Cut All You Want Part II
CAN'T TOUCH THIS...
Ed Leamer, director of the UCLA Anderson Forecast: "It's not going to alter the housing situation, or clarify defaults and delinquencies."
Andrew Laperriere, at International Strategy & Investment Group: "There is no silver bullet from Washington that will prevent home prices from falling further."
And you thought a double rate cut would LOWER mortgage rates?
Sept 10th, 10 year yield 4.32%; despite yesterdays double cut, today, the 10 year -19 ticks, and the yield has erupted 22 bps in 9 days to 4.55%.
HALT !!!
Absolute Capital Management Holdings whose co-founder Florian Homm quit abruptly yesterday, stopped investors from withdrawing money from eight hedge funds that manage $2.1 billion.
ABOUT FACE!!!
The regulator for Fannie Mae and Freddie Mac has reversed policy and will allow the government- chartered companies to buy more home loans.
The Office of Federal Housing Enterprise Oversight will permit Fannie Mae and Freddie Mac to increase their mortgage portfolios by about 2 percent a year beyond the existing cap of about $1.5 trillion.
ABOUT FACE, YOU SLACKJAW!!!
A stiff upper lip, causes talking out the side of one's mouth... a week after Governor Mervyn King said such steps would encourage ``risky behavior.''
The Bank of England abandoned its opposition to emergency three-month money auctions and loosened lending standards.
"This measure is being taken to alleviate the strains in longer-maturity money markets." The BOE said it will accept "mortgage collateral" at the auction.
Much like yesterday's Fed cuts... Ross Walker, an economist at Royal Bank of Scotland:
"It's a significant departure. King, will have to demonstrate that the risks to the wider financial system were such that they justified these steps."
JINGLE KEYS... previously mentioned 03/22/07 and 05/03/07.
David Olson, president of Wholesale Access Mortgage Research & Consulting: "There are a number of people who have mortgage debt that's more than the value of their house...
and a lot of those people are going to walk away. That will put more homes on the market, which already has too many."
Listings in the Orlando, Florida, area show 26,300 homes for sale, a 20-month supply.
Nationally, it would take 9.6 months to sell off all the existing homes on the market, the longest amount of time in at least eight years.
RESET ARMS!!!
Credit Suisse Group: "The number of borrowers whose mortgage payments jump in the next three months will be the second-highest ever for a quarter."
First American LoanPerformance: "Adjustable-rate mortgages of all kinds worth $139.2 billion, the most ever, are scheduled to reset at higher interest rates in the next three months.
Subprime adjustable- rate mortgages make up $84.4 billion of that total.
In the third quarter, $136.7 billion of mortgages were slated for reset, with subprime comprising $87.4 billion.
About 2.91 million subprime borrowers have adjustable-rate mortgages, about 90 percent of which will have reset at higher interest rates by the end of 2008."
UBS:"The number of adjustable-rate subprime mortgages rose to 72.5 percent, or $1.26 trillion, of all adjustable-rate loans outstanding in the first quarter, a 17-fold increase over 2001."
ARE YOU MAGGOTS WORTHY?
First American LoanPerformance: 27% of ARM mortgagee's have already missed a payment.
Andrew Laperriere: "A lot of people are operating on a mistaken impression.
The fact that more than a quarter of subprime borrowers default on their adjustable loans before the rates reset makes a political solution less likely.
The myth here is that the resets have been the driver of payment delinquencies, but the fact is if the borrower can't afford the teaser rate payments, then they can't afford to ever pay back the loan."
Bert Ely, a banking consultant: "A lot of the folks who are in trouble are in trouble even before their mortgage rate resets.
They can't refinance because they shouldn't have gotten their mortgages in the first place."
CALLING A SPADE, A SPADE...
Sung to Dude (Looks Like a Lady) by Aerosmith... Do the Hanky Skanky... close your eyes, click your heels three times and repeat the mantra after me, there is no spillover, it is contained...
Senator Charles Schumer, chairman of the joint economic committee, criticised the handling of the subprime crisis by the Fed and the Bush administration.
"In March, Chairman [Ben] Bernanke came before this committee and told us that the problems in the subprime market would have little or no impact on the overall economy.
Despite all the reassuring statements we've heard from the administration that the impact of this mess would be 'contained', it has not been contained, but has been a contagion that has spread to all sectors of the economy."
I DON'T KNOW, BUT I'VE BEEN TOLD... from todays Nattering Economic Reports: How bad is it?
No one in their right mind can say that 849,000 less new homes being built is not going to have a MASSIVE effect on an economy in which 80% of all new jobs since 2001 were created by housing.
With tightened lending standards, higher rates, all time high inventories & massive default & foreclosure rates BOTH about to boom; already record price declines will accelerate to the downside.
And folks, this was in the good times. Our non durable service based economy hasn't even slipped into the long term stagflated recession it is headed for.
Get ready to witness the event of a lifetime, unless you already lived through the 1930's...
The mountain of dubious debt upon which the markets are based is about to implode, and the hyper inflated asset bubbles based upon it, rather than earnest wage gains, is about to pop and loudly.
Paul Ashworth, an economist at Capital Economics: "The Fed is lucky that inflation is beginning to behave itself again, because the housing market is in desperate need of some monetary stimulus"
The Nattering One disagrees... stagflation is doing anything but behaving.
And with the rate cut, its about to get much worse with crude oil going to $90, then $100 a barrel. Brace yourself for $4 a gallon gasoline "cojone squeeze".
What would that do? with the MEW (mortgage equity withdrawal) spigot already turned off and a consumer spending drought in process?
THE FEW, THE PROUD... Patrick Newport, an economist at Global Insight: "The eye of the storm is just ahead."
Robert Shiller, a Yale economist speaking to a Senate sub comittee: "The decline in house prices stands to create future dislocations, like the credit crisis we have just seen.
(While there had been) a focus on lax and irresponsible lending standards, I believe that this loss in housing value is the major ultimate reason we see a crisis today.
...the collapse of home prices might turn out to be the most severe since the Great Depression."
Alex Pollock, a fellow at the American Enterprise Institute: "Residential real estate is a huge asset class, with an aggregate value of about $21 Trillion...
and is of course the single largest component of the wealth of most households."
Just a 15% fall in house prices would wipe out $3.15 Trillion of household wealth. Hat Tip to Bloomberg, MSN & Financial Times.
Ed Leamer, director of the UCLA Anderson Forecast: "It's not going to alter the housing situation, or clarify defaults and delinquencies."
Andrew Laperriere, at International Strategy & Investment Group: "There is no silver bullet from Washington that will prevent home prices from falling further."
And you thought a double rate cut would LOWER mortgage rates?
Sept 10th, 10 year yield 4.32%; despite yesterdays double cut, today, the 10 year -19 ticks, and the yield has erupted 22 bps in 9 days to 4.55%.
HALT !!!
Absolute Capital Management Holdings whose co-founder Florian Homm quit abruptly yesterday, stopped investors from withdrawing money from eight hedge funds that manage $2.1 billion.
ABOUT FACE!!!
The regulator for Fannie Mae and Freddie Mac has reversed policy and will allow the government- chartered companies to buy more home loans.
The Office of Federal Housing Enterprise Oversight will permit Fannie Mae and Freddie Mac to increase their mortgage portfolios by about 2 percent a year beyond the existing cap of about $1.5 trillion.
ABOUT FACE, YOU SLACKJAW!!!
A stiff upper lip, causes talking out the side of one's mouth... a week after Governor Mervyn King said such steps would encourage ``risky behavior.''
The Bank of England abandoned its opposition to emergency three-month money auctions and loosened lending standards.
"This measure is being taken to alleviate the strains in longer-maturity money markets." The BOE said it will accept "mortgage collateral" at the auction.
Much like yesterday's Fed cuts... Ross Walker, an economist at Royal Bank of Scotland:
"It's a significant departure. King, will have to demonstrate that the risks to the wider financial system were such that they justified these steps."
JINGLE KEYS... previously mentioned 03/22/07 and 05/03/07.
David Olson, president of Wholesale Access Mortgage Research & Consulting: "There are a number of people who have mortgage debt that's more than the value of their house...
and a lot of those people are going to walk away. That will put more homes on the market, which already has too many."
Listings in the Orlando, Florida, area show 26,300 homes for sale, a 20-month supply.
Nationally, it would take 9.6 months to sell off all the existing homes on the market, the longest amount of time in at least eight years.
RESET ARMS!!!
Credit Suisse Group: "The number of borrowers whose mortgage payments jump in the next three months will be the second-highest ever for a quarter."
First American LoanPerformance: "Adjustable-rate mortgages of all kinds worth $139.2 billion, the most ever, are scheduled to reset at higher interest rates in the next three months.
Subprime adjustable- rate mortgages make up $84.4 billion of that total.
In the third quarter, $136.7 billion of mortgages were slated for reset, with subprime comprising $87.4 billion.
About 2.91 million subprime borrowers have adjustable-rate mortgages, about 90 percent of which will have reset at higher interest rates by the end of 2008."
UBS:"The number of adjustable-rate subprime mortgages rose to 72.5 percent, or $1.26 trillion, of all adjustable-rate loans outstanding in the first quarter, a 17-fold increase over 2001."
ARE YOU MAGGOTS WORTHY?
First American LoanPerformance: 27% of ARM mortgagee's have already missed a payment.
Andrew Laperriere: "A lot of people are operating on a mistaken impression.
The fact that more than a quarter of subprime borrowers default on their adjustable loans before the rates reset makes a political solution less likely.
The myth here is that the resets have been the driver of payment delinquencies, but the fact is if the borrower can't afford the teaser rate payments, then they can't afford to ever pay back the loan."
Bert Ely, a banking consultant: "A lot of the folks who are in trouble are in trouble even before their mortgage rate resets.
They can't refinance because they shouldn't have gotten their mortgages in the first place."
CALLING A SPADE, A SPADE...
Sung to Dude (Looks Like a Lady) by Aerosmith... Do the Hanky Skanky... close your eyes, click your heels three times and repeat the mantra after me, there is no spillover, it is contained...
Senator Charles Schumer, chairman of the joint economic committee, criticised the handling of the subprime crisis by the Fed and the Bush administration.
"In March, Chairman [Ben] Bernanke came before this committee and told us that the problems in the subprime market would have little or no impact on the overall economy.
Despite all the reassuring statements we've heard from the administration that the impact of this mess would be 'contained', it has not been contained, but has been a contagion that has spread to all sectors of the economy."
I DON'T KNOW, BUT I'VE BEEN TOLD... from todays Nattering Economic Reports: How bad is it?
No one in their right mind can say that 849,000 less new homes being built is not going to have a MASSIVE effect on an economy in which 80% of all new jobs since 2001 were created by housing.
With tightened lending standards, higher rates, all time high inventories & massive default & foreclosure rates BOTH about to boom; already record price declines will accelerate to the downside.
And folks, this was in the good times. Our non durable service based economy hasn't even slipped into the long term stagflated recession it is headed for.
Get ready to witness the event of a lifetime, unless you already lived through the 1930's...
The mountain of dubious debt upon which the markets are based is about to implode, and the hyper inflated asset bubbles based upon it, rather than earnest wage gains, is about to pop and loudly.
Paul Ashworth, an economist at Capital Economics: "The Fed is lucky that inflation is beginning to behave itself again, because the housing market is in desperate need of some monetary stimulus"
The Nattering One disagrees... stagflation is doing anything but behaving.
And with the rate cut, its about to get much worse with crude oil going to $90, then $100 a barrel. Brace yourself for $4 a gallon gasoline "cojone squeeze".
What would that do? with the MEW (mortgage equity withdrawal) spigot already turned off and a consumer spending drought in process?
THE FEW, THE PROUD... Patrick Newport, an economist at Global Insight: "The eye of the storm is just ahead."
Robert Shiller, a Yale economist speaking to a Senate sub comittee: "The decline in house prices stands to create future dislocations, like the credit crisis we have just seen.
(While there had been) a focus on lax and irresponsible lending standards, I believe that this loss in housing value is the major ultimate reason we see a crisis today.
...the collapse of home prices might turn out to be the most severe since the Great Depression."
Alex Pollock, a fellow at the American Enterprise Institute: "Residential real estate is a huge asset class, with an aggregate value of about $21 Trillion...
and is of course the single largest component of the wealth of most households."
Just a 15% fall in house prices would wipe out $3.15 Trillion of household wealth. Hat Tip to Bloomberg, MSN & Financial Times.
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