UH OH
S&P just dropped a bombshell
getting downright freaky
------------------------------------
S&P Lowers or May Cut Ratings on $534 Billion of Mortgage Debt
By Emma Moody
Jan. 30 (Bloomberg) -- Standard & Poor's lowered or may cut ratings on $534 billion of residential mortgage securities and collateralized debt obligations.
The securities represent $270.1 billion, or 6,389 classes, of mortgage securities rated between January 2006 and June 2007 and $263.9 billion, or 1,953 classes, of CDOs, S&P said today in a statement.
S&P just dropped a bombshell
getting downright freaky
------------------------------------
S&P Lowers or May Cut Ratings on $534 Billion of Mortgage Debt
By Emma Moody
Jan. 30 (Bloomberg) -- Standard & Poor's lowered or may cut ratings on $534 billion of residential mortgage securities and collateralized debt obligations.
The securities represent $270.1 billion, or 6,389 classes, of mortgage securities rated between January 2006 and June 2007 and $263.9 billion, or 1,953 classes, of CDOs, S&P said today in a statement.
can't afford your home? burn it down
this gonna get messy
---------------
Broke homeowners linked to arsons
Authorities in economically stressed cities see an increase in torched houses. Is the nation's mortgage mess transforming more Americans into criminals?
By Marilyn Lewis
Arson is nothing new in Detroit. It's a time-honored weapon of the angry, vengeful, distressed and dispossessed in a city that gets hurt harder and sooner than others, making it a perfect place to spot early evidence of stress from the real-estate meltdown.
The Detroit Fire Department can't draw a definitive link between its rising arson rate (151 arrest warrants in 2007), rising foreclosures (up more than 65% last year) and falling housing prices (the region's median house price dropped 17.3% in the past four years, to $145,173).
But Capt. Steve Varnas of the department's arson section says he sees a connection: In 2005, the city issued only 80 arrest warrants for arson -- about half the number last year. "Things were going great," Varnas says. "There were fewer desperate people in 2004 and 2005."
Across the U.S., homeowners are searching for ways to escape from mortgages they can't pay -- or don't want to. A few are turning to arson, but it's too soon to turn anecdotes into meaningful statistics. Consumer pressure and state laws require speedy settlements, which means insurance companies are quick to pay up and slower to complete complex arson investigations. Definitive answers will come later.
But the signs of trouble are there if you're looking for them:
* The FBI reportsthat arson grew 4% in suburbs and 2.2% in cities from 2005 to 2006. The 2007 numbers aren't out yet.
* In California, a state hit particularly hard by foreclosures, insurance companies must tell the state within 60 days if they suspect a fire is "questionable." Last year, more than 120 reports were filed, and in 14 foreclosure was named a possible factor. The previous year, just 70 reports were filed, with seven citing foreclosure, says the state insurance commissioner's office. (Not all reports become arson cases.)
* Arrest warrants for arson in Detroit rose 89% between 2005 and 2007. "We are up to our eyeballs in arsons," says Varnas, of the Detroit Fire Department. "We're not only dealing with hardened criminals. We're dealing with desperate people."
A trend -- or arson as usual?
In Stockton, Calif., where foreclosures are rampant, Deputy District Attorney J.C. Weydert is wondering whether he's looking at an arson trend or just a coincidence.
Weydert, a prosecutor with San Joaquin County's Economic Crimes/Insurance Fraud Unit, usually handles a residential arson case every two or three years. "Now I've got two in the pipeline," he says.
this gonna get messy
---------------
Broke homeowners linked to arsons
Authorities in economically stressed cities see an increase in torched houses. Is the nation's mortgage mess transforming more Americans into criminals?
By Marilyn Lewis
Arson is nothing new in Detroit. It's a time-honored weapon of the angry, vengeful, distressed and dispossessed in a city that gets hurt harder and sooner than others, making it a perfect place to spot early evidence of stress from the real-estate meltdown.
The Detroit Fire Department can't draw a definitive link between its rising arson rate (151 arrest warrants in 2007), rising foreclosures (up more than 65% last year) and falling housing prices (the region's median house price dropped 17.3% in the past four years, to $145,173).
But Capt. Steve Varnas of the department's arson section says he sees a connection: In 2005, the city issued only 80 arrest warrants for arson -- about half the number last year. "Things were going great," Varnas says. "There were fewer desperate people in 2004 and 2005."
Across the U.S., homeowners are searching for ways to escape from mortgages they can't pay -- or don't want to. A few are turning to arson, but it's too soon to turn anecdotes into meaningful statistics. Consumer pressure and state laws require speedy settlements, which means insurance companies are quick to pay up and slower to complete complex arson investigations. Definitive answers will come later.
But the signs of trouble are there if you're looking for them:
* The FBI reportsthat arson grew 4% in suburbs and 2.2% in cities from 2005 to 2006. The 2007 numbers aren't out yet.
* In California, a state hit particularly hard by foreclosures, insurance companies must tell the state within 60 days if they suspect a fire is "questionable." Last year, more than 120 reports were filed, and in 14 foreclosure was named a possible factor. The previous year, just 70 reports were filed, with seven citing foreclosure, says the state insurance commissioner's office. (Not all reports become arson cases.)
* Arrest warrants for arson in Detroit rose 89% between 2005 and 2007. "We are up to our eyeballs in arsons," says Varnas, of the Detroit Fire Department. "We're not only dealing with hardened criminals. We're dealing with desperate people."
A trend -- or arson as usual?
In Stockton, Calif., where foreclosures are rampant, Deputy District Attorney J.C. Weydert is wondering whether he's looking at an arson trend or just a coincidence.
Weydert, a prosecutor with San Joaquin County's Economic Crimes/Insurance Fraud Unit, usually handles a residential arson case every two or three years. "Now I've got two in the pipeline," he says.
or better yet when you walk away from your home
strip the home and trash it on your way out the door
---------------------------------------------------
January 13, 2008
Fair Game
Cruel Jokes, and No One Is Laughing
By GRETCHEN MORGENSON
NY Times
WHAT do banks call it when a troubled borrower abandons her home, sending them the keys?
“Jingle mail.”
And what do they call it when an irate borrower abandons his home, yanking electrical outlets from walls, leaving faucets running and otherwise trashing it on the way out?
“Taking the inside of the house with you.”
There's nothing like black humor to define — however sadly and starkly — the blows that keep on coming in this mortgage debacle. But make no mistake, lenders are only beginning to learn how to manage the onslaught of jingle mail and houses turned inside out.
Investors, homeowners and regulators have greeted the new year hoping that the worst of this financial nightmare is over. Some investors may even view Bank of America's planned bailout of Countrywide Financial last week as a sign that it is safe to wade back into financial services stocks.
But while other economic crises over the last decade were resolved relatively quickly and cleanly — the Mexican peso mess, the Russian debt debacle and the dot-com implosion — the unraveling of the great home mortgage boom is significantly more complex. There are infinitely more moving parts to this problem, and it will take far longer to right.
For example, while it is widely known that a wave of subprime adjustable-rate mortgages, or A.R.M.'s, will reset this summer — raising the specter of further foreclosures — an even more troublesome mess involving pay-option adjustable-rate loans lies well beyond that. These are the kooky loans that allowed borrowers to make payments that were a fraction of the interest owed, without paying back any principal.
Only when the loan balloons to 15 percent larger than its original size — a nifty development that results from a multisyllabic quagmire known as “negative amortization” — do lenders demand that borrowers pay down principal. In many cases, this will cause borrowers' monthly payments to double, according to analysts.
When do analysts say borrowers will have to start coughing up this extra cash? In 2009, or later.
“As difficult as the rescue prospects are for subprime borrowers, they are even worse for most pay-option A.R.M. borrowers,” said Michael D. Calhoun, president of the Center for Responsible Lending, a consumer advocacy group. “Three-quarters of pay-option borrowers are making the minimum payment based on 2 to 3 percent interest typically. The payment shock is so huge that a refinance is virtually impossible.”
Consider this as more evidence that we are moving into financial waters that we haven't had to navigate in quite some time — if ever. Because other housing downturns were not national in scope and did not involve mortgages that had been pooled, sliced up and sold to investors around the globe, it is almost impossible to predict how long the turmoil will last or how financiers, regulators, municipalities and homeowners will manage its fallout.
BUT it is possible to get a feel for what is happening on the ground from a new survey of 2,400 real estate agents sponsored by Inside Mortgage Finance Publications. The survey taps into the outlook of people who see troubled borrowers firsthand, when they try to sell their homes before foreclosure occurs.
For example, agents participating in the survey confirmed what many borrowers say: that loan servicers are downright unresponsive. This is especially true when distressed owners try to sell their homes before being put through the trials of foreclosure. When they sell at a price that is lower than the outstanding mortgage debt, that is known as a short sale.
Asked how servicers could streamline such sales, one said: “Allow you to go directly to the loss mitigation department without having to speak or argue with eight people before they finally give in and transfer you.” Another said: “Respond to offers within five business days — they are killing the market by taking upwards of three months to respond to an offer.”
A third participant said: “Answer their phone, make it easier to talk with the appropriate people, instead of playing Mickey Mouse games. I have never understood why these companies who are owners of a defaulted loan do not make it easier to communicate with agents who are trying to sell these homes.”
Thomas Popick, principal at Geosegment Systems, the designer of the survey and a supplier of data to financial services firms, said its findings show that loan servicers are averse to short sales, even though they may be the best solution for many borrowers, lenders and the overall real estate market.
“In many cases, loan modifications — no matter how generous the terms — only delay foreclosures on properties where the mortgage balance far exceeds the current property value,” he said. Homeowners who try instead to sell “know they cannot afford the property and are trying to do the responsible thing — sell the property to someone else who can afford it.”
Indeed, the agents in the survey said short sales take place at prices that are 16 percent, on average, below the amount outstanding on the mortgage. Not ideal, but better than the losses of 20 to 40 percent that lenders typically incur on homes put into foreclosure and sold.
One reason that short sales generate more money than foreclosed properties is that as a house sits empty, its condition declines rapidly. Another is that after being through the foreclosure process, with all its fees and humiliations, some borrowers simply decide to take the inside of the house with them.
“The attitude of the folks handling these situations with homeowners creates an adversarial relationship and makes the homeowners less able to understand and work through the situation,” one survey respondent said. “Most foreclosure properties when listed back on the market with the corporate seller look like they have been through a war — and they often have.”
To be sure, short sales are complex because they involve more participants — the mortgage holder, often a second lienholder, two real estate agents, the buyer and a seller. They also involve accepting losses, which no investor likes to do.
But in many cases, short sales would benefit stressed borrowers, their neighbors (whose property values fall when foreclosures around them rise) and the holders of the mortgage note in question.
Regulators must begin to prod servicers into allowing short sales when they are merited, in addition to loan workouts. Investors in mortgage securitization pools should also push the loan servicers who are supposed to represent their interests to ease such sales.
The nation's housing market is in a world of hurt, as everyone knows. If it is to recover quickly, transactions must clear. Frozen markets help no one. And it's way past time to face up to the losses that the subprime lending spree has created.
strip the home and trash it on your way out the door
---------------------------------------------------
January 13, 2008
Fair Game
Cruel Jokes, and No One Is Laughing
By GRETCHEN MORGENSON
NY Times
WHAT do banks call it when a troubled borrower abandons her home, sending them the keys?
“Jingle mail.”
And what do they call it when an irate borrower abandons his home, yanking electrical outlets from walls, leaving faucets running and otherwise trashing it on the way out?
“Taking the inside of the house with you.”
There's nothing like black humor to define — however sadly and starkly — the blows that keep on coming in this mortgage debacle. But make no mistake, lenders are only beginning to learn how to manage the onslaught of jingle mail and houses turned inside out.
Investors, homeowners and regulators have greeted the new year hoping that the worst of this financial nightmare is over. Some investors may even view Bank of America's planned bailout of Countrywide Financial last week as a sign that it is safe to wade back into financial services stocks.
But while other economic crises over the last decade were resolved relatively quickly and cleanly — the Mexican peso mess, the Russian debt debacle and the dot-com implosion — the unraveling of the great home mortgage boom is significantly more complex. There are infinitely more moving parts to this problem, and it will take far longer to right.
For example, while it is widely known that a wave of subprime adjustable-rate mortgages, or A.R.M.'s, will reset this summer — raising the specter of further foreclosures — an even more troublesome mess involving pay-option adjustable-rate loans lies well beyond that. These are the kooky loans that allowed borrowers to make payments that were a fraction of the interest owed, without paying back any principal.
Only when the loan balloons to 15 percent larger than its original size — a nifty development that results from a multisyllabic quagmire known as “negative amortization” — do lenders demand that borrowers pay down principal. In many cases, this will cause borrowers' monthly payments to double, according to analysts.
When do analysts say borrowers will have to start coughing up this extra cash? In 2009, or later.
“As difficult as the rescue prospects are for subprime borrowers, they are even worse for most pay-option A.R.M. borrowers,” said Michael D. Calhoun, president of the Center for Responsible Lending, a consumer advocacy group. “Three-quarters of pay-option borrowers are making the minimum payment based on 2 to 3 percent interest typically. The payment shock is so huge that a refinance is virtually impossible.”
Consider this as more evidence that we are moving into financial waters that we haven't had to navigate in quite some time — if ever. Because other housing downturns were not national in scope and did not involve mortgages that had been pooled, sliced up and sold to investors around the globe, it is almost impossible to predict how long the turmoil will last or how financiers, regulators, municipalities and homeowners will manage its fallout.
BUT it is possible to get a feel for what is happening on the ground from a new survey of 2,400 real estate agents sponsored by Inside Mortgage Finance Publications. The survey taps into the outlook of people who see troubled borrowers firsthand, when they try to sell their homes before foreclosure occurs.
For example, agents participating in the survey confirmed what many borrowers say: that loan servicers are downright unresponsive. This is especially true when distressed owners try to sell their homes before being put through the trials of foreclosure. When they sell at a price that is lower than the outstanding mortgage debt, that is known as a short sale.
Asked how servicers could streamline such sales, one said: “Allow you to go directly to the loss mitigation department without having to speak or argue with eight people before they finally give in and transfer you.” Another said: “Respond to offers within five business days — they are killing the market by taking upwards of three months to respond to an offer.”
A third participant said: “Answer their phone, make it easier to talk with the appropriate people, instead of playing Mickey Mouse games. I have never understood why these companies who are owners of a defaulted loan do not make it easier to communicate with agents who are trying to sell these homes.”
Thomas Popick, principal at Geosegment Systems, the designer of the survey and a supplier of data to financial services firms, said its findings show that loan servicers are averse to short sales, even though they may be the best solution for many borrowers, lenders and the overall real estate market.
“In many cases, loan modifications — no matter how generous the terms — only delay foreclosures on properties where the mortgage balance far exceeds the current property value,” he said. Homeowners who try instead to sell “know they cannot afford the property and are trying to do the responsible thing — sell the property to someone else who can afford it.”
Indeed, the agents in the survey said short sales take place at prices that are 16 percent, on average, below the amount outstanding on the mortgage. Not ideal, but better than the losses of 20 to 40 percent that lenders typically incur on homes put into foreclosure and sold.
One reason that short sales generate more money than foreclosed properties is that as a house sits empty, its condition declines rapidly. Another is that after being through the foreclosure process, with all its fees and humiliations, some borrowers simply decide to take the inside of the house with them.
“The attitude of the folks handling these situations with homeowners creates an adversarial relationship and makes the homeowners less able to understand and work through the situation,” one survey respondent said. “Most foreclosure properties when listed back on the market with the corporate seller look like they have been through a war — and they often have.”
To be sure, short sales are complex because they involve more participants — the mortgage holder, often a second lienholder, two real estate agents, the buyer and a seller. They also involve accepting losses, which no investor likes to do.
But in many cases, short sales would benefit stressed borrowers, their neighbors (whose property values fall when foreclosures around them rise) and the holders of the mortgage note in question.
Regulators must begin to prod servicers into allowing short sales when they are merited, in addition to loan workouts. Investors in mortgage securitization pools should also push the loan servicers who are supposed to represent their interests to ease such sales.
The nation's housing market is in a world of hurt, as everyone knows. If it is to recover quickly, transactions must clear. Frozen markets help no one. And it's way past time to face up to the losses that the subprime lending spree has created.
think its time for a dollar bounce
bouncing in asia more now (yen and USD strongest currencies yen carry trade unwind getting going)
dollar vs. other fiat still above its lows from late november
fed done cutting for 6 weeks unless we have a market crash or something (can't cut another 1.25% in the span of a few weeks anymore)
americans trying to frantically rid of debt
americans tightening up their spending habits and starting to save as they see a storm brewing
deflation eventually? already deflation in housing, now lets see what happens to gas at the pump, and milk at the store
we shall see
also we can have deflation while at the same exact time the USD falls in value vs. other fiat currencies (yen a good example of recent past)
deflation just means prices go down DOMESTICALLY the value of the dollar and its purchasing power in other countries is not what we are talking about
bouncing in asia more now (yen and USD strongest currencies yen carry trade unwind getting going)
dollar vs. other fiat still above its lows from late november
fed done cutting for 6 weeks unless we have a market crash or something (can't cut another 1.25% in the span of a few weeks anymore)
americans trying to frantically rid of debt
americans tightening up their spending habits and starting to save as they see a storm brewing
deflation eventually? already deflation in housing, now lets see what happens to gas at the pump, and milk at the store
we shall see
also we can have deflation while at the same exact time the USD falls in value vs. other fiat currencies (yen a good example of recent past)
deflation just means prices go down DOMESTICALLY the value of the dollar and its purchasing power in other countries is not what we are talking about
People new to the market are finding out that buy and hold isnt as easy as it sounds while their stocks are tanking.
Alot of blood in some stocks and people are already crying and the indexes really havent fallen much at all.
amzn finished the ah falling like a brick and sbux bringing back shultz hasnt worked.
:missingte
Alot of blood in some stocks and people are already crying and the indexes really havent fallen much at all.
amzn finished the ah falling like a brick and sbux bringing back shultz hasnt worked.
:missingte
yeah now that they used up alot of the rate cut ammo to keep this puppy up somewhat
i think the real fun begins
fed inconseqential (or much less than it has been since we started falling) at this point we got 6 weeks and they'll cut 25 or 50 bp markets know it
they also know they aren't stepping in intermeeting unless it gets really bloody
and goog with its valuations probably will be next up tomorrow night
aapl and amzn two of the "4 horseman" major damage with Q4 earnings, RIMM will be the last of 4 to report when i dunno
i think the real fun begins
fed inconseqential (or much less than it has been since we started falling) at this point we got 6 weeks and they'll cut 25 or 50 bp markets know it
they also know they aren't stepping in intermeeting unless it gets really bloody
and goog with its valuations probably will be next up tomorrow night
aapl and amzn two of the "4 horseman" major damage with Q4 earnings, RIMM will be the last of 4 to report when i dunno
well i don't know what my label is i've never read any austrian economic books nor keynesian i build my own economical beliefs through self investigation mainly online
i find that most books poison your mind as they always trying to push their own agenda....and it pigeon holes your brain to read what you WANT to believe not necessary what is correct
jdog
if last year regardless of what the frickin dollar is doing
i spent 30k on living expenses
this year
i spend money on the same exact living expenses
and it costs me 25000
is that deflation year over year ????? OF COURSE
forget money supply just simplify to that
anyway off to watch the debate bbl
i find that most books poison your mind as they always trying to push their own agenda....and it pigeon holes your brain to read what you WANT to believe not necessary what is correct
jdog
if last year regardless of what the frickin dollar is doing
i spent 30k on living expenses
this year
i spend money on the same exact living expenses
and it costs me 25000
is that deflation year over year ????? OF COURSE
forget money supply just simplify to that
anyway off to watch the debate bbl
tiz you are one out of 1,000,000 that has seen thier cost of living decrease
tyson just announced a SUBSTANTIAL price increase on chicken - probably 20%
hersheys just announced they are raising prices across the board 13%
kellogs, reducing the size of cereal boxes by 15% - same price though
was just notfied by my main supplier for my business that 2 of the largest manufactures are raising prices again across the board by avg. of 12% - which means 20% by the time it hits the customer. third year in a row of double digit increases
etc etc etc.
tyson just announced a SUBSTANTIAL price increase on chicken - probably 20%
hersheys just announced they are raising prices across the board 13%
kellogs, reducing the size of cereal boxes by 15% - same price though
was just notfied by my main supplier for my business that 2 of the largest manufactures are raising prices again across the board by avg. of 12% - which means 20% by the time it hits the customer. third year in a row of double digit increases
etc etc etc.
from global market blog...
Today's action smacks of a classic bear trap rally.
As you can see, the Fed did not really say much of anything other than risk was to the downside, something that any thinking person could figure out on their own accord. Fed actions however, are another matter. Cutting interest rates from 4.25 to 3.0 in less than two weeks tells the real story. This is what Fed actions say: "We are scared to death about a deflationary debt collapse".
Amazon Clobbered After Hours
MarketWatch is reporting Amazon earnings double on strong holiday sales.
After hours, Amazon fell from $74 to $70, then rose to $77 and is now trading at $65 and change. This is just another indication that Tech Has Topped.
Heading into a consumer led recession there are simply not going to be many places to hide out. However, one would never know that listening to the analysts on Bloomberg after the FOMC announcement. Several analysts actually predicted the Fed will be hiking rates within a year and this is all going to blow over by the fourth quarter.
Faith in the Fed remains in bubble territory. That faith will eventually be shattered.
Today's action smacks of a classic bear trap rally.
As you can see, the Fed did not really say much of anything other than risk was to the downside, something that any thinking person could figure out on their own accord. Fed actions however, are another matter. Cutting interest rates from 4.25 to 3.0 in less than two weeks tells the real story. This is what Fed actions say: "We are scared to death about a deflationary debt collapse".
Amazon Clobbered After Hours
MarketWatch is reporting Amazon earnings double on strong holiday sales.
For the quarter ended Dec. 31, Amazon (AMZN) reported earnings of $207 million, or 48 cents a share, compared with earnings of $98 million, or 23 cents a share, for the same period the previous year.
The bottom line results were in line with expectations from analysts, according to consensus forecasts from Thomson Financial.
However, expectations for operating profits disappointed. The company expects operating income to come in between $785 million and $985 million for the full year. The mid-point of that range - $885 million - is below the $958.4 million in operating income that was expected by analysts for the year.
"The argument against this stock for years has been that Amazon is great at selling things but not great at making good money," said Tim Boyd of American Technology Research. "Basically, it looks like they are back to their old ways here."
Amazon A Wile After Hours RideThe bottom line results were in line with expectations from analysts, according to consensus forecasts from Thomson Financial.
However, expectations for operating profits disappointed. The company expects operating income to come in between $785 million and $985 million for the full year. The mid-point of that range - $885 million - is below the $958.4 million in operating income that was expected by analysts for the year.
"The argument against this stock for years has been that Amazon is great at selling things but not great at making good money," said Tim Boyd of American Technology Research. "Basically, it looks like they are back to their old ways here."
After hours, Amazon fell from $74 to $70, then rose to $77 and is now trading at $65 and change. This is just another indication that Tech Has Topped.
Heading into a consumer led recession there are simply not going to be many places to hide out. However, one would never know that listening to the analysts on Bloomberg after the FOMC announcement. Several analysts actually predicted the Fed will be hiking rates within a year and this is all going to blow over by the fourth quarter.
Faith in the Fed remains in bubble territory. That faith will eventually be shattered.
i ain't talking about the past of course we've had inflation out the arse for 5 years and over the long haul fiat is inflationary,
granted wages and everything else have increased with them too which is also something to keep in mind (and the problems become big when wages don't keep up with the inflation which has been the problem the past 5 years also i might add),
housing prices, equities, investment have also inflated with it since milk was 5 cents a gallon too....
i'm talking about going forward from the CURRENTLY high prices
of course prices on alot of stuff aren't coming back to what they were 5 years ago
that's not the point i'm talking about are these prices going to keep escalating, stay flat, or even go down (deflation)
