I remember his "near the bottom" comment in July. When I head that I said to myself "these people have sh!!t for brain" OR "these people do not have integrity to speak the truth".
This IS going to be like rent control - and then you'll get parallel trends like "key money", a reduction in mortgage availability, immobility of people who are tied to their cheap-mortgage house - it just freezes the real estate market surely. Does CFC want to go into run-off mode in their business ?
I think the abyss is so obvious that he cannot deny it any longer. They have got to be panicked. Is there any plausible scenario for a recovery in 2008? The stock market seems to think so, but I have not read on this blog a single persuasive bullish argument in the past 12 months.
"He said he is "aggressively encouraging" the mortgage-service industry -- which collects loan payments from borrowers -- to develop criteria that would enable large groups of borrowers who might default on their payments to qualify for loans with better terms."
Unbelieveable. It is not the terms....it is the size of the principal. A large portion of the people who will default are going to do so because any debt structure which actually ammortizes the principal can not be afforded by the borrower/'owner'. It is not about the terms of the debt....it is about the amount. Put another way, people 'bought' things they can not pay for. Asking lenders/servicers to offer workouts is another way of saying reduce the amount owed....in other words just write off a portion of the debt.
CR, it's good to see there is somebody left in this country who knows what leadership looks like.
Unfortunately, at the moment the top folks in the Bush administration are too busy figuring out how to subpoena Scott McClellan's tax returns and sending some plumbers to Hillary's hotel room to consider mortgage finance issues.
My only thing is this if you give the deadbeats a break you need to give the responsible people the same break. Otherwise huge moral hazard. Now find somebody to fund this debacle and you found the last greatest fool.
Paulson thinks like the filthy rich person that he is. He will never wake up to the crisis in time. Fed Chairman Bair has a nice ring to it. She comes from Kansas and is corn fed down home people.
Sebastian, O-Joe, Banker or others are welcome to give it a try. It seems that the worst case arguments over the past year on this blog have been right. Eventually, the bulls will be right again, but perhaps not for years to come.
If you propose ideas you are stuck with defending them. If you make vague comments with no substance then you can always say you were misunderstood. After MLEC I don't think Paulson wants to commit to anymore really assinine plans. At this point he is just waiting for 1/29/2009 like the rest of us.
Paulson surely wasn't behind the curve reference housing - or the disaster it's going to cause - he's just spinning the propaganda machine to keep the boat afloat.
I know this is off topic - but, how much foreign investment has gone into U.S. Equity Markets since foreign central banks have begun dumping the dollar? I'd bet a rather large sum. But, they'll loose on that bet as well as soon as Paulson and Bernanke come out of the closet and drop the bomb that we are in recession without any end in sight.
This will be the early eightiesm(stagflation) all over again - but, this time on steroids.
meantime, in the other world, whoahhhh 108 handle on the Yen/US$. I know, saying 108 handle is pretentious but sometimes.. meantime has the DX broken 75 yet ? Let me check.. o well not yet - shall I stay up to see it in or not ?
You're correct. I am tired and popping off, more or less. Not sure what can be done, but I shall ponder it. It would be nice if others put their brains to it as well.
Read this Misean:
Federal Home Loan Banks to the Rescue! Puts FDIC and depositors at greater risk. Insured depositors are the wards of FDIC. Before August, FDIC would have had significant priority on the assets of a failed bank, selling off that bank's assets to pay insured depositors. Unsecured commercial paper holders, bond investors, stockholders, and other creditors could only take what was left. The exodus of debt investors from the funding of mortgage originators like Countrywide and their replacement by FHL Banks at the head of the queue fundamentally changes this order. FDIC now only gets its pickings after the FHL Banks and the additional $200 billion in financing they have provided. This makes it more likely that, in the case of multiple bank failures, FDIC will not get a large enough slice of the pie to pay off insured and uninsured depositors. Protected by their "super lien", the FHL Banks do not put themselves at risk by stepping in and lending to iffy members. They put FDIC at risk. And as we know from FSLIC's desmise in the 1980s, any failure of FDIC would probably be funded by taxpayers to the tune of billions. If things got bad, FDIC's $50 billion in reserves would allow it to pay off may of its depositors. But how many, and for how long? Considering that FDIC insures some $4 trillion in deposits, its $50 billion in reserves (about 1.2% of the total) is only a drop in the buckt. (Time for more J&B.) The Federal Home Loan Banks to the Rescue! - John Paul Koning - Mises Institute
Well, you could read "What is to be done" by v.i. Lenin but I don't think that helps. As I was reminded once, when after two years in the US, I returned to the UK, all assertive-like, got into the crowded tube in London which promptly stopped in some tunnel for 10 /15 minutes. Man, I was pissed - so I loudly stated "We need a bloody revolution. Storm the Bastille".
And after a moment's silence a voice from another corner of the carriage said - "No, mate, it won't do any good".
Which, considering the history of the French revolution probably captured the essence of our conundrum.
So Paulsen's new insight is that it would be impractical to do every workout as a "one-off" and instead there should be general standards and guidelines? Gee, what an idea...let's process these millions of screwed-up mortgages in an organized fashion with basic guidelines rather than do it in a chaotic panic. Wow, thanks Mr. Paulson. You must have been like a boss somewhere or something.
This sounds like a guy who never did anything other than give good meeting and was a cutup in those skits at Bohemian Grove. He's not just out of his depth on these issues, he apparently doesn't even have underlings who can feed him the right idea.
The only suggestion I've seen that keeps a lot of people in their homes in a financially coherent way is the Chapter 13 cramdown proposal. Most cases wouldn't actually land in bankruptcy, because the lender would agree to a writedown if it knew that it could happen in BK, and the borrowers would usually agree to a samller writedown to avoid BK and stay in the "house of their dreams (er, house os their present reality) Of course his would require a recognition of the true vaule of the assets which would cause huge pain in the financial system, but it's headed there anyway so why play games postponing it. Perhaps the Ch.13 reform idea being discussed is just so anathema to Paulsen and the banker ilk, that he can't even imagine it.
Shnapster, it better be the prelude to something. I don't mind people talking about ways to ease the pain - there are no dumb ideas, just dumb policy!
I'd offer some thoughts: I don't think it is a tragedy for someone with little or no money down to lose their home. So that leads to one of the criteria for modifications: downpayment size. People that put 10% or more down should be first in line for modifications (Paulson says there are too many people to help, so downpayment size should help prioritize who gets helped first).
For no or low downpayment "homeowners", perhaps some sort of expedited jingle mail without a foreclosure. Yes - that would put more pressure on prices in the short term, but lower prices would help with the eventual recovery.
For speculators or homeowners that used the Home ATM and are now in trouble: nothing.
My understanding is that the FDIC has about $0.10 on the dollar in reserves for the $100,000 it has to secure for everyone. How far am I aoff? - Mise
Considering that FDIC insures some $4 trillion in deposits, its $50 billion in reserves (about 1.2% of the total) is only a drop in the buckt. (Time for more J&B.) - FFDIC
LOL. I was going to be really snarky and take a WAG Mise was 'only' off by 'nine cents'... but I held my tongue (er, fingers) in check.
Little did I know snark can't even begin to match reality for craziness!
Well the only thing I can say is Hank & Ben know where there are a whole lot more 'pennies' should FDIC need a few. 'Course they won't send pennies - they send virtual pennies, don't need to buy zinc or copper that way.
Doesn't anyone think it's strange that Goldman Sachs keeps getting credit for avoiding the mortgage problems - they saw it coming - yet Paulson, the former Chairman of Goldman Sachs - was completely surprised?
That seems weird to me. I know Paulson was appointed Treasury Secretary in May '06, and Goldman didn't get out of their mortgage positions apparently until the end of '06 - but I'd still think someone would have said, "uh, hey Hank, housing could get real ugly."
dryfly - Glad you got a chuckle. This is the kind of stuff that I truly think will cause bank runs this time. In the 80s we had bank runs, mostly very small banks which FDIC is good at shutting down quickly. I have taken very quick flights to banks around the country when a run was starting. We had bags packed ready to go at a moments notice many times. Very small financial institutions just didn't get the media publicity in the 1980s that I personally think they may get this time around. Northern Rock put the media on notice that bank runs are big news now, however small bank runs typically are only covered in the local media and aren't picked up by the national wire services. That may change given how widely blogs will be following bank runs. Who had heard of a economics blog in 1985?
ac, I thought we'd see a move away from dollar assets and rising rates by the end of this year. Except I forgot that there would also be a rush to safety. So the ten year yield falls, while other rate rise. That makes sense in hindsight!
I don't think the liquidation of bad debt can be avoided. The only half-assed solution I see is to skip the REO phase. Cancel the old mortgage and offer the occupant a new mortgage at the current market value of the house. Of course, once the neighbors hear about this deal, they will quickly go into default to get the same deal. And investors wouldn't touch mortgage investments for about 20 years.
Too many unintended consequences. Too big to bail.
ac, I thought we'd see a move away from dollar assets and rising rates by the end of this year. Except I forgot that there would also be a rush to safety. So the ten year yield falls, while other rate rise. That makes sense in hindsight!
I suspect the statement about rates being higher is true in general despite the falling treasury yields. Like the increasing spreads on riskier loans, etc. And I notice the price of junk bonds are really sliding, etc.
I do think we're seeing growing risk aversion a flight from the dollar that's making it more costly to borrow in the United States overall unless maybe you're the federal government.
ac, I thought we'd see a move away from dollar assets and rising rates by the end of this year. Except I forgot that there would also be a rush to safety. So the ten year yield falls, while other rate rise. That makes sense in hindsight!
Warren Buffett had some interesting commentary on this.
Warren Buffet in Fortune Magazine How often have you seen a comment like this in articles about the U.S. dollar? "Analysts say that what really worries them is that foreigners will start moving out of the dollar."
Next time you see something like that, dismiss it. The fact is that foreignersas a wholecannot ditch their dollars. Indeed, because our trade deficit is constantly putting new dollars into the hands of foreigners, they have to just as constantly increase their U.S. investments.
It's true, of course, that the rest of the world can choose which U.S. assets to hold. They can decide, for example, to sell U.S. bonds to buy U.S. stocks. Or they can make a move into real estate, as the Japanese did in the 1980s. Moreover, any of those moves, particularly if they are carried out by anxious sellers or buyers, can influence the price of the dollar.
This is what I take from it. For a while we saw all assets move higher in unison. So much money was flooding in and it simply had to find a home. That should have been a giant red flag.
As real estate began to falter, less money flowed into it. That left the other asset classes having to pick up the slack (and absorb the excess dollars).
As the stock market began to falter, less money flowed into it. That left just the treasury market and our commodities with more money flowing into them.
The low yields on treasuries does not represent low inflation expectations to me, but rather a lack of alternatives. In fact, a lot of money has been flowing into inflation protected treasuries. They are outperforming their non-inflation protected counterparts this year.
If non-inflation protected treasuries falter next, then all that will be left is our commodities, our relatively small treasury inflation protected securities market, and the short end of the treasury yield curve (which offers at least some inflation protection).
On that note, we sure are exporting a lot of corn, wheat, and soybeans these days.
Like every other spittle-flecked (short term!) bear, I like seeing this as well. Still, careful CR. The pull of internet snark is great, and greater still his he who resists it. Or something like that.
The pull of internet snark is great, and greater still his he who resists it.
You are right of course.
Don't be too proud of this [financial] technological terror you've constructed; the ability to destroy a planet is insignificant next to the power of the Force.
<a href="http://politics.guardian.co.uk/homeaffairs/story/0,,2214459,00.html>It's a farce
A frantic, secret police-led search over the past week has been unable to locate the discs, containing information on half the British population, sent by unrecorded post. All banks and building societies have been alerted and the public has been told to be vigilant of raids on their bank accounts.
Treasury ministers were desperately hoping to stave off bank panic today, fearing account holders will rush to change their accounts either in person or on the internet, leading to a second banking crisis akin to the run on Northern Rock.
been a bear for the las few years..and love how CR can indulge in a bit of sarcasm after how bears have been ridiculed in mainstream media last 6 months...who is having the last laugh..i paid my college tuition shorting abk..cfc..mia..i love the abx..hehe
1) The lenders had a fair share of this mess and they should pay a fair share of price: either all their CDOs go to zero or they can preserve some value by compromising.
2) if there are signs of social unrest, the goverment needs to intervene ( including its representative agents).
3) Goldman Sachs has been shorting housing market and now its propaganda machinery is in full swing.( I bet they will take their profit soon).
4) Some posts are so vindicative and maybe a small dose of compassion will be nice.
Based on what a couple'a swells here thought was mumbo jumbo chart reading.
Swan dive to a waterfall on the daily chart as the DJIA heads immediately to 12500 and then 11,4 and points south.
Watch the events to see what "panic" looks like and feels like. It's not often that one can witness such a massive capitulation. IMHO, as I've said at Mish's repeatedly and early today, this is it.
I share other's bafflement at the low 10-year yield. How can that be safer than shorter-term treasuries? It seems Uncle Alan's "conundrum" is still with us.
I can't get over what CR said about focusing on the solution rather than sniping at the man (such an easy target), CR's truly a gentleman.
I think it's great that we all think there might be a solution, but realistically, I don't know if we have a handle on how many problems we're trying to solve at once.
It seems like all along the way, everybody thought of a way to get the American consumer to spend a little more and borrow a little more. (Like the credit card/bankruptcy fiasco that's unfolding.) I'm thinking the smart guys on Wall Street (yes, and we all know that they have intelligence, but maybe not wisdom) thought of some schemes that were pretty good; real estate used to be fairly safe. But they forgot that as the money scheme got bigger and bigger, more and more people took their cut, appraisers, brokers, etc. and like a wildfire, it got way out of control. Look at the language and the viewpoint of everyone along the way; if every other factor had stayed stable, their little fudge factor wouldn't have made much of a difference. In a 'normal' period of time, even the NAR's forecasts would have been bailed out, or at least, not seemed so ridiculous. Look at the slippery slope of the 'pier' loans. Those guys at the banks aren't stupid, but surely they were seduced by their past successes. I really think Paulson was/is shocked at what's coming down the pike. You might say he's clueless, but I believe that's probably more a function of being fed bad numbers in so many ways.
We got into a financial quagmire a step at a time, heedless, until we looked up and realized we're lost. In any direction we might step into quicksand, and we're not even sure of the direction home. After all this I'm ashamed to admit my only solution is to take it one day at a time, and watch out for the R.O.U.S.! (Princess Bride)
I share other's bafflement at the low 10-year yield. How can that be safer than shorter-term treasuries? It seems Uncle Alan's "conundrum" is still with us.
LONDON (MarketWatch) -- Investors are moving out of the European banking sector and into telecom stocks in an effort to keep yield levels high and safe in current volatile market conditions, fund managers and portfolio strategists say.
Keep those yield levels high AND safe. Reward without the risk! Woohoo!
(The sarcasm snark of the Internet has lured me in again.)
Yes. It's called racketeering, and continues apace with the serial sell ratings of Citigroup and possibly, Credit Suisse (FFDIC, was your bulletin for real? Your WSJ link was unavailing).
Anybody hear about Bushie's threat to lay off 150,000 DoD personnel if he doesn't get his defense money? Sure, it's cheap, partisan politics...but should it happen, what a clever means to fog up the blame for the immient/just-begun recession.
Sallie and Fannie are broke, making it impossible for those august institutions to be used in some subprime baleout.
Now politicians and others have turned to the banks themselves with proposals that they forgive debt by fixing interest rates, or whatever...
... but these are the same banks that are in financial straits, reporting record losses, which prompted calls from Schumer and others for Sallie and Fannie to buy up their debt...
So, how is that going to work? How much debt forgiveness is left in the frail carcasses of Countrywide, Citi, etc.? This has to be fiction.
I am not at all surprised by his comments since in another life I used to do advance work for political candidates. The point is he 1) has to say something, 2) it has to sound sympathetic, 3) it has to mean nothing, and 4) in hindsight he has to bbe able to claim that he was on top of things. THAT IS HOW THE GAME IS PLAYED.
I do not believe there is a solution. If there is it would impose costs on "innocent" parties.
I share your same amazement. I would also offer that someday, if what has been reported is completely true in regard to exposure and the avoidance of the meltdown, that they will need to exit the hedge. I think this poses more problem than most realize due to illiquidity.
btw- 3.98% on the 10 year overnight, I hate to say I told you so, but----
the commodity complex has begun collapse with the exception of oil, I am still waiting for that shoe to drop and expect that it will.
The extreme amounts of leverage in the system will continue to promote extreme moves.
The end-ticket in lbo and pe deals is all-but-gone, HY has been dessimated with far more room to go, corporate defaults moving to double digits in that space.
I also suspect that as bank and IB balance sheets get smaller, the margin requirements are being raised for the hedge complex. Tighter credit across the board is reality and the coming months will show the effects of this tightening.
The good news is that due to the unprecedented flight to quality which I also predicted, I think the catalyst is in place for a turn in the credit markets and the healing process. Consolidation.
Have you considered that Mr. Paulson played the rest of the IB community by talking up housing and MBS while he gave time and info so that GS could put itself into a position where it can short the markets and end up dominating the IB world?
When did the fortunes of GS turn up and the remainder turn down?
Where will Mr. Paulson be in one year? Getting his office at GS ready to move into again!
This is it, indeed. We get to see now how high a price we're going to pay for a national business model that thinks an ignorant public is more profitable than an informed one. (Thanks, Hank)
First policy idea: Never try to balance a democracy on that kind of business model.
Reuters: "Crude oil prices rose above a record $99 per barrel Wednesday as worries about inadequate winter supplies in the Northern Hemisphere and news of refinery problems stoked bullish sentiment."
Wow, bullish sentiment loves human suffering, apparently.
We don't need bears... maybe we need matadors. With red, red capes.
For speculators or homeowners that used the Home ATM and are now in trouble: nothing.
So the more skin you have in the game, the more we will try to watch out for you. If that skin is pre-declines and not neg amort, 'll certainly agree with that.
But how many borrowers, out of those in dire straights, does this definition cover ? I'll make a SWAG that it covers less than 15%. Which, if I'm correct, still leaves large swaths of FCs about to occur (and doesn't solve the problem that needs to be solved).
Paulson has not been behind the curve. He sees that MLEC will not fly, so it's Plan B. Now he will get Fannie and Freddy to bail out Citigroup and disguise what's going on as helping homeowners.
A common theme in Washington and on Wall Street is lack of responsibility for anticipating big picture problems. We don't have real leaders.
Our "leaders" believe more in appearing to be strong than in exercising the character, vision and resolve to be strong. Bush, obviously, is Exhibit A. But you meet these same empty suit types in positions of power all over Wall Street. Paulson is just an empty suit with bucks and bluster.
Now, the markets are starting to say: "Wait a minute. Nobody strong is in charge here. This is a charade."
Yes this will go down in history as the biggest scandle next to the enron/stockmarket scandle of 2000/01..we should have learned from that mistake,,but we didn't.....9-11 opened the door to even more scandle beyond our comprehension.
Now Middle class Americans work harder for worthless dollars,..I personaly work 2.5 jobs to surrive..buy choice..i refuse to be a debt slave..and pay worthless dollars for everything i require in life for myself as well as my family...It was all one big scam folks...why do you think all these top CEOs' are jumping ship...they are heading out of the country away from prosecution..while us bottom feeders have no choice but to live here and try to make ends meet and pick up the peices...We need a lynching folks..and we need to storm the White house and remove this scum. Our forefathers would have hung this bunch on the Cherry tree in front of the white house for all to see...the time has come to stand up..and SCREAM!!..ENOUGH!!! IS ENOUGH!!!..THIS IS MY COUNTRY...AND I AM NOT GOING TO TAKE IT ANYMORE.!!!!
fdic bair and now paulson advocating forbearance on a scale never seen before in this country. obviously, after homedebtors, HBs will be the next in line to ask for this deal. we are heading down the path that the japanese took and with similar consequences.
it is difficult to understand why bair has been pushing this anti-market solution. one might conclude that she is concerned about the ability of the banking industry to survive the coming depression in housing. however, insiders at the fdic do not think there is a housing crisis, do not believe there are any systematic concerns about the health of the banking system, and that the econmy will not fall into recession. so what then is exactly bair's angle on this, what job is she hoping to land?
"My point isn't to embarrass Paulson, but to show how far behind the curve he has been on housing and the credit crunch."
You give Paulson to little credit CR I think he knew damn good and well this was far from over like a CEO for most companies this was cheer leading and not what he really knew, those discussions are not for public consumption at least until they become to big to deny.
Embarrass him, embarrass him. He needs some embarrassing because he sounds like an idiot. He probably got to be Treasury Secretary in this administration because he is an idiot, and misery loves company.
FFDIC when I was in 2nd grade we did a field trip to the Bohemian Grove as guests of Grace Cathedral, the memory of folks like Tricky Dick dancing on stage beneath the redwoods in a pink-tutu haunts me to this day 35 years later....
Our asset economy has given rise to the unprecedented, biggest leverage/credit/debt economy ever! The underpinning factor, the pillar, for this economy is the inflated asset price. At the moment, we have a credibility problem with the world regarding asset valuations. When derivatives -- and derivatives of these derivatives-- of subprime loans can be evaluated to be investment-graded and sold to the world as such, we have a serious problem. So the partial short-term govt's remedy is to slow down the slide of the inflated asset prices and therefore the corresponding values of all other leveraged assets that have become the currency of our economy. If the vulnerabilities of the post-industrialization, house-of-card asset economy is not too ambiguous to an average joe like myself to realize, then I believe we do have a serious problem to solve.
I remember his "near the bottom" comment in July. When I head that I said to myself "these people have sh!!t for brain" OR "these people do not have integrity to speak the truth".
I do not know which is the case here>
This IS going to be like rent control - and then you'll get parallel trends like "key money", a reduction in mortgage availability, immobility of people who are tied to their cheap-mortgage house - it just freezes the real estate market surely. Does CFC want to go into run-off mode in their business ?
-K
I think the abyss is so obvious that he cannot deny it any longer. They have got to be panicked. Is there any plausible scenario for a recovery in 2008? The stock market seems to think so, but I have not read on this blog a single persuasive bullish argument in the past 12 months.
Hey Pilgrim,
The only persuasive argument that I have can imagine is called the Jubilee. Although I do not think the Banks will buy into it.
"He said he is "aggressively encouraging" the mortgage-service industry -- which collects loan payments from borrowers -- to develop criteria that would enable large groups of borrowers who might default on their payments to qualify for loans with better terms."
Unbelieveable. It is not the terms....it is the size of the principal. A large portion of the people who will default are going to do so because any debt structure which actually ammortizes the principal can not be afforded by the borrower/'owner'. It is not about the terms of the debt....it is about the amount. Put another way, people 'bought' things they can not pay for. Asking lenders/servicers to offer workouts is another way of saying reduce the amount owed....in other words just write off a portion of the debt.
sk, I can't tell from Paulson's comments if he is proposing something or just talking.
This seems like just talk to me. I can't comment on the merits until I see the proposal.
Best Wishes.
Pilgrim -
Are you trying to summon Sebastian?
CR, it's good to see there is somebody left in this country who knows what leadership looks like.
Unfortunately, at the moment the top folks in the Bush administration are too busy figuring out how to subpoena Scott McClellan's tax returns and sending some plumbers to Hillary's hotel room to consider mortgage finance issues.
My only thing is this if you give the deadbeats a break you need to give the responsible people the same break. Otherwise huge moral hazard. Now find somebody to fund this debacle and you found the last greatest fool.
Paulson thinks like the filthy rich person that he is. He will never wake up to the crisis in time. Fed Chairman Bair has a nice ring to it. She comes from Kansas and is corn fed down home people.
CR,
Unlike Ahnuld, he hasn't suggested policy proposals. But it sounds like he is up to the same thing.
"My point isn't to embarrass Paulson"
Why not, he's clearly a brain damaged idiot. I refuse to pull punches at this point with these morons who moved to the top because of connections.
Somebody has to call these morons out.
Cheers,
Shnapster,
Sebastian, O-Joe, Banker or others are welcome to give it a try. It seems that the worst case arguments over the past year on this blog have been right. Eventually, the bulls will be right again, but perhaps not for years to come.
FFDIC,
My understanding is that the FDIC has about $0.10 on the dollar in reserves for the $100,000 it has to secure for everyone. How far am I aoff?
Cheers,
Fed Chairman Bair has a nice ring to it.
WTFFDIC? did haloscan miss your tags - something like:
< sarcasm>Fed Chairman Bair has a nice ring to it.< /sarcasm>
Eventually, the bulls will be right again, but perhaps not for years to come.
Try a decade or so.
dollar down to 75.08 tonight, looking to break 75 in the near future. Oil yearning for $100 could get nasty quick.
Misean,
From the last post I can't agree with you more other than I wish I could use more colorful language.
As for Paulson he is doing just as good a job as Browney did on Katrina.
Mortgage Grapevine: What Really Doomed the mortgage market....
Yes,
And FUMBLE did a great job didn't he Joe D. Banks?
Cheers,
Misean, those comments were embarrassing for Paulson and I ridiculed them at the time.
However I find Paulson's comments today even more embarrassing. If you are going to do something, propose some ideas so we can discuss them.
"Aggressively encouraging" is not a plan. More MLEC.
Best Wishes.
CR,
If you propose ideas you are stuck with defending them. If you make vague comments with no substance then you can always say you were misunderstood. After MLEC I don't think Paulson wants to commit to anymore really assinine plans. At this point he is just waiting for 1/29/2009 like the rest of us.
CR,
Paulson surely wasn't behind the curve reference housing - or the disaster it's going to cause - he's just spinning the propaganda machine to keep the boat afloat.
I know this is off topic - but, how much foreign investment has gone into U.S. Equity Markets since foreign central banks have begun dumping the dollar? I'd bet a rather large sum. But, they'll loose on that bet as well as soon as Paulson and Bernanke come out of the closet and drop the bomb that we are in recession without any end in sight.
This will be the early eightiesm(stagflation) all over again - but, this time on steroids.
I think your point should be to embarrass Paulson. He deserves loads of scorn. He has been either extremely disingenuous or utterly clueless.
meantime, in the other world, whoahhhh 108 handle on the Yen/US$. I know, saying 108 handle is pretentious but sometimes.. meantime has the DX broken 75 yet ? Let me check.. o well not yet - shall I stay up to see it in or not ?
-K
Calculated Risk
CR,
You're correct. I am tired and popping off, more or less. Not sure what can be done, but I shall ponder it. It would be nice if others put their brains to it as well.
Cheers,
"Aggressively encouraging" is not a plan. More MLEC.
I wonder if Paulson considers 'wishing it would go away' a plan?
Or does 'sounding like I have a plan' for the next 14 months constitute a plan?
CR - you keep thinking like that and NOBODY is going to call you in January '08 to help them 'make plans'.
Read this Misean:
Federal Home Loan Banks to the Rescue! Puts FDIC and depositors at greater risk. Insured depositors are the wards of FDIC. Before August, FDIC would have had significant priority on the assets of a failed bank, selling off that bank's assets to pay insured depositors. Unsecured commercial paper holders, bond investors, stockholders, and other creditors could only take what was left. The exodus of debt investors from the funding of mortgage originators like Countrywide and their replacement by FHL Banks at the head of the queue fundamentally changes this order. FDIC now only gets its pickings after the FHL Banks and the additional $200 billion in financing they have provided. This makes it more likely that, in the case of multiple bank failures, FDIC will not get a large enough slice of the pie to pay off insured and uninsured depositors. Protected by their "super lien", the FHL Banks do not put themselves at risk by stepping in and lending to iffy members. They put FDIC at risk. And as we know from FSLIC's desmise in the 1980s, any failure of FDIC would probably be funded by taxpayers to the tune of billions. If things got bad, FDIC's $50 billion in reserves would allow it to pay off may of its depositors. But how many, and for how long? Considering that FDIC insures some $4 trillion in deposits, its $50 billion in reserves (about 1.2% of the total) is only a drop in the buckt. (Time for more J&B.)
The Federal Home Loan Banks to the Rescue! - John Paul Koning - Mises Institute
I'm beginning to worry that this Presidency will not be remembered primarily for Iraq.
CR - this has to be a prelude to a proposal. Hopefully sooner than dryfly would expect.
Nobody is allowed to just talk that much without...oh, wait...I forgot about Barack Obama.
What sayeth you - the CR readership?
Do "standardized criteria" mods amount to "amnesty"?
If so, do you oppose such amnesty? Or do you view it as necessary evil for the greater good of our economy?
re:
Not sure what can be done,
Well, you could read "What is to be done" by v.i. Lenin but I don't think that helps. As I was reminded once, when after two years in the US, I returned to the UK, all assertive-like, got into the crowded tube in London which promptly stopped in some tunnel for 10 /15 minutes. Man, I was pissed - so I loudly stated "We need a bloody revolution. Storm the Bastille".
And after a moment's silence a voice from another corner of the carriage said - "No, mate, it won't do any good".
Which, considering the history of the French revolution probably captured the essence of our conundrum.
I just make my own arrangements, best as I can.
-K
The link below is for Joseph Mason's paper on Loan Modification.
http://www.criterioneconomics.com/docs/20071003%20Loan%20Modification%20Paper.pdf
I'm wondering what mortgage experts here thinks about his viewpoint.
So Paulsen's new insight is that it would be impractical to do every workout as a "one-off" and instead there should be general standards and guidelines? Gee, what an idea...let's process these millions of screwed-up mortgages in an organized fashion with basic guidelines rather than do it in a chaotic panic. Wow, thanks Mr. Paulson. You must have been like a boss somewhere or something.
This sounds like a guy who never did anything other than give good meeting and was a cutup in those skits at Bohemian Grove. He's not just out of his depth on these issues, he apparently doesn't even have underlings who can feed him the right idea.
The only suggestion I've seen that keeps a lot of people in their homes in a financially coherent way is the Chapter 13 cramdown proposal. Most cases wouldn't actually land in bankruptcy, because the lender would agree to a writedown if it knew that it could happen in BK, and the borrowers would usually agree to a samller writedown to avoid BK and stay in the "house of their dreams (er, house os their present reality) Of course his would require a recognition of the true vaule of the assets which would cause huge pain in the financial system, but it's headed there anyway so why play games postponing it. Perhaps the Ch.13 reform idea being discussed is just so anathema to Paulsen and the banker ilk, that he can't even imagine it.
US Credit - ResCap swaps imply 72 percent default risk
US CREDIT-ResCap swaps imply 72 percent default risk
| Reuters
Shnapster, it better be the prelude to something. I don't mind people talking about ways to ease the pain - there are no dumb ideas, just dumb policy!
I'd offer some thoughts: I don't think it is a tragedy for someone with little or no money down to lose their home. So that leads to one of the criteria for modifications: downpayment size. People that put 10% or more down should be first in line for modifications (Paulson says there are too many people to help, so downpayment size should help prioritize who gets helped first).
For no or low downpayment "homeowners", perhaps some sort of expedited jingle mail without a foreclosure. Yes - that would put more pressure on prices in the short term, but lower prices would help with the eventual recovery.
For speculators or homeowners that used the Home ATM and are now in trouble: nothing.
Just some thoughts ...
Best to all.
OT, but anybody notice that the Nikkei's plunging again? Apparently the late bounce here isn't translating as well as it used to.
My understanding is that the FDIC has about $0.10 on the dollar in reserves for the $100,000 it has to secure for everyone. How far am I aoff? - Mise
Considering that FDIC insures some $4 trillion in deposits, its $50 billion in reserves (about 1.2% of the total) is only a drop in the buckt. (Time for more J&B.) - FFDIC
LOL. I was going to be really snarky and take a WAG Mise was 'only' off by 'nine cents'... but I held my tongue (er, fingers) in check.
Little did I know snark can't even begin to match reality for craziness!
Well the only thing I can say is Hank & Ben know where there are a whole lot more 'pennies' should FDIC need a few. 'Course they won't send pennies - they send virtual pennies, don't need to buy zinc or copper that way.
So basically I should go out now and get the biggest loan I can't afford that I can get?
Can I get this deal on my monthly rent, too? $1500 is just a lot to pay each month; I don't know what I was thinking when I signed the lease.
CR - you've got my vote for Fed Chairman, or Tresury Secretary. Take your pick.
That's an excellent point. Also, amnesty should only be contemplated for those who aren't already in default.
Credit Suisse Cut To Sell From Neutral By Goldman (Financial will take another hit tomorrow)
WSJ Error Page - WSJ.com
Moto - That Joe Mason paper has its moments. I won't even deduct points for the typo in the very first sentence. He wrote "paments", heh.
he meant "paymentz", of course.
Whatever. We all make mistakez.
Tresury.
I need to go to bed.
Best to all,
shnapsteria
CR,
At least he realizes that housing in 2008 is going to be much worse than 2007.
I offer something else that might be much worse in the future. Check out domestic corporate profits per capita and adjusted for inflation.
Flow of Funds Fun! v.5
FT LEX - US bank capital (Could a Premium subscriber please post the full article. Thanks.)
FT.com / Lex / Finance & governance - US bank capital
Doesn't anyone think it's strange that Goldman Sachs keeps getting credit for avoiding the mortgage problems - they saw it coming - yet Paulson, the former Chairman of Goldman Sachs - was completely surprised?
That seems weird to me. I know Paulson was appointed Treasury Secretary in May '06, and Goldman didn't get out of their mortgage positions apparently until the end of '06 - but I'd still think someone would have said, "uh, hey Hank, housing could get real ugly."
Oh well, just seems weird to me.
Best to all.
dryfly - Glad you got a chuckle. This is the kind of stuff that I truly think will cause bank runs this time. In the 80s we had bank runs, mostly very small banks which FDIC is good at shutting down quickly. I have taken very quick flights to banks around the country when a run was starting. We had bags packed ready to go at a moments notice many times. Very small financial institutions just didn't get the media publicity in the 1980s that I personally think they may get this time around. Northern Rock put the media on notice that bank runs are big news now, however small bank runs typically are only covered in the local media and aren't picked up by the national wire services. That may change given how widely blogs will be following bank runs. Who had heard of a economics blog in 1985?
Wow... where did this come from?
10-year is at 4.01% right now.
Makes me think there's some scared people out there tonight.
Chill CR. It will all come out in due course thru discovery, depositions and massive litigation.
ac, I thought we'd see a move away from dollar assets and rising rates by the end of this year. Except I forgot that there would also be a rush to safety. So the ten year yield falls, while other rate rise. That makes sense in hindsight!
Best Wishes.
I don't think the liquidation of bad debt can be avoided. The only half-assed solution I see is to skip the REO phase. Cancel the old mortgage and offer the occupant a new mortgage at the current market value of the house. Of course, once the neighbors hear about this deal, they will quickly go into default to get the same deal. And investors wouldn't touch mortgage investments for about 20 years.
Too many unintended consequences. Too big to bail.
Great link Yal.
My point isn't to embarrass Paulson...
Well perhaps one of your points should be to embarrass him. What about accountability and all that stuff?
ac, I thought we'd see a move away from dollar assets and rising rates by the end of this year. Except I forgot that there would also be a rush to safety. So the ten year yield falls, while other rate rise. That makes sense in hindsight!
I suspect the statement about rates being higher is true in general despite the falling treasury yields. Like the increasing spreads on riskier loans, etc. And I notice the price of junk bonds are really sliding, etc.
I do think we're seeing growing risk aversion a flight from the dollar that's making it more costly to borrow in the United States overall unless maybe you're the federal government.
CR,
ac, I thought we'd see a move away from dollar assets and rising rates by the end of this year. Except I forgot that there would also be a rush to safety. So the ten year yield falls, while other rate rise. That makes sense in hindsight!
Warren Buffett had some interesting commentary on this.
Warren Buffet in Fortune Magazine
How often have you seen a comment like this in articles about the U.S. dollar? "Analysts say that what really worries them is that foreigners will start moving out of the dollar."
Next time you see something like that, dismiss it. The fact is that foreignersas a wholecannot ditch their dollars. Indeed, because our trade deficit is constantly putting new dollars into the hands of foreigners, they have to just as constantly increase their U.S. investments.
It's true, of course, that the rest of the world can choose which U.S. assets to hold. They can decide, for example, to sell U.S. bonds to buy U.S. stocks. Or they can make a move into real estate, as the Japanese did in the 1980s. Moreover, any of those moves, particularly if they are carried out by anxious sellers or buyers, can influence the price of the dollar.
This is what I take from it. For a while we saw all assets move higher in unison. So much money was flooding in and it simply had to find a home. That should have been a giant red flag.
As real estate began to falter, less money flowed into it. That left the other asset classes having to pick up the slack (and absorb the excess dollars).
As the stock market began to falter, less money flowed into it. That left just the treasury market and our commodities with more money flowing into them.
The low yields on treasuries does not represent low inflation expectations to me, but rather a lack of alternatives. In fact, a lot of money has been flowing into inflation protected treasuries. They are outperforming their non-inflation protected counterparts this year.
If non-inflation protected treasuries falter next, then all that will be left is our commodities, our relatively small treasury inflation protected securities market, and the short end of the treasury yield curve (which offers at least some inflation protection).
On that note, we sure are exporting a lot of corn, wheat, and soybeans these days.
The Death of Real Yields v.3
Real yields died in the 1970s too, for what that's worth.
Ooooo... 10-year at 4.00% now. Very provocative.
Can China afford to keep bankrolling us as the yield falls on the T-bills and there's a flight from dollars?
Anyone else notice that over time CR has let a little sarcasm slip into his writing? Personally, I like it.
As I write this the yen is under 109 and the dollar slipped below 75. Its going to be interesting tomorrow morning...
Can China afford to keep bankrolling us as the yield falls on the T-bills and there's a flight from dollars?
I'd be surprised if China can afford it now. As much as we heckle our own banking system, at least we can see some of the data.
How much "sustainable" lending has been done in China to fuel a manufacturing industry that's currently using $100 oil?
Anyone else notice that over time CR has let a little sarcasm slip into his writing? Personally, I like it.
Like it? I love it!
Like it? I love it!
Like every other spittle-flecked (short term!) bear, I like seeing this as well. Still, careful CR. The pull of internet snark is great, and greater still his he who resists it. Or something like that.
Love ya boss.
Cheers,
prat
Prat,
The pull of internet snark is great, and greater still his he who resists it.
You are right of course.
Don't be too proud of this [financial] technological terror you've constructed; the ability to destroy a planet is insignificant next to the power of the Force.
<a href="http://politics.guardian.co.uk/homeaffairs/story/0,,2214459,00.html>It's a farce
A frantic, secret police-led search over the past week has been unable to locate the discs, containing information on half the British population, sent by unrecorded post. All banks and building societies have been alerted and the public has been told to be vigilant of raids on their bank accounts.
Treasury ministers were desperately hoping to stave off bank panic today, fearing account holders will rush to change their accounts either in person or on the internet, leading to a second banking crisis akin to the run on Northern Rock.
been a bear for the las few years..and love how CR can indulge in a bit of sarcasm after how bears have been ridiculed in mainstream media last 6 months...who is having the last laugh..i paid my college tuition shorting abk..cfc..mia..i love the abx..hehe
i meant mbia
go longhorns!!
Paulson is not a person whose comments should be given any credence.
He is not an economic manager. He is purely and simply a politician.
His comments are designed only for arse protection.
Ignore him.
Soon to be history, "Black Friday, November 23, 2007". Book it.
1) The lenders had a fair share of this mess and they should pay a fair share of price: either all their CDOs go to zero or they can preserve some value by compromising.
2) if there are signs of social unrest, the goverment needs to intervene ( including its representative agents).
3) Goldman Sachs has been shorting housing market and now its propaganda machinery is in full swing.( I bet they will take their profit soon).
4) Some posts are so vindicative and maybe a small dose of compassion will be nice.
Based on what a couple'a swells here thought was mumbo jumbo chart reading.
Swan dive to a waterfall on the daily chart as the DJIA heads immediately to 12500 and then 11,4 and points south.
Watch the events to see what "panic" looks like and feels like. It's not often that one can witness such a massive capitulation. IMHO, as I've said at Mish's repeatedly and early today, this is it.
I share other's bafflement at the low 10-year yield. How can that be safer than shorter-term treasuries? It seems Uncle Alan's "conundrum" is still with us.
I can't get over what CR said about focusing on the solution rather than sniping at the man (such an easy target), CR's truly a gentleman.
I think it's great that we all think there might be a solution, but realistically, I don't know if we have a handle on how many problems we're trying to solve at once.
It seems like all along the way, everybody thought of a way to get the American consumer to spend a little more and borrow a little more. (Like the credit card/bankruptcy fiasco that's unfolding.) I'm thinking the smart guys on Wall Street (yes, and we all know that they have intelligence, but maybe not wisdom) thought of some schemes that were pretty good; real estate used to be fairly safe. But they forgot that as the money scheme got bigger and bigger, more and more people took their cut, appraisers, brokers, etc. and like a wildfire, it got way out of control. Look at the language and the viewpoint of everyone along the way; if every other factor had stayed stable, their little fudge factor wouldn't have made much of a difference. In a 'normal' period of time, even the NAR's forecasts would have been bailed out, or at least, not seemed so ridiculous. Look at the slippery slope of the 'pier' loans. Those guys at the banks aren't stupid, but surely they were seduced by their past successes. I really think Paulson was/is shocked at what's coming down the pike. You might say he's clueless, but I believe that's probably more a function of being fed bad numbers in so many ways.
We got into a financial quagmire a step at a time, heedless, until we looked up and realized we're lost. In any direction we might step into quicksand, and we're not even sure of the direction home. After all this I'm ashamed to admit my only solution is to take it one day at a time, and watch out for the R.O.U.S.! (Princess Bride)
"this is it"
It certainly seems so.
Google Trends: recession
It appears that "recession" is firmly entrenched in the public mind now. This is different from the 2001 keyword graph.
http://www.realmeme.com/roller/images/meme/recessionDejanews.png
Billy Hill,
I share other's bafflement at the low 10-year yield. How can that be safer than shorter-term treasuries? It seems Uncle Alan's "conundrum" is still with us.
Income-hungry Europe investors switch to telecoms
Little choice for some; Vodafone, France Telecom benefit
Little choice?
LONDON (MarketWatch) -- Investors are moving out of the European banking sector and into telecom stocks in an effort to keep yield levels high and safe in current volatile market conditions, fund managers and portfolio strategists say.
Keep those yield levels high AND safe. Reward without the risk! Woohoo!
(The sarcasm snark of the Internet has lured me in again.)
Calculated Risk @ 1:34 am,
Yes. It's called racketeering, and continues apace with the serial sell ratings of Citigroup and possibly, Credit Suisse (FFDIC, was your bulletin for real? Your WSJ link was unavailing).
Anybody hear about Bushie's threat to lay off 150,000 DoD personnel if he doesn't get his defense money? Sure, it's cheap, partisan politics...but should it happen, what a clever means to fog up the blame for the immient/just-begun recession.
Just like after 9/11 - y'know?
Let me make sure I understand this:
Sallie and Fannie are broke, making it impossible for those august institutions to be used in some subprime baleout.
Now politicians and others have turned to the banks themselves with proposals that they forgive debt by fixing interest rates, or whatever...
... but these are the same banks that are in financial straits, reporting record losses, which prompted calls from Schumer and others for Sallie and Fannie to buy up their debt...
So, how is that going to work? How much debt forgiveness is left in the frail carcasses of Countrywide, Citi, etc.? This has to be fiction.
Rational expectations
I am not at all surprised by his comments since in another life I used to do advance work for political candidates. The point is he 1) has to say something, 2) it has to sound sympathetic, 3) it has to mean nothing, and 4) in hindsight he has to bbe able to claim that he was on top of things. THAT IS HOW THE GAME IS PLAYED.
I do not believe there is a solution. If there is it would impose costs on "innocent" parties.
I cant wait for the pandering politicians to really start talking about the economy and housing. I'll have to keep the TV off to keep from going nuts.
I dont think America wants to have responsible citizens anymore.
CR-
"Oh well, just seems weird to me."
I share your same amazement. I would also offer that someday, if what has been reported is completely true in regard to exposure and the avoidance of the meltdown, that they will need to exit the hedge. I think this poses more problem than most realize due to illiquidity.
btw- 3.98% on the 10 year overnight, I hate to say I told you so, but----
the commodity complex has begun collapse with the exception of oil, I am still waiting for that shoe to drop and expect that it will.
The extreme amounts of leverage in the system will continue to promote extreme moves.
The end-ticket in lbo and pe deals is all-but-gone, HY has been dessimated with far more room to go, corporate defaults moving to double digits in that space.
I also suspect that as bank and IB balance sheets get smaller, the margin requirements are being raised for the hedge complex. Tighter credit across the board is reality and the coming months will show the effects of this tightening.
The good news is that due to the unprecedented flight to quality which I also predicted, I think the catalyst is in place for a turn in the credit markets and the healing process. Consolidation.
As to recession, well 80% still stands.
Tough period ahead.
Have a great Thanksgiving!
Have you considered that Mr. Paulson played the rest of the IB community by talking up housing and MBS while he gave time and info so that GS could put itself into a position where it can short the markets and end up dominating the IB world?
When did the fortunes of GS turn up and the remainder turn down?
Where will Mr. Paulson be in one year? Getting his office at GS ready to move into again!
Not out of the realm of possibility.
This is it, indeed. We get to see now how high a price we're going to pay for a national business model that thinks an ignorant public is more profitable than an informed one. (Thanks, Hank)
First policy idea: Never try to balance a democracy on that kind of business model.
"the commodity complex has begun collapse with the exception of oil, I am still waiting for that shoe to drop and expect that it will."
Is gold going to de-couple from oil, or go down with the rest?
sdtfs
Get a copy of "Devil Take the Hindmost: A History of Financial Speculation"
Nothing new here... (which is, in some odd way, comforting).
Anon, nothing different: except the numbers in the hindmost and the size of the devil.
What this does not do.
Does not help specuvestors.
Does not bring mortgages in line with rent.
Doesn't reinfuse the ATM on the side of the house.
Makes new investor money for new mortgages go away.
Adds more opacity to the system.
Just my 2 cents
Reuters: "Crude oil prices rose above a record $99 per barrel Wednesday as worries about inadequate winter supplies in the Northern Hemisphere and news of refinery problems stoked bullish sentiment."
Wow, bullish sentiment loves human suffering, apparently.
We don't need bears... maybe we need matadors. With red, red capes.
For speculators or homeowners that used the Home ATM and are now in trouble: nothing.
So the more skin you have in the game, the more we will try to watch out for you. If that skin is pre-declines and not neg amort, 'll certainly agree with that.
But how many borrowers, out of those in dire straights, does this definition cover ? I'll make a SWAG that it covers less than 15%. Which, if I'm correct, still leaves large swaths of FCs about to occur (and doesn't solve the problem that needs to be solved).
BTW Arnold quoted Realty Tracs inflated foreclosure filings with his announcement yesterday. They do have an impact.
Paulson was pretty close until the credit markets collapsed in July/August - can't buy homes without money.
Maybe Paulson has been busy signing all those dollar bills?
Moral hazard to the Nth degree. Someone let me know when we get to the credit cards.
risk capital,
the commodity complex has begun collapse with the exception of oil, I am still waiting for that shoe to drop and expect that it will.
Agricultural Commodities Sector Remains Attractive: 'A Sense of Panic'
The tightest world grain stocks in about 30 years are contributing to rising food inflation, fueling worries about food shortages in some countries and straining international aid budgets.
Paulson has not been behind the curve. He sees that MLEC will not fly, so it's Plan B. Now he will get Fannie and Freddy to bail out Citigroup and disguise what's going on as helping homeowners.
A common theme in Washington and on Wall Street is lack of responsibility for anticipating big picture problems. We don't have real leaders.
Our "leaders" believe more in appearing to be strong than in exercising the character, vision and resolve to be strong. Bush, obviously, is Exhibit A. But you meet these same empty suit types in positions of power all over Wall Street. Paulson is just an empty suit with bucks and bluster.
Now, the markets are starting to say: "Wait a minute. Nobody strong is in charge here. This is a charade."
And the markets are bailing on these clowns.
Yes this will go down in history as the biggest scandle next to the enron/stockmarket scandle of 2000/01..we should have learned from that mistake,,but we didn't.....9-11 opened the door to even more scandle beyond our comprehension.
Now Middle class Americans work harder for worthless dollars,..I personaly work 2.5 jobs to surrive..buy choice..i refuse to be a debt slave..and pay worthless dollars for everything i require in life for myself as well as my family...It was all one big scam folks...why do you think all these top CEOs' are jumping ship...they are heading out of the country away from prosecution..while us bottom feeders have no choice but to live here and try to make ends meet and pick up the peices...We need a lynching folks..and we need to storm the White house and remove this scum. Our forefathers would have hung this bunch on the Cherry tree in front of the white house for all to see...the time has come to stand up..and SCREAM!!..ENOUGH!!! IS ENOUGH!!!..THIS IS MY COUNTRY...AND I AM NOT GOING TO TAKE IT ANYMORE.!!!!
My point isn't to embarrass Paulson, but to show how far behind the curve he has been on housing and the credit crunch.
That's beyond generous, seeing as how Hanky Panky and his maggot Wall Street buddies created this mess in the first place.
fdic bair and now paulson advocating forbearance on a scale never seen before in this country. obviously, after homedebtors, HBs will be the next in line to ask for this deal. we are heading down the path that the japanese took and with similar consequences.
it is difficult to understand why bair has been pushing this anti-market solution. one might conclude that she is concerned about the ability of the banking industry to survive the coming depression in housing. however, insiders at the fdic do not think there is a housing crisis, do not believe there are any systematic concerns about the health of the banking system, and that the econmy will not fall into recession. so what then is exactly bair's angle on this, what job is she hoping to land?
"My point isn't to embarrass Paulson, but to show how far behind the curve he has been on housing and the credit crunch."
You give Paulson to little credit CR I think he knew damn good and well this was far from over like a CEO for most companies this was cheer leading and not what he really knew, those discussions are not for public consumption at least until they become to big to deny.
Embarrass him, embarrass him. He needs some embarrassing because he sounds like an idiot. He probably got to be Treasury Secretary in this administration because he is an idiot, and misery loves company.
FFDIC when I was in 2nd grade we did a field trip to the Bohemian Grove as guests of Grace Cathedral, the memory of folks like Tricky Dick dancing on stage beneath the redwoods in a pink-tutu haunts me to this day 35 years later....
10 year with a 3 handle go-baaaabbbbyyyyy.
disclaimer: established a position for clients in DUG yesterday at $ 42
holding rates steady next month will make the Fed. look "old school."
Our asset economy has given rise to the unprecedented, biggest leverage/credit/debt economy ever! The underpinning factor, the pillar, for this economy is the inflated asset price. At the moment, we have a credibility problem with the world regarding asset valuations. When derivatives -- and derivatives of these derivatives-- of subprime loans can be evaluated to be investment-graded and sold to the world as such, we have a serious problem. So the partial short-term govt's remedy is to slow down the slide of the inflated asset prices and therefore the corresponding values of all other leveraged assets that have become the currency of our economy. If the vulnerabilities of the post-industrialization, house-of-card asset economy is not too ambiguous to an average joe like myself to realize, then I believe we do have a serious problem to solve.