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NEW -> Contingent Buyer Assistance Program
<p><img height="330" alt="" width="600" border="0" src="http://graphics8.nytimes.com/images/2007/10/09/business/09corus-600.jpg" />


Jeanette Graham of San Diego moved into her new condominium development last year, but few others have joined her.</p>

<p>


NYT: <a href="http://www.nytimes.com/2007/10/09/business/09corus.html?pagewanted=1&ei=5087&em&en=91b5bf8371cc0630&ex=1192248000">A Bank Bet on Condos, but Buyers Want Out </a> (free registration required)








I found this particularly interesting:





Mr. Goodkin, who has been hired by institutional investors trying to short Corus’s stock or buy up its loans at a discount, said that many buyers thought that they would be able to flip the apartments before having to close.





Financial sharks at work, well, It's not illegal, so go for it.


</p>
 
<p>Good article about inflation and the disconnect between wall street and main street.</p>

<p><a href="http://www.cnbc.com/id/21266962">www.cnbc.com/id/21266962</a></p>

<p>My favorite quote:</p>

<p>"That's because "core" producer prices--which leave out the volatile food and energy sectors--inched up only 0.2% last month. But the overall rate, which includes food and energy, jumped 1.1%.</p>

<p class="textBodyBlack">Wall Street tends to pay attention only to the "core" rate because it's less subject to seasonal ups and downs. <strong>But since Americans like to eat and drive their cars, those two activities are costing a lot more these days</strong>."</p>

<p class="textBodyBlack">Crazy American public.</p>
 
Ummm, someone needs to make graph's boyfriend happy

<p class="alt" id="comment-5229"><cite></cite></p>





<p><cite>graphrix</cite> Says:


><a title="" href="http://mortgage.freedomblogging.com/2007/10/11/realtors-jam-foreclosure-seminars-at-car-conference/#comment-5229">October 12th, 2007 at 12:57 am</a> </p>

<p>LOL. No Matt it wasn’t because they didn’t have room for but because you hat tip the realists like irvinehousingblog, housingwire, blown mortgage and calculated risk. You know it’s the media and the blogs who are bringing the market down. Just like the OCR did in the 90s with all their doom and gloom.</p>

<p>{sarcasm off}</p>

<p>BTW why isn’t IHB on your blogroll?</p>



<cite>Matt</cite> Says:


><a title="" href="http://mortgage.freedomblogging.com/2007/10/11/realtors-jam-foreclosure-seminars-at-car-conference/#comment-5251">October 12th, 2007 at 9:17 am</a>

<p>to graphrix,</p>

<p>Last time I checked Lansner was on IHB’s blogroll but Mortgage Insider was conspicuously absent.</p>

<p>YOUR BLOGGER</p>



>
 
<p>Thanks Nude. That Padilla I tell you he gets testy when you turn the sarcasm level up.</p>

<p><cite>graphrix</cite> Says:


><a title="" href="http://mortgage.freedomblogging.com/2007/10/11/realtors-jam-foreclosure-seminars-at-car-conference/#comment-5278">October 12th, 2007 at 5:47 pm</a> </p>

<p>Doh! Well I sure am the hypocritical one aren’t I? </p>

<p>I fixed that for you.</p>
 
<p>For the 1000 comment I thought it would be good to promote <a href="http://ml-implode.com/">ml-implode</a> and the new Countryfried T-Shirts.</p>

<p><img class="no-convert" id="productImage_main" title="CountryFried One side" height="350" alt="CountryFried One side" width="350" src="http://www.goodstorm.com/files/images/52ADFDDD_A88CE5D4.jpg" /></p>

<p><a href="http://www.goodstorm.com/item/anarchyware/countryfried_one_side">single sided</a></p>

<p><img class="image-thumb no-convert" id="productImage_back_close_up" title="CountryFried Two sides" height="112" alt="CountryFried Two sides" width="112" filename="back_9_thumbnail" largeversion="http://www.goodstorm.com/files/images/FE9237CD_196CB860.jpg" src="http://www.goodstorm.com/files/images/FE9237CD_C090EDDC.jpg" /></p>

<p><a href="http://www.goodstorm.com/item/anarchyware/countryfried_two_sides">double sided</a></p>
 
<p><a href="http://www.reuters.com/article/newsOne/idUSSP20704820071013?sp=true">M-LEC</a></p>

<p>I know most of the people here that are also interested in financial news also read the Calculated Risk blog, but I just wanted to post it on our own boards. </p>

<p>Personally, I think this is huge. The big banks are basically saying that they still can't sell their short-term commercial loans (asset-backed commerical paper) on the open market at an interest that is lower than the income they are getting from the long-term SIV investments (mostly mortgage-backed securities), so they are going to pool their own reseves (deposits) to loan to each other rather than sell off the assets of the SIV at a loss. What makes this huge is that it implies that marking these investments to market price would not just make a huge cut into their earnings, it may actually make them insolvent. This is tragic if it's just one bank like Citigroup (7 SIV's with ~$100 Billion in "assets"), but if it is several large banks (probable), or even most banks (likely), or a combination of banks, mutual funds, and pensions funds (yikes!) then all of those investments would have to be marked to the same market price. </p>

<p>Since LIBOR is still higher than the interest being paid to these SIVs , no one is buying the commercial paper at an interest rate that allows the banks to make any money at all. Which leaves them two choices, as I see it: Keep the assets and the income streams, or sell them off at whatever price they can get for them. Either way, the banks have to account for them on the balance sheet. I see M-LEC as a last ditch effort to avoid doing that.</p>

<p>I freely admit my understanding of this is rudementary at best, so I invite any and all comers to correct my misunderstandings and/or add anything I am missing, please.</p>
 
<p>Sniffles That Precede a Recession </p>

<p>By ROBERT J. SHILLER

<p>http://www.nytimes.com/2007/10/14/business/14view.html?_r=1&ref=business&oref=slogin</p>

</p>

<p>Published: October 14, 2007</p>
 
<p>"Several of the world’s biggest banks are in talks to put up about $75 billion in a backup fund that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that threatens the broader economy. </p>

<p>Citigroup, B of A and J P Morgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days." (<em>NY Times</em> 10/14/07)</p>
 
<p>UPDATE 1-US Fed says OK for Citigroup to manage UK pensions</p>

<p>http://www.reuters.com/article/bankingfinancial-SP/idUSN1225150120071012</p>
 
<p>Commercial RE</p>

<p><a rel="nofollow" href="http://www.economist.com/finance/displaystory.cfm?story_id=9954087">http://www.economist.com/finance/displaystory.cfm?story_id=9954087</a></p>

<p>Bear Stearns subprime funds. Very interesting.</p>

<p><a rel="nofollow" href="http://www.businessweek.com/magazine/content/07_43/b4055001.htm">http://www.businessweek.com/magazine/content/07_43/b4055001.htm</a></p>

<p>An out for some subprime bwrs?</p>

<p><a rel="nofollow" href="http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=anxOH4nv1deE">http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=anxOH4nv1deE</a> </p>
 
<p>What a way to start the week. I am sure that someone will find some way to spin the news so that it will justify a 400 point raise in the stock market.</p>

<strong>Citigroup Profit Falls 57%, Hurt by Subprime Losses</strong>

<p><a href="http://www.cnbc.com/id/21302640">www.cnbc.com/id/21302640</a></p>

<p><strong>Oil Soars to New Record Above $85 a Barrel</strong></p>

<p><a href="http://www.cnbc.com/id/21301410">www.cnbc.com/id/21301410</a></p>
 
<p>B of A, JP Morgan and Citigroup have finalized the plans to <s>save their asses</s> “bail” themselves out, with a little prodding from our friends at the Treasury dept. The plan is to create a fund that will buy tens of billions of dollars in investments that lost value after global credit markets crunched. It will be called the Master Liquidity Enhancement Conduit (M-LEC). It’s expected to be operational in about 90 days.</p>

<p><img style="WIDTH: 258px; HEIGHT: 295px" height="369" alt="" width="258" src="http://img105.mytextgraphics.com/photolava/2007/10/14/wheaties-485rp7o0r.jpg" /></p>
 
<p>M-LEC doesn't solve the problem. It just puts it off indefinetely. Until Citigroup and all the other's attempt to price what the SIV's are holding, there will not be a buyer of the ABCP. When they finally have to reveal the market price of what they hold, Citi (and others, but mainly Citi) will be forced take those losses onto their books. A 57% drop in earnings will look like a good day in retrospect.</p>

<p>I think this is the other shoe waiting to drop. I don't think Citi survives it, hence the creation of M-LEC.</p>
 
<p>The more I read about this M-LEC, the less I think it will do anything, including putting off the ineveitable. The funds to purchase the paper still has to come from the banks, and therefore will be unavailable to loan out or use as reserves for loaning out, thereby leading to more non-relief of the present crunch. Unless the Fed just tells the banks they don't need reserves, or the funds and the collateral in the M-LEC can serve double duty as reserves also. And the Fed just might do that.</p>

<p>The whole thing looks like alot of smoke and mirrors to me. But, what the hay, the Fed and the member banks have been getting away with this type of horse hooey for 94 years. Who is to say they won't keep getting away with it?</p>
 
<p>This is what I wish I could say to them....</p>

<p>"Hey Jackasses!! Yeah, You! You lent money to people then they defaulted and cannot pay you back. Why exactly should you be bailed out? Can I just email you guys every time I lose money in my TDAmeritrade account? Suck it up and take it like a man!" </p>

<p>Here's the link to the article on thestreet.com</p>

<p><a href="http://www.thestreet.com/s/citi-puts-lipstick-on-asset-backed-pig/newsanalysis/banking/10384449.html?puc=_tscana">http://www.thestreet.com/s/citi-puts-lipstick-on-asset-backed-pig/newsanalysis/banking/10384449.html?puc=_tscana</a></p>

<p> </p>

<p> </p>
 
And so it begins: <a target="_blank" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=adZjDSedSCeE&refer=home">First Baby Boomer Applies For Social Security Retirement Benefits</a>
 
<p>lm - Haven't read the article yet, but the title is spectacular. How much ya wanna bet that after a few of these "alternatives", the Fed or the Treasury or both will come riding to the rescue in the name of national security or financial order, but it will end up being the taxpayer who pays?</p>
 
<p>Not much of a headline, but Bernanke lays out the major events of the last few months pretty clearly: <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20071015a.htm">http://www.federalreserve.gov/newsevents/speech/bernanke20071015a.htm</a></p>

<p> </p>
 
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