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crispy&cole writes:
Did anyone really think this was temporary?
crispy&cole |
Homepage |
03.26.08 - 1:07 pm | #
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awgee writes:
Of course they are temporary. And the new TSLF auctions mature in 28 days at which time the borrowers will pay back their loans and take back their collateral.
awgee |
03.26.08 - 1:15 pm | #
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Missed Information writes:
I work not far from Bear Sterns building and I see some kind of demonstration going on there.
Nothing in the news yet.
Anyone know who is picketing and why?
Missed Information |
Homepage |
03.26.08 - 1:22 pm | #
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Rob Dawg writes:
Well that's all the news from Lake OFHEO where the market is strong, the houses are good looking and all the loans are above average.
Rob Dawg |
Homepage |
03.26.08 - 1:23 pm | #
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12th Percentile writes:
These are not permanent. That is ridiculous. That is like saying the bases in Iraq are permanent. We all know they are just "enduring". Now, doesn't that feel better?
12th Percentile |
03.26.08 - 1:29 pm | #
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Jas Jain writes:
--
OT, but an Economist (Kasriel) worth reading:
Greenspan’s Legacy of Debt
http://web-xp2a-pws.ntrs.com/con...nt/
ec032508.pdf
I have been warning about this for years.
GREENSPAN IS AN EVILDOER AND AN AGENT OF THE NYC BANKING AND FINANCE CROOKS. BERNANKE HAD TO FOLLOW IN HIS FOOT STEPS TO GET THE JOB.
That is what happens when Crooks take control of the whole economic system – a system of the Crooks…
Jas
Jas Jain |
03.26.08 - 1:29 pm | #
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Missed Information writes:
ok the people protesting at Bear Stearns building are angry homeowners:
http://www.wtnh.com/Global/story...37&
nav=menu29_2
Missed Information |
Homepage |
03.26.08 - 1:30 pm | #
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Jas Jain writes:
--
"Did anyone really think this was temporary?"
Crispy,
That is how Americans' crooked system works.
Politically impotent American People can't do a damn thing about it, no?
Jas
Jas Jain |
03.26.08 - 1:32 pm | #
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Missed Information writes:
from the article on the demonstration at BSC building:
"My interest rate is 12 percent and I can't refinance," Gail explained.
Gail is joining a dozen other homeowners from Connecticut who are protesting the federal bail out of Bear Strearns. The company went belly up and has added to the ongoing mortgage crisis.
"They need to help people out too, not just companies," said Gail.
looks like they are not averse to Fed-assisted purchase of their house!
Missed Information |
Homepage |
03.26.08 - 1:32 pm | #
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Doofus writes:
angry homeowners:
Isn't that redundant?
Doofus |
03.26.08 - 1:34 pm | #
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nades writes:
"Nothing is so permanent as a temporary government program." -- Dr. Milton Friedman
nades |
03.26.08 - 1:36 pm | #
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solo writes:
"The Neighborhood Assistance Corporation of America (NACA) believe the government isn't doing what it should to help at-risk homeowners."
Sure they are, you can walkaway now then buy at half price a few years from now.
solo |
03.26.08 - 1:37 pm | #
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michael schumacher writes:
Whatever the reasons for the protest I hope they bring torches and pitchforks.
That is the only way it will get play in the MSM..otherwise.....just another day in paradise..
Ciao
MS
michael schumacher |
03.26.08 - 1:38 pm | #
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nades writes:
Missed,
I dont know about the demonstrations, just be sure to have your camera if sh*t hits the fan... That would be a great YouTube video....
Till then:
The top lawmakers on the Senate Finance Committee said they are reviewing the terms of the taxpayer-backed sale of Bear Stearns Cos. to JPMorgan Chase & Co.
http://www.bloomberg.com/apps/ne...V2yE&
refer=home
nades |
03.26.08 - 1:38 pm | #
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scotty in the blue room writes:
I think I just found where JPM is investing:
The Zimbabwe dollar is pegged at 30,000 per U.S. dollar, while the more commonly used black-market rate collapsed to 55 million per dollar on March 19, from about 7,200 a year ago. The currency's slump has driven inflation to 100,580 percent in January, the highest in the world.
Rating agencies anyone?
scotty in the blue room |
03.26.08 - 1:40 pm | #
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homedad43 writes:
CR:
Thanks for the translation from bureaucratese. I read it several times and wasn't sure what I read.
I also didn't do well in word problems in elementary school.
homedad43 |
03.26.08 - 1:43 pm | #
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tyaresun writes:
This limit is not temporary. However, it should not be a cause for concern because significant inflation is part of the Fed solution.
tyaresun |
03.26.08 - 1:45 pm | #
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scotty in the blue room writes:
Time for DD:
Old news:
BARCLAYS is bankrolling President Robert Mugabe's corrupt regime in Zimbabwe by providing substantial loans to cronies given land seized from white farmers.
The British bank lent £750m to the country's new landowning elite in the first half of this year, mostly through a government scheme to boost farm productivity.
scotty in the blue room |
03.26.08 - 1:45 pm | #
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AllenM writes:
Hard times stories in the MSM-
http://money.cnn.com/galleries/2...ries/
index.html
This is going to be a long unwind.
Well, I hope that my own story isn't added to the pantheon of folks just crabbin by.
Just hopin' to muddle through now.
Someday this war's gonna end...
AllenM |
03.26.08 - 1:45 pm | #
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David Pearson writes:
This is a little OT as it relates to the previous NHS topic:
Sings of life are appearing in the housing market. The question is not, "have we bottomed," but rather "what does equilibrium look like in the housing market?"
One stab at equilibrium uses mean-regression in either home-price- to-income ratios or rental yields. By both measures we are far from equilibrium.
But even using mean-regressing variables doesn't produce a satisfying answer. We know where the mean has been historically, but how far will we overshoot that mean? For how long?
The answer depends on non-linear "feedback loop" effects. If lower house prices reduce housing demand, then we overshoot until some dynamic kicks in with opposite effects. In the past, this dynamic has been the cash flow yield from rentals, which at certain levels guarantees sufficient returns to absorb large amounts of price risk. A rental yield of 8% sounds juicy enough to stop house price declines in their tracks.
Okay, so 8% yields provide a floor on house prices. We are at around 4% now. How long do we spend below the mean? What's the balance of house price declines and rent increases that gets us there?
That question, I believe, is almost impossible to answer given the level of government intervention. And for this reason, any positive signs of life in the housing market are most likely insignificant data points on the uncertain path to equilibrium.
David Pearson |
03.26.08 - 1:45 pm | #
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Yearning to Learn writes:
OT (sorry)
but on CNBC they just had footage of a protest against the Bear Stearns Bailout.
the protestors got INTO Bear Stearns (there must be at least 100 in there I'd guess)
They're not affiliated with Bear. It looks like they might be regular taxpayers and/or people who lost their homes to foreclosure?
ROFL
we need more of this.
Yearning to Learn |
03.26.08 - 1:46 pm | #
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Elvis writes:
Temporary is a good word economic optimism.
Elvis |
03.26.08 - 1:46 pm | #
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Tanta writes:
Of course it's temporary, people. Get real.
By next year it'll be at 190% of area median, not 125%.
Tanta |
03.26.08 - 1:46 pm | #
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nades writes:
WAAAHHHHOOOOOO ! ! ! ! !
Y2L great story....
Any link?
I love pandemonium...
..........
nades |
03.26.08 - 1:48 pm | #
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Shnaps writes:
To infinity, and beyond!
limit will vary by MSA (Metropolitan Statistical Area).
Well, to be precise, it may vary by county or MSA.
Shnaps |
Homepage |
03.26.08 - 1:52 pm | #
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Darth Toll writes:
David Pearson,
Do you actually expect to see rent increases in the current environment? I've been seeing lower rents in my area (Sacramento) not higher.
Darth Toll |
03.26.08 - 1:52 pm | #
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cd writes:
Darth-Is Shingle springs-Placerville area taking same kind of hit as city?
Looking to buy up there next year.
cd |
03.26.08 - 1:56 pm | #
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Jas Jain writes:
--
Not kidding...
CNBC showing protestors (outside the BS building) against BSC bailout!
But, these people are in denial of their political impotence. We would need riots in many large cities and thousands of deaths before our economic masters would even listen to ordinary Americans. Otherwise, they ignore without any consequences. They feel safe!
Kings of Jodhpur would actually grant audiences and listen to people’s grievances often. It is hard for born-and-bred American dopes to believe but people of Jodhpur area genuinely loved their kings. British rule, lasting for only 60 years, was very mild (tax collector and military advisors; rest was left local and traditional). We were very fortunate compared to most Indians during the Muslim and British rule.
America will fully discredit democracy within the next 23 years (before the end of 2030). It is a fraud anyway with de facto rule of the moneybags.
Jas
Jas Jain |
03.26.08 - 1:57 pm | #
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Shnaps writes:
I guess Warsh ain't getting his hardhat from the Shnapster after all. It's up to $305.
Shnaps |
Homepage |
03.26.08 - 2:01 pm | #
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michael schumacher writes:
they should be a the Fed's doorstep not BSC or any other broker dealer. The fed needs to be the center of this protest.
They are the ones who are backstopping the market with our money.
Ciao
MS
michael schumacher |
03.26.08 - 2:01 pm | #
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Missed Information writes:
America will fully discredit democracy within the next 23 years
Yeah isn't it funny?
After Soviet empire fell, everyone was singing: this finally proves once and for all: communism does not work!
In 20 years we may hear, US proved once and for all: democracy does not work!
USA-induced world crisis may end up being an order of magnitude larger than USSR-induced one.
Missed Information |
Homepage |
03.26.08 - 2:02 pm | #
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idoc writes:
does anyone have a link for intraday libor?
idoc |
03.26.08 - 2:04 pm | #
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Missed Information writes:
CR, Tanta:
sorry for veering wide off-topic, but what you have on your hands now is a community, not just a blog.
we need a place to talk.
Missed Information |
Homepage |
03.26.08 - 2:04 pm | #
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REBear writes:
I bet for every King of Jodhpur there were 10 dope Kings who chopped protesters fingers.
REBear |
03.26.08 - 2:04 pm | #
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borkafatty writes:
I just received a a new $5 dollar bill as change...talk about play money...what a joke.
borkafatty |
03.26.08 - 2:05 pm | #
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Shnaps writes:
OT: Tanta - how come no post on your pal Bill Poole's new job? He is going to get more Rand-ie over at the Cato Institute, and being replaced by Dullard.
I mean, Bullard.
Shnaps |
Homepage |
03.26.08 - 2:06 pm | #
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idoc writes:
well, well, well. dollar down, yen up, stocks down, bonds down, but commodities up? oh my.
idoc |
03.26.08 - 2:10 pm | #
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FatalException writes:
As long as we all understand that the word "temporary" is being used here in the geological sense, there is nothing misleading about saying this is temporary.
The problem is that no one seems to realize that Pangaea was temporary too.
FatalException |
03.26.08 - 2:10 pm | #
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Jas Jain writes:
--
"USA-induced world crisis may end up being an order of magnitude larger than USSR-induced one."
MI,
Believe it or not, you are just paraphrasing what I said several years ago. Thanks. It makes sense.
Jas
Jas Jain |
03.26.08 - 2:11 pm | #
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David Pearson writes:
Darth,
I think there's a mis-match in rental markets that could produce rent increases.
There is an oversupply of single family housing, but this is typically not sustainable rental inventory. Sure, owners may want to rent for a year until things improve, but ultimately they rent on negative cashflows, and that does not pay the bills. Once they realize this, most would-be SFR landlords will have to sell rather than rent.
In contrast, there is likely excess demand for multifamily rentals (coming from delayed FTB's and the foreclosed-upon). Much rental stock was converted to condo's in the past few years, and again, reconversion to apartments requires higher cash yields than we see today.
IMO, multifamily rentals are capable of capturing rent increases, and they are the bulk of the rental market.
David Pearson |
03.26.08 - 2:11 pm | #
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Anonymous writes:
reading the money.com stories that AllenM posted...one America is already in Depression.
Anonymous |
03.26.08 - 2:11 pm | #
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Darth Toll writes:
cd, not as much. That is actually my home area and El Dorado County is a little stickier on the downside for some reason.
When I first started renting in p-ville a couple of years ago, you would be hard pressed to find any decent house for less than $1600. Now they seems to be in the $1300 range, so a step in the right direction but not as dramatic as Sac.
http://www.mtdemocrat.com/classi...hp?m=800&
s=1100
Darth Toll |
03.26.08 - 2:13 pm | #
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number2son writes:
Tanta, I want to know how the dim bulb in charge at OFHEO, James Lockhart, continues to get a free pass.
Prior to this, his agency's most recent stroke of genius was to relax the liquidity constraints on Fannie and Freddie -- agencies that Jim Grant acidly and left-handledly characterized as "exmplars of financial rectitude and transparency".
Lockhart, like his master in the White House, is an incompetent dunce.
number2son |
03.26.08 - 2:13 pm | #
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Elvis writes:
The good thing about a democracy is that about every 12 years or so there is a good presidential candidate. The bad thing about a democracy is that about every 12 years or so there is a good presidential candidate.
Elvis |
03.26.08 - 2:14 pm | #
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Ralph Cramdown writes:
idoc wrote: does anyone have a link for intraday libor?
It isn't very volatile. do your research.
Ralph Cramdown |
03.26.08 - 2:16 pm | #
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Markel writes:
I think hopes for a bailout of the big boys may be a tad displaced. As the Bear protest shows, while the insiders almost always win, we have some serious conflicts now that could stumble a rescue scheme. The Hamptons crowd is now competing against failing homeowners and neighborhoods, at a time when Fed action will be increasingly hamstrung.
Look at this from that Bloomberg article quoted above:
Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and Charles Grassley of Iowa, the committee's ranking Republican, gave Fed officials and JPMorgan executives a March 28 deadline to describe the assets involved in the transaction.
``Americans are being asked to back a brand-new kind of transaction, to the tune of tens of billions of dollars,'' Baucus said in a statement today. ``It's the Finance Committee's responsibility to pin down just how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal, and to monitor the changing terms of the sale.''
The Delaware company will liquidate the assets over 10 years, with JPMorgan absorbing the first $1 billion in losses, with the Fed bearing any that remain. Any such losses would hurt the Fed's balance sheet, and ultimately the taxpayer, because they would reduce the stipend the Fed pays to the Treasury from earnings on its portfolio. The dividend was $29 billion in 2006.
There's more in that article about the GSEs, and rumblings on both sides of the aisle about allowing them to binge on toxic waste.
Markel |
03.26.08 - 2:16 pm | #
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189@113 writes:
Whatever the reasons for the protest I hope they bring torches and pitchforks.
A little tar-and-feathering wouldn't hurt either.
Don't get J6P mad! Taking away his home is a very bad idea.
189@113 |
03.26.08 - 2:18 pm | #
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Jas Jain writes:
--
"I bet for every King of Jodhpur there were 10 dope Kings who chopped protesters fingers."
REBear,
India is as big and as diverse as Europe, including languages. Please remember that next time.
The region that used to be called Rajputana, now mostly state of Rajasthan, was governed by very competent people whom Moguls and the British reselected greatly. They took pride in their job!!!!!!!!!!!
They were sort of aristocracy that evolved along a different path due to somewhat remoteness (partly big desert of Thar). As I said, I was born in a lucky part of India and in the best governed kingdom within that. Hey, you can't beat being born lucky! American system now a days, rule of the Crooks, sucks. Americans were lucky (there were checks and balances on the Crooks) for a very long time and now their luck is running out, as the checks and balances have run out.
Jas
Jas Jain |
03.26.08 - 2:20 pm | #
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LJ writes:
These limits mean jack sh*t. Has anyone seen what the rates are on Fannie and Freddie Jumbos? They are awful...
enjoy!
30yr Fixed Agency Jumbo
6.625% (.166)YSP
7.25% (1.61) YSP
30yr Fixed Conforming
5.875% (.923) YSP
Why raise the caps if this is the BS we are going to get?
LJ |
Homepage |
03.26.08 - 2:20 pm | #
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Interesting Times writes:
If there was any thought to the $30 B backstop, the FED should have issues a statement to the effect that this money was to go directly to distressed homeowners via the MBS securities which are failing.
Of course, but the time that $30B makes it through the maze of CDO and MBS traches maybe 5 families could be saved.
But it's the thought that counts no ?
Interesting Times |
03.26.08 - 2:21 pm | #
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FFDIC writes:
Homes in my zip 75230 in the $417,000 range. The home on Briarmeadow at $409,000 is on my street and started at $519,000 over one year ago. This is its second listing with a new realtor. The first realtor's lowest price listing on this property was $399,000 when it was taken off the market for a few weeks and relisted at a HIGHER price. This is Preston Hollow where George Bush lived before going to the Texas governor's mansion and you know the sick story from there.
http://www.realtor.com/search/se...29&mxp=28&
typ=7
FFDIC |
03.26.08 - 2:22 pm | #
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Elvis writes:
"Don't get J6P mad! Taking away his home is a very bad idea."
His home that he put no money down, took out $200k of MEW, and used the money to lease Range Rovers and to buy luxury vacations all while paying the minimum payment on an option ARM (that he stopped paying 9 months ago and still likes in the house). Care to reconsider whose home it is?
Elvis |
03.26.08 - 2:23 pm | #
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Billy Shears writes:
Let's see,
I can't decide if this period in the stock market is like 1995, where a new leg in the bull market starts after a lackluster 1994.
Or, if it's like the fall of 1998 after the LTCM fiasco, and new leg of the bull market starts.
Jeez, so many bullish scenarios for this outcome.
More realistically, the economic data coming in year-to-date has been worse than expected or as bad as expected. I think this will be more like 1933 without FDR at the helm. Right now this economic ship is being steered by the crew of the Exxon Valdez on a drinking binge while navigating through a Cat 5 hurricane. A good outcome will require a miracle rather than another hat trick.
Billy Shears |
03.26.08 - 2:23 pm | #
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cd writes:
Thanks Darth-I really like that area-even jackson/sutter creek area is in my sights.
Plus I can make some money with my sluice box and pick nearby!!!!
cd |
03.26.08 - 2:23 pm | #
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Terry writes:
LJ said: "Why raise the caps if this is the BS we are going to get?"
I guess people should be careful what they ask for....
Terry |
03.26.08 - 2:26 pm | #
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Anonymous writes:
I don't know why 'temporary' is wrong. They intend to move it again, just up. It will be there in 15 years. 15 years is temporary, no?
Anonymous |
03.26.08 - 2:26 pm | #
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Harsh Realty writes:
Sorry, off-topic, but the interview on Bloomberg with James Grant is a must-watch:
Grant Calls Fed's Balance Sheet an `Economist Nightmare': Video March 25 (Bloomberg) -- James Grant, editor of Grant's Interest Rate Observer, talks with Bloomberg's Pimm Fox in New York about the Federal Reserve's intervention in the credit market crisis and its impact on the value of the U.S. dollar.
http://www.bloomberg.com
Harsh Realty |
03.26.08 - 2:26 pm | #
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Darth Toll writes:
David Pearson,
Your arguments make a lot of sense. What I find difficult to understand though, is how there can be any rent increases when people can't afford them. In other words, wages have been stagnant for years, offset by the house ATM machine.
Now that the HATM is broken, gas and food are through the roof, and layoffs are starting to take a bite out, where does the money come from to support higher rents? The landlords may wish this, but they may be surprised when the perceived additional demand from condo-conversions and the like evaporates with falling free cash-flow.
Think of a crack-spread for housing. Valero would love to raise gas prices but every time they do it is met with falling demand and so they lose money. People can always move in with the folks or other family members or friends if they can't afford the rent increase. Then we'll get to see what the REAL demand is.
Darth Toll |
03.26.08 - 2:31 pm | #
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LJ writes:
I found someone still doing subprime..what a joke
Purchase or Refinance - Full Doc ONLY - NO BANK STATEMENTS
1st Lien Rates
*No Seasoning Required to use Appraised Value!
590-619 FICO
Max DTI 55% LTV
LJ |
Homepage |
03.26.08 - 2:31 pm | #
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LJ writes:
I guess people should be careful what they ask for....
Terry | 03.26.08 - 2:26 pm |
I guess your right. I was under the impression it would be some sort of panacea. The joke was on me.
LJ |
Homepage |
03.26.08 - 2:32 pm | #
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giacutter writes:
A full-doc with 45% down payment?
Let the good times roll, again.
giacutter |
03.26.08 - 2:33 pm | #
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Ralph Cramdown writes:
Has anyone seen what the rates are on Fannie and Freddie Jumbos? They are awful...
30yr Fixed Agency Jumbo
6.625% (.166)YSP
7.25% (1.61) YSP
30yr Fixed Conforming
5.875% (.923) YSP
Why raise the caps if this is the BS we are going to get?
To me, those rates really don't look high at all. Maybe I'm operating over longer time horizons than people who can't remember the last time risk was priced reasonably.
Back when Winston Churchill was a young subaltern in India, he had to borrow from a local lender to finance his string of polo ponies. The rate was 2%/month. He complained, but he paid. Moral: He who doesn't have cash pays the going rate.
Ralph Cramdown |
03.26.08 - 2:33 pm | #
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michael schumacher writes:
you do have that %45 down payment...
Hello...anyone there....
They hung up..
Ciao
MS
michael schumacher |
03.26.08 - 2:33 pm | #
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Missed Information writes:
I think this will be more like 1933 without FDR at the helm.
You mean same FDR that order cattle to be slaughtered in order to prevent food price deflation?
Or same FDR that confiscated gold from people at half price?
Missed Information |
Homepage |
03.26.08 - 2:34 pm | #
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Handy Saputra writes:
I guest it's temporary.
Limit will vary by MSA (Metropolitan Statistical Area). To be precise, it may vary by county or MSA.
http://home-loan-rate.blogspot.com
Handy Saputra |
Homepage |
03.26.08 - 2:35 pm | #
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LJ writes:
A full-doc with 45% down payment?
Let the good times roll, again.
giacutter | 03.26.08 - 2:33 pm
No...35% down at the low, low rate of 9.58%! Get it while it last! Remember no bank statements...and shhhh! Don't worry about those pesky W-2's, just use a little computer magic and write in the income you want!!!!
Pathetic.
LJ |
Homepage |
03.26.08 - 2:35 pm | #
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Paul writes:
Washington Post article on our "recession".
http://www.washingtonpost.com/ wp...id=opinionsbox1
I guess he's been reading this blog.
"Regarding the economy, it's hard not to notice this stark contrast: The "real economy" of spending, production and jobs -- though weakening -- is hardly in a state of collapse, but much of today's semi-hysterical commentary suggests that it is."
I've tried to make this point several times in the last couple of months to no avail. I'm sure the economy looks terrible from the perspective of someone in foreclosure, but this is a personal situation of their own making (though not necessarily their fault).
I find this hysteria to be quite a curiosity.
Paul |
03.26.08 - 2:36 pm | #
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LJ writes:
Ralph Cramdown | 03.26.08 - 2:33 pm
My point is the spread between Fannie and Freddie Jumbos vs conforming. It appeared when they were going to raise the cap cap that the rates would be uniform.
LJ |
Homepage |
03.26.08 - 2:37 pm | #
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dryfly writes:
LJ writes:
I found someone still doing subprime..what a joke
Purchase or Refinance - Full Doc ONLY - NO BANK STATEMENTS
LJ - might just be advertising but that doesn't mean the loans actually go through. In a downturn most firms ratchet up advertising so as to pump more chum into the mouth of the funnel hoping some make it through and come out the back as done deals.
If you needed 10 closed transactions a week to make the number... and fallout was 50% that means you have to 'catch' 20 in the funnel. But if the fallout falls to only 10% making it through then you had better catch 100 in the funnel to make your number - assuming the distribution is uniform. In large pools of suckers, er I mean clients the assumption of uniformity is pretty sound so advertise like hell & try as best you can to manage the cattle call.
dryfly |
03.26.08 - 2:39 pm | #
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FFDIC writes:
NY Post - Brokers Get JPM Carrot To Stick With Bear (More Crooks JJ!)
"March 26, 2008 -- JPMorgan Chase will pay brokers at Bear Stearns a maximum bonus of 100 percent of the annual revenue they generated to keep them from leaving as the two companies combine."
http://www.nypost.com/seven/
0326..._bea_103619.htm
FFDIC |
03.26.08 - 2:39 pm | #
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Mook writes:
JPMorgan Chase will pay brokers at Bear Stearns a maximum bonus of 100 percent of the annual revenue they generated to keep them from leaving as the two companies combine.
In a just world, they, and every other Wall Street broker, would be receiving these bonus payments in the form of fractional interests in subprime MBS's and CDO^2's.
We'd quickly find out what they're really worth ... when they start hocking 'em on eBay to meet the payments on their Ferraris.
Mook |
03.26.08 - 2:44 pm | #
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Jas Jain writes:
--
MI,
How many Americans know the detailed history of 1930s? What saved FDR was the rising threat in Europe and then the WW II. Otherwise, he would have gone down as a failed President, because most of the New Deal effects were temporary and things were back to where they were by 1938-39. The self-regeneration was absent due to adversity between the govt and the capitalists. Capitalists of America LOVED both world wars. Some even financed the Russian Revolution!
No one benefited more from the two worlds wars than America’s capitalists. being at the right place at the right time helps.
Jas
Jas Jain |
03.26.08 - 2:45 pm | #
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halbhh writes:
I'm getting interested to compare my own calculation of the current breakeven point for cost to buy vs cost to rent.
Since we can compare this to the price/rent table on this site: (note their mortage/rent ratio is not useful as formulated):
http://www.housingtracker.net/af...e-income&
dir=up
I'd like feedback/improvements.
Here's my paramaters so far:
1. Use 20% down 6.0% 30yr fixed.
1a. Include value of time-cost (interst that could have been earned) on the downpayment.
2. Assume real estate taxes (which are included in rents) to be 2.2%
3. Use fed tax itemized decution for real estate taxes and mortage interest deduction in 25% bracket.
4. Remove principle payment from loan to equalize to renting. Thus we only need the interest cost of the purchase price, simplifying 1 and 1a.
5. Neglect market price movement of house, presume 0%.
6. Compare for 5 year period.
7. Set inflation of rent to be 0% for period.
(6&7 remove appreciation and rent inflation, which won't be especially bad I'd guess for many areas).
Ok, any corrections/improvements, folks?
If I get feedback, I'll eventually post my breakeven price/rent ratio for current buyers.
halbhh |
03.26.08 - 2:47 pm | #
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LJ writes:
dryfly | 03.26.08 - 2:39 pm |
First, I am not advertising. I am trying to contribute here on CR by giving insight into my industry.
Now fallout is getting near 90%. I don't do sub-prime but once in a while I get rate sheets from lenders I have never heard of. This is one of the first sub-prime rate sheets I have received in a long time and thought it might be interesting for others to look at.
I just had two full doc loans, conforming with credit scores of 790+ that almost didn't make it. I put them with Indy Mac and they tried everything in their arsenal to keep from closing them.
It seems as if no one wants to lend money anymore.
LJ |
Homepage |
03.26.08 - 2:47 pm | #
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Missed Information writes:
The "real economy" of spending, production and jobs -- though weakening -- is hardly in a state of collapse, but much of today's semi-hysterical commentary suggests that it is.
Maybe our hysterical tone is clouding your understanding of the words behind the tone?
About the worst-case scenario that we hysterics dare to predict is that US GDB may decline by say 20%. This means 8 out of 10 companies are still working, 8 out of 10 people still employed, you can still afford Ford Taurus (although you may be used to driving a Hammer), you can still go to the movies (although you may be used to having your own home theater).
20% reduction in the lifestyle quality is not such a big deal once you realize that you have previously spent 20% of your income on unnecessary stuff.
Like they say 'Great Depression was not bad at all, if you had a job'.
Missed Information |
Homepage |
03.26.08 - 2:47 pm | #
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Interesting Times writes:
Jas Jain - Doesn't "Negative Equity Certificates" seem a lot like the "War Bonds" ?
Interesting Times |
03.26.08 - 2:48 pm | #
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dryfly writes:
We'd quickly find out what they're really worth ... when they start hocking 'em on eBay to meet the payments on their Ferraris.
You'd find stacks of them left at the Emperor's Club...
dryfly |
03.26.08 - 2:48 pm | #
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ac writes:
I've tried to make this point several times in the last couple of months to no avail. I'm sure the economy looks terrible from the perspective of someone in foreclosure, but this is a personal situation of their own making (though not necessarily their fault).
I find this hysteria to be quite a curiosity.
Your link doesn't work.
Is this the same guy who was saying that all the concern about a housing bubble wasn't warranted a couple of years back?
ac |
03.26.08 - 2:53 pm | #
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dryfly writes:
LJ - I'm not ripping you for spamming - believe me, I'm thankful for insider input, I try to do the same thing for mfg here... I don't solicit either but report what I'm seeing. Sum of all anecdotal goes to data as numbers of reports gets large.
My point was the rates sheets you see & the pitches your principals feed you could all be teasers to motivate you to fill the funnel - so SOMETHING gets through. If they leveled with you as to how tough the selection was going to be you might just tell them to 'f' it & go fishing. Tell them to call you when they get serious again - if ever.
I see a lot of that myself - increased selling expense even though it is much harder to close... why do it? They know that and don't tell us. They aren't stooopid.
dryfly |
03.26.08 - 2:54 pm | #
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Tanta writes:
we need a place to talk
Walk past the wall across from the tapestry with trolls on it on the seventh floor corridor three times, thinking "we need a place to talk", and one will appear.
Tanta |
03.26.08 - 2:55 pm | #
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anon writes:
So - here's a toxic mix:
Allow republic elected officials to collaborate in creating a bank monopoly for a nation's currency creation. The officials protect with force, the monopoly for currency creation.
Allow that bank to run on a fractional reserve system - no reserves, but recognition of either government or private "debt" as assets - pick a nice ratio - 40:1 will do.
Natural fear and greed in a populace seeking freebies and "security", then fit all too nicely with elected officials seeking power.
With fiat currency capability (and encouraged by the private banks earning profit off fiat currency creation), the elected officials no longer fear being booted from office or revolt over taxes, which would normally be required to finance the freebies and "security".
Instead, inflate, inflate, inflate, devaluing the currency and stealing the value from the masses.
The government debt, combined with private debt, both create ever greater "assets" for the bank monopoly, with ever decreasing currency value, ever greater taxes, and ever greater depression.
Worked for the fall of Rome, fall of 17th c Spain, 18th c France, 1970's Mexico, 1990's Argentina, and banana republics on and on.
It's working great for the US today too.
anon |
03.26.08 - 2:56 pm | #
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Anonymous writes:
Paul = AOTC ?
Anonymous |
03.26.08 - 2:57 pm | #
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Missed Information writes:
Tanta,
your secret is safe with me.
Missed Information |
Homepage |
03.26.08 - 2:58 pm | #
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Tanta writes:
Purchase or Refinance - Full Doc ONLY - NO BANK STATEMENTS
Since not everyone is a mortgage insider, what this means is "real live full documentation of income, not that nonsense where we use your bank statement deposits to calculate "income" with."
You still have to submit bank statements (or verifications of deposit from the bank) to verify funds to close. You just can't claim that "recent cash flow" is "stable monthly income."
Tanta |
03.26.08 - 3:01 pm | #
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Sebastian writes:
Darth Toll said: "...What I find difficult to understand though, is how there can be any rent increases when people can't afford them. In other words, wages have been stagnant for years, offset by the house ATM machine...."
then: "...Now that the HATM is broken, gas and food are through the roof, and layoffs are starting to take a bite out, where does the money come from to support higher rents?..."
Go with that line of thought and see where it leads.
JMO, the people who *can* afford the things that are more expensive will drive up or support the price, even though people with less money become more hard-pressed.
Example: A person who lost his house because of a mortgage reset he couldn't afford, *but still has his job*, will support rents, since he both needs and can afford housing. The person who lost his house because he lost his job won't be able to afford rent, either.
This is why, until there's serious job-loss, the real trouble is a ways off.
FWIW.
Sebastian, Rogue Economist
Sebastian |
03.26.08 - 3:01 pm | #
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Terry writes:
LJ said: "I put them with Indy Mac"
Why did you choose them?
Terry |
03.26.08 - 3:04 pm | #
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LJ writes:
I see a lot of that myself - increased selling expense even though it is much harder to close... why do it? They know that and don't tell us. They aren't stooopid.
dryfly | 03.26.08 - 2:54 pm
I am basically self employed so I don't have any principals pitching me. I think I misread your comment and I apologize.
"If they leveled with you as to how tough the selection was going to be you might just tell them to 'f' it & go fishing."
I have been fishing a lot lately.
LJ |
Homepage |
03.26.08 - 3:04 pm | #
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Cal writes:
I'm so naive, I'm still shocked by the max DTI that the agency loans allow especially when they consider just the back end ratio and not the front end.
I realize it's all modeled, blah blah, etc. It just seems dangerous.
Like I said, I'm naive.
Cal |
Homepage |
03.26.08 - 3:04 pm | #
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Sebastian writes:
Paul said: "...I find this hysteria to be quite a curiosity."
I don't find it as curious as disappointing, since we just had another one 6 years ago at the last stock market bottom and another one 2 years before that at the stock market top.
S.
Sebastian |
03.26.08 - 3:04 pm | #
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halbhh writes:
Help.
Am I including everything?
Two more parameters (the first 7 above):
8. Presume renter must buy their own insurance (we do). So neglect insurance as equal.
9.Set maintainance to be like,hmmm....0.8%/yr
This calculation is actually looking quite easy. Anyone could do it with a little patience and the right simplifications for a limited time period.
halbhh |
03.26.08 - 3:05 pm | #
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ac writes:
More congratulations for Ben and the excellent job he's doing:
Crude closes up $4.68, or 4.6%, at $105.9 a barrel
ac |
03.26.08 - 3:05 pm | #
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cd writes:
OT-Did ppt team just step in?
cd |
03.26.08 - 3:05 pm | #
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Geoff writes:
Yes, they did.
Geoff |
03.26.08 - 3:06 pm | #
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norma writes:
It's only temporary, and next year we're all going to the metrics system....
norma |
03.26.08 - 3:06 pm | #
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LJ writes:
LJ said: "I put them with Indy Mac"
Why did you choose them?
Terry | 03.26.08 - 3:04 pm
They were giving 2.00 YSP on a 5/1 ARM at 5.125% and I was trying to do a no closing costs refinance. No other lender was even close on the YSP.
I regret it as Indy Mac proved to be a nightmare....dragged their feet in underwriting to make me get a lock extension for a .25 hit to YSP.
LJ |
Homepage |
03.26.08 - 3:06 pm | #
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Geoff writes:
I have this dictionary - under the listing Rogue, it says "hack."
Geoff |
03.26.08 - 3:07 pm | #
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halbhh writes:
Sebastian -- did you notice in that great link youg gave that the mortgage/rent ratio as they formulate it is useless (misleading)?
halbhh |
03.26.08 - 3:08 pm | #
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ac writes:
Maybe our hysterical tone is clouding your understanding of the words behind the tone?
Just think if some of those DC homebuyers listened to the hysterics coming from sites like this a couple of years ago they might not be staring down the barrel of six figure losses or outright bankruptcy today.
Sometimes results matter.
ac |
03.26.08 - 3:08 pm | #
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ac writes:
LOL
I just noticed the pump.
ac |
03.26.08 - 3:10 pm | #
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Missed Information writes:
re: ac
yeah, but Paul was extrapolating our hysterics to mean that we all should be starving to death about now, already.
I clarified it for him that all we meant was that some 10-20% of people will become very very unhappy for a few very very short years.
So all is well, really.
Missed Information |
Homepage |
03.26.08 - 3:11 pm | #
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Terry writes:
LJ said: "They were giving 2.00 YSP on a 5/1 ARM at 5.125% and I was trying to do a no closing costs refinance. No other lender was even close on the YSP."
I understand.
Terry |
03.26.08 - 3:11 pm | #
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FFDIC writes:
Tell it acDC!
FFDIC |
03.26.08 - 3:12 pm | #
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Sebastian writes:
halbhh said: "Sebastian -- did you notice in that great link youg gave that the mortgage/rent ratio as they formulate it is useless (misleading)?"
Have you been reading my posts about CR's charts? Why don't you give him a hard time, too, while you're at it?:)
S.
Sebastian |
03.26.08 - 3:13 pm | #
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anon writes:
we will end in the red. cant make it too obvious
anon |
03.26.08 - 3:14 pm | #
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anon writes:
The dow will end in the red.
anon |
03.26.08 - 3:15 pm | #
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dryfly writes:
I am basically self employed so I don't have any principals pitching me. - LJ
Me too - the companies I sell for are called my 'principals' & they pitch me like crazy in an effort to get me out selling harder for them. But they are the ones who make the final decision to close the business (acceptance terms & price) & that is the deal maker or breaker... very frustrating at times.
So I'm contemplating doing a whole lot more fishing this summer too.
dryfly |
03.26.08 - 3:16 pm | #
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rich writes:
>They're not affiliated with Bear. It looks like they might be regular taxpayers and/or people who lost their homes to foreclosure?
I can't wait to see this on TV.
Wrestling matches between people who lost their homes and Bear Stearns employees who lost their life savings.
rich |
03.26.08 - 3:16 pm | #
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REBear writes:
anon,
We already had one red day this week.
REBear |
03.26.08 - 3:16 pm | #
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sam writes:
jas:
did you have your morning intake today...so glum and all.
BTW, swetamber or digamber??
sam |
03.26.08 - 3:17 pm | #
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Anonymous writes:
Go McCain, Go Bush, more death, more cost!! Bring honor to America!!!
The passing of the 4,000th service member in Iraq is a tragic milestone and a testament to the cost of this war, but for those of us who live and fight in Iraq, we measure that cost in smaller, but much more personal numbers. For me those numbers are 8, the number of friends and classmates killed in Iraq and Afghanistan, and 3, the number of soldiers from my unit killed in this deployment. I'm 25, yet I've received more notifications for funerals than invitations to weddings.
Anonymous |
03.26.08 - 3:18 pm | #
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Bob Dobbs writes:
"20% reduction in the lifestyle quality is not such a big deal once you realize that you have previously spent 20% of your income on unnecessary stuff."
If it's only 20%, I agree completely. Starbucks might hate it, but we'd get through OK. We as individuals would cut back; some industries would learn to take less profit and/or become more efficient.
But if it were 30-40% -- and I've heard such suggestions, though only from the European media -- and we're talking about a fairly major restructuring in the way life is lived in these United States.
Just saying.
Bob Dobbs |
Homepage |
03.26.08 - 3:19 pm | #
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Anonymous writes:
I guess the "PPT" had an afternoon golf game with the second gunman.
Anonymous |
03.26.08 - 3:20 pm | #
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cd writes:
If the market closes green today please pass me the bongwater! Any drink will quench my thirst for reality then!
cd |
03.26.08 - 3:20 pm | #
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Me in Mass writes:
Max DTI 55% LTV
This makes no sense - Max DTI of 55% would be max debt to income of 55% - I think they forget to inidicate the max LTV - probably much higher than 55% ...............
Me in Mass |
03.26.08 - 3:21 pm | #
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halbhh writes:
Sebastian -- it's a good site though, and I think the price/rent ratio is quite useful.
It appears no one else here at the moment is intersted in knowing the current breakeven price/rent ratio for buyers, so I'll happily keep it to myself. :-)
halbhh |
03.26.08 - 3:23 pm | #
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Gary writes:
Ouch on FGIC
http://atrios.blogspot.com/
2008_...881134278653246
Gary |
03.26.08 - 3:23 pm | #
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bobn writes:
"My interest rate is 12 percent and I can't refinance," Gail explained.
12 percent! Amazing.
Too bad high-rate mortgages aren't fatal - we'd have a Darwin Award winner here!
bobn |
03.26.08 - 3:24 pm | #
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Anonymous writes:
watch the video...she says it's 12.63%
Anonymous |
03.26.08 - 3:26 pm | #
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query_tool writes:
halbhh --
I'd modify #5
3. Use fed tax itemized decution for real estate taxes and mortage interest deduction in 25% bracket.
The way I think about it, the only benefit I get from these deductions is the incremental amount *above* the $10,700 I'd get for taking the standard deduction. (That's for Married filing jointly / $5,350 if you're single)
query_tool |
03.26.08 - 3:26 pm | #
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cd writes:
FGIC rueters link
http://www.nytimes.com/reuters/b...r=1&
oref=slogin
cd |
03.26.08 - 3:27 pm | #
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ron writes:
OT:
Jumbo rates 7.23%, soon to 8%.
ron |
Homepage |
03.26.08 - 3:28 pm | #
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ac writes:
yeah, but Paul was extrapolating our hysterics to mean that we all should be starving to death about now, already.
I clarified it for him that all we meant was that some 10-20% of people will become very very unhappy for a few very very short years.
Well I suspect the most widespread casualty will be peoples' expectations of the future and their retirement plans.
I know a lot of people who had retirement "in the bag" because their house was appreciating at 15% YoY. That was their plan.
Now that's been flipped upside down and suddenly retirement looks nowhere in sight. I'm starting to see a real psychological impact on people who have good jobs and look to have very good lives.
But in a lot of ways to them they're dealing with "the end of the world"... or at least the end of the world they thought they were living in a year ago.
People are highly resiliant and they'll get over it, but in the short term a lot of them are seeing this dream of theirs collapse, and that can be very traumatic (been there; done that).
ac |
03.26.08 - 3:29 pm | #
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Paul writes:
ac writes:
Is this the same guy who was saying that all the concern about a housing bubble wasn't warranted a couple of years back?
No that was not me. The link is to todays washington post column by Robert Samuelson. Go to the opinions page and the title is "Hold the Hysteria". The quote about hysteria was from Samuelson, not me. Sorry for the confusion.
Paul |
03.26.08 - 3:30 pm | #
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anon writes:
bobn
thats not funny at all. there are many people out ther holding on by their fingertips and I am one of them. Never thought I would find myself in the position I am in, but here I am with a six figure income gone, no job prospects and a family to feed and send to school. I was the last to think it could happen to my family. It can happen to you.
anon |
03.26.08 - 3:30 pm | #
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halbhh writes:
query_tool writes:
....
The way I think about it, the only benefit I get from these deductions is the incremental amount *above* the $10,700 I'd get for taking the standard deduction. (That's for Married filing jointly / $5,350 if you're single)
yeah, I was just thinking of that a minute ago. Say usually a married couple, so 10,700 standard deduction, and perhaps there non-real estate deductions would be about ....??? $4000 maybe.
In that case the renting couple has a $6700 offset vs the itemized real estate deductions of the homeonwer couple.
Your thought? Is $4000 reasonable?
halbhh |
03.26.08 - 3:34 pm | #
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ac writes:
No that was not me. The link is to todays washington post column by Robert Samuelson. Go to the opinions page and the title is "Hold the Hysteria". The quote about hysteria was from Samuelson, not me. Sorry for the confusion.
Is he an economist by any chance?
Keep in mind that the governing principle behind contemporary economics is to convince everybody that there's nothing wrong with the economy when in fact there really is.
All part of this "Age of Incompetence".
ac |
03.26.08 - 3:34 pm | #
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scotty on safari writes:
OT: Hunting down ZIMBABWE debt:
Pimco Commercial Mortgage Securities Trust Inc · NSAR-B · For 12/31/04 · EX-99.Q3
15.A) Custodian/Sub-custodian: BARCLAYS BANK OF ZIMBABWE LTD.
B) Is this a Custodian or Sub-custodian? (C/S): S
C) City: ZIMBABWE State: Zip Code: Zip Ext.:
D) Foreign Country: ZIMBABWE Foreign Postal Code:
E) Mark ONE of the following with an 'X':
TYPE OF CUSTODY
Member Nat'l Foreign Insurance Co.
Bank Sec. Exchg. Self Custodian Sponsor
Sec.17(f)(1) Rule 17f-1 Rule 17f-2 Rule 17f-5 Rule 26a-2 Other
scotty on safari |
03.26.08 - 3:36 pm | #
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Paul writes:
Eveyone knows the words "meltdown" and "collapse" are used quite frequently in this forum. I am merely suggesting they are not precise descriptions of the issues confronting us.
A recession is when you lose your job. A severe recession is when I lose mine. Indeed, perspective is everything.
There are always "losers" in an economy like ours. There are more now with the bubble bursting, but it is others, not I, who are extrapolating the bursting bubble to "meltdown" and "collapse".
I absolutely agree that this is a bad, terrible, etc situation for many people.
Paul |
03.26.08 - 3:37 pm | #
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Anonymous writes:
Speaking of Depression era nostalgia
{In the nine years since Congress buried Glass-Steagall, the Depression-era act that separated investment banking from commercial banking, we've seen most large investment banking/brokerage firms gobbled up by commercial banks: Salomon Smith Barney by Citigroup. PaineWebber by UBS, Prudential/A.G. Edwards by Wachovia and First Boston and Donaldson Lufkin Jenrette by Credit Suisse - just to name a few.
... ....
....Should big securities firms should be regulated as banks?
I have one answer: Duh!
What we think of as Wall Street is already a business line of commercial banks.
In the nine years since Congress buried Glass-Steagall, the Depression-era act that separated investment banking from commercial banking, we've seen most large investment banking/brokerage firms gobbled up by commercial banks: Salomon Smith Barney by Citigroup. PaineWebber by UBS, Prudential/A.G. Edwards by Wachovia and First Boston and Donaldson Lufkin Jenrette by Credit Suisse - just to name a few.
Even securities stalwart Pershing Advisor Solutions is now part of Bank of New York Mellon.
Except for Goldman Sachs, Merrill Lynch, Morgan Stanley and Lehman Brothers, there really is no independent securities industry anymore. The only activity separating these giants from a commercial bank is the ability to take deposits, which is a low-profit business line that none of the remaining investment banks wants anyway.
Wall Street as we knew it is gone. The Fed's opening of the discount window to non-banks, therefore, is de facto recognition of the integration of securities and banking. We now have a U.S. banking system that is akin to the universal system in Europe, where giant commercial banks do everything.
The U.S. regulatory system eventually will reflect this reality. The Fed will take over regulation of the remaining large securities firms - or probably regulate them jointly with the SEC, thus creating a handful of monolithic banks that are too big to fail.
Which will lead to a whole new set of problems.
Evan Cooper is the senior managing editor and online editorial director of InvestmentNews.}
http://www.investmentnews.com/ap...2&
rssfeed=rss02
Anonymous |
03.26.08 - 3:37 pm | #
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Eric writes:
The current practice has been to adjust the conforming loan limit upward for year-to-year changes in average house prices (I won't get into the exact index, but it's pretty bogus), except that it doesn't ever go down and the adjustment is based solely on what happened between October of last year and October of this year (maybe it's September, I forget). The new policy is more conservative because it "remembers" past price declines.
Eric |
03.26.08 - 3:38 pm | #
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cd writes:
anon- Best of luck to you and your family! Can you relocate for another job, kids in hs? Simple sells right now..Peanut butter and honey sandwichs rock.
Did your profession give you consulting skills where you can make it happen as business?
Best of luck
A quicker correction would make this better right now..Fessing up brings your out of the abyss-So banks? what say here
cd |
03.26.08 - 3:39 pm | #
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Paul writes:
Robert J. Samuelson is a weekly columnist for The Post, writing on political, economic and social issues. His column appears on Wednesdays.
Paul |
03.26.08 - 3:40 pm | #
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scotty on safari writes:
Yah,
There is a possibility that ZIMBABWE symbolizes nationalized subprime-like packaging, pools, trusts and derivatization, which may be diultive to future earnings. See also, covered bonds, e.g, Irish Covered Bonds, etc...
Pimco Strategic Global Government Fund Inc · NSAR-A · For 7/31/07
scotty on safari |
03.26.08 - 3:41 pm | #
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Paul writes:
The first is upsetting (rising gas prices, falling home prices, fewer jobs) but reflects the normal reverses of a $14 trillion economy. The second ("panic," "financial meltdown") suggests the onset of something catastrophic and totally outside the experience of ordinary people.
Paul |
03.26.08 - 3:42 pm | #
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ac writes:
Eveyone knows the words "meltdown" and "collapse" are used quite frequently in this forum. I am merely suggesting they are not precise descriptions of the issues confronting us.
I agree that are more articulate ways of describing the apocalypse in the the credit markets.
ac |
03.26.08 - 3:42 pm | #
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query_tool writes:
HALBHH - I'm not sure how you get to $4,000 of other deductions if you've got a standard job working for a company.
Maybe I'm not deducting things I should..... but I gave $1,500 to charities, maybe $150 for the deductible portion of vehicle licensing fees, $40 for turbo tax (tax prep fees). That's it. What other non-housing itemized deductions would you be taking?
query_tool |
03.26.08 - 3:42 pm | #
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REBear writes:
Senator Dodd invites Treasury's Paulson to testify in Senate
Bear deal raises serious questions about Fed policy:Dodd
REBear |
03.26.08 - 3:46 pm | #
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Ralph Cramdown writes:
What if house prices never return to historic income multiples?
One of the things driving them higher in the last few years has been consumers playing bond trader, financing long-term obligations with short term rates and using the difference for more house rather than lower payment. Obviously this can't continue in the face of rising rates/risk premiums.
But there's no law saying consumers have to spend only x% on housing, or have to pay it off within 30 years. Obviously many of these clowns have been doing backdoor extensions with cash-outs, like that idiot woman today who, after 20 years in the same house, can't afford to pay off the remaining principal at 12%. For young buyers who stretch, it's called being "house poor" and it's assumed they grow out of it.
I don't watch many TV dramas or comedies. One thing that strikes me when I do is the lifestyle depicted. In addition to my old favorite, the police detective who wears a $1,200 suit, my new one is the depicted shelter.
Last decade there were several popular NYC based sitcoms. The shelter depicted, although expensive if you knew NYC real estate prices, looked adequate and utilitarian if you were from elsewhere. This decade, the focus has been on suburbia. All the homes are McMansions and the set decoration is high-end and flawless, even though the characters have fewer visible sources of income than their predecessors. These people aren't depicted as rich, rather as the new normal.
I think the generation that grew up on this TV are going to spend whatever it takes to get as close as it takes to this depiction, just as you probably learned what normal is from the TV you watched in your formative years. I have no idea how they're going to afford it, but I imagines amortizations will get longer and discretionary spending will decrease. Both of these are bad for the economy and one is bad for retirement savings.
What do you think? Will there be a great lowering of expectations for the generation about to embark on household formation? Will antidepressant sales rocket up from already high levels to ease the disconnect? Or will they pay even more interest for even longer to get what they see on TV? Or maybe *shudder* they'll get the Judge Judy distopia of being shouted at for missing car payments, over and over.
Ralph Cramdown |
03.26.08 - 3:47 pm | #
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Missed Information writes:
who are extrapolating the bursting bubble to "meltdown" and "collapse".
We did have a meltdown of monetary policy, and a total collapse of ABS markets.
Then there was an Armageddon in the municipal auction rate bond market, and a panic in the treasury market.
Those are not exaggerations.
But most of the people don't even need to understand what these markets are. For majority, it is still a land far, far away.
It's just that the minority of affected people seems to be growing larger and larger.
When 20% of WaMu's ALT-A loans are delinquent, I would say the word 'meltdown' is fairly appropriate for a market which traditionally was fairly stable.
Missed Information |
Homepage |
03.26.08 - 3:47 pm | #
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cd writes:
query tool-telephone bills, rent (if not a owner) utility bills etc certain % of that based off sq ftg used for business.. of course mileage if not paid by employer
cd |
03.26.08 - 3:48 pm | #
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Anonymous writes:
"..totally outside the experience of ordinary people"
Hello? This is exactly what the Fed is doing.
Anonymous |
03.26.08 - 3:48 pm | #
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dryfly writes:
Senator Dodd invites Treasury's Paulson to testify in Senate
Bear deal raises serious questions about Fed policy:Dodd
REBear | 03.26.08 - 3:46 pm | #
Geee, I wonder if a few of Dodd's contributers got burned, ya think?
dryfly |
03.26.08 - 3:48 pm | #
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REBear writes:
When 20% of WaMu's ALT-A loans are delinquent
MI,
Is that true?
REBear |
03.26.08 - 3:49 pm | #
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ac writes:
The first is upsetting (rising gas prices, falling home prices, fewer jobs) but reflects the normal reverses of a $14 trillion economy. The second ("panic," "financial meltdown") suggests the onset of something catastrophic and totally outside the experience of ordinary people.
I'll be honest paul -- the thing that troubles me the most is that I was very bearish on housing.
For a while back in 2005-2006 I was really starting to think maybe I was a little bit crazy for worrying that housing would be such a major threat.
The problem is that things appear to be turning out worse than I expected.
It makes it harder for me to dismiss somebody like Jas.
I used to think of someone like Gary Shilling as being a dire pessimist repeatedly warning of a major recession.
Now he almost sounds a bit worried when he writes about the credit markets: "This could be much worse than we originally thought. This doesn't look like a typical recession." (paraphrase)
I'm reminded of that old saying: "The bears are always too early, and too optimistic."
ac |
03.26.08 - 3:49 pm | #
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Red Pill writes:
I agree we have to be very very careful about using words like meltdown and collapse.
We need to save words for the future deterioration of the situation.
let's see
armageddon, maelstrom, conflagration, . . .
Red Pill |
03.26.08 - 3:51 pm | #
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ac writes:
"..totally outside the experience of ordinary people"
Hello? This is exactly what the Fed is doing.
Excellent point.
Why is the Fed engaging in absolutely unprecedented intervention in the markets?
Whatever their words may be, their actions say "we're worried the economy might collapse".
ac |
03.26.08 - 3:52 pm | #
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C Mack writes:
Anon at 3:18
Please accept our condolences for loss of your comrades. Not much fun looking at your war from this side of the pond either.
Meanwhile, those of us who are veterans always remember the induction oath where you swear to
uphold and defend the Constitution,
not whoever is in political office at the moment.
It is a wonder there are not more Armed Froces mutinies, for Constitutional protection reasons, while we are witnessing today the door busters at Bear Stearns.
I could say mor but there is no need to -- come home safe.
C Mack |
03.26.08 - 3:53 pm | #
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Missed Information writes:
re: REBear
22.69% now and quickly climbing.
http://feeds.feedburner.com/~r/M...-
revisited.html
Missed Information |
Homepage |
03.26.08 - 3:54 pm | #
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scotty on safari writes:
OT/Trouble brewing for Pimco and State Street?
heavyweight foreign mining companies would press ahead with operations in Zimbabwe despite a nationalisation law that analysts warned could deepen an economic crisis ravaging the country.
The world's largest platinum miner, Anglo Platinum and Rio Tinto have said they would continue mining after President Robert Mugabe signed into law on Sunday a bill giving locals the right to take majority control of foreign companies, including mines and banks.
Nationalisation has not discourged Rio Tinto, which has diamond interests in Zimbabwe.
"Rio Tinto is supportive of the move towards indigenisation provided that it is done at the right pace and in a way that does not discourage much needed overseas investment in the Zimbabwe mining industry," it said in a statement.
Zimbabwe is already suffering from foreign investor flight, the world's highest inflation rate of over 100 000 percent and severe food, fuel and foreign currency shortages.
scotty on safari |
03.26.08 - 3:54 pm | #
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halbhh writes:
query_tool writes:
HALBHH - I'm not sure how you get to $4,000 of other deductions if you've got a standard job working for a company.
Maybe I'm not deducting things I should..... but I gave $1,500 to charities, maybe $150 for the deductible portion of vehicle licensing fees, $40 for turbo tax (tax prep fees). That's it. What other non-housing itemized deductions would you be taking?
qt, you may be right, as self-employeed I'm thinking of health insurance payments, but self-employeed people are a minority. Perhaps $2500 is a better number. Probably there are averages on-line somewhere, but for this $1000 difference would not affect the final number much anyway. So just $3000 perhaps is a good enough number. Your thought?
halbhh |
03.26.08 - 3:55 pm | #
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dryfly writes:
But there's no law saying consumers have to spend only x% on housing, or have to pay it off within 30 years. Obviously many of these clowns have been doing backdoor extensions with cash-outs, like that idiot woman today who, after 20 years in the same house, can't afford to pay off the remaining principal at 12%. For young buyers who stretch, it's called being "house poor" and it's assumed they grow out of it.
No natural law says price/income ratios will revert HOWEVER there are logical reasons why they might and probably will revert to historic ranges with the biggest being that economic fluctuations (recessions) tend to put a higher bound on how far these ratios can get out of whack.
During long periods of expansion & rising salaries housing prices climb... but once there is a serious recession - lotsa folks lose jobs & foreclosures & weak salaries push down prices (or in stagflation - at least flatten).
Result is you don't see median price to median income outside the 2:1 to 4:1 'trading range' very often of for long. I doubt that will change this time.
dryfly |
03.26.08 - 3:56 pm | #
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robbie writes:
anonymous writes: For me those numbers are 8, the number of friends and classmates killed in Iraq and Afghanistan, and 3, the number of soldiers from my unit killed in this deployment. I'm 25, yet I've received more notifications for funerals than invitations to weddings.
I'm so very sorry for your losses. Thank you so much for your willingness to serve. (despite vehement disagreement with the premises of those asking you to serve)
robbie |
03.26.08 - 3:57 pm | #
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Pondering the Mess writes:
Of course the limit cannot decrease - housing only goes up! Lending standards, however, can only go down!
Come on already - let's just cut to the chase with the taxpayer-funded lair-loans for all. Gotta keep housing unaffordable - the alternative is "unthinkable" since Wall Street pigs won't benefit from the refinancing game anymore.
Pondering the Mess |
03.26.08 - 3:57 pm | #
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scotty on safari writes:
Re: Senator Dodd invites Treasury's Paulson to testify in Senate
Those bastards work for us, i.e, Americans that want justice. Inviting Paulson? Paulson needs to be under investigation, as does The Fed Board!
scotty on safari |
03.26.08 - 3:57 pm | #
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Troy writes:
What other non-housing itemized deductions would you be taking?
State & Local Income & Property Taxes
Troy |
03.26.08 - 3:58 pm | #
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scotty on safari writes:
https://www.cia.gov/library/publi...r/
2187rank.html
Rank Order - Current account balance
100
Zimbabwe $ -538,000,000 2005 est.
164
United States $ -747,100,000,000 2007 est.
scotty on safari |
03.26.08 - 4:02 pm | #
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Rob Dawg writes:
Paul writes:
Eveyone knows the words "meltdown" and "collapse" are used quite frequently in this forum. I am merely suggesting they are not precise descriptions of the issues confronting us.
"Neutron Economy" doesn't have the cachet it had in the 70s.
"Auger in" implies no survivors.
"A sinking ship" presumes there is a rescue vehicle nearby.
IMO our responses to date have been directed towards a combination of 90s Japan with 70s US economy in a desperate attempt to avoid 30s America. It isn't that the Fed is running out of bullets, it is that this isn't a problem that can be solved with bullets. Insolvency cannot be cured with liquidity and I know of no way to inject solvency into the lenders or borrowers. If "meltdown" doesn't work for you how about "dominoes?" "Death spiral?" My favorite; "undamped asymmetrical heterodyned response" but I already said that with "auger in." Unfortunately the answer is for things to break before trying to fix them. If you try to fix them too early you end up with negative value Bear Stearns holding the US taxpayer hostage for $10 and firstborns to named later (when the market for firstborns improves).
Rob Dawg |
Homepage |
03.26.08 - 4:03 pm | #
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ac writes:
Zimbabwe despite a nationalisation law that analysts warned could deepen an economic crisis ravaging the country.
Wait... I thought inflation was the solution to all our economic problems. How can this be?
Ben?
ac |
03.26.08 - 4:04 pm | #
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cd writes:
keep the line at 1340 sir! we got .93 left in reserve sir! Great job boys!
cd |
03.26.08 - 4:07 pm | #
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scotty on safari writes:
War
Anyone see any issues with the economics of war and honor. No need to get into politics, just look at how a war can crash an economy and obviously, recall pre-WWII Germany! This is sick, because you can almost substitute America's systemic corruption/collusion to that of Zimbabwe! Meanwhile, Paulson and his fellow tribe members will help themselves to more of the resources from the vault...
The government of Zimbabwe faces a wide variety of difficult economic problems as it struggles with an unsustainable fiscal deficit, an overvalued official exchange rate, hyperinflation, and bare store shelves. Its 1998-2002 involvement in the war in the Democratic Republic of the Congo drained hundreds of millions of dollars from the economy. The government's land reform program, characterized by chaos and violence, has badly damaged the commercial farming sector, the traditional source of exports and foreign exchange and the provider of 400,000 jobs, turning Zimbabwe into a net importer of food products. Badly needed support from the IMF has been suspended because of the government's arrears on past loans and the government's unwillingness to enact reforms that would stabilize the economy. The Reserve Bank of Zimbabwe routinely prints money to fund the budget deficit, causing the official annual inflation rate to rise from 32% in 1998, to 133% in 2004, 585% in 2005, passed 1000% in 2006, and 26000% in November 2007. Private sector estimates of inflation in 2007 are well above 100,000%. Meanwhile, the official exchange rate fell from approximately 1 (revalued) Zimbabwean dollar per US dollar in 2003 to 30,000 per US dollar in 2007.
scotty on safari |
03.26.08 - 4:07 pm | #
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barely writes:
"I find this hysteria to be quite a curiosity.
Paul "
Yes Paul. I agree 100%. It's all just hysteria. I think the Fed ought to crank FF rates back up to 5% and abandon all those silly auctions where they give money away to banks. Let's just get straight back to business as usual for our eternal Goldilocks economy that you rightly recognize doesn't need any handouts.
barely |
03.26.08 - 4:10 pm | #
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Ralph Cramdown writes:
Result is you don't see median price to median income outside the 2:1 to 4:1 'trading range' very often of for long. I doubt that will change this time.
Oh, I agree. 5:1 or 6:1 permanently is unsustainable. But even a slight shift, say from 3:1 to 3.5:1, is hundreds of dollars per month per household, the equivalent of one less car in the driveway or some other big hole in the economy, unless the bondholders are spending the surplus here and now.
Ralph Cramdown |
03.26.08 - 4:11 pm | #
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OriginalFrank writes:
"Meanwhile, those of us who are veterans always remember the induction oath where you swear to
uphold and defend the Constitution,
not whoever is in political office at the moment.
It is a wonder there are not more Armed Froces mutinies, for Constitutional protection reasons, while we are witnessing today the door busters at Bear Stearns."
Am I correctly reading this as incitement to mutiny? Wow - that would probably be a new low for us here.
OriginalFrank |
03.26.08 - 4:11 pm | #
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Anonymous writes:
no OF, just plenty of trolls around today mucking up the threads.
Anonymous |
03.26.08 - 4:15 pm | #
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idoc writes:
i find it quite significant that despite the increased margin requirements at the commodities exchanges which was a blatant attempt by the PPT to dump the prices of oil and gold, that they are once again soaring back to previous levels. it says that true investors don't give a hoot about having to put up serious cash to get into the commodity complex. very bad for stocks.
idoc |
03.26.08 - 4:17 pm | #
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dryfly writes:
Oh, I agree. 5:1 or 6:1 permanently is unsustainable. But even a slight shift, say from 3:1 to 3.5:1, is hundreds of dollars per month per household, the equivalent of one less car in the driveway or some other big hole in the economy, unless the bondholders are spending the surplus here and now.
Ralph Cramdown | 03.26.08 - 4:11 pm | #
Yup - people make those choices all the time... to be cash rich or house poor. But the economy can handle that - it can't easily handle a reset from 6:1 back to 3:1 (or maybe 10:1 back to 4:1 in bubble zones like the Bay Area) without heartache.
But sometimes there is no cure for heartache except time.
dryfly |
03.26.08 - 4:18 pm | #
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bobn writes:
NY Post - Brokers Get JPM Carrot To Stick With Bear (More Crooks JJ!)
"March 26, 2008 -- JPMorgan Chase will pay brokers at Bear Stearns a maximum bonus of 100 percent of the annual revenue they generated to keep them from leaving as the two companies combine."
So that means the BSC brokers will owe JPM money, right?
bobn |
03.26.08 - 4:19 pm | #
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number2son writes:
Otherwise, he would have gone down as a failed President, because most of the New Deal effects were temporary and things were back to where they were by 1938-39.
Your comments rarely merit rebuttal, let alone a full reading, but this is a myth itself and should not pass unchallenged. Ask anyone who lived through those times if they think the New Deal was a failure. For that matter, ask anyone who currently benefits from it. That would include anyone receiving Social Security benefits or has received an FHA loan, to name just two examples.
number2son |
03.26.08 - 4:19 pm | #
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Red Pill writes:
Am I correctly reading this as incitement to mutiny? Wow - that would probably be a new low for us here.
OriginalFrank | 03.26.08 - 4:11 pm | #
So do you believe we serve the Constitution or the current political leadership?
We did indeed elect this leadership constitutionally (sort of). So if the leadership starts to betray the Constitution, are we still honor bound to do their bidding since they were constitutionally elected? These are questions that can lead to some very strong differences of opinion.
Red Pill |
03.26.08 - 4:20 pm | #
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energyecon writes:
barely, et al:
I have to agree, the Fed is running around with its freaking hair on fire rolling out new alphabet soup programs on a damn near daily basis, invoking actions under codes not used in umpty ump years, bond yields not seen in 50+ years and what else...and some of the slackwits are doing their best Kevin Bacon imitation from "Animal House."
Those my friends, are 'rouge economists', as they are putting lipstick on a pig and telling you to pucker up and pony up, it's really 'Kristen' and she is a bargain at $5K/hour - and I call bullsh!t!
[/rant]
energyecon |
03.26.08 - 4:20 pm | #
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ipodius writes:
So do you believe we serve the Constitution or the current political leadership?
You know i have no idea but I'm sure there are many places to debate such issues other than a housing/economics blog.
Some of you people need a life if this is what you spend your days worring about. Or maybe you all just need an appointment arranged by the Emperor's Club. Just saying...
ipodius |
03.26.08 - 4:22 pm | #
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halbhh writes:
Oh, I agree. 5:1 or 6:1 permanently is unsustainable. But even a slight shift, say from 3:1 to 3.5:1, is hundreds of dollars per month per household, the equivalent of one less car in the driveway or some other big hole in the economy, unless the bondholders are spending the surplus here and now.
Ralph Cramdown | 03.26.08 - 4:11 pm | #
Good point. Another relevant piece is in the book "The Two Income Trap" where families using both incomes to pay the mortage are at a lot of risk of default.
halbhh |
03.26.08 - 4:26 pm | #
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Missed Information writes:
You know i have no idea but I'm sure there are many places to debate such issues other than a housing/economics blog.
Some people, like Mish, would tell you that there would be no housing crisis if not for the unconstitutional Fed :)
So it is suited for housing blog :)
Missed Information |
Homepage |
03.26.08 - 4:27 pm | #
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energyecon writes:
It seems ironic that a Wall Streeter is b!tching about getting the same deal that thay they are offering the American taxpayer...
FGIC Sees No Need to Honor Agreement With IKB, Calyon (Update3)
By Jody Shenn
March 26 (Bloomberg) -- FGIC Corp. said it's walking away from an agreement to provide $1.9 billion in guarantees on mortgage-linked securities because Credit Agricole SA and IKB Deutsche Industriebank didn't live up to their side of the deal.
FGIC ``has no further obligation'' because certain responsibilities weren't met and IKB, the German bank that had to be bailed out four times in the past year, misrepresented its condition, FGIC said in a statement today. FGIC, IKB and Credit Agricole are fighting the matter in court. If FGIC wins, the benefit ``could be material,'' the New York-based company said.
Bond insurers are seeking ways to relieve themselves of guarantees on collateralized debt obligations to temper their losses amid rising mortgage defaults. Security Capital Assurance Ltd.'s XL Capital Assurance Inc. last week was sued by Merrill Lynch & Co. after XL voided obligations on $3.1 billion of CDOs because of what it called a breach in agreements over rights to influence matters such as whether the CDOs should be liquidated.
``These guys should have a new motto: Heads we win, tails we rescind,'' said Julian Mann, the vice president for fixed income at First Pacific Advisors LLC, which manages $3.4 billion of bonds. Mann doesn't oversee positions in bond insurers, he said.
[snip]
energyecon |
03.26.08 - 4:33 pm | #
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dryfly writes:
Good point. Another relevant piece is in the book "The Two Income Trap" where families using both incomes to pay the mortage are at a lot of risk of default.
halbhh | 03.26.08 - 4:26 pm | #
I actually had that as a homework assignment back in a mfg grad school statistics class. In short if the couple has fixed costs (including mtg) greater than the after tax income of the LOWEST earner alone - the probability of default is greater than if they had one income and lived up to the fixed cost limit of that one income alone.
The reason people upscale with two incomes is obvious: they can live larger on the two incomes than the one alone & just take the risk. The prof wasn't preaching - just wanted people to look at the situation and make the numbers talk back.
BTW - we had to model all sorts of scenarios - there are ways to 'mediate' the risk but all require living smaller and applying the dreaded 'S' word - saving.
dryfly |
03.26.08 - 4:35 pm | #
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Red Pill writes:
Some of you people need a life if this is what you spend your days worring about. Or maybe you all just need an appointment arranged by the Emperor's Club. Just saying...
ipodius | 03.26.08 - 4:22 pm | #
Pretty rich coming from someone commenting on a housing, finance, and economics blog. :)
I know people in the military who take these questions quite seriously.
Okay okay. I know wars and poor leadership have no relevance to the economy. ;)
Red Pill |
03.26.08 - 4:35 pm | #
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BusinessTime writes:
OK halbhh-- C'mon, show your work!
BusinessTime |
03.26.08 - 4:39 pm | #
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halbhh writes:
dryfly -- interesting. I'm 1/2 thru that book. I'll keep your rule of thumb in mind. The author(s) (one a Harvard prof) were also pointing out the disadvantageous subprime lending way back in 2003(!).
halbhh |
03.26.08 - 4:39 pm | #
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rich writes:
>REBear writes:
Senator Dodd invites Treasury's Paulson to testify in Senate
Bear deal raises serious questions about Fed policy:Dodd
Maybe Sen. Dodd could pick Paulson's brain a little about the PPT while he's at it.
Shine a little sunshine into how the Fed loans money to dealers to pump up U.S. equity index futures at certain times of the day.
rich |
03.26.08 - 4:40 pm | #
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Tiltmom writes:
Tanta, can you please confirm that I'm in the right place?
All I see is a vanishing cabinet and a bunch of ponies.
Tiltmom |
03.26.08 - 4:42 pm | #
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halbhh writes:
Bus |