Friday, November 30, 2007
WASHINGTON (Reuters) - The Treasury Department is finalizing a plan with mortgage industry leaders that will hold interest payments steady for many subprime borrowers facing higher rates and possible foreclosure.
"'Your purists are going to scream to high heaven that their contract is being altered, but your pragmatists are going to say, 'Do I want to reduce cash flow or see my Triple A-rated bond go south?' Pragmatists are going to do the deal,' Marta said.
He said it was 'hard to overstate the severity' of the effect of massive mortgage foreclosures on Wall Street, where exposure to subprime mortgages has been 'spread like pixie dust.'"
"'More than anything else, this borrowing represents a triumph of greed over fear.'
When you boil all the risks down to their essence, its all about reputation, as shown with the decision by BSC to bail out their wayward progeny. But there is a limit to the amount of capital which BSC or any prime broker can deploy to prop up the sagging market for CDOs. Look for the Fed to get involved in the CDO mess sooner rather than later, but hopefully before a major dealer is taken down. Just imagine what happens to the dollar and to the US financial markets if the Fed begins to accept this toxic waste as collateral on emergency discount window loans."
So as I attempt to explore in a non judgmental way, the many crags and crevices of my mental landscape I am truly surprised but what I find there. More disturbing is what it looks like when I honestly consider how coping mechanisms/perceptions/fears manifest in how I walk through the world. I previously imagined myself to be a honest forthright person. No bullshit etc.
That is a joke. Except not funny at all. Really kind of depressing and I know I am supposed to be doing this in a non judgmental way, but there is absolutely a voice in my head now saying "Tsk, Tsk all the lifetime wasted that you could have been living without this (fear/misperception/faulty expectation). I'm thinking its a long ass way from here to true compassion for me.
Tuesday, November 27, 2007
"'Today the foreclosure crisis has the potential to break the back of our economy, as well as the backs of millions of American families, if we don't do something soon,' said Palmer, a Democrat, who serves as president of the mayors group.
The Global Insight report forecast U.S. homeowners would see property values fall by $1.2 trillion in 2008, with almost half of those overall losses coming in California. California property values are expected to drop by 16 percent in 2008, the report said, costing the most populous state almost $3 billion in property taxes.
The report said the weakening U.S. property market would have knocked some $676 billion from home values, but another $519 billion in losses could be tied directly to the financial problems facing borrowers unable to meet escalating monthly mortgage payments."
Sunday, November 25, 2007
- Sensual desire (kamacchanda): Craving for pleasure to the senses.
- Anger or ill-will (byapada, vyapada): Feelings of malice directed toward others.
- Sloth, torpor and boredom (thina-middha): Half-hearted action with little or no concentration.
- Restlessness and worry (uddhacca-kukkacca): The inability to calm the mind.
- Doubt (vicikiccha): Lack of conviction or trust.
Which, you know, great. Elizabeth Gilbert made a point in on her website. She has an FAQ on the book and one of them is whether she felt selfish for tkaing the year off to focus on herself. In her answer she describes how everyone around her suffered because of her depression/anger/frustration/general unhappiness. This makes sense to me. I can see me getting angry at things people tell me that should in no way generate anger in me, but it does and then anything I say in response is affected by the anger. They know it, I know it and it leaves me feeling awful. So I am going to spend the time to try very hard to fix the anger. Wish me luck.
"Some numbers don't add up But if you examine another figure, the gross U.S. federal debt, you'll see something strange.
First, the U.S. debt has increased in each of the past eight years, even in the two years when surpluses were reported. Second, the gross federal debt, which includes the obligations held by the Social Security and Medicare trust funds, has increased much faster than the deficits -- about $3.3 trillion over the same eight years.
That's $2 trillion more than the reported $1.3 trillion in deficits over the period. Can you spell 'Enron'? In other words, while the reported deficits averaged $164 billion over the past eight years, U.S. government debt increased an average of $418 billion a year.
That's a lot more than twice as much. How could this happen? Easy. The U.S. Treasury Department simply credits the Social Security, Medicare and other trust funds with interest payments in the form of new Treasury obligations. No cash is actually paid. The trust funds magically increase in value with a bookkeeping entry. It represents money the American government owes itself. So what happens if the funny money is taken away? When the imaginary interest payments are included, Social Security and Medicare are running at a tranquilizing surplus (that $181.5 billion mentioned earlier). But measure actual cash, and the surplus disappears.
"Some 2 million homeowners hold $600 billion of subprime adjustable-rate mortgage loans, known as ARMs, that are due to reset at higher amounts during the next eight months. Subprime loans are those made to people with poor credit. Not all these mortgages are in trouble, but homeowners who default or fall behind on payments could cause an economic shock of a type never seen before.
Some of the nation's leading economic minds lay out a scenario that is frightening. Not only would the next wave of the mortgage crisis force people out of their homes, it might also spiral throughout the economy. The already severe housing slump would be exacerbated by even more empty homes on the market, causing prices to plunge by up to 40 percent in once-hot real estate spots such as California, Nevada and Florida. Builders like Chicago's Neumann Homes, which filed for bankruptcy protection this month, could go under.
The top 10 global banks, which repackage loans into exotic securities such as collateralized debt obligations, or CDOs, could suffer far greater write-offs than the $75 billion already taken this year. Massive job losses would curtail consumer spending that makes up two-thirds of the economy. The Labor Department estimates almost 100,000 financial services jobs related to credit and lending in the U.S. have already been lost, from local bank loan officers to traders dealing in mortgage-backed securities. Thousands of Americans who work in the housing industry could find themselves on the dole. And there's no telling how that would affect car dealers, retailers and others dependent on consumer paychecks.
Based on historical models, zero growth in the U.S. gross domestic product would take the current unemployment rate to 6.4 percent. That would wipe out about 3 million jobs from the economy, according to the Washington-based Economic Policy Institute.
"Until recently her mother, Carolyn, who waits tables at the same roadside diner, sent Hot Spring $100 a month under the nonprofit hospital's longstanding zero-interest payment plan. Dial says she couldn't make payments herself because she spends more than $150 a month for other treatment and insulin.
In October she learned that Hot Spring had transferred her account to a company called CompleteCare, one of the many small firms fueling the little-known medical debt revolution. Enticed by the enormous potential market of uninsured and poorly insured patients, financial giants such as General Electric (NYSE:GE - News), U.S. Bancorp (NYSE:USB - News), Capital One (NYSE:COF - News), and Citigroup (NYSE:C - News) are rapidly expanding in the field or joining the fray for the first time. CompleteCare informed Dial that under the complicated terms of her newly financed debt, her minimum monthly payment had shot up more than fourfold, to $455. Dial says she doesn't have anywhere close to that amount left over after rent, food, and other doctor visits: 'Every extra dime I have goes to paying medical bills.'"
Monday, November 12, 2007
"The mortgage black hole is worsening...it is deeper, darker, scarier than what the banks originally thought,' he told analysts during a conference call. 'My sense is they don't have a clear picture of how this will play out, and their confidence is low.'
James said the banks — pressured by massive writedowns from losses linked to subprime mortgages — will keep lending standards tight for the time being. He believes the market for leveraged loans, which buyout funds use to finance deals, appears to be picking up after a crippling summer."
"Now that 'children no longer provide any economic benefit to their parents, but are rather costly impediments to material success, people well adapted to this new environment will tend not to reproduce,' Longman writes. 'And many others who are not so successful will imitate them, and for good reason.' Families might choose to have only one child so they can afford to splurge on one while maintaining their own comforts of living (um, that would be me)."
The problem, experts say, is that U.S. lawmakers and corporations aren't addressing many of the challenges facing families. Longman points to the continuing culture wars between work and family: "Everyone who wants to may join the paid labor force, but almost no one gets a family wage or enough help from government to defray the costs of raising children." He figures the critical moment will emerge during the next decade, "as millions of Baby Boomers start crashing past the boundaries of old age, and as today's teenagers find themselves saddled with massive student loans, rising taxes, and growing frustration over the difficulty of forming or affording a family."
The hope is that some savior will invent policies to ease parents' financial pain. "We need somebody somewhere to think of a new vision of what families can be," Skolnick says."People want to get past the family value wars."
Until then, as Longman puts it bluntly: "Child rearing is fast becoming a sucker's game. Though the psychic rewards remain, the economic returns to individual parents have largely disappeared, while the cost of parenthood is soaring."
Click here to join the debate on whether kids are worth the cost.
Saturday, November 10, 2007
The uninvited guest: Chinese sub pops up in middle of U.S. Navy exercise, leaving military chiefs red-faced | the Daily Mail
Thursday, November 08, 2007
"5. What We Need Are More Fake Plastic Trees The New York Times this morning spells out what all this means pretty clearly: '[I]n an ominous portent for the national economy, Mr. Whittey has grown tight with his money. His home is worth far less than it was a year ago, and his equity has evaporated. And like many other involuntary adopters of a newly economical lifestyle, he can borrow no more.'"
Wednesday, November 07, 2007
"Poor countries are likely to have to cut food consumption after an “alarming” increase in their agricultural commodities bill, the United Nations’ Food and Agriculture Organisation warned on Wednesday.
The FAO said its biannual Food Outlook report that high and volatile prices of grains, such as wheat and maize, could curtail procurement in many countries."
Tuesday, November 06, 2007
"Now that big lenders are originating fewer mortgages, servicing revenues make up a greater percentage of earnings. Because servicers typically keep late fees and certain other charges assessed on delinquent or defaulted loans, 'a borrower's default can present a servicer with an opportunity for additional profit,' Ms. Porter said.
The amounts can be significant. Late fees accounted for 11.5 percent of servicing revenues in 2006 at Ocwen Financial, a big servicing company. At Countrywide, $285 million came from late fees last year, up 20 percent from 2005. Late fees accounted for 7.5 percent of Countrywide's servicing revenue last year.
But these are not the only charges borrowers face. Others include $145 in something called 'demand fees,' $137 in overnight delivery fees, fax fees of $50 and payoff statement charges of $60.
Property inspection fees can be levied every month or so, and fees can be imposed every two months to cover assessments of a home's worth. 'We're talking about millions and millions of dollars that mortgage servicers are extracting from debtors that I think are totally unlawful and illegal,' said O. Max Gardner III, a lawyer in Shelby, N.C., specializing in consumer bankruptcies. 'Somebody files a Chapter 13 bankruptcy, they make all their payments, get their discharge and three months later, they get a statement from their servicer for $7,000 in fees and charges incurred in bankruptcy but that were never applied for in court and never approved."
Sunday, November 04, 2007
"Throughout their history, Quakers have refused to take oaths.
Their belief is that one should tell the truth at all times. Taking an oath implies that there are two types of truthfulness: one for ordinary life and another for special occasions."
A truthful life is elusive maybe impossible.