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NEW -> Contingent Buyer Assistance Program
<p>Calculated Risk talks about a PPT (plunge protection Team) that helps to prevent the mkt from plunging. I thought this was a joke. Apparently it's not a joke.</p>

<p>Apparently it's been going on since 1989, nearly 20 years and apparently involves the govmint buying shares in some fashion. There is a 41 page paper appended to one of the posts which I have not got the energy to read.</p>

<p>So we are getting the death of a thousand cuts instead. Hell, that might not even be a bad thing.</p>
 
<p>Fannie, Freddie Could See Easing of Capital Requirement</p>

<p><a href="http://online.wsj.com/article/SB120578728020242975.html?mod=hps_us_whats_news">http://online.wsj.com/article/SB120578728020242975.html?mod=hps_us_whats_news</a></p>

<p class="times">The Office of Federal Housing Enterprise Oversight is close to reducing, but not completely removing, an excess capital requirement it has in place at both firms, people familiar with the matter said. The requirement, imposed in the wake of accounting problems several years ago, forces them to hold 30% more capital than their normal minimums.</p>
 
<p>Overstating income helped sink mortgage industry</p>

<p><a href="http://www.dailynews.com/business/ci_8582831">http://www.dailynews.com/business/ci_8582831</a></p>

<p>That's reflected in a quarterly report that Interthinx published. The company found that 24.4percent of home loans examined in the third quarter of 2007 were deemed to have a high risk of fraud, a number that declined to 21.7percent in the fourth quarter. The fraud problem gained national attention last week, when President Bush's Working Group on Financial Markets called for stricter regulation of mortgage lenders. </p>
 
<p>In 1978, my secy wanted to buy a house--it was a 1200 square foot townhouse, she had a downpayment and our mutual boss was brought the income verification to send back to the lender.</p>

<p>How much do you want me to put down he said? </p>

<p>She sold it a few years later, having timed it wrongly, for exactly what she paid for it. </p>

<p>This is absolutely nothing new. It's an arms race. They want pay stubbs, you can get someone to fake them.</p>

<p>Of course, she was very smart and wouldn't have bought something SHE thought she couldn't afford. And her parents were well off, so if needed they would have helped out. Her next 2 houses she did very well on, financially speaking.</p>
 
<p>Bank-to-bank lending freezes, bankers ask “who's next?”</p>

<p>http://www.globeinvestor.com/servlet/story/RTGAM.20080317.wmarketsseizure0317/GIStory/</p>
 
<p><em>First, JPM is overpaying.</em></p>

<p>I'm still stunned.</p>

<p>Four months ago, BSC was worth $120/share.</p>

<p>Five days ago, BSC confirmed it's book value of $80+/share when trading at $60/share.</p>

<p>The client's freaked and wanted their money.</p>

<p>On Friday it got pummeled 50% to $30/share.</p>

<p>On the weekend it virtually got sold for $2/share.</p>

<p>You may be right, but how exactly does a company go from $80/share book value to virtually $0 in three days?</p>

<p> </p>

<p> </p>
 
It's not worth anything more than what someone is willing to pay for it. That's the funny thing about financial firms, IMO. Most of their business is intangible, like pressing buttons on a compute ror wiring some funds electronically. They don't produce anything tangible.
 
<em>"You may be right, but how exactly does a company go from $80/share book value to virtually $0 in three days?"</em>





When your published book value is based on a fantasy, it is a matter of when people realize your true book value is zero. This is why all the lenders have been trying to avoid valuing all of their toxic paper on a mark-to-market basis. If they all did this, it would be revealed all of their book values are negative.
 
They have to keep MBIA, Ambac, BSC, etc. from going to bankruptcy, because in bankruptcy everything gets valued at market prices and none of the banks or lenders or hedge funds or insurance houses or ... can afford to have their derivatives marked to market.
 
<em>>>When your published book value is based on a fantasy, it is a matter of when people realize your true book value is zero. This is why all the lenders have been trying to avoid valuing all of their toxic paper on a mark-to-market basis. If they all did this, it would be revealed all of their book values are negative.</em>





In a sense, you could analogize that to housing. Just because your appraiser said and your lender agreed that your house was worth $1M, if no one wants to buy it at $1M, is it still valued at $1M?
 
<p><a href="http://www.nytimes.com/2008/03/18/opinion/18tabarrok.html?_r=1&oref=slogin">http://www.nytimes.com/2008/03/18/opinion/18tabarrok.html?_r=1&oref=slogin</a></p>

<p> </p>

<img alt="" src="http://graphics8.nytimes.com/images/2008/03/18/opinion/18opchart.large.gif" />
 
California February 2008 Home Sales

March 14, 2008



http://www.dqnews.com/News/California/RRCA080314.aspx



A total of 20,513 new and resale houses and condos were sold statewide last month. That makes it the slowest February in DataQuick's records, which go back to 1988. Sales were up 7.1 percent from 19,145 in January and down 34.3 percent from 31,228 for February last year.



The median price paid for a home last month was $373,000, down 2.6 percent from $383,000 for the month before, and down 21.0 percent from $472,000 for February a year ago. The median peaked last March/April/May at $484,000.



Around half the drop in median is due to shifts in the types of homes selling, and how those homes are financed. Last month 15.5 percent of the state's financed home purchases were purchased with "jumbo" loans over $417,000. A year ago it was 37.3 percent.



The typical mortgage payment that home buyers committed themselves to paying last month was $1,665. That was down from $1,743 in January, and down from $2,196 for February a year ago. Adjusted for inflation, mortgage payments are back to where they were four years ago. They are 22.2 percent below the spring 1989 peak of the prior real estate cycle. They are 32.8 percent below the current cycle's peak in June 2006.
 
<p><em>The Federal Open Market Committee decided today to <strong>lower its target for the federal funds rate 75 basis points to 2-1/4 percent.</strong></em></p>

<p><em>Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.</em></p>

<p><em>Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.</em></p>

<p><em>Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.</em></p>

<p><em>Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting. </em></p>

<p><em>In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco.</em></p>
 
<p>L.A. listing prices down another $600</p>

<p><a href="http://latimesblogs.latimes.com/laland/2008/03/la-listing-pric.html">http://latimesblogs.latimes.com/laland/2008/03/la-listing-pric.html</a></p>

<p>Date Median listing price Inventory </p>

<p>4/06 $579,666 27,251


4/07 $545,000 35,489


5/07 $545,000 38,297


6/07 $540,000 40,766 (up 20.4% y/y)


7/07 $535,000 42,685 (up 14.5% y/y)


8/07 $529,000 44,483 (up 13.6% y/y)


9/07 $520,000 46,414 (up 16.9% y/y)


10/07 $510,000 46,603 (up 15.6% y/y)


11/07 $499,900 46,503 (up 19.0% y/y)


12/07 $495,000 (down 10.0% y/y) 43,174 (up 28.2% y/y)


1/08 $479,900 (down 12.6%) 40,850 (up 33.3% y/y)


2/08 $475,000 (down 13.5%) 43,625 (Up 38.3%)


3/3/08 $469,000 (down 14.7%) 42,356 (Up 35.0%)<strong></strong>


3/10/08 $465,500 (down 15.4%) 41,838 (Up 32.3%)


<strong>3/17/08 $464,900 (down 15.5%) 42,098 (Up 31.4%)</strong></p>
 
Fresh data add to US housing gloom

<p>"New housing projects in the US fell by 0.6 per cent in February, in a decline that was smaller than expected, but economists said there was still no end in sight to the slump in the US housing industry.</p>

<p>Housing starts dropped to 1,065,000 units on an annualised basis last month, the commerce department said on Tuesday, while it made upward revisions to figures for January and previous months.</p>

<p>However, the stronger-than-expected showing was offset by a 6.2 per cent fall in building permits for single family homes and a 10.8 per cent drop in permits for multi-family homes – key measures of future construction activity.</p>

<p>“The bottom line is that construction activity should continue to erode throughout 2008”, said analysts at Goldman Sachs. The housing slump, involving falling home prices and rising foreclosures, has been at the root of the credit crisis that began hitting Wall Street last year and led to a sharp slowdown in the US economy, with many economists now pointing to a recession... </p>

<p><em>Financial Times</em> 3/18</p>
 
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