HARM's Comments

Three Strikes Against Home Buyers

Tue, 27 Jan 2009 14:15:47 -0500

"All of this is directly opposite of Barbara Corcoran's advice she recently gave on Good Morning America. Who to believe?"

Let's see... motivational speaker, self-help book peddler and Bubblevision talking head, or... common sense and reason.

That's a tough choice!

Three Strikes Against Home Buyers

Tue, 27 Jan 2009 13:51:14 -0500

Great article! Preach the Truth, Alexander --sing it, brother!

"First, the article should include a 4th strike against buyers->the home owning banks themselves. Who is digging into how aggressive banks are with unloading properties? From my experience, it’s not very. Why should they? They’re flush (not all, but too many) with TARP money and the promise of the government to give them more. Banks have traditionally been the most willing to part with real estate and clear it from their books, but no longer—or at least not at a rate or in an amount that you would expect."

The phenomemon of "ghost inventory" (unlisted bank REOs) and "shadow inventory" (private sellers who want to sell, but not at today's prices) is well documented and very real. Some estimates place current ghost inventory at 2:1 vs. listed inventory.
www.calculatedriskblog...

DON'T be a knife-catcher.
DO pay attention to local house price-vs.-HH income ratios.
DO pay attention to local house price-vs.-rent ratios.
DO pay attention to the Shiller chart.
www.financialsense.com...
DO pay attention to the Credit-Suisse ARM reset chart.
www.housingwire.com/wp...

Let's Have Inflation

Tue, 20 Jan 2009 14:21:32 -0500

I'm not saying you're wrong, but let's remember that all of the "prudent people who have been doing the right thing all along" also suffer as real estate values decline. The only true winners in such a scenario are those who rent their homes.

Wrong. If you did not "lever up", HELOC or cash-out refi to the sky or recklessly speculate, you will not be hurt at all. In fact, those 30% or so of American families that own their homes outright will actually BENEFIT from falling prices in the form of lower property tax bills. Existing prudent owners will also benefit from the fact that, when they need to move, their NEXT home will cost much less, and they will not have to compete with NINJA Option-ARM armed speculators.

No "Detector" in BS --just BS.

Housing Solution: Crashing Home Prices or Cheaper Mortgages?

Thu, 11 Dec 2008 18:40:55 -0500

Peak-bubble housing prices must be protected at all costs! Remember, housing is unique, unlike any other commodity (where lower prices is generally viewed as a good thing for regular working people). And government is much better at setting the fair market value than Mr. Market, everyone knows that.

Sky-high housing costs at insane DTI levels --like we *still* have in CA-- encourages people to take on massive levels of debt they will never pay off, and to become captive to the banking and real estate industry. This "stimulates" the economy, when people must work 2-3 jobs apiece and spend every dime they have to service that hungry 'gator.

What do you people think would happen if people stopped getting mortgages at 10-11X HH incomes? Utter chaos, desolation... Max Max, that's what! Why... without monster mortgages people might begin... (*gasp*) SAVING again --the Horror! The absolute worst outcome for our economy is for housing along the bubble coasts to come down to a level truly affordable for working or middle-class family incomes. We must do *anything* to prevent this!

Please write your Congresscritter and demand that they man those ramparts!

MORE BAILOUT SCHEMES to protect high prices & executive bonuses!
MORE ARTIFICIALLY CHEAP MONEY from the Fed!
MORE COMPLICATED, DODGY LOANS to help prop up those prices!

The Shallowest Generation

Wed, 05 Nov 2008 18:12:40 -0500

"The boomers footed the multi trillion dollar bill to waged a decades long cold war against the greatest evil empire empire in history - and won - saving the world from communist enslavement and bringing freedom to Eastern Europe and Russia,. WW2 pales in comparison.

Baby boomers have footed the bill for trillions of dollars in US foreign aid for decades - tell me what other country has done even a fraction of that?

Baby boomers have paid for the 'war on poverty' by the Great Society - just look at the great standard of living the 'poor' people have in this country. As one person in India trying to get into the US said "I want to live in a country where the poor people are fat".

This hardly sounds like selfishness to me."

Oh, Lordy... so many fictions, where to start?

Boomers did not actually *pay* for any of the above, which is one of the reasons why per-capita government and personal debt levels are at all-time highs, as the author has already pointed out.

Aid to the poor --aka old school "socialism"-- went out of vogue during the Reagan Administration ('Welfare Cadillac Queens' and whatnot) and social program defunding accelerated under following administrations including Clinton's (welfare reform). Unfortunately, corporate socialism and unchecked military spending more than made up for any savings, by a huge margin.

As a Gen-Xer, I have been geniunely "poor", as in one unemployment or min-wage paycheck away from homelessness --and not for laziness, lack of skills, education or willingness to take menial jobs, either. I doubt many non-blue collar/minority Boomers can relate, hence the warped view of the "great standard of living" U.S. poor supposedly enjoy.

Boomers were born into an America of broadly shared prosperity, virtually free higher education, cheap housing and medical care, high manufacturing output, a large trade surplus, an expanding middle class, and an almost debt-free government.

Boomers are leaving my (and future generations) with prosperity for the very few, sky-high college costs mostly financed with debt, a massive housing bubble, the most expensive per-capita medical costs ever, a shrinking manufacturing base, an enormous trade deficit, a shrinking middle class, and government in hock to the tune of $11 Trillion + $53Trillion more in future unfunded liabilities.

I wish I had written this article. Kudos to the author for a job well done, and the courage to tell it like it really is, without pulling any punches.

Fed Losing Credibility?

Wed, 05 Nov 2008 17:49:34 -0500

You're implying that the Fed still *has* any credibility left to lose. A dubious claim at best.

The Biggest Bubble of Them All

Tue, 04 Nov 2008 20:32:33 -0500

"I suggest you learn your facts before you comment. From CNN.com (hardly a Bush fan): cnn.com/2008/US/07.../ - Yellowcake found in Iraq."

I read the article, and stand by my original assertion: no WEAPONS-GRADE uranium found in Iraq to date.

"WASHINGTON (CNN) -- The United States secretly shipped out of Iraq more than 500 tons of LOW-GRADE uranium dating back to the Saddam Hussein era, the Pentagon said Monday.

...He said yellowcake uranium is a commonly traded commodity used for nuclear power generation. It is NOT ENRICHED and cannot be used without first going through a complicated enrichment process, he said, but because of the unstable nature of Iraq, the United States and the Iraqi government decided it should be moved out of that country. Iraq has no nuclear power generating plants."

The Biggest Bubble of Them All

Tue, 04 Nov 2008 18:25:00 -0500

"It is pretty clear that Muslim nations are not aligned with the interests of the U.S. -- which are principally, to be and remain, a nation of liberty for all its people. Saddam Hussein was known to have met with Bin Laden, so although Hussein may not have had direct involvement in the 9/11 attacks, the association was there, and we do know that he was working on WMDs...whether we found ready-to-deploy weapons or not is irrelevant: we did find weapons-grade uranium, and he had every intention of developing capabilities to harm the U.S. Couple that with the mass-murders of his own people...and there were plenty of good reasons to take action in Iraq."

Despite what you may have gleaned from listening exclusively to Fox News, Rush and Laura Ingraham, we never found any weapons-grade uranium or other WMDs in post-war Iraq. Pre-war Iraq was also one of the least radicalized and most secular Arab-dominated countries... until we invaded it. The supposed "link" to OBL has also been conclusively discredited. The two men clearly detested one another. But then, reality has a known liberal bias, so facts don't count to the "Base".

Yes, Saddam was an evil murderous dictator... in a world full of evil murderous dictators. Where to draw the line? Are we to be the world's policeman for all foreign governments?

"Now...about the bubbles facing the U.S. -- we have a bubble of moral bankruptness that is causing MANY of our troubles:

1) People complain about the HUGE cost of healthcare? The spread of STDs, early and unwed pregnancies, drug and alcohol addictions, obesity, and more...are ALL due at least in part to moral character issues."

Uh-huh... so STDs, unplanned pregnancies, drug & alcohol addiction was completely unkown to pre-New Deal America, then? People in previous centuries must have been angels, I suppose. And the fact that 2/3rds of healthcare costs go to bureacracy, lobbying, advertising, malpractice insurance and end-of-life care is totally irrelevant too.

You do have a point on obesity; however, I suspect that the Green Revolution and the resulting abundance of cheap, high-sugar foods has a little more to do with that.

"2) Worried about government debt? Maybe we should reconsider entitlement government -- again, a moral and character issue! Those who are mentally and physically able should earn their own way. Period. The government as an entitlement machine fosters this moral delinquency that is our entitlement nation! We won't shrink the national debt by remaining on this socialist path. And incidentally, has any people ever retained their freedom by continually expanding their dependence on government? By very definition, it is impossible to do so!!"

Wow, finally a statement I can (mostly) agree with. However, I suspect that "SCC" --like many neocons-- does *not* include Wall Street bailouts, discretionary military expansionist spending, or corrupt no-bid government contracts as a form of "entitlement".

U.S. Socialism is only for the rich & powerful, dont'cha know.

Hottest Potato in Washington: The Homeowner Bailout Plan

Wed, 29 Oct 2008 14:58:24 -0400

One stipulation of a federal program, for example, is that in exchange for a loan guarantee, the government gets a big chunk of any future appreciation in the house, even if you don't sell for 25 years. But sharing your house with Uncle Sam is a strange proposition, and even distressed borrowers are reluctant to go along with that.

Ahhh... the "choosy beggar" syndrome. Here's a thought: if underwater borrowers don't want to accept some taxpayer profit-sharing as part of a bailout on taxpayers' dime --F*** 'em. That alone should weed out a huge chunk of the greedbag speculator component.

Return of Weimar Monetary Policies?

Mon, 13 Oct 2008 15:54:15 -0400

"this Monday September 13"

Actually, it should be, "this Monday, October 13".

The Next Bubble?

Mon, 13 Oct 2008 15:50:20 -0400

"There is no intrinsic value for gold."

Actually, not true. Quite a few practical uses for gold, including non-corrosive electrical contacts (your PC likely has quite a few of them). By contrast, there truly is no "intrinsic value" for fiat currency --aside from the value of the paper it is printed on.

In any case, it's not the "practical uses" for gold that has fueled its meteoric rise over the past 6 years. It is gold's perceived value as an inflationary hedge and "safe haven" for preserving your purchasing power during financial crises --such as the one we're experiencing now.

You cannot easily "debase" gold by "printing" a lot more of it at will. It has to be mined, and cannot be produced everywhere on earth. It's recent rise reflects (well justified) insecurity about the financial system and fiat currency, not speculators' sudden interest in the metal. Its inherent scarcity renders it enemy #1 of inflationists and monetarist gamblers everywhere, which is a good reason why prudent investors should always have some.

The Unwinding of the Moral Hazard Trade

Fri, 10 Oct 2008 12:55:53 -0400

"Of course, as with any government action, the unintended consequence has been a complete lack of trust on the part of investors who have now seen that the government will leave them out in the cold if it suits their agenda."

The government SHOULD leave such "investors" out in the cold. In fact it should not be bailing out *anyone*, barring FDIC/NCUA-insured retail depositors.

Why should being rich and politically connected automatically guarantee a taxpayer bailout? Is that what you call "capitalism"? I must have missed class the day they taught socialism-for-the-rich = free-market capitalism.

Global Coordinated Rate Cut: Nice Try, but the Party Is Over

Wed, 08 Oct 2008 20:41:15 -0400

BSexposer,

MS was predicting a housing/credit-bubble induced worldwide recession 3+ years ago. Feel free to trawl his archives if you don't believe it: globaleconomicanalysis.../

The only major point on which he and like minded bloggers differed was whether or not it would be an inflationary or deflationary recession.

Home Ownership: The Ideal That Refuses to Die

Wed, 08 Oct 2008 19:30:43 -0400

"The last thing we need right now is a resurgence in homeownership."

Uhhh.. point taken, but I think what you mean here is the ILLUSION of homeownership. If you take out a 107% LTV NINJA loan, you "own" *nothing*. In fact, you very likely owe more than the place is worth, as 16% of the country now does --and rising.

In any case, based on the personal testimonials published daily in the local RE propaganda rags (known as "newspapers"), it seems that (_gasp_) RENTING is a fate WORSE THAN DEATH for some people. Many FBs seem to feel that paying 3X rent for the same damned house is far preferable to renting and thus becoming an Untouchable / social leper.

Fed Funds Rate Irony

Tue, 07 Oct 2008 18:35:21 -0400

What's so "ironic" about the Fed basically repeating the same mistake they made last time (trying to "cure" one debt-induced asset bubble with another?).

"You keep using that word. I do not think it means what you think it means" --Inigo Montoya

The current Fed chairman wholeheartedly believes that the Great Depression was caused by deflation --or rather, the Hoover-era Fed's "allowing" deflation to take root-- and does not assign any special importance to the massive overleveraging and stock market gambling that preceded the 1929 crash.

Naturally, if one refuses to recognize the *cause* of a market panic and assigns all the blame to a *symptom*, then the Fed's actions might SEEM ironic, even though they are not.

It is also interesting that your chart only goes back to 2000 vs. say 1980, which would show that today's 2% is still shockingly LOW by historical standards.

Don't Blame Deregulation For This Crisis, It's All About Lack of Regulation

Tue, 07 Oct 2008 18:14:09 -0400

There is a *huge* difference between true "regulation" and "taxpayer corporate subsidies".

Examples of true business regulation that is actually *beneficial* to the average taxpayer and consumer:

Slavery outlawed
Child labor laws
Anti-racketeering laws
Anti-Trust laws
Anti-discrimination/in... laws
Anti-pollution laws
OSHA/worker safety laws
FDA food safety inspections

Examples of NON-regulation corporate handouts ("socialism for the rich") frequently mistaken for actual regulation:

TARP
Bear-Stearns/AIG bailouts
Nationalization of Phonie & Fraudie
Fed's 2% (soon to be 1% or 0%)
MID for non-owner-occupied flip houses, HELOCs and cash-out refis

Roubini Was Right

Tue, 07 Oct 2008 17:59:20 -0400

"Even a dead clock is right twice a day."

Yeah, Chris B is right on --Dow 36,000 here we come!!

What's Wrong with This Suggested Solution to the Mortgage Mess?

Wed, 01 Oct 2008 16:16:41 -0400

The second half of this post looks Greek to me. An improperly labeled html tag, perhaps?

I'm Speechless: Palin on the Bailout

Fri, 26 Sep 2008 20:05:51 -0400

Big Government "conservatives"
Socialist "capitalists"
reverse-Robin Hood bailouts
Borrow and Squander Republicans (vs. Tax and Spend Democrats)

The hypocrisy and cognitive disconnect is staggering.

I'm Speechless: Palin on the Bailout

Fri, 26 Sep 2008 18:22:45 -0400

I wans't aware that Katie Couric works for MoveOn.org and DailyKos too. That group must have quite a powerful reach, considering that even conservatove columnists are now either questioning her readiness to lead, or asking for her to step down:

David Brooks, George Will, Kathleen Parker and David Frum
politicalticker.blogs..../

Wall Street, 1792 - 2008?

Fri, 26 Sep 2008 18:08:17 -0400

User 270430 nailed it. There was no "we" in the so-called "prosperity" of the last 8 years, and frankly not much in the way of inflation-adjusted gains for the bottom 90% during the previous 20 either.

The only arguments the pro-bailout crowd has are the same tired lies and threats they've been using on the rest of us all along:

1. Financial blackmail: if you don't bail us out, we'll crash the whole economy

Reality: ha! Funny thing is, they've already been doing a good job of screwing the rest of us --even *without* the bailout. I think we can safely take our chances that the sun won't explode if we don't bail out rich a$$holes. If they're so damned sure they can *really* pull off a "Dr. Evil", I say let the f**kers SHOW us.

2. Bluff: if you don't bail us out, the system will grind to a halt. No one will be able to get a loan, access their bank accounts or use their ATM & credit cards.

Reality: Not bloody likely. Despite all the massive failures that have already taken place, I haven't heard of a single credible case of anyone *not* being able to access their FDIC or NCUA-insured money or use their ATM and credit cards. For that matter, plenty of people are still getting mortgages and loans --they're just requiring credit checks and reasonable down-payments now (*gasp* --the Horror!).

3. Conflating Wall Street with Main Street: We're all in this together ("Main Street may want to think twice. As Congress bickers, its country is burning")

Reality: Ummm... sorry pal, but the "country" isn't burning --YOUR hedge fund, IB and/or portfolio are what's "burning". The stock market is down and lots of underwater speculators are hurting, sure, but the rest of us worker-peon (who actually pay taxes) are hardly dying in the street. For that matter, I don't recall anyone ever asking ME if it was a good idea to start handing out NINJA loans to ever crook, liar and speculator on the planet.

There is no "WE" here --YOU gambled, and YOU lost. Tough shit --that's CAPITALISM (the system you *claim* to love so much)!

There is no "CRISIS" here -- reckless gamblers are losing money and want the rest of us to reimburse them. They made their bed, they should lie in it.

Bailout in Installments Is Still Nonsense

Thu, 25 Sep 2008 17:58:58 -0400

Agreed that our "elected" (read: bought and paid for) Dear Leaders are not the sheep --we are. Only question this time is, are we getting sheared or slaughtered?

Barney Frank's Money Quote

Thu, 25 Sep 2008 12:46:47 -0400

@user225084/,

Patrick.net, Calculated Risk or HBB?

Barney Frank's Money Quote

Thu, 25 Sep 2008 12:45:56 -0400

blackbody for Treasury Secretary. Can I get a second?

I'll second that --and nominate Jake Huneycutt for SEC Chairman.

Barney Frank's Money Quote

Thu, 25 Sep 2008 11:28:51 -0400

Methinks you're not asking the right questions.

For starters, how about *not* doling out one red cent and letting overleveraged IBs, banks and insurance companies that made risky bets fail? Y'know, that old quaint concept known as CAPITALISM. That way, better run institutions could buy up the remaining performing assets (and hire the non-crooked, competent employees), and the assholes that caused this so-called "crisis" could be left with the consequences of their own actions.

Reverse-socialism
Privatize profits, socialize lossses
Plutocracy
Feudalism
Fascism

Whatever you want to call the current system, it sure as hell ain't free-market capitalism.

What Credit Crunch?

Thu, 25 Sep 2008 03:32:01 -0400

Noooo! You don't understand, Mr. Perry --it's an EMERGENCY!!!! Banksters and friends of powerful N.Y. politicians are LOSING MONEY for Chrissakes!

It's the END of the WOOOOORLD! and we must bail them all out NOWWW!!!! (did I mention rich, connected gamblers are losing money?)

Be Careful What You Wish For!
Debt = Wealth
Living within your means/spending less = Great Depression, Part II
Feudalism = the "new" capitalism
4 legs good, 2 legs better

We all have to capitulate to bankster demands for "700 Beellion dollarrrrs", or Dr. Evil (Hank Paulson) will blow us up with his huge freakin' economic death ray! Do you *really* want to take the chance that *not* sending Hank's pals a blank check won't mean the end of life on this planet??? You're probably the kind of fool that actually READS a mortgage doc before you sign it.

Don't think or question authority --ACT NOW, or we're all DOOOOOMED!!!!

Where's "johndough110" or Mark ("blowing") Sunshine when we need them?

What the President Didn't Say

Thu, 25 Sep 2008 02:29:41 -0400

Greetings, taxpayers!

Sure, we completely blew the call on the housing bubble a few years back. Yes, it really existed, and yes, we sort of encouraged (and subsidized) loaning all that money to liars, crooks and deadbeats who had no intention of ever paying it back. Oh, and yeah, we also sort of encouraged reckless risk-taking and turned a blind eye to Wall Street/banking "regulation" (what a quaint term!) when it might have made a difference. And in hindsight, having all those IBs leveraging those funny-money loans 30:1 wasn't the great economic panacea we thought it was.

But... this time it's "different". We really need you to TRUST us to "fix" things this time. And the last thing we want you to do is *think* about it first. I mean, it's a no-brainer. Bailing out reckless IBs and rich gamblers is the AMERICAN WAY. It's "Free Market Capitalism" (tm) at its finest. Remember: four legs good, two legs better.

Well... gotta go now. All these "trash for cash" swaps are really creating awesome opportunities in commodities and other currencies that us insiders need so we can skim all the cream before the rest of you suck--, er, fine citizens catch on.

Anyway, thanks for listening and being so easily manipulated. And don't forget to pick up our tab on our way out!

Sincerely,

Pres. Bush
Dick
Hank
Bernie
Greenie
Congress

Warren Buffett on Goldman Sachs and the Financial Bailout Package

Thu, 25 Sep 2008 01:38:23 -0400

johndough110,

Wow, thanks for the reality check. I had no idea that you had the gift of flawless prescience --which you obviously possess, or you could in *no way* be 100% sure that Paulson's naked bailout for his rich buddies will "save" the economy. Or be 100% sure that *not* passing it will result in "bread lines" and consequences "much worse than any of us can imagine" (no fear-mongering going on here!).

I mean, it would obviously be the End of the World if reckless greedbags actually had to suffer the consequences of their own bad decisions, right? I mean that's soooo capitalistic (vs. the reverse-socialism, a.k.a. feudalism, so in vogue these days).

And thanks for reminding me that --more than anything else-- what Americans need right now is *more leverage*. God forbid Bernie & Hank's endless cheap-money spigot ever get turned off and debt-addicted spendthrifts have to start (*gasp*) living witin their means! No HELOC-bought plasma, matching his'n'her gov't subsidized Hummers, $0-down neg-am NINJAs (The horror...).

Oh, and you are *so* right about Buffett. The world's richest man is really "sticking his neck out" risking... basically pocket change for him. Foolish of me to take umbrage at the fact he's trying to profit by basically blackmailing and then raping the U.S. taxpayer.

Shame on me, I guess.

Does It Have To Be Exactly $700 Billion?

Thu, 25 Sep 2008 00:24:56 -0400

Warren Buffett on Goldman Sachs and the Financial Bailout Package

Thu, 25 Sep 2008 00:05:45 -0400

Oh, wait --I forgot. Buffett and his shareholders will earn gazzillions with his cynical (yet, like, totally shrewd) deal by inciting panic and economically blackmailing people like me. That excuses everything --he's totally a totally cool "alpha" male. My bad...