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Posted: 6/11/2009 12:49:07 AM EST
Link Posted: 6/11/2009 2:26:20 AM EST
Link Posted: 6/11/2009 2:32:58 AM EST
Just another nail.
Link Posted: 6/11/2009 2:39:05 AM EST
Originally Posted By shootemup:
Just another nail.


yup
Link Posted: 6/11/2009 2:51:08 AM EST
Originally Posted By shootemup:
Just another nail.


Seems that there are multiple nails each day...
Link Posted: 6/11/2009 3:05:47 AM EST
Link Posted: 6/11/2009 3:15:00 AM EST
IMPOSSIBLE!!! The recession is over Steve LIESman said so the other day...


GR
Link Posted: 6/11/2009 3:43:21 AM EST
Link Posted: 6/11/2009 4:53:36 AM EST
Link Posted: 6/11/2009 6:13:59 AM EST
As more dollars get burned up I take it we won't be seeing serious inflation any time soon?
Link Posted: 6/11/2009 6:26:26 AM EST
Originally Posted By ArmdLbrl:
As more dollars get burned up I take it we won't be seeing serious inflation any time soon?


Why?

All it takes is a printing press and the desire to pander.

Link Posted: 6/11/2009 6:33:25 AM EST
More losses from "creative financing." This recession hasn't bottomed out by "long shot," just wait until GM & Chrysler bankruptcies, and Option ARMs ripple through the USA and world economies. The news media is trumpeting the fact that unemployment rate is down and the retail sales are up, just little "ups and downs," but long term I believe the worst is yet to come.
Link Posted: 6/11/2009 7:29:44 AM EST
Link Posted: 6/11/2009 7:41:38 AM EST
As an investor I`m scared to death. I moved some of my dollars to an Australian gov`t backed fund today. I``ve been in business thirty years, lived within my means and saved a SHITPOT FULL of money. More than enough to retire on. My investments, all prudent, are at a SEVERE risk right now. The ONE wants it all and I ain`t going down without a fight. Fuck Him.
Link Posted: 6/11/2009 8:15:44 AM EST
Originally Posted By ACEB36TC:
As an investor I`m scared to death. I moved some of my dollars to an Australian gov`t backed fund today. I``ve been in business thirty years, lived within my means and saved a SHITPOT FULL of money. More than enough to retire on. My investments, all prudent, are at a SEVERE risk right now. .


This is the real problem, and it is not all fiduciary in nature.

Those of us who have been prudent, and who have more than saved up to privately fund our retirement...

... the ones who have lived and worked according to the timeless wisdom of delayed gratification, the wisdom of the Bible, and of countless other traditions: WE are the ones who get screwed the most.

We have saved up for security.

And there is no security to be found. Anywhere.

Link Posted: 6/11/2009 8:41:53 AM EST

the VAST majority of commercial loans are NOT interest only, but they're 10 year notes with 30 year amortization schedules.

At the end of the 10 year period, you need to refi.

Many of these properties will be upside down.

Link Posted: 6/11/2009 8:46:30 AM EST

Originally Posted By Hawkeye:
I do believe I remember reading not that long ago, that the commercial losses were slated to possibly dwarf what we saw with the housing losses.....


I know for a fact that I read that right here on ARFCOM and it wasn't that long ago.

Damn! Screwed, so screwed.
Link Posted: 6/11/2009 8:51:15 AM EST
Originally Posted By psyops4fun:
Originally Posted By ArmdLbrl:
As more dollars get burned up I take it we won't be seeing serious inflation any time soon?


Why?

All it takes is a printing press and the desire to pander.



Credit and asset destruction probably followed by lots of bankruptcies –– all of which are deflationary.
Link Posted: 6/11/2009 1:38:39 PM EST
Nothing to worry about, guys. Relax. After all, the DJIA went up today.

If this were really a problem, obviously the DJIA would reflect that.

Right?
Link Posted: 6/11/2009 1:54:48 PM EST
Originally Posted By JBlitzen:
Nothing to worry about, guys. Relax. After all, the DJIA went up today.

If this were really a problem, obviously the DJIA would reflect that.

Right?


I have a friend like that. He keeps insisting that the market has already priced all of this chaos in and is forward-looking. I am seeing the second third of the decline later this year. He thinks that that is not possible.
Link Posted: 6/11/2009 2:33:17 PM EST
I'm being sarcastic. There's no way this stuff is priced in, which makes the market activity even more unnerving.
Link Posted: 6/11/2009 2:35:29 PM EST
So, relative to this post, how much time has to pass (http://www.ar15.com/forums/topic.html?b=1&f=5&t=884926) before we say it won't happen?

I am thinking this summer/fall will show us the worst of what will come unless some other "bailout" happens which will delay the "bottom" for a few more months.

What do you guys think?
Link Posted: 6/11/2009 2:38:25 PM EST
[Last Edit: 6/11/2009 2:42:02 PM EST by trwoprod]
Originally Posted By JBlitzen:
I'm being sarcastic. There's no way this stuff is priced in, which makes the market activity even more unnerving.


I know. I keep making the same point and he shows me his models. I keep saying "all that red suggests a lack of support" and he insists that the market has already priced it all in, whatever "it" is.

I have a case of Bollinger on the market seeing a low of 400/4000 or so (he gets to tell me if I win) in the next 12 months.

I also said that oil would be $75/bbl by the end of June back at New Years.

I also said that we would see 6000 or so in July of last year (I said 6500, maybe 6200 on the low end).

I also said three years ago that the issue would be deflation.

I said in 2006 that we would be risking a systemic credit lockup.

I have made some money lately ...

ETA:

And the secret of my success is that I didn't see the difference between now and the oil crash. I am not a financial genius. I just have an intact memory.
Link Posted: 6/11/2009 2:39:24 PM EST
Originally Posted By runawayabc123:
So, relative to this post, how much time has to pass (http://www.ar15.com/forums/topic.html?b=1&f=5&t=884926) before we say it won't happen?

I am thinking this summer/fall will show us the worst of what will come unless some other "bailout" happens which will delay the "bottom" for a few more months.

What do you guys think?


4th Q of this year –– 1st Q of next year, unless, as you say, Obama throws the kitchen sink at the problem and wrecks everything for the next ten years trying to avoid making bankers pay the price for poor due dilligence.
Link Posted: 6/11/2009 2:56:48 PM EST
Why do you think 4Q or 1Q next year?

I was thinking summer/fall (3Q, early 4Q) because that is when the interest only loans start reseting like crazy. Or are you thinking it takes time for those resets to upset the market? (I didn't account for/think of that until now.)
Link Posted: 6/11/2009 3:14:25 PM EST
[Last Edit: 6/11/2009 3:15:23 PM EST by runawayabc123]
Another question... all of those interest only loans... do you think the average barrower understood the loan they were buying?

Because my sister bought in Vegas about a year and a half ago (I told her not too, but she said he got a "good deal" ) and she got a forever interest only loan because she was a teacher. When the market took a shit her husband ex wanted to let the bank take it back because they were under water. I know she understood the loan, but I don't think he did. (Also, she isn't willing to default on it as long as she has a job and can pay.)
Link Posted: 6/11/2009 3:24:58 PM EST
[Last Edit: 6/11/2009 3:28:03 PM EST by trwoprod]
Originally Posted By runawayabc123:
Why do you think 4Q or 1Q next year?

I was thinking summer/fall (3Q, early 4Q) because that is when the interest only loans start reseting like crazy. Or are you thinking it takes time for those resets to upset the market? (I didn't account for/think of that until now.)


I think that the triggering event will be all of the foreclosures and bankruptcies hitting the books. The pig in the python has been 18 months of foreclosures that the banks have been taking a very long time with (on purpose and because they don't want to hire people to process them). That huge volume is starting to pop out now. Bankruptcies will follow about six months later. The backlog will be staggering. The losses will be staggering. And because of Bush and Obama holding off dealing with this for 18 months the impact will be two plus years of this stuff hitting at the same time and it will look bad. Very bad. Historic bad. Like a 6% national forclosure rate for a few quarters and massive bankruptcy efforts as everyone does the same thing at once.

I don't see some sort of Mad Max scenario, just a whole lot of people who can no longer use consumer credit for years, a whole lot of homes that will never be sold, a whole lot of value destroyed (imaginary or not). That's not inflationary.
Link Posted: 6/11/2009 3:29:24 PM EST
Originally Posted By runawayabc123:
Another question... all of those interest only loans... do you think the average barrower understood the loan they were buying?

Because my sister bought in Vegas about a year and a half ago (I told her not too, but she said he got a "good deal" ) and she got a forever interest only loan because she was a teacher. When the market took a shit her husband ex wanted to let the bank take it back because they were under water. I know she understood the loan, but I don't think he did. (Also, she isn't willing to default on it as long as she has a job and can pay.)


I think that they did in Texas because one impact of the oil bust and real estate crash was that we license mortgage brokers pretty well here because we got really, really badly burned. Other places, not so much. And these are complex documents.
Link Posted: 6/11/2009 3:40:37 PM EST
So what you are saying is: keep your $ out of banks and housing, and debt.
Link Posted: 6/11/2009 3:49:23 PM EST
Originally Posted By fla556guy:
So what you are saying is: keep your $ out of banks and housing, and debt.


Lots of smaller banks are in great shape. I have a lot of money with my local bank.

But yes, debt is very hard to service in deflationary times. And having cash on hand gets you amazing bargains.
Link Posted: 6/11/2009 3:54:35 PM EST
Investors in bonds that packaged $62 billion of debt for U.S. offices, hotels and shopping malls are bracing for more loan defaults through 2010 as Bank of America Merrill Lynch says landlords’ monthly payments may jump 20 percent or more.


Congratulations!
Link Posted: 6/11/2009 4:01:21 PM EST
Originally Posted By trwoprod:
4th Q of this year –– 1st Q of next year, unless, as you say, Obama throws the kitchen sink at the problem and wrecks everything for the next ten years trying to avoid making bankers pay the price for poor due dilligence.


I've pushed it back a little; things will probably go pear-shaped by then, but if it makes it to mid-2010 without a blowup I'll admit I was wrong. The ARM resets start in late 2009 and are really going by 2010 through 2011. Factor in a few months lag time for the owners to blow through any cushion and fall 90 days behind.

A dollar collapse could be inflationary, since it would drive up commodity prices. There are a lot of nervous foreigners holding bonds right now.
Link Posted: 6/11/2009 4:23:15 PM EST
Originally Posted By mcgredo:
Originally Posted By trwoprod:
4th Q of this year –– 1st Q of next year, unless, as you say, Obama throws the kitchen sink at the problem and wrecks everything for the next ten years trying to avoid making bankers pay the price for poor due dilligence.


I've pushed it back a little; things will probably go pear-shaped by then, but if it makes it to mid-2010 without a blowup I'll admit I was wrong. The ARM resets start in late 2009 and are really going by 2010 through 2011. Factor in a few months lag time for the owners to blow through any cushion and fall 90 days behind.

A dollar collapse could be inflationary, since it would drive up commodity prices. There are a lot of nervous foreigners holding bonds right now.


The reason that I think that it may be sooner (although you may be dead right –– it has taken two years longer to start correcting than I thought) is that if the mounting losses that are clear to everyone in real estate courtesy of foreclosures and bankruptcies are not reflected on the banks' books by the end of the year I really think that there will be a severe lack of confidence in any and all of the numbers and what limited support their is in the market will evaporate. No one wants to be the one left without a chair when the music stops and enough people are down 30% right now that they are likely (I think) to take their money off the table "early" and when enough of them do that "early" becomes "now". I think that there may well be enough people in trouble in Colorado, California, Florida, Nevada, and so on to double the national bankruptcy rate in short order and potentially to double the forclosure rate in the next three months as all of the stale paper comes out of the pipeline from last year and earlier this year.

But I thought that the correction would be in full swing by the end of 2007 and it wasn't, so maybe the fantasy that everything is OK will keep the support up. As long as Obama is continuing Bush's policies of not holding banks to normal accounting requirements anything is possible, I suppose.
Link Posted: 6/11/2009 4:24:07 PM EST
Originally Posted By mcgredo:
Originally Posted By trwoprod:
4th Q of this year –– 1st Q of next year, unless, as you say, Obama throws the kitchen sink at the problem and wrecks everything for the next ten years trying to avoid making bankers pay the price for poor due dilligence.


I've pushed it back a little; things will probably go pear-shaped by then, but if it makes it to mid-2010 without a blowup I'll admit I was wrong. The ARM resets start in late 2009 and are really going by 2010 through 2011. Factor in a few months lag time for the owners to blow through any cushion and fall 90 days behind.

A dollar collapse could be inflationary, since it would drive up commodity prices. There are a lot of nervous foreigners holding bonds right now.


This is a big reason that I was confident in my $75/bbl by June or July prediction.
Link Posted: 6/11/2009 4:26:41 PM EST
Hell....I just bought a 1/3rd acre commerical lot for 185K.

Two years ago, the seller listed the property for 400K with a local realtor.

After reading all this, I'm thinking I bought too soon and should have waited til early next year....who knows...
Link Posted: 6/11/2009 5:34:38 PM EST
Originally Posted By trwoprod:
Originally Posted By runawayabc123:
Why do you think 4Q or 1Q next year?

I was thinking summer/fall (3Q, early 4Q) because that is when the interest only loans start reseting like crazy. Or are you thinking it takes time for those resets to upset the market? (I didn't account for/think of that until now.)


I think that the triggering event will be all of the foreclosures and bankruptcies hitting the books. The pig in the python has been 18 months of foreclosures that the banks have been taking a very long time with (on purpose and because they don't want to hire people to process them). That huge volume is starting to pop out now. Bankruptcies will follow about six months later. The backlog will be staggering. The losses will be staggering. And because of Bush and Obama holding off dealing with this for 18 months the impact will be two plus years of this stuff hitting at the same time and it will look bad. Very bad. Historic bad. Like a 6% national forclosure rate for a few quarters and massive bankruptcy efforts as everyone does the same thing at once.

I don't see some sort of Mad Max scenario, just a whole lot of people who can no longer use consumer credit for years, a whole lot of homes that will never be sold, a whole lot of value destroyed (imaginary or not). That's not inflationary.


Are you allowing for the Option ARM / Prime ARM recasts that start ramping up in Q1/2010? Looks to me like that little gift runs until Q3-Q4/2012.

Housing bubble crash 2.0 right about the same time Commercial takes the dive. Oh joy.
Link Posted: 6/15/2009 5:46:14 PM EST
Originally Posted By trwoprod:
The pig in the python has been 18 months of foreclosures that the banks have been taking a very long time with (on purpose and because they don't want to hire people to process them).


There's a LOT of dark matter REOs out there that the banks have been holding out on. They're trying to kick the can down the road, hoping the economy will recover and save them, I think. I don't think it will work; next year the Alt-A's go belly up, and they'll have the dark matter REOs on top of that for double the fun.

http://realestate.yahoo.com/Foreclosures/time-to-unleash-real-estate-investors;_ylt=AieHHJGf6wotwdyJw8viC5EsZcMF



Arizona is now in the news and not in a good way. The latest figures from RealtyTrac.com show that during the first quarter Arizona had the second highest rate of foreclosure actions in the nation, trailing only Nevada. One out of every 54 Arizona homeowners received a foreclosure notice during the first three months of the year.
...
Gloria Handley, a real estate agent in Chandler with RE/MAX Achievers, says that across the state there have been roughly 20,000 home sales so far this year. Of that number, she estimates that 75 percent were lender owned or short sales.

What the numbers from Arizona and elsewhere generally don't say is that while bank-owned properties make up a growing percentage of the homes available for sale, banks are actually keeping large numbers of properties off the market.

A study by RealtyTrac compared homes held by banks with homes actually listed on local MLS systems. The result? RealtyTrac's senior vice president Rick Sharga estimates that only 30 percent of bank-owned properties are listed and that 600,000 to 700,000 foreclosed homes nationwide are being held off the market by lenders.

“If lenders opened the foreclosure floodgates and listed every bank-owned property for sale the marketplace impact would be catastrophic,” says Sharga. “If the homes now held by lenders were immediately offered for sale home prices would fall, property tax collections would plummet, unemployment would instantly rise and the economy would quickly deteriorate. By keeping foreclosed homes off the market lenders have reduced the inventory of homes available for sale and thus prevented housing prices from dropping further.

“Alternatively,” says Sharga, “the cost of holding hundreds of thousands of homes is enormous and cannot continue indefinitely. If the inventory of unsold properties is not reduced or eliminated the results will damage the entire economy.”


Maybe divergent price structures––housing prices drop a lot, import commodity prices go up.
Link Posted: 6/15/2009 6:07:51 PM EST
Originally Posted By psyops4fun:
Originally Posted By ACEB36TC:
As an investor I`m scared to death. I moved some of my dollars to an Australian gov`t backed fund today. I``ve been in business thirty years, lived within my means and saved a SHITPOT FULL of money. More than enough to retire on. My investments, all prudent, are at a SEVERE risk right now. .


This is the real problem, and it is not all fiduciary in nature.

Those of us who have been prudent, and who have more than saved up to privately fund our retirement...

... the ones who have lived and worked according to the timeless wisdom of delayed gratification, the wisdom of the Bible, and of countless other traditions: WE are the ones who get screwed the most.

We have saved up for security.

And there is no security to be found. Anywhere.


Don't worry if you have anything saved up there will be some slick talking SOB with a team of Lawyers show up to get it.

Link Posted: 6/15/2009 6:46:52 PM EST
Originally Posted By mcgredo:
Originally Posted By trwoprod:
The pig in the python has been 18 months of foreclosures that the banks have been taking a very long time with (on purpose and because they don't want to hire people to process them).


There's a LOT of dark matter REOs out there that the banks have been holding out on. They're trying to kick the can down the road, hoping the economy will recover and save them, I think. I don't think it will work; next year the Alt-A's go belly up, and they'll have the dark matter REOs on top of that for double the fun.

http://realestate.yahoo.com/Foreclosures/time-to-unleash-real-estate-investors;_ylt=AieHHJGf6wotwdyJw8viC5EsZcMF



Arizona is now in the news and not in a good way. The latest figures from RealtyTrac.com show that during the first quarter Arizona had the second highest rate of foreclosure actions in the nation, trailing only Nevada. One out of every 54 Arizona homeowners received a foreclosure notice during the first three months of the year.
...
Gloria Handley, a real estate agent in Chandler with RE/MAX Achievers, says that across the state there have been roughly 20,000 home sales so far this year. Of that number, she estimates that 75 percent were lender owned or short sales.

What the numbers from Arizona and elsewhere generally don't say is that while bank-owned properties make up a growing percentage of the homes available for sale, banks are actually keeping large numbers of properties off the market.

A study by RealtyTrac compared homes held by banks with homes actually listed on local MLS systems. The result? RealtyTrac's senior vice president Rick Sharga estimates that only 30 percent of bank-owned properties are listed and that 600,000 to 700,000 foreclosed homes nationwide are being held off the market by lenders.

“If lenders opened the foreclosure floodgates and listed every bank-owned property for sale the marketplace impact would be catastrophic,” says Sharga. “If the homes now held by lenders were immediately offered for sale home prices would fall, property tax collections would plummet, unemployment would instantly rise and the economy would quickly deteriorate. By keeping foreclosed homes off the market lenders have reduced the inventory of homes available for sale and thus prevented housing prices from dropping further.

“Alternatively,” says Sharga, “the cost of holding hundreds of thousands of homes is enormous and cannot continue indefinitely. If the inventory of unsold properties is not reduced or eliminated the results will damage the entire economy.”


Maybe divergent price structures––housing prices drop a lot, import commodity prices go up.


They must –– MUST –– write the bad paper off. It will never –– NEVER –– recover. I think that the land prices in some parts of Austin that were over a million dollars an acre for residential property back in 1985 may have approached this level in 2005 for a few months, but not in an adjusted way. They never recovered. All of those 6500 square foot incredibly-badly-built McMansions four hours outside of LA that Countrywide sold to an illegal alien making $24,000 a year with a $1.4 million dollar 130% negam note will never make them money. NEVER. Until these things are off the books (and things like this are a staggering amount of about three years of sales in a bunch of states) the recovery will not start.

Damned right there's a lot of dark matter out there.
Link Posted: 6/16/2009 7:17:19 AM EST
By keeping foreclosed homes off the market lenders have reduced the inventory of homes available for sale and thus prevented housing prices from dropping further.


Aren't the banks making a huge mistake with this strategy of keeping prices artificially high, thus encouraging more inventory to come onto the market?

Housing starts, building permits surge 06/15/09

Hopes for a bottom in the housing market were bolstered by two Commerce Department reports this morning.

Housing starts jumped 17.2% in May to a seasonally adjusted annual rate of 532,000, after tumbling 12.9% in April. Economists had expected starts to have risen 5.9% last month. The increase was helped by a 62% gain in new construction of multifamily homes. Starts of single-family rose 7.5% to a 401,000 rate.

Building permits, which are a gauge of builder confidence, rose 4% to a seasonally adjusted rate of 518,000. Economists had expected permits to have risen to 509,000 from April's record low of 498,000.
Link Posted: 6/16/2009 8:02:49 AM EST
[Last Edit: 6/16/2009 8:04:38 AM EST by trwoprod]
Originally Posted By Bubbles:
By keeping foreclosed homes off the market lenders have reduced the inventory of homes available for sale and thus prevented housing prices from dropping further.


Aren't the banks making a huge mistake with this strategy of keeping prices artificially high, thus encouraging more inventory to come onto the market?

Housing starts, building permits surge 06/15/09

Hopes for a bottom in the housing market were bolstered by two Commerce Department reports this morning.

Housing starts jumped 17.2% in May to a seasonally adjusted annual rate of 532,000, after tumbling 12.9% in April. Economists had expected starts to have risen 5.9% last month. The increase was helped by a 62% gain in new construction of multifamily homes. Starts of single-family rose 7.5% to a 401,000 rate.

Building permits, which are a gauge of builder confidence, rose 4% to a seasonally adjusted rate of 518,000. Economists had expected permits to have risen to 509,000 from April's record low of 498,000.


Here's the thing –– what Bush did at the very end convinced banks and bankers that if they would just play chicken with the Fed, they would win. You see, they have no way out in many cases so why not try something that has worked before –– the fact that the crisis will be even worse just makes it more likely (based on what Bush set up and Obama is continuing) that nothing bad will happen to the banks and bankers. It's a very serious moral hazard issue, and hardly the first time that the Bush Administration screwed something like that up. They see that doing the wrong thing is far more profitable –– for them. As the downside risk is unemployment and possibly minimum security prison, why not play chicken with the Fed. It worked before!

Of course, for the market, if you assume that we are still letting the free market work post-Bush "I have to destroy the free market to save it", it's terrible. It prevents the correction from happening. But for desperate banks and bankers, it looks more likely that they will get bailed out the longer they hold out and the worse it gets.

Thanks, George. Thanks a lot.
Link Posted: 6/16/2009 11:08:00 AM EST
If these bonds go valueless, that means more wealth is destroyed.
That means the shortage of dollars gets worse not better.
That means the US Goverment can print their way out of trouble without inflating the dollar.
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