========================= This may be a Doom first, an advertisement. Doomers who will be near Tucson Thursday evening should take note of this event from the Arizona Daily Star Business Calendar (published Jan 12th). Thursday…Economic Outlook and Developments in Mortgage Markets — Berger Auditorium, McClelland Hall, University of Arizona, 1130 E. Helen St. The Eller College of Management’s Distinguished Speaker Series presents Susan Bies, member of the Board of Governors of the Federal Reserve System. The lecture and reception following are free and open to the public. Arrive early. Space is limited. 5:15 p.m. 621-9400. =========================   Amid record after record…
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K must have seen me struggling last week, because he’s sent along links to a couple of the Fed’s research papers from last year. As usual with him, interpretation is left as an exercise for the reader. I’m guessing that the Atlanta Fed paper [1] was suggested as a way to see how the Big Banks of NYNY stumbled on a prototype Fed system during the Panic of 1907, three years before that Jekyll Island meeting discussed in my Jan 4th post roughed in the present system. Perhaps a takeaway from the Philly Fed’s effort [2] is that during the…
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Usually Doom readers aren’t shy. Take K for instance. The other day he burst open the gates of Castle to announce a new insight about Lennar. He proposes the HB as a sort of anti-DavidLereahWatch. Lennar seems so grounded in reality that they could serve as an antidote to NAR’s Chief Economist. K even proposes we should institute a whole "Lennar" Category to index their forecasts. We’re not quite ready to do that yet, but on K’s say-so we’re certainly going to study their activity and announcements with renewed vigor. K is typical. Doom readers, even the occassionally hostile REIC…
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Once again Mr. Twist was first up at Doom with this find. Blogger-in-Chief Keith of HousingPanic called it: "Post of the year". That might be a bit extreme (Doom’s anonymous CA postal worker comes to mind), but Keith’s not too far off the mark. HP’s frequent commenter butch has posted a recipe (scroll down) [1] for the housing bubble. I’d invite Doomers to follow the link and see Butch’s work in context. Below is reproduced an edited version, adding a few links and footnotes that we hope will supplement this excellent work.

Move over Robert Shiller.  Shiller, the author of "Irrational Exuberance," and the authority on speculative bubbles apparently can hang up his hat.  Blanche Evans in a Realty Times article explains the real reason behind current price declines- home buyers are meanies. Previous to this, meanie buyers have not apparently been given serious consideration in speculative bubble studies. In a paper by Jose´ A. Scheinkman and Wei Xiong, they seem to indicate, as does Shiller, that the "irrational" component happens when prices are on the way up, not on the way down.  Scheinkman and Xiong refer to this phenomenon as "overconfidence." …
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I don’t know what Doom would do without L. Today he passed along this article [1] detailing how the two big GSEs have only two and one half months to get cracking on implementing the same guidlines on non-traditional loans as federally chartered banks now have to follow. The actual press release is here.[2]

Sovereign Default Lite? Poole Targets GSEs Fannie and Freddie have been on a roll lately. First, their traditional friends, the Democratic Party,[1] are set to take over both houses of Congress. Then, their regulator, OFHEO, run by Bush confidant James Lockhart, has frozen the $417k conforming limit for GSE mortgages in the face of declining median US house prices. This could well allow them to win back much of the MBS business they lost to private label lenders over the last few years. Finally, 30 year fixed rates are at multi-year lows,[2] so they stand to get lots of re-fi…
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Minorities Pay More Since the Great Depression of the 1930s, both Democratic Party and Republican administrations have promoted homeownership. Federal programs have used agencies and the GSEs to deliver programs and subsidies to make housing more affordable, meaning that it would cost less to buy a home. Since the dawn of the Millenium, however, this word affordable has acquired the stench of something three weeks dead and very, very, evil. Now "affordable" means "low teaser rate", the narrow end of the alligator’s snout, ready to trap the unwary family into a mortgage that will be their ruin. Perhaps worse, since…
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Hat tip to Ben’s commenter Captain Credit [1] for starting me off on this one. The hint led me to a Bloomberg article [2] detailing how two senior Fed officials had just given detailed and complementary speeches on inflation.

The Dow index keeps setting records. As if we required more evidence we’re facing perhaps the greatest sucker rally [1] of all time, even the authors of Dow 36,000 have surfaced.[2] If you have been reading Doom for a while, you might have seen some assertions that the housing market is important to the larger economy. Look at the top of our homepage and you’ll see a claim that the boom has popped. Shouldn’t this be a problem for the larger economy? Fear not. The CEO of Countrywide, America’s largest mortgage lender, whose mortgage profit dropped 40% last quarter, calmly…
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As was widely expected, the Fed has decided to pause on interest rates.  Forbes stated the following:

The very simple message presented here is for those of you just starting to research your personal real estate decision. Every bubblehead knows what I’m about to reveal, but it’s something that must be said. The Adjustable Rate Mortgage (ARM) is a trap. Why this is the case is captured in this quote from a story [1] from the beginning of October in the Denver Post.

In speaking of the housing sector yesterday, BB&T analyst Todd Vencil indicated that while most builder and sector metrics were currently poor and worsening, Some of the early indicators — including mortgage applications and levels of inventory in certain markets — are beginning to suggest that while we may not be at the bottom of the business cycle yet, we’re at least progressing toward it.  The market’s confidence in homebuilders has increased in recent weeks–most homebuilder stocks have rebounded somewhat since the end of July.  However, the bankruptcy of Kara Homes has been talked about a great deal lately, and…
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As Doomers might expect, within minutes of having Jay Butler’s Phoenix Home Sales report for September in hand, I was merrily graphing away.  Here’s the appreciation graph, and this time I couldn’t resist plotting the trend line:

Paul Sarbanes must have put something extra in the coffee. "Weeks not months" indeed. Just nine days after the Sept 20 Senate hearing "Calculated Risk: Assessing Non-Traditional Mortgage Products", the agencies have released their new guidance.[1]