patrick.net

HelloKitty,

I agree, Carbon trading is a questionable practice. Basically, the worst polluters of CO2 are given a free pass because they have been bad, and then they even get paid for having been bad. A better method would be to penalize them up front and then remove the penalties as the emissions are reduced.

As I said in an earlier post, most government programs get corrupted into corporate welfare. What else is new.

HIV, Y2K and (let me add) SARS have all been exploited for profit. So has Terrorism, as you mentioned. But that should not stop us from trying to stop real problems. And these are all real problems. although by varying degree.

Nice to see an analyst that "gets it". Show me the LTV!
"The modern foundation of the lending market is about to be uprooted as FICO scores, the long trusted gauge for lenders in determining risk and price, will prove virtually meaningless in this credit cycle," wrote analyst Meredith Whitney in a research note.
"Today, as a higher percentage of people own homes and many of them have taken on 'too much house' or high LTV [loan-to-value] loans, things are different," Whitney said Wednesday.
She added that many individuals previously considered "prime" customers who took on loans with LTV ratios of 80% and higher are performing closer to subprime loans.
"For those lenders overly weighted to FICO scores in underwriting, we expect the rudest awakening," Whitney wrote.
"We believe LTV analysis will prove far more predictive of not just loss frequency, but more importantly of loss severity," she said, noting that she believes investors have underestimated the severity of the current credit cycle, "as we expect losses to be far worse than in any period in U.S. history."

I agree, Carbon trading is a questionable practice.

Sigh...

IF "global warming" is real, carbon trading is our only hope.

carbon trading is so hilariously questionable my mind interprets it as the modern day equivalent of paying the priest to get your dead parents into heaven. Its really the exact same thing as in nothing happens but money changing hands from the sheep to the shearer. Always follow the money.

Arguing against "global warming" is like saying earth is round centuries ago.

Time will inevitably tell.

carbon trading is so hilariously questionable my mind interprets it as the modern day equivalent of paying the priest to get your dead parents into heaven.

That I do not agree. It is a market solution and the only feasible solution.

Again, IF "global warming" is real.

Okay... an attempt to bring this back to housing.
How about a law to make it illegal to build a new house in the Central/ San Joaquin Valleys or Inland Empire without a geothermal heat pump for heating and cooling.

OK, so what happens five years from now, what is the rate the mortgages will be frozen at, and what about investors who thought they were going to get those honkin' big checks? What if that was their retirement plan?

From Bloomberg:
Dec. 5 (Bloomberg) -- Federal regulators and U.S. lenders agreed to freeze interest rates on subprime mortgages for five years to stem rising foreclosures, said a person familiar with the measure.

President George W. Bush will announce the accord tomorrow, which was negotiated by officials including Treasury Secretary Henry Paulson. Paulson will hold a press conference at 1:45 p.m. in Washington to discuss the plan, Treasury said in a statement.

``We have got to do something drastic, and we have to do something quickly,'' said Representative Elton Gallegly, a Republican from California. ``I don't like the government getting involved in the private sector, but we have potential problems we are already seeing come to pass.''

Paulson finalized the deal as the housing recession entered a third year, threatening the economic expansion. The collapse in the market for securities backed by subprime mortgages cost the chief executive officers of Merrill Lynch & Co. and Citigroup Inc. their jobs, roiled markets from Auckland to New York and forced the Federal Reserve to cut interest rates twice.

More than 30 percent of borrowers with subprime adjustable- rate mortgages are behind on their payments before their loans reset higher and 775,000 homes with $143 billion of mortgage debt will go into foreclosure over the next two years, according to estimates from analysts at Credit Suisse Group.

Stocks Rally

rmerle Says:
December 5th, 2007 at 12:52 pm
"Hi, I am a reporter at the Washington Post working on a story about Paulson’s bailout plan. I am looking for people — in the D.C. region — who think it isn’t a good idea. If you are interested in being interviewed on this issue, please send me an email at merler@washpost.com. Thanks, Renae"

It is only now that the mainstream media cares what people here think? Renae, I think you guys should stick to getting your soundbites from the NAR they're the experts.

Bap33,

I'm wondering why you hate the ACLU so much. You are always claiming to be such a patriot, and the ACLU protects such American things as freedom of speech and other rights guarenteed us by the Constitution of the United States of America. Why is protecting the Constitution "lib"?

The ACLU even helped the couldn't-serve-in-Vietnam-because-of-an-anal-cyst Rush Limbaugh. He's hardly a "lib".

the ACLU is very selective in what it looks into - so while gun ownership is a right in the US they are very anti gun-ownership. Also the civil rights of whites to have say a "white club" in a college are ignored, while they'll put a lot of energy into the rights of blacks, hispanics, etc to have all kinds of separate stuff.

I'm really on the fence about the ACLU because they do defend a lot of things I care about, yet as a white working-class American they're as often my enemy as my friend.

SFWoman Says:

> Bap33, I’m wondering why you hate the ACLU so much.
> You are always claiming to be such a patriot, and the
> ACLU protects such American things as freedom of speech

More often than not the ACLU protects “left wing speech” and protects against “conservative speech”. The ACLU will defend the guy that wants to say “Jesus was a Homo”, and fight to make a guy in the same company take down a sign at his desk that says “Jesus is Lord”…

P.S. The Google ad at the bottom of the Blog wants me to click for "the Lowest Possible Price on a Hummer"

Somebody really needs to answer Renae Merle. She asked a polite question.

Renae, this blog was started by San Francisco Bay Area housing "bears". It grew to include participation from southern California as well, and various people in Oregon, Arizona, Idaho, and CA refugees in places farther east now post here. But if you are looking for folks in the DC area you may be out of luck.

(I'm a 5th generation northern CA native who picked up stakes and moved to Boise in early 2006.)

justme Says:

> It’s pretty obvious that you just really do not WANT to care
> about CO2 and global warming, and any excuse will do.
> It is a real problem, and it is a problem when people just do
> not want to deal with it.

Since almost everyone (from right wing nut balls to left wing tree huggers) can agree that at one time North America was covered with ice we know that there are periods of “global warming” and “global cooling”. We have a solid couple thousand years of recorded history and I have not read of any actual “problem” caused by “global warming”. This might come as a shock to many tree huggers but the carbon emissions related to the burning of “fossil fuels” did not just start when the Hummer was introduced a few years ago. As recently as 100 years ago (before air tankers) a single lightning strike would burn hundreds of acres of forest and most people not only cooked over an open flame but burned all their trash…

FormerAptBroker, way to go!

"Global warming" is a non-issue manufactured in today's 3-ipods-per-teenager world.

SFWoman quoted an article that Said:

> More than 30 percent of borrowers with subprime
> adjustable- rate mortgages are behind on their
> payments before their loans reset higher…

Most people forget that almost ALL foreclosures are due to dropping home prices (I put in the “almost” since I’m sure there has been at least one guy out there who wanted to ruin his credit and would not let someone take over the payments on his loan that was for less than the home was worth).

Every year there are tens of thousands of people who can’t make their loan payments any more who sell their homes. These people will not be able to do this with home prices falling and even if they do pass a payment cap law it will dust reduce the number of foreclosures.

In the past three cycles multi family residential has followed residential down. At the rate prices are falling it looks like I might be buying another apartment in Sacramento by 2010 ( a year ago I would have guessed I was going to have to wait until 2012)…

http://flippersintrouble.blogspot.com/

Peter P Says:

> “Global warming” is a non-issue manufactured
> in today’s 3-ipods-per-teenager world.

The same teenagers watch Al Gore movies on one of the seven flat screen TVs in their homes (if they are not watching on the seatback screens in the car or on the portable DVD player, or one of their three iBooks or one of Dad’s PC laptops) and badger their parents if they don’t buy “eco friendly” products (funded by Al Gore’s friends and co-workers in the VC world)…

P.S. I just heard a radio ad telling me that the world will end as we know it if I don’t buy a new energy efficient furnace or AC unit…

P.P.S. As someone that does not own a flat screen TV, an iPod, or an AC unit I find it funny that the ads (and studies supporting the near term end of life on this planet due to global warming) are always paid for by the new eco product of the month when we would be better off in no one bought any new crap…

I have not watched Al Gore's movie.

My friend made me watch some animal rights crap featuring disturbing images. Afterwards, I went straight for steak.

a year ago I would have guessed I was going to have to wait until 2012…

And hopefully next year events will make 2009 the year to buy...

It amazes me that that so many lawmakers and media cannot see that "affordability" is low prices. They seem to push for keeping prices high, and seek "affordability" in longer terms and lower interest rates.

If 1/3 to 1/2 of homes are paid off, and many more were bought pre-bubble, just how many FB are there? Falling prices may not hurt as many as we keep hearing, but will certainly help the next generation.

DinOR Says:
I took your observation to mean that it was very sector specific. More to the point, dot com start-ups. Unless you were at a “pink-slip party” who cared?

In the bay area (esp. Si-Valley), the segment that has the greatest influence on middle-class housing is the tech industry. Not just dot-coms, but big tech as well. While several dot-coms and web-2.0 companies will flame out, the grand total of all of them is comparable to a single wave of layoffs at an Intel or a Sun which hits hundreds in one swoop.

sriramgopalan Says:
I agree with SP. But, for the job market to come down, the Apple and Google share prices have to come down.

Strong correlation, maybe - I don't see why this is a causative factor.

I remember how horrible the job market was in 2001-02.

Bad as that was, the downturn was relatively short and the next bubble helped. The early 90's was more extended, with a tough job market from '90 to '95. I was fortunate enough to be relatively shielded at the time, but a lot of folks I know were hurting very badly back then.

And on a different note, I am really happy to see Dubya announced a program to help the FB's. This is the most reliable sign that nobody will actually get any help. :-)

I am really happy to see Dubya announced a program to help the FB’s. This is the most reliable sign that nobody will actually get any help.

Maybe they should treat the forclosure "crisis" like a natural disaster. Put the FB forclosees in FEMA trailers til they get back on their feet.

HeadSet Says:
It amazes me that that so many lawmakers and media cannot see that “affordability” is low prices.

They want increasing prices supported by long debt service sustained via low interest rates. This maximizes REIC revenue, mortgage industry profits and property-tax revenues at the expense of the public who has to pay for all of this.

That is why every arsehole politician, media hack and industry shill these days wants to do something about "affordable mortgages", not "affordable home prices".

Put the FB forclosees in FEMA trailers til they get back on their feet.

Or some Superdome... LOL!

There's a certain trend in the Bay Area for people to move into trucks with campers or RVs though, as they lose their houses. FEMA trailers would be a Godsend in the Bay Area.

As it was, I was, if I stayed there, going to put what little stuff I have in a storage unit, and find various places to sleep in the bushes there. I'd probably have found some sort of lodging by now, but who knows.

This is not the place to discuss my solution to the overcrowding there though.

That is why every arsehole politician, media hack and industry shill these days wants to do something about “affordable mortgages”, not “affordable home prices”.

Unless the debtors outnumber the savers, noticeable public moneys used to bailout irresponsible homedebtors may meet with serious backlash. After all, Hillary had to back down from the vote buying "$5,000 to each newborn" when enough would be payers revolted. Hope.

SP, that's the beauty of a ponzi scheme. You are of course right on. If their plan was successful I wonder how they would sustain prices for the next wave of buyers. Would rates go to 1% fixed to sustain the buyers of today's investment?

Would rates go to 1% fixed to sustain the buyers of today’s investment?

How about forcing all loans to be assumable? That way you can pay someone to take over your loan, financed with an equity extraction.

Well now it gets interesting. It seems the word on the street is the bail out will pass. I'm eager to see the details of how it is financed, and how the contractual issues were worked out.

Another potential side effect I'm curious to see play out is how the tension between prudent first time home buyers and home prices will resolve. As far as I can tell, the bail out has just eviscerated the first-time home buyer market. The investors aren't going to be stupid and back suicide loans again. About the only first-time home buyers left are the prudent ones. Either the prudent buyers blink and sign onto loans that break their financial backs, or asset holders blink and re-price. The asset holders can hold out as long as moving the asset off their books costs more than just clinging on.

So I guess I must wait another 5 years before buying near the bottom!

I'm as mad as hell and I'm not going to take it anymore!

http://www.freedomrally12-16.org/

Time for a tea party!

@Apostasy

I am one of those prudent first-time home buyers to be. I still rent a $350/month $hitbox on a $80,000/year income. I so far have been able to pay off my car, eliminate all revolving credit from college and get my student loans down to $9,000. I don't like renting and would like to buy my own place, but can hold out longer than the banks. I might just keep saving for a downpayment and one day discover that I can just buy a home outright :)

I know my rent will probably not go up because my landlord works 3 odd jobs. I am a reliable renter that pays many costs that otherwise would be stuck on her. Things like water, electricity, and gas can be turned "off" but the connection fees everymonth add up to a nice sum.

In return for this bailout, I want the mortgage deduction to be taken away. I want all subsidies for irresponsible lending taken away. I would also support the destruction of Fannie Mae, good ol Mac. I don't want any support from the government for home prices.

The only thing that may be good about the bail out is the debt shackles being placed on FBers. Many may actually end up oweing more in 5 years than they do now. If they simply walk away, take the hit on their credit, and rent, they might actually be better off. The Fed may inflate out money supply up high enough that my last point won't matter. If that happens, our foreign creditors *masters* will correct our wayward ways.

Hi folks, long time no see. Just got back from a Thanksgiving vacation down under.

Learned about the rate freeze at the departure lounge, I must admit that the thought of applying for a political asylum flashed across my mind at that moment.

Welcome to the era of US Xera.

DS,

maybe Sydney is in a serious housing bubble, Perth and Brisbane are not. I checked out the local rental guide, these two commodity states are running at 4-6% gross rental yield, not great but reasonable.

Sydney is just as bad as the Bay Area, ~2% gross rental yield.

Btw, congrats on Kevin Rudd, I was not surprised at the outcome since we arrived a day before the election, and everyone we talked to was in favor of him.

It doesn't matter whether the rate is frozen or not if you fast forward to 5 years from now. I am an avid reader and believer of the freak spiel on oil drum.

I would love to embrace the days when the oil runs dry. I am particularly disgusted by all the F250 or Hummer drivers in BA who are just commuting. I wish that gas would go to $10/gallon and I'd love to watch how they cope.

In the mean time, I am adding positions on oil during the dip.

PROP 13 CAUSES GLOBAL WARMING
FACTS:
1. Since 1977 global temperatures are rising every year/ice melting
2. Job changers keep old home to keep low tax basis and have super long commutes
3. Number 2 piled up over 30 years means almost no one can carpool in CA.
4. People even fly from LA to SF or opposite for job twice a week and with taxi/rental car etc this is a ton of fuel.
5. Thirty Five MILLION Californians living under p13 in the #1 polluting country in the #1 'car drivingest' state mean p13 has MASSIVE GLOBAL IMPACT.

END p13=SAVE the world!

Even if it *might* be true the stakes are simply TOO HIGH to risk it and we MUST do something to end p13!

Kitty,

Alriiight :-) :-)

Malcolm Says:
If their plan was successful I wonder how they would sustain prices for the next wave of buyers.

Easy - that would become a problem for the _next_ generation of bankers. That is the beauty of the Boomer Mind Trick (tm)

Hi guys,
just so you know the administration is creating something like a brand new GSE. Basically, the banks will get all the loans and apply to the GSE, if the loan passes the relevant ranges then the GSE will buy it for the price the banks decide is right. The banks can then return the money to the investors. The loans accepted become gov property so the gov can even just go ahead and forgive the loan since it is toxic anyway.
The gov seems like they are doing something for the ppl, not much however. They save the banks and the investors together. Everybody is real happy.
I don't believe it can work, but the big ones will get their money back and the rest, well, you can figure.

OMG SP before I got to the end in my mind I was thinking, yeah the boomer mentality. I wonder if Congress will create some sort of government guaranteed reverse mortgage product for boomers with no equity in their houses? Maybe something like the 125% loans but a reverse mortgage.

I knew this was coming and I got very upset on another thread when our governor bought in to the 'voluntary' rate freezes. As usual my over reacting proves well founded as I read today's newslinks and notice the federal government considering imposing lower rates on existing contracts and basically saying the forced bond revaluations are better than them going broke. Basically the government has determined that the bondholders should be satisfied with whatever the government deems is fair.

Wasn't the housing bust supposed to naturally be nicely contained only in the housing sector. I thought there was no risk of it spreading.

What really pisses me off is that even I realize that only a miniscule number of FBs will actually survive with government help, but the damage to the credibility of many institutions will be severely hurt, and investors will be even more cautious in the future if they think that there could come a day when the government nationalizes their pools and revalues them because borrowers made bad decisions.