As a lawyer once told me that until they file the papers there is nothing to worry about. Until Fannie actually goes after these crooks, this is a nothingburger.
Well, at least they aren't shoveling the crap that this is happening because of their committment to 'affordable housing'.
( But I'd quibble with the comment that same-period home sales being 'up' in California is somehow a good thing. )
Even with the posted loss, FNM has gone down as bad as it should. Financials improving because of oil-selloff, but what does oil have to do financials anyway?
Oh well. In the meantime, I'll just wait for the day when I could finally sell my few FNM stocks at break-even price of $50.34/share...
"We are now seeing average initial charge off severities of 40% for loans in Califorinia." Time to recalculate losses and reserves for other Ca lenders.
WSJ
The Return of 'Good Bank-Bad Bank'
S&L-Era Approach Catches On
Of Separating Loser Loans From Healthy Assets
"..John Douglas, a former FDIC counsel, said that if loans are taken out of the bank's holding company, the cross-guarantee liability doesn't apply. The source-of-strength doctrine is "more myth than fact," he adds. The courts "have never forced a bank-holding company to put money in a bank subsidiary." The Return of 'Good Bank-Bad Bank' - WSJ.com
Why didn't they mention Wyoming? I'm sure there is some positive signs there with all the energy money. And North Dakota, too. They really missed on on some good PR.
Although Fannie Mae cut its dividend by 30 cents, taxpayers shouldn't be forced to protect shareholders of government-sponsored enterprises, said Joseph Stiglitz, a Nobel Prize winning economist.
So somebody explain to me why Wall Street is suddenly so effing happy and the dollar has strengthened? Just because the price of oil has dropped? That's supposed to make everything better?
Nice little ass beating going on with WAMU today what the hells that all about kids. LOL Cox and the SEC had better put them under the witness protection program.
It is a good thing home prices are sticky otherwise the GSE worst case plans for orderly unwinding would get in trouble and instead they'd be talking about default rates accelerating on a weekly basis.
That week of July 7 was one of the worst Fannie Mae has experienced in the debt and equity markets.
Now that sticky is finally dead is there aanybody out there still clinging desperately to the idea of reversion to mean? That's the next myth to implode.
Gimme a break; if you cannot see that you are facing a systemic problem, given the unprecedented household debt to GDP ratio, you do not deserve to be in a position of financial responsibility.
Yes, that is why I nominated the word of 2008 to be "Lubricated" Home prices are "Lubricated." They were on the way up and they are on the way down. People can argue sticky as much as they want, but I see price slides.
Now that sticky is finally dead is there aanybody out there still clinging desperately to the idea of reversion to mean?
Reversion to mean has always been right.
The problem is that people interpret "mean" to be "avg" instead of "angry". It is much more sensible with the latter.
DC is ok for now in the inner sanctum (arlington, alexandria, stuff like that)
There's an ongoing debate on the NoVA Bubble Blog about whether this can continue. As you might expect, those that live in the "inner sanctum" argue that big price drops will never happen there - access to Metro, desirable areas, good schools, gov't jobs, blah blah blah.
Those who have half a brain argue that as the price delta between the "inner sanctum" and other areas increases the marginal buyer will start to move outward, eventually impacting Arlington, etc. Classic econ 101 "substitute good" stuff. I live in an area that was fine last year and is getting savaged this year, so I'm pretty sure the inner areas will eventually be affected.
dc1000 insists that everything in the DC area is just peachy. dc1000, where are you? You haven't been around lately. Coincidence?
Elvis | 08.08.08 - 11:56 am | #
Elvis,
It is goofy. All our rentals are in Cape Coral. Yes,the place down 50% in values. I have NO problem renting the units. All the tennants have jobs. I can actually say all the rents have been on time. If you bought rentals in the last 5-6 years though,you are fucked,to put it nicely...And yes prices are still to high in Cape Coral,even at 50% discounts...
Heck even my company quitely lifted its hiring freeze. I haven't seen any drop off in our freight volumes.
We have actually been picking up a few accounts...
I hear ya Jason. Similar price action in the Bay Area CA where I am. I know about DC because I lived there previously and have a brother living in Arlington now. It will be the last to fall, and the decline wont be as severe as the garbage way out west of DC, but it will fall in time. It's pretty clear that there is real money holding it up, but there is also a lot of poser owners, the ALTA people. And they are about to be served notice that the party is over. This is nearly the same thing as when we talk about SF and SV here in the Bay. Only the most prime neighborhoods are holding up completely. Even in SF city, the junk stuff started coming down a while back.
Fannie Mae said it does not have plans to tap the Treasury credit line that opened up for it in the housing bill signed into law last week by President Bush.
Here is my guess about WaMu. There has been news shared among the big boys. They are using that to make informed investments. We will be privvy to that news some time in the near future once it has been priced in. Just a hunch.
We had several days like this back and the end of the last rally. I could give a damn about charts or patterns but this one is distinct enough to stand out. Huge pump earlier and then very little volatility the rest of the day. Sort of like gravity's rainbow without the gravity.
Fannie Mae said it does not have plans to tap the Treasury credit line that opened up for it in the housing bill signed into law last week by President Bush.
That can mean only one thing: Fannie Mae has plans to tap the Treasury credit line.
Tech is weakening significantly. There's one shocker today buried in all the data.
CCOI, a small-cap which once was one of the "hot" Internet 2.0 companies, guided significantly lower and said the Internet traffic it handles fell by 1% in the most recent quarter. Projections for Net traffic growth have ranged from 15-25% annually.
So, corporate net traffic (mainly what provides CCOI revenues) has hit the wall fairly quickly.
The stock got destroyed and lost one-third. This is like 4th quarter 1999. One by one, tech companies disappoint and get destroyed. But the indexes keep rising. You're seeing the near future one jigsaw puzzle piece at a time. Pretty soon, the whole picture will be clear.
I saw Syron on the CNBC excerpt (The Big Picture)....he said he took over in early 2004 - surely, this puts him on the bridge well before the iceberg hit. Now I really don't understand, Tanta, why you thought the prior article was a hit piece. As far as I can tell, at best he was asleep at his post....hardly a ringing endorsement.
So, the housing market has returned to earth fast and hard. Still calling bottom I see....
As for "inside the Beltway..." According to Zillow my College park house has lost 10.5k in the last 30 days. Of course this isn't helped by home invasions cough cops breaking down doors and shooting peoples dogs.
A bit OT, but all I hear about is Cali, Florida etc. Can any of the wise beings who inhabit Planet Tanta give me their opinion on markets where values are rising or at worst staying steady? My wife is desperate to buy a house ( we are currently renting) and I'm running out of reasons to stall. I'm in Columbia, Mo fwiw - a typical midwest college town.
In addition, Missouri is one of those states where housing sales figures are not required to be reported to the public - is there a resource for getting this info without jumping through too many hoops? - tia.
Jim - that was where I used to live. Its still a serious mixed bag inside the beltway. In case people dont realize it, it's not all great.
Speaking of which, how are things in Hyattsville these days? Did they get much of a runup? It really stunk up the joint there back in the days I was around, but oddly enough, there were some places that had great old houses with huge potential. Wonder how that turned out.
OT-Like Beijing-Wall Street is producing a lot of smoke/smog..It will get clearer next week as the stench will be lifted by the boys that regulate this smog...
? for you-Can the SEC go beyond the 30 day short extension? without legislation? cheers...
yeah, but if things get bad enough for arlington to crash, then we will have bigger problems. Arlington crashing means the federal government in it's current form is no more, and I for one will be heading to the countryside.
The reruns are just as bad as the original. But the good thing this time around is that I bought a satellite dish as well and it's picking up dropping oil and booming airline prices, so I can sit on my shorts in coach class and watch the money roll in.
Badgerboy, I highly suggest looking at what happened to the DC commercial and residential real estate markets in the mid 90s when the govt spending cutbacks came. You can bet your butt that when we get out of Iraq in a year, and start ot do something about the growing budget outlook problem, DC will get spanked. All that booming contract business has a lot of downside potential.
This is deflationary stage of the depression, cash is king, the hyperinflation stage is a couple of years off. Next wave of loan defaults will be over leveraged drillers, oil companies, miners, and farmers.
None of this has much affect on the stock market. It is like one of those dolls that when you knock it over, it just pops right back up. Panics so far a momentary and bullishness is persistent. Far from the bottom still. We need more gloom and despair and sheer hopelessness. The widespread sense that stocks have no future, like in the late 70s.
Why would a company pay a dividend if it is not profitable?
My take: Some funds cannot invest in securities without a dividend of a nickle. So it is a misguided attempt to manipulate the share price.
In truth, a smart fund manager will look for an exit on the stock that just cut its dividend to the $0.05, so it's a pretty pointless exercise.
Maybe instead of "push backs" Fannie should try to use second order derivatives. (as we all know they have a lot of experience with first order derivatives) They might get lucky and may "hold water".
Really doubt cutbacks are coming. In fact, I think defense spending under Obama would be higher than under McCain. If Obama cuts defense, and there happens to be another terrorist attack, then I can assure you he will get 1 term and democrats lose congress.
It's ironic that McCain, the republican has more leeway to cut than the democrat.
Regardless, I will believe the budget cuts when congress actually passes them.
Bopper, same thing here in KC. You're stuck with your common sense. My 101 logical and intelligent reasons not to buy a house falls on deaf ears with my husband, but telling him that every new home is like another turd in the pool to me and I am just not comfortable getting in the water... Well, it's scary but he gets that!
Your market is relatively stable. It looks like had you bought a year ago, you'd be up 3%. That isn't the case for most Americans.
Play around with this calculator. Columbia, MO is on the MSA drop-down list: The page cannot be displayed
Then go buy a house already! Just get a boring fixed-rate loan and don't buy more than you can afford. Good luck.
FFDIC writes:
Anybody been to Vineyard National's Corona headquarters or its branches today.
I have to be in Corona all afternoon so I plan on stopping by there.
As long as there's no line, I'll walk in and inquire about jumbo CD's...I hope to get a fridge magnet, oven mitt or other treasures.
Anyone think oil's run wasn't parabolic? We've had a high-to-low 22% correction in under 1 month; that kind of move up or down doesn't happen in non-highly speculative markets.
Geoff,
I think those defense contractor jobs will get whacked. Those people are significantly overpaid for the same job they did in the military for about half. I believe the budget will see significant changes including the military budget, and DC will suffer.
OT: A BusinessWeek article by Matthew Goldstein (hat tip to Calculated Risk commenter "synthetic-guarantee groupie") describes a proposal to do just that, transfer ownership of closed pension plans from Main Street firms that find them burdensome to Wall Street firms that see an opportunity. Why am I (along with the article's author) not entirely enthused?
When will GS call for oil to rise again?...Stay tuned..This pump as ment't above is either to mask something big or a treat for China on opening day....
I own a small strip in the outer burbs of NOVA. I had been running at 100% occupancy until now when my weakest tenant threw in the towel. Had a commercial broker stop by fronting a potential tenant. He told me that the two major shopping centers about a mile away are hurting big time. Both shopping centers opened within the past two years and rented space (still some vacancies)in the low 20's to $25 ft (have a good idea of the associated costs and this is still a low cap rate). Well, he said that the centers due to low traffic were having to rewrite leases in droves (his word) to the mid to upper teens (down in my range). Ugh, that's gonna hurt them.
Nobody seems to care about FRE and FNM right now. Money is fleeing the Euro into the US. The spinmaster in the US have convinced the lemmings of the world that the taxpayer has it covered. Well done all.
And soon it will hurt you in the form of lower rents. My guess is that you have a lower cost basis and can deal with the pain, though. Not so for those jokers with new construction and huge debt.
This is deflationary stage of the depression, cash is king, the hyperinflation stage is a couple of years off. Next wave of loan defaults will be over leveraged drillers, oil companies, miners, and farmers.
Damn, that's a page right out of my top secret playbook.
Q: What do you sell when they call to say they're coming to repossess your house and your car?
Well by supporting Kosovo independence the West (EU and US) asked for it. If separatism if good for Serbia, then why not for Georgia? Russian military might will crush the Georgians, and what can the US do about it? NOTHING. The US is slipping not only financially but also militarily. The EU will get its face rubbed in the mud.
Why can the Russians attack US soil and nobody is in a panic? What is going to happen to The Masters next year if the Russians are occupying. Tiger Woods won't be happy. Won't be happy at all.
Elvis, no one is gonna get out of this unsinged. Lest of all me. Fortunately, I have a premium location and the cost basis to charge lower, MUCH lower if necessary and still cover the nut.
On the bright side I'm looking forward to picking up some property CHEAP from the bank in the next year or three. If you have the resources to make it to the otherside the near term will provide some once in a lifetime opportunities.
Georgia last month increased the size of its military to 37,000 soldiers and today Saakashvili called up reservists and urged the nation to defend ``every meter'' of land. Russia has a standing army of about 1.1 million.
`Energy Corridor'
``Fighting continues,'' Russian Major General Marat Kulakhmetov, commander of Russia's peacekeeping forces in South Ossetia, said by mobile phone. The peacekeepers have suffered casualties, although it's too early to say how many, he said.
Georgia is a key link in a U.S.-backed ``southern energy corridor'' that links the Caspian Sea region with world markets, bypassing Russia, the world's biggest energy producer. Two pipelines pass through the country linking Azerbaijan and Turkey.
The BP Plc-led Baku-Tbilisi-Ceyhan oil pipeline, which has been closed since Aug. 5 due to an explosion in Turkey, runs about 100 kilometers south of the South Ossetian capital of Tskhinvali.
The most recent violence in the region erupted on Aug. 1, when South Ossetia said Georgian shelling of the regional capital Tskhinvali claimed six lives. Georgia said South Ossetian forces sparked the fighting.
``The conflict might be short and hot, but my sense is that neither party wants a prolonged conflict,'' said Michael Denison, associate fellow at London-based research group Chatham House and a professor of international security at the University of Leeds.
The EU, in a statement today expressed grave concern'' about the fighting and said it isworking toward a cease fire.''
So Georgia wants to ally itself to US energy strategy in Russia'a back yard? NOT smart, not smart at all. And Georgia is finding that out right now.
Black Dog,
Without their huge construction management fee (that is riskless for them and a ripoff to investors), what are the developers of new retail going to do? No cash flow and no backside profits equal BK.
yeah, I couldn't figure that one out FOUR years ago.
The last property I looked closely at was spring of '04. Walked away from it because there was no way in hell I could envision getting the $$'s in rent. Well, along came some fools 2 years later who paid 2 1/2 times what I would have paid. Unbelievable. I would have LOVED to seen their cash flow analysis they provided to their lender. WTF was everyone thinking? Forget the borrowers. Could the lender fog a mirror?
Totally OT, but I just checked my bank's (Navy Federal Credit Union) mortgage rates, which I've not done in some time. Apparently, they've very recently gotten into offering FHA loans, and today, they're offering an FHA 1-year ARM at 5.375% interest with 0 discount points & 1 origination point.
I'm a money-dolt, but why would anybody be offering such cheap 1-year ARM's?
Other strategies include emphasizing marketing programs to grow lower cost or non-interest bearing transaction accounts, and using the CDARS program and structured repurchase agreements as alternative wholesale borrowing sources. The potential use of interest rate swap agreements to match fund certain long-term commercial loans or as a fair value or cash flow hedge against certain asset and liability types, and using investment security cash flows to fund realized loan growth or to pay down short-term borrowings are also evaluated as potential strategies by ALCO.
I'm seeing an underground economy emerging with an increase of CDARS and Jumbo Loans (non-conforming) and new ways to adjust loan loss reserves. Shelia, are you there???:
Bank's revenues are derived principally from interest on our loans and
mortgage-related securities, interest and dividends on our investment
securities, and noninterest income (including loan servicing fees, deposit
servicing fees, gains on sales of loans and commissions on insurance, security
and annuity sales).
July 22, 2008 5:00 pm ET
/seekingalpha.com/article/86381-washington-mutual-inc-q2-2008-earnings-call-transcript
During the quarter we provided for losses at 2.7 times net charge offs of $2.17 billion bringing our loan loss reserves to $8.5 billion at the end of the second quarter. The reserves we now have available to address possible charge offs are up substantially. As a percentage of loans in our portfolio the reserve has more than tripled from year-end 2007 and our coverage ratio of reserves to nonperformers has more than doubled over the same timeframe.
With that, Id like to now give you a brief overview of our second quarter results. We reported a net loss of $3.3 billion, driven by a $5.9 billion provision for loan losses. This increased our loan loss reserves by 79% from the first quarter. Despite our quarterly loss, we ended the second quarter with a tangible equities to tangible asset ratio of 7.79% up from 6.4% in the first quarter.
Approximately one third of the quarters provisions related to significant changes in key assumptions the company used to estimate incurred losses in its loan portfolio in response to the increasingly adverse credit trends. Specifically, the company shorten the historical time period used to evaluate default frequencies for its [inaudible] to a one year period reflecting the evolving risk profile of the loan portfolio and adjusted severity assumptions for all single family mortgages to reflect the continuing decline in home prices. For any specific population of loans, loan loss provisions must equal charge offs. ... blah, blah...
It's ironic that McCain, the republican has more leeway to cut than the democrat. Not really surprising to one (just barely) old enough to remember "only Nixon could go to China."
Thanks for the feedback, people. I guess I've run out of excuses. Thing is, I'll be paying about 90% of the house purchase with cash from my San Diego condo sale (circa 2006) - I'm ahead of the pigmen so far and I'm loathed to line their pockets in a market that may decline significantly in the near future. Ah well, onwards and ... er downwards!
jim: US Marines just got done training Georgian troops last month, the Russians are clearly going to believe that we greenlighted the Georgian invasiosn, and, like you, I expect the Russians to punish Georgia severely, and, also, look at Bush's remarks today, the US "supports the territorial integrity of Georgia"
does that mean we support the invasion because Georgia says that South Ossetia is part of Georgia?
this is one is going to end up biting Georgia and the US in the ass
Richard - don't forget the added spice of Israel's complicity in all of this - they provided advanced weaponry up until a couple of days ago, as well as a number of experts to train the Georgian military how to use those weapons. Just google Russia Israel Georgia for the info.
Oh My God!!! We are in biiiggg trouble. Fannie and Freddie are DEAD! DEAD! DEAD! And the U.S. Taxsury (Taxpayers/Treasury) are on the hook for all the losers out there who bought houses they couldn't afford.
I guess the media will find some way to spin this into to good news for the kool-aid drinkers out there by pointing out that when this is all over; the good news will be that houses will cost about $20,000 each and the bad news will be oil will be about $20,000 a barrel.
I know. What surprises me is that mainline combat between the world's major crude producer and a West-leaning state with a pipeline issue is not inducing a geopolitical risk bid, here.
This has nothing to do with a direct source of crude being at risk, but it has a great deal to do with Russki attitudes towards the rest of us.
Fox News: 12 Year Old Girl Tells the Truth about war Georgia - Video Censorship For the Americans
The answer Condoleeza Rice - Video
Truth about South Ossetia War - Video
Saakashvili's crimes in S. Ossetia
As made a video in Gori Georgia
Saakashvili Dog of Bush
A lot of news out there today.
Nervous? Just a little bit...
FNORD
As a lawyer once told me that until they file the papers there is nothing to worry about. Until Fannie actually goes after these crooks, this is a nothingburger.
Well, at least they aren't shoveling the crap that this is happening because of their committment to 'affordable housing'.
( But I'd quibble with the comment that same-period home sales being 'up' in California is somehow a good thing. )
Hmmmm...Alt-A loans defaulting now. Who'da thunk? Well, I guess anyone who reads this blog knew...maybe they should too.
The ray of sunshine is that when we die next week our casket will be pink, our favorite color, instead of black.
all fed-ucked up
except the equities market of course
dow 200 points up, ha!
"lions and tigers and bears oh my
lions and tigers and bears oh my"
Tanta.. Just passing along a compliment. Great work you have been doing.
Even with the posted loss, FNM has gone down as bad as it should. Financials improving because of oil-selloff, but what does oil have to do financials anyway?
Oh well. In the meantime, I'll just wait for the day when I could finally sell my few FNM stocks at break-even price of $50.34/share...
I need a pony in my armpit now!
"We are now seeing average initial charge off severities of 40% for loans in Califorinia." Time to recalculate losses and reserves for other Ca lenders.
WSJ
The Return of 'Good Bank-Bad Bank'
S&L-Era Approach Catches On
Of Separating Loser Loans From Healthy Assets
"..John Douglas, a former FDIC counsel, said that if loans are taken out of the bank's holding company, the cross-guarantee liability doesn't apply. The source-of-strength doctrine is "more myth than fact," he adds. The courts "have never forced a bank-holding company to put money in a bank subsidiary."
The Return of 'Good Bank-Bad Bank' - WSJ.com
When you are trying to paint Michigan, of all places, as a sign of hope, you are really in deep doo-doo.
Why didn't they mention Wyoming? I'm sure there is some positive signs there with all the energy money. And North Dakota, too. They really missed on on some good PR.
Taxpayers Shouldn't Have to Protect Fannie: Stiglitz
Nobel Prize Economist's Bleak Economic Outlook - CNBC
Although Fannie Mae cut its dividend by 30 cents, taxpayers shouldn't be forced to protect shareholders of government-sponsored enterprises, said Joseph Stiglitz, a Nobel Prize winning economist.
Best economist in my book.
Wells Fargo loans are going to be more scrutinized in the next quarter...
So somebody explain to me why Wall Street is suddenly so effing happy and the dollar has strengthened? Just because the price of oil has dropped? That's supposed to make everything better?
Bob - this is clearly a bottom
The market IMO has to break above its 50 day MA before it moves back down
BTW anyone see WaMu today?
Bob,
It is Friday. It is summer. The Olympics are here. And they are drinking already. Why wouldn't they be happy?
Nice little ass beating going on with WAMU today what the hells that all about kids. LOL Cox and the SEC had better put them under the witness protection program.
Why wouldnt they be happy?
Hmm...let's see, the few bits of the high priced property markets that havent tanked are going to have alt-a cut out from under them. Poof!
Russia goes to war with neighbor.
Party! Buy buy buy buy buy!!!
50 day MA = 1300-1298 or so and I think we will hit it on Mon or tues...
W00t! NoVA made the list of "crash and burn" areas!
-Jaso
It is a good thing home prices are sticky otherwise the GSE worst case plans for orderly unwinding would get in trouble and instead they'd be talking about default rates accelerating on a weekly basis.
That week of July 7 was one of the worst Fannie Mae has experienced in the debt and equity markets.
Now that sticky is finally dead is there aanybody out there still clinging desperately to the idea of reversion to mean? That's the next myth to implode.
Thanks much, CR and Brian.
Ugly.
Whoocoodanode?
Gimme a break; if you cannot see that you are facing a systemic problem, given the unprecedented household debt to GDP ratio, you do not deserve to be in a position of financial responsibility.
dc1000 insists that everything in the DC area is just peachy. dc1000, where are you? You haven't been around lately. Coincidence?
Well at least we have decoupling working in our favor...er, um, don't we?
DC is ok for now in the inner sanctum (arlington, alexandria, stuff like that)
But take a drive 20 minutes outside of the beltway and it is toast in a lot of areas.
And more to come thanks to ALT A ruling today.
Devilishly looking forward to Fannie Mae's Q3 report. Thanks CR!
"Now that sticky is finally dead " RD
Yes, that is why I nominated the word of 2008 to be "Lubricated" Home prices are "Lubricated." They were on the way up and they are on the way down. People can argue sticky as much as they want, but I see price slides.
and dead people.
Now that sticky is finally dead is there aanybody out there still clinging desperately to the idea of reversion to mean?
Reversion to mean has always been right.
The problem is that people interpret "mean" to be "avg" instead of "angry". It is much more sensible with the latter.
Airplane! - "Try not to worry"
YouTube -
Personally, I see debt people.
Moin Bob,
"So somebody explain to me why Wall Street is suddenly so effing happy and the dollar has strengthened?"
They will change their tone when the earnings from the multi nationals will will be hit or at laest no longer get the benefit.....
Back this out and lots auf "impressive" numbers are looking lousy....
We in Germany have seen the opposite effect this on a daily basis....
DC is ok for now in the inner sanctum (arlington, alexandria, stuff like that)
There's an ongoing debate on the NoVA Bubble Blog about whether this can continue. As you might expect, those that live in the "inner sanctum" argue that big price drops will never happen there - access to Metro, desirable areas, good schools, gov't jobs, blah blah blah.
Those who have half a brain argue that as the price delta between the "inner sanctum" and other areas increases the marginal buyer will start to move outward, eventually impacting Arlington, etc. Classic econ 101 "substitute good" stuff. I live in an area that was fine last year and is getting savaged this year, so I'm pretty sure the inner areas will eventually be affected.
-Jaso
As long as Zillow spits out high values, most of the masses will have no clue they lost so much until they sell or try to re-fi.
California mortgage lending looks to be almost single-handedly be taking down the entire US financial system.
What a spectacle.
dc1000 insists that everything in the DC area is just peachy. dc1000, where are you? You haven't been around lately. Coincidence?
Elvis | 08.08.08 - 11:56 am | #
Elvis,
It is goofy. All our rentals are in Cape Coral. Yes,the place down 50% in values. I have NO problem renting the units. All the tennants have jobs. I can actually say all the rents have been on time. If you bought rentals in the last 5-6 years though,you are fucked,to put it nicely...And yes prices are still to high in Cape Coral,even at 50% discounts...
Heck even my company quitely lifted its hiring freeze. I haven't seen any drop off in our freight volumes.
We have actually been picking up a few accounts...
Chris
Speaking of which Beazer pulled out of Freso
Bloomberg.com
- Bloomberg.com
WTF is going on? Are Hank and Ben doing day trading today? I don't like this.
I hope Brian is on the payroll by now.
I hear ya Jason. Similar price action in the Bay Area CA where I am. I know about DC because I lived there previously and have a brother living in Arlington now. It will be the last to fall, and the decline wont be as severe as the garbage way out west of DC, but it will fall in time. It's pretty clear that there is real money holding it up, but there is also a lot of poser owners, the ALTA people. And they are about to be served notice that the party is over. This is nearly the same thing as when we talk about SF and SV here in the Bay. Only the most prime neighborhoods are holding up completely. Even in SF city, the junk stuff started coming down a while back.
Any guesses as to why WaMu is receiving a special thrashing today?
Anybody been to Vineyard National's Corona headquarters or its branches today?
Fannie Mae said it does not have plans to tap the Treasury credit line that opened up for it in the housing bill signed into law last week by President Bush.
Fannie Mae says its plans don't include Treasury access
| Reuters
LMAO, Think a bunch of politicians will have a different view of that outlook.
Tim,
Looks like max pain for SPY options at 128...
Here is my guess about WaMu. There has been news shared among the big boys. They are using that to make informed investments. We will be privvy to that news some time in the near future once it has been priced in. Just a hunch.
We had several days like this back and the end of the last rally. I could give a damn about charts or patterns but this one is distinct enough to stand out. Huge pump earlier and then very little volatility the rest of the day. Sort of like gravity's rainbow without the gravity.
Fannie Mae said it does not have plans to tap the Treasury credit line that opened up for it in the housing bill signed into law last week by President Bush.
That can mean only one thing: Fannie Mae has plans to tap the Treasury credit line.
OT
Tech is weakening significantly. There's one shocker today buried in all the data.
CCOI, a small-cap which once was one of the "hot" Internet 2.0 companies, guided significantly lower and said the Internet traffic it handles fell by 1% in the most recent quarter. Projections for Net traffic growth have ranged from 15-25% annually.
So, corporate net traffic (mainly what provides CCOI revenues) has hit the wall fairly quickly.
The stock got destroyed and lost one-third. This is like 4th quarter 1999. One by one, tech companies disappoint and get destroyed. But the indexes keep rising. You're seeing the near future one jigsaw puzzle piece at a time. Pretty soon, the whole picture will be clear.
Simple MSM Economic Equation:
1/Whatever is said = truth.
You could still cram a lot of Alt-A's down Fannie's throat before years end.
rich,
What do you think about TNX not joining the index party today?
"Fannie Mae takes $2.3B loss, slashes dividend
- 1 hour ago
" Dow 11,673.01 +241.58 (2.11%)
- 10 min ago
O Yeah, all must buy value, NOW!
(I know, i know, the daily market fluctuations are RANDOM, still o YEAH!)
I saw Syron on the CNBC excerpt (The Big Picture)....he said he took over in early 2004 - surely, this puts him on the bridge well before the iceberg hit. Now I really don't understand, Tanta, why you thought the prior article was a hit piece. As far as I can tell, at best he was asleep at his post....hardly a ringing endorsement.
So, the housing market has returned to earth fast and hard. Still calling bottom I see....
As for "inside the Beltway..." According to Zillow my College park house has lost 10.5k in the last 30 days. Of course this isn't helped by home invasions cough cops breaking down doors and shooting peoples dogs.
Anyone notice that UBS is also buying back it's auction debt? There's a quick $19B.
A bit OT, but all I hear about is Cali, Florida etc. Can any of the wise beings who inhabit Planet Tanta give me their opinion on markets where values are rising or at worst staying steady? My wife is desperate to buy a house ( we are currently renting) and I'm running out of reasons to stall. I'm in Columbia, Mo fwiw - a typical midwest college town.
In addition, Missouri is one of those states where housing sales figures are not required to be reported to the public - is there a resource for getting this info without jumping through too many hoops? - tia.
Jim - that was where I used to live. Its still a serious mixed bag inside the beltway. In case people dont realize it, it's not all great.
Speaking of which, how are things in Hyattsville these days? Did they get much of a runup? It really stunk up the joint there back in the days I was around, but oddly enough, there were some places that had great old houses with huge potential. Wonder how that turned out.
Wonder how that 30 billion from bear stearns is doing???
WTF is happening today? all this bad news and the market is up 200? WTF?
UBS spends 19B....WTF?
my shorts are taking a killing!!!!!!!!!!!
GLD is getting wacked!!!!!!!!!
Big Bopper buy the cheapest house you can find, try Detroit. Then you can limit your losses.
OT-Like Beijing-Wall Street is producing a lot of smoke/smog..It will get clearer next week as the stench will be lifted by the boys that regulate this smog...
? for you-Can the SEC go beyond the 30 day short extension? without legislation? cheers...
shooting peoples dogs.
I thought it was only mayoral dogs.
Have they started shooting the common too?
Kinda inverse to stocks. First the common gets shot, then the preferred.
Ministry of Truth - thanks for the reply, but we are stuck here for the foreseeable future. Anyone else care to chime in?
WTF is happening today? all this bad news and the market is up 200? WTF?
Yeah, the March-May rally is running on repeat on my TV, too. I didn't like it the first time, and now I gotta watch the stinkin' reruns.
yeah, but if things get bad enough for arlington to crash, then we will have bigger problems. Arlington crashing means the federal government in it's current form is no more, and I for one will be heading to the countryside.
The reruns are just as bad as the original. But the good thing this time around is that I bought a satellite dish as well and it's picking up dropping oil and booming airline prices, so I can sit on my shorts in coach class and watch the money roll in.
Banks going to be eating a whole bunch of farm loans with the Cornholio going on in the grain markets.
Badgerboy, I highly suggest looking at what happened to the DC commercial and residential real estate markets in the mid 90s when the govt spending cutbacks came. You can bet your butt that when we get out of Iraq in a year, and start ot do something about the growing budget outlook problem, DC will get spanked. All that booming contract business has a lot of downside potential.
Doc, as long as we're doing Airplane!
references, this one may be especially apropos:
YouTube - Shit hitting fan
Paying a dividend after reporting a loss, I just don't get it. Why would a company pay a dividend if it is not profitable?
"We expect this effort to increase our credit loss recoveries in 2008 and 2009"
More rainbow chasing ?
GLD is getting wacked!!!!!!!!!
This is deflationary stage of the depression, cash is king, the hyperinflation stage is a couple of years off. Next wave of loan defaults will be over leveraged drillers, oil companies, miners, and farmers.
None of this has much affect on the stock market. It is like one of those dolls that when you knock it over, it just pops right back up. Panics so far a momentary and bullishness is persistent. Far from the bottom still. We need more gloom and despair and sheer hopelessness. The widespread sense that stocks have no future, like in the late 70s.
Why would a company pay a dividend if it is not profitable?
My take: Some funds cannot invest in securities without a dividend of a nickle. So it is a misguided attempt to manipulate the share price.
In truth, a smart fund manager will look for an exit on the stock that just cut its dividend to the $0.05, so it's a pretty pointless exercise.
Maybe instead of "push backs" Fannie should try to use second order derivatives. (as we all know they have a lot of experience with first order derivatives) They might get lucky and may "hold water".
Geoff,
Really doubt cutbacks are coming. In fact, I think defense spending under Obama would be higher than under McCain. If Obama cuts defense, and there happens to be another terrorist attack, then I can assure you he will get 1 term and democrats lose congress.
It's ironic that McCain, the republican has more leeway to cut than the democrat.
Regardless, I will believe the budget cuts when congress actually passes them.
Bopper, same thing here in KC. You're stuck with your common sense. My 101 logical and intelligent reasons not to buy a house falls on deaf ears with my husband, but telling him that every new home is like another turd in the pool to me and I am just not comfortable getting in the water... Well, it's scary but he gets that!
Russkis pounding Georgia, ruble sliding, oil down?
Big Bopper -
Your market is relatively stable. It looks like had you bought a year ago, you'd be up 3%. That isn't the case for most Americans.
Play around with this calculator. Columbia, MO is on the MSA drop-down list:
The page cannot be displayed
Then go buy a house already! Just get a boring fixed-rate loan and don't buy more than you can afford. Good luck.
FFDIC writes:
Anybody been to Vineyard National's Corona headquarters or its branches today.
I have to be in Corona all afternoon so I plan on stopping by there.
As long as there's no line, I'll walk in and inquire about jumbo CD's...I hope to get a fridge magnet, oven mitt or other treasures.
I hear that port activity sucks....you could always buy an excess shipping container and convert it.
Curbed LA: Really, It's A Cargo Container Home
Anyone think oil's run wasn't parabolic? We've had a high-to-low 22% correction in under 1 month; that kind of move up or down doesn't happen in non-highly speculative markets.
Big Bopper
What Shnaps said and call a Methodist realtor and pray.
Geoff,
I think those defense contractor jobs will get whacked. Those people are significantly overpaid for the same job they did in the military for about half. I believe the budget will see significant changes including the military budget, and DC will suffer.
OT: A BusinessWeek article by Matthew Goldstein (hat tip to Calculated Risk commenter "synthetic-guarantee groupie") describes a proposal to do just that, transfer ownership of closed pension plans from Main Street firms that find them burdensome to Wall Street firms that see an opportunity. Why am I (along with the article's author) not entirely enthused?
Thank you synth!
moqui
Try to steal a FDIC sign to sell on ebay in 2015...
Evil Short Seller Alert: MBIA May Sue Short-Seller Ackman's Pershing Square
MBIA Agrees to Reinsure $184 Billion in Debt for FGIC (Update1) - Bloomberg.com
Gotta go. An great ebay item just arrived wrapped in Detroit newspaper I want to read...
When will GS call for oil to rise again?...Stay tuned..This pump as ment't above is either to mask something big or a treat for China on opening day....
CR, do you need me yet? I'm right by the phone.....
I had an interesting conversation yesterday.
I own a small strip in the outer burbs of NOVA. I had been running at 100% occupancy until now when my weakest tenant threw in the towel. Had a commercial broker stop by fronting a potential tenant. He told me that the two major shopping centers about a mile away are hurting big time. Both shopping centers opened within the past two years and rented space (still some vacancies)in the low 20's to $25 ft (have a good idea of the associated costs and this is still a low cap rate). Well, he said that the centers due to low traffic were having to rewrite leases in droves (his word) to the mid to upper teens (down in my range). Ugh, that's gonna hurt them.
Nobody seems to care about FRE and FNM right now. Money is fleeing the Euro into the US. The spinmaster in the US have convinced the lemmings of the world that the taxpayer has it covered. Well done all.
@ BG
There is no oil is Georgia. It is a fight over transportation of energy, pipelines.
Russia is just mopping up their sphere of influence in the region.
Black Dog
thanks for the report. And this is before the consumers really pull back.
Wow Schnaps, that shows housing appreciating in Atlanta, Denver, KC, Dallas, Nashville etc... color me leery!
OT-look at SUN as alternative to DUG...
Ugh, that's gonna hurt them.
black dog
And soon it will hurt you in the form of lower rents. My guess is that you have a lower cost basis and can deal with the pain, though. Not so for those jokers with new construction and huge debt.
This is deflationary stage of the depression, cash is king, the hyperinflation stage is a couple of years off. Next wave of loan defaults will be over leveraged drillers, oil companies, miners, and farmers.
Damn, that's a page right out of my top secret playbook.
Q: What do you sell when they call to say they're coming to repossess your house and your car?
A: Whatever you've got.
MLM: including the spouse, kids and dog/cat?
Q: What do you sell when they call to say they're coming to repossess your house and your car?
OR
A: You buy a bunch of ammo, food, and water and hole up.
Spouse repossessions are a contrary indicator. Spouse swaps, on the other hand, are a sign we really are reliving the 70s.
Simmons out on the wires 'believes in abbiotic oil' says 'oil should be at $10/barrel forever
Well by supporting Kosovo independence the West (EU and US) asked for it. If separatism if good for Serbia, then why not for Georgia? Russian military might will crush the Georgians, and what can the US do about it? NOTHING. The US is slipping not only financially but also militarily. The EU will get its face rubbed in the mud.
Why can the Russians attack US soil and nobody is in a panic? What is going to happen to The Masters next year if the Russians are occupying. Tiger Woods won't be happy. Won't be happy at all.
@ jim
Exactly. Look at a map and Georgia is within miles of Sochi. Winter games in Sochi in 2014.
Also, Russia has cornered the gas plays around the Caspian. They want to divert energy from Western markets to India and China.
Stock market is too dizzy with bullishness to have picked up on this yet:
Putin Says `War Has Started,' Georgia Claims Invasion (Update4) - Bloomberg.com
War near to Iran and Iraq. Involving a nation that aspires to NATO membership. Hmmmm.
Elvis, no one is gonna get out of this unsinged. Lest of all me. Fortunately, I have a premium location and the cost basis to charge lower, MUCH lower if necessary and still cover the nut.
On the bright side I'm looking forward to picking up some property CHEAP from the bank in the next year or three. If you have the resources to make it to the otherside the near term will provide some once in a lifetime opportunities.
Once in a lifetime opportnity wes BAC at 19.
Booyaaahahahahahhaha
jump on board ! market to sp1550!
Georgia last month increased the size of its military to 37,000 soldiers and today Saakashvili called up reservists and urged the nation to defend ``every meter'' of land. Russia has a standing army of about 1.1 million.
`Energy Corridor'
``Fighting continues,'' Russian Major General Marat Kulakhmetov, commander of Russia's peacekeeping forces in South Ossetia, said by mobile phone. The peacekeepers have suffered casualties, although it's too early to say how many, he said.
Georgia is a key link in a U.S.-backed ``southern energy corridor'' that links the Caspian Sea region with world markets, bypassing Russia, the world's biggest energy producer. Two pipelines pass through the country linking Azerbaijan and Turkey.
The BP Plc-led Baku-Tbilisi-Ceyhan oil pipeline, which has been closed since Aug. 5 due to an explosion in Turkey, runs about 100 kilometers south of the South Ossetian capital of Tskhinvali.
The most recent violence in the region erupted on Aug. 1, when South Ossetia said Georgian shelling of the regional capital Tskhinvali claimed six lives. Georgia said South Ossetian forces sparked the fighting.
``The conflict might be short and hot, but my sense is that neither party wants a prolonged conflict,'' said Michael Denison, associate fellow at London-based research group Chatham House and a professor of international security at the University of Leeds.
The EU, in a statement today expressed grave concern'' about the fighting and said it isworking toward a cease fire.''
So Georgia wants to ally itself to US energy strategy in Russia'a back yard? NOT smart, not smart at all. And Georgia is finding that out right now.
Black Dog,
Without their huge construction management fee (that is riskless for them and a ripoff to investors), what are the developers of new retail going to do? No cash flow and no backside profits equal BK.
including the spouse, kids and dog/cat?
At the moment, I'd be tempted to let the two year old go at a bargain price.
yeah, I couldn't figure that one out FOUR years ago.
The last property I looked closely at was spring of '04. Walked away from it because there was no way in hell I could envision getting the $$'s in rent. Well, along came some fools 2 years later who paid 2 1/2 times what I would have paid. Unbelievable. I would have LOVED to seen their cash flow analysis they provided to their lender. WTF was everyone thinking? Forget the borrowers. Could the lender fog a mirror?
Totally OT, but I just checked my bank's (Navy Federal Credit Union) mortgage rates, which I've not done in some time. Apparently, they've very recently gotten into offering FHA loans, and today, they're offering an FHA 1-year ARM at 5.375% interest with 0 discount points & 1 origination point.
I'm a money-dolt, but why would anybody be offering such cheap 1-year ARM's?
This is new to me, but we touched CDARS yesterday; looks like a weird way to build loan loss reserves????
WesBancos Asset/Liability Management Committee (ALCO).
Other strategies include emphasizing marketing programs to grow lower cost or non-interest bearing transaction accounts, and using the CDARS program and structured repurchase agreements as alternative wholesale borrowing sources. The potential use of interest rate swap agreements to match fund certain long-term commercial loans or as a fair value or cash flow hedge against certain asset and liability types, and using investment security cash flows to fund realized loan growth or to pay down short-term borrowings are also evaluated as potential strategies by ALCO.
I'm seeing an underground economy emerging with an increase of CDARS and Jumbo Loans (non-conforming) and new ways to adjust loan loss reserves. Shelia, are you there???:
Bank's revenues are derived principally from interest on our loans and
mortgage-related securities, interest and dividends on our investment
securities, and noninterest income (including loan servicing fees, deposit
servicing fees, gains on sales of loans and commissions on insurance, security
and annuity sales).
Washington Mutual, Inc. (WM)
Q2 2008 Earnings Call
July 22, 2008 5:00 pm ET
/seekingalpha.com/article/86381-washington-mutual-inc-q2-2008-earnings-call-transcript
During the quarter we provided for losses at 2.7 times net charge offs of $2.17 billion bringing our loan loss reserves to $8.5 billion at the end of the second quarter. The reserves we now have available to address possible charge offs are up substantially. As a percentage of loans in our portfolio the reserve has more than tripled from year-end 2007 and our coverage ratio of reserves to nonperformers has more than doubled over the same timeframe.
With that, Id like to now give you a brief overview of our second quarter results. We reported a net loss of $3.3 billion, driven by a $5.9 billion provision for loan losses. This increased our loan loss reserves by 79% from the first quarter. Despite our quarterly loss, we ended the second quarter with a tangible equities to tangible asset ratio of 7.79% up from 6.4% in the first quarter.
Approximately one third of the quarters provisions related to significant changes in key assumptions the company used to estimate incurred losses in its loan portfolio in response to the increasingly adverse credit trends. Specifically, the company shorten the historical time period used to evaluate default frequencies for its [inaudible] to a one year period reflecting the evolving risk profile of the loan portfolio and adjusted severity assumptions for all single family mortgages to reflect the continuing decline in home prices. For any specific population of loans, loan loss provisions must equal charge offs. ... blah, blah...
It's ironic that McCain, the republican has more leeway to cut than the democrat. Not really surprising to one (just barely) old enough to remember "only Nixon could go to China."
Geof: Re Hyattsville - This made lots of sense
Arts District Hyattsville: EYA Townhomes & Live-Work Homes in Hyattsville, Maryland
ISTR that their prices are way down. Because there were always plenty of people willing to pay well North of 600k for a townhouse in Hyattsville. NOT.
Thanks for the feedback, people. I guess I've run out of excuses. Thing is, I'll be paying about 90% of the house purchase with cash from my San Diego condo sale (circa 2006) - I'm ahead of the pigmen so far and I'm loathed to line their pockets in a market that may decline significantly in the near future. Ah well, onwards and ... er downwards!
jim: US Marines just got done training Georgian troops last month, the Russians are clearly going to believe that we greenlighted the Georgian invasiosn, and, like you, I expect the Russians to punish Georgia severely, and, also, look at Bush's remarks today, the US "supports the territorial integrity of Georgia"
does that mean we support the invasion because Georgia says that South Ossetia is part of Georgia?
this is one is going to end up biting Georgia and the US in the ass
Richard - don't forget the added spice of Israel's complicity in all of this - they provided advanced weaponry up until a couple of days ago, as well as a number of experts to train the Georgian military how to use those weapons. Just google Russia Israel Georgia for the info.
thanks, updated my blog with this info
Oh My God!!! We are in biiiggg trouble. Fannie and Freddie are DEAD! DEAD! DEAD! And the U.S. Taxsury (Taxpayers/Treasury) are on the hook for all the losers out there who bought houses they couldn't afford.
I guess the media will find some way to spin this into to good news for the kool-aid drinkers out there by pointing out that when this is all over; the good news will be that houses will cost about $20,000 each and the bad news will be oil will be about $20,000 a barrel.
Ross,
I know. What surprises me is that mainline combat between the world's major crude producer and a West-leaning state with a pipeline issue is not inducing a geopolitical risk bid, here.
This has nothing to do with a direct source of crude being at risk, but it has a great deal to do with Russki attitudes towards the rest of us.
Truth about South Ossetia Wars
Truth About War - South Ossetia
Fox News: 12 Year Old Girl Tells the Truth about war Georgia - Video Censorship For the Americans
The answer Condoleeza Rice - Video
Truth about South Ossetia War - Video
Saakashvili's crimes in S. Ossetia
As made a video in Gori Georgia
Saakashvili Dog of Bush