I hate to say this but:

Bernanke lowered rates faster than any Fed chairman since 1982, and inflation in 2007 jumped 4.1%, the most in 17 years. US housing starts in December fell to the lowest level since 1991, and fallout from the collapse of the US subprime mortgage market has triggered $US181 billion in writedowns and credit losses at the world's largest financial firms.

The US, the largest shareholder of the International Monetary Fund, said February 25 it may allow the IMF to sell as many as 401 metric tons of gold to meet budget shortfalls. The Fed forecasts food and energy costs will stop climbing in the months ahead.

As for Countrywide, they need to melt into the dust!

So the BAC purchase is still on ? I mean if 71% are making minimum payments - I expect the deal to hit a not-so-small snag pretty soon.

This is very tacky, but check out who will be helping Fed Rates, look at this little puke: Kevin M. Warsh, 35

Jane Lauder is joining the migration of the well-heeled from their traditional breeding ground east of Central Park to the treeless precincts of Lower Manhattan.

She plans to occupy a newly purchased $12.63 million penthouse triplex with a terrace in a recently converted building in NoLIta.

Ms. Lauder, 31, the daughter of Ronald Lauder and the granddaughter of the cosmetics pioneer Estée Lauder, is vice president for marketing for the Estée Lauder brands American Beauty and Flirt! She is married to Kevin M. Warsh, 35, who works in the White House as a special assistant to the president for economic policy. Mr. Warsh has his primary residence in Washington, according to the White House press office.

The couple were married in April 2002 at Mr. Lauder's estate in Palm Beach, Fla. Two years earlier, Ms. Lauder gave an interview to Harper's Bazaar, in which she showed off her apartment on Park Avenue on the Upper East Side.

That article highlighted Ms. Lauder's collections of snow globes and modern art and described an apartment full of works by Ellsworth Kelly, Jasper Johns, Warhol, Matisse, Lichtenstein and de Kooning and furniture designed by Frank Lloyd Wright and Alvar Aalto.

Well, the little puke has his work cut out for him. The Federal Reserve gig will be tough, too.

Re: Warsh's appointment in 2006 drew criticism based on his age and experience (at 35 years old, he was the youngest appointment in the history of the Federal Reserve).
In 2007, Wall Street Journal Senior Special Writer, Gregory Ip reported Warsh's "youth and political background raised some eyebrows at the time.

He joined President Bush's staff in 2002 as an economic policy adviser, after a “surprise” call from the White House to his office at Morgan Stanley & Co. in New York City.

At Stanford, he majored in public policy, was chair of the ASSU his senior year, and says he learned a valuable business skill: golf.

Warsh is married to Jane Lauder, '95, a senior vice president at Clinique and daughter of cosmetics heir and longtime Republican contributor Ron Lauder—a fact that provided fodder for criticism on Warsh's appointment.

Warsh says carping that he was too young, too inexperienced and too politically connected was blunted by “support from a broad range of folks” with whom he had worked in financial and capital markets. “I suspect this happens with all nominations. It is a tough political environment.”

Hedgehog:

The 10K states: "Borrowers electing to make less than full interest payments 71%" (page 126). Of the 4 options available to the borrower, only one allows them to pay less than the full interest, and therefore the most likely answer to your question is (a). I guess there could be a few borrowers who are making a payment of more than the minimum but less the full interest due. However, those loans are still experiencing negative amortization.

Last bit on The Fed Corruption:

Fed Nominees Pressed on Political Ties
Questions Raised Over Their Service in Administration, but Confirmation Is Likely
By Nell Henderson
Washington Post Staff Writer
Wednesday, February 15, 2006; Page D03

Fed Nominees Pressed on Political Ties - washingtonpost.com

President Bush's decision to elevate three former administration economic advisers to the Federal Reserve Board prompted questions yesterday about whether they would be able to steer the economy independently of the White House they have served.
"This is inevitably going to create the impression that the board is more political than in the past," Schlesinger said. "This creates more of a burden on Bernanke and company to prove they're not taking their cues from [White House Deputy Chief of Staff] Karl Rove."
Warsh, 35, who has served on Bush's National Economic Council for the past four years, is a special assistant to the president for economic policy.
Heck of a 4 years of doing nothing and looking away at the subprime implosion, as it got a little frothy!!!!

HSBC 'to unveil $16bn writedown'

BBC NEWS | Business | HSBC 'to unveil $16bn writedown'

Nice start to the week

Bush Deficit at Record as Treasuries Deter Pensions

Bush Deficit at Record as Treasuries Deter Pensions (Update2) - Bloomberg.com
March 3 (Bloomberg) -- Philadelphia's $4 billion pension deficit is causing the city's retirement-fund manager to shun Treasuries at a time when the Bush administration needs him most.
Yields on 30-year U.S. bonds that fell to a record low of 4.10 percent this year are forcing pension funds to favor equities, corporate debt and commodities in an attempt to cover unfunded liabilities and meet return objectives of about 8 percent. Even the federal government's own Pension Benefit Guaranty Corp. said on Feb. 19 that it plans to shift $15 billion to stocks from debt.
``In the long run I don't know if there's going to be too much value'' in Treasuries, said Jeremy Wolfson, who oversees $8.5 billion as chief investment officer at the City of Los Angeles Department of Water and Power Pension Fund. He said the fund will pare its debt holdings to 25 percent from 35 percent and raise its holding of non-U.S. assets such as international stocks to 24 percent from 15 percent over the next four years.

shift $15 billion to stocks from debt

From the frying pan into the fryer.

Expert: Arctic polar cap may disappear this summer
Expert: Arctic polar cap may disappear this summer_English_Xinhua

The polar cap in the Arctic may well disappear this summer due to the global warming, Dr. Olav Orheim, head of the Norwegian International Polar Year Secretariat, said on Friday.
    The shrinking of the Arctic ice cap has been astonishing, Orheim said in an interview with Xinhua.
    "Ice sheet hit the historical low of 3 million square km duringthe hottest weeks last summer, while it covered 7.5 million squarekm on average before the year 2000, " he said.
    "If Norway's average temperature this year equals that in 2007,the ice cap in the Arctic will all melt away, which is highly possible judging from current conditions," Orheim said.

British lawmakers, criticizing bankers and financial supervisors over their handling of the global credit crisis, warned investment banks to make their financial products more transparent or face extra regulation.

Lawmakers want to avoid detailed regulation,'' although such an approach may be needed unless banks address theproblem of overly complex products,'' the House of Commons Treasury Committee said in a report today.

The panel is investigating how defaults on subprime mortgages in the U.S. rippled through the financial system after credit markets froze. The largest banks and securities firms have reported $163 billion in writedowns on holdings tied to subprime loans. In the U.K., Northern Rock Plc was forced into public ownership after finding itself unable to raise funds.

The best and the brightest at our top investment banks have expended great energy designing ludicrously complex financial products,'' Treasury Committee Chairman John McFall said.Product complexity has introduced increased opacity into our financial system, making it almost impossible to determine where risk lies.'

Did anyone read the change of fortune of the Peloton Fund? During its liquidation, AAA paper is traded with 30% hair cut. Maybe that is next wave of mark-to-market.

Re: ... half of the $87.04 billion

50% of that will be burned up

I hate to go back to Kevin M. Warsh, 35, but it was people like him in Washington that were asleep during this period where fraudstrers like Countrywide were busy pumping The OwnerShip Society to people that should have not have been blindly given keys to homes which they could not afford. It was fraud from Bush down to the illegal immigrants that all lied and it was people like the puppet Kevin M. Warsh, 35 that were given jobs they knew nothing about, while fraud on top of fraud continued to multiply and spread like the virus it is today! People like Kevin M. Warsh, 35 should go before a Grand Jury this week and explain why they allowed this to occur on there watch and why they are not accountable, or explain why the derivatives market and SIFMA were allowed to ruin America while they closed their eyes!

Yah,

SIX Swiss Exchange - Market Data

HSBC (HBC), the big British institution formerly known as Hongkong & Shanghai Bank, said NOVEMBER 26, it will take $45 billion worth of troubled debt securities tied to structured investment vehicles onto its balance sheet, without hitting earnings or capital.

LOL!

Germany has spearheaded a crackdown on tax havens after evidence emerged that hundreds of rich Germans had evaded taxes by parking money in Liechtenstein banks.

Countries across three continents have launched raids on suspected tax dodgers and pressure has increased on nations such as Liechtenstein to make its banking sector more transparent. "We are having an intense political debate about tax oases in Europe," the FTD quoted an unidentified senior German government official as saying. "We are working on the various instruments if (tax havens) don't change their practices,"

christofay writes:
I might be mistaken, but mortgage rates haven't fallen while Bernanke's been cutting; mortgage rates have been rising.
christofay | 03.03.08 - 2:59 am | #

Yeah Soros predicted this some time back. If you lower short term rates too much, people get worried about inflation and long term rates go up.

Hey folks, OT but how do I refresh the CR site without closing and opening it back up?

wheat farmer said:

Do you really think a 35 year old punk that never did anything will have any clue as how to fix hyperinflation and a depression? This is like a yacht club and he will run for president in 4 years and win

Hey, I belong to a yacht club and your statement offends me. To become commodore, you need to be vice commadore which means you work your butt off for a year (24x7 job) for free. Not like these Fed jobs where you can be asleep at the wheel for months on end.

Gomer

If Bank of America is smart, they won't follow through on the Countrywide purchase. They would be smarter to let them go bankrupt and pick away at the carcus. A $2 billion loss now will be much less than what they'll lose over the long run.

Look at how the Wachovia purchase of Golden West worked out. Wachovia is stuck with $100 billion or so of option arms. Primarily in California.

Warren Buffett on Monday said the U.S. economy is in recession and that "stocks are not cheap."

Speaking on CNBC television, Buffett also said he is no longer offering to guarantee $800 million of municipal bonds backed by MBIA Inc

Buffett Says U.S. in Recession, Stocks Not Cheap
| Reuters

CNBullshit is going to have a hard time spinning that one.

charlie writes:

Look at how the Wachovia purchase of Golden West worked out. Wachovia is stuck with $100 billion or so of option arms. Primarily in California.

Charlie ... one other thing re Wachovia and Golden West that IMO does not bode well is the reset @ 125% of original balance. While this was always a sell point to differentiate b/w CFC's POA and all the others that reset @ 110% or 115%, to me it just means that MORE Neg-AM is piled on and the day of reckoning is delayed and will be MUCH worse in its carnage. A Lot of those minimum paying Golden West POA customers also have Equity Builder feature, which of course re-amortizes your loan every 14 days- good if paying to equity. Nasty little side effect of re-amortizing the Neg-Am every 14 days.

A humorous aside looking over the 10K is that Wachovia is booking ~$15B USD in goodwill for Golden West purchase of ~$24B, with a fair value of ~$8B. And yet they say there is NO IMPAIRMENT. LOL

"If you have no understanding of the underlying investments, why would you place your funds or anyone else's in the vehicle and pay 2 and 20?"
I wouldn't and no one else has to either. There is a generalized myth out there that if you just put up a shingle and have a pulse, millions and millions of dollars will just come pouring in for you to manage at 2 & 20.
Having gone thru the capital raising process more than once and seeing friends do the same I can tell you that is most certainly not the case. It is a long and difficult slog and your presentations are mostly not understood and the questions are usually miles off the mark.
I don't doubt that in times of upheaval such as we are in now you will find lots and lots of areas where people got killed. But ask yourself, is the average hedge fund doing better or worse than say the average bank that was investing capital on its shareholders behalf. Last I looked when the bank ceo's get axed for blowing the thing up they get a few tens of millions in severance to shore up their local yacht club. Doesn't work that way in hedge fund land.
There are plenty of underachievers and dishonest people in about any business but there are also plenty of brilliant people who have been quietly successful and fly totally under the radar. I've said it before and stand by the idea that the hedge fund industry is about as close to a meritocracy as you will get outside of professional sports.
I do agree that public pension funds are a joke. There is no reason to have them as it concentrates political power. Each employee could have a 401k like every one else in the world and figure out what to do with it. The pension funds exist because the unions which help the folks get elected get to fleece the taxpayers at every turn.

One of the Realtors at our company works with Contrywide, handles repos for them. They require every buyer to be preapproved by their financing, even if a buyer has his own financing, before submitting an offer. They're hopelessly corrupt.

I had to deliver foreclosure notice to a house last year, and the guy who owned it was outside working on the lawn. Usually I don't have to meet people who've lost their homes; I just tape the notice to the front door. But in this instance I couldn't avoid it, so I tried to be polite when I handed him the notice and explained the situation.

He was a nice guy, didn't argue with me, but he said he had made all the late payments and was now current on the note. I asked him if he had documentation to that effect, and sure enough he did. He showed me copies of the checks he had sent to Wells Fargo. I told him to hire a lawyer and file a suit for wrongful foreclosure to save his house.

But he decided not to do that and instead vacated the house in a week. Why, I don't know. He had a legitimate complaint. They had taken his money and foreclosed on him anyway. But that's Wells Fargo underwriting Countrywide financing for you.

The DOJ is investigating Countrywide for unscrupulous business practices just like that. Charging excessive fees, not applying payments, wrongful foreclosures. I hope they get put out of business.

Billions in bad loans should be the least of their worries. They ought to be worried about debilitating fines and prison sentences for everyone from the CEO down.

"Most ARM loans reset as per LIBOR, thus, less likely to go down."

Liz, LIBOR is down from 5.50 this past summer to about 3.00. If the Fed goes another 50 it will too. So indeed if you have variable rate loan tied to LIBOR you are getting some major relief.

I just discharged out of Chapter 7 a month ago. The house was included and was not reaffirmed. Countrywide just sold the loan to Litton Loan Servicing.

Anonymous writes:
Re: Most ARM loans reset as per LIBOR

Many loans reset with Prime, but the terms of what premium will be added back on top of that rate is the million dollar question.

Actually Most Pay Option Arms are priced off MTA, Libor, COSI/CODI with an obvious spread off whichever index was used.

Wachovia's 125% forced reset just delays the pain and intensifies it considerably.
Putting aside issues of index volatility and movement relative to broader market/economic trends CFC, WAMU, IMB, BU, DSL, Chevy, etc were supposedly a "worse" POA product in that they reset quicker than Wach @ 110% - 115%. IMO if I'm facing a painful reset I'd rather get it out of the way sooner, however unpleasant, than delay it until its REALLY unpleasant.