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The mother of all meltdowns.
WaMu BooHoo!
Good morning early risers!
bank failure friday, here we go!
RIP WaMu.
sl
WHAM MU!!
Grim –
Is there one “root cause” of this financial crisis?
Attached is the most bracing – and profound – article I’ve read on this whole situation.
Your readers should find it kosher –
The Diversity Recession: What Was The Financial (And Political) Establishment Thinking?
By Steve Sailer
The weird thing about the tumbling of the latest financial house of cards is that the cornerstone, such as it was, was confidence in the increasing ability of the bottom half of society to pay back unprecedentedly large debts.
Underlying these vast pyramids of debt was, all too often, a promise by a single mother who works at the DMV or a drywaller from Chiapas to (following a brief teaser period) make mortgage payments of, say, $3750 per month for the next several decades.
In recent times, investors have typically gotten rich in our society by betting on the rich to get richer. And most of the time, that’s what happens: the rich get richer. Every so often, however, we have a meltdown because, during the bubble, investors temporarily overestimated the rate at which the rich will get richer—e.g., Silicon Valley in 2000, the Texas oil patch in 1982, commercial real estate developers around 1990, and so forth.
But, most of the time, you can get richer betting on the rich to get richer.
For example, Southern California is full of people who used to be movie, TV, or pop music stars but aren’t anymore. Yet, with the exception of addicts who blew all their money on drugs, you almost never hear of ex-stars having to undergo the humiliation of having to get real, boring, non-glamorous jobs to pay the rent. Among ex-stars who stay off drugs, you find a lot of them during the longer and longer periods “between projects” coaching their kids’ soccer teams, taking yoga classes, noodling on screenplays they never finish, walking their dogs, and just generally enjoying pleasant lives without bosses or jobs.
A big reason for them not running out of rent money: back when they were making lots of money, they didn’t rent, they bought—and in very expensive neighborhoods.
One of the things everybody does when he becomes a star is to buy a house in Beverly Hills. And then when you aren’t a star anymore and finally run out of money, rather than get a job, you sell your Beverly Hills house, which has appreciated dramatically, to somebody who is currently a star, and you buy a cheaper house in Santa Monica and live off the difference while you pretend you still have a career in the industry.
Then, after a decade or two of going out to lunch at nice restaurants you are running out of money again. So you sell your Santa Monica house to a newly rich person for a lot more than you paid for it and buy a cheaper house in Encino. Lather, rinse, and repeat.
This strategy works because the rich have been getting richer.
What’s totally strange about the mortgage meltdown, however, is that the bet, at its base, was on the more marginal members of society to be able to pay off their inflated debts—a bet on the pretty-close-to-poor to get pretty-close-to-rich.
And that made no sense at all.
The homeownership rate had been stuck at about 64% since the late 1960s. The Clinton and Bush administrations pushed hard to get it up to 68-69%.
What in the world made anybody think that the second quartile up from the bottom was developing more earning capacity?
They’d sent their wives out to work a couple of decades before. What could they do now to pay bigger mortgage payments in the future?
The second quartile folks weren’t getting better educated, weren’t getting more unionized, weren’t facing less competition from China, weren’t facing less competition from immigrants, weren’t getting married at higher rates so they could better pool their earning capacity.
So what trend suggested they were now developing more capacity to pay back huge debts than before?…
So, let’s say that big stars’ homes in the Hollywood Hills go for a median of $11 or 12 million. In the spring of 2006, the median sales price of all homes (houses and condos) in the Los Angeles region, an urban area of about 5 million people that includes vast tracts of Nowheresville in South Central and the San Fernando Valley, was $580,000. (It’s now just under $400,000). So the ratio of home prices for stars to nobodies was about 20 to 1.
Now, 20 to 1 sounds like a big difference. But most measures of ability to pay would favor stars over nobodies by much more than 20 to 1.
Consider net worth outside of home equity. I would guess that most people who take out a $10 million mortgage might have, say, $10 million in stocks, bonds, CDs, art, vintage cars, and other assets, for a 1 to 1 ratio. What was the net worth of the median buyer of a $580,000 home with almost zero down payment in LA in 2006? $58,000? Maybe not that much when you subtract the car loans and outstanding credit card debt.
If the median net worth was $58,000, that’s a ten to 1 ratio between mortgage and net worth (heck, there were buyers in 2006 and 2007 who had a net worth consisting of a monthly bus pass and some lottery tickets, so their ratio was close to infinite) vs. 1 to 1 for the rich folks.
Obviously, I just made most of these numbers up. But I know that I at least got the sign right. So how did people not notice that financial institutions were making huge bets on something that just wasn’t happening—the lower middle of society getting much better off economically?
(And don’t tell me about how much cheaper DVD players have gotten. I’m not talking about standard of living, I’m talking about ability to pay debt obligations.)
That level of stupidity requires a bipartisan consensus on what you aren’t allowed to talk about in public.
Are you some kind of Communist who is saying that America”s free enterprise system can’t generate enough high-paying jobs to pay for all this debt?
Are you some kind of racist who is saying that America’s increasingly diverse population won’t pay back their debts?
Oh, wait—it just didn’t.
And they just haven’t.
Hmmm.
[Steve Sailer (email him) is founder of the Human Biodiversity Institute and movie critic for The American Conservative. His website http://www.iSteve.blogspot.com features his daily blog.]
From the FDIC:
JPMorgan Chase Acquires Banking Operations of Washington Mutual
JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund.
“For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks,” said FDIC Chairman Sheila C. Bair. “For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning.”
JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.
“WaMu’s balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses,” Bair said.
Washington Mutual Bank also has a subsidiary, Washington Mutual FSB, Park City, Utah. They have combined assets of $307 billion and total deposits of $188 billion.
Thursday evening, Washington Mutual was closed by the Office of Thrift Supervision and the FDIC named receiver. WaMu customers with questions should call their normal banking representative, service center, 1-800-788-7000 or visit http://www.WaMU.com. The FDIC’s consumer hotline is 1-877-ASK-FDIC (1-877-275-3342) or visit http://www.fdic.gov.
Q-is the debate on for tonight?
From Bloomberg:
JPMorgan Buys WaMu Deposits; Regulators Seize Thrift
JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.’s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.
Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank “unsound,” the Office of Thrift Supervision said late yesterday. WaMu’s branches will open today and depositors will have full access to all their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said on a conference call.
WaMu is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business and led to the hastily arranged rescues of Merrill Lynch & Co. and Bear Stearns Cos., which was itself absorbed by JPMorgan. WaMu in March rejected a takeover offer from JPMorgan Chief Executive Officer Jamie Dimon that the savings and loan valued at $4 a share.
…
WaMu collapsed as its credit rating was slashed to junk and its stock price tumbled. Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week. WaMu fired CEO Kerry Killinger on Sept. 8 and replaced him with Alan Fishman, who was awarded a $7.5 million signing bonus and $1 million salary.
From MarketWatch:
KB Home Q3 loss widens to $1.87 a share vs 46 cents year ago
KB Home Q3 revenue $681 million vs $1.54 billion a year ago
KB Home Q3 loss widens to $144.7 million from $35.6 million
Crap you go and finaly start a thread after I post in the last one…
To avoid the spam filter.
Candidate A claims Candidate B is useless in the bailout negotiations. Candidate A’s party said Candidate B is bringing election politics in to the mix to get publicity at the expense of what’s important to the economy and to the american public.
Replace A and B with either name. It doesn’t matter.
Cindy,
“So the House conservative Reps, who are listening to their constiuents, want insurance coverage for MBS instead of a bailout …What does that mean exactly..?”
It means my house is on fire, sell me fire insurance.
Wachovia’s next.
All those Golden West option ARMs just keep rotting.
They won’t be able to get out from under. Those mortgages are worse than what took out WM.
“It means my house is on fire, sell me fire insurance.”
- ROFL! And we have a candidate for the vote of the day already!
California housing prices down 41%, YOY.
Virtually all of Wachovia’s ARM portfolio is “secured” by California RE.
From the WSJ:
WaMu Is Seized, Sold Off to J.P. Morgan,
In Largest Failure in U.S. Banking History
By ROBIN SIDEL, DAVID ENRICH and DAN FITZPATRICK
In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.
The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country’s financial crisis. But the deal, as constructed by the Federal Deposit Insurance Corp., could hold some glimmers of hope for the beleaguered banking system because it averts any hit to the bank-insurance fund.
Instead, J.P. Morgan agreed to pay $1.9 billion to the government for WaMu’s banking operations and will assume the loan portfolio of the thrift, which has $307 billion in assets. The full cost to J.P. Morgan will be much higher, because it plans to write down about $31 billion of the bad loans and raise $8 billion in new capital. All WaMu depositors will have access to their cash, but holders of more than $30 billion in debt and preferred stock will likely see little if any recovery.
…
The failure of WaMu eclipsed what had long been America’s largest bank bust on record, the 1984 collapse of Continental Illinois, which had $40 billion in assets.
The fact that no bank was willing to buy WaMu until it failed shows how badly confidence has eroded in a banking system awash with record profits just a few years ago. Faced with deepening losses on mortgages, credit cards and other loans, big and small banks across the country are struggling with what many bank executives say is a crisis far deeper than the savings-and-loan debacle.
The seizure of Washington Mutual is likely to send tremors through the thrift industry. Many of WaMu’s smaller brethren are also struggling with a wave of bad loans and some have already been ordered by regulators to raise capital and stop growing. Many community and regional financial institutions are also slashing dividends, selling branches and reining in lending in order to preserve capital.
Every body that wants to get a good understanding of the bail out, I’m posting this again.
Peter Orszag, Director of the Congressional Budget Office Testified before the House Budget Committe. I have links to the transcripts and webcast on the bottom of that page.
You can skip through my ramblings if you want but I urge you to watch the video. It’s 2 hours long and gives a very good explanation of the plan, why it was requested and if and how it will work.
There are issues with the plan and he can’t say how much it will cost or if it will be effective. If it doesn’t work, we’ll be in worse shape if we have another problem. The Bernanke/Paulson testimony doesn’t give anywhere near this much info.
Right now would not be a bad time to drop an e-mail to Shelby, Bunning, etc to thank them and encourage them not to give in.
BTW, I am in no way a conservative Republican. I am an anarchist, but these guys are saving our a**…at no small risk to their own.
After Wachovia, any other big names? I mean, besides GS and MS.
Really there’s not much left to worry about.
Really there’s not much left to worry about.
Yeah, but is that because there really isn’t anyone else left to worry about?
Clot [17],
Jim Bunning.
Hopefully, he can pitch another perfect game.
http://www.baseball-almanac.com/boxscore/06211964.shtml
(17) Yeah Clotpoll!
I’m with you on this…They have listened!
And didn’t the WAMU deal prove, in a way, that the market FDIC can take care of some of this mess?
Meant market and FDIC
MJ,
Just JPM’s derivative book. But then again, a blank check will be greatly appreciated.
sas (468, yesterday): see, if you read the most recent “chapter” in the story, it’s about one of the revered elders who did serve in wartime (iraq, basically)… got fed up with the gov’t trying to manipulate elections by assassination… he trains folks in survival and scouting skills. (short version: it was a compliment, and the comic does have the occasional educational bit on scouting, tracking, and survival stuff.)
i like it. :*)
(ps: i’m a girl, not a bloke. ;)
Richard Shelby said this AM that there never really was a deal as reported yesterday. The House Reps were left out..no one asked them.
Sure, some will say it is a political ploy to bring in M at this juncture, but Shelby was pretty adament that the conservatives are just listening to their constituents.
What’s the guess? There’s a new ‘bailout’ proposal, or they can agree on nothing and just let things play out?
What are the republicans proposing?
MJ,
I forgot, Deutsche Bank. One would think that would be Germany’s problem. One would be wrong.
What are the republicans proposing?
How many Republican parties are there now? The Pres already went prime time with his plan.
Is the GOP that fractured?
“After Wachovia, any other big names? I mean, besides GS and MS.”
I’m surprised people aren’t talking more about GE. Investors are definately reacting.
Their subprime and consumer credit operations looks like it might have leveraged their other businesses units, not entirely but to a degree. I mean wasn’t that the point of merging risky banking units with other lines of business in other big companies?
In addition to subprime, Home Depot was, maybe still is one of their big credit card accounts, add in their appliances and they took multiple hits from housing normalization. Airlines slowing down doesn’t help either.
From what I’ve seen they still haven’t found a buyer for GE Money but I haven’t really been following.
Not sure if they are going to fail but they definately took a big hit to their share price. If they fail though, it would overshadow any other failure in my opinion.
Not sure I would bet against them, they’re big enough to witstand a big hit. I just find it interesting to see what a small thing like subprime mortgages could do to such a big company.
I’m cynical because I believe that the WaMu seizure was orchestrated to force a bailout deal out of Congress.
Off topic- I think that everyone going to vote should be forced to watch the P-alin -Couric interview before entering the polls. People that think that she is clueless are giving her way too much credit.
(26) Laughing -
“What are the Republicans proposing?”
That is what I am asking. They want Wall Street to take the hit – not Main Street.
I’m sorry but I only caught some of it. I think a plan was circulated that called for a mortgage-backed securities insurance fund, rather than a tax payer-funded purchase of the securities.
Well, at least I’m not the only one with dark conspiratorial thoughts about the timing of the WaMu failure.
Latest from Roubini (9/26):
The Treasury plan (even in its current version agreed with Congress) is very poorly conceived and does not contain many of the key elements of a sound and efficient and fair rescue plan. Like in my 10 step HOME plan many other economists and commentators (Charles Calomiris, Raghu Rajan, Kotlikoff and Mehrling, Luigi Zingales, Martin Wolf, Barry Ritholtz, Chris Whalen and twenty others whose views have been featured this week in the RGE Monitor group blogs) have presented ideas that would have minimized the cost to the US taxpayer of a resolution of this financial crisis. It is a disgrace that no professional economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury rescue plan.
Specifically, the Treasury plan does not formally provide senior preferred shares for the government in exchange for the government purchase of the toxic/illiquid assets of the financial institutions; so this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the firms; with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money.
Moreover, the plan does not address the need to recapitalize badly undercapitalized financial institutions: this could have been achieved via public injections of preferred shares into these firms; needed matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; suspension of dividends payments; conversion of some of the unsecured debt into equity (a debt for equity swap).
The plan also does not explicitly include an HOLC-style program to reduce across the board the debt burden of the distressed household sector; without such a component the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.
Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.
(33) Yeah Clotpoll!
Should we be scared that the one canadate that ‘doesn’t know much about economics’ is a key member in putting together a bailout? Think he’s being advised by Keating?
#28 – Is the GOP that fractured?
Yes, it has been since 2000 and those fractures have been getting bigger.
There is still a portion of the party with its roots in Goldwater-esque political conservatism with heavy libertarian leanings.
BC Bob,
Maybe not ‘not our problem’
When asked about foreign banks Paulson said any bank that does business in the US will be able to participate since it would be a benefit to be good for america.
I’m assuming foreign banks also participate in our federal reserve system if they do business here? Is that correct? Or do they deal with their own central banks?
Well, at least I’m not the only one with dark conspiratorial thoughts about the timing of the WaMu failure.
tosh,
A coworker and I speculated about this earlier in the week..
any body know how is Larry Kudlow doing these days? Hope he’s not using drugs again.
HC
Cindy (21)-
The JPM handoff kept the FDIC out of WM.
The FDIC’s tapped out. IMO, they will be the next explosion.
Right after the first big bank run.
“Should we be scared that the one canadate that ‘doesn’t know much about economics’ is a key member in putting together a bailout? Think he’s being advised by Keating?
Worse, he’s being adviced by the guy that called us a nation of whiners that also pushed for a lot of deregulation that helped lead us here.
I’m sorry I have no details but from what I can gather the conservative Republican base of the House of Representatives is saying “no” to the “sky is falling” unless we do this immediately idea. They want cooler heads to prevail and a reduction of tax-payer liability in this.
Apparently they DID consult some economists. It sounds like they are listening to their constiuents and holding up the deal until certain assurances are met.
They also are basically DARING the house to go ahead and pass it. Let O show up at the debate and say Yes, I was for bailing out Wall Street.”
Clot! You win the office Deathpool!
sl
Tom (29)-
Hey, GE will be okay.
They can always increase their sales of sensitive technologies to Iran.
Cindy (31)-
That insurance fund had better have more than .03/USD in loss reserves. :)
um… should I be clearing out my bank of america account?? [I wish I was joking]
sl
(40) Clot
But couldn’t more deals be struck without the FDIC is the price was realistic?
And here’s a video from Olberman (yeah I know) http://www.youtube.com/watch?v=lQ4kH3sNNTo
McCaln says “Our financial market approach should include encouraging increased capital in financial institutions by removing regalatory, accounting and tax impediments.”
Ha!
Did I ever get double donged last night!!!!!
First I had a 5K WAMU bond that I bought pre 2008 that I lost all my money but since chase basically stole Wamu and got it for free Chase stock went way up and my Chase stock is up 15K.
Felt like being in a three way with pamela sue anderson and tommy lee and me in the middle loving Pam while tommy is on top of me splitting me open like John Holmes tearing into a tiny asian chick.
(45) Clot – so if the money were to go somewhere – couldn’t go to have these outfits BORROW the money instead of just give it to them?
tosh (36)-
“There is still a portion of the party with its roots in Goldwater-esque political conservatism with heavy libertarian leanings.”
Then, there is the American Taliban wing: full of messianic, nihilistic f@scists, posing as conservatives.
Reason Wamu deal was done on Thursday night as they had a run on the bank the last few days plus a lot of west coast company use Wamu for payroll, they put the cash in their Thursday night and checks are handed out Friday to workers. All payroll accounts are over 100K so all those paychecks would be worthless when handed out this morning. And many a small business would go under in a chain reaction.
NCC and KEY are shaky today. Detroit and Clevland were very hard hit. Don’t see how both can survive.
Cindy (47)-
You can get the deposits of a bank for a nominal “premium”. However, when one bank takes over another, the failed bank’s liabilities must be marked-to-market by the acquirer and written down.
That could be a teensy problem.
John (49)-
Don’t look now: JPM down in the pre-market.
When will the press spotlight JPM’s derivatives exposure? The number is in the googleplex range…so staggeringly large, that any deterioration will have the whole planet living in caves and eating bugs.
(54) Last night Newt was calling for a 3-year rolling average to mark to market – would that help?
We really need to know what this Rep plan involves.
#51 – Then, there is the American Taliban wing: full of messianic, nihilistic f@scists, posing as conservatives.
Yeah, well yeah.
It used to be a party filled with Ron Pauls. Good times, good good times.
Is it ironic that their Faustian bargain was made with conservative Christians?
/cry
John (49)-
Besides, you deserve to lose your shirt for putting that image into my head for the rest of the day.
Cindy (50)-
Would YOU make a loan to any of these nincompoops?
#30 db2: I missed it. How bad was she?
John (53)-
NCC has been dead man walking for over a year. They have been insolvent the whole time.
But I love doing short sales through them. Once you toss them a contract, tax return and hardship letter, they wave it through.
Anyone check the Bankrate Safe and Sound ratings lately? I just checked and RBC has dropped a notch and BB&T isn’t rated.
Emergency rate cut?
Clot,
They might be a long shot but I’d definately consider it if the odds were right. Thought about shorting them a year ago but I’ve looked into lots of short positions but am too chicken. I kick myself a lot over that.
any body know how is Larry Kudlow doing these days?
Didn’t you hear? He LOVES the bailout.
Maybe that’s why he dropped his creed at the beginning of his show…
I found this – pretty vague..
http://www.comcast.net/articles/news-politics/20080925/POLITICS-US-FINANCIAL-BAILOUT-REPUBLICANS-GROUP-polit/
Clotpoll,
What’s the buzz around sellers these last few weeks since all this financial sh*t has hit the mainstream? Are they smelling panic? Are you starting to see real capitulation by Joe and Jane Sixpack?
“But I love doing short sales through them. Once you toss them a contract, tax return and hardship letter, they wave it through.”
Try sending them a 2.50 in cash, a cupcake and a tic tac and see if they approve that. You never know.
I can’t even have Kudlow on in the background anymore with the sound turned all the way down. The things that come out of his mouth are an affront to the intelligence of any creature that walk upright.
Tom (67)-
You pretty much described what they’ll take when they’re holding a second.
“When will the press spotlight JPM’s derivatives exposure?”
Ouch.
Some of the second lienholders I deal with ask for no more than $1,000 for short sale approval…and you can hardball them out of even that, if you’re willing to play a little bluff-and-feint.
“What’s the buzz around sellers these last few weeks since all this financial sh*t has hit the mainstream? Are they smelling panic? Are you starting to see real capitulation by Joe and Jane Sixpack?”
Gary,
It’s NNJ, we’re insulated. They raised their asking prices 10-15%, across the board. They heard a bailout is coming.
gary (66)-
No. But don’t worry. Their nonchalance is the final guarantee that they will end up being the biggest losers…and the best marks.
Patience, my friend. Remember, you’re a homeowner too.
nowallstreetbailout.com
So, to sum up today’s thread so far:
Pamela Anderson told John the bailout was a done deal and to go ahead and load up on WM bonds.
Ok. Proceed.
Props to Clot (and I believe Skep and SG, and perhaps tosh) who had WAMU in the death pool. If I left anyone out, my bad.
In a way, this morass has made a liar out of me. After the FSLIC/S&L debacle nearly 20 years ago, I told folks that the next big acronym in crisis would be the PBGC. People hear rumblings and remind me that I predicted it. Now I don’t have any conspiratorial thoughts about Wamu—the feds did this sort of thing a lot during the last banking crisis. One reason they aren’t now is because FIRREA changed the rules.
Now, with apologies to Tosh and his peeps, for my conspiracy theory: The bailout will happen because the financial shock will have a huge impact on government. Consider that if individual and corporate taxpayers are taking huge losses, that hurts tax collection in a major way for years, perhaps decades, to come. I will be taking losses next year that I will have to take in increments over a few years, offsetting unearned income. Think of the NOLs that hard-hit businesses will take. Even healthy businesses will buy up sick ones in order to get and use the NOLs. Thus, the segment of the populace that pays the most in taxes, the “wealthy” and corporations, will be paying substantially less, even with O’s tax hikes.
Consider also the PBGC–it is the payor of last resort when a defined benefit plan sponsor goes under. The assets held in reserve for pensions have taken a huge hit, so a lot of pensions are now underfunded. As the companies go under, PBGC makes up the difference, but not dollar for dollar, so in that sense PBGC isn’t like FDIC and once it is tapped, the pensioners are SOL. Politically, that is going to prove unpopular, and PBGC will likely be forced to make good on pensions, meaning massive infusions of taxpayer dollars.
These are just two legs that would get kicked out in a collapse, but they are pretty big legs. I can only surmise (not being an economist or financial expert) that the feds shudder to think what would happen if tax revenues dive precipitously and the failing businesses start taking underfunded plans down with them.
Not a cheery thought, but this is my take on why the Feds will pass a bailout.
“You pretty much described what they’ll take when they’re holding a second.”
If this bailout doesn’t go through I’d prefer to keep the 2.50 and the cupcake myself.
What do you mean that second lien holders ask for $1,000 for approval?
Is that the fee or do ou mean if your doing a short sale all they want is $1,000 to settle the debt?
#72 BC Bob: Don’t laugh. I was following one hosue in my town, started at 650k, repeated priced drops, change of realtors, it finally was priced down to 425K.
It drops of the mls,and I figured it either went UC, or the listing expired.
It came back on the market a few days later for 459K!!. Yes that is the answer solve the housing mess by increasing prices.
JPMorgan Chase said it was not acquiring any senior unsecured debt, subordinated debt, and preferred stock of WaMu’s banks, or any assets or liabilities of the holding company, Washington Mutual Inc. JPMorgan also said it will not take on the lawsuits facing the holding company.
So what happens to the above listed liabilities? Who picks up the tab for it all?
http://www.youtube.com/watch?v=Vbg6hF0nShQ&feature=related
Link to the interview. She reminded me of that beauty pageant contestant in SC.
So what happens to the above listed liabilities? Who picks up the tab for it all?
See #15 above:
but holders of more than $30 billion in debt and preferred stock will likely see little if any recovery.
Thanks grim.
How will this affect WaMu employees? It sounds like JPM will be keeping most of the WaMu branches open, but I’m assuming WaMu corporate employees are screwed….,
Gator is wishing everyone a great weekend from the C-1 President’s Club.
Ref 33. Senior preferred shares. If it’s good enough for Buffet it ought to be good enough for Paulson. BTW, if GE goes belly up, does that mean they take CNBC off the air?
“After Wachovia, any other big names? I mean, besides GS and MS.
Really there’s not much left to worry about.”
– All the companies who begged to be added to the no-short list.
From what I remember there weren’t any bailouts after the tech bubble burst.
Lots of people lost a lot of money. Not just people getting into trading for the first time but people who’s retirement accounts declined because even “sound” companies had some elevation and were seen as good bets for mutual fund managers and other institutional investors.
Lots of companies failed and there were a lot of good companies that could have been profitable. Problem is you can’t take a $1mil idea and throw $50mil at it hoping to make the same return.
IB’s were flush with money and blew it away bettng they could manipulate the housing market forever.
Tom (77)-
That $1,000 is the sum of what they want to resolve the whole shooting match and approve the short sale moving to completion.
Last week, I got the servicer of a second lien- with an outstanding balance of $87,000- to accept $1,000 in return for their approval.
Most second liens have been sold, sliced and diced to the point at which the servicers may not know who really owns them (anytime you see a foreclosure plaintiff with the name of say, “Homex, as servicer for Deutsche Bank MBS #2456879-00-5697″, you know it’s been put through the sausage machine). Most servicers now have blanket orders from identifiable owners to simply accept whatever can be recovered in short sales.
JPM will close all the redundant Wamu branches and just add the deposits to their branches. Not sure what the overlap is w/ their branch network.
So, Dow down 1,000 by noon?
Fed conducting more reverse repos this morning.
Why pull liquidity out? Does the Fed itself need it?
At what point toady, given current opening level of Dow, is the first circut breaker?
Happy Friday everyone!
#88 – In Manhattan the overlap is pretty big, IIRC WaMu has 300 branches in NYC. The Manhattan ones are all in pretty expensive territories.
I really wish the WaMu guy in the commercials wasn’t african american and instead someone like Carrot Top because I have a great commercial for JP Morgan’s new commercial. They have that pack of old bankers tieing up and kicking the young guy.
But a commercial of a group of old white guys ganging up on a black guy isn’t very PC.
GAtor, Say hello to Gate 74 for me.
Today, not toady lol
http://www.cnbc.com/id/24494689
Bush speaking now
oops, now over.
“From what I remember there weren’t any bailouts after the tech bubble burst.”
Tom,
Dot Com vs Wall Street.
Shore-
The toadies are on Capitol Hill.
#98 – Ha!
I know it’s a complete lark, but today’s market action will probably be tame until the last hour. Sort of like a market basketball game. I have a funny feeling that a lot of people are not going to be comfortable holding shares long going into this weekend.
Although I’m quite happy that congress appears to be behaving well, the lack of credit availability is going to kill our economy. I guess now we wait and see how our Asian masters view the failure of the passage of what Cramer calls ‘the Invest in America’ plan. If they fail to continue buying our debt, then SAS’s proposal for personal survival from last night might become good advice to follow.
NCC and KEY are shaky today. Detroit and Clevland were very hard hit. Don’t see how both can survive.
Wait. You don’t see how those CITIES can survive? Poor Lions. Just when they fire Matt Millen …
Clot,
Perhaps it was Freudian.
Clot,
So I’m assuming this is when there is a larger primary lien that is in or at risk of default.
I haven’t looked closely at other counties but for the Bergen County foreclosures I track on my site, it seems very rare that the wining bid, when there is one, even covers the judgment on the primary lien holder. No surplus funds means junior lien holders get nothing in a foreclosure.
Understandable why you’d be able to get them to knock that down. They probably figure you’ll pay the $1k just to save time.
Ever run into a case where the secondary lien was greater than the primary and it was the secondary that was defaulting?
I wonder if people in a position like that would choose to keep up payments on the secondary and let the primary go into default. Either the primary or secondary might buy the other’s interest out. If there’s enough equity the bank won’t mind going to auction but in toss up situations I wonder if it would be a good opportunity for the homeowner to get a good work out.
“This sucker could go down.”
Chaos,” “disarray,” “unprecedented political wrangling,” Treasury Secretary Henry Paulson on bended knee pleading for a lifeline, and President George W. Bush warning, “if money isn’t loosened up, this sucker could go down.” These were the dramatic scenes in Washington yesterday where the historic $700 billion bailout plan now looks very much in doubt, The New York Times, Wall Street Journal and Financial Times all report this morning. Congressional negotiators called off talks at 10:30 p.m. EST, the NYT reports, failing to reach an agreement and all but piercing the bubble of hope generated by the markets’ comeback earlier in the day. The high drama culminated in a plea from Paulson to Democratic leaders, barging into their White House meeting on Thursday, urging them not to say anything that could destroy the fraught negotiations, WSJ reports. The newspaper adds, “In doing so, the Treasury secretary got down on one knee, a gesture that one of these people described as a moment of levity in a rough day.”
http://tbm.thebigmoney.com/features/todays-business-press/2008/09/26/sucker-could-go-down
Good to know we have a leader with such a vocabulary…
In the Bee today
“We’ve reached fundamental agreement on a set of principals” said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, adding that a bill could pass within days.
Less than 30 minutes later, however, Bachus denied that an agreement had been reached. While progress was made on peripheral issues, Bachus said House Republicans remained adamantly opposed to the central point of the plan: purchasing bad assets from struggling firms.
“There’s not a deal. There’s not a deal made. There was progress on the issues,” Bachus told reporters. He said House Republicans “would prefer a loan where we fix an interest rate or we would prefer insurance” rather than having the government buy bad assets.”
Baltimore Business Journal:
BB&T chief exec slams bailout plan
http://baltimore.bizjournals.com/baltimore/stories/2008/09/22/daily42.html?ana=yfcpc
“A significant and immediate tax credit for financial institutions to purchase homes would be a more effective solution for the financial crisis than the proposed $700 billion federal bailout, said BB&T CEO John Allison.
The federal government should also buy homes, and not securities backed by mortgages, he wrote in a Sept. 23 letter to the U.S. Congress.”
One of the British monarchs, I believe it may have been Victoria, once observed that too much public exposure adversley affected the aura of a leader and reduced his or her effectiveness. This had to have been bu-sh’s 4th or 5th public announcement on this issue in the past week. True enough, most of them were drive-bys, but I don’t remember any president doing such a thing during my lifetime. I don’t even think that FDR made so many comments about the economic crisis during any given week.
“He said House Republicans “would prefer a loan where we fix an interest rate or we would prefer insurance” rather than having the government buy bad assets.””
Not wanting to buy bad assets? Obviously, he has never worked at the Fed.
“This sucker could go down.”
Reports from Chappaqua indicate that, when former president Bill Clinton heard this, he immediately booked a seat on the Acela.
Will do Shore. It will be easy to do since I am at Gate 71.
Hello S Fla sun. I am going to try and pick up a beach condo foreclosure with my meager ATM withdrawal just for kicks. SoBe GTG, anyone?
Tom (105)-
Yes. Second holders almost always cave in because of: a) the presence of a first lienholder and b) no money left for them once everybody ahead of them is paid off. Better to get $1,000 than nothing.
A first lienholder letting a property go at the sheriff sale for less than the upset price indicates that they don’t even think it’s worth it to seize the collateral. Chances are, those “winning” bidders will end up wishing they’d let those properties go back to the bank for $100.
“Ever run into a case where the secondary lien was greater than the primary and it was the secondary that was defaulting?”
Yes. In fact, I recently had one myself. Those are great. In my case, the first was for 180K and there was a second (actually a HELOC) of 240K, held by BAC. It was a loan taken and approved over the phone, drive-by appraised and funded. The borrower immediately drained the LOC and used the funds as a DP on a house in Charlotte (I promise you, I’m not imaginative enough to make this stuff up).
Anyway, BAC couldn’t wait to get this one done, as they were in a position to luckily recoup about 160K. That one took about a week.
Business or pleasure?
#73 clot: That is truly amazing. Even with all that has transpired, there are still people who are nonchalance about this whole nightmare,and believe that their house values are not or will not go down??
Funny (pathetic), but I do not remember people being that stupid during the last housing down turn.
Clot,
In a situation like that, which smacks of fraud by the homeowner(as well as what should be criminaly-punishable stupidity by the second lender), the homeowner should face some criminal charges. An action like that does not strike this turnip as anything other than an attempt to steal money for a downpayment.
Here’s some friends of Bi
http://www.liveleak.com/view?i=3be_1222409488
Pure fun! Girls weekend. Lots of beaches, mojitos and latin music.
So, consumer sentiment is SLIGHTLY lower. WTF. Slightly?
Finally got to look at some of the KB figures from this morning;
3Q Net orders at -66% (1,329 vs 3,907)
3Q Cancellation rate %51 (!) vs %27 (2nd Q)
Staff cut by %40 since beginning of year. They mostly sub-contract, but still….
%51 drop in homes delivered %10 drop in price.
So it’s getting worse for some of the builders.
So now that dubya’s reign is winding down, any thoughts on what he’s going to do next?
I don’t see him making big bucks on the lecture circuit like Cllnton or starting a foundation.
Bill C was on Letterman earlier this week and Paris Hllton yesterday. Am I the only one bothered that about the same amount that people pay to hear him speak is paid to her show up at a club or event? :(
Gator,
Watch out for the storm brewing. May need to stay in and party.
SoBe GTG, anyone?
I’d have done Vegas, seems fitting.
“I don’t see him making big bucks on the lecture circuit ”
Not unless it is a comedy routine.
Sad to say,though, there are likely a few groups that will step up to the plact, offer him several million to speak to their small private gatherings, and then a few friends will put him onto some boards.
Gator,
Enjoy Collins ave, etc. Even raining, it is not the usual routine.
Clot’s question from last night:
“So, an acquiring party can buy branches and deposits and prevent FDIC receivership?”
it is called a purchase and assumption transaction and it is the preferred method of the FDIC for resolving bank failures. it is pretty flexible, but basic idea is to let another sound bank assume deposits without being exposed to failed bank’s other obligations. generally, FDIC will only assume control in a receivership fashion if no P&A transaction can be brokered.
Has anyone here heard about the Fed shipping dollars to other central banks in order to keep the dollar from rising?
also, when P&A is done successfully, there is minimal cost to the FDIC fund.
Tosh
in honor of Nj patient…..
Yes, and this concludes another episode of simple answers to simple questions.
# toshiro_mifune Says:
September 26th, 2008 at 9:35 am
Fed conducting more reverse repos this morning.
Why pull liquidity out? Does the Fed itself need it?
Gotta run but…IMHO – This Paulson plan is going down. Bush came on to calm the markets but the House Reps want Wall Street to pay for this money – suspend dividends etc. We shall see.
Where is NJ patient anyway?
#89 tosh
Manipulation. Pull liquidity out to tank the market some more and extort $700 Billion from US taxpayers.
Clot,
Thanks, good story.
Not sure if you’ve been looking at what’s happening at auctions in your area but here in BC, of the last 23 properties that didn’t go back to the bank, average judgment was about 437k average winning bid was 308k.
Some look like really good deals on the surface. Probably not the market for a quick turnaround and too uncertain for the uninitiated but for some people looking to buy and live or rent them might want to take a look.
SHore,
Bush is just looking desperate at this point. I think he sees his legacy going down the drain is scrambling to look like a hero in this current mess.
#17
“BTW, I am in no way a conservative Republican. I am an anarchist, but these guys are saving our a**…at no small risk to their own.”
Clot– not surprisingly, I disagree. The Repubs who are against this are taking far less risk politically than the people who are supporting it. It is easy to demonize wall st; it is much harder to explain to ordinary americans how wall st is connected to them
“Has anyone here heard about the Fed shipping dollars to other central banks in order to keep the dollar from rising?”
Shore,
There was some economist on cspan yesterday morning. I don’t remember where he was from but a lot on the panel were economists from banks and other financial institutions.
One of the things he said was going into debt for the bailout would be good because it will devalue the dollar. That would give foreign investors even more incentive to capitalize Wall St.
So if what you said is true, I wouldn’t be surprised.
Paln’s new film
http://tinyurl.com/4tf23k
#21
“And didn’t the WAMU deal prove, in a way, that the market FDIC can take care of some of this mess?”
question is who steps up to take over the next big bank. can anyone do it? FDIC cannot absorb a WB failure. doubtful that JPM would step up again. That leaves BAC, but after ML, do they have the ammo? very precarious situation right now
#131 Shore Guy
I think he is tied up with some personal issues.
#133 Tom.
How many went to the same person. I though there was some rich person going round buying them up?
#52
“Reason Wamu deal was done on Thursday night as they had a run on the bank the last few days plus a lot of west coast company use Wamu for payroll, they put the cash in their Thursday night and checks are handed out Friday to workers. All payroll accounts are over 100K so all those paychecks would be worthless when handed out this morning. And many a small business would go under in a chain reaction.”
one of many connections to “Main St.” in this mess. I assume everyone likes getting paid
Shore,
regarding plastics from last night.
You may have missed my point. I was just offering some info and i agree that heating or freezing material in them is not the best idea.
That said, its about risk mitigation. I avoid it when i dont get to worked up about it. I could list 100 chemicals that you encounter day to day that are worse. As with anything substance, the harm is in the relative size of the dose/exposure
“I think he sees his legacy going down the drain”
Ket,
The sad thing is that he actually seems to believe he will be admired in history. Absent his reaction to 9-11, after he got back to DC (the rest of the day was pathetic), his invasion of Afghanistan, and the initial gains in Afghanistan, he has been abysmal. The inattention to the economy just puts an underline, italics, and bold emphasis on the utter failure of his presidency. If there is a decline even just on a par with the 70s or early 80s, he will in my opinion be rated as the worst (or maybe amongst the worst 5) president ever.
Skeptic, Shore
i believe that Guy Fawkes mentioned that we should look out for action based on all of the corporate debts that roll over at the end of the month. Sounds like he nailed it.
Ket,
I agree with you. My feeling is that if one can mitigate exposure to chemicals throughout one’s life, one should.
Shore,
sorry for the horrible grammar @ 142. That was barely English. Too much multitasking.
PGC,
I don’t remember exactly but I do remember there were like 2 or 3 names I saw that picked up more than 1.
Any reputable on-line gold dealers you guys recommend?
Supersized intellect emphatically called WaMu’s demise about one year ago. Man, Clot, you were right on!
There is a letter in the Op-Ed section of today’s WSJ from the BOFA CEO Ken Lewis.
He wants us all to support the Bail Out package so we don’t have an economic recession.
The F%$#er is looking to dump the Country Wide garbage on the tax payer !!
“sorry for the horrible grammar @ 142″
No worries. When I use my thumb keyboard I am very often horrified at what posts.
Common worthless, pref 1000 = 1 and bonds they have not decided yet but they are as valuable as WHOOPS and Crazy Eddie bonds from back in the last junk bond melt down when old Milken still had his toupee. The will pay I bet like a nickle on a dollar just to get the bondholders to sign off they won’t keep suing. Basically even senior bonds are toast.
I knew I would get hit, I had a bunch of 5k high yield bonds and I made it this far without a hit. I have been buying munis and cds only last six months.
watergapnomad Says:
September 26th, 2008 at 9:20 am
JPMorgan Chase said it was not acquiring any senior unsecured debt, subordinated debt, and preferred stock of WaMu’s banks, or any assets or liabilities of the holding company, Washington Mutual Inc. JPMorgan also said it will not take on the lawsuits facing the holding company.
So what happens to the above listed liabilities? Who picks up the tab for it all?
Anti [150],
Of course. Why else do the deal?
#144
” believe that Guy Fawkes mentioned that we should look out for action based on all of the corporate debts that roll over at the end of the month. Sounds like he nailed it.”
kettle– I don’t want to see the result of an experiment that prevents this debt from being rolled over
repost from last night
PAULSON gets called out!!! Rep. Peter Defazio – “We should not be rolled by a Wall Street exec who is masquerading as the Secretary of the Treasury”
video
http://tinyurl.com/4tf23k
repost from last night
PAULSON gets called out!!! Rep. Peter Defazio – “We should not be rolled by a Wall Street exec who is masquerading as the Secretary of the Treasury”
video
http://video.google.com/videosearch?q=Rep.+Peter+Defazio&hl=en&emb=0&aq=f#
all of the personal insults are really unproductive. If Defazio doesn’t agree with the plan, he can just say so without getting personal. it is pathetic to see how washington is completely incapable of addressing a crisis without grandstanding and name calling.
Ket,
I know Pete pretty well. He is as honest as the day is long. I need to call him and thank him for that comment.
157 skeptic
Its not personal Sonny. Its strictly business.
it is the business of CYA while the country goes down in flames.
from OTS re: WaMu:
“Deposit Outflows — Since July 2008, the pressure on WMB increased market conditions continued to worsen. Significant deposit outflows began on September 15, 2008. During the next eight business days, WMB deposit outflows totaled $16.7 billion, shortening the time available to augment capital, improve liquidity, or find an equity partner. Given the Bank’s limited sources of funds and significant deposit outflows, it was highly likely to be unable to pay its obligations and meet its operating liquidity needs.”
It is funny. Every business that bu-sh was responsible for running came to a bad end. True enough, he was the titular head of the Texas Rangers, but in that role he was the hale fellow well met, and others ran the business.
Mr. Gentlemen’s C came onto the scene in 2000 promising to run the country like a business. Well, looking at his own past failures, and the failures in the auto industry, Wall Street, etc, it seems that he kept that promise.
I agree that Bu-sh has zero credibility at this point. Paulson’s credibility is significantly diminished as well. But you do not need to take their word for it. You can simply look at the events of the past few weeks to see that this is a major crisis with the potential to sping completely out of control very fast.
“it is the business of CYA while the country goes down in flames.”
skep,
Been covering for awhile.
Unfortunately, 700B is not a pimple on a cows #ss. The problem is worldwide. European banks are in worse shape than ours, more leverage. US taxpayers can’t not solve this problem. It’s too damn huge.
Cover me.
e.g., FDIC has never failed to make good on 100% of deposits up to 100k. what if, next week, that promise was broken? how do you think the public would react?
“You can simply look at the events of the past few weeks to see that this is a major crisis with the potential to sping completely out of control very fast.”
Inmdeed. Which makes it more important that any plan come with the complete buy-in of a majority of Rs and Ds in both houses.
“what if, next week, that promise was broken?”
Pitchforks and torches. They will never allow the deposits to go un protected. It is easier to print $ and let the value of each new $ fall than to suffer civil disruptions.
you know – I love seeing all these mooks in congress/senate bashing wall street for this mess, forgetting that they pushed hard for affordable mortgage products and an end to discriminatory lending practices (and I don’t mean race, but socio-economic). Anyone remember that rhetoric during the “everyone should own a home” craze, or was I in some altered state?
and please, I think the banking industry is to blame for a majority of this mess, but not completely alone.
[164]
is a pimple
Right now folks can get FDIC insurance for millions, placing $ in various banks etc. I wonder if they will rewrite the regs to cap the amount any oner social security number or EIN can have protected across the entire banking system.
Print,print,print. Who cares if a pizza costs an ounce of gold?
Shore,
Next time you see DeFazio please give him a one man standing ovation from me. I’ve been watching his videos on youtube a lot lately.
skep-tic,
I’d go a step further than saying Paulson’s credibility is diminished. I’d say it’s toast. Same with Bernanke. The two of them have been working on this problem for months now, all along telling us everything is going to be ok. Then all of a sudden they need congress to push through this emergency bail out.
That’s just poor performance for some high ranking officials in the administration.
I can understand the need for them to not cause panic but that is no excuse for not coming up with a back up plan and working on it with congress just in case.
#166
Shore– I believe that a faction of R’s are making a political calculation that sabotaging this plan is the best way to turn the tables on the dems and make them appear to be the more corrupt, out of touch party just before the election. The R’s up till now had no means of changing the subject from their incompetance. I believe some of them think this is it. I do think some are driven by a genuine philsophical agenda, but I also believe others are far more cynical. It is disgusting.
Print,print,print. Who cares if a pizza costs an ounce of gold?
Why would a pizza cost an ounce of gold? You can print pizzas but you can’t print gold.
Tom,
I just called his office. He was out abut I offered many thanks. Consider one of those to have been yours. Next time I speak to him, I will give the ovation.
“That’s just poor performance for some high ranking officials in the administration”
If they had any honor, they would apologize for messing up and resign.
“You can print pizzas but you can’t print gold.”
Wasn’t that an album by REO Speedwagon? Or maybe it was Iggy Pop.
yeesh. This sounds like a bit of sound banking:
[snip]
“Wachovia had $122 billion of option adjustable-rate mortgages as of June 30, plus $45 billion in more traditional mortgages. That total of $167 billion ranks second among U.S. lenders behind Bank of America Corp.’s $239 billion, followed by Citigroup Inc.’s $145 billion, according to an Oppenheimer & Co. report on Sept. 23. ”
[snip]
http://www.bloomberg.com/apps/news?pid=20601087&sid=a06k7mrKNJUU&refer=home
Isn’t all of this a testimony to our instant gradification culture? do we really need this bail out by today at 4pm, or can we continue to look at what is needed in the fire drill sense of the word, and strategize the rest…another words, can’t we do both?
The theory behind the global credit crunch
It began inflating in the United States of America in the latter years of the 20th century, after the US Government was persuaded to deregulate the finance industry.
Unlike previous bubbles, this one has not been confined to real estate or shares although those markets certainly hyperinflated.
This bubble is pumped full of a strange class of asset called a “derivative”, a kind of financial steroid that has bulked up balance sheets, markets and economies with artificial wealth.
Derivatives, of which the now widely acknowledged mortgage-backed securities are just one small subset, have grown astoundingly since they were first introduced on Wall Street not many years ago.
Real Estate is not the main issue here. But all MSM can talk about is Housing.
“You can print pizzas but you can’t print gold.”
I tried printing a pizza. Now I need a new fuser.
House Hunter,
It’s not our instant gratification culture it’s Wall Streets.
Remember, most of the time when they originated a loan, they turned around to securitize it and sold it offvery quickly up until investors no longer wanted those.
Subprime mortgage issuance went from like 20% to 80% (don’t have exact numbers in front of me) in just a short number of years.
If abolishing the fed is part of the bailout, I may change my mind.
If the derivatives were suddenly declared void — poof, gone. Who loses? The underlying assets still exist. If they derivatives are froth on the top of the economy, like too much head on top of beer, can we just blow it off somehow? Cerainly the upper 1/1000 of 1% of the population will get hammered, but…….
Tom Says:
September 26th, 2008 at 10:19 am
Clot,
Thanks, good story.
Not sure if you’ve been looking at what’s happening at auctions in your area but here in BC, of the last 23 properties that didn’t go back to the bank, average judgment was about 437k average winning bid was 308k.
Some look like really good deals on the surface. Probably not the market for a quick turnaround and too uncertain for the uninitiated but for some people looking to buy and live or rent them might want to take a look.
I need an advice for next year – not now…
Where exactly thouse auctions are going on – is it in municipal building of each town?? or is it different?
And how can you get the list of houses being auctioned off and is it possible to look at them and possible have a home inspection before hand?
Stu,
Your problem is you used a laser printer. Pizza’s can only be printed using ink jets, or diesub printers.
http://edition.cnn.com/2008/WORLD/europe/09/26/rocket.man.english.channel.ap/index.html?iref=mpstoryview
Can we give Paulson and Big Ben a pair of these?
this will sound nerdy as hell, but i’d like to say that at a landmark moment in US history, I feel more plugged in reading this board than watching the news.
and it’s not close, really.
we officially buy guns this weekend. the wife, who was long against guns, is now down. mostly, i think, due to some of the dire situations you guys have predicted.
Rep Defazio at Best
http://www.youtube.com/watch?v=j6B5rtwRmf0
Al,
Others here have more experianced than I but, the business of buying homes on the courthouse steps at auction brings considerable risk. It looks like the best bet for most folks is to let the auction fail then buy from the bank.
SG
Is there any $ value of these derivatives and other fancy products worldwide? I read somewhere between 500-600 trillion!!
Thanks
The debate is on, I hear.
interesting opinion piece in WSJ from John Paulson arguing that gov’t should buy preferred shares in banks as did buffet, rather than taking MBS
List of economists against the plan:
http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm
3b (115)-
“Funny (pathetic), but I do not remember people being that stupid during the last housing down turn.”
That’s because before the last housing downturn, millions of mortgages were not granted to stupid people.
Am I not understanding soething correctly?
These banks and financial institutions seem to have leveraged items that tie back directly to residential mortgages.
Isn’t that like getting two mortgages for the same house?
US Senate leader Harry Reid says Congress will stay in session until a Wall Street bailout is agreed, after talks broke down on Thursday.
For more details: http://www.bbc.co.uk/news
Shore (116)-
That’s exactly what it was.
Your problem is you used a laser printer. Pizza’s can only be printed using ink jets, or diesub printers.
Hands down, best pizza is made with an Epson FX-86 dot matrix near letter quality printer.
Shore (124)-
So, in other words, he goes back to his pre-political life?:
“Sad to say,though, there are likely a few groups that will step up to the plact, offer him several million to speak to their small private gatherings, and then a few friends will put him onto some boards.”
“That’s because before the last housing downturn, millions of mortgages were not granted to stupid people.”
YES! This is the crux of it.
New securities made MBS, SIV, CDO, etc
Funded with sham assets — $$$ from mortgages that were fraudulent.
Sold to millions of investors…
aka PONZI scheme.
sl
#184
“If the derivatives were suddenly declared void — poof, gone. Who loses? The underlying assets still exist.”
Shore– probably people on this board who are far more qualified than me to suggest answers, but it seems to me this would leave many people unhedged, which would change the economics of many credit arrangements currently outstanding. in other words, I think there would be significant spillover effects beyond the derivatives themselves
Clot,
He should be hunted down with dogs and people with clubs.
Tom (133)-
Show me that some of those properties can cash flow positive, and I’ll be impressed.
My guess is, these properties are being taken down by the first wave of “investors”, who will soon be impaled in short order by the ever-falling knife.
http://www.youtube.com/watch?v=gY2vxl20jeg
More of Peter before bu-sh’s bailout speech.
WaMu may file for bankruptcy shortly: Merrill Lynch
11:40 a.m. 09/26/2008 Provided by
(Reuters) – Washington Mutual may file for bankruptcy shortly, said Merrill Lynch analyst Kenneth Bruce terminating coverage of the stock.
The top U.S. savings and loan bank, whose market value has been virtually wiped out because of soaring mortgage losses, was closed by regulators on Thursday, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.
The company witnessed $16.7 billion in deposit outflows from September 15 to September 24, according to an Office of Thrift Supervision statement.
“We suspect the series of ratings downgrades and concerns over the position of U.S. financial institutions, in particular Washington Mutual, led to the deposits outflow,” Bruce said.
Shares of Washington Mutual sank 90 percent to 16 cents in morning trade
skep (135)-
Wow! What a concept! Legislators who listen to their constituents.
Is that what you define “taking less political risk” to be?
“The Repubs who are against this are taking far less risk politically than the people who are supporting it.”
So apparently there were a grand total of 4 condos that went under contract in Hoboken last week. By my calculations there is about 3 years of inventory for 1br’s, and 1 3/4 years of 2br’s.
Shore (143)-
I think Bush broke under the Warren G Harding “floor” about five days ago.
He’s solidly in Millard Fillmore territory now.
And that could be an insult to Fillmore.
Al,
Like Shore said buying foreclosures involves a lot of risk but I disagree that people are better off buying from the banks once they take posession. It looks like some of the better deals are getting sold before they make it to the auction. The longer the auction goes on the more it costs the bank. Once the bank takes posessions they usually sell through a local agent which means they have to pay a commission too. If you do a short sale before an auction with a realtor you’ll have to deal with that as well. But the sooner the banks unload it seems the better.
Things change all the time though and next year might be completely different.
I can’t answer all your questions but I have a post on my site regarding how foreclosure auctions work in Bergen County. Doesn’t tell you everything you need to know but I recommend a book in there to get you started. Pick up some more, not the ones on informercials. You have a year to learn about the process. That should be enough time to educate yourself.
I also have listings on my site as well that you can get to from the link to my blog I posted.
http://www.youtube.com/watch?v=vWKURQn0CRM
BO picked the wrong guy, Pete should have been the one. he can talk ank keep people’s attention.
“List of economists against the plan:”
Orion [194],
Along with a voting member of the FOMC, Fisher.
Clot– one aspect of leadership is to take a hit to do the right thing when it is unpopular. we legitimately disagree on what the right thing to do is here. but I am not convinced that these repubs are so principaled, and I think some of them are playing more to their constituents misplaced priority of revenge/schadenfreude.
Orion (149)-
I can’t take all the credit for that call. I used to deal daily with Long Beach Financial, WaMu’s subprime swamp.
They were so bad, I figured any company that owned such a POS could never survive. Long Beach couldn’t even make money when the market was rising. Even in 2004, I used to see lists of borrowers that didn’t even make one single payment after closing!
Shore (151)-
“No worries. When I use my thumb keyboard I am very often horrified at what posts.”
Don’t apologize. I think there are a couple of posters here who don’t even possess opposable thumbs.
I can’t answer all your questions but I have a post on my site regarding how foreclosure auctions work in Bergen County. Doesn’t tell you everything you need to know but I recommend a book in there to get you started. Pick up some more, not the ones on informercials. You have a year to learn about the process. That should be enough time to educate yourself.
I also have listings on my site as well that you can get to from the link to my blog I posted.
I am not necessary going to buy the house off auction. I looked at details and aware of difficulty and issues.
I would like to go to a few auctions just for kicks/experience, without intention to buy. However in Central NJ there is either no acutions or their location is a somewhat of a mystery – is it usually in a a courthouse – for example where would auctions be for house in Metuchen? Cranford? Westfield?. Clark??
aS i SAID BEFORE AT THIS POINT
so now Mr. M is going to debate despite absence of a plan. this guy is embarrassing himself.
Clot,
At least Fillmore got the California Compromise through congress and kept the Civil War from breaking out at a time that the Union lacked the resources to win the war.
Bush has my vote for worse than Fillmore.
Skep (157)-
A lot of more of us think Defazio merely stated the obvious.
I am warily optimistic today. Perhaps this country has finally decided enough financial crime is enough.
As I said before At this point I believe by next year I will be moving out of NJ.
but you never know – economy might make it impossible to get a job.
So just for kicks I want to go to see few of thouse auctions with my own eyes. – do a pretend run – find information aboutt he house, see how it is all done. It would not hurt.
skep (160)-
“it is the business of CYA while the country goes down in flames.”
The sun came up this morning. The Dow is not down 500 points.
The only world that’s crumbling is that of the robber barons.
If it were not for the fact that big Di-ck would take over, and his ticker is not likely up to the stress, I would hope that bus-hit would have the honor to resign.
clot– some pretty big dominoes are falling. biggest bank failure in history last night and you think this only affects the robber barons?
Clot,
Here’s the 2nd to last one sold.
http://www.bergenjerseyforeclosures.com/bjf/PropertyDetail?id=103
I didn’t pic the first one because from the aerial photo it looks like it might need a lot of work. Roof looks bad at least.
Anyway, the one I linked to went for below 2001 prices. 20% down and mortgage payment turns out to be around $1,500 with current rates including tax and insurance.
You have MLS access and more experience. You tell me if you think it would be cash flow possitive. I have a feeling it might be but if you could look up comperable rentals I would appreciate it.
The administration has lied about or misjudged things so often that they lack the credibility to achieve action in a crisis. The current team should clear the decks and allow some folks who lack a demonstrated history of wrong calls or duplicity to take over and work with congress to get something done.
“so now Mr. M is going to debate despite absence of a plan. this guy is embarrassing himself.”
Maverick = Desperate?
From previous article. This derivative bubble is many times bigger then even economy.
Now the derivative bubble is so huge that its deflation represents an extraordinarily daunting challenge.
It will take years for all the worthless IOUs to be extracted from the world financial system.
This will be an unavoidably painful operation. The dollar has been the world reserve currency for decades. It seems inevitable that the currency must undergo a major devaluation and it will not please foreign creditors to be repaid in less valuable dollars than the ones they originally loaned.
Confidence in America’s ability to pay its debts will be sorely shaken and it is likely that Americans will have to adjust their standards of living to suit their actual, heavily indebted circumstances. Prices of imports including energy will rise, foreigners may stop financing US deficits, thereby endangering social programs and credit will be in painfully short supply.
The consequences for the rest of the world are unclear, but they are unlikely to be favourable.
Al (185)-
Those questions tell me that you should never, ever get within a mile of a sheriff sale.
99% of the stuff around here goes back to the bank. The other 1% is looking for a sucker. Wanna audition for that role?
I’m a longtime investor, and I don’t get near sheriff sales these days. Like jumping into an alligator pit in a suit of meat.
i don’t see why it would be bad if w’s vp had a very very brief presidency? about 3 minutes long?
Shore (190)-
Like banks price these dumps right? By the time most of this swill hits the market, it’s being repped by some soccer mom, overpriced by 30% and well on the way to growing mold problems that can never be mitigated.
“It looks like the best bet for most folks is to let the auction fail then buy from the bank.”
alia,
President Pelosi, is one reason.
I am not sure how we can bail out a bubble of this size!
http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7BB9E54A5D%2D4796%2D4D0D%2DAC9E%2DD9124B59D436%7D&dist=TNMostRead
“growing mold problems that can never be mitigated”
I bet there are some federal agriculture programs for which one could be subsidized for urban farming, or something dealing with CO2 mitigation from DOE.
Those questions tell me that you should never, ever get within a mile of a sheriff sale.
What is the damage from going and looking/listening??
Why NOBODY would tell me how do you find out location/time and listings before the auction??
I am not buying… Not this year. Just want to look and learn.
“Like jumping into an alligator pit in a suit of meat.”
Clot, mind if I borrow that? I get a lot of emails asking how to buy a particular foreclosure and I do my best to let them know they shouldn’t even think about putting any money down before educating themselves thoroughly on the process. Your first line is what comes to mind a lot but I try and be polite and tell them to learn first then decide. The alligators should help drive home the point.
The scary thing is that a number of the clueless emails have been from agents. I would think that they would have some idea.
Al, in NJ from my understanding they are usually run by the sheriff.
Call up your county sheriff office or look at their website for information.
Take the time to learn before you go. The problem with auctions is they can be exciting and people get tempted. Not that you can buy anything if you don’t show up iwth cash or a casheirs check though.
Isn’t everyone already in a suit of meat?
I do not work with derivatives and do not pretend to even play a derivative expert in summer stock but, when one has created an “asset” class that is bigger than all of the worlds real assets, it sounds like one big Ponzi scheme. These things appear to be bets on bets on bets, on bets and people believe each one is worth the value of all of the others leading up to them. This is absurd.
In the case of a revolution, such nonsense would be outlawed and the plutocrats would take the hit. Why not do the same thing without the social disruption of an overthrow? The world will live witha a few less billionairs. Under the current state of things we are hammering everyone, and the crash seems to be coming anyway. The folks who invented the derivative products, and the folks who feasted on them have brought the worls’s economy to the edge of collapse. Better we should push them over the edge than the other way around, no?
“The sun came up this morning.”
Clot,
Not in my neighborhood.
here is my bold prediction again: dow is going to close positive.
bi,
The market is trading on anything but fundamentals so, I suspect you may be correct.
Why NOBODY would tell me how do you find out location/time and listings before the auction??
By the wqy – I went to clerk in a municipal building – real estate tax records section and she told me that she have no information or have no Idea how do you find it.
to your surprise. today’s weakest sector is not financial, not rimm related tech. but energy and materials, both down almost 5%.
from the WSJ
Short-term money markets remained in turmoil, heightening the likelihood the credit pullback may harm the broader economy.
Inside markets that are hidden to most Americans — the overnight Treasury repo market, the short-term commercial-paper markets and the floating-rate municipal bond markets — action was unfolding that will soon affect how companies meet payroll, pay vendors and make investments.
These markets allow companies with ample reserves to squeeze out a few extra dollars by investing the cash in securities with life spans of just days or weeks. All that cash helps keep the economy lubricated by distributing money to other firms that need short-term loans to buy inventory or meet payroll.
Some distressing signs emerged Thursday from one of the most important of these marketplaces, the commercial-paper market, where companies borrow money for periods of just a day to up to a year. The market contracted by $61 billion in the week ended Sept. 24, its largest decline since August 2007, when investors fled over some of the first warning signs of the subprime-mortgage crisis. In the latest week, banks and other financial companies accounted for most of the decline, as they took $50.3 billion of paper off the market.
The decline follows a $52.1 billion shrinkage in the week ended Sept. 17, which reduces the overall market to $1.702 trillion, according to Federal Reserve data.
“The world is clearly saying this is a huge problem,” said Harjeet Heer, who runs the Global Aggregate business at Baring Asset Management, which manages $17.8 billion in fixed-income assets.
These changes already are having effects on a host of companies that are constantly managing their cash positions.
Payroll processor Paychex Inc. transmits billions of payroll payments each day for 500,000 U.S. businesses.
Last week, Paychex’s chief financial officer, John Morphy, moved some of his working cash out of short-term municipal bonds and some money-market funds and into discount notes issued by government-backed Fannie Mae and Freddie Mac, called agency discount notes.
******************
please note above: CFO of company that processes billions of payroll payments each day does not have confidence in private credit markets. this is the wall st / main st link in action
Wow! What a concept! Legislators who listen to their constituents.
Is that what you define “taking less political risk” to be?
“The Repubs who are against this are taking far less risk politically than the people who are supporting it.”
This isn’t about principle, it’s about popularity. The R’s are the minority. They don’t have the votes to stop this thing. They have the luxury of getting to oppose this, but still have it pass despite their objections. You don’t get blamed for a Wall Street crash & you get to go home and tell your constituents that you opposed handing out their tax dollars to Wall Street fat cats. This is the best career position to be in.
more from above article:
“There is so much mistrust in the markets that banks and funds aren’t extending credit to customers even for a few hours during the day, as they usually do. Instead, lenders are waiting until the last possible moment to release funds, creating a logjam at day’s end when they wire money to branches, subsidiaries or other accounts. The backup of cash transfers has led the Federal Reserve to keep its money-transmission system open late, said a Fed spokesman.”
I thought this was funny.
Warning, might be offensive.
Tom Says:
September 26th, 2008 at 12:24 pm
Al, in NJ from my understanding they are usually run by the sheriff.
Call up your county sheriff office or look at their website for information.
Take the time to learn before you go. The problem with auctions is they can be exciting and people get tempted. Not that you can buy anything if you don’t show up iwth cash or a casheirs check though.
Thanks for the advice on sheriffs office.
I think you are talking about lists like this one?
http://www.co.middlesex.nj.us/sherifffc/ForeclosedHomes.aspx
It is very easy to resist temptation – I am not going to have any cash for a while. I did read about legal implications and various risks of buying on the auction quite a bit.
But what I found that theoretical knoweledge does not even prepare you for something as simple as doing a title search in the tax records office.
“I do not work with derivatives”
shore,
I stated this a long time ago. Consider your electrical box, totally hard wired. Hundreds of wires, multiple colors, intertwined, some taped together, some dangling, some serrated.
When you turn the lights on and they work, all is fine. However, when boom, boom, out go the lights, good luck. You better have an electrician, not named Bergabe or Paulson, handy.
At this point, the lights are flickering. Please call your electrician.
231: but just think, wouldn’t it put hillary’s knickers in a twist if someone *else* got to be the First Woman President? (if you like the idea of hc’s knickers twisted up. i’m fairly neutral on her, myself.)
NJMLS Bergen County Comp Killers!
Wyckoff, 200 HILLCREST AVE
SOLD: $660,000 6/27/2005
(Added central A/C, new kit and appliances)
SOLD: $650,000 9/23/2008
Westwood, 2 BENSON AVE
SOLD: $585,000 4/6/2006
SOLD: $517,700 9/17/2008
Tenafly, 1 CHURCHILL RD
SOLD: $999,000 3/1/2005
SOLD: $875,000 9/19/2008
Teaneck, 188 CRANFORD PL
SOLD: $399,000 1/27/2005
(New kitchen)
SOLD: $385,000 9/19/2008
Paramus, 63 SUMMIT ST
SOLD: $735,000 4/11/2006
SOLD: $680,000 9/22/2008
Hackensack, 577 SUMMIT AVE
SOLD: $799,900 7/18/2003
SOLD: $770,000 9/19/2008
Hackensack, 159 HERMAN ST
SOLD: $490,000 6/7/2004
SOLD: $420,000 9/23/2008
Fair Lawn, 15-03 LUCENA DR
SOLD: $610,000 7/19/2004
SOLD: $501,000 9/25/2008
Fair Lawn, 1-19 BERDAN AVE
SOLD: $350,000 2/27/2006
SOLD: $300,000 9/23/2008
Al,
The clelrk doesn’t do the work for you but they usually have a reasearch station you can use.
Get that book in the link, it will tell you pretty much everything you need to know and then some. The hardest thing is understanding the market and setting a good price for you. The research is tedious but easy once you know what to do.
You have nobody to guide you in the process but yourself so you have to learn as much as you can on a lot of different sources.
I tried to guide you to the information you’re looking for. There’s no way I can answer a book’s worth of information.
“here is my bold prediction again: dow is going to close positive.”
Bi,
Who cares about the DOW? Completely trivial. The harebrained, you, follow that. Watch the credit markets. Learn about Libor at 6% and Ted spread at +300.
253. for today, ted spread is down compared other days this week even equity market is down. i see this as positive
#163 skeptic:You can simply look at the events of the past few weeks to see that this is a major crisis with the potential to sping completely out of control very fast.
Again skep you fail to address the credibility problem, and that is all along Bush and Paulson were saying all is well, the crisis is contained, even up until 2 weeks ago Paulson was preaching this.
Now it is armageddon. Paulson, Bernanke, Bush and anybody else had plenty of time to craft a plan after Bear failed in March.
That is why I do not trust any of them.
Al: Here is link to Somerset County Sheriff’s website.
http://www.somcosheriff.org/sales.htm
Al: Here is link to Morris county website
http://www.mcsheriff.org/main/civil_sheriffsales/
Al: Middlesex County Sheriff
http://www.co.middlesex.nj.us/sherifffc/foreclosedhomes.aspx
# toshiro_mifune Says:
September 26th, 2008 at 12:31 pm
I thought this was funny.
Warning, might be offensive.
toshiro – lately, if its not a little offensive it CAN’T be funny.
#254 – It’s still at 293 when it’s usually 50. In what world is that positive?
Have you looked at the 5y chart to get some sort of idea of what it usually is? Or are you just looking at intraday movement?
Al,
Middlesex’s clerk has a lot of info online https://mcrecords.co.middlesex.nj.us/records/index.jsp
Took 2 seconds to do a google search to find it. Don’t take this the wrong way, but if you can’t do that much you really need to learn more.
“253. for today, ted spread is down”
bi,
Good. Put that in your blackbox and follow that. Then, you will be able to tell us how the stock market will be performing in the future.
TD Bank is clean as far as i know. Canadians went through a similar but smaller credit crisis about 8 years ago. I worked for them for 5 years and they were always extremely conservative in lending, frustrating to many bank officers but now we see they had good reason. They have also correctly predicted mass consolidation in US market for the last 3 years. Cant speak for Commerce, they were always very aggressive but I dont think they have any toxic mortgages or derivative products.
#255
3b– I believe I did address the credibility problem above when I said Bush has no credibility and Paulson’s is slim. Actually, congressional leaders have little credibility as well since they have basically broken all of their promises. I see a political reality in which the gov’t has no credibility to address a real crisis, having spent all its capital on name calling and crying wolf. regardless of whether or not a solution is found I think all incumbents should be thrown out
BI:
See #3
http://biz.yahoo.com/bizwk/080926/sep2008pi20080925049629.html
Ending the Credit Crunch: Four Benchmarks to Watch
3b– I am saying don’t take gov’t's word for it– look at events. Look at what people outside of gov’t are saying. Even people who are not down with the current plan, most of them agree that some kind of gov’t intervention is necessary
Nigerian E-mail scam? Nope. It’s the Paulson bailout. Seriously.
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury
Henry Paulson
“It’s still at 293 when it’s usually 50. In what world is that positive?”
Tosh,
Yeah, what an incerdible drop today.
incredible
WB fading ,,, are they next
max,
WB is safe and sound. It’s those terrorist short sellers that are driving this perfectly sound and well managed company to the brink of insolvency. (sarcasm off).
WB has been insolvent for months!
I like to look at old stories once in a while for a laugh. This one is from 2002. It talks about record foreclosures and there being no bubble.
“That said, home-price increases are likely to decelerate — year-over-year increases have already dropped from near 8 percent last year to 6.5 percent in the latest National Association of Realtors survey — and some local markets may see falling prices, Seiders predicted.”
Link here
Towns That Could Be Hit Hardest by the Financial Crisis
Already the financial sector alone has lost 10,000 jobs through July, or about 2% of finance jobs. Moody’s Economy.com projects that New York City and its suburbs will lose 65,000 finance jobs by the middle of 2010, or 11% of the total.
n other words, smaller financial centers and their suburbs could also see trouble ahead. BusinessWeek.com worked with PolicyMap.com, a Philadelphia-based online data and demographics site, to rank the communities with the largest percentage of residents working in finance, real estate, insurance, and leasing. Topping the list is Darien, Conn., an affluent New York suburb where the median salary is $168,000 and 27% of residents work in those industries. Bloomington, Ill., home of State Farm Insurance, came in second, followed by Hoboken, N.J., which is across the Hudson River from Wall Street.
[188] Laughing,
Be sure to buy ammo. Lots of it. It will only get more expensive.
When you buy a gun, be sure it is a common caliber — don’t go for unusual, like Makarov. Great gun, but hard to get ammo.
Consider used guns as they cost less but just as good. Since they are simple devices, it is easy to assess maintenance. All mine are used, and I am happy with them.
Finally, consider state laws. NJ is very tough and a lot of guns that are legal in PA are not legal here. I ran into that issue. Amazingly, this applies more to long guns.
From CR, new home sales and recessions;
http://2.bp.blogspot.com/_nSTO-vZpSgc/SNva2sOm-HI/AAAAAAAADXc/yfR-ipdAWoQ/s1600-h/new+home+sales+and+recessions.png
BC 275
Are you suprised that more builders have not imploded?
NJ Towns from list above
3. Hoboken, N.J.
Share population in finance and real estate: 23.33%
Nearest large city: New York
Population: 40,002
Median salary: $81,356
6. Summit, N.J.
Share population in finance and real estate: 19.74%
Nearest large city: New York
Population: 20,618
Median salary: $111,497
Emphasis added.
NCC according to 10-K:
Core deposits, excluding escrow funds, grew to $84.1 billion at December 31, 2007
#266 skeptic:Even people who are not down with the current plan, most of them agree that some kind of gov’t intervention is necessary.
I am not saying that it is not necessary at this point, (even though it never should have gotten to this point).
I do not trust the people involved (Bush Bernanke, and Paulson), bring in independent,neutral outside experts to come up with a solution, instead of the clowns who bear no small part of thr responsibility for getting us into this mess in the first place.
“The Paulson solution fails because it does not help consumers or businesses service debt, it does not create any jobs, it increases the national debt, and it encourages more reckless lending by banks. Attempting to bail out banks on the back of cash strapped consumers is simply doomed to fail.”
“If printing money was the solution to all problems, Zimbabwe would be the most prosperous country in the world.”
“Paulson wants to recapitalize banks so they can keep lending. Ironically, one of the problems is lending. The US has been on a credit binge to such an extent that I have to ask what more do we need? More Pizza Huts? More Home Depots? More Houses? More Nail Salons? More Car Dealers? What?”
“What is the urgent need to lend still more?”
“We are in this mess because of too much reckless lending. We do not need more lending, we need more saving!”
http://globaleconomicanalysis.blogspot.com/2008/09/open-letter-to-congress-on-700-billion.html
[131] Shore
Shh. Ask Grim. Offline. Or get my email from grim or kettle.
Nom
Also, as I just found out you can no longer get pistol ammo, black powder, and some slugs like lightfields without your Firams ID card on your person. I’m, long on buck shot for close encounters, 7mm rem mag to reach out and touch someone, slugs and blackpowder. MY mz has an effective range out to two hundred yards with conical bullets. Back to lurking.
“Are you suprised that more builders have not imploded?”
make,
Can’t believe Beazer is still standing, or crawling.
Does anyone know if Peapack Gladstone bank is safe?
what about hov,,, who are they kidding,
dead, just don’t know it yet
I am new homehowner. I have one question: is there a cap(3% or 4%) for the property increase every year?
Your help is appreciate.
Thanks
“Gas Shortage In the South Creates Panic, Long Lines”
“If Drivers Can Fill Up, They Get Sticker Shock”
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092504159.html
typo in privious message. Here is the correct one.
I am new homeowner. I have one question: is there a cap(3% or 4%) for the property tax increase every year?
Your help is appreciate.
Thanks
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Hey All!
I’ve been visting this site for a long time but never posted before. Because my brother just moved back from CA to Ridgewood, I have decided to move to around that area with my family (two kids 5 and 2). However, it appears this area really isn’t getting hit hard, if at all, in terms of home prices coming down. For example, even though home prices haven’t come down all that much on Long Island – you can see that sales have plunged. But around Ridgewood area – it appears prices are holding and sales are keeping steady to next year. What gives?
Recapitalizing Banks
Banks are undercapitalized. They need funding badly. Here is what I propose.
1)Reduce the capital gains tax by 50% for any investor willing to cash out stocks and invest in 5 year bank CDs.
2) Eliminate the difference between long term and short term capital gains.
3)Eliminate taxable interest on savings accounts, CDs, and US treasuries.
The above would promote saving rather than speculation and provide a big boost in government revenues as well. Stock prices will not be affected over the long haul by these measures.
I love this idea from Minn
BC Bob 287
see this chart
http://img221.imageshack.us/img221/6721/gtstusmok5.gif
you are seeing the results of the recent hurricanes in Texas and Louisiana. They caused the shut down of refineries. refineries have been running at very high utilization levels, 90+ % last i looked pre-hurricane and just keeping up with supply.
The shortage has not hit the northeast because a large portion of the finished gasoline that is imported comes into NY ports. (RBOB)
This shortage should begin to resolve itself over the next few weeks assuming no further interruptions.
also see the following charts
gasoline stocks
http://www.theoildrum.com/files/EIA%20Gasoline%20Stocks.png
Refinery shortfalls (Louisiana)
http://www.theoildrum.com/files/LA%20Refinery%20Shortfalls%209_23.png
refinery shortfalls (Texas)
http://www.theoildrum.com/files/TX%20Refinery%20Shortfalls%209_23.png
Nom,
As Brigadoonian, I don’t know if you read the Westfield Goleader, but there is an angry letter in there about the huge traffic snafu they have created at the north end of E Broad. I found out from my mechanic that every few years, to get the traffic lights certified by NJ, they alter the traffic pattern at this light (one left hand turn lane, not 2) to be acceptable, and then eventually, when they are certified, they change it back to the way that works. All this is in response to Kenilworth losing a big judgement a few years ago in a DWI accident because their traffic lights weren’t State certified.
I post this as a COMPLETE departure from talking about actual important world events. But seriously, its f^%$^%$d up my commute. Where is my bailout?
alia (229)-
Many of my friends would like to do things with VPILF. Most of those actions would be about 3 minutes long, too.
“i don’t see why it would be bad if w’s vp had a very very brief presidency? about 3 minutes long?”
Tom (235)-
The agents always have the least idea. Sure, use my line.
BC
As i am sure you are aware, most modern supply chains are JIT (Just In Time) i.e no reserve stock to speak of. The greatest weakness in such a system is that nay disruption greater then a little blip and you will have rapid shortages develop that can cascade.
This will be an unexpected effect of the financial turmoil. Similar to how grain elevators couldn’t buy corn due to loans not being available, we are about to see what may appear to be random shortages of various good and services. It however, is not random. you just have to know what part of the supply chain is the weak link. easier said then done.
#288 Yup, there has been a shortage for the last week. About 1/3 of the stations have gas. All the BP stations around me have been out for six days. There were about 25 cars lined up at the Kroger gas station this morning. Add to that the fact that Wachovia has a large presence in Atlanta and it’s just good times everywhere you look.
Oh, and whats up with the russian PRON spam????
September 26th, 2008 at 1:32 pm
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Clot,
Any opinion on if that property would be cash flow positive? Looked up some listings on CL and it either is or is very close just factoring in the mortgage.
I can’t say for sure but I think the intent is to sell.
It’s 2pm. Time for Bi to be proven wrong once again.
anyone see this yet???
Exploiting FDIC Loopholes Enriches Former U.S. Bank Regulators
By David Evans
Enlarge Image/Details
Sept. 25 (Bloomberg) — As chief of staff of the Federal Deposit Insurance Corp. from 1999 to 2002, Mark Jacobsen was responsible for a safety net that protects U.S. savers. He now runs a company that critics say is designed to stretch that net to its breaking point.
Jacobsen, 42, is president and co-founder of Arlington, Virginia-based Promontory Interfinancial Network, a company that makes it easy for a wealthy depositor to keep FDIC-insured cash in separate accounts at multiple banks. It offers customers up to $50 million of FDIC insurance, 500 times the single-account limit approved by Congress.
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aBaYKQD_UPcE
alia,
Personally, I try not to think about Hillary’s knickers.
BC,
“At this point, the lights are flickering. Please call your electrician”
BC,
Given an electrical box like that, I would be inclined to call that electrician and have him divert the main line to a new electrical box and toss the old one.
WaMu deal suggests home prices may fall further
NEW YORK (MarketWatch) — When buying Washington Mutual’s banking business, J.P. Morgan Chase & Co. weighed the risks of the deal using some worrying assumptions about house prices and future losses on mortgages.
Wachovia has more than $100 billion of option ARMs. These types of mortgages allowed borrowers to choose between several different monthly payments. The lower payment options increased the total amount owed, which is known as negative amortization. Wachovia stopped offering these home loans this summer. See full story.
“We expect this deal to have a negative impact on the value of credit-impaired banking institutions,” Cannon wrote in a note to investors on Friday.
World is waking upto Option-ARM !!!
Barry Benson [290],
You shouldn’t have said that. See, you’re going to get skewered now because a lot of people here are convinced (deluded) that you’re going to get a house in a town like Ridgewood for at least 20% or better off of peak prices. However, if one would actually go out and look at these homes as I do on a regular basis, one would see that yes, indeed, the prices in the sought-after towns in North Jersey are holding up.
But again… shhhh… we don’t want to poke a stick too many times. Then again, what do I know? I’ve been told to be patient and wait and I’ll see a BIG price reduction sooner rather than later. I’ve been told that a week ago, a month ago, 6 months ago, a year ago, 18 months ago and two years ago.
It would be insane to make bank cds tax free. Munis are tax free and the cheap funds raised pay schools, hospitals, police, firemen, roads etc. Once state govt had to pay full interest rates you prop taxes and state taxes would go through roof.
#290 Barry:But around Ridgewood area – it appears prices are holding and sales are keeping steady to next year. What gives?
That is all yesterday’s news. As far Ridgewood, look at all the list prices that are now in the 400k’s something unheardard of a couple of years ago.
Alos look at the large amont of inventory for sale there. Last time I looked it was over 100 SFH’s. Very little is selling there either.
you can get way more than $100k FDIC insured in the same bank. You just need a wife you trust, and ira accounts…
http://www.fdic.gov/edie/
We hate to interupt your current programming of gloom, doom and the end of life as we know it, but. . . . .
Gary/Clot/Grim:
Any information on MLS #2499772. Seems to be off the GSMLS. It has been listed/relisted at least twice. Want to know if someone stupid actually bought the house. Seller said “present all offers” but didn’t like our offer.
Thanks in advance
remember: Free your mind!
kettle,
Most of the big grain exporters grant loans to the farmers before they even grow the crop so as to guartantee product, sometimes in the form of direct crop financing, and sometimes by fowarding them Ferilizers, so it’s a little different than oil refineries.
Oops. Looks like things were a bit worse at WM than they let on:
NEW YORK (MarketWatch) — When buying Washington Mutual’s banking business, J.P. Morgan Chase & Co. weighed the risks of the deal using some worrying assumptions about house prices and future losses on mortgages.
That’s sparked concern that mortgage-related assets held by rival banks including Wachovia Corp.
WB may be worth less than previously thought.
Late Thursday, J.P. Morgan announced an agreement to buy WaMu’s banking subsidiary after the nation’s largest thrift was seized by the Federal Deposit Insurance Corp. See full story. In a presentation on its WaMu acquisition, J.P. Morgan forecast a 58% peak-to-trough slump in California home prices if the U.S. enters a severe recession. In Florida, house prices could fall 64% in such a scenario, while nationwide prices could drop 37%, the bank said.
J.P. Morgan also immediately wrote down the value of WaMu’s assets by more than $30 billion, mainly because the giant bank expects losses on the thrift’s mortgage holdings to be higher than previous expectations.
The write-downs assume that cumulative losses on WaMu’s $51 billion option adjustable-rate mortgage portfolio will reach 20%.
That’s a lot higher than the 12% cumulative losses that Fred Cannon, an analyst at Keefe, Bruyette & Woods, was expecting.
Wachovia has more than $100 billion of option ARMs. These types of mortgages allowed borrowers to choose between several different monthly payments. The lower payment options increased the total amount owed, which is known as negative amortization. Wachovia stopped offering these home loans this summer. See full story.
“We expect this deal to have a negative impact on the value of credit-impaired banking institutions,” Cannon wrote in a note to investors on Friday.
Wachovia shares slumped 28% to $9.78 during afternoon trading. Credit default swap spreads on the bank’s debt surged by more than 800 basis points and now trade at distressed levels, according to Credit Derivatives Research.
J.P. Morgan assumes cumulative losses of at least 20% on WaMu’s home equity lines of credit and home equity loans. KBW’s Cannon was expecting cumulative losses of 10%.
J.P. Morgan’s projection of losses on WaMu’s prime and subprime mortgage exposures were also higher than Cannon’s estimates, the analyst said.”
Wanda Sykes on Jay Leno: Bailout & Paln
Tom (301)-
What property?
Morph (310)-
Expired 9/19.
#306 gary: You can start the process, with your own house.
Look you can believe whatever you want, but the fact remains that prices are falling,and the speed is picking up, maybe not fast enough for you, but it is.
The fact also remains that I lived through the last houisng bust,and prices decliend dramatically from the peak when we bought. My wife and I used to kick ourselves for not waiting,when we would go out and look.
If they fell back than, when you had to qualify for a mtg, then they are going to fall now. Simple as that.
We are close to a financial meltdown,and you still believe prices will reamin unaffected!!!
You have got to calm down Dude.
#308
112 SFH’s in Ridgewood -17 of which are under 500-13 in the 500′s- over 30 in the 600-800 range
disclaimer-info reliable not guaranteed
“World is waking upto Option-ARM !!!”
SG,
Exactly what snake oil Hank is selling.
Gary:
I hope the drop in local housing prices does not happen so quickly that you miss it entirely and we all end up selling apples.
3b[316],
Please excuse Gary. He’s trying to sponsor Usain Bolt, to run in the Boston Marathon.
Clotpoll Says:
September 26th, 2008 at 9:42 am
Shore- The toadies are on Capitol Hill?
Where?
http://www.youtube.com/watch?v=F5Cf5OusjrQ
clot:
Thanks, you are the best. stupid question: by “expired”, I assume that it means it was not sold and is not being marketed thru the MLS. . . . .please no “Bad news bears” jokes about “assume”
Gary,
Bear, Lehman, Merrill, Wamu, Countryslide, Indymac, Fannie, Freddie, hundreds of mortgage firms, etc., all bite the dust. The only group immune, NNJ sellers. Almost as funny as Paterson Plank Joe to Larry Csonka.
From an e-mail newsletter from Diane Turton Relators. At least they are telling their sellers not to expect people to come in the door, drop to their knees and shine the seller’s shoes whilst in a bidding war.
enewsletter@dianeturton.com
The Principles of Pricing
Pricing your home correctly is critical to a successful sale as it will help your
home sell faster and for top dollar. Determining a home’s asking price involves
comparing similar homes that have recently sold while also investigating local
market trends. In the end, the market will determine your selling price so it’s
critical you do your research upfront.
Start by evaluating the recent sales in your area that are similar in square footage
and age. You’ll also want to examine the number of bedrooms & bathrooms, the
home’s condition and other issues like surrounding houses (ie. is it the biggest
house on the street). Don’t forget to consider homes which have recently expired
as well as those that are currently for sale.
Some people believe it’s okay to list a home at a higher price because they can
always reduce it later on; however, this often backfires as the home will develop
a stigma if it sits on the market too long. A huge buzz is created when a new property
hits the market but if it sits there, it will quickly lose its appeal and become
stale. “How long has it been on the market?” is one of the first questions buyers
ask. If it’s been a while, they won’t feel the need to make an offer right away.
If on the other hand it’s just been listed, there’s a sense of urgency!
It’s a common belief that sellers don’t have anything to lose by overpricing their
home as they won’t lose out on any offers as they feel buyers will just offer what
they feel is fair. This however isn’t always the case since many buyers are hesitant
to attach their name to a low offer as they don’t want to insult the seller. Many
buyers are intimidated by the negotiating process and feel they’ll be wasting everyone’s
time with an offer that’s so far off the asking price.
Timing is also a key issue. The Spring and Fall are traditionally the best times
of year to sell so overpricing your home and having it sit on the market may mean
you miss out on the peak time of year. Furthermore, carrying costs such as insurance,
taxes and utilities will quickly build up if you get stuck carrying two homes at
once.
Having your property sit on the market is also inconvenient as you’ll need to keep
it ultra clean for potential buyers who will want to come and see it on a moment’s
notice. Overpricing your property may also mean you unintentionally help your competition
as buyers will see other homes in your area as better deals since they’re less expensive.
If you price your home at market value, those same buyers will consider your home
more seriously.
Setting an asking price isn’t an exact science and market factors (buyer or seller
markets) make a huge difference so make sure you do your research ahead of time
so you’re able to best estimate a competitive asking price. The best case scenario
when listing your home is that it sells quickly and for top dollar. To achieve
this ideal scenario, make sure you don’t overprice your home.
From the Palin – Katie Couric recent interview….
Katie Couric – Thank you for being here, Governor Palin.
Sarah Palin – I’m all about being here.
Katie Couric – Are you and John McCain in favor of this $700 billion bailout?
Sarah Palin – I’m totally in favor of supporting the troops. My son is a troop.
Katie Couric – Right. But I’m asking about the bailout proposal for Wall Street.
Sarah Palin – You sure are. You betcha.
Katie Couric – So are you in favor of it?
Sarah Palin – Reform needs to be in the Wall Street. Not just sittin’ on the curb of Wall Street. We need it in the middle of the street. Like a dead squirrel.
Katie Couric – Can we afford to give tax breaks to the wealthiest Americans right now?
Sarah Palin – Well, what do you mean by tax breaks? Like on a car? Those kinds of breaks?
Katie Couric – Less taxes.
Sarah Palin – You know, I’m really into the Bush doctrine. I’m like, supporting it.
Katie Couric – In the event that something were to happen to John McCain, are you ready to step in and be president?
Sarah Palin – I have the steadiness to be steady. I’m getting in there and really doing it. Not just not doing it. I’m not going to be like ‘hey, presidency, talk to the hand.’
Katie Couric – But are you ready to become the leader of the free world?
Sarah Palin – Totally. I will totally lead the world. Any world. I will lead Mars or whatever too if those guys need a world president. Or just a Mars president. I took on the ole’ boys club in Alaska and I can take it on in Mars.
Katie Couric – But I’m not asking about being president of Mars.
Sarah Palin – But I am answering about being president of Mars because a president person needs to be prepared for anything. I like to reform.
Katie Couric – I understand you only just got a passport last year.
Sarah Palin – You know, I was in Idaho for my friend Amber’s wedding a ways back. Lemme tell you, Katie. We American taxpayers have a lot more in common with other countries than we think. There were Budweiser beers cans at that Idaho wedding. And Hot Pockets too. Those pizza flavored ones. Yummy.
Katie Couric – Wait, are you saying that Idaho is another country?
Sarah Palin – I’m saying they have Hot Pockets just like us. Pizza ones even. It’s called ‘the globalization.’
Katie Couric – But let me get this straight because I think it’s important. Is Idaho another country?
Sarah Palin – You know, I’m not going to get into that right now. I think American men and women and men are focused on solutions. Not what’s a country or what’s not a country. Some places aren’t countries. They’re just things. And that’s ok. Do you know the difference between a country and a thing?
Katie Couric – I’m not sure I do.
Sarah Palin – Hot Pockets.
Katie Couric – And finally, where will you and John McCain take this country?
Sarah Palin – We are going to take it somewhere really nice. A nice place where all American taxpayer people will totally be like ‘hey, hello, this is really nice.’” And then we’ll take it from that really nice place and over to a nicer place, a super duper nice one. More super duper nice than my cousin Marge even. And the American taxpayer people will be like ‘hey, this is a super duper nice place. More than Marge even.’” Reform.
Katie Couric – Thank you, Governor.
Chifi,
I always liked that song.
morph (322)-
Yes.
The njrereport primer:
1) Thou shalt not calm down Gary
2) Thou shalt not silence Bi nor his black box of infinite inverse reliability
3) Thou shalt not disagree with Skep-tic
4) Thou shalt not discuss energy when Kettle1 is not present
5) Thou shalt not make investment recommendations in the presence of ChicagoFinance
6) Thou shalt not listen to Frank
7) Thou shall not compare any story to one of John’s
8) Thou shall not call Reinvestor101 by his blog name or number
9) Thou must never refer to Brigadoon as anything but Brigadoon
10) All bad loan writedowns announced in the news must immediately be followed by a post stating, “There will be no more write-downs!”
11) All homes of the cape cod variety must either be immediately preceded by, followed by or actually be called POS
12) All posts between 5am and 7:30am must immediately be preceded by another entry containing only the word ‘frist’
13) Thou must appreciate Grim and eventually send some sheckles his way through the link on the home page.
Nj Lifer, 311
yes they are somewhat different, but here is an example of what i was talking about
Jul 20, 2008 (Star Tribune – McClatchy-Tribune Information Services via COMTEX) — Scott Dubbelde has told himself, time and again, that there is no use fretting about things over which he has no control.
Even so, the general manager of a grain elevator cooperative in Hanley Falls, Minn., lies awake at night, worrying about the ballooning debt his elevator has incurred to finance its inventory.
“I’d be lying to you if I said I wasn’t worried,” Dubbelde said. “This is about our survival.”
“The big question many agricultural analysts are asking is how much debt elevators can incur before a liquidity crisis occurs and banks start tightening. Swanson estimates that U.S. financial institutions already have provided at least $10 billion to grain elevators, just to fund margin calls for futures contracts. Some elevators have been forced to turn to three or more lenders just to meet their debt obligations.”
ML just layed-off 15% of it staff?
13) Thou must appreciate Grim and eventually send some sheckles his way through the link on the home page.
!!!
Well, this sounds like the GOP in the House is not inclined to follow the lead of Great Leader:
House GOP: We’ll Oppose Any Bailout of Wall Street
http://www.cnbc.com/id/26895236
Boehner’s letter to Pelosi:
http://msnbcmedia.msn.com/i/CNBC/Sections/News_And_Analysis/_News/__EDIT%20Englewood%20Cliffs/080926_Pelosi.pdf
3b, BC Bob, Stu,
LOL! You guys wanna f*cking kill me! :) I guess my wife is a Saint, wouldn’t you think? I don’t know whether I should buy you guys a drink at the next GTG or run for my life!! LOL!
Re #327:
14. No member shall beat up another member, at least while someone is watching;
15. No poofters;
16. There are no rules, refer to # 14;
17. No poofters.
No offense, I hope
Tom,
Thanks for the info, I tried to post your site but was unable.
KL
Bush has lost the house Rs. He has lost the faith of the American people. He states that if we do not act immediately, we face collapse, yet he cannot bring along his own party. He has no moral authority. He has no intellectual authority. He is leaving the nation rudderless.
As such, he should resign.
Federal Reserve leads central bank injection of billions
http://www.telegraph.co.uk/finance/3086611/Federal-Reserve-leads-central-bank-injection-of-billions.html
“Apocalyptic” and “money market meltdown” were phrases used to describe the distress at the heart of the financial system – the interbank market where banks lend to each other. After a US debt-rescue deal stalled overnight, the US Federal Reserve moved rapidly this morning with the European and Swiss central banks to deliver a further $13bn (£7bn) into crippled money markets.
Commercial banks usually seek extra funds at the end of each quarter, but credit has all but dried up as banks demand higher interest for the loans they make to each other as fear that another lender may collapse stalks the market. “The problem is neither a lack of liquidity nor a question of the level of interest rates,” said Stephane Deo, an economist at UBS. “It is essentially a problem of trust between banks.”
morpheus, regarding your rule 14.
The other day, one or two of the regular posters requested that they be beaten. So, you may need to amend that one.
Rule 18 – I don’t want to catch anyone not drinking.
kettle,
You are right about the smaller grain elevators. Unlike the big boys that have their hand in the entire chain (ie. ADM, Bunge, Cargill, Louis Dreyfuss) capital will be even harder to come by for these guys.
UK banks could qualify for $175 billion of US bailout plan
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4828413.ece
Britain’s five leading high street banks have as much as £95.3 billion ($175 billion) of distressed assets on their books that may qualify for the American bailout scheme.
If the British banks tap the rescue fund being set up by the US Treasury and the Federal Reserve to the maximum, they could secure one quarter of the $700 billion being made available. Under the terms of an outline agreement that appeared to have been reached by US policymakers last night, Britain’s lenders will be able to use the facility.
House Republicans Give Boehner A Standing Ovation Over Bailout Stance
Sep 26, 2008
——————————————————————————–
(The Politico) House Republicans gave Minority Leader John Boehner (R-Ohio) a standing ovation today as he briefed them on the last developments in the battle over President Bush’s $700 billion Wall Street bailout plan, according to Patrick O’Connor, who is covering a GOP members-only meeting.
Boehner and the House Republican leadership has been roundly criticized by the Democrats over their unwillingness to support the Bush bailout package, but his rank-and-file is backing the Ohio Republican strongly. House Republicans have offered a series of principles as an alternative to the White House’s bailout plan, but have yet to unveil an actual bill.
[snip]
http://www.cbsnews.com/stories/2008/09/26/politics/politico/thecrypt/printable4480809.shtml
“UK banks could qualify for $175 billion of US bailout plan”
My ancestors threw the UK out of most of North America, then others went and pulled their chestnuts out of the fire in 1917, and 1941. $crew their banks. Let them take their own writedowns.
http://news.cnet.com/8301-13578_3-10051790-38.html
Do you oppose the $700 billion Wall Street bailout? Click here
Posted by Declan McCullagh 78 commentsShare
Digg Del.icio.us Reddit Facebook Google Newsvine Yahoo! Bookmarks Twitter Stumbleupon E-mail Print Bailout type Cost to taxpayers (Source: Reuters)
Proposed Treasury Department legislation $700 billion+
Bear Stearns financing $29 billion
Fannie Mae and Freddie Mac nationalization $200 billion
AIG loan and nationalization $85 billion
Federal Housing Administration housing rescue bill $300 billion
Mortgage community grants $4 billion
JPMorgan Chase repayments $87 billion
Loans to banks via Fed’s Term Auction Facility $200 billion+
Loans from Depression-era Exchange Stabilization Fund $50 billion
Purchases of mortgage securities by Fannie Mae and Freddie Mac $144 billion
TOTAL $1.8 trillion+
COST PER HOUSEHOLD $17,064+
A flurry of Web activism is channelling misgivings about the proposed $700 billion Wall Street bailout into political action.
There is NoWallStreetBailout.com, which asks visitors to sign a petition to Congress. It features a quote from Allan Meltzer, a professor at Carnegie Mellon University’s business school, saying: “This is scare tactics to try to do something that’s in the private but not the public interest. It’s terrible.”
The cross-town competition comes from VoteNoBailout.org, which says: “We are witnessing a bankers’ coup d’etat. In the name of saving the economy from a crisis created by their own greed and immense profits, the biggest bankers have taken a country and a people hostage.”
There’s also FinancialPetition.org, plus a humorous, off-color Web site that encourages people to “list” items they want the government to buy.
Public pressure in opposition to the bailout, from these sites and from unexpected sources like the AFL-CIO and Republican Newt Gingrich, may have helped to slam the brakes on what had been an unusually fast-moving process in Washington.
By midday Thursday, news articles began appearing saying a “tentative bailout agreement” had been struck between congressional leaders and the White House. But the day ended with the talks in tatters, an intra-party rebellion by House Republicans, and a promise to continue the meetings on Friday.
Republicans including House Minority Leader John Boehner objected to the proposal as putting taxpayers on the hook for what could be potentially huge losses, according to the summary by The Washington Post. Boehner and his colleagues are backing an alternative that would involve a rescue plan financed by the banks themselves, not taxpayers. (Because their party controls the Congress, Democratic leaders don’t actually need Republican support. They want it anyway for political cover.)
Ask an economist whether the $700 billion bailout will harm or help the economy, and the answer will depend on his or her political (or at least philosophical) predilections.
New York Times columnist Paul Krugman said “doing nothing isn’t a serious option.” Treasury Secretary Henry Paulson told a House committee on Wednesday that doing nothing would “threaten American families’ financial well-being, the viability of businesses both small and large, and the very health of our economy.” An editorial in the Salt Lake Tribune took a similar approach.
Other economists draw unnerving parallels to the Great Depression, warning that it was caused precisely by this kind of government intervention in the economy. The Competitive Enterprise Institute’s OpenMarket.org says the proposed $700 billion intervention will prove to be either “excessively costly or unnecessary.” Peter Schiff, a well-known stock market bear and president of Euro Pacific Capital, warned: “We’re going to have a tremendous recession if the government does nothing but we’re going to have a worse one” if it does. Also see the Huffington Post’s reasons to oppose the bailout, and Republican Rep. Ron Paul’s warning that “it’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs.”
The 1920s boom that led to the Great Depression was aided, and may have been largely caused, by the Federal Reserve’s expansion of the money supply by 8 percent a year, or 62 percent over an eight-year period. Such a boom was due for a bust, which started in September 1929.
Instead of taking a hands-off approach, the Federal Reserve intervened on a dramatic scale, in part to allow loans to be taken over; one union leader called it a “barrier against financial demoralization.” President Herbert Hoover overruled his Treasury secretary, who counseled a laissez-faire approach, and embarked on programs to artificially keep wages constant (or higher), expand public works, and boost farm subsidies. By 1931, as the Depression was well under way, Hoover was busy calling for an investigation of short sellers. He later summarized his policies as: “We met the situation with proposals… of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic.”
It’s true that the proposal the Bush administration is advancing today does not come close to the extreme measures that Hoover adopted. But what critics–especially those online–seem to fear is that another step down that path could prove to be an unusually risky one.
Maybe i missed something, but where did all of WAMU’s money go? They have about 500 billion in combined asset and deposit value. JPM only paid 1.9 billion for 188 billion in deposits!!! I must be missing something here as it seems a lot of assets just disappeared……
Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.
Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The largest previous U.S. banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.
http://www.reuters.com/article/newsOne/idUSTRE48P05I20080926?sp=true
snip
It Is About Bush. House conservatives may have liked President Bush back when he was cutting taxes and sporting high approval numbers, but many of them have little reason to support or trust him now. He’s a lame duck with approval ratings that are hovering around 30 percent, so he has little to offer members in the way of political protection. And some conservatives think Bush is ideologically adrift, whether on his more conciliatory second-term foreign policy or immigation or, more recently, his refusal to veto the housing rescue package in July that nearly all House conservatives opposed.
Now, conservatives privately suspect that Bush is being too heavily influenced by Henry Paulson and other Wall Street alumni in the administration. So yesterday’s plea from the president for their support simply didn’t do the trick.
snip
http://voices.washingtonpost.com/capitol-briefing/2008/09/why_house_republicans_balked.html?hpid=topnews
“I don’t know whether I should buy you guys a drink at the next GTG or run for my life!! LOL!”
Gary,
Bring your wallet and your track shoes. However, first buy the drinks.
Regarding grain elevators, those things are the lifeblood and the center of so many small communities throughout the midwest. Talk about hitting main street.
bi,
Are you anxiously awaiting the close. We’ll see you at 4:01.
http://www.lewrockwell.com/snyder/snyder15.html
Section 19(a)(2) of Senator Dodd’s original bill provides that if the Federal Reserve Board exercises this authority, it must notify the Senate Committee on Housing, Banking and Urban Affairs and the House Committee on Financial Services of “the specific terms of the actions of the Board, including the size and duration of the lending, the value of any collateral held with respect to such a loan, the recipient of warrants or any other potential equity in exchange for the loan, and any expected cost to the taxpayer for the cost of such exercise.”
The first thing to notice about the Dodd language is that it contemplates the possibility that both stock or other equity and warrants may be acquired and transferred by the Board to private parties, and not to the government. Under 12 U.S.C. 343, the Fed already has this power to structure loans as it sees fit in unusual and exigent circumstances. The Dodd bill simply requires that the Senate and House be informed what the Fed has done, and provides no authority to Congress to control it.
So the vaunted Congressional “oversight” consists simply of being informed of what has been done after the fact. But note this well: The bailout bill provides no mechanism for assuring that the federal government acquires any ownership stake in the companies it bails out for the funds it provides. It is not nationalization. What will happen is that the Fed will have the power to preserve and make new kings of finance on the backs of taxpayers.
“What will happen is that the Fed will have the power to preserve and make new kings of finance on the backs of taxpayers.”
It worked for the oligarchs in Russia. Perhaps we will need to change the name of The Department of Homeland Security to the Department of Rodina Security.
from the WSJ Deal Journal (with this thou shall not disagree):
“Perhaps the greater failure by Bernanke, Paulson and President Bush was a reluctance to scare the hell out of people. A leader shows gravitas and concern, not panic. But, perhaps, a little panic wouldn’t hurt. Because you get the sense that Main Street is so busy being angry, that it isn’t sufficiently frightened. The public still doesn’t connect their lives to the crisis. But it should.
Because no bailout bill means that:
By the close of the stock market on Monday, the value of Main Street’s IRAs, 401Ks and pension plans will be worth a lot less than on Friday. How much? Hard to say, but a loss of 20% isn’t crazy.
By week’s end, there is a good chance that a raft of large banks will be taken over by federal regulators.
Within two weeks, as the banks hoard cash, the credit lines on most of Main Street’s credit cards will be reduced, foreclosure proceedings accelerated and car-leasing programs suspended.
Within a month, Main Street won’t be able to buy a home, a car or a tractor unless paid for in cash. As the credit markets shutdown, the mortgage, auto and small-business loan markets will nearly disappear. And the economy will grind to a near halt.
Far fetched? Not at all. It is the absence of credit–not too much of it–that causes great economic depressions.
The credit markets even today are essentially frozen, waiting for a resolution of the bill.
I am not holding my breath waiting for Main Street to come around and support the bill. And I certainly don’t expect Congress and the two presidential candidates to quickly put away their swords.
No, that would be the right thing to do. They will take the nation to the brink this weekend. And then–and only then–will they do the right thing.
This shouldn’t just make you cynical. This should make you question everything about the kind of government we have.”
http://www.nyse.com/attachment/liveflashbell.htm
For those interested in watching a bell ring.
here is an interesting question: will NYC become a sh*thole again?
WaMu/FDIC: did someone post this?
http://www.bloomberg.com/apps/news?pid=20601103&sid=ahGfuxAYf7hA&refer=us
This is all very much like the ‘Sea of Monsters’in the 1968 Beatles film ‘Yellow Submarine’. Psychedelic dinosaurs wander a white landscape peppered with black holes. Big monsters eat little ones. Then comes the vacuum-cleaner monster steadily hoovering up all others until there are none left. It then hoovers up the entire backdrop. Perplexed it looks around for something else to swallow and sees the end of its own tail. Whoosh – it’s all gone. Nothing left.
skep-tic Says:
September 26th, 2008 at 3:53 pm
here is an interesting question: will NYC become a sh*thole again?
skep: I think the answer there is a qualified “no”. Bloomberg alluded to mistakes made in the 1970′s/1980′s that wouldn’t be repeated.
I think one mistake was along the lines of petty crime and general lawlessness. Strained budgets have a way of blowing up these plans though. I think another issue is also about understanding that at some point the tax base needs to be appeased, and if pushed too hard, they will vote with their feet.
Skeptic,
here is an interesting question: will NYC become a sh*thole again?
Not mach of a question. The answer is yes. NYC tax revenue is rapidly evaporating while obligations increase. a more apt question may be how far does it fall?
Ket,
The other question is whether it falls far enough to persuade folks that they should move across the river.
I had 30 minutes to kill yesterday, so I walked from Carnegie Hill to the 125th Street Metro-North station. As a passed, Duke Ellington Square or Tito Puente Circle (whatever it’s called), I saw a well dressed blue-blood looking guy walking out of a project. I’m guessing he scored some smack. Not that it is Buckingham Palaca up there now, but when I was in High School, there is no way I would walk anywhere north of 96th Street except around Mt. Sinai or in the park.
[351]
“By the close of the stock market on Monday, the value of Main Street’s IRAs, 401Ks and pension plans will be worth a lot less than on Friday. How much? Hard to say, but a loss of 20% isn’t crazy.”
Too bad. Markets go up, markets go down. All investments are attached to the hip with inherent risk. How about be duplicate the markets in the mid 60′s. Wake up, if you are you are not risk tolerant, move to t bills. We survived a 90% loss, peak to trough, in the Nasdaq, just a few years back. We’ll survive another hit.
“Within a month, Main Street won’t be able to buy a home, a car or a tractor unless paid for in cash.”
Nothing will change, on Main Street, with a $700B smoke screen. Like a bucket of water in the ocean. However, Main’s Street purchasing power will decline, interest rates will rise and real incomes will be hit harder.
“The credit markets even today are essentially frozen”
Let the banks go to the market, raise cash, dilute shareholder value and cut/eliminate dividends.
“By week’s end, there is a good chance that a raft of large banks will be taken over by federal regulators.”
Why wait until the end of the week? Do it yesterday.
shotgun wachovia marriage with Citi this weekend.
#356
CF– I saw bloomberg on meet the press last week where he said NYC won’t cut back on basic services (read: policing) the way it did in the 70s. As you say, this is a great idea, but the question is how to pay for it if revenues drop massively as they look like they will.
Is it too late to propose a government guarantee of all mortgage debt?
I want to make a comment about a stock in which I have no position, do not intend to have a position, nor do I have any view.
I have rarely witnessed an established stock for a decent sized company with a real business that is not under duress (e.g., financials) get such a one day demolition.
RIMM…..blam!
NYC future?
In NYC the marginal/gentrifying areas will inevitably become sh!tholes again. The nice areas will probably slip a little, but with all the new families that have moved in I don’t think many will uproot themselves unless they have suffered a fairly devastating loss. That being said, there are many suffering devastating losses. Let’s see how things fall out over the next few years.
Oh, wait, I think we’re already halfway there.
year to date, NYC murders are up 9.5% over last year (see PDF below). long way back to early 90s, but still interesting
http://www.nyc.gov/html/nypd/downloads/pdf/crime_statistics/cscity.pdf
I have to state this is for Intel based systems only (mainly laptops) and you would be well advised to IMAGE your disk BEFORE YOU TRY THIS just in case something happens and you cannot load your Vista (IMAGE, IMAGE, IMAGE!!!)
Once you have your disk images precede with the following:
Backup your registry or make a restore point just in case.
Under search: regedit
Navigate to: HKEY_LOCAL_MACHINE\System\CurrentControlSet\Servic es\
Locate: folder “iaStor”
Under “iaStor” you will find a folder named “Parameter” > delete this folder
Locate: folder “iaStorv”
Under “iaStorv” you will find a folder named “Parameter” > delete this folder
Reload Vista
Cheers,
Carl
In the early 90′s the best parts of NYC, prime uptown areas, took a 20-40% price hit, peak to trough.
Citi in talks to take over Wachovia – Bloomberg
so what are the current marginal areas in NYC? will this be the end of the recent upsurge of families with young children in the city?
I just recieved a credit card offer from Wamu, I wrote no thanks and put it in the prepaid envelope they sent me, so now they have to pay the postage, Hah! that’ll teach em.
KL
#332 gary: We still love you, we just wanna hit you;than you can buy us drinks.
Hey, who is going to buy me my beer?
I called the fall of WaMu for at least a year now.
Don’t you be trying to steal my thunder Clot!
:)
SAS
and Citibank is still going down too.
give it some time son…give it some time..
SAS
[374]
SAS, that was it. I forgot your props. Yes, you were putting WAMU in the dead pool for some time.
Props to you sir.
but, you also have to take SAS with the bad.
I just checked on an Etrade account that I forgot I had, and haven’t looked at it for sometime.
yikes, nothing like a few grand being sucked out of you due to forgetfullness.
Sheeeet
SAS
[370]
“Citi in talks to take over Wachovia”
Great, at least all my worthless stock will be consolidated in one place.
OK sas, now I gotta go move my downpayment out of Citi after your Wamu call…
GTG at the offical SAS bunker?????
The cuts are to be made across the board, affecting agencies including the Police Department, which must cut costs by $95 million this year
http://www.nytimes.com/2008/09/24/nyregion/24bloomberg.html?em
[338] tosh
I thought that was “no pooftahs”?
sas (374)-
As I recall, I was way out in front on that call. At least 12 months…probably more like 18.
Lost my pants with my position in Wamu. Put 3K in the stock last week. It was really a coin toss, no guts no glory kind of situation. I got rammed in the back today. I could have used that 3K and go to vegas. What a freakin’ waste,. Feeling miserable. I am never pitting my my money in the stock market, never again.
putting
“GTG at the offical SAS bunker?”
which one?
I got 9 lives and can be at 2 spots at the same time.
SAS
chi (364)-
They have been beaten by AAPL.
Clot,
ok bloke… we will have to share the crown.
SAS
Zack,
I hope you mean that a little more than all the “I am never drinking again”s I have heard.
C going down. Toast.
Money center banks will fail. Not all, but 1-2.
Zack,
I highly recommend investing in hookers and blow. Your still gambling but you get to give the screwing as opposed to receiving it, unless thats your think of course…..
“Citi in talks to take over Wachovia”
Washitty.
Courtesy of Dealbreaker.
Any Friday night failures? Or was the FDIC too busy with WaMu to bother?
About Citi…
I know some people who sit high at Citi.
Last word I got was last spring, this person, told me “they have no idea how much money they are losing” & “they are worried” & “it going to get bad”
when people who sit at those nice long tables. in nice conference rooms, say these types of things, it ain’t good.
you be the judge, just passing along what I know, and when I got it.
and no, I won’t tell you who “they” are..
SAS
Why are the stupid builders rallying on speculation about the bailout? This bailout just helps the banks with their L3 assets.
How does this bailout make Joe SixPack want to buy more houses?
Clot – any light to be shed on this?
121,000 job cuts. this is looking to be worse than late 80′s/early 90′s Wall St retrenchment. I wouldn’t be surprised if the number hits 200k, once you factor in hedge funds, Wamu, Wachovia.
http://www.bloomberg.com/apps/news?pid=20601110&sid=apSGgutpX6f4
there are alot of nice apts for sale all over the place on Wall St.
When the time is ripe, just for yucks, I may pick one up just so I can wake up and goto my window and piss on the head of some bloke in a suit thinking he is Kenneth Cole.
he he… ye
SAS
Is Chase (Manhattan) still a bank? How could they be, I haven’t heard a good OR bad thing about them.
(I just went to their website, it says “Welcome, WAMU customers”)
“US Mint suspends sale of 24-karat gold coins”
http://tinyurl.com/3tnvvk
“When the time is ripe, just for yucks, I may pick one up just so I can wake up and goto my window and piss on the head of some bloke in a suit thinking he is Kenneth Cole.”
SAS,
When the time is ripe, you’ll only be able to piss on tourists.
“When the time is ripe, you’ll only be able to piss on tourists.”
the german ones will like it
From the BP;
Boomer time;
http://bigpicture.typepad.com/photos/uncategorized/2008/09/26/baby_boomer_panic.png
“the german ones will like it”
skep,
Actually, it’s mainly tourists now. Been there lately?
297, Clot: i think i’m disappointed in your friends. either what they want to do should take much longer, or much less long. cough. cough. cough.
“STIGLITZ CALLS BUSH BAILOUT PLAN”
http://tinyurl.com/4ox76x
think I might goto a comedy club tonight..alot of bad news lately.
SAS
SAN FRANCISCO (MarketWatch) — American International Group Inc. (AIG:American) said late Friday the New York Stock Exchange granted it an exemption to issue preferred shares to the U.S. Treasury without shareholder approval. “The Audit Committee of the Board of Directors of AIG has determined that delay necessary in securing shareholder approval prior to the issuance of the Preferred Stock would seriously jeopardize the financial viability of AIG,” the company said in a statement.
#396 Where is pret!!
#403
“Been there lately?”
BC–Not for several months. But the Euros are swarming midtown as well
Chris Dodd & company have inserted an item into the bailout plan to require 20% of the money paid back be put into ACORN. ACORN, the Association of Community Organizations for Reform Now, is the nation’s largest community organization of low and moderate income families. Obama was their lawyer for 7 years. They sponsored the creation of 0 down mortgages. Is Chris Dodd on Drugs?
Chris Dodd is a closet Armeggedonist.
“Some economic historians say a “contagion” effect, where depositors in one bank reacted to neighboring banks’ failures by pulling money, started the great run of the 1930s. To be sure, the Federal Deposit Insurance Corp. makes today’s situation completely different, but that didn’t stop WaMu depositors whipping out $16.7 billion in 10 days.”
WSJ Marketbeat Blog
#375 – so what are the current marginal areas in NYC? will this be the end of the recent upsurge of families with young children in the city?
Marginal in terms of price support? FiDi! LES/Bowery, parts of Chelsea, and Chinatown.
I saw bloomberg on meet the press last week where he said NYC won’t cut back on basic services (read: policing) the way it did in the 70s.
I saw parts of that as well. I think they’ll try not to cut back too far but won’t have a choice. The tax base will take a huge hit and won’t be replaced any time soon. Remember the IBs are now gone, if the securities everyone has been selling are worthless then the revenues everyone had for the past few years were illusory. Not a pretty picture. This was a golden age in Manhattan for some.
I don’t know if I’m the only one but I’ve been seeing a lot more homeless people around the city since the beginning of summer. It’s been very noticable.
This could come in handy at either Armageddon or at your next tailgate.
http://www.carguygarage.com/elporico.html
Cramer says that if bailout doesn’t occur Dow goes to 8368. It’s a very precise forecast I see.
Anyone think the silent bank run is being caused by the short selling ban in the financials?
scenes from a bank:
Me: Need to make a withdrawal.
Her: (that look – ‘another one?’)
Me: Have a lot of people been coming in?
Her: Yes. Tons.
Me: Panic set in yet?
Her: Oh yeah.
She said there were too many people who took out $5k and above today to count.
Where’s Booya Bob?
World’s Largest Chevy Dealer Closes; May Be First of Many
Posted: Sep. 26, 2008 10:09 a.m.
“Mr. Big Volume” has gone silent. The Detroit News reports that the world’s largest Chevrolet dealership is closing its doors, “unable to survive in a weak economy with high gas prices and an inventory heavy on trucks and SUVs.” Bill Heard Chevrolet will close its last 13 branches, which stretch across the South from Alabama to Texas, laying off 2,700 employees in the process. The closure is expected to be one of many we’ll see in coming years.
http://usnews.rankingsandreviews.com/cars-trucks/daily-news/080926-World-s-Largest-Chevy-Dealer-Closes-May-Be-First-of-Many-/
holy crow!
these guys on Phil Donahue were right all along, and watch the stupid sheep like reaction from idiot Donahue and morons in the crowd. wow!
Phil Donahue Show regarding the Militia 1994 Part 1
http://tinyurl.com/48y2dd
Phil Donahue Show regarding the Militia 1994 Part 2
http://tinyurl.com/48y2dd
Phil Donahue Show regarding the Militia 1994 Part 3
http://tinyurl.com/48y2dd
“Phil Donahue Show regarding the Militia 1994 Part 4″
http://tinyurl.com/48y2dd
wow, looks like the militia guys were right all along.
someone should interview these guys today, and shame Phil Donahue.
SAS
“Silver Supports Reinstating NYC Commuter Tax”
http://tinyurl.com/4pm2os
So I’m in Philly and I work in North Wales-Lansdale which is north of the city. I can not believe the amount of businesses that have been around for years that are going out of business. Car dealerships, furniture stores, gas stations, and restaurants all seem to be taking a massive hit.
There are a ton of empty stores everywhere.
September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.
”Fannie Mae has expanded home ownership for millions of families in the 1990′s by reducing down payment requirements,” said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. ”Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980′s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
Under Fannie Mae’s pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 — a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation’s biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990′s. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University’s Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
To Wendy (289):
There is no cap on property tax increases in New Jersey.
Vic (399)-
Believe me, 3/4 of the HBs have been insolvent for over a year. They are all in a conspiracy of silence with their bank lenders about the values of their current projects and the underlying loan quality of the financing. It’s a though the bankers have a gun pointed at the builders’ heads and vice versa. If anybody admits to deteriorating conditions, they’ve literally jumped off the cliff together.
The insurance companies are another story. They play much rougher, and a couple of mid-sized builders have been forced into BK by insurers who have lent money for land and projects.
Pension funds are also big funders of HBs, both through stock purchase and direct investment. I’d guess a good deal of the pension money that’s gone the HBs’ way is now gone forever, except the pension funds don’t know it yet…since the banks and HBs are keeping their little pact of silence.
Give it time. As Mike Morgan often says, it will all degenerate to nothing. The whole ball of string will eventually unravel.
alia (408)-
I’ve been waiting all day for your riposte. :)
sas (410)-
Just don’t go all Vietnam once you’re there.
Large discounts hit home sellers
A moribund market has meant falling sales and lower prices
Home sellers are being forced to accept offers on average 9% below their asking price, said the Royal Institution of Chartered Surveyors (Rics).
The gap between asking and selling price is widening as the property market downturn worsens, Rics added.
Property prices have fallen by 11% in the past year, according to major lenders, while sales have fallen by more than half.
The available evidence suggests that prices and sales will fall further.
“With housing transactions currently at a 30-year low, many vendors are being forced to lower their asking prices to achieve a sale in an ever shrinking market or they are being forced to rent their property until the market picks up,” said Simon Rubinsohn, RICS chief economist.
“The gap between asking prices and selling prices could widen in the coming months as the downturn in the economy becomes more visible, he added.
Big gaps
The smallest gap between asking and selling price was in Scotland where house prices are still rising.
But in the North of England, the discount between asking and selling price was the largest, at 12.5%.
Those vendors in Wales, the West Midlands and East Midlands, and the North West were accepting offers, on average, 10% below their asking price.
And the gap was smaller in London, at just 8.5%.
Rics said this was because London’s economy was more diverse, with a large jobs market, giving sellers “more room for optimism” about the price they could hope to achieve when selling a house or flat.
However Mr Rubinsohn warned this could change.
“The London market could be adversely affected as employment in the financial sector drops off,” he said.
BC (411)-
What’d I say? The 85 bn would be gone this week?
They’re tapped out.
430 – Clot.
Here are Bob Toll’s transactions.
11-Sep-08 TOLL ROBERT I
Officer 216,800 Direct Automatic Sale at $25.18 per share. $5,459,024
9-Sep-08 TOLL ROBERT I
Officer 500,000 Direct Automatic Sale at $25.67 – $26.19 per share. $12,965,0002
8-Sep-08 TOLL ROBERT I
Officer 500,000 Direct Automatic Sale at $26.02 – $26.72 per share. $13,185,000
Certainly, a huge vote of confidence. Why cant the institutional dopes see this?
is the fed going to shoot another hostage this weekend to get the bailout passed?
Vic (435)-
Because those institutions are holding billions of HB stock and have even more tied up in direct investments.
And, don’t get me started on the billions they have tied up in MBS, that are now already close to worthless and levered against a rapidly-depreciating asset class. Once you put a sell call on the HBs, you’ve pulled the rug out from under your own marked-to-blackbox trash.
Where you sit is where you stand..
wachovia and standandar
Morgan, positioning his clients for Monday. Looks like Fidelity has slapped on a 30% trading cap during aftermarket hours:
Fidelity v. Ameritrade
I am advising all clients to transfer their accounts out of Fidelity to Ameritrade, immediately.
If you trade with Fidelity, you need to know that you are restricted to a 30% cap when entering a trade when the markets are closed. What this means is, if a position closed at 100, and we think the market is going to move big and lock us out of electronic trading like it did in 1987, we can only enter a trade electronically for up to 130 or 70, depending upon whether we are long or short. With most positions, that would not matter, but with double short ETFs or extreme positions, that will be a big problem if we are locked out of trading during the trading day.
Therefore, we are recommending that all clients transfer their accounts to Ameritrade immediately. If you have more than $500,000 in an account, you may want to consider two accounts or using two brokers.
I did speak with the Fidelity people, and they advised me there was no way around that policy.
We have a direct contact for our clients at Ameritrade who will assist you with the transfer. He is first class, and you can talk to him like he is family.
kettle1 Says:
September 26th, 2008 at 3:35 pm
Maybe i missed something, but where did all of WAMU’s money go? They have about 500 billion in combined asset and deposit value. JPM only paid 1.9 billion for 188 billion in deposits!!! I must be missing something here as it seems a lot of assets just disappeared……
Deposits are liabilities for a bank, so presumably 312 billion of sr. debt, sub, pref, and shareholder equity went poof.
SAN FRANCISCO (MarketWatch) — Banco Santander SA , Wells Fargo & Co. and a handful of other suitors are in early talks with Wachovia Corp. to buy the bank, The Wall Street Journal reported late Friday on its Web page, citing a person familiar with the situation. Earlier, The New York Times reported that Citigroup Inc. was in early talks to buy the troubled bank.
Stu…Reagarding post #330, A very good list altho I must take exception with #11…while capes will always be the gold standard for a true POS, let us not forget the split and the grandaddy of all bad houses, the bilevel. POS’s all.
as usual, you will feel the sky is falling when you read this blog. but SKF/SRS really sucks.
Clot,
“Tom (301)-
What property?”
See 225
bi: Just wait. REITs are a flight to safety for their dividends. Once the dividends get cut when the rent checks stop coming in…lookout! If you do not understand how CRE works I advise you to stay far away!
rhymingrealtor,
What info? I posted a lot of crap on here today.
Can you email me and tell me what problem you had posting to the site please?
email is info at my domain
“you will feel the sky is falling when you read this blog”
thats because…it is,
and the mainstream media & those 2 puppets (Omama & McStain) are blowing smoke up your skirt telling you its ok, now watch football, goto WalMart, and feel good that your govt loves.
SAS
I’m watching the comedy club right now:
the presidental debates. Two fkn losers.
You will hear them not address the devaluation of the dollar, and the hijacking of your finances by the private federal reserve.
SAS
“There is no cap on property tax increases in New Jersey.”
Didn’t they just sign in a new 4% cap on property taxes? There were alos a lot of cuts in the budget for property tax relief.
Victorian,
If the SEC can put a ban on short sales to keep stocks up, they should also ban insider sales on the same companies in my opinion.
431, clot
oh dear. you gotta warn me in advance when i’m supposed to have a rapier wit.
Obama said “orgy”
Tom (444)-
I don’t have access to NJMLS, but based on the info in that link in #225, it looks like you might be able to cash flow it positive, with the assumptions you provided and a rent of $2,500 or better. I certainly like its potential cash-on-cash return.
Negatives? I hear Lodi is not exactly posh…and an $8,500 tax bill on a property that could be taken down for a little over $200,000 is troubling.
alia (451)-
No pressure. I liked your answer, actually.
In my sick world, rapier wit is required every second, every day, even while sleeping.
VPILF is having to be coached- hourly- so that she can step out again in a week or two and deliver less that 45 minutes of rapier wit…only to be sequestered again until election day.
And VPILF only has to deliver her rapier wit against a debate opponent who has the IQ of a doorknob.
stu (445)-
Let bi burn. In the environment we’re entering on Monday, he won’t make it through a week before he’s margined out.
REITs are just like every other stinking part of the RE/finance complex. If an investor wants to take on a proven performer like Mort Zuckerman (BXP), that investor does so at his own risk. Zuckerman will make it through whatever crisis comes along…and come out the other end smarter, stronger and bigger. On the other hand, the average REIT has a heavily-cooked book that hides vacancy, mismanagement, insane projections and unsustainable dividends.
Stu (445)-
And, CRE is a stinking POS.
“as usual, you will feel the sky is falling when you read this blog.”
bi,
Is falling? Thankfully, Noah’s meteorologist didn’t forecast a slight drizzle.
I am proud to watch the two clowns on TV tonight, knowing that I wouldn’t support either damn one of them…even at gunpoint.
Schmucks, both of them.
Ohdrama NOBAMA
s/l
Drag’ em Off The Interstate, Sock It To ‘Em J.P. Blues
Santander? Wachovia?
Maybe Santander wants to learn new ways of losing money even faster on mortgage lending to deadbeats, against properties with no intrinsic value.
They’ve jumped in and picked up two dying UK mortgage outfits this year. Wachovia may prove to be the rat they can’t swallow.
“Negatives? I hear Lodi is not exactly posh”
Clot,
Certainly not Posh Spice. The only reason to step foot in the town is NJDMV and Satin Dolls. Come to think of it, town officials would be wise to try to have the short sale ban extended to include this pos town.
Do the Satin Dolls girls work at DMV?
“Hugh Hefner to sack Playboy bunnies amid financial crisis”
http://www.telegraph.co.uk/news/newstopics/howaboutthat/3077911/Hugh-Hefner-to-sack-Playboy-bunnies-amid-financial-crisis.html
Re: REITS
Don’t disagree with anyone’s assessment of the outlook on CRE but if – if – one wants to play the REITs in this environment look at the healthcare ones.
Facilities are usually nursing homes, ambulatory surgery centers, etc. Most of their underlying rents come from insured procedures or Medicare. Plus they’re specialized facilities, meaning the ‘tenants’ can’t really just up and leave to hop across the street for a lower rent (costs alot to move those 2 ton MRI units).
Just a thought. All disclaimers apply.
“Do the Satin Dolls girls work at DMV?”
Clot,
The first bomb is reserved for Trenton, the 2nd for DMV, Lodi. Another thought, the foreclosure bus tour, of NNJ, can arrange for a stop at Satin Dolls.
“Lodi”
I opened my mouth one night too much in the ballroom, got jumped, beaten, & dragged off to Lodi and almost left for dead back in the late 70s.
SAS
sas (467)-
Talk about stuck in Lodi again…
BC (466)-
I will MC that bus tour…even though I know nothing about Bergen RE and still get lost even looking for the Meadowlands.
Is anybody in Upper Saddle River or Alpine getting foreclosed yet?
Flexible spending at Wamu;
http://www.youtube.com/watch?v=laot_Eomr3s&eurl=http://www.wallstreetfighter.com/2008/09/8-WaMu-commercials-that-seem-funny-now.html
back then,
Lodi was the NNJ mafia’s local dumping ground. I learned that well when 3 blokes in suits and Grease hair approaced me and I drunk as a skunk.
SAS
“I opened my mouth one night too much in the ballroom, got jumped, beaten, & dragged off to Lodi and almost left for dead back in the late 70s.”
SAS,
The dead,not yet accounted for, outnumber the living by 1.5-1, in Lodi.
http://www.youtube.com/watch?v=laot_Eomr3s&eurl=http://www.wallstreetfighter.com/2008/09/8-WaMu-commercials-that-seem-funny-now.html
JB,
470 in mod. Can you move it up.
Did anybody notice that we had no $700b bailout passed and we’re all still breathing?
Yeah, some company’s payroll might be delayed. Some bounced checks.
I’m not feeling the crisis vibe here. I’m just not feeling it. How do I get the sense of urgency back?
what were we doing in Lodi or that area?…I have no idea.
I think a call girl was putting us on a goose chase…oh hell, I forget.
SAS
“I’m not feeling the crisis vibe here. I’m just not feeling it. How do I get the sense of urgency back?”
don’t worry, when bread cost $7/load and gas $10/gallon, that feeling will come back real quick.
:)
SAS
Should I blog more about politix?
SAS, that’s not gonna bother me. I’m another one that’s been in hell before. I’ve waded in floating bodies. Lost almost everything in dot.com.
OMG. Met’s lose, we flick to Cramer. Cramer’s talking about the hidden bank runs going on right now. The dow is headed to 8,373 absent the bailout.
Pat (477)-
You lose all the poignant drama of the bank queue when everybody can move money out of banks via the intertubes.
I’d guess a lot of loot is moving out of Wachovia right about now.
Didn’t Cramer say the bottom was in three weeks ago? Why does anybody listen to that loudmouth jack@ss?
Yeah, I wanted to see the queues, too. Do miss brick and mortar.
Clot,
I just picked the first one, I didn’t go through the list to pick out one I thought would be the best deal. Did it that way so that I’m not giving anyone advice but to analyze one picked just based on convenience.
There might be opportunities but you’re right on there being risk. A lot depends on where the market is going. It may be cash flow possitive now but who knows what happens later.
The only point I’m trying to make is that I think they’re worth a look. What concerns me is the discounts banks are willing to give. Makes me wonder if they know something we don’t.
I posted on a story concerning an investment firm trying to get into the rental market through foreclosures and it’s not going great for them. But they did say they’re competing with mom and pop investors who have it easier and cheaper.
Not saying people should run out to do it.
$64 million of that $300 billion dollars allocated under Congresses homeowner assistance legislation has been allocated to help NJ deal with foreclosures and abandoned property.
“How to Identify a Bank Likely to Fail”
http://tinyurl.com/3hp97c
O.K. Cutest thing I’ve heard today.
David Letterman reports some positive news that one of the Lehman Brothers has been adopted by Angelia Jolie.
If a bank goes under, what happens to the saftey deposit boxes?
Regarding property tax caps, here’s a link
http://www.politickernj.com/governors-press-office/23478/homeowner-property-tax-relief-its-way
http://sunfell.wordpress.com/2008/09/11/time-to-choose-citizen-or-serf/
Tom (481)-
“What concerns me is the discounts banks are willing to give. Makes me wonder if they know something we don’t.”
It is the rare bank that has a clue. The smart bank is the one that takes today’s market price and undercuts it by at least 10%, if not 25-30%. Most banks take forever to rehab their REO and prep it for sale; then they turn it over to agents who don’t even bother to photograph the dumps with their cell phones.
Any cubicle jockey- given a 10th grade education and a copy of the bank’s balance sheet- can parlor game the outcome of this whole mess.
d2b (485)-
What’s in it?
Theoretically, that is.
Clot,
What I meant by that was that the banks have done a big 180 at auction.
They have lost confidence but now want the taxpayers to take on enourmous debt to increase consumer and investor confidence.
So I wonder if they want to increase consumer confidence in the short therm to get some cash and bad debt off their books, sell off their reo’s and brace for impact.
I think there was a clear winner of the debate and it was….
Jim Lehrer.
I liked that he let discussions continue I wish they could extend the time limit.
I am against time tables for withdrawl from debates.
Mc-C’s lack of debate prep really showed in that first half an hour. How anyone who is not a ploicy wonk or who follows politics closely could make heads or tails out of much he was saying is beyond me.
I trust that he knows the answers but, he better learn to convey clearly that he does.
http://online.wsj.com/article/SB122243266787878709.html
“The face-off reflected years of tension between the Bush White House and House Republicans, and exposed the ideological differences within the Republican party and the role of government in free markets.”
These fiscal conservatives are just trying to be heard after years of having no leadership. All of the ills of the economy have been laid at the Republican’s feet as though no Democrat contributed to the demise of Freddie and Fannie. I imagine it also sticks in their craw that one the lead negotiators in the bailout plan is none other than Barney Frank.
At least the process slowed and John Q is finally hearing a few details reguarding the country’s financial problems on the nightly news.
Shore,
What I don’t understand is why he was so unprepared? The financial crisis shouldn’t have taken any more time away from him than it did O. Neither one of them serves on relevant committees.
I’m not sure he knows the answers. I think he knows what he knows and relies on others to fill him in on the rest, but it’s not so much that he learns from others but memorizes. At least that’s the perception I have been getting from watching his campaign. It seems like a lot of times he had to say he’d get back to reporters. That’s fine but it just seemed like a lot and by now he should know.
When it comes to the military or foreign affairs he knows a lot and has done a lot for a long time. When it comes to other issues he was off the mark. He’s been talking about earmarks for so long, you would think he would not make such a big gaff as to clame they have trippled in the past 5 years when they are actually down like 24% vs 3 years ago.
M was talking as if he was talking to his base, not to a mixed crowd. Maybe I’m reading into it but it seemed like he was confused when he said some of his buzz phrases and didn’t receive roaring applause.
I don’t think he did as well on the current economic issues. For that he should have been prepared since he suspended his campaign for 72 hours to address that. Maybe O is just a quicker study and that might be important with the fast pace at which things move these days.
Like I said I liked the format, might have been better seated at a table facing each other. Then the post debate show can be a game of heads-up NL Hold’em.
McCon looked like a tired old doofus.
anyone notice who B.O. (not body odor) kept calling McCon the wrong first name?
#494 Tom,
And they could thumb wrestle for a tie breaker.
(493)..one OF THE lead negotiators..
http://www.businessandmedia.org/printer/2008/20080924145932.aspx
bairen, I missed that what did he call him?
#498 Tom
I heard him say Tom at least once. He also called him Jim a few times. At first I thought O was talking to Lehrer, but when I heard it again I realized he was talking about McCon.
New game…
With all the turmoil in the market today and for any of you who have money left, be aware of the next expected mergers and get in on the ground floor so you too can make the big bucks.
1. Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W.R. Grace Co. will merge and become: Hale, Mary, Fuller, Grace
2. Polygram Records, Warner Bros., and Zesta Crackers join forces and become: Poly, Warner Crackers
3. 3M merges with Goodyear and becomes MMMGood
4. Zippo Manufacturing, Audi Motors, Dofasco, and Dakota Mining will merge and become: ZipAudiDoDa
5. FedEx is expected to join forces with its competitor UPS and become FedUP
500 Cindy
That was cute. Unfortunately, Polygram ceased to exist years ago. I think it sold out to Seagrams.
OK guys, what do you think? Wachovia is offering a 12 month CD for 4.25% Do I roll the dice and count on the FDIC?
Cindy (497)-
Barney Frank is another one of the crooks who would be a waste of a bullet.
I’d say turn a pack of dogs on him, too…but the dogs might not want to get near him.
stater (502)-
Take the money to AC. At least if you lose it, you’ll have some fun.
If Wachovia spits the bit and no other bank is there to scoop them up, they will tap out the FDIC.
I wonder how well Sheila Bair is sleeping these nights.
Santander…BWAHAHAHAHAHAHA!!!
Maybe Santander wants in, so they can jump on the too big to fail/bailout gravy train.
For all those eager to beat up the current Administration at every turn: h++p://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
I am not exactly a supporter, but fair is fair.
# sas Says:
September 26th, 2008 at 11:01 pm
“I’m not feeling