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To promote stability in the secondary mortgage market and lower the cost of funding, the GSEs will modestly increase their MBS portfolios through the end of 2009. Then, to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10 percent per year, largely through natural run off, eventually stabilizing at a lower, less risky size.
....
Government support needs to be either explicit or non-existent, and structured to resolve the conflict between public and private purposes. And policymakers must address the issue of systemic risk. I recognize that there are strong differences of opinion over the role of government in supporting housing, but under any course policymakers choose, there are ways to structure these entities in order to address market stability in the transition and limit systemic risk and conflict of purposes for the long-term. We will make a grave error if we don't use this time out to permanently address the structural issues presented by the GSEs.
In the weeks to come, I will describe my views on long term reform. I look forward to engaging in that timely and necessary debate.
It sounds like declaration by FHFA of "martial law" in the mortgage market to me.
"A PSL is a Personal Seat License. A Personal Seat License is a one-time payment for permanent control of a Giants home game seat. The purchase guarantees the owner’s right to purchase a season ticket as long as the Giants play in the new stadium. It also provides the purchaser with control of successorship of the tickets, a benefit now only available for direct family members. The PSL stays active on the condition that the season tickets are purchased annually."
Sounds like it tradable option to me with an expiry date of the closing of the stadium. If you have 50 yd line seats they are going to be worht more then the $20K you pay.
Market must not like any eventual winner of the race between 2 mavericks on Rep side vs a Dem who has outgrown pimping the residents of South chicago and State of Illinois.
I was going to post Monday that market not even touching 1305 resistance looked like end of any uptrend.
It is only a short period of time for market to test Jul lows since only save haven is cash not commodidies or energy anymore as recession bears down on us more and more.
Unleaded Gas $3.35 in NJ and no sign of increased demand.
I was in NJ Meadowlands area earlier this evening and was talking to some Giants fans who are going to pony up money for their personal seat licenses. One explained it was like "a good investment" like a livery cab medallion or seat on NY stock exchange that usually goes up in value.
At least it make makes a market for value of seasons ticket and may create estate valuations for deceased ticket holders.
How the Grinch stole Christmas.
I was talking to a retail consolidator for several clothing chains last night and he stated that commercial banks have cut back on availability of seasonal financing. In the past, bank loan officers would individually stick their necks out to approve these inventory loans. Now loan officers meet by committee before approving anything at rates about 7.325%.
He has lost some of his business as a result and does not see any fixes in economy until 2010.
AIG too big to fail, I think not.
Think about the potential outcry of all those Japanese life insurance holders if AIG goes into some sort of runoff status.
There is no GSE standing behind their next to worthless paper investment to make it liquid.
FNM should be no big deal today since it's got a backstop form Congress.
RE WM & WB
They were both down 9% today on heavy volume.
I been eyeing their NJ branches over the last 2 weeks trying to get idea of what type of purpose these surely soon to be vacated structures could be used for if they became available to new tenants.
WM branches in NJ are mostly small sized B class strip mall locations in working class towns mirroring the predatory loans they tried to originate. Most would be hard pressed to be rented as hair salons or dollar store locations.
WB branches are more formidable and larger structures. They have small high up windows and large amounts of brick work at street level outside and high teller counters and half walls separating customers form bank officers inside.
However, most of the well run consumer/small business banks which would be prospective accquring banks of these branches like customer friendly designs with lots of glass and open areas.
What comes to mind as a prospective new tenant for their branches is adult video stores. <g>
I think 1 or 2 large retail bank failures would mark beginining of the end for the banking crisis al la S&L crisis. One would have to say enough is enough and the strong will survive.
some things
I visited some relatives in Brooklyn last weekend and noticed:
- a large Maersk container ship passing under Verrazano bridge heading into Port Newark direction.
It was riding high in the water with maybe 2 layers of cargo coming into US ports. I guess not much imports coming into country.
- Passed the old Dime savings Bank at Ave P and Coney Island Ave. It seems that the free home applicances like toasters my parents got in 60's for serially opening $20 accounts eveuntally sunk them in 1908's S&L crisis.
The branch is now operated by guess who Wamu.
- I was amazed that those $20 digital to analogue TV converters actually work when we gave one to my motherinlaw who needed it. We got clear reception from about 100 miles away from Philadelphia with much better then the comparable analogue reception.
- the ecology seems to be doing much better in NJ since manufacturing is just about dead.
I have seen several snowy egrets right next to more then one swamps in the warehouse districts. The most amazing sight was blue heron in South Orange reservation right outside of Newark. The last time I saw one of those was deep inside the Adudbon santuary on the Black river near Mendham NJ.
- Newark ready to blow once government entitlements get turned off. Also as bad as in the 60's before the riots.
Commerce was biggest retail banking outlet headquartered in NJ
123 96 61 Commerce Bancorp, Inc., Cherry Hill, NJ 100211 Bank 49,255,506
They have been blanketing the state the last 20 years with 5,000 sq ft 7 day a week retail outlets usually paired with CVS or Rite Aid stores in same parking lot.
They just got bought out by TD Bank north of toronto who have no meaningful presense in NJ. I think they control ameriturd brokerage as well.
If banks are generally f'ed up by mortgages and negative savings rate, like sly said it not much more than customer confidence holding them up.
I got a customer how owns about 12 square blocks in Newark NJ and in last 6 months got permission from city officials to take ownership control of side streets from the city.
With in weeks now they got a slew of homeless shanties on their property and spend $1,000 a week in tippage fees to remove illegal dumping by contractors at night.
So much for the benifits of being property owner.
It seems the word gets out, (I think police and city workers) to let petty criminals and homeless know where the police wouldn't hassle them if they do something usually illegal.
They have to invest in fences cameras and security guards in order to protect themselves for what city provided for them with their taxes.
I can remember in 2000 that bloggers on heavily shorted tech stocks boards told everyone to put their shares in cash account so they couldn't be shorted.
Continuing Government regs is going to prop this market up any way they can in the short term.
It is slightly more difficult to bet against financials in simple manner since options are always time dependent and carry premimum.
Investors betting against US equities will find a way to bypass these restictions
I found this in one bac earnings headlines
Countrywide, whose results weren't part of Bank of America's figures, posted a second-quarter net loss of $2.33 billion, including just under $4 billion in credit-related losses.
The news on financials is just so hard to fathom and it just seems to keep coming day after day.
MER announcement of negative $2.1B in net revenues for the quarter last week just tells you that things are pretty messed up.
I found this in one bac earnings headlines
Countrywide, whose results weren't part of Bank of America's figures, posted a second-quarter net loss of $2.33 billion, including just under $4 billion in credit-related losses.
The news on financials is just so hard to fathom and it just seems to keep coming day after day.
MER announcement of negative $2.1B in sales for the quarter last week just tells you that things are pretty messed up.
You better watch out you may get on one of those computer lists that doesn't let you go through airport screening.
I noticed this at end of BAC earnings report.
The second-quarter results don't include the operations of Countrywide Financial Corp., which Charlotte-based BofA bought July 1.
There are going to be a lot of retail banks closing down if government bailouts stop with investment banks and the companies originating the debt products they sell like FRE & FNM.
Financials got a way more lower to go.
I haven't seen any seen any bank failures like previous crisis like S&L of the late 80's.
There are some pretty badly run retail banks out there who just going to get steamrollered as losses related to real estate writeoffs continues exceed any potential gains form lower costs of borrowing from the FED who are hamstrung to continue to lower rates.
IMB announcement today is just first of several before this is over.
TD WM still need to bite the bullet and downsize dramatically their retail storefronts concepts.
Regional banks such as NYB still adding branches.
VIX parabolic
http://finance.yahoo.com/q?s=%5EVIX
MER cash raising problems must be severe
VIX has been pussy cat not getting to fearful levels.
I can only ascribe it to more outright liquidations of profitable positions as in tech and energy recently vs protecting holdings with long puts.
Everyone seems to be raising cash vs trying to catch falling meat cleaver in financials.
Job numbers lousy; with very little of a silver lining if you call UI rate of 5.5% a good thing.
I can't see how market will hold positive by close.
Bounce to be expected.
I think last selloff was fairly panciky since we havn't gotten any new bad news especially in US.
OTOT I noticed that Bloomberg TV was running a news item this morning that Madame Marie from Springsteen song fame had died. For those of don't know see was a foutune teller in Asbury Park that got mentioned in Sandy on his first album.
http://www.nj.com/news/index.ssf/2008/07/madam_marie_who_told_fortunes.html
Maybe some of the NY investment bankers could have used her advise over the years the way they been making decisions on business loans. <g>
GE got a lot of rabbits in their hat.
They got nuclear and rail if oil keeps going up.
If it gets really bad they could get congress to earmark one entry scan for every school. The one at the statue of Liberty is a big waste of money. They would have to reprogram it to detect garlic, curry, kimchi on kids breath.
http://www.gesecurity.com/portal/site/GESecurity/menuitem.32d6221157ddac1d942d57e7140041ca/?vgnextoid=cacfc0b043514010VgnVCM10000067307003RCRD&isP=%22true%22
I was looking for new car and I can't seem to find any turbo diesel models in US marketplace.
If you scan the Saab websites across the world you can find a very fuel efficient turbo diesel engine in most continets except the Americas.
You can't find one in US but this military sales option looks interesting.
http://www.saab.com/main/GLOBAL/en/ids/us_military_sales_faq.shtml#q1
Read that open short interest on NYSE was record 7.4%
I don't think we have crossed the point from this being a very profitable hedge to a driving force for a bear market rally.
If I was short financial stocks, I wouldn't be covering until the writeoffs of loans start to slow.
The malls are crowded with homeowners bartering their "government cheese" checks with merchants.
The money should make it's way to it's ultimate destination of China soon.
My wife's been following the Larry Sinclair blog for a while
and she thinks Obama going down next Thursday when he's going to be at the National Press Club with his allegations.
He is the "real internet rumor" that the Obama bloggers don't want it happen by bombarding the NPC with threating emails.
www.larrysinclair0926.wordpress.com
PS the legitimate press knows all about Larry and is keeping quiet.
RE AAPL and cell phone carriers
Watching LA lakers trying to avoid a a sweep and verizon wireless commerical is playing Christmas music jingles in June exhorting you to buy fancy phone now.
It is going to be good month before the new Iphone is available. Who is going to commit to anything that receives email and plays video unless more then emergency replacement for a broken existing device.
Reminds me of the Osborne Executive portable computer premature announcement that killed the Osborne1 sales more then 25 years ago and let Compaq corner the portable market.
OTOT
I noticed in distressed areas, 5-10% of houses are for sale unoccupied with lawns not being cut.
With the high price of gas, even filling up a gas can costs $20.
I wonder of a lawn cutting business using sheep or other type of herbivores is viable. Maybe the Dems in Congress would come up with some type of tax credits to enhance bottom line. One could tout it as "green" business.
Economy is stalled in neutral. Most small businesses are running a deficit which can not continue indefinitely.
RE exactly 7-years to the date from
I think you could make a calendar for the next 7 years going forward pinpointing future dates of the releases of the minutes of the FED meetings that fall almost to the same date very year.
Some reversal of markets would coincide with those FED minute release dates like today when the internal debate in the FED for pro and against additional rate cuts was very spirited.
The market doesn't one bit a FED fighting for the wheel of the ship during the tempest of the storm.
RE AIG
NJ data center employees given option of relocating to Texas in a consolidation move and is closing NJ site in SEP.
Anything different about today's pullback that would prevent another move upwards later this week as some of your previous posts would indicate.
go to youtube and
search
"trinity of hell"
before obama's lawyers shut it down
RE AIG
Structured credit market hasn't rebounded, AIG CFO says
Sales for the most recent period fell 54 percent to $14.03 billion from $30.65 billion.
It sounds like it's going to take some time to put humpty dumpty back together again.
A friend of mine who works there remembers well a corporate email that hailed triumphantly the passing of $1 T of corporate assets.
I been busy with a lot of things recently.
I am very convinced that economy is in a major recession.
I walked into electrical supply house yesterday at 4 PM and asked if they knew of any electricians looking for work to do a 200 amp service panel upgrade.
I called the electrician at 5 PM he was over at the house by
6PM and they installed it today for $ 1,100 including all parts.
This is a $2,000 job since I had it quoted out earlier by 2 suppliers. It seems that the electrician had a homeowner fink out on full weeks work and his crew had nothing to do this week.
Stock prices seem to be liking a little inflation as long as costs can get passed on and consumers buy.
The rate at which inflation is spreading from food and energy tells me core inflation numbers are not going to be to anyones liking.
A full sized car must have a ton of steel in it even if most of it is recycled which is going to be hard not to pass on costs.
your steel price increases are starting to pass through
1)This was from a computer case supplier
ALL Cases price Will Go UP Next Monday !!!!
2) I have mattress component distributor as a customer who is spending 2 weeks in Turkey looking for new suppliers because Chinese made steel items are going way in up price
I been holding a bunch of short calls that were underwater the last 2-3 weeks on the ride up but not 1 share was assigned short.
It tells me not to many professionals think we are out of the woods yet.
As interesting that Sep contracts, 3 more months out, have very little premium.
My GE story
I had a part time employee whose husband had major medical problems and she was racking up big debts living off credit cards to pay current expenses. I let her go about 6 months ago and the calls from creditors kept coming in.
Most banks like Chase,Citigroup & Bank of America stopped calling when you told them the employee doesn't work here anymore they stop calling. They started calling shortly after she stopped working.
GE money bank just started calling recently and they just kept calling and calling and calling. One Sunday night this March they called 5 times on a Sunday well into the night.
Something tells me they weren't as worried as they should have been with the book of business and are finding out the hard way what the condition of their consumer loans is really like.
I've been stocking on bars of soap whch is mostly made from beef tallow. It has a long shelf life and you never want to run out of it. <g>
Ditto emptyheads observation on food
It is beocming clear that administration policy grain for fuel not food is going to cause massive rioting all across the third world: Pakistan Africa, asis and then eventually inner city U.S.
One can live without new car but one has to eat.
2) What is your feeling on effect of typical trader/investor switching to double long or short etfs on major sectors or indexes.
I think it is contributing to wild swings in S&P not the change in the short selling tick rule.
WHo the hell would invest in individual stocks when they trade agressively with these new entities.
RE RIMM
The revenue breakdown for the quarter was approximately 81% for handhelds, 14% for service, 3% for software and 2% for other revenue.
Sounds like theri becoming a handset company to me.
They do solar in NJ, I've been in this building and I can tell you it will never meet any reasonable payback timeline.
http://www.greenbuildingsnyc.com/2007/11/07/ferreira-constructions-net-zero-headquarters-branchburg-new-jersey/
This company is so whored up with state highway construction projects that even with grants on top of rebates that it still doesn't make economic sense.
Wouldn't wind be too erratic to be counted on meet peak demand of residential users
If plugins were going to go bigtime, solar electric would also come along for the ride as well.
Just looking at that report US electrical grid would have to support 24% increase in capacity. It would radiate from the power plants, transmissions grids, transformers on the poles to at least another 20-30 amps circuit on average on each and very house.
I could see electrics in the suburbs for the green crowd but it falls apart in the highly built up areas. There is no feasible mechanism for drivers in large cities to recharge their cars on city streets.
I would have put solar panels up on my roof by now but it is hard to justify total cost of installation including 60% rebates considering the labor bill from electricians to cover new infrastructure of supply panel, batteries, invertors etc.
RE leaving the cap off the toothpaste or closing the garage door.
Are you sure your wife hasn't taken a long vacation and you've been on your own for a while. <g>
PS bank brokerage combination another thing to blame on Clintons