I'm sorry, dear, I was too wasted--I mean, indisposed--to keep up with yesterday's comments. (Too many people post too much that's too tedious on Saturdays, to be honest.)
So Bob gets the hat tip, but you get a free subscription to Calculated Risk!
What if we really have hit the absolute growth maximum limit? It takes now maybe six debt dollars to create one GDP dollar in the US and the ratio is getting worse all the time.
What then? Unemployment will soar because fewer and fewer workers are needed and the remaining workforce is more and more skilled and specialized.
There is no growth to compensate for the rise on productivity per person. How do you share the profits between people in that kind of society? When there is maybe 30 percent permanent unemployment rate?
Laughter,
Well, the social costs of the current way of doing business are starting to mount. Unrestricted immigration bringing people to El Norte is starting to impose huge social costs on the United States. Wait until your taxes have to go up to provide universal health care to everybody who shows up here. Just connect the dots.
As for the financial system, the trainwreck is starting- CR's comment that several bank failures (oh yeah, we'll just merge them Japanese style for containment purposes) are coming is a big sign that we in the blog underworld are starting to see the beginning of the end...I give you the word- Journaleros. We may all be subprime, but some of us will be competing with them soon.
The part that gets a bit unnerving is that I think this is more the end of the beginning than the beginning of the end for a Great Unwind...though I take your meaning that it may also be seen as the beginning of an end.
The utter lack of believability or integrity in established authority figures in this mess (Paulson, ASF et.al. working for the homeowners...right...) has helped create the space where some parts of the MSM will turn to informed sources in the blogosphere, IMNSHO. As they spew increasingly unconvincing messages (containment, it's just sub-prime, etc.) look for a higher profile for credible alternative sources such as CR & Tanta.
As they spew increasingly unconvincing messages (containment, it's just sub-prime, etc.) look for a higher profile for credible alternative sources such as CR & Tanta.
There's other good blogs that have excellent content from bloggers like Sudden Debt and Theroxylandr. If you read the piece that Hellasious of Sudden Debt wrote today on False Prophets, it's a masterpiece.
But the difference in this blog is that the bloggers can attract a group of informed and opinionated but respectful and generally open-minded bloggees. Like I say, if you can find the consensus of this blog, you will know what is coming.
For purposes of making personal decisions about the future, this blog is the most helpful because of the mix of opinions. But that's the real art of the blogger.
I posted this disreputable video in an attempt to assure everyone that even after Major Media Exposure, I have no intention of knuckling under and behaving myself.
A fascinating though somewhat technical piece . . .
Now there's Tanta . . . fascinating though somewhat technical.
Great blog, CR. I liked your recent piece on CRE loans. It's still a little under the radar with all this residential noise, but that's going to be big next year.
And hello and congrats from jolly olde Englande where the Great and Inevitable Collapse over here is still being denied and rebutted by the fawning Imperialist media.
If I was running the WSJ, I'd make you an offer...
Bailouts -
FHLB advances - Now that's a bailout! Imagine if Bush announced loans to troubled borrowers for loan amounts greater than the home value and at reduced interest rates.
" The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth."
This point was made before in the CR comments. Tanta/CR?
Congrats! One of my friends who I turned on to this blog remarked to me yesterday "I think Tanta's got more brains than the sum total of the current administration." Perhaps we need to print up some "Draft CR & Tanta" t-shirts for this upcoming election.
Just remember, when a lawyer writes about fraud, what he's really after is 1/3 of whatever you might collect. Where does he imagine that all the payments for this rampant fraud are going to come from? The pockets he's reaching for are nowhere near deep enough to make whole the people who have been defrauded.
Leverage is the great wealth-destroyer. What's being papered over is the net worth of the huge derivatives pyramid. Just don't ask how big the negative number is; that kind of question is what started the unravelling to begin with ...
It occurs to me we're already seeing a breakdown in the system. From some accounts some of the state courts are being backlogged by the foreclosure proceedings. I'm taking a guess that from the servicers, back offices, and whatever legal entities are necessary, they're getting choked with paperwork. I'm guessing some of the smaller fry are going to be benefiting from being in the large school of failures. Perhaps stopping payment after March might gain them a few more months of "free housing" as the system clogs. And there will be collateral damage to every public entity associated with the proceedings, no?
I like
"Detail Obsessed Literal-Minded Small Picture Pain in the Ass Who Doesn't Play Ball" better then "Fascinating (Though Somewhat Technical)"
OT AllenM Can you point me to one single payer (universal) helath care system that is more expensive(by whichever metric you choose) then the mess we have now?
"I think Tanta's got more brains than the sum total of the current administration."
Well, you know I hate to deflect a compliment, but your average third-grade math class has more brains than the sum total of the current administration . . . at least it appears to me that way most days.
Hell of a find Tanta - I DON'T remember those days - they kinda fuse in a mist of joss-sticks, crosslegged seating, futons - best stop there I think and take out those 1971 40 cents and make an operator assisted call for 3 minutes - were calls really THAT expensive then ? -
I posted this disreputable video in an attempt to assure everyone that even after Major Media Exposure, I have no intention of knuckling under and behaving myself
Pfft.
You wouldn't know "disreputable" if it bit you on the ass.
Congrats to the CR, Tanta, and to the complete cast of scoundrels, misfits and ne'er-do-wells that inhabit this blog.
I have no intention of knuckling under and behaving myself
Well played !
Perhaps we need to print up some "Draft CR & Tanta" t-shirts for this upcoming election.
I can just hear the political operatives from both major parties muttering "loose cannon"... and they are right ! And its about damn time !
Perhaps the time has arrived for a fiscally conservative, morally liberal party to seize power... lord know we've tried the opposite with little success.
"Well, you know I hate to deflect a compliment, but your average third-grade math class has more brains than the sum total of the current administration . . . at least it appears to me that way most days."
Probably not in the "Faith Based" Schools most of the administration attended?
Those guys must be praying every night for the laws of physics to be repealed.
"Knowledge of that is of little benefit if you are standing ankle-high in sewage ... it is to your advantage to call the plumber."
The folk who levered up 15-1 to buy ABCP through hedge funds are no more innocent than the originators or the conduits were. At current prices they've magnified the mortgage losses several times. We can afford the original losses; we can't afford the leveraged losses. These schemes are all about preventing the leveraged losses from unwinding; that way lies financial ruin.
The question is, what's your priority? Putting people in jail?? Getting five cents on the dollar instead of four??? Or perhaps, just perhaps, salvaging enough of the wreck to avoid a depression????
the usefulness of newpapers and tv is less and less obvious to me.
While I agree in spirit, let's not lose sight that the MSM function is to gather information, albeit by mostly press releases nowadays, and CR functions to analyze the data and give it context. We benefit from being able to read different takes on the same info from vastly different points of view, which could never be cost efficient in other forms.
I'd like to add my congratulations, and say that as a specialist journalist, I've found CR's coverage, particularly the analysis, better than anything in the mainstream media (including WSJ/FT) and as good as or better than most of the specialist press as well.
"The question is, what's your priority? Putting people in jail?? Getting five cents on the dollar instead of four??? Or perhaps, just perhaps, salvaging enough of the wreck to avoid a depression????"
My priority is having a nice Sunday while I enjoy this whole "local boy and girl make good" story, while following my local NFL team and later in the day enjoying some really good pizza, after which I will fall asleep while watching a DVD.
Also, I don't think anyone could afford to pay anything close to what CR and Tanta should command for their labor and expertise. I view this analogous to what I tell my friends who want to pay me for helping them out," You couldn't pay me enough to do this for you, but I'll do it for free!"
I read Irvine Housing Blog and CR.
Seems like the best blogs are like good edited research journals, except nobody reads those except specialists. Partly because of their deliberately turgid prose and use of the passive voice. Whereas the blogs are fun to read. My husband, who does publish lots of research papers, that the blogs are like journal articles corrected in real time with the corrections there for all to see.
Just posted this at naked Cap, but it is interesting and worth a scan!
CDOs for B-Note Could Mean Greater Risk
MBA (6/17/2004) Murray, Michael
NEW YORKAs real estate collateralized debt obligations (CDOs) gain importance to B-piece buyers, some analysts wonder how these CDOs could affect B-piece buyer "discipline."
There is a new generation of real estate CDOs where youre taking the B-notes and putting them there [in the CDOs], said Brian Lancaster, managing director at Wachovia Securities, Charlotte, N.C., speaking at the Commercial Mortgage Securities Associations annual convention. Youre going to see linkage to that part of the market now.
A CDO is an asset-backed security (ABS) that usually includes a portfolio of corporate or sovereign bonds or bank loans. Real estate CDOs are multi-sector deals in which the collateral is a mix of CMBS, residential mortgage-backed securities (RMBS), real estate investment trusts (REITs) and ABSs.
Lancaster said the B-note market is not as efficiently priced as it once was.
They [real estate CDOs] play a really critical role, Lancaster said. If that market were to diminish, I think it would have a very significant impact. But I think at this stage of the game, it will only grow.
Benedict Aitkenhead, managing director at Credit Suisse First Boston LLC , New York City, said B-piece buyers could be less stringent about kickouts and credit characteristics when they would refinance themselves out of the risk position in a CMBS deal in anticipation of doing a CDO within six months of their buying position. Aitkenhead wondered whether CDOs bring a greater risk to the discipline of the B-piece buyer.
Mark Warner, managing director at BlackRock , New York City, said that no matter how a B-piece buyer finances the risk, it is still the investors risk. For most of us who are public entities, there is the public accounting and public financial discipline that you own the risk and however you finance it, its still yours, Warner said.
Warner said that BlackRock uses CDOs as financings for General Accepted Accounting Principles (GAAP) rather than sales so it owns all of the liabilities and the assets.
In any event, you are going to own the credit risk of the lowest grade of the equity of the double-BB [bonds] in the CDO, Warner said. If you put in unrated bonds in the single B-minuses all the way out to the triple-Bs, somewhere along the line the credit risk hasnt been shifted. It may be masked, it may be more opaque to the triple-A buyer but somewhere that credit risk still exists. Whoever owns it, will have to be just as diligent to determine the bonds that go in and how the workout strategies affect the bonds.
Warner added that the bondholder or B-piece buyer would still need to consider interest shortfalls, how they affect the cashflows, who is receiving cashflow and who is not, as well as other tests.
If you own bonds in a CDO that are not receiving cashf
That is a great article. I always thought of the SF Chronicle as a left-wing rag not worthy of lining a litter box. The author is an attorney, not an editor or reporter at the paper, so we can't give them too much credit, but they did publish it, and Pender's article mentioning Tanta was good too.
However, the SF Chronicle is and will be framing the housing crash and any systemic financial crisis as a result of Bush Administration and Republican policies. Indeed, the Chronicle's sister rag, the LA Times, published an article today by Steve Fraser, "writer and editor", predicting the end of the GOP as a result of the coming depression. Of course, the Times failed to provide any background on Fraser, a favorite of the radical left Bush-hating crowd. The Smirking Chimp blog loves Fraser as well as the LA Times, and the SF Chronicle is citing anonymous financial bloggers like Tanta. Birds of a feather...
Kudos to you Tanta for attracting attention for your expertise for sure, but also for what a commenter above noted as your "moral compass" or maybe it was "the" moral compass that informs this expertise. Or maybe it was informing us, some of whom (I speak personally, always willing and ready to tinker with my compass, you?) desperately need to have their moral compass's declination adjusted.
Ok, enuff shorting those with faulty compasses...just wanted to note that on-the-ground performance trumps melt-in-the-air official pronouncements about it...the exemplary performance is here. I think people are getting it.
Long time reader, first time poster, as they say...
As for so many others, this blog has given me a condensed course in the way the real financial world works. An interpretation of the 'news behind the news' as it were.
Thanks, Tanta and CR, for all the snarky education, and a reasonably balanced, if cynical, view.
I actually bought a duplex in 2006, but in was a dump that was actually priced quasi-realistically for the nutso Bay Area (~360k), and it was time to move on.
I think the Bay Area market will be sliding on down until I'm underwater, or close to it, but I'm not going to leave anytime soon, being in the last place for 20 years...
It certainly was a 'holy crap' moment reading SFGate and seeing Calculated Risk finally get some props from what passes for MSM 'round these parts.
Just what we need in America is more financial innovation. How about sticking with what we have and not coming up with new ways to screw even more people.
First rule about getting out of a deep hole. Quit digging.
Major crude producer Iran has completely stopped carrying out its oil transactions in dollars, oil minister Gholam Hossein Nozari said on Saturday, labelling the greenback an "unreliable" currency, considering its devaluation and the oil exporters' losses," he added.
I think the citations and recognition are great, especially as CR and Tanta enjoy the recognition.
Still, it's like the San Miguel de Allende conundrum: you move there because it's just terrific - except people keep moving there because it's just terrific.
alternate reality that fine SF piece has been linked here at least twice by our better faster bloggers and is now our reality. Tomorrow is a new reality.
iho- check out the costs in Norway, but they float on oil- so it probably isn't a fair comparison.
Our problem is that there are 10 million folks here who most likely shouldn't be here (including those pesky russians, irish, and no good canadians aside from the usual suspects)- and without their use of our emergency room system for basic healthcare, we would most likely not face as much fiscal pressure on our healthcare system.
But then I live in a state with a huge fiscal hole in the ground with a Republican majority in the statehouse that doesn't see a problem.
Duh, they are the problem, and will soon face removal after they shut down state government- wanna bet?
Now, on the dollar front :http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20071208%5cACQDJON200712080440DOWJONESDJONLINE000007.htm&
In other words, you can't invade us, so now we get to call the dollar worthless without any consequence.
Time for a nasty deal Tancredo style with El Presidente Cardenas- we will allow 6 million workers to stay here as long as 2 million barrels a day of oil shows up- otherwise we solve some of demand the hard way. Not that it is going to happen like that, but I am just sayin' it could.
Hello all. I'm just catching up this evening. Has anyone posted this from Mish's take on the coming bank failures? I liked it but then bank failures were my one and only business for 20 years.
Sorry Tanta, but I've fallen out of the Tanta-worship crowd.
Tanta: "I am personally getting tired of all the people who are upset because they colored inside the lines.."
Let's see, that would include renters, savers, young people, owners of free and clear property, owners that didn't buy or sell during the boom years (and probably, all inclusively, taxpayers). Yep, they're upset and screaming loudly. Where's your pinko compassion Tanta?
Tanta: "I imagine a bunch of folks with "wealth" that came to them in the form of RE capital gains that they were able to take because some fool got a foolish loan, now bitching because they might have to return some of that "wealth" to retroactively "correct" the loan terms."
As sk said above ".. tax policy is a great indicator of what how much pox "society" wants to visit upon you". I too try to ignore those preening idiots that just happened to make their deals at the right time and took advantage of outrageous capital gains tax treatment as a result of laws passed in what, 1996? Truly, a middle class welfare program at its worst. Who can we blame for passing that law? I admit, being a renter, I am envious of those wealthy fools, et tu?
Tanta: "I have a real problem with the idea that foreclosing on these current owners would be "good for" potential new owners right now. That argument assumes that the stuff could all be sold as REO in the near term at values that wouldn't continue to fall. The fact is, nobody knows at this point how far values can fall even if we (especially if) we unload a big wave of REO into the market. So any lender making a new loan to a new first-timer who is trying to buy this REO is taking a big chance. This is my point about FHA Modernization: it's on the table because everyone recognizes that we will need government-insured loans to facilitate the purchase of this REO."
No, Tanta, this will simply prop values at unaffordable prices. You know this! Government insured loans will perform just fine when DTI's are at 30% and FICO's are above 660. We are not all subprime you know. Again, you ignore renters or young people just graduating who can't afford to buy an outhouse at today's prices.
I'm starting to question your self-described "Pinko" credentials. How does maintaining artificially high, absurd real estate prices help responsible first time homebuyers or renters that refused to play the complicated game that you and your colleagues created?
Real estate prices need. to. crash.
I'm assuming that if 2 million properties owned by banks flood the market, those properties will quickly be snapped up by 2 million smart buyers if the price is right.
Tanta: "Remember that absent FHA Modernization, the FHA maximum loan amounts are still pretty modest."
$417,000? Modest? See comment above.
HOPE NOW PLAN
GATHERING THREAT
AXIS OF EVIL
WEAPONS OF MASS DESTRUCTION
FIGHT'EM THERE NOT HERE
BRING'EM ON
STAY THE COURSE
LAST THROES
HECK OF A JOB BROWNIE
GLOBAL WAR ON TERROR
I AM THE DECIDER
STUFF HAPPENS
ABU GHRAIB
HALLIBURTON
PREEMPTIVE WAR
WALTER REED
BLACKWATER
EXECUTIVE POWER
BODY ARMOR
KATRINA
GUANTANAMO
YELLOWCAKE
WATERBOARDING
DICK CHENEY
KARL ROVE
ALBERTO GONZALES
SCOTTER LIBBY
JACK ABRAMOFF
CONDOLEEZZA RICE
RUMSFELD
PAUL WOLFOWITZ
HARRIET MIERS
PAUL BREMER
GEORGE TENENT
JOHN ASHCROFT
MIKE BROWN
JOHN BOLTON
HANK PAULSON
SHEILA BAIR
BEN BERNANKE
ALAN GREENSPAN
GOLDMAN SACHS
WALL STREET
Hah. Investec only bought Kensington this year. Worst. Investment. Ever. That's going to be an amusing conversation for me with their head of mortgage principal finance tomorrow.
Congratulations on the nod from the Chronicle. You may or may not have seen it, but Kurgman was directing people to you guys for news and analysis on the Paulson plan here:
You know - since you are all MSM now - you should think about submitting some of your articles to The Economist... if you could make them shorter and a little less dry!!
However, don't get carried away. I just read the ubernerd articles on mbsI, II, & III. And I need more. More about how these things flow into the CDO's that are exploding. It's amazing how you can start with something like a basic mortgage, which has been around a long time and has worked pretty well and turn it into something that is highly speculative. Now that I'm getting a clue, I'm highly interested in the next steps taken by the big brains to blow up their customers (bag holders).
Anyway, congrats and don't forget to feed the uber nerds.
File that one under the Label: "Bzzzzzz... POP"
well, there goes the neighborhood.
JT
wow, and i thought i was a wasted last night...
hey i linked to that article yesterday!
Santa will bring you something too bacon!
hey i linked to that article yesterday!
I'm sorry, dear, I was too wasted--I mean, indisposed--to keep up with yesterday's comments. (Too many people post too much that's too tedious on Saturdays, to be honest.)
So Bob gets the hat tip, but you get a free subscription to Calculated Risk!
okay i can live with that, as long as i get a curtsy next time.
What if we really have hit the absolute growth maximum limit? It takes now maybe six debt dollars to create one GDP dollar in the US and the ratio is getting worse all the time.
What then? Unemployment will soar because fewer and fewer workers are needed and the remaining workforce is more and more skilled and specialized.
There is no growth to compensate for the rise on productivity per person. How do you share the profits between people in that kind of society? When there is maybe 30 percent permanent unemployment rate?
Congratulation to CR and Tanta.
Laughter,
Well, the social costs of the current way of doing business are starting to mount. Unrestricted immigration bringing people to El Norte is starting to impose huge social costs on the United States. Wait until your taxes have to go up to provide universal health care to everybody who shows up here. Just connect the dots.
As for the financial system, the trainwreck is starting- CR's comment that several bank failures (oh yeah, we'll just merge them Japanese style for containment purposes) are coming is a big sign that we in the blog underworld are starting to see the beginning of the end...I give you the word- Journaleros. We may all be subprime, but some of us will be competing with them soon.
Someday this war's gonna end...
That's it. If you're cool I'm leaving.
Hey, she even fixed the link in the story. Note to future linkers: not every site on the web is a simple "dot com".
AllenM,
The part that gets a bit unnerving is that I think this is more the end of the beginning than the beginning of the end for a Great Unwind...though I take your meaning that it may also be seen as the beginning of an end.
The utter lack of believability or integrity in established authority figures in this mess (Paulson, ASF et.al. working for the homeowners...right...) has helped create the space where some parts of the MSM will turn to informed sources in the blogosphere, IMNSHO. As they spew increasingly unconvincing messages (containment, it's just sub-prime, etc.) look for a higher profile for credible alternative sources such as CR & Tanta.
There's other good blogs that have excellent content from bloggers like Sudden Debt and Theroxylandr. If you read the piece that Hellasious of Sudden Debt wrote today on False Prophets, it's a masterpiece.
But the difference in this blog is that the bloggers can attract a group of informed and opinionated but respectful and generally open-minded bloggees. Like I say, if you can find the consensus of this blog, you will know what is coming.
For purposes of making personal decisions about the future, this blog is the most helpful because of the mix of opinions. But that's the real art of the blogger.
That's it. If you're cool I'm leaving.
Eff that. If we're cool, I'm leaving.
I posted this disreputable video in an attempt to assure everyone that even after Major Media Exposure, I have no intention of knuckling under and behaving myself.
Tanta,
Got any ubernerd posts on the back burner? That should immediately tarnish any hint of 'coolness' and reassure the faithful!
A fascinating though somewhat technical piece . . .
Now there's Tanta . . . fascinating though somewhat technical.
Great blog, CR. I liked your recent piece on CRE loans. It's still a little under the radar with all this residential noise, but that's going to be big next year.
I think we have the new CR branding:
Fascinating (Though Somewhat Technical)
Congrats CR and Tanta!!!
Congrats guys. When are you planning an IPO?
Ain't that just the picture...
CR and Tanta up on that stage... Tanta endlessly and drunkenly tuning her guitar until CR starts to walk away and say "forget it..."
Until Tanta begins one of her jingle jangle 10000 word posts about SIVs.
Don't call us groupies. We're "Band Aids"!
Congrats
And hello and congrats from jolly olde Englande where the Great and Inevitable Collapse over here is still being denied and rebutted by the fawning Imperialist media.
Congrats on the recognition Tanta and CR.
Another MUST read is also in the SF Chron:
"MORTGAGE MELTDOWN
Interest rate 'freeze' - the real story is fraud. Bankers pay lip service to families while scurrying to avert suits, prison"
MORTGAGE MELTDOWN / Interest rate 'freeze' - the real story is fraud / Bankers pay lip service to families while scurrying to avert suits, prison
This is simply an amazing article that will be loved by readers here. Share the link and the love.
SBM
If I was running the WSJ, I'd make you an offer...
Bailouts -
FHLB advances - Now that's a bailout! Imagine if Bush announced loans to troubled borrowers for loan amounts greater than the home value and at reduced interest rates.
They cite you only when they can't spin any more. Don't be flattered too much by the maggots in the msm.
" The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth."
This point was made before in the CR comments. Tanta/CR?
Congrats! One of my friends who I turned on to this blog remarked to me yesterday "I think Tanta's got more brains than the sum total of the current administration." Perhaps we need to print up some "Draft CR & Tanta" t-shirts for this upcoming election.
This is a very good summary of what we already know:
Why Home Prices Are Important To the U.S. Economy -- Seeking Alpha
SBM -
Just remember, when a lawyer writes about fraud, what he's really after is 1/3 of whatever you might collect. Where does he imagine that all the payments for this rampant fraud are going to come from? The pockets he's reaching for are nowhere near deep enough to make whole the people who have been defrauded.
Leverage is the great wealth-destroyer. What's being papered over is the net worth of the huge derivatives pyramid. Just don't ask how big the negative number is; that kind of question is what started the unravelling to begin with ...
"Just remember, when a lawyer writes about fraud, what he's really after is 1/3 of whatever you might collect."
And when a plumber writes about sub-standard plumbing, he wants you to pay him to fix it.
Knowledge of that is of little benefit if you are standing ankle-high in sewage ... it is to your advantage to call the plumber.
It occurs to me we're already seeing a breakdown in the system. From some accounts some of the state courts are being backlogged by the foreclosure proceedings. I'm taking a guess that from the servicers, back offices, and whatever legal entities are necessary, they're getting choked with paperwork. I'm guessing some of the smaller fry are going to be benefiting from being in the large school of failures. Perhaps stopping payment after March might gain them a few more months of "free housing" as the system clogs. And there will be collateral damage to every public entity associated with the proceedings, no?
I like
"Detail Obsessed Literal-Minded Small Picture Pain in the Ass Who Doesn't Play Ball" better then "Fascinating (Though Somewhat Technical)"
OT AllenM Can you point me to one single payer (universal) helath care system that is more expensive(by whichever metric you choose) then the mess we have now?
Siberian Donkey Muffin,
The link you posted to the Sean Oleander article is powerful stuff.
Keep doing your best to corner Paulson and make him tell the truth.
But be careful. I don't want you to end up in Guantanamo. I hear it's worse there than Siberia.
"I think Tanta's got more brains than the sum total of the current administration."
Well, you know I hate to deflect a compliment, but your average third-grade math class has more brains than the sum total of the current administration . . . at least it appears to me that way most days.
Tanta, you lost your "homepage"...
Tanta, you lost your "homepage"...
That evil Haloscan conspires against me again. And just when my day was starting to look up, too . . .
Hell of a find Tanta - I DON'T remember those days
- they kinda fuse in a mist of joss-sticks, crosslegged seating, futons - best stop there I think and take out those 1971 40 cents and make an operator assisted call for 3 minutes - were calls really THAT expensive then ? -
-K
I posted this disreputable video in an attempt to assure everyone that even after Major Media Exposure, I have no intention of knuckling under and behaving myself
Pfft.
You wouldn't know "disreputable" if it bit you on the ass.
Congrats to the CR, Tanta, and to the complete cast of scoundrels, misfits and ne'er-do-wells that inhabit this blog.
I have no intention of knuckling under and behaving myself
Well played !
Perhaps we need to print up some "Draft CR & Tanta" t-shirts for this upcoming election.
I can just hear the political operatives from both major parties muttering "loose cannon"... and they are right ! And its about damn time !
Perhaps the time has arrived for a fiscally conservative, morally liberal party to seize power... lord know we've tried the opposite with little success.
"Well, you know I hate to deflect a compliment, but your average third-grade math class has more brains than the sum total of the current administration . . . at least it appears to me that way most days."
Probably not in the "Faith Based" Schools most of the administration attended?
Those guys must be praying every night for the laws of physics to be repealed.
Well, I'd say congrats, but your intelligence begins where theirs ends.
You are not writing down to your audience, unlike newspapers and standard media.
Frankly, the usefulness of newpapers and tv is less and less obvious to me. When your blog is better than the best--the NYT, the WSJ or NPR even.
Perhaps in a thousand years or so,we
can convert others to our way of thinking. OK make it two thousand.
Calculated Risk will never be cool.
I like it that way.
Seminole83,
"Knowledge of that is of little benefit if you are standing ankle-high in sewage ... it is to your advantage to call the plumber."
The folk who levered up 15-1 to buy ABCP through hedge funds are no more innocent than the originators or the conduits were. At current prices they've magnified the mortgage losses several times. We can afford the original losses; we can't afford the leveraged losses. These schemes are all about preventing the leveraged losses from unwinding; that way lies financial ruin.
The question is, what's your priority? Putting people in jail?? Getting five cents on the dollar instead of four??? Or perhaps, just perhaps, salvaging enough of the wreck to avoid a depression????
the usefulness of newpapers and tv is less and less obvious to me.
While I agree in spirit, let's not lose sight that the MSM function is to gather information, albeit by mostly press releases nowadays, and CR functions to analyze the data and give it context. We benefit from being able to read different takes on the same info from vastly different points of view, which could never be cost efficient in other forms.
I'd like to add my congratulations, and say that as a specialist journalist, I've found CR's coverage, particularly the analysis, better than anything in the mainstream media (including WSJ/FT) and as good as or better than most of the specialist press as well.
WhoStruckJohn:
"The question is, what's your priority? Putting people in jail?? Getting five cents on the dollar instead of four??? Or perhaps, just perhaps, salvaging enough of the wreck to avoid a depression????"
My priority is having a nice Sunday while I enjoy this whole "local boy and girl make good" story, while following my local NFL team and later in the day enjoying some really good pizza, after which I will fall asleep while watching a DVD.
Also, I don't think anyone could afford to pay anything close to what CR and Tanta should command for their labor and expertise. I view this analogous to what I tell my friends who want to pay me for helping them out," You couldn't pay me enough to do this for you, but I'll do it for free!"
seminole83-
You'd better not watch cahuenga's video then. You won't be able to sleep for a week after that...
Congrats CR & Tanta. Your blog is simply outstanding.
Congrats CR and Tanta!
(It's great fun to be a small part of the peanut gallery here)
I read Irvine Housing Blog and CR.
Seems like the best blogs are like good edited research journals, except nobody reads those except specialists. Partly because of their deliberately turgid prose and use of the passive voice. Whereas the blogs are fun to read. My husband, who does publish lots of research papers, that the blogs are like journal articles corrected in real time with the corrections there for all to see.
We Regret To Inform You That This Is A Government Bailout
("If you want a long analysis of the implications of the plan that diverges greatly from our own, check out Calculated Risk.")
Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip - We Regret To Inform You That This Is A Government Bailout
Just posted this at naked Cap, but it is interesting and worth a scan!
CDOs for B-Note Could Mean Greater Risk
MBA (6/17/2004) Murray, Michael
NEW YORKAs real estate collateralized debt obligations (CDOs) gain importance to B-piece buyers, some analysts wonder how these CDOs could affect B-piece buyer "discipline."
There is a new generation of real estate CDOs where youre taking the B-notes and putting them there [in the CDOs], said Brian Lancaster, managing director at Wachovia Securities, Charlotte, N.C., speaking at the Commercial Mortgage Securities Associations annual convention. Youre going to see linkage to that part of the market now.
A CDO is an asset-backed security (ABS) that usually includes a portfolio of corporate or sovereign bonds or bank loans. Real estate CDOs are multi-sector deals in which the collateral is a mix of CMBS, residential mortgage-backed securities (RMBS), real estate investment trusts (REITs) and ABSs.
Lancaster said the B-note market is not as efficiently priced as it once was.
They [real estate CDOs] play a really critical role, Lancaster said. If that market were to diminish, I think it would have a very significant impact. But I think at this stage of the game, it will only grow.
Benedict Aitkenhead, managing director at Credit Suisse First Boston LLC , New York City, said B-piece buyers could be less stringent about kickouts and credit characteristics when they would refinance themselves out of the risk position in a CMBS deal in anticipation of doing a CDO within six months of their buying position. Aitkenhead wondered whether CDOs bring a greater risk to the discipline of the B-piece buyer.
Mark Warner, managing director at BlackRock , New York City, said that no matter how a B-piece buyer finances the risk, it is still the investors risk. For most of us who are public entities, there is the public accounting and public financial discipline that you own the risk and however you finance it, its still yours, Warner said.
Warner said that BlackRock uses CDOs as financings for General Accepted Accounting Principles (GAAP) rather than sales so it owns all of the liabilities and the assets.
In any event, you are going to own the credit risk of the lowest grade of the equity of the double-BB [bonds] in the CDO, Warner said. If you put in unrated bonds in the single B-minuses all the way out to the triple-Bs, somewhere along the line the credit risk hasnt been shifted. It may be masked, it may be more opaque to the triple-A buyer but somewhere that credit risk still exists. Whoever owns it, will have to be just as diligent to determine the bonds that go in and how the workout strategies affect the bonds.
Warner added that the bondholder or B-piece buyer would still need to consider interest shortfalls, how they affect the cashflows, who is receiving cashflow and who is not, as well as other tests.
If you own bonds in a CDO that are not receiving cashf
Congratulations, Tanta and CR!
There's no success like failure...
I saw that article! Congrats! I thought the least they could have done was provided a link to your site! Come on guys....
SBM,
That is a great article. I always thought of the SF Chronicle as a left-wing rag not worthy of lining a litter box. The author is an attorney, not an editor or reporter at the paper, so we can't give them too much credit, but they did publish it, and Pender's article mentioning Tanta was good too.
However, the SF Chronicle is and will be framing the housing crash and any systemic financial crisis as a result of Bush Administration and Republican policies. Indeed, the Chronicle's sister rag, the LA Times, published an article today by Steve Fraser, "writer and editor", predicting the end of the GOP as a result of the coming depression. Of course, the Times failed to provide any background on Fraser, a favorite of the radical left Bush-hating crowd. The Smirking Chimp blog loves Fraser as well as the LA Times, and the SF Chronicle is citing anonymous financial bloggers like Tanta. Birds of a feather...
Fed expected to lower rates despite raging inflation
Fed expected to lower rates despite raging inflation - MarketWatch
Gotta love that headline.
Kudos to you Tanta for attracting attention for your expertise for sure, but also for what a commenter above noted as your "moral compass" or maybe it was "the" moral compass that informs this expertise. Or maybe it was informing us, some of whom (I speak personally, always willing and ready to tinker with my compass, you?) desperately need to have their moral compass's declination adjusted.
Ok, enuff shorting those with faulty compasses...just wanted to note that on-the-ground performance trumps melt-in-the-air official pronouncements about it...the exemplary performance is here. I think people are getting it.
Long time reader, first time poster, as they say...
As for so many others, this blog has given me a condensed course in the way the real financial world works. An interpretation of the 'news behind the news' as it were.
Thanks, Tanta and CR, for all the snarky education, and a reasonably balanced, if cynical, view.
I actually bought a duplex in 2006, but in was a dump that was actually priced quasi-realistically for the nutso Bay Area (~360k), and it was time to move on.
I think the Bay Area market will be sliding on down until I'm underwater, or close to it, but I'm not going to leave anytime soon, being in the last place for 20 years...
It certainly was a 'holy crap' moment reading SFGate and seeing Calculated Risk finally get some props from what passes for MSM 'round these parts.
New FHA & HUD programs == Financial Innovation.
Just what we need in America is more financial innovation. How about sticking with what we have and not coming up with new ways to screw even more people.
First rule about getting out of a deep hole. Quit digging.
OT
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
CONTRACT AVOIDANCE IS THE REASON FOR THE PLAN. I THINK EVERYONE WHO WANTS TO UNDERSTAND WHAT IS GOING ON SHOULD READ THIS FROM THE SF Chronical:
MORTGAGE MELTDOWN / Interest rate 'freeze' - the real story is fraud / Bankers pay lip service to families while scurrying to avert suits, prison
I think the citations and recognition are great, especially as CR and Tanta enjoy the recognition.
Still, it's like the San Miguel de Allende conundrum: you move there because it's just terrific - except people keep moving there because it's just terrific.
UBS to announce more writedowns...
UBS may announce writedowns - report - MarketWatch
Mertle, we have ALWAYS been cool. (I confess very early on I had a doubt or two about dryfly:>)
alternate reality that fine SF piece has been linked here at least twice by our better faster bloggers and is now our reality. Tomorrow is a new reality.
iho- check out the costs in Norway, but they float on oil- so it probably isn't a fair comparison.
Our problem is that there are 10 million folks here who most likely shouldn't be here (including those pesky russians, irish, and no good canadians aside from the usual suspects)- and without their use of our emergency room system for basic healthcare, we would most likely not face as much fiscal pressure on our healthcare system.
But then I live in a state with a huge fiscal hole in the ground with a Republican majority in the statehouse that doesn't see a problem.
Duh, they are the problem, and will soon face removal after they shut down state government- wanna bet?
Now, on the dollar front :http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20071208%5cACQDJON200712080440DOWJONESDJONLINE000007.htm&
In other words, you can't invade us, so now we get to call the dollar worthless without any consequence.
Time for a nasty deal Tancredo style with El Presidente Cardenas- we will allow 6 million workers to stay here as long as 2 million barrels a day of oil shows up- otherwise we solve some of demand the hard way. Not that it is going to happen like that, but I am just sayin' it could.
Someday this war's gonna end...
Hello all. I'm just catching up this evening. Has anyone posted this from Mish's take on the coming bank failures? I liked it but then bank failures were my one and only business for 20 years.
Mish's Global etc.
The Washington Post leads with these two housing related business stories tonight:
Michelle Singletary - A Subpar Plan to Save Subprime Borrowers - washingtonpost.com
On the Phone With the Home in The Balance - washingtonpost.com
Sorry Tanta, but I've fallen out of the Tanta-worship crowd.
Tanta: "I am personally getting tired of all the people who are upset because they colored inside the lines.."
Let's see, that would include renters, savers, young people, owners of free and clear property, owners that didn't buy or sell during the boom years (and probably, all inclusively, taxpayers). Yep, they're upset and screaming loudly. Where's your pinko compassion Tanta?
Tanta: "I imagine a bunch of folks with "wealth" that came to them in the form of RE capital gains that they were able to take because some fool got a foolish loan, now bitching because they might have to return some of that "wealth" to retroactively "correct" the loan terms."
As sk said above ".. tax policy is a great indicator of what how much pox "society" wants to visit upon you". I too try to ignore those preening idiots that just happened to make their deals at the right time and took advantage of outrageous capital gains tax treatment as a result of laws passed in what, 1996? Truly, a middle class welfare program at its worst. Who can we blame for passing that law? I admit, being a renter, I am envious of those wealthy fools, et tu?
Tanta: "I have a real problem with the idea that foreclosing on these current owners would be "good for" potential new owners right now. That argument assumes that the stuff could all be sold as REO in the near term at values that wouldn't continue to fall. The fact is, nobody knows at this point how far values can fall even if we (especially if) we unload a big wave of REO into the market. So any lender making a new loan to a new first-timer who is trying to buy this REO is taking a big chance. This is my point about FHA Modernization: it's on the table because everyone recognizes that we will need government-insured loans to facilitate the purchase of this REO."
No, Tanta, this will simply prop values at unaffordable prices. You know this! Government insured loans will perform just fine when DTI's are at 30% and FICO's are above 660. We are not all subprime you know. Again, you ignore renters or young people just graduating who can't afford to buy an outhouse at today's prices.
I'm starting to question your self-described "Pinko" credentials. How does maintaining artificially high, absurd real estate prices help responsible first time homebuyers or renters that refused to play the complicated game that you and your colleagues created?
Real estate prices need. to. crash.
I'm assuming that if 2 million properties owned by banks flood the market, those properties will quickly be snapped up by 2 million smart buyers if the price is right.
Tanta: "Remember that absent FHA Modernization, the FHA maximum loan amounts are still pretty modest."
$417,000? Modest? See comment above.
HOPE NOW PLAN
GATHERING THREAT
AXIS OF EVIL
WEAPONS OF MASS DESTRUCTION
FIGHT'EM THERE NOT HERE
BRING'EM ON
STAY THE COURSE
LAST THROES
HECK OF A JOB BROWNIE
GLOBAL WAR ON TERROR
I AM THE DECIDER
STUFF HAPPENS
ABU GHRAIB
HALLIBURTON
PREEMPTIVE WAR
WALTER REED
BLACKWATER
EXECUTIVE POWER
BODY ARMOR
KATRINA
GUANTANAMO
YELLOWCAKE
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WALL STREET
$417,000? Modest?
The FHA maximum loan amount isn't $417,000 in any area. If you're going to spout off, then for heaven's sake keep up with the details.
Mertle, we have ALWAYS been cool.
Baloney. We've always been helpless nerds.
Where have you been?
From Break.com
I have a bad case of diarrhea (this is a hilarious video about how the Japanese people learn to speak English.)
Bad Case Of Diarrhea Video
Sorry. Not being an uber-mortgage nerd, I was thinking of conforming loans?
greatest blog or greatest blog?
It never fails to deliver. Love for CR and Tanta!
Investec plans subprime lender sale to Goldman Sachs
Investec plans subprime lender sale to Goldman Sachs: report
| Reuters
Hah. Investec only bought Kensington this year. Worst. Investment. Ever. That's going to be an amusing conversation for me with their head of mortgage principal finance tomorrow.
Ginger Yellow please put a tip in the jar. Thanks.
Mertle, we have ALWAYS been cool. (I confess very early on I had a doubt or two about dryfly:>)
bailey | 12.09.07 - 6:01 pm | #
bailey is a wise man.
"was"
-K
Congratulations on the nod from the Chronicle. You may or may not have seen it, but Kurgman was directing people to you guys for news and analysis on the Paulson plan here:
Evil Bush/Paulson plot - Paul Krugman Blog - NYTimes.com
Congrats CR & Tanta!
You know - since you are all MSM now - you should think about submitting some of your articles to The Economist... if you could make them shorter and a little less dry!!
Congrats on the msm notice.
However, don't get carried away. I just read the ubernerd articles on mbsI, II, & III. And I need more. More about how these things flow into the CDO's that are exploding. It's amazing how you can start with something like a basic mortgage, which has been around a long time and has worked pretty well and turn it into something that is highly speculative. Now that I'm getting a clue, I'm highly interested in the next steps taken by the big brains to blow up their customers (bag holders).
Anyway, congrats and don't forget to feed the uber nerds.
Congrats!!
Mazel tov guys! Can't wait till the day when the press gets all short of breath when CR gives them props.