Of course the world is not going to end. But for a lot of people, it sure will feel like it.
I'll have to touch base with my brother-in-law, who is fortunately renting, out in El Cerrito.
By the way, I love California, at least all the places I've visited, but the real estate bubble out there has been utterly appalling. We considered buying a vacation home with the inlaws a while back, in the Russian River valley area, but when I saw the prices i told my wife, no way in hell.
Don't worry. Nothing bad is gonna happen. Its just a Bear Market. People will go back to work and everyting will be fine, Not spectacular, but fine.
For me 2001 was full of troubles. But 2002 and 2003 was just business as usual. I was going into vacations and buying stuff I need. And I was shopping for new house in late 2003, which was definitely a sign of confidence...
Theroxylander - don't forget that 2001 also wasnt a real recession because of the massive tax cuts, the low interest rates, etc. None of that likely to be repeated this time around, which is why I predict a very different recession, one that actually impacts consumers.
Thornburg Mortgage Asset Corp. said late Tuesday that it is delaying a dividend payment after getting margin calls and finding it more difficult to fund its mortgage assets in the commercial-paper and asset-backed securities markets. The payment of the company's second-quarter common dividend of 68 cents a share has been rescheduled to Sept. 17. The dividend was originally scheduled to be paid on Aug. 15 to shareholders of record on Aug. 3. By Sept. 17, the company said it will receive its scheduled monthly mortgage payments for August and will have had more opportunity to manage through "this difficult environment."
Oh CR, that cannot be good. Kind of scary that they were thought to be insulated, via the containment argument. If it's as bad as I think it will be, that should be the final nail in the coffin for the containment theory.
Sorry for all the stupid questions, but what exactly does "fund its assets" mean? That they can't get the cash they need to fund new loans (in which case wouldn't they be creating new assets rather then funding existing ones)? Or does it mean they can't sell loans they've already made (in which case, what exactly is the problem)?
I've noticed that the longer dated bonds are very skittish these days, probably because of concerns about a dollar crash, China, etc.
Ironically, I think it's possible that bonds could actually sell off (and rates could rise) if the Fed lowers rates now, delivering another body blow to housing.
Geoff, once again I think you are right. We didn't have the necessary level of recession in 2001, nor, more importantly in my view, the natural correction in housing. Instead, we got a bubble of obscene proportions.
Combine that with a Fed that has no cards left to play, and the single most profligate administration in the history of the Republic, and we are in for some pain.
What will it take for people to wake up? The middle and lower classes have been systematically held down and screwed by the top 1%.
The enemy is not China, despite what CNN and the rest will keep bleating. Class warfare has been going on for 25 years in earnest. It's just that 98% of us haven't been fighting back.
Gee what has happened to everyone else who has "delayed" their dividend. Anybody still counting on getting that AHM dividend that was declared. I suspect that within a week TMA's stock price will be lower than the cost of the weekday newspaper. I would also suspect that the $5 (-26%) hit to book value is not the end of it. TMA now stands for Throwing Money Away
Re: Thornburg, I thought the book value statement was even more amazing:
"Mr. Goldstone continued, "After careful analysis of the current value of our mortgage securities portfolio, we believe that our book value, which includes recent changes in the market value of our mortgage securities and liabilities is $14.28 per share as of August 13, 2007 versus $19.38 per share as of June 30, 2007. The majority of that book value decline has occurred over the past week, ..."
25% reduction in book in a week. Now apply that to mortgage-related portfolios of CFC, BAC, C, hedgies, insties, etc. and see where their balance sheets wind up.
We've had a pressing issue of how companies ought to value portfolios when no mark-to-market can be made. If TMA is a decent indicator (and "reasonable" valuations on CDOs and other derivatives are likely worse), then this blog needs to get more pessimistic to catch up with reality
Mr. Morici, the former chief economist for U.S. International Trade Commission and now a business professor at the University of Maryland's School of Business, lays the blame squarely on what he calls the "sinfully wealthy Barons of Wall Street" who tried to pull off "an Ivy League Ponzi scheme."
25% reduction in book in a week. Now apply that to mortgage-related portfolios of CFC, BAC, C, hedgies, insties, etc. and see where their balance sheets wind up.
From what's been indicated by Tanta, Thornburg was one of the more responsible lenders. If they're losing 25% of their portfolio value, just think what the rest of the crew is going to be dealing with.
Gary,don't give up on the Russian River,It will get a LOT more affordable.The percentage of homes bought with exotic loans was high,many people refied into ARMS,and more people will be forced to sell because their other investments went sour.the RR is one of the hardest hit parts of sonoma county,and will continue to be because its economy is real estate and tourism.be CAREFUL when buying,there are flooding problems,tectonic problems, many communities are being forced to install sewage treatment plants at huge expense,and there are the Methheads,who do not make good neighbors (potgrowers,while paranoid,are usually peaceful and not so spectacularly unhinged)
If TMA is a decent indicator (and "reasonable" valuations on CDOs and other derivatives are likely worse), then this blog needs to get more pessimistic to catch up with reality
PUFF, PUFF, PUFF Hey wait man... PUFF, PUFF... we're running as fast as we can... PUFF-PUFF-PUFF cut us some slack and slow this damned race down, wouldja?
(potgrowers,while paranoid,are usually peaceful and not so spectacularly unhinged)
PUFF, PUFF, PUFF Hey wait man... PUFF, PUFF... we're running as fast as we can... PUFF-PUFF-PUFF cut us some slack and slow this damned race down, wouldja?
maybe first
yeah, every dog has his day.
Don't worry. Nothing bad is gonna happen. Its just a Bear Market. People will go back to work and everyting will be fine, Not spectacular, but fine.
Of course the world is not going to end. But for a lot of people, it sure will feel like it.
I'll have to touch base with my brother-in-law, who is fortunately renting, out in El Cerrito.
By the way, I love California, at least all the places I've visited, but the real estate bubble out there has been utterly appalling. We considered buying a vacation home with the inlaws a while back, in the Russian River valley area, but when I saw the prices i told my wife, no way in hell.
All the leaves are brown
And the sky is gray
Gary,
I have a simple indicator that tells me if I can afford something," My pocket-book." Imagine that.
For me 2001 was full of troubles. But 2002 and 2003 was just business as usual. I was going into vacations and buying stuff I need. And I was shopping for new house in late 2003, which was definitely a sign of confidence...
Recessions are not so bad as some say.
For a bit more Cramer, check out this Curbed post . . . but please, don't post anything about CR over there, their comments are a cesspool.
Curbed NY: Your Daily Credit Crunch Red Meat, Craigslist Edition
And don't forget to wipe your feet before you come back!
Hello, Theroxy
Read your blog often. Good work.
I think this recession will be a real recession. Back when stock market crashed in 2000, it was all
non-leveraged( actual) money. This time well .....
"on't worry. Nothing bad is gonna happen. Its just a Bear Market. People will go back to work and everyting will be fine, Not spectacular, but fine."
This is not going to be somekind of recession-lite a la early 90's or even 2000/2001. This will be one huge hellish one.
Thornburg Mortgage halted for news pending
Theroxylander - don't forget that 2001 also wasnt a real recession because of the massive tax cuts, the low interest rates, etc. None of that likely to be repeated this time around, which is why I predict a very different recession, one that actually impacts consumers.
Thornburg Mortgage delays dividend amid margin calls
Thornburg Mortgage Asset Corp. said late Tuesday that it is delaying a dividend payment after getting margin calls and finding it more difficult to fund its mortgage assets in the commercial-paper and asset-backed securities markets. The payment of the company's second-quarter common dividend of 68 cents a share has been rescheduled to Sept. 17. The dividend was originally scheduled to be paid on Aug. 15 to shareholders of record on Aug. 3. By Sept. 17, the company said it will receive its scheduled monthly mortgage payments for August and will have had more opportunity to manage through "this difficult environment."
Oh CR, that cannot be good. Kind of scary that they were thought to be insulated, via the containment argument. If it's as bad as I think it will be, that should be the final nail in the coffin for the containment theory.
The news is, they delayed the dividend more than a month, out to Sept. 17th.
ouch.
Thornburg Mortgage delays dividend amid margin calls - MarketWatch
D'ow!
Bear just scored another direct hit. How many sitting targets...sorry, "banks" you yanks have out there on the Sea of Debt?
Sorry for all the stupid questions, but what exactly does "fund its assets" mean? That they can't get the cash they need to fund new loans (in which case wouldn't they be creating new assets rather then funding existing ones)? Or does it mean they can't sell loans they've already made (in which case, what exactly is the problem)?
I've noticed that the longer dated bonds are very skittish these days, probably because of concerns about a dollar crash, China, etc.
Ironically, I think it's possible that bonds could actually sell off (and rates could rise) if the Fed lowers rates now, delivering another body blow to housing.
The Fed might have painted itself into a corner.
gng: I think they mean pay for the new loans that they've got in the pipeline, as the lines have dried up.
Applied Materials' earnings dip 7.5% in third quarter
Geoff, once again I think you are right. We didn't have the necessary level of recession in 2001, nor, more importantly in my view, the natural correction in housing. Instead, we got a bubble of obscene proportions.
Combine that with a Fed that has no cards left to play, and the single most profligate administration in the history of the Republic, and we are in for some pain.
What will it take for people to wake up? The middle and lower classes have been systematically held down and screwed by the top 1%.
The enemy is not China, despite what CNN and the rest will keep bleating. Class warfare has been going on for 25 years in earnest. It's just that 98% of us haven't been fighting back.
Gee what has happened to everyone else who has "delayed" their dividend. Anybody still counting on getting that AHM dividend that was declared. I suspect that within a week TMA's stock price will be lower than the cost of the weekday newspaper. I would also suspect that the $5 (-26%) hit to book value is not the end of it. TMA now stands for Throwing Money Away
Re: Thornburg, I thought the book value statement was even more amazing:
"Mr. Goldstone continued, "After careful analysis of the current value of our mortgage securities portfolio, we believe that our book value, which includes recent changes in the market value of our mortgage securities and liabilities is $14.28 per share as of August 13, 2007 versus $19.38 per share as of June 30, 2007. The majority of that book value decline has occurred over the past week, ..."
25% reduction in book in a week. Now apply that to mortgage-related portfolios of CFC, BAC, C, hedgies, insties, etc. and see where their balance sheets wind up.
We've had a pressing issue of how companies ought to value portfolios when no mark-to-market can be made. If TMA is a decent indicator (and "reasonable" valuations on CDOs and other derivatives are likely worse), then this blog needs to get more pessimistic to catch up with reality
OT but a good read
'Ivy League Ponzi Scheme'
Mr. Morici, the former chief economist for U.S. International Trade Commission and now a business professor at the University of Maryland's School of Business, lays the blame squarely on what he calls the "sinfully wealthy Barons of Wall Street" who tried to pull off "an Ivy League Ponzi scheme."
25% reduction in book in a week. Now apply that to mortgage-related portfolios of CFC, BAC, C, hedgies, insties, etc. and see where their balance sheets wind up.
From what's been indicated by Tanta, Thornburg was one of the more responsible lenders. If they're losing 25% of their portfolio value, just think what the rest of the crew is going to be dealing with.
Gary,don't give up on the Russian River,It will get a LOT more affordable.The percentage of homes bought with exotic loans was high,many people refied into ARMS,and more people will be forced to sell because their other investments went sour.the RR is one of the hardest hit parts of sonoma county,and will continue to be because its economy is real estate and tourism.be CAREFUL when buying,there are flooding problems,tectonic problems, many communities are being forced to install sewage treatment plants at huge expense,and there are the Methheads,who do not make good neighbors (potgrowers,while paranoid,are usually peaceful and not so spectacularly unhinged)
If TMA is a decent indicator (and "reasonable" valuations on CDOs and other derivatives are likely worse), then this blog needs to get more pessimistic to catch up with reality
PUFF, PUFF, PUFF Hey wait man... PUFF, PUFF... we're running as fast as we can... PUFF-PUFF-PUFF cut us some slack and slow this damned race down, wouldja?
(potgrowers,while paranoid,are usually peaceful and not so spectacularly unhinged)
PUFF, PUFF, PUFF Hey wait man... PUFF, PUFF... we're running as fast as we can... PUFF-PUFF-PUFF cut us some slack and slow this damned race down, wouldja?
dryfly | 08.14.07 - 6:07 pm | #
What kind of puffing is that?
What kind of puffing is that?
I was thinking more along the lines of pessimism running hard to catch up with reality... but whatever works for you.