Headlines...

NEW -> Contingent Buyer Assistance Program
What can they possibly say to prove THIS IS A BOTTOM? Because the amount of the write-down is so big, it must be it? I want to throw my mouse at my computer screen. Show me the proof Wall Street.





Didn't S&P just come out a few weeks ago and say...."no more write downs?" Any sensible person would view this as a sign of more to come. A lot of people are getting sucked into this rally today. Here is the front page of Yahoo! finance. Read the intro paragraph and then the headlines. Where is this good news?




Top Stories

<cite>As of <em>2 hours, 14 minutes ago</em></cite>

<a href="http://us.rd.yahoo.com/finance/finhome/topstories/apf;_ylt=AhQzrOTyApUCXs82SqbJYwO7YWsA/*http://biz.yahoo.com/ap/080401/wall_street.html"><strong>Stocks Surge to Start Q2; Dow Soars Almost 400 Pts</strong></a><cite>- AP</cite>

<p>Wall Street began the second quarter with a big rally Tuesday as investors rushed back into stocks <strong>amid optimism that the worst of the credit crisis has passed and that the economy is faring better than expected.</strong></p>



<a href="http://biz.yahoo.com/ap/080401/us_banking_jobs.html">Celent: 200,000 US Banking Jobs at Risk</a><cite>- AP</cite>

<a href="http://us.rd.yahoo.com/finance/news/topnews/*http://biz.yahoo.com/ap/080401/economy.html">Manufacturing, Construction Weaken</a><cite>- AP</cite>

<a href="http://us.rd.yahoo.com/finance/news/topnews/*http://biz.yahoo.com/ap/080401/auto_sales.html">Ford, Toyota US Sales Down in March</a><cite>- AP</cite>

<a href="http://us.rd.yahoo.com/finance/news/topnews/*http://biz.yahoo.com/ap/080401/switzerland_ubs.html">UBS Will Write Down $19 Billion</a><cite>- AP</cite>

<a href="http://biz.yahoo.com/ap/080401/finance_analyst_note.html">Goldman Analyst Expects More Write-Downs</a><cite>- AP</cite>

<a href="http://finance.yahoo.com/tech-ticker/article/9492/Wall-Street-Castles-Made-of-Sand?tickers=UBS,DB,NCC,LEH,C,MER,GS">Wall Street Castles Made of Sand</a><cite>- Tech Ticker</cite>

>
 
<p>Wall Street is in its own fairyland. . . they just make up stuff now. </p>

<p>Bad economic news equals a bottom, good economic news equals boom. </p>

<p>I mean the traders are still arguing whether we are in a recession and claim that there is no inflation... . I have stop paying attention to the stock market.</p>
 
<p>A very fine Op-Ed in the LA Times which expresses much of my personal frustration (and I suspect that of the IHB crowd) with Washington these days.</p>

<p><a href="http://www.latimes.com/news/opinion/commentary/la-oe-schiff31mar31,0,5268536.story">http://www.latimes.com/news/opinion/commentary/la-oe-schiff31mar31,0,5268536.story</a></p>

Let the housing chips fall

The quicker we reach bottom, the quicker we can recover.

<p>By Peter Schiff





March 31, 2008





The economic crisis enters a new and more dangerous phase daily, and Americans of all levels of economic sophistication are scrambling to make sense of the myriad remedies and proposals that are springing from Washington.





The Fed has slashed interest rates -- even in the face of inflation and a crashing dollar -- and conjured new mechanisms to inject cash directly into the financial markets, including the bizarre engineering of the Bear Stearns buyout. In addition, legislators and regulators have enacted, or are pushing through, measures that will place a moratorium on home foreclosures, suspend interest rate adjustments and compel Fannie Mae and Freddie Mac to buy more mortgages. Further game-changing proposals are working their way through the think tanks and policy proposal pipelines: loan balance reductions, the suspension of "mark to market" accounting, direct federal mortgage purchases and, most bizarre, the suggestion of a Wall Street Journal columnist that the federal government buy and bulldoze the "least wanted" foreclosed homes.





When lost in the details of these measures, it is easy to miss their unifying goal: pump cash into the market, encourage lenders to keep lending and, ultimately, stop home prices from falling. But try as they might, it won't work.





The government is worried for good reason. The value of the trillions of dollars of mortgage-backed bonds that course through the American financial system is a function of homeowners' capacity -- and willingness -- to repay their mortgages. To an extent not widely understood, this is all tied to home prices.





When prices rise, everybody can repay loans. Price appreciation builds equity, and that allows even overstretched buyers to refinance or sell at a profit -- so mortgage lending becomes nearly risk free. Defaults are rare, but if they do occur, banks reclaim houses worth more than the loan. When prices are falling, this process is reversed and lending to overstretched buyers becomes a losing proposition, no matter how low interest rates drop or how much money the government drops from helicopters. That's why banks have curtailed lending.





The government is trying in vain to get funds flowing again and put a floor under prices. But it's too late. U.S. home prices are like a beach house supported by eight pillars: lax lending standards, low down payments, "teaser" interest rates, widespread real estate speculation, pliant appraisers, willing lenders, easy refinancing and a market for mortgage-backed securities. Knock out even half of these pillars and the house comes crashing down. We've knocked out all of them. Yet everyone hopes that this allegorical house can defy gravity and that bubble-era prices can be sustained in a post-bubble world.





After an unprecedented, unsustainable and irrational home price bubble for most of the current decade, authorities have about as much ability to keep prices from falling as King Canute had in stopping the tide.





At current levels, the average American still can't afford the average house. Despite the creativity of its new policies, Washington can't alter that math. The only mechanism to restore balance and get the credit flowing is for prices to fall steeply to a true market level, and for losses (for consumers and corporations) to be recognized and absorbed.





Anecdotal and statistical evidence supports this. Foreclosed homes at auction quickly find buyers and financing when price declines are severe enough. February's existing home sales figures showed the largest year-over-year price drop on record. And it was also the first month that the number of sales ticked upward in a year.





The quicker home prices find a sustainable bottom, the quicker our economy can truly recover.





Instead, the government is trying to float our allegorical collapsed beach house on a flood tide of new liquidity. But the fixes compound the problem. They're creating runaway inflation, shrinking the value of the dollar -- and heading toward unprecedented government meddling in the marketplace and a diminished sanctity of contracts.





If left unchecked, these policies may save a few mortgage holders and bail out some Wall Street firms, but they'll also wash away the prosperity that Americans have built up over generations.





Peter Schiff is president of Euro Pacific Capital and the author of "Crash Proof: How to Profit From the Coming Economic Collapse."


</p>
 
<p>Redfin commentary on current OC housing trends</p>

<p>http://lansner.freedomblogging.com/2008/04/02/are-oc-homes-priced-low-to-draw-higher-bids/</p>
 
<a href="http://tinyurl.com/2lyh7f"><strong>Senate Leaders Agree on Housing Relief</strong></a>





WASHINGTON (AP) — Senate leaders announced an agreement Wednesday on legislation to ease the slumping housing market and help millions of families threatened by foreclosure.





The scaled-back proposal released by Majority Leader Harry Reid, D-Nev., and GOP Leader Mitch McConnell of Kentucky contains an amalgam of ideas aimed at boosting demand for housing and helping homeowners saddled with subprime mortgages avoid foreclosure.





For instance, the plan contains $4 billion in grants to local governments to buy and refurbish foreclosed homes, new authority for states to issue bonds to be used to refinance subprime mortgages and a $<strong>7,000 tax credit for people buying new homes or properties in foreclosure.





...</strong>But economists across the political spectrum sounded skeptical that the measure would have much practical effect to ease the wrenching crisis in the housing market and the wave of foreclosures spreading across the country. ...
 
<p>all the changes proposed to the FHA just annoy me completely - aren't we supposed to be trying to help people - not enslave them. Funny, cause the people that don't qualify for FHA won't get such a nice deal - won't buy a house - and may actually end up in a better situation in the long run. </p>
 
Seriously. When good news comes out, the market pops. When bad news comes out, they say "it's already priced in."





What a load of sh*t. How the hell to you explain, let alone prove, that statement.
 
<p>Median Prices Hang Tough in March </p>

<p><a href="http://www.voiceofsandiego.org/articles/2008/04/04/toscano/822marchmedian040308.txt">http://www.voiceofsandiego.org/articles/2008/04/04/toscano/822marchmedian040308.txt</a></p>

<p><img alt="" src="http://images.townnews.com/voiceofsandiego.org/storyart/mar08prsqft.jpg" /></p>
 
<p> <a href="http://www.nationwide.co.uk/hpi/methodology.htm">http://www.nationwide.co.uk/hpi/methodology.htm</a></p>

<p>House prices are slightly seasonal - that is, prices are higher at certain times of year irrespective of the overall trend. This tends to be in spring and summer, when more buyers are in the market and hence sellers do not need to discount prices so heavily, in order to achieve a sale. The effect on prices over the year is of the order of +/- 2%; however this is much smaller than the change in volume of property transactions. The seasonal effect is estimated twice a year using established statistical methods.</p>

<p>For the monthly house price index where changes can be as little as 0.1%, seasonal factors are important. The Nationwide therefore produce a seasonally adjusted series for UK house prices which seeks to remove this effect so that the overall trend in prices is more readily apparent.</p>

<p>Seasonal adjustment shows that June is generally the strongest month for house prices (raw prices are 1.3% above their SA level) and January is the weakest (raw prices are 1.9% below their SA level).</p>
 
<a href="http://www.frbsf.org/news/speeches/2008/0403.html">http://www.frbsf.org/news/speeches/2008/0403.html</a>

<p class="MsoNormal"> The link between house prices and delinquency rates is not surprising. It remains true that delinquencies and foreclosures are often precipitated by life events such as illness, divorce, or the loss of a job. However, the amount of equity in the home affects the ability or willingness of homeowners to keep current on their mortgage payments when these events occur. In a market in which house prices have been stagnant or declining, a borrower with a recent mortgage secured with little or no down payment does not have the flexibility to tap into the equity in the house to weather a life event. Moreover, some borrowers may be able to afford their loans but still be unwilling to make the payments if house prices are expected to remain low or to decline. In that case, some borrowers may conclude that they should just walk away.</p>

<p class="MsoNormal">…</p>

<p class="MsoNormal">To the extent that the subprime meltdown is tied to declining house prices rather than interest rate resets, other borrowers, including prime borrowers, also could be affected. Indeed, while default rates for the latter loans are lower than for subprime loans, delinquency rates among all categories are highly correlated with house price declines across regions of the country. More formal statistical analysis confirms that differences in house-price change account for most of the regional differences in delinquency rates, whether borrowers are prime or nonprime, or whether loans have fixed or variable rates.</p>
 
I have been reading and hearing from the re bulls that lower prices will bring buyers to the market. It makes sense, doesn't it. If the television you have been wanting goes on sale, you are much more likely to buy it, as are others, right? Right.<p>

But, what is very odd about real estate and investments such as equities or commodities or whatever, is that the opposite is true. As prices move up, folks are more willing to invest. As prices move down, folks are less willing to buy real estate. As prices go down, folks are less willing to pay interest on a depreciating asset.<p>

If you have any doubts about what I just wrote, think about this. As prices went up in this last real estate cycle, were more folks interested and buying real estate or less. If I remember correctly, as prices went up, a mania was in effect and even folks who could not afford to buy, were buying. And this continued until there were no more buyers.<p>

The opposite will hold true on the downside.<p>

You may say, "But that is not smart. You should buy when prices are low and sell when prices are high." Well, you are absolutly correct, but the majority does exactly the opposite of what is best. That is why there are markets. That is the real reason the rich get richer and the masses don't.
 
You must log in or register to reply here.
Back
Top