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Post Info TOPIC: Home values tumble $1.7 trillion in 2010 ($9 trillion since 2005)
pima


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Date: Dec 14, 2010
Home values tumble $1.7 trillion in 2010 ($9 trillion since 2005)
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> Yes, but the fact is they get that money from individual investors. I
> am sure you are like us, we get 4 phone calls at least 2x a yr. 1 from
> Bullet's alma mater, 1 from mine, 1 from the college our DS attends
> and 1 from the college our DS attends. No check from us, means less to
> invest. AT the same time they need to upgrade buildings and facilities
> to recruit students, thus, they are tied to the dividends of their
> mutuals. If these mutuals do not perform high enough they divest.

You have a truly bizarre notion of what an individual investor is.

When I state an individual investor, I am talking about people. Nobody who writes a check to endowment expects an ROI. The term was meant in a generic manner since you were discussing people as investors.

It does not take away from the fact that Duke's endowment is created by donations, which they in turn invest. These endowments are insane. For example, VT's endowment is 550 million. If Joe Schmoe class of 98 decides not to write a check because the economy stinks, than they have less to invest.

If they invest in Oppenheimer Global, and see the ROI is not meeting their expectations they will divest. If Oppenheimer Global's stock goes down, than they may decide to re align their investments. If they own 20% of a company and divest that entire 20%, that will hurt the company's Moody rating. A lower Moody's rating, and the cost of borrowing money increases. Higher costs means lower returns, lower returns means less investment. Less investment means less capital, less capital means even higher ratings. There is a downward cycle.

It is all inter-related. You can't just say If Lennar needs access to money, they could borrow it from a bank,
or from investors in the form of a bond offering or they could do
a secondary stock placement. Lennar has over $900 million in the
bank so my guess is that they have no need to borrow in the near
term.

Also, I am sure that they don't have 900 million sitting there unspoken for. Please read their 2009 annual report. You will see as I stated earlier they too have done some major cutbacks in the housing market.

They have stated this for their housing:
Revenues down 32%
Net loss of 417 million or $2.45 per share That includes 560 MILLION in write off for valuations.
Home building operating loss of 647 MILLION
27% down in deliveries of new homes
14% down in orders for new homes
Their cancellation rate is at 18%, which is an uptick from 26% the yr before

This is not a stock market thread, but a housing thread. Lennars annual report shows how gloomy the picture is for housing.

> If you want to take it to the very simplistic terms when gold is up,
> housing is down. HOWEVER, 850 for gold 30 yrs ago with a 18% int rate,
> is not what we are facing now, thus, that theory is thrown out the
> door. Housing was down because of interest rates not gold prices.

When gold is up, housing is down? How do you explain gold rising 30%
between 2000 and 2005 while home prices are rising?

Between 2000 and 2005, I sold 2 homes and bought 2 homes (we owned 3 different homes between these yrs...sold 2001, bought 2002, sold 2005, bought 2005).
My home that we bought in 2002 was built in 2000 for 185K. They sold it to us in 2002 for 299. We sold it in 05 for 555K.

Gold may have increased by 30%, but that is far short of what people were getting as a return in the housing market. Had the original owners kept that house for 5 yrs, they would have made 370K return on a 185K investment....plus all their tax write offs!

30% in this scenario would be seen as DOWN from an investment POV.


Lumber is always a tell in the housing market. The reason why is because lumber is needed for framing, thus, large orders of lumber is reflective of housing starts from a market POV (pulled permits is the other tell).

When companies like Lennar, Toll, Basheer, DR and MI start buying large amount of lumber, that is a good sign.

Next tell is Sales for companies like Home Depot or Lowe's. People who can't afford their mtg., can't afford to upgrade their house. Sales and revenues are different. You want to look at the sales number.

Final tell, rental prices plummeting. There is an inverse relationship between rentals and home sales. When the rental price hits that magic number where it is cheaper to buy than to rent, people start buying. Currently, we have yet to hit that magic number.

A lot has to do with people not feeling comfortable in the fact that we hit the bottom of the re-sale market, thus they are staying in a rental. When they believe now is the time to jump, you will see rental vacancies increase, thus that will cause landlords to decrease their price just to get someone in the property. The minute you see that happen is the minute you BUY.

Housing is like any other economy. FIFO. If you were an investor, now is the time to start buying with the intention of renting and then flipping.  The problem is that most people can't do that since if it is not your primary residence you need to come to the table with a higher down payment (usually in the 30%) range.  Not many people have 30% hanging out in their checking account, or on their home equity line.  Thus, they sit on the market, and the prices continue to fall.  Which means renters will still sit on the side lines before they buy. 

That doesn't even include how difficult it is to get a mtg.  "A" paper which I deal with exclusively, has gone from 700 FICO to 750.  VA loans where all the military member had to do was prove they were alive, now need at least a 720 to qualify with a national lender.  VA loans were considered a perk for the military because the constraints and requirements were the most liberal. 

That is the housing market now.  RE agents use to ask the client how much do you want to spend back in the 00-05 yrs before they took them out.  Now they want a pre-qual letter before they step out the door and waste their gas showing them homes.

In 00-05 DOM was avg weeks, and that was a crappy property.  Now the best property is looking at 180 DOM (Days on Market) for the perfectly staged home.  Perfectly staged means new carpets, great appliances, flowers on the DR table, in other words Model homes.

Even when it comes to foreclosures we are having problems.  Owners aren't thrilled that they lost their home and they occassionally will do horrific damage to the house.  That means the neighbors pay the price because now REO (the foreclosure arm in the RE office) will have to lower the price even further.

Here are some of my favorites I have seen in the past few yrs
1. Concrete poured in pools and toilets
2. Spray painted walls
3.  Everything in the house stripped down to the padding on the floor, and including the bannisters and bathroom vanities.  In one home they took every appliance and the kitchen counter.  They were kind enough to leave the instruction manuals for the appliances in the cabinet drawer.

My all time favorite...a garden hose pulled up to the 2nd floor and left on all night to flood the home.

That is what we are facing in real life terms when it comes to foreclosures. 

The minute you realize the destruction of the home, is the minute you understand that if we do not stop these foreclosures, we will continue to see the market fall because non-stressed sales can't compete in price.  Not only can't they compete in the price, but they can't "show well" when BoA doesn't have the lawn mowed weekly, creating the illusion of a neglected neighbor.  Why should I pay top dollar and have to look at that eye sore? Thus, the non distressed owner has to lower their price.

Finally you also need to understand appraisals when it comes to MV.  Appraisers now in the US are also on a national pool.  You no longer can call your lender and have them tweak it.  They are assigned by the pool.  Appraisals, work with a simple system.  3 actives 3 solds in the last 6 months that are in the immediate area with limited distance.

~~~ If there are 6 comps in your neighborhood that fit the comp., they are not going 3 miles down the road to another neighborhood.

~~~If the price comes up short, the sale could be over.  Thus, the owners will now lower their price and the market continues to go down...the next appraisal is now going to taake that new price as their comp....see how it goes down and down?

I hope you drop this gold issue, and let it go back to why the RE market has lost trillions.













-- Edited by pima on Tuesday 14th of December 2010 08:49:36 AM

-- Edited by pima on Tuesday 14th of December 2010 09:16:41 AM

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pmrlcomm


Senior Member

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Posts: 160
Date: Dec 13, 2010
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Can you type more slowly as well. It's easier to follow that way also... LOL

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longprime


Guru

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Posts: 2549
Date: Dec 13, 2010
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I would wish that you two will break up your discussion into smaller pieces. (For us who have ADD and have slower B cells. Its very hard to follow the discussion.  evileye

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BCEagle91


Senior Member

Status: Offline
Posts: 133
Date: Dec 13, 2010
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> Yes, but the fact is they get that money from individual investors. I
> am sure you are like us, we get 4 phone calls at least 2x a yr. 1 from
> Bullet's alma mater, 1 from mine, 1 from the college our DS attends
> and 1 from the college our DS attends. No check from us, means less to
> invest. AT the same time they need to upgrade buildings and facilities
> to recruit students, thus, they are tied to the dividends of their
> mutuals. If these mutuals do not perform high enough they divest.

You have a truly bizarre notion of what an individual investor is.

Let's take a look at what the Investopedia has to say:

--------------------------------
What Does Retail Investor Mean?

Individual investors who buy and sell securities for their personal account, and not for another company or organization.

Also known as an "individual investor" or "small investor".
--------------------------------

> In this market they are being hit 3x as hard, their ROI is down and
> charitable is down, while costs are increasing. In other words their
> endowments are shrinking. Plus, many of them have to report to a board
> of regents.

More Americans are in a giving mood again
Charitable donations are up; heed these tips to stretch your dollars

Thirty-six percent of charities reported an increase in donations
during the first nine months of the year, up from 23% during the same
time period in 2009, according to the Nonprofit Research
Collaborative, a group that includes the Association of Fundraising
Professionals, Blackbaud, and the Center on Philanthropy at Indiana
University, among others.

And 37% reported a decrease in giving the first three quarters of this
year, down from 51% that said the same last year.

“Based on what we’ve seen so far... we would extrapolate that this end
of the year is likely to be better than what it was in 2009 but not
nearly what it was in 2007 — the best on record,” said Melissa
S. Brown, associate director of research for The Center on
Philanthropy at Indiana University.

Another survey released in October found that 55% of American donors
plan to maintain their level of charitable giving in the fourth
quarter, and 8% said they’d give more than in past years because the
need for help is more acute, according to research from the Fidelity
Charitable Gift Fund. About 600 adults participated in the survey, and
all of them intended to donate $200 or more to charity in 2010.

http://www.marke****ch.com/story/more-americans-are-in-a-giving-mood-again-2010-12-13

Endowment Returns Climbed 12.6 Percent Last Year but Failed to Erase Recession Losses

Broad gains in the stock market last year helped college endowments
earn their first positive investment return in three years, according
to a preliminary study by the National Association of College and
University Business Officers and Commonfund.

Endowment returns climbed an average of 12.6 percent for the fiscal
year that ended in June. Despite those increases, many funds do not
appear to have erased the losses they suffered during the recession.

This year's figures, which come from a diverse sample of 80 colleges,
are a big improvement from 2009, however, when the more than 800
surveyed endowments averaged returns of minus 18.7 percent, the worst
in the 39-year history of the study.

The average return over the past three years is now minus 3 percent,
according to estimates based on a sample of 64 colleges; over the
past five years, it is 2.7 percent.

http://chronicle.com/article/Endowment-Returns-Climbed-126/125236/

> Now take FMR who owns 20% of Lennar. They divest and Lennar is going
> to have a problem making payroll since their capital dried up!

It appears that you have no understanding of how the stock markets
operate. If Fidelity sells their shares, someone else will buy them
at some price. Companies and individuals buy shares, even when a
company has declared bankruptcy.

If Lennar needs access to money, they could borrow it from a bank,
or from investors in the form of a bond offering or they could do
a secondary stock placement. Lennar has over $900 million in the
bank so my guess is that they have no need to borrow in the near
term.

> You want to pretend that Lennar would not go belly up if a majority
> shareholder dumped their stock in one day, all 20%. Me otoh will say
> they are DOA if FMR left them.

> That is just business since. FMR has to answer to shareholders, and
> sure as sh*t they are not going to risk their company or job for an
> investment. Lennar is an investment.

I own a little Canadian energy company in Canada. During the flash
crash, it went from about $9 to $2. It didn't go bankrupt. Yes, Lennar
would not go belly up if a majority shareholder dumped their stock in
one day. Bankruptcy is a function of assets and liabilities. The stock
market is just a beauty contest.

I've owned companies that have gone bankrupt and have bought companies
in bankruptcy. I've also caught the falling knife. You don't know what
you are talking about.

> So you are stating that they are not looking at the fundamental of
> long term growth?

Here's the technical analysis site of a friend (he has a Phd in Fine
Arts and is quite accomplished in his field):

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2287993

Those charts tell you all that you need to know about the markets. There
is zero fundamental content.

> In other words you are only looking from a short trade position.

No. Technical analysis is dimensional. The patterns and indicators
that are seen in trading one-second intervals apply to one-minute
intervals, one-hour intervals, one-day intervals, one-week intervals,
one-month intervals and even one-year intervals. So you can use
technicals to match your trading horizons.

> No you were talking about present, I went back to 05. You talked about
> current values, I just happened to remind you that when you say 400%,
> look back a few yrs or decades.

This is what you originally wrote:

>> The reality is we can all play chicken little for every single
>> market.

>> Automobile, Air line, military, housing, utilities, stock, etc.

>> None of that has to do anything with the topic of this
>> conversation, which you started.

>> The govt will impact our economy. The stock market will impact the
>> govt. It is a which came first the chicken or the egg.

>> Here is where we are standing IMHPO:

Where did you state that you were talking about 2005?

> Gold was 850 in 1980, 30 yrs ago. It is now 1300+. The DOw was @900
> and is at the 11K marker.

> Long run which was a better investment god or the Dow?

In 1929, the $INDU was 380. Today it is 11,430. In 1929, the price of gold
was $20.67. Today it is $1,394.50.

Which was the better investment over the long run?

> That plus you were an elected official in your life too.

Here is what I wrote:

>>>> The effects of the economy on elections has been well-known since
>>>> Bush I lost because of the Feds timing on rate cuts. If the recovery
>>>> had been a little earlier, then Bush I probably would have been
>>>> reelected.

You apparently thought that there was a period between Bush and I and so
read "I lost because of the Feds timing on rate cuts." Bush I commonly
refers to the first President Bush.

Now I can understand you making this reading error but then I used the
same terminology in the second sentence where there is no ambiguity.
Furthermore, I wrote:

>>>> Of course the end of the party eventually arrived and Bush II had
>>>> a meltdown on his hands.

in the fourth sentence making it crystal clear what Bush I meant. For
the careful reader anyways. Now if you enter "Bush I" in Google, you
will get the Wikipedia entry for George H.W. Bush. Get it?

> I have been licensed for close to a decade. I have sold over 100
> million in home sales. You state you know nothing about RE, but than
> insinuate I don't either. Give me that respect. Do you think I know
> nothing if I can't explain mtgs? You state you don't know RE, so than
> how can you say my posts indicate otherwise?

You've answered questions in a way that leads me to believe that you have
holes in your knowledge of real estate.

> Isn't that contradictory? I don't know software engineering, but I am
> sure you don't know what you are talking about! That is what you are
> saying.

Someone can certainly say that about me and there are folks that do in
the engineering forum. I certainly don't know everything about
software engineering as it is an incredibly broad field. When I don't
know something I just admit that I don't know something. I don't try
to imply that I know everything about software engineering.

> Yes, it does, it says I stick with journalistic news and not personal
> opinions. Blogs are personal opinions, none of them need to be based
> on fact. Lawyers don't reveal their pieces to guarantee that no
> lawsuit will occur.

There are many blogs that post objective facts. They may post your
mainstream media reports, charts from the Federal Reserve that the
mainstream media doesn't post because their audience wouldn't
understand it and stuff that the mainstream media won't post.

Ever hear of a guy named John Edwards?

> No it isn't because you need to go back to inflation, COL, employment,
> Dow, bonds, etc. There is no simple answer.

Actually there is. I'm amazed that you don't just look it up in Google.

> If you want to take it to the very simplistic terms when gold is up,
> housing is down. HOWEVER, 850 for gold 30 yrs ago with a 18% int rate,
> is not what we are facing now, thus, that theory is thrown out the
> door. Housing was down because of interest rates not gold prices.

When gold is up, housing is down? How do you explain gold rising 30%
between 2000 and 2005 while home prices are rising?

> Again, inflation, COL, employment, DOW, bonds, etc drove the housing
> mkt more than gold.

Gold is the tell.

> Investment wise we are mutuals deducted monthly, so I could not answer
> that question. Yet, I will say, I have a ton of gold jewelery that is
> sitting in a cabinet that I haven't worn for yrs if not decades...maybe
> I should sell it now.

Most mutual funds do not short securities.

The reason for gold is the lack of confidence in fiat currencies. Some
people buy houses, companies or toasters.

> Beware, the minute people like me starting selling off gold jewelry in
> droves is the minute you should divest from gold.

People like you have been selling gold jewelery for several years. The
Bank of London sold a few hundred tons of bullion between $250 and
$312 an ounce a decade ago. That seemed like a really, really stupid
move but my guess is that it was to cover gold that their banks leased
out. Leasing out gold is essentially shorting it. You borrow the gold
from a central bank, lend it out to someone and they make stuff out of
it and sell it. If the price is going down - no problem; you owe what
the price is. If the price goes up, you are in a short squeeze. However
you have to deliver actual metal; not paper. Banks aren't always that
good at delivering physical. Right now the wealthy are accumulating and
taking deliver of physical. Gold is moving from weak hands to strong
hands.


> Again HUH?

> Yes, I know a tell. Trust me, after raising 3 teenagers, not only do I
> know a tell when I see it, but I can sense it before they even start
> it!

> Are you saying that mining is the tell to the housing market?

> If so, than I would say to you, the true tell for housing is lumber or
> steel. Mining is coal or ore. You can build a home with out them, but
> you can't do it without wood!

No, the physical metal.

Look at the correlation between Lumber (if you can find the charts) and
gold. Or look at a CRB chart.


__________________
pima


Guru

Status: Offline
Posts: 728
Date: Dec 13, 2010
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We're also talking about individual investors. Last time I checked,
the endowments at Duke, Yale, Harvard, etc. are institutional
investors; not individual investors.

Yes, but the fact is they get that money from individual investors. I am sure you are like us, we get 4 phone calls at least 2x a yr. 1 from Bullet's alma mater, 1 from mine, 1 from the college our DS attends and 1 from the college our DS attends. No check from us, means less to invest. AT the same time they need to upgrade buildings and facilities to recruit students, thus, they are tied to the dividends of their mutuals. If these mutuals do not perform high enough they divest.

In this market they are being hit 3x as hard, their ROI is down and charitable is down, while costs are increasing. In other words their endowments are shrinking. Plus, many of them have to report to a board of regents.

Now take FMR who owns 20% of Lennar. They divest and Lennar is going to have a problem making payroll since their capital dried up!

You want to pretend that Lennar would not go belly up if a majority shareholder dumped their stock in one day, all 20%. Me otoh will say they are DOA if FMR left them.

That is just business since. FMR has to answer to shareholders, and sure as sh*t they are not going to risk their company or job for an investment. Lennar is an investment.


A true technician ignores fundamentals.

So you are stating that they are not looking at the fundamental of long term growth?

In other words you are only looking from a short trade position.

> We are what 10-20% above what it was 2 yrs ago, but still 20% below
> what it was 4 yrs ago.

You were talking about the present; not July 2008

No you were talking about present, I went back to 05. You talked about current values, I just happened to remind you that when you say 400%, look back a few yrs or decades.

Gold was 850 in 1980, 30 yrs ago. It is now 1300+. The DOw was @900 and is at the 11K marker.

Long run which was a better investment god or the Dow?

I'm a software engineer and part-time trader. I don't claim to know about
real estate. Of course you claim to know something about real estate but
some of your posts indicate otherwise.

That plus you were an elected official in your life too.

I have been licensed for close to a decade. I have sold over 100 million in home sales. Iwas awarded national awards from a national company in sales.  I also was recognized yr after yr by the state in sales. You state you know nothing about RE, but than insinuate I don't either. Give me that respect. Do you think I know nothing if I can't explain mtgs? You state you don't know RE, so than how can you say my posts indicate otherwise?

FWIW I also must take at least 32 credit hour every 2 yrs in continuing education to keep my license for the state and the nation.

Isn't that contradictory? I don't know software engineering, but I am sure you don't know what you are talking about! That is what you are saying.

I never ever read blogs. Blogs are personal opinion pieces. I prefer
> to stick with AP news.

That explains a lot.

Yes, it does, it says I stick with journalistic news and not personal opinions. Blogs are personal opinions, none of them need to be based on fact. Lawyers don't review their pieces to guarantee that no lawsuit will occur when it factually incorrect.  Most forums will not allow links to blogs for this purpose.

> To give an illusion gold is the be all in the equation is a fallacy at
> best.

What is the historical relationship between housing and gold? Simple
question, no?

No it isn't because you need to go back to inflation, COL, employment, Dow, bonds, etc. There is no simple answer.

If you want to take it to the very simplistic terms when gold is up, housing is down. HOWEVER, 850 for gold 30 yrs ago with a 18% int rate, is not what we are facing now, thus, that theory is thrown out the door. Housing was down because of interest rates not gold prices.

Again, inflation, COL, employment, DOW, bonds, etc drove the housing mkt more than gold.

> For now, just like it was in the 80's people will walk away from
> gold.

Are you short gold then?

Investment wise we are mutuals deducted monthly, so I could not answer that question. Yet, I will say, I have a ton of gold jewelery that is sitting in a cabinet that I haven't worn for yrs if not decades...maybe I should sell it now.

Beware, the minute people like me starting selling off gold jewelry in droves is the minute you should divest from gold.

SUPPLY AND DEMAND

> HUH? Are you implying that we print money because of the coal we dig
> out of the ground? Are you saying that inflation is directly connected
> to mining?

> Even so, what does that have to do with housing TODAY? AFterall, this
> thread was about housing prices dropping now!

Do you know what a tell is?

Again HUH?

Yes, I know a tell. Trust me, after raising 3 teenagers, not only do I know a tell when I see it, but I can sense it before they even start it!

Are you saying that mining is the tell to the housing market?

If so, than I would say to you, the true tell for housing is lumber or steel. Mining is coal or ore. You can build a home with out them, but you can't do it without wood!








-- Edited by pima on Monday 13th of December 2010 02:02:04 PM

__________________
Raising a teenager is like nailing Jello to a tree
BCEagle91


Senior Member

Status: Offline
Posts: 133
Date: Dec 13, 2010
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> Fidelity is one company, and just an example. There are other mutuals
> out there like Oppenheimer, morningstar, USAA, and those lovely
> endowments from Duke, Yale, Harvard, etc. Fidelity may own 5%, but
> what about these other big investors? What if Fidelity leaves Ford and
> invests their assets in RJ Reynolds, do you think that it will not
> impact Ford in the least bit?

Okay, so you're caught making stuff up and so you try to make more
stuff up? And then you ask a bunch of questions? Why don't you do a
little research and take a look at the top institutional holders of
these stocks? Fidelity isn't the only company in the top ten lists.

We're also talking about individual investors. Last time I checked,
the endowments at Duke, Yale, Harvard, etc. are institutional
investors; not individual investors.

What if Fidelity leaves Ford? Don't you know that there are two sides
to every transaction? If Fidelity is selling, someone else must be
buying. Fidelity generally tries to sell into rallies to exit positions.
Sometimes this is not possible if they are facing waves of redemptions.

> FMR owns approx 20% (18.7) of Lennar. That is a lot for one company to
> live and die by in the terms of investment. FMR divests from Lennar
> and the fat lady is singing because the loss of 20% in investment is
> BIG...B.I.G. big, something that is hard to come up with in short term
> notes.

You are clueless about markets.

> You can just look at a chart, but if you don't understand that
> Northrop (not northup) is not the builder of the 35 and the 22 is
> being made by LOCKHEED MARTIN BOEING, than you also don't get the
> defense world.

> You should never invest in defense if you don't understand the
> market. The 22 and the 35 are 5th and 6th gen fighters. Yrs from now,
> up into 2040 those planes will be flying. They will need spare parts,
> they will have decade long DPD contracts PLUS, the 35 is being sold to
> our allies to replace their jets. That means additional money from the
> global economy.

A true technician ignores fundamentals.

> What does Lennar and their product have to do with the stock market?
> You took a quote of mine and responded to it in a way that had no
> relevance in your answer. Look at what you quoted me with...show me
> where it says anything about the stock market at all! I was talking
> about a product, you warped it into the stock market is alive and
> healthy.

You posted several sectors which you claimed investors were not
investing in. I just replied with specific instances of stocks in
those sectors.

> To respond to that statement, OMG yes, it is so alive and healthy that
> we are still below the DOW avg of July 2008.

> We are what 10-20% above what it was 2 yrs ago, but still 20% below
> what it was 4 yrs ago.

You were talking about the present; not July 2008.

> SO you are stating that you were an elected official at one time and
> you were at a level where rates mattered. Traditionally that puts you
> on a national level and not city or state. It appears you are placing
> blame of your loss on others and not your own campaign.

You need to brush up on your reading skills.

> I never ever read blogs. Blogs are personal opinion pieces. I prefer
> to stick with AP news.

That explains a lot.

> SO now I am a moronic RE agent? The person who you have yet to answer
> any RE question at all to...mill rate, arms, MTA, eminent domain,
> discrimination, etc. Everything I have explained in detail.

I'm a software engineer and part-time trader. I don't claim to know about
real estate. Of course you claim to know something about real estate but
some of your posts indicate otherwise.

> If you stretch it out sure gold has an impact, but OMG you need to
> stretch it out big time. Mtgs are based on yields, if the dollar goes
> up or down it is reflective of gold prices, but mtg companies do not
> invest just in gold, they invest in bonds and stocks. You are not
> getting into a very gritty area, however again, gold is just a PART of
> the equation. You will also need to address the prime rate, the Fed
> gives to get that yield.

> To give an illusion gold is the be all in the equation is a fallacy at
> best.

What is the historical relationship between housing and gold? Simple
question, no?

> For now, just like it was in the 80's people will walk away from
> gold.

Are you short gold then?

> HUH? Are you implying that we print money because of the coal we dig
> out of the ground? Are you saying that inflation is directly connected
> to mining?

> Even so, what does that have to do with housing TODAY? AFterall, this
> thread was about housing prices dropping now!

Do you know what a tell is?



__________________
pima


Guru

Status: Offline
Posts: 728
Date: Dec 13, 2010
Permalink  
 

> P/E ratio always plays into that equation when it comes to stock
> market values. A high P/E ratio and companies like Fidelity will not
> invest.

FMR LLC (Fidelity Investments) holds 5.88% of Ford.
Fidelity Disciplined Equity Fund owns 0.47% of Ford.
FMR LLC owns 5.26% of Apple.
Fidelity Contrafund owns 1.78% of Apple.
Fidelity Growth Company Fund owns 0.69% of Apple.
FMR LLC owns 5.26% of Southwest Airlines.
Fidelity Growth Company Fund owns 1.38% of Southwest Airlines.
FMR LLC owns 2.02% of Raytheon.
FMR LLC owns a whopping 18.05% of Lennar.
Fidelity Magellan Fund owns 8.71% of Lennar.
Fidelity Growth Company Fund owns 1.4% of Lennar.
Fidelity Equity-Income Fund owns 1.28% of Lennar.
Fidelity Puritan Fund owns 1.17% of Lennar.

I get the feeling that you just make a lot of stuff up.

Fidelity is one company, and just an example. There are other mutuals out there like Oppenheimer, morningstar, USAA, and those lovely endowments from Duke, Yale, Harvard, etc. Fidelity may own 5%, but what about these other big investors? What if Fidelity leaves Ford and invests their assets in RJ Reynolds, do you think that it will not impact Ford in the least bit?

FMR owns approx 20% (18.7) of Lennar. That is a lot for one company to live and die by in the terms of investment. FMR divests from Lennar and the fat lady is singing because the loss of 20% in investment is BIG...B.I.G. big, something that is hard to come up with in short term notes.


> When you understand how military contracts work (they are time
> constraint), than you will understand when to buy and sell regarding
> companies like Raytheon. Obama is turning back to Bush 41 program.

General Dynamics shows a bullish cup with handle formation poking away at
new highs since June. Northrup has a similar pattern. Lockheed is getting
killed. Boeing is similar to Raytheon. Clearly there are strong and weak
companies. I really don't need to know why they are strong for trading -
I can just look at the chart.

You can just look at a chart, but if you don't understand that Northrop (not northup) is not the builder of the 35 and the 22 is being made by LOCKHEED MARTIN BOEING, than you also don't get the defense world.

You should never invest in defense if you don't understand the market. The 22 and the 35 are 5th and 6th gen fighters. Yrs from now, up into 2040 those planes will be flying. They will need spare parts, they will have decade long DPD contracts PLUS, the 35 is being sold to our allies to replace their jets. That means additional money from the global economy.

> Lennar is a builder, that builds in only 17 states. Traditionally
> Lennar has made their mark when other builders like Hovananian or US
> Homes want to leave. As a realtor I would nevr suggest a Lennar home,
> unless they are also looking at a DR Horton home. Their quality is not
> on par with Toll, Equity or Basheer. Your point only proves that
> people want to spend less, Lennar allows them to do this because their
> product is inferior compared to the original builder for the PUD.

My point is that you think that the stock market is cratering when it
is alive and healthy.

What does Lennar and their product have to do with the stock market? You took a quote of mine and responded to it in a way that had no relevance in your answer.  Look at what you quoted me with...show me where it says anything about the stock market at all!  I was talking about a product, you warped it into the stock market is alive and healthy.

To respond to that statement, OMG yes, it is so alive and healthy that we are still below the DOW avg of July 2008.

We are what 10-20% above what it was 2 yrs ago, but still 20% below what it was 4 yrs ago.

The effects of the economy on elections has been well-known since Bush
I lost because of the Feds timing on rate cuts. If the recovery had
been a little earlier, then Bush I probably would have been
reelected

SO you are stating that you were an elected official at one time and you were at a level where rates mattered. Traditionally that puts you on a national level and not city or state. It appears you are placing blame of your loss on others and not your own campaign.

Have you ever read the housing bubble blog?

I never ever read blogs. Blogs are personal opinion pieces. I prefer to stick with AP news.

What is the historical relationship between gold and housing? A real
estate agent should be able to answer that.

SO now I am a moronic RE agent? The person who you have yet to answer any RE question at all to...mill rate, arms, MTA, eminent domain, discrimination, etc. Everything I have explained in detail.

If you stretch it out sure gold has an impact, but OMG you need to stretch it out big time. Mtgs are based on yields, if the dollar goes up or down it is reflective of gold prices, but mtg companies do not invest just in gold, they invest in bonds and stocks. You are not getting into a very gritty area, however again, gold is just a PART of the equation. You will also need to address the prime rate, the Fed gives to get that yield.

To give an illusion gold is the be all in the equation is a fallacy at best.

> Again, you are trying to divert the subject. You brought in gold, and
> gold has relatively nothing to do with housing, since mtgs are tied to
> the BOND market. Bonds are tied to the stock in an inverse ratio.

It has a lot to do with housing but gold is quite an intricate world.
It's only now that the world has started to pay attention.
For now, just like it was in the 80's people will walk away from gold.

> Miners have what to do with housing?

Miners are the tell when central bankers and governments print.

HUH? Are you implying that we print money because of the coal we dig out of the ground? Are you saying that inflation is directly connected to mining?

Even so, what does that have to do with housing TODAY? AFterall, this thread was about housing prices dropping now!

> You are throwing out apples when we are discussing oranges.

I enjoy a good fruit salad.

Glad you agree that you are throwing things in that have nothing to do with the topic.



-- Edited by pima on Monday 13th of December 2010 12:55:38 PM

__________________
Raising a teenager is like nailing Jello to a tree
BCEagle91


Senior Member

Status: Offline
Posts: 133
Date: Dec 13, 2010
Permalink  
 

> P/E ratio always plays into that equation when it comes to stock
> market values. A high P/E ratio and companies like Fidelity will not
> invest.

FMR LLC (Fidelity Investments) holds 5.88% of Ford.
Fidelity Disciplined Equity Fund owns 0.47% of Ford.
FMR LLC owns 5.26% of Apple.
Fidelity Contrafund owns 1.78% of Apple.
Fidelity Growth Company Fund owns 0.69% of Apple.
FMR LLC owns 5.26% of Southwest Airlines.
Fidelity Growth Company Fund owns 1.38% of Southwest Airlines.
FMR LLC owns 2.02% of Raytheon.
FMR LLC owns a whopping 18.05% of Lennar.
Fidelity Magellan Fund owns 8.71% of Lennar.
Fidelity Growth Company Fund owns 1.4% of Lennar.
Fidelity Equity-Income Fund owns 1.28% of Lennar.
Fidelity Puritan Fund owns 1.17% of Lennar.

I get the feeling that you just make a lot of stuff up.

> I am sure meant Raytheon, not Raythen. Raytheon is a defense
> contracting company with all of the new defense systems coming down
> the pike, including the 35 being sold to our allies, they have been
> sitting pretty. However, under the Obama administration, contracting
> jobs are being diminished which means Raytheon in the next fews yrs
> will be tightening their belts. Thus, they will not be hiring and the
> contracts they hold now will end and their expected income will
> decrease dramatically. Less money coming in, means less emplpyment
> opportunitis and less money to reinvest, which means their assets will
> reduce, and that will cause people to invest somewhere else until
> their P/E ratio makes them more favorable

> When you understand how military contracts work (they are time
> constraint), than you will understand when to buy and sell regarding
> companies like Raytheon. Obama is turning back to Bush 41 program.

General Dynamics shows a bullish cup with handle formation poking away at
new highs since June. Northrup has a similar pattern. Lockheed is getting
killed. Boeing is similar to Raytheon. Clearly there are strong and weak
companies. I really don't need to know why they are strong for trading -
I can just look at the chart.

> Lennar is a builder, that builds in only 17 states. Traditionally
> Lennar has made their mark when other builders like Hovananian or US
> Homes want to leave. As a realtor I would nevr suggest a Lennar home,
> unless they are also looking at a DR Horton home. Their quality is not
> on par with Toll, Equity or Basheer. Your point only proves that
> people want to spend less, Lennar allows them to do this because their
> product is inferior compared to the original builder for the PUD.

My point is that you think that the stock market is cratering when it
is alive and healthy.

> Southwest is going through their own growing pains for this yr. MY
> very BFF's DH in this world is a SWA pilot. They live in NC, but to
> hold his Capt line number he flies out of CA. SWA was able to stay
> ahead of the curve because how they buy fuel. Currently, they are not
> hiring pilots. Their line numbers are slowing, which means their costs
> are increasing and profits are decreasing

And their stock price is doing fine.

> Duke, I am assuming you mean Duke University. Endowments are
> endowments.

No. I was posting one company for each sector that you said was
in the toilet.

> SO if it is only brake enlighten us on the gas peddle.

QE2.

> How about the fact that most people have a mutual or a 401K that
> invest for them, and currently the P/E for Nasdaq companies are lower
> than Dow companies, thus these large companies like Fidelity are
> placing their investments in Nasdaq traded companies.

Apple's PE is 21.
Oracle's PE is 24.
Microsoft's PE is 12.
Intel's PE is 11.5.
Cisco's PE is 14.5.
Google's PE is 24.5.
Applied Material's PE is 19.
Amazon's PE is a whopping 71.

Caterpillar's PE is 30.
IBM's PE is 13.
3M's PE is 15.
Bank of America's PE is around 8.

Seems to me that PEs are high in various areas. The $INDU has the
boat anchors of a few financials and maybe some industrials aren't
doing well but it seems to me that big-cap tech has higher PEs.

Now you said that "That means people are not investing,"

But they're putting money into their 401Ks? Is that investing or
not? My 401K fund has a few cash/short-term bond options and that's
where people hide out when they are bearish.

> HOWEVER, my point is from an individual stance not a mutual or
> 401K. They are not upping their monthly investments. Companies are
> letting employees go which means their costs are being reduced. They
> have a choice of reinvestment or pay down debt. Reinvestment means
> more jobs, pay down debt means something else.

Well, I always considered mutual funds and 401Ks to be investments
by individuals. I think that most people think the same thing.

Still, the market is going up, up, up. Pretty strange in an environment
where "people are not investing."

> Simple because they are taking the Berkshire Hathaway approach. You
> can spit numbers at me all day long, but that number does not state
> the actual return, especially when we are really looking at the most a
> 17 yr return.

I've owned BRK/A for many years in the past (I do not currently hold
it) and I did read the annual reports along with following the
writings and speeches of Mr. Buffett.

You do not know what you're talking about.

> Since when do we expect our presidents to have their fingers in every
> pie and every ingredient in that pie? I thought we had a check and
> balance system. Barney Frank was in charge of that aspect and he sugar
> coated the crap out of it not only to the American Citizen, but to the
> MOCs. Yet, now it is Bush's fault he didn't realize Barney was being
> creative when it came to Fannie Mae and Freddie Mac?

The effects of the economy on elections has been well-known since Bush
I lost because of the Feds timing on rate cuts. If the recovery had
been a little earlier, then Bush I probably would have been
reelected. This didn't go unnoticed with President Clinton and he did
a nice ramp job on the money supply and the dollar going into his
reelection. Of course the end of the party eventually arrived and Bush
II had a meltdown on his hands. He got the ball rolling in time to get
reelected. Obama cranked up the fiscal stimulus and Bernanke the
monetary stimulus and that's cranked the markets pretty hard. Will it
be in time for his reelection? I don't know. At any rate, with QE2 and
the new tax cuts, at least the recovery won't flameout anytime soon.

Presidents do what they have to do to be reelected. I knew about the
manipulations by the Clinton administration and hoped that Bush would
be different. Well, he wasn't because he wanted to be reelected. That's
apparently the system that we have and it looks like that it will work
this way for the foreseeable future.

I'm not hostile to President Bush. I actually met him many years ago
and he was nice enough to pose for a picture with my daughter. He is a
rather gracious person one-on-one but he's awful in front of a podium.

> Yep it was so obvious, that the avg homeowner just had to pitch a sign
> and sold it within days. You have no RE experience, I do. I can tell
> you in May/June/July 05 I would order the company sign to be delivered
> (drilled in) within 24 hours of getting the listing and by the next
> day when I went to put my rider on, I brought along the under contract
> rider. Maybe in NH it was obvious, but def. not in VA, NJ. MD. and NC

It was obvious to those that could read charts. Unfortunately that's a
pretty small percentage of the population.

Have you ever read the housing bubble blog?

> This thread is about housing and in the housing market GOLD mans
> squat.

What is the historical relationship between gold and housing? A real
estate agent should be able to answer that.

> Gold maybe up 400%, but if I go back in my memory Gold with the COI is
> not up 400% compared to their peak back in the 80s.

Gold was in a bubble back in the 80s. Lots of things go in and out of
bubbles. You have to know when to hold em and when to fold em.

> Again, you are trying to divert the subject. You brought in gold, and
> gold has relatively nothing to do with housing, since mtgs are tied to
> the BOND market. Bonds are tied to the stock in an inverse ratio.

It has a lot to do with housing but gold is quite an intricate world.
It's only now that the world has started to pay attention.

> Miners have what to do with housing?

Miners are the tell when central bankers and governments print.

> You are throwing out apples when we are discussing oranges.

I enjoy a good fruit salad.



__________________
pima


Guru

Status: Offline
Posts: 728
Date: Dec 13, 2010
Permalink  
 

Ford is up over 1200% in the last two years.
Southwest Airlines is up about 50% over the last two years.
Raythen is down 10% over the last two years.
Lennar is up almost 100% over the last two years.
Duke is up over 14% in the last two years.
The QLDs (my main trading vehicle) are up almost 200% in the past two years.

P/E ratio always plays into that equation when it comes to stock market values. A high P/E ratio and companies like Fidelity will not invest.

I am sure meant Raytheon, not Raythen. Raytheon is a defense contracting company with all of the new defense systems coming down the pike, including the 35 being sold to our allies, they have been sitting pretty. However, under the Obama administration, contracting jobs are being diminished which means Raytheon in the next fews yrs will be tightening their belts. Thus, they will not be hiring and the contracts they hold now will end and their expected income will decrease dramatically.  Less money coming in, means less emplpyment opportunitis and less money to reinvest, which means their assets will reduce, and that will cause people to invest somewhere else until their P/E ratio makes them more favorable 

When you understand how military contracts work (they are time constraint), than you will understand when to buy and sell regarding companies like Raytheon.  Obama is turning back to Bush 41 program.

Lennar is a builder, that builds in only 17 states. Traditionally Lennar has made their mark when other builders like Hovananian or US Homes want to leave. As a realtor I would nevr suggest a Lennar home, unless they are also looking at a DR Horton home. Their quality is not on par with Toll, Equity or Basheer. Your point only proves that people want to spend less, Lennar allows them to do this because their product is inferior compared to the original builder for the PUD.

Southwest is going through their own growing pains for this yr. MY very BFF's DH in this world is a SWA pilot. They live in NC, but to hold his Capt line number he flies out of CA. SWA was able to stay ahead of the curve because how they buy fuel. Currently, they are not hiring pilots. Their line numbers are slowing, which means their costs are increasing and profits are decreasing

Duke, I am assuming you mean Duke University. Endowments are endowments.


> None of that has to do anything with the topic of this conversation,
> which you started.

Well, they do. But the effect has only been a brake on the way down

SO if it is only brake enlighten us on the gas peddle.

> Disposable income is low. Consumers are not using credit cards. Mtgs
> are being foreclosed on at a steady rate.

> That means people are not investing, which means companies P/E are not
> rising. No investment, no capital. No capital, no reinvestment. Throw
> in the tax issue and we created the perfect storm.

And that's why the Nasdaq is up 100%, right? Because noone is investing?

How about the fact that most people have a mutual or a 401K that invest for them, and currently the P/E for Nasdaq companies are lower than Dow companies, thus these large companies like Fidelity are placing their investments in Nasdaq traded companies.

HOWEVER, my point is from an individual stance not a mutual or 401K. They are not upping their monthly investments. Companies are letting employees go which means their costs are being reduced. They have a choice of reinvestment or pay down debt. Reinvestment means more jobs, pay down debt means something else.

Perhaps you could explain why Apple is trading at $324 a share. Why
Lulumon is trading at $71 a share. Why Chipoltle, a burrito maker is
trading at $235 a share. Why Amazon is trading near its all-time
highs. Stocks have been on a tear the last two years. It's like free
money.

Simple because they are taking the Berkshire Hathaway approach. You can spit numbers at me all day long, but that number does not state the actual return, especially when we are really looking at the most a 17 yr return.

> Bush had nothing to do with this, the FHA had everything to do with
> it. If you want to throw stones, Throw at Barney Frank, because even
> Obama and Mc Cain called him out on the carpet, while he stated all is
> well.

Bush was the president. He should have seen all of the creative
acconting going on in companies and in the banking system. Yeah, the
SEC really got tough. They threw Martha Stewart in jail and declared
the system whole.

Since when do we expect our presidents to have their fingers in every pie and every ingredient in that pie? I thought we had a check and balance system. Barney Frank was in charge of that aspect and he sugar coated the crap out of it not only to the American Citizen, but to the MOCs. Yet, now it is Bush's fault he didn't realize Barney was being creative when it came to Fannie Mae and Freddie Mac?

At least you finally discussed housing again.

> At that time I was a contracted RE agent. which required bi-monthly
> meetings. Everyone knew we hit the tri-fecta. gas prices, appraisals
> and credit scores. In 05 every RE agent saw it coming. The good ones
> were honest with their clients.

The bubble was obvious to a lot of other people well before that. Just
read the charts.

Yep it was so obvious, that the avg homeowner just had to pitch a sign and sold it within days. You have no RE experience, I do. I can tell you in May/June/July 05 I would order the company sign to be delivered (drilled in) within 24 hours of getting the listing and by the next day when I went to put my rider on, I brought along the under contract rider. Maybe in NH it was obvious, but def. not in VA, NJ. MD. and NC

Staging was unheard of in 05.

> Hate to tell you even to this day GOLD prices mean nothing.

If they meant nothing, why would the large central bankers of the world
expend so much effort to suppress them?

Gold prices are up 400% in the last decade.

Miners are up over 1,000%.

Real Estate is where?

In the toilet.

This thread is about housing and in the housing market GOLD mans squat.

Gold maybe up 400%, but if I go back in my memory Gold with the COI is not up 400% compared to their peak back in the 80s.

Again, you are trying to divert the subject. You brought in gold, and gold has relatively nothing to do with housing, since mtgs are tied to the BOND market. Bonds are tied to the stock in an inverse ratio.

Miners have what to do with housing?


You are throwing out apples when we are discussing oranges.



-- Edited by pima on Monday 13th of December 2010 11:11:08 AM

__________________
Raising a teenager is like nailing Jello to a tree
BCEagle91


Senior Member

Status: Offline
Posts: 133
Date: Dec 13, 2010
Permalink  
 

> The reality is we can all play chicken little for every single
> market.

We can.

My perspective is that what the bears say is quite often true. But
they are fighting the ability of Central Banks to create seemingly
unlimited amounts of money.

> Automobile, Air line, military, housing, utilities, stock, etc.

Ford is up over 1200% in the last two years.
Southwest Airlines is up about 50% over the last two years.
Raythen is down 10% over the last two years.
Lennar is up almost 100% over the last two years.
Duke is up over 14% in the last two years.
The QLDs (my main trading vehicle) are up almost 200% in the past two years.

No chicken little fromm me. Just riding the train.

> None of that has to do anything with the topic of this conversation,
> which you started.

Well, they do. But the effect has only been a brake on the way down.

> The govt will impact our economy. The stock market will impact the
> govt. It is a which came first the chicken or the egg.

I vote for the former.

> Disposable income is low. Consumers are not using credit cards. Mtgs
> are being foreclosed on at a steady rate.

> That means people are not investing, which means companies P/E are not
> rising. No investment, no capital. No capital, no reinvestment. Throw
> in the tax issue and we created the perfect storm.

And that's why the Nasdaq is up 100%, right? Because noone is investing?

Take a look at Mercury Computer: Up 400% in the last two years. 100%
in the last six months. Why is that? Is it because noone is investing?

> I don't see any cheerleaders here.

We don't have stock market cheerleaders which is why the markets have
been doing so well.

> Why do we call them Bull and Bear markets? A bear attacks by striking
> down its aggressor. A bull attacks by striking up.

Here's an alternate explanation:

Historically, the middlemen in the sale of bearskins would sell skins
they had yet to receive. As such, they would speculate on the future
purchase price of these skins from the trappers, hoping they would
drop. The trappers would profit from a spread - the difference between
the cost price and the selling price. These middlemen became known as
"bears", short for bearskin jobbers, and the term stuck for describing
a downturn in the market. Conversely, because bears and bulls were
widely considered to be opposites due to the once-popular blood sport
of bull-and-bear fights, the term bull stands as the opposite of
bears.

> Right now, everyone is striking down. Everyone has no faith when it
> comes to risk.

Perhaps you could explain why Apple is trading at $324 a share. Why
Lulumon is trading at $71 a share. Why Chipoltle, a burrito maker is
trading at $235 a share. Why Amazon is trading near its all-time
highs. Stocks have been on a tear the last two years. It's like free
money.

> History here...when did Bush take office? Jan. 2001...re-election was
> in 04.

Thanks for making my point.

> The definition of nascent from Merriam is: "coming or having recently
> come into existence"

Thanks again for making my point.

> In 2001 because of 9/11 our country closed the DOW for days. There was
> no market rally. If there was we wouldn't have had to keep the DOW
> closed. Yes, he came into it, but he never predicted the impact of
> 9/11 from an economical POV. He was doing everything possible to keep
> the economy flux. People were afraid to travel. People were afraid
> to invest. I think it is unfair to make your assessment. We just
> came out of a 2 mo. long legal battle regarding our President. People
> were still reeling.

People weren't afraid to invest. I was on the trading boards through
that period. A lot of traders that I know refused to short the markets
and considered it their patriotic duty to go long.

The impact of the internet bubble on the Nasdaq was a greater than 60
percent drop. The impact of 9/11 was actually a lot smaller.

> The RE bull market ended in early 06, nowhere near the end of his 2nd
> term. It topped out in summer of 05. He took his oath Jan 2005, it
> crashed 6-9 months later, leaving him basically 3 1/2 more yrs. in
> office. Again nowhere near the end.

I've already said that the top was in mid-05. But it takes a while for
markets to crash after they top. The NASDAQ peaked in late 2007. It
took a dip down through 2008 and then cratered in the last couple of
months. I remember the trip quite well. I recall buying New Century a
day or two before earnings on the advice of an industry insider. I
didn't like the technical behavior of the stock and got out just
before earnings. They dropped something like a third on earnings news
and declared bankruptcy in short order.

> Bush had nothing to do with this, the FHA had everything to do with
> it. If you want to throw stones, Throw at Barney Frank, because even
> Obama and Mc Cain called him out on the carpet, while he stated all is
> well.

Bush was the president. He should have seen all of the creative
acconting going on in companies and in the banking system. Yeah, the
SEC really got tough. They threw Martha Stewart in jail and declared
the system whole.

> At that time I was a contracted RE agent. which required bi-monthly
> meetings. Everyone knew we hit the tri-fecta. gas prices, appraisals
> and credit scores. In 05 every RE agent saw it coming. The good ones
> were honest with their clients.

The bubble was obvious to a lot of other people well before that. Just
read the charts.

> Hate to tell you even to this day GOLD prices mean nothing.

If they meant nothing, why would the large central bankers of the world
expend so much effort to suppress them?

Gold prices are up 400% in the last decade.

Miners are up over 1,000%.

Real Estate is where?

In the toilet.


__________________
pima


Guru

Status: Offline
Posts: 728
Date: Dec 13, 2010
Permalink  
 

The reality is we can all play chicken little for every single market.

Automobile, Air line, military, housing, utilities, stock, etc.

None of that has to do anything with the topic of this conversation, which you started.

The govt will impact our economy. The stock market will impact the govt. It is a which came first the chicken or the egg.

Here is where we are standing IMHPO:

Disposable income is low. Consumers are not using credit cards. Mtgs are being foreclosed on at a steady rate.

That means people are not investing, which means companies P/E are not rising. No investment, no capital. No capital, no reinvestment. Throw in the tax issue and we created the perfect storm.

I don't see any cheerleaders here.

Why do we call them Bull and Bear markets? A bear attacks by striking down its aggressor. A bull attacks by striking up.

Right now, everyone is striking down. Everyone has no faith when it comes to risk.

The stock market crashed in 2000 and President Bush needed something to pump the economy before reelection. He got it in the form of both a nascent stock market rally in Fall 2002 and an ongoing housing bull market. And then he to the downside of that near the end of his second term.

History here...when did Bush take office? Jan. 2001...re-election was in 04.

The definition of nascent from Merriam is: "coming or having recently come into existence"

In 2001 because of 9/11 our country closed the DOW for days. There was no market rally. If there was we wouldn't have had to keep the DOW closed.  Yes, he came into it, but he never predicted the impact of 9/11 from an economical POV.  He was doing everything possible to keep the economy flux.  People were afraid to travel.  People were afraid to invest.  I think it is unfair to make your assessment.  We just came out of a 2 mo. long legal battle regarding our President.  People were still reeling.

The uptick in housing occurred for many reasons.
1. Cheaper to buy than to rent.
~~~ When the mtg pmt is less than the rental people will buy.

2. More people buying will cause prices to increase, and thus people will jump into the market

3. When it becomes cheaper to rent than to own, people rent, because it is someone else's fiscal pain.

The RE bull market ended in early 06, nowhere near the end of his 2nd term. It topped out in summer of 05.  He took his oath Jan 2005, it crashed 6-9 months later, leaving him basically 3 1/2 more yrs. in office.  Again nowhere near the end.

Bush had nothing to do with this, the FHA had everything to do with it. If you want to throw stones, Throw at Barney Frank, because even Obama and Mc Cain called him out on the carpet, while he stated all is well.

At that time I was a contracted RE agent. which required bi-monthly meetings. Everyone knew we hit the tri-fecta. gas prices, appraisals and credit scores. In 05 every RE agent saw it coming. The good ones were honest with their clients.

Hate to tell you even to this day GOLD prices mean nothing.



-- Edited by pima on Monday 13th of December 2010 08:35:27 AM

-- Edited by pima on Monday 13th of December 2010 08:50:10 AM

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BCEagle91


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There are two large asset classes that can be used to pump the economy: stocks and real estate. The stock market crashed in 2000 and President Bush needed something to pump the economy before reelection. He got it in the form of both a nascent stock market rally in Fall 2002 and an ongoing housing bull market. And then he to the downside of that near the end of his second term.

At the moment, it appears that the Fed is working on the stock market as the real estate market got so high and so far from fundamentals that it has to drop to some semblance of real support. The Nasdaq certainly has the same issue. It was well over 5,000 in 2000 and has only recouped about 50% of that, even after ten years.

If you want to see all of the risks, just hop on a bear site. These sites believe that the end of the world is just around the corner and you'll find all of the bearish information that you care to see. They can be depressing sites. I like to go by the charts as they tell the story along with some insider information. Easier to look at the charts than to listen to what the cheerleaders are saying.

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pima


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If you were in the RE world, bank or real estate between O3-05, it was an insane world.

The lenders brought out new products every week. I highly doubt there are any lenders now doing an MTA or a 1 yr ARM with 0% down. The govt allowed this to occur.

If you look at the RE world, and understand some of these loans you will know that we still have not hit bottom.

5/25 80/0/20 purchased June 2005 (height of market):

~~~That means they came with 0 money, took a first for 80% and a 2nd for 20%, thus 100% financing.

The ARM will not readjust until May 2011, because it goes for 5 FULL yrs, and adjusts on the 1st day of the 6th yr. That is 2011.

A 5 usually comes with a 1% increase for 5 yrs, which means they will now need to come up with $1 per thousand borrowed.

We have yet to see these mtgs readjust. Hard to come up with 500 bucks a month in this economy if you are already struggling with the fixed rate to start with.

3/27 purchased in 07

Market crashed and you thought you got a good deal. The problem is it continued to crash, lenders are not lending and with the 3, traditionally it is a 2 point spread capping at 9 over 5 yrs. Thus, you might need 1200 for that same 500K loan

MTA stands for a Moving Treasury Avg, the problem is you get these great low pmts at 1st, but this is a negative amoritization loan. So the longer you hold it the deeper in debt you go. This was the popular loan back in 03-05 for McMansions, since the note would not come due for 8 yrs. MTA's can only be compared to as RAM mtgs for those under 60.

Problem is now after 8 yrs of negative you are up the creek since the house is worth 50% less while the debt kept increasing.

All of these mtgs were approved by the govt, because the goal was home ownership. That goal killed our economy.

The bail out did nothing to help. What they should have done is what they are now talking about. Mark to market. Give the banks a reason to reduce the note to the market value. Allow the homeowners to readjust their mtg to the market value, exception MTA.

If the homeowner can convert their ARM or fix to current market value, than they will be most likely able to stay in the home. That would reduce the foreclosure or short sale. The foreclosure process is not a 3 month process, it can take yrs.

Take the ARM owner, who has made every pmt for 5 yrs, but now it jumps 500, and they fall behind, that means more short sales or foreclosures. Banks are not in the business of owning and selling homes.

Now take them with that ARM and readjust the mtg debt to the market, the homeowner would be able to stay because the pmt is tied to the actual worth, thus, they are now going to be able to stay.

The more people we can keep in their homes the better off the economy will be.

1 in 6 jobs are tied to the RE market.

Can't make your mtg pmt, means tightening of the wallet in discretionary funds.

Look back to 03-05 people were either selling or re-financing and spend it at Lowe's Home Depot, or elsewhere. Can't pay the mtg, and sure as sh*t you are not buying paint to paint a room, put in a deck or plant flowers. Not going to Lowe's to buy paint and they aren't hiring. Lowe's places less paint orders with Valspar will need to readjust their budge, thus they won't hire either.  Should I keep going down the list with Mohawk for carpet,  or Trek for decks or Corian for counters? 

Remember if Mohawk doesn't need carpet, they don't need Dupont for the materials
to create the carpet.

If Bruce doesn't need a large supply for wood for their floors, than their supplier of wood is hit.

If nobody is buying ceiling fans or putting in blinds to upgrade their home since theyare doing everything they can do not to miss a mtg pmt, than  Hunter and Levelor will need less employees, due to less demand.

Hunter has less orders, that means less glass, less lightbulbs, less electrical.  Levelor means less wood, less plastics.    Both meand less demand from their suppliers.  Less demand, means higher chances of lay offs.  Higher chance of unemployment means tightening of belts in the house.  Thus, less disposable spending and the spin continues in a negative motion.

That also doesn't even address plumbers, electricians, carpenters, etc.

Now when the homeowner has their mtg mark to market, they can afford to buy that paint. The neighbor does not have to compete against a short sale or a foreclosure. That means the downward spin stops.

Additionally remember RE taxes play into this equation. If RE taxes stabilize than the city/county can stabilize and not have to lay off employees. That means those employees have disposable income, which they will put back into the economy. The more they put back the more economy grows.

Tumbling prices create a very big impact, and until you realize that the RE world has an inter-connected aspect with the economy, all you are doing is protracting the pain.

The gold issue does make an impact, but not to the length or strength it does with the RE.

BC you may invest in gold, but for me, at this point if you just started that is like investing in the RE world back in 04, gold is going to crash and now is not the time to start investing.  Now is the time to convert gold and become a land lord.  People who own homes as investment properties are getting the tax right off from rental, PLUS, when ownership is down rental prices are up.  That means you get a better tax advantage.


-- Edited by pima on Monday 13th of December 2010 07:45:11 AM

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poetgrl


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All you are talking about is all the different levels of market manipulation, whether from the FED and the artificially low rates being used to prop up the entire economy both after the tech bubble and the 9/11 crash, or the fact that those sub-prime loans were being given at all.  First, because it was mandated by the congress, and later because the brokers realized they could make a killing in no-doc loans, since anyone would give them, since nobody was liable.

But, the Billions given to banks by Treasury were not used to buy troubled assets and the money that was funnelled through AIG was not used to buy troubled assets....either.

Your argument is so lacking in understanding it's not worth getting into any further.

There was no true market for these instruments.

It was clear to many with any kind of clear understanding, who looked at these instruments, that the were valued highly incorrectly.  Wildly incorrectly.  No true market, just a con perpetrated on uneducated investors by those who were running from their own debt.  The steeper the collateraized debt got, the faster they ran, until they couldn't outrun it any more.  The only reason it hasn't been labelled fraud can be seen in the FED and Treasury conference rooms, and in the hallways, too.


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Abyss


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The "problem" with your position is that you are "assuming" a market.There was. Maybe a simple one with different players having massive different information. But the level and amount of transaction clearly meet the definition of a market.

With transparency there is no market, not for the instruments which destroyed the financial system.Categorically false. There are willing buyers and sellers of CDS. If there is supply and demand the market already exists!

The minute there was the slightest amount of light brought to bear on these particular instruments, the market dried up completely, which is why Treasury had to intervene.No, that's not why the Treasury intervened. The Treasury intervened because the underlying value of the MBS/CDO securities cratered. That's why the Fed buys MBS directly, and not CDS. The massive overvaluation of MBS is the reason for the crisis.

What is the cause of the CDS nuclear bomb? The MBS bomb that preceded it. The MBS market was fully liquid and transparent, yet was massively priced wrong.

Edit: I do realize that the Treasury support some of the CDS market directly with their takeover of AIG. However, that pales in comparison to the 1T+ investment that the Fed did to prop the MBS market.


-- Edited by Abyss on Sunday 12th of December 2010 11:18:45 PM

-- Edited by Abyss on Sunday 12th of December 2010 11:41:38 PM

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poetgrl


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The "problem" with your position is that you are "assuming" a market.

With transparency there is no market, not for the instruments which destroyed the financial system.

The minute there was the slightest amount of light brought to bear on these particular instruments, the market dried up completely, which is why Treasury had to intervene.

I am saying the only reason there even WAS a market for the derivatives on this subprime loan insurance was because there was no transparency.

The basis for your argument is false.  There was no real market, only fraud.

SEE:  Junk Bonds and Drexel for a corollary....



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Abyss


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poetgrl wrote:

They blew up because they had no idea what they were doing.

There were maybe five people on the planet with the time and energy to read every single one of these contracts. 

The instruments they were creating had no other side.  THEY were the other side.  Then they manipulated it when a few other people figured out a way to play them against themselves.

There is no "right" price for subprime mortgage traunches.....

It doesn't exist.  It's 0 or whatever 'they' decide.  Even AIG, who they talked into this for a while, saw that before too long, and look at what happened to them, anyway.

I'm not saying there is no use for some of these tools.  There is.  But only out in the light of day.


Yet again, there is no connection between transparency and the crash. The middle men (the issuers) got burned. The people with the greatest information advantage got burned. That's why transparency is not the issue.

I agree that transparency is something which we should strive for! I just think it didn't affect the 2008 financial implosion much. It just spread the damage around more.

 



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longprime


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deleted by self.

I'll buy that Poetgrl.


-- Edited by longprime on Sunday 12th of December 2010 09:34:19 PM

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poetgrl


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They blew up because they had no idea what they were doing.

There were maybe five people on the planet with the time and energy to read every single one of these contracts. 

The instruments they were creating had no other side.  THEY were the other side.  Then they manipulated it when a few other people figured out a way to play them against themselves.

There is no "right" price for subprime mortgage traunches.....

It doesn't exist.  It's 0 or whatever 'they' decide.  Even AIG, who they talked into this for a while, saw that before too long, and look at what happened to them, anyway.

I'm not saying there is no use for some of these tools.  There is.  But only out in the light of day.

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Abyss


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poetgrl wrote:

If there is no "market" which there was not, then there is no real price.

The dodgy behavior of Paulson (GS for life) around the issue of getting the funds to funnel to his partners at GS is one thing that points to the fact that the lack of a market, the off-book nature of these particular tools, and the way they were used for a derivatives market, created the nature of the explosion.

In a transparent market, the price will be arrived at by consensus.  Lacking consensus, and once the idiot young guys at these places started to have fun with all of this, as if it were a math problem in a class and not an actual amount of real world cash committment, they were able to say, "This costs this," and based on their reputation, they were able to "sell" or buy this stuff.....wherever they wanted to sell or buy it. 

In the end, the lack of a transparent market was what created the situation which required the cash infusions we made into these particular groups.

Morgan was forced to take the money, though they didn't need it.  The rest of them needed it.

These instruments were actually invented as a reaction to the horrible policy initiated by Frank and his buddies forcing banks to make bad loans.  Because they could get thier risk off book with these instruments, and because they had no choice but to make these bad loans, they used this.  Once it became clear they could make money in addition to gettint the cash reserves down by getting the bad loans off the books, it became its own secondary market.

But, the whole thing was designed as a black hole so that these organizations could leverage up 30% on every dollar.  The market in these insurance derivatives was actually an ancillary outcome, which is one reason among many, the catastophe is so horrifying. 

There is a reason they are lobbying so hard to keep it off book and on these monopolistically controlled clearing houses.  They need to keep it that way for as long as they possibly can.  They've still got some really, really bad assets on thier books.


There is a market for MBS & CDOs. Those were priced incorrectly for years. So it's clear that transparency isn't the only thing required to find the correct price - it only finds the consensus price.

The fact that CDS prices aren't transparent, as I've said already, is irrelevant. The main issuers (the ones who make money in non-transparent markets) blew up.



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poetgrl


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If there is no "market" which there was not, then there is no real price.

The dodgy behavior of Paulson (GS for life) around the issue of getting the funds to funnel to his partners at GS is one thing that points to the fact that the lack of a market, the off-book nature of these particular tools, and the way they were used for a derivatives market, created the nature of the explosion.

In a transparent market, the price will be arrived at by consensus.  Lacking consensus, and once the idiot young guys at these places started to have fun with all of this, as if it were a math problem in a class and not an actual amount of real world cash committment, they were able to say, "This costs this," and based on their reputation, they were able to "sell" or buy this stuff.....wherever they wanted to sell or buy it. 

In the end, the lack of a transparent market was what created the situation which required the cash infusions we made into these particular groups.

Morgan was forced to take the money, though they didn't need it.  The rest of them needed it.

These instruments were actually invented as a reaction to the horrible policy initiated by Frank and his buddies forcing banks to make bad loans.  Because they could get thier risk off book with these instruments, and because they had no choice but to make these bad loans, they used this.  Once it became clear they could make money in addition to gettint the cash reserves down by getting the bad loans off the books, it became its own secondary market.

But, the whole thing was designed as a black hole so that these organizations could leverage up 30% on every dollar.  The market in these insurance derivatives was actually an ancillary outcome, which is one reason among many, the catastophe is so horrifying. 

There is a reason they are lobbying so hard to keep it off book and on these monopolistically controlled clearing houses.  They need to keep it that way for as long as they possibly can.  They've still got some really, really bad assets on thier books.

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Abyss


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your point is that transparency isn't the issue when it is.Nope. And nothing you've said has changed my views.

If there is no market, if the only "markets" are controlled by the middle men, who, in this case, also happened to be the "end-users" in many cases, once AIG stopped making these bets.I can't understand this sentence. A rewrite might be in order?

(AIG stopped making these bets early on, in fact, which was when Morgan got out of the game.)  The people who stayed in the game, GS, Deutch, S. Generale, became the insurers as well as the middle men.And? This didn't cause the blow up.

Find out what they did when the markets began to go bad.  They kept moving the mark and they did not pay out on any of it until THEY were able to find a way to take the mortgage default position they needed, by selling these things to unsuspecting customers, which is a conflict of interest in the extreme, and, quite frankly, fraud.And? This didn't cause the blow up.

I have changed my mind though on our original point of contention. The way these issuers behaved was very 'scam like' once they realized their exposure to an asset that was about to go nuclear. That's only on a "secondary trade" so to speak. Once the primary issues were made the dice was already rolled.


-- Edited by Abyss on Sunday 12th of December 2010 08:37:56 PM

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poetgrl


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I actually can't refute your points one by one.

your point is that transparency isn't the issue when it is.

If there is no market, if the only "markets" are controlled by the middle men, who, in this case, also happened to be the "end-users" in many cases, once AIG stopped making these bets.

(AIG stopped making these bets early on, in fact, which was when Morgan got out of the game.)  The people who stayed in the game, GS, Deutch, S. Generale, became the insurers as well as the middle men.

Find out what they did when the markets began to go bad.  They kept moving the mark and they did not pay out on any of it until THEY were able to find a way to take the mortgage default position they needed, by selling these things to unsuspecting customers, which is a conflict of interest in the extreme, and, quite frankly, fraud.

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Abyss


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longprime wrote:

As I remember the late 90's credit bubble.


Some lenders and banks were financing manufactured/mobile homes.

Then packaging them as CDS with high yield, which they were getting from the structure purchaser. Low down on a depreciable product.

 


You mean CDO, not CDS?

 



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longprime


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As I remember the late 90's credit bubble. 

Some lenders and banks were financing manufactured/mobile homes.

Then packaging them as CDS with high yield, which they were getting from the structure purchaser. Low down on a depreciable product.


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Abyss


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poetgrl wrote:

okay.  I'm sure you know what you are talking about.


Or you could simply rebut my points.

Knowledge such as yours would make my argument look elementary with little effort.



-- Edited by Abyss on Sunday 12th of December 2010 08:17:48 PM

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poetgrl


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okay.  I'm sure you know what you are talking about.

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Abyss


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poetgrl wrote:

Payne-

I PM'd you.

Actually, most on CC accused me of being conservative whenever they got annoyed with me.

I don't know why you think that my understanding of the derivatives market has anything to do with being liberal.  It does not.

The person whose opinion I am basing this off happens to be quite conservative and happens to be in this particular business.

But, there ya have it.

-- Edited by poetgrl on Sunday 12th of December 2010 07:54:28 PM


Your PM was not convincing. Talk with your resources and get back with me.

The balance sheet problems for the major players originated from MBS/CDO value deterioration. That Goldman or other investment banks demanded collateral from AIG because CDS were tied MBS/CDOs doesn't mean untransparency caused the blowup. It's almost immaterial.

Major issuers of CDS *know* the market. AIG mostly likely had the most transparent view of the CDS market and they still blew up. Transparency wasn't the issue, they simply didn't price the CDS right.

-- Edited by Abyss on Sunday 12th of December 2010 08:15:08 PM

-- Edited by Abyss on Sunday 12th of December 2010 08:15:33 PM

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poetgrl


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Payne-

I PM'd you.

Actually, most on CC accused me of being conservative whenever they got annoyed with me.

I don't know why you think that my understanding of the derivatives market has anything to do with being liberal.  It does not.

The person whose opinion I am basing this off happens to be quite conservative and happens to be in this particular business.

But, there ya have it.

-- Edited by poetgrl on Sunday 12th of December 2010 07:54:28 PM

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Abyss


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I don't actually "care" what you've read or not read.Very well. I happen to care what you've read on this subject. So, what have you read?

Look at it this way, by 2006 Dimon's JP Morgan was absolutely refusing to be involved in this market any further for a reason.And? What does this have to do with the untransparency of the market?

But, you can go ahead and believe what you "read."  I happen to actually know.Yes, we know all about your liberal omniscience.

 



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poetgrl


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I don't actually "care" what you've read or not read.

Look at it this way, by 2006 Dimon's JP Morgan was absolutely refusing to be involved in this market any further for a reason.

But, you can go ahead and believe what you "read."  I happen to actually know.

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Abyss


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poetgrl wrote:


I'm not saying that the derivative insurance market was a "scam," what I am, however, saying is that it is completely untransparent and controlled "off book," and because of that it could never be priced correctly.


No, the untransparency of the market was probably the least important reasoning for the mispricing. In fact, I haven't read that this untransparency led to the 2008 financial collapse *in any way*.

And I'm no friend of the financial services industry. That's one thing no one would ever call me.


-- Edited by Abyss on Sunday 12th of December 2010 07:36:01 PM

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poetgrl


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Abyss--

You are just not "right"

I'm not saying that the derivative insurance market was a "scam," what I am, however, saying is that it is completely untransparent and controlled "off book," and because of that it could never be priced correctly.

The people (GS, for one) who owned the market used it as a way to keep losses off the books NOT to actually insure the mortgages.  It was a derivative of a derivative of a derivative, and, in fact, it was all so incredibly intertwined, it was actually not possible to "price" it, at all.  

What "they" (these same too big to fails who were bailed out by us taxpayers) are currently doing with the so-called clearing houses is to keep others out and to keep it from becoming pricable or transparent and this is being allowed to continue.  Read the article I linked.  It is one of the greatest monopoly situations of our times, backstopped by us, the taxpayers, so that:  if those few banks win, as long as they win, they win, with no transparency at all.  If they lose, then they win, with the US taxpayer being, once again, forced to step in and "save" them.

You have to understand that it is not about free markets.  This is the opposite of free markets.  This is socialism and crony capitalism at its worst, and the derivative market which was develped from the mortgage insurance market, was one of the worst scams in history.....If Goldman didn't own our government outright, you'd be pretty surprised. 

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Abyss


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And CDS are not a "scam" or anything of that nature. They simply weren't priced correctly. And some of participants got hosed. You want to know who those buyers (edit: sellers) are?

- AIG
- Lots of foreigners.

If they had been priced right there simply wouldn't have been the calamity.

-- Edited by Abyss on Sunday 12th of December 2010 08:08:16 PM

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Abyss


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longprime wrote:

I have tremendous disdain and hate for the W's administration and by extension the R's.


During the bubble, if you knew where to look, hear, and see. The local DA's, the State's Finance and Business, Attorney General, and the Federal SEC, HUD, Comptroller, FDIC, saw and knew the problems but the politics and the influence  were more important than responsibility and ethics.

Since you've been in the money business, Did you see it coming?

 


Where were the Dems screaming to get things done? There were none.

Your belief of our government's ability to predict the future seems to be...wrong.


-- Edited by Abyss on Sunday 12th of December 2010 05:38:52 PM

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BCEagle91


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From Doug Noland's Credit Bubble Bulletin, Jul 20, 2001. The knowledge has been out there in the public and for free for a long time. I think that I learned about CDOs from one of Noland's articles in 2001. It might have been this one - I'm not sure. He's written about CMOs too. Should have been pretty easy to see this one coming - as usual, the only question is WHEN?

While it did not garner much attention, I am of the view that American Express's announcement of an $826 million write-down of its high-yield investment portfolio is a very significant Credit Bubble development. We have, of course, written often of our expectation of considerable problems in the area of "structured finance." And with $500 billion outstanding ($411 billion issued during the past three years!), we have mentioned collateralized debt obligations (CDOs) as an area of acute vulnerability. While they are rather lengthy, I am including remarks from American Express management that address some very critical issues and signals what we view as a likely sea-change in the marketplace for risk and sophisticated Wall Street "structured" products.

"AEFA (American Express Financial Advisors) has invested in high-yield securities for about 15 years. In the 1997/1998 time frame, AEFA began investing in structured investments such as collateralized debt obligations (CDOs) and structured loan trusts (SLTs) and increased their holdings in high-yield securities as a percent of their overall investment portfolio to between 10 and 12%. Now the structured investments represent ownership interest in an underlying pool of high-yield bonds and loans. AEFA's holdings of these include products they manufactured and sold to institutional investors - however it also includes products we had purchased from third parties. At the end of the first quarter of this year, the total high-yield portfolio amounted to approximately $3.5 billion, or 11% of total investments. It included approximately $90 million of CDO residuals, $400 million of low-grade CDOs, and $3 billion of directly owned bonds. In addition, the AEFA portfolio also included approximately $900 million of high-grade CDOs and $745 million of investment grade structured loan trusts.

It has now become clear that in 1997 when we began to significantly increase our holdings of high-yield investments - mostly through structured instruments - we took on securities that did not have the appropriate balance for us between risk and reward. So why were these investments made? Well, most of the structured investments were purchased as long-term investments in 1988 when the default rates were at historically low levels. AEFA entered into these structured investments at a time of a bull market and, as you know, a very robust economy. Given the favorable loss experience we had in high yield investments in prior years and the positive spread versus investment grade securities, this type of investment seemed to make sense. Also, many of AEFA's structured investments were in investment grade, so they thought they had a reasonable level of protection against loss.

http://www.safehaven.com/article/198/cdo-trouble


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poetgrl


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Okay, I "see" your point about it all, but this is a long and smart look at something going on right now which absolutely needs to be taken to anti-trust court.  The flagrant violations are astonishing.

As for whether I "saw" it coming?  Nope.  But, I did know 100% that CDS' and the rest were a scam and that you couldn't actually "make money" from them.  For a while I tried to figure out what they were until I realized you couldn't figure out what they really were, financially, in terms of pricing and profit, because they had nothing to do with pricing and profit in an understandable way, they were about profit and power.  Different.

Now, read this, and ask what has changed.  http://www.nytimes.com/2010/12/12/business/12advantage.html?src=me&ref=business

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longprime


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I have tremendous disdain and hate for the W's administration and by extension the R's. 

During the bubble, if you knew where to look, hear, and see. The local DA's, the State's Finance and Business, Attorney General, and the Federal SEC, HUD, Comptroller, FDIC, saw and knew the problems but the politics and the influence  were more important than responsibility and ethics.

Since you've been in the money business, Did you see it coming?



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poetgrl


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Date: Dec 11, 2010
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Sometimes I think we should write a book about the Greenspan bubbles, and we should call that book "The Icarus Agenda."

evileye

ETA:  Longprime, what do you think of Too Big to Fail. ?  I liked the other two books, but I haven't read that one.

Did you ever read House of Cards, about what happened to Bear Stearns when this all first began? 

-- Edited by poetgrl on Saturday 11th of December 2010 05:22:09 PM

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SamuraiLandshark


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test

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BCEagle91


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The housing bubble blog started around 2002 and we all knew that it would collapse along with the general form on how it would unfold. Of course we didn't know the timing. Watching it unfold in the summer of 2006, then 2007, 2008, etc. was surreal. All of the stuff that we had talked about for years was unfolding before us.

> we have a long way to go to absorb the excess housing and acquire a sense of stability and
> liquidity.

We had a few more banks fail this week. We'll probably have a bunch more fail in 2011.

A common expression on the housing bubble blog was to have plenty of popcorn to watch things unfold.

Our government and the Federal Reserve are trying all sorts of things to prop up real estate and to get the economy going. These are really proxies - large players try to get into the stream of money coming from the Fed and the US.

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longprime


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It was monopoly money, anyways anyhow.

quote:

"In October 2007, the U.S. Secretary of the Treasury called the bursting housing bubble "the most significant risk to our economy."[3]

evileye

Secretary of Treas, John Paulson, previously Chairman of Goldman Sachs, and a big short of subprimes, knew, but didn't believe that the incumbent R's had a stomach to tell business, regulators, and government leadership.  (an high school senior, would say that the USTreasury and Federal Reserve, were 'just amazingly, amazingly. ' )

I'm reading,  Too Big to Fail, Andrew R Sorkin, 2010.

Finished couple weeks ago, The Big Short, Michael Lewis, 2010.

and 6 months ago, The Quants, 2009.

 

we have a long way to go to absorb the excess housing and acquire a sense of stability and liquidity.



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BCEagle91


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Well, okay: Zillow says that the housing peak was in June 2006.

http://www.prnewswire.com/news-releases/us-homes-set-to-lose-17-trillion-in-value-during-2010-bringing-total-value-lost-since-market-peak-to-9-trillion-111583879.html

I imagine that some areas peaked sooner or later but the date that I've usually seen is around Summer 2005. I think that's the time that The Housing Bubble Blog commonly uses.

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BCEagle91


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The United States housing bubble is an economic bubble affecting many parts of the United States housing market, including areas of Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, Ohio, Oregon, Rhode Island, Tennessee, Utah and Virginia. Housing prices peaked in early 2005, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2010. On December 30, 2008 the Case-Shiller home price index reported its largest price drop in its history.[1] Increased foreclosure rates in 2006–2007 among U.S. homeowners led to a crisis in August 2008 for the subprime, Alt-A, collateralized debt obligation (CDO), mortgage, credit, hedge fund, and foreign bank markets.[2] In October 2007, the U.S. Secretary of the Treasury called the bursting housing bubble "the most significant risk to our economy."[3]

--Wikipedia

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BCEagle91


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All of the articles that I read had the housing peak in Summer 2005.

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longprime


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> now why would they take a 2005 Benchmark when the housing market high was in 2006-07?

evileye


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BCEagle91


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http://mailformat.dan.info/quoting/bottom-posting.html

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longprime


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>>>>>I'm complaining to the Moderator,There ought to be definite forum rule to limit the number of > per post.

////+++Very confusing to find where the other end of > and where the poster makes their comment. %%%

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BCEagle91


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> BTW I am not a betting woman, but 10 would get me 20 that people who hold a tg or
> looking for one can tell me when is the best time to buy, Bond market up or down?

A home is a place to live.

It's not an ATM.

It's not for gambling.

A lot of you folks are too tied to real estate - it seems like you worship at its altar with real estate agents, mortgage brokers and appraisers as the high priests.

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BCEagle91


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> I have linked BAH rates to show how the market is different across the
> nation. I have stated that I know RE facts and would gladly discuss
> eminent domain with you or RE tax assessment is not RE value. You have
> opted to ignore these responses and say "STRAW MAN"

Irrelevent.

You continually put things in my mouth making strawman arguments.

> You did not respond to the questions, you deflected it by saying prove
> me wrong. Hard to prove you wrong when you keep deflecting.

It's quite hard to figure out where you are going and why you ask
irrelevent questions. If you have a problem with something I posted,
please quote it directly.

> I asked because if you don't know mil tax rate, than you can't get how
> the county makes yp their budget. If you don't know the foreclosure
> system do you know how it works for RE taxes, and how the mill rate
> changes based on the RE assessment?

If you have a problem with something that I wrote, please quote it. Most
of your writing has no context.

> This is not straw man, this is true dollars and cents.

I didn't say that that was a strawman.

> If I was take a poll right now, I would bet my kids lives that the
> majority of posters here on this site do not know if their rate is
> above 1.0 or below without pulling out their RE tax bill. I bet they
> could not tell me what their house is assessed at for RE purposes,
> and the drop dead date for RE tax challenges. Homeowners get the
> bill and toss it in the can. They don't realize that their own
> county could be ripping them off big time.

Irrelevent.

> This topic is not about gold, but home prices.

And you don't see the relationship?

> This is a topic about home values correct?

On internet threads, topics and subjects are variable.

> LIBOR is instrumental in the loan rate. You need to understand the mtg
> system to understand the home values tumbling.

I'm a trader. I trade lots of things. I study bubbles because they are
useful in making money off herd behavior. I do understand credit
bubbles. You can read Doug Noland's Credit Bubble Bulletins to see
flows of funds - he provides an excellent weekly recap of global
credit markets.

I really don't care about home values tumbling; I'd be happy if they
dropped another fifty percent. That would make them a lot more affordable.

> Someone who took an 80/10/10 in 03 with a 3/27 understands that the
> LIBOR was a factor. What they means to them is they brought 10% to
> the table took a first with a 3 yr ARM for 80% and a second for
> 10%. AT day 1 starting yr 4 the LIBOR would determine their new
> rate. Typically they can charge 1-2% pts more. People who bought
> these homes with this type of mtg expected pay raises or housing
> prices to increase so they could at least change to fix. What they
> got was the market crashed and now the mtg was going to increase by
> hundreds of dollars per month.

Wonderful.

> Not a straw man, that is fact.

I think that you're pretty confused as to the thread of the conversation.

> As others have stated Zillow is not a site like the NAR or MRIS.

Fine. Federal Reserve good enough for you? They're not that far off from
the Zillow numbers.

> Using Zillow is a straw man.

You don't understand what a strawman is.

> The thing with stating straw man is that it is an easy out. Say it and
> thus, it must be so.

Why should I respond to something that you say I said when I didn't say it?

> You have stated I am using a straw man approach, and honestly I
> don't care; because everytime you do I go back and illustrate how
> you ignore what I ask and divert the subject.

Rubbish.

> I would much rather be called a straw man, than someone who refuses to
> defend their position.

I am not calling you a strawman. I am calling your argument or claims a
straw man.

Read an intro book on logic, reasoning and debate.



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