patrick.net

Ok... Let me have it :)

But this may also be the kick we need to get more sane prices. There's a house in my neighborhood that has been priced at $619k for months because they can't go any lower baed on what they owe. If a portion was forgiven (which I'm against btw but I'm trying to make lemonade) they could lower the price to where the house would sell. That would help reset comps around the area and we'd get some honest price discovery.

Interesting point grywlfbg thanks for the reply .
I'm also against the whole idea of it but it seems inevitable in some shape or form.
I see there's a thread "August surprise" so I guess this thread is a bit redundant but I think with all the bearishness out there in general that nominally this would be quite bullish for the markets.

We recently have the Hindenburg Omen ,Crawfords Cardinal and Prechters 3 of 3 wave down predictions in the biz news so somethings got to give. Thanks

Wildly DOWN is the only way prices can go, years of HYPE and everyone buying to flip moved prices so far from trend, that until avg, us housing is 120-130 and Cal bay area 200-300 we are not at the bottom, and with other price influences we might see lower prices then we think possible

Be careful of unintended consequences. If they forgive balances, and then let them refi on the new balance, That family with the home listed at $600k+ that grywlfbg mentions does not need to sell, as the owner would no longer be in distress or danger of default, since they mortgage would now be manageable.

All that will be left on the market (or the vast majority thereof) would be foreclosures and estate sales - at least initially.

I am in the big picture looking to very expensive oil, and food, HIGHER TAXES, healthcare costs, leaves NO money left for housing, say by 2015 250 PBL oil, I mean in a Global recession we have 80 oil? Holy cow, it would have been 20 five years ago during a recession, food is going parabolic due to more people eating better (meat) globally, USA is no longer going to be able to consume the worlds resources for so cheap that allowed us to grow at the rate we did, holy cow, people don't apply yesterdays metrics to tomorrows costs, HOUSING has to come down, in Ca. it is INSANE and in 10 years this post will look either laughable or maybe even optimistic but it has merit.

Actually, the big banks don't want to do this and likely cannot afford it. They have swaps and derivatives to worry about.

EastCoastBubbleBoy says

Be careful of unintended consequences. If they forgive balances, and then let them refi on the new balance, That family with the home listed at $600k+ that grywlfbg mentions does not need to sell, as the owner would no longer be in distress or danger of default, since they mortgage would now be manageable.
All that will be left on the market (or the vast majority thereof) would be foreclosures and estate sales - at least initially.

I disagree. People sell houses all the time. Old people downsize, Young people upsize, people get new jobs in other towns, etc, etc. With the market seized up the way it is now people lose the flexibility to take advantage of mobility. Sure, people will no longer be pushed into selling due to an unaffordable mortgage but there's plenty of activity in a healthy, liquid market.

Again, not that I'm advocating bailing these people out. I'd prefer they foreclose and put the house up for sale to the highest bidder - none of this shadow inventory crap. But of course that won't happen in Capitalist America. It would be a crime to let markets actually work.

After mortgage is forgiven, they cannot sell/refinance the home. They need to remain committed to their original loan. If they were allowed to sell/refinance with another lender, then the banks have no incentives. They may as well stick to short selling. They are not trying to release you from debt. They are just trying to squeeze everything possible out of them. It's like someone running a marathon. They give up because they have no energy to run anymore. But someone is in the back shoving you, and pushing you, making sure you do not stop. That is what forgiving some of the balance means. They'll look at all your finances, and take everything you can pay, leaving no money for enjoyment in life.

The way you wrote it sounds sweet but I don't think it's right. The securitized mortgages that were sold Off-Shore went mainly to Europe; Treasury debt went to China.
When it comes time to roll over treasury debt, they will have a gun to our heads.
Meanwhile, friendlier trading partners in Europe suffering a contagion that some banks in Nothern Europe are too stressed to deal with because they're the ones who bought the dirty bathwater.
Doesn't sound sweet to me.

Why does everyone think global economic superiority is a zero sum game? I heard a story on NPR yesterday where they estimate that in 20 years China will surpass the US as the #1 economy in the world. I say "bring it on". England was the #1 economy before us, and they seem to be doing OK still. France before that, and Spain before that. Just because you're not the #1 economy doesn't mean your country is going to turn into a 3rd world hell hole overnight.

I actually think it would be good to have China have a great economy because it means that there will be more Chinese people that want to buy products from the US. Higher wages over there means it's less cost effective to outsource jobs, and maybe they will start to insource jobs instead. We've already seen that start to happen with US companies choosing to move jobs to low wage states like Georgia, Alabama, and Mississippi, instead of overseas.

Tell us what we can make, that will they will not copy, make at a 100th of the cost. The sheer number of the population, will make them the biggest economy. They will also be in comp. for resources, they also so far have shown to be a bit better at gaming the system, as they were out stock piling raw materials when the prices were at lows and when they did not need the raw martial (but they knew they would or could sell it at big gains) I am NOT a FAN of their government BUT we must realize that due to their NO RULES ,methods that will HURT us... in many many ways,. they are NOT our friends. They will cost us money to be

Here's the BEST answer to MARKET gonna go wild, NOT (wildly down maybe more likely)
http://www.businessinsider.com/15-signs-that-the-us-housing-market-is-headed-for-complete-and-total-collapse-2010-8?source=patrick.net#home-sales-at-depressing-lows-1

Once the Obama stops printing money he cant back and Pelosi is out, things will start to correct themselves. It will take awhile dig out of this mess he keeps creating. True, some things started before he came to office, but he has only compounded the issues. This socialist attitude he has must go out the door in November. Oust all the pension backer bailout phoneys, stimulous creators, etc.

thunderlips11 says

After many years of dominance, both the United States and the UK are showing signs of decline

Are you kidding? US and UK can never decline. We can go to the extent of extorting Al Qaeda to keep our economy up :)

[quote]"When they start letting folks refinance on the forgiven balance on their mortgages.The markets gonna go wild . I think it’s coming"[/quote]

Yeah, I don't think that's coming. Here's why... the banks never have to deal with the general populace directly when it comes to BIG figures. Out go the lobbyists, chat to the feds, (who ALREADY have our money) tax payer monies go out to the banks who get (basically interest free money) until they are able to recoup/start taking a profit again. No need to involve current homeowners, when you have access to everyones money (including mine, and I don't even own a home). The best part in this little, song and dance is, it has a nice deflection tangent. Most americans don't really get the concept of tax payer money (I know some of it must be mine, but surely it's only pennies), but if the bank calls your home and deals with you direct... well fuck me... homeowners get restless and run around with pitch forks and get nasty.

I think it's obscene that GM (who were so fried they were gonna go under) are bouncing back LESS THAN 2 YEARS after the big wigs at GM were jetting to DC, hat in hand. Wow! Really? Just 2 years to get back to profit taking? In a recession? Who is buying a new car right now... honestly? What? You can't turn a profit in the biggest credit/equity glut ever recorded, but in a recession, with über tight credit... suddenly you're floating on your own? Notice I didn't even mention how destroyed many potential car buyers credit has become, think how that must play a part.

Last time I checked, it took more than 2 years to bring a new production design to market. So what's changed? (Rhetorical)