Personally, I put a huge amount of blame on President Clinton and the Republicans of 1997. The 2-year residency tax exemption was probably the single biggest driver in this whole fiasco.
Geebus fluck dude, you are such a moronic jackhole that you can't even use logic to figure out the source of the situation, or at least one of the root causes. You know for a fact that I can't stand Bush, yet you post this. Why?
1. Because you have nothing to counter it.
2. Because you know almost nothing about the situation and you can't even reason yourself out of a wet paper bag.
3. Because you love to start crap.
Personally, you should be banned for running around saying stupid sh!t like above.
- May 21, 2001
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I normally don't post about the Pending Home Sales index, but I think it is worth mentioning today. This index measures how many contracts have been signed but not yet closed. This index has only been around for 7 years, but we just got the largest drop ever on it and it is statistically about tied with its lowest level ever (and that low was aided by 9/11).
Basically, don't expect the already low home sales to pick up much in the next few months.
This quote is quite important:
Basically, don't expect the already low home sales to pick up much in the next few months.
This quote is quite important:
Not only is the number of contracts low, but the ones that are signed are more and more likely to not go through. That is a double whammy to home sales.
This baby lies squarely in Bush's lap. It was his policy of tax cuts combined with ridiculous 1 % interest rates that created the wherewithal to inflate this bubble. Sure previous policies played their part too but the main power behind the bubble is Bush policies. The lowering of the interest rates was practically the first thing Bush/Greenspan did after Bush came into office.
The President has little to no affect on interest rates. Greenspan cut back rates in response to the tech bubble bursting and 9/11. It was a simple reaction to a country heading into recession while facing low inflation, especially since rates had been increasing in the face of inflationary pressures and attempts to curb rampant growth during the tech boom.
You should probably brush up on the economics and the causes/effects of monetary policy on the economy.
I do firmly believe that 1% was too low and the rate should have been increased faster to curb the growth. That and the reserve % for the banks should have been increased, along with a removal of the 2-year tax exemption on housing capital gains. Houses should be taxed just the same as stocks, regardless of how long you hold them.
- May 21, 2001
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The President should have little to no influence. But, I could see some presidents who can be very persuasive convincing the Fed to shift policy.
That said, the presidency (not the president) has a lot to do with interest rates. By all accounts, Greenspan should have cut interest rates half a year sooner than he did. The tech bubble had already burst ~9 months before. But they have a long standing policy of not touching interest rates during a presidential campaign. This policy led to a small recession at the end of Bush Sr.'s term and led to a small recession right after Clinton's term.
The tech bubble burst in March 2000. The fed waited until Jan 2001 to make a move. And when it did make a move, it was a large and sudden surprise move (just after the 2000 election mess was settled). They waited too long and thus they had to act severely. The result: they overshot and overreacted. The housing bubble was given a serious boost.
No, I don't think Clinton, Bush, or Gore had anything to do with those cuts. But the battle for the presidency had EVERYTHING to do with the cuts. That battle made the cuts too late and too severe. If there wasn't a presidential election in 2000, we would never have reached 1% interest rates. Instead, we would have been at 2%-3% sooner and stayed there.
theeedude
Lifer
- Feb 5, 2006
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Don't forget this beauty:
http://www.bloomberg.com/apps/...6CPQun5.3bQ&refer=home
Burst, bubble, burst
http://www.bloomberg.com/apps/...6CPQun5.3bQ&refer=home
Burst, bubble, burst
Vic
Elite Member
- Jun 12, 2001
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It's pretty pointless to argue economic facts with the resident hacks. They blame Bush for their bouts of constipation and then pray for their next bout so that they can have something new to blame him for. In between, they oscillate between him being a stupid puppet and him having omnipotent powers for evil. It just goes to show how irrational the combination of persistent pessimism with the need for scapegoating really is.
My favorite is the election stealing claims and setting up 9-11 to invade Iraq. This is an administration that cant piss on a toilet seat without some leak(pun intended) getting out to the NY Times so they can write a new op-ed piece about pissing on toilet seats and how Bush's admin has failed yet again. Yet we are supposed to believe they pulled off two elections and a war in what would be the biggest conspiracy in the history of mankine without a single peep or leak?
not to turn this isn't a 9/11 conspiracy thread, there were peeps. They were squelched or ignored. Read the book Collusion, then come back to me, perhaps then you might know enough to speak on this matter.
During 2001, Greenspan?s visits to the White House more than tripled the 1.0 per month average he compiled from 1996 to 2000. Rather than checking in only for a monthly lunch with the Council of Economic Advisors (CEA) as he did in December, the chairman visited the White House three times in January. For 2001 as a whole, his White House visits averaged 3.1 per month.
link
Sure, Greenspan just happened to loved those cucumber sandwiches Bush's new cook made :rolleyes;
That's interesting. Just as people thought the tech boom would collapse he started visiting more, when we started heading into a recession he did the same.
Color me shocked. What would be telling would be what he did during the 88-93 period.
- May 21, 2001
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Percent of homes entering foreclosure is at record high. And things are only going to get worse. More and more ARMs are resetting each month until Oct (where it will finally stabilize). 1.11% of mortgages are 90+ days behind; 0.65% are entering foreclosure.
PWNED
China Sells Bonds to Finance Overseas Investments
Under pressure to boost the returns it gets on its massive foreign exchange holdings, the government sold $69 billion worth of bonds to raise capital to fund an ambitious program of overseas investment. Its first two big forays have already proved, for now at least, less than stellar calls. It bought as much as $100 billion in US mortgage bonds not long before that market hit the wall. Then followed up with a big stake in private equity firm Blackstone, only to see the shares plunge as the credit crunch took hold.
China Sells Bonds to Finance Overseas Investments
Under pressure to boost the returns it gets on its massive foreign exchange holdings, the government sold $69 billion worth of bonds to raise capital to fund an ambitious program of overseas investment. Its first two big forays have already proved, for now at least, less than stellar calls. It bought as much as $100 billion in US mortgage bonds not long before that market hit the wall. Then followed up with a big stake in private equity firm Blackstone, only to see the shares plunge as the credit crunch took hold.
- May 21, 2001
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And yet people seem to think that our government would do perfectly well at investing social security money into stocks. I certainly don't trust slow governmnet groups to be efficient enough to do well; that politicians are the best stock pickers, or that curruption will not take over. Oh, I own a large amount of XYZ stock, as a politician, lets have the government invest billions into XYZ, I sell at a high, and retire a multi-millionaire.
Pliablemoose
Lifer
- Oct 11, 1999
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Dullard, I read something about Alt A loans the other day and how they're the iceberg, and the current sub prime crump is the tip of the iceberg?
Can you explain that to me with sock puppets or something?
- May 21, 2001
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Engineer posted a wonderful link not too long ago. Here it is. I point you to some data in that link (sorry they are pie graphs and not sock puppets):
1) Figure 1: Subprime is 20%, Alt-A is 20%, Jumbo is 12%, and Prime-Conforming is 45%. Thus, in size of dollars, Alt-A and subprime are about equal in size. What does that mean? It means that both Alt-A and subprime are minor players but significant players in the mortgage market. I'm not sure if the iceberg comparison is valid in terms of mortgage dollars.
2) Figures 10/13: Alt-A has grown dramatically in the last 3 years. But so has subprime. In fact, they seem to go hand-in-hand; the iceberg comparison doesn't seem valid here. What does that mean? Rules-of-thumbs that worked in the past won't work now, we are in uncharted territory. Thus, things are inheritantly more risky because we don't have history to help guide us.
3) Figure 30: Here is an interesting graph. Alt-A mortages are an anomaly. Alt-A mortgages are 2-3 times as like to be interest only or negative amortization. What does that mean? Interest only and negative amortization loans frequently mean that the borrower owes the same amount or even owes more than when the mortgage was originally given. These people likely have no equity at all in the house. That makes it easier for them to abandon ship. If you have no valuable luggage, you'll find it easier to abandon ship too. Sure, they may trash their credit score, but otherwise they lose nothing from a foreclosure. Heck, they very well could gain dramatically financially from a foreclosure. That is a scary thought. And since Alt-A is so far different from other loans here, the iceberg comparison may actually be valid.
4) Figure 32: Alt-A is mostly comprised of people who didn't provide much documentation (if any at all) that they actually have an income. What does that mean? They might not have the income to pay the mortage. Or maybe they do. We just don't know. We are in uncharted territory (see #2 above) being controlled by people who didn't give us their financial resume.
5) Figure 42: On the other hand, it is subprime mortages that will be dramatically increasing in payments in the next 2 years. Thus, subprime may very well feel the pain first. It is 3-5 years out when subprime resets are negligible and that Alt-A resets double. I'll repeat. The pain will start in subprime and then move to Alt-A.
6) Figures 43/45: Prime fixed mortgages are showing no differences in foreclosures compared to other years, while Alt-A fixed is higher than recent years, but still just at year 2002 levels. People who got fixed mortgages seem to be doing ok.
7) Figures 44/46: Prime ARM mortgages are showing increases in foreclosures. But, look at Alt-A ARMs! Their foreclosure rate is 4-5 times higher than it was just 2 years back.
Summary: Alt-A is filled with undocumeted or low documented borrowers who if they took out Interest only, negative amoritization, or ARM loans will be being foreclosed on in a couple of years.
Vic
Elite Member
- Jun 12, 2001
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Subprime is the just new name for traditional small institution mortgage lending in the Fannie Mae era. These were the loans your local bank or S&L used to give out, hold, and service (traditionally, the loan officer who made the loan was also responsible for collecting the payments). Not long ago, these loans were simply called "non-conforming," meaning that they didn't conform to Fannie Mae salability guidelines.
Alt-A was Wall Street's big foray into the mortgage world. IIRC, the term itself was coined around 10 years ago by Aurora Loan Services, subsidiary of Lehman Bros. The idea for them was to cater to commisioned/bonused/business owners/self-employed people with high credit scores and strong assets but who couldn't document stable income.
This was a desperately needed niche, because prior to these products, it was a off-color joke in the mortgage business that we had 2 products, 7% or 10%. You might have perfect credit and more money in the bank than the loan amount requested, but if your tax returns didn't show the income that Fannie required, then you got lumped in with the bruised credit deadbeats and paid the same rate. So if you want, think of Alt-A as subprime for the more affluent.
Anyway, the important thing to keep in mind here is that Alt-A borrowers do have "luggage". People with 720 scores and 6 months in the bank do not benefit from foreclosure and bankruptcy. The other thing to keep in mind is that, unlike subprime, "No Doc" loans did not exist in Alt-A lending at sky-high LTV's. Low documentation, yes. No doc, no.
Alt-A was Wall Street's big foray into the mortgage world. IIRC, the term itself was coined around 10 years ago by Aurora Loan Services, subsidiary of Lehman Bros. The idea for them was to cater to commisioned/bonused/business owners/self-employed people with high credit scores and strong assets but who couldn't document stable income.
This was a desperately needed niche, because prior to these products, it was a off-color joke in the mortgage business that we had 2 products, 7% or 10%. You might have perfect credit and more money in the bank than the loan amount requested, but if your tax returns didn't show the income that Fannie required, then you got lumped in with the bruised credit deadbeats and paid the same rate. So if you want, think of Alt-A as subprime for the more affluent.
Anyway, the important thing to keep in mind here is that Alt-A borrowers do have "luggage". People with 720 scores and 6 months in the bank do not benefit from foreclosure and bankruptcy. The other thing to keep in mind is that, unlike subprime, "No Doc" loans did not exist in Alt-A lending at sky-high LTV's. Low documentation, yes. No doc, no.
Pliablemoose
Lifer
- Oct 11, 1999
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Thanks for the explanation, anyone notice that between the Euro banks & the Fed Reserve, nearly 90 billion was injected into the economy today?
Modern day ghost town now appearing
9-13-2007 1 out of 27 foreclosed in Stockton California
A town in central California has become ground zero in the wave of foreclosures plaguing the US housing market in the wake of the sub-prime lending crisis.
With a population of nearly 300,000, Stockton has acquired the unfortunate distinction of having the highest foreclosure rate of any US city, with one in 27 households left counting the cost of the credit crunch
Stockton's Weston Ranch neighborhood, a 15-year-old subdivision of modest tract homes, has the worst foreclosure rate in the area
"It's not the CEO of Intel who lives in Weston Ranch, but the guy who details his car," Geri Taylor, broker at Weston Ranch Realty for twelve years told AFP
"People are just walking away," said Taylor. "We've seen houses with food still on the table from when the sheriffs have come knocking."
Lupe Dominguez washed his car in his driveway two doors down from a shabby bungalow with a front window covered in a yellow and black poster announcing a public auction with a fifty thousand dollar starting bid.
"That house has been empty for nine months or so and the sign has been there for two," he said.
A friend who lived down the street lost his house to foreclosure and then rented a house that he had to vacate because it too was foreclosed, he said.
"We've got 350 homes for sale in this neighborhood right now and at this rate, that is five years of inventory," said Taylor.
9-13-2007 1 out of 27 foreclosed in Stockton California
A town in central California has become ground zero in the wave of foreclosures plaguing the US housing market in the wake of the sub-prime lending crisis.
With a population of nearly 300,000, Stockton has acquired the unfortunate distinction of having the highest foreclosure rate of any US city, with one in 27 households left counting the cost of the credit crunch
Stockton's Weston Ranch neighborhood, a 15-year-old subdivision of modest tract homes, has the worst foreclosure rate in the area
"It's not the CEO of Intel who lives in Weston Ranch, but the guy who details his car," Geri Taylor, broker at Weston Ranch Realty for twelve years told AFP
"People are just walking away," said Taylor. "We've seen houses with food still on the table from when the sheriffs have come knocking."
Lupe Dominguez washed his car in his driveway two doors down from a shabby bungalow with a front window covered in a yellow and black poster announcing a public auction with a fifty thousand dollar starting bid.
"That house has been empty for nine months or so and the sign has been there for two," he said.
A friend who lived down the street lost his house to foreclosure and then rented a house that he had to vacate because it too was foreclosed, he said.
"We've got 350 homes for sale in this neighborhood right now and at this rate, that is five years of inventory," said Taylor.
WhipperSnapper
Lifer
- Oct 30, 2004
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