This is the making of a disaster. The only way Paulson has no plans to use these powers is if he is a complete and total idiot, and you don't become the CEO of GS by being any kind of idiot.
From my CONgressCritter, interested in "affordable housing"
[Today, the House passed comprehensive housing legislation to address our nation's mortgage crisis. The American Housing Rescue & Foreclosure Prevention Act (H.R. 3221) assists families facing foreclosure keep their homes, helps other families avoid foreclosures in the future and supports the recovery of communities experiencing empty homes. I am pleased H.R. 3321 passed with a bipartisan vote of 272 -152.
...
Since most Americans' primary investment is their home, ending the mortgage crisis is vital to America's economic recovery. I believe we must do all we can to protect and expand the American dream of home ownership; furthermore, affordable housing is crucial to strong families, strong communities and a strong economy. The American Housing Rescue & Foreclosure Prevention Act is a strong step in the right direction.]
Doublespeak featured (I believe) Barney Frank claiming that one of the recent anti-affordable-housing bubble bills had an affordable housing provision within it.
Roubini on the big brokers. Soverign wealth funds running Merrill, Morgan Stanley and some others. Hey that'll be the day. America having to sell itself off piece by piece to the big money 'cause we're BROKE.
The broker/dealer business model is "inherently unstable" and the four remaining major firms will not be independent in a few years, says Nouriel Roubini, economics professor at NYU's Stern School and chairman of RGE Monitor.Embattled Lehman Brothers is likely to seek a buyer "within months," Roubini says. Lehman Brothers ceasing to be independent is not such a shocking outcome, but Roubini ultimately sees a similar outcome for Goldman, Merrill Lynch, and Morgan Stanley.The problem, he says, is that broker/dealers use the same model as banks -- borrow short and lend long -- only they borrow on even shorter timeframes, use more leverage, and don't have the kind of government backstop banks enjoy.In the wake of Bear Stearns' demise, which showed how brokers are vulnerable to a "run on the bank" if they can't get overnight funding, the Fed temporarily opened its discount window to brokerage firms. But making that option permanent means submitting to the same kind of regulation and capital requirements as banks; that, in turn, means a very different business model -- and much lower profitability -- for Wall Street firms, whose current business model is "not viable," he says.With U.S. financial giants like JPMorgan, Citigroup, and Bank of America dealing with internal issues, the most likely buyers are international financial firms or sovereign wealth funds, Roubini says. But unlike in 2007, foreigners are not going to settle for preferred shares, and non-voting rights next time around.That raises the questions: Is America ready for (true) foreign ownership of major financial institutions? And do we have a choice?
All I can say is watch the 10 year treasury rates go up as this bill gets signed into law. I truly believe our own federal government is trying to bankrupt our great country! For what reason?
Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking "How the hell can Countrywide add to Bank of America earnings?" Here's how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over "Fraudulent Conveyance" are now surfacing.
Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
Someone posted this on naked capitalism last week:
"If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferso
One single question: Can the US taxpayer afford this?
Next step: Backstop WS profits to the rate of inflation.
Private profits and social losses.
God Bless the land of the Free. Spain never went this far. France would not consider it. And, England simply nationalized it. But for now the US is set assume a huge amount of financial risk for an unknown period of time.
It's all a loan. A $300 billion loan (to Wall Street) to pay the interest on a $3 trillion loan (to homeowners). In one year it will be a ten trillion loan, added to a twenty trillion debt.
Thirty trillion. An unthinkable sum. All for some shitboxes in the desert. Dear God.
Mortgage and corporate borrowing costs are rising. Eventually all these bailouts will cause treasury yields to rise also. Corproate profits will be hurt. So will capital investment. What's worse, much of our public debt is short term and therefore subject to interest rate risk.
And just how are rising rates going to help debt burdened consumers in a consumer economy?
The stock market is unpredictable in the short term. Longer term, I remain a bear. Implied returns in a rising rate environment are between 2% & 5% over the next decade.
What difference does the ownership of IB's make? If Chinese govt owned GS and Merrill would the business decisions be different? I argue no; in fact getting a foreign SWF to buy IB's would be like selling Pebble Beach to a Japanese company at an overinflated price.
Let me be the first to praise the Nay votes of Democratic Congress Critters Boyda, DeFazio and Kaptur. It takes some serious stones to vote against your party and risk being branded as heartless politicians who want to throw people out of their homes. If you live in the districts of these three Congressmen, please send them some love.
Oddly, we just bailed out China and Japan in a big way. They are the biggest owners of Fannie & Freddie paper. By rights, China and Japan as well as pimco and all the other foolish investors should be taking haircuts on their bond investments.
Instead, the U.S. tax payer is now responsible. WTF!!!!!
while I commend the effort to try and get the Senate to block this there is NO WAY that is going to happen. This was all part of Paulson's plan from the get go. Present a thoroughly vague and never-ending open ended "solution" and then watch the congress "try" to derail it.
There are enough people out there who think it really will "save 'merica"
They should try the NACA approach..at least that has a chance of effecting some workable solution.This is just more "Hope Now" packaged in a shiny bow.
"You people don't like what the Democrats in the House just did"
Ohhh, that's child's play. Wait till Obama gets his chance.
The rate of decline in standard of living will only accelerate. All those illegals will be right there in front of you consuming those scarce hospital rooms and medical services - first come, first served. Unemployed homeless will camp out overnight to get socialized medicine from public servant medial professionals.
Anybody but me having trouble posting. When I try to preview or publish, I get an IE error page. When I hit bacspace to recall the comment and try again, I get a Duplicate post message although the orinonal never show up. Tried on two posts with same result.
El Cliffo writes:
No, TCA, that's wrong. If those 45 Republicans who voted Yes had voted No, the bill still would have passed because of the Democrats, 227-201.
At 9%, I think our "representatives" already know that the people don't dig what they're doing. They don't really seem concerned about that. Instead of calling them, maybe just yell into a pillow.
The fed and treasury have no idea how bad the average American's finances are.
Over 50% of working age families would be broke within three months if they lost only one of their two incomes.
High prices and reckless lending caused this mess. How will perpetuating that situation effect a solution??
I believe mass housing defaults would lead to more affordable housing and a better long run financial outcome for the majority. Debt slavery is no way to live. Foolish lenders would take losses. But hey, the top 1% of wealth holders own 60% of all stocks and bonds. So what if they lose 10% of their wealth.
The rate of decline in standard of living will only accelerate. All those illegals will be right there in front of you consuming those scarce hospital rooms and medical services - first come, first served. Unemployed homeless will camp out overnight to get socialized medicine from public servant medial professionals.
Then we'll have a Supreme court that will make abortions and same sex marriages mandatory! All normal marriages will be null and void and we'll all be forced to marry illegal aliens of the same sex! The Vice President will no longer be able to hunt lawyers. Halliburton will move to Dubai,... oh wait, that's going too far.
Anonymous writes:
The ignorant people of this country deserve every inch of the fudge packing they are about to receive.
About to? We've been taking it for years with nary a peep! As far as I can tell, they're giving us exactly what they think we want.
No way does the Senate vote this down. There will be significant arm-twisting if it's even close. The Dems are now in control and they'll use the same underhanded tactics the Republicans have been using for years to get this passed.
Our only hope is W. I can't believe I just typed that.
What a shell game. Think about it. If prices are crashing, a default is the best solution for actual home ownership. Why not trade houses (after defaulting) with the guy across the street. Same basic house, but 200K cheaper.
Is there anything in this bill that deals with the problem of seconds or HELOCs on the loans that are to be refinanced into FHA loans? If I were holding a second I'd be holding out for a bone before I agreed to be wiped out by the refi. I think Tanta's expounded on this in the past, but I haven't seen any discussion of it recently.
I'm also not clear on how MI would respond in this situation--is the insurer at all liable for the lender's haircut here?
It's always been about the $600 trillion in financial products that are tied to those home prices. Keep the inevitable from happening for just a little while longer and they can continue the shell game. Stuff them into level 3 forever and they might...just might get away with it in time for the election in 2012. That's what this is all about.
I think Fannie/Freddie will respond to the conforming limit increase by tightening guidelines further. It exposes them to more risk in the most riskiest of markets.
I think the FHA "bailout" portion is a non-event, the borrowers have to qualify under 31/43 ratios using tax returns to underwrite and the lenders have to write down principal to 90% LTV at the minimum. If the borrower doesn't qualify @ 90% LTV they have to writedown more.
And just because FHA insures the loan doesn't mean someone else wants to buy it. So the lenders are looking at jumping through all these hoops and taking losses and still being stuck with the paper OR foreclosing and getting the cash and moving on.
Economist this week in an article "End of illusions" about fannie/freddie etc - starts it with a funny story about a science professor giving a lecture on the solar system and gravity. An elderly lady interrupts to claim that, contrary to his assertions about gravity, the world travels through the universe on the back of giant turtle.
"But what supports the turtle?" retorts the professor. "You can't trick me" says the woman. "It's turtles all the way down".
The article ends by pointing out that the turtle at the bottom of the pile is the US taxpayer.
As the Senate inches toward passage of a $300 billion bill to help homeowners facing foreclosure, a new Rasmussen Reports national survey shows that only 21% of voters think the federal government should provide such assistance.
Slightly more than half (51%) say the government should not help these troubled homeowners and 27% are undecided.
Forty-six percent (46%) blame the ongoing home foreclosure crisis on individuals who borrowed more than they could afford, while 42% say Wall Street investors and mortgage companies caused the problems.
I now mixed feelings on this one....in doing some thinking, I say Good on you - you have parked the risk, made money, and stiffed somebody else. This is the American dream - God Bless!
Besides the average Joe won't really know why they are paying highter taxes, have a reduced standard of living, and must cross the street to walk on the other side because that side is reserved for "big" folks.
Some say the dollar will suffer. I say no; it will move up the US has now decided to backstop risk and foreign investing. Bucky will rally.
<a href="http://video.google.com/videoplay?docid=452908915009246507&q=system+of+a+down+deer+dance&ei=e8GHSKasGYGeqgLd-emyCA&hl=en>PUSH THE STRING AROUND!!
Meanwhile what was a 6% mortgage earlier this year is now a 6.75%. Running the numbers, that reduces a $430K home to $400K (equal monthly payments).
If the congress wanted to support 2005 home valuations, and save the housing market, lenders, and bondholders, all they had to do was double the mortgage deduction; that would move a $300K house to $450K, assuming 6% rates, at a cost of around $100B/yr in additional tax breaks.
Don't go to Costa Rica. They have great beaches, great free health care, great rain forests...you really don't want to go there.
But if you must, perhaps we can meet on a beach somewhere and make snarky comments about the US economy. It would be like live blogging. With dirt cheap rum.
Cal writes:
I think Fannie/Freddie will respond to the conforming limit increase by tightening guidelines further. It exposes them to more risk in the most riskiest of markets.
I agree, this is the right approach if they want to limit their financial risk...the problem is that it exposes them to quite a bit of political risk.
We may be approaching a "we destroyed the GSEs in order to save them" moment.
Yalt, there is a bone for the seconds - they get to share in the home's appreciation in return for having their loans written off. Not exactly a very tasty bone. That part is all relatively moot as the hoops that have to be jumped through for the mortgage replacement loan would challenge a Cirque du Soleil acrobat anyway.
I have my doubts as to how independent the regulator will be from political pressure to allow/encourage/force the agencies to "save the housing market."
/tinfoil
But I'm willing to wait and see how the regulator actually acts, and I'll be happy to be proven wrong.
Well it all depends on the regulator. But Lockhart has seemed solid and definitely scared for the GSE. So as long as he is on board I think the GSE will have a tough time.
Stuff them into level 3 forever and they might...just might get away with it in time for the election in 2012. That's what this is all about.
Ciao
MS
Anonymous | 07.23.08 - 7:42 pm | #
DING DING DING we have a winner !
Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.
"Some lawmakers have been skittish about the administration's plan for the GSEs, calling it a 'blank check' that potentially puts U.S. taxpayers on the hook."
The House vote (223/for - 136/against) indicated that more than "some" opposed the bill. It's not too late to voice your opinion as it has yet to go to the Senate. Federal subsidy of this debt does nothing to ease the problem - it simply delays the day of reckoning. The best it can accomplish is to transfer the burden of debt from the IBs onto the American Taxpayer. Contact your senators and make you voice heard. Simply tell then NO to Senate bill #3221!
The folks at the Market Ticker Forum have mobilized in an effort to oppose the passage of the Paulson F&F bail out bill. The video posted to FedUpUSA provides a clear concise overview of what is at stake here. I urge you to view it.
Is the shared appreciation really anything? It isn't a compelling feature for the seconds and if they do take it its just something else bad for the FB's. It just ensures FB's get even less if the market ever recovers (and I think things like this makes sure that any recovery will be muted).
"Is the shared appreciation really anything? It isn't a compelling feature for the seconds and if they do take it its just something else bad for the FB's."
Exactly. This STOOPID idea has been trial ballooned for a while now. My take is that it just makes it more likely for two things:
FB says Ef it to restructure.
FB does a restructure, gets the loan = market price and immediately puts the place on the market...it's no longer a short sale.
This is the problem with these sorts of things. They're easy as f*ck to game. The morons who write this bilge think that it gives an incentive to the 2nd holder, but it changes the incentive of the other party too. Likely that 2nd/heloc holders won't go along unless they're strong armed.
Conjure Bag says, "Suckers, you didn't even read it!"
Hillary Clinton admitted she didn't even read the intelligence report on Iraq before she voted on the war. What are the odds that any of the 435 people in the House actually read the full bill? I'd bet cold hard cash that none have read it.
El Cliffo writes: "That is not a veto-proof majority."
Bush has said he won't veto. I doubt he'll suddenly flip. It would be a massive betrayal of those members who were able to cast a vote for "fiscal responsibility" only because of the promised veto.
If he does veto, I wouldn't count on the Representatives (who, remember, are all up for re-election) voting the same way on the override. There might even be a rush to be the first to announce a change in vote, since suddenly it isn't a noble stand for fiscal responsibility, it's a cruel vote to throw people out of their homes.
OK, so you take one of the few insolvent homeowners who qualify that hasn't been paying (so he's actually got some disposable income now) and shoehorn him into a loan after a haircut that leaves him broke after actually making a payment.
This screws consumption by saving the lender a little money, temporarily until he defaults.
Any attempt to tamper with Mr Market will eventually backfire.
" The American Bankers Association, meanwhile, was mostly supportive of the bill but criticized a provision that would require banks to report aggregate payments made to business customers.
"ABA has long supported efforts to reform oversight of Fannie Mae and Freddie Mac while simultaneously protecting the cooperative structure of the Federal Home Loan Banks. We also support the efforts of Congress and the administration to bring stability to the marketplace with regard to these GSEs,""
Marcy Kaptur is my representative (representing Toledo and NW Ohio) She VERY rarely sides with the other side of the aisle. I suspect she's not keen on bailing out Wall Street !
I'd call and write my Senators, but it will do absolutely no good. Boxer and Feinstein will vote for this regardless of how many voters told them not to.
Currently Smoking Cannabis writes:
At 9%, I think our "representatives" already know that the people don't dig what they're doing. They don't really seem concerned about that. Instead of calling them, maybe just yell into a pillow.
Currently Smoking Cannabis | 07.23.08 - 7:35 pm | #
Why does cannabis have to be illegal? Because it is necessary to control competing forms of stores of value. Look at the Whiskey rebellion early in our country. Alex Hamilton the leading proponent of our first central bank was also the major proponent of the whiskey tax. The predecessor of the IRS was the ATF. The IRs was formed in 1913 for one reason. To make sure we paid our taxes in Federal Rreserve Notes. Look at Talley Sticks in England. They functioned as money because one had to pay their taxes in them. Luxury goods that do not need to be consumed for survival function well as a commodity of exchange.
"Angered by an excise tax imposed on whiskey in 1791 by the federal government, farmers in the western counties of Pennsylvania engaged in a series of attacks on excise agents. The tariff effectively eliminated any profit by the farmers from the sale or barter of an important cash crop, and became the lightning rod for a wide variety of grievances by the settlers of the region against the federal government"
Maybe you all should start spreading rumors that the state of Israel is against the housing bailout. Most Senators have loyalty to Israel before Wall Street or ... anything else, really.
A 53-year-old wife and mother fatally shot herself soon after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead.
Police in Taunon say Carlene Balderrama used her husbands high-powered rifle to kill herself Tuesday afternoon, 90 minutes before her foreclosed home was to be sold at auction.
The mortgage company notified authorities, who found her body an hour later.
Police say she left a note to her family telling them to take the life insurance money to pay for the house.
FT has a story out on China tightening its mortgage market. I would like to officially welcome China to our little mortgage party.
My favorite quote from the story:
"If financial institutions of Freddie Mac and Fannie Maes calibre could get into such a bad situation, then what does that mean for Chinese financial institutions?
Dear lord, if anyone refers to Freddie and Fannie as high calibre leveraged 60 to 1, then they are really in trouble.
"Passage of this bill sends a helpful signal of confidence to housing markets and investors. Freddie Mac will continue doing its part to help the economy by raising private capital, helping put families into homes through sound underwriting, and helping troubled borrowers avoid foreclosure," said Doug Duvall.
Bwahahahahahahahahaha!
Raising PRIVATE Capital?!
Bwahahahahahahahaaha!
Oh man! This article is so full of sh*t it's not funny.
no problem-it helped me for a second too!!! well I mean I went back for seconds, thirds etc...
The best way to protest this that I believe is to go exempt or claim 12 on w-4 for the rest of the year..They'll feel it and it would be painful...I just changed and faxed over to HR today...I'll buy silver to hedge against dollar demise with new found withholding status..
or go to brazil to find that reef girl..10 women to 1 man works even for my ugly ass
The bailout won't do anything because no one will make money on it.
Fred and Fannie, well, the gov. gives them money. They keep making loans except the pool of people who can qualify shrinks while their problems eat cash like my niece shopping at the mall.
Interest rates go up. Somebody, not sure who, wants a better return on the money. Problem is who is lending?
We must get Laura Richardson back to L.A. to help our budgets in their time of need. She was last seen traipsing around New Orleans looking shocked and amazed and indignant.
In a statement on Wednesday, Paulson said the bill will "provide temporary authorities to give confidence to markets and will create a strong, independent regulator better able to address the risks these enterprises [Fannie and Freddie] pose."
They want to white wash toxic garbage to Fanny and Freddy. This is so Orwelian it melts my brain.
"Arnie threatenting to reduce state wages to minimum wage until budget is passed."
The employees will just call in sick and hit them with disability pay along with a discrimination suits. Public employees know how to milk the system better then anyone.
Thanks, Misean (at 8:03), that's what I was looking for. I still don't see how it can be made to work, but at least now I have some idea what they're trying to do.
As i said earlier. It's boiler plate shite. The homeowner will either walk or restructure then sell. 2nd/heloc gets nothing. I guess there's a hope that some FB's will be dumb enough to pay on underwater/flat 0 equity loans long enough for inflation unadjusted prices to rice above the new loan limit, that the 2nd/heloc gets something back at sale.
It's quite a stupid plan. I wonder how FASB is going to allow these "ASSets" to be booked?
WTF is a regulator going to do? Say they are well captalized?
I mean the only thing they can really do is shrink their balance sheets and exposure. Then of what use are the GSEs? They can't take the crap off the banks' balance sheets and they can't accept new loans. Seriously. What is all this talk about a new regulator, like it's going to change anything in a positive way. No one even says what this magical regulator is supposed to accomplish.
What's my point? That once the people who call themselves Austrians get rid of all their gobbledeegook and (and once the marxists get rid of all theirs) they are essentially the same. Both movements were co-opted by people who wanted a lot of money and power.
"No one even says what this magical regulator is supposed to accomplish."
Why, he waves his magic wand, and suddenly the crap that banks want to sell them are 1:1 in value and the GSE's can take them, then the GSE's get to rob taxpayers o make them whole. And they're all AAA.
WHOOT!
Of course the backstoppers are kinda f*cked...but who cares about them.
I propose all bonus pool money earned by the investment banks under the umbrella of taxpayers be siezed and payed into a governement trust to be used to offset losses to US taxpayers. Furthermore, the decree would be retroactive for the ast 5 years. All major financial CEOS would be forced to resign and their assets would be frozen pending restitution claims. Investment banking salaries would be defacto capped by regulated fee structure. Dark pools should be outlawed.
On July 5, 2008, the Associated Press (AP) released a story titled: Secret U.S. mission hauls uranium from Iraq. The opening paragraph is as follows:
The last major remnant of Saddam Husseins nuclear program a huge stockpile of concentrated natural uranium reached a Canadian port Saturday to complete a secret U.S. operation that included a two week airlift from Baghdad and a ship voyage crossing two oceans.
See anything wrong with this picture? We have been hearing from the far-left for more than five years how, Bush lied. Somehow, that slogan loses its credibility now that 550 metric tons of Saddams yellowcake, used for nuclear weapon enrichment, has been discovered and shipped to Canada for its new use as nuclear energy.
It appears that American troops found the 550 metric tons of uranium in 2003 after invading Iraq. They had to sit on this information and the uranium itself, for fear of terrorists attempting to steal it. It was guarded and kept safe by our military in a 23,000-acre site with large sand beams surrounding the site.
Well, the Austrian's really got going in America after WWII...
And somehow they puttered along and were taken up by the libertarians and any "conservative" think tank type operation that advocated free markets. Ipso facto profundo, we have arrived at our little situation that we have today where the entire economy is crumbling due to austrian fueled "free markets."
How Marxism was co-opted? Not as familiar with the Russian side of the story, but it was taken up around the world as an excuse for a lot of violence and anarchy.
Why are austrian's really like marxists? Same kooky extremism in two different directions.
the only problem is it has been there since before 1991...
Tuwaitha and an adjacent research facility were well known for decades as the centerpiece of Saddam's nuclear efforts.
Israeli warplanes bombed a reactor project at the site in 1981. Later, U.N. inspectors documented and safeguarded the yellowcake, which had been stored in aging drums and containers since before the 1991 Gulf War. There was no evidence of any yellowcake dating from after 1991, the official said
What f*cking free market in the US or any other country are you talking about?
For f8ck's sake...do you actually read any articles? What Austrian ideas...which at worst advocate a return to Constitutional principals..exist in the current climate?
Already called foul so I'll finish with this. Ayn Rand ain't an Austrian. She was an Objectivist. Some Austrian's are Objectivists...but lately, in particular...not many.
If you want to explain to me how Austrian economics have helped us over the last few decades, be my guest. Just please knock off the righteous indignation.
Well here's what makes me uncomfortable, in a nutshell:
Austrian economics, to me equates to free markets. I think we've learned that this is not a viable concept. Free markets don't exist. Either knowing this or not, the austrian flag wavers have convinced a great many people that we need greater and greater deregulation. Well here we are. If they didn't know it, then they are not so bright. If they did, they are evil.
The U.S. housing market will lose more than 10 trillion dollars in phantom wealth before this crash has finished. 300 some billion dollars is 3% - nothing but string pushing.
Sure, get a piece of it. Just like you should get a piece of the 3 trillion dollar Iraq slaughter. I'd rather go dancing.
"When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turned out it was socialism right here in the United States of America..."
Suicide clause in life insurance policies is almost always 2 years. (Pays as long as policy has been in force 2 years.)
They always say, however, "not applicable in Missouri". Apparently Missouri has some statute invalidating the suicide clause. I've always wondered whether they have a higher incidence of suicide than other states.
all right, let's triple it and fuel the next housing boom; the next generation should worry about corresponding bust and higher taxes...
p.s. why pay taxes, let's just borrow from china and propel their economy to another 20 years of hyper growth at our expense,
yeah yeah i know.
did the Romans say economy is not the zero sum game and ignore obvious manipulation of currency exchange by not always friendly "other" governments?
A bit of an exaggeration, I suppose, but close enough.
The plan is voluntary, isn't it? A lot was made of that feature back when the idea was first floated, anyway, and I'd be surprised if it had changed.
Why would the second mortgage holder agree to this if the loan is currently performing?
I'm starting to sound like the folks who thought it wasn't possible to modify a securitized loan, but either I'm missing something or the plan is a red herring.
"Austrian economics, to me equates to free markets. I think we've learned that this is not a viable concept. Free markets don't exist. Either knowing this or not, the austrian flag wavers have convinced a great many people that we need greater and greater deregulation. Well here we are. If they didn't know it, then they are not so bright. If they did, they are evil."
You have to show free markets exist. Where? Gov't controlled money and financial markets are a free market. Free means free pal. They don't exist.
Tell friends and neighbors about this fiasco. People are enraged to find they are on the hook for Fannie and Freddie. These are people who could've cared less about any of this stuff, til now. They are asking me for phone numbers now to call in the AM.
This is easy, takes just a moment of your time and is FREE.
Fools rush in where angels fear to tread...
Austrian economics sounds to me like French existentialism. Lots and lots of elegant theory about how things work, but in the end, doesn't hold up well against the dull realities of how we really act.
Generally we're not that hot at modeling our behavior, regardless of realm. I think it's sort of a Schroedinger's cat problem.
Sartre was probably shooting spitwads at the bald heads.
In my area of Northern Virginia, I tested the financing online. For 5% down on a $500K loan, you woudl find no offers. For 20% down on a $500K loan, the lowest offer was 6.5% with 2 points but the average was 8%. I suspect that this bill does nothing for the average person and will cause the interest rates to increase dramatically. To count the increase, the housing price will have to drop which is exactly opposite of what this bill is suppose to do.
Usually I deserve a little kiss before I am screwed. Oh well, at least I don't own my place and have a job for the next five years. Cheers.
For CR and some of the milder types on this blog, please keep in mind the following:
Any efforts to put a "floor" under housing will also have the unintended effect of putting a ceiling also.
That's how socialism works - the masses get a certain measure of security at the expense of the possibility of building real wealth. Meanwhile, a small group of elites (that would be the pigmen) don't have to follow the rules and get fat.
So if this bill passes and somehow succeeds in stopping or at least slowing the decline, I am confident that one of the costs will be very limited upside in the next upturn.
"You have to show free markets exist. Where? Gov't controlled money and financial markets are a free market. Free means free pal. They don't exist."
Yep, it is really funny reading Ayn Rand free markerter Greenspan explain how he could run the biggest central planning agency in the world (aka the FED) this side of the Kremlin and still be true to his beliefs. His explaination boilded down to he could do more "good" inside the FED than outside. Well he did "good" alright, he helped destroy the economy and gave us the worst of both worlds. He is a key player in the deregulation of the banks, extended negative interest rates, creative mortgages and the current mess.
Deregulate a massive industry like banking and you get the pigmen, crooks and schemers coming out of the wood work. Add war,extended periods of cheap money and the results are very predictable.
I guess there's a hope that some FB's will be dumb enough to pay on underwater/flat 0 equity loans long enough for inflation unadjusted prices to rice above the new loan limit, that the 2nd/heloc gets something back at sale.
Of course the more likely scenario is, the FB tries to stay in their house, it loses another 20% in value, he walks and/or can't make payments and WE end up bailing out the bondholders. And of course how much pressure will there be on appraisers? The banks don't want to write off any more principal than required. I'm guessing that most of the "fair market values," that 90% of which gets refinanced will tend to come out such that the FB will save $100-50/month on the new loan. Enough to make them bite at the refinance opportunity, but not enough to make the loan affordable. ALOT of these loans will end up in forclosure, only WE'LL be holding x% of the bag.
This bill is great for China, Japan, investment banks, and hedge funds. Will anyone be able to name a distressed homeowner (making under $1m /yr) that gets directly helped by this? (aside from indirect help trickling through china owned bonds doing better).
The dollar will crash, taxes will skyrocket, and everyone in my generation or later who was "stupid" enough to be responsible when it comes to saving for a house and not buying something that one cannot afford will face unaffordable housing for at least a decade or more as the price drops are dragged out over as long a period a time as possible. Note that there will be NO substantial wage increases to bridge this gap.
Great job... Vote out everyone who voted for this bill in the next election, and keep voting them out until they are gone. Tell your friends, too, that their taxes will be going up to pay for illegals and shylocks living in 4,000 square foot McMansions that they could never afford.
i've got a dumb blonde wife and she recons the banks holding securatised mortgages will offload billions dollars of them onto the gse's, making their balance sheets whole again. even my dog looked at her funny
GRRRRRR!
This is the making of a disaster. The only way Paulson has no plans to use these powers is if he is a complete and total idiot, and you don't become the CEO of GS by being any kind of idiot.
From my CONgressCritter, interested in "affordable housing"
[Today, the House passed comprehensive housing legislation to address our nation's mortgage crisis. The American Housing Rescue & Foreclosure Prevention Act (H.R. 3221) assists families facing foreclosure keep their homes, helps other families avoid foreclosures in the future and supports the recovery of communities experiencing empty homes. I am pleased H.R. 3321 passed with a bipartisan vote of 272 -152.
...
Since most Americans' primary investment is their home, ending the mortgage crisis is vital to America's economic recovery. I believe we must do all we can to protect and expand the American dream of home ownership; furthermore, affordable housing is crucial to strong families, strong communities and a strong economy. The American Housing Rescue & Foreclosure Prevention Act is a strong step in the right direction.]
So who's more bearish, Yves or CR?
Anybody going to tape this?
How's BUCKY reacting ?
Some guy in my office who knows nothing about any of this just shouted out: 300 Billion WTF! ! ! !
...................
Abbadee.....abbadee....abba....
That's all folks!!!!
ades: scream back $1.5 Trillion WTF!
Max writes:
So who's more bearish, Yves or CR?
I was hoping they'd have more bearish people there, CR might have looked like a bull next to recent sentiment...
.............
I would like to begin to capitalize on misery at this point. Any suggestions on where to start?
Uncle Billy Vs. Mt. Pelerin writes:
nades: scream back $1.5 Trillion WTF!
Seriously, I hope there are more like him! (Outraged at all of this)
..............
Doublespeak featured (I believe) Barney Frank claiming that one of the recent anti-affordable-housing bubble bills had an affordable housing provision within it.
Roubini on the big brokers. Soverign wealth funds running Merrill, Morgan Stanley and some others. Hey that'll be the day. America having to sell itself off piece by piece to the big money 'cause we're BROKE.
The broker/dealer business model is "inherently unstable" and the four remaining major firms will not be independent in a few years, says Nouriel Roubini, economics professor at NYU's Stern School and chairman of RGE Monitor.Embattled Lehman Brothers is likely to seek a buyer "within months," Roubini says. Lehman Brothers ceasing to be independent is not such a shocking outcome, but Roubini ultimately sees a similar outcome for Goldman, Merrill Lynch, and Morgan Stanley.The problem, he says, is that broker/dealers use the same model as banks -- borrow short and lend long -- only they borrow on even shorter timeframes, use more leverage, and don't have the kind of government backstop banks enjoy.In the wake of Bear Stearns' demise, which showed how brokers are vulnerable to a "run on the bank" if they can't get overnight funding, the Fed temporarily opened its discount window to brokerage firms. But making that option permanent means submitting to the same kind of regulation and capital requirements as banks; that, in turn, means a very different business model -- and much lower profitability -- for Wall Street firms, whose current business model is "not viable," he says.With U.S. financial giants like JPMorgan, Citigroup, and Bank of America dealing with internal issues, the most likely buyers are international financial firms or sovereign wealth funds, Roubini says. But unlike in 2007, foreigners are not going to settle for preferred shares, and non-voting rights next time around.That raises the questions: Is America ready for (true) foreign ownership of major financial institutions? And do we have a choice?
If this doesn't cause a monster rally I don't know what will.
Apparently our congress just can't stand the thought of "cat juggling".
From the movie "The Jerk" with Steve Martin.
Oh the horror. Okay, Okay, how much?
I love to watch the totally predictable fold by congress. We get what we vote for!
The bill passed 272-152. That is not a veto-proof majority.
I knew it was coming but it hard to believe it is here . Yikes !
Newsflash: Americans had better get a new dream other than home ownership and fast !
That is not a veto-proof majority.
Except there will be no veto. Bush wants the Paulson plan; Congress gets foreclosure relief.
Quid Pro Quo
Uggghhhh! We are so fvcked and our pols are all criminally negligent.
I think Bush just wants his term to be over so he doesn't have to do anymore public speaking.
Man-moth writes:
If this doesn't cause a monster rally I don't know what will.
Man-moth | Homepage | 07.23.08 - 6:57 pm | #
well Paulson Schumer and Franks
make a pretty good start for the monsters in "Where the Wild Things are"
"That is not a veto-proof majority"
Hank will do a reach-around on Dubya.
I still like the part where the "tax credit" has to be paid back......
That's not a credit it's a loan.
Ciao
MS
Looks like the Inman site is down. Wow, CR is popular.
All I can say is watch the 10 year treasury rates go up as this bill gets signed into law. I truly believe our own federal government is trying to bankrupt our great country! For what reason?
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
From Mish's Global Economic Trend Analysis: You Know The Banking System Is Unsound When....
Move along...nothing to see here...crony capitalism rules the roost in America and the middle class rubes pay the taxes !
Someone posted this on naked capitalism last week:
"If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferso
This should make life interesting.
One single question: Can the US taxpayer afford this?
Next step: Backstop WS profits to the rate of inflation.
Private profits and social losses.
God Bless the land of the Free. Spain never went this far. France would not consider it. And, England simply nationalized it. But for now the US is set assume a huge amount of financial risk for an unknown period of time.
"That's not a credit it's a loan."
It's all a loan. A $300 billion loan (to Wall Street) to pay the interest on a $3 trillion loan (to homeowners). In one year it will be a ten trillion loan, added to a twenty trillion debt.
Thirty trillion. An unthinkable sum. All for some shitboxes in the desert. Dear God.
They can still block it if you call your Senator RIGHT NOW and tell them to vote NO
Go to FedUpUsa.org
pass the video around and get others to call NOW
We are ALL screwed!!!
Roll call here.
Mortgage and corporate borrowing costs are rising. Eventually all these bailouts will cause treasury yields to rise also. Corproate profits will be hurt. So will capital investment. What's worse, much of our public debt is short term and therefore subject to interest rate risk.
And just how are rising rates going to help debt burdened consumers in a consumer economy?
The stock market is unpredictable in the short term. Longer term, I remain a bear. Implied returns in a rising rate environment are between 2% & 5% over the next decade.
Save, save, save.
Hmmm. I wonder who will bail out the American gov't when it goes bankrupt?
Perhaps the Chinese again?
What difference does the ownership of IB's make? If Chinese govt owned GS and Merrill would the business decisions be different? I argue no; in fact getting a foreign SWF to buy IB's would be like selling Pebble Beach to a Japanese company at an overinflated price.
The SWFs couldn't rape us any more than our own people have.
Let me be the first to praise the Nay votes of Democratic Congress Critters Boyda, DeFazio and Kaptur. It takes some serious stones to vote against your party and risk being branded as heartless politicians who want to throw people out of their homes. If you live in the districts of these three Congressmen, please send them some love.
Oddly, we just bailed out China and Japan in a big way. They are the biggest owners of Fannie & Freddie paper. By rights, China and Japan as well as pimco and all the other foolish investors should be taking haircuts on their bond investments.
Instead, the U.S. tax payer is now responsible. WTF!!!!!
Great. We'll preserve the American Dream by bankrupting America!
I guess it'll be like 300 million people living in a condo complex with an insolvent HOA.
You people don't like what the Democrats in the House just did?
Democrats: Yes 227 No 3 Not Voting 6
Republican: Yes 45 No 149 Not Voting 5
TOTALS Yes 272 No 152 Not Voting 11
The difference is if the Chinese own them and they lose 8.9B the CEO gets taken out back and shot. Hey when can they get their money together?
while I commend the effort to try and get the Senate to block this there is NO WAY that is going to happen. This was all part of Paulson's plan from the get go. Present a thoroughly vague and never-ending open ended "solution" and then watch the congress "try" to derail it.
There are enough people out there who think it really will "save 'merica"
They should try the NACA approach..at least that has a chance of effecting some workable solution.This is just more "Hope Now" packaged in a shiny bow.
Ciao
MS
"You people don't like what the Democrats in the House just did"
Ohhh, that's child's play. Wait till Obama gets his chance.
The rate of decline in standard of living will only accelerate. All those illegals will be right there in front of you consuming those scarce hospital rooms and medical services - first come, first served. Unemployed homeless will camp out overnight to get socialized medicine from public servant medial professionals.
Can't wait!
El Cliffo writes:
You people don't like what the Democrats in the House just did?
They hold the majority of the blame, but if those 45 Repubs vote no, this thing fails...
And a GOP president will sign it...
Keep those presses rollin'
The treasury's a-moanin'
Keep that paper flowin'
PAULSON!!!!!!!!!!
I'm not sure how you can make good investment decisions if you believe there are two political parties in this country.
good luck with that.
No, TCA, that's wrong. If those 45 Republicans who voted Yes had voted No, the bill still would have passed because of the Democrats, 227-201.
Anybody but me having trouble posting. When I try to preview or publish, I get an IE error page. When I hit bacspace to recall the comment and try again, I get a Duplicate post message although the orinonal never show up. Tried on two posts with same result.
Jim
I suppose instead of national health care we get national house care.
The ignorant people of this country deserve every inch of the fudge packing they are about to receive.
El Cliffo writes:
No, TCA, that's wrong. If those 45 Republicans who voted Yes had voted No, the bill still would have passed because of the Democrats, 227-201.
You're right. My bad. I'm not two brite!
Ok, maybe this is to lighten the mood-or darken it depending-
But give 3 countries to wait out the storm. Paraguay, yeah, we know that already
Surfing in Costa Rica, anyone?
Email your senators. Tell them to vote it down. It's worth a try.
If those 45 Republicans who voted Yes had voted No, the bill still would have passed because of the Democrats, 227-201.
If you think there's a difference between the two, then you are part of the problem.
At 9%, I think our "representatives" already know that the people don't dig what they're doing. They don't really seem concerned about that. Instead of calling them, maybe just yell into a pillow.
The fed and treasury have no idea how bad the average American's finances are.
Over 50% of working age families would be broke within three months if they lost only one of their two incomes.
High prices and reckless lending caused this mess. How will perpetuating that situation effect a solution??
I believe mass housing defaults would lead to more affordable housing and a better long run financial outcome for the majority. Debt slavery is no way to live. Foolish lenders would take losses. But hey, the top 1% of wealth holders own 60% of all stocks and bonds. So what if they lose 10% of their wealth.
I have emailed and left a message however at this point it's a done deal.
How would you like to be known as the group of the congress that denied 'merican families the RIGHT to home ownership??
Because that's how it will be spun and they know it.
Sad really..
Ciao
MS
The rate of decline in standard of living will only accelerate. All those illegals will be right there in front of you consuming those scarce hospital rooms and medical services - first come, first served. Unemployed homeless will camp out overnight to get socialized medicine from public servant medial professionals.
Then we'll have a Supreme court that will make abortions and same sex marriages mandatory! All normal marriages will be null and void and we'll all be forced to marry illegal aliens of the same sex! The Vice President will no longer be able to hunt lawyers. Halliburton will move to Dubai,... oh wait, that's going too far.
Anonymous writes:
The ignorant people of this country deserve every inch of the fudge packing they are about to receive.
About to? We've been taking it for years with nary a peep! As far as I can tell, they're giving us exactly what they think we want.
No way does the Senate vote this down. There will be significant arm-twisting if it's even close. The Dems are now in control and they'll use the same underhanded tactics the Republicans have been using for years to get this passed.
Our only hope is W. I can't believe I just typed that.
What a shell game. Think about it. If prices are crashing, a default is the best solution for actual home ownership. Why not trade houses (after defaulting) with the guy across the street. Same basic house, but 200K cheaper.
What's the Senate version numeric designation and title?
Is there anything in this bill that deals with the problem of seconds or HELOCs on the loans that are to be refinanced into FHA loans? If I were holding a second I'd be holding out for a bone before I agreed to be wiped out by the refi. I think Tanta's expounded on this in the past, but I haven't seen any discussion of it recently.
I'm also not clear on how MI would respond in this situation--is the insurer at all liable for the lender's haircut here?
Angry-
This is not about home ownership at all.
It's always been about the $600 trillion in financial products that are tied to those home prices. Keep the inevitable from happening for just a little while longer and they can continue the shell game. Stuff them into level 3 forever and they might...just might get away with it in time for the election in 2012. That's what this is all about.
Ciao
MS
I think Fannie/Freddie will respond to the conforming limit increase by tightening guidelines further. It exposes them to more risk in the most riskiest of markets.
I think the FHA "bailout" portion is a non-event, the borrowers have to qualify under 31/43 ratios using tax returns to underwrite and the lenders have to write down principal to 90% LTV at the minimum. If the borrower doesn't qualify @ 90% LTV they have to writedown more.
And just because FHA insures the loan doesn't mean someone else wants to buy it. So the lenders are looking at jumping through all these hoops and taking losses and still being stuck with the paper OR foreclosing and getting the cash and moving on.
Is this the biggest transfer of wealth in American history ?
Economist this week in an article "End of illusions" about fannie/freddie etc - starts it with a funny story about a science professor giving a lecture on the solar system and gravity. An elderly lady interrupts to claim that, contrary to his assertions about gravity, the world travels through the universe on the back of giant turtle.
"But what supports the turtle?" retorts the professor.
"You can't trick me" says the woman. "It's turtles all the way down".
The article ends by pointing out that the turtle at the bottom of the pile is the US taxpayer.
If you think there's a difference between the two, then you are part of the problem.
Republicans are actively stupid; Democrats are unintentionally stupid.
Pushing on a LIMP string
With their fiscal housing BAIL-out
They like to PUSH THE STRING AROUND!!
zackattack:
Search Results - THOMAS (Library of Congress)
As the Senate inches toward passage of a $300 billion bill to help homeowners facing foreclosure, a new Rasmussen Reports national survey shows that only 21% of voters think the federal government should provide such assistance.
Slightly more than half (51%) say the government should not help these troubled homeowners and 27% are undecided.
Forty-six percent (46%) blame the ongoing home foreclosure crisis on individuals who borrowed more than they could afford, while 42% say Wall Street investors and mortgage companies caused the problems.
I now mixed feelings on this one....in doing some thinking, I say Good on you - you have parked the risk, made money, and stiffed somebody else. This is the American dream - God Bless!
Besides the average Joe won't really know why they are paying highter taxes, have a reduced standard of living, and must cross the street to walk on the other side because that side is reserved for "big" folks.
Some say the dollar will suffer. I say no; it will move up the US has now decided to backstop risk and foreign investing. Bucky will rally.
aaron writes:
Is this the biggest transfer of wealth in American history ?
I'd say this
was bigger.
As a citizen of Ameristan, I am puzzled. Should I be called an Ameristani, an Ameri, or simply a person
of Anglo-Ameristan descent?
aleister perdurabo - with all due respect these numbers only matter at election time otherwise they dont mean a thing.
<a href="http://video.google.com/videoplay?docid=452908915009246507&q=system+of+a+down+deer+dance&ei=e8GHSKasGYGeqgLd-emyCA&hl=en>PUSH THE STRING AROUND!!
Meanwhile what was a 6% mortgage earlier this year is now a 6.75%. Running the numbers, that reduces a $430K home to $400K (equal monthly payments).
If the congress wanted to support 2005 home valuations, and save the housing market, lenders, and bondholders, all they had to do was double the mortgage deduction; that would move a $300K house to $450K, assuming 6% rates, at a cost of around $100B/yr in additional tax breaks.
man moth
Don't go to Costa Rica. They have great beaches, great free health care, great rain forests...you really don't want to go there.
But if you must, perhaps we can meet on a beach somewhere and make snarky comments about the US economy. It would be like live blogging. With dirt cheap rum.
Cal writes:
I think Fannie/Freddie will respond to the conforming limit increase by tightening guidelines further. It exposes them to more risk in the most riskiest of markets.
I agree, this is the right approach if they want to limit their financial risk...the problem is that it exposes them to quite a bit of political risk.
We may be approaching a "we destroyed the GSEs in order to save them" moment.
Yalt,
I think the regulator changes the game for the GSEs and removes politics (somewhat) from the equation. That is until politicians have him removed
.
I think they will be much less profitable as the regulator forces them to build capital.
House Approves Housing Bill
Conjure Bag says, "Suckers, you didn't even read it!"
Yalt, there is a bone for the seconds - they get to share in the home's appreciation in return for having their loans written off. Not exactly a very tasty bone. That part is all relatively moot as the hoops that have to be jumped through for the mortgage replacement loan would challenge a Cirque du Soleil acrobat anyway.
I have my doubts as to how independent the regulator will be from political pressure to allow/encourage/force the agencies to "save the housing market."
/tinfoil
But I'm willing to wait and see how the regulator actually acts, and I'll be happy to be proven wrong.
Well it all depends on the regulator. But Lockhart has seemed solid and definitely scared for the GSE. So as long as he is on board I think the GSE will have a tough time.
Stuff them into level 3 forever and they might...just might get away with it in time for the election in 2012. That's what this is all about.
Ciao
MS
Anonymous | 07.23.08 - 7:42 pm | #
DING DING DING we have a winner !
Mish's Global Economic Trend Analysis: You Know The Banking System Is Unsound When....
Yalt,
Yes the stuffed in a heloc thingy.
Mr. Mortgage’s Guide to the TRUTH! » Page not found
Cheers,
"Some lawmakers have been skittish about the administration's plan for the GSEs, calling it a 'blank check' that potentially puts U.S. taxpayers on the hook."
The House vote (223/for - 136/against) indicated that more than "some" opposed the bill. It's not too late to voice your opinion as it has yet to go to the Senate. Federal subsidy of this debt does nothing to ease the problem - it simply delays the day of reckoning. The best it can accomplish is to transfer the burden of debt from the IBs onto the American Taxpayer. Contact your senators and make you voice heard. Simply tell then NO to Senate bill #3221!
The folks at the Market Ticker Forum
have mobilized in an effort to oppose the passage of the Paulson F&F bail out bill. The video posted to FedUpUSA provides a clear concise overview of what is at stake here. I urge you to view it.
Please fill out the petition if you oppose the bailout:
Petition To Implement "The White Paper"
Damn my ass is sore...
Cheers,
Is the pool taking bets for when the Tbond market starts to really kvetch?
Also sign my petition against the bailout. Lots of great comments and better graphics!!
Angry Renter: Oppose the Mortgage Lender Housing Bailout
12 and man mouth,
I will be near roca bruja,
http://www.shorelinesurf.com/ac-posterphotos/ac-roca.jpg
I will keep the beer cold! And CSC-a blunt for you
Is the shared appreciation really anything? It isn't a compelling feature for the seconds and if they do take it its just something else bad for the FB's. It just ensures FB's get even less if the market ever recovers (and I think things like this makes sure that any recovery will be muted).
Well Japanese financials are happy about this, or at least the market players are.
We're not just bailing out US Banksters.
I feel like punching something.
Cheers,
We are all subprime lenders now....
Cal,
"Is the shared appreciation really anything? It isn't a compelling feature for the seconds and if they do take it its just something else bad for the FB's."
Exactly. This STOOPID idea has been trial ballooned for a while now. My take is that it just makes it more likely for two things:
This is the problem with these sorts of things. They're easy as f*ck to game. The morons who write this bilge think that it gives an incentive to the 2nd holder, but it changes the incentive of the other party too. Likely that 2nd/heloc holders won't go along unless they're strong armed.
Cheers,
Conjure Bag says, "Suckers, you didn't even read it!"
Hillary Clinton admitted she didn't even read the intelligence report on Iraq before she voted on the war. What are the odds that any of the 435 people in the House actually read the full bill? I'd bet cold hard cash that none have read it.
Uncle Billy Vs. Mt. Pelerin writes:
I would like to begin to capitalize on misery at this point. Any suggestions on where to start?
Distilleries.
El Cliffo writes: "That is not a veto-proof majority."
Bush has said he won't veto. I doubt he'll suddenly flip. It would be a massive betrayal of those members who were able to cast a vote for "fiscal responsibility" only because of the promised veto.
If he does veto, I wouldn't count on the Representatives (who, remember, are all up for re-election) voting the same way on the override. There might even be a rush to be the first to announce a change in vote, since suddenly it isn't a noble stand for fiscal responsibility, it's a cruel vote to throw people out of their homes.
Feckless Ness,
"Distilleries."
I should thing Lefty is salivating over this outcome.
Cheers,
What happened to our country? I'm glad the Supreme court let us keep our guns.
OK, so you take one of the few insolvent homeowners who qualify that hasn't been paying (so he's actually got some disposable income now) and shoehorn him into a loan after a haircut that leaves him broke after actually making a payment.
This screws consumption by saving the lender a little money, temporarily until he defaults.
Any attempt to tamper with Mr Market will eventually backfire.
Was any change made to the conforming loan limit?
8:34 is me
" The American Bankers Association, meanwhile, was mostly supportive of the bill but criticized a provision that would require banks to report aggregate payments made to business customers.
"ABA has long supported efforts to reform oversight of Fannie Mae and Freddie Mac while simultaneously protecting the cooperative structure of the Federal Home Loan Banks. We also support the efforts of Congress and the administration to bring stability to the marketplace with regard to these GSEs,""
Bwahahahahahahahahahahahahahahahahahha!
GASP!
BWAHAHAHAHAHAHAHAHAHAHHAHAHHAHAHAHAHHA!
Cough!
Cooperative structure....
Bwahahahahahahahahaha!
Oh Glod!
Whew.
Ahem.
This really sucks.
Cheers,
Yes, conforming limit is 625k in the new bill.
REBear: yep, permanently increased to $625K.
Marcy Kaptur is my representative (representing Toledo and NW Ohio) She VERY rarely sides with the other side of the aisle. I suspect she's not keen on bailing out Wall Street !
I'd call and write my Senators, but it will do absolutely no good. Boxer and Feinstein will vote for this regardless of how many voters told them not to.
Currently Smoking Cannabis writes:
At 9%, I think our "representatives" already know that the people don't dig what they're doing. They don't really seem concerned about that. Instead of calling them, maybe just yell into a pillow.
Currently Smoking Cannabis | 07.23.08 - 7:35 pm | #
Why does cannabis have to be illegal? Because it is necessary to control competing forms of stores of value. Look at the Whiskey rebellion early in our country. Alex Hamilton the leading proponent of our first central bank was also the major proponent of the whiskey tax. The predecessor of the IRS was the ATF. The IRs was formed in 1913 for one reason. To make sure we paid our taxes in Federal Rreserve Notes. Look at Talley Sticks in England. They functioned as money because one had to pay their taxes in them. Luxury goods that do not need to be consumed for survival function well as a commodity of exchange.
"Angered by an excise tax imposed on whiskey in 1791 by the federal government, farmers in the western counties of Pennsylvania engaged in a series of attacks on excise agents. The tariff effectively eliminated any profit by the farmers from the sale or barter of an important cash crop, and became the lightning rod for a wide variety of grievances by the settlers of the region against the federal government"
The Whiskey Rebellion | Early America's Milestone Historic Documents
I second "Mistah Bonzai's" suggestion. Go to FedUpUSA
, watch the video, and call your Senator.
This is beyond outrageous; it is completely obscene.
Why does anyone think that communicating with your elected officials in any way other than in the "memo" section of your checks has any impact?
really, how much evidence do you need?
Maybe you all should start spreading rumors that the state of Israel is against the housing bailout. Most Senators have loyalty to Israel before Wall Street or ... anything else, really.
For the men of this blog..
a little something for our sanity...
http://www.surfersvillage.com/gal/pictures/girl2-gal.jpg
http://i65.photobucket.com/albums/h232/sk8itup123/reef_girl_cecilia.jpg
just saying...yeah I'm pissed but thier are still some great things about being 6 feet above ground..
btw-my form of protest is adjusting my w-4 and opening up llc in nevada..
Can you say too bad mr. federal govt...
12th Percentile,
"Why does anyone think that communicating with your elected officials in any way other than in the "memo" section of your checks has any impact?"
I don't. They're owned. Nothing to see here move along.
Cheers,
TAUNTON, Mass.
A 53-year-old wife and mother fatally shot herself soon after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead.
Police in Taunon say Carlene Balderrama used her husbands high-powered rifle to kill herself Tuesday afternoon, 90 minutes before her foreclosed home was to be sold at auction.
The mortgage company notified authorities, who found her body an hour later.
Police say she left a note to her family telling them to take the life insurance money to pay for the house.
They're all just running up the tab before they announce NESARA.
NESARA, the National Economic Security And Reformation Act
It's almost morning, friends.
cd,
Thanks for the lovely ass shots. Quite appropriate really...if you think about it for like 1/10th of a second.
Cheers,
Conjure Bag wants to know.
"Has everyone stocked up on canned tuna and chocolate drink mix?"
FT has a story out on China tightening its mortgage market. I would like to officially welcome China to our little mortgage party.
My favorite quote from the story:
"If financial institutions of Freddie Mac and Fannie Maes calibre could get into such a bad situation, then what does that mean for Chinese financial institutions?
Dear lord, if anyone refers to Freddie and Fannie as high calibre leveraged 60 to 1, then they are really in trouble.
FT.com: Chinas banks told to tighten mortgages
FT.com / China - China’s banks told to tighten mortgages
"Police say she left a note to her family telling them to take the life insurance money to pay for the house."
That's some insurance policy. Insurance rarely covers suicide. Stupid 'till the end I guess.
Cheers,
OT but this article by my favorite business humor editor at the Denevr Post has me freaked.
Barking Up the Wrong Securities:
Death of an auction-rate securities salesman
Barking up the wrong securities - The Denver Post
Wachovia is implicated in this article but I understand it's an industry wide problem (why do they call it that, what physical product do they make?)
Anyway, my mom was sold some muni's by a "nice man" with Smith Barney last November. How can I tell if they are of this stink or not?
mp,
"Has everyone stocked up on canned tuna and chocolate drink mix?"
Tuna yes chocolate no. I don't drink milk.
Cheers,
"Insurance rarely covers suicide."
Wrong. Many policies cover suicide after the policy has been in force for one full year.
"Passage of this bill sends a helpful signal of confidence to housing markets and investors. Freddie Mac will continue doing its part to help the economy by raising private capital, helping put families into homes through sound underwriting, and helping troubled borrowers avoid foreclosure," said Doug Duvall.
Bwahahahahahahahahaha!
Raising PRIVATE Capital?!
Bwahahahahahahahaaha!
Oh man! This article is so full of sh*t it's not funny.
Cheers,
Misean,
no problem-it helped me for a second too!!! well I mean I went back for seconds, thirds etc...
The best way to protest this that I believe is to go exempt or claim 12 on w-4 for the rest of the year..They'll feel it and it would be painful...I just changed and faxed over to HR today...I'll buy silver to hedge against dollar demise with new found withholding status..
or go to brazil to find that reef girl..10 women to 1 man works even for my ugly ass
mp,
You're right. Just googled. But often at half price.
Cheers,
Ok, I am no genius. Is this what can happen?
"criticized a provision that would require banks to report aggregate payments made to business customers"
That's the part that I thought was evil. That's salt in the wound. That's the coup de gras. That's just mean.
For the right rate, I will lend.
cd,
"or go to brazil to find that reef girl..10 women to 1 man works even for my ugly ass"
Really? What the hell am I doing here then.
I gotta get a flight.
Cheers,
Go read the lead story at latines.com
Arnie threatenting to reduce state wages to minimum wage until budget is passed.
Nice.
You go Ahnold. Show em what Austrian economics is all about.
Arnie threatenting to reduce state wages to minimum wage until budget is passed.
LMAO! Is that inflationary or deflationary?
Mr. Beach,
"Arnie threatenting to reduce state wages to minimum wage until budget is passed."
YouTube -
Cheers,
Arnie also promised to "open da books and look for wasteful spending." Idiocracy is alive and well in California.
We must get Laura Richardson back to L.A. to help our budgets in their time of need. She was last seen traipsing around New Orleans looking shocked and amazed and indignant.
In a statement on Wednesday, Paulson said the bill will "provide temporary authorities to give confidence to markets and will create a strong, independent regulator better able to address the risks these enterprises [Fannie and Freddie] pose."
They want to white wash toxic garbage to Fanny and Freddy. This is so Orwelian it melts my brain.
Cheers,
"Arnie threatenting to reduce state wages to minimum wage until budget is passed."
The employees will just call in sick and hit them with disability pay along with a discrimination suits. Public employees know how to milk the system better then anyone.
Uncle Billy Vs. Mt. Pelerin,
"You go Ahnold. Show em what Austrian economics is all about."
The governator is about as Austrian in his economics as Marx.
Cheers,
Thanks, Misean (at 8:03), that's what I was looking for. I still don't see how it can be made to work, but at least now I have some idea what they're trying to do.
Sh... Mise... don't tell anyone, but so were the Austrian economists.
Uncle Billy Vs. Mt. Pelerin,
"Sh... Mise... don't tell anyone, but so were the Austrian economists."
I obviously know what the Mt. Pelerin society is man. So what's your point.
Cheers,
And the debt limit get raised to $10.6 Trillion!
There is a limit on how much foreign aid we will accept?
And bucky rallies on this fabulous news. The world is full of stupid stupid people.
Yalt,
As i said earlier. It's boiler plate shite. The homeowner will either walk or restructure then sell. 2nd/heloc gets nothing. I guess there's a hope that some FB's will be dumb enough to pay on underwater/flat 0 equity loans long enough for inflation unadjusted prices to rice above the new loan limit, that the 2nd/heloc gets something back at sale.
It's quite a stupid plan. I wonder how FASB is going to allow these "ASSets" to be booked?
Cheers,
"Republicans are actively stupid; Democrats are unintentionally stupid."
Excellent Troy, nailed it!
WTF is a regulator going to do? Say they are well captalized?
I mean the only thing they can really do is shrink their balance sheets and exposure. Then of what use are the GSEs? They can't take the crap off the banks' balance sheets and they can't accept new loans. Seriously. What is all this talk about a new regulator, like it's going to change anything in a positive way. No one even says what this magical regulator is supposed to accomplish.
stuart,
"And bucky rallies on this fabulous news. The world is full of stupid stupid people."
When you have a stupid system, gaming it is the only logical way to play it.
The plays look stupid...but it's just gaming the system.
Cheers,
"What difference does the ownership of IB's make?"
In Moscow in '91 I told a TASS correspondent: "If the SU falls you're going to have the IMF here in Moscow running Russia's finances."
His reply: "Please."
Mise:
What's my point? That once the people who call themselves Austrians get rid of all their gobbledeegook and (and once the marxists get rid of all theirs) they are essentially the same. Both movements were co-opted by people who wanted a lot of money and power.
barely,
"No one even says what this magical regulator is supposed to accomplish."
Why, he waves his magic wand, and suddenly the crap that banks want to sell them are 1:1 in value and the GSE's can take them, then the GSE's get to rob taxpayers o make them whole. And they're all AAA.
WHOOT!
Of course the backstoppers are kinda f*cked...but who cares about them.
Cheers,
Uncle Billy Vs. Mt. Pelerin,
Linkage to your proof or I call foul.
Cheers,
I propose all bonus pool money earned by the investment banks under the umbrella of taxpayers be siezed and payed into a governement trust to be used to offset losses to US taxpayers. Furthermore, the decree would be retroactive for the ast 5 years. All major financial CEOS would be forced to resign and their assets would be frozen pending restitution claims. Investment banking salaries would be defacto capped by regulated fee structure. Dark pools should be outlawed.
On July 5, 2008, the Associated Press (AP) released a story titled: Secret U.S. mission hauls uranium from Iraq. The opening paragraph is as follows:
The last major remnant of Saddam Husseins nuclear program a huge stockpile of concentrated natural uranium reached a Canadian port Saturday to complete a secret U.S. operation that included a two week airlift from Baghdad and a ship voyage crossing two oceans.
See anything wrong with this picture? We have been hearing from the far-left for more than five years how, Bush lied. Somehow, that slogan loses its credibility now that 550 metric tons of Saddams yellowcake, used for nuclear weapon enrichment, has been discovered and shipped to Canada for its new use as nuclear energy.
It appears that American troops found the 550 metric tons of uranium in 2003 after invading Iraq. They had to sit on this information and the uranium itself, for fear of terrorists attempting to steal it. It was guarded and kept safe by our military in a 23,000-acre site with large sand beams surrounding the site.
Yeah, Uncle Billy, which people do you mean, exactly, who did the co-opting and want a lot of money and power, huh?
Proof of the similarities or for their co-option?
Names some names, dude.
Well, the Austrian's really got going in America after WWII...
And somehow they puttered along and were taken up by the libertarians and any "conservative" think tank type operation that advocated free markets. Ipso facto profundo, we have arrived at our little situation that we have today where the entire economy is crumbling due to austrian fueled "free markets."
(cnt'd)
Bets in?
Dude I hope you have stronger than that. That was weak as sh*t.
Uncle Billy Vs. Mt. Pelerin,
I actually know some of these people. I've been published in the Quarterly Journal of Austrian Economics. WTF are you talking about?
Cheers,
How Marxism was co-opted? Not as familiar with the Russian side of the story, but it was taken up around the world as an excuse for a lot of violence and anarchy.
Why are austrian's really like marxists? Same kooky extremism in two different directions.
Kung fu,
the only problem is it has been there since before 1991...
Tuwaitha and an adjacent research facility were well known for decades as the centerpiece of Saddam's nuclear efforts.
Israeli warplanes bombed a reactor project at the site in 1981. Later, U.N. inspectors documented and safeguarded the yellowcake, which had been stored in aging drums and containers since before the 1991 Gulf War. There was no evidence of any yellowcake dating from after 1991, the official said
Mise: It shouldn't make you so angry. You can write all you want. Ayn Rand did that too. This whole movement has created a sickness.
Or at least has been a symptom of it.
Name calling. No substance.
Lame.
Uncle Billy Vs. Mt. Pelerin,
What f*cking free market in the US or any other country are you talking about?
For f8ck's sake...do you actually read any articles? What Austrian ideas...which at worst advocate a return to Constitutional principals..exist in the current climate?
FOUL!
Cheers,
Wow, it does make you angry.
Exactly... what free markets. What idealized markets. I read enough to call foul each time myself.
cd beat me to it with the repudiation of the erroneous uranium claim -- Kung Fu Panda should read more carefully.
Uncle Billy Vs. Mt. Pelerin,
Already called foul so I'll finish with this. Ayn Rand ain't an Austrian. She was an Objectivist. Some Austrian's are Objectivists...but lately, in particular...not many.
Good argument....
Nice debate....
Weak!
Cheers,
Mise: I'm not a died in the wool anything except realist, so I don't have a whole theological framework and angry doctrine. Sorry.
If you want to explain to me how Austrian economics have helped us over the last few decades, be my guest. Just please knock off the righteous indignation.
Just the blanket assertions of a crotchety old man.
(patiently awaiting diatribe)
Uncle Billy,
"Wow, it does make you angry.
Exactly... what free markets. What idealized markets. I read enough to call foul each time myself."
Yes it does. Because you assert things that are not correct, and then claim you have made a point.
Given that you're an inpatient...I'll stop now.
Cheers,
300 billion, wow I has to get me a piece of that.............
Everybody quick get as much as you can b4 it is all gone.......
http://src.senate.gov/public/_files/radio/bunning7_15_08.mp3
Come on Burning, you the only hope we gots.
Well here's what makes me uncomfortable, in a nutshell:
Austrian economics, to me equates to free markets. I think we've learned that this is not a viable concept. Free markets don't exist. Either knowing this or not, the austrian flag wavers have convinced a great many people that we need greater and greater deregulation. Well here we are. If they didn't know it, then they are not so bright. If they did, they are evil.
The U.S. housing market will lose more than 10 trillion dollars in phantom wealth before this crash has finished. 300 some billion dollars is 3% - nothing but string pushing.
Sure, get a piece of it. Just like you should get a piece of the 3 trillion dollar Iraq slaughter. I'd rather go dancing.
"When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turned out it was socialism right here in the United States of America..."
Niiiice. If a tree falls in the forest....
Anonymous | 07.23.08 - 9:52 pm |
"Come on Burning, you the only hope we gots."
http://www.moviesoundclips.net/movies1/aliens/difference.wav
Best I could do. Sorry no video.
Cheers,
Suicide clause in life insurance policies is almost always 2 years. (Pays as long as policy has been in force 2 years.)
They always say, however, "not applicable in Missouri". Apparently Missouri has some statute invalidating the suicide clause. I've always wondered whether they have a higher incidence of suicide than other states.
all right, let's triple it and fuel the next housing boom; the next generation should worry about corresponding bust and higher taxes...
p.s. why pay taxes, let's just borrow from china and propel their economy to another 20 years of hyper growth at our expense,
yeah yeah i know.
did the Romans say economy is not the zero sum game and ignore obvious manipulation of currency exchange by not always friendly "other" governments?
2nd/heloc gets nothing.
A bit of an exaggeration, I suppose, but close enough.
The plan is voluntary, isn't it? A lot was made of that feature back when the idea was first floated, anyway, and I'd be surprised if it had changed.
Why would the second mortgage holder agree to this if the loan is currently performing?
I'm starting to sound like the folks who thought it wasn't possible to modify a securitized loan, but either I'm missing something or the plan is a red herring.
"Austrian economics, to me equates to free markets. I think we've learned that this is not a viable concept. Free markets don't exist. Either knowing this or not, the austrian flag wavers have convinced a great many people that we need greater and greater deregulation. Well here we are. If they didn't know it, then they are not so bright. If they did, they are evil."
You have to show free markets exist. Where? Gov't controlled money and financial markets are a free market. Free means free pal. They don't exist.
Cheers,
p.s.s.
by other I mean ideologically other....
Mise: that's exactly what I just said. We'd better both get some rest.
Uncle Billy Vs. Mt. Pelerin,
"Mise: that's exactly what I just said. We'd better both get some rest."
No it's not...but I'll take a surrender at any time.
Cheers,
Please please please CALL your Senators TOMORROW.
It's a FREE CALL:
1-877-851-6437
1-800-828-0498
1-866-340-9281
1-866-338-1015
1-866-220-0044
Tell friends and neighbors about this fiasco. People are enraged to find they are on the hook for Fannie and Freddie. These are people who could've cared less about any of this stuff, til now. They are asking me for phone numbers now to call in the AM.
This is easy, takes just a moment of your time and is FREE.
They do not read emails. They DO take calls .
Wow, lets just criminalize the practice of making out loans to "unqualified" borrowers. Unf'in real.
Page Not Found
Hank's buddies are just spreadin' the blame
"I feel like punching something"...Misean, call a Senator instead.
I went ballistic on one of my reps today...still feel good, and that was hours ago.
Mark this day on your calendar. One step closer to serfdom.
Pitiful Amerikens, you don't know real suffering yet. Morbo
Vain attempt at last word:
I say: "Free markets don't exist."
Then Mise says: "Free means free pal. They don't exist"
Then I say: "That's what I just said"
Then Mise says: "No it's not."
I don't want a draw, I want to learn, but it ain't going to happen tonight
:
Fools rush in where angels fear to tread...
Austrian economics sounds to me like French existentialism. Lots and lots of elegant theory about how things work, but in the end, doesn't hold up well against the dull realities of how we really act.
Sartre used to stand on top of tall buildings so he could see everyone's bald spots. That's not dull!
Don't let the Senate pass this bill.
Go here and sign the petition. Call, fax or email your Senator today!!!
The Market Ticker
Generally we're not that hot at modeling our behavior, regardless of realm. I think it's sort of a Schroedinger's cat problem.
Sartre was probably shooting spitwads at the bald heads.
I'm foreclosing, and I think that this bill is wrong! Let the banks burn, baby burn. We are overdue for a depression.
In my area of Northern Virginia, I tested the financing online. For 5% down on a $500K loan, you woudl find no offers. For 20% down on a $500K loan, the lowest offer was 6.5% with 2 points but the average was 8%. I suspect that this bill does nothing for the average person and will cause the interest rates to increase dramatically. To count the increase, the housing price will have to drop which is exactly opposite of what this bill is suppose to do.
Usually I deserve a little kiss before I am screwed. Oh well, at least I don't own my place and have a job for the next five years. Cheers.
Please dear readers, take the time to read The Theory of Moral Sentiment and you WILL understand the invisible hand IS what moves the market.
No Government interference is necessary!
Adam, no one disagrees that there is an invisible hand. The problem is that the one we have now is disconnected from the rest of the body.
What a great day!
simple solution to a bailout:
You know what I'd do? I'd take that deal 'n' crawfish, then drill that ol' Devil in the ass. What about you Juanito, what would you do?
-Curly Bill
it is your money, after all
They call it the "American dream" because you have to be asleep to believe it.
whoops,
YouTube - Say Goodnight, Dick
one more try,
George Carlin - Please Wake Up America •
VideoSift: Online Video *Quality Control
For CR and some of the milder types on this blog, please keep in mind the following:
Any efforts to put a "floor" under housing will also have the unintended effect of putting a ceiling also.
That's how socialism works - the masses get a certain measure of security at the expense of the possibility of building real wealth. Meanwhile, a small group of elites (that would be the pigmen) don't have to follow the rules and get fat.
So if this bill passes and somehow succeeds in stopping or at least slowing the decline, I am confident that one of the costs will be very limited upside in the next upturn.
Something to think about if you are a realtor ...
"You have to show free markets exist. Where? Gov't controlled money and financial markets are a free market. Free means free pal. They don't exist."
Yep, it is really funny reading Ayn Rand free markerter Greenspan explain how he could run the biggest central planning agency in the world (aka the FED) this side of the Kremlin and still be true to his beliefs. His explaination boilded down to he could do more "good" inside the FED than outside. Well he did "good" alright, he helped destroy the economy and gave us the worst of both worlds. He is a key player in the deregulation of the banks, extended negative interest rates, creative mortgages and the current mess.
Deregulate a massive industry like banking and you get the pigmen, crooks and schemers coming out of the wood work. Add war,extended periods of cheap money and the results are very predictable.
I guess there's a hope that some FB's will be dumb enough to pay on underwater/flat 0 equity loans long enough for inflation unadjusted prices to rice above the new loan limit, that the 2nd/heloc gets something back at sale.
Of course the more likely scenario is, the FB tries to stay in their house, it loses another 20% in value, he walks and/or can't make payments and WE end up bailing out the bondholders. And of course how much pressure will there be on appraisers? The banks don't want to write off any more principal than required. I'm guessing that most of the "fair market values," that 90% of which gets refinanced will tend to come out such that the FB will save $100-50/month on the new loan. Enough to make them bite at the refinance opportunity, but not enough to make the loan affordable. ALOT of these loans will end up in forclosure, only WE'LL be holding x% of the bag.
This bill is great for China, Japan, investment banks, and hedge funds. Will anyone be able to name a distressed homeowner (making under $1m /yr) that gets directly helped by this? (aside from indirect help trickling through china owned bonds doing better).
So, it is over.
The dollar will crash, taxes will skyrocket, and everyone in my generation or later who was "stupid" enough to be responsible when it comes to saving for a house and not buying something that one cannot afford will face unaffordable housing for at least a decade or more as the price drops are dragged out over as long a period a time as possible. Note that there will be NO substantial wage increases to bridge this gap.
Great job... Vote out everyone who voted for this bill in the next election, and keep voting them out until they are gone. Tell your friends, too, that their taxes will be going up to pay for illegals and shylocks living in 4,000 square foot McMansions that they could never afford.
"Mission Accomplished!"
i've got a dumb blonde wife and she recons the banks holding securatised mortgages will offload billions dollars of them onto the gse's, making their balance sheets whole again. even my dog looked at her funny