Headlines...

NEW -> Contingent Buyer Assistance Program
<p><strong>SAN FRANCISCO (MarketWatch) -- The Federal Reserve injected roughly $6 billion into the banking system on Thursday. </strong></p>

<p> The Fed carried out three repurchase agreements totaling $47.25 billion, according to the Web site of the Federal Reserve Bank of New York. </p>

<p> The first was a 14-day, $8 billion repo on Thursday morning. The second was a six-day, $20 billion repo roughly an hour later. The third was a one-day, $19.25 billion repo. The Fed accepted more than $20 billion of mortgage-backed securities as collateral in the moves, the Web site said. </p>

<p>Other agreements were expiring, so the Fed ended up adding roughly $6 billion in extra liquidity into the system, said Lou Crandall, chief economist at Wrightson ICAP.</p>
 
<p>Okay, this is a little late. Circa 1993, however I wonder with all of the builder slow-downs etc, we'll be seeing articles like this early next year? <a href="http://findarticles.com/p/articles/mi_m5072/is_n4_v15/ai_14370475">http://findarticles.com/p/articles/mi_m5072/is_n4_v15/ai_14370475</a></p>

<p>How would work in Portola Springs? How many people need to default on their tax payment before the bond itself is considered in default?</p>
 
The following (sorry, it's long) is one of my favorite disclosures from a recent local water bond Mello-Roos / CFD issues:





----------------------


<p class="MsoNormal"><u>Sub-prime Mortgages</u><u> </u>


</p>

<p class="MsoNormal">During the past several years, many persons have financed the purchase of new homes using loans with adjustable interest rates that start low and are subject to being reset at higher rates on a specified date or upon the occurrence of specified conditions. Many of these loans allow the borrower to pay interest only for an initial period (e.g., two or three years). Also, lenders, referred to a sub-prime lenders, have made loans for the full purchase price of homes without requiring a down payment from the borrowers and, in some cases, without requiring independent verification of the borrowers' income and ability to make loan payments. Economists who follow housing trends in Southern California predict that as the interest rates on adjustable rate loans are reset (and payments are increased) there will be a decrease in home prices as fewer borrowers will be able to qualify for adjustable rate loans or conventional loans.


</p>

<p class="MsoNormal">Many borrowers who purchased homes with adjustable rate loans have refinanced before the interest reset date to obtain loans with fixed interest rates and payments that are lower than the reset interest rates and the resulting payments. However, as interest rates on conventional loans increase borrowers will not be able to refinance adjustable rate loans at lower interest rates. Some economists are concerned that a reduction in home prices will result in many existing homeowners having loan balances that exceed the value of their homes. Homeowners who may have financed the purchase of their homes with loans that did not require a down payment may also find that their loan balances exceed the value of their homes.


</p>

<p class="MsoNormal">Recent articles in financial publications report that the federal government is considering imposing stricter lending requirements that will have to be satisfied before borrowers will be allowed to obtain mortgage financing for home purchases to insure that they have the ability to make loan payments. Also, an article in the May 15, 2007 edition of the Wall Street Journal reports that more than half the banks responding to a Federal Reserve survey said they had tightened their standards for sub-prime loans in the preceding three months. Approximately 45% of these banks reported that they are also tightening standards for nontraditional mortgages, i, e., interest-only mortgages and mortgages with limited income verification. Stricter lending requirements could result in an reduction in the demand for new homes, as fewer purchasers would be able to qualify for loans, which might be a contributing factor to a reduction in home sales prices.


</p>

<p class="MsoNormal">For the reasons discussed above, homeowners in the District who may have purchased their homes with adjustable rate loans may experience difficulty in making their loan payments and paying the Special Taxes levied on their property. This would result in an increase in the Special Tax delinquency rate in the District and possible depletion of the Reserve Account. If there were significant delinquencies in Special Tax collections in the District and the Reserve Account were depleted, there could be a default in the payment of principal of and interest on the Bonds.


</p>

<p style="text-align: justify; text-indent: 0.45in; line-height: 11.4pt;" class="MsoNormal">Homeowners who experience difficulty in making their loan payments may resort to bankruptcy proceedings. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes. See "Special Tax Delinquencies," "Payment of Special Taxes" and "Bankruptcy" below and "SECURITY FOR THE BONDS -- Covenant for Superior Court Foreclosure."</p>



<p class="MsoNormal"> </p>
 
Here is a disclosure regarding NSR's issue:





<p class="MsoNormal"><u>Undeveloped Property</u><u> </u>


</p>

A portion of the property within the District is undeveloped. Undeveloped property is less valuable per acre than developed property, especially if there are no plans to develop such property or if there are severe restrictions on the development of such property. Undeveloped property also provides less security to the owners of the Bonds should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of the Special Taxes. A slowdown in or cessation of the development of land in the District could impair the ability and willingness of the owners of undeveloped property to make Special Tax payments, and could greatly reduce the value of such property in the event it has to be foreclosed upon to collect delinquent Special Taxes.
 
Well, yes, one could. Off the top of my very exhausted head (sorry, I'm whining), one of the best ways is to call the financial advisor on the bonds and ask. Alternately, you can send a public records request to the CFD (which is a public entity) and ask. The challenge, however, is finding out which district you want and then finding out who the board is, and finding out how you contact them. While it's all perfectly legal, finding representation for your taxation is very difficult. I suspect Howard Jarvis is spinning in his grave.
 
<p>Good news from Goldman Sachs about the mortgage crisis (sarcasm alert)</p>

<p><a href="http://www.cnbc.com/id/21832463">www.cnbc.com/id/21832463</a></p>

<p class="textBodyBlack">"The impact of the U.S. mortgage market crisis on the underlying economy could be "dramatic" as leveraged investors <strong>may need to scale back lending by up to $2 trillion</strong>, according to investment bank <strong><strong>Goldman Sachs</strong></strong>."</p>

<p class="textBodyBlack">"But unlike stock market losses, which are typically absorbed by "long-only" investors, this mortgage-related hit is mostly borne by leveraged investors such as banks, broker-dealers, hedge funds and government-sponsored enterprises.</p>

<p class="textBodyBlack">And leveraged investors react to losses by actively cutting back lending to keep capital ratios from falling -- A bank targeting a constant capital ratio of 10 percent, for example, would need to shrink its balance by $10 for every $1 in losses."</p>

<p class="textBodyBlack">"The macroeconomic consequences could be quite dramatic," Hatzius said in the note to clients. "If leveraged investors see $200 billion of the $400 billion aggregate credit loss, they might need to scale back their lending by $2 trillion."</p>

<p class="textBodyBlack">"This is a large shock," he said, adding the number equates to 7 percent of total debt owed by U.S. non-financial sectors. "</p>

<p class="textBodyBlack">I guess this is in line with the 200-400 billion dollar estimate most investment brokerage firms have been estimating as the cost of the subprime fallout. But I think people do not realize the real impact that 200-400 billion dollar loss really means. </p>
 
<p>I cannot take Ben Stein seriously. . .I know he worked with Nixon and has a distinguished resume but everytime I see him I think 1) "Laffer curve", 2) "Anyone? Anyone?", and 3) "Bueller...Bueller?"</p>

<p> </p>
 
<p>Different angle to the Goldman Sachs comments, and interesting quotes from other sources as well</p>

<p><a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aXHulkIznCr0&refer=home">Goldman Sees Subprime Cutting $2 Trillion in Lending (Update5)</a>





</p>
 
<p>Jubak sez, buy land, or land rich companies!!</p>

<p>Geesh, groan. Land in the middle of nowhere is land in the middle of nowhere.</p>

<p>Land near cities will be needed eventually, but is subject to all the ills this blog was set up examine.</p>

<p>Even the deceased Mr. Bruss advised people who wanted to retire in 10 years and build somewhere other than where they were living advised people not to do it, unless they planned to build within a year or so.</p>

<p>I suppose if the land has a good precious metals mine on it, that would be ok, eh, augee?</p>
 
<p>O.C. upscale home prices seen off 22% by ‘12</p>

<p><a href="http://lansner.freedomblogging.com/2007/11/16/oc-upscale-home-prices-seen-off-22-by-12/">http://lansner.freedomblogging.com/2007/11/16/oc-upscale-home-prices-seen-off-22-by-12/</a></p>
 
<p>From the containment files:</p>

<p><strong>Gartner warns of <a target="_blank" href="http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9047279">semiconductor industry downturn</a> in 2008</strong></p>

<p><em>A potential U.S. recession would hit chip makers very hard, IT consultant says.</em></p>

<p><em>The Stamford, Conn.-based IT consulting firm told clients in a report issued this week that the U.S. faces a recession by early next year because of climbing oil and gas prices and a <strong>struggling house market</strong>.</em></p>

<p><em></em></p>
 
America's vulnerable economy

<p class="info">Nov 15th 2007


From <em>The Economist</em> print edition</p>

Recession in America looks increasingly likely. Can booming emerging markets save the world economy?




<img title="" height="257" alt=" " width="300" src="http://www.economist.com/images/20071117/4607LD1.jpg" />

<p>IN 1929, days after the stockmarket crash, the Harvard Economic Society reassured its subscribers: “A severe depression is outside the range of probability”. In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession's pitiful forecasting record offers little comfort. Our latest assessment (see <a href="http://www.economist.com/opinion/displaystory.cfm?story_id=10134077">article</a>) suggests that the United States may well be heading for recession.





<a href="http://www.economist.com/opinion/displayStory.cfm?Story_ID=10134118">http://www.economist.com/opinion/displayStory.cfm?Story_ID=10134118</a></p>
 
<p>ll - Do you know how to recognize a precious metals mine?</p>

<p>It is the hole in the ground with the liar standing over it. </p>
 
Getting worried downtown

<p class="info">Nov 15th 2007 | WASHINGTON, DC


From <em>The Economist</em> print edition</p>

Whether or not it's an official recession, America's economy will feel grim



<p><a href="http://www.economist.com/opinion/displaystory.cfm?story_id=10134077">http://www.economist.com/opinion/displaystory.cfm?story_id=10134077</a></p>

<p>The bigger point is that even if the economy technically avoids a recession, it will feel like one to most Americans—because it will be led by consumers. That will be a big change. Consumer spending has not fallen in a single quarter since 1991; it has not fallen on an annual basis since 1980. Consumers barely noticed America's last recession—when low interest rates and high house prices kept them spending solidly (see chart 5). Just how voters and politicians react to a consumer downturn in an election year is worryingly uncertain. </p>
 
<p>I'm a bear, and I'm afraid. Is there any place in the forest left to hide?</p>

<p>With the Recession Becoming Inevitable the Consensus Shifts Towards the Hard Landing View. And the Rising Risk of a Systemic Financial Meltdown</p>

<p><a href="http://www.rgemonitor.com/blog/roubini/227330">http://www.rgemonitor.com/blog/roubini/227330</a></p>

<p>"I now see the risk of a severe and worsening liquidity and credit crunch leading to a generalized meltdown of the financial system of a severity and magnitude like we have never observed before. In this extreme scenario whose likelihood is increasing we could see a generalized run on some banks; and runs on a couple of weaker (non-bank) broker dealers that may go bankrupt with severe and systemic ripple effects on a mass of highly leveraged derivative instruments that will lead to a seizure of the derivatives markets (think of LTCM to the power of three); a collapse of the ABCP market and a disorderly collapse of the SIVs and conduits; massive losses on money market funds with a run on both those sponsored by banks and those not sponsored by banks (with the latter at even more severe risk as the recent effective bailout of the formers’ losses by theirs sponsoring banks is not available to those not being backed by banks); ever growing defaults and losses ($500 billion plus) in subprime, near prime and prime mortgages with severe known-on effect on the RMBS and CDOs market; massive losses in consumer credit (auto loans, credit cards); severe problems and losses in commercial real estate and related CMBS; the drying up of liquidity and credit in a variety of asset backed securities putting the entire model of securitization at risk; runs on hedge funds and other financial institutions that do not have access to the Fed’s lender of last resort support; a sharp increase in corporate defaults and credit spreads; and a massive process of re-intermediation into the banking system of activities that were until now altogether securitized. "</p>
 
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