does this signal a rise in the ten year to nearly 5%

3.83 to 4.33 - 4.83?

and what of the shorter end, say the two year--1.5 to 2?

I should clarify:
I am of the opinion that the govt has telegraphed its moves to us. the modus operandi: bailout and bailout and bailout until govt's credit card is pried away from its cold dead fingers.

if mortgage rates should begin to rise then we run into residential and commercial RE woes again which puts pressure on the banks. Haven't we learned our lesson? "There can be no more Lehman's!" (cue patriotic music, trademarked of course).

Without the Wall St there can be no Main St. At least that's what anybody important is telling me these days.

only way I see these rates rising is if all the banks have unloaded all their crap to the Fed, Fannie, Freddie, Ginnie, FHA, and FDIC. doesn't seem possible yet.

maybe I"m just pessimistic after the last 12 months though.

CalculatedRisk wrote:

Restarting later in the year is a different issue ...

Is the the same as raising interest rates then taking them back, then raising them and taking them back again? snark/

QE bullets are NOT shooting real straight these days.

nanoo
you mean yo yo rates?

Comrade Misean is Dope wrote:

Feral knows if they are the only player things could implode quickly.

implode or explode?

rates go up?

Yearning to Learn wrote:

if mortgage rates should begin to rise then we run into residential and commercial RE woes again which puts pressure on the banks

true. If rates stay under 6.5 it won't be too bad. That rate doesn't scare people who want to buy, it just lowers those able to buy due to increased payments. Which may be a good thing?

If rates take off for the sky, Fed will go back to buying MBS, but by then both Wallstreet and Mainstreet will be begging them to do so.

Putsch yourself in the position of the Unabankers.

YTL, they're seeing if they can't close a back door or two. And finding, as any historian might have told them, that it's often not possible. They would say, perhaps rightly, they had no choice but to intervene as they did, but it becomes no less a trap for all that.

Comrade Misean is Dope wrote:

I think implode is the proper term

prolly so

either way

dey's gwynne be a bunch a 'plodin goin on

I really think this particular program is what the Feral hates most about the "Audit the Feral" thing. There seems to be an implicit assumption that the Feral is buying newly packaged stuff, and while I'm sure they are, I suspect a bunch of crap is going on their books, and the available supply of crap is not abating.

It also doesn't help that recent FHA loan quality is, well, not quality.

U.S. 2-Year Notes Rise Most in Five Months as Jobs Decline - BusinessWeek

If the fed raises rates, watch how fast it gets taken back and StimpakII new QE apps are created

bingo. this is my thought as well.

we used to use the words "pushing on a string" a lot back here in 2006/2007 (ahh the good old days)

now i feel like we need another saying. something that denotes a person who theoretically has control, but is unable to let go of this so-called control

maybe like: "riding the crazed bronco" or "reining in the bucking bronco"????

the cowboy has the reins, and he is riding that horse... but he better not let go of the reins or he'll get a'kickin. and any illusion of him "controlling" that bronco is ludicris in the extreme... no matter what CNBC (I mean the rodeo announcer) says.

Yearning to Learn wrote:

something that denotes a person who theoretically has control, but is unable to let go of this so-called control . . .

aka "riding the tiger".

Yup.

You guys may be right. I've been wrong plenty before.

We will find out soon enough. If rates start going up in Feb, the lenders are warning the Fed that they will tank housing and the market if there is no more free lunch.

YTL, I agree that we are ridding a wild horse here. Maybe more like holding a snake by it's neck, if you let go you get bit.

josap
i see it as how is this going to afffect me in just about everything.

Timing is everything!!! Why March?? I'm wondering if the FED will hold to its timeline of March. Just as the seasonal house buying/selling is heating up, they are going to pull the rug out. Hmmm, my guess is that it gets a new cut off date of late fall.

Good Morning Doomers.

Mrs. Gnome and I are on day 3 of bathroom remodel.
Why, oh why, did they put 1 inch of concrete behind the wall tile and under the floor tile?

gabyjan wrote:

i see it as how is this going to afffect me in just about everything.

Yep, we do. Because we look behind the window dressing and think past lunch.

My sister is just like YTL's neighbors. If her 401k balance is better than last year - happy happy time.

flyover
the ides of march?

NORTH CHARLESTON, S.C. (AP) — Boeing has released some information about the tax breaks it is expecting to get as part of the deal to put its $750 million airplane assembly plant in South Carolina, a newspaper reported Saturday.

No dollar amounts were disclosed, but Boeing said Friday it would pay Charleston County 4 percent on its real and personal property for 30 years, the same rate as for an owner-occupied home, according to The Post and Courier of Charleston.

Industrial taxpayers are typically assessed at 10.5 percent, but a spokeswoman for the manufacturer said the deal wasn't uncommon.

Boeing to pay 4% tax in SC, less than half of normal rate - WIS News 10 - Columbia, South Carolina |

---10.5% vs. 4%.
A little more lube, please.

burnside:
yeah: riding the tiger would work, if it hadn't been coopted by a few books and songs, which tend to mean that you grab that tiger and through riding it you become a stronger person....

@ which is bankers:
I don't want to write Fed Chair any more than I have to. It makes me throw up in my mouth every time I do. (where's a napkin).

@gabyjan:
don't know much about rodeos... I wish dryfly were here he may know... but I went to the MN state highschool rodeo championship this year at the State Fair, and one thing I learned: there is no controlling those horses. you just hold on for dear life. based on the numbers of kids slammed into the walls of the stadium, I'm guessing turning those horses is difficult to say the least.

HomeGnome wrote:

Boeing said Friday it would pay Charleston County 4 percent on its real and personal property for 30 years, the same rate as for an owner-occupied home . . .

Reported as a concession. Or could you call it parity?

ytl
reason i said turn horse is because thats what the riding instuctor yelled at me, up on a 16 hand horse who was taking a shot at kicking her. it worked and i got good at turning him i hope he got dizzy,i did.

gaby...SS funds were 'borrowed from' in the 90s. So its digging into future funds now. you know 'printed funds'. The world is awash in dollar liquidity (digital), a tsunami of it. The sad part is, it wasn't even close to being enough.

Yearning to Learn wrote:

yeah: riding the tiger would work

not to be maudlin but how about

roping a whirlwind

now i feel like we need another saying.

How about, "Ride the Snake"

Beer bonging the toilet.

just make sure we have the option for 'temporary for appearance sake' K?

josap wrote:

The Fed wants RRE to work on it's own. So it will suport the market during the slow time and see if normal market factors take over in the prime buying season. That is a good plan, if there is a market at higher rates and lower housing prices.

Makes sense, but that's a big IF. I know of friends who took houses off the market because they were not getting a 'decent price' for what I considered overpriced homes. They will be waiting even longer now!!

I edited, bonging.

It's a reply to TYL's grabbing the tiger by the tail thingy.

Gabyjan said:
ytl
reason i said turn horse is because thats what the riding instuctor yelled at me, up on a 16 hand horse who was taking a shot at kicking her. it worked and i got good at turning him i hope he got dizzy,i did.

I therefore nominate Gabyjan as next Fed Chair. (oops, said the F word, now I puked in my mouth again).

Misean:
I liked "boning the toilet" better.

it's evocative. it's everything I like in a Fed descriptor. Way better than riding tigers or broncos or even snakes (although those are all apropos).

there it is then: the Fed is boning the toilet. and will continue to do so for a very long time.

nanoo
oh yes i remember that scared the crap,and i wasnt too big on 401k or anything like that
might as well have had connected to the lotteries. jmo tho

hoocoodanode a single letter could put a metaphor in a completely different light?

Reminds me of the time I did that, keeled over in the process and got my head stuck between the throne and the wall. Upside: that cold tile floor felt heavenly on my throbbing head.

By Gawd, I'll do just about anything to be rid of the 1 inch pink and white tiles....

I've strapped on the beer goggles more than a few times in my life; but I've never boned a toilet (that I remember)

[note to self: failure to abandon dead thread leaves one talking to one's self.]

I've had some interesting conversations that way.

Yearning to Learn wrote:

the Fed is boning the toilet

I like it too

used in lieu of screwed the pooch, blowing it, sniffing their socks, etc

Any N. Cali posters get shaken up yesterday?

YTL..apparently Paulson did that in in his office pre TARP.

I'm up way before my squeeze is. He hears me talking in my office, usually saying profanities or OMG, omg...NO, OMG. I guess that makes me a total fruitcake.

If you'd gotten up at a reasonable hour, Gnome, like 5AM, you'd have caught the last thread, and would know how practical Scots are. Well, for you benefit, my dear, I'll make a suggestion for your shithouse.

Wear these and save yourself a lot of elbow grease.

Gnomester, nonetheless I hope Charleston gets the relo. They need the jobs and revenue. To say nothing of fresh payroll active in the local economy. From recent reports, Boeing could use some reduction in expenses. So be it.

HomeGnome wrote:

Any N. Cali posters get shaken up yesterday?

They're still working off their hangovers, east coast boy.

Bosch<

We're renting a Demolition Hammer this morning.
http://www.demolitionhammer.info/Demolition-Hammer-1.jpg

burnside<
You may well be right.

Juvenal Delinquent wrote:

I called that earthquake last week, but didn't feel a thing.

Oh fer chrissakes! It was a 4.1 in Humboldt County. That kinda quake wouldn't even cause notice from someone puffing the shake grown up there.

volker glad to entertain folk at volker stupidity

josap wrote:

No place if the rate of return is not enough to cover the risk. That leaves the Fed to come back in and suport the MBS pile of crap.

Exactly. They can have a stock market OR a treasury market OR a housing market. Pick 1 out of three.

If you audited the FED books, I'm guessing you would find that they are funding all three right now.

,rade misan
there was a 6.5 near euraka
besides that one.

Comrade Misean is Dope wrote:

puffing the shake

volker already sorry he ask question

i know thats why i asked kcoop for a boa icon for bank of america hehehehehe

We need snakes and a toilet, lol. I agree lmao this am. much needed too.

Comrade Misean is Dope wrote:

The stuff left in the baggy after you puff all the bud.

oh.

The toilet is on the airplane, right? (Sometimes I miss some bits.)

(And I've already been admonished to keep up, so obviously that going to happen.)

josap, when the fed started buying long bonds, I had a litter of kittens.

Now, what happens when CRE blows up balance sheets starting this year into the next 3?

Anybody a fully-fledged member of the 6 mile high club?

It's tricky business exiting, when there's 6 people waiting in line

anonymous
i thought we were talking about homeGnomes bathroom.maybe you arent the only one that missed some bits.

nanoo
a litter of puppies?

Will the Pecora gene express? Angelides talks a good game.

Nanoo-Nanoo wrote:

Now, what happens when CRE blows up balance sheets starting this year into the next 3?

They roll the CRE notes. Banks do this all the time, even in good times. There has already been some of this occuring. The smaller notes can be rolled, it is the mega million loans that won't be rolled.

The bigger issue to me, is that CRE investors are much more likely to walk away or file BK if they can't work a deal with the lender.

bearly i dont think the fed believes it either,maybe its a threat.

Blah-blah, blaH, blah blah Harry Reid said the word negro blah blah blah blah, blah blah.

Why do I watch MTP?

Election year and Fed tightening the screws on the economy and the electorate ahead of the election date ?

PULEEEEEEEASE!

Nanoo-Nanoo wrote:

when the fed started buying long bonds

The fed always buys long bonds. All they did last year was return the level of treasury bonds to where they were before the crisis.

The Fed printed a lot of money between Sept 2008 and Feb 2009. Since then they have been recycling the money from direct loans to banks (via the alphabet soup of programs) into Treasury and Agency purchases.

Now they are talking about removing some of the excess reserves (via reverse repos and Term deposit facility), which no one really know what effect it will have. However, the growth of money supply has slowed sharply in the last of half of 2009, this has been a bad sign in the past.

josap
what would it mean to and friends?

josap, here's the big fat risk I see with this. Ok so we now know the FDIC has created a LLC to deposit CRE loan losses that is being funded partially by private investors. But cbms is (like with RRE) another different ball of wax which as I read it, has been kept off balance sheet for the most part. These are the really big ones, Dubai a small sampling of how these debt structure go round the world.

I've already worn out 3 worry buttons on this one and I just bought another 24 packages of new ones for this year. I can't see a way around it. I am sincerely looking for one.

ytl
but remember does gods work and the fed might be jealous

the Fed is playing chicken, but it's with the retail investors, Pensions, and the nonbank entities.

Fed, banks on one side. Everybody else on the other.
Govt officials not sure which side to take, and thus decide to go with the "experts" (Fed).

josap wrote:

So far they have done pretty well with all 3.
Stocks are up.
Treasuries are stable.
Housing is loosing value less fast. ( that is about as good as that will get)

But the Fed would have to continue printing like crazy and that makes China very unhappy.

I agree. Eventually the dollar is worthless, but how can they ever stop? The jobs aren't coming back..

When Bernanke shows us a business plan that brings 10 million jobs back to the USA, I'll get interested in going long on the dollar.

gaby...those are 'shelf-stable' I'm going to barter with them if I don't use them all up. 100 to a case.

100 to a case? Whoa! Put me down for 6 cases, Nanoo. I'll be happy to pay you Tuesday.

7 warm degrees here today, almost 30 degrees higher than yesterday at this time!

Now what is this about the Fed drinking from the toilet again? Even the cat knows not to drink the blue water.

Nanoo-Nanoo wrote:

I've been attempting (and failing) at understanding reverse repos and tri-party reverse repos. This stuff makes my brain melt. My understanding of the money supply is that what the fed printed really just got soaked up in a super-duper giant sponge of leverage, not in the physical money supply...correct? This is particularly evident by the banks holding reserves at the fed reserve instead of lending. correct?

I keep a simple view.. I believe money supply can contract in one of two ways:
1) Take physical bills from your wallet and burn them
2) The Treasury can tax it out of the system and the Fed can delete the money from the computer

It grows whenever:
1) You borrow money
2) The government prints

Sell a house today, pocket $300K. Say the buyer never makes a payment, they gonna take the $300K away from you? Nope...

People get excited about the amount of money "contracting" when they talk about credit. Well it's not.. The growth in credit is slowing down... The money supply grows every time you borrow money.

When Bernanke shows us a business plan that brings 10 million jobs back to the USA, I'll get interested in going long on the dollar.

What if we just bunker the whole country? That would keep us busy for a while. And while we're at it, human-powered generators, like on triremes of yore, would likewise keep scads of people from milling around in soup lines.

The Fed is (supposedly) not concerned about the quantity of excess reserves becoming inflationary (i.e., banks starting another credit boom) because they can use interest on reserves, term deposits, repos, etc., which would lock up the reserves.

two links

first, Daily Reckoning trade of the decade:

Our NEW Trade of the Decade!

and two, Ambrose is observing the sixth Japanese Treasury Secretary in 18 months

18 months!

Japan braves bond markets with high-risk plans, talks down the yen - Telegraph

and if he has his way......

Nanoo-Nanoo wrote:

CRE loan losses that is being funded partially by private investors.

CRE players are the ones will really, really deep pockets. Private investors will suport that market much faster than RRE.

Bond Girl wrote:

The Fed is (supposedly) not concerned about the quantity of excess reserves becoming inflationary (i.e., banks starting another credit boom) because they can use interest on reserves, term deposits, repos, etc.

Well, they certainly can't sell MBS to soak up liquidity! But I rather suspect that the "excess reserves" are neither, and are in fact slush to keep the payment system and the churn going, as well as to bubble up the 401k market...erm stock market.

thank you bond girl, longwaver, Rajesh, josap.

I noted on the CR post the 'terms' of the LLC still keep some significant losses on the books of the DIF. But I think it is a positive move actually. I had more kittens on the Corus bank losses and CRE speculative losses put on the books of the DIF...not exactly part of their mandate as I understand it. Of course this is why the FDIC is a relic post Sarbanes-Oxley-Gramm.

This is why I still argue that although regulatory reform is mandatory...structural reform must come first for the regulatory reforms to actually work.

My stash of buttons also includes big red ones that say "don't panic".

Its still those cmbs I think the fed will have difficulties with and will add a lot of zero's to that balance sheet.

energyecon wrote:

think of the health benefits!

And the initial wave of coronaries would thin out the heard a titch as well. Double plus good.

Coppertops. That struck a nerve.

Bond Girl, thanks. I'll go read.

Anonymous Bosch wrote:
And while we're at it, human-powered generators, like on triremes of yore, would likewise keep scads of people from milling around in soup lines.
I just sat in fascination for the past 40 minutes or so at peopleofwalmart.com ... I agree, but the sickcare/fatcare/deathcare lobbies won't - healthy people will seriously impact their bottom line.

DAMN! And here I loaded up on those THIMK! buttons.

7 1/2%, I repeat. 7 1/2%

Back on topic: I say we see 30 yr fixeds at 3.5% before we see 6.5%.

great post Bond Girl, thank you again.

I still see a giant conundrum for fed policy vs the consequences not just in the capital markets but the real economy. This is exacerbated by interest rate policies by foreign central banks elsewhere, no?

About 15 years ago I watched a money-kiting operation between 3 companies grow to ever-larger amounts, in order to keep their respective games going.

It went from $50k amounts early on, to amounts of $500k in a years time at least a few times a week, until they got caught.

Arrow Trucking Lawsuit, Millions in Fraud
TULSA, OK -- Tulsa-based company Arrow Trucking is being accused of swindling a Utah bank out of more than $12 million. The company shut down operations three days before Christmas, saying it didn't have money for paychecks and had the drivers' gas cards turned off. The move left hundreds of drivers stranded across the country and everyone wondering what happened. Now a federal lawsuit filed on Friday details the months leading up to Arrow's closing.

Transportation Alliance Bank, or TAB, in Ogden, Utah was Arrow's main lender. It accuses Arrow of months of false statements and deception that resulted in the bank paying Arrow $12.5 million in inflated invoices. Among the allegations, that Arrow would show TAB a false invoice that a customer owed more money that it actually did. Then Arrow would change the invoice for the customer to show the actual amount owed and Arrow would keep the difference. A source who used to work in Arrow's billing department tells The News On 6, employees didn't know why they were changing the invoices and that it went on for several months before the bank discovered the discrepancy. The bank eventually cut off financing and Arrow shut down, leaving nearly 1,500 people without a job, including Oregon truck driver Mark Miller.

LL.

burnside beat me to it.

Distant memories suggest kitting doesn't work out very well.

CNN anchor was making fun of Florida yesterday. They were talking about Florida's new version of Puxatawney Phil and Groundhog day. They said "when the iguanas fall out of the trees in Florida, there will be 6 more weeks of winter."

Comrade Kristina wrote:

"when the iguanas fall out of the trees in Florida, there will be 6 more weeks of winter."

good one.

lol CK: I'll be on the lookout for funky looking handbags and shoes.

I thought it was cute too but those poor little guys are just flopping out of the trees. We've also had to rescue hundreds of sea turtles that went into shock from the frigid temps. I'll be glad when our temps get back up to normal...BRRRRR

It went from $50k amounts early on, to amounts of $500k in a years time at least a few times a week, until they got caught.

$2QQ. Two thousand trillion dollars. $2,000,000,000,000,000. If it implodes 1%, banks must write down 20 thousand billion dollars.

What about the velocity of money. Has it sped up any?

yogi--I think I agree with your math

the leveraging via derivatives has been unabated

fragile, that's how every analcyst describes the system

and why I'm thinking more along systemic failure, crossing currencies, whirling, whirling, whirling

in a wonderfully beautiful sea of Dervishes

.....huh? wha? I nodded off there

http://research.stlouisfed.org/publications/mt/20100101/mtpub.pdf

See you all later.

GOLDMINE...thank you. Bond Girl.

This whole discussion of how much interest rates will rise seems to miss a number of important points.

1. If the Fed and Treasury aren't buying this stuff, the private sector will demand tighter underwriting standards. THAT will cause more trouble for keeping home prices artificially high.
2. The really interesting question for me is what will happen to real interest rates and prepayment on this stuff. A number of people who don't know MBS think of them as being like treasuries with higher interest. That's not the case. Treasuries don't prepay.

If deflation will continue over the typical time horizon of the bonds, you will get horrible default rates. Prepayments would consist mostly of foreclosures, but without loss of principal. As long as you are buying bonds guaranteed by the US Govt, not so bad.

If there is a lot of inflation, the bonds wouldn't be a very good investment. You'd wish you had invested in shorter term bonds, or something besides bonds. The only good part is they would prepay faster than in the deflation scenario.

With inflation similar to typical historic numbers (2-4%), these bonds will have a long duration. There will be moderate foreclosures, and plenty of people stuck in their homes unable or unwilling to move or refi. These would be an OK deal.

You've started something, Liz. We had one using doorknobs after some experimentation. Made life "interesting".

I had a Siamese who could sometimes open doors by
swinging on the knobs.

I thought OTC derivatives outstanding was like $600T?

530 thousand billion is only a little shy of 600 trillion.

why? do you like fingernails on chalkboards?

Why I only read 530 thousand... wow...

According to this ECB Paper its only $5 trillion gross... (I believe it is on page 12.)

Excerpt:
According to the BIS, the gross market value therefore provides a more accurate measure of the scale of ? nancial risk transfer in OTC derivatives markets. The gross market value measures the cost of replacing all existing OTC contracts and was estimated at USD 33.9 trillion at end-2008. However, even gross market values generally overstate the payment flows at risk as they do not take into account legally enforceable bilateral netting agreements or the collateralisation of OTC positions.

While it is difficult to calculate an exact figure that reflects the actual payment flows at risk in the OTC market, the BIS estimates that the gross credit exposure (which takes into account legally enforceable netting agreements but not collateralisation) in the global OTC market stood at approximately USD 5 trillion at end-2008. While this figure is significantly smaller than the USD 592 trillion in notional amounts outstanding, the exposures created in the global OTC market are still of a systemically relevant size. Moreover, as explained in the next section, it is also important to note that while notional amounts outstanding have recently decreased, gross market values continue to rise at a rapid pace.

This means adding more money SLOWS DOWN the velocity?

lawyerliz wrote:

This means adding more money SLOWS DOWN the velocity?

My SWAG is that the Total = Money x Velocity was cratering, so after trying to address velocity with rate cuts to the zero bound, they turned to jacking up money to maintain the total...which is unfortunately based on tons o' fraudulent value.
(taking money as the monetary base)

,rade kristina
cat opens round knobbed doors those hook and eye things up high so far work

Yearning to Learn wrote:

Perhaps they'll stop it and switch to something more covert. there are so many programs and backdoor options that have opened up of late. so perhaps mortgage support will take another guise.

That's right. They've been busy. By now, the govt support for asset prices and banking is deeply embedded in the system in dozens of ways. They ain't ever gonna let this get broken up.

Total deriv. approaching 2QQ. OTC 60 TT.

Similarly, gross credit exposures3 fell by 18% from an end-2008 peak of $4.5 trillion
to $3.7 trillion.

http://www.bis.org/publ/otc_hy0911.pdf?noframes=1

But that's if no counterparties were to fail. (Bwaahhhaaahhhaaaa) Also does not include CDS outside US.

I'm going skiing in the backcountry, where there's quadrillions of snowflakes, but no financial ones...

Adios~

some investor guy wrote:

If the Fed and Treasury aren't buying this stuff, the private sector will demand tighter underwriting standards. THAT will cause more trouble for keeping home prices artificially high.

Then that would defeat the whole purpose. The govt will guarantee repayment so that there will be no constraints on lowering underwriting standards. Underwriting standards can then be dialed up or down to hit the house price support goals.

It is not possible to make underwriting any tighter in South Florida
without reducing the number of loans granted from miniscule to zero.

If Citi, among the most egregious of Wall Street reprobates, feels it can get away with business as usual, it’s because it fears no retribution.

Without REAL financial reform - not more bullshit and outlook by assclown economists - Obama is gone in 2012

lawyerliz

my wife and i have accounts at a couple other banks

jpm-chase was... 10k...not the biggest deal

but as i said to the branch manager

its the principle of the thing

and the interest

lawyerliz wrote:

It is not possible to make underwriting any tighter in South Florida

So what are the current standards?

In fact, prospective South Florida borrowers would be
better off if underwriting went back to the way it was in
days of yore (the 60s and 70s and late 80s) and interest
rates went UP by a point or 2, and yes I mean a 100 basis
points or 200. People would complain a lot, but things
would start moving. (At even lower prices)

It isn't just South Florida. My Realtor friend here has said she can't get anyone qualified right now. She had one guy with an 800 FICO and a hefty down payment and the bank kept trashing the deal and asking for more every time they were supposed to close. The guy finally said screw it and paid cash. The only work she has is doing short sales.

lawyerliz wrote:

In fact, prospective South Florida borrowers would be
better off if underwriting went back to the way it was in
days of yore (the 60s and 70s and late 80s) and interest
rates went UP by a point or 2, and yes I mean a 100 basis
points or 200. People would complain a lot, but things
would start moving. (At even lower prices)

I think we are all having difficulty, as burnside said, reconciling these comments with the FHA rules, which appear very loose. Does the FHA have much, much tighter rules in FL?

heres the other article at mother jones

thats a great crib sheet for those

who want to show dis believers that the 'bailouts" go far beyond the TARP money

The Real Size of the Bailout | Mother Jones 

join the movement

Move Your Money 

Frank Rich's piece 'The Other Plot to Wreck America'
The is doing a far better job than terrorists could ever hope to do

YLSP wrote:

in the global OTC market stood at approximately USD 5 trillion at end-2008. While this figure is significantly smaller than the USD 592 trillion in notional amounts outstanding,

the notional amount of swaps outstanding was always hyperbole- it is this 5 trillion measure that is the important number. 5 trillion is a large number but it has to be put into perspective relative to the credit exposure of the global banking industry to various other products- C & I loans, mortgages, etc. Although I don't have the numbers my gut suggests that the 5 trillion number is a lot less than their exposure to those activities.

A secondary number which I think is even more important is the concentration of that number amongst financial institutions. My guess is that the exposure amongst the various financial institutions is quite small because of their netting arrangements and because most bank tend to run fairly balanced portfolios in terms of exposure and that 1/2 or more of that exposure is what the banking industry has to end users e.g. a pension fund that purchased a CDS to protect its bond investment or a corporation using a swap to manage its currency exposure.

What made AIG so unusual was that it was a very very large end user and thus anchored one end of a very large chain of transactions. Ironically, it was the credit protection mechanisms i.e. requiring counter parties to place additional collateral that made a problem into a crisis. If AIG's swaps hadn't required them to put up more collateral based on their down grade they might have been able to survive. Margin as required on contracts traded on an exchange are a useful way of getting rid of credit risk concerns but it is an important lesson to learn - "risk is never eliminated merely transformed" You exchange one kind of risk for another and by putting something on an exchange you substitute margin risk for credit risk. A sudden move requiring a large amount of margin sets into motion a whole new set of problems.

Comrade Kristina wrote:

The guy finally said screw it and paid cash.

I've thought that the best end for the housing crash would be: Banks start competing with cash buyers, and the banks should absolutely walk away from deals that are overpriced.

If loans are causing an asset to inflate, then the market for that asset changes fundamentally.

That is impressive.

I had a part calico/part tabby that had figured out the doorknob was the path to freedom. If someone left the kitchen chair near the door, she would put both paws on the doorknob and wiggle it. I would torment her by asking where her opposable thumb was, which was the only obstacle between her and unfettered freedom.

(She was the greatest cat on earth, btw.)

I have no re-fis or sales pending.

None, zero, zilch.

Either my deoderant has failed me permanently, or
something else is going on. My last file to close, sale at
57.5K loan at 43 or 46, I forget had to go conventional, because
the condo had no reserves, tho well kept and not too many
foreclosures. It took 6 months to get it thru and a couple
of different lenders. Everybody had given up, including the
real estate brokers. It was an estate sale, not a short sale.

One broker had nothing close in 09. The other one is a real
estate vulture, who buys very low priced houses and didn't
buy for years during the boom.

The first one has a listing down in the homestead area, which
is somewhat off the beaten track. 180k at peak, now listing
lowered to 50k, and NO CALLS, NO OFFERS. I expressed a
tad of interest myself, but it is too far away from my ofc. This
is an estate sale too. Never lived in 'cause the buyer died.

Maybe my sample size is too small. Maybe I'm crazy.
That's the way I'm seeing it. The onlything positive was my friend
client who sez the Gables/Grove are moving. The broker with
no sales sez maybe it's because the people who live there still
have employers willing to hire the corporate transfer companies
who buy the houses so the borrowers can move. I dunno.

At issue in front of the courts:
- Whether the information was "obtained from a person". In Fox Business it was ruled that information was obtained from the borrowers. In Bloomberg the judge ruled only the names were obtained from a person, but the other information was internally generated by the FRBs. In fact the judges both used the same case to bolster their decision (Buffalo Evening News vs. SBA). Bloomberg judge says the borrowers names are clearly not confidential information.
- Additionally, the Fox court imported a "program effectiveness" test; that the information would hurt program effectiveness. Bloomberg judge contends this was incorrect. A previous court of appeals held this "speculation" that Congress intended a "program effectiveness test".

I think there's strong evidence the Bloomberg case will hold; it looks like the judge intentionally was more thorough in answering some of the questions, perhaps because she was ruling against another judge in her district? I really hope this stands; I can't believe judges will allow "economic crises" concerns to be a rationale for withholding FOIA information. It seems like precisely the reason the information must be allowed to be released.

Government agencies are going to be used to bailout or provide assistance to banks, in massive amounts of money, yet there's not going to be any transparency? This is America!

Comrade Kristina wrote:

hefty down payment

CK, it's hard to know all the facts of any one case from hearsay, but the key pieces needed for a good loan (unsupported by govt guarantees) are:

1. Collateral. In FL, with RRE values going through a roller-coaster ride, I think a maximum of 70% CLTV on a conservative appraisal is wise.
2. Ability to pay. With FL going through a recession more severe than elsewhere, I would think a maximum DTI ratio of 35%, on a fully verified and steady income from a stable employer, would be wise.
3. Willingness to pay. I don't know the scale of credit scores very well, but you don't want to be handing over tens of thousands of dollars, or hundreds of thousands of dollars, of someone's savings to someone who has failed to repay other debts. So a good credit score should be required.

Do you know if this person refused a loan met all of these criteria?

China overtakes Germany as biggest exporter - Yahoo! Finance

Phx Metro RRE sales for Dec 2009.

By type of loan is near the bottom of the page.

http://www.armls.com/pdfs/HmSalesMaricopaNov2009.pdf

lawyerliz wrote:

I forget had to go conventional, because
the condo had no reserves, tho well kept and not too many
foreclosures. I

following up on my previous post I suspect that many of the stories of turn downs has a lot with elements like that.

I would also add that if I was a buyer I would be very concerned about paying all cash for something that a bank was not willing to finance. It seems to me that if you are prepared to make a large down payment (20-25%- again a large down payment means different things to people) and the bank was unwilling to finance it seems to that it is too easy to dismiss it as just a bank being difficult.

lawyerliz wrote:

I have no re-fis or sales pending.
None, zero, zilch.

I am sure the deodorant still works well, LL.

But the story you tell is primarily of low volume because of a lack of buyer interest, with the expected occasional incident illustrating how difficult a non-FHA is at this time in FL. All of this is not that surprising. But I am not hearing that it is hard for an owner-occupation buyer with solid downpayment, credit, and a good steady income, to qualify for an FHA loan in FL. Do I have that right?

China's Exports Increase, Possible Renminbi Appreciation Seen in 2010

We could see the appeals court rule the term sheets be released to public, however the names of the financial institutions has to be redaceted?

Earthquake?

Slept thru it.

6.5 is a nothingburger.

NW