Tue 23 Sep 2008
“Oh my goodness, this payment is more than I thought it would be”
Categories: Economics , Housing Bubble , New Jersey Real EstateFrom the Press of Atlantic City:
Census supports feeling New Jersey ‘cost of living is out of control’
Nanci David fulfilled her dream of owning a home in 2004, moving into a two-story yellow house on a quiet Pleasantville street.
But now, the single mom said she’s thinking of a future outside New Jersey. Her housing expenses have been escalating, she said, and she still has another 27 years left on her mortgage, which is set at $1,530 per month.“I do like New Jersey, but the cost of living is out of control,” said David, 27, a Honduran immigrant who works two jobs to support her 7-year-old son. “My salary hasn’t really changed. I’ve been looking at moving to other places, maybe Florida or South Carolina.”
U.S. Census figures released today only bolster the perception that the Garden State is the land of high-priced living.
New Jersey homeowners last year paid the second-highest costs in the nation in maintaining a house with a mortgage, or $2,278 per month. Only Californians paid more, at $2,314 per month.
Meanwhile, the median price of a month’s rent in New Jersey, including utility and fuel costs, was the third-highest nationwide, at $1,026. Hawaii ($1,194) and California ($1,078) were first and second.
More than 46 percent of New Jersey mortgage holders and nearly half of all renters paid 30 percent or more of their monthly incomes on housing costs, 2007 census data show. Nationwide, only 37.5 percent of homeowners paid 30 percent or more of their income on mortgage and housing costs.“Everybody has bills, everybody has mortgages … and it seems like we’re at the highest with taxes. We’re at a breaking point in New Jersey,” said Jerry Cantrell, president of the New Jersey Taxpayers’ Association. “It has got to be turned around, or we’re going to be headed in a spiraling fiscal mess.”
…
Corretta Stringfield, a financial counselor with Tri-County Community Action Partnership, a Bridgeton agency that assists homeowners, said her clients often don’t realize how much it costs each month to own a home.“They think, ‘I can afford this’ because they are qualified, and then they find out down the line, ‘Oh my goodness, this payment is more than I thought it would be,” Stringfield said. “We make sure to drive home that the price in maintaining a home includes principal, interest, taxes and insurance. And while the prices of homes in New Jersey might be declining, the taxes aren’t.”
From the Star Ledger:
Corzine urges public works spending to spur state’s economy
Gov. Jon Corzine today proposed accelerating state spending on public works projects such as schools, roads and mass transit and encouraging the creation of new energy conservation jobs — all in a bid to forestall the dire economic consequences of the Wall Street financial crisis.
Corzine also suggested New Jersey’s bargain commercial real estate prices might attract jobs from New York’s embattled financial services industry.
The governor spoke about the crisis on Wall Street following a two-hour meeting in Newark, where he invited 27 business leaders and state officials to discuss strategies for bolstering the state’s economy. A $700 billion bailout package now being discussed by Congress not only should help financial institutions, but also should go toward keeping families from losing their homes, Corzine said. And he raised concerns about allowing huge compensation packages for Wall Street titans responsible for the current meltdown.
“How we pay people on Wall Street and in a lot of places needs serious revision,” said Corzine, who entered politics after running the investment bank Goldman Sachs. “There needs to be ‘clawback’ considerations when people have not done well and it comes out after they have been paid. Executive compensation comes under the purview of the board of directors, and I don’t think those boards have always done a good job.”
Among the ideas that emerged form the brainstorming session was bringing New Jersey’s smaller community banks together to form lending syndicates that, with backing of the state Economic Development Authority, could funnel capital to businesses caught in the credit crisis.
From the IHT:
Al Ray is so strapped for cash, the only time he eats out is on Wednesday or Sunday, when the local McDonald’s sells hamburgers for 49 cents.
Ray lost his engineering job last November, and has been working as high school tutor, scratching out about $1,000 a month — if he’s lucky. He struggled to make his $1,400 monthly mortgage payment and $330 monthly homeowners’ association fee until May, when he stopped paying.
Ray, 44, is looking for work and renting out a room in his two-bedroom condo in Davie, Fla., for $500, but his monthly income doesn’t match his expenses and he’s facing foreclosure.
“I barely have money to survive,” he said.
Ray is one of more than 7.5 million people — almost 15 percent of American homeowners with a mortgage — who are spending half of their income or more on housing costs, according to 2007 data released Tuesday by the U.S. Census Bureau. That is up from nearly 7.1 million the year before.
Traditionally, the government and most lenders consider a homeowner spending 30 percent or more of their income on housing costs to be financially burdened. But that definition now covers almost 38 percent of American homeowners with a mortgage — 19 million of them.
Though home prices have fallen this year, in the most expensive markets where home prices tripled during the boom, many working families still cannot afford to buy a home.
“We had a bubble,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “This is a case where we absolutely want the market to adjust.”
The data underscore the serious affordability problems in this country and highlight how the slightest financial problem — from a lost job to higher gas prices or insurance premiums — can put a family behind on their mortgages and into the realm of foreclosure.
When home prices fell in the early 1990s, borrowers had more equity in their homes, and were able to escape foreclosure. But now, an estimated 10 million homeowners owe more on their mortgages than their homes are worth, according to Moody’s economy.com.
From the Star Ledger:
Faltering economy slows immigration to N.J. and nation
A faltering U.S. economy slowed the flow of immigrants into the United States dramatically last year, with New Jersey among more than a dozen states experiencing a drop in immigration compared with the prior year.
But the state continued to have one of the highest rates of foreign-born residents, according to data released Monday by the U.S. Census Bureau.
The nation added about a half million immigrants in 2007, down from more than 1.8 million the year before, according to the Census bureau’s annual release of American Community Survey data, which looks at the social, economic and housing characteristics of the nation’s population.
“The U.S. is still a beacon for many people who want to come here for all kinds of reasons,” said William Frey, a demographer at the Brookings Institution who analyzed the numbers. “But what this shows is that the economy plays a big part in it.”
Fourteen states showed declines in the estimated number of immigrants from 2006 to 2007, including New Jersey, New Mexico, Vermont and South Dakota.
The fall-off in immigration, especially in New Jersey, comes as no surprise to James Hughes, dean of the Bloustein School of Policy and Planning at Rutgers University.
“I’d be shocked if it didn’t given the slow job growth in the state,” said Hughes, who blamed the decline on a stunted economy.
“We should be less of a magnet than we had been,” he said. “Word gets around in the immigrant community on where the good jobs are.”
New Jersey was producing some 74,000 private sector jobs annually from 1992 to 2000, a number that fell off to about 23,000 a year from 2004 to 2006, Hughes said.
“But in 2007 we virtually flat lined,” he said, citing just 3,700 new private sector jobs last year.
This year is far worse, he said, with New Jersey losing 14,600 jobs during the first eight months of 2008.
“Home building is in the tank,” Hughes said, explaining immigrants often find work in the construction industry.
From the Daily Record:
Corzine proposes ways to jolt N.J. economy
With the credit crisis threatening to send New Jersey’s economy into a tailspin, Gov. Corzine said Monday the state needs to work with energy companies and smaller, healthier banks to provide a short-term jolt.
Corzine also called for school and road construction projects to create jobs and jump-start the economy. But he acknowledged public works projects might be tough to come by given the state’s precarious finances.
“All of us understand there is a developing, real economic problem on the ground,” Corzine said. “In fact, I think most people think Main Street knew there was a problem before Wall Street knew there was a problem.”
frist
From WSJ.com
Bloggers React: The Bailout
Bloggers were mixed when it came to the government’s plan to step in and bail out Fannie Mae and Freddie Mac, but there were a few concerns raised, not the least of which concerns the possibility that any relief rally in the stock market will be a short-lived one.
‘The end of capitalism’
John Nery
Last week’s tumultuous events on Wall Street have pushed economists and non-economists alike to wonder about “capitalism’s new course,” as a headline in Monday’s The Wall Street Journal phrased it. (The subhead was less coy: “US bailout plan marks decisive turn in government’s role.”) On the BBC News website, a roundup of commentary ponders nothing less than the future of capitalism: “Where now for capitalism?” (I found the page through colleague Carlos Conde’s blog on gmanews.tv.) Indeed, the newspaper Conde writes for, the International Herald Tribune, carried a New York Times article Monday on the unlikely partnership of US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke with, on the “jump” or continuation page, the full and helpfully explicit headline: “Odd couple buries dogma in drafting Wall Street bailout.”
Lies, damned lies and overly optimistic RICHARD SIKLOS
LOS ANGELES — No shortage of villains have been accused of igniting the financial brushfire that is sweeping across Wall Street: The housing bubble, misguided interest rate policy, poor regulation, numbskull ratings agencies, vicious short sellers and out-of-control personal greed are just a few of the suspects. Maybe all share the blame. But what if the underlying problem goes far beyond Wall Street? What if the U.S. economy has just been a lot worse than we’ve thought for a long time and now the chickens are finally coming home to roost?
Grim,
“Gov. Jon Corzine today proposed accelerating state spending on public works projects such as schools, roads and mass transit and encouraging the creation of new energy conservation jobs — all in a bid to forestall the dire economic consequences of the Wall Street financial crisis.”
The two operative thoughts in that report are:
1. accelerate public spending - translation - spend money we don’t have faster.
2. Forestall the consequences of the crisis - translation - you can run but you can’t hide.
The Establishment Lives!
By DAVID BROOKS
Published: September 22, 2008
Once, there was a financial elite in this country. During the first two-thirds of the 20th century, middle-aged men with names like Mellon and McCloy led Wall Street firms, corporate boards and white-shoe law firms and occasionally emerged to serve in government.
Starting in the 1960s, that cohesive elite began to fall apart. Liberal interest groups took control of Democratic economic policy. Supply-side think tankers and Southern conservatives dominated the GOP.
Hedge Funds The Next Leg Down?
A key barometer of financial distress, overnight interbank offer rates (LIBOR), eased slightly today but is still noticeably above levels of a week ago. The TED spread, which compares three-month Treasury yields and three-month Libor, traded at 2.28% today, down from last week’s record above 3% (a TED spread below 0.90% is the norm).
“The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible,” says an economist who predicted the crisis two years ago.
“As the recession gets worse, corporate bankruptcies will increase, as will the default rate on corporate bonds. This, in turn, will reverberate in the market for credit default swaps [insurance policies against debt defaults] …Depending on the distribution of those losses, such an event might still break one or two of the big [providers] in this heavily concentrated market.” Wolfgang Münchau in the Financial Times of London, Sept. 21
From Bloomberg:
Paulson Plan May Push National Debt to Post-World War II Levels
Treasury Secretary Henry Paulson’s $700 billion proposal to stabilize the banking system may push the national debt to the highest level since 1954, threatening an erosion of foreign appetite for U.S. bonds.
The plan, which asks Congress for funds to buy devalued securities from financial institutions, would drive the debt above 70 percent of gross domestic product and the annual budget gap to an all-time high, possibly exceeding $1 trillion next year, economists estimated.
“This is sobering, absolutely sobering, even to someone who doesn’t drink,” said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington.
At risk for the world’s largest economy: a jump in interest rates prompted by the glut of additional Treasuries needed to finance the plan, and a diminished desire among international investors to add to their holdings. The dollar yesterday slid the most against the euro since the European currency’s 1999 introduction.
New York to regulate credit derivatives
By Aline van Duyn and Joanna Chung in New York
Moves to regulate the $62,000bn credit derivatives market escalated on Monday, with New York state planning to bring parts of the sector under the control of its insurance supervisors from January.
“The absence of regulatory oversight is the principal cause of the Wall Street meltdown,” said David Paterson, governor of New York, adding that credit derivatives were a “major contributor” to the crisis.
Andrew Cuomo, the state’s attorney-general, last week announced a wide-ranging investigation into potentially illegal short-selling of investment bank shares.
Seems like we are moving from gloom and doom to simply doom.
Former industry whiz warned about credit derivatives
LUCAS OLENIUK/TORONTO STAR
The U.S. government has now put its balance sheet at risk, says Satyajit Das, risk consultant and derivatives expert.
After making a handsome sum engineering exotic credit derivatives during his 25-year career, Das has spent the better part of the past decade preaching on their dangers.
Those convoluted debt instruments, particularly toxic credit default swaps, helped trigger the demise some of America’s most storied financial institutions.
With the financial crisis tightening its chokehold on global banks, Das’ forewarnings – outlined in his 2006 book Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – are looking rather timely. Still, some in the industry initially scoffed at his warnings.
“They thought that I had somehow found religion in my old age,” Das said in an interview at a downtown hotel. “There were two views. I was a crackpot now … The second was a deep sense of betrayal. Some people felt deeply betrayed. How could one of their own do this?”
Road-rage driver burns to death
http://preview.tinyurl.com/52mr5c
A driver, overcome with road rage, burned to death after ramming into a car and then setting her own car on fire by furiously revving the engine.
If you read the article and substitute Col klink for the driver and US. Dollar, economy, financial system, etc for other key words makes for an interesting read.
The bailout from hell
Debra J. Saunders
Tuesday, September 23, 2008
As for this Bush administration “troubled asset relief plan” to authorize Treasury Secretary Hank Paulson to spend another $700 billion bailing out investment firms has too many question marks, I am not sold.
Yes, I’ve talked to experts who believe the package is necessary to thaw an international credit freeze and the run on money markets. But it is difficult to assume that they really understand how to fix the credit mess when most experts didn’t see this coming.
As it is, it also doesn’t make much sense for the federal government to spend (which means borrow) as much as $700 billion - or a total of $1 trillion, when you add in the other bailouts - in order to stave off a credit crunch.
Alas, I do not see President Bush pushing a fiscally conservative bailout plan. At the very least, Bush should have opened with a smaller price tag, say, $100 billion.
From Barron’s,
Week of the Living Dead
Listen carefully to the cries of “chaos” on Wall Street: Some of those shouting loudest are trying to make others pay for bankers’ and borrowers’ mistakes. Finding no others willing to step up, the Fed and Treasury are becoming the nation’s stand-in speculators.
The Treasury will borrow to buy mortgages and the Fed will print money to buy Treasuries. The danger is that they are igniting a great inflation to stave off a great depression. If so, this week will enshrine President Bush with President Carter, and Ben Bernanke with G. William Miller.
Just as the Weimar Republic printed money to pay war reparations that the Germans couldn’t afford, the United States of America is putting its full faith and credit — until neither remains — behind mortgages that its citizens can’t afford. All investors can do is hope that the ultimate sacrifice of capital destruction won’t be necessary.
#16 continued
“I said: ‘You’ve got to get out of the car. It’s going to burst into flames.’
“But she raised her right fist towards me in a threatening manner before slamming the door shut.
…..Firefighters put out the blaze, but Ms was already dead.
My bad. Actually the driver was more like an investment bank.
Bail Me Out Tonight
The candidates’ reluctance to take on the biggest issue of the day might be understandable though, because sometimes when they try they just make things worse for themselves. In the WP’s op-ed page, George Will writes that McCain “is behaving like a flustered rookie playing in a league too high.” The conservative columnist says that McCain’s “childish reflex” to insist that the chairman of the Securities and Exchange Commission “betrayed the public trust” and should be axed “is a harbinger of a McCain presidency.” Will even goes as far as to wonder whether conservatives can really trust McCain to make good judicial selections due to his “impulsive, intensely personal reactions to people and events.” While Obama might not be ready to sit in the Oval Office due to his inexperience, it “is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency.”
Hey Grim,
I was just curious to see when you may be posting the September sales numbers. Those graphs are the highlight of my month.
Thanks.
From Dr. Housing Bubble
http://www.doctorhousingbubble.com/html
“King Paulson ran into a hitch. As it turns out, there may need to be a bit of oversight for that $700 billion bailout.”
(a) Executive compensation restrictions
(b) Regulation and accountability
(c) Mortgage cram-downs in bankruptcy court
(d) equity sharing
Frankly, these should have been in the bill from the beginning. The initial 3-page skeleton from comrade Paulson looked like one of those napkin deals you do with a drunken buddy. In fact, it was amazing in simplicity and lacked depth but provided incredible power.
Here is the 44 page bill that has a little bit more substance that came out today.
He provides the link to the politico site “Discussion Draft 110th Congress 2nd session.”
Clot - notes from your Mike Morgan call..
Morgan’s Dow @ 7200 in considerably lower than my 9600.
“Pensions will be wiped out…”
“Pelosi’s nephew fleeced Calpers…”
I’m looking like a real loser here…
If he discusses STRS let me know..They hold the bit I receive from my years in Oregon.
Thanks
What fresh hell is in store for us today?
Coming up on Squawk: Bob Nardelli drives Chrysler into a bridge abutment.
Clot, 24
regarding Nardelli. I thought Home Depot shoplifters are prosecuted to the fullest extent of the law.
guess not.
my bad.
sl
Excuse me. but why in the hell would you post something like this? This is not at all relevant to the blog topic and no analogy is going to make it so. You have a fixation on the macabre.
Get help.
bairen Says:
September 23rd, 2008 at 6:35 am
Road-rage driver burns to death
http://preview.tinyurl.com/52mr5c
A driver, overcome with road rage, burned to death after ramming into a car and then setting her own car on fire by furiously revving the engine.
If you read the article and substitute Col klink for the driver and US. Dollar, economy, financial system, etc for other key words makes for an interesting read.
Well that didn’t work - let’s try this (sorry to practice here - trying to post the discussion draft from the 110th Congress 2nd session.)
http://www.politico.com/static/PPM41_ayo08b28.html
“What fresh hell is in store for us today?”
Clot,
I’m going to a French restaurant and will start to get acclimated to French wines.
grim -
27 in mod, not sure why. No O or Mc References.
Repost from last night.
Theme song for the new Colonel and Bergabe guidelines for market trading….
http://www.youtube.com/watch?v=1NvgLkuEtkA
Bairen [16]
reminds me of the game Mad Libs.
how about “Mad Libs the DOW edition”
http://www.madlibs.com/home/
Idea: A live blog TV show… actually have someone telling the truth on TV. the True Reality Show starring Grim, your host. Guests tonight include… Kettle, Clott, and RE 101 ! A don’t miss line up!
any suggestions/additions??
It is week 2 of the gas crisis here in Nashville. I don’t need to drive because I can walk to everything I need on a daily basis, but even I am worried what I would do if I had to drive my car with its half full gas tank somewhere for an emergency. I can’t imagine what my coworkers who looked down at me for the past 2 years for living close by are thinking because they have been worrying about driving to work ever since gas prices started rising into the $3+ range last year.
Then I read the national news and the discussion on this blog about the news and housing. I have no choice but to feel depressed.
Anyone see this? This is great
http://dailyrecord.com/apps/pbcs.dll/article?AID=/20080923/COMMUNITIES/809230357&referrer=FRONTPAGECAROUSEL
The median home value in Morris county is now over $500,000, just because the owners think so
From SG[18],
“If financial companies are insolvent, let the creditors fight over the corpses in court.”
Chi (32)-
Tony Montana, as metaphor for me:
http://www.youtube.com/watch?v=M59I8eShAr8
BC (30)-
There are worse ways to go.
all disclaimers …
bought the index about 2 months ago. it’s about even. i assume that if the bailout is officially announced, it, along with everything else, will spike.
this is a long-term investment - money we weren’t going to touch until retirement. is the move to just let it ride, or try to prevent it from going down by yanking it out and then jumping back in six months from now?
and no, i’m not going to solely make a decision based on what 1-2 people here say. but you guys have been so right about so many things, it would behoove me not to put this out there.
My next door neighbor who works for a hedge fund in the back office was told they are being shut down. They are out of a job. All they are concerned with now is whether they get some sort of severance.
They are shutting down because their funding. The IB who was supporting them cut them off. From speaking with them, they were a sizable hedge fund.
Pretty sad cause this person is really nice….
What hedge fund?
AH [40],
This hideous ban, short, will decimate prime brokerage, options market and hedgies. In addition to that, it will even have an adverse effect on some good stocks, by taking away the ability to hedge.
#34 Gryffindor - I hear ya. There’s a gas shortage here in Atlanta too but it seems to be easing a bit. Colonial Pipeline diverted gas meant for NY to the southeast. Still, it will be another week before things settle down. I must admit that when I tried to find gas on Saturday and all the stations I tried were out, it really fed into my uneasiness about the economy and the mess on Wall Street. I am a bit ashamed to admit that I had a gut reaction to the prospect of an item I needed and wanted being unavailable at any price. I just gave up and went home but it made me wonder if things would just get worse, for all of us.
In mod. No bad words, just bad vibes.
This Bloomberg headline is another example of the current financial media bias:
Oil Short Squeeze Prompts Call to Curtail Speculators (Update1)
Last Friday was the biggest short squeeze rally in the history of the stock market and all the headlines were “Wall Street Jumps on Paulson Plan” yada yada yada.
When market manipulation occurs and the PPT isn’t involved it’s a problem, when they are involved it’s some sort of heroic act of patriotism.
John:
I do not really know which hedge fund they worked for. When I get their permission, I will tell you the IB that supplied them with capital.
“Sept. 23 (Bloomberg) — Lennar Corp., the second-largest U.S. homebuilder, reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.”
“The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,” Chief Executive Officer Stuart Miller said in the statement.
“Although the Federal government has recognized that stabilizing the housing market is critical to solving the current credit crisis, the government has yet to act meaningfully to help stabilize home prices,” Miller said in the statement.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aJjLkJ7UUql4&refer=news
Five Things You Need to Know: Will the Bailout Succeed - Kevin Depew
“There is one thing necessary to understanding what is happening and it is this: no one at U.S. banks, no one at the Federal Reserve, and no one in politics can accept the reality that real estate assets in this country remain oversupplied, overpriced and overleveraged.”
“It is that simple.”
http://wwwminyanville.com/articles/Paulson-banks-US-bailout-treasury-TAF/index/a/19114
Washington Mutual Inc. (WM) posted one of the largest changes in recent premarket trading among financials - a 8.7% drop - as worries persist about the nation’s largest savings-and-loan. The stock fell 22% Monday as the company continues to be courted by number of potential suitors, but has yet to announce any major news. The mortgage lender is considering all options, from a straightforward sale to raising new capital to a government-assisted takeover.
Meanwhile, Ambac Financial Group Inc. (ABK), jumped 8.3% to $3.80, reversing most of Monday’s drop caused by a warning that its asset portfolio would be insufficient to cover collateral requirements if the company were hit with a downgrade. Rival MBIA Inc. (MBI), which Monday dropped 5.7% despite the firm’s reiteration that it has enough cash to cover any required payments caused by a downgrade, was inactive premarket.
Of the two remaining large standalone investment banks, which are being converted out of that model and into traditional bank-holding companies, Morgan Stanley (MS) - which slipped 0.4% Monday - rose 5.2% to $28.50, while Goldman Sachs Group Inc. (GS) slid 1.5% to $119 on top of a 7% drop Monday.
JPMorgan Chase & Co. (JPM), which had been the Dow’s leading decliner Monday with a 13% drop, slid another 1.5% to $40.20 in recent premarket trading. Citigroup Inc. (C) slid 2.2% to $19.56 after dropping 3.1% Monday.
Meanwhile, Merrill Lynch & Co. (MER), which last week agreed to be acquired by Bank of America Corp. (BAC), slid 1.4% in recent premarket trading on top of a 4.9% drop Monday. Bank of America, which fell 8.9% Monday, was inactive premarket.
MAN! I suck at links!
I blew it AGAIN!!!
Could I kindly ask one of you capable people to post this so I can LOOK at it and see what I keep doing wrong!
I apologize in advance….
Got my first “bank owned”listing from my realtor in south jersey today. It was an interesting 2 story danish modern that I was in 2 years ago, asking was 500, a joke even then considering the deadbeats that got hold of it in the 80s cheesed out nearly all the charm with horrible DIY that was crumbling and the tackiest details. Bank is asking 280 but taking all offers. I’m not interested but it is still 80,000 over priced.
Yay! My first.
Capitulation
A military term. Capitulation refers to surrendering or giving up.
In the stock market, capitulation is associated with “giving up” any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.
After capitulation selling, it is thought that there are great bargains to be had. The belief is that everyone who wants to get out of a stock, for any reason (including forced selling due to margin calls), has sold. The price should then, theoretically, reverse or bounce off the lows. In other words, some investors believe that true capitulation is the sign of a bottom.
48 is RE: Minyanville link @ 46 - I am SO sorry!
Clotpoll Says:
September 23rd, 2008 at 8:16 am
Chi (32)- Tony Montana, as metaphor for me:
http://www.youtube.com/watch?v=M59I8eShAr8
clot: Scarface override….kind of early in the day to play the Ace of Spades….
#2
AL Ray needs to buck up and apply for a job at B&N where he could get 10 an hour.
Regarding Mike Morgan - Is there a link to a transcript or a recording of his conference call from yesterday?
I’d be very interested in hearing it.
Is this Paulson at his desk to start the day (or is it Kudlow)?
http://www.youtube.com/watch?v=X_VmpFr9SXE&feature=related
Gov. Jon Corzine today proposed accelerating state spending on public works projects
Great plan.
More public employees and more opportunity for corrupt sweetheart government contracts; exactly what NJ’s needs right now. Of course, all with borrowed money.
I have a different idea. How about cutting spending and putting money back in the pockets of NJ citizens.
56
it is maddening, this state and its voters
#56 you just don’t get comrade.
#4Main Street knew there was a problem before Wall Street knew there was a problem.”
Main St was part of the problem.
Glen@35
unbelievable article, and quite funny actually….
so this is what I am up against
Cindy,
My daughter is 7 and is in 3rd grade(autumn birthday). She was put in G&T by her school in 2nd grade. I didn’t find out until 2nd grade that she was being pulled out occasionally in first grade for testing by the G&T teacher. I suspect they don’t tell parents because they don’t want anyone campaigning for their child.
She reads well, she does word problems well etc. etc. The math facts are troublesome but as we discussed previously they are not emphasized at her school. Writing is coming along but behind her reading level. My husband is going to do a weekly lesson to teach her grammar because it is not taught at her school. We will also do flash card to help her memorize her math facts. I appreciate the information.
#35
This entire state will be school staff, police, municipal workers and state employees and they can all swap their tax dollars amongst themselves.
Lets get philosophical for a moment:
Excerpt for The “Tree of Liberty” letter
From Thomas Jefferson to William Smith
“The British ministry have so long hired their gazetteers to repeat and model into every form lies about our being in anarchy, that the world has at length believed them, the English nation has believed them, the ministers themselves have come to believe them, & what is more wonderful, we have believed them ourselves. Yet where does this anarchy exist? Where did it ever exist, except in the single instance of Massachusetts? And can history produce an instance of rebellion so honourably conducted? I say nothing of it’s motives. They were founded in ignorance, not wickedness. God forbid we should ever be 20 years without such a rebellion. The people cannot be all, & always well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty.”
————————————-
This passage seems to address the very problem that we have as a nation today. The MSM has become nothing but a propaganda tool for the corporations and their political interests, and the average individual is often not well informed on critical topics “The people cannot be all, & always well informed“.
The solution according to Jefferson is rebellion and protest. Perhaps the 70’s are a good example. Whether right or wrong, groups of citizens rose up in protest to actions they felt were wrong. this forces the discussion and resolution of the issues on both sides.
It has become socially frowned upon to challenge the status quo, to protest and down this road awaits “death to the public liberty“. As has been said many times in many ways, until the citizens take an active role in their government and society, the nation is left to the will of the corporations and political elite.
The current political backlash that appears to be developing over the IB bailout may perhaps be a glimmer of hope.
Stan@60
Me too. Maybe it’s this “sea of wealth” I keep hearing about.
errrm, correct #35. My mistake
Cindy,
your minyanville link
http://www.minyanville.com/articles/Paulson-banks-US-bailout-treasury-TAF/index/a/19114
Five Things You Need to Know: Will the Bailout Succeed?
It’s just past midday on the first Monday after the “Troubled Asset Relief Program” (TARP) proposal. The market is down 2.5% and things feel tense and weird, as if we are teetering close to the edge of something dangerous and unpredictable. That combination is usually all it takes to encourage the lurid thrill seekers while raising the hackles of the authorities. And indeed, that’s precisely where we find ourselves, that strange place between aggressive fun and oppressive violence.
ketlle1 = kettle1
#63 but that’s so……so…..French……
we are all about the Freedom Fries here in the good ole USofA
http://blogs.wsj.com/economics/2008/09/23/paulson-testimony-on-turmoil-in-us-credit-markets/
“The ultimate taxpayer protection will be the market stability provided as we remove the troubled assets from our financial system…
When we get through this difficult period, which we will, our next task must be to address the problems in our financial system through a reform program that fixes our outdated financial regulatory structure, and provides strong measures to address other flaws and excesses.”
A competent man has something that is missing here: timing. Banking is trust. Those in charge missed the timing on this one. They must be treated as undeserving of trust, including P.
An incompetent man also must show something that is missing now: penitence. Incompetence without penitence can never generate trust.
France seems to be a theme today…
“How we became the United States of France”
http://www.time.com/time/nation/article/0,8599,1843168,00.html?
“Census supports feeling New Jersey ‘cost of living is out of control’”
Do us all a favor and move out of NJ, how about Honduras for a change?
renter, personally, I’ve been brushing up on my Chinese banking terms.
“Corzine proposes ways to jolt N.J. economy”
How about lowering taxes instead? What an idea.
#71 frank: Temper, temper grasshopper.
You know we are all in big trouble here in NJ when the signs start appearing in Spanish.
(66) Kettle1 - Thanks ever so much. Also, thanks for the ctrl/scroll trick. It works like a champ.
Re: links -Do I need to add html at the end everytime?
#75 my son gets his homework instructions in spanish and english
#73 frank NJ taxes are high for the most part becasue NJ voters keep voting yes for spending increases. It starts at the lcoal level.
Of course now with all that has transpired some of the loudest proponents of increased spending that I know are now complaining about high taxes.
already discussed?
In a change over the weekend, the Treasury Department specified that foreign banks with significant operations in the United States would be covered by the bailout fund.
http://www.msnbc.msn.com/id/26843082/
Cindy
to add links i would suggest that you select the full text in the address bar at the top of the web page and then “right-click” and select “copy”.
Then right click in the text box on this blog where you type and paste it
largest 5 investment banks by market cap (chart)
http://1.bp.blogspot.com/_8rpY5fQK-UQ/SNhMHX0B3qI/AAAAAAAAESg/xFVqsX1YeX8/s1600-h/Market-Cap.png
In honor of the French theme today, I present the sheer awesome that is Flight of the Conchords.
#79 - Kettle1 - I’m pretty sure it was, I may be thinking of calculatedrisk though.
kettle [79],
Yes, it was thrown all over the walls here. Also, the rumor is that Heil Hank will bring in Nick Leeson to manage taxpayers cds risk.
#82 - Odd, youtube html seems to become some sort of odd recursive link when you post it.
From before,
http://www.youtube.com/watch?v=nUaQCvRyn78
(61) renter
Congratulations - your daughter is probably in the top 2% of her class. Schools usually hesitate designating “talented and gifted” because they are then obligated to track those students and make modifications.
No grammar - Hum…They may be doing a “daily language” component that has grammar built in. Also, adopted reading series have built in grammar lessons. There is usually a line-a-day format at grade 2 where punctuation and capitalization are taught.
Mix writing with reading. You can work with your daughter by having her write retellings of stories at home or create a different ending. By stressing organization, she could retell in a beginning, middle, ending format. Also, early writers rush to a “climax.” For them the entire story they have to tell IS the climax. Encourage the developement of the characters and setting..a rising plot - then a climax and ending.
Also usually - grade 2/3 writers need to be encouraged to expand their word choice. Have her use “active” verbs - don’t settle for is, are, was, were. Practice adding “ing” - Try to get her to “picture” what she wants to say -then write. That will usually bring out more expressive adjectives.
Hope that helps…
I’m at the PHL airport headed to Boston and every single tv is tuned to CNBC, I suppose they want us to keep track of how were spending our money.
This came out last week but just saw it today. It’s regarding regulators encouraging banks to invest in the GSE’s.
Lots of banks, including community banks bought up billions in preferred stocks and now want some sort of relief from that.
Not sure which regulators encouraged this but I’ve always suspected that Fannie and Freddie just used to take up some of the bad mortgages off the banks books.
In 2007, Fannie and Freddie bought another billions of dollars of bad subprime debt. Really bad. They’ve bought more in the past but not as bad as what they bought in 2007. Other banks were encouraged to invest billions of dollars in the GSE’s but they ultimately failed.
Now we’re talking about $700billion used to buy bad mortgages that even the GSE’s and private label mortgage securitization firms wont touch.
Let’s get real here. There is little value to these mortgages and anyone that says there’s a possibility of making a profit from the sale of these mortgages isn’t being realistic. Yeah there’s a chance, just like there’s a chance I can throw a ball at a wall and all the molecules in both can line up in such a way that the ball actually passes through the wall. But I’ve never actually seen that happen.
“There is little value to these mortgages and anyone that says there’s a possibility of making a profit from the sale of these mortgages isn’t being realistic.”
Couldn’t have stated the problem better Tom.
I like your suggestions and will give them a try. I didn’t realize they had to track my daughter. This is an important thing to know. Thank you Cindy.
http://www.doctorhousingbubble.com/california-housing-report-still-going-down-in-flames-median-price-for-the-state-301000-37988-homes-sold-in-august-101724-distressed-foreclosure-filings-you-do-the-math/
Okay Kettle1 - I’m trying that…
My daughter taught me by typing in the link - but some links are too long so your way is excellent!
I try to learn something new every day but lately it is 100 new things every day!
Wow…Even Ben Stein has seen the light, although he contradicts himself in his latest yahoo article.
Everything You Wanted to Know About the Credit Crisis But Were Afraid to Ask
http://finance.yahoo.com/expert/article/yourlife/109609
“And I was right…to a point. The amount of subprime that defaulted was at most - after recovery in liquidation - about $250 billion. A huge sum but not enough to torpedo the US economy.”
“As I said, the pit of loss is bottomless. Warren Buffett, the smartest man of all time in the world of finance, has called financial derivatives - of which Credit Default Swaps are a prime example - “weapons of financial mass destruction.” And so they are. As with the hydrogen bomb, no one thought they would ever be used to end the world. But unless someone figures a way out - and maybe the new RTC is and maybe it isn’t - we are in real peril.”
“Let’s get real here. There is little value to these mortgages and anyone that says there’s a possibility of making a profit from the sale of these mortgages isn’t being realistic.”
Tom [88],
Bingo.
They are worthless, the bottom tranches. The vultures don’t even want to sniff it. Shoved down the throats of the US taxpayers! In addition to that, with immunity!!
and impunity, even.
;P
getting pretty sick of this wall st vs main st dichotomy. it is a symbiotic relationship.
For those that don’t understand the problems with the financial markets here’s an example that I think will clear things up.
One day Dale and Bill are standing in the ally drinking Alamo Beer with their two friends. Bill finishes his beer and makes a successful hook shot with his empty can into the cooler. Dale, impressed but not confident he can repeat the act bets bill $1million that he can’t do it again.
Bill takes this bet but then completely misses his next shot and proceeds to write Dale a check for $1million.
When Dale goes to cash the check the teller informs him that there is only a bit over $400 is Bills checking account and decides to give Dale those funds. Bill then winds up bouncing a check.
Later on Bill and Bobby, Hank’s son are finishing their thanksgiving dinner and make a $1million bet over they wishbone. Bill wins and transfers his $1million claim against Bobby to Dale to cover his initial bet.
Yeah this an unrealistic example in a cartoon. In the real world, Dale would be able to approach someone and use his $1 million IOU as collateral to secure real assets and the entity selling those assets would use the “proceeds” of the sale in their earnings report which would increase their stock’s value. This gives them more borrowing power.
The first five senators are roasting Paulson, Bernanke & Greenspan.
there is nothing sad about a hedge fund closing. Hedge funds are the biggest scams on Wall St.
skep-tic
more parasitic than symbiotic.
development -not developement
I’m pretty sure a teacher is supposed to know how to spell…
Have a great day…
Clot and other real estate professionals on here,
I thought you might like this. From Rep. Peter DeFazios’s (D-Oregon) 5 minutes this morning.
First he goes on to talk about how Paulson’s been consistently wrong saying things will be fine after asking for credit for fannie that will not be used but then they get bailed out, bear, aig, etc.
Say’s there’s no credit crunch if you have good credit you can still get a loan. Oregon community banks and credity unsions are stil lending out money to individuals and small businesses with good credit. My interpretation… The credit crunch seems to be between big lenders and big businesses that have become too big compared to their real market potential.
Anyway.. this is the interesting analogy he makes on the bailout…
“Let’s think of Henry ‘Hank’ Paulson as a Realtor. Here’s the deal. He’s got a great house he wants to sell you. Now, the thing about that is he can’t give you an appraisal on the house, there are no market comperables and he can’t tell you what it’s going to cost but it is a great deal for you. That is the bailout he is proposig. To take this junk from Wall St, that no one understands and put it on the federal books.
What if we spend… borrow $700 billion and the market continues to go down. That’s what the asian markets said yesterday. They said ‘Wait a minute! Sounded good at first, but where’s the US going to get the $700 billion? Who’s going to lend it to them? Or are they just going to print it and cause inflation? And what if it doesn’t work? What will they do then? We aren’t dealing with some of the fundamental underlying problems that we have.”
cindy Says:
September 23rd, 2008 at 9:32 am
(61) renter
Linda called me at 6:15PM last night and said that Hunter refused dinner (23 months). He went into the living room, pointed at the TV and said “baseball Mets”. I told Linda that the content of a Mets game in September is not suitable for young children.
BTW - Mets/Jets…all I needed last night was a Knicks game for the trifecta….
Ben Says:
September 23rd, 2008 at 10:10 am
there is nothing sad about a hedge fund closing. Hedge funds are the biggest scams on Wall St.
_________________________________________________
Oh Really, it is sad when a nice person who is an office manager loses their job. They are not evil or greedy at all. This person is one of the nicest people I have ever met.
Hope you don’t lose your job dickhole
Ben, couldn’t agree more. The hedge funds use massive leverage to move the prices of securities by trading 10% or more of the volume than sell. They have been the ones abusing and manipulating the shorts. Hopefully some of these financial “Geniuses” will be exposed for what they are.
ChiFi: I’m going to the Mets game tomorrow night to obtain some torture first hand.
Hype it is unfortunate, there are a lot of nice people who are not actually involved in the high paying trading role and even traders who are good people and it is sad to see them out of a job. The ibanks are the same way lots of Ops people who were not involved in any of the profit or shenanigans got their pink piece of paper.
Regarding King John’s infrastructure proposal:
If the funds for improving basic transportation and telecommunications infrastructure came from the general fund and were paid for by slashing other parts of the budget, it could be a net positive. If it involves a single cent in borrowed funds, it is foolish.
chi (103)-
I’d suggest you start listening to Depeche Mode, but I bet it was the Mets that drove you to them in the first place.
I don’t even watch them anymore. They are simply too pathetic.
jcer:
I hear ya man, it is rough. Trust me, if this person was a trader I would not have nearly as much sympathy for them.
On another note, my co-workers mother works at another hedge fund. They are on the brink of shutting down. I will let everyone know if they do.
Skep: Had the bonuses on Wall Street eight short months ago not broken records and or had not been flaunted all over the media, the support of Wall Street on main street might have been greater. Want to see the divide broken? Have some of these fat cats give back some of their undeserved sheckles.
Could someone explain what financial derivative are?
Regarding the media. Do not for a moment delude yourself about the purpose of a newspaper, news magazine, TV, station, radio station, or media network. They do not exist to provide you with news. They exist to make a profit and they use the delivery of news to attract viewers of advertisements for the advertisers.
“more parasitic than symbiotic.”
Someone walks into a branch on main st and asks for a loan, lets say $100k to buy a home or start a business. They do something tangible with the money they borrow. Lets say it’s a 30 year mortgage at 8%.
Now the bank generaly doesn’t have the cash on hand for all these loans without going below their reserve limits so they borrow the money from the fed or through the fed from other banks. Many cases a short term loan.
Bank borrows $100k at lets say 5% then quickly sells the mortgage to a firm that securitizes it. Gets traded a few times and somehow it’s worth more then the 3% difference in interest rates?
I’m not sure of all the details on what happens in the secondary market. I wish I could find an example that describes the lifecyle of a subprime mortgage that shows the value of each product as it goes through the different stages of the market.
What seems clear though is not just that the values of homes were inflated, but then the values of these subprime mortgages was infalate when they were offered to investors and that value was able to be put on the books before it was realized. This seems to be reinforced by the fact that $100 of billions have already been used to prop up this mess and $700 bln more is needed for what people are saying is $250bln in subprime mortgages.
Rep Holt of NJ this morning said “By helping Main St we can help Wall St but by helping Wall St we don’t necisarilly help Main St. Bailing out those holders of financial paper does not help the homeowners facing foreclosure. If we go to the root of the problem we can help both.”
#113 - Here’s an overview on derivatives.
From Google News, can’t post link:
An almost Guy Fawkes moment last week in Pakistan. How long before the Taliban take over that government, and “special weaons”?
akistan’s top leaders were to dine at the Marriott hotel devastated by a truck bombing over the weekend, but changed the venue at the last minute, a senior official said Monday.
(snip)
Back to real estate. There was a house in my town that I was following.
The original asking price Spring 2007, was 650k (insane), they kept lowering thr price, relisting with different realtors etc. It finally was reduced to 425K.
I was waiting to see if the next leg down would be 399K;at which point it would have become interesting.
It drops off the mls at 425K. I assumed either it went UC, or the listing expired. It came back on the market yesterday for 459K!!
Yep that is the way to sell the house, take it off, and put it back on for more money.
All Hype,
Yes it’s sad. But look at the upside. An office manager, receptionist, computer tech, programmer, janitor, etc that works at a hedge fund or other troubled financial institution can do the same job at another company.
If the institutions they work for are not good, are not healthy for our economy, cause problems in many respects, we shouldn’t use the poor innocent people that will be losing their jobs as an excuse to keep them runing.
Imagine a company that kills kittens to make silly putty for third world orphans (yeah it’s a stretch to illustrate the point). Only a small number of employees kill the kittens and another small number a directly involved in keeping the business of killing kittens going and these people make the most money, by far out of this. Should we keep killing kittens so that the people that file documents, take calls and make appointments don’t have to look for another job?
#10
“So we have arrived at one of those moments. The global financial turmoil has pulled nearly everybody out of their normal ideological categories. The pressure of reality has compelled new thinking about the relationship between government and the economy. And lo and behold, a new center and a new establishment is emerging.”
Brooks is way too smart to write for the Times.
Tom:
Point well taken. I know they will find another job. It was just tough looking them in the face as I got into my car this morning when they told me the news. Sorry if I got a little heated on the board.
Apologies to Ben also…
#119 Tom: True. But with the economy in a recession, away from the financial woes. It wills till eb difficult for these people to get a job.
The other thing is many of these people were making mofre than they would have been outside of the financial industry.
A 45 year old ops guy with 15 or 20 years in the business was making a nice buck. It will be impossible to replace that salary in another industry.
For secrarties etc, easier, but still probably not at the same salary.
O: Bailout likely to delay spending programs
O says massive financial bailout probably would delay his spending initiatives
DOUGLASS K. DANIEL
AP News
Sep 23, 2008 08:52 EST
Democratic presidential candidate B O says he probably would have to delay the spending programs he has called for during his campaign in light of the massive government bailout being proposed for the nation’s financial industry.
The Bush administration and Congress on Tuesday were discussing the details of a $700 billion financial rescue plan. O said the problem should be dealt with as a short-term crisis with bipartisan action and then as a long-term structural issue.
“Although we are potentially providing $700 billion in available money to the Treasury, we don’t anticipate that all that money gets spent right away and we don’t anticipate that all that money is lost. How we’re going to structure that in budget terms still has to be decided,” O told NBC’s “Today” show in an interview aired Tuesday.
“Does that mean I can do everything that I’ve called for in this campaign right away? Probably not,” he said. “I think we’re going to have to phase it in.”
The Illinois senator has proposed ambitious and expensive initiatives aimed at health care, education, infrastructure, alternative energy and other concerns. He didn’t say what proposals might be delayed first, adding that tax revenues would play a role in any budget decisions.
O made no reference to the rescue plan’s impact on his call for tax cuts for most taxpayers and tax increases for wealthier Americans. On Friday, he said a bailout would not bar him from pushing for middle-class tax cuts, a central proposal in his campaign.
In a speech Monday, O urged Democrats to be as fiscally tough as conservative Republicans and said that the bailout was forcing a new perspective on the federal budget.
O said in the interview aired Tuesday that his running mate, JB, should have waited before commenting on the idea of bailing out the huge insurer American International Group Inc. B initially rejected bailing out AIG, a position taken by Republican presidential candidate John McC that drew O’s criticism.
When AIG’s financial meltdown first drew questions of possible government intervention, McC said taxpayers shouldn’t be “on the hook” for AIG or any other corporation. B also said that the government shouldn’t bail out AIG. For his part, O at the time didn’t take a position on the idea of a buyout.
“I think that in that situation, I think Joe should have waited as well,” O told NBC. Both O and McC have since said the government’s plan to lend AIG $85 billion was regrettable but necessary.
McC’s campaign released an ad Tuesday criticizing O and his allies as being “mum” during the financial crisis “because no one knows what to do.”
In another disagreement within the campaign, B said Monday that he would not have allowed an O ad that mocked McC as an out-of-touch, out-of-date computer illiterate, calling the TV spot “terrible.” Hours later, B issued a statement backing off that criticism and saying that he had seen the ad for the first time and found nothing “intentionally personal” in its criticism.
“Having now reviewed the ad, it is even more clear to me that given the disgraceful tenor of Sen. McC’s ads and their persistent falsehoods, his campaign is in no position to criticize, especially when they continue to distort B’s votes on an issue as personal as keeping kids safe from sexual predators,” B said.
McC’s campaign responded to B’s initial remarks by noting his “condemnation” of the ad.
“B O has brought the sleazy gutter politics of Chicago to our national stage, exposing his call for a ‘new politics’ as a lie and embarrassing even his own running mate with the low road campaign he’s running,” campaign spokesman Brian Rogers said in a statement Monday night.
On Tuesday, O’s campaign issued a new TV ad claiming that McC had protected tax breaks for U.S. corporations that hide profits offshore and received $50,000 from “grateful” insurance company executives and their lobbyists.
Getting nostalgic.
Shall we chip together and send him a copy of Dow 36000.
http://www.slate.com/id/2139497/
3b,
lots of people made a killing in beanie babies too but the government doesn’t come in and prop up that market so that people can benefit.
There were a lot of people making more money than they should as a result of the artificial boom in the economy and it resulted in raising prices in other areas too. The economy needs to settle down the wealth needs to be more evenly distributed instead of credit to keep sound sectors of the economy functioning properly in my opinion.
I’m depressed about this horrible situation. Have you noticed the price of food in just the past week alone??
We need a revolution. Everyone needs to STOP - stop buying extras, stop driving altogether. Stop all disposable spending - no movies, no restaurants, etc. That will send a message!
#20
“George Will writes that McCain “is behaving like a flustered rookie playing in a league too high.” The conservative columnist says that McCain’s “childish reflex” to insist that the chairman of the Securities and Exchange Commission “betrayed the public trust” and should be axed “is a harbinger of a McCain presidency.” Will even goes as far as to wonder whether conservatives can really trust McCain to make good judicial selections due to his “impulsive, intensely personal reactions to people and events.” While Obama might not be ready to sit in the Oval Office due to his inexperience, it “is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency.””
I have started to think the same thing.
93 bc bob
Put the chest waders on!
[119] So then we are not really going to kill kittens?
re That will send a message!
You are depressed so everyone else should commit suicide.
Thanks, bt no thanks
re That will send a message!
You are depressed so everyone else should commit suicide.
Thanks, but no thanks
Another joke;
http://oversight.house.gov/contact/tiplines/financial.asp
To go back to the tech bubble… It wasn’t a company that decided to use a sock puppet to sell pet food over the internet that caused inflated stock prices and the market to crash.
There were a lot of great ideas and websites that could have been very profitable. The problem was that it started out with a couple of guys in a basement with an idea that turned into a big IPO that made a lot of money for the investment banks and financers.
So instead of people using the new technology to start a company on a shoe string budget that could gain international reach on little money, millions of dollars were invested in companies, not with the hopes that the company could return the investments through revenues but through becoming public. A lot of these companies could be started with very little money and see huge returns as their growth was in the 3 and 4 digit range but that doesn’t mean you can throw more money at them and still see the same returns.
Some guy can spend a few grand on a hot dog cart and permits and see a quick return on his investment on his corner, but you can’t expect to give the same person a million bucks to start the same business.
Some businesses can be very profitable but their size in the marketplaces is small. You can’t force the size of that market to grow and see the same rate of return. I think that’s what happened with the subprime market. It was small and risky but profitable. Securitization of non prime mortgages was a very small percentage in the begining but then almost all non prime mortgages originated were securitized and the number of non prime mortgages grew dramatically. It grew way beyond what was reasonable and sustainable but people expected if that market segment grew the performance would remain the same. That wasn’t the case.
#125 Tom: True, but the dislocations will be significant.
It is very difficult to tell people they have to downsize their living, or start over.
I’d pick a new metaphor for killing kittens to make silly putty.
http://www.urbandictionary.com/define.php?term=killing+kittens
Tom, hogwash, everyone wants hot dogs. If we put all our money into hot dogs, we’d be better off. Instead, we put them into granite countertops.
3b,
I’m not saying it’s going to be easy. I just think it needs to happen.
Perhaps you should have also looked up silly putty when your were there Hughesrep?
Silly putty - The term for male ejaculate when it lands in someone’s eye.
I think people will go into debt to maintain their standard of living. If the option is closed off because of tighter credit then and only then will we have a public outcry.
#138 They are already in debt to maintain their standrd of living. When all the credit cards are maxed out, what else is left?
Renter, I don’t think that is the case. The public outcry will be from the 50+ yr old plus people who worked for 10,15,20 years in the financial industry operations who now in 6 months have lost their job(Basically not easily employable either) and retirement fund. It really isn’t these people’s fault and they were not necessarily making big $. In reality many of these jobs existed before the boom and there is no reason for them to disappear beside the fact that some greedy SOB’s needed a big bonus and the execs were trying to appease the shareholders. This is where the outcry is, the under 40 set should have little problem getting a job provided they have good skills but the older folks will not be so lucky and their retirement money is gone and it is very sad.
“#138 They are already in debt to maintain their standrd of living. When all the credit cards are maxed out, what else is left?”
What’s left is that american consumers need to consume less and pay down their existing credit as well as save more.
When producers get hit by the lack of consumption and can no longer extend the same amount of credit, if they want consumptiom to increase the solution would be to make sure real money trickle’s down to consumers.
The alternative is to increase the profit margins on necessities but that can cause problems as it did when Argentina’s water supply was privatized.
This is the most cogent analysis on the bailout plan by Paul Krugman -
“Now, if the price Treasury pays is very low — anything comparable to what financial institutions are able to sell the stuff for now — it’s going to do nothing for confidence and capital. If the price is high, confidence and capital will improve — but taxpayers may well take a big loss. The premise of the Paulson plan– though never stated bluntly — is that these assets are hugely underpriced, so that Uncle Sam can buy them at prices that help the financial industry a lot, without big losses for taxpayers. Are you prepared to bet $700 billion on that premise?
But how can we help the financial situation without making that bet? By taking an equity stake. That way, if it turns out that the feds are pumping money in at above-fair prices, at least they get ownership, just as a private white knight would have.
There is no, repeat no justification for refusing to grant equity warrants that provide some taxpayer protection. This is, for me, an absolute deal or no-deal point. ”
http://krugman.blogs.nytimes.com/
http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp
This is an older article about credit card debt. It breaks it down instead of quoting the average. I don’t know what the latest figures are however this article doesn’t paint as grim a picture as quoting the average.
Thoughts anyone?
hughesrep and Stu,
I was familiar with both “killing kittens” and “silly putty” when I made that comment and thought it was very appropriate. My appologies to any exploited third world orphans that were disgusted by my remark. I am sometimes a really sick $&@$.
Ask For A Filibuster
Please email and phone the following Senators with this message:
For the good of the United States of America, I am asking [Senator/Congressman] [insert name here] to stand up to justice and protect the taxpayer. Please filibuster Paulson’s proposal. Instead, please consider solid alternatives offered by Hussman and Mish to recapitalize banks in a way that protects the taxpayer.
Shelby, Richard C.- (202) 224-5744
Bunning, Jim - (202) 224-4343
Grassley, Chuck - (202) 224-3744
Kyl, Jon - (202) 224-4521
Ensign, John - (202) 224-6244
Congressman Mike Pence - (202) 225-3021
http://globaleconomicanalysis.blogspot.com/
#140 jcer:This is where the outcry is, the under 40 set should have little problem getting a job provided they have good skills but the older folks will not be so lucky and their retirement money is gone and it is very sad.
In a rcession every on will have problems getting a job. Some more than others. Even for the under 40 set.
If you have been in the financial industry lets say since college/grad school graduation, and you are now in your early 30’s, it will still be difficult to start over,and in msot cases at a much lower salary.
Wall Street Crisis Hits Home
Tuesday, September 23, 2008
There’s no “for sale” sign on the front lawn, but this six-bedroom Colonial revival house in Glen Ridge, built in 2002, just went up on the Garden State Multiple Listing Service at $3.9 million. The owner is a senior vice president at Lehman Brothers.
The property at 78 Ridgewood Avenue has a storied past. Ridgers remember it as the historic Tudor that Curt Schade was renovating in 2001 when it burned down in a blaze that blackened the entire sky in the south end of Glen Ridge. He rebuilt this house in 2002, but sold it four years later when the current owner offered him $4 million in a private transaction. [CORRECTION: We had heard and reported $4 million, but as several commenters have pointed out, the tax records say that sale was $3.7 million.]
Taxes, according to the Essex County Full Tax Report, are only $45,269.
“This is the first of many in my view,” said one real estate agent, who asked not to be named.
http://www.baristanet.com/2008/09/wall_street_crisis_hits_home.php
Here’s another one. These guys are bucking the trend
http://www.nj.com/warrenreporter/index.ssf/2008/09/developer_hackettstown_communi.html
Sorry, I don’t consider homes “starting” at $435,000 affordable.
Those of us outside of the financial sector who have not been making enormous sums of money have been locked out of the housing market. The astronomical rise in housing prices has lowered our standard of living in a real sense.
Someone once told me that you should spend 2.5 times your annual salary on housing or that should be the number you start with. You then save for a down payment and shop accordingly. If you apply the rule to the $435,000 then your annual income should be 174,000.
renter@150
174,000 is no stretch. I think people working at McDonalds make that in this state.
Do we have another winner for days spent in congress?
Steroid use in baseball > 700 Billion bailout
Steroid use in baseball > Healthcare crisis
Steroid use in baseball > War in Iraq
renter:
Haven’t you heard? It’s different this time. The number is now 3.5 times. You only need to make $125,000.
#151 - Steroid use in baseball > War in Iraq
Thanks for reminding me of this. That is so so so sad.
renter@149
you and me both
[101] cindy,
Some months back, I posted a link to a MSM website that had a picture of a teacher in a class with small children. The easel behind her had what appeared to be a lesson plan, and the top announced what appeared to be the grade: It read “ferst grad”
Teachers without spellcheck or a new take on phonics, I couldn’t say.
#63
“The MSM has become nothing but a propaganda tool for the corporations and their political interests, and the average individual is often not well informed on critical topics”
this is pretty extreme. the media prints/broadcasts what sells.
The under 35 crowd and the over 55 crowd on wall street both have their own set of job hunting problems. Between 1988 and 1993 every single one of my friends did an MBA, lots got CPAs and other certifications and did low paid Big 4 work to build their resumes as the economy was in terrible shake and you could not job hunt and could only move up at work if you stood out since work was a hierachy back them you could only talk to your lowly supervisor school was a great way to get ahead. Not all but a lot of the under 35 crowd have only known good times, I have lots of friends at Bear/Lehman who never did big four or have an MBA or certification and made 250K in their mid 30’s while sitting in a cube with just a BA/BS. Well those young guys are toast, a bankrupt company and a BS won’t get you much. My brother who is in his 40’s did his public accounting out of school and in the last recession knocked off his NYU MBA and he got a job, the over 55 crowd either has not kept up and even if they did age discrimination holds them back.
When you have 500 online resumes and you need to pick ten to interview HR starts the key word searches and if you have not sat on boards, become certified, did big 4 or have an MBA etc. you are toast. My old company in 1992 used to run ads in the times with a ton of qualifications for even low jobs, when I asked why they said if they didn’t they would get 20,000 aplications for one job.
Considering my 22 year old niece fresh out of engineering school makes 60K and so does her boyfriend 125K is not that high a hurdle.
Stu Says:
September 23rd, 2008 at 12:23 pm
renter:
Haven’t you heard? It’s different this time. The number is now 3.5 times. You only need to make $125,000.
Will the Jets and the Yankkees be included in the bail out plan?
#88
“This came out last week but just saw it today. It’s regarding regulators encouraging banks to invest in the GSE’s.
Lots of banks, including community banks bought up billions in preferred stocks and now want some sort of relief from that.
Not sure which regulators encouraged this but I’ve always suspected that Fannie and Freddie just used to take up some of the bad mortgages off the banks books.”
depositary institutions are limited in the types of investments they can hold. preferred GSE shares were considered among the safest investments available of their type under the law. herein is an example of the flaw inherent in designating specific types of assets as a means of risk management. the alternative (more dynamic risk management) has its own flaws, of course. These issues are the sort that will need to be considered as the banking laws are reformed. It is not a simple process — there will be tradeoffs. But the overall point is that the motivation in this case was soundness and safety. It is interesting to see how such a motivation can easily backfire.
“Does that mean I can do everything that I’ve called for in this campaign right away? Probably not,” he said.
Gator,
Whichever one wins will regret having won. With the exception of when Abraham Lincoln and FDR took office, never has a president taken office that the nation was facing such an uncertain future. Our economy is not as strong as it should be, our position of leadership in the world has suffered self-inflicted wounds, and we seem either unwilling or unable to face our budget issues honestly.
I saw a post about how we are close to the indebetness, as a percentage of GDP, to our all time high. Apparently it occurred in the early fifties. A big difference between then and now is that in the fifties, were were THE economic giant. Europe was still picking itself up from the matt. Asia was a non factor. We held all the good cards, but now……..
We should not ecpect any additional spending on anything from any politician and, in fact, should demand cuts. Once we have made significant cuts, we may need a tax surcharge to help retire debt more quickly. Our debt is a noose around our throat.
If North Korea invades South Korea, we have no option but to help, but that drives up the cost of government. Likewise for Iran, and any number of other countries. Regardless of who wins, emergencies will pop up. If our national credit card is maxed out, and we have no equity left to draw upon, we may not be able to respond; that would be a killer.
#100
“more parasitic than symbiotic.”
how so? Millions of people are defaulting on mortgages, car loans, credit card debt, etc after living high for years. who is the parasite? that debt was as good as income (except tax free) since it will never be repaid. Wall St screwed up definitely and in some cases may have done worse, but Joe Consumer is not innocent.
Marbury gone? booya…
http://sports.espn.go.com/nba/news/story?id=3604025
Hey Grim,
I am also curious to see when you going to posting the September sales numbers. those graphs are really good and i always wait for that post every month.
Also do you have recent Lowball offer numbers?
Thanks.
#150 Renter stick to 2.5x if you cant find it where you live then maybe its time to move where the income to housing ratios are in line with reality. Or you could just kill yourself working to pay for a mortgage and property taxes.
Dont forget your NJ property taxes either on a $435K home with 20% (86K) down you carry about a 2,000 a month mortgage payment. The property taxes guessing would be around 6,000 yearly. So the taxes alone would be another $500.00 or 25% a month on top.
$500.00 a month you cant expect to ever recoup.
#162 -
After all this done and dusted, the banks will only lend to people who have been prudent and maintained good credit. So, Joe Consumer who has been living high will be punished.
Where is the punishment for Wall St.? Heck, they don’t even want to reduce exec compensation and do not want to dilute existing shareholder equity. So, they want our money and don’t want go give up any of their privileges.
Why do you consider spending less personal suicide??? We are a grossly fat and spoiled country. If we take the reins in our own hands and slow down our consumption, the market will have no choice to adjust.
It’s going to happen anyway - wait and see what eggs, bread, milk, etc cost one year from now. Then choose: a movie night out or food for your family.
Tosh #54
Here is the link to Morgan’s call
http://morganfl.org/
#162 skeptic: Agreed. I have no sympathy for Joe Consumer. He was loving every minute of it. Now he is crying.
My wife and I sat back in amazement these last few years,and literally watched people gorge themselves on cheap easy credit,and live the lifestyle of the rich and clueless.
Commentary: Bailouts will lead to rough economic ride
Ron Paul
h++p://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
sTU,
Re silly putty,
This is so endemic that there is a term for it?
#112
“Had the bonuses on Wall Street eight short months ago not broken records and or had not been flaunted all over the media, the support of Wall Street on main street might have been greater. Want to see the divide broken? Have some of these fat cats give back some of their undeserved sheckles.”
I understand why there is little sympathy. One thing to keep in mind is that many of these people are out of work right now and their past comp which was largely in the form of restricted stock is worthless. So these people are not getting away scot free. Many of them may be permanently unemployed unless they completely change professions and not all of these people are independently wealthy. I doubt most people will think the last few years were worth it in the end except a tiny sliver at the very top. Since these were the real “risk takers” (at least in theory), we should certainly hold them accountable. But I think too often, the condemnation is painted with too broad of a brush.
That urban dictionary is a great site. I’ve been reading it for years. The example sentences revealing how the term is used is really the best part of their site.
I lead such a sheltered life. It is hard to believe that I got to this advanced age without hearing someone shout out at a party, “Hey, you up in the loft, watch that silly putty, people are trying to have a converstaion down here. If you’re gonna kill kittens do it behind closed doors.”
“O said the problem should be dealt with as a short-term crisis with bipartisan action and then as a long-term structural issue”
#123
yes– Mr. O is sounding much more together on this issue than Mr. M. His pragmatism is attractive.
3166 victorian: Unfortunatley that is the way it works. Somebody has to get thrown under the bus.
Form a purely economic (although heartless) standpoint, the thinking might be why help out these homeowners.
They are the economic walking dead, they are or will going into foreclosure, their credit cards are maxed out, some will be losing their jobs, and on and on.
The powers that be IMO are looking to the next generation or batch of people if you will
NEW YORK — Google is showing travelers how to navigate New York City via mass transit.
The nation’s biggest public transportation system was added today to the popular search engine’s mapping service.
Now, people looking up locations in the city will get public transit options alongside
driving directions. The feature includes information about subways, buses and commuter railroads.
The Metropolitan Transportation Authority and some other organizations already provide transit trip planners. Google executives note that theirs is integrated with other search features, such as street views and restaurant reviews.
Google offers transit information in about 70 other cities worldwide, including Chicago and Tokyo.
http://www.app.com/apps/pbcs.dll/article?AID=/20080923/NEWS/80923038
Jerry Cantrell? Isn’t he the guitarist for Alice in Chains?
Alice in chaines? Sounds like a party John was telling us about.
chains, even
#168 - Dink - Thanks for the link!
Tom et al,
Helping irresponsible debters (anyone with an unaffordable mortgage) DIRECTLY HURTS responsible savers like me.
If you “help them” afford their mortgage and “stay in their home” that they can’t actually afford, you are both 1) rewarding them for being irresponsible in the first place and 2) propping up real estate prices to levels outside the reach of responsible savers, encouraging more irresponsibility in order to get into the overpriced real estate.
Get it? You CANNOT help the bad/idiot/irresponsible people without hurting the good/hardworking/virtuous people.
Since this is America, the former outnumber the latter by legions.
skep: I agree and too sympathize for the underlings.
Something must be done about executive compensation though. I own a natural gas driller stock where the CEO’s compensation alone is equal to one tenth of the companies earnings. This company has 18,000 employees. This is ludicrous.
MJ,
Amen!
September 23, 2008
Paulson Plan Shows A Weakness: Above Market Pricing, Greater Taxpayer Risk
One of the aspects of the Paulson bailout bill that was not clear until today is that the Treasury has no intention of running a true action for the toxic assets on bank balance sheets. An auction would tend to set very low prices on the current value of mortgage-backed paper. Based on the few transactions which have taken place in the past, this might be as low as 30 cents on a dollar.
It has been widely assumed that banks would need to take large write-downs on the devalued assets, creating the need for them to raise more capital and further dilute shareholders.
All of those assumptions were mistaken.
In testimony today, Ben Bernanke described the plan by saying “it is designed to avoid forcing banks to sell or value their mortgage assets at a `fire-sale’ price. In a harsher tone than he has ever used in testimony, Bernanke spelled out the benefits that would accrue when the government can buy these mortgage assets at close to “hold to maturity” prices instead of the “fire-sale price.”
The plan puts taxpayers at a substantially greater risk than a true auction system. Buying these toxic assets inexpensively gives the Treasury a chance to profit from its risk if the paper appreciates in value over time, providing taxpayers some “upside” . The more that assets appreciate, the better the chance that the American public’s long-term liability is low.
What has become clear is that Treasury plans to purchase bad assets from banks at prices very near their original value. The risk to taxpayers under this program would be tremendous. If housing prices continue to fall, so will the value of the paper the government has purchased. Under this set of circumstances the public could be at risk for underwriting the great majority of the Treasury’s purchases and never having a chance to recoup their investment.
Buying troubled bank assets at above where they would be valued in a free market now and at a price which is near to the potential price when they mature is a great handout to the banks but undermines almost any chance that the Treasury will ever get any meaningful yield from the bailout.
Taxpayers lose any chance of being made whole
http://www.247wallst.com/2008/09/paulson-plan-sh.html
#176- 3b
“Form a purely economic (although heartless) standpoint, the thinking might be why help out these homeowners.
They are the economic walking dead, they are or will going into foreclosure, their credit cards are maxed out, some will be losing their jobs, and on and on.”
I am not calling out to help these suckers, they absolutely deserve what is coming to them. What I am calling out for, is that Wall St. to bear some responsibility for this mess and take some punishment.
If you have read Paulson’s plan, they are essentially getting off scot free.
Stu,
I have thought for some time that once executive salary reaches either some multiple of the company’s median worker-bee salary or some multiple of the POTUS salary, the executives should be ineligible for tax-preferred deferred compensation, and the companiies that make such large executive compensation payments should not be allowed to count the salaries and benefits as a business expense. The companies also should be excluded from government contracts (or, in the present situation, bailouts)
This is not neccessarily THE solution, and I don’t know that I want government setting executive compensation. That said, there is no reason why the rest of us should take a hit for what companies decide to do.
skep-tic:
Irresponsible citizens are responsible for their own damned mess.
Similarly, irresponsible financial companies are responsible for their own damned mess.
It is NEVER RIGHT to punish sensible/cautious/responsible people for the welfare of the reckless/irresponsible people.
“Bernanke spelled out the benefits that would accrue when the government can buy these mortgage assets at close to “hold to maturity” prices instead of the “fire-sale price.””
Mr Smith, of course you think you want to pay below sticker price for this car. Let me tell you, you are wrong to wanbt to do that. Paying full sticker price ensures that this dealership thrives. If we thrive, our sales staff has the ability to dine out, to buy furniture, and to buy cookies at your bakery.
“It is NEVER RIGHT to punish sensible/cautious/responsible people for the welfare of the reckless/irresponsible people.”
WHAT country do you come from? Punishing the responsible is the new orthodoxy. Get with it, spend, Spend, SPEND — but only with borrowed dollars.
MJ,
I agree. The problem is if this is such a dire situation that we need to spend so much money to keep wall st working and so much of this resolves around mortgages and foreclosures, pualson and bernake say that’s the root of the problem, then we should try and help out everyone, not just the banks.
The prudent will be punished either way, lets not just reward wall st is my view.
Though from listening to what paulson and bernake said this morning. I’m starting to think it’s all a big crock of sh!t.
#184
“Something must be done about executive compensation though.”
One interesting thing about attempts to regulate executive comp is that they often backfire and tend to raise comp even higher. One example is the extensive disclosure that began to be required around 2005. Now every CEO in the country can see an itemized breakdown of what every other CEO is getting and they all demand the same. Or SarbOx, which put CEOs personal wealth and freedom on the line every time they file quarterly statements with the SEC– this is a significantly increased risk associated with the job and executives demand higher pay to compensate.
I think once you see a few examples like the above, you start to think that maybe regs alone cannot reign in exec comp. It has to be a choice of boards of directors and so far they have not seen an advantage in making that choice. I think a few big shareholder lawsuits may change that attitude going forward, but we will see.
I always like shooting putty at the moon more than silly putty.
skep-tic,
The point about bonuses is that if these people, that were already making well above what other sectors were making, didn’t pay out these bonuses earned on such risky vehicles that they didn’t fully understand, they would have been better able to handle this downturn without taxpayers coming to their rescue.
It’s like some idiot starting a fireworks company in June, making a killing in July but paying all the profits earned that month out and then asking for help because he can’t keep up with payroll or keep the lights on in august.
“Irresponsible citizens are responsible for their own damned mess.
Similarly, irresponsible financial companies are responsible for their own damned mess.
It is NEVER RIGHT to punish sensible/cautious/responsible people for the welfare of the reckless/irresponsible people.”
#189
MJ– If you look at what I am saying, I am not saying it is “right,” just that it is necessary. This problem, I think, is so huge at this point that the responsible people are going to get hurt either way. We all depend on having a functioning market. Allowing it to collapse I think would actual bring even greater harm to the responsible people than a bailout. I think it is very unfortunate that we have arrived at this point, particularly since it seemed so obvious that it was building for so long, but I believe this is where we are today.
“The point about bonuses is that if these people, that were already making well above what other sectors were making, didn’t pay out these bonuses earned on such risky vehicles that they didn’t fully understand, they would have been better able to handle this downturn without taxpayers coming to their rescue.”
#195
Tom– I agree and am not trying to argue otherwise. However, I think your point of view may be slightly narrow here. How many people may have made more than they otherwise would have due to the fact that we did not suffer a hard recession following the dotcom bubble? The growing economy did not just benefit people on Wall St, homebuilders, etc, even if their gains may have been outsized. And to the response that most people’s wages were stagnant, one might consider that wages might have fallen without a bubble economy. I am not saying everyone is equally blameworthy; I am just saying that past events are not the most relevant issue at this point and even if they were they are not 100% straightforward.
MJ,
There will be times that the good has to help out the bad. This is one of those times. I’m actually in support of raising the taxes on families making more than 250K which hopefully will soon include my family. Unfortunately, the Paulson plan lacks any punishment for the misbehaved nor even tries to deal with the causes of the crisis. It is simply the removal of the toxic crap from banks balance sheets so the bad behavior can once again be restarted. Congress appears to be realizing this as well as the residents on main street.
I agree with Skep that something must be done as the damage without a solution will be far greater than with one. Where we must focus our efforts is on making sure the same mistake can not happen again. Rewarding the fat cats seems like the opposite of what should be done.
There have been many solutions offered and a lot of them make a lot of financial sense to me. Here is my screwball plan.
1) Regulate the crap out of the surviving banks/brokers as punishment for their past excesses. If they don’t like it, remove their FDIC insurance and see if the depositors remain.
2) For those who are facing foreclosure but can afford modified payments, the government takes the mortgage and issues a 40 year mortgage to improve the value of the toxic paper. The banks have no say in this since the gubmint is already holding their life preserver.
3) Treat the financial companies that go belly up on a one by one, case by case basis as they have been doing.
4) Maintain the ban on short selling of the financials until the hedge fund industry is either brought to it’s knees or accepts regulation. Then lift the ban.
5) Government should buy and hold homes that fall into foreclosure. People who foreclose can rent them to help defray the carry costs. When the housing market bottoms, these homes will eventually get sold.
6) Explain all of this to the public in a way they can understand it to avoid panic. (I think Mr. O might be a bit better at this than Mr. M or Mr. B.)
skep (160)-
I called this well over a year ago:
“I’ve always suspected that Fannie and Freddie [were] just used to take up some of the bad mortgages off the banks books.”
What I didn’t see happening was that the gubmint was telling institutions to buy Phony/Fraudy common & preferred with tons of pension money and other funds that shouldn’t have been used.
Locally, a little bank (Unity) just announced they will take an impairment of over 500K due to losses on Phony/Fraudy preferred.
skeptic,
Things aren’t so bad. According to Paulson it’s bad enough that they need a 700bln dollar bailout but not bad enough that they want to discuss compensation at banks.
Sorry but if a problem is so bad that other people need to come to the rescue but you’re unwilling to make concessions it’s bull.
Swift justice.
http://www.ibnlive.com/news/sacked-employees-lynch-ceo-in-office-premises/74075-3.html
and Barclay’s not wasting any time..
http://dealbreaker.com/2008/09/barclehs-not-wasting-any-time.php
drawn from DB
Uh oh. Dow down 150 to 10.85K
Wamu $3.11.
Market needs it’s methadone and Paulson/Bernanke/Congress debate is not exactly the fix it had in mind.
Clot 198,
I must not becoming across strong enough if you’re confusing me with skep-tic :)
I thought the same thing too and wasn’t aware of what was going on to keep Freddie and Fannie alive with all the bad decisions they were making.
It was news to me too when I heard it talked about this morning.
I figured Fannie and Freddie were just eating up bad debt to save the banks. It pissed me off when I heard they were trying to get other sound banks to help keep them alive. Completely insane. Even the efforts they took to spread the pain around didn’t help.
“I’m actually in support of raising the taxes on families making more than 250K which hopefully will soon include my family.”
I hate taxes and politicians who raise them generally, which is the main reason I tend to vote R. But I can accept the need to pay higher taxes in this case because I think it is really a make or break issue for this country. I hope the size of this bill will cause our leaders to wake up and really start to prioritize going forward. I am reassured that Mr. O is already acknowledging this and I am very surprised to find myself changing my mind about him so late into this campaign.
No one has shown me why we can’t let what should fail just fail.
I am only going to be hurt by a bailout.
My money, earned over decades, is held in diversified cash positions in companies that are not on Wall St, not public, and not invested in them. T-bills, FDIC savings, and lowest risk money markets in the most conservative banks. I put their names into google every day and they are never in the news.
My life insurance company is ultra conservative and in no danger.
Same with my property and casualty insurance.
And I want to buy a house. In Basking Ridge. But I rent an apartment instead. Not because I can’t buy a house — I could buy a huge house in Basking Ridge in cash — but because they are still vastly overpriced and I’m not a fool. That is why I am on this blog.
Anecdotes from the trenches:
Two different clients of mine (separate situations) have had a member of family approach them to help bail out a bad real estate holding….neither situation represents an egregious mistake of judgement on the owner’s part, just a confluence of events conspiring to produce duress.
yeech…
John,
I am too frightened to even ask what that means.
#200
Tom– Let me ask you a question. Let’s say you are already a rich guy and have very desireable experience as a banking exec. You are watching this whole crisis unfold and seeing heads roll among CEOs. You know these guys are going to need to be replaced and ordinarily, you might step up. But now Congress is saying that your comp will be limited to $400k per yer. You make more than that off of your muni interest. Are you going to step up to run one of these institutions, knowing there is a strong liklihood that it could fail and that you and your family will be personally liable in a shareholder suit for $400k per year?
I think trying to reign in CEO comp is a good idea in theory, but my point is that pragmatism should control.
Steroids in baseball should still be top priority. The integrity of our home run records are more important than the integrity of our balance sheet. Oh wait, there are more Barry Bonds rookie cards floating around than Hank Aaron rookie cards. Lets stop investigating Bonds. We can keep the value of his rookie card propped up.
Paulson: “Even in good times there are many foreclosures, there are some people that can’t afford to stay in their homes but there’s a huge effort being made that everyone that can afford to stay in their homes and want to stay in the home stays in their home”
Great. So we can save all those homeowners that are in trouble, not because they can’t afford to stay in their homes but because they ran out of stamps, or lost their checkbook or had a mailman that stole all their mail. Problem solved.
resp to #185:
So besides being great for the banks, this is an attempt to prevent further housing price declines? Is this an intended effect of the bailout?
Just great!
Well, then I will not buy a house. In fact, besides necessities, I will not buy anything. F*** the US economy. I play by the rules and then you go changing the rules of the game. Screw it!
I will rent in a relatively good school district and let the property taxes of all those irresponsible people pay for my child’s school.
To homeland security monitoring this website: up yours!
Sorry, but had to vent!
#186 victorian: Oh I agree. But I am just not surprised that they may get off scot free. Paulson’s arrogance is truly shocking.
That being said giving Judges the power to modify mtg amounts in a bankruptcy case,would be suicide for the housing market.
No contract will over be woth the paoer it is written on again,and what prospective homebuyer would want to buy knowing that theoretically the guy next door could get 25, 50 75K or more wiped off his mtg.
General comment: I appreciate everyone’s outrage, but honestly, there were a select few people that recognized that these outcomes were predestined. In fact, among the most damaged are likely the conservative ones that were finally converted at the latter stages, who purchased the most overpriced assets.
In context, many of these actions were foolhardy, but easily rationalized at the time. Not acknowledging that a view in hindsight provides clarity is rather convenient. However, it appears that venting anger is the priority here…..
Bottom line, what will a bailout, that allows mortgage modifications to take place by judges, do to the housing market?
Does it halt a decline in prices, slow a decline, or not affect the decline at all?
Does anyone have any granularity on the judge-modification provisions being proposed? Is it a matter of writing off debt, or just increasing the term to a point where folks can cover the nut, even thoughthe interest payments over time will skyrocket? If it is the first, I suspect it will seriously slow the decline in prices. If it is the latter, I don’t know that it does much at all after a year or so.
“No one has shown me why we can’t let what should fail just fail.”
MJ: Companies need to be able borrow money to grow. My company can’t expand without a loan which means less job growth. The construction company who will build our new plant needs a loan to purchase equipment. The bank charges interest on all of these loans to turn a profit. Without liquidity in the banking system loans can not be made and jobs will be lost, even though you were not responsible for it. The toxic crap the banks are carrying are impossible to value so they are not willing to take risks until that value is determined which means no loans. No loans means no growth means big recession.
Only way to find out the value of the toxic crap is for housing to bottom. Only way housing is going to bottom is if we let it. Delaying the bottom may create order which is better than panic, but the crisis will last a lot longer.
Other option is to raise interest rates to get people to save and invest, but in the short run the pain would be great. Those on the cusp of bankruptcy would go under.
I still think the 2nd option is the best, but there could be riots and looting.
#185 Young Buck:What has become clear is that Treasury plans to purchase bad assets from banks at prices very near their original value. The risk to taxpayers under this program would be tremendous. If housing prices continue to fall, so will the value of the paper the government has purchased. Under this set of circumstances the public could be at risk for underwriting the great majority of the Treasury’s purchases and never having a chance to recoup their investment.
It would have been nice if he spelled out his rationale for this? What possibel benefit is ther tot eh American people in doing this?
Absolutely insane.
MJ (182)-
When the bailout comes, if the Dems provisions are included, I will immediately default on my mortgage.
You’d be an idiot to keep paying it.
“Are you going to step up to run one of these institutions, knowing there is a strong liklihood that it could fail and that you and your family will be personally liable in a shareholder suit for $400k per year?”
Skep,
Not everyone takes actions to maximize their personal income. Are you familiar with the Dollar-A-Year jobs of the WWII era? Every cabinet official, in any presidential administration over the past 100 years could have earned more in the private sector. Federal judges with 30 years on the bench are paid less than ney associates in “Big Law” firms. People of character step up every day to do thiongs for their country, even though they could earn more in other activities.
e can provide insurance protection for folks who step up to the plate, that is, in the final analysis, a small detail.
Clot,
I KNEW I should have not paid off the mortgage. I knew I should not have paid the credit cards each month.
#212 shore: It could slow the decline in prices, but IMO it would just destroy the market.
What buyer would want to buy and run that risk? What would than be a true market price or comp for similiar houses? The questions in my mind are endless.
“That being said giving Judges the power to modify mtg amounts in a bankruptcy case,would be suicide for the housing market.”
another method might be to require a non-binding mediation prior to foreclosure. see if a third party can help broker a workout that is better for both
“Treasury plans to purchase bad assets from banks at prices very near their original value.”
The news is full of stories about SWFs swooping in and buying distressed companies with the expectation that they will make a killing. If any of this toxic debt was worth buying, the SWF funds would have done so. That the free market does not want it, at any discount, points to the folly of the USG buying it.
To elaborate…
What I’ve saved to date did not come easily, I worked for every penny.
More importantly, I have never leased a car, carried a credit card balance, taken any mortgage, or any business loan. Until I was married, I lived in a one bedroom apartment with a bed, one chair, a computer desk, and a single plastic bowl, two spoons, one fork, and two knives. I had a dishwasher for 8 years that I never once used. For my first six years out of college, I drove back and forth to work in a suit (one of three) inside a 1 liter 70hp honda civic with one side mirror and no air conditioning.
So, what I mean to say is, I’m not some donald trump guy born into wealth. I have been lucky, for sure. But I’ve been responsible as well.
I’ve wanted a house for many years. But real estate has been driven up to ridiculous prices with easy/bad mortgages. I don’t take loans I can’t afford and I don’t buy overpriced assets. And now I’m going to be made to suffer further for it.
Shoreguy/Clot,
“I KNEW I should have not paid off the mortgage.”
Believe me, the same thoughts have crossed my mind. Why should those with flat screen TV’s get bailed while I’m still watching a ten year old 27″ CRT? Well the solution must provide benefit to both parties. I don’t need a 40-year loan, but the flat screen guy might. The banks benefit as do I as I don’t have to pay for his foolish mistakes.
Tom (191)-
It’s bigger than a crock of shit. It’s the absolute, immediate destruction of the US…and probably any conventions of social order that keep average folks from behaving badly.
Stu, agree with points above, except you left out punishing the Gov’t folks who definitely had a part in this…easy money and pushing home ownership were policies they enacted, on both sides of the fence.
3b “What buyer would want to buy and run that risk?”
I understand what you are saying, BUT, if the prices stop declining (as a result of folks who could not afford to stay in the homes being given f*cked-up deals that do allow them to stay), then the risk of buying and seeing ones investment decline in value decreases, no? That lack of, or decline in, downside risk will, I suspect, attract buyers, which puts upward pressure on home prices.
clot: Your comments on mtg modifications would be appreciated, especially since so many of us here expect to or shoud I say expected to buy.
Do you believe as I do that it would destry the housing mkt?
Or will people (myself included) demand bigger price discounts as an insurance premium to guard against potential mtg modifications?
“except you left out punishing the Gov’t folks”
How about a pillory on the Mall?
chicagofinance Says:
General comment: I appreciate everyone’s outrage, but honestly, there were a select few people that recognized that these outcomes were predestined. In fact, among the most damaged are likely the conservative ones that were finally converted at the latter stages, who purchased the most overpriced assets.
* * *
I get what you’re saying. Some folks were beaten into submission, weary of prices going higher every year, finally relenting and taking out a mortgage they can’t afford on a house that’s way, way overpriced.
But that doesn’t make the government action any less cruel to folks like me.
“while I’m still watching a ten year old 27″ CRT?”
Heck, and this is a statement I have never uttered before, yours is bigger than mine.
skep-tic,
If I’m already a rich guy and don’t need to work would I step up to replace one of these guys that ran a 100+ year institution into the grave for 400k/year? I would do it for $1/year with a $399,999 bonus that was voted on by shareholders. And I would watch the company like a hawk. I would reduce compensation across the board. If the fate of our nations economy was so much at stake, not just the company I would stand up in front of everybody and say we’re all going to tighten our belts. For years we’ve been rolling in money and we need to make changes so that we don’t punch a big hole in our economy and we don’t kill our company. And the first salary to be cut is mine and it will be cut more than anyone elses. Hopefully everyone can keep their jobs but with a smaller economy there might not be room for everyone but we’re going to do our best to keep everyone on. We’re all going to make sacrifices and work very hard to fix things and make sure that we can be around and a leader for 100 more years.
The point of Sarbanes-Oxley is to make executices responsible. If they’re not responsible for mistakes, why should they be responsible for gains? Doesn’t make sense.
And with my $1/yr salary I would be concerned about making sure to do a responsible job to avoid any complications. Come on man… these people should be familiar with risk reward. There’s a risk, but if you do your job right there’s a big reward. If you don’t do your job right you deal with the consequences. As they’re learning now, you can’t successfully hedge all your bets.
A better question to ask is this. If you had a company and you had an employee that wasn’t doing a good job would you continue to pay them the same?
First of all this is not a bailout. The newspapers made up that word. We loaned AIG money at a high rate collateralized by 80% of their company and they have two years in to sell assets in an orderly manner to pay it back or be siezed by the US govt. The AIG loan is like your dad paying for your wedding if he gets to approve of your spouse. It is a loan with a lot of strings. Secondly, the risk to our whole financial system has forced the powers to be to do this and finally the little guy, aka deadbeats, if they paid off all their loans and leases we would be a lot better off.
This is no less a lie when the big o states taxes are only going up for 5% of people and down for 95% of people, hey wait a minute 35% of the US population pays no federal tax so it should be only at most 60% of people taxes are going down. 35% of the population who pay no taxes will now receive welfare checks financied by the fools who get up at 5am to go to the city to work to the late hours of the night. I guess the new slogan will be don’t be a fool drop out of school.
Well, DUH!
“How To Save Housing–What’s Needed Is A True Correction”
[snip]
http://www.cnbc.com/id/26855844
The under 35 crowd and the over 55 crowd on wall street both have their own set of job hunting problems.
All of the lofty degrees and certifications are useless, if you don’t have good network.
Anybody know how to easily pull up the back-end .xls files on lien servicer websites so the equity is clear?
I know I can do some searches if I know a name, but is there an easier way?
Like atfs. I got the sheets searching random NJ towns.
#217
“Not everyone takes actions to maximize their personal income. Are you familiar with the Dollar-A-Year jobs of the WWII era? Every cabinet official, in any presidential administration over the past 100 years could have earned more in the private sector. Federal judges with 30 years on the bench are paid less than ney associates in “Big Law” firms. ”
Shore– yes, I know people like this from law school and undergrad who went to work for the DOJ and Whitehouse. They are good people, smart and could have made a lot more money. I am sure there are people like this in the financial world too, but they may be harder to come by. When you are in a crisis you want the best and I think that it might be a mistake to put up barriers to getting these people (greedy or not). But I also understand the public desire to say enough is enough.
“The AIG loan is like your dad paying for your wedding if he gets to approve of your spouse. It is a loan with a lot of strings. ”
John,
As it should be. As the Scottish saying goes, “He who pays the piper gets to call the tune.”
I am actually pretty happy with the terms of the AIG bailout; however, Paulson’s proposal to bailout Wall Street comes without the necessary strings.
If the firms balk at the strings, fine, don’t take the money. If you can afford to walk away from the government’s money you are not in need of it. If you need it, then you accept the strings.
We accept this in every aspect of life. You want the raise, it involves moving to Deluth. You want to get married, you need to put up with mom.
As we said in the 70s, “@$$, gas, or grass, nobody rides for free.”
#224 Shore: It does not make sense to me. I would have to know what the new modified mtg amount would be.
For instance if one of those people that might be modified originally paid 500K, but are now having the mtg changed to 400K, than I would not want to spend any more than 400K, but the seller out there is still asking 500K for his similar house.
Without the information a prospective home buyer takes a huge risk.
Shore Guy
Who is going to buy? If prices don’t come down, not only are mortgages more expensive and less available, there is no mania. There is no pressure to buy now or else you’ll miss the party. We’re into the hangover.
skep (202)-
I make good money, I resent paying taxes like crazy (look at the great uses they currently put our money to!), and I’ll be goddamned if I have to start paying more to finance the utter insanity now being proposed.
This is the perfect time for gubmint to realize that they need to start dismantling departments, firing people, turning out the lights and getting fat, displaced, foot-shuffling bureaucrats the hell out of DC.
The gubmint needs to be shrunk to the point at which it performs only the functions origninally intended in the Constitution and at which it can function on a more reasoned- and reasonable- budget.
That reasonable budget does not include usurous federal taxes, criminal double-taxation of capital gains (of any type) and 700 billion bailouts of Piltdown men in Savile Row suits.
“When you are in a crisis you want the best and I think that it might be a mistake to put up barriers to getting these people (greedy or not). ”
Inasmuch as “the best” got us here, I will take my chances on some promising minor-league prospects.
Shore Guy
John,
As it should be. As the Scottish saying goes, “He who pays the piper gets to call the tune.”
—–
We have a piper down, I repeat, we have a piper down…
skep (206)-
You have made another excellent argument for letting the failed entity simply go ahead and fail.
I will take ANY amount of “pain” that Klink and Bergabe threaten, if only they will let things go to black.
Because propping up these failed institutions will only bring even more pain in the end.
3b,
But the mortgage amount does not tell the whole story.
My concern, and I know there are lefties/pinkos/insert whatever bleeding-heart-tem-you-want here who disagree with me on this perspective, is that folks who bought homes they could not afford skewed housing prices and adversely affected prudent people; consequently, until the people who behaved imprudently are forced out, through short sales, foreclosure, etc, the market cannot return to normal and the prudent made the closest to whole as is possible.
#234 skeptic: When you are in a crisis you want the best.
And did not not the so called best get us into this crisis in the first place?
morph (209)-
I’m with you, all the way. We have to stand up to these criminals before they steal what’s left of our country.
#242 shore: I agree 100%
So, Shore..what you’re saying is the economic behavior cannot proceed.
You must, therefore, believe that a shadow economy in housing will begin to mushroom.
Hmmm……Back to my tax lien research.
Not true, I have a huge network and never once got a job through a connection. I am always the most qualified as I am always scared I will get fired at any moment and keep up. For instance everyone is saying IFRS is the next hot thing and there will be a big need for accountants coming up and it is a recession proof opportunity. Well even though I have an MBA I am taking the five accounting classes I need to sit for the CPA so I am ready for it. I did same things with Russian Bond Crisis, Y2K, Basel 2, SOX etc. Get in early and ride the way but jump off before the crash. If you don’t keep up you are crushed.
SG Says:
September 23rd, 2008 at 2:05 pm
The under 35 crowd and the over 55 crowd on wall street both have their own set of job hunting problems.
All of the lofty degrees and certifications are useless, if you don’t have good network.
Essentially, what DC fearsd is an economic neutron bomb — where the homes are left standing but empty. I am not so sure that it is a bad thing, longterm, to have some folks pushed out of assets they never could afford in the first place.
Re 240 like they say under the 59th st bridge “he who pay the ho gets the blow”
Pat,
I am not sure that I got your last post. It could be the wine I had with lunch.
I don’t know that I have any idea what is going to happen. But, I am pretty confident that if folks get their mortgage debt reduced via a judeg or legislation, it will reduce the liklihood of prices declining.
I don’t know if anyone has been paying attention the the Paulson/Bernanke show but the testimony has been very interesting.
I really doesn’t looking like the draft proposal will pass at all.
#239
“I make good money, I resent paying taxes like crazy”
Clot– I agree with everything you wrote except your characterization of the bailout. It is not just a bailout for the very rich. If it was, there would be no need.
I think FDR was one of the worst presidents of all time. I think he was close to being a dictator posing as a president. However, one thing he did understand, and one thing his laissez-faire contemporaries did not, is that sometimes, if the gov’t does not offer its teat to the public, the public will cut the lady’s head off. I believe we are in that sort of situation today.
skep (219)-
Oh, boy. As if the form the workout takes will matter at all:
“…another method might be to require a non-binding mediation prior to foreclosure. see if a third party can help broker a workout that is better for both.”
Just more Titanic deckchair arrangement.
If not already mentioned, there is an interesting article on Bob Toll (and his thoughts on McMansions, etc.) in Portfolio magazine.
For those familiar with Hoboken, there’s a rumor floating around that Toll has come back to anyone still renting at Hudson Tea with another offer to buy their apartment.
211 - chifi
I think the anger being vented is directed towards the means of the proposed bail-out.
The newer, softer side of breach of contract.
Shore (220)-
Let’s replace E Pluribus Unum with something a little catchier:
“The USG. Going where only idiots dare go!”
From the patron saint of NJ, about offers having strings:
“And my car’s out back
If you’re ready to take that long walk
From your front porch to my front seat
The door’s open but the ride it ain’t free”
CR is reporting -
“Report: Hedge funds suffer mass redemptions”
Roubini predicted that the next phase would be hedge fund withdrawals:
“The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.”
We should really put Roubini in charge of overseeing the bailout.
Grim,
In mod and can’t tell why.
well, we’ve had bankruptcy in this country for going on I think about 130 yrs. It was really an innovation, much like limited liability, that laid the groundwork for the risk taking culture that exists here. all sorts of debt are written down in bankruptcy, and mortgages have traditionally been immune to it, but the other forms of debt survive despite this, and mortgages would probably survive as well (albeit with higher rates).
3b (225)-
“clot: Your comments on mtg modifications would be appreciated, especially since so many of us here expect to or shoud I say expected to buy.
Do you believe as I do that it would destry the housing mkt?”
Yes. It would be utter destruction. Once the sanctity of contracts is violated, investor pools immediately dry up. The actual physical assets’ values would immediately collapse, and the few remaining means of financing their purchase would require so much money down, require such bulletproof credit and become so expensive that virtually no one could buy a house…at any price. An expected byproduct could also be the complete disintegration of the mortgage insurance business (like they aren’t close to it already).
As for me: if that piece comes down the pike? Game over.
“I think FDR was one of the worst presidents of all time.”
Skep,
And the saddest thing — at least from the perspective of this Repub-lican — is that bu-sh (he no longer gets a “B”) is a bigger social-ist than FDR ever tried to be.
Clot,
And comments like you just made point to the need for hearings before congress runs full tilt toward adopting bailout legislation. Wghether or not the bailout is good public policy is one thing but, if we decide it is, then it should be well crafted policy that looks at all the various pitfalls.
Shore (235)-
And I always thought that was from Girls Gone Wild:
“@$$, gas, or grass, nobody rides for free.”
Clot,
Never saw the show. But did hear the phrase uttered hundreds of times back in the day.
CNBC “snap poll” (and “poll” should be in tripple quotes)
Who stands to gain the most from the proposed bailout plan? * 19245 responses
Wall Street
65%
Main Street
4.6%
Both
17%
Neither
7.4%
Don’t know
5.6%
http://www.cnbc.com/id/26853438
#269 clot: Just as I thought. On another note should not the Realtor profession be campaigning against this proposal, or do they just not have a clue?
242 Shore - I am a one of the “lefties/pinkos/insert whatever bleeding-heart-tem-you-want” and I completely agree with you.
I also don’t understand what’s so horrible about people “losing” a home to foreclosure when they put no money down. They never owned anything in the first place.
I don’t know if this was posted before, but I did not see it:
http://www.cnbc.com/id/26854595
U.S. home prices fell 0.6 percent in July from June, the fastest drop in three months which sent home values to the lowest since about the end of 2005, according to a government report on Tuesday.
CNBC.com
——————————————————————————–
Over the 12 months ending in July, U.S. home prices fell 5.3 percent, according to the seasonally adjusted monthly House Price Index from the Office of Federal Housing Enterprise Oversight.
A huge supply of unsold homes, tighter lending standards and record foreclosures have pushed down home prices, bringing the cumulative decline since the April 2007 peak to 5.8 percent, according to the report.
Home prices fell a revised 0.3 percent in June from May, which OFHEO originally reported as unchanged. The decline in July was the sharpest since a 0.8 percent drop in April.
Prices fell in all regions, ranging from a decline of 1.1 percent in the Middle Atlantic states of New York, New Jersey and Pennsylvania to a drop of 0.1 percent in the West North Central states of North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas and Missouri, the report said.
The OFHEO index is calculated using purchase prices of houses financed with mortgages that have been sold to or guaranteed by Fannie Mae [FNM 1.32 0.53 (+67.09%) ] or Freddie Mac [FRE 1.33 0.48 (+56.47%) ]. The index was introduced in the fourth quarter of 2007 and has shown less severe declines in prices than other reports.
For example, the Standard and Poor’s S&P/Case-Shiller 20-City Composite Home Price Index slipped 0.5 percent in June from May, bringing the measure down a record 15.9 percent from June 2007.
However, the month-over-month drop in the 20-city index was the smallest since July 2007. S&P will release its July figures on Sept. 30.
OFHEO’s report precedes separate data this week gauging the state of the U.S. housing market, currently suffering the worst downturn since the Great Depression of the 1930s.
The National Association of Realtors will release data Wednesday on U.S. sales of existing homes in August. The Commerce Department will release data Thursday on U.S. sales of new single-family homes in August.
Taking into account inflation, are we talking 2004 values?
Brookfield buys GMAC real estate unit
http://biz.yahoo.com/ap/080923/brookfield_gmac_home_acquisition.html?.v=1
Brookfield Asset Management buys GMAC real estate unit for undisclosed sum
NEW YORK (AP) — A unit of Brookfield Asset Management Inc. said Tuesday it is buying the real estate arm of GMAC Financial Services for undisclosed terms.
The Toronto-based asset manager’s Brookfield Residential Property Services will buy GMAC Home Services LLC from GMAC Residential Holding Company LLC and Residential Capital LLC.
The deal includes GMAC Real Estate, which has about 80 company-owned real estate offices and about 1,000 franchised offices nationwide, and GMAC Home Services Mortgage, the mortgage origination service within some of those offices, said GMAC Financial Services spokeswoman Gina Proia. In addition, the sale includes GMAC Global Relocation Services.
In early September, GMAC Financial Services said it was exploring “strategic alternatives,” often used to hint at a business sale, for the Home Services unit as part of a restructuring of its mortgage business, which was hit hard by the housing market downturn.
Residential Capital LLC, or ResCap, GMAC’s Richfield, Minn.-based mortgage lending division, will continue to lend through brands such as Ditech and GMAC Mortgage Direct, Proia said.
The purchase expands Brookfield’s Residential Property Services into the U.S. market, said Chairman George Myhal. In Canada, Brookfield operates under the Royal LePage, La Capitale, Johnston & Daniel and Centract brand names.
New York-based GMAC is controlled by Cerberus Capital Management, but automaker General Motors Corp. still holds a 49 percent stake in the business.
Brookfield Asset Management shares gained 7 cents to $27.07 in midday trading.
#256 shore:But, I am pretty confident that if folks get their mortgage debt reduced via a judeg or legislation, it will reduce the liklihood of prices declining.
I see it as the exact opposite. Comrade clot is in agreement with me.
Gator,
They owned “THE DREAM.”
My grandparents were in their fifties before they could afford a tiny home. Thee are worse things than being a , gasp, renter.
The fact that a leftie like you and a right-wing reactionary like me find common ground on this issue points to the folly of what was going on.
Bottom line is we’re in a horrible situation and we need to realize what the problems are and we’re going to have to do things we’re not going to like.
The first thing we have to do is accept the fact that the housing market will not “recover” in a way that will keep the market going. It will reach a bottom and from there continue to rise at a reasonable pace, not the pace that it has in the past decade.
Since so much in the banking world seems to be driven by mortgages according to Paulson/Bernanke, those activities need to brace for the change and we shouldn’t pretend we’re going back to living like we’re in the boom. It’s over. Everyone needs to let go of their sense of entitlements to the benefits they received during the boom. Everyone. So that when things go back to normal everyone is fine.
Now we have to figure out how to land safely. We have to find the best medicine and it’s not going to taste good. I would have much preferred that we were not in this situation and there were plenty opportunities for us to not be.
We need to find a way to save the reckless without rewarding them and we need a way for those that weren’t to have their contributions to get us out of this mess repaid.
Don’t bother knocking if the Van is rocking
skep (258)-
That’s where we disagree. I think it IS only a bailout for the rich, larcenous and indolent. You can tell it’s so, because the rich, larcenous and indolent are fighting so hard not to suffer a whit of consequence. Truth be told, they seem to be the only ones out there who want this solution (oh…they and the Democrat legislators who want to use the bailout as a chance to tack on their own pathetic sops to their welfare constituency).
What is really so shocking is that these people are being aided and abetted by public officials. Today’s testimony is surreal, in that it appears Klink and Bergabe actually believe we are so stupid as to swallow the lies they are spewing.
Re hearing:
It is very surprising to me how little Bernanke and Paulson have to say to defend the plan, almost as if they weren’t even trying to put up an argument.
Clot– Bernanke is an expert on the Depression. You don’t think he is simply trying to avoid a rerun? That is the most straightforward explanation. The conspiracy angle is much more attenuated.
Gospidin 3b, moi tvarish,
I don’t know. It may not cause prices to rise, but, the decrease in the number of “distressed borrowers” will result in fewer people having to sell. I am confident that result will cause a decrease on downwaqrd pressure for housing prices. There may not be any upward pressure, and, with time and inflation, flat prices may result in more affordable housing, but it may well cause a halt in the declines.
I suspect this is the calculation Paulson and Big Ben have made. They keep talking about the need to prevent people from losing “their” homes. As if a debtor “owns” an asset. If they will lose them or walk away from them anyway, due to going underwater, there is nothing to be gained by modifying the loans.
It’s comical to think that DC can solve this problem without creating hyper-inflation and shackle the next 4-5, probably more, generations in tomorrow’s version of chattel slavery.
Why are we relying on the same crooks/liars that created this charade, to now resurrect the insolvent? Six months ago, the problem was contained [we were led to believe], there will be no spillover to the general economy and our banking system was financially sound. Today, the same carnival barkers are forcing armageddon down our throats.
Heil Hank is asking for $700B up front and an open check book. Not only that, if it passes, it will be porked barrelled to the moon. The same institution that has us $11T in debt, closer to $60T when you add in future obligatiions, will now manage cds and measure counter party risk? On top of this they will be accepting the lowest tranches at above market pricing? If it wasn’t so sad it would be comical. This is the same institution that spends 2K on toilet seats?
Hank’s proposal will just saddle taxpayer’s with more debt. In addition to this, we will be duplicating Weimar. How does small business, the engines that fuel the economy, benefit? Future credit will be constrained and their burdensome health care costs and rising taxes have not been addressed in this bogus bailout. Save some CEO’s #ss, fire up the expense accounts, bring on the strippers, fuel up the jet, etc.. In the same equation, ignore small business in this country?
Hey, there are no easy answers. Unfortunatley, we have gone to great lenghts to create this mess and now the piper has to be paid. When leverage contracts, liquidity drys up. You can’t artifically create it without further, serious, future consequences. It’s either a 1930’s, deflationary, deep/deep recession/depression or a Weimar hyper-inflationary depression. Pick your poision. Prepare for the worst, hope for the best. There is no pain free govt solution forthcoming. Govt can in no way, shape or form halt/reverse a business cycle. They can only compound the problem. One other thought, how’s our govt handling the reconstruction of New Orleans.
Duckweed,
I believe that the prepared remarks were: We are from the executive branch, trust us. Have we ever lied to you before?
Shore (273)-
Girls Gone Wild is not a show. It’s sort of a serial…something. :)
“Don’t bother knocking if the Van is rocking”
Even better was that plus “Don’t laugh, it could be your daughter in here.”
The models they used to determine the amount of risk for a lot of the types of products and transactions they came up with were very wrong. Knowing this now it means they need to take greater measures to mitigate that risk.
The credit crisis is that banks over extended credit and now they can’t do that. The credit is not coming back. It doesn’t make sense to run at that level of indebtness.
Right now there are a lot of commercials, websites, etc for lawyers taking mesoProbablySpamFilteredTheleoma cases. They’re making a ton of money.
If tomorrow a miracle cure comes out that fixes everything, should we not let it because all these people working at law firms will loose the bulk of their income?
We have to do what’s right and sometimes that means people are going to make less money and some industries are going to have to contract. Things change you have to learn to deal with change not force things to stay the same.
Isn’t that what we told factory workers that lost their jobs when manufacturing moved overseas?
Joe Biden sees FDR on television during 1929 stock market crash:
“When the stock market crashed, Franklin Roosevelt got on the television and didn’t just talk about the princes of greed,” Biden told Couric. “He said, ‘Look, here’s what happened.’”
http://www.politico.com/blogs/bensmith/0908/Biden_garbles_Depression_history.html
First, FDR was not the president in 1929.
Second, the American public would not see television until the 1939 World’s Fair.
love the headline:
Paulson Plays Pinata
Joshua Zumbrun 09.23.08, 2:20 PM ET
Paulson and Bernanke take their bailout to Congress and take a beating in return. What does that mean for their plan?
Before Henry Paulson and Ben Bernanke even had the chance to speak this morning, senators were on the attack.
[snip]
Putting The Crisis In Perspective
http://www.forbes.com/business/2008/09/23/congress-paulson-congress-biz-beltway-cx_jz_0923pinata.html
Was joe dropping acid in ‘29?
Reminds me of the time I dated a “spitter” and the next day after a date on a very cold night a co-worker wanted to know what that frozen tapoica pudding was doing on the side of my passenger door.
“Bernanke is an expert on the Depression.”
skep,
He’s an economics professor who never worked in banking. However, he does enjoy helicopters. Is the rumor true that he traded in his helicopter for a 747?
ANyone see this before. It puts things in perspective, especially the desire to NOT take an equity stake.
http://digg.com/world_news/Smiling_Henry_Paulson_600_000_000_of_Goldman_Sachs_Stock
A spitter?
Nevermind, got it.
Stock Owned $632.4 mil
http://www.forbes.com/lists/2006/12/VY36.html
all mr. o said is what we should do in very general term. he never proposed any specific since he hasn’t gather all the opinions from his 300 economic advisers. like it or not, mr. m did have some specifics:
1) build MFI
2) fire Cox
3) need oversight committee including highly respected people such as buffett, romney and bloomberg
4) salary cap for bailedout CEOS: 400K.
Shore:
“I believe that the prepared remarks were: We are from the executive branch, trust us. Have we ever lied to you before?”
The Senate answered “Yes” and sufficiently impressed my low expectation.
bi [302],
Go back to your blackbox.
Qwerty:
Biden is a gaffe machine and on some level it is hilarious. I suppose his gaffes are not as criticized since he does not intend to deceive through them. Now had he said that he’s been to Iraq when he stopped in Kuwait to refuel, then you would have had a much better case.
I never paid to get scr-ew-ed before. I don’t know that I like the feeling.
3b (275)-
With Realtors, always take the “no clue” choice.
304$, by my blackbox, SKF, GLD and USO will be in hot water again. all disclaimers apply
“When the stock market crashed, Franklin Roosevelt got on the television and didn’t just talk about the princes of greed,” Biden told Couric. “He said, ‘Look, here’s what happened.’”
Post of the day.
Credit default swaps
A house insured for more than its value is always considered a fire risk. But home insurance is regulated and arson is a criminal offence. That keeps most people honest, most of the time. The same cannot be said of the credit default swap industry. The private, over-the-counter market allowing two parties to bet on the likelihood of a company defaulting on its debt had, by the end of 2007, grown to at least $62,000bn in notional amounts insured – more than the all the credit outstanding worldwide. Contracts, however, are registered nowhere but in the books of the partners. Nobody really knows the real volume of trading, the method(s) of prices discovery or, in President George W. Bush’s phrase, the “interlinks” of risk.
god you people whine. how about we just let the government do what it knows how to do and what it should do and thats help out the people that elected these officials into office in the first place. you will all still be able in a year to whine and moan about the jones down the street who just bought a nice house while your still in your studio apt sleeping on futons. and regarding the bankruptcy’s thats only going to befor people who qualify, and their going to put in the balance not shave off principle so no real estate crash for all you haters who think your going to buy some mansion in morris co for $1 and have virtually no mortgage. get real folks. this is te real world where everything and everyone has a price
BI:
1) build MFI
2) fire Cox
3) need oversight committee including highly respected people such as buffett, romney and bloomberg
4) salary cap for bailedout CEOS: 400K.
Drill baby drill!
Mitchell (279)-
Brookfield? Now there’s a genuine vulture transaction. Those dudes are smart.
““He said, ‘Look, here’s what happened.’””
I thought THAT is what Lincoln said as he surveyed the Gettysburg battlefield during a helecopter flyover in Marine One.
“and have virtually no mortgage”
I, for one, have less than “virtually no mortgage” and over 3,000 square feet of house. One can be outraged without being poor, or propertyless.
Stu @ 3:10PM
As a matter of fact Biden recently claimed his chopper was “forced down” in Afghanistan:
“If you want to know where Al Qaeda lives, you want to know where Bin Laden is, come back to Afghanistan with me,” Biden said. “Come back to the area where my helicopter was forced down, with a three-star general and three senators at 10,500 feet in the middle of those mountains. I can tell you where they are.”
http://blogs.abcnews.com/politicalpunch/2008/09/the-story-behin.html
Turns out, the chopper was “forced down” by snow.
It’s hilarious to see people maintain their double-standard, depending on if a politician’s name is followed by a D or an R.
Bob– I know you hate this plan, but I do not think anybody likes it. It is as you say, pick your poison. Bernanke and Paulson to me seem more qualified than most who could be in their positions at this point. You have got one guy (Bernanke) who is acutely aware of the failures in policy that led to the Depression. We are not repeating those failure now, even if you think we may be failing in a different way. In Paulson you have a guy who rose to the top of what is almost universally considered the top financial institution on the planet. I think these guys have as good of a perspective on this thing as anyone we could hope to have in their positions right now. And we should also keep in mind that they assumed their jobs when the damage was already really done. They are here to clean up the mess, and I think at least Ben has known this for some time. It really is a horrible state of events.
According to Benny, the depression happened not because there was no policy response, but because the helicopter technology necessary to carry out said response didn’t exist yet.
#287 shore: I still disagree, but we can agree to disagree.
Once prospective buyers know that mtges can be changed (lowered), it will kill the housing market.
I am not talking necessarily about the peopl who need to sell, but just sellers in general.
I can tell you right now, that if this passes, it will factor in to my bid when I buy.
I am outraged at the number of people who read every complaint on this blog and then complain about the complainers.
Grim,
So it was Sikorski’s fault?
Shore…I didn’s see the Gumbint as a choice so I had no response to that poll..all of the above would be a more valid one
“how about we just let the government do what it knows how to do”
[311],
That’s the problem, the same dolts that poured gasoline onto the fire.
The only solution for RE prices, in this bill, would be a provision to bulldoze 11 months of inventory or blow up 2M vacant homes.
Stu,
I have had it with your complaints about those who complain about complainers complaining. It is just wrong and needs to stop.
#317 skeptic:I could agree with some of what you say.
The problem is neither one of these guys were hoenst from the begining.
There is a real credibility factor here.
“Turns out, the chopper was “forced down” by snow.”
And now they can control the weather!?!?!?! We’re so screwed.
skep (286)-
That’d be terrific, except this meltdown isn’t firing up the same way Depression I did.
The reason I’m convinced this is a conspiracy is that Klink and Bergabe consistently laughed off the “Depression” catcalls from our little corner of the blogoshpere and spent the past two years sounding the all clear horns.
Only now, at the 11th hour, do Bergabe and Klink invoke the “Depression” comparisons…and in a way that is intended to seem subtle, yet packs the punch of Ali.
I wrote to a friend this morning that Beavis and Butthead’s testimony reminded me of a teenage kid, bum rushing the parents for keys to the car on a Friday night.
On second thought, most teenagers’ negotiating skills are better.
skep [317],
All I can do is plan acordingly. I’m set up for both scenarios.
accordingly.
#311 Are you on ludes??
“credibility factor”
THAT’S IT. A new reality show staring members of the executive branch, living with the congressional leadership. We put cameras everywhere and watch them as they carry out various economic tasks. THAT would get Joe and Jane Main Street to watch. Tune in this week to see who gets voted out of government.
Shore (287)-
When all significant pools of investor capital run away from mortgage finance- due to gubmint-mandated breaches of contract- the values of the asset in question will plummet.
3b mortgages will not be changed so easily. i cant believe a portion of people on here think this to be true.
Stu:
it just becomes SO repetative people complaining about the EXACT same thing
oh we’re mad as hell and not gonna take it anymore…gimme a break…everyone on here knows that we need to pick our poison at this point and thats to get this bailout in some way shape or form out the door and working. b/c surprise surprise a lot of the posters/complainers on this board be it 35 under or 55+ will be out of everything job,shelter,food etc. im sure no one was complainging this much before when the economy was booming? how many people that are here hiding behind postings and handles didnt get some fat bonus from their job which by the looks of it isnt happening this year? how many folks here have got the xbox ps3 flat screen and blu ray discs??? ah but you werent complaining about that before? and if they raise taxes…so what? does anyone here even have an idea of what they normally pay?? no you just go to your CPA’s have them tell you what it is and off you go back to being the consumer zombies you have always been. before this site even existed i’m sure a majority of you were the exact things you hate now.what happened? what life changing event did you have that made you take this new outlook? maybe we should have an emotional bailout and get to the root of your meltdowns…
Qwerty: I was not aware of that one. Thanks for enlightening me. Biden truly is a moron, but at least O is a lot healthier than M so he won’t be leading this country anytime soon hopefully.
#317 - skeptic -You have got one guy (Bernanke) who is acutely aware of the failures in policy that led to the Depression.
I disagree. Bernanke has an opinion as to what led to the Depression, education though it may be. Many, especially from the Austrian School, disagree.
Bernanke’s solution is still to react as if this was a liquidity crisis & purchase troubled debt instruments from banks freeing up their cash so it can be lent out.
Clot,
Your assessment as to how long that would take to occur?
#332 - Nod
“O is a lot healthier than M”
Stu,
True enough. Still, who does not believe that if O wins there isnt a whole pool of motivated nutcaeses with sniper rifles just waiting to be the one to make history. Anyone who takes that job has a target on them, but O’s will be huge and illuminated.
I disagree. Bernanke has an opinion as to what led to the Depression, education though it may be. Many, especially from the Austrian School, disagree.
Bernanke’s solution is still to react as if this was a liquidity crisis & purchase troubled debt instruments from banks freeing up their cash so it can be lent out.
Weak response, at least FDR went back in time and tried to use television to warn the masses of the coming depression. Time travel is way cooler than printing presses.
#334 - 2nd sentence should read Bernanke has an opinion as to what led to the Depression, educated though it may be
I suck.
“Anyone who takes that job has a target on them, but O’s will be huge and illuminated.”
I surely hope this is not the case. If O did get shot, it won’t help the NRA’s position.
#338 - You win the thread sir.
/golf clap
They will make the case that if the whole population were armed, someone could have detected the assassin and shot him, thus saving the president.
Shore Guy wrote;
then the risk of buying and seeing ones investment decline in value decreases, no? That lack of, or decline in, downside risk will, I suspect, attract buyers, which puts upward pressure on home prices.
* * *
Stock prices and house prices will stay inflated in terms of $USD, but the real value of $USD will fall, crushing savers and responsible people, and ultimately all Americans.
Imagine a giant balloon of filled with pain and suffering that’s grown since WWII. That balloon will either burst and cover mostly the people responsible for creating it, or leak over a longer period time, tarring everyone in America, even those who had nothing to do with its construction. The amount of pain and suffering is still the same, and will be released one way or another.
#313 Clotpoll
Got to agree with you.
Brookfield just created a US presence.
#334
what would the Austrian response be (if any). not being sarcastic, just actually curious.
(296)-
A classic, in every regard.
Almost Hemingwayan in its simplicity and taut sentence structure.
#345 - They’d argue that the deflationary period we are entering is needed and evidence that further credit creation can not be sustained.
#345 - skep - Sorry I didn’t have a longer response. Your question deserves one but I’m pressed for time right now.
If the plan is successful at stoping the decline in home prices, I don’t think it will keep people from selling homes.
Sure the people in distress may stay in their homes/mortgages, but it will just make the majority of people that bought before the bubble and regretted not selling in 2005 happy they can get back in the market.
I really don’t see any realistic way for home prices to rise unless incomes increase.
we should also remember that Hitler was an Austrian.
Shore (335)-
About one day. The day a judge reduces the principal balance on a defaulting mortgage.
345 skeptic,
from wikipedia Austrian School Explanations
Another explanation comes from the Austrian School of economics. Theorists of the “Austrian School” who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote America’s Great Depression (1963). In their view, the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame.
In opinion, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929[15] predicted the economic downturn, stating that “the boom will collapse within the next few months.”
Ludwig von Mises also expected this financial catastrophe, and is quoted as stating “A great crash is coming, and I don’t want my name in any way connected with it,”[16] when he turned down an important job at the Kreditanstalt Bank in early 1929.
One reason for the monetary inflation was to help Great Britain, which, in the 1920s, was struggling with its plans to return to the gold standard at pre-war (World War I) parity. Returning to the gold standard at this rate meant that the British economy was facing deflationary pressure.[17] According to Rothbard, the lack of price flexibility in Britain meant that unemployment shot up, and the American government was asked to help. The United States was receiving a net inflow of gold, and inflated further in order to help Britain return to the gold standard. Montagu Norman, head of the Bank of England, had an especially good relationship with Benjamin Strong, the de facto head of the Federal Reserve. Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.[17] Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.
In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable.
The artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market’s adjustment and made the road to complete recovery more difficult.[18]
Furthermore, Rothbard criticizes Milton Friedman’s assertion that the central bank failed to inflate the supply of money. Rothbard asserts that the Federal Reserve bought $1.1 billion of government securities from February to July 1932, raising its total holding to $1.8 billion. Total bank reserves rose by only $212 million, but Rothbard argues that this was because the American populace lost faith in the banking system and began hoarding more cash, a factor quite beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and this, Rothbard argues, was the cause of the Federal Reserve’s inability to inflate.[19]
Tom: It’s not that home prices will rise. It’s that if the government acts here and bails out the irresponsible homesquatters**, the ridiculously inflated prices we currently have will not fall as fast as they should but rather drift downward in a painful spiral.
** I call them homesquatters because people with mortgages they cannot afford are not homeowners.
skep-tic 350,
You would make Mike Goodwin very proud.
EPIC BAIL !!!
The real issue here is complicated. On a macro level no money has been lost on housing. For instance my lazy neighbor who got let go around in late 2001 from his job started flipping houses even though the dolt has a maid, lawn service and can’t even take out the trash. He bought several pos capes and splits and had home depot parking lot mexicans fix them cheap with as many short cuts as possible and did several six figure flips to subprime sludge. Well that guy stopped flipping in 2005 when he sold his last one at a break even and has not worked a day since. He put a few hundred thousand in the bank and the people who bought those home depot quick fix splits and capes at close to 600K are on the verge of defauling. They did not lose their money on their home investments, my neighbor actually has it and is spending it down while he waits for the next get rich scheme. The problem is the people like my neighbor ain’t giving the money back and the suckers who bought those overprices 2004-2006 flips are going under or will need loan modifications.
#349Tom: As clot says once you start changing mtg contracts it will be all over for housing.
Perhaps Klink and Bergabe are aware of that,and as such are reluctiant to offer much help to these people.
Perhaps they realize that having prices correct, and a new group of buyers come in who can actually afford the houses, and who will have disposable income to buy paint, furnishings and all the rest,is one of the keys to jump starting the economy again.
#352
that is an interesting idea. isn’t an alternate view that the gold standard itself could have been the problem?
as far as I can tell, the incidence of financial panics was greatly reduced once the fed was created. so to the extent that the austrian school thinks central banking is not necessary, I think this seems suspect.
MJ,
I agree except I would include the idiot bankers that lent money to the irresponsible homesquatters.
I think with interest rates this low and the realization that they can’t feed credit to the masses like they did to manipulate the housing market, banks are going to need to see the volume of mortgages increase. They’re not going to make nearly as much on the mortgages or collateralization as they did before so they’re going to need to volume to make up via origination fees. For volume to increase, prices need to go down.
I’ve always suspected that there would be an effort to keep house prices stable but that it would only last once banks unloaded the properties they currently have and the foreclosure rate declined.
If this bailout goes through, it looks like it’s scheduled to run for 2 years. I don’t think we’ll hit bottom till after that.
Ouch. Market looks like it will close near or at low of the day.
3b,
Have you heard what Paulson/Bernanke have been saying? They’re hoping this keeps house prices afloat.
I’m working on a post for my site with more details but have had a few interruptions and haven’t finished yet.
LOL buymys–tpile.com ftw!! (don’t want to run afoul of link or censor filters..)
#349
The bailout wouldn’t put more money in consumers pockets and it doesn’t make housing more affordable.
You cant stop it. Employers wont be handing out more money, governments overtaxed, Inflation is increasing, banks are already closing lending only to qualified people, Housing is still not in line with a lot of areas income and employment.
Loans for homes never should have been given to people who are not responsible. Granted a percentage will be bad luck cases but few and far between.
The bailout would punish the people who are being responsible/practical and rewards the people who mis-managed it all.
http://www.nytimes.com/2008/09/21/realestate/21cov.html?ref=realestate
IN theory, slowing sales and the prospect of further weakness after the meltdown on Wall Street should mean it’s a buyer’s market in Manhattan.
But mortgages are so difficult to get, and co-op boards are making such tough demands, that enterprising bargain hunters are finding that although the time should be right for them, it is sometimes impossible to leap into action.
Bankers are rejecting those who do not have near-perfect credit or long credit histories. Buyers are finding that no matter how much they have for the down payment, they seem to need more. And if they are trying to buy in co-op buildings, they are facing more stringent requirements; some buyers have to wait and sell their existing homes because sellers and co-op boards will not entertain offers until they do.
Mitchel,
Maybe I wasn’t clear. That’s the plan, for the bailout to keep housing afloat. Personally I don’t think it will work.
“Weak response, at least FDR went back in time and tried to use television to warn the masses of the coming depression. Time travel is way cooler than printing presses.”
We didn’t need a time machine. We had plenty of smart guys calling this insane in 2002-2003. One of them was running for president not to long ago. People on capital hill still think he’s cooky. “No one saw this mess coming, Mr. Ron Paul, you have the floor for 5 minutes”. One day, it will be “Mr Ron Paul, you have the floor for 5 hours”.
Bond of the day!!! Tax free 5.8% NJ investment grade and insured AMT free muni bond- I haven’t seen that in years.
NEW JERSEY ST TRANSN TR FD AUTH TRANSN 00.00000% 12/15/2036 SYS BDS SER. 2006C
Price (Ask) 19.920
Yield to Worst (Ask) 5.800%
#361 Tom:Have you heard what Paulson/Bernanke have been saying? They’re hoping this keeps house prices afloat.
I know that is what they are saying, but I do not think they believe it. They are throwing a bone to the Democrats in that they appear to be doing something for the existing homowners in trouble, when in reality they need to be swept away, and the next batch need to be bought in,and I believe Klink and Bergabe know that.
Their main concern is with getting the toxic securities off of the financial companies books on to the U.S. government.
There will be casaulities, and it will be homeowners in trouble and a decline in home prices.
SKF just keeps inching its way up…
All possible disclaimers. I can’t wait until Oct 2, when these crooks lock it down again.
Come to think of it, I don’t have to disclaimer SKF. If you’re not in already, you can’t buy it.
However, you can sell it or short it.
I love America!
“Their main concern is with getting the toxic securities off of the financial companies books on to the U.S. government.
Yes that’s the main concern. But, if you believe them, they also want to get credit flowing again. What they’re claiming, and what some people here seem to believe, is that if we have credit flowing again, everything is fixed. I do not beleive that if the banks get this bailout they will open up lending at the same pace. They were hurt too bad. This is not going to fix the credit problem.
There is no credit problem. It just seems like the contraction is a problem because there was such a over abundance of credit. People have to learn to live and do business without that much credit.
#365 Tom got ya.
I think Paulson/Bernanke know it wont work either that’s why they are pushing for an immediate approval. They know the longer it takes the more questions arise that this wont work.
http://en.wikipedia.org/wiki/Image:Quaalude.jpg
Clot,
Re SKF, I was actually looking closely at it since I first saw it mentioned here.
Made some fantasy trades based on different criteria. Going in an out 3 times and would have made out like a bandit :(
Finally was going to jump in for real but it didn’t reach the price I thought it would and didn’t get in. Stupid because I just missed by a buck and would have been out the following week with a nice gain.
Was going to get in again friday but wasn’t sure what the changes would mean. Monday morning cancelled an order I put in Sunday night. Market price was far too low compared to the previos NAV. Surprised it would have come back so much in one day.
Translation… I’m kicking myself for being a chicken way back when.
“They know the longer it takes the more questions arise that this wont work.”
Mitchell,
They probably figure they have a week. It will take Congress that long to catch on;
“…authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000, outstanding at any one time”
Since they goosed the markets last Friday, short ban, the Dow is off approx 800 points from Friday’s high. OK, what now?
John #367
That’s very good. 5.8% tax free? How does one go about inquiring further about it?
Thanks.
You cant get credit flowing again without putting EXTRA dollars in a persons hand.
Un-employment Increased.
Taxes Increased
Interest Rates Increased.
Cost of Living Increased.
Housing Values Fell or aren’t Moving.
Insurance increased.
None of the above are corrected with the bailout.
All of the above unfortunately fall onto the burden of responsible parties. They don’t have it any more. Increase any of the above any more and the responsible become Victims. If your a victim you cant help anyone and with the housing market stalled or decreased there is no escape plan.
To cut corners people are holding onto their cars longer. No Payment vs Car Payment. After all most cars dont get much better gas mileage to offset the car payment vs gas prices. Some just don’t have the money or are afraid to spend it.
How many feel their property taxes are going to just go up next year? Automatically people anticipate another increase in property taxes. So they put the extra aside predicting its going to happen. Everyone hit with extra heating and cooling bills too? Chances are your usage didn’t change but the rates did. Everyone was hit in every direction and the increases on every level were accepted. No one is fighting to reduce the cost of living. Nobody is calling shins on the price of oil. Nobody is saying thats BS when the power plant claims it needs to charge more. Especially in the face of companies recording record profits someone should be saying what F? You cried poverty then had record profits. Government has failed to protect consumers but instead is placing the burden upon them as long as they pay it.
If they reduce energy prices and reduce taxes the system will start moving.
The Bailout talks caused Oil to increase and would wind up increasing peoples taxes and make those with a dollar save it even more. It simply wont work. It will worsen things.
Paulson & Bernanke don’t even talk intelligently about the topics they are supposidly expert in. Cox sounded marginally better.
that Biden quote is fantastic.
i wish mcain and biden would debate, it would be fantastic, it would have no relevance to anything that is going on right now, but the unintentional comedy would be off the charts
“How many feel their property taxes are going to just go up next year? Automatically people anticipate another increase in property taxes.”
Especially in Jersey, this is a huge deal. In places like CA, where there are caps on the yearly increase, one can budget for what will happen taxwise. In Jersey, it is like spinning one of those big wheels in a casino.
“In Jersey, it is like spinning one of those big wheels in a casino.”
But with the big wheel you have a chance of winning.
It’s more like a wishing well. Your throw your money in and make a wish that will never come true.
I had a buddy who had a wife like that.
Maybe it is more like protection money. You know they are going to show up, but you can’t be sure just how much they will demand.
from Reuters:
“Paulson replied bluntly, “We need the full authority.”
“What this is about is market confidence,” he said. “It’s a sad story, but the American taxpayer is already on the hook.”"
************
Pretty big gamble doing nothing if you ask me.
Skep,
To paraphrase Leona Helmsley, “Only the little people have to bail out Wall Street.”
Skep,
To paraphrase Leona Helmsley, “Only the little people have to bail out Wall Street.”
Skep,
To paraphrase Leona Helmsley, “Only the little people have to bail out Wall Street.”
well, apparently Buffet doesn’t think GS is worth 0.
Buffet buying 5 billion worth of GS. Get’s preferred shares.
My investment club own GS. I guess this is good ;)
why do we keep letting this guy in the country?
UNITED NATIONS — Iran’s president accused “a few bullying powers” of trying to thwart his country’s peaceful nuclear program and declared in a speech Tuesday before the U.N. General Assembly that “the American empire” is nearing collapse.
“why do we keep letting this guy in the country?”
Because we are obliged to.
The bad thing about hosting UN is that twits like this get to here. The good thing that comes from hosting the Un is that it makes it easy to spy on them.
Does anyone think that there is any truth to the rumor that O will replace JB?
Stu,
Looks like you and Gator will be hosting a GTG at a nice restaurant, what with your killing in GS.
d2b,
Unless B needs to leave due to a serious health condition or terrible family issue, it would kill B’s campaign.
And, if that happened, his only hope woul Obi Wan Hillary Clinton.
Existing Home Sales released tomorrow.
New Home Sales on Thursday.
I posted my thoughts on the $700bln bail out based on new information, the first draft anyway :)
The thing that bothered me the most was how much they talked about buying up second liends that would otherwise normally lose completely in a foreclosure.
I really don’t think this plan will help America.
#323 “blow up 2M vacant homes” - sounds like a dream job for Clot and Kettle.
Tom, Tom, Tom, it will help a very important slice of Americans, Wall Street Americans. And, in a few months, the bu-sh administration staff from treasury, SEC, etc., will be looking for work and will need the Wall Street Americans to come to THEIR aid.
I wish Shore. I think the Gator and my portion amounts to about $50. We planned to slowly average in, just like Warren Buffet ;)
Stu,
I read someplace that you and he were often mistaken for each other. I know it must be a burden but, try to buck up under the pressure.
It sounds like the politicos in DC have gotten the message that, as proposed, the bailout was wrong. Now would seem the time to inform our respective representatives and the committee leadership that allowing judges to modify mortgages will kill housing lending.
Shore,
I’m not sure it will even help Wall St. At least not to the degree that they claim.
I mean, yeah it’d be nice if someone came to me and offered to pay top dollar for my used toilet paper, but I’d be a bit suspicious of their motivations.
Comparing the value of crap covered toiled paper to defaulting subprime second mortgage securities and contracts is probably not fair. There’s some value as crap as a fertilizer and you could probably get dogs to eat it.
Ever since Yun said we haven’t hit bottom, I’ve been trying to figure out how to make sense of this.
I mean he’s always wrong when he talks about the market and especially in calling bottom.
I think I’ve figured it out in a way that keeps my brain from exploding.
We’ve hit bottom. It’s just that the bottom happens to be a steep downward slope.
‘Tuesday before the U.N. General Assembly that “the American empire” is nearing collapse.’
Is this Clotpoll or BC Bob? Sounds like it could either one of them.
#244 “only the functions origninally intended in the Constitution” YES!!!! And let the failures fail.
Buffet buys gs, he gets 10 yield and 10 prem if it is refunded and chance to convert to stock if it is in his favor, about all he didn’t get was his name on the building, mark my words my wamu bonds at 30 cents on a dollar they are going to pull a GS and money will come out of the blue.
Wait a minute. Is this where the current government wanted us to save for our retirement(alternative to social security)?
Wow!
“I share the outrage that people have,” Paulson said. “It’s embarrassing to look at this. I think it’s embarrassing to the United States of America. There is a lot of blame to go around.”
Now that Hanky shares our anger can we share his Goldman bonuses?
WAIL ST.
HEHE,
“Now that Hanky shares our anger can we share his Goldman bonuses?”
Didn’t you hear? Our infrastructure is collapsing. All we have left are one way streets.
Saw the three stooges speaking earlier today.
“housing market is not going to recover is the economy is declining”
UM, idiot, the housing market still ridiculously overpriced. WTF is it supposed to recover from?
“If we don’t act now we risk a recession.”
Hahaha. Risk? Recession (Oooh I’m so scared) is an absolute CERTAINTY no matter what stunt you pull.
may have missed this, sorry if someone mentioned it earlier.
truemajority.com are organizing a protest on wall street this Thursday at 4pm.
“Since Wall Street is asking us to give them money for their worthless investments, some of our creative friends are planning to bring their OWN junk to Wall Street and see if they’ll buy it. Bring your collectible mugs and limited edition Thomas Kinkade prints and add ‘em to the pile!”
(265) Victorian
“We should really put Roubini in charge of overseeing the bailout.”
Agreed
I would like to see our general economy on solid footing. He evidently understands the derivatives market and could aid in the unwinding of the SIV, MBS, CDO’s. And hopefully see to it that such nonsense never occurs again.
But I am NOT FOR BAILING out housing.
There have been fortunes made and lost in this country. We are just used to it being by folks named Rockefeller. Maybe this time around it will have been by folks who had the foresight (like John’s neighbor) to flip houses. I know right now, the money is being made by those who have the cash to pick up houses for a song as rentals in California. Maybe it will be in equities once those drop as well.
Roubini said the illiquid mortgage assets needed to be bought at a discount and he thought a HOLC-type institution would do a better job than an RTC.
If I am remembering his article correctly, he said only the debt of first-time buyers should benefit from debt reduction.
This business of bailing out jerks who over used their credit cards is ludicrous. People better stop spending money - just like the rest of us…
We need to have the recession/depression - some pain so we won’t forget - but maybe some of Roubini’s ideas could help make the recovery faster.
So I’m working on some stuff, somehow cspan was on in the background and I’m not really paying attention.
Then I start thinking about some things regarding the financial crisis. Which bothers me a little cause I was trying to work on something unrelated.
Then I freak out. Cause I realize my inside voice has a british accent!
Thankfully, it wasn’t my inside voice. It was British Prime Minister Gordon Brown speaking about the global financial crisis.
He just happened to be saying some things I agree with.
Couldn’t find the video but here’s the text of the speech.
I wish one of our leaders could say what he said. At least the parts I heard. :)
Instead we get. “C’mon people they sky is falling open up your checkbooks and I’ll fix everything. Trust me. Have I ever steered you guys wrong before?”
Not only do most Canadians not understand the full impact of carbon tax, cap and trade, Liberal Leader Stephane Dion and his party do not fully understand it either. Neither Liberal MP’s Mr. Pearson nor Mr. McCallum knew that greenhouse gases were not the principal drivers of climate change or that only 0.0019 % of our atmosphere is composed of the anthropogenic CO2 targeted for reduction (!) in “Green Shift” by massive changes to tax and spending models.
Reform BC is pleased to announce that our online publicity campaign appears to have blocked manipulation of voters by the `green-shifting’ federal Liberal Party. We will now focus our publicity campaigns on blocking the hybrid carbon tax and cap-and-trade scams (as adopted by the B.C. provincial Liberal party) where a recent victim was Lehman Brothers, bankrupted in its naïve quest to become prime broker for emissions trading on EU/Chicago climate exchanges.
“A carbon tax trumps cap-and-trade system The Gazette Publishe Monday, April 07 British Columbia charged in last week where federal government and other provinces are hesitating to go .. adding cap-and-trade regime to .. carbon tax it brought in earlier this year, B.C. [Liberal government] has [passed] .. B.C.’s Greenhouse Gas Reduction (Cap and Trade) Act .. part of the province’s contribution to the Western Climate Initiative. Seven U.S. states, Manitoba and B.C. joined forces last year to design a way to reduce greenhouse-gas emissions”
http://www.canada. com/montrealgaze tte/news/ editorial/ story.html? id=3e61782c- d6c6-469d- 9d2c-875314588c8 4
Carbon Disclosure Project (CDP), a collaboration of 385 institutional investors [including bcIMC, the British Columbia Investment Management Corporation which manages the pension fund assets of public servants who profit from their control over the carbon tax and cap and trade rates!] with assets under management of $57 trillion, has issued its 2008 information request to the world’s largest corporations. Companies are requested to measure and disclose their greenhouse gas emissions and report on their strategy for dealing with risks and opportunities associated with climate change.”
http://www.cdprojec t.net/
Our research suggests that Lehman Brothers was targeted for a reverse-takeover of its distressed assets in a bait-and-switch conspiracy by Lehman’s racketeering competitors in the $57 trillion Carbon Disclosure Project (CDP). The CDP was launched in 2000 by Rockefeller family agents at JP Morgan Chase and the Desmarais family agents with Groupe AXA and BNP Paribas.
It is no coincidence that the UN Oil-for-Food swindle was set up to be run by these same two banking families by Canadian privy councilor Maurice Strong, the Liberal depopulationist, the Saddam bribee and godfather of the Kyoto Protocol and the Chicago Climate Exchange fraud with Al Gore.
In 2000, the agents began using a mix of predatory loans, pump-and-dump strategies and credit-default swaps to eliminate competitors, including Lehman Brothers to the global family duopoly in carbon tax, cap and trade markets and the insider redistribution of trillions of dollars to the Liberal producers of nothing!
What is the connection between the bankrupt Lehman Brothers and the likelihood that in four years’ time our electricity bills will jump another 25 per cent (on top of the rises likely from soaring coal and gas prices)? The answer is that, before its collapse, Lehman was pitching to become the leader in the vast trade created by the new worldwide regulatory system to ‘fight climate change’ by curbing emissions of carbon dioxide. The biggest money-spinners will be the schemes whereby industry will pay for permits to emit CO2 at so much a ton, either directly to governments or by buying them on an international market … … http://www.telegrap h.co.uk/opinion/ main.jhtml? view=DETAILS&grid=A1YourView&xml=/opinion/ 2008/09/21/ do2105.xml
that is all
-SAS
Cindy,
“This business of bailing out jerks who over used their credit cards is ludicrous. People better stop spending money - just like the rest of us…”
I think I remember reading that you used to work at an S&L. I don’t know it what capacity so I don’t know if this was an innocent bias you acquired or you have some sort of agenda.
What part of the proposed plan bails out jerks that over used their credit cards?
You do realize, that the money will go to people that issed the credit or those that bought securities based on that credit right? We’re not sending out checks to people to pay down their mortgages and credit card bills.
The plan is being sold as not likely to cost the full $700 billion because we’re going to purchase these mortgages and securities and then sell them at a later date. If we told the people who owed the credit card debt that they didn’t have to pay it back then we wouldn’t be able to sell these securites based on credit card debt could we?
Meredith Whitney: Bailout Won’t Do Jack, Cutting Estimates
http://conquerthewallstreet.blogspot.com/2008/09/meredith-whitney-bailout-wont-do-jack.html
“Meredith Whitney weighs in on the bailout plan, saying it won’t help bank fundamentals in the foreseeable future. She also whacks her estimates on Bank of America (BAC), Wachovia (WB), et al.”
UPDATE: FBI Probes Fannie, Freddie, Lehman, AIG For Fraud -AP
http://money.cnn.com/news/newsfeeds/articles/djf500/200809232045DOWJONESDJONLINE000716_FORTUNE5.htm
Bergabe and klink, imperfect together.
Mike Morgan, tonight, on Buffett’s sweet deal:
“Very sad times. Remember the Maria Bartiromo interview with Buffet, when he slipped and said Paulson called him on the big Sunday a couple of weeks ago? Many people wondered why Paulson would call a private citizen to discuss Fed matters? Obviously, we now know.
Sham Deal - Buffet gets special stock with a 10% dividend and he gets the right to by another $5B at $115, when the stock was trading at $125 and the deal makers knew it would spike on this kind of news. So why didn’t Goldman set a higher price on the stock? Buffet would have never done the deal. He probably cut this deal with Paulson himself when they spoke on that funky Sunday.
Conspiracy? - We have never witnessed anything like this, with rule changes and special deals and the biggest thief in the world, running the financial world. The Buffet deal could only have been done if Goldman had a new business model . . . because the old business model was busted. Voila, they have a new business model as of Sunday night courtesy of King Henry . . . and less than 48 hours later, Buffet come in with $5B.
Someone needs to question that Sunday conversation. Someone needs to question this Sunday’s move to bring Goldman under the Fed’s wings as a commercial bank. Someone needs to question the very deal struck with Buffet. But no one will.
Main Street or Wall Street? - The price of Buffet’s stock is at $4,300 for Class B and $128,800 for Class A . . . because he doesn’t want to deal with Main Street. And Warren Buffet stands to lose more in a market crash than any person on the planet. Warren Buffet’s deal with Goldman is just another example of the power of Paulson and his Wall Street fraternity.
Free Markets Will Prevail - Eventually, the free market will prevail. Eventually, the markets will crash. But once again, the market will bubble up on the Buffet news. Paulson is truly brilliant. There could not have been a better moment than now to pull this card out of his sleeve. After today’s Hearings, Paulson was cooked and he was going to be the focus of the media tonight. Not anymore. Now the focus will be on the household name of Warren Buffet and his purchase of stock. But . . . and this is a HUGE but . . . Even though the consumer and the PPT will be back in there buying tomorrow, nothing has changed. The toxic stuff is still there. We have not resolved anything. This just give Wall Street more time to suck up the dollars and more time to trade in and out of pension fund portfolios.
Ban On Short Sellers - Maybe we need to question why a sham deal like Buffet’s should be allowed. It is the opposite of what we saw with short sellers, but at least the short sellers were all dealing on a level playing field. In fact, the deal would not have been done at all if Paulson did not instruct Cox to ban short selling.
Paulson Crossed the Line - Why has no one yet publicly questions why Buffet has a private call from the Secretary of the Treasury about a company the guy ran as COO and CEO . . . and government business with a private citizen involved in Wall Street so heavily. This was a private deal with our top government guy in the mix. If we thought we had stinky fish yesterday, we have super-stinky fish today.
I hope you will all take a moment to write your Senators and Congressmen again, because market manipulations like this will destroy everything we have ever dreamed of. Wall Street is pulling out all stops to make sure Main Street crashes . . . so Wall Street can come back in and pick up the pieces for next to nothing.
Tomorrow . . . The markets will probably rally on the Buffet Bail-Out, but eventually the stink will overcome even Warren Buffet. He had no choice. If no one stepped up to the plate tonight, it was all over tomorrow. And he would have suffered huge losses. We already saw that this afternoon. Obviously, Paulson still has weapons. We just never dreamed he had so many fraternity brothers. I think this deal will come back to haunt even Buffet, because there is so much more to be written . . . and even great men (or formerly great men) can’t stop Mother Nature or the Free Markets.”
Frank [406],
Look at a US dollar chart, make your own conclusions.
By the way, hedgies are getting whacked left and right. Come again, how is the short sale ban a positive for the hedge fund community? Can’t wait for this one.
Tom (420)
“You do realize, that the money will go to the people that issued the credit or those that bought the securities based on the credit right?”
What I had heard discussed as being added to the plan was “cram downs” - reduced balances - for credit card users and car loan folks.
The dems are trying to add help for homeowners - right?
Tell me what you know - I have been at work all day.
You are right - that speech would have been wonderful to watch.
The first proposal he made was for transparency..
I will give King Henry this: he has more bazooka shells than I ever thought he could possibly have.
But I’m with Morgan. One day hence, it will be back to the plummet. This thing has picked up too much momentum, and it doesn’t stop until it hits rock bottom.
BC (425)-
Whenever you pose this simple question, Frank usually disappears for about a day and a half.
I think he is a washroom attendant or a barista in his hedge fund’s cafeteria.
Of course, maybe Frank’s hedge fund has promoted him from barista to chief risk manager…
I just inadvertently insulted baristas.
Sorry.
Clot [429],
Jerome Kerviel’s risk mgr.??
Media Not Reporting Failed Financial Agencies Are Big Donors to _O_b_a_ma
http://tinyurl.com/3mg43p
Oh my God!
It just dawned on me who this bailout is for after I overheard something unrelated while I was out.
I don’t know why it dawn on me before when I was writing up about it. Paulson and Bernanke were talking about buying up debt based securities.
We’re not only bailing out banks, we’re bailing out people that invested heavily in credit based securities.
This partly a hedge fund bailout isn’t it?
What other big institutions purchase so much mortgage and credit backed securities?
“The 50 Richest Members of Congress”
http://tinyurl.com/3s83of
Tom,
No.
Japan, China and Bill Gross.
Clot - It looks like the foreclosure next door is now going for $225,000. - from $325,0000 in 2006. It is now being shown and would make a good home for someone. My friend who owns rentals put in a bid at $180,000.
She owns a rental down the street and it has never been empty for a day.
My other friend who has been putting in cash lowballs could easily buy in Fresno at her price but wants Clovis. She says she sees the same guys at these distressed properties buying up rentals right and left.
Night of the Living Debt
http://tinyurl.com/3nvq5h
Council on Foreign Relations insider Carroll Quigley warned us back in 1966 when he wrote:
The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank… sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.
What will be the catalyst for revolt? How are we not yet incensed enough?
the mother of all rip offs
http://business.smh.com.au/business/the-mother-of-all-ripoffs-20080924-4mrb.html
Well with Buffet’s new interest in Goldman and their new limits on leverage as a Bank Holding Company is it safe to say the heady bonuses are history?
And what is Bergabe doing, threatening us? That we will enter a recession unless we buy these toxic assets at inflated prices??
So what! Bring on a recession. I contend that there are currently tons of jobs that exist that are based on nothing, and shouldn’t have existed in the first place.
WTF happened to capitalism? Calling Reinvestor, please explain capitalism to me once again please.
The debt escalator had reached the top floor even under previous ultralax credit environment. The best case scenarios for this bail-out will not return us to such a credit environment. Hence, debt deflation is unavoidable - without huge increases in real income. The Gov can not even inflate/print theor way out of this, people and institutions will just hoard cash and foreign banks will deflate their currency to maintain exports.
The only solution is repudiate the debt, or negotiate principle relief with creditors - at individual, corporate, and national levels.
All CDS transactions between third parties must be canceled, with return of original purchase price + interest.
The only purpose of providing this link is to encourage class warfare. We’ve not had class warfare in this country until here of late. It started with boiling resentment of those who bought houses and now has moved to a general resentment of people who’ve accumulated wealth. Is it now a crime to have money?
All of this is delaying congressional action.
Shame on you Sas.
sas Says:
September 23rd, 2008 at 9:55 pm
“The 50 Richest Members of Congress”
http://tinyurl.com/3s83of
“No.
Japan, China and Bill Gross.”
You know that was my first thought. That we were doing this to avoid WWIII. Russia and other countires are on that list too?
I say we take out Bill Gross first. Our swift and decisive victory should serve as a warning to the rest.
First of all, you continue to show disrepect by insisting on using my damn number and my X. I have requested that you cease and desist from this behavior on more that one occasion, yet you persist. Please just go back to your truncated handle.
Capitalism is not perfect and there are times when the government must be called upon to help. They get in the way with their stupid regulations, so there’s nothing wrong with the expectation that they help when there’s a problem.
It’s the damn job of the government to support economic activity. We are now quickly moving back to Keynesian economic theory just in the nick of damn time.
Sybarite101 X Says:
September 23rd, 2008 at 10:13 pm
And what is Bergabe doing, threatening us? That we will enter a recession unless we buy these toxic assets at inflated prices??
So what! Bring on a recession. I contend that there are currently tons of jobs that exist that are based on nothing, and shouldn’t have existed in the first place.
WTF happened to capitalism? Calling Reinvestor, please explain capitalism to me once again please.
“The 50 Richest Members of Congress”
#50 on that list is 5.02 million.
So about 10% of congress has a net worth of over $5mil. Maybe that explains where McC got that number from.
cindy (436)-
When the purchase will cash flow positive on a rental, the investors come out to play.
Syb (439)-
“How are we not yet incensed enough?”
John Q has been systematically lulled into torpor and stupidity by thought control and Skinner Box conditioning that masquerades as education. The average American’s brain is a blob of goo.
A quick refresher on the Skinner Box:
http://en.wikipedia.org/wiki/Image:Skinner_box.png
Shore Guy Says:
September 23rd, 2008 at 3:21 pm
Stu, I have had it with your complaints about those who complain about complainers complaining. It is just wrong and needs to stop.
Isn’t that a book by Al Franken?