So, I'm stumped. Are they..?
1. trying to maintain commissionable transactions
2. trying to set-up the GSE's for blame if RE prices continue to tank
3. Other
lama, insofar as they're serious about the subprime refi thing--and I think it's mostly just a currently-fashionable excuse--they just want the GSEs to take some problems off their hands. By and large, they want the conforming limit to keep increasing because they recognize, precisely, that it is some sort of a drag on bubble markets. Obviously for the last several years it hasn't been a very effective drag, but there you go. The "non-agency" subprime and Alt-A lenders declared a few years ago, in effect, that the agencies had become irrelevant as private capital poured into the mortgage market. Now that private capital's a bit spooked, suddenly the agencies matter again.
What they're after, of course, is GSE and FHA LTVs. The maximum financing allowed in conforming loans is as high as it is, of course, precisely because the conforming limits are there. What they seem to expect is that the regulators will allow the GSEs to buy bigger loans at the same risk profile they use currently; otherwise increasing the conforming limit isn't going to do any good.
The fact of the matter is that the GSEs have not spent the last five years being "the lender of last resort." Now that those lenders who cheerfully ignored agency standards are in trouble, they want the GSEs and FHA to "stabilize" the market by loosening guidelines right when the knife is starting to fall. It's just more socializing of risk right at the time when privatized rewards are starting to look doubtful.
the Proposed Guidance would be detrimental to:
1) the national economy,
2) home buyers,
3) current home owners,
4) the industries that serve homeownership,
Last) and to the success of the housing missions of the Enterprises...
I'm guessing it has more to do with 1-4, with an emphasis on 4, than it does the mission of the "Enterprises."
1&2) Only the higher priced home are selling, let's at least keep money moving in the markets that are viable. No one will touch low-income/subprime right now.
3) Current home owners underwater need to refi at last year's prices (which will help "contain" meltdown repercussions), if the average price is marked to market we lose support for the top tier refi's and we are in enough trouble (see 1 and 2) already.
4) half the industry is scheduled to go under as ARMs reset: subsidize the markets that are viable.
Last) we're still working on that one..., but maybe, "if we all go BK how will that help low-income borrowers?"
Quite amazing to see the bubble mentality (RE only goes up) embedded in legislation. Is this what happens when legislators can't understand their homework and legislation is written by lobbyists? Helps make sense of our current relationship with China...
I thought NAR was predicting only a tiny fall in prices, followed by a quick rebound. Almost makes you think that they privately believe the price picture is worse than their public statements, doesn't it?
FHA's negative subsidy is spendable money for Congress. The negative subsidy goes straight to the budget deficit calculation, and straight to each committee's "spending limits" (yeah, I know). But FHA is projecting that the negative subsidy will go positive in the next budget (meaning they will lose money) unless the down payment assistance loophole is closed. So lowering the conforming loan limit would cause FHA to save money, by lowering volume of lending, if the loophole remains open. And the total amount is tiny - FHA used to claim to make about 3 cents for every hundred dollars insured, now it's less than half a cent for every hundred dollars. And FHA itself is tiny - we're not talking about big budget dollars here, although we are talking about real dollars as far as a Congressional committee is concerned.
I wonder what year the current statute was written, the one they quoted that says the conforming loan limit is adjusted annually by adding to each such [previous] amount . . . a percentage thereof equal to the percentage increase during the twelve-month period ending with the previous October in the national average one-family house price
Either the folks that wrote the statute had (a) forgotten about the era of the 20's-30's, or (b) assumed that folks could handle addition with negative numbers.
Thanks Tanta,
Reminds me of a lot of things in the tax code as well. Some group or other is "trying to help the disadvantaged" (or, actually themselves) and another boondoggle is created/continued.
I'm pretty sure that the statute was passed in 1980, in the midst of some pretty high rates of inflation. Don't count on Congress to think of "gee, what happens if in a few years from now things look different."
I had put on my tinfoil hat and taken a whack at this issue in this Nov 16th post. Thanks for your illuminating piece. I may not yet understand what's going on here, but enlightenment is certainly closer now.
mort_fin (2:00pm): I thought NAR was predicting only a tiny fall in prices, followed by a quick rebound.
We captured a hilarious graph where Fannie subscribed to a similar fantasy in this Nov 9th post. The third graph has been removed from the slide deck since. (by the way, error in my title, Berson not Bernson).
If you're going to ask the GSEs and FHA to take on the increased marginal risk of higher-balance loans of worse quality, you might want to actually quantify the risk of their failure to do so.
Silly Tanta - you know full well they aren't going to ask any such thing - their bought & paid for congress critters will do all the asking and gladly so... without prompting... because its good policy and everyone knows it except for a few stick in the mud bureaucrats at the GSEs. That'll all get ironed out this fall...
Assuming 100% LTV ($417,000)
REALTORS collects 6% = $25,020.
Commission adjustment of $700 to save a deal, and net $24,320 duh.
They are worried that if the negative adjustment to the conforming loan limit begins and actual average value declines of 20 to 40 percent occur over they next several years how you going to keep the prices propped up without that government supplied, insured, or sponsored liquidity?
Either the folks that wrote the statute had (a) forgotten about the era of the 20's-30's, or (b) assumed that folks could handle addition with negative numbers.
And we haven't even gotten to 'imaginary numbers' yet...
Incidently, tomorrow is supposed to be reckoning day for those BSC funds. You'd think the highly leveraged one would have wiped out its principal and then some, and then some more, and then some more. 20:1 leverage means 5% loss wipes out your principal. However I am betting on some more lies and coverups. THey announce a 5% loss and pay off the investors under the table to keep their mouths shut and not sue. In reality we know a portfolio of CDO's consisting in large part of subprime junk has got to be at least 10% underwater value-wise at this point, more than likely 50%, right?
Incidently, tomorrow is supposed to be reckoning day for those BSC funds.
itsallgreek - I'd be astonished if the big dogs investing in the BSC leverage funds don't already know exactly where they stand... mom-n-pop on main srteet maybe not... but these funds are not supposed to be 'mass retail'... they didn't have to make that many calls to inform the bulk of the money what's up... once the numbers started coming in the calls had to be going out.
I can't believe for a minute that they will send out form letter statements to clients w/out a prior heads up.
Same with a PR statement.
You don't pay 2 & 20 to learn about this stuff the same time readers on CR learn, if you catch my drift...
Whatever consequences there are from that thing - my guess is it is already well known by their clients & is 'priced in' by now.
dryfly: And we haven't even gotten to 'imaginary numbers' yet
You think not? Well if you take 2.71828, raise that to the power of a 180 degree spin multiplied by the the square root of minus one, then you get exactly where we're heading ... straight down.
DR, I smell the same rat. They want to nip any decrease in the ass now BEFORE the big losses show up. I don't understand why the limits are different by state to begin with. It should be a national figure, period. Why take on more systemic risk by pushing the limits higher in say CA, thereby concentrating the exposure to areas more prone to volatility?
Drop the whole nuber to $200K, transferring the risk to regional banks and the ample supply of liquidity in the financial markets, and be done with it.
And what's more, sounds like they are worried about applying a national price drop figure to state limits, which is absurd. They should be applying state price changes to state limits, if they intend to continue having differing limit values.
Either do a national number, adjust it nationally and have it make sense all across the country (same limit in Omaha as Oakland)... OR have state numbers then adjust it state by state as conditions in those states change.
One or the other but no smörgåsbord thank you very much... though I do love a smörgåsbord.
Took Tantas dare and read the rambling request for comments. Looks like they have actually taken into account declines in the past, but made it policy to defer a negative waiting for things to get better the next year, in hopes of a positive number for averaging purposes. The day of reckoning has arrived and now they must come to Jesus. Read that some where and thought it was cool. Does Jesus take Visa?
Looks like they have actually taken into account declines in the past, but made it policy to defer a negative waiting for things to get better the next year, in hopes of a positive number for averaging purposes.
Makes sense, sorta. Kinda like having a perpetual happy hour because its always 5 o'clock somewhere.
Tanta, i will just point out that we never really get into the quantification side of the problems with the mortgage market (if we have please put up the link and refrain from slapping me). we tut-tut origination practices a lot but don't talk much about how risk is being mispriced and mismanaged. for example, the CPR, CDR, severity assumptions blah blah being used to price whole loans were/are horribly wrong because they are assuming no doc piggybacks will only default at this rate which is ridiculous and doesn't consider fraud or rampant speculation and assumes optimistic HPA, continued access to refinance, etc etc. i don't know if this is because it's too esoteric for a blog or because the majority of the useful data isn't publicly available but we do kind of miss the other side of the equation here (how the risk is being mispriced and how it is aided and abetted by various parties). we have very nice conceptual discussions about some of this but i have a mathematical bent and like to see numbers and this post reminded me of this. maybe an ubernerdatorial on what goes into whole loan pricing or something would help?
"Incidently, tomorrow is supposed to be reckoning day for those BSC funds."
yes, i've been looking forward to this announcement. will be interesting to see what happens. i'm inclined to think BSC will sweep all this under the rug and magically say all investors losses are trivial and back to business as usual. the hooker in that though is the SEC and that guy from Ohio should be looking closely at this (as well as the rest of the world). if the news is bad this could be a market moving event. i'm also inclined to think the news could be bad with the hint being the bad performance of the abx, cmbx indices lately. get out the popcorn and get ready to click those mouses.
bacon dreamz, my problem is always that I have a ton of proprietary copyrighted information about loan pricing that isn't freely available on the web, and although I have emailed a few of the analysts in question to ask if I could exerpt some of it, I haven't gotten any responses. CR and I really don't want the investment banks (or anyone else) coming down on us like a ton of lawyered-up bricks for copyright infringement.
You, I'm sure, know what kind of information is available to every mortgage trading desk in the country. There are a few kind traders out there who send me bid color and spreads and updated metrics (like CPR) to keep me posted, but it's all on a confidential basis and I don't burn sources.
For instance, I got a fair amount of information regarding the June remittances, and I'd love to have posted about it. The payment velocities were horrifying. But nobody puts that kind of information out on the web for free. So far as I know, ABSNet is the only online source for any regular free information on deal pricing, but of course it doesn't address the question of how the securities we're looking at today were originally rated and priced.
And I'll be honest with you: I need to see some documentation on current whole-loan pricing strategies. The last time I personally had anything to do with pricing whole loans (jumbo A and Alt-A ARMs, mostly) was in 2003 (and, let me say, by then we were losing way more deals than we won. I just wouldn't go where everyone else was going on low-doc and 100% financing, nor would I agree to the insane deal stips people were getting from my conduit competitors.) I've looked at some of the levels my trader friends have shown me on subprime and Alt-A paper over the last few years and I couldn't tell you where those numbers come from (if I had to guess, I'd say they came straight from S&P's LEVELS on a half-assed tape crack with a large adjustment thrown in for some crazy valuation of the servicing rights. I don't know where these folks were getting their SRP, either.)
So unless some angel out there can point me to some publically-available data to work with, I'm afraid I can't say anything more about pricing issues than rumors I hear. And I won't post based on rumors; that'll just make me sound like every other nitwit on the net.
I suppose I could probably pull enough info together on CPR to write something . . . nerdly . . .
I'm not a lawyer (and I don't play one on TV) but unless what you know is a trade secret and you signed a non-disclosure agreement (or whatever similar), you can publish anything with your own words. Copyright protects "expressions of ideas" not facts or ideas themselves. In many cases you can publish excerpts verbatim and it qualifies as fair use.
I don't hold my breath to read about some tasty and juicy bits of information, though, because what you know is likely under non-disclosure agreement. But please, don't confuse it with copyright. Copyright is a "right to copy" not "right to forbid to learn about".
poszi, I know that I can paraphrase most of the copyrighted information that I receive, even though it's not on the net. The thing is, I don't really want to paraphrase it, I want to copy the charts and tables in it and share them with CR readers. And all these documents involve proprietary information and forbid reproduction in whole or in part without permission.
If what people would like to read is just a more general "how pricing comes about," I could do that, with the caveat that things have apparently changed somewhat since I regularly priced whole loans. But that won't answer the question of whether these loans in particular were mispriced without making reference to data about these loans.
Tanta,
One of the problems with pricing right now is that nobody wants to talk about it. But if you deconstruct a vertical abx tranche you can get a very good idea.
Just looking at the AAA75/AA10/A5/BBB5/ BB/B/C5 from AAA right on down to BBB available on Markit I would say that anything with a fico below 700 is almost unable to be sold without incurring huge losses that the originating fees are unable to cover. Looking at the number and making a ballpark guess- I would say that between 5 to 7% discount on the whole tranche would be enough to move the debt- but at no profit whatsoever.
Based on that, the only players are going to be folks who can keep the loans unsliced and undiced, and are willing to make sure that the loans will most likely perform.
But that puts the entire model of how the subprime industry performed into dire question. After all if the assets are not sufficient to collateralize the instrument, the warehouse lenders that provide the bridge financing are going to back away from their clients the mortgage lender (glorified front offices) and then worry if the music has stopped what dreck will be left on the warehouse line that will be unsaleable. What other assets do you see them possessing? Big headquarters buildings and tons of lease space in strip malls. Whoopee.
The more I get my mind around this, the bigger the problem gets, as this model has been used in a bunch of industries to slice and dice debt.
Anybody want a CDO based on six thousand truck loans? Ugh.
Someday this war's gonna end...but the aftermath of the greatest real estate bubble in history will take quite a while.
CA prices have gotten so loopy that comps in HI are actually a better value. Seems you can get a much nicer (and newer housing stock) over there than in the Bay Area for the same or lower price (and it's in gorgeous Hawaii fer chrissakes!).
But HI has long been "high cost" and so conforming limits on 1 unit are $625,500 (150%). So what was amusing is that you seem (for now) to get more home for the money over in HI AND you've got a $625k conforming limit to play with as well.
BTW - there's been a decent amount of pushing to get CA to be re-classified as a "high cost" state from CMBA, CAMB, CAR, etc.
BTW 2 - weekly REO list for my county shot up this week. For comparison weekly list might be 7 pgs or so - this week 21.
I should also point out, bacon dreamz, that I am not particularly the go-to person on the quant side. I can use a calculator with the best of them, but I spent most of my career getting pushed into the mushier area of ops due diligence, credit policy, and legal docs/custodial issues, because--forgive me, but it's true--I was the only member of the secondary marketing team who could read long sentences without whining. Same thing with the trades: the other guys got to run the models, I got to write up the damned deal stips. ("But you're the only one on the floor who knows the difference between "stated," "streamlined," "reduced," "lite," and "fast and easy." If you don't write the deal stips, somebody else will have to actually read credit guidelines." That was always how it went.)
So things get into these divisions of labor in companies, where the people who understand things like income verification docs and settlement statements and appraisals and shit get separated from the math people, and after a while the whole thing breaks down. I'd complain about the loan characteristics, and the pricing people would say "we priced that in," and I'd say "How? I'm telling you we don't understand fully what these characteristics are." So I'd try to write deal stips that would allow me to drill down into some files, after delivery but prior to settlement, and to kick out anything that looked squirrelly. But my competitors were writing deal stips that basically required almost no due dilly and promised no kickouts, and so the deals just went away.
That's one reason why I have been so obsessed with the question of due diligence, data quality, and fraud lately and not so obsessed with pricing. At some level, when the operations break down far enough, it doesn't matter how good the pricing models are. You can calculate a perfect CPR rate, but if the flaming loans have major errors on the title chain, they won't ever prepay because they can't get a release of lien. So I spent most of my time with my hair on fire on the qualitative side, not the quant side. I never should have admitted to those people that I was a lit major.
Tanta, that very lack of quality means that the models that were backtested in the dark ages will no longer work- primary conditions have changed, but the pricing quants kept plugging in the same parameters. You helped make those parameters what they were by rejecting so much paper- but guess what- after folks stopped looking in the package it got stuffed with dreck!
You have better get well rested- your megaconsulting career is about to begin as the mortgage industry once again embraces quality control after a bottom line blasting.
No doc state income is just plain insane. I hereby state my income is $1.2 million a year as a dishwasher at Joe's taco shack. I have $2 million in my 201k.
I will be able to make my reset in three years from $1,500 a month to $8,000 by renting the mansion out as a movie set to the sleaze industry. Ok?
Thanks for the loan!
You know it was crap, I know it was crap, but too many folks made huge bonuses in taking away your dealflow Tanta, and now they are going to enjoy finding the next bubble.
Reductions in the conforming loan limit could impair the ability of some borrowers to refinance out of subprime mortgages, which is of particular concern for families with problematic mortgages
And who exactly is to blame for those problematic mortgages? Well, of course, it's the MBA, the NAHB and the NAR and their constituency.
In other words, "Please don't take away the only possible help for the disgusting criminal mess that we created."
We need to take away a lot more from those scum. A lot more.
Hey MBA, NAHB, and NAR, here's a thought for you sleazebags: Never again!!
fair enough, Tanta! I for one really dislike the information that is available to the public. i guess it's just too much of a beast for it to be freely available which is why LP costs $200k/yr. maybe a government agency could do it...i don't think there's anything useful for free so we're all out of luck until you decide to go out in a blaze of glory and burn all your sources.
It's even worse than that, Allen. For instance, all these models use WA DTI (and DTI range) as a pricing input. That's not so crazy if you verify income.
On a bunch of stated-income IO loans that were qualified on the IO payment, it's worse than useless. I'd rather leave DTI out of the calculation entirely than feed made-up numbers into the model, because the whole point of "stated income" is to state enough to produce decent-looking DTIs. (Whenever I see the odd loan with stated income and a debt ratio of 50%, I wonder whether I got the last honest stated income borrower or just some dolt who can't divide four-digit numbers.)
Same thing with LTV: all kinds of these models use LTV but not CLTV for pricing purposes (if they're not buying the second lien). So an 80% deal with a cash down payment gets the same price as an 80% deal with a borrowed down payment. I presume (I hope) it has changed, but not all that long ago S&P's LEVELS didn't require CLTV for first-lien loans. And a whole lot of people looked right into my big baby blues and told me it didn't matter.
And when I said something on the order of "on this planet it matters, bucko," I got asked to produce historical data proving it! So, since nobody has, historically, been stupid enough to write 100% financing in a bubble, that means I have no handy "evidence" that it's stupid. Sure, yeah, maybe it'll work out . . . especially since we're all so damned sure that those appraisals are worth shit . . .
You're right, we just created a situation in which the models couldn't produce anything worthwhile, because we were trying to price stuff that was, basically, designed to defeat the pricing models.
maybe it's actually a problem that mortgages are so damn complicated that there really isn't anybody who understands both the Tanta side and the quant side really well...oh wait S&P does, right?
Who says it has to end? I'm nearly finished with my Perpetual Liquidity Machine. Through sophisticated financial engineering and arbitraging labor in parallel universes, I think I might have come up with a way to keep this party going. It might also require giving up on reporting data once the internal inconsistencies grow too great but as long we can keep television operational things should be fine.
i'm pretty sure S&P said they fixed the CLTV problem...now it will be perfect next time something anomalous happens! oh wait, no, it will fail horribly again because it can't capture something that hasn't happened before...the exact time you might think you need your model to work...
It's funny, bacon dreamz. I think I've spent 50% of my career saying "You know, this stuff is a lot more complicated than you think," and the other 50% saying "For christ's sake, people, they're just freakin' mortgage loans. How goddam complicated is the concept of down payment for you, bub?"
It just depends on where the enemy fire is coming from, I guess.
Yes, Tanta, i have heard a lot of people in the mortgage biz who like to say to newbies: "Mortgages have something for everybody; they can be as simple or as complicated as you want. They can just be a mortgage or they can be a complicated set of equations that you need to know stochastic calculus to solve. That's what makes it so great!
we just created a situation in which the models couldn't produce anything worthwhile, because we were trying to price stuff that was, basically, designed to defeat the pricing models.
Tanta hit the nail on the head. but i guess a lot of those subprime guys were so "creative" they also outsmarted themselves and went BK. what's that phrase, creative destructionism or something?
or they can be a complicated set of equations that you need to know stochastic calculus to solve.
Heh. I'm sure a copy of Mathematica comes standard on every mortgage traders' desk. How well does Ito calculus work without the Brownian motion assumption? Uh, boss, yeah... we have a problem in our second differential... somebody get Ito on the line!
What do you call it when a Mortgage Trader's mouth is moving?
The students who made out the best were chemical engineering majors. They earned an average 5.4 percent more than last year, bringing their average to $59,361, according to the survey.
Computer engineering majors were offered $56,201, up 4.8 percent.
Mechanical engineering grads offers' rose 4.6 percent to $54,128. Electrical engineering grads' offers increased by 3.2 percent to $55,292. Civil engineers earned $48,509, up 5.4 percent.
Computer science majors saw salaries rise 4.1 percent to $53,396, while information sciences grads received a 4.6 percent increase to $50,852. (Most expensive colleges.)
The average offer for economics graduates (business/managerial) was $48,483, while finance grads received a mean of $47,239. There is no prior data for these majors because they were grouped together in earlier studies.
Management of information systems majors posted a 4.2 percent increase to $47,648. Marketing graduates averaged $40,161, up 6.1 percent.
Accounting grads' average rose 2.3 percent to $46,718, while business administration and management graduates saw their average rise 3.9 percent to $43,701.
Liberal arts graduates also saw broad increases. Political science majors' offers averaged 5.9 percent more at $34,590. English majors' averages rose 5.3 percent to $32,553.
Psychology majors averaged $31,631, up 4.7 percent, while sociology majors earned 3.5 percent more at $32,033.
History majors were offered an average of $33,768, up 3.3 percent.
What I can't figure out is why dryfly keeps pissing and moaning and whining about being broke and eating Hy-Vee meatloaf when he's got a chemical engineering degree . . . he must have had a double-major in psychology.
"as long we can keep television operational things should be fine."
I threw mine out in the street and hung some garlic on that little darling 7 years ago, they had better find some circus for us yahoos to go with that bread.
"So English majors are still as close to the poverty line as they were when I got one . . . some things never change"
It's gone beyond call centers and other relatively low-wage jobs," said Blinder, a former White House economic adviser who now teaches at Princeton University.
Blinder describes a divide between people who provide "impersonal" services that require little face-to-face interaction, such as radiologists, and those with truly hands-on jobs like taxi drivers or janitors. The second group will fare much better in a global economy, he said.
In 20 years, he expects carpenters to make more money than computer programmers. That means the U.S. education system needs to do a better job of preparing the next generation for the type of work that will exist.
regarding IMB's note on their clog that lifetime losses (using LEVELS) is down to 63 bps in 2Q from 85 bps in 1Q, which they claim signals that they have awesomely improved underwriting, what would the number be if product mix had been the same in both quarters (i assume fixed rate production is up in 2Q)?
they like to claim they're the industry leader in disclosure but if the disclosure doesn't get you where you need to go it's just a bunch of numbers...
"Though I know exceptions. My friend's son just got out from Harvard and got $200k to start."
I went to Dartmouth and saw some of this. From what I saw, a lot of this was much more about networking with the right Alumni groups than about being any good at what you do. With that said, with as much as these univerisities cost these days, students should definitely take advantage of these oportunities if they can.
"Heh. I'm sure a copy of Mathematica comes standard on every mortgage traders' desk"
It is well known that a significant portion of Wolfram's customer base is the financial sector. They marketed that sector hard because they don't have to give the discounts that they do to academics.
It is well known that a significant portion of Wolfram's customer base is the financial sector.
Of course the financial engineers are busily integrating with gaussians using Mathematica and probably even training their machine learning models with bad data. I was thinking how funny it would be for Louis Ranieri types to be using Mathematica while the market is in turmoil.
What I can't figure out is why dryfly keeps pissing and moaning and whining about being broke and eating Hy-Vee meatloaf when he's got a chemical engineering degree . . . he must have had a double-major in psychology.
LOL. Biochemistry was my 'second' actually... but never quite got the full double major 'cause I was pulled out of college by a job offer too good to turn down... working in one of the first really big ethanol wet mills (circa early 1980s). Pay wasn't 'headline' caliber straight out of school but the experience was...
The thing to realize about the salaries of all those fresh new engineering grads you read about is many are making about the same amount 20 years later - that is unless somewhere along the line they ALSO learn to think (as opposed to just calculate).
However that is NOT something you want to include on your engineering resume, not out of school - no one wants young engineers to think.
I was 'crippled' early on as an ideal engineering candidate because I entered engineering from the liberal arts side... my transcripts showed it too. Even took French for god's sake.
I started as a freshman in the 'College of Liberal Arts' but besides French & History & Econ I also had all this math, chemistry, biology & physics (took that stuff too 'cause it was interesting)... but what do I do with it? I needed a way to feed myself... So I applied to the Inst of Technology - Chem Eng Dept & was (to my astonishment) accepted. It was all downhill from there.
To make matters worse I come from a family full of misfits & apples don't fall far from the tree... About five years out of college I was asked to leave the ethanol biz & join our small family business (components sales & engineering support to large OEMs) and I did. Been independent ever since (and eating at HyVee in places like Dubuque as a result).
Seriously - over the almost 25 years I've been at it I've done pretty well - saved some money. But because income stream is irregular, stuff like HyVee meatloaf & real cheap chain motels are a big part of my 'business plan'.
That and living in a house I would classify as a dump in small town working class rural America. It isn't all hell - besides being VERY inexpensive, it is in the middle of some of the most beautiful country you can imagine. Not all compensation is financial.
Well my buddies and I can testify that Ben in 'The Graduate' certainly wasn't an engineering grad. If he was he'd have thought plastics (engineered polymers to us) were way cooler than even the hottest middle aged 'desperate housewife'.
HTR is the canary in the coal mine. It is all MBS stuff.
And then there's the really ominous last paragraph:
The Fund announced that effective July 13, 2007, John Dolan will retire as portfolio manager and officer of Hyperion Brookfield Asset Management, Inc., and will resign as Vice President of the Fund. Michelle Russell Dowe will take over as portfolio manager of the Fund.
I figure Mr. Dolan probably enlisted to go to Iraq or got a better job at Enron, but, on the other hand, that might be him scampering down the mooring line on that sinking ship over there named the "HTR".
dryfly: And we haven't even gotten to 'imaginary numbers' yet
Well, those "stated incomes" weren't exactly real numbers, the prices have been irrational for the last few years. Despite all the algebraic manipulations and complexities of the MBS market, we're just waiting for the "come to jesus" moment when the whole market becomes transcendental.
There, I knew abstract algebra would come in handy someday...
So, I'm stumped. Are they..?
1. trying to maintain commissionable transactions
2. trying to set-up the GSE's for blame if RE prices continue to tank
3. Other
lama, insofar as they're serious about the subprime refi thing--and I think it's mostly just a currently-fashionable excuse--they just want the GSEs to take some problems off their hands. By and large, they want the conforming limit to keep increasing because they recognize, precisely, that it is some sort of a drag on bubble markets. Obviously for the last several years it hasn't been a very effective drag, but there you go. The "non-agency" subprime and Alt-A lenders declared a few years ago, in effect, that the agencies had become irrelevant as private capital poured into the mortgage market. Now that private capital's a bit spooked, suddenly the agencies matter again.
What they're after, of course, is GSE and FHA LTVs. The maximum financing allowed in conforming loans is as high as it is, of course, precisely because the conforming limits are there. What they seem to expect is that the regulators will allow the GSEs to buy bigger loans at the same risk profile they use currently; otherwise increasing the conforming limit isn't going to do any good.
The fact of the matter is that the GSEs have not spent the last five years being "the lender of last resort." Now that those lenders who cheerfully ignored agency standards are in trouble, they want the GSEs and FHA to "stabilize" the market by loosening guidelines right when the knife is starting to fall. It's just more socializing of risk right at the time when privatized rewards are starting to look doubtful.
the Proposed Guidance would be detrimental to:
1) the national economy,
2) home buyers,
3) current home owners,
4) the industries that serve homeownership,
Last) and to the success of the housing missions of the Enterprises...
I'm guessing it has more to do with 1-4, with an emphasis on 4, than it does the mission of the "Enterprises."
1&2) Only the higher priced home are selling, let's at least keep money moving in the markets that are viable. No one will touch low-income/subprime right now.
3) Current home owners underwater need to refi at last year's prices (which will help "contain" meltdown repercussions), if the average price is marked to market we lose support for the top tier refi's and we are in enough trouble (see 1 and 2) already.
4) half the industry is scheduled to go under as ARMs reset: subsidize the markets that are viable.
Last) we're still working on that one..., but maybe, "if we all go BK how will that help low-income borrowers?"
Quite amazing to see the bubble mentality (RE only goes up) embedded in legislation. Is this what happens when legislators can't understand their homework and legislation is written by lobbyists? Helps make sense of our current relationship with China...
Again...
The occ report. PG 5
no credit losses, ever
http://www.occ.treas.gov/ftp/deriv/dq406.pdf
ps..Ford fire sale Weekend
GSEs--would remain at $417,000
I think they should drop it to 100k that would make housing affordable, which is why they were created in the first place.
I thought NAR was predicting only a tiny fall in prices, followed by a quick rebound. Almost makes you think that they privately believe the price picture is worse than their public statements, doesn't it?
FHA's negative subsidy is spendable money for Congress. The negative subsidy goes straight to the budget deficit calculation, and straight to each committee's "spending limits" (yeah, I know). But FHA is projecting that the negative subsidy will go positive in the next budget (meaning they will lose money) unless the down payment assistance loophole is closed. So lowering the conforming loan limit would cause FHA to save money, by lowering volume of lending, if the loophole remains open. And the total amount is tiny - FHA used to claim to make about 3 cents for every hundred dollars insured, now it's less than half a cent for every hundred dollars. And FHA itself is tiny - we're not talking about big budget dollars here, although we are talking about real dollars as far as a Congressional committee is concerned.
I wonder what year the current statute was written, the one they quoted that says the conforming loan limit is adjusted annually by adding to each such [previous] amount . . . a percentage thereof equal to the percentage increase during the twelve-month period ending with the previous October in the national average one-family house price
Either the folks that wrote the statute had (a) forgotten about the era of the 20's-30's, or (b) assumed that folks could handle addition with negative numbers.
Thanks Tanta,
Reminds me of a lot of things in the tax code as well. Some group or other is "trying to help the disadvantaged" (or, actually themselves) and another boondoggle is created/continued.
I'm pretty sure that the statute was passed in 1980, in the midst of some pretty high rates of inflation. Don't count on Congress to think of "gee, what happens if in a few years from now things look different."
oops - 3 cents per dollar, not per $100. Like Gary Watts, I'm sometimes decimally challenged.
I had put on my tinfoil hat and taken a whack at this issue in this Nov 16th post. Thanks for your illuminating piece. I may not yet understand what's going on here, but enlightenment is certainly closer now.
mort_fin (2:00pm): I thought NAR was predicting only a tiny fall in prices, followed by a quick rebound.
We captured a hilarious graph where Fannie subscribed to a similar fantasy in this Nov 9th post. The third graph has been removed from the slide deck since. (by the way, error in my title, Berson not Bernson).
If you're going to ask the GSEs and FHA to take on the increased marginal risk of higher-balance loans of worse quality, you might want to actually quantify the risk of their failure to do so.
Silly Tanta - you know full well they aren't going to ask any such thing - their bought & paid for congress critters will do all the asking and gladly so... without prompting... because its good policy and everyone knows it except for a few stick in the mud bureaucrats at the GSEs. That'll all get ironed out this fall...
Assuming 100% LTV ($417,000)
REALTORS collects 6% = $25,020.
Commission adjustment of $700 to save a deal, and net $24,320 duh.
They are worried that if the negative adjustment to the conforming loan limit begins and actual average value declines of 20 to 40 percent occur over they next several years how you going to keep the prices propped up without that government supplied, insured, or sponsored liquidity?
Either the folks that wrote the statute had (a) forgotten about the era of the 20's-30's, or (b) assumed that folks could handle addition with negative numbers.
And we haven't even gotten to 'imaginary numbers' yet...
Incidently, tomorrow is supposed to be reckoning day for those BSC funds. You'd think the highly leveraged one would have wiped out its principal and then some, and then some more, and then some more. 20:1 leverage means 5% loss wipes out your principal. However I am betting on some more lies and coverups. THey announce a 5% loss and pay off the investors under the table to keep their mouths shut and not sue. In reality we know a portfolio of CDO's consisting in large part of subprime junk has got to be at least 10% underwater value-wise at this point, more than likely 50%, right?
Incidently, tomorrow is supposed to be reckoning day for those BSC funds.
itsallgreek - I'd be astonished if the big dogs investing in the BSC leverage funds don't already know exactly where they stand... mom-n-pop on main srteet maybe not... but these funds are not supposed to be 'mass retail'... they didn't have to make that many calls to inform the bulk of the money what's up... once the numbers started coming in the calls had to be going out.
I can't believe for a minute that they will send out form letter statements to clients w/out a prior heads up.
Same with a PR statement.
You don't pay 2 & 20 to learn about this stuff the same time readers on CR learn, if you catch my drift...
Whatever consequences there are from that thing - my guess is it is already well known by their clients & is 'priced in' by now.
Implode-O-Meter's at 99; gotta get the Agencies in line to pick up that slack!
dryfly: And we haven't even gotten to 'imaginary numbers' yet
You think not? Well if you take 2.71828, raise that to the power of a 180 degree spin multiplied by the the square root of minus one, then you get exactly where we're heading ... straight down.
DR, I smell the same rat. They want to nip any decrease in the ass now BEFORE the big losses show up. I don't understand why the limits are different by state to begin with. It should be a national figure, period. Why take on more systemic risk by pushing the limits higher in say CA, thereby concentrating the exposure to areas more prone to volatility?
Drop the whole nuber to $200K, transferring the risk to regional banks and the ample supply of liquidity in the financial markets, and be done with it.
And what's more, sounds like they are worried about applying a national price drop figure to state limits, which is absurd. They should be applying state price changes to state limits, if they intend to continue having differing limit values.
Small clarification - FHA's limits are at the county level, not the state level.
barely - I agree.
Either do a national number, adjust it nationally and have it make sense all across the country (same limit in Omaha as Oakland)... OR have state numbers then adjust it state by state as conditions in those states change.
One or the other but no smörgåsbord thank you very much... though I do love a smörgåsbord.
Things freaking crazy.
Small clarification - FHA's limits are at the county level, not the state level.
Makes it pretty easy in Nebraska.
barely,
Took Tantas dare and read the rambling request for comments. Looks like they have actually taken into account declines in the past, but made it policy to defer a negative waiting for things to get better the next year, in hopes of a positive number for averaging purposes. The day of reckoning has arrived and now they must come to Jesus. Read that some where and thought it was cool. Does Jesus take Visa?
Looks like they have actually taken into account declines in the past, but made it policy to defer a negative waiting for things to get better the next year, in hopes of a positive number for averaging purposes.
Makes sense, sorta. Kinda like having a perpetual happy hour because its always 5 o'clock somewhere.
Yes, Jesus takes Visa. He works at Home Depot, at least until the INS gets its budget increased.
Tanta, i will just point out that we never really get into the quantification side of the problems with the mortgage market (if we have please put up the link and refrain from slapping me). we tut-tut origination practices a lot but don't talk much about how risk is being mispriced and mismanaged. for example, the CPR, CDR, severity assumptions blah blah being used to price whole loans were/are horribly wrong because they are assuming no doc piggybacks will only default at this rate which is ridiculous and doesn't consider fraud or rampant speculation and assumes optimistic HPA, continued access to refinance, etc etc. i don't know if this is because it's too esoteric for a blog or because the majority of the useful data isn't publicly available but we do kind of miss the other side of the equation here (how the risk is being mispriced and how it is aided and abetted by various parties). we have very nice conceptual discussions about some of this but i have a mathematical bent and like to see numbers and this post reminded me of this. maybe an ubernerdatorial on what goes into whole loan pricing or something would help?
Love,
ps my whole point was that i think it would help people have a better understanding of how the secondary market worksl
"Incidently, tomorrow is supposed to be reckoning day for those BSC funds."
yes, i've been looking forward to this announcement. will be interesting to see what happens. i'm inclined to think BSC will sweep all this under the rug and magically say all investors losses are trivial and back to business as usual. the hooker in that though is the SEC and that guy from Ohio should be looking closely at this (as well as the rest of the world). if the news is bad this could be a market moving event. i'm also inclined to think the news could be bad with the hint being the bad performance of the abx, cmbx indices lately. get out the popcorn and get ready to click those mouses.
bacon dreamz, my problem is always that I have a ton of proprietary copyrighted information about loan pricing that isn't freely available on the web, and although I have emailed a few of the analysts in question to ask if I could exerpt some of it, I haven't gotten any responses. CR and I really don't want the investment banks (or anyone else) coming down on us like a ton of lawyered-up bricks for copyright infringement.
You, I'm sure, know what kind of information is available to every mortgage trading desk in the country. There are a few kind traders out there who send me bid color and spreads and updated metrics (like CPR) to keep me posted, but it's all on a confidential basis and I don't burn sources.
For instance, I got a fair amount of information regarding the June remittances, and I'd love to have posted about it. The payment velocities were horrifying. But nobody puts that kind of information out on the web for free. So far as I know, ABSNet is the only online source for any regular free information on deal pricing, but of course it doesn't address the question of how the securities we're looking at today were originally rated and priced.
And I'll be honest with you: I need to see some documentation on current whole-loan pricing strategies. The last time I personally had anything to do with pricing whole loans (jumbo A and Alt-A ARMs, mostly) was in 2003 (and, let me say, by then we were losing way more deals than we won. I just wouldn't go where everyone else was going on low-doc and 100% financing, nor would I agree to the insane deal stips people were getting from my conduit competitors.) I've looked at some of the levels my trader friends have shown me on subprime and Alt-A paper over the last few years and I couldn't tell you where those numbers come from (if I had to guess, I'd say they came straight from S&P's LEVELS on a half-assed tape crack with a large adjustment thrown in for some crazy valuation of the servicing rights. I don't know where these folks were getting their SRP, either.)
So unless some angel out there can point me to some publically-available data to work with, I'm afraid I can't say anything more about pricing issues than rumors I hear. And I won't post based on rumors; that'll just make me sound like every other nitwit on the net.
I suppose I could probably pull enough info together on CPR to write something . . . nerdly . . .
Tanta,
I'm not a lawyer (and I don't play one on TV) but unless what you know is a trade secret and you signed a non-disclosure agreement (or whatever similar), you can publish anything with your own words. Copyright protects "expressions of ideas" not facts or ideas themselves. In many cases you can publish excerpts verbatim and it qualifies as fair use.
I don't hold my breath to read about some tasty and juicy bits of information, though, because what you know is likely under non-disclosure agreement. But please, don't confuse it with copyright. Copyright is a "right to copy" not "right to forbid to learn about".
poszi, I know that I can paraphrase most of the copyrighted information that I receive, even though it's not on the net. The thing is, I don't really want to paraphrase it, I want to copy the charts and tables in it and share them with CR readers. And all these documents involve proprietary information and forbid reproduction in whole or in part without permission.
If what people would like to read is just a more general "how pricing comes about," I could do that, with the caveat that things have apparently changed somewhat since I regularly priced whole loans. But that won't answer the question of whether these loans in particular were mispriced without making reference to data about these loans.
Tanta,
One of the problems with pricing right now is that nobody wants to talk about it. But if you deconstruct a vertical abx tranche you can get a very good idea.
Just looking at the AAA75/AA10/A5/BBB5/ BB/B/C5 from AAA right on down to BBB available on Markit I would say that anything with a fico below 700 is almost unable to be sold without incurring huge losses that the originating fees are unable to cover. Looking at the number and making a ballpark guess- I would say that between 5 to 7% discount on the whole tranche would be enough to move the debt- but at no profit whatsoever.
Based on that, the only players are going to be folks who can keep the loans unsliced and undiced, and are willing to make sure that the loans will most likely perform.
But that puts the entire model of how the subprime industry performed into dire question. After all if the assets are not sufficient to collateralize the instrument, the warehouse lenders that provide the bridge financing are going to back away from their clients the mortgage lender (glorified front offices) and then worry if the music has stopped what dreck will be left on the warehouse line that will be unsaleable. What other assets do you see them possessing? Big headquarters buildings and tons of lease space in strip malls. Whoopee.
The more I get my mind around this, the bigger the problem gets, as this model has been used in a bunch of industries to slice and dice debt.
Anybody want a CDO based on six thousand truck loans? Ugh.
Someday this war's gonna end...but the aftermath of the greatest real estate bubble in history will take quite a while.
Observation on loan limits:
CA prices have gotten so loopy that comps in HI are actually a better value. Seems you can get a much nicer (and newer housing stock) over there than in the Bay Area for the same or lower price (and it's in gorgeous Hawaii fer chrissakes!).
But HI has long been "high cost" and so conforming limits on 1 unit are $625,500 (150%). So what was amusing is that you seem (for now) to get more home for the money over in HI AND you've got a $625k conforming limit to play with as well.
BTW - there's been a decent amount of pushing to get CA to be re-classified as a "high cost" state from CMBA, CAMB, CAR, etc.
BTW 2 - weekly REO list for my county shot up this week. For comparison weekly list might be 7 pgs or so - this week 21.
I should also point out, bacon dreamz, that I am not particularly the go-to person on the quant side. I can use a calculator with the best of them, but I spent most of my career getting pushed into the mushier area of ops due diligence, credit policy, and legal docs/custodial issues, because--forgive me, but it's true--I was the only member of the secondary marketing team who could read long sentences without whining. Same thing with the trades: the other guys got to run the models, I got to write up the damned deal stips. ("But you're the only one on the floor who knows the difference between "stated," "streamlined," "reduced," "lite," and "fast and easy." If you don't write the deal stips, somebody else will have to actually read credit guidelines." That was always how it went.)
So things get into these divisions of labor in companies, where the people who understand things like income verification docs and settlement statements and appraisals and shit get separated from the math people, and after a while the whole thing breaks down. I'd complain about the loan characteristics, and the pricing people would say "we priced that in," and I'd say "How? I'm telling you we don't understand fully what these characteristics are." So I'd try to write deal stips that would allow me to drill down into some files, after delivery but prior to settlement, and to kick out anything that looked squirrelly. But my competitors were writing deal stips that basically required almost no due dilly and promised no kickouts, and so the deals just went away.
That's one reason why I have been so obsessed with the question of due diligence, data quality, and fraud lately and not so obsessed with pricing. At some level, when the operations break down far enough, it doesn't matter how good the pricing models are. You can calculate a perfect CPR rate, but if the flaming loans have major errors on the title chain, they won't ever prepay because they can't get a release of lien. So I spent most of my time with my hair on fire on the qualitative side, not the quant side. I never should have admitted to those people that I was a lit major.
Tanta, that very lack of quality means that the models that were backtested in the dark ages will no longer work- primary conditions have changed, but the pricing quants kept plugging in the same parameters. You helped make those parameters what they were by rejecting so much paper- but guess what- after folks stopped looking in the package it got stuffed with dreck!
You have better get well rested- your megaconsulting career is about to begin as the mortgage industry once again embraces quality control after a bottom line blasting.
No doc state income is just plain insane. I hereby state my income is $1.2 million a year as a dishwasher at Joe's taco shack. I have $2 million in my 201k.
I will be able to make my reset in three years from $1,500 a month to $8,000 by renting the mansion out as a movie set to the sleaze industry. Ok?
Thanks for the loan!
You know it was crap, I know it was crap, but too many folks made huge bonuses in taking away your dealflow Tanta, and now they are going to enjoy finding the next bubble.
Someday this war's gonna end...
Reductions in the conforming loan limit could impair the ability of some borrowers to refinance out of subprime mortgages, which is of particular concern for families with problematic mortgages
And who exactly is to blame for those problematic mortgages? Well, of course, it's the MBA, the NAHB and the NAR and their constituency.
In other words, "Please don't take away the only possible help for the disgusting criminal mess that we created."
We need to take away a lot more from those scum. A lot more.
Hey MBA, NAHB, and NAR, here's a thought for you sleazebags: Never again!!
fair enough, Tanta! I for one really dislike the information that is available to the public. i guess it's just too much of a beast for it to be freely available which is why LP costs $200k/yr. maybe a government agency could do it...i don't think there's anything useful for free so we're all out of luck until you decide to go out in a blaze of glory and burn all your sources.
It's even worse than that, Allen. For instance, all these models use WA DTI (and DTI range) as a pricing input. That's not so crazy if you verify income.
On a bunch of stated-income IO loans that were qualified on the IO payment, it's worse than useless. I'd rather leave DTI out of the calculation entirely than feed made-up numbers into the model, because the whole point of "stated income" is to state enough to produce decent-looking DTIs. (Whenever I see the odd loan with stated income and a debt ratio of 50%, I wonder whether I got the last honest stated income borrower or just some dolt who can't divide four-digit numbers.)
Same thing with LTV: all kinds of these models use LTV but not CLTV for pricing purposes (if they're not buying the second lien). So an 80% deal with a cash down payment gets the same price as an 80% deal with a borrowed down payment. I presume (I hope) it has changed, but not all that long ago S&P's LEVELS didn't require CLTV for first-lien loans. And a whole lot of people looked right into my big baby blues and told me it didn't matter.
And when I said something on the order of "on this planet it matters, bucko," I got asked to produce historical data proving it! So, since nobody has, historically, been stupid enough to write 100% financing in a bubble, that means I have no handy "evidence" that it's stupid. Sure, yeah, maybe it'll work out . . . especially since we're all so damned sure that those appraisals are worth shit . . .
You're right, we just created a situation in which the models couldn't produce anything worthwhile, because we were trying to price stuff that was, basically, designed to defeat the pricing models.
maybe it's actually a problem that mortgages are so damn complicated that there really isn't anybody who understands both the Tanta side and the quant side really well...oh wait S&P does, right?
Someday this war's gonna end...
Who says it has to end? I'm nearly finished with my Perpetual Liquidity Machine. Through sophisticated financial engineering and arbitraging labor in parallel universes, I think I might have come up with a way to keep this party going. It might also require giving up on reporting data once the internal inconsistencies grow too great but as long we can keep television operational things should be fine.
i'm pretty sure S&P said they fixed the CLTV problem...now it will be perfect next time something anomalous happens! oh wait, no, it will fail horribly again because it can't capture something that hasn't happened before...the exact time you might think you need your model to work...
It's funny, bacon dreamz. I think I've spent 50% of my career saying "You know, this stuff is a lot more complicated than you think," and the other 50% saying "For christ's sake, people, they're just freakin' mortgage loans. How goddam complicated is the concept of down payment for you, bub?"
It just depends on where the enemy fire is coming from, I guess.
Thank you for confirming my analysis about how this is truly going to be an epic financial landscape reshaping event.
Well, from massive losses come new innovations that will change how all of this works- again. I can only hope for the better.
The war will end because we will be unable to finance anything beyond bare survival internationally.
Someday...
Yes, Tanta, i have heard a lot of people in the mortgage biz who like to say to newbies: "Mortgages have something for everybody; they can be as simple or as complicated as you want. They can just be a mortgage or they can be a complicated set of equations that you need to know stochastic calculus to solve. That's what makes it so great!
actually, FHA was stupid enough to write 100% LTV into a bubble, and the resulting historical data analysis has been on GAO's website for 2 years now.
http://www.gao.gov/new.items/d0624.pdf
we just created a situation in which the models couldn't produce anything worthwhile, because we were trying to price stuff that was, basically, designed to defeat the pricing models.
Tanta hit the nail on the head. but i guess a lot of those subprime guys were so "creative" they also outsmarted themselves and went BK. what's that phrase, creative destructionism or something?
or they can be a complicated set of equations that you need to know stochastic calculus to solve.
Heh. I'm sure a copy of Mathematica comes standard on every mortgage traders' desk. How well does Ito calculus work without the Brownian motion assumption? Uh, boss, yeah... we have a problem in our second differential... somebody get Ito on the line!
What do you call it when a Mortgage Trader's mouth is moving?
Brownian Motio
This is funny:
The students who made out the best were chemical engineering majors. They earned an average 5.4 percent more than last year, bringing their average to $59,361, according to the survey.
Computer engineering majors were offered $56,201, up 4.8 percent.
Mechanical engineering grads offers' rose 4.6 percent to $54,128. Electrical engineering grads' offers increased by 3.2 percent to $55,292. Civil engineers earned $48,509, up 5.4 percent.
Computer science majors saw salaries rise 4.1 percent to $53,396, while information sciences grads received a 4.6 percent increase to $50,852. (Most expensive colleges.)
The average offer for economics graduates (business/managerial) was $48,483, while finance grads received a mean of $47,239. There is no prior data for these majors because they were grouped together in earlier studies.
Management of information systems majors posted a 4.2 percent increase to $47,648. Marketing graduates averaged $40,161, up 6.1 percent.
Accounting grads' average rose 2.3 percent to $46,718, while business administration and management graduates saw their average rise 3.9 percent to $43,701.
Liberal arts graduates also saw broad increases. Political science majors' offers averaged 5.9 percent more at $34,590. English majors' averages rose 5.3 percent to $32,553.
Psychology majors averaged $31,631, up 4.7 percent, while sociology majors earned 3.5 percent more at $32,033.
History majors were offered an average of $33,768, up 3.3 percent.
College grads see higher starting salaries this year - Jul. 12, 2007
So English majors are still as close to the poverty line as they were when I got one . . . some things never change.
Hey, I doubled in Finance and Accounting. I'm going to ask for a raise.
What I can't figure out is why dryfly keeps pissing and moaning and whining about being broke and eating Hy-Vee meatloaf when he's got a chemical engineering degree . . . he must have had a double-major in psychology.
"..he must have had a double-major in psychology."
So, maybe he's using that phychology to try to get a tip jar of his own?
Tanta: Yeah, I mean he could be making the big bucks making plastics come out looking like protein in food testing.
Dryfly, I have one word for you: PLASTICS.
"as long we can keep television operational things should be fine."
I threw mine out in the street and hung some garlic on that little darling 7 years ago, they had better find some circus for us yahoos to go with that bread.
It's hard to be young college graduate...
Though I know exceptions. My friend's son just got out from Harvard and got $200k to start.
It took me many years to get there myself
"So English majors are still as close to the poverty line as they were when I got one . . . some things never change"
It's gone beyond call centers and other relatively low-wage jobs," said Blinder, a former White House economic adviser who now teaches at Princeton University.
Blinder describes a divide between people who provide "impersonal" services that require little face-to-face interaction, such as radiologists, and those with truly hands-on jobs like taxi drivers or janitors. The second group will fare much better in a global economy, he said.
In 20 years, he expects carpenters to make more money than computer programmers. That means the U.S. education system needs to do a better job of preparing the next generation for the type of work that will exist.
Page Not Found | Reuters.com
Our kids might want to buy a few hammers maybe R/E will have hit bottom by then.
regarding IMB's note on their clog that lifetime losses (using LEVELS) is down to 63 bps in 2Q from 85 bps in 1Q, which they claim signals that they have awesomely improved underwriting, what would the number be if product mix had been the same in both quarters (i assume fixed rate production is up in 2Q)?
i notice you can't leave a comment on the clog...
they like to claim they're the industry leader in disclosure but if the disclosure doesn't get you where you need to go it's just a bunch of numbers...
"Though I know exceptions. My friend's son just got out from Harvard and got $200k to start."
I went to Dartmouth and saw some of this. From what I saw, a lot of this was much more about networking with the right Alumni groups than about being any good at what you do. With that said, with as much as these univerisities cost these days, students should definitely take advantage of these oportunities if they can.
"Heh. I'm sure a copy of Mathematica comes standard on every mortgage traders' desk"
It is well known that a significant portion of Wolfram's customer base is the financial sector. They marketed that sector hard because they don't have to give the discounts that they do to academics.
It is well known that a significant portion of Wolfram's customer base is the financial sector.
Of course the financial engineers are busily integrating with gaussians using Mathematica and probably even training their machine learning models with bad data. I was thinking how funny it would be for Louis Ranieri types to be using Mathematica while the market is in turmoil.
What I can't figure out is why dryfly keeps pissing and moaning and whining about being broke and eating Hy-Vee meatloaf when he's got a chemical engineering degree . . . he must have had a double-major in psychology.
LOL. Biochemistry was my 'second' actually... but never quite got the full double major 'cause I was pulled out of college by a job offer too good to turn down... working in one of the first really big ethanol wet mills (circa early 1980s). Pay wasn't 'headline' caliber straight out of school but the experience was...
The thing to realize about the salaries of all those fresh new engineering grads you read about is many are making about the same amount 20 years later - that is unless somewhere along the line they ALSO learn to think (as opposed to just calculate).
However that is NOT something you want to include on your engineering resume, not out of school - no one wants young engineers to think.
I was 'crippled' early on as an ideal engineering candidate because I entered engineering from the liberal arts side... my transcripts showed it too. Even took French for god's sake.
I started as a freshman in the 'College of Liberal Arts' but besides French & History & Econ I also had all this math, chemistry, biology & physics (took that stuff too 'cause it was interesting)... but what do I do with it? I needed a way to feed myself... So I applied to the Inst of Technology - Chem Eng Dept & was (to my astonishment) accepted. It was all downhill from there.
To make matters worse I come from a family full of misfits & apples don't fall far from the tree... About five years out of college I was asked to leave the ethanol biz & join our small family business (components sales & engineering support to large OEMs) and I did. Been independent ever since (and eating at HyVee in places like Dubuque as a result).
Seriously - over the almost 25 years I've been at it I've done pretty well - saved some money. But because income stream is irregular, stuff like HyVee meatloaf & real cheap chain motels are a big part of my 'business plan'.
That and living in a house I would classify as a dump in small town working class rural America. It isn't all hell - besides being VERY inexpensive, it is in the middle of some of the most beautiful country you can imagine. Not all compensation is financial.
Dryfly, I have one word for you: PLASTICS.
Well my buddies and I can testify that Ben in 'The Graduate' certainly wasn't an engineering grad. If he was he'd have thought plastics (engineered polymers to us) were way cooler than even the hottest middle aged 'desperate housewife'.
Don't you agree?
What a superb post!
This might be of interest:
CNNMoney.com: 404 Page Not Found
HTR is the canary in the coal mine. It is all MBS stuff.
And then there's the really ominous last paragraph:
The Fund announced that effective July 13, 2007, John Dolan will retire as portfolio manager and officer of Hyperion Brookfield Asset Management, Inc., and will resign as Vice President of the Fund. Michelle Russell Dowe will take over as portfolio manager of the Fund.
I figure Mr. Dolan probably enlisted to go to Iraq or got a better job at Enron, but, on the other hand, that might be him scampering down the mooring line on that sinking ship over there named the "HTR".
Tanta,
Of all the bons mots you have written, this is the best:
It's just more socializing of risk right at the time when privatized rewards are starting to look doubtful.
That sums it up. That really sums it up. That's the news in a nut shell.
Is it morally loathesome? Is it the behavior of the playground bully? Is it enough to make you vomit?
All I know is that it's true.
Is it morally loathesome? Is it the behavior of the playground bully? Is it enough to make you vomit?
arbogast, come on down!
You are the next contestant on The Price Is Right!
Ok, contestants, the next item you will bid on is a gallon of organic milk at Safeway!
AUDIENCE CLAPS
contestant #1: $4.50?
contestant #2: $5.00?
contestant #3: $0.001?
arbogast: $5.01?
And the price is... $5.99... congratulations arbogast, come on up!
arbogast: Oh Ben, I can't believe I'm finally here! I just can't believe it!
Inflation ain't nothin' but the socialization of the cost of risk!
Hmm, I just noticed that the Volume 2 of the Proceedings of the IFC Conference on Measuring the financial position of the household sector are available online now. Interesting stuff there, e.g.: The financial position of households after a macroeconomic crisis: the case of Argentina. The conference was last summer, but the papers weren't available in the net earlier. Volume 1 seems to be also available; it was published in March.
Dr. Strangemoney,
I am out of my depth here, but I would have thought that deflation was the socialization of the cost of risk.
Moneylenders do very well in a deflationary setting and really horribly during inflation.
What am I missing?
dryfly: And we haven't even gotten to 'imaginary numbers' yet
Well, those "stated incomes" weren't exactly real numbers, the prices have been irrational for the last few years. Despite all the algebraic manipulations and complexities of the MBS market, we're just waiting for the "come to jesus" moment when the whole market becomes transcendental.
There, I knew abstract algebra would come in handy someday...
US sub-prime mortgage losses ‘could top £50 billion’ - Charcol
usd 100 billion losses
is this true?
Firoz Ali
VA Loans, VA Refi, VA refinance, VA Purchase
Veteran Loans are gaining groud as other loan types are going away.