Michael Panzner at Seeking Alpha has a great post, “Donald Lambro’s Dangerous Suprime Delusions,” which I found a pleasure to read because he takes on a deserving target, namely, a pathologically optimistic piece by Donald Lambro,”Subprime Shakeout Just a Rough Patch.” The piece is fun, in part because Lambro is such a deserving target, and […]
Read more...This story in today’s Financial Times, “As America falters, policymakers must look ahead,” is remarkable because, as far as I can tell, it is the first time a prominent economist has come out and said the unwinding of the housing bubble is likely to have nasty consequences (actually, take that back, Paul Krugman had a […]
Read more...On Thursday, both Democratic and Republican members of the Senate Banking Committee chewed out Roger Cole, the Federal Reserve’s director of supervision and regulation, for failing to intervene in the rapid rise of the issuance of mortgages to customers who were clearly likely to default, and now are, losing their homes and their investment in […]
Read more...An excellent article Thursday in the Financial Times, “In the new liquidity factories, buyers must still beware,” by Mohamed El-Erian, the CEO of Harvard Management Company. He explains that a great deal of the liquidity in the markets is created not by the monetary authorities, but by the participants themselves, and works through a simple […]
Read more...An intriguing piece, “One Person’s Dumpster Is Another’s Diner,” ran yesterday at Alternet.org. For those who aren’t familiar with the term (as I wasn’t prior to reading this piece) Freeganism (a conjunction of “free” and “vegan”) is the philosophy that participation in our capitalist economy makes a person complicit in the exploitative practices that are […]
Read more...That’s how a couple of Fedwatchers interpreted the latest FOMC report, including Tim Iacono at Seeking Alpha in “FOMC Statement Changes Scream Stagflation.” The report also says the housing “adjustment” ain’t over. FYI, we thought staflation was coming (see here) From Iacono: The Federal Reserve Open Market Committee meeting concluded just a short time ago […]
Read more...A Bloomberg story, “Homeowners, Lenders Skirt Default, May Curb U.S. Housing Slump,” highlights a practice used by banks with borrowers in default, the so-called short sale. Rather than foreclose on the property, banks accept a price below the loan balance on a quick sale. Although the Bloomberg piece doesn’t say so, this is a long […]
Read more...Yesterday, the Wall Street Journal had a story, “Economy Can Withstand More Mortgage Foreclosures,” which said, About 1.1 million foreclosures are likely to result from jumps in monthly payments on adjustable-rate home-mortgage loans made in 2004 through 2006, according to a study by First American CoreLogic. Christopher Cagan, director of research at the real-estate-information concern […]
Read more...The first is from Dean Baker of Beat the Press, “Nonsense on Housing in the NYT Magazine:” I generally give the NYT magazine more license than the rest of the newspaper…But, I am still old-fashioned enough to think that being literary should not prevent one from being able to use logic. The “Pop Psychology” piece […]
Read more...I have lunch from time to time with the inventor of an important class of financial product who currently runs a rather large hedge fund (assets well over $1 billion). He also started out as a Fed economist. It’s important as a trader to have a point of view, but not to get one’s ego […]
Read more...A couple of days ago, we took a dim view of an “alarmist” (and more important, inaccurate) analysis of alleged real estate losses at commercial banks. The reason we took issue with it was that is was wrong on several critical counts, and its conclusion was therefore off base. We use the word “alarmist” with […]
Read more...Articles in Slate (which we found via Economist’s View via Marginal Revolution) and the New York Times point out the dark side of home ownership. Is this merely a needed bout of contrarian thinking, or is this the very early signs of a shift in attitudes towards home ownership? As I will address below, I […]
Read more...A short post on Seeking Alpha, “A Play on Subprime Woes and Homebuilders: TOL vs. KBH” that summarizes a Barron’s story on how the subprime saga is developing. It is consistent with what we’ve said in other posts, namely, by itself, the subprime problem isn’t big enough to damage the economy seriously. But the subprime […]
Read more...Now I am as fond of gloom and doom scenarios as the next guy. But some analysts are presenting fairly straight up the center scenarios of things will get bad (as opposed to how bad things will get) that don’t comport with facts. I like and have a lot of respect for the blog The […]
Read more...As readers may recall, Felix Salmon posted a very critical take, “Is there a looming crisis in the mortgage market?” on Gretchen Morgenson’s New York Times story, “Crisis Looms in Mortgages.” We parsed the two stories, drawing on other sources, in our “Reactions to New York Times Mortgage Market Story.” Since then, the markets took […]
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