Zandi: "Looking For a Bottom"
Submitted by
CalculatedRisk on Thu, 02/05/2009 - 9:30am (263 comments)
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Banana sluggish?
Seeing how this guy works at Moody's, I can't imagine how his opinion is even remotely relevant.
Banana sluggish?
Tom Stone | 02.05.09 - 12:55 pm | #
That aimed at B Dobbs? UCSC?
Zandi is a terrible forecaster.
Even his rear view mirror analysis is abysmal.
Of course this makes him an ideal wall street eCONomist.
Is there an actual methodology to his predictions, or is it based on history?
Can you have a double dip recession without the initial headfake recovery part? Because that's what I think is gonna happen.
Predicting a bottom in house prices today is analogous to reading entrails.
Angry Saver has it exactly right. If you were to go back and look at dismal.com's housing commentary over the past couple years, the only phrase that would come to mind is "hoocoodanode".
What if the lay offs just continue for another two years.
Blah Blah Blah.....Give me the Super Lotto numbers.
Depends how you define inventory. Just like pro formas "depend" on your assumptions. Starts are difficult to call since the homebuilder BKs still haven't happened yet. Because of this fact, I think starts will probably bottom in 2010, but it is hard to tell.
"I agree with Zandi that housing starts will bottom in 2009."
Not bad. The question then will be how long will they sit on that bottom?
Nostrovia,
lucifer writes:
Predicting a bottom in house prices today is analogous to reading entrails.
lucifer | 02.05.09 - 12:58 pm | #
don't insult entrail readers!
Suspend mark-2-market just before this weekend. What a coincidence! Banks get their marks clipped massively but wait, there's no mark to start with because the SEC took it away. That won't leave a mark.
The level of corruption and conspiracy is completely out of control.
"Moody's Economy.com chief economist Mark Zandi projected: "
Stopped reading it right there.
Ciao
MS
I don't think inventories can rise too much. Far fewer new homes are being built and increases in inventories will push prices down until an equilibrium is reached. They may still go down, but we're likely at or near the peak. After all, people have to live somewhere.
Some "L"'s look like this
|____________________________________
Nostrovia,
I think inventories have topped out because they're reached saturation point, not because there aren't any more houses out there. Realtors refuse to take any more listings, banks refuse to begin or complete foreclosure proceedings. Maybe the drop in realtor numbers is even putting a cap on inventory. Don't think inventory will drop for a looong time, and it can't really go any higher....
Econbrowser: Distressing Picture of the Day
This is of course the famous Credit Suisse chart of mortgage resets and recasts.
We start heading up in 2012 ... maybe ...
And some Ls look like this.
Henry Paulson - News, photos, topics, and quotes
I wonder if Obama will replace Geithner with John Cummutta,he has lots of experience transforming debt into wealth.And I finaly visited Jas' Homepage,I thought FSU was more football oriented,and "He's so vain" just doesn't cut it as a fight song.Sorry if I am rambling,I toured a neighbours drying barn which sure smelled good,but I feel real hungry for some reason,happy too.
Maybe Zand isn't as big as a tool as I thought he was:
According to estimates several years ago by Mark Zandi, chief economist of Moody's Economy.com, the measures that produced the biggest "bang for the buck" were increases in unemployment benefits, which produced about $1.73 in additional demand for every dollar spent. Tax rebates to all citizens generated about $1.19 for every dollar spent, while reductions in tax rates produced only 59 cents per dollar
"After all, people have to live somewhere."
With parents, kids, in banos and refrigerator boxes, caves and freeway underpasses....
Nostrovia,
blueridge writes:
I think inventories have topped out because they're reached saturation point, not because there aren't any more houses out there.
at a certain point you don't get more inventory, you just get ghost towns.
A few points on why prices will not stop tanking for a while:
1 - Current owners who purchased in the last 4 years are underwater and do not have the funds to sell. This slows turnover and number of move ups and move downs.
2 - Those who had equity in their homes pulled it all out with HELOCs and have that monster to pay off before considering selling in a depressed market.
3 - Renters are getting better deals now and can either pressure their landlords or just move to a better and cheaper place. (this is me)
4 - A decent number of speculators are either wiped out or won't be speculating for many years.
5 - Banks have significantly tightened their loaning criteria and downpayment requirements. They are also having some trouble offloading to the secondary markets (I am ignoring FHA for now)
6 - Can't buy a house when you're unemployeed. 1,000,000 more of those last month...
Gee... I know I missed some points...
So how will thse points suddenly disappear in 2009?
Any one of these factors is enough to continue to drag prices for a long time.
"Banana sluggish?
Tom Stone | 02.05.09 - 12:55 pm | # "
You a slug, dude?
Zandi is a putz.
"I agree with Zandi that housing starts will bottom in 2009."
Whatwasthat? Back away from the bong....
Unless home prices drop another 80% from here, there will be NO recovery in 2009. No job = no income.
Five solid years of insane easy lending and debt-fueled consumerism will not be unwound in two years.
--
A note to economists...
Change of hands doesn't change the true problem with the housing inventory -- Vacant Units. Until Vacant Units start to decline, for at least 3-4 quarters, we have a growing problem.
BTW, change of hand in bad debt doesn't change the real problem either!
Jas
However I think it is still too early to forecast the bottom in house prices, especially in the mid to high priced areas. ~CR
Zandi might be right and exactly because of what CR says above. More and more upper priced houses are going to default. It will raise the median house price.... The NAR will spill the hell out of it....
So how will thse points suddenly disappear in 2009?
well, they could get replaced with something far worse.
"
However I think it is still too early to forecast the bottom in house prices, especially in the mid to high priced areas."
CR lives in coastal California. He knows: the bottom has yet to heave into view. Housing prices are being kept at mid depth by thermals of hope.
Here's Mark Zandi's rosy forecast on the California housing market.
But Mark Zandi of Economy.com said other pressures will keep prices from falling.
Global investors cant get enough of U.S. real estate, he said. So although we are seeing record prices, the truth may be a bit more conservative. Demand will decrease as interest rates rise, and prices will level off. But with the constant influx of new residents to California and continued demand for U.S. real estate investments, there will be an ever-expanding base of demand to support current pricing levels.
Milken Institute Events - 2005 State of the State Conference - California's Housing Market: How Much ‘Froth’ Is Out There?
Facts are stubborn things.
good point, nades. some action along those lines seems very possible
"dashingdwl"
You don't understand the meaning of starts, do you?
Does anybody know what the current US debt to GDP ratio is? I thought it was close to 400%. I saw Zandi on TV about a week ago saying that the stimulus package was justified and manageable because the ratio is only 40%. Seems like he is telling a whopper of a lie.
A FIGHTING slug,Bob,and once Head Garbler at Fmali...I remember parts of the last night at the old Catalyst to put things in perspective.
We're all entrail readers now. Just that now we're cutting up banks and examining their toxic financial crap.
I'm going to make a prediction...
Policymakers are now realizing that BAC and C are toast and must be nationalized/wound down. But when their assets hit market, price discovery is going to be a bitch for all the other banks that have similar "assets" on their books.
This change is intended to allow the government to put the dead banks out of their misery without forcing the "healthy" (hahaha) banks immediately to recognize their own insolvency.
Eventually they will get their anyway, but we can't afford a collapse of our entire financial system overnight.
Mark to market rules are going to be suspended for distressed asset sales as a result of failed institutions. If anything, this should be an indication that they are making the right decisions in regard to BAC/C.
I fervently hope...
Bottom coming to a 2012-2015 near you.
A very flat bottom for some time.
--bh
For your reading pleasure:
Positive Surprises Not Helping 2009 Forecasts
quantitativelyqueeezy writes:
We're all entrail readers now. Just that now we're cutting up banks and examining their toxic financial crap.
lunch is coming back up. got to ru
for the sake of argument, what happens to these bottom housing callers with 20% unemployment by end of 2010?
Don't think inventory will drop for a looong time, and it can't really go any higher....
blueridge
.
Except in places that are behind the curve, like the Northwest, where I live. I expect to see a lot more foreclosures here, due to job loss-- our unemployment is already at double digits in many places and climbing. But housing prices are still far too high relative to incomes. Too high to work as rentals, even.
As far as I can tell, the only thing that's holding prices up here is the perception that the Northwest is 'nice.' People still want to move here. If a big wave of foreclosures hits here, that perception should go away. Because there's no real difference between this area and the Inland Empire, or Vegas.
An economist is someone who can tell you tomorrow why the things he forecast yesterday did not happen today.
I am still waiting to hear Zandi explain his previous bad forecasts (thus qualifying him as an economist).
--
Please don't look to economists, including CR, for accurate forecasts on housing, CRE and the economy.
It is the debt, stupid!
And economists don't yet get it. We are long ways from the mean-reversion of debt. No?
Jas
What is considered inventory? Does the graph include the "shadow" inventory that is actually larger than the current inventory for sale? Some have said the shadow inventory is over 60% of that which is currently for sale.
That might make a difference in calling a bottom.
Jas,
We have 19 million empty homes per the census bureau.
Basing forward demand on the recent bubble demand is utterly ridiculous. yet this is what eCONomists do time and time again.
During the last stock boom, I calculated that based upon wall street earnings forecasts, earnings would surpass sales within two decades. I kid you not.
C, BAC, and AIG will not be put out of their miseries until the government guarantees are exhausted.
And economists don't yet get it. We are long ways from the mean-reversion of debt. No?
Jas Jain | Homepage | 02.05.09 - 1:10 pm | #
I actually believe that it might the only thing in the world that always goes up....
(Until that gigantic implosion occurs that no one wants to talk about....)
Zandi: "Looking For a Bottom"
Written next to glory holes from coast to coast.
As far as North Coastal Cali,we are a LOOOOONG way from sustainable prices for most homes ( Some exquisite high end parcels excepted).And as far as more building more homes here,Water.If you want to see the Bleak future of most of California take a look at the reports and predictions from the State Hydrologist's office.You can kiss Agriculture and several large cities goodbye unless we find new sources soon.
Very good analysis. Better than most professionals.
United States Financial Reconstruction/Stimulus Plan 2.5.09
To whom it may concern......
1) Nationalize (Receivership) insolvent banks whose failure would present "systemic risk".
a) Segregate healthy operations from unhealthy operations.
b) Holders of bank bonds take haircuts with net average of 30% off par.
c) Government retains and, over time, works out unhealthy paper and operations.
d) Reprivatize healthy operations as banks as soon as possible.
e) Shareholders retain a residual right (warrant) to purchase 10% of shares of reprivatized banks at 25% discount when banks are reprivatized.
2) U.S. Treasury offers to refinance all existing, performing mortgages at 4%.
Freddie Mac and Fannie Mae will act as the U.S. Treasury's agent for this task. If the mortgage exists, even if it is under water or the holder does not seem credit worthy, and if it is performing without delinquency, it can be refinanced with a fixed 4% amortized mortgage, no questions asked.
a) Rewards those who have been doing the right thing by paying their mortgages.
b) Stimulus effect by reducing payments, leaving consumers with more money to spend.
c) Pays off the majority of the CMO's in existence and reduces the uncertainty of valuations in that market, thereby making good an otherwise "dodgy" asset class. Makes liquid a major "bad" asset class. Increased liquidity available to delever, to invest, or to lend.
d) Freddie Mac and Fannie Mae, acting for the Treasury, offer to refinance at 4% any new traditional, vanilla (No ARMS, Option ARMS, or IO) mortgages made after the effective date, but only after the mortgages have performed for thirty-six months without delinquency.
e) Mortgage refinancing plan to be funded by the sale of U.S. Treasury debt, not agency debt.
f) Plan is temporary and will be wound down when economy stabilizes.
3) Cut payroll taxes by 50%.
a) Immediate stimulus effect for consumers and businesses.
b) Creates "hot" money, highly likely to be spent now, in contrast to income tax benefits for larger companies and individuals that will be recognized later, and some of which will be saved or used to reduce debt.
c) Applies to FICA and Medicare payroll taxes.
d) Plan is temporary and will be wound down when economy stabilizes.
4) Other stimulus spending and tax cuts as Congress and the administration agree.
Please consult with Tim Geithner and Lawrence Lindsey for details.
Because there's no real difference between this area and the Inland Empire, or Vegas.
scone | 02.05.09 - 1:10 pm | #
I think you're over-stating this, no way things are that bad up there.
In defense of Mark Zandi.
Excerpt from "Triple-A Failure", NYT April 27, 2008, by Roger Lowenstein:
"Even Mark Zandi, the very visible economist at Moody's forecasting division...was worried about the chilling crosswinds blowing in the credit markets. In a report published in May 2006, he noted that consumer borrowing had soared, household debt was at a record and a fifth of such debt was classified as subprime..."
"...Zandi fretted about the razor-thin level of homeowner's equity, the avalanche of teaser mortgages and the $750 billion of mortgages he judged to be at risk..."
Yes, it's fashionable to make the automatic assumption that all analysts are short-sighted, complicit in scams of massive proportions, etc. But we can be better than that here on this blog, right?
Sebastia
Elvis,
I'm saying starts will continue to crater (no recovery) because there will not be enough buyers who have an income stream, or the income stream they do have will be significantly smaller. Smaller incomes will demand lower prices. Tighter lending will also demand lower prices. Lets just forget the exploding inventory of homes and apartments, which also wont clear until prices drop significantly to reflect current incomes and lending standards.
So yes, I understand starts.
I just want to say again....Hogwash!
@Doom & Gloomer - debt to GDP ratio... are you asking about public (government) debt to GDP or total debt (consumer, corporate, government)?
The former is probably in the area of 75%. The latter, I have no idea. I bet you could piece it together from St. Louis Fed data streams though.
Jas, if you really want to know how we bear and breed dopes here, check this out.
Tavistock Institute - Illuminati Fascists Use Nazi "Mind Control" Techniques To Destroy America
I find it interesting any bottom call or other potential sign of good news generates a lot of anger in the CR community - as is evidenced by how many responses an entry like this can generate.
I will gauge this entry will generate alot of anger, meaning we will get 310 responses.
Anyone want to take the over under?
for the sake of argument, what happens to these bottom housing callers with 20% unemployment by end of 2010?
ryph
~~~~~
Or interest rates sky rocket as foreigners exit and issuance explodes.
According to estimates several years ago by Mark Zandi, chief economist of Moody's Economy.com, the measures that produced the biggest "bang for the buck" were increases in unemployment benefits, which produced about $1.73 in additional demand for every dollar spent.
Is this a good thing though? It seems that one of the most serious structural problem in the US economy may be excessive demand from consumers in proportion to production.
I think one of the biggest flaws of modern economic theories is that "demand" is synonymous with "good". We had lots of demand in recent years. That hasn't turned out so well because it wasn't configured in a structurally sound and sustainable way.
From a short-term political perspective, of course, any kind of demand is good.
Hence the ongoing destructuring of economies around the world into a boneless amorphous slime state.
How about chart for business debt to GDP?
No one of consequence | 02.05.09 - 1:15 pm |
Looks interesting, but no mention of public stocks, pikes or rolling heads.
And didn't everyone and his housekeeper buy a house by the end of 2007?
Who is itching to buy a house this year?
for the sake of argument, what happens to these bottom housing callers with 20% unemployment by end of 2010?
ryph
Or large increases in taxes.
"So yes, I understand starts.
dashingdwl"
I'm still not so sure.
Seb,
"Yes, it's fashionable to make the automatic assumption that all analysts are short-sighted, complicit in scams of massive proportions, etc. But we can be better than that here on this blog, right?"
When I'm paid what he's paid to call it wrong in the national spotlight I'll get back to you.
Nostrovia,
Just shut up Sebastian.....they all put out pieces that play both sides.
Zandi is nothing more than Cramer...
Ciao
MS
"I think one of the biggest flaws of modern economic theories is that "demand" is synonymous with "good"."
Or "bulldozing" is "bad."
"Jas Jain writes:
Please don't look to economists, including CR, for accurate forecasts on housing, CRE and the economy.
It is the debt, stupid!
And economists don't yet get it. We are long ways from the mean-reversion of debt. No?
Jas
Jas Jain | Homepage | 02.05.09 - 1:10 pm |"
I don't quite agree with Jas on this one.
I say, It's the Collateral Damage Stupid. The collateral is damaged.
for the sake of argument, what happens to these bottom housing callers with 20% unemployment by end of 2010?
ryph | 02.05.09 - 1:10 pm | #
Judging by the recent past, they roll the forecast forward a couple quarters and pick up another paycheck.
"And as far as more building more homes here,Water.If you want to see the Bleak future of most of California take a look at the reports and predictions from the State Hydrologist's office.You can kiss Agriculture and several large cities goodbye unless we find new sources soon."
Down here we are effed because the lifestyle liberals stonewalled developing more water resources in the '70s, '80s, and '90s as a way of controlling growth.
They've built a pilot desalination plant -- because it's a water resource that can be used only in emergencies, and thus not encourage development. But a) it's damned expensive, b) no full-sized plant has been built, and c) nobody ever figured out what to do with concentrated salt water. And we're not even hooked up to the state system. We're entirely on our own.
The boys down at the sewage treatment plant are happy to talk about grey water usage for landscaping or pumping highly-treated waste water back into acquifers several miles upslope of the wells (they do that in LA). "But nobody on the council wants to hear it," one of them told me.
We're real good at conservation, but you can't conserve your way out of everything.
I think you're over-stating this, no way things are that bad up there.
sdtfs
.
That's the thing, there's some sort of 'things are different here' mentality about the Northwest. I guess I shouldn't complain, it will help when I sell the house. But check out this thread. The 'doom' is coming from people who have lived in the Northwest for some time. The 'hope' is from people who don't live here. And the hopers don't have anything to back up their hope, just emotions and perceptions:
If You Want to Move Without a Job, Please Read (Portland: transplants, 2009) - Oregon (OR) - City-Data Forum
I think the Northwest has taken over the 'land of milk and honey' mythological role that was once held by California. It's just a mirage, but people don't want to face reality.
Anyone want to take the over under?
Bandit | 02.05.09 - 1:17 pm | #
Vegas Book has set the line at 187
>Interesting Times
Very good analysis. Better than most professionals.
rich | 02.05.09 - 1:14 pm | #
Exactly, Rich.
It is better than "professional" analysis, because it is founded on intellectual honesty, common sense and REALITY.
The so-called "professionals" are paid to provide analysis that allows for ever more selling of financial products.
That system of selling is vital to the fed's dissemination of inflation into the eCONomy.
At this point, we have more inflation in the eCONomy than real GDP! Ever wonder why Buffett calls it "capital allocation" rather than "investing"????
CR, please post a story about this:
Bailout watchdog: Treasury overpaid - Feb. 5, 2009
"The Treasury Department overpaid for the assets it purchased as part of the $700 billion financial sector bailout, according to testimony of a bailout oversight official before Congress on Thursday."
No shit?
I must have eaten my devils advocate cereal this morning but I'm with Seb on Zandi too..... Zandi is a smart chap, he knows whats going on. He has for a while. He also knows who pays him... Still hes know about the problems out there.....
No One of Consequence --
That an official document? I suspect it is...
1) Sounds good
2) Is Geithner insane???? Goodbye dollar...
3) Can we afford this?
4) Figures
ac,
"I think one of the biggest flaws of modern economic theories is that "demand" is synonymous with "good"."
And it's oft ignored (and flawed) logical corollary:
Demand is finite, supply infinite.
Nostrovia,
Ive been reading steve keen, an australian economist, lately in regard to his notion, (like that of irving fishers in the 30s)
that credit (debt) is money... and more than that which would be indicted solely by gov money creation and fractional reserve banking combined
why?
because in the course of commerce, with the creation of commercial lines of credit and all other instruments of promises to pay, those who create credit dwarf all other sources of "money"
the bottom line is that all this talk about 800 billion or 750 billion or tarp or 4% home mortgage is nothing more than nibbling around the edges
if we as a nation want to avoid the worst depression in our history...
assuming we might be able...and i think (guess) thats a long shot
then we must strike at the hart of the problem...credit
now i respect those who argue that excessive debt (credit) got us into this mess and i agree
but heres a simple analogy to drugs
if you take a full blown alcoholic and deprive him of all booze (or similar cns depressant) he (she) will go into seizure and possibly cardiac arrest
just like the alcoholic, we must re float the economy and then go thru step by step withdrawal
of course if thats not preferential, or possible (or possible and it might not be possible)
then we can have financial armegeddon which i think likely if the dems and repubs dont have a come to Jesus moment real soon
heres a very techy piece (for me its techy but wouldnt be for FFDIC dryfly or MP)
Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit” | Steve Keen's Debtwatch
hart_heart
sheesh cant spell
Speed writes:
And didn't everyone and his housekeeper buy a house by the end of 2007?
Who is itching to buy a house this year?
Speed | 02.05.09 - 1:19 pm | #
We are not itching to buy a home this year but in my area I have found a few homes that payments on a 30 year mortgage @ 5% would be below our below market rent payments.
Maybe it would be interesting, for a change of pace, for everyone here to pause and take a guess at:
1) what the state of the union would look like, and
2) what/how they would each be doing now,
if the credit/housing bubble had never happened.
S&P 500 to go over 1000 in two months? Who the heck are these people??? Based on what, whisfull thinking and happy dream?
Economy Bust: S&P to 1000
Has Deleveraging Even Begun? (Not For the Fainthearted) « naked capitalism
US aggregate debt ... 50 trillion or more
3.5 times GDP or more ...
Inventories have peaked.
a peakist! loser
"However I think it is still too early to forecast the bottom in house prices, especially in the mid to high priced areas."
We held on to two of our rental houses...both are in California, one in the high desert, one near Pasadena. Both are now close to parity (within 10-15%) with rents vs. P+I to own (assuming one could qualify for a loan).
The high desert house lost most of it's "value" last year...the Pasadena house lost most of it's "value" rather recently and abruptly.
Bigger and bigger parts of Southern California are finally falling in line rents vs. owning. Next up to bat...the "never-fall" hubris social cache areas. Trust me.
Bob Dobbs writes:
"And as far as more building more homes here,Water.If you want to see the Bleak future of most of California take a look at the reports and predictions from the State Hydrologist's office.You can kiss Agriculture and several large cities goodbye unless we find new sources soon."
Down here we are effed because the lifestyle liberals stonewalled developing more water resources in the '70s, '80s, and '90s as a way of controlling growth.
and as we all know growth can go on forever and trees grow to the moo
i would guess the smart money is getting ready to exit stage right. why be long going into tomorrow's UE numbers?
Maybe it would be interesting, for a change of pace, for everyone here to pause and take a guess at:
Anonymous | 02.05.09 - 1:25 pm | #
3) How the Civil War would have turned out if the Confederacy had Sherman tanks.
"3) How the Civil War would have turned out if the Confederacy had Sherman tanks.
sdtfs"
4) How long would the Roadrunner cartoon have lasted, if the Coyote died when he fell off the cliff?
Here's another thread on the bad jobs situation in Portland, and they are certainly better off than the rural areas:
Is finding a job really that hard? (Portland, Beaverton: unemployment, construction) - Oregon (OR) - Page 4 - City-Data Forum
.
Maybe I shouldn't be posting this. I'm working against my own financial self-interest.
We are not itching to buy a home this year but in my area I have found a few homes that payments on a 30 year mortgage @ 5% would be below our below market rent payments.
Ticker Tape of Doom
Property Taxes which are going to go nowhere but way up over the next decade and upkeep costs may make it less attractive
4) How long would the Roadrunner cartoon have lasted, if the Coyote died when he fell off the cliff?
Elvis | 02.05.09 - 1:33 pm | #
Damn, anon's right,...this is fun!
Rents are on the decline - if you're looking for rentals, you might want to figure in another 10% decline from the lowest you think today's market holds.
And if we're in for a depression - you don't want to have a mortgage on property you don't live in.
"Down here we are effed because the lifestyle liberals stonewalled developing more water resources in the '70s, '80s, and '90s as a way of controlling growth.
and as we all know growth can go on forever and trees grow to the moon
mock turtle | 02.05.09 - 1:28 pm | # "
Disengage snark, Mock. I'm not against controlling growth. I am against shortsighted, backdoor ways of doing it that endanger the entire community. That assume that hard times will never come.
So here we are facing a major drought with in a completely self-contained watershed with no viable Plan B.
2) what/how they would each be doing now,
if the credit/housing bubble had never happened.
Anonymous | 02.05.09 - 1:25 pm | #
Having zero debt, I never participated in the bubble. The question is: How much of my income the last 10 years have been a result of other people's debt? I'd say significant amount. Did I put a gun to their heads and told them to go into debt to pay me? No.
for conjure
Productivity rises in Q4: hours and output down
Productivity in the non-farm business sector increased at a 3.2% annualized rate as output fell 5.5% and hours worked dropped 8.4%. The decline in output was the largest since 1982 while the decline in hours was the weakest since 1975
http://www.marketwatch.com/news/story/Productivity-up-Q4-working-hours/story.aspx?guid={BABCA31D-B433-416F-84CC-4CACE14A1CD2}
Mr. Zandi, what you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.
Bandit writes:
I find it interesting any bottom call or other potential sign of good news generates a lot of anger in the CR community - as is evidenced by how many responses an entry like this can generate.
I will gauge this entry will generate alot of anger, meaning we will get 310 responses.
Anyone want to take the over under?"
Too slow a day - Ill take the under.
US aggregate debt ... 50 trillion or more
3.5 times GDP or more ...
Shhhhhhh! We don't talk about the real issue anymore. It's all bread and circuses now.
Dirk,
Thanks for the link - I had that exact question in mind earlier this morning - how much S&P earnings guidance had deteriorated in the last week...
Your pony is no good here
LOL!
Jas Jain writes:
Change of hands doesn't change the true problem with the housing inventory -- Vacant Units. Until Vacant Units start to decline, for at least 3-4 quarters, we have a growing problem.
Very interesting insight. Can you expand on it? I understand that as long as there are vacant units, there will be downward pressure on sales prices, but are there other dynamics in play? For example, perhaps the unoccupied stock can remain effectively out of circulation in a zombie state where its owners (banks or individuals) don't want to book the loss?
Tom Stone writes:
As far as North Coastal Cali,we are a LOOOOONG way from sustainable prices for most homes ( Some exquisite high end parcels excepted)
Please could you specify which areas you consider exempt? Thank you for sharing your insights from years of experience in the area.
--
BAC Bank of American Contagion (garbage heap of toxic financial products)
Or, Bank of American Cockroaches
Or, Bank of American Crooks
Take you pick.
In not too distant a future, the term American, outside of America, would be used for banking crooks and dopes among the general population. For example, a German in Germany who behaves like a dope would be referred to as American. The same would go for crooked bankers and debt pushing goons like the old Mafia thugs.
How did America get to this point? Bankrupters and Fraudsters of New York City (BFNYC), true scum of the earth, got control of the government and the economy. Precisely what democracy was meant to deliver to the moneybags of London, first, and NYC, now! Obama, Summers, Geithner, etc., are agents of BFNYC; otherwise, they wouldnt have the job they do today.
Jas
but heres a simple analogy to drugs
if you take a full blown alcoholic and deprive him of all booze (or similar cns depressant) he (she) will go into seizure and possibly cardiac arrest
just like the alcoholic, we must re float the economy and then go thru step by step withdrawal
of course if thats not preferential, or possible (or possible and it might not be possible)
I actually agree with this. The problem I see with it though is that I don't think anyone really controls credit in real terms. The government and Fed may control the paper that represents credit in the markets, but if they try to "create" credit by creating that paper, there's no guarantee you'll create real credit.
My view comes from my observations about what credit is: The voluntary lending of real resources. That seems to be a phenomenon that emerges in an economy where there's some degree of confidence and trust. I.E. I'll lend you my chainsaw for a six pack of beer because people generally seem trustworthy and responsible. This leads to a more efficient use of resources (you don't have to buy a whole new chainsaw just to cut down one tree every 5 years), and the process itself is highly efficient because it's done cooperatively - nobody is resisting the exchange and hiding the chainsaw or emptying out the beer cans and filling them with water (or worse).
That's the problem with this government and Fed created "credit" - if I believe that you're not responsible enough to return my chainsaw, I'm not going to want to lend it to you and I'm going to try hide it if the Fed is coming to force me to give it to you. I'm going to perceive them as the enemy and do things to avoid or undermine their influence. Likewise I'm not going to take seriously pieces of paper that represent credit that I don't believe really exists or is viable. In fact I may be crafty and instead use this false appearance of credit to scam other people with this paper and get their chainsaws.
All of this takes effort, and none of it is productive. It's almost kind of a civil war going on in the economy.
5) part of the 25% unemployment rate
6) standing in, or working, the soup line
How can anyone call THE bottom when the effects of the Alt-A's and Option ARM's haven't even hit yet? We're not there yet, folks. Sorry, try 2010 at the earliest, maybe 2011 or 12........13?
This is how the libs control urban growth.
Agenda 21 - Wikipedia, the free encyclopedia
Inventories are understated. What about all of the shadow inventory that isn't reported?
Only the shadow knows.....
Sorry, meant to say rural.
Mid to high priced areas won't drop as much until housing recovers for lots of good reasons.
1) Haven't seen them drop much in the past six months, and we know past performance is a darn good indicator of future performance.
2) An increasing price differential between mid/high priced areas and all the rest is sustainable indefinitely, especially during an economic downturn, because nature enjoys a vacuum.
3) Rich people are vastly more intelligent than every one else. Why would these wise beings buy and live in expensive homes if the prices had any chance of dropping significantly? They obviously know that prices will gently drop for a short time, plateau at a mostly pleasant price, and then begin shooting upwards shortly.
What about all of the shadow inventory that isn't reported?
Good point. Wish I'd thought of that.
No the libs contain rural growth via meth
Oh you're going to love this...
BoA: "One Bank"
YouTube - [One Bank] Bank Of America - One (U2 Cover) **HIGHER RES**
7) denying a credit bubble would have masked the problems
Massive runup in MS and GS shares can only mean that a secondary offering is forthcoming. Wait for it...
Zandi's head has been spotting bottom for a while now. Hard not to with your head so far up your ass.
My view comes from my observations about what credit is: The voluntary lending of real resources.
We stopped basing credit on real resources a LONG time ago. How much of the credit over the past 10 years is self liquidating?
We have ponzi eCONomy. No doubt about it. The recurring bubbles are the result of the need to create credit to pay the interest on the previous credit.
The credit monster must be "FED" interest or the system implodes.
"After all, people have to live somewhere."
With parents, kids, in banos and refrigerator boxes, caves and freeway underpasses....
Nostrovia,
Comrade Misean is Dope
And there are still tons of apartments being completed. How long will it take to go through the condo backlog?
Not to mention, what fraction of the population is moving back in with Mom and Dad. We've never had this level of bedrooms per population before! Most baby boomers that I know have 2+ properties. Eventually, they will economize back down to 1.
I think in 2009 we'll hit the new home construction bottom. But not yet...
I'm sure I'm not the only one waiting for the shadow inventory to hit the market. Too many people are itching to jump in to buy. We have to go through capitualation to recover and only Las Vegas and Orlando seem to have gotten there so far.
Got Popcorn?
Neil
scone, I currently live the Northwest and am ready to go back to Vegas, I've had enough of these hillbillies.
McMansions can hold 3 generations, easy.
Whats happening to my rally! Wheres my monkey! Pet him!
McMansions can hold 3 generations, easy.
Speed | 02.05.09 - 1:46 pm | #
My 2-2 apartment can do that. McMansions can hold the Ming Dynasty.
Some actually do!
Ugh, I've been arguing most of the morning on another blog with the Pollyanna set that thinks we've hit the bottom in housing. I've just been told I'm a half empty type of person and that this whole crisis has been blown out of proportion, according to them, everything is fine and the libs are trying to scare people by telling them we are in a dire crisis...And we wonder how we got here...BAh...
--
Jas Jain writes: Change of hands doesn't change the true problem with the housing inventory -- Vacant Units. Until Vacant Units start to decline, for at least 3-4 quarters, we have a growing problem.
Very interesting insight. Can you expand on it? I understand that as long as there are vacant units, there will be downward pressure on sales prices, but are there other dynamics in play? For example, perhaps the unoccupied stock can remain effectively out of circulation in a zombie state where its owners (banks or individuals) don't want to book the loss?
Hymns for the Lord,
The cost-of-carry for an empty unit is the crucial variable. WHEN PRICES WERE GOING UP AT DOUBLE-DIGIT RATE THE COST-OF-CARRY WAS NOT AN ISSUE. Under normal circumstances the effective cost-of-carry is 8-10%, but even with low interest govt loans it is not going to be below 5%. The only rational choices become rent or get rid of by selling or defaulting.
The next important factor would be falling rents as the housing demand goes negative and as more and more empty units are rented at lower prices.
Jas
Hymns,they are not exempt,they recently came on the market for prices that make sense for properties of that quality.I am specifically thinking of one 300 acre plus property one hour from the sf financial district (given light traffic)which has good water,good soils and some solid improvements.These are not places that can be duplicated and deservedly sell for a premium.
scone, I currently live the Northwest and am ready to go back to Vegas, I've had enough of these hillbillies.
Anonymous
.
That's pretty much the lifestyle. I guess I should count my blessings. The one foreclosure in my zip code sold fast, asking $319. Some people will pay a premium to live here.
Massive runup in MS and GS shares can only mean that a secondary offering is forthcoming. Wait for it...
Gavshire Hathaway | 02.05.09 - 1:43 pm | #
Yes, GS said they want to pay back their TARP funds but had some pesky capital ratio issue IIRC...
LOL -" Monster moove - S&P could hit 1000 by Spring -
'Monster Move' Coming for Stocks S: Tech Ticker, Yahoo! Finance
Massive runup in MS and GS shares can only mean that a secondary offering is forthcoming. Wait for it...
Gavshire Hathaway | 02.05.09 - 1:43 pm | #
So what did the massive rundown mean?
Got Popcorn?
Neil
neil | Homepage | 02.05.09 - 1:44 pm | #
been a long time, Neil.
the answer to your question is now no, don't have popcorn. Can't afford it anymore.
Our Economy Problem
What no one is talking about is the fact that our economic model is broken ... kaput.
70% consumption based on cheap easy credit, exponential debt expansion and trade deficits is gone forever ...
You can't stimulate what is defunct ... They will try to create more debt only to have it sucked into the vortex of Zombie Banks and dying conspicuous consumption.
"Flat-bottomed charts you make the blogging world go round."
"Flat-bottomed charts you make the blogging world go round."
Send lawyers, guns, and money
.
Thread music!
YouTube - Queen Fat Bottom Girls
The Madoff story gets stranger by the day. His defense attorney Ira Sorkin supposedly was an investor in Madoff's Ponzi scheme. Word on the street is that Madoff didn't invest in anything, so where's the money? And his investors were a very sophisticated group that surmised that his unusually high returns were due to his insider trading, so why was Markopolos on the hill yesterday screaming foul after all these years of the SEC looking the other way as investors in stocks and real estate got duped? If Madoff's investors are bailed out by taxpayers, Congress will have to bail out everyone who lost money in the rigged real estate and stock markets over the last 20 years.
Eric writes:
Massive runup in MS and GS shares can only mean that a secondary offering is forthcoming. Wait for it...
Gavshire Hathaway | 02.05.09 - 1:43 pm | #
So what did the massive rundown mean?
Eric | 02.05.09 - 1:50 pm | #
That they're insolvent.
Splain to me how we're close to "peak inventory" when:
--"shadow" & bank-held "ghost" inventory outnumbers listed inventory at least 2:1?
--unemployment & layoffs are still increasing, not fading?
--large majority of option-ARMs & neg-ams (which formed the bulk of bubble-coast sales from 2001-2007) have yet to reset or recast?
Unless Uncle Sugar offers me $150k+ cash to buy right now, I'm still not budging.
Interesting top of the list for selling on strength: SPY
Money Flows: Selling on Strength - Markets Data Center - WSJ.com
Bob Dobbs wrote
Disengage snark, Mock. I'm not against controlling growth
Bob Dobbs, i got your point
i apologize if you were offended by my glib remark
i just recoil at the notion that some (not saying you) seem to almost worship growth
"That they're insolvent.
Gavshire Hathaway | 02.05.09 - 1:55 pm | # "
If that was truly allowed to happen (and I agree they have been for quite some time) we'd all be in a much better position at this point IMO. IT would still be painful and last for about 1.5 year's but we would be able to see the light.....at this point all there is to see is the darkness:
YouTube - Peter Gabriel-Darkness
Ciao
MS
ac writes:
All of this takes effort, and none of it is productive. It's almost kind of a civil war going on in the economy.
ac | 02.05.09 - 1:39 pm | #
Possibly the most prescient comment on this thread, or any thread today.
/two hands clapping
--bh
Blackhawk down!
Hey kids, 'Black Swan' Taleb is on Bloomberg. He likes Russia. And he seems to be low-carbing again.
Teddy wrote
The Madoff story gets stranger by the day. His defense attorney Ira Sorkin supposedly was an investor in Madoff's Ponzi scheme. Word on the street is that Madoff didn't invest in anything, so where's the money? And his investors were a very sophisticated group that surmised that his unusually high returns were due to his insider trading, so why was Markopolos on the hill yesterday screaming foul after all these years of the SEC looking the other way
there is evidence to suggest that he had fiends who conducted knock off schemes and the losses from this entire "industry " may be an order of magnitude larger (LARGER)!!!
we are so seriously effed
--
Madoff story tells a lot about a certain group of "smart people." These people don't understand the dictum: If it is too good to be true... Also, they can't identify obvious crooks.
The same goes for the Scam Lovers among the general public.
Jas
A.C. difficult to have sustainable demand without an economy that is value added in-nature as opposed to being a banana republic; got gold?
Moodys Will Review $302.6 Billion in Commercial Mortgage Debt
By Sarah Mulholland
Feb. 5 (Bloomberg) -- Moodys Investors Service is reviewing the ratings of $302.6 billion in commercial mortgage-backed securities.
The review encompasses 52 percent of outstanding U.S. commercial mortgage-backed debt ranked by Moodys, the New York- based ratings company said today in a statement.
link to story above
SPX could reach 1000 in spring. Why not? Might go through the lows first though.
If it does hit 1000 consider it a gift from the short gods.
Comrade Byzantine_Ruins writes:
Moodys Will Review $302.6 Billion in Commercial Mortgage Debt
Another ah-shit
.
U.S. Housing Slump Has Just Begun,
Feb. 5 (Bloomberg) -- Lets say you own a $1 million home in Santa Barbara, California. The house seemed like a steal when you bought it with that adjustable-rate mortgage in 2005. You still love the white beaches and those yachts bobbing up and down in the harbor. Then you awaken early one morning, troubled that your monthly payments will soon double. You go out to pick up your newspaper and see for-sale signs on five houses on the street. One identical to yours just sold for $500,000. Are you going to pay the bank $1 million plus interest for your place? John R. Talbott, a former investment banker for Goldman Sachs, poses that hypothetical question in his latest book of financial prophesy, Contagion.
His answer: I dont think so, he says. If Im right, then this housing decline has only just begun.
...
Talbotts latest predictions are sobering. The U.S. is only halfway through the total potential decline in housing prices, he says. Home values will continue to deteriorate for four to five years, he forecasts. Adjustable-rate mortgages issued in 2004 and 2005, for example, are only now resetting for the first time, he notes.
...
This crisis was no accident, he says. It began, in Talbots view, because the U.S. government was co-opted into deregulating the financial industry. Politicians were paid to deregulate industry, taking billions of dollars each year in campaign contributions.
His investment advice for this prolonged recession: Hang on to cash and invest in gold or Treasury Inflation-Protected Securities, or TIPS. If he had to invest in stocks, he would put his money in China.
.
500 million job losses tomorrow. Hat tip to Nancy Pelosi
Keep your gold. Currency is backed by a nations's ability to manufacture accurate, nuclear tipped cruise missiles. Not by some Lucky Charms pot of metal. Dump the AynRand/RonPaul websites and do some Michael Phelps worthy bongloads of Realpolitik.
"Madoff story tells a lot about a certain group of "smart people."..."
Jas, those smart people knew that Madoff was crooked. They just thought he was cheating other people, not THEM.
there is evidence to suggest that he had fiends who conducted knock off schemes...
If it's a typo, it shouldn't be. Madoff and Mephistopheles?
Madoff reminds me of Chilkoot Charlie's, a bar in Anchorage, Alaska...they had a slogan on the sign, "We cheat the other guy and pass the savings on to you!"
Mark and CR, you can look for a bottom in housing in four to five years.
Looking anytime before is nothing but wishful thinking.
There is as much speculative froth in the stock market today as there was at the peak in October of 2007. Maybe more. After all this economic misery and mistakes, market investors have learned nothing, toned down nothing. It's the stupidest market of all time.
The market is even more over-valued now, relative to earnings and the trend in earnings, than it was in October of 2007.
It tells you that the market is setting up for another big crash like October 2008. It's just a question of when.
Why is the market so frothy? It could be partly the PPT. There is huge govt. liquidity sloshing around and some of it is seeping into the market. You even see some life in yen carry, some days. Maybe some hedge funds are giving it one last fling.
It's hard to know where the money is coming from. But it is definitely speculative, leveraged money. Still.
Like an alcoholic, speculative, leveraged money can't easily quit. And it always finds a bottom.
P.S. If you are trapped in the inflation vs. hyperinflation debate, you're missing a major bottoming in commodities prices. Mixed food (DBA) is up 3%+ today. Mixed energy (DBE) is up 2%+, and silver is up 2%+.
As stocks tank, I think a lot of the speculative leverage will spill over into commodities and PMs.
ac at 139 wrote in part
I actually agree with this. The problem I see with it though is that I don't think anyone really controls credit in real terms. The government and Fed may control the paper that represents credit in the markets, but if they try to "create" credit by creating that paper, there's no guarantee you'll create real credit.
==
ya know ac you and i differ a lot
but we agree a lot too
i believe you are on target regarding the lack of credit control
and thats why, last night re reading fischer, who was so discredited 75 years ago, and some of it deservedly so...
but yet so right about some things
http://fraser.stlouisfed.org/docs/meltzer/fishdeb/33.pdf
--
Rosenberg: Single-family units under construction 20% above new home sales
David Rosenberg, without a doubt, is the best American-born economist. And I have read almost all his reports for the past 4-5 years. I don't always agree with his forecasts (he is under pressure at times!), but his data presentation and analysis is superb.
Jas
SIFMA Asks for Muni Help
SIFMA Asks for Muni Help
In identical letters sent to House Financial Services Committee chairman Barney Frank, D-Mass., and Senate Banking Committee chairman Christopher Dodd, D-Conn., SIFMA said the federal government should also consider: developing a commercial paper purchase facility to buy muni debt, similar to the Federal Reserve's Commercial Paper Funding Facility, which is currently closed to tax-exempt paper; authorizing $200 billion to start new state revolving fund programs for municipal financings; modifying restrictions on pension fund investments in in-state tax-exempt bond funds; and appointing a contact at Treasury to monitor the economic functioning of the muni market.
In addition, they ask the federal government to find a way, through a conduit, to finance the purchase of outstanding Federal Family Education Loan Program loans to thaw the frozen market for student loan bonds.
"Today, most ARS auctions continue to fail and many thousands of investors are holding securities which offer no liquidity and cannot be sold," the group said.
SIFMA called for Treasury to use funds under the Troubled Assets Relief Program to purchase ARS. It also said the government should: develop a federal liquidity facility to write standby letters of credit for ARPS; allow ARPS to be used as collateral for the Fed's discount window; and create develop a temporary federal guarantee program for ARPS.
In its letters, SIFMA warned that the lack of liquidity in the muni market, and in the ARS market in particular, has made it difficult for state and local issuers to meet their financing needs. It has threatened the viability of small regional broker-dealer firms and left individual investors holding onto illiquid securities, the securities group said.
"The municipal bond market is experiencing a significantly low level of liquidity," the group said. "State and local issuers are facing a critical need for reliable long-term credit enhancement, making it difficult to bring issues to the market."
Thanks, rich. I love it when a respected commenter has my point of view.
ac
im sorry
link is broken
google
the debt deflation theory of the great depression irving fisher
the pdf is the first hit returned
MEMORANDUM
FROM: Conjure Bag
TO: Hon. Barack Obama
Barack:
All of the 2006 and 2007 tranches of RMBS are about to be downgraded. That will be several hundred billion in losses.
Moody's is now reviewing commercial. We know where that's going.
Do yourself a favor. Seize the banks.
Do it now.
Regards,
Conjure
Jas, I'm glad you upped your medication this morning.
Much better tone, no invective.
Thank you.
Bush/Cheney passed a shitbag to Obama whose hope and change ( while admirable ) will not prevent the inevitable casual effect that the standard of living has or will go down for most Americans.
Keep your gold. Currency is backed by a nations's ability to manufacture accurate, nuclear tipped cruise missiles. Not by some Lucky Charms pot of metal. Dump the AynRand/RonPaul websites and do some Michael Phelps worthy bongloads of Realpolitik.
hehe I can not wait to see all you poor me's when the fiat dollar is at -40 or -35...your ignorance to your surroundings is going to run painful.
some dopes are seduced by presentation!
Conjure
mp
.
In the house?!
You speak in the east, mp, they answer in the west.
Gross just used the "D" word
Comrade Kristina said: "Ugh, I've been arguing most of the morning on another blog with the Pollyanna set that thinks we've hit the bottom in housing. I've just been told I'm a half empty type of person and that this whole crisis has been blown out of proportion, according to them, everything is fine and the libs are trying to scare people by telling them we are in a dire crisis...And we wonder how we got here...BAh..."
I'm sorry you had that unpleasant experience. How about a "Sebastian" joke to cheer you up?
Choose the answer or answers to the following problem that would best match Sebastian's.
Problem: You have an 8 ounce glass filled with water. You pour precisely 4 ounces out of the glass. What can be said about the condition of the glass?
a) The glass is half-empty.
b) The glass is half-full.
c) I don't accept your premise.
d) We won't know for sure until the next quarter.
e) Is the glass from California? Because the median size of a glass from California is twice that of a median size glass from everywhere else in the country.
That means there's actually 16 ounces of water in the glass when it's full, so pouring out precisely 4 ounces would leave 12 ounces, making the glass 75% full...even by California standards.
Anywhere else in the country, after pouring out precisely 4 ounces of water the glass would not only still be full, but there would be an extra half-glass left over.
This suggests a simple solution to the housing crisis: If every California homeowner sold their house at a 25% discount from its peak price, they could buy 1 1/2 houses elsewhere in the U.S., thereby absorbing all the excess inventory and driving prices back up.
Better?
Sebastia
All Hail Conjure and MP.
Always glad to see and learn from them, but it usually means something awful is about to happen.
Sebastian
You ever think about running for office?
Better?
Sebastian
Sebastian
Are you my broker or my realator? If I would of listened to either one, I'd be out ten's of thousands
Obama admin says u/e will be at 17 year high
The Democrats are having a hard time pushing though the Porky Stimulus with "a collection of everyone’s favorite programs"
Senators Push to Cut Stimulus; Reid Warns Against Killing Plan
Senators Push to Cut Stimulus; Reid Warns Against Killing Plan - Bloomberg.com
Senator Susan Collins, a Maine Republican leading a push to strip billions from the plan, said lawmakers are “very leery of having an enormous package” that is “just a collection of everyone’s favorite programs.”
OT -- over two days, I had to go to five WalMarts before I found 9 mm. ammunition on the shelf.
On the empty shelves on Monday, the price was $17.88/box.
This morning, when I found some on the shelf (just delivered this morning), it had moved up to $19.88/box.
Guns, ammunition, and gun-smithing (30 day wait for a gunsight repair): true growth areas in today's America.
Oh that should play well in Liverpool...
Brown Signals U.K. Wont Block Bonus Payments at RBS (Update2)
Brown Signals U.K. Won’t Block Bonus Payments at RBS (Update2) - Bloomberg.com
Inventories have peaked?! What about the shadow inventory, only getting bigger and bigger? What about the invisible inventory, swelling as well?
I've posted a blog post on why the $15,000 tax credit will actually lower home prices. Read below if interested.
Blogger: Blog not found
Sebastian: So an 8 oz glass is actually 16oz if its made in California?
Hmm, just saw this on craigslist:
craigslist | Page Not Found
A dealer is renting out "new" vehicles ...
Is this what they're doing to make use of their idle inventory? Also, wtf-prices?
omg... that cant be the real sebastian.
i laughed, w/him
"We are long ways from the mean-reversion of debt. No?"
Agreed.
Anonymous said: "Are you my broker or my realtor? If I would of listened to either one, I'd be out ten's of thousands"
If I'd listened to CR and sold my house 2 years ago I'd have to pay 10% more for the same house.
Sebastia
Sebastian, I've always been a sensible, pragmatic kinda gal. If I'm pouring water into the glass and I fill it half way, it's half full. If I'm pouring water out of the glass and pour half out, it's half empty...discuss...
Ugh, I've been arguing most of the morning on another blog with the Pollyanna set that thinks we've hit the bottom in housing. I've just been told I'm a half empty type of person and that this whole crisis has been blown out of proportion, according to them, everything is fine and the libs are trying to scare people by telling them we are in a dire crisis...And we wonder how we got here...BAh...
I'm having the opposite experience with my mother. She has all my late dad's assets: plenty of money, mostly in cash, TIPs, and short-term bonds. But she's absolutely paralyzed with fear. She won't drive to see my brother because she calculated it costs her about 200 bucks with gas and depreciation. She could spend that every day of the rest of her life and still leave us a decent sum but she's terrified she'll run out of money and starve. So she stays home. It's very disturbing.
mp, in your disussion re Krugman last night, why is there no mention of relative profit margin v. price deflation in Krugman's work?
If I'd listened to CR and sold my house 2 years ago I'd have to pay 10% more for the same house.
Sebastian
Sebastian
You better sell now
mp writes:
MEMORANDUM
FROM: Conjure Bag
TO: Hon. Barack Obama
Barack:
All of the 2006 and 2007 tranches of RMBS are about to be downgraded. That will be several hundred billion in losses.
MP here's a link... summit ideas
directly to White House, Joe's asking for your help
A Strong Middle Class | The White House
mp, so good to see your posts. I seriously thought they would have seized them by now...Perhaps if the "Socialism" stigma hadn't been thrown out there early and often, it would have been possible...
terrified she'll run out of money and starve. So she stays home. It's very disturbing.
Fair Economist
93 year old that froze to death had $600k
"Sebastian, I've always been a sensible, pragmatic kinda gal. If I'm pouring water into the glass and I fill it half way, it's half full. If I'm pouring water out of the glass and pour half out, it's half empty...discuss... ;)"
Conjure Bag says, "BWAHAHAHAHAHAHA!"
"Kristina, you have a great day."
Anonymous said: "You ever think about running for office?"
It would have to be local. I'm pretty sure I wouldn't be able to carry California.
S.
Inventory levels increased sharply in 2006 and 2007, but have been close to 2007 levels for most of 2008. In fact inventory for the last five months was below the levels of last year. This might indicate that inventory levels are close to the peak for this cycle.
My theory is we've attained terminal velocity for foreclosures. I do not believe the banks can process NOD/NOT/REOs any faster than they are now.
Inventory will be determined by sales numbers alone. If we sell more than we bring on, it'll drop. but we have to sustain the selling speed because the FC speed will sustain at this rate for years.
"The next important factor would be falling rents as the housing demand goes negative and as more and more empty units are rented at lower prices."
Largely agree with the thoughts on housing.
however, we're rapidly getting to the point where there are two classes of homeowners, those with majority equity even at 1995 prices, and everyone else. about half of 'everyone else' is underwater, soon they will be. when that comes we have a bottom. we'll be seeing 400K sfrs in newport beach, west la, connecticut, san francisco, condos in the village in manhattan for the low 300s, high SFR 200s in secondary markets like encinitas, seattle, wash dc. that will be capitulation.
Mp,
Fitch Ratings takes various ratings actions on the U.S. residential servicer ratings for Countrywide Home Loans, Inc. (CHL), as follows:
Expired
Vegas Book has set the line at 187
Vegas Book | 02.05.09 - 1:22 pm | #
Vegas book pays the over.
Vegas Book has set the line at 187
/////
isn't that about the median nba o/u this year?
Sebastian too bad Zillow doesn't pay cash for homes. LOL!!!
"It's hard to know where the money is coming from. But it is definitely speculative, leveraged money. Still."
INO Foreign Exchange - US Dollar/Japanese Yen (FOREX:USDJPY) Price Chart and Quote
Not hard at all really.
Sebastian too bad Zillow doesn't pay cash for homes. LOL!!!
Ministry of Truth
They don't? There goes my new Hummer
"too bad Zillow doesn't pay cash for homes."
no kidding. zillow is 80% over market in the OC hills.
Due to varying deal language, about 31% of Fitch rated Prime and Alt-A transactions have a greater risk of senior bond downgrades with the remaining 69% having limited risk.
The Bankruptcy Reform Act of 1994 eliminated the risk of bankruptcy cramdowns on first mortgages secured solely by the debtors principal residence and, since then, Fitch has considered the risk of losses due to borrower bankruptcy filings as small. With the potential change in law that risk could become a more material one. The current proposed cramdown legislation provides a bankruptcy judge the ability to reduce the mortgage by a significant amount; the difference between the mortgage amount and todays market value of the property.
The rating implications of bankruptcy cramdown risk are amplified in certain existing Prime and Alt A RMBS transactions where bankruptcy losses are not allocated as typical credit losses. In these Prime and Alt-A transaction documents, the amount of bankruptcy loss that is to be allocated to the bonds in reverse sequential order is limited to a very small total, on the order of $100,000 to $300,000. Bankruptcy losses in excess of this limit are then allocated, pro rata, across the capital structure, Fitch said in a release.
With regard to new ratings, given the level of uncertainty that would be introduced by the proposed law, Fitch would likely only assign AAA ratings if all the losses from cramdowns were allocated as other losses are assigned, in reverse sequential order, as is the case for many current Prime and Alt A transactions. That decision would only be made definitively when an understanding of the final language of any proposed cramdown legislation was obtained.
Conjure,
Were you around the mid-Atlantic region of the US from 1861-1863, when Lincoln manuevered the North into backing emancipation as a war measure, despite his own and others' doubts about the Constitutionality of such action (rights of states, personal property, etc)?
Just thinking you must have seen this sort of thing before.
Have a dog's ball and toad bone on me. Always a delight to hear from you.
Ha, I just zillowed my house, I still have 45K in equity according to them! I'm rich bitches! Haha...Ok, where's my vodka?
jg: I've gone to same Walmart 1/29, 2/4 and 2/5 and they are all out 9mm box of 100. On 1/29 they had 6 boxes of 50.
the past 2 days: none that I could see.
They are also out of buckshots, 22lr box of 500+, and 308 win. Still few boxes of 40 s&w were visible. (Did see plenty of slug & bird shots).
I don't care about other calibers so I can't say but the shelves looked awefully empty....
anon-yen dollar
is that a double bottom near 89?
that car dealer renting toyotas for that much will soon be closing doors, I could get a used 90's honda or truck for 4 of his pymnts
Buy more ammo, shoot more soup cans!!
@Kristina
Congratulations on handing Sebastian his head.
Best regards to all of you. It's work time. Again.
Problem: You have an 8 ounce glass filled with water. You pour precisely 4 ounces out of the glass. What can be said about the condition of the glass?
Sebastian
.
Here's another problem.
Close your mouth and swallow.
Now, take a glass, spit into it, and fill it with water. Are you willing to drink the water?
That's the crisis in a nutshell, IMO.
.
That zillow is kinda scary, they have pics from the end of my driveway, satellite views...YIKES...
Speed is right-
"An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.
Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS."
Banks Sitting On An Inventory Time Bomb - CNBC
Ministry of Truth said: "Sebastian too bad Zillow doesn't pay cash for homes. LOL!!!"
Business plan! Set up Zillow like Intrade. Or better yet, like Nasdaq! Might finally be able to get some real price discovery.
S.
MP
In theory, i believe the fractional reserve system itself limits the expansion of credit by the commercial banks. ie. Just as it imposes a limit on the expansion of the money supply, it also places a limit on the debt supply.
Because if you don't place a limit on the debt supply, then you have exactly the same problem you have with the money supply, only over a longer time period, and with the eventual debt cascade results that Fisher describes. Which also points to fundamental stability problems with FRB, but that's another can of worms entirely.
-- w
That zillow is kinda scary, they have pics from the end of my driveway, satellite views...YIKES...
Comrade Kristina
.
No more nude sunbathing?
Everyone's saying that "...this is the worst since the Great Depression" or "...thats the worst since GD..." WTF? If thats case, aren't we in the Great Depression II then? Or as from what I've read from a few, "The Great Recession"?
Scone! Shhhhhhhh!!!!!!
Off-topic, but does anyone know what happened to the USD-Gold inverse correlation? Over the last few weeks, I've noticed that the inverse correlation has totally broken down and now appears to be a POSITIVE correlation!
Very interesting stuff...
Comrade Kristina said: "That zillow is kinda scary, they have pics from the end of my driveway, satellite views...YIKES..."
I checked out mine, too, and it makes me mad because it's all from before I did a bunch of landscaping.
S.
My brother agreed to terms on the REO in Phoenix: Originally listed at $2.5mm Sept 07 went for $950k. I told him to bid $800k but he choked and went higher; BofA countered within a day and that's when he figured he offered too high.
4 other houses listed within 500 yards, avg. asking price is $2.2mm, but the abr has been set 50% below that. Anybody who bought in Paradise Valley in the last 10 years is hosed.
If you are going to buy ammo buy ammo
Gun Magazines and Gun Clips - Magazines and Clips at GunBroker.com
Try again
http://www.gunbroker.com/Auction/ViewItem.asp?Item=122303940
spx is trying to get thru and stay above 850
numbers might be nicely painted tomm..
re ammo: cheaperthandirt.com is OK, too.
"USD-Gold inverse correlation?"
i'm not sure such a thing exists. the dollar can rally on a forex basis at the same time as gold. no big whoop. that probably says more about pound and euro weakness than anything else.
sebastien
Clearly the glass is 50% too large
--
Lynn "I will show you my big tits first" Tilton, on Boob-berg right now, says that she has the solution to the housing problem and wrote to Geithner.
We need more dopes and bimbos to provide solutions for the housing problems? God help America!
If only we had no solutions-peddlers the problem would correct when it should.
Jas
there is evidence to suggest that he had fiends who conducted knock off schemes and the losses from this entire "industry " may be an order of magnitude larger (LARGER)!!!
we are so seriously effed
mock turtle | 02.05.09 - 2:03 pm | #
With fiends like these, who needs enemas?
No more nude sunbathing?
scone | 02.05.09 - 2:40 pm
No kidding.
Sebastian, had I known, I'd have washed my vehicles for the photo op and cleaned the pool better...geez.
In a deflationary collapse we cut all the glasses down to size, right? Or do we preserve the evidence of excess capacity? Thoughts?
EvilHenryPaulson writes:
sebastien
Clearly the glass is 50% too large
EvilHenryPaulson | 02.05.09 - 2:45 pm | #
She could spend that every day of the rest of her life and still leave us a decent sum but she's terrified she'll run out of money and starve. So she stays home. It's very disturbing.
Fair Economist | Homepage | 02.05.09 - 2:29 pm | #
There is some basis for this kind of concern for elderly people. One major health issue could wipe out a large amount of any nest egg. Plus there's the potential for the need for moving to an assisted living facility. That'll eat up savings in a hurry as well, and when you run out of cash they evict you. These days old age can be a financial black hole.
"USD-Gold inverse correlation?"
i'm not sure such a thing exists.
USD-gold inverse correlation is (was) about as strong an economic correlation as you can find.
In the period ending 8/14/08 the 1-year correlation was -63%. It only went positive for a short period around july to august 2007.
http://static.seekingalpha.com/uploads/2008/8/16/saupload_goldvusd.png
It's a STRONG inverse correlation that in the last few weeks has broken down (I wish I had some actual statistical correlations to prove this...)
This sight is great also
http://www.gun-deals.com/ammo
The basic problem is that WTF pricing was everywhere for everything, not only for real estate.
The bottom calling has only just begun.
On Zandi's assessment of inventory levels:
Who cares?
The way inventory is calculated as months of supply relative to sales just means inventory is another way of measuring sales activity.
A more valuable metric is housing stock v households, which CR points out is way out whack (and getting worse), which means prices still need to fall.
Sebastian writes:
Comrade Kristina said: "That zillow is kinda scary, they have pics from the end of my driveway, satellite views...YIKES..."
I checked out mine, too, and it makes me mad because it's all from before I did a bunch of landscaping.
.
I'm not even in Zillow. Not 'in' with the 'in' crowd. I'm bummed!
A quick google search revealed some articles about the 2009 breakdown of the USD-gold correlation
Gold and the Dollar Running Together: Why? | Gold News
Gold and dollar gain on risk aversion - Business Intelligence Middle East - bi-me.com - News, analysis, reports
Relationship between US, Aussie dollar and gold | 03 February 2009 | www.commodityonline.com
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everything is fine and the libs are trying to scare people by telling them we are in a dire crisis...And we wonder how we got here...BAh...
Comrade Kristina | Homepage | 02.05.09 - 1:48 pm | #
My favorite cons are the religious whackos.
If they are making money, it is a sure sign of God's favor on the righteous.
If they lose money, it's the dirty hippies' fault!
dirty hippies, damn them!
"Bob Dobbs, i got your point
i apologize if you were offended by my glib remark
i just recoil at the notion that some (not saying you) seem to almost worship growth
mock turtle | 02.05.09 - 1:59 pm | #"
No prob. Just thought there was a misunderstanding.
My favorite cons are the religious whackos.
If they are making money, it is a sure sign of God's favor on the righteous.
If they lose money, it's the dirty hippies' fault!
Gary
.
Shhhh. You'll wake Pavel. He's our resident Opus Dei special ops.
LMAO, ya'll are a mess, that's why I love you guys and gals...I aspire to dirty hippiedom personally...
Shhhh. You'll wake Pavel. He's our resident Opus Dei special ops.
scone | 02.05.09 - 2:59 pm | #
LOL. I view Pavel as one of the decent ones.
Personally I don't get organized religion, but I only despise the religious nuts who actively seek to hurt others. Plenty of decent churchgoing liberals out there.
"Shhhh. You'll wake Pavel. He's our resident Opus Dei special ops."
Eh? Someone mention my name?
Doh, now you've done it, there's Pavel...
Comrade Kristina writes:
That zillow is kinda scary, they have pics from the end of my driveway, satellite views...YIKES...
Comrade Kristina | Homepage | 02.05.09 - 2:39 pm | #
One does have to be careful about the in the buff sunning.
Reminds me of a couple of years ago. I flew over our place to take some pics of it. Was talking with the neighbors about how good the pics turned out. Dropped an aside (jokingly) to the neighbor lady about her getting a sunburn where it might hurt a bit if she was not more careful. She blushed so red I almost died laughing. She is still convinced that I have a pic of her. LOL
That WIN (Washington Interfaith Network) meeting I'm going to next month might actually give some insight on how the crisis is affecting people on ground day-to-day level.
The DC gov. actually does listen. Just recently it was persuaded by WIN to provide more low-income housing than it had planned to. The network does things like that.
My head has finally exploded. Is there a banker in the house who can put it back together?
BTW, we had some friends over for dinner last night, both in their 70s, one a retired mid-level Commerce Dept. employee, so well-experienced in community planning that he's been a consultant in Africa, Central Asia, the the Caucasus, Russia.
They have been burned in their investments, and they are very unhappy about it. Multiply by millions?
The fundamentalist christians hate catholics too..... soo I doubt Pavel would be on their friends list
Looking for a bottom: he should look at the lower part of his back. There is a bottom there, but it stinks!
Guys check the link below if you like to feel powerful and rejuvenated in a natural way!
http://tinyurl.com/akvd3
Way up yonder some one questioned how much total debt (here presented as a % of GDP) there was in the US. The answer is too much.
BullandBearWise.com - Outstanding Debt and GDP
Debt (total governmental, private and corporate) is about 350%. The previous high was in 1932 at about 190%. Get the picture.
When all the lay-offs start adding to the housing inventory and the "Option Arms" start resetting in the next two years, it his very hard to see any reduction in inventory or bottom in the housing market.
JP writes:
Is there an actual methodology to his predictions, or is it based on history?
JP | Homepage | 02.05.09 - 12:57 pm | #
History shows that after the '90 Cali RE bust, sales bottomed in '92, and prices bottomed in '96. Zandi's nonsense is based on the methodology of ignoring history.
JP writes:
Is there an actual methodology to his predictions, or is it based on history?
JP | Homepage | 02.05.09 - 12:57 pm | #
Here a link to where he gets his info Magic 8-Ball - Wikipedia, the free encyclopedia
The problem is that you got a whole lot of people looking to sell, so as soon as prices even inch up a little, or things appear to be stabalizing, more sellers will come out of the woodworks.
I believe the housing crisis will drag on for years.
Woop-de-Doos for 12-18 months, then the median sales indicators will have merit. Pending sales reveal nothing, GIGO. Right now, the data is useless unless you have a key to the pre-bad bank backdoor to analyze or call your favorite oreo clearinghouse for real numbers on where this is going.
What a dick move by Zandi. He knows full well that NAR numbers are totally fungible by banks. Daily I'm sifting through MLS and see within a given search radius that the number of homes on market compared to actual foreclosures (realtytrac) are off by a long shot. This excludes pre-foreclosures and auction properties both of which are swelling like t*ts in a sauna. Banks purposely hold off listing properties on the books for a variety of reasons, not least price control and public opinion over the state of the market. In the end, it's the a-hole who gets suckered into buying in the next 24 months who's going to eat the negative-equity pie in earnest.