Empiric Student Property Share Discussion Threads

[briarberry] 11/9/2008 19:59

Mortgage rates are plunging -- for those who qualify

Would-be borrowers who have been flooding lenders with phone calls find that standards have changed.

By E. Scott Reckard, Los Angeles Times Staff Writer - September 11, 2008

The government takeover of Fannie Mae and Freddie Mac has sent mortgage rates tumbling, prompting homeowners and would-be buyers to flood loan offices with phone calls.

But there's a catch: Although the lower interest rates make it easier to get a mortgage, many lenders this week also raised the minimum down payment they'll allow on a loan -- making it impossible for some people to qualify for a mortgage.

And the decline in rates doesn't apply to you if you're borrowing more than $730,000.

[bluenose851] 11/9/2008 15:35

lies dam lies and statistics.!! Property on the cost blanca north has fallen about 15-20%. Valuations from the banks were always 20-30% over the real value, but now the valuations are more realistic. You can only take the transaction price as the real yardstick. Currency also makes a big difference. If an English seller is going back to the UK they can drop their price by 25% and still get the same seling amount as they would have a year ago.

[briarberry] 10/9/2008 15:37

oil - 5.9

gasoline - 6.5

Total Stocks (Incl SPR) (7) 1,681.9 1,697.0 down - 15.1

[briarberry] 10/9/2008 12:51

Lehman lost $3.9 billion in 3rd Q (Is that all ? More lies?)

[briarberry] 09/9/2008 20:33

(more big bailouts) DJ US States Running Out Of Money In Jobless Funds - Report

DOW JONES NEWSWIRES

Unemployment insurance trust funds are being depleted in many economically
hard-hit states, setting the stage for a federal bailout to keep them solvent,
USA Today reported Tuesday. As the number of U.S. jobless hit 9.5 million in
August, pushing the unemployment rate to a five-year high of 6.1%, states such
as California, New York, Ohio and Michigan are projected to run out of
unemployment insurance funds either this year or in 2009. About one-third of
the jobless receive unemployment insurance from state governments. The federal
government is required to loan states money when their funds run dry. "People
will get their benefits. It's just a matter of where the money will come
from," a spokeswoman at the California Employment Development Department said.

[briarberry] 08/9/2008 13:40

Nouriel Roubini

"Like the action taken in the Bear Stearns case and other recent government interventions and bailouts of private and quasi private financial institutions this is a form of privatization of profits and socialization of losses; it is socialism and corporate welfare for the rich, well connected and Wall Street."

[briarberry] 08/9/2008 13:34

Even the Fed says FNM & FRE will lose $300 billion (elsewhere I've read that others suggest $1 trillion)...


U.S. Losses on Fannie, Freddie May Be $300 Billion, Poole Says

By Christopher Swann and Pimm Fox

Sept. 7 (Bloomberg) -- William Poole, former president of the Federal Reserve Bank of St. Louis, said taxpayers may face a $300 billion bill to revive Fannie Mae and Freddie Mac, the mortgage giants being taken over by the Federal government.

``I would not be surprised if their total losses aggregate about 5 percent of their obligations'' of about $6 trillion, Poole said today in an interview on Bloomberg Radio. ``Five percent does not seem to me to be an outrageous guess.''

[briarberry] 08/9/2008 13:30

The P/E ratio for the Standard & Poor's 500-stock index = 24 !!!


IF there's a silver lining to bear markets, it is that they make stocks cheap for the next wave of investors. But so far in this downturn, it isn't working out that way.

Based on the price-to-earnings ratio, stocks have actually become more expensive even as share prices have come tumbling down. In fact, the P/E ratio for the Standard & Poor's 500-stock index, based on earnings over the previous four quarters, has risen to just over 24 from around 19, according to S.& P.

Though share prices are off by about 20 percent since the market peaked on Oct. 9, 2007, corporate earnings -the "E" in the P/E ratio - have fallen even further. In the first quarter this year, earnings of the S.& P. 500 sank 17.5 percent, according to Thomson Financial. But the index, excluding dividends, itself declined 9.9 percent. And in the second quarter, corporate profits declined by an estimated 22 percent while stock prices fell by a much more modest 3.2 percent.

[briarberry] 08/9/2008 01:45

Money for everyone, except small investors...


The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans."

[briarberry] 08/9/2008 01:34

U.S. Unveils Takeover of Two Mortgage Giants

WASHINGTON - The Treasury Department on Sunday seized control of the quasi-public mortgage finance giants, Fannie Mae and Freddie Mac, and announced a four-part rescue plan that included an open-ended guarantee to provide as much capital as they need to stave off insolvency.
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In a possibly unprecedented move into the private markets, the Treasury Department will also buy billions of dollars in Fannie and Freddie mortgage securities on the open market. This move is likely to make it much easier for the companies to finance somewhat riskier loans.

[briarberry] 08/9/2008 01:13

going to be interesting watching...

US mortgage rates
TNX
US$ index

[briarberry] 08/9/2008 01:10

From the FT-

"An aggressive assault by the US government on mortgage rates via its engagement with Fannie and Freddie could help mitigate the threat of catastrophic falls in house prices. But if the wider economic pressures continue to gather in force the US government might at some point have to consider much more extensive intervention – potentially to socialise a larger share of the losses and help recapitalise large parts of the private financial sector."

[briarberry] 05/9/2008 17:54

WASHINGTON – A record 9 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis continues to mount, the Mortgage Bankers Association said Friday.

But the source of trouble in the mortgage market has shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.

[briarberry] 05/9/2008 17:52

Main Bank of China Is in Need of Capital

By KEITH BRADSHER - September 4, 2008 - The New York Times

HONG KONG - China's central bank is in a bind.

It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac.

Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank's tiny capital base. The bank's capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from the International Monetary Fund.

Now the central bank needs an infusion of capital. Central banks can, of course, print more money, but that would stoke inflation. Instead, the People's Bank of China has begun discussions with the finance ministry on ways to shore up its capital, said three people familiar with the discussions who insisted on anonymity because the subject is delicate in China.

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Mr. Prasad said that during his trips to Beijing on behalf of the I.M.F., he had repeatedly cautioned China over the enormous scale of its holdings of American bonds, emphasizing that it left China vulnerable to losses from either a strengthening of the yuan or from a rise in American interest rates. When interest rates rise, the prices of bonds fall.

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The central bank's difficulties do not, by themselves, pose a threat to the economy, economists agree. The government has ample resources and is running a budget surplus. Most likely, the finance ministry would simply transfer bonds of other Chinese government agencies to the bank to increase its capital. But even in a country that strongly discourages criticism of its economic policies, hints of dissatisfaction are appearing over China's foreign investments.

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By buying United States bonds, the Chinese government has been investing a large chunk of the country's savings in assets earning just 3 percent annually in dollars. And those low returns turn into real declines of about 10 percent a year after factoring in inflation and the yuan's appreciation against the dollar.

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China spent more than one-eighth of its entire economic output last year on foreign bonds, and then picked up the pace during the first half of this year. Chinese officials have suggested in recent comments that they are increasingly interested in stopping the yuan's rise, and thus are willing to continue buying foreign securities to support the dollar. In fact, the yuan weakened slightly against the dollar last month after 26 consecutive months of gains.

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The central bank has gone to great lengths to maintain its foreign purchases. The money to buy foreign bonds has come from the reserves required that commercial banks must deposit with the central bank. In effect, China's commercial banks have been lending the central bank more than $1 trillion at an interest rate of less than 2 percent.

To keep the banks strong when they were getting such little interest on their reserves, the central bank has kept deposit rates low. The gap between what banks are paying on deposits and the rates they are charging ordinary customers to borrow is several percentage points. This amounts to a transfer of wealth from ordinary Chinese savers to the central bank and on to Americans who are selling their debt to the Chinese.

The central bank is now under considerable pressure to reduce the commercial banks' reserve requirements to encourage growth as the Chinese economy shows signs of slowing.

Victor Shih, a specialist in Chinese central banking at Northwestern University, said that when he visited the People's Bank of China for a series of meetings this summer, he was surprised by how many officials resented the institution's losses.

He said the officials blamed the United States and believed the controversial assertions set forth in the book "Currency War," a Chinese best seller published a year ago. The book suggests that the United States deliberately lured China into buying its securities knowing that they would later plunge in value.

[briarberry] 04/9/2008 16:55

new lows on the NYSE comp

[briarberry] 04/9/2008 16:01

oil stocks, not much change...

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) decreased by 1.9 million barrels from the previous week. At
303.9 million barrels, U.S. crude oil inventories are in the middle of the
average range for this time of year. Total motor gasoline inventories decreased
by 1.0 million barrels last week, and are near the lower boundary of the average
range.

Total Stocks (Incl SPR) -3.6mb

[briarberry] 03/9/2008 22:50

Total US car sales bounced back a bit in August, mainly due to GM's incentives

Total domestic-made and import light vehicles at a 13.6 million rate, up 8.7 percent from the 17-year low of 12.5 million in July.

(should help the retail sales figure)

[briarberry] 03/9/2008 18:20

Ford Motor Co. said Wednesday its U.S. sales fell 26.5 percent in August, as the struggling automaker's results -- even worse than July's dismal figures -- showed that the U.S. auto sales slump may not have bottomed out.

[briarberry] 03/9/2008 18:12

In his famous treatise, "The Wealth of Nations," Adam Smith noted there had never been a "single instance" of sovereign debts having been repaid once "accumulated to a certain degree." We (the USA) may have reached Smith's threshold.

[briarberry] 03/9/2008 18:02

South Korea heads for black September with won problems

Heavy investment by the Korean Government in Fannie, Freddie and other US-related agency bonds has left a potentially huge liquidity problem - perhaps $50 billion (£27.4 billion) - in the foreign reserve portfolio. Some believe that Seoul might have no ammunition left to prevent a significant flight from the won. Fruitless currency intervention by South Korea - increasingly desperate-looking verbal and financial measures to fight the market trend - cost about $20 billion in July alone.

[briarberry] 02/9/2008 14:32

The credit crunch is still as bad as ever...


John Mauldin - August 29, 2008

Now, let's drop back and look at what has happened since 1997. Credit spreads are now much higher than even in the worst of the last recession. (Source: Bespoke)



And if you have to go into the high-yield market, which is now once again referred to as the junk bond market, you have really been hit. Your spreads, on average, have risen from 240 bps to over 860 bps in the last year. That means IF (and that is a Big IF) you can find someone to loan you money, you will likely be paying an interest rate close to 13% for your money.


LIBOR may be the most important rate of all, as so many contracts, including many US and European mortgages, are based on LIBOR. Hedge funds, mortgage banks, large and small corporations, and a host of interest-rate-sensitive investments borrow money based on LIBOR. Few of them anticipated such wild swings.



Bottom line? One of the clues as to the end of the credit crisis will be when credit spreads move back closer to historical norms. And we are not close to that yet.

[briarberry] 01/9/2008 11:12

Sept. 1 (Bloomberg) -- Manufacturing in China contracted for a second month in August, underscoring the risk of a slump in the world's fourth-biggest economy.

The Purchasing Managers' Index was a seasonally adjusted 48.4, unchanged from July, the China Federation of Logistics and Purchasing said today in an e-mailed statement.

[briarberry] 01/9/2008 00:33

A good collection of statistics, nothing new, makes grim reading...


As Alan Greenspan denies causing the housing crisis today, his words from November 2002 come back to haunt him, "our extraordinary housing boom...financed by very large increases in mortgage debt, cannot continue indefinitely into the future." After making this statement, he proceeded to slash the discount rate to 1% in June 2003 and left it at that level for a year.

[briarberry] 31/8/2008 21:52

non-food inflation out of China is moving into low double digits...


Asda, the supermarket group, is exploring shifting part of its manufacturing base away from China because of the soaring cost of doing business.

Prices in China have risen sharply over recent months due to surging wage inflation in the country's manufacturing hubs and rising commodity prices. Retailers claim that non-food inflation out of China is moving into low double digits.

Food prices, for example, are estimated to have risen by 25 per cent this year