Wednesday, March 26, 2008

Obenwan Bernanke, you are our only hope

In spite of vigorous denials from the FED regarding the weekend rumor that the FED was going to intervene DIRECTLY in the MBS market to mop up the mess, this morning blog feed is full of such analysis. A lot of legislation, basically inspired by depression-era precedents, is floating around to put a floor on the debt as housing falls. These are desperate times and the "end of free-market capitalism as we know it" according to Martin Wolf of the FT. I will reserve comment on "moral hazard" and legislation as this is full separate blog and really the topic du jour.

From RGE monitor this morning:

  1. /Barr/Tyson: Saving America's Family Equity (SAFE) loan plan inspired by the successful Home Owner's Loan Corporation introduced in 1933 to deal with wave of foreclosures: Treasury and Fed would run auctions in which GSEs would buy mortgages at discount--> investors take writedown, improve their liquidity--> GSEs work with originators to restructure loans to prevent foreclosure--> only owner-occupied homes eligible, no speculators--> SAFE loans pooled and repackaged with government guarantee--> once market normalizes, SAFE ceases operation.
  2. FT: Dodd proposes $20bn to follow Alan Blinder, SAFE proposal for Depression-style mortgage refinancing agency (HOLC) operating with $200-400bn.
  3. Alan Blinder: Introduce government agency like FDR's Home Owners’ Loan Corporation (HOLC) to buy "old (or upside down) mortgages from banks -->nearly 20% of the HOLC’s borrowers defaulted anyway but HOLC closed its books in 1951 with a small profit. Likely scale of operation today: $200-400bn (see Pollock from AEI for details.)
  4. Baker: Upside down homeowners are actually better off if they walk away and rent instead, the only ones hurting are the banks--> The bank bailout crew wants to stop the bloodshed on Wall Street by having the government step in and either guarantee or buy up the bad mortgages.


They are really all the same idea and can be explained as such:
Housing is still in free-fall with horrible numbers as of this morning. Banks have recognized 120B of losses with at least the same to go (we are only half way). FED monetary policy is running out of steam (I don't fully buy that: 400B liquidity injection should stabilize M2, but I am following Goldman economist analysis) so fiscal/legislative has got to take over. Guaranteeing/Buying the loans that are down the toilet essentially stops the bleeding of the banks and socializes the losses.

The Depression era agencies took 20 years to unwind the mess, and showed a small profit at the end. I do believe as many commentators point out that the MBS market is oversold and represents a rate of default that is catastrophic. But really do I know better than the market? if the market is right, we are fucked anyway and the FED/Govt needs to step in now, if the market is slightly wrong then the FED/Govt needs to step in now and will turn a profit which would just be fair. If the market is wrong by a lot, sign me up to buy some MBS. Last time I checked in a private fund to go do just that, they charged hedgies fees (which I refuse out of principle) and so far (2 month into it) are down 15%, for a supposed return of 15%, ouch!!!

14 comments:

Army No Va said...

Obenwan is not any hope...he can't fix it. Only lower prices will fix the housing market. Or higher incomes and rents. But with gloablization and recession (or worse) and an oversupply of houses in most areas...

Bottom will be 2010-12 range varying by locale and price/income and rent/mortgage ratios. Price/income needs to get back to 3x or so. Maybe a bit higher in really high demand/low supply areas. Rent/Mortgage > 1.2 to bottom out (rare, special properties, e.g., Mint condition/modernized tastefully 1890s Victorian in good school district, excepted to some degree).

No, Silicon Valley, your 1960s drab ranches are not special! You are toast too...! Look for a 40% haircut out there...that's better than CA's Inland Empire...figure 70% down there - worse if gasoline hits $5 / gallon.

Marcf said...

LOL on silicon valley Pierre. I totatlly never understood people standing by run-down 1950 shit going "isn't my piece of shit special!"... real estate is too personal.

What I mean by Obenwan is the clearing of the MBS market, the govt buying the bad loans, which happened in 1930's as deetailed in the blog...

that is within their reach and within that and existing liquidity, this should be enough to backstop the problem... for good.

Army No Va said...

OK, I see. Yes. The government will support MBS. Makes sense. Will limit the downside to the ratios I outlined (which we saw in the Austin TX crash of the late 80s in a much better economic environment there).

The Fed cannot change the psychology of people very easily. People are beginning to realize it makes no sense to buy a house and pay $5000 / month on a mortgage when you can rent it for $2000 / month. Especially when its value is going down.

We are already down as much as 40-50% off early 2006 prices in the central valley of CA and parts of FLA. 20% off good areas in San Diego. There are a lot of foreclosures coming yet regardless of what the government does. It won't matter that they fixed your crazy adjustable rate or put a floor on the MBS market if you owe $500K and your house is worth $300K. You walk, even if you can pay the mortgage. Saw this too in the late 1980s in spades.


Oh, and another bottom indicator...when the Palo Alto and Orlando crowd says RE is a terrible investment, it's time to buy :-) ...

Marcf said...

you don't lose your sense of humor. Agreed that renting seems to make a lot more sense in many cases. In the case of give backed mbs at least they may be more able to renegociate the mortgages. I believe it is really the jingle mail phenomena that is scaring the banks shitless. The old adage that house payments are what people drop last is a myth this time around. I was reading about a district that was trying to sue the rightful owners of abandoned houses to make them maintain the properties, except in many cases they don't even know who owns the house I'm the first place. Owner is long gone. Bank has sold the loan to some little village in Norway. The don't really know where the deeds are. Imagine you are the mayor of the little village, you get a call that says: remember that subprime debt you bought for 100 from us? The payments have stopped, the collateral is a crappy house that is going down. Yeah no one wants that paper, it is worth 5 today. What? Yeah you are stuck with that paper and that house. Oh and you are being sued to maintain the house.
Securitization is dead for a long long time, long live securitization.

Army No Va said...

Won't be just subprime....Alt-A and Prime will see major foreclosure rates over the next 3 to 4 years.

Looks like the banks are just figuring out that, geez, these HELOCs amd 2nds up to 100% or 120% of value are REALLY exposed, like we won't get squat back on them!

Many people use these as emergency reserves or even just out of the ordinary expenses (like major car repair or house repair). Bye, bye... Banks won't lend anything above 80% LTV soon, unless it is government guaranteed. Which is going to make JUMBO loans hurt even more (even in areas with the temp increases in conforming). How many people have 20% down on a $500K house? Especially a $500K "starter" house!! And a 700+ FICO too...

Marcf said...

Yeah...

I do relate to the 700k starter house. It may sound funny nowadays, but I haven't moved from the ranch we moved in when we moved from SV. I still remember the painful realization that I couldn't afford a starter house in SF. I just couldn't. Then of course I couldn't even afford the rent! that is when we moved to ATL. I do feel for the guys that feel shutout of the market and will see their public dollars bailout the guys that over-extended. There is a profound injustice in that. But hey, you know, guns, wits, horses, houses, john wayne and ronald reagan. The self sufficient cowboy dream! And some people wonder why France loved Jerry Lee Lewis. America is much funnier and true to form when it is goofy.

Marcf said...

In retrospect that was a little harsh :) France loved John Wayne too!

Anonymous said...

本土成人貼圖站大台灣情色網台灣男人幫論壇A圖網嘟嘟成人電影網火辣春夢貼圖網情色貼圖俱樂部台灣成人電影絲襪美腿樂園18美女貼圖區柔情聊天網707網愛聊天室聯盟台北69色情貼圖區38女孩情色網台灣映像館波波成人情色網站美女成人貼圖區無碼貼圖力量色妹妹性愛貼圖區日本女優貼圖網日本美少女貼圖區亞洲風暴情色貼圖網哈啦聊天室美少女自拍貼圖辣妹成人情色網台北女孩情色網辣手貼圖情色網AV無碼女優影片男女情色寫真貼圖a片天使俱樂部萍水相逢遊戲區平水相逢遊戲區免費視訊交友90739免費視訊聊天辣妹視訊 - 影音聊天網080視訊聊天室日本美女肛交美女工廠貼圖區百分百貼圖區亞洲成人電影情色網台灣本土自拍貼圖網麻辣貼圖情色網好色客成人圖片貼圖區711成人AV貼圖區台灣美女貼圖區筱萱成人論壇咪咪情色貼圖區momokoko同學會視訊kk272視訊情色文學小站成人情色貼圖區嘟嘟成人網嘟嘟情人色網 - 貼圖區免費色情a片下載台灣情色論壇成人影片分享免費視訊聊天區微風 成人 論壇kiss文學區taiwankiss文學區

Anonymous said...

本土成人貼圖站大台灣情色網台灣男人幫論壇A圖網嘟嘟成人電影網火辣春夢貼圖網情色貼圖俱樂部台灣成人電影絲襪美腿樂園18美女貼圖區柔情聊天網707網愛聊天室聯盟台北69色情貼圖區38女孩情色網台灣映像館波波成人情色網站美女成人貼圖區無碼貼圖力量色妹妹性愛貼圖區日本女優貼圖網日本美少女貼圖區亞洲風暴情色貼圖網哈啦聊天室美少女自拍貼圖辣妹成人情色網台北女孩情色網辣手貼圖情色網AV無碼女優影片男女情色寫真貼圖a片天使俱樂部萍水相逢遊戲區平水相逢遊戲區免費視訊交友90739免費視訊聊天辣妹視訊 - 影音聊天網080視訊聊天室日本美女肛交美女工廠貼圖區百分百貼圖區亞洲成人電影情色網台灣本土自拍貼圖網麻辣貼圖情色網好色客成人圖片貼圖區711成人AV貼圖區台灣美女貼圖區筱萱成人論壇咪咪情色貼圖區momokoko同學會視訊kk272視訊情色文學小站成人情色貼圖區嘟嘟成人網嘟嘟情人色網 - 貼圖區免費色情a片下載台灣情色論壇成人影片分享免費視訊聊天區微風 成人 論壇kiss文學區taiwankiss文學區

Anonymous said...

85cc免費影城 愛情公寓正妹牆川藏第一美女 成人影片 情色交友網 美女視訊 美女視訊 視訊情人高雄網 JP成人影城 383成人影城 aa片免費a片下載 a片線上看aa片免費看 ※a片線上試看※sex520免費影片※ aa片免費看 BT成人論壇 金瓶影片交流區 自拍美女聊天室 aa片免費a片下載 SEX520免費影片 免費a片 日本美女寫真集 sex520aa免費影片 sex520aa免費影片 BT成人網 Hotsee免費視訊交友 百分百貼影片區 SEX520免費影片 免費視訊聊天室 情人視訊高雄網 星光情色討論版 正妹牆 383成人影城 線上85cc免費影城 85cc免費影城 85cc免費影城 85cc免費影城 ※免費視訊聊天室※ ※免費視訊聊天室※ 免費視訊聊天室 85cc免費影片 85cc免費影片 080苗栗人聊天室 080苗栗人聊天室 080中部人聊天室 080中部人聊天室 免費a片下載 免費a片 AA片免費看 aa片免費看 aa片免費看 aa片免費看 aa片免費看 日本av女優影片 av女優 av女優無碼影城 av女優 av女優 百分百成人圖片 百分百成人圖片 視訊情人高雄網 電話交友 影音電話交友 絕色影城 絕色影城 夜未眠成人影城 夜未眠成人影城 色咪咪影片網 色咪咪影片網 色咪咪影片網 色咪咪影片網 色咪咪影片網 免費色咪咪貼影片 免費色咪咪貼影片 色情遊戲 色情遊戲 色情遊戲 色情遊戲 影音視訊交友網

Anonymous said...

視訊交友網 080視訊聊天室 ※免費視訊聊天室※ ※免費視訊聊天室※ 視訊聊天室 成人影音視訊聊天室 ut影音視訊聊天室 ※免費視訊聊天室※ 視訊ukiss聊天室視訊ukiss聊天室 視訊交友90739 視訊交友90739 情人視訊網 168視訊美女 168視訊美女 168視訊美女 視訊美女館 視訊美女館 免費視訊美女網 小高聊天室 小高聊天室 aio交友聊天室 aio交友聊天室 交友聊天室 交友聊天室 線上a片 線上a片 線上a片 線上a片 線上a片 免費線上a片 免費線上a片 嘟嘟成人網站 成人漫畫 情色文學 嘟嘟成人網 成人貼圖區 情色文學成人小說 微風成人區 情色貼圖區 免費視訊聊天 免費成人圖片區 愛情公寓 愛情公寓聊天室 寄情築園小遊戲 免費aa片線上看 aa片免費看 情色SXE聊天室 SEX情色遊戲 色情A片 免費下載 av女優 俱樂部 情色論壇 辣妹視訊 情色貼圖網 免費色情 聊天室 情人視訊聊天室 免費a片成人影城 免費a片-aa片免費看 0204貼圖區 SEX情色 交友聊天-線上免費 女優天堂 成人交友網 成人情色貼圖區 18禁 -女優王國 080視訊美女聊天室 080視訊聊天室 視訊交友90739 免費a片 aio 視訊交友網 成人影城-免費a片※免費視訊聊天※85cc免費影片日本線上免費a片 免費色咪咪影片免費色咪咪影片aaa片免費看影片aaa片免費看成人影城情人視訊高雄網sex520免費影片080聊天室080聊天室aa的滿18歲影片免費av18禁影片免費av18禁影片免費av18禁影片aa的滿18歲影片聊天室ut愛情公寓尋夢園聊天室

Anonymous said...

免費 a 片
aaaaa片俱樂部影片
免費線上 aa 片試看85CC
aaaaa片俱樂部
av女優影片情色文學
亞洲禁果洪爺影城
日本av淫蕩人妻免費漫畫帝國
777美女dvd無碼av女優
視訊辣妹girl5320 貼片貼圖區
85cc免費影片辣妹自拍圖
本土自拍影片qq 美美色網漫畫
卡通aa片自拍走光貼圖
百分百成人圖片avdvd
視訊辣妹找援交
免費影片下載一葉情貼圖片區
情色網成人電影
論壇區
自拍偷拍情色無碼dvdav無碼
dodo豆豆聊天室
2sex999情人輔助品a片線上試看
成人影片下載免費線上a片
sex520
色情漫畫777美女dvdav
小護士免費 aa 片試看
網路自拍美女聊天室天堂
080聊天網桃園天堂
av免費情色影片無碼
新竹援交成人影片情色網
雪之深戀 080聊天網水之浪漫
sex888入口免費性影片觀賞
高中生援交偷拍自拍限制級色情 片
aa 片試看免費卡通
百分百成人情色圖片
sex888movie影城情色小說
a片天堂日本 avdvd 介紹免費觀賞
日本sex貼片網情色文學
百分百貼圖區亞洲avdvd
嘟嘟情人色網免費線上成人影片
倉井空免費影片彩虹頻道免費影片
sex520 net情趣 商品
aa影片下載城小魔女貼片區
av女優卡通aa片下載天堂
情色影片免費觀賞0204貼圖區
色妹妹免費情慾影片觀賞aa
sex888影片分享區高中生援交
aio交友愛情館成人圖片區
視訊聊天情色sex888 freebbs hk
a片免費觀賞sexy girls get fucked
免費 aa 片試看情色文學
av 女優 卡通美女短片免費試看
383成人視訊 美女
嘟嘟貼圖區av影片下載
卡通aa片hilive tv 免費電影天堂
免費線上avdvd觀賞卡通影片卡通aa片
34c無碼影片情色 網站
34c甜心寶貝貼片
sex520免費影片85cc
一夜情sex999免費影片
援交友留言桃園無碼a片
高雄援交av影片
34c小魔女免費影片
sex女優王國avdvd無碼
日本美女寫真貼圖片區
彩虹頻道免費影片卡通aa片
777美女dvd自拍影片
成人情色 視訊21sex
情人輔助品日本 avdvd 介紹免費觀賞
avsex無碼a片
av女優sex貼片
辣妹視訊自拍美女聊天室
視訊美女jp成人
6k情人網情色視訊
sex520影片免費觀賞
台灣kiss911h影片線上a片
嘟嘟線上免費a片觀看
素人自拍et免費影片下載
辣妹貼圖新竹援交
sexy girl比基尼美女
卡通aa片免費看
歐美模特兒寫真
a片18成人avooo,sex
月宮貼圖情趣 商品
援交女sex movie免費 a 片
aa片免費看影片色漫畫帝國
一葉情貼圖片區 av127
免費a片線上看,av無碼
同志色教館et免費影片下載
aa影片下載城
辣妹視訊微風成人區
一本道 a片 東京熱情色影片

Anonymous said...

成人視訊交友
視訊網路美女
免費視訊聊天
ut聊天室辣妹視訊
live173影音視訊聊天室
免費視訊聊天
一夜情人視訊
免費視訊聊天
免費視訊聊天
免費視訊聊天
免費視訊聊天
xxx383美女寫真
kk777視訊俱樂部
xxx383成人視訊
情色 視訊免費成人
xxx383
免費a片線上觀看s383視訊
xxxpanda
線上 aa 片試看,成人 視訊
xxxpanda com
xxx movie
一對多視訊,美女短片免費試看
免費a片卡通,免費成人片試看
xxx18
玩美女人影音秀
xxxholic次元魔女
xxxholic春夢記
xx18 net影片交流區
性愛,a漫,線上a片
xx插插排行榜
hi5 tv免費影片
xxxpanda com
免費成人影片sex女優
xvediox com
sex383線上娛樂場
aaa的滿18歲卡通影片
台灣美眉討論區
台灣無碼女優
免費a片卡通,travian tw4
sexy girl video movie
520sex
gogo2sex
aaaaa片俱樂部影片
xx18 net影片交流區
sex女優王國情色
sex情色
av969 免費短片
免費成人情色
ut視訊
168 視訊聊天
色美媚,洪爺的家
色美媚,洪爺的家
6k聊天網,搞笑影片,性愛,後宮
哈尼視訊,鹹濕視訊
土豆網韓劇播放
線上 aa 片試看嘟嘟,免費線上a電影
情色文學,情色視訊交友
微風論壇短片區
免費色咪咪影片網
av383,dvd,無碼影片
玩美女人,自拍
無碼卡通,性愛,聊天室
日本 a 片,無碼影片,美女,sexy,a片天堂
sex520貼片,日本av女優,色美眉,sex,成人
檳榔西施摸奶影片,免費A片
a片短片試看,av女優報報
免費 a片,sogo 色論壇
免費h影片,成人影片分享
電影,h片,卡提諾王國小說
UT影音視訊聊天室
色美眉部落格 2,視訊主播脫衣秀
比基尼美女的奶,玩美女人影音秀
比基尼美女的奶,玩美女人影音秀
免費影片觀賞,av博物館
免費影片觀賞,av博物館
av 女優,黑色會美眉
av 女優,黑色會美眉
成人影片,h片,無碼a片
吉澤明步
成人,UT視訊交友,視訊女郎,免費視訊秀,限制級
免費 aa 片試看,成人影片分享
無碼av女優, 色美眉部落格 2
無碼av女優, 色美眉部落格 2
遊戲天堂,免費av,美女自拍
倉井空免費影片,情趣 商品,視訊 美女
免費a片線上觀看,sex520貼片
辣妹脫衣麻將視訊聊天室
夢幻家族影音視訊聊天室
免費 a 長片線上看,黑澀會美眉無名,辣妹no3
080色情聊天室 080尋夢園
wii遊戲壓片,情色遊戲

Anonymous said...

85cc免費影城85cc免費影片免費 a 片台灣論壇免費影片線上免費a片觀看85cc免費影片線上觀賞a片免費看免費A片A片-sex52085cc免費影片免費卡通影片線上觀看小魔女免費影城免費看 aa的滿18歲影片免費a片卡通sex888影片分享區520sex貼片區aaaa彩虹頻道免費影片sex520免費影片後宮0204movie免費影片免費色咪咪影片網成人a影片論壇免費影片下載aaaaaa片俱樂部sex520免費影片sex888免費看影片馬子免費影片免費線上a片gogo2sexaaa片免費看短片免費 a 片aaa片免費看短片免費線上avdvd成人圖片區18成人avoooaaa的滿18歲卡通影片免費線上歐美A片觀看sexdiy影城plus論壇dudu sex免費影片85cc成人影城臺灣情色網線上免費a長片免費卡通影片線上觀看彩虹頻道免費影片洪爺影城浪漫月光論壇bbs x693 com sex888 sex383線上娛樂場85cc免費影片sex888 freebbs hksogo 成人論壇sex999日本美女寫真集日本 avdvd 介紹免費觀賞微風成人av論壇aaaa 片俱樂部免費影片下載a亞洲免費影片線上直播卡通美女a片免費試看免費成人視訊視訊情色遊戲援交av080影片sexdiy影城sex520免費影片sex888movie影城情色小說 杜蕾斯成人一本道 a片 東京熱情色影片本土辣妹34c影片直播吉澤明步sex888免費看影片論壇a 免費影片觀賞aa的滿18歲影片av080免費試看sex888 freebbs hk免費aa片試看免費影片觀賞av博物館aaa免費看影片亞洲禁果影城免費a片aaaaa片俱樂部影片5278論壇金瓶影片交流區383movie成人影城aio性愛dvd辣妹影片直播免費a片線上觀看,sex520貼片ut13077視訊聊天avdvd無碼情色電影日本 avdvd 介紹免費觀賞台南援交友留言hi5 tv免費影片1314視訊成人論壇成人免費視訊 完美女人hilive tv 免費電影34c蒼井空影片下載avdvdsex383線上娛樂場aio交友愛情館sex383線上娛樂場JP成人網免費視訊聊天室微風成人