Gold, zero, and stimulus.

[indio]

When David Rockefeller dies, who will the Fed take it's orders from?

That's of course that's if he ever does die. At 92 years old, he might be an other-world demon who must be shot with a silver-bullet, or have a stake driven through his heart, or otherwise will live forever, spreading his evil tentacles around the world until he finally rules the world completely.

By the way KoolPappy PD, great Jeckyl Island reference. I'll be sure to read the link later. It may take a while, but if enough people open their eyes and minds a little, they'll start to realize what's really going on.

[degenerategambler]

60 Minutes - Video, Reports, Profiles, Interviews - CBSNews.com

This is a really good expose on the subprime mess in real estate.

[stevo]

Thx DG.

[pokerjoe]

I saw that, degen. Glad they mentioned, if briefly, how many of the foreclosure "victims" gamed the system. They got lots of money back and free rent while waiting for foreclosure to happen. Wish they'd mentioned that the drop in prices you hear about is actually much, much worse than stats let on, because of three huge numbers not in the sales prices: money invested in fixing up the house, incentives given back to the buyer, and closing costs traditionally picked up by the buyer, now on the seller's tab.

Here's the newest gaming-the-system ploy: max out your home equity; buy a second home (for not much money, with prices dropping), THEN let your first home go into foreclosure. Your credit gets shot, but because you already bought a new home it doesn't matter much.

Politicians are scrambling to help foreclosure "victims." You and I are the victims. There are two kinds of people getting foreclosed on: smart ones who gamed they system and made tons of money, and dumb ones who got completely played. So we can reward con artists and idiots with bailouts funded by the responsible and tax-paying, or we can let the shit sort itself out.

Do they still have that billboard off the 15 in Vegas, homes for sale, no money down, no closing costs, no payments for a year?

There is one real solution to the foreclosure mess: a law mandating that all foreclosed properties be sold within 30 days. The problem is empty houses deteriorating, attracting crime, and killing whole subdivisions. Banks don't want to sell at the market price because that price is so low. Until a foreclosed house is sold, a bank doesn't really have to admit how much it lost on the deal. So the reject an auction's highest bid.

[Crony]

Pokerjoe,

Once a house goes to auction, there is no rejecting a highest bid.
Highest bid gets it.

What does happen is many of the mortgage companies bid on their own properties that are going to foreclosure.

In Texas they are allowed to put in a high low bid.
What that means is they have a spread and no one at the auction can bid unless it is higher than the high side of their bid.

It is not uncommon for the spread of a high low bid to be something like $250,000 to $300,000. So unless you are bidding $300,001 the mortgage company gets the property for $250,000.

[stevo]

120 Billion wrote off and and the head of some of these houses stilll walked off with a nice bonus.

Nice close.


Interesting comment on once they combined securities with mortgages it seperated lender and borrower.

Unreal you could just put you made 400k and they didnt check. No due diligence. Pretty unreal.

thx again degenerategambler.

[degenerategambler]

They essentially paid people to buy a house so they could continue to package the mortgages up with AAA rating and sell to funds throughout the world. But don't worry the "poor homeowners" have more free money coming in the mail from Bush to keep the other ponzi scheme that is the American economy alive for 1 more week.

[pokerjoe]

No, Crony, they can and do set minimums, and sometimes keep an option to reject all bids. IOW, it isn't entirely a real auction at all.

Here, I just quickly googled this up:
Selling a Home Via Auction Growing in Popularity — The Real Estate Bloggers


Selling a Home Via Auction Growing in Popularity
October 27th, 2006 | Real Estate Sales

If you are looking at selling your home quickly, a growing trend in the country is using the auction system. Homes sold via auction increased by 5.9 percent in 2006 and auctions have been trending upwards over the past 5 years.

While using an auction may seem unconventional, people interested in a quick sale have used this effectively. There is an excitement that auctions bring that is done correctly can significantly increase the price of a sale, and if you use the minimum bids correctly, you will be out only the fees to the auctioneer if the home does not sell.

[pokerjoe]

Or this:
Going, Going, Still Here! (or A Not-So-Successful Auction)

I had seen the signs proclaiming this coming auction a few weeks back. I had read the small print. I knew what was going to happen because of it. Here’s the small print in a nut shell:

-Bidders had to register and provide a $1,000 check at registration (no problem. If you didn’t win the bidding, you would get it back)
-Winning bid had to add 7% as a Buyer’s Premium and that would be the sales price. So if the winning bid is $100K the sales price would be $107K (OK, this sounds good for the seller, but only good for the buyer if he gets the home at an appropriate price. Bidder, set your limit and stick with it)
-House is sold As-is (no problem here either, you still have an inspection period and can back out if severe problems arise)
-Seller to provide clear title at closing (good, because anything but is unacceptable)
-Closing to take place with pre-chosen closing agent (this can be OK, but ordinarily the buyer chooses the closing company as the buyer is paying the title insurance. I’d need to ask more questions about this before I give the go ahead on this.)
-and the one that I knew would result in a flop of an auction: Seller can accept, reject or counter-offer the winning bid. ah hah!
That last one is the reason the auction failed to reach it’s mark. There were approximately 25 people in attendance. From their nametags, I would guess that 10 of them were from the listing agent’s office. Perhaps another 10 were observers such as myself. The owners of the home were apparently there. They provided some info to the auctioneer and I took them to be the owners anyway. There were 4 registered bidders but only 3 did any bidding.

The low # of bidders was not the reason for this auction turning out the way it did. It was the last item on the list. Why is that last item the one that can make or break an auction? Because it told everyone who may have had an interest in bidding that it was not an absolute auction.

An absolute auction means that the winning bidder wins. Period. His bid does not have to be approved by the seller. The seller has agreed beforehand that he will accept whatever the highest bid is.

Can this be risky to the seller? You bet your sweet potatoes it can! But can it result in a heck of a lot of excited bidders at an auction? Bet those same sweet potatoes on it. Heck yeah.

Anyone who knows that a desirable home can be had for any amount less than the market value is going to try to be there and win the bidding. And once bidding starts, chances are he will get caught up in the furor and the bidding will start going the way a seller wants…up..up..and up!

That’s not what happened yesterday in the Redland. It took the auctioneer about 6 minutes to start the bidding at $150,000 and take it to $350,000. At $350K it stalled. He had a very hard time getting anyone to offer more than that. After some cajoling and dropping down from $400K, $375K to $360K he was able to solicit a bid at $360K. After a little more effort he was able to get it to $365K. But the buck stopped there. Not one of the 3 bidders was willing to bid more than that for this $900,000 home (that I think is worth $750,000).

[Mjulian]

The decoupling of risk from reward in the credit markets was an unfortunate side affect driven primarily by cheap capital provided through the Feds misguided monetary policy.

Contagion from the mortgage markets to the corporate credit markets and equities markets, and ultimately the overall economy has occurred. As pokerjoe alludes, it is a natural progression that should be allowed to proceed unfettered by well-meaning regulation.

However, it seems pain is to be avoided at all future costs, especially during an election year; hence, the plethora of "stimulus plans", "mortgage bailouts", etc. Fed monetary policy through fed funds rate adjustments is no longer a functional model for managing economic volatility. I am not sure waht is a better method but I'm sure minds far more brilliant than mine can come up with something effective.

When you think about it, this whole subprime fiasco is US capitalism in a nutshell, good and bad. A product was created to address a real problem: dwindling home ownership among the lower and middle class. Success was gradually followed by excess, abuse, and ultimately implosion.

The key is to let the implosion occur, clean up the pieces and retool. Capitalism is nothing if not resilient.

As Jerry would say, Keep on Truckin'

[KoolPappyPD]

Originally Posted by indio

By the way KoolPappy PD, great Jeckyl Island reference. I'll be sure to read the link later. It may take a while, but if enough people open their eyes and minds a little, they'll start to realize what's really going on.

I WISH A FEW PEOPLE WOULD TAKE THE TIME TO READ IT...VERY EYE OPENING...READ IT AND GO "WOW"!

[Crony]

Pokerjoe,

I am talking about the Foreclosure Auction that takes place on the courthouse steps. What you wrote about sounds like a preforeclosure auction.

Every house that goes to auction in Texas starts with an opening bid by the mortgage company. In effect that is the minimum opening bid. If there is a high low bid, the mortgage company gets to buy it at auction at a predetermined price unless someone exceeds the high bid.

If you out bid the mortgage company for the house, the only way you don't end up with it is if the original owner declares bankruptcy on the day of the auction. There is no pulling of the property by the mortgage company once auctioned.

Might work differently in other states, but that is how they run them in Texas.

[degenerategambler]

Originally Posted by KoolPappyPD

I WISH A FEW PEOPLE WOULD TAKE THE TIME TO READ IT...VERY EYE OPENING...READ IT AND GO "WOW"!

If you enjoyed that article and haven't seen Aaron Russo's documentary you'd probably enjoy it as well.

America: Freedom to Fascism - Director's Authorized Version

[StarnetGypsy]

Originally Posted by JohnGalt

Fading all of you "the sky is falling" people and putting most of my liquid assets into the stock market this week, mutual funds primarily, spread out over several different types.

alot of good buys out there. market is retracing, which is healthy, and will rebound like it usually does. i refuse to give the idiots in charge any semblence of the ability to wipe it out ...

[degenerategambler]

Be careful gyps, I think we might get a bounce up to 12,800-13,000 and then a steeper correction.

[StarnetGypsy]

thanks Dgen. i aint in the buying mood tho, and if i were it'd have been silver at $11.50 last August (now $16.60), or 45% appreciation in 6/mos.

you may be right about continued corrections tho, and being that we're in an election year it will be interesting to watch just how much it drops. the more it drops, the more people will want change in policies and influence their votes?

[alysheba88]

At least no one talking about how real estate cant go down. How this time it is different. Miss those days

[niltes]

i am still invested in the yen and in gold, but i have taken
positions in the politically safe, resource rich countries' currencies
too (canada and australia). although you might not get fabulously rich
from these investments, you are likely to grind out a nice double
digit return, especially if you sell options against your currency positions
(fxy-japan, fxc-canadian, fxa-australian). i am very satisfied with my results over the last year + and i see nothing happening domestically to
protect the dollar. how low is bottom, i don't know; but i doubt we are
close.

[pokerjoe]

They took another step closer to 0 interest rate today, and then signal "pause." Hmm. As you approach 0, what else can you do but pause?

So, interest rates drop, punishing savers, and the IRS starts sending out inflationary "free money" checks to everyone, which also punishes savers....spend it all, boys. The government's going to inflate our debts away.

Thank God our debt is denominated in our own currency. Thank God that all those countries selling us shit we don't need for money we don't have, keep buying our debt.