From Bloomberg:
Bernanke May Cut Benchmark Rate by Most Since Volcker
Federal Reserve Chairman Ben S. Bernanke may be readying the deepest interest-rate cut in a generation as the central bank struggles to prevent a meltdown in financial markets and a recession.
Traders predict the Federal Open Market Committee, meeting today in Washington, will lower the overnight lending rate by a full percentage point or more, based on futures prices in Chicago. That would be the biggest reduction since 1984, when Paul Volcker led the central bank, and would bring the benchmark rate down to 2 percent.
The Fed took emergency steps over the weekend to stave off a financial panic, lowering its rate on direct loans to banks and becoming lender of last resort for Wall Street’s biggest dealers in government bonds.
“The Fed has moved very aggressively to deal with liquidity problems that are major,” said former Fed Governor Lyle Gramley, now a senior adviser at Stanford Group Co. in Washington, who said today’s reduction may be as much as a full percentage point. “They need to be aggressive on the monetary policy side. This is the worst crisis we have faced in more than 50 years.”
The severity of the crisis was underscored by the Fed’s emergency action on the evening of March 16, the first weekend policy shift since 1979. A week ago, the debate among economists was whether the Fed would cut by 50 basis points or 75 basis points.
…
Now, a reduction of 1 percentage point is seen as a sure bet among futures traders and some anticipate a move of as much as 1.25 percentage points. Either would be the deepest since Volcker’s Fed lowered the federal funds rate to 10 percent from 11.75 percent in October 1984.
…
Recent economic data suggests the first recession since 2001 may have begun in December or January. Harvard University economist Martin Feldstein, a member of the committee that officially declares when a recession has started, said last week that he believed a recession was under way and it could be the most severe since World War II.“They are worried about the spillover effects of financial markets and what they can do to keep that from happening,” said Robert Eisenbeis, former research director at the Atlanta Fed who is now chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey.
…
“Bernanke believes the economy is in a very serious situation right now,” said Paul Kasriel, director of economic research at Northern Trust Co. in Chicago. “The Fed is worried about a very severe credit contraction that can cause an even weaker economy.”
U.S. Mulls Next Steps in Crisis
Further Bailouts, Stimulus Likely; Markets Still Edgy
By BOB DAVIS, GREG IP and DAMIAN PALETTA
March 18, 2008; Page A1
As jittery investors digested Washington’s dramatic steps Sunday to broker a bailout of Bear Stearns Cos. and offer emergency credit to Wall Street firms, the possible outlines of a broader response to the U.S. financial crisis began taking shape.
The result is likely to be a heavier hand of government in the form of corporate bailouts, fiscal incentives and regulation.
…
Today, the Federal Reserve is expected to further cut the federal-funds rate, charged on overnight loans between banks, by between a half percentage point and a full point. The Fed hopes that cheaper credit will stimulate business activity and aid strapped financial institutions. But it may not cut as much as some on Wall Street expect, given continued inflation concerns.
Much of the emergency action taken so far, including Sunday’s decision to extend central-bank loans to Wall Street brokerage firms, has been driven by the Fed. That possibly insulates Congress and the White House from steps that eventually could be costly to taxpayers, although at present the Fed considers that unlikely.
The Bush administration is mulling additional fixes to America’s wounded housing-finance sector, where the crisis erupted last summer. One step the White House is actively considering involves reducing constraints on Fannie Mae and Freddie Mac, government-chartered companies that play a huge role in financing mortgages. The two companies have been operating under elevated capital requirements for the past few years because they were caught up in accounting scandals. Under the plan, those requirements would be eased so the companies would have more money to buy mortgages from banks desperate for liquidity.
Another proposed Bush administration regulatory change involves the Federal Housing Administration. The FHA, which insures mortgages, is developing a plan to allow more distressed homeowners to qualify for government-backed loans. That’s important because many borrowers are having a hard time refinancing amid lender worry about potential losses. Government insurance may give lenders more confidence to refinance financially troubled borrowers.
From Bloomberg:
U.S. Housing Starts Probably Fell to 17-Year Low in February
Builders in the U.S. broke ground on the fewest houses in 17 years last month as the real estate recession showed no sign of abating, economists said ahead of a government report today.
Residential starts fell 1.7 percent to an annual rate of 995,000, according to the median of 64 economists surveyed by Bloomberg News. Permits, a gauge of future building, probably fell to a 1.02 million pace from 1.061 million in January.
The Federal Reserve, which is forecast to cut its benchmark interest rate by a full percentage point today, is struggling to stem a meltdown in financial markets that is damaging the economy. Stabilization in housing may be difficult to engineer as property values fall, while lenders tighten borrowing rules and keep mortgage rates elevated.
“Housing will continue to have a drag on growth,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “There is more adjustment to come in the level of housing starts that will contribute to paring inventory.”
The Commerce Department is scheduled to issue the starts report at 8:30 a.m. in Washington. Estimates in the Bloomberg News survey ranged from 950,000 to 1.08 million.
From the Guardian:
U.S. households face the unthinkable: budgeting
After years of living large, U.S. households are finally learning what financial experts thought they never would: to live within their means.
Economists have long warned that the U.S. consumer was on an unsustainable spending frenzy and that savings rates were dangerously low. Now, families are being forced into financial responsibility by the housing downturn and a weakening economy.
“For many years people on Wall Street have refused to believe that American consumers could ever change their spending habits,” said David Rosenberg, North American economist at Merrill Lynch . “But it’s happening.”
“Frugality is in, extravagance is out,” he added.
Consumer spending accounts for 70 percent of the U.S. economy and, according to Rosenberg, 30 percent of that is discretionary spending — that is, buying stuff you can live without.
Hillsdale Comp Killer
6 Clayton Street, Hillsdale NJ
Purchased: 11/8/2005
Purchase Price: $630,000
MLS# 27443411
Sold: 3/17/2008
Sale Price: $415,000
REO
#4 grim: I think that house was bank owned. Also, that house was sold for $420,000 in 2003!
oh nevermind, I didnt see your REO
Lender owned..
Residential Funding Co.
From Bloomberg:
U.K. Inflation Rate Rises to Highest in Nine Months
U.K. inflation accelerated to a nine-month high in February as gas and electricity prices rose, limiting the Bank of England’s scope to cut interest rates.
Consumer prices climbed 2.5 percent from a year earlier, compared with 2.2 percent in January, the Office for National Statistics said today in London. The result matched the median prediction of 31 economists in a Bloomberg News survey. Prices rose 0.7 percent on the month, the most since May 2001.
Inflation has now exceeded the 2 percent target for five months. Bank of England Governor Mervyn King said last month that consumer price-gains may accelerate further, and policy makers have said they face a dilemma as they seek to lower interest rates to shore up economic growth.
“The bank’s biggest concern is a period of high, above- target inflation that feeds through to expectations,” said Nick Kounis, an economist at Fortis Bank NV in Amsterdam, who formerly worked at the U.K. Treasury. “On the other hand, they are facing a marked slowdown in growth. This is the toughest challenge since the Monetary Policy Committee’s inception.”
From the Record:
EnCap project looks like ‘fraud’
A bipartisan panel of state lawmakers called Monday for a criminal probe of the EnCap Golf project, saying evidence suggests that the failed Meadowlands venture rose and fell on fraud, conspiracy and theft by deception.
“And that’s just the beginning,” said Sen. Bob Smith, a Middlesex County Democrat who headed the special committee. “This is not walking like a duck, or quacking like a duck. This looks pretty clear to be fraud.”
From the AP:
Federal Reserve expects growth in N.J. in 2008
New Jersey’s economy likely will grow moderately through next fall.
The Federal Reserve Bank of Philadelphia said Monday it expects the economy to grow by just 1.6 percent over the nine months from February through early fall.
The regional bank noted the number of hours put in by manufacturing workers rose in January, and the number of jobs based in the state held steady.
However, January saw a slight increase in new unemployment claims and the unemployment rate jumped to 4.5 percent, up from 4.2 percent a month before. The number of new building permits fell in January, and vendors reported another drop in the volume of orders.
The Garden State’s economy grew by just 2 percent from January 2007 until this January.
From MarketWatch:
Treasury’s Paulson: Turbulence in our capital markets
Treasury’s Paulson: ‘We’re on a sharp down climb’
down climb
Is that Orwellian doublespeak?
Wouldn’t it have been easier to simply concatenate the words?
Down Climb
Downclimb
Decline
Treasury’s Paulson: ‘We’re on a sharp [decline]’
Are Fed Funds Futures really pricing a FFR of 1.5% in April?
Wow..
From the NY Times:
Rescue Tests the Credibility of the Fed
Far more than at any time before, the Federal Reserve is putting its vast resources and its reputation on the line to rescue Wall Street’s biggest institutions from their far-reaching mistakes.
Over the next few months, the central bank will lend hundreds of billions of dollars to banks and investment firms that financed a mountain of mortgages now headed toward default.
No one knows how many financial institutions will be looking for money, or how much they will seek. No one knows how much in hard-to-value securities the central bank, in return, will have to hold as collateral.
And no one knows how much the Fed could lose if the borrowers fail to repay their loans or whether hundreds of billions of dollars will ultimately have to come from taxpayers to shield the nation’s financial system from ruin.
From the Chicago Sun-Times:
Banks bailed out, homeowners sinking
By Jesse Jackson
The economy is sinking. Two million homeowners are in or headed to foreclosure. One in 10 homes is “under water,” worth less than its mortgage. Gas and food prices are soaring. Jobs are down; incomes have never recovered. The subprime mortgage collapse has turned into a global credit crisis.
So last week, to reassure “hard-working Americans,” President Bush traveled up to Manhattan to speak to the New York Economic Club, an audience of bankers and investors terrified that the bottom is falling out of the credit markets.
Bush allowed that the economy was entering into a “rough patch,” but warned against “overcorrection.” He spent most of his time talking about what he opposed doing for the economy, including any effort to compel banks to renegotiate mortgages that are in trouble. For homeowners generally, no bailout was possible; we have to let the market work.
For the bankers, however, it was a different story. Bush praised the Federal Reserve and the Treasury for their “strong action” to “promote stability in our markets.” He was hailing the $400 billion bailout the Fed has begun to help banks with their sinking subprime mortgage loans, including the dramatic overnight deal to save Bear Stearns, an investment house that was about to go belly up. Bear Stearns, it was decided, was simply too large to fail.
A bailout for the bankers who caused the problem, and nothing for the homeowners that are its victims? Homeowners didn’t create the subprime mortgage market. They didn’t create the system that rewarded brokers for making loans without any concern of whether they could be repaid or not. They didn’t profit from the predatory lending scams, the hidden clauses, accelerating interest rates, etc. Buccaneer bankers and hedge-fund operators created the Ponzi scheme — and profited from it big-time.
Both the borrowers and the lenders made the same bet — that home prices would continue to go up. Now as they crater, both are in trouble. And the administration is saying they’ll bail out the bankers but provide little beyond counseling for the homeowners. That is not right.
If I lose my job and can’t pay my mortgage who will help me?
Hope Now :))
Tuesday Outlook: Market Manipulation?
http://seekingalpha.com/article/69027-tuesday-outlook-market-manipulation
It looks like the government took Bear shareholders for a ride. It fees like Zimbabwe, I give you $2 for your farm and get lost.
“GOLDMAN SACHS POSTS LOWER REVENUE, PROFIT BUT CEO CITES ‘STRONG CUSTOMER ACTIVITY'”
Customer Activity as in bank runs?
grim (9)-
“…saying evidence suggests that the failed Meadowlands venture rose and fell on fraud, conspiracy and theft by deception.”
Who said the ’80s were dead?
rebar (20)-
Put activity and short-selling?
Oops- I forgot- Goldman advises their clients to go long and then takes the other side of the trade.
My bad.
grim (13)-
I think the correct FFR bet should be 0. Soon.
I think we can christen 2010-2020 “The Lost Decade”. Now.
Extremely interesting article regarding the Goldman/Chase deal
http://www.moneyandmarkets.com/Issues.aspx?Closer-to-a-Financial-Meltdown-1558
sorry Bear/Chase deal
Next American phenomenon: housewives in trailer parks short the USD in a universal carry trade.
Goldman Sachs Conference Call to Announce First Quarter 2008 Results
February 27, 2008
New York, February 27, 2008 – The Goldman Sachs Group, Inc. (NYSE: GS) plans to announce its first quarter 2008 financial results on Tuesday, March 18th in a release that will be issued at approximately 8:30 am (ET). The press release will also be available on the firm’s web site, http://www.gs.com.
A conference call to discuss the firm’s results, outlook and related matters, will be held at 11:00 am (ET). The call will be open to the public.
Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (U.S. domestic) and 1-706-679-5627 (international). The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of our web site, http://www.gs.com/shareholders. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on our web site or by dialing 1-800-642-1687 (U.S. domestic) or 1-706-645-9291 (international) passcode number 36386153, beginning
From MarketWatch
Lehman Brothers 1st Quarter Net Down 57% To $489M; Revenue Down 52%
Lehman Brothers Holdings Inc.’s fiscal first-quarter net income dropped 57% as results were hurt by net mark-to-market adjustments of $1.8 billion. Net income for the quarter ended Feb. 29 was $489 million, or 81 cents a share, compared with $1.15 billion, or $1.96 a share, a year earlier. The New York company said net revenue, representing total revenue less interest expense, declined 31% to $3.51 billion from $5.05 billion. On average, analysts surveyed by Thomson Financial expected earnings of 72 cents a share on revenue of $3.35 billion. Total assets under management in the quarter were $277 billion. Lehman Brothers shares were up 13% at $36 in premarket trading. Shares closed Monday down $7.51, or 19.1%, at $31.75, after trading as low as $20.25 following J.P.
From MarketWatch:
Goldman Sachs’ net income falls 53%
Goldman Sachs Group Inc. Tuesday reported fiscal first-quarter net earnings of $1.51 billion, or $3.23 a share, compared with $3.2 billion, or $6.67 a share, in the year-ago period. Total net revenue dropped to $8.33 billion from $12.73 billion, the Wall Street firm reported. Chief Executive Lloyd Blankfein in the earnings release said market conditions “are clearly very difficult.” Goldman Sachs took net losses on residential mortgages and securities of $1 billion, while credit products included a loss of roughly $1 billion related to non-investment-grade credit origination activities, and lower results from investments compared with the previous year.
0.5 core!
Our wealth is being confiscated by negativity and what I see as class warfare.
There’s boiling resentment against those who benefited from real estate and a distinct desire to see them have a comeupance. How else can you explain the gleeful cheers exhibited by some?
The only difference between now and the recent years is perception. People just don’t believe anymore. The doom and gloomers have the upper hand and are seeking to destroy the progress we’ve made in this country. While we kill ourselves internally, our enemies are laughing at us and are positioning themselves to take advantage of us.
I will fight this by continuing to believe. If enough people did this, we’ll defeat the doom and gloomers. Belief without action to support it is difficult however, which is why I support:
1) Lowering interest rates to zero if we have to(the fed looks like it will move in this direction)
2) Longer amortization periods for mortgages (i.e. 100 year mortgages)
3) Dealing with Iran as a means to remedy the terrorist threat and to shore up the dollar by controlling the oil supply. Continuing the fight in Iraq to support the same objectives.
4) Start to deal with the those who are making noises about moving away from the idea that oil must be traded in dollars. We need to stamp that notion out now and stamp it out hard. We should reserve the gunboat diplomacy option because we might have to bodyslam somebody to make an example. Russia is a problem.
From MarketWatch:
U.S. Feb. single-family housing starts fall to 17-year low
U.S. Feb. single-family starts fall 6.7% to 707,000 pace
U.S. Feb building permits fall to 16-year low
U.S. Feb. housing starts fall 0.6% to 1.065m pace
U.S. Feb. building permits fall 7.8% to 978,000 pace
U.S. Feb. housing starts better than 990,000 expected
Bottoms, bottoms everywhere!
It’s a great time to buy real estate AND equities!
From Bloomberg:
Housing Starts, Building Permits in U.S. Decreased in February
Housing starts in the U.S. dropped in February and construction permits fell to the lowest level in more than 16 years, signaling construction will continue to hurt economic growth.
Builders broke ground on 1.065 million homes at an annual rate, down 0.6 percent from a revised 1.071 million pace in January that was higher than previously reported, the Commerce Department said today in Washington. Building permits, a sign of future construction, sank 7.8 percent to a 978,000 pace, fewer than projected.
The Federal Reserve, which is forecast to cut its benchmark interest rate by a full point today, is struggling to stem a meltdown in financial markets that is damaging the economy. Stabilization in housing may de difficult to engineer as property values fall, while lenders tighten borrowing rules and keep mortgage rates elevated.
“You’re seeing a continued correction in the housing market, where there’s still a huge overhang of homes in the market for sale and very weak demand,” Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York, said before the report. “Demand will continue to stay weak and homebuilding will remain weak.”
Economists forecast starts would fall to a 995,000 pace from a previously reported 1.012 million in January, according to the median of 64 estimates in a Bloomberg News survey. Projections ranged from 950,000 to 1.08 million.
Building permits were expected to fall to a 1.02 million rate for February, from 1.061 million a month earlier.
…
The decline in starts was led by a 6.7 percent slump in construction of single-family homes. February’s 707,000 pace was the weakest since January 1991. Work on multifamily homes, such as townhouses and apartment buildings, increased 14 percent to an annual rate of 358,000 in February.
The Northeast was the only region were total starts dropped last month, falling 28 percent. The decline was led by a record 42 percent slump in construction of single-family homes.
x (24)-
Thanks. Great stuff.
I think the correct FFR bet should be 0. Soon.
Clot,
You need to think outside of the box. Who says we need to stop at zero?
We can push interest rates into negative territory and actually pay people to borrow and spend. After all, spending is what supports our economy. It only seems fair that we compensate those individuals and businesses for their service to our country.
A $350k 30 year fixed @ -1% would cost only $833 per month. This would definitely put a floor under home prices.
[/sarcasm off]
MLS#: 2499005 CO: Morris* TOWN: Mount Olive Twp.* (2327)
AD: 312 WINDING HILL DR*
AVAIL IMMED. 3% TO BUYER
Can they just not reduce the price.
In case anyone missed this little tidbit: JPM payed less for Bear Stearns than the Yankess did for A-Rod. Ooofa!
Price reduction at Maxwell Place in Hoboken:
http://newjersey.craigslist.org/rfs/609304785.html
But hurry! If it isn’t sold by 3/31, they’re going to rent it out!
dinra,
A full 3% commission to the buyer broker…
IMHO, 5% is the new 6%, and 4.5% is the new 5% for the higher priced listings.
They think they can attract more buyers by giving agents more of an incentive to show.
Just keep in mind that the owner paid $460k for that place, that is probably the most relevant bit of information.
GS & Lehman both posted better than expected results. Guess it all depends how you want to spin it.
I would have liked to know the numbers that Bear was going to post.
Imus – What part of this says “better than expected”
Lehman Brothers Holdings Inc.’s fiscal first-quarter net income dropped 57% as results were hurt by net mark-to-market adjustments of $1.8 billion. Net income for the quarter ended Feb. 29 was $489 million, or 81 cents a share, compared with $1.15 billion, or $1.96 a share, a year earlier.
S&P cuts CIT counterparty rating.
grim (40)-
The most damning symptom in the current sick market is the fact that incentives directed toward buyers- such as seller concessions on prepaids, points and closing costs- are neither being offered by sellers nor asked for by buyers. Traditionally, weak markets are always marked by extensive usage of these incentives. In fact, it can be argued that such incentives actually help the market stabilize and recover by increasing affordability and lowering initial costs of ownership.
That seller concessions are not being employed demonstrates two things:
1. RE prices still have no correlation to buyers’ incomes. Prices are so out-of-whack, no amount of seller concessions will help matters. The NJ market will remain stuck until prices come into line with real incomes.
2. Following from #1, no amount of improvement in mortgage rates will stimulate increased buying. Tighter qualification standards and underwriting scrutiny will continue to disqualify large amounts of buyers…no matter how low rates go.
Any rate cut predictions for today?
I hope to see 25-50 basis points, however I know that is crazy talk.
If the Fed really wants to help people, they would stand behind the dollar. If they only gave us a small 25 bps cut, you would see gasoline and heating oil prices drop overnight. Food prices would follow. This would put real money back in people pockets. Markets would sell off initially on the news, but they would get over it and just deal with it.
I’m not sure I would bet against the Fed Futures though. So far Bernanke has given the street exactly what it has wanted and expected.
RentininNJ Says:
March 18th, 2008 at 8:41 am
I think the correct FFR bet should be 0. Soon.
“Clot,
You need to think outside of the box. Who says we need to stop at zero?
We can push interest rates into negative territory and actually pay people to borrow and spend. After all, spending is what supports our economy. It only seems fair that we compensate those individuals and businesses for their service to our country.”
DAMN. Beat me to it.
bath (43)-
Let’s not forget that LEH also doesn’t report derivatives exposure to the Fed.
I’m sure the conservative and prudent leadership at LEH has kept that number low…
[sarcasm off]
x-underwriter: Very good article.
Reading all this makes me wonder, is Fed drawing all this ideas from other realm: War Theories.
I am sure we have developed large scale computerized models depicting what would happen in case of 3rd world war. All they have to do is plug-in the companies that represent Companies, and Weapons with Financial instruments. There would be core zone to protect, secondary zone, and companies on outskirts that can be sacrificed for sake of the core players.
That seller concessions are not being employed demonstrates two things:
1. RE prices still have no correlation to buyers’ incomes. Prices are so out-of-whack, no amount of seller concessions will help matters. The NJ market will remain stuck until prices come into line with real incomes.
2. Following from #1, no amount of improvement in mortgage rates will stimulate increased buying. Tighter qualification standards and underwriting scrutiny will continue to disqualify large amounts of buyers…no matter how low rates go.
Perfect. I can’t express it any better and I’ll say it again: the majority of people are simpletons and f*cking morons. Plain and simple… and I’m not apologizing.
GS & Lehman both posted better than expected results. Guess it all depends how you want to spin it.
While beating or missing analyst expectations is an important factor from an equities pricing perspective, I’m personally more interested in the raw top and bottom line numbers as a proxy for the health (or lack of) of the street. The financials, as well as the homebuilders, are indicators to me, both of their underlying markets and market sentiment.
That said, the change in net income and the scale of writedowns are both more important to me than whether or not EPS met or missed expectations. I don’t follow these markets because I trade or hold these stocks.
The best was that story from California where the guy picked strawberries for a living and bought a 700k house
rent (46)-
The Fed is way beyond being able to help John Q. They’re trying to save the world.
BTW…does anyone know how to break up a squatter camp of Visigoths?
50/50 on whether or not Lehman goes under?
SG (49)-
If you use the war theory analogy, Buffett came up with the perfect metaphor:
derivatives = weapons of mass destruction
We can push interest rates into negative territory and actually pay people to borrow and spend. After all, spending is what supports our economy. It only seems fair that we compensate those individuals and businesses for their service to our country.”
This actually has merit. If Ben pushed rates to (-15%) it could have a stimulus effect. But only if they start draining peoples savings accounts, money market accounts, cd’s, ira’s, and 401k/403b accounts at that rate.
BTW…does anyone know how to break up a squatter camp of Visigoths?
Jellied Gasoline is the cheapest.
CLOT 53 A sreet sweeper.
http://world.guns.ru/shotgun/sh09-e.htm
That’s street
23 clot
“I think we can christen 2010-2020 “The Lost Decade”.”
Yes.
Visigoths: A buffet of swill and grog usually calms the masses.
Imus (41)-
When I was in college, I once drank a large amount of moonshine. Even though I got sick and had a terrible hangover, I did not die.
That was also a better-than-expected result.
mike (58)-
Three prodigious pieces of weaponry, from a country that’s turned crowd control into an art form.
From the AP:
Prices Up, Housing Contruction Drops
Wholesale prices rose again in February as another hefty increase in energy costs offset falling food prices. Outside of food and energy, prices shot up at the fastest pace in 15 months.
In another sign of troubles in housing, construction of new homes fell by a larger-than-expected 0.6 percent in February to an annual rate of 1.065 million units.
The Labor Department reported Tuesday that wholesale prices were up 0.3 percent last month, following an even bigger 1 percent jump in January.
Outside of food and energy, the rise in inflation was a troubling 0.5 percent, the biggest increase for core inflation since a rise of 0.9 percent in November 2006.
The hefty February increase in core inflation raises concerns that relentless increases in energy costs over the past two years are beginning to spread to other areas of the economy.
So much for LEH, Wachovia pointing the finger at Merrill this morning.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTdCg4dcOgxY&refer=home
OT,
Anybody plan on listening to the Supreme COurt arguments of 2nd amendment gun rights today? This case looks like it will have a huge impact on the gun law debates as one of the primary questions before the court is does the 2nd amendment refer to the people as in an individual or as in people being the state.
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
reinvestor101(31), thanks I enjoyed that. A nicely done troll. I think it says a lot about njreport that you had no takers…
The over-under on Lehman is around Friday. That gives them the weekend to shop around ala BSC.
ket,
Every time I read this:
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
I can’t help but think of this:
“It is the duty of every patriot to protect his country from its government.” – Thomas Paine
How do we rise up against an oppressive government, to protect our country, if we’re stripped of our arms?
(Am I going to go to jail for saying this?)
Tard (31)-
“People just don’t believe anymore.”
You seem to have confused individual belief with institutional trust.
I do not expect you to understand this.
(31)-
“I will fight this by continuing to believe.”
I will now shave with a cheese grater.
I’ll let you all know if they have razors in Guantanamo.
Stimulus Rebate Money…
if you are eligible….
http://www.irs.gov/newsroom/article/0,,id=180247,00.html
grim (72)-
I’ve said worse here, and I’m not under surveillance (I think).
From MarketWatch
SUBPRIME TODAY
February housing starts, permits fall
What are the costs of Fed rate cuts?
Inflation ticks higher in February
Goldman, Lehman results hit by credit turmoil
Recession could be shallow but long
Commentary: Retooling a 1930s concept to halt housing’s slide
Recession started in December, data suggest
Northern Rock unveils job cuts
China nervous about U.S. subprime fallout
Details to headlines at link above
grim 69
(Am I going to go to jail for saying this?)
Dont worry, a number of people on this board will be picked up at the same time, so we may share a cell in GITMO. Also, i wouldnt worry about the black helicopters until at least november.
Also consider that the DHS terrorist watch list currently has about 800,000 US citizens on the list. And that is only the official list. be aware that the FBI and CIA have been using automated search/tracking software for years to track peoples online behavior and statements.
From MarketWatch:
Goldman says net losses on mortgages, credit roughly $2 bln
Goldman Sachs Group Inc. said on Tuesday that net losses on residential mortgage loans and securities during the brokerage firm’s first quarter reached roughly $1 billion.
Lets spend more money we dont have…
NJ Considering Universal Health Care
http://www.dbtechno.com/health/2008/03/18/new-jersey-considering-universal-health-care-plan/
Housing starts paused in its downward spiral with a modest 0.8 percent rise in January. Still, the latest number for a 1.012 million unit pace is still badly depressed and is down 28 percent on a year-on-year basis. Given the continued high levels of unsold new and existing homes, starts are likely to resume their downtrend in February. Housing starts Consensus Forecast for February 08: 0.99 million-unit rate Range: 0.96 million to 1.02 million-unit rate.
Rate cut? Is liquidity REALLY the problem?
No, but when all you have is a hammer…
Hey Grim, how long did it take for you to get that gun?
grim Says:
March 18th, 2008 at 6:35 am
Hillsdale Comp Killer
6 Clayton Street, Hillsdale NJ
Purchased: 11/8/2005
Purchase Price: $630,000
MLS# 27443411
Sold: 3/17/2008
Sale Price: $415,000
REO
________________________________________________
This hits a little close to home–a good friend has been pressuring his retired parents for years to sell their long-paid off Hillsdale split, and move to Florida. Mom was all for it, Dad had no interest in Florida, but finally gave in–this summer. Put it on the market for over $600k–and have yet to get a bite. Now asking in the $500s, and it sounds like there are still no takers. Considering they bought decades ago and have a comfortable pension, this isn’t a life or death issue for them; but I can see where this is going if they’re competing against REOs for a $100k that aren’t even moving.
I’ll take the 100 year amortization on a new 335 convertible please.
1995-2000 Tech Bubble
1997 – 1998 Beanie Babie Bubble
2001-2007 Housing Bubble
….P.S. With ZERO interest of course ;-)
Correction of above: REOs for $100k less that aren’t even moving. Once we have $100k REOs in Hillsdale, I think we will have officially achieved “blood in the streets.”
The handgun permitting process took 7 months.
Yes, you read that right, 7 months.
Anyone who thinks you can get a handgun in a month is out of their mind.
That includes 3 visits to the local police station, two character witnesses, background and psychological check, 3 sets of fingerprints, and a NICS check (FBI) when I actually purchased the gun.
#3
“Frugality is in, extravagance is out,” he added.
tell that to my next door neighbor who bought a new Escalade over the weekend. BTW, he is in his late 20s and still living in his parents’ basement
This article is from Indian newspaper by reputed economist. It has pretty good summary of past growth and future scenarios for emerging markets.
End of the 9% growth dream
#88 Grim: and yet the people who would use a gun for violence can get one in an hour.
tbw,
Funny thing about that, turns out criminals don’t obey laws.
“grim Says:
March 18th, 2008 at 10:03 am
The handgun permitting process took 7 months.
Yes, you read that right, 7 months.”
F it I’ll just walk back to the Jersey City projects
Goldman Quietly Warning Employees Of Another Round Of Layoffs
http://dealbreaker.com/2008/03/goldman_quietly_warning_employ.php
I’m confused and just don’t get it. Credit is fairly tight, it hard to get a loan out there for any reason. Whether it’s a business loan, mortgage, but when you are finally approved for a loan then they give it to you for cheap.
It’s dirt cheap to get a loan these days but credit is tight.
What part am I missing?
BTW, Homeland Security, my above comment was a joke.
Q&A with someone with Lobbyist experience on Banking industry.
GSE Nation: Interview with Robert Feinberg
BBC piece on tent camps in the LA area.
69 grim
“(Am I going to go to jail for saying this?)”
Of course not. A “detention center” in Eastern Europe.
Clot
“I’ve said worse here, and I’m not under surveillance”
You finally said something dumb.
#92: makes me wonder who these gun laws are protecting?
#46 Clot:The NJ market will remain stuck until prices come into line with real incomes.
And how long before sellers and or realtors get that message?
#89 skep-tic
That guy is our new hero. He has no exposure to the current housing rout and he even escapes rent payments. That is my kind of guy.
Problem is that Escalade will help him pick up plenty of girls but where is he going to take them? The real reason why so many 20 somethings pay rent to live in their own place. As soon as I had two months security and 1 month rent saved up I was outta there post college.
Kettle watching the SC very closely, that decision can vastly move us into a police state if it goes the wrong way. As much as I hate to quote Bill Bonner “you will hear how liberty and modesty die – to the sound of thunderous applause”
Grim I’m thinking of getting my FFL, last year I had a great deal in North Carolina on a 20 gauge for the wife (she like shooting clays). Due to my New Jersey state residency I can not buy guns outside of the facist state of New Jersey without an FFL even with a NJ firearms ID card. I had to have my brother in law purchase the gun very embarrassing
800 more housing units near Edison train station?
EDISON — A redevelopment proposal for an industrial park near the Edison Train Station was unveiled Saturday after a week of resident involvement in the planning process.
The initial proposal includes 1,000 parking spaces, a public plaza, a hotel, retail spaces and a combination of townhouses, lofts, and affordable housing to be built in a 44-acre lot that is occupied by decayed industrial warehouses.
Residents participated all week in workshops … where they voted through interactive planning models for their preferred features. Their ideas were melded together to produce a new vision of the area designed to streamline traffic and add nearly 800 residences to the town.
http://www.thnt.com/apps/pbcs.dll/article?AID=/20080316/NEWS/803160432/1001
Problem is that Escalade will help him pick up plenty of girls but where is he going to take them?
Back seat of the Caddy.
I think my apple cart needs a trailer hitch, or maybe a modification so I can fit it in the back of an escalade.
grim,
I’ve never understood why you got a gun(?)
My father was an assistant postmaster. In the 1950’s and 1960’s, when he took the receipts to the bank, he was required to strap on a holster and a gun, and he HATED it. He was quite happy to shoot the Japanese on Iwo Jima, but he wasn’t looking to play Wyatt Earp once he got home. It was also a requirement that the gun be loaded at all times. It was kept in a locked drawer in the postmaster’s office. There was an oath to defend the US mail – at gun point, if need be.
My father was always happy that nobody tried anything. He had seen too many guys shot and killed.
Guns scare me. I would never have one in the house.
knives scare me. too sharp, might get cut.
#103
“Problem is that Escalade will help him pick up plenty of girls but where is he going to take them?”
Mike– I think the Escalade is itself the solution here. He traded in a Caddy sedan
“THE LAYOFFS AT BEAR HAVE BEGUN! I’m actually a sophomore who was planning to intern at Bear Stearns this summer. I called the guy I had interviewed with originally this afternoon. He said he was busy, so I agreed to call back after 4:30. At 5 pm, I call, and some other guy picks up and says, “He no longer works here”. There you have it…the massacre begins.”
http://dealbreaker.com/2008/03/no_one_not_even_the_hopeful_su.php
I looked into getting a gun in NYC when I lived there a few years ago. Lets just say it was impossible to do so. By those standards the gun laws in NJ are lax.
Ok, no more gun discussion. I’d like to cut it off at this point.
Jamey Says:
March 18th, 2008 at 9:57 am
Rate cut? Is liquidity REALLY the problem?
There are three options:
a. provide a wider ocean and slow it down
b. get on the Carpathia
c. enjoy the music
From MarketWatch:
Lehman has cut 1,100 jobs in March: CFO
Clot– you mentioned that some banks are offering below market rates in order to grab business– is this happening with jumbos as well?
Hehehe,
I have been on the phones all week/weekend with my former Bear coworkers and so far it is pretty tame over there. I heard that a bunch of the private client services guys (brokers) walked out of the place on Monday with their things but they would never have been retained anyway so I doubt if they were even fired. That guy probably just took another job. It is going to take JPM some time to decide who to has the business knowledge and is worth keeping. Probably at least another month. That being said I can’t see them keeping the I bankers at Bear another 5 minutes longer. Lord knows they are worthless and JPM has no reason to keep them. The rest of the business is at least worth holding onto to investigate the synergies/overlap.
New Currency ETFS:
Chinese, Indian Currency ETNs Launch
http://seekingalpha.com/article/69043-chinese-indian-currency-etns-launch
#`111 hehe: According to the people I knwo at Bear. They wer told to come in on a day to day basis, with teh understanding that ecah day they coem in, will be the last.
Almost all of the employees will be let go,and there will be little to no severance.
2 people I know well, have lost a fortune. What a disgrace.
#117 mike; The only real value business that Bear has left is the clearing operation.
And the nice new headquarters on Madison Ave. (That building is valued at 1.2 billion;they bought the whole firm for 200 million). The rest of the firm is gone.
It’s truly sad.
Delta Air Lines says it will offer voluntary severance payouts to roughly 30,000 employees — more than half its work force — and cut domestic capacity by an extra 5% this year to deal with soaring fuel prices. Full article coming soon.
While we’re on the topic of the Bear HQ.
JPMorgan Chase halts plans for WTC headquarters after Bear Stearns deal
JPMorgan Chase abandoned plans to move its downtown headquarters to the World Trade Center site in the wake of its deal to acquire Bear Stearns.
JPMorgan spokesman Joe Evangelisti says the bank plans instead to move employees to a Madison Avenue skyscraper that houses Bear Stearns’ offices. He says alternate uses would be considered. The Wall Street Journal first reported the news Monday on its website.
BSC is up 50% so far today. lol
Mike NJ Says:
LOL@”It is going to take JPM some time to decide who to has the business knowledge and is worth keeping.” As if anybody at JPM has “business knowledge” and “is worth keeping.”
3b,
I am holding out hope that my IT buddies will at least latch on for a bit when they look to integrate the IT systems. A year ago I would have been in the same position. Truly shocking and makes you see how quickly this all can unravel around us.
How would you find out the security of a bank?
I’ve heard through word of mouth that Bogota Savings Bank has low mortgage rates. I believe they continue own the loan and do not sell them.
But, as there are only two branches…
Hudson City Savings and Columbia were recommended as well.
Anyone have any info?
PS No, I decided or found anything to purchase at this time.
Why should average American suffer because of Wall Street guys screwed up?”
Watch the arguments: http://xrl.us/bgmfy
Jim Rogers predicting the failure of the United States central bank, warning people to get out of dollars ASAP
….
Latest from Schiff – “Why should the average American have to pay more for gasoline and more for food because these Wall Street guys screwed up?”
Rich,
Go fish. I’ve pointed a number of clients to similar sources and have heard wildly differing responses from all of them. Some on-par, some completely non-competitive.
Most surprising is the fact that none of my clients have gotten a competitive quote from Hudson City, despite all the chatter.
I’m tempted to inquire there myself, just to get a feel for what they are offering.
In terms of mortgages, the only thing you need to be concerned with is they make it to the closing table, under the agreed upon terms.
Well I was wrong re Lehman and Goldmans earnings. I guess the long slow decrease over the past few months was all the drop you’ll see until the next market event.
The little guy is not suffering, he is laughing. The average blue collar or low income guy has no stocks, no MBS or corp bonds, they are the dopes loaded up on loans that are getting reset lower. They don’t even have a nickle in the bank so low cd rates are meaningless.
He’s laughing paying $4 for a frigging gallon of gas?
#126 Mike The IT guys in the cklearing opearions of Bear may survive, but in the rest of the firm I do not see it.
JP of course will not want Bear’s fixed income division, including the muni dept, as they already have those areas covered.
Bear’s equity business is small, nothing there that I can see them wanting.
And Bear has never really broken into the asset mgmt. business, although they have tried.
the only thing I see of any value, is again the clearing business, perhaps soem corporate/high net worh accounts, and some nice office buildings.
#127 Rich: you don’t care if the initial bank sells your loan the only worry is will you get the keys at the closing table or have to ante up…key sign you are going to meet trouble is if your loan officer/broker is not “in touch” throughout.
#129 Grim: “In terms of mortgages, the only thing you need to be concerned with is they make it to the closing table, under the agreed upon terms.”
Wow, we agree? maybe we are dancing on the concrete floor of “THE BOTTOM”….a joke!
Mustard and Relish sandwiches for everyone!
#131 john: If the big guys are hurting, the little guys are going to hurt more. Surely you know that by now.
I think my apple cart needs a trailer hitch, or maybe a modification so I can fit it in the back of an escalade.
I would also get the front mounted tow hook option. They will be useful for hooking up the donkey. You might need to pull the engine though to bring down the weight.
Grim / JLB,
I agree as well. That’s why I was wondering about finding out the security of the bank or if anyone had any experience with them.
The reason I mention that the bank holds the loan is the fact that they have a vested interest. They would take due diligence to make sure you are able to pay the loan. In that case I would believe the bank WOULD be able to make it to the closing.
I spoke with HCSB in the past asking if they have a better rate for someone with stellar credit. The response I received was that they only accept those with stellar credit, so no.
If I was looking for a bank stock to own, HCSB might be one I’d be interested in. But using them for a mortgage, no.
Bogota Savings Bank looks pretty competitive to me from looking at their site. But I didn’t spend time to find out if there are additional fees not listed in the APR, etc.
At this point I’m just curious. Thanks for the responses.
Any other mortgage lender recommendations?
From the Jersey Journal:
Citing sluggish market, Bayonne condo project on hold
A large-scale residential condominium project for Downtown Bayonne has been put on the back burner because of the slumping housing market.
Other Bayonne developments are also being delayed, probably due in part to the faltering economy, one city official observed. “There’s little motivation to build if you can’t rent or sell your product,” City Planner John Fussa said.
Jason Kaplan, president of The Kaplan Companies, of Highland Park, said that he’d be asking the city Planning Board for a one-year extension of city approvals for his Waterford at Bayonne, an 84-unit condo development on the site of the old Drogin bus company at the south end of Kennedy Boulevard, between Second and Third streets.
Kaplan said the company “has delayed marketing” and is “exploring going to rentals.”
“I’m not going to build in this sort of market,” Kaplan said.
Any other mortgage lender recommendations?
Explore the broker option as well, given the dramatic changes in the market lately, a good broker should be able to present you with a number of alternatives that might not be readily obvious to outsiders. They’ve got more visibility into rates and programs than we do.
Nothing to lose by doing so, at this point I’d approach any of these engagements as “interviews”. Shop around, these guys are hungry for well qualified borrowers.
ahh Bayonne…
Grim, clot and anyone intested..this link is for a 1 million$ home going to auction starting at 439,000…amazing.
http://www.ushomeauction.com/property.php?auctionID=H-022&itemID=14853&venueId=88&start=0
also, the tent city story #98 has been in the BBC news quite a while…the press is not touching it on this side of the pond – wonder why?
“Thank you for calling the “USA”
Please listen carefully as our menu items have changed.
For Mandarin, press 1.
For Arabic, press 2.
All others please contact INS to have your paperwork processed regarding your deportation.
njpatient,
Please sir, an analysis of section 6.11 in the following document:
http://www.bearstearns.com/includes/pdfs/investor_relations/merger.pdf
6.11 Asset Option.
I’m reading this as:
Should the merger fail, JP Morgan has the option to acquire the Bear HQ for $1.1b less outstanding liabilities.
Not bad Dimon, if you can’t have the company, you’ll get the building as a consolation prize.
Yes, I read that somewhere else yesterday as well.
Clotpoll Says:
March 18th, 2008 at 9:47 am
grim (72)-
“I’ve said worse here, and I’m not under surveillance (I think).”
Clicking on the phone line when you pick up. Been there, done that.
Wasn’t it previously speculated on this blog that the bad news wouldn’t come out until after the bonus checks cleared? This surely is evidence of that.
What really pisses me off is that they all just paid themselves $30 billion in bonus money when they knew this would soon happen.
They should be leading these guys out in handcuffs for fraud, embezzlement, and everything. Instead, the’re just getting fired and will probably go on to do the same thing somewhere else.
I used to work at Merrill Lynch (IT), and was never laid off, just left on my own. Lay offs always come around the third week in April, and they are definitely coming. Bonus pools were lower this year as well
#149, any specific reason why lay offs always come around the third week in April?
#148 X: and will probably go on to do the same thing somewhere else.
Ain’t many places left to go to.
#150 ledward: Actually the big ones typically come in the Fall, but in the past I have seen them in the Spring too.
It is end of the many firm’s first quarter. And in many instances if 1st quarter results are bad, it is indicative of what the rest of the year might bring.
#145
the option to buy the building is exercisable only if the deal falls through. it appears to be inserted in the agreement in lieu of a customary break up fee
grim (81)-
…every problem looks like your mother-in-law?
From MarketWatch:
All mortgages declined in quarter: Goldman CFO
Goldman Sachs Group Inc.’s chief financial officer said mortgage holdings, even those rated prime, fell across the board during the February quarter. “Basically all mortgage assets declined in value,” said David Viniar during a Tuesday conference call. “Right up to the very top of the quality. So anything you were long went down in value.”
Spring is OK, but Fall is truely bad because poor guy loses bonus for 3 quarter hard work.
“Home buyers are unlikely to put down offers on houses that they think will lose value.”
Wrong! They can’t afford them, it’s the price! Why is this concept so difficult to understand?
#153 skeptic: I belive the deal will go through. bear has no other choice.
“it’s the price!”
I think the failure of the media to understand this is based on the fact that a couple of years ago, people were lining up to buy at these inflated prices. So most reporters can’t understand how prices could now be out of reach. They really are not seeing the big picture (that houses were only affordable as long as 0% down teaser-rate ARMs were available and house prices continued to go up)
#158
3b– it will be interesting to see how the Bear shareholders vote. This is pretty close to a full wipeout for them anyhow
A nice peice on the new Wall St that may arise form the ashes.
Young pret if your around. Pay attention to where it talks about job losses on the street being far worse then they were in 2001/03.
http://www.marketwatch.com/news/story/wall-street-got-asked-for/story.aspx?guid=%7B1F0148F8%2D3066%2D4582%2DB344%2DF731E3244989%7D
skep (116)-
A jumbo is now defined as over 729K. Up to that limit, it’s an agency loan (still chuckling over the fact that it’s also NJ’s new FHA limit…can you imagine sorting thru this mess in 2-3 years?).
If you’re looking at a jumbo, I’ve got to think Hudson City is still the bees knees…IF you have top credit and a DP.
Sen. Barack Obama confronted white resentment head-on in a way not often seen in a political race. He compared the dark thoughts of white citizens to those of his former pastor, Rev. Jeremiah Wright. Obama said: “In fact, a similar anger exists within segments of the white community. Most working- and middle-class white Americans don’t feel that they have been particularly privileged by their race. So when they are told to bus their children to a school across town; when they hear that an African American is getting an advantage in landing a good job or a spot in a good college because of an injustice that they themselves never committed; when they’re told that their fears about crime in urban neighborhoods are somehow prejudiced, resentment builds over time.”
#160 skpetic: it will, but at the end of the day the deal IMO will close.
My 2 buddies are walking around shell shocked. I truly feel for them.
#163: that is from The Washington Wire
#162– Thanks. One further question:
“A jumbo is now defined as over 729K. Up to that limit, it’s an agency loan”
I actually a little confused on how this is playing out in real life. Wasn’t there some chatter that these larger mortgages would still be offered at higher rates due to problems with securitization?
#162 clot: Any thoughts on how this Spring market unfolds (right after Easter, unless delayed). Are the sellers/realtors out there getting the picture yet, or are we still in deep denial?
Your thoughts as always appreciated.
grim (129)-
To approach Hudson City, you need 720+ FICO, 20% DP, everything documented.
Any less than that, and they pretty much walk you out of the bank.
Guns scare me. I would never have one in the house.
When they load the rairoad cars, having a gun will be the only reason they bypass your house.
3b (167)-
Dead. Festering. Throw some lime on the corpses. Start digging mass graves. GSMLS at 34,000…and it’s not even April 1. Throw in all the REO/foreclosures/short sales turning into comps, and the rout is pretty much complete.
All the players furiously guzzling Kool-Aid. Funny thing now, though: every few days, I see agents’ names on tax lien & lis pendens filings. A few days later, they’ve “temporarily left the business” and gotten a W-2 job.
Does anyone know when BSC share holders will vote on the merger?
155:
Goldman Sachs Group Inc.’s chief financial officer said mortgage holdings, even those rated prime, fell across the board during the February quarter. “Basically all mortgage assets declined in value,” said David Viniar during a Tuesday conference call. “Right up to the very top of the quality. So anything you were long went down in value.”
If all mortgages have gone down in value could a person purchase their mortgage back at a discounted price? I am sure that this would be extremely complicated but it is an interesting thought.
skep (166)-
The primary components of higher agency rates are penalties and fees imposed for low credit scores. They range from 50 to 250 bps.
This is a comment post made on the Washington Wire about Obama’s speech and it is very well said:
“The profound mistake of Reverend Wright’s sermons is not that he spoke about racism in our society. It’s that he spoke as if our society was static; as if no progress has been made; as if this country – a country that has made it possible for one of his own members to run for the highest office in the land and build a coalition of white and black; Latino and Asian, rich and poor, young and old — is still irrevocably bound to a tragic past.”
At the end of this section, Obama reveals a disturbing ideology- that America’s past is tragic. There are unpleasant moments but it is more about triumph than tragedy. And yet he thinks he is a savior leading us from a dark abyss. This mind set makes echoes the words of Michele Obama’s (her comments about feeling proud of America for the first time) and are the root of Reverend Wright’s tirade. America’s past is not simply a blight we must escape. Such an outlook is the real tragedy.
skep,
I’ve heard from one source that the new conforming jumbos were pricing at approximately 25bps higher than traditional conforming. Not bad, but certainly not on par.
Grim (141),
Thanks, that’s good info.
Clot (168),
True, and yet they aren’t competitive. Why any one would use them is beyond me.
#58 “I love the smell of napalm in the morning – it smells like victory.”
BSC folding = How many more houses on the market in Northern New Jersey.
I bet these houses won’t hit the market until late summer/early fall time at the earliest. Easily looks like we won’t hit bottom until 2009 at earliest.
grim and clot– thanks for the info on the loans.
163.JLB Says:
March 18th, 2008 at 12:44 pm
Sen. Barack Obama confronted white resentment head-on in a way not often seen in a political race. He compared the dark thoughts of white citizens to those of his former pastor, Rev. Jeremiah Wright. Obama said: “In fact, a similar anger exists within segments of the white community. Most working- and middle-class white Americans don’t feel that they have been particularly privileged by their race. So when they are told to bus their children to a school across town; when they hear that an African American is getting an advantage in landing a good job or a spot in a good college because of an injustice that they themselves never committed; when they’re told that their fears about crime in urban neighborhoods are somehow prejudiced, resentment builds over time.”
An Honest Assessment. I can remember forced diversity training at work telling me I was personally responsible for all the ills of the country starting with giving Indians Smallpox laden blankets. The fact that my earlist German ancestor was 1862 (fought for the Union), and my Italian ancestor 1920, was irrelevant. I was guilty by virtue of my skin. Even though neither ancestor could afford to give away a blanket.
lawsuits begin:
http://s.wsj.net/public/resources/documents/WSJ_LB_BSterns_Complaint_031708.pdf
rebar (171)-
So what if the shareholders say no? If they do, there’s every chance BSC must then declare bankruptcy. They are insolvent, and no other firm will accept them as a counterparty.
Also notice how the “other offer” BSC seems to be furiously soliciting isn’t materializing. The Fed has already killed the market of potential suitors by: a) giving JPM free money to do the deal, plus indemnifying them against losses; and b) stating to the world that they prefer a money center bank be BSC’s buyer.
Calculated Risk posted a good summary on the Fannie Jumbo Conforming guidelines.
http://calculatedrisk.blogspot.com/2008/03/jumbo-conforming-loan-guidelines.html
1. Fixed rates can be sold to Fannie on or after April 1; ARMs on or after May 1. The loan has to be closed on or after March 1 to be subject to the following rules; inventory loans (closed from last July to March) have to be subject to a “negotiated commitment.”
2. No AUS approvals. It seems they plan to update Desktop Underwriter (their automated underwriting system) before the year is out, but they haven’t done so yet and they’re rollin’ without it.
3. For principal residences, fixed-rate loans are limited to 90% LTV/CLTV for a purchase, and 75% LTV/95% CLTV for a no-cash-out refi. ARMs are limited to 80%/80% on a purchase and 75%/90% on a no-cash-out refi. CASH OUT REFIS ARE NOT ALLOWED.
4. For second homes and investment properties, the maximum LTV/CLTV is 60% in all cases for purchases and no-cash-out refis.
5. Minimum FICO for any loan is 660, with a minimum of 700 for LTVs greater than 80%.
6. One-unit properties only.
7. On a primary residence, existing subordinate liens must be resubordinated. The new loan cannot “cash out” an existing subordinate lien.
8. No late mortgage payments in the preceding 12 months.
9. 45% maximum DTI, with ARMs qualified at fully-amortizing fully-indexed rate.
10. Full doc only.
11. For purchases, the borrower must make at least 5% of the down payment from his or her own funds.
12. A full appraisal with interior inspection is required on all loans; if the property value is more than $1 million, a field review appraisal is also required.
13. Loans are subject to all current pricing adjustments, plus another .25 for FRMs and .75 for ARMs.
gas prices!
http://www.kpho.com/news/15625342/detail.html
Another way to look at JPM/BSC is that it’s a Fed-engineered shotgun wedding. One party is insolvent & buried by its out-of-control derivatives positions. The other party, while answering to the Fed, is only nominally-solvent and is sitting on a derivatives position that is a 10 kiloton hydrogen bomb.
Much like a shotgun wedding, the legitimacy bestowed upon the union by the act of the wedding is no more than a cover-up. The child of the union was conceived a bastard and delivered under dubious circumstance.
(185)-
Or, the short version, if you will:
Lipstick on a pig.
clot (182)
Will fed also stop funding LEH as well? You can’t fund one and not the other. The fed also can’t allow a BSC bankruptcy. IMO, another unintended consequence.
Confused (180)-
“I was guilty by virtue of my skin. Even though neither ancestor could afford to give away a blanket.”
Original sin, gubmint flavor.
Don’t worry, if this spring is a bust, there is always next spring to look forward to.
Spring home-selling season could disappoint: Soleil
Hopes that the key spring selling season will lift the housing market out of its doldrums could end up being disappointed, some analysts say. “Our industry contacts have suggested that although pricing declines and fire sales have boosted traffic and may help to reduce inventories, they are unlikely to result in a meaningful spring selling season due to continued negative market sentiment,” wrote analysts at Soleil Securities Group in a research note Tuesday. Home-builder stocks rallied sharply Tuesday as markets expected the Federal Reserve to cut interest rates again. “While the expected Fed easing today should be a key positive for the home builders, we continue to note that the current credit crisis is keeping mortgage rates elevated nonetheless and lending standards remain very tight,” Soleil said.
rebar (187)-
When the Fed starts handing money to the shadow banking system (those that answer to no one), ALL the consequences are unintended.
We’re in uncharted waters now.
Was this posted yet? From the New York Times:
Home Sweet Investment
http://www.nytimes.com/2008/03/18/opinion/18tabarrok.html?_r=1&scp=1&sq=home+sweet+investment&st=nyt&oref=slogin
Truly annoying. Apparently the US will not face the same decline in home prices as Japan did because Japan’s increase was steeper and higher and because, you know, there are only so many houses to go around here. The famous Shiller charts are right there next to the article and this guy has the nerve to suggest that “fundamentals” will support higher home prices. Not one mention of affordability of course.
Mind-boggling.
I think the failure of the media to understand this is based on the fact that a couple of years ago, people were lining up to buy at these inflated prices. So most reporters can’t understand how prices could now be out of reach
I was listing into some talking head on CNBC this morning going on and on about how the Fed has bailed out Wall Street, but they really need to be focusing on stopping home prices from falling further.
Affordability never seems to come up in these conversations. They always give the impression that timid buyers are sitting on the sidelines, cash in hand, just waiting for home prices to stabilize so they feel comfortable enough to jump in.
If current “owners” can’t hold on to these homes at these prices, what makes you think the next round of first time buyers will fare any better? Just where is this army of financially solvent buyers with loads of cash and good credit that is supposed to start talking down all of this inventory if only the Fed stabilizes home prices.
grim (183)-
“On a primary residence, existing subordinate liens must be resubordinated. The new loan cannot “cash out” an existing subordinate lien.”
Fannie/Freddie, to holders of subordinated paper:
Choke on it.
rent (192)-
That talking head was Ara Hovnanian.
#192 – Exactly. And the funny thing is that the only reason we have cash and good credit is because we are fiscally responsible and didn’t overpay during the bubble. If we didn’t buy then we obviously won’t be buying until prices are more realistic.
We aren’t timid, we are angry.
clot(190)
I agree. It could also be that major share holders have already signed off on the deal.
art (195)-
Don’t be angry, be smart. Nothing to be angry about; if you’re flush- and on the sidelines- you’re about to win.
No amount of inflation, skulduggery, bailouts- or anything else- is going to prop up housing prices. The inertia prinicple is engaged, and the only thing that will stop Wil E is the canyon floor.
See you there.
rebar (196)-
I’m guessing it doesn’t include the 1/3 of the float owned by BSC employees.
Thanks Clot,
I’d like to think I am angry AND smart!
Meep Meep!
By FT.com
Why the Fed must act in unfamiliar ways
By Mohamed El-Erian
It is déjà vu for those who remember previous emerging market crises: imploding balance sheets, a bank run, disorderly falls in the currency and emergency policy responses (including on a Sunday evening). Yet there is a huge difference: this is happening in the US and not in an emerging economy.
As they consider what to do next, the US authorities would be well advised to study the experience of emerging economies. If they do, they will focus on three main findings.
First, incremental steps using traditional policy instruments are ineffective.
Second, it is no longer a matter of designing a perfect policy response. It is about finding the one with the least collateral damage and backing it with meaningful international support.
Third, the earlier the authorities move with their policy response and stay ahead of the process of reducing levels of leverage, the less severe will be the clean-up that needs to be done once the financial crisis abates.
Alex Tabbarock wants every town to be urbanly dense
#192
“Affordability never seems to come up in these conversations. They always give the impression that timid buyers are sitting on the sidelines, cash in hand, just waiting for home prices to stabilize so they feel comfortable enough to jump in.”
there’s also a failure to understand just how much more unafforable housing is now than ever before. I constantly hear people my parents’ age talk about how buying their first house was such a struggle. I’m sure it was, but today is a completely different ballgame. Again, the ONLY reason it was possible for the overwhelming number of 1st time buyer was due to shady morgages. Now that these are harder to come by it is becoming evident just how unafforable housing really is.
RentininNJ,
When politicians talk about bailing out home owners, they never ever talk about those that are priced out.
Define “realistic prices”
How much could one expect to pay in 3-5 years for a good condition 3 bed, 1.5 bath colonial style home in a town like Wyckoff? $300,000? $200,000? $50,000???
Can someone please provide the link with the funny powerpoint type presentation “how subprime works” or somehting like that.
It was with one with the cartoon stick figures
tbw,
I’m as bearish as they come, but your examples are all too low. Even with 30% nominal price declines, your subject property would still be well above the range you quote.
The Man and the Monkeys: A Wall Street Fable
Once upon a time in a village a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers knew that there were many monkeys in their forest. They left their farms on the plains and went into the forest to catch them. The man bought thousands at $10.
As the supply of monkeys started to diminish the villagers stopped looking. Finding and catching monkeys was soon no longer worth the effort for $10. They started to return to their farms to plant the spring crop.
The man then announced that he would buy monkeys for $20 each. This new higher price renewed the effort of the villagers and they headed back into the forest to find and catch monkeys again to sell.
When the monkey supply diminished even further that summer and the people started to return to their farms, worried they had not made enough money selling monkeys to buy all the food they needed but had not planted any crops yet either, the man raised the price he’d pay for monkeys to $25 each. The hunt was on again.
Soon the supply of monkeys became so small that a villager didn’t see a monkey in a day of hunting let alone catch one. Even at $25 each the effort was not profitable so the villagers finally headed back to their farms that fall. After nine month’s absence from their farms they knew the time had passed to produce enough food for the coming winter, but at least now they had enough money from selling monkeys to buy food to eat.
But the man wasn’t finished. He announced that he would buy monkeys for $50 each! The villagers became very excited. He also explained that he had to go to the city on business and that his assistant was to stay behind to buy monkeys on his behalf.
As soon as the man left the assistant told the villagers, “So you think you have made a lot of money selling monkeys, don’t you? But do you want to really get rich?”
“Yes, yes!” said the villagers.
The man’s assistant went on. “I have a gigantic, enormous cage filled with monkeys. I will sell them to you for only $35 each and when the man returns from the city you can sell them to him for $50 each and make a fat profit. You don’t even have to work to find monkeys at all. Then you can not only buy all the food you need for this winter you call all buy flat panel TVs, too.”
The villagers were thrilled. They collected all of their savings together and bought all the monkeys in the assistant’s cage then awaited the man’s return.
They never saw the man nor his assistant again. All the monkeys that were once in the woods were now in the village. All of the villager’s savings were gone.
Moral: Substitute housing for monkeys. As the winter of the US economy arrives, you still have the house you had before the price was bid up. Now that prices are falling back down, who has your savings?
Now you know how Wall Street works an asset bubble racket.
$350,000?
#170 clot: Thanks as always. It should be an absolute dismal selling season.
Hopefully the serious sellers, who have to/need to/want to, and can will start to get serious with asking prices.
From CNBC:
Mortgage Rates Aren’t Likely to Move Lower
Even with a big cut in interest rates today, homeowners shouldn’t hold their breath waiting for their mortgage rates to follow.
If recent history is any guide, the Federal Reserve’s aggressive rate-cutting will have little or no effect on long-term loans to homeowners.
In fact, mortgage rates even have bounced up a bit following some Fed cuts since September 2007.
It’s all because banks continue to be reticent to lend money and investors are especially leery of mortgage-backed securities, the market for which has been shattered by hundreds of thousands of defaults during the subprime mortgage collapse. Instead of lending money, banks are using newfound liquidity brought on by rate cuts and Fed term auctions to boost their balance sheets and pay dividends.
That leaves mortgage brokers doubtful that they’ll catch a break from today’s rate cut, which futures trading suggests will be a full percentage point.
“Anyone who can give you a definitive answer today is going to be guessing” what will happen to mortgage rates, said Alan Rosenbaum, president of GuardHill Financial in New York. “Normally when the Fed reduces 100 basis points you’re going to see rates come down immediately. However, in this situation no one is really sure.”
#204: Define “realistic prices”
I define realistic as generally in line with historical norms of affordability (i.e. price-to-income ratio)
Victorian,
What happens with the extra monkeys? The villagers clearly don’t have enough money to buy all the monkeys back at prices higher than what they were paid for them.
Define “realistic prices”
When the a
Define “realistic prices”
When a middle class family can afford a middle class home as is the historic norm.
If you want to get technical; when the median family income can afford the median home using traditional affordability guidelines. (BTW this is tracked by the Wells Fargo Housing Opportunity Index)
In North Jersey, housing is traditionally a little less affordable, so I would not expect a perfect median income to median home match like I would expect to see in other markets.
This is also an overall measure of affordability. Some towns will remain expensive and therefore more “exclusive” while other towns will be very affordable.
#212 –
I am assuming that they had some savings built up over the years + sale price of previous monkeys.
#208 tbw: I think you will see prices get back to 2001/02 levels, perhaps even lower.
I think it was Homer who used to post here about prices going to 99 levels and I used to chucle, now you never know.
Renting (205),
I think this is what you are looking for:
http://ivanisevic.de/subprime.pps
Not to worry all, with the Baby Boom generation bearing down on retirement, several investment firms are working on new computer calculators that will apply so-called Monte Carlo simulation strategies based upon on age as well as market returns to come up with new AAA rated investments that do not have the ability to fail.
Please be sure to move substantial portions of 401ks and IRAs into these new types of investments as soon as they become available so you will not miss out on having a wonderful retirement.
From AMNY:
Experts: City will feel economic crunch
On a day of Wall Street upheaval, New Yorkers awaited the fallout from an accelerating downturn that experts feared could leave no part of city life untouched.
The stunning implosion of Bear Stearns is “the equivalent of manufacturing town where a plant shuts down,” said James Brown, labor market analyst at the state Department of Labor, “You’re going to feel it.”
Indeed, there can be little doubt of that in a city where 20 percent of its wages and salaries come from Wall Street firms, even though those companies employ only 5 percent of the workforce. Wall Street bonuses and wages have accounted for nearly half of the city’s growth in its income base since 2003, according to official estimates.
A dip in such an important area could drag down real estate, restaurants, and theaters, not to mention lead to cuts in services as state and city budgets are slashed.
“People become more conservative in their spending habits,” said Kathryn Wylde, president of the Partnership for New York City. “People start keeping money under their beds. We’re a financial capital, but we’re also a shopping capital, a media capital, and there could be a significant impact on a number of industries that are important to New York.”
She added that even those with steady, seemingly layoff-proof jobs would likely be hit as well. And more bad news: A big drop in residential rents may not result, and the price of goods and services could soar even as businesses shutter.
Ok, lets have the predictions
50 bps cut – Wall street cries, indicies end red
75 bps cut – Status quo, slight decline
100 bps cut – Status quo, slight rally into the close
125 bps cut – To the moon!
.75bps
75bps with oil @ 120 next Fri.
Jaw,
Yes. Thanks
An interest rate drop might worsen things as more people might see this as an opportunity to unload and move to places that are cheaper. Thus reducing the population in places like NJ/CA/IL. Reduced population means tax hikes needed to NJ Govt and you know that will makes things worse.
Those with bad loans to begin with I cant see getting approved for much better ones when the home is valued less than the loan. 0% down on an undervalued home? Who is willing to approve those loans?
This could actually hurt places that have had bad housing bubbles instead of just sucking it up.
The soon to be $4.00 a gallon gas prices which effect the cost of everything might offset any possible savings anyhow.
Of course they cant raise it either. If anything I think they are trying to find the sweet spot of how to keep subprime people paying their bill by just adjusting interest rates. This wont work.
We need cheap fuel or alternatives, cheaper taxes, less government overhead spending, and some sort of insurance reform. We need something that puts a dollar back into peoples pockets.
Interest rates don’t do any good if no one is buying because they cant afford to buy. In fact they put less dollars in people’s pockets because your money is making less depending on where its at.
75 bps
markets sell off, but stay positive for the day.
An interest rate drop might worsen things as more people might see this as an opportunity to unload and move to places that are cheaper.
To whom are they going to sell?
I hate to say it but maybe its no longer a time to rent but a time to some to move back in with their parents. Take the ME and My Space factor out of the equation.
I’m with 222
75bps with oil @ 120 next Fri
.75bps
100 bps. Can’t upset the market! The earth would cease to rotate.
75 bps
They need to keep something in reserve.
JLB Says:
Obama reveals a disturbing ideology- that America’s past is tragic. There are unpleasant moments but it is more about triumph than tragedy. And yet he thinks he is a savior leading us from a dark abyss. This mind set makes echoes the words of Michele Obama’s (her comments about feeling proud of America for the first time) and are the root of Reverend Wright’s tirade. America’s past is not simply a blight we must escape. Such an outlook is the real tragedy.
________________________________________________
Oh please. You and everyone else on this blog criticize this country, and in particular it’s government, day in and day out–but you find the Obamas’ outlook “tragic”? This is pure comedy.
I think we will be in “afforable” territory when the monthly cost to own a place is similar to the monthly rent. Rent is the best measure of affordability because it is dictated by actual workerss incomes, not the terms of debt financing. The monthly cost to buy a similar place where I live is double my rent, so I think prices need to fall 30-50% to be “affordable”
.75 – Keep most of today’s gains
TBW (208)
Still to low in my estimation
75 points
The message will be
“We are in sharp downturn but we will do everything to stabilize the environment with all the powers we have.”
ALBANY, N.Y. – The state’s new governor revealed Tuesday that he had affairs with several women, including a state employee. The confession came day after he took over from former Gov. Eliot Spitzer, who was driven from office amid a prostitution scandal.
Must be something in the NY water?
#226 people who see this/duped as a buy opportunity. Buyers are out there and with the recent house drops and reduced interest they will believe now is the time to buy because they weren’t a part of 2005 get rich quick.
The advertising is going to go nuts in the spring everywhere “Now is the best time to buy” “The boat is back in port dont miss your chances” “Interest rates will never be this low again” This will be the summer of massively aggressive advertising in real estate because of the reduced interest rate. “Not since 1974 have rates been reduced this much buy now before they increase and the deals are gone FOREVER”
Ben 1.25%
.75 is the winner
75
Realistic prices: If a home sold in 1998 for $275,000, it should sell today for approximately $430,000. It shouldn’t sell for $575,000 as some d*chebag realtor with an IQ of 70 or the id*ot seller with a ripped tee-shirt and beer gut would lead you to believe.
Offer them the full price based on the true market value, not the fantasy price their out-of-work uncle heard from a commercial during a break in the Jerry Springer show. Case closed.
75 points it is as predicted
Ha – I’m so happy to be wrong.
Fisher, Plosser dissent from 8-2 vote to cut rates
FOMC says uncertainty increases about inflation
FOMC says outlook for economy has weakened further
Fed cuts discount rate by 75 basis points to 2.50%
FOMC says financial markets under considerable stress
FOMC cuts federal funds rate by 75 basis points to 2.25%
statement
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.
Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.
Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.
Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.
In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco.
#236
Mitchell– I don’t think people will fall for it this time. The curtain has been pulled back and people know that real estate can lose value now (big time). They are not going to rush in to buy just because the real estate industry says it’s the chance of a life time– these people have no credibility any longer
Most imp. point is 2 dissenting votes that did not want to be even that aggressive
Got to agree there, when was the last time we had 2 dissenters?
At least in NY their wife is not in on the action and it is one at a time.
Confused In NJ Says:
March 18th, 2008 at 2:14 pm
ALBANY, N.Y. – The state’s new governor revealed Tuesday that he had affairs with several women, including a state employee. The confession came day after he took over from former Gov. Eliot Spitzer, who was driven from office amid a prostitution scandal.
Must be something in the NY water?
#231: that was a post by someone else and I do not disparage this country
#244: most people do not buy a house the same way they buy stocks and in the long view houses will appreciate.
YIKES!!!!!!!! ING NEW CD RATES
6 Month 2.75% 03/18/08 Open Now
9 Month 2.50% 03/18/08 Open Now
12 Month 2.50% 03/18/08 Open Now
18 Month 2.50% 03/18/08 Open Now
24 Month 2.50% 03/18/08 Open Now
30 Month 2.50% 03/18/08 Open Now
36 Month 2.50% 03/18/08 Open Now
48 Month 2.50% 03/18/08 Open Now
60 Month 3.00% 03/18/08 Open Now
Ben got cold feet.
We are to the point of bolding random text, Mr. NC?
#226 exactly
#248
“in the long view houses will appreciate.”
how long?
In the long run houses are BAD investments. Single digit appreaciations with lots of upkeep. The upside is forced savings by the borrower.
In fact a house you live in is not an investment it is just a place to cop a squat.
137 3b
Trickle-down economics, right?
One wonders what effects would do if Ben got caught of being client # 13?
#255 Njpatient: Correct.
#244 I like to think all of us in here look at the housing market and take into consideration the US economy. Were all here for research and collective thinking and the majority consensus of where things are. However not everyone is here, reads the news, and even less understands everything as a whole. I think everyone here knows better.
However they will see a record low interest rate and houses priced lower than 2004/2005 and will jump into it. They see how their one friends house is still priced higher than when they bought it and they will buy into it. They will be influenced by sales tactics and bombarded with advertising. They will be told if you bought in 2005 yes but your getting lower interest rates at a lower price and people will buy this. Those who are able to get out of the mess will rent but I suspect a good portion of them will leave to places that are cheaper knowing their dollar goes farther someplace else. Lets say PA.
It wont be the buying frenzy of a few years back thats for sure but I would expect that the low interest rate and reduced house prices will bring out some buyers this spring/summer.
Its certainly a better deal than buying in 2005. Is it the bottom? I don’t think so for many places.
#253 skpetic; Real Long. JLB is going kicking and screaming into the deep, dark, cold night.
145 grim
Sorry.
Can’t have an opinion on that.
#251 You watch I’m betting in the spring/summer of 2008 we all will be saying I never saw so many ads for real estate in my life.
not permitted.
Mitchell,
You are assuming that these people are savy enough to save and have an excellent credit rating yet be able to get sucked in by advertising?
I would think the ones that fall for this won’t get mortgage approval. The few that do won’t be enough to make a dent in the housing market.
#258 –
Credit is tight. Sure, many will think that this is a good time to buy – but how many ppl have 20% DP and 700+ FICO?
Once they make a trip to the bank, thing will not be as rosy.
#263 Rich: Spot On. As always.
#253: In 2004 I would have said long view could be 1 year. In 2008 the long view would be out 5,10 or more years. But keep in mind people don’t normally trade houses like they trade stocks. People who are shopping real estate might look at prices daily but people who are living in homes they own aren’t typically that involved. Many people I know use a house as shelter and base location on schools, neighborhood, ease of transport, etc. and they can eat a small loss if they need to sell or roll in a gain but they aren’t speculators looking for a big payout in that way.
#64 victorian: Shocking as it may sound, some will not have any idea there are any problems at all out there, until they go to get financing.
#258
“your getting lower interest rates at a lower price and people will buy this.”
Mitchell– This “historically low rates” line has been used for years at this point. There is nothing new here that would cause legions of buyers to spring out of the woodwork. Even if some people do fall for it initially, they will reach a different conclusion when they actually try to get the financing (esp 1st time buyers). The fact is that credit is actually much tighter than it was a year ago. The historically low rates are only available to the buyers who don’t really need them. So the barrage of ads that you probably correctly predict won’t amount to much.
JLB Says:
#231: I do not disparage this country
________________________________________________
Yeah–okay.
I love this joke….
It’s not even safe now to put your money in the mattress……
http://www.forbes.com/2008/03/17/tempur-pedic-closer-markets-equity-cx_lal_0317markets34.html?partner=yahootix
Bubble, just leave him in the fever swamp babbling to himself.
#269: feel free to bring facts to the table as I would happily reevaluate if you think I have disparaged this country.
#271: njpatient shouldn’t you be working? I mean 110 hours a week and you still have time to insult me, I almost feel honored.
JLB
I’m working.
You’re talking about me, too. You just don’t know it.
#263 Not everyones credit rating is crud.
A lot of renters missed the housing bubble. They might see this or be convinced this is the time to buy.
#264 This is why some other states are seeing an influx of renters buying in other states as apposed to those able to sell to get to another state.
—
I will say this Renters may have more buying power than existing home owners in a lot of places.
Keep in mind I’m not saying house values will increase as a result of this. What I am saying is that I believe you will see more home sales this spring/summer than last year because of the reduced house prices and low interest rates.
If they go long it can play out in their favor. If they expect to get rich in 2-3 years they will be sadly disappointed.
Could they get a better deal next year? Very possible but that all depends on how well the Govt can convince people there is no recession. A president change and a few tweeks and the govt could convince people its 2005 again. People are sheep.
New president, Pull out of Iraq, and Get gas prices under $3.00 a gallon and the bubble will grow.
Just reduce the interest rates and things might show signs of leveling. Either way more than just the interest rate drop needs to occur to stimulate the economy back upward.
Does anyone remember agreesive advertising stating “It’s the best time to buy” in the years 1995-2000? that was a great time to buy, rates were around 7% prices were at the optimum salary to debt ratio. I don’t remember if those years were advertised that way, Clot do you remember?
KL
247.John Says:
March 18th, 2008 at 2:19 pm
At least in NY their wife is not in on the action and it is one at a time.
Confused In NJ Says:
March 18th, 2008 at 2:14 pm
ALBANY, N.Y. – The state’s new governor revealed Tuesday that he had affairs with several women, including a state employee. The confession came day after he took over from former Gov. Eliot Spitzer, who was driven from office amid a prostitution scandal.
Must be something in the NY water?
McGreevy is an equal opportunity, multiculturally diverse, pervert. Probably inter species, too. NY is behind the times.
#266
“In 2008 the long view would be out 5,10 or more years. But keep in mind people don’t normally trade houses like they trade stocks.”
JLB– Agreed there will always be buyers due to life circumstances, but prices are determined by the buyers (or lack thereof) at the margin. It is a fact that sales have crashed in the last year and inventory has grown higher. The buyers that continue to buy due to life circumstances are insufficient to maintain comps. And even if you plan to stay in your house forever, are you happy to overpay by 20+%? The alternative is to sit on the sidelines for a year or two while the market corrects and maybe retire a few years early when all is said and done.
#275
Mitchell– it’s not just about credit rating. you also need to document your income now and except for FHA loans come up with a sizeable downpayment.
#278: agreed, except many people can’t sit on the sidelines for a year or two. If you can and you have the capital to purchase then I guess it can’t hurt to sit for the next year or two. But, if you need a mortgage and low rates or rentals aren’t available in the area you want to live then now is not the worst time to buy.
DJIA up 300
here is the link for the google subprime thingy
how subprime works ( google docs)
http://faves.com/Out.ashx?u=http%3A%2F%2Fdocs.google.com%2FTeamPresent%3Fdocid%3Dddp4zq7n_0cdjsr4fn%26skipauth%3Dtrue%26pli%3D1&d=1644.111183374957&ls=urldtitle
Look at Gold
However they will see a record low interest rate and houses priced lower than 2004/2005 and will jump into it.
Mitchell,
If anything, your scenario will only prolong the downturn. It’s more likely that sellers desperate for any positive news to grasp onto, rather than buyers, will buy into the advertising onslaught and “best rates in years” sales pitch.
Rather than accepting reality and lowering their price, they may use this to justify their fantasy price in their own mind.
#4 grim
6 Clayton Street, Hillsdale NJ
Purchased: 11/8/2005
Purchase Price: $630,000
Sold: 3/17/2008
Sale Price: $415,000
REO
Looks like I overpaid on my REO….. :*)
It’s good to see the REO’s moving. I have started to notice some overpriced listings coming off the market and not returning. I think the downward push on prices is having an effect.
Renting,
Seems like the only thing these “bottom/recovery calls” do is to lure more sellers into the market.
So at what point do we declare the NAR “Best time to buy” media campaign a complete bust?
Over the course of the campaign, sales have fallen and inventory has risen.
Seems that only sellers are drinking the kool aid.
# 113 “I’d like to cut it off at this point.”
Isn’t that what Mrs. Spitzer said on Friday?
# 287
But the line from NAR will be, “It would have been worse had we not stepped in to protect home values.”
Wow based on the home prices today middle class people make 250K a year!!!
Define “realistic prices”
When the a
Define “realistic prices”
When a middle class family can afford a middle class home as is the historic norm.
BSC 6.41, +1.60, +33.3%) on Tuesday. S&P said it believed that Bear Stearns’ stock price, which gained more than 45% Tuesday, was up primarily on speculation that the company’s recently announced acquisition by fellow investment bank J.P Morgan Chase (JPM 42.00, +1.69, +4.2%) would not go through at the announced $2-a-share price. The ratings agency disputed such speculation. “Considering the alternative, which we believe is bankruptcy, we find this unlikely, nor do we expect other buyers to surface,” S&P said. “We believe much of the impetus behind JPM’s move was supplied by the financing guaranteed to the firm by the Federal Reserve, and we would not expect other potential acquirers to be afforded the same package of financing.” S&P raised its price target for Bear Stearns by 50 cents to $2.50 to “reflect the strength of JPM shares.”
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
U.S $ INDEX shooting up.
# 280 “But, if you need a mortgage and low rates or rentals aren’t available in the area you want to live then now is not the worst time to buy.”
On the other hand, people so situated are unlikely to have lots of downpayment cash and, as a result, most of what they pay each month will be interest, insurance, and tax. Even if rental prices are high, it may well be worth sitting out.
Hi, can anyone tell me what happened to GSMLS #’s 2460687 and 2472728?
Thanks!
Here’s an easy solution to the recent stock market woes: Have the Fed cut interests rates by 50 to 100 basis points daily. Every time he cuts rates, it juices the Dow by several hundred. Why wait a month or even weeks in between? We could be at DJIA 20,000 in no time!
New president, Pull out of Iraq, and Get gas prices under $3.00 a gallon and the bubble will grow.
Bubbles don’t work that way. Bubbles are like forest fire; they don’t burn over the same area twice. We may see new bubble somewhere else in the economy, but housing is dead; at least until the current fiasco fades from memory. Once the curtain is pulled back and all of the “new paradigm” thinking is revealed as a fraud, it’s over. It’s like trying to get someone to believe in Santa Claus again once they find their stash of presents in their parent’s closet.
John Says:
March 18th, 2008 at 3:23 pm
Wow based on the home prices today middle class people make 250K a year!!!
—————————-
This is dead on. Home prices today incorporate the expectation that both spouses work and will devote far in excess of 30% of gross income to housing. My in-laws (baby boomers) don’t understand this. I get the “Oh, we worked hard and saved and stretched. It’s always been like that. Why should your generation be any different?” I make $100k MORE than they did (ajusted for inflation) at the time they bought their house, and I still could not afford their house (and neither could they, for that matter).
Let me phrase this another way. If you buy a home in the summer of 2008 I wouldn’t expect the home to have gained any value until 2012-2013 even then its not going to move upward quickly.
JLB I believe is saying the same its a 5-10 year commitment now to see any return on investment if you buy in 2008.
The get rich quick off housing is gone. Ended in 2005. No one should be thinking this. Its about home ownership not about making money any more.
Do I think NJ has hit rock bottom. No. I think it needs to drop another 10-15% before it flat lines. But it might be close enough that some people will come out of the woodwork. Those would be the renters that missed the housing boom. They might think lightning is going to strike in the same place twice or try the low interest rate plan over 30 years. The short term people wont get loans.
Either way you have to go into it with the idea you will live there for 30 years.
Most people are not smart. Never underestimate these people in large numbers. E-Trade anyone? Yes you can manage your own portfolio? These same people did it to the stock market with the dot com bubble.
You have to think like a non investor and say where are these get rich quick idea people going to strike next so you can grab a piece before they over inflate the market and you can bail way before they have the idea it goes up forever.
#284 While most people don’t live in reality I think they comprehend the house is overpriced when it sits on the market for months on end and a Realtor is telling them its not selling maybe we should lower the price. Those people obviously wont sell. Not everyone lives outside reality and houses that have had the same owner for the last 10+ years will sell. Its their opportunity to get out with a profit or watch another year go by and see the house price decline.
Hey sellers!! What are you waiting for, put your house on the market now! The FED has cut the rates to 2.25%!! WOW!! Interest rates are LOW, LOW, LOW and there is so much pant up demand!! HURRY!! And since interest rates are low and there’s so many buyers waiting on the sidelines, I believe you can tack an additional 10% on to your asking price. Remember, Spring is prime buying time, you’ll have plenty of buyers!!
Mitchell #298, I have a few long-time renter friends who are finally starting to look at the possibility of buying a home. Not one of them has come close, however. They’re still finding homes either downright unaffordable or simply “not worth it” at current costs.
sync
728 – UC
687 – Sold at $320k
#296 your right I should not have used bubble there but house values turning upward instead. Wont move fast but it will stabilize if in fantasy world we see under $3.00 gas prices in the near future instead of the $4.00 I think we will be seeing.
Confused,
277 – IMO your comment about McGreevey says more about you than him.
grim #301, thanks. Do you know how long it took for 728 to go UC?
#278: I think you just described my situation. I’d love to buy a place, but I’ll rent for the next 50 years if the alternative is spending $800K – $1M in today’s dollars for a 4 bedroom in a nice town with a good commute.
#150 ledward..ditto as to what 3b stated in 152
BTW – just thought I’d share something I had heard from two different people who went to the Hall Street Estates, new homes being built in P-way. Both of them were told prices were non negotiable and they have plenty of demand. They were both rather rudely told to come back when they’re willing to pay asking.
#305, you must exaggerate the fact. who is willing to wait 50 years if he/she could afford the house? Life is short, enjoy whatever you can.
Do renters live joyless lives?
#293: that’s what they want to pay. It can be very strategic to have a mortgage even when you could pay cash for your house.
Hey why we are in fantasy world about cheaper houses, I can’t wait till 200K waterfront homes in southampton and 100K central park pied a tiers!!! Will be nice places to get away from it all when I want to leave my 300K alpine home.
Do renters live joyless lives?
Imagine Sisyphus lugging a 20 year old ‘fridge up 3 flights of stairs, only to have it tumble down as soon as he reaches the top.
Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. said in separate notes to clients yesterday that the Fed would cut by 1 percentage point.
# 309
Up until they die a pitiful death .
Tongue planted firmly in cheek.
Down payments are now history. Why should you risk your own hard-earned money when you can risk the bank’s money? A house is an investment: If it performs poorly, you cut your losses and walk away. Let the bank deal with it. Stop thinking of a house as a place to live.
It’s true. I will not be emotionally complete until I buy a house.
Did the Dow hit +400?
I used to get beat up on the playground in elementary school for not owning a house. I’ve been in therapy trying to come to terms with being a “renter,” but am still worried about what society might think.
Lots of closet renters out there who live a life of shame behind a charade of homeownership.
3315 cdawg: Except you cannot buy a house without a down payment today. Gotta get yourself up to speed. The no down payment days are gone.
#317 Sure did!
Has anyone walked into an open house and muttered “you complete me”?
from 291 – “Considering the alternative, which we believe is bankruptcy,”
Bring on bankruptcy :)
bear rally
275:
Ah yes, I get it: Pent-up demand. Maybe in North Carolina…
322: I did. Once. But I was talking to the complimentary cheese platter.
322
No but I have walked in and said “Show me the MONEY!”
Rent #192 –
There you go being all logical again.
I have a question for you finance folks. I have a good amount of cash in my 401K. I moved all of my cash two different funds in October ’07. Dow around 13,500 (Notably the only smart move I have ever made in the market). It is not sitting in an income fund and stable fund.
I want out, even though I have a YTD return of around 1%. Is there any way I can cash out of my equity and shift it to my own retirement fund without penalty. I would like to put it into commodities or something far far away from the dollar. Please Help! Thanks.
TJ,
The funds you’re talking about are in your 401k, correct?
Are you ANYWHERE near retirement?
329,
The short answer is no. You are limited to the options in your 401K plan. If you quit your job you could then move the 401K into a personal IRA or rollover into a new job’s 401K. The individual IRA would give you more options than a traditional 401K.
More Xanadu problems…
http://www.nj.com/news/index.ssf/2008/03/sports_authority_to_review_xan.html
syncmaster Says:
March 18th, 2008 at 4:03 pm
“Has anyone walked into an open house and muttered “you complete me”?”
Richard.
TJ, Your only option to avoid a peanaty is to roll it over into an regular IRA which through which you will have more investment options.
Try asking the beneifts administrator at your compnay to see if it is an option.
#322 Here is my take on the whole NJ Xanadu idea.
http://en.wikipedia.org/wiki/Marge_vs._the_Monorail
(209)-
“Hopefully the serious sellers, who have to/need to/want to, and can will start to get serious with asking prices.”
You hit it on the head: “have to/need to” will dictate the actions that follow.
#336 clot: I stand waiting and ready, to meet those sellers, when they appear;and appear they will.
Sean (217)-
Monte Carlo = pile of shit
from the Boston Globe:
The (Always) Sunny Side of the Street
By Binyamin Applebaum
March 16, 2008
Real estate agents are people who believe in the power of believing. They think drops in housing prices are caused in large part by negative thinking. They have confidence that downturns end when people have confidence again. They would like us, the grouchy media, to share with you, the reluctant public, two words of instruction: Buy now.
….
Listen, 2002 was a great time to buy…. 1997 was a great time to buy….
Now is not a great time to buy. Most housing analysts believe that prices will keep falling through 2008. Some people have reasons to buy now, and that’s fine, particularly if they’re planning to settle down for a while. I bought a condo last fall. But buying now is a choice you should make despite the condition of the market, not because of it….
I write often about people facing foreclosure. With some regularity, real estate agents write me to ask if the people used an agent to buy the home. The answer usually is yes. Real estate agents in recent years helped many people buy homes they could not afford.
I don’t hear agents talking about this or chewing on the consequences. Instead, I hear that the good times will return again if home buyers will just . . . buy . . . homes.
For time being, HAVE to give Bernanke and Fed credit (whether you love them or hate them). Anyone know what Morgan’s earnings will look like?
I hate to say it but maybe its no longer a time to rent but a time to some to move back in with their parents.
I must say, me and the missus did this to help out my parents plus save for a nice down payment. We plan on starting to look to buy in June sometime. We don’t want to buy and then leave out parents hanging because they are trying to sell their house but when i hear my mother talk about listing it for $440,000 it really pisses me off. This house is worth $375,000 at best. It sat for 6 months without even a lowball at $450,000 last March-September. My mother is stubborn and “doesn’t want to give it away”. My father want’s to list it at $399,000 or even $389,999….we’ll see.
340 Imus
Definitely agree that we have to give Bernanke and Fed credit. I’m less sure that we agree about what we’re giving them credit for…
That and the 450Sq Ft basement is not fun to live in anymore. We are used to it and have our eye on the ball but it’s getting time to move on. We don’t plan on moving from the house we buy for a very long time either so we’d like to try buying this Summer.
Too bad Mr. Bernanke and the Fed cannot do anything to help all the employees at Bear whose lives have been upended, and many who have lost it all.
kl (276)-
When has it not been the “best time to buy”?
In the early ’80s, my Dad would do a wrap mortgage on a borrower’s house in order to get the rate down to 14.5% from 17-18%. To that borrower, it was a great time to buy.
My first mortgage was in 1989, a 5/1 ARM at 11.5%. This represented a huge drop in rates. For me, there was never a better time to buy.
Until, that is, I bought my next house in 1994 with a privately-held mortgage (don’t ask) at 5.5%.
“Until, that is, I bought my next house in 1994 with a privately-held mortgage (don’t ask) at 5.5%.”
I didn’t know that loan sharks gave such low rates.
The point is not that one should wait until it’s the “best time to buy”; too often, this is a coded message, meant to impart the idea that purchasing at a certain time will lead to great financial reward for the buyer.
When an overwhelming number of buyers come back to the understanding that a house is a place to live…not a speculative financial vehicle…order will return to RE markets.
Clotpoll Says:
March 18th, 2008 at 4:52 pm
Sean (217)- Monte Carlo = pile of shit
clot: Monte Carlo is fine. The problem is the sacks and sacks of dufuses in personal finance circles who think it provides some kind of answer to anything, or who do a poor job of interpreting results. It is basically the blind leading the blind……there are many well meaning types in my field who think they are on the cutting edge of planning, when all these tools do is give them and their clients overconfidence that they have figured everything out…..
patient (346)-
In a way, that loan was worse than any deal I could’ve gotten from a loan shark.
That low rate wasn’t predicated upon the lender’s love for me. There was an expectation of performance in other ventures I had going jointly with the lender.
And, if I didn’t perform, the loan was callable.
One neat little thing about that loan, though: it was never recorded.
What a day!!!!! I love Wall Street, housing is sooooo boring next to the jolt of seeing your life savings disappear one day and reappear the next, leaving you with a net net of no loss and no gain but the longest set of skid marks your pair of hanes have ever seen.
#341 Joeycasz
It might not be the ideal living situation however I am glad to hear you all have a roof over your head. It also is a great opportunity to save for the down payment instead of it being lost to rent.
Best of luck to both you and your parents future.
Sounds like the deal Jim McGreey’s Limo Driver used to have!
Clotpoll Says:
March 18th, 2008 at 5:16 pm
patient (346)-
In a way, that loan was worse than any deal I could’ve gotten from a loan shark.
That low rate wasn’t predicated upon the lender’s love for me. There was an expectation of performance in other ventures I had going jointly with the lender.
And, if I didn’t perform, the loan was callable.
One neat little thing about that loan, though: it was never recorded.
349 clot
sounds like a godd*mn nightmare – until the last sentence.
John (352)-
“Sounds like the deal Jim McGreey’s Limo Driver used to have!”
Having to schtup McGreevey’s beard…while he watched?
Oy vey. I’d rather have a week of colonoscopies.
“lost to rent”
what are you a realtor ad? Lost to mortgage is more like it!!!
If you pay a 3k mortgage just to rent it out for 2K how come the guy renting is throwing money away? The owner has a huge loss of use of funds and is losing 1K a month yet according to realtors he is the smart one.
thank goodness high fuel prices don’t cause inflation or otherwise cause hiccups in the economy generally. Shwoo!
http://news.yahoo.com/s/ap/20080318/ap_on_bi_ge/delta_jobs;_ylt=AlrCnwHKPGa.EbsRt7QsYmOs0NUE
“ATLANTA – Delta Air Lines, faced with a weak economy, dimmer hopes of a combination with Northwest Airlines and record fuel prices that are eating up profits, said Tuesday it will offer voluntary severance payouts to roughly 30,000 employees — more than half its work force — and cut U.S. capacity by an extra 5 percent.”
Admittedly, those aren’t Manhattan jobs.
patient (353)-
You should’ve been on the line when the county clerk called me after I paid off the loan.
The lender had sent them a notice of satisfaction on a note they’d never submitted for recording.
John – in tepid defense of Mitchell, I think he was comparing renting to living with your parents, rather than comparing it to buying.
Right, Mitchell?
Sellers,
Aim 50k under the 2002 comp & make those greedy buyers get in a bidding war!
Sean Says:
March 18th, 2008 at 4:45 pm
TJ, Your only option to avoid a peanaty is to roll it over into an regular IRA which through which you will have more investment options.
Try asking the beneifts administrator at your compnay to see if it is an option.
________________________________________________
You can only rollover your 401k balance to an IRA on the basis of a qualifying event (reaching age 59 1/2 or leaving your job). You have various non-penalizable in-service distribution options (other than a loan), but they are all still otherwise taxable.
#358 Correct thanks njpatient
Dual families in a parent owned home. If they give money to someone else the parents don’t benefit. At the same time they probably receive a reduced rent allowing them greater savings for a down payment.
BubbleYum Says:
March 18th, 2008 at 5:29 pm
Sean Says:
March 18th, 2008 at 4:45 pm
TJ, Your only option to avoid a peanaty is to roll it over into an regular IRA which through which you will have more investment options.
Try asking the beneifts administrator at your compnay to see if it is an option.
________________________________________________
You can only rollover your 401k balance to an IRA on the basis of a qualifying event (reaching age 59 1/2 or leaving your job). You have various non-penalizable in-service distribution options (other than a loan), but they are all still otherwise taxable.
BY: by IRC you can withdraw money from your 401(k) and roll it if your company’s plan allows it. Most don’t though. It can be done though…
to add: it is one method to convert your tax-deferred 401(k) money into a Roth while still employed. Again, most employers do not offer the option.
to add: it is one method to convert your tax-deferred 401(k) money into a Roth while still employed. Again, most employers do not offer the option.
He should pay his parents rent.
njpatient Says:
March 18th, 2008 at 5:24 pm
John – in tepid defense of Mitchell, I think he was comparing renting to living with your parents, rather than comparing it to buying.
Right, Mitchell?
Housing Doom posted a piece about how garbage collections can indicate the state of housing and the economy:
http://housingdoom.com/2008/03/17/less-garbage-as-more-people-leave/
Now if only more people would leave NJ, it might not take me all day to drive across Middlesex County.
On Dual Income families. I think there is lot of myth. I would agree as society we have larger percentage of dual income families compared to lets say 1960’s, but I dont think that percentage is much difference from 1990’s.
Everyone thinks that since in today’s time everyone has 2 incomes, and hence can afford higher home prices. From what I see, as soon as couples have kids, the second income for large percentage of population becomes not that substantial to continue working. I am talking about majority, of course you will have minority where it all make sense.
re: 217 clot
I was being sarcastic, but unfortunately we will eventually see a new round of garbage rated like diamonds.
What will it take to convince my boyfriend that maybe we shouldn’t buy a place? I’ve pointed him to this blog, but he still thinks we can do it on $150G combined salary.
We’ve both been living with our respective families since graduating college and saving money (we can probably do a 20% DP on a $350,000 property). No, he doesn’t have an Escalade. He REFUSES to ever rent; meanwhile, I’d have no problem with renting because my initial goal was to live in Manhattan for the rest of my life… unfortunately, I wound up stuck in Jerz.
And yes, I know we could have saved more, but living like paupers would have resulted in at least one suicide attempt, if we were lucky!
Cramer on his Variety show calls bottom, and tells people to keep their money in the markets.
I think it is time to buy Zimbabwean dollars.
SG – I was comparing dual-income family ratios to the Boomer generation. I agree there are not many more than in the 1990s. However there are a lot of families that save on dual professional (or decidedly middle-class) incomes in order to get into a house, after which the wife stops working to stay at home.
My point is that did not used to be the case. It was possible at one time for a single income earner to get the family into the house without the spouse having to pull in a substantial income.
We also have many buyers who extended themselves to their eyeballs in mortgage debt on two incomes with an ARM (or worse) loan. Although I have no empirical evidence to back this up either, I assure you this was not widespread in previous generations.
chicagofinance Says:
March 18th, 2008 at 5:41 pm
BubbleYum Says:
March 18th, 2008 at 5:29 pm
Sean Says:
March 18th, 2008 at 4:45 pm
TJ, Your only option to avoid a peanaty is to roll it over into an regular IRA which through which you will have more investment options.
Try asking the beneifts administrator at your compnay to see if it is an option.
________________________________________________
You can only rollover your 401k balance to an IRA on the basis of a qualifying event (reaching age 59 1/2 or leaving your job). You have various non-penalizable in-service distribution options (other than a loan), but they are all still otherwise taxable.
BY: by IRC you can withdraw money from your 401(k) and roll it if your company’s plan allows it. Most don’t though. It can be done though…
________________________________________________
True–as I said, many plans do offer non-penalizable in-service withdrawal options, but they are still taxable. I assumed TJ was trying to avoid both the penalty and retain the tax deferrral.
Bru,
With a combined income of $150k, no debt, and a $70k down payment, a property priced at $350k is affordable. If it meets your needs and you will stay there long term, why not?
369 Bru
Show him the “Suzanne Researched This” commercial, followed by the Dr. Laura clip where the spouse calls up to ask what to do about the fact that she pushed her husband into buying a house that’s going to bankrupt them.
373 grim
I assumed they were aiming higher and that Bru’s example was intended to give an idea of the finances. But what you say is obviously correct – those numbers work fine.
Yum and chi
I don’t do qualified plan work, but there’s this on the rollover question:
http://www.accumulatingmoney.com/can-i-rollover-my-401k-while-still-employed/
371 CDawg
One myth spread by MSM and politicians is that exotic mortgage products such as interest only or ARMs are recent inventions by the evil lending industry. No doc loans have been around for people who own their own businesses or have other reasons for keeping their revenues discreet. Interest only loans have been around for people in situations where their present income may be small but their future income is guaranteed to go up (medical resident, recent law school grad). The difference now is that we now have banks pitching these loans to normal people, and we have a generation of homeowners who thought that they could refi their way out of any calamity since RE always goes up. The game has ended, and it will be a disaster. I can say that because on this board I don’t need to worry about eggs being tossed at my (rented) house.
Bru….NYC is amazing…why stay here. You only go around once….Jersey is great for having kids….but NYC is da bomb Yo.
Mitchell
Yes it is and thank you!
make those greedy buyers get in a bidding war!
Greedy buyers? I just want one house :)
grim,
What’s the lowdown with 1473 Van Houten Ave.? Do you have the info on this one?
BubbleYum Says:
True–as I said, many plans do offer non-penalizable in-service withdrawal options, but they are still taxable. I assumed TJ was trying to avoid both the penalty and retain the tax deferrral.
BY: based on patient’s post, you agree that if you can get tax-deferred money out, you can roll it. You are not forced to recognize the balance as income….
sorry, please allow me to go further…I don’t entirely agree with the poster at patient’s link……the rules are more flexible that that person suggests. The issue is that poster is being conservative. That said, you better be damned careful about how you are doing this….
VISA blows out the top of the range…b!tch
http://www.bloomberg.com/apps/news?pid=20601103&sid=a29L2LCpdgG0&refer=us
Amazing…. simply amazing. This lovely double-wide could possibly sit so long at this price that either the earth will consume it through plate tectonics or humans will evolve into apes.
http://www.realtor.com/realestate/mahwah-nj-07430-1097340163/
Have they started layoffs at BSC?
Gary,
Purchased 8/1/2006 for $355,000. Listed 11/2/2007 for $409k. Hasn’t seen a price reduction even though it has been on the market for 137 days.
re: 385 Gary, the suit of armor in the L/R makes it well worth it, think Castle on a hill.
Thanks Grim. I was wondering about that one because I remember when it sold and was surprised to see it on the market again. I bet it was purchased with a teaser or some BS loan.
Sean,
lol! Absolutely! I bet a lot of weed has been consumed in that place.
BY/chi – again, I don’t do qualified plan work, but agree with chi at 383.
385 gary
That thing must be on 6 acres backing up to a game preserve.
Or maybe it’s just overpriced.
Gary, did you check out Bru’s blog?
(369)-
I can’t say anything nice, so I won’t say anything at all.
patient (393)-
“Gary, did you check out Bru’s blog?”
This is like waving bleeding roadkill in the face of a rabid wolverine.
Bru – if you and the BF buy a house together, what will you do with it if you break up?
Merrill Lynch’s Rosenberg said that in the fourth quarter of 2007, Americans’ household debt almost equaled 140 percent of their after-tax income and that they were spending 14.3 percent of their after-tax income paying down that debt.
“Simply put, that means Americans are spending more on servicing their debt than they do on food,” Rosenberg said. “This is not just affecting stressed-out or soon-to-be-foreclosed home owners. This hurts everybody.”
Rosenberg predicted Americans will start saving more, which he said will shave 1 percentage point off annual U.S. consumer spending growth for years to come.
“It is hard to say how bad things will get,” Rosenberg added. “We’re in unchartered territory at this point.”
__________________________________
Yeah?? How’s Merrill’s debt, bucko? Oh, and that’s “uncharted”, not “unchartered”.
the rest of it he kinda has a point about….
The only way I can stop myself is to hack off my fingers…
patient (396)-
What the hell…here goes:
What would Alanis Morrisette do?
Rosenburg probably doesn’t know about the stimulus package.
And I’m here to remind you
Of the mess you left when you went away
It’s not fair to deny me
Of the cross I bear that you gave to me
You, you, you oughta know
Bru – I know I am old fashioned about this, but I really don’t think it’s a great idea to make such a major purchase with someone when you aren’t ready to legally commit to them forever. (That is, assuming you are allowed to legally commit.)
nice
“I will not be ignored, MIchael…”
Can someone post the link for the cartoon explanation of why the market crashed? I forget what it was called.
Art (402)-
Shhh. The word “commit” may be a trigger for her.
#397 njpatient: Rosenberg predicted Americans will start saving more.
Well how exactly can they save more, if they are servicing their debt.They have to eat too.
404 clot
I don’t recognize that one
enlighten me?
patient (397)
Thanks for the bad news (no really). I was starting to get worried with all the good stuff happening in the market. I was starting to believe I would actually have to pay a extremely large sum of money for a POS cape and be in debt up to my eyeballs for the next 30 years.
I know that prices have to come down but it is days like today that make you think twice.
(408)-
Fatal Attraction. Glenn Close, after the boiled bunnies and before the rub-a-dub in the tub.
#408 Come on! Every married man should know that one!
#370 sean:Same Cramer who toled em to keep their Bear stock.
Realtors: When you take a house off MLS and relist it with a new MLS #, isn’t it common to lower the price even a bit?
Been tracking a house in Bucks County for quite sometime. Started at 569,900 in July of 07, then went down to 549,900 in Oct of 07 and then 549,900 in Nov 07.
Sat at the same price until March, when it was yanked and relisted – at 549,900 again.
I’m assuming they don’t NEED to sell (still need to pull when they bought) but made the quick lowers in the fall in hopes of unloading it before the dead winter season.
Now the re-list is for ‘new spring buyers’ (enter laugh here).
whoops, that lowered price in Nov should be 539,900, and it was relisted at 539,900 as well
take me away (409)-
Wait ’til noon tomorrow, when all the traders realize it’s the same old sh#t, different day.
All 400+ points will be given back by Friday.
#368 sean: Dont think so. No investor is ever going to look at ratings in the same light again
Sorry didn’t see it was already posted earlier. Thanks.
3b it may take two decades but we will see junk investments in some form again, rated, regulated and stamped with some kind of approval. Under the covers junk but to the unsuspecting investors it will seem like gold.
“Fatal Attraction. Glenn Close, after the boiled bunnies and before the rub-a-dub in the tub.”
Duh! [*smacks forehead*]
gaigon jinn
“I was starting to get worried with all the good stuff happening in the market. I was starting to believe I would actually have to pay a extremely large sum of money for a POS cape and be in debt up to my eyeballs for the next 30 years.”
I’ve been saying since the summer that this would be a lot worse than the worst pessimists are saying. That remains true, and the bad times have only just begun. We have just scratched the surface.
This will be getting a LOT worse.
I promise.
Arthur C. Clarke, RIP
njpatient Says:
March 18th, 2008 at 9:32 pm
I promise.
uh….Shatner?
247. John
He and his wife, Michelle Paige Paterson, said they both had affairs during a time when their marriage was headed toward divorce.
Clot:
My wife and I were driving around Clinton and drove by one of your listings: 2459313. What the heck is with those windows? I originally just thought the owner was a little wacky but the whole street is the same way. The designer must have been on something.
galg (424)-
I think the architect designed these houses after watching “Yellow Submarine”.
What can I say? I sell ’em; I don’t design ’em.
BTW, that joint is a serious short sale. If I can’t get it sold, that will be the venue for a njrereport foreclosure fiesta. The pool out back is stylin’.
Bohemian Rhapsody
Is this the real price?
Is this just fantasy?
Financial landslide
No escape from reality
Open your eyes
And look at your buys and see.
I’m now a poor boy
High-yielding casualty
Because I bought it high, watched it blow
Rating high, value low
Any way the Fed goes
Doesn’t really matter to me, to me
Mama – just killed my fund
Quoted CDO’s instead
Pulled the trigger, now it’s dead
Mama – I had just begun
These CDO’s have blown it all away
Mama – oooh
I still wanna buy
I sometimes wish I’d never left Goldman at all.
I see a little silhouette of a Fed
Bernanke! Bernanke! Can you save the whole market?
Monolines and munis – very very frightening me!
Super senior, super senior
Super senior CDO – magnifico
I’m long of subprime, nobody loves me
He’s long of subprime CDO fantasy
Spare the margin call you monstrous PB!
Easy come easy go, will you let me go?
Peloton! No – we will not let you go – let him go
Peloton! We will not let you go – let him go
Peloton! We will not let you go – let me go
Will not let you go – let me go (never)
Never let you go – let me go
Never let me go – ooo
No, no, no, no, no, no, no, –
Oh mama mia, mama mia, mama mia let me go
S&P had the devil put aside for me
For me, for me, for me
So you think you can fund me and spit in my eye?
And then margin call me and leave me to die
Oh PB – can’t do this to me PB
Just gotta get out – just gotta get right outta here
Ooh yeah, ooh yeah
No price really matters
No liquidity
Nothing really matters – no price really matters to me
Any way the Fed goes..
sean (426)-
A parody of Freddie Mercury explains it all. :0
I seriously need a vacation.
It is with teary eyed sniffle-i-ness that I bid you all fond fare-thee-well.
I have found my draeam home and no longer will be living in New Joisey.
I will be a Seldonian (whatever the f**k that is…)
http://www.ushomeauction.com/property.php?auctionID=H-022&itemID=15557&venueId=88&start=0
Bid me a fond farewell and think of me often!
I’m off to buy curtains!
(2 separate styles to “match” the front windows, of course…)
njpatient Says:
March 18th, 2008 at 9:36 pm
Arthur C. Clarke, RIP
I’m taking you literally…
http://www.youtube.com/watch?v=uA4iPFsEW0I&feature=related
spam (428)-
Did they wipe the brain spatter off the wall?
Or is it sold as-is?
428 431
The reason it’s so expensive is that it’s the actual house where Evil Dead II took place – I mean, was filmed.
sean, that is brilliant. just had dh and sis in stitches (don’t *think* it was my rendition of freddie’s cultured tones that did it.)
Home Sweet Investment
http://www.nytimes.com/2008/03/18/opinion/18tabarrok.html?_r=1&scp=1&sq=home+sweet+investment&st=nyt&oref=slogin
Truly annoying. Apparently the US will not face the same decline in home prices as Japan did because Japan’s increase was steeper and higher and because, you know, there are only so many houses to go around here. The famous Shiller charts are right there next to the article and this guy has the nerve to suggest that “fundamentals” will support higher home prices. Not one mention of affordability of course.
Just sent this guy an email to check out this blog and that he’s wrong. Not that it matters …
Clot,
s’aight…
I budgeted for a shop vac and 3 filters.
I cannot go wrong.
This feels so right.
You know? When you just know?
WOW! WTF are they doing?
Fannie, Freddie Regulator
Plans Capital Announcement
By JAMES R. HAGERTY and DAMIAN PALETTA
March 19, 2008
The regulator for Fannie Mae and Freddie Mac is expected to announce a plan this morning that will give the government-sponsored mortgage investors more scope to prop up the home-mortgage market.
The plan involves a reduction in capital requirements for the companies and a promise by them that they will each raise several billion dollars of capital this year, likely through a sale of preferred shares, according to several people familiar with the situation. As a result, they are expected to be able to provide additional funding of as much as $200 billion for home mortgages and related securities.
Dang. Patterson sure as hell is blind. Wifey’s kinda hot.
What is it with these guys? Their wives ain’t chopped liver.
#436,
They are going bankrupt, buy some puts.
“The plan involves a reduction in capital requirements for the companies ”
I promise.
I should ignore everything all day and just watch Fox 5 news at 10. Another Ashley tidbit:
http://tinyurl.com/2g39xh
[436]ChiFi
Don’t sweat it.
Inadevertently, you were redirected the The Onion’s website.
See?
This whole thing is a parody.
Take a Xanax and lay back to watch American Idol.
The world is flat.
432 Mr. Patient-
Hubby is a huge Evil Dead and Bruce Campbell fan. He says it was filmed in NC- also looked it up on wikipedia.
patient (439)-
Crackhead, meet 8-ball.
Like Alice in f-ing Wonderland. Curiouser and curiouser.
lost (441)-
Then you and hubby should get in a bidding war with Spammy over that crime scene.
Clot
Nope I’m good thanks. I think that would be one of the few things that I would consider grounds for divorce.
Clotpoll Says:
March 18th, 2008 at 9:19 pm
Wait ’til noon tomorrow, when all the traders realize it’s the same old sh#t, different day.
– I would rather say ‘different toilet’
I have found my draeam home and no longer will be living in New Joisey.fare-thee-well.
I will be a Seldonian (whatever the f**k that is…)
In NJ, that house would be advertised as a “great alternative to a condo with just a little TLC” it would probably be offered around $290k.
Mine mine all miiiiiiiiiiiiiiiiiiiiiiinnnnneeeeeeeeee
I SAW IT FIRST!
I TOUCHED IT!!
MOM, I LICKED IT!!!! IT’S MINE!!!!!!!!!
More proof that we are witnessing the end of days:
“The discovery was a surprise to Francis. Just this morning, (3/18), he’d offered Dupre $1 million to host his 2008 Girls Gone Wild Spring Break Tour and pose for his new GGW magazine. But he wisely withdrew that costly offer when someone – he won’t say who – tipped him off to the fact that he already had sexy footage of Dupre.
In the news release, Francis likened Dupre to “a cloud that keeps circling back over the landscape.”
The irony of this statement was apparently lost on the GGW founder and CEO.
Francis, who served 11 months in a Nevada prison for two counts of tax evasion, was released a week ago from Nevada custody so he could face charges in Florida related to filming 17-year-old girls in a shower. A day later, he pleaded no contest in Florida to child abuse and prostitution charges and the judge released him on time served and fines. Then, he jumped on a plane and flew to L.A. to hold a press conference at the Beverly Hilton Hotel to herald his return to public life.
Francis still faces charges in L.A. of misdemeanor sexual battery for allegedly touching a woman inappropriately at a party.”
441 lost
I was being sarcasmic.
Thread’s getting a bit long. Where’s dad?
Sorry Patient. Evil Dead stuff is taken seriously around here for some reason.
Checking his Girls Gone Wild archives.
(436) chicagofinance
GWB said this week they would take additional steps to make sure the recession starts when he gets out of office.
Fannie and Freddie will be allowed (forced) to burn through their capital reserves about 10 or 20 billion to refinance junk, with leverage would be about 200 Billion.
Bear (no pun intended) all regulations and rules are now off, even the emergency brakes on the rollercoaster have been removed.
More Fox 5 news: Virgin Mary found outlined in trunk of palm tree. Pilgrimages underway.
Capital reserves are so last century…
Why have reserves when you can just use leverage?
451 lost
As it should be
ChiFi…
http://www.theonion.com/content/news/u_s_takes_out_debt_consolidation
“WASHINGTON, DC — Plagued by late fees, high interest rates, and harassing creditors, the U.S. took out a debt-consolidation loan Monday, combining the nation’s $6.1 trillion debt into a single, easy monthly payment.”
(Bush watches an E-Z Debt commercial on a White House TV.)
“My fellow Americans, we have just taken the first step toward regaining control of our finances,” said President Bush at a press conference. “Thanks to a joint arrangement between the Treasury Department, the Federal Reserve, and E-Z Debt Services of Baltimore, we are finally on our way to freedom from debt.”
“As of press time, the national debt stands at $6,144,393,982,061.52.”
(more)
I’m in moderation hell.
I hope Grim wakes up soon :)
Grim is probably polishing his gun. (no pun intended.)
This huge oversold market may have finally hit bottom, Jim Cramer told viewers of his “Mad Money” TV show Tuesday.
“Last Tuesday’s rally was not the bottom of this market,” he said, “but today’s rally was.”
http://www.thestreet.com/story/10408387/1/cramers-mad-money-recap-why-this-420-point-rally-is-different.html
I’m trying to console ChiFi by showing
the OTHER headlines in this parody….
See ChiFi?
It’s all a big JOKE.
U.S. Takes Out Debt-Consolidation Loan
WASHINGTON, DC—Plagued by late fees, high interest rates, and harassing creditors, the U.S. took out a debt-consolidation loan Monday, combining the nation’s $6.1 trillion debt into a single, easy monthly payment.
America Online To Build Three Million Home Pages For The Homeless
VIENNA, VA—According to AOL CEO Steve Case, there is room enough for everyone in cyberspace.
Google Announces Plan To Destroy All Information It Can’t Index
MOUNTAIN VIEW, CA—Executives at Google, the rapidly growing online-search company that promises to “organize the world’s information,” announced Monday the latest step in their expansion effort: a far-reaching plan to destroy all the information it is unable to index.
TWA Flight 800 Rebuilt, Ready To Return To Air
ST. LOUIS—19 months after its tragic crash off the coast of New York, TWA Flight 800 is rebuilt and ready to return to the skies.
Recent business
Asian Markets Fall Like Cherry Blossoms In Gentle Spring Rain
Feb 15, 2008
GM Introduces New 2008 Line Of Layoffs
Feb 08, 2008
Congress To Raise Alpacas To Aid Struggling Economy
Jan 30, 2008
3.2 Million Unemployed Americans Apply For Opening At Ohio-Area Bob Evans
Jan 21, 2008
Kraft Introduces New Kraft Doubles For Couples
Jan 18, 2008
business In Brief
Halliburton Given Contract To Rebuild Cheney
linky:
http://www.theonion.com/content/business
This one got me laughing
“Lou Dobbs Hosts Moneyline From Window Ledge”
http://www.theonion.com/content/node/27772
(This is from 2002, apparently just as bad?)
Chifi, Yum, Sean,
Thanks for your feedback. I am going to check with my companys benefit department to see what they have to say. I am ultimately trying to avoid tax and penalty as those will probably counter any anticipated gains that I wish to expect.
Thanks Again.
BTW-you can shop there, too.
ChiFi, we can all chip and get this for you…
http://store.theonion.com/gift-box-pro-whisk-set-p-147.html
I’m actually sad, though…they had a really neato gift back during the holidays, but I don’t see it online.
It’s a “USB Toaster”. You plug it into any available USB port on your laptop and about 28 minutes later, you have wonderful, warm toast. Excellent gift for those who like to snack while they read about Jim Cramer…
Huh…
I wonder if it’s sold out.
Shanghai is down again, I gather the commies are POed with the markets and the sandstorms in Bejing. Perhaps they don’t like Visa?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=1801730&sid=123443&dist=TQP_chart_date&freq=1&time=1mo
Paul Volcker being interviewed on Charlie Rose now!
I think the reason why we’re considering buying before marriage is because we want to be sure we can truly support ourselves before we get married – we have no plans on begging our parents to help us with our bills. Personally, I would prefer renting for a year so that we know we can put up with each other’s day-to-day quirks (we’ve been together for almost six years), but The Boy is a confident fellow.
Also, it would be rather weird to be a modern engaged woman still living with the parents. Granted, it’s also weird for a modern woman to still live with the parents, though considering these days that’s the fate of anyone whose parents won’t put them up in their “own” place, I suppose I am a trailblazer.
We’d consider living NYC if we actually worked there. I know many people do it, but commuting to the Jerz (especially if you need a car to get to and from work) is rather … pointless. Regardless, we are Jersey people, and we know we couldn’t live far from NYC; I went to school in Boston, and I found that city lovely, but dull.
And if you think I’m dumb and annoying, at least I am not like my acquaintances who just put their Middlesex County townhome on the market – and it hasn’t been a year since they closed on it! They thought they’d be living there for years, but then they suddenly became gung-ho on moving South. I suspect they bumped into Mitchell. ;)
Grim, thanks for 373 … we’re not going to jump just yet, but it makes me feel a bit better (amid all the doom and gloom here) that perhaps it’s possible.
Actually, I’d like to thank everyone for the feedback – even the condenscending variety. Still, I must say there are two things people are truly judgmental on: How other people spend their money, and baby names.
I think Hillary will get us out of the Great Depression 21st Century. She will have constitution changed to eliminate term limits. She will re-invent Social Security. HRC will be the initials of the best 21st century president.
Paul Volcker being interviewed on Charlie Rose now!
Thanks. Just turned it on. What did Volker do to Charlie Rose?
Renting,
LOL! Actually Charlie said yesterday that he had a small accident and either fell or bumped his head on something.
Volcker doesn’t strike me as the abusive type.
Can we recruit this man back as fed chairman? Seems like he’s not afraid to call a spade, a spade.
Trip (471)-
“Seems like he’s not afraid to call a spade, a spade.”
That disqualifies him from leading the modern-day Fed.
Understood Volcker’s philosophical point on advocating a greater use of Fannie/Freddie to absorb more of the mortgage market shocks. However, it seems naive to have such an expectation, knowing what pitiful shape these two GSE’s are in. Their balance sheets simply aren’t up to the task.
Absent Fannie/Freddie, where else is there to park the slop?