patrick.net

http://www.youtube.com/watch?v=yqMjMPlXzdA&feature=related

Check this out. I will not surrender any of my Bill of Rights to a police officer. Avoid them and maybe nothing happens. If you can't avoid them, be prepared to use force to defend your rights. Just hope all their other cop buddies are too busy trying to keep the peace else where.

Hey TOB:
why don't you take your convulated ideas with idiotic conclusions with you back to europe. Take all your brothers who created all this finacial mess back to europe too.

You are no better than the illegal immigrants coming from south of border, its just that you came "little early".

we don't want your stupid capitalism

R u demented. Do I need to loan my brain cells to you, to make you understand that i am not an immigrant.
I am a proud native and have very "long" history here.
I am sorry to call you european.I should have qualified it like
"Born here European !"
Can you please ask your "born here european friends" in Newyork and washington who created this financial mess to join you on your long awaited journey back to forgotted motherland Europe.
I am sure you are from germany, I can bet on it.

Demented TOB says : I am not going to debate the native because i am a moron and cannot debate him so i am going to just ASSUME he is chindian so that its to debate him. BTW i am related to hitler, i just asked my grandma
I love my "born here european friends" who created the biggest financial mess in US history and scammed every hardworking american.

..and i am guessing you are Alan greenspan. Com'on dude, give me a break !
OK ..everybody, lets continue our discussion on the main topic.
TOB is now playing Peek-a-boo , just ignore him.
He dreaming of wierd immigrant guys now.Looks like he had some trauma at the hands of some immigrants. Do we have a Guess game running on this blog now.Hey TOB , be a man and debate like a man...don't be sissy and force yourself to believe than i am an immigrant.I don't want to continue this debate with a sissy.
Bye ( i hope you go back to germany soon )

The action surrounding LEH and MER seems pretty heavy. What are people's guesses on the impact to the mortgage market?

I suspect credit availability will shrink even more, causing corresponding decreases in the buyer pool size. The sensationalism over FNM, FRE, LEH, and MER is deafening, and it seems likely WaMu, AIG and Wachovia will join the fray before the year is out. That would cause potential buyers (and lenders) to pull in their horns, get more cautious on buy decisions, slowing originations even further.

At this point, only one hell of a stick save from all the major central banks would smooth over this sticky wicket. I don't count that out yet; it looks like Paulson is hoarding his bullets and trying to stall for time, but I think they will start feeling like they are pushing on a string soon. Then this mess starts to get really interesting.

Apostasy,
It was clear that when the US Governement took Fannie and Freddie into conservatoship that they were going to allow the Lehman's, Merril's, Goldman's, and Morgan Stanelys die. If they do not get suitors they will all eventually go into Cahpter 11 (as Lehman has) which means stiffing the stock holders AND the bond holders. I think this means that non-performing bundles of mortgages now go ALL THE WAY BACK from investors to - you guessed it - the Mae's. This means the tax payer. So, rather than proping up each and every player ala Bear one at a time, the governement has said quite simply, "go away: and is just playing the last possible backstop.
Credit availability, as you said, is pertty much gone. Now we will se the other shoes drop: Commercial real estate, businesses with marginal business models that needed cheap cash, higly leveraged buy-outs. We will see the government realise AIG needs to go. There will be a 50-50 shot that the American Auto bailout (to the tune of $25 billion) will NOT occur. Hedge funds will die and not be allowed to come back as regulation will prevent their market manipulations.

Bets are:
a sharper global contraction (say -3 to -5%),
high US unemployment (over 8%),
real estate will revise to lower as securitzation is gone - no more borrow short and lend long. This means mortgages will increase 2 basis points, permanently. This is a 16% decline in property value.

On the bright side:
Sosciety has shifted a great many of itsbest and brightest int finance. Why work 10-12 hour days as a physician or electrical engineer for $80k=$140k when you can make 7 figures a year in finance. With 100,000 already gone from finance and at least that many more to come, society gets its engineers and doctors back. Something I prize.

In my last post I called for world-wide Central Banks to pull together. I think this will not happen. And, maybe thats okay. Just maybe we will get a better system in the place of this current one.

I think the fed is in an inflate or die situation. As long as the Saudis keep recycling their wealth into treasuries, this counterintuitive behavior in treasuries might continue. However, this cannot continue indefinitely, especially with recent very inflationary measures the fed has taken. This includes accepting equities for cash loans. Unbelievable! I thought taking mortgage debt was bad!

I wonder how big the piles of LEH are at the Fed window today? I wonder how many fed notes they are getting for one?

Possible Layoffs at eBay, Golden Parachutes for Execs
By: Ina Steiner
Sun Sept 14 2008 11:21:14

Barrons cites a Wedge Partners report that "the company's business is "deteriorating" and that the company is readying layoffs that could affect 10% of the company's 15,000 employees."

If there are layoffs, it will be interesting to compare the severance packages of "regular employees" and managers with those of eBay's top executives.

Like many corporate boards, eBay's Board of Directors put into place Golden Parachutes for its top executives. It appears from SEC filings that some top execs will receive two years' target cash compensation, defined as annual base salary plus target annual incentive bonus. That "bonus" is usually 100% of salary, so it would be like getting 4 years' worth of pay if they are laid off. (President and CEO John Donahoe's target bonus is 125% of salary.)

Donahoe and Dutta's severance packages are detailed in this SEC filing.

Here's one example of a Golden Parachute. On July 16, 2008, eBay revealed in an SEC filing that the company's Chief Financial Officer Bob Swan would receive a severance package in the event of his termination without cause:

providing a cash payment equal to two years' target cash compensation (defined as annual base salary plus target annual incentive bonus) if the termination occurs within two years of the date of the severance agreement, one and one-half years' target cash compensation if the termination occurs more than two but within three years of the date of the severance agreement, and one year's target cash compensation if the termination occurs more than three years after the date of the severance agreement.

I highly recommend this article to anyone using informal revocable trusts to "increase" the amount insured by the FDIC in a single bank.
Informal revocable trusts are commonly known as “payable on death” (POD) accounts, “in trust for” (ITF) accounts, “as trustee for” (ATF) accounts, “transfer on death” (TOD) accounts, or Totten trust accounts.
The short summary is: the account title must include commonly accepted terms such as "payable on death," "in trust for," "as trustee for" or similar language to indicate the testamentary nature of the account. These terms may be abbreviated as POD, ITF or ATF. If this doesn't appear on your bank statement -- good luck. If only I had such problems...

I remember somebody in this forum mentioned this scenerio a year back on what it would take to shake the fortress.

1) Arm resets
2) credit (mortgage) tightening
3) job losses

We had 1 and 2 but not 3. finally 3 is coming to bay area.
There is not much fat in tech market because of our recent memory of tech bust causing companies to hire conservatively.I wouldn't expect something like 2001 bust but its going to be significant.
finally, all the predictions from patrick dot net are becoming reality.
laws of economics never cease to exist, they just need some time to show up.

HP to cut 24,600 jobs as part of EDS integration
Monday September 15, 4:58 pm ET
By Jordan Robertson, AP Technology Writer

Hewlett-Packard to cut 24,600 jobs, 7.5 percent of work force, in EDS integration

SAN FRANCISCO (AP) -- Hewlett-Packard Co. said Monday it plans to cut 24,600 jobs over the next three years, about 7.5 percent of its work force, as it combines operations with Electronic Data Systems Corp., the technology-services company it recently acquired.

Most of the cuts will come from within EDS's ranks, and nearly half will hit jobs in the U.S., HP said Monday after the markets closed.

In spite of being mentally prepared for everything that's happening - it's still painful. The years after dot com boom are already feeling like a lost decade. A disastrous war, a disastrous budget and a disastrous economy.

Only if Greenspan and his worshipers hadn't thought of him as God, things could have been so different. There were so many warning signs - and all were ignored. In the end, this will be another textbook example of a bubble that could have fit into "Short History of Financial Euphoria" by John Kenneth Galbraith and written around 15 years ago.

I feel bad saying this. But maybe we as a society deserve this. When debt is considered wealth, what else can happen ? Trying to keep a positive attitude, may be we will see a return of fiscal conservatism and frugality. And hopefully our children will see a better future as a result, and if not maybe our grand-children.

I have a weird wish to see Bush play the fiddle on TV in from of Wallstreet as it Burns :)

*front

Section 8 will just have to cut their benefits. Maybe they will start handing out tents to people that can't afford housing.

http://www.youtube.com/watch?v=NN97tmw6qvY

A run for liquidity!!!

Stuck in B.A. says: I feel bad saying this. But maybe we as a society deserve this. When debt is considered wealth, what else can happen?

Don't feel bad. My very first rant on patrick.net was about the instant gratification mindset and how people were living the good life on credit. Sooner or later they have to pay the bill; that applies to our country as well. Everyone thought houses and cheap credit were a get rich quick scheme. I know lots of people who withdrew home equity to buy cars, vacations, boats and other depreciating assets.

My deep hope is that our nation comes to its senses about its own consumption, especially the needless consumption. We burn through water, energy, luxury goods, credit and entertainment at an absolutely phenomenal rate. There is a price to pay for keeping up with the Joneses, and if we're going to get our mojo back as a country, we need to pay that. Hard work, conservation, saving, building productive assets--that's what makes a nation wealthy. The entitlement attitude never dies quietly. We're probably going to see just how messy it gets when the repo guy is hauling away all the Mercedes, Audis and jet skis. Many of those second homes declared as primary residences will get carted off, too. And people who have been rolling huge balances between 0% APR cards will eventually get caught when nobody else will issue fresh plastic.

The U.S. needs to realize (again) that the only things we really deserve are the rule of law, our individual freedoms and the fruits of our own hard work.

TOB,

I value my citizenship as well. I get mad to think about how the US is diluting the value of my "share" of American stock to illegal aliens.

*sarcasm on*
Because of the crap going down and the shrinking supplies of cheap oil, I think the US should adopt a thug plan. We should use our weapons to take what we have not earned and just refuse to honor the existing debt that we have. Why not pull all of our military forces in Iraq south to the southern oil fields of iraq, Kuwait, and Saudi Arabia? Take the oil and feed our oil hunger. While we are at it, we should tkae their gold too. In return we could drop them left over food past the expiration date that we did not eat.

*sarcasm off*

I think the only way to clean up this whole mess is to get rid of the weeds and leave the healthy plants.
We should round up all the idiots who have IQ less than 100, don't even have a high school education and are a burden on our society and then send them to a remote island. We should get rid of all the "Useless born here europeans", illegals/H1bs from india/china/mexico back to where they belong.
Can you imagine a country without all these crooks who created this financial mess and all the fat asses who consume fifty times more than what they produce.

Hey TOB : Get the fu*k out of my country and go back to germany !

TOB says: as for the rest of your points, I notice that the attitude of people situated one or two notches above me is : “this recession won’t effect me! poor little amerislobs, theyre getting whats coming to them.”

I doubt that I am two economic notches above you; I am certainly not in the top 10%. I'm just a normal middle class engineer. I expect to have a house, wife, kids, a typical American car (Camry, Explorer, etc), take typical American vacations (beach, mountains, lake, camping), play fetch with my dog and maybe have a garden for relaxation. I expect to earn a decent wage, have adequate health insurance, and otherwise lead an unremarkable life.

All this bullshit about foreign cars, expensive clothes, plasma TVs, eating out five nights a week, holding season tickets to pro sports, cruises, tropical timeshares, fancy jewelry, bling and faux wealth... it's just marketing and foolishness. If you work your ass off, sure, you can have those things, but they aren't coming to you. Nobody is born deserving them. I decry the average American's obsession with living large, especially when easy credit replaces hard work.

I'm not sad that the illusion will come to an end for many people. Most folks weren't buying things to survive or better themselves. It was indulgence. Well, too much candy rots the teeth, and eventually you have to face the dentist's drill. And it's not schadenfreude, either. We can't build a stable society when the gold leaf is only a millimeter thick.

Brand wrote :
"All this bullshit about foreign cars, expensive clothes, plasma TVs, eating out five nights a week, holding season tickets to pro sports, cruises, tropical timeshares, fancy jewelry, bling and faux wealth… it’s just marketing and foolishness."

excellent point.

self regulation has limits. There is a reason cocaine is banned and not left up to citizens to control thier impulses.
Human beings are not rational like the economists dream.There has to be a limit on how much and how credit is offered to citizens.Most people can't make rational decisions. They will take more debt than they can handle.

TOB : get the Fu*k out of my country and go back to germany.

Oh Bap33, when will you learn that all the welfare, section 8, and food stamp expenses will never come close to the corporate welfare costs we are incurring?

Seriously, think about it. How many welfare queens would it take to meet the cost of our bail out of the Wall Street set who the current administration wish to make "whole"?

Your rage is misguided my friend. If you wish revenge on those who suck money from the rest of us for no good gain, then you are targeting the wrong demographic entirely.

As my father always advised (wisely), follow the money trail. We spend far more on corporate welfare than we could ever spend on the truly needy. 3 trillion or so to the yacht-owning jet-set crowd make me far me more nauseated than the piddling amount we spend to take care of those who are truly less fortunate.

Give it a rest, why don't you?

TOB, I'm with you in spirit. I don't like to sound racist or anti-immigrant. But it does bother me to know that so many come from abroad and refuse to assimilate. They're using a loop-hole, taking advantage of our doctrine to take in the poor and disenfranchised to allow them to create a new life and perverting it for their own selfish, economic ends (i.e. they maintain foreign-citizenship and regularly send funds home, all the while not learning or giving a sh*t about "America").

By the same token, H1-B visa holders, and even illegal immigrants employed under a fake social security number, are helping support our greedy Social Security and Medicare systems. Whether they love America, assimilate, learn English, or not, they are contributing to our GDP and our entitlement programs. Remember, H1-B visa holders and illegal immigrants can never apply for these benefits. They pay and get nothing.

Perhaps that offers some solace?

Okay - let me take a stand even if Patrick does not.

This is a housing forum.

Nothing productive ever comes from these rants about race and immigration. If you want to discuss those items, please go to and immigration or culteral anthropology site.

I am sick of this board being hi-jacked by these discussions.

Patrick - deleting posts is fine. I am betting (almost) no-one would mind.

Lets see we have, so far:

Roche, ebay, HP, Yahoo (previously)
Goog is at 438 from a 52 week high of 747

IT is an easy defer. So, I am going to jump in and guess Cisco is next on the job-loss parade.

We know VC funding is wayyyyy down.

We also know price destruction is collaring HELOCs meaning 'safety net' equity to get past periods of job loss are drying up.

Things are getting tough.

There is an old saying, "Don't bet against the Fed"

The problem is this: what is the Fed saying.

It bails out Bear. Then it takes the Mae's into consefvatoreship. Then it allows Lehman to go under but it seems like it will do something to prop up AIG?

Um, look. I can figure out what to do financially if the Fed intervenes.
I can figure what to do if the Fed allows the cascading failures to occur.

But interveining some times and not other times. Uhh, is this like a personal thing for Paulson from his old GS days? What the heck are they doing!?!

Duke,

Thanks for continuing to post here. I feel the same, this is not a housing blog anymore.

Patrick,

Please do something about it.

Having GS come out with the kind of results doesn't give much confidence to market. If there isn't a bailout of AIG then, we can see duke's prediction of 8500 soon. My guess is, there will be some kind of patch work which won't look exactly like a bailout.

Just wanted to chime in and say I'm interested in the housing-related posts too. Another vote for deleting off-topic posts and/or strongly discouraging them.

There is so much fucking welfare out there-just open your eyes. I know at least 20 crack-head's that don't contribute shit to this country - they are a fucking drain on society. They fucking complain that they have to leave the bar to go pick up their free grocieries from the county food pantry(they register in the morning & then have to go back to pick up their food).They all work cash jobs when they feel like it. They all knock up their whore girlfriends & then get free sec 8 housing. They just keep their clothes in the trunk of their car, so they don't technically live there. I've seen so much fucking welfare in my short lifetime. I've done remodling work in both Illinois & Wisconsin on these sec 8 apartment complexes-it's always the same. Not one mother fucker works- the place is always filthy. Always some whore w/ kids while 3 guys sit on the couch all day watching Springer. Shit one time I got freaked out so many mother fuckers came out of their apartments - I didn't know what the fuck was going on. My boss said it was government cheese day- trucks came around giving out tons of free food to able bodied 20 yr olds. Cut these mother fuckers off right the fuck now or else this country is going to continue to head right down the shitter!

I seem to recall an article a while back about the solvency of the Fed. The way Ben has been throwing money around lately. . . how low are we on that thermometer? I think the Fed had like 800b?
As many have pointed out: lowering rates has no effect since these are all solvency issues. Banks, brokerages, and even insurers chased returns, massively over leveraged, and lent money to hedge funds which were even MORE over-levereadged. As this unwinds, it seems like it may be just too much money for even the Fed to handle.
I am very glad to see ECB put in 75b, and London put in 25b. I am nervous about Ben putting in $75b as we have already poined up, what, like 500b? With more than 200b to go for the Mae's? And as securitized assets starts kicking bck - as far as the Fed.

I mean Yikes!

So - back to housing.

I have urged all to have a strong cash position. Get a very secure job. And be patient. Buying should make sense in a few years. If it does not make sense at that time to buy its becasue the tent cities and the soup lines will make it obvious that buying that dream 3/2 in Palo Alto doesnt make any sense to anyone.

TOB:Most of the mooches I personally know grew up middle class with hard working parents, so my only conclusion would be that public schools helped mold them into worthless pieces of shit...

At this point, we've already lost. They should let AIG fail with the rest of the insolvent banks and financial institutions. They never have, and will never do anything for me personally, so why should I pony up to save them.

TOB was right earlier in this thread. They could have built every family a brand new house with the money we've already spent to bail everyone out. This is fucking ridiculous.

The market is practically BEGGING to crash. Just let it. Why drain all of our bank accounts for another 2 years while everyone slowly goes broke. The real problem with their interventions is that they are fucking up the one thing that could actually save an average american at this point in time... A REAL ECONOMY.

We WILL go back to a real economy. We didn't forget how to be productive. It just didn't make sense when you could make 3 times as much shuffling paper.

Just let it happen. Let's get this over with.

It appears that it can't last much longer.

Who knows what would happen if we wipe out foreign holdings. But in light of that risk it would be prudent to get out of Iraq and re-enable our military to PROTECT our country.

It's not like the rest of the world will be doing peachy without us consuming all of their goods. We should be able to hold our own in a fight.

Look, I'm not saying it's optimal by any means. It's just starting to appear that it's going to happen regardless. Why fight it? We'll be better off accepting it and dealing with the consequences while we still have firepower to do so.

They can keep making toasters if they want, but no one is going to buy them. It has nothing to do with what I want.

Duke,

Indeed, "what is the Fed saying". It is almost like the following was taking place:

BigInvestors/WallSt realize that financial stocks are a lost cause, but try to bully the Fed into yet another rate cut by taking down the entire stock market. Fed signals that it will not bite. In a sense, the Fed calls the bluff. BigInvestors blink and back off, and engineers a "rally on the bad news"

By the way, is the "selective enhanced enforcement against naked shorting" still in place?

S*it, did you all see that RFIXX money market fund is dipping to a NAV of 0.97 as of this evening because of losses on Lehman Brothers?

This is getting very serious....

http://www.marketwatch.com/news/story/money-market-giant-freezes-redemptions/story.aspx?guid={691A8CB9-B98F-4677-87D3-1CC274AB5103}

No mention of this at the front page of www.reservefunds.com.