Foreclosure Storm Will Hit U.S. in 2009 as Loan Changes Fail
2008-12-11 – Bloomberg.com
“U.S. foreclosure filings climbed 28 percent in November from a year earlier and a brewing “storm” of new defaults and job losses may force 1 million homeowners from their properties next year, RealtyTrac Inc. said”
A total of 259,085 properties got a default notice, were warned of a pending auction or were foreclosed on last month, the seller of default data said in a report today. That’s the fewest since June. Filings fell 7 percent from October as state laws and lender programs designed to delay the foreclosure process allowed delinquent borrowers to stay in their homes.
“We’re going to see a pretty significant storm next year,” Rick Sharga, executive vice president of marketing for Irvine, California-based RealtyTrac, said in an interview. “There are two or three clouds that suggest a pretty heavy downpour.”
Rising unemployment, expiring foreclosure moratoriums and state efforts that “run out of steam” will push monthly filings toward the record of more than 303,000 set in August, Sharga said. The number of homes that revert to lenders, the last stage of foreclosure and known as “real estate owned” orREO properties, will increase to 1 million from as many as 880,000 this year, he said. …
Goldman Recommends Credit Default Swaps Against NJ, CA, WI, FL, OH, MI, Others
Mishes Global Economic Trends Blog -
The state of New Jersey is insolvent. Bankrupt might be a better word. New Jersey is $60 billion in the hole on pension funding and the Governor is planning on skipping payments in a “pension payment holiday” until 2012 so as to not increase property taxes. To top it off, the ongoing plan assumptions are 8.25%. Sorry NJ, that simply is not going to happen. ….
Inquiring minds are now reading that Goldman Draws Ire for Advising Default Swaps Against New Jersey.
Goldman Sachs Group Inc., one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 states’ debt.
Bets against public debt, once unheard of on bonds considered safe enough for retirees, have soared as the National Conference of State Legislatures projects recession-fueled budget crises will cause $97 billion of shortfalls nationwide over the next 18 to 24 months.
Jumbo Prime: ‘Walk Away’ Loans – More Downgrades Coming
2008-12-10 — ml-implode.com
“This story was originally released a couple of weeks ago but somehow did not make it to the blog. It goes hand in hand with the Moody’s downgrade of many Bank of America Jumbo Prime deals citing a 13% delinquency rate. This represents a total meltdown in the sector happening right now that nobody is reporting.”
Fed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheet
This is a difficult one to wrap my head around. But the idea that they are trying to create a different class of debt is very troubling. The resulting confusion can’t be good for investors who were fooled by GSE AAA ratings based on “implicit” guarantees.
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Move Presents Challenges: ‘Very Close Cousins to Existing Treasury Bills’
By JON HILSENRATH and DAMIAN PALETTA – Wall Street Journal
The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.
Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools.
Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter.
It isn’t known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle: The Federal Reserve Act doesn’t explicitly permit the Fed to issue notes beyond currency.
Potentially, The Worst Housing Crash in American History?
2008-12-08 — doctorhousingbubble.com
“It is important to note that home building during the Great Depression dropped by 80% between the years 1929 and 1932. It is also the case that many families owned farms which clearly isn’t a factor in today’s market. But we can use current measures and try to determine how deep our current decline is in relation to the past. Keep in mind that when you read 1929 – 1932 you may get a psychological feeling that this was a short timeframe. Remember that in late 1929 we saw the peak of the stock market and the bottom wasn’t reached until the middle of 1932 and it lingered near the lows for a very long time. If we follow a similar timeline with our market peak in October of 2007, then we can expect a bottom in the summer of 2010.
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