say, who has good examples of "privatize the profit and socialize the losses" in the financial world?
We have mining companies who leave their mess. We have Superfund sites.
In the financial world we have:
S&L crises?
GM?
Chrysler?
As someone who called in to HOPE, I was told that I should have done a deed in lieu a long time ago, although by waiting, I inadvertently fell under the protections of the new 1099 rules.
They did suggest a short sale; but without any offers in 11 months on the market, that was about as useful as a pat on the head.
Hope hotline counselors typically theydon't suggest specific actions to a loan servicer, such as an interest rate freeze or a repayment plan. However, says Brenda Grauer, housing policy adviser to the Illinois attorney general, "We've found the most effective approach is to actually come up with a concrete proposal that will work for the particular borrower."
Who could possibly have known that coming up with a concrete proposal that will work for a particular borrower might actually help reach a resolution of the situation?
Here we thought just putting the guy on hold and calling up the bank and connecting the two would do the trick.
The hotline counselor referred Ms. Rhinehart to a local affiliate of NeighborWorks America, a congressionally chartered housing group, which says it asked the lender, HSBC Holdings PLC, to fix the loan at the initial rate of 7%. HSBC agreed to lower the rate to 4.68% for six months, reducing the monthly payment to $765.
I'm from your bank and i am here to help you! I am having trouble understanding some of this...I stopped taking drugs years ago.....what mix allows you to think these proposals make sense? meth and mushrooms washed down with everclear?
Recall that the original release, the wrong number (1-800 in place of 1-888) was given out. So, it got off to a bad start, and went downhill from there.
They did a lousy job of explaining Anthony Pennington-Cross' credentials. Before coming to MU, he had done mucho academic-type research on subprime, when he was with the st.louis fed.
Okay, just sling the D word around like it's gonna scare us. Heck, 35% of the commenters have predicted it.
Seriously, I thought it was interesting that the global strategist for a London bank would consider the possibility of U.S. laws changing so that the Fed could buy assets other than Treasuries.
Is London calling?
Or is the Bush Administration just behind the curve in dealing with the potential scope of the problem?
FFDIC,
Nobody wants to acknowledge this, but I believe the gov't under the auspices of the Patriot Act has been doing this for quite some time. Am I a conspiratist? Maybe...
Another administration bungle. Look at the bright side, at least it's not causing significant deaths.
The capacity of our government to work efficiently and effectively is utterly gone. And I doubt much will change even if Obama is elected POTUS. This country needs a devastating depression to expunge all the corruption and arrogance it has accumulated over the five decades since it abandoned the gold/silver standard. We have lost touch with reality to the point where we started denying it existed. Big mistake.
And I have bad news for Pollyannas who blithely speculate about how soon the recovery will start: the US is in a death spiral and there won't be any recovery. Not with the US in any recognizable form.
every prediction Mish has ever made has been wrong.
Wrong, but let's not argue the point.
What matters is the quality of information accompanying the analysis, and he provides good information. The bank data was good -- coming from the Comptroller of the Currency, of all places.
Gotta separate the wheat from the chaff (and not let your personal biases get in the way).
Since, in fact, CalculatedRisk is often miscited as calculatedrisk.com in the MSM, what does it take to get the standard, but incorrect, URL address to transfer to the blogosphere?
Just getting to the IndyMac confessional post and noticed this:
And there were many events along the way that confirmed for those of us who believed that innovative home lending was possibly a paradigm shift (similar to widespread ownership of stocks by consumers) and definitely a legitimate marketplace
It occurs to me that so many people are going to be caught completely off-guard when they realize the "widespread ownership of stocks by consumers" is also an anomaly that will end very badly. Soooo many of these so-called "paradigm shifts" will ultimately be shown to be passing phenonema tied to the boomer demographic. Ironically, Bush's plan to privatize Social Security through the stock markets may have roughly marked the top of consumer participation in the equity markets.
i'm a recent (six month) reader and 'engager' of CR. the wealth of information and opinion is exponentially higher than what CR and Tanta charge (read: zero), or what is available in the national rags. i'm here because it's the only place, to my knowledge, where intelligent, well informed people can discuss finance and economics without the typical internet bullshit of personal vendettas and assinine navel gazing.
any possibility of keeping it above the lowest common denominator? pretty please? if i'm in the minority no problem, i'll sulk back to the bland WSJ and (at least humorous) Economist.
Personally I think it turned out just like the govt. planned. A plan that looks like they are doing something when in reality they are doing absolutely nothing.
And now the solution is to give people an extra 30 day freeze to "work out" a loan on which many probably cannot even affort to pay the principal, let alone the interest.
Just more of the same from this administration. Just think Katrina etc. etc. -- all talk, no substance.
"any possibility of keeping it above the lowest common denominator? pretty please? if i'm in the minority no problem, i'll sulk back to the bland WSJ and (at least humorous) Economist."
EL, it's just late nights. When our hosts are awake and paying attention, things are much more, um, sober. You should read on the job, like the rest of us .
Death spiral. Those are big words. You might want to look up "hyperbole" in the dictionary.
Heh. Elvis, you should look up impersonation in the dictionary.
(Sorry, EL.)
Seriously, it is increasingly apparent that this unfolding debacle is not something from which the US (or the globe) will miraculously emerge intact. As a hegemonic power, the US took a very wrong turn during the Vietnam War. Don't blame that boob GWB; the die was cast by LBJ and Nixon. When we cast off the anchor of hard money, we lost its gravitas. We tossed overboard the fundamental check that it exerted on both thought and action.
We could have surrendered our new empire and kept hard money, but at highest levels the empire was deemed more important.
This is not OT. The absurdity of recent lending practices was not aberrative. Nor was the Nasdaq bubble, nor the S&L crisis, nor 70's inflation. When we chose to turn our very currency into an illusion, we lost our ability to discern reality, to measure and evaluate the significance of just about everything.
The US is in a death spiral similar to that of the Roman Empire and for the same reason.
Tj,
yes, I just read it. I admit I do not fully understand it. I Thought
that the FED would fight deflation tooth and nail,especially during an election year. I think the article
was trying to say that the FED has no control over it. Can you explain
further please?
Fears of a global slowdown triggered by US housing market woes wiped $5.2 trillion (£2.7 trillion) off global stock markets in January, say analysts.
According to ratings firm Standard and Poor's, 50 out of 52 share indexes around the world ended the month lower.
FBI investigates sub-prime crisis BBC NEWS | Business | FBI investigates sub-prime crisis
The FBI is investigating 14 companies embroiled in the sub-prime mortgage crisis as part of a crackdown on improper lending.
It did not identify the companies but said the investigation encompassed developers, sub-prime lenders and investment banks.
DH, yes, the takeaway is that the Fed is largely powerless. Short term commerical credit leads moves in the fed funds rate. The effective funds rate keeps coming in below the target rate as credit demand dries up. The Fed has been aggresively draining liquidity from SOMA, otherwise they'd have to cut the target rate even more quickly to match demand. Poster "nothing" over on ticker forum has covered the subject exhaustively. A search for posts by her will provide a wealth of info.
In the first two weeks after the bail-out, LTCM continued to lose value,
particularly on its dollar/yen trades, according to press reports which put the loss at
$200 million to $300 million. There were more attempts to sell the portfolio to a
single buyer. According to press reports the new LTCM shareholders had further talks
with Buffett, and with Saudi prince Alwaleed bin talal bin Abdelaziz. But there was
no sale. By mid-December, 1998 the fund was reporting a profit of $400 million, net
of fees to LTCM partners and staff.
In early February, 1999 there were press reports of divisions between banks in
the bailout consortium, some wishing to get their money out by the end of the year,
others happy to "stay for the ride" of at least three years. There was also a dispute
about how much Chase was charging for a funding facility to LTCM. Within six
months there were reports that Meriwether and some of his team wanted to buy out
the banks, with a little help from their friend Jon Corzine, who was due to leave
Goldman Sachs after its flotation in May, 1999.
By June 30, 1999 the fund was up 14.1%, net of fees, from last September.
Meriwether's plan approved by the consortium, was apparently to redeem the fund,
now valued at around $4.7 billion, and to start another fund concentrating on buyouts
and mortgages. On July 6, 1999, LTCM repaid $300 million to its original investors
who had a residual stake in the fund of around 9%. It also paid out $1 billion to the 14
consortium members. It seemed Meriwether was bouncing back.
With over $3T in money market accounts, it's a matter of price. The immediate problem is that we can't discover the price for many instruments. I'm interested in mortgage debt at 30 cents. These pukes don't want to take the hit. So we have to dance around until reality sets in and everyone accepts it. Mark the crap down until it moves! Money is lost. Get over it...why we collectively put up with this nonsense is crazy. Manufacturing and retail can't get away with this.
Lesson learned - Any market of significant size should trade on an exchange.
As every real estate veteran knows, the market is cyclical and could eventually turn in the bank's favor. Ronald Peterson, an analyst in Chicago for Sterne, Agee & Leach, a Birmingham [Ala.]-based brokerage, argues that Glickman's gamble may one day pay off -- if people who signed contracts for condos pony up the promised dough. "The $64,000 question is, do these investors show up and close the deal at the price they agreed to? Then Corus is fine," Peterson says. "But if they walk away, Corus would be on the hook."
Oliver Q, thank you for the list.
Interesting that Detroit is at the top, but news stories are seldom about Detroit. There'll be some about Cleavand and a lot about Florida or California. I guess Detroit was left for dead.
By the way...
I just popped here to see what folks have to say and lo and behold I found another elvis!
He is with a capital "E".
Mine is a lowly lower-case one.
At one time I sported mutton-chops with Imperistical asperations. I am not He who graced GraceLand. I just share the name.
Credit Woes Hit Funding
For Loans to Students
By LIZ RAPPAPORT and RANDALL SMITH
WSJ February 13, 2008; Page A1
The credit crunch that has so far caused more than $100 billion of losses for big Wall Street investment firms now extends to students in Michigan, and it could soon hit many other borrowers, ranging from California museums to the prestigious Deerfield Academy prep school in Massachusetts.
Yesterday, the Michigan Higher Education Student Loan Authority, a state agency, said on its Web site that "due to the current and unprecedented capital-markets disruption" it will stop making loans under the state's Michigan Alternative Student Loan, or MI-Loan, program. More than 100 Michigan colleges and universities participate in the program.
The former brain behind Bush on O'Reilly last night:
(quote)
ROVE: I think its principally. I think the economy the media has been beating the drum for years and years and years that the economy stinks. And after a while, that begins to color peoples attitudes.
(end quote)
It's that damn media--after all they've been warning about this for years, haven't they?
I think literally everybody missed a big part of the story on the Buffett news yesterday, including some usually pretty sharp people on the blogs. ("Everything but subprime.")
EVERYBODY just leaped to the conclusion that Buffett offered to take all insured muni bond biz of monolines. I read nothing of the sort. I read $800 billion, which would would only be about two-thirds.
Before anyone can assume or reinsure a risk, credit analysis is necessary. Buffett's staff would have to do that bond by bond. It would probably take months. Once a municipal bond prospectus is filed, it usually is not updated. To get current data for due diligence, you need cooperation from the issuers, insurers and regulators.
There is a lot of bad insured municipal credit that Buffett would not want at any premium. He needed to start lobbying his case to be able to start a long, tedious due diligence process. Also, he may have needed a trial balloon to see if it would be worthwhile hiring, say, several hundred credit analysts.
Chorus
Telephone line, give me some time, Im living in twilight
Telephone line, give me some time, Im living in twilight
O.k. so no--ones answering,
Well cant you just let it ring a little longer
Ill just sit tight, through the shadows of the night
Let it ring for evermore.
Oliver Q,
Nice post. I live in the middle of area that had a 1,288% increase. I didn't realize this. Surprising. Thanks for the information.
My next door neighbors were foreclosed on. They took out all the equity they could and let their dogs wreck the house. They took the proceeds from the house ATM and bought a bigger house in West Virginia for cash. I like the new neighbors a lot better. So, I guess everyone, except possibly the banks, made out OK. Makes me happy.
it will stop making loans under the state's Michigan Alternative Student Loan, or MI-Loan, program
OK, that could stab the student where/when they least expect it. The students would them turn to mommy/daddy (or the grandparents) for backup liquidity. Those individuals may have their own liquidity problems (HELOC's, home ATM, et al).
This could bode badly for the institutes of higher education.
I am so confused how running a debt/scam economy with debt used in the place of income and fiat paper in the place of real money could end badly? Hahaha - just kidding - it couldn't end any other way, sadly.
Unreal... the sooner the real price discovery happens, the better. That would also mean the end to the blasted "save the sheeple/home-moaners" campaigns.
[This could bode badly for the institutes of higher education.]
It's about time, isn't it? Seems like every effort to expand opportunities for higher education have been focused on getting students more money- mostly in the form of loans. The only industry that has outpaced higher ed's pricing increases is health care. 'Twould be refreshing to see the universities do some belt-tightening and cost-cutting of their own.
funny, like everywhere else run by MBAs, Universities 've been moving toward part-timers and grad students handling the teaching to cut costs and have been doing so for a while. Let me know how that candy-stiper handled your operation and how well the interns have been running your fortune 500 company, why don't cha?
Duh... it's not wonder the December rate freeze plan hardly helped anyone, when to qualify you have to:
1. Have a subprime ARM loan with a 36 month or less initial fixed rate originated between 1/1/2005 and 7/31/2007.
2. ARM must reset for the first time between 1/1/2008 and 7/31/2010.
3. Your loan must be in a packaged MBS security, not held on a bank's books.
4. You have to call your loan servicer.
5. You have to be current on your loan.
6. You have to be able to pay the starter (initial) fixed rate on the loan.
7. You are unable to refinance.
8. You have less than 3% equity in the home (hence unable to refinance)
9. Current credit score must be below 660.
It's all just positioning to make it look like the loan servicers care and are trying to do something to help. The administration's hands are tied because the industry is making up all the rules.
They did it again yesterday... if you call us ten days after getting the letter we know you won't open, we might be able to help you, but only if we can get around to it in 30 days, otherwise we will foreclose anyway.
Bloomberg is reporting other entities (municipalities, etc.) are having trouble raising money in these auctions and some are only able to get financing at huge rates like 20% for a 30 day loan (sort of like Jackson Hewitt does w/ poor taxpayers qualified for EITC). The same banks that are holding mortgage related losses refuse to lend except at ridiculous high rates, particularly when there is no insurance on the bonds (WBuffett where are you?). Nodoby knows all the ways the public will pay in months to follow.
Ditto and double ditto. This used to be a blog for information and learning. Now there is too much bosting about one's shorts/puts etc and too much blather. Just cut it out.
And btw, Banker, are you still out there? We miss your well informed postings.
Never gonna happen, the big banks won't let this go through:
Foreclosure Bill Would Mandate Mitigation
American Banker Wednesday, February 13, 2008 / By Stacy Kaper
Rep. Maxine Waters, who chairs the House Financial Services housing subcommittee, is drafting legislation that would ban foreclosures unless lenders make good-faith efforts to keep borrowers in their home and would require reporting on modifications. But industry representatives who have analyzed the draft said it would create a host of problems. Industry representatives said the bill would force them to break existing mortgage contracts and would open them to a barrage of investor lawsuits. They said it also would allow borrowers who did not receive an appropriate loan modification effort to sue. The servicer would have to notify the borrower in writing within seven days of implementing any loss-mitigation strategy, and servicers would also be forbidden from outsourcing loss-mitigation activities outside the United States.
The lenders say this would be too "burdensome" on them. Despite any legislative efforts, the industry (big banks) is too powerful and influential to let this go through. Big business always wins.
odoby.
Yeah, nobody. Time to kick it up a notch.
bacon- RSS fiend. mastur spell czecher.
Hmm
MLEC Super Duper SIV Thingy
Hope Now cry later.
Monoline bailout oops no.
Now Project Lifeline. ha_g_a_
How about project pull your head out of your ass. I think there is a much more pressing need for that.
Thank God this govt. bunch was not around in the 1930s.
bacon dreamz, nodoby is a Tanta original! See her earlier post: Project Lifeline
.
Best Wishes.
FFDIC,
Good point we would still be in the last Depression
say, who has good examples of "privatize the profit and socialize the losses" in the financial world?
We have mining companies who leave their mess. We have Superfund sites.
In the financial world we have:
S&L crises?
GM?
Chrysler?
FFIDC, I really enjoyed the advice that people upside down in their homes should "seriously consider selling their home". Sell to whom?
Just another reminder of the old Wall Street saying: "Hope is for Dopes".
Best Wishes
What's next in this mad scramble? Automatic principal writedowns?
Would all the capital this sucks out of the banking system balance out with the improved ability to repay the loan?
bacon dreamz, nodoby is a Tanta original! See her earlier post: Project Lifeline.
i know, i was the one who pointed it out in the first place, remember?
As someone who called in to HOPE, I was told that I should have done a deed in lieu a long time ago, although by waiting, I inadvertently fell under the protections of the new 1099 rules.
They did suggest a short sale; but without any offers in 11 months on the market, that was about as useful as a pat on the head.
Hope hotline counselors typically theydon't suggest specific actions to a loan servicer, such as an interest rate freeze or a repayment plan. However, says Brenda Grauer, housing policy adviser to the Illinois attorney general, "We've found the most effective approach is to actually come up with a concrete proposal that will work for the particular borrower."
Who could possibly have known that coming up with a concrete proposal that will work for a particular borrower might actually help reach a resolution of the situation?
Here we thought just putting the guy on hold and calling up the bank and connecting the two would do the trick.
The hotline counselor referred Ms. Rhinehart to a local affiliate of NeighborWorks America, a congressionally chartered housing group, which says it asked the lender, HSBC Holdings PLC, to fix the loan at the initial rate of 7%. HSBC agreed to lower the rate to 4.68% for six months, reducing the monthly payment to $765.
No Hope Now Unless You Own A Gun...Then Sleep Sweetly.
Is that too gruesome?
How many people were told to stave off the foreclosure sales as long as possible so they can afford the deposit on an apartment?
Hope sinks eternal
what happened to the other 149,502 callers?
They don't matter.
Lumpeninvestor, wrong number or telemarketers ....
Actually - most of them were calling for money! ROFLOL.
Best Wishes.
I'm from your bank and i am here to help you! I am having trouble understanding some of this...I stopped taking drugs years ago.....what mix allows you to think these proposals make sense? meth and mushrooms washed down with everclear?
bacon dreamz, oops. Sorry. Yes, I remember now.
Best Wishes.
bd: 5
. . . but who's keeping score?
Recall that the original release, the wrong number (1-800 in place of 1-888) was given out. So, it got off to a bad start, and went downhill from there.
bd: 5
organic tofu visionz: 8?
Ah, the cruel, ironic side of our friendly, informative CR.
Very funny. But, tsk, tsk.
Depression risk might force U.S. to buy assets
Depression risk might force U.S. to buy assets
| Reuters
They did a lousy job of explaining Anthony Pennington-Cross' credentials. Before coming to MU, he had done mucho academic-type research on subprime, when he was with the st.louis fed.
and no, A P-C isn't the Shnapster.
I prefer the who coodanode tag.
I think that tag sums up the zeitgeist more effectively.
FFDIC,
Okay, just sling the D word around like it's gonna scare us. Heck, 35% of the commenters have predicted it.
Seriously, I thought it was interesting that the global strategist for a London bank would consider the possibility of U.S. laws changing so that the Fed could buy assets other than Treasuries.
Is London calling?
Or is the Bush Administration just behind the curve in dealing with the potential scope of the problem?
FFDIC,
Nobody wants to acknowledge this, but I believe the gov't under the auspices of the Patriot Act has been doing this for quite some time. Am I a conspiratist? Maybe...
35%? Really??? Wow, that puts us up there with ranks of non-mortgaged homeowners!
35%? Really???
Oh, yeah. This place is a nesting site for doom and gloomers.
As I've said before, I can't worry about failed auctions until the U.S. Treasury holds one and nobody bids.
sportsfan,
I prefer the term "realists".
And everyone laughed when I wasted more than $7 buying NoHopeNow.com and org.
(Picking up on an earlier thread)
Mish is... how to put it...
An idiot.
Oooo scary
Bzzt thanks for playing
To a first approximation, every prediction Mish has ever made has been wrong.
He sure writes a lot, though.
Another administration bungle. Look at the bright side, at least it's not causing significant deaths.
The capacity of our government to work efficiently and effectively is utterly gone. And I doubt much will change even if Obama is elected POTUS. This country needs a devastating depression to expunge all the corruption and arrogance it has accumulated over the five decades since it abandoned the gold/silver standard. We have lost touch with reality to the point where we started denying it existed. Big mistake.
And I have bad news for Pollyannas who blithely speculate about how soon the recovery will start: the US is in a death spiral and there won't be any recovery. Not with the US in any recognizable form.
sportsfan,
I gave up watching sports regularly, because it was a waste of time. Maybe you should consider doing the same.
Unirealist,
Death spiral. Those are big words. You might want to look up "hyperbole" in the dictionary.
every prediction Mish has ever made has been wrong.
Wrong, but let's not argue the point.
What matters is the quality of information accompanying the analysis, and he provides good information. The bank data was good -- coming from the Comptroller of the Currency, of all places.
Gotta separate the wheat from the chaff (and not let your personal biases get in the way).
Elvis,
Thanks for the advice. GFY.
okay...a bit of levity and reality for those addicted to credit (its time for rehab folks!)
YouTube -
Mish is... how to put it...
An idiot
I like Mish!
sportsfan,
You sound like you beat your kids. Leave them alone.
Conjure and I have one last thought for today:
The banks are going to run out of capital.
We're sure FFDIC can explain why.
CR and Rob Dawg,
Okay, buying the site name is very funny (although I'm not sure of the commercial value yet), but something rather important just happened:
When I type in No Hope now I am connected to No Hope now
When I type in Calculatedrisk.com - Economics Resources and Information. I do not get any connection to this website.
Since, in fact, CalculatedRisk is often miscited as calculatedrisk.com in the MSM, what does it take to get the standard, but incorrect, URL address to transfer to the blogosphere?
Elvis, what is your problem other than the fact that a bloated druggie who died choking on his own vomit seems to be your lifetime hero?
Good news: 15% of callers got some Hope.
Just getting to the IndyMac confessional post and noticed this:
And there were many events along the way that confirmed for those of us who believed that innovative home lending was possibly a paradigm shift (similar to widespread ownership of stocks by consumers) and definitely a legitimate marketplace
It occurs to me that so many people are going to be caught completely off-guard when they realize the "widespread ownership of stocks by consumers" is also an anomaly that will end very badly. Soooo many of these so-called "paradigm shifts" will ultimately be shown to be passing phenonema tied to the boomer demographic. Ironically, Bush's plan to privatize Social Security through the stock markets may have roughly marked the top of consumer participation in the equity markets.
Karl picked up on the little D thangy too and went to town on it. Good night, sweet dreamz bacon...
The Market Ticker
hate to read the above thread...
i'm a recent (six month) reader and 'engager' of CR. the wealth of information and opinion is exponentially higher than what CR and Tanta charge (read: zero), or what is available in the national rags. i'm here because it's the only place, to my knowledge, where intelligent, well informed people can discuss finance and economics without the typical internet bullshit of personal vendettas and assinine navel gazing.
any possibility of keeping it above the lowest common denominator? pretty please? if i'm in the minority no problem, i'll sulk back to the bland WSJ and (at least humorous) Economist.
Personally I think it turned out just like the govt. planned. A plan that looks like they are doing something when in reality they are doing absolutely nothing.
And now the solution is to give people an extra 30 day freeze to "work out" a loan on which many probably cannot even affort to pay the principal, let alone the interest.
Just more of the same from this administration. Just think Katrina etc. etc. -- all talk, no substance.
FFDIC,
DAAAAAMMMMMNNNNN!!!! Karl must've posted that late, 'cuz I read his Buffet post earlier. Guess I better check out Winter's take on this too.
mp, still out there? Killer stuff!!!
Wow, turns out it's Adler, not Winter, with this one. God I love the internet!
Just to add to the discussion, to me it seems clear that the Lifeline program is probably more for investors than people think.
Even AAA paper is become Junk rated. Products and Services Overview
We're hitting lows or pulling hairs at lows. Holders can't sell this crap at anything but fire-sale prices most likely.
ABX-HE-AAA 07-2 \t7 \t2 \t76 \t0A08AHAD4 \t65.50 \t99.33 \t65.50
ABX-HE-AA 07-2 \t7 \t2 \t192 \t0A08AGAD6 \t35.00 \t97.00 \t34.67
ABX-HE-AAA 07-1 \t7 \t1 \t9 \t0A08AHAC6 \t68.33 \t100.09 \t68.28
ABX-HE-AA 07-1 \t7 \t1 \t15 \t0A08AGAC8 \t35.31 \t100.09 \t35.31
ABX-HE-AAA 06-2 \t6 \t2 \t11 \t0A08AHAB8 \t81.89 \t100.12 \t79.97
ABX-HE-AA 06-2 \t6 \t2 \t17 \t0A08AGAB0 \t54.92 \t100.12 \t51.47
ABX-HE-AAA 06-1 \t6 \t1 \t18 \t0A08AHAA1 \t94.00 \t100.38 \t90.09
ABX-HE-AA 06-1 \t6 \t1 \t32 \t0A08AGAA9 \t81.31 \t100.73 \t77.58
"any possibility of keeping it above the lowest common denominator? pretty please? if i'm in the minority no problem, i'll sulk back to the bland WSJ and (at least humorous) Economist."
EL, it's just late nights. When our hosts are awake and paying attention, things are much more, um, sober. You should read on the job, like the rest of us
.
Death spiral. Those are big words. You might want to look up "hyperbole" in the dictionary.
Heh. Elvis, you should look up impersonation in the dictionary.
(Sorry, EL.)
Seriously, it is increasingly apparent that this unfolding debacle is not something from which the US (or the globe) will miraculously emerge intact. As a hegemonic power, the US took a very wrong turn during the Vietnam War. Don't blame that boob GWB; the die was cast by LBJ and Nixon. When we cast off the anchor of hard money, we lost its gravitas. We tossed overboard the fundamental check that it exerted on both thought and action.
We could have surrendered our new empire and kept hard money, but at highest levels the empire was deemed more important.
This is not OT. The absurdity of recent lending practices was not aberrative. Nor was the Nasdaq bubble, nor the S&L crisis, nor 70's inflation. When we chose to turn our very currency into an illusion, we lost our ability to discern reality, to measure and evaluate the significance of just about everything.
The US is in a death spiral similar to that of the Roman Empire and for the same reason.
mp,
You were the first to notice that the
bank reserves(non-borrowed) went negative.
What makes you think that the banks are gonna run out of capital when the FED will take any garbage for collateral?
DH,
Take a gander at that link that FFDIC posted above.
Tj,
yes, I just read it. I admit I do not fully understand it. I Thought
that the FED would fight deflation tooth and nail,especially during an election year. I think the article
was trying to say that the FED has no control over it. Can you explain
further please?
I hope Buffett is busted for antitrust abuses!
World markets lose $5.2trillion
BBC NEWS | Business | World markets lose $5.2trillion
Fears of a global slowdown triggered by US housing market woes wiped $5.2 trillion (£2.7 trillion) off global stock markets in January, say analysts.
According to ratings firm Standard and Poor's, 50 out of 52 share indexes around the world ended the month lower.
FBI investigates sub-prime crisis
BBC NEWS | Business | FBI investigates sub-prime crisis
The FBI is investigating 14 companies embroiled in the sub-prime mortgage crisis as part of a crackdown on improper lending.
It did not identify the companies but said the investigation encompassed developers, sub-prime lenders and investment banks.
FFDIC,
is that for real? Is there another twist that it could be? Is this 100% concrete or open for contrasting views?
And what about the other 150k people who called? What did they tell them? Walk away? Get f-ed? Lube up 'cause it's gonna hurt a bit?
Hope is not a plan...
DH, yes, the takeaway is that the Fed is largely powerless. Short term commerical credit leads moves in the fed funds rate. The effective funds rate keeps coming in below the target rate as credit demand dries up. The Fed has been aggresively draining liquidity from SOMA, otherwise they'd have to cut the target rate even more quickly to match demand. Poster "nothing" over on ticker forum has covered the subject exhaustively. A search for posts by her will provide a wealth of info.
LESSONS FROM THE COLLAPSE OF HEDGE FUND, LONG-TERM
CAPITAL MANAGEMENT
By David Shirreff
http://elsa.berkeley.edu/users/webfac/craine/e137_f03/137lessons.pdf
In the first two weeks after the bail-out, LTCM continued to lose value,
particularly on its dollar/yen trades, according to press reports which put the loss at
$200 million to $300 million. There were more attempts to sell the portfolio to a
single buyer. According to press reports the new LTCM shareholders had further talks
with Buffett, and with Saudi prince Alwaleed bin talal bin Abdelaziz. But there was
no sale. By mid-December, 1998 the fund was reporting a profit of $400 million, net
of fees to LTCM partners and staff.
In early February, 1999 there were press reports of divisions between banks in
the bailout consortium, some wishing to get their money out by the end of the year,
others happy to "stay for the ride" of at least three years. There was also a dispute
about how much Chase was charging for a funding facility to LTCM. Within six
months there were reports that Meriwether and some of his team wanted to buy out
the banks, with a little help from their friend Jon Corzine, who was due to leave
Goldman Sachs after its flotation in May, 1999.
By June 30, 1999 the fund was up 14.1%, net of fees, from last September.
Meriwether's plan approved by the consortium, was apparently to redeem the fund,
now valued at around $4.7 billion, and to start another fund concentrating on buyouts
and mortgages. On July 6, 1999, LTCM repaid $300 million to its original investors
who had a residual stake in the fund of around 9%. It also paid out $1 billion to the 14
consortium members. It seemed Meriwether was bouncing back.
With over $3T in money market accounts, it's a matter of price. The immediate problem is that we can't discover the price for many instruments. I'm interested in mortgage debt at 30 cents. These pukes don't want to take the hit. So we have to dance around until reality sets in and everyone accepts it. Mark the crap down until it moves! Money is lost. Get over it...why we collectively put up with this nonsense is crazy. Manufacturing and retail can't get away with this.
Lesson learned - Any market of significant size should trade on an exchange.
OT - Corus in the news
Y! Finance
As every real estate veteran knows, the market is cyclical and could eventually turn in the bank's favor. Ronald Peterson, an analyst in Chicago for Sterne, Agee & Leach, a Birmingham [Ala.]-based brokerage, argues that Glickman's gamble may one day pay off -- if people who signed contracts for condos pony up the promised dough. "The $64,000 question is, do these investors show up and close the deal at the price they agreed to? Then Corus is fine," Peterson says. "But if they walk away, Corus would be on the hook."
Foreclosure Rates for 2007, Metro Areas
Detroit, Stockton, Las Vegas Post Highest 2007 Metro Foreclosure Rates According to RealtyTrac(R) Year-End 2007 Metropolitan Foreclosure Market Report(TM)
US total foreclosure filings in 2007: 2,203,295.
Up 79.21% from 2006.
Top Ten:
Detroit
Stockton
Las Vegas
Riverside/San Ber'dino
Sacramento
Cleveland
Bakersfield
Miami
Denver
Ft. Lauderdale
We will know the bottom is being reached when large numbers of renters stop paying because they can't afford the monthly.
That will trigger notice that it's then time to start looking and lining up the deals because at that point, RE can't go any lower.
It happened in the early 1930's and imo it'll happen in the US within the next few years.
Happy Days are Almost Here Again.
Oliver Q, thank you for the list.
Interesting that Detroit is at the top, but news stories are seldom about Detroit. There'll be some about Cleavand and a lot about Florida or California. I guess Detroit was left for dead.
By the way...
I just popped here to see what folks have to say and lo and behold I found another elvis!
He is with a capital "E".
Mine is a lowly lower-case one.
At one time I sported mutton-chops with Imperistical asperations. I am not He who graced GraceLand. I just share the name.
I sometimes post at Mark Thoma's excellent blog.
More bad news on the credit crunch front:
Credit Woes Hit Funding
For Loans to Students
By LIZ RAPPAPORT and RANDALL SMITH
WSJ February 13, 2008; Page A1
The credit crunch that has so far caused more than $100 billion of losses for big Wall Street investment firms now extends to students in Michigan, and it could soon hit many other borrowers, ranging from California museums to the prestigious Deerfield Academy prep school in Massachusetts.
Yesterday, the Michigan Higher Education Student Loan Authority, a state agency, said on its Web site that "due to the current and unprecedented capital-markets disruption" it will stop making loans under the state's Michigan Alternative Student Loan, or MI-Loan, program. More than 100 Michigan colleges and universities participate in the program.
Credit Woes Hit Funding For Loans to Students - WSJ.com
At the ASF conference they said that only 1,000 loans have been refinanced through FHA Secure. We're talking drop in the ocean numbers.
The former brain behind Bush on O'Reilly last night:
(quote)
ROVE: I think its principally. I think the economy the media has been beating the drum for years and years and years that the economy stinks. And after a while, that begins to color peoples attitudes.
(end quote)
It's that damn media--after all they've been warning about this for years, haven't they?
I think literally everybody missed a big part of the story on the Buffett news yesterday, including some usually pretty sharp people on the blogs. ("Everything but subprime.")
EVERYBODY just leaped to the conclusion that Buffett offered to take all insured muni bond biz of monolines. I read nothing of the sort. I read $800 billion, which would would only be about two-thirds.
Before anyone can assume or reinsure a risk, credit analysis is necessary. Buffett's staff would have to do that bond by bond. It would probably take months. Once a municipal bond prospectus is filed, it usually is not updated. To get current data for due diligence, you need cooperation from the issuers, insurers and regulators.
There is a lot of bad insured municipal credit that Buffett would not want at any premium. He needed to start lobbying his case to be able to start a long, tedious due diligence process. Also, he may have needed a trial balloon to see if it would be worthwhile hiring, say, several hundred credit analysts.
Chorus
Telephone line, give me some time, Im living in twilight
Telephone line, give me some time, Im living in twilight
O.k. so no--ones answering,
Well cant you just let it ring a little longer
Ill just sit tight, through the shadows of the night
Let it ring for evermore.
Oliver Q,
Nice post. I live in the middle of area that had a 1,288% increase. I didn't realize this. Surprising. Thanks for the information.
My next door neighbors were foreclosed on. They took out all the equity they could and let their dogs wreck the house. They took the proceeds from the house ATM and bought a bigger house in West Virginia for cash. I like the new neighbors a lot better. So, I guess everyone, except possibly the banks, made out OK. Makes me happy.
Americans selling homes find prices sink below mortgage values....
Americans Selling Homes See Prices Go Below Mortgage (Update2) - Bloomberg.com
it will stop making loans under the state's Michigan Alternative Student Loan, or MI-Loan, program
OK, that could stab the student where/when they least expect it. The students would them turn to mommy/daddy (or the grandparents) for backup liquidity. Those individuals may have their own liquidity problems (HELOC's, home ATM, et al).
This could bode badly for the institutes of higher education.
What did they tell the other 150,000 callers?
I am so confused how running a debt/scam economy with debt used in the place of income and fiat paper in the place of real money could end badly? Hahaha - just kidding - it couldn't end any other way, sadly.
Unreal... the sooner the real price discovery happens, the better. That would also mean the end to the blasted "save the sheeple/home-moaners" campaigns.
fema for foreclosures. good job brownie.
[This could bode badly for the institutes of higher education.]
It's about time, isn't it? Seems like every effort to expand opportunities for higher education have been focused on getting students more money- mostly in the form of loans. The only industry that has outpaced higher ed's pricing increases is health care. 'Twould be refreshing to see the universities do some belt-tightening and cost-cutting of their own.
funny, like everywhere else run by MBAs, Universities 've been moving toward part-timers and grad students handling the teaching to cut costs and have been doing so for a while. Let me know how that candy-stiper handled your operation and how well the interns have been running your fortune 500 company, why don't cha?
Duh... it's not wonder the December rate freeze plan hardly helped anyone, when to qualify you have to:
1. Have a subprime ARM loan with a 36 month or less initial fixed rate originated between 1/1/2005 and 7/31/2007.
2. ARM must reset for the first time between 1/1/2008 and 7/31/2010.
3. Your loan must be in a packaged MBS security, not held on a bank's books.
4. You have to call your loan servicer.
5. You have to be current on your loan.
6. You have to be able to pay the starter (initial) fixed rate on the loan.
7. You are unable to refinance.
8. You have less than 3% equity in the home (hence unable to refinance)
9. Current credit score must be below 660.
It's all just positioning to make it look like the loan servicers care and are trying to do something to help. The administration's hands are tied because the industry is making up all the rules.
They did it again yesterday... if you call us ten days after getting the letter we know you won't open, we might be able to help you, but only if we can get around to it in 30 days, otherwise we will foreclose anyway.
Bloomberg is reporting other entities (municipalities, etc.) are having trouble raising money in these auctions and some are only able to get financing at huge rates like 20% for a 30 day loan (sort of like Jackson Hewitt does w/ poor taxpayers qualified for EITC). The same banks that are holding mortgage related losses refuse to lend except at ridiculous high rates, particularly when there is no insurance on the bonds (WBuffett where are you?). Nodoby knows all the ways the public will pay in months to follow.
EL at 1:31 am
Ditto and double ditto. This used to be a blog for information and learning. Now there is too much bosting about one's shorts/puts etc and too much blather. Just cut it out.
And btw, Banker, are you still out there? We miss your well informed postings.
Never gonna happen, the big banks won't let this go through:
Foreclosure Bill Would Mandate Mitigation
American Banker Wednesday, February 13, 2008 / By Stacy Kaper
Rep. Maxine Waters, who chairs the House Financial Services housing subcommittee, is drafting legislation that would ban foreclosures unless lenders make good-faith efforts to keep borrowers in their home and would require reporting on modifications. But industry representatives who have analyzed the draft said it would create a host of problems. Industry representatives said the bill would force them to break existing mortgage contracts and would open them to a barrage of investor lawsuits. They said it also would allow borrowers who did not receive an appropriate loan modification effort to sue. The servicer would have to notify the borrower in writing within seven days of implementing any loss-mitigation strategy, and servicers would also be forbidden from outsourcing loss-mitigation activities outside the United States.
The lenders say this would be too "burdensome" on them. Despite any legislative efforts, the industry (big banks) is too powerful and influential to let this go through. Big business always wins.