The jobs so far are not declining because...people will do anything not to lose their house? illegals doing the construction were never tallied unlike their supervisors? the management can always find lawns to cut or maintenance contracts to keep some staff? (productivity is up people)
Looks like the escalation in Iraq/Iran might help cushion this "soft spot". I am not so sure that the Fed drops interest rates to help housing...I'm not sure that works anymore.
Households continue to leverage up, albeit at a slower pace. I think it's worth repeating one simple fact: analysis of the Q3 flow of funds report shows households mortgaged 92.6% of the 1% increased market value of their real estate holdings. You have to go back to Q1 '94 to find a higher value, 147.9%.
Here's what I put in the previous thread:
If the quarter-to-quarter rate in market value continues to fall, as it has since Q2 '05, any increased borrowing will come straight from equity, forcing down household net worth.
It seems reasonable, given the present situation, to expect a demand side credit event.
In re Kasriel's analysis: Yup! Yup! Yup! I would only add that falling household net worth and falling indebtedness from the demand side will be two of the reasons for lowering rates. There's your credit event. All very pro-cyclical. Five years from now they'll still be arguing about whether to call it a "credit crunch".
Well, folks, the chickens are coming home to roost in a hurry. Somewhere Bill Lerach is smiling like he just won the lottery. Conference call at 6PM eastern time if you would like to listen in as the analysts roast the management team. The scales may be starting to fall from their eyes.
"IRVINE, Calif., Feb. 7 /PRNewswire-FirstCall/ -- New Century Financial Corporation (NYSE: NEW - News), a real estate investment trust (REIT), today announced that it will restate its consolidated financial results for the quarters ended March 31, June 30 and September 30, 2006 to correct errors the company discovered in its application of generally accepted accounting principles regarding the company's allowance for loan repurchase losses.
The company establishes an allowance for repurchase losses on loans sold, which is a reserve for expenses and losses that may be incurred by the company due to the potential repurchase of loans resulting from early-payment defaults by the underlying borrowers or based on alleged violations of representations and warranties in connection with the sale of these loans. When the company repurchases loans, it adds the repurchased loans to its balance sheet as mortgage loans held for sale at their estimated fair values, and reduces the repurchase reserve by the amount the repurchase prices exceed the fair values. During the second and third quarters of 2006, the company's accounting policies incorrectly applied Statement of Financial Accounting Standards No. 140 - Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. Specifically, the company did not include the expected discount upon disposition of loans when estimating its allowance for loan repurchase losses.
In addition, the company's methodology for estimating the volume of repurchase claims to be included in the repurchase reserve calculation did not properly consider, in each of the first three quarters of 2006, the growing volume of repurchase claims outstanding that resulted from the increasing pace of repurchase requests that occurred in 2006, compounded by the increasing length of time between the whole loan sales and the receipt and processing of the repurchase request.
Importantly, the foregoing adjustments are generally non-cash in nature. Moreover, the company had cash and liquidity in excess of $350 million at December 31, 2006.
Although the company's full review of the legal, accounting and tax impact of the restatements is ongoing, at this time the company expects that, once restated, its net earnings for each of the first three quarters of 2006 will be reduced.
In light of the pending restatements, the company's previously filed condensed consolidated financial statements for the quarters ended March 31, June 30 and September 30, 2006 and all earnings-related press releases for those periods should no longer be relied upon. The company expects to file ame
The jobs so far are not declining because...people will do anything not to lose their house? illegals doing the construction were never tallied unlike their supervisors? the management can always find lawns to cut or maintenance contracts to keep some staff? (productivity is up people)
Looks like the escalation in Iraq/Iran might help cushion this "soft spot". I am not so sure that the Fed drops interest rates to help housing...I'm not sure that works anymore.
Agree. I think the Fed raising/cutting rates will only marginally impact the way the housing bust plays out.
In other news, December's revolving credit was up .6 billion. Non-revolving 5.4 billion.
Households continue to leverage up, albeit at a slower pace. I think it's worth repeating one simple fact: analysis of the Q3 flow of funds report shows households mortgaged 92.6% of the 1% increased market value of their real estate holdings. You have to go back to Q1 '94 to find a higher value, 147.9%.
Here's what I put in the previous thread:
If the quarter-to-quarter rate in market value continues to fall, as it has since Q2 '05, any increased borrowing will come straight from equity, forcing down household net worth.
It seems reasonable, given the present situation, to expect a demand side credit event.
In re Kasriel's analysis: Yup! Yup! Yup! I would only add that falling household net worth and falling indebtedness from the demand side will be two of the reasons for lowering rates. There's your credit event. All very pro-cyclical. Five years from now they'll still be arguing about whether to call it a "credit crunch".
Houston we have a problem at New Century.
Well, folks, the chickens are coming home to roost in a hurry. Somewhere Bill Lerach is smiling like he just won the lottery. Conference call at 6PM eastern time if you would like to listen in as the analysts roast the management team. The scales may be starting to fall from their eyes.
"IRVINE, Calif., Feb. 7 /PRNewswire-FirstCall/ -- New Century Financial Corporation (NYSE: NEW - News), a real estate investment trust (REIT), today announced that it will restate its consolidated financial results for the quarters ended March 31, June 30 and September 30, 2006 to correct errors the company discovered in its application of generally accepted accounting principles regarding the company's allowance for loan repurchase losses.
The company establishes an allowance for repurchase losses on loans sold, which is a reserve for expenses and losses that may be incurred by the company due to the potential repurchase of loans resulting from early-payment defaults by the underlying borrowers or based on alleged violations of representations and warranties in connection with the sale of these loans. When the company repurchases loans, it adds the repurchased loans to its balance sheet as mortgage loans held for sale at their estimated fair values, and reduces the repurchase reserve by the amount the repurchase prices exceed the fair values. During the second and third quarters of 2006, the company's accounting policies incorrectly applied Statement of Financial Accounting Standards No. 140 - Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. Specifically, the company did not include the expected discount upon disposition of loans when estimating its allowance for loan repurchase losses.
In addition, the company's methodology for estimating the volume of repurchase claims to be included in the repurchase reserve calculation did not properly consider, in each of the first three quarters of 2006, the growing volume of repurchase claims outstanding that resulted from the increasing pace of repurchase requests that occurred in 2006, compounded by the increasing length of time between the whole loan sales and the receipt and processing of the repurchase request.
Importantly, the foregoing adjustments are generally non-cash in nature. Moreover, the company had cash and liquidity in excess of $350 million at December 31, 2006.
Although the company's full review of the legal, accounting and tax impact of the restatements is ongoing, at this time the company expects that, once restated, its net earnings for each of the first three quarters of 2006 will be reduced.
In light of the pending restatements, the company's previously filed condensed consolidated financial statements for the quarters ended March 31, June 30 and September 30, 2006 and all earnings-related press releases for those periods should no longer be relied upon. The company expects to file ame
mp - It might be interesting to see what happens given the new bankruptcy laws. If there is wage garnishing, new financial asset for Wall Street?
Well, that was short and sweet. I missed the first part, but basically they just read the press release.
AG, wage garnish will be the walking around money.
Hell, who knows, Lehman Bros and Goldman Sachs could end up in the real estate business!