There are parts of the country that I'm not familiar with--bubble ground zero like FL and Phoenix--where REO and short sales may have driven median prices back down to near historical norms. Finding a bottom to the US housing market, whatever that may be, will restore confidence like no action Ben and Hank can take. At the same time, there are parts of the country, like Boston, that are still in a bubble.
But now comes the credit crisis and (d)(r)ecession--which will drive home prices down some more. Snatching defeat from the jaws of victory.
One third to One half of the pending sales are REO contracts. That means a single home sells bck to the bank and then witihn a few short months sells to a new retail homeowner/investor. That IMO represents so much distortion that the reported pendings and sales are not comparable to past years.
--
Radar Logic PPSF is falling, YoY, at the fastest rate ever -- -17.8%, YoY. Also, the decline from the peak is converging with Case-Shiller. All metros where PPSF is down more than 20% from the peak have foreclosure driven sales increases.
monta's ankle writes:
shock and awe and now ppt buying houses
Maybe McCain knew that the PPT is starting to buy houses and just said it to try to lay claim for it....
Puzzling commentary from Krugman this morning about the rate cuts. Boils down to he thinks the ratye cuts were the "right" thing to do but thinks it is not going to change anything. OK. Please send your application for the new FED head to Washington with that kind of powerful logic!:
"The trouble with rate cuts
The coordinated rate cut was the right thing to do. But I dont expect much from it because the relationship between Fed funds rates and the rates most businesses actually pay is very weak right now, thanks to the messed-up state of the financial system.
A quick illustration: in early July 2007, before the crisis, the target Fed funds rate was 5.25% and the rate on 30-day A2/P2 commercial paper that is, CP issued by less-than-sterling borrowers was 5.4%. On Monday of this week, the target Fed funds rate was 2%, down 325 basis points from pre-crisis levels, but the CP rate was 5.61% up from pre-crisis levels.
So will this latest rate cut make any difference to borrowers."
Boston is definitely bubblicious, and it faces a long grind down. The problem here is that literally 50-60% of homeowners have no mortgage and "they're not going to give it away". Because of this intrasigence over the last 6 years, there are few young families to eventually purchase the houses (you can check the state census numbers).
There is an enormous air pocket underneath the 50+ year old age bracket. As these citizens are turning into net sellers (death, illness, etc.), there are few buyers. It's just going to be a slow, long grind here.
Matt, yes. I've followed the market here closely for the last 5 years.
Boston is not going to collapse--by no means. But it will decline inexorably for a while. The median age in some "nicer"--and I use that word loosely--towns is 50(!).
Very few young families to re-populate whole blocks of Belmont, etc. Big problems up here, I'm afraid.
Krugman and Bernanke were colleagues (friends?) at Princeton and that makes it tough for Paul. He is being more loyal than honest--been there, done that, looked very stupid at the time. Defending friends lowers IQ exponentially.
Foreclosures = Price declines
More Foreclosures = More Price Declines
More Price Declines = More Sales
The math is quite simple.
Unfortunately, most of these sales are skewed towards the low end. The result is people are becoming educated to only buying distressed properties in this market.
Middle and upper tiers are next in line for 40-50% drops from their peaks. Westside of Los Angeles has now cracked. 136 foreclosures in Santa Monica.
Safe_As: Surprisingly you are the first person to comment on one of the ominous future signs for real estate demand. Demographics going forward are horrible. That air pocket under 50 or 45 years old is huge, dramatic really. And the demographic under the 45's is racially and culturally way different. There is so little "demand" under the baby boomers that its frightening. As the boomers turn to net sellers this will become glaringly apparent.
When the collective system is interested in nothing but "up" (and there assets are tied to appreciation) it doesn't take much coordination to achieve the desired result.
If it were one entity doing this then someone on the floor would have talked at this point...unless they are too afraid to.
You or I could juice the futures market on the SPX...doesn't take much to get that done however the intraday moves are likely the work of a few coordinated institutions. But again...if your book is tied to appreciation (and most of them are) it's not that hard to accomplish those wild ass moves up.
for those of you last night.....I'm here ...couldn't convince the wife on the trip....there's always Brazil in a month though!!!
Still a fine city, just in decline. Economics here are tough for continued growth. Factor in the huge tax shortfalls and entitlements coming down the pipe and it will be messy here for at least a decade, I imagine.
Sales track pendings pretty well, but if for some reason houses took longer between pending and close, like financing got tougher to finalize or there were more short sales (taking forever to close), you would see a jump in pendings without a corresponding jump in sales 45 (now 60) days later.
In many S. CA markets 70 of sales are FCs or short sales. 30% fall out of escrow. NAR reports sales as anything listed--condos, SFH, foreclosures or otherwise.
And McCain should go quietly into the night with his mortgage plan. Let's give EVERYONE an incentive to default on their mortgage. An old fool who will say anything to win.
Even before the recent downturn, older Americans were on track to continue working longer. Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Over the next decade, the number of workers who are 55 and older is expected to increase at more than five times the rate of the overall work force, the BLS reported.
I don't think it's true that Boston is not going to collapse. It's not immune, it's not "different here." Everyone's not a neurosurgeon.
Look at Davis Square--crappy, ugly old unrenovated Victorians for $700K-900K, yet only 8% of individuals in the Davis zip earn over $100k.
It's a pure bubble, kept up by the fact that sellers won't put their houses on the market and sales have plunged. Unlike Phoenix, there are no huge developers with jillions of residences they have to sell in Back Bay, so we escaped the early reckoning. Second seating is still available, however.
Divorce lawyer and demolition contractor! Splendido, still in a growth industry...and now that home sales are up looks like I missed the bottom. heh heh
MS writes: "When the collective system is interested in nothing but "up" (and there assets are tied to appreciation) it doesn't take much coordination to achieve the desired result. "
Ditto. I can't get six people over to my house for a dinner party on the same night.
Or my co-workers on the same page for the simplest of tasks.
Yet the human race has somehow produced this completely efficient group of traders who drive the market in lock-step self-interest?
Don't worry. True, the Nikkei is down 75% from the 1989 high. It's soon back to 1970s levels. But Nikkei's bottom is in sight: it will be reached when we're back to the 1845 level.
We have nothing to fear but fear itself...and little warm puppies...with rabies, scabies, and heartworm. Nothing to fear but fear and completely bonkers sell-at-any-cost stampeding panic. Actually nothing to fear at all, really.
Oh it's certainly a bubble. It's just going to take longer to work its way through the system.
A lot of those crappy Davis Square houses are owned by some 80 year old widow. They are absolutely not going to sell it for it's worth. She will die two years from now, and here estate will hold onto it at a high price for another year. It will fall into disrepair and eventually will be sold for much less and need a lot of work. I've seen it many times here.
In fact, literally half of open houses I've been to have been estate sales. The have little motivation to sell a piece of property with no mortgage.
Apr - 570
May - 510
Jun - 680
Jul - 400
Aug - 420
Sep - 100!!!!!
Snowbirds usually pick up Oct pretty good. It will be interesting if we see a big jump. Last year was a little over 900 in Oct. The low end is starting to sit even with asking prices of 10-20 cents on the dollar of the last loan...
Phoenix is ground zero of illegal alien zone. Arizona passed tough laws against illegal aliens, and now they are recovering as a result. Phoenix was never super expensive either.
What an interesting demographic shift boston is going to undergo ten-twenty years from now. That is, unless an earthquake knocks everything down into the muck of back bay.
damn fine cheesesteak place there too, al capone's i think its called.
damn fine pizza place too. figs I think it's called. over the bridge from MIT and to the right along the high street. was on foot, so not too far down. I still have wet dreams about the fig, prosciutto and blue cheeze pizza I had there.
Besides, Markel, prices are already down a good 20% here--definitely 10% off the top and the 10% if you low ball. Desperate sellers do exist and their numbers are growing, they are just in relatively short supply here. Every young family that overpays for a house in MA is adding to the future stressed housing ranks.
As the greatest gen disappears, you will see more and more pressure here.
Been sitting on the sidelines since 2003. I'm hoping the grind down here doesnt' take that long... Some signs of reality were leaking out this fall, but still a long way to go.
"In Praise of Bernanke
By DAVID LEONHARDT
The Federal Reserves rate cut part of a coordinated international effort has put Ben Bernanke front and center for yet another day. Over the past couple of years, Mr. Bernanke, the Fed chairman, has come in for a fair bit of criticism. Some of it has been justified, I think.
But its also worth taking a moment to consider how well prepared he is for his current task. He spent his career studying the lessons of the Great Depression and, to a lesser extent, Japans 1990s slump. (And his fellow economists have enormous regard for him and his work.) He now finds himself having to put those lessons into practice. His qualifications by no means guarantee that hell succeed. But its hard to imagine anyone who is more qualified to try to minimize the damage from the current crisis."
Defending PPT's existence isn't that tough. First off, realize that the Justice Dept played religious games and got away with it until they foolishly fired some of the zealots. Defense refused to buy protective armored vehicles because they were not manufactured by the "right" companies--oh, and Halliburton "lost" 8-11 billion in cash.
No, PPT exists--you have to suspend disbelief with Bushies.
One point on pendings. The past 5 months of data has been extremely volatile. The last time we say a swing bigger than 7.4% was October of 2001. Existing home sales have also been volatile. So a 1-time 7%+ rise doesn't tell us as much about the strength of sales as it would in more normal times. It is largely a reflection of noise in the data. Pendings are more volatile than existing home sales, and that may reflect cancelled pending sales. The real story, though, has been that sales seemed to have stopped falling. Credit troubles are going to get the decline started again.
I am in Atlanta and have seen the under 50 crowd of yuppies and young up and coming ececutives buy 400+ homes by the truck load. Those poor saps are having kids and are loosing jobs like my 90 yr old grandma looses her reading glasses. This fluffed up market is tasting the medicine but still refuses to swallow. Guess the shaft scared them....
PitchPole, volume is drying up at the high end--I can say that with absolute confidence. That is the first step in a market with relatively few mortgaged properties. This is the beginning of the air pocket regarding young families. The top end just isn't moving. At all. In some of the "tonier" neighborhoods--again the term is used loosely--there are 3-5 years of inventory of above median price houses.
What few young families that remain are buying are the absolutely low end houses for $450,000. And they make good money. The net sellers at the top literally have no one to sell to. Of course, they are under no pressure to sell, so it's just a grind.
Could we have a ticker tape parade for the central bankers and world treasuries? We could through $100 bills at them from high windows like confetti...except they'll be denominated in much higher multiples, and still be just as worthless. Just leave of the ink...as they'll be more suitable for the toilet paper usages.
But its hard to imagine anyone who is more qualified to try to minimize the damage from the current crisis."
OMG, I think I'm going to vomit.
Dope Brontide | 10.08.08 - 10:45 am | #
Dope,
you shall have heard Italian's MSM before the bail-out was approved, stating that the crisis was hard but Helicopter Ben and Hank "Bukkowski" Paulson were the best in charge we could EVER have to manage it.
Popeye writes:
The PPT hypothesis predates Bush. It's been around for as long as folks needed an explanation for their own missed calls on the market.
Popeye | 10.08.08 - 10:48 am | #
I believe there was a law passed in 1988 that legalized PPT.
Hey MS,
Which direction are option spreads for puts going to narrow? Does the bid rise, or the ask fall, IF the short selling resumes tomorrow? Or do they converge to middle ground?
I'm just curious if put options are likely to lose their premium as people dump them and short stocks directly.
Glod, can't you PPT doubters do simple research?!?
"The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,[1] signed on March 18, 1988 by United States President Ronald Reagan.
The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".[1]
As established by Executive Order 12631, the Working Group consists of:
* The Secretary of the Treasury, or his designee (as Chairman of the Working Group);
* The Chairman of the Board of Governors of the Federal Reserve System, or his designee;
* The Chairman of the Securities and Exchange Commission, or his designee; and
* The Chairman of the Commodity Futures Trading Commission, or her designee."
The question is how often do they directly interfere. I believe infrequently. However well placed phone calls and well timed Fed repos, have an effect as well.
safe_as_apartments writes:
PitchPole, volume is drying up at the high end--I can say that with absolute confidence. That is the first step in a market with relatively few mortgaged properties. This is the beginning of the air pocket regarding young families. The top end just isn't moving. At all. In some of the "tonier" neighborhoods--again the term is used loosely--there are 3-5 years of inventory of above median price houses.
What few young families that remain are buying are the absolutely low end houses for $450,000. And they make good money. The net sellers at the top literally have no one to sell to. Of course, they are under no pressure to sell, so it's just a grind.
I would go one further -- in my area, very affluent suburbs about half an hour south of Boston, I am not seeing anything moving less than 300K: there is simply no middle market. It is only first-time buyers, and they simply can't afford anything more (and in quite a few cases, I'm sure, they can't afford the 300K -- and we may very well see some back on the market in a few years.)
Uptick in pending sales may be due to latent pent-up demand now recognizing that while prices may continue to fall, mortgage availability will continue to diminish, if not vanish completely under resonable terms. Even in down housing markets, there is a churning regular demand for housing, which has been on the sidelines for at least a year. Demand based on fear that the credit spigot is quickly running dry.
do you know what's going on in Cambridge? Sold there in 2006 and things were still crazy, though going down. rents were very high there. has there been any easing you've noticed?
The spread should narrow....look at HIGOH...Bid 15.30 Ask 17.20
If you write (as an option writer) a put you have to hedge it with long shares. Calls are just the opposite. If you can't short stock then you raise the premium to make it less attractive. They don't want to go long on the stock so the BID to sell is much lower....
The spreads should calm down a bit however nothing is what it appears at this point.
Low end houses at 450k - that kills me! (And is exactly why we've been sitting on the sidelines so long - I don't mind spending good money, but it has to represent some value for crying out loud.) I'd be laughing if we didn't have three kids three years old and under running out of space in our current rental...
Been sucking up the idea of a new rental lately. Spring will tell.
Of course there is no PPT. Just some really hungry and deep-pocketed longs out there scooping while the blood runs deep. And their using their OWN money, and their rubbing their hands in glee at their smart purchases.
Like jumping in front of a stampede and stopping it dead flat by waving your hands and cowboy whistlin'.
If you're in Boston area, check out rentals in near-Cambridge (off Mt. Auburn) Watertown -- convenient, some really nice inexpensive places, big with outdoor space. Better than Somerville imho. And some damn good Armenian food.
Man-moth, I don't follow Cambridge that well. I generally have a keen eye on neighborhoods we might settle in, and Cambridge is not one of them. I do know that violent crime has picked up recently. I would guess it is suffering from the same problem: low-end moving, high-end stalled.
Pole, $450,000 low-end in good commuter areas like Needham, Westwood, etc. The buyers are making $125,000 combined. Big problem if one loses job. Above that, hardly a market.
I've heard anecdotally from some trying to sell in Mansfield that lower end houses (
Uptick in pending sales may be due to latent pent-up demand now recognizing that while prices may continue to fall, mortgage availability will continue to diminish, if not vanish completely under resonable terms.
In Sacramento, demand has held up nicely even as prices plummet. Granted, 50%+ of all sales are REOs, and 25%+ are to "investors," but there's still demand. There's been a large influx of Bay Area Section 8 renters into the Sacramento area. Why stay in an apartment in Oakland, when you could get a 3000 sqft house in Sac for the same price? Not sure what Sec 8 pays, but it seems to be enough to support the current house prices.
I think that mentality is finally beginning to dawn on many of the younger generation here in MA, especially degreed professionals: why in the hell am I going to pay 450K for a 3/2 or a 4/2, when I can rent for a fraction of that price and save my money? I think that's largely why I am seeing only houses less than 300K selling, because the professionals and the DINKs, who could get a mortgage for something higher (not necessarily "afford", however) are balking at the prices. To them, the difference between renting and buying is saving XX dollars a month versus saving no dollars, or even having to scale back their lifestyle. The only people I see still buying houses are the people who are living paycheck to paycheck and haven't struggled to save a downpayment, and therefore to them, buying a fixer-upper 2/1 for 300K is just a rent payment with a premium for the privelege of "owning".
Just a couple days ago I found an old envelope in the house with some US currency (paper and COINZ!)from the first half of the 20th century, with the dollars that say "IN SILVER PAYABLE TO THE BEARER ON DEMAND" etc.
For you Boston-ers. I'm in Sudbury, and in these parts is the same as you guys have been seeing. The high end ($1M+) has zero movement. The middle stuff (say $700k-$1M) (if you can call that middle) is stuck as well. The only homes moving are ones purchased with conforming loans, and that's still slow.
I myself bough a short-sale around 600k over the summer. We moved from a $1.5M+ neighborhood, and the old neighbors are putting up a good show of confidence but you can see the fear in their eyes.
It's just people in the denial phase. In six months it will be lower....don't you think??
It may get a bounce or two but people are convinced that this is just a bump in the road. It's not...it's the end game of financing growth at any cost with cheap debt.
Problem is that debt is not going to be any cheaper in 6 month's. Money can be cheap as it wants....if it's not offered to you it's meaningless.
I can't tell you how many times I've heard the line "don't look at your 401k for six months" in the last two days.
For someone under 59.5 years old, I think the penalties (state and federal), additional penalty, and tax bracket amount to about 50% shave off the gross. The gross is down 28% from one report I heard last night.
Nades- I live in brookline (coolidge corner.) It is still a lovely place to live but quite expensive. I would give it a little more time if you're looking to buy. On the other hand there are a few new condo buildings in the area that are going to be difficult to fill - you might get some deals in the coming months.
Absolutely, feesher. It's going to be a grind. Most of those who own there homes outright could never in a million years afford them today if they were younger versions of themselves.
The starter home phenomenon is not quite dead yet, it's just limited to the bottom of the barrel, because the mortgage market has tightened to the point where starting families that don't make more than 100K (which is most) can't get a mortgage for more than 300K. When downpayments of 10% or more return to fashion, that's when the "starter home" phenomenon will truly disappear, and good riddance to it, I say.
Thanks for the input, safe. Violent crime in Huron Village is hard to imagine (bought there pre-bubble & rented in Watertown for years before that). Funny you & Pitch are both in Watertown. CR fans know where the deals are!
C'mon guys, this suff about the PPT is ludicrous. It all stems from a silly story about the creation of the President's Working Group on Financial Markets following the 1987 crash. I know all the stories about mysterious buying of index futures and all that, but let's be serious!
Yeah, its an omen and lesson learned. Never shoudda left the metal standard. Instead of payable to bear in metal, inscription should now read, "Abandon hope all ye..."
Save that paper currency, you'll need it for wadding while packing lead ball atop dry powder in the musket we'll be using in near term. If you're lucky enough to have a musket...
Starter home is dead in Boston and NE, IMHO, because there will be no equity build because of the slow grind down. Entire swathes of buyers will have no equity after 10 years of paying down their mortgage. Thus, it's harder to assume an even bigger mortgage.
Panzer units are now within sight of Paris, the top half of the Eiffel Tower is visible over the Western horizon. There was some trouble in the morning as the new field cook stoves, manufactured by IG Farben,
tended to explode because of a defect in the gas valve. Tactical planners are concerned that thunderstorms predicted for the afternoon over eastern France will slow the already delayed advance, however the clound cover will be a welcome cover from French spotter aircraft...
and I'll add this about metro-west Boston. Confirming the "grid" thesis. It looks like the super high end it, for now, whistling past the graveyard. No sales means no comps to the downside which means we can pretend there is no drop in high end price.
But... in those neighborhoods, you know there is at least 1 family that is running a tight budget, low down, int only. There will be layoffs. All it takes is one family to hit the rocks and have to sell at any price, and that will break the logjam or price fantasy.
I agree it's dead going forward, but the mentality isn't dead just yet. Too many people still stretching to buy the crap at the bottom of the barrel (because it's all they can afford) just so that they can "get into a home". The only difference is that, because of the mortgage tightening, these people aren't getting into 450K homes, they are getting into 250K homes, but the end result will likely be the same: if they don't lose the house, they will ikely be stuck in it with no hope of a move-up for a long time to come.
@Violent crime around Central Square and Cambridge Port is not so hard to imagine.
Yeah, I remember--before the bubble!--my student handbook warned about going into Central Square at night. But that was where the cheap beer was. Even in "high times," with Central Sq. properties bid up to $500sf, I still saw people shooting up in the parking lot behind the co-op.
last month on MRIS my MD county had a lot more 200K homes show up where zero had been before however, more 300K plus as well, the 200 and lower move but the 300k+ now have a 24 month inventory....
If you're looking at Natick, you might as well look at the north side of Framingham. It's not at all like the downtown area and the public schools are supposed to be good. Just stay north of Rt. 9.
I hear the train a comin'
It's rollin' 'round the bend,
And I ain't seen the sunshine,
Since, I don't know when,
I'm stuck in Folsom Prison,
And time keeps draggin' on,
But that train keeps a-rollin',
On down to San Antone.
Britain threatens to sue Iceland to protect savers
REYKJAVIK, Iceland (AP) Britain added to the financial chaos engulfing Iceland by declaring Wednesday it planned to sue over lost deposits held by thousands of Britons with Icelandic bank accounts.
The news from London even overshadowed an emergency loan Wednesday from Sweden to Iceland's biggest bank.
The promise of legal action by the British government to recover deposits belonging to 300,000 British account holders with the Icesave Internet bank came after its parent, Landsbanki, was placed in receivership.
"We are taking legal action against the Icelandic authorities," Prime Minister Gordon Brown told journalists in London. "We are showing by our action that we stand by people who save."
Not to be a pedant, but "inflection point" doesn't mean the highest point on a curve, or the point where it changes from increasing to decreasing. "Apex" would better suit that meaning. An inflection point is the point along a curve where the curvature changes sign -- where a curve changes from concave to convex. /pedantry off
I tend not to believe that any area is immune, even the downtown areas. Wait until crime really rockets. If the top ends were always immune throughout history, then the cities would look a lot different than they do now.
Finanz-Korps Panzer units are now racing the afternoon thunderstorms on the road to Paris. The troops are fed and the defective IG Farben cookstoves are cast aside. Advantage: the fuel trucks have had a chance to catch up.
Interesting Times writes:
Why@ ZIRP | 10.08.08 - 11:47 am | #
I was thinking more of the new (expensive) supply coming from canada and russia.
Interesting Times | 10.08.08 - 11:48 am | #
Russia has to sell at any price, Canada will be in deep trouble if production can't become more efficient fast, shortfalls will probably be made up by other producers like Venezuela who must sell more. They will pump like crazy to stay in power. Remember, oil over 60 is a recent phenom. Oil can go down that far without bankrupting producers.
Maxed out...surprised an admitted racist doesn't just say what you say on your own blog...Obama's intelligence and integrity must be discounted because it comes with black skin. Atwater and Rove have eviserated working folks economically while distracting them with cultural smoke and mirrors.
That little game is played out...40iks now 101ks and pension funds ready to go bust...nowit is all about the money...and why working folks who voted republican don't have any.
In that first speed bump called the Great Depression, even Frank Lloyd Wright's designed homes could not sell. They were blighted for many, many years. Not even 10 cents on the dollar.
Ah, the good ol' days. Where loss was contained merely to the purchase price, instead of being socialized into an ultra 3X loss by Fed and Treasonry intervention.
MetLife sells shares at discount after stock sinks
| Reuters
The largest U.S. life insurer by assets, said on Wednesday it will cut an unspecified number of jobs, one day after it announced plans to raise capital in the middle of a global credit squeeze.
I'm guessing a consumer package in the 400-500 billion dollar range that will provide families with $4000-$15000 of cash for this holiday season... spend.. spend... spend.
JJL - Plenty of sites that fully document that the waste and over paid governemnt kleptocracy should be cut instead.
Sure, but they won't be. The social programs crucial for getting residents through the recession without massive upswings in crime and homelessness, however, will be. The homeless don't have very good lobbyists.
I'm guessing a consumer package in the 400-500 billion dollar range that will provide families with $4000-$15000 of cash for this holiday season... spend.. spend... spend.
Dope Brontide | 10.08.08 - 11:57 am | #
"Rachel writes:
Sure, but they won't be. The social programs crucial for getting residents through the recession without massive upswings in crime and homelessness, however, will be. The homeless don't have very good lobbyists."
Rachel,
As wil the TARP bailout, tough. If the politicians in mass are not voted out and forced to change their ways, obvioulsy nothing changes. Arguing to maintain the staus quo so as not to upset anything is more of the same old behavior that has brought us to Great Depression II. More people need to think for themsleves and hold government accountable. It is not for the weak of course, and so we will never see it.
The kids hear some creeeeak from the floor and the scuffle of bunny slippers and we will some some very topical comment threads...just post Tanta, we promise to behave on your thread!
Nice handle! The ten year treasury note looks to be selling hard with the market tanking and a rate cut today...so the rates are rising rather than falling as expected.
Fannie had $24 Trillion in mortgages: As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) owned or guaranteed about half of the U.S.'s $12 trillion mortgage market
Total Global GDP is about $50 Trillion
The market for Derivatives like Credit Default Swaps is over $60 Trillion
Before the Bond Market Association,
Government Securities and Funding Division
September 27, 2006
Ensuring the integrity of the Treasury market is essential. The U.S. Treasury market is the deepest and most liquid market in the world. Average daily trading volumes currently fluctuate in the neighborhood of $600 billion--many times the average daily trading volumes in the U.S. equity and corporate bond markets--and dealers operate with very thin bid-ask spreads. The liquidity and depth of the Treasury market have made it a critical national asset:
JJL - Sure, that's why I'm not voting for most of the incumbents on the slate, and voting third party much of the time, especially for local offices (where they're likely to win.) But repealing the income tax won't fix political corruption. It's (as others have pointed out) likely to make it worse.
Sorry, I need to correct myself. The VXN (for Nasdaq) has broken through 60. @ 61.83
The VIX will follow, wait until the mid-day switcheroo where once market makers have lured money into stocks, they withdraw with the spoils of a good switcheroo
The equity sell-off has eviscerated some $4.6 trillion of global stock market wealth in the past three weeks alone, according to the market capitalization loss on MSCI's main world equity index.
Over the last 12 months, that figure is more than $12.4 trillion, of which some $7 trillion comes from the United States.
Fannie and Freddie already own or guarantee more than 40 percent of the $12 trillion in U.S. home loans, and have been pushing more money into the market by increasing mortgage bond purchases since regulators seized their operations, according to Freddie Chief Executive Officer David Moffett.
Libor, set by 16 banks in a daily survey by the British Bankers' Association at about noon in London, determines rates on $360 trillion of financial products worldwide, from home loans to derivatives.
Anyone catch the story in the WSJ?
Says that 29% of people who bought within the past five years are under water on their mortgages. The fundamentals are STRONG!
To reduce the counterparty risk in the money markets a triage between insolvent banks that need to be shut down and a recapitalization of solvent banks is necessary together with massive injections of liquidity in non-banks and the corporate sector. Yesterdays plan to support the commercial paper market something I recommended last week - is a step in the right direction. Direct lending by the government to small businesses via the Small Business Administration is also necessary to avoid the implosion of smaller businesses.
a generalized temporary blanket guarantee of all deposits is now necessary both in the US and in Europe followed by a triage between insolvent banks to be closed rapidly and illiquid but solvent banks that deserve to be rescued to avoid the moral hazard of such blanket guarantee;
the flawed $700 bn TARP legislation will have to be modified in three ways to: a) allow for direct government injection of public capital in banks in the form of preferred shared matched by private capital contributions by current shareholders (via suspension of all dividend payments and matching Tier 1 capital provided by private shareholders); b) implement a clear plan to reduce the face value of mortgages for distressed home owners and avoid a tsunami of foreclosures; c) do a rapid and radical triage between solvent banks and insolvent banks that need to be rapidly closed.
given the collapse of private aggregate demand (consumption is falling, residential investment is falling, non-residential investment in structures is falling, capex spending by the corporate sector was falling already before the latest financial and confidence shock and will now be plunging at an even faster rate) you need to give a boost to aggregate demand to ensure that an unavoidable two-year recession does not become a decade long stagnation. Since the private sector is not spending and since the first fiscal stimulus plan (tax rebates for households and tax incentives to firms) miserably failed as households and firms are saving rather than spending and investing it is necessary now to boost directly public consumption of goods and services via a massive spending program (a $300 bn fiscal stimulus): the federal government should have a plan to immediately spend in infrastructures and in new green technologies; also unemployment benefits should be sharply increased together with a targeted tax rebates only for lower income households at risk; and federal block grants should be given to state and local government to boost their infrastructure spending (roads, sewer systems, etc.). If the private sector does not spend and/or cannot spend old fashioned traditional Keynesian spending by the government is necessary. It is true that we are already having large and growing budget deficits; but $300 bn of public works is more effective and productive than spending $700 bn to buy toxic assets.
So we are now very close to the systemic financial meltdown that I outlined in my February paper. But radical action can be taken and should be taken to control the damage and prevent this meltdown from occurring. At this point the US, the advanced economies (and now most likely even some emerging market economies) will experience an ugly recession and an ugly financial and banking crisis regardless of what we do from now on. We are already now in a global recession that is getting worse by the day. What radical policy action can only do is preventing what will now be an ugly and nasty two-year recession and financial crisis from turning into a systemic meltdown and a decade long economic depression. The financial and economic conditions are extreme; thus extreme policy action is needed now to save the global economy from an ugly depression.
Pending sales were up because the down payment assistance ended at the end of September. I've been looking for months and never saw another couple looking at the same house until the first couple of weeks in September. One house I looked at had four couples looking during the time I was there. They were all couples who couldn't afford a down payment (and probably the house). They seemed panicked to find something they could close on before the program ran out. All those that couldn't close by the end of September will be back on the market because they can't come up with a down payment. The last couple of weekends have been back to normal. It's a ghost town everywhere I'm looking.
Maxed Out Mama --totally agree. I mean, finally, a candidate who isn't all high on themselves for their book smarts and ability to master and deploy abstract concepts in real world situations; who isn't all, like, hey, look at me, I actually read books, and newspapers, and (gasp) academic papers on complex subjects, like, you know, the economy! Who isn't all stuck up for being smart! I mean, go, Sarah, go! You're just as provincial, small-minded, ostrich-like --and humble about it --as I am!
emo!!!
Pending home sales up in August?
I'll bet broken contracts were up in September. Way up.
Not only are 'pending' sales up, imaginary sales are way up too.
Bottom!!! House sales up, we all win!!!
Does it mention the percentage of REOs?
This doesnt make sense to me. But its NAR. So who really knows. Its just hard for me to believe that anything with housing can be up.
I'm a pending millionaire!
The BOM rate (back on market- fell out of escrow) has been very high around here. Bet it will be even higher for Sept.
second?
CR: Does PHSI include REO/Condo sales?
It's possible that we'll see pending begin to diverge from closings going forward.
Now if only McCain can win, he'll buy my loan....
I will believe it when I see the existing home sales in a couple of months. Until then, pure fantasy!
shock and awe and now ppt buying houses
This data point does seem to fly in the face of what I'm hearing on the ground in MA. But what do I know?
heheheh PPT is going to warehouse US houses or containerize them for shipment to asia.
We're in a weird place, aren't we?
There are parts of the country that I'm not familiar with--bubble ground zero like FL and Phoenix--where REO and short sales may have driven median prices back down to near historical norms. Finding a bottom to the US housing market, whatever that may be, will restore confidence like no action Ben and Hank can take. At the same time, there are parts of the country, like Boston, that are still in a bubble.
But now comes the credit crisis and (d)(r)ecession--which will drive home prices down some more. Snatching defeat from the jaws of victory.
A weird place.
One third to One half of the pending sales are REO contracts. That means a single home sells bck to the bank and then witihn a few short months sells to a new retail homeowner/investor. That IMO represents so much distortion that the reported pendings and sales are not comparable to past years.
--
Radar Logic PPSF is falling, YoY, at the fastest rate ever -- -17.8%, YoY. Also, the decline from the peak is converging with Case-Shiller. All metros where PPSF is down more than 20% from the peak have foreclosure driven sales increases.
Jas
monta's ankle writes:
shock and awe and now ppt buying houses
Maybe McCain knew that the PPT is starting to buy houses and just said it to try to lay claim for it....
Wait for it...
Wait for it...
Bottom!
mcfraud, take my house, please.
Millionaires are so 1920s.
We are all pending billionaires, because our government is investing our non-existent money so wisely.
Everyone under the TARP.
hey, no hanky panky under the tarp!
Puzzling commentary from Krugman this morning about the rate cuts. Boils down to he thinks the ratye cuts were the "right" thing to do but thinks it is not going to change anything. OK. Please send your application for the new FED head to Washington with that kind of powerful logic!:
"The trouble with rate cuts
The coordinated rate cut was the right thing to do. But I dont expect much from it because the relationship between Fed funds rates and the rates most businesses actually pay is very weak right now, thanks to the messed-up state of the financial system.
A quick illustration: in early July 2007, before the crisis, the target Fed funds rate was 5.25% and the rate on 30-day A2/P2 commercial paper that is, CP issued by less-than-sterling borrowers was 5.4%. On Monday of this week, the target Fed funds rate was 2%, down 325 basis points from pre-crisis levels, but the CP rate was 5.61% up from pre-crisis levels.
So will this latest rate cut make any difference to borrowers."
A ton of cancellations!
Is there a doc link that explains all of the acronyms used on CR.
I can figure out most, but...
Pleading ignorance (and therefore, bliss).
The problem is for every house sold, there are two more foreclosed. How long can that continue?
sNARk
JoGa - most are standard intarwebz acronyms, so use the goog, then ask.
Markel,
Boston is definitely bubblicious, and it faces a long grind down. The problem here is that literally 50-60% of homeowners have no mortgage and "they're not going to give it away". Because of this intrasigence over the last 6 years, there are few young families to eventually purchase the houses (you can check the state census numbers).
There is an enormous air pocket underneath the 50+ year old age bracket. As these citizens are turning into net sellers (death, illness, etc.), there are few buyers. It's just going to be a slow, long grind here.
Same for most of the Northeast.
until mcfraud buys every house?
Comrade Baron Von Helmut III: a buy-one, get one free sale?
Someone please inform PPT that there'll be no hookers or blow until they put together a credible rally today.
I am not impressed.
safe as apartments, you're in boston?
Markets appear unstable... at stall speed here.
I think in a few years we could see DOW 56,000
usually a buy one get one free has a same or lower price caveat, how will the value be determined?
Matt, yes. I've followed the market here closely for the last 5 years.
Boston is not going to collapse--by no means. But it will decline inexorably for a while. The median age in some "nicer"--and I use that word loosely--towns is 50(!).
Very few young families to re-populate whole blocks of Belmont, etc. Big problems up here, I'm afraid.
Still 90% cash.
That 10% invested ain't doing so well.
Even after getting "bargains"
Sucker's rally likely to end?
.......and, down and down it goes.
I'm hearing Tom Petty now..."cuz I'm free falling, free falling...
Krugman and Bernanke were colleagues (friends?) at Princeton and that makes it tough for Paul. He is being more loyal than honest--been there, done that, looked very stupid at the time. Defending friends lowers IQ exponentially.
too bad, i love that city.
damn fine cheesesteak place there too, al capone's i think its called.
COmrade Kristina: one of my favourites songs indeed!
well, that was a quickie. i feel cheated.
Foreclosures = Price declines
More Foreclosures = More Price Declines
More Price Declines = More Sales
The math is quite simple.
Unfortunately, most of these sales are skewed towards the low end. The result is people are becoming educated to only buying distressed properties in this market.
Middle and upper tiers are next in line for 40-50% drops from their peaks. Westside of Los Angeles has now cracked. 136 foreclosures in Santa Monica.
WestsideREmeltdown
Safe_As: Surprisingly you are the first person to comment on one of the ominous future signs for real estate demand. Demographics going forward are horrible. That air pocket under 50 or 45 years old is huge, dramatic really. And the demographic under the 45's is racially and culturally way different. There is so little "demand" under the baby boomers that its frightening. As the boomers turn to net sellers this will become glaringly apparent.
PeakVT writes:
JoGa - most are standard intarwebz acronyms, so use the goog, then ask.
Thanks. Will do.
Best regards to all commenters.
I've learned more in 2 weeks reading CR that I have in 5 years from watching and reading bloviating self-annointed know it alls in other media.
I appreciate how everyone here types quick responses (in all caps) to weak minded analysis calling
BULLSH!T BULLSH!T.
A precious commodity.
there is no PPT.....
When the collective system is interested in nothing but "up" (and there assets are tied to appreciation) it doesn't take much coordination to achieve the desired result.
If it were one entity doing this then someone on the floor would have talked at this point...unless they are too afraid to.
You or I could juice the futures market on the SPX...doesn't take much to get that done however the intraday moves are likely the work of a few coordinated institutions. But again...if your book is tied to appreciation (and most of them are) it's not that hard to accomplish those wild ass moves up.
Ciao
MS
Still a fine city, just in decline. Economics here are tough for continued growth. Factor in the huge tax shortfalls and entitlements coming down the pipe and it will be messy here for at least a decade, I imagine.
Watching L2 for GS and it I doubt they hold that 115
Sales track pendings pretty well, but if for some reason houses took longer between pending and close, like financing got tougher to finalize or there were more short sales (taking forever to close), you would see a jump in pendings without a corresponding jump in sales 45 (now 60) days later.
mining shares to ever recover?
Home sales up??
Then give back the 700 billion!!
Home sales up??
Then give back the 700 billion!!
No can do...GS has already placed that on it's sheet....in level 3 of course
Ciao
MS
In many S. CA markets 70 of sales are FCs or short sales. 30% fall out of escrow. NAR reports sales as anything listed--condos, SFH, foreclosures or otherwise.
And McCain should go quietly into the night with his mortgage plan. Let's give EVERYONE an incentive to default on their mortgage. An old fool who will say anything to win.
Retirement accounts have lost $2 trillion so far
Yahoo! 404 - Page Not Found
Even before the recent downturn, older Americans were on track to continue working longer. Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Over the next decade, the number of workers who are 55 and older is expected to increase at more than five times the rate of the overall work force, the BLS reported.
Falling.
.
.
.
.
.
.
.
.
.
!!!!!!! EEEEK
I don't think it's true that Boston is not going to collapse. It's not immune, it's not "different here." Everyone's not a neurosurgeon.
Look at Davis Square--crappy, ugly old unrenovated Victorians for $700K-900K, yet only 8% of individuals in the Davis zip earn over $100k.
It's a pure bubble, kept up by the fact that sellers won't put their houses on the market and sales have plunged. Unlike Phoenix, there are no huge developers with jillions of residences they have to sell in Back Bay, so we escaped the early reckoning. Second seating is still available, however.
Daddy, tell me there IS a PPT.
PPT's pumps airlocking again. May have burned out the pump cylinder trying to pump air. Call the engineers!
Divorce lawyer and demolition contractor! Splendido, still in a growth industry...and now that home sales are up looks like I missed the bottom. heh heh
GS 118+
He's the magic man, Momma. Go those magic hands............
"Shut her down, she's pumpin' mud"...
Under the TARP:
Who farted?
More for sale signs in my s/d going up everyday.....Every other house is for sale. Just damn.....
Too bad half of them are bank-owned. We're not even 20% through it folks. We still need 20 million illegals to go home.
MS writes: "When the collective system is interested in nothing but "up" (and there assets are tied to appreciation) it doesn't take much coordination to achieve the desired result. "
Ditto. I can't get six people over to my house for a dinner party on the same night.
Or my co-workers on the same page for the simplest of tasks.
Yet the human race has somehow produced this completely efficient group of traders who drive the market in lock-step self-interest?
We're not afraid enough to produce that - yet.
Markets will stabilize when participants stop thinking about making bets and start making investments based on the prospects of the company.
Going to be a long, long time.
CRFan
Well said.
However, I also firmly believe in MS's theory that a few coordinated institutions steer intraday moves
Don't worry. True, the Nikkei is down 75% from the 1989 high. It's soon back to 1970s levels. But Nikkei's bottom is in sight: it will be reached when we're back to the 1845 level.
In sum, stocks have never been cheaper.
Why@ ZIRP: you made me LOL hard.
Phoenix is back to it's long term trend, no more bubble here.
.....and Sarah (distort reality) Palin is "pending" President of the United States.
Could someone please help this neophyte ... PPT? I thought it was Putnam something ...
We have nothing to fear but fear itself...and little warm puppies...with rabies, scabies, and heartworm. Nothing to fear but fear and completely bonkers sell-at-any-cost stampeding panic. Actually nothing to fear at all, really.
Phoenix is back to it's long term trend, no more bubble here.
Is that true at all price levels? Is that what Case-Shiller shows?
"Markets will stabilize when participants stop thinking about making bets and start making investments based on the prospects of the company".
Well put. Shortsightedness in this f****** mess will make you go broke.
Markel,
Oh it's certainly a bubble. It's just going to take longer to work its way through the system.
A lot of those crappy Davis Square houses are owned by some 80 year old widow. They are absolutely not going to sell it for it's worth. She will die two years from now, and here estate will hold onto it at a high price for another year. It will fall into disrepair and eventually will be sold for much less and need a lot of work. I've seen it many times here.
In fact, literally half of open houses I've been to have been estate sales. The have little motivation to sell a piece of property with no mortgage.
However, I also firmly believe in MS's theory that a few coordinated institutions steer intraday moves
Erik Von Stronheim | 10.08.08 - 10:37 am | #
Exactly, that sounds well within the realm of possibility, if not damn well likely.
Gambling, like lies, has short legs.
Is the short sale restriction still active?
I've got this one...
PPP = the Plunge Protection Team
a fictitious(?) governmental group trying to stop the economic free fall
I wish I COULD go broke....Bummer,I realized that I am already broke. I was really looking forward to the trip.
PPT is coming into to pump it again
MOVE BEN
CLEAR
Hmmmmm,
My county in SW Florida...
Apr - 570
May - 510
Jun - 680
Jul - 400
Aug - 420
Sep - 100!!!!!
Snowbirds usually pick up Oct pretty good. It will be interesting if we see a big jump. Last year was a little over 900 in Oct. The low end is starting to sit even with asking prices of 10-20 cents on the dollar of the last loan...
Chris
Phoenix is ground zero of illegal alien zone. Arizona passed tough laws against illegal aliens, and now they are recovering as a result. Phoenix was never super expensive either.
What an interesting demographic shift boston is going to undergo ten-twenty years from now. That is, unless an earthquake knocks everything down into the muck of back bay.
damn fine cheesesteak place there too, al capone's i think its called.
damn fine pizza place too. figs I think it's called. over the bridge from MIT and to the right along the high street. was on foot, so not too far down. I still have wet dreams about the fig, prosciutto and blue cheeze pizza I had there.
Sorry PPT - not PPP
PPT = the Plunge Protection Team
Besides, Markel, prices are already down a good 20% here--definitely 10% off the top and the 10% if you low ball. Desperate sellers do exist and their numbers are growing, they are just in relatively short supply here. Every young family that overpays for a house in MA is adding to the future stressed housing ranks.
As the greatest gen disappears, you will see more and more pressure here.
--
Goldman Sex,
Goldchain Sex!
Suckers rally indeed. There are pletiful of suckers born every minute for the Fraudsters to screw. That is the reason for America's being.
Jas
safe as apartments -
Been sitting on the sidelines since 2003. I'm hoping the grind down here doesnt' take that long... Some signs of reality were leaking out this fall, but still a long way to go.
Pitch
In Praise of Bernanke - Economix Blog - NYTimes.com
"In Praise of Bernanke
By DAVID LEONHARDT
The Federal Reserves rate cut part of a coordinated international effort has put Ben Bernanke front and center for yet another day. Over the past couple of years, Mr. Bernanke, the Fed chairman, has come in for a fair bit of criticism. Some of it has been justified, I think.
But its also worth taking a moment to consider how well prepared he is for his current task. He spent his career studying the lessons of the Great Depression and, to a lesser extent, Japans 1990s slump. (And his fellow economists have enormous regard for him and his work.) He now finds himself having to put those lessons into practice. His qualifications by no means guarantee that hell succeed. But its hard to imagine anyone who is more qualified to try to minimize the damage from the current crisis."
OMG, I think I'm going to vomit.
Defending PPT's existence isn't that tough. First off, realize that the Justice Dept played religious games and got away with it until they foolishly fired some of the zealots. Defense refused to buy protective armored vehicles because they were not manufactured by the "right" companies--oh, and Halliburton "lost" 8-11 billion in cash.
No, PPT exists--you have to suspend disbelief with Bushies.
One point on pendings. The past 5 months of data has been extremely volatile. The last time we say a swing bigger than 7.4% was October of 2001. Existing home sales have also been volatile. So a 1-time 7%+ rise doesn't tell us as much about the strength of sales as it would in more normal times. It is largely a reflection of noise in the data. Pendings are more volatile than existing home sales, and that may reflect cancelled pending sales. The real story, though, has been that sales seemed to have stopped falling. Credit troubles are going to get the decline started again.
I am in Atlanta and have seen the under 50 crowd of yuppies and young up and coming ececutives buy 400+ homes by the truck load. Those poor saps are having kids and are loosing jobs like my 90 yr old grandma looses her reading glasses. This fluffed up market is tasting the medicine but still refuses to swallow. Guess the shaft scared them....
anon @ 10:42-
Still in place.....worked out well dontcha think
I look forward to it's return if only to allow the bid to return to the options market. Spreads have downright SUCKED since it was put in.
Same thing happened in July too..
Ciao
MS
PitchPole, volume is drying up at the high end--I can say that with absolute confidence. That is the first step in a market with relatively few mortgaged properties. This is the beginning of the air pocket regarding young families. The top end just isn't moving. At all. In some of the "tonier" neighborhoods--again the term is used loosely--there are 3-5 years of inventory of above median price houses.
What few young families that remain are buying are the absolutely low end houses for $450,000. And they make good money. The net sellers at the top literally have no one to sell to. Of course, they are under no pressure to sell, so it's just a grind.
Could we have a ticker tape parade for the central bankers and world treasuries? We could through $100 bills at them from high windows like confetti...except they'll be denominated in much higher multiples, and still be just as worthless. Just leave of the ink...as they'll be more suitable for the toilet paper usages.
TARP to be renamed Dutch Oven.
The PPT hypothesis predates Bush. It's been around for as long as folks needed an explanation for their own missed calls on the market.
But its hard to imagine anyone who is more qualified to try to minimize the damage from the current crisis."
OMG, I think I'm going to vomit.
Dope Brontide | 10.08.08 - 10:45 am | #
Dope,
you shall have heard Italian's MSM before the bail-out was approved, stating that the crisis was hard but Helicopter Ben and Hank "Bukkowski" Paulson were the best in charge we could EVER have to manage it.
BARF!!!!!!!!!!
GS under 115...
Popeye writes:
The PPT hypothesis predates Bush. It's been around for as long as folks needed an explanation for their own missed calls on the market.
Popeye | 10.08.08 - 10:48 am | #
I believe there was a law passed in 1988 that legalized PPT.
Hey MS,
Which direction are option spreads for puts going to narrow? Does the bid rise, or the ask fall, IF the short selling resumes tomorrow? Or do they converge to middle ground?
I'm just curious if put options are likely to lose their premium as people dump them and short stocks directly.
Well that bump in the markets lasted awhile
AC-
If your there I guess I covered EWZ a bit too early!!
Still wanting to go long?
Ciao
MS
Today the past means nothing. The US financial model will soon be on the ash heap of other failed economic models.
PPT starring as "The Little Engine That Couldn't"
What are the turkeys going to do if we go into a recession?
Mel,
I didn't mean to suggest the PPT hypothesis is without merit. It's simply a proposition that can't be proved one way or the other.
I have to agree with Most Honorable Ministry of truth. -170 and counting
Have the suckers left the building yet or is CNBC still on?
Comrade Bagholders,
Glod, can't you PPT doubters do simple research?!?
"The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,[1] signed on March 18, 1988 by United States President Ronald Reagan.
The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".[1]
As established by Executive Order 12631, the Working Group consists of:
* The Secretary of the Treasury, or his designee (as Chairman of the Working Group);
* The Chairman of the Board of Governors of the Federal Reserve System, or his designee;
* The Chairman of the Securities and Exchange Commission, or his designee; and
* The Chairman of the Commodity Futures Trading Commission, or her designee."
Working Group on Financial Markets - Wikipedia, the free encyclopedia
The question is how often do they directly interfere. I believe infrequently. However well placed phone calls and well timed Fed repos, have an effect as well.
Nostrovia,,
It's turned out there is no financial crisis after all. Everyone just read Calculated Risk a bit too much, and thus panicked.
safe_as_apartments writes:
PitchPole, volume is drying up at the high end--I can say that with absolute confidence. That is the first step in a market with relatively few mortgaged properties. This is the beginning of the air pocket regarding young families. The top end just isn't moving. At all. In some of the "tonier" neighborhoods--again the term is used loosely--there are 3-5 years of inventory of above median price houses.
What few young families that remain are buying are the absolutely low end houses for $450,000. And they make good money. The net sellers at the top literally have no one to sell to. Of course, they are under no pressure to sell, so it's just a grind.
I would go one further -- in my area, very affluent suburbs about half an hour south of Boston, I am not seeing anything moving less than 300K: there is simply no middle market. It is only first-time buyers, and they simply can't afford anything more (and in quite a few cases, I'm sure, they can't afford the 300K -- and we may very well see some back on the market in a few years.)
Uptick in pending sales may be due to latent pent-up demand now recognizing that while prices may continue to fall, mortgage availability will continue to diminish, if not vanish completely under resonable terms. Even in down housing markets, there is a churning regular demand for housing, which has been on the sidelines for at least a year. Demand based on fear that the credit spigot is quickly running dry.
Thanks JoGa - now that I think about it I've read that here before ... need to pay more attention.
Later today a neighbor of mine is trading me a Sony LCD Bravia for a case of tuna packed in water.
Suckers leaving the building by windows, not stairs.
safe_as_apartments,
do you know what's going on in Cambridge? Sold there in 2006 and things were still crazy, though going down. rents were very high there. has there been any easing you've noticed?
Do we break 8k today?
"Now Is The Time to Think Long Term and Buy Stocks" --- Wall Street Journal
Headline cited at the inflection point on today's Google Dow Chart.
This index is like the MBA applications index - WORTHLESS! Anything from the NAR is not worth my time
GH-
The spread should narrow....look at HIGOH...Bid 15.30 Ask 17.20
If you write (as an option writer) a put you have to hedge it with long shares. Calls are just the opposite. If you can't short stock then you raise the premium to make it less attractive. They don't want to go long on the stock so the BID to sell is much lower....
The spreads should calm down a bit however nothing is what it appears at this point.
Still have HIG puts.....
Ciao
MS
Err, I meant "not seeing anything moving GREATER than 300K".
come on 8000
Dow Chart's shape on Google finance is likely to read P3NIS.
Embarassing.
Rise in the 10 year yield is very ominous. We may be passing from the "government panicking and making things worse" phase to the "bond crash" phase.
safe -
Low end houses at 450k - that kills me! (And is exactly why we've been sitting on the sidelines so long - I don't mind spending good money, but it has to represent some value for crying out loud.) I'd be laughing if we didn't have three kids three years old and under running out of space in our current rental...
Been sucking up the idea of a new rental lately. Spring will tell.
Pitch
Of course there is no PPT. Just some really hungry and deep-pocketed longs out there scooping while the blood runs deep. And their using their OWN money, and their rubbing their hands in glee at their smart purchases.
Like jumping in front of a stampede and stopping it dead flat by waving your hands and cowboy whistlin'.
Most heard excuse from a failed investor "I am in it for the long term"
MoT,
I'm OUT it for the long term.
REALTORS here have been pushing people to buy while they can still get NO DOWN PAYMENT!!!
Thanks MS. I just added to my "collection" of HIG puts. November $20's. Let's hope we get some action soon!
Johnny Lee nails it, IMHO.
only 100 points on the DJIA and we've caught up with Japan.
私達はすべて今日本語である
Ciao
MS
Oppposite day today at the PPT offices....
Pitch,
If you're in Boston area, check out rentals in near-Cambridge (off Mt. Auburn) Watertown -- convenient, some really nice inexpensive places, big with outdoor space. Better than Somerville imho. And some damn good Armenian food.
got back into DOG (dow inverse) this morning about $80, I'm betting the bleeding continues
I got new tee-shirts:
"A Fifty Point Basis Cut and All I Lost was 2%"
Accepting Yen and gold, only. No USDs!
Rise in the 10 year yield is very ominous. We may be passing from the "government panicking and making things worse" phase to the "bond crash" phase.
Where would they go?
It will be interesting to see how many of these contracts actually close.
Mortgage brokers say that they are getting lot of inquiries, but they cant qualify anybody for the mortgage.
Bernanke's put.
Man-moth, I don't follow Cambridge that well. I generally have a keen eye on neighborhoods we might settle in, and Cambridge is not one of them. I do know that violent crime has picked up recently. I would guess it is suffering from the same problem: low-end moving, high-end stalled.
Pole, $450,000 low-end in good commuter areas like Needham, Westwood, etc. The buyers are making $125,000 combined. Big problem if one loses job. Above that, hardly a market.
I've heard anecdotally from some trying to sell in Mansfield that lower end houses (
We are all Japanese language?
Watakushitachi wa subete Nihon De aru! Subete ishunkan no uchi ni okane-mochi kara bimbo ni o-kawari shita.
I can't tell you how many times I've heard the line "don't look at your 401k for six months" in the last two days.
Well if you look at it then........
Ciao
MS
sorry, cut off.
Lower end houses in Mansfield sitting for years.
Uptick in pending sales may be due to latent pent-up demand now recognizing that while prices may continue to fall, mortgage availability will continue to diminish, if not vanish completely under resonable terms.
In Sacramento, demand has held up nicely even as prices plummet. Granted, 50%+ of all sales are REOs, and 25%+ are to "investors," but there's still demand. There's been a large influx of Bay Area Section 8 renters into the Sacramento area. Why stay in an apartment in Oakland, when you could get a 3000 sqft house in Sac for the same price? Not sure what Sec 8 pays, but it seems to be enough to support the current house prices.
MS writes:
I can't tell you how many times I've heard the line "don't look at your 401k for six months" in the last two days.
What happens after the 6 months?
SFK was fascinating this AM. 122 to 127 @ open to 352.50 high - now 124
Absoutely, man-moth. I live in Watertown. Completely insane that people would pay double/sqft to live in Cambridge or Somerville.
Boston People,
Any movement in Brookline? I use to live there some years ago. Loved it. If I ever move back it might be there.
TIA
.....
Man-moth - know the area well, currently in Watertown. Not bad, but need more outdoor space. Went to school in Somerville/Medford and not going back.
Safe - Been looking in the strip of towns from Arlington to Boxbourough.. still too expensive.
Ooops, got a meeting.
Thanks guys,
Pitch
What happens after the 6 months?
That's when you look at your 401k.
I dunno, but it "feels" like the down trend is running out of steam.
Popeye
Bond Crash Phase Commencing
Care of BBerg
U.S. Treasury to Auction More Debt Amid `Severe Dislocations'
Oct. 8 (Bloomberg) -- The U.S. Treasury sees ``severe
dislocations'' in the government bond market and plans to sell
more debt to address shortages, the department said today.
The market problems ``are across the Treasury market curve''
and are primarily affecting medium- and long-term debt, from two-
year notes through 30-year bonds, a Treasury official told
reporters.
Multiple securities will be reopened in upcoming auctions,
the Treasury said.
What happens after the 6 months?
In six months you'll be trading in squirrels so your 401K won't matter anymore...problem solved.
PitchPole,
I think that mentality is finally beginning to dawn on many of the younger generation here in MA, especially degreed professionals: why in the hell am I going to pay 450K for a 3/2 or a 4/2, when I can rent for a fraction of that price and save my money? I think that's largely why I am seeing only houses less than 300K selling, because the professionals and the DINKs, who could get a mortgage for something higher (not necessarily "afford", however) are balking at the prices. To them, the difference between renting and buying is saving XX dollars a month versus saving no dollars, or even having to scale back their lifestyle. The only people I see still buying houses are the people who are living paycheck to paycheck and haven't struggled to save a downpayment, and therefore to them, buying a fixer-upper 2/1 for 300K is just a rent payment with a premium for the privelege of "owning".
let's send this down to 8000 and see if j6pack finally pulls what's left of his retirement.
Frog in pot. Add Water. Add flame.
Observe.
1) Don't look at your 401k for six months
2) ????
3) Profit!
Just a couple days ago I found an old envelope in the house with some US currency (paper and COINZ!)from the first half of the 20th century, with the dollars that say "IN SILVER PAYABLE TO THE BEARER ON DEMAND" etc.
Is it an omen?
For you Boston-ers. I'm in Sudbury, and in these parts is the same as you guys have been seeing. The high end ($1M+) has zero movement. The middle stuff (say $700k-$1M) (if you can call that middle) is stuck as well. The only homes moving are ones purchased with conforming loans, and that's still slow.
I myself bough a short-sale around 600k over the summer. We moved from a $1.5M+ neighborhood, and the old neighbors are putting up a good show of confidence but you can see the fear in their eyes.
feesh
MOT-
It's just people in the denial phase. In six months it will be lower....don't you think??
It may get a bounce or two but people are convinced that this is just a bump in the road. It's not...it's the end game of financing growth at any cost with cheap debt.
Problem is that debt is not going to be any cheaper in 6 month's. Money can be cheap as it wants....if it's not offered to you it's meaningless.
Ciao
MS
I can't tell you how many times I've heard the line "don't look at your 401k for six months" in the last two days.
For someone under 59.5 years old, I think the penalties (state and federal), additional penalty, and tax bracket amount to about 50% shave off the gross. The gross is down 28% from one report I heard last night.
Pole, haven't followed Arlington, but someone looking there has found the same phenomenon. Low-end moving, high-end stalled.
The starter home phenomenon is completely dead for the next decade, especially in the NE.
Pitchpole and Man-Moth.
Check out Natick. Surronded by the "W" towns (I don't mean georgie).
-
Nades- I live in brookline (coolidge corner.) It is still a lovely place to live but quite expensive. I would give it a little more time if you're looking to buy. On the other hand there are a few new condo buildings in the area that are going to be difficult to fill - you might get some deals in the coming months.
Those figures of upward sales on housing while 175k lost jobs, you jest.
Absolutely, feesher. It's going to be a grind. Most of those who own there homes outright could never in a million years afford them today if they were younger versions of themselves.
It's just a matter of time. A slow grind, indeed.
Wait till the laid off yuppies start sending in the jingle mail for their underwater speculative investments in RE.
I'm in a money market fund for what pittance 403(b) I have.
Will that fund be the first or last to be evaporated?
safe,
The starter home phenomenon is not quite dead yet, it's just limited to the bottom of the barrel, because the mortgage market has tightened to the point where starting families that don't make more than 100K (which is most) can't get a mortgage for more than 300K. When downpayments of 10% or more return to fashion, that's when the "starter home" phenomenon will truly disappear, and good riddance to it, I say.
Interesting development in retail. TGT is up after reporting worse than expected retail sales. WMT is down after reporting better than expected.
ac writes:
What happens after the 6 months?
That's when you look at your 401k."
And see that it's down 75%
And notice on your cell bill that calls to your NYC broker are being picked up in St. Croix.
Thanks for the input, safe. Violent crime in Huron Village is hard to imagine (bought there pre-bubble & rented in Watertown for years before that). Funny you & Pitch are both in Watertown. CR fans know where the deals are!
Cheers
BBC (roughly): It was the financial version of comic book heros banding together to fight evil.
Yeah, except the comic book heros win. Minor point.
GS hits 117 agai
C'mon guys, this suff about the PPT is ludicrous. It all stems from a silly story about the creation of the President's Working Group on Financial Markets following the 1987 crash. I know all the stories about mysterious buying of index futures and all that, but let's be serious!
/prepared to be flamed...
SOMA just lowered to 10!
Comrade Bagholders,
Frick the DOW. The S&P is solidly below 1000 now.
GAH!
Nostrovia,
@Builder Bob
Yeah, its an omen and lesson learned. Never shoudda left the metal standard. Instead of payable to bear in metal, inscription should now read, "Abandon hope all ye..."
Save that paper currency, you'll need it for wadding while packing lead ball atop dry powder in the musket we'll be using in near term. If you're lucky enough to have a musket...
We still need 20 million illegals to go home.
Are you kidding? We're gonna beg those 20 million potential customers to stick around by rubber-stamping their citizenship.
Starter home is dead in Boston and NE, IMHO, because there will be no equity build because of the slow grind down. Entire swathes of buyers will have no equity after 10 years of paying down their mortgage. Thus, it's harder to assume an even bigger mortgage.
Panzer units are now within sight of Paris, the top half of the Eiffel Tower is visible over the Western horizon. There was some trouble in the morning as the new field cook stoves, manufactured by IG Farben,
tended to explode because of a defect in the gas valve. Tactical planners are concerned that thunderstorms predicted for the afternoon over eastern France will slow the already delayed advance, however the clound cover will be a welcome cover from French spotter aircraft...
and I'll add this about metro-west Boston. Confirming the "grid" thesis. It looks like the super high end it, for now, whistling past the graveyard. No sales means no comps to the downside which means we can pretend there is no drop in high end price.
But... in those neighborhoods, you know there is at least 1 family that is running a tight budget, low down, int only. There will be layoffs. All it takes is one family to hit the rocks and have to sell at any price, and that will break the logjam or price fantasy.
feesh
Violent crime around Central Square and Cambridge Port is not so hard to imagine.
Rachel,
If you're in Brookline, have some Rami for me. Restaurant we miss most in the Boston area. Cheap and wicked delicious.
Thanks, Morse--moved to the Mid-Atlantic region.
It's happening feesher, but the infrequency is where the grind comes from.
serf alan greenspend,
"SOMA just lowered to 10!"
You mean it goes to 11 too?
Nostrovia,
quite a battle at sp 980-990 levels..
Mibtel \t16648.00 \t-1164.00 \t-6.53%
AllStars \t9213.00 \t-483.00 \t-4.98%
Dow Jones \t9289.96 \t-157.15 \t-1.58%
Ftse100 \t4381.60 \t-223.62 \t-4.86%
^GDAXI \t5044.76 \t-5.29%
Great job with rate's cut!
safe,
I agree it's dead going forward, but the mentality isn't dead just yet. Too many people still stretching to buy the crap at the bottom of the barrel (because it's all they can afford) just so that they can "get into a home". The only difference is that, because of the mortgage tightening, these people aren't getting into 450K homes, they are getting into 250K homes, but the end result will likely be the same: if they don't lose the house, they will ikely be stuck in it with no hope of a move-up for a long time to come.
translation to the above
"we are all japanese now"
Really we are....hope you have savings. Only thing that got them through it.
Ciao
MS
Great job with rate's cut!
Goldman Sex | 10.08.08 - 11:19 am | #
I hope they are sure these 'pushes' are not at some destructive resonant frequency of the system.
cd writes:
quite a battle at sp 980-990 levels..
There's a point at which everyone who wants out has already sold.... at least temporarily.
ac,
Bond vigilantes just rode into town; packing six-guns and Winchesters. No pitchforks and pikes for these guys.
@Violent crime around Central Square and Cambridge Port is not so hard to imagine.
Yeah, I remember--before the bubble!--my student handbook warned about going into Central Square at night. But that was where the cheap beer was. Even in "high times," with Central Sq. properties bid up to $500sf, I still saw people shooting up in the parking lot behind the co-op.
NY Fed says current dealer aggregate limit of $4 billion is increased to $5 billion
Securities lending program minimum fee cut to 0.10 percent from 0.50 percent
last month on MRIS my MD county had a lot more 200K homes show up where zero had been before however, more 300K plus as well, the 200 and lower move but the 300k+ now have a 24 month inventory....
blackhat writes:
let's send this down to 8000 and see if j6pack finally pulls what's left of his retirement.
Frog in pot. Add Water. Add flame.
Observe
The frog leaps out of the pot when it gets too warm, which makes one wonder...is J6P smarter than a frog?
With the short rule expiring by the open tomorrow do options premiums come in ?
If you're looking at Natick, you might as well look at the north side of Framingham. It's not at all like the downtown area and the public schools are supposed to be good. Just stay north of Rt. 9.
Europe is starting to look really ugly.
Thank you, AIG.
When you need a world wide rate cut just to ensure a 3-4% DROP you are in serious trouble.
The frog leaps out of the pot when it gets too warm, which makes one wonder...is J6P smarter than a frog?
noobgoldberg | 10.08.08 - 11:23 am | #
If J6P jumps out too soon, he's branded a tin foil hat wearing freak,
unfortunately.
Man-moth, are you a beaver? Crimson? (I'm both, btw. '99 S.B. and '00 '08 PhD)
It's odd that all three charts for Nas, Dow and S&P look like exact replicas of each other...
Anything relevant lined up for today on CSPAN?
I hear the train a comin'
It's rollin' 'round the bend,
And I ain't seen the sunshine,
Since, I don't know when,
I'm stuck in Folsom Prison,
And time keeps draggin' on,
But that train keeps a-rollin',
On down to San Antone.
Yep, Europe suckin' it large:
FTSE 100 -5.42
DAX 30\t-6.32
CAC 40\t-6.49
Comrade Kristina writes:
It's odd that all three charts for Nas, Dow and S&P look like exact replicas of each other...
i.e.: P3NIS
The day Paulson or Bernake go live on TV and start talking about an open effort to handle CDS will be the day the market rises 20%.
Europe is starting to look really ugly.
Take a look at an intra-day chart or two. Mind-blowing.
The article requested is no longer available.
Britain threatens to sue Iceland to protect savers
REYKJAVIK, Iceland (AP) Britain added to the financial chaos engulfing Iceland by declaring Wednesday it planned to sue over lost deposits held by thousands of Britons with Icelandic bank accounts.
The news from London even overshadowed an emergency loan Wednesday from Sweden to Iceland's biggest bank.
The promise of legal action by the British government to recover deposits belonging to 300,000 British account holders with the Icesave Internet bank came after its parent, Landsbanki, was placed in receivership.
"We are taking legal action against the Icelandic authorities," Prime Minister Gordon Brown told journalists in London. "We are showing by our action that we stand by people who save."
And this ladies and gentlemen, is you get the market to finish up on the day.
11:00 a.m.: Paulson to hold a press conference at 3:00 pm easter
Comrade Bagholder AIG's toes,
"If J6P jumps out too soon, he's branded a tin foil hat wearing freak,
unfortunately."
I wear that moniker with pride. But I've been out of the pot since 1/2000.
Nostrovia,
Not to be a pedant, but "inflection point" doesn't mean the highest point on a curve, or the point where it changes from increasing to decreasing. "Apex" would better suit that meaning. An inflection point is the point along a curve where the curvature changes sign -- where a curve changes from concave to convex. /pedantry off
Thread music:
YouTube -
Any opinion(s) on how this will affect credit card offers. I could never figure out exactly what mechanism was funding the balance transfer phenom.
"Collapsing like a wet taco"
-CNBC Bimbo
I tend not to believe that any area is immune, even the downtown areas. Wait until crime really rockets. If the top ends were always immune throughout history, then the cities would look a lot different than they do now.
Now the marijuana decriminalization question, well that's just a gimmie.
Givith thy green bud...why not legalize it, but here is the kicker, only sell it in liquor stores and you must be over 21.
Would be great for the economy in the long run....at least when the depression really hits we will all smile in the face of hunger....
oh and that is not the 1929 depression..more like the 1873...read on it you will see the correlation.
@Uncle Billy Vs. Mt. Pelerin
Settle down, you can't afford to travel to that country now anyway.
Bond market action is ominous. Stocks decline and 10-year drops?!
argentina is the answer.
Finanz-Korps Panzer units are now racing the afternoon thunderstorms on the road to Paris. The troops are fed and the defective IG Farben cookstoves are cast aside. Advantage: the fuel trucks have had a chance to catch up.
PPT warming up their helicopters...oh shit, they just crashed into the Hudson River
Julia: Thank you
And exact translation if it's not too much trouble?
Interesting Times writes:
Why@ ZIRP | 10.08.08 - 11:47 am | #
I was thinking more of the new (expensive) supply coming from canada and russia.
Interesting Times | 10.08.08 - 11:48 am | #
Russia has to sell at any price, Canada will be in deep trouble if production can't become more efficient fast, shortfalls will probably be made up by other producers like Venezuela who must sell more. They will pump like crazy to stay in power. Remember, oil over 60 is a recent phenom. Oil can go down that far without bankrupting producers.
Maxed out...surprised an admitted racist doesn't just say what you say on your own blog...Obama's intelligence and integrity must be discounted because it comes with black skin. Atwater and Rove have eviserated working folks economically while distracting them with cultural smoke and mirrors.
That little game is played out...40iks now 101ks and pension funds ready to go bust...nowit is all about the money...and why working folks who voted republican don't have any.
0.15!!!!!! on the 10 year......prepare for battle!...yikes!!!!
yep, that was MaxedoutMama, you can read the entire fawning essay on her blog that she linked to.
um, yikes.
ok, back to macroeconomics.
In that first speed bump called the Great Depression, even Frank Lloyd Wright's designed homes could not sell. They were blighted for many, many years. Not even 10 cents on the dollar.
Ah, the good ol' days. Where loss was contained merely to the purchase price, instead of being socialized into an ultra 3X loss by Fed and Treasonry intervention.
ella es tan estúpido que no masturbarse?
Oil can go down that far without bankrupting producers.
Why@ ZIRP | 10.08.08 - 11:54 am | #
Agreed - for the shortterm, in this deleveraging environment, where financials can't be shorted.
In case you needed another reason to drink.
VIX 57.76
OMFG
Got ammo?
Uncle Billy Vs. Mt. Pelerin: estupidA ... se masturba. Sorry, just nitpicking.
Was Reid speaking of MetLife
MetLife to cut jobs; shares plunge
MetLife sells shares at discount after stock sinks
| Reuters
The largest U.S. life insurer by assets, said on Wednesday it will cut an unspecified number of jobs, one day after it announced plans to raise capital in the middle of a global credit squeeze.
@argentina is the answer.
Yet further proof that Argentine women are awesome.
Heard about two car dealerships yesterday. One a Subaru dealer, the other a Jeep dealer, both shut down because they couldn't get flooring.
Things are moving faster, maybe faster than the Fed thinks they are.
I'm guessing a consumer package in the 400-500 billion dollar range that will provide families with $4000-$15000 of cash for this holiday season... spend.. spend... spend.
Gracias por los corrections Carlo
JJL - Plenty of sites that fully document that the waste and over paid governemnt kleptocracy should be cut instead.
Sure, but they won't be. The social programs crucial for getting residents through the recession without massive upswings in crime and homelessness, however, will be. The homeless don't have very good lobbyists.
C&C,
Do I have to pay to register with Roubini? I'd like to know his policy recs but...
I'm guessing a consumer package in the 400-500 billion dollar range that will provide families with $4000-$15000 of cash for this holiday season... spend.. spend... spend.
Dope Brontide | 10.08.08 - 11:57 am | #
I've got cars to fix, that would come in handy.
300+ comments and maybe 5% are topical. Show some restraint people.
ok uncle, just for you here it goes (i regret making the comment by now):
"es tan boluda que seguro ni se masturba"
(so it's more like: she is so stupid that for sure she doesn't even masturbate)
i promise never to make any other inappropriate comment from now on.
rachel,
Here in San Fran the homeless have superb lobbyists. They are big enough to form an important voting block.
Mp,
that's on top of the 20 Bill Heard dealers that closed last month. The largest GM dealer in the country.
So google can't deal with gender? Makes sense... most of us can't either.
both shut down because they couldn't get flooring.
what is flooring in the auto dealer sense?
My OMFG moment today just came when I saw the TNX...
"Got ammo?"
It's comments like this that makes me wonder if you Americans will come out of this in one piece.
Flooring is short-term financing to bring in new vehicles for sale.
"300+ comments and maybe 5% are topical. Show some restraint people."
Sorry grandpa Dawg.
Julia: speaking for myself, any comment that throws light on stupidity or lies is always appropriate.
mp,
I think the FED is behind about 6 months. Yes, moving much faster then they think or imagine.
"My OMFG moment today just came when I saw the TNX"
What's the TNX?
Rob Dawg writes:
300+ comments and maybe 5% are topical. Show some restraint people.
While Tanta's away, the kids can play.
"Do I have to pay to register with Roubini"
No its free
Dawg,
No disrespect, but this ain't EN.
"Rachel writes:
Sure, but they won't be. The social programs crucial for getting residents through the recession without massive upswings in crime and homelessness, however, will be. The homeless don't have very good lobbyists."
Rachel,
As wil the TARP bailout, tough. If the politicians in mass are not voted out and forced to change their ways, obvioulsy nothing changes. Arguing to maintain the staus quo so as not to upset anything is more of the same old behavior that has brought us to Great Depression II. More people need to think for themsleves and hold government accountable. It is not for the weak of course, and so we will never see it.
The kids hear some creeeeak from the floor and the scuffle of bunny slippers and we will some some very topical comment threads...just post Tanta, we promise to behave on your thread!
The entire Roubini Internet Doomsday Device has been free for a month or so.
Too small to fail,
Nice handle! The ten year treasury note looks to be selling hard with the market tanking and a rate cut today...so the rates are rising rather than falling as expected.
TED spread moving up ... 3.77
VIX or VXN probably will break through 60 today (another early morning musing coming true)
Time to party
Roubini Hallowe'en Mask
...which makes me wonder once again...
Who is paying all those RGE "analysts"?
it's not a TARP it's a TRAP!
Perspective?
Fannie had $24 Trillion in mortgages: As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) owned or guaranteed about half of the U.S.'s $12 trillion mortgage market
Total Global GDP is about $50 Trillion
The market for Derivatives like Credit Default Swaps is over $60 Trillion
US Treasury Debt/deficit maybe $12 Trillion
Iraq War, maybe $3 Trillion
Interesting old FYI:
Remarks of Deputy Assistant Secretary for Federal Finance
James Clouse
U.S. Department of the Treasury
http://www.ustreas.gov/press/releases/hp118.htm
Before the Bond Market Association,
Government Securities and Funding Division
September 27, 2006
Ensuring the integrity of the Treasury market is essential. The U.S. Treasury market is the deepest and most liquid market in the world. Average daily trading volumes currently fluctuate in the neighborhood of $600 billion--many times the average daily trading volumes in the U.S. equity and corporate bond markets--and dealers operate with very thin bid-ask spreads. The liquidity and depth of the Treasury market have made it a critical national asset:
Rob Dawg writes:
300+ comments and maybe 5% are topical. Show some restraint people.
Police your own blog, Dawg. Lots of informative stuff in this thread.
JJL - Sure, that's why I'm not voting for most of the incumbents on the slate, and voting third party much of the time, especially for local offices (where they're likely to win.) But repealing the income tax won't fix political corruption. It's (as others have pointed out) likely to make it worse.
Sorry, I need to correct myself. The VXN (for Nasdaq) has broken through 60. @ 61.83
The VIX will follow, wait until the mid-day switcheroo where once market makers have lured money into stocks, they withdraw with the spoils of a good switcheroo
Police your own blog, Dawg. Lots of informative stuff in this thread.
Man-moth
Actually it was your posting under a counterfeit handle that was the last straw.
@ Ministry of Truth
Maybe Met, but might be Hartford. They just sold off $2.5-billion to German insurer Allianz yesterday.
Ouch GS 113 now...Hank, where's the helicopters?
Maxed out is just looking for webhits, don't take the bait.
Ritholz (TBP) does the same thing albeit in a more covert way.
Ciao
MS
Finanz-Korps Panzer Force encountering thunderstorms and French Partisans near Troyes ....
WTF? I have not! I post under Man-moth and you can check my IP with CR.
Maxed out is just looking for webhits, don't take the bait.
Nah, that wasn't her. Just somebody trying to start a flame war.
Non-unique handles: another reason Haloscan sucks.
"(Back to listening co-workers debate if Obama is a terrorist)."
CRFaN:
You mean some people up your way are still taking McCain seriously? I'm impressed.
I'll park a few more thoughts here:
The equity sell-off has eviscerated some $4.6 trillion of global stock market wealth in the past three weeks alone, according to the market capitalization loss on MSCI's main world equity index.
Over the last 12 months, that figure is more than $12.4 trillion, of which some $7 trillion comes from the United States.
Fannie and Freddie already own or guarantee more than 40 percent of the $12 trillion in U.S. home loans, and have been pushing more money into the market by increasing mortgage bond purchases since regulators seized their operations, according to Freddie Chief Executive Officer David Moffett.
Libor, set by 16 banks in a daily survey by the British Bankers' Association at about noon in London, determines rates on $360 trillion of financial products worldwide, from home loans to derivatives.
Market, meet Cliff. Cliff, Market. "Nice to meet you, Cliff. Ought to drop over some time."
I dunno max, several mentions of her blog out-of-the-blue the past few days.
My guess is MS is spot-on.
Rate cut didn't work....
soooo, what's next????
santelli calling the end of low yields ten year blowing out...ouch oh well there goes the refi index peak to trough now another 40%
Anyone catch the story in the WSJ?
Says that 29% of people who bought within the past five years are under water on their mortgages. The fundamentals are STRONG!
Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water' - WSJ.com
VIX historic chart, implied volatility of the S&P index was 80 in the last great depression.
The credit crunch may cause another great depression | vox - Research-based policy analysis and commentary from leading economists
Here's the rest of the Roubini article:
So we are now very close to the systemic financial meltdown that I outlined in my February paper. But radical action can be taken and should be taken to control the damage and prevent this meltdown from occurring. At this point the US, the advanced economies (and now most likely even some emerging market economies) will experience an ugly recession and an ugly financial and banking crisis regardless of what we do from now on. We are already now in a global recession that is getting worse by the day. What radical policy action can only do is preventing what will now be an ugly and nasty two-year recession and financial crisis from turning into a systemic meltdown and a decade long economic depression. The financial and economic conditions are extreme; thus extreme policy action is needed now to save the global economy from an ugly depression.
Ciao
MS
Pending sales were up because the down payment assistance ended at the end of September. I've been looking for months and never saw another couple looking at the same house until the first couple of weeks in September. One house I looked at had four couples looking during the time I was there. They were all couples who couldn't afford a down payment (and probably the house). They seemed panicked to find something they could close on before the program ran out. All those that couldn't close by the end of September will be back on the market because they can't come up with a down payment. The last couple of weekends have been back to normal. It's a ghost town everywhere I'm looking.
Main body of the AIG Panzer Battalion still 236 km from Paris...
Thanks MS.
Maxed Out Mama --totally agree. I mean, finally, a candidate who isn't all high on themselves for their book smarts and ability to master and deploy abstract concepts in real world situations; who isn't all, like, hey, look at me, I actually read books, and newspapers, and (gasp) academic papers on complex subjects, like, you know, the economy! Who isn't all stuck up for being smart! I mean, go, Sarah, go! You're just as provincial, small-minded, ostrich-like --and humble about it --as I am!
Bernanke has thrown in damned near everything except the kitchen sink and Mr. Market is still down 200 (DJIA).
Most expect a test at 9,000 and, given Mr. Market's lack of enthusiasm, it looks like it'll go through it.
Off the charts. Time to dust off the history books. A real "Come to Jesus" moment.
CRFaN said: "I dunno max, several mentions of her blog out-of-the-blue the past few days."
Running flame war over there lately - complete with counterfeit names. It's slopped over here.
Be very skeptical of inflammatory, out of character posts.
We do need unique names.
Thanks MS.
I'm going to forward that excerpt to my politicians. In my non-expert opinion, I think he's right.
Is conjure speaking today? Or is he curled up in the fetal position?