I love ebay sometimes...

[HAULN-SS]

I don't think anyone has argued it wasn't fraud. Seeing a house sold 3 times in a year, for an ever growing sum sure reeks of fraud to me. Why do you think the money earned from this is being stuffed in a mattress to never be seen again? Hell, most of it's already gone on landrovers and flat screens, right? The people earning the return on the MBSs havent lost anything, the people applying for the no-doc loans didn't lose anything, they just went back to mexico or wherever (see surnames in washington post foreclosure section), so really a few lenders will go under, some speculative flippers lost their shirts, and in a relatively short time, things are back to normal.

What came first? The credit crunch, or the housing value slide? Do you think when the value of oil peaks and corrects we're going to be in dire straights again? More or less a speculative mania going on there, since supplies are indeed doing just fine.

[Ginger]

edit

[Dave]

Andy, that was a very clear, concise, and well-written summary of why the housing market is FUBAR. However, that's only a part of the whole equation. Yeah, finance is my "gig" :-), but I honestly have no idea where all the money is.
I'm great with personal finances and stuff, but handling corporate finance and "where all the money goes" is something that I've barely hit the tip of the iceberg. Doesn't help that its been several years since i was in school... I'm ashamed to admit it, yes, but I'm not going to pretend to know what I'm talking about in that arena.

Honestly, I agree with both of you. I tend to lean towards Evan's "let the system fix itself" theory, but a lot of people fucked up to get us there and there isn't going to be simple, easy fix to it.
And for the record, I don't know who my senator is, but I sure as hell know that 9 months ago, before the shit hit the fan, I could afford to drive my truck every day to work but I sure can't now. Yeah, gas is an easy target, but I suspect weak dollar + changing supply/demand are why our prices are skyrocketing.

[HAULN-SS]

The shit hitting the fan you refer to are speculative investors moving to oil from MBSs, btw. I think that's where the money went. I don't know if that point was lost in my previous post or not.

[Evan]

I think a false assumption that a lot of people are making here is that all this "created" wealth like what Andy talked about is a good thing and how the market should have stayed. Like I said, this is a correction, not a crisis.

Dave, one of the biggest factors in gas prices right now is oil speculators and commodity investors. The money that investors took out of the .com bubble when it burst and put into the housing bubble are now putting it into oil and commodities since the housing bubble burst.
Where are in a bubble market cycle, and it really really sucks.

[WRXtranceformed]

3rd quarter of '09, the housing market across the country will be normalized~

[.RJ]

Normalized = bottomed out?

[WRXtranceformed]

Nope, back to realized profits mostly across the board, for those companies that aren't completely retarded and didn't drive themselves into the ground during the downturn

[ScottyB]

for those companies that aren't completely retarded and didn't drive themselves into the ground during the downturn

yep, if you want your buy-1-get-1-free deal you better act now! operators are standing by! :lol:

<!-- m --><a class="postlink" href="http://latimesblogs.latimes.com/laland/2008/06/in-escondido-bu.html">http://latimesblogs.latimes.com/laland/ ... do-bu.html</a><!-- m -->

[Sijray21]

http://latimesblogs.latimes.com/laland/2...do-bu.html

san diego!

who wants to split this ;-)

[WRXtranceformed]

for those companies that aren't completely retarded and didn't drive themselves into the ground during the downturn

yep, if you want your buy-1-get-1-free deal you better act now! operators are standing by! :lol:

<!-- m --><a class="postlink" href="http://latimesblogs.latimes.com/laland/2008/06/in-escondido-bu.html">http://latimesblogs.latimes.com/laland/ ... do-bu.html</a><!-- m -->

Rofl!!!

[Andy]

I think a false assumption that a lot of people are making here is that all this "created" wealth like what Andy talked about is a good thing and how the market should have stayed. Like I said, this is a correction, not a crisis.

Someone give me some numbers that says this isn't a crisis*.

*A crisis doesn't necessarily mean government intervention. It just means that the situation is greater than the normal business cycle correction.

Fraud was clearly committed on a large scale. No way someone gets a 300K-500K loan without mortgage brokers inflating income "estimates." We won't know how large until the Feds start investigating this stuff.

[Evan]

I think a false assumption that a lot of people are making here is that all this "created" wealth like what Andy talked about is a good thing and how the market should have stayed. Like I said, this is a correction, not a crisis.

Someone give me some numbers that says this isn't a crisis*.

*A crisis doesn't necessarily mean government intervention. It just means that the situation is greater than the normal business cycle correction.

Its hardly a "crisis", a word that has been so overused and misused that it doesnt mean anything anymore. "Crisis" is a price shock to the tune of "no one can afford to eat anymore"

We are talking in circles now so I guess we will just have to agree to disagree. Btw, its your job to prove its a crisis, not mine to disprove it Mr. Sky-is-falling

Fraud was clearly committed on a large scale. No way someone gets a 300K-500K loan without mortgage brokers inflating income "estimates." We won't know how large until the Feds start investigating this stuff.

Its called risk. Risk that the MBS buyers assumed (whether they knew it or not, there is no free lunch and no gauranteed 5% security!!!).
This is the correction.

I got approved for a $650k loan when I made a lot less money than I do now, and had a fresh truck payment to boot. There was no fraud, just overzealous loan writers writing loans too agressively. Those who bought those mortgage backed securities took on that risk, and they got hit hard for it. I dont know how else to explain it Andy, there is no gaurantee of returns on an investment, and its not a "crisis" if/when the market corrects.

[Andy]

Evan, look into the mortgage industry in the past 5 years. It grew so fast that they were taking non college grads or college grads with non business/math backgrounds e.g. music majors and the like.

Those guys irresponsibly gave out loans or falsified income statements. They knowingly generated a bad product which received AAA bond status from their accomplices.

If I invest a 1 trillions bucks in a AAA security, I expect that due diligence was paid by the financial institutions. No one expects guaranteed returns but a AAA rating means something. but in teh case of MBS, the AAA ratings were at best erroneous, at worst, fraudulent.

What I'm telling you is that you're assuming that this is normal market cycles and what I'm telling you is that its not. Business does not include violating good business practices or securities regulation.

Normal risk does not include fraud. That's why we have laws governing these things.

[ScottyB]

so there appears to be two arguments here. one is that the MBS situation is a mess and things happened that are outside the scope of normal business practices. the second is the definition of the word Crisis. is this correct? if so:

Normal risk does not include fraud.

I will agree with you on this. however, i don't think it is a crisis. I agree with Evan's statement that a:

"Crisis" is a price shock to the tune of "no one can afford to eat anymore"

also, this thread has gone off-topic the likes of which i have not seen in some time alute:

[Steve85]

Yes it did get OT, I was wondering why it kept coming to the top.

A few thoughts...

You donÔÇÖt need to really inflate income, you adjust the qualifying ratios. The standard for a long time was 28/36. That means 28% of gross HH income for the PITI payment and a max 36% of HH income for all debt. A couple with $100K income will qualify for about 300K. A payment of $2300 (28,000/12) is about $300K at 6%. Assuming no other large debts, less than an additional $8000 per year.

Push those ratios to 37/45 (which our system uses) and you get that same couple in a $500K mtg.

Now, qualify them using the 37/45 ratios on an ARM at the 2 year introductory rate of 4% and now you have a fully qualified borrower for a $675K mtg. And, based on historically low foreclosure rates for ÔÇ£qualified borrowersÔÇØ MBSs get AAA ratings.
The MBSs were also used as collateral to borrow more money to lend out. When you leverage up like that you either get rich go Bear Stearns. Some market analysts think this drove the private equity boom.

It may be difficult to really pinpoint fraud, but rest assured more than just home prices need correction. These practices need correcting. And if the govt sends the message they will mitigate risk for everyone then history will repeat itself in similar fashionagain. (S&L..circa 80s)

One proposed fix that will do just that.

Sen Dodd and his buddies have come up with a plan. Assess the value of the house and readjust the mortgage principal based on the new value, less 20% for equity. e.g you have $200K mtg, the house is now worth $180K so you cannot re-fi out of your ARM or afford the impending adjustment. The new mtg will be based on a principal of $162K (180 less 20%). Why will the bank go for this? The gov't guarantees to make up the difference if defaulted. This is a great idea, what we have learned is ignoring risk is very very bad, the solution, eliminate risk, sorry, I misspoke, spread the risk to only those not responsible.

It gets better, their argument is that this will do two things:
1) Make homes affordable.
2) Protect the value of other homes by preventing foreclosure.

That's right, this plan will make home prices/values go up and down simultaneously. BRILLIANT!!

[.RJ]

So, really, the entire feedback system needs reform.

Looks like if its paid, then they cant fuck you.

[Apoc]

Buy.com Deal With eBay Angers Sellers

SAN FRANCISCO ÔÇö The golden era of the small seller on eBay, hawking gewgaws and knickknacks from the basement or garage, is coming to a noisy and ignominious end.

The deal with Buy.com has added over five million fixed-price listings to eBay.com since the beginning of the year ÔÇö for items from Xbox 360 video game consoles to Weber grills.

Since eBayÔÇÖs search listings favor larger sellers who can add perks like free shipping, which improve their feedback ratings, Buy.comÔÇÖs presence has hurt many smaller sellers that compete in those product categories.

<!-- m --><a class="postlink" href="http://www.nytimes.com/2008/07/14/technology/14ebay.html?ex=1373774400&en=d25dcd0da013b7ba">http://www.nytimes.com/2008/07/14/techn ... 0da013b7ba</a><!-- m -->

Of course I did just my MotoGP tickets there from an independent seller but I'd agree with the article.

[Evan]

buy.com sells gewgaws and kickknacks?

sounds like "Evil big company" blathering from NYT to me

[Jeff]

I didn't want to start a new thread but I wanted to share this. One of the projects I have yet to chronicle from my new house is the building of my kegerator. Because of its odd size the only kegs available blessed me with Michelob Ultra. So I got on e-bay and ordered a Mic Ultra tap handle. The pretty cool looking ribbon one. Anyway, its been awhile in shipping and I thought this was amusing from USPS tracking.

Label/Receipt Number: 0115 0134 7113 1357 2694
Detailed Results:

Processed, August 01, 2008, 12:29 am, CHARLOTTESVILLE, VA 22911
Processed, July 31, 2008, 10:23 pm, CHARLOTTESVILLE, VA 22911
Processed, July 31, 2008, 10:51 am, HOT SPRINGS, VA 24445
Missent, July 31, 2008, 8:34 am
Arrival at Pick-Up-Point, July 31, 2008, 8:07 am, HOT SPRINGS, VA 24445
Processed, July 31, 2008, 1:10 am, CHARLOTTESVILLE, VA 22911
Electronic Shipping Info Received, July 28, 2008


Dumbasses...