The real question is, "Why did it take so long for this mess to unravel"? We'll let the "regulators" deal with that issue.
Thursday, March 29, 2007
Wednesday, March 28, 2007
Ron Paul - The Only Honest Politician?
Ron Paul lectures Ben Bernanke. It's nice to know that there is at least 1 honest Politician in Washington.
Tuesday, March 27, 2007
Trump - The Time to Buy is When the Market is Bad!
This advice may seem like common sense but as the old saying goes, "Common sense is not so common".
Housing Bubble vs Great Depression
Are these supposedly smart people actually dumb or are they just morally bankrupt?
Friday, March 23, 2007
David Walker on 60 Minutes!
David Walker, the Comptroller General for the U.S. Government Accountability Office (i.e. The Head Accountant of the U.S. Government), did this fascinating interview with 60 Minutes. It's his quote that is highlighted at the top of this blog and he has earned a lot of respect from people that know and in some cases, have known for years, exactly what he is talking about. I hope that his warnings do not fall on deaf ears.
60 Minutes Interview
Click on the link above to watch the video.
David Walker Biography
60 Minutes Interview
Click on the link above to watch the video.
David Walker Biography
The Face of the U.S. Housing Bubble
When things like this happen, you have to wonder how bad things are going to get. This story is just the tip of the iceberg. Mortgage bloggers have been reporting these types of abuses for years and the stories are finally making their way to the mainstream media. You will hear many stories like this in the next few months/years as the MSM exploits the pain and suffering of the housing bubble "victims".
Miami Condo Owners - Run For Your Life (RFYL)
Miami condo investors have finally woken up to the new reality of the housing bubble and are finding ways to walk away from deals that they made in hopes of flipping for a profit. Now the legal fights begin. Laywers representing buyers, builders, and commission starved real estate agents will get in the ring to battle it out for the scraps that will remain after the market settles into a "normalized" price level. Watch the supply of condos in Florida market over the next 3 years. There should be some very attractive deals for those smart enought to sit on the sidelines and watch the carnage unfold.
In January, the developers of condo project 2 Midtown announced they would build 455 units instead of 459.
That's all it took for buyers Barry and Rachel Craemer to declare their contract void a week later and demand their $117,000 deposit back. The buyers for 47 units have sent such letters, and the builder is determined not to let any of them out.
In a cool housing market already overflowing with condos, what were once hot properties are now hot potatoes that many don't want in their hands. Buyers seeking to get out of contracts are pouncing on changes in developers' plans, including those related to higher insurance costs. Some are even combing through documents for blown deadlines, which developers blame on hurricane delays.
The tension is rising as closing day approaches for the roughly 25,000 new condos expected this year and next. And the spats between buyers and developers will help decide one of the biggest questions in the troubled housing market -- how many condo sales will actually close. If the spats continue, they would signal a rocky time to come, with unsold units and falling prices.
'This may be the beginning of the `interesting period,' '' said real-estate analyst Michael Cannon. ``We will see it evolve through 2008.''
So far, there have not been widespread defaults or much litigation, and by most accounts, buyers are going to the closing table, however reluctantly. Still, there is evidence of growing unease.
Attorney Gary Saul, who represents developers for 2 Midtown and other projects, said that six months ago he didn't receive any letters from buyers wanting out. Now they're coming from 10 percent of the buyers in buildings, sometimes as much as 20 percent.
Michael Schlesinger, a lawyer who has sued developers, said buyers started to call him in December, wanting out. He has signed 12 clients.
''Now I am getting three calls a week,'' he said.
And developer Gregg Covin, who plans to start closing next month for his 200-unit Ten Museum Park on Biscayne Boulevard, said 10 buyers in the past two months have approached him to get out. He has found vulture investors -- whom he allows to swoop in and buy at 2003 presale prices -- to purchase their contracts.
''The scary thing is, people who have flaked on me tell me they have like five other contracts in other buildings under construction,'' Covin said.
Florida's law allows condo contracts to be voided before closing if developers make ''material'' changes that are ''adverse'' to buyers. Buyers complain about changes they never signed up for, but developers accuse them of making excuses to flee because they no longer can flip the units for a fat profit. The estimates of how many buyers are speculators -- who bought so they could resell -- range from 30 percent to more than 70 percent.
`THESE ARE FLIPPERS'
''These are not people who have been wronged,'' Saul said. ``These are flippers who wouldn't be saying anything if the market was going well.''
To which Rachel Craemer replied: ``Who are they to decide? The person who makes the determination should be the buyer, not the seller.''
Both parties have plenty to lose. Condo buyers risk losing typical deposits of 20 percent, instead of 10 percent for new single-family homes, said real-estate analyst Lew Goodkin.
''That is prompting some folks to look at every possible technicality rather than walking away,'' he said.
Goodkin predicts that disputes will increase as closings approach for buildings sold in 2005 and 2006, because prices were higher and buyers have more at stake.
Developers in turn are worried that if they give one buyer a break, they will lose the building. With their support, legislation is pending in Tallahassee that would make it tougher for buyers to get out of condo contracts.
'If I am a developer and you come to me with your lawyer and I let you out, the first thing that lawyer does is tell everyone else in the building, `I can get you out, too,' '' said Miami attorney John Sumberg, who represents builders.
Insurance is a particularly sensitive area of dispute. Developers gave buyers projections for monthly maintenance costs when they signed contracts. But skyrocketing insurance premiums have pushed maintenance fees far beyond projections, prompting buyers to say their contracts are no longer valid and they shouldn't have to close.
Casey Serin Finally Makes the Big Time!
The blogosphere has been reporting on Casey's adventures/exploits for almost a year now but suddenly, the MSM has caught up with his story. Congratulations Casey! It's time for your day in the sun...uh shade, no make that MSM Hell!
America's housing market
Cracks in the façade
Mar 22nd 2007 | NEW YORK AND WASHINGTON. DC
From The Economist print edition
America's riskiest mortgages are crumbling. How far will the damage spread?
CASEY SERIN knows all about the excesses of America's housing bubble. In 2006 the 24-year old web designer from Sacramento bought seven houses in five months. He lied about his income on “no document” loans and was not asked for anything so old-fashioned as a deposit. Today Mr Serin has debts of $2.2m. Three of his houses have been repossessed; others could share that fate. His website, Iamfacingforeclosure.com, has become a magnet for those whose mortgages are in trouble.
Mr Serin and people like him are Wall Street's biggest uncertainty just now. How many Americans are saddled with mortgages they cannot afford on houses that are losing value? The answer matters to anyone who bought high-yielding mortgage-backed securities when a booming property market made mortgages look safe. It also matters to investment banks, which packaged the securities and often own subsidiaries that originate mortgages. It may determine whether America's economy falls into recession. It could even affect the outcome of next year's elections.
Most of the damage so far is in the “subprime” mortgage market, which lends to people whose income is too low, or whose credit history too patchy, to qualify for an ordinary mortgage. On March 13th the Mortgage Bankers Association reported that 13% of subprime borrowers were behind on their payments. Some 30 of America's subprime lenders have closed their doors in the past three months. The cost of insurance against default for the riskiest tranches of subprime debt has soared. The worst effects may not be felt until the mortgage payments of many borrowers with no equity in their homes rise sharply.
Is this a mere irritant in America's vast economy, or the start of something much worse? Opinion on Wall Street is divided. Most argue that the mortgage mess, though a blight on anyone caught up in it, will not spread. The number of mortgages at risk is too small for defaults to threaten everyone else. Even if a fifth of the $650 billion of adjustable-rate subprime loans went bad, that would be a blip in the $40 trillion market for debt. If repossessions extended the housing downturn, it would not derail an economy that—housing apart—remains healthy, with unemployment of 4.5% and jobs growing strongly.
Cellar signal
Growing numbers of pessimists disagree. They think the subprime squeeze marks the start of a broader credit crunch that could drag the economy into recession. Stephen Roach, the famously gloomy chief economist at Morgan Stanley, recently called subprime mortgages the new dotcoms. Just as the implosion of a few hundred internet ventures in 2000 sparked a much broader stockmarket correction and an eventual recession, so the failure of the riskiest mortgages may distress the rest of a debt-laden economy.
To try to assess who is right, you need to know the share of mortgages potentially at risk. And you need to understand the channels through which subprime defaults could spread to the wider economy.
America's residential mortgage market is huge. It consists of some $10 trillion worth of loans, of which around 75% are repackaged into securities, mainly by the government-sponsored mortgage giants, Fannie Mae and Freddie Mac. Most of this market involves little risk. Two-thirds of mortgage borrowers enjoy good credit and a fixed interest rate and can depend on the value of their houses remaining far higher than their borrowings. But a growing minority of loans look very different, with weak borrowers, adjustable rates and little, or no, cushion of home equity.
For a decade, the fastest growth in America's mortgage markets has been at the bottom. Subprime borrowers—long shut out of home ownership—now account for one in five new mortgages and 10% of all mortgage debt, thanks to the expansion of mortgage-backed securities (and derivatives based on them). Low short-term interest rates earlier this decade led to a bonanza in adjustable-rate mortgages (ARMs). Ever more exotic products were dreamt up, including “teaser” loans with an introductory period of interest rates as low as 1%.
When the housing market began to slow, lenders pepped up the pace of sales by dramatically loosening credit standards, lending more against each property and cutting the need for documentation. Wall Street cheered them on. Investors were hungry for high-yielding assets and banks and brokers could earn fat fees by pooling and slicing the risks in these loans.
Standards fell furthest at the bottom of the credit ladder: subprime mortgages and those one rung higher, known as Alt-As. A recent report by analysts at Credit Suisse estimates that 80% of subprime loans made in 2006 included low “teaser” rates; almost eight out of ten Alt-A loans were “liar loans”, based on little or no documentation; loan-to-value ratios were often over 90% with a second piggy-bank loan routinely thrown in. America's weakest borrowers, in short, were often able to buy a house without handing over a penny.
Lenders got the demand for loans that they wanted—and more fool them. Amid the continuing boom, some 40% of all originations last year were subprime or Alt-A. But as these mortgages were reset to higher rates and borrowers who had lied about their income failed to pay up, the trap was sprung. A new study by Christopher Cagan, an economist at First American CoreLogic, based on his firm's database of most American mortgages, calculates that 60% of all adjustable-rate loans made since 2004 will be reset to payments that will be 25% higher or more. A fifth will see monthly payments soar by 50% or more.
Few borrowers can cope with such a burden. When house prices were booming no one cared. Borrowers refinanced or sold their homes. But now that prices have flattened and, in many areas, fallen, those paths are blocked.
Click on the Headline link for the full article.
"Liar Loans": Mortgage Woes Beyond Subprime
Hold onto your hats folks! It looks like things are about to get a lot worse. Sure, the industry shills are out in full force stating that the housing market has bottomed in the U.S. but clearly, the problems are just beginning. As always, credit fuels bubbles but once liquidity dries up, prepare for the crash! It appears that there is a lot of credit that is about to blow up!
Subprime mortgages have been generating a lot of attention, and worry, among investors, economists and regulators, but those loans may be only part of the threat posed to the housing market by risky lending.
Some experts in the field are now concerned about the so-called Alt. A mortgage loan market, which has grown even faster than the market for subprime mortgage loans to borrowers with less than top credit.
Alt. A refers to people with better credit scores (A-rated) who borrow with little or no verification of income, or so-called alternative documentation.
But some people in the industry call them "stated income" loans, or worse, "liar loans." And they were an important part of the record real estate boom of 2004 and 2005 that has recently shown signs of turning into a bust.
Standard & Poor's estimates that the Alt. A market has gone from less than $20 billion in loans in the fourth quarter of 2003 to more than $100 billion in each of the last three quarters. Overall, new Alt. A loans totaled $386 billion in 2006, according S&P's estimates - up 28 percent from 2005.
By comparison, subprime loans reached $640 billion in 2006, according to trade publication Inside Mortgage Finance, though that was down about 4 percent from the record level reached in 2005.
"Much of the growth of the last few years has come from reaching out beyond where the lenders should have reached out," said Guy Cecala, publisher of the trade publication. "It wasn't normal business that walked through their door. All was based on the idea that home price appreciation would cover over a lot of the problems that occurred. But that hasn't happened."
But just as the Alt. A market has grown even faster than subprime, some believe it could shrink even faster amid growing concerns in the marketplace. That means another pool of money that has supported home sales and housing prices being yanked just as home sales and prices are already in decline.
The loans were very popular with buyers seeking investment property rather than a home to live in. And while default and delinquency rates for Alt. A are just a fraction of the rates for subprime, the widespread use of the loans by investor-buyers is a concern. That's because there's a glut of investor-owned homes and condos already up for sale - with prices tumbling in many markets.
"There's a reason they ask on the application do you intend to live in the property," said David Berson, chief economist for mortgage financing firm Fannie Mae. "People who live in a property are less likely to default than investors."
Still, Berson said that while default rates are likely to rise for many Alt. A loans, he doesn't think it will reach the levels seen in the subprime sector. He said only 1.5 percent of Alt. A loans are now 60 days or more delinquent, while in subprime it is 7.5 percent. Absent a major recession, he doubts that Alt. A loans will reach the same kind of delinquency or default rates causing worries and lender bankruptcies in subprime.
But many in the field say that there is a real squeeze on Alt. A loans as lenders tighten up on underwriting standards. Mitch Ohlbaum, president of mortgage broker Legend Mortgage whose business was about 55 percent Alt. A, said he's seen a dramatic change in the business the last few years, and its now swinging back away from the loans.
"Stated income borrowers were typically self-employed people who write off a lot of income, so their tax returns really don't reflect what they're earning," said Ohlbaum. But he said the loans have grown in popularity for folks who had no money to put down on a home, or could only pay interest on a loan, especially by real estate investors.
"All that nutty stuff is going to disappear," said Ohlbaum. "Everyone today is shying away from the 100 percent of value loan. But anytime there's a big change in the market like there is now, everyone will overcompensate for a while. I think this will last for 12 to 14 months before things are back to normal, and I think you'll see more foreclosures, more people in trouble in the meantime."
And he said some types of Alt. A loans that had become popular, such as the no-money-down loans, are almost impossible to arrange today. And the definition of what is considered an A-quality borrower has tightened up.
Inside Mortgage Finance's Cecala said he believes underwriting of the loans had grown too loose by the end of last year, and that even some subprime borrowers were getting so-called low-doc or no-doc loans. He believes as much as a quarter of Alt. A loans were going to subprime borrowers. "In some ways it's the worst possible combination," he said.
Now with the market correcting, even some borrowers with good credit are having Alt. A loan applications rejected, Ohlbaum said. That will cut off another source of financing for the battered real estate market.
The biggest Alt. A lender is Pasadena, Calif-based IndyMac Bancorp. Trade publication Inside Mortgage Finance estimates it did $70.2 billion of the loans in 2006, up 48 percent from a year earlier. As the sector grew, its shares shot up nearly 50 percent in a year and hit a record high in April 2006. But with rising concern about the mortgage sector, its shares have plunged 36 percent since the start of 2007.
But it's not just the smaller lenders like IndyMac in the sector. Like subprime, some of the nation's largest finance firms are major players. Countrywide Financial, one of the nation's largest mortgage lenders, is the No. 2 Alt. A lender with $68 billion in loans, according Inside Mortgage Finance.
GMAC, the finance unit of General Motors that is now 51 percent owned by Cerberus Capital, is No. 3 on the list at $44 billion, and a unit of General Electric is No. 4 at $28.3 billion, just ahead of Washington Mutual, the nation's largest thrift with $25 billion in the loans.
What is not known is which Wall Street firms, banks and hedge funds have bought hundreds of billions of dollars worth of mortgage-backed securities comprised of Alt. A loans, or have lines of credit out to the smaller Alt. A lenders.
"If they get spooked, you'll see the same things that are happening in subprime-repurchase requests, funding sources drying up," said Cecala.
But Fannie Mae's Berson said he doesn't foresee the problems getting as bad as subprime, even if the problems in the sector do get worse. He said the changes taking place are needed, though they will raise the cost of credit.
"I would suspect that investors will view credit risk with a better eye going forward," he said. "Loans that have potentially more risk will end up with higher [rate] spreads. Maybe they'll just widen to where they should be."
Subprime mortgages have been generating a lot of attention, and worry, among investors, economists and regulators, but those loans may be only part of the threat posed to the housing market by risky lending.
Some experts in the field are now concerned about the so-called Alt. A mortgage loan market, which has grown even faster than the market for subprime mortgage loans to borrowers with less than top credit.
Alt. A refers to people with better credit scores (A-rated) who borrow with little or no verification of income, or so-called alternative documentation.
But some people in the industry call them "stated income" loans, or worse, "liar loans." And they were an important part of the record real estate boom of 2004 and 2005 that has recently shown signs of turning into a bust.
Standard & Poor's estimates that the Alt. A market has gone from less than $20 billion in loans in the fourth quarter of 2003 to more than $100 billion in each of the last three quarters. Overall, new Alt. A loans totaled $386 billion in 2006, according S&P's estimates - up 28 percent from 2005.
By comparison, subprime loans reached $640 billion in 2006, according to trade publication Inside Mortgage Finance, though that was down about 4 percent from the record level reached in 2005.
"Much of the growth of the last few years has come from reaching out beyond where the lenders should have reached out," said Guy Cecala, publisher of the trade publication. "It wasn't normal business that walked through their door. All was based on the idea that home price appreciation would cover over a lot of the problems that occurred. But that hasn't happened."
But just as the Alt. A market has grown even faster than subprime, some believe it could shrink even faster amid growing concerns in the marketplace. That means another pool of money that has supported home sales and housing prices being yanked just as home sales and prices are already in decline.
The loans were very popular with buyers seeking investment property rather than a home to live in. And while default and delinquency rates for Alt. A are just a fraction of the rates for subprime, the widespread use of the loans by investor-buyers is a concern. That's because there's a glut of investor-owned homes and condos already up for sale - with prices tumbling in many markets.
"There's a reason they ask on the application do you intend to live in the property," said David Berson, chief economist for mortgage financing firm Fannie Mae. "People who live in a property are less likely to default than investors."
Still, Berson said that while default rates are likely to rise for many Alt. A loans, he doesn't think it will reach the levels seen in the subprime sector. He said only 1.5 percent of Alt. A loans are now 60 days or more delinquent, while in subprime it is 7.5 percent. Absent a major recession, he doubts that Alt. A loans will reach the same kind of delinquency or default rates causing worries and lender bankruptcies in subprime.
But many in the field say that there is a real squeeze on Alt. A loans as lenders tighten up on underwriting standards. Mitch Ohlbaum, president of mortgage broker Legend Mortgage whose business was about 55 percent Alt. A, said he's seen a dramatic change in the business the last few years, and its now swinging back away from the loans.
"Stated income borrowers were typically self-employed people who write off a lot of income, so their tax returns really don't reflect what they're earning," said Ohlbaum. But he said the loans have grown in popularity for folks who had no money to put down on a home, or could only pay interest on a loan, especially by real estate investors.
"All that nutty stuff is going to disappear," said Ohlbaum. "Everyone today is shying away from the 100 percent of value loan. But anytime there's a big change in the market like there is now, everyone will overcompensate for a while. I think this will last for 12 to 14 months before things are back to normal, and I think you'll see more foreclosures, more people in trouble in the meantime."
And he said some types of Alt. A loans that had become popular, such as the no-money-down loans, are almost impossible to arrange today. And the definition of what is considered an A-quality borrower has tightened up.
Inside Mortgage Finance's Cecala said he believes underwriting of the loans had grown too loose by the end of last year, and that even some subprime borrowers were getting so-called low-doc or no-doc loans. He believes as much as a quarter of Alt. A loans were going to subprime borrowers. "In some ways it's the worst possible combination," he said.
Now with the market correcting, even some borrowers with good credit are having Alt. A loan applications rejected, Ohlbaum said. That will cut off another source of financing for the battered real estate market.
The biggest Alt. A lender is Pasadena, Calif-based IndyMac Bancorp. Trade publication Inside Mortgage Finance estimates it did $70.2 billion of the loans in 2006, up 48 percent from a year earlier. As the sector grew, its shares shot up nearly 50 percent in a year and hit a record high in April 2006. But with rising concern about the mortgage sector, its shares have plunged 36 percent since the start of 2007.
But it's not just the smaller lenders like IndyMac in the sector. Like subprime, some of the nation's largest finance firms are major players. Countrywide Financial, one of the nation's largest mortgage lenders, is the No. 2 Alt. A lender with $68 billion in loans, according Inside Mortgage Finance.
GMAC, the finance unit of General Motors that is now 51 percent owned by Cerberus Capital, is No. 3 on the list at $44 billion, and a unit of General Electric is No. 4 at $28.3 billion, just ahead of Washington Mutual, the nation's largest thrift with $25 billion in the loans.
What is not known is which Wall Street firms, banks and hedge funds have bought hundreds of billions of dollars worth of mortgage-backed securities comprised of Alt. A loans, or have lines of credit out to the smaller Alt. A lenders.
"If they get spooked, you'll see the same things that are happening in subprime-repurchase requests, funding sources drying up," said Cecala.
But Fannie Mae's Berson said he doesn't foresee the problems getting as bad as subprime, even if the problems in the sector do get worse. He said the changes taking place are needed, though they will raise the cost of credit.
"I would suspect that investors will view credit risk with a better eye going forward," he said. "Loans that have potentially more risk will end up with higher [rate] spreads. Maybe they'll just widen to where they should be."
UK Central Banker Comes Clean
Lives ruined and unsustainable debt carried by millions of consumers. Suddenly, the UK Central Banker admits to his shenanigans. Did someone say oopsy?
Ex-Governor George says Bank deliberately fuelled consumer boom
The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession, the former Bank Governor Eddie George admitted yesterday.
Lord George said he and his colleagues on the Monetary Policy Committee " did not have much of a choice" as they battled to prevent the UK being dragged into a worldwide economic slump by slashing interest rates. And he said his legacy to the current MPC was to "sort out" the problems he had caused.
Lord George, who headed the Bank for a decade from 1993, revealed to MPs on the Treasury Select Committee that he knew the approach was not sustainable. "In the environment of global economic weakness at the beginning of this decade... external demand was declining and related to that, business investment was declining," he said. "We only had two alternative ways of sustaining demand and keeping the economy moving forward - one was public spending and the other was consumption.
"We knew that we were having to stimulate consumer spending. We knew we had pushed it up to levels which couldn't possibly be sustained into the medium and long term. But for the time being, if we had not done that, the UK economy would have gone into recession just as the United States did."
He said he was "very conscious" that stimulating consumer demand could give rise to problems in the future. "My legacy to the MPC, if you like, has been 'sort that out'," he said. Under Lord George's governorship, rates were slashed from 6 per cent in 2001 to 3.5 per cent in 2003, pushing house price inflation above 25 per cent and high street spending growth to its highest since the late-Eighties boom.
In a wide-ranging discussion on the first 10 years of the MPC, Lord George also rejected suggestions that the MPC should target specific concerns such as soaring house prices, arguing that it was vital to take the broader picture of the economy.
Meanwhile, Kate Barker, a current MPC member, said in a speech last night that interest rate changes might become more frequent as the committee tackles volatile energy prices, rising inflation expectations and increasing pricing power. "This is a different kind of uncertainty from worries about demand which have been more usual during my time on the MPC, and I suggest that this may prompt a change in observed behaviour towards more frequent interest rate changes," she told the CBI North East dinner.
Ex-Governor George says Bank deliberately fuelled consumer boom
The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession, the former Bank Governor Eddie George admitted yesterday.
Lord George said he and his colleagues on the Monetary Policy Committee " did not have much of a choice" as they battled to prevent the UK being dragged into a worldwide economic slump by slashing interest rates. And he said his legacy to the current MPC was to "sort out" the problems he had caused.
Lord George, who headed the Bank for a decade from 1993, revealed to MPs on the Treasury Select Committee that he knew the approach was not sustainable. "In the environment of global economic weakness at the beginning of this decade... external demand was declining and related to that, business investment was declining," he said. "We only had two alternative ways of sustaining demand and keeping the economy moving forward - one was public spending and the other was consumption.
"We knew that we were having to stimulate consumer spending. We knew we had pushed it up to levels which couldn't possibly be sustained into the medium and long term. But for the time being, if we had not done that, the UK economy would have gone into recession just as the United States did."
He said he was "very conscious" that stimulating consumer demand could give rise to problems in the future. "My legacy to the MPC, if you like, has been 'sort that out'," he said. Under Lord George's governorship, rates were slashed from 6 per cent in 2001 to 3.5 per cent in 2003, pushing house price inflation above 25 per cent and high street spending growth to its highest since the late-Eighties boom.
In a wide-ranging discussion on the first 10 years of the MPC, Lord George also rejected suggestions that the MPC should target specific concerns such as soaring house prices, arguing that it was vital to take the broader picture of the economy.
Meanwhile, Kate Barker, a current MPC member, said in a speech last night that interest rate changes might become more frequent as the committee tackles volatile energy prices, rising inflation expectations and increasing pricing power. "This is a different kind of uncertainty from worries about demand which have been more usual during my time on the MPC, and I suggest that this may prompt a change in observed behaviour towards more frequent interest rate changes," she told the CBI North East dinner.
Wednesday, March 21, 2007
Sunday, March 18, 2007
Eureka! The Mainstream Media Finally Wake Up!
As usual, the mainstream media (MSM) is a "day late and a dollar short". They are finally catching on to the problems in the U.S. mortgage market that bloggers have been reporting on for over 3 years. This year, they should award the Pulitzer Prize to a blogger! This is where the real reporting happens!
Friday, March 16, 2007
Greenspan Cartoons
Okay, this next one isn't a cartoon but the comedic value is just too high to avoid posting it! American Hero? There may be some regret over this choice in a few years. It all depends on how the mortgage meltdown is spun!
Top investor sees U.S. property crash
Jim Rogers is never one to pull any punches. He hits straight to the gut with his outlook on the fallout from the subprime meltdown that is currently underway. Stay Tuned!
Top investor sees U.S. property crash
Wed Mar 14, 2007 12:59PM EDT
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.
"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.
"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
"When markets turn from bubble to reality, a lot of people get burned."
The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.
"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.
"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.
"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.
Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.
But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."
The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.
When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
Mortgage malaise may bring recession: Merrill
Merril is taking the lead on addressing the problems in the mortgage market. While many analysts are still bullish about the strength of the overall economy, Merril acknowledges that the impact of a credit crunch could be severe to the housing and stock markets. Stay Tuned!
NEW YORK (Reuters) - House prices could tumble 10 percent this year and force the United States into recession if a credit crunch taking shape in the mortgage market gathers steam, Merrill Lynch said in research notes this week.
If correct, the prospects of this scenario will prove troubling for equities investors, who could face a stock market decline of 30 percent or more as measured by the S&P 500 index (.SPX : Quote, Profile, Research), the brokerage said.
Merrill said the biggest concern is that tighter lending standards in the mortgage market, even if confined to lower-quality borrowers, will constrain overall housing demand and hamper recovery in the struggling housing market.
"It is not inconceivable (given what is happening now to mortgage originations) that we end up with something closer to a 10 percent decline in home prices this year," Merrill Lynch said.
Merrill said this alone would slow the economic expansion to a rate of about 1.5 percent to 1.75 percent this year, which it termed a "growth recession".
The traditional definition of a recession is two consecutive quarters of declining gross domestic product.
However, if the inflation-fighting Federal Reserve were to keep rates unchanged to contain price growth -- instead of cutting by 1 percentage point in the second half of 2007 as Merrill expects -- then this would put the probability of an outright recession in the second half at "very close to 100 percent".
In the past, moves by financial markets to price in some risk of a recession, without actually experiencing one, has led to an average drop in the S&P 500 of 16 percent in sell-offs lasting 13 weeks.
"But if we do end up seeing a recession, then it's game over: the historical record shows that the average decline in the S&P 500 is 34 percent and the average duration is 37 weeks - more than double the magnitude and triple the duration of classic non-recessionary correction," Merrill added.
Thursday, March 15, 2007
Tuesday, March 13, 2007
Lenders initiate foreclosures at record pace
It's getting UGLY and it's accelerating!
NEW YORK (Reuters) - Lenders launched foreclosure actions against more than one in every 200 U.S. mortgage borrowers in the fourth quarter of 2006, the biggest share of homes at the start of the repossession process on record.
Driven by subprime borrowers having trouble making payments, the proportion of mortgages in the initial stages of foreclosure was at the highest in the 37-year history of the Mortgage Bankers Association's National Delinquency Survey.
The share of mortgaged homes at the start of the foreclosure process rose to a seasonally adjusted 0.54 percent last quarter, topping the previous record of 0.50 percent touched in the second quarter of 2002, when the economy was recovering from recession.
Late payments on U.S. mortgages also rose in the fourth quarter to their highest level in three-and-a-half years.
Delinquency rates rose in 49 states, and foreclosure inventory grew in 44 states, according to the MBA.
After the MBA delinquency report the three main U.S. equity indexes extended losses and sank by about 2 percent. U.S. Treasury debt prices rose as investors sought a safe haven from the potential spread of woes in the subprime mortgage market.
"Subprime borrowers are more likely to be susceptible to the cumulative increases in interest rates that we have experienced and the resultant nationwide slowing of home-price appreciation, including outright declines in some markets," said MBA chief economist Doug Duncan.
Problems in the subprime mortgage sector, which involves loans to riskier borrowers, have been a major factor roiling the U.S. financial markets in recent weeks.
"Significant increases in delinquency rates have in some cases led to unexpected increases in credit losses and the failure of some subprime specialist firms," Duncan said. "Some lenders who have been exiting the business stated that they didn't underwrite properly the risk in the loans."
Subprime mortgage lenders have been battered by defaults and demands from their own lenders to take back soured loans at a loss. Lax underwriting standards added to the problems. Over two dozen lenders have quit the industry in the last year.
As risk premiums demanded on future business grow, lenders pass higher costs on to borrowers, making it more difficult for people to take out new home loans.
"We would expect possibly up to a 30 percent reduction in subprime production in 2007 relative to 2006, as that pricing has already hit the Street," Duncan said.
Rep. Barney Frank (news, bio, voting record) (D-Mass.), chairman of the House Financial Services Committee, said on Tuesday that he plans to introduce legislation to restrict overly risky mortgages.
DELAYED HOUSING STABILITY
The MBA also pushed back its prediction for when the U.S. housing sector will regain its footing, saying this will be toward the end of this year. In December, it forecast that a turnaround would happen in the middle of 2007.
Delinquencies rose for all loan types but were largest for subprime adjustable-rate loans that reset at higher interest rates, the industry trade group said.
The overall mortgage delinquency rate increased to a seasonally adjusted 4.95 percent in the fourth quarter, up from 4.67 percent in the prior quarter and from 4.70 percent in the fourth quarter of 2005.
Subprime adjustable-rate mortgage (ARM) delinquencies jumped to 14.44 percent in the fourth quarter from 13.22 the prior quarter.
In contrast, prime ARM delinquencies rose to a much lower 3.39 percent from 3.06 percent.
"The gist is that the prime market delinquencies are still far from troubling levels and the trends are also not worrisome, while the subprime pace of deterioration remains broadly unaltered and problematic," said Alan Ruskin, chief international strategist at RBS Greenwich Capital in Greenwich, Connecticut.
Mounting troubles in subprime loans are unlikely to significantly taint mortgages held by borrowers with higher credit quality, many strategists contend.
"We think the spillover to other parts of the mortgage sector is going to be limited. It's not something that we expect to have significant macro implications," said Torsten Slok, senior economist at Deutsche Bank.
Anthony Ryan, U.S. Assistant Treasury Secretary for financial markets, told Reuters that the subprime mortgage problems appeared to be "fairly well contained."
Mississippi, Louisiana and Michigan had the highest overall delinquency rates, well above the national average, at 10.64 percent, 9.10 percent and 7.87 percent, respectively.
The states with the largest increases in overall delinquency rates from the prior quarter were West Virginia, Maine and Florida.
The Northeast's overall seasonally adjusted delinquency rate of 4.58 percent and the West's 3.18 percent rate were below the 4.95 percent national average. The North Central region's late payment rate of 5.68 percent and the South's 5.71 percent rate exceeded it.
(Additional reporting by John Poirier and Svea Herbst in Washington)
Tuesday, March 06, 2007
The big bet that could melt Wall Street
A report about the slow unwinding of the carry trade. It may still have a long way to go or things could turn around suddenly if the unwinding of a lot of these loans suddenly creates a shockwave of liquidity extraction in the markets.
A look at the 'yen carry trade' and why so many investors are starting to worry it might unravel.
By Grace Wong, CNNMoney.com staff writer
March 6 2007: 7:42 AM EST
NEW YORK (CNNMoney.com) -- As investors wonder if the global market selloff is reaching a bottom, economists are keeping a close eye on one big trading bet that could send more seismic tremors through Wall Street.
For more than a decade, investors have profited by borrowing yen at ultra-low interest rates and using the funds to buy higher-yielding investments based in other currencies - known in Wall Street parlance as the yen carry trade.
But last week's market swoon has brought risk back into focus, and a number of these borrowers have been unwinding those trades lately.
"There's been complacency and underpricing of risk across the board," said Nouriel Roubini, chairman of Roubini Global Economics, a research firm. But now many big investors, as well as policy-makers, are bracing for more volatility in the markets, he said.
While the yen carry trade grew popular after Japan started holding interest rates steady near zero six years ago, it's only recently that a variety of hedge funds, insurance companies and mutual funds are getting out of those bets - and removing a key source of support for stocks.
In the process they've sparked a swift rise in the yen - which has jumped 4 percent against the dollar in the last week alone - as they've bought yen to repay their loans.
While it's difficult to quantify the size of the yen carry trade, investors have borrowed yen aggressively to fund a wide range of investments - from riskier assets in emerging markets to safer investments like U.S. Treasury bonds, economists said.
They're divided, though, on whether the yen's recent rise is a short-term run or the start of a massive unraveling of yen-based trades that could roil financial markets further.
"It's a little shake-out. A few people scared out of the yen carry trade may have pushed the currency up, but it doesn't mean the yen carry trade has changed fundamentally," said Robert Brusca, chief economist of FAO Economics.
Interest rates in Japan are still super-low relative to rates in the United States and Europe. Japan's benchmark short-term interest rate stands at 0.5 percent, compared to 5.25 percent in the United States and 3.5 percent across most of Europe.
The Bank of Japan brought an end last July to its ultra-easy monetary policy by raising rates for the first time since 2000. But its rate hikes haven't been consistent and the central bank isn't expected to aggressively raise rates anytime soon.
Howard Simons, a strategist at Bianco Research in Chicago, thinks given how low Japanese rates are versus the rest of the world, the yen carry trade still has a long way to go in any unwinding.
And "the unwind, if it starts to occur - is not going to be a one-week occurrence. It's going to occur over a long period," he noted.
Others see the yen's recent spike as the start of a real unraveling of the carry trade. "By all appearances, this is the real thing," said Patrick Fearon, economist with A.G. Edwards & Sons.
While the spread between interest rates in Japan and elsewhere around the world remains wide, investors are realizing now that the yen can move much more quickly even if the central bank doesn't raise rates very quickly - thereby destroying the profitability of the carry trade, Fearon said.
"Even if the Bank of Japan holds rates steady - as it is widely expected to do - a rise in the yen itself could spark a self-sustaining unwinding of the carry trade," he added.
And suddenly - since last week's 416 point drop for the Dow - investors have woken up to the risk inherent in financial markets.
When markets are more volatile, expect big gains and big losses to come hard and fast, Roubini said, referencing the yen's abrupt movements during the Asian financial crisis, when the yen jumped as much as 12 percent during one 72-hour period in 1998.
"This is not a risky trade I would continue if I was an investor. Any trigger can cause a sudden movement at this point," Roubini said.
The big bet that could melt Wall Street
A look at the 'yen carry trade' and why so many investors are starting to worry it might unravel.
By Grace Wong, CNNMoney.com staff writer
March 6 2007: 7:42 AM EST
NEW YORK (CNNMoney.com) -- As investors wonder if the global market selloff is reaching a bottom, economists are keeping a close eye on one big trading bet that could send more seismic tremors through Wall Street.
For more than a decade, investors have profited by borrowing yen at ultra-low interest rates and using the funds to buy higher-yielding investments based in other currencies - known in Wall Street parlance as the yen carry trade.
But last week's market swoon has brought risk back into focus, and a number of these borrowers have been unwinding those trades lately.
"There's been complacency and underpricing of risk across the board," said Nouriel Roubini, chairman of Roubini Global Economics, a research firm. But now many big investors, as well as policy-makers, are bracing for more volatility in the markets, he said.
While the yen carry trade grew popular after Japan started holding interest rates steady near zero six years ago, it's only recently that a variety of hedge funds, insurance companies and mutual funds are getting out of those bets - and removing a key source of support for stocks.
In the process they've sparked a swift rise in the yen - which has jumped 4 percent against the dollar in the last week alone - as they've bought yen to repay their loans.
While it's difficult to quantify the size of the yen carry trade, investors have borrowed yen aggressively to fund a wide range of investments - from riskier assets in emerging markets to safer investments like U.S. Treasury bonds, economists said.
They're divided, though, on whether the yen's recent rise is a short-term run or the start of a massive unraveling of yen-based trades that could roil financial markets further.
"It's a little shake-out. A few people scared out of the yen carry trade may have pushed the currency up, but it doesn't mean the yen carry trade has changed fundamentally," said Robert Brusca, chief economist of FAO Economics.
Interest rates in Japan are still super-low relative to rates in the United States and Europe. Japan's benchmark short-term interest rate stands at 0.5 percent, compared to 5.25 percent in the United States and 3.5 percent across most of Europe.
The Bank of Japan brought an end last July to its ultra-easy monetary policy by raising rates for the first time since 2000. But its rate hikes haven't been consistent and the central bank isn't expected to aggressively raise rates anytime soon.
Howard Simons, a strategist at Bianco Research in Chicago, thinks given how low Japanese rates are versus the rest of the world, the yen carry trade still has a long way to go in any unwinding.
And "the unwind, if it starts to occur - is not going to be a one-week occurrence. It's going to occur over a long period," he noted.
Others see the yen's recent spike as the start of a real unraveling of the carry trade. "By all appearances, this is the real thing," said Patrick Fearon, economist with A.G. Edwards & Sons.
While the spread between interest rates in Japan and elsewhere around the world remains wide, investors are realizing now that the yen can move much more quickly even if the central bank doesn't raise rates very quickly - thereby destroying the profitability of the carry trade, Fearon said.
"Even if the Bank of Japan holds rates steady - as it is widely expected to do - a rise in the yen itself could spark a self-sustaining unwinding of the carry trade," he added.
And suddenly - since last week's 416 point drop for the Dow - investors have woken up to the risk inherent in financial markets.
When markets are more volatile, expect big gains and big losses to come hard and fast, Roubini said, referencing the yen's abrupt movements during the Asian financial crisis, when the yen jumped as much as 12 percent during one 72-hour period in 1998.
"This is not a risky trade I would continue if I was an investor. Any trigger can cause a sudden movement at this point," Roubini said.
Sunday, March 04, 2007
A Week of Volatility
Here's an interactive global map (free at the WSJ) of the week's trading. Watch how the week progressed, Scroll over any country, and you get their Bourse performance for that day:
Saturday, March 03, 2007
Enron 2 in the Subprime Lending Market?
Anyone that was paying attention, knew that this was coming but the pace of the unraveling is accelerating at breakneck speeds!
New Century says it faces criminal probe
Subprime-mortgage lender warns it will likely breach lending covenant
By John Letzing & Alistair Barr, MarketWatch
Last Update: 9:04 PM ET Mar 2, 2007
SAN FRANCISCO (MarketWatch) -- New Century Financial Corp. said late Friday that it's facing a federal criminal probe and will likely breach a major lending covenant with its financial backers, bringing into question the survival of the second-largest U.S. subprime-mortgage lender.
The U.S. Attorney's Office for the Central District of California is conducting a federal criminal inquiry into trading in New Century securities as well as accounting errors, the company wrote in a regulatory filing late Friday.
The Securities and Exchange Commission also is looking into the company, as is the regulatory arm of the New York Stock Exchange, New Century disclosed. The company added that it is complying with all three inquiries.
Shares of New Century (NEW: 14.65, -1.20, -7.6% ) were down almost 25% in after-hours trading Friday at about $11, after falling more than 7% in the regular session to $14.65.
The mortgage lender said it expects that it won't report at least $1 of net income for the two quarters ended Dec. 31, as stipulated in covenants with its lenders.
New Century did say that it has received waivers from six of 11 of these lenders, though it has not received waivers from the remaining five. Some of these waivers will take effect when New Century gets similar waivers from the other lenders that have the two-quarter net income covenant, according to the company.
Subprime mortgages are offered to home buyers who fail to meet the strictest lending standards. Lenders specializing in such loans, like New Century, rely in part on big banks known as warehouse lenders to finance their operations. These backers require that subprime lenders meet certain minimum financial targets; otherwise, they have the right to end the business relationship.
'If New Century's lenders do not grant the requested waivers, the company is likely to be forced to sell or shut down.'
— Zack Gast, CFRA
"Subprime lenders without deposits depend on their warehouse lines," said Zack Gast, a financial sector analyst at the Center for Financial Research and Analysis, a research firm. "If New Century's lenders do not grant the requested waivers, the company is likely to be forced to sell or shut down."
Indeed, New Century warned that if it can't get waivers or covenant amendments from enough of its financial backers, the company's auditor, KPMG, will conclude "that substantial doubt exists as to the company's ability to continue as a going concern."
New Century slashed its forecast for loan production earlier this year because early-payment defaults and loan repurchases have led to tighter underwriting guidelines. The company also said that it has to restate most of its results from 2006 because of mistakes in how it accounted for losses on repurchased loans.
Companies like New Century that specialize in subprime loans have suffered as housing prices stopped rising and interest rates climbed from record lows. See full story.
New Century says it faces criminal probe
Subprime-mortgage lender warns it will likely breach lending covenant
By John Letzing & Alistair Barr, MarketWatch
Last Update: 9:04 PM ET Mar 2, 2007
SAN FRANCISCO (MarketWatch) -- New Century Financial Corp. said late Friday that it's facing a federal criminal probe and will likely breach a major lending covenant with its financial backers, bringing into question the survival of the second-largest U.S. subprime-mortgage lender.
The U.S. Attorney's Office for the Central District of California is conducting a federal criminal inquiry into trading in New Century securities as well as accounting errors, the company wrote in a regulatory filing late Friday.
The Securities and Exchange Commission also is looking into the company, as is the regulatory arm of the New York Stock Exchange, New Century disclosed. The company added that it is complying with all three inquiries.
Shares of New Century (NEW: 14.65, -1.20, -7.6% ) were down almost 25% in after-hours trading Friday at about $11, after falling more than 7% in the regular session to $14.65.
The mortgage lender said it expects that it won't report at least $1 of net income for the two quarters ended Dec. 31, as stipulated in covenants with its lenders.
New Century did say that it has received waivers from six of 11 of these lenders, though it has not received waivers from the remaining five. Some of these waivers will take effect when New Century gets similar waivers from the other lenders that have the two-quarter net income covenant, according to the company.
Subprime mortgages are offered to home buyers who fail to meet the strictest lending standards. Lenders specializing in such loans, like New Century, rely in part on big banks known as warehouse lenders to finance their operations. These backers require that subprime lenders meet certain minimum financial targets; otherwise, they have the right to end the business relationship.
'If New Century's lenders do not grant the requested waivers, the company is likely to be forced to sell or shut down.'
— Zack Gast, CFRA
"Subprime lenders without deposits depend on their warehouse lines," said Zack Gast, a financial sector analyst at the Center for Financial Research and Analysis, a research firm. "If New Century's lenders do not grant the requested waivers, the company is likely to be forced to sell or shut down."
Indeed, New Century warned that if it can't get waivers or covenant amendments from enough of its financial backers, the company's auditor, KPMG, will conclude "that substantial doubt exists as to the company's ability to continue as a going concern."
New Century slashed its forecast for loan production earlier this year because early-payment defaults and loan repurchases have led to tighter underwriting guidelines. The company also said that it has to restate most of its results from 2006 because of mistakes in how it accounted for losses on repurchased loans.
Companies like New Century that specialize in subprime loans have suffered as housing prices stopped rising and interest rates climbed from record lows. See full story.
Friday, March 02, 2007
The Best or Worst Commercial of All Time?
I defy anyone to watch this and then try to get that song out of your head!
David Walker Warning!
Straight from the man who's quote is highlighted in the Header of this blog, the sad reality of the U.S. financial position and how things are only getting worse. Remember, this is the U.S.' Head Accountant and he can't be fired for anything that he says. Luckily, that allows him to speak the truth. I would suggest tuning in to 60 Minutes for the full report.
U.S. COMPTROLLER: PRESCRIPTION DRUG BILL 'MAY BE THE MOST FINANCIALLY IRRESPONSIBLE LAW IN 40 YEARS'; Thu Mar 1 2007 13:41:11 ET
Bill Will Add $8 Trillion to Long-Term Medicare Obligations That Could Already Bankrupt the U.S.
The U.S. government's top accountant says the law that added a prescription drug benefit to Medicare may be the most financially irresponsible legislation passed since the 1960s. U.S. Comptroller General David Walker says Medicare -- barring vast reform to the program and the nation's healthcare system -- is already on course to possibly bankrupt the treasury and adding the prescription bill just makes the situation worse. Walker appears in a Steve Kroft report to be broadcast on 60 MINUTES Sunday, March 4 (7:00-8:00 PM, ET/PT) on the CBS Television Network.
"The prescription drug bill is probably the most fiscally irresponsible piece of legislation since the 1960s," says Walker, "because we promise way more than we can afford to keep." He argues that the federal government would need to have $8 trillion today, invested at treasury rates, to cover the gap between what the program is expected to take in and what it is expected to cost over the next 75 years Ð and that is in addition to more than $20 trillion that will be needed to pay for other parts of Medicare. "We can't afford to keep the promises we've already made, much less to be piling on top of them," he tells Kroft.
The problem is the baby boomers. The 78 million people born between 1946 and 1964 start becoming eligible for Social Security benefits next year. "They'll be eligible for Medicare just three years later and when those boomers start retiring en masse, then that will be a tsunami of spending that could swamp our ship of state if we don't get serious," says Walker.
As life expectancies increase and the cost of health care continues to rise at twice the rate of inflation, radical reform in health care will be necessary, Walker says. He says the federal government is also going to have to find ways to increase revenue and reduce benefits. The alternative is ugly. Walker shows Kroft General Accounting Office long-term projections that assume the status quo continues, with the same levels of taxation, spending, and economic growth. By the year 2040, Walker says, "If nothing changes, the federal government is not going to be able to do much more than pay interest on the mounting debt and some entitlement benefits. It won't have money left for anything else...."
Sen, Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, tells Kroft that this problem is well known among members of Congress: "Yes, they know in large measure, Republicans and Democrats, that we are on a course that doesn't add up." And he acknowledges nobody is addressing the matter. Why? "Because it's always easier not to," Conrad says, "because it's always easier to defer, to kick the can down the road to avoid making choicesÉYou get in trouble in politics when you make choices."
Walker believes the biggest problem may be that everything seems okay now, so people don't have the sense of urgency that's needed to make tough choices. But the longer we wait, he argues, the harder it's going to be to solve the problem. "The fact is that we don't face an immediate crisis and so people say, ÔWhat's the problem?' The answer is, we suffer from a fiscal cancer...and if we do not treat it, it could have catastrophic consequences for our country," he tells Kroft.
Top Ten Signs You Have A Bad Stockbroker
Top Ten Signs You Have A Bad Stockbroker (via David Letterman)
10. When stocks go up, his pants go down
9. He's unavailable whenever "General Hospital" is on
8. Invested your entire portfolio in JetBlue
7. Instead of Wall Street, he works at Wal-Mart
6. He shaves his head and goes into rehab
5. Hot stock tips, no -- nude photos of Alan Greenspan, yes
4. Keeps using the word Ga-zillion
3. No number 3 -- writer depressed after losing everything in stock market
2. A few years back told Martha, "Sure it's legal"
1. Claims he once had a three-way with Morgan Stanley and Merrill
10. When stocks go up, his pants go down
9. He's unavailable whenever "General Hospital" is on
8. Invested your entire portfolio in JetBlue
7. Instead of Wall Street, he works at Wal-Mart
6. He shaves his head and goes into rehab
5. Hot stock tips, no -- nude photos of Alan Greenspan, yes
4. Keeps using the word Ga-zillion
3. No number 3 -- writer depressed after losing everything in stock market
2. A few years back told Martha, "Sure it's legal"
1. Claims he once had a three-way with Morgan Stanley and Merrill
Thursday, March 01, 2007
StandUp Economist: 10 Principles of Macro-Economics
Mankiw’s Principles
#1. People face tradeoffs.
#2. The cost of something is what you give up to get it.
#3. Rational people think at the margin.
#4. People respond to incentives.
#5. Trade can make everyone better off.
#6. Markets are usually a good way to organize economic activity.
#7. Governments can sometimes improve market outcomes.
#8. A country’s standard of living depends on its ability to produce goods and services.
#9. Prices rise when the government prints too much money.
#10. Society faces a short-run tradeoff between inflation and unemployment.
------------------------------------------------------------
Translations
#1. Choices are bad.
#2. Choices are really bad.
#3. People are stupid.
#4. People aren’t that stupid.
#5. Trade can make everyone worse off.
#6. Governments are stupid.
#7. Governments aren’t that stupid.
#8. Blah blah blah.
#9. Blah blah blah.
#10. Blah blah blah.
------------------------------------------------------------
via Stand Up Economist
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