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ralph

Dar ELaine,
Can you blame uneducated,hard working hispanic immigrants from wanting to live the "American Dream of homeownership?" Companies such as Delta funding had programs 1st time homebuyer,80 ltv,no ss#,no credit score needed. I closed numerous deals like this when I was taking advantage of the housing bubble. Any kind of loan could get done. Gutted apartments with no rentals in Bed-sty were being refinanced with NO INTERIOR PHOTOS by HSBC,Decision 1 unit. Up to 95% ltv with a 600 credit score, and STATED INCOME!!! Everyone in the mortgage industry knew in 2004 that we had a MASSIVE MASSIVE Nightmare in front of us. Yet no one tried to do sound loans because the yield spread premuim you recieved as compensation, rewarded you for selling the much much riskier loan. Its as if the Banks wanted this to Blow up horribly in the end. Iam convinced from being heavily involved in mortgages for 5 years, that this was all totally planned in advance. Every bank knew they were writing AWFUL loans, but they didnt care because they could securitize it and dump it in pension funds and foreigners laps. The price we will pay for this is the HYPERINFLATION of the dollar.

Blunt Force Trauma

Fed rate nears zero, food price goes higher. That and the fact it causes the US dollar to lose it's 'value'.

Wheat Soars Most in 20 Years on Federal Reserve's Rate Decrease (Bloomberg)

https://tinyurl.com/5zpnac


Buffalo Ken

OK - Maybe economics is not really a voo-doo science, but lets all understand that economics is not a "hard science". So economics cannot help but be imbued by bias - particularly that oh so insidius "poltico-power-money-ego" bias bull. So the critical thing is to keep the economic relationships simple (do you hear Calvino?). Eight variables or fewer. You know: Supply and Demand. BALANCE.

I sure hope some of the currently existing banks can begin to appreciate the concept of "balance", but I doubt it. Don't worry - better ideas are waiting in the wings and these ideas will emerge. I have some ideas that I plan on documenting on several "batterybank" sites I have registered. Balance is key.

Peace,
Ken
batterybanks.info

Buffalo Ken

Right - for "money" to "work" there needs to be balance. If the balance ain't there, then the money won't work, and then, the "money-handlers" will be without a job.

Good riddance - we need some better hands, but of course, the current "money handlers" will demand all sorts of payment when they themselves are so bankrupt. Hypocrisy to the nth degree.

Peace,
Ken

djcrow22

Elaine, thank you for all of your hard work. You amaze me on a daily basis with your output and research. Any chance of writing a basic primer on currency? Yen rising, dollar falling, yada yada... Your explanation of the carry trade was excellent and I get the gist of what China and Japan are doing ect. Any help is appreciated. Thanks...

Buffalo Ken

Here is a concern I have regarding "talk on the Internet". A vast sum of magnificent knowledge might be lost if this material is not printed out. What Elaine has done here could be a magnificent book of tremendous value for so many. A "publisher" ought make a proposal to Elaine to publlish the book "gratis" so to speak. Then, if there are profits, a portion should go to Elaine so that she can continue to improve her homestead. If I was a publisher, I would do this. The content here has value in my humble opinion.

Peace,
Ken

Blunt Force Trauma

AIG used billions from Fed but hasn't said for what (Int'l Herald Tribune)

Oh, I know...houses in the Hamptons, Panama, The Caymans and in Ecuador.

https://tinyurl.com/5s39ks

Russia, China sign landmark oil pipeline deal (Breibart)

"Hey, U.S. No oil for you!" - Oil Nazi

https://tinyurl.com/5tuaor

ziff house

Elaine , my apologies if this has already been covered, but;

interest rate swaps , derviatives, the vast bulk of the beast i made of these things. they sound innocuous, staid, what could be more boring. they are not connected to inflated assets etc.
But two things seem really anomalous'
- there are 376 ? trill of them 376 trill of anything is anomalous-
- 0% interset rates are pretty anomalous too.
there has got to be a story here.

ziff house

Never underestimate the bad guys, if they can succeed with this high dollar crap, it will lower the cost of those imports and dampen inflation.
With everybody singing the same tune about the markets, it sure looks like a bottom, chartwise this is not 29 and its setup for a big rally.

Buffalo Ken

Hey ziff,

are you part of ziff davis by chance?

If so, you could publish.

Peace,
Ken

Buffalo Ken

"Big rally" or "dead cats all about".

Place your bets!

Peace,
Ken

Buffalo Ken

Just as an aside, I one time pulled a long-time dead grey cat from Providence Rd. Threw the carcass out in a dumpster at the Providence Square apartments. That cat was nothing but skin and bones.

Peace,
Ken

Buffalo Ken

and speaking of numbers, 3 is so irrational - it all starts with three.

1/3

2/3

so on so forth.

But take the reciprocal and then it ain't irrational anymore.

Now the square root of 10. That is a whole nether matter. Knowledge is sacred moreso than just about anything else.

Peace,
Ken

Blunt Force Trauma

Redacting public contracts?

Bailout Scandal: Undisclosed Sums Paid to NY Mellon Bank (Washington Watch - Oct. 23rd)

https://tinyurl.com/6df7r9

More:

Bailout package: Blacked out provisions for compensation (Divining The News)

https://tinyurl.com/6jawce

Blunt Force Trauma

Bloomberg doublespeak alert!

U.S. Economy: GDP Shrinks at Fastest Pace Since 2001 (Bloomberg)

Then, in the next story, Bloomberg tells us that stocks 'rose' on GDP - even though it shrank - but less than expected, blah, blah, blah.

https://tinyurl.com/5kpxya

U.S. Stocks Gain on GDP, Rate Cuts; Intel, Home Depot Advance (Bloomberg)

https://tinyurl.com/5lb4um

PK Scott

Hi Elaine,

I lived in Austin, Texas in the 80's when the previous real estate bubble went bust.

I was able to buy a house in a small town outside of Austin at the nadir of the the bust for less than $20,000. (At one time it had been under contract for $45,000 so it had theoretically fallen over 50% in value).

I worked for a realtor in that town from about 1993 to 1999. I was lucky, the realtor I worked for was one of the ethical ones.

I watched the early part of the bubble in central Texas. It was never as wild a ride as California or Florida, but it was definately a rising market, to the point where even today a house in Austin is out of reach for a lot of people who have good jobs (like cops and teachers).

Most people are not sophisticated enough to understand an asset bubble. A lot of them were on a treadmill with their income not even keeping up with inflation and rents on the rise. The lure of little or no money down to get ahold of a house before the price went inevitably out of reach didn't really look that crazy.

Of course this was BEFORE lenders went on a lending orgy to anyone with a pulse, so people weren't normally placed in propertied that they could not afford.

It was pretty standard practice (in the office I worked in) to send potential buyers to a reliable lender to get them "prequalified" for a loan and then help them shop within their means.

Since then I have bought and sold several houses (I'm NOT a flipper, it was relocation for my husbands work) and as a buyer I can tell you the lender I went with used due dilligence and required and perused all our financial information up to and including pay check stubs, bank statements, and IRS tax documents for the 2 preceding years.

Some people were imprudent and purchased beyond their means and were not weeded out by lenders, some were convinced to get in on ARMs that they didn't understand, and I am sure there was fraud as well. But the average person didn't see the "trap" because real estate was always going up and they were desperate get on the "property ladder" before the rung they could barely grasp was yanked forever beyond their reach.

Nobody was talking about the unsustainability of the price of real estate, it was all just up-up-and-away.

The underlying problem wasn't the sub-prime lending, it was the bubble created by too much cheap money chasing too few quality assets. This is the same phenomena I observed when my husband asked me to look into investing for his 401K. (My introduction to economics) When so called financial advisors were saying that P/E was unimportant because you were going to make money off of appreciation of your equity not earnings. (My first real SAY WHAT? moment.)
I have no economics training and didn't know a technical from a fundamental, but apparently training in economics nulls common sense. Even before I knew anything about derivatives and the gross distortions that they created I knew that a pattern of perpetual growth was immpossible.
The same dynamic that was blowing a bubble in the real estate market was working in the stock market.
The other side of the coin was the crack dream that real prosperity could be built out of a mountain of debt. Anybody with a lick of sense knows that a point is reached where debt will be defaulted on if it reaches the point where the debt is immpossible to repay. Debt cannot grow to the sky any more than real estate or the stock market.
When the bottom of the pyramid collapsed (the American consumer) the whole house of cards HAD to fall with it.
The whole derivatives scam and the carry trade were tools that to just keep blowing the bubble bigger and bigger, believing the whole time that the bubble would never burst, and in so will increase the carnage exponetially.

PK Scott

Hey Ken,

The Elliot Wave people think this is absolutely a dead cat bounce (maybe all the way back p to 10,000). They use some kind of fractal wave count stuff that is confusing to me but seem to get their calls pretty right.

The prediction is that after this one we get a bigg assed drop to around 5,000. Then maybe we get another bounce and a drop that may ultimately wind up below 1,000.

It sounds pretty dire, but the last depression wrung 95% out of the markets before they really hit bottom.

don

Politics at best: I was reading how the FDIC is going to bail out 3 million homes with 50 Billion, which is part of the 700 Billion plan. Meanwhile, I see no plan in place for the use of the capital that is still on the sidelines. From a political posturing, I still see this benefiting Obama, knowing that resolution is no-where in sight, the money will be released after Nov. 4th, knowing that Goldman Sachs former leader is in charge of the 700B cookie jar. Also, Delta Airlines/Northwest gets approval from DOJ for its merger, which only took 7 months !! We know that the democratic
base does not like airline mergers and the approval comes, just before the Election. Politics, never.......

PLovering

In 1992, U.S. taxpayers paid the FED banking system $286 Billions in interest on debt the FED created out of thin air.

IOWs each of the 300 FED stockholders got a $24 Billion dollar dividend.

Today, each of those 300 FED stockholders gets a dividend closer to $100 Billions.

The FED's books are not open to the public. And Congress has yet to audit them.

PK Scott

Hey Ziff, as far as I can tell EVERYONE is not singing the same tune. They are up down and sideways.

You are right though, it's NOT 1929, we are actually in lots worse shape from some perspectives.

Back then we weren't so dependant on just in time delivery and we weren't so dependant on energy. I'm not just talking oil here. Even in the 70's there were still a lot of people and animal powered machines/tools lying around. Have you priced a hand crank butter churn? If you can find one it's an antique and it will set you back over $100 dollars. How about a cream separator? Most of them are defunct and/or have been used as a planter. $150.00 minimum. A new one will set you back about $300.00. How about a non-electric washing machine. (grandma had one, you agitaded it by hand and wrung the clothes out with a hand crank wringer.) Ice box? Ice house? (Granpa worked through the dpression in an ICEHOUSE back when ice was delivered door to door and a necessity.)
My parents lived through the depression and they are the kind of people who re-used tin foil. My mom talks still talks about it. They were farmers, at least they ate.

The whole dollar thing is probably an anomaly. Chances are pretty good that it won't last. Remember every government on the planet is begging the banks to LEND. What happens if the floodgates open up again? Inquiring minds want to know.

Blunt Force Trauma

Don said, "I was reading how the FDIC is going to bail out 3 million homes with 50 Billion..."

You're missing a zero :)

Treasury, FDIC Said to Consider Guarantees to Stem Foreclosures (Bloomberg)

"The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a program that may offer about $500 billion in guarantees for troubled mortgages to stem record foreclosures, people familiar with the matter said."

Stem? You mean not 'stop' the foreclosures? So the sudden death heart attack instead becomes a slow flesh-eating disease? Well then. Sign me up!

https://tinyurl.com/68y85y

Blunt Force Trauma

....to add, Don. I don't see how any of the above 'benefits' Obama. No matter when the release date of the casino toilet paper is to be. People will still lose their homes - just a little slower.

Buffalo Ken

I don't really care about the large-scale market (the dow and others), cause they will go where they will. Its a casino after all.

But I do care about silver and I care about gold. Plus just a bit of platinum is nice too. If the Dow goes down to a thou, who is gonna suffer - not most. Most will just go about their day-to-day business and I am amongst them. I am one of the peasants and we don't need no stinking loans from the damn hypocritical banks - they can keep their fake paper money.

I gotta color-laser printer. Hells Bells, its been a printing.

Peace,
Ken

Buffalo Ken

And one last thing that I know....I have it so much better than so many peasants from the past....I know this. But still, I consider myself a peasant. I come from humble origins. Small house type folks.

Peace,
Ken

Blunt Force Trauma

Ken said:

"If the Dow goes down to a thou, who is gonna suffer - not most."

-Are you serious? The DOW as it is today, has throngs of the innocent that don't play the racket who are losing pension fund money as that money that was put into pension funds (portion of wages) has been packaged and gambled away on mortgages and other investment vehicles by those entrusted with sustaining those nest-eggs which are at best, half of what they were a year ago. The DOW has far-reaching effects. Don't kid yourself.

"Most will just go about their day-to-day business and I am amongst them."

-In the souplines and/or looking for work.

"I am one of the peasants and we don't need no stinking loans from the damn hypocritical banks - they can keep their fake paper money."

-Which we all need for day-to-day living, unfortunately, as we are told by them that it has 'value'. Also, unless you have countless (hundreds of) thousands saved, you'll need those loans for cars, houses and big ticket items. But with the squandering going on; good luck.

Buffalo Ken

Blunt Force Trauma - I just don't buy into the fear. Foolish maybe, but fearful not.

Peace,
Ken

Buffalo Ken

Plus - so many plants can grow back all by themselves. With modern no-how and ancient wisdom, the sky is the limit.

Peace,
Ken

Buffalo Ken

Lastly - if I had kept my funds is cash (US Dollars) I would have plenty more than I need to pay off all of my debts -- I suppose in hindsight this would have been the smartest being that my debts are also in US dollars (no uncertainty). But, to me the US Dollar is a dead end road, so I rolled the dice - so far it hasn't been profitable, but I don't really care cause my debt is very small.

Peace,
Ken

Blunt Force Trauma

It has nothing to do with fear, Ken. It's reality. The DOW affects 401(k), IRA and retirement plans. It's a loss in equity - liquidity for someone that has worked all their life. It also tends to be a barometer of the economy which means it 'measures' your ability to find another job or get a raise or just keeping your job.

The only 'fear' is that if you're close to retirement age, what is happening on the DOW greatly affects the above. it's why you'll see stories such as this one:

State's pension funds take $5B hit (Star Ledger)

https://tinyurl.com/628b2x

Ignoring that and the DOW IS foolish. Which you've already stated that you are. I have my moments as well. You're not alone :)

Buffalo Ken

Peasants know that sometimes they have to pick up and leave. Peasants know that they have the numbers. Peasants know what needs to be done when the time comes.

Peace,
Ken

Buffalo Ken

Blunt - I know I'm not alone. Nor are you.

Paul S

Here is a link of a Dennis Kucinich vid from the House Floor: https://www.youtube.com/watch?v=Feyu2Db2QuU . The Congress has too few like Kucinich. That's the problem.

Blunt Force Trauma

Hey Ken, gotta burst your balloon on gold. Sorry. Also remember, that is a 'crisis', as has happened before; the 'bastards' will confiscate your gold. Make sure it's physical and not bonds/paper and bury it next to the Oak tree behind the dog house :)

Reality Dawning...For Gold (Euro-Pacific Capital)

https://tinyurl.com/62m6yo

Paul S

I think our politicians have their fingers in the dyke. The you-know-what will hit the fan after the election. And: the low point of the election coverage from last night? Tom Delay being interviewed about Obama. Why have Delay on? Delay created and fostered the 'culture of corruption' in Washington. Delay left the House when he was indicted for violating finance laws. What next? Having Hustler publisher Larry Flynt on the air to plead for equal rights for women? Why not? That's no worse than interviewing the sleazeball from Texas, Delay.

calvino

Wamu sent me an invitation to refinance my thirty year mortgage taken out in 2001. The letter was about one thing - getting my rate lowered! So I took the bait and called. I did not miss any payments with Wamu and did not pay late ever. They offered me 7.375%. That is much higher than my original rate. I agreed of course, because I know that Wamu needs the money and I want to help them make a 600 point spread. Not.

ziff house

''With everybody singing the same tune ''
yes that was off the cuff, but the big howl in the press is a good bottom marker and i'll stick to my guns about the charts. Charts have a mystical power you know.

Ziff-davis? sorry no, i'm just a forest gnome.

Buffalo Ken

ziff-house - me too. I'm living in the forest, but I'm not a gnome.

calvino - I knew you were out there....600 point spread - you must be kidding. 500 maybe.

Peace,
Ken

Blunt Force Trauma

Awesome Gnome Video (Youtube)

-Well not really. Terrible quality, but it looks a lot like Benny to me.

https://tinyurl.com/3cv8t4

don

Blunt: did you steal my zero..thanks.............
I was looking at the 700 billion that is being
guarded by Former Ceo Paulson and he gets to play sheriff with the money allocation. Keep the ugly numbers in play so it looks nasty and then release the money after Nov. 4th. Politics...............
I looked up the contributions for Obama and one of the biggest contributors is Goldman Sachs. That is the correlation I am making. Sure like to know what body of the govt. is protecting the main
street individual. I find none...........

DrKrbyLuv

The system is a mess which is really no surprise. Fractional lending and fiat currencies work for a relatively short time before they implode.

How can a system, that creates liquidity through loans, but never creates the interest to be paid ever be expected to work?

The loans and interest simply cannot be fully paid.

It's a scheme that works over and over again through-out the world. People are quite stupid to trust the economy to the elite scum. Those bastards make the mafia look like good fellas.

Elaine - I had a 1956 chevy in high school (1968-70). It was an ugly and rusty mess but in those days, if you had wheels, you were made. The bad looks were more than made up by the cherry bomb glass pack muffler, nice looking wheels and a really nice 8 ball shifter.

My front seat had a nice zebra cover, made me feel like I was in the jungle which somehow was appropriate.

PLovering

Correction to previous post:

U.S. taxpayers paid the 300 FED shareholders a dividend of only $1 Billion each in 1992.

And a 4-5 $Billion dividend, each, today.

Sorry about the math.

Blunt Force Trauma

Don said:

"I looked up the contributions for Obama and one of the biggest contributors is Goldman Sachs."

You'll find Gollum and others at the top or near to it on most of the candidates' contribution lists.

Speaking of Gnomes...caught with their pants down I see!

Lies and Audiotape: Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending (EIR)

https://tinyurl.com/65dq83

calvino

Wrong Buffalo. The Fed Funds overnight rate has been dropped to 1% yesterday. Wamu will be muzzling at that trough and regurgitating back to me at 7.375%. That is 600 points plus.

Blunt Force Trauma

Bubble, Bubble: Unprecedented Bailouts and Loans from Fed

Oct. 25, 2008 (EIRNS)—The weekly Federal Reserve report on how much banks are borrowing from the bailout facilities, released Thursday, shows that banks borrowed this week at the highest rate on record. On Oct. 22 alone, banks borrowed $107.5 billion, which is an all-time high. The daily average for the week, from Thursday to Wednesday, was $105.8 billion a day. The previous all-time high was a daily average of $99.7 billion, the previous week. At the same time, over the last week, another $144.2 billion in loans were made to money market mutual funds. In a third category, investment banks, Goldman Sachs, Morgan Stanley, and Merrill Lynch borrowed another $111.3 billion for their London broker-dealer subsidiaries. Reporters at the White House briefing today tried to extract an answer from White House spokeswoman Dana Perrino about why such skyrocketing borrowing by banks "after" the Paulson Bailout. Perrino claimed that the $700 billion approved by Congress has not actually gotten to any banks yet--Paulson's team is still hiring "the right kind of consultants" to administer the bailout.

PLovering

Market Ticker has excellent post on recourse vs non-recourse loans.

New loans may be recourse loans, whereby the bank owns you for life.

https://market-ticker.denninger.net/

Blunt Force Trauma

"New loans may be recourse loans, whereby the bank owns you for life."

i.e. - Slaves, Serfdom

calvino

Legion is back. Get behind me devil.

Elaine Meinel Supkis

I descended from the Bardis. Yes, recourse loans will enslave you every bit as much as credit card loans. Note how the gnomes worked hard to make credit card loans hard to evade.

And thanks for all the links and comments. Things are moving fast. And I notice that Typepad restored my control of my HTML coding this last few hours. Damn them to hell for screwing with my site!

Blunt Force Trauma

KABOOM!

Fed Buys $145.7 Billion of Commercial Paper in Start of Program (Bloomberg)

'The Federal Reserve bought commercial paper valued at $145.7 billion in the first days of the program aimed at backstopping the market, indicating the central bank is generating most of this week's record gains in short-term corporate borrowing.'

-That's expensive toilet paper. Must be 10 ply, baby-powder scented.

https://tinyurl.com/5gln6m

calvino

Senator Obama has said that he wants to expand the Small Business Administration so as to provide the financing that American startups require. Since investment bankers have failed abjectly to finance future growth and manufacturing, I like the Senator's proposal very much. I do not understand why the taxpayers need a skein of banker parasites that are failures in their role, whereby they kill the host. Several completely useless McMansions in exurbia is the difference between having the next Genentech or Fairchild Semi. I am completely disgusted with these preening cretins. Vote Obama.

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