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Friday, August 29, 2008

Housing/Subprime/Credit Roundup — August 29, 2008

Items of Interest:

Prime Foreclosure Starts Surge Past Subprime in JulyHousing Wire:
Prime Foreclosure Starts Surge Past Subprime in July -- There can be no remaining doubt that the nation’s mortgage crisis has become a problem for prime credit borrowers: data released by the HOPE NOW coalition on Wednesday finds that prime foreclosure starts have finally moved ahead of subprime foreclosure starts, for the first time since the industry coalition began collecting data in July of last year — and likely for the first time in a much longer timeframe, as well, sources suggested to HousingWire Thursday afternoon.

It’s a point that was missed in many media reports touting HOPE NOW’s success in preventing more than 2 million foreclosures during the past year; but it’s a critical shift that should be garnering more public policy focus than it currently is.

HOPE NOW’s monthly data shows that during July, foreclosures were initiated on 105,000 prime borrowers and 92,000 subprime borrowers. Prime foreclosure starts in July were well more than double the 51,000 recorded one year earlier, and up almost 10 percent from June; in comparison, subprime foreclosure starts in July were up 22 percent from one ago, and up 10 percent month-over-month as well...

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Housing Wire:
Mortgage Insurers See Defaults Increase in July -- Home owner delinquencies are ratcheting back up again after a few months of easing; the latest data suggesting this comes Friday morning from the Mortgage Insurance Companies of America, a trade group representing many of the nation’s private mortgage insurance companies. MICA reported that July defaults were up nearly 34 percent from one year earlier, reaching 68,831; that compares to 67,908 in June.

The year over year comparison is potentially inflated, however, as one large lender altered how it reports insured defaults in April; it’s unclear what the impact of that change has been in subsequent months.

Further, starting with July’s data, MICA no longer includes data from Triad Guaranty Inc., the nation’s seventh-largest insurer. Triad said in June that it would stop selling new policies and move its portfolio into runoff after failing to raise fresh capital.

“We are continuing to see a return to basics in the housing market, and home loans with private mortgage insurance are playing an important role in that effort,” said Suzanne Hutchinson, executive vice president of MICA.

With Triad missing from July’s data, it’s tough to say just how much defaults rose in July; but we know defaults are on the rise, given data released earlier this month...
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NY Sun:
Unthinkable Happens: Manhattan Apartment Prices Fall -- Recently released city records indicate that apartments in prime Manhattan neighborhoods are selling for less than their purchase prices - a phenomenon that until now was virtually unheard of in the seemingly invincible New York City real estate market.

Among the apartments selling for a loss is a unit at 80 John St., in the financial district, which recently sold for $590,000, much lower than the $720,000 selling price in January. At 515 West End Ave., on the Upper West Side, an apartment recently sold for $2.1 million - $50,000 less than its 2005 purchase price. There are also apartments currently on the market that are listed for below their previous purchase prices:

A three-bedroom condominium at 166 Duane St. in TriBeCa - the wealthiest ZIP code in America, according to Forbes magazine - is on the market for $4.495 million, well below the $4.7 million paid for the unit in April.

"This clearly indicates that the market is not what it was," the president of the real estate appraisal firm Miller Samuel, Jonathan Miller, said. "Two years ago, you'd be pressed to find an apartment that sold for less than its purchase price." ...
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Thursday, August 28, 2008

Housing/Subprime/Credit Roundup — August 28, 2008

Items of Interest:

Wall Street Journal:
Tight Credit Puts Squeeze On Big Three Auto Dealers -- The credit crunch squeezing Detroit's Big Three auto makers is now spreading to some of their dealers, adding financial pressure to a group already strained by this year's big drop in auto sales.

The latest and most prominent example is Bill Heard Enterprises Inc., one of the largest Chevrolet dealers in the country, with 2007 sales of $2.1 billion. Earlier this month GMAC LLC, the financing company partly owned by General Motors Corp., stopped doing business with Bill Heard over concerns about financial losses related to the privately owned chain of 14 stores, Bill Heard confirmed through a spokesman.

The weakening credit profiles of GM, Ford Motor Co. and Chrysler LLC and their finance arms are adding a new challenge for dealers...

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RealEstalker:
Michael Phelps Buys in Baltimore -- Just about every news and quasi-news outlet in the damn world is reporting that young Mister Phelps recently splashed out on a $1,690,000 condo overlooking Baltimore's revitalized Harborfront.

Details on the apartment are slim, but most reports say it measures 4,080 square feet. Your Mama can only hope it's got high ceilings and an extra-long bath tub...

Michael Phelps buys Baltimore condo
related:
CNBC / Realty Check:
Michael Phelps Fuels the Condo Market -- Not that he needs anymore, but yet another kudo to Michael Phelps for doing his part in the housing recovery.

Instead of heading for La-La-Land*, where all those cameras await, or for a spicier set-up in South Beach, the millionaire medal man reportedly decided to sink $1.69 million into his hometown of Baltimore...

TMZ:
Phelps -- Now a Real Homie -- [photo gallery]
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Wednesday, August 27, 2008

Housing/Subprime/Credit Roundup — August 27, 2008

Items of Interest:

Paul Jackson / Housing Wire:
Mortgage Applications Increase — or Did They? -- Most media sources will report that mortgage applications posted their first increase in three weeks, according to data released by the Mortgage Bankers Association on Wednesday, as mortgage rates fell slightly. The group’s weekly application survey found that applications rose 0.5 percent from one week earlier, with a composite index rising to 421.6 for the week ended Aug. 22. Applications are off 31.2 percent from year-ago levels, however, the MBA said.

But — as has been the case throughout the current cycle — the MBA data may be overstating forward demand for mortgages, given that the index data doesn’t correct for multiple applications. A separate application index, known as the MAX, found that applications fell sharply last week; the MAX corrects for multiple applications, and tends to be relied upon by prepayment modelers more often, as a result...

related:
USA Today:
Mortgage applications rise 0.5% as most rates dip -- The Mortgage Bankers Assocation said Wednesday that its composite index of loan applications rose slightly in the week ended Aug. 22, as interest rates slipped.

The composite index rose a seasonally adjusted 0.5%, the MBA said, as the refinance index increased 0.3% from the previous week and the purchase index increased 0.6%.

The refinance share of mortgage activity increased to 35.2% of applications from 34.8% the previous week, the MBA said. The adjustable-rate mortgage (ARM) share fell to 7.9% from 8.0% of applications the previous week.

The report said the average rate for 30-year fixed-rate mortgages slipped to 6.44% from 6.47% the previous week...
----
CNN Money:
Mortgage fraud still soaring -- A crackdown on underwriting has failed to halt an explosion of fraudulent home loans.

With the housing market in turmoil and lending standards tougher than ever, you'd think that the kind of unscrupulous activity that helped plunge the industry into crisis would be a thing of the past.

You'd be wrong. Mortgage fraud is still soaring, according to a new report from the Mortgage Asset Research Institute (MARI), a division of ChoicePoint.

The study found that the number of fraudulent loans issued during the first three months of 2008 skyrocketed 42% compared with the same period in 2007...
----
Wall Street Journal:
FHA Raises Its Premiums to Insure Repayment of Mortgages -- The Federal Housing Administration, a U.S. agency that is rapidly shouldering more of the risk on home loans, raised the premiums it charges for insuring that mortgages will be repaid.

In a posting on its Web site Tuesday, the FHA said the upfront premiums charged to most borrowers will be 1.75% of the loan amount, effective Oct. 1. That is up from the 1.5% that was in effect until July 14, when the FHA adopted a "risk-based" pricing system that created a range of charges depending on borrowers' credit scores and the amount of the down payment or equity they owned in the homes. In late July, Congress approved a housing bill that included a provision requiring the FHA to revert to a standard premium at least until Oct. 1, 2009.

On a $300,000 loan, the new upfront premium works out to $5,250, up from $4,500. The annual premiums paid by borrowers would remain at 0.50% to 0.55% of the loan balance.

The FHA may well need more income to cope with the payouts it will have to make to lenders and loan investors in coming years. At a time when house prices generally are falling, the share of new mortgages insured by the FHA has soared to 23% in July from a low of 1.8% in 2006...
----
CNN Money:
2 million troubled borrowers avoid foreclosure -- The Hope Now coalition reports that it completed a record number of mortgage workouts in July - but that was outpaced by the increasing rate of foreclosures.

Hope Now has helped more than 2 million at-risk borrowers stay in their homes during the past 13 months, according to numbers released by the coalition on Wednesday.

The alliance of mortgage servicers, counselors, and investors assembled to combat foreclosures fixed more than 192,000 problem loans during July, a one-month record that represents a 6% increase over June.

Despite this progress, foreclosures continue to climb; 91,752 families lost their homes in July. That represents an increase of 14% from June and more than double the number of July 2007, when only 42,043 homes went to foreclosure...
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CNN Money:
Bankruptcy filings surge to 1 million - up 29% -- Number of bankruptcy filings in recent 12-month period rises to nearly 1 million.

As things in the economy have gotten worse, the number of people and businesses heading to bankruptcy court has spiked.

Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures released Wednesday.

Total filings rose to 967,831 from 751,056 a year earlier.

Business filings jumped more than 41% to 33,822 from 23,889 in the year-ago period. Personal filings totaled 934,009, up 28% from last year...
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Forbes:
America's Most Distressed Housing Markets -- During the recent real estate run-up, flippers who bought and sold homes within a year often reaped great profits.

Today, you still see a lot of flipping, only buying and selling within a year often results in staggering losses.

Who is suffering? Regular homeowners, speculators and the foreclosed upon who try to get out of loans they can't afford or properties worth less than the value of their mortgages.

Hardest-hit are those in Las Vegas, Sacramento, Calif., and Los Angeles...

America's Most Distressed Housing Markets:
  1. Las Vegas, Nev. - Homes sold for a loss: 69% - Sold within year of last sale: 30.5%
  2. Sacramento, Ca. - Homes sold for a loss: 63.8% - Sold within year of last sale: 30.8%
  3. Riverside, Ca. - Homes sold for a loss: 65.1% - Sold within year of last sale: 27.7%
  4. Denver, Colo. - Homes sold for a loss: 42.3% - Sold within year of last sale: 37.3%
  5. Detroit, Mich. - Homes sold for a loss: 56.4% - Sold within year of last sale: 23.7%
  6. San Diego, Ca. - Homes sold for a loss: 54.4% - Sold within year of last sale: 24.5%
  7. Memphis, Tenn. - Homes sold for a loss: 43.8% - Sold within year of last sale: 29.4%
  8. Phoenix, Ariz. - Homes sold for a loss: 52.1% - Sold within year of last sale: 21.4%
  9. Los Angeles, Ca. - Homes sold for a loss: 51.1% - Sold within year of last sale: 20.8%
  10. San Francisco, Ca. - Homes sold for a loss: 48% - Sold within year of last sale: 19.5%
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Tuesday, August 26, 2008

Housing/Subprime/Credit Roundup — August 26, 2008

Items of Interest:

Bloomberg:
U.S. Says Banks on `Problem List' Rose 30% in Quarter -- The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased 30 percent in the second quarter to the highest total in five years as more commercial real-estate loans were overdue.

The list had 117 banks as of June 30, up from 90 in the first quarter and the highest since mid 2003, the agency said today in its quarterly report without naming any institutions. FDIC-insured lenders reported net income of $4.96 billion, down 87 percent from $36.8 billion in the same quarter a year ago.

``Quite frankly, the results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,'' FDIC Chairman Sheila Bair said at a news conference in Washington...

----
Housing numbers:
  • S&P/CaseShiller Home Price Index: 167.69 vs. 167.20 consensus forecast
  • S&P/CaseShiller Composite 20 city index (one year change): -15.92% vs. -16.20% cons.
  • Census Bureau - New Home Sales: 515,000 vs. 525,000 consensus forecast
  • New Home Sales (one month change): 2.4% vs. -0.9% cons.
  • Median price of a new home $230,700, from $246,200 a yr. ago: -6.3%
-----
Bloomberg:
U.S. House-Price Slide Eases, S&P/Case-Shiller Shows -- U.S. house prices declined at a slower pace for the fourth straight month in June, signaling that the worst housing slump in more than 25 years may be starting to stabilize.

Home prices in 20 U.S. metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May, the S&P/Case-Shiller index showed. Prices were down 15.9 percent from the previous year, less than economists had forecast.

The figures add evidence that the drag on the economy from the housing slump is lessening, while officials and analysts predict that a rebound remains at least a year away. A private report yesterday showed that sales of existing homes in the past three months averaged the same rate as the previous period...
related:
Housing Wire:
Housing Prices Post Record Decline in Q2 -- In a nutshell, U.S. home prices in general are still falling at an astronomical rate, but some areas have seen the rate of decrease moderate in recent months — an effect that may be seasonality, may be the start of more sustained price declines (compared to accelerated price declines), or may reflect purchase activity at the lower price points and among deeply-discounted foreclosure properties now flooding many key local housing markets...

Housing Doom:
Case-Shiller Home Price Drops Slowing And Accelerating -- My take: Seasonal patterns show that month-to-month moderation in price drops is to be expected the first half of the year. The year-over-year drops are more significant- and those continue to accelerate.

Have a great morning, and don’t let the spin give you vertigo.

CNBC / Realty Check:
Home Prices Turning Up in Spots

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Bloomberg:
New-Home Sales in U.S. Rose From 17-Year Low, Inventory Plunged -- New-home sales in the U.S. improved in July from a 17-year low and construction cutbacks by builders reduced the glut of properties on the market by the most in almost five decades.

Sales increased 2.4 percent to a 515,000 annual pace that was lower than anticipated after a downwardly revised 503,000 rate in June, the Commerce Department said today in Washington. The number of unsold homes on the market fell 5.2 percent, the most since November 1963, to a 416,000 pace.

Lower prices have made homes more affordable for Americans still able to obtain a mortgage, stemming the slide in demand and making it more likely the property glut will clear. A more stable housing market would eliminate one of the biggest risks to the economy even as the credit crisis and job losses threaten growth...

Economists forecast new-home sales would drop to a 525,000 annual pace from an originally reported 530,000 rate the prior month, according to the median estimate in a Bloomberg survey of 76 economists. Forecasts ranged from 493,000 to 570,000.

The median price of a new home decreased 6.3 percent to $230,700, from $246,200 a year earlier....
related:
CNNMoney:
New home sales rise, but grim news lurks -- Sales of new homes in July grew 2.4%, due to a large downward revision in sales from the previous month. Unadjusted monthly sales fall to 13-year low...

Calculated Risk:
July New Home Sales -- According to the Census Bureau report, New Home Sales in July were at a seasonally adjusted annual rate of 515 thousand. Sales for June were revised down to 503 thousand...
----
CoreLogic:
First American CoreLogic Releases June 2008 LoanPerformance House Price Index -- The LoanPerformance HPI provides a comprehensive set of monthly home price indices and median sales prices covering 7,569 ZIP codes, 958 Core Based Statistical Areas (CBSA) and 676 counties located in all 50 states and the District of Columbia [via TBP] ...

CoreLogic: June 2008 LoanPerformance House Price Index----
Jim Boswell / Minyanville:
Our Assets Are Your Debts -- How Fannie, Freddie went rogue.

Though Fannie and Freddie are indeed sponsored by the government, they don't act or operate like government-affiliated entities. Instead, they act like what they really are: 2 independent, publicly-traded, Fortune 500 companies - profit-driven, rather than policy-driven.

Because it's impossible to serve 2 masters at the same time -- and because Fannie and Freddie's primary allegiance is to their stockholders -- they have repeatedly operated counter to the best interest of the financial goals and policies of a complacent and somewhat bewildered U.S. Government...
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St. Louis Dispatch: Other shoes to drop
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Reuters:
Gross, Fuss say any new GSE deal needs Treasury - Bill Gross, chief investment officer at bond giant Pimco, tell Reuters again that a Treasury bailout of Fannie Mae and Freddie Mac isn't imminent, and said last week that, "The election season and the relatively recent passage of the (Treasury) authorization argue for delay as long as possible," though he notes both will have to keep selling notes and debt at "relatively stable spreads." [via USNews]

Did Freddie Mac find a quarter on the way to bankruptcy court?

Washington Post:
Freddie Mac Sells $2 Billion in Notes -- Freddie Mac sold $2 billion of short-term notes in a weekly auction, generating better demand compared with last week as the second-largest U.S. mortgage-finance company paid higher yields compared with benchmarks...

Housing Wire:
Another theory on Freddie’s debt sale -- [financial trickeration?] a bank buying $100 million of Freddie paper yielding 2.858% could flip it to the Fed, borrowing $97 million at around 2.4%...
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FT: How to shore up America’s crumbling housing market
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Monday, August 25, 2008

Housing/Subprime/Credit Roundup — August 25, 2008

Items of Interest:

Bloomberg:
U.S. Existing Home Sales Rose 3.1 Percent in July -- Sales of previously owned homes in the U.S. rose in July from a 10-year low, while the gain wasn't enough to reduce the supply of properties on the market.

Resales rose 3.1 percent, more than forecast, to an annual rate of 5 million from 4.85 million in June, the National Association of Realtors said today in Washington. The median price dropped 7.1 percent from July 2007, and the number of homes for sale jumped to a record.

Record foreclosures have pushed property values down even more, luring some bargain hunters into the market. Still, stricter lending rules, rising unemployment and a glut of unsold houses signal the outlook for residential real estate remains grim.

``It'll be a while before we get a real recovery in housing,'' Stephen Gallagher, chief U.S. economist at Societe Generale in New York, said before the report. ``These things take time to work through. Prices have come off, so that's helping home sales a little.'' . . .

related:
Barry Ritholtz /The Big Picture:
Existing-home sales drop 13.2% as prices fall 7.1% -- Prices also fell. The national median existing-home price for all housing types was $212,400 in July, down 7.1% from a year ago prices of $228,600. The NAR notes that "The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the geographic composition of sales can distort median price data."

We have mentioned this seasonality before, but that is not the only factor involved in the monthly sales increase. About 40% of the existing home sales are now distressed nationwide. Hence, the downward pressure on prices, which are attracting value buyers...

Kevin Depew / Minyanville:
Fear Mixed With Incredulity -- These days, hammering a For Sale sign in the front yard of a home must feel a bit like driving a stake into the rotting corpse of a vampire; fear mixed with incredulity and the foggy notion that this unnatural gesture may not, in fact, work. And so we get headlines like those streaming across the wires this morning: "Existing US Home Sales Up 3.1 Percent in July." That's good, but only until nightfall. Then the bad craziness begins all over again...

Fil Zucchi / Minyanville:
Here come the condos!! -- This morning housing data showed a jump in condos for sale from 595k units last month, to 769k units this month. That is a huge increase and puts the months-supply of condos on the market at an eye-popping 15.1 months.

A couple of thoughts: First this probably reflects the coming onslaught of condos being delivered and being put back on the market immediately. I say the "coming onslaught" as opposed to "the onslaught" because it won't be until whole new projects deliver and construction financing expires, that we will see the real hit of entire developments being foreclosed on by lenders.

Second, areas like the District of Columbia proper (not the suburbs where the bloodbath is in full swing), which so far have not seen meaningful price declines are about to take it on the chin. Privately owned units in a tell-tell development I have been watching for years are on the market for $50k (15%) less than what new units are being marketed for.

What this all adds up to is that we may be about to start the last leg down of the greatest financial bubble in history. That's not necessarily good news since these kind of "last plunges" - in any market - tend to be the most violent and painful, and once they are over the market is likely to flatline for years...
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John Mauldin / Minyanville:
Financials in Trouble, Part 1 -- Bank failures could total $850 billion.

The US Banking System Is in Trouble

A few weeks ago when I was in Maine, I met Chris Whalen. Chris is the managing director of a service called Institutional Risk Analytics, whose primary business is analyzing the health of banks and financial institutions.

If you’re one of their clients, you can go to their website and drill quite deep into all aspects of every bank in America. And they’ve come up with various metrics to compare how well-capitalized a bank is, how much risk it's taking and what kind of losses (or profits) it can expect. It’s a one-of-a-kind firm, and the data gives Chris a very special perspective on the US banking system.

And what he sees isn’t pretty. There’s a crisis brewing. He expects 100 banks to fail between now and July of 2009. Most of them will be small, but there will be a few large banks. He estimates their total assets at $850 billion (not a typo!). Those are the assets the FDIC is going to have to cover when they take over the banks...
related:
Bennet Sedacca / Minyanville:
Dead Banks Walking?

Bloomberg:
Libor Signals Tighter Credit as Banks Balk at Lending -- In a replay of the last four months of 2007, interest-rate derivatives imply that banks are becoming more hesitant to lend on speculation credit losses will increase as the global economic slowdown deepens. Binit Patel, an economist in London at Goldman Sachs Group Inc., said in an Aug. 21 report that nations accounting for half of the world's economy face a recession.

The premium banks charge for lending short-term cash may approach the record levels set last year, based on trading in the forward markets, where financial instruments are sold for future delivery. Back then, concern about the health of the banking system led investors to shun all but the safest government debt, sparking the biggest end-of-year rally for Treasuries since 2000...

Losses and writedowns on securities related to home loans to people with poor credit now exceed $504 billion at financial institutions...
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John Mauldin / Minyanville:
Financials in Trouble, Part 2 -- It's almost a foregone conclusion that the US Treasury will have to step in and essentially nationalize the 2 government-sponsored enterprises. The estimated losses in these 2 firms are far beyond what they could raise in a traditional market. And the longer the government waits, the worse the situation is likely to get.

Moody’s downgraded the preferred stock in these firms to almost junk levels because of the increased likelihood of “direct support” from the US Treasury. Depending on the nature of the support, this could wipe out holders of both common and preferred...

The basic problem is this: Without Freddie and Fannie, the mortgage market would go from crippled to moribund, if not dead. We've created a system that couldn't function without them, and the cost of allowing them to collapse would be another 1930s-style Depression - the era in which these firms were first created.

They were never designed to take on the huge leverage they did, nor to use hundreds of millions in lobbyists' money and campaign contributions to create a massive payment scheme for management and shareholders. Congressional estimates are that this could cost US taxpayers $25 billion, a significant multiple of their current market caps...
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Andrew Jeffery / Minyanville:
Mortgaging the Future -- Mark Zandi, chief economist at Moody’s Economy.com, estimated earlier this year that as many as 10% of all U.S. homeowners, or 8 million borrowers, are upside-down. With the median home price hovering around $200,000, this means the true value of housing stock (around $1.6 trillion) cannot be determined.

Thus far, home prices on a nationwide basis have fallen around 15% (depending on whose data you believe), which means roughly $240 billion in home equity is yet to be wiped out - despite the fact that it no longer exists...
----
Wall Street Journal:
Home-Price Watchers Hope Drop Slows -- This week's housing-market data won't erase the souring situation surrounding Fannie Mae and Freddie Mac, but there still might be a way to make lemonade.

Start with the S&P/Case-Shiller home-price-index report due out Tuesday. It will likely show continued price declines across the country as the housing slump drags on. Those are the lemons. To sweeten that up, look to the rate of price declines in hard-hit markets such as those in California and Florida. If the rate of declines slows, as some experts expect, there is your sugar...
----

In Merced, Calif., of the central valley, frames of houses in the Riverstone development have bleached in the sun for more than a year.Merced, California: abandoned Riverstone housing development

NY Times:
In the Central Valley, the Ruins of the Housing Bust -- As Merced goes, so might go much of the nation. With as many as 2.5 million homes in the United States entering foreclosure this year and, at best, sales of only five million existing houses, the foreclosure price is becoming the rule in many areas. In Los Angeles County, whose 10 million people make it the most populous county in the United States, a third of the sales are foreclosures.

Local markets will not truly begin to recover until their foreclosures are absorbed, but just as few in Merced saw reasons for caution at the height of the boom, hardly anyone is optimistic now. Bank repossessions are accelerating as overleveraged owners see the value of their properties sink. Merced County had a record 523 foreclosures in July, quadruple the rate of a year earlier, according to DataQuick.

The repossessions are accelerating as overleveraged owners see the value of their properties sink and can find no way out...
----
CNNMoney:
These homes for sale stink -- Never before have there been so many squalid, dilapidated homes on the market - and they're helping to exaggerate already-plummeting home prices.

Mold, maggots and piles of festering trash - no wonder home prices are in freefall.

It's not just the subprime mortgage crisis that's to blame for plummeting home prices. A flood of squalid properties on the market is helping to exaggerate the post-bubble price declines.

"Part of the reason home prices are declining is a fundamental deterioration in the housing stock," said Glenn Kelman, CEO of the online, discount broker Redfin. "During the boom, nine out of 10 houses for sale in many markets were in prime condition. Now, for every 10 houses, at least three are dogs."

Most of these mutts are foreclosed properties that have been permitted to fall into disrepair by lenders overwhelmed with thousands of vacant homes. If these houses sell at all, they're going for bargain basement prices that are hurting home values throughout the neighborhood...
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The Anglo American:
MERRILL LYNCH: US Sub-Prime Gambling Debts Paid for by British Tax Payer for the next 60 years. -- Merrill Lynch has run up a $29bn loss from its collateralized debt obligations, which are backed, though not completely, by subprime mortgages. This debt has now been channeled through its UK subsidiary, Merrill Lynch International.

UK law allows such losses to be carried forward indefinitely, setting them against future profits. The Financial Times estimates that Merrill Lynch will be able to lower its UK tax bill by as much as $8bn...
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Gretchen Morgenson / NY Times:
What Will Mac ’n’ Mae Cost You and Me? -- THE inevitability of a taxpayer-funded bailout of Freddie Mac and Fannie Mae, the hobbled mortgage behemoths, shook investors last week, and shares in both companies plummeted on fears that existing stockholders would be wiped out...

There is no certainty about what form a Mac ’n’ Mae rescue would take. Naturally, this is giving investors the jitters. Up and down Fannie’s and Freddie’s capital structure, debt and equity holders want to know how a bailout would affect them...
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NY Times:
Finding the Mess Behind the Mess -- A BURSTING real estate bubble set off the Japanese recession of the 1990s, which deepened as ailing banks languished. It took Japan’s economy more than a decade to resume steady, noticeable growth.

Will this happen to the United States? Probably not, but we may face a protracted process of recovery, stretching longer than the two or so years usually required to climb out of recession.

Behind every financial crisis there is usually a crisis in the real economy, based in some underlying structural deficiency. Even if the financial crisis is bottoming out, sooner or later the real crisis must be faced.

The fundamental problem in the American economy is that, for years, people treated rising asset prices as a substitute for personal savings. The thinking went something like this: As long as your home’s value rose every year, you didn’t have to set aside so much from your paycheck.

Of course, asset prices haven’t been rising much lately, so many people will need more savings for their retirement or for possible emergencies...
related:
Seeking Alpha:
Real Estate Bubble Is Only in 4 States: CA, FL, NV, AZ -- For four states (Arizona, California, Florida and Nevada) there has definitely been a real estate bubble with a definite crash in prices in in recent quarters (see top chart above of Nevada). For six other states (Hawaii, Maryland, Massachusetts, Michigan, Rhode Island and Virginia), there's some correction in prices going on, but not enough of a price drop to make it a crash (subjective opinion, see middle chart above). For the other forty states, it seems clear that there hasn't been a crash at all, and real estate prices have continued to increase in most of those forty states...
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NY Times:
A Mission Goes Off Course -- Whenever the mortgage finance giants, Fannie Mae and Freddie Mac, find themselves in a tough spot — and boy, are they in a tough spot now! — they always seem to find a way to blame their problems on “the mission.” “We exist to expand affordable housing,” says Fannie Mae on its Web site, and although it also lists its other mission — providing liquidity for the American housing market — it is the former that has long been the companies’ trump card.

That mission of creating affordable housing is the reason that Alan Greenspan, the former Federal Reserve chairman, could testify, year after year, that Fannie and Freddie had become so large, and took so much risk, that they could one day damage the nation’s financial system — only to be utterly ignored by the same members of Congress who otherwise hung on his every word.

The mission is why Representative Barney Frank, the powerful, and usually clear-eyed, chairman of the House Financial Services Committee, will defend Fannie and Freddie even now, when their misdeeds are so clear...

Doctor Housing Bubbe:
10 Reasons why there will be no Second Half Recovery in 2008: Federal Reserve, Housing, and Jobs -- Reason #6 - Lenders are Stuck -- Lenders are sticking their fingers in their ears and trying to ignore the bombastic sound of the piper coming down the street. They don’t want to listen to the utter reality that we have $500 billion in shameless toxic pay option mortgages that are set to reset starting NOW. These loans will prove to be more troublesome than the subprime loans for a variety of reasons. First, the housing market has no buffer room anymore. That is, the entire housing market is in shambles and people will now be selling at the worst time possible...
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Mish's Global Economic Trend Analysis:
Repossessed Toys Are A Booming Business -- The San Diego Union-Tribune is reporting The Economy is forcing many to let go of luxury toys...

From Yachts To Luxury Autos, Loans Go Unpaid As The Economy Struggles. It's a Boom Time For Repo Man...

InsideBayArea is reporting Gas, economy drown Delta boating...

Frugality is the new reality. For many it is a forced event.
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Wednesday, August 20, 2008

Housing/Subprime/Credit Roundup — August 20, 2008

Items of Interest:

Housing Wire:
Mortgage Applications Fall to Lowest Level in Six Years -- Mortgage applications headed downward again last week, reaching levels not seen since 2002 as refinance volume continues to shrink and purchase applications remain at historically low levels. The Mortgage Bankers Association said Wednesday morning that its weekly survey of applications found a 1.5 percent decrease in its composite application index, to 419.3 for the week ended Aug. 15. That total was off 34.2 percent compared to year-ago application volume.

The MBA application index is calibrated to March 16, 1990; a reading of 419.3 means that application activity was roughly 4.2 times greater than when the index was first established. Application volume is now off 61 percent from its 2008 peak, recorded in February.

The drop in the MBA index roughly corresponded to results in a separate application index, the MAX series published by Mortgage Maxx LLC and often used by Wall Street prepayment researchers as a forward demand indicator; the MAX index fell 3.3 percent to a reading of 117.3 for the week ended Aug. 15, while a subindex tracking application activity in California fell 4.3 percent.

“With two more weeks left until the unofficial end of summer and mortgage rates threatening six-year highs, little on the horizon suggests any reversal of the current seasonal trend through the end of 2008,” said Mortgage Maxx publisher Paul Descloux...

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Wall Street Journal:
Rising Cost of Debt Stokes Fears On Freddie's Prospects -- Freddie Mac was forced to offer unusually rich terms to investors in a $3 billion auction of its debt, raising anew concerns about the health of the mortgage giant, a vital prop for the U.S. housing market.

Investors increasingly believe the U.S. government will take steps to rescue Freddie Mac and its sibling, Fannie Mae. The Treasury Department recently received authority from Congress to bail out the two companies, although it stopped short of doing so. Both now play a dominant role in financing mortgages. A rise in the companies' borrowing costs could translate into higher mortgage rates for consumers, prolonging the housing slump...
related:
Seeking Alpha: Will a 7% Mortgage Threat Doom Fannie and Freddie?
Big Picture: Paulson Playing Chicken With Markets: Guess Who Will Win? (GSE Edition)
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Washington Post:
Fannie's Perilous Pursuit of Subprime Loans -- As It Tried to Increase Its Business, Company Gave Risks Short Shrift, Documents Show

In January 2007, as years of loose mortgage lending were about to send the nation's housing market into devastating decline, Fannie Mae chief executive Daniel H. Mudd wrote a confidential memo to his board.

Discussing the company's successes, Mudd said one of Fannie Mae's achievements in 2006 was expanding its involvement in the market for subprime and other nontraditional mortgages. He called it a step "toward optimizing our business."

A month later, Fannie Mae outlined plans to further expand its activities in the subprime market. The company recognized the already weak performance of subprime loans but predicted that they would get better in 2007, according to another Fannie Mae document.

Internal documents show that even late in the housing bubble, Fannie Mae was drawn to risky loans by a variety of temptations, including the desire to increase its market share and fulfill government quotas for the support of low-income borrowers...
related:
Infectious Greed: Desperately Seeking Subprime

The Big Picture: His Name is Mudd -- I find it amusing that some lying liars argue that the Fannie Mae (FNM) and Freddie Mac (FRE) were "forced" to purchase sketchy mortgages by some government HUD or CRA mandate. As the Washington Post reveals, that turns out to be completely false. Rather, it was a mad grab for growth that sent Fannie into the arms of the most risky mortgages...
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AP / MSNBC:
Foreclosures likely skewing housing indicator -- Some analysts say market conditions are worse than what the data show

As if the housing market wasn’t scary enough, the record-setting surge in foreclosures could be distorting some of the closely watched housing data used to gauge the market’s health.

The foreclosure glut is making listings of homes for sale a less reliable indicator, because much of the distressed inventory might be left out. In addition, fire-sale prices for such properties may also be skewing volume figures.

Some real estate analysts say this may indicate that housing conditions are worse than they now look, dampening hopes that the troubled market could soon be bottoming out...

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said...
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Tuesday, August 19, 2008

Housing/Subprime/Credit Roundup — August 19, 2008

Items of Interest:

Housing Wire:
Single Family Housing Starts Hit 17-Year Low -- U.S. home builders may be cutting back sharply on the number of new homes built, but it may not be fast enough for a housing market moving even more quickly in reverse. Single-family housing starts fell 2.9 percent to a seasonally-adjusted annual rate of 641,000 in July, the lowest level since January 1991; but completions remained well above starts, at a rate of 791,000, according to data released Tuesday morning by the Commerce Department.

In other words, builders are frenetically pulling back on starts but still completing far more homes than they’re starting each month; with anemic demand tied to rising foreclosures and tighter credit standards, an elevated completions number relative to new single-familly starts suggest that builders may yet be pushing too many homes out onto the market despite efforts to pull back.

“The data paints a picture of buidlers pulling back, but not enough and not fast enough,” said one source, a senior executive at a commercial bank that asked not to be named...

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Barry Ritholtz / The Big Picture:
Housing Starts -- We’ve come a long way...

Housing Starts
but barely dented inventory stockpile...

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Bloomberg:
Large U.S. Banks May Fail Amid Recession, Rogoff Says -- Credit market turmoil has driven the U.S. into a recession and may topple some of the nation's biggest banks, said Kenneth Rogoff, former chief economist at the International Monetary Fund.

``The worst is yet to come in the U.S.,'' Rogoff, a Harvard University professor of economics, said in an interview in Singapore today. ``The financial sector needs to shrink; I don't think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.''

The U.S. housing slump has triggered about $500 billion in credit market losses for banks globally and led to the collapse and sale of Bear Stearns Cos., the fifth-largest U.S. securities firm. Bonds of regional banks such as National City Corp. and Keycorp are under pressure on expectations of more fallout. Rogoff, 55, said the government should nationalize Fannie Mae and Freddie Mac, the nation's biggest mortgage-finance firms.

Freddie Mac and Fannie Mae ``should have been closed down 10 years ago,'' he said. ``They need to be nationalized, the equity holders should lose all their money. Probably we need to guarantee the bonds, simply because the U.S. has led everyone into believing they would guarantee the bonds.''
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Kevin Griffin / Mortgage News Clips:
Calling it a Subprime Crisis is Sooo Last Year -- What began as a Subprime Crisis last summer has taken many twists and turns, claimed so many victims. History books may end up calling this crisis the Subprime slash Deleveraging slash LIBOR slash Auction-Rate Securities Crisis. One could easily add a few more slashes/names (TOBs, ABCP, Alt A, Prime, Moral Hazard, Too Big to Fail). How about we simplify things a bit and just call it the Hydra Crisis. You recall Hercules vs. the Hydra, the nine-headed monster from Greek Mythology. When Hercules cut off one of its heads, two heads would grow back. That visual accurately portrays this crisis...
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Monday, August 18, 2008

Housing/Subprime/Credit Roundup — August 18, 2008

Items of Interest:

Bloomberg:
Fannie, Freddie Fall on Likely Need for a Bailout -- Fannie Mae and Freddie Mac tumbled in New York trading to their lowest levels in more than 17 years on concern the government will be forced to bail out the mortgage- finance companies, wiping out common stockholders.

Fannie slid 22 percent, while Freddie dropped 25 percent after Barron's reported that the Bush administration is anticipating the government-chartered companies will fail to raise the equity they need to offset credit losses, prompting the U.S. Treasury to act. The companies' stock market values are well below the minimum of $10 billion in capital that each would need to raise to ``have any credibility,'' Barron's said in its story.

``We agree with the call for Treasury intervention and think it is very, very likely to happen before the end of the third quarter,'' Ajay Rajadhyaksha, the head of fixed income strategy for Barclays Capital Inc., said in a telephone interview today. ``Without government help, we think there is very little chance of Freddie completing a significant capital raising.'' ...

related:
Housing Wire:
Fannie, Freddie Take Another Beating -- A story appearing in Barron’s — which, it should be noted, didn’t exactly say anything really new — managed to ignite the latest round of selling by equity investors in shares of Fannie Mae and Freddie Mac...
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Zillow.com:
2nd Quarter Real Estate Report & press release
  1. Nearly 24% of homes sold in the past year were sold at a loss;
  2. Of those who purchased a home in the past five years, 29% are “upside
  3. down” (negative net equity);
  4. Median home values are down a record 10% over the past year;
  5. Home values are now deflating in 85% of the country;
  6. Almost 15% of housing sales are now foreclosed transactions.
  7. Foreclosed homes account for 50% of all home sales in some markets
  8. The second quarter is the sixth consecutive quarter of home value declines and we see little promise of turnaround in the short-term as the rates of decline have yet to slow and, in fact, actually accelerated in many markets.
  9. Interestingly, homeowners seem to be oblivious to the reality of the housing market as it pertains to their individual home. As reported last week through the Q2 Zillow Homeowner Confidence Survey(6), 62 percent of homeowners think their home value increased or stayed the same in the past year and 75 percent expect their home value to increase or stay the same in the next six months...

Zillow Real Estate report 2nd Quarter 2008
related:
The Big Picture:
Zillow Q2 RE Update -- Most homeowners [want to believe they] live in a town not unlike Lake Wobegon, where everybody is above average...

David Rosenberg / Merrill Lynch:
Daily Snapshot of Market Moving developments [pdf] -- The backdrop in housing remains decisively negative. The latest data from Zillow showed that …
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Barry Ritholtz /The Big Picture:
Nonfeasance in Financial Oversight -- If I had to select a single word to describe the Greenspan era of the Federal Reserve (and to a lesser degree, the Bush White House) Nonfeasance is the word I would choose.

How bad was the Nonfeasance this last housing cycle? An Associated Press investigation, including "dozens of interviews" and the review of "thousands of state and federal documents" found that:
  • Since 2005, at the height of the housing boom, more than two dozen states and U.S. territories have violated federal rules by failing to investigate and resolve complaints about appraisers within a year. Some complaints sat uninvestigated for as long as four years. As a result, hundreds of appraisers accused of wrongdoing remained in business.

  • The only tool federal regulators have to force states into compliance is so draconian -- it would effectively halt all mortgage lending in a state -- that it has never been used.

  • Both state appraisal boards and the federal agency tasked with their oversight are chronically understaffed, many with only one full-time investigator to handle the hundreds of complaints that arrive each year. Some don't even have an investigator.
related:
AP:
Weak rules cripple appraiser oversight -- As soaring home prices set the stage for America's great housing meltdown, a critical step in making sure those home sales were a fair deal -- the real estate appraisal -- was undermined from within. After the nation's last major banking disaster, Congress set up a system to catch rogue appraisers. Their game: inflating the value of homes at the direction of equally unscrupulous real estate agents and mortgage brokers, whose commissions are determined by the size of the deals.

But a six-month Associated Press investigation found that the system is crippled by both the bumbling of its policemen and their inability to effectively punish those caught committing fraud. And despite ample evidence appraisers are pressured into inflating home values -- sometimes to prices in support of loans that are more than buyers can afford -- the federal regulators charged with protecting consumers have thus far made a conscious choice not to act...
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Dr. Doom: Nouriel RoubiniNew York Times:
Dr. Doom -- On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.

The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.” People laughed — and not without reason...
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Vanity Fair:
The King of Central Park West -- The highest-priced new apartment building in the history of New York—indeed, at roughly $2 billion in sales, the most lucrative in the world—isn’t a sleek, one-of-a-kind glass tower. It’s architect Robert A. M. Stern’s 15 Central Park West, an ingenious homage to the classic Candela-designed apartment buildings on Park and Fifth Avenues...

The apartments were sold out before construction was completed this year, at the highest prices of any new building in the history of New York. The Zeckendorfs started selling them at roughly $2,500 a square foot, which was already at the top of the New York market, and they kept raising the prices as construction went on, until the last apartments were sold at something approaching $4,000 a square foot. The total sales were in the range of $2 billion, making 15 Central Park West the most successful apartment building in the world—the architectural equivalent, you might say, of the highest-grossing movie in history...
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Arnold Kling / EconoLog:
Freddie Mac: My Chapter -- Richard Syron... became Freddie Mac's CEO in 2003. Syron wanted to do more for low-income housing, and he did not trust the people that he found at Freddie Mac. As we now know, there was a blow-up between Syron and Freddie Mac's Chief Risk Officer over loans with low down payments. The Chief Risk Officer argued that such loans were bad for borrowers, bad for Freddie Mac, and bad for the country. Syron fired him.

In theory, Syron might have been correct. It could have been the case that the Freddie Mac holdovers he inherited were too conservative in the types of loans they were willing to buy. It could be that the policy of minimizing low-income lending and maximizing financial health was the wrong way to deal with the trade-off.

In practice, Syron's timing was awful. He pushed Freddie Mac into high risk loans just as the real estate bubble was in its final few years. He then compounded this mistake by ignoring those at Freddie Mac who said that if the company was going to take these risks, then it had to raise more capital...
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Robert Shiller book: The Subprime Solution - How Today's Global Financial Crisis Happened, and What to Do about ItReview: Robert Shiller’s Subprime Solution -- I’ve just finished Robert Shiller’s Subprime Solution: How Today’s Global Financial Crisis Happened, and What to Do about it ...

First, he thinks the subprime meltdown had more to do with psychology and sociology than economics. People believed themselves into a bubble, to the point where even rational, conservative people like the heads of Fannie Mae and Freddie Mac couldn’t forsee price drops of more than 13.4% in the housing market.

There is a strong theme of irrational responses in the face of fundamental uncertainty in this book, something The Black Swan author Nassim Taleb (who wrote a blurb for Shiller’s book) has a lot to say about. Most of the leaders of the day couldn’t see the subprime crisis as it happened, simply because they didn’t think these issues could ever get that bad.

Shiller spend a lot of time comparing the housing bubble in the US from 2000-2007 to the housing bubble which existed in the 1920’s just before the stock market crash of 1929 and the ensuing Great Depression...
related:
Economist View:
Robert Shiller interview: The Subprime Solution [video]
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Daily Kos:
$4,748.62: Your part in the housing bailout so far -- You would think that if the government was to give $1.43 Trillion (that's trillion, with a 'T') of low-interest, taxpayer-backed loans to wealthy Wall Street investors that tax paying Americans in general would be outraged. But considering the lack of any sort of public protest, that assumption would be wrong.

Maybe the public simply doesn't understand what has happened. On the off-chance that this is true, here's a quick and dirty explanation of how 10% of the GDP of America is transferred from the public to the "have's and have more's".

"The U.S. dollar is a 'faith-based currency' dependent on the credibility of a central bank"
-- Dallas Federal Reserve Bank President Richard Fisher

Federal Reserve Assets decline in quality----

Saturday, August 16, 2008

Photo Finish Analyzed: Phelps over Cavic by One-Hundredth of a Second in 100M Butterfly

Michael Phelps wins by 1/100 of a second over Cavic of SerbiaThe Olympic 100 meter butterfly race was won in an amazing come from behind victory by Michael Phelps in 1/100 of a second over Serbia’s Milorad Čavić. Anyone watching the race might have had the same reaction as Phelps' mother, Debbie, who at the finish held up two fingers, thinking her son had come in second.

Phelps won by taking an extra alligator-arm half stroke, called a short finish by swimmers, to out touch Čavić, who was gliding to the wall in what swimmers call a long finish. The difference between the two was infinitesimally small. Phelps swam the entire race from behind, and was seventh at the turn. He knew he needed to do something desperate to win.

“When I took that last stroke I thought I lost the race there, but it turns out that was the difference,” Phelps said later.

Phelps had a time of 50.58, a personal best and an Olympic record. Cavic was timed in 50.59.

The swimming team officials from Serbia, participating as an independent nation for the first time in nearly a century, protested the results. But after looked at the official FINA footage of the race finish, broken down to the 10-thousandth of a second, they backed off their protest.

Here are some photos showing how Phelps won the race:

Phelps touches wall ahead of CavicNote how Phelps' fingers (in far lane) are slightly bowed, showing that he is pressing on the wall, while Cavic's fingers are still straight. Click to enlarge.
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photo finish: Michael Phelps, on left; Milorad Cavic on rightMichael Phelps, on left; Milorad Cavic on right

photo finish: Michael Phelps, on left; Milorad Cavic on rightPhelps, left, touches wall ahead of Cavic; click to enlarge.

photo finish: Michael Phelps beats Milorad Cavic by 1/100 sec.photo finish: Phelps wins by 1/100 sec.
Notice now Cavic lifted his head and increased his drag
as he glided to the wall, probably why he lost.

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 Phelps over Cavic by 1/100 photo, top viewPhelps, top, lunges for wall ahead of Cavic
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Michael Phelps over Cavic by 1/100 photo finishPhelps, right, touches wall ahead of Cavic
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Phelps photo finishMichael Phelps (right) just out-touches Serbia's Milorad Cavic
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Phelps, lane 5, starts his last stroke to the wall

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Michael Phelps celebrates victory in 100m butterfly, photoPhelps celebrates win
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Michael Phelps and 'Mike' Cavic shake hands after race, photoCavic, left, shakes hands with Phelps
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Friday, August 15, 2008

Housing/Subprime/Credit Roundup — August 15, 2008

Items of Interest:

Louise Story / NY Times:
Home Equity Frenzy Was a Bank Ad Come True -- “Live Richly.”

That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried the phrase would encourage people to live exorbitantly, says Stephen A. Cone, a top Citi marketer at the time.

Still, “Live Richly” won out. The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people to lighten up about money and helped persuade hundreds of thousands of Citi customers to take out home equity loans — that is, to borrow against their homes. As one of the ads proclaimed: “There’s got to be at least $25,000 hidden in your house. We can help you find it.” ....

Equity vs. Debt
Home Equity: The Debt Trap----
related:
The Big Picture:
Home Equity Frenzy! -- Is it any surprise that the weakest post-recession economic recovery since WWII in terms of job creation and wage gains led to an enormous debt creation? People are loathe to give up their standard of living, and they will -- and did -- go deeply into debt to maintain their "lifestyles."

Paul Kedrosky / Infectious Greed:
Mortgage Marketers, Stupid Consumers and Jessica Rabbit -- To me, this [NY Times story] is another example of absolving consumers of responsibility. It's not my fault; it's those evil mortgage marketers who did it to me! I am tired of that sort of thing. I am tired of the line of argument that says consumers responded stupidly to what was happening in real estate markets, goaded, in large part, by evil mortgage finance companies. That argument is too convenient by half...
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Andy McCain, John McCain's son, sat on Troubled Bank's BoardWall Street Journal:
McCain's Son Sat on Troubled Bank's Board -- Sen. John McCain's son served until last month on the board audit committee of a Nevada bank that is struggling to survive amid mounting losses and regulatory scrutiny.

Andrew K. McCain, 46, was on the board of Silver State Bancorp for five months before he resigned on July 25 for unspecified "personal reasons," according to a news release issued by the bank at the time.

Andy McCain was on the board of Silver State Bancorp for just five months before he resigned on July 25 for 'personal reasons.'

A week after Mr. McCain's departure, the Henderson, Nev., company reported a loss of $62.7 million in the second quarter and said its capital -- the bank's cushion to absorb losses -- had eroded significantly. At the same time, Silver State announced the resignations of its chief executive and chairman...
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Realty Check:
Foreclosure Fixes: Why They Are Failing -- The voluntary programs to date have been doomed to failure for a couple of reasons. First, they were all voluntary, and didn’t provide lenders or loan servicers any “cover” that would allow them to get out of the contractual requirements they had in terms of foreclosure proceedings. Second, the huge pool of securitized loans really weren’t easy to do modifications or workouts on...
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Forbes / MSNBC:
The fastest dying cities in the United States -- Ohio tops the list with four communities in the top 10, Michigan is second

The turmoil of the mortgage market granted a temporary reprieve from hearing about the woes of America's Rust Belt. That doesn't mean things are better. Despite a decade of national prosperity, the former manufacturing backbone of the U.S. is in rougher shape than ever, still searching for some way to replace its long-stilled smokestacks.

Where's it worst? Ohio, according to our analysis, which racked up four of the 10 cities on our list: Youngstown, Canton, Dayton and Cleveland. The runner-up is Michigan, with two cities — Detroit and Flint — making the ranking...
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AP / MSNBC:
Trump to buy McMahon's home for him -- Developer says it ‘would be an honor’ to help out entertainer

Donald Trump will soon be Ed McMahon’s landlord.

Trump announced Thursday he would save the television personality’s Beverly Hills mansion from foreclosure by buying it for an undisclosed amount and leasing it to McMahon.

The developer told the Los Angeles Times he doesn’t know McMahon personally, but acted out of compassion because helping out “would be an honor.” ...
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Calculated Risk

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