Calculated Risk is usually not the kind of message board with this sort of posting. You unfortunately came to the wrong place and you will not find too many fans here. Actually, people here might end up being opposed to your cause even MORE for the simple reason of the manner in which you post it.
Crispy, Anything coming out of Kohn's pie-hole is likely a waste of time today. He might be saving his ammo for another day. Wise men only speak when it improves the silence.
Speaking of bringing out your dead: The XHB Philly housing index is carving out new lows ... RYL down big, BZH flirted with $5/share, no doubt it will be back for a more extended stay in dead-beat-a-ville.
brian23: what info do you have that the contemplated cuts are to AAA tranches? From the dollar amounts and number of issues affected, my thought would be that it affects all but the AAA tranches, but I could well be wrong.
KBW analyst Diane Merdian now estimates Citigroup (C) will take $15.3 billion in writedowns in the fourth quarter tied to mortgage-backed debt and collateralized debt obligations, instead of the $11 billion previously estimated, according to a report from The Associated Press.
Citi shares are down 1.2% to $28.52 which will put them at a new 52-week low.
Re: Calculated Risk is usually not the kind of message board with this sort of posting.
Ive noticed a lot of posting here lately which would be better off in private cell phone chats or private emails, or long flowing letters to lovers and friends, but not much meat here lately! Lots of complaints like yours though:
Calculated Risk is usually not the kind of message board with this sort of posting.
I mean who would care about 40 year loans with zero down and increased Jumbos?
O/T - Checked out the damage on CNBC about a half hour ago and the anchor(ette), whatever her name is, primed for an upcoming story about whether the increasing entry of Sovereign Wealth Funds was good or bad. Her comment: "...or is it a bad thing for the companies?"
Forget the companies, try a broader perspective. How 'bout the country?
Springfield's multimillion investment was supposed to represent a new chapter in the city's beleaguered financial history. After years of financial woes, city officials tightened expenditures and in the last two years began generating surpluses, some of it invested through Merrill Lynch.
The investments, backed by home loans, plummeted in value amid the ongoing subprime mortgage disaster. Worth nearly $14 million last year, Springfield's investment today is worth just $1.2 million.
HOW THICK IS WARREN BUFFETT'S TEFLON? A trial in which the defendents will make him out to be a "corporate crook" could finally put a dent in the armor of the self-righteous hypocrite. But how will the liberal media cover it? Here's the Wall Street Journal's take so far:
...the Jan. 7 criminal trial of four former insurance executives of General Re Corp., a reinsurance unit of Berkshire Hathaway Inc., and one former executive of American International Group Inc., could be as much about Mr. Buffett as it will be about a seven-year-old reinsurance transaction that federal prosecutors said was a fraud.
The case...is the culmination of a nearly three-year inquiry into what prosecutors said was a sham deal that helped AIG boost its loss reserves in 2000 and 2001 by about $500 million, misleading analysts and investors about the amount of losses AIG could absorb and buttressing its stock price. The trial will likely cast an unflattering light on the alleged inner workings of General Re and renew questions about the involvement of Mr. Buffett in the transaction.
On trial will be Ronald Ferguson, 65 years old, former General Re chief executive; Elizabeth Monrad, 53, former General Re chief financial officer; Christopher Garand, 60, General Re's ex-senior vice president of finite reinsurance; Robert Graham, 59, General Re's ex-assistant general counsel; and Christian Milton, former head of reinsurance at AIG. Several of the defendants will assert in the trial that Mr. Buffett, widely known as the "Oracle of Omaha" for his investment prowess and his reputation for integrity, knew about the deal, giving it the stamp of legitimacy.
That FHA reform will be a done deal very soon and the news media and blogs are ignoring it almost 100% as this is fast-tracked at lightspeed. Screaming is stupid but how does one bring matters such as these to the attention of sleeping apathetic people? Im doing my part as a taxpayer to suggest this is wrong. It seems other taxpayers dont get it yet, which is often the case IMHO.
This news has been covered ad nauseum. Just about everyone on this blog knows that the HOR has passed these. Lockhart, Senate and Bush have made it clear what they will do when this reaches them - NO GO. Reforms first.
Bring something worthwhile to the discussion, or go back protecting your bridge..
Jan. 4 (Bloomberg) -- State Street Corp., BlackRock Inc., Societe Generale and Deutsche Bank AG units are among the managers of collateralized debt obligations deemed at risk of failing to repay their most-senior classes amid declining creditworthiness of mortgage-linked debt, according to Wachovia Corp. research.
CDOs with $64 billion in original balances have experienced so-called events of default since mid-October, caused by downgrades on collateral, according to a report yesterday by Charlotte, North Carolina-based Wachovia analyst Justin Pauley. Harding Advisory LLC and Tricadia CDO Management LLC each managed five of such failing deals, the most.
What does Lockhart have to do with FHA reform? And the Senate has already passed a slightly less ambitious version of the bill, and it's now in conference. And Bush has said he wants the legislation. So what is your point?
I recall reading that a large portion of CDO assets were Bank issued, something like preferred equity? Am I mistaken? We have all focused on Mortgage, car loan, credit card and LBO debt, but I remember being surprised at the large percentage of Bank related paper. Is this one of the keys to the ability of banks to enable the leveraging of hedge funds and investment bank borrowings? Or am I completely barking (mad) up the wrong tree?
I'm assuming you're the same troll who has been Buffet-trolling for days now. Get a life.
Crispy, I was about to post the same article, which i found via Atrios. Like I've been saying, this is going to be a lawsuit bonanza for years to come.
I just listened to our wonderfull president statement (about economy) on CNBC. Basically he said nothing of any substance. He said our finacial system has strong foundation and etc.
U.S. financial markets are "strong and solid," President Bush said Friday and urged Congress against raising taxes when it returns from its holiday break. Raising taxes would be "the worst thing" lawmakers could do for the economy, Bush said.
>
So raising taxes when the economy is "strong and solid" is "the worst thing" lawmakers could do.
That's about all he can say. As entertaining as it might be to imagine a world where he tells the population that they're all going to lose their home equity and maybe their home with it, then drops the bomb that the financial system is paralyzed in fear because some of the big players are borderline insolvent and the rest of the players are worried that the they'll be dragged down with them due to counterparty issues. I don't think it would be an enjoyable experience for anyone outside of their bankerdome. The situation is dicey enough without a full scale stock panic on our hands.
If you think about, Bush has been an excellent President . . . for his base.
The top 1-2% have reaped countless billions in tax cuts, the defense contractors and oil companies have reaped hundreds of billions . . . and f*ck everybody else.
The success of Huckabee and to a lesser extent Paul, both of whom the establishment GOP despises, indicates that they won't be able to pull this stunt again any time soon.
But what do they care? they're laughing all the way to the bank, and have been since the first round of tax cuts and the first bombs fell in Iraq.
We are paying the price for seven years of the most corrupt government this country and possibly the world has ever seen.
"We are paying the price for seven years of the most corrupt government this country and possibly the world has ever seen."
Oh good grief. I mean, I like overheated, partisan, ideologic pap as well as the next guy, but at least go for something original. I mean, this must have been cribbed from the Clinton-haters of the late 90's, right?
FFDIC:
this NYT story you posted about Zions buying back their own cr@ap to make the year-end numbers is just disgusting:
how much of the friggin' numbers that financial companies disclose these days are generated in a similar way? How much hidden stuff is still out there?
" We probably will get action if and when there is a good scandal. Perhaps some bank will fail even though it seemed to have plenty of capital. Then there will be expressions of shock, and calls for changing the rules to reflect economic reality."
PRECISELY! Why on earth does it all have to wait until the sh*t hits the fan?
Why can's some of these companies and the bosses (a la Merrill and Citi's ex-CEOs) be held responsible??
President Bush said Friday that while there is some uncertainty about slowing economic growth, the nation's ``financial markets are strong and solid.''
Bush spoke after meeting with his top economic advisers about possibly drafting a package to stimulate the U.S. economy as it weathers the housing slump, rising oil prices and an uptick in unemployment.
That's better than cutting rates excessively IMO. Unless they start taking garbage for collateral.
Since the central problem is that they can't convince the bond market that the collateral in question IS anything other than garbage...
The source of every fiscal crisis in the world has been government meddling in the free market in conjunction with poor policies from central bankers
It's as if he is an Apple or Unix partisan telling us how Microsoft is the cause of all the world's problems. The guy imagines -- a la John Lennon -- a world without central banks and government.
He's brilliant in his explanation of monetary issues, but no more realistic than Karl Marx in his alternative universe...
Frank, feel free to actually address the substance. And by the way, I am a Democrat - I don't support either Paul or Huckabee; first choice Edwards, second choice Obama. I think the deteriorating economic conditions favor Edwards populist approach, but the crash may be unfolding too slowly for people to appreciate it.
A fish rots from the head. We are headed into a recession as we speak, if we're not their already, and the mess we're in has been not only enabled but also encouraged from the highest level of government.
$6B here, a few more there, have we hit the $120B that was dumped on taxpayers in the 1980s S&L scam?
I suspect that when the X trillion $ of speculative pricing made possible by the exponential increase of "risk-free" credit during the past 7 years is wrung out of the tulip, er, real estate and "investment" markets, the taxpayers' bill will dwarf the Reagan era excess.
So what's the consensus estimate on the cost of this latest pump-and-dump scam? Any guesses? And will a civil society exist to do the accounting when the dust settles?
Gary, I don't consider this a political opinion site so won't comment on the politics of the election.
On the economic side, my perception is that economists generally agree that the President has limited direct impact on macro economics, with much of that being set in motion by events beyond his control.
Bush did not first appoint Greenspan nor, I believe, did he establish the regulatory requirements for mortgage companies, real estate profiteers, etc.
I'm not defending Bush but believe that ascribing some magical control of our economy to the President - whoever it is - is cargo cult thinking.
Greenspan is a Republican appointee, as you know and has plenty of blame resting on his shoulders. If you've been around here long, you've seen plenty of posts, including mine, heaping scorn around the man like kindling around Joan of Arc.
As for Bush: Leave aside for the moment his disastrous class-warfare tax policy and immoral war in Iraq (which together have brought the country to $9 Trillion in debt).
The man's political appointees have hamstrung any regulation of this mess. They nakedly gave away billions to student loan companies. AND for much of his tenure his party held control of Congress, and so is responsible for the whole of fiscal policy.
Recall the sage economic advice of Bush after 9/11: Go out to the malls and buy some crap, it's your patriotic duty.
The man has been a disaster for the country. Cryn until you're blue about how partisan I am. This is all objective truth.
A $500 million bid list of cash asset-backed securities and a $2.9 billion bid list of synthetic subprime ABS were circulating today. The bid lists were likely the result of the liquidations of cash and synthetic ABS CDOs. While such large lists do occur from time to time, sellers seemed more urgent today than normal, said secondary market participants. "There seems to be added desperation right away today to sell assets and raise capital," said one CDO manager. "There are no bids for super senior risk trading at 25 and 30 [cents on the dollar] on both high-grade and mezzanine deals across the board. People have realized how bad it is and the whole tone of conversation is different. It's pretty scary."
At least 50 collateralized debt obligations experiencing event of default in past months to date, leading to several liquidations. Not all CDO liquidations have been put to bid lists, however. Often buyers for liquidating assets are found privately, said another manager, which is in line with the increasingly clubby atmosphere already evident in new issuance marketing.
On the economic side, my perception is that economists generally agree that the President has limited direct impact on macro economics, with much of that being set in motion by events beyond his control.
Try telling that to the unemployed person who's losing their house. They just want someone to blame, and someone to make it all better.
this NYT story you posted about Zions buying back their own cr@ap to make the year-end numbers is just disgusting
I think you may have missed the point of that article...
It's the money market funds, not Zions bank, that are "tidying" their books. The ABCP market has gotten a bad enough name that money market funds don't want ABCP showing in their holdings in their quarterly reports. That means that retail investors are going to have a hard time determining risk from looking at end-of-quarter holdings because they don't accurately reflect day-to-day holdings.
The second issue is that these banks "off-balance-sheet" vehicles aren't off-balance-sheet if the bank takes the loss. This issue isn't unique to Zions. I think it was Citi that had similar problems a few weeks ago.
Gary, you are right -- to me your objective truth looks like partisan subjectivity so no point in arguing it.
DaveNYC, agreed! Unfortunately, one common human characteristic is that no one wants to look in the mirror and find the person to blame. And that is where some of the problem we face is located.
I'm not worried about $1 Tn in CDOs...after all, they're backed up up with a whopping $15Bn in CDS paper. They'd have to have more than a [b]1.5%[/b] default rate for [i]me[/i] to worry.
What does Lockhart have to do with FHA reform? And the Senate has already passed a slightly less ambitious version of the bill, and it's now in conference. And Bush has said he wants the legislation. So what is your point?
mort_fin | 01.04.08 - 1:45 pm | #
Do you really believe that changes to the GSE's will happen without the Senate first making attempts to support reforms? Paulson, Bush and Lockhart reiterated this just 2 weeks ago. From what I have seen related here at CR, FHA and sub-prime legislation has had and will have ZERO effect on stopping the downhill slide in the mortgage financing business and housing prices; do you see otherwise?
They could reduce interest rates to zero and inject all the liquidity they want; it won't make people want to buy a depreciating asset.
Also, the problem is too big to even address, much less solve. A little nibbling around the edges will make a few happier for a short time and that is all.
A lot of the stuff now being officially downgraded really was never worth very much to start with.
Same as Enron; people who claimed they lost their life's savings really never had the (pension fund)savings in the first place. Investors lost when they bought, not when Enron failed.
First significant order of business for this Administration and the Republican Congress was to enact the financial industry-backing "bankruptcy law". The lenders and banks thought they had their backs covered when they would ultimately unleash their toxic financial engineered waste. The subsequent "Ownership Society" agenda enabled by the "loose monetary" policy created a perfect profit-reaping environment for the financial sectors. But their greeds had no limits and culminated in the economic disasters that we are facing today. Whoever inherits this mess will face the similar fate that Carter had to deal with after several damaging years under Nixon. The next 4 yrs will be rough -- economic stagnation, exacerbated turmoils in the Middle East, heightened trade tensions, protectionism with China, rising urban crimes, rising xenophobic anxiety... not good, not very good. We have seen this before.
You also stated that the President wouldn't allow it. How do you square that with this quote from a Reuters article
In a speech delivered in the White House Rose Garden, Bush endorsed his administration's plan to help less creditworthy borrowers by lowering the required downpayment for FHA loans and raising the limit on mortgages that would be eligible.
I mean who would care about 40 year loans with zero down and increased Jumbos?
Your right, there are better blogs!
Anonymous | 01.04.08 - 1:10 pm | #
This is FHA? FHA got raised to conforming. Recent GSE discussions were to allow for jumbo purchases; and extending loans to 40 years? (approved in 2005). Reform to support GSE isn't going to happen overnight.Anon, was a blubbering idiot
The original post is removed. Using terms like "lightning" fast passage and saying that mortgage affordability issues aren't addressed at CR, is just plain bizarre.
"We believe that California has weathered the subprime storm of 2007, the market has almost corrected and that 2008 represents an opportunity to move forward," said Alan Nevin, the Sacramento association's chief economist, on a conference call.
Edited by CR: Please don't spam the threads.
Edited By Siteowner
Anonymous
You've put the same thing in the last several posts. Go outside and scream about it.
MAY cut, may may may... you bears are full of speculation and no substance.
I dont know how this could be. Afterall, they were all AAA rated and just as good as muni's?
-sigh-
Anonymous,
Calculated Risk is usually not the kind of message board with this sort of posting. You unfortunately came to the wrong place and you will not find too many fans here. Actually, people here might end up being opposed to your cause even MORE for the simple reason of the manner in which you post it.
I suggest you take this to Mish or Russ Winter.
Ugly 1st week for 2008. Digging up the Wall St graveyard and bringing out all the dead. More to come...
MAY cut, may may may... you bears are full of speculation and no substance.
LOL. Are you being ironic?
Fed to auction $30 billion at short-term auctions this month
I thought Kohn had a speech at 11:30 am est? I am waiting for his spin...
Fed to auction $30 billion at short-term auctions this month
That's better than cutting rates excessively IMO. Unless they start taking garbage for collateral.
Why is that better? So only the large WS players can benefit from a stealth rate cut, while main street has their HELOC's kept at a higher rate?
I usually read & learn here, but this article may be interesting to others here:
'More than 140,000 people are expected in Las Vegas for the start of the Consumer Electronics Show on Monday.
The latest in gadgets and home electronics will be on display, as technology firms hope to ride out a global economic slowdown.
"The industry has to brace itself," admitted Gary Shapiro, president of the US Consumer Electronics Association.
...
"My feeling is that the US is in for tough times," said Mr Shapiro.'
BBC NEWS | Technology | Tech show to fight economic fears
Hey its Friday after all!
Crispy, Anything coming out of Kohn's pie-hole is likely a waste of time today. He might be saving his ammo for another day. Wise men only speak when it improves the silence.
Speaking of bringing out your dead: The XHB Philly housing index is carving out new lows ... RYL down big, BZH flirted with $5/share, no doubt it will be back for a more extended stay in dead-beat-a-ville.
"Unless they start taking garbage for collateral."
ac-
Are you being facetious? I don't have the link, but I believe that the Fed is now accepting used car loans at the disount window.
What is next? Used toasters?
brian23: what info do you have that the contemplated cuts are to AAA tranches? From the dollar amounts and number of issues affected, my thought would be that it affects all but the AAA tranches, but I could well be wrong.
OT: on the Chinese inflation front, AKA, "there is no decoupling in globalization" -
"Inflation" tops list of public concerns in China
404 Not Found
Chinese funds expand more than two times to 3.2 trillion yuan in 2007
404 Not Found
and finally, in the "we are all serf's, er subprime" dept. -
China's consumption to hit record low despite higher income growth than GDP
404 Not Found
ok, back to the non CRT world...
Lying to get a home loan is now a felony in Texas
Lying to get a home loan is now a felony |
News for Dallas, Texas | Dallas Morning News
| Steve Brown | Real Estate | Business Columnist | Dallas Morning News
KBW analyst Diane Merdian now estimates Citigroup (C) will take $15.3 billion in writedowns in the fourth quarter tied to mortgage-backed debt and collateralized debt obligations, instead of the $11 billion previously estimated, according to a report from The Associated Press.
Citi shares are down 1.2% to $28.52 which will put them at a new 52-week low.
probert,
Re: Calculated Risk is usually not the kind of message board with this sort of posting.
Ive noticed a lot of posting here lately which would be better off in private cell phone chats or private emails, or long flowing letters to lovers and friends, but not much meat here lately! Lots of complaints like yours though:
Calculated Risk is usually not the kind of message board with this sort of posting.
I mean who would care about 40 year loans with zero down and increased Jumbos?
Your right, there are better blogs!
Floyd Norris - Now You See Those Securities, Now YOu Don't (Zions Bancorp)
HIGH & LOW FINANCE; Securities, In a Swoon, Come Home - NY Times
James --
Citi shares are down 1.2% to $28.52 which will put them at a new 52-week low.
More like an 8-year low...
O/T - Checked out the damage on CNBC about a half hour ago and the anchor(ette), whatever her name is, primed for an upcoming story about whether the increasing entry of Sovereign Wealth Funds was good or bad. Her comment: "...or is it a bad thing for the companies?"
Forget the companies, try a broader perspective. How 'bout the country?
Springfield's multimillion investment was supposed to represent a new chapter in the city's beleaguered financial history. After years of financial woes, city officials tightened expenditures and in the last two years began generating surpluses, some of it invested through Merrill Lynch.
The investments, backed by home loans, plummeted in value amid the ongoing subprime mortgage disaster. Worth nearly $14 million last year, Springfield's investment today is worth just $1.2 million.
Brokerage probed in big loss for Springfield - The Boston Globe
Actually, I'm surprised by how little discussion there is of FHA Reform on this blog.
But I'd certainly agree that screaming about it in every post is probably not a particularly smart way to draw attention.
HOW THICK IS WARREN BUFFETT'S TEFLON? A trial in which the defendents will make him out to be a "corporate crook" could finally put a dent in the armor of the self-righteous hypocrite. But how will the liberal media cover it? Here's the Wall Street Journal's take so far:
...the Jan. 7 criminal trial of four former insurance executives of General Re Corp., a reinsurance unit of Berkshire Hathaway Inc., and one former executive of American International Group Inc., could be as much about Mr. Buffett as it will be about a seven-year-old reinsurance transaction that federal prosecutors said was a fraud.
The case...is the culmination of a nearly three-year inquiry into what prosecutors said was a sham deal that helped AIG boost its loss reserves in 2000 and 2001 by about $500 million, misleading analysts and investors about the amount of losses AIG could absorb and buttressing its stock price. The trial will likely cast an unflattering light on the alleged inner workings of General Re and renew questions about the involvement of Mr. Buffett in the transaction.
On trial will be Ronald Ferguson, 65 years old, former General Re chief executive; Elizabeth Monrad, 53, former General Re chief financial officer; Christopher Garand, 60, General Re's ex-senior vice president of finite reinsurance; Robert Graham, 59, General Re's ex-assistant general counsel; and Christian Milton, former head of reinsurance at AIG. Several of the defendants will assert in the trial that Mr. Buffett, widely known as the "Oracle of Omaha" for his investment prowess and his reputation for integrity, knew about the deal, giving it the stamp of legitimacy.
The board "believes that Merrill Lynch can and should be held fully accountable for any potential losses," the statement said.
lmfao!! ML get ready for some serious lawsuits!
I don't know the reason they cut ????
I am waiting more imformations from you
The U.S. has spent the last decade building phony dot-bomb companies and McMansions.
Throw in a senseless war, deficit spending and massive trade deficits (foreign borrowing) and its pain city dead ahead.
Too little money creation came from new productive enterprises. Five dollars of new debt for each $1.00 dollar of new GDP. What a scam.
mort_fin,
That FHA reform will be a done deal very soon and the news media and blogs are ignoring it almost 100% as this is fast-tracked at lightspeed. Screaming is stupid but how does one bring matters such as these to the attention of sleeping apathetic people? Im doing my part as a taxpayer to suggest this is wrong. It seems other taxpayers dont get it yet, which is often the case IMHO.
DH
Unless they start taking garbage for collateral.
They won't do that, they will insist that the collateral be rated AAA. cough
Anon,
This news has been covered ad nauseum. Just about everyone on this blog knows that the HOR has passed these. Lockhart, Senate and Bush have made it clear what they will do when this reaches them - NO GO. Reforms first.
Bring something worthwhile to the discussion, or go back protecting your bridge..
And so it begins...
Jan. 4 (Bloomberg) -- State Street Corp., BlackRock Inc., Societe Generale and Deutsche Bank AG units are among the managers of collateralized debt obligations deemed at risk of failing to repay their most-senior classes amid declining creditworthiness of mortgage-linked debt, according to Wachovia Corp. research.
CDOs with $64 billion in original balances have experienced so-called events of default since mid-October, caused by downgrades on collateral, according to a report yesterday by Charlotte, North Carolina-based Wachovia analyst Justin Pauley. Harding Advisory LLC and Tricadia CDO Management LLC each managed five of such failing deals, the most.
State Street, BlackRock Manage Some CDOs in Default (Update2) - Bloomberg.com
I was wondering why BLK was down nearly $16 today.
Carmichael,
What does Lockhart have to do with FHA reform? And the Senate has already passed a slightly less ambitious version of the bill, and it's now in conference. And Bush has said he wants the legislation. So what is your point?
Unless they start taking garbage for collateral.
They won't do that, they will insist that the collateral be rated AAA. cough
wink wink nudge nudge
Seriously, Bernanke talks about monetizing private assets in his famous (infamous) deflation speech, so I have to assume its in the cards.
BTW, the monetization would be indirect -- the Fed would monetize US debt and the government would buy the assets.
Want to see my "stimulus package"?
The pressure on cutting Citi's dividend must be enormous.
On topic hypothesis:
I recall reading that a large portion of CDO assets were Bank issued, something like preferred equity? Am I mistaken? We have all focused on Mortgage, car loan, credit card and LBO debt, but I remember being surprised at the large percentage of Bank related paper. Is this one of the keys to the ability of banks to enable the leveraging of hedge funds and investment bank borrowings? Or am I completely barking (mad) up the wrong tree?
Anon @ 1:18, grow a pair and pick a handle.
I'm assuming you're the same troll who has been Buffet-trolling for days now. Get a life.
Crispy, I was about to post the same article, which i found via Atrios. Like I've been saying, this is going to be a lawsuit bonanza for years to come.
I just listened to our wonderfull president statement (about economy) on CNBC. Basically he said nothing of any substance. He said our finacial system has strong foundation and etc.
U.S. financial markets are "strong and solid," President Bush said Friday and urged Congress against raising taxes when it returns from its holiday break. Raising taxes would be "the worst thing" lawmakers could do for the economy, Bush said.
So raising taxes when the economy is "strong and solid" is "the worst thing" lawmakers could do.
That's about all he can say. As entertaining as it might be to imagine a world where he tells the population that they're all going to lose their home equity and maybe their home with it, then drops the bomb that the financial system is paralyzed in fear because some of the big players are borderline insolvent and the rest of the players are worried that the they'll be dragged down with them due to counterparty issues. I don't think it would be an enjoyable experience for anyone outside of their bankerdome. The situation is dicey enough without a full scale stock panic on our hands.
ajw, thanks for the link. Ugly.
daveNYC, I vote for a full on stock panic, now. The sooner folks panic, the sooner we can move to fixing this mess, which will take a decade.
probert says: "I suggest you take this to Mish or Russ Winter"
Darn near chocked on my ham sand!!
LOL
If you think about, Bush has been an excellent President . . . for his base.
The top 1-2% have reaped countless billions in tax cuts, the defense contractors and oil companies have reaped hundreds of billions . . . and f*ck everybody else.
The success of Huckabee and to a lesser extent Paul, both of whom the establishment GOP despises, indicates that they won't be able to pull this stunt again any time soon.
But what do they care? they're laughing all the way to the bank, and have been since the first round of tax cuts and the first bombs fell in Iraq.
We are paying the price for seven years of the most corrupt government this country and possibly the world has ever seen.
Basically he said nothing of any substance.
Did anyone expect anything different from this unspeakably incompetent administration?
"We are paying the price for seven years of the most corrupt government this country and possibly the world has ever seen."
Oh good grief. I mean, I like overheated, partisan, ideologic pap as well as the next guy, but at least go for something original. I mean, this must have been cribbed from the Clinton-haters of the late 90's, right?
Frank,
Relax, even when you bring up things here of amazing importance, they censor it like garbage and then hope people will chat about "other things"!
FFDIC:
this NYT story you posted about Zions buying back their own cr@ap to make the year-end numbers is just disgusting:
how much of the friggin' numbers that financial companies disclose these days are generated in a similar way? How much hidden stuff is still out there?
" We probably will get action if and when there is a good scandal. Perhaps some bank will fail even though it seemed to have plenty of capital. Then there will be expressions of shock, and calls for changing the rules to reflect economic reality."
PRECISELY! Why on earth does it all have to wait until the sh*t hits the fan?
Why can's some of these companies and the bosses (a la Merrill and Citi's ex-CEOs) be held responsible??
President Bush said Friday that while there is some uncertainty about slowing economic growth, the nation's ``financial markets are strong and solid.''
Bush spoke after meeting with his top economic advisers about possibly drafting a package to stimulate the U.S. economy as it weathers the housing slump, rising oil prices and an uptick in unemployment.
"Forget the companies, try a broader perspective. How 'bout the country?
homedad43 | 01.04.08 - 1:16 pm"
homedad43 the reality is that, like it or not, the US is a debtor nation.
That's better than cutting rates excessively IMO. Unless they start taking garbage for collateral.
Since the central problem is that they can't convince the bond market that the collateral in question IS anything other than garbage...
<a href="http://bigpicture.typepad.com/comments/2008/01/latest-lereah-b.html>Latest Lereah Book
Nice.
Regarding Mish, he had this to say today:
The source of every fiscal crisis in the world has been government meddling in the free market in conjunction with poor policies from central bankers
It's as if he is an Apple or Unix partisan telling us how Microsoft is the cause of all the world's problems. The guy imagines -- a la John Lennon -- a world without central banks and government.
He's brilliant in his explanation of monetary issues, but no more realistic than Karl Marx in his alternative universe...
"Did anyone expect anything different from this unspeakably incompetent administration?"
Absolutly NOT.
"every fiscal crisis"..So it was the feds that dumped tulips 300 years ago. Gosh I always wondered about this.
Frank, feel free to actually address the substance. And by the way, I am a Democrat - I don't support either Paul or Huckabee; first choice Edwards, second choice Obama. I think the deteriorating economic conditions favor Edwards populist approach, but the crash may be unfolding too slowly for people to appreciate it.
A fish rots from the head. We are headed into a recession as we speak, if we're not their already, and the mess we're in has been not only enabled but also encouraged from the highest level of government.
barley, I've long suspected that Greenspan was over 300 years old
barley, Gary: (-:
$6B here, a few more there, have we hit the $120B that was dumped on taxpayers in the 1980s S&L scam?
I suspect that when the X trillion $ of speculative pricing made possible by the exponential increase of "risk-free" credit during the past 7 years is wrung out of the tulip, er, real estate and "investment" markets, the taxpayers' bill will dwarf the Reagan era excess.
So what's the consensus estimate on the cost of this latest pump-and-dump scam? Any guesses? And will a civil society exist to do the accounting when the dust settles?
One measure of a blog is the insight/ego ratio. Barry R. is about a .2, Mish about a .6, Roubini about a 1.2 or so. These measures are empirical.
I am watching CNBC ( just because I have no other financial channel). They are doing their very best to put the best lip stick on this ugly pig.
Do they think their viewers are stupid? Seems like it.
Gary, I don't consider this a political opinion site so won't comment on the politics of the election.
On the economic side, my perception is that economists generally agree that the President has limited direct impact on macro economics, with much of that being set in motion by events beyond his control.
Bush did not first appoint Greenspan nor, I believe, did he establish the regulatory requirements for mortgage companies, real estate profiteers, etc.
I'm not defending Bush but believe that ascribing some magical control of our economy to the President - whoever it is - is cargo cult thinking.
Bob_in_MA -- I like your empirical blog metrics.
Roubini's ego is bigger than that of Ritholz, IMO. Mish is in an alternative ego-space, where all Ron Paul gold bugs are equal...
Economics and politics are inextricably linked.
Greenspan is a Republican appointee, as you know and has plenty of blame resting on his shoulders. If you've been around here long, you've seen plenty of posts, including mine, heaping scorn around the man like kindling around Joan of Arc.
As for Bush: Leave aside for the moment his disastrous class-warfare tax policy and immoral war in Iraq (which together have brought the country to $9 Trillion in debt).
The man's political appointees have hamstrung any regulation of this mess. They nakedly gave away billions to student loan companies. AND for much of his tenure his party held control of Congress, and so is responsible for the whole of fiscal policy.
Recall the sage economic advice of Bush after 9/11: Go out to the malls and buy some crap, it's your patriotic duty.
The man has been a disaster for the country. Cryn until you're blue about how partisan I am. This is all objective truth.
A $500 million bid list of cash asset-backed securities and a $2.9 billion bid list of synthetic subprime ABS were circulating today. The bid lists were likely the result of the liquidations of cash and synthetic ABS CDOs. While such large lists do occur from time to time, sellers seemed more urgent today than normal, said secondary market participants. "There seems to be added desperation right away today to sell assets and raise capital," said one CDO manager. "There are no bids for super senior risk trading at 25 and 30 [cents on the dollar] on both high-grade and mezzanine deals across the board. People have realized how bad it is and the whole tone of conversation is different. It's pretty scary."
At least 50 collateralized debt obligations experiencing event of default in past months to date, leading to several liquidations. Not all CDO liquidations have been put to bid lists, however. Often buyers for liquidating assets are found privately, said another manager, which is in line with the increasingly clubby atmosphere already evident in new issuance marketing.
On the economic side, my perception is that economists generally agree that the President has limited direct impact on macro economics, with much of that being set in motion by events beyond his control.
Try telling that to the unemployed person who's losing their house. They just want someone to blame, and someone to make it all better.
this NYT story you posted about Zions buying back their own cr@ap to make the year-end numbers is just disgusting
I think you may have missed the point of that article...
It's the money market funds, not Zions bank, that are "tidying" their books. The ABCP market has gotten a bad enough name that money market funds don't want ABCP showing in their holdings in their quarterly reports. That means that retail investors are going to have a hard time determining risk from looking at end-of-quarter holdings because they don't accurately reflect day-to-day holdings.
The second issue is that these banks "off-balance-sheet" vehicles aren't off-balance-sheet if the bank takes the loss. This issue isn't unique to Zions. I think it was Citi that had similar problems a few weeks ago.
Where is that great Financial genius Kennith Lay when we need him most...
Gary, you are right -- to me your objective truth looks like partisan subjectivity so no point in arguing it.
DaveNYC, agreed! Unfortunately, one common human characteristic is that no one wants to look in the mirror and find the person to blame. And that is where some of the problem we face is located.
I'm not worried about $1 Tn in CDOs...after all, they're backed up up with a whopping $15Bn in CDS paper. They'd have to have more than a [b]1.5%[/b] default rate for [i]me[/i] to worry.
TTFN, back to my resume.
Carmichael,
What does Lockhart have to do with FHA reform? And the Senate has already passed a slightly less ambitious version of the bill, and it's now in conference. And Bush has said he wants the legislation. So what is your point?
mort_fin | 01.04.08 - 1:45 pm | #
Do you really believe that changes to the GSE's will happen without the Senate first making attempts to support reforms? Paulson, Bush and Lockhart reiterated this just 2 weeks ago. From what I have seen related here at CR, FHA and sub-prime legislation has had and will have ZERO effect on stopping the downhill slide in the mortgage financing business and housing prices; do you see otherwise?
They could reduce interest rates to zero and inject all the liquidity they want; it won't make people want to buy a depreciating asset.
Also, the problem is too big to even address, much less solve. A little nibbling around the edges will make a few happier for a short time and that is all.
A lot of the stuff now being officially downgraded really was never worth very much to start with.
Same as Enron; people who claimed they lost their life's savings really never had the (pension fund)savings in the first place. Investors lost when they bought, not when Enron failed.
First significant order of business for this Administration and the Republican Congress was to enact the financial industry-backing "bankruptcy law". The lenders and banks thought they had their backs covered when they would ultimately unleash their toxic financial engineered waste. The subsequent "Ownership Society" agenda enabled by the "loose monetary" policy created a perfect profit-reaping environment for the financial sectors. But their greeds had no limits and culminated in the economic disasters that we are facing today. Whoever inherits this mess will face the similar fate that Carter had to deal with after several damaging years under Nixon. The next 4 yrs will be rough -- economic stagnation, exacerbated turmoils in the Middle East, heightened trade tensions, protectionism with China, rising urban crimes, rising xenophobic anxiety... not good, not very good. We have seen this before.
Carmichael,
The subject was FHA Reform. Why are you bringing up the GSEs? You stated that the Senate wouldn't allow it. Check out the link below
U.S. Senate: Legislation & Records Home > Votes > Roll Call Vote
Note - passed by the Senate, 93 to 1.
You also stated that the President wouldn't allow it. How do you square that with this quote from a Reuters article
In a speech delivered in the White House Rose Garden, Bush endorsed his administration's plan to help less creditworthy borrowers by lowering the required downpayment for FHA loans and raising the limit on mortgages that would be eligible.
FHA reform for home loans likelier after Bush speech
| Reuters
So far as I can tell, Bush and the Senate are on board with FHA Reform, despite your claim to the contrary.
I mean who would care about 40 year loans with zero down and increased Jumbos?
Your right, there are better blogs!
Anonymous | 01.04.08 - 1:10 pm | #
This is FHA? FHA got raised to conforming. Recent GSE discussions were to allow for jumbo purchases; and extending loans to 40 years? (approved in 2005). Reform to support GSE isn't going to happen overnight.Anon, was a blubbering idiot
The original post is removed. Using terms like "lightning" fast passage and saying that mortgage affordability issues aren't addressed at CR, is just plain bizarre.
You seem uptight Mort.
In the spirit of unbridled optimism, the SF Chronicle presents...
California builders say housing slump will turn around this year
"We believe that California has weathered the subprime storm of 2007, the market has almost corrected and that 2008 represents an opportunity to move forward," said Alan Nevin, the Sacramento association's chief economist, on a conference call.