Post article highlights (use tinyurl.com for the link), random thoughts and word from the street here...
Yup, right on schedule, it's getting ugly out there (no matter what realtors on commission tell you)
November 18, 2007
BUBBLETALK - Open thread to talk about the housing crash and mortgage meltdown
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397 comments:
«Oldest ‹Older 201 – 397 of 397Look how far the dollar is down.
When is it going to land?
I should have stayed on the farm.
Should have grown wheat like my old man.
Paulson you can't hide CDOs forever.
Eventually there value will be found.
Then vultures who can't wait to feed.
Will have plenty of CEOs on the ground.
Cheers
Who made the US Dollar weak, didn't the Federal Reserve lower interest rate in an Inflationary environment.
Why blame the speculators it is their job to bit up oil price when the Federal Reserve flood the market with excess liquidity.
It is reasonable to say that if the supply for oil verse the demand for oil stays the same then why should crude oil price be going up.
But if the currency at which oil is being purchased weaken to the point that it can not purchase another good for the same price then isn't that currency worth less.
For example, you need to buy a loaf of bread but it cost one Euro.
However, you normally make butter for a living and you needed bread.
Let say no want want to buy your butter in Europe, but the Americans think it is the great thing.
Normally you can sell one stick of butter for one US Dollar.
In other words if one Euro trade for one US Dollar then one loaf of bread should trade for one stick of your butter
Now let say that the Federal Reserve weaken the US Dollar by lowing interest rate so that one Euro trade for two US Dollar.
Let say there is still the same demand for the same supply of butter you can make, but if you sold the butter for one US Dollar then you can only buy half a loaf of bread for your stick of butter.
http://www2.ljworld.com/news/
2007/nov/06/speculators_
blamed_rising_oil_prices/
Speculators blamed for rising oil prices
A weak dollar has made purchases of oil on the futures market look increasingly attractive to foreign investors.
Crude oil futures prices continue a steep upward trend on the New York Mercantile Exchange.
Billionaire Texas energy investor Boone Pickens predicts that prices will top $100 in coming months.
Motorists are feeling the pinch, with the average price for regular-grade gas rising
It appears increasingly obvious that oil prices are being pushed into the stratosphere by speculators in a lightly regulated global trading market that has grown by leaps and bounds.
A favorite whipping boy — “Middle Eastern tensions” — again is being trotted out to explain the soaring prices.
Yes, Turkey is threatening to go after Kurdish rebels in northern Iraq.
Yes, Iran continues to invite trouble, including a potential U.S. military strike.
But even if one of these hot spots explodes, the odds are still against a major, sustained curtailment of global oil supplies.
Fadel Gheit, a respected energy analyst for Oppenheimer & Co. in New York, predominantly blames speculators.
“There is absolutely no shortage of oil,” he told me by telephone recently. “I’m absolutely convinced that oil prices shouldn’t be a dime above $55 a barrel.”
Oil speculators include “the largest financial institutions in the world,” he said. “I call it the world’s largest gambling hall. ... It’s open 24/7. ... Unfortunately, it’s totally unregulated. ...This is like a highway with no cops and no speed limit, and everybody’s going 120 miles per hour.”
Speculators can trade from anywhere via their Blackberries and buy oil on the margins by putting up only a small fraction of the price of a barrel, Gheit said.
Oil prices are escalated by a “fear premium,” he acknowledges — trepidation that events such as a new Mideastern conflict will escalate prices.
Gheit said he is “making a bet that the U.S. will have air strikes in Iran in the next two to four months,” but he notes that global oil supplies haven’t been seriously curtailed even by the prolonged war in Iraq.
Gheit and I share the belief that stronger oversight and regulation of energy markets are needed. Fortunately, Congress is looking at strengthening the Commodity Futures Trading Commission, as outlined in a recent in-depth story in the Washington Post.
What would make Petro-dollar and US Dollar go to parity.
Currently not a whole lot.
So remember the main driver for higher crude oil price is that Crude Oil future is pricing in the future value of the US Dollar not the supply and demand for oil.
http://www.investorwords.com/
3960/purchasing_power_parity.html
purchasing power parity
Definition
The theory that, in the long run, identical products and services in different countries should cost the same in different countries.
This is based on the belief that exchange rates will adjust to eliminate the arbitrage opportunity of buying a product or service in one country and selling it in another.
For example, consider a laptop computer that costs 1,500 Euros in Germany and an exchange rate of 2 Euros to 1 U.S. Dollar.
If the same laptop cost 1,000 dollars in the United States, U.S. consumers would buy the laptop in Germany.
If done on a large scale, the influx of U.S. dollars would drive up the price of the Euro, until it equalized at 1.5 Euros to 1 U.S. Dollar - the same ratio of the price of the laptop in Germany to the price of the laptop in the U.S.
The theory only applies to tradable goods, not to immobile goods or local services.
The theory also discounts several real world factors, such as transportation costs, tarrifs and transaction costs.
It also assumes there are competitive markets for the goods and services in both countries.
Is China dumping US Dollar in favor of the EURO.
Is China also saying Bye Bye to US Treasury
http://www.bloomberg.com/apps/
news?pid=20601080&sid=
ajWInGspzJzA&refer=asia
China will invest in stronger currencies when improving the structure of its $1.43 trillion in foreign-exchange reserves, Cheng Siwei, vice chairman of the National People's Congress, said.
``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng said in an address to a conference in Beijing today. ``China will use our income to readjust but that doesn't necessarily mean we'll buy more euros,'' he told reporters later.
Chinese investors reduced holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to the end of August. While the U.S. dollar fell 4.7 percent against the yuan this year, the euro advanced 5.7 percent against the Chinese currency.
``Cheng has a history of speaking out on a range of financial market and economic developments and his comments are not always accurate,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. Balancing U.S currency and euro holdings ``would represent a massive selling of the dollar,'' Maguire said.
Not looking good for the US Dollar Index.
http://quotes.ino.com/chart/
?s=NYBOT_DX&v=i
Last trade 75.527
http://www.treas.gov/tic/mfh.txt
Where did the Caribbean Banking Centers get the the money to buy the US Treasury that China and Japan have been dumping.
How much leverage are Caribbean Banking Centers using to buy US Treasury.
What happens when the bet goes wrong and when the margin on leverage money become called upon.
Are "speculators and hedge funds" and Caribbean Banking Centers one and the same.
If the US Dollar Index continue to fall what would happen to US Treasury rate.
http://www.fxstreet.com/
US Dollar was trampled after Cheng Siwei, vice chairman of the Chinese People's Political and Consultative Conference, said that China should diversify its forex reserves into stronger currencies like the Euro.
Dollar trades near record low vs euro on speculation ECB to hike rate
The US dollar traded near a record low against the euro in afternoon Asian trade Wednesday on speculation the European Central Bank (ECB) will raise interest rates tomorrow.
"There may be a chance that the ECB will increase the interest rate Thursday because of rising inflation," said Daniel Chan, senior investment strategist at DBS Bank.
Inflation in the euro zone accelerated to 2.6 percent in October from a year ago, faster than the 2.1 percent pace seen in September, Chan said. Record high crude oil prices may further stoke inflation.
http://www.sharewatch.com/story.php?storynumber=84803
Does it seems like the opposite in America, US Federal Reserve punish the MANY by trying to save the FEW
More than 650,000 Australians are facing mortgage stress following the tenth interest rate hike since 2002.
http://www.news.com.au/perthnow/
story/0,21498,22717445-951,00.
html?from=public_rss
PRIME Minister John Howard has apologised to people struggling to pay off mortgages after the Reserve Bank lifted official interest rates this morning.
Mr Howard has acknowledged that the rise would "hurt" borrowers.
"I sympathise with them ... I don't like it," he said.
"I'm sorry, I regret the additional burden that will be placed upon them as a result."
The Reserve Bank board met yesterday and announced its decision today. The raise is expected to hurt the re-election prospects of Prime Minister John Howard, being announced in the middle of the federal election campaign.
The decision comes in the wake of last month's strong inflation figures and a series of other indicators suggesting price pressures are becoming overheated.
Australians have been dealt 10 interest rate rises in the last five years - and six times since the last election in 2004 despite Mr Howard's promise to keep interest rates low.
Westpac chief economist Bill Evans said he expected another rate rise in December and another next year.
"We also retain our expectation of a further rate hike in first half of 2008, pushing the rate peak to 7.25 per cent from our previous forecast peak of 7 per cent," Mr Evans said.
Other economists from the big banks – which are responsible for the bulk of Australia's home lending – agreed
"It now looks as though the Reserve Bank has considerably more work to do in order to dampen medium-term inflationary pressures," said economists at ANZ Bank, who predicted two more rate hikes in the first half of 2008.
The big banks have already hinted they may raise home loan rates more than any official rate rises given higher funding costs in the money markets.
NY AG Cuomo is expected to come out with more lawsuits today. From what I've gathered it's against another AMC. (Appraisal Management Company.) News at 11.
Nice story
http://tinyurl.com/239ecy
The stock market is going to be very ugly today with the GM news leading the markets down.
Same as yesterday.....
Another day, another 100 basis points (so far...) for Canada.
CAD$1.00 = US$1.09
US$1.00 = CAD$0.91
Why would China buy the dollar high and sell low? And then buy expensive Euros...presumably to sell them when they go low? It doesn't make sense to me.
WaMu is a $2 stock waiting to happen.
Anyone else here ready to break below $20 a share today?
Looks like snowflake's new blog has a message - the flake must have either been arrested or fleed the country.
Personnel changes... too funny.
The attorney general of New York has sent subpoenas to fannie and freddy. It seems they bought a lot of shakey loans from WaMu that they either knew or should have known were not up to government standards. It seems WaMu used a lot of inflated appraisals.
You want a laugher right now?
Look at the DJIA priced in terms of gold since the year 200.
http://tinyurl.com/2sp36
See the chart entitled "Medium Term Dow / Gold Ratio".
MASSIVE CRASH.
You guys will love this - MSM is starting to get it:
"25 real estate markets poised to fall"
" Orlando
5-yr home price forecast: -34.2%
Home price/rent ratio: 23.8
15-yr average: 14.9
Note: People typically won't spend more in monthly costs to own a home than they would to rent. While prices soar from time to time, sending the ratio to exceptional heights, the relationship eventually should return to its historical average."
The Dow Jones Industrial Average fell 360.9 points, or 2.6%, to 13,300.0, with all of its 30 components ending in the red. (nov 7th - 5pm est).... maybe because all mortgage problems are "contained" and "local" :D
Why would China buy the dollar high and sell low? And then buy expensive Euros...presumably to sell them when they go low? It doesn't make sense to me.
______
Uh, maybe they're simply a lot better at economics than trading/investing!
In the face of all the terrible headlines and all common sense, all the talking heads on TV are saying the worst is over again! I guess it never gets old. The idea that things in the credit markets are going to improve relies heavily on the concepts of Suspension Of Disbelief and Deus ex machina to reconcile the massive problems going forward.
At what level does the US Dollar have to be versus the Euro, before Trade War begins.
http://www.bloomberg.com/apps/
news?pid=20601085&sid=
aZUhDckICL7w&refer=europe
Sarkozy Says Dollar Drop Risks Triggering Trade War
French President Nicolas Sarkozy told a joint session of the U.S. Congress the Bush administration must stem the dollar's plunge or risk triggering a trade war.
``The dollar cannot remain `someone else's problem,''' Sarkozy said today on Capitol Hill. ``If we are not careful, monetary disarray could morph into economic war. We would all be its victims.''
Sarkozy's complaints that the U.S. currency's drop against the euro is undermining European competitiveness struck a discordant note in a summit intended to demonstrate an improving U.S.-French relationship.
His comments came as the euro surged to a record high against the dollar. The currency touched $1.4731 today, a 65 percent gain since the end of 2001.
Hey, while the markets crash and the FED contemplates printing more money and lowering rates, check out the latest news from CNN:
Sheriff: Suspected deputy killer confesses
Grieving mom's plea draws Blackwater offer
Bush urges democratic route for Pakistan
Finland school shooter dies
'Offensive' costume puts Senate hearing on hold 38 min
Source: 2nd head rolls after fake FEMA briefing
Dry town gets water only 3 hours a day Video
WSB: Man uses Taser on carjacker, gets shot
Scanner can detect whether you have meth Video
Ticker: Bill Clinton: Dems might be 'swift-boated'
Eva Longoria delivers pizza to picket line Video
Britney Spears' mom: 'I blame myself'
Deputy is longest arm (and leg) of the law
Fashion show uses holograms, not models Video
CNN Heroes: Vote for your favorite hero
CNN Wire: Latest updates on top stories
Can someone respectfully tell Federal Reserve Bank of St. Louis President William Poole that No One Likes US Dollars Anymore, so the FED can lower interest rate to zero.
http://www.gracecheng.com/blog/
592/No%20One%20Likes%20US%20
Dollars%20Anymore.html
The US dollar is taking a really hard beating today, and the USD downtrend sees no signs of decelerating.
At the time of writing, EUR/USD surged upward to another fresh high around 1.4730 and USD/CHF plunged to a 12-year low around 1.1250 after a Chinese official warned that China may further diversify its reserves out of US dollars.
PBOC vice-director Xu Jian said the USD is losing status as world currency. That may be true in time to come as Euro is becoming stronger.
My fellow traders, this is indeed an exciting time to be trading currencies as you can profit from the dollar's decline.
The bearish USD sentiment is unlikely to change for the time being, and selling pressure on the USD will weigh at various rebound levels.
Don't be bothered by "overbought" and "oversold" levels because they are meaningless in the current trending market.
.
Remember, we were told real estate bubbles were local not national!
.
like da guy said..."why do i feel poor compared to the brit...who lost the empire"
Go on Uncle Benny drop interest rate to zero so that hedge funds can get their Wall Street bonuses this year.
http://www.amny.com/news/local/
am-realestate-1108,0,7184798.
story?coll=amny_home_rail_
headlines
News of a bursting bubble and increasing foreclosure rates is daily fare in reports of the American real estate market - unless it's New York City's market that's being discussed. Then the picture seems oddly stable; some would even say sunny for the foreseeable future.
The average sale price for a home in the city climbed to $782,000 in the third quarter of 2007, an increase of 20 percent from the same period in 2006, according to figures released yesterday by the Real Estate Board of New York.
"New York City is still considered a cool place to be, and everybody wants a part of it," said Richard Grossman, executive director of downtown sales for Halstead Property. "I have friends from all over country trying to move here."
"Unless banks stops lending we [the local real estate market] is not going to fall," he said.
Grossman pointed out a number of factors contributing to the city's seeming immunity from the national real estate crisis.
Foremost, he said, is that the city does not have a high proportion of the subprime loans blamed for many recent foreclosures. Co-op apartment buildings tend not to accept them, and in general New Yorkers make more money than the typical subprime borrower.
A weak dollar is also keeping the local market strong by attracting foreign investors in city real estate, Grossman said. Then, there is the age-old factor of supply and demand.
"Even with all the construction going on, you just can't build housing fast enough in this city," he said.
Yesterday's report found prices were highest in Manhattan, where the average home sold for $1.33 million, or around $1,176 per square foot. The average cost of a home went up in every borough except Staten Island, which saw a 2.8 percent drop.
The board's findings is based on data collected by the city and includes all condominimums, co-ops and one- to three-family homes sold in July, August and September.
Is it true that everyone else on Wall Streets are getting a big Wall Street bonus this year except fixed-income professionals.
Will fixed-income professionals lose their title of kings of Wall Street when it comes to bonus this year.
How much more does the Federal Reserve have to weaken the US Dollar Index before fixed-income professionals can get their title back.
http://www.heraldtribune.com/
article/20071107/ZNYT01/711070816/
-1/BUSINESS02
Bonuses are the golden goose of Wall Street, constituting the bulk of compensation for bankers and traders and even for asset management professionals.
Banks set aside about 50 percent of revenue to pay their employees, generally according to a combination of individual performance, group performance and overall institutional performance.
The last couple of years have been spectacular.
Wall Street executives say that estimating bonuses has been particularly challenging this year.
Data from Johnson & Associates and the Options Group varied a bit, but reflected the same trends. Johnson & Associates predicted that bonuses up 5 and 20 percent, respectively, for equity and equity derivative traders; and up 10 to 20 percent for investment bankers. Bonuses for corporate staff members, according to Mr. Johnson, will be flat to 5 percent up, and asset management will be getting increases of 5 to 10 percent, and that equity and investment banking bonuses would rise 10 percent.
But this year, bonuses for some fixed-income professionals, who have been the kings of Wall Street for more than six years, will fall.
Do you want a bigger bonus.
Is it time to jump ship or is it time to make your keep.
With the weaker US Dollar, isn't Commodity CDO the new game in town.
http://www.ifilive.com/
shownews.eds?newsid=7699
Hedge Funds Still Grappling With High Staff Turnover, Survey Finds
A survey conducted by Job Search Digest, a job search website focused on the hedge fund industry, revealed key insights into the world of hedge fund compensation. Significant bonuses and high turnover, the survey suggests, extend to workers on both sides of the Atlantic, including London.
The 2007 Hedge Fund Search Digest Compensation Survey captures information from industry players at all levels. The respondents are from more than 200 hedge funds firms, including Credit Suisse, Deutsche Bank, Goldman Sachs, and Morgan Stanley. Most respondents have less than two years with their firms, suggesting high employee turnover in the industry.
There is a lot of movement among hedge-fund employees, according to the survey. Though 50% of survey respondents had more than 10 years of professional experience, more than 60% of respondents reported being with their current firm for two years or less. This short tenure is reflected in a fraction of the professionals sharing in the equity pie.
"The survey raises an interesting question," said David Kochanek, president of Job Search Digest, which publishes Hedge Fund Search Digest (HFSD). "Are the players unhappy because intelligent, well-educated hard charging 'Type A' people are never satisfied? Or, does the hedge fund industry have a problem."
"With the very top hedge fund managers earning hundreds of millions of dollars, even those making a million a year wonder what they could be making if they jump to another firm," Kochanek added.
Production-based bonuses are an integral part of employees' compensation, the survey found, and range from 38% of base salary to more than 400% for top producers. The survey found the further you move up in the organization, the bigger that bonus percentage becomes.
Is it time to follow the money trail
http://ca.us.biz.yahoo.com/iw/071107/
After witnessing the recent plunge in the markets influenced by the resource sector, the falling housing slump and employment issues, smart investors and hedge funds are shifting interests into other sectors.
On Tuesday, the Energy Department's Energy Information Administration predicted oil consumption will rise in the fourth quarter and next year despite higher prices, and that inventories will fall.
This contributed to the rise in oil futures to a new record above $97 a barrel Tuesday.
Bombings in Afghanistan and an attack on a Yemeni oil pipeline compounded the supply concerns that have driven crude prices higher in recent weeks, further led by a government prediction on Tuesday that domestic oil inventories will fall further this year while consumption rises.
The weak dollar, which fell to a new low against the euro Tuesday, is also lifting oil prices.
Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
The dollar reached yet another record low against the euro Tuesday.
Do you still want your million dollar Wall Street Bonus.
Can you make a million with just a $100,000
http://economictimes.indiatimes.
com/Market_News/
To_make_million_start_with_100000/
articleshow/2515644.cms
The rupee is on steroids. It has gained amazing muscle and is now pounding the life out of every dollar in sight. If you want to put a human face to this tragedy, just look at the shell-shocked fund managers, traders and CEOs around you.
They are watching their promised million-dollar bonuses leak lakhs by the day. In January, a million-dollar bonus was worth Rs 4.40 cr. By November, it has leached Rs 50 lakh, adding up to Rs 3.90 cr. And the bottom is still not in sight. As Charlie Brown once said in ‘Peanuts’ — Sometimes I lie awake at night, and I ask, “Where have I gone wrong?” Then a voice says to me, “This is going to take more than one night.”
Of course, it is sad. Yet, completely avoidable. If only these alpha managers, with MonaVie in their veins and the India story in their hearts, had hedged their currency risk, their wives would be wearing Chanel instead of Shantanu & Nikhil.Surely they knew the RBI allows individuals to hedge up to $100,000 without producing any underlying documents. If you are a family of four PAN card holders, that means $400,000. This cash can be freely cancelled and re-booked at the local bank.
For the more adventurous, there is always Dubai. The DGCX, a local commodity exchange, runs the world’s only rupee futures. That means you can take a futures position on the rupee in the same way as a jeweller does gold or steel companies do nickel. In the end they are squared off. By October-end, the six-month-old contract has seen trading of almost $260 million.
The RBI allows individuals to remit up to $200,000 overseas. But the law does not allow brokers to set up terminals of foreign exchanges in India. So punters use the Internet to trade in rupee futures. Some use their subsidiaries abroad.
Local brokers here say there is a sudden interest in rupee futures among money changers, forex traders, exporters and importers. Forex traders especially love the cash that arbitrages can bring. Indian exporters too have discovered the hard way the virtues of currency cover. Even the more aware ones have taken a drubbing because they weren’t far-sighted enough.
Are you still investing in US Treasury
http://www.thehindubusinessline.
com/2007/11/04/stories/
2007110451380100.htm
Foreign institutional investors have till date trebled their investment in the country’s debt market in the current calendar year, as compared to the same period last year.
They have invested $1.596 billion in the current year, against $487 million in the corresponding period last year. Dealers attribute the increased flow to the interest differential between returns on rupee and dollar investments. In the past 10 months, interest rates in the US have been easing, and Indian bond yields have stayed high. The strengthening of the rupee against the dollar has provided the icing on the interest arbitrage cake.
“The upgrade of India’s sovereign rating to investment grade and the improvement of the country’s macro situation and growth fundamentals have meant that FIIs have been quickly filling up their investment limits in debt. India is offering a better credit environment than some of the other international markets,” said Mr Rajeev Ahuja, Head-Fixed Income, Capital markets, Citigroup.
If the US Dollar continues to fall and stays weak what is those AAA US Treasury worth to you.
http://www.nasdaq.com/aspxcontent/
NewsStory.aspx?cpath=
20071106%5cACQRTT200711062324
RTTRADERUSEQUITY_1739.htm&
Fitch Affirms Germany's Long-term Foreign, Local Currency IDRs At 'AAA', Outlook Stable
Federal Republic of Germany's long-term foreign and local currency Issuer Default Ratings, or IDRs, were affirmed at 'AAA' and short-term IDR at 'F1+', the Fitch Ratings said Tuesday. The outlooks for the long-term IDRs were stable. The rating agency affirmed country ceiling at 'AAA' and also affirmed 'AAA' country ceilings for all euro-area member countries.
Brian Coulton, Managing Director in Fitch's Sovereign Group said "Germany looks on track to record a balanced budget this year, four years ahead of schedule. This is testimony to the expenditure discipline shown by the government through the lean years, the VAT increase and improvements in the economy wrought by private sector restructuring."
The report added that the rating was supported by high income, strong economy and stable and effective political, civil and social institutions. High standard of governance and the government's benchmark borrower status in deep euro-area capital market also underpinned 'AAA' rating.
The general government deficit slid to 1.6% of GDP in 2006, improved from 3.2% level recorded in 2005. Fitch expects the budget to be in balance in this year and deficits to be only 0.5% of GDP in 2008 and 2009.
Is ECB rate hike in the card for this Thursday.
Will a stronger Euro weaken the impact of higher Crude Oil prices.
http://www.bloomberg.com/apps/
news?pid=20601100&sid=
aoPILv.fQvFM&refer=germany
German Industrial Production Unexpectedly Increases
German industrial output unexpectedly increased in September, led by construction and energy.
Production rose a seasonally adjusted 0.3 percent from August, when it advanced 1.9 percent, the Economy and Technology Ministry in Berlin said today. Economists expected a 0.5 percent decline, according to the median of 38 forecasts in a Bloomberg News survey. From a year earlier, output rose 6 percent, when adjusted for the number of working days.
Growth in emerging markets such as Russia and China is helping offset the impact of the euro's appreciation on exports, encouraging companies to expand.
If Alan Greenspan said higher Crude Oil price is not a problem then will speculators and hedge funds continue playing the new game in town.
Is Commodity CDO the new game in town
http://www.bloomberg.com/apps/
news?pid=20601086&sid=ae2
CDlHHhjMA&refer=news
Greenspan Says World Economy Will Acclimate to Oil Above $100
Former Federal Reserve Chairman Alan Greenspan said rising oil prices will lead businesses and consumers around the world to consume less fossil fuel and increase their use of alternative energy sources.
``The sooner we get the higher prices, the quicker the world economy will accommodate,'' Greenspan told a conference of executives in Sao Paulo, Brazil, via satellite. ``They can be a remedy for high oil consumption, which can result in less and less dependence.''
Crude oil today rose above $98 a barrel in New York for the first time, as the U.S. dollar fell to a record low against the euro.
Greenspan said the price increases are driven in part by a recent ``explosion'' of growth in developing countries and a push by oil-producing nations to keep the cost of oil high to boost revenue. Oil has gained 68 percent this year.
Will Crude Oil go to $100 if allot of damage is done by the storm in the North sea on Thursday.
http://www.iht.com/articles/
2007/11/06/bloomberg/bxcom.php
Oil rises as storm worsens in North Sea
Crude oil rose to a record $97 a barrel in New York on Tuesday as a storm forecast to produce large waves in the North Sea forced BP and ConocoPhillips to evacuate workers and cut production.
Conoco and BP said they had started evacuations from some areas before the weather worsened. The North Sea produced 4.4 million barrels of oil a day last year, more than Iran. A U.S. Energy Department report Wednesday is expected to show that crude oil supplies fell 1.5 million barrels last week.
"All indications point to inventories falling yet again," said Gene McGillian, an analyst at TFS Energy in Connecticut. "Overnight the dollar against the euro and the attack on the pipeline in Yemen was a reminder of how precarious supplies are. Now there are evacuations of North Sea platforms, just what we don't need."
Crude oil for December delivery rose $2.72 to $96.70 barrel on the New York Mercantile Exchange in afternoon trading. Futures climbed to $97, the highest intraday price since trading began in 1983. Prices are up 61 percent from a year ago.
http://investing.reuters.co.uk/
news/articleinvesting.aspx?type
=allBreakingNews&storyID=
2007-11-07T115745Z_01_L07538382_
RTRIDST_0_NORWAY-STORM-WRAPUP-
1.XML
Helicopters are evacuating hundreds of offshore workers from Norwegian North Sea fields run by BP and ConocoPhillips on Wednesday, due to an Arctic storm which poses a risk to aging oil and gas platforms.
BP plans to shut its 80,000 barrels per day Valhall oilfield from Thursday night, while ConocoPhillips said it may be forced to shut down five of 16 oil platforms at the Ekofisk oil and gas field complex, seen producing some 236,000 barrels per day.
Moody's Investors Service on Wednesday cut its ratings on a number of asset-backed securities sold by Credit Suisse, citing higher-than-expected delinquencies in the residential mortgages backing the deals.
Moody's cut 82 tranches from 18 deals, and has an additional 13 tranches on review for downgrade. The deals are backed by first-lien, fixed and adjustable rate mortgages, and Alt-A loans, and were issued in 2006 and late 2005, Moody's said.
http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=
2007-11-07T214123Z_01_
N07563666_RTRIDST_0_
CREDITSUISSE-RATING-ABS.XML
Morgan Stanley pegs subprime hit at US$3.7 billion
Morgan Stanley has provided additional information about the firm's U.S. subprime related exposures, which have declined in value as a result of continued market deterioration since August 2007.
http://www.eubankers.net/
eu_subscribeme.php?myarticleid=11277
Junk bonds are returning back in favor.
Flow of funds from Excess Global Liquidity has to go somewhere.
http://www.iht.com/articles/2007/
11/07/bloomberg/bxatm.php?WT.mc_id
=rssbloomberg
The most toxic part of the junk bond market is suddenly back in favor.
"When you have a lot of toggles, you know that the market's not too worried about risk," said Margaret Patel, a senior portfolio manager at Evergreen Investment Management in Boston. They are "a bull market security," she said.
The bonds accounted for about 18 percent of the $19.9 billion of new high-yield debt during October, up from an average of 8 percent in the first half of the year, when $8 billion was sold, Bloomberg data show.
The securities rebounded as demand for high-yield corporate debt recovered and the economy showed few signs of slowing. Junk bond sales in October were almost double the $11.2 billion sold in all of July, August and September.
Junk bonds returned 0.61 percent on average in October after gaining 2.44 percent in September, the most in four years. They advanced 1.12 percent in August following a loss of 3.14 percent in July, according to Merrill Lynch's U.S. high-yield master II index.
Leveraged buyout firms are willing to pay the higher coupon on toggles because they provide more flexibility in times of financial trouble.
Moody's, the ratings agency, on Wednesday put on review for downgrade debt issued by 16 different structured investment vehicles - off-balance-sheet entities that use short-term debt to fund longer-term investments.
The downgrades included for the first time some very large bank-sponsored vehicles that had been thought to be the strongest and most likely to survive.
Citigroup projects $64bn worth of write-downs of mortgage-related investments at the investment banks. Of this, $44bn represents estimated write-offs by the 16 largest dealers on holdings of listed collateralised debt obligations - pools of debt sliced into tranches of varying risk.
It forecast write-downs will rise to $10.2bn at Merrill Lynch, $7.2bn at UBS, $3.3bn at Deutsche Bank, $4.3bn at Goldman Sachs, $2.8bn at Barclays, $1.9bn at RBS and $1.7bn at Morgan Stanley.
JPMorgan estimates write-downs of CDO holdings at banks, insurance companies and asset managers in the coming months will reach $60bn-$70bn.
http://www.msnbc.msn.com/
id/21675286/
Losses in AIG's investment portfolio, credit-swap portfolio and mortgage-insurance business added up to about $1.4 billion, and caused net income to fall by 27 percent compared with last year's third quarter.
Back in August, AIG called exposure to subprime debt "minimal." On Wednesday, it maintained that despite some losses due to mortgage-backed bonds, its exposure to the debt remains "high quality," with "substantial protection."
But with asset quality so debatable right now, investors found little solace in the assurance.
http://www.cnbc.com/id/21677515/
for/cnbc?__source=RSS*tag*&par=RSS
New York Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac as he expanded his investigation into ``widespread'' collusion between real estate appraisers and lenders including Washington Mutual Inc.
Cuomo is seeking information on whether home loans purchased by Fannie Mae and Freddie Mac, the two biggest investors in U.S. mortgages, were based on tainted property appraisals. Investment banks were also subpoenaed, he said, declining to name them.
The attorney general's investigation calls into question the value of securities Fannie Mae and Freddie Mac have guaranteed from mortgages provided by lenders. Cuomo said he discovered a ``pattern of collusion'' between lenders and appraisers and that he's targeting banks beyond Seattle-based Washington Mutual for potentially pressuring appraisers.
``I don't believe it's just about Washington Mutual,'' Cuomo said at a press conference in Manhattan today. ``I believe it's widespread. I believe it's the rule not the exception. And we're investigating Fannie Mae and Freddie Mac and other investment banks as to the underlying practices that have allowed this to go on for so long.''
http://www.bloomberg.com/apps/
news?pid=20601103&sid=ajFo10xQYMd0
Merrill Lynch said on Wednesday its total exposure to risky collateralized debt obligations and subprime mortgages is $27.2 billion, or about $6.3 billion more than what the company disclosed late last month.
Merrill's larger figure is mostly because of a deeper level of disclosure surrounding its banking operations. For the first time, the world's largest brokerage disclosed $5.7 billion worth of exposure to U.S. subprime mortgages at Merrill Lynch Bank USA, a Utah-chartered industrial bank, and Merrill Lynch Bank & Trust Co., a full-service thrift.
Those operations file disclosures and financial statements with U.S. banking regulators, which have not required details on subprime exposure.
Merrill Lynch added that the U.S. Securities and Exchange Commission is investigating matters related to its subprime mortgage portfolio.
Merrill Lynch said SEC staff initiated the inquiry on Oct. 24, the same day the company reported a $2.3 billion loss for the third quarter, mostly because of writedowns of subprime mortgage related assets. Merrill made the disclosure in a quarterly SEC filing. The company said it is cooperating with the SEC.
In addition, Merrill said its exposure to CDOs is now $15.82 billion, or about $600 million more than what the company revealed in its third-quarter earnings release on Oct. 24.
http://www.cnbc.com/
Ron Paul talked about money at a local high school this morning.
“We have this bizarre idea … that when Washington comes up short, whether it’s to fight a war or run the welfare state, you know what we do? We print the money,” he told about 100 students at Nashua South High School. “Now how much sense would it have to take to figure out that if you could just print money at will, maybe the value of money is going to go down.”
The result, he told the students, is a greater debt that they will inherit. And today, the impact is being seen in things like gas prices. “When you fill up your car," Paul said, "and it’s $3 a gallon, or $4 or $5 a gallon, don’t blame price gouging. Blame the government for a bad monetary policy and a bad foreign policy."
He warned that if no action is taken, “the dollar can lose a lot more value, which means prices can go up a lot more, the economy can get a lot weaker, the stock market could crash.”
All of his ideas were rooted in the Constitution, Paul said.
http://firstread.msnbc.msn.com/
archive/2007/11/07/454040.aspx
Guys and Gals, there is a new and insidious wave of destruction. A powerful undertow of lack of funding. I just returned from a meeting where a person employed by the State of Pennsylvania Job Bank was informed that her minimum wage job would no longer have any benefits..as in Holidays, Sick time, Personal days, etc. and also she (employed 3 months in a promised 2 year training and location job) must now seek a new position and "prove" that she is applying for one or being interviewed for a job 2X per week. She is 77 years old. The former Federal funding that supported this job is now being used to bail out the credit crisis.
Also, a student at a local University received only half of the promised support by the Federal program in a currently concluded semester and she was given the remaining bill of $2.5K with "That's all you are going to get from the Fed". Why? The money is bailing the credit crunch and has been removed from all "benefit" type systems across the board!!!! Also, a Citicorp rep is laying off more employees, down to 8 in his office!
"Federal Reserve Chairman Ben Bernanke says the central bank is concerned about credit crunch and rising oil prices." - so concerned that he's gonna cut the rates again and again ...
I am looking for a link to a Peter Schiff interview that I saw on FOX news a while back.
The discussion was with respect to whether or not home "owners" with ARM loans should re-negotiate terms with lenders. Schiff, making the right argument, says no way in hell - the borrowers are underwater anyway.
The sheeple at FOX news (and it may have been Mike Norman as one of the panelists), however, kept saying that the borrowers absolutely should re-negotiate terms.
If someone could post a link to this video, it'd be much appreciated.
Thanks.
Want to know why all the bank owned foreclosures aren't selling?
Here's my theory.
The banks set a minimum or reserve price at the foreclosure auction.
If there are no bids above the reserve price the bank holds on to the property.
The reserve price that the bank sets has not much to do with market prices, or supply and demand. it is based on how much the bank is owed, and what the bank thinks it should get. The bank is just another "stubborn seller"
Now why doesn't the bank just sell at market? (they sell credit card debt to collection agencies for pennies on the dollar.) They will soon, just not yet. As long as the bank owns the property, it shows as an asset, and it can show as an asset with whatever dollar amount the bank wants to make up. So why does the bank want it to show as an asset?
So that the numbers look good for the year, and when the numbers look good, year end bonuses still get paid out.
As soon as those bonus checks get paid out and cashed in January, that's when the valve gets released and you hear the whooshing sound of all the foreclosures being dumped for whatever prices.
"...why does the bank want it to show as an asset?
So that the numbers look good for the year, and when the numbers look good, year end bonuses still get paid out..."
{bingo}
Going to be quite a show this spring, as all the factors come together.
Can you say PPT?
I just discovered this blog.
It is clear to me that Keith understands all aspects of economics and all aspects of the current realities and nuances of monetary policy and the banking system better than I do.
Just a brief reading of any of his commentaries makes one better educated on the academic theories or the practical realities of any of these subjects than any one textbook or any complete university degree, whether it be a Bachelors, Masters, or Ph.D.
The world would be a better place if it were run unilaterally by Keith. He is the beginning and the end of all wisdom on these subjects.
I know when I'm outclassed. I feel so much dumber than Keith when I read his scintillating insights. I am useless. Keith rules. It is all so obvious.
Pathetically and regretfully yours,
And with the sincerest and utmost respect for the brilliant Keith,
Ben Bernanke
What's Countrywide hiding?
http://housingdepression.blogspot.com/2007/11/countrywide-more-losses-in-closet.html#links
Looks like they are hiding $12 billion assets in the closet.
Snake Angelo is doing it again.
Get ready folks we are all going to begin bailing out millionaires with jumbo loans now.
I cannot believe I live in this country anymore. I want out.
http://tinyurl.com/yshu67
Now he wants to use tax payer dollars for $1 million mortgages!!!!
http://housingdepression.blogspot.com/2007/11/1million-fanniefreddiie-loan.html
A collateralised debt obligation (CDO) managed by State Street Global Advisors may have started selling some of its assets, ratings agency Standard & Poor's said in a release late on Thursday.
S&P said it slashed its ratings on Carina CDO Ltd's top tranche of securities issued by 12 notches to the junk level of BB from a top-notch rating of triple-A previously. S&P also cut the ratings on the subordinate levels of the CDO.
The S&P action has raised more worries about the exposure of U.S. financial institutions to credit markets, helping drive the dollar to a fresh record low against the euro in Asia trading and hitting regional equity markets, traders said.
The ratings cut on the CDO is more severe than would be justified by the deterioration of the underlying assets because the decision to liquidate will depress prices and affect all notes that were issued, S&P said.
"While the trustee has not informed us when the collateral will be liquidated, we believe the liquidation process has begun," S&P said in the release.
The Carina CDO is backed by asset-backed securities and managed by State Street Global Advisors, a unit of State Street Corp
State Street has become embroiled in the problems plaguing financial institutions from the surge in defaults on subprime mortgages that led to this year's credit crunch.
Three customers of State Street filed a suit last month against State Street Global Advisors and affiliate State Street Bank over losses suffered from exposure to subprime mortgages.
http://today.reuters.com/news/
articleinvesting.aspx?storyID
=urn:newsml:reuters.com:
20071109:MTFH72972_
2007-11-09_04-42-46_T14586&
type=comktNews
Does Global Re-balancing means that the US Dollar could fall more.
http://www.livemint.com/2007/11/
08233153/Morgan-Stanley
-Asia-chief-bats.html
Roach is not overtly worried about the declining strength of the dollar. “It’s a mistaken idea for people to think that a reserve currency can’t often move up and down,”
Stephen Roach, Morgan Stanley Asia Ltd’s chairman, said the US dollar will retain its status as the world currency for the next 15-20 years.
“The yen, the euro, the sterling, the Swiss franc will take on greater roles but these still don’t come close to commanding the kind of security that the US dollar does in investors’ minds.
It will take 15-20 years for these currencies to take on the dollar’s status,” he said.
Roach was speaking at an interview on Thursday at the International Finance Forum in Beijing. “There’s no way the yuan can even approach the dollar’s status as the world currency.
The yuan headed for its biggest weekly advance against the dollar since 2005
The yuan climbed 0.12 percent to 7.4117 versus the dollar as of 1:13 p.m. in Shanghai, the highest since the currency's dollar peg was scrapped in July 2005, according to the China Foreign Exchange Trade System. It is set for a 0.6 percent gain this week, bigger than last week's 0.56 percent advance.
http://quote.bloomberg.com/apps/
news?pid=20601087&sid=a0pTv4pnqp6s
if i can get a dose of that age reversing fountain of youth alterationing pills they used to create that super mouse they were writing about last month, will i become a mutant mousheeple.......
I recently saw Chairman Bernanke's testimony in the U.S Congress and was very upset by the demeanor and tone of Mr Ron Paul. It is not fitting for a member of U.S congress to kick on the FED to gain political points (Ron Paul for president right).
Anybody who knows economics knows that monetary policy at this point can not and will not be able to fully adress the U.S domestic real estate related problems. Simply put fiscal action is needed and the U.S congress is in charge for that.
However, the U.S congress, which is smack full of idiots and populists simply do not know or have a clue on what to do and can only whine about the FED (blame everybody else but us dear voters!). Thus, I am very negative towards the chances that anybody will actually DO something to forestall this crisis before it is too late. A bear market is a foregone conclusion although some currency gains may artificially protect some exporting companies's bottom lines for a short while.
Can't get to the countrywide ex employee's blog - has it shut down?
Great political cartoon (ala housing/mortgage woes) in the Seattle paper today! Guess what? Seattle ISN’T different!
http://tinyurl.com/37sb62
Funny youtube video about subprime
http://www.youtube.com/watch?
v=SJ_qK4g6ntM
Awaiting the news that year end bonuses on wall street average around zero. Give them a ham sandwich as a bonus.
AND YOU'LL BE LUCKY IF YOU HAVE A JOB IN JANUARY MF'ERS so don't even think about whining like a bÃtch!
Good for nothing sob's at the likes of merrill and citi have their share of the blame for this dollar mess.
So now visa wants to go public.
Any chance they wish they did that a year ago?
How about an ACTION CLASS LAWSUIT : PEOPLE vs FEDERAL RESERVE - losing money through deliberate inflation ?! i mean we could easily prove in court that this is all part of bailing out banks , lenders and so on. Keith , a new thread about this ?!
SERIOUSLY!!
What did happen to the ExCWinsider blog, does anyone know??
I am still hanging by a thread at CFC, and there was more great info out there!! WHY was it shut down??? Boooooooo Hooooooooooo
There are four financial markets.
A) BONDS
B) CURRENCIES
C) COMMODITIES
D) EQUITIES
The financial markets are not about looking at one sub loop process.
The financial markets are also about looking at factors that start and end one sub loop process and begin another sub loop process.
This current sub loop has two triggers:
(a) The unwinding of Yen Carry Trade
(b) The price point at which the process of lowing interest rate will cause US consumers to spend before inflation set in.
"(a)" is the trigger the that engage this current sub loop.
"(b)" is the trigger that allows the Federal Reserve to get out of this current sub loop.
But what about the main program.
The main program start with that fact that US Currency is the Reserve Currency of the World.
Ben Bernanke's Federal Reserve group is so concentrated in the getting out of this sub program loop that they are refusing to look at the fact the main program is a much bigger loop that is running out of bullets.
This Federal Reserve group is ignoring the stepping GAPs that allow the main loop program to work.
Paul Adolph Volcker had the discipline to fix the main program, which allow Alan Greenspan to wind down the stepping GAPs.
This Federal Reserve group knows that there is only one more GAP left.
This GAP should be reserved to allow the main program to be fix, unless this Federal Reserve group feels it is time to give up the US Dollar as the reserve currency of the World.
http://themessthatgreenspanmade.
blogspot.com/2007/11/update-to-
bernanke-cycle.html
1. Federal Reserve cuts interest rates
2. Equity markets surge
3. Dollar decline accelerates
4. The price of oil and gold soar
5. Treasury reiterates "strong dollar policy"
6. Housing market problems get worse
7. Credit market problems get worse
8. Dollar decline accelerates
9. The price of oil and gold soar
10. Federal Reserve talks tough on inflation
<----- YESTERDAY
11. Treasury reiterates "strong dollar policy"
<----- YESTERDAY
12. Equity markets plunge
<------------ YOU ARE HERE
13. Go to step 1
This Federal Reserve big bail out will surpass that of the Saving and Loan bail out, but the Federal Reserve seems to forget the amount of bullets it had to do that work during the S&L crisis.
http://www.smartmoney.com/bn/ON/
index.cfm?story=ON-20071109-
000810-1628
Two more big banks warned Friday afternoon that treacherous credit market conditions will weigh on fourth-quarter results.
In filings with the Securities and Exchange Commission, Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), both indicated conditions have deteriorated since the third quarter.
Bank of America, the second-largest U.S. bank by assets, said it expects "significant dislocation" in the market for collateralized debt obligations, or CDOs, to persist and said it will hurt its fourth quarter results. Trouble in that market primarily affected Bank of America's capital markets businesses in the third quarter, and it will continue to hurt that unit.
But market turmoil sparked by a wave of credit downgrades after Sept. 30 may have a broader effect on the whole company, including segments of its global wealth and investment management business, Bank of America said.
The Charlotte financial giant didn't provide an estimate of the damage to come. Last month, the bank reported $607 million in third-quarter trading losses and recorded $247 million in loan markdowns, helping lower third-quarter profits by 32% to $3.7 billion
CDOs are instruments that bundle different kinds of risk, and some include bonds backed by mortgage loans to subprime borrowers. As of Sept. 30, the bank had $15.5 billion in liquidity support for commercial paper issued by the CDOs. Bank of America also has a net $2.4 billion in super-senior CDO exposure through its CDO structuring business and a net $1 billion in CDO exposure through warehouses.
As a reserve currency the US Dollar will have the greatest influence as a safe haven unless it weaken to a point were commodities like gold and oil become an alternative safe haven.
Remember many central banks still carry gold as a reserve currency of last resort.
During time of major World Wars gold become the defacto reserve currency
http://www.dailyfx.com/story/
currency/eur_news/
Dollar_Firms_on_Carry_Trade_
1194633711381.html
Dollar Firms on Carry Trade Unwind, but US Economic Outlook Worsens
The US dollar posted a modest rebound on the day’s trade, as a sharp sell-off in the Dow Jones Industrial Average sent forex carry trade currencies significantly lower through the period.
The Japanese Yen was by far the largest gainer through the New York currency trading session, while the high-yielding Australian and New Zealand dollars fell significantly off of recent heights.
The damaging mix of rising prices and slowing consumption underlines uncertainty for the world’s largest economy.
In a speech yesterday, Federal Reserve Chairman Ben Bernanke offered a relatively pessimistic outlook for domestic growth and inflation prospects, saying that US GDP expansion would slow considerably in the final quarter of the year.
Bernanke likewise forecasted that inflation will remain elevated through the same period. These trends leave the Fed with the difficult prospects of rising price pressures and slowing economic activity.
When will people start running to the German bund or Commodities for save haven.
http://www.reuters.com/article/
reutersEdge/idUSL0964162820071109
Yen shock may prompt next wave of market crisis
Just as renewed waves of forced asset sales and bank write-downs risk turning this year's credit market turmoil into a vicious circle, the Japanese yen looks set to deliver another shock to global markets.
An accelerating slide in the U.S. dollar this week has been driven by a growing conviction that the U.S. Federal Reserve will be forced into further steep interest rate cuts.
And as dollar losses against the yen started to spiral on Friday, fears have risen of a mass unwinding of the yen "carry trade" -- currency trades funded by cheap, low interest rate yen and estimated to be worth up to $200 billion.
Sudden losses on these trades -- which thrive when currency market volatility is low -- could force speculative hedge funds to cut other market bets to fund those losses, and also reverse the flood of Japanese money invested overseas in recent years.
"The potential for a further carry unwind -- presuming we are now in a second wave of risk aversion -- is quite high now," said Michael Metcalfe, senior strategist at State Street.
"These waves of risk aversion are washing through markets one after the other and seem to be hitting the credit markets first, then equity markets and then the FX markets," added Metcalfe. "It's what happened in July and August and it seems to be what's happening again now."
Funny ,but I was just thinking about the process it would take to fire a Fed Chairman .Does anyone know ? Is it true that a Federal Reserve Chairman has a 4 year term ?
It's a fact that lowering interest rates is causing more destruction than raising the rates would of caused . Lowering the interest rates did not cause a boom to the market ,but rather just a short term fake run up in the stock market . It didn't change what banks were willing to charge for credit to the people ,in fact rates went up across the board ,especially with credit cards .
It seems to me that the overall plan is to lower rates to nothing ,set up government backed loans up to 1 million dollars and use that lending agency of government backed loans to bail out the bad loans and provide easy credit at low rates to provide future bad loans (to try to bail out the housing market ).
After Bernanke stated that the bottom would be reached in 6 months regarding the housing contraction ,there should of been questions regarding his sanity .
I want the taxpayers dollars to be saved for more important issue that will come up in the future, rather than a stupid attempt to stop the housing crash ,at the expense of the dollar.
Whatever the answers are to the current credit debt mess ,what the Fed Chairman is trying to do right now will not work . Americans have got to get away from real estate bubbles and stock market bubbles and get productive again in industry that creates good jobs for Americans.
Use taxpayers dollars for re-building roads and bridges and that will put alot of construction workers to work .
I don't know all the answers ,all I know is that the course that the Fed Chairman is going is not going to work and it will simply pass the buck to the taxpayers and it's not constructive .
The Corporations have gained to much power in the last decade and it's about time that the balance of power go back to middle class America in the form of policy that will benefit main street America.
Sometimes pure profit is not as important as outright survival .
With so much help from the government, why does the Federal Reserve need to help them out some more.
http://www.bloomberg.com/apps/
news?pid=20601087&sid=
aY2TsfbM4ulg&refer=home
Buyout Firms, Hedge Funds Look to Senate, Bush to Beat Tax Rise
Private-equity firms and hedge funds may lose their first legislative skirmish when the U.S. House votes today on a proposal to raise their taxes. They will find friendlier territory ahead in the Senate and the White House.
The House is poised to adopt a $78.3 billion measure that would alleviate the impact of the alternative minimum tax this year. The measure offsets lost revenue by more than doubling the tax rate on so-called carried interest, the payment that executives at buyout and venture-capital firms, and real-estate and oil and gas partnerships, receive for managing investments.
The tax increase is less likely to pass the Senate, where Republicans have vowed to block it, and President George W. Bush has threatened a veto if it does get through.
``They lost round 1 in the House,'' said Sam Geduldig, a Republican lobbyist at Washington-based Clark Lytle & Geduldig, which represents financial-services companies such as Fidelity Investments. ``Round 2 with the Senate is evenly divided and it looks much more favorable with the president and the veto.''
Will hedge funds let it ride on oil, commodities and weakening US Dollar.
http://www.bloomberg.com/apps/
news?pid=20601101&sid=
a6l.Yy9vCdGI&refer=japan
Hedge Funds Have Best Month in Over Two Years, Eurekahedge Says
An index tracking global hedge funds recorded its best performance in almost two years in October as equities rose and commodities including gold and oil advanced, according to Eurekahedge.
The Eurekahedge Hedge Fund Index, which tracks the performance of 2,575 funds investing globally, gained 3.6 percent, the biggest advance since January 2006, according to preliminary figures compiled by Eurekahedge, a Singapore-based hedge-fund research and publishing company. The index rose 3.3 percent in September.
The MSCI World Index climbed 3 percent in October, helping managers of so-called long-short funds who bet on rising and falling stock prices, the Eurekahedge report said. Those managing commodity-related hedge funds also benefited as crude rose to a record and the price of gold jumped to the highest since 1980 amid a plunging dollar, the report said.
Regional indexes continued to rebound after the turmoil in the U.S. subprime loan market. The Eurekahedge North American Hedge Fund Index advanced 2.7 percent, while the one tracking European hedge funds added 2.1 percent.
In Asia, the Eurekahedge Japan Hedge Fund Index, which tracks 126 funds investing in Japan, climbed 0.6 percent. The index tracking hedge funds investing in Asia outside Japan jumped 4.7 percent.
Hedge funds keen on China, India debt markets: survey
China and India are the two most popular destinations for Asia-focused hedge funds that invest in credit, despite having markets that are still in development, consultancy Oliver Wyman said on Wednesday.
The firm, which examined the investment preferences of 60 of the largest Asia-focused hedge funds active in debt markets, found that 78 percent of the funds surveyed were investing in China and 76 percent in India.
This compared with 71 percent for Japan, which has a highly developed debt market, 59 percent in Taiwan and 45 percent in South Korea.
Less popular as an investment destination were the Philippines at 44 percent, Australia at 39 percent, Thailand at 33 percent, Indonesia at 30 percent and Hong Kong at 29 percent.
Hedge fund managers were happy to invest in China and India's less liquid markets because they saw more chances to earn a profit, said Bradley Ziff, director of the hedge funds advisory practice at Oliver Wyman.
"Hedge funds were looking for higher yield and opportunities with lower rated credits ... those credits tended to be in places like Indonesia, China and India," he told Reuters.
"If you were to say to somebody 'Where are the most liquid markets that people trade credit?' you would probably come up with a different answer."
http://in.news.yahoo.com/
071106/137/6mwwy.html
Realtors gone wild!
link
Keith-Have you heard anything about another rate cut?
Someone posted a message over on yahoo message board there's rumor the feds will have another surprise interest rate cut in store for us this month and another one again next month.
This is very scary news.
Just wondering if you heard anything...
I'm a regular poster but posting Anon to keep things confidential....
Oh sh*t. I just found out my brother-in-law just transfered all his money in the stock market yesterday...he trades inside and outside his retirement funds.
He said he's seen this before, and thinks its going up big time next week.
my husband didnt know what to say. So, he didnt say anything.
I also have a good friend who just handed over her entire savings to a money manager last week to invest in the market.
Maybe its just me, but I have this sick & uneasy feeling...
Dont get me wrong, I'm not jealous or envyous...I want people to get ahead in this world, however they can. Actually, I'm happy where we are financially, which is better safe than sorry.
Whats everyones thoughts here about about what may or may not transpire next week?
Hopefully Keith will start a new thread to discuss the markets conditions for next week.
You guys and dolls will like this:
Vancouver nears the top of the rollercoaster!
"Although the sales office at 1 Bloor Street doesn't open for another week, about a dozen people are already lining up to buy a piece of this real estate"
"People lining up are getting curious looks from passersby. Many say they can't believe they'd go through the trouble to buy a condo that won't be built for a few more years."
Here is a hypothetical question for the group...
Suppose that you want to purchase a house, but want to represent yourself in the transaction. How can you pocket the 3 percent buyer's commission? Can you write an offer and state that the buyers commission is to be paid to you upon closing?
Also, how can you view the house without a broker's representation?
Do speculators and hedge funds realize that all US quoted banks will have to publish asset figures in conformity with Financial Accounting Standard 157, "Fair Value Measurements" by next spring.
http://www.timesonline.co.uk/tol/
comment/columnists/
william_rees_mogg/
article2852547.ece
What are FAS 157 and 159? They are the new United States (Federal) accounting standards that have been introduced to regulate the valuation of bank assets.
These valuations are of crucial importance because they are the basis of all bank lending: no assets, no lending; no lending, no bank.
According to an informative article in The Financial Times, the new standards will apply fully from Thursday.
Many US banks have adopted them already. All US quoted banks will have to publish asset figures in conformity with FAS 157 by next spring.
The new rules divide bank assets into three “levels”, according to the freedom with with which they can be bought or sold.
Level-one assets, which are easy to value or trade, have to have quoted prices in active markets such as US government bonds or gold bullion.
Level two is an intermediate stage; these assets are not as fully marketable as level one, but still sufficiently tradeable to have a definite value.
Level-three assets – usually artificial financial instruments – are the problem. They do not have quoted prices in active markets. They have to be valued by reference to the bank’s own models.
http://www.bis.org/bcbs/
commentletters/iasb20.pdf
How many of the primary mortgage that were backed by the 22% "piggy back" mortgage from 2005 to 2006 got a credit rating of AAA.
Will Financial Accounting Standards No. 157, Fair Value Measurements require bankers to show the true value of these risky loans
http://www.thnt.com/apps/pbcs.dll/
article?AID=/20071111/BUSINESS/
711110333/1003/rss08
Investors shun 2nd mortgages
The common practice of homebuyers with shaky credit taking out second mortgages for downpayments is ending because there's no investor demand for securities backed by such loans.
The availability of second-mortgage financing for subprime borrowers has all but disappeared, according to a trade publication's survey last month of more than 1,000 mortgage bankers and brokers.
Typically, homebuyers who couldn't come up with 20 percent of the purchase price for a cash downpayment were required to buy mortgage insurance from companies like PMI Group Inc., Radian Group Inc. and MGIC Investment Corp. to protect lenders from default.
But in 2005 and 2006, at the peak of the housing boom, 22 percent of new mortgages had "piggyback" second loans used for downpayments, according to a recent Federal Reserve analysis of home loan data.
The downside, as many lenders and investors discovered, is that if a borrower defaults, the holder of the second mortgage typically gets nothing, even after a foreclosure sale.
Did yield premiums U.S. corporate bonds rise to the highest in four years last week.
So despite high yields, why are investors shunning bonds
Are bond investors waiting on the first quarter impact of Financial Accounting Standards No. 157, Fair Value Measurements.
http://www.iht.com/articles/2007/
11/11/bloomberg/
sxpulled.php?WT.mc_id=
rssbloomberg
Investors are demanding a yield premium of 224 basis points more than the U.S. Treasuries of similar maturities, according to a JPMorgan index, the highest since it started in Sept. 30, 2005. Asian bond sales plunged 75 percent in the third quarter, the biggest decline in six years, according to data compiled by Bloomberg.
The extra yield investors demand to own investment-grade corporate bonds rose 3 basis points to 1.69 percentage points, the widest since March 2003, Merrill Lynch index data shows. Yield premiums on junk-rated bonds rose 15 basis points to 491 basis points, the most in four years, Merrill data show.
http://www.pensionriskmatters.com/
2007/11/articles/valuation/
fas-157-and-fas-159-day-of-
reckoning-for-pension-investors/
In case you missed it a few weeks ago, the Financial Accounting Standards Board voted 4-3 in favor of implementing FAS 157 on time. Ignoring early adopters, FAS 157 takes effect as of November 15, 2007.
http://www.fiercefinance.com/
story/fas-157-wreaks-havoc-bank-
earnings/2007-09-26
The rule issued last year by the FASB describes methods to value assets and liabilities at fair or market values. Banks can also choose to "fair-value certain financial assets or liabilities they formerly didn't-their own debt, for example." The results are hard-to-compare numbers about how the rule affected each company.
Are big banks bracing for the impact of Financial Accounting Standards No. 157, Fair Value Measurement.
http://www.thestandard.com.hk/
news_detail.asp?pp_cat=1&art_id
=56712&sid=16250543&con_type
=1&d_str=20071112
HSBC set to report US$1b in bad debts
HSBC Holdings (0005) will announce additional bad debts of US$1 billion (HK$7.8 billion) from its US mortgage business, according to a report in London.
HSBC Finance Corp and HSBC USA are scheduled to report third- quarter earnings on Wednesday at 6.30pm Hong Kong time.
Europe's largest bank by capitalization will report the additional bad debt this week, The Daily Telegraph said at the weekend, without citing sources.
The report has analysts guessing the true extent of losses in the sector overall.
A HSBC provision will follow last year's, when it set aside US$10.6 billion, prompting its first profit warning.
Does Fannie Mae have to comply to Financial Accounting Standards No. 157, Fair Value Measurements.
http://money.aol.com/news/articles/
_a/fannie-loses-14b-in-3q-warns-
on-08/n20071109172609990075
Fannie Mae 's third-quarter loss more than doubled to $1.4 billion, the mortgage finance company said Friday, while forecasting industry troubles through 2008 because of mounting home loan delinquencies.
Do Structure Investment Vehicles (SIV) have to comply Financial Accounting Standards No. 157, Fair Value Measurements
http://www.ft.com/cms/s/0/
b5c914f2-9097-11dc-a6f2-
0000779fd2ac.html
Super-SIV clear to sign more banks
The three US banks behind the planned $75bn superfund for distressed mortgage assets have revised the proposal in a move that should allow them to start signing up other banks within the next 10 days.
Citigroup, Bank of America and JPMorgan have agreed to simplify the plan, which many banks and investors declared unworkable, but it still needs to be signed off by senior management at the banks and by credit rating agencies.
Officials are optimistic the fund could be up and running by the middle of next month as originally hoped. “There has been very strong progress. It looks like a term sheet could come late next week or early the following,” said one person familiar with the discussions.
The fund, which has the backing of the US Treasury, is designed to help stabilise the market for asset-backed securities amid threatened fire sales of assets by cash-strapped structured investment vehicles (SIVs).
Shanghai Composite down 196.05 (3.69%) to 5,119.49
Hang Seng down 1,158.22 (4.02%) to 27,622.22
NIKKEI down 500.85 (3.21%) to 15,065.26
http://www.forbes.com/markets/
feeds/afx/2007/11/11/
afx4326611.html
China stocks dive 4 pct on bank reserve hike
Hong Kong shares fell sharply Monday morning, led by banks and properties, after China again increased its reserve requirement for banks to cool the economy.
Investors were also discouraged by Wall Street's fall Friday after US financial institutions announced they will book more losses from their subprime mortgage exposure.
'The overall market sentiment is turning bad,' said Castor Pang, strategist at Sun Hung Kai Financial. 'A lot of negative factors are weighing on the market such as the drop in Dow Jones and the latest increase in reserve ratio.'
Over the weekend China's central bank raised the reserve requirement for banks by 50 basis points to 13.5 percent, effective Nov 26.
It was the ninth time this year that the reserve requirement, or the amount of deposits that banks must park with the central bank, has been increased in an effort to curb bank lending and slow economic growth.
The Nikkei is 3.4% down this morning ...
"Do Structure Investment Vehicles (SIV) have to comply Financial Accounting Standards No. 157, Fair Value Measurements"
Good God! Stop posting this crap here! Nobody cares!
Get a life!
Hi Keith, Strange how the MSM becomes more like housing panic with each passing day - this article is written by Jewish Democrat Joseph Stiglitz (who served in the Clinton administration).
VANITY FAIR
http://tinyurl.com/22j48m
The president has not driven the United States into a recession during his almost seven years in office. Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris—or even the Yukon—becomes a venture in high finance.
I'm scared. I keep getting clues as to how stupid people are in this country. Yesterday, in a discussion about why Bush is a good president (that alone tells the story on this one), somebody pulled this one out of their ass: "Under Bush, my home's price has tripled!". Taken out of context, you might think this person was arguing against the asinine idea that Bush is a good president. But no...this was a reason given to praise the 'accomplishments' of that monkey.
So I ask, "So how is that a good thing?"...silence.
Then, "You do understand the difference between 'price' and value, right?"...silence.
And finally, "So, you still own the house. You're all excited about paper gains that don't mean shit until you sell and get out of the market?"...silence.
Idiots, they're everywhere. All around me. Help.
This blog is great!
Could some of you suggest other blogs that you find interesting. Topics that include RE and finance.
Thank you
Keith, after mortgage implode this is my next stop.
Hi Anonymous,
I like HousingDepression. It's both about finance and Real Estate.
http://housingdepression.blogspot.com/
Will Financial Accounting Standards 157 exposed Level 3 tier of assets that are currently valued according to in-house models, or "mark-to-make-believe."
What is the true value of Level 3 tier of assets, and what kind of write down will be seen come the first quarter of 2008.
http://www.telegraph.co.uk/money/
main.jhtml?xml=/money/2007/11/12/
cnfasb112.xml
The new rule from the US Financial Accounting Standards Board - known as FASB regulation 157 - comes into force on Thursday.
It affects the Level 3 tier of assets that are currently valued according to in-house models, or "mark-to-make-believe" in the words of Bob Janjuah, credit chief for the Royal Bank of Scotland.
Although Level 3 assets are thinly traded, a series of ABX indexes give a rough guide to the market value of some $1,200bn sub-prime mortgage securities. These show that the lowest grades of 2006 vintage debt are worthless; BBB grades are down to just 18 cents on the dollar. AA grades are trading at around 60 cents, and AAA are near 85 cents.
Moreover, much of the entire $3,000bn global market for collateralised debt obligations is under strain. Merrill Lynch has declared a 30pc writedown on its holding of CDOs, offering a glimpse into the true values.
Few of the banks have admitted to losses on anything like the scale suggested by market prices. UBS is still booking its US mortgage debt at 90 cents on the dollar.
While nobody knows what lies under the Level 3 rock, the new rule could spell trouble.
If FAS 157 were in effect today would Tier 3 bank debt be mentioned.
http://investing.reuters.co.uk/
news/articleinvesting.aspx?type
=newIssuesNews&storyID=
2007-11-12T133736Z_01_L12562771
_RTRIDST_0_ISTC-CREDIT-COSTS-
UPDATE-3.XML
3-Ireland's ISTC warns on SIV woes, postpones results
International Securities Trading Corp Plc (ISTC) became the latest victim of the crisis in the structured investment vehicle (SIV) market, postponing its results and suspending "grey" market trade in its shares.
The Dublin-based specialist lender, which also cancelled a convertible bond issue, said on Monday it expected to take a one-off charge of at least 70 million euros ($103 million) as it revalues $305 million worth of SIV capital notes it holds.
ISTC said all its SIV notes, which make up 7 percent of its portfolio, had been either downgraded or put on review for downgrade by Moody's Investors Service last week.
As a result, "ISTC believes that it will now have difficulty in retaining the existing financing or alternatively obtaining new financing for the SIV capital note portfolio," the company said in a statement.
Paul Somers, an executive director at ISTC, told Reuters the company only owned notes issued by bank-sponsored SIVs. The bulk of ISTC's portfolio is in Tier 1 and Upper Tier 2 bank debt issued by banks across Europe, he said.
"What it means for us really is that we are talking to all our banks," he said. "We'll probably meet them over the next few days and will be explaining to them our overall position with clear reference to the SIV capital notes and the impact they've had on us."
Keith,
check this out
http://housingcrashtv.blogspot.com
The site has a couple of clips about a scandalous home equity scam from the UK - the shared appreciation loan.
The scheme is as follows; find a retiree how owns a house (one who hopefully doesn't understand a thing about finance), offer them a loan whereby the bank gets a large proportion of the value of the house rather than regular interest and principal payments; house prices increase, the retiree has to sell (typically because a partner has died) and the bank gets the house. Often, the banks receive multiples of the original value of the house. The effective interest rates on these loans are often stratospheric.
This scheme is like something out of the sopranos. And hey, it is all legal!
If FAS 157 are causing banks to write down their debt in third quarter of this year and making banks form a super SIV fund to cover tier 3 asset, then would it be safe to say that tier 3 asset are probably worth pennies on the Dollar.
If that is the case why would investors want to invest in the SIV super fund now when they could wait until after FAS 157 come into effect and expose the risk.
If a debt is worth pennies to the dollars should the debt not be brought for pennies to the dollar.
http://www.ft.com/cms/s/0/
b5c914f2-9097-11dc-a6f2-
0000779fd2ac.html
Citigroup, Bank of America and JPMorgan have agreed to simplify the plan, which many banks and investors declared unworkable, but it still needs to be signed off by senior management at the banks and by credit rating agencies.
Officials are optimistic the fund could be up and running by the middle of next month as originally hoped. “There has been very strong progress. It looks like a term sheet could come late next week or early the following,” said one person familiar with the discussions.
The fund, which has the backing of the US Treasury, is designed to help stabilise the market for asset-backed securities amid threatened fire sales of assets by cash-strapped structured investment vehicles (SIVs).
S&P may downgrade 484 Alt-A mortgage-backed securities
Standard & Poor's said on Friday that it may cut ratings on 484 classes of residential mortgage securities backed by so-called Alt-A home loans.
The influential agency also warned that it could downgrade ratings on 63 classes of net interest margin securities, a type of derivative that's tied to the Alt-A backed securities in question.
"These actions reflect a persistent rise in the level of delinquencies among the Alt-A mortgage loans supporting these transactions," S&P said in a statement.
Total delinquencies for Alt-A transactions issued during 2005 and 2006 have increased 43.27% to 9.90% since July 2007, the agency noted.
http://www.marketwatch.com/News/
Story/Story.aspx?guid=
%7b69E72EFB-EA90-435A-B84F-
485CCB25716D%7d&siteid=yhoo&dist
=yhoo
The Structure Investment Vehicles VS Financial Accounting Standard 157 race are on.
Financial Accounting Standard 157 provides guidance on how to calculate the fair (or market) value of assets and liabilities come into effect this Thursday.
http://www.financialweek.com/
apps/pbcs.dll/article?AID=/
20071022/REG/71019028
The proposed superfund, if successful, would alleviate the problem by making a market in currently illiquid assets and paying better prices.
“It’s a stopgap measure to buy some time,” said one analyst with a credit rating agency, who asked to remain anonymous. “If the SIVs can avoid selling assets in the next six months, maybe the market comes back and they’ll have other options.”
If the trading volumes and prices of a wide swath of mortgage-backed securities, collateralized debt obligations and other thinly-traded securities don’t recover by then, the marking to market required per FAS 157 could force companies and banks to recognize further large losses.
The vehicles are currently kept off balance sheet because they are nominally owned by third-party investors.
If most big banks have already comply to FAS 157 in third quarters of this year, then what are smaller banks doing to get ready for FAS 157.
http://www.financialweek.com/
apps/pbcs.dll/article?AID=/
20071022/REG/71019028
The investment banks, most of which have already adopted FAS 157, all reported significant write-downs of assets in their latest quarters, though they gave little detail about the valuation assumptions they used.
Most of the commercial banks, however, apply fair-value methods on a less consistent basis. Many of them took big write-downs in the third quarter—and more write-downs could come on their asset portfolios as well as from their exposure to off-balance-sheet risks through their sponsorship of structured investment vehicles.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aB_6eGuiMWHM&refer=news
Wall Street is still going to make a profit this year.
WTF? Is this spin or are we all idiots?
More Countrywide offices slated for closure tomorrow---
Shhhhhh...Don't Tell!!
Countrywide Insider
As more big banks exposed their debt in third quarter of this year before FAS 157 comes into play, speculators and hedge funds cover their yen carry trade lost by shorting the US Dollar.
As US Dollars Index drops, speculator and hedge funds buy Crude Oil futures and Crude Oil Price climb.
As Federal Reserve get more concern about the development of SIV super fund, they lower interest rate.
The lowering of interest rate caused US Dollar Index to get even more weak as investors see the Federal Reserve as saying they will devalue the US Dollar to bail out the banks.
The weakening US Dollar push the Yen stronger, causing market players to short the US Dollars and Crude Oil Price shot up more.
As credit crisis loss deepens as November 15 approves, speculators and hedge funds are getting more worry about the impact of FAS 157.
Speculators and hedge funds dump carry trade positions and the Yen become even stronger.
As Yen Carry Trade unwinds investors buy th safe haven of US Treasury.
SIV super funds might work and Dow rally, but investors were re-awaken by the fact that November 15 is only few days away.
Dollar get stronger as market players join in and buy US Treasury, then dollar get stronger as Crude oil prices go down.
Will the spike in US Dollar Index be enough to give Federal Reserve another chance to lower interest rate in December, causing the US Dollar Index to go down again.
Spin it any way you want, but in the past several weeks one could safely say that there is a strong direct relationship between US credit crisis, Yen Carry Trade, US Dollar and Crude Oil prices.
http://finance.yahoo.com/
q/bc?s=USDJPY=X&t=3m
Yen Last traded at 109.54 ¥ to the USD.
http://quotes.ino.com/chart/
?s=NYBOT_DX
US Dollar Index Last trade 76.085
http://quotes.ino.com/chart/
?s=NYMEX_CL.F08.E
Crude Oil Last trade 92.70
No link for this, but there was a very interesting 5 minute segment on CNBC tonight at about 22.00 GMT, with Maria Bartiromo - "Rating the agencies".
Two guests slated the rating agencies, declared Countrywide bankrupt, and also had a couple of pointed comments about the function of journalism in the markets.
Maria didn't contradict a thing, and even berated one of the guests when he gushed in economic jargon: "Speak english, tell me how AA rated suddenly becomes junk!"
How serious is the inflation problem in China.
Is it wise that the Yuan be pegged to the US Dollar, or should it be pegged to the Euro.
http://www.ft.com/cms/s/0/
eaa8c4d2-90c0-11dc-a6f2-
0000779fd2ac.html?nclick_check=1
Ballooning inflation is regarded as a major reason for the Communists' victory in 1949 and the 1989 turmoil that began in Tiananmen Square has been blamed at least in part on inflation of more than 20 per cent.
Three people were killed and 31 injured at the weekend in a stampede for low-priced cooking oil in the western Chinese city of Chongqing.
The incident is a reflection of the current surging inflation, which has in the past been a harbinger of social upheaval in the country.
A 20 per cent discount on five-litre bottles of rapeseed oil at Carrefour had people lining up from 4am on Saturday. A stampede ensued four hours later when the doors were opened to the shopping mall where the French hypermarket is located.
"The government is investigating to determine the cause of the accident," Carrefour said yesterday.
Wholesale vegetable oil prices in China have jumped more than 40 per cent in the past year and increases accelerated in October, with weekly price rises of about 3 per cent at supermarkets in Beijing.
Prices of other foodstuffs such as milk, pork and eggs are also rocketing, contributing to annual headline inflation of more than 6 per cent - the highest level for more than a decade.
China has a history of relatively benign price increases spiralling quickly into double-digit inflation.
Should BOJ have controlled the unwinding of the YEN in middle of last year instead of allowing the YEN Carry Trade situation past the point of no return this July.
Is Federal Reserve going down the same destructive path as BOJ, or are the Federal Reserve really left with no choice now that BOJ has past the point of no return.
http://www.ddinews.gov.in/Business/
Business+-+Headlines/
Yen+rises+to+18mth+high.htm
The yen strengthened beyond 110 against the dollar for the first time in 18-month as a slump in Asian stocks prompted investors to cut holdings of higher- yielding assets bought with money borrowed in Japan.
"Everyone's nervous over the outlook for subprime losses," said Akifumi Uchida of the marketing unit at Sumitomo Trust and Banking in Tokyo, Japan's fifth-largest publicly traded bank. "Investors are unwinding carry trades as they're risk averse. The yen is being bought."
The yen traded at 110.21 per dollar in Tokyo and touched 109.85, the highest since May 2006, from 110.69 late in New York on November 9.
Washington Post article straight from the CFR economist on how the Fed should (will) act.
http://tinyurl.com/36pwda
"it would take a "rather extraordinary series of events" to create a situation in which the United States ought to intervene directly in currency markets by coordinating the sale of euros or yen and buying dollars."
He says this more than once. Is this what's next for us?
To CW Insider:
How do I get back on the EX Countrywide Blog? THAT was entertainment.
How many offices? I am waiting for the ROC's to go . . .
Regional Operation Centers. This is where all "stuff" happens.
Let the down grade begin as more bad news play the Federal Reserve for a fool.
http://money.cnn.com/2007/11/12/
news/companies/fannie_freddie.ap/
index.htm?postversion=2007111208
A Lehman Brothers analyst downgraded shares of mortgage companies Fannie Mae and Freddie Mac on Monday, expecting lower home prices to cause continued turmoil in the credit markets.
Fannie Mae on Friday said its third-quarter loss more than doubled to $1.4 billion and forecast 4 percent lower home prices in 2008, which is expected to hurt demand for mortgages.
Lehman's Bruce Harting cut his rating on Fannie Mae to "Equal Weight" from "Overweight" and reduced his price target to $46
Harting said Fannie Mae's delinquency trends are worsening in the Midwest and in California, Florida, Arizona and Nevada and that credit trends have gotten much worse, consistent with all other mortgage companies.
Is OPEC nervous about the sudden drop in crude oil price.
Normally, it is a good chance for Federal Reserve to raise interest rate when crude oil price drop because it has a bigger effect on slowing down inflation, but OPEC probably down have to worry about the Federal Reserve raising rate.
http://www.bloomberg.com/apps/
news?pid=20601072&sid=
abFGq6XtAPA4&refer=energy
OPEC Won't Raise Output at Summit, Gulf Officials Say
OPEC, the producer of more than 40 percent of the world's oil, has no plan to discuss raising production targets at its Heads of State Summit in Riyadh on Nov. 17-18, oil officials from Iran and a Persian Gulf state said.
The Organization of Petroleum Exporting Countries won't discuss raising supply at the summit and will instead discuss that during a Dec. 5 ministerial-level meeting in Abu Dhabi, United Arab Emirates, Iran's OPEC governor, Hossein Kazempour Ardebili, told the state-run Islamic Republic News Agency today.
Is Jim Cramer trying to play the Federal Reserve again.
http://www.thestreet.com/_tscct/
video/index.html?clipId=
10389644&channel=Cramer+
On+Demand&cm_ven=&cm_cat=
&cm_ite=#10389644
Why would any foreign investors want to buy into the super SIV funds if they are only going to get 20 cent to the dollar.
http://www.smartmoney.com/bn/ON/
index.cfm?story=ON-20071112-
000312-0948
Bad mortgage debt may cost banks as much as $400 billion by the time the credit crisis has run its course, a widely tracked Wall Street analyst wrote in a research report Monday.
Plus, the bonds and securities that investment banks layered with subprime loans could lose as much as 80 cents on the dollar
What is the connection between Yen Carry Trade and the DOW Jones World Stock Index
http://seekingalpha.com/article/
53799-is-this-it-for-the-carry-
trade
Market sentiment did an about-turn last week as uncertainty mounted on the back of the credit situation going from bad to worse. The upshot of the deteriorating outlook was a reassessment of risk by market participants as evidenced by a number of measures such as the Volatility Index (VIX), and the CBOE Put/Call Ratio pointing to complacency making way for fear.
But nowhere is it illustrated more vividly than by the continued appreciation of the Japanese yen as investors unwind their carry trades. The carry trade involved borrowing cheaply at low Japanese interest rates and re-investing in high-yielding assets. The unwinding of the carry trade is putting downward pressure on high-yielding currencies such as the Australian dollar and the British pound and is furthermore leading to the liquidation of stocks across a broad spectrum. The latter phenomenon is clearly shown by the strong inverse relationship between the Japanese Yen Index (blue line) and the Dow Jones World Stock Index (red line) in the following graph:
http://static.seekingalpha.com/
uploads/2007/11/12/carry_trade.jpg
A further strengthening of the Japanese yen, on top of a barrage of other slumping economic and market factors, could spell bad news for financial markets in general. In short, this week promises to be a key week for financial markets, and investors should exercise extreme caution.
Sheila Bair, chairwoman of the FDIC, proposed last month that lenders simply freeze interest rates on so-called subprime mortgages carried by people who live in the homes they bought and who have been current in their payments so far.
"We have a huge problem on our hands," she said. "We can't just sit here doing this kind of case-by-case, laborious restructuring process ... For owner-occupied housing where the loan is current ... just convert that (loan) into a fixed-rate mortgage. Keep it at the starter rate. Convert it into a fixed rate. Make it permanent. And get on with it."
Bair's proposal, however, ignores some basic facts about how the mortgage and housing markets work.
For starters, each loan is a binding contract between a lender and a borrower. The lender has given up some money that could have been invested elsewhere, and the borrower has agreed to pay a certain interest rate for the use of that money. Included in that rate is a risk premium. The less reliable the borrower, the higher the price they have to pay for the money, to compensate the lender for the higher likelihood that some of those loans will never be repaid.
If, suddenly, that agreed-upon interest rate is unilaterally lowered, the contract held by the lender is, if not worthless, seriously devalued.
Few people care about lenders losing money. They are not exactly sympathetic characters. But follow that money a little farther along its path. Many of these loans were packaged and sold to investors as securities. By putting their money on the line, those investors were the ultimate source of the capital that allowed millions of people with low incomes or spotty credit records to buy a home.
An across-the-board write-down of those loans would wreak havoc on the securities industry, causing an overnight loss of billions of dollars of value in the investments they hold. It would also send an ominous message to anyone thinking of investing in the mortgage market in the future: your money is not safe here. Future investors would thus require an even bigger premium to part with their money for mortgage loans. The end result? Less money in the mortgage market, less money to lend and higher interest rates for everybody.
http://www.pressofatlanticcity.com/
opinion/syndicated/story/
3739310p-13210245c.html
The BOJ board left the unsecured overnight call loan rate unchanged at 0.50%, the lowest among Group of Seven nations.
Bank of Japan board members voted 8-1 Tuesday to keep interest rates steady, as continued instability in global capital and financial markets is making it difficult to forecast the course of Japan's economy.
http://online.wsj.com/article/
SB119492598578891037.html
Who will be out first E-trade or Countrywide.
http://money.cnn.com/2007/11/12/
news/companies/countrywide.ap/
index.htm?section=money_
mostpopular
Countrywide: downgrade could be crushing
Mortgage lender says that a credit downgrade would severely impact its ability to raise money.
Countrywide's ability to raise money and increase deposits in its banking subsidiary could be hampered if its credit ratings were downgraded below investment grade, the mortgage lender said in a regulatory filing.
Countrywide (Charts, Fortune 500), the nation's largest mortgage lender, said further reductions to its credit ratings would severely limit its ability to access public debt markets, according to a quarterly report filed late Friday with the Securities and Exchange Commission.
In addition, as much as $5.5 billion in deposits at Countrywide Bank could be "subject to placement with another bank" if its ratings were cut further, the company said.
So what is really going on in the mortgage industries.
Why have none of the big boys fail yet.
Are all the bad stories just smoke and mirrors to get the federal government to bail out the big boys.
If so then another downgrades should not hurt Countrywide.
Be interesting to see what happens if Countrywide get another down grade.
http://www.cnbc.com/id/21757026
Countrywide Is Hiring? (What About Those Layoffs!?)
I live near Countrywide headquarters in Calabasas, Calif., out in Thousand Oaks, where Countrywide Bank is based.
Here, there are two major employers--Countrywide and Amgen
Amgen Inc. Both have problems, both have announced layoffs.
But when I ask dry cleaners and hair dressers and dentists if they're seeing a drop off in business, they tell me they're only losing Amgen business.
Has Countrywide exaggerated potential job cuts in an effort to buy sympathy from the Fed and the debt markets?
Meantime, go to the Countrywide web site, and they have more then 2,800 job OPENINGS. Type in "foreclosure" in the search box and you'll find 49 jobs available. Some are "Bilingual Workout Negotiators," who try to help people keep their homes. But there are also "Foreclosure Specialists," who have the responsibility of "Mitigating loss and legal risk to Countrywide and its investors by accurately managing the foreclosure process."
I also know personally that the company is interviewing appraisers who can specialize in revaluing repossessed homes. I know some out-of-work appraisers who need a job after the housing boom burst. When a door closes.
If you are in credit card trouble and max out on one of your credit card, but were able to get another credit card to pay down the debt of the first credit card - are you debasing your credit worthiness.
If the world was awash with Excess Global Liquidity will you be able to get a third credit card to pay down the debt of your second credit card - No, but that was what happened for the past ten years in the credit market.
What happens when the word CREDIT WORTHINESS all of sudden start popping up and creditors began to realize you borrowed more then you are capable to pay, your credit score would probably start going down and interest rate charge to borrow more money would go up.
Now think of the US Dollar Index like your credit score in the situation mentioned above, and interest charge to borrow more like inflation.
http://www.safehaven.com/
article-8813.htm
US Dollar Devaluation Signals Risk Of Accelerating Global Hyperinflation
Soon, the falling US Dollar ($) will reach a point of maximum pain, where trading partners will be forced to print enough currency to absorb accelerating quantities of $'s or have their currencies soar further against American fiat.
Known by many as the 'race to zero' all fiat currency systems undergo in their latter stages, and based on the observation the $ has now signaled it's in crash mode, one should expect this process to accelerate as essentially what is occurring is US debt holders are being bailed out.
What's happening is the market knows they can't pay, and therefore the need to inflate debts away has now gripped macro-conditions.
A recap on Yen Carry Trade and why so many speculators and hedge funds were able to make so much money on it just by borrowing the yen to buy US Treasury.
http://www.youtube.com/
watch?v=o9YNGGKbhH4&e
The profit from US Treasury can be reinvested in the same loop again or by using yen carry trade to buy riskier asset as tier 1, tier 2, or tier 3 level bank debt tied to US subprime loans.
In the last few months as subprime loan collapse and credit crisis exposed, speculators and hedge funds start to unwind their position making the Yen stronger.
See why BOJ can no longer raise rate, and a super SIV fund are need to hide those lost as FAS 157 dead line approaches.
Is it wise to put all your eggs in one basket and trust the Super SIV fund to solve all of your problems.
http://www.bloomberg.com/apps/
news?pid=20601087&sid=
afcMYJuNZ3G8&refer=home
Legg Mason Inc. and SunTrust Banks Inc. are propping up money-market funds to cushion them from possible losses on debt issued by structured investment vehicles.
Legg Mason invested $100 million in one of its money funds and arranged $238 million in credit for two others, the Baltimore-based company said in a Nov. 9 regulatory filing. SunTrust Banks Inc. received approval from regulators last month to protect two money funds that bought debt from Cheyne Finance Plc if the SIV is unable to repay the Atlanta-based bank.
The 10 largest managers of U.S. money funds have $50 billion in SIV debt, some issued by vehicles such as Cheyne that defaulted because of losses from securities linked to subprime mortgages, according to reports from the companies. At least three companies -- Legg Mason, SunTrust and Wachovia Corp. of Charlotte, North Carolina -- have stepped in to make sure their funds don't ``break the buck,'' or fall below the $1 a share net asset value that all funds strive to maintain.
``This is the first real case'' of securities held by money-market funds defaulting, said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence Newsletter.
183 major U.S. lending operations have "imploded"
http://ml-implode.com/
Great News:
Deutsche Bank Foreclosures Tossed Out of Ohio Federal Court - "They Own Nothing!"
Read further in
iamfacingforeclosure.com
Now all CDOs/SIVs Value is ZERO.
Foreclosures resolved.
Thanks Wall Street for your great Engineering Feat.
Keith,
As I understand it Ron Paul want to eliminate net-neutrality. This would make reading a blog like your painfully slow to load and virtually wipe out the easy access to opposing voices. In this rergard I have serious reservations about supporting Ron Paul. Better to have government oversight to allow free communication than to to have a corporatocracy running our discourse in America, Think Fox News all the time.
The news that Etrade is near bankruptcy does not surprise me. I've heard from contacts I have here in DC that bank-runs as they had in England might be a real possibility here in the US.
Anonymous said...
Great News:
Deutsche Bank Foreclosures Tossed Out of Ohio Federal Court - "They Own Nothing!"
Read further in
iamfacingforeclosure.com
Now all CDOs/SIVs Value is ZERO.
Foreclosures resolved.
Thanks Wall Street for your great Engineering Feat.
---------------------------
Thanks for the link.
Sounds like they went to law without formal assignment of the lender's interest - maybe like a stockholder using a broker's nominee account turning up in court without the actual stock certificate?
Can't imagine this will derail foreclosures - they'll just compel formal assignments on the basis of equitable entitlement and refile the suits.
It does seem to show that ease of transaction in the financial markets can get you tangled up in legal barbed wire.
Maybe Congress will intervene with a statute "deeming" an equitable interest sufficient for the formal process.
why wait, pony up, donate now! and on the 16th!
Sheila Bair, chairwoman of the FDIC, proposed last month that lenders simply freeze interest rates on so-called subprime mortgages...An across-the-board write-down of those loans would...send an ominous message to anyone thinking of investing in the mortgage market in the future...
F*ck that! Some of those teaser rates were at ridiculous levels like 2%. What kind of a message does that send to the majority of us that didn't buy more house than we can afford, made reasonable down payments, and were smart enough to avoid variable-rate loans? Can I get my 5% fixed-rate mortgage cut to 2% also?
Here's a brilliant strategy planned by the homebuilder Lennar: Build houses, then sit on them for a year. Yeah, the prices are gonna go back to "normal" by then.....
WOW, LEN sounds like a great stock to short!
You just can't make this sh*t up.....
http://tinyurl.com/3bjqr3
Hey HP fools: Latest CBS/NY TIMES poll from NH. NH as in the Live Free Or Die state. As in the one place where Ron Paul should do well:
Romney 34%
Giuliani 16%
McCain 16%
Paul 8%
8%. Good luck with all that. That old fool is laughing all the way to the bank as you dimwits keep sending him money.
THE 2ND SHOE JUST DROPPED!
Wall street dealers who setup and sold the mortgage backed CDO's and other SIV's to the world sold off only the revenue streams from performing mortgages. They kept the value of foreclosure rights to themselves.
This may explain why the NINA loans were allowed in the first place. Wall street bankers wanted them to fail after the resets so they would get the properties for free in foreclosure and the stupid mortgage backed CDO/SIV investor would be left holding the bag.
deutsche-bank SIV BAGHOLDER foreclosure filings are thrown out of court
Get ready for the US Dollar to tank like never before as the rest of the world wakes up and realizes that Wall-Street bankers are just a bunch of flim-flam artists and dump all USD assets to escape.
area51: Saw the mothballing article in Tuesday's WSJ. I was laughing when I read this. The strategy is to build houses and hold off selling them until a later time. Their concept is holding inventory and carrying costs will be cheaper than selling at a discount. I always thought some revenue was better than none at all.
I guess time will tell and we will see.
I wonder how a consumer would react to buying a new construction house that was built, two-five or more, years ago and selling as new. Don't you think the consumer would see this as a condition to ask for a price reduction? Its not new anymore.
Awesome. NAR's hilarious history of ineptitude in predicting future home sales.
http://tinyurl.com/2nytfo
The Second Shoe said:
Wall street dealers who setup and sold the mortgage backed CDO's and other SIV's to the world sold off only...
Although 'dealer' isn't a designation held in high esteem, more accurately they would be referred to as 'traficantes'.
Housing Price Forecast:
Survey: How many people believe that when this credit crisis is over, prices of homes will be in the price range between 2007 foreclose median price to 1998 median homes price.
Look at the Zillow 10 Year Market Value Change then look at the Scottsdale, AZ Real Estate Market Snapshot for median price for foreclosure.
1998 median price $160,000
2007 foreclosure median price $311,000 for Scottsdale, AZ
When people start talking about rappers and supermodels shunning the dollar, you know there's a problem.
As the greenback recently hit historic lows against other major currencies, rap mogul Jay-Z released a new video in which he flashes euros, not dollars.
While investors, multinational businesses and travelers have been witnessing the dollar's slide for years, pop culture is new territory.
Jay-Z's "Blue Magic" video seems to have been an attempt to acknowledge the dollar's decline in an ironic way and to paint the artist as an international superstar who is smarter than those accepting greenbacks.
"It is probably a particularly good strategy as the 'image of the dollar' loses its 'currency' as an emblem of extravagance and success," Steven Tepper, associate director of Vanderbilt University's Curb Center for Art, Enterprise and Public Policy, said in an e-mail. "So, you have the combination of a weakening visual icon - the dollar - and a growing international audience that will understand and connect to the image of the euro."
http://www.youtube.com/
watch?v=DhU8wJOuWkw
Message to all you goldbugs and amateur economists:
The massive price decline in houses, on the order of 30% or more can be nothing other than deflationary. No single cost contributor comes close to offsetting that. Just visualize the nominal drops, $50,000-$100,000 or more. Combined with a slowing economy, you got pure deflation. You'll never see recession, because Americans cannot give up buying the latest fashions and electronic junk.
Good luck with your gold, adjusted for inflation today, comes nowhere near the 1980 peak. Enjoy the speculative wave while it lasts....
Same goes for oil............
Why is the European economies growing even when Euro is at an all time high.
Is the Euro the next status symbol.
http://www.bloomberg.com/apps/
news?pid=20601085&sid=
a9yHso7auWHE&refer=europe
German Economic Growth Accelerated in Third Quarter
German economic growth accelerated in the third quarter as companies and consumers increased spending.
Gross domestic product grew 0.7 percent in the third quarter from the second, when it expanded 0.3 percent, the Federal Statistics Office in Wiesbaden said today. That's the fastest pace since the fourth quarter of 2006 and in line with the median forecast of 39 economists in a Bloomberg News survey.
Germany is powering the euro region's expansion for a second year after companies boosted spending and hiring to meet booming exports.
The French economy grew 0.7 percent in the third quarter from the second, the Paris-based Insee statistics office said today. In Spain, Italy, Austria and the Netherlands, growth also accelerated in the third quarter.
The economy of the 13 nations sharing the euro probably expanded 0.6 percent in the third quarter after 0.3 percent growth in the second, according to a Bloomberg survey. Eurostat, the European Union's statistics office in Luxembourg, will publish that report at 11 a.m. today.
``Growth has picked up again'' after a ``slight weakening'' in the second quarter, German Economy Minister Michael Glos said today in a faxed statement. ``The German economy continues to be on a robust growth path.''
With this kind of growth, will ECB raise interest rate
http://www.bloomberg.com/apps/
news?pid=20601101&sid=
axn5BAsabVb8
`Raise Interest Rates'
``The euro zone has room to raise interest rates,'' said Boris Schlossberg, senior currency strategist at DailyFX.com in New York.
The euro may gain against the dollar for a third day on expectations Europe's interest-rate disadvantage against the U.S. may narrow.
The euro advanced yesterday after the region's economic growth accelerated more than forecast in the third quarter, adding to the case for higher European Central Bank borrowing costs.
Even Japan's economy is growing.
Should the Yen and Euro be allot higher then the US Dollar.
http://www.channelnewsasia.com/
stories/afp_asiapacific_business/
view/311209/1/.html
Japan's economy grows annualised 2.6% in third quarter
Japan's economy grew at a stronger-than-expected annualised rate of 2.6 percent in the third quarter of 2007, rebounding after a contraction in the second quarter, the government said Tuesday.
Can you image US Fed Fund Rate at 19.75 percent.
http://www.bloomberg.com/apps/
news?pid=20601086&sid=
a2Fbr3k8JabM
Brazil's retail sales rose more than expected in September, led by sales of cars, computers and home appliances, as record low interest rates stoke consumer demand in Latin America's biggest economy.
Retail, supermarket and grocery store sales, as measured by units sold, rose 8.5 percent in September from the year-ago month, the national statistics agency reported today. Economists expected an 8 percent gain, according to the median of 31 forecasts in a Bloomberg survey.
The report added to speculation that central bankers won't move to lower the benchmark lending rate anytime soon on concern that accelerating economic growth will fuel inflation, said Zeina Latiff, an economist with ABN Amro NB's Brazilian unit.
``The figure reinforces the central bank diagnosis about the need to pause,'' said Latiff, in a phone interview from Sao Paulo.
Against the backdrop of the fastest economic growth since 2004, the bank on Oct. 17 paused after 18 straight cuts, holding the overnight rate at an all-time low of 11.25 percent, down from 19.75 percent in September 2005
Funny thing about Inflation when it is caused by a weak US Dollar.
Inflation tends to grow slowly, but when it starts to pick up speed Inflation will start increasing the price of goods around the World quickly.
http://www.nasdaq.com/aspxcontent/
NewsStory.aspx?cpath=
20071113%5cACQRTT200711131942
RTTRADERUSEQUITY_1383.htm&
New Zealand's third quarter producer price index rose 2.3 percent from the quarter before, according to Statistics New Zealand.
The index, which measures prices factories, farms and other producers pay for commodities and services to run their companies, was 1.7 percent higher than for the corresponding period one year ago.
Milk prices spurred most of the gains, with prices paid by dairy processors jumping 27 percent, the largest increase since the agency began reporting its index.
Producer output prices, paid to factories, farms and other producers, rose 1.6 percent in the 3rd quarter, and 2.1 percent over the same period one year ago. Prices received by dairy farmers jumped a record 29 percent, thanks to rising world prices and a weaker economy.
It would be interesting to see what next year growth outlook would b if the US Dollar continue to weaken.
http://www.fxstreet.com/news/
forex-news/article.aspx?
StoryId=b0c45332-e32d-454e-9847-
75e10bbbaee6
Austria's economy grew 0.8% in the third quarter of this year, compared with the previous quarter, and grew 3.4% year-on-year, said the Austrian Institute of Economic Research, or WIFO, Wednesday.
In the second quarter, Austria's gross domestic product grew 0.7% on the quarter and 3.3% on the year.
The institute said the primary growth driver continued to be exports. In the third quarter, Austrian exports were up 1.2% on the quarter, after rising 2% on the quarter in the third quarter of 2006, WIFO said.
Imports grew 1% on the quarter in the third quarter, an increase from growth of 0.4% in the second quarter.
Another growth driver was investment into machinery and electronics equipment, while consumer spending remained a weak point in Austria's economic growth in the third quarter, WIFO said.
Public spending rose 2% on the quarter in the third quarter, while private households upped their spending by a mere 0.5%. In the second quarter, public and private spending both rose 0.4%.
What are the consumers expectation for Inflations.
http://www.gasbuddy.com/
gb_retail_price_chart.aspx?time=24
National Gas price is at 3.103 and it is approaching all time high of 3.17
http://news.yahoo.com/s/nm/
20071114/bs_nm/
usa_fed_fisher_dc_1
The U.S. economy remains healthy despite the housing crisis but inflation could be pushed up by food and energy prices, a top Federal Reserve policy-maker said in on Wednesday.
"I find that there is greater symmetry of risk between growth and inflation than is commonly surmised," Dallas Federal Reserve Bank President Richard Fisher said in a speech prepared for delivery to an Australian economists group in Sydney. A text was provided via E-mail.
"Our concern about inflation at the Dallas Fed stems from two more pervasive sources -- food and energy, where we foresee a risk of a more pernicious pass-through effect than we saw in the recent price increases of underlying commodities," he said.
Core inflation, which strips out food and energy prices on the grounds that these are volatile components of the index, is running in the 2 percent range.
But Fisher said he was uncomfortable about ignoring the trend in energy and food prices and noted that it was rare for core and food inflation to diverge for very long.
Maybe US Core Inflation is tamed, but do not tell that to the guy who has to put gas in his car to go to work, and buy food for his family.
http://www.sanfrangasprices.com/
A 20 cent increase would mean the average will be $3.70/gallon for regular unleaded in couple of weeks in the bay area.
http://www.usatoday.com/money/
industries/energy/
2007-11-12-gas-prices_N.htm
Drivers' price at the pump could rise by 20 cents
Gasoline prices could rise as much as 20 cents in the next few weeks as the price at the pump catches up with the recent surge in oil costs, the head of the Energy Department's analytical arm said Monday.
"We haven't seen the full pass-through yet," Energy Information Administration head Guy Caruso said.
Oil prices have risen approximately $20 a barrel in the past two months. Retail gasoline costs have increased about 30 cents a gallon in that time. The agency's models suggest gas prices will likely rise another 20 cents in the next two or three weeks to fully reflect the jump in oil costs, Caruso told reporters.
Rising global energy and food prices are fuelling headline U.S. inflation that could hit 4% by next fall, according to a new report from CIBC World Markets.
“By fall of 2008, an economy that entered a slowdown with a headline inflation rate above 3% could be facing a headline rate taking aim at 4%. As a result, the Fed may be rushing to re-tighten (rates) before year-end 2008.”
The report finds that the U.S. Federal Reserve Board, which focuses on core CPI (excluding energy and food prices), will ignore these headline inflationary concerns in the near-term while it focuses on stimulating the economy and keeping it from falling into a recession.
These secular inflation threats from food and energy will be set aside by the Fed.
says Avery Shenfeld, senior economist with CIBC World Markets and author of the report.
Shenfeld notes that the Fed’s focus on core CPI made sense in a world in which gasoline or food prices went up and then came back down, but that four key longer-term trends are now driving energy and food inflation in the U.S.
First, rapid energy demand in developing nations has stretched supply and pushed crude oil prices to record levels. Second, energy price hikes combined with a weakening greenback are increasing America’s current account and trade imbalance. Third, higher energy costs are being passed on to consumers and businesses through a wide range of core items from airline tickets prices to trucking costs to petrochemical costs for products like plastic. Finally, the policy response to subsidize ethanol production has seen a rising share of U.S. agriculture devoted to growing corn for ethanol production and this has pushed up feed grain prices and in turn meat, dairy and egg prices.
http://www.investmentexecutive.com/
client/en/News/DetailNews.asp?id
=41943&IdSection=148&cat=148&
BImageCI=1
An interesting article on proper valuation of sales prices based on rental rates....
http://tinyurl.com/2gf5h2
.... Many factors determine the value of a house. A family would consider the quality of local schools, the number of bedrooms, the size of the yard. Economists assessing a region look at interest rates, employment, and population growth. But over time the most reliable guide to home values is rents.
In most markets people won't lay out much more in monthly costs to own a house or condo than they would to rent a similar property unless they expect a huge profit when they sell. Indeed, speculators chasing quick profits did a lot to inflate the recent bubble.
But once the fervor fades, prices must fall to restore their normal, long-term relationship with rents. Rents exercise a kind of inevitable gravitational pull on prices. The ratio of prices to rents "behaves much like price/earnings ratios for stocks," says Yale economist Robert Shiller. "Like P/Es, price-to-rent ratios are mean-reverting." In other words, while prices soar from time to time, sending the ratio to exceptional heights, sooner or later the relationship is bound to return to its historical average.
So what are rents saying about home values today?
....
According to our calculations, prices in most markets will fall by double digits over the next five years.
.....
I am a Jew and you are living under my dominion!!!! KNEEL BEFORE ME, GOYIM FOOLS!!!!!!
Hey Keith, is this really what you intended with this website? If so, that's cool, but I think alot of folks don't want to participate lest they be accused of being hired by the corp/gov/jew/industrial/military complex to monitor their thoughts,and shills for the republicans.
Of course, I have found a way to participate. And if these guys can accuse my entire religion of such idiotic machinations, than I certainly have the right to be heard calling these guys basement dwellers, life's losers, ingrates, tin foil hat wearers, etc.
That seems only fair, don't you think?
That's right "machinations", obviously a Jew with a good education, no doubt paid for by Israel!!!! HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Great story in the New York Times about forclosures in Ohio. A judge threw out 17 forclosure petitions because the bank trying to forclose could not actually prove they own the houses. The investment pools are so complicated that it's not clear who owns the houses. This will make it a lot harder to forclose. This will only be temporary relief for homedebtors but it's a really big nail in the coffin of mortgage backed securities. It should also add to subprime losses for banks and anybody who owns mortgage backed bonds, CDO's, SIV's and other toxic waste investments.
Thought I might as well let you know who I am. I am hoping other Jews will come up from the Command Center too...
Come on guys/gals, be a mench!
Can you say 92%?
http://bankingpanic.blogspot.com
I think that the new tagline, "You Didn't Think The Gains Were Permanent, Did You?", is awesome. Hats off to Keith.
I see that the US dollar has gained about 600 basis points on the Canadian dollar in the last week. We are in crazy crazy times, I've never seen such volatility.
How about the people who lied on about their income to get the crazy loan.
http://finance.sympatico.msn.ca/
investing/stocks/
article.aspx?cp-documentid=
5719491
Who's to blame for the U.S. mortgage mess?
No. 1: Alan Greenspan
No. 2: Countrywide CEO Angelo Mozilo
No. 3: Christopher Ricciardi
No. 4: Ralph Cioffi and Jim Kelsoe
No. 5: The ratings agencies
No. 6: Mortgage brokers
If Christopher Ricciardi helped turn Merrill Lynch (MER.N) into the "Wal-Mart of the CDO industry" between 2003 and 2006, should he be called the modern father of CDO.
http://news.morningstar.com/news/
ViewNews.asp?article=/
DJ/200710250018DOWJONESD
JONLINE000033_univ.xml
In 2003, Merrill Lynch & Co. hired Christopher Ricciardi, an expert in complex structured products called Collateralized Debt Obligations that were growing fast.
Ricciardi came from Credit Suisse (CS) , then the leading underwriter of CDOs, and brought a team with him to Merrill that included Steve D'Agostino, Lars Norell and Plamen Mitrikov.
In late 2002, Merrill (MER) was a minor player in CDOs, but by the end of 2003, the firm had become the largest underwriter of the products in the world. It retained that lead in 2004, 2005 and 2006.
That fast expansion came back to bite Merrill on Wednesday as the investment bank reported an unexpectedly large third-quarter loss from almost $8 billion in write-downs. Most of that came from the firm's exposure to CDOs, built up from years of underwriting the products.
Now analysts are questioning Merrill's risk management, while Moody's Investors Service and other agencies have downgraded the firm's credit and debt ratings. The bank still has $15.2 billion of exposure to CDOs, leaving analysts and investors wondering whether further write-downs may be needed.
From today's WSJ Marketplace section:
"Stalled Condo Projects Tarnish Trump's Name"
52 story Trump Tower Tampa construction stopped. No financing and many lawsuits pending. Buyers are irate.
A Ft. Lauderdale condo project put on hold indefinitely.
There's more.
http://tinyurl.com/2devuv
Here is one of the BEST articles I have read that details the current credit "Crisis"...
http://www.lewrockwell.com/orig5/regan-j2.html?ref=patrick.net
Ron Paul is the only candidate so far who doesn't try to dance around questions. He gives a straightforward answer and actually backs it up.
chicanery (2007)
Hillary Dick-Chenery bought.
Orange louse ran up the stock.
The clock strikes four,
stock dived some more;
gone what the greedy man bought, doo-doo.
The market is due for a correction, we all know it. It is important for this to happen quickly so we can get back to business. The market is in flux, with list prices on houses no longer reflecting what they are really worth. An auction, however, is a good way to gauge how much people will pay. http://www.bidhive.com is a site for real estate professionals to post property for online bidding, so consumers can work out the kinks in the market.
Wells Fargo CEO says Housing as Bad as during
Great Depression
http://tinyurl.com/yqaamk
http://video.nbc4.com/player/?id=185237
Down and out in Md...
burn, baby, burn...
Peter Schiff takes the chaos of the world and makes it brilliantly, elegantly simple.
http://tinyurl.com/2w5ew4
CNBC Today Show says there is a 75% of recession. Consumer spending has slowed, and this will cause gas, food, and home price deflation.
Says pull back is showing up at Starbucks,and retails stores like Khols, JC Penny's and Macy's.
Another 26 foreclosure actions put on hold - PDF of Ohio District Court's decision:
http://tinyurl.com/2ac9m2
Plaintiffs failed to submit sufficient evidence to establish standing AND jurisdiction.
It looks like they'll have to go back and establish the chain of assignments to the letter.
But what if the original lender has gone bust (180 and counting!)? They'll have to reconstitute those companies and get the court to appoint an administrator to authorise endorsement of the assignments. Expenseeeef!
The National Association of Realtors commercial I just posted should be up your alley.
http://www.stevequayle.com/qf_november_15_2007.mp3
If you are depressed do not listen to this.
If you do not want to take the blue pill do not listen to this.
If you are a Patriot, a Ron Paul Supporter, a Libertarian or Keith,
then please, set aside some quality political enhancement time for some "need to know" views, whether you AGREE OR NOT with the commentary, please be informed.
FMW
Interview with Alex Jones, Reporter and documentary producer of ENDGAME.
Is this your plan, Keith?
++++++++++++++++++++++++++
One respondent wrote: "Being an expat in Europe with a European employment contract, I am paid in euros, and happy to get paid in euros, and shop in the US, just as long as the cycle lasts through my retirement, so I can pick up pension in Europe and retire in the US."
Want out of your preconstruction condominium contract?
contact a florida real estate attorney.
http://www.depositrecoveryservices.com
and the public airwaves, whose utilization has already been paid for are being privatized and the public will pay for it and be extorted over and over again... this in relation to the conversion from digital to analog televisions.............see jan 09 for another upcoming screw job guaranteed by what bribes and kick backs and skim jobs....job ................????
If currency can be compared to fashion, then can the US Dollar be considered out of style, and the Euro in style.
Will the Euro become the new status symbol of the world.
http://www.washingtonpost.com/
wp-dyn/content/article/2007/11/
16/AR2007111601617.html?nav
=rss_opinion/columns
See if you can identify the following country: Its currency is falling sharply in global markets; its speculative real estate bubble has burst; its financial sector is weakened by bad loans and lack of transparency. This economy is teetering on the edge of recession, and, thanks to borrowing so heavily abroad, its economic future is at the mercy of international creditors.
I'm talking about Thailand, of course, as it stood 10 years ago -- on the edge of the devastating Asian financial crisis. But if that description bears more than a little resemblance to the United States today, then I have made my point.
If America were Thailand, the International Monetary Fund would long ago have imposed austerity conditions that forced us to put our financial house in order.
Home builders such as WCI Communities Inc. and Pulte Homes Inc. aim to survive an industrywide unraveling by selling houses at bargain prices.
Nationwide, Pulte cut prices $10,000 to $50,000 during a sales event.
Industry veterans say the bigger players are better positioned to ride out this downturn than the one 15 years ago because they are not as concentrated in any particular region.
So as the California, Florida and Nevada markets sink, builders with national scope such as D.R. Horton and Pulte can turn to healthier areas like Seattle, Portland, Ore., North Carolina and South Carolina.
The industry is "going to be a shadow of itself once we get through this downturn," said Mark Zandi, chief economist at Moody's Economy.com, who predicts home prices won't rebound until late 2009 or early 2010. "Everyone was too optimistic."
http://www.sun-sentinel.com/
business/realestate/
sfl-flzbuilders1115nbnov15,
0,7004691.story
The US Dollar must be truly out of style when the Euro has become the new status symbol of the World.
http://agonist.org/20071116/
the_dollars_decline_from_
symbol_of_hegemony_to_
shunned_currency
The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.
After months of huge and sustained turmoil on the money markets, lack of confidence in the world's totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.
"An American businessman over here who is given the choice would take anything but the dollar," David Buik of Cantor Index said yesterday. "I would want to be paid in yen, and if not yen then the euro or sterling."
Why waste time on the US Dollar, when you could have the new status symbol of the world - EURO.
http://www.businessday.co.za/
articles/world.aspx?ID=
BD4A614286
Investors yesterday bet on a larger appreciation of the United Arab Emirates (UAE) dirham after the central bank said for a second time this week that it was considering dropping the currency’s peg to the tumbling dollar.
One-year dirham forward rates have been climbing since central bank governor Sultan Nasser al-Suweidi said in Tokyo on Tuesday that the dollar’s slide on global markets had pushed the world’s sixth-largest oil exporter to a “crossroads” on the dirham’s peg.
The UAE could switch away from a “single currency peg to a multi currency basket”, although it would act only in concert with Gulf Arab neighbours preparing for monetary union as early as 2010, Suweidi said on Tuesday.
Want to know what is going on in orlando and the market trends there
http://orlandorealestatetrends.wordpress.com
Are US CEO wising up to the fact that at one point the weakening US Dollar will start impacting their share price, as US investors favor foreign equities over US equities, and as foreigners realize their more potential for gain by not investing in US Assets until the US Dollar stop falling.
http://www.taipeitimes.com/News/
biz/archives/2007/11/18/2003388411
The US dollar weakened against the euro and the British pound on Friday in the wake of fresh economic news including a report that showed a surprise drop in US industrial production last month.
The US dollar could come under further pressure from the Gulf states, where a group of six oil-rich countries, the Gulf Co-operation Council, looks set to unpeg their currencies from the US unit in the coming weeks, analysts said.
With so much recent attention on oil price and speculation on whether OPEC will increase oil product do you think that the closed-door meeting was really inadvertently broadcast to journalists when OPEC voiced their concern about the falling US Dollar.
http://www.theglobeandmail.com/
servlet/story/LAC.20071117.
ROPEC17/TPStory/Business
U.S. dollar decline subject of debate at OPEC.
Saudi foreign minister, Saud al-Faisal, said publicly declaring concern could send the U.S. dollar down further.
Ali al-Naimi, Saudi Arabia's oil minister said "Nobody wants to have less money than more money," "I'm sure we all agree on that."
A rare glimpse behind the closed doors of OPEC accidentally occurred here last night, revealing a debate over whether to make a reference to the falling U.S. dollar in the organization's official declaration after its summit ends on Sunday.
Roughly a half-hour of a closed-door meeting of oil ministers and senior officials from the 13 members of the Organization of the Petroleum Exporting Countries was inadvertently broadcast to journalists in the press room before the feed was shut off when a staffer yanked the television cable out of the wall.
Iran and Venezuela, as well as Nigeria, pushed to have the U.S. dollar issue mentioned in the declaration.
The organization, which mostly sells its product priced in U.S. dollars, is receiving less money for oil as the value of the greenback tumbles.
OPEC officials say there won't be a decision at this weekend's meeting on whether to increase production. That discussion will be left to a meeting of the organization's oil ministers in Abu Dhabi on Dec. 5. Several OPEC members, including Mr. el-Bardi, who is Libya's oil minister, don't see any reason to increase output, arguing that current supplies are adequate.
Check out the Real Estate Agent.
http://www.maxim.com/Bonusbabeashley/girls_of_maxim/4239/284.aspx
She deserves your 6%
State going after real estate broker
Attorney General Tom Corbett yesterday said he would ask federal prosecutors to open an investigation.
"This guy's a con artist. He just keeps shifting schemes," said Mr. Corbett.
This time, investigators say he moved on to a wide-ranging home sales operation that falsified incomes to enable unqualified buyers to obtain mortgages, filed fraudulent liens against homes he was selling to extract money from the sellers, created fraudulent second mortgages and practiced law without a license.
http://www.post-gazette.com/
pg/07321/834721-54.stm
Scam Artist Weeps, Gets 26 Years
The now-infamous, confessed scam artist Matthew Cox, who once fancied himself sometimes as Robin Hood and other times as the evil Mr. Burns from “The Simpsons,” using elaborate mortgage fraud and identity theft schemes to bilk more than 100 homeowners and lenders in eight states out of millions of dollars, wept in US District Court in Atlanta Friday as he apologized to his victims and hoped for a merciful sentence.
Instead, Cox was sentenced to more time than similar fraudsters receive -- 26 years in federal prison.
http://www.11alive.com/news/
article_news.aspx?storyid=106584
Record Price Drop Forecast in Real Estate
The U. S. real estate market, already stressed by the mortgage mess, will experience falling home prices at a record rate in 2008, according to the new annual Housing Predictor national forecast.
Home prices are forecast to drop in the over-whelming majority of markets in all 50 states. Housing Predictor independently tracks more than 250 local housing markets in all states and regularly reports changes in each market place to keep visitors up to date on local market conditions. The annual national forecast is issued each year and updated mid-way through the year.
Real estate markets, especially in highly populated states, which experienced all time record high appreciation during the real estate boom will see prices plummet at double digit levels in 2008.
http://www.webwire.com/
ViewPressRel.asp?aId=52426
The owner of a Berks County-based mortgage business has agreed to plead guilty to mail fraud in a case that has left hundreds of homeowners in jeopardy of losing their homes. Federal prosecutors say 71-year-old Wesley A. Snyder, owner of Personal Financial Management, is cooperating with the investigation into his now-bankrupt business.
Federal prosecutors say that, since 1988, Snyder took in more than $65 million from 811 purchasers of his "wrap-around" mortgages. But they say he forwarded only $39 million to the banks and other institutions that provided the underlying financing.
The U.S. Attorney's Office also says Snyder defrauded 31 investors out of $3 million. Also today, some of PFM's customers accused some of the nation's largest banks of funding a Ponzi scheme and failing to perform adequate oversight.
An amended complaint filed in Philadelphia federal court seeks to limit what can be collected from the homeowners by the lenders that provided financing through companies Snyder owned and operated. Snyder's companies filed for bankruptcy in September, claiming a $40 million deficit.
http://www.wfmz.com/view/
?id=176076
Higher heating bills in winter forecast
Expect to pay $100 to $300 more as rising oil prices drive up costs
Prepare to tighten your belt if you plan to turn up the thermostat this winter.
Rising prices of crude oil are expected to inflate heating costs between $100 and $300 a home, even for the 76 percent of households in the Rochester area that rely on natural gas for heat.
Crude oil price increases have already been felt at the gasoline pump in the last two weeks, with the local price of regular now averaging $3.27. As the heating season is just starting to warm up, the effects of $95-a-barrel crude oil will take a little longer to be felt by utility customers, but they will be felt by everybody.
http://www.rochesterdandc.com/
apps/pbcs.dll/article?AID=/
20071117/BUSINESS/711170322/1001
THE 2ND SHOE JUST DROPPED!
Wall street dealers who setup and sold the mortgage backed CDO's and other SIV's to the world sold off only the revenue streams from performing mortgages. They kept the value of foreclosure rights to themselves.
This may explain why the NINA loans were allowed in the first place. Wall street bankers wanted them to fail after the resets so they would get the properties for free in foreclosure and the stupid mortgage backed CDO/SIV investor would be left holding the bag.
deutsche-bank SIV BAGHOLDER foreclosure filings are thrown out of court
Get ready for the US Dollar to tank like never before as the rest of the world wakes up and realizes that Wall-Street bankers are just a bunch of flim-flam artists and dump all USD assets to escape.
==================================
The Financial Sense Radio Show talked about this towards the end of part 2. They also said that the really scary part is that congress is considering bills that would let BK judges rewrite the contractual terms of a mortgage and lower the principal due the lender.
Trillions of Dollars are going to be lost globally in this WORLD WIDE CREDIT CRUNCH.
Welcome to the Very Great Depression!
Click here then select part 2 of the 3rd HOUR for November 17 Broadcast
Front page of today's NYTimes:
As Owners Feel Mortgage Pain, So Do Renters
"a survey taken this year by the Mortgage Bankers Association found that one in eight foreclosures was non-owner-occupied"
http://tinyurl.com/28ww3o
Cool, your post was made in 2008. You are one magical dude :)
Somebody please explain..
Why the euro is more fundamentally sound than the dollar. I thought France, Germany, Italy had debts, relative to their GDP, just as large as the US. Don't they have entitlement spending / welfare state problems too?
I thought the euro was just as funny money as the Us dollar. Am I mistaken?
Any explanations appreciated if you have the time.
Thanks for this awesome blog it's been really informative. And Go Ron Paul
http://news.independent.co.uk/world/americas/article3169653.ece
Rappers join models in insisting on euros as greenbacks fall further out of fashion
David Usborne in New York
Published: 17 November 2007
Pay attention as you watch the catchy new music video from the mega-star rapster Jay-Z, "Blue Magic", and see if you can't spot the product placement. It is not a fancy car that he is endorsing – although both his rides, a Rolls- Royce and soft-top Bentley, are plenty spiffy – but rather a currency – and it is not the dollar.
Like so many in the hip-hop genre, the song is a celebration of ostentatious wealth. But capturing the attention of commentators in this clip, shot in the glimmering, neon-lit canyons of New York City, are the repeated glimpses of flickering wads of €500 notes. Jay-Z has thus performed a currency defection: the dollar is not just down, it is out. The euro is the new bling.
What is wrong with this new generation of mortgage bankers.
Didn't banking professionals hold allot of respect at one time in history.
http://www.kentucky.com/569/
story/231849.html
Mortgage bankers go back to basics
Mortgage bankers are eagerly going back to basics before Congress makes them.
At the annual convention of the Mortgage Bankers Association, or MBA, the most oft-spoken phrase was "back to basics." No matter what you were doing -- walking past a shoeshine stand, staring mutely at your shoes in an elevator or waiting in line for lunch -- you heard someone uttering "back to basics."
That means the home loan du jour conforms to standards set by mortgage giants Fannie Mae and Freddie Mac: It isn't a jumbo (a mortgage for more than $417,000), isn't subprime (for a borrower with iffy credit), and it has a fixed rate. Preferably, the borrower totes a good-size down payment (if buying) or sports serious equity (if refinancing).
If the mortgage business is going back to basics, then, by definition, it wandered away from the basics. Indeed, that's what happened.
Standard & Poor's on Friday cut the ratings on $3.7 billion of residential mortgage-backed securities from this year's first half, which are supported by U.S. first-lien subprime, first-lien Alt-A, and closed-end second-lien mortgage loans.
The 536 classes of securities from 2007 represent 0.75 percent of the $496 billion of RMBS rated by S&P between Jan. 1, 2007 and July 9, 2007. S&P said the rating actions follow its July 10, 2007 announcement of its revised methodology for assigning new ratings to the securities.
S&P said it lowered the ratings on a total of 157 RMBS backed by first-lien subprime mortgage loans totaling about $18.8 billion. The total represents 12.4 percent of the $151 billion RMBS rated through the first half by S&P.
The rating agency also cut 215 RMBS backed first-lien Alt-A mortgage loans totaling $4.7 billion, which represents 2.3 percent of the $204.6 billion RMBS rated by S&P in the same period.
Another 20 RMBS totaling $3.6 billion that are secured by closed-end second-lien mortgage loans were also downgraded. That represented 20.8 percent of the $17.3 billion rated by S&P in the first half.
S&P also said it may cut ratings on 803 classes of U.S. residential mortgage-backed securities backed by closed-end second-lien mortgage loans issued from the beginning of 2004 through the end of 2006.
The 803 classes had an original total principal balance of approximately $21.53 billion, S&P said in a statement.
http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=
2007-11-16T220149Z_01_
N16325068_RTRIDST_0_
SANDP-RATINGS-RMBS-UPDATE-2.XML
Russdog, the Euro is the biggest currency in the world which floats against the dollar. The dollar has several severe drags on it now in the form of runaway spending. There's Iraq but the real damage was the senior drug plan. Initially it was projected way too low of a cost. It has spiraled upwards many fold since. That and lots of pork spending (Sen. Stevens bridge to nowhere in Alaska) has told the world it is happy to spend way more than it takes in. Europe is nowhere near as bad so the Euro has benefitted tremendously.
Several people are calling the Euro overvalued, but really it's about how severe the dollar has crashed, and that's a far less sexy way of looking at it. Now it appears we're heading into recession. The rest of the world should follow us there 6 months later as that's usually the way it works. Typically our Fed would cut interest rates to spur the economy to recover. The problem is though many people are already overdosed on credit, so what will cheaper rates do when the most valuable asset, housing, is falling?
Make no mistake this is going to be a mess. At worst foreign holders of greenbacks will used depressed prices to buy American assets and corporations. We will lose high-paying jobs and our stature in the world. Watch Dubai. Many U.S. corporations already have a presence there and it won't be a stretch to move their headquarters to the Middle Eastern, oil wealth rich region, rather than stay in the U.S.
By the way, the new French prez told Congress last week the U.S. runs the risk of instigating a trade war if they don't prop up the dollar. This is startling because Sarcozy was the new darling of American conservatives, well until he said that.
From Time Mag:
Last Thursday, to the delight of Democrats, Walberg (R,Mich) lived up to his conservative ideals — voting against a bill in the House that tightens restrictions against predatory lending.
Hey Repubs, are you that fck'in STUPID!!??
Check out www.orlandorealestatetrends.wordpress.com
A blog about the crisi that is now facing Orlando Florida
Lead story on cnn.com today:
Crime scene: foreclosure
Cleveland's mortgage meltdown has sparked a crime wave in the nation's hardest hit area for troubled homeowners.
http://tinyurl.com/24yv7o
Keith, there are 2 distinct crashes occurring back here in the USA. The AZ/CA/FL bubble pop that everyone loves to talk about, and the continuing irreversible structural economic decline in Cleveland, Detroit, etc. More threads focusing on the latter, please. Not everyone lives in sunbelt bubble cities.
Just needed to share this beautiful line from CNN's report of a survey of consumers:
"The good news is that a declining percentage of Americans express concern about paying off consumer and mortgage debt," said CFA Executive Director Stephen Brobeck."
Of course they are not concerned. They never intended to make the mortgage payment in the first place.
But inflation's only 2% !?!
http://news.bbc.co.uk/2/hi/business/7097981.stm
Thanksgiving dinner cost 'up 11%'
Rising turkey prices were the top contributor to dinner inflation
US consumers will pay 11% more for their traditional Thanksgiving meal next Thursday than they did last year, a study has suggested.
The American Farm Bureau Federation found that cooking a dinner for 10 with dishes such as turkey, stuffing and pumpkin pie would cost $42.26 (£20.71).
The biggest contributor to the $4.16 rise was turkey, with a 16 lb (7kg) bird having gone up $1.93 to $17.63.
The cost of feed for the birds and fuel to deliver them have risen sharply.
Rising fuel and food prices were also strongly reflected in Thursday's jump in US consumer prices.
The US Labor Department said its consumer price index rose by 0.3% in October compared with September while core prices, which exclude the volatile components of food and energy, climbed by 0.2%.
On a 12-month basis, consumer prices increased by 3.5% percent and core prices by 2.2%.
'Wholesome value'
The consumer prices index is based on a broader basket of goods than the figures from the American Farm Bureau Federation (AFBF).
The AFBF shopping list included turkey, stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream and coffee with milk.
It was keen to stress that Thanksgiving dinner is still reasonably priced.
"Consumers can enjoy a wholesome, home-cooked turkey dinner for just over $4 a person -- less than a typical fast-food meal," said AFBF economist Jim Sartwelle.
Americans will celebrate Thanksgiving on 22 November.
Really interesting discussion. Keep up the good work HousingPanic, it's great that you can bring so many of us together.
Word from the trenches, folks...
Beazer Homes in TX is having a brain fart. They try to pull out of pre sale contracts siting various "disputes" with people willing to buy. In the market where supply of buyers is drying up rather quickly it seems to be rather stupid decision. Oh well, I'm sure they just hope the home prices will go up and they'll make more money by selling in the future.
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