Dr. Housing Bubble Blog Fri 2009-11-20 08:25 EST

Fannie Mae and Wells Fargo Announce Creative Mortgage Solutions: A New Thing Called Renting. Option ARM Scenarios, Lease for Deed, and Delaying the Financial Future.

Last week, foreclosure Hall of Fame member and government stepchild Fannie Mae announced a stunning $18.9 billion loss. Remember last year when we were told that bailing out the enormous Government Sponsored Entities that we would be turning a profit? Well that didn't exactly pan out and both Fannie Mae and Freddie Mac have been a vortex for taxpayer money. With that said, Fannie Mae announced a ``lease for deed'' program that will essentially convert struggling homeowners to that feared word, renters. In the same week after Attorney General Jerry Brown sent his letter to the top option ARM wheelers and dealers in California, Wells Fargo came out with its ingenious solution. Wells Fargo has decided, at least as it stands, to convert their Pick-A-Pay option ARMs into glorious interest only loans for periods of six to ten years.

deed; delays; Dr. Housing Bubble Blog; Fannie Mae; financial future; leased; New Thing Called Renting; Option ARM Scenarios; Wells Fargo Announce Creative Mortgage Solutions.

Thu 2009-11-19 10:26 EST

Goldman left foreign investors holding the subprime bag | McClatchy

Greg Gordon

Goldman sold more than $57 billion in risky mortgage-backed securities during a 14-month period in 2006 and 2007, including nearly $39 billion issued from mortgages it purchased. Meanwhile, the firm peddled billions of dollars in complex deals, many of them tied to subprime mortgages, in the Caymans and other offshore locations...Goldman's traders also made huge bets that those securities would lose value by buying insurance-like contracts, called credit-default swaps, with private parties. Beginning early in 2007, they bought swaps on a London-based exchange.

Goldman left foreign investors holding; McClatchy; subprime bag.

zero hedge Mon 2009-10-12 10:10 EDT

Albert Edwards Warns Of Western Authorities' Positioning For Dismal Failure, As US Becomes Japan Redux

Albert Edwards continues doling out common sense; everyone, and the market in particular, continues ignoring it...The post-bubble whiplash in the economic and profits cycle is exactly a replay of Japan?'s experience. They too had seen an extended period of strong and steady growth going into the peak of the bubble. It took many years, repeated painful lapses back into recession, and sharp declines in equity markets before investors fully de-rated valuations low enough to reflect a new new paradigm...To gauge whether the world economy can surprise and escape this balance sheet recession, keep a very close eye on the bank lending numbers.

Albert Edwards Warns; Becomes Japan Redux; dismal failure; positive; Western authorities; Zero Hedge.

ClubOrlov Mon 2009-10-12 09:53 EDT

Marketing in a Small Town - Interview No. 3

kollapsnik

Dmitry Davydov runs a popular Russian-language blog. Periodically we correspond, and publish the correspondence...I do not know whether the coming age will be Dark Age, but I am sure that it will be rather dim. After all, the art of lying has displaced a lot of useful knowledge.

3; ClubOrlov; interview; Market; small towns.

zero hedge Tue 2009-09-22 16:22 EDT

Top Goldman Lobbyist Barred From Communicating With House's Financial Services Committee

In a rare example of testicular fortitude, Barney Frank has "banished" Goldman's Michael Pease from communicating with the U.S. House of Representatives Financial Services Committee. According to Reuters, the Goldmanite, and former committee staffer, has been "asked" not to interfere with the Congressional panel for a period of 12 months. According to Barney Frank aide Steven Adamske: "Mr. Paese left our offices in September 2008, and was not allowed to communicate with any committee members or staff for a period of one year due to normal ethics restrictions that apply to all House and Senate employees. Out of an abundance of caution due to the nature of financial regulation reform, the chairman has extended Mr. Paese's recusal for another year." Pease "was the committee's deputy staff director before he quit to work for the Securities Industry and Financial Markets Association as a lobbyist. Goldman hired him in April.

communications; House's Financial Services Committee; Top Goldman Lobbyist Barred; Zero Hedge.

zero hedge Mon 2009-09-21 15:41 EDT

Federal Reserve Accounts For 50% Of Q2 Treasury Purchases

The degree of intermediation by the Federal Reserve in the issuance of US Treasuries hit a record in Q2, accounting for just under 50% of all net UST issuance absorption. This is a startling number, as the Fed's $164 billion in Q2 Treasury purchases dwarfs the combined foreign/household UST purchases of $101 billion and $29 billion, respectively, over the same time period. In fact, the Fed was a greater factor in UST demand than all three traditional players combined: Foreigners, Households and Primary Dealers, which amounted to a $158 billion in net Q2 purchases. This dramatic imbalance puts a lot of question marks over how the upcoming hundreds of billions in incremental Treasury purchases will be soaked up, now that QE only has $15 billion of capacity for USTs...

50; Federal Reserve Accountable; Q2 Treasury Purchases; Zero Hedge.

Calculated Risk Fri 2009-09-04 19:01 EDT

Junk Bond Default Rate Passes 10 Percent

CalculatedRisk

From Rolfe Winkler at Reuters: U.S. junk bond default rate rises to 10.2 pct -SP The U.S. junk bond default rate rose to 10.2 percent in August from 9.4 percent in July ... Standard & Poor's data showed on Thursday. The default rate is expected to rise to 13.9 percent by July 2010 and could reach as high as 18 percent if economic conditions are worse than expected, SP said in a statement. ... In another sign of corporate distress, the rating agency has downgraded $2.9 trillion of company debt year to date, up from $1.9 trillion in the same period last year. Bad loans everywhere ...

Calculated Risk; Junk Bond Default Rate Passes 10 Percent.

naked capitalism Fri 2009-09-04 18:45 EDT

Stiglitz Doubts Recovery Can Be Sustained

Joseph Stiglitz takes issue with the view of economists (well, economists surveyed by Bloomberg and the Wall Street Journal, which not surprisingly have a Pollyannish optimistic streak) that the economy is in or on the verge of a recovery. ``In most quarters, there is a feeling we should move away from the dollar system. The question is do we do it in an orderly way, or a chaotic way,'' Stiglitz said. ``The size of the deficit and the size of the balance sheet of the Fed have just increased the anxiety and the desire that something be done...'' Between the fall of the Berlin Wall and the collapse of Lehman Brothers was ``the short period of American triumphalism, where we dominated the global scene. That period is over,'' Stiglitz said.

naked capitalism; Stiglitz Doubts Recovery; sustained.

Thu 2009-07-30 00:00 EDT

Jesse's Café Américain: The Worst Is Yet to Come

Jesse's Café Américain: The Worst Is Yet to Come -- Howard Davidowitz; ``the briefly sunny period in 1930-1 when most economists and public officials agreed that the Depression was already over and the economy was back on track...t was the second half of the great stock decline after the 1929 Crash that did the most damage, because this is when the carnage moved from financial assets and the banks into the real economy''

comes; Jesse's Café Américain; worst.

Fri 2009-07-24 00:00 EDT

naked capitalism: Guest Post: Is Inflation Inevitable?

Van R. Hoisington and Lacy H. Hunt ``betting on inflation as a portfolio strategy will be as bad a bet in the next decade as it has been over the disinflationary period of the past twenty years when Treasury bonds produced a higher total return than common stocks''

Guest Post; inflation inevitably; naked capitalism.

Tue 2009-04-21 00:00 EDT

Interfluidity :: When did the crisis begin?

``the crisis that we're in now is precisely the same crisis we've been in since at least the S&L crisis. We've had a cancer, with some superficial remissions, but fundamentally, for the entire period from the 1980s to 2008, our financial system in general and our banks in particular have been broken.''

crisis begin; Interfluidity.

Sun 2008-11-23 00:00 EST

Joe Bageant: Sarah Palin is the Future of Conservatism

by Anonymous Political Consultant John Brown; ``In a system, which is entering a period of semi-permanent crisis, to plant oneself or one's party in its political center is to make yourself responsible for a political system which is forever failing, losing legitimacy and eventually its right to rule. In the long run, the future will belong to whichever political force flies the boldest flags, stands credibly far enough from those who will be held accountable for our troubles, and curses the loudest at the coming darkness.''

Conservatism; future; Joe Bageant; Sarah Palin.

Fri 2008-11-07 00:00 EST

Hussman Funds: Stock Performance Following the Recognition of Recession

by William Hester; ``period following the broad acceptance of a recession is usually far better for investors than the period that precedes it''

Hussman Funds; Recession; recognition; stocks performed.

Sun 2008-08-24 00:00 EDT

The return of global inflation

by Martin Hutchinson (Prudent Bear); "Almost all the world has abandoned proper anti-inflationary discipline and is destined to suffer a period of high inflation and recession in the coming years...Only a few countries like Brazil have taken the inflationary threat sufficiently seriously and will thus be in a position to continue expanding even while the rest of the world endures recession"

global inflation; returns.

Sat 2008-07-12 00:00 EDT

Winter (Economic & Market) Watch >> Take Downs and Drawing the Wrong Straw

Winter (Economic & Market) Watch >> Take Downs and Drawing the Wrong Straw: "the last six months of the Bush administration will mark one of the greatest periods of systematic looting in American history"

Draw; economic; Market; Take Downs; watch; winter; Wrong Straw.

Sun 2008-07-06 00:00 EDT

Jesse's Café Américain: Lessons from the Panic of 1907

Jesse's Café Américain: Lessons from the Panic of 1907: "almost all panics and crashes are preceded by sustained periods of artificial growth, not based on improvements in productivity, but by a false expansion in the money system, aided and abetted by speculators and financiers." "almost all panics and crashes involves relatively small groups of people who seem to be at the heart of the matter, and are closely interlinked into small cartels of corrupted self-dealing, involving the accumulation of enormous personal fortunes." "always the overextension of credit and excessive leverage" "A free and just society is not a prize to be won or a gift that can be bestowed; it is a recurring commitment, an enduring obligation."

1907; Jesse's Café Américain; Lessons; panic.