patrick.net

Peter P :

Without knowing any hard information, the cynic in me says - look at the lis of his campaign donors. You may find the answer behind all this eco-friendly taxi initiatives.

StuckInBA,

Amen. I need to hear someone say "we're putting an end to this Tom Foolery once and for all" before I can get comfortable with any kind of a recovery path.

Speaking of Tom:

seekingalpha.com/article/67197-foreclosure-proof-homeowners?source=feed

Barry Ritholtz calls 'em as he sees 'em.

And now an even more complicated scheme will save us ?

I am not expert enough to decide that issue. It just seems a reasonable way forward. At least I haven't heard any other "solution" which seems more reasonable. No magic - just a way to mitigate losses or at least spread them out over time so they don't become a calamity. I think everyone agrees houses will *eventually* appreciate again, particularly if the measure of that appreciation is the new value (after the writedown). If that has some value, maybe you can sell it today as a security? *If* you can find buyers, then you book less losses today and we can all move on with our lives. Maybe?

Besides, I thought we got to this point not because of the securitization per se, but because loan standards went to hell (for a variety of reasons).

Oops! Long story short, a SoFL developer friend of Barry's sells personal res. in 2005 and prepares for storm. Rents for over 2 years and notices every house (3 mil. +) he and his wife look at have "owners" that haven't made a payment since they moved in back in '05!

There's such a backlog of FC's in Dade Co. these squatters continue to live payment free! I guess renting really IS just throwing your money away! :)

Besides, I thought we got to this point not because of the securitization per se, but because loan standards went to hell (for a variety of reasons).

Without securitization, could loan standards have gone to hell?

I guess renting really IS just throwing your money away!

I guess so.

Since life is a zero-sum game, success hinges on the ability to privatize gains and socialize losses.

I don't know if people here read Patrick's links every day. Some today, 2/5/08 are as frightening as I have ever read.

Sometimes after building a particularly negative and massive economic meltdown case I run it through a reality checker of serial poababilites - or if I am really lazy I justtally up my own list of whos whos on a pro-con.

More and more very crdible sources are dramatically turning to the massive economic meltdown mode. The TAF, possible Fed margin calls (which happened and MASSIVELY exxacerbated the Great Depression), bank insolvency, the dollar destruction, the unwillingness of SWF to stem the tide of sentiment. . . It is all adding up.

To my mind, the clear signal the Fed sent out to the world's Central Banks was this, "Lower yuor rates with us or the crises of confidence will push the needed US receission in a quicker and deeper massive recession" And unlike the US, which has previously bailed out the Aisan Crises, the South American Crises, the Russain Crises, Long Term Capital Management, etc, the wolrd is saying, "No help for you." I don't think they get just how hard they will be hit by a large US recession until the damage is done.

If we do not see some help (formerly and temporarily in form of SWF) we are going to get some of the scariest activity since the Great Depression.

In additional to simple trade collapse, job destruction is at hand. It is clear Muni's cannot raise funds. 20%? Eegads.

If I could only watch one peice of data at this point, I would watch the ATF. It signals monetary destruction and the resultant de-leveraging across all asset classes will be world-rattling.

I would pay good money to hear a point/counter-point on the end-game of our current monetary deflatin, because the only one I envision has only the Great Depression as a precendent.

There was this guy, CrAzY guy in the 80's called Tom Vu that advocated not paying your rent for 6 mos. while the eviction process runs it's course to get the seed money to start a business.

Just think what Tom could've become in this fraud-fest?

Without securitization, could loan standards have gone to hell?

Absolutely agree. Of course there are always many reasons, but passing risk to others, who in turn slice-n-mix-n-package it and pass it on to "other others" must take the real blame in mis-pricing of risk.

The thing is all these proposals are coming in without complete analysis. Mish pointed out what would happen if lenders start agreeing to principal reduction. People will deliberately fall behind in payments to qualify for it.

This scheme would simply make people be creative about realizing any gains that might come. They will sell the house and car together. The house will sell for a loss and the car will be "sold" for 100K. Whatever. The point is people will come up with creative schemes to not pay the gains to the banks and keep it all for themselves.

We need to understand that this is about money. Every single person tries to maximize his/her profit. And even an honest person will explore all legal loopholes. Hence the saying. The road to hell is paved with good intentions.

The road to hell is paved with good intentions.

Well said.

In the world of unintended consequences, good intentions are not enough for the "greater good."

Anybody catch the PBS Newshour story on inflation in the US?
http://www.pbs.org/newshour/bb/business/jan-june08/dollarsworth_03-04.html
It was a eye-opener on many levels -- I mean, did you know that there are still companies making jeans in Amerika? They would be doing even better in the export market except for the fact that they also get hit by inflation as they source all their raw materials (cloth, zippers, etc) from outside the US. But still, who would have guessed?!
They also noted that container ships going back to Asia are now fuller than in the past. Apparently the export market for used paper is booming -- and US recycled paper is so much cheaper than that from European and other markets. I know, everyone let out a collective sigh... our economy is being propped up by those blue recycling bins in your office. Everybody do your part and print out this blog so that you can read it offline.
DWARD LEAMER, Director, UCLA Anderson Forecast: We're living beyond our means. We've got to tighten the belt. That means less spending on foreign products, fewer imports. And we're experiencing that in the last year, as a matter of fact. We're not as wealthy as we thought we were, which requires some significant belt-tightening and some planning about our futures.
PAUL SOLMAN: That's what the weak dollar is, says Leamer, the embodiment of a new, lower U.S. standard of living, at least for the time being, while the rest of the world splurges for a change.

Even more scary news:
www.nytimes.com/2008/03/05/dining/05glute.html

MSG may not be the bogeyman we thought, but food labeling laws certainly dance around it. Apparently "hydrolyzed soy protein" is roughly the same as MSG so people use it to circumvent sauce label disclosure. My bottle of Otafuku "Yakisoba" sauce says in a red box on the front "No added MSG" but the ingredients on the back includes hydrolyzed soy protein.

I dislike processed food and additives.

lower U.S. standard of living

Does it mean no iPods? :(

Does it mean no iPods?

No, only 3 iPods per person. So chances are your iPod will not match your purse color. So you will buy less purses. That means less revenue for purse industry and the cascading effect will slow down the economy.

"Spices and Herbs" on the label of your salad dressing bottle usually means: preservatives.

That's why I make my own salad dressing.

I am not a big fan of salads, except warm seafood salad or anything with beets in it.

I hate lettuce, especially raw. I love cooked escarole.

"your iPod will not match your purse" LOL!

Wouldn't it be neat-o to find that all of the ill-gotten/fraudulent gains from the housing boom were all locked away in a huge vault somewhere and all we had to do to make everything whole again was to dig it up and give it back to it's rightful owners?

The vault (unlike noted treasures of the past) would simply be marked "Stuff" on the entry's massive doors.

As in "what did you buy with all the equity you took out of your home? Oh... "stuff".

When our intrepid explorers unveil it the "aroma" of a MILLION lap dances will swarm over you like a warm breeze! 10 million chrome Fatboy Harleys. A billion linear feet of hardwood flooring only surpassed by a Trillion un-scratched lotto tickets! All in mint condition.

All is well.

RE: salad dressing

How about citrus olive oil emulsion with clam juice?

How about a Sales Tax on used Harleys? Just coordinate with all 50 DMV's and every time a 2001 or newer Harley changes ownership, HALF of the proceeds go to the Housing Boom Bail-Out SuperFund!?

Monitor C/L and Ebay for MEW toys and collect up front. Sorry, homedebtors have abused the honor system so now we need to see cash on the barrel head.

Oh, you paid "cash" for your Harley? Pffftt. Yeah right.

There are some pretty good used LS430 deals out there on CL!

Without securitization, could loan standards have gone to hell?

That's a great question to which I don't have an answer. But maybe if the regulators actually paid attention, loan practices might have remained sane, securitization or not. Of course if we accept that sec. *was* the cause, then it would've led to this disaster sooner or later. Instead of doing so via housing market it may have done so via who knows which market. I would argue however that if I could pick my personal "this is the worse way to blow up the world's financial system", doing so via sec. of recklessly made mortgages would be my pick. I think.

But maybe if the regulators actually paid attention, loan practices might have remained sane, securitization or not.

This is why regulations are best left to Free Market.

10 million chrome Fatboy Harleys. A billion linear feet of hardwood flooring only surpassed by a Trillion un-scratched lotto tickets! All in mint condition.

hey you forgot the granite countertops! and the stainless stell appliances!

DinOR :

Since they are making the Indiana Jones movies again, you can submit the idea for the next movie. I might call it "Indiana Jones and the National Treasure". It would have been appropriate but it would be an insult to Indiana Jones movies.

This is why regulations are best left to Free Market.
I would rather trust a firing squad for those in the C-suite or on the board, who should've known better but opted to continue to "dance". Is that too Chinese? :-)

Free Market "fails" because we fail it by installing moral hazards.

Free Market “fails” because we fail it by installing moral hazards.

You might as well say that it fails because we live in the real world. I mean, has there ever been a free market in the sense that you mean it? It's a bit like saying "let's fight crime not by incarcerating criminals, but by allowing individual self-defense and waiting for everyone to become 'enlightened'"

by allowing individual self-defense

I don't know. Places with high crime rates tend to have a "special" interpretation of the 2nd Amendment.

O.k?

"Indiana Jones and the Temple of... Stuff"

"National Embarrassment"

"Indiana Jones and the Last MEW-sade"

?

DinOR, what did you eat for lunch? You are super funny today. :)

Well that may be changing depending on the holding in the DC v. Heller case.....

Hey my brother actually paid cash for his Fatboy Harley. He's a naer-do-well pauper by choice (career in print journalism) who got his part of my dad's estate and has been going around blowing it on toys. Since he's 60 years old and has no other financial reserves, I view this as the height of irresponsibility.

He told me he bought a new Fatboy off the dealer's floor since it was an "investment, that never goes down in value". Since when does Lawrence Yun work for HD?

So a Fatboy is the wheeled equivalent of pergraniteel?

Maybe DinOR is exhibiting an MSG reaction.

DennisN,

I would have had more respect for your brother had he taken out a car loan on his Harley.

sorry, I am having MSG reaction, motorcycle loan.

Well, DC v. Heller is going to be the one of the most interesting cases this year.

Actually at $20K+, a Fatboy requires a "car-sized" loan.

The oral arguments in Heller are scheduled for 10 AM on March 18th, and the USSC has announced they'll post the audio later in the day. See www.supremecourtus.gov/oral_arguments/availabilityoforalargumenttranscripts.pdf for how to access audio and transcripts.