Headlines...

NEW -> Contingent Buyer Assistance Program
<p>The tooth fairy is going to supply the money, with contributions from the sale of all the lost socks that the sock fairy has been hoarding.</p>

<p>For what it's worth, I have been in malls a bunch in Miami and the space coast, and except for the Christmas ornaments, you couldn't tell it was


Christmas; the number of people seem to be about the same as any other season, no extra Christmas shoppers at all.</p>
 
<a href="http://tinyurl.com/2rgopn">The ISM slipped for the fifth straight month</a>.


<em>


</em>

<p><em> Norbert Ore, chair of the ISM factory survey committee, dismissed doom and gloom reports and said manufacturing exports were doing well. </em> <em> "The closer manufacturers are tied to exports, the better life is going to be right now," Ore said. </em> </p>

<p><em>On the optimistic side, the new-orders index edged up to 52.6% from 52.5% in October. </em> </p>

<em>Production rose to 51.9% in November from 49.6% in the previous month. </em> <em>


On the pessimistic side, employment fell to 47.8% in November from 52.0% in the prior month. This is the lowest since September 2003. This could cause economists to trim their forecasts for the key November unemployment report to be released Friday. Economists are now expecting a slim 60,000 jobs were added in the month.</em>


<em>


The price index inched higher to 67.5% in November from 63.0%.</em>





Is it just me, or does it seem strange that the ISM is down, but our exports are up? And, exports are a major contribution to our GDP, keeping the GDP numbers up.
 
The spirit of William Jennings Bryan lives. Hillary's five year freeze (and perhaps the Fed's inflationary policies) could use a quote from the Cross of Gold speech, which advocated moving from the gold standard in order to cause inflation and make it easier for farmers to pay their debts in post-inflation dollars. "this was a struggle between the idle holders of idle capital and the struggling masses who produce the wealth and pay the taxes of the country; and my friends, it is simply a question that we shall decide upon which side shall the Democratic Party fight. Upon the side of the idle holders of idle capital, or upon the side of the struggling masses? That is the question that the party must answer first; and then it must be answered by each individual hereafter. The sympathies of the Democratic Party, as described by the platform, are on the side of the struggling masses, who have ever been the foundation of the Democratic Party.



There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it."



Audio from 1896http://historymatters.gmu.edu/d/5354/
 
And there are those who think that it is un-Constitutional for our government to legislate to make anyone prosperous. Legislation which favors one group discriminates against another group.
 
<p>Hmm, lack of headlines actually. I agree with many on Lasner's blog, this should be a front page, top half story.</p>

<p>Some highlights: 37.6% of sales resulted in a loss. Average loss $109K. In January loss sales were 20% of volume, in October 70%...</p>

<p>http://lansner.freedomblogging.com/2007/12/03/bet-wrong-on-oc-home-lose-109514/</p>
 
<em>>>And there are those who think that it is un-Constitutional for our government to legislate to make anyone prosperous.</em>





Oh Awgee, I love you to death, but that train left the station circa 1786. Head to the library or Amazon and check out <a href="http://orca.ocpl.org/uhtbin/cgisirsi/1KhN01XdAb/ALISOVIEJO/42090276/9">The Gilded Age</a> for post Civil War tales.





Awhile back I asked if you knew of the K Street Project and never followed up. <a href="http://www.washingtonmonthly.com/features/2003/0307.confessore.html">Well, here ya go.</a>
 
Wow. <a href="http://mortgage.freedomblogging.com/2007/12/04/option-one-shuts-down-lending-irvine-cuts-unknown/">Mortgage Insider » Blog Archive » Option One shuts down lending, Irvine cuts unknown - OCRegister.com</a>
 
<p><a href="http://online.wsj.com/article/SB119669624800711876.html">Paulson Urges Congress To Act on Loan Woes - WSJ.com</a></p>

<p class="times"><em>"Even as the administration prods lenders to help troubled borrowers, </em><a class="times rolloverQuote" onmouseover="window.status=(' Quotes & Research for FNM');return true" onmouseout="window.status=('');return true" href="http://online.wsj.com/quotes/main.html?type=djn&symbol=FNM"><em>Fannie Mae</em></a><em> and </em><a class="times rolloverQuote" onmouseover="window.status=(' Quotes & Research for FRE');return true" onmouseout="window.status=('');return true" href="http://online.wsj.com/quotes/main.html?type=djn&symbol=FRE"><em>Freddie Mac</em></a><em> announced additional fees, or surcharges, that will raise the cost of some new mortgage loans. The surcharges, likely to be passed on to consumers, will affect certain loans purchased or guaranteed by the two government-sponsored mortgage companies after March 1. Some lenders already are starting to apply them, said Lou Barnes, a mortgage banker in Boulder, Colo".</em></p>

<p class="times"><em>"The surcharges affect mortgage borrowers who have credit scores below 680, on a standard scale of 300 to 850, and who are borrowing more than 70% of the property's value. For instance, someone with a credit score of 650 would pay a surcharge of 1.25% of the loan amount for a mortgage to be sold to Fannie. On a $300,000 loan, that would mean extra fees of $3,750 for the borrower. That could be paid in cash or in the form of a higher interest rate than would normally apply".</em></p>
 
Ben Stein's comments on Goldman Sach's role in the CDO mess;

http://www.nytimes.com/2007/12/02/business/02every.html?em&ex=1196917200&en=4549799c0aaca324&ei=5087%0A
 
<p>So Fannie and Freddie think that house prices are going to go down at least 10% more, and so now the real cushion is 30% down not 20% down?</p>

<p>This money is lieu of mtg insurance? 680 is not great, but it's not really horrible either.</p>

<p>When we came to Florida in '72, we had gotten into law school, but did not actually have jobs yet. The bank wanted 20% down, which we had because of the sale of a previous house, and help from relatives. The hub promptly got a job with the hurricane center, which was then on the U of M campus, accross the street from the law school. </p>

<p>Point is, we would not have gotten that loan, if the standards were as tight as they are today. We lived there 9 years, paid every payment on time, and more than doubled our money. From $22,500, which was about 2500 under mkt (the seller hated realtors and deducted the commission from the sale price) to a big $50,000. F & F's actions will more than cancel out the bail-out, assuming it ever happens.</p>
 
<p><a href="http://www.ft.com/cms/s/0/e2ed6322-a2b5-11dc-81c4-0000779fd2ac.html?nclick_check=1">Dodd questions Paulson’s role in subprime crisis</a></p>

<p>From FT:</p>

<p>"The political tensions over the US subprime mortgage meltdown rose on Tuesday as the chairman of the powerful Senate banking committee questioned the role of treasury secretary Hank Paulson in the crisis.</p>

<p>Chris Dodd, the Democratic senator from Connecticut who is running for president, said he was “deeply concerned” about a column in The New York Times that accused Goldman Sachs of “injecting dangerous financial products into the world’s commercial bloodstream” during Mr Paulson’s tenure as chief executive of the company.</p>



“If these facts are indeed true, the administration’s inaction when this crisis began to emerge earlier this year, is increasingly suspect,” Mr Dodd said. “It is in the best interest of resolving this crisis if Secretary Paulson  . . . addresses the concerns. Failure to do so may be cause for a more formal investigation.”



<p>Mr Dodd’s statement came one day after Mr Paulson called on Congress to pass housing legislation that he has said would help curtail an expected onslaught of home foreclosures next year."</p>
 
<a href="http://www.reuters.com/article/bondsNews/idUSN0452941320071204">Subprime bond losses to climb to 20 pct -analysts</a>







Apparently, it is not just a subprime problem...








<p> DANA POINT, Calif., Dec 4 (Reuters) - Expected losses for troubled mortgages known as Alt-A loans are now more than double earlier forecasts and losses for subprime bonds originated in 2006 may climb to 20 percent or more, analysts said on Tuesday.</p>

<p> Moody's Investors Service on Tuesday raised its forecast for expected losses for U.S. mortgages known as "Alt-A" residential mortgage debt. Loss estimates for Alt-A bonds reviewed by Moody's increased by an average of 110 percent from initial expectations, with some loss estimates up by as much as 270 percent, Moody's said in a report.</p>

<p> Alt-A mortgages are made to borrowers with credit scores above subprime but who have other risky attributes, such as no proof of income or lack of an equity stake in the property.</p>

<p> "Alt-A performance has not been very good," said Jonathan Polansky, a managing director at Moody's Investors Service, during a panel discussion at a bond conference on Tuesday.</p>

<p> For subprime bonds, losses for those underlying securities for collateralized debt obligations, or CDOs, are expected to be "well over 20 percent," said Kevin Kendra, managing director for structured credit at Derivative Fitch.</p>

<p> UBS AG has raised its expectations for subprime bond losses to about 20 percent, said Douglas Lucas, an executive director at UBS. As recently as this summer those losses were expected to be 16 percent, versus 11 percent at the beginning of the year, he said during a panel discussion on Tuesday at the Opal Financial Group CDO Summit.</p>

<p> Other financial firms have estimates of between 18 percent and about 23 percent, Lucas said. UBS last month said the U.S. subprime crisis could result in losses totaling between $380 billion to $480 billion, including $85 billion in losses due to the collapse of CDOs. (Editing by Leslie Adler) </p>
 
<a href="http://tinyurl.com/3cccpl">So much for containment</a>.





<p><strong>Subprime woes spread north of the border</strong></p>

<p>Analysis: Canada cuts rates in response to U.S. woes</p>

<p>With the Bank of Canada cutting interest rates on Tuesday, the U.S. subprime mess has thus claimed another victim, contrary to the happy talk from U.S. officials earlier in the year that it would remain "contained" to a small sector of the U.S. economy.</p>

The bank explicitly cited the contagion from subprime in its statement announcing the quarter-point cut in the overnight rate to 4.25%.





"Global financial market difficulties related to the valuation of structured products and anticipated losses on U.S. subprime mortgages have worsened since mid-October, and are expected to persist for a longer period of time," the bank said.
 
<p>Is that 20% the AAA top tranches, bottom tranches or all tranches combined?</p>

<p>Let me try again.</p>

<p>Are they saying they're expecting a 20% default rate for the underlying asset securing the bond or are they saying the are expecting the bond itself to lose 20% (market value trading) or are they saying that 20% of the CDO holders in the lower tranches aren't getting diddly?</p>

<p> </p>

<p> </p>
 
America is not in the mood...





<a href="http://www.nytimes.com/2007/12/01/business/01charts.html">To shop</a>.





AMERICANS have grown much more pessimistic about both their own future and that of the economy, according to surveys being released just as the holiday shopping season gets going.





While it is unclear how much that pessimism will influence shopping, the pollsters are finding that fewer Americans say they are planning major purchases than at any time in recent years, and that the proportion expecting the economy will <strong>create more jobs is at its lowest level since 1974</strong>.





Such concerns could be cited as an argument for the Federal Reserve to lower interest rates when its Open Market Committee meets Dec. 11, despite worries about inflation. But another survey indicates that Americans are growing more worried about the inflation outlook as well.





And here is the chartporn:





<img src="http://graphics8.nytimes.com/images/2007/11/30/business/1201-biz-CHARTSweb.gif" alt="" />
 
<p>Re <strong>Subprime woes spread north of the border</strong></p>

<p>Don't worry, Canada, like the US, now has a former Goldman Sachs guy as as governor of the Bank of Canada (<a href="http://www.gata.org/node/5599">http://www.gata.org/node/5599</a>). I'm sure he'll help them out, just like Paulson in the <a href="http://www.ft.com/cms/s/0/e2ed6322-a2b5-11dc-81c4-0000779fd2ac.html?nclick_check=1">Dodd questions Paulson’s role in subprime crisis</a> link ealier in the headlines thread.</p>

<p></p>
 
<a href="http://www.ft.com/cms/s/0/567cb7cc-a2be-11dc-81c4-0000779fd2ac.html?nclick_check=1">Legg Mason sees dire credit market</a>.





Chip Mason, chief executive and founder of Legg Mason, one of the world’s largest money managers, said on Tuesday that the credit markets are in the worst state he has seen in his 47 years in the business.

<p>“It is a very unusual situation. I have not seen anything like this, where nothing is traded,” said Mr Mason. Legg has more than $1,000bn in assets under management, including several large money market funds.</p>

<p>Mr Mason said the US Treasury should put $20bn into the planned structured investment vehicles superfund, in an indication that the government was standing behind it. That would boost confidence, he said at Legg Mason’s annual media event in New York.</p>

<p>He said the credit turmoil had been notable for hitting money markets and traditional mortgages, which were traditionally among the lowest-risk investing classes.</p>

<p>Mr Souede, whose Permal manages close to $40bn, put the odds of a recession in the US at about 40 per cent. He appeared slightly more pessimistic than the others on the Legg Mason panel. </p>

<p>He added that if the US went into recession, “China will fall hard and take the rest of Asia with it. I don’t think that China can withstand a severe US recession”.</p>
 
Why does Peter do this to himself? That, Mike Norman is a F'ing prick.


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