Mortgage Rates Drop! It Does Not Mean What it Used to
2008-11-26 — ml-implode.com
Remember folks, we have seen this happen a few times this year. Rates went right back up after the initial knee jerk lower. This actually happened yesterday as after the initial betterment in the morning, all banks re-priced for the worse multiple times yesterday paring back the rate improvement sharply. I am still not convinced that the low rates will last – Mr Mortgage talks about in the link below.
Fed Commits $800 Billion More to Unfreeze Lending
By Scott Lanman and Dawn Kopecki
Nov. 25 (Bloomberg) — The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.
The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a program of $200 billion to support consumer and small-business loans, the Fed said in statements today in Washington.
With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.
“They’re trying to put funds into the system, trying to unfreeze these markets,” said William Poole, the former St. Louis Fed president, in an interview with Bloomberg Television. “Clearly, the Fed and the Treasury are beginning to take a large amount of credit risk.”
The Fed will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae, the statement said. Treasury Secretary Henry Paulson said at a press conference that $200 billion is just the “starting point” for the asset-backed securities program.
“The economy is turning down pretty dramatically,” he said. “It’s very important that lending continue to be available.”
Peter Schiff, he was right the whole time 2006 – present
I sure wish some of the foolish talking heads on our televisions could be held accountable for misinformation. But hey, it is the news, since when have we pushed for accuracy. Peter Shiff has tried and tried to speak to the masses about the upcoming crisis and the true net effects it could have on the entire economy. But instead of listening, it was easier to laugh and ridicule. Watch the video for yourself.
Donny Deutsch has the “Right Idea”
2008-11-24 — ml-implode.com
This housing and mortgage crisis is not a result of millions borrowers buying beyond their means or some massive consumer driven multi-year mortgage fraud era where everyone lied to buy a home. This crisis was caused by fraud alright – but not by the consumer.
The greatest real estate bubble of all time was only able to occur because of the bank’s allowing home owners to use extraordinary leverage created through exotic loan programs and easy credit that never existed before and never will again.
Gift Cards for the Holidays? Think Again…
from a friend of mine, via email
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i wanted to give everyone a heads up that if you tend to give gift cards around the holidays, you need to be careful that the cards will not be honored after the holidays.
Stores that are planning to close after Christmas are still selling the cards through the holidays even though the cards will be worthless January 1. There is no law preventing them from doing this. On the contrary, it is referred to as ‘Bankruptcy Planning).
Below is a partial list of stores that you need to be cautious about.
Circuit City (filed Chapter 11)
Ann Taylor 117 stores nationwide closing
Lane Bryant, Fashion Bug ,and Catherine’s to close 150 stores
nationwide
Eddie Bauer to close stores 27 stores and more after January
Cache will close all stores
Talbots closing down specialty stores
J. Jill closing all stores (owned by Talbots) Pacific Sunwear (also owned by Talbots)
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January.
Home Depot closing 15 stores 1 in NJ ( New Brunswick )
Macys to close 9 stores after January
Linens and Things closing all stores
Movie Galley Closing all stores
Pep Boys Closing 33 stores
Sprint/Nextel closing 133 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores./>Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Lowes to close down some stores
Dillard’s to close some stores
Why a Gold Standard?
Once a Gold Standard Warrior, has Alan Greenspan lost his youthful wisdom?
Donald Grove
Washington Correspondent
Casey Research, LLC.
The Casey Report
The $800 billion bailout, and billions more being pumped less obviously into the global economy, will cure nothing. Americans are clamoring for a savior. No one is willing to believe that the party is over. In the past, someone always came to our rescue.
Like a parent dispelling a childhood nightmare, FDR soothed the masses with the assurance that they had nothing to fear but fear itself. To this day, he is revered for turning a depression into the Great Depression. In the aftermath of the dot-com bubble, Fed Chairman Alan Greenspan came to the rescue with a brand-new bubble in real estate.
Even if there was someone out there who could pull off one more illusionary rescue, it would only delay the inevitable and worsen the pain. Pain now or more pain later. The compassionate solution is to let Adam Smith’s invisible hand guide us, as should have been happening all along. Almost no public figures have the backbone to speak honestly about what’s wrong. There is no free lunch. Still, voters believe the promise that “I will give you what you want and make someone else pay for it.” Neither Congress nor either presidential candidate can take us back to the fairytale world of mortgaged opulence we blissfully enjoyed in the recent past.
Economist, Roubini: 20 Reasons why things are hopeless…
I have not made a formal tally of Roubini’s various lists of why the economy is going (and will continue to go) to hell in a handbasket, but recent sightings suggest his typical list is eight to twelve reasons.
However, in his latest missive, on the subject of why the consumer is toast, Roubini outdoes himself and comes up with twenty reasons. Oh, sorry, AT LEAST twenty reasons. I also don’t think I’ve ever read Roubini say his tally of woes was less than comprehensive.
In case you are new to this line of discussion, “falling consumption” in the absence of big time government countermeasures, equals “memorably bad downturn.”
Is there some secret significance to this development? Numerologists and technical analysts are encouraged to weigh in. Personally, I think his list does boil down to a dozen or so reasons, but be sure to read down to his last point, where he draws his bottom line, a peak to trough fall in GDP of 10%. He needed 20 reasons to steel readers for his conclusion.
And I am really not making fun of Roubini. It is merely that because his messages are so consistently grim and have so far proven correct, one needs to find comic relief where one can.
The End of the Wall Street Boom
Ron Paul Advisor Peter Schiff on Glenn Beck (10/06/08)
Great analysis, discussion and data
The G-20’s Secret Debt Solution
by 11-13-08
If you think this weekend’s G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks … think again.
Behind the scenes, a far more fundamental fix is being discussed — the possible revaluation of gold and the birth of an entirely new monetary system.
I’ve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what I’m about to tell you now is not on the G-20 table this weekend.
Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. You’ll see why in a minute.
First, the G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition …
“If we can’t print money fast enough to fend off another deflationary Great Depression, then let’s change the value of the money.”
I call it … “The G-20’s Secret Debt Solution”
FDIC’s Bair pushes aggressive mortgage plan
NEW YORK (CNNMoney.com) — In a surprise move, FDIC Chairwoman Sheila Bair Friday unveiled details of her plan to have the government help delinquent homeowners.
There are two key elements to the proposal.
First, housing payments for delinquent borrowers would be reduced to 31% of gross monthly income.
To get there, mortgage rates could be set as low as 3% for five years, before increasing at an annual rate of 1 percentage point until it hits the prevailing market rate. Loan terms could be extended as long as 40 years.
Second, to encourage servicers and investors to participate, the government would share up to 50% of the losses if a borrower who had been helped ended up in default anyway. The risk of re-default had been one obstacle to getting lenders on board with systematic modification plans.
Fannie Mae to Paulson: Please sir, may I have some more?
This is getting ridiculous.
On top of a record $29bn quarterly loss (and the tacit admission that it will continue to report losses for the forseeable future), and buried on page 218 is this little gem in Fannie Mae’s 10-Q filing with the SEC:
Treasury’s funding commitment may not be sufficient to keep us in a solvent condition
Say what? This is what:
Under the senior preferred stock purchase agreement, Treasury has made a commitment to provide up to $100 billion in funding as needed to help us maintain a positive net worth. To the extent we draw under the funding commitment in the future, the amount of Treasury’s funding commitment will be reduced by that amount. If we continue to experience substantial losses in future periods or to the extent that we experience a liquidity crisis that prevents us from accessing the unsecured debt markets, this commitment may not be sufficient to keep us in solvent condition or from being placed into receivership.
That’s right – Fannie Mae’s taken a page from AIG’s playbook. One massive bailout – and $100bn – may not have been enough to set the mortgage lender to rights.
But the question is – will anything be?
General Motors is on the Brink of Default and Bankruptcy
2008-11-09 — blogspot.com
The Real Unemployment Numbers
2008-11-08 — seekingalpha.com
Unemployment continues to skyrocket to a number far higher than 6.5% … although this is the official number the American people are told. That number simply does not jive with every anecdotal piece of evidence, sentiment gauge, and the like. Because it’s a government manufactured myth, as we’ve pointed out many times in the past – keep feeding the sheep false figures and hope they don’t figure it out. I’ve long since stopped dissecting a few of the major government reports because they all have been (ahem) “modified” since the early ’90s to show favorable statistics. But since we get new readers, most of whom don’t recognize the “Man” behind the curtain statistics, I pull out some old blog entries to showcase reality.
Let me preface this whole charade by saying “today’s” number will be revised in the future, so the market infatuation with numbers that constantly get revised within 30-60 days is in and of itself, sort of silly – but it is what it is. To that end…
- Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.
So when market participants reacted to “better than expected” August and September numbers and stock valuations changed those days – did it really make sense since it was based on a data set that meant essentially nothing? 30 days ago we told you 159,000 jobs were lost – oops, now it’s 284,000. Etc. (We had to keep the real numbers a secret until the election, eh?) So aside from all the other problems with the data – that is one reason alone to basically ignore this data and just listen to the companies themselves – the companies chopping 5000 jobs here, 7000 jobs there, 8000 jobs out there. (Click link to read further)
…..
The amount of people working part-time for economic reasons surged by 645,000 in October to 6.70 million, following an increase of 337,000 in September. The current level is 2.3 million higher than a year ago and is the highest since July 1993, when the tally was also 6.70 million. No higher figure has been seen since the 1982 recession, when a record 6.86 million people were working part-time for economic reasons.
Peter Schiff: ‘There is a major, major crisis coming’
Peter Schiff, president of Euro Pacific Capital Inc. and disciple of Austrian School economics, says “a major, major crisis is coming,” thanks to the government’s attempts to ‘fix’ the economy with giant bailouts.
Well, he’s been right so far
Forecast 2009: Your home
CnnMoney 2008-11-06
Home prices are down 20% nationwide since their peak in July 2006, according to the S&P/Case-Shiller home price index. Economist Nouriel Roubini of New York University, who accurately predicted the housing slide and credit crisis, expects another 20% decline in home prices next year. Patrick Newport of economic forecasting firm Global Insight projects a 15% drop.
NO MORE MORTGAGE PAYMENTS SOON – Get Ready to Default!
The New Bailout- NO MORE MORTGAGE PAYMENTS!
The plan is to FULLY SUBSIDIZE millions of borrower’s mortgage payments for three years. The program is predicated upon the housing market improving within the next 5-years. This is a really bad assumption to make but also could shed some light on the Fed’s inflation expectations. This plan may help borrowers de-leverage temporarily but will not help the broader housing market. It just kicks the default can down the road several years.
“In five years’ time, participants would, in all likelihood, be able to sell their homes or refinance their mortgages at amounts that would allow them to repay the loan.”
This program does nothing about the leading cause of loan default across higher paper grades, which is negative equity. Those severely underwater borrowers that would chose to participate in something like this are the very ones that you want to foreclosure upon in order to clear the market in the first place. The primary reason one would enter a program like this is if you planned on walking anyway. After three years when their mortgage payments kick in again or five when the big balloon is due, do you really think the these underwater home owners will feel better about their situation or more passionate about saving the home in which they have lived for free for years knowing they are another $100k in debt? I think not.
Second Mortgage Notes For less than 1 cent on the Dollar!!?
2008-11-03 — ml-implode.com
“A good friend who specializes in distressed real estate assets such as notes and REO just bought 27 second mortgages with a face value of $2,153,400 million for $2400 – that’s TWO THOUSAND FOUR HUNDRED DOLLARS.”
Nearly One of Five Underwater on Mortgage
thetruthaboutmortgage.com
While the problem can be seen nationwide, a handful of states are taking the brunt of it, including Arizona, California, Florida, Georgia, Michigan, Nevada, and Ohio.
These seven states account for 58 percent of all underwater borrowers, but just 36 percent of outstanding mortgages.
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