Pickle Real Estate

Reading Between the Head-Lines

Mortgage Meltdown, More Pain To Come

2009-05-31  Mish’s Global Economic Blog

Yale University economist Robert Shiller has often dazzled audiences with a chart showing home prices from 1890 to present. Someone even used Mr. Shiller’s chart to make a YouTube video that puts its viewer on a roller-coaster ride over peaks and valleys in home pricing. It’s a bumpy ride.

Now another economist, Thomas Lawler, says Prof. Shiller’s chart is “bogus.” Mr. Lawler says Mr. Shiller cobbled together data that are inconsistent and sometimes unreliable. Mr. Shiller defends his work and accuses Mr. Lawler of making “wild allegations.”


Full Analysis Here

June 2, 2009 Posted by | Banking, Foreclosure, Real Estate, Stats | 1 Comment

Bolivia in the 80’s vs. The U.S now??

In the 1980s, Bolivia and much of Latin America went through a painful period of hyperinflation that brought the country to the brink of collapse.

June 2, 2009 Posted by | Banking, Foreclosure, Investments, Stats | Leave a comment

Dr. Ron Paul – German hyperinflation 1/16/09

June 2, 2009 Posted by | Banking, Stats | 1 Comment

Black Swan Fund Makes a Big Bet on Inflation

2009-06-01 Wall Street Journal

“A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation. The firm, Universa Investments L.P., is known for its ties to gloomy investor Nassim Nicholas Taleb, author of the 2007 bestseller “The Black Swan,” which describes the impact of extreme events on the world and financial markets. ”

Full Article Here

June 2, 2009 Posted by | Banking, Foreclosure, Investments | Leave a comment

So Yesterday was a HUGE day as Real Data on Housing Poured in

3 Fascinating articles.  Woooooaah Nelly, it seems as things were not as rosy as we thought for the last month.

Mortgage Delinquencies, Foreclosures, Rates Increase

Bloomberg: http://www.bloomberg.com/apps/news?p…mO8&refer=home

“Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March this week as the government’s effort to fix the housing slump lost momentum.”

Mortgage Marekt Seizes Up

Mish’s Global Economic Blog: http://globaleconomicanalysis.blogsp…-locks-up.html

“With respect to yesterday’s episode in the mortgage market — yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.”


Denninger.net: http://market-ticker.denninger.net/a…e-On-Fire.html

“To put this in a bit more simple form, this means that while the banks are claiming to be increasing loss provisions, loans are going bad faster than their provisioning is increasing – which means they’re reporting “profits” that are false, as provisions for bad loans hit earnings. So we can take some more off those “reported earnings”, as much as another $6-10 billion dollars.”

May 29, 2009 Posted by | Banking, Foreclosure, Lending, Real Estate, Stats | Leave a comment

Peter Schiff on Fox News “Gold will break $1000 soon”

Fox News

“Peter Schiff talks about the price of gold and a possible run for Chris Dodd’s Senate seat. According to this report at Time yesterday, since markets crashed last fall, there have been a dearth of media outlets asking Peter to speak about how things are going to get even worse.”

May 27, 2009 Posted by | Banking, Investments, Stats | Leave a comment

How Far From the Bottom?

2009-05-27 Ritzhold.com

” Searching for the housing bottom, with Barry Ritholtz, FusionIQ CEO and the Fast Money traders.”

Full Video here

May 27, 2009 Posted by | Banking, Foreclosure, Investments, Real Estate, Stats | Leave a comment

Clayton, Re-Invents Mobile Homes

www.Claytonhomes.com – Take a look what the “new mobile homes” look like. WOW!

They are also moving forward on the concept of a “green manufactured home”, see the link below.

 http://www.treehugger.com/files/2009/01/clayton-ihome-design.php  – When Warren Buffet bought Clayton Homes in 2003 I was still working in the prefab biz; Punching well above my weight, I sent him an email about the business case for a mobile home manufacturer doing well designed green housing. I don’t know if he got it; I never got an answer.

I feel this might revolutionize homes as we know it.

May 21, 2009 Posted by | Investments, Real Estate | Leave a comment

Five Economic Storms Raging NOW!


“JP Morgan Chase & Co., Citigroup, Wells Fargo & Co., Goldman Sachs Group, GMAC LLC, SunTrust Banks, Inc., and Fifth Third Bancorp — are at risk of failure and may have to cut back lending dramatically to stay alive.”

Full Article Here

May 11, 2009 Posted by | Banking, Foreclosure, Lending, Real Estate | 1 Comment

Economic casualties pile into tent cities

2009-05-06 USAtoday.com

The homeless include a startling number of first-time homeless, she says. We asked them what industries they were involved in. The majority were talking about construction, the housing industry, real estate. There was a direct correlation to the housing market crash.

Full Article Here

May 11, 2009 Posted by | Banking, Foreclosure, Real Estate, Stats | Leave a comment

Misleading jobless claims data and recessions

2009-05-06 Greenspan mess Blog

“One of the many “green shoots” that has popped up recently for the U.S. economy is the possible peaking of weekly jobless claims, what has been increasingly referred to as a “reliable” indicator for the end of recessions since 1967 when this data was first collected. The chart below, similar to the one published by CR in this item from a couple weeks ago shows the correlation.”

Full Article Here

May 11, 2009 Posted by | Banking, Foreclosure | Leave a comment

The capital well is running dry and some economies will wither

2009-04-27  Telegraph.co.uk

Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.

Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.

Full Analysis Here

April 28, 2009 Posted by | Banking, Lending, Real Estate, Stats | Leave a comment

Commercial Real Estate Time Bomb Goes Off But No One Notices

2009-04-23 Mish’s Global Economic blog

The Commercial Real Estate Time Bomb has gone off but it has been lost in the euphoria of economic cheerleading and bottom calls based on dubious (at best) earnings reports from banks. Here are a few headline items from the past week or so to consider.

Malls shedding stores at record pace

CNN Money is reporting Malls shedding stores at record pace

Strip malls, neighborhood centers and regional malls are losing stores at the fastest pace in at least a decade, as a spending slump forces retailers to trim down to stay afloat, according to a real estate industry report.

In just the first quarter of 2009, retail tenants at these centers have vacated 8.7 million square feet of commercial space, according to the latest report from New York-based real estate research firm Reis.

That number exceeds the 8.6 million square feet of retail space that was vacated in all of 2008.

Reis’ report shows that store vacancy rates at malls rose 9.5% in the first quarter, outpacing the 8.9% vacancy rate registered in all of 2008, and marking the largest single-quarter jump in vacancies since Reis began publishing quarterly figures in 1999.

Full Article Here


April 22, 2009 Posted by | Foreclosure, Investments, Real Estate | Leave a comment

For Housing Crisis, the End Probably Isn’t Near

2009-04-22 NYTimes.com

In 2006 and early 2007, the official housing statistics were still showing that house prices were holding up. But that was largely because so many sellers were refusing to sell. The auctions, made up mostly of foreclosed homes, showed the truth: house values were starting to plummet in many places.

So a few weeks ago, I decided to go to an auction at a hotel ballroom in Washington — and to study the results of several others elsewhere — with an eye to figuring out whether prices may now be close to bottoming out.

That’s clearly a huge economic question. Last week, JPMorgan’s chief financial officer told Eric Dash of The New York Times that JPMorgan, and presumably other banks, would be under pressure “until home prices stabilize and unemployment peaks.”

Full Article Here

April 22, 2009 Posted by | Banking, Foreclosure, Lending, Real Estate | Leave a comment

A Backdoor Nationalization of Banks?

2009-04-21 WallStreetJournal.com

It seems we are off to the races with the gov’t being the primary shareholder of bank interests. Good Lord, what’s next?

Full Article Here

April 21, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate | Leave a comment

Is That Recovery We See?

2009-04-11   Ritzhoild.com

Is That Recovery We See?
By John Mauldin

  • Is That Recovery We See?
  • Those Wild and Crazy Analysts
  • The Shadow Inventory of Homes
  • Commercial Real Estate Starts a Long, Slow Slide
  • P/E Ratios Go Negative!
  • The Effect of Earnings Surprises
  • Corporate Earnings and Recovery in Recessions
  • The Implosion in Social Security

The market, we keep hearing and reading, is telling us that there is recovery around the corner. And pundits point to data that seems to suggest the worst is behind us. The leading economic indicators, while still down significantly, seem to be in the process of bottoming. There is a large amount of stimulus in the pipeline. Mark-to-market has been modified. Housing seems to be finding a bottom, if you look at the rise in sales from January. And so on.”

Full Analysis Here

April 13, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Gerald Calente – The World’s #1 Trends Forecaster

www.trendresearch.com – Meet Gerald Calente

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente. New York Post

Read this terribly frightening article Greald wrote about the economy to come.

“It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.”  …..

“We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to. It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression, people’s minds weren’t wrecked on all these modern drugs – over-the-counter drugs, or crystal meth or whatever it might be. So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.”

Full Article Here

April 13, 2009 Posted by | Stats | Leave a comment

Close Look at the Accelerating Rate of Unemployment

2009-04-09 Mish’s Global Economic Blog

The trend in unemployment is unmistakably up and accelerating. Let’s start with a discussion of widely followed data followed by many additional charts that you may not have seen before.

Here is a closeup from Jobs Contract 15th Straight Month; Unemployment Rate Soars to 8.5% courtesy of the BLS.

Full Analysis Here

April 9, 2009 Posted by | Stats | Leave a comment

JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo and More Than 1,800 Other Institutions Believed to Be at Risk of Failure Based on Fourth Quarter 2008 Data

2009-04-09 Businesswire.com

JUPITER, Fla.–(BUSINESS WIRE)–Several of the nation’s largest banks, including JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, plus more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts, according to Martin D. Weiss, Ph.D., president of Weiss Research, Inc., an independent research firm.

The analysis is based on Fourth Quarter 2008 data from TheStreet.Com and the Comptroller of the Currency (OCC). Several large institutions received significant ratings downgrades from the prior quarter, including Citibank, downgraded from C- to D; Wells Fargo, downgraded from C- to D+; and SunTrust Bank, downgraded from C- to D+.

Full Article Here

April 9, 2009 Posted by | Banking | Leave a comment

California Foreclosures About To Soar

2009-04-09 ZeroHedge Blog

The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium — this wave is so big I would not put it past them trying it. 

CA foreclosure background – in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NOD’s and NTS’s at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSE’s announced this week that they were coming off moratorium, which could increase foreclosures by 20-25% alone.


Full Article Here

April 9, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Moyers Interview: Sharing the Blame for the Economic Crisis?


Must Watch!

Bill Moyers Journal
Sharing the Blame for the Economic Crisis?…
William K. Black, former senior bank regulator

3 parts


April 9, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Be Prepared for “Extraordinary Circumstances”

2009-04-02 Mishes Global Trends

The last words you want to see in an appropriations bill from Congress are the words “in case of an emergency” or their twin sister “in the event of extraordinary circumstances“.

When you see those words it is a near certainty that an “emergency” or that “extraordinary circumstances” are right around the corner.

Full Article Here

April 3, 2009 Posted by | Banking, Foreclosure, Investments, Stats | Leave a comment

50 Truths about the Economy…. Run for Cover!!

2009-03-26 – blogspot.com

These are just a few simple realities under which we currently exist. To deny the existence of one or more of these truths does not make it go away. And as time goes by, the effects of these truths becomes magnified and the gravity of our situation becomes more clear. The worst is yet to come. Please prepare wisely

50 truths: The simple, underlying fundamentals of a dying system. The Top 10:

  1. Unemployment is increasing
  2. Federal tax revenues are decreasing
  3. Consumer spending is decreasing
  4. The risk of catastrophic Deflation is increasing
  5. The risk of catastrophic Hyperinflation is increasing
  6. The U.S. debt is increasing
  7. The U.S. deficit is increasing
  8. The risk that the U.S. government will eventually find itself unable to service its debt is increasing
  9. Homelessness is increasing
  10. Poverty is increasing

See all of them at the link below…

Full Article Here

April 2, 2009 Posted by | Real Estate | Leave a comment

Which Trend Do You Think We Are On?

So, we are on the blue continuum.  It appears that it almost matches the 30’s Depressionary numbers.  I feel we will see another deep, dark drop shortly.  The current upswing has very little bering on the condition of the full economy.

Full Size Chart here: http://dshort.com/charts/bears/four-bears-large.gif

April 2, 2009 Posted by | Investments, Real Estate | Leave a comment

House of Cards, Hour Long Special on CNBC

Excellent explanation of what happened between 2001 and today. I caught a glimpse of CNBC’s documentary on the financial crisis called “House of Cards” just now and I highly recommend anyone who’s interested on how we got ourselves into such trouble to watch it.

From what I’ve seen, it at least explains:

  • How it was a credit crisis to a stock market crisis to a economic crisis.
  • What a CDO is and Alan Greenspan’s take on it.
  • What some people have done to warn it and how others knew things were going to be bad.

The show, House of Cards, is going to be on CNBC and premiers tonight (2/12/2009) at 8:00pm ET and 12:00am ET.

Or you can view this entire special online here:


February 23, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

The Short and Simple Story of the Credit Crisis.


February 23, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Lenders drop mortgage brokers

I’ve been talking with investors about this very thing for the past year. Unfortunately, I think this one is inevitable.  Banks have been pulling their warehouse lines for the past year and increasingly, local banks, are beginning to lend only to their customers.  Seems as if it’s back to sitting at the bankers desk or using our new subprime lender, FHA.

2009-02-14 – CNNMONEY.com

NEW YORK (CNNMoney.com) — Some big banks have cut back on doing business with mortgage brokers – and if the trend continues, many mortgage brokers could close down.

That may be bad news for consumers because fewer brokers could lead to a less competitive marketplace and more expensive home loans resulting from consumers not being able to easily comparison-shop rates.

Full Article Here

February 19, 2009 Posted by | Real Estate | Leave a comment

Lots of Reactions on Obama/Housing Plan

Pulled from various sites/blogs:

The Economist

Robert Reich

Felix Salmon at Portfolio.com

Calculated Risk

February 19, 2009 Posted by | Foreclosure, Stats | Leave a comment

Obama’s Plan Aimed at Helping Troubled Homeowners

2009-02-18 – WSJ.com

Homeowner Affordability and Stability Plan

Executive Summary

The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.

· Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates.

· Millions of workers have lost their jobs or had their hours cut back, are now struggling to stay current on their mortgage payments – with nearly 6 million households facing possible foreclosure.

· Neighborhoods are struggling, as each foreclosed home reduces nearby property values by as much as 9 percent.

1. Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affortdable

2. A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners

3. Supporting Low Mortgage Rages by Strengthening Confidence in Fannie Mae and Freddie Mac.

The Homeowner Affordability and Stability Plan is part of the President’s broad, comprehensive strategy to get the economy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs. The key components of the Homeowner Affordability and Stability Plan are:

See Full Plan Here

February 18, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Total Bailout Tab, To Date…

2009-02-17 –  Ritzhold.com

“Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through Feb. 10, the government has made commitments of nearly $8.8 trillion and spent $2 trillion. Here is an overview, organized by the role the government has assumed in each case.”

See Chart Here

February 18, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Stimulus Bill Signed

2008-17-08  –  NYTimes.com

“President Obama has not ruled out a second stimulus package, his press secretary, Robert Gibbs, said on Tuesday, just before Mr. Obama signed his $787 billion recovery package into law with a statement that it would “set our economy on a firmer foundation.”

Full Article Here

February 18, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Foreclosure Epidemic

2009-02-17 – ritzhold.com

Media has it all wrong. Housing is trying to become normal again. It was “in turmoil” when no-one could afford a house without entering into criminally negligent financing arrangements with the mortgage thieves.


February 18, 2009 Posted by | Foreclosure | Leave a comment

Inconvenient Debt: A Detailed Look at the Latest Monetary Base Figures

On his FOX News show, Glenn Beck went back and showed in detail the chart that he had previously showed on his show. Here he is showing the latest Adjusted Monetary Base chart from the St. Louis Federal Reserve Bank. Never in the history of the country has the monetary base increased this much so rapidly. If this continues, inflation will go out of control.

February 5, 2009 Posted by | Stats | Leave a comment

Economist Roubini: The U.K. is NOT Iceland

2009-01-25 – calculatedriskblog.com

“In many ways the UK looks more like the US than Iceland: a housing and mortgage boom that got out of control; excessive borrowing (mortgage debt, credit cards, auto loans, etc.) and low savings by households; a large and rising current account deficit driven by the consumption boom (and private savings fall) and the real estate investment boom; an overvalued exchange rate; an over-bloated financial system that took excessive risks; a light-touch regulation and supervision system that failed to control the financial excesses; and now an ugly financial and economic crisis as the housing and credit boom turns into a bust. This will be the worst financial crisis and recession in the UK in the last few decades.”

Full Article Here

January 28, 2009 Posted by | Investments, Stats | Leave a comment

Obama Banking Plan?

2009-01-25 – NY Post.com

As the Obama economic team huddles this weekend in an attempt to hammer out the framework of their plan, three options have been bandied about:

* Nationalizing the banks.

* Creating a government-owned “bad bank” to take the toxic assets off of the bank’s balance sheet.

* Continuing the Bush Administration rescue plan of pumping in taxpayer money on an as-needed basis.

Full Article Here

January 28, 2009 Posted by | Banking | Leave a comment


2009-01-26 – Calculatedriskblog.com

“[M]ost members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others. But if hundreds of billions of dollars of new investment is needed … what do taxpayers get in return?”
Full Article Here

January 28, 2009 Posted by | Banking | Leave a comment

Bankruptcy Courts May Be Allowed To Consider MALPRACTICE

2009-01-26- Housingdoom.com

This infuriates me… “There has been a “foreclosure prevention” idea that has been kicked around for awhile now. It is to allow bankruptcy judges to alter mortgage loan terms and even to reduce a borrower’s principal balance. I have not seen a short, concise name for this suggested mortgage “cram down” program so I would like to suggest one of my own”

Original Article Here

January 28, 2009 Posted by | Foreclosure, Investments, Stats | Leave a comment

Flood of foreclosures: It’s worse than you think


“Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.”

original article

January 28, 2009 Posted by | Banking, Foreclosure, Real Estate | Leave a comment

Mortgage default notices up 121% over year ago

“Notices of home-loan default in San Diego County spiked by 121 percent in December, dampening hopes that the housing market decline that began in 2005 is nearing its bottom.”
original article

January 28, 2009 Posted by | Banking, Foreclosure, Lending, Real Estate | Leave a comment

Bank Failures and Commercial Real Estate


“As I’ve noted several times most regional banks avoided the residential real estate market (because they couldn’t compete) and instead focused on CRE and C&D (construction & development) lending. This exposed many regional banks to excessive CRE and C&D loan concentrations, and now that CRE will implode in 2009, many of these banks will be in serious jeopardy.”

January 28, 2009 Posted by | Banking, Real Estate | Leave a comment

Volcker Group’s recommendations for financial reforms

Paul Volcker is “the last honest guy” in the world, according to one of the foremost critics of the financial industry, Martin Mayer. Volcker was the guy who beat inflation in the early 1980s by raising interest rates as high as 18%. He also warned against the repeal of Glass-Steagall and many other excesses of our financial economy.

Another heavy hitter is Domingo Cavallo, the guy who beat inflation in Argentina by pushing through the currency board regime that took monetary policy out of the hands of the Argentine authorities.

But you’re right that others in this Group of 30 were indeed present at the scene of the crime. The signature right next to Volcker’s on the report is Jacob Frenkel’s, the vice chairman of AIG.  Excerpts from the report are below. ————–

“All systemically significant financial institutions, regardless of type, must be subject to an appropriate degree of prudential oversight.” [this would include investment banks and insurers]

“Large, systemically important banking institutions should be restricted in undertaking proprietary activities that present particularly high risks and serious conflicts of interest…” [Prop trading should be outlawed entirely for commercial banks.  They’ve got their hands full just measuring the credit risk of their loan books.]

“To guard against excessive concentration in national banking systems…limits on deposit concentration should be considered at a level appropriate to individual countries.” [Too bad the government’s chosen method for resolving failed banks is to kick their assets upstairs to a bigger balance sheet, concentrating deposits even more.  E.g. B of A—Countrywide, JPM—WaMu and Wells Fargo—Wachovia.]

etc, etc…. see the reports below.

30 Page Report can be downloaded here for free.

Full Report can Be Purchased Here for $49.

January 16, 2009 Posted by | Investments, Stats | Leave a comment

WaMu’s New $1 million 5-year 1% Balloon Loan (mod) – $878 Per Month!


“It is obvious that these loan modification plans have been born as a result of panic and the need to protect the bank’s balance sheets rather than doing what is beneficial for the home owner and broader housing market.”

Full Article Here

January 9, 2009 Posted by | Banking, Foreclosure, Investments | Leave a comment

No Recovery for Real Estate as Speculators Dominate Sales


“We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” said Stiglitz, a Columbia University professor of economics. “We could see a double-dip in the housing recession if that happens.”


“In past housing recessions, we didn’t see as many mortgages under water, so it didn’t matter if the focus was on speed and not on maximizing value,” Stiglitz said. “Now, the same banks that created the problems by mismanaging their risk are mismanaging the disposal of their assets.”

Full Article Here

January 9, 2009 Posted by | Banking, Foreclosure, Investments | Leave a comment

US fiscal policy: the Keynesian fallacy on steroids

The government’s attempt to spend (read borrow) our way out of this situation may lead to a total collapse of the dollar.

The Fed meeting minutes released today sure paint a picture of a Federal Reserve with very little regard for how to unwind these measures or what the long term consequences could be. I think a collapse in dollar assets is a very real concern after years of being considered nearly lunatic fringe talk.

Willem Buiter wrote a great piece on this.

Analysis of Destroying the Dollar


January 6, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

Peter Schiff vs the Federal Reserve – LIVE!

Peter Schiff speaks directly to Federal Reserve members on CNBC.

Among other unpleasant observations, Peter calls the U.S. a banana republic and mocks the Fed with ‘the idea’ of exporting prosperity via printing endless money (debt) to the rest of the world!

This should be a real thrill for those of us that want to see the money masters face that we know the truth about our multi-fractional reserve ponzi scheme banking system.

January 6, 2009 Posted by | Banking, Foreclosure, Investments, Lending, Stats | Leave a comment

More Citi-style Bailouts on the way….


 “Treasury issued a report today articulating the “guidelines” for its “Targeted Investment Program,” the program under which taxpayers bailed out guaranteed $306 billion worth of Citigroup’s toxic assets in late November. Why do you care? Because this program will likely be used to offer similar “guarantees” when Bank of America, Chase, Wells Fargo, Goldman and Morgan Stanley show up hat-in-hand on taxpayers’ doorsteps…”

 original article

January 6, 2009 Posted by | Banking | Leave a comment

Peter Bernstein’s biggest worry? The dollar


 “As as has been argued here previously, Schumpeter was right: creative destruction is necessary for a capitalist economy to thrive. The business cycle can’t be inflated into oblivion. In attempting that during his years at the Fed, Greenspan allowed financials to grow too large. Now they have to fail, but they can’t be allowed to. In Bernstein’s words: there’s too much debt, but reducing it “quickly” will “bring down the whole system.” Presumably the only solution is to bring it down slowly. That may just happen if we’re lucky. Despite the government’s efforts to reflate the debt bubble, it is deflating as banks deleverage. My personal belief is we won’t be lucky. The stupendous growth of U.S. liabilities, via bailouts and the Fed’s growing balance sheet, will lead to a large fall in the value of the dollar. A view I think Bernstein shares…”

 original article

January 6, 2009 Posted by | Banking, Investments, Stats | Leave a comment

Printing Money – And The Steep Price That Comes With It

2008-12-29 – NY Times

“We got into this mess to a considerable extent by overborrowing,” said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. “Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch, and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”

Full Article Here

January 6, 2009 Posted by | Banking, Investments, Stats | Leave a comment

Quite Possibly The Scariest Housing-Related Chart Ever

This chart is the average decline of home values in CA since peak years. What will 2009 bring? When will this stop?  This is terrifying.

January 6, 2009 Posted by | Stats | Leave a comment

60 Minutes reports: A Second Mortgage Disaster On The Horizon?

We’ve been saying this for a long time… and for the record, Ill pull up a previous post from a few months ago with a very troubling graph showing the true impact of these new Alt-A and Pay Option ARMS. 

60 Minutes Piece is Here

From my April 24 post:

Recently, I have researched the impact and adjustment period of different types of adjustable loans.  It seems by the end of 2008, most of the subprime adjustable loans will have adjusted at least on some level.  Many in the media are speaking of the lending crisis ending at the end of this year.  My data says differently.  Beginning in Q1 of 2009 and continuing through Q4 of 2011, we will see an influx of new adjustables, ALT-A and Pay Option ARMS.  This is just the beginning of the Tidal Wave as most of these loans are already in a negative equity state.  See this Adjustment schedule for yourself.  Month 1 is January 2007. 



December 16, 2008 Posted by | Real Estate | Leave a comment

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. …

Full Article Here

December 12, 2008 Posted by | Banking, Foreclosure, Real Estate | Leave a comment

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.

Full Article Here

December 12, 2008 Posted by | Banking, Foreclosure, Investments, Real Estate | Leave a comment

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.” 

Full Analysis Here

December 12, 2008 Posted by | Foreclosure, Lending, Real Estate | Leave a comment

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.


Move Presents Challenges: ‘Very Close Cousins to Existing Treasury Bills’


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.

Full Article Here

December 12, 2008 Posted by | Banking, Foreclosure, Investments, Lending, Real Estate, Stats | Leave a comment

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.

Full Analysis  Here

December 12, 2008 Posted by | Banking, Foreclosure, Lending, Real Estate | Leave a comment

Commercial real estate heading South

2008-12-08 — ml-implode.com

The default rate on commercial mortgage debt has remained near historic lows, even while residential-related debt suffered a severe downturn.

But that is now beginning to change, sending new shock waves into much-battered banks, private-equity funds and other financial institutions that participate in the $1 trillion commercial real-estate debt market.

Full Article Here

December 11, 2008 Posted by | Foreclosure, Lending | 1 Comment

Majority of Modified Loans Fail After 6 Months, Regulator Says

Bloomburg – 2008-12-08

“Most U.S. mortgages modified by lenders to help keep struggling borrowers in their homes fell back into delinquency within six months, the chief regulator of national banks said. ”

Almost 53 percent of borrowers whose loans were modified in the first quarter of this year re-defaulted by being more than 30 days overdue, John Dugan, head of the Treasury Department’s Office of the Comptroller of the Currency, said today at a housing conference in Washington.

Full Article Here

December 8, 2008 Posted by | Foreclosure, Lending, Stats | Leave a comment

NFP: Joblosses Even Worse Than Reported

By Barry Ritholtz – December 8th, 2008, 6:34AM

Over the past few years, we have railed at the prettyfied numbers that come out of BLS regarding NFP job creation and the unemployment rate. From the Birth Death Adjustment to the understated unemployment rate, the official data (and corresponding headlines) painted a very misleading picture of what was going on. No conspiracy, mind you — just a creeping bias that has slowly distorted the data.


Hence, the past few years of aberrational, credit-driven economic growth was hidden from the public view. Many (tho not all) of Wall Street Economists were too hapless or cowardly to point this out. And some even cheerleaded the absurdity of the “Goldilocks” BLS data. Some simply declared the US a Nation of Whiners.

With the economy now in a full blown recession, and the Housing and Credit crisis getting worse, it hardly semed necessary to pile on BLS. Until Friday’s report. As bad as it was, looking beneath the headline data hows that it was worse — much worse — than reported. Consider the following:  

Full Article Here

December 8, 2008 Posted by | Stats | Leave a comment

Hanks Bad Gamble – CRITICS: Rescue Plan Bungles Make Profits Less Likely

2008-12-02 – NYpost.com

“All we’ve created is dead banks, not true value in their stock,” said Paul Miller, a banking analyst with FBR Capital Markets.

Of course the government just buying common equity stakes wouldn’t be so great either, unless they were going to get serious about taking an active stake in management, and forcing increased consumer lending.

But then, what exactly would we be left with? Not a private free market, that’s for sure. Almost makes one pine for New Deal-era direct consumer lending programs and work programs.

There seem to be no good solutions — no matter what Hank does, there are very serious (if not fatal) flaws with the plan. And by continously shifting plans, even more confusion is added, which is toxic to the market. Hank and Ben seem to want to do a little bit of everything, without really committing anything, which seems to be a horrible recipe for success.

Or maybe its just that every intervention is a bad intervention. Is this all really better than just letting the system fall apart so something new can take its place? As far as the list of things we were trying to prevent, the stock market has already collapsed (though it could go further), mortgage lendering is still too constrained for most people (given prices), and consumer lending is still being choked off. What exactly are we gaining from all this intervention and “official” uncertainty?

Full Article Here

December 2, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

Understanding De-Leveraging, Merideth Whitney on Credit Cards

2008-12-02  – Optionamrageddon.com

If you want to understand de-leveraging, you could do worse than Meredith Whitney’s op-ed in yesterday’s Financial Times.  She noted that $3 trillion of credit had been “expunged” from the economy so far this year.  She also said credit card lines could be substantially reduced:

“I estimate that the mortgage market will shrink for the first time in US history and that the credit card market will be 18 months behind it. While just over 70 per cent of US households have access to credit cards, 90 per cent of these people use credit cards as a cash-flow management vehicle, or revolve payments at least once a year. While the credit card market is small relative to the mortgage market, it has grown to play a key role in consumer liquidity. Declining liquidity here will have disastrous effects on consumer spending and the economy. My primary concern is preserving liquidity to consumers, who command more than two-thirds of gross domestic product,” said, Whitney.

Full Analysis Here

December 2, 2008 Posted by | Banking, Investments, Lending | Leave a comment

Private Mortgage Insurance Applications Continue Slide

2008-12-01 —thetruthaboutmortgage.com

“Private mortgage insurance volume sunk further in October as defaults continued to rise, the Mortgage Companies of America (MICA) said today.” 

Full Article Here

December 2, 2008 Posted by | Banking, Foreclosure, Stats | Leave a comment

It’s official: US has been in a recession all year

2008-12-01 — yahoo.com

“The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday.”
Wow, since this time last year…. no way!!!

Full Article Here

December 2, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

Mortgage Rates Drop! It Does Not Mean What it Used to

2008-11-26 — ml-implode.com


Ok – I have heard enough of the rampant speculation about how a 50bps drop in mortgage rates are going to save the housing market – I wish it were that simple. We don’t have a lack of liquidity in the mortgage market, we have a lack of qualified borrowers and major asset devaluation.

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.

Full Analysis Here

November 30, 2008 Posted by | Banking, Lending | Leave a comment

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 MaeFreddie 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.”

Full Article Here

November 25, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

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.  

November 25, 2008 Posted by | Banking, Foreclosure, Investments, Lending, Stats | Leave a comment

Donny Deutsch has the “Right Idea”

2008-11-24 — ml-implode.com


“In case you have not watched Donny Deutsch over the past few weeks, his new format is in-your-face coverage about the financial crisis using CNBC anchors or contributors as guests each night. His favorites seem to be Gasparino and Jeff Mackey. It is very good. It’s funny to see the CNBC guys say things they would never say during the trading day. The word ‘insolvent’ comes up more times during the Donny hour than during than regular 12-hour CNBC day.” ….

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.

Full Article Here

November 24, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

Mr Mortgage on Loan Mods, TARP & Home Sales


November 24, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

Gift Cards for the Holidays? Think Again…

from a friend of mine, via email


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
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

November 20, 2008 Posted by | Stats | Leave a comment

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.

Full Article Here

November 20, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

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.

Roubini’s List Here

November 19, 2008 Posted by | Stats | Leave a comment

The End of the Wall Street Boom

The End- by Michael Lewis – please read an excerpt below. You can find the full article at the link in the bottom.

“At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.” Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.”…..
Read the full piece below…. it will shock you.

November 18, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

Ron Paul Advisor Peter Schiff on Glenn Beck (10/06/08)

Great analysis, discussion and data

November 15, 2008 Posted by | Banking | Leave a comment

One World Currency To Be Presented In EU Meeting As A Solution For Economic Crisis

November 15, 2008 Posted by | Banking, Investments, Lending, Stats | Leave a comment

The G-20’s Secret Debt Solution

by Larry Edelson   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”

Fascinating Analysis Here

November 14, 2008 Posted by | Banking, Investments, Stats | Leave a comment

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.

Full Article Here

November 14, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

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?

Full Article Here

November 11, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

General Motors is on the Brink of Default and Bankruptcy

2008-11-09 — blogspot.com

“Right at the close of trading Fitch and the other rating agencies cut General Motors debt ratings. In particular Fitch was quite specific that GM will either be bailed out or will be forced to default and restructure.”
“Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default.”
Full Article Here

November 10, 2008 Posted by | Foreclosure | Leave a comment

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.

Continued Article Here

November 10, 2008 Posted by | Stats | Leave a comment

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

November 10, 2008 Posted by | Foreclosure, Investments, Stats | Leave a comment

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.

Full Article Here

November 6, 2008 Posted by | Foreclosure, Lending | Leave a comment



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.

Full Analysis Here

November 5, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

Second Mortgage Notes For less than 1 cent on the Dollar!!?


“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.”

Full Article Here

November 5, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

Nearly One of Five Underwater on Mortgage



“Roughly 7.63 million properties, or 18 percent of all those with a mortgage, are currently upside down, meaning the balance of the mortgage is greater than the current property value.”
Another two million borrowers are close to being in a negative equity position, putting nearly a quarter of U.S. homeowners in a very bad position, further exacerbated by ongoing downward pressure on home prices.

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.

Full Article Here


November 5, 2008 Posted by | Banking, Investments, Lending | Leave a comment

New foreclosure plan on tap

FDIC offers plan to systematically modify loans for homeowners most at risk of foreclosure. Agency chief hopes program will spur other banks to take similar measures.

NEW YORK (CNNMoney.com) — One of the country’s top banking regulators said Thursday that the government is working on a plan to do more to help troubled homeowners.

Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that her agency and the Treasury Department are working closely to find ways to prevent avoidable foreclosures. The plan would use the Treasury Secretary’s new authority under the Emergency Economic Stabilization Act to provide guarantees to mortgage lenders.

“Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “Specifically the government could establish standards for loan modifications and provide guarantees for loans meeting those standards.”

Full Article Here

IndyMac and the FDIC began working together to modify loans after they went under overnight.  Their process, as discussed on August 20, 2008, looked like this.  I assume a  similar model will be used for current process.  Full Article about IndyMac loan modifications.

October 23, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

US house prices face long fall to bottom: analysts


 “We don’t know yet the impact of the economic turmoil on the housing market and I suspect it will not be positive.”

Despite a US government rescue of mortgage giants Freddie Mac and Fannie Mae and a 700-billion-dollar program to rescue banks, mortgage rates are still rising and will remain high relative to the levels of previous years, analysts say.

Full Article Here


October 22, 2008 Posted by | Banking, Foreclosure, Lending | Leave a comment

ALT-A: The Risk Abatement Disaster is Coming


 “As late as the spring of 2007, major national lenders were still aggressively marketing Alt-A products with with ridiculously vacuous underwriting criteria: A borrower could secure a no income/no asset documentation cash-out refinance loan, with a simultaneous second mortgage up to 95% CLTV, on a non-owner occupied investment property, with only a 620 FICO, two months PITI reserves and a debt to income ratio up to 60%. Now everyone responsible for the mounting losses will throw up their hands in utter surprise that the golden child of the short lived post-subprime era was a bad idea too.”


Great data here –>  Full Article

October 22, 2008 Posted by | Banking, Lending | Leave a comment

Mr Mortgage – Time to Get Your Bailout!

October 22, 2008 Posted by | Banking, Foreclosure, Stats | 1 Comment

States Collect Less Tax Revenue, Expect More Layoffs

22 States Face Tax Shortfalls, Frugality To Hit State Budgets

The moribund economy is drying up tax revenues more dramatically than expected, forcing 22 states, including California, to confront growing budget gaps. Some states have already eliminated jobs and services — and more cuts are likely.

The new shortfalls — totaling at least $11.2 billion — come just months after numerous states enacted belt-tightening measures while writing their yearly budgets. Officials also adjusted their revenue projections downward to account for the slowing economy. But in many cases, the actual revenue for the first quarter of the fiscal year, which began July 1, has proven to be even lower.

“States have been confronted with bad economic circumstances in the past, but never so many states, all at once,” said William T. Pound, executive director of the National Conference of State Legislatures.

The revenue pools are shrinking for a number of reasons: Rising layoffs are cutting into payroll taxes. The credit crisis and housing slump are affecting taxes levied on real estate deals. Sales taxes are shrinking as shoppers worried about the economy stay home.

Full Analysis Here

October 20, 2008 Posted by | Banking, Foreclosure, Investments, Lending | 1 Comment

Bank Bailout… not helping main street at all


 John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios – not be lent out. In other words, they intend to hoard it.

This means, bluntly, that not one nickel of benefit will be seen by Main Street, despite claims by Paulson, Bush and others that this bailout is necessary for “Main Street, not Wall Street.”

Full Article Here

October 17, 2008 Posted by | Banking, Foreclosure, Lending, Stats | 1 Comment

S&P Warns on $351.7 Billion of Alt-A RMBS

By: PAUL JACKSON – housingwire.com
October 15, 2008

Standard & Poor’s Ratings Services said Wednesday that it had placed ratings on 5,536 classes from 456 U.S. RBMS transactions backed by Alt-A mortgage collateral issued in 2006 and 2007 on review for likely downgrades.

Perhaps most telling is that the mortgages involved aren’t short-term resets: S&P said that most of the Alt-A transactions now under review are collateralized by fixed and long-reset hybrids (meaning rates are fixed for five or more years from origination dates). In aggregate, the affected classes represent an original par amount of approximately $351.7 billion; that total is $280.1 billion in current balance.

Driving the likely downgrades is yet another update to loss severity projections by the rating agency, which said it now expects average loss severity on affected mortgage deals to be at 40 percent rather than the previous threshold of 25 percent.

“Continued foreclosures, distressed sales, an increase in carrying costs for properties in inventory, costs associated with foreclosures, and further declines in home sales will depress prices further and push loss severities higher than we had previously assumed,” S&P analysts said in a press statement.

Full Article Here


October 16, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

What Stability??? Longterm, we are screwed either way…

To avoid another Lehman style bankruptcy, the Fed has basically guaranteed, well, the worldwide banking system. The problem is that an “unlimited guarantee requires unlimited access to financing.” No one, not even the Fed, has unlimited access to financing. The Fed only has unlimited access to a printing press. If the dollar loses all its value due to hyperinflation, it won’t be worth much to anyone as insurance against loss.

Full Article Here

October 15, 2008 Posted by | Banking, Investments, Lending | Leave a comment

DOW jumps 900+ points in one day

Dow jumps 936 points and S&P up 104, in the biggest point gains ever. The Dow, S&P and Nasdaq all gain over 11%.

NEW YORK  (CNNMoney.com) — Stocks rallied Monday afternoon, with the Dow rallying 976 points during the session, as investors bet that the worst of the credit crisis is over, following a series of global initiatives announced over the last few days.

The Dow Jones industrial average (INDU) ended 936 points higher, after having risen as much as 976 points during the session. The advance was the largest ever during a session on a point basis. The point gain was equal to 11.1%, the best one-day percentage gain since Sept. 1932 and the fifth-best ever.

Full Article Here

October 13, 2008 Posted by | Investments, Stats | Leave a comment

Bernanke: Economic outlook weaker (Say it aint so Ben)

Bernanke: Economic outlook weaker

Fed chairman says financial crisis will dampen economy well into 2009 and hints at future rate cuts; says recent actions by Fed, Treasury should help economy recover.

In a speech before the National Association of Business Economics in Washington on Tuesday, Bernanke said the threat of inflation has receded recently, while the economy has continued to weaken. This could be interpreted as a sign that the central bank might be preparing to lower its key fed funds rate soon.

“Overall, the combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased,” he said.

Full Article Here

October 7, 2008 Posted by | Banking, Foreclosure, Investments, Lending | Leave a comment

Business loan bailout

Federal Reserve to buy loans crucial to business to unfreeze markets.

NEW YORK (CNNMoney.com) — The Federal Reserve announced a new program to help the battered market for short-term business loans – taking its closest step yet to lending directly to businesses.

The program addresses commercial paper, a form of short-term funding that is crucial to many businesses operations.

Commercial paper is sold by major corporations and most of the nation’s leading financial institutions. They use the proceeds to fund day-to-day business operations. It is bought primarily by money market fund managers and other institutional investors.

Before the current credit crisis, there was nearly $2 trillion of commercial paper outstanding and was mostly issued for short terms – never more than nine months – and thus had to be renewed frequently.

Full Article Here

October 7, 2008 Posted by | Banking, Investments, Lending | Leave a comment

“The Economist” polls American economists on the Presidential election

The Economist’s poll of economists

Examining the candidates

Oct 2nd 2008 | WASHINGTON, DC
From The Economist print edition

In our special report on the election we analyse the two candidates’ economic plans. Here, we ask professional economists to give us their views.

Full Article Here

Full Report Here – 20+ Page Analysis

October 6, 2008 Posted by | Investments, Stats | Leave a comment

Bailout Bill Passes!


No updated media stories yet; but just confirmed this live on TV. Our worst fears confirmed — what could have been just an ugly downturn will now probably be a lengthy depression and in many ways, the final nail in the coffin for a sovereign United States.  Let’s hope something good comes of this money.

Update: Here’s a news article.

Update 2: The market barely paused on the way down after the bill passage; as I write this the Dow has reversed course over 200 points to the downside.

Update 3: Minyanville has reprinted comments from Mr. Practical from back in March which we think are worth re-reading in light of the latest bailout attempt:

…. when government grows too big and through its hubris believes its bureaucracy knows more than the market, the seeds of eventual deflation are sewn… I’m talking about direct intervention in the supply of credit to “ensure price stability.” That lie is due to the political refusal to allow the market to tighten.

The problem becomes worse when big government aligns itself with big business (the extinction of entrepreneurs) to affect the natural self-correction processes of the market.

Years of debt accumulation aren’t cured by a 5% correction in stocks, as Wall Street would have you believe. A major debt correction — one that the market has been trying to accomplish for years but which has been rejected time and time again by Fed policy — is necessary to correct the huge imbalances that exist. To deny the necessity of this eventuality is, of course, human.

Total US debt is now 3.6 times GDP and continues to grow. But new debt is less and less effective in driving economic growth: More income is going to service that debt and less to creating production, the stuff that generates income.

In 1929, US debt was 2.9 times – the second highest it’s ever been. Despite Mr. Bernanke’s false recollections of Fed actions back then, they created an immense amount of liquidity (credit) trying to cure the stock market crash. The market did rally temporarily as a result, then slowly crashed to deeper lows, since that new credit just went to short-term speculation in stocks. The new money did no real good, because there was already too much capacity, so the credit never went to creating production.

October 3, 2008 Posted by | Banking, Investments, Stats | Leave a comment

Financial Times: “Derivatives market faces biggest test”

Derivatives market faces biggest test 2008-10-03 — ft.com

The $54,000bn credit derivatives market faces its biggest test in October as billions of dollars worth of contracts on now-defaulted derivatives on Fannie Mae, Freddie Mac, Lehman Brothers and Washington Mutual are settled. It’s notable that the credit derivatives market has been the source of not a sudden implosion, but something of a slow and steady fizzle. It turns out that the very non-standard, and non-exchange-traded properties of derivatives that has been so worrisome actually keeps things from happening too suddenly. So that is a good thing. However, it does not eliminate the ultimate need of most participants to take losses — and it is bad in the sense that it drags the “crisis” on for longer.

Full Article Here

October 3, 2008 Posted by | Banking, Investments, Lending | Leave a comment

Stocks crushed!! DOW Loses 777 points.

CNNMoney.com Monday, Sept. 29, 2008

Approximately $1.2 trillion in market value is gone after the House rejects the $700 billion bank bailout plan.

Full Article Here

September 29, 2008 Posted by | Banking, Foreclosure, Lending, Stats | Leave a comment

Uh Oh, The Credit Market Is Closed


Welcome to the credit market, folks, it is officially closed.

After Lehman, Fannie Mae (FNM), Freddie Mac(FRE), AIG (AIG) and Washington Mutual (WM) debt and preferred holders have been unmercifully tossed under the bus so
Jamie Dimon can be given banks, do you really think many want to get in front of this train wreck.

Me thinks not.

  • For what it’s worth, I was just offered Wachovia (WB) 5.8% hybrids at $0.10 on the dollar, and I passed. A block of 30-year Wachovia paper just traded at $0.35 on the dollar. This is not preferred stock or hybrid, folks, this is subordinated debt.
  • Washington Mutual sub paper? $0.01 on the dollar. This is what a credit rout looks like. And until this ship is righted, watch out. There are others trading similarly, like Morgan Stanley (MS) and, while I have no positions, it’s quite interesting to watch.
  • So the few that can raise capital, like JPMorgan (JPM) and Goldman Sachs (GS) will survive, but many failures lie directly in front of us.
  • Many regional banks are likely next.

Full Analysis Here

September 26, 2008 Posted by | Banking, Foreclosure, Investments, Lending | Leave a comment

Congress Pushes for Changes to Paulson Bailout Plan


 Shelby told reporters yesterday that “I think the secretary now realizes that what he sent up is not just going to be rubber- stamped.”

Paulson said it would be a “grave mistake” to adopt Schumer’s proposal because it sent the wrong signal to the market and didn’t give Treasury “the tools to do the job.”

Leaders in both parties are working to shore up support for an effort to restore investor confidence. They also want to limit the risks for lawmakers who are being asked to vote on the biggest government intervention in the financial markets since the Great Depression, just six weeks before the elections.

Full Article Here


September 24, 2008 Posted by | Banking, Foreclosure, Investments | 1 Comment