President Obama is going to pay your mortgage! (Taxpayers really, but who is counting?)

From the NYT:

U.S. Will Push Mortgage Firms to Reduce More Loan Payments

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.

This entry was posted in Economics, National Real Estate, Politics, Risky Lending. Bookmark the permalink.

107 Responses to President Obama is going to pay your mortgage! (Taxpayers really, but who is counting?)

  1. grim says:

    From the Philly Inquirer:

    S. Jersey faring worse on jobs than Phila. area

    The Delaware River marks not just a geographic barrier between Southeastern Pennsylvania and South Jersey, but also a persistent economic divide.

    Compared with Philadelphia’s suburban Pennsylvania counties, the South Jersey counties of Burlington, Camden, and Gloucester have higher jobless rates, higher mortgage-delinquency rates, and lower average wages, according to government data.

    The unemployment rate in Burlington, Camden, and Gloucester Counties was 10 percent in September, compared with 7.1 percent in Bucks, Montgomery, Chester, and Delaware Counties.

    The jobless rate of 19.2 percent in the troubled city of Camden weighs on the figure for South Jersey, but even without it, the aggregate rate for the three counties – which are home to nearly a quarter of the region’s population – was 9.6 percent.

    Add Philadelphia’s 11 percent unemployment rate to the mix in Southeastern Pennsylvania, and the overall rate there jumps to 8.4, still significantly below the rate in South Jersey.

    Second-quarter mortgage-delinquency rates were 3.88 percent in Burlington County, 4.55 percent in Gloucester County, and 4.76 percent in Camden County, Federal Reserve Bank of New York data show. In Philadelphia’s Pennsylvania suburbs, the highest rate was 3.01 percent in Delaware County, the lowest was 1.83 percent in Chester County.

    Average weekly wages also do not look good for South Jersey, where pay is 19 percent lower than in Philadelphia’s Pennsylvania suburbs.

  2. grim says:

    From the Record:

    N.J. business leaders eagerly await GOP governor

    Not many governors take office in an economy as bad as the one Governor-elect Chris Christie will inherit in January.

    And few face a business community as expectant as today’s.

    After nearly a decade of Democratic gubernatorial rule, business leaders hope the arrival of a Republican to the governor’s office will bring radical change to the state’s troubled economy and solutions to a range of woes.

    They include the perception that the state is anti-business, expensive and losing its vaunted reputation as an engine of growth.

    A sense of the business community’s grim outlook could be seen in a statement by the New Jersey Business & Industry Association, a Trenton-based trade group, last week as it released a survey showing that only 1 in 10 businesses think New Jersey is a good place to expand — down from 1 in 2 a decade ago

    “The dismal state of the New Jersey economy puts the focus squarely on the one thing that state government can do to improve the situation: improve the business climate,” the association wrote.

    That’s easier said than done in a state that has lost 170,000 jobs and where unemployment is at 9.7 percent.

  3. grim says:

    From the NYT:

    A Little Alfredo With That Listing?

    DURING the two years that their two-bedroom Glen Cove colonial was on the market, Jenna Caggiano and Rich Peck would often return home after yet another real estate open house to find dinner ready. Their brokers — Natalie C. McCray and Eileen B. Heimer of Daniel Gale Sotheby’s International Realty — had cooked it during the event, between visits from potential buyers.

    Ms. Heimer “would have a pot roast going,” recalled Ms. Caggiano, a teacher. Or she might have taken sausage out of the freezer and made pasta with sauce. “We would come home and have a whole meal.”

    At other times, Ms. Heimer baked cookies and was a baby sitter for the two young Peck children. Ms. McCray took care of the family dog, Reese, moved furniture and packed up clutter. She helped Mr. Peck take the dining-room doors off their hinges, carry them outside and paint them.

    With houses sitting on the market longer, Ms. McCray said, “the whole process is more intense and stressful on the sellers.”

    To reduce that stress and temper the disappointment of lower sale prices — and also to keep clients from dropping them for another agent partway through a seemingly endless sales process — some brokers are significantly expanding their job descriptions.

    Beyond rearranging furniture and decluttering, they take on jobs like plant watering, bed making and floor scrubbing; they check on homes when the owners are out of town; and sometimes even apply a coat of sealer to the driveway or do real estate-related paperwork.

  4. grim says:


    I’ll be around this afternoon, are you working?

  5. Schumpeter says:

    grim (3)-

    Here’s the best dish an agent can cook for sellers:

    At week 6 of the listing, they either get real and reduce the price of their cabbage-reeking POS split with an 11K tax bill, or every night when they come home, they can damn well microwave a cup of ramen for themselves.

    Two years on the market? Unbelievable. Who’s the biggest loser there? The seller or the agents? Obviously, neither understand the time value of money.

  6. Seneca says:

    … just read the CNN story on the Obama mortgage mod program. The comments section is a must read. Lots of folks complaining about the ineptitude of the banks and government. Lost paperwork, taking too long to get their three months/five months of modified payments, questions on why their loans are not simply having principal reduced.

    Look, if I bought 5x more house than I needed at 50% more than its worth now, I would be the first in line to get my modification.

    But I am not overextended. If the majority of the population is still employed and paying their mortgage/rent on time, how many times can Obama ask us to bend over before we decide our ass hurts and he can go F*ck himself?

  7. Schumpeter says:

    Like I want a listing for two years.

    I’d rather have a second c0ck.

  8. Seneca says:

    linky to CNN story

    Read the comments but refrain from tossing your breakfast.

  9. lostinny says:

    Re: Maui

    I don’t have a lot of cash but I do have some skills that would be very valuable out there. The problem is there’s a lot of competition. I looked at some listings last night. Lots of good deals to be had. However, I need to be more familiar with several neighborhoods before seriously thinking about it. And, the dog would have to be in quarantine for six months before she would be able to live there. At her age, I don’t think that’s a good idea.

  10. serenity now says:

    Anyone have experience with Amerisave??
    They are offering me refinance for 25yr at 4.375%
    Have locked in rate pending documentation.

  11. kettle1 says:


    from yesterday
    The “Royals” of the UAE ain’t gonna pay

    I am sure Issa bin Zayed has made a few “friends” with his nasty little fetish. Once they step outside of their home country the royal family will probably want to keep a very close eye on their backs. for 180 billion an “accident” can be almost guaranteed.

  12. Jim says:

    Did anyone look at the link to #8 on the individual bailout stories. All the folks receiving modifications will have windfalls when the economy picks up. They will get higher paying jobs while their mods keep them at ridiculously favorable terms.

  13. crossroads says:

    am I wrong to assume that foreclosures would be happening
    at record rates even if unemployment was at %6 or %7? It seems to me with the wave of resetting loans coming we would have these problems anyway.

  14. chicagofinance says:

    C: I’m going here tomorrow…any questions that you want me to ask?

  15. 3b says:

    Some of the firms ought to be embarrassed, and they will be.”

    Perhaps some of the borrowers ought to be embarrased too!!

  16. kettle1 says:


    Soon, all three billion of us will communicate, collaborate, and community-build – buy, sell, borrow, and invest – together without middlemen, brokers, or gatekeepers.”

    I hate to be a spoil sport, but have you noticed how gloabally everyone, including the US and US companyies are jockying to insert themsleves into the middle of virtual communication? <any companies have already done so without the average joe even recognizing it. Google deep packet inspection. Most large internet companies are very capable of acting as middle men if they wanted to. Governments are fighting hard to maintain tax revenues from online transactions and in many ways its a marketing wet dream.

    the authors vision is possible but unlikely at this point. As long as the average joe is OK with being a corporate slave.

  17. kettle1 says:

    3b 16

    Perhaps some of the borrowers ought to be embarrased too!!

    Why? why cant you or i play by the same rules as the corporate persons of the world?

    from a purely logical perspective (not ethical or moral) it makes no sense to concern yourself with embarrassment or any other such notions if a legal action is going to further your personal goals and potentially benefit you financially.

    At some point we are all stupid for not playing the game

  18. Cindy says:

    15 Chicago

    I am curious about the fate of Wells Fargo. The whole Golden One/Wachovia option arm to interest only to hold off the write downs thing. Is that going to work?

    I see that there was a plan….

    pg. 502 “The new provision would allow Wells Fargo to use all of Wachovia’s write-downs as a deduction against its own income, thus enabling the combined bank to save billions in future taxes.”

    Is it going to work or is Wells going to regret the day they paid $7 for anything.

    I like the Kovacevich dude. He built Wells Fargo into a well-run institution here on the West Coast – then this all came about.

    Will he be spared?

    This is interesting also re: Lehman: pg. 535

    “Despite claims to the contrary by Paulson, it seems undeniable that the fear of a public outcry over another Wall Street rescue was at least a factor in how he approached Lehman’s dilemma.”

    Or did he just not like Fuld as some have said.

    Sorkin writes: “CEO Richard Fuld did make errors, to be sure – some out of loyalty, some out of hubris, and even some possibly, out of naivete. But unlike many of the characters in this drama, whose primary motive was clearly to save themselves, Fuld seems to have been driven less by greed that by an overpowering desire to preserve the firm he loved.

    He seemed to have a bit of a soft spot for Fuld.

    There were just so many back-room deals. I just wonder if he ran home and took a shower after every interview….

  19. lostinny says:

    18 Kettle

    At some point we are all stupid for not playing the game


  20. Cindy says:

    17 – Kettle

    Just started to read it – I’m sure you would love it. 230 pages – a day’s read for you. I would be very interested to know what you think.

    From no phones to net phones…

    pg. 12 “What is the likely impact of such rapid Web phone diffusion? A 2005 study of 21 developing countries by Leonard Waverman of the London Business School, showed that an extra 10 mobile phones per 100 people in a typical developing country leads to an additional 0.59 percentage points of growth in gross domestic product (GDP) per person. With millions of phones arriving every year in the developing world, we can expect to see life-changing benefits showing up everywhere.

    An example…

    After the Asian Tsunami in 2004, sardine fishing of the coast of Kerala in southern India came to an abrupt halt. Then, boats started going out with mobile phones so they could stay in touch with their families.

    Something interesting happened…

    “With the mobile phones on board, the fishermen came to realize they could call the coastal markets while they were still at sea. Rather than sell their fish at beach auctions, they could call around for the best price along a wider swathe of the coast. This has produced better efficiencies and the dumping of fewer hauls. Information technology improved access – and that in turn is making a difference at all levels of commerce on the coast of India.”

  21. Shore Guy says:

    Cue the IDF. I wonder if we can disclaim knowledge of wave after wave of Israeli warplanes crisscrossing Iraq? Or does Israel opt to use a quantum weapon and pawn off the incident as an Iranian nuclear accident?

  22. Shore Guy says:

    With all of these handouts, there is no longer a compelling reason to do anything prudently. The options, scrimp and save and deny ones’s self and get buggered to pay for the imprudent or live above one’s means, enjoy, travel, spend, live for the moment and never have to pay the bill.

    This, it seems, is the reality of the situation.

  23. 3b says:

    #18 Kettle: Agreed. But it is just not right, and goes against everything I believed in,and everything I thought this country was.

    But you are right, and I will play the game go FHA and keep my money and than request to be modified.

  24. Shore Guy says:

    From each, according to his ability, to each, according to his need. This is the new motto for the federal government right? That whole E pluribus thing had to be updated anyway.


  25. Cindy says:

    Well this can’t be bad….

    Washington Post “Lobbyists pushed off advisory panels”

  26. Shore Guy says:

    “But you are right, and I will play the game”

    What is there left to say.

  27. Shore Guy says:


    Have a good flight back to the workers’ paradise, umm, debtors’ paradise.

  28. 3b says:

    #8 I like the woman who is outraged at BOA, not helping modify her loan quickly enough and her quote that she will never do business with them again!!!!

  29. 3b says:

    #28 Nothing.

  30. Shore Guy says:

    From CBS News:

    “Party Crashers: Pay Us $500K, We’ll Talk

    NEW YORK, Nov. 29, 2009

    An American TV executive says the couple that crashed President Obama’s first state dinner is now offering to talk to broadcast networks about it – providing they’re well paid.

    The executive, who spoke on condition of anonymity because the network doesn’t publicly discuss bookings, says representatives for Michaele and Tareq Salahi contacted networks to urge them to “get their bids in” for an interview”

    There was once a time in this country when we put our time and attention into developing technologiesand building products that amazed the world.

  31. Shore Guy says:

    Can USSS arrest these two just to spare us their hawking the next couple of weeks? If not, perhaps they will get their own series, “The Party Crashers,” complete with a Christmas special.

  32. kettle1 says:

    Who here thinks anyone who bought after 2004 with less then 20+% down will have any equity left in 2016-2017????

  33. NJGator says:

    Shore 29 – We’ve got one more day at sea before we are back in California. We’re staying over an extra day to take Lil Gator to the zoo. Sailing’s been a bit rough since yesterday. Stu and lil Gator are fine. I, however, have been sea sick since yesterday afternoon.

  34. SG says:

    Furious investors warn troubled Dubai it will ‘never raise a penny again’

    Investors are angry that the announcement was made at the start of the Islamic Eid and US Thanksgiving holidays, leaving them in the dark for days. “They won’t be able to raise a penny again from the international investment community,” one hedge fund manager said.

    As well as putting the frighteners on stock market investors who had been betting on a “V-shaped” bounce out of recession, Dubai’s crisis has turned the spotlight on other countries that could struggle to repay their hefty debts.

    Danny Gabay, director of City consultancy Fathom says Latvia, Greece, Ukraine and Hungary, which all face severe fiscal problems, are “on the front line,” in the battle to avoid a government debt crisis in the future.

  35. Cindy says:

    15 – Chicago – Could you let me know how that turns out – Very interested…

  36. 3b says:

    #34 I don’t think many who put 20% down will have any equity left either. And lets not forget all who purchased in 2003 and before who sucked equity out for additions, renovations, cars, college tuition, and, vacations. And lets not forget the 10k and more a year in property taxes today.

    I believe real estate will be dead for a generation or more.

  37. SG says:

    The Collapse of Finance…

    “A breath-taking blunder in Dubai… Dubai is looking more like Argentina than Singapore – but a lot less predictable,” says the FT editorial.

    No one is sure what is going on. Most people take from this story what we knew all along: lending to shady characters in sunny places is not an easy way to make money. Especially when the shady characters own the country.

    Trouble is, shady characters run near all the world’s countries. If an investor cannot trust the ruling family of Dubai, how can he trust the commies who run China? Or the hacks who run the United States of America?

    What will he think when he gets a closer look at Britain’s finances? Britain, too, relies heavily on the financial industry. And Britain, too, is heavily dependent on debt. Its public finances are among the worst in the world. Japan’s public debt, to add another example, is already 200% of GDP. It’s expected to reach 300% in a few years. And yet, Japan – like the US and Britain – just keeps borrowing. How long can this go on? When will Britain, the US, and Japan announce their own moratoria on debt service payments?

    “Consider a country. For the top 20% of the population real incomes have increased by 60% since 1970. But for the other four-fifths real income has fallen by more than 10%. Am I talking about Guatemala or Bolivia? These sort of inequalities have in the past provoked resentment sometimes articulated through revolutionary movements and social unrest. But I am not talking about a tiny Latin American state; these figures apply to the US. How can this be? Middle class America is surely better off compared to 1970; if you look at higher car ownership, better housing, more white goods and gadgets. The answer is debt. No wonder the politicians are frightened of it contracting!”

    We have been saying that the last 10 years was a ‘lost decade’ in terms of income, employment and stock market growth. For most people, their whole adult lives have been spent slipping backward. Since the Carter Administration, the typical American has lost income. A whole generation made no financial progress.

    But they didn’t revolt. Instead, they borrowed. It gave them more gadgets, gizmos and floor space. It also gave them the impression that things were getting better. Now we’ve reached the end of that period of debt expansion. Now debt is contracting. So are lifestyles.

  38. kettle1 says:


    the average generational length in the US is about 25 years. I think we bottom out around 2016-2018, when you will here evevryone permanantlly swearing off RE and the next boom is likely to start around 2020 or so peaking 2024-26.

    Thats what google tells me anyway. Only time will tell and by then i doubt we will be blogging here anymore.

  39. yo'me says:

    Nov. 29 (Bloomberg) — The United Arab Emirates’ central bank said it “stands behind” the country’s local and foreign banks, which face losses from Dubai World’s possible default, and offered them access to more money under a new facility.

    Banks will be able to use a special facility tied to their current accounts that can be accessed at a cost of 50 basis points above the three-month local benchmark interest rate, the Abu Dhabi-based regulator

  40. yo'me says:

    We don’t need no more trouble.What we need is love..Who is going to stop the war?

  41. Sean says:

    re #41 – NO WAY the UAE covers all that DEBT. It is in the range of 180 Billion in construction loans.

    Also seems now nobody has to pay now in Dubai or go to prison.They are no longer arresting people and putting them in debtors prison for bounced checks as of this week, there were something like 1/2 a million bounced checks in the first 5 months of the year. Many of the check bouncers were real estate flippers.

    From today’s news.

    “Instead of being investigated by police or prosecuted, delinquent tenants and homeowners will be referred to a new judicial committee that will make a binding judgment on whether they should be held to payment. It will also deal with developers who run into financial difficulties and cannot pay their investors.”

    The move, decreed by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, follows growing concern that the criminal courts, and prisons, have become clogged up with bad-debt cases as a result of the global financial crisis.”

    Also I heard they organized “orderly” write-downs at all UAE banks for the next year or two. There is NO way 100% will be covered by the UAE.

    $0.05 or $0.10 on the dollar is the new black.

  42. Sean says:

    re: #8 – Seneca – Anecdotal.

    Know of someone who went through the process to get the “trial modification”.The bank insisted upon a wire transfer of all monthly payments for the mortgage mod. Friend who was a realtor by the way has now told me apparently the bank is now refusing the wire transfers.

  43. Barbara says:

    I predict Shria law for deadbeats.

  44. Seneca says:

    Sean #44 – I have no doubt the banks are screwing with people in a major way. I just don’t understand why our government is so interested in beating its head against a wall with a program that is not working.

    One of the comments mentioned letting people declare bankruptcy without the usual decade long ding on your credit. I haven’t thought through all the implications but my initial reaction is; fine, why not? It seems like a better alternative than the mortgage mod programs.

    You turn the keys back over to the bank and find a place you can afford to live in without worrying about credit 5 years from now once you found a job and have been paying bills. The bank has to deal with the bad asset and why not since they were the ones taking the risk on the bad credit. RE prices fall and that works out well for the prudent (and patient) homebuyers.

    Do I really care if someone who defaulted doesn’t have bad credit for 10 years? It will hurt me anyway as I probably have some equity in some of the banks that made those bad loans but its a minor hit and less agonizing than waiting 10 years for RE prices to finally drop.

    I have no idea what I am talking about and shouldn’t post when sleep deprived but, just thinking out loud.

  45. yo'me says:

    The bank has to deal with the bad asset and why not since they were the ones taking the risk on the bad credit. RE prices fall and that works out well for the prudent (and patient) homebuyers.

    Exactly!They are suppose to cover their behind if the collateral depreciate in value.The consumer defaults,they get the collateral.

  46. d2b says:

    It would be very interesting to see the state of the housing market if bankruptcy had absolutely no consequences.

  47. kettle1 says:


    if bankruptcy has no consequences, then you might see housing markets return to the pre 1920’s boom standards. A time when you generally only saw 20 – 30% loans (i.e. 70-80% DP). You would also see a much flatter market and a higher level of financial segregation in housing as the median incomed levels and below would be unlikely to be able to come up with the DP needed and prices driven way lower then anyone would now image as even those with the income to build up the DP are not going to be bidding homes upt to 1 million for a .1 acre lot in millburn.

    Such a move would be a game changer and probably crush debt markets as there is no way that the huge market of RE based derivatives would survive such a game changing move intact in its current form.

  48. kettle1 says:


    it would be a 50 megaton neutron bomb on the RE industry. Consider those who have huge mortgages and now see the value of RE drop like a stone around them. It would essentially force a large % of people to declare strategic bankruptcy. It would likely be a self reinforcing cycle.

    It would essentially be free money if done correctly.

  49. kettle1 says:

    Re Dubai

    They have little oil, little water, and little arable land. They bet the house on their future as a global banking center and hence the standard derivate RE markets that are associated with global banking centers (NYC, London, HongKong etc).

    Once they their banking sector is toast they are seriously SOL. Their Palm and World Island complexes will be remembered for their hubris,55.125961&spn=0.459402,0.617294&t=h&z=11

  50. kettle1 says:


    back to the future? Wonder what it looks like in 2023

  51. kettle1 says:

    Its official. The Kettle Family Tree is UP!

    happy holidays all :)

  52. Al Gore says:

    You guys are gonna love this one.

    “The US public will be “outraged” by Citibank’s $8 billion loan to Dubai just six weeks after the bank was bailed out, US House of Representatives domestic policy subcommittee chair-man has said. Dennis Kucinich commented on the Dubai loan and other US banking investments as a congressional panel released a report that strongly questioned Citibank’s actions. The report, shown to 7DAYS, cites the Dubai loan as the largest of the “questionable transactions” by banks after the US government bailed them out. It notes that the loan to Dubai’s public sector came on December 14, just six weeks after the US government gave Citibank a $25 billion bail-out. “

  53. leftwing says:

    “Exactly!They are suppose to cover their behind if the collateral depreciate in value.The consumer defaults,they get the collateral.”

    A basic tenet of commercial and consumer banking has always been two sources of repayment.

    The first source on a mortgage is always the cash flow of the borrower.

    The secondary source is the collateral.

    No banker in his right mind shiould make a one way bet on the collateral. It is a ‘heads I lose, tails you win’ scenario since if the banker is right (i.e. the value of the collateral increases dramatically) all the banker gets is repaid while if the collateral takes a hit the bank suffers.

    The primary source of repayment remains the earnings of the borrower. Take this source away, through easing bankruptcy standards or otherwise, and then really watch lending and real estate sales contract.

  54. Veto That says:

    “*Major banks being told to obtain storage for new currency dollars.”

    AlGore, you posted this yesterday. What is this referring to? What ‘currency dollars’?

  55. yo'me says:

    In asia no banker in his right mind to give a loan at 20% downpayment.the usual is 30 to 50% depends how credible is the buyer.There is no credit score,so previous history with the same bank is all your relying on.30 years mortgage are unheard of,until recently.Only government loans you can get 20 years.In a downturn,say collateral loose 30% of value,banker is covered with remaining principal plus income on interest payment.
    Is not America great!You can call the house yours with no meat on the game and walk away,if you made a mistake on the investment.

  56. kettle1 says:


    I would assume that AL Gore is referencing FRN 2.0 (Federal Reserve Note, the paper you currently have in your wallet)

    There is a general scenario that the US avoids default or Wiemar by issuing a new dollar or issuing “greenbacks” directly instead of federal reserve notes (Greenbacks are paper currency issued directly by the treasury and independently of the FED). It would make our outstanding debt worthless overnight or anywhere between worthless and some % of the new greenback/FRN2.0. The USG could set the value of greenbacks:FRN at any ratio they see fit, but most likely at some rate above 0 that would avoid nuking the US credit rating while still effectively wiping out a significant portion of the outstanding foreign debt.

    Its a possible scenario though an unlikely one at this point. The right to issue money rests with congress and they could direct the treasury to begin issuing greenbacks at a set rate at anytime. They could also require the FED to issue FRN’s for foreign debt only or some other such scheme.

  57. kettle1 says:


    I would assume that AL Gore is referencing FRN 2.0 (Federal Reserve Note, the paper you currently have in your wallet)

    There is a general scenario that the US avoids default or Wiemar by issuing a new dollar or issuing “greenbacks” directly instead of federal reserve notes (Greenbacks are paper currency issued directly by the treasury and independently of the FED). It would make our outstanding debt worthless overnight or anywhere between worthless and some % of the new greenback/FRN2.0. The USG could set the value of greenbacks:FRN at any ratio they see fit, but most likely at some rate above 0 that would avoid nuking the US credit rating while still effectively wiping out a significant portion of the outstanding foreign debt.

    Its a possible scenario though an unlikely one at this point. The right to issue money rests with congress and they could direct the treasury to begin issuing greenbacks at a set rate at anytime. They could also require the FED to issue FRN’s for foreign debt only or some other such scheme.

    In such a scenario, congress could also tie the greenback to some portion of gold and massively devalue FRN’s in order to attempt a salvage of credit rating.

    This is a summary of what i have seen on the matter and not my personal analysis.

  58. 3b says:

    #40 Kettle: We will see. I wonder what property taxes will be than? 25k 30k or more on a 3 bed pos cape? Perhaps property taxes will keep a lid on the next boom.

  59. kettle1 says:

    3b 60

    re 30K property taxes:

    I think that the currency issue would be under better control by then. maybe 30K in year 2000 FRNs but we will either see a huge interest rate spike followed by massive debt restructuring and defaults ( after a nice round of substanial inflation to wipe out a chunk of the debt, or perhaps we really do end up on greenbacks by then.

    Note that the FED has already asked for congressional approval to issue its own debt, which for all intents and purposes woul2 act as FRN 2.0

  60. Al Gore says:

    61. Thanks for the insight Kettle. I really didnt know what to make of it.

    What really has me concerned is that the FDIC is 8 billion in the hole.

  61. Veto That says:

    “What really has me concerned is that the FDIC is 8 billion in the hole.”

    Gore, Why is this a big deal? Our fed govt is $13 trillion in the hole.

  62. kettle1 says:

    AL Gore:

    If the FED was given the right to issue its own debt, then the issue of the 8 billion is trivial.

  63. kettle1 says:


    I am not the currency expert here, as i said just repeating what i have read else where

  64. Al Gore says:

    “It seems that the healthy banks will get to come up with new funds all over again to protect the unhealthy banks, or maybe it is the regionals and community banks which will get to fund the problem. Or with any luck, the taxpayers can get to participate in the misery here. The Federal Deposit Insurance Corporation, or FDIC, has reported that the deposit insurance balance has now slipped into negative territory in the third quarter. The balance fell by $18.6 billion and is now at -$8.2 billion. Part of the reasoning for this is because the FDIC had to set aside $21.7 billion in provisions for additional bank failures.

    There were 50 banks which failed and were taken over in the quarter. But this list of “troubled banks” rose to 552 in Q3 from 416 in Q2. Interestingly enough, the banks covered posted a profit of $2.8 billion despite credit coming in sharply and despite loan balances being down almost 3% or $210 billion. That drop in loans is the largest on record. Assets fell by 0.4% or by over $54 billion.

    Thankfully we have seen slower charge-offs from more recent data outside of this report, because the charge-off figure was $50.8 billion from the banks in Q3 with the highest reading at 2.71% of loans. Delinquent loans (non-current) were up over 10% to $366.6 billion in Q3.

    This marks the second time in the FDIC history that the funds have gone into the negative balances. With the troubled banks rising and with the total count of seized banks now over 100, this is probably going to continue looking awful for the Q4 report as well. The good news is that, just like unemployment, is a lagging indicator…. as long as it doesn’t keep going on and on.”

    Im no expert either but I heard a report that the FDIC watchlist is not 552 banks its 2035.

  65. still_looking says:


    Just got home now. started at 0700.

    First case of the day?

    Lady with “crampy abdominal pain” every 15 mins… whoopsy! nope. she didn’t know she was pregnant.

    thankfully did NOT deliver in the ER (or hopefully at all…) OBGYN estimates her at less than 30 weeks (too early.)

    I am the proud owner of a few more gray hairs.

    god help me.


  66. still_looking says:

    Seneca, 8 RE mortgage remod article-

    F*ck that soci@list shithead!

    (Yeah, I am in a bad mood, not that anyone gives a shit. I actually have to f*cking work for my money.)


  67. still_looking says:

    Shore, 32

    All my hospital is abuzz about is “Did Mrs Woods beat up Mr. Woods.”

    I — for one — don’t give a f*cking gerbil’s ass whateverthef*ck they were doing… Who.The.F*ck.Cares????


  68. Aardvark says:

    Still_looking – are you a Doctor?

  69. Rev. Al says:

    Would appreciate some thoughts on the purchase of a townhome that uses a heat pump as its sole source of HVAC. Never lived in a place that had this type of setup and there is no backup fuel (oil/heat) to switch over to, should the temps really drop off for a sustained period of time. From the research I’ve done, it sounds like a more inexpensive option to run when temps are moderate, but I don’t like surprises.

    It’s a new unit, installed less than 2 years ago but I don’t have more specifics on it yet. The home is about 2000 sq feet and spans 3 levels – built in the early 80’s. Does anyone have this type of setup, and when it gets really cold and you need to have it use the heat coils to get the real heat going, what kind of electric bills are you looking at?

    The Rev.
    Still outraged.

  70. kettle1 says:

    Al Gore, George Soros, now Rev AL…….

    Quite the crowd we are attracting here!

    Rev AL

    Try this out.

  71. cobbler says:

    Some here ‘ve been dreaming of moving to Uruguay…
    Many voters said the single five-year term required by Uruguay’s constitution wasn’t enough to consolidate the successes of Vazquez, a Marxist oncologist who enjoyed 71 percent approval ratings in a poll this month.
    Vazquez imposed a progressive income tax, using the additional revenue to lower unemployment and poverty, provide equal access to health care to everyone under 18 and steer the economy to 1.9 percent growth this year even as many other economies shrank.

    I guess O is better for you guys – at least he doesn’t attempt to provide the equal access to health care anymore…

    When in Geneva I much underestimated the readiness (and interest) of the Swiss to ban the minarets – with today’s referendum results, it may be a beginning of some big changes in old Europe.

  72. Rev. Al says:

    Thanks, kettle. Will have to crunch the numbers with what is known.

    If only I was better at predicting the weather. And the stock/RE market. And the outcome of the Jets games.

    The Rev.
    I understand deficit spending. I was born in deficit spending.

  73. Schumpeter says:

    Shore (32)-

    These are the last gasps and death throes of a dying empire.

    Nothing to do now but wait for the buzzards to gather.

    Another day closer to oblivion.

  74. Schumpeter says:

    Shore (33)-

    At least this story beats the couple who pretended to put their kid in a balloon and cut him loose.

    Maybe we should bring back putting people in stocks at the public square and letting passers-by throw tomatoes at them.

  75. Schumpeter says:

    SG (36)-

    Me? I’m just mad that a place like this exists. What can you say about a giant, overdeveloped man-made sandbar where a guy can’t watch a stripp@r or get a proper glass of whiskey?

    “Investors are angry that the announcement was made at the start of the Islamic Eid and US Thanksgiving holidays, leaving them in the dark for days. “They won’t be able to raise a penny again from the international investment community,” one hedge fund manager said.”

  76. kettle1 says:


    the minaret issue seems to be similar to the mexican/central american issue in the US. You have the “native” population at or below replacement birth rates and at the same time have a wave or immigrants with a very foreign culture coming in and reproducing at much higher rates, threatening to become an established portion of the nation.

    No culture that lasts very long will welcome such a change with open arms.

  77. Schumpeter says:

    3b (38)-

    Generation? Try two.

    Everybody who can tell a bad RE story will have to be dead and buried before those who follow us will purchase RE without thinking twice, getting a giant gubmint handout as part of the deal…or both.

  78. SG says:

    yo’me says:
    November 29, 2009 at 7:15 pm
    In asia no banker in his right mind to give a loan at 20% downpayment.the usual is 30 to 50% depends how credible is the buyer.

    Coming from India, I have followed Indian Real Estate for few years now. Though they were little more prudent compared to US, but even in Asia the Lending standards were significantly lax. In emerging country like India, the bubbles tend to be much more volatile. The prices pretty much doubled every 2 years. Real Estate companies acted like Internet stocks during boom time. Most home builders over there did IPOs and raised ton of money, invested in land banks at much larger price points.

    In Asia, the Banks may not face foreclosure problems as US, but they face problems of over lending to crook home builders. This builders took money, bought land and did not finish the projects that they took loan for. When real estate prices doubles every 2 year, lot of unintended consequences can happen.

    Dubai’s issues are similar. Some are saying China’s issues are probably 1000 times more compared to Dubai.

  79. Shore Guy says:


    The heat pumps that I have seen use forced air and in the heat exchange have several heating elements used for providing heat to the structure once the temperature gets to a certain point and the heat pump alone cannot provide the necessary delta T (difference between the temperature of the air temp going into the heat exchanger and the temp of the air coming out). These heating elements can be used as “emergency heat” in the event of a compressor failure. Of course, at that point you are 100% electric heat.

  80. kettle1 says:


    historical weather data for you

    if you dont like morristown, just change it to whatever town you want

  81. Schumpeter says:

    sl (69)-

    Agreed. It’s a non-story. Good for distracting a bunch of 104-IQ, white, duffer types from the collapse of Western civilization.

  82. SG says:

    Clot 77

    Here you. I stayed in Riyad for about 2 weeks last year, and could not wait to get out of the place as fast as I could. Its kind of funny, when you live in so much affluence, but can’t really enjoy freedom. I would take some 3rd world country any day compared to these Gulf countries. A colleague of mine from France got hackled by security guard for taking picture of mall sign !!!

    “Me? I’m just mad that a place like this exists. What can you say about a giant, overdeveloped man-made sandbar where a guy can’t watch a stripp@r or get a proper glass of whiskey?”

  83. kettle1 says:


    3.5 yr weather data

    it looks like you will get hit with electric usage in jan. Most air source heat pumps i have seen need electric heat assist below about 15F and are running primarily electric heat once you approach 0F. There is a version of air source heat pump that can go to -35F but i doubt you would see those around here.

  84. Schumpeter says:

    SG (85)-

    I hear all those Saudi douches guzzle Johnny Blue like the world is ending tomorrow.

  85. Shore Guy says:

    A friend of mine played pro basketball in the Middle East and his description brought home the police-state nature of the kingdoms there. It is no place for despises monarchy as a form of government to live.

  86. Shore Guy says:


    The gppd news for you is that you can get booze and strumpets in Saudi. The bad news is that, if the morals police find out, you will be executed (or have little Clot wacked off with an ax).

  87. Shore Guy says:

    gppd = good

    “wacked,” um, let’s make that “cut.”

  88. Shore Guy says:

    for ONE who despises. Egads, no more wine for me.

  89. chicagofinance says:

    HEHEHE: from Hoboken 411’s Urban Chicken Doomed thread…
    143. plywood
    November 29th 2009 – 18:34:44 |
    He’s REALLY clucked up. He told me his career really laid an egg and now he’s just winging it. To make matters worse his main chick flew the coop on him, and he looked really fried. I grilled him about his life now, he told me he’s writing a book about his old job which he is hoping will be a “pullet surprise”. I told him if he had any more nuggets to keep me abreast. I asked him if he wanted to go out for omelets, but he told me he had had his fill of mixed-up kids, they always seemed to have a leg up on him. However, I thought he was buffaloing me, and that he just wanted to go hit the sauce again.

  90. chicagofinance says:

    NOVEMBER 30, 2009
    Shhh! Wall Street is Spending Again
    Confident of Getting Big Bonuses, Traders Quietly Open Wallets


    Conspicuous consumption is making a comeback on Wall Street. But no one wants to admit they’re doing it.

    As traders and investment bankers near the finish line of what looks like a boom year for pay, some are spending money like the financial crisis never happened. From $15,000-a-week Caribbean getaways to art auctions to $200,000 platinum wristwatches that automatically adjust for leap years, signs of the good life are returning.

    “What we’re seeing in the last four to eight weeks is a fairly substantial uptick” in demand for extravagant purchases as Wall Street employees grow more confident that the market’s steep rebound so far in 2009 will soon bring them fat bonuses, says David Arnold, senior vice president at Robb Report, a magazine targeted at the super-wealthy.

    Flight Options Inc., which sells 25-hour blocks of flight time on private planes starting at $97,000, says sales in the New York area are up sharply in the past month because of the market’s resilience. “People are spending money again, and they’re starting to travel consistent with their previous habits,” says Jay Heublein, vice president of sales at the Richmond Heights, Ohio, company.

    One of the most popular routes: the three-hour flight from New Jersey’s Teterboro Airport, just a short ride from Manhattan, to Palm Beach International Airport, near second-home hotspots for some successful traders and bankers.

    Much of the evidence for the spending rebound is anecdotal, largely because it is so recent. Still, even some widely cited barometers of Wall Street consumption suggest confidence is returning.

    The $3.9 million median sales price for luxury Manhattan apartments in the third quarter was down 2.9% from a year earlier but up 6.7% from 2009’s second quarter, according to Prudential Douglas Elliman Real Estate.

    The world’s chief auction houses, Sotheby’s and Christie’s International, brought in about $596 million combined from their semiannual sales of impressionist, modern and contemporary art in New York earlier this month. In comparison, their spring sales in May fetched $409 million.

    Extravagant spending won’t help Wall Street clean up its reputation, especially since firms rescued by U.S. taxpayers are rebounding much faster than the rest of the country. But the high rollers now reopening their wallets are at least trying to avoid being caught in the jarring displays of wealth that were a hallmark of the pre-crash years.

    In 2007, private-equity giant Stephen Schwarzman famously hired Rod Stewart to play at his 60th-birthday bash.

    These days, financial institutions are aggressively price-shopping among party venues, event planners say. Ice sculptures and elaborate floral arrangements are out. So is top-shelf liquor, with bars instead stocked with beer, wine and soda. Party planners are cutting parties to three hours long from four.

    “We’re booking a number of holiday parties, but have been told to be very discreet about it,” says Fred Seidler, who handles sales for Terminal 5, a trendy Manhattan concert venue that doubles as a party site. In December, the cavernous waterfront space is on track for as many as 15 corporate events, pushing sales toward a 60% increase from last year. He won’t identify any clients.

    A senior investment banker at a major Wall Street firm recently planned to impress clients with front-row World Series tickets. The company, a recipient of U.S. government aid, nixed the plans, citing potentially bad publicity. The investment banker wound up schmoozing his clients about 20 rows behind third base at Yankees Stadium.

    “We have to be cognizant of the fact that we will be judged in the court of public opinion,” Citigroup Chief Executive Vikram Pandit told a gathering of employees this month. Christmas parties normally paid for by Citigroup bankers and traders out of their own pockets are being canceled due to the hostile political environment this year.

    Wall Street bankers participated at a Sotheby’s auction of contemporary art earlier this month. The auction included an Andy Warhol painting that fetched $43.7 million. Sotheby’s won’t say who bought the wallpaper-like grid of greenbacks called “200 One Dollar Bills,” but dealers say expectations of higher financial-industry bonuses are stoking strong bidding.

    Sandy Heller, an art adviser who buys for SAC Capital Advisors founder Steve Cohen, says he is taking Wall Street clients to next week’s major art fair, Art Basel Miami Beach. “We’re not going to Miami so we can buy everything with a credit card,” Mr. Heller says, “but as far as a broad mood goes, my clients are feeling more positive.”

    At dinner parties in late 2008, some Wall Street bankers and traders bemoaned the foolishness of their “top tick” purchases: a $100,000 car, a place in the Hamptons and exclusive country-club memberships. Human-resources departments got requests for low-interest loans to meet monthly expenses of certain employees. Goldman Sachs Group Inc. changed how it doled out certain stock grants as a way to get cash into the hands of squeezed employees.

    Those nightmares are fading. “In September and October, things started to light up, and November was a fantastic month for bookings,” says Tom Smyth, owner of St. Barth Properties, which rents vacation homes on the Caribbean island of St. Barts. A three-bedroom home with an ocean view costs at least $15,000 a week.

    Robb Report’s December issue featured an offer for buy two silver Mercedes-Benz sports cars: a fully restored 1954 model known as “the Gullwing,” for doors hinged at the car’s roof, and its 2011 counterpart. With a $1 million price tag, the package sold in 36 hours to a man the magazine won’t identify.

    More than a dozen people are on a waiting list at London Jewelers, a Long Island retailer that caters to vacationing Wall Street types, for certain watches made by Switzerland’s Patek Philippe SA that track the moon’s phases and cost as much as $200,000.

    Demand for luxury watches has been gradually rising for months, says Candy Udell, president of London Jewelers. By May, people who delayed big-ticket purchases for fear of looking ostentatious were venturing back into pricey boutiques. “They couldn’t hold back any longer,” she says.

    —Kelly Crow and Liz Rappaport contributed to this article

  91. Shore Guy says:

    $200m to know the phase of the moon? That seems like a real steal. It is not like looking up in the sky is an option for those times one MUST know the moon’s phase NOW.

  92. cobbler says:

    kettle [78]
    Yes – similar – but the Swiss were way less PC about the minarets than we are here about the Mexicans: see the pics in the article (these posters had been all over Geneva a month ago)

    (also, I think they are more justified)

  93. PGC says:

    #93 Yikes

    I got to see some of the Rudenstine flow and it was impressive.

  94. PGC says:

    #83 Jamil

    Your knowlege of history matches your knowlege of politics.

  95. sas says:

    remember what i told you about cat bonds?

  96. sas says:

    looks like we got Cap and Raid’ cat bonds to finance the liquidation of violators of a 350 ppm cap in CO2.


  97. Al Gore says:

    Upfront money needed to ease UN climate deal

    NEW YORK – Money on the table — perhaps $10 billion a year or more — could help close a deal in Denmark next month and keep climate talks moving toward a new global treaty in 2010. But if poorer nations see too little offered up front, the U.N. conference could end in discord.

    Time to poney up America. You have done enough damage to Al Gores planet.

  98. Qwerty says:

    RE: “Would appreciate some thoughts on the purchase of a townhome”

    Buying a condo/townhouse today is suicide. They take a particularly large beating during a downturn because they’re so easy to comp.

    Your neighbor’s 2,000 sq ft POS just sold at $200K? You’re now the owner of a $200K POS.

  99. The first time home buyers credit has been great for our countries real estate market. We needed a spark as a real estate market, and its starting too pay off. I am glad they extended it.

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