patrick.net

Anyway, I think the majority of today's problems were rooted in evil policies created in the 1930's.

Duke Says:
the wheels totally came off the bus in 2003 when Mozilla led the industry the rest of the way into the dumper by killing underwriting.

"Mozilo" - the excessively orange debt-peddler

"Mozilla" - the excessively excellent open-source web-browser platform

Some of us are quite fond of Mozilla and contribute to its code, so don't knock its good name. :-)

Mostly the middle-class

The middle-class is an unnatural occurrence in history anyway. But don't worry... I am sure all slaves in the future have iPods. :)

Some of us are quite fond of Mozilla and contribute to its code, so don’t knock its good name.

Some perspective...

I consider myself a die-hard Microsoft supporter. I have been using Internet Explorer since version 1.0.

I am typing this message from a Firefox window.

I don't buy the argument that corporations somehow need consumers to spend like to be able to survive.

If consumers become frugal, companies that make actually useful products and provide actually useful services will continue to thrive.

Others don't deserve to surive! Creative destruction, baby!

Can anyone please explain the moderation rules here? I did not use any foul language in a previous post, yet it goes to moderation.

DennisN :

From where I come in India there is a non-profit organization (Graahak Sangh - meaning Group Buyers) that does similar to what you have done. They buy bulk, high quality stuff, and distribute it in smaller portions. The cost savings were substantial.

Duke says: This roughly corresponds to 2003 prices in 2010 WITHOUT adjusting the dollars for inflation.
Futures trading for the SF Case/Shiller Home Price Index from CME :
Nov. 08: 158.40
Nov. 012: 153.40

Historic Index Nov. 03: 153.36

The market seems to agree with you (although it appears to be showing a VERY rough ride the next 6 months). I imagine core Fortress regions will more likely follow the gradual trajectory you laid out over the next couple of years while less desireable ones will hit the bottom quicker. I still have not seen a huge inventory boost in the $1 million-$250k range that I would expect in my region. Will be interesting to see what happens during the summer. At any rate, even if inventory isn't ballooning, there are enough REOs to make life interesting.

More than one link in a post will trigger moderation.

And Mozilla begat Netscape, and Netscape begat Firefox. Sounds very Old Testament to me.

If consumers become frugal, companies that make actually useful products and provide actually useful services will continue to thrive.

But that economy cannot support enough "subprime" companies, which are required to support the employment base.

It all boils down to the fact that human civilization is a farce.

thenuttyneutron :

I am not sure about all the rules but words like soc1ali1sm can also get you in moderation. Hence I spell like sh1t (pun intended).

Summer? What am I thinking? The Silent Spring is coming...

I am not sure about all the rules but words like soc1ali1sm can also get you in moderation.

I am not fan of socialism but Patrick does not moderate base on ideology.

The problem with "socialism" is that it contains the name of a male potency drug.

>It all boils down to the fact that human civilization is a farce.

Ha. Not much can be done about that too.

In fact, we could adopt Advaita and just argue that everything material is an illusion anyway!

Peter P, how did you manage to put the forbidden word in there and not get moderated?

Pooling together for bulk purchase is very popular in China. It ranges from travel to diapers, from buying townhome /apartment from developers (no kidding!) to going to a concert.

It is ad hoc kind of group. People with the same intention of purchase meet each other on forum and form bulk purchase group right there to negotiate a better price.

The only disappointment so far is, I haven't seen exploding inventory yet. It seems like all the FBs are holding back for the spring (dead cat) bounce. Officially, when does spring season start for home transaction?

Now Mozilo knew the mortgage industry, and she bore him a child. ;)

"socialism"

Peter P, how did you manage to put the forbidden word in there and not get moderated?

He invoked the holy name of libertarianism: Saint Paul.

I am always baffled by the "optimisitic" attitude of the Wall Street. How come with CIT poised to go down, UBS about to explode and many more to come, the market is back to happy days again?

Am I not getting the right news feeds?

The unemployment claim is surging, and yet the financial index is up 6+%, I must be a very pessimistic person, too dark to live in this merry-go-around world.

OO
I think the FB are just not under enough pressure yet. Resets have been moderated by the low LIBOR and congress is talking massive bailout - they have already aided with "dont 1099 me bro". Even Bernanke is saying, "Cram down". Of course they are hanging on.

The only thing worse then buying a $1,000,000 McMansion is actually paying for yours when your neighbor gets to renegitate theirs for $600,000.

The timing and degree of price capitulation seems to now depend directly on the government.

OK, now I am scared, we are collapsing. He's been so accurate in being the "signal".

Behold: The End of the End Is Nigh

By Jim Cramer
RealMoney.com Columnist
3/20/2008 3:01 PM EDT
Click here for more stories by Jim Cramer Try Jim Cramer's Action Alerts PLUS

If we can get to the end of March, we will be able to get out of a lot of this credit crunch. The Fed is going to allow you to take your bad stuff and return it for cash. The Fed is just borrowing them, but they can borrow them for a long time.

This is the plan to forestall the apocalypse, to take the four ailing horsemen of the pending financial apocalypse -- Citigroup (C - commentary - Cramer's Take), Merrill (MER - commentary - Cramer's Take), UBS (UBS - commentary - Cramer's Take) and Washington Mutual (WM - commentary - Cramer's Take) -- and make it so they don't get sent to the glue factory. This facility will also allow Bank of America (BAC - commentary - Cramer's Take) and Wachovia (WB - commentary - Cramer's Take), which are swimming in this bad paper -- AAA real estate paper in particular -- to catch their breath. These both need it, as you see the WB dividend yield and you recognize that Bank of America is going to own some real bad paper when the Countrywide (CFC - commentary - Cramer's Take) deal closes.

I want to be very clear, the moment the Treasury Department stopped being laissez-faire, the moment that it was no longer in a "let them eat cake" mode -- which is what happened when Bear (BSC - commentary - Cramer's Take) failed -- the world changed. We then saw the Treasury end the chokehold it had on Fannie Mae (FNM - commentary - Cramer's Take). If the Fed wants to ensure a bull market in financials, all it has to do is issue $200 billion in yearlong paper, that's what the Street is desperate for, and bid for Fannie Mae mortgage bonds. Then I would predict we would begin to clean up the housing overhang, as it would be easier to get mortgage money more cheaply.

We are getting close to a resolution; we do need to prevent the four horsemen of the financial apocalypse from going lame.

That's the all-clear signal for the end of the bear market.

At the time of publication, Cramer had no positions in the stocks mentioned.

OO :

You never heard of short covering rallies ? ;-) The margin calls hit the short sellers as well. Or those long-short guys who not have to book the profit to answer Mr. Margin.

Logic has no chance in this market on a short term basis. I am using these rallies to accumulate ultra-shorts.

NIA

@SP thanks for the deleveraging definition. Indeed I already did this in 05-06 when I sold my 4 crapshacks in Los Angeles and now happily rent while sitting on a pile of depreciating dollars.

Hi there, I have been reading a long time. Never posted before. I also must be too pessimistic for this world. I do not get why the financials are rallying so big. And I have to say I am just so angry at the Fed and our beloved Govt. Seriously why would I continue to honestly pay my taxes, if they are going to pay for bonuses for the crooks on Wall Street?

I am just flabbergasted! Socialism for the rich is right. Crazy world.

If the fed buys up the 'bad paper' and is the investor will the servicing companies even bother to foreclose? Will the fed approve workouts/short sales and does the fed even have any loan servicing guidelines at all?(of course not now..but they will have to have some or turn it over to hud).

I predict a few million vacant residential and commercial buildings regardless of the paper pushing that happens or who owns them. Vacant McMansions rotting away not even for sale for years. Maybe they will become HUD homes for low end rentals if the democrats can get organized. certainly the FL highrise condos are going to be low end rentals within 2 years.

Stuck,

be careful with your ultra-shorts. UBS is the largest couterparty of ultrashort (if you are loading up Proshares, you can read the prospectus). I have closed out most of my ultrashort positions because of the potential UBS blowup.

Your gain will be meaningless if the counterparty goes down. Now not only does one need to worry about betting on the right direction, one also needs to think about whether the gain can be realized (aka, whether the sucker on the other side has enough cash to pay you).

OO, Duke :

You are right about inventory not exploding - ONLY IF - you are talking about the Fortress. In the fortress it has only increased it to seasonal levels.

But have you looked at the so called fringe areas ? Morgan Hill and Gilroy have almost 2 years of inventory.

Evergreen has over 500 - which it was last summer. Remember, in 2006, Evergreen never crossed 400. Almost the entire San Jose is exploding.

I do not track East Bay that well. But seems like we have in Alameda county, almost double the inventory compared to Jan 03 and triple of Jan 04.

That does seem like an explosion to me.

OO :

Thanks for the ultra-short warning. I will look into it.

Anyone know if BS shareholdres (aka employees) are still looking to nix the JPMC buyout? They know THEY get more if it goes to bankruptcy, and I am betting they don't care if they are the lead domino that topples many more investment firms/banks/hedgies.

Only way I can see it is this: Big losing owner says, "I will pay $400 million to take it private" then gets a little time from the margin calls to get there. By the time that is done they are, poof, a client at the Fed window to unload their bad paper.

Don't they just have to live until March 27 when all bigger investment banks get to cash in their MBSs and CDOs to the Fed for real money? And if they still go under, even after seriel 28 day visits to ther window, they don't care because they will have divested themselves of, well, themselves?

Regarding inventory :

It is also possible that some people may be holding off from listing and waiting for the new conforming limit to take effect. If that's the case, then this could be the "calm before the storm" on the inventory front.

Stuck,

Apart from the counterparty risk, you may also look into the how these ultrashorts are structured. Some of them are just repos/swaps backed by MBS toxic, so even if you bet on the right direction and your counter party is safe and sound, you may still not be able to realize your gain, if the market just blows up before you cash out.

That's why I am adding to my physical PM, just one less thing to worry about, and one less prospectus to read. Who would have known the PIMCO Unhedged international bond that I bought was loaded with toxic mortgage sh*t that I took great pain to avoid? Who would have known that the MM account at major brokerages all have exposure to mortgage sh*t?

Now I need to study DBA and RJA prospectus to see if they are exposed to these mortgage sh*t in any unexpected ways.

I've been thinking more about executive pay and the $137billion in Wall Street bonuses over the last 6 years.

Put executive (and bonus) pay in escrow. Hold it for 10 years. This would halt short term planning and short term actions that manipulate stock prices just to beef up anual bonuses. I hate the statement, "We can't get the $137 billion back"

If executives and emlyees complain, I can think of 50 other people in your company that would be happy to be CEO for far, far less than the paycheck financial CEOs are insisting on.

As of February 22, 2008, the price of copper is $3.7741 per pound and zinc is $1.1188 per pound. At these prices, the pre-1982 copper cent contains 2.49 US cents which makes them an attractive target for melting by people wanting to sell the metal at a profit. However, the United States Mint, in anticipation of this practice, implemented new regulations[6] on December 14, 2006 which criminalize the melting of cents and nickels and place limits on export of the coins. Violators can be punished with a fine of up to 10 000 USD and/or imprisoned for a maximum of five years.

Peter P, how did you manage to put the forbidden word in there and not get moderated?

I can approve messages in moderation. However, this time the message just went through. Strange.

He invoked the holy name of libertarianism: Saint Paul.

LOL!

Logic has no chance in this market on a short term basis.

Trading is not about logic. It is about embracing emotion and yet be insulated from emotion. It is a paradox.

Your gain will be meaningless if the counterparty goes down.

Is UBS too big to let fail?

Now I need to study DBA and RJA prospectus to see if they are exposed to these mortgage sh*t in any unexpected ways.

OO, how about some deep ITM DBA calls? You pay very little time premium on those. It costs less to obtain the same up-side exposure, freeing up more cash for PM. On the other hand, your down-side exposure is limited to the cost of the option.

If you hold the options long enough, you *may* even qualify for the long-term tax rate. Not tax advice.

You can run the analysis through some option software and see it for yourself.

Not investment advice. Options investing involves great risks.

Anyone notice how incredibly quiet the National Association of Realtors has been lately? Not a peep coming from those folks, probably wise to walk quietly lest the incur the wrath of the masses of FB's.

Interesting to see what the timing and messaging of their next big media spend will be. "It's always a good time to buy or sell a house" probably will not work anymore.

At the very least, we are leaving them quite a mess to figure out.

I worry for this next generation coming up. Risks run large of alienating the whole batch. Standard of living decline should be very noticeable. Very susceptible to agitation for societal change which might turn out to be a good thing.

I think one obvious societal change will be a decline in household formation, with teens cohabiting with their rents well into the 20’s. Families might come together in ways they do not yet expect.