Forcibly Reducing Mortgage Rates Lower?
According to WaPo,
Paulson is looking into this. Seems okay on the surface, but really would only seem to help people that can re-fi, but Treasury talks about it in terms of trying to spur new buying. But,
Big Picture hits the nail on the head on a core issue we've had for some time in housing (something that people that have owned homes for 20+ years cannot seem to understand):
There are two problems with Housing:
- Ultra low rates and an abdication of lending standards put 3 - 4 million people in homes they could not afford. The real costs of home ownership have been forcing many of these people to move back into more affordable quarters (i.e., rentals).
- By just about every measure, home prices remain significantly elevated over historic metrics.And given the chain of sales that accompanies any existing home sale — the starter home/move up home/bigger house/even nice home/downsize retiree — anything that keeps home prices out of reach of the starter and move up buyers damages the entire chain fo purchasers.
.
Emphasis mine. New homeowners have been priced out of the first time home market under older lending [20% down]/ saving / spending [no more than 25-33% of income on mortgage] habits, and have had to adapt. Moving to the ex-urbs, lots of PMIs, >50% of income spent on mortgage are all habits that most of my friends and contemporaries have had to choose to buy into their first home. This mortgage / credit crisis disproportionately hits the 1st time homeowners that have bought in the past 5 or so years. Not that buying your 1st home in say 1999 was a piece of cake either.
Oh, and bonddad says things suck right now. Indeed.
Labels: Bonddad, economy, housing, The Big Picture, WaPo
Just a Thursday...
Clearing out some tabs I've had open in Firefox for a few days now:
"We will be told that the Federal Reserve and the Treasury have finally gotten it right. The scope and size of the proposed program will arrest the decline in home prices, restore stability to the financial markets, enable banks to get back to the business of lending, and restore the confidence of the American consumer.
While the program certainly has each of these points as a goal, the amount of time to achieve each goal is unknowable, but an important factor. Moses was told he would lead the Jews to the Promised Land. He didn’t know it would take 40 years. And, in all due respect to Bernanke and Paulsen, Moses was working with God. They are working with Congress."
-Jim Welsh, Welsh Money Management
Labels: 2008 Elections, Angry Bear, Bonddad, dailykos.com, economy, John McCain, macroeconomics, Spending, The Big Picture
Some money quotes, tho I do not understand the rules they're talking about here (bolding mine):
As we learn this morning via Julie Satow of the NY Sun, special exemptions from the SEC are in large part responsible for the huge build up in financial sector leverage over the past 4 years -- as well as the massive current unwind
Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms.
You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.
Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.
Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.
As Mr. Pickard points out that "The proof is in the pudding — three of the five broker-dealers have blown up."
Labels: 2008 Elections, economy, Homeland Security, macroeconomics, NY Sun, The Big Picture, Wall Street
Copied over from TBP, since there's no known link:
Pricing in a Bush Presidency?
New York Times, July 9th 2000
(insert link)
"Stocks sold off again today as the markets is pricing in the likely impact of a George W. Bush presidency.
Since Bush has emerged as the polling leader in March, stocks have been hit hard. The NASDAQ has fallen 37%, while the S&P500 and the Dow are both down 20%, placing equities squarely in bear market territory.
Various Wall Street strategists have expressed concern regarding how a new set of Bush monetary and overseas policies could impact equities.
"My biggest concern is that the promised Bush tax cuts will be in extremely expensive. That would create huge deficits and be extremely inflationary" said Peter Leslie, a trader on the CBOT floor." Governor Bush has promised to reduce captial gains and dividend taxes, and lower the marginal rates on the nation's biggest earners. He has not explained how these tax cuts will be funded.
Maverick Capital fund manager Henry Carlyle is more concerned with government spending than Tax cuts. The Dallas resident stated "I have followed Governor Bush in Texas, and fiscal discipline is not his strong suit." Cabot expects a big increase in federal spending and budget deficits that will have ramifications for both inflation and an interest rates.
Vanguard chief John Bogle is more concerned with a lax regulatory environment: "A return to the sort of crony capitalism that we've seen in the past would wreak havoc with investor confidence. We need a strong SEC to make sure companies are transparent, and report their accounting fully and fairly. We should not throw the individual investor to a wild and woolly free market that is totally lacking in supervision." The Vanguard chief has long been a proponent of a strong regulatory environment for the protection of individual investors. "I do not see that sort of regime under a President Bush."
Robert Rubin, the Treasury Secretary under Presdient Clinton who retired last year to join the Board of Citigroup, focused on the Federal Reserve. "The next president needs to make sure that the Federal Reserve fulfills its obligations as bank supervisor. I am concerned that Governor Bush, as President, would move away from strict regulation of markets for ideological reasons." Rubin, a Democrat, warned of negative repercussions for the housing and financial sectors. "[Since joining Citigroup], I have been looking into the issue of derivatives. This is another area that requires close scrutiny from both the Treasury Department and the Federal Reserve. I see Bush lacking expertise in this crucial area."
Goldman Sachs chief investment strategist Robert Hormat, was even blunter in his assessment of a Bush Presidency: "I am looking for a market crash as a reaction to the election of George W. Bush. Investors should brace themselves for losses of 50% or more -- and even worse in the Tech sector -- should he be elected."
Legendary legendary oil trader T. Boone Pickens is more optimistic. "We should expect several military conflicts in the Middle East under President Bush, and while this may not be great for the economy it will be terrific for my energy holdings." If Bush gets elected, Pickens plans on opening a new oil based hedge fund, and is forecasting 100% increase in the price of oil to $40. "I'm an Oil, George is an Oil man, and his VP Dick Cheney is an Oil man. I expect energy returns to significantly outperform equity markets over the next eight years" he said."
Here's another
blast from the past about how Oil&Gas spent a lot on getting W elected. Apparently, it's good for profits, dont you think? Not even a million dollars invested in W, and ExxonMobil does HOW many billions in profits PER MONTH??
Labels: 2000 Elections, Cheney, dubya, economy, energy policy, NY Times, The Big Picture
Friday Quick Hits
trying to get SOMETHING done today, but had to post these things:
* There's been a lot of talk amongst the talking class about why the polling on the dem side in NH was pretty much so wrong to say that Obama had a massive upswing to jet WAY past Hillary. Actually, he may have had a big swing up, but it only got him to within 3%...Anyways, two articles on this subject - a
C&L vlog post about Chris Matthews shooting his mouth off and Tom Brokaw having to give him a little what-for; and
this editorial from the T&G.
* The Big Picture turns me onto another blog that was just waiting for me to find...
http://themessthatgreenspanmade.blogspot.com/ just amusing from the title; I'll have to look at this in more detail later...
Labels: 2008 Elections, Barack Obama, blog, crooksandliars.com, Democrats, Hillary Clinton, The Big Picture
More Stupid Unemployment Numbers
Firstly,
this rosy news was not how it was reported
on Bloomberg when I was listening this morning...
My boy at
The Big Picture infers a lot of the same thing - that the jobs data is not as rosy as the Fed makes it out to be. And, of course, as I harp on all the time, the unemployment rate is just total bunk - it really doesn't give you anything meaningful.
Labels: 2008 Elections, economy, The Big Picture, unemployment, USA
They are completely delusional. Completely. Interesting to see just how rediculous the sub-prime lending truly was. Of course, there were some people that
were worried about this macro- issue over the past few years that
saw this whole ball of wax coming down the pipe...
Labels: 2008 Elections, blog, Boston, dailykos.com, economy, macroeconomics, Masachusetts, poverty, RBE, real estate, The Big Picture, wages
The Big Picture is quickly becoming my fav economics blog. As
I've always stated that the unemployment rate is completely bogus, since the
denominator is a melange of stats regarding those that WANT to look for jobs + those employed.
Since the labor pool has shrunk, the percentage of course has gone down.
Labels: economy, macroeconomics, media, RBE, The Big Picture, unemployment
