...and the savior might be:

RON PAUL!

I might be going out on a limb here.

Although I am a True Blue Democrat, I cannot help but agree with and admire Ron Paul. Check out his statement on high risk credit:

The real answers are, and always have been, found in the principles of the free market. Let the market set the interest rates. If we had been functioning under a true and transparent free market system, we would not be in the mess we are in today. Government, like the American household, needs to live within its means to get back on stable fiscal ground.

The Middle Class is always the victim. The Regular Republicans are only for themselves and the top tier, high net worth 10%'ers. The Regular Democrats are only for themselves and baby-sitting-check-getting-welfare-queens. Those of us in the middle that actually work and pay the taxes so everyone else can stay up late and party need to organize.

Can Daley help us?

No, he cannot.

Daley to target home foreclosures

Tribune staff report
August 19, 2007

CHICAGO - Speaking about the increasing number of home foreclosures in Chicago and in the nation, Mayor Richard Daley said Saturday that the city hopes to compile a list of people who lost their homes to foreclosures, in an effort to try to help them.

"We have to take a list of all of them, get all the mortgage companies and have to try to build their lives," the mayor said at a news conference announcing a new principal at Harper High School in West Englewood. He did not specify what the city would do with the list.

Sorry, Richie. There is no hope. I'm sure "the community" of West Englewood appreciates the words, but not even All The King's Men will be able to put Humpty back together. I wonder what culpability da Mayor and his developer buddies feel from whipping the public into a OwnACondo.com frenzy? Only now to see the error of their ways.

Can the Fed Help Us?

No they cannot.

I saw on CNBC that Lehman Bro's is predicting a 50 bp cut to the fed fund rate, and Goldman Sachs is calling for 75.

I liked Rick Santelli's match with Krazy Kudlow the other day. R.S. was claiming that this won't help the economy. K.K. was disagreeing, in that it *will* help Goldman Sachs. They are both correct.

Fed is taking care of its members and widening their spreads to help them cover their Hedges, LBOs, and MBS. But the banks won't lower their rates. They can't. They need to be profitable. The big boys know that there are allot of foreclosures coming down the pipe and have to prepare.

R.S. is correct that Harry Potter can't magically put the pieces back together. Houses will sell for MUCH less in the coming years. They already are. People over bought. Those of us left at the curb are not going to chase the car anymore. Sorry.

But these foreclosures are still a problem. The auctions will pass with NO takers. The banks will sit on them for as long as possible eating at their cash reserves. Their LTV's are way too high, and poof one day they will all agree to kill the Comps and dump them, MARKING THEM TO THE MARKET!

Video: R.S. v. K.K.

Don't Go Away Mad, Girl, Just Go Away

Audio clip from NPR about RE in MI and OH.

Listen here

Detroit = Englewood?

Funny, no mention of Chicago. All around us from Detroit to Cleveland to St. Louis, from California to Florida, the nations RE markets are going thermo-nuclear. But some how Chicago is impervious. Hm.

I think this Motley Crew song is appropriate....

Don't Go Away Mad lyrics

We Could Sail Away
Or Catch A Freight Train
Or A Rocketship Into Outer Space
Nothin' Left To Do
Too Many Things Were Said
To Ever Make It Feel
Like Yesterday Did

Seasons Must Change
Seperate Paths/Separate Ways
If We Blame It On Anything
Let's Blame It On The Rain

I Knew It All Along
I'd Have To Write This Song
Too Young To Fall In Love
Guess We Knew It All Along

That's Alright, That's Okay
We Were Walkin' Through Some Youth
Smilin' Through Some Pain
That's Alright, That's Okay
Let's Turn The Page

My Friends Called Today
Down From L.A.
They Were Shooting Pool All Night
Aleeping Half The Day
They Said I Could Crash
If I Could Find My Own Way
I Told Them You Were Leaving
On A Bus To Go Away

That's Alright, That's Okay
We Were To Kids In Love
Trying To Find Our Way
That's Alright. That's Okay
Held Our Dreams In Our Hands
Let Our Minds Run Away
That's Alright, That's Okay
We Were Walkin' Through Some Youth
Smilin' Through Some Pain
That's Alright Let's Turn The Page
And Remember What I Say Girl
And It Goes This Way

Girl, Don't Go Away Mad...
Girl, Just Go Away!

Jumbo Loss

This is from Bubble News Network:

Thornburg Mortgage’s Jumbo Decline

Larry Goldstone, president of Thornburg Mortgage attempts to persuade viewers that the 46% drop Thornburg’s stock today was an overreaction. You do have to give the guy credit for facing the music, although, what else does he have to lose. Either way Goldstone offers very little substance to reassure investors.

Originally aired on: 8/14/2007 on CNBC

Thornburg Mortgage lends jumbo loans. Their stock has taken quite a hit. It seems like 6,700+ SFR and condo sellers will have allot of trouble finding a buyer.

What will happen? Will asking prices actually go down? Think about that number: 6,700! Now granted on Realtor.com you cannot pick a specific price, but you get the idea. Not everyone will sell their house at that price. When will Chicago wake up?

I Got It, I Got It

It appears that nobody in the open market wants the junky mortgage backed securities anymore. Not even Canadians!

Coventree Fails to Sell Asset-Backed Commercial Paper

Aug. 13 (Bloomberg) -- Coventree Inc., the Canadian finance company that went public in November, failed to sell asset-backed commercial paper to replace maturing debt because of the credit crunch caused by U.S. subprime mortgage losses.

The shares tumbled 35 percent after the company extended maturities on C$250 million ($238 million) of commercial paper and sought emergency funding for another C$700 million of debt. Toronto-based Coventree's units have about C$16 billion of asset- backed commercial paper outstanding.

...

In the U.S., asset-backed commercial paper comprises about $1.15 trillion of the $2.16 trillion in commercial paper outstanding. The debt is backed by mortgages, bonds, credit card and trade receivables as well as car loans.

...

The company has other commercial paper maturing and may be forced to extend maturities on that debt too and draw more money from other sources, Coventree said.

I love the main stream media, it took about 1/3 through the article to get a definition of "commercial paper". I kind of figured that it was MSB's, but I did not want to put words in their mouths.

It appears that the Fed is trying to have it's cake and eat it too. They kept the Fed rate the same, but are throwing money at the problem. But who is catching it? And which problem are they talking about? Bush does not want a bail out for the lonely homeloaner. So why is the Big Banks getting free cash from the Fed, and where is it coming from?





The Fed Bought What?

What is significant about Friday's repurchase agreements is not so much their size, but the securities that the Fed exchanged for money: mortgage-backed securities (MBS). Indeed, the entire $38 billion dollar injection went to MBS purchases, the largest open market purchase of this asset type ever conducted by the Fed, smashing the previous record of $8.6 billion set back in September of 2005. See chart, above.

Remember, it's not the Fed's money to throw away. It's our. (And China's and Japan's and Russia's.........)

First Smartest Thing He's Said

It took 6+ years, but he finally said something smart.

Bush Rules Out Any Federal Bailout for Homeowners

Topics:Taxes | Politics & Government
Sectors:Oil and GasBy AP | 09 Aug 2007 | 05:58 PM ET Font size:

President Bush said Thursday concern should be shown those who've lost their homes but it's not the federal government's job to bail them out.

"Obviously anybody who loses their home is somebody with whom we must show an enormous empathy," Bush said. Asked whether he would champion a government bailout, Bush responded: "If you mean direct grants to homeowners, the answer would be `No, I don't support that.'"

There is video too! Boy, up until now, I thought he was 100% dumb.

Wait, I spoke too soon:

In a wide-ranging news conference at the White House, the president also said that he's interested in exploring the possibility of providing tax relief to U.S. corporations.

I ALMOST had some respect for Dubya... ALMOST.

The Shrinking Jumbo Loan

Mortgage Fears Drive Up Rates On Jumbo Loans

By JAMES R. HAGERTY
August 7, 2007; Page A1

Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors.

This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. Normally, mortgage rates move in tandem with Treasurys, but market jitters have caused investors to ditch mortgage securities.

...

Lenders -- having already slashed lending to subprime borrowers, as those with weak credit records are known -- now are jacking up rates on jumbo mortgages for prime borrowers. These mortgages exceed the $417,000 limit for loans eligible for purchase and guarantee by Fannie and Freddie. They account for about 16% of the total mortgage market, according to Inside Mortgage Finance, a trade publication, and are especially prevalent in California, New Jersey, New York City, Washington, D.C., and other locales with high home costs.

...

Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.

The higher costs for such loans will put further downward pressure on home prices in areas where homes typically bought by middle-class people can easily cost $500,000 to $700,000.

Middle Class people can afford $500,000-700,000 mortgages?? That's news to me. The note on $500,000 @ 7.3% = $3,427.85! $700,000 = $4,799.00! What is Middle Class anymore? To qualify for a $500,000 loan in the traditional model, a family would need a income of $166,666.66. That's over 80g's per parent.

Anyway, this move by Wells Fargo (and others to follow?) will cause asking prices to drop. According to Realtor.com, there are 8,706 SFR, condos, townhomes, and MFRs in the Chicago city limits that are above $450,000. There are a total of 41,555 units for sale right now in Chicago! The jumbos are 20% of the market. And guess where those units are? The Middle Class and better neighborhoods. Anyone that bought a jumbo loaned house in the last 2 years are, as of now, underwater.

Take This Survey

CNBC.com has a survey for Wall St. and Main St. Take a look at it, and give your opinion.

Econ-Recon Survey

Cramer Says So

Cramer: No really, dump your house

I know that this clip has been all of the HP blog-o-sphere. I think it bears repeating. However, if you do not remember, the law deciders changed the bankruptcy laws.

Just becareful.

Housing Panic has a good thread about this.