patrick.net

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.

try this link for justme

http://tinyurl.com/6jv8zv

WOW - Breaking the buck will have some consequences!

http://tinyurl.com/6jv8zv

On top of that - frozen funds!

Thanks, Paul.

http://www.cranedata.us/archives/news/2008/9/

"The Dow Jones story also says, "[​S]​everal money funds reported holdings in Lehman paper in their most recent filings.... One example is the Primary Fund managed by New York money manager The Reserve. As of May 31, the $​64.​85 billion Primary Fund had some $​785 million in Lehman commercial paper and medium-​term notes." It quotes Crane, "​Their holding of Lehman is not large enough to threaten the NAV," and adds, "`​The Reserve has historically protected the NAV of its money funds as needed."

OOOOOOPS!

So it boils down to whether "The Reserve" has enough private reserves to prop up the Lehman losses and get back to NAV of 1.00. But depositors may still be frightened and create a run on the fund, and this may snowball. very bad.

AIG is being bailed out

http://www.cnbc.com/id/26747020

I was hoping the FED would let them fail too.

TOB wrote: "sure is funny how the banking industry was all about deregulation until the shit hits the fan. funny that"

where are all the rebuplican's who want a self-regulating free market.
what a joke !
Even a casino needs some regulation :-)

TOB,

I like the decimal in front of the trillion dollar number. When you say it like that, it does not sound too bad :)

It only amounts to about $3000 per an American citizen!

Well I see on the TV that it is 85 billion and not 850 billion :) It is not quite as bad as I first thought.

I am now considering taking as much money as I can out of my bank account. I am not scared of losing it due to a bank failure. I am more scared that it will buy less and less stuff.

Today I bought some M193 Ball to replace what I used yesterday. I was shocked to see it went from $6.00 per box to $9.00 per box in just 3 months! I am not stretched yet, but it won't take much more before my standard of living gets hit in a noticable way.

*note that is just an example of inflation that I have seen and not an endorcement of buying firearms out of fear*

Because when you lose money, you just take tax dollars!

..and threaten public with financial collapse if they don't want to part with thier money. Wow !
Somebody needs to publish a book :
" 100 ways top 1% have screwed the rest "

thenuttyneutron says:

I am now considering taking as much money as I can out of my bank account. I am not scared of losing it due to a bank failure. I am more scared that it will buy less and less stuff.

Aren't you saving for a down payment on a house? In that case, your money in the bank is becoming worth more.

Yes I am saving for a home downpayment. That is in an Emigrantdirect acount and amounts to about 20k. I am talking about my fun money account that only has about $1k in it. This is the money I take from my cut of my weekly paycheck and use it for anything I want. Toys, eating with college buddies at reteraunts etc. It is money I can burn without the wife getting mad. She gets the same deal as me with her check.

This way we can spend money on what we think is cool but the other thinks is a waste and have no fights over it.

I burned what I thought was $80 of M193 ball yesterday. Today I find that it is now 50% more and cost me $118.00! I use this amount after 2 trips to the range and restock what I use every other month or so. Why not take all my fun money out and buy the toy accesories now while it is cheaper? I hav money burning in my barrel :)

* I have money burning through a hole in my barrel :)

Nut,

I see. It is good to have a little mad money set aside as you save.

When you wrote "taking as much money as I can out of my bank account," I thought you were getting absorbed into the "inflation" dark side and were looking to blow savings on a car, big screen, etc., while your money "still had value."

Seriously Patrick,

What is going on with the non-housing/non economic crap on this blog? Why are you allowing your blog to be hijacked? Even if you agree with the sentiment of our "resident race baiters," surely this is not the appropriate forum for this debate.

I am truly grateful for the information Patrick.net provides. Please Patrick, keep this blog about Housing.

Thank you.

I no longer can bear to watch.

Fed called another bluff. My first reaction to the 'bailout' of AIG was disappointment. I mean, hey, it was their stupid strategy to jump into buying MBSs. Then AIG and Greenberg stated it is not a solvency issue but rather a liquidity issue for AIG.
So Uncle Sam gives them $85 billion and calls their bluff. "Prove its liquidity"

***What is nice is this***

The 85b is an 11% loan with a 2 year term. And it replaces their executives.

This gives the new AIG team 2 years to sell stuff to meet the $85b loan.

I think it very likely that the MBSs it holds will still be impaired in Sep of 2010 so betting on those things coming back anywhere close to par is NOT going to happen. This means we get to see a whole bunch of these weird peripheral busnisses spun out (like the air-craft leasing business) but over a 2 year time frame so that they do not have to be fire-saled to vulture funds.

I rate this as an excellent chance the taxpayer will make 11% a year for 2 years on 85b.

What is ominous is this: I think 11% is the coming prevailing rate. Fix that number in your head. I think we are seeing the Fed capitulate on the idea of full employment and stable prices. Ben has seemingly lowered his sites from "No Depression No Matter What" to "The previous system had too much leverage. It will unwind. I'll try to make this unwinding as gentle as I can - but its going to be bad"

And THAT I can live with. Finally, a little sanity.

So, as for housing. Higher future rates cause price destruction. But it is a fundamental maxim of economics that it is better to buy a asset cheaply with expensive money than to buy a assett dearly with cheap money. Strengthen your cash positions and look around in 2 years.

Heh - looks like I was right.

Fed did run out of money.

Treasury now sending money to Fed directly. $50b.

Wow!

A trillion here, a trillion there. Soon you are talking about real money!

I don't know where HARM, RandyH, DinOR, PeterP, LiLLL, Skibum, Jimbo, SFWoman, et.al are......

But they've gotta be "enjoying" (for lack of a better word) these past few days.

When I first found this site I though they were all WRONG about the housing situation...

They were not.

Man, what a show.

Duke, yeah, the Fed called the rate cut bluff and now called the AIG bluff.

I'll answer my own question about naked short selling: New rules are enacted today, with penalties and blocking further short selling (on a per issue basis?) by any broker failing to deliver.

http://www.reuters.com/article/newsOne/idUSN1752748520080917

I am curious. Now that the Financ sector has sucked ALL of the money out of the FEd. . .what about other people hoping for handouts? Notably, the auto industry. Even after all the recent lay-offs, they are still a major employer in the US. Can/will the governmen go dump 25b on them?

http://money.cnn.com/2008/09/17/news/economy/treasury_fed.ap/index.htm?postversion=2008091711

The FED is now having to raise money by having the Treasury sell bonds for them! I wonder if the central bank can finance a deficit like the gubermint can. I wonder if the other central banks will step in to save the Federal Reserve if they ran out of cash because of the credit crunch.

Neutron,

This makes it sound like the Treasury is having to guarantee the Federal Reserve's debt. Those are two big dominoes to have lined up.

The 85b is an 11% loan with a 2 year term. And it replaces their executives.

Well Duke, I hope those execs are not removed "without cause," else some like chief exec Robert B. Willumstad may get over $8 million severence pay.

I also hope you are right about the 11%. Maybe yesterday's 3% increase in the LIBOR overnight rate is part of a trend.

Normally the central banks could move in concert to provide funds to the US by buying treasuries - even with their below inflation yields.
Strangely enough, so many are moving into treasuries now (as a flight from the market) that the US is having no problem selling - the market to buy these things is not making them cost more.
As people flee the market, companies capitalization goes down - which makes them attractive for people to buy who have actual money. The trick will be to fogure out what price point will attract foreign capital to buy distressed American businesses. My guess has been that we will see significant market pruchasing starting at Dow 8500. I am further guessing we will see the market stabalize below that. Say, something closer to 7,000.
I had always wondered what companies would do with their 'war chests'. For a long time I thought it would be smart to buy up cheap assets and weaker competition. With their hamerrng of company cpaitalization I think we will see a number of companies use their cash to take themselves private. Its that or watch Singapore own John Deere.

In the San Jose region, 38 percent of homeowners who purchased their property in 2005 owe more than what the properties are now worth; 46 percent of those who bought their homes in 2006 have negative equity and about 32 percent of those who acquired real estate last year are under water, according to Zillow.