Housing Bubble Bursting?

[Randolph Kinney]

I thought by now the economy and stock markets would be in much worse shape. Housing is an obvious disaster and the markets are down a bit but I'm really starting to wonder if things are going to get anywhere near as bad as some people predict. Take housing out of the equation and it seems like things are a little slow but not anywhere near disaster status.

Mark,

When the president and both houses of congress get together to literally give away $168 billion, what does that tell you? When was the last time that happened?

When the FED cuts the interest rates by 0.75% and then 9 days later cuts the interest rates by another 0.50% down to 3%, what does that tell you? When was the last time that happened?

If you have been in stocks related to housing, the financial sector or insurance of financial products, how big of a loss do you have right now?

I was noticing yesterday that wheat is well over $10 a bushel and the chart is amazing showing a steep rise. When was the last time wheat was at this level?

Of course, you know the price of gold is over $900 per once and silver is now over $17 an once, when was the last time you saw these metals at these prices?

Of course, you know oil is hovering at $90+ a barrel.

Sum this up and ask again, why are some stocks way down and others are not? Anything connected to inflation like agriculture related industries are doing very well. There are developing food shortages in Asia now and talk of shortages here too.

If the U.S. actually develops a recession (rising unemployment), you will see that affect worldwide. If not, you will see stagflation continuing. The FED is ready to lower the interest rates again in March.

I am attaching a graph of the unemployment rate for San Diego county. Tell me what you think.

 

[Randolph Kinney]

Less lending means less buyer demand

Morgan Stanley scaling back residential mortgage business


NEW YORK (MarketWatch) -- Morgan Stanley said Wednesday that it is scaling back its residential mortgage business and ending its lending program in the United Kingdom, becoming the latest victim of the ravaged home lending business.

 

[Randolph Kinney]

Less mortgage insurance available means less buyer demand

MGIC seeks capital boost as mortgage crisis bites its bottom line

SAN FRANCISCO (MarketWatch) -- MGIC Investment Corp. reported a $1.47 billion quarterly net loss on Wednesday and said it's looking at ways to boost capital as rising delinquencies and foreclosures hit the mortgage insurer hard.

 

[Randolph Kinney]

Less residential construction means less jobs, means less buyer demand

Economic Report: Home builders say gloom won't dissipate in 2008

ORLANDO (MarketWatch) -- The housing market will not stabilize until late in 2008 at best, with sales, starts and prices continuing their slide through most of the year, economists attending the International Builders Show here said Wednesday.

 

[MARK JOLLIFF]

Mark,

When the president and both houses of congress get together to literally give away $168 billion, what does that tell you? When was the last time that happened?

When the FED cuts the interest rates by 0.75% and then 9 days later cuts the interest rates by another 0.50% down to 3%, what does that tell you? When was the last time that happened?

If you have been in stocks related to housing, the financial sector or insurance of financial products, how big of a loss do you have right now?

I was noticing yesterday that wheat is well over $10 a bushel and the chart is amazing showing a steep rise. When was the last time wheat was at this level?

Of course, you know the price of gold is over $900 per once and silver is now over $17 an once, when was the last time you saw these metals at these prices?

Of course, you know oil is hovering at $90+ a barrel.

Sum this up and ask again, why are some stocks way down and others are not? Anything connected to inflation like agriculture related industries are doing very well. There are developing food shortages in Asia now and talk of shortages here too.

If the U.S. actually develops a recession (rising unemployment), you will see that affect worldwide. If not, you will see stagflation continuing. The FED is ready to lower the interest rates again in March.

I am attaching a graph of the unemployment rate for San Diego county. Tell me what you think.

Randolph, I'm with you on where I think things are going. it just seems to me the news is much worse than the effect it's having. That's all. I'm shorting as you know but it is kind of impressive how the markets are holding up despite obvious panic by the fed and the ridiculous stimulus. Things are slow where I work and almost everyone I know outside of real estate are doing o.k at work with some minor slowing for a few. If things play out half as bad as Roubini ,Mauldin and Peter Schiff say they are then they will be much worse than they are now. I'm just surprised how little effect the horrible stats are having on the markets.. The stats and opinions of the experts above suggest a much more rapid decline. Oh by the way the failure of the rating agencies to downgrade the monoliners(MBIA,AMBAC) is frigging crazy. Daily talks about a bailout for these guys and they maintain a triple AAA rating. With my short position I know the market will drop big if they downgrade. Moody's and Fitch have no credibility what so ever and how no one has sued them yet is even more amazing. I've never been a conspiracy guy but I believe they are getting pressure not to downgrade when everyone with at least one braincell knows these companies are fighting for their lives. Total BS.

 

[Randolph Kinney]

Randolph, I'm with you on where I think things are going. it just seems to me the news is much worse than the effect it's having. That's all. I'm shorting as you know but it is kind of impressive how the markets are holding up despite obvious panic by the fed and the ridiculous stimulus. Things are slow where I work and almost everyone I know outside of real estate are doing o.k at work with some minor slowing for a few. If things play out half as bad as Roubini ,Mauldin and Peter Schiff say they are then they will be much worse than they are now. I'm just surprised how little effect the horrible stats are having on the markets.. The stats and opinions of the experts above suggest a much more rapid decline. Oh by the way the failure of the rating agencies to downgrade the monoliners(MBIA,AMBAC) is frigging crazy. Daily talks about a bailout for these guys and they maintain a triple AAA rating. With my short position I know the market will drop big if they downgrade. Moody's and Fitch have no credibility what so ever and how no one has sued them yet is even more amazing. I've never been a conspiracy guy but I believe they are getting pressure not to downgrade when everyone with at least one braincell knows these companies are fighting for their lives. Total BS.

Mark,

Actually, the markets are down from their peak, maybe 20%. I am trying to point out that stocks respond to future earnings. The indexes are going down, not because every stock in the index is going down, because some stocks are being hit hard, like down 50 to 90 percent.

You need to refine your play.

However, just as an expanding economy is like a rising tide lifting all boats (except the ones with holes in them), a shrinking economy is like a falling tide and all boats go down to one degree or another. If layoffs increase and unemployment rises, that will affect stock values negatively.

The markets went up today because the president signed the $168 billion give away that also raises the loan limits of the GSEs and FHA. That and retails sales increased 0.3% for the month of January; autos and gasoline propelled the rise in retail sales. These are one time events.

Just hang tough and adjust your strategy as the economy shifts.

 

[moh malekpour]

This essay is answers to some of wall street cheerleaders . Nelson Hultberg VS. Nicholas Vardy
THE PLAGUE OF THE WITCH DOCTORS

 

[Randolph Kinney]

California Foreclosure Auctions Soar In January

CALIFORNIA FORECLOSURE AUCTIONS SOAR IN JANUARY

As many as 80 percent of defaulting homeowners may lose their home at auction

DISCOVERY BAY, CA, February 12, 2008 – ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure with daily auction updates, today issued its monthly California Foreclosure Report. The number of properties sold at foreclosure auction jumped by 55 percent in January to a total of 19,821, with a combined loan value of $8.06 Billion. Compared to the same period one year ago, this represents a staggering 454 percent increase.

Notices of Defaults recorded in January numbered 38,617, up 16.4 percent from 32,948 in December, 2007. This increase follows a 45.1 percent increase from November to December. With a minimum of roughly four months between recording of a Notice of Default and the property being sold at auction, the recent increases in defaults clearly indicate that auction sales are likely to also increase further in the coming months. By comparing January sales to defaults four months ago, it appears that as many as 80 percent of defaulting homeowners may now lose their home at auction.

Homeowners aren’t the only party to foreclosure under pressure. This month 98 percent of auction sales went back to the lender after receiving no bids despite the significant discounts now being offered by lenders at auction. Out of the 19,821 homes that went to auction, 13,950 were discounted, with an average opening bid discount of 16 percent. Of that, 4,624 had discounts of 30 percent or more.

The majority of these discounts are from the amount owed on an 80 percent first mortgage made in the last 2 to 3 years, meaning that many of these properties are being offered at 50 to 70 percent of their prior value.

========================================================

Is it time to think about buying distressed real estate?

 

[Riick]

Credit Unions -- The new subprime (article)

The New Subprime? Credit Unions and Community Banks Look to Fill Lending Void

As subprime credit dries up amid the worst housing slump since the Depression-era, many troubled subprime borrowers are apparently finding help from two sources that were oft-overlooked during the recent housing run-up: credit unions and community banks.



Via the Wall Street Journal, a return to more personal lending:

Unlike big lenders, credit unions didn’t suffer heavy losses in recent months because they never made risky subprime loans.​

Bill Hampel, chief economist at the Credit Union National Association, says that while some credit unions have experienced “collateral damage” from the subprime crisis, as members have lost jobs in depressed areas, most have strong balance sheets and near-record capital levels. As a result, they’re “going to make any loan they possibly can make,” he said.​

Many credit unions continue to refinance subprime loans and offer banking products no longer available from other lenders, including five-year adjustable-rate mortgages.​

It’s possible here that cash-flush community banks and credit unions — more conservative lenders that judiciously avoided the rush to subprime — are now setting themselves up to lose a good chunk of that cash.
......... <deliberately snipped here>

 

[Cigar]

NAHB cuts off Congress:

Today, the National Association of Home Builders' Political Action Committee, BUILD-PAC, and its 150-member Board of Trustees representing all 50 states, agreed to cease all approvals and disbursements of BUILD-PAC contributions to federal congressional candidates and their PACs until further notice.

Full Article

As a member of the NAHB in the 60s I was appalled to hear them pushing for replaceable housing, it's here with the deteriorating flakeboard, plastic wrap sealed, fibercement covered, tract houses built on floating slabs and held together with caulking. I find it hard to believe that the NAHB wasn't at the heart of the easy mortgage crises.