Powered by TypePad

« Run The Solar Plant At Night When Its Cool | Main | Unit Roots »

March 03, 2009

Comments

Sue

Enlightened,

They spelled out their intent in the Politico article. They needed a bogeyman now that Bush/Cheney are out of Washington. Carville polled Limbaugh last year and found his poll numbers were low, even among republicans. Voila. Instant bogeyman!

Amused bystander

Soylent, I would add to that list:

4) Point out the hedious corruption among the Democrat elites. Not just the politicians, but the business folks who expect the middle class to bail them out. Get clear about what realy happened on Wall st. Get. Very. Clear.

(I am am suprized that no white paper has been forthcoming thus far from the GOP)

Take this attitude to the whole stimulus con-game. just who benefits from it. Who is getting the money and why.

Take on voter fraud too in this context.

5) Point out how oppressive this whole thing can and will be. Highlight the dangerous erosion of freedoms, Show that it really is a totalitarian system that they are promoting.

bad

Charlie, I fail to see how enough mortgages can be re-written to make a difference. Obama put all kinds of caveats on who can receive a bailout. Seems if the situation were so dire, all moertgages would need bailed out regardless of the worthiness factor.

But I'm simple so show me the numbers and I will try again for understanding.

PaulL

Enlightened,

I think since Obama and the Ballerina have so explicitly targeted Rush, that protects his voice on the air.

bad

That Politico article shut down debate about Limbaugh over at Tapper. It's as if he disappeared.

Neo

For those who were surprised to find out that Boy George was gay ...

JOHN EDWARDS CONFESSION TO DYING WIFE:
"IT'S MY BABY!"

John Edwards has finally confessed to his cancer-stricken wife Elizabeth what the rest of the world already knows - that he fathered a child with his mistress.

hit and run

PaulL:
I don't recall McCain essentially calling Obama a coward.

Well, he didn't push the coward thing much, not nearly enough for my tastes, but when Obama did his Wild Bill Hickock immitation ("I’m ready to duel John McCain on taxes right here, quick draw"), the McCain campaign countered with...

"If Barack Obama wants this so-called duel then why did he and his entourage run for the hills when John McCain challenged him to 10 town halls."

echoing the Wild Bill theme.

PaulL

Hit,

I advised McCain to hammer Obama with it every day, but did he listen to me?

99.9% of the public never were aware of any of his campaign's press releases.

You know, what was so silly about this is that McCain, for all his reputation, was unimpressive at his town halls. It was mostly done by rote. Canned responses to the same old questions. Obama shouldn't have feared appearing with him at a real town hall, but he did. That travesty that masqueraded as a town hall in the official debate schedule, well, I don't know how to end the sentence.

Enlightened

At first glance I thought that said John Edwards confessed "the dingo got my baby"....

Enlightened

.

Boatbuilder

I like it. Let Rush, who is big, bad, bulletproof and fearless, fight the ground war, do the dirty work, and rally the troops. He has nothing to lose and everything to gain.

Meanwhile, the Republican leadership--that's Boehner, McConnell, Cantor et al continue to take the high road: state that the Obama plan is bad, that the Republicans have a reasonable, common-sense plan which draws on the principles of Kennedy, Reagan and Clinton (heh)--cutting taxes, controlling spending, and promoting econnomic growth through encouragement of both private and public-sector initiatives recognizing long-term economic incentives as the key to a productive economy and society. (Yes--the past Republican record on these issues is less than perfect--but they are on record as opposing the Porkulus billl in the first place, and can now attack from a position of relative strength)

Questions about Rush should be met with expressions of deep concern about the president having an "enemies list" and the propriety of a President publicly attacking a private citizen and a member of the free press, in order to distract the country from his own failure to do his job.

The public is going to be howling in anger in 6 months--even if the rosiest economic scenarios of the Obama apologists come true, we will be in considerably worse economic shape then then we are now. The muddle won't want to hear that it's all Bush's fault then. They have been and will be looking for someone to fix things, and it will become increasingly apparent that Obama is not up to it. They will go to the Republicans--if they play their cards right.

And Steele should continue to play nice and court the "moderates," While at the same time making sure that Spector, Snowe, Collins et al either stay in line or recieve no support. If the RNC acts moderate in public and is conservative behind the scenes (OK--that's a wish at this point) that's fine with me.

hit and run

PaulL, if I didn't know any better, I'd think that I had written that. I agree with it all.

Funny, going back through the post I put up on my blog at the time with that quote from the McCain, I re-read an AP article about the happenings. In the space of a few paragraphs, we had...

During a round of appearances in Missouri, Obama worked to link McCain to the unpopular Bush ...

Throughout the day, Obama argued that McCain "thinks we're on the right track," drawing boos from his audiences. ...

"They're going to say I'm a risky guy," Obama said. "What they're going to argue is I'm too risky.

Right? Well. After Team McCain's comment that Obama was a coward, Obama went for this...

"I don't hear very much positive from Sen. McCain," he said. "He seems to be only talking about me. You need to ask John McCain what he's for, not just what he's against."

That's the last sentence in the article, self-contradictory to the previous paragraphs, but left unchallenged by the writer and certainly by any McCain response.

Eh, I don't want to re-live the terrible, horrible, no good, very bad campaign. Then again, reviewing such a clusterschmuck is a distraction I can belive in today of all days.

Or something, I don't know.

Ranger

Point out the hedious corruption among the Democrat elites. Not just the politicians, but the business folks who expect the middle class to bail them out. Get clear about what realy happened on Wall st. Get. Very. Clear.

This is a critical point. Paul Volker had to admit last week that part of the reason there are 13 critical vacancies at Treasury right now (in the middle of the worst financial meltdown in living memory), was that a full 1/3rd of the candidates they wanted to put forward had tax problems.

These are obviously high power Wall Street banker types who love to talk about "spreading the wealth around" with their liberal Wall Street friends, as long as it is somebody else's wealth.

Remind them that the Wall Street types being bailed out are guys like Rubin (Dem), Corzine (Dem), and the like. The big time Wall Street bankers are for the most part Dems. The Republican bankers are the small town guys that (for the most part) played by the rules and are in decent shape.

Boatbuilder

Unfortunately, they can't get carried away--most of the Wall St. types were sharp enough to play both sides of the aisle--or had equally-filthy rich Republican partners who took care of that end.
The non-politicians need to keep hammering on this--the idea that the fat cats are all Republican is an enduring myth--but I don't think that many of the Republican congresscritters are clean enough to throw stones.

sbw

We need to axelturf the crap out of it.

No we don't.

Axelturfing shows they have no principles, that they don't value trust, and that to them, its all a game.

We just need to point out their axelturfing exposes them to be unprincipled, untrustworthy, and insincere.

Try to hide that behind a flag pin.

glenda

Hit: OK, Your prayer is in my Bible next to a candle by family pics-that was lit daily to help my girl. I will download your family "toe picture" from vacation in Wyoming and get to work! Help is on the way!! And never forget, there's always beer, food, cheer and internet at my abode in Texas! The Houston job market is not as bad as other areas.
And, Obambi had nothing to do with Wootie's job, her predecessor resigned to move with her husband and family, because of his job.
JOM peeps are with you and yours--they are great group prayers and thinkers!! Nothing but love, nothing but love....

clarice

boatbuilder, that was a very thoughtful post.

Porchlight

Per Hot Air, Gibbs says in presser today that tangling with Rush is "counterproductive."

Seems this little tactic is being criticized from several quarters including Michael Scherer at Time (!) and Jay Cost. Good links for anyone following this story...

Neo

During the campaign, presumably thinking of his Silicon Valley supporters, Obama proposed eliminating capital-gains taxes on start-ups in order to offset some of the tax effects that I’ve highlighted. This idea was always make-believe. As I predicted last July, the president’s just-released budget has “delayed” the proposal until 2014. Translation: it isn’t going to happen. Like the college students who stayed up late to hear Obama’s campaign speeches only to find his first significant action to be a stimulus program that will transfer about $1 trillion from them to the Baby Boomers, Silicon Valley Obama supporters may find themselves in an uncomfortable environment. A government-dominated economic era may not be an auspicious one in which to start companies that threaten big, incumbent corporations with lots of political clout.

Enlightened

Hey! - At what time did Rush challenge Bambi to the duel and at what time did Gibbs start backpedaling the meme?

I smell a scaredy-cat in a Ballerina tutu.

OMG - Rush actually said the Great Rahmbini was effeminate, with instincts like a female rat.

Bwwwaaaahahhh. He even posted a picture of Rahmbini doing what looks like a pirouette or some such. Well, I'm guessing Rush won't be throwing down a tutu gauntlet for a pirouette dance-off.

Pofarmer

was that a full 1/3rd of the candidates they wanted to put forward had tax problems.

Tall lampposts and short ropes. The amount of corruption in NY and DC is almost beyond beleif from out here in the hinterland.

Matt

The money on Wall Street has gone primarily to the dems in the past 10 years. They typically try to back the winning horse and then placate the minority party with the table scraps. Either way, they win. Goldman has run U.S. financial policy for the past 50 years.

Old Lurker

"The mechanism in the law and Constitution for renegotiating contracts in insolvency is bankruptcy."

For sure I have spent my whole career on the borrowing side of Deeds of Trusts and have wrangled with many a lender. But I have always respected the bargain my lenders thought they were making with me.

Seems to me the devil is in the detail on this. If you think of these loans as simply a contract like any other, then I understand your point about throwing these contracts into the bankruptcy pot with all the other obligations and assets of the borrower.

But the usual arrangement is for the property securing the note to be actually owned by a trustee for the benefit of the noteholder. When the note is paid off, the trustee transfers title to the borrower but until then, the bank owns the house more than the borrower does.

One reason for this is the lender has bargained for first claim on that asset if things go bad, and accepts a lower interest rate in return for being first in line before the borrower and all other creditors (except taxes) with respect to that one asset held in trust for the lender. The other creditors get higher interest rates because they are further back in the line and have to fight with the other creditors for the remaining assets. So mortgage loans secured by Deeds of Trust cost say 6% and credit card loans cost 22% or whatever.

Allowing the judge to wave his magic wand to reduce the loan amount and the payments while denying the lender his right to reclaim the house seems to me to take away from the lender effective access to that Deed held in trust for him, shifts the property more to the borrower, and by reducing payments and the principal, effectively enhances the position of the unsecured creditors and the borrower too ... all at the expense of the orginal mortgage lender. And all by changing the centuries old rules of the game regarding first Deeds of Trust on primary residences.

I grant you the right/ability of congress to rewrite these rules, and I understand why some lenders might want to sue for peace on the issue while trying to survive as an independent bank (ha!). But for damn sure future lenders will not make loans priced on the old rules if this sort of Hugo Chavez action occurs or is seriously considered or threatened. Fool me once, shame on you. Fool me twice, shame on me.

Active borrowers in good standing, or people hoping to borrow in the future, should be scared to death of this action.

Charlie (Colorado)

Po', I'd like a pony, too. The mortgage cramdown in bankruptcy law is what is needed to let that be renegotiated. You tell me a legal way to let the market write down those mortgages without changing the law, and I'll listen.

As before, make sure to show your work.

bad

I agree completely, Old Lurker.

Additionally, not paying what I owe is something I can't imagine getting comfortable about.

bad

Charlie, on another thread I asked if you thought this mortgage issue can be solved with the limited number of mortgages that can be adjusted based on Obama's need for "righteous" adjustments.

Do you have numbers on how many are likely to qualify?

Pofarmer

You tell me a legal way to let the market write down those mortgages without changing the law, and I'll listen.

Just like it's always been done, put em on the market, which is the way this should have been handled from the start. I can't pay for my shit, it goes on the market, if it doesn't bring enough to cover my debt, then I'm into the lender, unless they decide to forgive it. We don't need to make up all these complicated mechanisms to do things that have been done for centuries.

All of this action comes from what "Could" have happened without government intervention. Companies "Could" have missed payroll. Cities "Could" have been unable to sell bonds, etc, etc. None of that stuff DID happen, so we really can't tell now, can we?

Pofarmer

And, why do we need a cram-down at all, anyway?

If you are upside down on your house, but you can make your payments, then shut up and make the damn payments, someday you'll be back on the good side, and maybe you and your kids get a valuable lesson. If you can't make the payments, then there's probably somebody out there who can make payments on it at some price.

Charlie (Colorado)

Bad, I think part of it is that there are two (or more) mechanisms at work; one of them is a change in the law that hasn't happened yet. But the essential point really is simple: there are a bunch of houses with mortgages where the mortgage amount is significantly more than the house is actually worth. Now, i you listen to the rants, it sounds like it's everyone, but in fact it's just a few states where this is really true, California and Nevada being two of them. The worst of these seem to have had the house values drop by upwards of 40 percent, so say those houses are worth 0.6 of what the mortgage assessed value started as.

There are a bunch of banks that depend on those loans as part of their balance sheets. Those banks know that if they foreclose, they will get something like half of the already-reduced value. That means they'll get 0.3 as much as the assessed value. A lot of those banks know that if they take a 70 percent haircut on these mortgages, FDIC will knock on their doors. But there are really only three choices: negotiate the loans down now and continue to hae them perform on less principal, or let the banks foreclose, and have them not perform and net even less. If we take the second choice, then we further can choose to either pay off depositors etc via FDIC, or default. If there's another choice, I can't see what it is. None of them are great, but that's life.

OL, it's pretty much the same problem with your point. You present me with another option. Would you rather pay for it by allowing bankruptcy judges to do what bankruptcy judges have always done -- which includes protecting the debtors as well as the creditors and trying to find an equitable solution -- or by forcing a ton of foreclosures, personal bankruptcies, bank receiverships, and FDIC payments?

Does it mean they may have to change the way they do mortgages? You bet: if the risk profile changes, the mortgage costs will have to change. But we're back to the same point: tell me another solution. It's fine to say "we've never done it that way before" -- although, honestly, it's not that far from being precedented, this sort of thing happens all the time in commercial mortgages.

But it doesn't much matter if it's happened before: it's happened now. If you have another answer, tell us.

Sue

The problem as I see it is we are throwing money at a problem that has yet to be addressed. It reminds me of education. It isn't really broken, it just doesn't get enough money. Kids graduate that can't read or write but if they just had a few more dollars, they could teach them. Makes you wonder how our forefathers learned anything before the federal government got involved.

Sue

You bet: if the risk profile changes, the mortgage costs will have to change.

And how does this help the slumping housing market? It seems to me you are piling on a another problem to the original problem that wasn't solved to begin with. Or even discussed.

Pofarmer

The worst of these seem to have had the house values drop by upwards of 40 percent, so say those houses are worth 0.6 of what the mortgage assessed value started as.

As long as the borrower is making the payments, this should be a total non-issue. Now, if the banks have to "Mark to market", then, yes, you have an issue.

How many of these loans are at risk of non-performance? What if unemployment goes past 10%? What if the cram-downs occur, and the market continues dropping?

Sue

Po,

Throw more money at them. That's always a good answer.

Pofarmer

It seems to me that the problem here is that we're trying to preemptively solve problems. Such and such person says "Ahck, this or that is gonna happen." People in power say "Let's throw and few hundred Billion at it!" This or that doesn't happen, so, obviously throwing a few hundred billion at it was the correct and only solution.

Rick Ballard

"Do you have numbers on how many are likely to qualify?"

Here is the 'simple' 17 page outline of the program. I don't think anyone in the world could guess the number who may qualify. It's totally dependent upon what the servicers are willing to do. There are no LTV guidelines - a servicer could leave the principal alone and drop the interest rate as low as 2% in order to meet that 31% income requirement. If you take the CA average ARM balance of $323,840 with the average interest rate of 7.58% then the 31% income is about $86K, drop the rate to 2% and $46K works. The monthly P and I drops from $2,220 to $1,196.

The Feds pick up 50% of the drop in interest with no cramdown.

mel

Rick-

Thanks for the earlier linkages.

As far as this cram-down, two observations, at least as far as I understand it, first is that all valuations and contract terms will be decided on a per contract basis, and only by the courts. That will keep a lot of trial lawyers busy. Remind me again, where do they ordinarily contribute those hard earned fees?

Second, if the federal government is a partial payor of this revised mortgage, are they also not a de facto part owner? Anyone else see a problem with this certain camel nose under the tent flap?

Or am I missing something?

Rick Ballard

Mel,

It's not "only by the courts", it's per the servicer agreement and wholly voluntary. The 3 MBS prospectuses which I've read allow the loan service provider to alter terms of the mortgage at the discretion of the service agency. The problem comes from the liability incurred by the service agency for doing so on an "olly olly oxen free" basis to a whole class. The proposed modification plan does not provide a "hold harmless" clause (nor could it, without specific legislation).

So Citi can jump in the pool but WFC, as agent for DeutscheBank, will probably watch quietly from the sidelines. BAC might go for it with some of their CountryWide portfolio.

clarice

Country Wide and its execs are aparently cleaning up, buying defaulted mortages up cheaply.

http://www.nytimes.com/2009/03/04/business/04penny.html?hp

and the beat goes on.

Pofarmer

first is that all valuations and contract terms will be decided on a per contract basis, and only by the courts.

Well, shucks, that won't take long at all.

Rick Ballard

Clarice,

The kicker is whether the Feds use loan counts or loan dollars - my bet is that the ACORN scum who worked the Blue Hells are going to clean up again in the Blue Hells while the CA 'burbs, with 50% of the dollars but 20% of the loan count, gets less than even 20% by count.

It's '40 acres and 3BR 2BA' time.

Sue

I just want to know if these house values rise and the owners make a profit, do we get to share in that profit? Or will we just share in their misery?

kim

I'm hearing radio ads for how to call for information about mortgage modifications. Wothehell?
===============================

Jane

HIt,

I'm skipping ahead to add my love and hope and prayers to the pile for you and your family. It's hard for me to imagine this not ending up being a good thing for you - because that is the kind of magic you have - so don't let the bumps on the way get you down.

And can you relocate to the Northeast this time?

clarice

Well, well Ms Jane, horning in on my sweeties agin, heh? I already asked him to D.C. SO THERE.
I'm warming up the mud.

Rick Ballard

"Or will we just share in their misery?"

Are you sure there will be misery? This isn't a deadbeat bailout. You have to be current to qualify. We're coming up on two years since the "end of MBS" (four months to go) so we're talking about people who have kept their word for at least twenty months. I think this might break the spiral but a lot depends upon where the allocations begin and how quickly the service providers react.

If housing stabilizes then the detoxification of assets will follow.

bad

Rick, I know I keep asking this question but humor me.

Are there going to be enough righteous bailouts to make a difference?

bad

Clarice, I read that article earlier in the day. The ingenuity and chutzpah is mind boggling.

bad

Rick, let me ask another way.

How many billions in housing need to be rescued for this mess to unwind?

Rick Ballard

Bad,

I can't get beyond 'maybe'. The cost of buying down the average rate on all ARMs to 4% for five years is about $54 billion. The ALT-As would cost $42 billion on the same basis. That's half the haircut. The $75 billion seems like a reasonable number but I wonder if the banks are going feel real excited about their half of the haircut.

I can't get to 'this won't work because...' but I can't get 'this is a sure thing' either. I can say that I believe it will do a lot more good than anything done by the Dems to date but that ain't much.

mel

Rick-

I think I'm going to have to re-read what I misread and re-evaluate.

Thanks for your insight, just the same.

See what I meant about the GECC CDS being a short "push"? They discovered how hard it is to push on a string. The best barometer for that stuff is David Faber, if he, or Joe Kernan for that matter, are quoting CDS quotes, it is ALWAYS a short push. You can trade off of them for a few minutes at least. It's coming to an end though, traders are starting to use it as a buy signal, and you can see the confusion in their faces. Very funny stuff.

Thanks again, I appreciate it.

mel

bad-

When was the last time you were on a trampoline with an older sibling or cousin? Do you remember how to "steal a bounce"? In economic terms, every time the government steps in front of somebody else being able to make a choice, they have "stolen the bounce".

Oh, yeah, you were asking about housing.... ;~{) (traditional wink, broken nose, moustache, with fat chin)

Rick Ballard

"They discovered how hard it is to push on a string."

It looks to me like the shorts covered at 6 bucks from the volume spikes.

mel

But they got short around $7, not much bang, they were looking for a Citi price.

That, my friend, is an expensive search for the bottom. Paid almost more in commish than got for in the return.

And, it is what makes a market, the willingness to put money on the table to find out who's right. And why I get up in the morning.

Which is why I've got to turn in.

Night all.

bad

Sweet dreams Mel.

Thanks Rick. If the rest of the world is gonna get screwed from our financial mess, O better not get lax about national security.

TCO

We should have let the bad debts and Goldman and all that get wortked out. HUUUUGE morla hazard and proppoing up of dead men going on. Hope you commie RINOs enjoy paying taxes so Paulson doesn't have to (on 700 mil).

TCO

You're a moron, Maguire. Both on economic incentives and on politics. You RINO scum killed the Republican party. We could have rocked th vote in November 08 with a populist anti-bailout agenda. Instead you all are killing the country to keep Goldman Sachs from a well deserved bankruptcy.

kim

All this moral hazard is on Obama and crew, now, TCO, in case you hadn't noticed. And since you don't know what the economic and political consequences of not stopping the panic last September would have been, you are just speculating, and repeatedly and boringly so.
======================================

kim

I've figured out what a fantasist you are, TCO. Do you really think, with the MSM we have, that a populist message would have 'rocked the vote'? Did you see what MSM did to a real 'populist' message?

I'm sure you did, because I know you liked Palin. So, off with the fantasies, and rejoin the real world.

What 'ya gonna do now, to insure that a populist message 'rocks the vote' in 2010 and 2012? Ignorant, misplaced, and mistaken 'I told ya so's' aren't going to cut the mustard.
==========================================

hit and run

Jane:
And can you relocate to the Northeast this time?

If I were smart, I'd drop everything and move there immediately and hound you until you agreed to let me be your manager/p.r. agent.

Together, we'd rule the world.

Jane

Hit,

You've got a deal! What fun we will have!

BTW the latest pocast of FWDAJ is up (which I haven't even heard yet) LUN

hit and run

Well, Jane, I would have to work mrs hit and run over pretty hard. She's a Texan first and a Southerner at heart after that.

And I do have to admit most of my cajoling right now is going into trying to convince her to move to our family's place up in Idaho....turn this Involuntary Shrugitude into an intentional and permanent one.

Besides, I kinda hinted that were Obama to win the election, I would move to Idaho. Maybe this is a sign...

But ruling the world with you sounds like more fun, so...

DebinNC

I think in 10 years a sizable number of Americans will fantasize about living on some arable land in Idaho or similar spots off the beaten path. Heck, I'm already doing so.

cathyf

I'm hopelessly behind with threads (been dealing with girl scout cookies for the last week) so somebody else may have already pointed this out. This here:

That aside, the Fed is providing a put on the underlying assets at a strike of 67% of the purchase price; ... because the investment manager clearly has an economic incentive to buy high-variance assets.
is a nice succinct statement of what is wrong with employee stock options.

The comments to this entry are closed.

Wilson/Plame