 percent and 9.5 percent growth this year, as a result of a US slowdown and tightening measures in China.

http://www.thestandard.com.hk/
news_detail.asp?we_cat=2&art_id=
40712&sid=12769174&con_type=1&d_
str=20070322; March 22, 2007 3:28 AM
Anonymous said...: Carry Trade is Live and Well, but remember LTCM.

Hedge Funds know that liquidity will continue to be pumped into the global system, but can a collapse of the Taiwan Dollar happen?

Taiwan's dollar, down 1.6 percent this year, may extend its losses as the central bank considers ending two years of interest-rate increases and traders search for financing alternatives to Japan's yen.

Traders are borrowing Taiwan dollars to purchase assets in Indonesia, the Philippines and India, where benchmark interest rates are as much as 6.25 percentage points higher, using the so-called carry trade. Domestic funds also are buying more overseas debt after 10-year government bond yields fell below 2 percent this year.

HSBC Holdings Plc and UBS AG recommend using the Taiwan dollar for carry trades as an alternative to the yen, because rising Japanese interest rates sent the currency up 3.2 percent against the U.S. dollar in the past five weeks. Central Bank of the Republic of China (Taiwan) Governor Perng Fai-nan said in an interview last week that his board is moving ``closer and closer'' to a possible pause in raising borrowing costs.

``The attraction of the Taiwan dollar for funding will increase, especially as there's more volatility elsewhere,'' said Richard Yetsenga, a Hong Kong-based strategist at HSBC, Europe's biggest bank. He said the yen will gain, making it more expensive to pay loans used for carry trades.

http://www.bloomberg.com/
apps/news?pid=20601080&sid=
a4BKZVtv.77Q&refer=asia

China regards Taiwan as a renegade province and has threatened war if the self-ruled island declares formal independence.

Chen's government considers the Bush administration a key behind-the-scenes ally in its struggle to break away from China, even though the United States - like most countries -has pledged formal ties to Beijing instead of Taipei.

http://www.unpo.org/
article.php?id=6459; March 22, 2007 3:43 AM
Anonymous said...: San Jose mortgage lender with $6 billion in mortgages in 2006 stops funding loans

LoanCity, a wholesale mortgage lender based in San Jose, stopped funding loans as of Tuesday.

Privately owned LoanCity, founded in 1999, funded about $6 billion in mortgages in 2006, Soukoulis said. It mostly loaned to borrowers with good credit - those known "A" and "Alt-A" customers, he said. These borrowers have good credit scores, but some apply for loans without providing full documentation of their income or assets.

Dennis Steinbach, owner of S&L Home Loans in San Jose, said his staff worked frequently with LoanCity, and learned Tuesday afternoon via fax that the company would stop funding loans that day.

Steinbach said he expects to see more wholesale lenders close or merge as banks tighten their lending criteria. The no-money-down loans that became popular with first-time buyers are starting to dry up, he said, even for those with good credit.

"Every day this week I have gotten a notice from a lender who's cutting off 100 percent financing programs of some kind," he said.

http://www.mercurynews.com/
realestatenews/ci_5490326; March 22, 2007 4:36 AM
Anonymous said...: Subprime woes may spread to Alt-A and jumbo loans

PACIFIC Investment Management Co, the fund manager which first predicted a collapse in US home prices almost two years ago, has said that losses on subprime mortgage will spread to other "aggressively underwritten" loans.

"It is likely that the poor performance we have seen in subprime loans will carry over to some degree into the most aggressively underwritten loans in the Alt-A and possibly jumbo prime markets," Pimco said in the report.

Alt-A loans make up about 20 percent of mortgages issued last year, according to Credit Suisse.

The question is will the NINJA implosion get as bad as the 2000 S&L fallout of the late 80's?

It starts off with one alt-A lender like Loancity then spreads to other alt-A lenders, as one default uncovers another default.

Just like the 42 Subprime lenders that were uncovered, the alt-A lenders will do the same.

http://eng.zgjrw.com/News/
2007319/English/286728402900.html; March 22, 2007 4:51 AM
Anonymous said...: What does NINJA means?

HCL Finance Inc., a San Jose, Calif.-based subprime mortgage lender, made a name for itself at the height of the California real estate boom with a signature loan it called the NINJA – No Income, No Job, No Assets.

Distressingly, HCL wasn't alone in offering these and other exotic mortgages to millions of Americans least able to take on debt.

How lenders such as HCL got so deeply into the low-brow business of lending to the riskiest home buyers helps explain the spectacular meltdown of the U.S. subprime mortgage market.

And if experts are right, worries about the $10-trillion (U.S.) in mortgages out there could soon infect other areas of consumer credit, helping to drag the planet's largest economy closer to recession, along with dependent countries.

“This is spreading beyond the subprime market,” warns economist Joseph Mason, a former federal bank regular who now teaches finance at Drexel University's LeBow School of Business. “There's starting to be spillover into prime loans.”

Finally the Federal Reserve is admitting to Alan Greenspan conclusion by changing their message today.

http://www.theglobeandmail.com/
servlet/story/
RTGAM.20070316.wxrsubprime17/
BNStory/Business/home; March 22, 2007 4:55 AM
Anonymous said...: The subprime credit crunch is beginning to ensnare even borrowers with good credit.

Lenders are increasingly refusing to lend to homebuyers who can't make a down payment of more than 5 percent, especially if they won't document their income. Until recently such borrowers qualified for so-called Alt A mortgages, which rank between prime and subprime in terms of risk.

Last year the category accounted for about 20 percent of the $3 trillion of U.S. mortgages, about the same as subprime loans, according to Credit Suisse Group.

``It's going to be very difficult, if not impossible, to do a no-money-down loan at any credit score,'' said Alex Gemici, president of Parsippany, New Jersey-based mortgage bank Montgomery Mortgage Capital Corp. Companies that buy the loans ``are all saying if they haven't eliminated them yet, they'll eliminate them shortly.''

Tighter lending standards may slash subprime mortgage sales in half this year and Alt A mortgages by a quarter, according to Ivy Zelman, a Credit Suisse analyst in New York who covers homebuilders. The new requirements will force some prospective homebuyers to save more money for a down payment or risk being denied credit.

Pulling Back

Bear Stearns Cos., General Electric Co.'s WMC Mortgage, Countrywide Financial Corp., IndyMac Bancorp Inc., Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Credit Suisse have all said in the last two weeks they're pulling back from buying Alt A mortgages sold with no down payment or in a refinancing of the house's entire value.

Such companies facilitate the mortgage market by buying loans and repackaging them for sale as bonds to buyers such as insurers and hedge funds.

http://www.bloomberg.com/apps/
news?pid=20601087&sid=
a8ilcv.eOxMc&refer=home; March 22, 2007 5:13 AM
Anonymous said...: The collapse in shares of subprime- mortgage companies over the past month rewarded so-called short sellers who bet that rising defaults among the riskiest borrowers would curb lenders' profits.

Some traders who predicted declines in shares of New Century Financial Corp., NovaStar Financial Inc. and Accredited Home Lenders Holding Co. say such stocks may fall further as loan delinquencies increase and demand for mortgage-backed securities wanes. New Century sank 90 percent last month, while NovaStar lost 73 percent. Accredited slid 54 percent.

``The subprime guys are history,'' said Steven Persky, chief executive officer of the $1.1 billion Los Angeles-based hedge fund Dalton Investments LLC, which began shorting shares of subprime lenders two years ago. ``They're ultimately going to have to file'' for bankruptcy.

New Century, NovaStar and Accredited Home were some of the most-shorted U.S. stocks from Feb. 12 to March 12, the date of last month's short-sale statistics from the New York Stock Exchange.

Short interest in the stocks climbed last month after New Century, the biggest specialist in home loans made to people with relatively low credit ratings, and HSBC Holdings Plc, Europe's biggest bank, said losses from bad U.S. home loans were piling up faster than they expected.

http://www.bloomberg.com/
apps/news?pid=20601087&sid=
adGBgBug_kKU&refer=home; March 22, 2007 5:19 AM
Anonymous said...: Yesterday was T+12, and this morning AHM is still on the failure to deliver threshhold list. That means that if the naked short positions aren't brought below the threshhold (less than 250,000 naked shorts in AHM's case), the forced covering begins tomorrow.

That doesn't necessarily mean that AHM's price will go up, but at least the hammering by the naked shorts that has brought it down will end.

http://messages.finance.yahoo.com/
Stocks_%28A_to_Z%29/
Stocks_A/threadview?m=tm&bn=
607&tid=11073&mid=11073&tof=
2&frt=2

Naked Short List For 13 Consecutive Trading Days

Delta Financial Corporation (AMEX: DFC),

American Home Mortgage Investment Corp. (NYSE: AHM)

http://www.buyins.net/press/
nakedshort/2007/03/
PR_2007-03-21_on13_1.htm

Naked Short Sells and Depository Trust & Clearing Corporation

Strategic failure to deliver

http://www.youtube.com/
watch?v=7fcre8P2UUY

How Does Naked Short Sells works?

http://www.businessjive.com/
nss/darkside.html; March 22, 2007 6:02 AM
Anonymous said...: Why have Subprime Stocks been going up in the past two weeks?

Have the fundamental change?

http://messages.finance.yahoo.com/
Stocks_%28A_to_Z%29/Stocks_A/
threadview?m=tm&bn=607&tid=
11073&mid=11073&tof=2&frt=2

In finance, a short squeeze is a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock.

Short squeezes result when short sellers cover their positions on a stock.

This can occur if the price has risen to a point where these people simply decide to cut their losses and get out. (This may happen in an automated manner if the short sellers had previously placed stop-loss orders with their brokers to prepare for this eventuality.)

Since covering their positions involves buying shares, the short squeeze causes an ever further rise in the stock's price, which in turn may trigger additional covering.

Short squeezes are more likely to occur in stocks with small market capitalization and small floats.

The opposite of a short squeeze is the less common long squeeze.

http://en.wikipedia.org/wiki/
Short_squeeze

Short Squeeze will cause price of the stock to go up.

slide 60

Naked Short Squeeze will cause price of the stock to go up unlawfully.

slide 63

http://www.businessjive.com/
nss/darkside.html; March 22, 2007 6:35 AM
Anonymous said...: The FHA encourages lending to lower-income families by promising to repay lenders if the borrower does not.

The money comes from premiums paid by borrowers, not from taxpayers. In the mid-1990s, the FHA started insuring riskier loans. Borrowers were no longer required to make a down payment.

Lenders could arrange larger loans simply by projecting that a borrower's income was likely to increase. The share of Americans who own homes rose to almost 69 percent last year from 65 percent in 1996.

The FHA was responsible for a share of the increase. So were subprime lenders, which make loans with high interest rates to the same people traditionally served by the FHA.

But now the number of foreclosures also is pushing into record territory, driven by defaults on FHA and subprime loans, according to estimates made by the lending industry.

"The mortgage industry has said they have increased home ownership," HUD's inspector general, Kenneth Donohue, told a U.S. House committee last week.

"However, at what cost to the American people?"

http://www.dollarcollapse.com/inp/
view.asp?ID=50; March 22, 2007 6:54 AM
Anonymous said...: got my hometown local small town newspaper today and the local politico budget demands a 14% tax increase for schools, no 2% yearly inflation or private wage increase of that sort there, as iot went up 12% last year, or it will go to sales tax?????!!!!!; March 22, 2007 7:18 AM
Anonymous said...: HOA takes only cash buyers and sees a 90% cut in money available from buyers?; March 22, 2007 7:26 AM
Anonymous said...: average, typical declining dollar?; March 22, 2007 7:28 AM
Anonymous said...: "When Barak or Hillary are in power it will get worse. We are in a death spiral down!"

Oh yeah, blame this mess on Hillary and Barak. Have you noticed that the Republicans who constantly wave the flag of accountability, are never responsible for anything wrong. They are sooooo perfect all the time.

I say it once again: if you Republicans love Bush and the GOP so much, you should volunteer to go to Iraq.; March 22, 2007 8:41 AM
Anonymous said...: http://news.yahoo.com/s/nm/20070319/ts_nm/usa_subprime_detroit_dc

Tragic housing situation in Detroit. It's not even funny.; March 22, 2007 3:05 PM
Anonymous said...: Ha-ha! You suckers who don't have houses or paid your credit off are going to foot the bill for all of our spending. How do you like THEM apples?

Note the article below, in italics:

Senate Weighs Aid to 2.2 Million Subprime Borrowers

By James Tyson

March 13 (Bloomberg) -- U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.

``The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,'' Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities.

Foreclosures involving homeowners who took out subprime loans from 1998 until 2006 could cost $164 billion, Dodd said, citing a December study by the Center for Responsible Lending in Durham, North Carolina. The government needs to provide at-risk homeowners ``forbearance or something like that to give them a chance to work through and get a new financial instrument here that they can manage financially better,'' Dodd said.

Delinquencies among subprime mortgage borrowers hit a four- year high in the fourth quarter, the Washington-based Mortgage Bankers Association said today. The trade group said 13.33 percent of subprime borrowers were behind on payments in the quarter, the highest rate since the third quarter of 2002.

More than two dozen mortgage lenders have gone bankrupt, closed operations or sought buyers since the beginning of last year as the effect of looser lending standards, slowing home- price gains, and less wage growth left banks holding bad loans.

Looking to Help

Congress ``may need to do something much more quickly to provide some protection or you could end up with a lot of poverty and blight,'' Dodd said. Federal aid of a few billion dollars ``may be a lot less costly'' than $164 billion in lost wealth, he said.

Mortgage defaults during the next two years may rise to $225 billion, with about $170 billion tied to subprime loans, according to a report yesterday by analyst at Lehman Brothers Holdings Inc. led by Srinivas Modukuri. Subprime borrowers are those with poor or limited credit backgrounds or high debt.

Dodd didn't specify the channel through which federal aid would be offered. ``I don't want to settle on the specifics of it, but clearly we are looking at what we can do to help out.''

Any formal legislation would have to be approved by Dodd's committee, then passed by both the full Senate and the House of Representatives before being signed into law by the president.

Costly Solution

Federal aid ``would come at a cost,'' said Douglas Duncan, chief economist at the Mortgage Bankers Association. ``It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?''

Duncan expressed doubt that 2.2 million subprime mortgage borrowers will lose their homes, noting that the association lists only 300,000 such borrowers as being in foreclosure now.

Senator Richard Durbin, the No. 2 Senate Democratic leader, said he is open to the idea of helping subprime borrowers while noting that Democratic leaders haven't decided whether to do so.

``We have not discussed it, but that doesn't mean that we can't or shouldn't,'' Durbin said in an interview. ``Senator Dodd is in a key position on the Banking Committee and he's talked to us about the scope of this problem and what the reasonable response might be. I'm sensitive to it. There's nothing worse than a person losing their home.''

Durbin said that Democratic leaders will look to Dodd for recommendations as Dodd's committee examines the issue.

New Bill

Representative Barney Frank, a Democrat from Massachusetts and chairman of the House Financial Services Committee, reiterated today that he intends to introduce a bill to deter lenders from offering consumers mortgages they can't afford.

``We plan to legislate to restrict those kinds of mortgages going forward,'' Frank said after a hearing in Washington. He declined to elaborate on the timing or details of such legislation.

Dodd reaffirmed a plan to introduce a bill that would combat predatory lending. ``There is a difference between a subprime lender and a predator, and I don't want to lose the subprime lender,'' he said.

The Federal Reserve, Federal Deposit Insurance Corp and other U.S. regulators on March 2 directed banks to scrutinize underwriting standards, provide more information to customers about borrowing risks and ensure borrowers are able to repay loans.

``Finally the federal regulators are beginning to indicate that they want to start requiring similar standards to be used for prime and subprime lending,'' Dodd said, referring to the new guidelines.

``I am a strong advocate of subprime lending,'' Dodd said. ``I don't want that word to become a pejorative as junk bonds did.''

While not constituting a drag on the economy, defaults may increase to $300 billion if home prices fall and borrowers forgo refinancing because of stricter lending standards, Lehman said.

To contact the reporter on this story: James Tyson in Washington at jtyson@bloomberg.net; March 22, 2007 4:27 PM
Anonymous said...: Business as usual, guys...time for a refi boom so I can make 300k a year out of my house again...

Florida Gator

Government Is `Here to Help' Subprime Borrowers: Caroline Baum

By Caroline Baum

March 21 (Bloomberg) -- Congress is making noises about doing something to help homeowners who can't meet their mortgage payments hold on to their slice of the American Dream.

Democratic presidential frontrunner Hillary Clinton, senator from New York, wants even lower mortgage rates for homeowners facing foreclosure. Senate Banking Committee Chairman Chris Dodd, Democrat of Connecticut, and House Financial Services Chairman Barney Frank, Democrat of Massachusetts, are holding hearings to determine Congress's legislative options.

As a sideshow, our elected representatives will probably spank regulators for not doing more to curb deceptive lending practices and hang executives of subprime lenders out to dry for presiding over the boom-bust cycle.

While lawmakers' intentions may be noble, it's a pretty safe bet that, left to their own devices, they will muck things up even more.

Just to summarize the storyline to date: During the housing boom of the last five years, people with bad credit histories, many of whom lied about their income and nature of employment, got mortgage loans they weren't qualified for to buy homes they couldn't afford. Now that home prices have stopped rising, and the house can't be refinanced or sold at a profit, Congress wants the taxpayer to subsidize the mortgages so these folks can remain in their unaffordable homes.

What's wrong with this picture? Surely there were plenty of cases of fraud, as there always are during extended periods of rising asset prices. (The bodies of both victims and perpetrators generally float to the surface when the bubble bursts.) The legal system is capable of prosecuting loan fraud, a federal crime, be it on the part of the borrower (lying about his income) or the lender (misrepresenting the terms of the loan).

Fraud Is a Crime

Any false statement made to a lender, even if the lender encourages it, constitutes fraud. Why do we need new laws?

``There are adequate laws in place to address false statements on loan applications,'' says Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission enforcement attorney now in private practice. Similarly, existing ``mail and wire fraud statutes are sufficiently broad to cover predatory conduct by unscrupulous lenders.''

That won't stop Congress, which is forever passing laws to ensure the last problem doesn't recur. The Sarbanes-Oxley Act of 2002, for example, enacted in the wake of corporate accounting scandals, is getting a second hearing. With increased distance from the accounting chicanery following the bursting of the technology and Internet stock bubble in 2000, it seems that in its haste, Congress may have imposed too heavy a regulatory burden on small businesses, thereby reducing the competitiveness of the U.S.; March 22, 2007 4:53 PM
Anonymous said...: Failed mortgages fly under the radar. From feds on down, no one keeps close track of foreclosures, limiting oversight

BINYAMIN APPELBAUM, LISA HAMMERSLY MUNN & TED MELLNIK
Staff Writers, The Charlotte Observer

The Stewarts Crossing subdivision in Charlotte has had a high percentage of foreclosures. The city of Charlotte does not count foreclosures. Neither does Mecklenburg County. Nor the state of North Carolina. Nor the federal government.

As a result, authorities did not notice an emerging pattern: Foreclosures increasingly were concentrating in starter home neighborhoods.

An Observer analysis of county records found 35 Mecklenburg developments of low-priced homes built in the past decade with foreclosure rates of 20 percent or higher. Dozens of residents say the concentrations have damaged their communities. Prices fell. Renters moved in. Crime sometimes rose.

But as the foreclosures piled up, authorities were unaware....Even the Federal Housing Administration, which insured many of the failed loans, didn't track the concentrations....The Department of Housing and Urban Development, which administers the FHA program, was unable at first to say how many loans it insured on streets in Southern Chase. It was unable to say which ones had foreclosed. And it didn't know all the failed loans were in one neighborhood.

The lack of information about the location of foreclosures makes it harder to regulate the lending industry. Buyers share responsibility for the loans they accept, and foreclosures sometimes result from the loss of a job or an unexpected expense. But regulators say that concentrations of foreclosures often indicate misconduct by someone else, such as a broker who arranged a number of loans or an appraiser who valued the homes.

None of the government agencies contacted by the Observer plans to start tracking foreclosures.

For the rest of the article:

http://tinyurl.com/2ubz34; March 22, 2007 8:27 PM
Anonymous said...: http://news.goldseek.com
/TacticalInvestor
/1174575780.php; March 23, 2007 1:51 AM
Anonymous said...: It might seems weird to the untrained eyes to see house or land price raising when the central bank start tightening its monetary policy, but it does happen.

BOJ needs to learn from Alan Greenspan recent mistake if BOJ does not want another housing bubble in Japan.

BOJ need to get its rate up to 2.75 fast.

Japanese land prices rose for the first time in 16 years last year, according to government figures that confirm that Japan is finally pulling out of asset deflation and that the economic recovery is broadening across the country.

Average residential land prices rose 0.1 per cent nationwide in 2006, while commercial land prices rose 2.3 per cent, the widely watched survey showed.

However, the recent rise in land prices has also been a factor behind the Bank of Japan’s eagerness to raise interest rates in the face of political opposition.

Toshihiko Fukui, the central bank governor, told the Diet on Thursday that rising land prices and currency rates were among the factors that could affect monetary policy.

There is concern within the bank that sharp price increases in some urban areas are creating an asset bubble – something the central bank has been keen to avoid following its experience during the 1980s.

http://www.ft.com/cms/s/
1e2d1226-d862-11db-a759-
000b5df10621.html; March 23, 2007 4:50 AM
Anonymous said...: HSBC Mortgage Services Weekly Communications Update
March 22, 2007

HSBC has made the decision to discontinue correspondent channel acquisitions through HSBC Mortgage Services.

Your HSBC representative will be in contact shortly and will work closely with you over the next few weeks as we will cease acquisitions through Mortgage Services on May 31, 2007.

http://content.householdaccount.
com/d1/HMS106/hms106_web.html; March 23, 2007 5:00 AM
Anonymous said...: Shareholder Class Action Filed Against Accredited Home Lenders Holding Co. by The Law Firm of Schiffrin Barroway Topaz & Kessler, LLP

The Complaint charges Accredited and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:

(1) that the Company was improperly accounting for loan losses as conditions in the sub-prime industry deteriorated;

(2) that as such, the Company's financial statements were materially misstated;

(3) that the Company's underwriting guidelines were not adequately restrictive for borrowers in the sub-prime loan market;

(4) that Accredited would be forced to further tighten its underwriting guidelines which would have a material impact on its future loan productions;

(5) that the Company was operating without effective risk management policies and procedures in place;

(6) that Accredited lacked adequate internal and financial controls; and

(7) that, as a result of the above, the Company's statements about its financial well-being and future business prospects were lacking in any reasonable basis when made.

http://biz.yahoo.com/prnews/
070322/clth334.html?.v=1; March 23, 2007 5:43 AM
Anonymous said...: IMPAC MORTGAGE HOLDINGS INC.

-UBS said it expects the non-prime real estate investment trust to report a first-quarter loss, which would require it to obtain further waivers of previously breached warehouse lending covenants, or pay off the related facilities.

--If Impac breaches covenants again, the risk of losing, or being restricted from its credit lines is high, the brokerage added.

http://yahoo.reuters.com/news/
articlehybrid.aspx?storyID=
urn:newsml:reuters.com:
20070320:MTFH96209_2007
-03-20_14-23-24_
BNG46884&type=comktNews&rpc=44; March 23, 2007 6:06 AM
Anonymous said...: Series 2006-WF1

—Class M-5, rated 'BB+', placed on Rating Watch Negative.

The 2006-WF1 transaction is currently experiencing 5.08% of serious delinquencies

Series 2006-WF2

—Class M-5, rated 'BB+', placed on Rating Watch Negative.

The 2006-WF2 transaction is currently experiencing 4.5% of serious delinquencies

The loans in the 2006-WF1 and 2006-WF2 transaction are serviced by Wells Fargo

The mortgage loans consist of fixed- and adjustable- rate loans extended to Alt-A borrowers and are secured by first liens primarily on one- to four-family residential properties.

http://digital50.com/news/
items/BW/2001/07/14/
20070322005686/
fitch-affirms-25-places-
4-rmbs-classes-on-negative-
watch-from-4-cmlt-issues.html; March 23, 2007 6:38 AM
Anonymous said...: Latest count of major US mortgage lenders that have croaked since late 2006:

44 lenders have now gone kaput

Two more added to the list in the last two days

#44: Sunset Direct Lending
#43: Kellner Mortgage Investments

http://ml-implode.com/; March 23, 2007 7:11 AM
Anonymous said...: http://tinyurl.com/2xfvb9

Housing Market Blues

Resident Fellow Desmond Lachman

As in a Greek tragedy, the present unraveling of the US housing market is being accompanied by all too predictable choruses. At periodic intervals, the Wall Street economist chorus assures us that the worst of the housing downturn is over and that the spillover affects to the rest of the economy will be minimal. For its part, the policymaker chorus intermittently spouts forth soothing words to calm nervous markets at this time of heightened investor uncertainty. And these choruses get rudely interrupted every now and again by ever worsening data coming out of the housing market only to start the cycle of reassuring choruses anew.

While the inclination of policymakers to act as cheerleaders is perfectly understandable, one can only hope that they do not allow their positive spin to blind themselves to the likely need for early monetary policy easing. For an aggressive easing in interest rates will soon be needed to limit the economic fallout from the housing bust that now appears to be in full swing.

In the debate as to where the housing market might be headed, all too much attention has centered on the grave troubles now surfacing in the sub-prime mortgage market rather than on the gross excesses that characterize the overall US housing market. In particular, scant attention is being paid to the fact that housing prices in constant dollar terms surged by a staggering 70 percent between 2000 and 2006, or by an amount that has no precedent over the past 100 years. Nor is much attention being focused on the fact that the remarkable relaxation of mortgage lending standards over the past six years has raised the percentage of US households owning homes from a fairly stable historical average of 64 percent to almost 70 percent by 2006.; March 23, 2007 1:53 PM
Anonymous said...: I'm stunned! Existing home sales data is in and blows away expectations. Is the bust over? http://infohype.blogspot.com; March 23, 2007 2:28 PM
Anonymous said...: http://www.nytimes.com/2007/03/23/business/23speed.html?_r=1&oref=slogin

An article on automated underwriting. Nytimes registration etc etc etc.; March 23, 2007 3:08 PM
Anonymous said...: Anon: March 08/07:

"OK last one I promise.

To recap:
Brooklyn up 19%. Seattle up 14%. Missoula up 11%. And finally we have all of Canada up 10%. I'll bet there are a few Torontonian HPers who sold in 2005 kicking themselves hard these days, huh boys?"

My wife and I have been renting for about 15 years now in Toronto, in the St. Andrew area (near Hoggs Hollow). It started at $ 400 / month and we currently pay about $ 810 / month including parking, locker, maintenance, taxes, heat, c/hot water, appliances and so forth. My friends rents a 2 - bedroom with a great patio, for about $850 / month. Hydro runs me about $35 / month.

Thank-God I rented.

I thought about RE in Toronto in 1997, however, decided to purchase RE assets in another nation to take advantage of the "Asian contagion" buying opportunity. Great move.

For a fraction of what a house goes for here (not including the fees, taxes, insurance and interest), I have roughly 1000 acres and a great house.. Tons of exports to booming nations like China and India - for example, just building my first water bottling plant for export to Shanghai, China.

If I purchased a house in Canada sure I'd have ONE paid off house in the "frozen north", so what, whoopie-do-da. I'm currently building entire sub-divisions now on my lands with my own funds.

Although the house price run-up seems quite nice, it's not even in the same ball-park as the returns I normally expect. There are much, much better investments out there which can generate far, far greater returns than RE ever will...but you can't be timid and stay with the herds. I'm 40 now, retired in that I do NOT have to work, I just do as I love creating new businesses to keep busy.

Renting isn't for everyone, but it can be a great move if you invest wisely with your savings. If you did buy, however, and think you're doing well then great, all the power to you.; March 23, 2007 3:28 PM
Anonymous said...: A crash? That is when you slip in the bathtub and crack your skull on the faucet.; March 23, 2007 5:13 PM
Anonymous said...: "Business as usual, guys...time for a refi boom so I can make 300k a year out of my house again...

Florida Gator"

```````````````````
Yeah and I suppose that's why you live in Florida will all the old fucks and white trash. Becuase you have been raking in 300k a year selling 60 year IO Option ARMs. BUAHAHAHAHAHA. Fucking joke you are. Get a real job bitch, it's over.; March 23, 2007 6:28 PM
Anonymous said...: In the month when Subprime Lenders have the most problems Home Sale shot through the Roof, due to normal market fundamental. What was that fundamental? “Higher Housing Price Affordability Index equals Higher Housing Sales.”

The National Association of Realtors reported Friday that sales of existing homes rose by 3.9 percent last month, pushed higher by a sharp increase in sales activity in the Northeast.

The price of a median home sold last month dropped to $212,800, down by 1.3 percent from the same month in 2006. It marked a record seven straight months that the median home prime has fallen compared to the same period a year ago.

Analysts said the price declines were helping to lure buyers back into the market.

Sales of existing homes were up 3.9 percent in the Midwest and 1.6 percent in the South, while sales were unchanged in the West. The reluctance of sellers in the West to trim prices was holding back a rebound in that region.

In other words, “Lower Price - Higher Sales.” When Subprime Lenders were taken out of the equation of the housing market fundamental, the housing market has return to normal – Housing Price Affordability Index went up.

This proves Regulators need to crack down on Subprime lending practice even more especially in California were majorities of the loans are still non-conforming (alt-A, option ARM, or Subprime). Easy credits due to Subprime lending practice made West coast sellers reluctant to lower price holding back a rebound in that region.

The words "unexpectedly rose" shows how many Greedy Financial Analysts did not understand the fundamental. This report proves that “Fear” over shadow some of these Financial Analysts’ Judgment.

What was that Fear? It was the fear of losing the chance to make easy money.

http://biz.yahoo.com/ap/070323/
economy.html?.v=12; March 23, 2007 7:01 PM
Anonymous said...: http://tinyurl.com/2n7scs

Foreclosures Force Suburbs to Fight Blight

SHAKER HEIGHTS, Ohio — In a sign of the spreading economic fallout of mortgage foreclosures, several suburbs of Cleveland, one of the nation’s hardest-hit cities, are spending millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic.

In suburbs like this one, officials are installing alarms, fixing broken windows and mowing lawns at the vacant houses in hopes of preventing a snowball effect, in which surrounding property values suffer and worried neighbors move away. The officials are also working with financially troubled homeowners to renegotiate debts or, when eviction is unavoidable, to find apartments.

“It’s a tragedy and it’s just beginning,” Mayor Judith H. Rawson of Shaker Heights, a mostly affluent suburb, said of the evictions and vacancies, a problem fueled by a rapid increase in high-interest, subprime loans.

“All those shaky loans are out there, and the foreclosures are coming,” Ms. Rawson said. “Managing the damage to our communities will take years.”; March 23, 2007 7:18 PM
Anonymous said...: If you're still holding long-term bonds, don't wait. Dump them now!

US senators said Federal regulators act too slowly on Subprime Lenders.

With Home Sales shooting up on the month of February when subprime lending practice was taken out of the equation shows that Federal regulators needs to be more aggressive in cracking on non-conforming lending practice (alt-A, option ARM, Subprime, and Jumbo).

It is true that as many bad loans default, bad borrowers and Subprime lenders will be squeezed out of the housing market. However, the unexpected rise in the housing sales shows that smart buyers are stack on the sideline waiting to buy.

As subprime lenders leave the housing market and housing price fall back to normal, traditional lenders with conforming loan will be able to replace them. This process will bring back “Creditworthiness” to the US financial market.

However now that Federal Reserve Board Chairman Ben Bernanke is trying out the “Greenspan put!” will the market go into a Depression?

The problem is Ben Bernanke do not have the same amount of room to maneuver as Alan Greenspan.

Paul Volker left Alan Greenspan with the capability to maneuver, but what did Alan Greenspan leave Ben Bernanke?

In a time when the Federal Reserve needs to be courageous and strong they are scared and weak.

Read this article:

A Bernanke Put Could Have two
Important Market Implications

For starters, the Fed's new approach is causing the yield curve to return to normal.

In plain English, that means short-term interest rates are now falling below long-term rates. [Editor's note: For more information on the yield curve, see “ Fed Chairman Wrong Again? ”]
That's an important signal! It tells us that bond traders are afraid the Fed will sacrifice its long-term, inflation-fighting credibility in order to try and “save” housing.

They're buying short-term notes, which will benefit from a rate cut. And they're selling long-term bonds, which will get whacked if the Fed lets inflation get out of hand.

I can't argue with that strategy. In fact, I've been telling you to stick to short-term Treasuries for a long time.

If you're still holding long-term bonds, don't wait. Dump them now!

The long bond already got pasted for a full point on Thursday, and more downside could be dead ahead!
Plus, the dollar will likely continue to weaken if Bernanke cuts rates.

Several foreign central banks are still hiking interest rates, some aggressively. Therefore, investors will pull money out of the dollar and switch into other, higher-yielding currencies.

It's already happening. The dollar is trading right around its lowest level versus the euro since March 2005. Relative to the Australian dollar, it's at its lowest level since late 1996.

http://www.marketoracle.co.uk/
Article589.html; March 23, 2007 7:44 PM
Anonymous said...: On Wednesday, March 21 “Judgment Day” came for Ben Bernanke and he failed the test.

Why did Bernanke fail the test, because he fail to see that in the month when Subprime Lenders have the most problems Home Sale shot through the Roof, due to normal market fundamental. What was that fundamental? “Higher Housing Price Affordability Index equals Higher Housing Sales.”

On Thursday Investors are selling the long treasury and buying short. Get ready for “Zero Coupon” its Year 2000 all over again.

Guess What

One of this country's popular financial talking heads, Suze Orman, disclosed recently that she invests the bulk of her money in tax-free zero-coupon municipal bonds.

http://www.fool.com/investing/
dividends-income/2007/03/19/
investor-007s-bond-dossier.aspx; March 23, 2007 8:04 PM
Anonymous said...: Moody's Cuts Mortgage Bond Series 16 Levels, Says Fund Diverted

By Christine Richard

March 23 (Bloomberg) -- Moody's Investors Service cut its ratings on a series of mortgage-backed bonds 16 levels after learning U.S. Mortgage Corp., the servicer of some of the loans, diverted almost $6 billion away from the payment of the bonds.

A series of bonds issued by MASTR Alternative Loan Trust 2002-3 were cut from Aa2, the third-best investment grade, to Caa3, the third-worst junk rating, Moody's said. Another series was lowered from A2 to C, a 15-level drop. The ratings cuts follow a report from the trustee of the mortgage bonds, Wells Fargo Bank N.A., which took over servicing of the portfolio after U.S. Mortgage filed for bankruptcy, Moody's said.

``This is a very unusual situation that Aa2 bonds would suffer losses,'' said Nicolas Weill, chief credit officer in Moody's structured finance group. ``The servicer has committed some significant irregularities and there's a forensic investigation ongoing to see what happened.''

The two lowest-rated series of bonds have begun to take losses, and ``at this stage, the likelihood of any significant recoveries seems remote,'' Moody's said.

Moody's said the diversion totaled about $5.92 billion. ``Additional losses might be reflected in future remittance reports,'' Moody's added.

The loans were backed by 15-year and 30-year fixed-rate mortgages. These mortgages rank between prime and subprime in terms of risk, and include mortgages on which borrowers don't make a down payment or don't provide documentation of their income, Moody's said.

The mortgage bond issue also includes two series of triple- A rated securities, according to Moody's. One series was cut to Aa2, a two-level reduction, while the other series remains AAA because it's guaranteed by bond insurer MBIA Inc.

Moody's said U.S. Mortgage Corp. filed for bankruptcy in December.

To contact the reporters on this story: Christine Richard in New York at Crichard5@bloomberg.net

http://messages.finance.yahoo.com/
Stocks_%28A_to_Z%29/Stocks_C/
threadview?m=tm&bn=3223&tid=
44098&mid=44098&tof=1&frt=2; March 23, 2007 8:47 PM
Anonymous said...: Lender files for bankruptcy
Subprime's decline continues with People's Choice of Irvine.

Irvine-based People's Choice Home Loan, a unit of People's Choice Financial Corp., became at least the second subprime lender to file for bankruptcy protection in the county in the past two months.

The lender, which previously scuttled plans to become publicly traded, has more than $100 million in both debt and assets, according to its filing with the U.S. Bankruptcy Court in Santa Ana. It held $3.7 billion in loans as investments as of March 2006, and made $5.7 billion in loans in 2005.

It's the latest casualty in a rapidly expanding shake-up among companies that make loans to borrowers with rocky credit profiles. With more homeowners skipping loan payments amid a housing slump, mortgage companies are bogged down with sour loans they can't sell.

http://www.ocregister.com/
ocregister/money/
article_1625805.php; March 23, 2007 8:52 PM
Anonymous said...: Easy Credit and Subprime lenders to blame for housing crisis, but should Ben Bernanke add fuel to the fire and prolong this housing correction?

Champagne owes TD Banknorth about $56,000 on the original mortgage to the home. In addition, she owes approximately $79,000 on the equity loan from Bank of America and is in default on a $10,000 Town of Hartland Home Repair Network revolving loan program.

http://morningsentinel.
mainetoday.com/news/local
/3718296.html

It is sad to see the Champagne in their conditions, but what about the other families that easy credit and bad subprime lending practice hurt also.

TD Banknorth, the financial giant that brought the Garden name back to Boston, is expected to unveil today a major round of job cuts and branch closings, the Herald has learned.

http://business.bostonherald.com/
businessNews/view.bg?articleid=
190284; March 23, 2007 9:36 PM
Anonymous said...: Fox News Big Story Fri Mar 23

'Is the bust over'?

'Have we hit bottom'?; March 23, 2007 9:52 PM
Anonymous said...: Global liquidity is caused by the yen carry trade. How because investors such as hedge funds and pension plans borrow in yen at interest rates still close to zero to finance investment in whatever assets strike their fancy.

The yen carry trade, like subprime lending, is self-sustaining, but only up to a point. Borrowers are effectively selling yen, depressing its value and generating gains from interest- rate differentials and from the weakening of the currency.

But traders eventually start buying the artificially cheapened yen and the value of outstanding debt starts to rise.

Sandra Stoutenburg, an analyst for the InvesTech Market Analyst newsletter, contends that the trade "has provided a major source of liquidity in world markets."

If that is so, she wrote in a recent issue, its unwinding could have a severe impact on the yen, for starters. When borrowers began repaying their loans in the late 1990s, the reversal of the capital flow became a cascade.

The yen soared about 25 percent against the dollar over a few months in late 1998, and stocks tumbled worldwide. A one-two punch of an unwinding of the yen-carry trade and of subprime loans could have a similar impact now, she said.

If a liquidity crunch results again in a bear market and perhaps a recession, will it lessen the likelihood that investors will allow future speculative excesses to occur? Brown would not bet on it.

"Unfortunately," he said, "it seems in the nature of capitalism that what starts as a genuine trend can become extrapolated into a bubble as investors pursue a particular theme to its limits."

In other words, what is worth doing is worth overdoing.

http://www.iht.com/articles/
2007/03/23/yourmoney/
minvest24.php; March 23, 2007 9:56 PM
Anonymous said...: Um...you're all wasting your time...home sales are up...it's almost as if this entire blog and it's readers are crying wolf when there is a fence around the sheep; March 24, 2007 12:24 AM
PrecisionDan said...: I bet you don't post that last comment; March 24, 2007 12:25 AM
eternitus said...: Please, for your own good, read my blog about the current housing data released by the NAR on Friday. I've posted an article from the Wall Street Journal (Which you can't get unless you pay otherwise) and some
of my own comments... The data are hugely misleading due to the seasonal adjustment that is made.

The biggest story should be the 7.6% drop in median house prices since July 2006... That's enormous... imagine you bought then with a $20K down payment and now you have to move... Where'd my money go?

That's the danger of buying at the top.

Check out my blog to learn more... I spend the time writing because I think people need to know what the data they are fed actually mean, so they can think for themselves! Please read!

http://financeguru-eternitus.blogspot.com/; March 24, 2007 8:07 PM
Anonymous said...: HAHAHA Crying wolf keep believing that.LOL! When people like you come on here and make comments like that it makes me smile when I hear some idiot is in foreclosure.I will always think of you.LOL!; March 24, 2007 9:01 PM
Anonymous said...: Now this is scary:

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070324:MTFH03937_2007-03-24_12-42-02_L24236583&type=comktNews&rpc=44

IMF to urge further depreciation in dollar

BERLIN, March 24 (Reuters) - The International Monetary Fund will say further depreciation by the U.S. dollar is needed to help correct global imbalances in its latest World Economic Outlook (WEO), Germany's Sueddeutsche Zeitung said on Saturday.

Quoting from a draft of the WEO, the paper said the Washington-based fund argued "extraordinarily aggressively" for a correction in exchange rates, above all so as to reduce the massive U.S. current account deficit.

The dollar, which slid to a 2-year low against the euro last week, should continue to depreciate in the mid-term, while the yen, the Chinese yuan and currencies of oil-exporting countries in the Middle East should all appreciate, the draft WEO said.

The WEO, which is due to be published in mid-April, will add that there is no great need for further interest rate increases by the European Central Bank, according to the paper.

Editors Choice: Best pictures
from the last 24 hours.
View Slideshow

Thanks to solid growth in the 13-nation euro zone, the ECB would not create problems by raising its main lending rate to about 4.0 percent from 3.75 percent at present, the IMF said.
--------------------------

A possible scenario, the Bill Gross , scenario.

Fed & Treasury actively work down dollar, with interest rate cuts. Soon, the dollar will be viewed as the "funding currency" for the carry trade and the traders will then push it down further and further.

The Fed will create massive liquidity---but as with the Bank of Japan---most of it will flow to markets outside the USA.

Unlike Japan we will see strong import goods inflation, along with deflation in asset prices, i.e. real estate and stocks simultaneously, since both are aggressively valued now in the USA.

Of course real estate in Europe is insanely valued (except Germany) but if the dollar becomes the funding for a new carry trade --- in which case the solid euro becomes the new standard reserve currency --- U.K. and EU property may continue to be fully valued.

US will have a profound stagflation as Europe and Russia further gain in prosperity, along with resurgent Japan.; March 25, 2007 3:32 AM
Anonymous said...: "Um...you're all wasting your time...home sales are up."

Um...yeah...you are a dipshit douchebag. You must be referring to that one sided sales report the NAR recently put out. DUHHHHHHHHHH. Friggin asshat. We just left the top of the rollercoaster drop.; March 25, 2007 5:43 AM
Anonymous said...: To the untrained eyes it looks like the economy is at a turning point, and the Fed is confused and chasing its tail.

To the trained eyes the Fed is Scare, very very Scare and it want to lower interest rate.

"The way things stand, we're worried more about inflation, which to be frank is still way too high, but not worried enough to raise interest rates, because we think the economy will slow, which of course also has its risks, because the economy could slow too much and force us to cut interest rates rather than raise them.

"And then we have to consider how the markets would react. Lowering rates right now runs the real risk of further inflating those debt-driven bubbles we see in commercial real estate and corporate takeovers. It could also send the wrong signal about how we're ready to ride to the rescue of banks and investment houses and hedge funds that got themselves in trouble with all those subprime mortgages that have now gone sour.

"Raising rates, on the other hand, would surely aggravate the mortgage situation -- we certainly wouldn't call it a crisis -- sending even more mortgages into delinquency and foreclosure. The last thing we need is to get accused of raising rates just as the economy was dipping into recession, as we did back in the fall of 2000.

"Maybe the most honest thing to say is that we haven't got a clue whether the greater risk will come from the economy getting too hot or too cold -- only that both of these risks have increased since the last time we met.

"So after two days of blah, blah, blah, we decided to keep our powder dry and our options open and keep everyone guessing about what we're going to do -- or whether we're going to do anything at all. It may be we lucked out and we've got things just where we want them, with the economy sorting things out on its own without any pushing and prodding from us."

http://www.washingtonpost.com/
wp-dyn/content/article/2007/
03/23/AR2007032301996.html; March 25, 2007 8:13 AM
Anonymous said...: Federal Reserve Governor Frederic Mishkin says keeping inflation in check may require rate increases. However, Fed governor is to scare and warns against rate hikes.

Core U.S. inflation is likely to drop to 2 percent from about 2 1/4 percent, but pushing it below that may require higher interest rates, Federal Reserve Governor Frederic Mishkin said on Friday.

"I am less optimistic about the prospects for core PCE inflation to move much below 2 percent in the absence of a determined effort by monetary policy," Mishkin said in remarks prepared for delivery to a conference organized by the Federal Reserve Bank of San Francisco.

Mishkin was referring to a favorite inflation gauge of the U.S. central bank - the 12-month change in the government's Personal Consumption Expenditures index with volatile food and energy costs set aside.

An advance text of Mishkin's remarks was distributed to reporters in Washington.

Mishkin said he is "reasonably optimistic" that core inflation will drift down. But the process will take a while because of the recent rebound in prices for gasoline and petroleum products, he said.

Higher fuel prices have boosted the costs of many goods and services and as firms pass costs along to customers, monthly core inflation readings will be higher than they would otherwise be, he added.

Meanwhile, Mishkin said he believes long-term inflation expectations are currently anchored at a level not far below the current rate of inflation, and bringing them down even lower would be challenging.

"A substantial further decline in inflation would require a shift in expectations, and such a shift could be difficult and time consuming to bring about," Mishkin said.

Pushing inflation expectations lower might require holding interest rates up at a level that would lead to slower economic growth and higher unemployment, he said.

"The historical record suggests that permanently lowering inflation expectations may require keeping monetary policy tight for a substantial period, resulting in considerable output and employment losses for a time," he said.

Mishkin's remarks on inflation come two days after a statement from the Fed's policy-setting committee that many took to be a step away from an inclination toward raising interest rates if necessary to bring inflation down.

http://money.cnn.com/2007/03/24/
news/economy/fed_Mishkin/
index.htm?postversion=2007032401; March 25, 2007 8:20 AM
Anonymous said...: ABX-HE Referenced Subprime Loans May See Continued Stress

Rising delinquencies and resultant price declines have been felt most acutely in the ABX-HE-2006-2 (06-2) and ABX-HE-2007-1 (07-1) CDS indices due to their heightened exposure to a slower home price appreciation (HPA) environment and riskier low documentation loans to subprime borrowers with piggyback second loans, according to Fitch Ratings. And in a new report by the rating agency, continued problems are likely.

'Roughly 75% and 90% of the underlying loans in the 06-2 and 07-1 indices have experienced less than 5% HPA following origination, as compared with the ABX-HE-2006-1 index (06-1), with 26% of the loans in the less than 5% HPA category,' said Suzanne Mistretta, Senior Director, Credit Policy. In addition, roughly 10% of the 07-1 loans and 6% of the 06-2 loans are in areas that experienced home price declines of up to 5%. In contrast, only 2% of the 06-1 loans have experienced negative HPA.

'Subprime loans underlying the three indices could face more stress in the future

http://home.businesswire.com/
portal/site/moreover/
index.jsp?epi-content=
GENERIC&newsId=20070321006032&&
newsLang=en&beanID=1868105982&
viewID=news_view; March 25, 2007 8:41 AM
Anonymous said...: Now that the FOMC is neutral with regard to Federal Reserve policy, yields are likely to rise at the long end of the yield curve.

I predict that at its next meeting on May 9, the FOMC will shift to an easing bias and that the first rate cut will be made following the June 27 - 28 FOMC meeting.

This is bearish for bonds because the Fed will be cutting rates as the economy slips further towards recession with inflation above their assumed comfort zone.

Even the yield on the 2-Year could begin to rise towards my assumed mid-year level of 5.0%. A bearish steepening will accelerate when the yield on the 30-Year begins to rise above my annual support at 5.054.

http://www.rightsideadvisors.com/
feed/commentary.aspx?Path=/rsa/
commentary/blog/
20070324_162636_msg.html; March 25, 2007 9:02 AM
Anonymous said...: The nonprime mortgage business is in a mess because during the boom years, hardly anyone had an incentive to say no.

The siren song of bountiful paychecks drowned out the murmurings of conscience. “Are there individuals and folks in the supply chain here and there that don’t care, or don’t necessarily have the borrower’s best interest at heart?” asks Jim Svinth, chief economist for LendingTree.com. “Yes. But that can be said about just about any industry where people are paid on commission.”

Problems are developing with subprime mortgages, which are home loans for people with flawed credit histories, as well as Alt-A mortgages. Alt-A loans are for borrowers who have so-so or even good credit, but who don’t document their income or assets. A lot of interest-only loans can be lumped into the Alt-A category, too. Together, subprime and Alt-A are known as nonprime.

The mortgage industry’s participants chase after profits while dumping the risks onto someone else. The chain of buck-grabbing and buck-passing starts with mortgage brokers and loan officers — the people who work directly with borrowers.

http://www.naplesnews.com/
news/2007/mar/25/
what_caused_nonprime_mortgage_
business_falter/?business; March 25, 2007 6:37 PM
Anonymous said...: Price cuts on homes motivating buyers

http://www.heraldtribune.com/
apps/pbcs.dll/article?AID=
/20070324/BUSINESS/703240437

February proved a brighter month for existing home sales -- a 5 percent increase in the Sarasota-Bradenton market -- but Sarasota-Bradenton's median sales price dropped 9 percent last month when compared with February 2006, from $324,200 to $294,500.

Plenty of buyers waiting on the sideline ready to jump in when homes price go down.

Regulator and policy makers need to know that in a free market 3% of zero is still zero.

As bad loans are sold, good one can replace these bad loan as long as subprime practice is subdue. This gradual process will bring creditworthiness back into the mortgage backed securities market.

Motivation of profits will correct this housing market as long as everything is on a even (legal) playing field.

Regulators and policy makers need to put more pressure on the few bad applies that is giving a black eye to this industries.; March 25, 2007 6:56 PM
Anonymous said...: Banking on risk due to "NINJA"

“NINJA” loan — NINJA standing for “No Income, No Job and No Assets.”

Future looks ominous because of 'innovative' mortgage products

Today’s pop quiz involves some potentially exciting new products that mortgage bankers have come up with to make homeownership a reality for cash-strapped first-time buyers.

Here goes: Which of these products do you think makes sense?

(a) The “balloon mortgage,” in which the borrower pays only interest for 10 years before a big lump-sum payment is due.

(b) The “liar loan,” in which the borrower is asked merely to state his annual income, without presenting any documentation.

(c) The “option ARM” loan, in which the borrower can pay less than the agreed-upon interest and principal payment, simply by adding to the outstanding balance of the loan.

(d) The “piggyback loan,” in which a combination of a first and second mortgage eliminates the need for any down payment.

(e) The “teaser loan,” which qualifies a borrower for a loan based on an artificially low initial interest rate, even though he or she doesn’t have sufficient income to make the monthly payments when the interest rate is reset in two years.

(f) The “stretch loan,” in which the borrower has to commit more than 50 percent of gross income to make the monthly payments.

(g) All of the above.

If you answered (g), congratulations! Not only do you qualify for a job as a mortgage banker, but you may also have a future as a Wall Street investment banker and a bank regulator.

n fact, the innovative products are now so commonplace, they have been the driving force in the boom in the housing industry at least since 2005. They are a big reason why homeownership has increased from 65 percent of households to a record 69 percent.

They help explain why outstanding mortgage debt has increased by $9.5 trillion in the past four years. And they are, unquestionably, a big factor behind the incredible run-up in home prices. Now they are also a major reason the subprime mortgage market is melting down.

http://www.redding.com/news/
2007/mar/25/banking-risk/; March 25, 2007 7:02 PM
Anonymous said...: The recovery in dollar was mainly due to profit taking after the subprime market triggered selloff has reached a climax right after FOMC meeting. The current sentiments on dollar remains fragile and should Bernanke sounds dovish, another round of dollar selling will be triggered.

Interest rate expectation came back to dominate the forex market last week after risk aversion and carry trade theme faded.

This could be characterized by dollar's weakness after the dovish FOMC statement against higher yield currencies including GBP, AUD, NZD and even CAD when interest rate expectation on these currencies changed.

The biggest event last week was the FOMC meeting. Though Fed kept rate unchanged at 5.25% as widely expected, there were some important changes in the language of the accompanying statement.

Firstly, growth outlook was somewhat downgrade from "firmer economic growth" to recent indicators have been "mixed" and with "some tentative signs of stabilization have appeared" changed to "the adjustment in the housing sector is ongoing".

Secondly, regarding inflation, the statement has clearly spelled out that "risk that inflation will fail to moderate as expected" is still fed's predominant concern.

http://www.fxstreet.com/
technical/analysis-reports/
daily-forex-technical-report/
2007-03-24.html; March 25, 2007 7:32 PM
Anonymous said...: Question: How come you keep posting your opinion about option arms on every option arm post. I think we all understand how you feel and don't give a damn. Yes I agree that the option arm is not for everybody but if the client knows how to use it correctly than we should leave it up to the client if they want an option arm or not.

Answer: "I'm not tense, just terribly, terribly alert." :)

More times than not, this is a very dangerous loan. It makes me sick with all the inexperienced L/O's only looking to make 3% on the back and probably charge 1% on the front too.

An then there are the AE's who are all over the thread hoping to be the lender of choice.

I am helping educate and that is it. I do not intend to be cruel to people by the Option ARM comments. I must be making my point to have a thread started about me?

How many L/O know how to really take a complete application, run the loan through DO/DU or LP, do FHA and use Subprime as a last resort instead of a starting point. And I never charge origination and never price a loan to make the max.

http://forum.brokeroutpost.com/
loans/forum/2/106966.htm; March 25, 2007 7:40 PM
Anonymous said...: The average Joe said Housing Bubble Can Never Pop.

There is no liquidity in the housing market.

http://www.youtube.com/
watch?v=tkzb5cmmma8; March 25, 2007 8:11 PM
Anonymous said...: February Housing Sales Figure.

No Spin just hard facts.

http://www.paperdinero.com/
images/ehs0207.gif

Particularly notable are the following:

http://www.realtor.org/
Research.nsf/Pages/EHSdata

* Majority of median prices are down.

* Majority of sales are down.

* Inventory and Months Supply show double digit increases on a year-over-year basis.

Yet again, the Bulls on Wall Street and CNBC waxed wildly optimistic with the initial “top-line” numbers of a report before delving into the details thoroughly enough to realize that they had gotten ahead of themselves.

http://paper-money.blogspot.com/; March 25, 2007 8:23 PM
Anonymous said...: Orange County house sales were up last month, but house prices down again.

The median price of an existing single-family home in Orange County was down last month, making February the sixth of the past seven months to see year-over-year price declines, the California Association of Realtors reported today.

The median price – or the price at the midpoint of all home sales – was $692,820, the association reported, up slightly from January's median, but down 3.9 percent from February 2006.

Existing single-family home sales, which usually make up about two-thirds of all homes sold in the county, first fell below year-ago levels in August and have been down every month since then except for November.

http://www.ocregister.com/
ocregister/money/housing/
article_1629242.php; March 25, 2007 8:27 PM
Anonymous said...: NINJA does it again.

“NINJA” loan — NINJA standing for “No Income, No Job and No Assets.”

Until last year, financial counselors at the Home Ownership Center of Greater Cincinnati spent most of their time teaching Americans how to buy a first home. Now, they're deluged by broken and bereft homeowners facing foreclosure.

"Oh Lord, there is no way we can keep up with these calls," said Kaye Britton, a foreclosure counselor at the downtown nonprofit group that promotes home ownership to minority Americans, among others.

Britton has been helping clients reach the American dream of owning a home since 2002. Handmade wall signs urge would-be buyers to "sweat the small stuff" and note the lender's golden rule: "They have the gold, they make the rules."

Foreclosures were formerly rare, caused mostly by the loss of job, divorce or medical bills.

But when rising interest rates began driving up mortgage payments last year, homeowners started to feel the pain. Phones at credit counselors across the country are now ringing off the hook.

"We knew it was going to be bad, but we didn't think it would be this bad," said Britton, echoing many who warned that increasingly exotic mortgage programs -- including those that required no down payment on home purchases -- would come back to haunt home buyers.

http://impactlab.com/
modules.php?name=News&file=
article&sid=11088; March 25, 2007 8:49 PM
Anonymous said...: Despite low rates, mortgage demand falls Application activity drops for the first time in four weeks, Mortgage Bankers Association's seasonally adjusted index says.

http://money.cnn.com/2007/03/21/
real_estate/bc.usa.mortgages.
mba.reut/index.htm?postversion=
2007032108; March 25, 2007 8:53 PM
Anonymous said...: Subprime Market Continues To Dive; Mortgage Companies Forecast Sour Returns

As the subprime lending industry continues to suffer from setbacks, companies like Countrywide and People's Choice are in deep trouble.

People's Choice Financial Corp.'s California subsidiary, People's Choice Home Loan Inc., which specialized in loans to clients with poor credit history, filed for Chapter 11 bankruptcy protection on Tuesday this week. The news was followed by an announcement by Countrywide, saying the firm expects to report that its mortgage defaults in 2006 will be the worst on record.

Countrywide executive Sandor Samuels admits the company's "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89 percent... We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000."

Meanwhile, the subprime industry as a whole remains in the red as at least four companies have sought credit protection this year alone. That stacks up to the over 20 firms which have left the market altogether in 2006.

http://www.allheadlinenews.com/
articles/7006839300; March 25, 2007 8:56 PM
Anonymous said...: When you've bought a house, you don't own the house -- the bank owns the house -- you just own the risk.; March 25, 2007 9:49 PM
Anonymous said...: US Consumer Takes a Dive

It couldn't last forever. The US consumer couldn't just keep building up more and more debt on ever higher levels of spending. Eventually debt service had to overwhelm the US consumer and bring down spending.

Perhaps March marks the beginning of the big reduction in US consumerism. Data from ShopperTrak shows an amazing year over year slowdown in the month of March:

In my mind most of the US economy and most US citizens have already been experiencing a significant recession. Underreporting inflation has helped the government show positive growth numbers, but only the financial sector has really been growing.

Based on recent data it seems likely that the slowdown for the rest of us will soon be harsh enough that even the GDP data shows enough negative growth and the recession will be obvious, even to economists.

http://rebalancing.blogspot.com/
2007/03/us-consumer-takes-dive-it
-couldnt-last.html; March 25, 2007 11:14 PM
Anonymous said...: Sen. Charles Schumer, D-N.Y., warned Sunday that 91,000 New York families could lose their homes because of the rise in subprime mortgages rates.

"The bottom line here is that the subprime bust is leading us right into a foreclosure boom, and thousands of people will be left in the lurch," Schumer said at a news conference in his Manhattan office.

Schumer said more federal oversight is needed in the subprime lending market.

"The subprime market is the Wild West of mortgage loans, and it's time we bring a sheriff into town," Schumer said.

http://www.wnbc.com/news/
11373271/detail.html; March 25, 2007 11:34 PM
Anonymous said...: U.S. overall consumer confidence fell sharply last week, according to an ABC News/Washington Post poll released Tuesday.

The consumer comfort index fell seven points to -5 in the week ended March 18, from +2 a week earlier.

According to the survey, 42% of respondents expressed confidence in the economy, down from 47% the week before. Also, 61% of those polled said their own finances were in good standing, down from 64% in the prior week. In assessing the buying climate, 39% of respondents said it was good, down from 42% a week earlier.

The consumer comfort index was based on a random survey of 1,000 respondents nationwide ended March 18. The index measures typical Americans' confidence in three areas: the national economy, their own finances, and their willingness to spend money, according to the report.

http://www.fxstreet.com/
news/forex-news/
article.aspx?StoryId=c0544406-
e584-48a3-b3d0-d490235f4f2e; March 25, 2007 11:44 PM
Anonymous said...: Stephen Roach Says Recession in late 2007 early 2008.

The bursting of two bubbles seven years apart – dot-com and housing – holds the key to the macro outlook. While different in many respects, these sharp swings in asset markets share one thing in common – the initial belief that any spillovers would be limited and that the rest of the economy and financial markets would remain unscathed.

Just as that view turned out to be wrong in the early 2000s, I fear a similar outcome today.

The contrasts between the spillovers in the real economy in the aftermath of the two bubbles could well be of even greater importance to the macro call.

Seven years ago, the spillover risks were concentrated in business capital spending – a sector that made up about 12.5% of the US economy in late 1999 and early 2000. In the aftermath of the bursting of the equity bubble, business capital spending fell 16% from its late-2004 peak to its early-2003 trough; by contrast, over the same nine-quarter period, the rest of the economy increased by 5%.

Today, the potential spillover risks are concentrated in personal consumption – a sector that makes up about 71% of real GDP, or nearly six times the size of the capex spillover sector that was the defining characteristic of the last post-bubble shakeout.

Therein lies the case for a post-bubble macro contagion that could end up being a good deal worse over the next year than it was seven years ago.

If income growth weakens – a more likely outcome in a post-housing shakeout – the consumption hit on GDP growth could be in the 1.5 percentage point range. That could push GDP growth toward the 1% threshold – easily into growth-recession” territory and not all that far from an outright downturn.

Given the likelihood of meaningful consumer spillovers, I would place about a 40% probability on an outright recession scenario in late 2007 and early 2008.

The Federal Reserve now seems to be preparing itself for just such a possibility. By changing its risk assessment at the March policy meeting

http://www.morganstanley.com/
views/gef/archive/2007/
20070323-Fri.html; March 26, 2007 3:11 AM
Anonymous said...: Will consumers spending grind to a halt by Summer?

Spending has to stop some where if Inflation eats into the consumers budget.

For the consumer who is also a subprime borrower, will higher gas price be the strew that break their back?

For today stressed out Subprime borrowers, there is not much wiggy room.

Most likely with raising house prices over the past few years many new subprime borrowers have to live further from work. So how will these strecthed subprime borrowers cope with their long commute this summer when the Nation is averaging $2.603 and high gas prices has not yet officially started?

California a state with one of the most subprime borrowers has gas price that is averaging $3.12 today. If gas price is at $3.12 per gallon today can gas price go up to $4.50 per gallon by summer?

Tension is building up and that means gas price will go up also.

Oil nears $63 as Iran tensions intensify

"The situation in the Middle East has become much more uncertain and the risk of tensions intensifying has underpinned the rise in oil prices and will continue to support prices,"

Iran's capture of British navy personnel last week has also heightened tensions. Iran said on Sunday it was considering charging 15 British sailors and marines with illegally entering its waters

Thousands of foreign oil workers have left the oil rich Niger Delta since February last year, when a new militant group staged a series of attacks that forced Royal Dutch Shell to shut a fifth of Nigeria's oil production.

Gasoline futures rose 1.1 cents on Monday to $2.93 a gallon, the highest since August.

http://africa.reuters.com/
wire/news/usnSYD83482.html; March 26, 2007 3:52 AM