From the Asian Investor: Taiwan insurers ordered out of US agency MBS.
The FSC has not only limited insurance company exposure to Fannie, Freddie and Ginnie bonds and mortgage-backed securities, but has decided that existing credit ratings are meaningless.
The Insurance Bureau at the Financial Supervisory Commission in Taipei announced revised rules on how insurance companies can treat investments in mortgage-backed securities (MBS). The FSC says it cannot see how the United States will develop a valid mechanism to assess the credit quality of MBS issued by US federal housing loan agencies, namely Fannie Mae, Freddie Mac and Ginnie Mae.
Taiwanese insurers are now ordered to back off from investing in mortgage-backed securities arranged by the three institutions, or from holding their debt. The rules set maximum allowed exposures; beyond that, they don’t explicitly order insurers to sell their holdings, although the impression in reading the regulations is certainly one of disapproval.
(Ed: boldface in original article.)
Friday, October 24, 2008
Thursday, October 23, 2008
Adios, Lemmings!
From Forbes: GM suspending benefits.
General Motors Corp. said Thursday it will suspend several benefit programs for salaried workers as it seeks to cut costs in the difficult auto market.
The automaker will temporarily stop company matching of its 401(k) program as of Nov. 1, GM spokesman Tom Wilkinson said. It also will suspend tuition reimbursement and adoption assistance programs as of the end of this year, he said.
Yeah, "temporary".
Portfolios devastated. No matching. No tuition assistance.
All assuming that GM even survives (doubtful.)
Sell your house? Ooops, you're "upside down".
Goodbye, retirement. Hello, serfdom.
General Motors Corp. said Thursday it will suspend several benefit programs for salaried workers as it seeks to cut costs in the difficult auto market.
The automaker will temporarily stop company matching of its 401(k) program as of Nov. 1, GM spokesman Tom Wilkinson said. It also will suspend tuition reimbursement and adoption assistance programs as of the end of this year, he said.
Yeah, "temporary".
Portfolios devastated. No matching. No tuition assistance.
All assuming that GM even survives (doubtful.)
Sell your house? Ooops, you're "upside down".
Goodbye, retirement. Hello, serfdom.
Tuesday, October 21, 2008
Who Wants to be a Delusionaire?
From Reuters: Wal-Mart customers delay buying necessities.
Wal-Mart Stores Inc's U.S. customers, increasingly worried about their own financial security, are waiting until they get their paychecks to buy even the most basic necessities, the retailer's U.S. division head said on Tuesday.
Wal-Mart's sales typically surge around pay periods at the beginning and middle of the month. Castro-Wright said that spike has become more pronounced as consumers' budgets become more stressed.
In the last few months, the percentage of overall sales from the days surrounding those pay periods has risen 250 basis points, he said.
And, in a "disturbing" trend, Castro-Wright said Wal-Mart for the first time is seeing a paycheck-related spike in sales of baby formula, suggesting consumers are rushing to buy such necessities as soon as they have the cash.
He said credit used as a form of payment at Wal-Mart is falling and that the decline is expected to reach into the double digits this year.
Castro-Wright declined to comment about the general economy. When asked about the holidays, he said: "Christmas is going to come .... consumers are just going to be more cautious."
This is delusional thinking. Retail is going to be abysmal this Christmas.
What are these people smoking?
Wal-Mart Stores Inc's U.S. customers, increasingly worried about their own financial security, are waiting until they get their paychecks to buy even the most basic necessities, the retailer's U.S. division head said on Tuesday.
Wal-Mart's sales typically surge around pay periods at the beginning and middle of the month. Castro-Wright said that spike has become more pronounced as consumers' budgets become more stressed.
In the last few months, the percentage of overall sales from the days surrounding those pay periods has risen 250 basis points, he said.
And, in a "disturbing" trend, Castro-Wright said Wal-Mart for the first time is seeing a paycheck-related spike in sales of baby formula, suggesting consumers are rushing to buy such necessities as soon as they have the cash.
He said credit used as a form of payment at Wal-Mart is falling and that the decline is expected to reach into the double digits this year.
Castro-Wright declined to comment about the general economy. When asked about the holidays, he said: "Christmas is going to come .... consumers are just going to be more cautious."
This is delusional thinking. Retail is going to be abysmal this Christmas.
What are these people smoking?
P.T.Barnum Lives!!!
From MSNBC: Hard times have some flirting with survivalism.
Atash Hagmahani is not waiting for the stock market to recover. The former high-tech professional turned urban survivalist has already moved his money into safer investments: Rice and beans, for starters.
“I hoard food,” says Hagmahani, 44, estimating that he has enough to last his family a year or two. “I’m not ashamed to admit it.”
“People keep asking when this (economic crisis) is going to clear up,” says Hagmahani, who agreed to be interviewed on the condition that he be identified only by this pseudonym, which he uses for his survivalist blog, or by his first name, Rob.
With foreclosure rates running rampant, financial institutions teetering and falling, prices for many goods and services climbing, and jobs being slashed, many Americans are making preparations for worse times ahead. For some, that means cutting spending and saving more. For others, it means taking a step into survivalism, once regarded solely as the province of religious End-of-Timers, sci-fi fans and extremists.
That often manifests itself as a desire to secure basic emergency resources — what survival guru Jim Wesley Rawles describes as “beans, bullets and Band-Aids.”
Rawles, speaking by phone from an “undisclosed location” somewhere between the Cascades and the Rocky Mountains, said he has seen traffic on his Web site, SurvivalBlog.com, explode in the last year.
Others more directly embedded in the survival industry say they, too, are seeing the biggest surge of orders since the run-up to Y2K, when angst surged over whether computers would survive the dawn of a new millennium.
“I’m getting slammed with big orders,” said Kurt Wilson, a distributor of freeze-dried foods and other provisions with decades-long shelf life, like canned meat, cheese and butter.
“I have customers who were spending 200 bucks a month now spending $5,000 to $8,000,” Wilson said from his warehouse in Coeur d’Alene, Idaho. “I get little old ladies calling up, stocking up for their grandchildren.”
Wilson, who also has an online radio show called the Armchair Survivalist, said one of his new clients is a New York interior designer who specializes in outfitting cramped Manhattan apartments with hidden food storage units that double as tasteful furnishings.
Wow, you really can sucker them coming and going. It's un-fuckin-believable!
Atash Hagmahani is not waiting for the stock market to recover. The former high-tech professional turned urban survivalist has already moved his money into safer investments: Rice and beans, for starters.
“I hoard food,” says Hagmahani, 44, estimating that he has enough to last his family a year or two. “I’m not ashamed to admit it.”
“People keep asking when this (economic crisis) is going to clear up,” says Hagmahani, who agreed to be interviewed on the condition that he be identified only by this pseudonym, which he uses for his survivalist blog, or by his first name, Rob.
With foreclosure rates running rampant, financial institutions teetering and falling, prices for many goods and services climbing, and jobs being slashed, many Americans are making preparations for worse times ahead. For some, that means cutting spending and saving more. For others, it means taking a step into survivalism, once regarded solely as the province of religious End-of-Timers, sci-fi fans and extremists.
That often manifests itself as a desire to secure basic emergency resources — what survival guru Jim Wesley Rawles describes as “beans, bullets and Band-Aids.”
Rawles, speaking by phone from an “undisclosed location” somewhere between the Cascades and the Rocky Mountains, said he has seen traffic on his Web site, SurvivalBlog.com, explode in the last year.
Others more directly embedded in the survival industry say they, too, are seeing the biggest surge of orders since the run-up to Y2K, when angst surged over whether computers would survive the dawn of a new millennium.
“I’m getting slammed with big orders,” said Kurt Wilson, a distributor of freeze-dried foods and other provisions with decades-long shelf life, like canned meat, cheese and butter.
“I have customers who were spending 200 bucks a month now spending $5,000 to $8,000,” Wilson said from his warehouse in Coeur d’Alene, Idaho. “I get little old ladies calling up, stocking up for their grandchildren.”
Wilson, who also has an online radio show called the Armchair Survivalist, said one of his new clients is a New York interior designer who specializes in outfitting cramped Manhattan apartments with hidden food storage units that double as tasteful furnishings.
Wow, you really can sucker them coming and going. It's un-fuckin-believable!
Sunday, October 19, 2008
Frozen Foolishness
From the Irish Times: Iceland fixes crown at different rate to market.
Having been untraded for days after it collapsed, Iceland's crown is moving towards a dual exchange rate with the central bank selling foreign currency to locals much cheaper than the international market rate.
Iceland's government took control of its banking system last week and has since imposed harsh foreign exchange controls, holding an auction every day to set the value of the crown.
Friday's fix valued it at 151 to €1 and 112.69 to the dollar, slightly weaker than yesterday's levels. But the Reuters matching dealing system showed the crown at almost half that value in international trade at 275 to the euro.
"What the government is doing is giving away foreign exchange locally at much cheaper than the market rate."
If the crown continues to strengthen internationally even while weakening locally, the differential between the two rates might disappear and reach equilibrium. Otherwise, with Iceland's foreign reserves dwindling, the analyst said it could only continue local foreign currency selling for days or a couple of weeks.
This is moronic. They are setting themselves up for a "second" crisis once their foreign reserves disappear.
What should any rational Icelander (individual or corporation) do?
Either convert to euros because the rest of the foolish taxpayers are financing you. Or play the roundtrip multiple times a day. Buy at the "official" rate and sell on the open market. Take your winnings and convert them to gold.
Incredible!
Well, no nation has managed to go bankrupt twice in a month but Iceland seems to be giving it the ol' college try.
This is dumber than dumb.
Having been untraded for days after it collapsed, Iceland's crown is moving towards a dual exchange rate with the central bank selling foreign currency to locals much cheaper than the international market rate.
Iceland's government took control of its banking system last week and has since imposed harsh foreign exchange controls, holding an auction every day to set the value of the crown.
Friday's fix valued it at 151 to €1 and 112.69 to the dollar, slightly weaker than yesterday's levels. But the Reuters matching dealing system showed the crown at almost half that value in international trade at 275 to the euro.
"What the government is doing is giving away foreign exchange locally at much cheaper than the market rate."
If the crown continues to strengthen internationally even while weakening locally, the differential between the two rates might disappear and reach equilibrium. Otherwise, with Iceland's foreign reserves dwindling, the analyst said it could only continue local foreign currency selling for days or a couple of weeks.
This is moronic. They are setting themselves up for a "second" crisis once their foreign reserves disappear.
What should any rational Icelander (individual or corporation) do?
Either convert to euros because the rest of the foolish taxpayers are financing you. Or play the roundtrip multiple times a day. Buy at the "official" rate and sell on the open market. Take your winnings and convert them to gold.
Incredible!
Well, no nation has managed to go bankrupt twice in a month but Iceland seems to be giving it the ol' college try.
This is dumber than dumb.
Friday, October 17, 2008
So Much for Clean Tech!
From MSNBC: All-electric carmaker hits a financial wall.
Tesla Motors — maker of a $109,000, all-electric, emissions-free sports car that can do 0-60 mph in 4 seconds — this week said it had hit a financial wall, specifically a shortage of cash.
Musk said Tesla also will reduce its work force a "modest" amount and close its engineering office near Detroit, Mich., moving those jobs to new headquarters in San Jose, Calif.
"We are not far from being cash flow positive," Musk wrote, "but even if that threshold ends up being further than expected."
You are NOT cash-flow positive.
The $25B "bailout" of the Big Three screwed you over big time because you didn't get any of the taxpayer cheese.
Oil prices are going to fall in the upcoming deflation.
And you are making a $109K car headed into an epic recession.
Hasta luego, baby!
Tesla Motors — maker of a $109,000, all-electric, emissions-free sports car that can do 0-60 mph in 4 seconds — this week said it had hit a financial wall, specifically a shortage of cash.
Musk said Tesla also will reduce its work force a "modest" amount and close its engineering office near Detroit, Mich., moving those jobs to new headquarters in San Jose, Calif.
"We are not far from being cash flow positive," Musk wrote, "but even if that threshold ends up being further than expected."
You are NOT cash-flow positive.
The $25B "bailout" of the Big Three screwed you over big time because you didn't get any of the taxpayer cheese.
Oil prices are going to fall in the upcoming deflation.
And you are making a $109K car headed into an epic recession.
Hasta luego, baby!
Thursday, October 16, 2008
Why doesn't James Cameron film this?
From USA Today: Last Titanic survivor sells off her mementos.
The last living survivor of the Titanic is selling off her disaster-related mementos in order to pay the bill at a British nursing home.
Millvina Dean, 96, was an infant when the passenger ship sank in 1912.
"I am not able to live in my home anymore. I am selling it all now because I have to pay these nursing home fees and am selling anything that I think might fetch some money," she tells the paper. "The fees are quite expensive. The more money I can get from the auction the better."
Kate Winslet, eat your heart out, bee-yatch!
The last living survivor of the Titanic is selling off her disaster-related mementos in order to pay the bill at a British nursing home.
Millvina Dean, 96, was an infant when the passenger ship sank in 1912.
"I am not able to live in my home anymore. I am selling it all now because I have to pay these nursing home fees and am selling anything that I think might fetch some money," she tells the paper. "The fees are quite expensive. The more money I can get from the auction the better."
Kate Winslet, eat your heart out, bee-yatch!
Wednesday, October 15, 2008
Tuesday, October 14, 2008
How to become a CEO?
From MSNBC: Credit cards at the tipping point?.
Dire times are coming for consumers who hold credit cards and the banks that issue them, according to a report released Tuesday.
A spokeswoman for Capital One said she hadn't seen the report and was unable to comment on it, but pointed towards reassuring comments made by CEO Richard Fairbank at a recent equity analyst conference.
“In our U.S. card business, we're taking many actions to navigate the current downturn,” he said. “The credit card business is exceptionally resilient, with high risk-adjusted margins and a business that doesn't suffer the issues of collateral value that currently plague in particular the mortgage industry.”
He's bragging that there's nothing to worry about because there's no collateral!
Amazing. Quite splendiferous.
Dire times are coming for consumers who hold credit cards and the banks that issue them, according to a report released Tuesday.
A spokeswoman for Capital One said she hadn't seen the report and was unable to comment on it, but pointed towards reassuring comments made by CEO Richard Fairbank at a recent equity analyst conference.
“In our U.S. card business, we're taking many actions to navigate the current downturn,” he said. “The credit card business is exceptionally resilient, with high risk-adjusted margins and a business that doesn't suffer the issues of collateral value that currently plague in particular the mortgage industry.”
He's bragging that there's nothing to worry about because there's no collateral!
Amazing. Quite splendiferous.
Friday, September 26, 2008
Stickin' it to the man
From El Universal in Mexico: Carstens: crisis en EU es peor que la de 1929. (Translation: Carstens: crisis in the US is worse than 1929.)
El secretario de Hacienda, Agustín Carstens, previó afectaciones en la economía mexicana por la crisis financiera en Estados Unidos, principalmente en exportaciones, remesas y turismo.
Desde su perspectiva, el problema económico en el país vecino es quizá peor que la gran depresión de 1929. Aclaró que en materia macroeconómica la situación mexicana es más sólida, lo que ha permitido enfrentar la incertidumbre financiera.
Translation:
The Secretary of Finance, Agustin Carstens, anticipated the impact of the financial crisis in the US principally in exports, remittances and tourism.
In his perspective, the economic problem in the neighboring country is perhaps worse than the Great Depression of 1929. He clarified that the macroeconomic situation in Mexico is more solid which has helped address the financial uncertainty.
While the "macroeconomic situation" in Mexico is "more solid" (which is fuckin' poo-inducingly scary just to say out loud), the idea that they are not going under the proverbial bus is a joke.
Get a clue, folks!
GD Part II coming up.
As Brahms once told a critic, "Any fool can see that!"
El secretario de Hacienda, Agustín Carstens, previó afectaciones en la economía mexicana por la crisis financiera en Estados Unidos, principalmente en exportaciones, remesas y turismo.
Desde su perspectiva, el problema económico en el país vecino es quizá peor que la gran depresión de 1929. Aclaró que en materia macroeconómica la situación mexicana es más sólida, lo que ha permitido enfrentar la incertidumbre financiera.
Translation:
The Secretary of Finance, Agustin Carstens, anticipated the impact of the financial crisis in the US principally in exports, remittances and tourism.
In his perspective, the economic problem in the neighboring country is perhaps worse than the Great Depression of 1929. He clarified that the macroeconomic situation in Mexico is more solid which has helped address the financial uncertainty.
While the "macroeconomic situation" in Mexico is "more solid" (which is fuckin' poo-inducingly scary just to say out loud), the idea that they are not going under the proverbial bus is a joke.
Get a clue, folks!
GD Part II coming up.
As Brahms once told a critic, "Any fool can see that!"
Wednesday, September 24, 2008
Shame
From Bloomberg: Bernanke Signals U.S. Should Pay More for Bad Debt.
Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis.
``Accounting rules require banks to value many assets at something close to a very low fire-sale price rather than the hold-to-maturity price,'' Bernanke said in testimony to the Senate Banking Committee today. ``If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.''
Analysts said Bernanke is essentially advocating that government use a pricing model that assumes that the debt will be paid in full over a long period of time. That is different from the mark-to-market model used by investment banks that prices assets at what they are worth on a given day.
Bernanke opposed efforts by banks to lobby regulators to remove mark-to-market pricing in their portfolios. A suspension of such accounting would hurt investor confidence, he said.
``They are basically saying, `Let's take a best-case scenario, let's assume we don't have losses,''' said Julian Mann, vice president at First Pacific Advisors LLC in Los Angeles. ``Home prices continue to deteriorate. There are real losses here.''
The whole thing is beyond moronic.
Mark-to-market is real. It's as real for Bill Gates as it is for you. What someone else is willing to pay this morning for your crap whether it's your used underwear or Morgan Stanley stock is real. And you'd better believe it!
In any case, banks must mark-to-market so that investors have confidence but the US Treasury doesn't require confidence?
Surely you jest, Professor!
I've never been more ashamed in life as a former academic.
Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis.
``Accounting rules require banks to value many assets at something close to a very low fire-sale price rather than the hold-to-maturity price,'' Bernanke said in testimony to the Senate Banking Committee today. ``If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.''
Analysts said Bernanke is essentially advocating that government use a pricing model that assumes that the debt will be paid in full over a long period of time. That is different from the mark-to-market model used by investment banks that prices assets at what they are worth on a given day.
Bernanke opposed efforts by banks to lobby regulators to remove mark-to-market pricing in their portfolios. A suspension of such accounting would hurt investor confidence, he said.
``They are basically saying, `Let's take a best-case scenario, let's assume we don't have losses,''' said Julian Mann, vice president at First Pacific Advisors LLC in Los Angeles. ``Home prices continue to deteriorate. There are real losses here.''
The whole thing is beyond moronic.
Mark-to-market is real. It's as real for Bill Gates as it is for you. What someone else is willing to pay this morning for your crap whether it's your used underwear or Morgan Stanley stock is real. And you'd better believe it!
In any case, banks must mark-to-market so that investors have confidence but the US Treasury doesn't require confidence?
Surely you jest, Professor!
I've never been more ashamed in life as a former academic.
Dishonorable Dismention
From the Bulwer-Lytton Fiction Contest (him of the "it was a dark and stormy night" fame) which rewards bad prose, an also-has-been:
Carey, unnerved by an affair that had suffered through weeks of volatility, walked unsteadily, her dress etching complex runes in the fine patina of dust along the antiquated floor, to a rose-scented box of love letters in a vain attempt to find solace, like a security fund struggling to find liquidity in the US sub-prime mortgage market.
Carey, unnerved by an affair that had suffered through weeks of volatility, walked unsteadily, her dress etching complex runes in the fine patina of dust along the antiquated floor, to a rose-scented box of love letters in a vain attempt to find solace, like a security fund struggling to find liquidity in the US sub-prime mortgage market.
Monday, September 22, 2008
A Big Salute
Nasdaq reports: DHIL opts out of NASDAQ’s Covered Securities List. (Warning: PDF.)
NASDAQ issuer Diamond Hill Investment Group, Inc. (DHIL) has voluntarily opted-out of NASDAQ's list of Covered Securities under the SEC's Emergency Order, effective today, September 22, 2008. Diamond Hill Investment Group, Inc. will not be subject to the restrictions of the Emergency Order.
The EE has never heard of Diamond Hill but he raises his hat instantaneously to the gentlemen.
Sirs, you make veritable pussies out of the Morgan Stanley's and Goldman Sachs' of the world.
May your portfolios overflow with shorts, and consequently may you show these rubes and retards how the game is played!
NASDAQ issuer Diamond Hill Investment Group, Inc. (DHIL) has voluntarily opted-out of NASDAQ's list of Covered Securities under the SEC's Emergency Order, effective today, September 22, 2008. Diamond Hill Investment Group, Inc. will not be subject to the restrictions of the Emergency Order.
The EE has never heard of Diamond Hill but he raises his hat instantaneously to the gentlemen.
Sirs, you make veritable pussies out of the Morgan Stanley's and Goldman Sachs' of the world.
May your portfolios overflow with shorts, and consequently may you show these rubes and retards how the game is played!
Sunday, September 21, 2008
Doffing Caps
From Yahoo! Finance: Last major investment banks change status.
The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks -- Goldman Sachs and Morgan Stanley -- to change their status to bank holding companies.
Gentlemen, a moment if you will. A minute of silence for the passing of the "investment bank" model.
This is not a positive if you will. Their leverage is curtailed; they will be able to acquire all less than marginal banks, and hence they will survive but you do realize that all "marginal" banks just got tossed under the bus, don't you?
Last year, there were 5 investment banks. Tomorrow 0.
It should be reasonably obvious that this is not a "positive" thing.
The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks -- Goldman Sachs and Morgan Stanley -- to change their status to bank holding companies.
Gentlemen, a moment if you will. A minute of silence for the passing of the "investment bank" model.
This is not a positive if you will. Their leverage is curtailed; they will be able to acquire all less than marginal banks, and hence they will survive but you do realize that all "marginal" banks just got tossed under the bus, don't you?
Last year, there were 5 investment banks. Tomorrow 0.
It should be reasonably obvious that this is not a "positive" thing.
Saturday, September 20, 2008
The World Finally Tunes In
From the Washington Post: The Street Doesn't Look So Shiny Anymore.
The title character of my 2007 novel, "Confessions of a Wall Street Shoeshine Boy," was inspired by a real-life shoeshiner who plied his trade among the Guccis and Ferragamos of the financial district. What a view he had! From the very bottom rung of the economic ladder, he watched Wall Street insanity of outlandish proportions: the shady world of unbelievable hedge-fund profits, the supermodel girlfriends, $5,000 bottles of wine, cocaine-fueled trading and partying, the jaw-dropping castles of the new superrich being erected in Greenwich and the Hamptons.
A shoeshine boy who works on the trading floor saw his own, more modest business plummet last week, too. On Monday, as Lehman Brothers expired, he shined only five pairs of shoes instead of the usual 25 to 35. Business didn't get much better as the week wore on.
Few people on the trading floor were inclined to make small talk with menial workers last week, one such worker told me, because 90 percent of the staff had put in full days over the weekend, trying to figure out the latest repercussions for their company. All day, he saw people staring at their monitors in disbelief, pausing only to yell, "What the [expletive]?" or "This is a [expletive]-show." There was none of the usual horseplay or joking around. Instead, people were screaming into their phones and then slamming them down.
Many of the traders who were used to receiving six-figure annual bonuses have started brown-bagging their lunches instead of ordering in sushi or eating out at local restaurants. "Dude, we already passed the recession," one trader explained to the worker. "This is the Depression. Save your money."
One trading-floor denizen described how it happens: Your phone rings, and you're told to report to human resources. You stand up and announce to the people in your row that it's all over. If they like you, they hug you and maybe even applaud. In many cases, they'll be the ones to clean out your desk. Right after you get fired, you're marched out of the building by security. An employee at one of the biggest, best-run firms told a shoeshine boy, "Nobody is safe. I could be out of here tomorrow."
When a financial journalist friend of mine asked a prominent executive how this would all end, he replied, "With riots in the streets."
The title character of my 2007 novel, "Confessions of a Wall Street Shoeshine Boy," was inspired by a real-life shoeshiner who plied his trade among the Guccis and Ferragamos of the financial district. What a view he had! From the very bottom rung of the economic ladder, he watched Wall Street insanity of outlandish proportions: the shady world of unbelievable hedge-fund profits, the supermodel girlfriends, $5,000 bottles of wine, cocaine-fueled trading and partying, the jaw-dropping castles of the new superrich being erected in Greenwich and the Hamptons.
A shoeshine boy who works on the trading floor saw his own, more modest business plummet last week, too. On Monday, as Lehman Brothers expired, he shined only five pairs of shoes instead of the usual 25 to 35. Business didn't get much better as the week wore on.
Few people on the trading floor were inclined to make small talk with menial workers last week, one such worker told me, because 90 percent of the staff had put in full days over the weekend, trying to figure out the latest repercussions for their company. All day, he saw people staring at their monitors in disbelief, pausing only to yell, "What the [expletive]?" or "This is a [expletive]-show." There was none of the usual horseplay or joking around. Instead, people were screaming into their phones and then slamming them down.
Many of the traders who were used to receiving six-figure annual bonuses have started brown-bagging their lunches instead of ordering in sushi or eating out at local restaurants. "Dude, we already passed the recession," one trader explained to the worker. "This is the Depression. Save your money."
One trading-floor denizen described how it happens: Your phone rings, and you're told to report to human resources. You stand up and announce to the people in your row that it's all over. If they like you, they hug you and maybe even applaud. In many cases, they'll be the ones to clean out your desk. Right after you get fired, you're marched out of the building by security. An employee at one of the biggest, best-run firms told a shoeshine boy, "Nobody is safe. I could be out of here tomorrow."
When a financial journalist friend of mine asked a prominent executive how this would all end, he replied, "With riots in the streets."
Thursday, September 18, 2008
Losing it completely...
From the Chicago Tribune: Economist recounts talk with Fed chairman.
Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.
The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.
At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.
"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."
Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.
The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.
At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.
"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."
Wednesday, September 17, 2008
Night of the Long Knives
From the New York Sun: Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers.
The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.
The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.
In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.
This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.
The SEC justified the less stringent capital requirements by arguing it was now able to manage the consolidated entity of the broker dealer and the holding company, which would ensure it could better manage the risk.
The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.
The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.
In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.
This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.
The SEC justified the less stringent capital requirements by arguing it was now able to manage the consolidated entity of the broker dealer and the holding company, which would ensure it could better manage the risk.
Nobody Expects the HEGI Liquidation!
From the New York Daily News: Hard economic times hits the High End Girlfriend Index.
The Dow Jones industrial average rebounded a bit Tuesday, but the true index for measuring hard times - the High End Girlfriend Index - was off the charts.
The HEGI is charted by Edward Hayes, a noted lawyer who started as a Bronx homicide prosecutor but has become the go-to guy among the city's moneyed classes when promises are broken.
"Particularly if you happen to be a woman in trouble," Hayes says.
The model for the defense lawyer in Tom Wolfe's "Bonfire of the Vanities," Hayes is an astute observer of social archetypes, including a particular sort of schlub who was invisible to girls in high school but became a magnetic figure thanks to the magic of millions.
"You have a Wall Street guy and he looks like one of the seven dwarfs," Hayes says.
The schlub finds himself with a fabulous girlfriend such as used to brush pasthim as if he were a wall. He will do almost anything to keep her if his magic millions suddenly evaporate, even selling his watch and cuff links.
"The last overhead to go is a really high-end girlfriend," Hayes says. "If you're a short, ugly 40-year-old guy and you're throwing over a high-quality girlfriend, you're desperate."
The absolute economic low comes with a realization that Hayes summarizes in a sentence.
"I can't afford her anymore!"
The Dow Jones industrial average rebounded a bit Tuesday, but the true index for measuring hard times - the High End Girlfriend Index - was off the charts.
The HEGI is charted by Edward Hayes, a noted lawyer who started as a Bronx homicide prosecutor but has become the go-to guy among the city's moneyed classes when promises are broken.
"Particularly if you happen to be a woman in trouble," Hayes says.
The model for the defense lawyer in Tom Wolfe's "Bonfire of the Vanities," Hayes is an astute observer of social archetypes, including a particular sort of schlub who was invisible to girls in high school but became a magnetic figure thanks to the magic of millions.
"You have a Wall Street guy and he looks like one of the seven dwarfs," Hayes says.
The schlub finds himself with a fabulous girlfriend such as used to brush pasthim as if he were a wall. He will do almost anything to keep her if his magic millions suddenly evaporate, even selling his watch and cuff links.
"The last overhead to go is a really high-end girlfriend," Hayes says. "If you're a short, ugly 40-year-old guy and you're throwing over a high-quality girlfriend, you're desperate."
The absolute economic low comes with a realization that Hayes summarizes in a sentence.
"I can't afford her anymore!"
Thursday, September 11, 2008
Don't Cry For Me, Florida!
From the WSJ: Condo Buyers In Florida Seek To Exit Deals.
Condo buyers in hard-hit markets across the country have been scouring their contracts for loopholes and flaws that would allow them to back out. Investors in Florida, where many were looking to flip their condos for a quick profit in a rising market, have been particularly aggressive in using the courts.
During the housing boom, Florida -- like some other areas noted for tourism and retirement living -- attracted hordes of speculators. By some estimates, more than half of all the deposits for Miami condos were put down by people planning to flip them for a profit without living in them, says Jack McCabe, chief executive officer of McCabe Research & Consulting in Deerfield Beach, Fla.
But developers built far more condos than demand could absorb. The glutted Miami market now has close to 50,000 units -- a record four years' worth of inventory -- for sale or under construction. The national condo market, by contrast, has a 12-month inventory, up from 4.7 months in 2005, according to the National Association of Realtors.
Faced with such sobering prospects, many buyers no longer want to close on their properties, as they risk steep losses when they try to sell. In some buildings, as many of 30% of condo buyers are turning to the courts in an effort to cancel their contracts. If unsuccessful, they have to either go ahead and close on a unit they no longer want or walk away and lose their deposits, which are typically between 10% and 20% of the purchase price.
Dora and Umberto Arena, of Hollywood, Fla., are among the thousands of investors who are looking to the courts for relief. When the Arenas bought their deluxe $595,000 condo in Hallandale Beach, developers urged them to move quickly to put down their $120,000 deposit. The planned 283 units at the Ocean Marine Yacht Club in Hallandale Beach sold out in only three weeks when they were offered to the public three years ago.
"We saw this beautiful 48-slip marina in their brochures, and it sounded wonderful to have a place for a boat and to live in that brand new building," says Ms. Arena, 64.
Despite the name, the Ocean Marine Yacht Club has no marina.
I'm sorry, I'm sorry, I just can't resist it.
BWAHAHAHHAHAHHAHAHAHHHHHHHHHHHH!!!
Condo buyers in hard-hit markets across the country have been scouring their contracts for loopholes and flaws that would allow them to back out. Investors in Florida, where many were looking to flip their condos for a quick profit in a rising market, have been particularly aggressive in using the courts.
During the housing boom, Florida -- like some other areas noted for tourism and retirement living -- attracted hordes of speculators. By some estimates, more than half of all the deposits for Miami condos were put down by people planning to flip them for a profit without living in them, says Jack McCabe, chief executive officer of McCabe Research & Consulting in Deerfield Beach, Fla.
But developers built far more condos than demand could absorb. The glutted Miami market now has close to 50,000 units -- a record four years' worth of inventory -- for sale or under construction. The national condo market, by contrast, has a 12-month inventory, up from 4.7 months in 2005, according to the National Association of Realtors.
Faced with such sobering prospects, many buyers no longer want to close on their properties, as they risk steep losses when they try to sell. In some buildings, as many of 30% of condo buyers are turning to the courts in an effort to cancel their contracts. If unsuccessful, they have to either go ahead and close on a unit they no longer want or walk away and lose their deposits, which are typically between 10% and 20% of the purchase price.
Dora and Umberto Arena, of Hollywood, Fla., are among the thousands of investors who are looking to the courts for relief. When the Arenas bought their deluxe $595,000 condo in Hallandale Beach, developers urged them to move quickly to put down their $120,000 deposit. The planned 283 units at the Ocean Marine Yacht Club in Hallandale Beach sold out in only three weeks when they were offered to the public three years ago.
"We saw this beautiful 48-slip marina in their brochures, and it sounded wonderful to have a place for a boat and to live in that brand new building," says Ms. Arena, 64.
Despite the name, the Ocean Marine Yacht Club has no marina.
I'm sorry, I'm sorry, I just can't resist it.
BWAHAHAHHAHAHHAHAHAHHHHHHHHHHHH!!!
Wednesday, September 10, 2008
Bass Ackwards
From the WSJ: Retailers Reprogram Workers In Efficiency Push.
Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.
AnnTaylor Stores Corp. installed a system last year. When saleswoman Nyla Houser types her code number into a cash register at the Ann Taylor store here at the Oxford Valley Mall, it displays her "performance metrics": average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
Some employees aren't happy about the trend. They say the systems leave them with shorter shifts, make it difficult to schedule their lives, and unleash Darwinian forces on the sales floor that damage morale.
Current and former employees of the Langhorne store say that within months of the system's installation in May 2007, the culture shifted from collegial to highly competitive. "You could see people stealing sales from other people," says Julie Abrams, a former cashier at the store. Salespeople were "trying to get each other out of the way to get to the client," she says.
This is a classic example of Frédéric Bastiat's "unseen" problem, or as the EE calls it the "physicist's fallacy". Anything that can't be measured must not be worth anything.
The EE would really like to see the ROI on this system. After the cost of all the machines, the cost of the platform and the software, and the labor turnover that is inevitable with such a system whether the additional sales/store justifies such a thing.
The EE bets that it does not.
In fact, if retailers want to get "real", they should start with an intelligent inventory-stocking system. Putting five of each size on the racks does not work. You end up with the small's and the XXXL's and nothing in between. The inventory has to match the demographics, capisce, paisano?
Before it installed the system, AnnTaylor spent a year studying labor efficiencies. It established standards for how long it should take for employees to complete certain tasks: three seconds to greet a shopper; two minutes to help someone trying on clothing; 32 seconds to fold a sweater; and most importantly, five minutes to clinch a sale.
Incidentally, all repeat sales are built on customer loyalty. Giving your customers the bum's rush doesn't exactly endear you to them.
AnnTaylor calls its system the Ann Taylor Labor Allocation System -- Atlas for short. It was developed by RedPrairie Corp., a retail-operations software firm based in Waukesha, Wisc. "We liken the system to an airplane dashboard with 100 different switches and levers and knobs," said AnnTaylor's Mr. Knaul. "When we launched that, we messed with five of them." Giving the system a nickname, Atlas, he said, "was important because it gave a personality to the system, so [employees] hate the system and not us."
Right, because the people are total morons. They will blame the system and not you. Of course. What could be more obvious?
Now you should go twirl the other 95 knobs. Then you should design a system to check whether your knob-twirling is as efficient as can be.
That's a "meta-system" with another 20 knobs. You can call that system ASS (AnnTaylor System System) so that you can blame the system and not you.
Or you could just make clothes that people actually want so that you don't need salespeople.
That would be, like, so radical, dude!
Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.
AnnTaylor Stores Corp. installed a system last year. When saleswoman Nyla Houser types her code number into a cash register at the Ann Taylor store here at the Oxford Valley Mall, it displays her "performance metrics": average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
Some employees aren't happy about the trend. They say the systems leave them with shorter shifts, make it difficult to schedule their lives, and unleash Darwinian forces on the sales floor that damage morale.
Current and former employees of the Langhorne store say that within months of the system's installation in May 2007, the culture shifted from collegial to highly competitive. "You could see people stealing sales from other people," says Julie Abrams, a former cashier at the store. Salespeople were "trying to get each other out of the way to get to the client," she says.
This is a classic example of Frédéric Bastiat's "unseen" problem, or as the EE calls it the "physicist's fallacy". Anything that can't be measured must not be worth anything.
The EE would really like to see the ROI on this system. After the cost of all the machines, the cost of the platform and the software, and the labor turnover that is inevitable with such a system whether the additional sales/store justifies such a thing.
The EE bets that it does not.
In fact, if retailers want to get "real", they should start with an intelligent inventory-stocking system. Putting five of each size on the racks does not work. You end up with the small's and the XXXL's and nothing in between. The inventory has to match the demographics, capisce, paisano?
Before it installed the system, AnnTaylor spent a year studying labor efficiencies. It established standards for how long it should take for employees to complete certain tasks: three seconds to greet a shopper; two minutes to help someone trying on clothing; 32 seconds to fold a sweater; and most importantly, five minutes to clinch a sale.
Incidentally, all repeat sales are built on customer loyalty. Giving your customers the bum's rush doesn't exactly endear you to them.
AnnTaylor calls its system the Ann Taylor Labor Allocation System -- Atlas for short. It was developed by RedPrairie Corp., a retail-operations software firm based in Waukesha, Wisc. "We liken the system to an airplane dashboard with 100 different switches and levers and knobs," said AnnTaylor's Mr. Knaul. "When we launched that, we messed with five of them." Giving the system a nickname, Atlas, he said, "was important because it gave a personality to the system, so [employees] hate the system and not us."
Right, because the people are total morons. They will blame the system and not you. Of course. What could be more obvious?
Now you should go twirl the other 95 knobs. Then you should design a system to check whether your knob-twirling is as efficient as can be.
That's a "meta-system" with another 20 knobs. You can call that system ASS (AnnTaylor System System) so that you can blame the system and not you.
Or you could just make clothes that people actually want so that you don't need salespeople.
That would be, like, so radical, dude!
Friday, September 05, 2008
Thursday, September 04, 2008
You're My Trust-Fund Baby, Baby!
From the SF Chronicle: Rights groups faults Wachovia's mortgage aid.
Susan Fallis, a communications professor at Saint Mary's College in Moraga, so far seems to fall into the "get the loans off the books" camp of Wachovia customers. In 2004, she sold the Santa Cruz parking lot her father bought in the 1960s for his mobile home business. She reinvested the approximately $3 million into 20 single-family houses in and around Reno, with a 40 percent down payment on each one.
Sixteen of the loans were Pick-a-Payment mortgages from Wachovia. Because Reno rents dropped as her minimum payments climbed, she is now losing about $7,000 per month. She has asked Wachovia to temporarily lower the interest rate on her loans by less than two percentage points, without asking for any adjustment on the loan principal. The change would enable her to break even, but company representatives have told her allowing it "would require a complete reversal in corporate policy," she said.
If Wachovia doesn't allow any modifications, Fallis expects she will have no choice but to default in the next few months. She said everyone loses in that scenario.
Not everyone, baby! Just you, and your $3M, and your dreams of real-estate riches.
Susan Fallis, a communications professor at Saint Mary's College in Moraga, so far seems to fall into the "get the loans off the books" camp of Wachovia customers. In 2004, she sold the Santa Cruz parking lot her father bought in the 1960s for his mobile home business. She reinvested the approximately $3 million into 20 single-family houses in and around Reno, with a 40 percent down payment on each one.
Sixteen of the loans were Pick-a-Payment mortgages from Wachovia. Because Reno rents dropped as her minimum payments climbed, she is now losing about $7,000 per month. She has asked Wachovia to temporarily lower the interest rate on her loans by less than two percentage points, without asking for any adjustment on the loan principal. The change would enable her to break even, but company representatives have told her allowing it "would require a complete reversal in corporate policy," she said.
If Wachovia doesn't allow any modifications, Fallis expects she will have no choice but to default in the next few months. She said everyone loses in that scenario.
Not everyone, baby! Just you, and your $3M, and your dreams of real-estate riches.
Coffee is for Closers!!!
From The Sun in the Inland Empire: Price wars in N. Fontana.
Price wars are being waged in north Fontana's upper middle-class neighborhoods as home builders drop prices, hoping to stave off multimilion-dollar losses.
They're competing against one another, but collectively, their products are going up against bank-owned properties, foreclosures and short sales on homes that were built just two or three years ago around the corner.
Jeff Hill knows all about it. Owner of Dana Point-based J. Hill and Associates, the real estate broker has about 20 short sales that aren't moving because banks and sellers are desperately trying to salvage any value they can.
One of them, a 2,572-square-foot home, lies a half-mile away from the Centex tract and is on the market for about $315,000.
"They've postponed the sale four times," Hill said about the sellers. "We have an offer, and then they go out and do their own appraisal ... and by the time they come back, the buyer finds something else. Meanwhile, the values decline even further."
Sellers should be happy with buyers' offers, Hill feels.
"Everyone saves a lot more money that way, including the lender that's foreclosing," he said. "Buyers walk away when sellers try to counter the offer."
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, 'n the realtor's is shee-it
If you're happy and you know it, walk away (clap clap)
Price wars are being waged in north Fontana's upper middle-class neighborhoods as home builders drop prices, hoping to stave off multimilion-dollar losses.
They're competing against one another, but collectively, their products are going up against bank-owned properties, foreclosures and short sales on homes that were built just two or three years ago around the corner.
Jeff Hill knows all about it. Owner of Dana Point-based J. Hill and Associates, the real estate broker has about 20 short sales that aren't moving because banks and sellers are desperately trying to salvage any value they can.
One of them, a 2,572-square-foot home, lies a half-mile away from the Centex tract and is on the market for about $315,000.
"They've postponed the sale four times," Hill said about the sellers. "We have an offer, and then they go out and do their own appraisal ... and by the time they come back, the buyer finds something else. Meanwhile, the values decline even further."
Sellers should be happy with buyers' offers, Hill feels.
"Everyone saves a lot more money that way, including the lender that's foreclosing," he said. "Buyers walk away when sellers try to counter the offer."
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, walk away (clap clap)
If you're happy and you know it, 'n the realtor's is shee-it
If you're happy and you know it, walk away (clap clap)
Saturday, August 30, 2008
"Real" GDP
From the BEA website: GROSS DOMESTIC PRODUCT AND CORPORATE PROFITS: Second Quarter 2008.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.3 percent in the second quarter of 2008.
Domestic profits of financial corporations increased $24.7 billion in the second quarter, compared with an increase of $37.3 billion in the first.
Are you fuckin' kiddin' me?
Financial companies had NO true profits in either Q1 or Q2. In fact, they were busy taking writedown after writedown marking down even past profits as fake.
Guess someone forgot to tell the government statisticians.
BWAHAHAHAHHAHAHAHAHHHHHHHHHHHHHH!!!
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.3 percent in the second quarter of 2008.
Domestic profits of financial corporations increased $24.7 billion in the second quarter, compared with an increase of $37.3 billion in the first.
Are you fuckin' kiddin' me?
Financial companies had NO true profits in either Q1 or Q2. In fact, they were busy taking writedown after writedown marking down even past profits as fake.
Guess someone forgot to tell the government statisticians.
BWAHAHAHAHHAHAHAHAHHHHHHHHHHHHHH!!!
Sunday, August 24, 2008
How to Lie Academic-style
From CNN Money via Yahoo!: Job Boom Could Be Coming Soon.
There is no denying that the job market is weak.
The Department of Labor has reported that 432,000 people filed for unemployment benefits in the past week - making this the fifth straight week that jobless claims topped the 400,000 mark.
And so far this year, there has been a loss of 463,000 jobs.
Yet, some are starting to see light at the end of the tunnel on the job front. Economists at the University of Michigan said in a report released yesterday that 900,000 jobs will be added next year and that 2.6 million more will be created in 2010.
"To get this sort of recovery, you'll have to have a turnaround in housing. So you'll have to see a pickup in construction jobs. We could also get a pickup in vehicle manufacturing with the shift to smaller cars," she said.
Does anybody believe this?
We've had the biggest housing bubble in history, a financial bubble that dates back to 1983, and a credit bubble that has infested every single asset class worldwide.
The US "consumer" has no more access to credit. It's put-up-or-shut-up time.
We are just about to enter what is likely to be the most deep recession since the Great Depression. There are 18.4 million houses that are currently unsold and unoccupied in the US, and these people are betting on a turnaround in housing?
Jeez, even Chicago Cubs fans are not so retarded.
There is no denying that the job market is weak.
The Department of Labor has reported that 432,000 people filed for unemployment benefits in the past week - making this the fifth straight week that jobless claims topped the 400,000 mark.
And so far this year, there has been a loss of 463,000 jobs.
Yet, some are starting to see light at the end of the tunnel on the job front. Economists at the University of Michigan said in a report released yesterday that 900,000 jobs will be added next year and that 2.6 million more will be created in 2010.
"To get this sort of recovery, you'll have to have a turnaround in housing. So you'll have to see a pickup in construction jobs. We could also get a pickup in vehicle manufacturing with the shift to smaller cars," she said.
Does anybody believe this?
We've had the biggest housing bubble in history, a financial bubble that dates back to 1983, and a credit bubble that has infested every single asset class worldwide.
The US "consumer" has no more access to credit. It's put-up-or-shut-up time.
We are just about to enter what is likely to be the most deep recession since the Great Depression. There are 18.4 million houses that are currently unsold and unoccupied in the US, and these people are betting on a turnaround in housing?
Jeez, even Chicago Cubs fans are not so retarded.
Thursday, August 21, 2008
The `Preserves' are in a Pickle!
From The Washington Independent: Fraud Worsens Foreclosure Crisis.
At The Barber's Chair, in the small, quiet community of Accokeek at the far end of Prince George's County, Md., the talk often turns to the foreclosure crisis -- for good reason. Here, in the nation's most affluent majority black jurisdiction, a remarkable example of the growing wealth of the new black middle class, foreclosures are growing at one of the fastest rates in the country, and foreclosure fraud is increasing right along with it.
With locals constantly in and out, Leo Harrington, the owner, hears it all. How people who bought homes once valued at $800,000 down the the road at upscale subdivisions like The Preserves or at the one- and two-acre homesites of St. James have friends and relatives living in their basements to help pay the mortgage.
Aah, the Joys of Home Pawn-ership™!
At The Barber's Chair, in the small, quiet community of Accokeek at the far end of Prince George's County, Md., the talk often turns to the foreclosure crisis -- for good reason. Here, in the nation's most affluent majority black jurisdiction, a remarkable example of the growing wealth of the new black middle class, foreclosures are growing at one of the fastest rates in the country, and foreclosure fraud is increasing right along with it.
With locals constantly in and out, Leo Harrington, the owner, hears it all. How people who bought homes once valued at $800,000 down the the road at upscale subdivisions like The Preserves or at the one- and two-acre homesites of St. James have friends and relatives living in their basements to help pay the mortgage.
Aah, the Joys of Home Pawn-ership™!
Wednesday, August 20, 2008
Cannibal Sector
From the New York Times via Yahoo!: Hungry at 30,000 Feet? Pay Up.
The announcement from US Airways in June that it was going to start charging coach passengers $2 for soft drinks and bottled water — water! — on all its domestic flights, as well as $1 for coffee or tea, is only the latest sign that when it comes to flying these days, there increasingly is no such thing as a free lunch.
Well, the article goes on for a bit, and it's a bloody bore of an article so the EE will give you the precis version.
(On a side note, they used to teach the EE how to write precis versions in English class. Guess the journalists never attended an English class nor learnt how to put stuff in "tabular" format.)
Here's the precis:
Who didn't see that one coming? Raise your hands now. C'mon, c'mon, don't be shy.
This is news?!?
Anyway, for those prices, you could easily get a gourmet meal from Dean & Deluca "to go" and a half-bottle of wine (like Hannibal Lecter.)
Just to be really clear for those not in the "know" of New York stores, this is the store that the snooty matrons of Park Ave. hit when they want something "catered".
So crap airline food is being priced as pricier than the gourmé-ist of gourmet foods?!?
Looks like a "cannibalistic" death spiral to me.
The announcement from US Airways in June that it was going to start charging coach passengers $2 for soft drinks and bottled water — water! — on all its domestic flights, as well as $1 for coffee or tea, is only the latest sign that when it comes to flying these days, there increasingly is no such thing as a free lunch.
Well, the article goes on for a bit, and it's a bloody bore of an article so the EE will give you the precis version.
(On a side note, they used to teach the EE how to write precis versions in English class. Guess the journalists never attended an English class nor learnt how to put stuff in "tabular" format.)
Here's the precis:
All airlines are charging, and prices are retardedly high.Whoop-dee-doodle-doo!
Who didn't see that one coming? Raise your hands now. C'mon, c'mon, don't be shy.
This is news?!?
Anyway, for those prices, you could easily get a gourmet meal from Dean & Deluca "to go" and a half-bottle of wine (like Hannibal Lecter.)
Just to be really clear for those not in the "know" of New York stores, this is the store that the snooty matrons of Park Ave. hit when they want something "catered".
So crap airline food is being priced as pricier than the gourmé-ist of gourmet foods?!?
Looks like a "cannibalistic" death spiral to me.
India Rising
From the Washington Post: Indians Trapped by Debt as Easy Money Dries Up.
In the past two months, Ravinder Raina tossed and turned on many sleepless nights trying to re-do the math of his family's monthly expenses.
Rising mortgage payments, soaring inflation and fuel prices were beginning to put the squeeze on the spending spree he'd taken for granted for the past four years. So after painstaking discussions with his wife, he drew up a list of expenses to cut. The family would stop buying famous-brand clothes. They would not window-shop if they did not need anything. They would use credit cards less and replace their gasoline-fueled car with a vehicle that uses cheaper natural gas.
The past four years have brought India economic growth of seemingly unstoppable momentum, often 9 percent a year, helped along by big inflows of foreign investment. Rising incomes and low interest rates enabled many middle-class Indians to realize the dream of owning a home, even while still in their 30s.
Trapped in debt, many middle-class Indians are struggling to cope. Raina's monthly mortgage payment has gone up by 12 percent. "I have to cut corners now, or I may not be able to pay back my loan before retirement," he said. Payments on some loans have doubled since 2004, when interest rates were at a record low.
"The boom of the last four years mesmerized them to live beyond their means," said Deepak Raheja, a therapist who runs a support group called the Hope Foundation. "In the past ten weeks, I am getting five to six new patients every week with financial worries about mortgages, loan repayments and credit card bills. All in the age group of 25 to 40. They exhibit anxiety, helplessness and depression. Some even contemplate suicide."
"The Indian middle class is now deferring purchase decisions because they are locked in the rising mortgage trap from multiple loans. They did not anticipate this cash crunch. They thought India's growth story would only go up, up and up," Bijoor said.
Gee, where have we heard that "up, up, up" before?
In the past two months, Ravinder Raina tossed and turned on many sleepless nights trying to re-do the math of his family's monthly expenses.
Rising mortgage payments, soaring inflation and fuel prices were beginning to put the squeeze on the spending spree he'd taken for granted for the past four years. So after painstaking discussions with his wife, he drew up a list of expenses to cut. The family would stop buying famous-brand clothes. They would not window-shop if they did not need anything. They would use credit cards less and replace their gasoline-fueled car with a vehicle that uses cheaper natural gas.
The past four years have brought India economic growth of seemingly unstoppable momentum, often 9 percent a year, helped along by big inflows of foreign investment. Rising incomes and low interest rates enabled many middle-class Indians to realize the dream of owning a home, even while still in their 30s.
Trapped in debt, many middle-class Indians are struggling to cope. Raina's monthly mortgage payment has gone up by 12 percent. "I have to cut corners now, or I may not be able to pay back my loan before retirement," he said. Payments on some loans have doubled since 2004, when interest rates were at a record low.
"The boom of the last four years mesmerized them to live beyond their means," said Deepak Raheja, a therapist who runs a support group called the Hope Foundation. "In the past ten weeks, I am getting five to six new patients every week with financial worries about mortgages, loan repayments and credit card bills. All in the age group of 25 to 40. They exhibit anxiety, helplessness and depression. Some even contemplate suicide."
"The Indian middle class is now deferring purchase decisions because they are locked in the rising mortgage trap from multiple loans. They did not anticipate this cash crunch. They thought India's growth story would only go up, up and up," Bijoor said.
Gee, where have we heard that "up, up, up" before?
Tuesday, August 19, 2008
Prices don't drop except when they Drop
From the Ventura Star: Positive signs are seen in housing.
Prices don't appear to be falling as rapidly as they were, sales are rising, and default notices appear to be leveling off, said Mark Schniepp, executive director of the California Economic Forecast Project in Goleta.
If notices of default fall now, then foreclosures will peak and then start to decline in December, Schniepp said. Though he does not believe prices will drop much more, he predicts more year-over-year price declines.
So prices "won't drop" but he predicts more "price declines"?
My brain hurts.
Prices won't drop but they will decline. Should we bring in a buncha English majors to analyze this one?
Post-modernism, eat your heart out.
Derrida, Deleuze, Guattari, where the fuck are you?
C'mon Baudrillard, is this is a "simulacra" of reality, or a "simulation" of reality, or is this "reality", or is this reality?
Let's get a debate going, bee-yatches, about the difference between a "price drop" and a "price decline".
BWAHAHAHHAHAHAHAHHAHHHHHHHHHHHH!!!
Prices don't appear to be falling as rapidly as they were, sales are rising, and default notices appear to be leveling off, said Mark Schniepp, executive director of the California Economic Forecast Project in Goleta.
If notices of default fall now, then foreclosures will peak and then start to decline in December, Schniepp said. Though he does not believe prices will drop much more, he predicts more year-over-year price declines.
So prices "won't drop" but he predicts more "price declines"?
My brain hurts.
Prices won't drop but they will decline. Should we bring in a buncha English majors to analyze this one?
Post-modernism, eat your heart out.
Derrida, Deleuze, Guattari, where the fuck are you?
C'mon Baudrillard, is this is a "simulacra" of reality, or a "simulation" of reality, or is this "reality", or is this reality?
Let's get a debate going, bee-yatches, about the difference between a "price drop" and a "price decline".
BWAHAHAHHAHAHAHAHHAHHHHHHHHHHHH!!!
Getting Non-Insurably Banged (Jiggly-Jiggly)
From The Bakersfield Californian: Building halted at two City in the Hills tracts.
Construction at two neighborhoods in northeast Bakersfield’s City in the Hills development has been halted by one of the builders there, K. Hovnanian Homes, a company official said.
Rosemary Arbor and Lantana’s Edge are on hold, said Joseph Manisco, vice president and chief legal officer at the company’s Southern California regional office in Ontario.
Manisco said the tracts weren’t profitable.
Corina Hilton, meanwhile, said on top of everything else, her home took more than a year to get built — she bought it almost two years ago, paying much more than units now go for — and has had numerous problems since she moved in at the end of last year.
“I got screwed,” Hilton said.
BWAHAHAHAHAHAHAAHHAHAHHHHHHHHHHHH!!!
Construction at two neighborhoods in northeast Bakersfield’s City in the Hills development has been halted by one of the builders there, K. Hovnanian Homes, a company official said.
Rosemary Arbor and Lantana’s Edge are on hold, said Joseph Manisco, vice president and chief legal officer at the company’s Southern California regional office in Ontario.
Manisco said the tracts weren’t profitable.
Corina Hilton, meanwhile, said on top of everything else, her home took more than a year to get built — she bought it almost two years ago, paying much more than units now go for — and has had numerous problems since she moved in at the end of last year.
“I got screwed,” Hilton said.
BWAHAHAHAHAHAHAAHHAHAHHHHHHHHHHHH!!!
Monday, August 18, 2008
Financial Quote of the Day
Kicking a California Realtor™ in the tits is a "deflationary" event these days.
Sunday, August 17, 2008
Goring Sacred Bulls
Heaven knows the EE is not Hemingway's biggest fan but this quote from Esquire, 1935 is quite apposite:
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
Thursday, August 14, 2008
Quick Quiz on Investments
If you only had $1,000 to "invest", what would you do?
(Let's assume you have emergency funds and all that jazz, but you only have an extra $1,000 to invest.)
Remember the goal? You need to maximize ROI (return on investment.)
The answer will probably surprise you.
(Hint: What happens if only had $500 or even $250?)
(Let's assume you have emergency funds and all that jazz, but you only have an extra $1,000 to invest.)
Remember the goal? You need to maximize ROI (return on investment.)
The answer will probably surprise you.
(Hint: What happens if only had $500 or even $250?)
Wednesday, August 13, 2008
Hilarious
Awesomely funny.
(Source: Cassandra Does Tokyo.)
ACME Systematic Leveraged Macro Momentum Fund LP
321 Overprice Street
Greenwich, CT
00573
Dear Investor,
This letter is to inform you that the wheels have come off of the proverbial wagon at ACME Systematic Leveraged Macro Momentum Fund LP, and that the same awesome thematic portfolio that made you feel (in the first half-year) as if you'd become very rich in comparison to those sucking wind on their leveraged MBS portfolios or Japanese Small-Cap Value Funds, has, quite literally, spontaneously combusted in our faces.
Our long-oil (PBR, SU, SWN), long coal (MEE, BTU), long fertilizer (POT, MOS), and long iron ore (CLF, RIO) positions have been crushed (no pun intended), and though we remain hopeful going forward as the story remains "in tact", our models have forced us to sell some in response to prevailing price action. Our offsetting shorts in selected financials (MS, BLK, GS, and LM) have not fared as we expected, while our core retail and consumer discretionary shorts in AZO & URBN, DECK have quite literally been lodged deeply and inexplicably in an unmentionable orifice.
If that were all we'd not be too sullen, all things considered, but unfortunately our short US dollar positions (vs. everything), our JPYNZD & CHFAUD carry trades have also not performed to forecasted expectations, and both our our long-only, and zero-exposure long vs. short commodity baskets have imploded with a rapidity that would even frighten Taleb to vows of silence. Oh, and if that weren't enough, our gold and silver longs, too, have gone south as if trying to re-embed themselves in the ground, whilst the short Russell-2000 ETFs we've been using as a hedge have been behaving all-too priapically. These losses of course are not as bad - relatively speaking - as some of our peers (who regretfully are no longer in business) and should of course be viewed in the proper context of our delft avoidance of long exposure in the worst of the RMBS and CMBS sectors, our eschewing of becoming a CDO issuer/manager, and our resolve to avoid anything denominated in Icelandic Kronor. Unfortunately we still have a large (leveraged) position in high-yielding cov-lite loans, US sub-prime credit-card-backed receivables for which we remain unable to obtain sensible bids at levels near to where our auditors and administrators agreed that we should pay our prior year's incentive fees. Only our long Japanese REIT portfolio and our unlisted fund of Spanish Olive Groves have held their ground, though regretfully we refrained from hedging the currency risk, and so these too, are now in the red and eroding rapidly.
We have no explanation, since our trades are systematically based upon doing what others are doing (only, hopefully, faster... though, in this instance, not fast enough). Nor do we offer you apologies. You [presumably] knew the risks, and felt the glory (if only for a while). We do lament the the now-sky-high high-water mark, and the absence of performance fees (this year).
Finally, saving the best for last, we will be suspending redemptions as per the Force Majeureclause 6(c)-2 of the Private Placement Information Memorandum of the Fund. We trust you'll agree that only something supernatural could have torpedoed such a finely constructed portfolio put together by the best and the brightest Wall St. has to offer.
Yours sincerely,
Hugh G. Fallis - Managing Partner
ACME Systematic Leveraged Macro Momentum Fund LP
(Source: Cassandra Does Tokyo.)
ACME Systematic Leveraged Macro Momentum Fund LP
321 Overprice Street
Greenwich, CT
00573
Dear Investor,
This letter is to inform you that the wheels have come off of the proverbial wagon at ACME Systematic Leveraged Macro Momentum Fund LP, and that the same awesome thematic portfolio that made you feel (in the first half-year) as if you'd become very rich in comparison to those sucking wind on their leveraged MBS portfolios or Japanese Small-Cap Value Funds, has, quite literally, spontaneously combusted in our faces.
Our long-oil (PBR, SU, SWN), long coal (MEE, BTU), long fertilizer (POT, MOS), and long iron ore (CLF, RIO) positions have been crushed (no pun intended), and though we remain hopeful going forward as the story remains "in tact", our models have forced us to sell some in response to prevailing price action. Our offsetting shorts in selected financials (MS, BLK, GS, and LM) have not fared as we expected, while our core retail and consumer discretionary shorts in AZO & URBN, DECK have quite literally been lodged deeply and inexplicably in an unmentionable orifice.
If that were all we'd not be too sullen, all things considered, but unfortunately our short US dollar positions (vs. everything), our JPYNZD & CHFAUD carry trades have also not performed to forecasted expectations, and both our our long-only, and zero-exposure long vs. short commodity baskets have imploded with a rapidity that would even frighten Taleb to vows of silence. Oh, and if that weren't enough, our gold and silver longs, too, have gone south as if trying to re-embed themselves in the ground, whilst the short Russell-2000 ETFs we've been using as a hedge have been behaving all-too priapically. These losses of course are not as bad - relatively speaking - as some of our peers (who regretfully are no longer in business) and should of course be viewed in the proper context of our delft avoidance of long exposure in the worst of the RMBS and CMBS sectors, our eschewing of becoming a CDO issuer/manager, and our resolve to avoid anything denominated in Icelandic Kronor. Unfortunately we still have a large (leveraged) position in high-yielding cov-lite loans, US sub-prime credit-card-backed receivables for which we remain unable to obtain sensible bids at levels near to where our auditors and administrators agreed that we should pay our prior year's incentive fees. Only our long Japanese REIT portfolio and our unlisted fund of Spanish Olive Groves have held their ground, though regretfully we refrained from hedging the currency risk, and so these too, are now in the red and eroding rapidly.
We have no explanation, since our trades are systematically based upon doing what others are doing (only, hopefully, faster... though, in this instance, not fast enough). Nor do we offer you apologies. You [presumably] knew the risks, and felt the glory (if only for a while). We do lament the the now-sky-high high-water mark, and the absence of performance fees (this year).
Finally, saving the best for last, we will be suspending redemptions as per the Force Majeureclause 6(c)-2 of the Private Placement Information Memorandum of the Fund. We trust you'll agree that only something supernatural could have torpedoed such a finely constructed portfolio put together by the best and the brightest Wall St. has to offer.
Yours sincerely,
Hugh G. Fallis - Managing Partner
ACME Systematic Leveraged Macro Momentum Fund LP
Saturday, August 09, 2008
Uncontroversial Advice
Well, the email lines seem to be clogged. O Great EE, or O Asshole EE, now that you have already predicted what's coming down the poop-chute, what shall we do?
Insert hand-wringing. Cue Edith Wharton.
So in the great spirit of decency (rare for the EE), here's some non-controversial advice about the credit upheaval and the upcoming depression.
If you have a gift card to any store, blow the money NOW!
That store may or may not last. Chances are it won't. Will they last through the New Year? Unless, you can read a balance sheet, who the fuck knows? And even then, given their exposure to "derivatives", all bets are off.
Blow 100% of all of your gift cards right now, and don't look back.
This is about as uncontroversial as any advice about finance gets. It's pretty bleedin' obvious.
Also, don't hand out any gift cards. That's pretty fuckin' obvious too.
Insert hand-wringing. Cue Edith Wharton.
So in the great spirit of decency (rare for the EE), here's some non-controversial advice about the credit upheaval and the upcoming depression.
If you have a gift card to any store, blow the money NOW!
That store may or may not last. Chances are it won't. Will they last through the New Year? Unless, you can read a balance sheet, who the fuck knows? And even then, given their exposure to "derivatives", all bets are off.
Blow 100% of all of your gift cards right now, and don't look back.
This is about as uncontroversial as any advice about finance gets. It's pretty bleedin' obvious.
Also, don't hand out any gift cards. That's pretty fuckin' obvious too.
Friday, August 08, 2008
USA or Rural China?
From the Merced Star: Living in limbo: Tenants feeling the mortgage mess.
Brandy Menina's apartment hasn't had hot water for six weeks.
When she and her three teenage daughters want to bathe and wash their long hair, she fills up four pots and two roasting pans with water and heats them on the stove.
Sounds like the kind of problem she should complain to her landlord about. But Menina doesn't enjoy a typical landlord-tenant situation. The apartment building she lives in is in foreclosure.
Now a bank owns it, and it's hired a real estate company to sell the building. They want her out so they can sell it. Menina says she'll leave when she can -- legally, she's entitled to stay for at least another month.
In the meantime, she's waging a battle to get her hot water turned back on.
Welcome to the First World™!
Brandy Menina's apartment hasn't had hot water for six weeks.
When she and her three teenage daughters want to bathe and wash their long hair, she fills up four pots and two roasting pans with water and heats them on the stove.
Sounds like the kind of problem she should complain to her landlord about. But Menina doesn't enjoy a typical landlord-tenant situation. The apartment building she lives in is in foreclosure.
Now a bank owns it, and it's hired a real estate company to sell the building. They want her out so they can sell it. Menina says she'll leave when she can -- legally, she's entitled to stay for at least another month.
In the meantime, she's waging a battle to get her hot water turned back on.
Welcome to the First World™!
Thursday, August 07, 2008
The Realtard™ Chronicles
From USA Today: Realtors live close to the edge.
Jack Jentzen never saw it coming. Four years ago, as a real estate agent in Elgin, Ill., he was enjoying the rewards of the most frenzied U.S. housing market in decades, and money poured in.
Now he's fighting to keep his home.
"I'm looking at jobs that are way lower than what I was once making," says Jentzen, 43.
As his business started to wither away, so did his financial security. He took out an equity line on his house. He exhausted most of his savings. The value of his home plummeted, and his lender cut off his equity line. Credit card bills climbed.
"The money in the bank is going to run out. If we lose this house, what do we do? What does my daughter do? My dad? I felt depressed and saw a psychologist. The market's just so tough now."
Shirley Van Scoyk, a Realtor in West Chester, Pa., spends her days on her farm with the horses she boards and her 80-pound American bulldog puppy. It might sound idyllic, but days with no work feel agonizing to her. At the moment, she has only one listing — her son's house. It's been on the market for three months.
"The hardest thing, where it all starts to unravel, is the effect of the difficult market on my self-esteem," Van Scoyk says.
When home sales were booming, she reveled in snagging sales and closing deals, and then snacking on crackers and soda in her car on the way to a settlement she'd struggled to move to the table.
"When the market is challenging like this, all the drama is gone, the hunt is gone, and this eats at your soul," she says. "I love doing business, and there is less business to do. I am in mourning for my work life. … I worked hard to get to be a Realtor. It made me a professional and a success. That bothers me worse than the income loss. I'm so incredibly depressed by not having work."
Robert Millosh, a Realtor for Re/Max in Middlesex County, N.J., says he'll need to find some other job to stay in the area. He used to earn at least $30,000 annually as a Realtor. Right now, he says, home sales are so dismal that he's looking at a job change or a move to Florida or Pennsylvania.
"I am almost broke and struggling to get by from day to day," says Millosh, who is 45 and single. "I'm having an estate sale for most of the furniture I have that I don't need. My life has been ripped apart."
Milltown, N.J., is a quaint small town, the kind of place families want to move to. They have an all-American Fourth of July celebration, with a parade, fishing, rodeo, a band in the park and fireworks at night. Millosh says it would be a hard place to abandon, but he might not have a choice.
He says he got in over his head after he began caring for his mother. His house was valued at $411,000 last year when he refinanced, and this year houses in his neighborhood were selling for less than $300,000. He's trying to sell his home for $349,000. His grandmother and mother built the house in 1951 for $18,000, and Millosh took out a mortgage in 2004 when his mother began to have medical problems. The original mortgage was for $100,000.
Now, he is looking at renting out rooms. Renting out his entire house or selling it, he says, could leave him homeless.
He took a bartending class in hopes of getting a job but says he could find only jobs as a busboy. "I've been looking for a job since October of last year and have yet to find anything," Millosh says. "I apply for anything, as long as it meets my minimum salary and travel area. I figured real estate would always be there for me."
Let me remind readers again that these are "used house" salesmen. They have no particular skills. The best job one could find was as a busboy.
BWAHAHAHAHAHAHHAHHHHHHHHHHHHHHHH!!!
Jack Jentzen never saw it coming. Four years ago, as a real estate agent in Elgin, Ill., he was enjoying the rewards of the most frenzied U.S. housing market in decades, and money poured in.
Now he's fighting to keep his home.
"I'm looking at jobs that are way lower than what I was once making," says Jentzen, 43.
As his business started to wither away, so did his financial security. He took out an equity line on his house. He exhausted most of his savings. The value of his home plummeted, and his lender cut off his equity line. Credit card bills climbed.
"The money in the bank is going to run out. If we lose this house, what do we do? What does my daughter do? My dad? I felt depressed and saw a psychologist. The market's just so tough now."
Shirley Van Scoyk, a Realtor in West Chester, Pa., spends her days on her farm with the horses she boards and her 80-pound American bulldog puppy. It might sound idyllic, but days with no work feel agonizing to her. At the moment, she has only one listing — her son's house. It's been on the market for three months.
"The hardest thing, where it all starts to unravel, is the effect of the difficult market on my self-esteem," Van Scoyk says.
When home sales were booming, she reveled in snagging sales and closing deals, and then snacking on crackers and soda in her car on the way to a settlement she'd struggled to move to the table.
"When the market is challenging like this, all the drama is gone, the hunt is gone, and this eats at your soul," she says. "I love doing business, and there is less business to do. I am in mourning for my work life. … I worked hard to get to be a Realtor. It made me a professional and a success. That bothers me worse than the income loss. I'm so incredibly depressed by not having work."
Robert Millosh, a Realtor for Re/Max in Middlesex County, N.J., says he'll need to find some other job to stay in the area. He used to earn at least $30,000 annually as a Realtor. Right now, he says, home sales are so dismal that he's looking at a job change or a move to Florida or Pennsylvania.
"I am almost broke and struggling to get by from day to day," says Millosh, who is 45 and single. "I'm having an estate sale for most of the furniture I have that I don't need. My life has been ripped apart."
Milltown, N.J., is a quaint small town, the kind of place families want to move to. They have an all-American Fourth of July celebration, with a parade, fishing, rodeo, a band in the park and fireworks at night. Millosh says it would be a hard place to abandon, but he might not have a choice.
He says he got in over his head after he began caring for his mother. His house was valued at $411,000 last year when he refinanced, and this year houses in his neighborhood were selling for less than $300,000. He's trying to sell his home for $349,000. His grandmother and mother built the house in 1951 for $18,000, and Millosh took out a mortgage in 2004 when his mother began to have medical problems. The original mortgage was for $100,000.
Now, he is looking at renting out rooms. Renting out his entire house or selling it, he says, could leave him homeless.
He took a bartending class in hopes of getting a job but says he could find only jobs as a busboy. "I've been looking for a job since October of last year and have yet to find anything," Millosh says. "I apply for anything, as long as it meets my minimum salary and travel area. I figured real estate would always be there for me."
Let me remind readers again that these are "used house" salesmen. They have no particular skills. The best job one could find was as a busboy.
BWAHAHAHAHAHAHHAHHHHHHHHHHHHHHHH!!!
Wednesday, August 06, 2008
Monday, August 04, 2008
Sunday, August 03, 2008
Crazy Math
From CNN: Foreclosures linked to subprime fraud.
Mortgage scammers took advantage of loopholes in New York State lending laws to defraud homeowners and lending institutions all over the state, according to a new report released Thursday.
In one example from 2006, Suzette Francis, a woman with two young children, no assets, working as a $10-an-hour security guard and living in a homeless shelter, obtained a mortgage for $470,000 that, as the report stated, "exhibited...every characteristic and feature associated with dangerous subprime loans."
Francis had down payment and no proven income or assets. Her adjustable rate mortgage started at 10.8% and was capped at 16.85%. At that rate, even her initial monthly payment came to more than $4,400. She would have to work 400 hours a month just to pay her loan.
And yet there are only 168 hours in a "traditional" week!
Mortgage scammers took advantage of loopholes in New York State lending laws to defraud homeowners and lending institutions all over the state, according to a new report released Thursday.
In one example from 2006, Suzette Francis, a woman with two young children, no assets, working as a $10-an-hour security guard and living in a homeless shelter, obtained a mortgage for $470,000 that, as the report stated, "exhibited...every characteristic and feature associated with dangerous subprime loans."
Francis had down payment and no proven income or assets. Her adjustable rate mortgage started at 10.8% and was capped at 16.85%. At that rate, even her initial monthly payment came to more than $4,400. She would have to work 400 hours a month just to pay her loan.
And yet there are only 168 hours in a "traditional" week!
Saturday, August 02, 2008
The Goobernator Tries to Collect Rent
From Delaware Online: Landlord crashes Hummer into tenants' home.
A landlord who was apparently upset at his tenants because they were behind on their rent crashed his Hummer into their home – his property – and then attempted to kick the door down, according to police.
Yeah, that'll really show who's boss. Crashing a hummer into your own home.
You really showed them, dude, you really showed them.
A landlord who was apparently upset at his tenants because they were behind on their rent crashed his Hummer into their home – his property – and then attempted to kick the door down, according to police.
Yeah, that'll really show who's boss. Crashing a hummer into your own home.
You really showed them, dude, you really showed them.
Thursday, July 31, 2008
Shameless
From the Boston Globe: Mass. foreclosure cases plummet.
The drop is attributed to a state law that took effect May 1 giving struggling homeowners a bit of breathing room. The so-called right-to-cure law created a 90-day period in which homeowners can "cure" mortgage delinquencies by catching up on payments or finding a buyer.
There were just 350 new cases brought by lenders against delinquent homeowners last month, compared with 2,308 in June 2007.
The number of foreclosure proceedings initiated in Massachusetts plummeted in June, a sign that a new state law delaying property takings is working.
Yeah, right. It's really working.
This is just so fuckin' shameless it's hard to endure.
Yeah, sure, report on the 89th day that things are great after a law puts a temporary moratarium for 90 days. How much more mendacious and shameless can you get, motherfuckers?
What's missing in the detail is that this the 27th straight month of Y-o-Y (year-on-year) declines for the Boston area?
Let's rephrase that again.
Prices have dropped 27 straight months in a row.
The drop is attributed to a state law that took effect May 1 giving struggling homeowners a bit of breathing room. The so-called right-to-cure law created a 90-day period in which homeowners can "cure" mortgage delinquencies by catching up on payments or finding a buyer.
There were just 350 new cases brought by lenders against delinquent homeowners last month, compared with 2,308 in June 2007.
The number of foreclosure proceedings initiated in Massachusetts plummeted in June, a sign that a new state law delaying property takings is working.
Yeah, right. It's really working.
This is just so fuckin' shameless it's hard to endure.
Yeah, sure, report on the 89th day that things are great after a law puts a temporary moratarium for 90 days. How much more mendacious and shameless can you get, motherfuckers?
What's missing in the detail is that this the 27th straight month of Y-o-Y (year-on-year) declines for the Boston area?
Let's rephrase that again.
Prices have dropped 27 straight months in a row.
Wednesday, July 30, 2008
Californication
From the Los Altos Town Crier: National home sales down, locally – up.
The average price of homes in June was $922,149, down from $970,702 in May.
The headline is absurd. They're trying to catch greater fools.
Besides, the EE is well aware that people have trouble conceptualizing large numbers like $900K.
Let's revisit the numbers again:
Drop = $970,702 - $922,149 = $48,553.
Number of days in June = 30.
Drop each day = $1,618.
That's a fuckload of money to be losing each bright summery California day in June, innit?!?
The average price of homes in June was $922,149, down from $970,702 in May.
The headline is absurd. They're trying to catch greater fools.
Besides, the EE is well aware that people have trouble conceptualizing large numbers like $900K.
Let's revisit the numbers again:
Drop = $970,702 - $922,149 = $48,553.
Number of days in June = 30.
Drop each day = $1,618.
That's a fuckload of money to be losing each bright summery California day in June, innit?!?
Sheeple Shearing
From Yahoo!: The Hidden Tax Traps in the Housing-Rescue Bill.
First, we have a $7,500 credit for new homeowners that's not really a credit. It's a loan. Those who qualify to receive this credit will receive 10% of the purchase price of their home -- up to $7,500, in the first year. Then they will repay the loan over a 15-year period, starting in the second year after the taxable year in which the house is purchased.
So it's not a tax-credit after all. It's just an interest-free loan that you have to pay back for the next 10 years.
I love this country. You get to shear the sheep all day long, and not only do they not object, but then afterwards, they even thank you for it.
"Thank you, sir! May I have another?"
First, we have a $7,500 credit for new homeowners that's not really a credit. It's a loan. Those who qualify to receive this credit will receive 10% of the purchase price of their home -- up to $7,500, in the first year. Then they will repay the loan over a 15-year period, starting in the second year after the taxable year in which the house is purchased.
So it's not a tax-credit after all. It's just an interest-free loan that you have to pay back for the next 10 years.
I love this country. You get to shear the sheep all day long, and not only do they not object, but then afterwards, they even thank you for it.
"Thank you, sir! May I have another?"
Tuesday, July 29, 2008
Friday, July 25, 2008
Hey-ho Hey-ho
From CBS: Housing Prices Drop By The Hour.
These numbers are sobering: If you are a homeowner reading this right now, when you wake up in the morning, the value of your house will have dropped about 45 dollars. And that's if you sleep just 8 hours.
If that isn't disturbing enough, wait until you see how much home prices have dropped in the past 2 years.
"I knew it was softening," said investor Philip Logue. " I just didn't realize how quickly, how fast the market was dropping."
When Logue put his Coral Gables house on the market, he thought for sure it would sell. He started at $650,000 in 2006. A couple of years later, and a $175,000 price drop. He's now renting the house out.
"I was really surprised," said Logue. " Especially at the end when we really dropped our pants down and I felt we were giving it away, and we still couldn't sell it."
After the pants down episode, a Joshua Tree was shoved up there!
These numbers are sobering: If you are a homeowner reading this right now, when you wake up in the morning, the value of your house will have dropped about 45 dollars. And that's if you sleep just 8 hours.
If that isn't disturbing enough, wait until you see how much home prices have dropped in the past 2 years.
"I knew it was softening," said investor Philip Logue. " I just didn't realize how quickly, how fast the market was dropping."
When Logue put his Coral Gables house on the market, he thought for sure it would sell. He started at $650,000 in 2006. A couple of years later, and a $175,000 price drop. He's now renting the house out.
"I was really surprised," said Logue. " Especially at the end when we really dropped our pants down and I felt we were giving it away, and we still couldn't sell it."
After the pants down episode, a Joshua Tree was shoved up there!
The Distortionist
From Realtor.org: Existing-Home Sales Down In June.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 2.6 percent to a seasonally adjusted annual rate1 of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5 percent lower than the 5.75 million-unit rate in June 2007.
Lawrence Yun, NAR chief economist, said first-time home buyers are critical to the health of the housing market.
Yun said there is a downward distortion in the price data.
BWAHAHAHAHAHAHHAHAHHAHAHHHHHHH!!!
They can't bring themselves to say that "prices are falling".
BWAHAHAHAHAHAHHAHAHHAHAHHHHHHH!!!
By this logic, an avalanche is a "downward distortion in skiing conditions".
A thunderstorm is a "downward distortion in sunny weather".
A genocide is a "downward distortion in human lives".
BWAHAHAHAHAHAHHAHAHHAHAHHHHHHH!!!
Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 2.6 percent to a seasonally adjusted annual rate1 of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5 percent lower than the 5.75 million-unit rate in June 2007.
Lawrence Yun, NAR chief economist, said first-time home buyers are critical to the health of the housing market.
Yun said there is a downward distortion in the price data.
BWAHAHAHAHAHAHHAHAHHAHAHHHHHHH!!!
They can't bring themselves to say that "prices are falling".
BWAHAHAHAHAHAHHAHAHHAHAHHHHHHH!!!
By this logic, an avalanche is a "downward distortion in skiing conditions".
A thunderstorm is a "downward distortion in sunny weather".
A genocide is a "downward distortion in human lives".
BWAHAHAHAHAHAHHAHAHHAHAHHHHHHH!!!
Thursday, July 24, 2008
The Joys of Home Pawn-ership
From the Boston Herald: Taunton woman commits suicide as home foreclosed.
TAUNTON - A 53-year-old wife and mother fatally shot herself soon after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead.
O’Berg also said a suicide note found next to Balderrama told her husband, John, and 24-year-old son to "take the (life) insurance money and pay for the house."
You weren't exactly the sharpest tool in the tool shed, were you, darling?
Life insurance doesn't pay off in case of suicide. Perhaps you should've read those documents just like you should've read the mortgage documents.
Police in Taunton said Carlene Balderrama used her husband’s high-powered rifle to kill herself Tuesday afternoon, after faxing the letter at 2:30 p.m.
Police did not immediately release the name of the mortgage company. O’Berg said Balderrama’s fax read, in part, "By the time you foreclose on my house I’ll be dead."
Aren't the joys of home ownership simply too delightful for words?
TAUNTON - A 53-year-old wife and mother fatally shot herself soon after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead.
O’Berg also said a suicide note found next to Balderrama told her husband, John, and 24-year-old son to "take the (life) insurance money and pay for the house."
You weren't exactly the sharpest tool in the tool shed, were you, darling?
Life insurance doesn't pay off in case of suicide. Perhaps you should've read those documents just like you should've read the mortgage documents.
Police in Taunton said Carlene Balderrama used her husband’s high-powered rifle to kill herself Tuesday afternoon, after faxing the letter at 2:30 p.m.
Police did not immediately release the name of the mortgage company. O’Berg said Balderrama’s fax read, in part, "By the time you foreclose on my house I’ll be dead."
Aren't the joys of home ownership simply too delightful for words?
Saturday, July 19, 2008
Dementia
From ABC News: People lined up to get mortgage help.
A few years ago, Gary Robinson bought this home in Antioch for about $700,000 using an interest-only loan and an adjustable rate that started at about four percent and has nearly doubled.
"My mortgage is at $5,000 dollars. It went from $2,000 to $5,000 and the house is worth 60 to 50 percent less," said Robinson.
"So what I'm here to do is ask Washington Mutual to seek a return on my investment," said Gary Robinson, an Antioch Homeowner.
Yeah, they're going to give you a return on your "investment". Any day now. Just you wait.
Dude, you're demented. You singlehandedly are the best argument in favor of issuing "breeding licenses".
A few years ago, Gary Robinson bought this home in Antioch for about $700,000 using an interest-only loan and an adjustable rate that started at about four percent and has nearly doubled.
"My mortgage is at $5,000 dollars. It went from $2,000 to $5,000 and the house is worth 60 to 50 percent less," said Robinson.
"So what I'm here to do is ask Washington Mutual to seek a return on my investment," said Gary Robinson, an Antioch Homeowner.
Yeah, they're going to give you a return on your "investment". Any day now. Just you wait.
Dude, you're demented. You singlehandedly are the best argument in favor of issuing "breeding licenses".
Monday, July 07, 2008
Everything beats the fuck out of Cleveland!
From Cleveland.com: Foreclosed homes depress prices throughout area.
The median home sale price in the city of Cleveland has dropped an astonishing 75 percent compared with the first six months of last year - from $62,000 to $15,500.
Guess it's all contained. Someone should send Paulson a memo.
Forty percent of single-family homes sold in Cleveland this year were purchased for less than $10,000.
Watch, out 1940's. Here we come!
The median home sale price in the city of Cleveland has dropped an astonishing 75 percent compared with the first six months of last year - from $62,000 to $15,500.
Guess it's all contained. Someone should send Paulson a memo.
Forty percent of single-family homes sold in Cleveland this year were purchased for less than $10,000.
Watch, out 1940's. Here we come!
Welcome to the Jungle
From Business Week: Upset homeowner shoots real estate agent in Mich.
A man upset about a property transaction fatally shot a real estate agent in the head during a meeting Tuesday morning in the victim's office, authorities said.
Troy VanderStelt, 34, was pronounced dead at 12:45 p.m. at Mercy Health Partners Hackley Campus in Muskegon, said Muskegon County Prosecutor Tony Tague.
A suspect was arrested a short time after the shooting at a home in nearby Norton Shores. Tague identified him as Robert Arnold Johnson, 73, of Roosevelt Park.
Tague said Johnson plotted to kill VanderStelt, took a .22-caliber semiautomatic handgun to the real estate agent's office, got him preoccupied with some paperwork in a conference room, stood next to him, pulled out the gun and shot him once in the temple.
A man upset about a property transaction fatally shot a real estate agent in the head during a meeting Tuesday morning in the victim's office, authorities said.
Troy VanderStelt, 34, was pronounced dead at 12:45 p.m. at Mercy Health Partners Hackley Campus in Muskegon, said Muskegon County Prosecutor Tony Tague.
A suspect was arrested a short time after the shooting at a home in nearby Norton Shores. Tague identified him as Robert Arnold Johnson, 73, of Roosevelt Park.
Tague said Johnson plotted to kill VanderStelt, took a .22-caliber semiautomatic handgun to the real estate agent's office, got him preoccupied with some paperwork in a conference room, stood next to him, pulled out the gun and shot him once in the temple.
Saturday, July 05, 2008
Flash 'n Sizzle
From the crappier Naples in Florida not the real one: Future uncertain for Third Street Plaza, some tenants say.
It’s a moving sale, the signs announce.
Reflections owner Larry Harris brought in his daughter and her boyfriend to help load the truck and haul the inventory into storage until he figures out a plan.
“We were so hard hit. Nobody was coming,” Harris said Wednesday morning while sitting in front of the shop he opened in November 2006.
On Gallery Row, the side that faces Broad Avenue, Gallery Matisse is gone, too.
In the past two years, The Good Life, a cookware store, left the Plaza; so did Bountiful, Artful Diva, Femme Fatale, Dominique Design Studio, Giggles and Glitz, Via Mediterranee, and ilSandalo on the inner courtyard.
Not THE Giggles and Glitz!
First the candle shops, then the pirate shops, and now the Artful Diva? And Giggles?
No way, man; no way.
It’s a moving sale, the signs announce.
Reflections owner Larry Harris brought in his daughter and her boyfriend to help load the truck and haul the inventory into storage until he figures out a plan.
“We were so hard hit. Nobody was coming,” Harris said Wednesday morning while sitting in front of the shop he opened in November 2006.
On Gallery Row, the side that faces Broad Avenue, Gallery Matisse is gone, too.
In the past two years, The Good Life, a cookware store, left the Plaza; so did Bountiful, Artful Diva, Femme Fatale, Dominique Design Studio, Giggles and Glitz, Via Mediterranee, and ilSandalo on the inner courtyard.
Not THE Giggles and Glitz!
First the candle shops, then the pirate shops, and now the Artful Diva? And Giggles?
No way, man; no way.
Wednesday, July 02, 2008
Scuppered
From the Bay Area: Fremont's pirate store to abandon ship.
FREMONT — All hands on deck! The Tri-City area's unique pirate store plans to abandon ship after nearly three years on the stormy retail seas.
Owner Don Hatcher, 47, said SeaWolf Trading Co. will raise anchor by Aug. 31, when the store's lease is up.
"We did great the first year, but we've been in the swamp for the past year, ever since the foreclosures started," he said. "We started to immediately see sales start slumping.
He said an effort to build community around the store by hosting a regular Guitar Hero video game night only attracted a small crowd, a result he attributed to gas prices.
Hatcher also was a vendor at last month's second Northern California Pirate Festival in Vallejo. He said plenty of people attended but seemed to spend less than at last year's fest.
"It's a rare place in Fremont, as opposed to the usual strip mall crap," Neu said. "We'll miss it."
C'mon kids, by now you've had enough practice. Can you say it?
HELOC!!!
He plans to sell off the décor, including an elaborate treasure cave, as well as the discounted wares — which this reporter succumbed to — before the store is sent to Davy Jones's locker.
YAAARRRRRRRRRRRRRRRRRRRRRRRRRR!
FREMONT — All hands on deck! The Tri-City area's unique pirate store plans to abandon ship after nearly three years on the stormy retail seas.
Owner Don Hatcher, 47, said SeaWolf Trading Co. will raise anchor by Aug. 31, when the store's lease is up.
"We did great the first year, but we've been in the swamp for the past year, ever since the foreclosures started," he said. "We started to immediately see sales start slumping.
He said an effort to build community around the store by hosting a regular Guitar Hero video game night only attracted a small crowd, a result he attributed to gas prices.
Hatcher also was a vendor at last month's second Northern California Pirate Festival in Vallejo. He said plenty of people attended but seemed to spend less than at last year's fest.
"It's a rare place in Fremont, as opposed to the usual strip mall crap," Neu said. "We'll miss it."
C'mon kids, by now you've had enough practice. Can you say it?
HELOC!!!
He plans to sell off the décor, including an elaborate treasure cave, as well as the discounted wares — which this reporter succumbed to — before the store is sent to Davy Jones's locker.
YAAARRRRRRRRRRRRRRRRRRRRRRRRRR!
Translation Engine
From Bloomberg: Paulson Calls for Process to Liquidate Failing Firms.
U.S. Treasury Secretary Henry Paulson called for regulatory changes that would allow financial firms to fail without threatening broader market stability.
``Two concerns underpin expectations of regulatory intervention to prevent a failure,'' Paulson said. ``They are that an institution may be too interconnected to fail or too big to fail. We must take steps to reduce the perception that this is so -- and that requires that we reduce the likelihood that it is so.''
We must "reduce the perception that an institution may be too big to fail".
Washington insiders (and others generally well-versed in the political process) will have no trouble interpreting this statement but for the general benefit, let me provide a translation:
"Currently, a large bank, and plenty of small banks are in too much deep doo-doo for us to bail out.
U.S. Treasury Secretary Henry Paulson called for regulatory changes that would allow financial firms to fail without threatening broader market stability.
``Two concerns underpin expectations of regulatory intervention to prevent a failure,'' Paulson said. ``They are that an institution may be too interconnected to fail or too big to fail. We must take steps to reduce the perception that this is so -- and that requires that we reduce the likelihood that it is so.''
We must "reduce the perception that an institution may be too big to fail".
Washington insiders (and others generally well-versed in the political process) will have no trouble interpreting this statement but for the general benefit, let me provide a translation:
"Currently, a large bank, and plenty of small banks are in too much deep doo-doo for us to bail out.
Monday, June 30, 2008
You show those Yankees!
From the Telegraph: British household debt is highest in history.
British households are now more indebted than those of any other major country in recorded history, it has emerged.
Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.
Michael Saunders of Citigroup warned that - at 173pc of household incomes - the debt burden is higher even than Japan's when it peaked in 1990, before more than a decade of deflation.
Let us review some basics:
Inflation is the expansion of money and credit. Deflation is the reduction of money and credit.
Can credit expand further in the UK? Possibly but unlikely.
What happens when debt is either paid back, or defaulted upon?
Thank you, that will be all.
British households are now more indebted than those of any other major country in recorded history, it has emerged.
Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.
Michael Saunders of Citigroup warned that - at 173pc of household incomes - the debt burden is higher even than Japan's when it peaked in 1990, before more than a decade of deflation.
Let us review some basics:
Inflation is the expansion of money and credit. Deflation is the reduction of money and credit.
Can credit expand further in the UK? Possibly but unlikely.
What happens when debt is either paid back, or defaulted upon?
Thank you, that will be all.
That Decoupling Hypothesis?
Not the Chindians. Not the Brazorussians.
The Amish.
From Ohio: Amish in Ohio feel pinch of higher gas prices.
They may use horses instead of autos for transportation, but the rising cost of gasoline is still pinching the wallets of members of an Amish community in southern Ohio.
Miller, a carpenter and horse breeder who bought Keim Family Market in Adams County last July, said several items have doubled in price from 2007 to 2008.
"The care and feeding of one horse, from $1,000 to $2,000," he said. "The cost of propane we use to run our refrigerators. Diesel fuel to run our coolers at the store and the big mixers in our bakery. The fuel bills are about $8,000 a month. Last year they were $4,000. ... It all adds up."
It has sparked widespread worry.
"It feels like a little red wagon going down the hill faster and faster," Yutzy said. "You know what's going to happen."
Even so, many Amish say they will rely on what they know.
The Amish.
From Ohio: Amish in Ohio feel pinch of higher gas prices.
They may use horses instead of autos for transportation, but the rising cost of gasoline is still pinching the wallets of members of an Amish community in southern Ohio.
Miller, a carpenter and horse breeder who bought Keim Family Market in Adams County last July, said several items have doubled in price from 2007 to 2008.
"The care and feeding of one horse, from $1,000 to $2,000," he said. "The cost of propane we use to run our refrigerators. Diesel fuel to run our coolers at the store and the big mixers in our bakery. The fuel bills are about $8,000 a month. Last year they were $4,000. ... It all adds up."
It has sparked widespread worry.
"It feels like a little red wagon going down the hill faster and faster," Yutzy said. "You know what's going to happen."
Even so, many Amish say they will rely on what they know.
Sunday, June 29, 2008
Pawn Me Up, Pawn Me Down
From California: Year of the hock .
Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard.
Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County
But the credit crunch and economic turmoil is sending bigger fish their way.
Irene Longoria, store manager of the Oceanside Gems N’ Loans, said her shop is pricing all kinds of jewelry items as customers seek collateral for loans, or sell them outright. Belly rings, tongue rings, single earrings, dental grills and gold teeth are being brought in.
New customers are finding out a lot more than they bargained for at their local pawnshop. Martin said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.
“She said, ‘It’s a diamond,’ and I said, ‘It’s not,’” Martin recalled. “Then she said, ‘That son of a b… !’”
One man came straight from the dentist, with gauze still in his mouth and blood on the tooth, she said.
“We just about screamed,” Longoria said. “I told him he should have cleaned it first. We’re seeing more and more dental scrap. We now have latex gloves to handle some of the things coming in.”
Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard.
Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County
But the credit crunch and economic turmoil is sending bigger fish their way.
Irene Longoria, store manager of the Oceanside Gems N’ Loans, said her shop is pricing all kinds of jewelry items as customers seek collateral for loans, or sell them outright. Belly rings, tongue rings, single earrings, dental grills and gold teeth are being brought in.
New customers are finding out a lot more than they bargained for at their local pawnshop. Martin said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.
“She said, ‘It’s a diamond,’ and I said, ‘It’s not,’” Martin recalled. “Then she said, ‘That son of a b… !’”
One man came straight from the dentist, with gauze still in his mouth and blood on the tooth, she said.
“We just about screamed,” Longoria said. “I told him he should have cleaned it first. We’re seeing more and more dental scrap. We now have latex gloves to handle some of the things coming in.”
How do you say puta in English?
From MSN: Single mom selling Fla. home, heart online.
After a year of trying to sell her four-bedroom home and eight years of singledom, Deven Trabosh is offering her South Florida home and a shot at marrying her on the Internet.
"I figured let's combine the ad because I'm looking for love and I'm looking to sell the house," said Trabosh, who teeters around the nearly 2,000 square-foot house in patent leather heels.
And now, you gave your name out so that plan is working out real well.
Ideally, Trabosh hopes a European man will close the deal and says she's willing to move overseas.
Because only those furriners are so stupid.
Her 21-year-old daughter Haley says she just wants her mom to find love.
How about a two-for-one combo deal?
After a year of trying to sell her four-bedroom home and eight years of singledom, Deven Trabosh is offering her South Florida home and a shot at marrying her on the Internet.
"I figured let's combine the ad because I'm looking for love and I'm looking to sell the house," said Trabosh, who teeters around the nearly 2,000 square-foot house in patent leather heels.
Pimp me"I'm struggling...I don't want to lose my house and I want to find somebody," said Trabosh, who changed her name in the ad to Traboscia to keep people from finding her in the phone book.
Pimp me
Pimp me, bay-bee
Till I lose control
Pimp me with your love
Till I lose control
And now, you gave your name out so that plan is working out real well.
Ideally, Trabosh hopes a European man will close the deal and says she's willing to move overseas.
Because only those furriners are so stupid.
Her 21-year-old daughter Haley says she just wants her mom to find love.
How about a two-for-one combo deal?
Academics Reveal the Obvious
From CEPR, a pretty-good academic paper: The Housing Crash and the Retirement Prospects of Late Baby Boomers.
This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, for the cohort that will be between the ages of 45-54 in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009. Finally, the projections show that the renters within the same wealth quintiles in 2004 will have more wealth in 2009 than homeowners in all three scenarios.
This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, for the cohort that will be between the ages of 45-54 in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009. Finally, the projections show that the renters within the same wealth quintiles in 2004 will have more wealth in 2009 than homeowners in all three scenarios.
Saturday, June 28, 2008
Relativity
From the Mississippi Clarion Ledger: Miss. mortgage bust unlikely.
The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008.
"(But now) be glad you're not in Florida, because that's a disaster," said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.
So 10% of foreclosures are normal?
Aah, wondrous economists who've never held a real job.
The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008.
"(But now) be glad you're not in Florida, because that's a disaster," said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.
So 10% of foreclosures are normal?
Aah, wondrous economists who've never held a real job.
Friday, June 27, 2008
Containment : A Timeline
February 21, 2007: "I'm waking up less at night than I was [over the slowdown in housing]. So far, there's been remarkably little effect [from housing] on the rest of the economy."
- San Francisco Fed President Janet Yellen (Source: MarketWatch)
March 28, 2007: "At this juncture...the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."
- Federal Reserve Chairman Ben Bernanke (Source: AFX News)
April 5, 2007: "The damage from the subprime market has been largely contained."
- Dallas Fed President Richard Fisher (Source: Dallas News)
April 20, 2007: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."
- US Treasury Secretary Henry Paulson (Source: Reuters)
April 20, 2007: "We do see some stabilization of demand in the housing market ... there is some indication that the market could be bottoming out."
- Federal Reserve Governor Frederic Mishkin (Source: Reuters)
Nothing to see here, folks. It's all contained.
- San Francisco Fed President Janet Yellen (Source: MarketWatch)
March 28, 2007: "At this juncture...the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."
- Federal Reserve Chairman Ben Bernanke (Source: AFX News)
April 5, 2007: "The damage from the subprime market has been largely contained."
- Dallas Fed President Richard Fisher (Source: Dallas News)
April 20, 2007: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."
- US Treasury Secretary Henry Paulson (Source: Reuters)
April 20, 2007: "We do see some stabilization of demand in the housing market ... there is some indication that the market could be bottoming out."
- Federal Reserve Governor Frederic Mishkin (Source: Reuters)
Nothing to see here, folks. It's all contained.
Tuesday, June 24, 2008
Gay Marriage & Falling Knives
From US News & World Report: The Gay Marriage Home-Buying Discount.
From wellsfordrealty.com (fist pound, Zillow Blog):
They have forgotten just one thing. Homos can do math in roughly the same proportion as the rest of the population so if they haven't been suckered into the RE market by now, this abomination won't exactly make them "catch a falling knife".
Or to translate it in terms that even the dumbest California Realtor™ can understand:
BWAHAHAHAHHAHAHAHHHHHHHHHHHHHHH!!!
From wellsfordrealty.com (fist pound, Zillow Blog):
Whether choosing to make California their primary or secondary residence by buying a home in San Diego, domestic partners seeking to take advantage of the new Same Sex Marriage Law in California can now get their wedding reception or a honeymoon getaway compliments [of] Wellsford Realty. With the purchase of a condo or home using their services, Wellsford Realty is rebating 33% back on the commission which can be used to celebrate their wedding day or plan that long awaited perfect honeymoon.Wow, this latest ploy is quite desperate. It's also awesomely hilarious.
They have forgotten just one thing. Homos can do math in roughly the same proportion as the rest of the population so if they haven't been suckered into the RE market by now, this abomination won't exactly make them "catch a falling knife".
Or to translate it in terms that even the dumbest California Realtor™ can understand:
BWAHAHAHAHHAHAHAHHHHHHHHHHHHHHH!!!
Sunday, June 22, 2008
Slogan Shouting on Sunday
From the North Country Times: High-end neighborhoods also suffering.
Several homes in one of North County's ritzier regions, the San Diego neighborhoods of Rancho Penasquitos and Rancho Bernardo, have tumbled 30 percent in value.
Further, foreclosures are rising, leading some real estate agents to believe the depreciation will spread and worsen.
The two neighborhoods were particularly desirable communities during the housing boom, boasting a central location, with a short commute to either the ocean or downtown San Diego, strong schools and a bevy of brand-new, 4,000 square-foot homes with $1.5 million price tags.
Now, some of those homes are selling for $1 million, if the homeowner is lucky.
"All across the board, the market's been hit," said Eric Elegado, a real estate agent based in Mira Mesa. "Homes that sold for a million, they're going for $600,000."
The drop in prices has drilled gaping holes into a theory that the higher-end market could be immune to the housing recession.
Oooh, that stinger oughta leave a mark.
But, but, but, it's SLOGAN time.
The government made me do it.
No, that doesn't quite work.
It's ALWAYS a good time to buy a house.
Is it now?
The Guvernator will help.
The Goober-nator is a girly-man. He vill do nuzhing, and you vill like it.
McSame will lower taxes and save the market.
No, no, no, that doesn't work either.
Yomama will send checks to everyone, and save the day.
Not quite working out either.
Shaq is coming.
Shaq-A-Laqa-Boom Boom, baby! It's gone Boom-Boom.
The Boomers are coming.
The Bust is already here.
It's different here.
It sure as hell is.
Thank you, thank you, the EE will be here all week.
Several homes in one of North County's ritzier regions, the San Diego neighborhoods of Rancho Penasquitos and Rancho Bernardo, have tumbled 30 percent in value.
Further, foreclosures are rising, leading some real estate agents to believe the depreciation will spread and worsen.
The two neighborhoods were particularly desirable communities during the housing boom, boasting a central location, with a short commute to either the ocean or downtown San Diego, strong schools and a bevy of brand-new, 4,000 square-foot homes with $1.5 million price tags.
Now, some of those homes are selling for $1 million, if the homeowner is lucky.
"All across the board, the market's been hit," said Eric Elegado, a real estate agent based in Mira Mesa. "Homes that sold for a million, they're going for $600,000."
The drop in prices has drilled gaping holes into a theory that the higher-end market could be immune to the housing recession.
Oooh, that stinger oughta leave a mark.
But, but, but, it's SLOGAN time.
The government made me do it.
No, that doesn't quite work.
It's ALWAYS a good time to buy a house.
Is it now?
The Guvernator will help.
The Goober-nator is a girly-man. He vill do nuzhing, and you vill like it.
McSame will lower taxes and save the market.
No, no, no, that doesn't work either.
Yomama will send checks to everyone, and save the day.
Not quite working out either.
Shaq is coming.
Shaq-A-Laqa-Boom Boom, baby! It's gone Boom-Boom.
The Boomers are coming.
The Bust is already here.
It's different here.
It sure as hell is.
Thank you, thank you, the EE will be here all week.
Saturday, June 21, 2008
Come back, Samuel Langhorne Clemens!
From the Dallas News: Eight arrested, three others indicted in North Texas mortgage fraud.
One of the defendants is Eric Farrington, 55, of Irving, a real estate investor, motivational speaker and convicted felon.
RE investor, motivational speaker, and convicted felon?
Or in Mark Twain's words, "... but the journalists seem to be repeating themselves."
One of the defendants is Eric Farrington, 55, of Irving, a real estate investor, motivational speaker and convicted felon.
RE investor, motivational speaker, and convicted felon?
Or in Mark Twain's words, "... but the journalists seem to be repeating themselves."
Thursday, June 19, 2008
Who's Divine Now?
From the Sun Sentinel in Florida: Thousands in Orlando want Shaq to help with mortgages.
Shaq is used to facing down the NBA's most intimidating players, but is Orlando's mortgage mess too much for him?
A week after Shaquille O'Neal told the Orlando Sentinel that he's working on a plan to rescue Central Floridians facing foreclosure, he has learned just how widespread the problem is.
People like Belinda Petroccia.
"There are so many shysters out there who take advantage of you financially and emotionally," said Petroccia, who saw her income dip with the tumbling real-estate market and now faces foreclosure on her Wedgefield home in east Orange County. "When I saw this, I thought, 'That's what I need -- maybe Shaq can help.'"
Wow, the tone of her wistful prayer is quite something, huh?
We've seen sweet plaintive missives to the Sweet Baby Jeebus, St. Joseph, Hanuman the Mighty Magic Monkey, Thor, Ra, and ... now, Shaq?
Welcome to the Pantheon of the Gods, Shaq, baby!
Shaq is used to facing down the NBA's most intimidating players, but is Orlando's mortgage mess too much for him?
A week after Shaquille O'Neal told the Orlando Sentinel that he's working on a plan to rescue Central Floridians facing foreclosure, he has learned just how widespread the problem is.
People like Belinda Petroccia.
"There are so many shysters out there who take advantage of you financially and emotionally," said Petroccia, who saw her income dip with the tumbling real-estate market and now faces foreclosure on her Wedgefield home in east Orange County. "When I saw this, I thought, 'That's what I need -- maybe Shaq can help.'"
Wow, the tone of her wistful prayer is quite something, huh?
We've seen sweet plaintive missives to the Sweet Baby Jeebus, St. Joseph, Hanuman the Mighty Magic Monkey, Thor, Ra, and ... now, Shaq?
Welcome to the Pantheon of the Gods, Shaq, baby!
Tuesday, June 17, 2008
Bashing Boredom
Top ten phrases inducing boredom in the EE related to the housing bubble.
10. "it's all contained".
9. "do something urgent to address the problem"
8. "new urbanism"
7. "it's a buyer's market"
6. "the Baby Boomers are moving here"
5. "it's different here"
4. "we didn't know what we were getting into"
3. "we bought it for the children"
2. "foreclosure due to illness"
and the top candidate:
1. "dream house"
Boring. NEXT!!!
10. "it's all contained".
9. "do something urgent to address the problem"
8. "new urbanism"
7. "it's a buyer's market"
6. "the Baby Boomers are moving here"
5. "it's different here"
4. "we didn't know what we were getting into"
3. "we bought it for the children"
2. "foreclosure due to illness"
and the top candidate:
1. "dream house"
Boring. NEXT!!!
Monday, June 16, 2008
Deploying Deflating Double-D's
From CNN: Is America's suburban dream collapsing into a nightmare?
When Shaun Yandell proposed to his long-time girlfriend Gina Marasco on the doorstep of their new home in the sunny suburb of Elk Grove, California, four years ago, he never imagined things would get this bad. But they did, and it happened almost overnight.
"It is going to be heartbreak," Yandell told CNN. "But we are hanging on."
Yandell's marriage isn't falling apart: his neighborhood is.
In Elk Grove, some homeowners not only cut their own grass but also trim the yards of vacant homes on their streets, hoping to deter gangs and criminals from moving in.
Other residents discovered that with some of the empty houses, it wasn't what was growing outside that was the problem. Susan McDonald, president of a local neighborhood association aimed at saving the lost suburban paradise, told CNN that around her culdesac, federal agents recently busted several pot homes with vast crops of marijuana growing from floor to ceiling.
And only a couple of weeks ago, Yandell said he overheard a group of teenagers gathered on the street outside his back patio, talking about a robbery they had just committed.
When they lit a street sign on fire, Yandell called the cops.
In Shaun Yandell's neighborhood, this has already started to happen. Houses once filled with single families are now rented out by low-income tenants. Yandell speculates that they're coming from nearby Sacramento, where the downtown is undergoing substantial gentrification, or perhaps from some other area where prices have gotten too high. He isn't really sure.
But one thing Yandell is sure about is that he isn't going to leave his sunny suburban neighborhood unless he has to, and if that happens, he says he would only want to move to another one just like it.
"It's the American dream, you know," he said. "The American dream."
Welp, y'all all heard it here first a long time ago.
Take away those double-D's, and whatdya have left?
Yeah, yeah, yeah, bitches.
"It's the American ream, you know," he said. "The American Ream."
When Shaun Yandell proposed to his long-time girlfriend Gina Marasco on the doorstep of their new home in the sunny suburb of Elk Grove, California, four years ago, he never imagined things would get this bad. But they did, and it happened almost overnight.
"It is going to be heartbreak," Yandell told CNN. "But we are hanging on."
Yandell's marriage isn't falling apart: his neighborhood is.
In Elk Grove, some homeowners not only cut their own grass but also trim the yards of vacant homes on their streets, hoping to deter gangs and criminals from moving in.
Other residents discovered that with some of the empty houses, it wasn't what was growing outside that was the problem. Susan McDonald, president of a local neighborhood association aimed at saving the lost suburban paradise, told CNN that around her culdesac, federal agents recently busted several pot homes with vast crops of marijuana growing from floor to ceiling.
And only a couple of weeks ago, Yandell said he overheard a group of teenagers gathered on the street outside his back patio, talking about a robbery they had just committed.
When they lit a street sign on fire, Yandell called the cops.
In Shaun Yandell's neighborhood, this has already started to happen. Houses once filled with single families are now rented out by low-income tenants. Yandell speculates that they're coming from nearby Sacramento, where the downtown is undergoing substantial gentrification, or perhaps from some other area where prices have gotten too high. He isn't really sure.
But one thing Yandell is sure about is that he isn't going to leave his sunny suburban neighborhood unless he has to, and if that happens, he says he would only want to move to another one just like it.
"It's the American dream, you know," he said. "The American dream."
Welp, y'all all heard it here first a long time ago.
Take away those double-D's, and whatdya have left?
Yeah, yeah, yeah, bitches.
Ya know it, ya know it.
Ya always wanna show it...
"It's the American ream, you know," he said. "The American Ream."
Thursday, June 12, 2008
WOOOOOOOOOOOOO!!! Party On, Garth!
From the Press Enterprise: Inland foreclosure auctions draw more sales as lenders get more flexible about prices.
Investors bought more foreclosed homes on the courthouse steps in California last month, reflecting a growing willingness of lenders to accept more deeply discounted bids, ForeclosureRadar, a Web site that tacks foreclosure auctions, reported Wednesday.
It was the first significant surge in investor activity at trustee sales since Foreclosure-Radar began tracking them in 2006, said its founder, Sean O'Toole.
Despite more than 97 percent of the foreclosed properties being returned to the lender after auction, there was a 34.6 percent increase in properties purchased by third parties, which most likely were investors, the report said.
Percentage returned (failed auction) = 97%
Percentage sold = 100 - 97 = 3%
This was a 34.6% increase from previous auctions.
Percentage previously sold = 3/1.346 = 2.23%
Percentage previously returned = 100 - 2.23 = 97.77%
You've gone from 97.77% failure to 97% failure.
Fuckin' A, Daddy-O!!! Crack open the Veuve Cliquot!
Investors bought more foreclosed homes on the courthouse steps in California last month, reflecting a growing willingness of lenders to accept more deeply discounted bids, ForeclosureRadar, a Web site that tacks foreclosure auctions, reported Wednesday.
It was the first significant surge in investor activity at trustee sales since Foreclosure-Radar began tracking them in 2006, said its founder, Sean O'Toole.
Despite more than 97 percent of the foreclosed properties being returned to the lender after auction, there was a 34.6 percent increase in properties purchased by third parties, which most likely were investors, the report said.
Percentage returned (failed auction) = 97%
Percentage sold = 100 - 97 = 3%
This was a 34.6% increase from previous auctions.
Percentage previously sold = 3/1.346 = 2.23%
Percentage previously returned = 100 - 2.23 = 97.77%
You've gone from 97.77% failure to 97% failure.
Fuckin' A, Daddy-O!!! Crack open the Veuve Cliquot!
Thursday, June 05, 2008
Camp Granada
From the LA Times: Hard lessons on getting home loans with no money down.
Two years ago, Patricia Prado worried that she would never be able to buy a house.
Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.
A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans -- one for 80% of the purchase price and another for the remaining 20%.
Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.
She acknowledged that she stated her monthly income as $7,500 on the loan application -- nearly double what she was actually earning in her job as a clerk at a food processing company and a second part-time job.
With their income down after her husband's layoff, Prado said they made their last three house payments with a credit card. In February, they stopped payments altogether.
Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened.
"They pick up on a lot of what's going on," she said. "They say, 'Why are you fighting with Dad? Why are we moving; we already have a house?'"
Dear Children,
Mommy and Daddy are complete and utter fuckups. One might even say that they are some of the biggest fuckups in town.
They bought a house they couldn't afford, and they were speculating even though they claim they're not.
Now, that they've got their financial clock completely and utterly cleaned, they're lying to you because they can't handle the truth themselves.
Love,
Your Friendly Neighborhood Banker.
Two years ago, Patricia Prado worried that she would never be able to buy a house.
Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.
A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans -- one for 80% of the purchase price and another for the remaining 20%.
Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.
She acknowledged that she stated her monthly income as $7,500 on the loan application -- nearly double what she was actually earning in her job as a clerk at a food processing company and a second part-time job.
With their income down after her husband's layoff, Prado said they made their last three house payments with a credit card. In February, they stopped payments altogether.
Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened.
"They pick up on a lot of what's going on," she said. "They say, 'Why are you fighting with Dad? Why are we moving; we already have a house?'"
Dear Children,
Mommy and Daddy are complete and utter fuckups. One might even say that they are some of the biggest fuckups in town.
They bought a house they couldn't afford, and they were speculating even though they claim they're not.
Now, that they've got their financial clock completely and utterly cleaned, they're lying to you because they can't handle the truth themselves.
Love,
Your Friendly Neighborhood Banker.
That Deflating Feeling
From Yahoo!: Household net worth drops by $1.7 trillion.
Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings.
Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level on record.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.
Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings.
Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level on record.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.
Wednesday, June 04, 2008
"Heeeeeeeeeeeeeeere's Foreclosure!"
The Wall Street Journal reports: Ed McMahon May Lose Beverly Hills Home.
Ed McMahon, the longtime sidekick to television star Johnny Carson, faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp.
ReconTrust, a unit of mortgage lender Countrywide Financial, on Feb. 28 filed a notice of default on a $4.8 million Countrywide loan backed by Mr. McMahon's home. The notice was filed with the Los Angeles County Recorder's Office but hasn't previously come to light. According to the filing, Mr. McMahon was then about $644,000 in arrears on the loan. It isn't clear whether Countrywide still owns the loan or is acting on behalf of investors who acquired it. Public records also show that Mr. McMahon had a separate home-equity line of credit from Countrywide of up to $300,000 secured by the same house.
Ed McMahon, the longtime sidekick to television star Johnny Carson, faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp.
ReconTrust, a unit of mortgage lender Countrywide Financial, on Feb. 28 filed a notice of default on a $4.8 million Countrywide loan backed by Mr. McMahon's home. The notice was filed with the Los Angeles County Recorder's Office but hasn't previously come to light. According to the filing, Mr. McMahon was then about $644,000 in arrears on the loan. It isn't clear whether Countrywide still owns the loan or is acting on behalf of investors who acquired it. Public records also show that Mr. McMahon had a separate home-equity line of credit from Countrywide of up to $300,000 secured by the same house.
Tuesday, June 03, 2008
Sunday, June 01, 2008
Sunday School
From Business Week: The Lowdown on Libor.
Financial institutions the world over use Libor—short for the London interbank offered rate—to set the interest paid on everything from mortgage loans to complex financial instruments.
What's the recent controversy about?
With the aftereffects of the credit crunch lingering, a high Libor, especially relative to U.S. Treasuries, would set off alarm bells that capital-starved financial institutions are still at risk for further meltdowns, says market research firm Global Insight's Brian Bethune. Some industry insiders have accused the banks of quoting falsely low rates for the surveys in order to force down Libor and paint a rosier picture of the lending environment. It's more likely that the banks are simply reporting their best rates, not the rate at which they're most commonly lending, Bethune says. The BBA is conducting what it calls "a regular review," with results due May 30. In the meantime, proposals have been offered to ensure Libor's accuracy, from surveying more banks to ditching Libor in favor of an alternative rate.
The EE isn't quite sure when LIBOR turned into Libor (maybe the limp-wrist journalists have trouble writing capital letters?) but since he was, many moons ago, educated in a Catholic school, he will explain this supposed "paradox" in the form of a "parable".
"If the EE sold you the first burrito for $0.01, and all subsequent ones for $1,000, and you ABSOLUTELY had to eat 4 burritos or die, would you say that the burrito cost you $0.01, or was the true cost closer to $750?"
Financial institutions the world over use Libor—short for the London interbank offered rate—to set the interest paid on everything from mortgage loans to complex financial instruments.
What's the recent controversy about?
With the aftereffects of the credit crunch lingering, a high Libor, especially relative to U.S. Treasuries, would set off alarm bells that capital-starved financial institutions are still at risk for further meltdowns, says market research firm Global Insight's Brian Bethune. Some industry insiders have accused the banks of quoting falsely low rates for the surveys in order to force down Libor and paint a rosier picture of the lending environment. It's more likely that the banks are simply reporting their best rates, not the rate at which they're most commonly lending, Bethune says. The BBA is conducting what it calls "a regular review," with results due May 30. In the meantime, proposals have been offered to ensure Libor's accuracy, from surveying more banks to ditching Libor in favor of an alternative rate.
The EE isn't quite sure when LIBOR turned into Libor (maybe the limp-wrist journalists have trouble writing capital letters?) but since he was, many moons ago, educated in a Catholic school, he will explain this supposed "paradox" in the form of a "parable".
"If the EE sold you the first burrito for $0.01, and all subsequent ones for $1,000, and you ABSOLUTELY had to eat 4 burritos or die, would you say that the burrito cost you $0.01, or was the true cost closer to $750?"
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