http://www.itulip.com/forums/showthread.php?p=47721#post47721

Got Gold?

I think there are a fair amount of people who know what’s up with the pensions. However, they don’t speak, because those pensions are the nuclear payload of this whole financial debacle.

When the pension funds finally tap out, that’s when I get long again.

At the very least, he should not be allowed to speak in public on a day like today.

This guy was a director at GS??? How can housing prices be propped up, while every other asset class is selling off? And…why would artificial support beneath housing prices even a good idea in an environment like the current one?

That guy from Housing Panic is right. Monkeys. Monkeys. Our country is run by a bunch of goddamned monkeys.

We have the gubmint we deserve.

Clot @ 642

Mike Morgan seems to be the only one addressing pensions…

“If there was ever a perfect storm to hit pension funds, This is it…home builders, hedge funds, mortgage industry and REITS.”

I listened to Roubini on Bloomberg from yesterday. He slipped in “You need punishment at this point.” And also said basically that Volcker called the Bear Stearns bailout borderline illegal.

If thousands more financial workers from NJ train towns get laid off this Fall, will there be a rush to the exits bust in RE for the train towns next Spring as their severance packages expire?

“Fish don’t bounce, and neither has housing or commercial property. In fact, dead fish get pretty stinky. And that is what is happening in housing and commercial real estate. You can listen to clowns like Jim Cramer or Lawrence Yun talk about the bottom . . . over and over and over. Cramer has called three or four bottoms, and now he has decided to peg the bottom out 300 from now. This gives him lots of time to change his mind and to blame it on any number of things. But it’s not just Crazy Cramer.

The Hype – We keep hearing about all of the fixes to the system. Unfortunately, the only way to fix the system is to allow the free market economy to work. Bailing out Fannie, Freddie and other banks is not going to fix anything . . . other than to take care of investors who should have known better. The system worked on the way up, as people demonstrated how prices can sky rocket when greedy demand is fueling the system with free money from the Fed. We saw foreign governments and investors pour money into mortgage back securities because of huge returns . . . even though the writing was on the wall. So the only way to fix the system is to allow the free market to take home prices and mortgages back to where they belong. If that means there will be losers, so be it. There were a lot of winners on the upside, and I don’t see any of them giving back the profits and huge bonuses in the tens of millioins. Since we are NOT allowing the free market system to work this out, the bottoms we are seeing are only in the minds of the guys manipulating the system for their own financial gain. Eventually, the markets will work this out, but it will be very ugly when the market “fixes” the “fixes” put in place by thieves like Paulson.

The Players – No need to talk about Paulson, Bernanke, Greenspan, Yun or any of the other culprits, since everyone is talking about them. I’m sure you’ve had your fill. I’d like to share a peek into what some of the silent players are doing . . . or not doing.

Hedge Funds – The hedgies I speak with are split. Some are buying simply for the short term trade. Technically, the home builders have taken it on the chin, and it’s an opportunity for the hedgies to rotate out of commodities, oil, gold, retails, etc. It will not last. And as we have seen in the past, the hedgies can trash a sector. Another reason the buying of the home builders will not last is . . . the “R” word. Redemptions. Unlike mutual funds, the hedgies can actually hang on to your money. Many of the hedge funds lock you up for a year or more. But we are seeing two things. Investors that were locked up are seeing their investments unfreeze . . . and they are pulling out. We’re also seeing lawsuits, so the glitter of the hedge fund industry is fading. With that, we will see more unwinding of positions and more failure. The home builders and the commercial property REITs will take heavy hits. On the other side of the hedge fund factor are the hedgies that can’t wait to pummel their unlucky cousins on the long side.

Pension Funds – This unlucky group will take the hardest hit as the builders fail. Pension funds own home builder stock, and they don’t like selling stock. Just look at the record of CALPERs with the home builders. They’ve made complete asses of themselves for statements about Standard Pacific and Lennar, just to name two. But pensions funds have two more problems. First, they are also invested in the home builders through the pension fund investments in hedge funds. Second, they are invested in the home builders through direct loans for development and land banking activities. If there ever was a perfect storm to hit the pension funds, this is it . . . home builders, hedge funds, mortgage industry and REITs. More on REITs in another piece I am preparing as I tour the West Coast.

Mutual Funds – Another source of trouble for the home builder stocks. This week will be the first week the consumer will start to hear about the crisis in the financial industry. Sure . . . they’ve been hearing things for months now. But with the failure of Lehman, and maybe WAMU, Merrill and a few other surprises, we will start to see the nightly news leading off with these stories. We will probably also see some wild swings in the DOW, which is all the general public really knows about. As they see and hear new horror stories, they will begin to sell their mutual funds, just like the more astute investors have been doing with the hedge funds. Unfortunately, the consumer is always the last one out, but when they start pulling out, the mutual funds will be forced to sell the home builder stocks . . . and that’s going to hurt. One final note here. This week The New York Times did a piece trying to convince consumers to stay in the markets. That’s when you really know the end is near.

Insurance Companies – You gotta love this group. It’s another double, triple, maybe even a quadruple whammy for the home builders. Like the pension funds, this group has invested in home builder stocks, land and joint ventures. What’s different here, is these guys don’t take prisoners. The banks have been sissies when dealing with the home builders. They realize, if they make too much of a stink about things like covenants and “true” asset value, the banks will trigger a domino effect that will shut them down months sooner than the FDIC will shut them down. So the banks work with the builders to hide and manipulate the numbers so the bankers can continue to take down huge salaries and bonuses. We’re starting to see a break in the ranks between the insurance companies and the banks. The biggest break was just a couple weeks ago, when the insurance companies forced Woodside into bankruptcy. I realize that was a private builder, but the insurance companies will move faster than the banks to protect their interests. I believe we will see more builders pushed to the brink by insurance companies, not banks.

General Public – The public sucks up Cramer’s Crap through a straw. They can’t get enough of it. It doesn’t matter that Cramer says Bob Toll is buying stock, when reality is Bob and his brother Bruce are selling stock . . . as well as other friends and family. It doesn’t matter that the public is fed numbers that have misrepresented the state of the industry for the last four years. So now when the public is told the industry is bottoming, they want to be first to get in on the greed. Unfortunately, the traders and institutional traders moved the stock prices up in advance of the crap from guys like Cramer. The General Public thinks they are buying at the bottom, when in fact, they are buying at the top for 2008. We will see prices of the home builders 25-75% lower over the next year. It’s basic supply and demand. The demand is not there, and what demand has been there . . . will soon be disappearing like the jet plane in the David Copperfield performance. If you’re still with me . . . you know the airplane was never there. And the good news we are hearing about the housing industry is just an illusion as well.

Which Builders Stink Up First? – The obvious ones are already trading in low single digits, but there might be a surprise or two there as well. For the big boys, you need to look at the impairments they have taken in comparison to what they still need to take. You need to look at what they are selling and how. You can’t do those things sitting in an office reading reports from analyst that are totally clueless, because they are relying on numbers from the builders themselves, as well as manipulated numbers from the National Association of Realtors, the Fed and the Case-Schiller Gang. The latter has been the last of the great numbers to fall, but it is starting to crumble as people realize just how off-base the Case-Schiller index is. One analyst did a great piece on the problems with Case-Schiller . . . like the fact that REOs, short sales and other distressed property is not properly addressed by Case-Schiller.

Centex, KB Homes, Lennar, Toll Brothers, Pulte and Horton all have a variety of issues. For some, there is good news. For others, there is very dark and very dire news. Clueless Cramer should not even discuss the builders anymore, because at this point he is misleading the general public with inaccurate information. Some attorneys might refer to this as negligent misrepresentation. Others might call it something else, when you consider the pumping of Toll Brothers coming from Cramer. In any event, we are short a number of the builders, while we are cautiously watching others, and pairing trades for the more conservative approach.

Commercial Property and the REIT Explosion – I am on a West Coast tour to confirm a few things we have been seeing in other markets, prior to putting out another piece on the REITs. Remember, all REITs are not alike. I am only talking about the REITs involved with commercial property and office space. I have not found enough cracks in the other REITs to warrant my time. And like I tell my clients . . . when I go to the buffet, I like to eat the lobster, not the bread. Look for my REIT piece within the next week. We are short a dozen or so REITs, and we will be increasing our REIT short positions substantially. The Street has been pumping this stuff . . . without doing their ground zero research or their research from Behind Enemy Lines.”

LMAO