What happens Paully when you have an economy which specializes in "time-saving" services...experience a recession which see a significant bump in unemployment? I'd say lots more people will have a lot more time on their hands and substaintially less money for "time-saving" services. Rinse, lather, repeat. I have a feeling this immigration problem will solve itself.
If it were only that simple, they'd probably say yes. The problem is the CDS pools. How much leveraged crap is written against these over-valued assets?
This gets much, much bigger than a 30% haircut. Heck, a 30% market cap on BAC from the peak of $55 would be $38.5, so not too far from where they're at. I'd be willing to say it's priced in already. The problem is the leverage and the derivatives and the fictitious capital.
This guy was the head of Goldman Sachs? You have GOT to be kidding me. Total Joker! I thought these types had some public speaking skills. The least you can do is fix the stutter when you know you are lying your ass off. It's kind of a giveaway.
How about something more to think about for RE market in the USA...
Lake Mead, a key source of water for millions of people in the southwestern United States, could go dry by 2021, a new study finds.
The study concludes that natural forces such as evaporation, changes wrought by global warming and the increasing demand from the booming Southwest population are creating a deficit from this part of the Colorado River system.
Along with Lake Powell, which is on the border between Arizona and Utah, Lake Mead supplies roughly 8 million people in the cities of Las Vegas, Los Angeles, and San Diego, among others, with critical water supplies.
Just the beginning! I heard him say it. What I didn't hear him say was that the longer it takes to fix the longer it will last. Just the opposite of your life insurers math. Sheesh.
As I have posted previously. Paulsen looks like a very nervous man. He is trying to cover his ar.e using the publics time & money. He understands full well that when the impending legal pusuits start in earnest, he is going somewnere that something smaller, Enron, lead to.
Then he & Chuckee & a few other greedy smart-arsses can use a monpoly board and rip each other off.
In the same cell!!
ba_lurker writes: GS likely has massive short positions in various markets.
GS thought it was smart by rapidly covering their losing CDOs with shorts last summer. But by now, even GS must realize that much of their "short" insurance (lots of CDS bets) will be worthless when they'll need 'em due to newly-absent counterparties.
Risk covered by risk covered by more risk... my mother would have described this as "too clever by half". They'd have been smarter to just take their lumps last year. God only knows what's in the Level 3 trunk now...
I am not sure why though, he is worth several hundred million and he was albe to sell his GS stock and pay ZERO tax and keep his money in treasuries (nice tax loophole).
Ambac Financial said late Tuesday that an $800 billion reinsurance proposal by Berkshire Hathaway Chairman Warren Buffett is not in the interest of all the bond insurer's policyholders or the company. "Mr. Buffet's proposal would result in little to no net capital relief to support Ambac's ratings," the bond insurer said in a statement e-mailed to MarketWatch. "Ambac continues to vigorously pursue various alternatives for taking our franchise forward to the benefit of all of our policyholders."
No kidding, bud. The offer was not intended to help you or your CDO clients. Good bye, monolines.
I would have expected Paulson, as the former head of the premier investment bank in the world (although really more of a hedge fund in reality), to be a much more captivating public speaker. I found myself wondering if he has a legitimate stuttering problem...
Paulson is always nervous because he knows full well the shady shit that went on at Goldman under his watch and he is praying that no one will put it together and decide to crucify him.
You stutter to indicate "I am rummaging around in my copious brain for just the right piece of info and phrase to effectively pull the wool over your eyes."
When I called my servicer a year ago and inquired about "doing something about that 10k dollar prepayment penalty" I got a snivelly remark about how my mortgage is owned in parts by so many different interests, that they could not possibly do anything about it. I got no further when I mentioned that the prepayment was a big stumbling block in my refi effort, and that I could forsee trouble down the line if we couldnt work out a way to stabilize my terms while my house still had equity-
Do you think ill get anything different when I call again and suggest writing down the note 30%?
Lake Powell is already been drawn down a lot. The dam itself maybe in trouble because of sediment building up.
Did they ever screw up a beautiful part of the world. Between the dam and the coal plant. I can feel myself getting pissed thinking about it. I lived near there a million years ago.
If they ever lower the principal balance by 30% on those who are 90 days late, what will the neighbors who are paying on time do? On a $500,000 loan out in CA that's a 150,000 gift. Hell yeah, i'll be 3 months late too.
MBIA and AMBAC probably felt pretty loved and needed for a while there. Like a heroic man drowning in the icey river after venturing out to save a poor stranded puppy, He sees his rescuers lining up along the banks of the cold river to save the day and pull the hero to shore. He then hears "Tie the rope around the puppy!"
The National Association of Home Builders has frozen all political contributions out of frustration with what it deems feeble efforts by the Bush administration and Congress to stabilize the housing market and stimulate homebuying. "
Front of the National Mortgage News website.
Kind of funny, wtf do they want the government to do, give money away? Oh wait, they are already doing that.
This is a (mostly) serious question: if (as per the Marketwatch article cited by Gary) the government buys stocks and assets, and therefore owns said stocks and assets, does that make the United States a socialist nation?
keen? Not really. We already know they are supposed to be awful, based on pathetic same store sales data. Retail inflation isnt doing much, so I dont see much way to get a very good number tomorrow month to month, however, the yoy figure might be good enough to get a short pop in the morning before people wake up to how screwed we are.
Can someone please explain to me 1. Why Buffett would offer relief to AMBEC (I assume it is not out of the goodness of his heart), 2. Why it is not in AMBEC's interest to take this offer, 3. Why is Buffett being excoriated as a selfish pig for making the offer?
Lin,
Briefly, the answer to your question is that the way in which ratings agencies rate municipals is very messed up. A single-A rated municipal is less likely to lose you money than a AAA rated corporate. Go figure. The game the monolines have been playing is "arbitraging" this difference - charging (real cash money) insurance premiums for (virtually no) difference in actual credit quality.
As someone smarter than me once said - how does it make sense that AMBAC, with $5 billion of capital , can guarantee the debt of California, which is the fifth biggest economy in the world???
So, why is Buffett offering to take the muncipal insurance book off Ambac? Because it's a license to print money. Clever old guys like Buffett like that kind of stuff.
Should Ambac say yes? Probably.... But at the right price. As the much maligned Sivaram Vileupathaii has said (I know I spelled it wrong, sorry) all this stuff is about the timing of losses, not the extent of losses. Take some bad stuff off your balance sheet and get cash. All businesses have to do this at some time.
If you want to see the heart of the problem watch the additional vidclips that come up with Tara talking about how to maneuver to still buy a house when your credit is still lousy. While the advice was accurate it's not clear that it's sensible - it's still all about getting into a house you can't afford. Nothing about waiting until the storm blows over and values are more realistic.
BtW - Buffett's offer to the insurers was to take the municipal insurance off their books and leave them with all the dreck. For which he's offering, what 3/4 or less on the dollar. And effectively leaving them with stuff they can't pay; i.e. bankrupt. Clever move on his part as with his new startup plus that stuff he owns the market.
But they go out of business - kaput. Kapisch. No wonder nobody wants to take him up on it.
Average Joe, very good article you forwarded to Lin at 6:29pm. Very interesting about the potential downgrades of the monolines now that Buffet made an offer.
Sue, I'm not sure where you got that business about the government buying stocks and bonds from the article I posted . . . there's nothing in there like that.
hiker90, I saw that Zillow article, but I'm not sure they are a good source of data.
I don't see how 39% of buyers in 2006 can be upside down, but less than 1% of homeowners overall. That doesn't add up.
Overall, only 3 percent of those who purchased in 2003, and less than 1 percent of all homes in the United States regardless of when they were purchased, have negative equity.
Other data shows it's closer to 10% of households with mortgages or 7%+ of all homeowners have no or negative equity. That makes more sense.
Some quick arithmetic: Forget all the other years, take 39% of the sales in 2006 (7.5 million sales) ... that is about 3 million homeowners. Yes, some people sold again, some were investors, etc, but I'm just taking one year.
Well 3 million divided by 75 million total homeowners is 4%. The less than 1% number makes no sense.
After seeing Wall Street pass out the Kool Aid to the sheep for some many years, it's a beutiful thing when they're now forced to drink it themselves, tastes good huh!!!!!!
Rumor that a $9B bank about to be shut down. Which one?
Wilmington Trust Company 9,896,328
Cathay Bank 9,617,516
Mellon Trust of New England 9,488,305
Bank Hapoalim 9,397,131
Arvest Bank 9,259,903
Israel Discount Bank of New York 9,111,754
Banco Santander 9,055,917
Corus Bank 9,019,234
International Bank of Commerce 8,942,788
Trustmark National Bank 8,768,502
Fremont Investment & Loan 8,727,553
First National Bank of Omaha 8,646,516
Texas State Bank 8,495,245
Umpqua Bank 8,211,618
NewAlliance Bank 8,169,964
Capmark Bank 8,119,633
First Niagara Bank 8,098,818
I thought Paulson was pretty frank. No Secretary of the Treasury is going to come out in public and say we are up a creek. The fact that he could admit we are at the beginning of the mortgage credit crisis says to me that he is resigned to a very long, drawn out recovery process. There will be plenty of time to discuss the recession as it comes into play acutely.
Look out below financials and cyclicals, we have a long way to fall.
Today I reviewed a loan quote for a neighbor who has done a $150,000 cash out refi for the last 3 years using NINJA Option ARMS with World Savings (now Wachovia). In today's offering Wachovia was willing to give her a new option ARM with a five year fixed rate of 6.50% and with a neg am teaser payment using 3.25%.
So there you have it. Despite all of the publicity Wachovia is still offering a neg-am option ARM using no underwriting but a FICO score and ignoring the fact that they have already given this borrower two cash out refis for a total of $300,000 only to now have a new application showing that, once again, the borrower has no liquid assets (of course, they don't ask) and has high balances on their credit cards. The reason for the refi is that they are having trouble making the payments on their (now) amortizing loan.
There was a time when a pattern of cash out refis and bill consolidation raised an underwriting red flag. But these fools are still doing these loans. Unbelieveable!
As someone smarter than me once said - how does it make sense that AMBAC, with $5 billion of capital , can guarantee the debt of California, which is the fifth biggest economy in the world???
For the same reason Bill Gates has life insurance. California has the lowest GO debt rating of any major state because of statutory limits on tax increases. It makes sense for CA to have insurance on its GO debt. It doesn't make sense for the podunk monorail, which would be rated C without insurance, to pay a few bucks and get triple A.
Everybody who thinks municipalities are so solid, get this straight. Municipalities are not regulated and they don't offer any guarantees. The insurance industry is and does.
Buffett's audience isn't the monolines. I think he's paving the way for one or more major monolines to be taken into receivership on the insurance company. There could be advantages to this happening before a downgrade. The holding company will still exist, and keep trading in the market, after the insurance company is taken over by New York, Wisconsin or Maryland.
Not to quibble on GO ratings..but do you have a link. Or a bit more analysis. Because I don't understand this staemnet:
"California has the lowest GO debt rating of any major state because of statutory limits on tax increases. It makes sense for CA to have insurance on its GO debt. It doesn't make sense for the podunk monorail, which would be rated C without insurance, to pay a few bucks and get triple A."
Sorry if this OT development has been mentioned already (from WSJ$):
Delphi's Bankruptcy Exit Hits a Snag
J.P. Morgan, Citigroup Confront Loan Hurdles
February 13, 2008
The $6.1 billion plan to pull auto-parts supplier Delphi Corp. out of bankruptcy protection was in jeopardy yesterday as bank lenders tried to cope with credit markets that remain virtually shut, say people familiar with the matter.
Delphi's chief lenders, J.P. Morgan Chase & Co. and Citigroup Inc.'s Citigroup Global Markets, are having difficulties syndicating the loan to other lenders, these people said. Hedge funds and other investors are also balking at the terms, saying that they aren't priced appropriately for the risk involved.
Increasingly, say investors and others involved in the matter, Delphi's former parent, General Motors Corp., may have to step in and provide financing to fill the gap. Yet too much GM involvement might spook stock investors, who don't want the country's largest parts supplier too beholden to GM and its price-cutting demands.
My, my, my. There certainly appears to be inflation in the cost of risk...
I don't know why anyone here thinks that someone who was excellent at one thing - running an investment banking firm like GS - would necessarily be excellent at another thing - being a great orator. I'm talking of course about Paulson. His job at GS wasn't to win friends and influence people - it was to make money. And he was pretty good at it. As were most heads of GS.
Also FWIW - I don't think it's polite to make fun of people who stutter or have other speech impediments.
Some of the slickest speakers in the world have nothing between their ears - only "golden tongues". That's probably why our political class is - in general - really pathetic. They don't say anything - but they really say it well.
BTW - I will be helping to prepare course materials for high school students about credit. Probably doing some teaching too. If any of you have any good ideas - based on personal experiences or otherwise - could you drop a few hints in your messages? I really don't know very much about credit (except a little about how to value it when I buy it) - I am a Dave Ramsey kind of person. But that is probably too extreme for most people these days. Robyn
P.S. Regarding the Buffett offer - my understanding based on his interview on CNBC this morning is that he isn't trying to buy the muni book of business from the monolines - he is only offering to reinsure it. Big difference. I haven't gone through the numbers (will do that tomorrow when I read the details in the print media). So I don't know if the numbers make sense. But - keep in mind that insurance is very different than reinsurance. Reinsurance - in general - accrues to the benefit of the insurer who buys the reinsurance - not to the people who bought the insurance policies from the insurer (although the law can vary from state to state). I haven't handled a reinsurance case in a long time - and I only handled them in Florida - but my recollection in general is that reinsurance proceeds become the assets of the insurer - and subject to any and all general claims against the insurer first (as opposed to specific claims by the insureds). Of course - who knows how any such deal might be structured and sliced and diced if it actually went through?
Is Bank of America already in the process of being bailed out by the federal government?
On the same day that it is announced that BofA will be added to the Dow, it also receives a Wells notice from the SEC. The next day the company says it may be willing to write down mortgages by 30% at a press conference with the Treasury Secretary. The company also has amnesty from the Department of Justice in exchange for cooperation. And the Countrywide deal hasn't fallen through yet.
The Dow addition might have top ticked the stock for at least a number of years, and with the state of its business it will exacerbate a Dow move down. Additionally, rolling Countrywide's and BofA's problems all together in one neat package would make it easy. The bailout would make politicians feel like they are solving the problem and the market would probably bounce off future lows. It seems possible.
Ambac Financial said late Tuesday that an $800 billion reinsurance proposal by Berkshire Hathaway Chairman Warren Buffett is not in the interest of all the bond insurer's policyholders or the company. "Mr. Buffet's proposal would result in little to no net capital relief to support Ambac's ratings," the bond insurer said in a statement e-mailed to MarketWatch. "Ambac continues to vigorously pursue various alternatives for taking our franchise forward to the benefit of all of our policyholders."
No kidding, bud. The offer was not intended to help you or your CDO clients. Good bye, monolines.
I can only imagine many lawyers now rubbing their hands as their clients ask to shovel the S*** back to the originators. Ever read ml-implode.com? They already tried. Most originators are so thinly capitalized that it only took a few loans put back at par to force them out of business. The real fight's going to be between people who bought the toxic-waste securities (including cities, universities, pension funds) and the people who sold them. That process has already started (story this past week out of Mass: Merrill Sued for Fraud by Massachusetts Over CDO Sale (Update3) - Bloomberg.com
BTW - I will be helping to prepare course materials for high school students about credit. Probably doing some teaching too. If any of you have any good ideas - based on personal experiences or otherwise - could you drop a few hints in your messages? I really don't know very much about credit (except a little about how to value it when I buy it) - I am a Dave Ramsey kind of person. But that is probably too extreme for most people these days. Robyn
God bless ya!
I'm not quite as negative vis-a-vis credit as our friend Mise but a healthy caution is wise.
I'd make 'em role play. Kids are good at that - show them what real jobs pay and what real stuff costs and make them budget - with & without credit.
Make them 'experience' a few set backs and see how scary debt is to navigate in even a minor family crisis.
Just my theory... if I lived closer I'd offer to help you volunteer. I've been a mentor to freshman engineering students and it was one of the most rewarding things I've ever done.
A bit dour now...but Robyn, building off dry's idea:
Show them APR and compunding interest. Show them how to calculate the cost of the thing they buy on a CC, vs. the csot of waiting and saving for it. Explain to them when the put something on revolving credit how much longer it takes to pay it off, and how much more of their labor it costs to buy CC vs. savings. THAT is the lesson they need to learn before they run the gauntlet of CC hucksters on the College campus, or the offers in the mail.
dryfly, if you were closer i'd toss you some of my engineering students! But reading that post you responded to, i'm beginning to understand why i get what i get out of the high schools. i'm not sure why in heaven's name one would have someone help prepare course material on a subject they admittedly know very little about, but hey, what do i know about academics
I'd show them how with a entry-level job at subway, working only 3days for 6 hours, that with a simple little I/O sisa, they can move out of the parents house and have the parents bail out of there own overpx'ed McEstate, there'by saving the household mucho-dinero, and would allow the whole family time to sit and watch brittany/k-fed re-run's.
AMBAC keeps turning down everything except capital injections (which nobody, especially Warren Buffet, is stupid enough to do). I think somebody at AMBAC wants a permanent vacation in the Cayman Islands.
Sue writes:
This is a (mostly) serious question: if (as per the Marketwatch article cited by Gary) the government buys stocks and assets, and therefore owns said stocks and assets, does that make the United States a socialist nation?
Sue | 02.12.08 - 6:20 pm | #
No, if it were the proceeds from national assets would be distributed more equitably.
Rumor that a $9B bank about to be shut down. Which one?
Haven't I been telling this board for six months that Corus is the stupidest bank in the U.S.?
Look, you have a $10 billion book of loans, almost all concentrated in CONSTRUCTION, almost all concentrated in hi-rise CONDOS, and most concentrted in BUBBLE MARKETS.
Whatever happened to diversification?
If Corus is the BK, their senior mgt. should be indicted for fraud. They've been putting out nothing but sunshine.
"DEFERRED PREMIUM REVENUEThe fair value of the Companys deferred premium revenue is based on the estimated cost of
entering into a cession of the outstanding portfolio with third-party reinsurers under current market conditions."
A balance sheet liability. The proposed cost of taking on that liability would be assets equal to 1.5x the current booked value of that liability. About $3b for mbi.
Show them an actual pay stub. Kids tend to be shocked when they see the difference between their gross and net pay when they get their first check. FICO!!!! I'm just a kid.
Surely Buffett's offer cannot just be simple reinsurance, limiting the monoline's exposure in the event of a muni default?
Because that would be pointless; the munis are not going to default. Or at least, that is not the risk that is threatening the monolines' ratings (and solvency).
I highly suspect Buffett's offer is structured to do precisely what he says: Put the muni holders "first in line". For that to be true, the reinsurance would have to be structured to kick in if the primary insurer (i.e. the monoline) takes a massive capital hit independent of the muni bonds.
Otherwise, Buffett's own description -- and the offer itself -- makes no sense at all.
For such protection, of course, Buffett would surely demand a significant premium... Which is why it is fair to characterize this as "buying the muni business on the cheap".
I believe today's interview on CNBC was primarily a performance for the regulator. Buffett is very, very good.
This is a (mostly) serious question: if (as per the Marketwatch article cited by Gary) the government buys stocks and assets, and therefore owns said stocks and assets, does that make the United States a socialist nation?
If it comes to that (and I hope it does not), you might be able to get a little perspective by looking at what happened to property (i.e. land) ownership between 1926-1934 in Florida. As it was explained to me (about 20 years ago, when doing some really old property title chain searches) when the property 'owners of record' could not pay their taxes, the counties attempted to sell tax certificates. There were no (or very few takers) due to the liquidity situation (keep in mind that the Fla land boom collapsed about 3 years ahead of the stock market crash). Thru some mechanism (which I do not have all the fine details of) the State of Florida (via the Internal Improvement Trust Fund) began buying the unsold tax certificates. That provided liquidity to the counties (so that they could continue operating as normal as the times allowed). Eventually, the State of Florida ended up owning large parts of the state (roughly 1/3). Those holdings were sold off piecemeal as the economic climate improved (late 1930's, etc). Some smaller tracts (especially environmentally sensitive areas) may still be held by the State to this day.
At times, companies put out PR that's just so weird that you just know something is wrong. Check this out about Corus and its condo lending:
"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."
Despite the collapse of once-hot condo markets, Corus isn't abandoning the game. It says it expects to lend as much as $1 billion more in the opening quarter of this year, which would equal half the new loans it made for all of last year. And much of that will be in the condo market, even as Glickman warns that foreclosures could prove to be the bank's "best course of action" for some clients."
Okay, so if condos are so iffy, and foreclosures are so probable, why are they saying they will loan another $1 billion in the first quarter? It just doesn't make sense.
Robyn-
I think using some real life examples would be good, both the positive and negative sides. Latrell Spreewell and Macklowe come to mind in the news. And personally I think role playing imagining being the lender might be helpful bringing in the profit motive of the lender to the fore!
Given that you have all been reading Robyn's posts for some time now, what makes you think she is being truthful re: mentoring students (or much else).
Spree update - no for sale signs, but there were 3 deer in his driveway. It was a really cool scene, actually. Too bad I only had my crap cameraphone to capture the moment.
I remember my grandfather in Jacksnville, Fl receiving his property tax notice which also
included a listing of land for sale. Some of it
was beach front property which was of little
use since you couldn't grow anything on it.
Take Misean's advice re compound interest and drive the point home.
Get some monopoly money and do a little research re avg income/spending for young person w or w/o kids. Then give them the monopoly money and make them deduct what they owe for bills. For bigger impact, do it as though they have kids.
Use real-life examples. Specifically MC Hammer, who blew through $5M in an incredibly short time.
Don't be afraid to inject a bit of morality into the job...these folks aren't your friends and aren't doing you any favors.
I haven't read everyones comments but it's obvious Paulson is shook. You can hear it in his voice. He knows we are in unprecedented territory and our total system is on the brink of collapse.
We all should buy guns and canned goods. This is going to get alot uglier before it gets better
Paulson, agreeing to serve in the Cabinet of the weakest and most underwhelming president this country has ever seen, tells you all you need to know about his character, judgment, and IQ.
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After seeing Wall Street pass out the Kool Aid to the sheep for some many years, it's a beutiful thing when they're now forced to drink it themselves, tastes good huh!!!!!!
Moxie, described in a wiki article that is just, wrong in so many ways. The pictured 12 oz. can could provide an adequate sample to everyone who will read this blog today.
1st
Is B of A willing to GET written down 30%?
♫ you got a lot .. more .. goin' for you with Hank ♫ ♫
name that tune, anyone?
I especially liked the part about our diverse economy....you know the hollowed out one that is majority comprised of services?
Wiki link
What happens Paully when you have an economy which specializes in "time-saving" services...experience a recession which see a significant bump in unemployment? I'd say lots more people will have a lot more time on their hands and substaintially less money for "time-saving" services. Rinse, lather, repeat. I have a feeling this immigration problem will solve itself.
"Is B of A willing to GET written down 30%?"
If it were only that simple, they'd probably say yes. The problem is the CDS pools. How much leveraged crap is written against these over-valued assets?
This gets much, much bigger than a 30% haircut. Heck, a 30% market cap on BAC from the peak of $55 would be $38.5, so not too far from where they're at. I'd be willing to say it's priced in already. The problem is the leverage and the derivatives and the fictitious capital.
This guy was the head of Goldman Sachs? You have GOT to be kidding me. Total Joker! I thought these types had some public speaking skills. The least you can do is fix the stutter when you know you are lying your ass off. It's kind of a giveaway.
I like Hank.
He just told folks they were screwed.
The stupid media didn't even have an intelligent followup.
Of course BofA isn't going to writedown everything by 30% frickin lickin fried chicken percent.
That would make them, um, insolvent.
So now we just sit here and watch everything begin to collapse.
Nothing more to say. Wall street is certafiably insane. Not just irrational, but insane.
Well, I have work to do. Got to start getting ready to make some popcorn and watch the edifice crumble.
Washington has no clue, but the solutions will have a very very very high price for Wall Street. They though Buffett was cruel...
Someday this war's gonna end...
The lie causes the stutter. With no hope, no future, scared witless the stutter is the normal reaction.
How about something more to think about for RE market in the USA...
Lake Mead, a key source of water for millions of people in the southwestern United States, could go dry by 2021, a new study finds.
The study concludes that natural forces such as evaporation, changes wrought by global warming and the increasing demand from the booming Southwest population are creating a deficit from this part of the Colorado River system.
Along with Lake Powell, which is on the border between Arizona and Utah, Lake Mead supplies roughly 8 million people in the cities of Las Vegas, Los Angeles, and San Diego, among others, with critical water supplies.
Yahoo! 404 - Page Not Found
2021 is just 13 yrs from now and the people that hold too long in these sectors are may be left high and dry !
Just the beginning! I heard him say it. What I didn't hear him say was that the longer it takes to fix the longer it will last. Just the opposite of your life insurers math. Sheesh.
A few days ago other jokers from GS said things are going to get worse. Today Hank repeated the same thing.
This can only mean one thing - pump n dump.
GS likely has massive short positions in various markets.
Products and Services Overview
New lows again.
How about the AAA 07 vintage trading at 65-68 cents on the dollar!!!
HEY, that is still supposed to be AAA!!!
LOL, I guess Buffett has left the buillding.
Someday this war's gonna end...
As I have posted previously. Paulsen looks like a very nervous man. He is trying to cover his ar.e using the publics time & money. He understands full well that when the impending legal pusuits start in earnest, he is going somewnere that something smaller, Enron, lead to.
Then he & Chuckee & a few other greedy smart-arsses can use a monpoly board and rip each other off.
In the same cell!!
regards
AHMEN! - and I quote from the news conference: "Lax underwriting procedures" it is not a subprime thing at all.
I can only imagine many lawyers now rubbing their hands as their clients ask to shovel the S*** back to the originators. All the warrants be damed.
Worst is yet coming but US can avoid recession? What a great country!
"Lake Mead, a key source of water for millions of people in the southwestern United States, could go dry by 2021, a new study finds.
The study concludes that natural forces such as evaporation.."
Can't the Fed just lower the rate of evaporation too?
Depression risk might force U.S. to buy assets
| Reuters
This is what he is trying to talk us out of....
Maybe it's just me, but every time I see Paulson talk I find it more and more difficult to believe that he was ever the head of Goldman.
There will be no resolution to this problem until
we consider FAITH BASED solutions. The answer is to declare a JUBILEE. (you could look it up)
Re X's Reuters article:
What's the point of the Treasury buying bonds and stocks? They have to issue debt to do it. Doesn't really get us anywhere.
If you want a sovereign wealth fund, you need some sovereign wealth.
"One foreclosure is a tragedy, but 1 million foreclosures is a statistics"
Hank Paulson-January 2009
ba_lurker writes: GS likely has massive short positions in various markets.
GS thought it was smart by rapidly covering their losing CDOs with shorts last summer. But by now, even GS must realize that much of their "short" insurance (lots of CDS bets) will be worthless when they'll need 'em due to newly-absent counterparties.
Risk covered by risk covered by more risk... my mother would have described this as "too clever by half". They'd have been smarter to just take their lumps last year. God only knows what's in the Level 3 trunk now...
You can tell he is nervous.
I am not sure why though, he is worth several hundred million and he was albe to sell his GS stock and pay ZERO tax and keep his money in treasuries (nice tax loophole).
Ambac says no! to Buffet anchor:
Ambac Financial said late Tuesday that an $800 billion reinsurance proposal by Berkshire Hathaway Chairman Warren Buffett is not in the interest of all the bond insurer's policyholders or the company. "Mr. Buffet's proposal would result in little to no net capital relief to support Ambac's ratings," the bond insurer said in a statement e-mailed to MarketWatch. "Ambac continues to vigorously pursue various alternatives for taking our franchise forward to the benefit of all of our policyholders."
No kidding, bud. The offer was not intended to help you or your CDO clients. Good bye, monolines.
Did you see him look at his blackberry when he was talking - I wonder if that was GW or BB?? :0
That snippet from marketwatch, by the way.
Ambac: Buffett plan is not in interest of all policyholders - MarketWatch
I would have expected Paulson, as the former head of the premier investment bank in the world (although really more of a hedge fund in reality), to be a much more captivating public speaker. I found myself wondering if he has a legitimate stuttering problem...
Doesn't really get us anywhere.
If you want a sovereign wealth fund, you need some sovereign wealth.
Fair Economist | 02.12.08 - 5:50 pm | #
Exactly. Just more Gov. involvement.
Secretary Paulson, in George Bush America, homes foreclose you!
Paulson is always nervous because he knows full well the shady shit that went on at Goldman under his watch and he is praying that no one will put it together and decide to crucify him.
You stutter to indicate "I am rummaging around in my copious brain for just the right piece of info and phrase to effectively pull the wool over your eyes."
When I called my servicer a year ago and inquired about "doing something about that 10k dollar prepayment penalty" I got a snivelly remark about how my mortgage is owned in parts by so many different interests, that they could not possibly do anything about it. I got no further when I mentioned that the prepayment was a big stumbling block in my refi effort, and that I could forsee trouble down the line if we couldnt work out a way to stabilize my terms while my house still had equity-
Do you think ill get anything different when I call again and suggest writing down the note 30%?
balls.
Lake Powell is already been drawn down a lot. The dam itself maybe in trouble because of sediment building up.
Did they ever screw up a beautiful part of the world. Between the dam and the coal plant. I can feel myself getting pissed thinking about it. I lived near there a million years ago.
I, I, I, I, I, think we're, we're we're we're screwed.
RK @ 5:49 -
You want a Jubilee?
Well, since Bono actually has some nice things to say about GW Bush and Africa/AIDS, GW needs to talk to his bud and get the ball rolling.
And the Pope has to get on board as well. Hey, Dad Bush did some cool things for Greater Germany, so he can get on the horn, too.
Mebbe have some really cool concerts in China and Abu Dhabi.
Wasn't there a movie about 20 years ago about a broke US having a telethon to raise money?
If they ever lower the principal balance by 30% on those who are 90 days late, what will the neighbors who are paying on time do? On a $500,000 loan out in CA that's a 150,000 gift. Hell yeah, i'll be 3 months late too.
MBIA and AMBAC probably felt pretty loved and needed for a while there. Like a heroic man drowning in the icey river after venturing out to save a poor stranded puppy, He sees his rescuers lining up along the banks of the cold river to save the day and pull the hero to shore. He then hears "Tie the rope around the puppy!"
"NAHB Freezes All PAC Contributions
The National Association of Home Builders has frozen all political contributions out of frustration with what it deems feeble efforts by the Bush administration and Congress to stabilize the housing market and stimulate homebuying. "
Front of the National Mortgage News website.
Kind of funny, wtf do they want the government to do, give money away? Oh wait, they are already doing that.
OK this is a bit OT but is anyone else keen to see the retail numbers tomorrow morning?
This is a (mostly) serious question: if (as per the Marketwatch article cited by Gary) the government buys stocks and assets, and therefore owns said stocks and assets, does that make the United States a socialist nation?
keen? Not really. We already know they are supposed to be awful, based on pathetic same store sales data. Retail inflation isnt doing much, so I dont see much way to get a very good number tomorrow month to month, however, the yoy figure might be good enough to get a short pop in the morning before people wake up to how screwed we are.
@Sue
ghasp!
Can someone please explain to me 1. Why Buffett would offer relief to AMBEC (I assume it is not out of the goodness of his heart), 2. Why it is not in AMBEC's interest to take this offer, 3. Why is Buffett being excoriated as a selfish pig for making the offer?
Sorry - just new here.
"OK this is a bit OT but is anyone else keen to see the retail numbers tomorrow morning?"
I am one of the companies that reports numbers to the commerce department...I already know they are shitty!
JUBILEE!!!
Lol - let the bankers rot, indeed.
Lin,
Read this
The Market Ticker
Lin,
Briefly, the answer to your question is that the way in which ratings agencies rate municipals is very messed up. A single-A rated municipal is less likely to lose you money than a AAA rated corporate. Go figure. The game the monolines have been playing is "arbitraging" this difference - charging (real cash money) insurance premiums for (virtually no) difference in actual credit quality.
As someone smarter than me once said - how does it make sense that AMBAC, with $5 billion of capital , can guarantee the debt of California, which is the fifth biggest economy in the world???
So, why is Buffett offering to take the muncipal insurance book off Ambac? Because it's a license to print money. Clever old guys like Buffett like that kind of stuff.
Should Ambac say yes? Probably.... But at the right price. As the much maligned Sivaram Vileupathaii has said (I know I spelled it wrong, sorry) all this stuff is about the timing of losses, not the extent of losses. Take some bad stuff off your balance sheet and get cash. All businesses have to do this at some time.
If you don't understand the difference between cash and accrual accounting then do by all means pay more attention to the answer above mine.
CR,
Did you see this article about Zillow's research?
"Third of recent buyers owe more than home's value"
Yahoo! 404 - Page Not Found
Best,
The only time in my life that I've stuttered like that was when I found out we were moving to Kansas F@cking City.
If you want to see the heart of the problem watch the additional vidclips that come up with Tara talking about how to maneuver to still buy a house when your credit is still lousy. While the advice was accurate it's not clear that it's sensible - it's still all about getting into a house you can't afford. Nothing about waiting until the storm blows over and values are more realistic.
BtW - Buffett's offer to the insurers was to take the municipal insurance off their books and leave them with all the dreck. For which he's offering, what 3/4 or less on the dollar. And effectively leaving them with stuff they can't pay; i.e. bankrupt. Clever move on his part as with his new startup plus that stuff he owns the market.
But they go out of business - kaput. Kapisch. No wonder nobody wants to take him up on it.
JUBILEE!!!
Lol - let the bankers rot, indeed.
Hmmmm...
All land outside the city walls reverts to its original owners during Jubilee. The Native Americans are going to be dancing in the streets.
FFDIC-
you started a rumor concerning a 9B banking institution. Provide validation please or retract your statement.
Average Joe, very good article you forwarded to Lin at 6:29pm. Very interesting about the potential downgrades of the monolines now that Buffet made an offer.
Why is Buffett being excoriated as a selfish pig for making the offer?
cherry picking the monolines' performing business lines.
Kinda like the 'B' Ark in HHGG. Buffett gets the good stuff and the monolines get sent off into space with the junk.
Sue, I'm not sure where you got that business about the government buying stocks and bonds from the article I posted . . . there's nothing in there like that.
Gosh, that did not last. I watched the BOA video but the Paulson one nows bear the legend " Sorry this video is no longer available".
The Paulson one just worked for me.
hiker90, I saw that Zillow article, but I'm not sure they are a good source of data.
I don't see how 39% of buyers in 2006 can be upside down, but less than 1% of homeowners overall. That doesn't add up.
Overall, only 3 percent of those who purchased in 2003, and less than 1 percent of all homes in the United States regardless of when they were purchased, have negative equity.
Other data shows it's closer to 10% of households with mortgages or 7%+ of all homeowners have no or negative equity. That makes more sense.
Some quick arithmetic: Forget all the other years, take 39% of the sales in 2006 (7.5 million sales) ... that is about 3 million homeowners. Yes, some people sold again, some were investors, etc, but I'm just taking one year.
Well 3 million divided by 75 million total homeowners is 4%. The less than 1% number makes no sense.
Best Wishes.
FFDIC-
you started a rumor concerning a 9B banking institution. Provide validation please or retract your statement.
risk capital,
This is haloscan... FFDIC doesn't have to say anything else.. time will tell if his statements have any meaning.
..my statements, on the other hand, have no meaning.. so don't listen to me..
ohno!! logic paradox.. blurg..
eli-
don't give a @#$%, what it is, if he is making false statements, knowingly, he needs to immediately retract the bullshit.
Oops, sorry, Gary, that was X's link above ...!
))>>*:(
see that ascii, risk capital...
that's me taking an ascii poop on your ascii head since you're an ascii poop head..
It came back!
Operation all your homes are belong to us.
I still think "operation free pony" is brillant.
brilliant eve
After seeing Wall Street pass out the Kool Aid to the sheep for some many years, it's a beutiful thing when they're now forced to drink it themselves, tastes good huh!!!!!!
Operation: Mission Accomplished.
Cheers,
From another forum comes the $9b bank list:
Rumor that a $9B bank about to be shut down. Which one?
Wilmington Trust Company 9,896,328
Cathay Bank 9,617,516
Mellon Trust of New England 9,488,305
Bank Hapoalim 9,397,131
Arvest Bank 9,259,903
Israel Discount Bank of New York 9,111,754
Banco Santander 9,055,917
Corus Bank 9,019,234
International Bank of Commerce 8,942,788
Trustmark National Bank 8,768,502
Fremont Investment & Loan 8,727,553
First National Bank of Omaha 8,646,516
Texas State Bank 8,495,245
Umpqua Bank 8,211,618
NewAlliance Bank 8,169,964
Capmark Bank 8,119,633
First Niagara Bank 8,098,818
I thought Paulson was pretty frank. No Secretary of the Treasury is going to come out in public and say we are up a creek. The fact that he could admit we are at the beginning of the mortgage credit crisis says to me that he is resigned to a very long, drawn out recovery process. There will be plenty of time to discuss the recession as it comes into play acutely.
Look out below financials and cyclicals, we have a long way to fall.
That ascii turd is a nice touch.
risk capital, I don't think FFDIC owes you (or the thread) a retraction.
It's not as if he cited a specific bank.
crispy, I'm starting to think it is CORS, especially after they just announced the dividend, LOL!
This is RUMOR ONLY!!! I am only the "copy and paste" messanger - dont kill me risk capital!!
Perhaps Freemont Darth?
Cheers,
crispy&cole,
best guessing can be done by finding out which states each banks do business in.. find me one in California and Florida..
That move to top of guesslist.
CORS is my bet too!
Misean, I've thought of that too. Those would be my top two picks at this moment.
Today I reviewed a loan quote for a neighbor who has done a $150,000 cash out refi for the last 3 years using NINJA Option ARMS with World Savings (now Wachovia). In today's offering Wachovia was willing to give her a new option ARM with a five year fixed rate of 6.50% and with a neg am teaser payment using 3.25%.
So there you have it. Despite all of the publicity Wachovia is still offering a neg-am option ARM using no underwriting but a FICO score and ignoring the fact that they have already given this borrower two cash out refis for a total of $300,000 only to now have a new application showing that, once again, the borrower has no liquid assets (of course, they don't ask) and has high balances on their credit cards. The reason for the refi is that they are having trouble making the payments on their (now) amortizing loan.
There was a time when a pattern of cash out refis and bill consolidation raised an underwriting red flag. But these fools are still doing these loans. Unbelieveable!
This time last year we were guessing which lender would go bust next...the more things change the more they stay the same...
Corus Bank - my vote; but I thought that in summer 2007!
For the same reason Bill Gates has life insurance. California has the lowest GO debt rating of any major state because of statutory limits on tax increases. It makes sense for CA to have insurance on its GO debt. It doesn't make sense for the podunk monorail, which would be rated C without insurance, to pay a few bucks and get triple A.
Everybody who thinks municipalities are so solid, get this straight. Municipalities are not regulated and they don't offer any guarantees. The insurance industry is and does.
Darth,
IF the rumors are true, I can't track anything but blog rumors down...those are the 2 I'd have neck and neck.
Cheers,
find me one in California and Florida..
In the $8.5B - $9.5B window, none of the banks had a home office in Fla. That doesn't mean they don't do business here tho. One was in CA.
Gary, thanks for posting that piece about Ambac.
Buffett's audience isn't the monolines. I think he's paving the way for one or more major monolines to be taken into receivership on the insurance company. There could be advantages to this happening before a downgrade. The holding company will still exist, and keep trading in the market, after the insurance company is taken over by New York, Wisconsin or Maryland.
GP, does this neighbor have a septum left at all? Or is gambling the drug of choice?
How the F@#^ can someone blow 300M in two years without a drug or gambling problem?
The only time in my life that I've stuttered like that was when I found out we were moving to Kansas F@cking City.
People eat well in KC. Fab BBQ and damn good steaks too. Okay that takes you through the first weekend, you're on your own after that.
rich,
Not to quibble on GO ratings..but do you have a link. Or a bit more analysis. Because I don't understand this staemnet:
"California has the lowest GO debt rating of any major state because of statutory limits on tax increases. It makes sense for CA to have insurance on its GO debt. It doesn't make sense for the podunk monorail, which would be rated C without insurance, to pay a few bucks and get triple A."
A real quick review gives me:
Fitch Rates Metropolitan Water District of Southern California GOs 'AAA' | Business Wire | Find Articles at BNET
PFD - History of GO Credit Ratings
General Obligation (GO) Bonds
Not disagreeing. Not understanding your point.
Cheers,
How the F@#^ can someone blow 300M in two years without a drug or gambling problem?
Invest it in CDO's ?
hy snags-
Delphi's Bankruptcy Exit Hits a Snag - WSJ.com
All,
Doom & gloom or the big D?
Depression risk might force U.S. to buy assets
| Reuters
Gary,
It was only $300K...sheesh. That's a couple trips to the Mercedes dealership.
Cheers,
Ray, LOL!
Sorry if this OT development has been mentioned already (from WSJ$):
Delphi's Bankruptcy Exit Hits a Snag
J.P. Morgan, Citigroup Confront Loan Hurdles
February 13, 2008
The $6.1 billion plan to pull auto-parts supplier Delphi Corp. out of bankruptcy protection was in jeopardy yesterday as bank lenders tried to cope with credit markets that remain virtually shut, say people familiar with the matter.
Delphi's chief lenders, J.P. Morgan Chase & Co. and Citigroup Inc.'s Citigroup Global Markets, are having difficulties syndicating the loan to other lenders, these people said. Hedge funds and other investors are also balking at the terms, saying that they aren't priced appropriately for the risk involved.
Increasingly, say investors and others involved in the matter, Delphi's former parent, General Motors Corp., may have to step in and provide financing to fill the gap. Yet too much GM involvement might spook stock investors, who don't want the country's largest parts supplier too beholden to GM and its price-cutting demands.
My, my, my. There certainly appears to be inflation in the cost of risk...
Delphi's Bankruptcy Exit Hits a Snag - WSJ.com
I don't know why anyone here thinks that someone who was excellent at one thing - running an investment banking firm like GS - would necessarily be excellent at another thing - being a great orator. I'm talking of course about Paulson. His job at GS wasn't to win friends and influence people - it was to make money. And he was pretty good at it. As were most heads of GS.
Also FWIW - I don't think it's polite to make fun of people who stutter or have other speech impediments.
Some of the slickest speakers in the world have nothing between their ears - only "golden tongues". That's probably why our political class is - in general - really pathetic. They don't say anything - but they really say it well.
BTW - I will be helping to prepare course materials for high school students about credit. Probably doing some teaching too. If any of you have any good ideas - based on personal experiences or otherwise - could you drop a few hints in your messages? I really don't know very much about credit (except a little about how to value it when I buy it) - I am a Dave Ramsey kind of person. But that is probably too extreme for most people these days. Robyn
P.S. Regarding the Buffett offer - my understanding based on his interview on CNBC this morning is that he isn't trying to buy the muni book of business from the monolines - he is only offering to reinsure it. Big difference. I haven't gone through the numbers (will do that tomorrow when I read the details in the print media). So I don't know if the numbers make sense. But - keep in mind that insurance is very different than reinsurance. Reinsurance - in general - accrues to the benefit of the insurer who buys the reinsurance - not to the people who bought the insurance policies from the insurer (although the law can vary from state to state). I haven't handled a reinsurance case in a long time - and I only handled them in Florida - but my recollection in general is that reinsurance proceeds become the assets of the insurer - and subject to any and all general claims against the insurer first (as opposed to specific claims by the insureds). Of course - who knows how any such deal might be structured and sliced and diced if it actually went through?
Is Bank of America already in the process of being bailed out by the federal government?
On the same day that it is announced that BofA will be added to the Dow, it also receives a Wells notice from the SEC. The next day the company says it may be willing to write down mortgages by 30% at a press conference with the Treasury Secretary. The company also has amnesty from the Department of Justice in exchange for cooperation. And the Countrywide deal hasn't fallen through yet.
The Dow addition might have top ticked the stock for at least a number of years, and with the state of its business it will exacerbate a Dow move down. Additionally, rolling Countrywide's and BofA's problems all together in one neat package would make it easy. The bailout would make politicians feel like they are solving the problem and the market would probably bounce off future lows. It seems possible.
Gary writes:
Ambac says no! to Buffet anchor:
Ambac Financial said late Tuesday that an $800 billion reinsurance proposal by Berkshire Hathaway Chairman Warren Buffett is not in the interest of all the bond insurer's policyholders or the company. "Mr. Buffet's proposal would result in little to no net capital relief to support Ambac's ratings," the bond insurer said in a statement e-mailed to MarketWatch. "Ambac continues to vigorously pursue various alternatives for taking our franchise forward to the benefit of all of our policyholders."
No kidding, bud. The offer was not intended to help you or your CDO clients. Good bye, monolines.
That made me laugh out loud!!! Very funny.
Robyn,
Cheers,
I can only imagine many lawyers now rubbing their hands as their clients ask to shovel the S*** back to the originators. Ever read ml-implode.com? They already tried. Most originators are so thinly capitalized that it only took a few loans put back at par to force them out of business. The real fight's going to be between people who bought the toxic-waste securities (including cities, universities, pension funds) and the people who sold them. That process has already started (story this past week out of Mass: Merrill Sued for Fraud by Massachusetts Over CDO Sale (Update3) - Bloomberg.com
BTW - I will be helping to prepare course materials for high school students about credit. Probably doing some teaching too. If any of you have any good ideas - based on personal experiences or otherwise - could you drop a few hints in your messages? I really don't know very much about credit (except a little about how to value it when I buy it) - I am a Dave Ramsey kind of person. But that is probably too extreme for most people these days. Robyn
God bless ya!
I'm not quite as negative vis-a-vis credit as our friend Mise but a healthy caution is wise.
I'd make 'em role play. Kids are good at that - show them what real jobs pay and what real stuff costs and make them budget - with & without credit.
Make them 'experience' a few set backs and see how scary debt is to navigate in even a minor family crisis.
Just my theory... if I lived closer I'd offer to help you volunteer. I've been a mentor to freshman engineering students and it was one of the most rewarding things I've ever done.
dey, robyn,
A bit dour now...but Robyn, building off dry's idea:
Show them APR and compunding interest. Show them how to calculate the cost of the thing they buy on a CC, vs. the csot of waiting and saving for it. Explain to them when the put something on revolving credit how much longer it takes to pay it off, and how much more of their labor it costs to buy CC vs. savings. THAT is the lesson they need to learn before they run the gauntlet of CC hucksters on the College campus, or the offers in the mail.
Cheers,
dryfly, if you were closer i'd toss you some of my engineering students! But reading that post you responded to, i'm beginning to understand why i get what i get out of the high schools. i'm not sure why in heaven's name one would have someone help prepare course material on a subject they admittedly know very little about, but hey, what do i know about academics
Is it just me? Or is the following statement appearing more and more often in WSJ and Bloomberg articles:
"Financial Institution X declined to comment"
???
I think they are unable to spin this stuff any more.
I'd show them how with a entry-level job at subway, working only 3days for 6 hours, that with a simple little I/O sisa, they can move out of the parents house and have the parents bail out of there own overpx'ed McEstate, there'by saving the household mucho-dinero, and would allow the whole family time to sit and watch brittany/k-fed re-run's.
AMBAC keeps turning down everything except capital injections (which nobody, especially Warren Buffet, is stupid enough to do). I think somebody at AMBAC wants a permanent vacation in the Cayman Islands.
bobn, what can they do? they are there to (theoretically) serve the interests of the shareholders, and those interests are irreparably shattered.
All they have left is to stave off BK / receivership as long as possible.
The iceberg has been struck, and there are neither lifeboats, nor cyanide for a painless end.
Sue writes:
This is a (mostly) serious question: if (as per the Marketwatch article cited by Gary) the government buys stocks and assets, and therefore owns said stocks and assets, does that make the United States a socialist nation?
Sue | 02.12.08 - 6:20 pm | #
No, if it were the proceeds from national assets would be distributed more equitably.
Warren Buffett's letter to bond insurers - MarketWatch
Here is the actual offer letter.
♫ you got a lot .. more .. goin' for you with Hank ♫ ♫
hardware hank
Haven't I been telling this board for six months that Corus is the stupidest bank in the U.S.?
Look, you have a $10 billion book of loans, almost all concentrated in CONSTRUCTION, almost all concentrated in hi-rise CONDOS, and most concentrted in BUBBLE MARKETS.
Whatever happened to diversification?
If Corus is the BK, their senior mgt. should be indicted for fraud. They've been putting out nothing but sunshine.
ken, lawyer here, i agree. in fact for a while i have been thinking that if it comes down to the big banks v pension funds-goodbye banks
as far as retail sales go...
I just wanna know how sales of Depends are doing this month
"DEFERRED PREMIUM REVENUEThe fair value of the Companys deferred premium revenue is based on the estimated cost of
entering into a cession of the outstanding portfolio with third-party reinsurers under current market conditions."
A balance sheet liability. The proposed cost of taking on that liability would be assets equal to 1.5x the current booked value of that liability. About $3b for mbi.
rich,
"They've been putting out nothing but sunshine."
But they loan to builders who offer sunshine as a value for the condo.
Ironic huh?
Cheers,
Misean,
Go here:
http://www.sifma.org/research/pdf/muni-credit-report07q2.pdf
And look at the map on page 3.
California is rated A1, A+, A+.
Louisiana has a lower rating, but that's mainly because it got trashed by the hurricane.
Robyn:
Show them an actual pay stub. Kids tend to be shocked when they see the difference between their gross and net pay when they get their first check. FICO!!!! I'm just a kid.
Robyn and Misean --
Surely Buffett's offer cannot just be simple reinsurance, limiting the monoline's exposure in the event of a muni default?
Because that would be pointless; the munis are not going to default. Or at least, that is not the risk that is threatening the monolines' ratings (and solvency).
I highly suspect Buffett's offer is structured to do precisely what he says: Put the muni holders "first in line". For that to be true, the reinsurance would have to be structured to kick in if the primary insurer (i.e. the monoline) takes a massive capital hit independent of the muni bonds.
Otherwise, Buffett's own description -- and the offer itself -- makes no sense at all.
For such protection, of course, Buffett would surely demand a significant premium... Which is why it is fair to characterize this as "buying the muni business on the cheap".
I believe today's interview on CNBC was primarily a performance for the regulator. Buffett is very, very good.
This is a (mostly) serious question: if (as per the Marketwatch article cited by Gary) the government buys stocks and assets, and therefore owns said stocks and assets, does that make the United States a socialist nation?
If it comes to that (and I hope it does not), you might be able to get a little perspective by looking at what happened to property (i.e. land) ownership between 1926-1934 in Florida. As it was explained to me (about 20 years ago, when doing some really old property title chain searches) when the property 'owners of record' could not pay their taxes, the counties attempted to sell tax certificates. There were no (or very few takers) due to the liquidity situation (keep in mind that the Fla land boom collapsed about 3 years ahead of the stock market crash). Thru some mechanism (which I do not have all the fine details of) the State of Florida (via the Internal Improvement Trust Fund) began buying the unsold tax certificates. That provided liquidity to the counties (so that they could continue operating as normal as the times allowed). Eventually, the State of Florida ended up owning large parts of the state (roughly 1/3). Those holdings were sold off piecemeal as the economic climate improved (late 1930's, etc). Some smaller tracts (especially environmentally sensitive areas) may still be held by the State to this day.
Nemo.....
I'm sure that there would be some sort of cut through clause putting brk in the position of the primary insurer.
Thats what he said he's doing.
At times, companies put out PR that's just so weird that you just know something is wrong. Check this out about Corus and its condo lending:
"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."
Despite the collapse of once-hot condo markets, Corus isn't abandoning the game. It says it expects to lend as much as $1 billion more in the opening quarter of this year, which would equal half the new loans it made for all of last year. And much of that will be in the condo market, even as Glickman warns that foreclosures could prove to be the bank's "best course of action" for some clients."
Expired
Okay, so if condos are so iffy, and foreclosures are so probable, why are they saying they will loan another $1 billion in the first quarter? It just doesn't make sense.
No, if it were the proceeds from national assets would be distributed more equitably.
ecoshift | Homepage | 02.12.08 - 9:03 pm | #
Ya instead of a few multi-billion billionaires hogging up all the goodies... party apparatchniks would get it all instead.
Nemo:
Per the letter, the premium is 1.5 x 6 billion or 9 billion.
Robyn- Just show and explain this to them...it's all they need to know:
YouTube -
Glickman is "going all in"
It's not like he has much to lose.
Robyn-
I think using some real life examples would be good, both the positive and negative sides. Latrell Spreewell and Macklowe come to mind in the news. And personally I think role playing imagining being the lender might be helpful bringing in the profit motive of the lender to the fore!
OT
am one of the companies that reports numbers to the commerce department...I already know they are shitty!
FEDX told me today that our large order was on hold due to Capex freeze, welcome to 2008!
Given that you have all been reading Robyn's posts for some time now, what makes you think she is being truthful re: mentoring students (or much else).
stinky - winnar!
I thought I was being too obsure.
Spree update - no for sale signs, but there were 3 deer in his driveway. It was a really cool scene, actually. Too bad I only had my crap cameraphone to capture the moment.
RayOnTheFarm,
I remember my grandfather in Jacksnville, Fl receiving his property tax notice which also
included a listing of land for sale. Some of it
was beach front property which was of little
use since you couldn't grow anything on it.
warren buffett has put in a bid to take over the federal reserve
Eoghan, Troy, Average Joe; Thanks for the assist in understanding Buffett's proffer. Li
Biggest thing I learned in working money:
Never mail cash
Operation Hope Not Our Easy Solution
a/k/a "OH NOES!!1!"
Robyn:
As to teaching kids about money.
I want to know who the rocket scientist was that thought BofA would be a dandy addition to the Dow 30 Industrials. Good job, guys!
I haven't read everyones comments but it's obvious Paulson is shook. You can hear it in his voice. He knows we are in unprecedented territory and our total system is on the brink of collapse.
We all should buy guns and canned goods. This is going to get alot uglier before it gets better
"Well 3 million divided by 75 million total homeowners is 4%. The less than 1% number makes no sense."
Thanks, CR. Thought I was suffering a brain-lock. I was coming up with "therefore, there must be over 400 million homes in the U.S.".
Paulson, agreeing to serve in the Cabinet of the weakest and most underwhelming president this country has ever seen, tells you all you need to know about his character, judgment, and IQ.
IMO
Robyn --
From the WaMu web site:
WaMoola for L.I.F.E
WaMoola for L.I.F.E. (Lessons in Financial Education)
We offer lessons for every grade level and workshopsin Spanish and Englishfor adults. We bring the instructor, the lesson and enough materials for the whole group. Lessons are grade and age appropriate and designed to cover various financial topics in easy-to-understand terms. For class information, contact your local Washington Mutual Financial Center.
Our business lines, including WM Financial Services and Washington Mutual Card Services (formerly Providian Financial Corporation), also offer financial tools and education.
Other Financial Institutions may have information available, also.
No, if it were the proceeds from national assets would be distributed more equitably.
ecoshift | Homepage | 02.12.08 - 9:03 pm | #
Ya instead of a few multi-billion billionaires hogging up all the goodies... party apparatchniks would get it all instead.
dryfly | 02.12.08 - 9:23 pm | #
I suppose. Six of one...
Same as it ever was...
After seeing Wall Street pass out the Kool Aid to the sheep for some many years, it's a beutiful thing when they're now forced to drink it themselves, tastes good huh!!!!!!
Moxie, described in a wiki article that is just, wrong in so many ways. The pictured 12 oz. can could provide an adequate sample to everyone who will read this blog today.
"To your point ... we're all screwed."
Why do I always come away from watching an appearance by TresSec Hank with a sudden impulse to flee the country?
Too bad for me I don't have enough home equity left to finance the plane ticket.