One of the signs that we have not reached a bottom with home prices is that there are so many people out there proclaiming that we are, and for all the wrong reasons.  Here’s a couple of lists I’ve seen in the past couple of days explaining why the bottom is in.  The first is from Business Insider: The issue going forward is whether we need another significant decline to allow what is presumed to be a “new wave” of foreclosures to be sold. Put me in the skeptical column, because a) the housing market has had almost 5 years…
Read more…

Why is the Prime Minister dipping his tea bag into the President’s cappuccino just 5 weeks ahead of the mid-term vote? CBC (9/28 ’10): “Great Lakes nuclear shipments topic of hearing” “There would be a greater radiological impact of someone with a pacemaker falling over the side of a boat and drowning,” Hawthorne said. “He would introduce more radioactive material into the lake than one of our steam generators.” I do believe they get weather in that part of the world occasionally …

If the transactions occurred over a one month period ending on Sept 15th, that puts the decision squarely around the period Zhou Xiaochuan was the subject to a series of odd rumours.  The article also provides some hints as to just how uninformative the H.4.1 figures can be. BL (9/27 ’10): “China Mortgage Bond Sales Probably Led Tumble in Foreign Holdings of Debt” The actual drop was probably less because of the methodology the Fed uses, Crandall said. The calculation is based on the original face amount of the securities and ignores any repayments from refinancing or home sales. Either…
Read more…

Being in foreclosure or having economic problems does not seem to be a prerequisite to be elected, but apparently, it’s not the problem for candidates that it’s been in times past: [Candidates] around the country are facing personal financial troubles. Their money woes are more than abstractions to be addressed with policy prescriptions and high-flying rhetoric — they are personal dramas that figure into their campaign stories. In some cases, adversaries point to these problems as examples of poor judgment and highlight perceived ethical lapses. But experts say they would be wise to tread carefully in a time of widespread…
Read more…

Mr. Big, aka Barry Ritholtz, is right to support NBER’s call on a statistical recovery and right to have lingering doubts.  I especially like reason #6 (of 10) that makes him nervous: “Recession Porn” at ZH & RGE. Well brace for a bit of depression porn, because coming out of this situation is going to take about a generation.  Long time Doomers will recognize that I subscribe to The Scott Reynolds Nelson Hypothesis: this W&M historian, a specialist in the legend of John Henry (Steel Drivin’ Man — update: note the critical typo in this quote from a key interview:…
Read more…

But what about the “old” losses we haven’t recognized yet?  Don’t they become “new” when we get around to lifting up the rug? Mere scaling arguments show that the assertion in the headline below can’t possibly be right.  Over the last two years (one fifth the period for this latest forecast) the GSEs in conservatorship have already lost three times that estimate.  In the seven days from the 6th to the 15th of this month foreign central banks dumped an amount of their Agency Debt holdings larger than that maximum estimated loss amount for the period starting two weeks from…
Read more…

Sure looks like it, at least superficially … . . . . . . Treasury (9/15 ’10): “Prepared Testimony of Assistant Secretary for Financial Institutions Michael S. Barr” We also recognize that financial markets and the public are depending on the ability of the GSEs in their current form to perform on their obligations.  The government is committed to ensuring that the GSEs have sufficient capital to perform under any guarantees issued now *** or in the future *** and the ability to meet any debt obligations. The Administration will take care not to pursue policies or reforms that would…
Read more…

Doom and Bill Maloni go back several years. Although I rarely agree with the former senior Fannie lobbyist’s defense of the GSEs we are often ready to re-post his insightful articles. Especially when they say nice things about us ———————————————————– Happy September; Welcome Back to Work!! by Bill Maloni Private Label Securities, Redux In last week’s blog, I noted that Fannie’s and Freddie’s regulator, the Federal Housing Finance Agency (FHFA) took a surprising stand and wrote 64 issuers or guarantors of private label subprime securities (PLS) sold to Fannie and Freddie, to get them to pay their GSE debts. Because…
Read more…

With the Fed possessing a world-class stable of lawyers, it’s a safe bet that every jot and tittle of the boss’ sworn testimony is rock-hard supportable.  Here I’m more interested in what he doesn’t say.

No price is too high … Reuters (9/3 ’10): “Analysis: Obama running out of options to aid housing market” “It is very very difficult to engineer some kind of large-scale foreclosure relief that doesn’t benefit at least one of two parties that (voters) don’t want to help,” [policy analyst Raj Date] said, referring to mortgage bond investors and homeowners who bought houses they could not afford.

Well Igor, nothing special over the weekend.  Just a bunch of central bankers meeting in Wyoming and plotting to take over all their host governments Reuters (8/26 ’10): “Fiscal ‘alchemy’ must mimic monetary science” Tax and budget policies need the same regularity and independence as monetary policy if countries around the world are to cope with looming stresses from pension programs, world central bankers were told at a Federal Reserve conference on Saturday.

According to Business Insider: (Thanks L!) The U.S. economy is in decline. The employment situation is going to go from bad to worse. Americans without jobs are Americans that cannot buy homes. Millions of Americans who are employed are finding it increasingly difficult to make it from month to month. The truth is that there is no way that Americans can afford the ridiculously inflated home prices that we have seen over the past decade any longer. So, yes, the U.S. housing market is headed for a complete and total nightmare. I couldn’t agree more, so here’s their list of…
Read more…

In the midst of a good Minyanville rant against Bill Gross and PIMCO, I found a quote too good not to share: Housing is a commodity like furniture and automobiles, and inducing citizens to buy more of it is no business of the state.

The Treasury Department has been hosting a housing convention today and various experts have spoken, including Bill Gross of PIMCO.  Here’s part of what Gross had to say today: “To suggest that there’s a large place for private financing in the future of American housing finance is unrealistic. The only way to bring housing back and to create liquid, financeable mortgage finance going forward would be to provide a government guarantee. It would be provided for by adequate insurance, by sufficient down payments, and over encompassing regulatory environment that instead of allowing no docs and liar loans provides adequate supervision…
Read more…

The timing of this huge policy dump on the eve of President Obama’s Conference on the Future of Housing Finance could not possibly have been more bizarre.  Last night here’s what was near the top of the “Recent Developments” list on the Fed’s front page (they’re all dated Monday August 16th): … Federal Reserve announces final rules regarding consumer notification of mortgage loan sales or transfers Federal Reserve proposes enhanced consumer protections and disclosures for home mortgage transactions Federal Reserve announces final rules to protect mortgage borrowers from unfair, abusive, or deceptive lending practices that can arise from loan originator…
Read more…