Headlines...

NEW -> Contingent Buyer Assistance Program
<p>Isn't there some quote on a library around here? Something about "You will fare better in times with books and no money, than in times of money and no books?" </p>
 
<p>Toronto - lineup in bone-chilling temperatures and shoving, shoving?! by Canadians to buy a condo</p>

<p><a href="http://toronto.ctv.ca/servlet/an/local/CTVNews/20071113/Condo_mania_071113/20071113?hub=TorontoHome">Condo mania hits as 1 Bloor St. goes on sale</a></p>
 
<p>The credit tightening continues ... only it's the banks suffering this time ...</p>

<p><a href="http://www.bloomberg.com/apps/news?pid=20601109&sid=aM.QxZjahtiw&refer=home"><a>Citigroup Pushes Bank Borrowing Costs Above Companies (Update6)</a> </a></p>
 
<p>Ohmigod. I read about half of it.</p>

<p>I do think the munibond fears are overblown, and a buying opportunity will be there in a year or so. If anybody has any money that is.</p>

<p>Even during the Great Depression few gov't/municipalites went bust.</p>

<p>You can call 'em AAA or BBB or CCC, but bonds, say, dependent on the collection of tolls on toll roads aren't going to go to zero. Property taxes will go down, but not to zero. This is not the same as the low tranches of the mortgage backed securities.</p>

<p>When I recklessly posted that the problem was $500 bill to a Trillion and a half, based on Countrywide's loans in foreclosure and some mental back of the envelope baby math, I didn't pause to consider what that meant in real life. Eff's post does, and the true math wizards are now at my lower range, to wit: half a trillion. </p>

<p>This is truly terrifying. Keep your powder dry.</p>
 
I agree with lawyerliz. There is a munibond problem, but for the most part, it is not them defaulting. Even if completely uninsured, the vast majority of munibonds have paid in full and on time.



However, there are a few groups that will be made very uncomfortable if bond insurers are downgraded. 1. There are a number of instituitonal investors that can only hold bonds with certain ratings. If you have an underlying BBB (an OK rating, still with a pretty high probability of repayment) with a AAA insurer, they can invest in it. But if that particular investor can only have AA and AAA rated bonds, they will have to sell. There is no default by anybody, but the investor is likely to take a loss if selling after a downgrade. 2. Some issuers have auction rate bonds outstanding. Those bonds are repriced at regular intervals like weekly or monthly. If their bond guarantor's rating drops, their borrowing cost rises. They can make some changes, but it's not something they do overnight. 3. Shareholder in the bond insurers.



Having seen insurance capacity disappear in other places (like windstorm coverage after a hurricane), new money usually comes swooping in. Bond insurance for municipalities has been profitable, and has a good chance of remaining that way. It's the other things which some bond insurers guaranteed that is causing concern. If you brought in a new bond insurer with serious backing, or split the existing book of an insurer between muni and others, things would look much more normal in the munibond market.
 
<p>OPEC Interested in Non-Dollar Currency</p>

<p><a href="http://biz.yahoo.com/ap/071118/opec.html">http://biz.yahoo.com/ap/071118/opec.html</a></p>

<p>Iranian President Mahmoud Ahmadinejad said Sunday that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a "worthless piece of paper."</p>
 
<p>Would it be a good thing or a bad thing if the Fed had powers like this....</p>

<p>China Freezes Lending to Curb Investing Frenzy</p>

<p><a href="http://online.wsj.com/article/SB119542008187297217.html?mod=MKTW">http://online.wsj.com/article/SB119542008187297217.html?mod=MKTW</a></p>

<p>In recent weeks, regulators have quietly ordered China's commercial banks to freeze lending through the end of the year, according to bankers in several cities. The bankers say that to comply, they are canceling loans and credit lines with businesses and individuals</p>
 
<strong>Emotional pandering on an issue they obviously do not understand...</strong>





<a href="http://www.nytimes.com/2007/11/19/opinion/19mon1.html?_r=1&ex=1353214800&en=ed65a5977c208196&ei=5088&partner=rssnyt&emc=rss&oref=slogin">New York Times Editorial</a>





Editorial


Keeping Americans in Their Homes





Published: November 19, 2007


The nation’s housing market is in a deep recession, and further declines in new construction, sales and prices are imminent. By the end of next year, falling home values, combined with rising payments on adjustable mortgages, tighter lending conditions and, in all probability, a faltering job market, will have unleashed mass foreclosures — estimated at several hundred thousand to two million — unless something is done to help keep Americans in their homes.





In a speech last week extolling the economy’s strength, President Bush made just one reference to the battered housing market, calling it “challenged,” and asserted that we can “deal with it” and other economic uncertainties, “particularly if we keep the taxes low.”





Fortunately, some members of Congress do have a plan to help.





Senator Richard Durbin, Democrat of Illinois, recently introduced a bill that would allow bankruptcy courts to modify repayment terms on mortgages for primary homes. That could keep an estimated 600,000 troubled borrowers in their homes, paying off their mortgages, albeit over longer terms, at lower interest rates or on lower principal balances.





The bill also undoes a longstanding injustice. Under current law, mortgages on primary homes are the only type of secured debt that is ineligible for bankruptcy protection. Owners of vacation homes, farms and commercial property can modify those debts in bankruptcy court. But not your everyday homeowner. Under any circumstances, that double standard should not be allowed. With a foreclosure debacle unfolding, it must be rectified.





There are worrying signs that the White House will oppose the reform. Opponents will likely argue that modifying troubled mortgages in bankruptcy may pose a threat to the legal sanctity of other contracts. That makes no sense. Contracts are modified every day in bankruptcy court. A mortgage on a primary home is not significantly different from other secured debt.





The mortgage industry is already warning that granting bankruptcy protection to most mortgages would raise borrowers’ costs. That doesn’t make much sense either. The total economic costs of foreclosure are much greater than bankruptcy-associated costs. The cost of making sound loans could drop if the Durbin bill became law.





Senator Durbin’s reform bill must move through the Judiciary Committee, which has jurisdiction over bankruptcy issues. The committee’s chairman, Senator Patrick Leahy of Vermont, should schedule a full committee hearing as soon as Congress returns from the Thanksgiving break. There is no time to lose.
 
<p>Ok, here's the real cause of the subprime problem. No one, from the RE agent to the mortgage broker, to the CDO packaging guys, all the way up to fund managers investing money, looked beyond their next paycheck/bonus, long term - who cares? You could switch jobs by then.</p>

<p>Wall Street Plans $38 Billion of Bonuses as Shareholders Lose </p>

<p>http://www.bloomberg.com/apps/news?pid=20601087&sid=ahE8xVisWsbE&refer=home</p>
 
<p><strong>Radioactive Paper</strong></p>

<p><a href="http://www.forbes.com/home/opinions/2007/11/16/croesus-chronicles-radioactive-oped-cz_rl_1119croesus.html">http://www.forbes.com/home/opinions/2007/11/16/croesus-chronicles-radioactive-oped-cz_rl_1119croesus.html</a></p>

<p>Translation ... those lower house prices are a comin' ...</p>

<p>"Further write-downs mean "credit will be constrained," says International Monetary Fund economist Gary Schinasi. Citi and others may well have to sell liquid assets on their balance sheets to buttress their capital positions."</p>
 
<p>Crime scene: foreclosure


Cleveland's mortgage meltdown has sparked a crime wave in the


nation's hardest hit area for troubled homeowners.


<a href="http://money.cnn.com/2007/11/16/real_estate/suprime_and_crime/index.htm?cnn=yes">http://money.cnn.com/2007/11/16/real_estate/suprime_and_crime/index.htm?cnn=yes</a>


</p>

<p></p>
 
So what happens when tax revenues plunge due to slowing of consumer spending? What happens when people pay their property taxes late, or don't pay at all? Will a cash flow crises not impede the municipalities ability to pay its bondholders?
 
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