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Wednesday, April 30, 2008

Housing/Subprime/Credit Roundup — April 30, 2008

Items of Interest:

Consumer Confidence Index at -41, April 29, 2008ABC News:
Confidence at Another 2008 Low -- Consumer confidence reached another new low for the year this week, moving within sight of its lowest in 22 years of weekly ABC News surveys.

The ABC News Consumer Comfort Index stands at -41 on its scale of +100 to -100, its second week at or below -40 – a level not seen since July 1993. It's far below its long-term average, -10, and within striking distance of its record low, -50 in early 1992.

Among other troubles, this week 78 percent of Americans say it's a bad time to spend money on things they want and need, the most since July 1992 and 2 points from the record. That may not bode well for the government's economic stimulus...

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Tuesday, April 29, 2008

Housing/Subprime/Credit Roundup — April 29, 2008

Items of interest:

Bloomberg:
S&P/Case-Shiller U.S. Home-Price Index Fell 12.7% -- Home prices in 20 U.S. metropolitan areas fell in February by the most on record, pointing to an imbalance between supply and demand that shows no sign of ending.

The S&P/Case-Shiller home-price index dropped 12.7 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.

Prices will probably keep sliding as foreclosures push even more properties onto the market just as stricter lending rules limit the number of qualified buyers. Shrinking home values have contributed to a slowdown in consumer spending that may already have tipped the economy into a recession...

Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for February, led by a 23 percent slump in Las Vegas and a 22 percent decline in Miami. Charlotte was the only area showing a gain with a 1.5 percent increase.

Compared with January, homes in all 20 areas covered dropped in value...

Case Shiller U.S. Home-Price Index Fell 12.7% in February 2008

Standard & Poors:
Steep Declines in Home Prices Continued [pdf]

CNN Money:
Housing prices post record declines
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CNBC / Reuters:
Home Foreclosures Jump for 7th Straight Quarter -- U.S. home foreclosure filings jumped 23 percent in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said Tuesday.

One of every 194 households received a notice of default, auction sale or bank repossession between January and March, for the seventh straight quarter of rising foreclosure activity, RealtyTrac said.Foreclosure filings were far-reaching, rising on an annual basis in 46 states and in 90 of the 100 largest metropolitan areas, to a total of 649,917 properties. The first quarter filings surged 112 percent from the same period last year...
Home Foreclosures And Banks: Here's A Real Disturbing Number - Realty Check / CNBC
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Monday, April 28, 2008

Housing/Subprime/Credit Roundup — April 28, 2008

Items of Interest:

Chicago Sun-Times:
Obama's subprime pal -- White House hopeful Barack Obama talks a lot on the campaign trail about how failing banks have used subprime loans to victimize customers....

One of the banks that went under after making a lot of subprime loans -- leaving 1,400 of its customers without part of their savings -- was Chicago's Superior Bank.

At the helm of Superior Bank at least some of the time was Obama's national finance chairwoman, Penny Pritzker, an heiress to the Pritzker fortune...

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Wall Street Journal:
Forget the Teardown, The 'Unbuild' -- Is Eco-Friendly But More Costly

When people think about someone tearing down a house, they probably imagine a dramatic scene beginning with a wrecking ball and ending with a pile of debris.

But times have changed. It's now possible to carefully disassemble a home, piece by piece, and use the parts for a new house and/or donate them for reuse elsewhere. Whatever is donated can be deducted from income tax. That's the route we chose for our teardown, which began last week...
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David C Nelson / Minyanville:
Is Tony Soprano Running American Express? -- Like most I have an Amex Blue card and recently I failed to pay my bill on time. I got a little busy so don’t spread the word or the credit card police will be knocking on my door. I noticed on my bill that the interest payment seemed a little higher than normal so I did the calculation. YIKES! To my horror I found that the rate had jumped to 27.99%. I thought I borrowed money from American Express not Tony Soprano.

I called customer service whose reps were very polite but told me that you jump to the “default” rate when late on a payment...
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Friday, April 25, 2008

Housing/Subprime/Credit Roundup — April 25, 2008

Items of Interest:

Mohamed El-Erian, FT.com,
co-chief executive and co-chief investment officer of Pimco:
Why this crisis is still far from finished -- During the past few weeks we have seen a growing number of market participants predict an end to the dislocations that erupted last summer and claimed victims throughout the financial system and beyond. While their predictions are understandable, they are premature. The dynamics driving the disruptions are morphing and may again move ahead of both the market and policy responses.

The optimistic view is based on two distinct elements. First, that the de­leveraging process is reaching its natural end as valuations stabilise and institutions come clean about their losses and raise capital; second, that a series of previously unthinkable policy responses have been effective in restoring liquidity to the financial system...

The market's worst is yet to come - Bill Fleckenstein
Everything’s Coming up Rosy! - Herb Greenburg
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NY Times:
Pain of Foreclosures Spreads to the Affluent -- This wooded town of roughly 60,000 on Long Island Sound — home to dozens of hedge funds, many millionaires and more than a few billionaires — is one of the wealthiest enclaves in the country. But even Greenwich is not immune to the wave of home foreclosures sweeping the nation.

On Stanwich Road, for example, a house worth $2.6 million is close to going on the block. On Hettiefred Road, the owner of a 2,720-square-foot, four-bedroom colonial featuring a luxury kitchen, swimming pool and tennis court, has been threatened with foreclosure for months. Several dozen other owners in Greenwich have received foreclosure notices this year...
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Thursday, April 24, 2008

Housing/Subprime/Credit Roundup — April 24, 2008

Items of Interest:

Bloomberg:
New-Home Sales in the US Plunge More Than Forecast -- Purchases of new homes in the US plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to hold off...

The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades...

MarketWatch: New-home sales plunge 8.5% to 17-year low in March
---
NY Times Magazine:
Triple-A Failure -- Mortgage volume surged; in 2006, it topped $2.5 trillion. Also, many more mortgages were issued to risky subprime borrowers. Almost all of those subprime loans ended up in securitized pools; indeed, the reason banks were willing to issue so many risky loans is that they could fob them off on Wall Street.

But who was evaluating these securities? Who was passing judgment on the quality of the mortgages, on the equity behind them and on myriad other investment considerations? Certainly not the investors. They relied on a credit rating.

Thus the agencies became the de facto watchdog over the mortgage industry. In a practical sense, it was Moody’s and Standard & Poor’s that set the credit standards that determined which loans Wall Street could repackage and, ultimately, which borrowers would qualify. Effectively, they did the job that was expected of banks and government regulators. And today, they are a central culprit in the mortgage bust, in which the total loss has been projected at $250 billion and possibly much more...
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The Big Picture:
Volatile Real Estate Market Driving Web Traffic --
Marketwatch video: Zillow upgrades their algo, claiming a 12% improvement. They also are allowing homeowners to improve and upgrade data about their houses:

----
Wall Street Journal:
Drinks? DJs? See Realtor Inside -- Despite sluggish home sales in most of the country, some Realtors and developers are sinking money into lavish open-house parties that they hope will draw crowds -- and an eventual buyer...

The Brighter Side of Housing -- The Wall Street Journal's quarterly survey of housing-market conditions in 28 major metro areas points to continued downward pressure on prices in much of the country...

Advice on Selling a Home Without a Real-Estate Agent -- June Fletcher has tips for a Minnesota home owner who is selling a condo in a resort area on her own...

Four at Four: Rice, Beer and UPS -- Food-related protests have been occurring worldwide, and in the U.S. now major discounters are seeing runs on products, particularly rice, as both Sam’s Club, the Wal-Mart Stores Inc. operated discounter, and Costco Wholesale Corp. have seen shelves cleaned out of rice as consumers worry about higher prices.

“It is just unreal what can happen when we get fear being spread as it is now, and when the general populace goes out and starts doing idiotic things like lining up at the Sam’s Club and the Costco and not buying one bag but buying 10 bags just because they might run out,” says Neauman Coleman, introducing broker at Neauman Coleman & Co. in Brinkley, Ark. Sam’s Club has decided to put limits (or rations, if you will) on the amount of 20-pound bags customers can purchase every week, and Costco earlier this week said it was considering such limits as well, which in a way is just as panicky a response...
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Wednesday, April 23, 2008

Housing/Subprime/Credit Roundup — April 23, 2008

Items of Interest:

Wall Street Journal:
Congress Hammers Out Breaks for Homeowners -- Congress has gone from considering ways to collect more taxes from homeowners, to dreaming up new tax breaks for home buyers. So who is likely to benefit from tax changes in the pipeline? And for how long? ...

----
Financial Times:
US regulator fears wave of bank failures -- US bank failures could rise above “historical norms” as a weakening economy puts pressure on badly underwritten loans, particularly in commercial real estate, according to a bank regulator.

In an interview with the Financial Times, John Dugan, who oversees about 1,700 national banks as comptroller of the currency, said the growing problems for lenders follow a period of almost four years in which no institution regulated by his agency had failed...
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MSNBC:
Shiller: Housing slump may exceed Depression -- An influential economist who long predicted the housing market bubble cautioned that the slump in the housing market could cause prices to fall more than they did in the Great Depression...
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Deutsche-Welle:
German Subprime Casualty IKB Accused of Insider Trading -- In Europe's first criminal investigation associated with the US subprime disaster, a German lender has been accused of insider trading shortly before its shares plummeted dramatically due to the banking crisis...
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Tuesday, April 22, 2008

Housing/Subprime/Credit Roundup — April 22, 2008

Items of Interest:

Existing Home Sales down 19.3%Calculated Risk:
March Existing Home Sales down 19.3% from 2007 --

The NAR reports: Existing-Home Sales Slip in March

Existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 2.0 percent to a seasonally adjusted annual rate of 4.93 million units in March from a level of 5.03 million in February, and remain 19.3 percent below the 6.11 million-unit pace in March 2007.
... graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993....

The median price of an existing home dropped to $200,700 from $217,400 a year earlier...
Exisiting Home Sales Down 19.3%- The Big Picture
Will Existing Home Sales "Inspire False Hope?"
- TBP
Sales of Existing Homes Fell - Bloomberg

comment: existing homes versus new homes: existing homes is more important since it represents 85% of the housing market.
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End of subprime leading at CountrywideBlown Mortgage:
Bank of America Neuters Countrywide? - CNN reports that Bank of America will eliminate all but the most sound mortgage products as it attempts to complete its takeover of Countrywide. Countrywide was made famous by its option ARM and other non-traditional products which have clearly back-fired. Which begs the question - why Countrywide mortgage at all?

Bank of America announced that the main asset that they wanted from Countrywide was the midwestern retail bank operations where BofA is currently lacking (and the massive servicing customer base), so it makes sense that with their booming retail business they aren’t working hard to make sure that Countrywide’s mortgage-units have a product worth selling...
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LA Times:
Arson to avoid foreclosure? -- Some folks celebrate their last home mortgage payment by setting fire to their loan agreement. Lately, some people behind on their mortgages are simply setting fire to their homes.

In what appears to be the latest symptom of the nation's mortgage meltdown and credit crisis, insurers, law enforcement officials and state agencies nationwide report a jump in home and automobile fires in the last year believed to have been set by owners unable to pay their debts. The numbers are small, but they're leading the insurance industry to scrutinize more closely what seem to be accidental blazes ...
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ABC News:
Harry's Bar in Venice Giving Discount to Americans Hit by Weak Dollar/Subprime woes -- Ernest Hemingway didn't have to worry about a strong euro, but Americans in Venice these days do, so the novelist's old haunt is giving U.S. tourists 20 percent off.

The classy, pricey restaurant near St. Mark's Square now sports a sign telling Americans they'll get the discount on all the items on the menu. The notice cites Americans' economic woes linked to the subprime loan crisis...
"Harry's Bar of Venice in an effort to make the American victims of subprime loans happier, has decided to give them a special 20 percent discount on all the items of the menu during the short term of their recovery."
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Monday, April 21, 2008

Housing/Subprime Roundup — April 21, 2008

Items of Interest:

Bloomberg:
Bank of America Net Income Falls 77% on Writedowns -- Bank of America Corp., the second- largest U.S. bank, said profit dropped for a third straight quarter as the company set aside $6.01 billion for bad loans.

First-quarter net income declined 77 percent to $1.21 billion from $5.26 billion a year earlier, the Charlotte, North Carolina-based bank said today in a statement. Results included $1.31 billion in trading losses and $2.72 billion in costs for uncollectible loans...

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Bennet Sedacca / Minyanville:
The Moral Hazard Club -- The Federal Reserve, clearly in panic mode, began changing the rules under which financial markets has operated for many decades...

When you add up all the Level II assets by just the eight largest holders in the U.S: JP Morgan, Citibank, Bank of America, Merrill Lynch, Goldman Sachs, Bear, Morgan Stanley and Lehman Brothers, it comes to a staggering $5 trillion - nearly half the size of the economy. Level III assets are nearly $600 billion...Is the Fed big enough to bail out all these assets? My best guess is probably not...

What strikes me as particularly odd is that there seems to be some favoritism displayed here by the Fed. Millions of people have lost their homes or will likely soon lose their homes, the economy is sinking into recession, companies are going bankrupt and what do we do? We allow brokerage firms and banks to shamelessly exchange their ‘supposedly AAA rated Mortgage Backed Securities’ for Treasury securities of the Federal Reserve.

I use the word ‘supposedly’ because if they were really AAA and had a market, why wouldn’t these firms just sell them in the open market? Because there is no market...
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Minyanville:
Bank of England Takes on Mortgage Debt -- Mimicking recent moves by the Federal Reserve, the Bank of England announced today a plan to trade $100 billion in government Treasury bills for mortgage-backed securities.

The Wall Street Journal reports the lending facility will allow British banks to swap AAA-rated assets backed by U.K. and European mortgages for government bonds. Although it will also accept highly rated credit card debt, the central bank said specifically it won't take securities backed by U.S. mortgages...
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USA Today:
Teens turn to thrift as jobs vanish and prices rise -- The souring job market and rising costs of the usual teenage indulgences — a slice of pizza, a drive to the mall, the hottest new jeans — are causing teens to do something they rarely do: be thrifty...

It's even becoming cool to be frugal...
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Bloomberg:
Bernanke Grapples With Greenspan as Volcker Scorns Fed Bailouts -- The event was a 2002 conference at the University of Chicago to celebrate the Nobel laureate Milton Friedman's 90th birthday. When Ben S. Bernanke rose to speak, he said that the Federal Reserve, of which he was then a governor, had come around to Friedman's view that the central bank's blunders were to blame for the Great Depression. ``We're very sorry,'' Bernanke said, prompting laughter. ``But thanks to you, we won't do it again.''

Bernanke, a longtime scholar of the 1929-to-1933 panic, now has the unwelcome task of trying to keep a new financial calamity from turning into a full-blown depression. What started as a meltdown in the market for subprime mortgages has turned into a worldwide credit and economic crisis.

Bernanke, now the Fed chairman, has responded with the most-aggressive expansion of the Fed's power in its 95-year history....
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Bloomberg:
Stocks `Fire Sale' Burns Investors as Debt Costs Rise -- A stock market fire sale at the cheapest prices in 13 years is burning investors as companies turn away from the highest credit costs in more than a decade.

Corporations in the U.S. and Europe must repay $1 trillion in debt maturing this year, the most since 2000, data compiled by New York-based Citigroup Inc. show. As the cost of borrowing for investment-grade companies climbed to 2.35 percentage points above government debt in the past year...
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Bloomberg:
UBS Says It Didn't Recognize Subprime Risk Until July -- UBS AG, Switzerland's biggest bank, said senior management of its investment bank only recognized the severity of its subprime problem in late July, when holdings could no longer be reduced or hedged at ``acceptable'' prices.

``It appears that the investment bank management did at no stage conduct a robust independent assessment of its overall subprime exposures,'' the Zurich-based company said in a report on its Web site today...
UBS:
UBS Issues Shareholder Report on Write-downs
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RealScoop.com:
RealScoop utilizes leading voice analysis technology to analyze statements made by public figures. The BELIEVABILITY METER™ analyzes each celebrity video second by second, displaying the real-time results in a color-coded manner from left to right. The most believable statements are green, gradually turning red as they become more questionable. (via TBP)

The CEO of Bear Stearns, Alan Schwartz, is interviewed by David Faber days before the firm collapsed.
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Sunday, April 20, 2008

Cool Pope Shoes

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Pope Benedict XVI (16th) wearing his red shoesPope Benedict XVI has been here and gone (U.S visit, April 15, 2008 - April 20, 2008). So who doesn't want a pair of his snazzy red shoes? Does the Pope really wear Prada?

Wikipedia:
Papal shoes -- The Papal shoes are the red leather outdoor shoes worn by the Pope. They should not be confused with the indoor papal slippers or the Episcopal sandals, which are the liturgical footwear proper to all Latin Rite bishops...

Pope Paul VI eliminated the gold cross and completely discontinued the custom of kissing the papal foot. Paul VI can be seen wearing red buckled shoes in photographs from his 1964 trip to Jerusalem. In 1969, Paul VI abolished buckles from all ecclesiastical shoes, which had been customarily required at the Papal Court and for prelates. He also discontinued the use of the indoor velvet papal slippers and the Paschal mozzetta and shoes. Paul VI wore plain red leather shoes throughout the rest of his pontificate. Pope John Paul I, who was pope for only 33 days, continued wearing the plain red leather shoes worn by Paul VI. Early in his pontificate Pope John Paul II wore red shoes; however he quickly adopted wearing ordinary brown shoes. Paul VI, John Paul I, and John Paul II were buried in the red leather papal shoes.

Pope Benedict XVI restored the use of the red papal shoes, which are provided by his personal cobbler in Rome.* ...
* WSJ:
Does the Pope Wear Prada? -- The senior Vatican official says the loafers were actually made by the pope's personal cobbler. But Prada has refused to confirm or deny the reports, allowing the press speculation to continue. A spokesman for Prada said the fashion house lacked "the necessary elements" to make an accurate determination...
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Red Pope shoes---
Red Papal shoes of Pope Pius VII (1808)---
Pope Benedict wearing his red shoes---Pope Benedict wearing his red shoes---
Pope John Paul II wore red shoes too, for a time.

Pope John Paul wearing red shoes---
update June 26, 2008:
The Vatican is still trying to kill the false rumor that Pope Benedict XVI wears Prada. Here is their latest story.

UPI:
Pope's shoes not made by Prada -- Rumors that Pope Benedict XVI wears shoes made by high-fashion Italian designer Prada are "of course false," Vatican sources say.

Speculation that the Pope wears designer clothes has been flying around since he was elected in 2005, The Times of London reported Thursday.

The Pope's brightly colored red shoes and attractive sunglasses have prompted many to deem him a "style icon," the Times said.

The rumors were cleared up Thursday in L'Osservatore Romano, the Vatican newspaper.

Vatican sources said the Pope gets his shoes from Adriano Stefanelli, a cobbler in Novara, Italy.

Spanish writer and author, Juan Manuel de Prada, wrote in the article the Pope is a "simple and sober man" and rumors saying otherwise were "stupid and banal."

"The Pope is not dressed by Prada but by Christ," he said.
related:
TimesOnline [UK] / June 26, 2008:
The Pope wears Prada? That's cobblers, says the Vatican -- According to Vatican sources the Pope's shoes are made by a cobbler from Novara called Adriano Stefanelli, who makes them from calf or kid for the winter and nappa leather for the summer. Papal shoe repairs are carried out by Antonio Arellano, a Peruvian shoemaker in the Borgo, the medieval quarter next to St Peter's. The article, on "Ratzinger's Liturgical Vestments", was written by Juan Manuel de Prada, the noted Spanish writer and author of The Tempest, who is not related to the fashion company. De Prada said that the image of the German-born Pope as concerned with "frivolity" was at odds with the truth, which was that he was a "simple and sober" man. Suggestions to the contrary were "stupid and banal". ...

Friday, April 18, 2008

Housing/Subprime Roundup — April 18, 2008

Items of Interest:

ABC News:
Mueller Expects More Corporate Fraud Cases -- The number of corporate fraud cases the FBI investigates is set to rise as part of the fallout from the subprime mortgage collapse, director Robert Mueller said today.

"We likely will see more corporate fraud cases in the months to come because of the ripple effect of the subprime crisis and its impact on the credit market," Mueller said in a speech to the American Bar Association.

During the wide-ranging speech on corruption and white collar crime, Mueller briefly expanded on remarks made the day before confirming that the FBI is investigating 19 institutions relating to the subprime lending crisis and the financial and investment vehicles used by those firms....

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Consumerist:
WaMu: Sorry We Don't Have Your $4200 In Cash, Want A Check? -- Maybe we're crazy but $4200 doesn't seem like too much money to withdraw in cash at a branch bank, especially if you give them 24 hours notice. Apparently, that large of a withdrawal leaves WaMu all tapped out. Is WaMu really that short on capital reserves?

CNN Money:
The 6 best places to buy a home these days The 6 cities where home prices are likely to rise the most - or fall the least - in the next 12 months.
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Thursday, April 17, 2008

Housing/Subprime Roundup — April 17, 2008

Items of Interest:

Mark Gimein / Slate:
Here Comes the Next Mortgage Crisis -- Subprime was just the beginning. Wait until California's prime borrowers start handing their keys to the bank.

California is to mortgage lending what Chicago is to pork bellies. For years, that meant it was a place with soaring house values; today, the foreclosure rate across the state is twice the national average and going up fast. Riverside County, outside Los Angeles, may be the foreclosure capital of the country, with a rate close to six times the national average. And housing prices are in freefall.

California should be the poster child for a mortgage-loan bailout. In few other places have so many taken on such onerous debts with so little equity. Unfortunately, the crisis in California is going to get much worse, and there is no bailout that will solve it. Why? Because if the first stage of the foreclosure crisis was about people who could not afford their mortgages, the next stage will be about people who have every reason not even to try to pay their mortgages.

Over the next several months, we're going to be subjected to a chorus of hand-wringing about the moral turpitude of people who walk away from their mortgages and pronouncements like last month's warning from Treasury Secretary Henry Paulson that people should honor their mortgage obligations. The problem with finger-wagging on what you "should" or "ought" to do is that, when it comes to money, you're usually given the lecture only when it's in your interest to do the opposite...

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Seeking Alpha:
Florida Has a Five-Year Supply of Condo's -- Florida Association of Realtors and market expert Jack McCabe of McCabe Research and Consulting: There’s currently a five-year supply of condo and townhouse units on the market in Dade County… an inventory of more than 24,000 units… Median sales prices for existing condo units in Ft. Lauderdale, Miami, and West Palm Beach/Boca Raton fell 10% from 2006 to 2007 and now range between $171,000-$263,500…
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Lasner on Real Estate:
Home-sales tsunami reaches O.C. beach towns -- Analysis of DataQuick’s March homebuying report shows that [Orange County, CA] county’s beach-close communities are no longer immune from the current housing slump. DataQuick identified 295 homes selling in beach cities’ ZIP codes last month, a 46% drop from a year ago. In these 17 ZIPs, last month’s median price change was off 11.9% vs. a year ago.

It’s a sea change, so to speak, as last year beach towns enjoyed some breaks from housing’s rough seas. For all of 2007, there was an 18% drop in sales in beach cities’ ZIP codes vs. 30%-plus declines in the rest of the county...

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Bankruptcy Filing Rates by District, Apr. 2006 to Mar. 2008Credit Slips:
Bankruptcy Filing Rates by District, Apr. 2006 to Mar. 2008 -- The March 2008 bankruptcy data showed that the U.S. average filing rate went over 4,000 per day for the first time since the 2005 bankruptcy. Bankruptcy filings have been steadily rising since the 2005 law's effective date, but national trends can mask local variation. Although bankruptcy data often is aggregated by state, it easily can be broken down to a little bit finer level. Bankruptcy filings are readily available by federal judicial district, for which there are ninety in the fifty states. Some districts occupy an entire state, but looking at districts allows us to see variation within a particular state. As always, these data are courtesy of Automated Access to Court Electronic Records (AACER)...
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MSNBC:
FBI sees surge in mortgage fraud investigations -- FBI Director Robert Mueller on Wednesday described a "tremendous surge" in mortgage fraud investigations and is diverting agents from other cases...

related:
Reuters: FBI home mortgage probe now targets 19 firms

Housing construction fell sharply in March -- Home building projects started in March fell by 11.9 percent to a lower-than-expected annual rate while building permit activity, a sign of future construction plans, was off 5.8 percent, a government report on Wednesday said...
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Bloomberg:
Goldman Trader Birnbaum to Form Hedge Fund After Subprime Gains -- Josh Birnbaum, one of the traders who led Goldman Sachs Group Inc.'s push into bets against subprime-mortgage bonds, has left the world's biggest securities firm and plans to form a $1 billion hedge fund...
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Wednesday, April 16, 2008

Housing/Subprime Roundup — April 16, 2008

Items of Interest:

Economist: The great American slowdownEconomist:
The great American slowdown -- The recession may not be as severe as many fear, but the recovery could take longer—and that is dangerous

AMERICANS are unaccustomed to recessions, particularly ones that involve shopping less. During the past quarter-century, the world's most powerful economy has suffered only two official downturns, in 1990-91 and 2001. Both were short and shallow. In 2001 consumer spending barely skipped a beat; a decade earlier it fell, but only briefly. Buoyed by rising asset prices and financial innovations that allowed ever more people to tap ever more debt, the collective American wallet has not snapped shut in almost two decades....

The Big Picture:
Economist Cover: The Great American Slowdown
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Bloomberg:
Housing Starts in U.S. Drop Twice as Much as Forecast, Hitting 17-Year Low -- Housing starts in the U.S. dropped more than twice as much as forecast in March to a 17-year low, signaling that declining construction will keep eroding economic growth this year.

Work began on 947,000 homes at an annual rate, down 11.9 percent from February and the fewest since March 1991, the Commerce Department said today in Washington. Building permits, a gauge of future construction, fell to a 927,000 rate from 984,000 the prior month.

Foreclosures are pushing down property values by adding to the glut of unsold homes, prompting buyers to hold out for better bargains and undermining new construction....
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Philip Davis / Seeking Alpha:
How To Solve the Housing Crisis Tomorrow -- Could the U.S. government could save homeowners from foreclosure - and bail out bankers too - by investing in U.S. residential real estate? ...

200 years ago, Thomas Jefferson warned us:
If Americans ever allow banks to control the issue of their currency, first by inflation and then by deflation, the banks will deprive the people of all property until their children will wake up homeless.
Well, 7,000 families a day are now losing their homes to foreclosures. That’s roughly 21,000 men, women and children each day being forced out of their homes, being stripped of their assets and often their life savings. This isn’t a one-day problem for these people, it can take many years to recover from losing a home, if ever! ...
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Southern California’s Housing Market Still Frozen: Report - Housing Wire
The Housing Crisis: Personal Responsibility and Wishful Thinking - Seeking Alpha
Commercial Real Estate Imploding - Seeking Alpha
Housing starts down, consumer prices up - The Mess That Greenspan Made
Buyers Beware - [foreclosures are tricky] Business Week
Wall Street's Billion-Dollar Paydays - Jenny Anderson, New York Times

Tuesday, April 15, 2008

Housing/Subprime Roundup — April 15, 2008

Items of Interest:

Bloomberg:
U.S. Foreclosures Jump 57% as Homeowners Walk Away -- U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes to lenders.

More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of default data, said today in a statement. Nevada, California and Florida had the highest foreclosure rates. Filings rose 5 percent from February.

About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are ``simply walking away and deeding their properties back to the foreclosing lender'' rather than letting the home be auctioned, RealtyTrac Chief Executive Officer James Saccacio said in the statement...

related:
Minyanville: Walking Away From Your Mortgage
MSNBC: Foreclosures continue to soar, worst is not over
SFGate.com: Fannie warns homeowners who walk away
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states with the highest foreclosure ratesDiana Olick / CNBC Realty Check:
Foreclosures: Leaving Homes And A Financial Mess Behind -- I stood in front of a foreclosed home on a sunny corner in West Palm Beach, Florida today.

The abandoned house was empty and worn, its overgrown lawn covered in trash, a sorry sight in an otherwise well-kept neighborhood. I don't know the particular story of that particular house, but I do know that plenty of folks are leaving homes like it behind, and leaving a financial mess along with it...

Slideshow:
  • Nevada - One in every 139 households received a foreclosure notice
  • California - One in every 204 households received a foreclosure notice
  • Florida - One in every 282 households received a foreclosure notice
  • Arizona - One in every 283 households received a foreclosure notice
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MSNBC:
Sinking housing market maroons homeowners -- As America’s housing market has foundered, homeowners who bought into newly rising projects at just the wrong time have found themselves marooned in abandoned developments...

Coalition squeezing Congress in mortgage mess -- Democrats crafting a housing rescue plan are under pressure from liberal groups to push aggressive measures that would force lenders to let homeowners restructure their mortgages...
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Monday, April 14, 2008

Housing/Subprime Roundup — April 14, 2008

Items of Interest:

John P. Hussman, Ph.D. / Hussman Funds:
Which "Inning" of the Mortgage Crisis Are We In? -- Clearly, as we enter April 2008, we appear to be quite early in the mortgage crisis, with only about a quarter of the cumulative resets having occurred. That places us near the start of the third inning, where we can expect each of the nine innings� to be about three months in duration. Unfortunately, the next three innings (quarters) are when the heavy hitters on the opposing team will come up to the plate, as the cumulative amount of resets will surge. With that surge, loan losses and foreclosures will also predictably spike higher...

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Barry Ritholtz / The Big Picture:
Volcker: Bernanke a One Termer -- Over the prior weekend of April 6, former Fed Chair Paul Volcker was present at a small gathering. Several luminaries from the worlds of finance, economics and trading were in also attendance.

The conversation turned to the present Federal Reserve. The blunt, straight talking Volcker stated that Ben Bernanke is not likely to serve more than one term as FOMC chief. Quote: "He's a one-termer." ...

Must See TV: Volcker's Speech on Financial Crises -- Paul Volcker on the credit crisis, Geenspan, Bernanke, etc. ...
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Herald Tribune [Florida]:
Lenders promise that walking away from house will hurt -- The country's two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing "walkaway" trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain ...
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Reggie Middleton / Seeing Alpha:
Talk of a Real Estate Bottom Already Is a Waste of Breath -- If I hear another pundit (ex. Ara Hovnanian) query or comment on reaching a "bottom" in the real estate market anytime soon, I am going to scream. In the conversation I was having with my father, I explained the current housing like a ball that we usually play with at ground level. Ground level is the equilibrium point. Now, I said, imagine throwing that ball 50 feet into the sky, then expecting it to suddenly stop in mid-air or 5 feet down in its descent back to the ground - ex. finding the "bottom" that the CNBC crew are in search of and expecting to come sometime next year. Physically, and realistically, this expected stop (or bottom) for the ball just ain't gonna happen. The same can be said for real estate values. When things pop that far outside of historical mean, expect a reversal...
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Friday, April 11, 2008

Housing/Subprime Roundup — April 11, 2008

Items of Interest:

MSNBC:
Senate passes bill to ease housing crisis -- The Senate on Thursday passed a bipartisan package of tax breaks and other steps designed to help businesses and homeowners weather the housing crisis...

Housing Wire:
Senate Passes Housing Bill, But Support Seen as Problematic
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Minyanville:
Sin City Slowdown -- Betting on Vegas real estate? You might want to reconsider.

The slowing economy and credit crisis has jeopardized a number of casino projects in Las Vegas, according to Reuters. Among the many casinos facing difficulty are The Cosmopolitan and Boyd's Echelon, a $4.8 billion project unable to secure over $950 million necessary for part of its construction. Existing casino operators like Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are readying for a recession...
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Bespoke Investment Group:
A Tale of Two Coasts -- The CME has housing futures that track the S&P/Case-Shiller home price indices. These futures allow big investors to trade or hedge against real estate prices nationwide. Since last September, the Composite 10-City futures contract that expires in February 2009 has fallen 12.56%, meaning investors have gotten more bearish on the outlook for real estate prices early next year.

There is a big discrepancy between the outlook for Los Angeles and New York, however. As shown, the February '09 contract for median home prices in Los Angeles has fallen nearly 28% over the last seven months, while the contract for New York has barely budged...
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Mark B. Rasmussen / Financial Sense Univ.
The American Dream? -- Home ownership has long been considered “The AMERICAN DREAM” and with the recent paradigms of the “WEALTH AFFECT” and the “OWNERSHIP SOCIATY”……..(Really fraud and myths I have written about earlier on this site)…..See “Debunked Myths of 2007”.

It is estimated that 8 - 10 Million Americans owe more than their home is worth today, as the rate of housing price decline accelerates and the economy slows…(actually early recession). According to Paul Kasriel and Asha Bangalore of Northern Trust, APX. 43% Of jobs created during the “Boom” were Real Estate related (Financial professionals of all stripes and huge numbers, realtors, appraisers, self employed contractors, appliance/ carpet/ window/ door/ concrete/ frame/ roofing manufacturers, sales people and installers, architects, landscape architects etc, etc.) What many of these people have in common is that they were self employed and independent contractors (Do not show up in unemployment data). Due to the job mix of the “Boom”, real unemployment is most likely understated by a record amount. Now that the housing market is declining the most since “The Great Depression”, one must wonder what is to become of all those housing related jobs. Perhaps it is not a good idea to have such an extremely unbalanced and single source economy…… (think Detroit and autos). Time will tell. Is there another bubble to replace all those jobs, income and wealth? ...
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India eNews:
Global realty investment expected to be down by 30 percent -- The global real estate investment market volumes for 2008 are expected to be down by over 30 percent as compared to 2007, a leading real estate consultant, Jones Lang LaSalle, has said in its latest report Thursday.

The Global Real Estate Capital Flow report suggests that the American and European investment markets will see a material decline in full year volumes and, although Asia may be more resilient, volumes will not achieve the heights of 2007...
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Thursday, April 10, 2008

Housing/Subprime Roundup — April 10, 2008

Items of Interest:

Wall Street Examiner:
Trouble in the Cockroach Hotels -- One of the odder Kool-Aid concoctions of the era have been cockroach hotels (CHs or hedge funds). Once the foil enters the CH, the doors are shut behind. Next they walk through the rooms with all the lights turned off looking for treasure, and find cockroaches instead. Incredibly a myth has been perped that these CHs were run by geniuses (about 10,000 of them gambling $1.8 trillion) when in reality they were nothing more than “take these dice from my good dead hands” gamblers...

This [Bloomberg] article, “Hedge Funds Come Unstuck on Truth-Twisting, Lies” gives a good overview. Aaron Krowne’s Hedge Fund Implode-o-Meter provides the play by play on the downfall of cockroach hotels...

Reuters:
Gloom and some doom seen for hedge funds, private equity
WSJ:
Hedge Funds Make It Hard To Say Goodbye
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Barry Ritholtz / The Big Picture:
Greenspan on Housing Bottoms -- Earlier this week, we noted that former Fed Chief Alan Greenspan had said that "the drop in US home prices will probably end 'well before' early next year as the number of houses in the market diminishes" (Greenspan 'Reputation Tarnishment' Tour Continues)...
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NY Times:
For Many, a Boom That Wasn’t -- ...The bigger problem is that the now-finished boom was, for most Americans, nothing of the sort. In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau’s inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less — about $60,500. This has never happened before, at least not for as long as the government has been keeping records. In every other expansion since World War II, the buying power of most American families grew while the economy did...
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Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia