Things fall apart. The center will not hold...
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September 28, 2007
BUBBLETALK - Open thread to talk about the mortgage meltdown, housing crash and run on the banks
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300 comments:
«Oldest ‹Older 201 – 300 of 300Sub-Prime Loans and CDOs Have Helped Create the Perfect Storm
You know things are getting bad when the Fed orders mortgage lenders to renegotiate loan payments with homeowners who are at risk of defaulting on their loans. Fed rarely steps in on such matters, analysts say that the Fed's message couldn't be more clear: A large number of foreclosures is not in the banks' best interest; a large number of foreclosed homes sold at auction prices is not in the real estate market's best interest; and a large number of evicted families is definitely not in the economy's best interest.
The housing boom that fueled the broad economy over the past decade has ground to a halt. Homeowners in virtually every demographic are feeling the squeeze. Home sales have dried up, home inventory is at a 9.6-month backlog (the highest in 16 years), foreclosures hit a record high in the second quarter, mortgage delinquencies also hit a record high in Q2 and, most alarming, home prices continue to fall. Standard & Poor's said its nationwide S&P/Case-Shiller Home Price Index fell 3.2 percent in Q2 compared with a year ago.
The Fed's fear is that if foreclosures continue, the real estate market will begin an accelerated downward spiral, forcing more foreclosures and destroying whatever is still propping up the U.S. economy. As usual in matters dealing with the economy, it's a complex situation. A confluence of factors -- a perfect storm, of sorts -- definitely brought the market to where it is now: predatory sub-prime lenders, relaxed lending standards, tighter bankruptcy laws that make it harder for individuals to declare bankruptcy, speculative real estate buying (home flippers) and, one of the biggest drivers, the use of collateralized debt obligations (CDOs) by investors who were seeking big returns.
CDOs made it possible for lenders to take on higher risks because they thought they were slicing and dicing the risk and selling it to investors. Unfortunately, investors rarely understood just what they were buying (and, boy, did they ever buy a lot of CDOs), as this issue's cover story (page 34) examines. Often, investors were blinded by the huge returns that CDOs regularly promised. Financial modeling is only partially to blame for the CDO mess. Portfolio managers, traders and risk managers either ignored warnings, ignored pessimistic data or failed to ask the proper questions required to understand what they were getting into when they invested in these obscure and risky instruments.
http://www.wallstreetandtech.com/
opinions/gregmacsweeney/
showArticle.jhtml;jsessionid=
D0VNREJWYOK5AQSNDLOSKH0CJUNN2
JVN?articleID=202100880
Fitch Ratings' wholly owned unit, Derivative Fitch, said the sudden withdrawal of liquidity, coupled with a possible sustained slowdown in new collateralized debt obligations (CDO) issuance, possibly means further impairment among CDO asset managers well into next year.
Even if the CDO market were to recover completely, specialist managers with poor or mediocre absolute performance may be completely shut out of new mandates as investors opt for managers with strong prior performance and good long-term business prospects, Fitch said.
http://www.forbes.com/
afxnewslimited/feeds/afx/2007/09/
24/afx4148176.html
A subprime mortgage unit of Fortress Investment Group, the $43bn hedge fund and private equity group, is to stop buying loans originated by brokers as it scales back operations. The move by Nationstar Mortgage, a wholly owned unit of Fortress, raises questions over the role that hedge funds and other relatively new entrants to the mortgage business in the market will play as a result of the subprime crisis.
http://ftalphaville.ft.com/blog/
2007/09/25/7568/fortress-unit-
moves-to-cut-subprime-links/
?source=rss
Need that new tire better buy it soon rubber price going up.
http://www.bloomberg.com/apps/
news?pid=20601012&sid=au4_
FWgMFacc&refer=commodities
Rubber futures in Tokyo, the global benchmark, rose for the first day in three on speculation that Japanese imports of the commodity may rise after the country's stockpiles almost halved from this year's peak.
Crude rubber stockpiles held at Japanese warehouses fell to 9,819 metric tons as of Aug. 31, down 49.7 percent from the peak at 19,504 tons as of Feb. 20, according to the Rubber Trade Association of Japan. Heavy rains disrupted plantation work in Thailand, slowing shipments from the world's largest exporter.
September consumer confidence survey and August existing homes sales data, is likely to set the tone for currency markets for the week.
Jonathan Cavanagh, a currency strategist at Westpac Banking Corp.
He said the market is now data dependent as news on the US economy will determine whether the Federal Reserve will cut interest rates again.
'The market is going to be a bit rangey until we get some fresh news on the economy out of the US,' Cavanagh said.
'My bias is that the US dollar will still head down'
Cavanagh said there remain lingering issues from last week including Saudi Arabia's decision not to follow the US with a rate cut which is normally the case.
The Saudi Monetary Authority said it would take 'appropriate steps' to halt a massive capital inflow that was pressuring inflation, leading the market to believe that Saudi Arabia might break its currency's long standing peg to the US dollar.
http://www.forbes.com/
afxnewslimited/feeds/afx/2007/09/
24/afx4151304.html
The New Zealand dollar hit a fresh six-week high against the greenback early today as the US currency showed continued weakness.
Investors are worried that weak economic reports will push the Federal Reserve to follow last week's half-percentage-point rate cut with more policy easing, further eroding the US dollar's yield advantage over other currencies, particularly the euro.
http://www.stuff.co.nz/
4214245a6023.html
http://tinyurl.com/yo4jeo
http://preview.tinyurl.com/yo4jeo
My God is this stripper-turned-mortgage broker OVER THE TOP!
Prince George's Fairy Tale Unravels For Woman at Center of Fraud Probe
Stripper turned Real Estate Agent turned Housewife turned Mess
a foreclosure avoider fraudster? straight out of the stripping and table-dancing business.
The June 2006 reception was equally glitzy, captured, like the wedding, on video. Patti LaBelle serenaded Jackson, 39, a former exotic dancer turned mortgage broker, and her groom, Kurt Fordham, 38. Later, the video shows the couple and their 360 guests sipping Mo�t and Cristal champagne and dining on lobster and shrimp fried rice, f
Last summer, Joy Jenise Jackson and Kurt Fordham hosted 360 guests at their $800,000 wedding. Jackson faces allegations of defrauding homeowners.
Last summer, Joy Jenise Jackson and Kurt Fordham hosted 360 guests at their $800,000 wedding. Jackson faces allegations of defrauding homeowners.
The price tag for the nuptials, Jackson told friends, was nearly $800,000.
I don't rent, I own.
Unlike you who bought into the bubble and will be paying on a depreciating asset I bought my place for .90 cents a square foot.
Blowfly is laughing so hard he is almost peeing in his drawers. I know that you are a dim witted, jerk-off, moronic renter retard that never owned anything except the stolen rusted Cadillac in front of your Liberty City housing project rental shack. You are the guy who's bussing the tables at Lincoln Road restaurants, carrying out the garbage to the dumpster going through it eating my leftovers and asking for spare change. Soon you'll be moving under the MacArthur Causeway. LMAO!!!
Blowfly said...
I don't rent, I own.
Unlike you who bought into the bubble and will be paying on a depreciating asset I bought my place for .90 cents a square foot.
Blowfly is laughing so hard he is almost peeing in his drawers. I know that you are a dim witted, jerk-off, moronic renter retard that never owned anything except the stolen rusted Cadillac in front of your Liberty City housing project rental shack. You are the guy who's bussing the tables at Lincoln Road restaurants, carrying out the garbage to the dumpster going through it eating my leftovers and asking for spare change. Soon you'll be moving under the MacArthur Causeway. LMAO!!!
___________________________________
Not only do I own, I have a 6.5% 30-year fixed mortgage with Wells Fargo home mortgage. Because I actually avoided the bubble and bought a home comparable with rent in the area (I could rent it out for 100$ more than my PTI+Association fee) I did not have to get a toxic mortgage like you did in order to pay the bubblicious price.
As far as my occupation; I have my Bachelors degree in Medical Technology from the University of Michigan-Flint And I am a registered board memeber of the American Society of Clinical Pathologist. BSMT (ASCP).
In short blowfly, you can blow me.
Does anyone have any tracking info source on the Austin 'luxury market' new home price declines? Talking about those multiple acre river and lake houses. Zip is showing the overall NW Austin market declines, but that is overwhelming the mid range subdivision homes in the $300-400 price range vs the $2-4Mil range of these luxury homes.
I wonder if anyone has done reports of returns increasing? I was at Home Goods spending my birthday gift card and some people there were buying stuff to stage their home. When we got to the register the clerk was upset about how much returns were increasing and there was a pile of stuff all around. I wonder if people return the stuff once the house sells, or doesn't sell.
meg said...
Just out of interest I went and did an IQ test, which scored 130. And I rent.
You know, IQ isn't really an accurate indication of intelligence. And it doesn't matter what your IQ is if you're an ill-mannered, mean-spirited, ego-centric tool. People just plain won't like you.
--------------------------------
Was this an internet based IQ test for which you paid $20 by chance? Moron, everyone gets a high score there. Then they feel good and tell their friends to go pay $20 too.
130...yikes yours is more like 30.
As far as my occupation; I have my Bachelors degree in Medical Technology from the University of Michigan-Flint And I am a registered board memeber of the American Society of Clinical Pathologist. BSMT (ASCP).
----------
The university of michigan at FLINT. And you are proud of that? God almighty I can only imagine the backwater hillbillies on campus.
Another shoe drops.......
American Home Mortgage Faces Inquiry
Monday September 24, 6:28 pm ET
By Stephen Bernard, AP Business Writer
Maryland Regulator Files Inquiry to Determine Why American Home Mortgage Checks Bounced
NEW YORK (AP) -- American Home Mortgage Investment Corp. bounced property tax checks for some Maryland homeowners, local and state officials said Monday, and they have demanded an explanation from the bankrupt mortgage lender and servicer.
The Maryland Commissioner of Financial Regulation filed an inquiry with American Home Mortgage on Friday. Melville, N.Y.-based American Home Mortgage has five days to respond to the letter, said Joseph Rooney, the deputy commissioner for Maryland's financial regulator.
Officials in New York and Washington state are also looking into bounced checks there.
Mortgage servicers typically collect property tax payments each month with a borrower's mortgage payment. The property taxes are then placed in an escrow account and held until property tax bills are due. Because they are placed in an escrow account, funds should always be available to make the payments.
The Maryland regulator asked American Home Mortgage to explain why the initial checks failed to clear and to clarify the scope of the incident, Rooney told The Associated Press.
One possible explanation, he said, was that the tax payments were caught up in bankruptcy court and frozen. When a company is in bankruptcy court, its assets are frozen to protect creditors. But experts say escrow accounts are protected from creditors, and thus should not be frozen in a bankruptcy proceeding.
Whether American Home Mortgage broke the law by bouncing checks from escrow accounts depends on how the account trusts were set up, said Ira Kharasch, a bankruptcy lawyer in the Los Angeles office of Pachulski Stang Ziehl Young Jones & Weintraub.
American Home Mortgage did not immediately return calls seeking comment.
In Frederick County, Maryland alone, American Home Mortgage bounced two checks totaling nearly $59,000 for property taxes on 12 loans serviced by the company. Frederick County received new, certified checks Friday to cover the payments.
In New York, where American Home Mortgage is based, at least one complaint has been filed with the state banking department related to a bounced check, a spokeswoman said.
American Home Mortgage bounced one check in Whatcom County, Washington related to a special tax assessment. Those funds were tied up in litigation as mortgage financier Freddie Mac, which owned the loans, wanted to change the company servicing them.
Freddie Mac fired American Home Mortgage as its servicer in August. Freddie Mac then seized the escrow accounts, but American Home Mortgage would not release the associated files needed to properly make the payments out of the accounts.
The two companies settled the suit last week, and those payments are expected to be disbursed by a new servicer hired by Freddie Mac.
"We were assured the money was handed over to a third party" in order to make the payment, Whatcom County tax supervisor Judy Reed said.
Regular property taxes, like those recently paid in Maryland, are due in Whatcom County Oct. 31, Reed said. Property taxes are collected at varying levels of government at different times of year across the country.
American Home Mortgage filed for bankruptcy in August amid the tightening credit market and demands for more collateral from its lenders.
Despite closing down its origination business, it continues to operate its servicing unit. American Home Mortgage was the 27th largest servicer in the country, as of June 30, with $43.49 billion in volume, according to Inside Mortgage Finance.
American Home Mortgage is scheduled to sell its servicing unit in a bankruptcy auction this week. Billionaire investor Wilbur Ross, known for purchasing bankrupt companies and turning them around, is expected to be among the bidders for the servicing unit.
Ross already has a connection to American Home Mortgage, having provided the lender a $50 million loan to help it finance its operations and pay legal fees during the bankruptcy process
As far as my occupation; I have my Bachelors degree in Medical Technology from the University of Michigan-Flint And I am a registered board memeber of the American Society of Clinical Pathologist. BSMT (ASCP).
You've got to be kidding me. You are a pathological liar claiming to own when your 30 or so IQ could not determine the difference between owning, stealing and renting. I believe you're too dumb to own or steal so you've got to be a renting imbecile. Good that you rent in Miami where you can commit crimes and not be punished on account of being a retard. I can't believe that a brain amputee such as yourself is allowed to comment on this otherwise interesting blog. Head back to the hills where you came from Mr. Fred Flintstone...
Oops, Lennar just posted a loss of a half billion.
In an unrelated note, the nimrods in the UAW went on strike against GM. A long strike would almost certainly bankrupt GM which would mean all current and retired GM employees would lose their retirenment health benefits and most of their pensions. The workforce would be reduced to next to nothing and most of the cars would be built offshore. I think the sun is setting on the UAW.
As far as my occupation; I have my Bachelors degree in Medical Technology from the University of Michigan-Flint And I am a registered board memeber of the American Society of Clinical Pathologist. BSMT (ASCP).
----------
The university of michigan at FLINT. And you are proud of that? God almighty I can only imagine the backwater hillbillies on campus.
____________________________________
I am proud of the fact that my degree lets me work in a job that I enjoy going to every morning and provides me more than enough money to support my family. I also get to feel good knowing the work I do helps to save the lives of people who have cancer.
I really don't have to prove myself to retards on the internet. Just making the point that Blowfly is an assclown who resorts to dreaming up false generalizations about people to make him feel better about his financial ruin.
Hi, my name is Ben Bernanke. Some have called me "Helicopter Ben". I wanted to earn my flight wings, so I said to myself, "Self, let's destroy the US Dollar to pacify the Wall Streeters. Makes as much sense as anything."
And so that's what I'm doing.
Thank you!
Thank you very much!
Like my beard? It distracts from my bald head, no? Greenie had a bald head and no beard! So I'm better! And I'm an inflation fighter who has studied the early 20th century depression VERY CAREFULLY. With a cool beard!
Thank you very much!
i think blowfly's on the verge of a complete mental breakdown
for all you Ron Paul doofuses:
http://www.freep.com/apps/pbcs.dll/article?AID=/20070925/NEWS06/70925040
And you wonder why nobody takes you people seriously.
Shhh!!!!!
“Thanks to the nearly flat-lined downtown real estate market, what was supposed to be a luxury condominium tower is morphing into a landmark low-income apartment project.”
“Goodbye KB Homes…got approval in April 2006 for a ritzy 184-unit condo design on B Street. Enter a San Diego firm planning to tweak that blueprint into 226 apartments for families who earn less than $42,000 a year.”
“The developer, San Diego-based Affirmed Housing, got the land at the bargain-basement price of $4.4 million, or $202 a square foot. The current per-square-foot average is $250; the average was $350 during the market heyday two years ago, said one real estate economist.”
“The area is on the edge of the downtown renaissance, with new residential towers popping up all around.”
“Across the street, a new condo complex is halfway finished. Vantage Point is selling at market prices, with one-bedroom units advertised at $350,000 and up. Two other new market-rate condo buildings, Smart Corner and Aria, are a few blocks away.”
Wasn't Flint ranked the worst city in America at some point? Eeegads.
Nah, Poor Blowfly just owns a condo in Miami and posting the truth that he lost 50% of his money really hit home.
I actually feel bad for the guy. Its natural when presented with the facts the choices he made have now led to his financial ruin to strike out in anger at the messanger.
Hmmmm ... crime in major cities suddenly skyrockets after DECADES of decreases.
Idiots :
http://www.kxnt.com/FBI:-Violent-Crime-Up-in-Las-Vegas/997895
It's the housing crash you morons.
I kind of like my "shitty 1BR rental" as most of the trolls seem to love to pounce upon.
I'm a simple man...All I need is a 1BR.
However...it's a brand new 1BR condo in Downtown Seattle where the two others (identical) for sale are priced at 550k (lower floor) and 650k (higher floor) respectively. Yeah...they have all the slab granite, stainless appliances, wood floors, spectacular views etc. etc. and are concrete & steel...not stick built.
I know I know...my owner didn't pay those pie in the sky prices. He only paid 508k...plus @450/mo HOA dues + property taxes.
I pay just over $1650.
And I can order room service from the fancy hotel in the complex also if I want!
Shitty 1BR?
I think not.
160 major U.S. lending operations have "imploded"
http://ml-implode.com/
Dollar hits fourth new low in as many days against the euro.
The dollar resumed its fall against the euro Tuesday, the fourth consecutive day of record lows.
The euro rose to its fourth consecutive record high, $1.4153, after worrying consumer confidence and home sales data were released Tuesday morning. By late afternoon in New York, the 13-nation euro was at $1.4146 compared with $1.4087 late Monday.
It was a half-point interest rate cut to 4.75 percent by the U.S. central bank last week that dragged the dollar down.
http://www.heraldstandard.com/
site/news.cfm?newsid=
18852978&BRD=2280&PAG=
461&dept_id=468387&rfi=6
IMF chief says credit crunch will continue.
International Monetary Fund managing director Rodrigo Rato says most of the impact of the global credit crunch will be felt in 2008 and the United States will be hardest hit.
Rato sees no quick fix for the global credit crunch triggered by defaults on US subprime home loans.
A few more months will be needed to access the full impact on banks, companies and governments, he added.
Rato is leaving the IMF and has declined to comment.
http://story.malaysiasun.com/
index.php/ct/9/cid/
3a8a80d6f705f8cc/id/285448/cs/1/
China’s inflation surged to an 11-year high in August and the trade surplus grew, the government reported Tuesday, adding to pressure on Beijing to ease currency controls and raise interest rates to cool its sizzling economy.
Inflation rose to 6.5 percent. The trade surplus widened by 33 percent over the year-earlier period to $24.97 billion, the second-highest monthly level on record.
The jump in the trade gap could add to pressure from Washington for Beijing to ease controls that critics say keep its currency undervalued and add to its surplus. The U.S. Senate is already considering two measures that would impose sanctions if Beijing fails to take action.
China ran a $15 billion trade surplus with the United States in August, according to customs figures. Exports to the United States rose 16.7 percent to $20.9 billion, while imports of U.S. goods rose 15.5 percent to $5.9 billion.
China’s trade surplus with the United States stands at $103.3 billion for the first eight months of the year, according to the Chinese government. It often reports a smaller figure than Washington for its trade gap with the United States.
The United States reported a trade deficit of $232.5 billion with China last year, its biggest ever with any country. The gap this year is expected to exceed that.
http://www.agweekly.com/articles/
2007/09/25/news/ag_news/news66.txt
Commodities have soared since last week's interest-rate cut, sparking inflation fears.
Oil shot to record levels above $80 a barrel, and gold climbed above $740 an ounce to its highest point since 1980. Copper and soybeans also jumped.
Commodities have been rising for years, amid growing demand from emerging economies, though they stumbled over the summer along with stock prices.
The rate cut could boost global growth and lift commodity demand further.
The cut depressed an already weak dollar — lower interest rates push investors to higher-yielding currencies. This made oil and other commodities priced in dollars appear cheaper to overseas investors, boosting prices.
http://seattletimes.nwsource.com/
html/businesstechnology/
2003900437_stoxcenter25.html
?syndication=rss
The euro struck another record high against the dollar in Asian trade on Wednesday on growing concerns that the world's largest economy is losing steam, dealers said.
"Market sentiment toward the dollar is still very weak and overall trend is to sell the greenback," said Marito Ueda, a currency trader at the FX Prime.
"The weak data overnight causes concern that the subprime housing loan problem might resurface," he said.
The Conference Board of the United States said its consumer confidence index fell to 99.8 this month, down from a revised 105.6 in August.
The confidence reading was sharply below Wall Street forecasts of 104.5 and was at its lowest level since November 2005.
The ailing US property market also got more bad news as an industry report showed existing home sales fell 4.3 percent in August and that the glut of unsold properties rose further.
http://news.yahoo.com/s/afp/
20070926/ts_afp/forexasia_
070926042301
Housing likely to continue to flail
The end of the real estate recession seems nowhere in sight, in light of a slew of bleak news Tuesday of falling sales and prices, a severe decline in construction and deep losses and layoffs at one of the nation's largest builders.
Sales of existing homes fell last month to their lowest point in five years, the National Association of Realtors says. The NAR says it expects more dismal figures for September as the housing market reels from the crisis in the mortgage industry.
http://www.usatoday.com/money/
economy/housing/2007-09-25-
existing-homes_N.htm
LOL at all the frothy rening hippies slinging big financial terminology around. Hey hippies what do you know about economics anyway? I thought all money was evil and we should just give peace a chance, right? Now suddenly all the filthy bandana-wearing rental hippies are economic experts. LOL.
Why don't you hippies stick to stuff you know like dipping tye-dies and swapping Greatful Dead bootlegs in your RENTAL studio apartments. Leave the money talk to the big boys and girls who actually OWN and WORK for a living.
If foreigners don't want the weak US Dollar they can always buy more wheat.
With the US Dollar getting weaker buying wheat is a better bargain.
Good time for Russia to stock up on US wheat.
It could be another "Russian Wheat Deal" Do you remember 1972?
http://www.agweekly.com/articles/
2007/09/25/news/markets/
markets15.txt
Wheat prices hit fresh peaks
Wheat prices surged again into record territory Thursday as dry weather menaced crops in the Southern Hemisphere, exacerbating the concerns of a world market bound by extremely tight supply and unrelenting demand.
Wheat Prices Skyrocket, Groceries Could Go Up Too
Prices for a bushel of wheat have more than doubled the going rate last year, that means everything you buy at the grocery store from cereal to pie crust could see a push.
One reason prices are high is because there's a shortage of wheat.
Most fields have already been harvested.
http://www.localnews8.com/Global/
story.asp?S=7101782&nav=menu554_1
US Dollar can only be the reserve currency of the world if US can control how the resource are sold.
http://www.telegraphindia.com/
1070925/asp/business/
story_8356231.asp
Energy-hungry India and China have been competing for Myanmar’s oil and gas reserves and, in recent months, the latter seems to be holding the edge.
Myanmar recently denied GAIL (India) Limited the status of “preferential buyer” for two of its (A1 and A3) offshore gas blocks and favoured PetroChina instead.
Myanmar’s decision to sell the gas to PetroChina had upset Indian policy-makers.
http://www.upi.com/
International_Security/
Emerging_Threats/Analysis/2007/
09/24/walkers_world_myanmars_
chinese_crisis/4791/
There is a further complicating factor in China’s presence in Myanmar, which is India’s nervousness at the prospect of a Chinese naval base at Sittwe in the Bay of Bengal, on India’s eastern flank.
This matches a similar Chinese-built port and naval base venture at Gwadar in Pakistan on India’s western flank.
Majority of hedge funds say '08 U.S. recession likely
http://www.reuters.com/article/
ousiv/idUSN2545697020070925
The global liquidity bubble is about to burst. The problem that we saw with Northern Rock is the tip of the iceberg. Get your money our of risky banks, and into either insured accounts or hard cash. It is going to start in about 1 month. Once the foreclosures start to jump, there will be runs on banks. Just like the 1929 run1
If bad loans go back to the same deadbeats then MBS investors aren't going to get paid.
Since most MBS securities are held buy foreigners who cares if those Asians lose their money.
http://www.canada.com/nationalpost
/financialpost/printedition/
story.html?id=1e1479bf-6b07-44d8-
9774-ac1932cc2176
U.S. House bill would let courts alter mortgages
Bankruptcy courts would be allowed to alter mortgages written by "predatory lenders" in moves that could save 600,000 Americans from foreclosure, according to the author of a bill introduced in the U.S. House of Representatives on Friday.
The legislation would repeal a provision that prohibits a bankruptcy court from modifying a home mortgage, according to Representative Brad Miller, a North Carolina Democrat, who sponsored the bill along with Democrat Linda Sanchez of California.
More bad news for US Dollar
http://news.moneycentral.msn.com/
provider/providerarticle.aspx?Feed
=FT&Date=20070925&ID=7526824
Losses in the US subprime mortgage market are set to escalate as falling housing prices prevent borrowers with adjustable rate mortgages from refinancing on better terms, data released on Tuesday suggest.
From today's Wall Street Journal:
(Sorry, I cannot post the link)
The housing market is going into a deeper chill, and consumers are starting to shiver.
Sales of existing homes in August fell sharply, and home inventories by one measure soared to an 18-year high, according to data released yesterday. One major home builder, D.R. Horton Inc., is auctioning homes this weekend with starting prices for some units at 50% off an earlier price.
The housing market is worrying consumers, raising fresh concerns about economic growth. Consumer confidence fell this month to its lowest level in almost two years, a new survey showed. Retailers such as Lowe’s Cos. and Target Corp. said they’re feeling the pain. Both reported softer-than-expected sales Monday.
“The combination of all this is indicative of an economy that has lost quite a bit of momentum,” said Joshua Shapiro, chief U.S. economist at the consulting firm MFR Inc., an economic forecasting firm that advises investors.
…
Optimists believe the Federal Reserve’s aggressive move last week to cut interest rates will help keep the economy out of recession. Also, exports are rising, thanks to a weaker dollar, and business investment is holding up.
Still, the pace of housing’s downturn is accelerating, surprising even some bearish analysts.
http://www.nytimes.com
/imagepages/2007/09/23
/weekinreview/20070923
_BAJAJ_GRAPHIC.html
From USA Today. This made me laugh a little. I appreciate those who know and admit their boundaries.
“I’ve given up forecasting how low housing sales will go,” says Joel Naroff, president of Naroff Economic Advisors.
I see that imbecile commenters on this blog are worried about Blowfly's financial health or real estate investments in Miami. This is apparent as you are too braindead to use Google. I make my money with other things than real estate motherf*ckers. The only way out of this is to elect Blowfly For President. Forget the dip-shit Ron Paul, he will do nothing for you. The only way to reinvigorate the real estate market is a national bulldozing program. All houses for sale and not occupied by the owner shall be leveled after 90 days on market. Is that too complicated for you f*cking morons? I suggest you all start training for your new careers at the Burger King drive through.
http://www.nytimes.com
/imagepages/2007/09/23
/weekinreview/20070923
_BAJAJ_GRAPHIC.html
__________________________________
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I see that imbecile commenters on this blog are worried about Blowfly's financial health or real estate investments in Miami. <<<
i beg your pardon....
Reality bites, even in bubblicious Florida:
"If you believe anyone telling you prices are stabilizing, or even showing signs of stabilizing, you are either on drugs or you have the IQ of a green mango. Prices are now in total free fall.. "
More at:
http://www.treasure-coast.us/weeklyupdate09-23-07?ref=patrick.net
The collateralized debt obligation CDO market has played a central role in creating the sub-prime housing quagmire we are currently muddling through.
How Does a CDO Work?
http://seekingalpha.com/article/
48283-how-does-a-cdo-work
What Went Wrong in the CDO Market?
http://seekingalpha.com/article/
48281-what-went-wrong-in-the-cdo-
market?source=feed
Late payments and defaults among subprime mortgages packaged into bonds rose last month, according to data for loans underlying benchmark ABX derivative indexes.
After August payments, 19.1 percent of loan balances in 20 deals from the second half of 2005 were at least 60 days late, in foreclosure, subject to borrower bankruptcy or backed by seized property, up from 17.5 percent a month earlier, according to a report yesterday from Wachovia Corp.
Prepayment speeds for the loans slowed, suggesting it's more difficult for borrowers to sell their homes or refinance, according to another report by New York-based analysts at UBS AG. Record levels of delinquencies and defaults on subprime mortgages are worsening as home prices decline and interest rates on loans adjust higher for the first time. As lenders tighten standards, borrowers are finding it harder to refinance into new mortgages with lower payments.
http://www.bloomberg.com/apps/
news?pid=20602007&sid=
aq8GPfDiASYc&refer=rates
Merrill 3Q Net May Be Hit By $4 Billion Writedown
Now it's Merrill Lynch & Co.'s (MER) turn to pay the bill from a summer that could prove even more painful for the investment bank than it was for most of its rivals.
For months, hedge fund traders have chattered about big losses in Merrill's loan portfolios, credit derivative trading and mortgage operations. On Wednesday, analysts piled in with their own numbers.
Goldman Sachs slashed its estimate of the rival brokerage firm's third-quarter earnings to 15 cents a share from $1.95, estimating a loss of $1.5 billion in the fixed-income division that includes Merrill's mortgage, lending and structured debt businesses.
"MER appears to be caught in the crosshairs of a number of headwinds," Goldman analyst William Tanona wrote in a note to clients, estimating Merrill will write down its leveraged buyout loan commitments, exposure to collateralized debt obligations and mortgage-related credit by $4 billion - more than each of its four main rivals that reported third-quarter results last week.
Goldman forecast net income of $208.9 million for Merrill's third quarter, down from $1.9 billion one year earlier.
Credit Suisse analyst Susan Katzke shaved her profit estimate by one-third in a pair of revised forecasts in the past two weeks. Katzke now forecasts earnings of $1.25 a share for Merrill's third quarter, down from $1.87 two weeks ago.
http://money.cnn.com//news/
newsfeeds/articles/djf500/
200709261837DOWJONESDJ
ONLINE000804_FORTUNE5.htm
Investors are bracing for up to €1,7bn in loan write-downs at Deutsche Bank when it reports third-quarter results next month.
HSBC Holdings, Europe’s biggest bank, said last week it would close its US subprime mortgage unit.
http://www.businessday.co.za/
articles/companies.aspx?ID
=BD4A572623
Crude oil rose a second day in New York as a tropical depression formed in the southern Gulf of Mexico and stockpiles fell to a 21-month low
http://www.bloomberg.com/apps/
news?pid=20601101&sid=
aVfTruUIVoRc&refer=japan
buddy.. the value of savings has been halved in the last seven years, not the lifetime at 3,5 percent inflation you tally?
From the Asbury Park Press:
(A NJ shore region newspaper)
http://tinyurl.com/25ay96
Last evening I talked to my wife about the housing crash and how we are going to be financially crushed. I told hr all about the stuff you guys write about here on this blog. I also told her that the dollar will be worthless and Gas was going to cost over $5 a gallon. We have about $50k saved up in CDs and I told her that unless we buy gold it will be pretty much worthless because we are going to have hyper inflation. I also told her that I might lose my job and that we will have to move from our current 2BR rental apartment to a 1BR or possibly face being homeless. Then I got drunk because I was so depressed and fell asleep. This morning I found a note on my night stand saying:
I'm leaving you and going back to my mother. You are a negative bi-polar depressed asshole. I'm withdrawing 25 Thousand from our savings account and will file for a divorce. Good luck hunkering down with Gold and canned ham.
Thanks a lot HP!
Arlene said...
Reality bites, even in bubblicious Florida:
"If you believe anyone telling you prices are stabilizing, or even showing signs of stabilizing, you are either on drugs or you have the IQ of a green mango. Prices are now in total free fall.. "
More at:
http://www.treasure-coast.us/weeklyupdate09-23-07?ref=patrick.net
September 26, 2007 10:35 PM
-----------------------------------------
You guy's have got to read this!
Thanks arlene.
Who has an opinion on when the foreclosures will reach their peak?
Hey cashcow, half of your problems have been solved. You are welcome, HP
ARMS WILL BE REFINANCED INTO 1% FIXED RATES!
KEITH WHY THE HELL IS THE GOVERNMENT GOING TO SAVE HIGH HOME PRICES AND KEEP UNDESERVING PEOPLE IN MORE HOMES THEN THEY CAN AFFORD WITH A BAILOUT!!?!?
Averting Foreclosures in Court
If a bill introduced in the U.S. House of Representatives on Friday passes, bankruptcy courts will have the authority to alter mortgages written by 'predatory lenders'.
According to the sponsors of the bill, Representative Brad Miller (North Carolina Democrat), Linda Sanchez (California Democrat), and Barney Frank (Massachusetts Democrat and House Financial Services Committee chairman), bankruptcy courts are currently prohibited from altering a homeowner's first mortgage loan.
It isn't clear yet how 'predatory lenders' will be sorted out from 'non-predatory lenders' in bankruptcy court, however, the new provision is expected to save more than 600,000 homes from foreclosure, and encourage lenders to work more closely with borrowers who are in trouble.
'Everyone will know what will happen in bankruptcy, so the fact that bankruptcy is an option would lead to negotiations between the borrower and lender ahead of that event,' said Rep Brad Miller.
Miller adds that responsible lenders have nothing to fear from the bill, but that predatory lenders should be nervous as they will most likely end up saddled with the mortgage.
A New Move By Countrywide
On the heels of the House bill, Countrywide Financial Corp, the largest U.S. mortgage lender, announced the company would be altering tens of thousands of loans before the end of the year in an attempt to stave off foreclosures.
Countrywide will be working with 35,000 borrowers in all, and will make modifications to at least 17,000 mortgage loans. Cutting or postponing payments, new repayment terms, and refinances are all part of the plan.
Countrywide is not the first lender to reach out to defaulting borrowers. According to a September 21 report from Moody's, lenders have already altered one percent of subprime mortgages.
Modifying Loans to Prevent Foreclosures
The mere idea of loan modifications has been heavily criticized by Wall Street and bond investors who fear that those with the riskiest holdings are most likely to get the break, while other investors get the shaft.
Nevertheless, at the beginning of this month, the Federal Reserve and other banking regulators started urging service companies to work with borrowers who are in danger of defaulting.
A good plan? Not really. Service companies are not mortgage lenders.
Service companies get paid to service (collect on) a loan. While some banks/mortgage lenders service their own loans, most do not. Instead, they turn the loans over to a service company-who either keeps the loan to service or turns it over to another party who has the option to do the same thing.
In others words, the Fed is asking a second, third, fourth, and possibly even a fifth party that had no hand in issuing the loan, to alter terms and interest. At best, this would be a conflict of interest because it allows a company to change the terms to continue servicing the loan.
At worst, it sets a dangerous precedent for the future and encourages even more risky lending.
http://tinyurl.com/yugqk4
Who has an opinion on when the foreclosures will reach their peak?
_____
Hard to see, the future is.
If a bill introduced in the U.S. House of Representatives on Friday passes, bankruptcy courts will have the authority to alter mortgages written by 'predatory lenders'.
________________________________
This bill is completely ridiculous and won't work. It will turn judges into mortgage brokers, for starters. How else will the courts be able to determine if a loan is predatory and/or if the bankrupt individual has enough income to pay for a refinanced mortgage at the going rate offered by lenders?
If a bill introduced in the U.S. House of Representatives on Friday passes, bankruptcy courts will have the authority to alter mortgages written by 'predatory lenders'.
________________________________
I think I understand Cramers remarks... about how banks don't want to originate loans.
If this bill becomes law, then its all out CREDIT CRUNCH TIME FOR HOUSING! Why? Because who is going to want to be the creditor holding mortgage paper or MBS, when the principal amount of the loan together with the interest rate is subject to change at anytime by the power of a BK Judge.
NO BANK, NO HEDGE FUND, NO MONEY MARKET FUND, NO INSURANCE CO., NOBODY IS GOING TO FUND MORTGAGES IF THIS BILL BECOMES LAW.
HOW MUCH IS YOUR HOUSE WORTH? ONLY AS MUCH AS SOMEONE 'CAN' AND 'WILL' PAY FOR IT!
How many CASH buyers do you think are out there? Hint lots of them, but only at something like 70% OFF current asking prices, where the ROI from rental income starts to make sense.
If this bill becomes law, I'd bet national median prices will be cut in half within 6 months or less!!!
Crude oil last trade 83.13
http://quotes.ino.com/
chart/?s=NYMEX_CL.X07.E&v=i
More bad news for the fall US Dollar.
If ECB raise rate the US Dollar will fall more.
http://www.iii.co.uk/news/
?type=afxnews&articleid=
6307586&subject=
markets&action=article
European Central Bank (ECB) may raise interest rates to curb inflation, making euro-denominated assets more attractive to investors.
http://news.yahoo.com/s/afp/
20070927/bs_afp/
germanyeconomyinflation_
070927133245
Inflation soars in key German regions
Inflation has jumped in four key German regions, anticipating a overall surge of prices in the eurozone's biggest economy, data released on Thursday showed.
Consumer prices jumped by 2.6 percent in the eastern German region of Saxony, following a rise of 2.0 percent in August, a statement said.
It was the biggest increase since June 2006, the region said.
On Wednesday, Germany's most populated region, North Rhine-Westphalia, said consumer prices had also surged by an annualised 2.6 percent in September, the biggest rise there in six years.
The sharpest increases by category in those states were for food and clothing, the regional statistics offices found.
At IXIS-CIB, analyst Sylvain Broyer was surprised by the price rises for clothing and shoes, which he noted were "unusual at this point in the year."
Fitch has downgraded two classes of notes and placed one class on Rating Watch Negative issued by Enhanced Mortgage-Backed Securities IV, Ltd. (EMBS IV). These rating actions are the result of Fitch's review process and are effective immediately:
--$14,000,000 class A-2 senior subordinated notes, rated 'A+', placed on rating watch negative;
--$6,000,000 class A-4 junior subordinated notes downgraded to 'B' from 'BB-' (remains on Rating Watch Negative);
--$30,000,000 preference shares downgrade to 'CCC/DR5' from 'B-' (remains on Rating Watch Negative).
EMBS IV is a mortgage market value collateralized debt obligation (CDO) collateralized by mortgage-backed securities (MBS), collateralized mortgage obligations (CMOs), asset-backed securities (ABS) and agency obligations.
http://www.forbes.com/businesswire
/feeds/businesswire/2007/09/27/
businesswire20070927005707r1.html
Houston ... I mean Ottawa we have a problem! HP check out the news regarding the Canadian banking sub-prime mess. Canadian banks on the hook for 135 billion. That's equal to all the profits for the six biggest banks in Canada for the next ten years!
Fitch Places $186MM on Watch Negative & Affirms $1.4B of Delphinus CDO 2007-1, Ltd.
Delphinus is a hybrid mezzanine structured finance collateralized debt obligation (CDO) that closed on July 19, 2007 and is managed by Delaware Investments. Delphinus has a revolving portfolio composed of residential mortgage-backed securities (88.9%), commercial mortgage-backed securities (0.6%) and structured finance CDOs (6.75%).
http://home.businesswire.com/
portal/site/moreover/
index.jsp?epi-content=
GENERIC&newsId=20070927005649&
newsLang=en&beanID=
1868105982&viewID=news_view
Banks flourish only if customers are confident that their money is safe. If people lose that confidence and prefer to put their wealth "under the mattress," banking institutions will fold like cards. Lending long and borrowing short can work only when the system inspires confidence.
Mortgage lending is inevitably long term. To cover such lending, banks depend on deposits by savers that may well be short term. If banks don't have enough deposits to cover their loans, they have to borrow on the interbank market. Banks are required to carry enough cash to cover up to five days of normal outgoings.
When banks are basically sound and solvent, there is no problem with these arrangements. But circumstances have not been normal recently amid fallout from the subprime mortgage problem in the United States.
Many of these loans were securitized, packaged and repackaged. Other banks accepted these securities often without adequately assessing the risks involved. As the ripples spread overseas, banks became increasingly reluctant to lend to one another against securities of doubtful value. Hedge funds seemed to grasp quickly that some mortgage institutions dependent on interbank borrowing were in a squeeze, and began short-selling shares in these institutions.
Northern Rock, a relatively new and aggressive mortgage bank based in northeast England, was known to be a major borrower in the interbank market and particularly vulnerable. When depositors heard that Northern Rock had applied to have the Bank of England (BOE) stand behind its obligations, they began to withdraw their funds, fearing that Northern Rock would go bankrupt and that they would lose their savings.
http://search.japantimes.co.jp/
cgi-bin/eo20070928hc.html
161 major U.S. lending operations have "imploded"
http://ml-implode.com/
CHINA'S COPPER PRICE TO KEEP CLIMBING: MINISTRY OF COMMERCE
The average price of 1# copper stood at 65,870 yuan (US$8,768) per ton in China in mid-September, up 1.7 per cent over the first half of September.
According to the latest report of International Copper Study Group (ICSG), world supply fell short of demand by 130,000 tons in the first half of this year after seasonal adjustment. The short supply gives strong support to the copper price hike.
http://au.biz.yahoo.com/070927/
17/1f14f.html
INFLATION, INFLATION, INFLATION
Foriegners taking advantage of weaker US Dollar to buy up US food supply.
http://news.yahoo.com/s/ap/20070927/
ap_on_bi_ge/commodities_review_13
Wheat, corn and soybean prices surged Thursday after the Agriculture Department reported U.S. exports are running well ahead of the average pace for this time of year — a reflection of strong worldwide demand and tight supplies.
Stockton Becomes Foreclosure Capital, USA
Families that fled the high-cost San Francisco Bay Area to buy a house in distant suburbs like Stockton now are losing them at record rates, according to samplings by RealtyTrac, which monitors default activity. The company analyzed default trends for the nation's largest 100 metropolitan areas and found Stockton had the nation's highest rate of foreclosures in the first six months of 2007.
About one of every 27 households in the area was in the foreclosure process in the first six months of 2007, according to RealtyTrac.
"They couldn't afford a home (in the San Francisco Bay Area), and they started pulling themselves out to the valley," said Alexis McGee, who operates Foreclosures.com, a Web site used by investors. "A lot of people bought houses they couldn't afford."
Other regions close to high-cost urban centers—Modesto, Merced and Riverside/San Bernardino—are also high up the foreclosure list.
http://cbs5.com/local/
local_story_270172226.html
The yen rebounded from a one-week low against the dollar on speculation losses related to subprime mortgage defaults will spread in the U.S. and Europe, slowing global economic growth.
The yen climbed against 14 of the 16 most-active currencies as investors reduced holdings of higher-yielding assets funded by loans from Japan, known as carry trades.
http://www.bloomberg.com/apps/
news?pid=20601092&sid=ahckCsFg.
CxE&refer=italy
The truth about what's happening now is that it is the beginning of a long and painful 3-4 years that sees the economy slide down into a recession.
The fact is the real estate industry went so mad selling and financing houses for years on end that there are now more houses owned by more people who can't afford to keep them, than there is income to support them.
Everyone was getting paid and everyone was making money so everyone went into a frenzy of activity. (Think: shark, freshly killed whale; cat, fresh raw fish).
It's like everyone reverted back into five years old and stuffed themselves with candy until they couldn't fit more in, and now they have to deal with what their body wants to do.
It's not going to be pretty. There are masses of houses financed way beyond what a non-fear-stricken buyer would pay. There are masses of people who bought houses on artificially low teaser rates that are now or will soon be expiring and whose payment will shoot way up beyond their ability to pay.
There will be an avalanche of houses going back to banks because they are financed way beyond what what any buyer would want to pay. Peoples' savings will be wiped out trying to hold on.
Home sales will slow to a trickle, associated jobs will disappear, spending will drop, job growth will drop, unemployment rise.
Just the same as the early '90's, it's going to be a long depressing 3-4 years. No-one is saying that right now because no-one wants to admit it to be true.
Though, where there is willfully ignorant behavior, financial institutions acting like pigs, individuals acting out of fear, there is (always) a price to pay.
Always.
If Greenspan were still Fed Chief there would have been higher rae raises, earlier to nip this in the bud.
Anyway, there's a recession coming and a lot of people losing their shirts.
CashCow said...
Last evening I talked to my wife about the housing crash and how we are going to be financially crushed. I told hr all about the stuff you guys write about here on this blog. I also told her that the dollar will be worthless and Gas was going to cost over $5 a gallon. We have about $50k saved up in CDs and I told her that unless we buy gold it will be pretty much worthless because we are going to have hyper inflation. I also told her that I might lose my job and that we will have to move from our current 2BR rental apartment to a 1BR or possibly face being homeless. Then I got drunk because I was so depressed and fell asleep. This morning I found a note on my night stand saying:
I'm leaving you and going back to my mother. You are a negative bi-polar depressed asshole. I'm withdrawing 25 Thousand from our savings account and will file for a divorce. Good luck hunkering down with Gold and canned ham.
Thanks a lot HP!
September 27, 2007 2:31 PM
=========================
You have (had) a very smart wife. Anyone who listen to the advice of bloggers is crazy.
I'm leaving you and going back to my mother. You are a negative bi-polar depressed asshole. I'm withdrawing 25 Thousand from our savings account and will file for a divorce. Good luck hunkering down with Gold and canned ham.
Only a renter could be so brainless to listen to advice from these bloggers. Anyway, your (ex) wife sounds like a stupid attention whore. I'd have kicked her c*nt ass out of the house a long time ago. Go get yourself one of those cheap downtown condos, I heard they are giving them away to brainfart renters such as yourself.
it would be great for home prices to drop 40%-50%, a great inter generational transfer!
given that old whites in US have 66% of wealth and they will not allow a change in Social Security that would allow genX to receive something out of it (they will not allow genX to drop out of SS either) it would be great for young people to buy their properties for less than the materials used!
a stock mkt crash also works as an inter-generational transfer. i'm so fed up with the entitlement mentality of old people, that i am welcoming both crashes... :-(
NetBank is the first US Bank that shut down since Superior Bank of Hinsdale, Ill in July 2001.
Someone needs to make a web page that start tracking US Banks failure like Implode-O-Meter did for major U.S. lending operations.
http://biz.yahoo.com/ap/070928/
netbank_closure.html?.v=14
FDIC Shuts Down NetBank Because of Excessive Level of Mortgage Defaults
NetBank Inc., an online bank with $2.5 billion in assets, was shut down by the government on Friday because of an excessive level of mortgage defaults.
It was the largest savings and loan failure since the tail end of the industry's crisis more than 14 years ago. Federal regulators appointed the Federal Deposit Insurance Corp. as a receiver for Alpharetta, Ga.-based NetBank.
NetBank, which had no physical branches, sustained significant losses last year "primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies," the Office of Thrift Supervision said in a statement.
The OTS oversees about 830 savings and loan institutions, or thrifts, ranging in size from giants like Seattle-based Washington Mutual Inc. to small community banks. By law, thrifts must have at least 65 percent of their lending in mortgages and other consumer loans.
NetBank had reached a deal to sell its deposit accounts and other assets to privately held EverBank of Jacksonville, Fla., but EverBank announced this month that the deal fell through.
EverBank in July completed its acquisition of NetBank's mortgage servicing business, and the FDIC said Friday that EverBank will purchase about $700 million in mortgage loans.
(they will not allow genX to drop out of SS either)
Did you know that SS is voluntary?
Think I'm wrong... prove it and show what law forces anyone to participte in FICA.
FDIC Shuts Down NetBank
http://tinyurl.com/29sv9z
FDIC Shuts Down NetBank Because of Excessive Level of Mortgage Defaults
Game on folks....
US Dollar Index fell like a rock today. Watch people start blaming Netbank bank collapse as the reason why the US dollar is collapsing.
USD Last trade 77.698
http://quotes.ino.com/
chart/?s=NYBOT_DX
Global sales of CDOs fell by about 50 percent to $61.6 billion in the third quarter, from $120.1 billion for the same period in 2006, as deteriorating subprime loans sapped demand for structured debt, Thomson Financial said.
http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=
2007-09-28T175916Z_01_N28434885_
RTRIDST_0_CDO-RANKINGS-UPDATE-
1.XML
"Entitlement Mentality" is a derogatory term that Republicans fostered to make people feel guilty about getting back money that they deserve and paid for all their lives to reach (most die before they even collect) and were guaranteed in a Democratic depression era society way back in Franklin Roosevelt's time. Now the government wants to get out of the payment business, but remember these are the people who allowed disability payments to drunks and drug users, but deny payments to legitimate citizens who worked all their lives and paid into the system.
On September 28, 2007, NetBank, Alpharetta, GA was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All insured depositors are now customers of ING Direct Bank, member FDIC. No advance notice is given to the public when a financial institution is closed.
The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a business checking account, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled information which should answer many of your questions.
Please select the link below to read more about this event:
FDIC Bank Closing Information for NetBank
The risk the Fed is running is that if the world begins to lose faith in the dollar then the Fed is useless. The dollar, and their ability to print more dollars, is the source of the Fed's power. Without that, they will just be a bunch of useless academics.
I'm perplexed as to why so many people are still hoping the Fed can save us from a situation they largely created.
What is the situation? Debt. Plain and simple. The U.S. is suffering from excessive debt. Don't believe me? Check out the statistics. Debt-to-GDP levels are at records, debt-to-output is at records, and debt-to-income is dangerously high [What I like about these measures are that they are relative to the size of the economy and therefore take into effect changes in inflation, population, and the like. In other words, with more people and more money, we can support more debt, but we cannot realistically support more debt relative to the size of our economy.] Government debt is reasonable relative to GDP and business balance sheets are strong, but consumer debt is simply too high.
http://www.safehaven.com/
article-8503.htm
Guys i've been reading HP for a couple of years i think. and while he is basically right, life goes on. there is more to the economy then housing. Yes it's worse than the tech bubble but we'll move on. Doom is Dumb.
lets just get on with it by offering what we think we should pay for housing. if they laugh insist that they take your number in 6mo they will be calling
The appreciation of the Saudi riyal against the US dollar during September, which saw the riyal at its highest against the greenback in 21 years, has fueled speculation whether the riyal will indeed maintain its peg to the US dollar or whether it will be revalued to a more realistic level to maintain the balance between the two currencies and therefore trade between the two countries.
Kuwait broke ranks in May 2007 when it depegged the Kuwaiti dinar from the US dollar and pegged it to a basket of major currencies to include the yen and the euro, which incidentally has similarly appreciated sharply against the US dollar. Kuwait defended its action saying a weaker dollar was driving up inflation by making imports more expensive.
In fact, there are signs that inflation is causing havoc with the dollar zone GCC economies. Saudi inflation hit a seven-year high of 3.83 percent in July as rents rose at their fastest pace since at least 2004, and a currency pegged to a sliding dollar helped drive up the cost of food imports. Inflation in Qatar, the world’s largest producer of liquefied natural gas, hit a record 14.81 percent in March before falling back to 12.8 percent in June. Inflation in the UAE, the third-largest Middle East oil producer, hit a 19-year high last year of 9.3 percent.
The problem for countries such as Saudi Arabia, UAE, Oman and Qatar — all big oil and gas producers — is that the US dollar serves effectively as a currency reserve for the above economies, whose dominant exports — oil and gas — are denominated of course in the US dollar. This is a double-edged sword. When the dollar is strong, everybody benefits from the currency upside. But when the dollar is weak, it puts pressure on the dollar-pegged currencies to revalue to bring parity with the downside effects of the weakening US dollar, such as potentially fueling inflation in the US.
SAMA recently declared that a 5.25 percent interest rate of the riyal against the US dollar is a realistic peg. This may control inflation but further fuel erosion of confidence in the US dollar.
http://www.arabnews.com/
?page=6§ion=0&article=
101872&d=29&m=9&y=2007
The appreciation of the Saudi riyal against the US dollar during September, which saw the riyal at its highest against the greenback in 21 years, has fueled speculation whether the riyal will indeed maintain its peg to the US dollar or whether it will be revalued to a more realistic level to maintain the balance between the two currencies and therefore trade between the two countries.
Kuwait broke ranks in May 2007 when it depegged the Kuwaiti dinar from the US dollar and pegged it to a basket of major currencies to include the yen and the euro, which incidentally has similarly appreciated sharply against the US dollar. Kuwait defended its action saying a weaker dollar was driving up inflation by making imports more expensive.
In fact, there are signs that inflation is causing havoc with the dollar zone GCC economies. Saudi inflation hit a seven-year high of 3.83 percent in July as rents rose at their fastest pace since at least 2004, and a currency pegged to a sliding dollar helped drive up the cost of food imports. Inflation in Qatar, the world’s largest producer of liquefied natural gas, hit a record 14.81 percent in March before falling back to 12.8 percent in June. Inflation in the UAE, the third-largest Middle East oil producer, hit a 19-year high last year of 9.3 percent.
The problem for countries such as Saudi Arabia, UAE, Oman and Qatar — all big oil and gas producers — is that the US dollar serves effectively as a currency reserve for the above economies, whose dominant exports — oil and gas — are denominated of course in the US dollar. This is a double-edged sword. When the dollar is strong, everybody benefits from the currency upside. But when the dollar is weak, it puts pressure on the dollar-pegged currencies to revalue to bring parity with the downside effects of the weakening US dollar, such as potentially fueling inflation in the US.
SAMA recently declared that a 5.25 percent interest rate of the riyal against the US dollar is a realistic peg. This may control inflation but further fuel erosion of confidence in the US dollar.
http://www.arabnews.com/
?page=6§ion=0&article=
101872&d=29&m=9&y=2007
Allstate takes a pounding
Insurer's shares are off 8% since June amid fear over $5 billion in subprime investments
http://www.chicagotribune.com/
business/chi-fri_allstate_
0928sep28,0,7526477.story?track=rss
Fitch Places Indymac's Servicer Ratings on Rating Watch Negative
The rating actions reflect the corporate rating of Indymac Bancorp ('BBB-/F2'), recently placed on Rating Watch Negative (see Fitch's September 26, 2007 Credit Update).
The rating actions also reflect the unprecedented disruption of the secondary mortgage market
http://www.forbes.com/businesswire/
feeds/businesswire/2007/09/28/
businesswire20070928005815r1.html
Inflation pressures were gathering steam Australia central bank will raise rates in the near term further weakening the US Dollar.
http://news.ninemsn.com.au/
article.aspx?id=300829
The Australian dollar stayed above 88 U.S. cents on Friday, within striking distance of its 18-year peak, boosted by growing appetite for higher-yielding currencies and rising commodity prices.
"It is such an amazing performance by the Aussie, having wiped out almost all the recent losses," said Tony Morriss, senior currency strategist at ANZ.
Australia is a big exporter of natural resources and gains in commodity prices help Australia's terms of trade and the dollar.
Surging demand for Australia's resources has helped its economy expand at a robust pace.
Fresh data on Friday showed inflation pressures were gathering steam and private sector credit was growing at a fast clip despite the turmoil in financial markets, reinforcing the view that the central bank will raise rates in the near term.
Fitch has downgraded Bear Stearns Asset Management's (BSAM) structured finance (SF) collateralized debt obligation (CDO) Asset Manager Rating to 'CAM3' from 'CAM2-'.
http://ca.news.finance.yahoo.com/s
/28092007/34/biz-finance-news-
fitch-downgrades-bear-stearns-
asset-management-s-cam.html
Hey Keith, cool to see your HP blog still GOING STRONG!
WOW - Just 2-months ago, the MSM was still at "full-speed ahead - everything's fine mode" - much different from today's headlines like, "MAJOR housing meltdown" and full "Systemic Financial CRISIS."
Woooow! JUST AMAZING!!!!!!
Now that everything back to normal and Fed Fund rate still down half a point shouldn't Inflation be the bigger concern.
Thus the weak US Dollar should continue to fall.
http://www.thehedgefundjournal.com/technical/index.php?articleid=54725552
Recent news in the financial press has focused on a potential ‘credit crunch’ amid speculation that recent high market liquidity may be coming to an end.
Never bet against the house, unless it asks you to.
The housing market is in such bad shape that one homebuilder is even helping investors bet its stock will drop.
That's not a misprint - it's exactly what Standard Pacific Corp. added as a sweetener to attract buyers for a $100 million convertible bond offering. Like most in the industry, the California-based builder has been hit hard by the real-estate prices collapse; enabling bond buyers to short its stock was the trick it needed to raise cash.
"With market conditions like they are right now, they must think this is their best approach," said Matthew Wilcox, a credit analyst at KDP Investment Advisors Inc. in Montpelier, Vt. "That will give them liquidity if they need it."
The unfolding reality is that things are far worse than even the most bearish housing industry watchers had anticipated.
http://www.zwire.com/site/
news.cfm?newsid=18866136&BRD=
1817&PAG=461&dept_id=68556&rfi=6
The Fed is gearing up the printing presses and revving up the helicopters.
http://www.smartmoney.com/
aheadofthecurve/index.cfm?story=
20070928
How come the dollar surged while the economy was weak in 2001 and 2002? How come the dollar fell as the economy strengthened from 2003 to the present? Clearly, there is no relation between economic strength and the value of a currency.
No, it's all about the Fed. It's all about how many dollar bills they churn out of their printing presses, and how many helicopters they use to rain those bills down upon our heads. That's all that matters.
Since the Fed cut interest rates by 50 basis points last week, the U.S. dollar has fallen by 1.7% against the rest of the world's major currencies. That may not sound like much, but it's actually a big move in the context of world currency markets. And it's especially notable because it takes the US dollar to a new all-time historic low.
Should anyone be surprised? The Fed's interest rate move was larger than expected, but its effect on the dollar could easily have been forecasted (in fact, I did, repeatedly, in this column). In essence, the Fed's move put more money into circulation to prop up what the central bank expects will be a weakening economy. When the Fed prints more dollars, then dollars become less scarce. So the price of dollars falls, just as the price of apples falls if a farmer produces a lot more apples and apples become less scarce. It's pretty basic economic logic.
And it's also basic logic that when the value of the dollar falls, the price of everything in the world — the dollar price, that is — tends to rise.
So we shouldn't be surprised to see the price of basic world commodities like gold and oil make new highs after the Fed announcement, just as the dollar made new lows. Over time, all the prices — in dollars — for all the world's goods and services will make similar adjustments.
Yes, we call that inflation.
More bad news for the weak US Dollar as Taiwan's central bank said they will continue to raise rates
http://sg.news.yahoo.com/rtrs/
20070929/tbs-markets-taiwan-
currency-b8dd11d.html
Taiwan's central bank said on Friday it will take appropriate measures to ensure the island's consumer prices remain steady, a week after it raised interest rates to a six-year high to keep inflation in check.
The comments fuelled some expectations that the central bank will continue to raise rates.
U.S. rates, however, are likely to fall further later this year, which will help narrow the gap and curb capital outflows from the island.
The central bank has been acting to prop up the Taiwan dollar over the past few months, mainly by raising interest rates and selling U.S. dollars in the foreign exchange market.
More bad news for the weak US Dollar.
With Inflation at 12 years high Singapore's central bank will allow its currency to strengthen
http://www.straitstimes.com/
Latest+News/Money/
STIStory_162229.html
SINGAPORE'S central bank will make its next monetary policy statement on Oct 10, the bank said on Friday.
The Monetary Authority of Singapore, which conducts policy through the Singapore dollar rather than by adjusting interest rates as most central banks do, left its policy stance unchanged at its previous meeting in April.
It has allowed for a gradual, modest appreciation of the Singapore dollar since April 2004.
Many economists expect that the MAS will again leave its policy stance unchanged at its biannual policy review even though inflation in the tiny city-state is on the rise.
The consumer price index rose 0.3 per cent in August from the previous month after seasonal adjustments but the annual inflation rate was at a 12-year high in August
With inflation running high in Hong Kong when will they scrap the peg to the US Dollar.
With Hong Kong being a major center for foreign exchange and derivatives activities what impact will a stronger Hong Kong dollar have on profitability when Hedge Funds convert their earning back into US Dollar.
http://news.yahoo.com/s/ft/
20070927/bs_ft
/fto092720071731235593
To keep the Hong Kong dollar in a trading band set at HK$7.75-7.85 to the US dollar, the Hong Kong Monetary Authority, the de facto central bank, has surrendered control of its interest rates to the Fed since 1983, when the peg was adopted.
That is fine when US and Hong Kong economic cycles are in sync. During the depths of the territory's last economic downturn in 2003, the Fed funds rate was conveniently just one per cent. But with Hong Kong now "enjoying its best period of sustained growth since the late 1980s", according to John Tsang, its financial secretary, the latest rate cut is just more fuel on the fire, and further exacerbated by a chronically weak US dollar.
"If interest rates continue to go down and the US dollar weakens further, we will experience expansionary consequences," says K.C. Kwok, the Hong Kong government's economist.
"[Economic] conditions here demand something different from the US," adds Tony Latter, a former HKMA deputy chief executive. "It's not always nice to have your monetary policy decided from abroad."
It seems like every countries are raising interest rate due to inflationary pressure.
Even Mexico has to raise interest rate.
Will this cause the price of crude oil from Mexico to go up again.
www.reuters.com/article/
bondsNews/idUSN2846281720070928
Mexican government bond yields rose for the fifth time in seven sessions on Friday as investors bet the central bank will raise interest rates soon to curtail inflation.
The yield on the benchmark 10-year government peso bond rose 6 basis points to 7.91 percent as its price fell 0.369 of a point to bid 100.522.
The bond is 16 basis points higher than its low point for the month on Sept. 19. Its yield soared after the central bank warned on Sept. 21 that a recently approved tax reform package could fuel inflation, and that it was keeping rates on hold "for now."
Inflation has been stuck in recent months around the central bank's upper limit of tolerance of 4 percent, and the bank removed mention in its last policy statement that it was on path to meet its long-term inflation goal of 3 percent.
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