patrick.net

HARM :

The financial journalists are the most unfortunate because their clueless-ness is very easy to point out when the future reveals the hard numbers. Their real clueless-ness is not realizing this fact.

The stock markets were supposed to be cured due to rate cuts. That's what the MSM told us there was a rally. What's the stock market's record after the "shock and awe campaign" ? SPY is down over 5% and QQQQ is down over 2%.

The same thing happened after the dot com bust. The Fed kept cutting interest rates and stocks kept finding new lows. Still you see MSM reporting the same idiotic headlines today. The REIC is at least evil, the MSM is simply pathetic.

he Fed kept cutting interest rates and stocks kept finding new lows.

I don't think the MSM has heard of the concept, "pushing on a string."

Headset,

Nice touch. I like it.

"We were saddened by your decision to sell,

(but understand why)

I suppose we won't be seeing much of you

for some time, what with the projects and all.

Please let us know when you get your life back"

Mr. & Mrs. DinOR

DinOR,

I wrote a little poem you can feel free to use for you "condolences" card:

-------------------------

You put your house up for sale,
Who knew buyers would bail?

After all of that MEW,
You're now feeling screwed.

You thought you were house-rich,
But ain't leverage a real bitch!

So it's time to foreclose,
And our local comps are all HOSED!

...

F-U, you damned FB!

I have a friend whose brother had invested/speculated and currently holds about 10 properties and creditors have started to hound. I have been talking about bubble with my friend for a long time and he did tell me his brother was taking steps to sell off some of his properties. Apparently he was surprised by how quickly market changed.

I have dealt with a few financial journalists, including those from top journals like Fortune, Forbes and WSJ. They are still green, but nevertheless get the by line with their name attached to the article, solo.

Most of them are, well, not that sharp among their peers. Unless you climb to the top and become a columnist, or anchor, journalists make very meager salary even for WSJ, this lady was complaining about her pay all the time, I got a sense that it was not much more than $50K, living in DC, and yet due to her line of work she needs to mingle with those for whom money is not an issue. She later quit and joined a lobby group. Given the huge discrepancy in financial reward, naturally, the sharpest all went into Wall Street, not WSJ.

Back when pay discrepancy was smaller, it was much easier to recruit talented journalists who worked for job satisfaction. Now it is getting very hard, because any talented person knows how to do simple financial arithmetics. I know of several young journalists from the top financial pubs who saw their positions as a transition into business school or law school which led to serious $$$. The churn in the industry was quite high.

It took me a while to figure out MEW means Mortgage Equity Withdrawal, for the longest time all I could think of is the sound a cat makes when when it gets screwed lol!

skibum :
You thought you were house-rich,
But ain’t leverage a real bitch!

OUCH ! LOL !

sa :
Apparently he was surprised by how quickly market changed.

That always cracks me up. Even the stock market doesn't change on a dime - there is always time to get out and minimize your loss OR protect whatever gains there are - as a trading strategy.

RE cycles are so much slower. Anyone who wanted to sell had all the time in the world to do it. To me this was nothing but slow. It has taken almost FOREVER for borrowers, lenders, policy makers and everyone involved to come to their senses. And they are still trying hard to avoid coming to their senses.

Quickly my foot.

Many a time I have had a laugh and even sent emails out with links to these stories where the 'experts' are stunned things turned so quickly. My favorite quote are things like "Who could have guessed things could turn so ugly so quickly?"

Hmm, maybe if you guys had been open minded and hadn't ridiculed everyone with a different opinion maybe it wouldn't be such a surprise.

Good News

Starbucks Replaces CEO With Chairman

Starbucks Replaces CEO Jim Donald With Chairman Howard Schultz, Plans to Close US Stores

SEATTLE (AP) -- Starbucks Corp. fired Chief Executive Jim Donald on Monday, handing the reins back to Chairman Howard Schultz as part of a major restructuring initiative aimed at pulling the company out of a downward slide.

The move, coupled with plans to close some U.S. stores and slow down opening new ones, comes as the world's largest chain of coffee houses has seen its stock plummet 50 percent over the last year amid declining traffic in its domestic stores.

Better News

Paulson: No Easy Answer to Mortgage Woes
Paulson Says There Is No Simple Solution to Housing and Mortgage Crisis

Paulson called the current housing correction inevitable after what occurred during the five-year boom in which sales and prices climbed to record levels.

"After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary," Paulson said.

He said that the correction was taking a toll on the economy that would continue for a period of months.

"It will take additional time for markets to regain confidence," Paulson said. "The overhang of unsold homes will contribute to a prolonged adjustment and poses by far the biggest downside risk."

Best News

Citigroup could axe 32,000 workers to stem lossesSuzy Jagger in New York
Citigroup is expected to cut up to 32,000 jobs to stem rising losses.

The world’s largest bank could lose 10 per cent of its workforce when it unveils full-year results next Tuesday. It is also believed to be considering the sale of non-core assets to raise capital.

However, Meredith Whitney, one of Wall Street’s top banking analysts, said that the only way Citigroup could repair its balance sheet would be by selling Smith Barney, the broker, for about $25 billion (£12.7 billion).

Ms Whitney, an analyst at CIBC World Markets, told The Times: “In these markets banks can only sell their best assets. The sale of non-core ones would not be material enough.

“To really reduce their leveraging, Citigroup have to sell a chunk of their mortgage or card portfolio, but there is no market for those assets. The only asset they could sell of any size is Smith Barney.”

StuckInBA Says:
When he heard our offer, he looked exasperated. He openly said, “They are not going to like it. They think prices are going to go up in the spring”.

If you don't mind telling us which house this was, I would be happy to make a 25%-off offer next week, followed by a 40%-off re-offer in the Spring. :-)

sa said:
Apparently he was surprised by how quickly market changed.

I would phrase it differently: "Apparently he was surprised by how much time he wasted in denial."

“After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary,” Paulson said.

In other words, all of Paulson's cronies have now closed their long positions and taken a short-posture on housing and mortgages.

Welcome to the dark side, you bastard, even if you are still doing it for your buddies.

Guys, another data point personal observation. Gilbert, AZ seems to be back to 2001/2002 pricing. The reason I know this is because one of those 1st time 'real estate investors' who thought I was nuts when I cautioned him about the market in 2004 had told me what he paid and what his house was worth. His single level 4 bedroom house with a cracked slab was worth in the high 200s at the time. He had paid high 100s in 2002. Now, a nicer house is listed for $185K in his area, and a few more are listed under 200K. Just 6 months ago they were asking 240ish for those houses. Prices seem to have snapped back.

PermaRenter,

Now that McD has started marketing McCoffee products, SBUX will loose the aura of exclusivity and go down the drain.

An interesting question is, what will be the next fad....

Also in the news, Bush is rattling his saber against Iran, based on the supposed provocation in the persian gulf.

Here's my question: Where is the Navy video of what happened and where is the tape of the supposed radio threats? I would like them to be published, analyzed and authenticated.

justme: the tapes are still in production; apparently there was some problem finding anyone who speaks farsi.

Shoot first, ask questions after you can find a translator?

Requiem,

They already had a translation that indicated a threatening radio message.
But now they need another translator for the msesage. Sounds fishy.

By the way, where did you read that they needed a translator?

I didn't, I'm just making snarky comments about how easy it is to release a "translation" but it takes some time to make the original if you can't find anyone who speaks farsi /and/ passes the political loyalty tests.

/joking

Ah, requiem, you were way ahead of me. Sorry.

I'm also waiting to see some "production values", as they call it in Hollywood.
:-)

Malcom,

I've also noticed LV flirting w/ 2001-2002 pricing. At peak 185k would not have purchased a "repartment". Now it's a 1,600+ sq./ft. SFH! Like yourself, I spoke w/ a great many people that scoffed at the notion they would EVER be revisiting this pricing model.

Additionally NV has done away w/ stated income loans and this has accelerated the process. What has surprised me is Palm Springs prices seem to be holding up quite well? Any local observations from the SoCal crowd?

skibum

I'm still around. Not lurking often, but I scan the blog a couple times a month or so.

I'm on extended mental break from the housing crisis. We're still renting and preparing to escape our current McMansion rental for something more comfortable that will take us through 2009/2010 if need be. Home prices here in Marin aren't budging much, and foreclosures aren't helping much yet. I follow PropertyShark and ForeclosureRadar pretty closely, but anything halfway decent gets snapped up by some realtor-investor somewhere and relisted at a bloated market price.

I spent a few weeks wrestling with realtors on Zillow's forums mistakenly thinking that would serve as some form of free anger therapy. Instead it just proved to me that we're doomed. The level of ignorance among the realtor-set demonstrated there is astounding. More distressing is the willingness of "normal" people to listen to them over folks like those who read and post here. I get a headache just thinking about some of the tripe that passes over there...

I'm planning to relaunch my blog in coming weeks, but it will probably be taking on more of a software industry focus and less of a general economic rantings vibe. I'm hoping to unload the remaining realtors and second life cultists who thrive off of sending me monthly hate mail...

...and most importantly, happy new year to everyone!

Patrick, HARM, et al.:

One of these days you should start a thread on anecdotes of crazy debt-to-income DTI levels. I have a couple of odd stories for you. It would be interesting to see who knows the story of the highest DTI ratio.

Randy H,

Happy New Year to you as well! Can we still read your blog by going to Capitalism 2.0?

StuckInBA Says:

RE cycles are so much slower. Anyone who wanted to sell had all the time in the world to do it. To me this was nothing but slow. It has taken almost FOREVER for borrowers, lenders, policy makers and everyone involved to come to their senses. And they are still trying hard to avoid coming to their senses.

I think malcom said it well. We all knew what was coming but a lot of folks looked other way. How else can we explain big financial institutions holding the bag.

@Randy H,

Good to hear from you, and thanks for the update from up there. I'm not really surprised - I've come to the conclusion that to even want to be a Realtor, you not only need to possess utter obliviousness to surrounding economic realities but more importantly an eternally optimistic outlook. These guys are never going to sell homes as curmudgeons and wet blankets.

It's like they're the grasshoppers and we're the ants, only in the end, the government bails out the grasshoppers and steals from the ants' winter stores.

wow CFC @ 6.60

Survival for Those in Foreclosure

http://www.theseuncertaintimes.blogspot.com/

Wow sa, that's amazing. That's about as low as Accredited Home Lenders got when I was shorting them. I wonder if they will survive.

I still do get a laugh out of imagining realtors accepting skibum as one of their professional peers.

Hi DinOR, that is interesting about Palm Springs. Personally I could never live there, I like to visit it every now and then but I guess there are enough people who want to be there that it has stickier prices. That is a tough place to get a reasonably priced hotel room during any kind of event.

beignet,

That article sounded like a "how to" book for predatory borrowers about gaming the system for a few months, all justified by FBs claiming victim status from an evil lender.

There is a similar article in the Patrick Housing Crash News "Dumping Your House?" California Rosenthal Fair Debt Collection Practices Act which protects consumers from creditor harassment when they are represented by an attorney. If a lender contacts you after you tell them you are represented by an attorney, that you refuse to pay, and not to call you ever again, then they must stop or they are liable for statutory damages of up to $1,000 per act.

Gives it the feel of the Ambulance Chaser ads you see on TV.

Great to hear from you, Randy! Kudos for trying to break through the Gold Wall of Propaganda. The ignorance of basic economics and real estate routinely demonstrated by so-called "experts" could fill the Library of Congress, with enough left over for the Grand Canyon.

I recall trying the same on a few Realtor blogs and having my posts deleted almost immediately. No profanity, no vulgarity, not even a snide "told ya so" tone --just facts, logic and sources. And yes, the public *still* trusts used house salesmen as though they were impartial experts and fiduciaries operating in their best interests. Some are slowly learning otherwise. The rest will never learn and get sheared again on the next up-cycle.

That’s about as low as Accredited Home Lenders got when I was shorting them. I wonder if they will survive.

But Orange Man said during last results that they will be profitable in the coming quarter. You mean you don't trust him ?

Orange man eventually might be fitted for an orange jumpsuit, what with all the "re-created" letters never actually sent to borrowers and all. He'll be in (BK) court well before that day, though, given their recent stock performance.