Housing Bubble Bursting?

[Austin]

Here is a good article that ties this all together:

http://www.humanevents.com/article.php?id=23218#continueA

Sinking Currency, Sinking Country
by Patrick J. Buchanan

Posted: 11/03/2007

 

[Randolph Kinney]

IndyMac - we ain't any different than the rest; bad loans

IndyMac Reports First Loss in Eight Years as U.S. Mortgage Market Weakens

IndyMac Bancorp Inc., the second- largest independent U.S. mortgage lender, reported a loss five times bigger than the company forecast in September as foreclosures and late payments rose to a record.

``We are in the midst of the most severe downturn our industry has experienced in modern times,'' IndyMac Chief Executive Officer Michael Perry said in a statement. ``While this loss is substantially higher than we had been forecasting, it was clearly not unexpected given the magnitude of the losses being reported by others in our industry.''

``In hindsight we could have pulled back sooner,'' the company said in the filing. ``But scale is critical for success. We were following major financial institutions and like most thought the downturn would not be this severe.''

IndyMac Bancorp increases credit reserves 47% to $1.39 bln

IndyMac Bancorp Q3 pretax credit costs $407.7 mln

IndyMac Bancorp Reports Third Quarter Loss of $202.7 Million, ($2.77) Per Share

 

[Austin]

Here is another good read from the Brits:

http://news.bbc.co.uk/2/hi/business/7070935.stm

Cleveland, Ohio, is an industrial city on the banks of Lake Erie in the US "rust belt". It is the sub-prime capital of the United States. One in ten homes in the city is now vacant, and whole neighbourhoods have been blighted by foreclosed, vandalized and boarded-up homes.

This ought to put a crimp in tax revenues in the big cities. This has some interesting political implications. Pyrotechnical implications too.

 

[Riick]

Here's an short outtake from Bill Gross' Novemrber '07 "Investment Outlook"
Balance at: http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+November+2007.htm

"....Mortgage write-offs, credit card losses, and increasing defaults on small
business loans will squeeze bank balance sheets and income statements for
the next several years. That pressure in turn will result in more conservative
lending practices, which will induce not a contraction in credit growth, but a
noticeable slowdown. Regulators, the press, and politicians will do their part
as well, characteristically closing the barn door after the subprime mortgage
horse has escaped from the barn. ..."

Personally, I think he sees the handwriting on the wall here.

Anyone willing to venture an opinion on how his projections of
(a) slowdown in credit growth & (b) increased government regulation
will affect our businesses -- and our profession?

 

[moh malekpour]

Is there any end to this? I remember a year ago on this thread a poster was asking if there was any good news. I have to tell that poster now that those bad news to him at that time are nothing in comparison to current news and I am afraid the current bad news are going to be good news in 6 months when we are going to see the future band news. It seems that the worse has to come and we haven't seen nothing yet.

 

[Terrel L. Shields]

In hindsight we could have pulled back sooner

That is a telling statement. As my lender bro. remarked recently, banks compete with each other and give up market share unwillingly. Had a banker been willing to decide the risk was too great and pull back, the investors would have been all over them for not making enough money and being a bad manager.
It was reminenscent of what an author gave as a scenario. Suppose that on Sept. 10, 2001, a rule had gone into effect to lock airplane cabins and Sept. 11, no attack came. Would the safety engineer who came up with this plan have been hailed as a hero? No. The airlines would have him in their sights for "wasting money" on something that obviously 'didn't work.".. He would have been fired.
Bank CEO's who are fired over failure to make money are wrongly fired. It's not their fault. Men go mad in herds and come to their senses one by one (McKay). The herd of lemmings heading for the cliff cannot see the edge until it is too late.

 

[Riick]

....Men go mad in herds and come to their senses one by one (McKay). The herd of lemmings heading for the cliff cannot see the edge until it is too late.

I take my hat off to you Sir. Poetry

 

[Randolph Kinney]

Dollar sinks, loan losses rise, FED to cut rate, China to ditch greehback

Dollar Falls to Record Against Euro on China's Plans to Diversify Reserves

The dollar slid to record lows against the euro and the Canadian dollar after a Chinese government adviser said plans to diversify foreign-exchange reserves will involve buying better-performing currencies.

The currency slumped to a 26-year low against the pound and a 23-year low against the Australian dollar. Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing the country ``will favor stronger currencies'' when adjusting its $1.43 trillion of reserves. He later added that doesn't mean buying more euros.

The decline helped drive the price of crude oil to a record and gold to a 27-year high, encouraging investors to buy assets in commodity-producing nations.

Chinese investors have reduced their holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to August. China Investment Corp., which manages the nation's $200 billion sovereign wealth fund, said last month it may get more of the nation's reserves to invest to improve returns.

The dollar slid against the Australian dollar and the Norwegian krone as losses from subprime-mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 percent next month.

The Reserve Bank of Australia raised its benchmark borrowing cost to 6.75 percent today, while traders added to bets Norway's central bank will increase its 5 percent deposit rate.

``The dollar is weak against a host of currencies, including the euro, the pound and the Australian dollar,'' said Mitsuru Sahara, senior currency sales manager at Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan's biggest publicly traded lender. ``We can't tell how much money banks will loose on subprime loans. The Fed is likely to cut rates again before the end of the year.''

 

[Greg Bell]

Shoooweee..GM Loss is 39 Billion , Oh never mind , it's just some little accounting adjustment by Arthur Anderson.No one knows how much garbage debt is held by all the major banks.Next year when the bulk of the Mickey Mouse loans reset we will see a tsunami of foreclosures.Quick , specialize in REO'S where the real money is...

 

[Austin]

DOLLAR NEW LOW...

...OIL NEW HIGH

GOLD $850

Every day the glacier slides a little farther at an increasing rate. We can actually stand and observe the movement on a daily basis. This can't keep up but so long before something breaks lose.
This is an economic adjustment and when these three factors reach their limit it will move into other areas. Blow a little smoke in the hole and see what pops up. As I have stated many times in this thread, our economy is politically controlled and for that reason I predict the next political move will be, as usual, in the wrong direction. Look for a massive government bailout of some sort with disastrous consequences in the interim. Remember 2008 is when the stuff will hit the fan and 2008 is an election year.