America opened it's eyes today. Yes, there is a positive side to the rejection of the largest fleecing of the American Citizen in history. While political pundits positioned themselves on either side of the aisle after the "stunning" defeat of this bailout package what was over-looked is...
They listened. Our government heard us. Protests, faxes, emails, phone calls... no amount of begging by the likes of Hank Paulson, George Bush, Ben Bernanke, Nancy Pelosi, Barney Frank, Christopher Dodd, et. al can change that fact. All the posturing in the world cannot and will not change the fact that we, the people, rose up, shouted, screamed, kicked and wailed "PLEASE DO NOT DO THIS!"
and... Congress blinked. So... bring on Armageddon. Let the apocolypse begin. Because Lord knows, Hank, Ben, G.W. and Nancy all told us it was going to happen if they didn't get to spend our money, so it must be so.
Are our problems solved? Not in the least. Are tough times ahead? Certainly. Will they try to ram another package down our throats? Probably. Will that pass? Who knows, but it shouldn't.
A crack addict has to hit rock bottom to recover. You can't hand him a rock every now and then and expect any change. However... cold turkey, no matter the pain, results in recovery and in recovery he gains strength. Think about it.
Credit is frozen or freezing over. Credit is what got us into this mess in the first place. Cold turkey might be the best thing.
A Request for Our Leaders
Please do not allow this reckless legislation and obvious bailout of Wall Street to pass. The true cost of this is much more in terms of OUR money... the PEOPLE'S money and more importantly the CITIZENRY OF THE UNITED STATES' GOOD WILL.
For years, we have listened to those on Capitol Hill eschew the virtues of reigning in reckless spending and protecting the American people. Now that Wall Street has CLEARLY violated the public's trust through unwarranted leverage, spending and greed using taxpayer money and putting the long term security of this country at risk by borrowing from our future is downright criminal.
Let the markets correct themselves. What happened to the resiliency of the American people we so proudly put forth at every political convention and whenever those seeking office seek votes?
Have we become so very dependant on debt as a Nation that to allow the ponzi scheme that created this mess to fall is a BAD thing?
I beg of you, Sir, to stop the fleecing of America. Let the people rework this. Represent US. Do not do so would be a travesty of the American Idea.
Respectfully...
The People Of the United States
PLEASE...
EMAIL THIS TO ALL OF YOUR REPRESENTATIVES ON A LOCAL, STATE, AND NATIONAL LEVEL.
THIS IS A RECKLESS QUICK FIX TO AN ISSUE THAT MUST BE ALLOWED TO WORK ITSELF OUT. THE UNINTENDED CONSEQUENCES ARE FAR WORSE WITH GOVERNMENT INTERVENTION ON THIS SORT OF SCALE. If you believe the rhetoric of "this is better than the alternative"... ask yourself... "Why is no one allowed to even PRESENT an alternative... and if they are so right and so good at what they do, why has NOTHING worked in any way, shape or form up to this point?"
Ask yourself that.
Click this link for phone and fax numbers for Senators
For years, we have listened to those on Capitol Hill eschew the virtues of reigning in reckless spending and protecting the American people. Now that Wall Street has CLEARLY violated the public's trust through unwarranted leverage, spending and greed using taxpayer money and putting the long term security of this country at risk by borrowing from our future is downright criminal.
Let the markets correct themselves. What happened to the resiliency of the American people we so proudly put forth at every political convention and whenever those seeking office seek votes?
Have we become so very dependant on debt as a Nation that to allow the ponzi scheme that created this mess to fall is a BAD thing?
I beg of you, Sir, to stop the fleecing of America. Let the people rework this. Represent US. Do not do so would be a travesty of the American Idea.
Respectfully...
The People Of the United States
PLEASE...
EMAIL THIS TO ALL OF YOUR REPRESENTATIVES ON A LOCAL, STATE, AND NATIONAL LEVEL.
THIS IS A RECKLESS QUICK FIX TO AN ISSUE THAT MUST BE ALLOWED TO WORK ITSELF OUT. THE UNINTENDED CONSEQUENCES ARE FAR WORSE WITH GOVERNMENT INTERVENTION ON THIS SORT OF SCALE. If you believe the rhetoric of "this is better than the alternative"... ask yourself... "Why is no one allowed to even PRESENT an alternative... and if they are so right and so good at what they do, why has NOTHING worked in any way, shape or form up to this point?"
Ask yourself that.
Click this link for phone and fax numbers for Senators
Now What?
The following is a reprint of my post for Wreconomic's sister blog: Foreclosure Statistics
OF COURSE the government is going to bail out Wall Street... what are friends for?
OF COURSE the government is going to pork up this bailout with some sort of foreclosure bailout package for homeowners.
OF COURSE this will not work, as NOTHING has worked since day one of this crisis. Why? Because values have not become remotely affordable and lending has contracted. No amount of bailout from anywhere will cause banks to loosen their lending standards to where they once were. As a matter of fact... this will most likely spark a huge sell-off in the Treasury Market, driving interest rates into the stratosphere.
You see.... our country is well past deficit spending... we are now spending our great-grand childrens' money. How can we do that? By borrowing it now. How do we borrow it? The Treasury sells more and more bonds to generate the cash now. As more bonds are generated, the supply swells, the price falls and the yields on those bonds rise. Interest rates rise. It's simple. And they know it. In effect, we will be printing money. They will argue that we aren't... but we are. Now combine falling asset values (housing prices, car prices, goods prices, stock prices) with an increased money supply (selling treasuries like mad to generate the cash to give to banks to buy the bad assets) and a lending contraction and...
PRESTO!
Lock up. Freeze. Bust. DEPRESSION. Call it whatever you want, but it ain't gonna get any better. Just how in the HELL is this going to help anyone? Really?
When the median home price is still WELL out of reach of the median income... just how is this going to help? Actually... no one in our pathetic excuse for a government has given us any reason that this will help. All they can say is that this is necessary and preferred over the "alternative." I ask you ... Senator Havalot... what, exactly, IS the alternative? And if that unspoken alternative is the big D word... why is it ALL OF A SUDDEN THE ONLY ALTERNATIVE? Where IN GOD'S NAME WERE YOU FOR THE LAST 2 YEARS WHILE THE WORLD CAUGHT ON FIRE?
HOLY COW, PEOPLE... IT'S TIME FOR A REVOLUTION. Remove the traitors. The Founding Fathers would have.
OF COURSE the government is going to bail out Wall Street... what are friends for?
OF COURSE the government is going to pork up this bailout with some sort of foreclosure bailout package for homeowners.
OF COURSE this will not work, as NOTHING has worked since day one of this crisis. Why? Because values have not become remotely affordable and lending has contracted. No amount of bailout from anywhere will cause banks to loosen their lending standards to where they once were. As a matter of fact... this will most likely spark a huge sell-off in the Treasury Market, driving interest rates into the stratosphere.
You see.... our country is well past deficit spending... we are now spending our great-grand childrens' money. How can we do that? By borrowing it now. How do we borrow it? The Treasury sells more and more bonds to generate the cash now. As more bonds are generated, the supply swells, the price falls and the yields on those bonds rise. Interest rates rise. It's simple. And they know it. In effect, we will be printing money. They will argue that we aren't... but we are. Now combine falling asset values (housing prices, car prices, goods prices, stock prices) with an increased money supply (selling treasuries like mad to generate the cash to give to banks to buy the bad assets) and a lending contraction and...
PRESTO!
Lock up. Freeze. Bust. DEPRESSION. Call it whatever you want, but it ain't gonna get any better. Just how in the HELL is this going to help anyone? Really?
When the median home price is still WELL out of reach of the median income... just how is this going to help? Actually... no one in our pathetic excuse for a government has given us any reason that this will help. All they can say is that this is necessary and preferred over the "alternative." I ask you ... Senator Havalot... what, exactly, IS the alternative? And if that unspoken alternative is the big D word... why is it ALL OF A SUDDEN THE ONLY ALTERNATIVE? Where IN GOD'S NAME WERE YOU FOR THE LAST 2 YEARS WHILE THE WORLD CAUGHT ON FIRE?
HOLY COW, PEOPLE... IT'S TIME FOR A REVOLUTION. Remove the traitors. The Founding Fathers would have.
The End Game is Near
Imagine yourself on a pristine beach, watching the seagulls soaring above, the dolphins feeding in the distance all the while feeling that warm, comforting breeze blowing inland. Salt spray caresses your senses and the soft sand beneath your feet comforts your soul.
Gazing seaward, you notice a small vessel on the horizon. As you focus your eyes on the boat, you notice what seems to be a small wave working it's way from the back of your view towards the hapless craft. Thinking nothing of it, you blink, only to discover that the wave has swallowed the boat and nothing is left. You curl your toes in the sand and a slightly uneasy feeling drifts over you. Your concern is mostly for the souls lost when the sea took the vessel to the bottom.
But the smell of the sea and the light breeze soon settle your soul once more. Casting your eyes once again towards the sea, you notice the wave has grown to a small bump, nearer than the horizon. "Must've been a big one... glad it's not near the shore..." you think to yourself.
Sitting down on the sand, you begin to feel comforted again by the fact that you are so far away from this event that it could not possibly affect you. As the seconds pass, you begin to realize that the shore line has extended itself about 500 yards further down the beach. Remembering something you saw on TV a few years back, you come to the realization that this isn't good. Just as you begin to think you should leave the beach, you look up and........................................
Countrywide, Indymac, Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Wachovia, Washington Mutual, National City and over 280 mortgage companies... GONE or GOING TO BE GONE.
Who thinks this crisis is near bottom? Show of hands....
Let the games begin!
The picture above is not for effect, folks. It's the face page from Fannie Mae's Prospectus. In case you have trouble seeing it, or are too lazy to look at it... allow me to help you:
"THE CERTIFICATES AND PAYMENTS OF PRINCIPAL AND INTEREST ON THE CERTIFICATES ARE NOT GUARANTEED BY THE UNITED STATES AND DO NOT CONSTITUTE A DEBT OR OBLIGATION OF THE UNITED STATES OR ANY OF ITS AGENCIES OR INSTRUMENTALITIES OTHER THAN FANNIE MAE" oh... may I add EXCEPT FOR YOU AND YOU AND YOU AND YOU AND YOU AND YOU AND....... ALL THE TAXPAYERS.
Of course... that doesn't appear anywhere, does it?
There. Does that help? Many thanks to The Market Ticker for that one. I've been waiting for the dust to settle on this before having at it, but it suffices to say that I'm absolutely stunned that a lowly mortgage guy such as myself could have predicted this before all the phonies on TV/Wall Street and the U.S. Government. As a matter of fact... we could all see this train wreck coming, couldn't we.
This isn't over by a long shot, people. There are SERIOUS implications to the "Nationalization" of both Fannie and Freddie. Legal, economic and moral. The robber barrons have resurfaced. The fleecing of America is almost complete. Now they've got our homes by the balls.
I encourage you to travel over to The Market Ticker and review. His opinion is a pretty close to mine. More later.
American Housing's Last Rites
Funny how these things happen, isn't it? Hmmm... let's see... as pontificated on February 18th, March 3rd, 4th, 22nd and 29th, today, September 5th, there are reports that the Treasury is near a plan to backstop Fannie Mae and Freddie Mac, effectively wiping out the shareholders and placing the burden of these completely insolvent institutions on the American Taxpayers' backs.
Pathetic. No... incredibly pathetic. Will common sense ever return to the American Pysche? I think not. Not until we hit rock bottom. Crack addicts hit rock bottom and either slowly rebound or die. This is where we are, America. Don't believe it? Think again. Our Government continues to feed us lies we know are not true but cling to in an effort to deny the oncoming pain.
As I said on February 18th of this year in Are Fannie and Freddie The Next to Fall:
"Fannie and Freddie have already posted MULTI-BILLION DOLLLAR LOSSES. All due to the fact that foreclosures on their books are at record levels. Now, let's add mortgages that are almost THREE TIMES THE SIZE of the median home price in the country. Mortgages that are either in default or about to go into default. Let's burden the GSE's with these toxic buyers. Oh yeah, and add on a heavy dose of depreciating assets.
What do YOU think will happen. It's clear to me, as it should be clear to everyone out there, that the government has absolutley NO idea what to do with this crisis. It's also very clear that Wall Street is not running for cover, but DIVING for it.
The thought that we are about to dump this problem on Fannie Mae and Freddie Mac should be a very sobering one."
Gee... I guess Bernanke, Paulson and company didn't see THAT one coming.
Following up on March 1st with Pulling The Plug on Fannie Mae and Freddie Mac:
"Who's passing out the crack pipe at these "meetings"? These firms are both upside down and insolvent. Their loan pipes are spiraling towards mass foreclosure on the subprime, Alt-A and prime side.
Increasing the loan limits and encouraging them to take more risk is going to help?
Not a chance, folks. This is a big set up for a taxpayer funded bailout, and yet another brilliant example of Wreckonomics....
The goal here is for these companies to take the bad mortgages off the books of the big banks (that are all teetering on the edge of failure as we speak). Once this happens, it will be much easier for the sheeple to accept a taxpayer funded government bailout.
Once again... the wicked web is weaved, and we are the flies getting the juice sucked out of us."
And, on March 4 the lunacy continued, as outlined in Big Ben and the Fed - The Setup is Here:
"The bailout, however nuts, is in the works. Bernanke goes on to say:
"The government-sponsored enterprises (GSEs), Fannie Mae (FNM) and Freddie Mac (FRE), likewise could do a great deal to address the current problems in housing and the mortgage market," Bernanke said. "New capital-raising by the GSEs, together with congressional action to strengthen the supervision of these companies, would allow Fannie and Freddie to expand significantly the number of new mortgages that they securitize."
"I urge the Congress and the GSEs to take the steps necessary to allow more potential homebuyers access to mortgage credit at reasonable terms. "
The groundwork is being laid. The fix is in, and they know it. We are going to pay for this mess, folks. Better get used to the idea."
As not to overdue the obvious, it pays also to read This Storm Will Have Many Eyes and Here Comes the Bailout, both from March.
The point? I think you get the point. The real estate party is over, baby. For anyone who believes it isn't, get a life. NO... really... get a life. Or a job, but those are going to get increasingly harder to come by as well.
What's going to happen? Well for starters, you can bet your bottom dollar that down payment requirements are going to increase. By the end of this year, you can count on needing a minimum 10% down payment on any sort of conventional type mortgage. Don't believe it? Zero down is gone. 3% down is gone. 5% down is currently available only in "non-declining markets" of which there are few. FHA is increasing their down payment from 3% to 3.5% on October 1st.
Wasn't it just about a year ago there was talk of lowering FHA's minimum requirement to "help" homeowners? What happened to that?
Things got worse. That's what happened. The bottom is nowhere near. We've got another 20%to go. Foreclosures are at a 30 year high, deliquencies are almost 9% on PRIME mortages, Alt-A is getting worse and subprime (remember that term?) is still going bad at a 25% clip. The inventory of available homes for sale is rapidly rising.
Now throw in hundreds of thousands of job losses and a broadly weakening economy. You get the point.
Pathetic. No... incredibly pathetic. Will common sense ever return to the American Pysche? I think not. Not until we hit rock bottom. Crack addicts hit rock bottom and either slowly rebound or die. This is where we are, America. Don't believe it? Think again. Our Government continues to feed us lies we know are not true but cling to in an effort to deny the oncoming pain.
As I said on February 18th of this year in Are Fannie and Freddie The Next to Fall:
"Fannie and Freddie have already posted MULTI-BILLION DOLLLAR LOSSES. All due to the fact that foreclosures on their books are at record levels. Now, let's add mortgages that are almost THREE TIMES THE SIZE of the median home price in the country. Mortgages that are either in default or about to go into default. Let's burden the GSE's with these toxic buyers. Oh yeah, and add on a heavy dose of depreciating assets.
What do YOU think will happen. It's clear to me, as it should be clear to everyone out there, that the government has absolutley NO idea what to do with this crisis. It's also very clear that Wall Street is not running for cover, but DIVING for it.
The thought that we are about to dump this problem on Fannie Mae and Freddie Mac should be a very sobering one."
Gee... I guess Bernanke, Paulson and company didn't see THAT one coming.
Following up on March 1st with Pulling The Plug on Fannie Mae and Freddie Mac:
"Who's passing out the crack pipe at these "meetings"? These firms are both upside down and insolvent. Their loan pipes are spiraling towards mass foreclosure on the subprime, Alt-A and prime side.
Increasing the loan limits and encouraging them to take more risk is going to help?
Not a chance, folks. This is a big set up for a taxpayer funded bailout, and yet another brilliant example of Wreckonomics....
The goal here is for these companies to take the bad mortgages off the books of the big banks (that are all teetering on the edge of failure as we speak). Once this happens, it will be much easier for the sheeple to accept a taxpayer funded government bailout.
Once again... the wicked web is weaved, and we are the flies getting the juice sucked out of us."
And, on March 4 the lunacy continued, as outlined in Big Ben and the Fed - The Setup is Here:
"The bailout, however nuts, is in the works. Bernanke goes on to say:
"The government-sponsored enterprises (GSEs), Fannie Mae (FNM) and Freddie Mac (FRE), likewise could do a great deal to address the current problems in housing and the mortgage market," Bernanke said. "New capital-raising by the GSEs, together with congressional action to strengthen the supervision of these companies, would allow Fannie and Freddie to expand significantly the number of new mortgages that they securitize."
"I urge the Congress and the GSEs to take the steps necessary to allow more potential homebuyers access to mortgage credit at reasonable terms. "
The groundwork is being laid. The fix is in, and they know it. We are going to pay for this mess, folks. Better get used to the idea."
As not to overdue the obvious, it pays also to read This Storm Will Have Many Eyes and Here Comes the Bailout, both from March.
The point? I think you get the point. The real estate party is over, baby. For anyone who believes it isn't, get a life. NO... really... get a life. Or a job, but those are going to get increasingly harder to come by as well.
What's going to happen? Well for starters, you can bet your bottom dollar that down payment requirements are going to increase. By the end of this year, you can count on needing a minimum 10% down payment on any sort of conventional type mortgage. Don't believe it? Zero down is gone. 3% down is gone. 5% down is currently available only in "non-declining markets" of which there are few. FHA is increasing their down payment from 3% to 3.5% on October 1st.
Wasn't it just about a year ago there was talk of lowering FHA's minimum requirement to "help" homeowners? What happened to that?
Things got worse. That's what happened. The bottom is nowhere near. We've got another 20%to go. Foreclosures are at a 30 year high, deliquencies are almost 9% on PRIME mortages, Alt-A is getting worse and subprime (remember that term?) is still going bad at a 25% clip. The inventory of available homes for sale is rapidly rising.
Now throw in hundreds of thousands of job losses and a broadly weakening economy. You get the point.
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