Cramer Opens His Yapper Again

CNBC Video--Cramer says don't buy a home

WOW!! Mind you, I heard with my own ears on Mad Money a few months back that Cramer admitted to RENTING!!!! Yes, RENTING. Oh My God! Watch this video.

The NAR demanded a retration. Cramer and The NAR president-elect debated on The Today Show:

Video: Debate

Boy, you think the NAR with all their money that they could hire a professional debator.

Oh No He Didn't!

The Federal Reserve's Interest Rate Cut Does Not Help Americans

by Axel Merk


In our assessment, the Federal Reserve's (Fed's) interest rate cut was wrong. Forget about the "moral hazard" of whether the cut would plant the seeds for further bubbles. Lowering interest rates is wrong because it will do few any good, but cause many a lot of harm.

As the most imminent result, the U.S. dollar has accelerated its decline versus hard currencies. When a country's central bank cuts interest rates, it is rare that the currency reacts in textbook fashion and declines more than a token amount versus other currencies; that's because, amongst others, lower interest rates may boost growth and make the currency more attractive for investments. Not so this time with the Fed's cut: lower interest rates are unlikely to boost economic growth. The reason? The markets are facing a valuation problem, not a liquidity problem.

The DJIA going above 14,000 for the first time ever. But what does that really mean when your dollars are worth less than when it was at 10,000?

"It's A Buyers Market", But...

...Don't even think about...

Making a low-ball offer

By Amy Hoak
MarketWatch
Article Launched: 09/22/2007 01:41:01 AM PDT

CHICAGO - Home sellers are not automatically turning up their noses at offers that come in far below their asking price these days as prices stagnate and the inventory of homes for sale remains elevated in many markets.

But buyers who do ask for deep discounts still risk offending sellers to the point where they quash any deal. So before making an aggressive offer, some homework is in order, real estate professionals say. Further, buyers need to effectively explain why the price of a home should be lower.

Maybe THIS is the problem:

Homeowners Just Don't Understand Value Of Homes

Posted By:Diana Olick
Topics:Housing | Real Estate
Sectors:Construction and Materials

A new survey out today from Reuters/University of Michigan looks at homeowners’ perceptions of their own homes’ values. When the survey flashed over the wires this morning, my email lit up with all the “Alert” desk folks at CNBC saying, “Omigod, this is huge.” I don’t agree. I say it’s not huge enough.

The survey’s headline says, “A record 26% of U.S. homeowners say the value of their homes has fallen during the past year.” Further, 21% of homeowners polled in September expect the value of their home to decline in the year ahead. The survey finds even bigger numbers if you look at folks just in the West, but that’s an overall national picture.

Ok, so 26% is a record, but I have to ask, why isn’t it higher?? The latest survey from S&P/Case Shiller, which looks at the nation’s top 20 metros as well as a full U.S. National index, shows nothing but negative now, and given the trend, into the near future. The national index shows a price drop of 3.2% from a year ago, with the 10-city composite down 4.1% and the 20-city composite down 3.5% from a year ago.

Oh, I get it. the Greedy Sellers are completely out of touch. Hmmm, how much longer can they keep making adjusted rate payments? I am still holding my breath!

Thumbs Down

Fed's move called into question

Rising bond yields and a slumping dollar fuel inflation worries after the rate cut.

By Walter Hamilton, Los Angeles Times Staff Writer

NEW YORK — Yields on long-term Treasury bonds jumped, the U.S. dollar sank and the price of gold surged Thursday, intensifying questions about whether the Federal Reserve's move this week to stimulate the economy could backfire.

Though the central bank's cut in short-term interest rates on Tuesday stoked the stock market, it has spooked some other markets -- mainly by raising fears of higher inflation that could undermine the economy.

...

Whatever is driving long-term Treasury yields up, it's bad news for the housing market.

"The cost of getting a mortgage has gone up, not down, since rates were cut," said Jim Keegan, a bond fund manager at American Century Investments in Kansas City, Mo. "So far the market's voting that [the Fed cut was] not the right thing to do."

The average rate nationwide for 30-year mortgages edged up to 6.34% this week from 6.31% last week, mortgage finance giant Freddie Mac said Thursday. The 30-year loan rate has mostly been falling since mid-July.

We will see what happens, but I think it it will be safe to assume that the Fed will cut again. The all important Dow did not flourish for long after the cut.

The only real way to help the housing market will be to pay off 1/2 of all homedebtor's loans. But what a mess that will be. And that will ruin homeownership those that did not get in and those about to come up.

As we well know, the Fed's job is to help out Wall Street not Main Street.

Fed Cuts

In case you missed it, the Fed cut it's key rate:

Fed cuts rates by a half percentage point

Bold reduction in fed funds aimed to forestall disruption in markets, economy

WASHINGTON (MarketWatch) -- In a surprisingly strong move, the Federal Reserve unanimously voted to cut its overnight interest rate target by a half percentage point to 4.75% Tuesday, citing turmoil in financial markets as a threat to economic growth.

"The forest fires in the economy had been spreading rapidly in the July-August period, and the Fed has recognized that it is going to take more than just a few buckets of water to bring this situation back under control," said Brian Bethune, U.S. economist at Global Insight.

U.S. stock markets rallied on the first cut in the federal funds rate in more than four years. Financial markets and analysts had been expecting a smaller quarter-point cut.

What does this mean? Will you get a better rate now? Will you be ale to stave off high prices with a low low rate?

According to Bankrate.com, maybe not:

Mortgage rates lower, too? Not so fast

Whenever the Fed cuts the federal funds rate, customers call mortgage lenders, eagerly expecting to take advantage of a drop in mortgage rates. By the time these phone calls are over, customers frequently feel disappointed and even suspicious. It just doesn't seem right. Why would banks raise mortgage rates while the Fed is cutting rates?

Things aren't that simple (or that sinister). Mortgage rates go up and down according to investors' expectations of long-term inflation. Simply put: If investors think inflation will accelerate, mortgage rates (and other long-term interest rates) rise.

So, is long term inflation a problem?

Gold hits 28-year high after dlr sinks to record lows

and

Oil prices rise above $82 a barrel


Let us see what the dollar is actually doing:

Loonie's rise latest sign of our dollar's fall

The American dollar is tumbling around the world.

On Thursday it reached parity with the Canadian dollar for the first time in 30 years and hit its lowest level yet against the euro, also dipping relative to the British pound and hitting a nine-year low against the Indian rupee.

Parity means one Canadian dollar buys one U.S. dollar, so a bottle of maple syrup could cost an American as much in Toronto as it does in New York.

So with gold shooting up, oil making a new high and the dollar falling off the cliff, I'd say we might have long term inflation. One way to tell, let us look back to Bankrate.com:

Mortgage rates rise slightly

The Federal Reserve cut interest rates this week. So naturally, mortgage rates went along for the ride, right?

Wrong.

The benchmark 30-year fixed-rate mortgage rose 4 basis points, to 6.32 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of one percentage point.

So what has Ben wrought on us? Higher inflation and not necessarily lower interest rates that won't help the falling knife of the housing crash steam rolling away.

But there is more, international consequences are growing.

China threatens 'nuclear option' of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

and


Fears of dollar collapse as Saudis take fright

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

Ben Bernanke has placed the dollar in a dangerous situation, say analysts

"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.

"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.

The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.

and

Iran to replace dollar with euro

The Iranian central bank is to convert the state's foreign dollar assets into euros and use the euro for foreign transactions.

"The government has ordered the central bank to replace the dollar with the euro to limit the problems of the executive organs in commercial transactions," Gholam Hossein Elham, a government spokesman, said on
Monday.

"We will also employ this change for Iranian assets [in dollars] held abroad."

Elham said that Iran's budget would in future be calculated in euros.

"Until now the budget has been calculated according to revenues in dollars but this calculation will now change," he said.

Can you see where this is going? I might be getting a little a head of a Chicago RE blog here, but the macro motions must be understood. The Butterfly Wing Theory is in full play. You might not have noticed the guy that lied about his income and had many ugly marks on his credit that over paid for a 1000 sq ft ranch in Norwood Park. But if multiplied by the hundreds, or thousands, or millions more such fools, you cannot help but notice a breeze. The problem is that now everyone holding a US$ is coming down with a cold.

Thanks, Ben!

Hair Cuts Are Scary

Fire Sale: Hovnanian Slices Luxury Home Prices

By AP 14 Sep 2007 10:29 AM ET Font size:

Hovnanian Enterprises, struggling like other home builders, is offering six-figure discounts on some of its properties this weekend as it attempts to draw interest in a slumping market.

Ross D. Franklin / AP

The sales blitz involves dropping prices by more 20 percent on some of its prime real estate.

The largest discounts are on the most expensive homes, including a 3-bedroom condominium by the Hudson River in West New York, which has been reduced $240,000, or 22 percent, to $862,000 this weekend. A 25-percent discount is
being offered on a 2-bedroom home in Jackson Township, N.J., which lowers its price tag to $300,501.

...

"We've certainly seen conditions in the housing market continue to deteriorate in the last several months," Chandan said. "The downward adjustment in prices, whether for new homes or existing homes, is going to be far more severe than what many people thought earlier this year."

...

"Depending on how successful it is, it might not be a one-time event," said Keith Gumbinger, vice president of HSH Associates, a consumer loan research firm in Pompton Plains, N.J., suggesting that buyers might wait if they thought a better discount was imminent.

Gumbinger found the sale remarkable, given low mortgage rates.

"You wouldn't think there is a need to go to the marketplace with such discounts," he said. "This is a pretty good indication from a prominent homebuilder that the market is troubled."

That Gumbinger guy is a blind fool.

I love the scare tactic with HOV. One time deal my ass. If a guy bought that condo for only $800k, would YOU buy a similar one for 20% more NEXT MONTH?? I think not.

Greenspan Said It, Not Me!

Greenspan: We've seen this turmoil before

Report: Economic bubbles can't be defused through interest rate adjustments, he suggests in speech.

September 7 2007: 6:07 AM EDT

NEW YORK (AP) -- "The human race has never found a way to confront bubbles," Former Federal Reserve Chairman Alan Greenspan said Thursday in reference to the euphoria that can precede contractions, or reactions, like the current market turmoil, according to a published report.

...

Bubbles can't be defused through incremental adjustments in interest rates, he suggested, the paper reported. The Fed doubled interest rates in 1994-95, and "stopped the nascent stock-market boom," but when stopped, stocks took off again. "We tried to do it again in 1997," when the Fed raised rates a quarter of a percentage point, and "the same phenomenon occurred."

There you have it, folks! From The Great Maestro himself. This thing needs to unwind on it's own and that is it. The sooner the better.

Another One Bites the Dust

Former Subprime Leader Ameriquest Closes

Saturday September 1, 12:25 am ET
By Gary Gentile, AP Business Writer

Former Subprime Leader Ameriquest Closes Amid Sale of Parent to Citigroup


LOS ANGELES (AP) -- Ameriquest Mortgage Co., once the nation's largest subprime lender, will close with barely a whimper, after the other assets of its parent company were sold Friday to Citigroup Inc.

Ameriquest, which saw its fortunes soar during the housing boom by lending to people with less than stellar credit, is the latest victim of a mortgage crisis that has left bankrupt companies and cash-strapped borrowers in its wake.

...

Under the agreement with ACC, Citigroup acquires servicing rights for $45 billion worth of loans. Terms of the deal, expected to close Sept. 1, were not disclosed.

...

The sale includes operational centers in Orange and Rancho Cucamonga, along with Rolling Meadows and Schaumburg, Ill., as well as a broker network extending across 48 states.

...

Ameriquest made a billionaire of its founder and chief owner, Roland Arnall, who is now U.S. ambassador to the Netherlands. He founded his company as Long Beach Savings in 1979 and built it into a major subprime lender.

How fitting. Who appointed him? I wonder how he got out of the S&L crisis in the 1980's? Probably the same way I'd imagine...

In March, the Texas Rangers severed a 30-year naming rights deal with Ameriquest and rebranded their home field as Rangers Ballpark in Arlington.

Boy, sounds like ENRON, eh? I wonder if the irony is lost regarding the team that accepted Arnall's money was the same team that Bush II owned...

I just cannot wait until Ditech goes under. I am so sick of their "People Are Smart" refi tv ad!