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Twist Is On The Road Again
2009-09-23 17:45:00
My thanks to John for keeping the wheels turning around here and keeping Igor in line the last while.  He’s been pulling more than his share.  Things will mostly be in his and Igor’s capable hands (and claws) for the next couple of days.  I’m off to the Big Apple to visit family. Consider this an ...
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the Fred eyes the Exits, Sheila flogging Treasure Coast Condos
2009-09-23 15:35:00
There are some who think it’s time for the central bank to exit the market. Others say such an abrupt end would undo the Fed’s efforts to keep mortgage rates low and instead suggest a gradual wind down of its purchases and an extension of the program into the early months of next year. - ...
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Government Agency To Get Bailout From Banks?
2009-09-22 21:51:00
I guess what goes around comes around, but at this rate, it’s hard to know if government and lenders are coming or going: [Hat tip Freedoms Phoenix] Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government. Senior regulators say they are seriously considering a ...
More About: Government , Banks , Agency , Housing Bubble

bump: the Ominous Euphoria of Panic
2009-09-22 12:38:00
Last Wednesday I called a bottom (why not? everyone else is ) I was visiting a friend near Dal, and baldly stated that the bottom was 6 weeks out. That would make it a bit more than 5 now.  I’m not completely sure why I made that assertion, basing it consciously on the staggering wave of happy-chat coming out of high authorities lately, like Bernanke recently uttering that the recession was likely over. Anyway, last evening I invited sidebar readers to the Google News Homepage and directed their attention to the indexes chart at upper right.  Overnight, I’ve come to realize that I’d sensed a bump through my toes on that one.  The signature will still be there for another 2 1/2 hours, but here it is for your inspection after that. What this means is that the algo trading community has now achieved nearly perfect correlation across diverse indexes.  If I understand the message of the students of emergent behavior that look at ant armies, this me...
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High Unemployment Causing Record Mortgage Defaults
2009-09-21 23:29:00
It’s tough to pay the mortgage when you don’t have a job: [Hat tip CPGone!] NEW YORK (Reuters) - High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday. Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters. But is the problem improving? Apparently not: August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed. The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months. The results, which correlat...
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CDARS, Moral Hazard & the FDIC
2009-09-19 13:02:00
“I’ve recently seen some cases where banks that participated in the CDARs program were cited for accepting third-party brokered accounts,” van Doorn said, referring to the Certificate of Deposit Account Registry Service that lets banks join a network and place funds into certificates issued by other network-member banks. “It’s still an open issue.” - NJ Biz1 I had to go back a couple of weeks to find that single item suggesting that there may possibly be a moral hazard problem with CDARS. Indeed, there seems to be an ominous reluctance in the mainstream media for bringing up CDARS in connection with the FDIC, even as the deposit insurance agency  is struggling4 against the perception that it may require a bailout of its deposit fund.  Nevertheless, if I’m reading the tea leaves correctly on this really obscure piece,2 there’s a serious war going on under the covers between an alarmed regulatory community and a lot of bankers ...
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Option ARMs: That Explosion Is The Sound Of The Other Shoe Dropping
2009-09-19 09:01:00
  Just when they thought it might be safe to go back in the housing market… [Hat tip Freedom's Phoenix] WASHINGTON (Reuters) - The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset. "Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama’s administration to discuss ways to combat mortgage scams. "That’s the next round of potential foreclosures in our country," he said. Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures. In Arizona, 128,000 of those mortgages will reset over the the next year...
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Housing Only Managing On Government Life Support
2009-09-18 14:24:00
For the most part, the consensus in the media seems to be that the housing market is showing some sort of tenuous "stabilization".  When I Googled "housing market" this morning, here’s what the main headlines looked like: The problem is that if housing isn’t falling, it’s because the government is propping it up: Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance. To keep funds flowing to the housing market, the government bailed out Fannie Mae and Freddie Mac last year and now effectively owns the mortgage finance giants and their combined $5.4 trillion in loans and guarantees. To keep mortgage rates low, the Federal Reserve is on track to purchase nearly $1.5 trillion in debt issued or guaranteed...
More About: Life , Government , Support , Housing

HFT Chiseling — How Quaint
2009-09-18 12:49:00
… While these advantages are measured in milliseconds rather than minutes, both high-frequency trading and flash orders enable certain investors to chisel a profit between bid and offer — the same abuse of inside market information and access that the S.E.C. tried to eliminate four decades ago. Now, traders have simply found different ways to tilt the playing field, … - David Silver, a former senior staff lawyer at the SEC, NYT1 Next week I’m workshopping "Aleynikov Blues" at Halifax’s Dublin St. Poetry Club.  The above should help my colleagues figure out what I’m talking about. —————&mdash ; [1]: "A Short History of Fast Times on Wall Street", by David Silver, New York Times, September 17, 2009. (& today’s, 18th, print edition)

Foreign Cenbank Holdings of US Obligations Weekly Update — to September 1
2009-09-18 09:01:00
[Congressman Alan] Grayson: “So who got the money?” Bernanke: “Financial institutions in Europe and other countries.” Grayson: “Which ones?” Bernanke: “I don’t know.” Grayson: “Half a trillion dollars and you don’t know who got the money?” - Wall St. Cheat Sheet1 Twist was circulating the above around the Castle earlier today with the comment "… you could purchase a bunch of treasuries and agency debt with that," to which I’m going to add the thought — last week. Foreign central banks have been suddenly gorging on Treasury Debt, but an even bigger number is this week’s Puplava number, and it was so extreme it merited notice in Bloomberg.2 The Fed’s assets rose $51.9 billion, or 2.5 percent, to $2.14 trillion, the highest since May, in the week ended yesterday, the central bank said today in Washington. Mortgage- backed securities increased by $59.8 billion to $685.1 bil...
More About: Update , Weekly , September , Holdings

UBS & CDO Sales: Early Warning
2009-09-16 20:36:00
1:23:33 Here’s a great story, a friend of mine went to Japan a year ago, was talking with one accountant, and he was talking about investing in some subprime securities, and the accountant said, ‘no, no, no, I don’t want any subprime securities, I want a CDO.’ [laughter] So, you know, that’s, yeah, there’s an issue, but I … - Tom Zimmerman,1 UBS fixed income analyst, March 28, 2007 So what’s the big tickle?2 …. And it’s fair to assume that Pursuit wasn’t the only hedge fund or institutional investor buying “crap” from UBS in the summer of 2007. The Pursuit case looks like it could become a much bigger headache for UBS than anyone imagined. Matt Goldstein and the gang at Reuters are all over this story of allegations that UBS may have had advance knowledge that Moody’s had doubts about some of their bonds.  But the Swiss bank’s top research boffin had been cracking that joke en plein air ...
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Nova Scotia’s New Empty Apology Act
2009-09-16 15:00:00
The Apology Act, which comes into effect Oct. 1, broadly defines an apology and states that it can’t be used as evidence in legal proceedings to establish fault or liability. - CBC1 As usual, there is rather more than meets the eye here, and it’s not a case of an eccentric rookie mistake by our newly elected NDP (that’s socialist, by the way, a Maritime first) provincial government, either.  The story and a commenter in the thread below note that the majority of Canadian and American jurisdictions, Australia and the UK all have similar laws.  So what gives with this? "An Act Respecting the Effect of an Apology and to Prohibit its Use as Evidence of Fault or Liability" … 3 (1) An apology made by or on behalf of a person in connection with any matter does not constitute an express or implied admission of fault or liability by the person in connection with that matter; does not constitute a confirmation of a cause of action or acknowledgm...
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Foreclosures Dominate Phoenix Condo Market
2009-09-15 09:01:00
  I was recently asked about the state of the Phoenix condominium market, which we haven’t looked at lately.  M pulled some numbers for us, and the numbers speak volumes about what’s happening out there.  [So does this picture from the 3rd Avenue Lofts in Scottsdale] Here’s what M had to say: [Numbers from 9/11] Active       ;                     5,775      1,997 Under Contract         ;   1,993      1,520 Sold (Past 30days)       860      &n bsp; 528   The number in red is the total of REO and pre-foreclosure.  76% of the pending sales are "distressed", but only 35% of listings.   You and I both know the condo market was a haven for speculation and fraud.  Some of the largest commercial defau...
More About: Foreclosures , Market , Condo

Crack of Doom: Bernanke’s Secret Weapon — Canada
2009-09-14 14:30:00
1:36:22 I think the idea was to facilitate industry consolidation. … Charlie’s not here, but an interesting factoid is, Chairman Bernanke’s 2nd most cited paper on the Great Depression is actually one that compares the business cycle in the United States and Canada in the 1930s. And the contraction activity was much more gradual [in Canada]. The reason? Canada didn’t have bank failures, because Canada had a consolidated banking system. - AEI1 Resident Fellow Vincent Reinhart, Oct 2, 2008 So this is a bit of shameless self-promotion for Doom ’s new transcript of 2 hours worth of battle chatter at the American Enterprise Institute a couple of weeks after Lehman’s collapse a year ago tomorrow. Meanwhile the Mothership is patting itself on the back because Canada hasn’t lost any banks so far this time either, … … but of course that had everything to do with the C$32 billion subsidy the banks got when retail and institutional inves...
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AEI Credit Crunch III: Complete Annotated Transcript
2009-09-14 04:32:00
0:50:30 … My brother’s a cardiologist, I should show him this as a cardiogram, you know, he would tell me the patient was long since dead. - Desmond Lachman Doom Transcripts: Index & Guide Housing Doom is pleased to present a complete unauthorized annotated transcript for the American Enterprise Institute’s October 2, 2008 event "What Lies Beyond the Credit Crunch ? Part III".1 The event site has a variety of resources including a summary and both an audio and a video of the proceedings. There is an official transcript, but the link to it does not seem to be currently working. Part of the importance of this seminar is that it occurred just over 2 weeks following the pivotal crisis of mid-September 2008.  In contrast to reflections2 a year later, these guys are giving their raw thoughts in a period before the story-line got established. Table of Contents [link navigation works best when full article displayed] 0:00:00 - Dead Air 0:01:35 - Peter...
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9605: HFT Fun & Games? Looks like …
2009-09-12 20:48:00
At any rate, the stock market, at the center of today’s economic crisis, closed on the eighth anniversary of 9/11 at nearly the exact same level the Dow Jones industrial average was at the day of that tragedy. Was this an eerie coincidence or some kind of coded Wall Street tribute? - Prison Planet1 Seems more like a mischievous exploit to me.  I’m guessing some young trader cowboy with more HFT horsepower than brains saw that the index was close to that symbolic level and nudged it into position, thereby coding an Easter Egg into the Dow itself.  You’d know a real hacker by her ability to refrain from doing something brain dead like that. —————&mdash ;—— [1]: "On anniversary, stock market closes at exact 9/11 level: Eerie coincidence or coded Wall Street tribute?", by Aaron Dykes, Prison Planet, September 12, 2009.
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Reverse Mortgage To Foreclosure In Less Than Three Years
2009-09-11 17:34:00
Anyone who’s ever watched any late night television has seen those commercials for reverse mortgage.  They are always touted by older celebrities claiming how safe these things are.  For those who actually believe that there’s little risk to a reverse mortgage, here’s a cautionary tale from our faithful longtime correspondent in Tucson- M.R.: Recently I passed a vacant house with a NOTS posted on the front fence. I know the owner of this property — she’s an elderly lady who took out a reverse mortgage in 2006. The NOTS gave the amount, $285,500. Twist, in no way, even during the height of the bubble, was that place ever worth that much. Very few places in zip code 85705 are. Furthermore, the lady was known for feeding every stray cat in the area, and for allowing them into her house. You can just imagine what the place smelled like. After she got the reverse mortgage, she went on a truly baffling spending spree. We’re talking things lik...
More About: Foreclosure , Mortgage , Years , Reverse Mortgage

Op-Ed Friday: Help Save Arizona- Eat Out
2009-09-11 17:24:00
  It’s Friday , and we finally have a solution to stabilizing the housing market- eat out.  After all, a bad economy makes for a bad housing market, and dining out will help fix that:  [Thanks L!] Gov. Jan Brewer took the stage Thursday with rocker and restaurateur Alice Cooper to convince Arizona ns that dining out is good for the state. Announcing a three-month public-awareness campaign called Dine 4 AZ, they said going to restaurants  supports businesses and helps preserve jobs. Brewer noted that restaurants generate 10 percent of Arizona’s tax revenues. "We are working hard to lead the Grand Canyon State forward and out of this recession, and Dine 4 AZ fits perfectly into our plan," she said. "Please treat your family to a meal and we’ll get through this together." According to Stephen D. Chucri, president and CEO of the Arizona Restaurant Association:   We’ve been hit hard by unemployment, immigration issue...
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Foreign Cenbank Holdings of US Obligations Weekly Update — to September 9
2009-09-11 09:01:00
Moody’s said in a report it doesn’t expect any downgrades of countries with triple-A ratings — the highest possible — in the "near future," adding that only a sustained increase in government debt over several years, which it doesn’t anticipate, would warrant such a decision. - WSJ1 Well, the good news is that this week’s Reuters report2 suggests if the US wants to sell a lot more debt, foreign central banks might not be in a mood right now to buy the stuff. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.3 Here is Doom’s updated CSV version4 of the agencies and treasuries foreign central bank holdings data set. The Puplava number barely budged. The Fed’s own holdings of mortgage-backed securities rose a mere $0.025 billion. Cenbanks sold a modest but significant $3.003 billion of Treasury Debt last week. Could this sputtering pattern presage a top? Agencies fell by $2.656 b...
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New Home Market “Stabilizing”? Maracay Homes Doesn’t Thin
2009-09-10 15:39:00
  You can watch the news to find out how the new home sale market is "stabilizing" and homebuilder sentiment is "improving", or you can do like I do and take a peek into L’s junk mail for a more realistic view of where builders think the market is headed: [Thanks L- it's great to have you back!] When the market was hot, the homebuilders wouldn’t give agents the time of day.  When the market cooled and builders were stuck with bloated inventories, they started offering higher commissions, gas cards and other perks.  Guess which mode Maracay is in?
More About: Market , Home , Homes

“… computers don’t manipulate markets, people do”
2009-09-10 12:47:00
The problem, of course, is that people have been given new, trading tools of mass destruction.. - WSJ1 This must-read article has just about every gun lobby trick of rhetoric deployed in defense of high-frequency trading. And as a special added bonus, they slide in that silent assumption, that’s been saturating the story arc, that Sergey Aleynikov actually did something. —————&mdash ;—– [1]: "Peering into the Black Box: Was Lehman Murdered by a Thousand Trades?", by David Weidner, Wall Street Journal [corrected -- thanks JMF! - jm], September 10, 2009.
More About: Computers , People , Markets

Phoenix Rental Prices Dropped 15% In The Past Year
2009-09-09 09:01:00
Rental prices are low in the Phoenix area- and are headed lower: Rent prices are likely to fall significantly in the coming months as a growing number of commercial real-estate investors buy up struggling apartment communities, according to some local real-estate analysts. The same phenomenon that has driven down home-sale prices appears to be occurring in the apartment market, they said, with cash buyers lowering prices as much as is necessary to attract paying customers. As a result, average rent prices have dropped an estimated 15 percent or more in the past year, and they could fall another 15 percent in the coming year, one local analyst said. Because cash investors don’t have a loan to repay, there really is no bottom line at which to hold their rent prices, said Jim Kasten, a Phoenix real-estate analyst and investor. The problem for apartment owners who do have mortgages is that they’ll have to lower their rent prices, too, if they hope to remain competitive,...
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Igor’s Dungeon
2009-09-09 00:25:00
Doom Transcripts: Index & Guide This is an open thread for the Housing Doom Page Transcript Index & Guide, a collection of navigational aids for Doom’s collection of transcripts of web audio / visual resources. Pages are not set up to have their own comment threads, so it was necessary to create a separate thread where comments on the Guide could be posted.
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Pending Sales No Longer Good Indicator Of Future Sales
2008-06-09 20:01:00
According to CNBC this morning, Housing Market Is Showing Signs of a Turnaround: Pending sales of previously owned U.S. homes unexpectedly rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower, a real estate trade group report showed. The National Association of ...
More About: Realtors , Future , Sales , Housing Bubble , Good

Crack of Doom: Feeling Poorer?
2008-06-09 09:03:00
It’s Monday, and if your wallet seems thinner to you these days, there’s a reason: The net worth of Americans fell $US1.7 trillion in the first quarter - the biggest drop since 2002; the amount of equity people have in their homes fell to 46.2%, the lowest level on record (and house prices are still falling); ...
More About: Housing Bubble , Crack , Doom , Feeling

Las Vegas May Home Sales: Inventory and Sales Up, Prices Down
2008-06-09 09:01:00
The Greater Las Vegas Association of Realtors (GLVAR) has released their May numbers.  The biggest news is the median price, which declined from $301,352 to $236,692 for a 21.5% drop. According to the Hubble Smith of the Review Journal:
More About: Sales , Housing Bubble , Home , Inventory

Phoenix Realtors Jumping From A Sinking Ship
2008-06-09 04:57:00
In 2005, you couldn’t throw a rock in Phoenix without hitting a Realtor, but that isn’t the case any more.  Apparently a lot fewer people are signing up for real estate school these days. [Hat tip Asset Hunter!] Connie Ross wonders a little when people tell her they want to enroll in real-estate school. Ross, a ...
More About: Realtors , Housing Bubble , Ship , Jumping

Portland: Not a ?bubble?, but still a bust
2008-06-08 14:25:00
  We keep hearing how the "Gloom and Doomers" are overstating the problems.  After all, the pundits tell us, "All real estate is local,"  so not all markets are feeling the pain.  There are still "bubble-proof" markets like Portland , Oregon: NORTH PLAINS, Ore. - Here at the western edge of the Portland metro area, green fields ...
More About: Housing Bubble , Bust , Bubble

Government Is No Good At ?Flip That House?
2008-06-07 15:01:00
Even some of the sharpest folks [Or perhaps I should say ESPECIALLY the sharpest folks] in real estate have gotten out of house "flipping". In a declining economy, with a glut of homes on the market, and financing difficult- it’s next to impossible to have flipping make financial sense.  That doesn’t stop government from wanting ...
More About: House , Government , Housing Bubble , Market trends , Good

Make Sure Your Real Estate Agent Is Really An Agent
2008-06-07 09:01:00
Real estate fraud hasn’t died, it’s just shifted gears a little. A brazen scammer working in Round Rock, north of Texas showed his "customers" several properties before renting out a home- that wasn’t for rent: Timothy Alonzo Nero did everything he could to convince customers he was a legitimate real estate agent, Round Rock police ...
More About: Agent , Estate , Real Estate , Real Estate Agent , Real