shit!

make them a "bank holding company" I'm sure they all have applications at hand.

Ciao
MS

Found on Drudge:

The article requested is no longer available.

Georgia congressman warns of Obama dictatorship

By BEN EVANS – 15 hours ago

WASHINGTON (AP) — A Republican congressman from Georgia said Monday he fears that President-elect Obama will establish a Gestapo-like security force to impose a Marxist or fascist dictatorship.

"It may sound a bit crazy and off base, but the thing is, he's the one who proposed this national security force," Rep. Paul Broun said of Obama in an interview Monday with The Associated Press. "I'm just trying to bring attention to the fact that we may — may not, I hope not — but we may have a problem with that type of philosophy of radical socialism or Marxism."

skent writes:
Byzantine,
Seriously that article is ummm... stupid. Breaking news!! Some idiot says asdlkfjasjf so it must be true!!!

I don't really think it's true, I think it's a leading economic indicator.

Seriously, Byzantine, does that post have anything to do with Toll Brothers and their guidances? Keep it topical, this isn't a political blog.

MS writes:

make them a "bank holding company" I'm sure they all have applications at hand.

That will have to wait until they are completely out of money. Then they get to be considered a bank.

B_R, that's what you get for reading Drudge. "The Dreck Report" would be more appropriate . . .

Somebody tell Broward Horne, he'll believe anything about O, as long as it sounds bad.

Was looking at more of mini-me's speech from yesterday. He mentioned a tranche report delivered to Congress. Found it via ustreas.gov at following link.

First Tranche Report to Congress

The Capital Purchase Program deadline is November 14. I imagine there will be some bloodletting as the scope of institutions who applied for help is much larger than expected.

ille_vir writes:
Seriously, Byzantine, does that post have anything to do with Toll Brothers and their guidances? Keep it topical, this isn't a political blog.

Umm, well, see, let me get a chalkboard here -- the economics takes place in the context of the American political milieu.

I would say that is an accurate indicator of the current American political climate. Irrationalism is strong factor in policymaking, even if you don't subscribe to it.

And yet no major HB has BKd. I think it is a function of the credit bubble. Durring the good times they were given huge lines of credit far beyond normal operating needs. They used that the do large scale flipping and speculation. The sale of BLM land at auction being a glaring example. When the first goes down all the other lenders will be forced to either limit draws and/or mark existing loans way down triggering serial HB implosion as they all rush for the exit simultaneously.

Here are the Appendices.

Tranche Report Appendices

The report itself is just propaganda...

I think we should be expecting another tranche report soon...

Woo! GM below 3 bucks a share! That's the lowest number since WW2 even without adjusting for inflation.

OMG! I read the Trench Report, and thought, "what a nice introduction to the report. But where is the report?"

Then I realized that that WAS the report! It doesn't say ANYTHING! Paulson must be laughing his ass off. Pelosi will certainly change the subject next time transparency or accountability is mentioned.

"I imagine we're going to bail the top 3 mkt participants but HBs are not where my heart lies -- do folks really think these co.s will be allowed to fail in the current climate of Uncle Sugar running the economy out of his pocket?"

Start-up costs for a homebuilding company are minimal, so barriers to entry are low. There is no need to bailout a homebuilder. Absolutely none. And I am highly doubtful it will be done. I believe the homebuilders are seen one of the major reasons for this debacle. The gov't will not show sympathy.

If Bob Toll doesn't go to jail for SEC violations, we should disband the SEC.

Re: plantaganet
The details are in the appendices. I'm trying to figure out if there is something to the December 31, 2009 date... but I just realized it's 2009; not 2008.

The HBs will not be rescued. Not only won't the public stand for it but they need to be destroyed so that their liabilities go to the grave with them. Too many home warranties on stick stacks, too many HOAs underwater, etc.

Rob Dawg writes:
The HBs will not be rescued.

Thanks for the reply!

How about instituting knockout clauses on all debt in the case of deflation. This would prevent the strangle effect, while allowing poor business models to fail.

"Don't blame the people who made the financial structure that made it all happen, blame the people who build the houses in response to demand."

The Congresses' primary friends/financial supporters were the creaters of the financial structures. Homebuilders are an easy sacrificial lamb, especially since it is so simple to start up a new homebuilder. I'm not saying it is completely fair, but it will likely be the outcome.

If they do not pay dividends for 6 periods, the Treasury has the right to appoint two directors. (Was that a requirement in the legislation? I lost track.)

Basically nothing compensation.

Pretty amusing compared to the amount of reporting you have to do for actual securities.

bearly writes:
When do we get the HALTED ON TRADE IMBALANCE LIQUIDATIONS?

Give it time man. If this is the American Three Kingdoms we're only on like page 9 of one of John Jakes' longer novels.

I mean "about compensation."

How about instituting knockout clauses on all debt in the case of deflation. This would prevent the strangle effect, while allowing poor business models to fail.

What's a "knockout clause"? Also, when it comes down to debt you either make good on your promise to pay it back or you don't. The lender either gets his wealth back or he doesn't. In real terms there is no grey area or in between.

And whenever lenders don't get their wealth back, whatever the mechanism, however much it is hidden behind paper manipulations, that leads to a strangling effect as lenders increasingly refuse to lend.

People know when they can buy less than before they made the loan.

You can't hide that with tricks.

If these guys fail, could that create problems down the line for those particular financial institutions?
homedad43

When the HBs fail they will singlehandedly take down(ey) many institutions. The scarier aspect his that HBs were darlings of MMFs and retirement funds. The HBs were a secret backdoor to laundering what is in effect mortgage loans and have the debt come out smelling like commercial paper backed by assets.

US International Reserve Positions release just came out for those that follow -

http://www.treas.gov/press/releases/2008111110131528808.htm

i've never found out why - Gold stock is valued monthly at $42.2222 per fine troy ounce.

serf Alan Greenspend,
re: Gold
Cost of acquisition or market price, whichever is lower wie German banking stil?

Rob Dawg writes:
The HBs were a secret backdoor to laundering what is in effect mortgage loans and have the debt come out smelling like commercial paper backed by assets.

Bonds on forward income streams collateralized by the land marked at inflated prices at the time of issuance?

The collapse in land prices are the reason homebuilders will go BK, because they greedily war chested 10 year supplies of land at market top prices (liabilities).

Specifically why I mentioned the BLM land auctions around Las Vegas and the phantom assets behind commercial paper. Lucky/unlucky that many "purchases" were actually JVs and options. Lucky because of lower gross exposure, unlucky because those investments are zeros at best.

From Chief Economist at MarketWatch:

So give yourself and the economy a present while you're shopping for others. This is the year to shop till you drop, and don't be afraid to haggle on prices.

Nowadays, everything is negotiable, whether it's a luxury car, a designer dress or a flat-screen TV. Don't forget to ask for a discount at restaurants as well -- especially the high end, which are suffering dramatic declines in diners.

The 6.5% unemployment rate means that 93.5% have jobs. What's more, many are not only keeping up with inflation, they are beating it.
More than ever, it pays to remember that when the going gets tough, the tough go shopping.

Cash is king, so get out there and shop Irwin Kellner - MarketWatch

Rob Dawg writes:
Specifically why I mentioned the BLM land auctions around Las Vegas and the phantom assets behind commercial paper.

Please tell me this cp is somehow not the cp Treasury is buying.

If the HBs bankrupt does that mean all of their land and houses will get auctioned off?

OT, related
So if one of the automakers were to BK would that mean all of their dealerships BK, and we get some type of insane "everything must go now!" type of sales?

EHP, not sure of your clarification or question. what i don't understand is from the IRP chart, how gold is valued.

(4) gold (including gold deposits and, if appropriate, gold swapped) 3 ---11,041

3/ Gold stock is valued monthly at $42.2222 per fine troy ounce.

is this a historic precedent? just curious in my geeky way.

serf Alan Greenspend,
I was speculating that the gold on their books is valued at the lower of (cost of acquisition) or (market price), which is how German banks do their books. I just threw in some german words to be fancy, but may have been confusing.

It's the reserves and IMF accounts so it is conceivable that they acquired it at $42.22 back in the early 70s. There was no reason to net acquire more gold since Nixon busted up Bretton Woods. A bunch of countries sold off gold around 2000 or thereabout, it's trendy

I wonder how they are going to pay for it.... Modifications for hundreds of thousands of homeowners.

Not even sure how they can handle that logistically. Just mail everyone a package of paperwork with a note, "This is your new mortgage. Cheers, US Treasury"

"The effort will ... aim to bring the ratio of household debt to income for these borrowers down to 38%."

Let's see how this works. The immigrant gardener, with $15k salary, has purchased an $800k home, with no money down. Just lower his principal by $760,500. Problem solved.

Our government has been frantically waving its arms around to prevent a cataclysmic stock market free-fall. I mean, another one aside from the one they caused by banning shorts.

At least they learned their lesson and haven't outlawed shorts again...

is this a historic precedent? just curious in my geeky way.
serf Alan Greenspend | Homepage | 11.11.08 - 11:12 am | #

Yes, $42.22/tr.oz. is the official price.

It's been that way since 1971 when Nixon closed the gold window. (That was approximately the market price in Paris at the time.)

I believe the IMF uses the same valuation for its gold and it's possible that the IMF's number is why the U.S. uses that number.

WSJ

The Federal Reserve said its big rescue plan for money-market funds will be delayed until later this month.

The delay, announced Monday, presents a challenge for the $3.6 trillion money-market industry, which is struggling to sell short-term debt into tight credit markets. The Fed plans to finance purchases for as much as $540 billion of the money funds' short-term debt.

Many had expected the buying program to be up and running last week, but now the Fed says it will start on or about Nov. 24. The funds need the money to meet investor redemptions.

The reason for the delay appears to be the Fed's preoccupation with other bailouts and wrangling over how the money-fund program will be set up.

It's hard to watch what's going on in each ring of the circus.

Could it be that the american tradition against haggling is like banning shorts on a stock exchange? Instead of a gradual decline of prices of goods in a store as less interested buyers meet their prices, buyers unwilling to buy at full price simply shake their head and walk away, until the stock is worthless.

"american tradition against haggling"

Not tradition so much as the evolved consequence of UPC code tags, scanners, point of sale inventory control and sales staff lacking authority to make any modification to price or terms.

"american tradition against haggling"

Which is just one of the many things that makes that Marketwatch cheerleader's quote posted by BondGirl above so funny.

OOOOOooooohhh, how's Warren Buffet's fine investment in GS lookin' on this fine day ?

wonder if this is why american express in now bank holding company?

The conundrum is this:
• A lot of debt does not reflect expected hold to maturity value
• That problem is so large that it directly shrinks money supply, and indirectly discourages more lending through fear/uncertainty
• Resulting deflation from a money supply contraction would strangle all debtors, even those that could reasonably repay under regular low or higher inflation

• The popular solution (supported by Bernanke, Krugman, Koo, ...) is to substitute for the contracting private credit, with public credit via government borrowing + spending
• I would advocate a more direct solution such as imposing deflationary knockouts on all debt (to keep legitimate loans payable, bad loans fail like bad loans should) or a combination of expediting default proceedings while acting as financier of last resort (market-based cramdowns if you will)
  -* to ease the transition for this shock, relax tax code for a period of time to allow losses to be spread out

ø the problem will persist until there is private credit growth (the expansionist public credit makes helps debts to be repaid slowly but surely with low interest rates, mine attacks the principal and is more of a controversial spanking of irresponsible lenders)
ø dangers include the newly undertaken public debt being unaffordable amongst increasing interest rates if it was spent without regard to generating a return
ø if other economies are growing, and thus their credit demand, then there is a threat to currency collapse

the do nothing option is to scare everyone off from debt for their entire lifetimes, and prolong the balance sheet repairing

"I would advocate a more direct solution such as imposing deflationary knockouts on all debt"

Very interesting. Do you know of any precedent - historical or current - for such a thing?

Jaswant,
Bob Toll has had a dubious track record for 3 years. Why did it take you 2.5 years to figure that one out?

That would be 22.5% interest(fully amortized over remaining 20 years). I don't think that is even close to being right.

Anonymous | 11.11.08 - 11:36 am | #

I think they were suggesting that his debt service costs would come from not paying principal for a period of time, not from rising interest rates. Who knows what really went on.

I am tempted to call all of these people idiots until I realize that I am going to be paying for their debt.

--
I posted this during 2007Q2…

[CR blog comment]: " I would love to see Bob Toll dragged through the mud on this."

Who allowed Robert Toll to do what he did?

I would love to see minimum of 100,000 Bankrupters and Fraudsters be crucified in every zip code and at every major intersection of NYC.

Civil war is coming to America and Bankrupters and Fraudsters will flee.

There are consequences to the greatest fraud in history.

Jas

FT.com / Companies / Property - Merrill chief sees severe global slowdown

Merrill chief sees severe global slowdown

By Greg Farrell in New York

Published: November 11 2008 14:42 | Last updated: November 11 2008 14:42

The global economy is entering a slowdown of epic proportions, comparable to the Great Depression, John Thain, chairman and chief executive of Merrill Lynch, warned on Tuesday.

“Right now, the US economy is contracting very rapidly. We are looking at a period of global slowdown, and a global slowdown in economic activity that affects everyone who participates in global markets,” he told investors. “This is not like 1987 or 1998 or 2001. The contraction going on is bigger than that. We will in fact look back to the 1929 period to see the kind of slowdown we’re seeing now.”

Gee John thanks for the timely update on your thinking. I hear Seattle's getting to be a really hot city to move to, what do you think Mr Thain?

But, it is a covenant that could legally be included in debt; in fact, in it very much like a put provision on a straight debt or convertible bond.

"Keeping folks locked in there upside down mortgage does nothing for sales velocity"

Or does not stimulate the economy by creating a need/demand for more new homebuilding.

Austin Tex,
I do like the idea as it is a simple feedback method to keep the credit system stable. It is probably too late for the US to switch tracks in mid-course this time without some very strong political moves

I am tempted to call all of these people idiots until I realize that I am going to be paying for their debt.
Bond Girl | 11.11.08 - 11:43 am | #

Yeah, I know what you mean. I am an idiot for buying a house that was not overpriced, that fit my budget, that I am working towards paying off early. I wish I was able to receive a cut in the principal that I owe. But no, I get to pay for someone else's debt reduction through my taxes. Moral hazard indeed.

Ulsterman writes:
Lifeguard1999, you left out the best quote of all...
Ulsterman | 11.11.08 - 12:01 pm | #

I thought the best quote was about how they stay at home now and play board games as a family, except for Monopoly.

"I thought the best quote was about how they stay at home now and play board games as a family, except for Monopoly.
Lifeguard1999"

I bet they play this alot:

In Trump: the Game players compete in two parts. In the first part, players circle the board, feeding money into the eight available properties, then bidding on those properties (not being able to see how much the property is worth) and collecting Trump cards . When all the properties are gone, the negotiation phase begins. Players use their Trump cards to buy and sell properties, some cards award huge payoffs for specific sets. After each player has passed their turn, the property values are revealed, and the player with the most money wins (usually in the $400-$600M range).