vagrant_joe

The Dysfunctional Credit Market

Hi Felix, I enjoy reading your articles although I don't always agree with them. In this instance, maybe we could be more clear as far a WHO's credit is drying up.

By saying that credit in general is drying up, we ignore very interesting data issued a week and a half ago from the Fed showing EXACTLY the OPPOSITE
-as in Mark Perry's article earlier today (seekingalpha.com/artic...).

Someone is lying. Either the data is wrong (from the FED) or Paulson et. al. is wrong. Someone's shoveling crap and I wouldn't be surprised to see it be either one.

Close to me, my brother & some of my friends have had no problem getting approved for home-loans recently and my ex-girlfriend just got approved for a $350k loan -even though she's only been working at her job for 8 mos. with no prior history in the field (she's a nurse). Not bad for a dried up credit market with gears that have ground to a halt and no-one trusts anyone anymore.

I don't see credit drying up. I see the Fed pumping a TON of money into the system, pulling off these bogus "swaps" with other central banks to lull folks into thinking the currency isn't being devalued at the same time, and I see more and more people that have worked themselves into a position of becoming uncreditworthy (defaulting on home loans and not paying credit card bills had that sort of consequence way before Paulson yelled "fire" in a crowded building).

So, many banks have worked themselves into that same uncreditworthy situation that many of their borrowers had. It happens. I wouldn't lend a buddy money again if he didn't pay me back the first time & did the same thing with 11 other buddies. And so it is between banks -maybe. Either they get their life/business together and make some cuts in the surpluses of their lives (inflated bonus's, branches on every corner, fancy lighting and fancy buildings) or they declare bankruptcy (like their customers) and someone else gets those branches, lighting, and buildings. Life goes on. Nothing to see here. Just a few folks waving socialist flags and having a little parade -hey, there's my congressman... that bastard...!

The Main Street - Wall Street Bout, Round Two

@constructe <--- do you have some numbers on consumer loans rising compared to bank-to-bank loan numbers falling? I'd love to use some of this info on a piece I'm writing

The Main Street - Wall Street Bout, Round Two

If we go by the governments own numbers, we're not in a recession, have positive GDP growth, and low inflation. Am I missing something? I mean, this sounds really terrible. Growth, stability. Oh, you mean that they lied about those things. Ah, yes, I'm sure they'll be much more forthcoming when they talk about wanting a trillion dollars with no oversight, immunity from possibly prosecution in the case of misuse of funds, and the person in charge of spending the money having over $400 Million of his personal wealth surprisingly in the last-company-standing in this whole mess. Didn't Paulson just say that everything was fine and that market fundamentals are strong just a few weeks ago?

The Main Street - Wall Street Bout, Round Two

www.visi.com/juan/cong.../ <----- Congressional contact info

clerk.house.gov/evs/20... <------ how your congressman voted on the bill

We've got some work to do to make sure that Socialism does not trump Capitalism in our government come the planned re-vote on Thursday/Friday

Bailout Talks Lose Sight of the Cost Question

I was reading yesterday that $3 Billion of MBS's were unloaded at 27 cents on the dollar back in November. Morgan Stanley unloaded a bucket-full of theirs at 22 cents on the dollar back in June. I've been trying to get an idea of what the current fair market value is on these (as Congress, Bush, et al want to buy a bunch of these things with our money, it'd be nice to know whether we're paying the $55k full-sticker price for that Escalade with 22" dubs that the neighbors son, G-dawg, financed -or we're getting it for the $7,500 that it's now worth as a gas guzzler, parked on that uncut, unwatered lawn, not-washed in 6-mos., with a crack going through the middle of the windshield, and some bumper damage from the last 3x that the repo man snuck over & tried to load it up on his tow-truck, in a bad market). Since June, home prices (especially in California) have continued to deteriorate at a pretty rapid pace. Condo's that were at $40k (yeah, really small condo's) at the bottom of the trough (say, 6 years ago or so) went up to between $150k-200k at their height. Those same condo's are now in the 70-100k range -with short sales near $60k. That $60k short sale was an $87k short sale in June (when Morgan Stanley unloaded). Could it hit $40k again? Maybe. I mean, the sort of folks that bought it the last time it was around $40k aren't really making much of anything more in their paycheck now. And, unemployment may be higher now than it was at that time. We are starting to see (and this is really fun) foreclosures on properties that were recently bought as bank owned foreclosures -second time around the block. It's easy to comb through Zillow & look for isolated examples which may not always be indicative of the market as a whole. So, how much is that doggie with the broken window? Well, if it was 22 cents back in June. Pricing has dropped since then, inventories have risen, qualified applicants are going down due to more normalized credit requirements, jobs are decreasing and set for a big decrease after Christmas (going to be some great after-Xmas liquidations), and on top of that, less folks are paying that mortgage on time or at all. Does 15-18 cents on the dollar sound like a fair guesstimate?

Of course, we could devalue the currency to the point where that $40k condo is riding back at $150-200k -but then an apple would have to be about $6/bite.

Is the $700 Billion Really for Bailing Out the Fed?

If the Fed gets it's bailout this weekend, it's time for a mass RECALL election campaign (lieberman.senate.gov/d...) come Monday. Petitions need to be drawn up in all 50 states for a special recall election for each Senator and/or Congressman/woman that has voted for the ~$700 Billion Fed Bailout and/or Frannie Bailout and/or $25 Billion GM/Ford/Chrysler Bailout and/or supporting an possible upcoming $150 Billion FDIC Bailout. To expropriate our savings though massive currency devalation (leading to hyper-inflation), circumvent capitalism, and accepting bribes from the very organizations who they are now saying need to be bailed out (opensecrets.org) is nothing short of deriliction of duty -and possibly criminal. RECALL elections work. They allow harmed individuals to easily have their say at the ballot box. They target and eliminate complacent politicians and put their political ambitions on ice through a quick and disgraceful end. They target an action which will not be tolerated and sends a clear, loud, decisive message to those weighing in their mind whether or not they will follow the same path. RECALL elections allow for localized actions to be taken en route to tackling larger issues -and they get a much needed discussion going at the local newspaper/church/town-... level. Anyone, feel free to add to the post with your states RECALL regulations, details, and/or RECALL petitions already started on this topic.

Even After the Bailouts, Housing is Still a Mess

man, this JasonC guy is nuts. I've seen his posts before. So, when a neighbor doesn't pay his VISA card bill at the end of the month, we should all chip in? Sorry buddy, spew your socialism (for the greater good) crap somewhere else. VISA factors in potential losses -if they do a bad job of this, they might go out of business and people with use AMEX or other companies will pop up instead. In fact, when folks don't pay their credit card bill, VISA (well, via the banks that actually hold the debt) sell that "bad debt" off to collection agencies. Check into it -there's a whole industry out there around bad debt collection. And, guess what, it doesn't involve the debt holder knocking on a few neighbors doors asking them to chip in. I hope that many adamantly oppose both the bailout bill and the whole theory around this anti-capitalistic crap -and specifically harass their elected officials until they get the idea. This is exactly the kind of bailout/price-fixing crap that we imposed sanctions on various Korean electronics over-should the rest of the world now place sanctions on US mortgage backed securities, CDS's, and dealing with the US banking system in general?

Even After the Bailouts, Housing is Still a Mess

Risks run both ways. Some folks took risks on buying homes 2-3 years ago with the thought that home prices would continue to increase and they would make off with a good ROI (sometimes with no money down at all). Others took the risk of not buying and possibly seeing the prices of housing running up to a level that those individuals could be priced out of the market forever (like the 1970's steep increases). Not that the author is doing this, but Paulson/Bernanke and other crooks are making it sound like they are alleviating risks took by investors -but this can only be done at the expense of others that took risks (and, should be rewarded accordingly when markets show favor to their strategy). Those that have saved money are being robbed through purposeful devaluation of the currency by those that believe that some folks risk taking is more important than others. This is not right -it can not even appear to be right. There is rhetoric which can be used to try & justify such events -but, even the rhetoric doesn't feel right. There are meltdowns in all markets -otherwise we wouldn't have seen DRAM price crashes in the early 2000's, crappy CROCS sandals prices falling through the floor, and liquidation auctions on Dovebid. Maybe the early bird gets the worm -but when that early bird has eaten too many worms and can no longer fly (too much debt), then there are coyotes and other scavengers that snack on good, plump birds. It's an ecosystem, just like any other -and when you screw with it, there are broad ramifications. Please urge your congressman to protect capitalism, not interfere with markets, and let risk takers from all sides have their fair share at working within the market.